Exhibit 10.6

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made this 22nd day of May, 2015
by and among REYNOLDS MACHINE CO., INC., a Wisconsin corporation (“Seller”),
Sypris Technologies Kenton, Inc. (“Purchaser”) and Wilbur M. Reynolds,
individually (“Red”), and in his capacity as Trustee of the Wilbur M. Reynolds
Living and Devolution Trust (“Trustee”) u/a/d 7/30/08 and Lisa Reynolds (“Lisa”)
(Red, Trust and Lisa, collectively, the “Seller Shareholders”).

 

RECITALS

 

A.      Seller is engaged in the business of manufacturing and selling metal
machined parts (the “Business”).

 

B.      Seller desires to sell to Purchaser and Purchaser desires to buy from
Seller all assets and rights of Seller and the Business as a going concern on
the terms and conditions set forth in this Agreement.

 

C.      Seller Shareholders are the owners of all of the capital stock of Seller
and desire for Seller and Purchaser to consummate the transaction as
contemplated hereby as more fully described and pursuant to the terms and
conditions set forth in this Agreement.

 

AGREEMENTS

 

In consideration of the premises and the mutual agreements herein contained, the
parties agree as follows:

 

1.      Transfer of Assets. Subject to the terms and conditions of this
Agreement and except as otherwise provided herein, Seller will sell and deliver
to Purchaser and Purchaser will purchase from Seller as of the Closing Date
substantially all of Seller's assets, including, without limitation, all right
and title to and interest in all Business assets, properties and rights of every
kind wherever located, and the Business as a going concern (the “Purchased
Assets”). The Purchased Assets shall include, without limitation, the following:

 

1.01      Personal Property. All machinery, equipment, vehicles, leasehold
improvements, tools, tooling, jigs, patterns, dies, molds, fixtures, furniture,
furnishings, software and all other personal property (“Personal Property”)
owned by Seller or used in the Business, provided that Seller is not selling and
Purchaser is not purchasing the Excluded Assets (defined below);

 

1.02     Leases. Seller and Purchaser will enter into a sublease (the “New
Berlin Sublease”) for the property known as 17005 West Ryerson Road, New Berlin,
Wisconsin (“New Berlin Property”), on a month-to-month basis substantially in
the form attached hereto as Exhibit A. Also, LMR Real Estate LLC, a Wisconsin
limited liability company (“LMR”) and Purchaser will enter into a lease (the
“Muskego Lease”) for the property located at 17626 Martin Drive, Muskego,
Wisconsin (“Muskego Property”) for the period beginning as of the Closing Date,
for a lease with rental of $5,000 per month, on a month-to-month basis
substantially in the form attached hereto as Exhibit B;

 

1.03      Contracts. All rights of Seller under (including, without limitation,
all of Seller’s right to receive goods and services and to assert claims and to
take other actions with respect to breaches, defaults and other violations
pursuant to) all of the contracts of Seller listed in Schedule 9.10 hereto (the
“Assumed Contracts”) .

 

1.04     Intangible Assets. All of Seller’s right, title and interest in and to
all goodwill, licenses, trade names (including, without limitation, the name
“Reynolds Machine Co., Inc.” and any derivation thereof), Internet websites,
addresses and domains, assumed names, trademarks, service marks, copyrights, in
each case with the goodwill associated therewith, trade secrets, confidential
information, formulas, processes, techniques, know-how, patents, patent
applications, letters patent, inventions, phone numbers and fax numbers, and all
other intangible assets (“Intangible Assets”);

 

 
1

--------------------------------------------------------------------------------

Exhibit 10.6

  

1.05     Inventory. All of Seller's inventories, including raw materials,
work-in-process, finished goods and supplies (“Inventory”);

 

1.06     Receivables. All accounts and notes receivable except receivables due
from a Seller Shareholder (“Accounts Receivable”);

 

1.07     Records and Documents. All records, computer software and documents,
computer source codes, books, supplier, dealer and customer lists, work orders,
credit information and correspondence, drawings, financial information creative
materials, advertising materials, promotional materials, studies, reports,
correspondence and other similar documents and records and, subject to legal
requirements, copies of all personnel records (with the exception of employee
medical records required by applicable legal requirements to be confidentially
maintained), and all other records and documents used in connection with the
operation of the Business wherever located (“Books and Records”);

 

1.08     Governmental Authorizations. All governmental authorizations, permits,
and licenses of Seller or the Business and all pending applications therefor or
renewals thereof, in each case to the extent transferable to the Purchaser;

 

1.09     Insurance Benefits. All insurance benefits of Seller or the Business,
including rights and proceeds, arising from or relating to the Purchased Assets
or the Assumed Liabilities;

 

1.10     Claims. All claims of Seller or the Business against third parties
relating to the Business, whether mature or inchoate, known or unknown,
contingent or non-contingent;

 

1.11     Deposits and Prepaid Expenses. Except as otherwise provided in Section
2, all rights of Seller or the Business relating to deposits and prepaid
expenses and claims for refunds and rights to offset in respect thereof; and

 

1.12     Other Assets. Any other assets owned, used or held for use by Seller or
otherwise in the operation of the Business, other than the Excluded Assets.

 

2.     Excluded Assets From Sale. Notwithstanding the foregoing, the Purchased
Assets shall not include the following assets of the Seller (collectively, the
“Excluded Assets”): (i) the corporate seal, articles of incorporation, minute
books, stock books, tax returns, or other records having to do with the
corporate organization of the Seller; (ii) the rights which accrue or will
accrue to the Seller under this Agreement; (iii) the rights to any Seller’s
claims for any federal, state, local or foreign tax refunds; (iv) any prepaid
federal and state taxes or other prepaid items or expenses the benefit of which
cannot be transferred to the Purchaser; (v) Security Deposit under the Lease for
the New Berlin Property and other deposits the benefit of which cannot be
transferred to Purchaser; (vi) Buick and Cadillac automobiles; (vii) four cell
phones with phone numbers and Verizon accounts therefor; (viii) American Express
and Mobil Oil credit card accounts; (ix) insurance policies on the life of any
Seller Shareholder; (x) Seller’s cash and bank accounts; and (xi) all contracts
other than Assumed Contracts.

 

3.      Liabilities. Subject to the terms of this Agreement and as partial
consideration for this Agreement:

 

 
2

--------------------------------------------------------------------------------

Exhibit 10.6

  

3.01     Assumed Liabilities.

 

(a)     Purchaser shall assume and agree to pay, perform, and discharge, in
accordance with their terms and in the ordinary course of business, the
liabilities and obligations of Seller as set forth below in this Section 3.01
(the "Assumed Liabilities") which relate to the Business. The Assumed
Liabilities shall consist only of the following and shall specifically exclude
those liabilities and obligations defined in Section 3.02 below as “Excluded
Liabilities”:

 

(i)     Trade payables incurred in the ordinary course of business to the extent
accrued in the Closing Balance Sheet;

 

(ii)     Accrued current liabilities for commissions payable to the extent
accrued and reflected in the Closing Balance Sheet;

 

(iii)     All liabilities and obligations of Seller or the Business arising from
actions or occurrences after the Closing Date with respect to the Assumed
Contracts; and

 

(iv)     Liabilities and obligations of Seller to all employees of Seller which
are hired by Purchaser as of the Closing for vacation pay and compensation, all
to the extent accrued in the Closing Balance Sheet.

