FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 0-14714 ASTEC INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Tennessee 62-0873631 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. Box 72787, 4101 Jerome Avenue, Chattanooga, Tennessee 37407 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (423) 867-4210 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.20 par value (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No (Form

FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year endedDecember 31, 2000
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________________ to____________________
Commission file number0-14714
ASTEC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Tennessee (State or other jurisdiction of incorporation or organization)	62-0873631 (I.R.S. Employer Identification No.)
P. O. Box 72787, 4101 Jerome Avenue, Chattanooga, Tennessee37407 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(423) 867-4210
Securities registered pursuant to Section 12(b) of the Act:NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.20 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____
(Form 10-K Cover Page - Continued) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non- affiliates of the registrant was approximately $422,089,000 based upon the closing sales price reported by the NASDAQ National Market on March 15, 2000, using beneficial ownership of stock rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to exclude voting stock owned by all directors and executive officers of the registrant, some of whom may not be held to be affiliates upon judicial determination. (APPLICABLE ONLY TO CORPORATE REGISTRANTS) Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of March 15, 2000 Common Stock, par value $.20 - 19,134,915 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents have been incorporated by reference into the Parts of this Annual Report on Form 10-K indicated: Document Form 10-K Proxy Statement relating to Part III Annual Meeting of Shareholders to be held on April 27, 2000 ASTEC INDUSTRIES, INC. 1999 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS Page - Continued)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $187,698,000 based upon the closing sales price reported by the NASDAQ National Market on March 15, 2001, using beneficial ownership of stock rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to exclude voting stock owned by all directors and executive officers of the registrant, some of whom may not be held to be affiliates upon judicial determination .
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:
As of March 15, 2001
Common Stock, par value $.20 - 19,331,567 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into the Parts of this Annual Report on Form 10-K indicated:
Document Proxy Statement relating to Annual Meeting of Shareholdersto be held on April 25, 2001	Form 10-K Part III
ASTEC INDUSTRIES, INC.
2000 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I	Page
Item 1. Business	1
Item 2. Properties	16
Item 3. Legal Proceedings	18
Item 4. Submission of Matters to a Vote of Security Holders	18
Executive Officers of the Registrant	19
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters	20
Item 6. Selected Financial Data	21
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	21
Item 8. Financial Statements and Supplementary Data	21
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	21
PART III
Item 10. Directors and Executive Officers of the Registrant	21
Item 11. Executive Compensation	21
Item 12. Security Ownership of Certain Beneficial Owners and Management	21
Item 13. Certain Relationships and Related Transactions	22
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K	22

Appendix A	A-1

Signatures

-iii-

PART I

Item 1. Business 1 Item 2. Properties 17 Item 3. Legal Proceedings 18 Item 4. Submission of Matters to a Vote of Security Holders 18 Executive Officers of the Registrant 18 PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters 20 Item 6. Selected Financial Data 20 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Item 8. Financial Statements and Supplementary Data 21 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 21 PART III Item 10. Directors and Executive Officers of the Registrant 21 Item 11. Executive Compensation 21 Item 12. Security Ownership of Certain Beneficial Owners and Management 21 Item 13. Certain Relationships and Related Transactions 21 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 22 Appendix A A-1 Signatures 27 PART I Item 1. BUSINESS
General

Astec Industries, Inc. (the "Company") is a Tennessee corporation, which was incorporated in 1972. The Company designs, engineers, manufactures, markets, and finances equipment and components used primarily in road building and related construction activities. The Company's products are used in each phase of road building, from quarrying and crushing the aggregate to application of the road surface. In addition, the Company is partner in a joint venture that makes testing and sampling equipment for the asphalt mix and aggregate processing industries. The Company also manufactures certain equipment and components unrelated to road construction, including trenching, auger boring, directional drilling, environmental remediation and industrial heat transfer equipment. The Company holds 9989 United States and 7669 foreign patents, has 5350 patent applications pending, and has been responsible for many technological and engineering innovations in the industry. The Company's products are marketed both domestically and internationally. In addition to plant and equipment sales, the Company manufactures and sells replacement parts for equipment in each of its product lines. The distribution and sale of replacement parts is an integral part of the Company's business.

The Company's ~~twelve~~fourteen manufacturing subsidiaries are: (i) Breaker Technology Ltd., which designs, manufactures and markets rock breaking and processing equipment and utility vehicles for mining; (ii) Johnson Crushers International, Inc., which designs, manufactures and markets portable and stationary aggregate and ore processing equipment; (iii) Kolberg-Pioneer, Inc., which designs, manufactures and markets aggregate processing equipment for the crushed stone, manufactured sand, recycle, top soil and remediation markets; (iv) Osborn Engineered Products SA (Pty) Ltd., which designs, manufactures and markets crushers, vibratory screening equipment and turnkey plants and mills; (v) Production Engineered Products, Inc., which designs, manufactures and markets high-frequency vibrating screens for sand and gravel and asphalt operations; (vi) Superior Industries of Morris, Inc., which designs, manufactures and markets conveyors and idlers; (vii) Telsmith, Inc., which designs, manufactures and markets aggregate processing equipment for the production and classification of sand, gravel, and crushed stone for road and other construction applications; (viii) Astec, Inc., which designs, manufactures ~~a line of~~and markets hot-mix asphalt plants, soil purification and ~~environmental remediation~~related components; (ix) CEI Enterprises, Inc., which designs, manufactures and markets heat transfer equipment and ~~related components; (ii)~~polymer and rubber blending systems for the hot-mix asphalt industry; (x) Heatec, Inc., which designs, manufactures and markets thermal fluid heaters, asphalt heaters, polymer and rubber blending systems and other heat transfer equipment used in the Company's asphalt mixing plants and in other industries; (iii) CEI Enterprises, Inc., which manufactures heat transfer equipment, polymer and rubber blending systems for the hot-mix asphalt industry; (iv) Telsmith, Inc., which manufactures aggregate processing equipment for the production and classification of sand, gravel, and crushed stone for road and other construction applications; (v) Kolberg-Pioneer, Inc., which manufactures aggregate processing equipment for the crushed stone, manufactured sand, recycle, top soil and remediation markets; (vi) Johnson Crushers International, Inc., which manufactures portable and stationary aggregate and ore processing equipment; (vii) Production Engineered Products,(xi) American Augers, Inc., which designs, manufactures and markets ~~high- frequency vibrating screens for sand~~auger boring and ~~gravel~~directional drilling equipment; (xii) Trencor, Inc., which designs, manufactures and markets chain and wheel trenching equipment and excavating equipment; (xiii) Carlson Paving Products, Inc., which designs, manufacturers and markets asphalt ~~operations; (viii)~~paver screeds; and (xiv) Roadtec, Inc., which designs, manufactures and markets milling machines used to recycle asphalt and concrete, asphalt paving equipment and material transfer vehicles; (ix) Trencor, Inc., which manufactures chain and wheel trenching equipment and excavating equipment; (x) Superior Industries of Morris, Inc., which manufactures conveyors and idlers for aggregate processing; (xi) Breaker Technology Ltd., which manufactures rock breaking and processing equipment and utility vehicles for mining; and (xii) American Augers, Inc., which manufactures auger boring and directional drilling equipment. vehicles.

Astec Financial Services, Inc. ("AFS") was formed in June 1996 as a wholly owned subsidiary of the Company to provide a wide range of financing products for leasing or acquiring the Company's equipment. AFS, a captive finance company, is dedicated to working with the Company's subsidiaries and their customers in arranging financing for the Company's equipment. AFS provides loans, operating leases, floor plans for dealers, fleet rental plans, and other financing plans to meet the needs of the industry.

Astec Systems, Inc. was formed late in 2000 in response to market demand for a new generation of modular aggregate processing plants. Astec Systems is not a manufacturing entity but designs and markets modular systems using the engineering capabilities of and equipment manufactured by the Aggregate and Mining Group and the construction expertise of Astec, Inc. As of December 31, 2000, three modular aggregate processing plants were under construction.

The Company is a 50% shareholder of Pavement Technology, Inc. ("PTI"). PTI manufactures innovative testing and sampling equipment and ~~packages~~sells complete asphalt mix design ~~laboratory products, thus allowing customers to purchase a complete design laboratory~~laboratories assembled from ~~one source.~~PTI and third-party equipment. The pavement analyzer technology has captured the interest of state departments of transportation, universities and contractors as a new standard for measuring pavement performance of hot-mix asphalt. The pavement technology product line enhances the services and equipment the Company is able to provide to its customers.

The Company's strategy is to be the low-cost producer in each of its product lines while continuing to develop innovative new products and provide first class service for its customers. Management believes that the Company is the technological innovator in the markets in which it operates and is well positioned to capitalize on the need to rebuild and enhance roadway infrastructure, both in the United States and abroad.

Segment Reporting

In 1998, the Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which changed the way the Company reported information about its operating segments. The information below conforms to current presentation requirements.

The Company's business units have separate management teams and offer different products and services. The business units have been aggregated into ~~three~~four reportable business segments based upon the nature of the product or services produced, the type of customer for the products and the nature of the production process. The reportable business segments are (i) ~~Hot-mix~~ Asphalt ~~Plants and Related Heat Transfer Equipment,~~Group, (ii) Aggregate ~~Processing Equipment~~ and Mining Group, (iii) Mobile Asphalt ~~Construction Equipment.~~Paving Group and (iv) Underground Group. All remaining ~~business units~~companies are included in the ~~"Other"~~"Other Business Units" category for reporting.

Financial information in connection with the Company's financial reporting for segments of a business under SFAS 131 is included in Note 12 to "Notes to Consolidated Financial Statements - Operations by Industry Segment and Geographic Area," appearing at Page ~~A-11~~A-20 of this report. ~~Hot-mix~~

Asphalt ~~Plants and Related Heat Transfer Equipment~~ Group

The ~~Hot-Mix~~ Asphalt ~~Plants and Related Heat Transfer Equipment~~Group segment is made up of three business ~~units--Astec,~~units, Astec, Inc., Heatec, Inc. and CEI Enterprises, Inc. These business units design, manufacture and market a complete line of asphalt plants and related components, heating and heat transfer processing equipment and storage tanks for the asphalt paving and other non-related industries.

Products

Astec, Inc. designs, engineers, manufactures and markets a complete line of portable, stationary and relocatable ~~hot- mix~~hot-mix asphalt plants and related components under the ~~ASTECr~~ASTEC® trademark. An asphalt mixing plant typically consists of heating and storage equipment for liquid asphalt (manufactured by Heatec), cold feed bins for storing aggregates, a drum mixer for drying, heating and mixing, a baghouse composed of air filters and other pollution control devices, hot storage bins or silos for temporary storage of hot-mix asphalt and a control house. The Company introduced the concept of plant portability in 1979. Its current generation of portable asphalt plants is marketed as the Six ~~PackTM~~ Pack^TMand consists of six portable components, which can be disassembled, moved to the construction site and reassembled, which reduces relocation expenses. Plant portability represents an industry innovation developed and successfully marketed by the Company. In 1996, an improved version of the Six ~~PackTM~~Pack^TM plant was developed, making it considerably easier to assemble and capable of being separated into movable parts for transport without the use of a crane. This design eliminated the use of cranes for disassembly or erection. The enhanced version of the Six ~~PackTM,~~ Pack^TM,known as the Turbo Six ~~PackTM,~~Pack^TM, is a highly portable plant which is especially useful in less populated areas where plants must be moved from job to job.

The components in Astec's asphalt mixing plants are fully automated and use microprocessor-based control systems for efficient operation. The plants are manufactured to meet or exceed federal and state clean air standards.

The Company has also developed specialized asphalt recycling equipment for use with its hot-mix asphalt plants. Many of its existing products are suited for blending, vaporizing, drying and incinerating contaminated products. As a result, Astec has developed a line of thermal purification equipment for the remediation of petroleum-contaminated soil.

Heatec, Inc. designs, engineers, manufactures and markets a variety of thermal fluid heaters, process heaters, waste heat recovery equipment, liquid storage systems and polymer and rubber blending systems under the ~~HEATECr~~HEATEC® trademark. For the construction industry, Heatec manufactures a complete line of asphalt heating and storage equipment to serve the hot-mix asphalt industry and water heaters for concrete plants. In addition, Heatec builds a wide variety of industrial heaters to fit a broad range of applications, including equipment for emulsion plants, roofing material plants, refineries, chemical processing, rubber plants and the agribusiness. Heatec has the technical staff to custom design heating systems and has systems operating as large as 50,000,000 BTU's per hour.

CEI Enterprises, Inc. ("CEI"), designs, engineers, manufactures and markets heating equipment and storage tanks for the asphalt paving industry and rubber and polymer blending systems. CEI's heating equipment uses hot oil, direct fired or electric heating processes. CEI's equipment includes portable and stationary tank models with capacities up to 35,000 gallons each.

Marketing

The Company markets its hot-mix asphalt and heat transfer products both domestically and internationally. The principal purchasers of asphalt and related equipment include highway contractors and foreign and domestic governmental agencies. Asphalt equipment is sold directly to its customers with domestic ~~soil remediation~~ and international sales departments. Outside dealers are not used to market hot-mix asphalt products, but agents are used to market asphalt plants and their components internationally.

Heatec equipment is marketed through both direct sales and dealer sales. ~~Seventeen manufacturers'~~Manufacturers' representatives sell heating products for applications in industries other than the asphalt industry. CEI equipment is marketed only through direct sales. Direct sales employees are paid salaries and are generally entitled to commissions after obtaining certain sales quotas.

Raw Materials

Raw materials used in the manufacture of products include carbon steel and various types of alloy steel, which are normally purchased from distributors. Raw materials for manufacturing are readily available. Some steel is delivered on a "just-in-time" arrangement from the supplier to reduce inventory requirements at the manufacturing facilities.

Competition

This industry segment faces strong competition in price, service and product performance and competes with both large publicly held companies with resources significantly greater than those of the Company and with various smaller manufacturers. Hot-mix asphalt plant competitors include CMI Corporation; Cedarapids, Inc., a subsidiary of Terex Corporation; and Gencor Industries, Inc. The market for the Company's heat transfer equipment is diverse because of the multiple applications for such equipment. Competitors for heating equipment include Gencor/Hyway Heat Systems, American Heating, Gentec and ~~GTX~~GTS Energy Systems.

Employees

At December 31, ~~1999~~2000, the ~~Hot-mix~~ Asphalt ~~Plant and Heat Transfer Equipment~~Group segment employed ~~1,041~~1,114 individuals, of which, ~~830~~913 were engaged in manufacturing, 8180 in engineering and ~~130~~121 in selling, general and administrative functions.

Backlog

The backlog for the ~~Hot-mix Asphalt~~hot-mix asphalt and ~~Heat Transfer Equipment segment~~heat transfer equipment at December 31, ~~1999~~2000 and ~~1998~~1999 was approximately ~~$59,300,000~~$41,203,000 and ~~$59,600,000,~~$59,350,000, respectively.

Aggregate ~~Processing Equipment~~ and Mining Group

The Company's Aggregate and Mining Group is comprised of ~~six~~eight business units ~~that are~~ focused on the aggregate, metallic mining and recycle markets. ~~Each subsidiary achieves its~~Seven of the subsidiaries achieve their strength by distributing products into niche markets and drawing on the advantages of brand recognition in the global market. ~~The~~These business units ~~in this group~~ are ~~Telsmith,~~Breaker Technology Ltd., Johnson Crushers International, Inc., Kolberg-Pioneer, Inc., Osborn Engineered Products, SA (Pty) Ltd., Production Engineered Products, ~~Inc., Johnson Crushers International,~~ Inc., Superior Industries of Morris, Inc., and ~~Breaker Technology Ltd.~~ Telsmith, Inc. The eighth subsidiary, Astec Systems, Inc., designs and markets aggregate processing systems comprised of equipment manufactured by the other seven subsidiaries in this segment and from selected equipment of the Asphalt Group.

Products

Founded in 1906, Telsmith, Inc. is the oldest subsidiary of the group. The primary markets served under the ~~TELSMITHr~~TELSMITH® trade name are the aggregate and metallic mining industries. Telsmith's core products are cone ~~(Gyrasphere?),~~(Gyrasphereâ ), jaw and impact crushers, which are recognized for their reliability. A wide range of vibrating feeders for primary crushing operations are complemented with large vibrating screens for the difficult scalping applications and sizing screens to handle the most rigorous specifications of finished aggregate products. Telsmith offers all their products as portables that are easily relocated to quarry sites to minimize the costs of transporting crushed stone. Equipment furnished by Telsmith can be purchased as individual components, as portable plants for flexibility or as completely engineered systems for both portable and stationary applications.

The stringent demands for quality aggregate to meet the specifications of the "Superpave" asphalt mixes has led to Telsmith's development of theSilver ~~BulletT~~Bullet™ narrow band cone crusher, which provides unparalleled results in producing a cubical product, as well as enhancing overall machine productivity.

In metallic mining operations, ~~TELSMITHr~~TELSMITH® equipment is used in primary crushing stages after the material has been blasted from the deposit. Secondary and tertiary crushing equipment, as well as vibrating screens, are employed in systems to reduce the material down to sizes for grinding mill feed or leech bed processes.

In 1994, Telsmith received ISO 9001 certification, the international standard of quality assurance in the design, development, production, installation and servicing of their products. This designation is recognition of the quality of Telsmith products and services in the worldwide marketplace.

Kolberg-Pioneer, Inc. ("KPI") designs, manufactures and supports a complete line of aggregate processing equipment for the sand and gravel, mining, quarrying and concrete recycling markets. KPI manufactures the well-known ~~Pioneerr~~Pioneer ® and ~~Kolbergr~~Kolberg® product lines. ~~Pioneerr~~

Pioneer®products include a complete line of primary, secondary, tertiary and quaternary crushers, including jaws, cones, horizontal shaft impactors, vertical shaft impactors and roll crushers. Kolberg-Pioneer rock crushers are used by mining, quarrying and sand and gravel producers to crush oversized aggregate to salable size. Vibrating feeders are used to convey aggregate to the primary crusher operations. The incorporation of vibrating grizzly feeders and vibrating scalpers allows small material to bypass the primary crusher. ~~Kolbergr~~

Kolberg®sand classifying and washing equipment is relied upon to clean, segregate and re-blend deposits to meet the size specifications for critical applications. The product line includes fine and coarse material washers, log washers, blade mills and sand classifying tanks. Screening plants are available in both stationary and highly portable models, and are complemented by a full line of radial stacking and overland belt conveyors.

Kolberg-Pioneer manufactures belt conveyors designed to move or store aggregate and other bulk materials, typically in radial cone-shaped stockpiles. Models offered include road portable, telescoping stationary and overland styles.

In addition, Kolberg-Pioneer manufactures pugmills, which are highly efficient homogenous mixing chambers consisting of twin shafts with timed, overlapping paddles used for soil remediation, cement-treated base and cold-mix asphalt. Pugmills are typically combined with either a bulk storage silo for introducing dry additives or with a pump for liquids.

Production Engineered Products, Inc. ("PEP") designs, manufactures and markets high-frequency vibrating screens for sand and gravel customers, as well as customers engaged in asphalt production. In addition, they incorporate the ~~high- frequency~~high-frequency screens into portable crushing and screening plants servicing the aggregate and industrial markets. ~~High- frequency~~High-frequency screens are adept in separating out small mesh particles where conventional screens are not ideally suited.

PEP's latest product development, the highly successful ~~"Fold`n~~"Fold'n Go" plant, incorporates features that allow ~~the~~ aggregate producers to efficiently manufacture asphalt chips and manufactured sand. This unit, with its on-plant stockpiling conveyors and its own power source, is totally self-contained.

Johnson Crushers International, Inc. ("JCI") designs, manufactures and distributes portable and stationary aggregate and ore processing equipment. This equipment is used in the aggregate, mining and recycle industries. JCI's principal products are cone crushers, three-shaft horizontal screens, portable plants, and replacement parts for competitive equipment. JCI offers completely re-manufactured cone crushers and screens from its service repair facility.

JCI™ cone crushers are used primarily in secondary and tertiary crushing applications, and come in both manual and remotely adjusted models. Horizontal screens are low-profile machines for use primarily in portable applications. They are used to separate aggregate materials by sizes. Portable plants combine various configurations of cone crushers, horizontal screens and conveyors mounted on tow-away chassis. Because ~~today's~~ transportation costs are high, producers use portable equipment to operate nearer to their job sites. Portable plants allow the aggregate producers to quickly and efficiently move their equipment from one location to another.

Superior Industries of Morris, Inc. designs and manufactures a complete line of portable and stationary conveyors. Its portable line includes 150-foot telescoping stacking conveyors, patented FD series axle assemblies and stationary conveyor systems for all types of bulk material handling, including stockpiling and overland transfer. Superior's product line also includes screening plants, wash plants, fine material washers and custom-built crushing plants. Superior's component division builds a complete line of conveyor idlers and maintains ISO 9001 certification for quality assurance.

Breaker Technology Ltd. ("BTL") designs, manufactures and markets hydraulic rock breaker systems for the aggregate, mining and recycling industries. They also design and manufacture a complete line of four-wheel drive articulated utility vehicles for underground mines and quarries.

In addition to the quarry and mining industries, BTL designs, manufactures and markets a complete line of hydraulic attachments for the North American construction and demolition markets. These attachments are sold on a variety of equipment including excavators, backhoe loaders, wheel loaders, and skid steer loaders. They include hydraulic breakers and compactors for the construction market and include crushers, pulverizers, shears and multi-processors for the demolition market.

BTL offers an extensive aftermarket sales and service program through a highly qualified and trained dealer network. ~~Marketing~~

Osborn Engineered Products, SA (Pty) Ltd. ("Osborn") designs, manufactures and markets a complete line of bulk material handling and minerals processing plants and equipment. This equipment is used in the aggregate, mineral mining, metallic mining and recycle industries. Osborn has been a licensee of Telsmith's technology for over fifty years. In addition to the Telsmith line of equipment, Osborn offers rotary and roll crushers, mills, portable crushing and screening plants, conveyor systems and idlers, and a line of IFE screens.

Marketing

Aggregate processing and mining equipment is marketed by 47122 direct sales employees, approximately ~~260~~516 independent domestic distributors and approximately ~~100~~74 independent international distributors. The principal purchasers of aggregate processing equipment include highway and heavy equipment contractors, open mine operators, quarry operators and foreign and domestic governmental agencies.

Raw Materials

Raw materials used in the manufacture of products include carbon steel and various types of alloy steel, which are normally purchased from distributors. Raw materials for manufacturing are readily available. Breaker Technology purchases rock breakers under a long-term purchasing contract from a Japanese supplier and also purchases crushers from an Italian supplier. Both the Japanese and Italian suppliers have sufficient capacity to meet the Company's anticipated demand; however, alternative suppliers exist for both of these components should any supply disruptions occur.

Competition

The ~~aggregate processing equipment segment~~Aggregate and Mining Group faces strong competition in price, service and product performance. Aggregate processing and mining equipment competitors include Metso (Nordberg); Svedala ~~and its subsidiary Universal; Greystone;~~Industri AB; Cedarapids, Inc.,; Powerscreen and Finley, subsidiaries of Terex Corporation; ~~Nordberg, Inc., and its subsidiaries Seco and Hewitt Robins;~~ Deister; Eagle Iron Works; and other smaller manufacturers, both domestic and international.

Employees

At December 31, ~~1999~~2000, the Aggregate ~~Processing Equipment~~and Mining Group segment employed ~~1,218~~1,444 individuals, of which ~~894~~988 were engaged in manufacturing, ~~101~~128 in engineering and support functions, and ~~223~~328 in selling, general and administrative functions.

Backlog

At December 31, ~~1999~~2000 and ~~1998,~~1999, the backlog for the Aggregate ~~Processing Equipment segment~~and Mining Group was approximately ~~$32,000,000~~$43,882,000 and ~~$32,700,000,~~$33,034,000, respectively. The ~~1998~~1999 backlog is restated for the ~~acquisitions~~acquisition of ~~Breaker Technology Ltd. and Superior Industries of Morris, Inc.~~ Osborn.

Mobile ~~Construction Equipment~~ Asphalt Paving Group

The Mobile ~~Construction Equipment~~Asphalt Paving Group is comprised of Roadtec, Inc. ~~which~~and Carlson Paving Products, Inc. ("Carlson"). Roadtec designs, engineers, manufactures and markets asphalt pavers, material transfer vehicles and milling machines. ~~Roadtec engineers emphasize simplicity, productivity, versatility~~Carlson designs and ~~accessibility in product design~~manufactures asphalt paver screeds that attach to the asphalt paver to control the width and ~~use.~~ depth of the asphalt as it is applied to the roadbed.

Products

Roadtec's patented Shuttle ~~Buggyr~~Buggy® is a mobile, ~~self- propelled~~self-propelled material transfer vehicle which allows continuous paving by separating truck unloading from the paving process while remixing the ~~asphalt surface material.~~asphalt. A typical asphalt paver must stop paving to permit truck unloading of asphalt mix. By permitting continuous paving, the Shuttle ~~Buggyr~~Buggy® allows the asphalt paver to produce a smoother road surface. As a result of the pavement smoothness achieved with this machine, certain states are now requiring the use of the Shuttle ~~Buggyr.~~Buggy®. Recent studies using infrared technology have revealed problems caused by differential cooling of the ~~hot- mix~~hot-mix during hauling. The Shuttle ~~Buggyr~~ Buggy®remixes the material to a uniform temperature and gradation, thus eliminating these problems.

Asphalt pavers are used in the application of hot-mix asphalt to the road surface. Roadtec pavers have been designed to minimize maintenance costs while exceeding road surface smoothness requirements. Roadtec also manufactures a paver model that is designed ~~to be used~~for use with the material transfer vehicle described above.

Roadtec milling machines are designed to remove old asphalt from the road surface before new asphalt mix is applied. They are manufactured with a simplified control system, wide conveyors, direct drives and a wide range of horsepower and cutting capabilities to provide versatility in product application. Additional upgrades and options are available to enhance the products and their capabilities.

Carlson's patented screeds are part of the asphalt paving machine that lays asphalt on the roadbed at a desired thickness and width, while smoothing and compacting the surface. Carlson screeds can be configured to fit many types of asphalt paving machines. A Carlson screed uses a hydraulic powered generator to electrify elements that heat a screed plate so that asphalt will not stick to it while paving. The generator is also available to power tools or lights for night paving. Available options allow extended paving widths and the addition of a curb on the road edge.

Marketing

Mobile ~~Construction Equipment~~Asphalt Paving equipment is marketed both domestically and internationally to highway and heavy equipment contractors, utility contractors and foreign and domestic governmental agencies. Mobile construction equipment is marketed both directly and through dealers. This segment employs 1422 direct sales staff, 29 foreign independent distributors and 1 domestic independent distributor.

Raw Materials

Raw materials used in the manufacture of products include carbon steel and various types of alloy steel, which are normally purchased from steel mills and other sources. Raw materials for manufacturing are readily available.

Competition

The ~~paving equipment~~Mobile Asphalt Paving Group segment faces ~~equally~~ strong competition in price, service and ~~performance, as do the Company's other operating segments. Mobile~~performance. Paving equipment and screed competitors include Caterpillar Paving Products, Inc., a subsidiary of Caterpillar, Inc.; Blaw-Knox Construction Equipment Company, a subsidiary of Ingersoll-Rand Company; ~~and~~ Cedarapids, Inc., a subsidiary of Terex ~~Corporation.~~Corporation; and Dynapac, a subsidiary of Svedala. The segment's milling machine equipment competitors include CMI Corporation; Caterpillar, Inc.; and Wirtgen America, Inc.

Employees

At December 31, ~~1999~~2000, the Mobile ~~Construction Equipment~~Asphalt Paving Group segment employed ~~322~~331 individuals, of which, ~~240~~237 were engaged in manufacturing, 2021 in engineering and support functions, and 6273 in selling, general and administrative functions.

Backlog

The backlog for the Mobile ~~Construction Equipment~~Asphalt Paving Group segment at December 31, ~~1999~~2000 and ~~1998~~1999 was approximately ~~$1,200,000~~$2,131,000 and ~~$4,200,000,~~$1,925,000, respectively. ~~Others~~The 1999 backlog is restated for the acquisition of Carlson.

Underground Group

The Underground Group segment consists of Trencor, Inc. and American Augers, Inc. This segment combines the marketing of the American Augers and Trencor products to be the innovative leader in both trenchless and trencher technology to install utilities and pipeline worldwide. In the previous year, Trencor and American Augers were included in the Other Business Units ~~This category consists of the Company's five other business units that do not meet the requirements for separate disclosure as an operating~~ segment. These other operating units include Trencor, Inc., American Augers, Inc., Astec Financial Services, Inc., Astec Transportation, Inc. and the parent company Astec Industries, Inc. Revenues in this category are derived predominantly from the sale of trenching, auger boring, horizontal directional drilling, mud/fluid systems and associated accessories and spare parts. This category also includes revenues from operating leases and other financial products offered by Astec Financial Services, Inc., the Company's finance subsidiary.

Products

Trencor, Inc. designs, engineers, manufactures and markets chain and wheel trenching equipment, canal excavators, rock saws, material processors and road miners. ~~Trencor's chain trenching machines utilize a heavy-duty chain (equipped with cutting teeth attached~~

With the ability to ~~steel plates) wrapped around a long moveable boom. These machines, with weights up to 450,000 pounds, are capable of cutting~~cut a trench upthrough solid rock in a single pass, Trencor trenching equipment is among the toughest in the world. Utilizing a unique mechanical power train, Trencor machines are used to ~~eight feet wide~~trench pipelines, lay fiber optic cable, cut irrigation ditches, insert highway drainage materials, and ~~thirty-five feet deep through rock.~~more. Trencor also makes foundation trenchers used in areas where drilling and blasting are prohibited. ~~In addition,~~Trencor recently redesigned their line of hydrostatic side-shift trenchers to complement the ~~wheel trenching machines are~~heavy-duty hydrostatic rock saws used ~~in pipeline excavation in soil and soft rock. The wheel trenchers weigh up~~ to ~~390,000 pounds and have a trench capacity~~install the rapidly growing worldwide network of ~~up to seven feet in width and ten feet in depth.~~ fiber optic cable.

Trencor canal excavators are used to make finished and trimmed trapezoidal canal excavations within close tolerances primarily for irrigation systems. The rock saw is used to lay water and gas lines, fiber optic cable, and for constructing highway drainage systems, among other applications.

Four Road ~~Minerr~~Miner® models are available with an attachment that allows them to cut a path up to twelve and a half feet wide and five feet deep on a single pass. The Road ~~Minerr~~Miner® has applications in the road construction industry and in mining and aggregate processing operations. Trencor manufactures a material processor which includes a crusher that operates independently from the trencher to process rock and related material (spoil) removed from the trench to make it suitable for use as a filler around pipes, cables or other lines being installed.

American Augers, Inc. designs, manufactures, markets and sells a wide range of trenchless equipment. ~~Three decades~~Today, American Augers is one of ~~dominant market leadership in horizontal~~the largest manufacturers of auger boring ~~has led American Augers to a pioneering position~~machines in the ~~rapidly growing market for trenchless utility installation. Complementary~~world, designing and engineering state-of-the-art boring machines, directional drills and fluid/mud systems ~~and downhole tooling are major components~~used in the underground construction or trenchless market. Augers plans to introduce three new directional drills during 2001, along with several new fluid/mud systems, giving it one of ~~company revenues.~~the broadest product lines in the industry. American Augers has over ~~2,500~~2,000 customers throughout the world that operate in the sewer, power, fiber-optic telecommunication, electric, oil and gas, and water industries.

Marketing

Trencor and American Augers market their products domestically through direct sales representatives and internationally through both direct sales and independent dealers and sales agents.

Raw Materials

American Augers maintains excellent relationships with its suppliers and has experienced minimal turnover. The purchasing group has developed ~~partnership~~partnering relationships with many of the company's key vendors to improve just-in-time delivery and thus lower inventory. ~~The~~Steel is the predominant raw material used to manufacture Trencor's and American Augers' ~~products is steel.~~products. Components used are engines, hydraulic motors and pumps, gearboxes, power transmissions and electronics systems.

Competition

Competition for sales of trenching, excavating, auger boring, directional drilling, and fluid/mud equipment includes Charles Machine Works (Ditch Witch); J.I. Case; Vermeer and other smaller custom manufacturers.

Employees

At December 31, 2000, the Underground Group segment employed 368 individuals, of which, 264 were engaged in manufacturing, 35 in engineering and 69 in selling, general and administrative functions.

Backlog

The backlog for the Underground Group segment at December 31, 2000 and 1999 was approximately $2,336,000 and $2,263,000, respectively.

Other Business Units

This category consists of the Company's three other business units that do not meet the requirements for separate disclosure as an operating segment. These other operating units include Astec Financial Services, Inc., Astec Transportation, Inc. and the parent company Astec Industries, Inc. Revenues in this category are derived predominantly from operating leases and other financial products offered by Astec Financial Services, Inc., the Company's finance subsidiary.

Competition

Competitors of the captive finance company include General Electric Credit ~~Corporation,~~Corporation; The CIT ~~Group,~~Group; Associates First Capital ~~Corporation,~~Corporation; Safeco Credit Company, Inc. and local financial institutions.

Employees

At December 31, ~~1999~~2000, the Other Business Units segment employed ~~394~~44 individuals, 10 of which ~~256~~ were engaged in manufacturing ~~37 in engineering~~operations and ~~101~~34 in selling, general and administrative functions. ~~Backlog The backlog for the Other Business Units segment at December 31, 1999 and 1998 was approximately $2,300,000 and $3,000,000, respectively.~~

Common to All Operating Segments

Although the Company has ~~three~~four reportable business segments, the following information applies to all operating segments of the Company.

Government Regulations

None of the Company's operating segments operate within highly regulated industries. However, air pollution control equipment manufactured by the Company, principally for hot-mix asphalt plants, must comply with certain performance standards promulgated by the federal Environmental Protection Agency under the Clean Air Act applicable to "new sources" or new plants. Management believes that the Company's products meet all material requirements of such regulations and of applicable state pollution standards and environmental protection laws.

In addition, due to the size and weight of certain equipment the Company manufactures, the Company and its customers sometimes confront conflicting state regulations on maximum weights transportable on highways and roads. This problem occurs most frequently in the movement of portable asphalt mixing plants. Also, some states have regulations governing the operation of asphalt mixing plants and most states have regulations relating to the accuracy of weights and measures, which affect some of the control systems manufactured by the Company.

Compliance with these government regulations has no material effect on capital expenditures, earnings, or the Company's competitive position within the market.

Employees

At December 31, ~~1999,~~2000, the Company and its subsidiaries employed ~~2,975 persons,~~3,301 individuals, of which ~~2,220~~2,402 were engaged in manufacturing operations, ~~239~~264 in engineering, including support staff, and ~~516~~635 in selling, administrative and management functions.

Telsmith, Inc. has a labor agreement, which covers approximately 190 employees, that expires on October 13, 2001. None of ~~the Company's~~Telsmith's other employees are covered by a collective bargaining agreement.

On ~~August 3, 1995, a union representation election was held at the~~February 1, 2001, Trencor ~~plant~~ and ~~a number of Trencor production and maintenance employees voted to be represented by~~ the United States Steelworkers of America, AFL-CIO, and ~~CLC. Trencor filed~~CLC entered into a ~~Petition for Review with the United States Court~~collective bargaining agreement that covers approximately 90 of Appeals for the Fifth Circuit and requested that the National Labor Relation Board's certification of the election be overturned due to alleged improper activity by the union. Trencor requested that a new representation election be held. Recently, in response to Trencor's appeal, the United States Court of Appeals for the Fifth Circuit returned the matter to the National Labor Relations Board and ordered that an evidentiary hearing on Trencor's complaints be held before an administrative law judge. That hearing was heldemployees. This agreement expires on January ~~15, 1998, with the administrative law judge rejecting~~31, 2004. None of Trencor's ~~claims. Consequently,~~other employees are covered by a collective bargaining agreement.

Other than Telsmith and Trencor, ~~appealed the decision to the National Labor Relations Board which upheld the administrative law judge's ruling. Management and union~~there are ~~now negotiating in an effort to reach agreement on a collective-bargaining agreement. Notwithstanding the current effort to negotiate an initial collective-bargaining effort at Trencor, the~~no other collective bargaining agreements.

The Company considers its employee relations to be good.

Manufacturing

The Company manufactures many of the component parts and related equipment for its products while several large components of their products are purchased "ready for use"; such items include engines, axles, tires and hydraulics. In many cases, the Company designs, engineers and manufactures custom component parts and equipment to meet the particular needs of individual customers. Manufacturing operations during ~~1999~~2000 took place at ~~nineteen~~twenty-one separate locations. The Company's manufacturing operations consist primarily of fabricating steel components and the assembly and testing of its products to ensure quality control standards have been achieved.

Seminars and Technical Bulletins

The Company periodically conducts technical and service seminars, which are primarily for contractors, employees and owners of asphalt mixing plants. In ~~1999,~~2000, approximately ~~385~~390 representatives of contractors and owners of hot-mix asphalt plants attended seminars held by the Company in Chattanooga, Tennessee. These seminars, which are taught by Company management and employees, cover a range of subjects including technological innovations in the hot-mix asphalt, aggregate processing, paving, milling, and recycle markets in which the Company manufactures products.

The Company also sponsors executive seminars for the management of the customers of Astec, Inc. Primarily the management of the Company teaches the seminars, but outside speakers are also utilized. In ~~1999,~~2000, approximately 70160 participants attended the executive seminars at the Company's state-of-the-art training center.

The Company sponsors Paving Professionals workshops at its training center for customers or potential customers of Roadtec, Inc. In ~~1999,~~2000, approximately 350 participants attended these classroom sessions. Actual equipment application experience was provided at the Roadtec facility. In addition, service training seminars were also held at the Roadtec facility for approximately ~~360~~450 customer service representatives. ~~During 1999,~~

Also during 2000, Telsmith had technical seminars for ~~78 English-speaking~~97 customer representatives ~~and another multi- lingual seminar with 26 attendees. Also during 1999, American Augers held directional drilling and auger boring seminars attended by approximately 40 customers.~~ at Telsmith's facility in Wisconsin.

In addition to seminars, the Company publishes a number of technical bulletins detailing various technological and business issues relating to the asphalt industry.

Patents and Trademarks

The Company seeks to obtain patents to protect the novel features of its products. The Company and its subsidiaries hold 9989 United States patents and 7669 foreign patents. There are 5350 United States and foreign patent applications pending.

The Company and its subsidiaries have approximately 7371 trademarks registered in the United States including logos for Astec, Telsmith, Roadtec and Trencor, and the names ASTEC, TELSMITH, HEATEC, ROADTEC, TRENCOR, KOLBERG, JCI and PIONEER. ~~Thirteen~~Eighteen trademarks are also registered in foreign countries, including Canada, Great Britain, Mexico, New Zealand and Indonesia. The Company has 2013 United States and foreign trademark applications pending.

The Company and its subsidiaries also license their technology to other manufacturers.

Engineering and Product Development

The Company dedicates substantial resources to engineering and product development. At December 31, ~~1999,~~2000, the Company and its subsidiaries had ~~239~~264 full-time individuals employed domestically in engineering and design capacities.

Seasonality and Backlog

During ~~1997, 1998 and~~ 1999, the Company's business volume became less ~~seasonal.~~ seasonal, due mainly to growth through acquisitions and internal growth in the paving segment during the early part of the year.During the first two quarters of 2000, the Company's business volume followed the normal seasonal trend with the second quarter being stronger than the first. The third and fourth quarters of 2000 were significantly impacted by the economic factors discussed in the following paragraphs and therefore did not follow the normal seasonal trend.

As of December 31, ~~1999,~~2000, the Company had a backlog for delivery of products at certain dates in the future of approximately ~~$94,830,000.~~$89,552,000. At December 31, ~~1998,~~1999, the total backlog, ~~updated~~restated to include ~~Superior Industries of Morris,~~Carlson Paving Products, Inc.~~, Breaker Technology~~ and Osborn Engineered Products SA (Pty) Ltd., ~~and American Augers, Inc.~~ was approximately ~~$99,460,000.~~ $96,572,000.

The Company's contracts reflected in the backlog are not, by their terms, subject to termination. Management believes that the Company is in substantial compliance with all manufacturing and delivery timetables.

Competition

Each business segment operates in adomestic markets that are highly competitive ~~domestic market in~~regarding price, service and product quality. While specific competitors are named within each business segment discussion, imports do not generally constitute significant competition for the Company in the United States. However, in international sales, the Company generally competes with foreign manufacturers that may have a local presence in the market the Company is attempting to penetrate.

In addition, asphalt and concrete are generally considered competitive products as a surface choice for new roads and highways. A portion of the interstate highway system is paved in concrete, but over 90% of all surfaced roads in the United States are paved with asphalt. Although concrete is used for some new road surfaces, asphalt is used for virtually all resurfacing, even the resurfacing of most concrete roads. Management does not believe that concrete, as a competitive surface choice, materially impacts the Company's business prospects.

Risk Factors Investors should carefully consider the risks described below before investing in Astec Industries, Inc. The risks and uncertainties described below are not the only ones facing the Company. Other risks

A decrease or uncertainties that we have not predicted or assessed may also adversely affect the Company. If any of the following risks occur, our earnings, financial condition or business could be materially harmed, and the trading price of our common stock could decline. A decreasedelay in government funding of highway construction and maintenance may ~~adversely affect~~cause our revenues and ~~operating~~ profits to decrease.

Many of our customers depend substantially on government funding of highway construction and maintenance and other infrastructure projects. Any decrease or delay in government funding of highway construction and maintenance and other infrastructure projects could cause our revenues and profits to decrease. Federal government funding of infrastructure projects is usually accomplished through bills, which establish funding over a multi-year period. The most recent spending bill was signed into law in June of 1998 and covers federal spending through 2003. ~~We cannot assure you that this~~This legislation ~~will not~~may be revised in future congressional sessions ~~that recent increases in~~and federal funding of infrastructure ~~will continue or that federal funding will not decrease~~may be decreased in the future, especially in the event of an economic recession. ~~Increases in fuel prices could reduce demand for fuel products, reducing the taxes collected into the Highway Trust Fund to be spent under TEA- 21.~~ In addition, Congress could pass legislation in future sessions, which would allow for the diversion of highway funds for other national purposes or could restrict funding of infrastructure projects unless states comply with certain federal policies. ~~Any~~

An increase in the price of oil or decrease ~~or delay~~ in ~~government funding~~the availability of ~~highway construction and maintenance and other infrastructure projects~~oil could reduce demand for our products.

A significant portion of our revenues relates to the sale of equipment that produces asphalt mix. A major component of asphalt is oil, and asphalt prices correlate with the price and availability of oil. A rise in the price of oil or a material decrease in the availability of oil would increase the cost of producing asphalt, which would likely decrease demand for asphalt, resulting in decreased demand for our products. This would likely cause our revenues and profits to decrease. In fact, rising gasoline, diesel fuel and liquid asphalt prices significantly increased the operating ~~profits.~~ and raw material costs of our contractor and aggregate producer customers, reducing their profits and causing delays in some of their capital equipment purchases. These delays, coupled with rising interest rates in 2000, and a general slowdown in the U.S. economy, decreased demand for several key categories of products. We expect the market conditions experienced during the second half of 2000 to persist for at least the next several quarters and to continue to negatively impact revenues and margins during 2001.

Downturns in the general economy or the commercial construction industry may adversely affect our revenues and operating ~~profits~~results.

General economic downturns, including any downturns in the commercial construction industry, could result in a material decrease in our revenues and operating results. Demand for many of our products, especially in the commercial construction industry, is cyclical. Sales of our products are sensitive to the ~~state~~states of the U.S., foreign and regional economies in general, and in particular, changes in commercial construction spending and government infrastructure spending. In addition, many of our costs are fixed and cannot be quickly reduced in response to decreased demand. We could face a downturn in the commercial construction industry based upon a number of factors, including: ~~-the level of~~

rising interest rates; ~~-availability~~
a decrease in the availability of funds for construction; ~~-labor~~
labor disputes in the construction industry causing work stoppages; ~~-energy~~
rising gas and fuel oil prices;
energy or building materials shortages; and ~~-inclement~~
inclement weather. ~~General economic downturns, including any downturns in the commercial construction industry, could result in a material decrease in our revenues and operating profits.~~

Acquisitions that we have made in the past and future acquisitions involve risks that could adversely affect our future financial ~~results~~ results.

We have completed ~~eight business and asset~~ten acquisitions since 1994 and plan to acquire additional businesses in the future. We ~~cannot guarantee that we will~~may be unable to achieve the benefits expected to be realized from our acquisitions. ~~Our future success~~In addition, we may incur additional costs and our management's attention may be ~~limited~~diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: ~~-we~~

we may have difficulty integrating the financial ~~administrative~~ and ~~operational~~administrative functions of acquired ~~businesses; -acquisitions~~businesses
acquisitions may divert management's attention from our existing ~~operations; -we~~operations
we may have difficulty in competing successfully for available acquisition candidates, completing future acquisitions or accurately estimating the financial effect of any businesses we ~~acquire; -acquisitions may not perform in line with our expectations which may adversely affect our financial results; -we~~acquire
we may have delays in realizing the benefits of our strategies for an acquired ~~business; -we~~business
we may not be able to retain key employees necessary to continue the operations of the acquired ~~business; -we~~business
acquisition costs may deplete significant cash amounts or may decrease our operating income
we may choose to acquire a company that is less profitable than we are or has lower profit margins than we ~~do; and -future~~do
future acquired companies may have unknown liabilities that could require us to spend significant amounts of additional ~~capital.~~ capital

Competition could reduce revenue from our products and services and cause us to lose market share.

We currently face strong competition in product performance, price and service. Some of our national competitors have greater financial, product development and marketing resources than we have. If competition in our industry intensifies or if our current competitors enhance their products or lower their prices for competing products, we may lose sales or be required to lower the prices we charge for our products. ~~We may also lose sales and be required to lower our prices as our competitors further develop and enhance their product lines.~~ This may reduce ~~revenues~~revenue from our products and ~~services.~~ services, lower our gross margins or cause us to lose market share. In fact, some key competitors slashed prices in 2000 in an effort to make sales as demand in our industry slowed. As a result, we experienced price erosion and lower gross margins.

We may face product liability claims or other liabilities due to the nature of our ~~business~~ business. If we are unable to obtain or maintain insurance or if our insurance does not cover liabilities, we may incur significant costs which could reduce our profitability.

We manufacture heavy machinery, ~~that~~which is used by our customers at excavation and construction sites and on ~~high- traffic~~high-traffic roads. Any defect in, or improper operation of, our equipment can result in personal injury and death, and damage to or destruction of property, any of which could cause product liability claims to be filed against us. The amount and scope of our insurance coverage may not be adequate to cover all losses or liabilities we may incur in the event of a product liability claim. We may not be able to maintain insurance of the types or at the levels we deem necessary or adequate or at rates we consider reasonable. Any liabilities not covered by insurance could reduce our profitability or have an adverse effect on our financial condition. We

If we become subject to increased governmental regulation, we may ~~be adversely affected by governmental regulations~~ incur significant costs.

Our hot-mix asphalt plants contain air pollution control equipment that must comply with performance standards promulgated by the Environmental Protection Agency. ~~We cannot assure you that these~~These performance standards ~~will not be increased~~may increase in the future. Changes in these requirements ~~or the adoption of new requirements applicable to our other products~~ could cause us to undertake costly measures to redesign or modify our equipment or otherwise adversely affect the manufacturing processes of our products. Such changes could have a material adverse effect on our operating results.

Also, due to the size and weight of some of the equipment that we manufacture, we often are required to comply with conflicting state regulations on the maximum weight transportable on highways and roads. In addition, some states regulate the operation of our component equipment, including asphalt mixing plants and soil remediation equipment, and most states regulate the accuracy of weights and measures, which affect some of the control systems that we manufacture. We ~~cannot assure you that we will not~~may incur material costs or liabilities in connection with the regulatory requirements applicable to our business. ~~An increase in~~

If we are unable to protect our proprietary technology from infringement or if our technology infringes technology owned by others, then the ~~price of oil or decrease in the availability of oil could reduce~~ demand for our products A significant portion of our revenues relate to the sale of equipment that produces asphalt mix. A major component of asphalt is oil, and asphalt prices correlate with the price and availability of oil. A material rise in the price of oilmay decrease or a material decrease in the availability of oil would increase the cost of producing asphalt, which would likely decrease demand for asphalt, resulting in decreased demand for our products. This could have a material adverse effect on our revenues and results of operations. We rely on proprietary technologies that we may be ~~unable~~forced to ~~protect from infringement or which may infringe upon technology owned by others~~ modify our products that could increase our costs .

We hold numerous patents covering technology and applications related to many of our products and systems, and numerous trademarks and trade names registered with the U.S. Patent and Trademark Office and in foreign countries. ~~We cannot assure you that the breadth or degree of protection of our~~Our existing or future patents or trademarks ~~will~~may not adequately protect us against infringements, ~~or that any~~and pending patent or trademark applications ~~will~~may not result in issued patents or trademarks. ~~We also cannot assure you that our~~Our patents, registered trademarks orand patent applications, if any, ~~will~~may not be upheld if challenged, ~~or that~~and competitors ~~will not~~may develop similar or superior methods or products outside the protection of our patents. This could reduce demand for our products and materially decrease our revenues. It is possible that our existing patents, trademarks or other rights may not be valid or that we may infringe upon existing or future patents, trademarks or proprietary rights of our competitors. In the event thatIf our products are deemed to infringe upon the patents or proprietary rights of others, we could be required to modify the design of our products, change the name of our products or obtain a license for the use of some of the technologies used in our products. We ~~also cannot assure you that we would~~may be ~~able~~unable to do any of the foregoing in a timely manner, upon acceptable terms and conditions, or at all, and the failure to do so could ~~have an adverse effect on our business and results of operations.~~ cause us to incur additional costs or lose revenues.

