EXECUTION COPY

 

 

 

 

 

ASSET PURCHASE AGREEMENT

 

BETWEEN

 

BUSH HOG, LLC,

 

CC INDUSTRIES, INC.,

 

ALAMO ACQUISITION, INC.,

 

AND

 

ALAMO GROUP INC.

 

Dated as of September 4, 2009

 

 

 

 

 

 

 

TABLE OF CONTENTS

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11.3     Discharge of Employee Benefits Obligations.	41
11.4     401(k) Asset Transfers.	41
11.5     WARN Act.	41
Section 12   42
POST-CLOSING MATTERS GENERALLY..	42
12.1     Ongoing Cooperation.	42
12.2     Litigation Support.	42
12.3     Product Liability Insurance.	43
12.4     Covenant Not To Compete.	43
12.5     Reasonable Restrictions.	43
Section 13   43
MISCELLANEOUS PROVISIONS.	44
13.1     Notices.	44
13.2     Amendments.	44
13.3     Assignment and Parties in Interest.	45
13.4     Expenses.	45
13.5     Entire Agreement.	45
13.6     Further Assurances.	45
13.7     Descriptive Headings.	45
13.8     Counterparts.	45
13.9     Governing Law.	45
13.10   Severability.	46
13.11   Construction.	46

 

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ASSET PURCHASE AGREEMENT

THIS AGREEMENT (the “Agreement”) is made and entered into as of September 4, 2009, by and among Bush Hog, LLC, a Delaware limited liability company (“Seller”), CC Industries, Inc., a Delaware corporation (“CCI”), Alamo Acquisition, Inc., a Delaware corporation (“Buyer”), and Alamo Group Inc., a Delaware corporation (“AGI”).  

PRELIMINARY STATEMENT

WHEREAS, Seller is in the business of manufacturing and distributing the Product Lines used in the agricultural market and in the agricultural industry and other outdoor uses (the “Business”); and

WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, substantially all of the assets of the Business, subject to certain designated liabilities, all on the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows:

SECTION 1  

CERTAIN DEFINITIONS

For purposes of this Agreement the following terms have the meanings set forth below:

“ ADEM ” means the Alabama Department of Environmental Management.  

 

“ ADEM Letter ” has the meaning set forth in Section 6.4.

“AGI” has the meaning set forth in the Preamble. 

“ALRERA” has the meaning set forth in Section 6.4. 

“ Affiliate ” refers to, with respect to any given Person, any other Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person.  The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” has the meaning set forth in the preamble, and shall include all Schedules and Exhibits.

 

 

 

 

 

 

“ Ancillary Agreements ” shall include all other agreements and instruments executed in connection with this Agreement, including but not limited to the Bill of Sale, the Assumption Agreement, the Assignment of Contracts and Leases, the Escrow Agreement, the Transitional Services Agreement, the Investor Rights Agreement and the Intellectual Property Assignment..

“Assignment of Contracts and Leases” refers to the Assignment of Contracts and Leases to be executed at closing by Seller and Buyer, substantially in the form of Exhibit A hereto.

“Assumed Contracts” means those Contracts designated as Assumed Contracts on Schedule 3.14 and sales and purchase orders relating to Purchased Product Lines entered into by Seller in the ordinary course of business. 

“Assumed Liabilities ” refers to, collectively, only those liabilities and obligations of Seller, excluding the Excluded Liabilities, (a) specifically listed, described or reserved for on the Interim Balance Sheet or trade accounts payable and accrued expenses incurred between the Interim Balance Sheet Date and the Closing Date in the ordinary course of business, consistent with past practice, that have not been or will not be satisfied or discharged on or prior to the Closing Date to the extent included in Net Working Capital, (b) arising with respect to the performance after the Closing Date of the Assumed Contracts, (c) to honor cash discounts on receivables outstanding as of the Closing Date to the extent such discounts are clearly reflected in the Books and Records, (d) for all costs in connection with the condition of the Owned Real Property and the Leased Real Property (excluding the Leased Real Property located in Telford, Tennessee), including but not limited to liabilities in connection with the presence of any Hazardous Materials or the compliance with any Environmental Laws except as to the Work and to the extent of Seller's indemnification obligations under Section 10 hereof, including Section 10.2A, (e) for all Warranty Claims arising subsequent to the Closing, (f) for all statutorily required dealer buy back obligations arising from and after the Closing Date, and (g) for products liability claims not considered Excluded Liabilities for products within the Purchased Product Lines manufactured or sold by Seller before Closing in connection with occurrences after Closing.  

“Assumption Agreement” has the meaning set forth in Section 2.2

“Audited Financial Statements” has the meaning set forth in Section 3.4(a).

“ BHATE Recommendations ” means that certain letter dated August 26, 2009, from BHATE Geosciences Corporation to Buyer.

“Bill of Sale” refers to the Bill of Sale to be executed at Closing by Seller, substantially in the form of Exhibit B hereto.

