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Exhibit 2.2
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ASSET PURCHASE AGREEMENT
BY AND AMONG
HAYNES WIRE COMPANY,
THE BRANFORD WIRE AND MANUFACTURING COMPANY,
CAROLINA INDUSTRIES, INC.,
AND
RICHARD HARCKE
DATED AS OF OCTOBER 28, 2004
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TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS................................................................................1
ARTICLE II. SALE AND
PURCHASE..........................................................................7
Section 2.01. Transfer of
Assets.........................................................................7
Section 2.02. Sale Free of
Encumbrances..................................................................7
Section 2.03. Certain Excluded
Assets....................................................................7
Section 2.04. No Assumption of
Liabilities...............................................................8
Section 2.05. Subsequent
Documentation...................................................................8
Section 2.06. Post-Closing Adjustments to Purchased
Inventory............................................8
ARTICLE III. PURCHASE
PRICE.............................................................................9
Section 3.01. Purchase Price and
Payment.................................................................9
Section 3.02. Fair
Consideration.........................................................................9
Section 3.03. Allocation of the Purchase
Price...........................................................9
Section 3.04.
Taxes.....................................................................................10
ARTICLE IV.
CLOSING...................................................................................10
Section 4.01. Closing
Date..............................................................................10
Section 4.02. Deliveries by
Sellers.....................................................................10
Section 4.03. Deliveries by
Buyer.......................................................................11
Section 4.04. Possession of Acquired
Assets.............................................................12
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLERS AND
HARCKE......................................12
Section 5.01. Organization;
Power.......................................................................12
Section 5.02. Authorization and Validity of
Agreement...................................................12
Section 5.03. No Conflict or
Violation..................................................................13
Section 5.04. Consents and
Approvals....................................................................13
Section 5.05. Financial
Statements......................................................................13
Section 5.06. Absence of Certain Changes or
Events......................................................14
Section 5.07. Tax
Matters...............................................................................14
Section 5.08. Absence of Undisclosed
Liabilities........................................................15
Section 5.09. Real
Property.............................................................................15
Section 5.10. Conformity of the Real
Property...........................................................16
Section 5.11. Equipment and
Machinery...................................................................16
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Section 5.12. Intellectual Property and
Software........................................................16
Section 5.13. Accounts
Receivable.......................................................................17
Section 5.14. Employee Benefit
Plans....................................................................17
Section 5.15. Labor
Relations...........................................................................18
Section 5.16. Environmental
Compliance..................................................................18
Section 5.17. Licenses and
Permits......................................................................19
Section 5.18. Insurance;
Bonds..........................................................................19
Section 5.19. Assigned
Contracts........................................................................19
Section 5.20.
Customers.................................................................................19
Section 5.21. Compliance with
Law.......................................................................19
Section 5.22.
Litigation................................................................................20
Section 5.23. Title to the Acquired Assets and Related
Matters..........................................20
Section 5.24. Absence of Certain Business
Practices.....................................................20
Section 5.25. No Other Agreements to Sell
Assets........................................................20
Section 5.26. Debts of
Branford.........................................................................20
Section 5.27. Due
Diligence.............................................................................20
Section 5.28. Broker's and Finder's
Fees................................................................21
Section 5.29. All Material
Information..................................................................21
Section 5.30. Sellers and Harcke Independently
Advised..................................................21
Section 5.31. Condition of Acquired
Assets..............................................................21
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF
BUYER...................................................21
Section 6.01. Organization;
Power.......................................................................21
Section 6.02. Authorization and Validity of
Agreement...................................................21
Section 6.03. No Conflict or
Violation..................................................................21
Section 6.04. Approvals and
Consents....................................................................22
Section 6.05. Broker's and Finder's
Fees................................................................22
ARTICLE VII. COVENANTS OF SELLERS AND
HARCKE...........................................................22
Section 7.01. Regulatory and Other
Approvals............................................................22
Section 7.02. Fulfillment of
Conditions.................................................................22
Section 7.03. Conduct of
Business.......................................................................23
Section 7.04. Certain
Restrictions......................................................................23
Section 7.05. No
Solicitation...........................................................................24
Section 7.06. Use of
Names..............................................................................24
Section 7.07. Post-Closing
Operations...................................................................25
Section 7.08.
Notification..............................................................................25
ARTICLE VIII. COVENANTS OF
BUYER........................................................................25
Section 8.01.
Access....................................................................................25
Section 8.02. Fulfillment of
Conditions.................................................................25
Section 8.03. Employee
Matters..........................................................................26
Section 8.04. Assumed
Liabilities.......................................................................27
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ARTICLE IX. CONDITIONS TO OBLIGATIONS OF
BUYER........................................................27
Section 9.01. Representations and
Warranties............................................................27
Section 9.02.
Performance...............................................................................27
Section 9.03. Closing
Deliveries........................................................................27
Section 9.04.
Laws......................................................................................27
Section 9.05. Regulatory Consents and
Approvals.........................................................27
Section 9.06. No Material Adverse
Change................................................................27
Section 9.07. Balance
Sheet.............................................................................27
Section 9.08. Bulk Sales
Compliance.....................................................................27
Section 9.09. Approval of Board of
Directors............................................................28
ARTICLE X. CONDITIONS TO OBLIGATIONS OF SELLERS AND
HARCKE...........................................28
Section 10.01. Representations and
Warranties............................................................28
Section 10.02.
Performance...............................................................................28
Section 10.03.
Laws......................................................................................28
Section 10.04. Regulatory Consents and
Approvals.........................................................28
ARTICLE XI. EXCESS
INVENTORY..........................................................................28
Section 11.01. Procedures for Storage and Disposition of Excess
Inventory................................28
Section 11.02.