Our success depends on key members of our management and other ~~employees~~ employees.

Dr. J. Don Brock, our Chairman and President, is ~~important~~of significant importance to our business and operations. The loss of his services may adversely affect our business. In addition, our ability to attract and retain qualified engineers, skilled manufacturing personnel and other professionals, either through direct hiring, or acquisition of other businesses employing such professionals, will also be an important factor in determining our future success. ~~We face risks of~~

Difficulties in managing and expanding in international markets could divert management's attention from our existing operations.

In ~~1999,~~2000, international sales represented approximately ~~10%~~12% of our total sales. We plan to continue to increase our presence in international markets. In connection with any increase in international sales efforts, we will need to hire, train and retain qualified personnel in countries where language, cultural or regulatory barriers may exist. Any difficulties in expanding our international sales may divert management's attention from our existing operations. In addition, international revenues are subject to the following risks: ~~-fluctuating~~

fluctuating currency exchange rates which can reduce the profitability of foreign sales; ~~-the~~
the burden of complying with a wide variety of foreign laws and regulations; ~~-dependence~~
dependence on foreign sales agents; ~~-political~~
political and economic instability of governments; and ~~-the~~
the imposition of protective legislation such as import or export barriers.

Our quarterly operating results are likely to fluctuate, which may decrease our stock ~~price~~ price.

Our quarterly revenues, expenses and operating results have varied significantly in the past and are likely to vary significantly from quarter to quarter in the future. As a result, our operating results may fall below the expectations of securities analysts and investors in some quarters, which could result in a decrease in the market price of our common stock. The reasons our quarterly results may fluctuate include: ~~-general~~

general competitive and economic conditions; ~~-delays~~
delays in, or uneven timing in the delivery of, customer orders; ~~-the~~
the introduction of new products by us or our competitors; ~~-product~~
product supply shortages; and ~~-reduced~~
reduced demand due to adverse weather conditions.

Period to period comparisons of such items are not necessarily meaningful and, as a result, should not be relied on as indications of future performance.

Our Articles of Incorporation, Bylaws, Rights Agreement and Tennessee law may inhibit a takeover, which could delay or prevent a transaction in which shareholders might receive a premium over market price for their shares.

Our charter, bylaws and Tennessee law contain provisions that may delay, deter or inhibit a future acquisition, or an attempt to obtain control, of Astec. This could occur even if our shareholders are offered an attractive value for their shares or if a substantial number or even a majority of our shareholders believe the takeover is in their best interest. These provisions are intended to encourage any person interested in acquiring us or obtaining control of us to negotiate with and obtain the approval of our Board of Directors in connection with the transaction. Provisions that could delay, deter or inhibit a future acquisition, or an attempt to obtain control, of us include the following: -a

a staggered Board of Directors; ~~-requiring~~
requiring a two-thirds vote of the total number of shares issued and outstanding to remove directors other than for cause; ~~-requiring~~
requiring advanced notice of actions proposed by shareholders for consideration at shareholder meetings; ~~-limiting~~
limiting the right of shareholders to call a special meeting of shareholders; ~~-requiring~~
requiring that all shareholders entitled to vote on an action provide written consent in order for shareholders to act without holding a shareholders meeting; and ~~-the~~
the Tennessee Control Share Acquisition ~~Act, which restricts transactions with significant stockholders.~~ Act.

In addition, the rights of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of our preferred stock that may be issued in the future and that may be senior to the rights of holders of our common stock. On December 22, 1995, our Board of Directors approved a Shareholder Protection Rights Agreement, which provides for one preferred stock purchase right in respect of each share of our common stock. These rights become exercisable upon a person or group of affiliated persons acquiring 15% or more of our then-outstanding common stock by all persons other than an existing 15% shareholder. This Rights Agreement also could discourage bids for ~~your~~the shares of common stock at a premium and could have a material adverse effect on the market price of ~~your~~our shares.

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Annual Report on Form 10-K are forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. They include statements concerning: ~~-our~~

our growth and operating strategy; ~~-liquidity~~

liquidity and capital expenditures; ~~-pending~~

pending acquisitions; ~~-our~~

our financing plans; and ~~-industry~~

industry trends.

You can identify these statements by forward-looking words such as "expect," "believe," "goal," "plan," "intend," "estimate," "may," "will" and similar words. These ~~forward- looking~~forward-looking statements involve known and unknown risks, uncertainties and other factors, including those described in the "Risk Factors" section and elsewhere in this prospectus, that could cause our actual results to differ materially from those suggested by these forward-looking statements.

Item 2.PROPERTIES
The location, approximate square footage, acreage occupied and principal function of the properties owned or leased by the Company are set forth below: Approximate Approximate Location Square Footage Acreage Principal Function Chattanooga, Tennessee 424,000 59 Corporate and subsidiary offices, manufacturing - Astec Chattanooga, Tennessee --- 63 Storage yard - Astec Cleveland, Tennessee 28,400 3 Offices and manufacturing - Astec Rossville, Georgia 40,500 3 Manufacturing - Astec Chattanooga, Tennessee 84,200 5 Offices, manufacturing - Heatec Chattanooga, Tennessee 135,000 15 Offices, manufacturing - Roadtec Chattanooga, Tennessee 51,200 7 Manufacturing and parts warehouse - Roadtec Chattanooga, Tennessee 5,000 2 Offices - Astec Financial Services Mequon, Wisconsin 203,000 30 Offices and manufacturing - Telsmith Sterling, Illinois 32,000 8 Offices and manufacturing - PEP Grapevine, Texas 176,000 52 Offices, manufacturing - Trencor Lakeville, Massachusetts 800 --- Leased sales and service office - Telsmith Libertyhill, Texas 700 --- Leased sales and service office - Telsmith Eugene, Oregon 23,800 --- Leased offices, manufacturing - Johnson Crushers International (expires April 30, 2000) Eugene, Oregon 130,000 8 Offices and manufacturing - Johnson Crushers International Eugene, Oregon 25,600 --- Leased offices, manufacturing - Johnson Crushers International Odessa, Texas 4,100 1 Leased to a third party Inman, South Carolina 13,600 8 Leased to a third party until September 30, 2000 with option to buy Albuquerque, New Mexico 110,700 14 Offices and manufacturing - CEI (partially leased to a third party) Yankton, South Dakota 252,000 50 Offices and manufacturing - Kolberg-Pioneer West Salem, Ohio 60,000 29 Offices and manufacturing - American Augers Thornbury, Ontario, Canada 55,000 12 Offices and manufacturing - Breaker Technology Ltd. Riverside, California 18,000 --- Leased offices and manufacturing - Breaker Technology, Inc. Solon, Ohio 5,700 --- Leased offices and manufacturing - Breaker Technology, Inc. Morris, Minnesota 125,000 30 Offices and manufacturing - Superior Industries of Morris Covington, Georgia 11,000 6 Offices and manufacturing - Pavement Technology

Location	Approximate Square Footage	Approximate Acreage	Principal Function
Chattanooga, Tennessee	424,000	59	Corporate and subsidiary offices, manufacturing - Astec
Chattanooga, Tennessee	---	63	Storage yard - Astec
Cleveland, Tennessee	28,400	3	Offices and manufacturing - Astec
Rossville, Georgia	40,500	3	Manufacturing - Astec
Chattanooga, Tennessee	84,200	5	Offices, manufacturing - Heatec
Chattanooga, Tennessee	135,000	15	Offices, manufacturing - Roadtec
Chattanooga, Tennessee	51,200	7	Manufacturing and parts warehouse - Roadtec
Chattanooga, Tennessee	5,000	2	Offices - Astec Financial Services
Mequon, Wisconsin	203,000	30	Offices and manufacturing - Telsmith
Sterling, Illinois	32,000	8	Offices and manufacturing - PEP
Grapevine, Texas	176,000	52	Offices, manufacturing - Trencor
Lakeville, Massachusetts	800	---	Leased sales and service office - Telsmith
Libertyhill, Texas	700	---	Leased sales and service office - Telsmith
Eugene, Oregon	130,000	8	Offices and manufacturing - Johnson Crushers International
Eugene, Oregon	25,600	---	Leased offices, manufacturing - Johnson Crushers International
Odessa, Texas	4,100	1	Leased to a third party
Inman, South Carolina	13,600	8	Leased to a third party until September 30, 2000 with option to buy
Albuquerque, New Mexico	110,700	14	Offices and manufacturing - CEI (partially leased to a third party)
Yankton, South Dakota	252,000	50	Offices and manufacturing - Kolberg-Pioneer
West Salem, Ohio	100,000	29	Offices and manufacturing - American Augers
Thornbury, Ontario, Canada	55,000	12	Offices and manufacturing - Breaker Technology Ltd.
Riverside, California	18,000	---	Leased offices and manufacturing - Breaker Technology, Inc.
Solon, Ohio	5,700	---	Leased offices and manufacturing - Breaker Technology, Inc.
Morris, Minnesota	152,000	30	Offices and manufacturing - Superior
Covington, Georgia	11,000	6	Offices and manufacturing - Pavement Technology
Tacoma, Washington	41,000	5	Offices and manufacturing - Carlson Paving Products
Cape Town, South Africa	400	---	Leased sales office and warehouse - Osborn
Durban, South Africa	300	---	Leased sales office and warehouse - Osborn
Witbank, South Africa	500	---	Leased sales office and warehouse - Osborn
Welkom, South Africa	300	---	Leased sales office and warehouse -Osborn
Bethal, South Africa	---	11	Vacant lot - Osborn
Johannesburg, South Africa	156,100	18	Offices and manufacturing - Osborn

Management believes that each of the Company's facilities provides office or manufacturing space suitable for its current needs and considers the terms under which it leases facilities to be reasonable.

Item 3. 3.Legal Proceedings

Management has reviewed all claims and lawsuits and, upon the advice of counsel, has made provision for any estimable losses; however, the Company is unable to predict the ultimate outcome of the outstanding claims and lawsuits.

Item 4.Submission of Matters to a Vote of Security Holders

None.

Executive Officers of the Registrant

The name, title, ages and business experience of the executive officers of the Company are listed below.

J. Don Brock, Ph.D., P.E., has been President and a Director of the Company since its incorporation in 1972 and assumed the additional position of Chairman of the Board in 1975. He was the Treasurer of the Company from 1972 until 1994. From 1969 to 1972, Dr. Brock was President of the Asphalt Division of CMI Corporation. He earned his Ph.D. degree in mechanical engineering from the Georgia Institute of Technology. Dr. Brock and Thomas R. Campbell, President of Roadtec, are first cousins. He is ~~61.~~ 62.

Richard W. Bethea, Jr., became Executive Vice President on January 1, 2001 and has served as the Company's Secretary since 1997. He served as Vice President and Corporate Counsel ~~and Secretary during 1997.~~from 1997 to 2000. Mr. Bethea has been a practicing lawyer since 1978. He has an undergraduate degree in accounting and a law degree from the University of Georgia. Before joining the Company, Mr. Bethea was a member (stockholder) and partner with the law firm Stophel & Stophel, P. C., in Chattanooga, Tennessee. He has served as the Company's litigation counsel since 1983. He is ~~47.~~ 48.

F. McKamy Hall, a Certified Public Accountant, became Chief Financial Officer during 1998 and has served as Vice President and Treasurer since 1997. He has served as Corporate Controller of the Company since 1987. From 1985 to 1987, Mr. Hall was Vice President of Finance at Quadel Management Corporation, a company engaged ~~in real~~inreal estate ~~management.~~ management.Mr. Hall has an undergraduate degree in accounting and a Master of Business Administration degree from the University of Tennessee at Chattanooga. He is ~~57.~~ 58.

W. Norman Smith was appointed Group Vice ~~President- Asphalt~~President-Asphalt in 1998 and has served as the President of Astec, Inc. since 1994. He formerly served as President of Heatec, Inc. from 1977 to 1994. From 1972 to 1977, Mr. Smith was a Regional Sales Manager with the Company. From 1969 to 1972, Mr. Smith was an engineer with the Asphalt Division of CMI Corporation. Mr. Smith has also served as a director of the Company since 1972. He is ~~60.~~ 61.

Robert G. Stafford was appointed Group Vice ~~President- Aggregate~~President-Aggregate in 1998. Prior to that time he served as President of Telsmith, Inc. since 1991. Between 1987 and 1991, Mr. Stafford served as President of Telsmith, Inc., a subsidiary of Barber-Greene. From 1984 until the Company's acquisition of Barber-Greene in December 1986, Mr. Stafford was Vice President - Operations of Barber-Greene and General Manager of Telsmith. He became a director of the Company in March 1988. He is ~~61.~~ 62.

Thomas R. Campbell has served as President of Roadtec, Inc. since 1988. From 1981 to 1988 he served as Operations Manager of Roadtec. Mr. Campbell and J. Don Brock, President of the Company, are first cousins. He is ~~50.~~ 51.

James G. Mayhas served as President of Heatec, Inc. since 1994. From 1984 until 1994 he served as Vice President of Engineering of Astec, Inc. He is ~~55.~~ 56.

Albert E. Guth has been President of Astec Financial Services, Inc. since 1996. He served as Chief Financial Officer of the Company from 1987 through 1996, as Senior Vice President from 1984 to 1997, Secretary of the Company from 1972 to 1997, and Treasurer from 1994 to 1997. Mr. Guth, who has been a director since 1972, was ~~the~~ Vice President of the Company from 1972 until 1984. From 1969 to 1972, Mr. Guth was the Controller of the Asphalt Division of CMI Corporation. He is ~~60.~~ 61.

Richard A. Patek became President of Kolberg-Pioneer, Inc. in 1997. From 1995 to 1997, he served as Director of Materials of Telsmith, Inc. From 1992 to 1995, Mr. Patek was Director of Materials and Manufacturing of the former Milwaukee plant location. From 1978 to 1992, he held various manufacturing management positions at Telsmith. Mr. Patek is a graduate of Milwaukee School of Engineering. He is 43. Ronald B. DeDiemar, P.E., became President of Telsmith, Inc. on January 4, 1999. From 1996 to 1998 he served as President of a consulting company, Cal-Mar Technology, Inc. From 1978 to 1996 Mr. DeDiemar held various executive positions with Process Technology Holdings, Inc., most recently as President of the We-Kers and Tyler Divisions. From 1960 to 1978 he held various engineering and marketing positions at Telsmith, a division of Barber-Greene. He is 61. 44.

Robert R. ~~Hoitt has~~Hoitthas been the President of Johnson Crushers International, Inc., which was acquired by the Company on November 1, 1998, since ~~July~~ 1995. From ~~April~~ 1966 through ~~June~~ 1995 he served in various management positions, including General Manager and Vice President of Cedarapids, Inc. in its Eljay division. He is ~~56.~~ 57.

Frank D. Cargould became President of Breaker Technology Ltd. and Breaker Technology, Inc. on October 18, 1999. The Breaker Technology companies were formed on August 13, 1999 when the Company purchased substantially all of the assets of Teledyne Specialty Equipment's Construction and Mining business unit from Allegheny Teledyne Inc. From 1994 to ~~1995,~~1999, he was Director of Sales - East for Teledyne CM Products, Inc. He is ~~57.~~ 58.

Roger K. Eve has been President of American Augers, Inc., which was acquired by the Company on October 29, 1999, since 1991. He was also appointed President of Trencor, Inc., ~~on October 29,~~in 1999. From 1981 to 1991, Mr. Eve served as President of J.C.B., Inc. and J.C.B. Excavators Ltd. He is ~~54.~~ 55.

Neil E. Schmidgall has been President of Superior Industries of Morris, Inc., which was acquired by the Company on November 1, 1999, since 1972. Since 1992, Mr. Schmidgall has been a director and partner of First Federal Savings Bank of Morris. He is ~~54.~~ 55.

Timothy Gonigam was appointed President of Production Engineered Products, Inc. on October 1, 2000. From 1995 to 2000 Mr. Gonigam held the position of Sales Manager for Production Engineered Products, Inc. He is 38.

Lawrence Raymond has been President of Carlson Paving Products, Inc., which was acquired by the Company on October 2, 2000, since 1986. He is 48.

Alan L. Forsyth has been Managing Director of Osborn Engineered Products SA (Pty) Ltd. since 1999. The Company purchased the materials handling and processing products division of the Boart-Longyear Division of Anglo Operations Limited on September 29, 2000. From 1998 to 1999, Mr. Forsyth was Deputy Managing Director and served as Divisional Director from 1987 to 1998. He is 48.

PART II
Item 5. 5.Market for Registrant's Common Equity and Related Shareholder Matters
The Company's Common Stock is traded in the NASDAQ Stock Market under the symbol "ASTE." The Company has never paid any cash dividends on its Common Stock.
The high and low sales prices of the Company's Common Stock as reported on the NASDAQ Stock Market for each quarter during the last two fiscal years ~~(adjusted to give effect to a two-for-one stock split which took effect on January 18, 1999),~~ are as follows: ~~Price Per Share 1999 High Low 1st Quarter 35-5/16 20-7/~~

Price Per Share

2000HighLow

1st Quarter 28-1/16 16-3/4

2nd Quarter 29-7/8 22-13/16

3rd Quarter 25-1/2 22-13/16

4th Quarter 14-3/8 8-3/8

Price Per Share

1999HighLow

1st Quarter 35-5/16 20-7/8

2nd Quarter 43-3/4 29-3/4 3rd Quarter 41-5/8 20-1/4 4th Quarter 29-3/8 14-3/4 Price Per Share 1998 High Low 1st Quarter 13-1/8 7-9/16 2nd Quarter 18-1/8 12-5/8 3rd Quarter 21-3/8 15-11/16 4th Quarter 28-3/4 17-3/4 29-3/4

3rd Quarter 41-5/8 20-1/4

4th Quarter 29-3/8 14-3/4

As of March 15, ~~2000~~2001 there were approximately ~~4,200~~6,100 holders of the Company's Common Stock.

Item 6. 6.Selected Financial Data
Selected financial data appear on page A-1 of this Report.

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's discussion and analysis of financial condition and results of operations appears on pages A-2 to A-5 of this Report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information appearing under the caption "Market Risk and Risk Management Policies" appears on page A-5 of this report.

Item 8.Financial Statements and Supplementary Data
Financial statements and supplementary financial information appear on pages A-6 to A-23 of this Report.

Item 9.Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.

PART III

Item 10.Directors and Executive Officers of the Registrant
Information regarding the Company's directors included under the caption "Election of Directors - Certain Information Concerning Nominees and Directors" in the Company's definitive Proxy Statement to be delivered to the shareholders of the Company in connection with the Annual Meeting of Shareholders to be held on April ~~27, 2000,~~25, 2001, is incorporated herein by reference. Information regarding compliance with Section 16(a) of the Exchange Act is also included under Section 16(a) "Filing Requirements" in the Company's definitive Proxy Statement, which is incorporated herein by reference.

Item 11.Executive Compensation
Information included under the caption, "Executive Compensation" in the Company's definitive Proxy Statement to be delivered to the shareholders of the Company in connection with the Annual Meeting of Shareholders to be held on April ~~27, 2000,~~25, 2001, is incorporated herein by reference.

Item 12.Security Ownership of Certain Beneficial Owners and Management
Information included under the captions "Election of Directors - Certain Information Concerning Nominees and Directors," "Common Stock Ownership of Management" and "Common Stock Ownership of Certain Beneficial Owners" in the Company's definitive Proxy Statement to be delivered to the shareholders of the Company in connection with the Annual Meeting of Shareholders to be held on April ~~27, 2000,~~25, 2001, is incorporated herein by reference.

Item 13.Certain Relationships and Related Transactions
On December 14, 1998, Edna F. Brock, the mother of Dr. J. Don Brock, Chairman of the Board and President of the Company, loaned $85,000 to the Company to supplement its working capital revolving credit facility. The Company executed a demand note payable to Mrs. Brock in connection with this loan bearing interest at a rate equal to that paid to Bank One N.A. under the Company's unsecured revolving line of credit. At the time Mrs. Brock loaned these funds to the Company, the Company's outstanding balance under its ~~$22,000,000~~$70,000,000 revolving credit facility was ~~$10,000,000.~~approximately $26,000,000. The Company is making ~~monthly~~quarterly interest payments to Mrs. Brock. In June of 2000, Mrs. Brock loaned the Company an additional $29,670, which bears the same interest rate as the previous note. At the time these funds were loaned to the Company, the Company's outstanding balance under its $150,000,000 revolving credit facility was $95,325,000.

PART IV

Item 14.Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) The following financial statements and other information appear in Appendix "A" to this Report and are filed as a part hereof:
. Selected Consolidated Financial Data.
. Management's Discussion and Analysis of Financial Condition and Results of Operations.
. Report of Independent Auditors.
. Consolidated Balance Sheets at December 31, ~~1999~~2000 and ~~1998.~~ 1999.
. Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 ~~1998~~ and ~~1997.~~ 1998.
. Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998.
. Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2000, 1999 ~~1998~~ and ~~1997.~~ 1998.
. ~~Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997. .~~ Notes to Consolidated Financial Statements.

(a)(2) Other than as described below, Financial Statement Schedules are not filed with this Report because the Schedules are either inapplicable or the required information is presented in the Financial Statements or Notes thereto. The following Schedules appear in Appendix "A" to this Report and are filed as a part hereof: ~~. Consent of Independent Auditors. .~~

Schedule II - Valuation and Qualifying Accounts.

(a)(3) The following Exhibits* are incorporated by reference into or are filed with this Report: 3.1 Restated Charter of the Company (incorporated by reference from the Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33-5348). 3.2 Articles of Amendment to the Restated Charter of the Company, effective September 12, 1988 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 3.3 Articles of Amendment to the Restated Charter of the Company, effective June 8, 1989 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 3.4 Articles of Amendment to the Restated Charter of the Company, effective January 15, 1999 (incorporated by reference from the Company Quarterly Report on Form 10-Q for the period ended June 30, 1999, File No. 0-14714). 3.5 Amended and Restated Bylaws of the Company, adopted March 14, 1990 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 4.1 Trust Indenture between City of Mequon and Firstar Trust Company, as Trustee, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 4.2 Indenture of Trust, dated April 1, 1994, by and between Grapevine Industrial Development Corporation and Bank One, Texas, NA, as Trustee (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 4.3 Shareholder Protection Rights Agreement, dated December 22, 1995 (incorporated by reference from the Company's Current Report on Form 8-K dated December 22, 1995, File No. 0-14714). 10.1 Loan Agreement between City of Mequon, Wisconsin and Telsmith, Inc. dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.2 Credit Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.3 Security Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.4 Mortgage and Security Agreement and Fixture Financing Statement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.5 Guarantee of Astec Industries, Inc. in favor of M&I Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.6 Loan Agreement dated as of April 1, 1994, between Grapevine Industrial Development Corporation and Trencor, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.7 Letter of Credit Agreement, dated April 1, 1994, between First Chicago NBD and Trencor, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.8 Guaranty Agreement, dated April 1, 1994, between Astec Industries, Inc. and Bank One, Texas, NA, as Trustee (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.9 Astec Guaranty, dated April 29, 1994, of debt of Trencor, Inc. in favor of First Chicago NBD (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.10

3.1	Restated Charter of the Company (incorporated by reference from the Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33- 5348).

3.2	Articles of Amendment to the Restated Charter of the Company, effective September 12, 1988 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714).

3.3	Articles of Amendment to the Restated Charter of the Company, effective June 8, 1989 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714).

3.4	Articles of Amendment to the Restated Charter of the Company, effective January 15, 1999 (incorporated by reference from the Company Quarterly Report on Form 10-Q for the period ended June 30, 1999, File No. 0-14714).

3.5	Amended and Restated Bylaws of the Company, adopted March 14, 1990 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714).

4.1	Trust Indenture between City of Mequon and Firstar Trust Company, as Trustee, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).

4.2	Indenture of Trust, dated April 1, 1994, by and between Grapevine Industrial Development Corporation and Bank One, Texas, NA, as Trustee (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).

4.3	Shareholder Protection Rights Agreement, dated December 22, 1995 (incorporated by reference from the Company's Current Report on Form 8-K dated December 22, 1995, File No. 0-14714).

10.1	Loan Agreement between City of Mequon, Wisconsin and Telsmith, Inc. dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).

10.2	Credit Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).

10.3	Security Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).

10.4	Mortgage and Security Agreement and Fixture Financing Statement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).

10.5	Guarantee of Astec Industries, Inc. in favor of M&I Ilsley Bank, dated as of February 1, 1994 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).

10.6	Loan Agreement dated as of April 1, 1994, between Grapevine Industrial Development Corporation and Trencor, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).

10.7	Letter of Credit Agreement, dated April 1, 1994, between First Chicago NBD and Trencor, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).

10.8	Guaranty Agreement, dated April 1, 1994, between Astec Industries, Inc. and Bank One, Texas, NA, as Trustee (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).

10.9	Astec Guaranty, dated April 29, 1994, of debt of Trencor, Inc. in favor of First Chicago NBD (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).

10.10	Supplemental Executive Retirement Plan, dated February 1, 1996 to be effective as of January 1, 1995 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 0-14714). *

10.11	Trust under Astec Industries, Inc. Supplemental Retirement Plan, dated January 1, 1996 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 0-14714). *

10.12	Astec Industries, Inc. 1998 Long-Term Incentive Plan (incorporated by reference from Appendix A of the Company's Proxy Statement for the Annual Meeting of Shareholders held on April 23, 1998). *

10.13	Astec Industries, Inc. Executive Officer Annual Bonus Equity Election Plan (incorporated by reference from Appendix B of the Company's Proxy Statement for the Annual Meeting of Shareholders held on April 23, 1998). *

10.14	Astec Industries, Inc. Non-Employee Directors' Stock Incentive Plan incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, File No. 0-14714). *

10.15	Second Amended and Restated Credit Agreement dated November 27, 1997 between the Company, Astec Financial Services, Inc. and First Chicago NBD (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997, File No. 0-14714).

10.16	First Amendment, dated October 30, 1998, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, File No. 0-14714).

10.17	Second Amendment, dated June 3, 1999, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999, File No. 0-14714).

10.18	Third Amendment, dated August 11, 1999, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999, File No. 0-14714).

10.19	Revolving Line of Credit Note dated December 2, 1997 between Kolberg-Pioneer, Inc. and Astec Holdings, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997, File No. 0-14714).

10.20	Guaranty Joinder Agreement dated December 1997 between Kolberg-Pioneer, Inc. and Astec Holdings, Inc. in favor of the First National Bank of Chicago. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997, File No. 0-14714).

10.21	Loan Agreement between the City of Yankton, South Dakota and Kolberg Pioneer, Inc. dated August 11, 1998 for variable/fixed rate demand Industrial Development Revenue Bonds, Series 1998 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714).

10.22	Letter of Credit Agreement dated August 12, 1998 between the First National Bank of Chicago and Astec Industries, Inc., Astec Financial Services, Inc. and Kolberg-Pioneer, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714).

10.23	Promissory Note dated December 14, 1998 between Astec Industries, Inc. and Edna F. Brock (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714).

10.24	Waiver for December 31, 1998, dated March 9, 1999, with respect to the Second Amended and Restated Credit Agreement, dated November 24, 1997 by and between the Company and The First National Bank of Chicago (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714).

10.25	Guaranty of Astec Industries, Inc., dated February 23, 1998, of debt of Pavement Technology, Inc. in favor of Tucker Federal Bank (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714).

10.26	Purchase Agreement dated October 30, 1998, effective October 31, 1998, between Astec Industries, Inc. and Johnson Crushers International, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714).
10.27	Term Loan in the amount of $15,000,000 dated August 13, 1999 by and between Astec Industries, Inc. and Bank One, NA (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999, File No. 0-14714).

10.28	Asset Purchase and Sale Agreement, dated August 13, 1999, by and among Teledyne Industries Canada Limited, Teledyne CM Products Inc. and Astec Industries, Inc. (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999, File No. 0-14714).

10.29	Stock Purchase Agreement, dated October 31, 1999, by and among American Augers, Inc. and Its Shareholders and Astec Industries, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, File No. 0-14714).

10.30	Stock Purchase Agreement, dated November 1, 1999, by and among SIMCO, LLC and the Superior Industries of Morris, Inc. Employee Stock Ownership Plan and Astec Industries, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, File No. 0-14714).

10.31	Amended and Restated Master Note in the amount of $15,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, File No. 0-14714).

10.32	Amended and Restated Master Note in the amount of $20,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, File No. 0-14714).

10.33	Sale of Business Agreement, dated September 29, 2000, between Anglo Operations Limited and High Mast Properties 18 Limited and Astec Industries, Inc. for the purchase of the materials handling and processing products division of the Boart-Longyear Division of Anglo Operations Limited.

10.34	Acquisition Agreement, dated October 2, 2000, by and among Larry Raymond, Carlson Paving Products, Inc. and Astec Industries, Inc.

10.35	Collective Bargaining Agreement, dated February 1, 2001, by and between Trencor, Inc. and the United States Steelworkers of America, AFL-CIO and CLC.

22	Subsidiaries of the Registrant

23	Consent of Independent Auditors

*	Management contract or compensatory plan or arrangement.
(b)	No reports on Form 8-K were filed in the fourth quarter.
(c)	The Exhibits to this Report are listed under Item 14(a)(3) above.
(d)	The Financial Statement Schedules to this Report are listed under Item 14(a)(2) above.

* 10.11 Trust under Astec Industries, Inc. Supplemental Retirement Plan, dated January 1, 1996 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 0-14714). * 10.12 Astec Industries, Inc. 1998 Long-Term Incentive Plan (incorporated by reference from Appendix A of the Company's Proxy Statement for the Annual Meeting of Shareholders held on April 23, 1998). * 10.13 Astec Industries, Inc. Executive Officer Annual Bonus Equity Election Plan (incorporated by reference from Appendix B of the Company's Proxy Statement for the Annual Meeting of Shareholders held on April 23, 1998). * 10.14 Astec Industries, Inc. Non-Employee Directors' Stock Incentive Plan. * 10.15 Second Amended and Restated Credit Agreement dated November 27, 1997 between the Company, Astec Financial Services, Inc. and First Chicago NBD (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997, File No. 0-14714). 10.16 First Amendment, dated October 30, 1998, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago. 10.17 Second Amendment, dated June 3, 1999, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999, File No. 0-14714). 10.18 Third Amendment, dated August 11, 1999, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999, File No. 0-14714). 10.19 Revolving Line of Credit Note dated December 2, 1997 between Kolberg- Pioneer, Inc. and Astec Holdings, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997, File No. 0-14714). 10.20 Guaranty Joinder Agreement dated December 1997 between Kolberg- Pioneer, Inc. and Astec Holdings, Inc. in favor of the First National Bank of Chicago. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997, File No. 0-14714). 10.21 Loan Agreement between the City of Yankton, South Dakota and Kolberg Pioneer, Inc. dated August 11, 1998 for variable/fixed rate demand Industrial Development Revenue Bonds, Series 1998 (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714). 10.22 Letter of Credit Agreement dated August 12, 1998 between the First National Bank of Chicago and Astec Industries, Inc., Astec Financial Services, Inc. and Kolberg-Pioneer, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714). 10.23 Promissory Note dated December 14, 1998 between Astec Industries, Inc. and Edna F. Brock (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714). 10.24 Waiver for December 31, 1998, dated March 9, 1999, with respect to the Second Amended and Restated Credit Agreement, dated November 24, 1997 by and between the Company and The First National Bank of Chicago (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714). 10.25 Guaranty of Astec Industries, Inc., dated February 23, 1998, of debt of Pavement Technology, Inc. in favor of Tucker Federal Bank (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714). 10.26 Purchase Agreement dated October 30, 1998, effective October 31, 1998, between Astec Industries, Inc. and Johnson Crushers International, Inc. (incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1998, File No. 0-14714). 10.27 Term Loan in the amount of $15,000,000 dated August 13, 1999 by and between Astec Industries, Inc. and Bank One, NA (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999, File No. 0-14714). 10.28 Asset Purchase and Sale Agreement, dated August 13, 1999, by and among Teledyne Industries Canada Limited, Teledyne CM Products Inc. and Astec Industries, Inc. (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1999, File No. 0-14714). 10.29 Stock Purchase Agreement, dated October 31, 1999, by and among American Augers, Inc. and Its Shareholders and Astec Industries, Inc. 10.30 Stock Purchase Agreement, dated November 1, 1999, by and among SIMCO, LLC and the Superior Industries of Morris, Inc. Employee Stock Ownership Plan and Astec Industries, Inc. 10.31 Amended and Restated Master Note in the amount of $15,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA. 10.32 Amended and Restated Master Note in the amount of $20,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA. 22 Subsidiaries of the Registrant 23 Consent of Independent Auditors * Management contract or compensatory plan or arrangement. (b) No reports on Form 8-K were filed in the fourth quarter. (c) The Exhibits to this Report are listed under Item 14(a)(3) above. (d) The Financial Statement Schedules to this Report are listed under Item 14(a)(2) above. *The Exhibits are numbered in accordance with Item 601 of Regulation S-K. Inapplicable Exhibits are not included in the list. APPENDIX "A" to ANNUAL REPORT ON FORM 10-K ITEMS 8 and 14(a)(1) and (2), (c) and (d) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES ASTEC INDUSTRIES, INC. Contents Page Selected Consolidated Financial Data A-1 Management's Discussion and Analysis of Financial Condition and Results of Operations A-2 Consolidated Balance Sheets at December 31, 1999 and 1998 A-6 Consolidated Statements of Income for the Years Ended December 31, 1999, 1998 and 1997 A-7 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1999, 1998 and 1997 A-8 Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997 A-9 Notes to Consolidated Financial Statements A-11 Report of Independent Auditors A-24 Schedule II - Valuation and Qualifying Accounts A-25 APPENDIX "A"

APPENDIX "A"
To
ANNUAL REPORT ON FORM 10-K
ITEMS 8 and 14(a)(1) and (2), (c) and (d)
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
ASTEC INDUSTRIES, INC.
Contents	Page
Selected Consolidated Financial Data	A-1
Management's Discussion and Analysis of Financial Condition and Results of Operations	A-2
Consolidated Balance Sheets at December 31, 2000 and 1999	A-6
Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998	A-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998	A-8
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2000, 1999 and 1998	A-10
Notes to Consolidated Financial Statements	A-11
Report of Independent Auditors	A-24
Schedule II - Valuation and Qualifying Accounts	A-25

SELECTED CONSOLIDATED FINANCIAL DATA ~~(in~~
(in thousands, except as noted *) Consolidated Income Statement Data 1999 1998 1997 1996 1995 Net sales $449,627 $363,945 $265,365 $221,413 $242,601 Selling, general and administrative expenses 56,280 46,796 36,125 35,346 35,025 Research and development 5,356 4,681 3,707 5,868 5,128 Loss on abandonment of foreign subsidiary 7,037 Income from operations 52,521 40,427 24,661 8,051 2,566 Interest expense 4,253 2,709 2,398 1,656 2,125 Net income 31,712 24,436 13,809 4,345 4,560 Earnings per common share*(1) Basic 1.66 1.30 .72 .22 .23 Diluted 1.59 1.26 .71 .21 .23 Consolidated Balance Sheet Data Working capital $127,569 $81,865 $71,459 $69,884 $58,015 Total assets 355,437 248,320 192,243 167,853 154,356 Total short-term debt 596 646 500 2,051 774 Long-term debt, less current maturities 102,685 47,220 35,230 30,497 17,150 Shareholders' equity 167,258 132,658 105,612 99,393 95,901 Book value per common share at year-end*(1) 8.75 7.44 6.12 5.37 4.75 Quarterly Financial Highlights (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $112,478 $119,958 $106,886 $110,305 Gross profit 28,009 33,839 27,779 24,549 Net income 8,567 11,155 7,915 4,075 Earnings per common share*(1) Basic .45 .59 .41 .21 Diluted .43 .55 .40 .21 Net sales $88,164 $108,124 $88,798 $78,860 Gross profit 22,304 25,826 22,175 21,599 Net income 5,559 7,389 5,779 5,709 Earnings per common share*(1) Basic .30 .39 .31 .30 Diluted .29 .38 .30 .29 Common Stock Price*(1) 1999 High 35-5/16 43-3/4 41-5/8 29-3/8 Low 20-7/8 29-3/4 20-1/4 14-3/4 1998 High 13-1/8 18-1/8 21-3/8 28-3/4 Low 7-9/16 12-5/8 15-11/16 17-3/4 noted*)

	2000	1999	1998	1997	1996
Consolidated Income Statement Data
Net sales	$ 520,688	$ 449,627	$ 363,945	$ 265,365	$ 221,413
Selling, general and
administrative expenses	69,011	56,280	46,796	36,125	35,346
Research and development	6,726	5,356	4,681	3,707	5,868
Income from operations	47,138	52,521	40,427	24,661	8,051
Interest expense	8,652	4,253	2,709	2,398	1,656
Net income	26,281	31,712	24,436	13,809	4,345
Earnings per common share*(1)
Basic	1.37	1.66	1.30	.72	.22
Diluted	1.33	1.59	1.26	.71	.21

Consolidated Balance Sheet Data
Working capital	$ 155,736	$ 127,569	$ 81,865	$ 71,459	$ 69,884
Total assets	402,306	355,437	248,320	192,243	167,853
Total short-term debt	1,986	596	646	500	2,051
Long-term debt, less current maturities	118,511	102,685	47,220	35,230	30,497
Shareholders' equity	194,623	167,258	132,658	105,612	99,393
Book value per common
share at year-end*(1)	10.07	8.75	7.44	6.12	5.37

Quarterly Financial Highlights		First	Second	Third	Fourth
(Unaudited)		Quarter	Quarter	Quarter	Quarter

2000	Net sales	$ 140,872	$ 159,726	$ 103,036	$ 117,054
	Gross profit	33,758	40,858	24,608	23,651
	Net income	8,627	12,719	3,407	1,528
	Earnings per common share*
	Basic	.45	.66	.18	.08
	Diluted	.44	.64	.17	.08

1999	Net sales	$ 112,478	$ 119,958	$ 106,886	$ 110,305
	Gross profit	28,009	33,839	27,779	24,549
	Net income	8,567	11,155	7,915	4,075
	Earnings per common share*
	Basic	.45	.59	.41	.21
	Diluted	.43	.55	.40	.21

Common Stock Price*
2000 High		$ 28.06	$ 29.88	$ 25.50	$ 14.38
2000 Low		16.75	22.81	9.94	8.38

1999 High		35.31	43.75	41.63	29.38
1999 Low		20.88	29.75	20.25	14.75

The Company's common stock is traded on the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market under the symbol ASTE. Prices shown are the high and low bid prices as announced by NASDAQ. The Company has never paid any dividends on its common stock.

The number of common shareholders is approximately ~~4,200. (1)~~ 6,100.

Restated for 1998 and prior to retroactively reflect the two-for-one stock split effected in the form of a dividend on January 18, 1999. ~~Page A-1~~

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations; 2000 vs. 1999

Net income for 2000 was $26,281,000, or $1.33 per diluted share, a decrease of $5,431,000, or 17.1%, compared to net income of $31,712,000, or $1.59 per diluted share in 1999. The weighted average number of common shares outstanding at December 31, 2000 was 19,721,288 compared to 19,930,376 at December 31, 1999.

Net sales for 2000 were $520,688,000, an increase of $71,061,000, or 15.8%, compared to 1999. The 2000 domestic sales increased from $403,832,000 to $464,313,000, or $60,481,000, a 15.0% increase. Domestic sales are primarily from equipment purchases made by customers for use in construction for privately funded infrastructure development and public sector spending on infrastructure development. Public sector spending at the federal, state and local levels is driven in large part by federal spending under the six-year federal-aid highway program, the Transportation Equity Act for the 21st Century ("TEA-21") enacted in June 1998. TEA-21 authorized the appropriation of $217 billion in federal aid for road, highway and bridge construction, repair and improvement and other federal highway and transit projects for federal fiscal years October 1, 1998 through September 30, 2003. During 2000, domestic sales were negatively impacted by rising interest rates, volatile and rising gas and oil prices, the beginning stages of a general economic slowdown and delays in public sector highway projects. Most of this negative impact was felt in the second half of the year. The increase in total sales is attributed primarily to 1999 acquisitions accounting for sales of $90,800,000 (with a full year of operations in 2000), offset by a $19,739,000, or 4.3% decline in internally generated sales.

International sales in 2000 increased $17,704,000, or 38.7%, to approximately $63,499,000 compared to 1999 international sales of $45,795,000. Increased sales in Central America, Africa and Australia comprise most of the increase over 1999. Asphalt plant equipment and underground equipment accounted for the increase in Australia. The increase in Africa and Central America was due to aggregate equipment sales.

Parts sales increased from $73,946,000 to $83,960,000, or 13.5%.

Gross profit was 23.6% in 2000 compared to 25.4% in 1999. Gross profit declines in asphalt and aggregate equipment accounted for most of the reduction. The erosion in both cases resulted from competitive price pressure and a lack of utilization of capacity primarily due to lower sales volumes.

In 2000, selling, general and administrative expenses increased to 13.3% of net sales from 12.5% of net sales in 1999. The primary reason for the dollar increase in SG&A is related to acquisitions in 1999 and 2000. The percentage is impacted by lower than expected sales while being staffed and equipped for much larger volume.

Research and development expenses increased by $1,370,000, or 25.7%, from $5,356,000 in 1999 to $6,726,000 in 2000. Excluding 1999 and 2000 acquisitions, research and development increased 9.7% as the Company continued developing innovative products.

Interest expense for 2000 increased to 1.7% of net sales from 0.9% of sales for 1999. The increase in dollars related primarily to borrowings required for acquisitions in 1999 and 2000 plus increased working capital.

Income tax expense for 2000 was $16,441,000 compared to $19,819,000 for 1999, or 38.5% of pre-tax income for both years.

The backlog at December 31, 2000 was $89,552,000 compared to $96,572,000 at December 31, 1999 (restated for acquisitions). The backlog for asphalt plant orders decreased significantly from 1999, while aggregate orders, primarily related to South Africa and aggregate systems business, increased from the prior year. The impact of TEA-21 has been felt incrementally in 1999 and 2000, but the full impact of the spending of appropriated funds may not be felt until 2001 or after. In this regard, the American Road and Transportation Builders Association's economists project highway construction growth from 9.0% to 10.8% in 2001. The Company expects the extremely challenging market and economic conditions that were prevalent during the second half of 2000 to persist for at least the next several quarters. The Company is unable to determine whether this backlog effect was experienced by the industry as a whole. We are unable to assess the amount of the impact attributable to the TEA-21 legislation which became effective in October 1998. While the backlog reflects a decline,
management believes that this is reflective of the current economic conditions in the United States and the current hesitancy of Astec customers to commit to capital equipment purchases. The hesitancy is a result of our customers awaiting improvement of economic conditions or the awarding of new contracts for jobs. The total spending on highway construction declined slightly in 2000 but is expected to rise slightly in 2001. The number of contracts put in place in 2000 declined, but the average size increased. Some contracts are multi-year contracts.

Asphalt Group: This segment had a decrease in sales of $4,703,000, or 2.4%, and a segment profit decrease of $7,452,000, or 29.3%, compared to 1999. The primary reasons for the decrease in sales are instability of gas and oil prices, delay of public sector construction projects and increasing interest rates. Competitive price pressure and lack of utilization of capacity significantly impacted gross profits and segment income.

Aggregate and Mining Group: The 2000 sales for this segment increased $35,731,000, or 23.0%, over 1999, primarily due to the acquisitions of Superior Industries of Morris, Inc. and Breaker Technology Ltd. in late 1999 and Osborn Engineered Products SA (Pty) Ltd. in late 2000. Segment profit increased $168,000, or 0.9% over 1999. Competitive price pressure and lack of utilization of capacity impacted gross profits and segment income.

Mobile Asphalt Paving Group: The 2000 sales in this segment decreased $4,107,000, or 6.1% versus 1999. Segment profit also decreased $2,856,000, or 25.5%. The decrease in sales was present in all product lines. There was some competitive price pressure, but there was less gross profit percent impact than in other segments.

Underground Group: The 2000 sales in this segment increased by $44,238,000, or 140.4%, over 1999, primarily from sales by American Augers, Inc., a November 1, 1999 acquisition, which were included for the full year of 2000. The directional drilling business of American Augers grew in connection with the optical fiber cable and other utility industries. The addition of American Augers' volume required reporting of this new segment under the provisions of FAS 131.

Results of Operations; 1999 vs. 1998

Net income for 1999 was $31,712,000, or $1.59 per diluted share, ~~diluted~~an increase of $7,226,000, or 29.8%, compared to net income of $24,436,000, or $1.26 per share diluted, in 1998, restated to reflect the two-for-one stock split that took effect on January 18, 1999.

Net sales for 1999 were $449,627,000, an increase of $85,682,000, or 23.5%, compared to 1998. The 1999 domestic sales increased from $294,430,000 to $403,832,000, or $109,402,000, for a 37.2% increase from 1998. The increase in domestic sales is attributed to increased sales in all product lines. A strong domestic economy and spending under the new six-year highway bill, TEA-21, which authorizes $217 billion in federal investment through 2003 for road repair, improvement and other federal highway and transit projects are the primary reasons for the increase in domestic sales. Approximately 46% of the sales growth was generated internally, while 54% was from acquisitions.

International sales for 1999 decreased $23,720,000, or 34.1%, to approximately $45,795,000 compared to 1998 international sales of $69,515,000. Sales in South America decreased 85% in 1999 from 1998 levels, with approximately 53% of the decrease attributable to a decrease in sales of trenching equipment and the remaining decrease split between decreased demand for asphalt equipment and aggregate processing equipment. International sales represented 10.2% and 19.1% of net sales in 1999 and 1998, respectively.

Gross profit ~~margin~~ was 25.4% in 1999 compared to 25.3% in 1998. Through September 30, 1999, the gross profit had improved to 26.4%; however, in the fourth quarter the ~~margin~~gross profit was impacted by costs relating to the move of one aggregate company to a new facility, by the costs of interruptions and delays associated with a computer installation in another company and the loss of international sales.

In 1999, selling, general and administrative expenses decreased to 12.5% of net sales from 12.9% of net sales in 1998. The volume increase in net sales is the primary factor responsible for the decreased percentage. Approximately 58% of the increase in dollars related to expenses of acquired operations.

Although research and development expenses increased $675,000, the percentage of net sales decreased to 1.2% in 1999 from 1.3% in the prior year. The increase in sales volume is the primary reason for the reduction in the percentage.

Interest expense for 1999 increased to 0.9% of sales from 0.7% of sales for 1998. The increase in dollars related primarily to borrowings required for acquisitions.

Income tax expense for 1999 was $19,819,000, or 38.5% of ~~pre- tax~~pre-tax income, compared to $15,126,000 for 1998, or 38.2% of ~~pre- tax~~pre-tax income. The increase is the result of the Company's decreased international sales and the mix of revenue by state.

The backlog at December 31, 1999 was $94,827,000 compared to $99,461,000 at December 31, 1998 (restated for acquisitions). The backlog contains a significant increase for asphalt plant orders and a reduction for aggregate orders. The impact of TEA-21 ~~has been~~was felt incrementally in 1998 and 1999, but the full impact of the initial funds may not be felt until 2000 or 2001. The Company is unable to determine whether this backlog mixture was experienced by the industry as a whole. While the expectation of future business growth by our domestic customers has had a positive impact on our backlog, we are unable to assess the amount of the increase attributable to the TEA-21 legislation which became effective in October 1998. While the domestic backlog reflects a positive development (increased from $88,335,000 to $90,936,000 at December 31, 1999 and 1998, respectively), management cannot confirm that this increase represents a trend. International sales tend to be stronger in the third and fourth quarters, offsetting normal slowing of domestic sales in those quarters. Page A-2 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Hot-mix 1999.

Asphalt ~~Plant and Related Heat Transfer Equipment Segment:~~Group: This segment had increases in sales of $29,291,000, or 17.9%, and segment profit of $3,884,000, or 18.0%, over 1998. The primary reason for the increase in sales was a strong economy accompanied by the impact of TEA-21. International sales in this segment decreased $9,490,000, or 35.3%, versus 1998.

Aggregate ~~Processing Segment:~~and Mining Group: The 1999 sales in this segment increased $42,494,000, or 37.7%, over 1998, primarily due to the acquisition of Johnson Crushers International, Inc., Superior Industries of Morris, Inc. and Breaker Technology Ltd. Segment profit increased $5,237,000, or 40.4% over 1998. International sales in this segment decreased $1,508,000, or 8.2% versus 1998.

