SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 31, 2003
Goddard Industries, Inc.
.. . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts 0-2052 04-2268165
.. . . . . . . . . . . . . . . . . . . . . . . . . . .
(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
705 Plantation Street, Worcester, Massachusetts 01605
.. . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of Principal Executive Offices) (Zip Code)
(508) 852-2435
Registrant's telephone number, including area code . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
(Former Name or Former Address, If Changed Since Last Report)
Item 2. Disposition
On January 31, 2003, Goddard Industries, Inc. (the "Registrant") sold
substantially all of the assets of one of its subsidiaries, Goddard Valve
Corporation ("Goddard Valve"), to Engineered Controls International, Inc., a
Delaware corporation ("ECII") pursuant to an Asset Purchase Agreement, dated
as of January 31, 2003, among ECII, Goddard Valve and Registrant (the "Asset
Purchase Agreement"). The purchase price is approximately $4.1 million with
adjustment for the final value of inventory and accounts receivable that are
being transferred at the date of closing. Of the total purchase price,
approximately $3.2 million was paid in cash at the closing and up to an
additional $900,000 is payable after the completion of a post-closing review of
the value of the inventory and disposed assets, and upon collection of
transferred accounts receivable. The assets disposed of by Registrant included
Goddard Valve's machinery & equipment, office equipment, inventory, accounts
receivable, intellectual property and proprietary information, including rights
to the use of the names "Goddard" and "Goddard Valve Corporation." In addition,
Registrant must discontinue its use of the name "Goddard Industries, Inc." by
May 31, 2003. The purchase price was determined as the result of arms' length
negotiations between unrelated parties. In conjunction with the sale,
Registrant agreed to provide certain short term transitional services to ECII.
The Goddard Valve business that was sold by Registrant to ECII, designs,
manufactures and sells cryogenic valves that are used primarily by the
industrial gas industries, including atmospheric gases, LNG, liquid hydrogen
and specialty gases used in semiconductor manufacture. After the sale of the
business of Goddard Valve, Registrant will continue to own and operate its
other subsidiary, Mack Valves Pty Ltd, located in Melbourne, Australia, which
manufactures industrial valves for specialized areas of industry, including a
range of water, steam, fire service and other valves used extensively in clean
water, fire prevention, mining and other industrial applications.
The terms of the transaction are more fully described in the Asset Purchase
Agreement that is filed as an exhibit herewith.
Item 7. Financial Statements and Exhibits
(a) Financial Statements.
None
(b) Exhibits.
Exhibit No. Description of Exhibit
1 Form of Asset Purchase Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GODDARD INDUSTRIES, INC.
Date: February 3, 2003 By: /s/ Salvatore J. Vinciguerra
Salvatore J. Vinciguerra, President
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
1 Form of Asset Purchase Agreement
EXHIBIT 1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of January
31, 2003, by and among Engineered Controls International, Inc., a Delaware
corporation (the "Purchaser"), Goddard Valve Corporation, a Massachusetts
corporation (the "Seller"), and Goddard Industries, Inc., a Massachusetts
corporation and the sole shareholder of the Seller (the "Shareholder").
Capitalized terms used in this Agreement without definition shall have the
meanings set forth or referenced in Article VIII.
WITNESSETH:
WHEREAS, the Seller is engaged in the business of manufacturing,
selling and distributing cryogenic valves and related products (the
"Business"); and
WHEREAS, upon the terms and conditions set forth in this Agreement, the
Purchaser desires to purchase from the Seller, and the Seller desires to sell
to the Purchaser, certain operating assets of the Seller as described herein.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Purchase and Sell. Subject to the terms and
conditions of this Agreement, at the Closing, the Seller shall grant, sell,
convey, assign, transfer and deliver to the Purchaser, and the Purchaser
shall acquire from the Seller, all right, title and interest of the Seller in
and to all of the assets, properties and rights of the Seller used in the
Business which are listed in Section 1.2 (the "Acquired Assets"), free and
clear of all Liens.
1.2 Acquired Assets. Except as otherwise specifically identified in
Section 1.3 as an Excluded Asset, the Acquired Assets shall include all
right, title and interest of the Seller as of the Closing Date in and to the
following assets used in the Business:
(a) all accounts receivable of the Seller ("Acquired Accounts
Receivable");
(b) all inventories of raw materials and supplies, manufactured
and purchased parts, work-in-process and finished goods (including, without
limitation, all such inventory which may be in transit or in the possession
of any third party);
(c) all machinery, equipment, supplies, tooling, motor
vehicles, furniture and furnishings, computers and computer systems,
including all databases, software programs, source codes and programmers'
notes, goods, office equipment and supplies and other tangible personal
property, wherever located;
(d) all of the Seller's Proprietary Rights and the goodwill
associated therewith;
(e) subject to Section 1.13, all agreements, contracts, leases,
purchase orders and other similar arrangements, as set forth on Schedule
1.2(e) (the "Acquired Contracts");
(f) all franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, grandfathered practices and similar
rights obtained from Governmental Authorities used in or related to the
Business, to the extent transferable to the Purchaser;
(g) all rights to receive mail and other communications related
to the Business (including, without limitation, mail and communications from
customers, suppliers, distributors, agents and others with respect to the
Acquired Assets or the Business) other than mail and other communications
related to the Excluded Assets or Retained Liabilities, it being understood
that each of the Seller and the Shareholder, on the one hand, and the
Purchaser, on the other hand, will deliver to the other any mail and other
communications to which it is entitled hereunder;
(h) all sales records, files (including EDP files), documents,
plans, order files, catalogs, technical information, pricing sheets,
instructions and manuals, employee handbooks, correspondence, customer and
supplier lists, drawings, specifications, displays, advertising and
promotional materials, studies, reports, data and other printed, written or
electronically-stored materials of whatever nature used in or related to the
Business, provided that copies of accounting records and ledgers shall be
provided to the Purchaser as reasonably requested; and
(i) all rights to use the telephone numbers, telecopier
numbers, internet website domain names and e-mail addresses used in
connection with the Business, provided that the Purchaser shall for a
reasonable period of time after the Closing supply new contact information
for the Seller or the Shareholder, as applicable, to any person attempting to
contact the Seller or the Shareholder.
1.3 Excluded Assets. The Purchaser shall not purchase, and the
Seller shall retain, the following assets of the Seller (collectively, the
"Excluded Assets"):
(a) all cash and cash equivalents, securities, certificates of
deposit, commercial paper, treasury bills and notes and other similar
investments, including the preferred stock of Webstone Company, Inc.;
(b) all interests in real property of the Seller;
(c) all intercompany accounts between the Seller and its
affiliates;
(d) the accounting records, ledgers, corporate seal, minute
books, stock books, Tax Returns and other records having to do with the
corporate organization of the Seller;
(e) the Seller's rights under this Agreement or any other
agreement between the Seller and the Purchaser entered into on or after the
date of this Agreement;
(f) all rights in any Employee Plans, and all assets held in
trust or otherwise under the Employee Plans;
(g) the rights of the Seller under any and all insurance
policies insuring the Seller, its assets, properties, operations, employees,
officers and directors, including, without limitation, the policies listed in
Schedule 2.1(r); and
(h) all claims, rights with respect to legal actions, causes of
action, right to refunds, rights of recovery, rights of set off and rights of
recoupment of any kind, including, without limitation, all rights to refund
of Taxes.
1.4 Assumed Liabilities.
(a) At the Closing, the Purchaser shall assume and agree to
pay, perform and discharge (i) all of the Seller's obligations arising or to
be performed from and after the Closing under the Acquired Contracts
excluding any obligations or liabilities arising out of or in connection with
any breach of an Acquired Contract occurring prior to or as of the Closing or
any commissions payable with respect to sales made prior to the Closing and
(ii) Warranty Obligations not exceeding $10,000 in the aggregate
(collectively, the "Assumed Liabilities").
(b) Except for the Assumed Liabilities, Purchaser is not
assuming, and the Seller hereby acknowledges that it is retaining, all of its
Liabilities (collectively, the "Retained Liabilities"), and the Seller
covenants that it shall pay, discharge and perform each of the Retained
Liabilities promptly when due, except to the extent contested by the Seller
in good faith by appropriate proceedings.
1.5 Purchase Price. In consideration for the Acquired Assets, the
Purchaser agrees to assume the Assumed Liabilities from the Seller and to pay
to the Seller the sum of $4,100,000, less any Purchase Price Adjustment
pursuant to Section 1.7 and any Receivables Adjustment pursuant to Section
1.10 (as adjusted, the "Purchase Price").
1.6 Payment of the Purchase Price.
(a) Pursuant to that certain letter of intent by and among the
Purchaser, the Seller and the Shareholder dated November 4, 2002 (the "Letter
of Intent"), the Purchaser has paid to the Shareholder a $41,000 deposit,
which amount shall be applied in full to the Purchase Price at the Closing.