Compliance................................................................................30
Section 11.03. Sales
Efforts.............................................................................30
Section 11.04. Offset of Returns for
Credit..............................................................30
ARTICLE XII. OTHER
AGREEMENTS..........................................................................30
Section 12.01. Tax Returns; Cooperation on Tax
Matters...................................................30
Section 12.02. Files and
Records.........................................................................31
Section 12.03. Certain
Costs.............................................................................31
Section 12.04. Payment of
Debts..........................................................................31
Section 12.05. Collection of Certain Accounts
Receivable.................................................31
Section 12.06. Costs of Clean-up of PCP
Contamination....................................................32
ARTICLE XIII.
INDEMNIFICATION...........................................................................32
Section 13.01.
Survival..................................................................................32
Section 13.02. Indemnification by
Sellers................................................................32
Section 13.03. Indemnification by
Buyer..................................................................33
Section 13.04.
Procedure.................................................................................34
Section 13.05. Buyer Right to
Offset.....................................................................34
ARTICLE XIV.
TERMINATION...............................................................................34
Section 14.01.
Termination...............................................................................34
Section 14.02. Effect of
Termination.....................................................................35
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ARTICLE XV.
MISCELLANEOUS.............................................................................35
Section 15.01. Confidential
Information..................................................................35
Section 15.02. Public
Announcements......................................................................35
Section 15.03.
Expenses..................................................................................35
Section 15.04. Utilities
Proration.......................................................................35
Section 15.05. Reasonable Efforts;
Cooperation...........................................................36
Section 15.06.
Notices...................................................................................36
Section 15.07.
Headings..................................................................................36
Section 15.08.
Construction..............................................................................36
Section 15.09.
Severability..............................................................................37
Section 15.10. Entire
Agreement..........................................................................37
Section 15.11. Amendments;
Waivers.......................................................................37
Section 15.12. Parties in
Interest.......................................................................37
Section 15.13. Successors and
Assigns....................................................................38
Section 15.14. Governing Law;
Jurisdiction...............................................................38
Section 15.15.
Counterparts..............................................................................38
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT"), dated as of October
28, 2004
(the "EFFECTIVE DATE"), is made and entered into by and among
Haynes Wire
Company, a Delaware corporation ("BUYER"), The Branford Wire and
Manufacturing
Company, a Connecticut corporation ("BRANFORD"), Carolina
Industries, Inc., a
Connecticut corporation ("CAROLINA INDUSTRIES") (Branford and
Carolina
Industries, collectively, "SELLERS") and Richard Harcke
("HARCKE").
WITNESSETH:
WHEREAS, Sellers are engaged in the business of owning and
operating a wire
manufacturing business (the "BUSINESS"); and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers
desire to sell
to Buyer, the Acquired Assets, as hereinafter defined, upon the
terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual
representations, warranties, covenants, and agreements herein
contained and for
other good and valuable consideration, the receipt and
sufficiency of which are
hereby acknowledged, and intending to be legally bound, the
parties hereto agree
as follows:
AGREEMENT
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms have the meanings
indicated
below:
"ACCOUNTS RECEIVABLE" means all accounts and notes receivable,
rights to
refunds, and deposits of any kind of Branford other than
Excluded Accounts
receivable and Uncollectible Accounts Receivable.
"ACQUIRED ASSETS" means the Accounts Receivable, Assigned
Contracts,
Equipment and Machinery, Files and Records, Intangible Assets,
Intellectual
Property, Licenses and Permits, Miscellaneous Assets, Purchased
Inventory, Real
Property, exclusive use of the names "Branford Wire and
Manufacturing Company"
and "B&S Wire Rod Sales" and all other assets of Branford as
of the Closing Date
(including all such items shown or reflected in the Closing
Balance Sheet of the
Seller, with additions thereto, net of dispositions in the
ordinary course of
the Business, since the Balance Sheet Date), of every kind,
nature, character,
and description, whether real, personal or mixed, whether
accrued, contingent or
other, and wherever situated, and whether or not reflected in
any financial
statement of Branford, used or useful in conducting the
Business
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including, without limitation, those listed on SCHEDULE 1.01
hereto, but
excluding all of the Excluded Assets.
"ACQUIRED WORKING CAPITAL" means, as of any date of
determination, an
amount equal to the sum of (i) Sellers' Accounts Receivable PLUS
(ii) Sellers'
Inventory (other than Excess Inventory), in each case as
reflected on Seller's
balance sheet prepared in accordance with past practice.
"AFFILIATE" means any person that directly, or indirectly
through one or
more intermediaries, controls, or is controlled by, or is under
common control
with, a specified Person or which together with a specified
Person is a member
of a controlled group (within the meaning of Code Section
1563(a) determined
without regard to Sections 1563(a)(4) and 1563(e)(3)(C)) of the
Code.
"ASSIGNED CONTRACTS" means the leases, contracts, agreements
and
arrangements assigned to Buyer by Seller hereunder and set forth
in SCHEDULE
1.02.
"ASSUMED LIABILITIES" has the meaning specified in SECTION
2.04.
"BALANCE SHEET DATE" means September 30, 2004 (the date of the
Interim
Balance Sheet).
"BRANFORD" has the meaning set forth in the introductory
paragraph hereto.
