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)
April 4, 1996
MILASTAR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-5105 13-2636669
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
No. 9 Via Parigi, Palm Beach, Florida 33480
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (407) 655-9590
Not Applicable
Former name, former address and former fiscal year, if changed since
last report.
MILASTAR CORPORATION AND SUBSIDIARIES
Item 2. Acquisition or Disposition of Assets
On April 4, 1996 (the "Closing Date"), Flame Metals Processing
Corporation ("Flame"), a Delaware corporation and a wholly-owned
subsidiary of Milastar Corporation, a Delaware corporation
("Registrant"), purchased substantially all of the assets (the "Assets")
and assumed certain liabilities (the "Liabilities") of New England Metal
Treating, Inc, a Massachusetts corporation ("Seller"), pursuant to an
asset purchase agreement dated as of April 4, 1996 (the "Purchase
Agreement").
The aggregate purchase price paid by Flame to Seller was
$729,623, which amount was comprised of the following: (i) a cash
payment of $500,000, (ii) assumption of the Liabilities in the aggregate
amount of $29,623 and (iii) Flame's promissory note in the principal
amount of $200,000, payable in 4 yearly installments. An amendment to
this report will be filed within 60 days of the date hereof under cover of
Form 8-K (amended) to reflect the adjustment to the purchase price as
well as to provide the pro forma and other financial information.
The terms of the sale are more fully described in the Purchase
Agreement, a copy of which is attached as an exhibit hereto.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial statements of business acquired:
It is impracticable to provide the required financial statements at the time
of the filing of this report. The required financial information will be
filed under cover of Form 8-K (amended) within 60 days of the date
hereof.
(b) Pro forma financial information:
It is impracticable to provide the required pro forma financial
information at the time of the filing of this report. The required pro
forma financial information will be filed under cover of Form 8-K (amended)
within 60 days of the date hereof.
(c) Exhibits:
10.10 Asset Purchase Agreement dated as of April 4, 1996 by and
among Flame, New England Metal Treating and Paul R. Ricard.
SIGNATURE
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.
MILASTAR CORPORATION
/s/ J. RUSSELL DUNCAN
J. Russell Duncan
Chairman of Board and
Chief Executive Officer
Dated: April 17, 1996
EXHIBIT 10.10
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made as of this 4th day of April,
1996, by and between NEW ENGLAND METAL TREATING, INC. , a
Massachusetts Corporation, with a principal place of business at 14 Sword
Street, Auburn (hereinafter the "Seller"), and NEW ENGLAND METAL
TREATING CORPORATION, a Massachusetts Corporation, with a
principal place of business at 14 Sword Street, Auburn (hereinafter the
"Buyer"). The Seller and the Buyer may hereinafter be collectively
referred to as the "Parties."
RECITALS
The Seller is engaged in the operation of the "Business" as hereinafter
defined.
The Buyer wishes to purchase certain assets of the Seller and the
Seller is willing to sell such assets to the Buyer on the terms and
conditions as set forth in this Agreement.
AGREEMENT
In consideration of this Agreement and the mutual promises herein
made and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the Parties, the
Parties agree as follows:
l. Definitions
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes,
liens, losses, expenses and fees, including court costs and attorneys' fees
and expenses.
"Acquired Assets" means all of the Seller's right, title and interest in
and to its accounts receivable, fixtures, processes, equipment, machinery,
tools, dies, jigs, appliances, leasehold improvements, inventories,
materials, supplies (including raw materials work in process, and
manufactured products and prototype models): its patents, licenses,
trademarks, trade secrets and trade names of every sort and kind; its books
of accounts and records which in any way relate to the conduct of the
business; the name New England Metal Treating as a trademark and trade
name; all business telephone numbers and all other franchises or other
privileges used, or for use in, or acquired for use by or in connection with
the business, including gas, power, light, water and other tributary and
utility properties being and intended to be all of the assets, businesses and
properties of every kind and nature, and wherever situated.
Without limiting the foregoing, the "Acquired Assets" shall include those
items set forth on Schedule 1, attached hereto and made a part hereof.
"Business" means the service business for the heat treating of metal as
regularly conducted by the Seller.
"Buyer" has the meaning set forth in the preface above.
"CERCLA" has the meaning set forth in paragraph 3(v) below.
"Closing" has the meaning set forth in paragraph 2(d) below.
"Closing Tate" as the meaning set forth in paragraph 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
Business and affairs of the Seller that is not generally available to the
public.
"Covenant -Not to Compete" has-the meaning set forth in paragraph
2(c) below.
"Debt" means (1) indebtedness or liability for borrowed money, (2)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (3) obligations for the deferred purchase price of property or
services (including trade obligations), (4) obligations as lessee under
capital leases, (5) current liabilities in respect of unfunded vested benefits
under plans covered by ERISA, (6) obligations under letters of credit and
acceptance facilities, (7) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment, so
supply funds to invest in any person or entity, or otherwise to assure a
creditor against loss, (8) obligations secured by any liens, whether or not
the obligations have been assumed, (9) any other Liabilities, whether or
not incurred in the Ordinary Course of Business, including any
prepayment penalties and charges resulting from prepayment of any Debt
and any accrued interest on any Debt, and (10) the remaining contract
values for services prepaid by any customers of the Seller.
