AGREEMENT OF PURCHASE AND
SALE OF ASSETS
DATED AS OF OCTOBER 24, 1997
BY AND BETWEEN:
WINDSOR DOOR, INC.
AS PURCHASER
AND
UNITED DOMINION INDUSTRIES, INC.
AND
WCGD, INC.
AS SELLER
RELATING TO THE PURCHASE AND SALE OF
SELLER'S WINDSOR DOOR DIVISION
HEADQUARTERED IN LITTLE ROCK, ARKANSAS
AGREEMENT OF PURCHASE AND SALE OF ASSETS
TABLE OF CONTENTS
Background Statement...................................................1
Statement of Agreement.................................................1
1.0 PURCHASE AND SALE OF BUSINESS ASSETS............................1
1.1 Assets Transferred..............................................1
1.2 Excluded Assets.................................................4
1.3 Transfer at Closing.............................................6
2.0 ASSUMPTION OF LIABILITIES.......................................6
3.0 CLOSING; PURCHASE PRICE.........................................6
3.1 Time and Place of Closing.......................................6
3.2 Computation and Payment of Purchase Price.......................7
(a) The Purchase Price..........................................7
(b) Net Operating Working Capital...............................7
(c) Closing Date Balance Sheet..................................7
4.0 ALLOCATION OF PURCHASE PRICE....................................9
5.0 REPRESENTATIONS AND WARRANTIES OF SELLER........................9
5.1 Corporate Organization..........................................9
5.2 Corporate Authorization, Certain Corporate Actions,
No Conflicts...................................................9
5.3 Company Financial Statements...................................10
5.4 Operations of the Company......................................11
5.5 Absence of Certain Changes or Events...........................11
5.6 Undisclosed Liabilities........................................13
5.7 Properties.....................................................13
5.8 Litigation; Orders.............................................14
5.9 Intellectual Property..........................................15
5.10 Labor Matters..................................................15
5.11 Compliance with Laws...........................................16
5.12 Taxes..........................................................16
5.13 Contracts......................................................17
5.14 Inventories....................................................19
5.15 Consents, Approvals, etc.......................................19
5.16 Certain Fees...................................................20
5.17 Licenses and Permits...........................................20
5.18 Employee Benefit Plans.........................................20
5.19 Transactions with Interested Persons...........................20
5.20 Environmental Matters..........................................20
5.21 Accounts.......................................................25
5.22 Letters of Credit, Surety Bonds, Guarantees....................25
5.23 Accounts Receivable............................................25
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5.24 Product Liabilities; Product Warranties........................25
5.25 Insurance......................................................26
5.26 Suppliers and Customers........................................26
5.27 Disclosure.....................................................26
5.28 Certain Defined Items..........................................26
6.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER......................27
6.1 Corporate Organization.....................................27
6.2 Corporate Authorization, Certain Corporate Actions,
No Conflicts..............................................27
6.3 Litigation; Orders.........................................28
6.4 Consents, Approvals, etc...................................28
6.5 Certain Fees...............................................28
7.0 CONDUCT OF BUSINESS OF THE COMPANY PRIOR TO CLOSING..............28
8.0 ACCESS TO INFORMATION AND DOCUMENTS..............................30
8.1 Access Prior to Closing....................................30
8.2 Access After Closing.......................................30
9.0 EMPLOYEES........................................................31
9.1 Employee Benefits Definitions....................................31
9.2 Employee Benefit Plans...........................................32
9.3 Employees and Offers of Employment...............................35
9.4 Seller's Employee Benefit Plans..................................36
9.5 Defined Benefit Plans............................................37
9.6 Defined Contribution Plans.......................................41
9.7 Benefit Restoration Plan.........................................43
9.8 Deferred Compensation Plan.......................................44
9.9 Flexible Spending Arrangements...................................44
9.10 Welfare Benefits.................................................44
9.11 Continuation of Certain Administrative Services
and Insurance Coverage..........................................45
9.12 Collective Bargaining Agreements.................................45
9.13 No Third Party Beneficiaries.....................................45
9.14 Union Contracts..................................................46
9.15 WARN.............................................................46
10.0 AUTHORIZATIONS...................................................46
11.0 CONSENTS AND APPROVALS...........................................47
12.0 WARRANTY SERVICE.................................................47
13.0 COLLECTION OF RECEIVABLES........................................47
14.0 FURTHER ASSURANCES...............................................48
15.0 CONDITIONS TO OBLIGATIONS OF THE PARTIES....,....................48
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15.1 Conditions to Obligations of Each Party....................48
15.2 Conditions Precedent to Purchaser's Obligations............49
15.3 Conditions Precedent to Seller's Obligations...............52
16.0 INDEMNIFICATION..................................................53
16.1 Seller's Indemnification...................................53
16.2 Purchaser's Indemnification................................54
16.3 Limitations on Indemnifications............................55
16.4 Procedure for Third Party Claims...........................56
17.0 OTHER PROPOSALS..................................................58
18.0 ARBITRATION......................................................59
19.0 COVENANT NOT TO COMPETE; NONSOLICITATION OF EMPLOYEES............61
20.0 TAX MATTERS......................................................61
21.0 NOTICES..........................................................62
22.0 BULK SALES COMPLIANCE............................................62
23.0 TERMINATION......................................................63
24.0 MISCELLANEOUS....................................................64
24.1 Entire Agreement; Modification.............................64
24.2 Waiver.....................................................64
24.3 Binding Effect, Transfer .................................64
24.4 Numbers and Headings.......................................64
24.5 Exhibits and Schedules.....................................65
24.6 Further Actions............................................65
24.7 Transaction Taxes; Transfer of Recording Fees;
Prorations................................................65
24.8 Counterparts...............................................66
24.9 Expenses...................................................66
24.10 Validity of Provisions.....................................66
24.11 Governing Law..............................................66
24.12 Risk of Loss...............................................66
24.13 Publicity..................................................66
24.14 Time is of the Essence.....................................67
24.15 Certain Understandings.....................................67
24.16 Third Party Beneficiaries..................................67
25.17 XxXxx Sale.................................................67
24.18 Future Business............................................67
25.0 CERTAIN DEFINITIONS..............................................68
Signatures.......................................................72
List of Schedules and Exhibits.....................................
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AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is dated as of the 24th day of October, 1997, by and between
UNITED DOMINION INDUSTRIES, INC., a Delaware corporation having its principal
offices in Charlotte, North Carolina ("United Dominion"), WCGD, INC., a Canadian
corporation and an affiliate of United Dominion ("WCGD") (United Dominion and
WCGD are hereinafter collectively the "Seller"), and WINDSOR DOOR, INC., a
Delaware corporation having its principal offices c/o American Buildings
Company, Eufaula, Alabama ("Purchaser").
BACKGROUND STATEMENT
A. Seller owns certain assets which together constitute its Windsor Door
division (the "Company"). The Company is engaged in the manufacture,
distribution and sale of residential garage doors and commercial rolling
steel doors and sectional doors (to the extent the Company is currently so
engaged, the "Business") with facilities located in Little Rock, Arkansas,
Marysville, California and Aurora, Illinois;
B. Purchaser desires to purchase from Seller and Seller desires to sell,
transfer and assign to Purchaser, substantially all the assets of the
Company, and Purchaser has agreed to assume certain liabilities related to
the Business for the purchase price and upon the terms and subject to the
conditions hereinafter set forth.
STATEMENT OF AGREEMENT
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
1.0 PURCHASE AND SALE OF BUSINESS AND ASSETS.
1.1 Assets Transferred. Seller will sell, transfer, convey, assign and deliver
to Purchaser and Purchaser will acquire from Seller, at the Closing (as
hereinafter defined), all right, title and interest in and to the
properties, assets and rights of every nature, kind and description,
tangible and intangible (including goodwill), whether real or personal,
whether accrued, contingent or otherwise and whether now existing or
otherwise acquired prior to the Closing Date primarily relating to, or used
or held for use by Seller primarily in connection with, the Business, as
the same may exist on the Closing Date, except for Excluded Assets as
defined in Section 1.2 below (collectively, the "Purchased Assets"), and
including without limitation all
those items in the following categories that primarily relate to, or are
used or held for use by Seller primarily in connection with, the Business:
(a) real property, specifically the real property located in Little Rock,
Arkansas and Marysville, California, described in EXHIBIT 1.1(A),
together with all buildings, equipment, improvements and fixtures
located thereon, and all right, title and interest, if any, of the
Seller in and to any easements, rights of way and other appurtenants
thereto (such as appurtenant rights in and to public streets)
pertaining to or benefiting such land including without limitation all
air rights, subsurface rights, water rights, xxxxx and appurtenant
development rights, and all tangible personal property currently used
in the repair, operation and maintenance of the real property and any
additions and improvements thereto between the date hereof and the
closing (the "Real Property");
(b) inventories of raw materials, work in process, finished products,
goods, spare parts, replacement and component parts (the inventories
held at the Company's locations in Little Rock, Arkansas, Marysville,
California, Aurora, Illinois and the distribution centers set forth on
Schedule 5.7 of the DISCLOSURE SCHEDULE, and inventories previously
purchased and in transit to the Company are collectively referred to
as the "Inventories");
(c) equipment, machinery, furniture, furnishings, vehicles, tools, dies,
molds, and replacement, repair and other parts and similar property;
(d) rights to sell or lease products sold or leased and rights to any
products under research and development prior to the Closing Date;
(e) subject to Article 11.0 of this Agreement, all contracts,
arrangements, license and technology agreements, sales and purchase
orders, bids, offers, documents submitted in response to bid requests
or solicitations or invitations to bid or quote, sales representative,
dealer and agency agreements, leases and other agreements, including
without limitation any right to receive payment for products sold or
services rendered pursuant to, and to receive goods and services
pursuant to, such contracts and to assert claims and take other
rightful actions in respect of breaches,
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defaults and other violations of such contracts and otherwise;
(f) prepaid expenses and xxxxx cash;
(g) all rights under insurance policies covering Inventories in transit
and all rights and claims under insurance policies for damage to any
Purchased Assets to the extent not repaired or replaced prior to the
Closing;
(h) notes and accounts receivable held by Seller and notes, bonds, and
other evidences of indebtedness of and rights to receive payments,
including but not limited to liens and security rights or other
collateral relating to such indebtedness;
(i) (i) patents throughout the world and applications therefor, (ii)
trademarks, service marks, trade names and registered user names
throughout the world, including registrations and applications for
registration thereof, if any, including without limitation the name
"Windsor Door" and any derivations thereof (but excluding the name
"United Dominion" and any derivations thereof), (iii) copyright
registrations throughout the world and applications therefor, and any
other non-registered copyrights, including in the cases of clauses
(i), (ii) and (iii) those items listed on the schedule of Seller's
disclosures attached as SCHEDULE 1 hereto (the "DISCLOSURE SCHEDULE")
(the Purchased Assets that are described in clauses (i), (ii) and
(iii) and all patents, trademarks and trade names listed in the
DISCLOSURE SCHEDULE are collectively referred to as the "Intellectual
Property");
(j) designs, plans, trade secrets, inventions, processes, procedures,
research records, manufacturing know-how and manufacturing formulae,
wherever located (the "Know-How");
(k) books, customer lists, records, computer disks and tapes, manuals,
advertising matter, catalogs, price lists, correspondence, mailing
lists, lists of customers and suppliers, distribution lists,
photographs, production data, sales and promotional materials and
records, purchasing materials and records, personnel records,
manufacturing and quality control records and procedures, blueprints,
research and development files, media materials, accounting
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records, sales orders files, drawings, surveys, plans and
specifications, parts reference guides, project files, profit and
marketing plans and other documents and records;
(l) to the extent their transfer is permitted by law, governmental
licenses, permits, approvals, license applications and product
registrations; and
(m) all of Seller's interest in that Agreement of Lease (the "Components
Plant Lease") dated as of July 15, 1997 between Maumelle Limited
Partnership, as landlord, and Seller, as tenant, and all of Seller's
interest in that Lease with Xxxxxx Investments for that property
located at 0000 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx (the "Aurora Plant
Lease" and, together with the Components Plant Lease, the "Leases").