"BRANFORD'S BENEFIT OBLIGATIONS" means all obligations,
arrangements or
customary practices (other than those contained in or provided
under Branford's
Plans), whether or not legally enforceable, to provide benefits
(other than
salary or wages) to present or former directors, employees, or
agents of
Branford. Branford's Benefit Obligations also includes
consulting agreements
under which the compensation paid does not depend upon the
amount of service
rendered, sabbatical policies, severance payment policies and
fringe benefits
within the meaning of Section 132 of the Code.
"BRANFORD'S PLANS" means each voluntary employees' beneficiary
association
under Section 501(c)(9) of the Code whose members include
employees of Branford
and all employee benefit plans, as defined in Section 3(3) of
ERISA, to which
Branford is a plan sponsor, as defined in Section 3(16)(B) of
ERISA, or to which
Branford otherwise contributes or has contributed, or in which
Branford
otherwise participates or has participated.
"BUSINESS" has the meaning set forth in the recitals hereto.
"BUSINESS DAY" means any day that the banks in Indianapolis,
Indiana,
U.S.A. are open for business.
"BUYER" has the meaning set forth in the introductory paragraph
hereto.
"BUYER BENEFIT PLANS" has the meaning specified in SECTION
8.03(b).
"CAROLINA INDUSTRIES" has the meaning set forth in the
introductory
paragraph hereto.
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"CERCLA" means the Comprehensive Environmental Response
Compensation and
Liability Act of 1980, as amended.
"CLAIM" has the meaning specified in SECTION 13.02.
"CLOSING" has the meaning specified in SECTION 4.01.
"CLOSING BALANCE SHEET" has the meaning specified in SECTION
3.02(b).
"CLOSING DATE" has the meaning specified in SECTION 4.01.
"CLOSING DATE A/R REPORT" has the meaning specified in SECTION
2.06(b).
"CLOSING DATE INVENTORY REPORT" has the meaning specified in
SECTION
2.06(b).
"COBRA" means Title X of the Consolidated Omnibus Budget
Reconciliation Act
of 1985, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACTS" means any agreement, lease, license, evidence of
indebtedness,
mortgage, indenture, security agreement or other contract.
"EFFECTIVE DATE" has the meaning specified in the first
paragraph of this
Agreement.
"ENCUMBRANCES" means all liens (statutory or other), leases,
mortgages,
pledges, security interests, conditional sales agreements,
charges, claims,
options, easements, rights of way (other than easements of
record), rights of
third parties and other encumbrances of any kind or nature
whatsoever.
"ENVIRONMENTAL REQUIREMENTS" mean all past, present and future
Laws, rules,
regulations, ordinances, policies, guidance documents,
approvals, plans,
authorizations, Licenses and Permits issued by any Governmental
Entity of the
United States, state or political subdivision thereof, and any
foreign
governmental body and all judicial, administrative, and
regulatory decrees,
judgments, and orders relating to human health, pollution, or
protection of the
environment (including ambient air, surface water, ground water,
land surface or
surface strata), including (i) Laws relating to emissions,
discharges, releases,
or threatened releases of Hazardous Materials, (ii) Laws
relating to the
identification, generation, manufacture, processing,
distribution, use,
treatment, storage, disposal, recovery, transport or other
handling of Hazardous
Materials, (iii) CERCLA; the Toxic Substances Control Act, as
amended; the
Hazardous Materials Transportation Act, as amended; RCRA; the
Clean Water Act,
as amended; the Safe Drinking Water Act, as amended; the Clean
Air Act, as
amended; the Atomic Energy Act of 1954, as amended; and the
Occupational Safety
and Health Act, as amended; and (iv) any similar Law.
"EQUIPMENT AND MACHINERY" means (i) all equipment, machinery,
furniture,
fixtures and improvements, tooling, spare parts, supplies,
computer hardware and
software, and motor vehicles (certificated or uncertificated)
owned or leased by
Branford in connection with the
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Business (including all leases of such property), (ii) any
rights of Branford to
warranties applicable to the foregoing (to the extent
assignable), and licenses
received from the manufacturers or sellers of any such item, and
(iii) any
related claims, credits, and rights of recovery with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as
amended.
"EXCESS INVENTORY" means the Inventory of Sellers that is not
Purchased
Inventory, ownership of which shall remain in [CAROLINA
INDUSTRIES] from and
after the Effective Date until purchased by Buyer or otherwise
disposed of as
provided in SECTION 11.01.
"EXCLUDED ACCOUNTS RECEIVABLE" means the accounts receivable of
Sellers
identified on SCHEDULE 1.03.
"EXCLUDED ASSETS" has the meaning specified in SECTION 2.03.
"FILES AND RECORDS" mean all files and records of the Seller
relating to
the Business, whether in hard copy or magnetic or other format
including
customer and supplier records, equipment maintenance records,
equipment warranty
information, plant plans, specifications and drawings, sales and
advertising
material, computer software and records relating to employees to
be employed by
the Buyer following the Closing.
"FINAL A/R REPORT" has the meaning specified in SECTION
2.06(b).
"FINAL INVENTORY REPORT" has the meaning specified in SECTION
2.06(b).
"GAAP" means generally accepted accounting principles in the
United States
of America, in effect from time to time, consistently
applied.
"GOVERNMENTAL ENTITY" means any court, government agency,
department,
commission, board, bureau or instrumentality of the United
States, any local,
county, state, federal or political subdivision thereof, or any
foreign
governmental body of any kind.
"HARCKE" has the meaning set forth in the introductory paragraph
hereto.
"HAZARDOUS MATERIALS" mean (i) any substance that is or becomes
defined as
a "hazardous substance," "hazardous waste," "hazardous
material," pollutant, or
contaminant under any Environmental Requirements, including
CERCLA; the
Superfund Amendments and Reauthorization Act, as amended; the
RCRA; and any
analogous and applicable Law; (ii) petroleum (including crude
oil and any
fraction thereof); and (iii) any natural or synthetic gas
(whether in liquid or
gaseous state).
