ASSET PURCHASE AGREEMENT
by and between
FANSTEEL INC.,
as Seller,
and
WHITESELL CORPORATION
as Purchaser
Dated as of December 30, 2004
TABLE OF CONTENTS
ARTICLE I DEFINED
TERMS...........................................................................................1
1.1 Defined
Terms...................................................................................1
1.2 Other Definitional and Interpretive
Matters.....................................................1
ARTICLE II PURCHASE AND SALE OF THE
ASSETS........................................................................2
2.1 Purchased
Assets................................................................................2
2.2 Excluded
Assets.................................................................................4
2.3 Certain Contracts, Licenses, and Intellectual
Property..........................................5
2.4 Power of Attorney; Right of Endorsement,
Etc....................................................6
ARTICLE III PURCHASE
PRICE........................................................................................6
3.1 Purchase Price and Related
Matters..............................................................6
3.2 Limited Assumed
Liabilities.....................................................................9
3.3 Retained
Liabilities............................................................................9
3.4 No Expansion of Third-Party
Rights.............................................................11
3.5 Allocation of the Purchase Price among the
Purchased Assets....................................11
3.6
Taxes..........................................................................................11
ARTICLE IV CLOSING; CLOSING CONDITIONS; PRE-CLOSING
COVENANTS....................................................11
4.1 Time and Place of the
Closing..................................................................11
4.2 Closing
Transactions...........................................................................12
4.3 Fansteel's Closing
Deliveries..................................................................12
4.4 Whitesell's Closing
Deliveries.................................................................13
4.5 Conditions to Whitesell's
Obligations..........................................................13
4.6 Conditions to Fansteel's
Obligation............................................................14
4.7 Affirmative Covenants of
Fansteel..............................................................14
4.8 Negative Covenants of
Fansteel.................................................................15
4.9 Covenants of
Whitesell.........................................................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
FANSTEEL.............................................................15
5.1 Organization, Power and Authority;
Subsidiaries................................................16
5.2 Ownership of Purchased
Assets..................................................................16
5.3 Intellectual Property
Rights...................................................................16
5.4 Power, Authority, Execution and
Delivery.......................................................16
5.5 Absence of
Litigation..........................................................................16
5.6 Governmental and Private Party Authorization and
Consent.......................................17
5.7 No
Conflicts...................................................................................17
5.8 Compliance with
Laws...........................................................................17
5.9 Rights of First Refusal and Related
Matters....................................................17
5.10 [Intentionally
deleted]........................................................................17
5.11
Inventory......................................................................................17
5.12 Change in Financial
Position...................................................................18
5.13 Accounts
Receivable............................................................................18
5.14 Contracts and
Commitments......................................................................18
i
5.15 Employee
Relations.............................................................................20
5.16 Absence of
Changes.............................................................................21
5.17
Customers......................................................................................22
5.18
Suppliers......................................................................................22
5.19 Employee Benefit
Plans.........................................................................22
5.20
Taxes..........................................................................................23
5.21 Environmental
Laws.............................................................................23
5.22 Product
Liability..............................................................................24
5.23 Union
Contract.................................................................................24
5.24 Disclaimer of Other Representations and
Warranties.............................................24
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF
WHITESELL...........................................................25
6.1 Organization, Power and
Authority..............................................................25
6.2 Due Authorization; Binding Obligation; No
Conflicts............................................25
6.3
Litigation.....................................................................................25
6.4 Financial
Performance..........................................................................26
6.5 Disclaimer of Other Representations and
Warranties.............................................26
ARTICLE VII CERTAIN ACTIONS AFTER THE
CLOSING....................................................................26
7.1 Employees of the
Business......................................................................26
7.2 Books and
Records..............................................................................27
7.3 Postal Addresses, Lock Boxes, Telephone Numbers
and Continuing Business Issues.................28
7.4 Retained
Mark..................................................................................28
ARTICLE VIII
TERMINATION.........................................................................................28
8.1
Termination....................................................................................28
8.2 Effect of
Termination..........................................................................28
ARTICLE IX ACCESS TO
INFORMATION.................................................................................28
9.1
Cooperation....................................................................................28
9.2
Access.........................................................................................29
9.3 Confidential
Treatment.........................................................................29
9.4
Non-compete....................................................................................29
ARTICLE X
MISCELLANEOUS..........................................................................................30
10.1 Survival of Representations and
Warranties.....................................................30
10.2
Indemnification................................................................................30
10.3 Transaction
Expenses...........................................................................31
10.4 Amendment and
Modification.....................................................................32
10.5 Entire
Agreement...............................................................................32
10.6 Execution in
Counterpart.......................................................................32
10.7
Notices........................................................................................32
10.8 Governing
Law..................................................................................33
10.9 Confidentiality;
Publicity.....................................................................33
10.10
Severability...................................................................................33
10.11
Assignment.....................................................................................34
ii
10.12 Binding Effect; No Third-Party
Beneficiaries...................................................34
10.13 Negotiation
Representations....................................................................34
10.14 Cumulative
Remedies............................................................................34
10.15 Dispute
Resolution.............................................................................34
10.16 Irrevocable Lock Box Account
Instructions......................................................35
Page
----
SCHEDULES TO TO BE DELIVERED TO WHITESELL
-----------------------------------------
Schedule 2.1(a) - Machinery and Equipment
Schedule 2.1(f) - Machinery and Equipment Contracts
Schedule 2.1(g) - Customer Contracts
Schedule 2.1(h) - Supplier Contracts
Schedule 2.1(k) - Intellectual Property Contracts
Schedule 2.1(l) - Prepaid Expense Items
Schedule 2.1(p) - Secured Claim Assets
Schedule 2.2(b) - Fixtures and Appurtenances
Schedule 2.3 - Post-Signing Purchased Contracts
Schedule 3.2 - Estimate of Limited Assumed Liabilities
Schedule 3.5 - Purchase Price Allocation
Schedule 4.7(e) - Required Filings of Fansteel
Schedule 5.2 - Liens Being Paid Off
Schedule 5.5 - Litigation
Schedule 5.6 - Consents
Schedule 5.7 - Conflicts
Schedule 5.14(a) - Contracts
Schedule 5.14(b) - Purchased Contracts
Schedule 5.15(a) - Union Issues
Schedule 5.16 - No Changes
Schedule 5.17 - Customer Exceptions
Schedule 5.18 - Supplier Exceptions
Schedule 5.19 - Benefit Plans Issues
Schedule 5.21 - Environmental Issues
Schedule 10.16 - Lock Boxes
APPENDICES
----------
Appendix I - Certain Definitions
EXHIBITS
--------
Exhibit A - List of Specified Employees
Exhibit B - Form of Confidentiality Agreement
Exhibit C - Form of Washington Facility Lease
iii
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and
entered into this
30th day of December 2004 by and among Fansteel Inc., a Delaware
corporation
("Fansteel"), and Whitesell Corporation ("Whitesell").