“Books and Records” shall mean all books and records of the Business (including such books and records as are contained in computerized storage media), including books and records related to Purchased Assets, inventory, purchasing, accounting, sales, research, engineering, manufacturing, maintenance, repairs, marketing, banking, Intellectual Property, shipping records, customer and supplier lists, records, literature, and correspondence, but excluding original personnel files and records relating to all existing and historical employees of Seller prior to the Closing Date (Buyer shall be permitted to make and retain copies of same).

 

 

 

 

 

“Business” has the meaning set forth in the first recital to this Agreement.  By way of clarification, “Business” does not include Excluded Assets. 

“Business Day ” refers to a day, other than a Saturday or a Sunday, on which commercial banks are required to open or are not authorized to close in the City of Chicago.

“Buyer” has the meaning set forth in the Preamble. 

“Buyer's Accounts Receivable” means an undivided one-half ownership interest in (a) the accounts receivable of the Business and (b) Seller's accounts receivable related to Utility Vehicles, as of the Closing Date.

 “Buyer’s Plan” has the meaning set forth in Section 10.4

“CCI” has the meaning set forth in the Preamble. 

“Cap” has the meaning set forth in Section 9.2.

“Closing” has the meaning set forth in Section 8.1.

 “Closing Date” has the meaning set forth in Section 8.1. 

 “Code” refers to the Internal Revenue Code of 1986, as amended.

“Collection Period” means for each receivable included in Seller's Accounts Receivable, the period beginning on the Closing Date and ending on the later of (a) the date that is twelve (12) months following the Closing Date or (b) the date that is six (6) months after the latest due date for such receivable, but not later than eighteen (18) months following the Closing Date.  Notwithstanding anything contained herein to the contrary, in the event of the bankruptcy, insolvency or reorganization of Buyer, an assignment for the benefit of creditor's of Buyer, or the inability of Buyer to pay its debts in the ordinary course of business, the Collection Period shall continue during the entire period of any such event and shall be tolled.

“Common Stock” means shares of the Common Stock, par value $0.10 of AGI.

“Consideration Shares” has the meaning set forth in Section 2.3(b).

“Contracts” refers to, collectively, all contracts, agreements, commitments, instruments, guaranties, bids, separation agreements, consent decrees and proposals to which Seller is a party as of the Closing Date and which are reasonably necessary to conduct the operation of the Business in the manner conducted by Seller prior to the Closing Date, including those listed on Schedule 3.14, including, but not limited to all unfilled orders outstanding as of the Closing Date for the purchase of raw materials, goods or services by Seller, and all unfilled orders outstanding as of the Closing Date for the sale of goods or services by Seller. 

 

 

 

 

 

“Damages” refers to, in respect of any obligation to indemnify any Person pursuant to the terms of this Agreement, any losses, claims, damages, liabilities, obligations, judgments, settlements and reasonable out-of-pocket costs, expenses and attorneys’ fees; excluding, however, all consequential, special or punitive damages (other than consequential damages arising from a breach of Sections 11.4 and 11.5).  Notwithstanding the foregoing, with regard to Damages relating to Qualified Environmental Matters and the removal of underground storage tanks, the exclusion in the preceding sentence with regard to special or punitive damages shall not be applicable, and Damages will include reimbursement for reasonable out-of-pocket costs of remediating, correcting, or otherwise addressing in a reasonably cost effective manner, the conditions giving rise to such Damages.

“Documents of Record” refers to copies of all documents referred to in the Title Commitment (as defined below).

“Employees” has the meaning as set forth in Section 10.1(a).

“Employee Benefit Plan” means all “employee benefit plans” as defined by Section 3.3 of ERISA, all specified fringe benefit plans as defined in Code Section 6039D, and all other bonus, incentive compensation, deferred compensation, profit sharing, stock option, stock appreciation right, stock bonus, stock purchase, employee stock ownership, savings, severance, supplemental unemployment, layoff, salary continuation, retirement, pension, health, life insurance, dental, disability, accident, group insurance, vacation, holiday, sick leave, fringe benefit or welfare plan, and any other employee compensation or benefit plan, agreement, policy, practice, commitment, contract, or understanding (whether qualified or nonqualified, written or unwritten), and any trust, escrow or other agreement related thereto. 

“Environmental Laws” refers to any federal, state or local statutes, regulations, or ordinances concerning pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, testing, treatment, storage, disposal, distribution, labeling, processing, discharging, release, threatened release, control or cleanup of any Hazardous Materials.

“ERISA” refers to the Employee Retirement Income Security Act of 1974, as amended.

“Established Loss” has the meaning set forth in Section 9.5.

“Estimated Net Working Capital” has the meaning set forth in Section 2.3(a).