 

3.02     Excluded Liabilities. Notwithstanding anything to the contrary in this
Agreement, Purchaser will not assume, pay or discharge any debts, liabilities,
obligations, contracts, loans, commitments or undertakings of Seller, whether
fixed, contingent or otherwise, unless expressly described in Section 3.01. All
liabilities of the Business, the Seller, any Seller Shareholder or any of their,
or their respective affiliates’, employees, officers, directors, agents or
attorneys, that are not Assumed Liabilities, shall hereafter be referred to as
the “Excluded Liabilities” and shall include, without limitation, the following:

 

(a)     All of Seller’s indebtedness for borrowed money and other debt not
included in liabilities on the Closing Balance Sheet (as defined below);

 

(b)     All liabilities of Seller or any Seller Shareholder, or liabilities
otherwise related to the Business, for federal, state or local income,
withholding, sales, use, corporate, excise, franchise, property or other taxes;

 

(c)     All liabilities of Seller or of the Business for all environmental,
ecological, health, safety or other claims pertaining to the Business or the
Purchased Assets;

 

(d)     Except as accrued in and reflected on the Closing Balance Sheet, all
liabilities of Seller or the Business relating to wages or other employee
compensation or deferred compensation plans, pension plans and profit sharing
plans, including all liabilities of Seller for worker’s compensation claims or
any other worker’s compensation claims arising out of incidents occurring prior
to the Closing Date;

 

(e)     Any liability or obligation incurred by Seller or any Seller Shareholder
in connection with the negotiation, execution or performance of this Agreement,
including without limitation, all legal, accounting, brokers, finders and other
professional fees and expenses;

 

(f)     Liabilities incurred by Seller or any Seller Shareholder after the
Closing Date;

 

 
3

--------------------------------------------------------------------------------

Exhibit 10.6

  

(g)     Any related party accounts not otherwise settled prior to or
simultaneously with the Closing;

 

(h)     Any liability arising out of or relating to products sold or services
rendered by Seller, any Seller Shareholder, or the operation of the Business
prior to the Closing Date; and

 

(i)     Any liability associated with the Purchased Assets or the Business,
whether in tort, contract, or otherwise, existing as of or accruing prior to the
Closing Date.

 

4.     Purchase Price.

 

4.01     Amount.      In consideration of Seller’s sale, assignment and transfer
of Purchased Assets and the performance by it and the Seller Shareholders of all
the terms, covenants and provisions of the Agreement on their part to be kept
and performed, Purchaser shall pay to the Seller the sum of Nineteen Million
Dollars ($19,000,000) subject to adjustment as provided in Section 4.02 which
total amount is referred to herein as the “Purchase Price.” On the Closing Date,
Purchaser shall pay by wire transfer in immediately available U.S. funds (a) One
Million Five Hundred Thousand Dollars ($1,500,000) (the “Escrow Funds”) to an
escrow account established pursuant to this Agreement and the Escrow Agreement
attached hereto as Exhibit C, and (b) to an account specified by Seller the
Purchase Price less (i) the amount specified in clause (a) and less (ii) any
amounts then due to Seller’s creditors and which are not included in Assumed
Liabilities and which are paid by Purchaser (Purchaser reserving the right to
pay any and all creditors directly, in Purchaser’s sole discretion). The Escrow
Funds will be held and disbursed by any Person agreed upon by the Parties (the
“Escrow Agent”) pursuant to the Escrow Agreement substantially in the form
attached hereto as Exhibit C. Escrow Agent shall invest the Escrow Funds as
directed by Purchaser and Seller, with the Escrow Funds to be disbursed first to
pay any amounts due to Purchaser with the remaining balance (including all
interest and earnings thereon) to be disbursed to Seller in accordance with the
terms and conditions of the Escrow Agreement.

 

4.02      Adjustment to Purchase Price. The Purchase Price is based in part on
the Stockholders’ Equity of the Business as of June 30, 2014, as shown on
Schedule 4.02, attached hereto (the “Interim Balance Sheet”), as adjusted to
reflect the elimination of cash, debt for borrowed money, security and other
deposits, property taxes and related party transactions (the “Pro Forma
Stockholder’s Equity”). The Purchase Price will be subject to adjustment should
the Pro Forma Stockholder’s Equity of the Business, as reflected on the “Closing
Balance Sheet” (defined below), be greater or less than the Pro Forma
Stockholder’s Equity shown on the Interim Balance Sheet. Such adjustment will be
equal to the dollar difference between the Pro Forma Stockholder’s Equity and
the Pro Forma Stockholder’s Equity reflected on the Closing Balance Sheet and
will be determined as follows:

 

(a)     Within forty-five (45) days after the Closing Date, Purchaser will
prepare and deliver to the Seller a balance sheet (the “Closing Balance Sheet”)
showing the Stockholder’s Equity of the Business as of the close of business on
the Closing Date (the “Final Stockholder’s Equity”). The Closing Balance Sheet
will be prepared in accordance with accounting principles generally accepted in
the U.S. consistently applied using the same methodology as was used in the
preparation of the Interim Balance Sheet, that is, shall not reflect cash, debt
for borrowed money, security and other deposits, property taxes and related
party transactions.

 

(b)     Along with the submission of the Closing Balance Sheet, Purchaser will
deliver a statement to the Seller, which contains the amount of the change in
the Purchase Price, if any, resulting from the difference between the Pro Forma
Stockholder’s Equity and the Final Stockholder’s Equity of the Business,
appropriately adjusted to reflect the elimination of cash, debt for borrowed
money, security and other deposits, property taxes and related party
transactions (the “Pro Forma Final Stockholder’s Equity”).

 

 
4

--------------------------------------------------------------------------------

Exhibit 10.6

  

(c)     Seller will then have thirty (30) days after the receipt thereof to
confirm or contest in writing the Closing Balance Sheet and the corresponding
impact on the Purchase Price. If the results are confirmed and the Purchase
Price is to be adjusted, a cash refund will be made to the Purchaser or Seller,
as applicable, by wire transfer within five (5) days after the date of
confirmation. If the results are contested, the parties will agree upon the
selection of an accounting firm to review the work and render a final and
binding ruling within thirty (30) days of such dispute. The cost of any such
audit will be borne by the party who fails to prevail. Any refund due to
Purchaser or Seller will be made within five (5) days after such ruling.

 

4.03     Allocation of Purchase Price. The Purchase Price shall be assigned and
allocated in accordance with the allocation which the parties will finalize at
or before Closing. The parties agree to report the results of this transaction
for federal, state and local tax purposes in accordance with the allocation set
forth therein.

 

4.04     Payments of Transfer Tax. All taxes levied or imposed in connection
with the sale and transfer of the Purchased Assets to Purchaser, including,
without limitation, any and all sales, use, transfer and excise taxes imposed by
federal, state or local taxing authorities, shall be borne one-half by Seller
and one-half by Purchaser.

 

5.     Closing. Subject to satisfaction or waiver of all of the conditions to
the obligations of Seller and Purchaser to close, Seller shall cease conduct of
the Business at the close of normal business on the Closing Date, and Purchaser
shall undertake management and control of the Business at the beginning of
business on the following day. The closing (the “Closing”) of the transactions
pursuant to this Agreement shall take place beginning at 10:00 a.m. on June 30,
2015 (the “Closing Date”) at the offices of Miller, McGinn & Clark, S.C. 788
North Jefferson Street, Suite 900, Milwaukee, Wisconsin or such other time and
place as Seller and Purchaser may agree.