1.2 Excluded Assets. Seller will retain and not transfer the following assets,
which shall not constitute Purchased Assets pursuant to Section 1.1 above
(collectively, the "Excluded Assets"):
(a) all casualty, liability, long-term disability, health, welfare and
other insurance policies maintained by or on behalf of Seller,
Seller's affiliates and, except to the extent provided in Section
1.1(g), rights thereunder and all rights under self insurance programs
maintained or established with respect to the Company;
(b) all foreign, federal, state or local tax refunds, tax refund claims
and tax credits, deductions or other tax benefits of Seller or
Seller's affiliates relating to periods prior to the Closing Date,
except that Seller shall have no right to seek refunds of real estate
taxes for periods prior to the Closing Date;
(c) subject to Article 8.0 hereof, all checks and drafts of Seller and all
Seller's records and files, banking records, tax returns, accounting
records and such other similar books and records located at the
corporate offices (or in record storage facilities) of Seller in
Charlotte, North Carolina, including, without limitation, such books
and records as may relate to the Business but that primarily relate to
other Excluded Assets or to Excluded Liabilities (as defined in
Article 2.0);
(d) all rights to use the name "United Dominion" or the United Dominion
logo, alone or in combination with any
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other words, logo or symbol, and any other trademarks, trade names,
service marks, or copyrights owned by or registered to Seller or
Seller's affiliates that are not used primarily in the Business, and
all supplies (other than items of Inventory) that indicate that the
Company is associated with Seller;
(e) all indemnity and contribution rights granted to Seller or owed by
third parties to Seller with respect to Excluded Liabilities and any
and all rights or assets arising from and related to the defense,
release, compromise, discharge, administration, management or
satisfaction by Seller of the Excluded Liabilities;
(f) all of Seller's rights, claims, actions, causes of action, vendor,
supplier and similar claims, judgments, claims and demands of whatever
nature relating to Excluded Assets;
(g) all computer programs and software not generated or purchased
exclusively for the Business (other than software listed on Schedule
5.9 of the DISCLOSURE SCHEDULE);
(h) all guarantees, letters of credit, bank drafts and similar items given
by the Seller or their affiliates for the benefit of the Company,
including but not limited to any guarantees of bank loans or lines of
credit;
(i) all of Seller's deferred charges, advance payments, prepaid items,
security and other deposits, claims for refunds, rights of offset, and
credits of all kinds relating to the Excluded Assets or to Excluded
Liabilities;
(j) all pension, profit sharing, incentive, stock benefit plans and 401(k)
savings or other plans related to the Business or employees of the
Business and, subject to Article 9.0 hereof, any funds or assets held
or reserved with respect thereto;
(k) all cash (except xxxxx cash), cash equivalents and marketable
securities held on behalf of the Company;
(l) all rights of Seller under this Agreement and the agreements,
instruments, and certificates delivered pursuant to this Agreement;
5
(m) all records prepared in connection with the sale of the Company,
including analyses relating to the Company; and
(n) all the additional assets and properties, if any, that are listed and
described on SCHEDULE 1.2(N).
1.3 Transfer at Closing. Pursuant to the terms and subject to the conditions
hereof, at the Closing, Seller shall transfer the Purchased Assets to
Purchaser pursuant to a Xxxx of Sale and Assignment in the form of EXHIBIT
1.3 and convey good, indefeasible and fee simple title to the Real Property
pursuant to bargain and sale deeds with covenants against grantor's acts,
free and clear of all liabilities, obligations, liens and encumbrances
("Encumbrances") excepting only those Encumbrances described on the
DISCLOSURE SCHEDULE and agreed to be assumed by Purchaser, Encumbrances of
record (other than mortgages and other recorded liens) that relate to the
Real Property, or Encumbrances assumed pursuant to the Liabilities
Undertaking (as hereinafter defined).
2.0 ASSUMPTION OF LIABILITIES. Subject to the terms and pursuant to the
conditions set forth herein, at the Closing, Purchaser will assume and
agree to pay, honor and discharge Seller's trade payables, accrued
expenses, such as salaries and wages, payroll taxes, vacation, advertising,
frequent buyer program, rent, warranty and similar liabilities of Seller at
the Closing Date incurred in the ordinary course of the Business which do
not result from, arise out of or relate to, and are not caused by, any
breach of contract (it being understood that warranty claims shall be
Purchaser's responsibility), tort, infringement or violation of law and
such other liabilities expressly assumed in the Liabilities Undertaking
(the form of which is attached to this Agreement as EXHIBIT 2.0) (the
"Assumed Liabilities"). Purchaser shall not assume and Seller shall pay,
honor, perform and discharge any liabilities, obligations or commitments of
Seller incurred by or on behalf of the Business prior to the Closing Date
other than those expressly assumed in the Liabilities Undertaking (the
"Excluded Liabilities").
3.0 CLOSING; PURCHASE PRICE.
3.1 Time and Place of Closing. The closing of the sale of the Purchased Assets
(the "Closing") shall take place at 10:00 a.m., Charlotte, North Carolina
time, on November 25, 1997, or such other date as Purchaser and Seller may
agree (the "Closing Date") at the executive offices of Seller in Charlotte,
North Carolina or at such other place as Seller
6
and Purchaser may agree. The Closing shall be effective as of 12:01 a.m. on
the Closing Date.
3.2 Computation and Payment of Purchase Price.
(a) The Purchase Price. In consideration of the sale, transfer,
conveyance, assignment and delivery of the Purchased Assets by Seller
to Purchaser, Purchaser will, in full payment thereof, in addition to
the assumption of the Assumed Liabilities pursuant to the Liabilities
Undertaking, pay to Seller at Closing a total purchase price equal to
Sixty Million Dollars (U.S. $60,000,000) (the "Purchase Price").
Pursuant to this Section 3.2, after Closing the Purchase Price shall
be subject to adjustment, dollar-for-dollar, (i) to the extent Net
Operating Working Capital (as hereinafter defined) on the Closing Date
is greater or less than the number obtained by multiplying 0.180 times
the "net sales" of the Business for the 12-month period ending on the
last day of the last full month ending prior to Closing, and (ii) as
set forth in Section 9.5 hereof. A party owing money pursuant to the
adjustment provided in the preceding sentence shall pay such amount by
wire transfer of immediately available funds within two business days
after final determination of the amount, if any, owed.
(b) Net Operating Working Capital. The term "Net Operating Working
Capital" as used herein shall be derived from the Closing Date Balance
Sheet (as defined below) and shall be calculated as total current
assets minus total current liabilities (excluding property tax and
bonus accruals). For purposes of this calculation, any accrual for the
Company's employer contribution to the Seller DC Plan (as defined in
Section 9.6(a)) shall be adjusted to be equal to $135,400.
(c) Closing Date Balance Sheet.
(1) The term "Closing Date Balance Sheet" as used herein shall mean a
balance sheet reflecting the Purchased Assets and Assumed
Liabilities, to be prepared by Seller as of the close of business
on the business day immediately preceding the Closing Date, and
adjusted and agreed upon by Seller and Purchaser as hereinafter
provided. Except as set forth in the DISCLOSURE SCHEDULE, the
Closing Date Balance Sheet shall be prepared from the books and
records of Seller and the Company, in accordance
7
with United States generally accepted accounting principles
("GAAP"), consistently applied, and all inventory and supplies
reflected thereon shall be so reflected on the basis of a
complete physical count initiated on October 24, 1997, at which
representatives of Purchaser may be present, and rolled forward
to the date prior to the Closing Date. The allowance for doubtful
accounts and warranty reserve to be set forth on the Closing Date
Balance Sheet shall be determined based on the historical
experience of the Business, and, with respect to accounts
receivable, shall take into account all valid defenses, set-offs
and counterclaims known to Seller. The Inventories shall be
valued in the ordinary course of the Business with appropriate
reserves (if applicable) for slow-moving, excess and obsolete
goods.
(2) A proposed Closing Date Balance Sheet shall be presented by
Seller to Purchaser as soon as possible after the Closing Date,
but not later than the date that is forty-five (45) days after
Closing. No later than the date that is forty-five (45) days
after the date of receipt by Purchaser from Seller of the
proposed Closing Date Balance Sheet, Purchaser shall submit in
writing to Seller any and all proposed adjustments, if any, to
the proposed Closing Date Balance Sheet received by it from
Seller. No later than the date that is twenty (20) days after the
date of receipt by Seller of Purchaser's proposed adjustments,
Seller shall notify Purchaser whether or not it accepts the
proposed adjustments and which, if any, it rejects. Thereafter,
for a period not to exceed thirty (30) days, Purchaser and Seller
will attempt in good faith to reach agreement on the Closing Date
Balance Sheet. Failing agreement within such time period, the
parties shall submit the issues in dispute to binding arbitration
pursuant to Article 18.0 of this Agreement. In the event
Purchaser and Seller agree on the Closing Date Balance Sheet or
disputed items are resolved through arbitration, such agreement
or arbitration decision shall be final and Purchaser shall have
no further recourse or claim with respect thereto except pursuant
to the representations and warranties contained in Article 5.0
hereof.
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4.0 ALLOCATION OF PURCHASE PRICE.
As soon as possible after the Closing Date, Seller and Purchaser shall
mutually agree on an allocation of the Purchase Price among the Purchased
Assets and the covenant not to compete set forth in Article 19.0 hereof in
amounts according to Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"). If Seller and Purchaser cannot agree on an
allocation, each shall make its own allocation to the Internal Revenue
Service without regard to the allocation of the other parties.
5.0 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Purchaser that, except as set forth on the DISCLOSURE SCHEDULE:
5.1 Corporate Organization. United Dominion is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and WCGD is a corporation duly organized and validly subsisting
under the laws of Canada. Each Seller has all requisite corporate power and
authority to own, lease, license and operate the properties and assets
owned, leased, licensed and operated in connection with the Business. Each
Seller is duly qualified, licensed or domesticated and in good standing in
each jurisdiction where the nature of its activities conducted in
connection with the Business, or the character of the properties owned,
leased or operated by it in connection with the Business, requires such
qualification, licensing or domestication and where failure to so qualify,
license or domesticate or be in good standing would, individually or in the
aggregate, (i) have a material adverse effect on the assets, financial
condition or business of the Company, (the assets, financial condition and
business of the Company shall hereinafter be referred to as the "Business
Condition of the Company"), (ii) adversely affect the ability of Purchaser
or Seller to consummate the transactions contemplated by this Agreement or
the Seller Related Instruments or (iii) adversely affect Purchaser's
ability to operate the Business following the Closing in substantially the
same manner as currently conducted by Seller (the matters set forth in
clauses (i), (ii) and (iii) hereinafter being collectively referred to as a
"Material Adverse Effect").