"Employee Benefit Plan" has the meaning set forth in paragraph 3(t)
below.
"Environmental, Health and Safety Laws" means CERCLA, the
Resource Conservation and Recovery Act of 1976, and the Occupational
Safety and Health Act of 1970, each as amended, together with all other
laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings and charges
thereunder) of Federal, State, local and foreign governments, and all
agencies thereof, concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or chemical, industrial, hazardous or toxic
materials, substances or wastes into ambient air, surface water, ground
water or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or chemical, industrial, hazardous or toxic
materials, substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Financial Statement" has the meaning set forth in paragraph 3(f)
below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Governmental Permits" has the meaning set forth in paragraph 3(I)
below.
"Hazardous Substance" has the meaning set forth in paragraph 3(v)
below.
"Indemnified Party" has the meaning set forth in paragraph 8(c) below.
"Indemnifying Party" has the meaning set forth in paragraph 8(c)
below.
"Intellectual Property" means all inventions, trademarks, service
marks, trade dress, logos, trade names and corporate names, trade secrets
and confidential business information (including customer and supplier
lists, pricing and cost information and business and marketing plans and
proposals), computer software, other proprietary rights and all copies and
tangible embodiments thereof, in whatever form or medium.
"Knowledge" means, where a Party represents a fact herein to his/
her/its Knowledge, that such Party knows or should reasonably have
known such fact after investigation.
"Liability" means any debt or other liability, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, or due or to become due, including
any liability for Taxes.
"Most Recent Fiscal Year End" has the meaning set forth in paragraph
3(f) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice, including with respect to
quantity and frequency.
"Parties" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity (or
any department, agency or political subdivision thereof), or any other
entity recognized under the laws of any state.
"Purchase Price" has the meaning set forth in paragraph 2(c) below.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest.
"Seller" has the meaning set forth in the preface above.
"Tax" means any Federal, State, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimate, or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
"Tax Amounts" has the meaning set forth in paragraph 8(b)((3))
below.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in paragraph 8(c)
below.
2. Purchase and Sale of Assets
(a) Basic Transaction. At Closing, and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller
and the Seller agrees to sell to the
Buyer all of the Seller's right, title and interest in and to the Acquired
Assets for the consideration specified below in this paragraph 2.
(b) Assumption of Liabilities. Subject to the terms and conditions of
this Agreement, the Buyer shall assume only those liabilities appearing on
the Seller's Balance Sheet as of September 30, 1995, in the aggregate
amount of $29,623.00, (collectively, the "Assumed Liabilities"),
consisting of the following:
Accounts Payable $27,645.00
Withheld taxes 1,954.00
Accrued Expenses 24.00
Total Assumed Liabilities: $29,623.00
Any increase or decrease in the Assumed Liabilities will result in a
corresponding and proportionate dollar-for-dollar decrease or increase in
the cash payment at Closing as set forth in paragraph 2(c)(3) below.
The Buyer will not assume liabilities not recorded and relating to those
set forth on Schedule 2(b) hereto (collectively "Excluded Liabilities") or
any other liabilities not specifically set forth herein.
(c) Purchase Price. The Buyer agrees to pay to the Seller and the
Seller's Principals a total of Seven Hundred Thousand Dollars
($700,000.00), subject to adjustments described herein (the "Purchase
Price") for the Acquired Assets and the covenant by the Seller not to
compete set forth in paragraph 5(b) of this Agreement (the "Covenant Not
to Compete").
(1) The Purchase Price set forth above is based on the Seller's Balance
Sheet, at Closing, reflecting total assets of at least $274,644.00. Any
decrease or increase in this amount will result in a corresponding and
proportionate dollar-for-dollar decrease or increase in the cash payment at
Closing as set forth in paragraph 2(c)(3) below.
(2) The Buyer has paid to the Seller, at the time of execution of a
Letter of Intent regarding this transaction, the sum of Ten Thousand
Dollars ($10,000.00) as earnest money, which sum is being held in escrow
by the Seller's Attorney. If this transaction is not consummated, said
earnest money shall be refunded to the Buyer in full.
(3) At the Closing, the Buyer shall pay to the Seller, by certified or
cashier's check, the sum of Four Hundred Ninety Thousand Dollars
($490,000.00), adjusted by the provisions of paragraphs 2(b) and 2(c)(1)
above, if applicable.
(4) The Buyer shall make subsequent payments of Fifty Thousand
Dollars ($50,000.00) each to the Seller or its assignee, by certified or
cashier's check, on January 1, 1997, January 1, 1998, January 1, 1999, and
January 1, 2000. Such payments shall be represented by a Promissory
Note, in substantially the form as attached hereto as Appendix 2(c)(4).
