Exhibit 10.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
ASTEC INDUSTRIES, INC.
DOUBLE L INVESTMENTS, INC.
AND
THE "SELLERS" REFERRED TO HEREIN
The Company is a holding company owning in fee simple certain real property, buildings and improvements, cranes, fixtures and other personal property used by Dillman Equipment, Inc. and more particularly described on Exhibit A attached hereto (the "Business Property") and certain other parcels of property unrelated to the operations of Dillman Equipment, Inc. and more particularly described on Exhibit B attached hereto (the "Excluded Property" and together with the Business Property, the "Property").
"Balance Sheet"— as defined in Article 4.18(a)(i).
"Bruce Dillman Note"—that certain Single Payment Note dated January 30, 2001 in the original principal amount of $900,000 by and between the Company as maker and Bruce A. Dillman as payee.
"Business Property"—the property described on Exhibit A attached hereto.
"Buyer's Closing Certificate"-as defined in Article 2.5(d)(ii).
"Buyer's Tax Returns"-as defined in Article 2.6(d).
"Closing Balance Sheet" -as defined in Article 2.2
"Company's Closing Certificate" –as defined in Article 2.5(b).
"Company's Closing Documents"- as defined in Article 4.2(a).
"Company Financial Statements"— as defined in Article 4.18(a).
"Company Indebtedness"— means, whether recourse is secured by or is otherwise available against all or only a portion of the Company’s assets, and whether or not contingent, (i) all obligations of the Company for borrowed money, whether current, funded, secured or unsecured, and every obligation of the Company evidenced by bonds, debentures, notes or similar instruments, (ii) all indebtedness of the Company for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (iii) all indebtedness of the Company created or arising under any conditional sale or other title retention agreement with respect to property acquired by the Company (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all indebtedness of the Company secured by a lien to secure all or part of the purchase price of the property subject to such mortgage or lien, (v) all obligations under leases which have been or must be, in accordance with historical accounting practices of the Company, recorded as capital leases in respect of which the Company is liable as lessee, (vi) any liability of the Company in respect of banker’s acceptances or letters of credit, (vii) all interest, fees and other expenses owed with respect to the indebtedness referred to above, and (viii) all indebtedness referred to above which is directly or indirectly guaranteed by the Company or which the Company has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
"Defect"—as defined in Article 3.4(c).
"Dillman Real Estate"—as defined on Exhibit A.
"Dillman Stock Purchase Agreement"—the agreement by and among Buyer, Dillman Equipment, Inc. and the stockholders of Dillman Equipment, Inc. for the sale of all the shares of the capital stock of Dillman Equipment, Inc. to Buyer.
"Encumbrance"—any charge, claim, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.
"Environment"—soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource.
(b) fines, penalties, judgments, awards, settlements, legal or administrative proceedings, damages, losses, claims, demands and response, investigative, remedial, or inspection costs and expenses arising under Environmental Law or Occupational Safety and Health Law;
"Environmental Law"— any Legal Requirement in effect as of the Effective Closing Date that requires or relates to (a) Releases or Threatened Releases of Hazardous Materials into the Environment, (b) pollution or protection of the Environment or (c) the manufacture, handling, transport, use, treatment, storage, or disposal of Hazardous Materials, other than relating to workers safety, useful products or materials manufactured, distributed or sold by the Company.
"ESA"—as defined in Article 3.4(b).
"Excluded Property"—the property described on Exhibit B attached hereto.
"Facilities Inspection Notice"—as defined in Article 3.4(c).
"Hazardous Activity"—the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, release, storage, transfer, transportation, treatment, or use (including any withdrawal or other use of groundwater) of Hazardous Materials in, on, under, about, or from a property or any part thereof into the Environment.
"Hendrickson Agreement"- that certain Agreement Regarding Conveyance of Real Estate by and between Brian Dillman ("Dillman") and Chris Hendrickson ("Hendrickson") dated December 23, 2004 as amended by that certain Amendment Agreement by and between Dillman and Hendrickson dated March 19, 2008 as to Dillman and June 10, 2008 as to Hendrickson.
"Income Taxes"—federal, state, local or foreign income or franchise Taxes or other Taxes measured in whole or in part by income and any interest and penalties or additions thereon.
"Inspections"—as defined in Article 3.4(a).
"Legal Requirement"—any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.
"Order"—any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.
"Permitted Exceptions"—as defined in Article 4.5.
"Person"—any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.
"Preclosing Balance Sheet"—as defined in Article 2.2.
"Proceeding"—any action, arbitration, audit, hearing, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.
"Property"—the property described on Exhibits A and B attached hereto.
"Release"—any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other releasing into the Environment, whether intentional or unintentional, excluding any Release pursuant to and permitted by any Governmental Authorization.
"Representative"—with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.
"Seller's Tax Returns"- as defined in Article 2.6(d).
"Tax"—any Tax (including any income tax, franchise tax, capital gains tax, gross receipts tax, value added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), imposed, assessed or collected by or under the authority of any Governmental Body.
"Tax Return"—any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threatened"—a claim, Proceeding, dispute, action, or other matter will be deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.
"Title Commitment"—as defined in Article 3.3(a).
"Title Company"—as defined in Article 3.3(a).
"Unaudited Interim Balance Sheet"— as defined in Article 4.18(a)(ii).
"Wirtjes Agreement"- that certain Land Contract executed by and between Leon K. Wirtjes and Kathleen B. Wirtjes and Double L. Investments, Inc. dated February 28, 2005 and recorded March 1, 2005 as document number 290235 in the Crawford County Wisconsin Register of Deed's Office.
| 2.2 | Closing Balance Sheet. |
On or before September 15, 2008, Company shall deliver a preclosing balance sheet of the Company to Buyer for review and approval (the "Preclosing Balance Sheet"). The Preclosing Balance Sheet shall pro forma the balance sheet of the Company as of the Closing Date and when the Company and Buyer agree on the Preclosing Balance Sheet, it shall become the “Closing Balance Sheet”. The Preclosing Balance Sheet and the Closing Balance Sheet shall be prepared in conformity with policies and methods of accounting historically used by the Company on a consistent basis and shall fairly present the financial position and results of operation and cash flows of the Company in all material respects. In the event that the Company and Buyer cannot agree on the Preclosing Balance Sheet, the Closing shall proceed using the Preclosing Balance Sheet prepared by the Company, and all unresolved issues related to the Preclosing Balance Sheet and/or the Closing Balance Sheet shall be submitted to arbitration post-closing in the manner provided by Section 11.2(a) of this Agreement. It is anticipated by Buyer that the only assets that will be reflected on the Preclosing Balance Sheet and the Closing Balance Sheet will be cash and the Business Property net of accumulated depreciation.
2.3 Purchase Price.
The total purchase price for the Stock (the "Stock Purchase Price") shall be an amount equal to:
(a) Three Million Dollars ($3,000,000); plus
(b) that amount equal to the cash and cash equivalents held by the Company as of the Closing Date; minus: that amount equal to the sum of all Company Indebtedness, Liabilities and payables as shown on the Closing Balance Sheet.
(iii) wire transfer instructions; and
(c) Each Seller who is a party to the Dillman Stock Purchase Agreement will deliver to Buyer:
(i) the Dillman Stock Purchase Agreement, executed by such Seller, together with stock certificates of Dillman Equipment, Inc. held by such Seller and other documents required of such Seller in order to complete the obligations of such Seller to facilitate the purchase of such Stock of Dillman Equipment, Inc. by Buyer pursuant to the Dillman Stock Purchase Agreement.
(d) Buyer will deliver the following at Closing:
(iii) sufficient funds to the Company so that the Company may pay in full at Closing all principal and interest due under the Bruce Dillman Note and direct the Company to and ensure that the Company does pay the Bruce Dillman Note at the Closing;
(iv) to Sellers’ Representative the Dillman Stock Purchase Agreement, executed by Astec Industries, Inc. together with payment and other documents required to complete the purchase of the stock of Dillman Equipment, Inc. pursuant to the Dillman Stock Purchase Agreement.