Mobile ~~Construction Equipment Segment:~~Asphalt Paving Group: The 1999 sales in this segment increased $7,050,000, or 11.7% over 1998. Segment profit also increased $1,310,000, or 13.2%. The primary increase in sales resulted from an increase in sales of our patented material transfer vehicle, the Shuttle Buggy. International sales in this segment decreased $2,850,000, or 36.5% versus 1998. Results of Operations; 1998 vs. 1997 Net income for 1998 was $24,436,000, or $1.26 per share diluted compared to net income of $13,809,000, or $0.71 per share diluted in 1997, restated to reflect the two-for-one stock split that took effect on January 18, 1999. Net sales for 1998 were $363,945,000, an increase of $98,580,000, or 37.1%, compared to 1997. The 1998 domestic sales increased from $206,463,000 to $294,430,000, or $87,967,000, for a 42.6% increase from 1997. The increase in domestic sales is principally attributed to a strong domestic economy and expectation of the initiation of spending under TEA-21. Approximately 59% of the sales growth was generated internally, while 41% was from acquisitions. International sales for 1998 increased $10,613,000, or 18.0%, to approximately $69,515,000 compared to 1997 international sales of $58,902,000. Due to the economic instability of some regions where the Company had done business in the past, the Company redirected sales efforts in 1998 toward countries that were financially capable of purchasing its equipment. As a result, the $9,183,000 decrease in sales in Southeast Asia was more than offset by increased sales of asphalt plants and trenching equipment, primarily in Central and South America and Canada. International sales represented 19.1% and 22.2% of total sales in 1998 and 1997, respectively. The gross profit margin was 25.3% in 1998 compared to 24.3% in 1997. The improvement primarily related to increased sales volume. It can also be attributed to improved manufacturing processes, better product design and the Company's continuing efforts to minimize sales discounts and control costs. In 1998, selling, general, and administrative expenses decreased to 12.9% of net sales from 13.6% of net sales in 1997. The volume increase in net sales was the primary factor responsible for the decreased percentage. Approximately 42% of the increase in dollars related to expenses of acquired operations. The single largest increase in expenses not related to acquisitions was selling expenses. Research and development expenses decreased to 1.3% of net sales in 1998 from 1.4% in the prior year. The increase in sales volume was the primary reason for the reduction in the percentage. Acquisitions accounted for 81% of the increase in dollars of research and development. Page A-3 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Interest expense for 1998 decreased to 0.7% of sales from 0.9% of sales for 1997. The increase in dollars related primarily to borrowings required for the growing captive finance company and for acquisitions. Income tax expense for 1998 was $15,126,381, or 38.2% of pre- tax income, compared to $9,156,977 for 1997, or 39.9% of pre- tax income. The reduction in the income tax rate was primarily attributable to the addition of Kolberg-Pioneer, located in South Dakota (which has no corporate income tax) and the Company's increased utilization of a foreign sales corporation. The backlog at December 31, 1998 was $95,665,000 compared to $67,435,000 at December 31, 1997, restated for acquisitions. This represents a 41.9% increase over 1997. The increase was principally attributed to increased asphalt plant and aggregate processing orders. The Company is unable to determine whether this increase in backlog was experienced by the industry as a whole or whether it reflects an increase of market share. Hot-mix Asphalt Plant and Related Heat Transfer Equipment Segment: This segment had increased sales of $30,271,000 in 1998, a 22.8% increase over 1997. Segment profit also increased $7,455,000, or 52.8%, over 1997. The primary reason for the increases was a strong economy accompanied by the expected impact of TEA-21 legislation effective October, 1998. International sales in this segment increased by 26.0% in 1998 over 1997. Aggregate Processing Segment: The 1998 sales in this segment increased $57,343,000, or 103.6%, over 1997, primarily due to the acquisition of Kolberg-Pioneer, Inc. and Johnson Crushers International, Inc. Segment profit increased $6,073,000, or 88.2%, over 1997. The growth due to acquisitions for 1998 over 1997 was approximately 35%. International sales in this segment decreased approximately 12.1% Mobile Construction Equipment Segment: The 1998 sales in this segment increased $11,830,000, or 24.4% over 1997. Segment profit also increased $3,369,000, a 51.7% increase over 1997. The primary increase in sales results from an increase in sales of our patented material transfer vehicle, the Shuttle Buggy. International sales increased 6.7%. The increase in profit was primarily a result of increased volume coupled with gross margin improvement.

Liquidity and Capital

During ~~1999,~~2000, the Company continued to maintain a strong financial position while funding capital projects, ~~and~~ working capital needs ~~principally~~and two business combinations with cash provided by operations, ~~while utilizing~~bank borrowings and low interest rate industrial revenue ~~bonds and bank borrowings to fund business combinations.~~bonds. At December 31, ~~1999,~~2000, working capital totaled ~~$127,569,000~~$155,736,000 compared to ~~$81,865,000~~$127,569,000 at December 31, ~~1998.~~1999. The working capital increase was primarily the result of ~~increased fourth quarter sales that led to~~ a ~~$19,341,000~~$10,323,000 increase in ~~trade~~finance receivables ~~net of customer deposits~~at Astec Financial Services ("AFS") and a ~~$28,113,000~~$17,816,000 increase in ~~inventories. $30,000,000~~inventories, excluding 2000 acquisitions. Approximately $4,255,000 of the increase in working capital was the result of the ~~three~~two acquisitions completed in ~~August through November.~~ 2000.

The Company has an unsecured ~~$90,000,000~~$150,000,000 revolving credit loan agreement with ~~Bank One, NA~~a bank which expires on November 22, 2002. At December 31, ~~1999,~~2000, the Company was utilizing ~~$47,370,000~~$98,700,000 of the amount available under the credit facility for borrowing and an additional ~~$20,026,000~~$18,440,000 to support outstanding letters of credit (primarily for industrial revenue bond issues). Principal covenants under the loan agreement include (i) the maintenance of minimum levels of net worth and compliance with minimum net worth, leverage and interest coverage ratios, (ii) a limitation on capital expenditures and rental expense, (iii) a prohibition against the payment of dividends, and (iv) a prohibition on large acquisitions except upon the consent of the lenders. The Company was in compliance with all financial covenants related to the credit facility at December 31, ~~1999.~~ 2000.

The Company initiated two term loans in connection with the 1999 acquisitions. On August 13, 1999 and October 29, 1999, the Company borrowed $15,000,000 and $20,000,000, respectively, from Bank One, NA. The Company is in the process of merging these term loans into thebank revolving credit ~~loan agreement. Page A-4 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) The revolving credit~~ facility ~~with Bank One, NA~~ provides for a segregated portion of up to ~~$40,000,000~~$50,000,000 for use by the Company's captive finance subsidiary, ~~Astec Financial Services ("AFS").~~AFS. Advances under this portion of the loan agreement are limited to the "Eligible Receivables" of AFS as defined in the loan agreement. At December 31, ~~1999,~~2000, AFS borrowings represented ~~$16,870,000~~$20,075,000 of the total ~~$47,370,000~~$98,700,000 outstanding under the loan agreement.

In addition to the bank revolving credit facility, the Company's South African subsidiary, Osborn Engineered Products SA (Pty) Ltd., has a credit facility available of $1,975,000 to finance short-term working capital needs and an additional $1,975,000 available to cover the short-term establishment of performance guarantee requirements.

The Company considers the unused portion of its bank revolving credit facility, ~~with Bank One, NA,~~ coupled with cash expected to be generated by operations, adequate to meet its foreseeable funding needs, including planned ~~2000~~2001 capital expenditures of approximately $12,600,000 (excluding ~~those~~expenditures for equipment leased to others). There is a provision in the loan agreement allowing the borrowing of ~~approximately $19,100,000.~~$10,000,000 from any source for needs beyond the revolver provisions. Capital expenditures (excluding those for equipment leased to others) were $20,791,000 in 2000 and $28,385,000 in ~~1999 and $18,465,000 in 1998.~~ 1999.

For additional information on current and long-term debt, see Note 6 to the Consolidated Financial Statements.

Market Risk and Risk Management Policies

The Company is exposed to changes in interest rates, primarily from its long-term debt arrangements. Under its current policies, the Company uses interest rate derivative instruments to manage exposure to interest rate changes for a portion of its debt arrangements. Taking into account the effects of interest rate derivatives designated as hedges, a hypothetical 100 basis point adverse move (increase) in interest rates would adversely affect interest expense by approximately $875,000 for the year ended December 31, 2000. The Company's earnings and cash flows are also subject to fluctuations due to changes in foreign currency exchange rates; however, these fluctuations would not be significant to the Company's consolidated operations.

Contingencies

See Note 9 to Consolidated Financial Statements for information on certain pending litigation and contingent liabilities arising from recourse financing arrangements.

Environmental Matters

Based on information available, management believes the Company has adequately reserved for potential environmental liabilities and does not believe the potential liability will materially impact the future financial position of the Company.

Goodwill

At December 31, ~~1999,~~2000, goodwill ~~totals $36,300,000,~~totaled $37,208,000, which is ~~21.7%~~19.1% of shareholders' equity and ~~10.3%~~9.2% of total assets. Impact of Year 2000 In prior years, the Company discussed the potential impact of Year 2000 issues and the nature and progress of its plans to become Year 2000 compliant. In late 1999, the Company completed remediation and testing of its systems, including systems of recently acquired companies. In addition, various measures were taken to notify and assist customers to become Year 2000 compliant and the Company queried its significant suppliers and other external agents (no external agents share information systems with the Company) as to their readiness for the Year 2000. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission-critical information technology and non-information technology systems and believes those systems responded successfully to the Year 2000 issues, either with its products, its internal systems or the products and services of third parties. The total expensed by the Company's Year 2000 project during 1999 was approximately $200,000 and was funded by the revolving credit line and through operating cash flows. The Company did not develop a fully documented contingency plan in the event it did not complete all phases of the Year 2000 project, but it did develop documented prudent preventive measures that could have been undertaken to secure operational capabilities in case of system failure. Those measures included identifying secondary sources for raw materials, goods and services; identifying alternate manufacturing routing methods; stocking additional critical raw materials; printing of paper documents and reports as reference tools; and performing disaster recovery testing for potential power interruptions or machine failures. For the near-term, the Company intends to keep in place these preventive measures mainly for external factors beyond the Company's immediate control which could impact operations. The Company designates each of the statements made by it in this section entitled Impact of Year 2000 as a Year 2000 Readiness Disclosure. Such statements are made pursuant to the Year 2000 Information and Readiness Disclosure Act. Page A-5

CONSOLIDATED BALANCE SHEETS December 31, Assets 1999 1998 Current assets: Cash and cash equivalents Note 1 $ 3,725,070 $ 5,352,739 Trade receivables less allowance for doubtful accounts of $1,966,000 in 1999 and $1,460,000 in 1998 60,093,938 44,922,366 Finance receivables Note 13 9,631,998 6,189,285 Notes and other receivables 11,639,809 1,315,650 Inventories Notes 1, 3 104,841,923 76,728,969 Prepaid expenses 4,308,596 2,717,896 Refundable income taxes 1,858,886 1,168,056 Deferred tax asset Note 8 6,931,749 6,424,860 Other current assets 319,358 7,303 Total current assets 203,351,327 144,827,124 Property and equipment, net Note 4 109,388,156 81,142,117 Other assets: Goodwill 36,299,808 12,511,530 Finance receivables Note 13 4,273,936 7,120,082 Notes receivable 493,352 1,054,987 Other 1,630,452 1,664,436 Total other assets 42,697,548 22,351,035 Total assets $355,437,031 $248,320,276 Liabilities and Shareholders' Equity Current liabilities: Current maturities of long-term debt Note 6 $ 595,635 $ 646,060 Accounts payable 36,430,028 27,418,287 Customer deposits 7,040,785 11,210,413 Accrued product warranty 4,075,358 3,624,252 Accrued payroll and related liabilities 14,579,479 11,516,286 Liabilities related to abandoned subsidiary 125,000 Other accrued liabilities 13,061,524 8,421,594 Total current liabilities 75,782,809 62,961,892 Long-term debt, less current maturities Note 6 102,685,470 47,220,000 Deferred tax liability Note 8 5,495,869 3,091,469 Deferred retirement costs Note 7 1,332,746 970,866 Other 2,882,561 1,415,095 Total liabilities 188,179,455 115,659,322 Shareholders' equity: Notes 1, 10 Preferred stock - authorized 4,000,000 shares of $1.00 par value; none issued Common stock - authorized 40,000,000 shares of $.20 par value; issued and outstanding - 19,121,062 in 1999 and 18,967,232 in 1998 3,824,227 3,793,446 Additional paid-in capital 46,918,852 44,332,177 Accumulated other comprehensive income Note 1 266,888 Retained earnings 116,247,609 84,535,331 Total shareholders' equity 167,257,576 132,660,954 Total liabilities and shareholders' equity $355,437,031 $248,320,276

	December 31,
Assets	2000	1999
Current assets:
Cash and cash equivalentsNote 1	$ 7,053,328	$ 3,725,070
Trade receivables less allowance for doubtful accounts of $2,105,000 in 2000 and $1,966,000 in 1999	55,500,511	60,093,938
Finance receivablesNote 13	23,011,883	9,631,998
Notes and other receivables	4,647,572	11,639,809
InventoriesNotes 1, 3	126,307,828	104,841,923
Prepaid expenses	3,595,524	4,308,596
Refundable income taxes	3,893,629	1,858,886
Deferred tax assetNote 8	7,824,451	6,931,749
Other current assets	159,059	319,358
Total current assets	231,993,785	203,351,327
Property and equipment, netNote 4	126,927,532	109,388,156
Other assets:
Goodwill	37,207,924	36,299,808
Finance receivablesNote 13	3,500,180	4,273,936
Notes receivable	362,138	493,352
Other	2,314,260	1,630,452
Total other assets	43,384,502	42,697,548
Total assets	$ 402,305,819	$ 355,437,031
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debtNote 6	$ 1,986,424	$ 595,635
Accounts payable	35,585,181	36,430,028
Customer deposits	6,463,715	7,040,785
Accrued product warranty	4,441,845	4,075,358
Accrued payroll and related liabilities	14,019,935	14,579,479
Other accrued liabilities	13,760,679	13,061,524
Total current liabilities	76,257,779	75,782,809
Long-term debt, less current maturitiesNote 6	118,510,887	102,685,470
Deferred tax liabilityNote 8	7,933,378	5,495,869
Deferred retirement costsNote 7	1,648,226	1,332,746
Other	2,884,421	2,882,561
Total liabilities	207,234,691	188,179,455
Minority interest	448,188	.
Shareholders' equity:Notes 1, 10
Preferred stock - authorized 4,000,000 shares of $1.00 par value; none issued
Common stock - authorized 40,000,000 shares of $.20 par value; issued and outstanding19,319,746 in 2000 and 19,121,062 in 1999	3,863,949	3,824,227
Additional paid-in capital	48,440,594	46,918,852
Accumulated other comprehensive income	(210,298)	266,888
Retained earnings	142,528,695	116,247,609
Total shareholders' equity	194,622,940	167,257,576
Total liabilities and shareholders' equity	$ 402,305,819	$ 355,437,031

See Notes to Consolidated Financial Statements. ~~Page A-6~~

CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 1999 1998 1997 Net sales $449,627,457 $363,945,191 $265,365,312 Cost of sales 335,471,243 272,040,941 200,872,181 Gross profit 114,156,214 91,904,250 64,493,131 Selling, general and administrative expenses 56,279,937 46,796,409 36,124,728 Research and development expenses 5,355,736 4,681,019 3,706,909 Income from operations 52,520,541 40,426,822 24,661,494 Other income (expense): Interest expense (4,253,219) (2,708,981) (2,397,902) Interest income 1,136,777 101,208 259,388 Other income - net 2,121,228 1,668,869 347,253 Equity in income of joint venture 6,096 74,578 96,158 Income before income taxes 51,531,423 39,562,496 22,966,391 Income taxes Note 8 19,819,145 15,126,381 9,156,977 Net income $31,712,278 $24,436,115 $13,809,414 Earnings per Common Share Net income: Basic $1.66 $1.30 $.72 Diluted 1.59 1.26 .71 Weighted average number of common shares outstanding: Note 1 Basic 19,064,516 18,799,063 19,111,880 Diluted 19,930,376 19,441,184 19,452,192

	Year Ended December 31,
	2000	1999	1998
Net sales	$520,687,851	$ 449,627,457	$ 363,945,191
Cost of sales	397,813,019	335,471,243	272,040,941
Gross profit	122,874,832	114,156,214	91,904,250
Selling, general and administrative expenses	69,011,339	56,279,937	46,796,409
Research and development expenses	6,725,884	5,355,736	4,681,019
Income from operations	47,137,609	52,520,541	40,426,822
Other income (expense):
Interest expense	(8,652,339)	(4,253,219)	(2,708,981)
Interest income	2,239,786	1,136,777	101,208
Other income - net	2,201,579	2,121,228	1,668,869
Equity in (loss) income of joint venture	(195,781)	6,096	74,578
Income before income taxes	42,730,854	51,531,423	39,562,496
Income taxesNote 8	16,441,440	19,819,145	15,126,381
Income before minority interest	26,289,414	31,712,278	24,436,115
Minority interest	8,328	.	.
Net income	$ 26,281,086	$ 31,712,278	$ 24,436,115
Earnings per Common ShareNote 1
Net income:
Basic	$ 1.37	$ 1.66	$ 1.30
Diluted	1.33	1.59	1.26
Weighted average number of common shares outstanding
Basic	19,221,754	19,064,516	18,799,063
Diluted	19,721,288	19,930,376	19,441,184

See Notes to Consolidated Financial Statements. ~~Page A-7~~ CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Years Ended December 31, 1999, 1998 and 1997. Accumulated Additional Other Total Common Stock Pain-in Retained Comprehensive Sharholders' Shares Amount Capital Earnings Income Equity Balance December 31, 1996 20,074,398 $4,014,880 $49,218,215 $46,289,802 ($ 127,150) $ 99,395,747 Net income 13,809,414 13,809,414 Other comprehensive income Minimum pension liability adjustment 127,150 127,150 Comprehensive income 13,936,564 Exercise of stock options, including tax benefit 20,000 4,000 60,975 64,975 Repurchase and retirement of common stock (1,453,238) (290,648) (7,491,656) (7,782,304) Balance December 31, 1997 18,641,160 3,728,232 41,787,534 60,099,216 105,614,982 Net and comprehensive income 24,436,115 24,436,115 Exercise of stock options, including tax benefit 326,072 65,214 2,544,643 2,609,857 Balance December 31, 1998 18,967,232 3,793,446 44,332,177 84,535,331 132,660,954 Net income 31,712,278 31,712,278 Other comprehensive income Foreign currency translation adjustment 266,888 266,888 Comprehensive income 31,979,166 Exercise of stock options, including tax benefit 139,609 27,922 2,189,534 2,217,456 Stock issued in business combination 14,296 2,859 397,141 400,000 Balance December 31, 1999 19,121,137 $3,824,227 $46,918,852 $116,247,609 $266,888 $167,257,576

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2000	1999	1998
Cash Flows from Operating Activities
Net income	$ 26,281,086	$ 31,712,278	$ 24,436,115
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	15,379,703	11,695,862	8,129,585
Provision for doubtful accounts	807,569	425,557	1,092,185
Provision for inventory reserves	1,437,610	1,265,120	1,289,740
Provision for warranty	1,308,058	1,466,176	4,048,899
Gain on sale of fixed assets	(94,261)	(146,268)	(341,575)
Gain on sale of equipment on operating lease	(2,142,119)	(969,845)	(956,271)
Gain on sale of finance receivables	(438,010)	(215,730)	(278,824)
Equity in loss (income) of joint venture	195,781	(6,096)	(74,578)
Minority interest in earnings of subsidiary	(8,328)	.	.
(Increase) decrease in:
Receivables	8,155,450	(6,011,492)	(11,352,173)
Inventories	(18,901,256)	(11,136,071)	(3,717,271)
Prepaid expenses	230,183	(1,683,262)	(703,735)
Deferred tax asset	494,685	1,229,527	(723,156)
Other assets	459,650	135,646	(444,725)
Increase (decrease) in:
Accounts payable	(3,675,821)	2,025,578	2,664,949
Customer deposits	(575,633)	(4,171,065)	4,094,466
Accrued product warranty	(1,249,472)	(2,090,771)	(3,828,493)
Income taxes payable	(984,131)	(329,480)	(817,515)
Other accrued liabilities	(3,272,367)	4,113,914	5,977,639
Foreign currency transaction (gain) loss	(120,257)	27,293	.
Net cash provided by operating activities	23,288,120	27,336,871	28,495,262
Cash Flows from Investing Activities
Proceeds from sale of property and equipment - net	319,789	266,601	992,841
Expenditures for property and equipment	(21,535,875)	(28,384,787)	(18,465,257)
Proceeds from sale of equipment on operating lease	48,920,688	29,748,064	22,609,684
Expenditures for equipment on operating lease	(53,882,130)	(25,216,820)	(28,015,599)
Additions to finance receivables	(74,134,723)	(37,820,908)	(18,398,321)
Collections of finance receivables	32,368,390	390,450	365,514
Proceeds from sale of finance receivables	38,554,353	28,093,482	9,820,384
Additions to notes receivable	(52,000)	(1,421,804)	(12,386)
Repayments on notes receivable	115,773	898,811	229,454
Cash payments in connection with business combinations, net of cash acquired	(7,468,669)	(52,448,406)	(8,506,458)
Net cash used by investing activities	(36,794,404)	(85,895,317)	(39,380,144)
Cash Flows from Financing Activities
Proceeds from issuance of common stock	$ 1,005,502	$ 1,364,275	$ 1,350,510
Net borrowings under revolving credit loan	16,285,337	55,788,775	3,290,000
Principal repayments of industrial bonds, loans and notes payable	(2,932,513)	(503,057)	( 614,183)
Proceeds from debt and notes payable	2,833,145	41,189	9,285,000
Net cash provided by financing activities	17,191,471	56,691,182	13,311,327
Effect of exchange rates on cash	(356,929)	239,595	.
Increase (decrease) in cash and cash equivalents	3,328,258	(1,627,669)	2,426,445
Cash and cash equivalents, beginning of period	3,725,070	5,352,739	2,926,294
Cash and cash equivalents, end of period	$ 7,053,328	$ 3,725,070	$ 5,352,739
Supplemental Cash Flow Information
Cash paid during the year for:
Interest	$ 8,499,094	$ 4,425,526	$ 2,778,422
Income taxes	$ 17,934,641	$ 20,472,411	$ 16,545,127
Tax benefits related to stock options:
Refundable income taxes	$ 555,962	$ 856,000	$ 1,159,925
Deferred tax asset	.	.	99,422
Additional paid-in capital	(555,962)	(856,000)	(1,259,347)
Non-cash business combination:
Investment in subsidiary	$ 1,576,844	$ 1,556,523	.
Accrued liability	(1,576,844)	(1,556,523)	.

See Notes to Consolidated Financial Statements. ~~PAGE A-8~~

CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 1999 1998 1997 Cash Flows from Operating Activities Net income $31,712,278 $24,436,115 $13,809,414 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,695,862 8,129,585 6,944,918 Provision for doubtful accounts 425,557 1,092,185 272,578 Provision for inventory reserves 1,265,120 1,289,740 418,906 Provision for warranty 1,466,176 4,048,899 2,811,009 (Gain) loss on sale of fixed assets (146,268) (341,575) 747,112 (Gain) loss on sale of equipment on operating lease (969,845) (956,271) (505,473) (Gain) on sale of finance receivables (215,730) (278,824) (158,043) Equity in (income) loss of joint venture (6,096) (74,578) (96,158) (Increase) decrease in: Receivables (6,011,492) (11,352,173) 1,005,946 Inventories (11,136,071) (3,717,271) (1,833,029) Prepaid expenses (1,683,262) (703,735) (2,010) Deferred tax asset 1,229,527 (723,156) 209,978 Other assets 135,646 (444,725) 261,094 Increase (decrease) in: Accounts payable 2,025,578 2,664,949 3,867,396 Customer deposits (4,171,065) 4,094,466 4,285,052 Accrued product warranty (2,090,771) (3,828,493) (2,143,242) Income taxes payable (329,480) (817,515) 2,880,447 Other accrued liabilities 4,380,802 5,977,639 1,885,445 Net cash provided by operating activities 27,576,466 28,495,262 34,661,340 Cash Flows from Investing Activities Proceeds from sale of property and equipment - net 266,601 992,841 459,025 Expenditures for property and equipment (28,384,787) (18,465,257) (9,043,675) Proceeds from sale of equipment on operating lease 29,748,064 22,609,684 15,400,539 Expenditures for equipment on operating lease (25,216,820) (28,015,599) (16,295,790) Additions to finance receivables (37,820,908) (18,398,321) (13,480,827) Collections of finance receivables 390,450 365,514 1,349,934 Proceeds from sale of finance receivables 28,093,482 9,820,384 12,769,861 Additions to notes receivable (1,421,804) (12,386) (116,536) Repayments on notes receivable 898,811 229,454 758,076 Cash payments in connection with business combinations, net of cash acquired (52,448,406) (8,506,458) (22,383,071) Net cash (used) by investing activities (85,895,317) (39,380,144) (30,582,464) See Notes to Consolidated Financial Statements. Page A-9 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Year Ended December 31, 1999 1998 1997 Cash Flows from Financing Activities Repurchase and retirement of common stock $(7,782,304) Proceeds from issuance of common stock $ 1,364,275 $1,350,510 64,975 Net borrowings under revolving credit loan 55,788,775 3,290,000 9,908,000 Principal repayments of industrial bonds, loans and notes payable (503,057) (614,183) (6,725,737) Proceeds from debt and notes payable 41,189 9,285,000 Net cash provided (used) by financing activities 56,691,182 13,311,327 (4,535,066) Increase (decrease) in cash and cash equivalents (1,627,669) 2,426,445 (456,190) Cash and cash equivalents, beginning of period 5,352,739 2,926,294 3,382,484 Cash and cash equivalents end of period $3,725,070 $5,352,739 $2,926,294 Supplemental Cash Flow Information Cash paid during the year for: Interest $ 4,425,526 $ 2,778,422 $2,369,389 Income taxes $20,472,411 $16,545,127 $8,142,405 Tax benefits related to stock options: Refundable income taxes $ 856,000 $ 1,159,925 Deferred tax asset 99,422 Additional paid-in capital (856,000) (1,259,347) See Notes to Consolidated Financial Statements. Page A-10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SHAREHOLDERS' EQUITY
For the Years Ended December 31, 2000, 1999 ~~1998,~~ and ~~1997.~~ 1998

.	Common Stock Shares Amount		Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Total Shareholders Equity
Balance December 31, 1997	18,641,160	$3,728,232	$41,787,534	$60,099,216	.	$105,614,982
Net and Comprehensive income	.	.	.	24,436,115	.	24,436,115
Exercise of stock options, including tax benefit	326,072	65,214	2,544,643	.	.	2,609,857
Balance December 31, 1998	18,967,232	3,793,446	44,332,177	84,535,331	.	132,660,954
Net income	.	.	.	31,712,278	.	31,712,278
Other comprehensive income:	.	.	.	.	.	.
Foreign currency translation adjustment	.	.	.	.	$266,888	266,888
Comprehensive income	.	.	.	.	.	31,979,166
Exercise of stock options, including tax benefit	139,609	27,922	2,189,534	.	.	2,217,456
Stock issued in business combination	14,296	2,859	397,141	.	.	400,000
Balance December 31, 1999	19,121,137	3,824,227	46,918,852	116,247,609	266,888	167,257,576
Net income	.	.	.	26,281,086	.	26,281,086
Other comprehensive income:	.	.	.	.	.	.
Foreign currency translation adjustment	.	.	.	.	(477,186)	(477,186)
Comprehensive income	.	.	.	.	.	25,803,900
Exercise of stock options, including tax benefit	198,609	39,722	1,521,742	.	.	1,561,464
Balance December 31, 2000	19,319,746	$3,863,949	$48,440,594	$142,528,695	$(210,298)	$194,622,940

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2000, 1999 and 1998

1. Summary of Significant Accounting Policies

Basis of Presentation - The consolidated financial statements include the accounts of Astec Industries, Inc. and its subsidiaries. The Company's ~~wholly- owned~~wholly-owned or consolidated subsidiaries at December 31, ~~1999~~2000 are as follows: American Augers, Inc. Johnson Crushers International, Inc. Astec, Inc. Kolberg-Pioneer, Inc. Astec Financial Services, Inc. Production Engineered Products, Inc. Breaker Technology, Inc. Roadtec, Inc. Breaker Technology Ltd. Superior Industries of Morris, Inc. CEI Enterprises, Inc. Telsmith, Inc. Heatec, Inc. Trencor, Inc.

American Augers, Inc.	Johnson Crushers International, Inc.
Astec, Inc.	Kolberg-Pioneer, Inc.
Astec Financial Services, Inc.	Osborn Engineered Products SA (Pty) Ltd. (88%)
Astec Systems, Inc.	Production Engineered Products, Inc.
Breaker Technology, Inc.	Roadtec, Inc.
Breaker Technology Ltd.	Superior Industries of Morris, Inc.
Carlson Paving Products, Inc.	Telsmith, Inc.
CEI Enterprises, Inc.	Trencor, Inc.
Heatec, Inc.

All significant intercompany transactions have been eliminated in consolidation.

The Company's investment in a 50% owned joint venture, Pavement Technology, Inc., is accounted for on an equity basis.

Use of Estimates - The preparation of the financial statements in conformity with accounting principles generally accepted ~~accounting principles~~in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents - The Company considers all highly liquid instruments purchased with a maturity of less than three months to be cash equivalents.

Inventories - Inventories (excluding used equipment) are stated at the lower of first-in, first-out cost or market. Used equipment inventories are stated at the lower of specific unit cost or market.

Property and Equipment - Property and equipment is stated at cost. Depreciation is calculated for financial reporting purposes using the straight-line method based on the estimated useful lives of the assets as follows: buildings (40 years) and equipment (3 to 10 years). Both accelerated and straight-line methods are used for tax reporting purposes.

Goodwill - Goodwill represents the excess of cost over the fair value of net identifiable assets acquired. Goodwill amounts are being amortized using the straight-line method over 20 years. Accumulated goodwill amortization ~~balances netted against goodwill were~~was approximately $5,104,000 and $3,071,000 ~~and $1,898,000~~ at December 31, 2000 and 1999, respectively.

Impairment of Long-lived Assets - In the event that facts and ~~1998, respectively.~~ circumstances indicate that the carrying amounts of long-lived assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a writedown is required. If this review indicates that the assets will not be recoverable, the carrying value of the Company's assets would be reduced to their estimated market value.

Revenue Recognition - A portion of the Company's equipment sales represents equipment produced in the Company's plants under short-term contracts for a specific customer project or equipment designed to meet a customer's specific requirements. Equipment revenues are recognized in compliance with the terms and conditions of each contract, which is ordinarily at the time the equipment is shipped. Certain contracts include terms and conditions through which the Company recognizes revenues upon completion of equipment production which is subsequently stored at the Company's plant at the customer's request. Revenue is recorded on such contracts upon the customer's assumption of title and all risks of ownership. The Company has a limited number of sales accounted for as multiple-element arrangements; related revenue on each product is recognized when it is shipped, and the related service revenue is recognized when the service is performed.

Advertising Expense - The cost of advertising is expensed as incurred. The Company incurred approximately $3,478,000, $3,964,000, ~~$3,052,000,~~ and ~~$2,054,000~~$3,052,000 in advertising costs during 2000, 1999 and 1998, ~~and 1997,~~ respectively. ~~Stock Based~~

Stock-based Compensation - The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for employee stock options in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly, recognizes no compensation expense for the stock option grants. The Company adopted SFAS No. 123, Accounting for Stock-based Compensation, in 1996 and is utilizing the disclosure only option permitted by the statement for employee stock options. See Note 10. Page A-11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Common Stock - On December 10, 1998, the Board of Directors declared a two-for-one split of the Company's common stock, effected in the form of a stock dividend payable on January 18, 1999, to stockholders of record on December 31, 1998. All agreements concerning stock options and other commitments payable in shares of the Company's common stock provide for the issuance of additional shares due to the declaration of the stock split. This stock split has been reflected in the Consolidated Statements of Shareholders' Equity at December 31, 1996. All references to number of shares, except shares authorized, and to per share information in the accompanying consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis.

Earnings Per Share - Basic and diluted earnings per share are calculated in accordance with SFAS No. 128, Earnings per Share. Basic earnings per share ~~excludes any~~is based on the weighted average number of common shares outstanding, and diluted earnings per share includes potential dilutive effects of options, warrants and convertible securities.

The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, 1999 1998 1997 Numerator: Net income $31,712,278 $24,436,115 $13,809,414 Denominator: Denominator for basic earnings per share 19,064,516 18,799,063 19,111,880 Effect of dilutive securities: Employee stock options 865,860 642,121 340,312 Denominator for diluted earnings per share 19,930,376 19,441,184 19,452,192 Earnings per common share: Basic $1.66 $1.30 $.72 Diluted $1.59 $1.26 $.71 Comprehensive Income - In 1998, the Company adopted SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income includes a foreign currency translation adjustment, and is included as a component of shareholders' equity. Segment Information - Effective December 31, 1998, the Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information. The statement generally requires that companies report segment information for operating segments which are revenue producing components for which separate financial information is produced internally. Pensions and Other Post-retirement Benefit Plans - Effective December 31, 1998, the Company adopted SFAS No. 132, Employers' Disclosures About Pensions and Other Post-retirement Benefits. The statement standardizes the disclosure requirements for pension and other post-retirement benefits, but does not change the measurement or recognition of the related benefit obligations, plan assets, or periodic benefit costs.

	Year Ended December 31,
	2000	1999	1998
.Numerator: Net income	$ 26,281,086	$ 31,712,278	$ 24,436,115
Denominator:
Denominator for basic earnings per share	19,221,754	19,064,516	18,799,063
Effect of dilutive securities:
Employee stock options	499,534	865,860	642,121
Denominator for diluted earnings per share	19,721,288	19,930,376	19,441,184
Earnings per common share:
Basic	$ 1.37	$ 1.66	$ 1.30
Diluted	$ 1.33	$ 1.59	$ 1.26

Derivatives and Hedging Activities - In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which was amended by SFAS Nos. 137 and 138, and is now required to be adopted ~~in years beginning after June 15, 1999. This statement was amended~~ by ~~SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of~~ the ~~Effective Date of FASB 133, which postponed the~~Company effective ~~date to years beginning after June 15, 2000.~~January 1, 2001. Because of the Company's minimal use of derivatives, management does not anticipate that the adoption of the new statement will have a significant effect on the Company's earnings or financial position.

Shipping and Handling Fees and Cost - The Company records the cost of shipping and handling as a reduction of the fees charged for shipping and handling. These amounts are included in net sales. Revenues and expenses were $11,857,000 and $12,719,000 for 2000, $9,169,000 and $8,706,000 for 1999 and $9,139,000 and $9,122,000 for 1998, respectively.

Reclassifications - Certain amounts for ~~1998~~1999 and ~~1997~~1998 have been reclassified to conform with the ~~1999~~2000 presentation. ~~Page A-12~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Business Combinations

The Company's acquisitions have been accounted for using the purchase method of accounting, and accordingly, the operating results of the acquired businesses are included in the Company's consolidated financial statements from the respective acquisition dates. The assets acquired and liabilities ~~are included based on an allocation of the purchase price.~~assumed were recorded at estimated fair value as determined by management. That portion of the purchase price in excess of the fair market value of the net identifiable assets acquired is recorded as goodwill and is being amortized using the straight-line method over 20 years. On December 2, 1997, the Company acquired certain assets and liabilities of the Construction Equipment Division of Portec, Inc. for $19,978,000 in cash and renamed the business Kolberg- Pioneer, Inc. ("KPI"). The purchase was initially financed under the Company's revolving credit agreement but was partially refinanced in 1998 using industrial revenue bonds. In connection with the acquisition, the Company and KPI entered into an equipment lease with Bank One, NA under which the Company and KPI lease machinery and equipment. The terms of the equipment leases range from 36 to 84 months, with total monthly lease payments of approximately $69,000. These are included in the lease commitments in Note 5. On November 1, 1998, the Company acquired substantially all of the assets and liabilities of Johnson Crushers International, Inc. ("JCI") for $8,000,000 in cash. The terms of the JCI acquisition agreement provide for additional consideration to be paid to the former shareholders if JCI's results of operations exceed certain targeted levels for 1999, 2000 and 2001. Such consideration is payable, at the Company's option, in cash or up to 50% in the Company's common stock, and will be recorded as additional purchase price when the amount is determinable. The maximum amount of contingent consideration to be paid is $6,660,000.

On August 13, 1999, the Company acquired substantially all of the assets of Teledyne Specialty Equipment's Construction and Mining business unit from Allegheny Teledyne, Inc. for approximately $18,900,000 in cash. The acquired business unit, having operations in both the United States and Canada, operates as Breaker Technology, Inc. in the U.S. and as Breaker Technology Ltd. in Canada ("BTI"). On October 29, 1999, the Company purchased the operating assets and liabilities of American Augers, Inc. for approximately $15,500,000 in cash and repayment of approximately $6,200,000 of debt. On November 1, 1999, the Company acquired the operating assets and liabilities of Superior Industries of Morris, Inc. ("Superior") for $17,000,000 in cash.

On October 2, 2000, the Company acquired the operating assets and liabilities of Carlson Paving Products Company, Inc. ("Carlson") for $4,170,000 cash and 144,162 shares of the Company's stock valued at approximately $1,577,000. On September 30, 2000, the Company purchased substantially all of the assets and liabilities of Osborn MMD, a Boart Longyear group operation, from Anglo Operations Limited for approximately $3,200,000 in cash. The acquired business is located in South Africa and operates as Osborn Engineered Products SA (Pty) Ltd.

A summary of the net assets acquired is as follows: AMERICAN BTI AUGERS SUPERIOR JCI KPI Current assets $12,218,333 $10,826,332 $6,446,529 $5,138,492 $16,530,866 Property, plant and equipment 1,847,523 2,950,450 9,256,214 1,796,739 4,714,500 Other assets 573,505 109,038 1,035,735 Current liabilities (6,159,326) (5,796,498) (1,865,435) (3,743,685) (5,032,911) Other liabilities (6,208,004) (1,189,218) (5,894) (492,000) Goodwill 11,025,239 11,700,858 2,548,938 4,814,348 3,221,736 Net assets acquired excluding cash 18,931,769 14,046,643 15,306,066 8,000,000 19,977,926 Cash 0 1,445,543 1,693,934 0 250 Net assets acquired $18,931,769 $15,492,186 $17,000,000 $ 8,000,000 $19,978,176 Page A-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	BTI	AMERICAN AUGERS	SUPERIOR	OSBORN	CARLSON
Current assets	$12,218,333	$10,826,332	$ 6,446,529	$7,634,984	$2,229,110
Property, plant and equipment	1,847,523	2,950,450	9,256,214	1,843,815	715,884
Other assets	.	573,505	109,038	48,809	19,005
Current liabilities	(6,159,326)	(5,796,498)	(1,865,435)	(4,667,809)	(640,400)
Other liabilities	.	(6,208,004)	(1,189,218)	.	(964,365)
Goodwill	11,025,239	11,700,858	2,548,938	(1,194,292)	4,385,025
Less: Minority interest	.	.	.	(439,861)	.
Net assets acquired excluding cash	18,931,769	14,046,643	15,306,066	3,225,646	5,744,259
Cash	.	1,445,543	1,693,934	.	2,585
Net assets acquired	$18,931,769	$15,492,186	$17,000,000	$3,225,646	$5,746,84

The following unaudited pro forma summary presents the consolidated results of operations as if the acquisitions ~~discussed above~~ had occurred at the beginning of ~~the~~each year ~~immediately preceding the year of acquisition.~~presented. The unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments, such as goodwill amortization expense and interest expense on acquisition debt. They do not purport to be indicative of the results that would have occurred had the acquisitions taken place at the beginning of the periods presented or of results which may occur in the future. Year Ended December 31, 1999 1998 1997 Net sales $521,756,000 $506,493,000 $ 314,314,000 Income from operations 60,651,000 56,160,000 28,142,000 Net income 34,422,000 30,000,000 14,609,000 Per common share outstanding: Basic $1.80 $1.60 $.76 Diluted $1.73 $1.54 $.75

	December 31,
	2000	1999
Net sales	$ 549,524,000	$ 555,781,000
Income from operations	54,138,000	67,727,000
Net income	26,655,000	35,542,000
Per common share outstanding:
Basic	$ 1.39	$ 1.86
Diluted	$ 1.35	$ 1.78

3. Inventories Inventories consisted of the following: December 31, 1999 1998 Raw materials and parts $45,640,440 $35,275,208 Work-in-process 15,884,177 18,138,057 Finished goods 31,606,965 15,807,998 Used equipment 11,710,341 7,507,706 Total $104,841,923 $76,728,969

Inventories consisted of the following:	December 31,
	2000	1999
Raw materials and parts	$ 41,783,985	$ 45,640,440
Work-in-process	27,520,881	15,884,177
Finished goods	39,574,507	31,606,965
Used equipment	17,428,455	11,710,341
Total	$ 126,307,828	$ 104,841,923

4. Property and Equipment Property and equipment consisted of the following: December 31, 1999 1998 Land, land improvements and buildings $62,976,860 $48,436,468 Equipment 87,918,504 61,370,775 Less accumulated depreciation (44,012,938) (36,460,807) Land, buildings and equipment - net 106,882,426 73,346,436 Rental property: Equipment 2,996,026 8,439,708 Less accumulated depreciation (490,296) (644,027) Rental property - net 2,505,730 7,795,681 Total $109,388,156 $81,142,117

Property and equipment consisted of the following:	December 31,
Property and equipment consisted of the following:	2000	1999
Land, land improvements and buildings	$ 72,799,811	$ 62,976,860
Equipment	101,544,216	87,918,504
Less accumulated depreciation	(55,543,607)	(44,012,938)
Land, buildings and equipment - net	118,800,420	106,882,426
Rental property:
Equipment	9,036,202	2,996,026
Less accumulated depreciation	(909,090)	(490,296)
Rental property - net	8,127,112	2,505,730
Total	$ 126,927,532	$ 109,388,156

Depreciation expense was approximately $13,347,000, $10,664,000 ~~$7,577,000~~ and ~~$5,608,000~~$7,577,000 for the years ended December 31, 2000, 1999 and 1998, ~~and 1997,~~ respectively.

5. Leases

The Company leases certain land, buildings and equipment ~~which~~that are used in its operations. Total rental expense charged to operations under operating leases was approximately $4,054,000, $3,329,000 ~~$2,597,000,~~ and ~~$1,569,000~~$2,597,000 for the years ended December 31, 2000, 1999 and 1998, ~~and 1997,~~ respectively.

Minimum rental commitments for all noncancelable operating leases at December 31, ~~1999~~2000 are as follows: 2000 $2,999,426 2001 2,482,667 2002 1,079,801 2003 538,903 2004 255,020 Thereafter - Page A-13

2001	$ 3,142,000
2002	2,493,000
2003	1,755,000
2004	1,247,000
2005	60,000
Thereafter	--

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also leases equipment to customers under contracts generally ranging from ~~two months~~36 to ~~forty-eight~~48 months. Rental income under such leases was $3,908,000, $2,467,000 ~~$1,994,000~~ and ~~$1,181,000~~$1,994,000 for the years ended December 31, 2000, 1999 and 1998, ~~and 1997,~~ respectively.

Minimum rental payments to be received for equipment leased to others at December 31, ~~1999~~2000 are as follows: ~~2000 $389,921 2003 $255,521 2001 255,521 2004 215,328 2002 255,521 Thereafter 244,540~~

2001	$ 491,852	2004	$ 267,547
2002	337,047	2005	280,473
2003	267,547	Thereafter	266,646

6. Long-term Debt Long-term debt consisted of the following: December 31, 1999 1998 Revolving credit loan of $90,000,000 at December 31, 1999, available through November 22, 2002, at interest rates from 6.31% to 8.25% at December 31, 1999, and at interest rates from 5.75% to 7.25% at December 31, 1998 $47,369,835 $26,520,000 Industrial Development Revenue Bonds payable in annual installments through 2006 at weekly negotiated interest rates 3,500,000 4,000,000 Industrial Development Revenue Bonds due in 2019 at weekly negotiated interest rates 8,000,000 8,000,000 Industrial Development Revenue Bonds due in 2028 at weekly negotiated interest rates 9,200,000 9,200,000 Term loan dated August 13, 1999 at the corporate base rate or 1.25% plus the Eurodollar rate due on January 2, 2001 15,000,000 Term loan dated October 29, 1999 at the Corporate base rate or 1.25% plus the Eurodollar rate due on January 2, 2001 20,000,000 Other current notes payable 211,270 146,060 Total long-term debt 103,281,105 47,866,060 Less current maturities 595,635 646,060 Long-term debt less current maturities $102,685,470 $ 47,220,000

Long-term debt consisted of the following:	December 31,
	2000	1999
Revolving credit loan of $150,000,000 at December 31, 2000, available through November 22, 2002, at interest rates from 7.44% to 9.25% at December 31, 2000, and at interest rates from 6.31% to 8.25% at December 31, 1999	$ 98,700,000	$ 47,369,835
Industrial Development Revenue Bonds payable in annual installments through 2006 at weekly negotiated interest rates	3,000,000	3,500,000
Industrial Development Revenue Bonds due in 2019 at weekly negotiated interest rates	8,000,000	8,000,000
Industrial Development Revenue Bonds due in 2028 at weekly negotiated interest rates	9,200,000	9,200,000
Term loan dated August 13, 1999 at the corporate base rate or 1.25% plus the Eurodollar rate due on January 2, 2001	.	15,000,000
Term loan dated October 29, 1999 at the corporate base rate or 1.25% plus the Eurodollar rate due on January 2, 2001	.	20,000,000
Other current notes payable	1,597,311	211,270
Total long-term debt	120,497,311	103,281,105
Less current maturities	1,986,424	595,635
Long-term debt less current maturities	$ 118,510,887	$ 102,685,470

The Company has an unsecured ~~$90,000,000~~$150,000,000 revolving line of ~~credit with Bank One, NA.~~credit. The agreement contains borrowing sub-limits which allow the Company and its subsidiary, Astec Financial Services, Inc., to borrow up to ~~$70,000,000~~$130,000,000 and ~~$40,000,000~~$50,000,000 respectively, not to exceed the total commitment amount. Advances under Astec Financial's sub-limit are limited to eligible receivables as defined in the agreement. Amounts outstanding under the agreement bear interest, at the Company's option, at a rate from .25% below prime to prime plus .50%, or from .75% to 2.00% above the London Interbank Offering Rate. The interest rate applied to borrowings is based ~~upon~~on a leverage ratio, calculated quarterly, as defined by the credit agreement. The credit agreement contains certain restrictive covenants relative to operating ratios and capital expenditures and also restricts the payment of dividends. The Company was in compliance with all financial covenants related to the above loan agreement at December 31, ~~1999.~~ 2000.

The aggregate of all maturities of long-term debt in each of the next five years is as follows:

2001	$ 1,986,424	2004	$ 510,635
2002	99,245,768	2005	510,635
2003	522,578	Thereafter	17,721,271

For 2000, ~~$ 595,635 2003 $ 511,779 2001 35,524,365 2004 510,635 2002 47,894,200 Thereafter 18,244,491 For 1999,~~ the weighted average interest rate on short-term borrowings, which includes current maturities of Industrial Revenue Bonds, was ~~6.1%~~3.52%. ~~Page A-14~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Retirement Benefits

The Company sponsors a defined benefit pension plan that covers all employees of its Kolberg-Pioneer subsidiary. Benefits paid under this plan are based on years of service multiplied by a monthly amount. In addition, the Company also sponsors two post-retirement medical and life insurance plans covering the employees of its Kolberg-Pioneer and Telsmith subsidiaries and retirees of its former Barber-Greene subsidiary. The Company's funding policy for all plans is to make the minimum annual contributions required by applicable regulations.

The following provides information regarding benefit obligations, plan assets and the funded status of the plans: Pension Benefits Other Benefits 1999 1998 1999 1998 Change in benefit obligation Benefit obligation at beginning of year $6,948,91 $9,571,211 $1,463,502 $1,270,785 Service cost 329,864 315,111 80,326 74,681 Interest cost 449,209 647,654 82,311 87,419 Actuarial gain/loss (1,077,018) 386,433 (200,982) 24,506 Participant contributions - - 125,109 74,542 Benefits paid (343,021) (582,080) (159,299) (68,431) Effect of termination - (3,389,415) - - Benefit obligation at end of year $6,307,948 $6,948,914 $1,390,967 $1,463,502 Change in plan assets Fair value of plan assets at beginning of year 6,607,594 9,394,007 - - Actual return on plan assets 727,585 629,415 - - Benefits paid (343,021) (582,080) - - Effect of termination - (2,833,798) - - Fair value of plan assets at end of year $ 6,992,158 $ 6,607,544 - - Funded status (underfunded) 684,210 (341,320) (1,390,967) (1,463,502) Unrecognized net actuarial (gain) loss (897,149) 315,446 271,160 492,636 Prepaid (accrued) benefit cost $(212,939) $(25,874) $(1,119,807) $(970,866) Weighted-average assumptions as of December 31 Discount rate 6.75% 6.75% 7.42% 6.75% Expected return on plan assets 9.00% 9.00% - - Rate of compensation increase 4.00% 4.00% - -

	Pension Benefits		Other Benefits
	2000	1999	2000	1999
Change in benefit obligation
Benefit obligation at beginning of year	$ 6,307,948	$ 6,948,914	$ 1,390,967	$ 1,463,502
Service cost	351,320	329,864	86,027	80,326
Interest cost	504,384	449,209	103,596	82,311
Actuarial (gain) loss	368,022	(1,077,018)	211,149	(200,982)
Participant contributions	.	.	367,665	125,109
Benefits paid	(322,371)	(343,021)	(503,904)	(159,299)
Benefit obligation at end of year	$ 7,209,303	$ 6,307,948	$ 1,655,500	$ 1,390,967
Change in plan assets
Fair value of plan assets at beginning of year	6,992,158	6,607,594	.		.
Actual return on plan assets	(296,982)	727,585	.		.
Benefits paid	(322,371)	(343,021)	.		.
Fair value of plan assets at end of year	$ 6,372,805	$ 6,992,158	.		.
Funded status (underfunded)	(836,498)	684,210	(1,655,500)		(1,390,967)
Unrecognized net actuarial (gain) loss	383,049	(897,149)	460,723		271,160
Prepaid (accrued) benefit cost	$ (453,449)	$ (212,939)	$(1,194,777)		$(1,119,807)
Weighted-average assumptions as of December 31
Discount rate	7.75%	6.75%	7.75%	7.42%
Expected return on plan assets	9.00%	9.00%	.	.
Rate of compensation increase	4.00%	4.00%	.	.

The weighted average annual assumed rate of increase in per capita health care costs is ~~7.7%~~12.0% for ~~2000~~2001 and is assumed to decrease gradually to ~~7.0%~~5.0% for ~~2003~~2008 and remain at that level thereafter. A 1% increase or decrease in the medical inflation rate would not have a significant effect on either the benefit obligation or the aggregate service and interest cost components of net periodic benefit cost.