(4) At the Closing, the following items will be prorated:
Prepaid Insurance
Utilities
Telephone Bills and Listings
Leases
Any other proratable items
(5) Unless the Parties agree on a different method of payment, all
payments due to the Seller from the Buyer shall be paid by certified or
cashier's check.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on or about April 4, 1996, the
affective date of execution hereof, as specified at the beginning of this
Agreement (the "Closing Date").
(e) Deliveries at Closing. At the Closing, (1) the Seller shall deliver to
the Buyer the various certificates, instruments and documents referred to
in paragraph 5 below to be delivered by the Seller, (2) the Buyer shall
deliver to the Seller the various certificates, instruments and documents
referred to in paragraph 5 below to be delivered by the Buyer, (3) the
Seller shall deliver to the Buyer bills of sale, assignments and such other
instruments of sale, transfer and assignment as the Buyer and its counsel
may request, transferring to the Buyer all of the Acquired Assets, free of
any liens, claims and encumbrances, (4) each Party will deliver the other
certificates, instruments and documents referred to in paragraph 5 below to
be executed and delivered by such Party, and (5) the Buyer will deliver the
consideration specified in paragraph 2(c) above.
(f) Allocation. The Parties shall allocate the Purchase Price (and all
other capitalizable costs) among the Acquired Assets and Covenant Not to
Compete for all purposes (including financial accounting and tax
purposes) in accordance with the allocation schedule attached hereto as
Schedule 2(f).
3. Representations and Warranties Concerning the Seller
The Seller represents and warrants to the Buyer that the statements
contained in this paragraph 3 are correct and complete as of the Closing
Date, except as set forth in any applicable Schedule delivered by the Seller
to the Buyer at the Closing.
(a) Organization and Authorization. The Seller is a Corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts.
The copies (certified by the Clerk of the Seller) of the Articles or
Organization of the Seller and all amendments thereto to date which have
been delivered to the Buyer are complete and correct as of the date of this
Agreement.
The Seller has full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms
and conditions.
(b) Noncontravention; Third Party Approvals. Neither the execution
and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (1) violate any constitution, statute,
law, regulation, rule injunction, judgment, order, decree, ruling, charge or
other restriction of any government, governmental agency, or court to
which the Seller is subject or any provision of its charter or bylaws or (2)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument or other arrangement to which the Seller is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
The Seller is not required, by any agreement, applicable statute, rule or
regulation or other law, or otherwise, to give any notice to, make any
filing with, or obtain any authorization, consent, approval of or waiver by
any Person in order for the Parties to consummate the transaction
contemplated by this Agreement or to assign to the Buyer all of its
permits, licenses, rights under leases and other agreements, and other
Acquired Assets.
(c) Brokers' Fees. There is no Liability or obligation on account of any
agreement, act or failure to act of the Seller to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could become liable
or obligated.
(d) Title to Assets. The Seller has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, including all Acquired Assets, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary
Course of Business.
(e) Affiliates. There are not now and have never been any Persons that
the Seller directly or indirectly controls.
(f) Financial Statements. Attached hereto as Schedule 3(f) are
Financial Statements and Supplementary Information and Forms 1120S,
United States Income Tax Returns for S Corporations, for the fiscal years
ended September 30, 1993, September 20, 1994, and September 30, 1995
(collectively the "Financial Statements").
September 30, 1995, is hereinafter called the "Most Recent Fiscal Year
End."
The Financial Statements (including any notes thereto) have been
prepared on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Seller as of such dates and the
results of operations of the Seller for such periods, are correct and
complete and consistent with the books and records of the Seller, which
books and records are correct and complete.
(g) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any material adverse
change in the business, financial condition, operations, results of
operations or future prospects of the Seller. Without limiting the generality
of the foregoing, since that date:
(1) no party (including the Seller) has accelerated, terminated,
modified or canceled any agreement, contract, lease or license (or series of
related agreements, contracts, leases and licenses) involving more than
$5,000 to which the Seller is a party or by which it is bound:
(2) the Seller has not delayed or postponed the payment of accounts
payable or other Liabilities outside the Ordinary Course of Business;
(3) the Seller has not canceled, compromised, waived or released any
right or claim (or series of related rights and claims) or other indebtedness
owing to the Seller'
(4) the Seller has not experienced any damage, destruction or loss
(whether or not covered by insurance) to any of its property;
(5) the Seller has not adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance, or any other plan, contract, or
commitment for the benefit of any of its officers or employees (or taken
any such action with respect to any other Employee Benefit Plan);
(6) there has not been any other material occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving the Seller; and
(7) the Seller has not committed to any of the foregoing.
(h) Undisclosed Liabilities. The Seller has no Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Seller giving
rise to any Liability), except for (1) Liabilities set forth in Schedule 3(h),
and (2) Liabilities which have arisen after the Most Recent Fiscal Year
End in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement or violation of law).
Schedule 3(h) sets forth all Liabilities of the Seller, except as described in
clause (2) of the immediately preceding sentence.