 

6.     Purchaser’s Obligations Prior to or at Closing. Purchaser hereby agrees
that it shall, prior to or at Closing, deliver to Seller or as otherwise
indicated:

 

6.01     Cashiers’ checks or wire transfers to Seller, Escrow Agent, and
Seller’s other creditors, as determined by Purchaser, in the amounts determined
in accordance with Section 4.01 and as agreed to by the parties prior to
Closing;

 

6.02      The Assignment and Assumption Agreement duly executed by Purchaser, in
the form attached hereto as Exhibit D (the "Assignment and Assumption
Agreement");

 

6.03      Certified copies of the resolutions adopted by the Board of Directors
of Purchaser authorizing the purchase of the Purchased Assets and the assumption
of the Assumed Liabilities from Seller in accordance with this Agreement;

 

6.04     The Consulting and Noncompete Agreements between Red, Lisa and
Purchaser in the form attached hereto as Exhibit E (the “Consulting and
Noncompete Agreements”), duly executed by Purchaser;

 

6.05     The New Berlin Sublease and the Muskego Lease, duly executed by
Purchaser;

 

6.06     The Escrow Agreement, duly executed by Purchaser;

 

 
5

--------------------------------------------------------------------------------

Exhibit 10.6

  

6.07     The Assignment of Intellectual Properties in the form attached hereto
as Exhibit F (the “Assignment of Intellectual Properties”), duly executed by
Purchaser; and

 

6.08     A certificate executed by Purchaser stating that the representations
and warranties made by Purchaser under this Agreement are true and correct as of
the Closing Date and further stating that all covenants to be performed by
Purchaser on or before Closing have been fully performed or otherwise satisfied
as ●of the Closing Date.

 

7.      Seller's and Seller Shareholders’ Obligations Prior to or at Closing.
Seller and Seller Shareholders shall, prior to or at Closing and unless waived
by Purchaser in writing, deliver or convey to Purchaser:

 

7.01      A Bill of Sale duly executed by Seller in form and content to the
reasonable satisfaction of Purchaser, transferring to Purchaser all of the
Purchased Assets subject to all the terms and conditions of this Agreement;

 

7.02      The Assignment and Assumption Agreement, duly executed by Seller;

 

7.03      The Assignment of Intellectual Properties, duly executed by Seller;

 

7.04      Certified copies of resolutions adopted by the Board of Directors and
Seller Shareholders authorizing the execution of this Agreement and the sale of
the Purchased Assets to Purchaser in accordance with the terms hereof;

 

7.05      Certificate of Status of Seller issued by the Department of Financial
Institutions of the State of Wisconsin within sixty (60) days of the Closing
Date;

 

7.06      The Consulting and Noncompete Agreements, duly executed by Red and
Lisa;

 

7.07      The New Berlin Sublease duly executed by Seller and the Muskego Lease,
duly executed by LMR, along with the cancellation of the existing lease for the
Muskego Property duly executed by Seller and LMR, and the signed written
consents of FR Welsh Bindery, LLC or other current landlord(s) of the New Berlin
Property and, if required, the lender(s) of such landlord(s), to the New Berlin
Sublease;

 

7.08      Articles of Amendment to Seller's Articles of Incorporation duly
executed in duplicate by a proper officer of Seller in a form acceptable to
Purchaser’s counsel, changing Seller’s corporate name to a name distinguishable
from Reynolds Machine Company upon the records of the Wisconsin Department of
Financial Institutions;

 

7.9      A Certificate executed by Seller and Seller Shareholders as of the
Closing Date stating that all representations and warranties made by Seller and
Seller Shareholders under this Agreement are true and correct as of the Closing
Date and further certifying that any covenants under this Agreement to be
performed by either of them on or before the Closing have been fully performed
or otherwise satisfied as of the Closing Date; and

 

7.10     Written consents of Meritor, Inc. and Dana Holding Corporation
(individually, a “Customer” and collectively, the “Customers”) to the transfer
and assignment of each of their respective supply agreements and/or purchase
orders to the Purchaser, as modified to the satisfaction of the Purchaser, in
Purchaser’s sole discretion, including the removal of competitiveness clauses.

 

 
6

--------------------------------------------------------------------------------

Exhibit 10.6

  

8.      Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants to Seller as of this date and as of the Closing Date that:

 

8.01      Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the power to own its property and carry on its business.

 

8.02      Authority. Purchaser has all necessary corporate power to execute and
deliver this Agreement and to consummate the transactions provided for herein,
and the execution and delivery of this Agreement by Purchaser and the
performance by it of the obligations to be performed hereunder have been duly
authorized by all necessary and appropriate action. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not conflict with or result in a breach of, or constitute a
default under, the terms or conditions of the Certificate of Incorporation or
Bylaws of Purchaser, any material judicial or administrative order or process,
any material agreement or instrument to which Purchaser is a party or by which
it is bound, or any material statute or regulation of any governmental agency.
This Agreement is, and each other agreement and document to be executed by
Purchaser pursuant hereto, will when so executed be valid and binding
obligations of Purchaser enforceable in accordance with their terms.

 

8.03      Warranties True and Correct. No warranty or representation by
Purchaser contained in this Agreement or in any writing to be furnished pursuant
hereto or previously furnished to Seller contains or will contain any untrue
statement of fact or omits or will omit to state any fact required to make the
statements therein contained not misleading.

 

9.      Representations and Warranties of Seller and the Seller Shareholders.
Seller and Seller Shareholders jointly and severally represent and warrant to
Purchaser as of this date and as of the Closing Date that:

 

9.01     Corporate Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin and has
all corporate power, and authority to own, operate and lease its respective
properties and carry on the Business as now conducted. Seller is duly licensed
and qualified to do business in and is in good standing under the laws of each
state where failure to do so would materially adversely affect the Business.

 

9.02     Authorization of Agreement. Seller has all necessary corporate power to
execute and deliver this Agreement and to consummate the transactions provided
for herein and the execution and delivery of this Agreement by Seller and the
performance by it of the obligations to be performed hereunder have been duly
authorized by all necessary and appropriate action by the Board of Directors and
shareholders of Seller. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with or result in a breach of, or constitute a default under the terms
or conditions of Seller’s Articles of Incorporation or By-Laws, any court or
administrative order or process or any statute or regulation of any governmental
agency and the consummation of the transactions contemplated hereby do not and
will not result in the breach of, or constitute a default under, any agreement
or instrument to which Seller is a party or by which Seller is bound except that
the consent of the Customers under their respective agreements are required for
the assignment of each. This Agreement is, and each other agreement and document
to be executed by Seller and/or Seller Shareholders pursuant hereto will be,
when so executed, valid and binding obligations of Seller and the Seller
Shareholders as the case may be enforceable in accordance with their terms.

 

9.03     Financial Statements. Seller has delivered to Purchaser copies of its
annual financial statements for the years 2012, 2013 and 2014 and interim
financial statements dated as of March 31, 2015 (“Financial Statements”)
prepared by Hoye & Associates Ltd. Such financial statements have been prepared
from the Books and Records of Seller and fairly present the financial condition
of Seller as of their respective dates and the results of its operations for the
periods covered thereby. Except as set forth in the Financial Statements or on
Schedule 9.03, (i) neither the Business nor Seller had any outstanding
indebtedness as of the date of the Financial Statements nor will they on the
Closing Date, and (ii) Seller is not a party to, and none of the Purchased
Assets are subject to, any note, bond, indenture or other instrument or contract
evidencing, creating or otherwise relating to indebtedness.