(b) At the Closing, the Purchaser shall pay to the Seller
$3,159,000 of the Purchase Price (the "Initial Purchase Price Payment"). The
Purchaser shall hold $700,000 in reserve for payment of any Purchase Price
Adjustment owed by the Seller to the Purchaser pursuant to Section 1.7 (the
"PPA Holdback") and shall hold $200,000 in reserve for payment of any unpaid
Receivables Adjustment owed by the Seller to the Purchaser pursuant to
Section 1.10 (the "Receivables Holdback"). Subject to Section 1.7, the PPA
Holdback (or remaining amounts thereof) shall be paid by the Purchaser to the
Seller as set forth in Section 1.8. The Receivables Holdback (or remaining
amounts thereof) shall be paid by the Purchaser to the Seller as set forth in
Section 1.10. The Initial Purchase Price Payment, the PPA Holdback (or
remaining amounts thereof) and the Receivables Holdback (or remaining amounts
thereof) shall be paid by wire transfer of immediately available funds in
accordance with the Seller's written wire transfer instructions delivered to
the Purchaser at least two (2) Business Days prior to the date payment is
due.
1.7 Purchase Price Adjustment. In the event that the total of the
value of the inventory plus the accounts receivable (in each case, net of
reserves) as reflected on the balance sheet of the Seller dated June 30,
2002, attached hereto as Schedule 1.7 (the "Reference Balance Sheet"),
exceeds the total of the value of the inventory plus the accounts receivable
(in each case, net of reserves) of the Seller as reflected on the balance
sheet of the Seller dated as of the Closing Date and prepared in accordance
with Section 1.8 (the "Closing Balance Sheet"), the amount of such excess
shall be deducted from the PPA Holdback (the "Purchase Price Adjustment").
If the Purchase Price Adjustment exceeds the amount of the PPA Holdback, the
Seller shall pay to the Purchaser the amount of such excess within two (2)
Business Days after the Purchase Price Adjustment (or any undisputed portion
thereof) has been determined in accordance with Section 1.8.
1.8 Closing Balance Sheet. Within thirty (30) days after the Closing
Date, the Seller shall deliver to the Purchaser the Closing Balance Sheet,
which shall be prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied as of the Closing Date and in the
same manner as the Reference Balance Sheet, except as provided in Section
1.9. The Purchaser or its representatives shall have full access to all
financial records and transaction details related to the Acquired Assets in
order to review the values reflected on the Closing Balance Sheet as prepared
by the Seller. The Closing Balance Sheet and the calculation of the Purchase
Price Adjustment based thereon shall be valid and binding upon the parties
and any amount by which the PPA Holdback exceeds the Purchase Price
Adjustment shall be due and payable by the Purchaser to the Seller within
thirty (30) days following delivery of the Closing Balance Sheet unless the
Purchaser notifies the Seller in writing of any dispute with respect thereto
within thirty (30) days following the delivery of the Closing Balance Sheet.
If the Purchaser delivers a dispute notice pursuant to which the Purchase
Price Adjustment is nevertheless calculated to be less than the PPA Holdback,
the Purchaser shall pay to the Seller within two (2) Business Days thereafter
the amount by which the PPA Holdback exceeds the Purchaser's calculation of
the Purchase Price Adjustment. If the Seller and the Purchaser are unable to
resolve any dispute with respect to the Closing Balance Sheet within twenty
(20) days following delivery of the Purchaser's written notice to the Seller
thereof, the dispute shall be submitted for resolution to Grant Thornton
(the "Evaluator"). The Evaluator shall act as an arbiter to determine any
such disputes based solely on presentations by the Purchaser and the Seller
and not by independent review. The Evaluator's determination shall be made
within thirty (30) days after the submission of the dispute, shall be in
accordance with this Agreement, shall be set forth in writing and shall be
final and binding on the parties. The Purchaser shall remit to the Seller
any remaining excess PPA Holdback within two (2) Business Days of the
Evaluator's decision. The Purchaser and the Seller shall each pay one-half
of the fees and expenses of the Evaluator. The Purchaser and the Seller
shall pay their own costs incurred in preparing or reviewing the Closing
Balance Sheet and preparing presentations for the Evaluator.
1.9 Closing Date Inventory. Within five (5) days prior to the
Closing Date, the Seller shall conduct a physical count of its inventory.
The Purchaser and its representatives shall be entitled to observe the
physical count and shall be afforded the opportunity to make such reasonable
investigations of the inventory as they shall desire, provided that the
Purchaser shall reasonably cooperate in keeping its and its representatives'
presence unknown to the Seller's employees other than Salvatore J.
Vinciguerra, Kenneth E. Heyman and Donald R. Nelson. The results of the
physical count shall be the basis for the valuation of the inventory on the
Closing Balance Sheet and the inventory shall be valued thereon in accordance
with the Seller's valuation policies (including determination of reserves)
which are and have been in conformance with GAAP and as applied to the June
30, 2002 and September 28, 2002 financial statements.
1.10 Collection of Acquired Accounts Receivable. After the Closing,
the Purchaser shall use commercially reasonable efforts to collect all of the
Acquired Accounts Receivable. If any payments of the Acquired Accounts
Receivable are received by the Seller, the Seller shall promptly remit the
same to the Purchaser. The parties agree that all payments received from a
customer with an outstanding Acquired Account Receivable shall be applied to
the oldest outstanding Acquired Account Receivable, provided that if such
customer has designated that the payment be applied to another Acquired
Account Receivable, it shall be applied to the designated Acquired Account
Receivable, and if such customer has designated that the payment be applied
to a post-Closing receivable, it shall nevertheless be applied to the oldest
Acquired Account Receivable unless such customer has made a specific claim in
writing regarding the Acquired Account Receivable to which the payment would
otherwise apply, in which case, such payment may be applied to the next
oldest Acquired Account Receivable or, if none exists, in any manner in which
the Purchaser shall determine. Beginning with the month following the
Closing Date, the Purchaser shall supply a monthly accounting of collections
to the Seller within ten (10) Business Days after the end of the month and
shall permit the Seller to assist in any collections which become older than
sixty (60) days. Once the outstanding amount of the Acquired Accounts
Receivable (less any reserves) becomes less than the amount of the
Receivables Holdback, the Purchaser shall on a weekly basis thereafter
release to the Seller the portion of the Receivables Holdback (or any
remaining portion thereof) in excess of the outstanding amount of the
Acquired Accounts Receivable (less any reserves). If any of the Acquired
Accounts Receivable remain outstanding six (6) months after the Closing Date,
and the aggregate amount of such remaining Acquired Accounts Receivable
exceeds the amount of the reserve for doubtful accounts included in the
Closing Balance Sheet, the Purchaser shall have the right (i) to assign or
cause to be assigned without recourse such unpaid Acquired Accounts
Receivable to the Seller and (ii) to deduct the amount of such excess from
the Receivables Holdback (the "Receivables Adjustment"). At the end of such
six (6) month period, the Purchaser shall pay to the Seller the amount of the
Receivables Holdback remaining after the Receivables Adjustment has been made
and shall deliver to the Seller an assignment of the remaining unpaid
Acquired Accounts Receivable. At that time, the Seller shall have the right
to collect the assigned Acquired Accounts Receivable in full. If the
Receivables Adjustment exceeds the amount of the Receivables Holdback, the
Seller shall pay to the Purchaser the amount of such excess within two (2)
Business Days after the Purchaser sends written notice to the Seller of the
assignment of the Acquired Accounts Receivable.
1.11 Allocation of the Purchase Price. The Purchase Price shall be
allocated among the Acquired Assets in accordance with Section 1060 of the
Code, which preliminary allocation shall be agreed upon by the Seller and the
Purchaser on Schedule 1.11 to be attached to this Agreement at or prior to
the Closing (and adjusted as necessary and agreed upon by the Seller and the
Purchaser within thirty (30) days after the Purchase Price Adjustment has
finally been determined in accordance with Section 1.8 to reflect any
Purchase Price Adjustment). The Seller and the Purchaser each hereby
covenants and agrees that it will not take a position on any income Tax
Return (including, without limitation, Internal Revenue Service Form 8594) or
with any Governmental Authority that is in any way inconsistent with the
terms of this section or the allocation set forth on Schedule 1.11. The
Seller and the Purchaser shall inform each other promptly of any challenge by
any Governmental Authority to the allocation set forth on Schedule 1.11 and
no party shall agree to any adjustment asserted by such Governmental
Authority without the prior written consent of the other party, which consent
shall not be unreasonably withheld. The Seller and the Purchaser agree to
cooperate with each other in preparing Internal Revenue Service Form 8594 for
filing by each of them and to furnish the other party with a copy of Internal
Revenue Service Form 8594 within a reasonable period before its filing due
date.