(I) Legal Compliance. The Seller, and its predecessors, if any, have
complied with all applicable laws, statutes and ordinances, rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings
and charges of Federal, State, local and foreign governments and all
agencies thereof that are material to operation of its business, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced against any of them
alleging any failure so to comply.
(j) Tax Matters
(1) The Seller has filed all Federal, State, county, local and foreign
Tax Returns required to have been filed and such returns are true and
correct. The Seller has paid all taxes, interest, penalties, assessments or
deficiencies that have or may become due pursuant to such returns or with
respect to any period or periods covered by such returns. There are no
present or, to the Knowledge of the Seller, threatened disputes as to Taxes
payable by the Seller. The Seller has delivered to the Buyer copies of all
Federal Tax Returns for its last three years. The Seller is not currently the
beneficiary of any extension of time within which to file any Tax Return.
No claim has ever been made by an authority in a jurisdiction where the
Seller does not file Tax Returns that Seller is or may be subject to taxation
by that jurisdiction. There are no Security Interests on any of the assets of
the Seller that arose in connection with any failure (or alleged failure) to
pay any Tax.
(2) The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party.
(3) Neither the Seller nor any employee responsible for Tax matters of
the Seller expects any authority to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of the Seller either (A) claimed or;-raised by
- -any authority in writing or (B) as to which any of the Seller or any
employee responsible for Tax matters of the Seller has Knowledge.
(4) The Seller has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(k) Real Property. The real property occupied by the Seller has been
operated in compliance with all Environmental, Health and Safety Laws
and other laws, regulations and ordinances, and there is no other condition
of such real estate that would adversely affect the Acquired Assets, or title
to such assets, or give rise to successor liability in the Buyer.
(l)Intellectual Property. The Seller owns or has the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property, including any trademark or trade name, necessary for the
operation of its Business as presently conducted and as presently proposed
to be conducted. Each item of Intellectual Property owned or used by the
Seller immediately prior to the Closing hereunder will be owned or
available for use by the Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder The Seller has taken all
necessary action to maintain and protect each item of Intellectual Property
that it owns or uses. Section 3(1) identifies each item of Intellectual
Property used by the Seller in connection with its Business.
(m) Tangible Assets. All items of equipment required to be inspected
and licensed have passed all required inspections, bear current inspection
stickers and have all licenses and other approvals, stickers and certificates
which evidence that such equipment is duly licensed. All of the machinery
and equipment necessary for operation of the Business of the Seller are in
working order and condition, normal wear and tear excepted, except for
Items Nos. 14, 16, 22 and 36, as set forth on Schedule 1 which are being
purchased "as is." All equipment included in the Acquired Assets are used
in the operation of the Business and
fit for the purposes for which they are utilized. With respect to those items
listed in Schedule 3(n)(1) as being leased, the leases covering such assets
are in full force and effect, free from default by the parties thereto and
freely assignable to the Buyer without consent of the lessor or any other
Person. The Seller owns or leases all tangible assets necessary for the
conduct of its Business.
(n) Contracts. Customers. Bank Accounts
(1) Schedule 3(n)(1) lists all agreements, including commitments,
leases (real estate and personal property), arrangements and other
agreements to which the Seller is a party or by which it or any of its
property is bound. The Seller has delivered to the Buyer a correct and
complete copy of each written agreement listed in Schedule 3(n)(1) and a
written summary setting forth the terms and conditions of each oral
agreement referred to in such Schedule 3(n)(1). All agreements required
by the Seller to operate its Business are listed in Schedule 3(n)(1). With
respect to each such agreement listed in Schedule 3(n)(1), except as
specifically identified in that schedule, the agreement is in full force and
effect and freely assignable to the Buyer without the need for the consent
of any other Person, and no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification or acceleration under the
agreement.
The Buyer has negotiated directly with the Lessor to lease the
premises presently leased by the Seller under the same terms and
conditions for a period of five (5) years with an option to renew for an
additional five (5) years. The success of these negotiations is a condition
precedent to the consummation of this transaction.
(2) Schedule 3(n)(2) sets forth a complete list of all customers of the
Seller. Except as set forth in such Schedule 3(n)(2), there have not been,
within the past twelve (12) months, any losses or threatened losses of any
customers, suppliers or employees or material changes in the contractual
relationships of the Seller with any customers or suppliers, which
individually or in the aggregate would have an adverse impact on the
Business.
(o) Notes and Accounts Receivable. The Seller has delivered to the
Buyer an accurate list and aging of the Seller's accounts and notes
receivable, which list is attached hereto as Schedule 3(o). Except for those
accounts as to which collection actions have been initiated, and which are
so designated in Schedule 3(o), all notes and accounts receivable of the
Seller are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, and are current and collectible.
(p) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Seller.
