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Exhibit 10.1
ASSET PURCHASE AGREEMENT
DATED MARCH 29, 2001
BY AND AMONG
GROS-ITE ENGINEERED COMPONENTS DIVISION OF TOMZ, INC.,
TOMZ CORPORATION,
GROS-ITE INDUSTRIES, INC.
AND
EDAC TECHNOLOGIES CORPORATION
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Defined Terms
1.2 Usage of Terms
1.3 References to Articles, Sections, Exhibits and Schedules
ARTICLE II
PURCHASE AND SALE OF ASSETS OF SELLER AND LEASE OF PREMISES
2.1 Transfer of Purchased Assets; Assumption of Assumed Liabilities
2.2 Purchase of Finished Goods Inventory
2.3 Purchase of Work In Process Inventory
2.4 Purchase of Tangible Personal Property
2.5 Purchase of Name
2.6 Assumed Contracts
2.7 Non-Assumption of Liabilities
2.8 Consents
2.9 Delivery of Purchased Assets
2.10 Limitation on Assumption of Warranty Obligations By Buyer and Seller
2.11 Lease of Premises
2.12 Seller's Storage at Premises
2.13 Noncompetition Agreement
2.14 INTENTIONALLY OMITTED
2.15 Delivery of Voting Agreement; Irrevocable Proxies
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price
3.2 Post-Closing Adjustment
3.3 Allocation of Purchase Price
3.4 Payment of Purchase Price
3.5 Closing Adjustments
3.6 Taxes
3.7 Guaranty by TOMZ Corporation
3.8 Collateral
3.9 Pledge of Securities
3.10 Offset
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ARTICLE IV
CLOSING
4.1 Closing
4.2 Conveyances at Closing
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EDAC AND GROS-ITE
5.1 EDAC's and Gros-ite's Representations
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND TOMZ CORPORATION
6.1 Buyer and TOMZ Corporation's Representations
ARTICLE VII
COVENANTS AND CONDUCT OF THE PARTIES PRIOR TO OR ON CLOSING
7.1 Pre-closing Covenants
7.2 Right of Entry
7.3 Conduct of Business
7.4 Lien Releases and Tax Clearance
ARTICLE VIII
COVENANTS AND CONDUCT OF THE PARTIES AFTER CLOSING
8.1 Survival and Indemnifications
8.2 Access to Retained Customer Records
8.3 Buyer's Defects
8.4 Covenant Not to Use Name
ARTICLE IX
MISCELLANEOUS
9.1 Expenses; Agreements Not to Market Assets
9.2 Casualty
9.3 Right of Termination and Procedure for Default
9.4 Further Assurances
9.5 Notices
9.6 Public Statements
9.7 Choice of Law
9.8 Titles
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9.9 Waiver
9.10 Effective; Binding
9.11 Entire Agreement
9.12 Modification
9.13 Counterpart
9.14 Consent to Jurisdiction
9.15 Confidential Information
9.16 Successors and Assigns
9.17 Arbitration Procedure
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SCHEDULES
Schedules Description
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1.1 Assumed Contracts
1.1(ll)(7) Computer Software
2.1(a) Permitted Encumbrances
2.4 Tangible Personal Property
3.2 Cost Accounting Method
3.3 Allocation of Purchase Price
5.1(a) Tradenames
5.1(b) Form of Seller's Resolutions
5.1(c) Resulting Defaults
5.1(d) Consents and Approvals
5.1(e) Litigation
5.1(g) Tax Matters
5.1(h) Title Matters
5.1(i) Real Property
5.1(j) Location of Tangible Personal Property
5.1(k) Options
5.1(l) Terminations
5.1(o) Patents/Trademarks
5.1(q) Warranties
5.1(r) Creditors
5.1(v) Vendors/Customers
5.1(w) Contracts
5.1(x) Employee Benefit Plans
5.1(y) Changes/Disputes
5.1(aa) Noncompliance
5.1(bb) Licenses/Permits/Certifications
5.1(cc) Employee Data
5.1(dd) Payments
5.1(ee) Affiliated Transactions
5.1(hh) Seller's Insurance
5.1(ii) Environmental/Health/Safety Matters
6.1(b) Form of Buyer's and TOMZ Corporation's Resolutions
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EXHIBITS
Exhibit Description
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A Lease of 1790 New Britain Avenue, Farmington, Connecticut
B Assignment of Peter Stanley Realty Company Lease of property
at 1838 New Britain Avenue, Farmington, Connecticut
C Noncompetition Agreement
D INTENTIONALLY OMITTED
E Guaranty Agreement of TOMZ Corporation
F Pledge Agreement of Zbigniew Matulaniec
G Warranty Bill of Sale
H Assignment Agreement
I Consent to Assignment
J Non-disturbance Agreements with Fleet Bank and Farmington
Savings Bank
K Closing Certificate
L Seller's Counsel's Opinion
M Buyer's Counsel's Opinion
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is by and between GROS-ITE
ENGINEERED COMPONENTS DIVISION OF TOMZ, INC., a Connecticut corporation with its
principal place of business at 47 Episcopal Road, Berlin, Connecticut 06037
("Buyer"), TOMZ CORPORATION, a Connecticut corporation with its principal place
of business at 47 Episcopal Road, Berlin, Connecticut 06037 ("TOMZ
Corporation"), EDAC TECHNOLOGIES CORPORATION, a publicly-held Wisconsin
corporation with its principal place of business at 1806 New Britain Avenue,
Farmington, Connecticut 06032 ("EDAC") and GROS-ITE INDUSTRIES, INC., a
Connecticut corporation with its principal place of business at 1806 New Britain
Avenue, Farmington, Connecticut ("Gros-ite") (EDAC and Gros-ite collectively,
"Seller").
STATEMENT OF FACTS
A. Seller is the owner and operator of, inter alia, a manufacturing
business known as "Gros-ite Engineered Components Division", which business is
located in Farmington, Connecticut ("Business").
B. Buyer desires to purchase from Seller and Seller desires to sell to
Buyer certain assets and contract rights relating to the Business upon the terms
and conditions contained in this Agreement.
C. In connection with the foregoing, Seller and Buyer desire to enter into
a lease for the premises located at 1790 New Britain Avenue, Farmington,
Connecticut.
In consideration of the foregoing premises, the mutual covenants and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the terms below shall
have the following meanings:
(a) "Closing Payment" shall mean the prepayment of One Million Seven
Hundred Fifty-Five Thousand Four Hundred Ninety-One Dollars
($1,755,491) made by Buyer to Seller pursuant to Section 3.4(b)(1).
(b) "Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or
is controlled by, such Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of
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management or policies (whether through ownership of securities or
partnership or other ownership interest, by contract or otherwise).
(c) "Agreement" shall mean, unless the context otherwise requires, this
Asset Purchase Agreement together with the Schedules and Exhibits
attached hereto and the certificates and instruments to be executed
and delivered in connection herewith.
(d) "Assumed Contracts" shall mean the Contracts identified on Schedule
1.1, which shall be assumed in writing by Buyer on the Closing Date.
(e) "Assumed Liabilities" shall mean those liabilities of Seller
specifically assumed by Buyer in this Agreement.
(f) "Business" shall mean the business conducted by Seller through its
Gros-ite Engineered Components Division, and shall not include any
other business operations of Seller.
(g) "Business Employees" shall mean those employees of Seller working in
the Business.
(h) "Claims Period" shall mean the period beginning on the date of this
Agreement and ending on the second anniversary of the Closing Date
except: (1) with respect to warranty work and Pratt & Whitney rework
matters as to which the Claims Period shall end on the third
anniversary of the Closing Date; (2) with respect to tax matters as to
which the Claims Period shall end on the sixth anniversary of the
Closing Date; and (3) with respect to Seller's and Buyer's covenant
set forth in Section 8.4, as to which the claims period shall survive
indefinitely.
(i) "Closing Date" is defined in Section 4.1.
(j) "COBRA" shall mean the provisions of Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code and all regulations thereunder.
(k) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(l) "Contracts" are defined in Section 5.1(w).
(m) "Deposit" shall mean the deposit in the amount of Fifty Thousand
Dollars ($50,000) paid by Buyer on account of the Purchase Price,
which amount is being held by Seller's counsel pursuant to the Escrow
Letter.
(n) "Employee Welfare Benefit Plan" shall have the meaning set forth in
ERISA Section 3(1).
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(o) "Encumbrance" shall mean any claim, lien, pledge, option, charge,
easement, security interest, right-of-way, encroachment, reservation,
restriction, encumbrance, or other right of any Person, affecting
title to the Purchased Assets.
(p) "Environmental, Health and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances
and other provisions having the force or effect of law, all judicial
and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the
presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or at
Closing in effect.
(q) "Environmental Report" shall mean:
(1) Correspondence dated November 8, 1982 (Anderson Oil & Chemical
Co. Kevin Delaney to Gros-ite Industries Bob Chicoine);
(1) Minges Environmental Laboratory Reports:
(A) March 11 and 30, 1983 - Reports to Gros-ite Industries; and
(B) March 11, 1983 - Report to American Research Corporation;
(2) NUS Corporation Report #C-583-9-8-54 (September 26, 1988)
Attached as "Appendix D" to the Rizzo Associates Level 1
Environmental Site Assessment report (copy provided appears
incomplete);
(3) Correspondence dated April 3, 1989 (DEP Peter Ploch to Gros-ite
Industries Robert Chicoine) with attachments:
(A) February 28, 1980 Form P-5 (1 page); and
(B) February 9, 1983 Hazardous Waste Inspection Checklist
(2 pages);
(4) Final Screening Site Inspection - #C-583-6-0-282 (NUS
Corporation, July 2, 1990) Attached as "Appendix D" to the Rizzo
Associates Level 1 Environmental Site Assessment report (copy
provided appears incomplete);
(5) Final Screening Site Inspection / Gros-ite Industries, Inc. (NUS
Corporation, July 16, 1990) Correspondence Report to DEP (only
partial report);
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(6) Underground Storage Tank Closure Plan (Aaron Environmental,
January 3, 1991) Underground Storage Tank Closure Technical
Specifications Checklist (2 pages), Table of Contents, Pages i,
ii, iii, and Pages 1 through 7, with attachments:
(A) Appendix A: Work Zone Illustration (Drawing 01);
(B) Appendix B: Site Specific Health and Safety Plan (9 pages);
(C) Appendix C: Underground Tank Transfer of Ownership Form,
Typical;
(D) Appendix D: Spill Report Notification Form (Page 2 only);
and
(E) Appendix E: Regulatory Correspondence (1 page letter to DEP/
January 2, 1990);
(7) Underground Storage Tank Removal Project (Aaron Environmental,
February 7, 1991) Table of Contents, Pages i and ii, and Pages 1
through 8, with attachments:
(2) Figure 1: Laboratory Analysis Results (Title page only,
laboratory reports not attached);
(A) Figure 2: Photographic Documentation (3 pages, 3 photographs
on each / black & white copy);
(B) Code of Federal Regulations (40 CFR Subparts E, F, G) Pages
918-925;
(C) Appendix - 1 Page Sketch of UST Location (dated 2/7/91);
(D) Northeast Tank Disposal Tank Pickup Receipt and Transfer of
Ownership form;
(E) January 28, 1991 Aaron Environmental Letter to Scott Deshefy
(DEP);
(F) January 29, 1991 Town of Farmington Building Permit #20518;
and
(G) July 31, 1989 State of Connecticut Interdepartmental
Message;
(8) Correspondence dated February 20, 1991 (Aaron Environmental to
Gros-ite Industries, Inc. Mr. Robert Chicoine) - 1 Page with
attachments:
(A) Connecticut Testing Laboratories Report 21-023-5 (February
6, 1991) 2 Pages for Oil & Grease and PCB analyses only, no
chain of custody; and
(B) Connecticut Testing Laboratories Report 21-023-5 (Page 2, 3,
4, and 5) for Method 602 / 8020 analyses only, no chain of
custody;
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(9) Correspondence dated March 6, 1995 Interim Site Investigation
Report (Aaron Environmental Kevin Bitjeman to Gros-ite Industries
Bob Tasillo) with attachment: Site Sketch March 6, 1995 - 1 Page;
(10) Results of Soil & Groundwater Samples / Vacant Parcel Between
American Research & Woods Electrical 3 Page Letter (Aaron
Environmental, March 9, 1995) with attachments:
(A) Figure 1 (Site Sketch, March 6, 1995);
(B) Boring Logs (4 Sheets) for SB-1, SB-2, SB-3, SB-4 (all
2/27/95);
(C) Phoenix Environmental Labs Sample Progress Reports (31 Pages
plus 1 Page Chain of Custody for sample Ids: AA60951 (SB-1
1-3), AA60952 (SB-1 30-32), AA60953 (SB-1), AA60954 (SB-2
5-7), AA60955 (SB-2 30-32), AA60956 (SB-2), AA60957 (SB-3
5-7), AA60958 (SB-3 30-32), AA60959 (SB-3), AA60960 (SB-4
5-7), AA60961 (SB-4 30-32), and AA60962 (SB-4);
(11) Correspondence dated June 22, 1995 Review of Environmental
Reports 2 page letter (Aaron Environmental to Gros-ite Industries
Frank Moskey) with Attachment Level II Environmental Site
Assessment report (ERI, June 1995):
(A) 11 page Text, 5 Tables, 2 Figures, site photographs (2
pages);
(B) Appendix A - Boring Logs and Well Construction Diagrams;
(C) Appendix B - Spectrum Analytical Reports (June 1, 1995)
AA32853, AA32854, AA32855, and AA32856 and (June 5, 1991)
AA33244, AA33245, AA33246, AA33247, and AA33250;
(D) Appendix C - Rizzo Associates Level I Environmental Site
Assessment (April 11, 1995), pages i, 1, 4, 5, 7, 11, 14,
16, 17, 19, 21, 23, 25, photo pages 1 to 13, 2 pages of
Appendix A, 2 pages of Appendix B, 2 pages of Appendix C, 11
pages of Appendix D, 6 pages of Appendix E, and 2 pages of
Appendix F; and
(E) Appendix D - Groundwater Technology Level II Environmental
Site Assessment report (October 1994) for the north adjacent
property (Pages 13, 15, 16, Figures 2 and 3, and Appendices
A-F missing);
(12) Phase I Environmental Site Assessment (Aaron Environmental, July
24, 2000) 2 page Cover Letter to Gros-ite Ron Popolizio, Table of
Contents (2 pages), Preface (1 page), report text (pages 1
through 22), with attachments:
(A) Site Locus Map and Site Plan (May 4, 1999);
(B) 22 pages of miscellaneous Town and DEP documents;
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(C) Con-Test Analytical Laboratory Report (July 21, 2000)
LIMS-49761 (12 pages);
(D) EDR Radius Map with GeoCheck, July 3, 2000 (Executive
Summary pages 1-6, Table of Contents (page 1), report (pages
2 to 44), pages EPA-1, GR-1 to GR-6, A-1 to A-6, A-8 to A-17
(page A-7 missing); and
(E) EDR City Directory Abstract, July 7, 2000 (9 pages);
(13) Correspondence Report to Gros-ite Industries Ron Popolizio
Summary of Historical Groundwater Date and Recent Soil and
Groundwater Investigation 3 page letter (Aaron Environmental,
November 3, 2000), with attachments:
(A) Table (Summary of Groundwater Analytical Results);
(B) Table (Summary of Soil Analytical Results);
(C) Figure (Soil & Groundwater Sample Locations / Collected
10/11/00) Sheet 1 of 1;
(D) Sample Collection Methods Summary (1 Sheet);
(E) Lab Reports and Chain of Custody (Con-Test Analytical
Laboratory LIMS-51564, 56 pages);
(F) Con-Test Analytical Laboratory QC Summary Report (17 Pages);
and
(G) Environmental Assessment Limitations (3 pages);
(14) Miscellaneous Documents:
(A) EPA Potential Hazardous Waste Site Preliminary Assessment
(Part 1) 1 page;
(B) NPL Eligibility Checklist (3 pages);
(C) CERCLIS Database Form (September 26, 1988) 3 pages;
(D) Aaron Environmental Specialists Environmental Assessment
Report form (3 pages);
(E) State of Connecticut Form 1064 (1 page) July 6, 1965; and
(F) State of Connecticut Form P-5 and site sketch (2 pages)
December 10, 1970.