1.12 Delivery of Assets. The Seller shall take all action necessary
or advisable to put the Purchaser in possession of the Acquired Assets
promptly following the Closing. The Purchaser shall, at its expense, prepare
for shipping and ship the tangible Acquired Assets from the Seller's premises
within sixty (60) days after the Closing Date. The Seller shall make its
premises available to the Purchaser or its agents for such purposes and shall
continue to provide adequate insurance for such tangible Acquired Assets for
sixty (60) days after the Closing Date.
1.13 Transfer of Acquired Contracts. If the consent of any other
party is required for the assignment of any Acquired Contract and, subject to
Section 4.2(d), such consent is not obtained prior to the Closing, the
Purchaser shall nevertheless satisfy and discharge the obligations of the
Seller thereunder so long as the Purchaser (as assignee or otherwise)
receives all the benefits and is permitted to exercise all of the rights of
the Seller thereunder. In the event, however, that consent to assignment of
such Acquired Contract cannot be obtained (whether before or after the
Closing) and the Purchaser is not permitted to receive all benefits or to
exercise all rights of the Seller thereunder, then, at the Purchaser's
option, the Seller shall be and remain responsible for all of the remaining
obligations under such Acquired Contract (and shall be entitled to all of the
benefits thereunder), provided that the Purchaser suspends the restrictive
covenants enumerated under Section 3.10 as applied to such Acquired Contract
and provides to the Seller access to the necessary technical materials, and
the Purchaser shall thereafter have no obligations with respect thereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Purchaser, as of the date hereof and as of the
Closing Date, as follows:
(a) Organization, Standing and Qualification. Each of the
Seller and the Shareholder is a corporation duly incorporated, validly
existing and in good standing under the Laws of the Commonwealth of
Massachusetts. The Seller (i) has full right, power and authority to carry
on its business as now being conducted, and to own or lease and operate its
properties as and in the places where such business is now conducted and such
properties are now owned or leased and operated, and (ii) is duly qualified,
licensed or authorized to do business and, if applicable, in good standing in
each jurisdiction listed on Schedule 2.1(a).
(b) Authority. Each of the Seller and the Shareholder has full
corporate power and authority to enter into this Agreement and each of the
other agreements, certificates, instruments and documents contemplated hereby
(collectively, the "Ancillary Documents") to which it is a party, and to
carry out the transactions contemplated hereby and thereby. Each of the
Seller and the Shareholder has properly taken all corporate action required
to be taken by it with respect to the execution and delivery of this
Agreement and each of the Ancillary Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby.
(c) Execution and Delivery. This Agreement has been duly
authorized, executed and delivered by each of the Seller and the Shareholder
and constitutes a legal, valid and binding obligation of each such party,
enforceable against such party in accordance with its terms and conditions,
except as enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar Laws affecting creditors' rights
generally or by general principles of equity. Each Ancillary Document to
which the Seller or the Shareholder is a party will have been duly
authorized, executed and delivered by such party upon the Closing and, upon
the execution and delivery thereof, will constitute a legal, valid and
binding obligation of such party, enforceable against such party in
accordance with its terms and conditions, except as enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar Laws affecting creditors' rights generally or by general principles
of equity.
(d) No Conflicts. Subject to obtaining the consents and
approvals listed on Schedule 2.1(d), the execution, delivery and performance
by each of the Seller and the Shareholder of this Agreement and each of the
Ancillary Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in the breach of any term, condition or provision of,
or require the consent of any Person under, or give rise to the right to
accelerate or terminate, or result in the creation or right to create any
Lien upon the Acquired Assets, under (i) its certificate of incorporation or
by-laws; (ii) any Law to which it or any of the Acquired Assets is subject;
(iii) any judgment, order, writ, injunction, decree or award of any
Governmental Authority to which it is subject; or (iv) any license,
agreement, commitment or other instrument or document to which it is a party
or by which it is otherwise bound. No authorization, approval or consent of,
and no registration or filing with, any Governmental Authority is required in
connection with the execution, delivery or performance by the Seller or the
Shareholder of this Agreement and each of the Ancillary Documents to which it
is a party, except for (i) required filings with the Securities and Exchange
Commission by the Shareholder and (ii) consents and approvals identified on
Schedule 2.1(d).
(e) Financial Statements. The Seller has previously delivered
to the Purchaser true and correct copies of the following financial
statements (consisting of a balance sheet and an income statement)
(collectively, the "Financial Statements"): the unaudited financial
statements of the Seller for the fiscal years ended September 30, 2000,
September 29, 2001 and September 28, 2002 (September 28, 2002 is herein
referenced to as the "Latest Financial Statement Date"). Except as set forth
on Schedule 2.1(e), the Financial Statements have been prepared from and are
consistent with the books, records and accounts of the Seller, have been
prepared in accordance with GAAP consistently applied through the periods
indicated and fairly present, as of the dates and for the periods referred to
therein, the Seller's financial position and results of operations. The
books and records of the Seller accurately record all transactions of the
Seller during the periods covered by the Financial Statements and since the
Latest Financial Statement Date.
(f) Ordinary Course. Since the Latest Financial Statement
Date, and except as otherwise disclosed on Schedule 2.1(f), the operations of
the Seller have been conducted in the ordinary course consistent with past
practice and the Seller has not made or instituted, or agreed to make or
institute, any material change in the methods of production, purchase, sale,
lease, management, marketing, distribution, accounting or operations of the
Business.
(g) Title to Assets. The Seller has good and marketable title
to all of the owned assets included in the Acquired Assets and valid and
subsisting leasehold interests in all of the leased assets included in the
Acquired Assets, free and clear of any Liens, except as set forth on Schedule
2.1(g).
(h) Accounts Receivable. Except as disclosed on Schedule
2.1(h), (i) the Seller's accounts receivable reflected on its balance sheet
dated as of the Latest Financial Statement Date (the "Latest Balance Sheet")
or arising since the Latest Financial Statement Date (collectively, the
"Accounts Receivable"), are bona fide and have arisen or were acquired in the
ordinary course of business and in a manner consistent with the Seller's
regular credit practices; (ii) the Seller's provision for doubtful accounts
reflected on the Latest Balance Sheet or reserved on its books since the
Latest Financial Statement Date has been determined in good faith and in
accordance with GAAP consistently applied through the periods indicated; and
(iii) since the Latest Financial Statement Date, the Seller has not canceled,
reduced, discounted, credited or rebated or agreed to cancel, reduce,
discount, credit or rebate, in whole or in part, any Accounts Receivable
except in the ordinary course of business consistent with past practice.
(i) Inventory. Except as disclosed on Schedule 2.1(i), (i) the
Seller's inventories which are reflected on the Latest Balance Sheet or which
have been acquired since the Latest Financial Statement Date were acquired in
the ordinary course of business and in a manner consistent with the Seller's
regular inventory practices; (ii) the inventories (subject to the inventory
reserve determined consistently with the Seller's past practices for
accounting for slow moving inventory) (A) consist substantially of quantities
and qualities which are usable and salable by the Seller in the ordinary
course of business, (B) are free from material defect, and (C) are maintained
at normal levels consistent with past practice and needs of the Business; and
(iii) no inventory is held by the Seller on consignment from other Persons or
is held by other Persons on consignment from the Seller, except inventory
which is held at the premises of Praxair, Inc. as part of the Seller's
contract with Praxair, Inc., which inventory will be specifically identified
for the Purchaser at the time of the delivery of the Closing Balance Sheet
pursuant to Section 1.8.
(j) Sufficiency of Assets. Except as disclosed on Schedule
2.1(j), which identifies those patterns owned by the Seller's vendors rather
than by the Seller to produce certain castings, the Acquired Assets comprise
all of the operating assets (exclusive of working capital and the Excluded
Assets) necessary for the conduct of the Business as currently conducted by
the Seller.
(k) Tangible Assets.
(i) Except as set forth on Schedule 2.1(k)(i), the Seller
has maintained the tangible Acquired Assets owned or leased by it in a
manner consistent with the ongoing requirements of the Business and,
with respect to leased property, consistent with the terms of the leases
applicable thereto, and has not altered its maintenance practices in
anticipation of the sale of the Business.
(ii) Except as set forth on Schedule 2.1(k)(ii), all
equipment currently used in the Business is free from material defects
and is in good operating condition and repair (subject to normal wear
and tear consistent with its age). It is understood that equipment
identified on Schedule 2.1(k)(ii) will be transferred to the Buyer in
"as is" condition.
(iii) The tangible Acquired Assets owned or used by the
Seller are located at the Seller's premises listed on Schedule 2.1(k)(iii).
(iv) The Seller shall deliver to the Purchaser a list of
the tangible Acquired Assets owned or used by the Seller within two (2)
Business Days prior to the Closing Date.