"HIRED EMPLOYEES" has the meaning specified in SECTION
8.03(a).
"INDEBTEDNESS" of any Person means, without duplication, all
obligations of
such Person (i) for borrowed money, (ii) evidenced by notes,
bonds, debentures
or similar instruments, (iii) for the deferred purchase price of
goods or
services (other than trade payables incurred in the
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ordinary course of business), (iv) under capital leases and (v)
in the nature of
guarantees of the obligations described in clauses (i) through
(iv) above of any
other Person.
"INDEMNIFIED PARTY" has the meaning specified in SECTION
13.04.
"INDEMNIFYING PARTY" has the meaning specified in SECTION
13.04.
"INTANGIBLE ASSETS" mean all intangible personal property rights
of the
Seller, including goodwill, customer lists and related
information, and all
contract rights with respect to the Assigned Contracts.
"INTELLECTUAL PROPERTY" means any and all of the following and
all rights
in, arising out of, or associated therewith: (i) all United
States and foreign
patents and applications therefor and all reissues, divisions,
renewals,
extensions, provisionals, continuations and
continuations-in-part thereof; (ii)
all inventions (whether patentable or not), invention
disclosures, improvements,
trade secrets, proprietary information, proprietary processes or
formulae,
franchises, licenses, know how, technology, technical data and
customer lists,
and all documentation relating to any of the foregoing; (iii)
all copyrights,
copyright registrations and applications therefor and all other
rights
corresponding thereto throughout the world; (iv) all trade
names, logos, common
law trademarks and service marks; trademark and service mark
registrations and
applications therefor and all goodwill associated therewith
throughout the
world; (v) all databases and data collections and all rights
therein throughout
the world; (vi) all computer software including all source code,
object code,
algorithms, display screens, layouts, firmware, development
tools, files,
records and data, all media on which any of the foregoing is
recorded, all Web
addresses, sites and domain names; (vii) any similar,
corresponding or
equivalent rights to any of the foregoing; and (viii) all
documentation related
to any of the foregoing.
"INTERIM BALANCE SHEET" has the meaning specified in SECTION
5.05.
"INVENTORY" means all Inventory of Sellers, wherever located,
including all
finished goods, work in process and raw materials.
"LAW" or "LAWS" means any local, county, state, federal or other
law,
statute, regulation, ordinance, rule, order, decree, judgment,
consent decree,
settlement agreement or governmental requirement enacted,
promulgated, entered
into, agreed or imposed by any Governmental Entity.
"LICENSES AND PERMITS" mean all licenses, permits,
franchises,
authorizations, and approvals issued by or under the authority
of a Governmental
Entity that relate directly or indirectly to, or are necessary
for, the conduct
of the Business, including those described in SCHEDULE 5.17.
"MATERIAL ADVERSE EFFECT," when used with respect to Sellers or
the
Business, means any event, change, occurrence, condition or
circumstance which
has had or may have a material adverse impact on any of the
Acquired Assets, the
prospects, operations or financial condition of the Business as
conducted by
Sellers immediately prior to the date hereof or the Closing, as
applicable, or
the ability of Sellers to consummate any of the transactions
contemplated by
this Agreement, and when used with respect to Buyer, means any
event, change,
occurrence,
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condition or circumstance which has had or may have a material
adverse impact on
the ability of Buyer to consummate any of the transactions
contemplated by this
Agreement.
"MISCELLANEOUS ASSETS" means all telephone numbers, web site
addresses and
post office boxes used by Branford in the Business, all
materials and supplies
(other than Inventory) to be used or consumed by Sellers in the
production of
finished goods and all prepaid expenses reflected on the Closing
Balance Sheet
to the extent such expenses accrue to the benefit of Buyer after
the Effective
Date.
"NONCOMPETITION AGREEMENTS" means the Confidentiality and
Noncompetition
Agreements in the Form attached as EXHIBITS 4.02(g)(i) and
4.02(g)(ii).
"PERSON" means any individual, corporation, partnership, joint
venture,
association, limited liability company, joint-stock company,
trust, or
unincorporated organization, or any Governmental Entity.
"PERSONNEL" means the current and former officers, employees
and/or agents
of any Seller.
"POLICIES" and "POLICY" have the meanings specified in SECTION
5.18.
"PURCHASE PRICE" has the meaning specified in SECTION 3.01.
"PURCHASED INVENTORY" means the Inventory of Sellers consisting
of
inventory consigned to third parties for sale, work-in-process
that is committed
to customer orders, work-in-process that is semi-finished goods,
raw materials
necessary to fulfill Sellers' existing order backlog and other
raw materials,
each as set forth on SCHEDULE 1.04, adjusted as provided in
SECTION 2.06.
"RCRA" means the Resource Conservation and Recovery Act, as
amended.
"REAL PROPERTY" has the meaning specified in SECTION 5.09.
"RELATED AGREEMENTS" means all agreements, instruments and
certificates
(other than this Agreement) to be executed by Sellers or Harcke
in connection
with the transactions contemplated by this Agreement, including
without
limitation each Bill of Sale, each Assignment and Assumption
Agreement and each
Noncompetition Agreement.
"REPLACEMENT COST" has the meaning specified in SECTION
11.01(c).
"SALE OF ASSETS" means the sale of the Acquired Assets by
Sellers to Buyer
pursuant to the terms of this Agreement.