(q) Insurance. The Seller has been covered during the past three (3)
years by the insurance policies listed in Schedule 3(q). No such policy was
terminated for any reason prior to the normal expiration date thereof. Each
such insurer has been properly and timely notified of all claims and other
contingent liabilities involving the Seller, no reservation of rights letters
have been received by the Seller from any such insurer, and each such
insurer has assumed defense of each suit or proceeding of a nature covered
by that policy of insurance issued by it. Schedule 3(q) lists all claims
submitted by the Seller to any insurer within the past three (3) years.
(r) Litigation. The Seller is not (1) subject to any outstanding
injunction, judgment, order, decree, ruling or charge or (2) a party to or
threatened to be made a party to any action, suit, proceeding, hearing or
investigation or, in, or before any court or quasi-judicial or administrative
agency of any Federal, State, local or foreign jurisdiction or before any
arbitrator. The Seller has no reason to believe that any action, suit,
proceeding, hearing or investigation may be brought or threatened against
the Seller.
(s) Employees. The Seller has delivered to the Buyer a list, attached as
Schedule 3(s), setting forth the names of all officers and employees (by
classification or type) of the Seller and their respective rates of
compensation, including the portions thereof attributable to bonuses, and
any other salary, bonus or other payment arrangement made with or
promised to any of them. The Seller is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices or other labor disputes. The
Seller has not committed any unfair labor practice. The Seller has no
Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of
the Seller, or of any intention by any employee to discontinue his/her
relationship with the Seller after Closing.
(t) Employee Benefits
(1) Except as listed in Schedule 3(t), the Seller does not maintain,
sponsor, adopt, make contributions to or obligate itself to make
contributions to or to pay any benefits or grant rights under or with respect
to (A) any pension, profit sharing or other plan of deferred compensation
(whether or not qualified under the Code), any medical plan, life insurance
plan, short-term or long-term disability plan, severance plan, dental plan or
other employee benefit plan or employee welfare benefit plan within the
meaning of ERISA, (B) any personnel policy, excess benefit, bonus or
incentive plan (including stock options, restricted stock, stock bonus and
deferred bonus plans), salary reduction agreements, change-of-control
agreements, employment agreements or consulting agreements, or (c) any
other plan, policy, program, agreement, contract or custom, whether or not
written or pursuant to a collective bargaining agreement, which provides
for the welfare of any of the Seller's employees, former employees,
independent contractors, beneficiaries thereof or other persons, and which
could give rise to or result in Buyer's (whether directly or indirectly)
having any debt, liability, claim or obligation of any kind or nature
(hereinafter all such plans, policies, arrangements, programs and
agreements, whether or not set forth in Schedule 3(t), are called
"Employee Benefit Plans*). A true and complete description of all
employee Benefit Plans of the Seller is set forth in Schedule 3(t).
(2) Except as may be specifically set forth in Schedule 3(t), the Seller
has never been required to contribute to any "multi-employer plan" as
defined in ERISA or has any Liability (including withdrawal Liability)
under any such multi-employer plan.
(3) The Seller does not maintain and has never maintained any
employee welfare benefit plan (as defined in ERISA) providing medical,
health or life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses or their dependents.
(4) The Seller has not failed to satisfy or incurred any tax liability for
failure to satisfy the continuation coverage requirements of group health
plans as described in Section 4980B of the Code.
(u) Guarantees. The Seller is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
(v) Environment. Health and Safety
(1) The Seller is and has been in compliance with all applicable
Environmental, Health and Safety Laws.
(2) Except as may be specifically set forth in Schedule 3(v), the Seller
has never generated, transported, treated, stored or disposed of any
Hazardous Substances (as hereinafter defined), except in accordance with
all applicable Environmental Health and Safety Laws, and no Hazardous
Substances are present on, in or under any real property now or previously
owned or leased by the Seller or any predecessor to the Seller or any asset
now or previously owned or leased by the Seller. No other asset owned or
leased by the Seller or a predecessor to the Seller contains (including
containment by means of any underground storage tank) any Hazardous
Substances. The Seller has not sent, transported, caused the transportation
of or disposed of any waste materials that are not Hazardous Substances,
at any site, location or facility, except in compliance with all
Environmental, Health and Safety Laws. Schedule 3(v) attached hereto
sets forth a full and complete list of each and every site at which the Seller
or any predecessor has disposed of solid waste materials.
(3) ~~'Hazardous Substances" shall include: (A) hazardous substances,
hazardous wastes or hazardous materials, as those terms are defined by the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq. ("CERCLA") and the Resource
Conservation and Recovery Act as amended by the Hazardous and Solid
Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq. and any other
Environmental, Health and Safety Laws, all as amended or hereafter
amended; (B) petroleum, including crude oil or any fraction thereof; (c)
any radioactive material, including any source, special nuclear or
byproduct material as defined in 42 U.S.C. Section 2011 et seq.; and (D)
asbestos in any form or condition.