RECITALS
A. WHEREAS, Fansteel, among other things, operates a certain
division known
as Washington Manufacturing (the "Washington Division");
B. WHEREAS, the Washington Division is engaged in the business
of the
manufacture, distribution and sale of engineered and custom wire
forms and
component parts (the "Business"); and
C. WHEREAS, Fansteel desires to sell, transfer and assign to
Whitesell, and
Whitesell desires to purchase from Fansteel, the Purchased Assets
(as defined
below) for consideration comprised of cash and the assumption of
certain limited
liabilities referred to hereafter as the "Limited Assumed
Liabilities" (as
further defined below), all as herein provided and on the terms and
conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the
respective
representations, warranties, covenants, and agreements set forth
herein, the
parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
-------------
1.1 Defined Terms. For the purposes of this Agreement, certain
defined
terms shall have meanings set forth in Appendix I.
1.2 Other Definitional and Interpretive Matters. Unless
otherwise expressly
provided, for purposes of this Agreement, the following rules of
interpretation
shall apply:
1.2.1. Gender and Number. Any reference in this Agreement
to gender
shall include all genders, and words imparting the singular number
only shall
include the plural and vice versa.
1.2.2. Headings. The provisions of the Table of Contents,
the division
of this Agreement into Articles, Sections and other subdivisions
and the
insertion of headings are for convenience of reference only and
shall not affect
or be utilized in construing or interpreting this Agreement. All
references in
this Agreement to any "Section" are to the corresponding Section of
this
Agreement unless otherwise specified.
1.2.3. Herein. The words such as "herein," "hereinafter,"
"hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision
in which such words appear unless the context otherwise requires.
1
1.2.4. Including. The word "including" or any variation
thereof means
"including, without limitation" and shall not be construed to limit
any general
statement that it follows to the specific or similar items or
matters
immediately following it.
1.2.5. Knowledge. The phrase "Knowledge of Fansteel" (or
words of
similar import) shall mean the actual knowledge, after reasonable
inquiry, of
(i) Fansteel's Chief Executive Officer and Chief Financial Officer,
(ii) Cass
Suwinski, (iii) Matt Smith, solely with respect to the financial
condition and
financial and accounting records of the Washington Division, and
(iv) Jonathan
Jackson, solely with respect to (x) compliance with Environmental
Laws and (y)
the representations and warranties made pursuant to Section 5.21.
1.2.6. Exhibits. The Exhibits attached to this Agreement
shall be
construed with and as an integral part of this Agreement to the
same extent as
if the same had been set forth verbatim herein.
1.2.7. Schedules. The Schedules attached to this
Agreement, or
otherwise delivered by Fansteel to Whitesell on or after the date
hereof (and
identified as a Schedule delivered pursuant to this Agreement),
shall be
construed with and as an integral part of this Agreement to the
same extent as
if the same had been set forth verbatim herein.