All items delivered by the parties at the Closing will be deemed to have been delivered simultaneously, and no such items will be deemed delivered or waived until all have been delivered.
(a) For a period of six (6) years after the Closing Date, Buyer shall, and shall cause the Company to, retain, and neither destroy nor dispose of, all Tax Returns, books and records (including computer files) of, or with respect to, the activities of the Company for all taxable periods ending on or prior to the Closing Date and to make such books and records available to Sellers on a reasonable basis. After the Closing, the Sellers' Representative shall instruct the Company's tax advisors to provide Buyer copies of all work papers related to sales, use and income tax returns filed since January 1, 2005 and review those work papers with Buyer at the reasonable request of Buyer.
(c) Buyer agrees that no election under Section 338 or Section 338(h)(10) of the Code and any corresponding or similar elections under state, local or foreign tax law shall be made with respect to the Company or the purchase and sale of the Stock hereunder.
Effective immediately following, and conditioned upon consummation of, the Closing, each Seller (each a "Seller Releasing Party") hereby irrevocably and unconditionally releases and forever discharges the Company and its respective successors and assigns (the "Company Released Parties") from any and all claims, charges, complaints, causes of action, damages, agreements and liabilities of any kind or nature whatsoever, including in their capacities as shareholders, officers, directors or employees of the Company, whether known or unknown and whether at law or in equity, arising from conduct occurring on or prior to the Closing Date ("Released Claims"), including without limitation any Released Claims relating to or arising out of such Seller’s ownership of Stock; provided that (a) the term “Released Claims” shall not include, and nothing contained in this Section 2.7 shall release, any claims or rights of a Seller Releasing Party (i) arising from ordinary course accrued liabilities and obligations incurred in connection with the Seller Releasing Party’s employment by the Company on and/or prior to the Closing Date (e.g., accrued salary, vacation, expense reimbursements, etc.), (ii) with respect to any obligations of the Company or Buyer arising under this Agreement or the Dillman Stock Purchase Agreement or under any agreement or document delivered or executed by the Company or Buyer in connection with this Agreement or the Dillman Stock Purchase Agreement, (iii) against the Company or Buyer arising under this Agreement, the Dillman Stock Purchase Agreement or under any other agreement or document delivered or executed by the Company or Buyer in connection with this Agreement or the Dillman Stock Purchase Agreement, or (iv) subject to the limitations set forth in the next sentence of this Section 2.7, for indemnification (and related rights) arising out of the Seller Releasing Party’s service as an officer or director of the Company regardless of whether such indemnification and related rights is pursuant to applicable law, the by-laws or charter of the Company, or any other director or officer indemnification agreement, and (b) this release shall only relate to those claims arising from conduct or omissions occurring on or before the Closing Date. The Sellers, the Company and Buyer hereby agree that if, following the Closing, any amount becomes due from any Seller, pursuant to Section 10.2 in respect of any Damages (a “Loss Payment”), such Seller shall have no rights against the Company, or any director, officer or employee thereof (in their capacity as such), whether by reason of contribution, indemnification, subrogation or otherwise, in respect of any such Loss Payment, and shall not take any action against the Company or any such person with respect thereto; provided, however, the foregoing shall not restrict, or apply to or limit, the rights and remedies of the Sellers under this Agreement and the agreements executed in connection herewith.
Effective immediately following, and conditioned upon consummation of, the Closing, the Company and Buyer (each a "Buyer Releasing Party") hereby irrevocably and unconditionally releases and forever discharges each Seller and their respective successors and assigns (the "Seller Released Parties") from any and all claims, charges, complaints, causes of action, damages, agreements and liabilities of any kind or nature whatsoever, including regarding their capacities as shareholders, officers, directors or employees of the Company, whether known or unknown and whether at law or in equity, arising from conduct occurring on or prior to the Closing Date ("Released Claims"); provided that (a) the term “Released Claims” shall not include, and nothing contained in this Section 2.7 shall release, any claims or rights of a Buyer Releasing Party (i) with respect to any obligations of the Sellers arising under this Agreement or the Dillman Stock Purchase Agreement or under any agreement or document delivered or executed by the Sellers in connection with this Agreement or the Dillman Stock Purchase Agreement, or (ii) against the Sellers arising under this Agreement, the Dillman Stock Purchase Agreement or under any other agreement or document delivered or executed by the Sellers in connection with this Agreement or the Dillman Stock Purchase Agreement, and (b) this release shall only relate to those claims arising from conduct or omissions occurring on or before the Closing Date.
3.1 Conveyance of Excluded Property.
At least thirty (30) days prior to Closing, the Company shall convey, all of its right, title and interest in and to the Excluded Property to the Sellers at its fair market value as determined by an appraisal, and the Company shall, upon request by the Buyer, furnish to the Buyer copies of all the conveyance documents relating to the Excluded Property. The conveyance of the Excluded Property shall be accomplished by a so-called "quitclaim" conveyance instrument without any representation or warranty by the Company whatsoever and Sellers agree to indemnify, defend and hold harmless the Company and Buyer after the Closing from and against any and all Company Indebtedness, Liabilities, obligations, costs or expenses whatsoever not paid prior to the Closing relating to the Excluded Property, whether or not such Company Indebtedness, Liability, obligation, cost or expense relates to the period arising before or after the disposition of the Excluded Property. The conveyance of the Excluded Property to Sellers shall specifically provide that Sellers shall assume and agree to pay: (i) all general real estate and personal property Taxes unpaid as of Closing whether or not yet due and payable with respect to the Excluded Property; (ii) all special assessments levied on the Excluded Property that are not paid prior to Closing and (iii) any Company Indebtedness, Liability or obligation secured by the Excluded Property (other than regarding the Bruce Dillman Note or Taxes accrued on the Closing Balance Sheet) and the Company or the Sellers shall obtain the release of the Company from any such Company Indebtedness, Liability or obligation secured by the Excluded Property (other than regarding the Bruce Dillman Note or Taxes accrued on the Closing Balance Sheet) prior to the Closing. Buyer shall have no liability of any nature whatsoever relating to the Excluded Property.
3.2 Taxes.
(a) Business Property. All real estate and personal property Taxes and special assessments of any type, nature or description due and payable with respect to the Business Property for all years prior to Closing shall be paid by the Company prior to the Closing. All real estate taxes, personal property Taxes and special assessments of any nature for 2008 shall be pro rated between the Buyer and the Seller and the unpaid portion of such taxes and assessments for the period prior to the Closing Date shall be shown as an accrual on the Closing Balance Sheet.
(b) Excluded Property. Sellers shall have responsibility for all general real estate and personal property Taxes and special assessments on the Excluded Property not paid prior to Closing. Buyer shall have no liability of any nature whatsoever relating to general real estate Taxes, personal property Taxes or special assessments on the Excluded Property.
3.3 Title Insurance.
(a) Buyer shall obtain a commitment to issue title insurance for the Business Property in the amount equal to the Stock Purchase Price (the "Title Commitment") from an agent of Lawyers Title Insurance Corporation or such other company as determined by Buyer (the "Title Company") within twenty (20) days of the execution of this Agreement by Buyer and the Company.
(b) Buyer shall have until the later of: (i) ten (10) days from the date the Buyer receives the final survey for the Business Property or (ii) September 15, 2008 to provide the Company with written notice of any commercially reasonable objection, excluding a Permitted Exception. The Company shall then remove such exception that Buyer has objected to on or prior to Closing, or elect not to remove such exception by written notice to Buyer. Should the Company elect not to remove any exception, Buyer may either (1) terminate this Agreement by giving written notice to terminate within five (5) days of receiving notice of the Company's election not to remove any exception or, (2) proceed to Closing and take title subject to such exception, which exception shall then be deemed a Permitted Exception. Buyer shall be responsible for the premium for the issuance of an owner's title insurance policy pursuant to the Title Commitment.