5.2 Corporate Authorization, Certain Corporate Actions, No Conflicts. Each
Seller has all requisite corporate power and authority to execute and
deliver this Agreement (including without limitation the Xxxx of Sale and
Assignment, the bargain and sale deeds and any other
9
agreements being delivered by Seller hereunder (collectively, the "Seller
Related Instruments")) and to consummate the transactions contemplated
hereby and thereby and all necessary corporate proceedings have been taken
to authorize the execution, delivery and performance by each Seller of this
Agreement and the Seller Related Instruments and the consummation of the
transactions contemplated hereby and thereby. This Agreement has been duly
authorized, executed, and delivered by each Seller, is the legal, valid and
binding obligation of each Seller, and is enforceable as to each Seller in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, fraudulent conveyance, insolvency or similar laws affecting
creditors' rights or by equitable principles relating to the availability
of remedies. Each Seller Related Instrument will be duly authorized,
executed and delivered by each Seller party thereto, and will be, upon
execution and delivery, the legal, valid and binding obligation of such
Seller, enforceable as to such Seller in accordance with its terms, except
as enforcement may be limited by bankruptcy, fraudulent conveyance,
insolvency or similar laws affecting creditors' rights or by equitable
principles relating to the availability of remedies. Assuming compliance by
both Purchaser and Seller and their affiliates with the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), neither the
execution, delivery, nor performance of this Agreement or any Seller
Related Instrument by Seller will, with or without the giving of notice or
the passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any lien,
charge or encumbrance on any of the Purchased Assets pursuant to, any
provision of each Seller's certificate of incorporation or bylaws or any
franchise, mortgage, deed of trust, lease, license, agreement,
understanding, law, rule or regulation, or any order, judgment, or decree
to which either Seller is a party or by which either Seller may be bound or
affected, to the extent such conflict, default, right to accelerate, loss
of rights, lien, charge or encumbrance would have a Material Adverse
Effect, except for contracts that expressly prohibit Seller from
transferring its rights and obligations thereunder without the consent of
another party thereto.
5.3 Company Financial Statements. Seller has furnished to Purchaser true and
complete copies of unaudited financial statements (unaudited balance sheets
and unaudited statements of profit and loss) of the Company as of and for
the years ended December 31, 1995 and 1996 and the nine months ended
September 30, 1997 (the "Historical Financial Statements"). Except as set
out in the DISCLOSURE SCHEDULE,
10
the Historical Financial Statements (a) have been prepared from the books
and records of the Company in accordance with GAAP applied consistently,
and (b) fairly present the financial position of the Company and the
results of its operations as of and for the periods then ended. The
statements of operations included in the Historical Financial Statements do
not contain any material items of non-recurring income or expense, except
as expressly specified therein.
5.4 Operations of the Company. The Business has been conducted only through the
Company and WCGD, and not through any other affiliate of Seller. No part of
the Purchased Assets or the Business is owned or operated by any entity
other than Seller. To Seller's Knowledge (as defined in Section 5.28),
except for the Excluded Assets and except as may be disclosed on the
DISCLOSURE SCHEDULE, the assets, properties and rights included in the
Purchased Assets comprise all of the material assets, properties and rights
of every type and description, real or personal, tangible or intangible,
primarily used by the Company in the operation of the Business. No item of
tangible personal property material to the operation of the Business is an
Excluded Asset. All items of tangible personal property included in the
Purchased Assets (other than Inventories in transit or held on consignment)
are located at the Real Property or at the locations listed in the
DISCLOSURE SCHEDULE. There are no existing agreements, options, commitments
or rights with, of or to any person to acquire any of Seller's assets,
properties or rights included in the Purchased Assets or any interest
therein, except for those contracts entered into in the normal course of
business consistent with past practice.
5.5 Absence of Certain Changes or Events. Since December 31, 1996, there has
not been any material adverse change in the Business Condition of the
Company. Without limiting the generality of the foregoing, except as
disclosed in the DISCLOSURE SCHEDULE or with respect to seasonal business
conditions consistent with past experience, since December 31, 1996, Seller
has not (i) canceled or compromised any material debt or claim, or waived
or released any right of substantial value relating to the Business; (ii)
modified, cancelled or terminated, or received any written notice of
termination of, any material contract, lease or other agreement relating to
the Business; (iii) transferred or granted any material rights under, or
entered into any settlement regarding the breach or infringement of, any
license, patent, copyright, trademark, trade name, invention or similar
right relating to the Business, or modified any existing right with respect
thereto; (iv) made any material
11
change in the rate of compensation, commission, or other direct or indirect
remuneration payable to any distributor or agent of Seller relating to the
operation of the Business; (v) made any capital expenditures or capital
additions or betterments in respect of the Business in excess of an
aggregate of $100,000; (vi) to Seller's Knowledge, incurred or become
subject to any liability (absolute, accrued or contingent), except current
liabilities incurred and liabilities under contracts entered into, all of
which were in the ordinary course of business; (vii) delayed or postponed
the payment of accounts payable and other liabilities outside the ordinary
course of business; (viii) mortgaged, pledged or subjected to lien any of
its assets, tangible or intangible, other than liens of current real
property taxes not yet due and payable; (ix) sold, assigned, licensed or
transferred any of its assets, tangible or intangible, which would have
been included in the Purchased Assets if the Closing had been held on
December 31, 1996 or on any date since then except in the ordinary course
of business; (x) suffered any damage, destruction or loss, whether or not
covered by insurance, (a) materially and adversely affecting the Business
Condition of the Company or (b) of any item or items carried on its books
of account individually or in the aggregate at more than $100,000, or
suffered any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility or other services required to conduct
the Business; (xi) received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or condition of
any similar character which has had or could reasonably be expected to have
a Material Adverse Effect; (xii) suffered any material adverse change in
its relations with, or any loss or to Seller's Knowledge threatened loss
of, any of its suppliers or customers disclosed pursuant to Section 5.26;
(xiii) (a) granted any severance or termination pay to any of the employees
of the Business, (b) entered into any employment, deferred compensation or
other similar agreement (or any amendment to any such existing agreement)
or arrangement with any of the employees of the Business, (3) increased any
benefits payable under any existing severance or termination pay policies
or employment agreements, or (4) increased the compensation, bonus or other
benefits payable to any of the officers of the Business or, other than in
the ordinary course of business and consistent with past practice,
employees of the Business; (xiv) entered into any transaction except in the
ordinary course of business or as otherwise contemplated hereby; or (xv)
entered into any agreement or made any commitment (contingent or otherwise)
to take any of the
12
types of action described in subparagraphs (i) through (xv) above.
5.6 Undisclosed Liabilities. Except as disclosed in the DISCLOSURE Schedule or
reflected in the Historical Financial Statements, Seller has no material
liabilities arising from the Company's operations that would be required to
be reflected on a balance sheet prepared for the Company in accordance with
GAAP. The Company does not have any material liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due, including any liability for taxes) except for
(i) liabilities under Contracts that are not yet due, (ii) liabilities
reflected on the September 30 Balance Sheet and (iii) liabilities which
have arisen after September 30, 1997 in the ordinary course of business and
consistent with past practice (none of which is a liability for breach of
contract (other than for warranty claims in the ordinary course of
business), tort, infringement claim or lawsuit).
5.7 Properties. With the exception of inventory sold in the ordinary course of
business since September 30, 1997, Seller has good, indefeasible and fee
simple title to, or holds by valid and existing lease or license, free and
clear of all Encumbrances, each piece of real and personal property
capitalized on the Company's balance sheet at September 30, 1997 (the
"September 30 Balance Sheet") or acquired after the date thereof, except
for Encumbrances that (i) are listed in the DISCLOSURE SCHEDULE, none of
which restricts in any material respect the use and present operation of
the Purchased Assets and the Business, (ii) are excepted in the Title
Policies (as hereinafter defined), (iii) are reflected on the September 30
Balance Sheet and will be assumed by Purchaser pursuant to the Liabilities
Undertaking, (iv) arise out of taxes or general or special assessments not
in default and payable without penalty or interest or the validity of which
is being contested in good faith by appropriate proceedings (provided no
formal proceeding has been filed to collect any such taxes or assessments
and no Encumbrances have attached to the Purchased Assets on account
thereof), or (v) are mechanics', carriers', workers', repairmens' or other
like liens that do not, individually or in the aggregate, materially
detract from, or interfere with the use of, the Purchased Assets in the
Business. Seller has made available to Purchaser complete and accurate
copies of all deeds, leases and other material agreements with respect to
the Real Property and all such deeds, leases and other material agreements
are listed in
13
the DISCLOSURE SCHEDULE; there does not exist under such deeds, leases or
other material agreements any default or event or condition which, after
notice or lapse of time or both, would constitute a default thereunder by
Seller, or to Seller's Knowledge another party thereto, that could,
individually or in the aggregate, have a Material Adverse Effect. Except as
disclosed in the DISCLOSURE SCHEDULE, the personal property capitalized on
the September 30 Balance Sheet is usable in the ordinary course of
business, ordinary wear and tear excepted. Except as disclosed on the
DISCLOSURE SCHEDULE, the buildings, machinery, equipment and other tangible
assets included in the Purchased Assets are free from material defects
(patent and latent), have been maintained in accordance with normal
industry practice, are in good operating condition and repair (subject to
normal wear and tear), are usable in the regular and ordinary course of
business, and conform in all material respects to all applicable statutes,
rules, regulations, ordinances, orders, writs, injunctions, judgments,
decrees, awards and restrictions of every governmental authority having
jurisdiction over any of the Real Property or the Business. Except as set
forth on the DISCLOSURE SCHEDULE, there are no unsatisfied requests for any
repairs, restorations or improvements to the Real Property or any tangible
assets from any Person, including without limitation any governmental
entity, and there are no ongoing material repairs to the Real Property or
any tangible assets being made by or on behalf of Seller. Seller has not
transferred any air rights or development rights relating to the Real
Property. Seller has not received written notice from any governmental or
quasi-governmental authority with respect to any actual or threatened
taking of any portion of the Real Property for any purpose by the exercise
of the right of condemnation or eminent domain. PURCHASER ACKNOWLEDGES
THAT, SHOULD THE CLOSING OCCUR, EXCEPT AS EXPRESSLY SET FORTH HEREIN,
PURCHASER WILL ACQUIRE THE PURCHASED ASSETS WITHOUT ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE AND,
EXCEPT AS EXPRESSLY SET OUT HEREIN, WILL ACQUIRE THE PURCHASED ASSETS IN AN
"AS-IS" CONDITION.
5.8 Litigation; Orders. Except as disclosed in the DISCLOSURE SCHEDULE, there
is no judgment or outstanding order, injunction, decree, stipulation or
award (whether rendered by a court or administrative agency, or by
arbitration), or any claim in excess of $10,000, legal action,
administrative proceedings, governmental investigation, arbitration or
other proceeding, pending or to Seller's Knowledge threatened against
Seller relating to the Business that,
14
individually or in the aggregate, could have a Material Adverse Effect.
5.9 Intellectual Property. The DISCLOSURE SCHEDULE contains a complete and
correct list of all patents, trade names, trademarks, trademark
registrations, service marks, registered user names and copyrights, and
applications for registration of the foregoing, both domestic and foreign,
presently used by Seller in the Business. The Intellectual Property used in
the Business is valid and in full force and effect and, except as set forth
in the DISCLOSURE SCHEDULE, Seller has not received any written notice or
claim that any of the Intellectual Property relating to the Business is
invalid or unenforceable by it. Except as set forth in the DISCLOSURE
SCHEDULE, the Intellectual Property and Know-How relating to the Business
are owned by Seller free and clear of any material license, sublicense,
agreement, right, understanding, judgment, order, decree, stipulation,
lien, charge or encumbrance. None of the Intellectual Property or any of
the technology covered thereby or any of the Know-How has been
misappropriated from any Person; Seller is not, in connection with the
Business, infringing upon or otherwise acting adversely to any Intellectual
Property owned by any other Person; and there is no claim or action by any
Person pending or to Seller's Knowledge threatened with respect thereto.
