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ASSET PURCHASE AGREEMENT BY AND AMONG KOPPERS INC. PORTEC RAIL PRODUCTS, INC. AND L. B. FOSTER COMPANY

Asset Purchase Agreement

ASSET PURCHASE AGREEMENT BY AND AMONG KOPPERS INC. PORTEC RAIL PRODUCTS, INC. AND L. B. FOSTER COMPANY | Document Parties: PORTEC RAIL PRODUCTS INC | Foster Thomas Company | Koppers Inc | L B Foster Company | Portec Rail Products, Inc You are currently viewing:
This Asset Purchase Agreement involves

PORTEC RAIL PRODUCTS INC | Foster Thomas Company | Koppers Inc | L B Foster Company | Portec Rail Products, Inc

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Title: ASSET PURCHASE AGREEMENT BY AND AMONG KOPPERS INC. PORTEC RAIL PRODUCTS, INC. AND L. B. FOSTER COMPANY
Governing Law: West Virginia     Date: 12/10/2010
Industry: Railroads     Law Firm: Buchanan Ingersoll     Sector: Transportation

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Exhibit 2.1

ASSET PURCHASE AGREEMENT

BY AND AMONG

KOPPERS INC.

PORTEC RAIL PRODUCTS, INC.

AND

L. B. FOSTER COMPANY

 


 

ASSET PURCHASE AGREEMENT

      ASSET PURCHASE AGREEMENT dated as of the 9th day of December, 2010 by and among Koppers Inc., a Pennsylvania corporation (“Purchaser”), Portec Rail Products, Inc., a West Virginia corporation (“Seller”), and L. B. Foster Company, a Pennsylvania corporation (“Foster”).

RECITALS:

      WHEREAS , Seller is engaged in the business of selling bonded insulated rail joints (assemblies and kits), polyurethane coat insulated rail joints, end posts, poly gage and tie plates, fiberglass (CyPly) joint kits, plastic insulation, standard joints, compromise and transition joints, and Weldmate joint bars manufactured at Seller’s Huntington, West Virginia facility (“the Huntington Facility”) to railroads and other customers (the “Business”);

      WHEREAS , in connection with Foster Thomas Company, a wholly owned subsidiary of Foster, accepting for payment shares of common stock of Seller validly tendered to Foster Thomas Company pursuant to that certain Offer to Purchase for Cash All Outstanding Shares of Common Stock of Portec Rail Products, Inc., dated February 26, 2010 by Foster Thomas Company (the “Tender Offer”), Seller desires to sell, assign, transfer and convey to Purchaser the Purchased Assets (as defined herein);

      WHEREAS , Purchaser desires to acquire from Seller the Purchased Assets; and

      WHEREAS , this Agreement sets forth the terms and conditions upon which Purchaser has agreed to purchase from Seller, and Seller has agreed to sell to Purchaser, the Purchased Assets.

     In consideration of the mutual agreements, covenants, representations and warranties contained herein, and in reliance thereon, Purchaser and Seller, intending to be legally bound, hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

     As used herein, the following terms shall have the following meanings:

      Administrative Services Agreement shall have the meaning set forth in Section 9.6.

      Alternative Arrangement shall have the meaning set forth in Section 11.6.

      Agreement shall mean this Asset Purchase Agreement.

      Aggregate Scheduled Liabilities shall have the meaning set forth in Section 3.1.1.

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      Ancillary Agreements shall mean the Bill of Sale, Assignment and Assumption Agreement, Administrative Services Agreement and any documents necessary to assign and transfer the Intellectual Property as set forth in Section 5.2.3.

      Asset and Liabilities Schedule shall have the meaning set forth in Section 6.5.

      Assignment and Assumption Agreement shall have the meaning set forth in Section 5.2.2.

      Assumed Liabilities shall have the meaning set forth in Section 4.1.

      Benefit Plans shall have the meaning set forth in Section 6.13.

      Bill of Sale shall have the meaning set forth in Section 5.2.1.

      Business shall have the meaning set forth in the Recitals.

      Business Contract shall have the meaning set forth in Section 2.1.3.

      Claim shall have the meaning set forth in Section 13.2.

      Closing shall have the meaning set forth in Section 2.3.

      Closing Date shall have the meaning set forth in Section 2.3.

      Contract shall mean any oral or written contract, agreement, contract right, license, lease, sublease, franchise, distributor agreement, sales representative agreement, instrument, document, purchase order, sales order, quotation, proposal, bid, commitment or any other legally binding arrangement to which Seller is a party or by or to which Seller is bound or subject.

      Code shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and any successor thereto.

      Divestiture Court Order shall mean an Order that is signed by a United States District Court Judge in the form of a Hold Separate Stipulation and Order entered into by Seller, Foster and DOJ and that attaches a Proposed Final Judgment, regarding Foster’s acquisition of Portec and divestiture of the Business.

      DOJ shall mean the antitrust division of the United States Department of Justice.

      Employee shall mean any individual employed by Seller who performs any job responsibilities relating to the conduct of the Business.

      Environmental Laws shall have the meaning set forth in Section 6.16.

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      Environmental Condition shall mean the presence or Release to the environment of Hazardous Material, including any migration of Hazardous Material through air, soil or groundwater, regardless of when such presence or Release occurred or is discovered.

      Environmental Liabilities shall have the meaning set forth in Section 6.16.

      Estimated Purchase Price shall have the meaning set forth in Section 5.1.

      Excluded Assets shall mean those assets that are not included in the transactions contemplated herein and as are further defined in Section 2.2.

      Excluded Litigation shall have the meaning set forth in Section 4.2(a).

      Foster shall have the meaning set forth in the Preamble.

      GAAP shall mean, as of the applicable date, generally accepted accounting principles in the United States of America, consistently applied.