(c) Company shall pay all transfer Taxes, if any, and record any and all documents necessary to remove encumbrances on the Business Property. Buyer shall pay to record any deed. All other costs or expenses relating to the performance of the obligations hereunder and the consummation of the transactions contemplated herein that have not been specifically allocated to either party shall be divided equally between the parties.
(a) Buyer shall be permitted to conduct any inspections, assessments, investigations, testing and/or sampling in connection with the Property, including, without limitation, with respect to any soil, water, air, paint or building material (collectively, the "Inspections") of the Property at reasonable hours upon at least three (3) business days prior written notice to Seller. Prior to Closing, Seller shall provide Buyer full access to the books, records, files, financial reports, plans and specifications, if any, that are in Seller’s possession or control that relate to the Property for the purpose of performing any tests, investigations and analyses which Buyer reasonably deems advisable.
(b) Buyer may conduct an asbestos study and an environmental site assessment ("ESA") of the Property with any such studies to commence no later than August 20 2008. Seller shall cooperate in the completion of the ESA providing full access to the Property and relevant documents and providing accurate answers to questions and questionnaires of the ESA contractor for which the Company is aware. At the Company or Sellers’ option, Buyer shall repair any damage to the Property caused by any entry upon the Property by Buyer and shall indemnify and hold the Company and Sellers harmless from any claims for liens, monetary loss, damage, personal injury or death caused by Buyer's activities on the Property or the activities of its agents, representatives, employees and/or contractors. Such indemnification obligation shall survive the termination of this Agreement.
(c) Buyer shall give written notice (the "Facilities Inspection Notice") to the Company or on before the later of (i) ten (10) days after the receipt of both the asbestos study and the ESA; or (ii) September 15, 2008 as to any and all Defects, as defined herein, pertaining to the Property. For purposes of this Agreement, a "Defect" is defined as a condition or conditions, or evidence of a condition or conditions, that would: (1) materially impair the health or safety of occupants of the Property; (2) result in a material violation of any applicable public or private law, standard or covenant relating to the Property; (3) materially impair the ability of Buyer to continue to use the Business Property as it is currently being used; or (4) be estimated to cost, in the aggregate, an amount in excess of $50,000.00 to repair, correct and/or remediate.
(d) The Company shall have ten (10) days after receipt of the Facilities Inspection Notice to commence measures to repair or remedy any Defects. Should the Company elect not to repair or remedy any Defect, Buyer may terminate this Agreement by giving written notice to terminate within five (5) days of receiving notice of the Company's election not to repair or remedy any Defect.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS
(a) Schedule 4.1(a) contains a complete and accurate list for the Company of its name, its jurisdiction of incorporation, other jurisdictions in which it is authorized to do business, and its capitalization (including the identity of each stockholder and the number of shares of the Stock held by each). The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Wisconsin, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under any Contracts. The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of all states and/or other jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except for such jurisdictions as to which the failure to be so qualified would not have a Material Adverse Effect.
(a) This Agreement constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms. Upon the execution and delivery by the Company of the Company's Closing Certificate and any other documents required to be delivered by the Company at Closing (collectively the "Company's Closing Documents") to which the Company is a party, the Company's Closing Documents will constitute the legal, valid, and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except that such enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. The Company has all necessary power, authority, and capacity to execute and deliver the Company's Closing Documents and to perform its obligations under the Company's Closing Documents.
(iv) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract (including, without limitation, any loan documents) to which the Company is a party or, to which any of the its property is subject, except for such violations, breaches, defaults or other occurrences which would not prevent or delay the Company from performing its obligations under this Agreement and the Company's Closing Documents and/or which would not have a Material Adverse Effect on the Company's results or operations, financial condition, assets or business; or
(c) This Agreement constitutes the legal, valid, and binding obligation of such Seller, enforceable against such Seller in accordance with its terms. Upon the execution and delivery by such Seller of the Sellers’ Closing Certificate and any other documents required to be delivered by such Seller at Closing (collectively the "Sellers’ Closing Documents") to which such Seller is a party, the Sellers’ Closing Documents will constitute the legal, valid, and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms, except that such enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. Such Seller has all necessary power, authority, and capacity to execute and deliver the Sellers’ Closing Documents and to perform its obligations under the Sellers’ Closing Documents.
(b) Each such Seller is the sole record and beneficial owner of the shares of Stock set forth opposite such Seller’s name on Schedule 4.3(b) attached hereto free and clear of any Encumbrances, including Encumbrances of spouses, former spouses or other family members, or other stockholders (or former stockholders) of the Company, other than as imposed by applicable securities laws.
The books of account, minute books, stock record books, and other records of the Company, all of which have been made available to Buyer, are complete and correct in all material respects and have been maintained in accordance with sound business practices. The minute books of the Company contain in all material respects accurate records of all meetings held of, and corporate action taken by, the stockholders, the board of directors, and committees of the board of directors of the Company, and no meeting of any such stockholders, board of directors, or committee has been held for which minutes have not been prepared and are not contained in such minute books to the extent that the action taken at such meeting would have a material effect on the Company. At the Closing, all of those books and records will be in the possession of the Company.
4.5 Title, Condition and Sufficiency of Property.
(a) The Company has good and marketable fee simple title to the Business Property, free and clear of all liens and Encumbrances, subject only to the Permitted Exceptions, as defined herein, (including matters otherwise approved or waived by Buyer pursuant to this Agreement). The title shall be subject to (i) easements, restrictions and other matters of record (which do not adversely affect the value of the Business Property in accordance with its existing use by an amount in excess of $50,000.00); (ii) ad valorem real and personal property Taxes for 2008 which are not yet due and payable and which shall be prorated between Buyer and Seller as of the Closing Date as provided in Article 3.2(a) and shall be shown as an accrual on the Closing Balance Sheet; and (iii) the potential property line dispute between the Dillman Property and the Knapp property to the south described on Schedule 4.5 (the foregoing items collectively, the "Permitted Exceptions").
(b) Schedule 4.5 sets forth a correct and complete list of (i) all real property currently owned by the Company, including the Business Property and the Excluded Property; (ii) all other material agreements or rights under which any Person has the right to occupy or use any Property owned by the Company; (iii) all other material agreements or rights under which the Company has the right to occupy or use any real property owned by others; and (iv) any other material lease or agreement of the Company related to the Property.
(c) All buildings and other improvements located on the Business Property that are necessary or desirable for the conduct of the business of Dillman Equipment, Inc. as currently conducted (including without limitation all water, sewer, gas, electrical and HVAC systems servicing Dillman Equipment, Inc.) are in satisfactory operating condition normal wear and tear excepted..
(d) To the Knowledge of the Company and except as disclosed on Schedule 4.5 all buildings and other real estate improvements located on the Business Property, and the use of the Business Property by the Company, comply in all material respects with all Legal Requirements relating to zoning and land use and with all easements, covenants and other restrictions applicable to the Business Property.
(e) The Business Property: (i) is adequately serviced by all utilities necessary for the conduct of the business of Dillman Equipment, Inc. as currently conducted on the Business Property; (ii) has adequate means of ingress and egress, either directly or by means of perpetual easements or rights-of-way that run with the Business Property; (iii) has adequate parking that is sufficient to meet the needs of the employees of Dillman Equipment, Inc. and its business invitees and to comply with applicable Legal Requirements; and (iv) is not located in whole or in part within an area identified as a flood hazard area by any Governmental Body.
(f) The Company has no leased real property that it currently occupies or is in possession of through real property leases. No certificate of occupancy is required to be obtained from any Governmental Body with respect to the Business Property. To the Knowledge of the Company the buildings, improvements, and fixtures located on the Business Property are (i) in compliance with all applicable zoning, health, safety, occupancy, use and other municipal ordinances and Legal Requirements; and (ii) in good condition and repair, subject only to ordinary wear and tear.
Except as set forth in Schedule 4.7, to the Knowledge of the Company, the Company has no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected in the Unaudited Interim Balance Sheet, liabilities incurred in the Ordinary Course of Business since the date thereof, and liabilities of a type not required to be reflected on a balance sheet prepared in accordance with the Company’s historical method of accounting, none of which, to the Knowledge of the Company, will have a Material Adverse Effect.