 

 

 

 

 

“Excluded Assets” refers to, collectively, only the following specific items (a) any cash or cash equivalents of Seller (including for this purpose all collected funds and items in the process of collection received in bank accounts associated with Seller through 11:59 p.m., Central Standard Time, on the Closing Date, but not including cash held in petty cash accounts of Seller) except to the extent used in the calculation of Net Working Capital, (b) Seller's Accounts Receivable, (c) any rights of Seller or any of its Affiliates to any Tax refund with respect to periods prior to the Closing Date, (d) any assets of any Employee Benefit Plan maintained by Seller or any of its Affiliates, (e) any property, casualty, workers’ compensation or other insurance policy or related insurance services contract relating to Seller or any of its Affiliates and any rights of Seller or any of its Affiliates under such insurance policy or contract, (f) any rights of Seller under this Agreement or under any other agreement between Seller and Buyer, (g) the assets, properties or rights of Seller listed on Schedule 2.1(a), including the assets, rights or properties to be purchased by Alo Tennessee, Inc. that are listed on the attachment to Schedule 2.1(a), (h) original personnel files and records relating to all existing and historical employees of Seller prior to the Closing Date (Buyer is permitted to make and retain copies of same), (i) any books, records and information solely related to any of the Excluded Assets or Excluded Liabilities, (j) company organizational documents, minute books and records and the like, (k) Seller's leased real property located in Telford, Tennessee, (l) finished goods related to Utility Vehicles and raw material and work in progress related to loaders, and (m) all past, present or future claims, causes in action and rights or actions by Seller against third parties relating to (i) the Business and/or any Purchased Assets arising from events, acts, omissions or circumstances on or prior to the Closing Date, or (ii) the Business and/or any Purchased Assets arising from events, acts, omissions or circumstances after the Closing Date to the extent such claim or action relates to or arose out of any matter for which Seller remains liable, including, but not limited to, any Excluded Liability and any matter for which Seller is obligated to indemnify Buyer pursuant to the terms of this Agreement, provided that to the extent that Seller's realization or pursuit of any item set forth in this clause (m) could negatively impact any relationship of Buyer in connection with the Business or any Purchased Asset in any material way, Seller shall not pursue the same or exercise any right or remedy prior to obtaining the written consent of Seller, which shall not be unreasonably withheld or denied. 

“Excluded Liabilities” refers to any and all liabilities and obligations of Seller or any Affiliate or Subsidiary of Seller (other than Assumed Liabilities), including but not limited to, (a) any liability or obligation of Seller or any of its Affiliates arising prior to, on or after the Closing Date in connection with any Excluded Asset, (b) any liability or obligation (whether assessed or unassessed) of Seller or any of its Affiliates with respect to Taxes, other than real estate taxes to the extent accrued or reserved for in determining Net Working Capital, (c) except for equipment lease payments to Great Dane Financial LLC, as accruing from and after the Closing Date, any liability or obligation with respect to any accounts payable of Seller as to which the account party is an Affiliate of the Seller, (d) any liability or obligation with respect to any checks issued by Seller prior to the Closing Date which are outstanding as of the Closing Date, (e) any liability or obligation of Seller with respect to indebtedness for borrowed money, (f) any liability or obligation of Seller or any of its Affiliates with respect to employees or employee benefits not specifically assumed by Buyer pursuant to 0, (g) any liabilities listed on Schedule 2.1(b), (h) any liabilities or obligations related to Seller's leased real property in Telford, Tennessee,  (i) for products liability claims for products within the Purchased Product Lines manufactured or sold by Seller before Closing in connection with occurrences prior to Closing and for products liability claims for Utility Vehicles, (j) Contracts of Seller other than Assumed Contracts and (k) Damages and costs relating to the Work. 

“Financial Statements” has the meaning set forth in Section 3.4(b).

“GAAP” refers to United States generally accepted accounting principles, as in effect from time to time, consistently applied. 

 

 

 

 

 

“Governmental Entity” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state, local, or municipal government, foreign, international, multinational or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory, administrative or judicial authority thereof, and any non-governmental regulatory body, including without limitation the New York Stock Exchange, to the extent that the rules and regulations or orders of such body have the force of Law.

“Hazardous Materials” refers to each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined, determined or identified as hazardous or toxic under any Environmental Law or the release of which is prohibited under any Environmental Law.  Without limiting the generality of the foregoing, the term will include the following, together with any applicable State of Alabama equivalent:

(a)       “hazardous substances” as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified in scattered sections of  26 U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C. sec 9601 et seq.); the Superfund Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.), or Title III of the Superfund Amendments and Reauthorization Act (42 U.S.C. sec 11,001 et seq.), each as amended to date, and regulations promulgated thereunder;

(b)       “hazardous waste” as defined in the Resource Conservation and Recovery Act of 1976 (42 U.S.C. sec. 6901 et seq.) and regulations promulgated thereunder;

(c)        “hazardous materials” as defined in the Hazardous Materials Transport Act (49 U.S.C. sec. 1801 et seq.) , as amended to date, and regulations promulgated thereunder; and

(d)        “chemical substance or mixture” as defined in the Toxic Substances Control Act (15 U.S.C. sec. 2601 et seq.), as amended to date, and regulations promulgated thereunder.

“HSR Act ” refers to the Hart‑Scott‑Rodino Antitrust Improvements Act of 1976, as amended.

“Indemnitee” has the meaning set forth in Section 9.5.

“Indemnitor” has the meaning set forth in Section 9.5.

“Indemnified Party” has the meaning set forth in Section 9.4.