(r) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(s) "ERISA Affiliate" shall mean a trade or business, whether or not
incorporated, which is deemed to be in common control or affiliated
with Seller within the
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meaning of Section 4001 of ERISA or Sections 414(b), (c), (m), or (o)
of the Code.
(t) "Excluded Assets" shall mean:
(1) Cash and cash equivalents of the Business;
(2) Obsolete Inventory;
(3) Accounts receivable of the Business;
(4) All contracts and agreements of the Business other than the
Assumed Contracts;
(5) All assets and properties of Seller not used in the Business;
(6) Real property leases except rights to parking as set forth in the
Lease and the assignment of Seller's rights under its lease with
Peter Stanley Realty as more particularly described in Section
2.11;
(7) Seller's corporate records and minute book;
(8) All motor vehicles owned by the Seller, except for the 1997 Ford
E-350 Van bearing V.I.N. 1FDKE30F7VHA80191;
(9) Items of Seller's tangible personal property used in the Business
NOT set forth on Schedule 2.4.
(u) "Financial Statements" is defined in Section 5.1(f).
(v) "Finished Goods Inventory" shall mean Seller's good and saleable, in
the ordinary course of business, (as such terms are defined by GAAP)
items of finished goods inventory relating to the Business.
(w) "Finished Goods Inventory Purchase Price" is defined in Section
3.1(a).
(x) "Finished Goods Inventory Value" is defined in Section 3.2.
(y) "GAAP" shall mean, with respect to all accounting matters and issues,
generally accepted accounting principles as in effect from time to
time, applied consistent with the Financial Statements.
(z) "Governmental Authority" shall mean any federal, state, local or
foreign government, or any political subdivision of any of the
foregoing, or any court, agency or other entity, body, organization or
group, exercising any executive,
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legislative, judicial, quasi-judicial, regulatory or administrative
function of government.
(aa) "Governmental Requirement" shall mean any law, statue, ordinance,
rule, regulation, ordinance, code, order, judgment, writ, injunction
or decree of any Governmental Authority.
(bb) "Knowledge" shall mean (1) with respect to Seller or Gros-ite, actual
knowledge, information or belief, after reasonable inquiry as
appropriate to the context of the statement in which the term is used
of Richard Dandurand, Ronald G. Popolizio and John J. DiFrancesco, and
(2) with respect to Buyer and TOMZ Corporation, actual knowledge,
information or belief, after reasonable inquiry, as appropriate to the
context of the statement in which the term is used, of Zbigniew
Matulaniec, with respect to the matters which are relevant to the
representation, warranty, covenant or agreement being made or given.
(cc) "LTA" shall mean the Long Term Purchase Agreement by and between
United Technologies Corporation acting through its Pratt and Whitney
Division and Gros-ite Industries, Inc. having a commencement date of
July 17, 2000.
(dd) "Lease" shall mean that certain lease agreement to be entered into by
Buyer and Seller for Buyer's lease of the Premises.
(ee) "MRP" shall mean the computer requisition system of the Pratt and
Whitney division of United Technologies Corporation.
(ff) "Multiemployer Plan" shall have the meaning set forth in Section 3(37)
of ERISA.
(gg) "Obsolete Inventory" shall mean any of Seller's Finished Goods
Inventory and Work In Process Inventory that are not good and saleable
in the ordinary course (as such terms are defined by GAAP).
(hh) "Person" shall mean any Governmental Authority, individual,
association, joint venture, partnership, corporation, limited
liability company, trust or other entity.
(ii) "Premises" shall mean the real property, with improvements, located at
1790 New Britain Avenue, Farmington, Connecticut, consisting of
approximately 45,5000 square feet of useable space as more
particularly described in the Lease.
(jj) "Pratt and Whitney" shall mean the Pratt and Whitney Division of
United Technologies Corporation.
(kk) "Purchase Orders" shall mean the written orders issued in connection
with the Business by each of Seller's customers constituting the
agreement by said customer to purchase certain goods or services from
Seller.
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(ll) "Purchased Assets" shall mean all right, title and interest of Seller
in and to the following assets and properties of Seller used in the
Business:
(1) the Tangible Personal Property;
(2) the Work In Process Inventory;
(3) the Finished Goods Inventory;
(4) all Purchase Orders relating to the Business;
(5) all drawings, designs, technology and intellectual property
exclusively used in the Business;
(6) all customer lists relating to the Business;
(7) the computer software embedded in the Purchased Assets or set
forth on Schedule 1.1(ll)(7), to the extent assignable;
(8) all customer records of the Business except the Retained Customer
Records;
(9) all rights and obligations (except as otherwise specifically set
forth in this Agreement) under the Assumed Contracts;
(10) all trade secrets and confidential business information, customer
and supplier lists, pricing and cost information, and business
and marketing plans and proposals related exclusively to the
Business;
(11) all originals or true copies of all operating data and records of
the Business on whatever media except Retained Customer Records;
(12) all of Seller's right, title and interest in and to the name
"Gros-ite Engineered Components Division;"
(13) all licenses relating to the Purchased Assets and the Business to
the extent they are transferable; and
(14) the 1997 Ford E-350 Van bearing V.I.N. 1FDKE30F7VHA80191.
(mm) "Purchase Price" shall mean the purchase price for the Purchased
Assets as set forth in Section 3.1.
(nn) "Representative" shall mean any officer, director, principal, attorney
or accountant or any employee designated by written notice to the
other party prior to the execution of this Agreement, of any Person.
(oo) "Reportable Event" shall have the meaning set forth in ERISA Section
4043.
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(pp) "Retained Customer Records" shall mean all customer records of the
Business retained by Seller pursuant to the requirements of Pratt and
Whitney or the Federal Aviation Administration.
(qq) INTENTIONALLY OMITTED.
(rr) "Tangible Personal Property" is defined in Section 2.4.
(ss) "Tangible Personal Property Purchase Price" is defined in Section
3.1(c).
(tt) "Tax" shall mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code ss.59A), 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, estimated,
or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
(uu) "Tax Liability" shall mean any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due) for Taxes.
(vv) "Tax Return" shall mean 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.
(ww) "WIP Purchase Price" is defined in Section 3.1(b).
(xx) "Work In Process Inventory" shall mean all items of Seller's good and
saleable in the ordinary course of business, (as such terms are
defined by GAAP) work in process relating to the Business, including
raw material inventory, detail inventory and parts in production.
(yy) "Work In Process Inventory Value" is defined in Section 3.2.
Section 1.2 Usage of Terms. Except where the context otherwise requires,
words importing the singular number shall include the plural number and vice
versa.
Section 1.3 References to Articles, Sections, Exhibits and Schedules. All
references in this Agreement to Articles, Sections (and other subdivisions),
Exhibits and Schedules refer to the corresponding Articles, Sections (and other
subdivisions), Exhibits and Schedules of or attached to this Agreement, unless
the context expressly, or by necessary implication, otherwise requires.
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ARTICLE II
PURCHASE AND SALE OF ASSETS OF SELLER AND LEASE OF PREMISES
Section 2.1 Transfer of Purchased Assets; Assumption of Assumed
Liabilities. Subject to the terms and conditions contained in this Agreement, on
the Closing Date:
(a) Seller shall sell, convey, transfer, assign, and deliver to
Buyer, and Buyer shall acquire from Seller, the Purchased Assets,
free and clear of any Encumbrances other than Seller's second
priority interest in the Work In Process Inventory pursuant to
Section 3.8; and
(b) Buyer shall assume the Assumed Liabilities.
Section 2.2 Purchase of Finished Goods Inventory. At the Closing, Seller
shall sell and Buyer shall acquire Seller's Finished Goods Inventory.
Section 2.3 Purchase of Work In Process Inventory. At the Closing, Seller
shall sell and Buyer shall acquire Seller's Work In Process Inventory.
Section 2.4 Purchase of Tangible Personal Property. At the Closing, Seller
shall sell and Buyer shall acquire those assets set forth on Schedule 2.4
(collectively, "Tangible Personal Property"). It is understood and agreed by the
parties hereto that the following will be transferred to Buyer, at no additional
cost to Buyer, eleven (11) Vantage Seats, all Unigraphics Seats utilized in the
Business as more fully described on said Schedule 2.4, two (2) Surfcam Seats and
five (5) Cadkey Seats presently being utilized by the Business in its production
process, the transfer of which shall be subject to the approval of Vantage,
Unigraphics, Surfcam and Cadkey, respectively, as required. Buyer shall assume
the maintenance contracts relating to the foregoing.
Section 2.5 Purchase of Name. At the Closing, Seller shall transfer to
Buyer all of Seller's right, title and interest in and to the name "Gros-ite
Engineered Components Division."
Section 2.6 Assumed Contracts. At the Closing, Seller shall assign and
transfer to Buyer and Buyer shall assume Seller's obligations, EXCEPT SELLER'S
WARRANTY OBLIGATIONS WITH RESPECT TO GOODS PRODUCED BY SELLER, arising from the
Closing Date forward pursuant to the following:
(a) the LTA;
(b) current orders originated through the MRP;
(c) Agreement with Vantage, provided the Vantage Seats are
transferred pursuant to Section 2.4, to the extent assignable;
(d) Agreement with Unigraphics, provided the Unigraphics Seats are
transferred pursuant to Section 2.4, to the extent assignable;
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(e) Agreement with Surfcam, provided the Surfcam Seats are
transferred pursuant to Section 2.4, to the extent assignable;
(f) Agreement with Cadkey, provided the Cadkey Seats are transferred
pursuant to Section 2.4, to the extent assignable;
(g) the Purchase Orders.
Prior to the Closing Date, the Seller shall provide Buyer with copies of
all vendor contracts and third party contracts materially relating to the
Business. The Seller shall transfer all of its right, title to and interest in
such agreements to Buyer and such assumed agreements will be deemed "Assumed
Contracts."
Section 2.7 Non-Assumption of Liabilities.