(b) Schedule 4.8(b) contains a complete and accurate list of all audits after 2004 of all such Tax Returns, including a summary description of the nature and outcome of each audit. All deficiencies proposed as a result of such audits have been paid, reserved against, settled, or, as described in Schedule 4.8(b), are being contested in good faith by appropriate proceedings. Schedule 4.8(b) describes all adjustments to the United States federal income Tax Returns filed by the Company or any group of corporations including the Company for all Taxable years since January 1, 2005, and the resulting deficiencies proposed by the IRS. To the Knowledge of the Company, and except as described in Schedule 4.8(b), no Seller nor the Company has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment of Taxes of the Company or for which the Company may be liable.
(d) No Legal Proceeding is pending or, to the Knowledge of the Company, has been threatened against or with respect to the Company in respect of any Tax. There are no unsatisfied liabilities for Taxes (including liabilities for interest, additions to Tax, and penalties thereon and related expenses) with respect to any notice of deficiency or similar document received by the Company with respect to any Tax (other than liabilities for Taxes asserted under any such notice of deficiency or similar document which are being contested in good faith by the Company and with respect to which appropriate reserves for payment have been established). There are no liens for Taxes upon any of the assets of the Company except liens for current Taxes not yet due and payable.
(f) The Company has not been a member of any "Affiliated Group" (as defined in Section 1504(a) of the Internal Revenue Code) or any combined, consolidated or unitary group, and the Company has no liability for Taxes of any other Person as a consequence thereof. The Company is not and has not ever been, a party to or bound by and Tax indemnity agreement, Tax sharing agreement, Tax allocation agreement or similar Contract.
(ii) to its Knowledge, the Company has not received at any time since January 1, 2005 any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (a) any actual, alleged, possible, or potential material violation of, or failure to materially comply with, any Legal Requirement, or (b) any actual, alleged, possible, or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.
(a) To the Knowledge of the Company, Schedule 4.10(a) sets forth all pending Proceedings: (i) that have been commenced by or against the Company; or (ii) that have been commenced by or against any Sellers that relate to or could reasonably be expected to affect the business of, or any of the assets owned or used by, the Company; or (iii) that otherwise relate to or could reasonably be expected to affect the business of, or any of the assets owned or used by, the Company; or (iv) that challenge, or that could reasonably be expected to have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.
(iii) neither the Sellers nor the Company has received, at any time since January 1, 2005, any written notice or other written communication from any Governmental Body or any other Person regarding any actual, alleged, possible, or potential violation of, or failure to comply with, any term or requirement of any Order to which the Company, or any of the assets owned or used by the Company, is or has been subject.
(ii) no officer, director, agent, employee, consultant, or contractor of the Company is bound by any Contract that purports to limit the ability of such officer, director, agent, employee, consultant, or contractor to (a) engage in or continue any conduct, activity, or practice relating to the business of the Company, or (b) assign to the Company or to any other Person any rights to any invention, improvement, or discovery.
(a) To the Knowledge of the Company, the Company is, and at all times has been, in compliance with, and has not been and is not in violation of or liable under, any Environmental Law. The Company has no basis to expect, nor has the Company or any other Person for whose conduct the Company is or may reasonably be held to be responsible received, any actual or Threatened order, notice, or other communication from (i) any Governmental Body or private citizen acting in the public interest, or (ii) the current or prior owner or operator of any property, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or Threatened obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any properties or assets (whether real, personal, or mixed) in which Sellers or the Company has or had an interest including, but not limited to, the Property (singularly, a "Property Interest" and, collectively, the "Property Interests"), or with respect to any Property Interests at or to which Hazardous Materials were generated, manufactured, refined, transferred, imported, used, or processed by the Company, or any other Person for whose conduct the Company may be held responsible, or from which Hazardous Materials have been transported, treated, stored, handled, transferred, disposed, recycled, or received.
(c) The Company has no basis to expect, nor has the Company or any other Person for whose conduct the Company is or may be held responsible, received, any citation, directive, inquiry, notice, Order, summons, warning, or other communication that relates to Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential violation or failure to comply with any Environmental Law, or of any alleged, actual, or potential obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any Property Interests, or with respect to any property or facility to which Hazardous Materials generated, manufactured, refined, transferred, imported, used, or processed by the Company, or any other Person for whose conduct the Company is or may be held responsible, have been transported, treated, stored, handled, transferred, disposed, recycled, or received.
(d) To the Knowledge of the Company, neither the Company or any other Person for whose conduct the Company is or may be held responsible, has any Environmental, Health, and Safety Liabilities with respect to any Property Interests, or at any property geologically or hydrologically adjoining any such property or assets. To the Knowledge of the Company, no Hazardous Material is present now, nor has any Hazardous Material been present within the past twelve (12) months, on, at, in, or under the property in a quantity exceeding one hundred (100) pounds, except as listed on Schedule 4.14(d).
(e) To the Knowledge of the Company, there are no Hazardous Materials present in violation of any Environmental Laws on or in the Environment at any Property Interests, or at any geologically or hydrologically adjoining property, including any Hazardous Materials contained in barrels, above or underground storage tanks, landfills, land deposits, dumps, equipment (whether moveable or fixed) or other containers, either temporary or permanent, and deposited or located in land, water, sumps, or any other part of such properties or such adjoining property, or incorporated into any structure therein or thereon. Neither the Company, nor any other Person for whose conduct the Company is or may be held responsible, or any other Person, has permitted or conducted, or is aware of, any Hazardous Activity conducted with respect to any Property Interests except in full compliance with all applicable Environmental Laws.
(f) To the Knowledge of the Company, there has been no Release or Threat of Release of any Hazardous Materials at or from any Property Interests, or at any other locations where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by the Property Interests, or any geologically or hydrologically adjoining property, whether by Sellers, the Company, or any other Person.
The Company does not have and has never had any employees. The Company has never been a party to any collective bargaining or other labor Contract. The Company has never had any employment, bonus, deferred compensation, pension, stock option, stock appreciation right, profit sharing or retirement plan, arrangement or practice or any medical, vacation, retiree medical, severance pay plan or any other agreement or fringe benefit, arrangement or practice of any nature, type or description.
Since January 1, 2005, neither the Company nor any director, officer, agent, or employee of the Company, or any other Person acting for or on behalf of the Company, has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company, or (iv) in violation of any Legal Requirement, (b) established or maintained any fund or asset that has not been recorded in the books and records of the Company.
4.18 Financial Statements.
(a) The Company has delivered to Buyer the following financial statements and notes (collectively, the "Company Financial Statements"):
(i) The internally generated balance sheet of the Company as of December 31, 2007 (the "Balance Sheet"), and the related unaudited statements of income, unaudited statements of shareholders’ equity and unaudited statements of cash flows of the Company for the periods then ended; and
(ii) the internally generated balance sheet of the Company as of June 30, 2008, (the "Unaudited Interim Balance Sheet") and the related unaudited statement of income, unaudited statement of shareholders’ equity and unaudited statement of cash flows of the Company for the seven months then ended.
(b) The Company Financial Statements present fairly in all material respects the financial position of the Company as of the respective dates thereof and the results of operations and cash flows of the Company for the periods covered thereby.
(c) The Company has not incurred contingent or other liabilities to the extent such liabilities and obligations were customarily recorded and/or disclosed under the method of accounting consistently used by the Company, either matured or unmatured, except for liabilities identified as such in the “liabilities” column of the Unaudited Interim Balance Sheet or as set forth on Schedule 4.7.
(d) The Closing Balance Sheet shall be prepared in conformity with policies and methods of accounting historically used by the Company on a consistent basis and fairly present in all material respects the financial position of the Company as of the Closing Date and all Company liabilities or obligations will be reflected on the Closing Balance Sheet to the extent such liabilities and obligations were customarily recorded and/or disclosed under the method of accounting consistently used by the Company, and for liabilities identified as such in the “liabilities” column of the Unaudited Interim Balance Sheet or as set forth on Schedule 4.7.