Except as set forth on the DISCLOSURE SCHEDULE, to Seller's Knowledge there
has not been, since January 1, 1993, any infringement or improper use by
any third party of the Intellectual Property or the Know-How relating to
the Business and there is no action or proceeding instituted by Seller
pending in which an act constituting an infringement of any of the rights
to such Intellectual Property or Know-How was alleged to have been
committed by a third party. The DISCLOSURE SCHEDULE lists all material
licenses, sublicenses or agreements relating to the use by third parties of
such Intellectual Property and Know-How, or the use by Seller of the
Intellectual Property of another Person, and there is no material default
by Seller or to Seller's Knowledge by another party under such license,
sublicense or agreement.
5.10 Labor Matters. Except as disclosed in the DISCLOSURE SCHEDULE, (a) there is
no pending or, to Seller's Knowledge, threatened collective bargaining
labor dispute, arbitration, investigation, lawsuit or administrative
proceeding relating to labor matters involving employees of the Company;
(b) Seller is in compliance in all material respects with all labor
agreements applicable to the Company, which agreements are set forth on the
DISCLOSURE SCHEDULE; (c) Seller with respect to the Business is in
compliance in all material respects with all applicable laws regarding
employment and employment practices, terms and conditions of employment,
wages, hours of work and occupational safety and health; (d) there is no
labor strike, collective slowdown, collective work stoppage or lockout
pending or, to Seller's Knowledge, threatened against Seller with respect
to the Business; and (e) Seller has not received written notice from any
union or employees setting forth demands for collective representation,
elections or for present or future changes in wages, terms or employment or
working conditions in respect of the Business. Complete and correct copies
of all of such labor agreements have been made available to Purchaser and
its representatives prior to the date hereof.
5.11 Compliance with Laws. The Business has been, and is being, operated in
compliance with all statutes, laws, regulations, ordinances, rules,
judgments, order or decrees applicable thereto, except where the failure to
so comply would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in the
DISCLOSURE SCHEDULE, Seller has not received written notice of any
citations, violations, suits, proceedings, orders, decrees or judgments
relating to zoning, building, use and occupancy, traffic, storm water
management, fire, health, sanitation, Environmental Laws (as hereinafter
defined) or other laws or regulations against, or with respect to, the
Business, the Real Property or the Leases or any part thereof which remains
uncured or of record.
5.12 Taxes. Seller has (taking into account any extensions of time granted to or
obtained by Seller) timely filed all federal, state, local and foreign
income tax returns relating to the operations of the Company and required
under applicable law to be filed on or prior to the date hereof. Seller has
(taking into account any extensions of time granted to or obtained by
Seller) timely filed all federal, foreign, state, local and other returns
and reports with respect to employee income tax withholding and social
security and unemployment taxes in compliance with applicable tax
withholding provisions applicable to the Company. All such returns and
reports were correct and complete in all material respects, and all income
and other taxes owed by the Company or in respect of the Business have been
paid or are being contested in good faith by appropriate proceedings. There
are no existing deficiencies or adjustments (or to Seller's Knowledge,
proposed deficiencies or adjustments) for any income taxes, or interest or
penalties thereon, that have been asserted or proposed in writing or
assessed against Seller relating to
16
the Business by any governmental unit and that are likely to have a
Material Adverse Effect.
5.13 Contracts.
(a) Except for agreements and arrangements listed in this Agreement or in
the DISCLOSURE SCHEDULE, Seller is not a party to (i) any agreements
with any key employee of the Company (A) the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature of the
transaction contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee extending for a period longer
than six months, (C) providing severance benefits or other benefits
after the termination of employment of such employee regardless of the
reason for such termination of employment; or (ii) any other employee
agreement or plan relating to the Company, including, without
limitation, any incentive or bonus plan or stock option plan.
(b) Except as set forth in the DISCLOSURE SCHEDULE, there is no written
contract, agreement, commitment or arrangement entered into or made by
Seller, or any outstanding unaccepted offer made by Seller ("Offer")
(A) that primarily affects any of the Purchased Assets, or (B) that is
binding on Seller and that primarily relates to the Company, and, in
each case:
(i) that is or relates to a mortgage, indenture, security agreement
or other agreement or instrument relating to the borrowing of
money by, or any extension of credit to, Seller;
(ii) that is or relates to a collective bargaining agreement or union
contract other than the Union Contracts (as defined in Section
9.14);
(iii) that contains or relates to covenants or other provisions
limiting the right of the owner of the Business to compete in any
line of business or with any person or in any area;
(iv) that is or relates to a license agreement, either as licensor or
licensee;
(v) that provides for or relates to any sharing of profits with other
Persons or any joint venture or similar enterprise;
17
(vi) that relates to the Real Property, including without limitation
management, service and maintenance agreements that in the
aggregate provide for payments of more than $25,000 per year;
(vii) that involves any remaining or unsatisfied obligation (A) to make
capital expenditures (whether through the purchase of real or
personal property or otherwise) involving U.S. $50,000 or more in
the case of any one item or group of items, (B) to purchase goods
involving U.S. $100,000 or more in the case of any one item or
group of items, or (C) to supply products or provide services
involving U.S. $100,000 or more in the case of any one item or
group of items;
(viii) that involves any sales agency, manufacturer's representative,
distributorship or marketing agreement that is not by its terms
(without regard to the law of the applicable jurisdiction)
cancelable by Seller without penalty on 90 days notice;
(ix) that provides for the lease of personal property with aggregate
payments of more than $50,000 per year or the lease of any real
property to or from any Person, or
(x) that is any other contract, agreement, commitment or arrangement
or Offer that is material to the Business Condition of the
Company.
Except as otherwise set forth in the DISCLOSURE SCHEDULE and subject
to the last sentence of this Section 5.13, each contract, agreement,
commitment, arrangement, plan, lease, license or similar instrument
included in the Purchased Assets, whether or not set forth on the
Disclosure Schedule, (collectively, the "Contracts") is a valid and
binding obligation of Seller and, to Seller's Knowledge, the other
parties thereto, enforceable in accordance with its terms (except as
the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether
such enforceability is considered in equity or at law), and is in full
force and effect (except for any Contracts which by their terms expire
after the date hereof or
18
are terminated after the date hereof in accordance with the terms
thereof, provided, however, that Seller shall not terminate any
material Contract after the date hereof without the prior written
consent of Purchaser, which consent shall not be unreasonably withheld
or delayed), and neither Seller nor, to Seller's Knowledge, any other
party thereto has breached any material provision of, nor is in
default in any material respect under the terms of (and, to Seller's
Knowledge, no condition exists which, with the passage of time, the
giving of notice, or both, would result in a default under the terms
of), any of the Contracts. No Contract contains, in the reasonable
opinion of Seller, any contractual requirement with which, to Seller's
Knowledge, Seller will be unable to comply. Except as set forth on the
DISCLOSURE SCHEDULE, each of the Contracts and each Offer is validly
assignable to the Purchaser without the consent of any other party
thereto so that, after the assignment thereof to the Purchaser
pursuant to this Agreement, the Purchaser will be entitled to the full
economic and other benefits thereof. Seller shall give Purchaser
written notice of each Contract listed on the DISCLOSURE SCHEDULE
which is terminated after the date hereof. For purposes of this
Section 5.13, the term "Contract" shall not include any employee
benefit plans referred to in Article 9.0 of this Agreement.
5.14 Inventories. The Company's Inventories that will be reflected on the
Closing Date Balance Sheet were acquired and have been maintained in the
ordinary course of business, and are suitable and useable for the
production or completion of the Company's products for sale in the ordinary
course of business. Seller is not under any material liability or
obligation with respect to the return of Inventories (other any return of
inventory in connection with warranty claims) in the possession of
wholesalers, retailers or other customers. Seller has not caused its
Inventories to be materially increased or decreased other than in the
ordinary course of business consistent with past practice.
5.15 Consents, Approvals, etc. Except for filings pursuant to the HSR Act and
otherwise as set forth in the DISCLOSURE SCHEDULE, there are no filings
required to be made by Seller or Seller's affiliates with, and there are no
consents, approvals, permits or authorizations required to be obtained by
Seller from, governmental and regulatory authorities of the United States,
or any other Person, in connection with the execution and delivery of this
Agreement and the Seller
19
Related Instruments by Seller and the consummation by Seller of the
transactions contemplated hereby and thereby, the failure of which to
obtain would, individually or in the aggregate, have a Material Adverse
Effect.
5.16 Certain Fees. Except for NationsBanc Capital Markets, Inc. whose fees shall
be borne solely by Seller, Seller has not employed any broker, investment
banker or finder or incurred any liability for any brokerage, investment
banking or finders' fees or commissions in connection with this Agreement
or the transactions contemplated hereby.
5.17 Licenses and Permits. The DISCLOSURE SCHEDULE lists all governmental
licenses and permits relating primarily to and used in connection with the
ownership of the Purchased Assets and the operation of the Business, which
are all the licenses and permits required in connection with the conduct of
the Business as currently conducted and ownership of the Purchased Assets
under applicable laws, statutes, ordinances, rules, regulations and orders,
except where the failure to possess such permits and licenses, individually
or in the aggregate, would not have a Material Adverse Effect. Such
licenses and permits are valid and in full force and effect, and except as
set forth on the DISCLOSURE SCHEDULE, none of such licenses or permits will
be terminated or impaired or become terminable as a result of the
transactions contemplated by this Agreement.
5.18 Employee Benefit Plans. See Article 9.0 for representations and warranties
relating to employee benefit plans.
5.19 Transactions with Interested Persons. Except as set forth on the
DISCLOSURE SCHEDULE, (a) the Company is not indebted to any director,
officer, employee or agent of Seller, or any of the Company's employees
except for amounts due as normal salaries, commissions, wages, bonuses, or
in reimbursement of ordinary expenses on a current basis and (b) no
employee or agent of the Company is indebted to the Company or Seller
except for advances for ordinary business expenses.
5.20 Environmental Matters.
(a) Except as disclosed in the DISCLOSURE SCHEDULE hereto:
(i) With respect to permits and licenses, (1) all licenses, permits,
consents or other approvals required under Environmental Laws (as
hereinafter defined) that are necessary to the operations of the
Business have been obtained, except where the
20
failure to possess such permits, licenses, consents or other
approvals, individually or in the aggregate, would not have a
Material Adverse Effect, and are in full force, and effect and
Seller is unaware of any basis for revocation or suspension of
any such licenses, permits, consents or other approvals; (2) to
Seller's Knowledge, no Environmental Laws impose any obligation
upon Purchaser, as a result of any transaction contemplated
hereby, requiring prior notification to any governmental entity
of the transfer of any permit, license, consent or other approval
which is necessary to the operations of the Business; (3) all of
the facilities and operations of the Business have been operated
by Seller in all material respects in accordance with the
representations and conditions made or set forth in the permit
applications and the permits for the Business; and (4) the
Business currently operates and, until the Closing, will continue
to operate in compliance in all material respects with such
permits, licenses, consents or approvals.