(a) The Buyer shall not assume or be bound by any duties,
responsibilities, obligations or liabilities of the Seller of any
kind, known or unknown, contingent or otherwise, other than those
obligations and liabilities expressly assumed by it pursuant to
this Agreement. Without limiting the foregoing, Buyer does not
assume, undertake or accept any duties, responsibilities,
obligations or liabilities of the Seller (that exist now or at
the Closing Date or that may arise in the future with respect to
any matter occurring at or prior to the Closing Date):
(1) with respect to employees or former employees of the Seller
or any of their beneficiaries, heirs or assignees,
including:
(A) any pension, accrued vacation or other liabilities;
(B) any matter arising by virtue of any collective
bargaining relationship or agreement or pursuant to the
National Labor Relations Act or any other labor
relations law; and
(C) any matter arising with respect to workers'
compensation, severance, payroll and/or unemployment
tax, pension, profit-sharing, health insurance, COBRA,
accrued but unused vacation or other employee benefit
liabilities in respect of any employees of Seller in
the Business employed by Buyer prior to the Closing.
(2) with respect to the Pension Benefit Guaranty Corporation or
any similar organization, whether arising out of the
employment by the Seller of any employees or former
employees, the transactions contemplated by this Agreement
or otherwise;
(3) with respect to:
(A) Tax;
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(B) Any claims for personal injuries, property damages or
consequential damages relating to Seller's actions or
inactions with respect to defective products sold,
condition or operation of the Business or Premises or
otherwise;
(4) with respect to any matter arising under any statute, rule
or regulation, including but not limited to antitrust, civil
rights, health, safety, labor, discrimination and
environmental laws, rules and regulations, at or prior to
the Closing Date; or
(5) arising out of or based upon any matters disclosed by Seller
on the Exhibits or Schedules to this Agreement at or prior
to the Closing Date.
(b) The Seller shall not assume or be bound by any duties,
responsibilities, obligations or liabilities of the Buyer or TOMZ
Corporation of any kind known or unknown, contingent or
otherwise, other than those obligations and liabilities expressly
assumed by it pursuant to this Agreement. Without limiting the
foregoing, Seller does not assume, undertake or accept any
duties, responsibilities, obligations or liabilities of the Buyer
or TOMZ Corporation (that exist now or at the Closing Date or
that may arise in the future with respect to any matter occurring
at or after the Closing Date):
(1) with respect to employees or former employees of the Buyer
or any of its beneficiaries, heirs or assignees, including:
(A) any pension, accrued vacation or other liabilities;
(B) any matter arising by virtue of any collective
bargaining relationship or agreement or pursuant to the
National Labor Relations Act or any other labor
relations law; and
(C) any matter arising with respect to workers'
compensation, severance, payroll and/or unemployment
tax, pension, profit-sharing, health insurance, COBRA,
accrued but unused vacation or other employee benefit
liabilities in respect of any employees of Seller in
the Business employed by Buyer at or after the Closing.
(2) with respect to the Pension Benefit Guaranty Corporation or
any similar organization, whether arising out of the
employment by the Seller of any employees or former
employees, the transactions contemplated by this Agreement
or otherwise;
(3) with respect to:
(A) Tax;
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(B) Any claims for personal injuries, property damages or
consequential damages relating to Buyer's actions or
inactions after the Closing Date with respect to
defective products sold, condition or operation of the
Business or Premises or otherwise;
(4) with respect to any matter arising under any statute, rule
or regulation, including but not limited to antitrust, civil
rights, health, safety, labor, discrimination and
environmental laws, rules and regulations, after the Closing
Date.
Section 2.8 Consents. Except with respect to those agreements set forth in
Section 2.6(c), (d), (e), and (f), to the extent that the assignment of any
contract, commitment or other item to be assigned to Buyer as provided in this
Agreement shall require the consent of the other parties, Seller shall use its
best efforts to obtain all such consents and, at the request of Buyer to
continue such efforts after the Closing Date. If any such consent is not
obtained, Seller agrees to cooperate with Buyer in any reasonable arrangements
(such as subcontracting, sublicensing or subleasing) designed to provide for
Buyer all of the benefits of Seller under such contract, commitment, or sales
order, as the case may be, including enforcement for the benefit of Buyer and
any and all rights of Seller arising out of the breach or cancellation of such
contract, commitment or other item.
Section 2.9 Delivery of Purchased Assets. Simultaneously with the Closing,
Seller shall deliver to Purchaser physical possession of all the Purchased
Assets.
Section 2.10 Limitation on Assumption of Warranty Obligations by Buyer and
Seller.
(a) With respect to the Finished Goods Inventory: Notwithstanding
anything in the Consent to Assignment (as hereinafter defined) to
the contrary, Buyer shall not assume any of Seller's warranty
obligations.
(b) With respect to Work In Process Inventory: Notwithstanding
anything in the Consent to Assignment to the contrary, Buyer
shall not assume Seller's warranty obligations arising under the
Purchase Orders, the LTA or otherwise where the warranty
obligation arises due to the fault of the Seller. Buyer, however,
will perform warranty work required due to Seller's defects at
Seller's written request and in exchange for payment by Seller to
Buyer of an amount equal to Buyer's cost of any such work
performed by Buyer on Seller's behalf plus fifteen percent (15%).
With respect to any warranty obligations arising under Purchase
Orders or the LTA in connection with defects in Work In Process
Inventory caused by the fault of Buyer, Buyer shall bear full
responsibility for any work necessary to correct the defect.
Notwithstanding anything in the Consent to Assignment to the
contrary, in the event that Buyer and Seller are unable to agree
as to the apportionment of fault with respect to defects in Work
In Process Inventory, any such dispute shall be submitted to
arbitration in accordance with the provisions of Section 9.17,
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with the nonprevailing party being responsible for payment of all
costs and expenses, including reasonable attorney's fees,
incurred in connection therewith by the prevailing party and a
penalty equal to twenty-five percent (25%) of the amount awarded.
Section 2.11 Lease of Premises. At the Closing, Seller and Buyer shall
enter into a lease in the form attached as Exhibit A covering the Premises.
Seller and Buyer shall also enter an assignment of lease agreement in the form
attached as Exhibit B covering three thousand (3,000) square feet of space in
the premises located at 1838 New Britain Avenue, Farmington, Connecticut.
Section 2.12 Seller's Storage at the Premises. Buyer shall permit Seller to
store at the Premises for a period not to exceed ninety (90) days from the
Closing Date, equipment of Seller located at the Premises immediately prior to
the Closing which does not constitute Purchased Assets. Buyer shall permit
Seller's MIS and Design employees to remain at the Premises for a period of
ninety (90) days immediately following the Closing Date. All risk of loss with
respect to the Seller's storage of its equipment at the Premises and location of
its employees at the Premises as permitted in this Section 2.12 rests solely
with Seller. Seller shall maintain adequate insurance coverage with respect to
such equipment and employees and shall provide Buyer with evidence of such
coverage at the Closing. In the event that Seller does not remove its equipment
and assets prior to the expiration of said ninety (90)-day period, Seller shall
pay Buyer for use and occupancy Forty-Five Dollars ($45) per day for each day
Seller's employees and/or equipment remain on the Premises. Seller shall be
responsible for all obligations relating to such equipment. Risk of loss with
respect to such equipment shall remain entirely with Seller.
Section 2.13 Noncompetition Agreement. At the Closing, EDAC, Gros-ite and
Buyer shall enter into a noncompetition agreement in the form attached as
Exhibit C.
Section 2.14 INTENTIONALLY OMITTED.
Section 2.15 Delivery of Irrevocable Proxies. Upon filing of a proxy
solicitation in connection with the transactions contemplated by this Agreement
with the Securities and Exchange Commission, Seller shall deliver to Buyer,
subject to applicable Federal and Wisconsin securities law, copies of the
irrevocable proxies of all members of EDAC's Board of Directors affirmatively
voting to approve the transactions contemplated by this Agreement.
ARTICLE III
PURCHASE PRICE AND PAYMENT
Section 3.1 Purchase Price. As consideration for the sale, transfer,
assignment, conveyance and delivery of the Purchased Assets, Buyer shall assume
the Assumed Liabilities and shall pay to Seller the following (collectively
"Purchase Price"):
(a) Subject to the provisions of Section 3.2, for the Finished Goods
Inventory, One Million Eight Hundred Forty-Eight Thousand Eight
Hundred Seven Dollars ($1,848,807) ("Finished Goods Inventory
Purchase Price");
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(b) Subject to the provisions of Section 3.2, for the Work In Process
Inventory, Three Million Five Hundred Ten Thousand Nine Hundred
Eight-Two Dollars ($3,510,982) ("WIP Purchase Price").
(c) for the Tangible Personal Property and the 1997 Ford E-350 Van
bearing V.I.N. 1FDKE30F7VHA80191, One Million Nine Thousand Five
Hundred Dollars ($1,009,500) ("Tangible Personal Property
Purchase Price");
(d) for all right, title and interest in and to the name "Gros-ite
Engineered Components Division", One Hundred Dollars ($100).
Section 3.2 Post-Closing Adjustment. The parties have determined the value
of the Finished Goods Inventory and the Work In Process Inventory as of December
30, 2000 to be as set forth in Section 3.1(a) with respect to Finished Goods
Inventory and Section 3.1(b) with respect to Work In Process Inventory (the
"Initial Value"). As soon as reasonably practicable after the Closing, but in no
event later than thirty (30) calendar days after the Closing, Seller shall (a)
conduct a physical inventory and determine a tentative value of the Finished
Goods Inventory as of the Closing Date ("Finished Goods Inventory Value") and
(b) determine the value of Work In Process Inventory as of the Closing Date
("Work In Process Inventory Value"). Seller shall present such Finished Goods
Inventory Value and Work In Process Inventory Value to Buyer in writing
(collectively "Tentative Value"). Buyer and its Representatives may observe the
physical inventory and review all computations used in preparations of the
Tentative Value. If Buyer does not give written notice of dispute thereof to
Seller within ten (10) days after receipt of the Tentative Value and all
supporting computations, the Tentative Value shall become the "Final Value." If
Buyer notifies Seller of a dispute within the ten (10) day period, Seller and
Buyer shall negotiate in good faith to agree upon the Final Value. If Seller and
Buyer cannot resolve the dispute within thirty (30) days thereafter, the parties
shall submit the matter to Ernst & Young, LLP to be resolved pursuant to Section
9.17 hereof, except that Ernst & Young, LLP shall administer the arbitration and
act as the sole arbitrator, which resolution of the Final Value shall be
conclusive and binding on the parties. Determination of the Final Value shall be
made in accordance with the valuation procedures contained in this Section.
If the Final Value is less than the Initial Value, the Purchase Price shall
be reduced by the difference between the Initial Value and the Final Value. If
such adjustment is required with respect to Finished Goods Inventory, Seller
shall pay to Buyer, by check or wire transfer, the entire adjustment amount
within five (5) days of the determination of the Final Value for Finished Goods
Inventory or, if applicable, within five (5) days of receipt of a determination
in resolution of any dispute over the Final Value of Finished Goods Inventory as
provided in this Section. If such adjustment is required with respect to Work In
Process Inventory, Seller shall pay to Buyer, by check or wire transfer,
one-half of the adjustment amount within five (5) days of the determination of
the Final Value of Work In Process Inventory or, if applicable, within five (5)
days of receipt of a determination in resolution of any dispute over the Final
Value of Work In Process Inventory as provided in this Section, and the balance
to be paid to Seller by Buyer pursuant to Section 3.4(b)(2) below shall be
reduced by the other one-half of the adjustment amount. In the event that the
determination in resolution of any dispute over the Final Value of Work In
Process Inventory occurs after the payment date set forth in Section
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3.4(b)(2), the Seller shall pay to Buyer, by check or wire transfer, the other
one-half of the adjustment amount within five (5) days of receipt of the
determination. Notwithstanding the foregoing, if the parties are in agreement as
to a part of the Final Value of Finished Goods Inventory and/or Work In Process
Inventory, only the disputed portion of the Final Value shall be submitted to
dispute resolution and payment for the part of the Final Value to which the
parties have agreed shall be made as otherwise provided herein without regard to
receipt of a determination in resolution for the disputed portion.
If the Final Value is greater than the Initial Value, Buyer shall pay
Seller the difference between the Final Value and the Initial Value. If such
adjustment is required with respect to Finished Goods Inventory, Buyer shall pay
to Seller, by check or wire transfer, the entire adjustment amount within five
(5) days of the determination of the Final Value for Finished Goods Inventory,
or if applicable, within five (5) days of receipt of a determination in
resolution of any dispute of the Final Value of Finished Goods Inventory as
provided in this Section. If such adjustment is required with respect to Work In
Process Inventory, Buyer shall pay to Seller, by check or wire transfer,
one-half of the adjustment amount within five (5) days of the determination of
the Final Value of Work In Process Inventory or, if applicable, within five (5)
days of receipt of a determination in resolution of any dispute over the Final
Value of Work In Process Inventory as provided in this Section, and the balance
to be paid by Buyer to Seller pursuant to Section 3.4(b)(2) below shall be
increased by the other one-half of the adjustment amount. In the event that the
determination in resolution of any dispute over the Final value of Work In
Process Inventory occurs after the payment date set forth in Section 3.4(b)(2),
the Buyer shall pay to Seller, by check or wire transfer, the other one half of
the adjustment amount within five (5) days of receipt of the determination.
Notwithstanding the foregoing, if the parties are in agreement as to a part of
the Final Value of Finished Goods Inventory and/or Work In Process Inventory,
only the disputed portion of the Final Value shall be submitted to dispute
resolution and payment for the part of the Final Value to which the parties have
agreed shall be made as otherwise provided herein without regard to receipt of a
determination in resolution for the disputed portion.