 

 
7

--------------------------------------------------------------------------------

Exhibit 10.6

  

9.04     Absence of Undisclosed Liabilities. There are no material liabilities
or obligations direct or indirect absolute or contingent, or any outstanding
evidence of indebtedness arising out of or relating to the Seller, the Business
or the Purchased Assets, including liabilities or obligations arising out of any
act, omission, transaction, circumstance, sale of goods or services, state of
facts or other condition which occurred, existed or arose with respect to the
period on or before the date hereof whether or not due or payable, except (a) as
reflected or as reserved against in the Financial Statements; or (b) liabilities
incurred in the ordinary course of business, consistent with Seller’s prior
practice, which in the aggregate, do not result in any material adverse change
in the financial condition of the Business or the Purchased Assets from that set
forth in the Financial Statements.

 

9.05      Inventory. The Inventory is of a quality and quantity usable and
saleable in the ordinary course of business consistent with past practice at the
values recorded in the Financial Statements.

 

9.06     New Berlin Property and Muskego Property. To the best of Seller’s and
Red’s knowledge, there are no structural or nonstructural defects in the
building or other improvements situated on the New Berlin Property or the
Muskego Property and all building systems therein are in all material respects
in good condition and working order (reasonable wear and tear excepted) and are
adequate in quality and quantity for the normal operation of the Business on the
New Berlin Property and the Muskego Property.

 

9.07     Planned Public Improvements and Special Assessments. To Seller's and
Red’s knowledge, there are no planned or contemplated public improvements that
may result in special assessments against the Property or the Muskego Property
or that may otherwise affect the availability of utility service or access to
the New Berlin Property of the Muskego Property.

 

9.08      Title to Purchased Assets. Seller has good, indefeasible and
marketable title to all Purchased Assets, free and clear of all mortgages,
security interests, title retention agreements, options to purchase, rights of
first refusal, liens, encumbrances, restrictions and other burdens, except for:
(a) a lien as security for money borrowed from Bank Mutual, and purchase money
lien of TCF Equipment Finance on various items of equipment, both of which will
be paid and satisfied at or prior to Closing; and (b) four lift trucks used by
Seller at the New Berlin Property which are leased from Wolter Investment
Company LLC.

 

9.09      Condition and Sufficiency of Purchased Assets. No maintenance outside
the ordinary course of business is needed with respect to the Purchased Assets.
None of the Purchased Assets or the leasing, occupancy or operation of the New
Berlin Property is in violation of any law or any zoning, or other ordinance,
code, rule, or regulation. The Purchased Assets are sufficient for safe and
normal use in the Business, have been maintained in accordance with applicable
maintenance specifications and are adequate, in quality and quantity for the
operation of the Business. The Purchased Assets constitute all of the assets,
tangible and intangible, of any nature whatsoever, necessary to operate the
Business in the manner presently operated and include all of the operating
assets of Seller. No affiliate of the Seller or Seller Shareholders (other than
the Seller) owns any assets, tangible or intangible, of any nature whatsoever
necessary for the operating of the Business. No notice from any governmental
body or other person has been served upon Seller or Red or upon any of the
Purchased Assets claiming any violation of any law ordinance, code, rule or
regulation or requiring, or calling attention to the need for, any work,
repairs, construction, alterations or installation on or in connection with the
Purchased Assets or the Business with which Seller has not complied.

 

 
8

--------------------------------------------------------------------------------

Exhibit 10.6

  

9.10     Assumed Contracts. The Parties will use their good faith, best efforts
to agree upon Schedule 9.10 on or before May 22, 2015. By such date, Schedule
9.10 will contain an accurate and complete list, and Seller will have delivered
to Purchaser accurate and complete copies, of the Assumed Contracts. The Assumed
Contracts are legally valid and binding and in full force and effect with
respect to the parties thereto and neither Seller nor, to Seller’s and the
Seller Shareholders’ knowledge, any of the other parties to any of the Assumed
Contracts is in default thereof. Seller and the Seller Shareholders have no
notice or knowledge of any claimed breach of any of the Assumed Contracts or of
the occurrence of any event which after the passage of time or the giving of
notice or both would constitute a default by Seller or any other party to any
Assumed Contract.

 

9.11     Litigation and Proceedings. Except for workers compensation claims
incurred in the ordinary course of business which are covered by insurance
maintained by Seller sufficient to pay such claims, there is no suit, action or
legal, administrative, arbitrative or other proceeding pending or, to Seller’s
or the Seller Shareholders’ knowledge, threatened against Seller with respect to
the Business or affecting the Purchased Assets and to Seller’s and Seller
Shareholders’ knowledge, Seller is not under investigation with respect to any
charge concerning violation of any law or administrative regulation, foreign,
federal, local or state, in respect to the operation of the Business, and no set
of facts or circumstances exist which would constitute a basis for any such
action, proceeding, investigation, suit or arbitration.

 

9.12     Compliance with Environmental Laws.

 

(a)     The term “Environmental Laws” shall mean all federal, state and local
laws including statutes, regulations and other governmental restrictions and
requirements relating to the discharge of air pollutants, water pollutants or
process wastewater or the disposal of solid or hazardous waste or otherwise
relating to the environment or hazardous substances or employee health and
safety.

 

(b)     The term “Hazardous Substances” shall mean all hazardous and toxic
substances, wastes and materials; any pollutants or contaminants (including,
without limitation, petroleum products, asbestos and raw materials which include
hazardous constituents); and any other similar substances or materials which are
regulated under Environmental Laws.          

 

(c)     Seller has not been required to nor has it filed any reports, returns or
other filings required to be filed with respect to the New Berlin Property, the
Muskego Property, or the Business under Environmental Laws.

 

(d)     The Business, the New Berlin Property, and the Muskego Property have
been and are being operated by Seller and Seller Shareholders in accordance with
all Environmental Laws. Neither Seller nor any Seller Shareholder has received
any notice nor does Seller or any Seller Shareholder have any knowledge that the
Business, the New Berlin Property, or the Muskego Property are not in compliance
with all Environmental Laws.

 

(e)     There are no actions pending, or to the knowledge of Seller or Seller
Shareholders, actions, claims or investigations threatened against Seller,
Seller Shareholders, the Business, the New Berlin Property, or the Muskego
Property, which in any case assert or allege (i) the Seller, Seller
Shareholders, Business, the New Berlin Property, or Muskego Property violated
any Environmental Law or is in default with respect to any order, writ,
judgment, variance, award or decree of any government authority; (ii) Seller or
Seller Shareholders are required to clean up or take remedial or other response
action due to the disposal, discharge or other release of any Hazardous
Substance on the New Berlin Estate, the Muskego Property, or elsewhere; or (iii)
Seller or Seller Shareholders are required to contribute to the cost of any
past, present or future cleanup or remedial or other response action which
arises out of or is related to the disposal, discharge or other release or any
Hazardous Substance by Seller, Seller Shareholders, or the Business. Seller,
Seller Shareholders, the Business, the New Berlin Property, and the Muskego
Property are not subject to any judgment, stipulation, order, decree or
agreement arising under Environmental Laws.

 

 
9

--------------------------------------------------------------------------------

Exhibit 10.6

  

9.13     Restrictions on Personnel. Neither the Seller Shareholders nor any of
the other officers, directors, employees or consultants of Seller has entered
into any agreement which is now in effect with any person, corporation,
partnership or business organization (other than Seller) requiring such person
to assign any interest in any invention or trade secrets related to the Business
or to keep confidential any such trade secrets or containing any prohibition or
restriction on competition or solicitation of customers.