(l) Proprietary Rights.
(i) The Seller owns or possesses licenses or other rights
to use all trademarks, trade and business names, logos, internet domain
names, service marks, service names, copyrights, patents, processes,
methods of production, industrial designs, trade secrets, inventions
(whether or not patentable) and computer software (collectively,
"Proprietary Rights") that are used in or necessary to the conduct of
the Business as currently conducted, except that based on usage since
its inception, neither the Seller nor the Shareholder has filed the
name "Goddard" or "Goddard Valve" for a trademark.
(ii) Schedule 2.1(l)(ii) sets forth a true and complete
list of all trademarks, trade and business names, logos, internet
domain names, service marks, service names, copyrights, patents and
computer software (other than standard commercially available software
to which the Seller does not hold a license to modify) included in the
Proprietary Rights owned or used by the Seller (identifying which are
owned and which are licensed), including all United States, state and
foreign registrations or applications for registration thereof and all
agreements relating thereto, and including any such Proprietary Rights
owned by the Shareholder or employees of the Seller but used by the
Seller in the Business.
(iii) Except as disclosed on Schedule 2.1(l)(iii), the
Seller is not required to pay any royalty, license fee or similar
compensation in connection with the conduct of the Business as
currently conducted.
(iv) Except as disclosed on Schedule 2.1(l)(iv), ), to the
best of the Seller's knowledge, the Seller has not interfered with,
infringed upon or misappropriated the Proprietary Rights of any other
Person or committed any acts of unfair competition. No claims have
been asserted by any Person alleging such interference, infringement,
misappropriation or act of unfair competition.
(v) Except as disclosed on Schedule 2.1(l)(v), to the
best of the Seller's knowledge, no Person is infringing upon the
Seller's Proprietary Rights, and neither the Seller nor the Shareholder
has notified any Person that it believes that such Person is
interfering with, infringing or misappropriating the Seller's
Proprietary Rights or engaging in any act of unfair competition or has
done any of the foregoing.
(vi) Except as disclosed on Schedule 2.1(l)(vi), there are
no Proprietary Rights developed by any shareholder, director, officer,
consultant or employee of the Seller that are used in the Business and
that have not been transferred to, or are not owned free and clear of
any Liens by, the Seller.
(vii) Except as disclosed on Schedule 2.1(l)(vii), the
Seller has not entered into confidentiality or nondisclosure agreements
with any employees.
(viii) Except as disclosed on Schedule 2.1(l)(viii),
the Seller has taken all reasonable measures, in accordance with its
business objectives, in all appropriate jurisdictions to register and
maintain the registration of its Proprietary Rights that may be
registered.
(m) Material Agreements. Schedule 2.1(m) sets forth a true and
complete list, and the Seller has provided to the Purchaser true and complete
copies (including all amendments and extensions thereof and all waivers
thereunder) or, if oral, an accurate and complete description, of each of the
following, to which the Seller is a party or is otherwise bound:
(i) all loan agreements, indentures, notes, installment
obligations, factoring arrangements, capital leases or other agreements
or instruments relating to the borrowing of money (or guarantees
thereof) or creating Liens upon any of the Acquired Assets;
(ii) all agreements for the purchase, sale or lease of
machinery or equipment entered into any time between June 30, 2002 and
the Closing Date;
(iii) all agreements, open purchase orders or commitments
for the purchase of inventory, assets or services, or any series of
related agreements or orders, involving payments by the Seller
following the Closing Date of more than $1,000;
(iv) all agreements, open sales orders or commitments for
the sale of inventory, assets or services, or any series of related
agreements or orders, involving receipts by the Seller after the
Closing Date of more than $1,000;
(v) all agreements with any Governmental Authority;
(vi) all leases, subleases or other agreements under which
the Seller has the right to use, or grants any other Person the right
to use, any real property;
(vii) all leases, subleases, licenses or any other
agreements under which the Seller has the right to use, or grants to
any other Person the right to use, any tangible personal property;
(viii) all licenses or other agreements under which
the Seller has the right to use, or grants to any other Person the
right to use, any Proprietary Rights;
(ix) all agreements limiting the ability of the Seller to
conduct the Business or to otherwise compete, including as to manner or
place;
(x) all joint venture, "partnering" or similar
agreements;
(xi) all sales representative, distributor or dealer
agreements, practices or understandings;
(xii) all agreements containing confidentiality provisions
to which the Seller is subject or entitled to benefit therefrom;
(xiii) all agreements relating to the consignment of
assets to any Person or pursuant to which the Seller has possession of
any assets consigned to it by any Person;
(xiv) all collective bargaining, union, employment,
consulting, non-competition (in favor of the Seller), retainer or
similar agreements; and
(xv) all other agreements, without regard to monetary
amount, which were not entered into in the ordinary course of business
or which are material to the conduct of the Business and not listed
above.
Except as disclosed on Schedule 2.1(m), neither the Seller nor, to the
best of the Seller's knowledge, any other party is in default under any
Acquired Contract and no event has occurred or is reasonably expected to
occur which (after notice or lapse of time or both) would become a breach or
default under, or would otherwise permit modification, cancellation,
acceleration or termination of, any Acquired Contract or would result in the
creation of or right to obtain any Lien upon, or any Person obtaining any
right to acquire, any assets, rights or interests of the Seller. Except as
disclosed on Schedule 2.1(m), (A) each Acquired Contract is in full force and
effect and is valid and legally binding against each of the other parties
thereto; (B) there are no unresolved disputes with respect to any Acquired
Contract; and (C) the Seller does not have any reason to believe that any
party to an Acquired Contract intends to either modify, cancel or terminate
an Acquired Contract or to refuse to renew an Acquired Contract on
substantially equivalent terms upon the expiration of the term thereof.
(n) Litigation. Except as disclosed on Schedule 2.1(n), there
is no claim, legal action, suit, arbitration, investigation by any
Governmental Authority or other proceeding pending or, to the best of the
Seller's knowledge, threatened against or relating to the Seller, the
Shareholder or their respective assets which, if adversely determined, is
likely to have a material adverse effect on the Business, or otherwise
prevent, hinder or delay consummation of the transactions contemplated
hereby. Neither the Seller nor any of its assets is subject to any
outstanding judgment, order, writ, injunction or decree of any Governmental
Authority.
(o) Compliance with Law. To the best of its knowledge, the
Seller has obtained and is in compliance with all licenses, permits and other
authorizations from all applicable Governmental Authorities necessary for the
conduct of the Business as currently conducted. To the best of its
knowledge, the Seller is in compliance, and has complied, with all Laws
applicable to it and to the operation of its business. The Seller has not
received any notice, report or written allegation of any actual or alleged
violation of any Laws that has not been fully satisfied.
(p) Warranties. Except for the Seller's standard warranties as
set forth on Schedule 2.1(p) (which Schedule sets forth all warranties issued
by the Seller during the past five (5) years), the Seller has not made any
warranty or representation in respect of any products, devices or services
supplied, assembled, manufactured, distributed or repaired or agreed to be
supplied by it. Except as disclosed on Schedule 2.1(p), since January 1,
2000, there have been no (i) breach of warranty or breach of representation
claims against the Seller or (ii) product recalls involving the Seller's
products, and no such claims are currently pending or threatened.
(q) Affiliated Party Transactions. Except as disclosed on
Schedule 2.1(q), none of (i) the Shareholder or (ii) any Affiliate or
employee of the Shareholder or the Seller is directly or indirectly a party
to any contract or other arrangement (whether written or oral) with the
Seller providing for services (other than as an employee of the Seller),
products, goods or supplies, rental or real or personal property, use of any
Proprietary Rights, or otherwise requiring payments from or to the same.
(r) Insurance. Schedule 2.1(r) sets forth a list of the
Seller's currently effective insurance policies that insure the Business or
the Acquired Assets (including property, casualty, liability (general,
products and directors and officers) and workers' compensation), listing for
each policy the identity of the insurance carrier, the policy period, the
limits and retentions and any special exclusions. Such policies are
currently in full force and effect and the Seller has not received any notice
of termination on the part of the insurance carriers. Schedule 2.1(r) also
sets forth a true and complete description of any self-insurance arrangement
affecting or relating to the Business.