“ Indemnifying Party ” has the meaning set forth in Section 9.4. 

“Independent Auditor” has the meaning set forth in Section 0.

“Intangible License” has the meaning set forth in Section 3.15(b).   

“Intangibles” has the meaning set forth in Section 3.15(a). 

 

 

 

 

 

“Intellectual Property” shall mean (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations in part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, domain names and corporate and partnership names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (c) all copyrightable works, all copyrights and all applications, registrations and renewals in connection therewith, (d) all mask works and all applications, registrations and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all drawings relating to the design and manufacture of all Product Lines, (h) all other proprietary rights, and (i) all copies and tangible embodiments thereof (in whatever form or medium). 

“Intellectual Property Assignment” refers to the Intellectual Property Assignment to be executed at Closing by Seller and Buyer, substantially in the form of Exhibit D hereto.

“ Interim Balance Sheet ” has the meaning set forth in Section 3.4(b).

“ Interim Balance Sheet Date ” refers to June 27, 2009.

“ Inventory ” means all raw material, work in progress, finished goods and parts of Seller used in the Business other than finished goods related to Utility Vehicles and raw material and work in progress related to loaders.

“IRS” refers to the Internal Revenue Service of the Department of the Treasury.

“Item of Dispute” has the meaning set forth in Section 2.4(a).

“Knowledge” as applied to Seller anywhere in this Agreement means: (a) the knowledge of Duane Prentice, Matt Mikesell, Howard May, Tom Patterson, David Middlebrooks, James Bearden and Alan Murray, and (b) the knowledge of any other fact or circumstance that would have or should have come to the attention of any of the individuals listed in clause (a) hereof in the course of discharging his duties in a reasonable and prudent manner consistent with sound business practices. 

“Law” means any statute, law (including common law), constitution, treaty, ordinance, code, order, decree, judgment, rule, regulation and any other binding requirement or determination of any Governmental Entity.

“Leased Real Property” has the meaning set forth in Section 3.9(b).

“Leases” has the meaning set forth in Section 3.9(b).

 

 

 

 

 

“Lien” refers to any mortgage, pledge, lien, security interest, claim, charge, equitable interest, option assessment, easement, encroachment or other encumbrance, other than Permitted Liens.

“Material Adverse Effect” refers to a material adverse effect with respect to the properties, operations, or financial condition of the Business taken as a whole, provided, that no change, effect or circumstance will be deemed (either alone or in combination) to constitute, nor will be taken into account in determining whether there has been or may be, a Material Adverse Effect to the extent that it arises out of or relates to: (a) a general deterioration in the United States economy or in the industries in which Seller operates, (b) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis, including an act of terrorism, (c) the disclosure of the fact that the Buyer is the prospective acquirer of the Business, (d) the announcement or pendency of the transactions contemplated hereby, (e) any change in accounting requirements or principles imposed upon the Seller or any change in applicable laws, rules or regulations applicable to Seller or the interpretation thereof, or (f) compliance with the terms of, or the taking of any action required by, this Agreement.

“Net Working Capital” means current assets less the sum of current liabilities as determined in accordance with methodologies used to prepare the Interim Balance Sheet and as more specifically set forth on Exhibit C attached hereto. 

“Objections Statement” has the meaning set forth in Section 2.4(a). 

“Owned Real Property” has the meaning set forth in Section 3.9(a).

“Permit” refers to any permit, approval, authorization, license, variance, certificates, registration, exemptions, rights of way, franchise privileges, grants and ordinances, or permission required by a Governmental Entity under any applicable Laws.

“Permitted Exceptions” has the meaning set forth in Section 8.3(c).

“Permitted Liens” refers to (i) mechanic’s, materialmen’s and similar liens with respect to amounts not yet due and payable or which are being contested in good faith through appropriate proceedings, (ii) liens for Taxes not yet delinquent or which are being contested in good faith through appropriate proceedings, (iii) liens securing rental payments under capital lease arrangements, (iv) other liens arising in the ordinary course of business and not incurred in connection with the borrowing of money (excluding any borrowed money from Affiliates of Seller), (v) liens disclosed on the Title Commitments, and (vi) other liens for monetary matters (other than in connection with the borrowing of money) included in the calculation of Net Working Capital and arising in the ordinary course of business.

“Person” refers to any individual, partnership, limited liability company, corporation, trust, association, government or any department or agency thereof or any other entity.

“ Pioneer Report ” means the Subsurface Investigation Services Report from Pioneer Engineering & Environmental Services, Inc. dated August 25, 2009.

“Preliminary Closing Statement” has the meaning set forth in Section 2.4(a).

 

 

 

 

 

“Product Lines” means the types of goods manufactured and/or distributed by Seller as of the date of this Agreement, and in the past, including but not limited to, rotary cutters, tillers, zero turn radius mowers, Utility Vehicles, backhoes, post hole diggers, loaders, finishing mowers, other landscaping equipment, and replacement parts. 