 

9.14     Taxes. All federal, state, county and local income, excise, sales,
transfer, use, gross receipts, ad valorem, payroll and other taxes, fees and
assessments imposed on Seller and payable by Seller and all federal and state
payroll taxes required to be withheld by Seller have been or will be duly,
timely and fully reported, paid and discharged.

 

9.15     Employee Benefit Plans.

 

(a)     Seller maintains the Reynolds Machine Company 401 (K) Savings Plan
(“Plan “) which is an “employee pension benefit plans”, as such term is defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974 (“ERISA”)
in compliance with applicable ERISA requirements.

 

(b)     Seller has made available to Purchaser true and complete copies of (i)
the documents governing the Plan as in effect on the date hereof and (ii) the
most recent annual report for the Plan prepared on the appropriate Internal
Revenue Service Form 5500 series, including all required attachments.

 

(c)     None of the assets of Seller are subject to any lien, constructive or
otherwise, arising under ERISA Section 4068.

 

(d)     Seller provides its full time employees with group term life insurance
and with health insurance for which the employees are required to make a
contribution for a portion of the cost.

 

(e)      Seller has made available to Purchaser true and complete copies of the
documents governing the health insurance plan and the group term life insurance
plan as in effect on the date hereof:

 

(f)     Seller has never been obligated to contribute to any multi-employer plan
within the meaning of ERISA Section 3(37). The Plan is not a “multiemployer
plan” (as defined in Section 3(37) of ERISA) (a “Multiemployer Plan”) or other
pension plan subject to Title IV or Part 3 of Title I of ERISA or Section 412 of
the Code, and neither any Seller nor any ERISA Affiliate (as defined below) has,
within the past six years, sponsored, maintained, participated in, contributed
to, or has been required to participate in or contribute to, or has any
liability in respect of, whether actual or contingent, a Multiemployer Plan or
other pension plan subject to Title IV or Part 3 of Title I of ERISA or Section
412 of the Internal Revenue Code (the “Code”). None of the Purchased Assets or
any ERISA Affiliate is, or may reasonably be expected to become, the subject of
any lien arising under ERISA or Section 430(k) of the Code. For purposes of this
Agreement, “ERISA Affiliate” shall mean any entity (whether or not incorporated)
other than Seller that, together with Seller, is required to be treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code.

 

 
10

--------------------------------------------------------------------------------

Exhibit 10.6

  

9.16      Labor Matters.

 

(a)     Seller is not a party to or bound by any union collective bargaining
agreements or other labor contracts. Seller is not, with respect to the
Business, a party to any pending arbitration or grievance proceeding or other
claim relating to any labor contract nor, to Seller’s and the Seller
Shareholders’ knowledge, is any such action threatened.

 

(b)     Seller is not bound by any court, administrative agency tribunal,
commission or board decree, judgment, decision, arbitration agreement or
settlement relating to collective bargaining agreements, conditions of
employment, employment discrimination or attempts to organize a collective
bargaining unit which in any case may materially and adversely affect Seller,
the Business or the Purchased Assets. Seller and the Seller Shareholders have no
notice or knowledge of any employment discrimination, safety or unfair labor
practice or other employment-related investigation, claim or allegation against
Seller.

 

9.17      Employees and Employment Contracts. Seller has no employment contract
with any person, nor any contract with any employee, involving termination,
retirement or termination pay, deferred compensation, profit sharing or pension
plans, employee benefit plans or other employee benefits or post-employment
benefits of any kind. Seller has provided complete and accurate lists of the
following information for each employee, director, independent contractor, and
consultant of Seller involved in the operation of the Business: (i) each
employee on leave of absence; (ii) name; (iii) job title; (iv) date of hiring or
engagement; (v) current compensation paid or payable; (vi) sick and vacation
leave that is accrued but unused as of the date of this Agreement; and (vii)
service credited for purposes of vesting and eligibility to participate under
the Plan, or any other employee or director benefit plan. Seller has not
experienced a “mass layoff’ or “plant closing” under the Worker Adjustment and
Retraining Notification Act (the “WARN Act”) or any similar state or local legal
requirement.

 

9.18      Insurance. Seller is insured by reputable insurers against all such
liabilities hazards and risks, and in such amounts as are usually carried by
prudent persons engaged in the same or similar line of business. Such insurance
is valid, outstanding, and enforceable and is written on an occurrence basis.

 

9.19     Intangible Assets. No Intangible Asset infringes, misappropriates,
violates or conflicts with the rights of any third party. No third party has
asserted, or threatened to assert, any claim contesting the right of Seller to
use, exercise, sell, license, transfer or dispose of any Intangible Assets or
any products, services, processes or materials covered thereby in any manner, or
challenging the ownership, validity or enforceability of any Intangible Assets.
No Intangible Assets are subject to any outstanding order, restricting in any
manner the licensing, assignment, transfer, use or conveyance thereof. The
consummation of this Agreement will neither violate nor result in the breach,
modification, cancellation, termination, suspension of or acceleration of any
payments with respect to any contracts, licenses or agreements relating to
Intangible Assets.

 

9.20     Warranties True and Correct. No warranty or representation by Seller or
Seller Shareholders contained in this Agreement or in any writing to be
furnished pursuant hereto or previously furnished to Purchaser contains or will
contain any untrue statement of fact or omits or will omit to state any fact
required to make the statements therein contained not misleading.

 

10.     Covenants and Agreements of Purchaser. Purchaser hereby covenants and
agrees that:

 

10.01     Satisfaction of Conditions. Purchaser shall act in good faith and
shall use its good faith efforts to cause to be satisfied all conditions to the
performance of its obligations hereunder.

 

 
11

--------------------------------------------------------------------------------

Exhibit 10.6

  

10.02     Access to Certain Information. As soon as practicable following the
Closing, but in no event later than ninety (90) days thereafter, Purchaser shall
deliver to Seller, at Seller’s expense, such information and data as Seller may
reasonably request including that required by Seller’s customary tax and
accounting questionnaires, in order to enable Seller to complete and file all
federal and state forms which may be required by law to be filed by it.

 

10.03     Record Retention. For a period of four (4) years following the Closing
Date, Purchaser agrees to maintain in a reasonably accessible place at its
principal office the books and records, including magnetic media files, if any,
delivered by Seller hereunder to the extent relating to the reasonably
foreseeable post-Closing needs of the Seller, to provide Seller and its
representatives reasonable access to such books and records during normal
business hours and to provide copies of such books and records to Seller or its
representatives at Seller’s expense.

 

10.04     Collection of Accounts Receivable. From and after the Closing Date,
Purchaser shall use reasonable efforts in accordance with normal business
practices to bill and collect the Accounts Receivable. Purchaser shall have no
obligation to resort to or threaten litigation or any other action to collect
the Accounts Receivable. All payments made by customer will be applied to
invoices in chronological order, that is, to Seller’s invoices before
Purchaser’s invoices. In the event any of the Accounts Receivable are not
collected within 120 days after closing, Purchaser may assign such account to
Seller or Seller Shareholders and deduct the amount thereof from payments
otherwise due Seller or Seller Shareholders under the Escrow Agreement or
Consulting and Noncompete Agreements, respectively.

 

11.      Covenants and Agreements of Seller. Seller and Seller Shareholders
hereby covenant and that:

 

11.01     Satisfaction of Conditions/Accounts Receivable. Seller and Seller
Shareholders shall act in good faith and shall use their best efforts to cause
to be satisfied all of the conditions to the performance of their obligations
hereunder. If Seller or any Seller Shareholder receives any payment applicable
to the Business after Closing, Seller shall hold such funds in trust for the
benefit of Purchaser and immediately remit such payment to the Purchaser.