(s) Taxes. The Seller, either individually or on a
consolidated basis with the Shareholder, (A) has filed or will file when due
(taking into account permitted extensions) with the appropriate Governmental
Authorities all tax returns, estimates and reports required to be filed by it
for all periods ending on or before the Closing Date ("Tax Returns"), all of
which Tax Returns are (or when filed, will be) true, correct and complete in
all material respects, and (B) has paid in a timely manner (or is properly
accruing for) all requisite taxes, levies, imposts, duties and assessments of
any nature whatsoever, including real and personal property taxes and
assessments, sales and use taxes, unemployment and social security taxes and
income tax withholding and interest and penalties with respect to any of the
foregoing ("Taxes"), which have or will become due and payable with respect
to all such periods. Except as set forth on Schedule 2.1(s), neither the
Shareholder nor the Seller is currently under audit by any Governmental
Authority for any Taxes or has received notice of: (A) any alleged failure to
file any Tax Returns or to pay any Taxes; (B) any alleged liability for the
Taxes of any entity which is deemed to be a predecessor or transferor of the
Business; (C) any audit adjustment; or (D) any planned audit of its Tax
Returns.
(
t) Employee Benefit Plans.
(i) Schedule 2.1(t)(i) lists all Employee Benefit Plans
which the Seller is maintaining or to which the Seller is contributing
("Employee Plans"). No corporation or other entity which, under
Section 4001(b) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), is under common control with the Seller (an
"ERISA Affiliate") maintains, or, since January 1, 1998, has
maintained, contributed to or been obligated to contribute to a Pension
Plan subject to Title IV of ERISA or Section 412 of the Code or a
"Multiemployer Plan," as such term is defined in Section 4001(a)(3) of
ERISA, which will result in liability to the Purchaser. Each Pension
Plan and Welfare Plan disclosed on Schedule 2.1(t) has in all material
respects been maintained in compliance with its terms and all
provisions of ERISA and the Code applicable thereto.
(ii) Each Pension Plan maintained by the Seller which is
intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so
qualified, and the Seller does not know of any fact which would
indicate that the qualified status of each such Pension Plan or the tax
exempt status of each trust created thereunder has been adversely
affected.
(iii) No "prohibited transaction," as such term is defined
in Section 406 of ERISA or Section 4975 of the Code, has occurred with
respect to any Pension Plan or Welfare Plan maintained by the Seller
which will result in liability to the Seller.
(iv) Each Welfare Plan maintained by the Seller has, to
the extent applicable, at all times been in compliance in all material
respects with the provisions of Section 4980B of the Code and Parts 6
and 7 of Title I of ERISA. Except as disclosed on Schedule 2.1(t)(iv),
none of the Welfare Plans provides or promises post-retirement health
or life benefits to current employees or retirees of the Seller beyond
their retirement date or other termination of service, except as
required by applicable law.
(v) Except as disclosed on Schedule 2.1(t)(v), all
contributions required to be paid under the terms of each Pension Plan
maintained by the Seller have been made by the due date thereof.
(vi) With respect to each Pension Plan subject to Title IV
of ERISA, (A) the Pension Benefit Guaranty Corporation (the "PBGC") has
not instituted proceedings to terminate any such Pension Plan, and no
other event or condition has occurred which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any such Pension Plan; (B) no accumulated
funding deficiency, whether or not waived, exists with respect to any
such Pension Plan; and (C) all required premium payments to the PBGC
have been paid when due.
(u) Insolvency. The Seller is able to, and following the
transactions contemplated hereby will be able to, pay its liabilities in the
ordinary course as they mature, and owns, and following the transactions
contemplated hereby will own, property which, at a fair valuation, is greater
than the sum of its liabilities.
(v) Material Adverse Changes. Since the Latest Financial
Statement Date, no event, change or development has occurred (other than
those generally affecting the cryogenic valve industry) which, in the
reasonable judgment of the Seller, is likely to have a material adverse
effect on the Business.
(w) Brokerage Fees. The Seller has not engaged or authorized
any broker, investment banker or other Person to act on its behalf, directly
or indirectly, as a broker or finder who might be entitled to a fee,
commission or other remuneration in connection with the transactions
contemplated by this Agreement, except that it will pay to Anania and
Associates a fee as a financial advisor.
2.2 Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Seller, as of the date hereof and as of
the Closing Date, as follows:
(a) Organization. The Purchaser is a company duly organized,
validly existing and in good standing under the Laws of the State of
Delaware.
(b) Authority. The Purchaser has full power and authority to
enter into this Agreement and each of the Ancillary Documents to which the
Purchaser is a party, and to carry out the transactions contemplated hereby
and thereby. The Purchaser has properly taken all action required to be
taken by the Purchaser with respect to the execution and delivery of this
Agreement and each of the Ancillary Documents to which the Purchaser is a
party, and the consummation of the transactions contemplated hereby and
thereby.
(c) Execution and Delivery. This Agreement has been duly
authorized, executed and delivered by the Purchaser and constitutes a legal,
valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms and conditions, except as
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar Laws affecting creditors' rights generally or
by general principles of equity. Each Ancillary Document to which the
Purchaser is a party will have been duly authorized, executed and delivered
by the Purchaser upon the Closing and, upon the execution and delivery
thereof, will constitute a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms and
conditions, except as enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar Laws affecting
creditors' rights generally or by general principles of equity.
(d) No Conflicts. The execution, delivery and performance by
the Purchaser of this Agreement and each of the Ancillary Documents to which
the Purchaser is a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not violate, conflict with
or result in a breach of any term, condition or provision of, or require the
consent of any Person under, (i) the articles of incorporation and by-laws of
the Purchaser; (ii) any Law to which the Purchaser is subject; (iii) any
judgment, order, writ, injunction, decree or award of any Governmental
Authority to which the Purchaser is subject; or (iv) any license, agreement,
commitment or other instrument or document to which the Purchaser is a party
or by which the Purchaser is otherwise bound. No authorization, approval or
consent of, and no registration or filing with, any Governmental Authority is
required in connection with the execution, delivery or performance by the
Purchaser of this Agreement and each of the Ancillary Documents to which the
Purchaser is a party.
(e) Litigation. There is no claim, legal action, suit,
arbitration or other proceeding pending or, to the best of the Purchaser's
knowledge, threatened against or relating to the Purchaser which, if
adversely determined, is likely to have a material adverse effect on the
ability of the Purchaser to perform its obligations under this Agreement or
any of the Ancillary Documents to which the Purchaser is a party, or
otherwise prevent, hinder or delay consummation of the transactions
contemplated herein or therein.
(f) Brokerage Fees. The Purchaser has not engaged or
authorized any broker, investment banker or other Person to act on its
behalf, directly or indirectly, as a broker or finder who might be entitled
to a fee, commission or other remuneration in connection with the
transactions contemplated by this Agreement.
ARTICLE III
CERTAIN COVENANTS
3.1 Conduct of the Seller Pending the Closing. Prior to the Closing,
except as contemplated by this Agreement, the Seller shall:
a) conduct the Business in the usual, regular and ordinary
course consistent with past practice;
(b) not sell, assign, transfer, lease or in any other way
encumber any of its machinery or equipment; and
(c) use commercially reasonable efforts to maintain and
preserve its relationships with customers, suppliers, distributors, agents
and others having business dealings with it and to retain the services of its
officers and employees.
3.2 No Solicitation. The Seller shall not, directly or indirectly,
initiate contact with, solicit, encourage or participate in any way in
discussions or negotiations with, or provide any information or assistance
to, any Person (other than the Purchaser) concerning the acquisition of the
Seller or any significant portion of its assets (including by merger,
consolidation, reorganization or any other transaction).
3.3 Reasonable Efforts; Assurances.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use all commercially reasonable
efforts to take or cause to be taken all actions, and to do or cause to be
done, and to assist and cooperate with the other party in doing, all things
necessary, proper or advisable to consummate and make effective as promptly
as practicable the transactions contemplated by this Agreement. Without
limiting the foregoing, the Seller shall cause any assets that are used by
the Seller in the Business but are currently owned by the Shareholder, any
affiliates of the Seller or any employees of the Seller to be assigned to the
Seller prior to the Closing. The parties shall attempt to consummate the
transactions contemplated by this Agreement on or before January 31, 2003,
and agree to act in good faith and in a spirit of fair dealing with respect
to the consummation of such transactions.
(b) If at any time after the Closing Date any further action is
reasonably necessary or desirable to carry out the purposes of this
Agreement, the Shareholder, the Seller and the Purchaser shall take such
further action without additional consideration.
3.4 Advice of Changes. Between the date of this Agreement and the
Closing Date, the Seller and the Shareholder, on the one hand, and the
Purchaser, on the other hand, shall promptly notify the other in writing of
any fact which, if existing or known at the date of this Agreement, would
cause any party's representations and warranties under this Agreement not to
be true and correct in any material respect.
3.5 Access to Information and Properties.
(a) The Seller shall provide to the Purchaser its financial
statements for the period ended December 31, 2002, including any preliminary
information relating to accounts receivable and inventory, as soon as the
same are available, but in any case not less than ten (10) days prior to the
Closing.