“Prorations” means closing adjustment, to the extent not already included in the calculation of Closing Net Working Capital, of utilities, rents, real estate taxes, wages, vacation, sick and holiday pay, and other pro-ratable items which shall be estimated at Closing and as per the Closing Date and reprorated upon the determination of actual amounts as herein provided. 

“Purchase Price”   shall mean the Stock Consideration plus (A) the amount, if any, by which the Net Working Capital as of the Closing Date exceeds $53,680,604, minus (B) the amount, if any, by which the Net Working Capital as of the Closing Date is less than $49,680,604, plus or minus (C) the Prorations.  The portion of the Purchase Price not evidenced by the Stock Consideration shall be paid as provided in Section 2.4.

 “Purchased Assets” refers to any and all of the business, properties, assets, goodwill, rights and claims of whatever kind and nature, real or personal, tangible or intangible, known or unknown, actual or contingent and wherever situated, which are owned by Seller and used in, held for use by, or related to the Business reflecting operation of the Business in the ordinary course, but specifically excluding all Excluded Assets, as the same may exist on the Closing Date, including but not limited to:

(a)        all machinery, equipment, test equipment, vehicles, furniture, office equipment and other tangible personal property including, but not limited to, those items listed on Schedule 1.1;

(b)        all Owned Real Property, improvements, fixtures and all other appurtenances thereto and rights in respect thereof listed on Schedule 3.9(a);

(c)        all Inventory as of the Closing Date;

(d)        the Buyer's Accounts Receivable;

(e)        all notes receivable and other claims for money or other obligations due to Seller arising out of the Business;

(f)         all parts and supplies of Seller held for use in connection with Warranty work for Utility Vehicles;

(g)        all of the Intellectual Property and the associated goodwill therewith;

(h)        all right, title and interest in, to and under all Assumed Contracts, subject in each case to the terms of such Assumed Contracts;

(i)         the Books and Records of Seller;

(j)         to the extent legally assignable, all Permits; and

 

 

 

 

 

(k)        any other tangible or intangible assets of Seller which are used in the Business and which are of a nature not customarily reflected in the books and records of a business, such as assets which have been written off for accounting purposes but which are still used by or of value to the Business. 

“Purchased Product Lines” refers to all Product Lines other than Utility Vehicles.

“Qualified Environmental Matter” means: (i) any contamination caused by any emission, discharge or release of Hazardous Materials on the Subject Areas prior to the Closing Date at concentration levels that require remediation under any applicable Environmental Laws, or (ii) any groundwater contaminated by a release, spill, disposal or leak of any Hazardous Materials on the Subject Areas prior to the Closing Date at groundwater concentration levels that require remediation under any applicable Environmental Laws. 

“Schedules” or “Disclosure Schedules” refers to, collectively, the various Schedules referred to in this Agreement delivered separately to Buyer on or before the date of this Agreement.

“Seller” has the meaning set forth in the Preamble.

“Seller's Accounts Receivable” means an undivided one-half ownership interest in (a) the accounts receivable of the Business and (b) Seller's accounts receivable related to Utility Vehicles, as of the Closing Date.

“Stock Consideration” shall mean one million seven hundred thousand (1,700,000) shares of Common Stock.

“ Subject Areas ” means those portions of the Owned Real Property designated in the BHATE Recommendations.

“Subsidiary” shall mean, as the case may be, any Person of which Seller (or other specified Person) shall own directly or indirectly at least a majority of the outstanding capital stock (or other units of equity interest) entitled to vote generally in the election of directors or in which Seller (or other specified Person) is a general partner or joint venturer without limited liability. 

“Supplement” has the meaning set forth in Section 5.5.

“Survey” has the meaning set forth in Section 0.

“Tax Return” refers to any report, return, information return or other information required to be supplied to a taxing authority in connection with Taxes.

 

 

 

 

 

“Taxes” refers to all federal, state, local and foreign taxes, charges, fees, levies, imposts, duties or other assessments, including, without limitation, income, gross receipts, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, environmental (including taxes under Code Section 59A), premium, federal highway use, commercial rent, customs duties, capital stock, paid up capital, profits, withholding, Social Security, single business and unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by the United States or any state, local, foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto, whether disputed or not.

“Third Party Intellectual Property” has the meaning set forth in Section 3.15(b). 

“Title Commitments” has the meaning set forth in Section 0. 

“Title Insurance Company” has the meaning set forth in Section 0.

“Transferred Employees” has the meaning set forth in Section 10.1(b) hereof. 

“Transition Services Agreement” refers to the agreement between Buyer and Seller providing for the provision of certain post-Closing transition services to be executed at Closing in a form reasonably acceptable to Buyer, Seller and their counsel. 

“Utility Vehicles” means the utility vehicles and all-terrain vehicles manufactured and/or sold by Seller.

 “WARN” refers to the Workers Adjustment and Retraining Notice Act of 1988, as amended.

“Warranty” shall mean all warranties of Seller on Product Lines set forth on Schedule 1.2 attached hereto.

“Warranty Claim” shall mean a claim by a purchaser of goods included in the Product Lines in accordance with a Warranty, and not otherwise.