ARTICLE II
PURCHASE AND SALE OF THE ASSETS
-------------------------------
2.1 Purchased Assets. On and subject to the terms and
conditions of this
Agreement, at the Closing, Fansteel shall sell, convey, transfer,
assign and
deliver to Whitesell, and Whitesell shall purchase from Fansteel,
free and clear
of all Liens, other than the Limited Assumed Liabilities, the
Permitted Liens,
and the Liens Being Paid Off (which shall be released upon the
occurrence of the
Required Closing Payment), all of Fansteel's right, title and
interest in and to
the following assets (other than the Excluded Assets), all as shall
exist at the
Closing (collectively, the "Purchased Assets"):
(a) the machinery, equipment, tooling, spare
parts, office
equipment, computers, telephone system, and supplies listed on
Schedule 2.1(a),
whether or not located at the Washington Facility (the "Machinery
and
Equipment");
(b) all raw material owned by the Washington
Division,
whether or not located at the Washington Facility, but only to the
extent such
raw material is (i) neither rusted, damaged nor obsolete (in each
case within
the general meaning of such term in the industry in which the
Business is
conducted) and (ii) required for the manufacture by the Washington
Division of
(x) products sold by it in the operation of the Business prior to
the Closing or
(y) products that support orders and web-based schedules under
agreed upon terms
from customers of the Business in the ordinary course of the
Business
(collectively, the "Raw Material Items");
(c) all work-in-process owned by the Washington
Division,
whether or not located at the Washington Facility, but only to the
extent such
work-in-process is part of the manufacture by the Washington
Division of (x)
products sold by it in the operation of
2
the Business required by a customer under a purchase order prior to
the Closing
or (y) products that support releases and web-based schedules under
agreed upon
terms from customers of the Business in the ordinary course of the
Business
(collectively, the "Work-In-Process Items");
(d) all finished goods owned by the Washington
Division,
whether or not located at the Washington Facility, but only to the
extent such
finished goods are (i) neither rusted, damaged nor obsolete (in
each case within
the general meaning of such term in the industry in which the
Business is
conducted) and (ii) consist of products of a type either (x) sold
by it in the
operation of the Business in the last 3 months prior to the Closing
or (y)
products that support releases and web-based schedules under agreed
upon terms
from customers of the Business in the ordinary course of the
Business, including
items identified as spare and service parts held for up to two
years projected
quantity for existing customers (collectively, the "Finished Goods
Items");
(e) all accounts receivable of the Washington
Division from
Third Party customers, employees, or others arising out of the
operation of the
Business (collectively, the "Receivables");
(f) all of the interest of, and all of the
rights and
benefits accruing to, the Washington Division, in its capacity as
purchaser,
lessee or licensee, under (x) all Contracts with respect to the
Machinery and
Equipment set forth on Schedule 2.1(f) and (y) in the case of any
Machinery and
Equipment that constitutes a Purchased Secured Claim Asset, the
Secured Claim
Document with respect to such Machinery and Equipment (such items
in clauses (x)
and (y), the "Machinery and Equipment Contracts"), subject to the
limitations
set forth in Section 2.3;
(g) all of the rights and benefits accruing to
the
Washington Division under all Contracts of the Washington Division
with Third
Party customers either (i) set forth on Schedule 2.1(g) or (ii)
entered into on
or after the date hereof, in each case subject to the limitations
set forth in
Section 2.3 (collectively, "Customer Contracts");
(h) all of the rights and benefits accruing to
the
Washington Division under all Contracts of the Washington Division
with Third
Party suppliers either (i) set forth on Schedule 2.1(h) or (ii)
entered into on
or after the date hereof, in each case subject to the limitations
set forth in
Section 2.3 (the "Supplier Contracts");
(i) all written customer lists and historical
sales data
owned by the Washington Division and related to the Business;
(j) all written product specifications owned by
the
Washington Division and which relate to products sold by it in the
operation of
the Business;
(k) all Intellectual Property of the Washington
Division
(including Intellectual Property Contracts either (i) set forth on
Schedule
2.1(k) or (ii) entered into on or after the date hereof) related
solely to the
Business, in each case subject to the limitations set forth in
Section 2.3;
3
(l) all prepaid expenses of the Washington
Division,
including employee compensation, utility payments, lease and rental
payments,
and unbilled charges and deposits but excluding insurance premium
payments,
related solely to the conduct of the Business which are listed on
Schedule
2.1(l) (collectively, the "Prepaid Expense Items");
(m) the Washington CBA (together with the
Machinery and
Equipment Contracts, Customer Contracts, Supplier Contracts, and
Intellectual
Property Contracts, in each case subject to the limitations set
forth in Section
2.3, the "Purchased Contracts");
(n) the corporate and trade names "Washington",
"Washington
Manufacturing", "Washington Manufacturing" and all variations
thereof to the
extent that such variations refer to the "Washington", "Washington
Manufacturing", or "Washington Manufacturing" name;
(o) the Records;
(p) the machinery, equipment, software and
other items (if
any) listed on Schedule 2.1(p) (each, a "Secured Claim Asset", and,
to the
extent acquired by Whitesell pursuant to this Section 2.1(p), a
"Purchased
Secured Claim Asset"), in each case only if either (1) the Secured
Claim
Obligation related to such Secured Claim Asset has been satisfied
or
extinguished (and Fansteel has provided written notice thereof to
Whitesell at
least two Business Days prior to the Closing Date), or (2) (A)
Whitesell agrees,
by written notice to Fansteel at least one Business Day prior to
the Closing, to
acquire such Secured Claim Asset (and to assume the Secured Claim
Obligation
related thereto pursuant to Section 3.2), and (B) the holder(s) of
the Secured
Claim Lien(s) on such Secured Claim Asset, at or prior to the
Closing, (i)
consent to the assignment by Fansteel to Whitesell of such Secured
Claim Asset
and the assumption by Whitesell of the Secured Claim Obligation
related to such
Secured Claim Asset and (ii) release Fansteel from any post-Closing
Liability in
respect of such Secured Claim Obligation;
(q) all transferable approvals, authorizations,
certifications, consents, variances, permissions, licenses,
registrations and
permits to or from, or filings, notices or recordings to or with,
federal, state
and local governmental authorities as held or effected by Fansteel
in connection
with the Business or the Purchased Assets; and
(r) all other assets or properties, located in
Washington,
Iowa, used or useful in conducting the Business, and not expressly
described as
"Excluded Assets" in Section 2.2.
2.2 Excluded Assets. Anything contained in Section 2.1 or
elsewhere herein
to the contrary notwithstanding, the Purchased Assets shall exclude
the
following assets and rights of Fansteel (collectively, the
"Excluded Assets"):
(a) the proceeds of the Purchase Price (as
hereinafter
defined) and Fansteel's other rights under this Agreement and
all documents
and instruments executed in connection with this Agreement;
4
(b) all real property interests of the
Washington Division
in the Washington Facility, and all fixtures and
appurtenances, which are
not Machinery and Equipment and are listed on Schedule 2.2,
located within
the bounds of the Washington Facility;
(c) the corporate and trade name "Fansteel" and
all
variations thereof;
(d) any inter-company or intra-corporate
receivables of the
Business;
(e) all contracts, purchase orders, supply
agreements, and
other arrangements which are not Purchased Contracts;
(f) all Raw Material Items, Work-In-Process
Items, and
Finished Goods Items not purchased by Whitesell;
(g) all bank accounts (subject to the
provisions of Section
10.16), cash (including cash in bank accounts), cash
equivalents and short
term investments of the Washington Division; and
(h) the registered mark "Fansteel Washington
Manufacturing"
(the "Retained Mark") (subject to the provisions of Section
7.4).