(4) The Seller has not received any notice of any private,
administrative or judicial action, or notice of any intended private,
administrative or judicial action, relating to the presence or alleged
presence of Hazardous Substances in, under or upon any real property or
other asset now or previously owned or leased by the Seller, or any
predecessor to the Seller, and there is no basis for any such notice or
action. Further, to the Knowledge of the Seller there are no pending or
threatened actions or proceedings (or notices of potential actions or
proceedings) from any governmental agency or any other entity regarding
any matter relating to any Environmental, Health and Safety Laws.
(5) The Seller has not been subject to, or received any notice of, any
private, administrative or judicial action or notice of any intended private,
administrative or judicial action, relating to the transportation or alleged
transportation of Hazardous Substances or the disposition thereof.
(6) Except as may be specifically set forth in Schedule 3(v), there are
and have been no past or present events, conditions, circumstances,
activities, practices, incidents or actions which interfere with or prevent
the continued compliance by the Seller with any Environmental, Health
and Safety Laws.
(7) There are no underground storage tanks located under any land
currently used or leased by the Seller.
(8) The Seller hereby waives, releases and agrees not to make any
claim or bring any cost recovery action against the Buyer under any
Environmental, Health or Safety Law now existing or hereafter enacted,
except to the extent that the Seller can establish that the condition was in
no manner related to any condition or circumstance existing as of or prior
to the Closing.
(9) None of the matters, if any, set forth in Schedule 3(v) does now or
shall ever result in a lien, encumbrance or claim against any Acquired
Assets or otherwise result in any loss for which the Buyer would be liable.
(w) Certain Business Relationships with the Seller. The Seller has no
direct or indirect interest in any competitor, supplier or customer of the
Seller or in any person or entity from whom or to whom the Seller leases
any real or personal property or in any other person or entity with whom
the Seller does business.
(x) Disclosure. The representations and warranties contained in this
paragraph 3 do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information
contained in this~~paragraph 3 not misleading. The Seller has no
Knowledge of any change or proposed change in any applicable law or
governmental policy which materially and adversely affects or may affect
the Business. There are no other facts or circumstances known to the
Seller not disclosed herein that may materially adversely affect the value
of the Seller's assets or the prospects of its Business.
(y) Conduct of Business Prior to Closing
(1) The Business of the Seller has been and will be conducted only in
the normal and usual course of business.
(2) The Seller shall not incur any obligations from the date of
execution of the Letter of Intent to the Closing except for those obligations
as are ordinarily incurred in the normal and usual course of business.
(3) The Seller shall not sell or encumber any of the Acquired Assets
from the date of execution of the Letter of Intent to the Closing except
such sales as are made in the normal and usual course of business.
(4) The Seller shall not remove or cause to be removed from the
premises, without the Buyer's express written consent from the date of
execution of the Letter of Intent to the Closing, any of the Acquired
Assets, except as may be required in the normal and usual course of
business.
(5) Seller shall continue to maintain at its expense all present
insurance required with respect to the premises and the operation of the
Business.
(6) No change has been or will be made in the Articles of organization,
or similar charter documents or bylaws of the Seller, except as may be first
approved in writing by the Buyer.
(7) No change has been or will be made in the capital structure of the
Business or the authorized or issued capital stock of the Seller.
(8) No dividend or other distribution or payment has been or will be
declared or made with respect to the capital stock of the Seller.
(9) Other than for normal compensation increases made and to be
made in the ordinary course of business and in accordance with past
practice, no increase has been or will be made, except with the consent in
writing by the Buyer, in compensation payable to or to become payable to
any officer, employee or agent of the Seller, and no bonus payment or
arrangement has been or will be made by the Seller.
4. Representations and Warranties Concerning the Buyer
The Buyer represents and warrants to the Seller that the statements
contained in this paragraph 4 are correct and complete as of the Closing
Date.
(a) Organization of the Buyer. The Buyer is a Corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts.
The copies (certified by the Clerk of the Buyer) of the Articles or
Organization of the Buyer and all amendments thereto to date which have
been delivered to the Seller are complete and correct as of the date of this
Agreement.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement nor the consummation of the transactions contemplated
hereby, violates or will violate any constitution, statute, regulation, rule
injunction, judgment, order, decree, ruling, charge or other restriction of
any government, governmental agency, or court to which the Buyer is
subject or any provision of its charter or bylaws or result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other
arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject.
(d) Brokers' Fees. There is no Liability or obligation on account of any
agreement, act or failure to act of the Buyer to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Seller could become liable
or obligated.
5. Additional Deliveries at Closing
The following shall be delivered or done at Closing immediately after
the execution hereof:
(a) Opinions of Counsel
(1) The Seller shall deliver to the Buyer an opinion of counsel to the
Seller in the form attached hereto as Appendix 5(a)(1)
(1) The Buyer shall deliver to the Seller an opinion of counsel to the
Buyer in the form attached hereto as Appendix 5(a)(2)
(b) Covenant Not to Compete. The Seller shall deliver to the Buyer a
Covenant Not to Compete in the form attached hereto as Appendix 5(b)
for four (4) years within a two hundred (200) mile radius of the Business.