      Governmental Authority means any domestic or foreign, national, state or local government, any subdivision, agency, board, bureau, court, commission, tribunal, regulatory agency, administrative agency, self-regulatory organization or any other federal, state or local governmental authority or instrumentality, or any quasi-governmental or private body exercising or entitled to exercise any regulatory, administrative, executive, judicial, legislative, police or taxing authority thereunder.

      Hazardous Material shall have the meaning set forth in Section 6.16.

      Huntington Facility shall have the meaning set forth in the Recitals.

      Huntington Lease shall have the meaning set forth in Section 6.9.

      Indemnity Acknowledgement Period shall have the meaning set forth in Section 13.4.

      Indemnified Party shall have the meaning set forth in Section 13.2(a).

      Indemnifying Party shall have the meaning set forth in Section 13.2(a).

      Independent Expert shall have the meaning set forth in Section 11.3.

      Intangible Personal Property shall have the meaning set forth in Section 2.1.4.

      Intellectual Property shall mean any and all:

     (i) Patents, patent applications, patent rights, inventions and discoveries that may be patentable, which are used, owned or held for use (as licensee, licensor or

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otherwise) in connection with the conduct of the Business on the date hereof or required for the operation of the Business;

     (ii) Fictional business names, trade names, service names registered and unregistered trademarks, service marks, and applications, which are used, owned or held for use (as licensee, licensor or otherwise) in connection with the conduct of the Business on the date hereof or required for the operation of the Business, including, without limitation, all of Seller’s rights to use the names Thermabond, Comply Epoxy Fiberglass Rail Joint and Comply Gauge Plate and Switch Rod Insulators and logo(s) related thereto;

     (iii) Copyrights in both published works and unpublished works, works which are the subject matter of copyrights, which are used, owned or held for use (as licensee, licensor or otherwise) in connection with the conduct of the Business on the date hereof or required for the operation of the Business; and

     (iv) Know-how, trade secrets, proprietary information, secret processes, formulations, engineering, confidential information, customer lists, supplier lists, price lists, processes, websites and domain names, technical information, data, process technology, plans, drawings (paper and electronic), and blue prints, and all similar property of any nature, tangible or intangible, which are used, owned or held for use (as licensee, licensor or otherwise) in connection with the conduct of the Business on the date hereof or required for the operation of the Business;

     (v) all licenses and rights related to any of the foregoing.

      Inventory shall have the meaning set forth in Section 2.1.1.

      Inventory Adjustment shall have the meaning set forth in Section 3.1.2.

      Labor Services Corporation Lease shall mean that certain Lease dated October 9, 1989 by and between Labor Services Corporation, successor by interest to Huntington Industrial Corporation, and Seller, successor by interest to RP Leasing Inc., as amended, pursuant to which Seller leases from Labor Services Corporation that portion of the Huntington Facility set forth in the Lease.

      Law shall mean any statute, law, rule, or regulation, or any judgment, order, ordinance, writ, injunction, or decree of, any Governmental Authority

      Liability shall mean any expense, liability or obligation of any kind, character, or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several.

      Liens means any charge, mortgage, option, purchase right, deed restriction, easement, right-of-way, pledge, security interest, restriction, claim, lien, or encumbrance.

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      Material Adverse Effect shall mean any effect or change that, individually or in the aggregate, is both material and adverse to the business, assets, condition (financial or otherwise) or results of operations of the Business taken as a whole, other than any such event, change or effect caused by or resulting from (w) changes in the economy as a whole that do not disproportionately affect Seller, (x) changes in laws or GAAP, (y) changes in circumstances or conditions affecting generally the industries in which the Business operates that do not disproportionately affect Seller, or (z) the execution, delivery or performance of this Agreement.

      Material Contracts shall have the meaning set forth in Section 6.6.

      Net Worth shall mean, with respect to any Person, the amount by which the book value of its assets exceeds the book value of its liabilities.

      Notice of Objection shall have the meaning set forth in Section 11.3.

      Party shall mean either Seller or Purchaser, individually, as the context so requires, and the term Parties shall mean Seller and Purchaser together.

      Permitted Liens shall mean encumbrances listed in Schedule 6.4, which are encumbrances (i) for Taxes, governmental charges, assessments or levies, provided that such Taxes, governmental charges, assessments or levies are not yet due or are being contested in good faith by appropriate proceedings and for which a stay is in effect; (ii) mechanics’, workmen’s, materialmen’s, repairmen’s, warehousemen’s, vendors’, landlords’ or carriers’ encumbrances, or other similar encumbrances arising in the ordinary course of business consistent with past practices and securing sums which are not past due or are being contested in good faith by appropriate proceedings and for which a stay is in effect; and/or (iii) related to Assumed Liabilities;

      Permits shall have the meaning set forth in Section 2.1.5.

      Person shall mean any person or entity, whether an individual, trustee, corporation, limited liability company, general partnership, limited partnership, trust, unincorporated organization, business association, firm, joint venture, Governmental Authority or any similar entity.

      Prepaid Items Adjustment shall have the meaning set forth in Section 3.1.4.

      Proceeding shall mean all proceedings, actions, claims, suits, investigations and inquiries by or before any arbitrator or Governmental Authority

      Products shall mean any of the products marketed by or sold by Seller or services provided by Seller in the conduct of the Business as of the Closing Date.

      Purchase Price shall have the meaning set forth in Section 3.1.

      Purchased Assets shall have the meaning set forth in Section 2.1.

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      Purchaser shall have the meaning set forth in the Preamble.

      Purchaser Affiliate shall have the meaning set forth in Section 14.14.

      Records shall have the meaning set forth in Section 2.1.7.

      Release shall mean any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the soil, land surface or subsurface strata, surface waters (including navigable waters and ocean waters), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life and any other environmental medium or natural resource or into or out of any property.