"SECURITY AGREEMENT" has the meaning specified in SECTION
4.02(a).
"SELLERS" has the meaning specified in the first paragraph of
this
Agreement.
"SITE ASSESSMENT" has the meaning specified in SECTION
4.02(n).
"STORAGE SITE" has the meaning specified in SECTION
11.01(a).
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"TAX" or "TAXES" mean all federal, state, local and foreign
taxes
(including excise taxes, value added taxes, occupancy taxes,
employment taxes,
unemployment taxes, ad valorem taxes, custom duties, transfer
taxes, and fees),
levies, imposts, fees, impositions, assessments and other
governmental charges
of any nature imposed upon a Person including all taxes and
governmental charges
imposed upon any of the personal properties, real properties,
tangible or
intangible assets, income, receipts, payrolls, transactions,
stock transfers,
capital stock, net worth or franchises of a Person (including
all sales, use,
withholding or other taxes which a Person is required to collect
and/or pay over
to any Governmental Entity), and all related additions to tax,
penalties or
interest thereon.
"TAX RETURNS" mean all returns, reports, information returns,
and other
documents (including all related and supporting information)
filed or required
to be filed with any Governmental Entity in connection with the
determination,
assessment, collection, or administration of any Taxes.
"TERMINATED EMPLOYEES" has the meaning specified in SECTION
8.03(e).
"UNCOLLECTIBLE ACCOUNTS RECEIVABLE" shall mean any account
receivable of
Sellers that has been written off as uncollectible prior to the
Closing Date and
included on the list of such accounts receivable delivered by
the Sellers to the
Buyer pursuant to SECTION 12.05.
ARTICLE II.
SALE AND PURCHASE
SECTION 2.01. TRANSFER OF ASSETS. Subject to the terms and
conditions set
forth in this Agreement, at the Closing, Sellers shall sell,
convey, transfer,
assign and deliver to Buyer, and Buyer shall purchase, acquire
and accept from
Sellers all of the right, title, and interest of Sellers in and
to the Acquired
Assets.
SECTION 2.02. SALE FREE OF ENCUMBRANCES. Sellers and Harcke,
jointly and
severally, represent, warrant and agree that the sale,
conveyance, transfer,
assignment and delivery by Sellers of the Acquired Assets to
Buyer as provided
herein is being made free and clear of all Encumbrances.
SECTION 2.03. CERTAIN EXCLUDED ASSETS. Notwithstanding any
other
provision of this Agreement to the contrary, the Acquired Assets
shall not
include the following assets of Sellers (collectively, the
"EXCLUDED ASSETS"):
(a) all cash on hand or on deposit;
(b) rights under agreements with suppliers (other than
Assigned
Contracts);
(c) minute books, stock ledgers and other corporate records of
any
Seller;
(d) assets held in any employee benefit plan of any Seller;
(e) the Excess Inventory; and
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(f) the Excluded Accounts Receivable.
SECTION 2.04. NO ASSUMPTION OF LIABILITIES. Buyer is not
assuming, and
shall not be responsible for in any manner, any obligations or
liabilities of
any Seller, direct or indirect, known or unknown, choate or
inchoate, absolute,
fixed or contingent, except (a) that Buyer agrees to assume and
timely pay or
perform all obligations of Seller under the Assigned Contracts
which (i)
initially accrue or arise after the Closing Date and (ii) are
not the result of
or caused by any breach or default thereunder by any Seller, and
(b) as set
forth in SCHEDULE 2.04 (such obligations, collectively, the
"ASSUMED
LIABILITIES"). Any Excluded Assets that remain on the Real
Property, as defined
herein, as of the Closing Date remain at Sellers' sole risk.
Buyer will have no
liability for damage to or destruction of Excluded Assets
whether caused by
Buyer's negligence or otherwise.
SECTION 2.05. SUBSEQUENT DOCUMENTATION. At any time and from
time to time
after the Closing Date, Sellers shall, upon the request of
Buyer, and Buyer
shall, upon the request of Sellers, promptly execute,
acknowledge, and deliver,
or cause to be executed, acknowledged, and delivered, such
further instruments
and other documents, and perform or cause to be performed such
further acts, as
may be reasonably required to evidence or effectuate (a) the
sale, conveyance,
transfer, assignment and delivery hereunder of the Acquired
Assets, (b) the
performance by the parties of any of their other respective
obligations under
this Agreement, and (c) the purposes and intent of this
Agreement.
SECTION 2.06. POST-CLOSING ADJUSTMENTS TO PURCHASED
INVENTORY.
(a) The amount of Purchased Inventory shall be increased or
decreased
by a number of pounds having a value as of the Closing Date
equal to (i) the
dollar amount by which Branford's Accounts Receivable as shown
on the Final A/R
Report, is lower or higher, respectively, than Branford's
Accounts Receivable as
shown on the Closing Date A/R Report; PLUS (ii) the amount by
which the net book
value of the Equipment and Machinery included in the Acquired
Assets is less
than $275,000. If the adjustment required by this SECTION 2.06
results in a net
decrease in Purchased Inventory, Buyer shall deliver to Sellers
a quantity of
the Purchased Inventory (in the inverse order specified in
SCHEDULE 1.04) equal
to the amount of such decrease and the Inventory so delivered
shall become
Excess Inventory for all purposes of this Agreement. If the
adjustment required
by this SECTION 2.06 results in a net increase in Purchased
Inventory, Sellers
shall deliver to Buyer a quantity of Excess Inventory (in the
order specified in
SCHEDULE 1.04) equal to the amount of such increase and the
amount so delivered
shall become Purchased Inventory for all purposes of this
Agreement. Any
transfer of Inventory as a result of the application of this
SECTION 2.06 shall
be completed within five (5) Business Days of determination of
the Closing
Balance Sheet, as provided for herein.