2.3 Certain Contracts, Licenses, and Intellectual Property.
Notwithstanding
any other provision of this Agreement to the contrary, to the
extent that the
assignment by Fansteel to Whitesell of any Purchased Contract,
governmental
license or registration, or Intellectual Property to be assigned
hereunder shall
require the consent or approval of another party thereto, this
Agreement shall
not constitute an assignment or attempted assignment thereof or an
assumption by
Whitesell of any of Fansteel's obligations thereunder if such
assignment or
attempted assignment would, without the consent of such other
party, invalidate
or constitute a breach thereof. Fansteel shall use its commercially
reasonable
efforts at its cost to obtain the written consent or approval to
the assignment
to Whitesell of each such Purchased Contract, governmental license
or
registration, or Intellectual Property with respect to which such
consent is
required for such assignment. Until such consent or approval is
obtained, each
Party agrees to cooperate with the other Parties in any reasonable
arrangement
necessary or desirable to provide to Whitesell the benefits of each
such
Purchased Contract, governmental license or registration, or
Intellectual
Property (subject to the assumption by Whitesell of Fansteel's
obligations
thereunder in manner and scope consistent with Section 3.2).
Furthermore, no
Purchased Contract entered into by the Washington Division on or
after the date
hereof will be deemed to have been assigned to Whitesell pursuant
to Section 2.1
and in fact constitute a "Purchased Contract" for purposes of this
Agreement,
unless either (i) such Contract was entered into by the Washington
Division in
the ordinary course of the Business and does not contain a delivery
date
commitment by the Washington Division beyond the 120-day
anniversary of the
Closing Date or (ii) Whitesell specifically agrees, in a writing
delivered to
Fansteel at least one Business Day prior to the Closing, to accept
such
Contract. At the Closing, Fansteel shall deliver to Whitesell a
document, which
shall include a statement that such document constitutes Schedule
2.3 to this
5
Agreement, listing all of the Contracts entered into by the
Washington Division
on or after the date hereof that constitute "Purchased Contracts"
within the
meaning of the prior sentence.
2.4 Power of Attorney; Right of Endorsement, Etc. Effective as
of the
Closing, Fansteel hereby constitutes and appoints Whitesell, and
its successors
and assigns, the true and lawful attorney of Fansteel with full
power of
substitution, in the name of Fansteel or the name of Whitesell, on
behalf of and
for the benefit of Whitesell, (a) to collect all Purchased Assets,
(b) to
endorse, without recourse, checks, notes and other instruments in
connection
with the Business and attributable to the Purchased Assets, (c) to
institute and
prosecute all proceedings which Whitesell may deem proper in order
to collect,
assert or enforce any claim, right or title in or to the Purchased
Assets, (d)
to defend and compromise all actions, suits or proceedings with
respect to any
of the Purchased Assets, and (e) to do all such reasonable acts and
things with
respect to the Purchased Assets as Whitesell may deem advisable,
subject to the
consent of Fansteel, which consent shall not be unreasonably
withheld.
ARTICLE III
PURCHASE PRICE
--------------
3.1 Purchase Price and Related Matters.
3.1.1. Purchase Price. In consideration for the Purchased
Assets,
Whitesell shall pay an aggregate purchase price (the "Purchase
Price") equal to
a combination of (i) an amount in cash (the "Cash Purchase Price")
equal to the
sum of (a) $1,150,000, plus (b) the gross book value of the
Receivables,
adjusted downward by a reserve (the "Receivables Reserve") as of
the Closing
Date (which shall be determined after the Closing pursuant to
Section 3.1.5 and
in accordance with GAAP consistently applied), but not to exceed
$70,000 in the
aggregate, for Receivables which are not collectible within 60 days
of the
Closing Date, plus (c) the sum of the prices invoiced by vendors to
the Business
for the Raw Material Items, based on the vendor invoices upon which
Fansteel
purchased the Raw Material for the Business prior to the Closing,
plus (d) the
sum of the Specified WIP Values of the Work-In-Process Items (with
the
"Specified WIP Value" of each Work-In-Process Item being equal to
the lesser of
(A) the actual cost of such Work-In-Process Item to the Business
(taking into
account allocable overheads and fixed costs of Fansteel) and (B)
eighty percent
(80%) of the latest prevailing selling price of the Washington
Division for the
Finished Goods Item related to such Work-In-Process Item prior to
the Closing),
plus (e) the sum of the Specified FG Values of the Finished Goods
Items (with
the "Specified FG Value" of each Finished Goods Item being equal to
the lesser
of (A) the latest standard book cost to the Business for such
Finished Goods
Item and (B) ninety-five percent (95%) of the latest prevailing
bona fide
selling price if in an open purchase order or web-based release
from a customer
of the Washington Division or if invoiced during the last 3 months
prior to the
Closing), plus (f) the unamortized balance of the Prepaid Expense
Items, having
transferable value and benefit to Whitesell, on the books and
records of the
Business, minus (g) the value (determined in accordance with GAAP
consistently
applied) of the Limited Assumed Liabilities, and (ii) as more fully
set forth in
Section 3.2, the assumption by Whitesell of all of the Limited
Assumed
Liabilities (and the discharge or performance by Whitesell of the
Limited
Assumed Liabilities when due in accordance with the terms thereof).