4.19 Disclosure.
To the Knowledge of the Company no representation or warranty of the Company or the Sellers in this Agreement omits to state a material fact necessary to make the statements herein taken as a whole, in light of the circumstances in which they were made, not misleading.
OTHER THAN THE REPRESENTATIONS AND WARRANTIES OF EITHER THE COMPANY OR THE SELLERS EXPRESSLY SET FORTH ABOVE IN ARTICLE IV, THE COMPANY, THE SELLERS AND THE SELLERS’ REPRESENTATIVE MAKE NO ADDITIONAL REPRESENTATION, STATEMENT OF FACT OR WARRANTY OF ANY KIND OR NATURE, EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE) WITH RESPECT TO THE COMPANY, THE STOCK, THE ASSETS OF THE COMPANY OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ALL OF WHICH ARE HEREBY DISCLAIMED.
(a) This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Upon the execution and delivery by Buyer of the Buyer's Closing Certificate and any other documents required to be delivered by Buyer at Closing (collectively, the "Buyer's Closing Document"), the Buyer's Closing Documents will constitute the legal, valid, and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms. Buyer has the absolute and unrestricted right, power, and authority to execute and deliver this Agreement and the Buyer's Closing Documents and to perform its obligations under this Agreement and the Buyer's Closing Documents.
(iv) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract (including without limitation any loan documents) to which Buyer is a party or, to the Knowledge of Buyer, to which any of its property is subject; or
Except as set forth Schedule 5.2(b), none of the Sellers nor the Company is or will be required to give any notice to or obtain any Consent from any Person, including without limitation, any owner or mortgage/lien holder in connection with the execution, delivery or performance of this Agreement or the consummation or performance of any of the Contemplated Transactions.
5.5 Access.
Buyer has accessed the Company's shareholders, directors, officers, employees, records and facilities to the extent Buyer has deemed necessary to enable Buyer to fully evaluate the merits and risks of closing the transactions contemplated hereby. The Company and Sellers have made available to Buyer all documents and other information that the Buyer has requested. The Buyer has notified the Company and Sellers of any fact, condition or circumstance of which Buyer has knowledge which would constitute a breach, misrepresentation or default by the Company and Sellers under this Agreement.
5.6 Status.
Buyer is purchasing the Stock for its own account, for investment only and not with a view to, or any present intention of, effecting a distribution of such Stock or any part thereof. Buyer acknowledges that the Stock has not been registered under the Securities Act or the securities laws of any state or other jurisdiction and cannot be disposed of unless they are subsequently registered under the Securities Act and any applicable state laws or an exemption from such registration is available. Buyer is an “accredited investor” within the meaning of Regulation D under the Securities Act. Buyer understands that it must bear the economic risk of the investment represented by the purchase of the Stock for an indefinite period.
The Company agrees that, during the period between the execution of this Agreement and the earlier of (x) the termination of this Agreement in accordance with Article 9 and (y) the Closing (the “Interim Period”), except as set forth on Schedule 6.1(a), and except with the consent of the Buyer, the Company (a) will conduct its business in the Ordinary Course of Business; (b) will not pay any dividends or make any other distributions to the Sellers other than in the Ordinary Course of Business; (c) will not make any capital expenditure or commitment therefor, except in the Ordinary Course of Business but in no event in excess of Seventy-five Thousand Dollars ($75,000) in the aggregate; (d) will not redeem, purchase, otherwise acquire, or issue any shares of its capital stock or grant any option, warrant or other right to purchase or acquire any such shares; (e) will not borrow money or make any loan to any Person except in the Ordinary Course of Business; and (f) will not cancel or waive any claims or rights of substantial value.
6.2 Access.
During the Interim Period, the Company shall allow the Buyer and its Representatives to have reasonable access to its premises, and to its properties, books and records during normal working hours, provided the Buyer gives the Company reasonable advance notice, and such access does not unreasonable interfere with the conduct of business of the Company and shall furnish the Buyer with such financial and operating data and other information with respect to the properties of the Company as the Buyer shall from time to time reasonably request. Following the Closing, the Sellers agree to use their Best Efforts to promptly furnish to Buyer information in their possession to enable Buyer to properly prepare financial statements and tax returns and other documents required to be filed with a Governmental Body. Buyer and the Company confirm that (a) the terms of that certain letter agreement of Buyer dated December 20, 2007, and acknowledged December 24, 2007 by Dillman Equipment, Inc. (the “Confidentiality Agreement”), shall apply to this Agreement as if fully set forth in this Agreement and as if Company were a party thereto and shall be and remain in full force and effect and shall not be deemed altered or amended by this Agreement, and (b) information regarding the Company or its status disclosed pursuant to this Agreement shall be deemed “Confidential Information” under such letter agreement. Buyer confirms that Buyer and its Affiliates will comply with their respective obligations under the Confidentiality Agreement. If the transactions contemplated by this Agreement are consummated at the Closing, the Confidentiality Agreement will terminate on the Closing Date.
During the Interim Period, Sellers will not, and will not permit the Company or any of their Representatives to, directly or indirectly solicit, initiate, respond to or encourage any inquiries or proposals from, discuss or negotiate with, or provide any non-public information to, any Person (other than Buyer) relating to any transaction involving the sale of the business or assets of the Company, or any of the capital stock of the Company, or any merger, consolidation, business combination, or similar transaction involving the Company.
6.6 Required Approvals.
(a) satisfy all the conditions precedent to its own respective obligations hereunder;
Each of the Sellers (as to itself and not with respect to the other Sellers) agrees, during the Interim Period, to use its Best Efforts to: (a) satisfy all the conditions precedent to its own obligations hereunder; (b) obtain Consents necessary or desirable with respect to such Seller for the consummation by such Seller of the transactions contemplated by this Agreement with respect to such Seller; and (c) remove any condition or state of facts pertaining to such Seller that otherwise would make consummation by Seller of the transactions contemplated hereby a violation of applicable law or a breach by Seller of a Contract to which such Seller is a party.
Buyer agrees that, as promptly as practicable during the Interim Period, it shall use its Best Efforts to: (a) satisfy all the conditions precedent to its own obligations hereunder; (b) obtain Consents necessary or desirable for the consummation of the transactions contemplated by this Agreement; (c) cooperate with the Company in obtaining all consents identified in Schedule 4.2(b)(i), (d) cooperate with Sellers and the Company in their respective efforts to satisfy all the conditions precedent to the Sellers’ or Buyer’s obligations hereunder; and (d) remove any condition or state of facts pertaining to Buyer that otherwise would make consummation of the transactions contemplated hereby a violation of applicable law or a breach of a Contract to which Buyer is a party.
6.8 Notification.
During the Interim Period, each of the Sellers will reasonably promptly notify Buyer in writing if such Seller acquires Knowledge of any fact or condition that causes or constitutes a material breach of any of representations and warranties of such Seller as of the date of this Agreement, or if such Seller acquires Knowledge of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute such a breach of such representations or warranties had such representations or warranties been made as of the time of occurrence or discovery of such fact or condition. During the same period, each Seller will reasonably promptly notify Buyer of the occurrence of any material breach of any covenant of such Seller in this Article 6 or, upon such Seller acquiring Knowledge thereof, of the occurrence of any event that may make the satisfaction of the conditions in Article 7 impossible or unlikely.
During the Interim Period, the Company will reasonably promptly notify Buyer in writing if the Company acquires Knowledge of any fact or condition that causes or constitutes a material breach of any of representations and warranties of the Company as of the date of this Agreement, or if the Company acquires Knowledge of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute such a breach of such representations or warranties had such representations or warranties been made as of the time of occurrence or discovery of such fact or condition. During the same period, the Company will reasonably promptly notify Buyer of the occurrence of any material breach of any covenant of the Company in this Article 6 or, upon the Company acquiring Knowledge thereof, of the occurrence of any event that may make the satisfaction of the conditions in Article 7 impossible or unlikely.