Net periodic benefit cost for 2000, 1999 ~~1998~~ and ~~1997~~1998 included the following components: Pension Benefit Other Benefits 1999 1998 1997 1999 1998 1997 Components of net periodic benefit cost Service cost $329,864 $315,111 $ 15,382 $80,326 $74,681 $56,468 Interest cost 449,209 647,654 222,812 82,311 87,419 55,241 Expected return on plan assets (592,008) (797,619) (226,050) - - - Amortization of prior service cost - 19,614 19,614 - - - Amortization of transition obligation - - - 33,700 33,700 33,700 Recognized net actuarial (gain) loss - - - (11,180) (205) (1,473) Curtailment/ settlement loss - 1,136,000 - - - - Net periodic benefit cost $187,065 $1,320,760 $31,758 $185,157 $195,595 $143,936 Page A-15

	Pension Benefits			Other Benefits
	2000	1999	1998		2000		1999		1998
Components of net periodic benefit cost
Service cost	$ 351,320	$ 329,864	$ 315,111	$ 86,027		$ 80,326		$ 74,681
Interest cost	504,384	449,209	647,654	103,596		82,311		87,419
Expected return on plan assets	(614,194)	(592,008)	(797,619)	.		.		.
Amortization of prior service cost	.	.	19,614	.		.		.
Amortization of transition obligation	.	.	.	33,700		33,700		33,700
Recognized net actuarial (gain) loss	.	.	.	(12,164)		(11,180)		(205)
Curtailment/settlement loss	.	.	1,136,000	.		.		.
Net periodic benefit cost	$ 241,510	$ 187,065	$1,320,760	$ 211,159		$ 185,157		$ 195,595

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Income Taxes

For financial reporting purposes, income before income taxes includes the following components: Year Ended December 31, 1999 1998 1997 United States $51,836,482 $39,318,695 $22,738,605 Foreign (305,059) 243,801 227,786 Income before income taxes $51,531,423 $39,562,496 $22,966,391 The provision for income taxes consisted of the following: Year Ended December 31, 1999 1998 1997 Current $19,188,853 $15,849,539 $9,264,743 Deferred provision (benefit) 630,292 (723,158) (107,766) Total provision for income taxes $19,819,145 $15,126,381 $9,156,977 A reconciliation of the provision for income taxes at the statutory Federal rate to the amount provided is as follows: Year Ended December 31, 1999 1998 1997 Tax at statutory rates $18,035,999 $13,846,874 $8,038,237 Benefit from foreign sales corporation (241,012) (620,000) (360,000) State taxes, net of federal income tax benefit 1,578,250 1,377,000 912,000 Income taxes of other countries (4,000) 11,000 38,000 Other items 449,908 511,507 528,740 Income taxes $19,819,145 $15,126,381 $9,156,977

	Year Ended December 31,
	2000	1999	1998
United States	$ 41,692,857	$ 51,836,482	$ 39,318,695
Foreign	1,037,997	(305,059)	243,801
Income before income taxes	$ 42,730,854	$ 51,531,423	$ 39,562,496
The provision for income taxes consisted of the following:
	Year Ended December 31,
	2000	1999	1998
Current	$ 15,803,033	$ 19,188,853	$ 15,849,539
Deferred provision (benefit)	638,407	630,292	(723,158)
Total provision for income taxes	$ 16,441,440	$ 19,819,145	$ 15,126,381
A reconciliation of the provision for income taxes at the statutory Federal rate to the amount provided is as follows:
	Year Ended December 31,
	2000	1999	1998
Tax at statutory rates	$ 14,934,626	$ 18,035,999	$ 13,846,874
Benefit from foreign sales corporation	(516,982)	(241,012)	(620,000)
State taxes, net of federal income tax benefit	1,389,290	1,578,250	1,377,000
Income taxes of other countries	66,030	(4,000)	11,000
Other items	568,476	449,908	511,507
Income taxes	$ 16,441,440	$ 19,819,145	$ 15,126,381

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. At December 31, 1999, the Company had deferred tax assets of approximately $8,055,600, and deferred tax liabilities of approximately $6,619,600, related to temporary differences and tax loss carryforwards.

Significant components of the Company's deferred tax liabilities and assets are as follows: Year Ended December 31, 1999 1998 Deferred tax assets: Inventory reserves $2,253,400 $1,444,700 Warranty reserves 1,262,100 1,250,600 Bad debt reserves 781,200 524,400 Other accrued expenses 3,758,900 3,889,500 Other credit carryforwards 159,300 Total deferred tax assets 8,055,600 7,268,500 Deferred tax liabilities: Property and equipment 6,024,200 3,879,800 Other 595,400 55,300 Total deferred tax liabilities 6,619,600 3,935,100 Net deferred tax asset $1,436,000 $3,333,400 Page A-16

	Year Ended December 31,
	2000	1999
Deferred tax assets:
Inventory reserves	$ 2,581,700	$ 2,253,400
Warranty reserves	1,381,700	1,262,100
Bad debt reserves	774,300	781,200
Other accrued expenses	4,250,000	3,758,900
Total deferred tax assets	8,987,700	8,055,600
Deferred tax liabilities:
Property and equipment	7,933,400	6,024,200
Other	64,400	595,400
Total deferred tax liabilities	7,997,800	6,619,600
Net deferred tax asset	$ 989,900	$ 1,436,000

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Contingencies

Management has reviewed all claims and lawsuits and, upon the advice of counsel, has made adequate provision for any estimable losses. However, the Company is unable to predict the ultimate outcome of the outstanding claims and lawsuits.

Certain customers have financed purchases of the Company's products through arrangements in which the Company is contingently liable for customer debt aggregating approximately ~~$11,776,000~~$18,816,000 and ~~$1,271,000~~$11,776,000 at December 31, ~~1999~~2000 and ~~1998,~~1999, respectively. These obligations average five years in duration and have minimal risk. Astec Financial Services, Inc. sold both finance and operating leases with limited recourse, generally not exceeding 15% of the purchase price, subject to elimination of recourse responsibilities through remarketing of equipment.

Other - The Company is contingently liable under letters of credit of approximately ~~$20,025,555~~$18,440,000 primarily related to Industrial Revenue Bonds.

10. Shareholders' Equity

The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock-based Compensation, requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, when the exercise price of the Company's employee stock options equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is generally recognized.

Under terms of the Company's stock option plans, officers and certain other employees may be granted options to purchase the Company's common stock at no less than 100% of the market price on the date the option is granted. The Company has reserved shares of common stock for exercise of outstanding non-qualified options and incentive options of officers and employees of the Company and its subsidiaries at prices determined by the Board of Directors. The shares reserved under the various stock option plans are as follows: (1) 1992 Stock Option Plan - 49,600, (2) 1998 Long-term Incentive Plan - 1,726,339 and (3) Executive Officer Annual Bonus Equity Election Plan - 292,772. In addition, a Non-employee Directors Stock Incentive Plan has been established to allow non-employee directors to have a personal financial stake in the Company through an ownership interest. Directors may elect to receive their compensation in common stock, deferred stock or stock options. Options granted under the Non-employee Directors Stock Incentive Plan and the Executive Officer Annual Bonus Equity Election Plan vest and become fully exercisable immediately. All other options outstanding vest over 12 months. All stock options have a ~~ten- year~~ten-year term. The shares reserved under the various stock option plans are as follows: (1) 1992 Stock Option Plan - 436,556, (2) 1998 Long-term Incentive Plan - 1,716,750, (3) Executive Officer Annual Bonus Equity Election Plan - 13,156 and(4) 1998 Non-employee Director Stock Plan -- 6,572.

Pro forma information regarding net income and earnings per share is required by SFAS No. 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a ~~Black- Scholes~~Black-Scholes option pricing model with the following weighted-average assumptions for ~~1997,~~ 1998, 1999, and ~~1999,~~2000, respectively; risk-free interest rates of ~~5.78%~~4.70% , ~~4.70%~~5.58% and ~~5.58%;~~5.25%, volatility factors of the expected market price of the Company's common stock of ~~.281,~~ .329, .381 and ~~.381;~~.444; and a weighted-average expected life of the option of four years.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models required the input of highly subjective assumptions, including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows. Page A-17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1999 1998 1997 Pro forma net income $30,466,266 $23,179,000 $13,782,000 Pro forma earnings per share: Basic $ 1.59 $ 1.23 $ .72 Diluted $ 1.53 $ 1.19 $ .71

	Year Ended December 31,
	2000	1999	1998
Pro forma net income	$ 23,156,686	$ 30,466,266	$ 23,179,000
Pro forma earnings per share:
Basic	$ 1.20	$ 1.60	$ 1.23
Diluted	$ 1.17	$ 1.53	$ 1.19

A summary of the Company's stock option activity and related information for the years ended December 31, 2000, 1999 and 1998 ~~and 1997~~ follows: Year Ended December 31, 1999 199 1997 Weighted Weighted Weighted Avg. Avg. Avg. Exercise Exercise Exercise Options Price Options Price Options Price Options outstanding, beginning of year 1,389,800 $10.91 1,052,000 $ 4.64 1,098,000 $4.62 Options granted 620,161 $29.74 663,800 $17.53 20,000 $4.57 Options forfeited 3,895 $29.59 46,000 $4.70 Options exercised 139,336 $ 9.77 326,000 $ 4.31 20,000 $3.25 Options outstanding, end of year 1,866,730 $16.29 1,389,800 $10.87 1,052,000 $4.64

	Year Ended December 31,
	2000		1999		1998
	Options	Weighted Avg. Exercise Price	Options	Weighted Avg. Exercise Price	Options	Weighted Avg. Exercise Price
Options outstanding, beginning of year	1,866,730	$ 17.23	1,389,800	$ 10.91	1,052,000	$ 4.64
Options granted	580,348	$ 25.58	620,161	$ 29.74	663,800	$ 17.53
Options forfeited	78,800	$ 18.59	3,895	$ 29.59	.	.
Options exercised	195,244	$ 5.12	139,336	$ 9.77	326,000	$ 4.31
Options outstanding, end of year	2,173,034	$ 20.53	1,866,730	$ 16.29	1,389,800	$ 10.87

The weighted average fair value of options granted whose exercise price was equal to the market price of the stock on the grant date was $25.58, $10.75 ~~$5.71~~ and ~~$2.07~~$5.71 for the years ended December 31, 2000, 1999 ~~1998~~ and ~~1997.~~1998. The weighted average fair value of options granted whose exercise price exceeded the market price of the stock on the grant date was ~~$12.04~~$28.05 and ~~$8.36~~$12.04 for the years ended December 31, ~~1999~~2000 and ~~1998.~~1999. The range of exercise prices for options outstanding and exercisable as of December 31, ~~1999~~2000 are as follows: ~~631,000~~436,556 options from ~~$0.69~~$1.63 to $7.43 and ~~629,764~~1,736,478 options from $17.38 to $36.00. ~~The remaining outstanding options become exercisable on March 9, 2000.~~

The Company has adopted a Shareholder Protection Rights Agreement and declared a distribution of one right (the "Right") for each outstanding share of Company common stock, par value $0.20 per share (the "Common Stock"). Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share (a "Unit") of Series A Participating Preferred Stock, par value $1.00 per share (the "Preferred Stock"), at a purchase price of $18.00 per Unit, subject to adjustment. The rights currently attach to the certificates representing shares of outstanding Company Common Stock, and no separate Rights certificates will be distributed. The Rights will separate from the Common Stock upon the earlier of ten business days (unless otherwise delayed by the Board) following the (i) public announcement that a person or group of affiliated or associated persons (the "Acquiring Person") has acquired, obtained the right to acquire, or otherwise obtained beneficial ownership of 15% or more of the then outstanding shares of Common Stock, or (ii) commencement of a tender offer or exchange offer that would result in an Acquiring Person beneficially owning 15% or more of the then outstanding shares of Common Stock. The Board of Directors may terminate the Rights without any payment to the holders thereof at any time prior to the close of business ten business days following announcement by the Company that a person has become an Acquiring Person. The Rights, which do not have voting power and are not entitled to dividends, expire on December 21, 2005. In the event of a merger, consolidation, statutory share exchange or other transaction in which shares of Common Stock are exchanged, each Unit of Preferred Stock will be entitled to receive the per share amount paid in respect of each share of Common Stock.

11. Financial Instruments

Credit Risk - The Company sells products to a wide variety of customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains an allowance for doubtful accounts at a level which management believes is sufficient to cover potential credit losses. As of December 31, ~~1999,~~2000, concentrations of credit risk with respect to receivables are limited due to the wide variety of customers.

Fair Value of Financial Instruments - The book value of the Company's financial instruments approximates their fair value. Financial instruments include cash, accounts receivable, finance receivables, accounts payable, long- and short-term debt and anone interest rate swap agreement. Substantially all of the Company's ~~short-~~short and long-term debt is floating rate debt and, accordingly, book value approximates its fair value. ~~Page A-18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Interest Rate Swap Agreement - ~~During 1998,~~In order to mitigate exposure to interest rate fluctuations, the Company's captive finance subsidiary, Astec Financial Services,Inc. ("AFS"), entered into an interest rate swap agreement ~~with a notional amount of $10,000,000~~on April 6, 2000, to fix interest rates on variable rate ~~debt and reduce exposure to interest rate fluctuations.~~debt. The swap agreement ~~was~~is effective for five ~~years. During 1999,~~years with a notional amount of $7,500,000. At December 31, 2000, the ~~counter party exercised the right to terminate the agreement. AFS received $400,000 related to the termination, which is being recognized over the remaining life~~fair value of the ~~agreement.~~ swap agreement was ($363,000).

12. Operations by Industry Segment and Geographic Area

The Company has ~~three~~four reportable operating segments. These segments are combinations of business units that offer different products and services. The business units are each managed separately because they manufacture and distribute distinct products that require different marketing strategies. A brief description of each segment is as follows: ~~Hot-mix~~

Asphalt ~~Plant and Related Heat Transfer Equipment~~Group - This segment consists of three operating units that design, manufacture and market a complete line of portable, stationary and relocatable hot-mix asphalt plants and related components and a variety of heaters, heat transfer processing equipment and thermal fluid storage tanks. The principal purchasers of these products are asphalt producers, highway and heavy equipment contractors and foreign and domestic governmental agencies.

Aggregate ~~Processing Equipment~~and Mining Group - This segment consists of ~~six~~eight operating units that design, manufacture and market a complete line of rock crushers, feeders, conveyors, screens and washing equipment. The principal purchasers of these products are open mine and quarry operators.

Mobile Asphalt ~~Construction Equipment~~Paving Group - This segment consists of ~~one~~two operating ~~unit~~units that ~~designs, manufactures~~design, manufacture and ~~markets~~market asphalt pavers, asphalt material transfer vehicles, milling machines and ~~milling machines.~~paver screeds . The principal purchasers of these products are highway and heavy equipment contractors and foreign and domestic governmental agencies.

Underground Group - This segment consists of two companies that design, manufacture and market auger boring machines, directional drills, fluid/mud systems, chain and wheel trenching equipment, rock saws, road miners and material processing equipment. The principal purchasers of these products are pipeline and utility contractors.

All Others - This category consists of the Company's ~~four~~three other business units, including the parent company, Astec Industries, Inc., that do not meet the requirements for separate disclosure as an operating segment. Revenues in this category are derived primarily from ~~the sale of trenching and excavating equipment and from~~ operating leases owned by the Company's finance subsidiary.

The Company evaluates performance and allocates resources based on profit or loss from operations before federal income taxes and corporate overhead. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

Intersegment sales and transfers are valued at prices comparable to those for unrelated parties. For management purposes, the Company does not allocate Federal income taxes or corporate overhead (including interest expense related to the Company's revolving line of ~~credit with Bank One, NA)~~credit) to its business units. Segment information for 1999 Hot-mix Aggregate Mobile Asphalt Processing Construction Plants Equipment Equipment All Others Total Revenues from external customers $192,525,695 $155,199,535 $67,374,684 $34,527,543 $449,627,457 Intersegment revenues 11,232,452 10,883,366 1,265,153 (216,617) 23,164,354 Interest expense 57,447 683,404 93,875 3,418,493 4,253,219 Depreciation and amortization 4,153,143 3,049,886 1,274,471 3,218,362 11,695,862 Segment profit 25,449,090 18,198,871 11,200,103 (24,310,649) 30,537,415 Segment assets 150,032,995 184,015,782 43,619,752 290,843,992 668,512,521 Capital expenditures 8,962,862 10,883,070 3,442,706 7,591,052 30,879,690 Page A-19

	Asphalt Group	Aggregate and Mining Group	Mobile Asphalt Paving Group	Underground Group	All Others	Total
Revenues from external customers	$187,823,335	$190,931,429	$ 63,268,136	$ 75,748,060	$ 2,916,891	$520,687,851
Intersegment revenues	13,427,266	21,024,808	120,618	504,963	3,051,983	38,129,638
Interest expense	4,742	769,003	175,634	340,583	7,362,378	8,652,340
Depreciation and amortization	4,774,154	5,078,301	1,629,792	2,082,141	1,815,315	15,379,703
Segment profit	17,996,985	18,367,234	8,343,809	6,835,885	(25,515,926)	26,027,987
Segment assets	167,042,229	202,701,018	58,826,228	59,934,607	262,897,237	751,401,319
Capital expenditures	8,562,340	6,819,029	1,602,651	3,336,470	470,534	20,791,024

Segment information for 1999	Asphalt Group	Aggregate and Mining Group	Mobile Asphalt Paving Group	Underground Group	All Others	Total
Revenues from external customers	$192,525,695	$155,199,535	$ 67,374,684	$ 31,510,153	$ 3,017,390	$449,627,457
Intersegment revenues	8,947,300	10,636,735	.	936,882	2,643,437	23,164,354
Interest expense	57,447	683,404	93,875	289,569	3,128,924	4,253,219
Depreciation and amortization	4,153,143	3,049,886	1,274,471	995,609	2,222,753	11,695,862
Segment profit	25,449,090	18,198,871	11,200,103	988,904	(25,299,553)	30,537,415
Segment assets	150,032,995	184,015,782	43,619,752	52,280,067	238,563,925	668,512,521
Capital expenditures	8,962,862	10,883,070	3,442,706	2,155,055	5,435,997	30,879,690

Segment information for 1998	Asphalt Group	Aggregate and Mining Group	Mobile Asphalt Paving Group	Underground Group	All Others	Total
Revenues from external customers	$163,234,857	$ 112,705,508	$ 60,324,759	$ 29,590,375	$ (1,910,308)	$363,945,191
Intersegment revenues	11,316,496	7,039,559	662,270	.	7,952,842	26,971,167
Interest expense	10,397	333,186	38,698	342,748	1,983,952	2,708,981
Depreciation and amortization	3,236,621	1,662,560	1,019,281	874,428	1,336,695	8,129,585
Segment profit	21,565,578	12,961,727	9,890,188	2,039,242	(20,839,063)	25,617,672
Segment assets	129,794,248	115,980,822	35,649,089	22,702,313	166,343,381	470,469,853
Capital expenditures	10,899,368	4,930,963	2,347,673	841,040	358,697	19,377,741

NOTES TO CONSOLIDATED Segment information for 1998 Hot-mix Asphalt Plants Revenues from external customers $163,234,857 Intersegment revenues 11,316,496 Interest expense 10,397 Depreciation and amortization 3,236,621 Segment profit 21,565,578 Segment assets 129,794,248 Capital expenditures 10,899,368 Segment information for 1997 Hot-mix Asphalt Plants Revenues from external customers $132,964,101 Intersegment revenues 8,808,916 Interest expense 130,788 Depreciation and amortization 2,819,408 Segment profit 14,110,492 Segment assets 101,877,245 Capital expenditures 3,361,074 Page A-20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Aggregate Mobile Asphalt Processing Construction Equipment Equipment All Others Total $112,705,508 $60,324,759 $27,680,067 $363,945,191 7,039,559 662,270 7,952,842 26,971,167 333,186 38,698 2,326,700 2,708,981 1,662,560 1,019,281 2,211,123 8,129,585 12,961,727 9,890,188 (18,799,821) 25,617,672 115,980,822 35,649,089 189,045,689 470,469,848 4,930,963 2,347,673 1,199,737 19,377,741 Aggregate Mobile Asphalt Processing Construction Equipment Equipment All Others Total $55,362,319 $ 48,495,151 $28,543,741 $265,365,312 1,536,222 1,491,976 3,476,457 15,313,571 251,376 56,142 1,959,596 2,397,902 1,038,511 834,845 2,252,154 6,944,918 6,888,381 6,520,863 (12,746,808) 14,772,928 86,902,667 27,909,735 155,226,915 371,916,562 1,797,757 1,515,724 589,854 7,264,409 FINANCIAL STATEMENTS

Reconciliations of the reportable segment totals for revenues, profit or loss, assets, interest expense, depreciation and amortization and capital expenditures to the Company's consolidated totals are as follows: Year Ended December 31, 1999 1998 1997 Revenues: Total external revenues for reportable segments $415,099,914 $336,265,124 $236,821,571 Intersegment revenues for reportable segments 18,791,541 19,018,325 15,313,571 Other revenues 34,527,543 27,680,067 28,543,741 Elimination of intersegment revenues (18,791,541) (19,018,325) (15,313,571) Total consolidated revenues $449,627,457 $363,945,191 $265,365,312 Profit: Total profit for reportable segments $54,848,064 $44,417,493 $27,519,736 Other profit (loss) (24,310,649) (18,799,821) (12,746,808) Equity in income of joint venture 6,096 74,578 96,158 Elimination of intersegment profit 1,168,767 (1,256,135) (1,059,672) Total consolidated net income $31,712,278 $24,436,115 $13,809,414 Assets: Total assets for reportable segments $377,668,529 $281,424,159 $216,689,647 Other assets 290,843,992 189,045,689 155,226,915 Elimination of intercompany profit in inventory and leased equipment (1,241,297) (2,410,064) (592,475) Elimination of intercompany receivables (172,653,814) (118,730,950) (101,660,138) Elimination of investment in subsidiaries (118,643,805) (84,228,341) (76,228,341) Other eliminations (21,433,081) (16,780,222) (1,192,509) Total consolidated assets $354,540,524 $249,163,951 $192,243,099 Interest expense: Total interest expense for reportable segments $834,726 $454,629 $438,306 Other interest expense 3,418,493 2,329,358 1,959,596 Total consolidated interest expense $4,253,219 $2,783,987 $2,397,902 Depreciation and amortization: Total depreciation and amortization for reportable segments $8,477,500 $5,918,462 $4,692,764 Other depreciation and amortization 3,218,362 2,211,123 2,252,154 Total consolidated depreciation and amortization $11,695,862 $8,129,585 $6,944,918 Capital expenditures: Total capital expenditures for reportable segments $23,288,638 $18,178,004 $6,674,555 Other capital expenditures 7,591,052 1,199,737 2,515,144 Total consolidated capital expenditures (excluding those for equipment leased to others) $30,879,690 $19,377,741 $9,189,699 Page A-21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Year Ended December 31,
	2000	1999	1998
Sales:
Total external sales for reportable segments	$ 517,770,960	$ 446,610,067	$ 365,855,499
Intersegment sales for reportable segments	35,077,655	20,520,917	19,018,325
Other sales	5,968,874	5,660,827	6,042,534
Elimination of intersegment sales	(38,129,638)	(23,164,354)	(26,971,167)
Total consolidated sales	$ 520,687,851	$ 449,627,457	$ 363,945,191
Profit:
Total profit for reportable segments	$ 51,543,913	$ 55,836,968	$ 46,456,735
Other (loss)	(25,515,926)	(25,299,553)	(20,839,063)
Equity in (loss) income of joint venture	(195,781)	6,096	74,578
Minority interest in earnings of subsidiary	(8,328)	.	.
Elimination of intersegment profit	457,208	1,168,767	(1,256,135)
Total consolidated net income	$ 26,281,086	$ 31,712,278	$ 24,436,115
Assets:
Total assets for reportable segments	$ 488,504,082	$ 429,948,596	$ 304,126,472
Other assets	262,897,237	239,460,432	166,343,381
Elimination of intercompany profit in inventory and leased equipment	(246,280)	(1,241,297)	(2,410,064)
Elimination of intercompany receivables	(144,200,101)	(172,653,814)	(118,730,950)
Elimination of investment in subsidiaries	(141,254,918)	(118,643,805)	(84,228,341)
Other eliminations	(63,394,201)	(21,433,081)	(16,780,222)
Total consolidated assets	$ 402,305,819	$ 355,437,031	$ 248,320,276
Interest expense:	.	.	.
Total interest expense for reportable segments	$ 1,289,962	$ 1,124,295	$ 725,029
Other interest expense	7,362,378	3,128,924	1,983,952
Total consolidated interest expense	$ 8,652,340	$ 4,253,219	$ 2,708,981
Depreciation and amortization:
Total depreciation and amortization for reportable segments	$ 13,564,388	$ 9,473,109	$ 6,792,890
Other depreciation and amortization	1,815,315	2,222,753	1,336,695
Total consolidated depreciation and amortization	$ 15,379,703	$ 11,695,862	$ 8,129,585
Capital expenditures:
Total capital expenditures for reportable segments	$ 20,320,490	$ 25,443,693	$ 19,019,044
Other capital expenditures	470,534	5,435,997	358,697
Total consolidated capital expenditures (excluding those for equipment leased to others)	$ 20,791,024	$ 30,879,690	$ 19,377,741

International sales by domestic subsidiaries by major geographic region ~~Were~~were as follows: Year Ended December 31, 1999 1998 1997 Asia $2,814,288 $5,363,481 $2,820,044 Southeast Asia 808,771 2,214,930 11,397,733 Europe 7,148,982 3,471,656 3,076,510 South America 4,280,998 20,712,903 10,000,648 Canada 12,694,606 12,072,217 8,618,053 Australia 962,743 1,467,738 4,298,554 Africa 1,434,304 2,668,923 444,313 Central America 9,995,037 11,893,005 7,461,261 Middle East 1,080,697 6,164,493 5,224,857 West Indies 4,365,563 3,176,713 2,998,406 Other 209,208 308,542 2,561,868 Total $45,795,197 $69,514,601 $58,902,247

	Year Ended December 31,
	2000	1999	1998
Asia	$ 1,589,937	$ 2,814,288	$ 5,363,481
Southeast Asia	2,824,572	808,771	2,214,930
Europe	7,137,599	7,148,982	3,471,656
South America	2,984,187	4,280,998	20,712,903
Canada	14,950,621	12,694,606	12,072,217
Australia	6,598,660	962,743	1,467,738
Africa	8,044,463	1,434,304	2,668,923
Central America	15,557,104	9,995,037	11,893,005
Middle East	205,300	1,080,697	6,164,493
West Indies	3,018,152	4,365,563	3,176,713
Other	588,325	209,208	308,542
Total	$63,498,920	$45,795,197	$69,514,601

13. Finance Receivables

Finance receivables are receivables of Astec Financial Services, Inc. Contractual maturities of outstanding receivables at December 31, ~~1999~~2000 were: Amounts Due In Financing Leases Notes Total 2000 $5,529,580 $4,551,092 $10,080,672 2001 829,572 1,385,403 2,214,975 2002 562,280 906,726 1,469,006 2003 298,466 657,404 955,870 2004 45,679 118,355 164,034 Thereafter 7,613 6,758 14,371 7,273,170 7,625,738 14,898,928 Less unearned income (382,758) (610,236) (992,994) Total $6,890,412 $7,015,502 $13,905,934

Amounts Due In	Financing Leases	Notes	Total
2001	$ 7,646,289	$ 11,894,736	$ 19,541,025
2002	817,038	981,998	1,799,036
2003	686,751	758,896	1,445,647
2004	477,679	321,115	798,794
2005	454,840	208,223	663,063
Thereafter	1,980,000	284,498	2,264,498
Total	$12,062,597	$14,449,466	$26,512,063

Receivables may be paid prior to contractual maturity generally by payment of a prepayment penalty. At December 31, ~~1999,~~2000, there were no impaired loans or leases. Recognition of income on finance receivables is suspended when management determines that collection of future income is not probable. Accrual is resumed if the receivable becomes contractually current and collection doubts are removed. Previously suspended income is recognized at that time. ~~Page A-22~~

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Astec Industries, Inc.

We have audited the accompanying consolidated balance sheets of Astec Industries, Inc. and subsidiaries as of December 31, ~~1999~~2000 and ~~1998~~1999 and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, ~~1999.~~2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

Chattanooga, Tennessee
February 23, 2001

REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Astec Industries, Inc.

We have audited the accompanying consolidated balance sheets of Astec Industries, Inc. and subsidiaries as of December 31, 2000 and 1999 and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Astec Industries, Inc. and subsidiaries at December 31, ~~1999~~2000 and ~~1998,~~1999, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, ~~1999,~~2000, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ~~/S/~~

/s/ Ernst & Young, LLP
Chattanooga, Tennessee
February ~~18, 2000 Page A-23~~ 23, 2001

A-24

ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE (II)
VALUATION AND QUALIFYING ACCOUNTS ~~FOR CONTINUING OPERATIONS~~
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 ~~1998~~ AND 1997 DESCRIPTION BEGINNING ADDITIONS OTHER ENDING BALANCE CHARGES TO ADDITIONS DEDUCTIONS BALANCE COSTS & EXPENSES December 31, 1999 Reserves deducted from assets to which they apply: Allowance for doubtful accounts $1,460,000 $425,557 $287,854 (3) $207,160 (1) $1,966,251 Reserve for inventory $3,683,292 $1,265,120 $1,639,600 (3) $1,456,837 $5,131,175 Other Reserves: Product warranty $3,624,252 $1,466,176 $1,075,700 (3) $2,090,770(2) $4,075,358 December 31, 1998: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $1,553,237 $1,092,185 $ $1,185,422(1) $1,460,000 Reserve for inventory $4,328,170 $1,289,740 $ $1,934,618 $3,683,292 Other Reserves: Product warranty $3,206,372 $4,048,899 $ $3,631,019(2) $3,624,252 December 31, 1997: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $1,266,939 $272,578 $523,507(3) $509,787(1) $1,553,237 Reserve for inventory $4,873,922 $418,906 $ $964,658 $4,328,170 Other Reserves: Product warranty $2,364,705 $2,811,009 $173,900 (3) $2,143,242(2) $3,206,372 1998

DESCRIPTION	BEGINNING BALANCE	ADDITIONS CHARGES TO COSTS & EXPENSES	OTHER ADDITIONS	DEDUCTIONS	ENDING BALANCE
December 31, 2000
Reserves deducted from assets to which they apply:
Allowance for doubtful accounts	$1,966,251	$807,569	$105,000⁽³⁾	$773,820⁽¹⁾	$2,105,000
Reserve for inventory	$5,131,175	$1,437,610	$830,000⁽³⁾	$1,135,029	$6,263,756
Other Reserves: Product warranty	$4,075,358	$1,308,058	$322,871⁽³⁾	$1,264,442⁽²⁾	$4,441,845

December 31, 1999
Reserves deducted from assets to which they apply:
Allowance for doubtful accounts	$1,460,000	$425,557	$287,854⁽³⁾	$207,160⁽¹⁾	$1,966,251
Reserve for inventory	$3,683,292	$1,265,120	$1,639,600⁽³⁾	$1,456,837	$5,131,175
Other Reserves: Product warranty	$3,624,252	$1,466,176	$1,075,700⁽³⁾	$2,090,770⁽²⁾	$4,075,358

December 31, 1998:
Reserves deducted from assets to which they apply:
Allowance for doubtful accounts	$1,553,237	$1,092,185	$ 0	$1,185,422⁽¹⁾	$1,460,000
Reserve for inventory	$4,328,170	$1,289,740	$ 0	$1,934,618	$3,683,292
Other Reserves: Product warranty	$3,206,372	$4,048,899	$ 0	$ 3,631,019⁽²⁾	$3,624,252

(1) Uncollectible accounts written off, net of recoveries.
⁽²⁾ Warranty costs charged to the reserve.
⁽³⁾ Represents reserve balances of subsidiaries acquired in the year.

Schedule (II) ~~Page A-24~~
A-25

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Astec Industries, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ASTEC INDUSTRIES, INC. BY:/s/ J. Don Brock J. Don Brock, Chairman of the Board and President (Principal Executive Officer) BY:/s/ F. McKamy Hall F. McKamy Hall, Chief Financial Officer, Vice President and Treasurer (Principal Financial and Accounting Officer) Date: March 13, 2000

ASTEC INDUSTRIES, INC.

BY:/s/ J. Don Brock

J. Don Brock, Chairman of the Board and
President (Principal Executive Officer)

BY:/s/ F. McKamy Hall

F. McKamy Hall, Chief Financial Officer,
Vice President, and Treasurer (Principal
Financial and Accounting Officer)

Date: March 23, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by a majority of the Board of Directors of the Registrant on the dates indicated: SIGNATURE TITLE DATE /s/ J. Don Bro ck Chairman of the Board March 13, 2000 J. Don Brock and President /s/ Albert E. Guth President, Astec Financial March 13, 2000 Albert E. Guth Services, Inc. and Director /s/ W. Norman Smith President - Astec, Inc. March 13, 2000 W. Norman Smith and Director /s/ Robert G. Stafford Group Vice President-Aggregates March 13, 2000 Robert G. Stafford and Director /s/ E.D. Sloan Director March 13, 2000 E. D. Sloan, Jr. /s/ William B. Sansom Director March 14, 2000 William B. Sansom /s/ Ronald W. Dunmire Director March 13, 2000 Ronald W. Dunmire /s/ George C. Dillon Director March 13, 2000 George C. Dillon /s/ William D. Gehl Director March 13, 2000 William D. Gehl /s/ Daniel K. Frierson Director March 13, 2000 Daniel K. Frierson /s/ Robert Dressler Director March 13, 2000 Robert Dressler Commission File No. 0-14714 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS FILED WITH ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

SIGNATURE	TITLE	DATE

/s/ J. Don Brock J. Don Brock	Chairman of the Board and President	March 23, 2001
/s/ Albert E. Guth Albert E. Guth	President, Astec Financial Services, Inc. and Director	March 23, 2001
/s/ W. Norman Smith W. Norman Smith	President - Astec, Inc. and Director, Group Vice President Asphalt -	March 23, 2001
/s/ Robert G. Stafford Robert G. Stafford	Vice President, Aggregates Processing Group and Director	March 23, 2001
/s/ J. Wade Gilley J. Wade Gilley	Director	March 23, 2001
/s/ William B. Sansom William B. Sansom	Director	March 23, 2001
/s/ Ronald W. Dunmire Ronald W. Dunmire	Director	March 23, 2001
/s/ Robert H. West Robert H. West	Director	March 23, 2001
/s/ William D. Gehl William D. Gehl	Director	March 23, 2001
/s/ Daniel K. Frierson Daniel K. Frierson	Director	March 23, 2001
/s/ Robert Dressler Robert Dressler	Director	March 23, 2001

Commission File No. 0-14714

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

EXHIBITS FILED WITH ANNUAL REPORT

ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

ASTEC INDUSTRIES, INC.