(ii) Seller currently operates and, until the Closing, will continue
to operate the Business in compliance in all material respects
with all applicable limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations of
Environmental Laws and related orders of any court or other
governmental entity;
(iii) There are not any existing, pending or, to the Seller's
Knowledge, threatened actions, suits, claims, investigations,
inquiries or proceedings by or before any court or any other
governmental entity directed against Seller in connection with
the operation of the Business which pertain or relate to (1) any
remedial obligations under any applicable Environmental Law, (2)
violations by Seller of any Environmental Law, (3) personal
injury or property damage claims relating to a release of
Hazardous Materials (as hereinafter defined) by Seller, or (4)
response, removal, or remedial costs under CERCLA (as hereinafter
defined) or any similar state law;
(iv) To Seller's Knowledge, no portion of the Real Property owned or
leased by the Seller with respect to the Business is located is
listed on any Contaminated Site List;
21
(v) During Seller's ownership of the Business, there has been no
Release (as hereinafter defined) of any Hazardous Materials on or
underlying the Real Property in violation of Environmental Laws;
(vi) To Seller's Knowledge, no asbestos-containing materials or
polychlorinated biphenyls ("PCBs") are present on or underlying
the Real Property;
(vii) To Seller's Knowledge, there are no underground storage tanks for
Hazardous Materials, active or abandoned, at any property now or
previously owned or leased by Seller with respect to the
Business;
(viii) During Seller's ownership of the Business, all Hazardous
Materials generated by the Business have been transported,
stored, treated and disposed of by transporters or carriers, or
at treatment, storage and disposal facilities, authorized or
maintaining valid permits under all applicable Environmental
Laws; and
(ix) To Seller's Knowledge, there are not material Environmental
Remediation Costs which are required or have been planned
relating to the operation of the Business.
(b) The DISCLOSURE SCHEDULE identifies all environmental audits or
assessments or occupational health studies relating to property or
facilities of the Company undertaken by employees of the Company or
Seller, agents, or independent contractors working at the request of a
Seller or the Company or, to Seller's Knowledge, by governmental
agencies or independent contractors working at the request of a
Federal, state or local government agency. Seller has provided to
Purchaser all engineering, geologic, environmental, and other
documents or maps in the possession of Seller relating to (i) any
Environmental Conditions (as hereinafter defined) existing on the Real
Property, or (ii) any violations by the Business of any Environmental
Laws.
(c) For purposes hereof, the following terms shall have the following
definitions:
"Contaminated Site List" means any list, registry or other compilation
established by any governmental entity of sites that require or
potentially require
22
investigation, removal actions, remedial actions or any other response
under any Environmental Laws or treaty covering environmental matters,
as the result of a Release or threatened Release of any Hazardous
Materials.
"Environmental Conditions" means any pollution, contamination,
degradation, damage or injury caused by, related to, arising from or
in connection with the generation, handling, use, treatment, storage,
transportation, disposal, discharge, release or emission of any
Hazardous Materials.
"Environmental Laws" means all laws, rules, regulations, statutes,
ordinances, decrees or orders of any governmental entity relating to
(a) the control of any potential pollutant or protection of the air,
water or land, (b) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (c)
exposure to hazardous, toxic or other substances alleged to be
harmful, and includes without limitation final and binding
requirements related to the foregoing imposed by (i) the terms and
conditions of any license, permit, approval or other authorization by
any governmental entity, and (ii) applicable judicial, administrative
or other regulatory decrees, judgments and orders of any governmental
entity. The term "Environmental Laws" shall include, but not be
limited to the following statutes and the regulations promulgated
thereunder, as currently in effect or as subsequently amended: the
Clean Air Act, 42 U.S.C. ss. 7401 et seq., the Clean Water Act, 33
U.S.C. ss. 1251 et seq., the Resource Conservation Recovery Act, 42
U.S.C. ss. 6901 et seq., the Superfund Amendments and Reauthorization
Act, 42 U.S.C. ss. 11011 et seq., the Toxic Substances Control Act, 15
U.S.C. ss. 2601 et seq., the Water Pollution Control Act, 33 U.S.C.
ss. 1251, et seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et
seq., the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., and any similar
state, federal or local statute or ordinance.
"Environmental Liabilities" means any and all liabilities,
responsibilities, claims, suits, losses, costs (including remediation,
removal, response, abatement, clean-up, investigative and/or
monitoring costs and any other related costs and expenses, including
without limitation Environmental Remediation
23
Costs), other causes of action recognized now or at any later time,
damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, attorney
fees and other legal fees (a) pursuant to any agreement, order,
notice, directive (including directives embodied in Environmental
Laws), injunction, judgment or similar documents (including
settlements), or (b) pursuant to any claim by a governmental entity or
other person for personal injury, property damage, damage to natural
resources, remediation or similar costs or expenses incurred or
asserted by such governmental entity or person pursuant to common law
or statute.
"Environmental Remediation Costs" means all costs and expenses of
actions or activities to (a) clean-up or remove Hazardous Materials
from the environment as required by any Environmental Law, (b) prevent
or minimize the movement, leaching or migration of Hazardous Materials
into the environment as required by any Environmental Law, (c)
prevent, minimize or mitigate the Release or threatened Release of
Hazardous Materials into the environment, or injury or damage from
such Release, as required by any Environmental Law and (d) comply with
the requirements of any Environmental Laws. Environmental Remediation
Costs include, without limitation, costs and expenses payable in
connection with the foregoing for legal, engineering or other
consultant services, for investigation, testing, sampling and
monitoring, for boring, excavation and construction, for removal,
modification or replacement of equipment or facilities, for labor and
material, and for proper storage, treatment and disposal of Hazardous
Materials.
"Hazardous Materials" means any (a) toxic or hazardous materials or
substances; (b) solid wastes, including asbestos, buried contaminants,
chemicals, flammable or explosive materials; (c) radioactive
materials; (d) petroleum wastes and spills or releases of petroleum
products; and (e) any other chemical, pollutant, contaminant,
substance or waste that is regulated by any governmental entity under
any Environmental Law.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment.
24
5.21 Accounts. Except as disclosed in the DISCLOSURE SCHEDULE, Seller does not
maintain any bank, securities, commodities or other brokerage or similar
account, safe deposit box or other depository for the Company, nor is any
such account, box or depository maintained on behalf of, or for the benefit
of, the Company.
5.22 Letters of Credit, Surety Bonds, Guarantees. The DISCLOSURE SCHEDULE
identifies all letters of credit, performance or payment bonds, guaranty
arrangements and surety bonds (collectively, the "Bonds") of any nature for
which Purchaser shall be required to establish its own Bonds either through
a direct substitution or the provision of a back-up letter of credit or
other Bond in favor of Seller related to such Bonds in order to keep any
contract in place and not cause a default thereunder.
5.23 Accounts Receivable. The accounts receivable of Seller arising from the
Business that will be reflected on the Closing Date Balance Sheet are valid
and genuine, and have arisen solely out of bona fide sales and deliveries
of goods, performance of services and other business transactions in the
ordinary course of business consistent with past practice.
5.24 Product Liabilities; Product Warranties.
(a) Except as set forth on the DISCLOSURE SCHEDULE, the Business has not
incurred, nor does Seller know of any liability, damage, loss, cost or
expense as a result of any systemic defect or other systemic
deficiency (whether of design, materials, workmanship, labeling,
instructions or otherwise) ("Product Liability") with respect to any
group of products sold or services rendered by the Company, whether
such Product Liability is incurred by reason of any express or implied
warranty (including, without limitation, any warranty of
merchantability or fitness), any doctrine of common law (tort,
contract or other), any statutory provision or otherwise and
irrespective of whether such Product Liability is covered by
insurance.
(b) Seller has furnished Purchaser with all forms of warranties or
guarantees of the Business' products and services that are in effect
or proposed to be used by Seller in the conduct of the Business. The
DISCLOSURE SCHEDULE lists all payments or settlements made in respect
of any such warranty or guaranty (including without limitation any
returns or allowances) in excess
25
of $10,000 since January 1, 1995, indicating the name of each customer
and the amount of each payment.
5.25 Insurance. The DISCLOSURE SCHEDULE sets forth a true, correct and complete
list of all policies of fire, medical, life, liability, product liability,
workmen's compensation, libel, health and other forms of insurance
presently in effect with respect to the Business. All such policies are in
full force and effect, all premiums due and payable with respect thereto
have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. All such policies are sufficient
for compliance in all material respects with all requirements of law and
the terms of the Contracts, are valid, outstanding and enforceable and will
remain in full force and effect through the Closing Date. Except as set
forth in the Disclosure Schedule, Seller has not been refused any insurance
in connection with the Business, nor has any coverage been limited by any
insurance carrier to which Seller has applied for such insurance or with
which Seller has carried such insurance in the last three years.
5.26 Suppliers and Customers. The DISCLOSURE SCHEDULE lists (i) all suppliers of
the Business to which Seller made payments during the year ended December
31, 1996, or expects to make payments during the year ending December 31,
1997, in excess of $250,000 and (ii) all customers that paid Seller during
the year ended December 31, 1996 or that Seller expects will pay to it
during the year ending December 31, 1997, more than $250,000. Except as set
forth on the DISCLOSURE SCHEDULE, Seller has not received written notice
that any of the suppliers or customers listed therein has terminated its
relationship with the Business.
5.27 Disclosure. No representation or warranty by Seller contained in this
Agreement, and no statement contained in the Seller Related Instruments or
the DISCLOSURE SCHEDULE, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary,
in the light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading.
5.28 Certain Defined Items. References in Sections 5.1 through 5.27 and
elsewhere in this Agreement to (i) "Seller's Knowledge" shall mean the
actual knowledge after reasonable inquiry of any officers of Seller at the
level of vice president or above including, without limitation June X.
Xxxxxxx (taxes), Xxxxxxx X. Xxxxxxxx (labor and employee benefits) and
Xxxxxx Xxxxx (environmental) (it being agreed
26
that the term "Seller's Knowledge" shall include such facts and
circumstances as Purchaser may have disclosed in writing to Seller prior to
the Closing Date and that "reasonable inquiry" shall be the request by
Seller of management of the Business and Xx. Xxxxxxx (with respect to tax
matters), Xx. Xxxxxxxx (with respect to employee benefits matters) and Xx.
Xxxxx (with respect to environmental matters) to review the Agreement and
the DISCLOSURE SCHEDULE and to provide certified statements concerning such
review); (ii) "Business Condition of the Company" and "Material Adverse
Effect" are defined in Section 5.1; and (iii) "Person" shall have the
definition provided in Article 25.0.
6.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents
and warrants to Seller that:
6.1 Corporate Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to own, lease, license and operate
its properties and assets and to conduct the businesses now owned, leased,
licensed and operated by it. Purchaser is duly qualified, licensed or
domesticated and in good standing in each jurisdiction where the nature of
its activities or the character of its properties require such
qualification, licensing or domestication and where failure to so qualify,
license or domesticate would have a material adverse effect on the assets,
financial condition, or business of Purchaser.
6.2 Corporate Authorization, Certain Corporate Actions, No Conflicts. Purchaser
has all requisite corporate power and authority to execute and deliver this
Agreement and all necessary corporate proceedings have been taken to
authorize this execution, delivery and performance by Purchaser of this
Agreement. This Agreement has been duly authorized, executed, and delivered
by Purchaser, is the legal, valid and binding obligation of Purchaser, and
is enforceable as to Purchaser in accordance with its terms, except as such
enforcement may be limited by bankruptcy, fraudulent conveyance, insolvency
or similar laws affecting creditors' rights or by equitable principles
relating to the availability of remedies. Assuming compliance by both
Purchaser and Seller with the HSR Act, neither the execution, delivery, nor
performance of this Agreement by Purchaser will, with or without the giving
of notice or the passage of time, or both, conflict with, result in a
default, right to accelerate or loss of rights under, or result in the
creation of any lien, charge or encumbrance pursuant to, any provision of
Purchaser's articles of
27
incorporation or bylaws or any franchise, mortgage, deed of trust, lease,
license, agreement, understanding, law, rule or regulation or any order,
judgment, or decree to which Purchaser is a party or by which Purchaser may
be bound or affected, to the extent such conflict, default, right of
acceleration, loss of rights, lien, charge or encumbrance would have a
material adverse effect on Purchaser.