(c) Tax Certificate and Compliance. The Seller shall deliver to the
Buyer a certificate from any taxing authority from which such a certificate
is available, of the Seller's good tax standing, and shall cause the Parties to
comply with any provisions for notice to, or permitting release of any liens
of, any taxing authorities as a result of or relating to any of the transactions
described in this Agreement.
6. Bulk Sales
At least fifteen (15) days prior to the Closing, Seller shall furnish
Buyer with a schedule of Seller's assets, a list of the names and addresses
of all of Seller's creditors, including all creditors which to Seller's
knowledge have disputed or contingent claims against the Seller as of such
date, a form of notice addressed to each such creditor, and any other
documents or information necessary to affect compliance in all respects
with all applicable Bulk Sales Laws so as to render Buyer free of any of
Seller's liabilities not assumed by the Buyer hereunder, all of which
unassumed liabilities Seller agrees to promptly pay or cause to be paid
when due. Buyer may, at its option, waive compliance with the Bulk Sales
Laws as aforesaid, in which event Seller shall furnish Buyer with an
indemnity satisfactory in form and substance to Buyer and its counsel to
be executed by the Seller.
7. Post-Closing Covenants
With respect to the period following the Closing:
(a) Training Period. Paul R. Ricard and Evelyn J. Ricard, the
principals of the Seller, agree to continue their normal day-to-day
activities in operating the Business for a period of six (6) full work weeks
following the Closing Date. During this six (6) week period, the Seller will
make a diligent effort to train the Buyer and its agents in all aspects of the
Business.
For this six (6) week period, or any extension thereof, Paul R. Ricard
and Evelyn J. Ricard shall enter into an Independent Contractors'
Agreement with the Buyer in the form attached hereto as Appendix 7(a).
Paul J. Ricard shall receive compensation of Fifteen Hundred Dollars
($1,500.00) per week and Evelyn J. Ricard shall receive compensation of
One Thousand Dollars ($1,000.00) per week.
(b) Cooperation
(1) The Seller agrees to cooperate fully and completely in the
introduction of the Buyer to the Seller's customers and in the transition of
the customers' business to the Buyer.
(2) The Seller and the Buyer agree to consult and cooperate with each
other as to the timing and content of announcements of the transaction to
the employees, customers and suppliers of the Seller and to the general
public.
(3) The Seller will use its best efforts to assist the Buyer in obtaining
any governmental permits or licenses (including any governmental permits
or licenses presently issued in the name of the Seller) or third party
consents to the assignment to the Buyer of such permits or licenses which
may be required by the Buyer to own and operate the Business on and
after the Closing and which may not be transferable or might terminate
with consummation of the transactions contemplated by this Agreement,
which new governmental permits and licenses shall be substantially
similar in scope to those heretofore issued to or used by the Seller,
provided that the foregoing shall not diminish or otherwise limit the
obligation in paragraph 5(c), of the Seller to deliver at Closing all
necessary third party consents to the transactions contemplated by this
Agreement. If, after the Closing, any other action is necessary or desirable
to carry out the purposes of this Agreement, each of the Parties shall take
such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request.
From and after the Closing, the Buyer will be entitled to possession of all
documents, books, records (including Tax records), agreements and
financial data of any sort relating to the Business of the Seller. Following
Closing, the Seller and the Buyer shall cooperate so that the Seller's
vehicles sold to the Buyer can be registered in the name of the Buyer as
soon as practicable after Closing. Following Closing, the Buyer shall
promptly notify the Seller of any communication from customers of the
Seller listed on Schedule 3(n)(2) indicating that any such customer is
terminating its relationship with the Buyer.
(c) Transition. The Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier or other business associate of the Seller from maintaining the
same business relationships with the Buyer after the Closing as it
maintained with the Seller prior to the Closing. The Seller shall refer to the
Buyer all customer inquiries relating to the Business of the Seller.
(d) Confidentiality. The Seller will keep confidential and not use any
of the Confidential Information, except in connection with this Agreement,
and deliver promptly to the Buyer or destroy, at the request and option of
the Buyer, all tangible embodiments (and all copies) of Confidential
Information which are in his possession.
8. Remedies for Breaches of This Agreement
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement,
and any covenant or other provision herein whose context so permits, shall
survive the Closing hereunder (even if the damaged Party knew or had
reason to know of any misrepresentation or breach of warranty at the time
of Closing) and continue in full force and effect forever thereafter (subject
to any applicable statutes of limitation).
(b) Indemnification Provisions for Benefit of the Buyer.
(1) If the Seller breaches (or in the event any third party alleges facts
that, if true, would mean the Seller has breached) any of its
representations, warranties, and covenants contained herein or in any
schedule, certificate, agreement or other document delivered hereunder,
then the Seller shall indemnify and hold harmless the Buyer, and the
Buyer Affiliates, and their respective directors, officers, stockholders,
affiliates, employees, agents, successors and assigns (collectively "Buyer
Indemnitees") from and against the entirety of any Adverse Consequences
the Buyer or any Buyer Indemnitee may suffer through and after the date
of the claim for indemnification resulting from, arising out of, relating to,
in the nature of, or caused by, the breach or the alleged breach.