During the Interim Period, Buyer will reasonably promptly notify the Company and Sellers’ Representative in writing if Buyer acquires knowledge of any fact or condition that causes or constitutes a material breach of any of representations and warranties of Buyer as of the date of this Agreement, or if Buyer acquires knowledge of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute such a breach of such representations or warranties had such representations or warranties been made as of the time of occurrence or discovery of such fact or condition. During the same period, Buyer will reasonably promptly notify the Company and Sellers’ Representative of the occurrence of any material breach of any covenant of Buyer in this Article 6 or, upon the Buyer acquiring knowledge thereof, of the occurrence of any event that may make the satisfaction of the conditions in Article 8 impossible or unlikely.
6.9 Share Restrictions.
Effective at, and subject to, the Closing, each Seller hereby waives any transfer restrictions or rights of first refusal or rights of first offer that such Seller had in the past, or has (whether by contract or otherwise), with respect to the transfer of the Stock to Buyer pursuant to the terms of this Agreement at or in connection with the Closing.
7.1 Accuracy of Representations.
The representations and warranties of the Company and the Sellers in this Agreement must have been accurate in all material respects as of the date of this Agreement and, solely with respect to Sections 4.1, 4.2, 4.3, and 4.17, must be accurate in all material respects as of the Closing Date as if made on the Closing Date, except for representations and warranties expressly stated to relate to a specific date, in which case such representations and warranties shall be true and correct on such earlier date and except for such inaccuracies, individually or in the aggregate, which do not constitute a Material Adverse Effect.
7.2 No Material Adverse Change.
Since the date of execution of the Agreement and as of the Closing Date, there shall have been no material adverse change in the Business Property or in the business, operations, prospects, assets, or condition of the Company, taken as a whole and no event has occurred or circumstance exists that could reasonably be expected to result in such a material adverse change provided however, that in determining whether such a material adverse change has occurred, any effect to the extent attributable to the following shall not be considered: (a) changes in applicable law or regulations or in prevailing interest rates; (b) changes in general economic conditions in the United States or in the industry in which the Company and its Subsidiaries operate; (c) any actions required to be taken or prohibited pursuant to the terms of this Agreement; and (d) any effects resulting from a public announcement of this Agreement.
(a) All of the covenants and obligations that Sellers and the Company are required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects.
(b) On the Closing Date, (i) Seller’s title to the Business Property shall be good and marketable and free and clear of all liens and encumbrances in compliance with Section 3.3 (b),subject only to the Permitted Exceptions; and (ii) the Title Company shall be unconditionally obligated and prepared, subject to the payment of the applicable title insurance premium and other related charges, to issue to Buyer an owner's title insurance policy for the Business Property in compliance with the Title Commitment.
(c) There shall be no unremedied or unwaived Defects.
(d) On the Closing Date, no part of the Business Property shall have been acquired, by authority of any governmental agency or condemning authority in the exercise of its power of eminent domain, nor on the Closing Date shall Seller have received written notice of any pending condemnation.
(e) Each document required to be delivered by the Company or Sellers pursuant to Article 2 must have been delivered.
(f) All of the agreements, other documents or certificates, or actions required to be entered into, delivered and/or taken at or prior to the Closing Date (other than by Buyer) in accordance with Article 2, including any actions or deliveries of Persons not a party hereto, shall have been entered into, delivered and or taken, as applicable.
(i) the opinion of Shuttleworth & Ingersoll, P.L.C. dated the Closing Date, in substantially the form attached hereto as Exhibit 7.5(a)(i).;
(ii) documents evidencing the conveyance of the Excluded Property and any Indebtedness associated therewith to Sellers, in form and substance reasonably satisfactory to Buyer;
(iii) release of the Company from any Indebtedness, Liability or obligations secured by, the Excluded Property (except for the Bruce Dillman Note and Taxes) in form and substance reasonably satisfactory to Buyer; including, but not limited to, the release of the Company from obligation whatsoever under the Wirtjes Agreement and the Hendrickson Agreement;
(iv) ESA reports for each parcel of Property, reflecting no uncured or unwaived Defect;
(v) the Title Commitment for the Business Property in compliance with Section 3.3(b); and
7.8 Officer and Director Resignations.
All officers and directors of the Company shall have delivered their written resignations from such offices, effective as of the Closing Date.
(d) The sale and purchase of the capital stock of Dillman Equipment, Inc shall be completed simultaneously in accordance with the Dillman Stock Purchase Agreement.
Each of the following documents must have been delivered to Sellers' Representative:
(i) the opinion of Chambliss, Bahner & Stophel, P.C. dated the Closing Date, in substantially the form attached hereto as Exhibit 8.4.
(b) by Buyer pursuant to the terms of Article 3.3(b) or Article 3.4(d);
Articles 4.8, 4.14, and 4.18.
(b) The representations and warranties of the Company and Sellers contained in the following provisions of this Agreement shall indefinitely survive after the Closing Date:
Article 4.3.
(c) The representations and warranties of Buyer contained in Article 5.2, 5.5 and 5.6 of this Agreement shall indefinitely survive after the Closing Date.
Provided further that, if prior to the expiration of the applicable survival period with respect to a good faith claim for indemnity hereunder, the indemnifying parties shall have been notified by the Buyer of such claim and such claim shall not have been finally resolved before the expiration of such survival period, any representation, warranty, covenant or agreement that is the basis for such claim shall continue to survive as to such claim and shall remain a basis for indemnity as to such claim until such claim is finally resolved. No claim under this Article 10 shall be valid if made after expiration of the applicable survival period.
10.2 Indemnification by Sellers.
(a) Beginning after the Closing and subject to the limits and terms set forth in this Article 10, the Sellers will, severally and not jointly (on a pro-rata basis, based on the proportion that the proceeds received by each such Seller in connection with the transactions contemplated hereby bears to the proceeds received by all Sellers in connection with the transactions contemplated hereby), indemnify, defend and hold harmless Buyer, the Company and their respective Representatives (collectively, the "Buyer Indemnified Persons") for any loss, liability, claim, damage, or expense (including reasonable costs of investigation, defense and attorneys’ fees), whether or not involving a third-party claim (collectively, "Damages"), incurred by Buyer to the extent resulting from:
(i) any breach of any representation or warranty made by the Company at or prior to Closing in this Agreement or in the Company’s Closing Certificate;
(ii) any breach by the Company at or prior to the Closing of any covenant or obligation of the Company in this Agreement; or
(iii) Company's ownership, use or disposition of the Excluded Property.
(b) Beginning after the Closing and subject to the limits and terms set forth in this Article 10, each Seller as to itself will indemnify, defend and hold harmless Buyer, the Company and their respective Representatives (collectively, the "Buyer Indemnified Persons") for any Damages incurred by Buyer to the extent resulting from:
(i) any breach of any representation or warranty made by such Seller at or prior to Closing in this Agreement or in the Seller’s Closing Certificate;
(ii) any breach by such Seller of any covenant or obligation of such Seller in this Agreement.
To the extent such Damages under clause (a) or (b) are covered by applicable insurance policies, including insurance policies which become effective on or after the Closing Date, Sellers shall be excused from liability under this Article 10. To the extent Sellers are excused from liability under this Article 10 solely because the Damages are covered by applicable insurance policies, the parties hereby waive any subrogation rights which their respective insurance carriers may have against Sellers under this Section 10.2. Rather, the Sellers shall be considered to be additional insureds.
10.3 Indemnification and Payment of Damages by Buyer and the Company.
Buyer and the Company will jointly and severally indemnify, defend and hold harmless Sellers and their respective Representatives (collectively, the “Seller Indemnified Persons”) for any Damages incurred by Sellers to the extent resulting from (a) any breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement, or (b) any breach by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on its behalf) in connection with any of the Contemplated Transactions.