Notwithstanding anything herein to the contrary, the value of an item of
inventory, whether Finished Goods Inventory or Work In Process Inventory, shall
be determined based upon the Book Value, as hereinafter defined, for each such
inventory item. "Book Value" shall mean the lesser of eighty-five percent (85%)
of the current selling price for such item as determined by reference to the
Purchase Order or other instrument pursuant to which such item is sold and
delivered to the customer, or Seller's actual cost, as determined by the cost
accounting method consistently applied set forth on Schedule 3.2 hereto.
Section 3.3 Allocation of Purchase Price. The Purchase Price shall be
allocated as set forth on Schedule 3.3 Unless otherwise agreed in writing by
Buyer and Seller, Buyer and Seller shall: (i) reflect the Purchased Assets in
each of Buyer and Seller's books and for federal, state, local and foreign tax
reporting purposes in accordance with such allocation; (ii) file all forms
required under Section 1060 of the Code and all other tax returns and reports in
accordance with and based upon such allocation; and (iii) unless required to do
so in accordance with a "determination" as defined in Section 1313(a)(1) of the
Code, take no position in any tax return, tax proceeding, tax audit or otherwise
which is inconsistent with such allocation.
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Section 3.4 Payment of Purchase Price. Buyer shall pay to Seller the
consideration set forth in Section 3.1 as follows:
(a) the Finished Goods Inventory Purchase Price shall be paid in
immediately available funds at the Closing;
(b) payment of the WIP Purchase Price shall be as follows:
(1) Fifty percent (50%) shall be paid in immediately available
funds in advance at the Closing ("Closing Payment"); and
(2) the balance shall be paid on the fifteenth (15th) day of
tenth (10th) month following the Closing Date;
(c) the Tangible Personal Property Purchase Price shall be paid at
the Closing; and
(d) the $100.00 due pursuant to Section 2.5 shall be paid at the
Closing.
Section 3.5 Closing Adjustments. There shall be prorated and adjusted
between Seller and Buyer as of the close of business on the Closing Date
personal property taxes, personal property lease payments, and software
maintenance agreement payments.
Section 3.6 Taxes. Seller shall be responsible for the payment of any
transfer, excise, business and occupation, gross receipts or other similar taxes
(other than sales and use taxes) imposed by reason of the transfer of the
Purchased Assets pursuant to this Agreement and any deficiency, interest or
penalty with respect to such taxes. Buyer shall be responsible for the payment
of any sales and use tax imposed by reason of the transfer of the Purchased
Assets pursuant to this Agreement and any deficiency, interest or penalty with
respect to such taxes.
Section 3.7 Guaranty by TOMZ Corporation. TOMZ Corporation shall guaranty
payment of the Purchase Price and all obligations of Buyer under this Agreement
by executing a Guaranty Agreement in the form attached hereto as Exhibit E,
which Guaranty Agreement shall provide that Seller shall only proceed against
TOMZ Corporation after it has first made written demand of Buyer and payment is
not made within sixty (60) days of delivery of such written demand to Buyer.
Section 3.8 Collateral. To further secure Buyer's obligations set forth
under Section 3.4(b)(2), Buyer shall grant Seller a second priority security
interest in the Work In Process Inventory, subordinate to the security interest
granted by Buyer to its lender pursuant to in the financing obtained by Buyer in
connection with its acquisition of the Purchased Assets. In connection
therewith, Seller shall deliver to Buyer at Closing, UCC-3 Termination
Statements executed by Seller. Seller hereby irrevocably appoints Buyer its
attorney-in-fact, coupled with an interest, to sign UCC-3 Termination Statements
on behalf of Seller in connection with the release of the security interests
hereby granted.
Section 3.9 Pledge of Securities. To secure all obligations of Buyer under
this Agreement, Buyer has caused Zbigniew Matulaniec to pledge to EDAC
marketable securities
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having a value, as of the date of this Agreement, of at least Four Hundred
Thousand Dollars ($400,000) pursuant to a Pledge Agreement in the form of
Exhibit F. Except as required to satisfy the Seller's liquidated damages claim
under Section 9.3(c) hereof, the Seller shall only proceed against the pledge of
marketable securities after it has made written demand of both Buyer and TOMZ
Corporation pursuant to its guaranty in Section 3.7 hereof and payment is not
made within sixty (60) days of delivery of such written demands to Buyer and
TOMZ Corporation.
Section 3.10 Offset. Notwithstanding any provisions in this Agreement to
the contrary, Buyer shall have the right to offset against any amounts due
Seller whether under this Agreement, the Lease or any other agreement or
document entered into with Seller any amounts due Buyer from Seller under this
Agreement including, but not by way of limitation, Seller's obligations arising
under Section 8.1. If Buyer withholds payments under this Section and the same
are determined in arbitration to have been wrongfully withheld, then interest
calculated per annum at the rate of prime as reported by The Wall Street Journal
effective as of the date of offset plus three percent (3%) will be added to such
balance due until paid in full and in addition thereto Buyer shall pay Seller a
penalty of twenty-five percent (25%) of the amount withheld.
ARTICLE IV
CLOSING
Section 4.1 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be held on or before the fifth (5th) day
following the meeting of the shareholders of EDAC scheduled for May 15, 2001
("Closing Date"). EDAC will not, unless required by law, reschedule this
shareholders meeting to a date later than May 30, 2001, or such other date as
mutually agreed upon by Buyer and Seller. The Closing shall occur at the offices
of Eisenberg, Anderson, Michalik & Lynch, 136 West Main Street, New Britain,
Connecticut 06052, or any other place as Buyer and Seller mutually agree. The
Closing shall be effective as of the close of business on the Closing Date.
Section 4.2 Conveyance at Closing.
(a) Seller's Delivery.
(1) Instruments and Possession. Upon the terms and conditions
contained in this Agreement, on the Closing Date; Seller
shall deliver to Buyer:
(A) a Bill of Sale conveying clear title to the Purchased
Assets, in the Form of Exhibit G;
(B) an Assignment Agreement assigning all rights to the
Assumed Contracts, in the form of Exhibit H;
(C) a consent to the assignment of the LTA ("Consent to
Assignment") in the form of Exhibit I;
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(D) the executed Lease;
(E) the Non-Disturbance Agreements in the form attached as
Exhibit J;
(F) statement from the State of Connecticut regarding
corporation income, unemployment and withholding taxes
in response to Seller's request for a tax clearance;
(G) a certificate of Status for each of EDAC and Gros-ite
updated to within two (2) weeks of the Closing Date;
(H) a certificate in the form of Exhibit K, executed by
EDAC and Gros-ite, dated the Closing Date, to the
effect that: (i) the representations and warranties of
EDAC and Gros-ite contained herein were true when made,
and, as in effect on the Closing Date, are true on the
Closing Date with the same effect as though made on and
as of the Closing Date; and (ii) each of EDAC and
Gros-ite has performed and complied with all of the
agreements and covenants to be performed or complied
with by it under this Agreement prior to and as of the
Closing Date;
(I) the legal opinion of Seller's counsel addressed to
Buyer, dated the Closing Date, in the form of Exhibit
L;
(J) the noncompetition agreement in the form of Exhibit C;
(K) the UCC-3 Termination Statements described in Section
3.8;
(L) certificate of title to the 1997 Ford E-350 Van bearing
V.I.N. 1FDKE30F7VHA80191;
(M) all consents required in connection with the Assumed
Contracts, except any consents required with respect to
the agreements set forth in Section 2.6(c), (d), (e),
and (f); and
(N) an assignment of Seller's rights and obligations under
its lease with Peter Stanley Realty regarding 1838 New
Britain Avenue, Farmington, Connecticut in the form of
Exhibit B.
(b) Buyer's Delivery.
(1) Instruments. Upon the terms and conditions contained in this
Agreement, on the Closing Date, Buyer and/or TOMZ
Corporation shall deliver or shall cause to be delivered to
Seller:
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(A) an Assignment Agreement assuming all rights to the
Assumed Contracts in the form of Exhibit H;
(B) a consent to the assignment of the LTA in the form of
Exhibit I;
(C) the executed Lease;
(D) the Non-Disturbance Agreements in the form of
Exhibit J;
(E) a certificate of Legal Existence for each of Buyer and
TOMZ Corporation updated to within two (2) weeks of the
Closing Date;
(F) a certificate in the form of Exhibit K, executed by
Buyer and TOMZ Corporation, dated the Closing Date, to
the effect that: (i) the representation and warranties
of Buyer and TOMZ Corporation and Buyer contained
herein were true when made, and, as in effect on the
Closing Date, are true on the Closing Date with the
same effect as though made on and as of the Closing
Date; and (ii) each of TOMZ Corporation and Buyer have
performed and complied with all of the agreements and
covenants to be performed or complied with by it under
this Agreement prior to and as of the Closing Date;
(G) the legal opinion of Buyer's counsel addressed to
Seller, dated the Closing Date, in the form of
Exhibit M;
(H) the Noncompetition Agreement in the form of Exhibit C;
(I) the Guaranty of TOMZ Corporation in the form of
Exhibit E;
(J) the UCC financing statements described in Section 3.8;
and
(K) the Pledge Agreement in the form of Exhibit F.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EDAC AND GROS-ITE
Section 5.1 EDAC's and Gros-ite's Representations. Each of EDAC and Gros-ite,
hereby, jointly and severally, represents and warrants to Buyer and TOMZ
Corporation as follows:
(a) Organization, Good Standing and Authority Seller to Conduct
Business. EDAC is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of
Wisconsin. Gros-ite is a
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corporation, duly incorporated, validly existing and in good
standing under the laws of the State of Connecticut. Schedule
5.1(a) sets forth each trade name or assumed name used by
Gros-ite and EDAC in the conduct of the Business. Each of EDAC
and Gros-ite has full power and authority to conduct its business
as it is presently being conducted and to own and lease its
properties and assets. Except as set forth on Schedule 5.1(a)
Seller conducts the Business directly and not through any other
Person.
(b) Power and Authority; Authorization; Binding Effect. Each of EDAC
and Gros-ite has all necessary power and authority and has taken
all action necessary to execute and deliver this Agreement, to
consummate the transactions contemplated by this Agreement, and
to perform its obligations under this Agreement. Copies of all
resolutions of the board of directors and shareholders of each of
EDAC and Gros-ite with respect to the transactions contemplated
by this Agreement, certified by the Secretary or an Assistant
Secretary of EDAC and Gros-ite, respectively, in the form
attached as Schedule 5.1(b) will be delivered to Buyer at
Closing. This Agreement has been duly executed and delivered by
EDAC and Gros-ite and constitutes a legal, valid and binding
obligation of each of EDAC and Gros-ite enforceable against EDAC
and Gros-ite in accordance with its terms, except as such
enforcement may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (2) the discretion of
the appropriate court with respect to specific performance,
injunctive relief or other forms of equitable remedies.
(c) No Conflict or Violation. The execution and delivery of this
Agreement, the consummation of the transactions contemplated by
this Agreement, and the fulfillment of the terms of this
Agreement do not and will not result in or constitute (1) a
material violation of or conflict with any provision of the
certificate of incorporation or by-laws of EDAC or Gros-ite,
(2) except as set forth on Schedule 5.1(c), a material breach of,
a loss of rights under, or constitute an event, occurrence,
condition or act which is or, with the giving or notice, the
lapse of time or the happening of any future event or condition,
would become, a material default under, or result in the
acceleration of any obligation under, any term or provision of,
any material contract, agreement, indebtedness, encumbrance,
commitment, license, franchise, permit, authorization or
concession to which EDAC or Gros-ite is a party, (3) a material
violation by EDAC or Gros-ite of any statute rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or
award applicable to EDAC or Gros-ite; (4) a material violation of
any state or federal securities laws or regulations; or (5) an
imposition of any Encumbrance on the Purchased Assets other than
as contemplated pursuant to Section 3.8 and as provided by Buyer
to its lender.
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(d) Consents and Approvals. Except for any filings or approvals set
forth on Schedule 5.1(d) no consent, approval or authorization
of, or declaration, filing or registration with, any Person is
required to be made or obtained by EDAC or Gros-ite in connection
with: the execution, delivery and performance of this Agreement;
the consummation of the transactions contemplated by this
Agreement; or Buyer's future conduct of the Business.
(e) No Proceedings. Except as set forth on Schedule 5.1(e), there is
no action, order, writ, injunction, intellectual property
infringement, judgment or decree outstanding, or claim, suit,
litigation, proceeding, arbitrary action or investigation pending
or, to Seller's Knowledge, threatened against, relating to or
affect in any adverse manner, Gros-ite, the Business, the
Purchased Assets or the transactions contemplated by this
Agreement and Seller is not in default under any judgment, order,
decree or stipulation affecting the Business.
(f) Financial Statements. Seller has delivered to Buyer audited
consolidated statements of operations, balance sheets, statements
of cash flows, and statements of changes in shareholders' equity
as of and for the fiscal year ended December 30, 2000 for Seller
("Financial Statements"). The Financial Statements (including the
notes thereto) have been prepared in accordance with GAAP applied
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 are consistent with the
books and records of the Seller (which books and records are
correct and complete).