(2) The Seller shall indemnify and hold harmless the Buyer and the
other Buyer Indemnitees from and against the entirety of any Adverse
Consequences the Buyer or any other Buyer Indemnitee may suffer
resulting from any pending or threatened litigation against the Seller or
affecting the Business, including any litigation or other matter disclosed in
Schedule 3(r).
(3) The Seller shall indemnify and hold harmless the Buyer and the
other Buyer Indemnitees from and against the entire amount of any taxes,
including, without limitation, income, franchise, gains, transfer and sales
and use taxes, and any interest or penalties with respect thereto, owed by
the Seller under Federal, State, county or local laws or that arise as a result
of the sale or other transactions described in this Agreement (hereinafter
collectively "Tax Amounts").
(4) Without limiting the generality of the foregoing indemnification
provisions, the Seller shall indemnify and hold harmless the Buyer and the
Buyer Indemnitees from and against the entirety of any Adverse
Consequences the Buyer or any Buyer Indemnitee may suffer as a result of
or arising from any claim by any creditor or any other Person against the
Seller.
(c) Right of Set-Off. The Buyer shall have the option of recouping all
or any part of any Adverse Consequences it may suffer or that it in good
faith believes it is likely to suffer or Tax Amounts it may pay or be
required to pay (in lieu of seeking, to the extent of such recoupment, the
indemnification to which it is entitled under this paragraph 8), or any other
amounts due the Buyer pursuant to this Agreement, by notifying the Seller
that the Buyer is setting off the amount thereof against the amounts due
and owing under the terms of paragraph 2(c) of this Agreement.
(d) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable or common law remedy the Buyer may have for breach of
representation, warranty, or covenant.
(e) Indemnification Provisions for Benefit of the Seller. The Buyer
shall indemnify the Seller for any expenses incurred by the Seller in the
event of any claims by any third party against the Seller directly resulting
from the Buyer's use of the name "New England Metal Treating" in
connection with the Buyer's operations after Closing; provided, however,
that the Buyer shall have the rights set forth in subparagraph (c) with
respect to Third Party Claims.
9. Miscellaneous
(a) Press Releases and Public Announcements. The Seller shall not
issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the
Buyer.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement, including the documents
referred to herein, constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements or representations by or
among the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective heirs, legal representatives, successors and permitted assigns.
The Seller may not assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
Buyer. The Buyer may (1) assign any or all of its rights and interests
hereunder to one or more of its affiliates, or (2) designate one or more of
its affiliates to perform its obligations hereunder.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The paragraph headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of the paragraph.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be deemed duly given if in writing and
twenty-four (24) hours after sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient
as set forth below:
If to the Seller:
Copy to:
Paul R. Ricard
24 Hanson Road
Charlton, MA 01507
Carl E. Baylis, Esq.
27-29 Mechanic Street
Worcester, MA 01608
If to the Buyer:
Copy to:
Flame Metals Processing Corporation
7317 West Lake Street
Minneapolis, MN 55426-4396
Edward D. Simsarian, Esq.
370 Main Street
Worcester, MA 01608
Either Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered
by giving the other Party notice in the manner herein set forth.
(h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless it is in writing and signed by the Buyer
and the Seller. No waiver by a 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.
(I) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof
or the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
(j) Expenses. Each of the Parties will bear its own costs and expenses,
including legal fees and expenses, incurred in connection with this
Agreement and the transactions contemplated hereby.
(k) Governing Law and Construction. This Agreement shall be
governed by the laws of the Commonwealth of Massachusetts. The Parties
have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this
Agreement. All pronouns referring to any gender shall be deemed to refer
to the other genders, as the context requires. Any reference to any Federal,
State, local or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without limitation.
The Parties intend that each representation, warranty and covenant
contained herein shall have independent significance. If any Party has
breached any representation, warranty and covenant contained herein in
any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter, regardless of the relative
levels of specificity, which the Party has not breached shall not detract
from or mitigate the fact that the Party is in breach of the first
representation, warranty or covenant.
(l) Incorporation of Exhibits Appendices and Schedules. The
Appendices and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
(m) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Party shall 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 hereof in
any action instituted in any court of the Commonwealth of Massachusetts,
and if no such court has jurisdiction over any Party, then in any court
having jurisdiction over the Parties and 'he matter, in addition to any other
remedy to which they may be entitled, at law or in equity.
Executed as of the date first above written.
Seller
NEW ENGLAND METAL TREATING, INC.
By:Paul R. Ricard, President
Buyer
NEW ENGLAND METAL TREATING CORPORATION
By:Michael M. Gumma, President
We, the undersigned, being all of the Directors and Shareholders of
New England Metal Treating, Inc., hereby warrant and guarantee that, to
the best of our knowledge and belief, the representations of the Seller
contained herein are true and correct.
Paul R. Ricard, Individually
Evelyn J. Ricard, Individually