6
3.1.2. [intentionally deleted]
3.1.3. Estimated Cash Purchase Price. Not more than five
(5) Business
Days nor less than two (2) Business Days prior to the Closing,
Fansteel shall
deliver to Whitesell in writing a reasonable, good faith estimate
(the "Estimate
Certificate") of the Cash Purchase Price determined in accordance
with Section
3.1.1 (but without regard for any Receivables Reserve, which shall
be determined
after the Closing pursuant to Section 3.1.5) and using the most
recent financial
information available (the "Estimated Cash Purchase Price"),
including the
details for such estimate, with such details to include an estimate
of each
component thereof, as specified in the definition of "Cash Purchase
Price". The
Estimated Cash Purchase Price shall be prepared, to the extent
applicable, in
accordance with GAAP consistently applied from period to period and
shall not
exceed $2,000,000.
3.1.4. Cash Payments At or Before Closing.
(a) Payment of the Estimated Cash Purchase Price. On
the Closing
Date, Whitesell shall pay the Estimated Cash Purchase Price less
the amount of
$200,000 (the "Cash Holdback"), by wire transfer of immediately
available U.S.
funds in accordance with the written payment instructions furnished
by Fansteel
to Whitesell prior to the Closing Date (the "Fansteel Payment
Instructions").
Such wire transfer shall be initiated by Whitesell no later than
10:00 am.,
Washington, Iowa, time, on the Closing Date.
3.1.5. Post-Closing Adjustment.
(a) Closing Statement. Whitesell shall prepare and
deliver to
Fansteel, not later than sixty (60) days after the Closing, a
statement and
calculation ("Closing Statement") of the Cash Purchase Price,
including the
details for such calculation, with such details to include a
calculation of each
component thereof, as specified in the definition of "Cash Purchase
Price"
(including the amount of any Receivables Reserve). The Closing
Statement shall
be prepared, to the extent applicable, in accordance with GAAP
consistently
applied from period to period. Fansteel shall cooperate (at its
expense), and
shall cause its accountants and representatives to cooperate (at
Fansteel's
reasonable expense), with Whitesell and its accountants,
representatives and
employees in the preparation of the Closing Statement.
(b) Objections. Within thirty (30) days following
Fansteel's
receipt of the Closing Statement, Fansteel shall notify Whitesell
in writing of
any objections that Fansteel may have to the Closing Statement,
stating in
reasonable detail the permissible grounds for any such objection
(an "Objection
Notice"); provided that the only permissible grounds for any such
objection
shall be Whitesell's non-compliance with the standards set forth in
this Section
3.1.5 for the preparation of the Closing Statement. If Fansteel
fails to deliver
an Objection Notice to Whitesell within such thirty (30) day
period, Fansteel
shall be deemed to have accepted the Closing Statement and the
calculation of
the Cash Purchase Price delivered by Whitesell, which shall be
final, binding
and conclusive for all purposes hereunder. During such thirty (30)
day period,
and thereafter until all matters in all Objection Notices are
resolved,
Whitesell shall afford to Fansteel and its representatives
reasonable access
during regular business hours to all of Whitesell's management and
books,
documents and records that relate to
7
the Business and are necessary or desirable for purposes of
Fansteel's review of
the Closing Statement (and permit Fansteel to copy such items for
purposes of
resolution of such matters).
(c) Dispute Resolution. If Fansteel timely delivers
an Objection
Notice to Whitesell in accordance with Section 3.1.5(b), Fansteel
and Whitesell
shall promptly consult with each other in good faith and exercise
reasonable
efforts to attempt to resolve differences in their respective
analyses of the
Closing Statement within twenty (20) days after Fansteel delivers
the Objection
Notice (or such longer period as the parties shall mutually agree).
Any matter
not specifically referenced in the Objection Notice shall be
conclusively deemed
to have been agreed upon by the parties. If the parties are unable
to resolve
their differences within such twenty (20) day period (or such
longer period as
the parties shall mutually agree), the matter shall be promptly
referred to a
mutually agreed upon Independent Accounting Firm, which shall make
its own
determination of the matters in dispute within fifteen (15) days
after the
matter is referred to it, based solely on the information submitted
by Fansteel
and Whitesell and based solely on the matters in dispute on the
standards set
forth above in Section 3.1.5(a) and Section 3.1.5(b). The
determination of the
Independent Accounting Firm shall be final, binding and conclusive
on the
parties.
(d) Fees and Expenses. Each party shall bear its own
fees and
expenses incurred in connection with enforcing its rights and/or
satisfying its
obligations under this Section 3.1.5. If the Independent Accounting
Firm is used
to resolve differences between Fansteel and Whitesell in accordance
with Section
3.1.5(c), all fees and expenses, including any retainers, of the
Independent
Accounting Firm: (i) shall be borne by Fansteel in the proportion
that the
aggregate dollar amount of such disputed items so submitted that
are
unsuccessfully disputed by Fansteel (as finally determined by the
Independent
Accounting Firm) bears to the aggregate dollar amount of such items
so submitted
and (ii) shall be borne by Whitesell in the proportion that the
aggregate dollar
amount of such disputed items so submitted that are successfully
disputed by
Fansteel(as finally determined by the Independent Accounting Firm)
bears to the
aggregate dollar amount of such items so submitted.