      Restricted Business shall mean railway friction management products and systems including gauge face lubrication with rail curve greases, top-of-rail friction modifiers products and systems, and on-board wheel friction modifier products and systems which apply such lubricants and friction modifiers and which monitor friction levels of a rail and/or wheel.

      Retained Liabilities shall mean those liabilities that are not assumed by Purchaser and as further defined in Section 4.2.

      Schedules shall have the meaning set forth in Article VI.

      Seller shall have the meaning set forth in the Preamble.

      Statement shall have the meaning set forth in Section 11.3.

      Tangible Personal Property shall have the meaning set forth in Section 2.1.2.

      Tangible Personal Property Adjustment shall have the meaning set forth in Section 3.1.3.

      Tax or Taxes shall mean all taxes, duties, charges, fees, levies or other assessments imposed by any taxing authority, including, without limitation, income, gross receipts, value -added, excise, withholding, personal property, real estate, sale, use, ad valorem, license, lease, service, severance, stamp, transfer, payroll, employment, customs, duties, alternative, add-on, minimum, estimated and franchise taxes (including any interest, penalties or additions attributable to or imposed on or with respect to any such assessment).

      Tender Offer shall have the meaning set forth in the Recitals.

      Third-Party Claim shall have the meaning set forth in Section 13.4.

      Threshold Amount shall have the meaning set forth in Section 13.3.

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ARTICLE II

TRANSFER OF PURCHASED ASSETS; CLOSING

     2.1 Purchased Assets . Subject to the terms and conditions of this Agreement, and based upon the representations and warranties contained in this Agreement, at the Closing, Seller shall assign, sell, transfer, convey and deliver to Purchaser, free and clear of all Liens (other than Permitted Liens), and Purchaser shall purchase from Seller, all of Seller’s right, title and interest in and to all of the assets, properties and rights used, owned or held in connection with the conduct of the Business on the date hereof or required for the operation of the Business, but excluding the Excluded Assets (such purchased and sold assets, properties and rights are collectively referred to as the “Purchased Assets”). The Purchased Assets shall include but not be limited to the following assets:

     2.1.1 Inventory . All inventories of finished goods, work-in-progress, raw materials, goods in transit from suppliers or manufacturers to Seller and goods held by third parties on consignment, in each case held, owned, paid for or payable by Seller and used, owned or held in connection with the conduct of the Business on the date hereof or required for the operation of the Business, as adjusted for additions and dispositions occurring in the ordinary course of business through the Closing Date (collectively, the “Inventory”);

     2.1.2 Tangible Personal Property . All machinery, spare, replacement or other parts, tools, equipment, lubricants, fluids, oils, supplies, filters, fittings, connectors, seals, gaskets, hardware, wire and other similar materials, chemicals, gas and fuel, displays, bins, leasehold improvements and fixtures, vehicles, materials, maintenance, shop, office and other consumable supplies, office furniture and office equipment, and computing and telecommunications equipment and other tangible personal property owned by Seller and used, owned or held in connection with the conduct of the Business on the date hereof or required for the operation of the Business and situated in the Huntington Facility, including without limitation the items listed on Schedule 2.1.2 (collectively, “Tangible Personal Property”, and for the avoidance of doubt, the term “Tangible Personal Property” does not include Inventory);

     2.1.3 Contracts Relating to the Business . All Contracts owned or held in connection with the conduct of the Business on the date hereof or required for the operation of the Business, including without limitation, the Material Contracts set forth in Schedule 6.6 (collectively, the “Business Contracts”);

     2.1.4 Customer Lists, Sales and Marketing Materials . All goodwill incident to the Business, customer lists, sales data, catalogs, reference resources, sales aides, sales literature, brochures, price lists, supplier lists, files, records, customer (including potential customer) and supplier (including potential supplier) correspondence files, credit files, names, mailing lists, art work, images, photographs and advertising material used, owned or held in connection with the conduct of the Business on the date hereof or required for the operation of the Business, whether in electronic form or otherwise (collectively, the “Intangible Personal Property”);

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     2.1.5 Permits, Licenses . All permits, licenses, registrations, orders, approvals, authorizations, certifications, consents, variances, zoning restrictions or permissions to or from, or filings, notices or recordings to or with, Governmental Authorities used, owned or held in connection with the conduct of the Business on the date hereof or required for the operation of the Business, to the extent such permits, licenses, registrations, orders and approvals are transferable to Purchaser (collectively, the “Permits”);

     2.1.6 Intellectual Property . All of Seller’s ownership interest, title and interest (ownership or otherwise) in or to any and all of the Intellectual Property and all books, records, information and materials which pertain to the Intellectual Property;

     2.1.7 Property, Personnel and Accounting Records . All other records and data of Seller relating to the Business, including property records and copies of personnel records of Employees who become employees of Purchaser (whether such records are in hard copy, electronic, or any other format), including, without limitation, all records and data regarding warranty and product liability claims regarding Products, quality control practices and procedures used in the Business, any operating, safety and maintenance manuals for the Business, engineering design plans and blueprints of the Business, as built plans, specifications and procedures of the Business, and operations procedures used at the Huntington Facility (collectively, the “Records”);

     2.1.8 Prepaid Items . Prepaid expense and deposit items of the Business on the Closing Date of the type described in Schedule 2.1.8 ;

     2.1.9 Computer Software . All computer applications software used, owned or held by Seller in connection with the conduct of the Business on the date hereof or required for the operation of the Business, owned or licensed, whether for general business usage (e.g., accounting, word processing, graphics, spreadsheet analysis, etc.) or specific, unique-to-the-business usage (e.g., order processing, manufacturing, process control, shipping, etc.) and all computer operating, security or programming software, owned or licensed by Seller, listed on Schedule 2.1.9 as being transferred to Purchaser;

     2.1.10 Other Intangible Assets . All claims Seller may have against any Person relating to or arising from the Purchased Assets, including all rights to recoveries for damages or defective goods, to refunds, insurance claims and chooses in action and all contract rights and warranty and product liability claims against third parties, arising after the Closing, regardless of whether any value is ascribed thereto in Seller’s financial statements, and all telephone numbers, telecopier numbers and facsimile numbers used in connection with the Business; and

     2.1.11 Labor Services Corporation Lease . In the event that Purchaser has not entered into a lease on or prior to the Closing Date with the landlord to lease at least a portion of the Huntington Facility to become effective as of the Closing Date, the Labor Services Corporation Lease.