6.3 Litigation; Orders. There is no judgment or outstanding order, injunction,
decree, stipulation or award against Purchaser that would prohibit the
consummation of the transactions contemplated by this Agreement.
6.4 Consents, Approvals, etc. Other than the filings pursuant to the HSR Act
and pursuant to the Securities Exchange Act of 1934 following the
consummation of the transactions contemplated hereby, there are no filings
required to be made by Purchaser or Purchaser's affiliates with, and there
are no consents, approvals, permits or authorizations required to be
obtained by Purchaser from, governmental and regulatory authorities of the
United States or any other country, or any other Person, in connection with
the execution and delivery of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby, the
failure of which to obtain would, individually or in the aggregate, have a
material adverse effect on Purchaser.
6.5 Certain Fees. Purchaser has not employed any broker, investment banker or
finder or incurred any liability for any brokerage, investment banking or
finders' fees or commissions in connection with this Agreement or the
transactions contemplated hereby.
7.0 CONDUCT OF BUSINESS OF THE COMPANY PRIOR TO CLOSING. From the date hereof
until Closing:
(a) Seller shall conduct the business and affairs of the Company in the
ordinary course and consistent with prior practice, shall comply in
all material respects with all laws, rules, regulations and orders
applicable to the Business and shall maintain, keep and preserve the
assets and properties of the Company in good condition and repair,
ordinary wear and tear excepted, and maintain insurance thereon in
accordance with present practices, and Seller will use its best
efforts (i) to preserve the Business and organization of the Company
intact, (ii) to keep available to Purchaser the services of the
Company's present employees, and (iii) to preserve for the benefit of
Purchaser the goodwill
28
of the Company's suppliers, customers, and others having business relations
with it;
(b) Seller will not (i) cause to occur any of the events or occurrences
described in Section 5.5 or (ii) take any action or omit to take any
commercially reasonable action which act or omission would result in
the inaccuracy of any of its representations and warranties set forth
herein, as if such representations and warranties were to be made
immediately after the occurrence of such act or omission;
(c) Seller will (i) obtain, with the assistance and cooperation of
Purchaser (including by providing any financial or other information
about the Purchaser as may be reasonably requested), the consent of
any party to any lease (including without limitation to the Leases) or
contract with Seller where the consent of such party is required by
reason of the transactions contemplated hereby; and (ii) provide to
Purchaser prompt written notice of any change in any of the
information contained in the representations and warranties made in
Article 5.0 or elsewhere in this Agreement or the DISCLOSURE SCHEDULE
or exhibits referred to herein; provided, however, that no supplement
or amendment of a schedule or exhibit made pursuant to this Section
shall be deemed to cure any breach of, affect or otherwise diminish
any representation or warranty made in this Agreement, or affect
Purchaser's ability to rely on the condition set forth in Section
15.2(a), unless Purchaser elects, after having reviewed such amended
or supplemental disclosure, not to terminate this Agreement in
accordance with Section 21(d) hereof, in which case Purchaser shall be
deemed to have waived such breach; and
(d) As soon as available and in any event within 30 days after the end of
each month prior to the Closing Date, commencing with October 1997,
Seller shall deliver to Purchaser a consolidated balance sheet and
related statement of operations of the Company. All such financial
statements shall (a) fairly present the financial position of the
Company and the results of its operations as of and for the periods
then ended, and (b) be prepared consistent with past practices, except
as expressly specified therein.
29
8.0 ACCESS TO INFORMATION AND DOCUMENTS.
8.1 Access Prior to Closing. Upon reasonable notice to Seller's representatives
in Charlotte, North Carolina, and during regular business hours, Seller
will give, and will cause the Company to give, Purchaser and Purchaser's
attorneys, accountants and other representatives reasonable access to the
Company's and Seller's personnel and all properties, documents, contracts,
books and records of Seller relating to the Business or the Purchased
Assets and will furnish Purchaser with copies of such documents (certified
by an appropriate officer of a Seller if so requested) and with such
information with respect to the affairs of the Company as Purchaser may
from time to time reasonably request. Purchaser will not improperly
disclose the same prior to the Closing and Purchaser acknowledges that any
information being provided to it or its representatives by Seller prior to
Closing pursuant to this Agreement is subject to the confidentiality
agreement between the parties dated August 28, 1997. Purchaser and its
representatives and agents shall have the right, at Purchaser's expense, to
conduct engineering tests on the buildings located on the Real Property.
Purchaser may also engage an environmental consultant to conduct a
customary and reasonable Phase I environmental review, taking into account
the nature, use and history of the Real Property. In the event Purchaser
determines in good faith that its Phase I environmental review provides a
reasonable basis for Phase II environmental testing, Purchaser shall seek
Seller's written consent to the specific testing that Purchaser seeks to
conduct. In the event Seller withholds its consent to testing for which the
Phase I testing provided a reasonable basis, Purchaser may elect to
terminate this Agreement in accordance with Section 23(e) hereof. Purchaser
shall conduct any reviews and testing so as to minimize any interference
with the operations of the Business, and shall indemnify Seller from and
against any and all claims, losses, damages and expenses (including
reasonable attorneys' fees) for damage to property or personal injury or
death arising out of or relating to such reviews or testing which is caused
by the negligence of Purchaser or its agents.
8.2 Access After Closing. After the Closing, upon reasonable written notice,
Purchaser and Seller shall furnish or cause to be furnished to each other
and their respective accountants, counsel and other representatives
reasonable access, during normal business hours, to such information
(including records pertinent to the Business) and assistance relating to
the Company as is reasonably necessary for
30
operations, financial reporting and accounting matters, the preparation and
filing of any returns, reports or forms, the defense of any tax claim or
assessment, or any other reasonable purpose communicated in writing to the
other party. In the case of Seller, such assistance shall include access to
any and all documents, records, files and correspondence relating to the
Business that are retained at Seller's corporate headquarters or in its
off-site storage, and Seller will use reasonable efforts to maintain at its
headquarters or in off-site storage for a period ending on the later of (i)
seven years after the Closing Date, or (ii) the date on which taxes may no
longer be assessed, any such documents, records, files or correspondence
that could be needed by Purchaser. In the case of Purchaser, such
assistance shall include reasonably prompt written response to reasonable
written inquiries of Seller related to such financial reporting, accounting
and tax matters, cooperation in responding to audit reviews and reports
made by taxing authorities to Seller regarding the Company, assisting
Seller (including making its employees reasonably available), at Seller's
expense, in defending any lawsuits or claims against the Seller with
respect to Excluded Liabilities relating to the operation of the Company by
Seller prior to the Closing Date and, at Seller's request, participation in
audits conducted with respect to Seller. Purchaser shall retain the books
and records of seller included in the Purchased Assets for a period ending
on the later of (i) seven years after the Closing Date, or (ii) the date on
which taxes may no longer be assessed. After the end of such period, before
disposing of any books or records, Purchaser shall give notice to such
effect to Seller and Seller, within a reasonable time after the receipt of
such notice, will notify Purchaser whether to destroy such documents or
whether Seller will, at Seller's cost and expense, remove and retain all or
any part of such books or records as Seller may select.
9.0 EMPLOYEES.
9.1 Employee Benefits Definitions. The following terms, as used herein, have
the following meanings:
"Benefit Arrangement" means any written, or to Seller's Knowledge oral,
employment, consulting, severance or similar contract or arrangement or any
written, or to Seller's Knowledge oral, plan, policy, fund, program or
contract or arrangement providing for compensation, bonus, profit-sharing,
stock option, or other stock related rights or other forms of incentive or
deferred compensation, vacation benefits, automobile benefits, country club
memberships,
31
insurance coverage (including any self-insured arrangements), health or
medical benefits, disability benefits, worker's compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life
insurance or other benefits) that (i) is not an Employee Plan, (ii) is
entered into, maintained, administered or contributed to, as the case may
be, by Seller or any of its affiliates and (iii) covers any employee of the
Business.
"Employee Plan" means any "employee benefit plan", as defined in Section
3(3) of ERISA (whether or not subject to ERISA) that (i) is maintained,
administered or contributed to by Seller or any of its affiliates and (ii)
covers any employee of the Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the rules and regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity which, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Title IV Plan" means an Employee Plan subject to Title IV of ERISA other
than any Multiemployer Plan.
9.2 Employee Benefit Plans. Seller hereby represents and warrants to Purchaser
as of the date hereof and as of the Closing Date that:
(a) The DISCLOSURE SCHEDULE identifies each Employee Plan. Seller has
furnished to Purchaser copies of the Employee Plans (and, if
applicable, related trust agreements) and all amendments thereto and
written interpretations thereof (including, without limitation,
summary plan descriptions and communications to employees) together
with the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) and the most recent actuarial
valuation report prepared in connection with any Employee Plan. The
DISCLOSURE SCHEDULE identifies each Employee Plan which is a Title IV
Plan. Except as set forth on the DISCLOSURE SCHEDULE, no Employee Plan
is a
32
Multiemployer Plan and no Employee Plan or Benefit Arrangement is
maintained in connection with any trust described in Section 501(c)(9)
of the Code. Seller shall provide Purchaser with complete age, salary,
service and related data as of the Closing Date for all Active
Employees (as defined below) covered under any Title IV Plan or
Multiemployer Plan.
(b) Seller is not subject to any obligation to fund any Employee Plan or
Benefit Arrangement described under Sections 4(b)(5) or 401(a)(l) of
ERISA.
(c) No "accumulated funding deficiency", as defined in Section 412 of the
Code, has been incurred with respect to any Employee Plan subject to
such Section 412, whether or not waived. No "reportable event," within
the meaning of Section 4043 of ERISA, other than a "reportable event"
that will not have, or reasonably be expected to have, a Material
Adverse Effect, and no event described in Section 4062 or 4063 of
ERISA, has occurred in connection with any Employee Plan. Neither the
Seller nor any of its ERISA Affiliates has engaged in, or is a
successor or parent corporation to an entity that has engaged in, a
transaction described in Sections 4069 or 4212(c) of ERISA or
incurred, or reasonably expects to incur prior to the Closing Date,
any liability under Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any plan
covered or previously covered by Title IV of ERISA or any liability
under Section 4971 of the Code that in either case could become a
liability of Purchaser or any of its ERISA Affiliates after the
Closing Date. No condition exists that (i) could constitute grounds
for termination by the PBGC of any employee benefit plan that is
subject to Title IV of ERISA that is maintained by Seller or any of
its ERISA Affiliates or (ii) presents a material risk of complete or
partial withdrawal from any Multiemployer Plan which could result in
Purchaser or any of its ERISA Affiliates incurring a material
withdrawal liability within the meaning of Section 4201 of ERISA. No
liability has been incurred and no condition exists or is contemplated
in connection with any Employee Plan or Benefit Arrangement which,
under ERISA, the Code or otherwise, has resulted or could reasonably
be expected to result in (i) the imposition of an Encumbrance on any
of the Purchased Assets, (ii) a claim against the assets of any
Employee Plan which is being transferred to a plan or plans of
Purchaser in accordance with the provisions of Sections 9.5 and 9.6
33
hereof (other than the Transferred Employees' claims for benefits that
are being assumed by Purchaser's Plan(s) as part of said transfer of
assets in accordance with the terms of such plans), or (iii) a
liability or obligation of Purchaser (other than a liability or
obligation that is expressly assumed by Purchaser in accordance with
the provisions hereof). The Purchased Assets are not now, nor will
they after the passage of time be, subject to any lien imposed under
Code Section 412(n) by reason of a failure of Seller or any of its
affiliates to make timely installments or other payments required
under Code Section 412.