(e) Payment of Adjustment. Within five (5) Business
Days after
the final determination of the Cash Purchase Price pursuant to
Section 3.1.5 (b)
or (c):
(i) if (x) the Cash Purchase Price (as finally
determined
pursuant to Section 3.1.5(b) or (c)) is greater than (y)
the amount
equal to (A) the Estimated Cash Purchase Price minus (B)
the amount of
the Cash Holdback, then Whitesell shall deliver to
Fansteel, by wire
transfer of immediately available funds to the account or
accounts
specified by Fansteel in writing, an amount equal to the
excess of the
amount referred to in clause (x) above over the amount
referred to in
clause (y) above; and
(ii) if (x) the Cash Purchase Price (as finally
determined
pursuant to Section 3.1.5(b) or (c)) is less than (y) the
amount equal
to (A) the Estimated Cash Purchase Price minus (B) the
amount of the
Cash Holdback, then Fansteel shall deliver to Whitesell,
by wire
transfer of immediately available funds to the account or
accounts
specified by Whitesell in writing, an amount
8
equal to the excess of the amount referred to in clause
(y) above over
the amount referred to in clause (x) above.
3.2 Limited Assumed Liabilities. On and subject to the terms
and conditions
of this Agreement, at the Closing, Whitesell will assume, discharge
or perform
when due in accordance with the terms thereof, the following
Liabilities of the
Business (the "Limited Assumed Liabilities") :
(a) all trade accounts payable of the Business to Third
Parties that
are properly accrued and recorded on the books of the Business as
of the
Closing, but not including any accounts payable arising prior to
the Closing
outside of the ordinary course of the Business, or which relate to
any Funded
Indebtedness arising or existing prior to the Closing;
(b) all property, ad valorem and other similar taxes
levied by local
and state governmental authorities on the personal and real
property which
comprises the Purchased Assets that are properly accrued and
recorded on the
books of the Business as of the Closing (the "Assumed Taxes");
(c) all sales, use and other similar taxes due in the
ordinary course
of the Business as a consequence of commercial transactions of the
Business that
are properly accrued and recorded on books of the Business as of
the Closing;
(d) the Liabilities of the Business arising or to be
performed on or
after the Closing under the Purchased Contracts other than as a
result of
Fansteel's pre-Closing breach or default under the Purchased
Contracts; and
(e) to the extent that a Secured Claim Asset constitutes a
Purchased
Asset, the Secured Claim Obligation (if any) related to such
Secured Claim
Asset.
Limited Assumed Liabilities that are monetary obligations are
specified in
detail, by type, on Schedule 3.2, using estimates where final
numbers are not
available. Any other liabilities not listed shall be retained by
and remain the
responsibility of Fansteel as Retained Liabilities under Section
3.3. As finally
determined pursuant to Section 3.1.5, in no event shall the
aggregate value of
the Limited Assumed Liabilities referred to in Section 3.2(a), (b),
(c) and (e)
above exceed the Cash Purchase Price.
3.3 Retained Liabilities. Except as specifically set forth in
Section 3.2,
Whitesell shall not assume any Liabilities of the Business (the
"Retained
Liabilities"), including:
(a) any Liability that arises out of the transactions
contemplated by
this Agreement or results from any breach or default by Fansteel
under this
Agreement or any agreement, certificate or other document or
instrument that may
be executed or delivered in connection with this Agreement or the
transactions
contemplated hereby, or any Liability where the existence,
imposition, nature or
extent of such Liability gives rise to or constitutes a breach or
default by
Fansteel under this Agreement or any other agreement, certificate
or other
document or instrument that may be executed or delivered in
connection with this
Agreement or the transactions contemplated hereby;
9
(b) any Liability directly or indirectly relating to the
Excluded
Assets, including payables under agreements not part of the
Purchased Contracts;
(c) any Liability relating to any violation of any Law by
the Business
or any employee or agent of the Business that arises out of or
results from any
act, omission, occurrence or state of facts prior to the Closing;
(d) any Liability or inter-company or intra-corporate
payable owed to
Fansteel or any Affiliate of Fansteel prior to the Closing;
(e) any Liability relating to any claims under worker's
compensation
laws, other worker claims, assessments, or fines arising from any
act, omission,
occurrence or state of facts prior to the Closing;
(f) any Liability relating to any claim arising from any
plating line
accidents occurring prior to the Closing;
(g) any commission, fee or claim of any Person employed or
retained or
claiming to be employed or retained by Fansteel to bring about, or
to represent
it in, the transactions contemplated hereby;
(h) any Liability or obligation relating to any federal,
state, local
or foreign income tax of Fansteel, including any interest or
penalties related
thereto and any liability for deferred income taxes of any nature,
and any
Liability for any other Taxes related to the Business, the
Washington Division,
the Washington Facility, or the Purchased Assets which arise from
any
conditions, actions, events, or incidents which occurred prior to
the Closing
(other than the Assumed Taxes);
(i) Liabilities arising from product liability claims or
warranty
claims for products manufactured or sold by Fansteel before the
Closing Date;
(j) any Funded Indebtedness of the Business prior to the
Closing;
(k) to the extent that a Secured Claim Asset does not
constitute a
Purchased Asset, the Secured Claim Obligation related to such
Secured Claim
Asset;
(l) Liabilities which arose or may arise from any
conditions, actions,
events, or incidents which occurred prior to the Closing in
connection with
violations of or liability under Environmental Laws;
(m) Liabilities or debts owed to any sales
representatives, agents, or
independent contractors (other than the Third Party suppliers
referred to in
Section 2.1(h)), whether in oral or written agreements, other than
those
included in the Limited Assumed Liabilities under Section 3.2;
(n) the COBRA liabilities specified to be borne by
Fansteel as
specifically set forth in Section 7.1; and
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(o) any other Liabilities of any kind or nature whether
now in
existence or hereafter arising, known or unknown by Fansteel, that
are not
assumed by Whitesell in the Limited Assumed Liabilities under
Section 3.2,
including, without limitation, the excess of (i) the aggregate
value (as finally
determined pursuant to Section 3.1.5) of the Limited Assumed
Liabilities
referred to in Section 3.2(a), (b), (c) and (e) above over (ii) the
Cash
Purchase Price (as finally determined pursuant to Section 3.1.5)
(it being
agreed that such excess shall treated as a reduction of like amount
of the
Limited Assumed Liabilities (before giving effect to this
provision), with such
reduction to be allocated among the individual Liabilities
comprising the
Limited Assumed Liabilities in a manner agreed upon by Fansteel and
Whitesell
promptly after the final determination of the Cash Purchase Price).