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Notwithstanding the foregoing, the transfer of the Purchased Assets pursuant to this Agreement shall not include the assumption of any liability related to the Purchased Assets unless Purchaser expressly assumes that liability pursuant to Section 4.1.

     2.2 Excluded Assets . Notwithstanding Section 2.1, the following assets, properties and rights (collectively, the “Excluded Assets”) shall be excluded from the Purchased Assets, and shall not be assigned or transferred to Purchaser:

     2.2.1 All assets, properties, and rights, whether fixed, absolute or contingent or otherwise, and wherever located which are not used, owned or held for use in connection with the conduct of the Business;

     2.2.2 All assets, properties, and rights, whether fixed, absolute or contingent or otherwise, and wherever located used primarily in connection with the following businesses of Seller: the lubrication and friction management business, the shipping systems division business, the curv bloc business and the car repair business, provided, however, that any of these tangible assets are not needed nor need to be replaced to conduct the Business even though they otherwise would constitute Tangible Personal Property because such tangible assets have had some use in the Business and any such tangible assets are set forth on Schedule 2.2;

     2.2.3 Cash and cash equivalents of the Business on hand or in bank accounts;

     2.2.4 Assets constituting any pension or other funds for the benefit of Employees;

     2.2.5 Corporate minute books and stock books;

     2.2.6 Any warranty and product liability claims and other contract rights against third parties (including, without limitation, insurance carriers), to the extent they relate to any products sold by Seller prior to the Closing Date or liabilities or obligations that are not assumed by Purchaser hereunder;

     2.2.7 Claims for refunds of Taxes and other governmental charges to the extent such refunds relate to periods ending on or prior to the Closing Date and were paid by Seller;

     2.2.8 The consideration paid to Seller pursuant to this Agreement;

     2.2.9 All receivables, if any, generated by loans to Employees;

     2.2.10 All notes receivable;

     2.2.11 All accounts receivable;

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     2.2.12 All cash, bank accounts, non-customer deposits, advances to affiliated entities, loans and investments;

     2.2.13 All books and records pertaining to any debts, liabilities or obligations of Seller not assumed by Purchaser pursuant to this Agreement;

     2.2.14 all insurance policies and rights thereunder, including, without limitation, all rights with respect to any pending claims and any refunds of premiums previously paid on account of insurance policies maintained by or for the benefit of Seller;

     2.2.15 all contracts (i) not owned or held in connection with the conduct of the Business on the date hereof and not required for the operation of the Business, (ii) all distribution, marketing, dealer, representative, sales agency contracts, and any other contracts providing for the payment to any Person based on sales, purchases or profits, other than direct payment for goods, in each case whether or not used in the Business and (iii) all contracts not otherwise included among the contracts to be assumed by Purchaser pursuant to this Agreement;

     2.2.16 prepaid items not identified on Schedule 2.1.8 ;

     2.2.17 the licensed software listed on Schedule 2.1.9 as not transferable;

     2.2.18 the “Portec” name and the items, if any, listed on Schedule 2.2; and

     2.2.19 in the event that Purchaser has entered into a lease on or prior to the Closing Date with the landlord to lease at least a portion of the Huntington Facility to become effective as of the Closing Date, the Labor Services Corporation Lease

     2.3 Closing; Effective Time . Subject to the satisfaction or waiver of the conditions set forth in Articles IX and X, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Buchanan Ingersoll & Rooney PC in Pittsburgh, Pennsylvania, at 10:00 AM (local time) on the business day following the date on which Foster notifies the depositary that it accepts the shares tendered in the Tender Offer for payment or at such other time and place as may be mutually agreed upon by Purchaser and Seller (the “Closing Date”). Foster shall keep Purchaser informed of the timing of giving such notice and in any event shall give Purchaser notice promptly upon giving the acceptance notice to the depositary. Seller and Purchaser acknowledge that the effective date of the transaction contemplated by this Agreement for all purposes (including, without limitation, for accounting purposes) is as of the opening of business on the Closing Date.

ARTICLE III

PURCHASE PRICE

     3.1 Purchase Price . The purchase price (the “Purchase Price”) for the Purchased Assets shall be equal to (i) Ten Million One Hundred Thousand Dollars ($10,100,000) less the

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Aggregate Scheduled Liabilities, plus or minus, as the case may be, (ii) (x) the Inventory Adjustment, (y) the Tangible Personal Property Adjustment and (z) the Prepaid Items Adjustment.

     3.1.1 “Aggregate Scheduled Liabilities” shall mean the sum of: the Closing Date accrued pro-rated employee compensation including bonus, incentive, sales commissions, vacation pay, sick pay, payroll taxes, 401(k) contributions and paid leave benefits to Seller’s employees which Purchaser employs following the Closing to the extent set forth on Schedule 3.1.1 and as determined in accordance with GAAP used by Seller in preparing Seller’s audited consolidated financial statements for fiscal year 2009 filed with the Securities and Exchange Commission. For the avoidance of doubt, the amounts set forth on Schedule 3.1.1 shall be used to determine the Estimated Purchase Price and shall be adjusted to actual amounts as of the Closing Date for purposes of determining the Purchase Price.