(b) From the date of this Agreement through and including the
Closing Date, upon reasonable notice, the Seller shall (i) give the Purchaser
and its counsel, accountants and other representatives reasonable access to
all books, records, offices and other facilities and properties of the
Seller, (ii) permit the Purchaser to make such inspections of the foregoing
as the Purchaser may reasonably request and (iii) cause its officers and
employees to furnish the Purchaser with such financial and operating data and
other information with regard to the business of the Seller as the Purchaser
may from time to time reasonably request with the understanding that all
requests for information shall be made through and shall be satisfied by only
one of three designated persons (Salvatore J. Vinciguerra, Donald R. Nelson
and Kenneth E. Heyman), and any access to facilities or records will have to
be accomplished in such a way as to prevent observation by any employees of
the Seller except the three designated persons. Any such access shall be
provided, and all such inspections may therefore be required to be performed,
after normal business hours or on weekends.
(c) After the Closing, upon reasonable notice and during normal
business hours, the Purchaser shall give or cause to be given to the Seller
and its counsel, accountants and other representatives reasonable access to
the books and records included in the Acquired Assets (including the right to
make copies thereof or extracts therefrom) for any reasonable purpose of the
Seller, including (without limitation) in connection with litigation or other
resolution of disputes, financial reporting, Tax Return preparation and Tax
compliance matters.
3.6 Public Announcements. Neither party will issue or cause the
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior
written consent of the other party hereto; provided, however, that nothing
herein will prohibit any party or any of its respective Affiliates from
issuing or causing the publication of any such press release or public
announcement to the extent that such party is advised by its legal counsel
that such action is required by Law, in which case the party making such
determination shall use reasonable efforts to allow the other party
reasonable time to comment on such release or announcement in advance of its
issuance.
3.7 Transaction Taxes. All transfer taxes, documentary stamp taxes,
recording fees, escrow fees and other similar charges shall be paid by the
party upon whom local law or custom in the applicable jurisdiction imposes
such responsibility.
3.8 Fulfillment of Warranty Obligations. After the Closing, the
Purchaser, on behalf and for the account of the Seller, shall undertake
warranty repairs or replacements relating to products sold or services
rendered by the Seller on or prior to the Closing Date in accordance with the
Seller's standard warranties for such products or as otherwise required by
Law, but excluding any claims for personal injuries or torts resulting from
such products (the "Warranty Obligations"). The Seller shall reimburse the
Purchaser for only the direct costs (inclusive of actual costs of materials
and labor, including a reasonable charge for overhead) in excess of $10,000
in the aggregate incurred by the Purchaser in the repair or replacement of
products in connection with fulfilling the Warranty Obligations, but not
including any indirect costs or consequential damages. The Purchaser shall
promptly notify the Seller of any Warranty Obligations of which it becomes
aware (other than from the Seller).
3.9 Agreements Relating to Employees and Employee Plans.
(a) The Purchaser may make offers of employment to those of the
Seller's employees, and on such terms and conditions, as the Purchaser
determines in its sole discretion. The Purchaser shall advise the Seller of
those of the Seller's employees to whom it intends to make offers as soon as
possible, but no later than ten (10) days prior to the Closing. The
Purchaser agrees not to contact these employees until after the Closing or at
such other time as may be agreed upon by the Seller and the Purchaser.
(b) The Seller shall provide those "qualifying beneficiaries"
who terminate their employment with the Seller or otherwise have a
"qualifying event" with respect to a Welfare Plan of the Seller with any
continuation of health benefits coverage which is required to be provided
under Part 6 of Subtitle B of Title I of ERISA or, if applicable, Section
4980B of the Code (commonly referred to collectively as "COBRA").
"Qualifying beneficiaries" and "qualifying event" shall have the meanings
ascribed to those terms in COBRA.
(c) The Seller shall indemnify and hold harmless the Purchaser
from and against any and all liabilities, costs or expenses arising under the
Worker Adjustment and Retraining Notification Act or any similar state
statutes with respect to the termination of any of the Seller's employees,
whether such termination occurs before or after the Closing.
3.10 Restrictive Covenants. Each of the Seller and the Shareholder
agree that:
(a) For a period of five (5) years following the Closing Date
(the "Non-Competition Period"), such party shall not participate in any
business or enterprise which manufactures, sells or distributes any cryogenic
globe valve and gate valve products anywhere in North America. For purposes
hereof, the term "participate" includes any direct or indirect interest in
any business or enterprise, whether as an officer, director, manager,
employee, shareholder, partner, sole proprietor, member, agent,
representative, independent contractor, consultant, distributor, creditor or
otherwise; provided however, that the term "participate" shall not include
ownership of less than three percent (3%) of the securities of a publicly-
held entity whose securities are traded on a national securities exchange or
in the over-the-counter market, so long as such party has no active
participation in the business of such entity.
(b) During the Non-Competition Period, such party shall not
directly or indirectly (i) induce or attempt to induce any employee of the
Purchaser to leave the employ of the Purchaser, or in any way interfere with
the relationship between the Purchaser and any employee thereof; or (ii)
induce or attempt to induce any customer, supplier, licensee, licensor,
distributor or other business relation of the Purchaser to cease doing
business with the Purchaser or in any way interfere with the relationship
between any such customer, supplier, licensee, licensor, distributor or
business relation and the Purchaser, as the case may be (including, without
limitation, making any negative statements or communications about the
Purchaser).
(c) If, at the time of enforcement of this Section, a court
shall hold that the duration, scope, geographic area or other restrictions
stated herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope, geographic area or other restrictions
deemed reasonable under such circumstances by such court shall be substituted
for the stated duration, scope, geographic area or other restrictions.
(d) Such party recognizes and affirms that in the event of a
breach of this Section, money damages would be inadequate and the Purchaser
would have no adequate remedy at law. Accordingly, such party agrees that
the Purchaser shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and such party's
obligations under this Agreement not only by an action or actions for
damages, but also by an action or actions for specific performance,
injunctive and/or equitable relief, in either case without proof of actual
damages and without posting a bond or other security, in order to enforce or
prevent any violations (whether anticipatory, continuing or future) of this
Agreement. In the event of a breach or violation by such party of this
Section, the running of the Non-Competition Period (but not of such party's
obligations hereunder) shall be tolled during the continuance of any actual
breach or violation.
(e) By virtue of such party's relationship to the Business,
such party has been exposed and has had access to confidential information
regarding the Business, including, without limitation, information concerning
the products pricing, marketing and promotion techniques, suppliers,
customers and financial information (all of the foregoing being herein
referred to collectively as "Confidential Information"). Such party agrees
that during the Non-Competition Period and at all times thereafter, such
party shall hold in confidence and shall not disclose or use (except for the
benefit of the Purchaser) any of the Confidential Information; provided,
however, that the foregoing shall not apply to information which (i)
subsequently becomes available to the general public other than by disclosure
by such party in violation hereof, or (ii) is disclosed, following written
notice to the Purchaser, under the terms of a subpoena or order issued by a
court of competent jurisdiction or pursuant to applicable law.
3.11 Change and Discontinuance of Use of Names. Each of the Seller
and the Shareholder shall file amendments to its articles of organization and
any certificates of authority to do business in foreign jurisdictions
changing its corporate name to a name which does not include the word
"Goddard," "Goddard Valve" or "Goddard Industries" or any derivatives
thereof. The Seller shall take such actions within three (3) Business Days
after the Closing and the Shareholder shall take such actions within 120 days
after the Closing. Each of the Seller and the Shareholder shall cease using
the name "Goddard" or any derivatives thereof for ongoing business purposes
(i.e., in connection with the sale of products and services) after the
Closing.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions contemplated hereby shall be subject to
the satisfaction on or prior to the Closing of the following conditions (any
of which may be waived in writing by the Seller):
(a) the Purchaser shall have performed and complied in all
material respects with all obligations and agreements required to be
performed and complied with by it hereunder on or prior to the Closing
(including, without limitation, those specified in Section 5.3);
(b) the representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all material
respects as of the Closing Date as if made as of such date (other than those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time, which need only be
true and accurate as of such date or with respect to such period); and
(c) no action, suit, claim or proceeding by or before any
Governmental Authority shall be pending which seeks to restrain, prevent or
materially delay or restructure the transactions contemplated hereby or which
otherwise questions the validity or legality of any such transactions.
4.2 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions contemplated hereby shall be subject
to the satisfaction on or prior to the Closing of the following conditions
(any of which may be waived in writing by the Purchaser):
(a) The Seller shall have performed or complied in all material
respects with all obligations and agreements required to be performed or
complied with by it hereunder on or prior to the Closing (including, without
limitation, those specified in Section 5.2);
(b) the representations and warranties of the Seller contained
in this Agreement shall be true and correct in all material respects as of
the Closing Date as if made as of such date (other than those representations
and warranties that address matters only as of a particular date or only with
respect to a specific period of time, which need only be true and accurate as
of such date or with respect to such period);
(c) no action, suit, claim or proceeding by or before any
Governmental Authority shall be pending which seeks to restrain, prevent or
materially delay or restructure the transactions contemplated hereby or which
otherwise questions the validity or legality of any such transactions; and
(d) the Seller shall have obtained on terms and conditions
reasonably satisfactory to the Purchaser the consents and approvals of third
parties listed on Schedule 4.2(d).