3.4 No Expansion of Third-Party Rights. The (i) assumption by
Whitesell of
the Limited Assumed Liabilities, (ii) transfer thereof by Fansteel
and (iii)
limitations in the description of Retained Liabilities in Section
3.3, shall in
no way expand the rights or remedies of any Third Party against
Whitesell or
Fansteel as compared to the rights and remedies which such Third
Party would
have had against Fansteel had Whitesell not assumed such
liabilities. Without
limiting the generality of the preceding sentence, the assumption
by Whitesell
of the Limited Assumed Liabilities shall not create any third-party
beneficiary
rights.
3.5 Allocation of the Purchase Price among the Purchased
Assets. The
Purchase Price shall be allocated among each item or class of the
Purchased
Assets as specifically agreed to by the parties and set forth on
Schedule 3.5
(which Schedule shall be delivered to Whitesell by Fansteel on or
prior to the
Closing Date). Fansteel and Whitesell agree that this allocation
shall be used
on Form 8594 and any other notice or filing required pursuant to
Section 1060 of
the Code.
3.6 Taxes. Whitesell agrees that it shall pay all sales,
transfer, document
recording tax, stamp tax, and other similar taxes, if any, required
to be paid
by reason of the sale of the Purchased Assets to Whitesell
hereunder, based upon
the allocation provided for in Section 3.5.
ARTICLE IV
CLOSING; CLOSING CONDITIONS; PRE-CLOSING COVENANTS
--------------------------------------------------
4.1 Time and Place of the Closing. The closing of the
transactions
contemplated by this Agreement (the "Closing") shall be effective
at 11:59 p.m.,
Washington, Iowa time, on December 31, 2004 (such date, the
"Closing Date"),
provided that all of the conditions to precedent set forth in
Section 4.5 and
4.6 shall have been satisfied or waived by the close of business on
December 30,
2004. In lieu of the consummation of the Closing on an in-person
basis by duly
authorized representatives of the parties, the parties hereto may
consummate the
Closing by facsimile transmission between them of the requisite
documents, to be
followed by overnight delivery of originals of said documents, and
by wire
transfer of the requisite immediately available funds specified
herein to be
delivered on the Closing Date no later than the time specified
herein for such
delivery.
11
4.2 Closing Transactions. Subject to the conditions set forth
in this
Agreement, the Parties shall consummate the following transactions
at the
Closing (or, in the case of subsection (c) below, at the time
specified
therein):
(a) Fansteel shall deliver to Whitesell executed bills of
sale for the
Purchased Assets to be sold by Fansteel hereunder (in form and
substance
reasonably satisfactory to Whitesell) no later than 9:00 a.m.,
Washington, Iowa,
time, on the Closing Date;
(b) Whitesell shall deliver to Fansteel executed
assumption agreements
to effect the assumption by Whitesell of the Limited Assumed
Liabilities (in
form and substance reasonably satisfactory to Fansteel);
(c) Whitesell shall deliver the Estimated Cash Purchase
Price, less the
Cash Holdback, by wire transfer (which shall be initiated by
Whitesell no later
than 10:00 a.m., Washington, Iowa, time, on the Closing Date) of
immediately
available funds in accordance with the Fansteel Payment
Instructions, on the
Closing Date (such payment, made on the Closing Date and initiated
no later than
the time on the Closing Date specified above, the "Required Closing
Payment");
(d) Fansteel and Whitesell shall deliver to each other
executed
counterpart signature pages to the Washington Facility Lease; and
(e) Fansteel and Whitesell, as applicable, shall deliver
the
certificates and other documents and instruments required to be
delivered by or
on behalf of such Party under this Article IV.
4.3 Fansteel's Closing Deliveries. Subject to and conditioned
upon the
Closing, at or prior to the Closing, Fansteel shall have delivered
to Whitesell
all of the following:
(a) a certificate of the Secretary of State of Delaware
(and each other
state in which Fansteel is qualified to conduct the Business)
providing that
Fansteel is in good standing;
(b) copies of all third-party and governmental consents,
approvals,
filings, waivers, releases and terminations that are required to be
obtained by
Fansteel pursuant to the terms and conditions of this Agreement;
(c) such certificates, documents or instruments as
Whitesell may
reasonably request (in form and substance reasonably acceptable to
Whitesell) to
effect the transactions contemplated hereby;
(d) a certificate of Fansteel certifying that the
conditions to Closing
set forth in Sections 4.5(a) and 4.5(b) have been satisfied; and
(e) Fansteel shall have delivered evidence (including
payoff letters,
releases of liens and/or UCC-3 statements), reasonably satisfactory
to
Whitesell, showing that all Liens on the Purchased Assets
(including the Liens
Being Paid Off) have been or will be
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released on the Closing Date (other than (x) Permitted Liens and
(y) to the
extent Secured Claim Assets constitute Purchased Assets, the
related Secured
Claim Liens (if any)).
4.4 Whitesell's Closing Deliveries. Subject to and conditioned
upon the
Closing, at or prior to the Closing, Whitesell shall have delivered
to Fansteel
all of the following:
(a) a certificate of the Secretary of State of the State
of Alabama
providing that Whitesell is in good standing;
(b) copies of all third-party and governmental consents,
approvals,
filings, waivers, releases and terminations that are required to be
obtained by
Whitesell pursuant to the terms and conditions of this Agreement;
(c) such certificates, documents or instruments as
Fansteel may
reasonably request to effect the transactions contemplated hereby;
(d) certified copies of the resolutions of Whitesell's
board of
directors approving the transactions contemplated by this
Agreement; and
(e) a certificate of Whitesell certifying that the
conditions to
Closing set forth in Sections 4.6(a) and (b) have been satisfied.