“ Work ” has the meaning set forth in Section 6.4.   

SECTION 2  

BASIC TRANSACTION

2.1        Purchase and Sale of Purchased Assets.

On the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer will purchase from Seller, and Seller will sell, transfer, assign, convey and deliver to Buyer, all of Seller's right, title and interest in and to the Purchased Assets. 

2.2        Assumption of Liabilities.

On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Seller will assign, and Buyer will assume the Assumed Liabilities, pursuant to an Assumption Agreement (“Assumption Agreement”), the form of which is attached hereto as Exhibit  E . 

 

 

 

 

 

2.3       Calculation and Payment of Purchase Price

(a)           At least three (3) Business Days prior to the Closing Date, Seller shall deliver to Buyer its good faith calculation of the Net Working Capital and Prorations as of the Closing Date (the “Estimated Net Working Capital”).   The Estimated Net Working Capital and any required adjustments thereto will be paid in accordance with Section 2.4 below.

(b)          At the Closing, the number of shares of Common Stock included within the Stock Consideration shall be issued to, and registered in the name of, Seller or its designee (“Consideration Shares”).

2.4       Final Net Working Capital and Prorations Calculation

(a)          Promptly, but in any event within sixty (60) days after the Closing Date, Buyer will deliver to Seller its calculation of Net Working Capital and Prorations (the “Preliminary Closing Statement”).  Seller will make personnel available to Buyer that are not part of the employees hired by Buyer under Section 11 hereof to assist Buyer in the preparation of the Preliminary Closing Statement.  Buyer shall (i) assist Seller in the review of the Preliminary Closing Statement and provide Seller and its representatives with full access to the books, records, facilities and employees of the Buyer, and (ii) cooperate fully with Seller and its representatives, including the provision on a timely basis of all information necessary or useful in reviewing the Preliminary Closing Statement.  Unless within the 30-day period following Seller’s receipt of the Preliminary Closing Statement, Seller delivers written notice to Buyer (the “Objections Statement”) setting forth in reasonable detail any and all items of disagreement related to the Preliminary Closing Statement, including the nature and dollar amount thereof (each, an “Item of Dispute”), subject to the resolution of any issues in the Objections Statement, the Preliminary Closing Statement (and its determination of Net Working Capital and Prorations) shall be conclusive and binding upon Seller and Buyer; provided that the only basis on which Seller shall be permitted to submit an Item of Dispute is that such Item of Dispute was not prepared in accordance with the accounting policies and procedures consistent with those used by Seller prior to the Closing Date in the preparation of the Interim Balance Sheet and in accordance with Exhibit C attached hereto or this Section 2.4(a) (as further defined or clarified by the definitions of the terms herein) or that a mathematical error was made. 

 

 

 

 

 

(b)         If Seller delivers an Objections Statement to Buyer within such 30-day period, Buyer and Seller shall use reasonable best efforts to resolve their differences concerning the Items of Dispute, and if any Item of Dispute is so resolved, the Preliminary Closing Statement shall be modified as necessary to reflect such resolution.  If all Items of Dispute are so resolved, the Preliminary Closing Statement (as so modified) (and the determination of Net Working Capital and Prorations) shall be conclusive and binding on Seller and Buyer.  If any Item of Dispute remains unresolved for a period of fifteen (15) Business Days after Buyer’s receipt of the Objections Statement, Buyer and Seller shall submit the remaining Items of Dispute to Grant Thornton LLP (the “Independent Auditor”).  Buyer and Seller shall request that the Independent Auditor render a determination (which determination shall be solely based on whether such Item of Dispute was prepared in accordance with the terms of this Section 2.4 or whether a mathematical error was made) as to each unresolved Item of Dispute within thirty (30) Business Days after its retention, and Buyer and Seller shall cooperate fully with the Independent Auditor so as to enable it to make such determination as quickly and as accurately as practicable.  The Independent Auditor's determination as to each Item of Dispute submitted to it shall be (i) based solely on presentations by Buyer and Seller which are in accordance with the guidelines and procedures set forth in this Agreement (i.e., not on the basis of an independent review), (ii) in writing and (iii) conclusive and binding upon Buyer and Seller, and the Preliminary Closing Statement shall be modified to the extent necessary to reflect such determination.  The Independent Auditor shall consider only the remaining Items of Dispute and the Independent Auditor may not assign a value to any Item of Dispute greater than the greatest value assigned by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand.  The costs and expenses of the Independent Auditor shall be borne by the prevailing party as determined by the Independent Auditor.  

(c)           If the Net Working Capital plus Prorations as finally determined pursuant to this Section 2.4 requires a payment to Seller, then Buyer shall pay to Seller such excess, dollar for dollar, from the next collections of Buyer's Accounts Receivable until such amount is fully paid.  If the Net Working Capital plus Prorations as finally determined pursuant to this Section 2.4 requires a payment to Buyer, then Seller shall pay to Buyer such shortfall, dollar for dollar, from the next collections of Seller's Accounts Receivable until such amount is fully paid. 