(g) Tax Matters. Except as set forth on Schedule 5.1(g) with respect
to the Business:
(1) Each of EDAC and Gros-ite has filed all Tax Returns that it
was required to file. All such Tax Returns were correct and
complete in all material respects. All taxes owed by EDAC
and Gros-ite (whether or not shown on any Tax Return) have
been paid. Neither EDAC nor Gros-ite is 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 EDAC or Gros-ite file Tax
Returns that either is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the
assets of EDAC or Gros-ite that arose in connection with any
failure (or alleged failure) to pay any Tax.
(2) Each of EDAC and Gros-ite 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.
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(3) To Seller's Knowledge, neither EDAC nor Gros-ite expects any
authority to assess any additional taxes with respect to the
EDAC or Gros-ite for any period for which Tax Returns have
been filed. There is no dispute or claim concerning any Tax
Liability of EDAC or Gros-ite either (A) claimed or raised
by any authority in writing or (B) as to which either of
EDAC or Gros-ite has knowledge. Schedule 5.1(g), lists of
all federal, state, local and foreign income Tax Returns
filed with respect to EDAC and Gros-ite for taxable periods
that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Neither EDAC nor
Gros-ite has delivered to the Buyer copies of any federal
income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by EDAC and
Gros-ite, respectively, therefore the Buyer places absolute
reliance upon the representations made with respect to
Taxes, Tax Liabilities, and Tax Returns on said Schedule
5.1(g) and otherwise herein.
(4) Neither EDAC nor Gros-ite has waived any statute of
limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
(5) Each of EDAC and Gros-ite has disclosed on its federal
income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income
Tax within the meaning of Codes ss.6662. Neither EDAC nor
Gros-ite is a party to any Tax allocation or sharing
agreement. Neither EDAC nor Gros-ite has been a member of an
affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was
the Seller) or (B) has any Tax Liability of any Person
(other than any of the Seller and its subsidiaries) under
Treasury Regulations ss.1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(6) The unpaid taxes of EDAC and Gros-ite, respectively, (A) did
not, as of December 30, 2000, exceed the reserve for Tax
Liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and
Tax income) set forth on the face of the Financial
Statements (rather than in any notes thereto) (B) do not
exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom
and practice of EDAC and Gros-ite, respectively, in filing
its Tax Returns.
(h) Title to Purchased Assets and Premises. Except as disclosed on
Schedule 5.1(h), each of EDAC and Gros-ite, respectively, has
such title to all of the Purchased Assets and the Premises as is
necessary to permit the use and enjoyment of the Purchased Assets
and Premises substantially in
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the manner that the Purchased Assets and the Premises are now
utilized by EDAC and Gros-ite, and the Purchased Assets and
Premises are free and clear of any Encumbrances, except as set
forth on Schedule 2.1(a). Each of Gros-ite and EDAC has full
right, power and authority to sell, convey and assign the
Purchased Assets and to enter into the Lease.
(i) Real Property. Schedule 5.1(i) sets forth a complete list of all
real property and interests in real property leased or subleased
by EDAC and Gros-ite and used in the Business.
(j) Tangible Personal Property. Schedule 2.4 sets forth a complete
list of each item of tangible personal property constituting
Purchased Assets owned by EDAC or Gros-ite having a value in
excess of $3,000, and is a complete list of each item of tangible
personal property constituting Purchased Assets leased by EDAC or
Gros-ite (other than individual leases of office equipment having
an annual rent of less than $3,000) (inclusive of the tangible
personal property not required to be set forth in Schedule 2.4
because of the foregoing dollar thresholds.) Except for the
Sutton Barrel Machine as set forth on Schedule 5.1(j), all of the
Tangible Personal Property is located at 1790 New Britain Avenue,
Farmington, Connecticut. Each item of Tangible Personal Property
is adequate for its intended use, free from defects (patent and
latent), has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which
it is presently used.
(k) Options. Other than set forth on Schedule 5.1(k), there are no
outstanding options, calls, contracts, leases or commitments of
any character for the sale or use of the Purchased Assets.
(l) Terminations. Other than as set forth on Schedule 5.1(l), no Work
In Process Inventory has been terminated by EDAC's or Gros-ite's
customers as of February 28, 2001.
(m) INTENTIONALLY OMITTED.
(n) INTENTIONALLY OMITTED.
(o) Patents and Trademarks. Schedule 5.1(o), sets forth a true and
complete list of all domestic and foreign patents, copyrights,
trademarks, trade names and all registrations or applications
with respect to the Purchased Assets and the Business, and
licenses or rights under the same relating to the Purchased
Assets and the Business, owned or held by EDAC or Gros-ite and
there is not outstanding with respect thereto any license or
other permission granted by EDAC or Gros-ite to any other person,
firm or corporation. The listing of patents and patent
applications on the attached Schedule 5.1(o) sets forth for each
entry the patent number, patent date,
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patent inventor, and patent title. There are no outstanding
claims which have been asserted in writing against EDAC or
Gros-ite alleging infringement of any patent, copyright,
trademark, trade name or license of any other person, firm or
corporation, nor has EDAC or Gros-ite been advised by its legal
counsel that there is outstanding any adversely held patent,
copyright, trademark, trade name or license on which such claim
could reasonably be based. There are no outstanding patent
applications by EDAC or Gros-ite. Except as set forth on Schedule
5.1(a), neither EDAC nor Gros-ite has used any tradenames during
the past five (5) years.
(p) Regulatory Filings. All material reports and filings required to
be filed with, and fees to be paid to, any Governmental Authority
or federal regulatory agency and state or federal public utility
or service commission by the EDAC and Gros-ite with respect to
the Purchased Assets have been timely filed, and from the date
hereof will be timely filed. All such reports, filings and fees
are and will be accurate and complete in all material respects.
(q) Product and Field Warranties. Except as set forth in Schedule
5.1(q), neither EDAC nor Gros-ite has any product warranties or
product guarantees (other than implied warranties and field
warranties and warranties contained in the EDAC's or Gros-ite's
standard forms of invoices and standard customer contracts,
disclosed on Schedule 1.1) now in effect or outstanding with
respect to the Business.
(r) Creditors. The Business has no creditors (secured or unsecured)
having a material claim in connection with the Purchased Assets
other than (1) accounts payable incurred in the ordinary course
and (2) those creditors listed on Schedule 5.1(r) for the amounts
owed as shown thereon.
(s) Nonconforming Use. The Business is not a nonconforming use at the
Premises and is not in violation of any ordinance or statute.
(t) Matters Relating to Employees.
(i) Offers of Employment to Seller's Employees. For the period
commencing on the date of execution of this Agreement and
continuing until the Closing Date, Buyer shall have the
absolute and unfettered right to solicit and to hire and
employ any Business Employees effective as of the Closing
Date. Buyer shall offer employment to those Business
Employees who Buyer, in its sole discretion, elects to
solicit for hire. With respect to employees of Seller who
are hired by Buyer as of the Closing, Buyer and Seller agree
to cooperate fully in the transition of any such employees
to employment with Buyer. Nothing contained in this Section
shall
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be construed to give rise to any obligation of Buyer to any
employee of Seller.
(ii) No Rights to Employment. After the Closing, nothing herein
expressed or implied shall confer upon any former employee
of Seller, or any union, collective bargaining agent or
other person or entity any rights or remedies (including,
but not limited to, any right to employment, or continued
employment, for any specified period) or any right to any
particular benefits in connection with any employment of any
nature or kind whatsoever under or by reason of this
Agreement.
(u) INTENTIONALLY OMITTED.
(v) Vendors and Customers of EDAC and Gros-ite. Set forth on Schedule
5.1(v) is a list of all customers of, and vendors to, the
Business which accounted for over 5% each of the total
consolidated sales and purchases of the Business of Seller during
the year ended December 30, 2000. Neither EDAC nor Gros-ite has
received any written communication indicating that there is a
substantial probability that any vendors or customers of the
Business will terminate their business relationship with EDAC or
Gros-ite.
(w) Contracts. Except as described in Schedule 5.1(w), neither EDAC
nor Gros-ite is, as of the date of this Agreement with respect to
the Business and the Seller's employees, a party to or bound by
any:
(1) employee collective bargaining agreement or other contract
with any labor union;
(2) employment agreements with any employee;
(3) employment or consulting agreements with any director,
officer, or consultant (excluding any such contracts or
arrangements terminable on ninety (90) days notice or less
without penalty or premium);
(4) intellectual property agreements;
(5) long term agreements with customers;
(6) subcontractor agreements, except Purchase Orders;
(7) distribution, agency or manufacturer's representation
agreements;
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(8) intercompany agreements, partnership agreements, joint
venture agreements or subcontractor agreements;
(9) military or government contracts;
(10) (A) lease or similar agreement under which Seller or
Gros-ite is lessee of, or holds or uses, any machinery,
computer hardware or software, equipment, vehicle or other
tangible personal property owned by a third party; (B)
license agreements; (C) continuing contract for the future
purchase of materials, services, supplies or equipment; (D)
management, service, consulting or other similar type of
contract; (E) computer maintenance agreement;
(11) distribution or sales agency agreement or arrangement;
(12) advertising agreement or arrangement (excluding any such
contracts or arrangements terminable on ninety (90) days
notice or less without penalty or premium);
(13) warranty agreements;
(14) with respect to the Business, bonus, incentive or deferred
compensation, profit sharing, stock option, retirement,
pension, group insurance, death benefit or other fringe
benefit plans, trust agreements, vacation pay, severance
pay, and other personnel policies or arrangements of Seller
pertaining to any of Seller's current or former employees or
consultants under which Seller is currently making or may in
the future make payments;
(15) contracts which purport to limit the freedom of EDAC or
Gros-ite to engage in any line of business in any geographic
area;
(16) employee invention assignment agreement;
(17) other contracts material to the Business, operations,
results of operations or prospects of EDAC or Gros-ite
(other than contracts relating to tangible personal property
not constituting Purchased Assets);
(18) nondisclosure agreements or restrictive covenants; or
(19) supplier agreements.
True and correct copies if in writing, and, to Seller's
Knowledge, if oral, accurate written summaries, of each of the
foregoing have been delivered to Buyer. Schedule 5.1(w) sets
forth a list of all of the above enumerated
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contracts, agreements, commitments, leases and instruments
relating to the Business which involve commitments in their
individual capacity in excess of $10,000, except purchase orders
and invoices. Each agreement, contract, lease, license,
commitment or instrument of EDAC and Gros-ite described on
Schedule 5.1(w) (collectively, "Contracts") is in full force and
effect, and enforceable in accordance with its terms except as
disclosed on Schedule 5.1(w) and, except as such enforcement may
be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights and (ii) the discretion of the appropriate
court with respect to specific performance, injunctive relief or
other forms of equitable remedies. Neither EDAC nor Gros-ite has
received notice that any party to any Contract intends to
terminate such Contract or to exercise or not exercise any option
under such Contract. Neither EDAC nor Gros-ite is (with or
without the lapse of time or the giving of notice, or both) in
material breach or default under any of the Contracts and no
other party to any of the Contracts is (with or without the lapse
of time or the giving of notice, or both) in breach or default
thereunder. The consummation of the transactions contemplated
hereby will not create a material default in or result in the
right of modification or termination of, any Contract.
(x) Employee Benefit Plans. Except as disclosed in Schedule 5.1(x),
(1) Neither Gros-ite, EDAC, nor any ERISA Affiliate of Seller,
contributes to, has ever contributed to, or has ever been
required to contribute to, any Multi-Employer Plan, and
neither Seller, nor any ERISA Affiliate of Seller, has any
liability (including withdrawal liability) under any
Multi-Employer Plan.
(2) The Employee Welfare Benefit Plans that are group health
plans (as defined in "COBRA") have complied in all material
respects with requirements of COBRA to provide health care
continuation coverage to qualified beneficiaries who have
elected, or may elect to have, such coverage. Seller or its
agents who administer any of the Employee Welfare Benefit
Plans have complied in all material respects and will
continue to comply in all material respects through the date
of Closing, with the notification and written notice
requirements of COBRA. There are no pending or, to Seller's
Knowledge, threatened claims, suits, or other proceedings by
any employee, former employee, participants or by the
beneficiary, dependent or representative of any such person,
involving the failure of any Employee Welfare Benefit Plan
or of any other group health plan ever maintained by Seller
to comply with the health care continuation coverage
requirements of COBRA.
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(y) Absence of Changes or Events. Except as set forth in Schedule
5.1(y), since December 30, 2000, EDAC and Gros-ite have conducted
the Business only in the ordinary course consistent with past
practice, and there has not been with respect to the Business:
(1) any change which, individually or in the aggregate, has had a
material adverse effect on the Business, nor, to Seller's
Knowledge, are any such changes threatened, anticipated or
contemplated, (2) any actual or, to Seller's Knowledge,
threatened, anticipated or contemplated damage, destruction,
loss, conversion, termination, cancellation, default or taking by
eminent domain or other action by any governmental body or
agency, (3) any pending or, to Seller's Knowledge, threatened,
anticipated or contemplated dispute of a material nature with any
customer, supplier, employee, landlord, subtenant or licensee of
EDAC or Gros-ite or any pending or, to Seller's Knowledge,
threatened, anticipated or contemplated occurrence or situation
of any kind, nature or description which is reasonably likely to
result in any reduction in the amount, or any change in the terms
or conditions which has a material adverse effect, of business
with any substantial customer or supplier of EDAC or Gros-ite
which would reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the Business, (4)
any material increase in the compensation payable or to become
payable to the Retained Employees, or agents or consultants of
Seller engaged in the Business, other than any such increase in
the ordinary course of business, (5) any material failure to
comply with any Governmental Requirement, or (6) any sale or
commitment to sell all or any portion of the Purchased Assets.