10.4 Indemnity Limitations—Sellers.
Notwithstanding any provision of this Article 10 to the contrary,
(a) The Sellers will have no liability (for indemnification or otherwise) under Section 10.2 until, and only to the extent that, the cumulative total of all Damages with respect to Section 10.2 exceeds Thirty Three Thousand Dollars ($33,000) (the “Deductible”), and the maximum aggregate amount for which the Sellers shall be liable to all Buyer Indemnified Parties taken together for Damages under Section 10.2 shall not exceed Five Hundred Thousand Dollars ($500,000) (the “Cap”); provided, however, that the Buyer Indemnified Parties shall not be subject to the limitations of the Deductible or the Cap in respect of claims for indemnification from a Seller for all Damages in connection with the breach by the Company or a Seller of any of his, her or its representations or warranties contained in Section 4.2(c), Section 4.3, Section 4.17, or a breach of the indemnification provisions of Section 3.1 and Section 10.2(a)(iii). The total cumulative amount of Damages for which the Sellers may be liable to the Buyer Indemnified Parties under this Article 10 arising from any breach or inaccuracy of the representations and warranties contained in Section 4.2(c), Section 4.3, Section 4.17, or a breach of the indemnification provisions of Section 3.1 and Section 10.2(a)(iii). shall be the aggregate Stock Purchase Price, with the liability of each Seller further limited (as in the case of the Cap) to his or her pro rata portion of the Damages based on the proportion that the proceeds received by each such Seller in connection with the transactions contemplated hereby bears to the proceeds received by all Sellers in connection with the transactions contemplated hereby.
(b) The amount of any Damages sought to be recovered by the Buyer Indemnified Parties under this Article 10(i) shall not include any incidental, indirect or consequential damages or any loss of profits, except to the extent included in claims for indemnification made in respect of third party claims against Buyer Indemnified Parties that seek such damages, and (ii) shall be net of any tax benefit obtained by such Buyer Indemnified Party or Seller Indemnified Party as a result of such Damages and the underlying facts associated with such Damages.
.
10.5 Indemnity Limitations—Buyer.
Buyer will have no liability (for indemnification or otherwise) under Section 10.3 until, and only to the extent that, the cumulative total of all Damages with respect to such matters exceeds Fifty Thousand Dollars ($50,000). Notwithstanding the foregoing limitation, this Section 10.5 shall not apply to: (i) any breach by Buyer of the representations or warranties of Sections 5.5 or 5.6; or (ii) any covenant or obligations of Buyer under this Agreement to be performed after the Closing Date.
10.6 Procedure for Indemnification—Third Party Claims.
(a) Promptly after receipt by an indemnified party under Articles 10.2, or 10.3 of notice of the commencement of any Proceeding against it, such indemnified party will, if a claim is to be made against an indemnifying party under such Article, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Article 10.6(a) is brought against an indemnified party the indemnifying party will be entitled to participate in such Proceeding and, to the extent that it wishes (unless (i) the indemnifying party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate, or (ii) the indemnifying party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such Proceeding and provide indemnification with respect to such Proceeding), to assume the defense of such Proceeding with counsel reasonably satisfactory to the indemnified party and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be liable to the indemnified party under this Article 10 for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding, other than reasonable costs of investigation. If the indemnifying party assumes the defense of a Proceeding, (i) no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party's consent unless the sole relief provided is monetary damages that are paid in full by the indemnifying party; and (ii)the indemnified party will have no liability with respect to any compromise or settlement of such claims effected without its consent. If notice is given to an indemnifying party of the commencement of any Proceeding and the indemnifying party does not, within sixty days after the indemnified party's notice is given, give notice to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will not have the right to assume the defense of such proceeding pursuant to this Section 10.6.
(c) Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise, or settle such Proceeding, but the indemnifying party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any court in which a Proceeding is brought against any Indemnified Person for purposes of any claim that an Indemnified Person may have under this Agreement with respect to such Proceeding or the matters alleged therein, and agree that process may be served on Sellers with respect to such a claim anywhere in the world.
10.7 Procedure for Indemnification—Other Claims.
A claim for indemnification for any matter not involving a third-party claim may be asserted by timely notice to the party from whom indemnification is sought outlining in reasonable detail the facts and basis of the claim.
10.8 Treatment of Indemnification Payment.
If Buyer or any Seller makes any payment to an indemnified party pursuant to this Article 10, then such amount shall be treated as an adjustment to the Purchase Price.
10.9 Exclusive Remedy and Escrow.
The remedies and causes of action provided in this Article 10 shall be the exclusive remedies and causes of action of the Parties hereto (including, without limitation, as to any Buyer Indemnified Persons) after Closing in connection with the terms of and the transactions contemplated by this Agreement, including without limitation any breach or non-performance of any representation, warranty, covenant or agreement contained herein; and each indemnified party does hereby waive any and all such other statutory, common law and contractual rights and remedies with respect to the subject matter of this Agreement. The Buyer Indemnified Persons agree that (a) any and all claims for Damages under this Article 10 shall first be made against and satisfied out of the Escrow Fund pursuant to the terms of the Escrow Agreement between Buyer, Sellers, the Bruce A. Dillman Trust dated as of October 19, 1977, the Company and, Dillman Equipment, Inc. and (b) the Sellers shall not have any liability under this Article 10, if at all, until the Buyer Indemnified Persons have fully exhausted the Escrow Fund in pursuit of any such claims.
ARTICLE 11. GENERAL PROVISIONS
11.1 Expenses.
Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and accountants. Notwithstanding the foregoing, prior to or at the Closing, Sellers shall reimburse the Company for any such expense incurred by the Company prior to Closing for attorneys’ fees and expenses or Grant Thornton’s fees and expenses for transaction advisory services. The Sellers agree to assume responsibility for, and promptly pay attorneys’ fees and expenses (and Grant Thornton’s fees and expenses for transaction advisory services) billed to the Company after Closing for legal services or transaction advisory services rendered to the Company prior to Closing in connection with the preparation, execution and performance of this Agreement. In the event of termination of this Agreement, the obligation of each party to pay its own expenses will be subject to any rights of such party arising from a breach of this Agreement by another party.
11.2 Mandatory Arbitration.
(a) Any controversy or claim between or among the parties, (other than those related to Section 11.13 and/or employment matters, which shall be resolved in the manner prescribed therein), including but not limited to those arising out of or relating to this Agreement, including any dispute concerning the Preclosing Balance Sheet and/or the Closing Balance Sheet as provided by Section 2.2 or any claim based on or arising from an alleged tort, shall be determined by binding arbitration in accordance applicable Delaware law, including the rules of arbitration under applicable Delaware law Judgment upon any arbitration award may be entered in any court having jurisdiction. Any party to this Agreement may bring an action, including a summary or expedited proceeding, to compel arbitration of any controversy or claim to which this Agreement applies in any court having jurisdiction over such action.
(b) Unless otherwise agreed by the parties, arbitration shall be conducted in Madison Wisconsin, or at such other location within three hundred twenty-five (325) from Madison, Wisconsin as may be mutually agreed to be the parties to this Agreement, and in the event the parties cannot agree by unanimous agreement of the arbitrators, and administered by a panel of three independent arbitrators, one selected by Sellers' Representative, one by Buyer and the third selected by agreement of such two prior arbitrators. All arbitration hearings will be commenced within forty five (45) days of the demand for arbitration. Further, the arbitrators shall only, upon a showing of cause, be permitted to extend the commencement of such hearing. Notwithstanding any other term of this Agreement, (i) each party shall be initially responsible to advance payment of the fees and expenses for the arbitrator selected by that party, and the parties shall initially share equally and pay the fees and expenses of the third arbitrator as well as all other incidental expenses relating to the arbitration; and; and (ii) following a final determination of the matter submitted to arbitration, the losing party shall bear, and shall promptly pay, the cost of the arbitration procedure and of the reasonable costs and expenses, including attorneys' fees, of the prevailing party.
11.3 Public Announcement.
Each party hereto acknowledges that certain of the terms and conditions of this Agreement contain important confidential information the disclosure of which could result in a competitive disadvantage to the other party. Accordingly, each party hereto agrees never to disclose, whether before or after a Closing, to any Person the terms and provisions of this Agreement except (a) to his legal or Tax advisors who have agreed to maintain the confidentiality of such information, (b) to senior officers of such party identified to the other party in advance who have agreed to maintain the confidentiality of such information, (c) when disclosure of such information is required by securities laws or regulations or in connection with legal proceedings, (d) to the extent required by other applicable law, (e) to the extent required to enforce such party’s rights and remedies hereunder, or (f) with the prior written consent of the other party.