(b) On the Closing Date, Sellers shall deliver to Buyer a
written
report showing all accounts receivable of Sellers outstanding on
the Closing
Date, excluding Excluded Accounts Receivable (the "CLOSING DATE
A/R REPORT"),
and a written report showing all Inventory of Sellers as of the
Closing Date
divided into the categories identified on SCHEDULE 1.04 (the
"CLOSING DATE
INVENTORY REPORT"). Not later than twenty (20) days after the
Closing Date,
Buyer may disagree with the information set forth in the Closing
Date A/R Report
or the Closing Date Inventory Report and notify Sellers in
writing specifying in
reasonable detail the items in
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disagreement and the basis therefor. If Buyer so disagrees,
Buyer and Sellers
shall meet and attempt in good faith to resolve the disagreement
on a mutually
satisfactory basis. If Buyer and Sellers are unable to resolve
the disagreement
within 10 days, Sellers and Buyer shall cause their respective
accountants to,
within 15 days after the end of such 10-day period, agree upon a
final Closing
Date A/R Report or Closing Date Inventory Report, in which case
such agreed-upon
report shall be final and binding on the parties. In the event
that their
respective accountants cannot agree upon such final report
within such
timeframe, their respective accountants shall, within 2 days,
jointly select an
independent auditor of recognized national standing to
determine, within 10
days, a final report as of the Closing Date, in which case such
determined final
report shall be final and binding on the parties. The final
Closing Date A/R
Report and the final Closing Date Inventory Report prepared and
finally
determined in accordance with this SECTION 2.06(b) are referred
to herein
respectively as the "FINAL A/R REPORT" and the "FINAL INVENTORY
REPORT".
ARTICLE III.
PURCHASE PRICE
SECTION 3.01. PURCHASE PRICE AND PAYMENT. Subject to the terms
and
conditions set forth in this Agreement, as full consideration
for the Acquired
Assets, Buyer shall:
(a) pay to Sellers at Closing in cash by wire transfer to an
account
designated by Sellers at least two (2) Business Days prior to
the Closing Date
an amount equal to Eight Million Three Hundred Thousand Dollars
($8,300,000);
and
(b) assume the Assumed Liabilities.
The amounts set forth in subsections (a) and (b) are referred
to
collectively as the "PURCHASE PRICE."
SECTION 3.02. FAIR CONSIDERATION. All of the parties acknowledge
and
agree that the consideration provided for in this ARTICLE III
represents fair
consideration and reasonably equivalent value for the sale and
transfer of the
Acquired Assets and the transactions, covenants and agreements
set forth in this
Agreement, which consideration was agreed upon as the result of
arm's-length,
good-faith negotiations between the parties and their
respective
representatives.
SECTION 3.03. ALLOCATION OF THE PURCHASE PRICE. Buyer and
Sellers agree
that the Purchase Price shall be allocated to the Acquired
Assets sold by
Sellers as set forth on SCHEDULE 3.03 subject to adjustment by
written consent
of both Sellers and the Buyer following a determination of the
Closing Balance
Sheet and shall file Internal Revenue Service Form 8594 (and/or
other
appropriate Tax Returns) with the applicable Taxing authorities,
and shall not
file any amendments or take any action inconsistent with the
foregoing in any
audit, refund claim, Tax Return, or any other administration or
judicial
proceeding, pursuant to Section 1060 of the Code and underlying
Treasury
Regulations promulgated thereunder. Sellers shall make its Tax
Returns and
amendments thereof available for inspection by Buyer for the
purpose of
verifying compliance with this SECTION 3.03.
<Page>
SECTION 3.04. TAXES. Sellers shall timely pay (a) all Taxes
arising out
of (i) the ownership or use of the Excluded Assets, (ii) the
ownership or use of
the Acquired Assets on or before the Closing Date, including all
real or
personal property Taxes and payroll withholding Taxes due and
payable (or
assessed for periods) on or before the Closing Date; and (b) all
Taxes,
including gross and net income Taxes, and transfer, recording,
sales and use
Taxes arising out of the sale or transfer of the Acquired Assets
pursuant to
this Agreement or the other agreements and instruments
contemplated hereby or
the recording or filing of any sale or transfer agreements or
instruments.
ARTICLE IV.
CLOSING
SECTION 4.01. CLOSING DATE. The closing of the transactions
contemplated
by this Agreement (the "CLOSING") shall take place at a date and
time mutually
agreed upon by the parties to the Agreement following
satisfaction or waiver of
all conditions set forth herein at the offices of Ice Miller,
One American
Square, 34th Floor, Indianapolis, Indiana (the "CLOSING
DATE").