(d) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during
the period since its adoption; each trust created under any such Plan
is exempt from tax under Section 501(a) of the Code and has been so
exempt since its creation. Seller has provided Purchaser with the most
recent determination letter of the Internal Revenue Service relating
to each such Employee Plan. Each Employee Plan has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Code.
(e) The DISCLOSURE SCHEDULE identifies each Benefit Arrangement. Seller
has furnished to Purchaser copies or descriptions of each Benefit
Arrangement (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof. Each Benefit
Arrangement has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations and has been maintained in
good standing with applicable regulatory authorities. Except as
expressly disclosed on the DISCLOSURE SCHEDULE, Seller and its
affiliates are party to no Benefit Arrangement that constitutes an
employment or consulting arrangement or contract.
(f) Neither Seller nor any of its affiliates has any current or projected
liability in respect of post-employment or post-retirement health or
medical or life insurance benefits for employees of the Business,
except as required to avoid excise tax under Section 4980B of the
Code.
34
(g) Except as set forth on the DISCLOSURE SCHEDULE, no Transferred
Employee will become entitled to any bonus, retirement, severance, job
security or similar benefit or enhanced benefit (including
acceleration of vesting or exercise of an incentive award) as a result
of the transactions contemplated hereby. There is no contract, plan or
arrangement (written or, to Seller's Knowledge, oral) covering any
employee or former employee of the Business that, individually or
collectively, could give rise to the payment of any amount that would
not be deductible pursuant to the terms of Section 280G of the Code.
9.3 Employees and Offers of Employment. Seller shall provide to Purchaser as
soon as practicable after the date of this Agreement and prior to the
Closing Date a list of all of the individuals who are employed by Seller in
the Business, together with a description of the amount and basis of each
employee's compensation, including whether such compensation is governed by
a collective bargaining agreement. On or prior to the Closing Date,
Purchaser shall offer employment to all Active Employees (as defined below)
of the Business; provided, that Purchaser may terminate at any time after
the Closing Date the employment of any employee who accepts such offer, in
which case Purchaser shall be solely responsible for any severance costs
associated therewith. For purposes of this Article 9.0, the term "Active
Employee" shall mean any Person who, on the Closing Date, is actively
employed by Seller or who is on short-term disability leave, authorized
leave of absence, military service or lay-off with recall rights as of the
Closing Date (such inactive employees shall be offered employment by
Purchaser as of the date they return to active employment), but shall
exclude any other inactive or former employee including any Person who has
been on long-term disability leave or unauthorized leave of absence or who
has terminated his or her employment, retired or died on or before the
Closing Date. Any such offers shall be at such salary, wage and benefit
levels and on such other terms and conditions as are substantially similar
in the aggregate to the salary, wage and benefit levels in effect at
Closing, except as otherwise provided in this Article 9.0. Any Active
Employee who accepts the Purchaser's offer of employment and who, within
ten days of the Closing Date, commences employment with
35
Purchaser by reporting for work and being actively employed by Purchaser
for at least one day is hereinafter referred to as a "Transferred Employee"
and all such employees are collectively referred to as "Transferred
Employees." Any Active Employee who does not accept Purchaser's offer of
employment but who, within ten days of the Closing Date, commences
employment with Purchaser by reporting for work and being actively employed
by Purchaser for at least one day shall also be deemed to be a Transferred
Employee for purposes of this Agreement. On or prior to the Closing Date,
Seller will furnish Purchaser with true and complete copies of the
employment records maintained by Seller with respect to each employee of
the Business, and Seller will furnish Purchaser with such other records and
documents relating to the Transferred Employees as Purchaser may from time
to time reasonably request. Seller will not take, and will cause each of
its subsidiaries not to take, any action which would impede, hinder,
interfere or otherwise compete with Purchaser's effort to hire any
Transferred Employees. Seller will retain and Purchaser shall not assume
responsibility for any Transferred Employee until such employee commences
active employment with Purchaser.
9.4 Seller's Employee Benefit Plans.
(a) Seller shall retain all obligations and liabilities, including
obligations and liabilities under the Employee Plans and Benefit
Arrangements, in respect of each employee or former employee
(including any beneficiary thereof) who is not a Transferred Employee.
Except as expressly set forth herein, Seller shall retain all
liabilities and obligations in respect of benefits accrued as of the
Closing Date (or, if later, the date active employment with Purchaser
begins) by Transferred Employees, including obligations and
liabilities under the Employee Plans and Benefit Arrangements, such as
(i) all liabilities and obligations arising under any group life,
accident, medical, dental or disability plan or similar arrangement
(whether or not insured) to the extent that such liability or
obligation relates to contributions or premiums accrued (whether or
not payable), or to claims incurred (whether or not reported), on or
prior to the Closing Date (or, if later, the date active employment
with Purchaser begins) and (ii) all liabilities and obligations
arising under any worker's compensation arrangement to the extent such
liability or obligation relates to the period prior to the Closing
Date (or, if later, the date active employment with Purchaser begins),
including liability for any retroactive worker's compensation premiums
attributable to such period, and neither Purchaser nor any of its
affiliates shall have any liability with respect thereto.
Notwithstanding the foregoing, to the extent Purchaser assumes
liabilities and obligations under Seller's incentive plans, Seller
shall reimburse
36
Purchaser, within 10 days of receiving notice from Purchaser, for its
pro rata share of such liabilities and obligations. Seller's pro rata
share shall be determined by Purchaser based on the ratio of earnings
(as defined in the applicable incentive plans) for the Business
through the Closing Date as compared to the earnings for the Business
for the relevant performance period. In the event that any collective
bargaining agreement assumed by Purchaser pursuant to Section 9.12
would cause Purchaser to assume any liabilities and obligations with
respect to vacation that are not accrued for on the Closing Date
Balance Sheet, there shall be a dollar for dollar purchase price
adjustment under Section 3.2. Except as expressly set forth herein, no
assets of any Employee Plan or Benefit Arrangement shall be
transferred to Purchaser or any of its affiliates or to any plan of
Purchaser or any of its affiliates.
(b) With respect to any Transferred Employee (including any beneficiary or
dependent thereof) who enters a hospital or is on short-term
disability under any Employee Plan or Benefit Arrangement on or prior
to the Closing Date and continues in a hospital or on short-term
disability after the Closing Date, Seller shall be responsible for
claims and expenses incurred both before and after the Closing Date in
connection with such Person until such time, (if any) that, in the
case of a Transferred Employee, such Person resumes full-time
employment with Purchaser or one of its affiliates and, in the case of
any beneficiary or dependent of a Transferred Employee, such Person's
hospitalization has terminated.
9.5 Defined Benefit Plans.
(a) Seller shall cause Seller's actuary for each of the United Dominion
Industries, Inc. Retirement Plan and the United Dominion Industries,
Inc. Master Pension Plan for Hourly Employees (each a "Seller DB
Plan") to determine in accordance with the provisions of Section
414(l) of the Code the present value of the accrued benefits of all
Transferred Employees under each Seller DB Plan as of the Closing
Date. For purposes of determining such amount, Seller's actuary shall
use the actuarial assumptions used by the PBGC as of the Closing Date
for determining the present value of accrued benefits on a plan
termination basis. Seller's actuary shall allocate the assets of each
Seller DB Plan between the accrued benefits of the Transferred
Employees and the benefits of the remaining plan
37
participants using the asset allocation methodology provided for in
Section 4044 of ERISA. The assets of each Seller DB Plan allocable to
the accrued benefits of the Transferred Employees pursuant to such
procedures as of the Closing Date is hereinafter referred to as the
"Closing Date 414(l) Transfer Amount". The Closing Date 414(l)
Transfer Amount shall be increased with interest from the Closing Date
to the date of the transfer of assets to Purchaser's defined benefit
plans as provided in Section 9.5(e) (the "Transfer Date") using the
PBGC interest rate applicable to the first 25 years that was used to
determine the present value of accrued benefits and reduced by the
amount of all benefit payments between the Closing Date and the
Transfer Date attributable to the Transferred Employees with interest
on such benefit payment amounts from the date of payment to the
Transfer Date using the same PBGC interest rate (the resulting amount
being hereinafter referred to as the "Transfer Date 414(l) Transfer
Amount"). Seller shall cause each Seller DB Plan to transfer the
Transfer Date 414(l) Transfer Amount on the Transfer Date to the
appropriate defined benefit plan designated by Purchaser as provided
in Section 9.5(e). All calculations by Seller's actuary pursuant to
this Section 9.5(a) shall be subject to review by Purchaser's actuary.
In the event of any dispute between Seller's actuary and Purchaser's
actuary regarding the calculations pursuant to this Section 9.5(a)
which cannot be resolved after good faith efforts, Seller and
Purchaser shall jointly appoint and pay for another actuary to review
the calculations in dispute to determine the appropriate amounts,
which determination shall be binding on Seller and Purchaser.
(b) Seller also shall cause Seller's actuary for each Seller DB Plan to
determine the "accumulated benefit obligation" of all Transferred
Employees under each Seller DB Plan as of the Closing Date. For
purposes of determining such amount, Seller's actuary shall use the
actuarial assumptions shown on SCHEDULE 9.5(B). The "accumulated
benefit obligation" of the Transferred Employees as of the Closing
Date determined pursuant to such procedures is hereinafter referred to
as the "Closing Date ABO Transfer Amount". The Closing Date ABO
Transfer Amount shall be increased with interest from the Closing Date
to the Transfer Date using the interest rate that was used to
determine the accumulated benefit obligation and reduced by the amount
of all benefit payments between the Closing Date
38
and the Transfer Date attributable to the Transferred Employees with
interest on such benefit payment amounts from the date of payment to
the Transfer Date using the same interest rate (the resulting amount
being hereinafter referred to as the "Transfer Date ABO Transfer
Amount"). All calculations by Seller's actuary pursuant to this
Section 9.5(b) shall be subject to review by Purchaser's actuary. In
the event of any dispute between Seller's actuary and Purchaser's
actuary regarding the calculations pursuant to this Section 9.5(b)
which cannot be resolved after good faith efforts, Seller and
Purchaser shall jointly appoint and pay for another actuary to review
the calculations in dispute to determine the appropriate amounts,
which determination shall be binding on Seller and Purchaser.
(c) To the extent the aggregate Transfer Date 414(l) Transfer Amounts for
all Seller DB Plans determined under Section 9.5(a) is less than the
aggregate Transfer Date ABO Transfer Amounts for all Seller DB Plans
determined under section 9.5(b), then there shall be a dollar for
dollar reduction in the Purchase Price provided for in Section 3.2 to
the extent of such difference. Conversely, to the extent the aggregate
Transfer Date 414(l) Transfer Amounts for all Seller DB Plans
determined under Section 9.5(a) exceeds the aggregate Transfer Date
ABO Transfer Amounts for all Seller DB Plans determined under Section
9.5(b), then there shall be a dollar for dollar increase in the
purchase price provided for in Section 3.2 to the extent of such
difference.
(d) With respect to any Active Employee who is on short-term disability
leave, authorized leave of absence, military service leave or lay-off
with recall rights as of the Closing Date and who, subsequent to the
Closing Date, becomes a Transferred Employee, Seller agrees to
transfer the assets and liabilities under the applicable Seller DB
Plan to the designated Purchaser DB Plan. Such asset and liability
transfer shall be made as of December 31 of the calendar year in which
such employee became a Transferred Employee and shall be determined in
accordance with the de minimis rule of Treasury Regulation
1.414(l)-l(n)(2). Seller shall cause such calculations to be performed
by Seller's actuary based on an interest rate to be agreed to by
Seller's actuary and Purchaser's actuary. All other actuarial
assumptions shall be as shown on Schedule 9.5(b). All calculations by
Seller's actuary pursuant
39
to this Section 9.5(d) shall be subject to review by Purchaser's
actuary. In the event of any dispute between Seller's actuary and
Purchaser's actuary regarding the calculations pursuant to this
Section 9.5(b) which cannot be resolved after good faith efforts,
Seller and Purchaser shall jointly appoint and pay for another actuary
to review the calculations in dispute to determine the appropriate
amounts, which determination shall be binding on Seller and Purchaser.