4101 Jerome Avenue

Chattanooga, Tennessee 37407

ASTEC INDUSTRIES, INC. ~~4101 Jerome Avenue Chattanooga, Tennessee 37407 ASTEC INDUSTRIES, INC.~~
FORM 10-K
INDEX TO EXHIBITS Exhibit Number Description Exhibit 10.14 Astec Industries, Inc. Non-Employee Directors' Stock Incentive Plan. Exhibit 10.16 First Amendment, dated October 30, 1998, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago. Exhibit 10.29 Stock Purchase Agreement, dated October 31, 1999, by and among American Augers, Inc. and Its Shareholders and Astec Industries, Inc. Exhibit 10.30 Stock Purchase Agreement, dated November 1, 1999, by and among SIMCO, LLC and the Superior Industries of Morris, Inc. Employee Stock Ownership Plan and Astec Industries, Inc. Exhibit 10.31 Amended and Restated Master Note in the amount of $15,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA. Exhibit 10.32 Amended and Restated Master Note in the amount of $20,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA. Exhibit 22 Subsidiaries of the registrant. Exhibit 23 Consent of independent auditors. EXHIBIT 10.14 Astec Industries, Inc. Non-Employee Directors' Stock Incentive Plan March 3, 1998 ASTEC INDUSTRIES, INC. 1998 NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN 1. Purpose. The purpose of the Astec Industries, Inc. 1998 Non-Employee Directors Stock Incentive Plan is to attract, retain and compensate highly-qualified individuals who are not employees of Astec Industries, Inc. or any of its subsidiaries or affiliates for service as members of the Board by providing them with an ownership interest in the Common Stock of the Company. The Company intends that the Plan will benefit the Company and its stockholders by allowing Non-Employee Directors to have a personal financial stake in the Company through an ownership interest in the Common Stock and will closely associate the interests of Non-Employee Directors with that of the Company's stockholders. 2. Defined Terms. Unless the context clearly indicates otherwise, the following terms shall have the following meanings: "Annual Retainer" means the annual retainer payable by the Company to a Non-Employee Director for service as a director of the Company, as such amount may be changed from time to time. "Board" means the Board of Directors of the Company. "Company" means Astec Industries, Inc., a Tennessee corporation. "Committee" has the meaning assigned such term in Section 3. "Common Stock" means the common stock, par value $0.20 per share, of the Company. "Deferral Period" has the meaning set forth in Section 6(b) of the Plan. "Deferral Termination Date" has the meaning set forth in Section 6(b) of the Plan. "Deferred Grant Date" has the meaning set forth in Section 6(b) of the Plan. "Distributions" has the meaning set forth in Section 6(b) of the Plan. "Election Form" means a form approved by the Committee pursuant to which a Non-Employee Director elects a method of payment of Annual Retainer and whether payment will be deferred, as provided herein. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Market Value", on any date, means (i) if the Common Stock is listed on a securities exchange or is traded over the Nasdaq National Market, the closing sales price on such exchange or over such system on such date or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the Common Stock is not listed on a securities exchange or traded over the Nasdaq National Market, the mean between the bid and offered prices as quoted by Nasdaq for such date, provided that if it is determined that the fair market value is not properly reflected by such Nasdaq quotations, Fair Market Value will be determined by such other method as the Committee determines in good faith to be reasonable. "Hardship" has the meaning set forth in Section 6(c) of the Plan. "Non-Employee Director" means a director of the Company who is not an employee of the Company or of any of its subsidiaries or affiliates. "Option" means an option to purchase Shares granted under Section 7. Options granted under the Plan are not incentive stock options within the meaning of Section 422 of the Internal Revenue Code. "Option Grant Date" means the date upon which an Option is granted to a Non-Employee Director pursuant to Section 7. "Option Notice" means a written notice, agreement or certificate with a Non-Employee Director from the Company evidencing an Option. "Optionee" means a Non-Employee Director of the Company to whom an Option has been granted or, in the event of such Non-Employee Director's death prior to the expiration of an Option, such Non-Employee Director's estate or other designated beneficiary. "Options Election Period" means the period designated by the Committee each year during which Non-Employee Directors may elect to receive Options as payment of some or all of their Annual Retainer. The Options Election Period shall end on or before December 31 of each year for the following Plan Year. "Participant" means any Non-Employee Director who is participating in the Plan. "Permitted Transferee" of an Optionee means (i) one or more of the following family members of the Optionee: spouse, former spouse, child (whether natural or adopted), stepchild, any other lineal descendent of the Optionee; (ii) a trust, partnership or other entity established and existing for the sole benefit of, or under the sole control of, one or more of the above family members of the Optionee, or (iii) any other transferee specifically approved by the Committee after taking into account any state or federal tax, securities or other laws applicable to transferable options. "Plan" means the Astec Industries, Inc. 1998 Non- Employee Directors Stock Incentive Plan, as amended from time to time. "Plan Year" means the twelve-month period ending on December 31 of each year which, for purposes of the Plan, is the period for which Annual Retainers are earned. "Stock Grant Date" has the meaning set forth in Section 6(a) of the Plan. "Rule 16b-3" means Rule 16b-3, as amended from time to time, of the Securities and Exchange Commission as promulgated under the Exchange Act. "Securities Act" means the Securities Act of 1933, as amended. "Shares" means shares of Common Stock. 3. Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). Subject to the provisions of the Plan, the Committee shall be authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations necessary or advisable for the administration of the Plan; provided, however, that the Committee shall have no discretion with respect to the eligibility or selection of Non-Employee Directors to receive awards under the Plan, the number of Shares subject to any such awards or the time at which any such awards are to be granted. The Committee's interpretation of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in it hereunder, shall be conclusive and binding upon all parties concerned including the Company, its stockholders and persons granted awards under the Plan. The Committee may appoint a plan administrator to carry out the ministerial functions of the Plan, but the administrator shall have no other authority or powers of the Committee. Notwithstanding the foregoing, the Board shall exercise any and all rights, duties and powers of the Committee under the Plan to the extent required by the applicable exemptive conditions of Rule 16b-3, as determined by the Board its sole discretion. 4. Shares Subject to Plan. The Shares issued under the Plan shall not exceed in the aggregate 25,000 Shares of Common Stock. Such Shares may be authorized and unissued Shares or treasury Shares. 5. Participants. All active Non-Employee Directors shall be eligible to participate in the Plan. 6. Stock Awards. (a) Grant Dates and Formula for Grants. Unless a Non-Employee Director has elected pursuant to Section 7 to receive Options as payment of his or her Annual Retainer for such Plan Year or to defer receipt of Shares as provided in Section 6(b), Shares of Common Stock shall be automatically granted on the date that Annual Retainers are payable in any Plan Year (each such date is hereinafter referred to as a "Stock Grant Date") to each eligible Non-Employee Director commencing with the 1999 Stock Grant Date. The total number of Shares included in each grant under this Section 6(a) shall be determined by dividing the Annual Retainer amount by the Fair Market Value per Share on the Stock Grant Date. Fractions will be rounded to the next highest Share. The Shares or rights to which a Participant is entitled under this Section 6(a) shall be in lieu of the payment of his or her Annual Retainer in cash or Options. (b) Deferral of Receipt of Shares. (i) Election to Defer. Each Participant will have the right to elect, pursuant to a written Election Form delivered to the Committee or the plan administrator prior to the commencement of each Plan Year, to defer the grant of the Shares that would otherwise be granted to the Participant during the next ensuing Plan Year until the earlier of (i) the Participant's termination of service as a director or (ii) another designated date at least three years after the date of such deferral election (in either case, the "Deferral Termination Date"). Pursuant to this Election Form, the Participant will elect whether all of the deferred grant will be (a) granted within 30 days after the Deferral Termination Date or (b) granted in approximately equal annual installments of Shares over a period of two to ten years (as the Participant may elect) after the Deferral Termination Date, each such annual grant to be made within 30 days after the anniversary of the Deferral Termination Date. The deferral Election Form signed by the Participant prior to the Plan Year will be irrevocable except in case of Hardship (as defined in Section 6(c)) as determined in good faith by the Board pursuant to Section 6(c). No Shares will be issued until the grant date(s) so deferred (the "Deferred Grant Date") at which time the Company agrees to issue the Shares to the Participant. The Participant will have no rights as a stockholder with respect to the deferred rights to Shares, and the rights to such Shares will be unsecured. (ii) Deferred Dividend Account. If any dividends or other rights or distributions of any kind ("Distributions") are distributed to holders of Common Stock during the period from the applicable Stock Grant Date until the Deferral Termination Date (the "Deferral Period") but prior to the Participant's termination of service, an amount equal to the cash value of such Distributions on their distribution date, as such value is determined by the Committee, will be credited to a deferred dividend account for the Participant as follows: the account will be credited with the right to receive Shares having a Fair Market Value as of the date of the Distribution equal to the cash value of the Distribution. The Company will issue Shares equal to the cumulative total of rights to Shares in such account within 30 days after the Participant's Deferral Termination Date. If a Distribution is distributed to holders of Common Stock after the Participant's Deferral Termination Date but prior to the issuance in full of the deferred Shares, an amount equal to the cash value of such Distributions pertaining to any Shares still deferred shall be converted into Shares equivalent in value to the Distribution (based on the Fair Market Value as of the date of Distribution) and such Shares will be issued to the Participant as soon as practical after the date of the Distribution. No right or interest in the deferred dividend account shall be subject to liability for the debts, contracts or engagements of the Participant or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that nothing in this Section 6(b) shall prevent transfers by will or by the applicable laws of descent and distribution. The Committee will have the right to adopt other regulations and procedures to govern deferral of grants of Shares. (c) Hardship. The Board may accelerate the distribution of all or a portion of a Participant's deferred grants of Shares on account of his or her Hardship, subject to the following requirements: (i) the value of such accelerated distribution shall not exceed the amount necessary to satisfy the Hardship, less the amount which can be satisfied from other resources which are reasonably available to the Participant, (ii) the denial of the Participant's request for a Hardship acceleration would result in severe financial hardship to the Participant, and (iii) the Participant has not received an accelerated distribution on account of Hardship within the 12-month period preceding the acceleration. For purposes of this Plan, "Hardship" of a Participant, as determined by the Board in its discretion on the basis of all relevant facts and circumstances and in accordance with the following nondiscriminatory and objective standards uniformly interpreted and consistently applied, shall mean a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of his or her dependent, loss of the Participant's property due to casualty, or other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. A financial need shall not constitute a Hardship unless it is for at least $1,000,000 or the entire value of the principal amount of the Participant's deferred grants. 7. Stock Option Awards. (a) Election to Receive Options. A Non-Employee Director may elect to defer 100% of his or her Annual Retainer by conversion to Options in accordance with this Section 7. A Non-Employee Director who wishes to receive his or her Annual Retainer for a Plan Year in the form of Options must irrevocably elect to do so during the Options Election Period for such Plan Year, by delivering a valid Election Form to the Committee or the plan administrator. A Non-Employee Director's participation in Section 7 of the Plan will be effective with respect to the Annual Retainer to be earned in the first Plan Year beginning after the Committee or the plan administrator receives the Non-Employee Director's Election Form. (b) Irrevocable, Annual Election. Elections to receive Options as payment of Annual Retainer are irrevocable and shall be valid only for one Plan Year. New elections must be made for participation in Section 7 of the Plan for subsequent Plan Years. (c) Time of Grant. Options shall be granted to each Non-Employee Director who, during the applicable Options Election Period, filed with the Committee or the plan administrator a written irrevocable election to receive Options as payment of such Non-Employee Director's Annual Retainer payable in the following Plan Year. Such Options will be granted on the date the Annual Retainer for such Plan Year is otherwise payable. (d) Number of Options. The Committee or the plan administrator shall cause to be calculated in the month of November of each year the Black- Scholes value of an Option under the Plan to purchase one Share of Common Stock. Such Black-Scholes value shall apply for purposes of this Section 7(d) for all Options to be granted in the following Plan Year. The number of Shares subject to an Option granted pursuant to this Section 7 shall be the number of whole Shares equal to: (A times B) divided by C, where: A = the dollar amount of the Annual Retainer that the Non-Employee Director elects shall be payable in Options; and B = the quotient of 1 divided by the Black-Scholes value of an Option for one Share (expressed as a percentage of the Fair Market Value of one Share of Common Stock); and C = the Fair Market Value per Share on the Option Grant Date. In determining the number of Shares subject to an Option, any fraction of a Share will be rounded to the next highest whole number of Shares. For example: Assume that a Non-Employee Director has elected to defer $5,000 of his or her Annual Retainer, that the Fair Market Value per Share on the Option Grant Date was $16, and that the most recently determined Black- Scholes value of an Option was 50% of the Fair Market Value. The Non-Employee Director would be granted 625 Options as payment of the $5,000 compensation. ($5,000 times 1/50%) divided by $16 FMV = 625 Options granted. (e) Exercise Price. The total price paid per Share under each Option granted under this Section 7 shall be the Fair Market Value per Share on the Option Grant Date. (f) Exercise of Options. Each Option shall be fully exercisable upon grant and will remain exercisable for 10 years from the Option Grant Date regardless of whether the Optionee remains a director of the Company throughout such term. An Option, or portion thereof, may be exercised in whole or in part only with respect to whole Shares. (g) Payment of Exercise Price. Shares shall be issued to the Optionee (or his Permitted Transferee) pursuant to the exercise of an Option only upon receipt by the Company from the Optionee (or his Permitted Transferee) of payment in full of the exercise price. The exercise price shall be payable in United States dollars upon the exercise of the Option and may be paid in cash, by check, or in Shares having a total Fair Market Value on the date of exercise equal to the exercise price; provided that if the Shares surrendered in payment of the exercise price were themselves acquired otherwise than on the open market, such Shares shall have been held for at least six months. The Committee may permit the use of any cashless exercise methods that are permitted by law. (h) Option Notice. Each Option granted under the Plan shall be evidenced by an Option Notice which shall be executed by an authorized officer of the Company. Such Option Notice shall contain provisions regarding (a) the number of Shares that may be issued upon exercise of the Option, (b) the exercise price per Share of the Option and the means of payment therefor, (c) the term of the Option, and (d) such other terms and conditions not inconsistent with the Plan as may be determined from time to time by the Committee. (i) Transferability of Options. No Option shall be assignable or transferable by the Optionee other than by will or the laws of descent and distribution or to a Permitted Transferee. Any transfer to a Permitted Transferee shall be subject to the following terms and conditions: (i) An Option transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution. (ii) Transferred Options shall continue to be subject to all the terms and conditions of the Option as applicable to the original Optionee (other than the ability to further transfer the Option). (iii) The Optionee and the Permitted Transferee shall execute any and all documents reasonably requested by the Committee or the plan administrator, including without limitation documents (A) to confirm the status of the transferee as a Permitted Transferee, (B) to satisfy any requirements for an exemption for the transfer under applicable federal and state securities laws, and (C) to evidence the transfer. (iv) Shares acquired by a Permitted Transferee through exercise of an Option may not be transferred, nor will any assignee or transferee thereof be recognized as an owner of such Shares by the Company for any purpose, unless a registration statement under the Securities Act and any applicable state securities act with respect to such Shares shall then be in effect or unless the availability of an exemption from registration with respect to any proposed transfer or disposition of such Shares shall be established to the satisfaction of counsel for the Company. 8. Prorated Grants. If on any date, Shares of Common Stock are not available under the Plan to grant to Non-Employee Directors the full amount of a grant contemplated by the Plan, then each such director shall receive an award equal to the number of Shares of Common Stock then available under the Plan divided by the number of Non-Employee Directors entitled to a grant of Shares or Options on such date. Fractional Shares shall be ignored and not granted. Any shortfall resulting from such proration shall be paid in the form of cash. 9. Withholding. Except with respect to the exercise of Options transferred to Permitted Transferees, whenever the Company issues Shares under the Plan, the Company shall have the right to withhold from sums due the recipient, or to require the recipient to remit to the Company, any amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery of any certificate for such Shares. 10. Adjustments. (a) Subject to Section 10(c) but notwithstanding any other term of this Plan, in the event that the Committee determines that any Distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, in the Committee's sole discretion, affects the Common Stock such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an award or awards hereunder, then the Committee shall, in such manner as it may deem equitable, adjust the number and type of shares (or other securities or property) which may be granted under the Plan (including, but not limited to, adjustments of the maximum number and kind of securities which may be issued); provided, however, that to the extent required by the applicable exemptive conditions of Rule 16b-3, any such adjustment shall be subject to approval by the Board. (b) Subject to Section 10(c) but notwithstanding any other term of this Plan, in the event of any corporate transaction or event described in paragraph (a) which results in Shares being exchanged for or converted into cash, securities or other property (including securities of another corporation), all stock grants deferred under Section 6 shall become the right to receive such cash, securities or other property, and there shall be substituted on an equitable basis for each Share of Common Stock then subject to an Option granted pursuant to Section 7 the consideration payable with respect to the outstanding Shares of Common Stock in connection with such corporate transaction or event, all without any change in the aggregate purchase price for the Shares then subject to the Option. (c) The number of Shares finally granted under this Plan shall always be rounded to the next highest whole Share. (d) Any decision of the Committee pursuant to the terms of this Section 10 shall be final, binding and conclusive upon the Participants, the Company and all other interested parties; provided, however, that to the extent required by the applicable exemptive conditions of Rule 16b-3, any such decision shall be subject to approval by the Board. 11. Amendment. The Committee may terminate or suspend the Plan at any time, without stockholder approval. The Committee may amend the Plan at any time and for any reason without stockholder approval; provided, however, that the Committee may condition any amendment on the approval of stockholders of the Company if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws, policies or regulations. No termination, modification or amendment of the Plan may, without the consent of a Participant, adversely affect a Participant's rights under an award granted prior thereto. 12. Indemnification. Each person who is or has been a member of the Committee or who otherwise participates in the administration or operation of this Plan shall be indemnified by the Company against, and held harmless from, any loss, cost, liability or expense that may be imposed upon or incurred by him or her in connection with or resulting from any claim, action, suit or proceeding in which such person may be involved by reason of any action taken or failure to act under the Plan and shall be fully reimbursed by the Company for any and all amounts paid by such person in satisfaction of judgment against him or her in any such action, suit or proceeding, provided he or she will give the Company an opportunity, by written notice to the Committee, to defend the same at the Company's own expense before he or she undertakes to defend it on his or her own behalf. This right of indemnification shall not be exclusive of any other rights of indemnification. The Committee and the Board may rely upon any information furnished by the Company, its public accountants and other experts. No individual will have personal liability by reason of anything done or omitted to be done by the Company, the Committee or the Board in connection with the Plan. 13. Duration of the Plan. The Plan shall remain in effect until the tenth anniversary of the Effective Date, unless terminated earlier by the Committee. 14. Expenses of the Plan. The expenses of administering the Plan shall be borne by the Company. 15. Effective Date. The Plan was originally adopted by the Board on March 12, 1998, and became effective upon the approval thereof by the stockholders of the Company on April 23, 1998 (the "Effective Date"). ASTEC INDUSTRIES, INC. By: /s/ Richared W. Bethea, Jr. Its: Secretary EXHIBIT 10.16 First Amendment, dated October 30, 1998, to the Second Amended and Restated Credit Agreement dated November 24, 1997, by and between the Company and Astec Financial Services, Inc. and The First National Bank of Chicago. EXHIBIT 10.16 FIRST AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT THIS FIRST AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of October 30, 1998 is by and among Astec Industries, Inc., a Tennessee corporation ("Astec"), Astec Financial Services, Inc., a Tennessee corporation ("AFS"; Astec and AFS are sometimes referred to herein individually as "Borrower" and collectively as "Borrowers"), the financial institutions parties hereto in their capacities as lenders hereunder (collectively, the "Lenders", and each individually, a "Lender"), The First National Bank of Chicago, as agent (in its individual capacity, "FNBC"), for itself, as Lender, and as administrative agent for the other Lenders ("Agent"). RECITALS WHEREAS, Borrowers, Lenders, and Agent entered into a certain Second Amended and Restated Credit Agreement dated as of November 24, 1997 (the "Credit Agreement"; all capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement), pursuant to which Lenders provided certain revolving credit and swing line facilities to Borrowers which facilities were guaranteed by certain guarantors defined therein; and WHEREAS, the parties hereto wish to amend and consent to certain provisions of the Credit Agreement on the terms and conditions set forth herein as of the date first written above (the "First Amendment Effective Date"). NOW, THEREFORE, for and in consideration of the terms and conditions contained herein, and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, Borrowers, Agent and Lenders hereby agree as follows: Section 1. Amendments and Waiver. 1.1. Article I. From and after the First Amendment Effective Date, Article I of the Credit Agreement is hereby amended by (a) inserting the following: "Consolidated Net Revenue" means the consolidated net revenue of the Credit Parties for the most recently completed fiscal year determined on a consolidated basis in accordance with Agreement Accounting Principles. and (b) inserting the following: "Johnson Acquisition" means the purchase of assets of Johnson Crushers International, Inc. pursuant to that certain Asset Purchase Agreement dated as of October __, 1998 between Johnson Crushers International, Inc. and Astec. 1.2. Section 6.16. From and after the First Amendment Effective Date, Section 6.16 of the Credit Agreement is hereby amended by inserting the following: (k) The Johnson Acquisition; provided, however, that (i) the purchase price is no more than $15,000,000, (ii) Astec submits a certificate prior to the closing transaction certifying that the Credit Parties are in compliance with the financial and other covenants hereunder on a pro forma basis, after giving effect to the Johnson Acquisition, and (iii) the purchaser thereunder and any Affiliate of Astec formed in connection therewith (if not a Credit Party on the date hereof) executes and delivers a guaranty to the Lenders in substantially the form of the Guaranty. 1.3. Section 6.23. From and after the First Amendment Effective Date, Section 6.23 of the Credit Agreement is hereby amended by deleting Section 6.23 in its entirety and inserting the following in substitution therefor: 6.23. Fixed Asset Expenditure. The Borrowers will not, nor will they permit any Credit Party to, expend, or be committed to expend, in the acquisition of fixed assets, in excess of five percent (5%) of Consolidated Net Revenue during any one fiscal year. The Agent and the Lenders hereby waive any Default that exists under Section 6.23 of the Credit Agreement for the period ending September 30, 1998. This waiver is specifically limited as set forth above and does not constitute a waiver of any provisions of the Credit Agreement in connection with any other period. 2. Reference to and Effect on the Credit Agreement. 2.1. Except as specifically amended above, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed. 2.2. Except as specifically provided herein, the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of Agent or Lenders under the Credit Agreement or any of the other Loan Documents, or constitute a waiver of any provision of the Credit Agreement or any of the other Loan Documents. Upon the effectiveness of this Agreement, each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby. 2.3. Each Guarantor joins in this Amendment solely for the purpose of consenting to the terms hereof, and each Guarantor hereby unconditionally consents to the terms of this Amendment and fully ratifies and affirms the Second Amended and Restated Guaranty, taking into account this Amendment. 3. Representations and Warranties. To induce Agent and Lenders to execute this Agreement, the Borrowers represent and warrant to Agent and Lenders as follows: 3.1. The Borrowers have all requisite power and authority to execute, deliver and perform this Agreement. 3.2. The execution, delivery and performance of this Agreement (i) has been duly authorized by all requisite action of Borrowers and (ii) will not (A) violate (1) any provision of law, statute, rule or regulation or the articles/certificate of incorporation or other constitutive documents or the by-laws or regulations of Borrowers, (2) any order of any court, or any rule, regulation or order of any other agency of government binding upon Borrowers, or (3) any provisions of any material indenture, agreement or other instrument to which Borrowers are a party, or by which Borrowers or any of their properties or assets is or may be bound, (B) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (ii)(A)(3) above. 3.3. This Agreement constitutes the legal, valid and binding obligation of Borrowers enforceable in accordance with its terms. 3.4. The representations and warranties in the Loan Documents are true and correct in all material respects with the same effect as though made on and as of this date. 4. Compliance. Borrowers are in compliance with all of the terms and provisions set forth in the Credit Agreement and the other Loan Documents and no Default or Unmatured Default has occurred and is continuing. Borrowers further acknowledge and agree that as of the date hereof they have no offsets or claims against Agent or Lenders under the Loan Documents or under other agreements between Borrowers and Lenders, or any defenses to Agent's or Lenders' enforcement of their rights and remedies under the Loan Documents. 5. Miscellaneous. 5.1. Entire Agreement. This Agreement, including all schedules and other documents attached hereto or incorporated by reference herein, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all other understandings, oral or written, with respect to the subject matter hereof. 5.2. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed an original, but all such counterparts shall constitute one and the same instrument. 5.3. Costs and Expenses. In accordance with Section 9.7 of the Credit Agreement, Borrower agrees to promptly pay all reasonable fees, costs and expenses incurred by Agent in connection with the preparation, execution and delivery of this Agreement. 5.4. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 5.5. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 5.6. Successors and Assigns. This Agreement shall be binding upon each of the parties hereto and their respective successors and assigns, except that Borrower may not assign its rights or obligations hereunder without the written consent of Agent and Lenders. [SIGNATURE PAGES TO FOLLOW] IN WITNESS WHEREOF, the Borrowers, the Lenders, the Guarantors and the Agent have executed this Agreement as of the date first above written. ASTEC INDUSTRIES, INC. By: /s/ Richard W. Bethea, Jr. Print Name: Richard W. Bethea, Jr. Title: Vice President Address: 4101 Jerome Avenue Chattanooga, Tennessee 37407 Telecopy: (423) 867-4127 Telephone: (423) 867-4210 Attention: F. McKamy Hall ASTEC FINANCIAL SERVICES, INC. By: /s/ Albert E. Guth Print Name: Albert E. Guth Title: President Address: 6400 Lee Highway, Suite 107 Chattanooga, Tennessee 37421 Telecopy: (423) 899-4456 Telephone: (423) 899-5898 Attention: Albert E. Guth IN WITNESS WHEREOF, the Borrowers, the Lenders, the Guarantors and the Agent have executed this Agreement as of the date first above written. HEATEC, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary TELSMITH, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary ROADTEC, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary ASTEC TRANSPORTATION, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary TRENCOR, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary PRODUCTION ENGINEERED PRODUCTS, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary ASTEC, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary CEI ENTERPRISES, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary KOLBERG-PIONEER, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary ASTEC HOLDINGS, INC. By: /s/ Richard W. Bethea, Jr. Its: Secretary IN WITNESS WHEREOF, the Borrowers, the Lenders, the Guarantors and the Agent have executed this Agreement as of the date first above written. THE FIRST NATIONAL BANK OF CHICAGO, individually and as Agent By: /s/ David T. McNeela Print Name: David T. McNeela Title: Vice President Address: One First National Plaza Chicago, Illinois 60670 Telecopy: (312) 732-5296 Telephone: (312) 732-5730 Attention: David T. McNeela IN WITNESS WHEREOF, the Borrowers, the Lenders, the Guarantors and the Agent have executed this Agreement as of the date first above written. FIRST AMERICAN NATIONAL BANK By: /s/ Michael Metcalf Print Name: Michael Metcalf Title: Vice President Address: One Union Square, Suite 100 Chattanooga, Tennessee 37402 Telecopy: (423) 755-6014 Telephone: (423) 755-6022 Attention: Michael Metcalf IN WITNESS WHEREOF, the Borrowers, the Lenders, the Guarantors and the Agent have executed this Agreement as of the date first above written. AMSOUTH BANK By: /s/ Steven Anderson Print Name: Steven Anderson Title: Vice President Address: 601 Market Center Chattanooga, Tennessee 37402 Telecopy: (423) 752-1558 Telephone: (423) 752-1623 Attention: Steven Anderson EXHIBIT 10.29 Stock Purchase Agreement, dated October 31, 1999, by and among American Augers, Inc. and Its Shareholders and Astec Industries, Inc. STOCK PURCHASE AGREEMENT BY AND AMONG AMERICAN AUGERS, INC. AND ITS SHAREHOLDERS AND ASTEC INDUSTRIES, INC. TABLE OF CONTENTS Page No. ARTICLE 1 PURCHASE AND SALE OF COMPANY SHARES 1.1 BASIC TRANSACTION. 1.2 PURCHASE PRICE. 1.3 PURCHASE PRICE ADJUSTMENT. 1.4 HOLD BACK ACCOUNT. 1.5 PURCHASE PRICE COLLECTION AGENT. 1.6 THE CLOSING. 1.7 DELIVERIES AT THE CLOSING. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS 2.1 AUTHORITY. 2.2 EXECUTION; BINDING EFFECT. 2.3 OWNERSHIP OF AND TITLE TO THE SHARES. 2.4 NO CONFLICT. 2.5 CAPITAL STOCK AND STOCKHOLDER RELATIONS. 2.6 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER OF THE COMPANY AND THE TRUST. 2.7 ORGANIZATIONAL DOCUMENTS. 2.8 BROKERS' FEES. 2.9 TITLE TO ASSETS. 2.10 SUBSIDIARIES AND AFFILIATES. 2.11 FINANCIAL STATEMENTS. 2.12 EVENTS SUBSEQUENT TO THE BASELINE FINANCIAL STATEMENT. 2.13 UNDISCLOSED LIABILITIES. 2.14 LEGAL COMPLIANCE. 2.15 TAX MATTERS. 2.16 INTELLECTUAL PROPERTY. 2.17 CONTRACTS. 2.18 EMPLOYEE ARRANGEMENTS, UNION AGREEMENTS AND BENEFIT PLANS AND GOVERNMENT COMPLIANCE. 2.19 NOTES AND ACCOUNTS RECEIVABLE. 2.20 POWERS OF ATTORNEY. 2.21 INSURANCE. 2.22 GUARANTIES. 2.23 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. ENVIRONMENTAL PROTECTION. 2.24 ABSENCE OF CERTAIN PAYMENTS. 2.25 ORGANIZATIONS AND CLUBS. 2.26 BANK ACCOUNTS. 2.27 CUSTOMERS AND SUPPLIERS OF THE COMPANY. 2.28 EMPLOYEE BENEFITS. 2.29 INVENTORY. 2.30 LITIGATION; ORDERS. 2.31 REAL PROPERTY. (a) Owned Real Property. (b) Leased Real Property. 2.32 YEAR 2000 COMPLIANCE. 2.33 COMPLETENESS OF STATEMENTS; EFFECT OF REPRESENTATIONS AND WARRANTIES. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE BUYER 3.1 ORGANIZATION OF THE BUYER. 3.2 AUTHORIZATION OF TRANSACTION. 3.3 NONCONTRAVENTION. 3.4 BROKERS' FEES. 3.5 INVESTMENT. 3.6 EMPLOYEES OF THE COMPANY. 3.7 NO ADVERSE TAX ELECTIONS. 3.8 SUFFICIENT FUNDS. ARTICLE 4 PRE-CLOSING COVENANTS 4.1 GENERAL. 4.2 NOTICES AND CONSENTS. 4.3 OPERATION OF BUSINESS. 4.4 PRESERVATION OF BUSINESS. 4.5 FULL ACCESS. 4.6 NOTICE OF DEVELOPMENTS. 4.7 EXCLUSIVITY. 4.8 SURVEY. ARTICLE 5 POST-CLOSING COVENANTS 5.1 GENERAL. 5.2 LITIGATION SUPPORT. 5.3 TRANSITION. 5.4 CONFIDENTIALITY. 5.5 ACCESS TO RECORDS. ARTICLE 6 CONDITIONS TO OBLIGATION TO CLOSE 6.1 CONDITIONS TO OBLIGATION OF THE BUYER. 6.2 CONDITIONS TO OBLIGATION OF THE SELLERS. ARTICLE 7 REMEDIES FOR BREACHES OF THIS AGREEMENT 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. 7.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER. 7.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS. 7.4 MATTERS INVOLVING THIRD PARTIES. 7.5 OFFER OF SETTLEMENT. 7.6 INFRINGEMENT CLAIMS. 7.7 NOTICE OF CLAIM. 7.8 OTHER INDEMNIFICATION PROVISIONS. ARTICLE 8 TAX MATTERS 8.1 TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. 8.2 TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE. 8.3 DISPUTES AS TO TAX RETURNS. 8.4 COOPERATION ON TAX MATTERS. 8.5 CERTAIN TAXES. ARTICLE 9 TERMINATION 9.1 TERMINATION OF AGREEMENT. 9.2 EFFECT OF TERMINATION. ARTICLE 10 DEFINITIONS, SCHEDULES AND EXHIBITS 10.1 DEFINITIONS. 10.2 10.2 LIST OF SCHEDULES AND EXHIBITS. ARTICLE 11 MISCELLANEOUS 11.1 SELLER AGENTS. 11.2 KNOWLEDGE. 11.3 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. 11.4 NO THIRD-PARTY BENEFICIARIES. 11.5 ENTIRE AGREEMENT. 11.6 SUCCESSION AND ASSIGNMENT. 11.7 COUNTERPARTS. 11.8 HEADINGS. 11.9 NOTICES. 11.10 GOVERNING LAW. 11.11 AMENDMENTS AND WAIVERS. 11.12 SEVERABILITY. 11.13 EXPENSES. 11.14 CONSTRUCTION. 11.15 INCORPORATION OF EXHIBITS AND SCHEDULES. 11.16 SPECIFIC PERFORMANCE. STOCK PURCHASE AGREEMENT THIS AGREEMENT made by and among Astec Industries, Inc., a Tennessee corporation (the "Buyer"), and American Augers, Inc., a Delaware corporation (the "Company") and Phil Jenkins ("Jenkins"), and Roger K. Eve ("Eve"), the Phil Jenkins Revocable Living Trust dated 1/6/67, as amended (the "Revocable Trust"), the Ann Arbor Hands-On Museum Irrevocable Trust dated 9/17/99 (the "Museum Trust"), the Dexter Intergenerational Care Center, Inc. Irrevocable Trust dated 9/18/99 (the "Dexter Trust"), the Chelsea Community Hospital Irrevocable Trust Dated 9/18/99 (the "Hospital Trust"), Michael T. Mooney ("Mooney"), Denis Fox ("Fox"), Thomas Hartzler ("Hartzler"), William Riel ("Riel"), Leonard Craig Johnson ("Johnson"), Lisa King ("King") and Tim Small ("Small") (Eve, the Revocable Trust, the Museum Trust, the Dexter Trust, the Hospital Trust, Mooney, Fox, Hartzler, Riel, Johnson, King and Small are hereinafter referred to individually as a "Seller" or collectively as the "Sellers") is entered into on September 21, 1999. The Buyer and Sellers are referred to collectively herein as the "Parties". W I T N E S S E T H: WHEREAS, the Sellers collectively own (or will own on the Closing Date) all of the outstanding capital stock of the Company (the "Shares"); and WHEREAS, the Sellers desire to sell and the Buyer desires to purchase the Shares pursuant to the terms and conditions of this Agreement; NOW THEREFORE, in consideration of the mutual promises and conditions contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Company and the Parties, intending to be legally bound hereby, agree as follows: ARTICLE PURCHASE AND SALE OF COMPANY SHARES Basic Transaction. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Sellers, and the Sellers agree to sell, transfer, assign and deliver to the Buyer, the Shares. Purchase Price. The Buyer agrees to pay to the Collection Agent (as defined below) on behalf of the Sellers at the Closing as consideration for the Shares an amount equal to Nineteen Million Six Hundred Seventy Thousand Dollars ($19,670,000) less the sum of (a) all long-term debt existing as of the Closing Date (including the current portion of the long-term debt) (the "Long-Term Debt") and set forth on Schedule 1.2(a) and (b) all loans to the Company from any Sellers existing as of the Closing Date and set forth on Schedule 1.2(a) (the "Shareholder Loans"). For purposes of this Agreement, mortgage debt secured by the Company's real property that was incurred for expansion of the Company's facilities with the written approval of the Buyer shall not be considered Long-Term Debt. The amount resulting from the calculation in the first sentence of this Section 1.2 shall be referred to as the "Purchase Price". For purposes of an example, based on the Baseline Financial Statements (as defined below and set forth on Schedule 2.11), the Long-Term Debt would be $1,597,405 and the Shareholders Loan would be $4,480,500, the sum of which is $6,077,905; accordingly, the Purchase Price would be $13,592,095. All but Five Hundred Thousand Dollars ($500,000) (the "Hold Back Amount") of the Purchase Price shall be paid to the Sellers by the Buyer at Closing in immediately available funds pursuant to wire transfer instructions delivered to the Buyer prior to the Closing Date. The Hold Back Amount shall be deposited into the Hold Back Account pursuant to Section 1.4. Immediately after the post-Closing adjustment has been made pursuant to Section 1.3, the Buyer shall make payment to the Collection Agent in immediately available funds equal to any additional portion of the Purchase Price owed to the Sellers. Purchase Price Adjustment. The Purchase Price will be adjusted upward or downward, as applicable, by the difference between (i) the net book value of the Company determined from the June 30, 1999 balance sheet of the Company (the "Baseline Financial Statement"), calculated in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis and (ii) the net book value of the Company on the Closing Date, calculated in accordance with GAAP applied on a consistent basis and subject to a confirming inventory observed by the Buyer and conducted in a manner acceptable to the Buyer (the "Closing Date Statement"). The Closing Date Statement shall be subject to certain pro forma adjustments which are set forth on Schedule 1.3. Schedule 1.3 also sets forth the mutually agreed upon methodology that will be used for the valuation of the Company's inventory for the Closing Date Statement. The Closing Date Statement shall be prepared by the Sellers and delivered to the Buyer as soon as practicable, but in any event not later than thirty-seven (37) days after the Closing Date. The Buyer shall have thirty (30) days from receipt of the Closing Date Statement to review, analyze, audit and propose changes to the Closing Date Statement. If any changes are proposed, the Buyer and the Sellers shall in good faith as soon as reasonably possible reach agreement on the Closing Date Statement and determine the adjustments and the Purchase Price. If they are unable to do so, the specific matters in dispute shall be submitted to KPMG's Cleveland, Ohio office or to another national, independent accounting firm (other than Ernst & Young, L.L.P. or Arthur Andersen, L.L.P.) approved by the Sellers and the Buyer. As expeditiously as possible, and in any event within ten (10) days of submission, KPMG (or such other independent accounting firm) will deliver to the Sellers and the Buyer its determination of the specified matters in dispute, which determination shall be final and binding on the parties hereto. The fees and expenses of KPMG (or such other independent accounting firm) shall be borne one-half by the Sellers and one-half by the Buyer. Immediately thereafter, the remaining portion of the Purchase Price owed to the Sellers, if any, shall be distributed from the Hold Back Account to the Collection Agent, and the remaining balance of the Hold Back Account shall be distributed to the Buyer. If the adjustment causes the Purchase Price to be in excess of the Purchase Price calculated in Section 1.2, then the Buyer shall pay such additional amount to the Collection Agent within ten (10) days within ten (10) days after the delivery of such determination from the independent accountants. If the adjustment causes the Purchase Price to be more than Five Hundred Thousand Dollars ($500,000) less than the Purchase Price calculated in Section 1.2, then the Sellers shall pay such additional amount to the Buyer within ten (10) days after the delivery of such determination from the independent accountants. The Parties anticipate that the Closing Date will be on or before October 31, 1999. If the Closing Date does not take place by October 31, 1999, then the Sellers, the Seller Agents and the Buyer shall use their best efforts to agree upon a final Closing Date Statement by December 31, 1999. Prior to the execution of this Agreement, the Revocable Trust granted non-qualified stock options to the employees of the Company set forth in Schedule 1.3(b) ("Optioned Employees") in the amount of shares set opposite their respective names in Schedule 1.3(b). Immediately prior to the Closing Date, the Optioned Employees will exercise their options and receive from the Revocable Trust an aggregate of Two Hundred Seventeen (217) Shares. The exercise price with respect to said options is $2,243.42 per share (the "Exercise Price"). The parties recognize that the fair market value of the options is in excess of the Exercise Price, and that the aggregate fair market value of the underlying Shares to be received upon the exercise of said options is approximately $2,200,000 (said amount to be verified and determined as of the Closing Date). The parties agree that the grant of the stock options and the exercise of the stock options described in the above paragraph have no impact on the net book value of the Company except for federal and state income tax consequences. The parties recognize that under Section 83 of the Code, and provided the parties comply with all applicable Code consent provisions, the difference between the fair market value of the options and the Exercise Price will entitle the Company to a federal income tax deduction and a corresponding recognition of taxable income to the Optioned Employees. Although the exact fair market value of the options is not presently determinable, the parties anticipate that the difference between the fair market value of the options and the Exercise Price could be in the range of $8,000.00 per share. Accordingly, the parties anticipate that the Company's tax deduction could be in the range of $1,700,000 resulting in a tax benefit of approximately $600,000 and a corresponding $600,000 increase in net book value of the Company as of the Closing Date. Hold Back Account. On or before the Closing Date, the Buyer shall deposit Five Hundred Thousand Dollars ($500,000) of the Purchase Price into an escrow account held by Firstar Bank, N.A. (the "Hold Back Account") until the post-closing adjustment set forth in Section 1.3 has been completed. The Hold Back Account shall be subject to the terms and conditions of an escrow agreement in the form attached hereto as Exhibit A (the "Escrow Agreement") and this Agreement. Purchase Price Collection Agent. (a) By the Closing Date, each Seller shall have irrevocably made, constituted and appointed, Firstar Bank, N.A. as such Seller's true and lawful attorney-in-fact and agent (the "Collection Agent") to act for such Seller in such Seller's name, to collect from the Buyer and disburse the Purchase Price (and any post-Closing Adjustments thereto) to the Sellers pursuant to the terms and conditions of a collection agent agreement in the form attached hereto as Exhibit B (the "Collection Agent Agreement"). (b) Each Seller hereby releases the Buyer, Firstar Bank, N.A. and their respective affiliates from any liability or loss incurred by such Seller as a result of the performance by the Collection Agent of its obligations in connection with this Agreement. The Closing. The delivery of the Purchase Price less the Hold Back Amount, the sale, transfer, and delivery of the Shares pursuant to Section 1.1 hereof and the delivery of the other instruments, certificates and legal opinions required hereunder (the "Closing"), shall take place at the offices of Kahn, Kleinman, Yanowitz & Arnson, 2600 Tower at Erieview, Cleveland, Ohio, on the third business day after the expiration or early termination of the statutory waiting period under the Hart- Scott-Rodino Antitrust Improvements Act of 1976 as amended or such other time and date as the parties may agree upon (the date and time of the Closing being referred to herein as the "Closing Date"). Deliveries at the Closing. At the Closing, (i) the Sellers (or the Seller Agents) will deliver to the Buyer the certificates, instruments, and documents referred to in Section 6.1 below, (ii) the Buyer will deliver to the Sellers (or the Seller Agents) the certificates, instruments, and documents referred to in Section 6.2 below, (iii) each of the Sellers (or the Seller Agents) will deliver to the Buyer stock certificates representing all of his or its Shares, endorsed in blank or accompanied by duly executed assignment documents, and (iv) the Buyer will deliver to the Collection Agent the consideration specified in Section 1.2 above. The Company shall pay off the Shareholder Loans and the Long-Term Debt at the Closing. ARTICLE REPRESENTATIONS AND WARRANTIES OF THE SELLERS In order to induce the Buyer to enter into this Agreement and the consummate the transactions contemplated hereby, the Sellers, Jenkins and the Company jointly and severally represent and warrant (except as to Sections 2.1, 2.2, 2.3 and 2.4, which the Sellers, Jenkins and the Company severally represent and warrant) that as of the date hereof and as of the Closing Date, the following representations and warranties are true, complete and accurate, and all such representations and warranties shall be continuing and shall survive the closing pursuant to section 7.1 below: Authority. The Sellers, Jenkins and the Company have the absolute and unrestricted right, power, authority and capacity to execute and deliver this Agreement and all ancillary documents or agreements related to this Agreement and the transactions contemplated thereby (collectively, the "Closing Documents") to which they are a party and to perform their obligations thereunder. No consents of any nature are required to complete the sale of the Shares, or if any consents are required, those consents will be obtained prior to the Closing. Execution; Binding Effect. The Closing Documents have been duly authorized and this Agreement has been, and the other Closing Documents have been or will be, duly and validly executed and delivered by the Company and the Sellers, and this Agreement constitutes, and the other Closing Documents constitute or will constitute, valid and binding agreements of the Company and the Sellers, enforceable against the Company and the Sellers, in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors' rights generally or by general equitable principles. Ownership of and Title to the Shares. Each Seller represents and warrants that as concerns the shares he, she or it owns (or will own on the Closing Date) the Shares set forth opposite such Seller's name on Schedule 2.3, that each such Seller has (or will have on the Closing Date) good and marketable title to the Shares set forth after his or its name, free and clear of all liens, encumbrances, restrictions on transfer, options, charges, security interests, equities and claims whatsoever, that each has the full legal right, capacity and power to execute, deliver and perform this Agreement; that this Agreement and the collateral documents referenced herein executed by each such Seller constitutes the legal, valid and binding obligation of each such Seller according to its respective terms; that each such Seller has full legal right and power to sell, transfer and deliver such Shares in the manner provided in this Agreement; that upon delivery of, and payment for, such Shares pursuant to this Agreement, the Buyer will acquire good and marketable title thereto, free and clear of all liens, encumbrances, restrictions on transfer, options, charges, security interests, equities and claims whatsoever; and that such Shares are at the date hereof and will on the Closing Date be duly authorized, validly issued and outstanding, fully-paid and non-assessable, with no personal liability attaching to the ownership thereof. No Conflict. Except as set forth on Schedule 2.4(a), neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Sellers or the Company are subject or any provision of the charter, bylaws or other organizational document of the Company or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Sellers or the Company are a party or by which they are bound or to which any of the Company's assets are subject which would have a material impact or effect on this transaction or the operations of the Company, or (iii) result in the imposition of any lien, charge, encumbrance or other security interest upon any of the Company's assets. Except as set forth on Schedule 2.4(b), there is no option, warrant, purchase right, or other contract or commitment that could require the sale, transfer, or other disposal of any capital stock or other securities of the Company (other than this Agreement). There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock or any other securities. Except as set forth on Schedule 2.4(c), there are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company. Except as set forth on Schedule 2.4(d), there are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company. Except as set forth on Schedule 2.4(e), neither the Sellers nor the Company are required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency, lenders, lessors or other third parties (including consents for assignments under any agreement that considers a change of a control to be an assignment) in order for the parties to consummate the transactions contemplated by this Agreement, other than compliance with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act. Capital Stock and Stockholder Relations. Except as set forth on Schedule 2.5(a), the issued and outstanding capital stock of the Company consists solely of the Shares. All of the Shares have been duly authorized, validly issued, fully paid, and are nonassessable. There are no outstanding options, warrants, contracts, preemptive rights, proxies, calls, commitments or demands of rights of any character obligating the Company to issue any shares of capital stock of the Company or options or rights with respect thereto or any other securities, and there are not existing or outstanding securities of any kind convertible into or exchangeable for capital stock of the Company. There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any shares of its capital stock including the Shares. To the knowledge of the Company or the Sellers (i) no current or former stockholder of the Company or of any corporation heretofore merged with or into the Company has any claim or cause of action whatsoever against the Company arising out of or in any way connected with any occurrence or state of facts in existence prior to the Closing Date and (ii) no such present or former stockholder shall come to have any claim or cause of action whatsoever against the Company, or any officer, director or stockholder of the Company, by virtue of, or in any way connected with, the transactions contemplated by this Agreement or otherwise. Except as set forth on Schedule 2.5(b), by the execution of this Agreement, the Sellers and Jenkins as of the Closing waive any and all rights, options, calls, equities or other claims (other than claims they may have pursuant to this Agreement) which the Sellers may have with respect to the Shares by reason of the transactions contemplated by this Agreement or any prior transaction, or any other claim or demand whatsoever that they may have against the Company. All of the Shares have been issued in compliance with all federal and state securities laws. Organization, Qualification, and Corporate Power of the Company and the Trust. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, all such jurisdictions being set forth on Schedule 2.6. The Company has all requisite authority, corporate or otherwise and all authorizations necessary to carry on and conduct the businesses in which it is engaged and to own or lease and use the properties and assets owned and used by it. The Company is not in default under or in violation of any provision of its charter, bylaws or other organizational or governing instrument. Jenkins represents and warrants that the Revocable Trust, the Museum Trust, the Dexter Trust and the Chelsea Trust are duly organized and validly existing. Organizational Documents. The Sellers have delivered to the Buyer (or will deliver prior to the Closing) correct, complete and certified copies of the charter documents and bylaws of the Company (as amended and in effect as of the date hereof), the minute books (containing complete, correct and true records of meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books of the Company (containing the complete, true and accurate record of stock issuances as of the date of delivery). Schedule 2.7 contains a true and complete list of all of the current officers and directors of the Company. Brokers' Fees. Except for the fee and/or commission due to McDonald Investments, Inc. from the Sellers, neither the Company nor the Sellers have any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. Any such fee or commission will be paid by the Sellers and not by the Company. Title to Assets. Except as set forth on Schedule 2.9, The Company has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, wherever located, including those shown on the Baseline Financial Statement (as defined below), or acquired after the date thereof, free and clear of all security interests, except for properties and assets disposed of in the ordinary course of business since the date of the aforesaid balance sheet. Subsidiaries and Affiliates. Except as set forth on Schedule 2.10, the Company does not have any subsidiaries or affiliated businesses or operations, and there are no other assets, operations, personnel, know how or the like owned, employed or used by the Company in the operation of the business known as "American Augers" that would not inure to the sole benefit and control of the Buyer upon consummation of the transactions contemplated by the Agreement. Financial Statements. Attached hereto as Schedule 2.11 are the revised financial statements of the Company dated as of June 30, 1999, as mutually approved by the Buyer and the Sellers (the "Baseline Financial Statement"). The Baseline Financial Statement has been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, presents fairly the financial condition of the Company as of such date and the results of operations of the Company for such periods, are correct and complete, and are consistent with the books and records of the Company (which books and records are correct and complete and kept in accordance with GAAP); provided, however, that the Baseline Financial Statement is subject to year-end adjustments which will not in the aggregate result in a material adverse change to the Baseline Financial Statement. The Baseline Financial Statement will also lack footnotes and other normal presentation items. Events Subsequent to the Baseline Financial Statement. Since June 30, 1999 and other than as set forth in Schedule 2.12, the Company has conducted its business in the ordinary course and there has not been any change in the business, financial condition, operations, results of operations, relationships with any suppliers or customers or future prospects of the Company which will or is likely to have a material adverse effect on either the net income or stockholders' equity of the Company. Without limiting the generality of the foregoing, since that date and except as set forth on Schedule 2.12: the Company has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the ordinary course of business having a fair market value in excess of Fifty Thousand Dollars ($50,000); the Company has not entered into any material agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) or any agreement, contract, lease, or license (or series of related agreements, contracts, leases and licenses) outside the ordinary course of business; no party (including the Company) has accelerated, terminated, modified, or canceled any material agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) to which the Company is a party or by which the Company is bound; the Company has not granted or allowed to be imposed any lien, claim, charge, security interest or other encumbrance in excess of Fifty Thousand Dollars ($50,000) upon any of its assets; the Company has not made any material capital expenditure (or series of related capital expenditures) or any capital expenditure outside the ordinary course of business in excess of Fifty Thousand Dollars ($50,000) that has not been reflected on the Baseline Financial Statement; other than in the ordinary course of business, the Company has not made any capital investment in, or any acquisition of the securities or assets of, any third party in excess of Fifty Thousand Dollars ($50,000); the Company has not made any loan or advance to, and has not received a loan or advance from the Sellers which will remain outstanding at the Closing; the Company has not issued any note, bond, or other debt instrument or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation; the Company has not unreasonably delayed or postponed the payment of accounts payable or other liabilities beyond the payment terms applicable to said accounts payable or liabilities; the Company has not canceled, compromised, waived, or released any right or claim (or series of related rights and claims) either involving more than Fifty Thousand Dollars ($50,000) or outside the ordinary course of business; the Company has not granted any license or sublicense of any rights under or with respect to any of the Company Intellectual Property (as defined below); other than as set forth in the documents delivered pursuant to Section 2.7, there has been no change made or authorized in the charter or bylaws of the Company; the Company has not issued, sold, or otherwise disposed of any shares of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any shares of its capital stock; the Company has not declared, set aside, nor paid any dividend or made any distribution with respect to the Shares (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of the Shares; the Company has not experienced any damage, destruction, or loss (whether or not covered by insurance) in excess of Fifty Thousand Dollars ($50,000) and which adversely affects its properties or business; the Company has not made any loan to, or entered into any other transaction with or on behalf of (including but not limited to guarantees of debt), any of its directors, officers, and employees other than normal salary, bonuses and employee benefits paid or granted in the ordinary course of business consistent with past practice; provided, however that none of the Sellers will directly or indirectly have received any bonuses, dividends or other forms of compensation (other than routine monthly salary paid in the ordinary course) from June 30, 1999 through the Closing; the Company has not granted any increase in the base compensation of any of its directors, officers, and employees outside the ordinary course of business, and has not adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan); the Company has not made any other change in employment terms for any of its directors, officers, and employees; other than in the ordinary course of business, the Company has not made or pledged to make any charitable or other capital contribution; there has not been any other material adverse occurrence, event, incident, action, failure to act, or transaction outside the ordinary course of business involving the Company, and the Company has concluded its business in the ordinary and usual course and in a reasonable business manner; the Company has not incurred any liability, contingent or otherwise, in excess of Fifty Thousand Dollars ($50,000), except in the ordinary and usual course of business; and the Company has not made any change in any method of accounting or principle of accounting. Undisclosed Liabilities. Except as set forth on Schedule 2.13, the Company does not have any liability or obligation whatsoever, whether accrued, absolute, contingent or otherwise (and the Sellers and the Company have no knowledge of a basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against it giving rise to any liability), except for liabilities set forth and adequately reserved against in the Baseline Financial Statement. Legal Compliance. Except as set forth on Schedule 2.14, to the Company's knowledge the Company has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), and no material action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed, commenced or threatened against it alleging any failure so to comply. Tax Matters. Except as set forth on Schedule 2.15(a) and subject to the indemnity limitations of Section 7.9: The Company has filed all tax returns and reports that it was required to file. All such tax returns and reports were correct and complete. All taxes owed by the Company (whether or not shown on any tax return) have been paid or accrued on the Baseline Financial Statement. The Company currently is not the beneficiary of any extension of time within which to file any tax return or report or to make any tax payment. No claim has ever been made by an authority in a jurisdiction where the Company does not file tax returns or reports that the Company is or may be subject to taxation by that jurisdiction. The Company has withheld and paid all taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or stockholder. The Sellers and the Company have no knowledge that any authority may assess any additional taxes for any period for which tax returns have been filed. There is no dispute or claim concerning any tax liability of the Company either (i) claimed or raised by any authority in writing or (ii) as to which either any of the Sellers or any of the officers and employees of the Company responsible for tax matters has been notified or has knowledge based upon personal contact with any agent of such authority. The unpaid taxes of the Company (i) did not, as of the date of the Baseline Financial Statement, exceed the reserve for tax liability set forth on the face of the Baseline Financial Statement and (ii) 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 the Company in filing tax returns. As concerns income tax, Schedule 2.15(b) sets forth all federal, state and local tax returns filed with respect to the Company for taxable periods ended on or after December 31, 1996, indicates those tax returns that have been audited, and indicates those tax returns that currently are the subject of audit, investigation or other inquiry. The Sellers have delivered to the Buyer correct and complete copies of all federal and state income tax returns, examination reports, and statements of deficiencies assessed against or agreed to by the Company since December 31, 1994. Schedule 2.15(b) also sets forth all other tax returns and reports filed with respect to the Company for taxable periods ended on or after December 31, 1996, indicates those tax returns that have been audited, and indicates those tax returns that currently are the subject of audit, investigation