ARTICLE V
CLOSING
5.1 Closing. The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Brown Rudnick Berlack
Israels LLP, One Financial Center, Boston, Massachusetts at 10:00 a.m.,
Boston time, on January 31, 2003, or at such other place, at such other time
or on such other date, as the parties may mutually agree. The date on which
the Closing actually occurs is referred to herein as the "Closing Date."
5.2 Deliveries by the Seller. Subject to the terms and conditions
hereof, the Seller shall deliver the following to the Purchaser at or before
the Closing:
(a) evidence that the Seller has obtained on terms and
conditions reasonably satisfactory to the Purchaser all consents and
approvals required under Section 4.2(d);
(b) such bills of sale and assignments (including assignments
of Proprietary Rights), special warranty deeds, duly endorsed certificates of
title of motor vehicles to be transferred, and other instruments and
documents of conveyance and transfer, in form and substance reasonably
satisfactory to the Purchaser, as shall be necessary and effective to
transfer and assign to, and vest in, the Purchaser all right, title and
interest in and to the Acquired Assets;
(c) a certificate of the Seller, in form and substance
reasonably satisfactory to the Purchaser, dated the Closing Date and signed
by the President or a Vice President of the Seller, certifying compliance
with the conditions set forth in Sections 4.2(a) and 4.2(b); and
(d) an opinion of counsel to the Seller substantially in the
form of Exhibit A attached hereto, and
(e) Restrictive Covenant Agreements executed by Salvatore J.
Vinciguerra, Donald R. Nelson and Saul I. Reck, respectively, substantially
in the form of Exhibit B attached hereto.
5.3 Actions or Deliveries by the Purchaser. Subject to the terms and
conditions hereof, the Purchaser shall deliver the following to the Seller at
or before the Closing:
(a) the Initial Purchase Price Payment in accordance with
Section 1.6(a);
(b) an assumption agreement, in form and substance reasonably
satisfactory to the Seller, evidencing the Purchaser's assumption of the
Assumed Liabilities;
(c) a certificate of the Purchaser, in form and substance
reasonably satisfactory to the Seller, dated the Closing Date and signed by
the President or a Vice President of the Purchaser, evidencing compliance
with the conditions set forth in Sections 4.1(a) and 4.1(b); and
(d) an opinion of counsel to the Purchaser substantially in the
form of Exhibit C attached hereto.
5.4 Other Documents. The parties agree to execute and deliver at the
Closing all Ancillary Documents and other documents that are necessary or
advisable in order to consummate the transactions contemplated hereby or in
connection herewith.
5.5 Expenses. Except as otherwise specifically provided herein, each
of the Purchaser and the Seller shall pay its own expenses, including, but
not limited to, attorneys', accountants', financial advisors' and brokers' or
finders' fees, incurred in connection with the transactions contemplated
hereby.
ARTICLE VI
TERMINATION
6.1 Termination. This Agreement may be terminated prior to the
Closing:
(a) at any time by mutual consent of the Purchaser and the
Seller; or
(b) by either the Purchaser or the Seller if the Closing shall
not have been consummated on or before March 31, 2003 (provided that the
terminating party is not otherwise in material breach of its obligations
under this Agreement), which date may be extended by written agreement of the
Purchaser and the Seller.
6.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with Section 6.1, this Agreement shall thereafter
become void and there shall be no liability on the part of any party hereto
or their respective directors, officers, shareholders or agents, except that
any such termination shall be without prejudice to the rights of any party
hereto arising out of the material breach by any other party of any covenant
or agreement contained in this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Seller and the Shareholder. Subject to
the terms of this Article VII, the Seller and the Shareholder jointly and
severally shall indemnify and hold harmless the Purchaser from and against
any liability, claim, demand, action, suit, proceeding, judgment, settlement,
loss, damage or expense, including, without limitation, reasonable
consulting, attorneys' and accountants' fees (collectively, "Losses"),
suffered or incurred by the Purchaser following completion of the Closing
which arise out of or result from:
(a) any inaccuracy in or breach of any of the representations
and warranties of the Seller contained in Section 2.1;
(b) any breach by the Seller of any covenant or agreement of
the Seller contained in this Agreement; or
(c) any of the Retained Liabilities, including any Retained
Liabilities for which the Purchaser is held liable as a successor or
otherwise.
Notwithstanding the foregoing, the Purchaser shall not be entitled to
indemnification hereunder with respect to Losses suffered or incurred under
Section 7.1(a): (i) until such Losses, exceed $40,000 in the aggregate (and
then only to the extent of such excess) and (ii) in an amount in excess of
$2,000,000 in the aggregate.
7.2 Indemnification by the Purchaser. Subject to the terms of this
Article VII, the Purchaser shall indemnify and hold harmless the Seller from
and against any Losses suffered by the Seller following completion of the
Closing which arise out of or result from:
(a) any inaccuracy in or breach of any of the representations
or warranties of the Purchaser contained in Section 2.2;
(b) any breach by the Purchaser of any covenant or agreement of
the Purchaser contained in this Agreement; or
c) any of the Assumed Liabilities.
7.3 Method of Asserting Third Party Claims. Promptly after the
assertion by any third party of any claim or demand against any Person that
may be entitled to indemnification under this Article VII with respect to
such claim (the "Indemnified Party"), the Indemnified Party shall promptly
notify the party from whom indemnification may be sought (the "Indemnifying
Party"), specifying the nature of such claim and the amount or the estimated
amount thereof to the extent then feasibly ascertainable (which estimate
shall not be conclusive of the final amount of such claim) (the "Claim
Notice"). Within thirty (30) days after receipt of a Claim Notice (the
"Notice Period"), the Indemnifying Party may assume the defense of such
claim; provided, however, that (a) the Indemnifying Party shall retain
counsel reasonably acceptable to the Indemnified Party; and (b) the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld), enter into any
settlement of a claim, consent to the entry of any judgment with respect to a
claim or cease to defend a claim, if pursuant to or as a result of such
settlement, consent or cessation, injunctive or other equitable relief shall
be imposed against the Indemnified Party or if such settlement does not
expressly and unconditionally release the Indemnified Party from all
Liabilities with respect to such claim, with prejudice. The Indemnified Party
may participate in the defense of such claim with co-counsel of its choice;
provided, however, that the fees and expenses of the Indemnified Party's
counsel shall be paid by the Indemnified Party unless (i) the Indemnifying
Party has failed to assume the defense and employ counsel as provided herein;
or (ii) a claim shall have been brought or asserted against the Indemnifying
Party as well as the Indemnified Party, and the Indemnified Party shall have
been advised in writing by outside counsel that there may be one or more
factual or legal defenses available to it that are in conflict with those
available to the Indemnifying Party, in which case such co-counsel shall be
at the expense of the Indemnifying Party. If the Indemnifying Party does not
assume the defense of such claim, the Indemnified Party may defend against
the same in any manner that it reasonably deems appropriate.
7.4 Method of Asserting Direct Claims. In the event an Indemnified
Party desires to assert a claim for indemnification against an Indemnifying
Party that does not involve a third party, the Indemnified Party shall
promptly send a Claim Notice with respect to such claim to the Indemnifying
Party. The Indemnifying Party shall notify the Indemnified Party within the
Notice Period whether it disputes all or any part of such claim.
7.5 Survival of Representations. All of the representations and
warranties contained in this Agreement shall survive for a period of fifteen
(15) months following the Closing Date except that those contained in Section
2.1(g) (Title to Assets) and those fraudulently made shall survive
indefinitely and those contained in Sections 2.1(s) (Taxes) and 2.1(t)
(Employee Benefit Plans) shall survive until the end of three (3) months
following the expiration of the applicable statute of limitation with respect
to the matter giving rise to the claim for indemnification. No claim for
indemnification may be made under this Article VII unless a Claim Notice is
given within the applicable survival period set forth herein.
7.6 Failure to Give Timely Notice. Except as provided in Section 7.5,
a failure by an Indemnified Party to give timely, complete or accurate
notice as required under Sections 7.3 or 7.4 shall not affect the rights or
obligations of any party hereunder except and only to the extent that, as a
result of such failure, any party entitled to receive such notice was
deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise damaged or prejudiced as a result of such failure
to give timely notice.