 

11.02     Access to Books and Records After Closing. For a period of four (4)
years following the Closing Date, Seller agrees to maintain in a reasonably
accessible place any books and records not delivered to Purchaser hereunder
(whether required to be delivered or not) relating to Seller and the Business
wherever located, to provide Purchaser and its representatives reasonable access
to such books and records during normal business hours and to provide copies of
such books and records to Purchase or its representative at Purchaser's expense.

 

11.03     Change of Names. Simultaneously with the Closing, Purchaser, or its
designated assignee, may change its name to “Reynolds Machine Co.” or a
variation thereof, and Seller shall file any and all documents required by the
Wisconsin Department of Financial Institutions to allow Purchaser or such
assignee to effect the foregoing name change. Seller shall also immediately
cease to use and thereafter refrain from using, the name “Reynolds Machine Co.”,
or any variation thereof. As provided in Section 7.08, at Closing, Seller shall
deliver to Purchaser Articles of Amendment to Seller’s Articles of Incorporation
changing Seller’s corporate name.

 

 
12

--------------------------------------------------------------------------------

Exhibit 10.6

  

11.04     Proration of Taxes and Expenses. Seller shall be responsible for the
expenses of the Business through the day of Closing, and Purchaser shall be
responsible for the expenses of the Business beginning with the day after the
Closing Date. Within sixty (60) days after Closing (or such other, longer period
which is reasonable under the circumstances), Purchaser shall submit to Seller
an invoice for expenses which are attributable to Seller’s operation of the
Business prior to Closing, were billed after Closing, were not included as
Assumed Liabilities and a portion of which are the responsibility of the Seller
under the provisions of this Section. The expenses of items such as utilities
shall be prorated based on the portion of the billing period prior to the
Closing Date and the portion of the billing period beginning with the Closing
Date.

 

11.05      Slow Moving and Obsolete Inventory. On the first anniversary of the
Closing Date, Purchaser shall have the right to put back to Seller, by written
notice, and Seller agrees to purchase from Purchaser any inventory that has not
been sold to any customer of the Business and has remained on the books of
Purchaser since the Closing Date. The purchase price of such inventory shall be
equal to the book value of such inventory on the Closing Date and shall be paid
to Purchaser within thirty (30) days of Purchaser’s invoice therefor. Upon the
written request of Seller, Purchaser shall store the inventory, sell such
inventory to a customer of the Business on Seller’s account and remit the
proceeds thereof to Seller. Purchaser will segregate and store such inventory
on-site at Purchaser’s facility without charge for up to twelve (12) additional
months.

 

12.     Indemnification by Purchaser.

 

12.01     Indemnification. Purchaser hereby covenants and agrees to indemnify,
defend and hold Seller and Seller Shareholders harmless from and against any
demand, claim, damage, liability, loss (which shall include any diminution in
value), cost, deficiency or expense (including; but not limited to, interest,
penalties, costs of investigation and the reasonable fees, disbursements and
expenses of attorney accountants and other professional advisors) (collectively
“Losses”) imposed or incurred by Seller or Seller Shareholders, directly or
indirectly arising out of, resulting from or relating to:

 

(a)     any inaccuracy breach of any representation or warranty of Purchaser
pursuant to this Agreement, including Schedules and documents delivered pursuant
hereto;

 

(b)     any failure by Purchaser to pay as due and perform the Assumed
Liabilities; or

 

(c)     any failure of Purchaser to duly perform or observe any term, provision,
covenant or agreement to be performed or observed by Purchaser pursuant to this
Agreement or any documents contemplated by this Agreement.

 

The obligations of Purchaser to indemnify and hold Seller harmless as described
herein shall survive the Closing for a period of thirty-six (36) months and the
consummation of the transactions contemplated by this Agreement.

 

12.02      Procedures. The procedural rules set forth in Section 13.02 shall
apply with respect to indemnification by Purchaser except that the parties’
respective obligations under Section 13.02 shall be reversed as appropriate.

 

13.     Indemnification by Seller and the Seller Shareholders.

 

13.01 Indemnification. Seller and the Seller Shareholders hereby agree jointly
and severally to indemnify, defend and hold Purchaser, and Purchaser’s
shareholders, officers and directors (Purchaser and such persons, collectively,
“Purchaser's Indemnified Persons”) harmless from and against any Losses imposed
or incurred by Purchaser’s Indemnified Persons, directly or indirectly, arising
out of, resulting from or relating to:

 

 
13

--------------------------------------------------------------------------------

Exhibit 10.6

  

(a)     any inaccuracy in or breach of any representation or warranty of Seller
or the Seller Shareholders pursuant to this Agreement including Schedules and
documents delivered pursuant hereto;

 

(b)     any failure of Seller to duly perform or observe any term, provision
covenant or agreement to be performed or observed by Seller pursuant to this
Agreement or any documents contemplated by this Agreement;

 

(c)     any and all liabilities or obligations of Seller, Seller Shareholders or
the Business other than the Assumed Liabilities.

 

The obligations of Seller and the Seller Shareholders to indemnify and hold
Purchaser’s Indemnified Persons harmless as described herein shall survive
Closing and the consummation of the transactions contemplated by this Agreement.

 

13.02      Procedures. Purchaser shall give Seller (who shall in turn notify the
Seller Shareholders) prompt notice of any written claim, demand, assessment,
action, suit or proceeding to which the indemnity set forth in this Section 13
applies. If the document evidencing such claim or demand is a court pleading,
Purchaser shall give such notice within ten (10) days of receipt of such
pleading, otherwise Purchaser shall give such notice within twenty (20) days of
the date it receives written notice of such claim. Failure to give timely notice
of a matter which may give rise to an indemnification claim shall not affect the
rights of Purchaser’s Indemnified Persons to collect such Loss from Seller and
the Seller Shareholders except to the extent such failure to so notify directly
and adversely prejudices Seller’s or the Seller Shareholder’s ability to defend
such Loss against a third party. The cost of any defense shall not become the
obligation of Seller or Seller Shareholder until Purchaser tenders notice of the
claim to Seller or Seller Shareholder. Seller’s failure to provide notice of any
claim, demand, assessment, action, suit or proceeding to any Seller Shareholder
shall in no way diminish or affect the indemnification obligations hereunder,
and Seller Shareholders waive all claims to the contrary.