     3.1.2 “Inventory Adjustment” shall mean the difference, if any, between the value of the Inventory set forth in the Asset and Liabilities Schedule and the book value of the Inventory (determined consistent with the accounting procedures used by Seller to prepare the Asset and Liabilities Schedule) on the Closing Date.

     3.1.3 “Tangible Personal Property Adjustment” shall mean the difference, if any, between the value of the Tangible Personal Property set forth in the Asset and Liabilities Schedule and the book value of the Tangible Personal Property (determined consistent with the accounting procedures used by Seller to prepare the Asset and Liabilities Schedule) on the Closing Date. Tangible Personal Property acquired by or disposed of by Seller on or prior to the date of the Asset and Liability Schedule is not subject to adjustment.

     3.1.4 “Prepaid Items Adjustment” shall mean the difference, if any, between the value of the Prepaid Items set forth in the Asset and Liabilities Schedule and the book value of the Prepaid Items (determined consistent with the accounting procedures used by Seller to prepare the Asset and Liabilities Schedule) on the Closing Date.

     3.2 Allocation of Purchase Price . Seller shall prepare and deliver a draft allocation of the Purchaser Price to Purchaser within sixty (60) days after the Closing to be filed with the Internal Revenue Service on IRS Form 8594. Purchaser shall review the draft allocation of Purchase Price. Purchaser and Seller shall cooperate in good faith to reach agreement on the allocation of the Purchase Price; such agreement will not be unreasonably withheld by either Party. After agreement on the allocation of the Purchase Price, the Parties shall make consistent use of the allocation for all Tax purposes and in all filings, declarations, and reports with the Internal Revenue Service, including reports required to be filed under the Code, unless a Party believes such allocation is in violation of applicable Law or the Code. In any proceeding related to the determination of Taxes, neither Purchaser nor Seller shall contend or represent that such allocation is not a correct allocation, unless Purchaser or Seller believes such allocation is in violation of applicable Law or the Code.

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     3.3 Transfer Taxes . Purchaser shall bear and be responsible for the payment of all Taxes (excluding Taxes based on or measured by income) that are or may be imposed by any government or political subdivision thereof and that are payable or arise as a result of the transfer of the Purchased Assets, notwithstanding the Party upon which such Taxes are actually imposed.

ARTICLE IV

ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS

     4.1 Assumed Liabilities . Upon the terms and subject to the conditions of this Agreement, at the Closing, Purchaser hereby agrees to assume, and satisfy or perform when due the following (collectively, the “Assumed Liabilities”): (a) the Aggregate Scheduled Liabilities and (b) all Liabilities associated with the sale of Products and warranty claims for Products sold on or after the Closing Date.

     4.2 Excluded Liabilities . Purchaser shall not assume nor in any way be liable or responsible for any Liability of Seller or the Business other than the Assumed Liabilities and Seller expressly retains liability for all other Liabilities of the Seller and the Business (the “Retained Liabilities”). The Retained Liabilities shall include, without limitation, the following:

 

(a)

 

any Liability for any litigation or claim asserted by a third party arising from Seller’s conduct of the Business or ownership of the Purchased Assets prior to Closing (collectively, the “Excluded Litigation”; for the avoidance of doubt, although there is no Excluded Litigation as of the date hereof, litigation and claims filed after the date hereof relating to Seller’s conduct of the Business or ownership of the Purchased Assets prior to Closing constitutes “Excluded Litigation”);

 

 

(b)

 

any Liability of Seller or the Business for Taxes for periods on or prior to the Closing Date, any Liability of Seller or the Business for Taxes attributable to the Excluded Assets and, except as set forth above in Section 3.3, any Liability for any Taxes arising because Seller is transferring the Purchased Assets pursuant to this Agreement;

 

 

(c)

 

any Liability under Benefit Plans of Seller;

 

 

(d)

 

any Liability of Seller arising from activities performed in connection with the Business on or prior to the Closing Date including product or warranty claims related to products sold or services provided on or prior to the Closing Date and any Liability of Seller or the Business arising from the breach by Seller of any of the Business Contracts or Permits to the extent attributable to the period on or prior to the Closing Date;

 

 

(e)

 

all Liabilities relating to the employment of the Employees of Seller (including, without limitation, all Liabilities arising pursuant to or in connection with the

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Portec Rail Products Inc. Retirement Plan) other than Liabilities relating to the employment of the Employees by Purchaser on or after the Closing Date if such Employees are actually employed by Purchaser; provided, however, that Seller will retain all Liabilities relating to or arising from the employment of such Employees by Seller prior to the Closing Date;

 

 

(f)

 

any governmental or employee claims for any period on or prior to the Closing Date, including, without limitation, back wage obligations, unfair labor practice charges and obligations under all existing employment agreements;

 

 

(g)

 

all Liabilities relating to the Excluded Assets;

 

 

(h)

 

any Liability of Seller for costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby;

 

 

(i)

 

any Liability of Seller under this Agreement;

 

 

(j)

 

notes and accounts payable and bank indebtedness;

 

 

(k)