(z) INTENTIONALLY OMITTED.
(aa) Compliance with Laws. Except as set forth on Schedule 5.1(aa),
each of EDAC and Gros-ite is presently and since January 1, 1998
has been in compliance in all material respects with all
Governmental Requirements with respect to the Business. Without
limiting the generality of the foregoing, since January 1, 1998
with respect to the Business.
(1) To Seller's Knowledge, no unresolved charge, complaint,
action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against EDAC
or Gros-ite alleging any failure to comply with any material
Governmental Requirement.
(2) Each of EDAC and Gros-ite has complied in all material
respects with all applicable Governmental Requirements
relating to the employment of labor, employee civil rights,
and equal employment opportunities.
(3) To Seller's Knowledge, neither EDAC nor Gros-ite has:
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(A) made or agreed to make any contribution, payment,
remuneration or gift of funds or property to any
governmental official, employee, or agent, customer or
supplier where either the contribution, payment or gift
or purpose thereof was illegal under any Governmental
Requirement or which could reasonably be expected to
subject EDAC or Gros-ite to any damage or penalty in
any civil, criminal or governmental litigation or
proceeding;
(B) established or maintained or agreed to establish or
maintain any unrecorded fund or asset for any purpose,
or made any false entries on any books or records for
any reason; or
(C) made or agreed to make any contribution, or reimbursed
any political gift or contribution made by any other
person, to any candidate for federal, state, local, or
foreign public office where such contribution or
reimbursement or the purpose thereof was illegal under
any applicable law.
(4) Each of EDAC and Gros-ite has filed in a timely manner all
material reports, documents and other materials that are or
were required to be filed (and the information contained
therein was correct and complete in all respects) under all
applicable Governmental Requirements, including Section 1877
of the Social Security Act.
(5) To Seller's Knowledge, Seller has possession of all records
and documents with respect to the Business that are or were
required to be retained under all applicable and material
Governmental Requirements.
(bb) Licenses; Permits; Certifications. Schedule 5.1(bb) sets forth a
complete list of all permits, consents, vendor codes, quality
assurance and related certifications, approvals and other
authorizations held by Seller and Gros-ite and used in the
Business.
(cc) Employee Data. Set forth on Schedule 5.1 (cc) is a list of the
employees working in the Business ("Business Employees"). Except
as set forth in Schedule 5.1(cc), with respect to the Business
Employees and the Business:
(1) Seller has no obligation to pay post-retirement health or
welfare benefits;
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(2) Seller has no employment agreement which is not terminable
at will by Seller without notice and without an obligation
to pay severance pay;
(3) There is no labor strike, dispute, slowdown or work stoppage
or lockout actually pending or, threatened against or
affecting Seller, and during the past year there has not
been any such action;
(4) No union organizational campaign is pending or, to Seller's
Knowledge, threatened;
(5) There is no unfair labor practice charge or complaint
against Seller pending or threatened before the National
Labor Relations Board nor is there a reasonable basis for
any such charge or complaint;
(6) During the past three (3) years, no Business Employee or
former employee has filed any claim nor, to Seller's
Knowledge, does any such employee have a reasonable basis
for any action or proceeding against Seller arising out of
any statute, ordinance or regulation relating to
discrimination in employment or employment practices
(including, without limitation, applicable workers'
compensation laws, the Fair Labor Standards Act, as amended,
Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. Section 1981, the Rehabilitation Act of 1973, as
amended, the Age Discrimination in Employment Act of 1973,
as amended, the Family and Medical Leave Act of 1993 or the
Americans with Disabilities Act).
(dd) Billing. With respect to the Business, all billing by EDAC and
Gros-ite has been true, fair and correct and in compliance in all
material respects with all applicable Governmental Requirements
and the policies of its customers.
(ee) Affiliated Transactions. Except as described in Schedule 5.1(ee),
with respect to the Business, neither Seller, Gros-ite, nor, to
Seller's Knowledge, any officer, director or Affiliate of Seller
(i) owns, directly or indirectly, any economic interest in
(excepting less than 5% stock holdings in securities of publicly
traded companies), or is an officer, director, employee or
consultant of, any Person which is, or is engaged in business as,
a competitor, lessor, lessee, supplier, distributor, sales agent
or customer of Seller, (ii) owns, in whole or in part, any
property that Seller uses in the conduct of the Business, (iii)
has guaranteed any indebtedness, obligation or contract of the
Business or provided any assistance with respect thereto, or (iv)
has any cause of action or other legal claim whatsoever against
or, except as set forth on the Financial Statements, owes any
amount to, the Business. To Seller's Knowledge, set forth on
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Schedule 5.1(ee) is a true and complete list of all transactions
and services since January 1, 2000 between EDAC, Gros-ite or any
of their Affiliates relating to the Business.
(ff) No Brokers. Neither EDAC nor Gros-ite has entered into any
agreement, arrangement or understanding with any Person which
will result in the obligation to pay any finder's fee, brokerage
commission or similar payment in connection with the transactions
contemplated by this Agreement.
(gg) Material Misstatements or Omissions. There is no fact,
transaction or development which EDAC and Gros-ite have not
disclosed to the Buyer in writing which could, individually or in
the aggregate, reasonably be expected to have a material adverse
effect on the Business. None of the representations or warranties
by EDAC and Gros-ite in this Agreement or in any document
delivered to the Buyer pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact, or omits to
state any material fact necessary to make the statements or facts
contained therein not misleading.
(hh) Insurance.
(1) Schedule 5.1(hh) sets forth the policies of insurance of the
Business, for the Premises, for the leased property at 1838
New Britain Avenue, and for the property leased as a parking
area from the State of Connecticut presently in force,
specifying with respect to each such policy the name of the
insurer, type of coverage, term of policy, limits of
liability and annual premium. Seller has heretofore
delivered to Buyer complete and correct copies of the
policies and agreements set forth in Schedule 5.1(hh).
(2) The insurance policies set forth on Schedule 5.1(hh) are in
full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date
have been paid (except to the extent indicated in Schedule
5.1(hh) and no notice of cancellation or termination has
been received with respect to any such policy. Such policies
are sufficient for material compliance with all requirements
of law and all agreements to which the Business is a party;
are valid, outstanding and enforceable policies; provide
adequate insurance coverage for the assets and operations of
the Business; will remain in full force and effect through
the respective dates set forth in Schedule 5.1(hh) without
the payment of additional premiums; and will not in any way
be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement or by all other
agreements incidental hereto.
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(ii) Environmental, Health, and Safety Matters. Except as set forth in
Schedule 5.1(ii),
(1) Each of EDAC, Gros-ite and their Affiliates has complied and
is in compliance, in all material respects, with all
Environmental, Health, and Safety Requirements.
(2) Without limiting the generality of the foregoing, each of
EDAC, Gros-ite and their Affiliates has obtained and
complied with, and is in compliance, in all material
respects, with, all permits, licenses and other
authorizations that are required pursuant to Environmental,
Health, and Safety Requirements for the occupation of the
Premises, the leased premises at 1838 New Britain Avenue,
and the operation of the Business; a list of all such
permits, licenses and other authorizations is set forth on
the attached Schedule 5.1(ii).
(3) Neither Gros-ite, EDAC nor either of its Affiliates has
received any written or oral notice, report or other
information regarding any actual or alleged material
violation of Environmental, Health, and Safety Requirements,
or any liabilities or potential liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective
obligations, relating to the Business or the Premises
arising under Environmental, Health, and Safety
Requirements.
(4) None of the following exists at the Premises in connection
with the Business: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3)
materials or equipment containing polychlorinated biphenyls,
or (4) landfills, surface impoundments, or disposal areas.
(5) Neither Gros-ite, EDAC nor any of its Affiliates has
treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance
in or on the Premises, including without limitation any
hazardous substance in a manner that has given or would give
rise to material liabilities, including any liability for
response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees,
pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended,
("CERCLA"), the Solid Waste Disposal Act, as amended,
("SWDA"), or any other Environmental, Health, and Safety
Requirements.
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(6) Neither this Agreement nor the consummation of the
transactions that are the subject of this Agreement will
result in any obligations for site investigation or cleanup
at the Premises, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
(7) Neither EDAC, Gros-ite nor any of their affiliates has,
either expressly or by operation of law, assumed or
undertaken any liability with respect to the occupation of
the Premises or the operation of the Business, including
without limitation any material obligation for corrective or
remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(8) To Seller's Knowledge, no facts, events or conditions
relating to the Premises will prevent, hinder or limit
continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or
corrective obligations pursuant to Environmental, Health,
and Safety Requirements, or give rise to any other
liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health
and Safety Requirements, including without limitation any
relating to onsite or offsite releases or threatened
releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources
damage.
(9) Seller hereby acknowledges receipt of a copy of the
Environmental Report describing the condition of the
Premises. Seller shall indemnify Buyer in accordance with
the provisions of Section 8.1 from any liability or expenses
incurred by Buyer with respect to the condition of the
Premises as set forth in the Environmental Report. Buyer
shall indemnify Seller from any liability or expenses
incurred by Seller with respect to Buyer's violation with
respect to the Premises of CERCLA or SWDA (as each is
defined in Section 5.1(ii)) or any other federal, state,
local, or foreign statute, regulation, ordinance or other
provision having the force or effect of law concerning
pollution or protection of the environment.
(jj) Gros-ite Industries, Inc.. Gros-ite has no tangible assets other
than its rights under the LTA and has no employees. Gros-ite is
wholly owned by EDAC.
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(kk) Inventory. All of Seller's inventory, and all inventory of Seller
reflected on the Most Recent Financial Statements is good and
saleable, in the ordinary course of business, (as such terms are
defined by GAAP).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND TOMZ CORPORATION
Section 6.1 Buyer and TOMZ Corporation's Representations
Each of Buyer and TOMZ Corporation hereby, jointly and severally,
represents and warrants to Seller as follows:
(a) Organization and Good Standing. Each of Buyer and TOMZ
Corporation is a Connecticut corporation, duly organized, validly
existing and in good standing under the laws of the State of
Connecticut. Each of Buyer and TOMZ Corporation has full power
and authority to conduct its business as presently being
conducted and to own and lease its properties and assets.
(b) Authority; Authorization; Binding Effect. Buyer and TOMZ
Corporation have all necessary power and authority to execute and
deliver this Agreement, to consummate the transactions
contemplated by this Agreement and to perform its obligations
under this Agreement. Copies of resolutions of the members and
board of directors of Buyer and TOMZ Corporation, respectively,
in the form attached as Schedule 6.1(b) with respect to the
transactions contemplated by this Agreement, will be delivered to
Seller at the Closing. This Agreement has been duly executed and
delivered by Buyer and TOMZ Corporation and constitutes a legal,
valid and binding obligation of Buyer and TOMZ Corporation,
enforceable against Buyer and TOMZ Corporation in accordance with
its terms, except as such enforcement may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights and
(2) the discretion of the appropriate court with respect to
specific performance, injunctive relief or other forms of
equitable remedies.
(c) No Conflict or Violation. The execution and delivery of this
Agreement, the consummation of the transactions contemplated by
this Agreement and the performance by Buyer and TOMZ Corporation
of its obligations under this Agreement, do not and will not
result in or constitute: (1) a violation of or a conflict with
any provision of the certificate of corporation of Buyer or TOMZ
Corporation; (2) a breach of, a loss of rights under, or
constitute an event, occurrence, condition or act which is or,
with the giving of notice, the lapse of time or the happening of
any future event or condition, would become, a material default
under, any term or provision of any contract, agreement,
indebtedness, lease, commitment, license, franchise, permit,
authorization or concession to which Buyer is a party; or
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(3) a violation by Buyer or TOMZ Corporation of any statute,
rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree or award.
(d) No Proceedings. There is no action, order, writ, injunction,
judgment or decree outstanding or claim, suit, litigation,
proceeding, arbitral action or investigation pending or
threatened against, relating to or affecting in any adverse
manner, Buyer, TOMZ Corporation or the transactions contemplated
by this Agreement.
(e) No Brokers. Buyer and TOMZ Corporation have not entered into any
agreement, arrangement or understanding with any Person which
will result in the obligation to pay any finder's fee, brokerage
commission or similar payment in connection with the transaction
contemplated hereby.
(f) Material Misstatements or Omissions. There is no fact,
transaction or development which Buyer or TOMZ Corporation has
not disclosed to Seller, in writing, which could, individually or
in the aggregate, reasonably be expected to have a material
adverse effect on Seller in its conduct of the Business. None of
the representations or warranties by Buyer and TOMZ Corporation
in this Agreement or in any document delivered to the Seller
pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement contains any untrue statement of a
material fact, or omits to state any material fact necessary to
make the statements or facts contained therein not misleading.
(g) Licenses; Permits. Buyer has all permits and licenses, other than
the Pratt and Whitney Vendor Code referenced in Section 7.1(a),
required in connection with Buyer's use of the Purchased Assets
in the operation of its business.
(h) Insurance. As of the Closing Date Buyer shall have in force and
shall maintain in force and effect during the Claims Period, a
policy of products liability insurance, including an aerospace
rider, in the amount of at least $10,000,000, which policy shall
be a "claims made" policy and which shall list Seller as an
additional insured.