2.5        Allocation of Purchase Price.

(a)            Buyer and Seller shall, before the Closing Date, agree on a preliminary allocation of the Purchase Price and the Assumed Liabilities among the Purchased Assets.  Subject to the requirements of any applicable tax law, all Tax Returns filed by Buyer and Seller shall be prepared consistently with such allocation as thereafter reconciled as provided herein. 

(b)           In the event that the Purchase Price reconciliation pursuant to Section 2.4 hereof requires adjustment to the allocation after the delivery of the Preliminary Closing Statement by Seller, Buyer and Seller agree to adjust the allocation to reflect such Purchase Price reconciliation and, subject to the requirements of any applicable tax law, to file consistently any Tax Returns required as a result of such Purchase Price reconciliation.

 

 

 

 

 

(c)            Within one hundred fifty (150) days after the Closing Date, Seller shall prepare those statements or forms (including Form 8594) required by Section 1060 of the Code and the regulations promulgated thereunder.  Such statements or forms shall be prepared consistently with the allocations under this Section.  Such statements or forms shall be agreed upon by the parties within thirty (30) days after the delivery of such statements by the Seller to the Buyer as required by this Section and shall be filed by the parties with their respective federal income Tax Returns as required by Section 1060 of the Code and the regulations promulgated thereunder and each party shall provide the other party with a copy of such statement or form as filed.

SECTION 3  

REPRESENTATIONS AND WARRANTIES OF SELLER AND CCI

Seller and CCI, jointly and severally, represent and warrant to Buyer and AGI as follows:

3.1        Due Organization; Power and Authority of Seller and CCI.

Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware.  CCI is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.  Seller is qualified to do business as a foreign limited liability company and is in good standing as such, in each jurisdiction where the nature of Seller’s activities requires such qualification, including each jurisdiction set forth on Schedule 3.1.  Each of CCI and Seller has full power and authority to execute and deliver this Agreement, and the execution and delivery by CCI and Seller of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of CCI and Seller, and this Agreement constitutes the legal, valid, and binding obligation of CCI and Seller enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, moratorium, or similar Laws from time to time in effect which affect creditors’ rights generally, and by legal and equitable limitations on the enforceability of specific remedies. Seller has full power to carry on the business presently being conducted by it.  Seller owns no Subsidiary. 

3.2        No Default Effected.

Except for any consents required in Section 7.9, neither the execution and delivery of this Agreement or any Ancillary Agreement by Seller, nor the consummation of the transactions contemplated hereby or thereby, nor the fulfillment of the terms and compliance with the provisions hereof or thereof, will conflict with or result in a breach of or a default (or in an occurrence which with the lapse of time or action by a third party, or both, could result in a default) with respect to any of the terms, conditions or provisions of any applicable order, writ or decree of any court or of any Governmental Entity applicable to Seller, or of the Certificate of Formation or Limited Liability Company Agreement of Seller (as amended), or of any Contract, Lease, Permit or other instrument to which Seller is a party or subject or by which either Seller or any of its properties or assets are bound, or of any applicable statute, rule, or regulation to which Seller or its business is subject.

3.3        Company Records.

Schedule 3.3 contains a true and correct copy of Seller’s Certificate of Formation, as amended. 

 

 

 

 

 

3.4        Financial Statements; Interim Balance Sheet.

(a)            The audited balance sheets of Seller at December 31, 2006, December 31, 2007, and December 31, 2008 and related statement of income and members interests for the periods then ended, audited by PriceWaterhouseCoopers and included as Schedule 3.4(a), were prepared in accordance with GAAP and present fairly the financial condition and the results of operations of Seller as of the dates and for the periods indicated thereon (“Audited Financial Statements”).     

(b)           The unaudited balance sheet as of June 27, 2009, and the related statement of income for the six‑month period then ended, included as Schedule 3.4(b) were prepared in accordance with GAAP and present fairly the financial condition and the results of operations of Seller as of the dates and for the periods indicated thereon (the “Interim Balance Sheet,” and with the Audited Financial Statements, the “Financial Statements”), subject to normal year-end adjustments and those adjustments required in order to cause the Interim Balance Sheet to reflect, on a pro forma basis, the transactions contemplated hereby.

3.5        Undisclosed Liabilities.

Except as would not be reasonably expected to have a Material Adverse Effect, Seller has no liabilities or obligations (whether absolute or contingent, liquidated or unliquidated, or due or to become due) except for liabilities and obligations (i) reflected or reserved for on the Interim Balance Sheet, (ii) that have arisen since the Interim Balance Sheet Date in the ordinary course of the operations of Seller (none of which results from, arises out of, relates to, is in the nature of or was caused by any breach of contract, breach of warranty, tort, infringement or violation of Law), (iii) relating to performance obligations under Leases and Contracts in accordance with the terms and conditions thereof or (iv) as expressly set forth herein or in any Schedule hereto.   