 

all Liabilities relating to the Business or the Purchased Assets arising under or relating to Environmental Laws or relating to any claim in respect of Environmental Conditions or Hazardous Material to the extent arising on or prior to the Closing Date, whether based on common law or Environmental Laws, whether such liabilities or obligations are known or unknown, contingent or accrued, including (i) any violation or alleged violation of Environmental Laws with respect to the ownership, lease, use, maintenance or operation of the Huntington Facility or any of the Purchased Assets on or prior to the Closing Date, and the costs associated with correcting any such violations; (ii) loss of life, injury to persons or property or damage to natural resources caused (or allegedly caused) by any Environmental Condition or the presence or Release or threatened Release of Hazardous Material at, on, in, under, adjacent to or migrating from the Huntington Facility or Purchased Assets to the extent occurring or in existence on or before the Closing Date, including any Environmental Condition or Hazardous Material contained in building materials at the Huntington Facility or the Purchased Assets or in the soil, surface water, sediments, groundwater, landfill cells, or in other environmental media at the Huntington Facility or the Purchased Assets; (iii) any Remediation of any Environmental Condition or Hazardous Material Released on or before the Closing Date at, on, in, under, or migrating from, the Huntington Facility or the Purchased Assets or in the soil, surface water, sediments, groundwater, landfill cells or in other environmental media at the Huntington Facility or the Purchased Assets; (iv) any bodily injury, loss of life, property damage or natural resource damage arising from the on-site or off-site storage, transportation, treatment, disposal, discharge, recycling or Release, or arising from the arrangement for such activities, in each instance on or before the Closing Date, or Hazardous Material generated in connection with the ownership, lease, use, maintenance or operation of the Huntington Facility or the Purchased

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Assets on or prior to the Closing Date; and (v) any Remediation of any Environmental Condition or Release of Hazardous Material arising from the on-site or off-site storage, transportation, treatment, disposal, discharge, recycling or Release, or arising from the arrangement for such activities on or before the Closing Date, of Hazardous Material generated in connection with the ownership, lease, use, maintenance or operation of the Business, the Huntington Facility or Purchased Assets on or before the Closing Date;

 

 

(l)

 

any Liability or obligation relating to the Business, the Huntington Facility or the Purchased Assets or otherwise of Seller or its Affiliates of any kind, known or unknown, contingent or otherwise, asserted or unasserted, arising out of or relating to any acts or omissions to act, facts or circumstance occurring or existing or ownership, lease, use, maintenance or operation of the Huntington Facility or the Purchased Assets by Seller to the extent attributable to the period on or before the Closing Date;

 

 

(m)

 

Any Liability relating to past employees of the Business, including but not limited to with respect to plans, programs, policies, commitments, or other benefit entitlement established or existing on or prior to Closing (whether or not such liabilities are accrued or payable at Closing, and whether or not such liabilities are contingent in nature);

 

 

(n)

 

any Liability under any employment, severance, retention or termination agreement with any employee of Seller or the Business;

 

 

(o)

 

any Liability arising out of any Proceeding pending as of the Closing Date;

 

 

(p)

 

any violations of Law by Seller or the Business arising out of any acts or omissions on or before the Closing Date; and

 

 

(q)

 

any Liability relating to clause (i) and clause (ii) of the definition of Permitted Liens.

     4.3 Offer of Employment . Purchaser shall have the right to offer employment as of the Closing Date to the Employees listed in Schedule 4.3, subject to Purchaser’s applicable hiring policies (to the extent such Employees are employed by Purchaser, the “Transferred Employees”) in substantially similar jobs, at substantially the same base salaries or wages as were paid or provided by the Seller immediately prior to the Closing Date. Purchaser shall provide or make available to the Transferred Employees benefit plans or arrangements which are, in the aggregate no less favorable to such Transferred Employees than those provided under the Benefit Plans and all Transferred Employees will be given credit in determining participation, benefit accrual and vesting for the period during which he or she was employed by the Seller to the extent that any similar benefit plan or arrangement uses length of service as a factor in determining participation, benefit accrual or vesting thereunder.

     4.4 Assistance with Offers of Employment . Seller and Foster will use their respective commercially reasonable efforts to encourage all Employees who are offered employment with

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Purchaser to accept such offers, and Seller and Foster will work together with Purchaser in good faith to ensure that as many Employees as possible accept offers of employment from Purchaser, except with respect to the Employees set forth on Schedule 4.4, whom Purchaser agrees Foster may solicit for employment.

     4.5 Vacation Liability . Purchaser shall assume liability for the vacation entitlement that each Transferred Employee has accrued as of the Closing Date to the extent such vacation entitlement is included on the Aggregate Scheduled Liabilities.

ARTICLE V

CLOSING

     5.1 Determination of Estimated Closing Price . Immediately prior to Closing, the Seller shall deliver to the Purchaser the Seller’s detailed estimate of the Estimated Purchase Price. “Estimated Purchase Price” shall equal (i) Ten Million One Hundred Thousand Dollars ($10,100,000) less the Seller’s estimate of the Aggregate Scheduled Liabilities, plus or minus, as the case may be, (ii) Seller’s estimate of (x) the Inventory Adjustment, (y) the Tangible Personal Property Adjustment and (z) the Prepaid Items Adjustment.

     5.2 Deliveries by Seller . At the Closing, Seller shall execute and deliver the following instruments to Purchaser:

     5.2.1 A general bill of sale substantially in the form of Exhibit A hereto (the “Bill of Sale”), transferring to Purchaser good and indefeasible title to all of the Purchased Assets, free and clear of all Liens other than the Permitted Liens;

     5.2.2 An instrument of assignment and assumption substantially in the form of Exhibit B hereto (the “Assignment and Assumption Agreement”), pursuant to which Purchaser shall assume the Assumed Liabilities as set forth in Article IV, and Seller shall assign to Purchaser, all of Seller’s right, title and interest in each of the Business Contracts, the Permits, the Labor Services Corporation Lease in the event that such lease is included in the Purchased Assets, other leases, licenses, other agreements and other intangible property included in the Purchased Assets, together with all third-party consents, including, without limitation, the consent of the lessor under the Labor Services Corporation Lease in the event that the Labor Services Corporation Lease is included in the Purchased Assets, required to assign any of the Business Contracts, the Permits, the Labor Services Corporation Lease in the event that the Labor Services Corporation Lease is included in the Purchased Assets, other leases, licenses, other agreements and other intangible property included in the Purchased Assets.