Without the prior written consent of the Sellers’ Representative in the case of disclosure by the Buyer and the Buyer in the case of disclosure by the Sellers, the parties agree that they shall not, and shall cause their respective Affiliates and lenders to not, publicly disclose the terms of the transactions contemplated by this Agreement except to the extent required by securities laws or regulations or in connection with legal proceedings.
Notwithstanding the foregoing, Buyer agrees that any press release made by Buyer with respect to this Agreement shall not disclose (i) the amount of the Stock Purchase Price or other payment terms hereunder and (ii) the amount of the purchase price or other payment terms under the Dillman Stock Purchase Agreement.
11.4 Notices.
All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by telecopier (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and telecopier numbers set forth within this Article 11.4 (or to such other addresses and telecopier numbers as a party may designate by notice to the other parties). Notice to any and all Sellers shall be deemed to have been given when notice is given to Sellers' Representative.
| Buyer: | F. McKamy Hall, CPA Vice President, Chief Financial Officer and Treasurer Astec Industries, Inc. 1725 Shepherd Road Chattanooga, TN 37421 Fax: 423-899-9956 Email: mhall@astecindustries.com |
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| With a copy to: | Chambliss, Bahner & Stophel, P.C. 1000 Tallan Building Two Union Square Chattanooga, TN 37402 Attn: E. Stephen Jett Fax: 423-508-1229 Email: sjett@cbslawfirm.com |
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Company (Pre-Closing): | Mr. Brian Dillman Double L Investments, Inc. 34618 County Highway K Prairie du Chien, Wisconsin 53821 Fax: Email: |
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| Sellers' Representative: | Mr. Brian Dillman Double L Investments, Inc. 34618 County Highway K Prairie du Chien, Wisconsin 53821 Fax: Email: |
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| With a copy to: | Shuttleworth & Ingersoll, P.L.C. 115 3rd Street S.E., Suite 500 Cedar Rapids, Iowa 52401 Attention: Brian D. Bergstrom Fax: 319-365-8725 Email: bdb@shuttleworthlaw.com |
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11.5 Waiver.
Prior to the Closing hereunder, the rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.
11.6 Entire Agreement and Modification.
This Agreement supersedes all prior agreements between the parties with respect to its subject matter (including the Letter of Intent between Buyer, the Company and Sellers dated April 22, 2008) and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter provided however, the terms of the Confidentiality Agreement shall remain in full force and effect unless terminated at Closing as set forth in Section 6.2 .. This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment.
11.7 Assignments, Successors, and No Third-Party Rights.
Neither Buyer nor any of the Sellers may assign any of its, his or her rights under this Agreement without the prior consent of Buyer and the Sellers' Representative, as applicable, except to the extent set forth in Section 2.1 above, and except that the rights of a Seller hereunder shall be assignable to his or her heirs, successors beneficiaries or representatives in the case of the death or incapacity of any Seller. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Sellers acknowledge that Buyer intends, relatively shortly following the Closing, to cause Astec, Inc. and the Company to merge with Astec, Inc. surviving the merger, with the result that Closing Astec, Inc. shall be the successor of the Company and all rights and obligations of the Company under this Agreement shall become the obligations and rights of Astec, Inc.
Nothing expressed or referred to in this Agreement will be construed to give any Person (including employees of the Company who are not parties to this Agreement or permitted assignees) other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and permitted assigns.
11.8 Severability.
If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
11.9 Sellers' Representative.
(a) The Sellers hereby appoint Brian Dillman (the "Sellers' Representative") as their attorney-in-fact with full power on his behalf to perform any and all acts necessary or appropriate in connection with this Agreement or any ancillary agreement, including, without limitation:
(i) disbursing among the Sellers the Stock Purchase Price, and any other payments paid to Sellers under this Agreement or in connection with the Contemplated Transactions;
(ii) making, granting or withholding any approvals, consents or determinations which may or could be made by the Sellers under this Agreement whether before, at or after the Closing, including the waiving of any conditions to the Sellers' obligations under Article 8 hereunder to close or negotiating and agreeing to terms and conditions of any indemnification rights or obligations asserted by or against the Sellers under Article 10; and
(iii) making, executing, acknowledging and delivering all such other agreements, orders, receipts, endorsements, notices, requests, instructions, certificates, letters and other writings and, in general, doing any and all things and taking any and all actions that the Sellers' Representative, in such Person's sole and absolute discretion, may consider necessary, proper or convenient in connection with or to carry out the activities described in clause (i) above and the transactions contemplated by this Agreement and the Contemplated Transactions.
(b) The Sellers' Representative shall not have any duties or responsibilities except those expressly set forth in this Agreement for the benefit of Sellers, and no implied covenants, functions, responsibilities, duties, obligations, or liabilities shall be read into this Agreement or any other agreement signed or authorized by the Sellers' Representative on any Seller's behalf.
(c) The Sellers' Representative shall be entitled to rely, and shall be fully protected in relying, upon any statements furnished to him by any Seller or the Buyer, or any other evidence deemed by the Sellers' Representative to be reliable, and the Sellers' Representative shall be entitled to act on the advice of counsel selected by him. The Sellers’ Representative shall be fully justified in failing ore refusing to take any action under this Agreement or any other agreement signed or authorized by the Sellers’ Representative on behalf of any Seller, unless he shall have received such advice or concurrence of the Sellers as Sellers’ Representative deems appropriate or he shall have been expressly indemnified to his satisfaction by the Sellers against any and all liability and expense that the Sellers’ Representative may incur by reason of taking or continuing to take any such action. The Sellers' Representative shall in all cases be fully protected in acting, or refraining from acting, under this Agreement or any other agreement signed or authorized by such persons on the behalf of any Seller, in reliance upon the powers granted hereunder, and any statements furnished to or any one of them, by any Seller or the Buyer or any other evidence deemed by the Sellers' Representative to be reliable, and any action taken or failure to act pursuant thereto, shall be binding upon all of the Sellers.
11.10 Article Headings; Construction.
The headings of Articles in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Article" or "Articles" refer to the corresponding Article or Articles of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. The parties, in acknowledgement that all of them have been represented by counsel and that this Agreement has been carefully negotiated, agree that the construction and interpretation of this Agreement and other documents entered into in connection herewith shall be construed neutrally in accordance with their plain meaning; and the construction and interpretation thereof shall not be affected by the identity of the party or parties under whose direction or at whose expense this Agreement and such documents were prepared or drafted.
11.11 Governing Law.
This Agreement will be governed by the laws of the State of Delaware without regard to conflicts of laws principles.
11.12 Counterparts.
This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.
11.13 Specific Performance.
Each of the parties acknowledges and agrees that the subject matter of this Agreement, including the business, assets and properties of the Company, is unique, that the other parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in material compliance with their specific terms or otherwise are materially breached, and that the remedies at law would not be adequate to compensate such other parties not in default or in breach. Accordingly, each of the parties agrees that the other parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions of this Agreement in addition to any other remedy to which they may be entitled, at law or in equity. The parties waive any defense that a remedy at law is adequate and any requirement to post bond or provide similar security in connection with actions instituted for injunctive relief or specific performance of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Asset Purchase Agreement as of the date first written above.
| | BUYER: |
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| | ASTEC INDUSTRIES, INC. |
| | By: /s/ F. McKamy Hall Title:CFO |
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| | SELLERS: |
| | /s/ Brian Dillman |
| | BRIAN DILLMAN, individually |
| | /s/ Christine Dillman Kolb |
| | CHRISTINE DILLMAN KOLB, individually |
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| | COMPANY: |
| | DOUBLE L INVESTMENTS, INC. |
| | By:/s/ Brian Dillman Title: President |
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