ARTICLE VIII
DEFINITIONS
8.1 Certain Definitions. For purposes of this Agreement, the
following terms and phrases shall have the following meanings:
"Affiliate" means, with respect to any Person, (a) if an entity, any
director, officer, manager, general partner or trustee of such Person, (b) if
an individual, a spouse, parent, sibling or descendant of such Person and (c)
any other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with
such Person. The term "control" includes, without limitation, the possession,
directly or indirectly, of the power to direct the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
"Business Day" means any day other than a Saturday, a Sunday or a legal
holiday on which banks are authorized or required to be closed for the
conduct of commercial banking business in Boston, Massachusetts or Winston-
Salem, North Carolina.
"Code" means the Internal Revenue Code of 1986, as amended.
"Employee Benefit Plan" means any (a) Pension Plan, (b) Welfare Plan
and (c) any other employee benefit, fringe benefit, perquisite, deferred
compensation, retirement, or employee stock option, stock purchase or stock
ownership plan, agreement or arrangement, whether or not subject to ERISA and
whether or not funded.
"Governmental Authority" means any court, arbitrator, administrative
agency or commission, or governmental or regulatory official, department,
agency, body, authority or instrumentality, whether foreign, federal, state
or local.
"Laws" means any federal, state, local, municipal or foreign statute,
law, ordinance, regulation, rule, code, order, other requirement or rule of
law.
"Lien" means any lien, claim, hypothecation, option, pledge, charge,
security interest, equitable interest, or other encumbrance of any nature or
kind whatsoever.
"Pension Plan" means any qualified or non-qualified Employee Pension
Benefit Plan (including any Multiemployer Plan), as such term is defined in
Section 3(2) of ERISA.
"Person" means any individual, sole proprietorship, general
partnership, limited partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, Government
Authority or other entity.
"to the best of the Seller's knowledge" or words of similar import mean
the actual knowledge, after conducting a reasonable investigation, of
Salvatore J. Vinciguerra, President and Chief Executive Officer of the
Seller, Donald R. Nelson, Vice President of Engineering of the Seller, and
Kenneth E. Heyman, Vice President and Controller of the Seller.
"Welfare Plan" means any Employee Welfare Benefit Plan, as such term is
defined in Section 3(1) of ERISA.
8.2 Other Defined Terms. Each of the following terms have the
meaning assigned to it in the Section indicated:
Term Section
Accounts Receivable 2.1(h)
Acquired Accounts Receivable 1.2(a)
Acquired Assets 1.1
Acquired Contracts 1.2(e)
Agreement Preamble
Ancillary Documents 2.1(b)
Assumed Liabilities 1.4(a)
Business Recitals
Claim Notice 7.3
Closing 5.1
Closing Balance Sheet 1.7
Closing Date 5.1
COBRA 10(b)
Confidential Information 3.11(e)
Employee Plans 2.1(t)(i)
ERISA 2.1(t)(i)
ERISA Affiliate 2.1(t)(i)
Evaluator 1.8
Excluded Assets 1.3
Financial Statements 2.1(e)
GAAP 1.8
Indemnified Party 7.3
Indemnifying Party 7.3
Initial Purchase
Price Payment 1.6(b)
Latest Balance Sheet 2.1(h)
Latest Financial
Statement Date 2.1(e)
Letter of Intent 1.6(a)
Losses 7.1
Non-Competition Period 3.11(a)
Notice Period 7.3
Participate 3.11(a)
PBGC 2.1(t)(vi)
PPA Holdback 1.6(b)
Proprietary Rights 2.1(l)(i)
Purchase Price Adjustment 1.7
Purchase Price 1.5
Purchaser Preamble
Receivables Adjustment 1.10
Receivables Holdback 1.6(b)
Reference Balance Sheet 1.7
Retained Liabilities 1.4(b)
Seller Preamble
Shareholder Preamble
Tax Returns 2.1(s)
Taxes 2.1(s)
Warranty Obligations 3.9
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices and other communications required or
desired to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally (including delivery by courier
service), transmitted by facsimile transmission with electronic confirmation,
or mailed by registered or certified mail, postage prepaid, return receipt
requested, as follows:
(a) If to the Seller or the Shareholder, to:
Goddard Industries, Inc.
c/o Salvatore J. Vinciguerra
5 Byfield Road
Newton, Massachusetts 02468
Attention: Salvatore J. Vinciguerra
Facsimile: (617) 964-5633
Telephone: (508) 579-4752
with a copy sent contemporaneously to:
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, Massachusetts 02111
Attention: Joel M. Reck
Facsimile: (617) 856-8201
Telephone: (617) 856-8558
(b) If to the Purchaser, to:
Engineered Controls International, Inc.
100 Rego Drive
Post Office Box 247
Elon, North Carolina 27244
Attention: Donald G. Armstrong
Facsimile: (336) 449-6594
Telephone: (336) 449-7707
with a copy sent contemporaneously to:
Neal, Gerber & Eisenberg
2 North LaSalle Street
Chicago, Illinois 60602
Attention: Miranda K. Mandel
Facsimile: (312) 269-1747
Telephone: (312) 269-8029
or to such other address as the Person to whom notice is to be given may have
previously furnished to the other parties in writing in accordance herewith.
Notice shall be deemed given on the date received (or, if receipt thereof is
refused, on the date of such refusal).
9.2 Amendments and Waivers. This Agreement may not be amended,
modified or supplemented except by written agreement of the parties hereto.
No waiver by any party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
9.3 No Presumption Against Drafter. Each of the parties hereto has
jointly participated in the negotiation and drafting of this Agreement. In
the event there arises any ambiguity or question of intent or interpretation
with respect to this Agreement, this Agreement shall be construed as if
drafted jointly by all of the parties hereto and no presumptions or burdens
of proof shall arise favoring any party by virtue of the authorship of any of
the provisions of this Agreement.
9.4 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Exhibits and
Schedules attached to this Agreement are for convenience only and shall not
be deemed part of this Agreement or be given any effect in interpreting this
Agreement. The use of the masculine, feminine or neuter gender herein shall
not limit any provision of this Agreement. The use of the terms "including"
or "include" shall in all cases herein mean "including, without limitation"
or "include, without limitation," respectively. References to any "Article,"
"Section," "Exhibit" or "Schedule" shall refer to an Article or Section of,
or an Exhibit or Schedule to, this Agreement. Any due diligence review,
audit or other investigation or inquiry undertaken or performed by or on
behalf of a party shall not limit, qualify, modify or amend the
representations, warranties or covenants of, or indemnities made by, any
other party pursuant to this Agreement, irrespective of the knowledge and
information obtained (or which should have been received) therefrom by the
investigating party, and consummation by a party of the transactions
contemplated hereby shall not be deemed a waiver of a breach of or an
inaccuracy in any representation, warranty or covenant or of its rights and
remedies with regard thereto.
9.5 Parties in Interest; Assignment. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their
respective successors, permitted assigns and legal representatives, and
nothing in this Agreement, express or implied, is intended to confer upon any
other Person any rights or remedies of any nature. No party may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other parties hereto; provided, however, that, upon written
notice to the Seller and the Shareholder, the Purchaser may assign this
Agreement and any rights hereunder to any Person acquiring all or
substantially all of the Business.
9.6 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the Laws of the Commonwealth of
Massachusetts, without regard to the conflicts of law principles of such
Commonwealth.
9.7 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
9.8 Severability. If any term or provision of this Agreement shall,
to any extent, be held by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Agreement or the application of such
term or provision to Persons or circumstances other than those as to which it
has been held invalid or unenforceable, shall not be affected thereby and
this Agreement shall be deemed severable and shall be enforced otherwise to
the full extent permitted by law; provided, however, that such enforcement
does not deprive any party hereto of the benefit of the bargain.
9.9 Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to herein and which form a part hereof) constitutes the
entire agreement among the parties hereto and supersedes all prior agreements
and understandings, oral and written, among the parties hereto with respect
to the subject matter hereof, but specifically excluding (i) the Reciprocal
Non-Disclosure Agreement dated as of October 1, 2002 by and between the
Shareholder and the Purchaser; provided, however, that the obligations of the
Purchaser thereunder shall terminate as of the Closing with respect to the
Confidential Information, as defined therein, of the Seller, and (ii) the
final two sentences of Section 5 of the Letter of Intent regarding the return
of the Escrow Amount, as defined therein.
9.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the Purchaser and the Seller on the date first above written.
THE SELLER:
GODDARD VALVE CORPORATION,
a Massachusetts corporation
By: ______________________________________
Name: Salvatore J. Vinciguerra
Title: President
THE SHAREHOLDER:
GODDARD INDUSTRIES, INC., a Massachusetts
corporation
By: ______________________________________
Name: Salvatore J. Vinciguerra
Title: President
THE PURCHASER:
ENGINEERED CONTROLS INTERNATIONAL, INC.,
a Delaware corporation
By:______________________________________
Thomas R. Darcy, President