or other inquiry. The Company has not waived any statute of limitations in respect of taxes or agreed to any extension of time with respect to a tax assessment or deficiency. Schedule 2.15(d) sets forth the following information with respect to the Company as of the most recent practicable date: (i) the basis of the Company in its assets; and (ii) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess charitable contribution allocable to the Company. Intellectual Property. Set forth on Schedule 2.16 is a complete and accurate list of all patents, trademarks, trade names, service marks, logos and registered copyrights, owned by or licensed to the Company, (including the name "American Augers" and all variations thereof) (collectively the "Company Intellectual Property"). To the Company's knowledge: There are no other forms of intellectual property rights necessary for the operation of the businesses of the Company as presently conducted other than the Company Intellectual Property. Each item of the Company Intellectual Property owned or used by the Company immediately prior to the Closing hereunder will be owned or available for use by the Company on identical terms and conditions immediately subsequent to the Closing hereunder. The Company has never interfered with, infringed upon, misappropriated or otherwise come into conflict with any intellectual property rights of third parties, other than as listed in Schedule 2.16(b), and none of the Sellers and the directors and officers (and employees with responsibility for intellectual property matters) of the Company has ever received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that the Company must license or refrain from using any intellectual property rights of any third party). No third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any of the Company Intellectual Property. The Company will not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any intellectual property rights of third parties as a result of the continued operation of its businesses as presently conducted. With regard to each item of the Company Intellectual Property: the Company possesses all right, title, and interest in and to the item, free and clear of any security interest, license, or other restriction; the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or threatened which challenges the legality, validity, enforceability, use, or ownership of the item; and the Company has never agreed to indemnify any of the Sellers or any other third party for or against any interference, infringement, misappropriation, or other conflict with respect to the item. Contracts. Schedule 2.17 sets forth a true and accurate list of the following oral and written contracts and other agreements to which the Company is a party: any agreement (or group of related agreements) for the lease of personal property to or from any of the Sellers or any third party providing for lease payments in excess of Fifty Thousand Dollars ($50,000) per annum; any agreement (or group of related agreements) for the purchase or sale of supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year or involve consideration in excess of Fifty Thousand Dollars ($50,000): any agreement concerning a partnership or joint venture; any agreement (or group of related agreements) under which the Company has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of Twenty-five Thousand Dollars ($25,000), or under which it has imposed a lien on any of its assets, tangible or intangible; any agreement concerning confidentiality or noncompetition; any agreement with any of the Sellers; any agreement under which it has advanced or loaned any amount to any of its directors, officers, and employees; any agreement under which the consequences of a default or termination could have an adverse effect on the business, financial condition, operations, results of operations, or future prospects of the Company in excess of Fifty Thousand Dollars ($50,000) in earnings before interest, taxes, depreciation and amortization; or any other agreement (or group of related agreements) the performance of which involves consideration in excess of Twenty-Five Thousand Dollars ($25,000). The Sellers have delivered to the Buyer a correct and complete copy of each written agreement set forth on Schedule 2.17 (as amended to date) and a written summary setting forth the terms and conditions of each oral agreement referred to in Schedule 2.17. With respect to each such agreement: (i) the agreement is legal, valid, binding, enforceable, and in full force and effect; (ii) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (iii) no party is in breach or default, and to the knowledge of the Sellers and the Company no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; (iv) no party has repudiated any provision of the agreement; and (v) to the knowledge of the Sellers and the Company, no party is the subject of bankruptcy proceedings, has had a trustee appointed on its behalf or is insolvent. Employee Arrangements, Union Agreements and Benefit Plans and Government Compliance. Schedule 2.18(a) sets forth a complete and accurate list and description of all oral or written employment, consulting or collective bargaining contracts, deferred compensation, change in control agreements, golden parachute agreements, profit-sharing, bonus, option, share purchase or other benefit or compensation commitment, benefit plans, arrangements, policies or plans, including all welfare plans of or pertaining to the present or former employees of the Company. Except as set forth on Schedule 2.18(a), to the Company's knowledge the Company has complied with all of its obligations, including the payment of all contributions, the filing of all reports, and the payment or accrual of all expenses for the period between the end of the previous plan year and the Closing Date, with respect to such contracts, commitments, arrangements and plans. To the Company's knowledge, the plans have been maintained in compliance with all applicable laws and regulations. To the Company's knowledge, the levels of insurance reserves and accrued liabilities with regard to all such plans are reasonable and are sufficient to provide for all incurred but unreported claims and any retroactive premium adjustments. Except as set forth on Schedule 2.18(b), the Company has no any oral or written employment, consulting or collective bargaining contracts, deferred compensation, change in control agreements, golden parachute agreements, profit-sharing, bonus, option, share purchase or other benefit or compensation commitment, benefit plans, arrangements or plans, including all welfare plans of or pertaining to the present or former employees of the Company. Schedule 2.18(c) sets forth the name of each salaried employee of the Company and such employee's annual salary, position and hire date. Except as disclosed on Schedule 2.18(d), the Company is in compliance with all worker compensation laws and requirements of all applicable states. Except to the extent set forth in Schedule 2.18(e): To the Company's knowledge, the Company is in compliance with all applicable laws and collective bargaining agreements respecting employment and employment practices, terms and conditions of employment and wages and hours and occupational safety and health; There is no unfair labor practice, charge or complaint or any other matter against or involving the Company or pending or, to the Company's knowledge, threatened before the National Labor Relations Board or any court of law; There is no labor strike, dispute, slowdown or stoppage actually pending or, to the Company's knowledge, threatened against the Company; To the Company's knowledge, no certification or decertification question or organizational drive exists or has existed within the past twenty-four months respecting the employees of the Company; No grievance proceeding or arbitration proceeding arising out of or under any collective bargaining agreement is pending against the Company or, to the knowledge of the Sellers or the Company, threatened; and, to the knowledge of the Company or the Sellers, no basis for any claim therefor exists; Except for general labor relation laws, there is no agreement (including any collective bargaining agreement), arbitration or court decision or governmental order which is binding on the Company or in any way limits or restricts the Company from relocating or closing any of its operations; The Company has not experienced any organized work stoppage or other labor difficulty since January 1, 1996; and There are no charges, or known administrative proceedings or formal complaints of discrimination (including discrimination based upon sex, age, marital status, race, national origin, sexual preference, handicap or veteran status) pending before the Equal Employment Opportunity Commission or any federal, state or local agency or court against the Company. Except as disclosed in Schedule 2.18(e), since January 1, 1994, there have been no governmental audits of the equal employment opportunity practices of the Company. Notes and Accounts Receivable. Except as set forth on Schedule 2.19, in the ordinary course of business all notes and accounts receivable of the Company are reflected properly on its books and records, are valid receivables subject to no refunds, adjustments, defenses, restrictions, assignments, disputes, setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts within 120 days of the date incurred without resorting to legal process, subject only to the reserve for bad debts set forth on the face of the Baseline Financial Statement as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company. Powers of Attorney. Except as set forth on Schedule 2.20, there are no outstanding powers of attorney executed on behalf of the Company. Insurance. Schedule 2.21 sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) to which the Company has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past three (3) years: the name, address, and telephone number of the agent; the name of the insurer, the name of the policyholder, and the name of each covered insured; the policy number and the period of coverage; the scope (including an indication of whether the coverage was on a claim made, occurrence, or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and a description of any retroactive premium adjustments or other loss-sharing arrangements. With respect to each such insurance policy: (i) the policy is legal, valid, binding, enforceable, and in full force and effect; (ii) the policy will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby (subject to (A) the terms of the policy, (B) the payment of premiums and (C) to no notice of cancellation by the Company subsequent to the Closing); (iii) neither the Company nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (iv) no party to the policy has repudiated any provision thereof. The Company has been covered during the past five (5) years by insurance in scope and amount customary and reasonable for the businesses in which it has engaged during the aforementioned period. Schedule 2.21 describes any self- insurance arrangements affecting the Company. Guaranties. The Company is not a guarantor nor otherwise liable for any liability or obligation (including indebtedness) of any other person or entity. Environmental, Health, and Safety Matters. Environmental Protection. To the Company's knowledge, the Company has obtained all permits, licenses and other authorizations and filed all notices and reports which are required to be obtained or filed by it for the operation of its business under federal, state and local laws relating to environmental matters, health and safety, pollution, or protection of the environment (the "HSE Laws"). To the Company's knowledge, the Company is in compliance in all respects with all terms and conditions of such required permits, licenses and authorizations. To the Company's knowledge, the Company is in compliance in all respects with all other applicable limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in the HSE Laws or contained in any law, regulation, code, plan, order, degree, judgment, notice or demand letter issued, entered, promulgated or approved thereunder. Except as disclosed on Schedule 2.23, to the Company's knowledge there are no past or present events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance in all material respects with, or which may give rise to any material common law or statutory liability, or otherwise form the basis of any material claim, action, suit, notice of violation, proceeding, or hearing pursuant to the HSE Laws, nor has there been any distribution, use, treatment, storage, disposal, transport, handling, emission, discharge, release or threatened release into the environment of any pollutant, contaminant, or hazardous or toxic material or waste with respect to the Company or its business. Except as disclosed on Schedule 2.23, the Company has received no notice of violation or the like of any complaint or other threat of any actions by any party related in any way to the HSE Laws. The real property owned or leased by the Company does not contain any asbestos, urea- formaldehyde, lead-based paint, or PCBs in any form. The Buyer may conduct a Phase I Environmental Site Assessment ("ESA") of the real property owned by the Company at the Buyer's expense. The Buyer may, at its option conduct a Phase II ESA on any item of concern noted in the Phase I ESA. Any material violation of the HSE Laws documented by the Phase II ESA but not reported by the Company on Schedule 2.23, shall be, at the Buyer's option, corrected to the satisfaction of the appropriate governmental authority by or at the cost of the Sellers, or corrected by the Buyer with the cost of correction deducted from the Purchase Price. Absence of Certain Payments. Other than for services legitimately and openly performed under applicable law, business discounts customarily granted in the ordinary course of business and nominal non-cash gifts, neither the Company nor, to any Seller's knowledge, any agent, employee or representative of the Company has made or offered to make to any customer, supplier, government official, insurance carrier, referral source, employee or agent or any other person or entity, any payment, gratuity, gift, service or thing of material value. Other than for services legitimately and openly performed under applicable law, business discounts customarily granted in the ordinary course of business and nominal non-cash gifts, neither the Company nor, to any Seller's knowledge, any agent, employee or representative of the Company has received or sought from any customer, supplier, government official, insurance carrier, referral source, employee or agent or any other person or entity, any payment, gratuity, gift, service or thing of material value. Organizations and Clubs. Set forth on Schedule 2.25 is a listing of all organizations and clubs of which the Company is a member or to which it pays dues or fees on behalf of itself or any person, which person shall be identified in the schedule. Bank Accounts. Schedule 2.26 sets forth a complete and accurate list of each bank or financial institution at which the Company has an account or safe deposit box (giving the address and account numbers) and the names of the persons authorized to draw thereon or to have access thereto. Customers and Suppliers of the Company. Customers. Schedule 2.27(a) sets forth a true and complete list of the ten (10) customers of each location of the Company that had the highest dollar billings over the twelve (12) months ended June 30, 1999. Except as set forth in Schedule 2.27(a), neither the Company nor the Sellers has any knowledge that any of the customers listed on the schedule has terminated or plans to terminate its relationship with the Company. The Company has disclosed to the Buyer its standard terms and conditions for sales by the Company, and those cases and customers with annual purchases in excess of $50,000 which have been granted a deviation from such standard terms and conditions. Suppliers. Schedule 2.27(b) sets forth a true and complete list of the ten (10) suppliers which did the highest dollar volume of business with the Company for the twelve (12) months ended June 30, 1999. Except as set forth on Schedule 2.27(b), to the knowledge of the Company and the Sellers, no supplier of the Company has ceased or refused to do business with the Company and neither the Company nor the Sellers have received oral or written notice that any supplier of the Company will cease or refuse to do business with the Company after the Closing and all suppliers of the Company will continue to do business with the Company consistent with prior practices after the Closing. Except as set forth on Schedule 2.27(b), neither the Company nor any Seller have any knowledge of any disruption (including delayed deliveries or allocations by suppliers or service providers) in the availability of the materials, products, supplies or services used by the Company, nor has the Company or the Sellers received oral or written notice that the Company (whether before or after the Closing) will be subject to any such material disruption. Neither the Company nor any Seller has knowledge of any condition (financial or otherwise) affecting any key supplier of the Company that is likely to reduce such supplier's ability to do business with the Company consistent with such supplier's prior business practices with the Company. There has been no change in the purchasing or payment practices of the Company with respect to its suppliers (including the availability and use of discounts) since June 30, 1999. Employee Benefits. The attached Schedule 2.28 is a true and complete list of the employee benefit plans maintained by or sponsored by the Company. Except as set forth on Schedule 2.28, the Company is not, and has not been, a "Plan Sponsor" (as defined in section 3(16)(B) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or an "ERISA Affiliate" (which shall mean, with respect to the Company, any other entity that, together with the Company, would be treated as a single employer under section 414 of the Internal Revenue Code of 1986, as amended (the "Code")). Except as set forth on the schedule, neither the Company nor an ERISA Affiliate has contributed to or does not contribute to any "employee pension benefit plans" ("Pension Plans") or "employee welfare benefit plans" ("Welfare Plans") (as described in section 3(2) and (1), respectively of ERISA), or "multiemployer plan" ("Multiemployer Plans") (as defined in either section 3(37) of ERISA or section 414(f) of the Code, or any other benefit plans governed by ERISA or the Code ("Other Plans"). Except as set forth on the schedule, neither the Company nor an ERISA Affiliate has, nor has the Company or an ERISA Affiliate had at any time, any obligation, arrangement, practice, plan or agreement to provide present or future benefits, other than salary and bonus, as compensation for services rendered, to any of its present or former employees, officers, directors, agents or representatives, nor any voluntary employees' beneficiary association under section 501(c)(9) of the Code ("VEBA") whose members include employees of the Company or an ERISA Affiliate, nor any obligation, arrangement, practice, plan or agreement providing stock options, stock purchase, deferred compensation, severance, "fringe benefits" (as described in section 132 of the Code), or any other employee benefits of any nature whatsoever ("Compensation Plans"). Pension Plans, Welfare Plans, Multiemployer Plans, Other Plans and Compensation Plans are collectively referred to as "Benefit Plans." The consummation of the transactions contemplated by this Agreement will not result in the payment, vesting or acceleration of any benefit or right under any Benefit Plan. All Benefit Plans have been maintained in accordance with ERISA and/or the Code, as the case may be. Except as reflected on the Baseline Financial Statement, neither the Company nor any Shareholder has knowledge of any liabilities related to any of the Benefit Plans. Inventory. All inventory of the Company, whether or not reflected in the Baseline Financial Statement, consists of a quality and quantity usable and salable in the ordinary course of business, except for obsolete items and items of below-standard quality which have been written off or written down to net realizable value in the Baseline Financial Statement or on the accounting records of the Company as of the Closing Date, as the case may be. All inventories not written off have been priced at the lower of average cost or net realizable value. To the knowledge of the Company and the Sellers, the quantities of each item of inventory (whether raw materials, work-in- process, or finished goods) are not excessive, but are reasonable in the present circumstances of the Company. The inventory obsolescence policies of the Company are appropriate for the nature of the products sold and the marketing methods used by the Company, the reserve for inventory obsolescence contained in the Baseline Financial Statement fairly reflects the amount of obsolete inventory as of the date of the Baseline Financial Statement and the reserve for inventory obsolescence to be contained in the accounting records of the Company as of the Closing Date shall fairly reflect the amount of obsolete inventory as of the Closing Date. No items included in the inventories are pledged as collateral or held by the Company on consignment from another except as set forth on Schedule 2.29. Schedule 1.3 sets forth the mutually agreed upon methodology that will be used for the valuation of the Company's inventory for the Closing Date Statement. Litigation; Orders. Except as set forth on Schedule 2.30 and subject to the indemnity limitations of Section 7.9, there is no proceeding pending, or to the knowledge of the Company or the Sellers threatened, against or relating to the Company or its property or assets. Except as set forth on Schedule 2.30 and subject to the indemnity limitations of Section 7.9, the Company and Sellers do not know of any basis or alleged basis for any such proceedings or of any governmental investigation relative to the Company, its property or assets, and no event has occurred, nor to the knowledge of the Company and the Seller does any circumstance exist, that may give rise to or serve as a basis for the commencement of any such proceedings. Real Property. Owned Real Property. Schedule 2.31(a) sets forth and describes briefly all real property that the Company owns. With respect to each such parcel of owned real property: there are no pending, or to the knowledge of the Company and the Sellers threatened, condemnation proceedings relating to the property or other matters affecting the current use, occupancy, or value thereof; all properties and facilities have received all governmental authorizations required in connection with the ownership or operation thereof and have been operated and maintained in accordance with all applicable legal requirements; there are no leases, subleases, licenses, concessions, or other agreements, written or oral, granting to any party or parties the right of use or occupancy of any portion of the parcel of real property; there are no outstanding options or rights of first refusal to purchase the parcel of real property, or any portion thereof or interest therein; there are no parties (other than the Company) in possession of the parcel of real property, other than tenants under any leases disclosed in the schedule who are in possession of space to which they are entitled; Leased Real Property. The Company does not lease any real property. Year 2000 Compliance. To the Company's knowledge, the computer software, computer firmware, computer hardware (whether general or specific purpose), and other similar or related items of automated, computerized, and/or software system(s) that are used or relied on, or have been purchased to be used and relied on, by the Company in the conduct of its business (collectively, "Information Technology") is designed to be used prior to, during, and after the calendar year 2000 A.D., and the Information Technology used during each such time period will accurately receive, provide and process date/time data (including, but not limited to, calculating, comparing and sequencing) from, into and between the twentieth and twenty-first centuries, including the years 1999 and 2000, and leap year calculations and will not malfunction, cease to function, or provide invalid or incorrect results as a result of date/time data, to the extent that other Information Technology, used in combination with the Information Technology of the Company, properly exchanges data/time data with it. Completeness of Statements; Effect of Representations and Warranties. To the knowledge of the Company and the Sellers, no representation or warranty of the Company or the Sellers in the Closing Documents contains any untrue statement of a material fact, omits any material fact necessary to make such representation or warranty, under the circumstances which it was made, not misleading, or contains any misstatement of a material fact. The Company and the Sellers have made reasonable inquiry and investigation concerning the matters to which the representations and warranties of the Company and the Sellers under this Agreement pertain and neither the Company nor the Sellers know of any facts, events or circumstances which have not been disclosed to the Buyer which are material to the Company or its business. Limited Representations and Warranties/Concerning the Schedules. (a) Except for those matters expressly set forth in this Agreement or any Schedule or Exhibit to this Agreement, Sellers do not make, and expressly disclaim, any representations or warranty as to the accuracy or completeness of any understanding, communication, disclosure, documentation, information (financial or otherwise,), reports or other materials furnished to Buyer whether prior to or following the date of this Agreement. Any financial projections provided to Buyer whether from the Sellers, the Company, the Company's agents, attorneys, or accountants are uncertain and subject to numerous hypotheses and assumption that may or may not occur, and therefore may not be relied upon by Buyer. (b) Disclosure of an item in any part of any Schedule or other attachment to this Agreement, or any other documents or instruments delivered hereunder or any Schedule, Exhibit or attachment thereto, should the existence of the item or its contents be relevant to any other section or paragraph of this Agreement or any Schedule or Exhibit to this Agreement, shall be deemed to be disclosed in that other section or paragraph of this Agreement or Exhibit to this Agreement, whether or not an express cross reference appears. ARTICLE REPRESENTATIONS AND WARRANTIES OF THE BUYER In order to induce the Sellers to enter into this Agreement and the consummate the transactions contemplated hereby, the Buyer represents and warrants that as of the date hereof and as of the Closing Date, the following representations and warranties are true, complete and accurate, and all such representations and warranties shall be continuing and shall survive the Closing pursuant to Section 7.1 below: Organization of the Buyer. The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Tennessee. Authorization of Transaction. The Buyer has full power and authority (including full corporate power and authority) to execute and deliver the Closing Documents and to perform its obligations thereunder. This Agreement and the Closing Documents constitute the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions. Except for compliance with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act and as set forth on Schedule 3.2, the Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government, governmental agency, lender or other third party in order to consummate the transactions contemplated by this Agreement. Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency or court to which the Buyer is subject or any provision of its charter or bylaws or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, loan, note or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject. Brokers' Fees. The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which any Seller could become liable or obligated. Investment. The Buyer is not acquiring the Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act of 1933. Employees of the Company. The Buyer represents and warrants that it is the Buyer's present intention not to terminate any of the Company's present employees. The Buyer covenants and agrees that it will not cause or permit the Company to engage in a "mass layoff" or "plant closing" (as defined in the Worker Adjustment and Retraining Notification Act of 1988, as amended), at any time within ninety (90) days following the Closing Date. No Adverse Tax Elections. The Buyer covenants and agrees it will not cause the Company to make any election under Section 338 of the Code, if the effect of such election or other action would adversely affect the Sellers' federal, state, local or foreign income tax liabilities. Sufficient Funds. At the Closing, the Buyer will have sufficient cash to pay the Purchase Price, the Shareholder Loans and Long-Term Debt. ARTICLE PRE-CLOSING COVENANTS The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. General. Each of the Parties will use his or its best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Article 6 below). Notices and Consents. The Sellers will cause the Company to give any notices to third parties, and will cause the Company to use its best efforts to obtain any third party consents, that the Buyer may request in connection with the matters referred to in Section 2.4 above. Each of the Parties will give any notices to, make any filings with, and use its best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to in Section 2.4 above. Without limiting the generality of the foregoing, each of the Parties will file any Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act, will use his or its best efforts to obtain an early termination of the applicable waiting period, and will make any further filings pursuant thereto that may be necessary, proper, or advisable in connection therewith. Operation of Business. The Sellers will not cause or permit the Company to engage in any practice, take any action, or enter into any transaction outside the ordinary course of business. Without limiting the generality of the foregoing, the Sellers without prior written consent from the Buyer will not cause or permit the Company to (a) declare, set aside, or pay any dividend or make any distribution with respect to its capital stock or redeem, purchase, or otherwise acquire any of its capital stock, (b) enter into a transaction with the Sellers, or (c) otherwise engage in any practice, take any action, or enter into any transaction of the sort described in Section 2.12 above. Preservation of Business. The Sellers will cause the Company to keep its business and properties substantially intact, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and employees. The Sellers will promptly notify the Buyer upon the Sellers or the Company receiving any oral or written notice that a customer or certain customers intends to reduce substantially or cease doing business with the Company. For purposes of this Section, "customer" shall mean a customer who individually accounts for five percent (5%) of the Company's annual gross revenue and "certain customers" shall mean customers who in the aggregate (whether related or not) account for five percent (5%) of the Company's annual gross revenue. Full Access. The Sellers will permit, and the Sellers will cause the Company to permit, representatives of the Buyer to have full access at all reasonable times, including permitting the Buyer's independent accountants to conduct an audit of the Company, and in a manner so as not to interfere with the normal business operations of the Company, to all premises, properties, personnel, books, records (including tax records), contracts, and documents of or pertaining to the Company. Notice of Developments. Each Party will give prompt written notice to the others of any material adverse development causing a breach of any of their respective representations and warranties in Article 2 and Article 3 above. Exclusivity. None of the Sellers will (and the Sellers will not cause or permit the Company to) (a) solicit, initiate, or encourage the submission of any proposal or offer from any person or entity relating to the acquisition of any capital stock or other voting securities, or any substantial portion of the assets, of the Company (including any acquisition structured as a merger, consolidation, or share exchange) or (b) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any person or entity to do or seek any of the foregoing. None of the Sellers will vote their respective Shares in favor of any such acquisition structured as a merger, consolidation, share exchange or purchase of assets. The Sellers will notify the Buyer immediately if any person or entity makes any proposal, offer, inquiry, or contact with respect to any of the foregoing. Survey. With respect to the real property owned by the Company, the Sellers will cause the Company to procure in preparation for the Closing a current survey of the real property owned by the Company certified to the Buyer, prepared by a licensed surveyor and conforming to current ATLA Minimum Detail Requirements for Land Title Surveys, disclosing the location of all improvements, easements, party walls, sidewalks, roadways, utility lines, and other matters shown customarily on such surveys, and showing access affirmatively to public streets and roads (the "Survey"). There shall be no survey defect or encroachment from or onto any property owned or leased by the Company which has not been cured or insured over prior to the Closing, except such defects or encumbrances that, in the aggregate, do not have a material adverse effect on the marketability of said property. ARTICLE POST-CLOSING COVENANTS The Parties agree as follows with respect to the period following the Closing. General. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties will promptly take without further consideration such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request. The Sellers acknowledge and agree that from and after the Closing the Buyer will be entitled to possession of all documents, books, records (including tax records), agreements, and financial data of any sort relating to the Company. Litigation Support. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (a) any transaction contemplated under this Agreement or (b) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Company, each of the other Parties will cooperate with him or it and his or its counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Article 8 below). Transition. The Sellers will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of the Company from maintaining the same business relationships with the Company after the Closing as it maintained with the Company prior to the Closing. The Sellers will refer all customer inquiries relating to the business of the Company to the Company from and after the Closing. Confidentiality. Each Seller will treat and hold all nonpublic information of the Company as confidential information for a period of three (3) years subsequent to the Closing and refrain from using any of the confidential information except in connection with this Agreement, and deliver promptly to the Buyer or destroy, at the request and option of the Buyer, all tangible embodiments (and all copies) of the confidential information which are in his or its possession. In the event that any of the Sellers are requested or required (by oral question or request for information or document sin any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any confidential information, that the Sellers will notify the Buyer promptly of the request or requirement so that the Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section. If, in the absence of a protective order or the receipt of a waiver hereunder, any of the Sellers is, on the advice of counsel, compelled to disclose any confidential information to any tribunal or else stand liable for contempt, that the Sellers may disclose the confidential information to the tribunal; provided, however, that the disclosing Seller shall use his or its reasonable best efforts to obtain, at the reasonable request of the Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the confidential information required to be disclosed as the Buyer shall designate. The foregoing provisions shall not apply to any confidential information which is generally available to the public immediately prior to the time of disclosure so long as such general availability is not due to a breach by the Sellers with the provisions of this Section. Access to Records. The Company will maintain the records of the Company in accordance with the Buyer's record retention policy. From and after the Closing Date, the Seller Agents (as defined below) and their representatives shall be allowed, upon reasonable request for proper business purposes, to inspect and copy at their expense the business records and accounts of the Company pertaining to transactions occurring or assets held at or before the Closing to the extent the Company then has possession of or access to such business records and accounts. ARTICLE CONDITIONS TO OBLIGATION TO CLOSE Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: the representations and warranties, as updated, set forth in Article 2 shall be true and correct in all material respects at and as of the Closing Date; the Sellers shall have performed and complied with all of their covenants hereunder in all material respects through the Closing; the Company and the Sellers shall have procured the Survey and all of the third party consents specified on Schedule 2.4(e) (except for those consents covered under Section 6.1(f) below); no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (iii) affect adversely the right of the Buyer to own the Shares and to control the Company, or (iv) affect adversely the right of the Company to own its assets and to operate its businesses (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); The Sellers shall have delivered to the Buyer a certificate to the effect that each of the conditions specified above in Section 6.1(a)-(d) is satisfied in all respects; all applicable waiting periods (and any extensions thereof) under the Hart- Scott-Rodino Antitrust Improvements Act shall have expired or otherwise been terminated and the Parties shall have received all other authorizations, consents, and approvals of governments and governmental agencies; Eve shall have entered into an employment and non-competition agreement with the Company and the Buyer in the form of Exhibit C hereto (the "Eve Employment Agreement"); Jenkins shall have entered into a non-competition and consulting agreement with the Company and the Buyer in the form of Exhibit D hereto (the "Jenkins Non- Competition and Consulting Agreement"); the Buyer shall have received from counsel for the Sellers an opinion, dated the Closing Date and in the form of Exhibit E; the Buyer shall have received the resignations, effective as of the Closing, of each director and officer of the Company other than those whom the Buyer shall have specified in writing prior to the Closing; such resignation to be accompanied by a waiver of any and all claims against the Company in the form of Exhibit F; there shall not have occurred any material adverse change since June 30, 1999 in the business, properties, assets, liabilities, results of operations, prospects or financial condition of the Company or physical loss or damage to any of the properties or assets (which, if covered by insurance could not be fully replaced within thirty (30) days of such loss or damage without payment by the Company of a deductible in excess of three percent (3%) of the loss amount) of the Company which materially and adversely affects or impairs the business now being or to be conducted by the Company, and the Sellers shall have delivered to the Buyer a certificate, signed by the Sellers and dated the Closing Date, to all such effects; the Sellers shall have delivered to the Buyer: (i) a certified copy of the charter of the Company from the Delaware Secretary of State; (ii) certificates of good standing from the Ohio Secretary of State and the Delaware Secretary of State (and any other state in which the Company is qualified); and (iii) a certified copy of the Company's bylaws; at Closing, the Sellers shall issue a "bring down" certificate certifying that there have been no material changes in the information contained in the Schedules since the date of the prior certification, or if there have been changes, such changes, in the aggregate, will not have a material adverse effect on the Company; the Buyer shall have been given an opportunity to review all financial and legal aspects of the Company's business, including an inspection of its facilities, observation of a closing inventory, environmental assessment and a review of its accounting and tax records, and to conduct interviews of its officers and employees, and shall have discovered no information or circumstances that cause it to believe that the Company may suffer a material liability in the future that has not been adequately disclosed and/or reserved for on the Baseline Financial Statement. the Company shall have terminated its 401(k) Pension Plan prior to the Closing Date, and the employees of the Company shall be eligible to participate in the Buyer's 401(k) Plan, according to its terms, effective as of the Closing Date; the Company shall have terminated its employment contract with Eve; the 1996 Stockholders Agreement dated as of October 1, 1996, as amended, by and among the Company and certain Sellers shall have been terminated; the Sellers shall have provided the Buyer with proof of the approval by the shareholders of the Company (in accordance with Delaware law and the Company's bylaws) of any direct or constructive payments to any employee, officer or director of the Company on account of a change of control of the Company so as comply with the exceptions for closely- held corporations under section 280G of the Code; and the Revocable Trust shall facilitate the exercise of certain options to purchase shares between the Revocable Trust, Eve and certain other employees of the Company in such a manner so as to qualify as a tax deductible transaction to the Company under Section 1.83-6(d) of the Code regulations, which shall have been confirmed by the Buyer's auditors. Furthermore, all amounts necessary to meet the tax withholding obligations of the Company on such exercises shall have been deposited with the Company before the Closing. The Buyer may waive any condition specified in this Section 6.1 if it executes a writing so stating at or prior to the Closing. Conditions to Obligation of the Sellers. The obligation of the Sellers to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions: the representations and warranties set forth in Article 3 above shall be true and correct in all material respects at and as of the Closing Date; the Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); the Buyer shall have delivered to the Sellers a certificate to the effect that each of the conditions specified above in Section 6.2(a)-(c) is satisfied in all respects; all applicable waiting periods (and any extensions thereof) under the Hart- Scott-Rodino Antitrust Improvements Act shall have expired and otherwise been terminated and the Parties and the Company shall have received all other authorizations, consents, and approvals of governments and governmental agencies; the Buyer shall have executed the Eve Employment Agreement; the Buyer shall have executed the Jenkins Non-Competition and Consulting Agreement; the Sellers shall have received from counsel for the Buyer an opinion, dated the Closing Date and in the form of Exhibit G; and the Buyer shall have procured all of the third party consents specified on Schedule 3.2; and all actions to be taken by the Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Sellers. The Sellers may waive any condition specified in this Section 6.2 if they execute a writing so stating that or prior to the Closing. ARTICLE REMEDIES FOR BREACHES OF THIS AGREEMENT Survival of Representations and Warranties. Except as otherwise provided herein, all of the representations and warranties contained in this Agreement or in any certificate delivered pursuant to this Agreement relating to the representations and warranties contained in this Agreement will survive the Closing (even if the damaged party knew or had reason to know of any misrepresentation or breach of warranty or covenant at the time of the Closing) and continue in full force and effect for a period of three (3) years after the Closing Date; provided, however, that (i) the representations and warranties set forth in Sections 2.3 and 2.9 shall survive indefinitely and (ii) the representations set forth in Sections 2.14, 2.15 and 2.23 shall survive until the expiration of the applicable state or federal statutory period of limitations to which the claim relates. No party will have any obligation to indemnify and Person pursuant to this Agreement with respect to any breach of a representation or warranty unless a specific claim has been validly made under this Agreement on or prior to the applicable survival period set forth above. The parties' indemnification obligations with respect to any breach of a representation in writing under this Agreement shall survive the applicable survival period to the extent (and solely to the extent) a claim has been properly asserted in writing prior to the expiration of the applicable survival period. Indemnification Provisions for Benefit of the Buyer. Subject to Section 7.9(b), the Sellers and Jenkins jointly and severally agree to defend, indemnify and hold the Buyer harmless from and against and with respect to any and all loss, damage, liability, deficiency, cost, obligation, or expense resulting from or with respect to (i) any breach of any covenant or warranty or representation or any material inaccuracy or material misrepresentation by the Sellers or the Company contained in this Agreement or any certificate or document delivered to the Buyer by the Sellers or the Company in connection with the transactions contemplated hereby; (ii) the failure of the Sellers, or any of the Sellers, to perform or comply with any covenant, agreement or obligation required by this Agreement to be performed or complied with by the Sellers; and (iii) all undisclosed, unbooked, under accrued or under reserved liabilities, including, but not limited to, assessments, taxes, penalties, interest, claims, losses, fines and judgments. Notwithstanding anything contained herein, no claim for indemnification shall be made by the Buyer hereunder against the Sellers or Jenkins for any claim (or related claims) under Section 7.2(a) that does not exceed Fifty Thousand Dollars ($50,000), at which time the Sellers and Jenkins jointly and severally shall incur liability for the entire amount of any such claim (or related claims). In any event, the Sellers and Jenkins shall have no liability hereunder to the Buyer for any claims hereunder once the amount paid, in the aggregate, by the Sellers and Jenkins exceeds $10,000,000. Indemnification Provisions for Benefit of the Sellers. The Buyer agrees to defend, indemnify and hold the Sellers harmless from and against and with respect to any and all loss, damage, liability, deficiency, cost, obligation, or expense resulting from or with respect to (i) any breach of any covenant or warranty or representation or any material inaccuracy or material misrepresentation by the Buyer contained in this Agreement or any certificate or document delivered by the Buyer to the Sellers in connection with the transactions contemplated hereby; and (ii) the failure of the Buyer to perform or comply with any covenant, agreement or obligation required by this Agreement to be performed or compiled with by the Buyer. Matters Involving Third Parties. If any third party shall notify any Party (the "Indemnified Party") with respect to any matter (a "Third Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Article 7, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced. Any Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any losses the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 7.4(b) above, (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably). In the event any of the conditions in Section 7.4(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys' fees and expenses), and (iii) the Indemnifying Parties will remain responsible for any adverse consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Article 7. Offer of Settlement. Notwithstanding anything contained in this Article 7 to the contrary, if a full and unconditional settlement offer solely for money damages is made by the applicable third party involved in the Third Party Claim, which offer the Indemnifying Party notifies the Indemnified Party in writing of the Indemnifying Party's willingness to accept, and the Indemnified Party declines to accept such settlement offer, the Indemnified Party may continue to contest such claim, free of any participation by the Indemnifying Party, at the Indemnified Party's sole expense, and the amount of any ultimate liability with respect to which the Indemnifying Party has any obligation to pay hereunder shall be equal to the lesser of: (i) the amount of the settlement offer which the Indemnified Party declined to accept; or (ii) the ultimate losses incurred by the Indemnified Party but subject to the limitations of liability set forth in Section 7.4. Infringement Claims. If any Third Party Claim arises as a result of the infringement or alleged infringement by the Company due to its use or sale of any Company Intellectual Property ("Infringement Claim"), the Buyer agrees that in the event it or the Company continues the activities or services giving rise to the Infringement Claim after it or the Company has notice thereof, then notwithstanding anything to the contrary herein contained, such Infringement Claim shall not be subject to indemnification by Sellers hereunder to the extent such Infringement Claim relates to the continued action of such activities, including any special damages attributable to knowingly continuing such activities. In the event an Infringement Claim is settled or otherwise disposed of through a licensing, royalty or similar arrangement requiring payments based on future sales of the products by Buyer or the Company, Buyer shall make (or shall cause the Company to make) such payments itself, and such payments shall not be subject to indemnification hereunder. Notice of Claim. When a Party determines in good faith that it has a claim or potential claim for indemnification pursuant to this Article 7 it shall deliver notice thereof to the other Party at the address specified in Section 11.7. Such notice shall set forth the section or sections under this Agreement pursuant to which such claim is made and the amount or estimate of the claim and shall state, in reasonable detail, the basis for such claim. The Indemnifying Party shall have twenty (20) days after receipt of a notice of claim within which to either pay such claim or notify the Indemnified Party of the Indemnifying Party's disagreement with all or a portion of said claim. If the Indemnified Party has not received notice of disagreement from the Indemnifying Party within the twenty (20) day period, the amount of the claim shall be compensible in full. If the Indemnified Party receives within the twenty (20) day period a notice of disagreement regarding only a portion of a claim, the portion of the claim not subject to disagreement shall be compensible. If the Parties are unable to resolve the validity or the amount of a claim after said twenty (20) day period, then the dispute may be resolved by arbitration to be conducted in Chattanooga, Tennessee, in accordance with the Arbitration Rules of the Center for Public Resources, New York, New York for Non-Administered Arbitration of Business Disputes, as they exist on the date of this Agreement, and the decision rendered by the arbitrator (who shall be selected by mutual consent by the Parties and, if the Parties are unable to agree on an arbitrator, an arbitrator shall be selected by the Center for Public Resources in New York, New York) shall be binding upon the Parties. Any such arbitration shall take place in Chattanooga, Tennessee. Any judgment upon any arbitration award may be entered in the highest state or federal court having jurisdiction thereof. Nothing herein shall be deemed to prevent the Buyer from making a claim for indemnification hereunder for potential or contingent claim or demand to the extent then feasible and the Buyer has reasonable grounds to believe that such a claim or demand may be made. Other Indemnification Provisions. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable, or common law remedy any Party may have with respect to the Company or the transactions contemplated by this Agreement. The Sellers hereby agree that they will not make any claim for indemnification against the Company by reason of the fact that any of them was a director, officer, employee, or agent of any such entity or was serving at the request of any such entity as a partner, trustee, director, officer, employee, or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses or otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement, or otherwise) with respect to any action, suit, proceeding, complaint, claim, or demand brought by the Buyer against the Sellers (whether such action, suit, proceeding, complaint, claim, or demand is pursuant to this Agreement, applicable law, or otherwise). Indemnification Limitations The Company will have no duty to indemnify any Seller or contribute funds for the benefit of any Seller, and each Seller waives any right to indemnification or contribution from the Company. Notwithstanding anything to the contrary contained in this Article 7: (i) the Sellers shall not be liable for incidental damages, indirect damages, or speculative damages; (ii) the Buyer shall not be entitled to recover more than once for any loss, damage, liability, deficiency, cost, obligation, or expense that may have resulted from the breach of more than one of the Company, Jenkins or Sellers' representations or warranties or the breach of more than one of the Company, Jenkins or Sellers' covenants or agreements hereunder; (iii) in no event will the total liability of any of the Sellers for all losses, damages, liabilities, deficiencies, costs, obligations, or expenses pursuant to this Article 7 or elsewhere in this Agreement exceed an amount equal to such Seller's Pro Rata Percentage of the Purchase Price. As used herein, the term "Pro Rata Percentage" shall mean a percentage calculated by dividing the number of Shares owned by a Seller by the total number of outstanding Shares as of the Closing Date. For example, if a Seller's Pro Rata Percentage of the Purchase Price equals $100,000, then the maximum amount for which that Seller would be liable under this Section 7 would be $100,000 in the aggregate. Notwithstanding anything to the contrary contained in this Article 7, the Sellers and Jenkins shall have no indemnification obligations in connection with or related to state sales and use taxes and penalties and interest thereon. The Company has insurance coverage of $4,000,000 to cover the possible damages, costs and expenses incurred in connection with that certain case styled Estate of Kenneth Lane v. American Augers, Inc. The Sellers and Jenkins shall have no indemnification obligations relating to said case; provided, however, that if the insurance carrier denies any coverage or covers less than the full amount of all damages, costs and expenses, in the aggregate, up to $4,000,000 in connection with the defense of said case then the Sellers and Jenkins shall have the indemnification obligations set forth in Section 7.2. The Company has insurance coverage of $2,000,000 to cover the possible damages, costs and expenses incurred in connection with that certain case styled Dana J. Stickler, Widow and administratrix of the Estate of Harry D. Stickler, deceased v. American Augers, Inc. The Sellers and Jenkins shall have no indemnification obligations relating to said case; provided, however, that if the insurance carrier denies any coverage or covers less than the full amount of all damages, costs and expenses, in the aggregate, less than $2,000,000 in connection with the defense of said case then the Sellers and Jenkins shall have the indemnification obligations set forth in Section 7.2. . ARTICLE TAX MATTERS The following provisions shall govern the allocation of responsibility as between the Buyer and the Sellers for certain tax matters following the Closing Date: Tax Periods Ending on or Before the Closing Date. The Buyer shall prepare or cause to be prepared in accordance with the terms of this Agreement and file or cause to be filed all tax returns for the Company for all periods ending on or prior to the Closing Date which are filed after the Closing Date. The Buyer shall permit the Sellers to review and comment on each such tax return described in the preceding sentence prior to filing. The Sellers' obligation to reimburse the Buyer for taxes of the Company with respect to such period to the extent such taxes are not reflected in the reserve for tax liability is set forth in Section 7.2. Tax Periods Beginning Before and Ending After the Closing Date. The Buyer shall prepare or cause to be prepared and file or cause to be filed any tax returns of the Company for tax periods which begin before the Closing Date and end after the Closing Date. The Sellers' obligation to reimburse the Buyer an amount equal to the portion of such taxes which relates to the portion of such taxable period ending on the Closing Date to the extent such taxes are not reflected in the reserve for tax liability is set forth in Section 7.2. For purposes of this Section, in the case of any taxes that are imposed a periodic basis and are payable for a taxable period that includes (but does not end on) the Closing Date, the portion of such tax which relates to the portion of such taxable period ending on the Closing Date shall (a) in the case of any taxes other than taxes based upon or related to income or receipts, be deemed to be the amount of such tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in the entire taxable period, and (b) in the case of any tax based upon or related to income or receipts be deemed equal to the amount which would be payable if the relevant taxable period ended on the Closing Date. Any credits relating to a taxable period that begins before and ends after the Closing Date shall be allocated in the same manner. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Company. Disputes as to Tax Returns. If the Sellers have an obligation to reimburse the Buyer for taxes under either Section 8.1 or Section 8.2 and if the Sellers object to matters on the tax returns filed thereunder, then the specific matters in dispute shall be submitted to KPMG's Cleveland, Ohio office or to another national, independent accounting firm (other than Ernst & Young, L.L.P. or Arthur Andersen, L.L.P.) approved by the Sellers and the Buyer. As expeditiously as possible, and in any event within ten (10) days of submission, KPMG (or such other independent accounting firm) will deliver to the Sellers and the Buyer its determination of the specified matters in dispute, which determination shall be final and binding on the parties hereto. The fees and expenses of KPMG (or such other independent accounting firm) shall be borne one-half by the Sellers and one- half by the Buyer. Cooperation on Tax Matters. the Buyer and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of tax returns pursuant to this Section and any audit, litigation or other proceeding with respect to taxes. Such cooperation shall include the retention and (upon the other Party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. the Buyer and the Sellers further agree, upon request, to use their best efforts to obtain any certificate or other document from any governmental authority or any other person or entity as may be necessary to mitigate, reduce or eliminate any tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). the Buyer and the Sellers further agree, upon request, to provide the other Party with all information that either party may be required to report pursuant to Section 6043 of the Code and all regulations promulgated thereunder. Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other such taxes and fees (including any penalties and interest) incurred in connection with this Agreement, shall be paid by the Buyer when due, and the Buyer will, at its own expense, file all necessary tax returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other taxes and fees, and, if required by applicable law, the Sellers will join in the execution of any such tax returns and other documentation. ARTICLE TERMINATION Termination of Agreement. The Parties may terminate this Agreement as provided below: the Buyer and the Sellers may terminate this Agreement by mutual consent at any time prior to the Closing; the Buyer may terminate this Agreement by giving written notice to the Sellers on or before the Closing Date if the Buyer's continuing business, legal, environmental, and accounting due diligence regarding the Company reveals any fact or facts that would or could reasonably likely result in materially adverse consequences or changes to the business of the Company as presently conducted subsequent to the consummation of the transactions contemplated by this Agreement; the Buyer may terminate this Agreement by giving written notice to the Sellers at any time prior to the Closing (i) in the event any of the Sellers have breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Buyer has notified the Sellers of the breach, and the breach has continued without cure for a period of thirty (30) days after the notice of the breach or (ii) if the Closing shall not have occurred on or before November 30, 1999, by reason of the failure of any condition precedent under Section 6.1 hereof (unless the failure results primarily from the Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and the Sellers may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing in the event the Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, any of the Sellers has notified the Buyer of the breach, and the breach has continued without cure for a period of thirty (30) days after the notice of breach or (ii) if the Closing shall not have occurred on or before November 30, 1999, by reason of the failure of any condition precedent under Section 6.1 hereof (unless the failure results primarily from the Company, the Sellers or Jenkins itself or themselves breaching any representation, warranty, or covenant contained in this Agreement). Effect of Termination. If any Party terminates this Agreement pursuant to Section 9.1 above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach). MISCELLANEOUS Seller Agents. (a) Each Seller has made, constituted and appointed, and by the execution of this Agreement irrevocably makes, constitutes and appoints Roger K. Eve and Phil Jenkins as such Seller's true and lawful attorneys-in-fact and agents (the "Seller Agents") to act for such Seller in such Seller's name, (i) to participate in the Closing and take all other such actions in connection with the transactions contemplated hereby and to receive, respond to and settle all claim notices and to receive, respond to and settle all other notices, communications and matters directed to such Seller under this Agreement (or to the Seller Agents on behalf of such Seller) and to take any action (or to determine to take no action) with respect thereto at or following the Closing as the Seller Agents may deem appropriate as effectively as such Seller could act for himself including, without limitation, delivery of certificates?representing the Shares and acceptance of payments due at the Closing, execution and delivery of documents and certificates and the settlement and compromise of any issue, dispute or controversy relating to the transactions contemplated hereby, (ii) to negotiate, terminate or amend this Agreement and the Closing Documents and (ii) to execute and deliver all instruments and documents of every kind incident to the foregoing for all intents and purposes and with the same effect as such Seller could do personally, and each such Seller hereby ratifies and confirms as such Seller's own act all that the Seller Agents shall do or cause to be done pursuant to the provisions hereof. (b) The death, incapacity, termination or dissolution of any Seller shall terminate the authority and agency of the Seller Agents with respect to such Seller. (c) Each Seller hereby agrees to indemnify the Seller Agents and hold the Seller Agents harmless against any loss, liability or expense incurred without negligent conduct or bad faith on the part of the Seller Agents and arising out of or in connection with his duties as Seller Agents for such Seller, including the costs and expenses incurred by such Seller Agents in defending against any claim of liability in connection therewith. (d) Each Seller hereby releases the Buyer from any liability or loss incurred by such Seller as a result of the performance or failure to perform by the Seller Agents of their obligations in connection with this Agreement. (e) By their execution hereof, Roger K. Eve and Phil Jenkins accept their appointment as Seller Agents hereunder by each Seller, agrees to exercise the rights and perform the obligations of Seller Agents in accordance with the terms and conditions of this Agreement, and acknowledges that they are accepting the position of Seller Agents solely in reliance upon the provisions of this Agreement and not, either in whole or in part, upon any other contract, agreement, commitment or understanding Knowledge. As used herein, the term "knowledge" (or words of similar import) means that an individual shall be deemed to have knowledge of a particular fact or other matter if (a) such individual is actually aware of such fact or other matter, or (b) a prudent individual similarly situated could be expected to discover or otherwise become aware of such fact or other matter in the course of carrying out his or her duties or conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter; the term "to the Company's knowledge" or "to the knowledge of the Company" (or words of similar import) means the knowledge of all key management personnel of the Company concerning the matters to which such representations and warranties relate, including, but not limited to, Roger K. Eve, Chairman and Chief Executive Officer, Michael T. Mooney, Chief Financial Officer, and Brad Dolan, Controller. Press Releases and Public Announcements. It is the understanding of the parties that on or within three (3) days after the date of execution of this Agreement, the Sellers and the Buyer will jointly announce the subject matter of this Agreement to the employees of the Company, and the Buyer will issue press releases and make the requisite government notice filings. No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person or entity other than the Parties and their respective successors and permitted assigns. Entire Agreement. This Agreement (including the documents, schedules and exhibits referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof. Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Company and the Parties named herein and their respective heirs, personal representative, estates, successors and permitted assigns. Neither the Company nor any Party may assign either this Agreement or any of his or its rights, interests, or obligations hereunder without the prior written approval of the Buyer and the Sellers; provided, however, that the Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its affiliated companies and (ii) designate one or more of its affiliate companies to perform its obligations hereunder (in any or all of which cases the Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder). Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to the Buyer: Astec Industries, Inc. P. O. Box 72787 4101 Jerome Ave. Chattanooga, TN 37407 Attn: Richard Bethea Fax: (423) 877-1818 With a Copy to: Chambliss, Bahner & Stophel, P.C. 1000 Tallan Building Two Union Square Chattanooga, TN 37402 Attn: E. Stephen Jett Fax: (423) 265-9574 If to the Sellers and/or Seller Agents: Roger K. Eve 4334 Woodlake Trail Wooster, OH 44691 Fax: (330) 345-8575 Phil Jenkins 6589 Jackson Road Ann Arbor, MI 48103 Fax: (734) 663-3553 With a Copy to: Kahn, Kleinman, Yanowitz & Arnson, L.P.A. The Tower at Erieview Suite 2600 Cleveland, OH 44114 Attn: Marc H. Morgenstern Fax: (216) 696-1009 Any Party may send any notice, request, demand, claim , or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy or ordinary mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Tennessee without giving effect to any choice or conflict of law provision or rule (whether of the State of Tennessee or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Tennessee. Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Buyer and the Seller Agents. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent fault, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. The course of conduct or course of dealing of the parties shall not operate to modify or waive the provisions of this Section. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In such event, the offending provision shall be modified to the minimum extent necessary to make it valid and enforceable. Expenses. Each of the Parties shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant. Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. Specific Performance. Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date first above written. ASTEC INDUSTRIES, INC. By: Title:/s/ Richard W. Bethea SELLERS: /s/ Roger K. Eve Roger K. Eve The Phil Jenkins Revocable Living Trust dated 1/6/67 By: /s/ Steve Tracy Steve Tracy, Trustee The Ann Arbor Hands-On Museum Irrevocable Trust dated 9/17/99 By: /s/ Steve Tracy Steve Tracy, Trustee The Dexter Intergenerational Care Center, Inc. Irrevocable Trust dated 9/18/99 By: /s/ Steve Tracy Steve Tracy, Trustee The Chelsea Community Hospital Irrevocable Trust dated 9/18/99 By: /s/ Steve Tracy Steve Tracy, Trustee /s/ Michael T. Mooney Michael T. Mooney /s/ Denis Fox Denis Fox /s/ Thomas Hartzler Thomas Hartzler /s/ William Riel William Riel /s/ Leonard Craig Johnson Leonard Craig Johnson /s/ Lisa King Lisa King /s/Tim Small Tim Small COMPANY: AMERICAN AUGERS, INC. By:/s/ Phil Jenkins Phil Jenkins EXHIBIT 10.30 Stock Purchase Agreement, dated November 1, 1999, by and among SIMCO, LLC and the Superior Industries of Morris, Inc. Employee Stock Ownership Plan and Astec Industries, Inc. ACQUISITION OF SUPERIOR INDUSTRIES OF MORRIS, INC. BY ASTEC INDUSTRIES, INC. November 1, 1999 TABLE OF CONTENTS Headings Page No. ARTICLE 1: DEFINITIONS 2 SECTION 1.1 SPECIFIC DEFINITIONS. 2 SECTION 1.2 OTHER TERMS. 5 SECTION 1.3 OTHER DEFINITIONAL PROVISIONS. 5 ARTICLE 2: PURCHASE AND SALE OF SHARES 6 SECTION 2.1 PURCHASE AND SALE OF SHARES. 6 SECTION 2.2 PURCHASE AND SALE OF PREMISES. 6 SECTION 2.3 SHARE CONSIDERATION, REAL ESTATE CONSIDERATION AND ESCROW AMOUNT. 6 SECTION 2.4 CLOSING; DELIVERY AND PAYMENT. 7 ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MAJORITY SHAREHOLDERS 7 SECTION 3.1 ORGANIZATION AND AUTHORITY OF COMPANY. 7 SECTION 3.2 CAPITALIZATION OF COMPANY. 7 SECTION 3.3 FINANCIAL STATEMENTS. 8 SECTION 3.4 ABSENCE OF CERTAIN CHANGES, EVENTS OR LIABILITIES. 8 SECTION 3.5 LITIGATION. 10 SECTION 3.6 COMPLIANCE WITH LAW; PERMITS. 10 SECTION 3.7 CONSENTS AND APPROVALS. 11 SECTION 3.8 TAX MATTERS. 11 SECTION 3.9 MATERIAL CONTRACTS. 11 SECTION 3.10 LABOR MATTERS. 12 SECTION 3.11 BENEFIT PLANS. 12 SECTION 3.12 ENVIRONMENTAL MATTERS. 13 SECTION 3.13 BROKERS AND FINDERS. 13 SECTION 3.14 TANGIBLE ASSETS. 14 SECTION 3.15 INTANGIBLE ASSETS. 14 SECTION 3.16 EMPLOYEES. 14 SECTION 3.17 INSURANCE. 15 SECTION 3.18 INVENTORY. 16 SECTION 3.19 YEAR 2000 COMPLIANCE. 16 SECTION 3.20 COMPLETENESS OF STATEMENTS; EFFECT OF REPRESENTATIONS AND WARRANTIES. 17 ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF SIMCO AND THE MAJORITY SHAREHOLDERS 17 SECTION 4.1 ORGANIZATION AND AUTHORITY OF SIMCO. 17 SECTION 4.2 BROKERS AND FINDERS. 17 SECTION 4.3 REAL PROPERTY. 18 SECTION 4.4 ENVIRONMENTAL MATTERS. 19 SECTION 4.5 LEGAL PROCEEDINGS. 19 SECTION 4.6 CONSENTS AND APPROVALS. 19 SECTION 4.7 COMPLETENESS OF STATEMENTS; EFFECT OF REPRESENTATIONS AND WARRANTIES. 19 ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF THE MAJORITY SHAREHOLDERS 20 SECTION 5.1 BROKERS AND FINDERS. 20 SECTION 5.2 REAL PROPERTY. 20 SECTION 5.3 ENVIRONMENTAL MATTERS. 21 SECTION 5.4 LEGAL PROCEEDINGS. 22 SECTION 5.5 CONSENTS AND APPROVALS. 22 SECTION 5.6 SECTION 1031 EXCHANGE. 22 SECTION 5.7 COMPLETENESS OF STATEMENTS; EFFECT OF REPRESENTATIONS AND WARRANTIES. 22 ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF THE ESOP AND THE MAJORITY SHAREHOLDERS 23 SECTION 6.1 AUTHORITY OF THE ESOP. 23 SECTION 6.2 BROKERS AND FINDERS. 23 SECTION 6.3 ESOP SHARES. 23 SECTION 6.4 LEGAL PROCEEDINGS. 23 SECTION 6.5 CONSENTS AND APPROVALS. 24 SECTION 6.6 NO DISSENTERS' RIGHTS. 24 SECTION 6.7 COMPLETENESS OF STATEMENTS; EFFECT OF REPRESENTATIONS AND WARRANTIES. 24 ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF BUYER 24 SECTION 7.1 ORGANIZATION AND AUTHORITY OF BUYER. 24 SECTION 7.2 BROKERS AND FINDERS. 25 SECTION 7.3 FINANCIAL CAPABILITY. 25 SECTION 7.4 SECURITIES ACT. 25 SECTION 7.5 LEGAL PROCEEDINGS. 25 SECTION 7.6 CONSENTS AND APPROVALS. 25 ARTICLE 8: TAX MATTERS 26 SECTION 8.1 TAX INDEMNIFICATION. 26 SECTION 8.2 TAX RETURNS. 26 SECTION 8.3 CONTEST PROVISIONS. 27 SECTION 8.4 ASSISTANCE AND COOPERATION. 27 SECTION 8.5 TRANSFER TAXES. 28 SECTION 8.6 SURVIVAL OF OBLIGATIONS. 28 ARTICLE 9: CERTAIN COVENANTS AND AGREEMENTS 28 SECTION 9.1 ACCESS AND INFORMATION. 28 SECTION 9.2 REGISTRATIONS, FILINGS AND CONSENTS. 28 SECTION 9.3 CONDUCT OF BUSINESS. 29 SECTION 9.4 BEST EFFORTS. 29 SECTION 9.5 RETENTION OF BOOKS AND RECORDS. 29 SECTION 9.6 HART-SCOTT-RODINO. 30 SECTION 9.7 FURTHER ASSURANCES. 30 SECTION 9.8 ENVIRONMENTAL CONCERNS. 30 SECTION 9.9 EMPLOYEE BENEFIT MATTERS. 31 ARTICLE 10:0 CONDITIONS TO THE PURCHASE AND SALE 31 SECTION 10.1 GENERAL CONDITIONS TO THE PURCHASE AND SALE RELATING TO PARTIES. 31 SECTION 10.2 CONDITIONS TO PURCHASE BY BUYER. 32 SECTION 10.3 CONDITIONS TO SALE BY SELLERS. 33 ARTICLE 11:0 INDEMNIFICATION 34 SECTION 11.1 SURVIVAL; RIGHTS AND REMEDIES NOT AFFECTED BY KNOWLEDGE. 34 SECTION 11.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE MAJORITY SHAREHOLDERS. 34 SECTION 11.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SIMCO. 36 SECTION 11.4 INDEMNIFICATION BY BUYER. 37 SECTION 11.5 INDEMNITY CLAIMS. 37 SECTION 11.6 NO LIABILITY OF COMPANY. 39 ARTICLE 12:0 TERMINATION 39 SECTION 12.1 TERMINATION. 39 ARTICLE 13:0 MISCELLANEOUS 40 SECTION 13.1 EXPENSES. 40 SECTION 13.2 BEST EFFORTS; FURTHER ASSURANCES. 40 SECTION 13.3 PUBLIC DISCLOSURE. 41 SECTION 13.4 ASSIGNMENT. 41 SECTION 13.5 AMENDMENTS AND WAIVERS. 41 SECTION 13.6 ENTIRE AGREEMENT. 41 SECTION 13.7 SCHEDULES. 41 SECTION 13.8 NOTICES. 41 SECTION 13.9 GOVERNING LAW. 41 SECTION 13.10 SEVERABILITY. 42 SECTION 13.11 SECTION HEADINGS. 42 SECTION 13.12 COUNTERPARTS. 42 SECTION 13.13 REPRESENTATION BY COUNSEL; INTERPRETATION. 42 SECTION 13.14 ARBITRATION CLAUSE. 42 ACQUISITION AGREEMENT THIS ACQUISITION AGREEMENT (this "Agreement") is made and entered into by and among Neil E. Schmidgall and Linda M. Schmidgall, individually and as Trustees of the Neil E. Schmidgall Revocable Living Trust and the Linda M. Schmidgall Revocable Living Trust, Paul Schmidgall, individually and as trustee of the Neil E. Schmidgall and Linda M. Schmidgall Charitable Remainder Unitrust, and Shawn Schmidgall (each of the foregoing referred to individually as "Majority Shareholder" and collectively as "Majority Shareholders"), SIMCO, LLC, a Minnesota limited liability company ("SIMCO"), the Superior Industries of Morris, Inc. Employee Stock Ownership Plan (the "ESOP"), Superior Industries of Morris, Inc., a Minnesota corporation (the "Company"), and Astec Industries, Inc., a Tennessee corporation (the "Buyer"). R E C I T A L S: WHEREAS, the Majority Shareholders collectively own 140,000 issued and outstanding shares of capital stock of the Company (the "Schmidgall Shares") in the respective amounts set forth in Exhibit A; and WHEREAS, the ESOP owns the remaining 60,000 shares of the issued and outstanding shares of the capital stock of the Company (the "ESOP Shares"; the ESOP Shares and the Schmidgall Shares are referred to collectively as the "Company Shares"); and WHEREAS, the Majority Shareholders and the ESOP desire to sell and transfer to Buyer (as defined herein), and Buyer desires to purchase from the Majority Shareholders and the ESOP, the Company Shares, as more specifically provided herein; and WHEREAS, SIMCO and Neil Schmidgall collectively own real property and improvements located in Morris, Minnesota, which constitutes all the real property and improvements used in connection with the business operations of the Company (the "Premises"); and WHEREAS, SIMCO and Neil Schmidgall desire to sell and transfer the Premises, as more specifically provided herein. NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and on the terms and conditions herein set forth, the parties intending to be legally bound hereby agree as follows: ARTICLE : DEFINITIONS Section 1.1 Specific Definitions. As used in this Agreement and any Exhibits, Schedules, or certificates delivered pursuant hereto, the following terms shall have the following meanings: "Agreement" means this Agreement and all Exhibits and Schedules. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such other Person. For the purposes of this definition, "control" of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether by ownership of securities, contract, law or otherwise and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "Antitrust Division" means the Antitrust Division of the United States Department of Justice. "Benefit Plans" has the meaning set forth in Section 3.11 "Breach" has the meaning set forth in Section 11.2 "Buyer" means Astec Industries, Inc., a Tennessee corporation. Buyer may designate at or prior to the Closing Date a wholly-owned subsidiary to complete the transactions set forth in the Agreement. Buyer and such subsidiary shall be jointly and severally responsible for the obligations of the Buyer under this Agreement. "Buyer's Indemnitees" has the meaning set forth in Section 11.2. "Claim" has the meaning set forth in Section 11.5. "Claim Notice" has the meaning set forth in Section 11.5. "Closing" has the meaning set forth in Section 2.4. "Closing Date" means the date of the Closing. "Code" means the Internal Revenue Code of 1986, as amended to the date hereof. "Company" means Superior Industries of Morris, Inc., a Minnesota corporation. "Company Shares" has that meaning set forth in the recitals. "Damages" means debts, obligations, losses, claims, damages (including incidental and consequential damages), liabilities, deficiencies, proceedings, demands, assessments, orders, judgments, writs, decrees, costs and other expenses (including costs of investigation and defense and reasonable attorneys' fees) or diminution of value, whether or not involving a third-party claim, of any nature and of any kind whatsoever. "EEOC" has the meaning set forth in Section 3.10. "Encumbrances" means any charges, claims, community property interests, conditions, equitable interests, liens, mortgages, easements, rights-of way, options, pledges, security interests, rights of first refusal or restrictions of any kind, including any restrictions on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. "Environmental Concerns" has the meaning set forth in Section 9.8. "Environmental Laws" has the meaning set forth in Section 3.12. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ESOP" means the Superior Industries of Morris, Inc. Employee Stock Ownership Plan. "ESOP Shares" has that meaning set forth in the recitals. "Financial Statements" has the meaning set forth in Section 3.3. "FTC" means the Federal Trade Commission. "GAAP" means generally accepted accounting principles in the United States of America, as in effect from time to time. "Hazardous Activity" means the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, release, storage, transfer, transportation, treatment, or use (including any withdrawal or other use of groundwater) of Hazardous Materials in, on, under, about, or from the Premises or any part thereof into the environment, and any other act, business, operation, or a thing that increases the danger, or a risk of danger, or poses an unreasonable risk of harm to persons or property on or off the Premises, or that may affect the value of the Premises or the Company. "Hazardous Materials" means any waste or other substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a contaminate under or pursuant to any Environmental Law, including any mixture or solution thereof, and specifically including petroleum and all derivatives thereof or synthetic substance therefor and asbestos or asbestos- containing materials. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indemnitee" has the meaning set forth in Section 11.5. "Indemnifying Party" has the meaning set forth in Section 11.5. "Information Technology" has the meaning set forth in Section 3.19. "Interim Financial Statements" has the meaning set forth in Section 3.3. "IRS" means the Internal Revenue Service. "Majority Shareholders" has the meaning set forth in the recitals. "Material Adverse Effect" means a material adverse effect on the business, operations, properties, assets, prospects or condition (financial or otherwise) of Company, taken as a whole, the Premises, or on any Seller's ability to perform any of their obligations under this Agreement and consummate the transactions contemplated hereby. "Material Contracts" has the meaning set forth in Section 3.9. "NLRB " has the meaning set forth in Section 3.10. "Pension Plan" has the meaning set forth in Section 3.11. "Person" means an individual, corporation, partnership, trust or unincorporated organization or government or any agency or political subdivision thereof. "Premises" has that meaning set forth in the recitals. "Profit Sharing Plan" has the meaning set forth in Section 9.9. "Real Estate Consideration" has that meaning set forth in Section 2.3. "Report" has the meaning set forth in Section 9.6. "Section 1031 Exchange" has that meaning set forth in Section 5.6. "Securities Act" means the Securities Act of 1933, as amended. "Sellers" has that meaning set forth in Article 7. "Schmidgall Premises" has the meaning set forth in Section 5.2. "Schmidgall Shares" has the meaning set forth in the recitals. "Share Consideration" has that meaning set forth in Section 2.3. "SIMCO" means SIMCO, LLC, a Minnesota limited liability company. "SIMCO Premises" has the meaning set forth in Section 4.3. "Tax" or "Taxes" means any federal, state, local or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, stock transfer, conveyance, intangible, stamp, duty, transfer, reporting, recording, license, excise, franchise or similar taxes, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties. "Tax Returns" means all federal, state, local and foreign Tax returns, Tax reports, and declarations of estimated Tax, including without limitation federal income tax returns that include the Company. "Third Party Claim" has the meaning set forth in Section 11.5. "UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of Minnesota. Section 1.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement and shall have the meanings indicated throughout this Agreement. Section 1.3 Other Definitional Provisions. For all purposes of this Agreement, except as otherwise expressly provided: The terms defined in this Article 1 have the meanings assigned to them in this Article 1 and include the plural as well as the singular; All accounting terms not otherwise defined herein having the meanings assigned under GAAP; All references to Articles, Sections, Exhibits and Schedules are to the designated Articles, Sections, Exhibits and Schedules, respectively, to this Agreement; Pronouns of either gender and neuter shall include, as appropriate, the other pronoun forms; The words "herein", "hereof", and "hereunder" and other words of similar import refer to this Agreement as a whole and not any particular Article, Section, or other subdivision; The use herein of the word "include" or "including", when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter; For the purposes of this Agreement, "knowledge" or "known" means actual knowledge or knowledge that would exist upon reasonable inquiry. A Person's knowledge shall specifically include the actual knowledge of any officer or trustee thereof, if applicable, or knowledge that would exist upon reasonable inquiry by any officer or trustee thereof, if applicable. For purposes of this Agreement, the term "ordinary course of business" shall mean an action that is consistent with the past practices of the applicable party and is taken in the ordinary course of the normal day-to-day operations of the applicable party, is not required to be authorized by the board of directors or similar governing body of the applicable party and is similar in nature and magnitude to actions customarily taken without any authorization by the board of directors of a corporation in the same line of business as the applicable party. ARTICLE : PURCHASE AND SALE OF SHARES Section Purchase and Sale of Shares. Upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from the Majority Shareholders and the ESOP, and the Majority Shareholders and ESOP agree to sell to Buyer, the Company Shares for the Share Consideration specified in Section 2.3(a). Section Purchase and Sale of Premises. Upon the terms and subject to the conditions of this Agreement, Buyer, SIMCO and Neil Schmidgall agree that SIMCO and Neil Schmidgall shall transfer, sell and assign the Premises to the Company and Buyer shall pay the Real Estate Consideration to SIMCO and Neil Schmidgall for such transfer, sale and assignment on the terms specified in Section 2.3. Section Share Consideration, Real Estate Consideration and Escrow Amount. The purchase price for the Company Shares shall be Thirteen Million Five Hundred Thousand Dollars ($13,500,000) (the "Share Consideration"). The Share Consideration shall be paid to the Majority Shareholders and the ESOP in the respective amounts set forth on Schedule 2.3(a). The purchase price for the Premises shall Three Million Six Hundred Fifty-two Thousand Five Hundred Dollars ($3,652,500) (the "Real Estate Consideration"). The Real Estate Consideration shall be paid to SIMCO and Neil Schmidgall in the amounts set forth in Schedule 2.3(b). Section Closing; Delivery and Payment. The closing of the sale and purchase of the Company Shares and the Premises contemplated herein (the "Closing") shall take place at the offices of Mansfield, Tanick & Cohen, P.A., 1560 International Centre, 900 Second Avenue, Minneapolis, Minnesota 55402 at 10:00 a.m. CDT on September 30, 1999, or at such other time or place as is mutually agreed to by the parties hereto. ARTICLE : REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MAJORITY SHAREHOLDERS The Company and the Majority Shareholders jointly and severally represent and warrant to Buyer as follows: Section Organization and Authority of Company. The Company is duly formed and validly existing as a corporation under the laws of the State of Minnesota. Seller has all necessary corporate power, capacity and authority to execute, deliver and perform this Agreement. This Agreement has been duly authorized by all requisite corporate action on the part of the Company, executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and by general principles of equity. Neither the execution and delivery by the Company of this Agreement nor consummation of the transactions contemplated hereby will violate any provision of the articles or certificate of incorporation or bylaws of the Company; or any contract provision, license, franchise or permit to which Company is a party or by which it is bound; or any law, statute or regulation or any injunction, order or decree of any government agency or authority or court to which the Company is subject except to the extent, in each case, that such a violation would not prohibit or materially impair the Company's ability to perform its obligations under this Agreement. Section Capitalization of Company. The authorized capital stock of Company consists of 500,000 shares of no par, common stock of which 200,000 shares are outstanding. The Majority Shareholders and the ESOP are the only shareholders of the Company and respectively own, beneficially and of record, that certain number of shares set forth in Schedule 3.2, free and clear of any Encumbrances. The Company Shares are duly authorized, validly issued, fully paid and nonassessable. There are no outstanding options, warrants or other rights to subscribe for or purchase from the Company, or any plans, contracts, or commitments providing for the issuance of, or the granting of rights to acquire, any capital stock of the Company or securities convertible into or exchangeable for capital stock of the Company and there are no shares of capital stock reserved for issuance by the Company. There are no unsatisfied preemptive rights in respect of capital stock of the Company. Immediately after the sale of the Company Shares by the Majority Shareholders and the ESOP pursuant to this Agreement, upon the registration of the Company Shares in the name of Buyer in the stock records of the Company and assuming that Buyer does not have any "notice" of any "adverse claim" to the Company Shares (as such terms are defined in the UCC), Buyer shall be a "protected purchaser" (as such term is defined in the UCC). Section Financial Statements. Company or the Majority Shareholders have heretofore furnished to Buyer copies of the following financial statements: unaudited balance sheets of the Company as at October 31 in each of the years 1994 through 1998, and the related unaudited statements of income, changes in stockholders' equity, and cash flow for each of the fiscal years then ended, and an unaudited balance sheet of the Company as at April 30, 1999 and the related unaudited statements of income, changes in stockholders' equity, and cash flow for the six (6) months then ended, including in each case the notes thereto (the "Interim Financial Statements"; all of those items in (a) and (b) above are referred to herein collectively as the "Financial Statements"). The Financial Statements represent actual, bona fide transactions and have been prepared in conformity with GAAP applied on a consistent basis (except for changes, if any, required by GAAP and disclosed therein), and the results of operations, changes in stockholders' equity and cash flows of the Company for such periods are consistent with the books and records of the Company and do not contain any items of special or non-recurring nature. Such Financial Statements fairly present in all material respects the financial position of the Company as at the respective date thereof and the results of operations and cash flows of the Company for the periods then ended. Section Absence of Certain Changes, Events or Liabilities. Except as set forth on Schedule 3.4(a), since April 30, 1999, and restated again through the Closing Date, the Company has not: issued, sold, purchased or redeemed any stock, bonds, debentures, notes or other corporate securities, or issued, sold or granted any option, warrant or right to acquire any thereof; waived or released any debts, claims or rights of value or suffered any extraordinary loss or written down the value of any inventories or other assets or written down or off any receivable in excess of the amounts reflected in the Interim Financial Statements; except as reflected in the Interim Financial Statements, made any capital expenditures or capital commitments in excess of $20,000 for any single transaction or any series of related transactions or in excess of $50,000 in the aggregate; made any change in the business or operations or the manner of conducting business or operations of the Company, other than changes in the ordinary course of business, none of which has, and which in the aggregate have not had, a Material Adverse Effect; terminated, placed on probation, disciplined, or warned any officer or supervisory employee of the Company; experienced any resignations of, or had any disputes involving the employment or agency relationship with any of, the employees or agents of the Company which could have a Material Adverse Effect; suffered any casualty, damage, destruction or loss to any of its assets or properties in excess of $25,000 for any one event or in excess of $100,000 in the aggregate; declared, set aside or paid any dividends or distributions in respect of the Company Shares (except as reflected on the Interim Financial Statements); paid or obligated itself to pay any bonuses or extraordinary compensation to, or made any increase (except increases in the ordinary course of business) in the compensation payable (or to become payable by it) to, any of its directors, officers, employees, agents or other representatives of the Company (except as reflected on the Interim Financial Statements); terminated or amended or suffered the termination or amendment of any contract, lease, agreement, license or other instrument to which it is or was a party which could have a Material Adverse Effect; adopted, modified or amended any plan or agreement so as to increase the benefits due the employees of the Company under any such plan or agreement; made any loan or advance to any person (except a normal travel or other reasonable expense advance to its officers and employees); suffered a Material Adverse Effect; subjected any of its assets or properties to any Encumbrances; paid any funds to any of its officers or directors, or to any family member of any of them, or any person in which any of the foregoing has any direct or indirect interest, except for the payment of installments of annual salaries reflected on the Interim Financial Statements; disposed of or agreed to dispose of any of its properties or assets other than in the ordinary course of business; entered into any transactions other than in the ordinary course of business; made any change in accounting principles, methods or practices; entered into any agreement, contract, lease or license (or series of related agreements, contracts, leases or licenses) involving more than $25,000 or made outside the ordinary course of business; delayed or postponed the payment of any accounts payable and other liabilities outside the ordinary course of business; been a party to any other occurrence, event, action, failure to act, or transaction outside the ordinary course of business involving the Company; or entered into any agreement or commitment (whether or not in writing) to do any of the above; and Except as set forth on Schedule 3.4(b), since April 30, 1999, and restated again through the Closing Date, the Company has: used its reasonable best efforts to preserve the business and organization of the Company, and to keep available, without entering into any binding agreement, the services of the Company's employees, and to preserve the goodwill of the Company's customers and others having business relationships with the Company; and continued its business and maintained its operations and equipment, books of account, records and files in the ordinary course of business. Except as set forth on Schedule 3.4(c), the Company does not have any liabilities of a material nature of the type required to be reflected as liabilities on a balance sheet prepared in accordance with GAAP, whether known or unknown, accrued or unaccrued, absolute or contingent or otherwise, except such liabilities that are reflected or disclosed in the financial statements referred to in Section 3.3, were incurred after April 30, 1999 in the ordinary course of business or the existence of which would not reasonably be expected to have a Material Adverse Effect. Section Litigation. Except as set forth in Schedule 3.5, there are no actions, suits, proceedings or investigations pending or, to the best of the Company's and the Majority Shareholders' knowledge, overtly threatened against Company at law, in equity or otherwise in, before, or by, any court or governmental agency or authority which individually or in the aggregate would reasonably be expected to have a Material Adverse Effect. Section Compliance with Law; Permits. To the best of the Company's and the Majority Shareholders' knowledge, the Company has conducted its business in compliance with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, noncompliance with which would have a Material Adverse Effect. To the best of the Company's and the Majority Shareholders' knowledge, the Company has all permits, governmental licenses, registrations and approvals necessary or required by law or rules or regulations of any governmental entity having jurisdiction over the Company to carry on its business as presently conducted, except for such permits, governmental licenses, registrations and approvals the lack of which has not had and will not have a Material Adverse Effect. Section Consents and Approvals. Except as set forth in Schedule 3.7, the execution, delivery and performance of this Agreement by Seller will not require any consent, waiver, authorization or approval of, or the making of any filing with or giving of notice to, any person, entity or governmental authority (other than as required under the HSR Act), except for such consents, waivers, authorizations or approvals which if not obtained would not reasonably be expected to have a Material Adverse Effect. Section Tax Matters. The Company or the Majority Shareholders have provided true and complete copy of the Company's income tax return filed for the period ending October 31, 1998. To the best of the Company's and the Majority Shareholders' knowledge, except as set forth in Schedule 3.8, all Tax Returns that are required to be filed on or before the Closing Date by or with respect to the Company have been filed, all Taxes shown to be due on the Tax Returns referred to in clause (i) have been paid in full, any deficiencies asserted or assessments made as a result of any examinations of the Tax Returns referred to in clause (i) by the IRS or the relevant state, local or foreign taxing authority have been paid in full, no issues that have been raised by the relevant taxing authority in connection with any such examination of any of the Tax Returns referred to in clause (i) are currently pending, and no waivers of statutes of limitations have been given or requested by or with respect to any Taxes of the Company. Section Material Contracts. Schedule 3.9 lists all contracts or arrangements of the Company which obligate the Company to pay more than $50,000 in any fiscal year or entitle the Company to receive more than $50,000 in any fiscal year, in each case including arrangements under which the Company would be obligated to purchase or sell pursuant to a purchase order; financing documents, loan agreements, capital leases or agreements providing for the guaranty of such obligations of any party other than the Company (in each case in excess of $50,000); distributorship, dealer or sales representative agreements or other agreements of the Company resulting in the marketing of products or services which individually involved the distribution of more than $50,000 of products or services in fiscal 1998 or the payment of more than $50,000 in commissions in fiscal 1998, respectively, or may be reasonably expected to do so in fiscal 1999; and employment or consulting contracts pursuant to which the Company paid more than $50,000 in fiscal 1998, or may be reasonably expected to do so in fiscal 1999, or which include change in control provisions (all of the foregoing are collectively referred to herein as the "Material Contracts"). The Company is not in default under, or in violation of, any Material Contract, except to the extent such violation or default would not reasonably be expected to have a Material Adverse Effect. True, correct and complete copies of all of the Material Contracts have been made available to Buyer. Section Labor Matters. The Company is in compliance in all material respects with all applicable federal and state laws respecting employment and employment practices, terms and conditions of employment, wages and hours, and is not engaged in any unfair labor or employment practice. Except as set forth in Schedule 3.10 there is no: (a) unlawful employment practice discrimination charge pending before the Equal Employment Opportunity Commission (the "EEOC") or any EEOC recognized state "referral agency" or, to the best of Company's and the Majority Shareholders' knowledge, threatened against or involving or affecting the Company; (b) unfair labor practice charge or complaint against the Company pending before the National Labor Relations Board (the "NLRB") or, to the best of Company's and the Majority Shareholders' knowledge, threatened against or involving or affecting the Company; (c) labor strike, dispute, slow down or stoppage actually pending or, to the best of Company's and the Majority Shareholders' knowledge, threatened against or involving or affecting the Company and no NLRB representation question exists respecting any of the employees of the Company; (d) grievance or arbitration proceeding pending and no written claim therefor exists; or (e) collective bargaining agreement that is binding on the Company. To the best of Company's and the Majority Shareholders' knowledge, no organizational efforts are presently being made involving any of the Company's employees and, for the past five years, none have been made. No union or other collective bargaining unit has been certified or recognized by the Company as representing any of the Company's employees during the past five years. During the past five years, no union or collective bargaining unit has sought such certification or recognition, and, to the best of Company's and the Majority Shareholders' knowledge, no union or collective bargaining unit is seeking or currently contemplating seeking such certification or recognition. Section Benefit Plans. Schedule 3.11 lists each "employee benefit pension plan", as such term is defined in Section 3(2) of ERISA (a "Pension Plan"), and each "employee welfare benefit plan", as such term is defined in Section 3(1) of ERISA (together with the Pension Plans, the "Benefit Plans"), which is maintained by or contributed to by the Company and which is subject to ERISA. Each Benefit Plan has been from its inception and remains in compliance in all material respects with such Plan's terms and, where applicable, with ERISA and the Code. Except for the ESOP and as set forth in Schedule 3.11, the Company has no incentive compensation, bonus, deferred compensation, stock option, stock ownership, stock bonus, stock purchase, savings, retirement, pension, profit-sharing, severance or other similar plan or arrangement with or for the benefit of any officer or employee. Each Pension Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS that it is a qualified plan for purposes of Section 401(a) of the Code, and there has been no amendment to any Pension Plan subsequent to the determination letter which would reasonably be expected to materially adversely affect such Plan's qualified status. To the best of the Company's and the Majority Shareholders' knowledge, nothing has occurred during the administration of the ESOP or any other Pension Plan that would materially adversely affect such Plan's qualified status. All contributions required to be made to any Benefit Plan have been timely made or reflected in the Financial Statements in all material respects. No Pension Plan has an "accumulated funding deficiency", as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived). The Company has not incurred any liability to the Pension Benefit Guaranty Corporation under Title IV of ERISA, other than for the payment of premiums, if any, all of which have been paid when due. The Company has never contributed or been required to contribute to any "multiemployer plan", as such term is defined in Section 3(37) of ERISA. The Company has not engaged in any "prohibited transaction", as such term is defined in Section 4975 of the Code, or a transaction prohibited by Section 406 of ERISA, for which a statutory or administrative exemption is not available and that would result in a material tax or a material penalty under Section 4975 of the Code or Section 502(i) of ERISA. Section Environmental Matters. To the best of the Company's and the Majority Shareholders' knowledge, except as set forth in Schedule 3.12: (a) the Company is in compliance with all applicable federal, state, foreign and local laws and regulations relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or sub-surface strata) (collectively, "Environmental Laws"), except for instances of non-compliance that individually or in the aggregate do not, and would not reasonably be expected to, have a Material Adverse Effect; (b) the Company has not received written notice of and is not the subject of, any actions, causes of actions, claims, investigations, demands or notices by any person or entity alleging liability or non-compliance with any Environmental Law; (c) there are no conditions existing which would reasonably be expected to form the basis of a claim against the Company for the violation or non-compliance with any Environmental Law which would have a Material Adverse Effect; and (d) there are no circumstances which would reasonably be expected to prevent or interfere in the future with the Company's material compliance with all Environmental Laws. Section Brokers and Finders. The Company has not employed any broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement who would be entitled to a broker's, finder's or similar fee or commission in connection therewith or upon the consummation thereof. Section Tangible Assets. The Company has valid leasehold interests in (in the case of leasehold interests in real or personal property), or good and marketable title to (in the case of all other personal property), all of their respective properties and assets reflected in the Financial Statements free and clear of all liens, security interests and other encumbrances, except liens, security interests and other encumbrances that: are reflected in the Financial Statements, are not material in amount, are incurred or made in the ordinary course of business and which do not materially adversely impair the usefulness of such properties or assets in the conduct of the business of the Company; constitute statutory liens of landlords, carriers, warehousemen, mechanics, repairman, workmen and materialmen and other liens imposed by law, in each case in the ordinary course of business; are liens for taxes, assessments, water or sewer rents or governmental charges or claims which are not yet delinquent or can be paid without penalty or are being contested in good faith and by appropriate proceedings; are covenants, easements, rights of ways, restrictions, encroachments and other imperfections or defects in title, in each case which do not interfere in any material respect with the ordinary conduct of the business of the Company or result in a material diminution in value of such assets; or are set forth on Schedule 3.14. Section Intangible Assets. The Company owns, or holds adequate licenses or other rights to use, all trademarks, service marks, tradenames, copyrighted material, patents, and other intangible personal property (including the tradenames set forth on Schedule 3.15) necessary to the conduct of its business as presently conducted, and such use does not infringe or violate any rights of any third parties. Section Employees. Schedule 3.16 is a true and complete list of all officers and employees of the Company including the amount of the current annual salary or hourly rate, date of birth, job title, vacation accrued, along with a description of any commitments to such officers and employees with respect to compensation payable hereafter. The Company has not, because of past practices or previous commitments with respect to the Company's officers or employees, established any rights or expectations on the part of such officers or employees to receive additional compensation inconsistent with past practices with respect to any period after the date hereof. Except as set forth in Schedule 3.16, none of the Company's officers or employees has given notice to the Company that he or she intends to leave the Company's employment. Except as set forth on the schedule, the Company has no reason to believe that any of the Company's officers or employees shall leave such employment. Set forth on Schedule 3.16 is a description of all claims made against the Company by officers or employees of the Company within the last twelve (12) months. Except as set forth in Schedule 3.16, the Company is not a party to or bound by any oral or written: employee collective bargaining agreement, employment agreement (other than employment agreements terminable by the Company without premium or penalty on notice of thirty (30) days or less under which the only monetary obligation of the Company is to make current wage or salary payments and provide current employee benefits), consulting, advisory or service agreement, deferred compensation agreement, confidentiality agreement or covenant not to compete; or contract or agreement with any officer or employee (other than employment agreements disclosed in response to clause (i) or excluded from the scope of clause (i)), agent, or attorney in fact of the Company; or obligation to provide, presently or in the future, retiree medical insurance coverage, retiree life insurance coverage, and other benefits for retired employees or directors of the Company, or their dependents. No officer, employee or director of the Company is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition, or proprietary rights agreement, between such officer, employee or director and any other Person that in any way has or will have a Material Adverse Effect. Section Insurance. At least ten (10) days prior to the Closing, the following information will have been provided by the Company with respect to each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) to which the Company has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past three (3) years: the name, address, and telephone number of the agent; the name of the insurer, the name of the policyholder, and the name of each covered insured; the policy number and the period of coverage; the scope (including an indication of whether the coverage was on a claims made, occurrence, or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and description of any retroactive premium adjustments or other loss sharing arrangements. With respect to each such insurance policy which is in force as of the Closing: (1) the policy is legal, valid, binding, enforceable, and in full force and effect; (2) the policy shall continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the contemplated transactions under this Agreement; (3) to the best of Company's and the Majority Shareholders' knowledge, the policy has been issued by an insurer that is financially sound and reputable; (4) the Company is not in breach or default (including with respect to the payment of premiums or the giving of notices), and to the best of Company's and the Majority Shareholders' knowledge, no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; (5) the policy does not provide for any retrospective premium adjustment or other experience-based liability on the part of the Company; (6) to the best of Company's and the Majority Shareholders' knowledge, the policies collectively provide adequate insurance coverage for the assets and the operations of the Company; and (7) to the best of Company's and the Majority Shareholders' knowledge, no party to the policy has repudiated any provision thereof. To the best of Company's and the Majority Shareholders' knowledge, the Company has been covered during the past five (5) years by insurance in scope and amount customary and reasonable for the businesses in which it has engaged during the aforementioned period. Section Inventory. All inventory of the Company, whether or not reflected in the Interim Financial Statements, consists of a quality and quantity usable and salable in the ordinary course of business, except for obsolete items and items of below-standard quality which have been written off or written down to net realizable value in the Interim Financial Statements. All inventories not written off have been priced at the lower of average cost or net realizable value. To the best of Company's and the Majority Shareholders' knowledge, the quantities of each item of inventory (whether raw materials, work-in-process, or finished goods) are not excessive, but are reasonable in the present circumstances of the Company. The Company has maintained no reserve for inventory obsolescence. Except as set forth in Schedule 3.14, no items included in the inventories are pledged as collateral or held by the Company on consignment from another. Section Year 2000 Compliance. Except as set forth in Schedule 3.19, to the best of Company's and the Majority Shareholders' knowledge, the computer software, computer firmware, computer hardware (whether general or specific purpose), and other similar or related items of automated, computerized, and/or software system(s) that are used or relied on, or have been purchased to be used and relied on, by the Company in the conduct of its business (collectively, "Information Technology") is designed to be used prior to, during, and after the calendar year 2000 A.D., and the Information Technology used during each such time period will accurately receive, provide and process date/time data (including, but not limited to, calculating, comparing and sequencing) from, into and between the twentieth and twenty- first centuries, including the years 1999 and 2000, and leap year calculations and will not malfunction, cease to function, or provide invalid or incorrect results as a result of date/time data, to the extent that other Information Technology, used in combination with the Information Technology of the Company, properly exchanges data/time data with it. Section Completeness of Statements; Effect of Representations and Warranties. To the best of Company's and the Majority Shareholders' knowledge, no representation or warranty of the Company or the Majority Shareholders in the Agreement contains any untrue statement of a material fact, omits any material fact necessary to make such representation or warranty, under the circumstances which it was made, not misleading, or contains any misstatement of a material fact. The Company and the Majority Shareholders have made due inquiry and investigation concerning the matters to which the representations and warranties of the Company and the Majority Shareholders under this Agreement pertain and neither the Company nor the Majority Shareholders know of any facts, events or circumstances which have not been disclosed to Buyer which are material to the Company or its business. ARTICLE : REPRESENTATIONS AND WARRANTIES OF SIMCO AND THE MAJORITY SHAREHOLDERS SIMCO and the Majority Shareholders jointly and severally represent and warrant to Buyer as follows: Section Organization and Authority of SIMCO. SIMCO has been duly organized, is validly existing and is in good standing as a limited liability company under the laws of its jurisdiction of organization, with all necessary power, capacity and authority to enter into this Agreement and perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by SIMCO and constitutes a legal, valid and binding obligation of SIMCO, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. No other proceedings on the part of SIMCO are necessary to authorize this Agreement and the consummation of transactions contemplated hereby. Neither the execution and delivery of this Agreement nor compliance by SIMCO with its terms and provisions will violate any provision of the articles of organization or operating agreement of SIMCO; or any contract provision, license, franchise or permit to which SIMCO is a party or by which it is bound; or any law, statute or regulation or any injunction, order or decree of any government agency or authority or court to which SIMCO is subject except to the extent, in each case, that such a violation would not prohibit or materially impair SIMCO's ability to perform its obligations under this Agreement. Section Brokers and Finders. SIMCO has not employed any broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement who would be entitled to a broker's, finder's or similar fee or commission in connection therewith or upon the consummation thereof Section Real Property. The attached Schedule 4.3 lists and describes briefly the particular parcels of the Premises that are owned by SIMCO (the "SIMCO Premises"). With respect to each such parcel of real property comprising the SIMCO Premises: SIMCO has good and marketable title to the parcel of real property, free and clear of any Encumbrances, except as set forth on Schedule 4.3, except for installments of special assessments not yet delinquent and recorded easements, covenants, and other restrictions, none of which individually or together impair the current use, occupancy, value or marketability of title of the property subject thereto; there are no pending, or to the best of SIMCO's and the Majority Shareholders' knowledge, threatened, condemnation proceedings relating to the property or other matters affecting the current use, occupancy, or value thereof; the legal description for the parcel contained in the deed thereof describes such parcel fully and adequately, the buildings and improvements are located within the boundary lines of the described parcels of land, are not in violation of applicable setback requirements, zoning laws, and ordinances (and none of the properties or buildings or improvements thereon are subject to "permitted nonconforming use" or "permitted nonconforming structure" classifications), and do not encroach on any easement which may burden the land, and the land does not serve any adjoining property for any purpose inconsistent with the use of the land, and the property is not located within any flood plain or subject to any similar type restriction for which any permits or licenses necessary to the use thereof have not been obtained; all properties and facilities have received all licenses, permits, consents, titles or registrations required in connection with the ownership or operation thereof and have been operated and maintained in accordance with all applicable federal, state, local, municipal, foreign, international, multinational or other administrative orders, constitutions, laws, ordinances, principles of common law, regulations, statutes or treaties; except as set forth in Schedule 4.3, there are no leases, subleases, licenses, concessions, or other agreements, written or oral, granting to any party or parties the right of use or occupancy of any portion of the parcel of real property; there are no outstanding options or rights of first refusal to purchase the parcel of real property, or any portion thereof or interest therein; there are no parties (other than SIMCO) in possession of the parcel of real property, other than tenants under any leases disclosed in the schedule who are in possession of space to which they are entitled; all facilities located on the parcel of real property are supplied with or have access to utilities and other services necessary for the operation of such facilities, including gas, electricity, water, telephone, and sanitary sewer, all of which services are adequate in accordance with all applicable laws, ordinances, rules, and regulations and are provided via public roads or via permanent, irrevocable, appurtenant easements benefiting the parcel of real property; and each parcel of real property abuts on and has direct vehicular access to a public road, or has access to a public road via a permanent, irrevocable, appurtenant easement benefiting the parcel of real property, and access to the property is provided by paved public right-of-way with adequate curb cuts available. Section Environmental Matters. To the best of SIMCO's and the Majority Shareholders' knowledge, except as set forth in Schedule 4.4, with respect to the SIMCO Premises: (a) SIMCO is in compliance with all applicable Environmental Laws, except for instances of non-compliance that individually or in the aggregate do not, and would not reasonably be expected to, have a Material Adverse Effect; (b) SIMCO has not received written notice of and is not the subject of, any actions, causes of actions, claims, investigations, demands or notices by any person or entity alleging liability or non-compliance with any Environmental Law; (c) there are no conditions existing which would reasonably be expected to form the basis of a claim against SIMCO for the violation or non-compliance with any Environmental Law which would have a Material Adverse Effect; and (d) there are no circumstances which would reasonably be expected to prevent or interfere in the future with the Company's material compliance with all Environmental Laws. Section Legal Proceedings. Except as set forth in Section 4.5, there are no actions, suits, proceedings or investigations pending or, to the best of SIMCO's and the Majority Shareholders' knowledge, overtly threatened against SIMCO at law, in equity or otherwise in, before, or by, any court or governmental agency or authority which individually or in the aggregate would reasonably be expected to have a Material Adverse Effect. Section Consents and Approvals. Except as set forth in Schedule 4.6 annexed hereto, the execution, delivery and performance of this Agreement by SIMCO will not require any consent, waiver, authorization or approval of, or the making of any filing with or giving of notice to, any Person, entity or governmental authority (other than as required under the HSR Act), except for such consent, waivers, authorizations or approvals which the failure to obtain would not reasonably be expected to have a Material Adverse Effect. Section Completeness of Statements; Effect of Representations and Warranties. To the best of SIMCO's and the Majority Shareholders' knowledge, no representation or warranty of SIMCO or the Majority Shareholders in the Agreement contains any untrue statement of a material fact, omits any material fact necessary to make such representation or warranty, under the circumstances which it was made, not misleading, or contains any misstatement of a material fact. SIMCO and the Majority Shareholders have made due inquiry and investigation concerning the matters to which the representations and warranties of SIMCO and the Majority Shareholders under this Agreement pertain and SIMCO and the Majority Shareholders do not know of any facts, events or circumstances which have not been disclosed to Buyer which are material to SIMCO or the SIMCO Premises. ARTICLE : REPRESENTATIONS AND WARRANTIES OF THE MAJORITY SHAREHOLDERS The Majority Shareholders jointly and severally represent and warrant to Buyer as follows: Section Brokers and Finders. No Shareholder has employed any broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement who would be entitled to a broker's, finder's or similar fee or commission in connection therewith or upon the consummation thereof Section Real Property. The attached Schedule 5.2 lists and describes briefly the particular parcels of the Premises that are owned by Neil Schmidgall (the "Schmidgall Premises"). With respect to each such parcel of real property comprising the Schmidgall Premises: Neil Schmidgall has good and marketable title to the parcel of real property, free and clear of any Encumbrances, except as set forth on Schedule 5.2, except for installments of special assessments not yet delinquent and recorded easements, covenants, and other restrictions, none of which individually or together impair the current use, occupancy, value or marketability of title of the property subject thereto; there are no pending, or to the best of the Majority Shareholders' knowledge, threatened, condemnation proceedings relating to the property or other matters affecting the current use, occupancy, or value thereof; the legal description for the parcel contained in the deed thereof describes such parcel fully and adequately, the buildings and improvements are located within the boundary lines of the described parcels of land, are not in violation of applicable setback requirements, zoning laws, and ordinances (and none of the properties or buildings or improvements thereon are subject to "permitted nonconforming use" or "permitted nonconforming structure" classifications), and do not encroach on any easement which may burden the land, and the land does not serve any adjoining property for any purpose inconsistent with the use of the land, and the property is not located within any flood plain or subject to any similar type restriction for which any permits or licenses necessary to the use thereof have not been obtained; all properties and facilities have received all licenses, permits, consents, titles or registrations required in connection with the ownership or operation thereof and have been operated and maintained in accordance with all applicable federal, state, local, municipal, foreign, international, multinational or other administrative orders, constitutions, laws, ordinances, principles of common law, regulations, statutes or treaties; except as set forth in Schedule 5.2, there are no leases, subleases, licenses, concessions, or other agreements, written or oral, granting to any party or parties the right of use or occupancy of any portion of the parcel of real property; there are no outstanding options or rights of first refusal to purchase the parcel of real property, or any portion thereof or interest therein; there are no parties (other than Neil Schmidgall) in possession of the parcel of real property, other than tenants under any leases disclosed in the schedule who are in possession of space to which they are entitled; all facilities located on the parcel of real property are supplied with or have access to utilities and other services necessary for the operation of such facilities, including gas, electricity, water, telephone, and sanitary sewer, all of which services are adequate in accordance with all applicable laws, ordinances, rules, and regulations and are provided via public roads or via permanent, irrevocable, appurtenant easements benefiting the parcel of real property; and each parcel of real property abuts on and has direct vehicular access to a public road, or has access to a public road via a permanent, irrevocable, appurtenant easement benefiting the parcel of real property, and access to the property is provided by paved public right-of-way with adequate curb cuts available. Section Environmental Matters. To the best of the Majority Shareholders' knowledge, except as set forth in Schedule 5.3, with respect to the Schmidgall Premises: (a) Neil Schmidgall is in compliance with all applicable Environmental Laws, except for instances of non-compliance that individually or in the aggregate does not, and would not reasonably be expected to, have a Material Adverse Effect; (b) Neil Schmidgall has not received written notice of and is not the subject of, any actions, causes of actions, claims, investigations, demands or notices by any person or entity alleging liability or non-compliance with any Environmental Law; (c) there are no conditions existing which would reasonably be expected to form the basis of a claim against Neil Schmidgall for the violation or non-compliance with any Environmental Law which would have a Material Adverse Effect; and (d) there are no circumstances which would reasonably be expected to prevent or interfere in the future with the Company's material compliance with all Environmental Laws. Section Legal Proceedings. Except as set forth in Schedule 4.5, there are no actions, suits, proceedings or investigations pending or, to the best of Neil Schmidgall's and the other Majority Shareholders' knowledge, overtly threatened against Neil Schmidgall at law, in equity or otherwise in, before, or by, any court or governmental agency or authority which individually or in the aggregate would reasonably be expected to have a Material Adverse Effect. Section Consents and Approvals. Except as set forth in Schedule 5.5 annexed hereto, the execution, delivery and performance of this Agreement by Neil Schmidgall will not require any consent, waiver, authorization or approval of, or the making of any filing with or giving of notice to, any Person, entity or governmental authority (other than as required under the HSR Act), except for such consent, waivers, authorizations or approvals which the failure to obtain would not reasonably be expected to have a Material Adverse Effect. Section Section 1031 Exchange. At or prior to Closing, Neil E. Schmidgall may enter into a Section 1031 exchange agreement for exchange of the Schmidgall Premises for other qualified property. The exchange shall be made pursuant to Section 1031 of the Internal Revenue Code (a "Section 1031 Exchange") and may take place simultaneously with the Closing or as a deferred exchange in accordance with Internal Revenue Code Section 1031 and the governing Treasury Regulations. Buyer agrees to cooperate with Neil E. Schmidgall in effecting the exchange, including: (i) execution of such documentation as shall be reasonably necessary to accomplish the Section 1031 Exchange; and (ii) accepting a conveyance of the Schmidgall Premises in accordance with the exchange agreement. Buyer's obligations under this Section 5.6 shall be specifically conditioned upon Buyer not incurring any excess costs and expenses in participating in the Section 1031 Exchange. Buyer's excess costs and expenses shall be defined as those additional costs and expenses which may be incurred with regard to the acceptance of the conveyance of the Schmidgall Premises in excess of those costs and expenses that would have been incurred in accepting conveyance of the Schmidgall Premises directly from Neil E. Schmidgall in accordance with the terms of the Agreement but for the Section 1031 Exchange. Notwithstanding the foregoing, upon payment of the Real Estate Consideration, Buyer will acquire the Schmidgall Premises without condition. In addition, Buyer (i) makes no and shall not make any representation whatsoever concerning the tax qualification or implication of the Section 1031 Exchange and (ii) shall not be required to acquire title to any other property other than the Schmidgall Premises. Section Completeness of Statements; Effect of Representations and Warranties. To the best of the Majority Shareholders' knowledge, no representation or warranty of the Majority Shareholders in the Agreement contains any untrue statement of a material fact, omits any material fact necessary to make such representation or warranty, under the circumstances which it was made, not misleading, or contains any misstatement of a material fact. The Majority Shareholders have made due inquiry and investigation concerning the matters to which the representations and warranties of the Majority Shareholders under this Agreement pertain and the Majority Shareholders do not know of any facts, events or circumstances which have not been disclosed to Buyer which are material to the Schmidgall Premises. ARTICLE : REPRESENTATIONS AND WARRANTIES OF THE ESOP AND THE MAJORITY SHAREHOLDERS The ESOP and the Majority Shareholders jointly and severally represent and warrant to Buyer as follows: Section Authority of the ESOP. This Agreement has been duly authorized, executed and delivered by the ESOP and constitutes a legal, valid and binding obligation of the ESOP, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. No other proceedings on the part of the ESOP are necessary to authorize this Agreement and the consummation of transactions contemplated hereby. Neither the execution and delivery of this Agreement nor compliance by the ESOP with its terms and provisions will violate any provision of the ESOP; or any law, statute or regulation or any injunction, order or decree of any government agency or authority or court to which the ESOP is subject except to the extent, in each case, that such a violation would not have a Material Adverse Effect. Section Brokers and Finders. The ESOP has not employed any broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement who would be entitled to a broker's, finder's or similar fee or commission in connection therewith or upon the consummation thereof Section ESOP Shares. The ESOP owns, beneficially and of record, the ESOP Shares free and clear of all Encumbrances. The ESOP Shares are duly authorized, validly issued, fully paid and nonassessable. Immediately after the sale of the ESOP Shares by the ESOP pursuant to this Agreement, upon the registration of the ESOP Shares in the name of Buyer in the stock records of the Company and assuming that Buyer does not have any "notice" of any "adverse claim" to the ESOP Shares (as such terms are defined in the UCC), Buyer shall be a "protected purchaser" (as such term is defined in the UCC). Section Legal Proceedings. There are no actions, suits, proceedings or investigations pending or, to the best of the ESOP's or the Majority Shareholders' knowledge, overtly threatened against the ESOP at law, in equity or otherwise in, before, or by, any court or governmental agency or authority which individually or in the aggregate would reasonably be expected to have a Material Adverse Effect. Section Consents and Approvals. The execution, delivery and performance of this Agreement by the ESOP will not require any consent, waiver, authorization or approval of, or the making of any filing with or giving of notice to, any Person, entity or governmental authority (other than as required under the HSR Act), except for such consent, waivers, authorizations or approvals which the failure to obtain would not reasonably be expected to have a Material Adverse Effect. Section No Dissenters' Rights. The execution, delivery and performance of this Agreement by the ESOP shall not create any rights for any Person (including, without limitation, the ESOP, or any participant in or beneficiary of the ESOP) under Section 302A.471 of the Business Corporations Chapter of the Minnesota Statutes, or any similar law or statute. Section Completeness of Statements; Effect of Representations and Warranties. To the best of the ESOP's and the Majority Shareholders' knowledge, no representation or warranty of the ESOP in the Agreement contains any untrue statement of a material fact, omits any material fact necessary to make such representation or warranty, under the circumstances which it was made, not misleading, or contains any misstatement of a material fact. The ESOP and the Majority Shareholders have made due inquiry and investigation concerning the matters to which the representations and warranties of the ESOP and the Majority Shareholders under this Agreement pertain and the ESOP and the Majority Shareholders do not know of any facts, events or circumstances which have not been disclosed to Buyer which are material to the ESOP. ARTICLE : REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to