ARTICLE VII
COVENANTS AND CONDUCT OF
THE PARTIES PRIOR TO OR ON CLOSING
Section 7.1 Pre-Closing Covenants. EDAC and Gros-ite, jointly and
severally, on the one hand, and Buyer on the other hand, each covenant with the
other as follows:
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(a) Contracts with Pratt and Whitney. On or prior to the Closing
Date, EDAC and Gros-ite shall have secured the written consent of
Pratt and Whitney to the assignment to Buyer of the LTA and to
the assignment to Buyer of all of Seller's and Gros-ite's right,
title and interest in and to the Purchase Orders and all orders
which originated pursuant to the MRP.
(b) Seller's Insurance. Seller shall maintain in full force and
effect during the Claims Period, a policy of products liability
insurance, including an aerospace rider, in the amount of at
least $10,000,000, which policy shall be a "claims made" policy
and which shall list Buyer as an additional insured.
Section 7.2 Right of Entry. Seller covenants that Buyer and its
Representatives shall have the right upon the signing of this Agreement to enter
the Premises and the premises at which the Business is operated at reasonable
times and shall have at all times, access to the Premises, at which the
Purchased Assets are located and to the books and records of the Seller, but
only as they relate to the Business, and that Seller shall furnish to Buyer and
its representatives such financial and operating data, and such other
information with respect to the Business and Purchased Assets as Buyer shall,
from time to time, reasonably request in connection therewith Buyer and its
representatives shall be privileged to contact and communicate with Seller's
management personnel, vendors, customers, manufacturers of its machinery and
equipment, and other persons having business dealings with the Business,
provided however that Buyer and its representatives shall first obtain the
written consent of Seller, which consent shall not be unreasonably withheld;
provided further, Buyer's access and inspection rights granted hereunder shall
not unreasonably interfere with the normal conduct of the Business.
Section 7.3. Conduct of Business. In addition to the other affirmative
covenants set forth in this Agreement and to induce Buyer to execute this
Agreement, Seller covenants that, from the date hereof until the Closing, except
as explicitly permitted otherwise by this Agreement or otherwise consented to in
writing by Buyer or otherwise affected by the review and advisory services
rendered by TOMZ Corporation to EDAC pursuant to the Consulting Services
Agreement between EDAC and TOMZ Corporation effective as of March 12, 2001, it
shall:
(a) Use its best efforts to conduct the Business in the ordinary
course and in the same manner as that in which it has been
conducting the Business in accordance with all applicable and
material laws, rules, regulations and ordinances of all federal,
state and local governments; and maintain its books of account in
a manner that fairly and accurately reflects in all material
respects its income, expenses and liabilities consistent with
prior practice;
(b) Use its best efforts to maintain and preserve the organization of
the Business intact and preserve its relationships with
employees, customers,
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vendors and others having business relations with it, so that its
business shall be unimpaired in every material respect on the
date of the Closing.
(c) Notify the Buyer of any material problem or development with
respect to its business and of any other events or occurrences
which would constitute a material breach of warranty or violation
of any covenant hereunder;
(d) Maintain the Purchased Assets and the Premises in normal
operating condition, ordinary wear and tear excepted, and make
all customary repairs and improvements thereto, PROVIDED,
HOWEVER, that in the event that such repairs and improvements
necessary for one or more of the Purchased Assets shall exceed
the purchase price established for such Purchased Assets, then
the Seller shall deliver the affected Purchased Assets to the
Buyer without making such repairs and improvements and the Buyer
shall pay Seller for affected Purchased Assets their respective
residual scrap value;
(e) Maintain its corporate existence, good standing, and
qualifications to do business and to continue to conduct its
business;
(f) Use its best efforts to maintain and keep its contract rights,
vendor codes and quality assurances certifications;
(g) Keep in full force and effect insurance comparable in amount and
scope of coverage to that now maintained by it;
(h) Pay and discharge when due all Taxes and other governmental
charges lawfully imposed upon it, the Acquired Assets, the
Premises, or any of its properties.
Section 7.4. Lien Releases and Tax Clearance. At the Closing, the Seller
shall deliver to the Buyer complete releases of all liens or security interests
in any of the Purchased Assets, or copies of such releases and written evidence
of the secured parties' commitment to deliver said releases in connection with
the Closing and written responses from the Connecticut tax department or other
appropriate authority to Seller's request for tax clearance certificates
regarding income, corporate and unemployment taxes and charges and related taxes
and charges due by Seller through the date of Closing.
ARTICLE VIII
COVENANTS AND CONDUCT OF
THE PARTIES AFTER CLOSING
Section 8.1 Survival and Indemnifications
(a) Survival of Representations, Warranties, Covenants and
Agreements.
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(1) All representations and warranties made by Seller contained
in this Agreement shall survive the Closing Date for the
duration of the Claims Period; except that all
representations and warranties contained in Section 5.1(h)
shall survive the Closing Date indefinitely. Any claim
initiated by Buyer with respect to such representations and
warranties must be made during the Claims Period, except for
claims relating to the representations and warranties in
Section 5.1(h), as to which claims may be made at any time
after the Closing. Except with respect to information
disclosed by Seller in this Agreement or otherwise known to
Buyer, all of said representations and warranties shall in
no respect be limited or diminished by any past or future
inspection, investigation, examination or possession
(whether before or after the Closing) on the part of Buyer
or its Representatives, unless waived in writing by Buyer.
All covenants and agreements made by Seller contained in
this Agreement (including, without limitation, the
indemnification obligations set forth in this Section) shall
survive the Closing Date until fully performed or
discharged.
(2) All representations and warranties made by Buyer contained
in this Agreement shall survive the Closing Date for the
duration of the Claims Period. Any claim initiated by Seller
with respect to such representations and warranties must be
made during the Claims Period. All covenants and agreements
made by Buyer contained in this Agreement (including,
without limitation, the indemnification obligations set
forth in this Section) shall survive the Closing Date until
fully performed or discharged.
(b) Indemnification by Seller. EDAC and Gros-ite, jointly and
severally, hereby indemnify and agree to defend and hold harmless
Buyer from and against any and all loss, liability, deficiency,
damage suffered or incurred, actions, suits, proceedings, claims,
demands, investigations, assessments, judgments, costs and
expenses (including, but not limited to reasonable legal and
accounting fees and expenses) (collectively "Losses"), in respect
of the following:
(1) the breach of any representation or warranty by EDAC or
Gros-ite contained in this Agreement, PROVIDED, HOWEVER,
that no claim for breach of any representation or warranty
shall be made with respect to any item disclosed herein;
(2) the nonfulfillment of any covenant or agreement by EDAC or
Gros-ite contained in this Agreement (including, without
limitation, the payment or performance by EDAC or Gros-ite
of any liability which is not an Assumed Liability);
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(3) the operation of the Business or the use or ownership of the
Purchased Assets by EDAC or Gros-ite or any predecessor of
EDAC or Gros-ite on or prior to the Closing Date (except to
the extent that such Losses constitute an Assumed
Liability);
(4) any repairs or replacements to the Tangible Personal
Property required as a result of a change in the condition
of the Purchased Assets (normal wear and tear excepted) from
the date of execution of this Agreement through the Closing
Date, exceeding $2,000 in the aggregate for all Tangible
Personal Property or $1,000 for any single item of Tangible
Personal Property, PROVIDED, HOWEVER, that in the event that
such repairs and replacements to any single item of the
Tangible Personal Property shall exceed the purchase price
established for such item of Tangible Personal Property,
then the Seller shall deliver such item of Tangible Personal
Property to the Buyer without making such repairs or
replacements and Buyer shall pay Seller for such item of
Tangible Personal Property its residual scrap value; and
(5) in respect of any Tax Liability of Seller whether arising at
any time prior to, at, or after the Closing Date, without
regard to any limitation concerning the amount or timing of
indemnification contained in this Agreement.
(c) Indemnification by Buyer and TOMZ Corporation. Buyer and TOMZ
Corporation in accordance with its Guaranty, jointly and
severally hereby indemnify and agree to defend and hold harmless
Seller from and against any Losses and in respect of:
(1) the breach of any representation or warranty by Buyer or
TOMZ Corporation contained in this Agreement;
(2) the nonfulfillment of any covenant or agreement by Buyer or
TOMZ Corporation contained in this Agreement (including,
without limitation, the payment and performance by Buyer of
the Assumed Liabilities); and
(3) the operation of the Business after the Closing Date
excluding Seller's warranty obligations and other
obligations not assumed by Buyer.
(d) Notification and Defense of Claims or Actions.
(1) As used in this Section, any party seeking indemnification
pursuant to this Section is referred to as an "indemnified
party" and any
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party from whom indemnification is sought pursuant to this
Section is referred to as an "indemnifying party." An
indemnified party which proposes to assert the right to be
indemnified under this Section shall submit a written demand
for indemnification setting forth in summary form the facts
as then known which form the basis for the claim for
indemnification. With respect to claims based on actions by
third parties, an indemnified party shall, within twenty
(20) days after the receipt of notice of the commencement of
any claim, action, suit or proceeding against it in respect
of which a claim for indemnification is to be made against
an indemnifying party, notify the indemnifying party in
writing of the commencement of such claim, action, suit or
proceeding, enclosing a copy of all papers served; provided,
however, that the failure to so notify the indemnifying
party of any such claim, action, suit or proceeding shall
not relieve the indemnifying party from any liability which
it may have to the indemnified party, except to the extent
that the indemnifying party is prejudiced thereby.
Thereafter, the indemnified party shall deliver to the
indemnifying party, within twenty (20) days after receipt by
the indemnified party, copies of all further notices
relating to such claim.
(2) If a third-party claim is made for which an indemnified
party is entitled to indemnification pursuant to this
Section, the indemnifying party will be entitled to
participate in the defense of such claim and, if the
indemnifying party so chooses, and provided that the
indemnifying party acknowledges the indemnifying party's
obligation to indemnify the indemnified party, to assume
primary responsibility for the defense of such claim with
counsel selected by the indemnifying party and not
reasonably objected to by the indemnified party.
(3) If the indemnifying party assumes the defense of a
third-party claim as set forth in paragraph (2) of this
Section, then (A) in no event will an indemnified party
admit any liability with respect to, or settle, compromise
or discharge, any such claim without the indemnifying
party's prior written consent and (B) each indemnified party
shall be entitled to participate in, but not control, the
defense of such claim with its own counsel at its own
expense. If the indemnifying party does not assume the
defense of any such claim, an indemnified party may defend
such claim in a manner as it may deem appropriate
(including, but not limited to, settling such claim, after
giving twenty (20) days prior written notice of such
settlement to the indemnifying party, on such terms as the
indemnified party may deem appropriate); provided, however,
that if the indemnifying party has acknowledged the
indemnifying party's obligation to indemnify the indemnified
party, the
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indemnified party may not settle such claim without the
consent of the indemnifying party.
(c) Limitations on Indemnification.
(1) Basket and Cap. Except with respect to the purchase price
adjustment as set forth in Section 3.2, a claim for breach
of Section 5.1(kk), warranty work performed by Buyer on
behalf of Seller pursuant to Section 2.10, and Losses of
Buyer, if any, arising from the claim of Ralph Bello and
Vera Associates Limited Partnership v. Gros-Ite Spindle, a
division of Gros-Ite Industries and Apex Machine Tool
Company, Inc., et al. Docket No. CV01-72993-S, with respect
to which Seller's obligation to indemnify Buyer and TOMZ
Corporation shall not be limited in any respect, Seller, on
the one hand, and Buyer and TOMZ Corporation, on the other
hand, shall indemnify the other party's indemnified persons
to the extent of all Losses; provided, however, that no
obligation to indemnify shall arise until the aggregate
amount of the Losses equals or exceeds Fifty Thousand
Dollars ($50,000); provided further, however, that neither
party's obligation to indemnify the other party's
indemnified persons shall exceed the Purchase Price as set
forth in Section 3.1 hereof.
(2) Claims Net of Certain Items. The amount of any Losses for
which indemnification is provided under Sections 8.1(b) and
8.1(c) above shall be net of (A) any amounts recovered or
recoverable by the indemnified person pursuant to any
indemnification by or indemnification agreement with any
third party, and (B) any insurance proceeds or other cash
receipts or sources of reimbursement available as an offset
against such Losses (and no right of subrogation shall
accrue to any insurer or third party indemnitor hereunder).
(3) Exclusion of Certain Damages. No party shall be responsible
for any indirect, special, punitive or consequential damages
whatsoever, including loss of profits or goodwill, in
connection with this Agreement. This limitation shall not
apply in the case of damages caused by deliberate and/or
intentional acts or omissions of any party.
Section 8.2 Access to Retained Customer Records. For a period of up to
three (3) years following the Closing Date, Seller will provide Buyer with
access to the Retained Customer Records at all reasonable times.
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Section 8.3 Buyer's Defects. Buyer shall correct and be responsible for any
defect in the Work In Process Inventory which is attributable to the fault of
Buyer.
Section 8.4 Covenant Not To Use Name. Seller and Gros-ite each hereby
covenant and agree that except as required for reporting purposes, it will not,
from the Closing Date forward, use in any manner, the name "Gros-ite Engineered
Components Division." Buyer and TOMZ Corporation each hereby covenant and agree
that it will not, from the Closing Date forward, use in any manner, the name
"Gros-ite" except in connection with the name "Gros-ite Engineered Components
Division of TOMZ Corporation."