     5.2.3 All other documents necessary to assign and transfer the Intellectual Property;

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     5.2.5 Such other instruments of conveyance and transfer as Purchaser may reasonably require in order to effectively vest in it, and put it in possession of, the Purchased Assets;

     5.2.6 The Administrative Services Agreement required by Section 9.6 below;

     5.2.7 Releases of any Liens on Purchased Assets (other than Permitted Liens) in form reasonably satisfactory to Purchaser;

     5.2.9 Copies of all Records, to the extent not previously provided, to be provided where located at the Huntington Facility, or if located elsewhere, by delivery to the Huntington Facility promptly following the Closing; and

     5.2.10 A certificate executed on behalf of Seller by an officer of Seller dated the Closing Date certifying that the conditions set forth in Article X have been fulfilled.

     5.3 Deliveries by Purchaser . At the Closing, Purchaser shall execute and deliver the following instruments to Seller.

     5.3.1 The Assignment and Assumption Agreement; and

     5.3.2 The Administrative Services Agreement required pursuant to Section 10.7 below; and

     5.3.3 A certificate executed on behalf of Purchaser by an officer thereof dated the Closing Date certifying that the conditions set forth in Article IX have been fulfilled.

     5.4 Payments by Purchaser . At Closing Purchaser shall pay in cash by wire transfer the Estimated Purchase Price to such account or accounts as the Seller shall direct by prior written instructions to Purchaser.

     5.5 Delivery of Possession . On and after the Closing Date, Seller shall cooperate with Purchaser to transfer possession and control of all of the Purchased Assets to Purchaser.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF SELLER

     To induce Purchaser to enter into this Agreement, Seller hereby makes, as of the date hereof and as of the Closing Date, the following representations and warranties to Purchaser, except as otherwise set forth in written disclosure schedules (the “Schedules”) delivered to Purchaser on or prior to the date hereof, a copy of which is attached hereto. All representations and warranties set forth in this ARTICLE VI shall be without regard to the “Seller’s knowledge,”

17


 

either actual or imputed, unless expressly limited to Seller’s knowledge. All references to “to Seller’s knowledge” or “to the best of Seller’s knowledge” (and similar phrases) shall be deemed to be to the knowledge of Richard J. Jarosinski, President and Chief Executive Officer of Seller, John N. Pesarsick, Chief Financial Officer of Seller, Bruce Wise, General Manager of Seller, Ron Junk, Vice President, Operations of Seller and J.R. Copley, Plant Manager of Seller.

     6.1 Organization, Good Standing and Power . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of West Virginia and has all requisite corporate power and authority to own, lease and operate its properties, to carry on its business as now being conducted and to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, to consummate the transactions contemplated hereby and thereby and to perform all the terms and conditions hereof and thereof to be performed by it . Seller is not a foreign person within the meaning set forth in Treasury Regulation Section 1.1445-2(b)(2)(iv).

     6.2 Authorization of Agreement and Enforceability . Seller has full corporate power and authority to enter into this Agreement and the Ancillary Agreements, to perform its obligations under the Agreement and the Ancillary Agreements and to carry out the transactions contemplated hereby. Seller has taken all necessary corporate action to authorize the execution and delivery of this Agreement and the Ancillary Agreements to which it is a party, the performance by it of all terms and conditions hereof and thereof to be performed by it and the consummation of the transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements to which it is a party constitute, and upon Seller’s execution and delivery thereof, will constitute, the legal, valid and binding obligations of Seller, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws affecting the enforceability of creditors’ rights generally and the discretion of courts in granting or denying equitable remedies.

     6.3 No Violation; Consents . Subject to Seller obtaining consents referred to in Schedule 6.3, the execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby will not, with or without the giving of notice or the lapse of time, or both, (i) conflict with or result in a violation of the organizational documents that govern Seller, including its certificate or articles of incorporation or bylaws; (ii) violate or require any consent, authorization or approval of, or exemption by or notice to any Government Authority, or filing under any provision of any law, statute, rule or regulation relating to the Business or the Purchased Assets or to which Seller is subject; (iii) violate any judgment, order, writ or decree of any court relating to the Business or the Purchased Assets or applicable to Seller; (iv) result in the creation or imposition of any Lien or encumbrance on the Purchased Assets other than a Permitted Lien, (v) result in any breach of, or constitute a default under, or give to others any rights of termination, amendment, acceleration or cancellation of, or require any notice of consent under, any Business Contract, or any note bond, mortgage, indenture, agreement, license or other instrument to which Seller is a party that would affect the Purchased Assets or the Business, except for such violations or breaches as to which requisite waivers or consents have been obtained and except for such violations or breaches which do not constitute a Material Adverse Effect, or (vi) require the consent or approval of, filing with, or notice to any Person.

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Except as set forth in Schedule 6.3, no consent or waiver of any person or entity is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, including consents or waivers from parties to the Contracts.

     6.4 Title to Properties; Absence of Liens; Sufficiency of Purchased Assets . Seller owns good and marketable title, or a valid leasehold interest, to all of the Purchased Assets, free and clear of all Liens, other than Permitted Liens. Except as set forth on Schedule 6.4, the Purchased Assets constitute all of the assets tangible and intangible of any nature whatsoever, necessary to operate the Business in the manner presently operated by Seller. All of the Purchased Assets will be operational on the Closing Date and are free from material defects (patent and latent) and have been maintained in accordance with normal industry practice, are in good operating condition and repair (subject to normal wear and tear) and are suitable for the purposes for which each is presently used.