4.5 Conditions to Whitesell's Obligations. The obligation of
Whitesell to
consummate the transactions contemplated by this Agreement is
subject to the
satisfaction of the following conditions as of the Closing:
(a) The representations and warranties set forth in
Article V hereof
shall be true and correct in all material respects both on the date
hereof and
as of the Closing (with the same effect as if made as of the
Closing) (except
where any such representation and warranty speaks by its terms as
of a different
date, in which case it shall be true and correct in all material
respects as of
such date).
(b) Fansteel shall have performed and complied in all
material respects
with all of the covenants and agreements required to be performed
by it under
this Agreement on or prior to the Closing.
(c) The purchase of Purchased Assets (and the assumption
of the Limited
Assumed Liabilities) by the parties hereunder shall not be
prohibited by any
applicable Law or Governmental Body.
(d) No preliminary or permanent injunction issued by any
court of
competent jurisdiction (or order of, or notice from, any
Governmental Body)
restraining or prohibiting the transactions hereby shall have been
issued and be
in effect.
Any condition specified in this Section 4.5 may be waived by
Whitesell;
provided that (i) no such waiver shall be effective against
Whitesell unless it
is set forth in a writing executed by Whitesell and (ii) such
waiver shall be
deemed to include a waiver by Whitesell of
13
any breach of any representation and warranty or covenant of
Fansteel that was
the basis, in whole or in part, for the non-satisfaction of such
condition.
4.6 Conditions to Fansteel's Obligation. The obligation of
Fansteel to
consummate the transactions contemplated by this Agreement is
subject to the
satisfaction of the following conditions as of the Closing:
(a) The representations and warranties set forth in
Article VI hereof
shall be true and correct in all material respects both on the
date hereof
and as of the Closing (with the same effect as if made as of
the Closing)
(except where any such representation and warranty speaks by
its terms as
of a different date, in which case it shall be true and
correct in all
material respects as of such date).
(a) Whitesell shall have performed and complied in
all material
respects with all of the covenants and agreements required to be
performed by it
under this Agreement on or prior to the Closing.
(b) The sale of the Purchased Assets (and the
assumption of the
Limited Assumed Liabilities) by the parties hereunder shall not be
prohibited by
any applicable Law or Governmental Body.
(c) No preliminary or permanent injunction issued by
any court of
competent jurisdiction (or order of, or notice from, any
Governmental Body)
restraining or prohibiting the transactions hereby shall have been
issued and be
in effect.
Any condition specified in this Section 4.6 may be waived by
Fansteel;
provided that (i) no such waiver shall be effective against
Fansteel unless it
is set forth in a writing executed by Fansteel and (ii) such waiver
shall be
deemed to include a waiver by Fansteel of any breach of any
representation and
warranty or covenant of Whitesell that was the basis, in whole or
in part, for
the non-satisfaction of such condition.
4.7 Affirmative Covenants of Fansteel. Prior to the Closing,
unless
Whitesell otherwise agrees in writing and except as expressly
contemplated by
this Agreement, Fansteel shall:
(a) conduct the business and operations of the Business
only in the
ordinary course of business, consistent with past practice;
(b) maintain the books, accounts and records of the
Business and the
Purchased Assets in accordance with past custom and practice;
(c) promptly (once it obtains knowledge thereof) inform
Whitesell in
writing of any material variances from the representations and
warranties
contained in Article V hereof or any breach of any covenant
hereunder by
Fansteel;
(d) cooperate with Whitesell and use commercially
reasonable best
efforts to cause the conditions to Whitesell's obligation to close
the
transactions contemplated hereby to be satisfied; and
14
(e) promptly make all filings and submissions, and obtain
all consents,
including those set forth on Schedule 4.7(e), necessary to
consummate the
transactions contemplated by this Agreement, and promptly provide
Whitesell with
copies of all correspondence, filings, or communications between
Fansteel or its
representatives and any governmental agency or authority or members
of their
staffs with respect to such filings and submissions.
4.8 Negative Covenants of Fansteel. Prior to the Closing,
unless Whitesell
otherwise agrees in writing and except as expressly contemplated by
this
Agreement, Fansteel shall not:
(a) make or grant any increase in the compensation of any
employee of
the Business (other than in the ordinary course of business
consistent with past
practice) or make or grant any increase in any incentive
arrangement or other
benefit covering any of the employees of the Business;
(b) enter into, or amend, terminate or otherwise modify,
any Purchased
Contract, other than in the ordinary course of business consistent
with past
practice; or
(c) dispose of any Machinery and Equipment, other than in
the ordinary
course of business consistent with past practice.
4.9 Covenants of Whitesell. Prior to the Closing, Whitesell
shall:
(a) promptly (once it obtains knowledge thereof) inform
Fansteel in
writing of any variances from the representations and warranties
contained in
Article VI or any breach of any covenant hereunder by Whitesell;
(b) cooperate with Fansteel and use its commercially
reasonable best
efforts to cause the conditions to Fansteel's obligation to close
the
transactions contemplated hereby to be satisfied; and
(c) promptly make all filings and submissions as necessary
and
advisable to consummate the transactions contemplated by this
Agreement, and
promptly provide Fansteel with copies of all correspondence,
filings, or
communications between Whitesell or its representatives and any
governmental
agency or authority or members of their staffs with respect to such
filings and
submissions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
OF FANSTEEL
-----------
To induce Whitesell to ente
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