the Majority Shareholders, the Company, the ESOP and SIMCO (the "Sellers") as follows: Section Organization and Authority of Buyer. Buyer has been duly incorporated and is validly existing under the laws of Tennessee, with the corporate power and authority to enter into this Agreement and perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by Buyer and constitutes a legal, valid and binding obligation of Buyer, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. No other proceedings on the part of Buyer are necessary to authorize this Agreement and the consummation of transactions contemplated hereby. Neither the execution and delivery of this Agreement nor compliance by Buyer with its terms and provisions will violate any provision of the charter or bylaws of Buyer; or any contract provision, license, franchise or permit to which Buyer is a party or by which it is bound; or any law, statute or regulation or any injunction, order or decree of any government agency or authority or court to which Buyer is subject except to the extent, in each case, that such a violation would not have a Material Adverse Effect. Section Brokers and Finders. Buyer has not employed any broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement who would be entitled to a broker's, finder's or similar fee or commission in connection therewith or upon the consummation thereof Section Financial Capability. Buyer has sufficient funds available to purchase the Company Shares and the Premises on the terms and conditions contained in this Agreement and will have such funds on the Closing Date. Section Securities Act. Buyer is acquiring the Company Shares solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act. Buyer acknowledges that the Company Shares are not registered under the Securities Act or any applicable state securities law, and that such Company Shares may not be transferred or sold except pursuant to the registration provisions of such Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable. Section Legal Proceedings. There are no actions, suits, proceedings or investigations pending or, to Buyer's knowledge, overtly threatened against Buyer at law, in equity or otherwise in, before, or by, any court or governmental agency or authority which individually or in the aggregate would reasonably be expected to have a Material Adverse Effect. Section Consents and Approvals. Except as set forth in Schedule 7.6, the execution, delivery and performance of this Agreement by Buyer will not require any consent, waiver, authorization or approval of, or the making of any filing with or giving of notice to, any Person, entity or governmental authority (other than as required under the HSR Act), except for such consent, waivers, authorizations or approvals which the failure to obtain would not have a Material Adverse Effect. ARTICLE : TAX MATTERS Section Tax Indemnification. Except to the extent disclosed on Schedule 3.8, or as otherwise provided for in the Financial Statements, the Majority Shareholders shall be liable for, indemnify and hold the Buyer harmless against any Taxes imposed on the Company (including, without limitation, any Taxes imposed on the Company in connection with any Benefit Plans) or the Premises for any taxable year or period (or portion thereof) that ends on or before the Closing Date to the extent such Taxes in the aggregate exceed the aggregate reserve or accrued amounts for Taxes shown on the Interim Financial Statements, which shall be a good faith estimate of such Tax liabilities of the Company as of the Closing Date, prepared in accordance with GAAP; provided, however, that the Majority Shareholders shall not be liable for, and shall not indemnify Buyer or the Company for, any Taxes resulting from any actual or deemed election pursuant to Section 338 of the Code in connection with the purchase of the Company Shares. The Majority Shareholders shall be entitled to any refund of Taxes of the Company that are allocable to such periods. Buyer shall be liable for, indemnify and hold the Majority Shareholders harmless against, any Taxes imposed on the Company that are allocable or attributable to any taxable year or period that begins after the Closing Date and, with respect to any taxable year or period beginning before and ending after the Closing Date, the portion of such taxable year or period beginning after the Closing Date. Buyer shall be entitled to any refund of such Taxes that are allocable to such periods. For purposes of paragraphs (a) and (b) of this Section 8.1, in order to apportion appropriately any Taxes relating to any taxable year or period that begins before and ends after the Closing Date, the parties hereto shall, to the extent permitted by applicable law, elect with the relevant taxing authority to treat for all purposes the Closing Date as the end of the taxable year of the Company. In any case where applicable law does not permit the Company to treat the Closing Date as the end of a taxable year of the Company, then whenever it is necessary to determine the liability of the Company for Taxes for a portion of a taxable year or period that begins before and ends after the Closing Date, the determination of the Taxes of the Company for the portion of the year or period ending on, and the portion of the year or period beginning after, the Closing Date shall be determined by assuming that the Company had a taxable year or period which ended with the Closing Date, except that exemptions, allowances or deductions that are calculated on an annual basis, such as the deduction for depreciation, shall be apportioned on a time basis. Section Tax Returns. Tax Returns that are required to be filed by or with respect to the Company shall be filed as follows: The Majority Shareholders shall file or cause to be filed when due (taking into account extensions) all Tax Returns that are required to be filed by or with respect to the Company for taxable years or periods ending on or before the Closing Date. Except as otherwise agreed, such Tax Returns shall be completed in a manner consistent with past practice. Buyer shall file or cause to be filed when due (taking into account extensions) all Tax Returns that are required to be filed by or with respect to the Company for taxable years or periods ending after the Closing Date. Except as otherwise agreed, such Tax Returns shall be completed in a manner consistent with past practice. Section Contest Provisions. Buyer shall promptly notify the Majority Shareholders in writing upon receipt by Buyer, the Company or any of their respective Affiliates of notice of any pending or threatened federal, state, local or foreign audits or assessments which may materially affect the liabilities for Taxes of the Company for which the Majority Shareholders would be required to indemnify Buyer pursuant to Section 8.1; provided that failure to comply with this provision shall not affect Buyer's right to indemnification hereunder except to the extent the Majority Shareholders is prejudiced by such failure. The Majority Shareholders shall have the right to be represented in any such audit or administrative or court proceeding relating to taxable periods for which they may be required to indemnify Buyer pursuant to Section 8.1, and to employ counsel of their choice at their expense. Neither Buyer nor Company may agree to settle any such claim for the portion of a taxable year or period which may be the subject of indemnification by the Majority Shareholders under Section 8.1 without the prior written consent of the Majority Shareholders, which consent shall not be unreasonably withheld. Section Assistance and Cooperation. After the Closing Date, each of the Majority Shareholders and Buyer shall: assist (and cause their respective affiliates to assist) the other party in preparing any Tax Returns which such other party is responsible for preparing and filing; cooperate fully in preparing for any audits of, or disputes with taxing authorities regarding, any Tax Returns of the Company; make available to the other and to any taxing authority as reasonably requested all information, records, and documents relating to Taxes of the Company; provide timely notice to the other in writing of any pending or threatened tax audits or assessments of the Company for taxable periods for which the other may have a liability under Section 8.1; and furnish the other with copies of all correspondence received from any taxing authority in connection with any tax audit or information request with respect to any such taxable period. Section Transfer Taxes. Buyer shall be liable for any sales, use, stock transfer, conveyance, intangible, stamp, duty, transfer, reporting, recording and similar fees, charges and Taxes applicable in connection with the transfer of the Company Shares or the Premises, together with any interest or penalties thereon. Section Survival of Obligations. The obligations of the parties set forth in this Article 8 shall remain in effect until the expiration of the applicable statute of limitations (including any waivers thereof). ARTICLE : CERTAIN COVENANTS AND AGREEMENTS Section Access and Information. The Sellers shall permit Buyer and its representatives after the date of execution of this Agreement to have reasonable access, during regular business hours and upon reasonable advance notice, to any financial and operating data and other information that is available with respect to the business and assets of the Company, the Company Shares and the Premises as Buyer shall from time to time reasonably request. In the event of the termination of this Agreement, Buyer shall promptly deliver (without retaining any copies thereof) to all applicable parties, or (at such parties' option) certify to such parties that it has destroyed, all documents, workpapers and other material obtained by Buyer or on its behalf from the Sellers or from any of their respective advisors, agents, employees or representatives as a result hereof or in connection with the matters contemplated by this Agreement, and all documents, workpapers and other materials prepared by Buyer or its advisors, agents, employees or representatives in connection with the matters contemplated by this Agreement, in each case whether so obtained or prepared before or after the execution hereof. Buyer shall at all times prior to the Closing Date, and in the event of termination of this Agreement, cause any information so obtained or prepared to be kept confidential and will not use, or permit the use of, such documents, workpapers and other materials in its business or in any other manner or for any other purpose except as contemplated hereby. Section Registrations, Filings and Consents. Prior to the Closing, the Sellers and Buyer shall cooperate and use their respective best efforts to make all registrations, filings and applications, to give all notices and to obtain any governmental or other consents, transfers, approvals, orders, qualifications and waivers necessary or desirable for the consummation of the transactions contemplated hereby. Section Conduct of Business. Prior to the Closing, and except as otherwise contemplated by this Agreement or consented to or approved by Buyer, the Majority Shareholders covenant and agree that the Majority Shareholders shall cause the Company: To operate its business in the ordinary course consistent with past practices and to use its commercially reasonable best efforts to preserve the business and goodwill of customers and suppliers; Not to change or amend its articles or certificates of incorporation or bylaws, issue, sell or redeem any shares of its capital stock, or issue or sell any securities convertible into, or options with respect to, or warrants to purchase or rights to subscribe to, any shares of its capital stock or enter into any agreement obligating it to do any of the foregoing, enter into any amendment of any Material Contract which materially adversely affects the rights of the Company thereunder or enter into any new, or make any amendment to any existing, collective bargaining agreement or Benefit Plan which materially adversely affects the rights of the Company thereunder, except as required by law, in which case the Majority Shareholders shall give prompt notice to Buyer; and Not to make, or enter into any agreement to make, any acquisition or sale of property or assets (tangible or intangible) other than in the ordinary course of business consistent with past practices. Section Best Efforts. Prior to Closing, each of the parties hereto shall use its commercially reasonable best efforts to fulfill or obtain the fulfillment of the conditions to Closing, including, without limitation, the execution and delivery of all agreements or other documents contemplated hereunder to be so executed and delivered. Section Retention of Books and Records. After the Closing Date, Buyer shall cause the Company to retain all books, records and other documents pertaining to the Company in existence on the Closing Date and to make the same available after the Closing Date for inspection and copying by the Majority Shareholders or their agents at such parties' expense, upon reasonable request and upon reasonable notice, for a period of three years after the Closing Date. For a period of five (5) years after the Closing, no such books, records or documents shall be destroyed by Buyer or the Company without first advising the Majority Shareholders in writing and giving the Majority Shareholders a reasonable opportunity to obtain possession thereof. Section Hart-Scott-Rodino. Each party who is required to do so shall file with the FTC and the Antitrust Division the notification and report form (the "Report") required under the HSR Act with respect to the sale and purchase of the Company Shares and the Premises. Each such party hereby covenants to prepare and file the Report required to be filed by it no later than thirty days following the date hereof, to cooperate with the other parties to the extent necessary to assist the other party in the preparation of its Report, to request early termination of the waiting period required by the HSR Act and, if requested, to promptly amend or furnish additional information thereunder. Section Further Assurances. At any time after the Closing Date, the Majority Shareholders and Buyer shall, and Buyer shall cause the Company to, promptly execute, acknowledge and deliver any other assurances or documents reasonably requested by Buyer or the Majority Shareholders, as the case may be, and necessary for Buyer or the Majority Shareholders, as the case may be, to satisfy its obligations hereunder. Section Environmental Concerns. Buyer shall have further investigated the environmental impact of those matters disclosed on Schedule 3.12 (the "Environmental Concerns") and determined in its reasonable discretion that no further investigation or remedial efforts are necessary with respect thereto. If Buyer determines in its reasonable discretion that further investigation or remedial efforts are necessary with respect to the Environmental Concerns, Buyer shall have the right to engage the services of an environmental consultant to perform further investigation activities as may be warranted in the reasonable discretion of Buyer. Company and the Majority Shareholders shall provide Buyer reasonable access to the Premises for the purpose of conducting further investigation activities, and Buyer shall use its best efforts to minimize any disruption to Company's business operations. The expense of any additional investigation and remedial activities shall be borne by Buyer. If Buyer determines in its reasonable discretion that further investigation or remedial efforts are necessary with respect to the Environmental Concerns, Buyer shall have the right to postpone the Closing Date until a date not later than December 31, 1999 by providing notice to Company thereof. If Buyer determines in its reasonable discretion that further remedial efforts are necessary with respect to the Environmental Concerns, Buyer shall provide notice to Company outlining the remedial efforts that are necessary. Provided, however, that if Company does not consent to the taking of further remedial efforts outlined in any notice from Buyer to Company delivered pursuant to the preceding sentence or if Buyer determines at any time prior to the Closing Date that the Environmental Concerns cannot be cured to the reasonable satisfaction of Buyer and provides notice to Company setting forth the reasons for such determination, Buyer shall not be obligated to consummate the purchase of the Company Shares and the Premises at the Closing as contemplated by this Agreement. Section Employee Benefit Matters. The Majority Shareholders and the Company shall cause the Superior Industries of Morris, Inc. Employees' Profit Sharing Plan (the "Profit Sharing Plan") to be terminated no later than one (1) day preceding the Closing Date; provided, however, that no distributions shall be made to the Profit Sharing Plan participants on account of termination until the Company has obtained a favorable determination letter from the Internal Revenue Service with respect to such termination. Such termination shall be effected by adopting Board Resolutions and a Profit Sharing Plan amendment substantially in the form attached hereto as Exhibit B. Also, no later than thirty (30) days following the Closing Date, the Majority Shareholders and the Company shall (i) cause the ESOP to be terminated; and (ii) file with the Internal Revenue Service an application to receive a determination letter with respect to the termination of the ESOP. No distributions shall be made to ESOP participants on account of termination until the Company has obtained a favorable determination letter from the Internal Revenue Service with respect to such termination. ARTICLE : CONDITIONS TO THE PURCHASE AND SALE Section General Conditions to the Purchase and Sale Relating to Parties. The obligations of the parties to consummate the sale and purchase of the Company Shares and the Premises at the Closing as contemplated by this Agreement shall be subject to the satisfaction or waiver by the parties on or prior to the Closing Date of the following conditions: No action or proceeding shall have been instituted and remain pending on the Closing Date before any court or governmental body or authority pertaining to the acquisition by Buyer of the Company Shares, or the result of which could prevent or make illegal the consummation of such acquisition. If applicable, the waiting period required by the HSR Act, and any extensions thereof obtained by request or other action of the FTC and/or the Antitrust Division, shall have expired or been terminated by the FTC and the Antitrust Division. Any required consents of third parties disclosed on Schedule 3.7, Schedule 4.5, Schedule 5.5, Schedule 6.5 and Schedule 7.6 annexed hereto shall have been obtained. As of the time of Closing, Company shall have purchased the airplane presently owned by 73 Charlie Company (the "Airplane") at its fair market value and on such other terms as are reasonably acceptable to Buyer and 73 Charlie Company. Section Conditions to Purchase by Buyer. The obligation of Buyer to consummate the purchase of the Company Shares and the Premises at the Closing as contemplated by this Agreement shall be subject to the satisfaction or waiver by Buyer on or prior to the Closing Date of each of the following conditions: Each of the representations and warranties of the Sellers contained in this Agreement shall be true in all material respects when made and as of the Closing Date, with the same effect as though such representations and warranties had been made on and as of the Closing Date (except representations and warranties that are made as of a specific date need be true in all material respects only as of such date); each of the covenants and agreements of the Sellers in this Agreement to be performed on or prior to the Closing Date shall have been duly performed in all material respects; Buyer shall have received at the Closing a certificate of a duly authorized officer of the Company as to the satisfaction of the Company's conditions set forth in clause (i) and clause (ii) of this Section 10.2, dated as of the Closing Date; Buyer shall have received at the Closing a certificate of a duly authorized officers of SIMCO as to the satisfaction of SIMCO's conditions set forth in clause (i) and clause (ii) of this Section 10.2, dated as of the Closing Date; and Buyer shall have received at the Closing a certificate of the duly authorized trustee of the ESOP as to the satisfaction of the ESOP's conditions set forth in clause (i) and clause (ii) of this Section 10.2, dated as of the Closing Date. During the period from the date hereof to the Closing Date, no event or condition shall have occurred which results in a Material Adverse Effect. Company shall have amended its corporate charter to permit Buyer to be a shareholder of the Company. Buyer shall have received certificates representing the Company Shares duly endorsed in blank for transfer or accompanied by duly signed stock powers in blank. Buyer shall have had delivered to it warranty deeds conveying to the Company good and marketable fee simple title to the Premises effective as of the Closing Date in form reasonably acceptable to Buyer. At least ten (10) days prior to the Closing Date, Buyer shall have had delivered to it a real estate title abstract or a commitment for an owner's title insurance policy in an amount equal to the Real Estate Consideration issued by a title insurance company acceptable to Buyer covering the Premises and containing only exceptions which would not adversely affect the use or marketability of the Premises. Buyer shall have received a certified copy of resolutions of the board of directors of the Company approving the transaction set forth in and execution of this Agreement. Buyer shall have received a certified copy of resolutions of the members or Board of Governors, as appropriate, of SIMCO approving the transactions set forth in and execution of this Agreement. The directors of the Company shall have tendered their written resignations effective as of the Closing Date. The Company shall have entered into employment agreements with Paul Schmidgall and Stan Wulf substantially in the form of Exhibit C attached hereto. The Company shall have entered into an employment agreement with Neil Schmidgall substantially in the form of Exhibit D attached hereto. Buyer shall have received an opinion from legal counsel to the Company in form and substance satisfactory to the Buyer and its counsel. Buyer shall have receive an opinion from legal counsel to SIMCO in form and substance satisfactory to Buyer and its counsel. Buyer shall have received an opinion from legal counsel to the ESOP in form and substance satisfactory to the Buyer and its counsel. Company shall have entered into agreement(s) with Wayne Riser providing him with access to the Airplane and employing him as a pilot on terms reasonably acceptable to the Buyer. Buyer shall have received such other documents as may be reasonably necessary to effect the Closing as anticipated in this Agreement. Section Conditions to Sale by Sellers. The obligation of Sellers to consummate the sale of the Company Shares and the Premises at the Closing as contemplated by this Agreement shall be subject to the satisfaction or waiver by Sellers on or prior to the Closing Date of each of the following conditions: Each of the representations and warranties of Buyer contained in this Agreement shall be true in all material respects when made and as of the Closing Date, with the same effect as though such representations and warranties had been made on and as of the Closing Date (except representations and warranties that are made as of a specific date need be true in all material respects only as of such date); each of the covenants and agreements of Buyer in this Agreement to be performed on or prior to the Closing Date shall have been duly performed in all material respects; and Sellers shall have received at the Closing a certificate of a duly authorized officer of Buyer as to the satisfaction of the conditions set forth in clause (i) and clause (ii) of this Section 10.3, dated as of the Closing Date. Sellers shall have received certified copies of resolutions of the executive committee of the board of directors of the Buyer approving the transaction set forth in and execution of this Agreement. The Majority Shareholders and ESOP shall have received payment of the Share Consideration in their respective amounts as set forth in Schedule 2.3(a) by wire transfer of immediately available funds to accounts designated by each party prior to the Closing. SIMCO and Neil Schmidgall shall have received payment of the Real Estate Consideration in their respective amounts as set forth in Schedule 2.3(b) by wire transfer of immediately available funds to accounts designated by SIMCO and Neil Schmidgall prior to Closing. Sellers shall have received an opinion from legal counsel to Buyer in form and substance satisfactory to Sellers and their counsel. Sellers shall have received such other documents as may be reasonably necessary to effect the Closing as anticipated in this Agreement. ARTICLE : INDEMNIFICATION Section Survival; Rights and Remedies Not Affected by Knowledge. The representations and warranties in this Agreement, the Schedules, any supplements to the Schedules, the certificates delivered pursuant to Article 10, any other certificate or document delivered pursuant to this Agreement and any other Closing Document will survive the Closing. The rights to indemnification and payment of Damages and all other rights or remedies provided herein, including those relating to any representations, warranties, covenants and obligations, will not be affected by any investigation conducted with respect to, or any knowledge acquired at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants and obligations. Section Indemnification and Payment of Damages By The Majority Shareholders. The Majority Shareholders shall indemnify and hold the Company, Buyer and their officers, directors, governors, members, managers, Affiliates, successors and assigns ("Buyer Indemnitees") harmless for, and shall pay to the Buyer Indemnitees the amount, to the extent not covered by insurance, of all Damages arising, directly or indirectly, from or in connection with: any breach or nonfulfillment of or failure to comply with in any respect ("Breach") any representation or warranty made by the Sellers; any Breach by the Sellers of any covenant, agreement or obligation of the Sellers; any Damages arising out of the ownership, use or conduct of the business or operations of the Company on or prior to the Closing Date or any act, omission, transaction, circumstance, fact, agreement, or other condition relating to the Company, known to the Sellers, which existed on or prior to the Closing Date and was not fully and properly disclosed to Buyer in the Financial Statements, the Schedules, the Exhibits or any other part of the Agreement; any act, omission, transaction, circumstance, fact, agreement, or other condition known to the Sellers, which existed on or prior to the Closing Date and was not fully and properly disclosed to Buyer in the Financial Statements, the Schedules, the Exhibits or any other part of the Agreement, relating to the following: (i)(A) the ownership, operation, or condition at any time on or prior to the Closing Date of any properties (including without limitation the Premises) and assets (whether real, personal, or mixed and whether tangible or intangible) in which the Company, SIMCO or the Majority Shareholders have or had an interest, or (B) any Hazardous Materials or other contaminants (including any tanks, equipment or other personal property or materials relating thereto) that were at any time prior to the Closing Date or are as of the Closing Date present on such properties or assets (including without limitation the Premises); or (ii)(A) any Hazardous Materials or other contaminants (and including any tanks, equipment or other personal property or materials relating thereto), wherever located, that were, or were allegedly, generated, transported, stored, treated, released or otherwise handled by the Company, SIMCO or the Majority Shareholders or by any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible at any time on or prior to the Closing Date, or (B) any Hazardous Activities that were, or were allegedly, conducted by the Company, SIMCO or the Majority Shareholders or by any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible; or any act, omission, transaction, circumstance, fact, agreement, or other condition known to the Sellers, which existed on or prior to the Closing Date and was not fully and properly disclosed to Buyer in the Financial Statements, the Schedules, the Exhibits or any other part of the Agreement, relating to the following: any bodily injury (including illness, disability, and death, and regardless of when any such bodily injury occurred, was incurred, or manifested itself), personal injury, property damage (including trespass, nuisance, wrongful eviction, and deprivation of the use of real property), or other damage of or to any Person, including any employee or former employee of the Company, SIMCO or the Majority Shareholders or any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible, in any way arising from or allegedly arising from any Hazardous Activity conducted or allegedly conducted with respect to the Premises or properties or other assets of or leased or subleased or used or operated by the Company or the operations of the Company prior to the Closing Date, or from Hazardous Material that was (1) present or suspected to be present on or before the Closing Date on or at such Premises or properties (or present or suspected to be present on any other property, if such Hazardous Material emanated or allegedly emanated from any of such Premises or properties and was present or suspected to be present on any of such Premises or properties on or prior to the Closing Date) or (2) released or allegedly released by the Majority Shareholders, SIMCO or the Company or any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible, at any time on or prior to the Closing Date. Buyer will be entitled to control any cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response action, any related proceeding, and any other proceeding with respect to which indemnity may be sought under this Section 11.2. Section Indemnification and Payment of Damages By SIMCO. SIMCO shall indemnify and hold the Buyer Indemnitees harmless for, and shall pay to the Buyer Indemnitees the amount, to the extent not covered by insurance, of all Damages, arising, directly or indirectly, from or in connection with: any Breach of any representation or warranty made by SIMCO; any Breach by SIMCO of any covenant, agreement or obligation of SIMCO; any act, omission, transaction, circumstance, fact, agreement, or other condition known to the Sellers, which existed on or prior to the Closing Date and was not fully and properly disclosed to Buyer in the Financial Statements, the Schedules, the Exhibits or any other part of the Agreement, relating to the following: (i)(A) the ownership, operation, or condition at any time on or prior to the Closing Date of the SIMCO Premises, or (B) any Hazardous Materials or other contaminants (and including any tanks, equipment or other personal property or materials relating thereto) that were at any time prior to the Closing Date or are as of the Closing Date present the SIMCO Premises; or (ii)(A) any Hazardous Materials or other contaminants (and including any tanks, equipment or other personal property or materials relating thereto), wherever located on the SIMCO Premises, that were, or were allegedly, generated, transported, stored, treated, released or otherwise handled by the Company, SIMCO or the Majority Shareholders or by any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible at any time on or prior to the Closing Date, or (B) any Hazardous Activities that were, or were allegedly, conducted on the SIMCO Premises by the Company, SIMCO or the Majority Shareholders or by any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible; or any act, omission, transaction, circumstance, fact, agreement, or other condition known to the Sellers, which existed on or prior to the Closing Date and was not fully and properly disclosed to Buyer in the Financial Statements, the Schedules, the Exhibits or any other part of the Agreement, relating to the following: any bodily injury (including illness, disability, and death, and regardless of when any such bodily injury occurred, was incurred, or manifested itself), personal injury, property damage (including trespass, nuisance, wrongful eviction, and deprivation of the use of real property), or other damage of or to any Person, including any employee or former employee of the Company, SIMCO or the Majority Shareholders or any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible, in any way arising from or allegedly arising from any Hazardous Activity conducted or allegedly conducted on the SIMCO Premises prior to the Closing Date, or from Hazardous Material that was (1) present or suspected to be present on or before the Closing Date on or at the SIMCO Premises (or present or suspected to be present on any other property, if such Hazardous Material emanated or allegedly emanated from any of such SIMCO Premises and was present or suspected to be present on any of such SIMCO Premises on or prior to the Closing Date) or (2) released or allegedly released on or from the SIMCO Premises by the Majority Shareholders, SIMCO or the Company or any other Person for whose conduct the Company, SIMCO or the Majority Shareholders are or may be held responsible, at any time on or prior to the Closing Date. Buyer will be entitled to control any cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response action, any related proceeding, and any other proceeding with respect to which indemnity may be sought under this Section 11.3. Section Indemnification By Buyer. Buyer shall indemnify and hold the Sellers and their successors and assigns ("Shareholder Indemnitees") harmless for, and will pay to the Shareholder Indemnitees the amount of, all Damages, to the extent not covered by insurance, arising directly or indirectly from or in connection with: any Breach of any representation or warranty made by Buyer; any Breach by Buyer of any covenant, agreement or obligation of the Buyer; any Damages arising out of the ownership, use or conduct of the business or operations of the Company after the Closing Date or any act, omission, transaction, circumstance, fact, agreement, or other condition relating to the Company which exists after the Closing Date. Section Indemnity Claims. Claims. In the event that any claim ("Claim") is hereafter asserted by a party hereto as to which such party may be entitled to indemnification hereunder, such party ("Indemnitee") shall notify the party required by the terms of this Agreement to indemnify the Indemnitee ("Indemnifying Party") thereof ("Claim Notice") within 30 days after (1) receipt of notice of commencement of any third-party litigation against such Indemnitee, (2) receipt by such Indemnitee of written notice of any third-party claim pursuant to an invoice, notice of claim or assessment, against such Indemnitee, or (3) such Indemnitee becomes aware of the existence of any other event in respect of which indemnification may be sought from the Indemnifying Party. The Claim Notice shall describe the Claim and the specific facts and circumstances in reasonable detail, shall include a copy of the Notice referred to in (1) and (2), above, shall indicate the amount, if known, or an estimate, if possible, of Damages that have been or may be incurred or suffered. Defense of Third Party Claim by Indemnifying Party. The Indemnifying Party may elect to defend or compromise any Claim by a third party ("Third Party Claim"), at its or his own expense and by its or his own counsel, who shall be reasonably acceptable to the Indemnitee. The election by the Indemnifying Party to defend or compromise a claim shall constitute an avowal by the Indemnifying Party that the Indemnifying Party is obligated to indemnify the Indemnitee with respect to such claim. The Indemnitee may participate, at its or his own expense, in the defense of any Claim assumed by the Indemnifying Party. Without the approval of the Indemnitee, which approval shall not be unreasonably withheld or delayed, the Indemnifying Party shall not agree to any compromise of a Claim defended by the Indemnifying Party which would require the Indemnitee to perform or take any action or to refrain from performing or taking any action. The Trustees of the ESOP shall receive Claim Notice from the Indemnitee for any claims, including a Third Party Claim, involving either the ESOP or its Trustees and shall be afforded the opportunity to defend against such claim or claims in accordance with the provisions set forth above. Assumption of Defense by Indemnitee. Notwithstanding the foregoing, if an Indemnitee determines in good faith that there is a reasonable probability that a proceeding may adversely affect it or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnitee may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise, or settle such proceeding, but the Indemnifying Party will not be bound by any determination of a proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld or delayed). Defense of Claim by Indemnitee. If, within thirty (30) days of the Indemnifying Party's receipt of a Claim Notice involving a Third Party Claim, the Indemnifying Party shall not have notified the Indemnitee of its or his election to assume the defense, the Indemnitee shall have the right to assume control of the defense or compromise of such Claim, and the costs and expenses of such defense, including costs of investigation and reasonable attorneys' fees, shall be added to the Claim. The Indemnitee shall have the right to compromise such Claim without the consent of the Indemnifying Party. Cooperation of Parties. The party assuming the defense of any Claim shall keep the other party reasonably informed at all times of the progress and development of the party's defense of and compromise efforts with respect to such Claim and shall furnish the other party with copies of all relevant pleading, correspondence and other papers. In addition, the parties to this Agreement shall cooperate with each other, and make available to each other and their representatives all available relevant records or other materials required by them for their use in defending, compromising or contesting any Claim. The failure to timely notify the Indemnifying Party of the commencement of such actions in accordance with Section 11.7(a) shall relieve the Indemnifying Party from the obligation to indemnify but only to the extent the Indemnifying Party establishes by competent evidence that it is has been materially and adversely prejudiced thereby. Section No Liability of Company. In the event a Claim is made against the Majority Shareholders, the ESOP or SIMCO for Buyer's Damages, the ESOP or SIMCO pursuant to this Agreement for Buyer's Damages, the Majority Shareholders, the ESOP and SIMCO shall not, nor shall they be entitled to, maintain, assert or make a claim against the Company, or the directors, officers, affiliates, successor or assigns of the Company for contribution, indemnity or for any other recovery, it being the intention of the parties hereto that after the Closing, the Company shall have no liability, obligation or responsibility for any Breach of the representations, warranties, covenants or obligations of the Sellers made in this Agreement. ARTICLE : TERMINATION Section Termination. Notwithstanding anything herein to the contrary, this Agreement shall terminate if the Closing does not occur on or before December 31, 1999, unless extended by mutual written agreement of the parties to this Agreement. This Agreement may be terminated by the mutual written consent of the parties to this Agreement, (x) by Buyer, if there has been a material misrepresentation or other material breach by Sellers of any of their representations, warranties, covenants and agreements set forth herein and there shall not have occurred and be continuing a breach or violation by Buyer, in any material respect, of any of its representations, warranties, covenants and agreements set forth herein and (y) by any of the Sellers if there has been a material misrepresentation or other material breach by Buyer of any of its representations, warranties, covenants and agreements set forth herein and there shall not have occurred and be continuing a breach or violation by any of the Sellers, in any material respect, of any of their representations, warranties, covenants and agreements set forth herein; provided, however, that if the breach by the non-terminating party is susceptible to cure, such party shall have 30 business days after receipt of written notice from the other party of its intention to terminate this Agreement in which to cure such breach, by Buyer if any of the Sellers or Buyer shall receive a request for further information under the HSR Act with respect to its filing thereunder from either the FTC or the Antitrust Division and Buyer believes, based on advice of counsel, that such request for additional information will likely result in a challenge by the FTC or Antitrust Division of the transactions contemplated by this Agreement (provided that Buyer exercises its right to terminate this Agreement prior to any of the Sellers making a responsive filing to such request) by delivering written notice of such termination to the Sellers, and any party hereto, on or after October 31, 1999, by written notice to the other parties, if (A) the Closing shall then not have occurred for any reason other than the breach or violation by the notifying party, in any material respect, of any of its representations, warranties, covenants and agreements set forth in this Agreement and (B) there shall not have occurred and be continuing a breach or violation by the notifying party, in any material respect, of any of such representations, warranties, covenants and agreements. If this Agreement is terminated pursuant to Section 12.1, this Agreement, other than with respect to the obligations under Sections 9.1, 13.1 and 13.3 hereof, shall thereafter have no effect, except that termination of this Agreement will not relieve either party of any liability for breach of any covenants or agreements set forth herein occurring prior to such termination. ARTICLE : MISCELLANEOUS Section Expenses. Unless otherwise indicated, the parties shall bear their own respective expenses (including, but not limited to, all compensation and expenses of counsel, financial advisors, consultants, actuaries and independent accountants) incurred in connection with the preparation and execution of this Agreement and consummation of the transactions contemplated hereby. Section Best Efforts; Further Assurances. Commitment to Best Efforts. Subject to the rights of any Seller or the Buyer, as the case may be, under Section 12.1, each party hereto shall use its best efforts to cause all conditions to its obligations hereunder to be timely satisfied and to perform and fulfill all obligations on its part to be performed and fulfilled under this Agreement, to the end that the transactions contemplated by this Agreement shall be effected substantially in accordance with its terms as soon as reasonably practicable, each party shall cooperate with the other party in such actions and in securing requisite consents and each party shall execute and deliver such further documents and take such other actions as may be necessary or appropriate to consummate or implement the transactions contemplated hereby or to evidence such events or matters. Limitation. As used in this Agreement, the term "best efforts" shall not mean efforts which require the performing party to do any act that is commercially unreasonable under the circumstances, to make any capital contribution or to expend any funds other than in payment of reasonable out-of-pocket expenses incurred in satisfying obligations hereunder, including but not limited to the fees, expenses and disbursements of its accountants, counsel and other professional advisors. Exclusive Dealing. Until the Closing Date or the earlier termination of this Agreement, the Sellers will not, nor will any of them permit any officers, directors, employees or other advisors or representatives to (i) solicit, initiate or encourage submission of any proposal to purchase the Company Shares, the Premises or any of the Company's assets, other than in the ordinary course of business; or (ii) enter into any agreement with respect to any such proposal. Section Public Disclosure. Prior to the Closing Date, none of the parties will make any public release of information regarding any matters contemplated herein without the consent of the other parties, except for press releases issued by Astec as required by law. Section Assignment. This Agreement may not be assigned by either party, by operation of law or otherwise. Section Amendments and Waivers. The provisions of this Agreement may not be amended, supplemented or changed orally, but only by writing signed by Buyer and Sellers and making specific reference to this Agreement. Section Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties, with respect to the subject matter hereof, except as otherwise contemplated herein; and is not intended to confer upon any other persons any rights or remedies hereunder. Section Schedules. The inclusion of any matter in any Schedule or Exhibit to this Agreement shall be deemed to be an inclusion for all purposes of this Agreement, including each representation to which it may relate. Section Notices. All notices, requests, demands or other communications herein required or permitted to be given shall be in writing and may be personally served, telecopied, telexed or sent by United States mail and shall be deemed to have given when delivered in person, upon receipt of telecopy or telex (with confirmed answerback) or five business days after deposit in the United States mail, registered or certified, postage prepaid and properly addressed to the party's address as set forth on the signature pages hereof. Any party may change the address to which notices are to be addressed by giving the other party written notice in the manner herein set forth. Section Governing Law. This Agreement shall be governed by, construed in accordance with, the laws of the State of Tennessee, without regard to conflicts of law principles. However, the sale, transfer and assignment of the Premises to the Company shall be governed by and construed in accordance with the laws and local practice of the State of Minnesota and all matters dealing with the governance of the ESOP and those matters dealing with the fiduciary obligations and responsibilities of the Trustees of the ESOP, except as preempted by ERISA, shall be governed by the laws of the State of Minnesota. Section Severability. In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section Section Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. Section Counterparts. This Agreement and any amendments hereto may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be considered one and the same instrument. Section Representation By Counsel; Interpretation. Each party acknowledges that such party has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law, or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of the parties. Section Arbitration Clause. Any dispute pertaining to this Agreement or the matters addressed herein shall be referred to arbitration at the request of any party before a single arbitrator. In any arbitration the parties shall be entitled to be legally represented. This matter shall be arbitrated solely under Title 35 United States Code, as interpreted by the United States Court of Appeals for the Federal Circuit, and pursuant to Title 9 United States Code, the Federal Arbitration Act. The Arbitration Rules of the Center for Public Resources, New York, New York for Non- Administered Arbitration of Business Disputes, as they exist on the date of this Agreement, are adopted as the rules governing this arbitration. Interpretation and enforcement of this instrument and all of this Agreement and all questions, issues or claims regarding the performance of the parties hereunder shall be controlled and governed by the law of the State of Tennessee except as otherwise specifically stated to the contrary in this Agreement. The arbitration shall take place in Morris, Minnesota, at a mutually agreeable site. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers therein duly authorized as of the 1st day of November, 1999. BUYER: COMPANY: ASTEC INDUSTRIES, INC. SUPERIOR INDUSTRIES OF MORRIS, INC. By: /s/ Richard W. Bethea, Jr. By: /s/Neil Schmidgall Title: Secretary Title: President MAJORITY SHAREHOLDERS: Neil Schmidgall Paul Schmidgall Linda Schmidgall Shawn Schmidgall NEIL E. SCHMIDGALL LINDA M. SCHMIDGALL REVOCABLE LIVING TRUST REVOCABLE LIVING TRUST By:/s/ Neil Schmidgall By:/s/ Paul Schmidgall Trustee Trustee By:/s/Linda Schmidgall By:/s/Shawn Schmidgall Trustee Trustee ESOP: SUPERIOR INDUSTRIES OF MORRIS, INC. EMPLOYEE STOCK OWNERSHIP PLAN By: Trustee SIMCO, LLC By: Title: Chief Manager By: Trustee NEIL E. SCHMIDGALL AND LINDA M. SCHMIDGALL CHARITABLE REMAINDER UNITRUST By: Neil E. Schmidgall Trustee EXHIBIT 10.31 Amended and Restated Master Note in the amount of $15,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA. AMENDED AND RESTATED MASTER NOTE (FIXED AND FLOATING RATES) $15,000,000.00 Date: December 15, 1999 FOR VALUE RECEIVED, ASTEC INDUSTRIES, INC. (the "Borrower") promises to pay to the order of BANK ONE, NA(the "Bank"), in lawful money of the United States at the office of the Bank at Bank One Plaza, Chicago, Illinois, or as the Bank may otherwise direct, the lesser of Fifteen Million and No/100ths Dollars ($15,000,000.00) or the aggregate outstanding unpaid principal amount of loans evidenced hereby ("Loans"), together with interest as provided below. Any person authorized to borrow on behalf of the Borrower (an "Authorized Person") may request a Loan by telephone or telex. The Borrower agrees that the Bank is authorized to honor requests which it believes, in good faith, to emanate from an Authorized Person, whether in fact that be the case or not. Loans may bear interest at either a fixed rate ("Fixed Rate Loans") or a floating rate ("Floating Rate Loans"). Loans shall be Floating Rate Loans unless the Bank and the Borrower agree to a fixed rate for a specific interest period. Subject to availability and for an interest period to be agreed upon Fixed Rate Loans shall bear interest at a rate equal to the sum of the Applicable Margin plus the Eurodollar Rate, where the Applicable Margin is .75% per annum from the funding date to and including October 31, 1999, 1.00% per annum from November 1, 1999 to and including December 31, 1999 and 1.25% per annum thereafter and the Eurodollar Rate is the rate at which deposits in U.S. dollars in the amount and for a maturity corresponding to that of the applicable interest period are offered by the Bank in the offshore interbank market at approximately 10 a.m. (Chicago time) two business days prior to the first date of such interest period, adjusted for maximum statutory reserve requirements. At the expiration of an interest period applicable to a Fixed Rate Loan, such Fixed Rate Loan shall automatically convert into a Floating Rate Loan unless the Bank and the Borrower agree to a fixed rate for a new interest period. All Floating Rate Loans and all Fixed Rate Loans shall be payable on January 2, 2001 (the "Maturity Date"). Interest on each Fixed Rate Loan shall be payable on the last day of the interest period for such Fixed Rate Loan. Floating Rate Loans shall bear interest at a rate equal to the corporate base rate of interest announced by the Bank from time to time, changing when and as the corporate base rate changes. Interest on Floating Rate Loans shall be payable on the Maturity Date and on demand thereafter. Any Floating Rate Loan or Fixed Rate Loan which is not paid on the Maturity Date (or any earlier accelerated maturity date) shall bear interest at a rate equal to the sum of the corporate base rate of interest announced by the Bank from time to time, plus 2% per annum, changing when and as the corporate base rate changes. Each payment of principal or interest hereunder shall be made in immediately available funds. If any payment shall become due and payable on a Saturday, Sunday or legal holiday under the laws of Illinois, such payment shall be made on the next succeeding business day in Illinois and any such extended time of the payment of principal or interest shall be included in computing interest. All interest hereunder shall be computed for the actual number of days elapsed on a 360-day year basis. The Borrower hereby authorizes the Bank to deposit the proceeds of Loans to, and to charge payments of principal and interest against, the Borrower's deposit account with the Bank. A Fixed Rate Loan may not be prepaid prior to the last day of its applicable interest period without the written consent of the Bank. If, for any reason, any payment of a Fixed Rate Loan occurs prior to the last day of its applicable interest period, the Borrower will indemnify the Bank for any loss or cost which the Bank determines is attributable to such payment, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Fixed Rate Loan. Loans bearing interest at a rate related to the corporate base rate may be prepaid by the Borrower, without premium or penalty. The Borrower hereby authorizes the Bank to record Loans, interest rates, interest periods, repayments, and payment dates on the schedule attached to this Note or otherwise in accordance with the Bank's usual practice. The obligation of the Borrower to repay each Loan made hereunder shall be absolute and unconditional notwithstanding any failure of the Bank to enter such amounts on such schedule or to receive written confirmation of the transaction from the Borrower. If the Bank requests a written confirmation of a requested Loan, the Borrower will confirm the terms of each Loan by mailing a confirmation letter to the Bank signed by any authorized person. If the Bank elects to confirm the terms of a Loan to the Borrower, the Borrower will notify the Bank in writing within 10 days after the Borrower's receipt of such confirmation if it believes such confirmation to be inaccurate, and the Borrower hereby waives any right to contest the accuracy of such confirmation after such 10-day period. In the event of disagreement as to the terms of a transaction, the Bank's records shall govern, absent manifest error. If any change in any law, rule, regulation or directive (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) imposes any condition the result of which is to increase the cost to the Bank of making, funding or maintaining any Fixed Rate Loan or reduces any amount receivable by the Bank hereunder in connection with a Fixed Rate Loan, the Borrower shall pay the Bank the amount of such increased expense incurred or the reduction in any amount received which the Bank determines is attributable to making, funding and maintaining the Fixed Rate Loans. The Bank may elect to sell participations in or assign its rights under Loans. The Borrower agrees that if it fails to pay any Loan when due, any purchaser of an interest in such Loan shall be entitled to seek enforcement of this note if the purchaser is permitted to do so pursuant to the terms of the participation agreement between the Bank and such purchaser. The Borrower hereby authorizes the Bank and any other holder of an interest in this Note (a "Holder") to disclose confidential information relating to the financial condition or operations of the Borrower (i) to any affiliate of the Bank or any Holder, (ii) to any purchaser or prospective purchaser of an interest in any Loan, (iii) to legal counsel, accountants, and other professional advisors to the Bank or any Holder, (iv) to regulatory officials, (v) as requested or required by law, regulation, or legal process or (vi) in connection with any legal proceeding to which the Bank or any other holder is a party. This Note is the Note issued pursuant to, and is entitled to the benefits of, the letter agreement between the Borrower and the Bank dated as of August 13, 1999 (which, as it may be amended or modified and in effect from time to time, is herein called the "Letter Agreement" as amended by that certain amendment to letter agreement dated as of December 15, 1999), to which Letter Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which the maturity of this Note may be accelerated. Nothing in this Note shall constitute a commitment to make loans to the Borrower. If any amount payable hereunder is not paid when due or upon demand, as applicable, then any indebtedness from the Bank to the Borrower may be offset and applied toward the payment of all unpaid principal, interest and fees payable hereunder, whether or not such amounts, or any part thereof, shall then be due. The Borrower expressly waives any presentment, demand, protest or notice in connection with this note now, or hereafter, required by applicable law and agrees to pay all costs and expenses of collection. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAW (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, GIVING EFFECT, HOWEVER, TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE BORROWER AND THE BANK EACH HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS NOTE OR THE RELATIONSHIP ESTABLISHED HEREUNDER. ASTEC INDUSTRIES, INC. By: /s/ Richard W. Bethea, Jr. Title: Secretary EXHIBIT 10.32 Amended and Restated Master Note in the amount of $20,000,000 dated December 29, 1999 by and between Astec Industries, Inc. and Bank One, NA. AMENDED AND RESTATED MASTER NOTE (FIXED AND FLOATING RATES) $20,000,000.00 Date: December 15, 1999 FOR VALUE RECEIVED, ASTEC INDUSTRIES, INC. (the "Borrower") promises to pay to the order of BANK ONE, NA (the "Bank"), in lawful money of the United States at the office of the Bank at 1 Bank One Plaza, Chicago, Illinois, or as the Bank may otherwise direct, the lesser of Twenty Million and No/100ths Dollars ($20,000,000.00) or the aggregate outstanding unpaid principal amount of loans evidenced hereby ("Loans"), together with interest as provided below. Any person authorized to borrow on behalf of the Borrower (an "Authorized Person") may request a Loan by telephone or telex. The Borrower agrees that the Bank is authorized to honor requests which it believes, in good faith, to emanate from an Authorized Person, whether in fact that be the case or not. Loans may bear interest at either a fixed rate ("Fixed Rate Loans") or a floating rate ("Floating Rate Loans"). Loans shall be Floating Rate Loans unless the Bank and the Borrower agree to a fixed rate for a specific interest period. Subject to availability and for an interest period to be agreed upon Fixed Rate Loans shall bear interest at a rate equal to the sum of the Applicable Margin plus the Eurodollar Rate, where the Applicable Margin is .75% per annum from the funding date to and including January 31, 2000, 1.00% per annum from February 1, 2000 to and including March 31, 2000 and 1.25% per annum thereafter and the Eurodollar Rate is the rate at which deposits in U.S. dollars in the amount and for a maturity corresponding to that of the applicable interest period are offered by the Bank in the offshore interbank market at approximately 10 a.m. (Chicago time) two business days prior to the first date of such interest period, adjusted for maximum statutory reserve requirements. At the expiration of an interest period applicable to a Fixed Rate Loan, such Fixed Rate Loan shall automatically convert into a Floating Rate Loan unless the Bank and the Borrower agree to a fixed rate for a new interest period. All Floating Rate Loans and all Fixed Rate Loans shall be payable on January 2, 2001 (the "Maturity Date"). Interest on each Fixed Rate Loan shall be payable on the last day of the interest period for such Fixed Rate Loan. Floating Rate Loans shall bear interest at a rate equal to the corporate base rate of interest announced by the Bank from time to time, changing when and as the corporate base rate changes. Interest on Floating Rate Loans shall be payable on the Maturity Date and on demand thereafter. Any Floating Rate Loan or Fixed Rate Loan which is not paid on the Maturity Date (or any earlier accelerated maturity date) shall bear interest at a rate equal to the sum of the corporate base rate of interest announced by the Bank from time to time, plus 2% per annum, changing when and as the corporate base rate changes. Each payment of principal or interest hereunder shall be made in immediately available funds. If any payment shall become due and payable on a Saturday, Sunday or legal holiday under the laws of Illinois, such payment shall be made on the next succeeding business day in Illinois and any such extended time of the payment of principal or interest shall be included in computing interest. All interest hereunder shall be computed for the actual number of days elapsed on a 360-day year basis. The Borrower hereby authorizes the Bank to deposit the proceeds of Loans to, and to charge payments of principal and interest against, the Borrower's deposit account with the Bank. A Fixed Rate Loan may not be prepaid prior to the last day of its applicable interest period without the written consent of the Bank. If, for any reason, any payment of a Fixed Rate Loan occurs prior to the last day of its applicable interest period, the Borrower will indemnify the Bank for any loss or cost which the Bank determines is attributable to such payment, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Fixed Rate Loan. Loans bearing interest at a rate related to the corporate base rate may be prepaid by the Borrower, without premium or penalty. The Borrower hereby authorizes the Bank to record Loans, interest rates, interest periods, repayments, and payment dates on the schedule attached to this Note or otherwise in accordance with the Bank's usual practice. The obligation of the Borrower to repay each Loan made hereunder shall be absolute and unconditional notwithstanding any failure of the Bank to enter such amounts on such schedule or to receive written confirmation of the transaction from the Borrower. If the Bank requests a written confirmation of a requested Loan, the Borrower will confirm the terms of each Loan by mailing a confirmation letter to the Bank signed by any authorized person. If the Bank elects to confirm the terms of a Loan to the Borrower, the Borrower will notify the Bank in writing within 10 days after the Borrower's receipt of such confirmation if it believes such confirmation to be inaccurate, and the Borrower hereby waives any right to contest the accuracy of such confirmation after such 10-day period. In the event of disagreement as to the terms of a transaction, the Bank's records shall govern, absent manifest error. If any change in any law, rule, regulation or directive (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) imposes any condition the result of which is to increase the cost to the Bank of making, funding or maintaining any Fixed Rate Loan or reduces any amount receivable by the Bank hereunder in connection with a Fixed Rate Loan, the Borrower shall pay the Bank the amount of such increased expense incurred or the reduction in any amount received which the Bank determines is attributable to making, funding and maintaining the Fixed Rate Loans. The Bank may elect to sell participations in or assign its rights under Loans. The Borrower agrees that if it fails to pay any Loan when due, any purchaser of an interest in such Loan shall be entitled to seek enforcement of this note if the purchaser is permitted to do so pursuant to the terms of the participation agreement between the Bank and such purchaser. The Borrower hereby authorizes the Bank and any other holder of an interest in this Note (a "Holder") to disclose confidential information relating to the financial condition or operations of the Borrower (i) to any affiliate of the Bank or any Holder, (ii) to any purchaser or prospective purchaser of an interest in any Loan, (iii) to legal counsel, accountants, and other professional advisors to the Bank or any Holder, (iv) to regulatory officials, (v) as requested or required by law, regulation, or legal process or (vi) in connection with any legal proceeding to which the Bank or any other holder is a party. This Note is the Note issued pursuant to, and is entitled to the benefits of, the letter agreement between the Borrower and the Bank dated as of October 29, 1999 (which, as it may be amended or modified and in effect from time to time, is herein called the "Letter Agreement" as amended by that certain amendment to letter agreement dated as of December 15, 1999), to which Letter Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which the maturity of this Note may be accelerated. Nothing in this Note shall constitute a commitment to make loans to the Borrower. If any amount payable hereunder is not paid when due or upon demand, as applicable, then any indebtedness from the Bank to the Borrower may be offset and applied toward the payment of all unpaid principal, interest and fees payable hereunder, whether or not such amounts, or any part thereof, shall then be due. The Borrower expressly waives any presentment, demand, protest or notice in connection with this note now, or hereafter, required by applicable law and agrees to pay all costs and expenses of collection. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAW (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, GIVING EFFECT, HOWEVER, TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE BORROWER AND THE BANK EACH HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS NOTE OR THE RELATIONSHIP ESTABLISHED HEREUNDER. ASTEC INDUSTRIES, INC. By: /s/ Richard W. Bethea, Jr. Title: Secretary EXHIBIT 22 Subsidiaries of the Registrant LIST OF SUBSIDIARIES Name Owned Jurisdiction of Incorporation American Augers, Inc. 100 Delaware Astec, Inc. 100 Tennessee Astec Financial Services, Inc. 100 Tennessee Astec Holdings, Inc. 100 Tennessee Astec Transportation, Inc. 100 Tennessee Breaker Technology, Inc. 100 Tennessee Breaker Technology Ltd. 100 Ontario, Canada CEI Enterprises, Inc. 100 Tennessee Heatec, Inc. 100 Tennessee Johnson Crushers International, Inc. 100 Tennessee Kolberg-Pioneer, Inc. 100 Tennessee Pavement Technology, Inc. 50 Georgia Production Engineered Products, Inc. 100 Nevada Roadtec, Inc. 100 Tennessee Superior Industries of Morris, Inc. 100 Minnesota Telsmith, Inc. 100 Delaware Trencor, Inc. 100 Texas EXHIBIT 23 Consent of Independent Auditors CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 33-14738 and 0-14714) pertaining to the Astec Industries, Inc. 1986 and 1992 Stock Option Plans, and to the 1998 Long-Term Incentive Stock Plan of our report dated February 18, 2000, with respect to the consolidated financial statements and schedule of Astec Industries, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 1999. ERNST & YOUNG LLP Chattanooga, Tennessee March 22, 2000

Exhibit Number	Description
10.33	Sale of Business Agreement, dated September 29, 2000, between Anglo Operations Limited and High Mast Properties 18 Limited and Astec Industries, Inc. for the purchase of the materials handling and processing products division of the Boart-Longyear Division of Anglo Operations Limited.
10.34	Acquisition Agreement, dated October 2, 2000, by and among Larry Raymond, Carlson Paving Products, Inc. and Astec Industries, Inc.
10.35	Collective Bargaining Agreement, dated February 1, 2001, by and between Trencor, Inc. and the United States Steelworkers of America, AFL-CIO and CLC.
Exhibit 22	Subsidiaries of the registrant.
Exhibit 23	Consent of independent auditors.