 

If Purchaser’s request for indemnification arises from the claim of a third
party, the written notice shall permit Seller or Seller Shareholders to assume
control of the defense of any such claim, or any litigation resulting from such
claim. Failure by Seller or Seller Shareholders to notify Purchaser of its
election to defend a complaint by a third party within twenty (20) days after
receipt of notice thereof shall be a waiver by Seller or any such Seller
Shareholder of its right to assume control of the defense of such claim or
action. Prior to any such notice, Purchaser shall be entitled to take all
reasonably necessary actions to defend the claim subject to the provisions of
the preceding paragraph. If Seller or Seller Shareholders assume control of the
defense of such claim or litigation resulting therefrom, Seller or Seller
Shareholders shall take all reasonable steps necessary in the defense or
settlement of such claim or litigation resulting therefrom, and Seller and the
Seller Shareholders shall hold harmless Purchaser’s Indemnified Persons, to the
extent provided in this Section 13 from and against all Loss arising out of or
resulting from any settlement approved by Seller or any judgment in connection
with such claim or litigation. Notwithstanding Seller’s or Seller Shareholders’
assumption of the defense of such third-party claim or demand, Purchaser shall
have the right to participate in the defense of such third-party claim or demand
at its own expense, provided that the ultimate responsibility for the defense of
the claim rests with Seller or Seller Shareholders. If Seller or Seller
Shareholders have an opportunity to settle any claims of a third party which it
wishes to accept, then in complete discharge of its obligation hereunder with
respect to such claim, Seller or Seller Shareholders may tender to Purchaser the
amount of money that would be payable to the claimant(s) to settle such claim
(in a manner that completely discharges any liability or obligation of the
Business and Purchaser) and it shall have no further objection with regard
thereto. Seller and Seller Shareholders shall not be entitled to settle any
claim that requires any action or inaction by the Purchaser, involves any
criminal charge or otherwise requires any admission of wrongdoing which in
Purchaser’s judgment would impair the goodwill or reputation of the Business,
without Purchaser’s express written approval, such approval to be in Purchaser’s
sole discretion. Purchaser shall furnish Seller or Seller Shareholders in
reasonable detail all information Purchaser may have with respect to any such
third-party claim and shall make available to Seller or Seller Shareholders and
their representatives all records and other similar materials which are
reasonably required in the defense of such third-party claim and shall otherwise
cooperate with and assist Seller or Seller Shareholders in the defense of such
third-party claim.

 

 
14

--------------------------------------------------------------------------------

Exhibit 10.6

  

If Seller or Seller Shareholders do not promptly assume and maintain
responsibility for, and control of, the defense of any such third-party claim or
litigation resulting therefrom (and in no event for any period longer than
thirty (30) days from notice requesting assurances thereof), Purchaser may
defend against such claim or litigation in such manner as it may deem
appropriate, and Seller and the Seller Shareholders shall indemnify Purchaser’s
Indemnified Persons from any Loss indemnifiable under Section 13.01 incurred in
connection therewith.

 

13.03      Payment.

 

(a)      Purchaser’s Indemnified Persons shall be entitled, but not obligated,
to recover any Loss pursuant to this Section 13 by means of set-off of any such
Loss against payments due the Seller Shareholders under the Consulting and
Noncompete Agreements or from the Escrow Funds. Recovery of any Loss by
Purchaser by set-off against any payment due or to become due under the
Consulting and Noncompete Agreements or from the Escrow Funds may occur only
upon compliance with Sections 13.03(b), and (c), below and in no event may
Purchaser’s Indemnified Persons offset any amount due to Seller Shareholders
under the Consulting and Noncompete Agreements or from the Escrow Funds while
Seller or Seller Shareholders are disputing a third-party claim as provided in
Section 13.02 above.

 

(b)      Prior to exercising Purchaser’s Indemnified Persons’ right to set-off
against the payment due under the Consulting and Noncompete Agreements or from
the Escrow Funds, Purchaser shall give Seller written notice of its intention to
do so, setting forth the nature and amount of the Loss giving rise to the right
of set-off. If Seller does not object to Purchasers notice of set-off within ten
(10) business days, Purchaser may then withhold any payment due under the
Consulting and Noncompete Agreements or demand payment from the Escrow Agent
which shall not constitute a default thereunder, provided that the set-off
amount does not exceed the Loss or the amount of proposed set off set forth in
such notice.

 

(c)     Basket Provision. Except as otherwise provided in Section 13.04, no
indemnification shall be payable by Seller until the aggregate Losses incurred
by all of Purchaser’s Indemnified Persons exceed Fifty Thousand Dollars
($50,000.00) at which time Seller and Seller Shareholders shall be responsible
for all such Losses in excess of Fifty Thousand Dollars ($50,000.00).

 

13.04      Survival of Indemnification. The obligations of Seller and the Seller
Shareholders to indemnify and hold Purchaser’s Indemnified Persons harmless with
respect to claims for indemnification made in connection with breaches of
Sections 9.01, 9.02, 9.04, 9.08, 9.12, 9.14 and 9.15 (“Fundamental
Representations”) shall survive for the respective statute of limitations
applicable to the underlying liabilities or obligations that give rise to such
claims (as extended by applicable waivers). All other claims for indemnification
made by Purchaser’s Indemnified Persons shall survive for a period ending
thirty-six (36) months after the date of Closing; provided that all such claims
shall survive until resolved if notice of such claim has been given before that
date. All claims for indemnification shall be subject to the Basket Provisions
of Section 13.03 (c) except claims for fraud, payment of a liability of Seller
which is not an Assumed Liability, or a claim for breach of the Fundamental
Representations. The total obligations of Seller and Seller Shareholders for
indemnification for any reason (except for any claims of fraud, any liability
which is not an Assumed Liability, or for the breach of a Fundamental
Representation) shall not exceed the Purchase Price.

 

 
15

--------------------------------------------------------------------------------

Exhibit 10.6

  

14.      Brokers. Evcor, Inc., a Florida corporation (“Seller’s Broker”) has
been retained by Seller and has acted on its behalf. Seller shall be responsible
for any payment, commission, or fee to be paid to Seller’s Broker. Purchaser and
Seller represent and warrant to each other that except for Seller’s Broker,
there are no brokerage or finders’ fees payable in connection with the
transactions contemplated hereby resulting from any actions taken by them and
they hereby indemnify, save and hold each other harmless from and against claims
by any broker or finder for a fee or expense which is based in any way on an
agreement, arrangement or understanding made or alleged to have been made by the
indemnifying party relating to the transactions contemplated hereby.

 

15.      Conditions Precedent to Seller’s Obligations. The obligations of Seller
under this Agreement are subject to the fulfillment at or prior to Closing of
each of the following conditions any or all of which may be waived by Seller.

 

15.01     Accuracy of Representations and Warranties. All representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all respects, and Purchaser shall have performed and satisfied all covenants,
conditions, and agreements and delivered to Seller or Seller Shareholders all
documents and agreements required by this Agreement to be performed, satisfied
or delivered by Purchaser at or prior to Closing.

 

16.     Conditions Precedent to Purchaser’s Obligations. The performance by the
Purchaser of its obligations under this Agreement are subject to the
satisfaction of the following conditions at or prior to Closing any or all of
which may be waived by the Purchaser except for the conditions in Sections
16.03.

 

16.01     Accuracy of Representations and Warranties. As of the Closing Date,
all representations and warranties of Seller and Seller Shareholders contained
in this Agreement shall be true and correct in all respects and Seller and
Seller Shareholders shall have performed and satisfied all covenants, conditions
and agreements and delivered to Purchaser all documents and agreements required
by this Agreement to be performed, satisfied or delivered by Seller or Seller
Shareholders at or prior to Closing.

 

16.02      No Restraint on Transaction. No action, suit or proceeding by any
governmental agency or other party shall have been instituted or threatened to
be taken to restrain, prohibit or otherwise challenge the legality of the
transactions contemplated herein.

 

16.03      Consents and Approvals. All consents and approvals of third parties
necessary in order for the parties to consummate the transactions contemplated
by this Agreement shall have been obtained. Further, Purchaser shall have
obtained the approval of Purchaser’s Board of Directors.

 

16.04     Material Adverse Effect. There shall not have occurred any Material
Adverse Effect with respect to the Seller. “Material Adverse Effect” means any
event, change, occurrence, circumstance or development which has had or would
have a material adverse effect on the condition (financial or otherwise) of the
Purchased Assets, taken as a whole, or that materially adversely affects the
ability of the Seller or the Purchaser, as the case may be, to consummate the
transactions contemplated by this Agreement or materially impairs or delays the
Seller’s or the Purchaser’s ability as the case may be, to perform its
obligations hereunder.