SECTION 4.02. DELIVERIES BY SELLERS. At the Closing, and
simultaneously
with delivery of possession of all of the Acquired Assets to
Buyer, Sellers have
delivered (or caused to be delivered) to Buyer originals or
copies, if
specified, of the following agreements, documents and other
items:
(a) A Security Agreement by and among Sellers and Buyer (the
"SECURITY
AGREEMENT"), executed by Buyer, in the form attached hereto as
EXHIBIT 4.02(a);
(b) A Bill of Sale, executed by Sellers, in the form attached
hereto as
EXHIBIT 4.02(b);
(c) Copies of all the resolutions adopted by Sellers' Boards
of
Directors and shareholders authorizing and approving the
execution and delivery
of this Agreement and all agreements contemplated hereby and the
consummation of
the transactions contemplated hereby and thereby, certified to
be true and
complete and in full force and effect by the corporate Secretary
of each Seller;
(d) An Assignment and Assumption Agreement, executed by Sellers,
in the
form attached hereto as EXHIBIT 4.02(d);
(e) Copies of each consent, waiver, authorization and approval
required
pursuant to SECTION 5.04 of this Agreement or necessary for the
sale of the
Acquired Assets or the assignment of the Assigned Contracts to
Buyer as
contemplated hereby;
(f) Certificates of Good Standing of each Seller issued by
the
Secretary of State of the State of Connecticut or other
appropriate Governmental
Authority, and Certificates of Authorization for each Seller
from the North
Carolina Secretary of State, dated within fifteen (15) days of
the Closing;
(g) Noncompetition Agreements, executed by each Seller and
Harcke;
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(h) Certificates of title for the motor vehicles included in
the
Acquired Assets, duly endorsed, and all other documents
necessary to effect
transfer of title to any such motor vehicles;
(i) The original of the ALTA title insurance policy with respect
to the
Real Property, as defined herein, issued by Chicago Title
Insurance Company;
(j) A Certificate executed by Sellers acknowledging delivery by
Buyer
of the items set forth in SECTION 4.03 of this Agreement and
certifying that
Sellers have performed in all respects all of the covenants,
agreements,
obligations and conditions required under this Agreement to be
performed,
complied with or fulfilled by Sellers on or before the Closing
Date;
(k) An opinion of counsel to Sellers, dated as of the Closing
Date, in
substantially the form attached hereto as EXHIBIT 4.02(k);
(l) The Closing Date A/R Report and the Closing Date Inventory
Report;
(m) A copy of the ALTA survey certified by Professional
Surveying
Services for the Real Property, as defined herein;
(n) A copy of the Phase I environmental site assessment
("SITE
ASSESSMENT") of the Real Property;
(o) Evidence of zoning of the Real Property that is satisfactory
to
Buyer, in its reasonable discretion;
(p) The list of Uncollectible Accounts Receivable provided for
in
SECTION 12.05(d);
(q) The evidence of compliance with applicable bulk sales or
bulk
transfer laws required by SECTION 9.08;
(r) Non-Foreign Affidavit executed by Sellers, in connection
with the
transfer of the Real Property;
(s) Owner's Affidavit executed by Sellers, in connection with
the
transfer of the Real Property;
(t) General Warranty Deed executed by Sellers, in connection
with the
transfer of the Real Property; and
(u) Such other documents and certificates, as Buyer shall
reasonably
request.
SECTION 4.03. DELIVERIES BY BUYER. At the Closing and
simultaneously with
the payment of the Purchase Price to Sellers, Buyer has
delivered (or has caused
to be delivered) to Sellers originals, or copies if specified,
of the following
agreements, documents and other items:
(a) The Purchase Price to be paid at the Closing pursuant to
SECTION
3.01 by wire transfer to accounts designated by Sellers;
<Page>
(b) The Security Agreement, executed by Sellers, in the form
attached
as EXHIBIT 4.02(a);
(c) Copies of all resolutions adopted by the Board of Directors
of
Buyer authorizing and approving the execution and delivery of
this Agreement and
all agreements contemplated hereby and the consummation of the
transactions
contemplated hereby and thereby, certified to be true and
complete and in full
force and effect by the corporate Secretary of Buyer;
(d) An Assignment and Assumption Agreement, executed by Buyer,
in the
form attached hereto as EXHIBIT 4.02(d);
(e) A Certificate executed by Buyer acknowledging delivery by
Sellers
of the items set forth in SECTION 4.02 of this Agreement and
certifying that
Buyer has performed in all respects all of the covenants,
agreements,
obligations and conditions required under this Agreement to be
performed,
complied with or fulfilled by Buyer on or before the Closing
Date;
(f) The Noncompetition Agreements, executed by Buyer;
(g) A Certificate of Good Standing of Buyer issued by the
Secretary of
State of the State of Delaware, dated within fifteen (15) days
of the Closing;
and
(h) Such other documents and certificates, as Sellers shall
reasonably
request.
SECTION 4.04. POSSESSION OF ACQUIRED ASSETS. Immediately
following the
Closing on the Closing Date, the Seller shall take all actions
which are
required or requested by the Buyer to put the Buyer in full
possession and
control of all of the Acquired Assets.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLERS AND HARCKE
As a material inducement to Buyer to enter into this Agreement
and to
consummate the transactions contemplated hereby, Sellers and
Harcke jointly and
severally represent and warrant to Buyer as follows:
SECTION 5.01. ORGANIZATION; POWER. Each Seller is a corporation
duly
organized, validly existing and in good standing under the laws
of the
jurisdiction of its incorporation. Each Seller is qualified as a
foreign
corporation and is in good standing in each state or
jurisdiction where
qualification is necessary because of the nature of the assets
and properties it
owns, leases or operates or because of the nature of the
business it conducts.