3.6         Accounts Receivable.

All accounts receivable relating to the Business reflected on the Interim Balance Sheet, and all accounts receivable relating to the Business and all accounts receivable of Seller in conjunction with the sale and distribution of Utility Vehicles arising subsequent to the Interim Balance Sheet Date, have arisen in the ordinary course of business of Seller.  All items that are required by GAAP to be reflected as accounts receivable on the Interim Balance Sheet and on the books of Seller are so reflected and any reserve accounts relating thereto have been established in accordance with GAAP.

3.7        Inventory.

 

 

 

 

 

 

The Inventory of the Business currently is, as the case may be, (a) substantially equivalent in quality to the materials, supplies and work-in-process, and additions thereto, generally included in such inventory in the past; (b) suitable for the manufacture and distribution of products of the Business in a manner substantially equivalent in quality to that achieved generally by the Business in the past and (c) of good and merchantable quality and is salable (in the case of inventory held for sale) or currently usable (in the case of other inventory) in the ordinary course of business, in all material respects and subject to any reserves with respect to such inventories set forth in the Interim Balance Sheet or, for inventory not existing as of the Interim Balance Sheet Date, on the books and records of Seller. The amounts shown for inventories on the Interim Balance Sheet were determined in accordance with the first-in, first-out method.  The value of obsolete, damaged or excess inventory and of inventory below standard quality has been written down to net realizable value on the Interim Balance Sheet, or adequate reserves have been provided therefore, and the value at which inventories are carried reflects first-in first-out valuation in accordance with GAAP.

3.8              Material Adverse Effect.

Since January 1, 2009, there has not been any Material Adverse Effect, and no event has occurred or circumstance exists to the Knowledge of Seller that may result in a Material Adverse Effect.

3.9              Real Property.

(a)           Owned Real Property .  Schedule 3.9(a) lists real property owned by Seller (the “Owned Real Property”).  Seller’s title to the Owned Real Property and improvements thereon is as set forth in the Title Commitments.  Except as disclosed on Schedule 3.9(a), none of the Owned Real Property is subject to any right or option of any other person, firm, corporation or other entity to purchase or otherwise obtain title to such property.

(b)           Leased Real Property .  Schedule 3.9(b) lists all real property leased by Seller (whether as lessor or lessee and including those in the names of nominees or other entities) and used or occupied in connection with the Business (the “Leased Real Property).  Schedule 3.9(b) contains a list of all leases and occupancy agreements, together with any amendments thereto (the “Leases”), with respect to the Leased Real Property.  Except as identified on Schedule 3.9(b) true, complete and accurate copies of the Leases have been made available to Buyer, and each of such Leases is in full force and effect without modification or amendment from the form delivered.  Neither Seller nor, to Seller’s Knowledge, any of the other parties to the Leases, is in material default under any of the Leases, which default would give either party thereto the right to terminate such Lease or give rise to the right on the part of either party to any material penalty or set-off.  

 

 

 

 

 

 

(c)            Title Commitments and Surveys .  Seller has delivered to Buyer preliminary title commitments (“Title Commitments”), Documents of Record and Surveys for all of the Owned Real Property, except that a separate survey has not been prepared for the Etheridge Subdivision parcel identified as Item 3 on Schedule 0.  As set forth on Schedule 0, the Title Commitments were issued by Chicago Title Insurance Company (the “Title Insurance Company”) in the minimum amount issued by the Title Insurance Company, cover title to each parcel of Owned Real Property, commit to the issuance of an American Land Title Association Owner's title insurance policy or leasehold title insurance policy, as the case may be, showing fee simple title or leasehold title in Seller subject to the title exceptions set forth therein, and contain a commitment to provide (where available) extended coverage over the general exceptions contained therein.  The Title Commitments shall be conclusive evidence of good title to the portion of the Owned Real Property as therein shown as to all matters insured by the policy, subject only to the exceptions as above stated.  Seller has also delivered to Buyer existing Surveys (the “Surveys”) of all of the Owned Real Property. 

(d)           Zoning .  Except as set forth on Schedule 3.9(d) or as disclosed on the Surveys: (i) Seller has not received any notice of any violation of any applicable building, zoning, land use or other similar statutes, laws, ordinances, regulations, permits or other requirements in respect of the Owned Real Property, which has not been heretofore remedied and (ii) Seller has no Knowledge of and has not received any notice (other than published notice not actually received) of any pending or contemplated rezoning proceeding affecting the Owned Real Property.  

(e)           Insurance Notices .  Seller has received no notice from any insurance carrier regarding defects or inadequacies in the Owned Real Property, which, if not corrected, would result in termination of Seller’s insurance coverage therefor or a material increase in the cost thereof.

(f)            Eminent Domain .  There is no pending or, to Seller’s Knowledge,  threatened: (i) condemnation of any part of the Owned Real Property by any Governmental Entity; (ii) special assessment against any part of the Owned Real Property; or (iii) litigation against Seller for breach of any restrictive covenant affecting any part of the Owned Real Property.

(g)           Utilities .  Seller has not received any notice from any utility company or municipality of any fact or condition which could result in the discontinuation of presently available or otherwise necessary sewer, water, electric, gas, telephone or other utilities or services for the Owned Real Property.

(h)           Foreign Investments .  Seller is not a “foreign person” within the meaning of Section