ARTICLE IX
MISCELLANEOUS
Section 9.1 Expenses; Agreements Not to Market Assets. Buyer and Seller
agree that each shall pay their own expenses incident to the negotiations of
this Agreement and other matters concerning the contemplated transactions,
including, without limitation, attorneys' fees, accountants' fees, and recording
and filing fees. Seller agrees that Seller shall not market, solicit offers for,
or enter into negotiations regarding, any of the Purchased Assets or the
Business or offer for sale (nor permit to be offered for sale) other than in the
ordinary course of business the Purchased Assets or the Business so long as
Seller shall be bound by this Agreement.
Section 9.2 Casualty. The risk of loss, destruction, casualty,
condemnation, eminent domain or damage to the Purchased Assets prior to the
Closing Date shall be borne by Seller. If prior to the Closing Date all or any
portion of the purchased Assets or the Premises is damaged by fire or other
casualty, then Seller shall, at its expense, repair the damaged property to
substantially the same condition as before the damage. In the event such damage
cannot be or is not repaired before the Closing Date or if such damage exceeds
Three Hundred Thousand Dollars ($300,000), Buyer shall proceed to Closing if the
insurance proceeds relating to such damage are adequate to cover replacement of
the property and are paid to Buyer at Closing. If such insurance proceeds are
not sufficient or not payable to Buyer at Closing, then Buyer may at its sole
option terminate this Agreement, in which event the parties shall be relieved of
all further liability hereunder and the Deposit shall be returned to Buyer.
Section 9.3
(a) Right of Termination and Procedure for Default. In the event that
on or before May 31, 2001:
(1) Seller has not provided to Buyer written evidence of the
consent of EDAC's and Gros-ite's shareholders and Board of
Directors properly authorizing EDAC and Gros-ite to enter
into this Agreement and consummate the transactions
contemplated hereby;
(2) the Consent to Assignment of the LTA in the form attached as
Exhibit I has not been executed by all
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parties and Pratt & Whitney, PROVIDED, HOWEVER, that the
only contingency that shall give rise to a right of
termination under this Section 9.3(a)(2) is the failure for
any reason whatsoever to obtain the consent of Pratt &
Whitney; and
(3) Seller has not obtained the consents of General Electric
Capital Corporation and Fleet National Bank to this
Agreement and the consummation of the transactions
contemplated hereby.
then Buyer, by written notice to Seller, at its option, and Seller, by written
notice to Buyer with respect to failure to obtain Pratt & Whitney consent or
General Electric Capital Corporation and Fleet National Bank consents only, at
its option, may terminate this Agreement. Termination by either Buyer or Seller,
as the case may be, shall be effective upon the other party's receipt of such
notice of termination.
In the event of such termination of this Agreement all of the Seller's and
Buyer's obligations hereunder shall terminate without further loss, cost,
damage, claim, right or remedy in favor of any party, and none of the parties
hereto shall have any further liability or responsibility to the other without
the need to exchange releases to confirm same, except that the Deposit, shall be
returned within five (5) days to Buyer.
(b) Default by the Seller. In the event that all of the conditions
precedent set forth in this Agreement have been satisfied or
waived by the Buyer on or prior to the Closing Date, and the
Buyer is ready, willing and able to proceed with the Closing, but
the Seller is unable, unwilling or refuses to consummate the
Closing in accordance with the terms and conditions of this
Agreement, or in the event that the Seller is otherwise in breach
of this Agreement, then the Buyer may proceed to protect and
enforce its rights by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of
any agreement contained herein or in any other documents,
agreements or instruments from the Seller, or for the injunction
against a violation of any of the terms hereof or thereof, or in
and of the exercise of any power granted hereby or thereby or by
law. The Seller recognizes that in such event, any remedy at law
may prove to be inadequate relief to the Buyer and therefore the
Buyer may obtain any such equitable relief, including, without
limitation, temporary and permanent injunctive relief in any such
case without the necessity of posting a bond or proving actual
damages. No course of dealing and no delay on the part of the
Buyer in exercising any right shall operate as a waiver thereof
or otherwise prejudice the Buyer's rights. No right conferred
hereby or by any other document, agreement or instrument from the
Seller upon the Buyer shall be exclusive of any other right
referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the
generality of the foregoing, the Buyer shall be entitled to all
damages and remedies available to Buyer under all applicable laws
as a result of such default, including, without limitation,
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the return of the deposit together with the interest thereon,
together with reasonable attorneys' fees and expenses incurred by
the Buyer to enforce this Agreement; provided, however, that
monetary damages shall be limited in the aggregate to the
Purchase Price as set forth in Section 3.1 hereof.
(c) Default by Buyer. In the event that the Seller is ready, willing
and able to proceed with the Closing and all conditions precedent
set forth in this Agreement have been satisfied but the Buyer
fails to complete the transactions contemplated in this
Agreement, which failure is due exclusively to the unwillingness,
inability or refusal of the Buyer to fulfill its obligations at
such Closing, then the Seller may terminate this Agreement and
retain the Deposit, together with the sum of Four Hundred
Thousand Dollars ($400,000) to be paid by Buyer to seller as
liquidated damages for all losses, damages, and expenses suffered
by the Seller, and this shall be the Seller's sole and exclusive
remedy at law or in equity. In such event, this Agreement shall
terminate without further loss, cost, damage, claim, right or
remedy in favor of any party against the other, without the need
for the exchange of releases.
Section 9.4 Further Assurances. Both before and after the Closing Date,
each party will cooperate in good faith with each other party and will take all
appropriate action and execute any agreement, instrument or other writing of any
kind which may be reasonable necessary or advisable to carry out and confirm the
transactions contemplated by this Agreement (including, but not limited to,
obtaining consents or approvals from any Person for the transfer of the
purchased Assets that are transferred subject to consent or approvals being
obtained).
Section 9.5 Notices. All written communications to parties required
hereunder shall be in writing and (i) delivered in person, (ii) mailed by
registered or certified mail, return receipt requested, (such mailed notice to
be effective four days after the date it is mailed) or (iii) sent by facsimile
transmission, with confirmation sent by way of one of the above methods, to the
party at the address given below for such party (or to such other address as
such party shall designate in a writing complying with this Section, delivered
to the other parties);
If to a Seller, addressed to:
EDAC Technologies Corporation
1806 New Britain Avenue
Farmington, CT 06032-3114
Attention: Chief Executive Officer
With a copy to:
Reinhart Boerner Van Deuren Norris & Rieselbach, S.C.
1000 North Water Street
P.O. Box 514000
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Milwaukee, Wisconsin 53203-3400
Attention: Daniel J. Brink, Esquire
Telephone: (414) 298-1000
Telecopier: (414) 298-8097
If Buyer, addressed to:
Gros-ite Engineered Components Division of TOMZ, Inc.
47 Episcopal Road
Berlin, Connecticut 06037-1522
Attention: Zbigniew Matulaniec
With a copy to:
Eisenberg, Anderson, Michalik & Lynch LLP
136 West Main Street
P.O. Box 2950
New Britain, Connecticut 06050-2950
Attention: Stephen J. Anderson, Esq.
Telephone: (860) 229-4855
Telecopier: (860) 223-4026
Section 9.6 Public Statements. The parties to this Agreement agree to
cooperate, both prior to and after the Closing, in issuing any press releases or
otherwise making public statements with respect to the transactions contemplated
by this Agreement, and no press release or other public statements shall be
issued without the joint consent of the parties to this Agreement, which consent
shall not be unreasonably withheld or delayed.
Section 9.7 Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Connecticut without regard to principles of conflicts of law, except
that, with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
the law of the jurisdiction under which the respective entity was organized
shall govern.
Section 9.8 Titles. The headings of the articles and sections of this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
Section 9.9 Waiver. No failure of any party to this Agreement to require,
and no delay by any party to this Agreement in requiring, any other party to
this Agreement to comply with
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any provision of this Agreement shall constitute a waiver of the right to
require such compliance. No failure of any party to this Agreement to exercise,
and no delay by any party to this Agreement in exercising, any right or remedy
under this Agreement shall constitute a waiver of such right or remedy. No
waiver by any party to this Agreement of any right or remedy under this
Agreement shall be effective unless made in writing. Any waiver by any party to
this Agreement of any right or remedy under this Agreement shall be limited to
the specific instance and shall not constitute a waiver of such right or remedy
in the future.
Section 9.10 Effective; Binding. This Agreement shall be effective upon the
due execution hereof by all of the parties to this Agreement. Upon it becoming
effective, this Agreement shall be binding upon the parties to this Agreement
and upon each successor and assignee of the parties to this Agreement and shall
inure to the benefit of, and be enforceable by, the parties to this Agreement
and each successor and assignee of the parties to this Agreement; provided,
however, that, except as provided for in the following sentence, no party shall
assign any right or obligation arising pursuant to this Agreement without first
obtaining the written consent of the other parties.
Section 9.11 Entire Agreement. This Agreement contains the entire agreement
among the parties to this Agreement with respect to the subject of this
Agreement, and supersedes each course of conduct previously pursued, accepted or
acquiesced in, and each written and oral agreement and representation previously
made, by the parties to this Agreement with respect thereto, including, without
limitation, the certain letter agreement, dated January 22, 2001, between Seller
and Buyer.
Section 9.12 Modification. No course of performance or other conduct
hereafter pursued, accepted or acquiesced in, and no oral agreement or
representation made in the future, by any party to this Agreement, whether or
not relied or acted upon, and no usage of trade, whether or not relied or acted
upon, shall modify or terminate this Agreement, impair or otherwise affect any
obligation of any party to this Agreement pursuant to this Agreement or
otherwise operate as a waiver of any such right or remedy. No modification of
this Agreement or waiver of any such right or remedy shall be effective unless
made in writing duly executed by the parties to this Agreement.
Section 9.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument. Any party may execute
this Agreement by facsimile signature and the other party shall be entitled to
rely on such facsimile signature as evidence that this Agreement has been duly
executed by such party. Any party executing this Agreement by facsimile
signature shall immediately forward to the other party an original signature
page by overnight mail.
Section 9.14 Consent to Jurisdiction. Each party to this Agreement hereby
(i) consents to the jurisdiction of the Untied States District Court for the
District of Connecticut or, if such court does not have jurisdiction over such
matter, the applicable state court in the State of Connecticut, and (ii)
irrevocably agrees that all actions or proceedings arising out of or relating to
this Agreement shall be litigated in such court. Each party to this Agreement
accepts for
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himself or itself and in connection with his or its properties, generally and
unconditionally, the exclusive jurisdiction and venue of the aforesaid courts
and waives any defense of forum non-conveniens or any similar defense, and
irrevocably agrees to be bound by any non-appealable judgment rendered thereby
in connection with this Agreement.
Section 9.15 Confidential Information. Seller and Buyer recognizes the
interest of each in maintaining the confidential nature of their businesses and
each agrees that it will not, directly or indirectly, at any time whatsoever,
disclose or in use in any manner any proprietary matter related to the business
of the other, knowledge of which, it has acquired as a result of the negotiation
of these transactions contemplated by this Agreement.
Section 9.16 Successors and Assigns. All of the terms of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors and permitted assigns of the parties hereto.
Section 9.17 Arbitration Procedure.
(a) Any dispute, controversy or claim arising out of or relating to
this Agreement, or to a breach hereof, including, without
limitation, its interpretation, performance or termination, shall
be finally resolved by binding arbitration before three neutral
arbitrators. The arbitration shall be in accordance with the
Commercial Arbitration rules of the American Arbitration
Association which shall administer the arbitration and act as
appointing authority. The arbitration including, without
limitation, the rendering of the award, shall take place in
Hartford, Connecticut and shall be the exclusive forum for
resolving such dispute, controversy or claim, subject to Section
9.17(b). The award of the arbitrators shall be final and binding
upon the parties to this Agreement but subject to the
requirements of the Connecticut Arbitration Act. The expense of
the arbitration (including, without limitation, the award of
reasonable attorneys' fees to the prevailing party) shall be
awarded as the arbitrators determine. Judgment may be entered on
the award by any court of competent jurisdiction in Connecticut.
(b) Nothing in Section 9.17(a) shall prohibit a party from
instituting litigation in aid of the arbitration proceeding and
to obtain preliminary injunctive relief to maintain the status
quo or a prejudgment remedy securing a claim for monetary
damages.
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IN WITNESS WHEREOF, the parties have executed this Agreement on this
day and year indicated at the beginning of this Agreement.
SELLER: GROS-ITE INDUSTRIES, INC.
By: /s/ Richard A. Dandurand
------------------------------------
Its President
SELLER: EDAC TECHNOLOGIES CORPORATION
By: /s/ Richard A. Dandurand
------------------------------------
Richard Dandurand
Its President
BUYER: GROS-ITE ENGINEERED COMPONENTS
DIVISION OF TOMZ, INC.
By: /s/ Zbigniew Matulaniec
------------------------------------
Zbigniew Matulaniec
Its Chief Executive Officer
TOMZ CORPORATION: TOMZ CORPORATION
By: /s/ Zbigniew Matulaniec
------------------------------------
Zbigniew Matulaniec
Its Chief Executive Officer
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