SECTION 5.02. AUTHORIZATION AND VALIDITY OF AGREEMENT. Each
Seller has
all requisite corporate power and authority to own, lease and
operate the
Acquired Assets, to carry on the Business as it is now being
conducted, and to
enter into, execute and deliver this Agreement and all Related
Agreements
executed by it, to consummate the transactions contemplated by
this Agreement
and other Related Agreements and to comply with and fulfill the
terms and
conditions of this Agreement and such Related Agreements. Harcke
has the legal
capacity and authority to enter into this Agreement and each of
the Related
Agreements, to be executed by
<Page>
Harcke and to carry out his obligations hereunder and
thereunder. The execution,
delivery and performance of this Agreement and each Related
Agreement by each
Seller and Harcke and the consummation by each Seller and Harcke
of the
transactions contemplated by this Agreement and each Related
Agreement have been
duly authorized by all necessary corporate action by the Board
of Directors and
shareholders of each Seller, and no other corporate proceedings
on the part of
any Seller are necessary to authorize such execution, delivery,
performance or
consummation. This Agreement and each Related Agreement has been
duly executed
and delivered by each Seller and Harcke, as applicable, and
constitutes a legal,
valid and binding obligation of each Seller and Harcke, as
applicable,
enforceable against each Seller and Harcke in accordance with
their respective
terms and conditions.
SECTION 5.03. NO CONFLICT OR VIOLATION. The execution, delivery
and
performance of this Agreement by each Seller and Harcke does not
and will not:
(a) violate or conflict with any provision of the certificate of
incorporation,
bylaws or other governing document of Sellers, (b) violate any
provision of Law
of any Governmental Entity applicable to any Seller, Harcke, or
the Business;
(c) violate or result in a breach of or constitute (with due
notice or lapse of
time or both) a default under any contract, lease, loan
agreement, mortgage,
security agreement, trust, indenture, license, consent order or
other instrument
or obligation to which any Seller or Harcke is a party, or by
which any Seller
is bound or to which any Seller's or Harcke's assets or
properties may be bound;
or (d) result in the imposition of any Encumbrance or
restriction on the
Business or any of the Acquired Assets.
SECTION 5.04. CONSENTS AND APPROVALS. SCHEDULE 5.04 sets forth a
list of
each consent, waiver, authorization or approval of any
Governmental Entity or of
any other Person, and each declaration to or filing or
registration with any
Governmental Entity required in connection with the execution
and delivery of
this Agreement by any Seller or Harcke or the performance by any
Seller and
Harcke of its or his obligations hereunder.
SECTION 5.05. FINANCIAL STATEMENTS. Attached hereto as SCHEDULE
5.05 are
true, correct and complete copies of (i) the balance sheets of
Sellers as of
April 30, 2003 and 2002 and the related statements of income,
changes in
stockholders' equity and cash flows for each of the fiscal years
ended April 30,
2003, 2002 and 2001, together with a true and correct copy of
the review letter
on such information by Sally Massagee, Sellers' independent
public accountant,
(ii) the balance sheet of Sellers as of April 30, 2004 and the
related statement
of income, changes in stockholders' equity and cash flows for
the year then
ended, and (iii) the unaudited balance sheet of the Sellers as
of July 31, 2004
(the "INTERIM BALANCE SHEET"), and the related unaudited
statements of income,
changes in stockholders' equity and cash flows for the three (3)
months then
ended, together with the notes thereto. All financial statements
referred to in
this SECTION 5.05 have been prepared in a manner consistent with
the manner in
which Sellers' Tax Returns are prepared. All of the financial
statements fairly
present, in all material respects, the financial position of the
Sellers as of
the respective dates thereof and the results of the Sellers'
operations and
changes in the stockholders' equity and cash flows for the
period then ended,
subject, in the case of clauses (ii) and (iii) above, to normal
recurring
adjustments which are not, individually or in the aggregate,
material.
<Page>
SECTION 5.06. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth
on SCHEDULE 5.06, since the Balance Sheet Date, Sellers have
operated the
Business in the ordinary course consistent with past practice
and there has not
been any:
(a) (i) increase in the compensation payable or to become
payable to
any Personnel engaged in the Business, (ii) bonus, incentive
compensation,
service award or other like benefit granted, made or accrued,
contingently or
otherwise, for or to any Personnel engaged in the Business,
(iii) addition to or
modification of any of the Branford's Benefit Obligations and
Branford's Plans
agreed to by any Seller for any Personnel engaged in the
Business other than in
the ordinary course of the Business consistent with past
practice, or (iv) new
employment agreement with any Personnel engaged in the
Business;
(b) cancellation of any indebtedness or waiver of any rights
having a
value of $5,000 or greater, whether or not in the ordinary
course of the
Business, or increase in any obligation or liability of Branford
except in the
ordinary course of the Business consistent with past
practice;
(c) execution and delivery, amendment, cancellation or
termination of
any contract, license or other instrument material to the
Business;
(d) failure to preserve the Business intact, to keep available
to Buyer
the services of the Personnel and to preserve for Buyer the
goodwill of each of
the Branford's dealers, suppliers, customers and others having
business
relations with it;
(e) change in accounting methods or practices;
(f) damage, destruction or loss (whether or not covered by
insurance)
affecting the Acquired Assets or the Business;
(g) sale, assignment, transfer or encumbering (or subjecting to
any
Encumbrance) of any of the assets or properties except in the
ordinary course of
the Business consistent with past practice;
(h) agreement by any Seller to do any of the foregoing; or
(i) other event or condition of any character which in any one
case or
in the aggregate has had or may have a Material Adverse Effect
on any Seller,
the Business or any of the Acquired Assets.
SECTION 5.07. TAX MATTERS. Each Seller has duly and timely filed
all Tax
Returns required to have been filed with any federal, state,
local or foreign
Taxing authority on or before the Closing Date and has timely
paid all Taxes due
and payable by it on or before the Closing Date, whether or not
shown on such
Tax Returns. Branford has set up reserves or accruals on the
Agreement Balance
Sheet which are adequate for the payment of all Taxes for all
periods through
the Closing Date. No Taxing authority has asserted any claim
against any Seller
for the assessment of any additional Tax liability or initiated
any acti
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