  

 
16

--------------------------------------------------------------------------------

Exhibit 10.6

 

16.05      Due Diligence. Purchaser (either directly or through its duly
authorized representatives) shall have completed a due diligence review of
Seller’s operations, the Purchased Assets and Seller’s books and records,
including a Quality of Earnings and Quality of Assets evaluation, and the
results of all such due diligence review shall be satisfactory to the Purchaser
in its sole discretion.

 

16.06     Continuing Business Relationship. Purchaser shall have determined, in
Purchaser’s sole discretion by any means that Purchaser deems appropriate, that
after Purchaser acquires the Business, the business relationship between
Purchaser as successor to Seller and Meritor, Inc. (“Meritor”) will continue
substantially as it has in the past in accordance with the long-term agreements
and other purchase orders between Seller and Meritor existing at the time of
such meeting with no potential changes or variations in term of contract,
pricing of contract, volume specifications or other material terms, except for
those modifications required by Purchaser, in its sole discretion, to such terms
and conditions, including without limitation, the deletion of competitiveness or
other early termination clauses. Purchaser shall provide prompt notice to Seller
upon the satisfaction of the condition set forth in this paragraph.

 

16.07     Financing. Purchaser shall have received financing for the Purchase
Price and working capital on terms and conditions satisfactory to Purchaser, in
Purchaser’s sole discretion.

 

17.     Exclusivity and Termination.

 

17.01     Exclusivity. From the date of this Agreement until the Closing Date,
the Seller shall not, and shall instruct Seller’s Broker not to, accept or
solicit any offer from, or enter into or continue business discussions with, any
person other than the Purchaser regarding the possible sale of the Business or
of the Purchased Assets.

 

17.02     Termination. This Agreement may be terminated in the manner set forth
below:

 

(a)     The parties may, by mutual written agreement, terminate the Agreement at
any time;

 

(b)     By either party by written notice to the other party if the Closing
shall not have occurred on or before the Closing Date, and such failure to close
is not due to breach of the party seeking to terminate this Agreement; and

 

(c)     By either party notifying the other in writing that the Conditions
Precedent to such party’s obligations set forth in Sections 15 or 16 have not
been satisfied, provided that the party giving such notice is not in breach of
such party’s obligations hereunder.

 

17.03     Effect of Termination. If this Agreement is terminated pursuant to any
of the provisions set forth in Section 17.02 above, this Agreement shall become
void and of no effect and neither party shall have any further liability toward
the other.

 

18.     .Miscellaneous.

 

18.01     Further Assurances. Upon reasonable request, from time to time, Seller
shall (or shall direct its directors, shareholders and officers to, if
appropriate) execute and deliver all documents which may be necessary or
desirable to perfect the right, title or interest of Purchaser in and to the
Purchased Assets.

 

18.02     Amendment and Severability. This Agreement may only be amended by a
written agreement of Seller, Seller Shareholders, and Purchaser. If any
provision, clause or part of this Agreement or the application thereof under
certain circumstances, is held invalid, the remainder of this Agreement or the
applications of each provision, clause or part under other circumstances, shall
not be affected thereby.

  

 
17

--------------------------------------------------------------------------------

Exhibit 10.6

 

18.03      Waiver. The failure of Seller or Purchaser to insist, in any one or
more instances, upon performance of any of the terms or conditions of this
Agreement, shall not be construed as a waiver or relinquishment of any rights
granted hereunder or the future performance of any such term, covenant or
condition.

 

18.04     Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
reputable overnight courier, or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered (by
hand or overnight courier), or if mailed five days after the date of deposit in
the United States mail or three (3) days after deposit with express mail
delivery service.

 

If to Seller or Seller Shareholders:

 

Reynolds Machine Co. Inc.

Attention: Wilbur M. Reynolds, President

17005 West Ryerson Road

New Berlin, WI 53151

 

and, in the case of Purchaser, to:

 

Sypris Technologies Kenton, Inc.

Attention: Paul Larochelle, President

101 Bullitt Lane, Suite 205

Louisville, KY 40222

  

with a copy to:

 

John P. Miller

Suite900

788 North Jefferson Street

Milwaukee, WI 53202

 

with a copy to:

 

Sypris Technologies Kenton, Inc.

John McGeeney, General Counsel

101 Bullitt Lane, Suite 450

Louisville, KY 40222

 

or to such other address as Seller or Purchaser may designate by notice in
writing to the other.

 

18.05      Benefit. This Agreement shall be binding upon and inure to the
benefit and burden of and shall be enforceable by Purchaser, its successors and
assigns, and Seller, the Seller Shareholders, their successors and assigns. This
Agreement may not be assigned by any party without the written consent of the
others, which consent shall not be unreasonably withheld.

 

18.06      Expenses. All expenses incurred by Seller, Seller Shareholders or
Purchaser in connection with the transactions contemplated hereby, including,
without limitation, legal and accounting fees shall be the responsibility of and
for the account of the party who ordered the particular service or incurred the
particular expense, except as otherwise provided herein.

 

18.07     Public Announcement. Except for a public announcement (in whatever
form) by Purchaser on or after Closing that it has acquired the assets and
business of Seller, no public announcement of the transactions contemplated
hereby shall be made by way of press release, disclosure to the trade or
otherwise except with the mutual approval of the parties, unless required by
applicable law.

 

18.08      Specific Performance and Other Remedies. In the event of any
controversy concerning the rights or obligations under this Agreement, such
rights or obligations shall be enforceable in a court of equity by a decree of
specific performance. Such remedy shall however, be cumulative and nonexclusive
and shall be in addition to any other remedy which the parties may have under
the law.

 

 
18

--------------------------------------------------------------------------------

Exhibit 10.6

  

18.09      Entire Agreement. This Agreement and the Schedules, Exhibits and
other documents to be delivered pursuant hereto constitute the entire agreement
among the parties hereto and there are no agreements, representations or
warranties which are not set forth herein. All parties being represented by
counsel, no one party shall be deemed the drafter of this Agreement with respect
to its interpretation.

 

18.10      Governing Law. This Agreement and all Exhibits and Schedules hereto
shall be governed by and construed in accordance with the laws of the State of
Wisconsin.

 

18.11      Severability. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.

 

18.12     Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which taken
together will constitute one and the same instrument.

 

(SIGNATURE PAGE TO FOLLOW)

  

 
19

--------------------------------------------------------------------------------

Exhibit 10.6

  

The undersigned have executed this Asset Purchase Agreement as of the date first
written above.

 

 

SYPRIS TECHNOLOGIES KENTON, INC.

 

 

 

By: /s/ Jeffrey T. Gill 

       Jeffrey T. Gill, Chairman

REYNOLDS MACHINE CO., INC.

 

 

 

By: /s/ Wilbur M. Reynolds

      Wilbur M. Reynolds, President

 

 

SELLER SHAREHOLDERS

 

 

By: /s/ Wilbur M. Reynolds 

      Wilbur M. Reynolds, as Trustee of

       the Wilbur M. Reynolds Living and

       Devolution Trust u/a/d 7/30/08

 

 

By:_ /s/ Wilbur M. Reynolds 

      Wilbur M. Reynolds Individually

 

 

By: /s/ Lisa Reynolds__

      Lisa Reynolds Individually

 

 

 

20 

 

--------------------------------------------------------------------------------