     6.5 Asset and Liabilities Schedule; No Undisclosed Liabilities . Schedule 6.5 sets forth a true and complete copy of the Seller’s Schedule of Asset and Liabilities, used in the Business as it relates to the Business as of October 31, 2010 (the “Asset and Liabilities Schedule”). The Asset and Liabilities Schedule is correct and complete and has been prepared from the financial records of Seller based upon GAAP used by Seller in the preparation of Seller’s audited consolidated financial statements for fiscal year 2009 filed with the Securities and Exchange Commission. Except as set forth on the Schedule of Assets and Liabilities, there are no material Liabilities related to the Business that would have been required to be disclosed on a balance sheet prepared in accordance with GAAP. Schedule 6.5(a) sets forth the Seller’s Schedule of Historical “Pro Forma” Financial Results as it relates to the Business for the annual periods ended December 31, 2006, 2007, 2008 and 2009 and the seven month period ended July 31, 2010 (the “Historical Financial Results Schedule”). The Historical Financial Results Schedule is correct and complete and has been derived from the financial records of the Seller. For the annual periods ended December 31, 2006, 2007, 2008 and 2009, the financial records were prepared based upon GAAP used by the Seller in the preparation of the Seller’s audited consolidated financial statements for the relevant fiscal year filed with the Securities and Exchange Commission. To the extent that allocations of amounts were required to determine amounts appearing on the Historical Financial Results Schedule, reasonable methods were utilized to determine such allocations. The Asset and Liability Schedule and the Historical Financial Results present fairly and accurately the financial position, assets and liabilities of the Business and the results of its operations and changes in its financial position for the periods indicated.

     6.5.1 Except as set forth in Schedule 6.5.1 , since the date of the Asset and Liabilities Schedule, (i) no Material Adverse Effect has occurred, (ii) other than in the ordinary course of business, there has not been any increase, or commitment to make a increase, in the compensation payable by Seller to any Employee, (iii) other than in the ordinary course of business, there has not been any increase in any bonus, insurance, pension or other employee benefit plan, payment or arrangement made to, for or with any

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Employee, and (iv) no other liabilities have been incurred other than in the ordinary course of business consistent with past practice.

     6.5.3 Since the date of the Asset and Liabilities Schedule, (i) Seller has operated the Business in the normal, usual and customary manner in the ordinary and regular course and has not, other than in the ordinary course of business consistent with Seller’s past practices, sold or otherwise disposed of, or committed to dispose of, any assets or incurred any liabilities, direct or contingent, (ii) Seller has used all reasonable efforts to preserve the Business, keeping available the services of the present Employees thereof and preserving all Business relationships with suppliers, customers and others with whom the Business has dealings, and (iii) Seller has not (a) entered into any transactions affecting the Business’ inventory outside of Seller’s customary and ordinary business practices or (b) made any purchases of machinery or equipment except in the ordinary course of business.

     6.6 Material Contracts .

 

(a)

 

Schedule 6.6 sets forth a complete list of all Material Contracts (as defined below), to which the Seller is a party or is bound and which relate to the Business. For purposes of this Agreement, a “Material Contract” of the Business means:

 

 

(i)

 

any consulting or other Contract with an Employee or any other shareholder, director, officer, or employee of Seller or any Seller Affiliate;

 

 

(ii)

 

any collective bargaining Contract or other Contract with any labor union or other employee representative with respect to the Employees or otherwise relating to wages, hours and other conditions of employment;

 

 

(iii)

 

any Contract for capital expenditures or the acquisition or construction of fixed assets which requires aggregate future payments in excess of $25,000;

 

 

(iv)

 

any license, royalty Contract or other Contract with respect to the Intellectual Property that grants to a third-party any rights to such intellectual property or that affects the ownership or, leasing of, title to, use of or any other interest in the Intellectual Property;

 

 

(v)

 

any Contract pursuant to which the Seller has entered into a partnership, franchise, or joint venture with any other Person to conduct the Business;

 

 

(vi)

 

any Contract under which the Seller is (A) a lessee or sublessee of real property used in the Business other than the Huntington Lease, (B) a lessee of, or holds or uses, any machinery, equipment, vehicle or other Tangible Personal Property used in the Business owned by a third person or entity which requires annual payments in excess of $25,000;

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(vii)

 

any Contract of the Business under which the Seller is a purchaser or supplier of goods and/or services which, pursuant to the terms thereof, requires payments by the Seller in excess of $15,000 per annum;

 

 

(viii)

 

any other type of Contract which is related to the conduct of the Business or required for the operation of the Business or ownership of the Purchased Assets; and

 

 

(ix)

 

any other type of Contract the termination or breach of which, or the failure to obtain consent in respect of, is reasonably likely to have a Material Adverse Effect.

 

(b)

 

All of the Material Contracts are legal, valid, binding, in full force and effect and enforceable in accordance with their respective terms and neither Seller nor, to the knowledge of Seller, any other party to any Material Contract, is in material default or breach of any of the terms thereof and no event has occurred which with notice or lapse of time would constitute a material breach or default or permit termination, modification or acceleration thereunder;

     6.7 Claims and Proceedings . Except as set forth on Schedule 6.7 , there are no actions, claims suits or proceedings, investigations pending or, to the knowledge of Seller, threatened by or against the Seller or that relate to or may affect the Business or any of the Purchased Assets, or events or occurrences which constitute, or reasonably could be expected to constitute, grounds for, or the basis of, any such actions, claims, suits, proceedings or investigations. Seller is not subject to any order, judgment, writ, injunction or decree of any court or Governmental Authority or body affecting the Business going forward other than garnishment orders or qualified domestic relations orders applicable to its employees.

     6.8 Tax Matters . Except as set forth in Schedule 6.8, (i) Seller has timely filed, in accordance with applicable law


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