(e) Prior to the Closing Date or as soon as practicable thereafter,
Purchaser shall establish or designate one or more defined benefit
pension plans for the benefit of the Transferred Employees covered by
each Seller DB Plan (each a "Purchaser DB Plan"). In consideration of
the transfer described in this Section, periods of employment by the
Transferred Employees with Seller prior to the Closing Date shall be
taken into account for purposes of determining eligibility for
participation, vesting of benefits and accrual of benefits under the
Purchaser DB Plans, but only to the extent such periods were taken
into account for such purposes under the Seller DB Plans as of the
Closing Date. The Purchaser DB Plans shall assume all benefit
liabilities of the Seller DB Plans with respect to the Transferred
Employees from and after the Transfer Date, and neither Seller nor the
Seller DB Plans shall be liable for such benefit liabilities from and
after such date.
(f) In order to effect the transfer of assets described in this Section,
Purchaser and Seller each hereby covenant and agree to take all
necessary and appropriate procedural steps at its own expense to
effect the transfer in accordance with the applicable provisions of
the Code and ERISA, including without limitation (i) to the extent
Seller and Purchaser, respectively, deem appropriate, amending the
Seller DB Plans and the Purchaser DB Plans, respectively (including
their respective related trusts), to provide for the asset transfer,
(ii) filing required IRS Forms 5310-A for the Seller DB Plans and the
Purchaser DB Plans, (iii) causing the necessary actuarial statements
to be prepared and included with the Form 5310-A filings, (iv)
providing any reports or notices required by ERISA to the PBGC or the
Transferred Employees or (v) to the extent Seller and Purchaser,
respectively, deem appropriate, obtaining a favorable determination
letter from the Internal Revenue Service regarding the qualified
status of the Seller DB Plans and the
40
Purchaser DB Plans, or as an alternative thereto, Seller and Purchaser
issuing mutually satisfactory indemnities to one another with respect
to such qualified plan status.
(g) Purchaser shall assume the obligations of Seller under the
multiemployer pension plans set forth on the DISCLOSURE Schedule. With
respect to each such Multiemployer Plan (i) neither the Seller nor any
ERISA Affiliate has incurred or expects to incur any withdrawal
liability under Title IV of ERISA (either as a contributing employer
or as part of a controlled group which includes a contributing
employer) in connection with a complete or partial withdrawal from
such plan; (ii) neither the Seller nor any ERISA Affiliate has
received notice that any such plan is in reorganization, that
increased contributions may be required in order to avoid a reduction
in plan benefits or the imposition of excise tax liability, or that
any such plan is or may become insolvent; (iii) neither the Seller nor
any ERISA Affiliate has failed to make any required contributions;
(iv) no such plan is a party to any pending merger or asset liability
transfer; (v) there are no PBGC proceedings against or affecting any
such plan; and (vi) no material withdrawal liability would be incurred
if a complete or partial withdrawal were to occur with respect to any
such plan immediately after the Closing.
9.6 Defined Contribution Plans.
(a) On the Closing Date or as soon as practicable thereafter, Seller shall
(i) cause the trustee of the United Dominion Industries, Inc. Compass
Plan and the United Dominion Industries, Inc. Compass Plan for Hourly
Employees (each a "Seller DC Plan") to segregate the assets of such
Seller DC Plan representing the full account balances of Transferred
Employees covered by such Plan as of the Closing Date, (ii) make any
and all filings and submissions to the appropriate governmental
agencies arising in connection with such segregation of assets and
(iii) make all necessary amendments to each Seller DC Plan and related
trust agreement to provide for such segregation of assets and the
transfer of assets as described below. The manner in which the account
balances of Transferred Employees under the Seller DC Plans are
invested shall not be affected by such segregation of assets.
41
(b) Prior to the Closing Date or as soon as practicable thereafter,
Purchaser shall establish or designate one or more defined
contribution plans for the benefit of Transferred Employees covered
under each Seller DC Plan (each a "Purchaser DC Plan"), shall take all
necessary action, if any, to qualify such plan under the applicable
provisions of the Code and Purchaser and Seller shall make any and all
filings and submissions to the appropriate governmental agencies
required to be made by it in connection with the transfer of assets
described below. As soon as practicable following the earlier of the
delivery to Seller of a favorable determination letter from the
Internal Revenue Service regarding the qualified status of each
Purchaser DC Plan or the issuance of indemnities satisfactory to
Seller and Purchaser, Seller shall cause the trustee of the Seller DC
Plan to transfer the full account balances, including outstanding loan
balances of the Transferred Employees under the Seller DC Plan (which
account balances will have been credited with appropriate earnings or
losses attributable to the period from the Closing Date to the date of
transfer), reduced by any necessary benefit or withdrawal payments to
or in respect of Transferred Employees occurring during the period
from the Closing Date to the date of transfer, to the appropriate
trustee as designated by Purchaser under the trust agreement forming a
part of the Purchaser DC Plan. Any Transferred Employee who is
employed on December 31, 1997 and who has completed 1,000 hours of
service with Seller and/or Purchaser during the 1997 plan year shall
be entitled to a matching employer contribution under the Seller DC
Plan and/or the Purchaser DC Plan. The expense for the 1997 plan year
matching employer contribution with respect to the Transferred
Employees shall be allocated between Seller and Purchaser based on the
percentage of the plan year between January 1, 1997 and the Closing
Date (which shall be Seller's allocable share of such expense) and the
percentage of the plan year from the Closing Date through December 31,
1997 (which shall be Purchaser's allocable share of such expense). If
one of the parties makes the entire matching employer contribution for
the 1997 plan year on behalf of the Transferred Employees, the other
party shall reimburse the contributing party for its allocable share
of such contribution within two business days after such contribution
is finally determined by the parties. Notwithstanding anything to the
contrary contained herein, unless waived by the Purchaser, the
Purchaser shall not be obligated to effect the trustee-to-trustee
42
transfer contemplated herein from any Seller DC Plan to a Purchaser DC
Plan unless Purchaser determines that the inclusion of the installment
method for payment of benefits is the only amendment that Purchaser
would have to make to Purchaser DC Plan(s) in order to satisfy the
provisions of Section 411(d)(6) of the Code in connection with the
trustee-to-trustee transfer contemplated herein.
(c) In consideration for the transfer of assets described herein, each
Purchaser DC Plan shall, effective as of the date of transfer
described herein, assume all of the obligations of Seller and any of
its ERISA Affiliates in respect of the account balances accumulated by
Transferred Employees under each Seller DC Plan (exclusive of any
portion of such account balances which are paid or otherwise withdrawn
prior to the date of transfer) on or prior to the Closing Date. In
consideration of the transfer described in this Section, periods of
employment by the Transferred Employees with Seller prior to the
Closing Date shall be taken into account for purposes of determining
eligibility for participation, vesting of benefits and eligibility for
employer matching contributions for plan year 1997 under the
Purchaser's DC Plans, but only to the extent such periods were taken
into account for such purposes under the Seller's DC Plans as of the
Closing Date. Neither Purchaser nor any of its affiliates shall assume
any other obligations or liabilities arising under or attributable to
any Seller DC Plan, which obligations and liabilities shall be
Excluded Liabilities.
9.7 Benefit Restoration Plan. Seller shall retain all obligations and
liabilities, including with respect to the Transferred Employees, under the
Restoration Plan for the Salaried Defined Benefit Retirement Plans of
United Dominion Industries, Inc. (the "Benefit Restoration Plan").
Effective as of the Closing Date, accrual of benefits by the Transferred
Employees under the Benefit Restoration Plan shall cease. The accrued
benefit, if any, of each Transferred Employee under the Benefit Restoration
Plan as of the Closing Date shall become fully vested as of the Closing
Date. Seller shall either pay to each affected Transferred Employee a
single sum cash payment in satisfaction of such accrued benefit determined
on such basis as shall be mutually agreeable to Seller and the affected
Transferred Employee, or in the alternative, Seller shall pay such accrued
benefit to the affected Transferred Employee in an annuity or other
mutually agreeable form of
43
benefit payment when such Transferred Employee attains age fifty-five (55),
or if later, separates from the service with the Purchaser.
9.8 Deferred Compensation Plan. Seller shall retain all obligations and
liabilities, including with respect to Transferred Employees, under the
Nonqualified Deferred Compensation Plan of United Dominion Industries, Inc.
(the "Deferred Compensation Plan"). Effective as of the Closing Date,
deferrals by Transferred Employees under the Deferred Compensation Plan
shall cease and Seller shall amend the Deferred Compensation Plan to
provide that employment by Purchaser shall be deemed to be continued
service with Seller for all purposes (other than deferrals) under the Plan.
9.9 Flexible Spending Arrangements. In the event the Closing Date occurs prior
to December 31, 1997, Seller agrees to continue to cover the Transferred
Employees under the flexible spending arrangements maintained by Seller
prior to the Closing Date (the "Seller FSA") through December 31, 1997 so
long as the affected Transferred Employees continue to remit to Seller in a
timely manner their respective contributions to the Seller FSA (at the
respective rates in effect on the Closing Date) for the period between the
Closing Date and December 31, 1997. Until the later of December 31, 1997 or
the Closing Date, Purchaser shall effectuate all payroll deductions with
respect to Transferred Employees under the Seller FSA in accordance with
such Employees' elections as in effect at the Closing Date (or in
accordance with any valid amendment to such elections after the Closing
Date). Effective as of the later of January 1, 1998 or the Closing Date,
Purchaser shall establish or designate "flexible spending arrangements,"
within the meaning of Proposed Treasury Regulation Section 1.125-2,
Q/A-7(c) covering Transferred Employees on terms no less favorable than
those afforded to employees of American Buildings Company.
9.10 Welfare Benefits. Purchaser shall use its commercially reasonable best
efforts to establish, effective as of the Closing Date, employee welfare
benefit plans (the "Purchaser Welfare Plans") which, in the aggregate, are
not less favorable than the terms of the employee welfare benefits plans
afforded to employees of American Buildings Company generally. Seller
agrees to cooperate with Purchaser and to provide assistance in
establishing such plans. After the Closing Date, Transferred Employees
shall be credited under the Purchaser Welfare Plans with any amounts
credited under
44
Seller's welfare plans prior to the Closing Date toward deductibles, stop
loss coverages and other similar amounts.
9.11 Continuation of Certain Administrative Services and Insurance Coverage. To
the extent requested by Purchaser in writing prior to the Closing Date,
Seller agrees to continue (i) to provide certain administrative services in
respect of the Transferred Employees as reasonably necessary for Purchaser
to conduct the Business and (ii) if Purchaser is unable to establish the
Purchaser Welfare Plans as of the Closing Date, to the extent permitted by
Seller's insurance carriers, whose consent Seller shall use its best
efforts to obtain, to cover Transferred Employees under the Employee Plans
and Benefit Arrangements which provide for insurance coverage and to
provide claims processing services in respect of the Transferred Employees
in both cases through December 31, 1997 or, in either case, until such
earlier time as Purchaser or its designated Affiliate can assume
responsibility for such insurance and administrative services in an orderly
manner. Purchaser agrees to reimburse Seller for Seller's costs reasonably
incurred in continuing to provide such insurance and administrative
services. Such continuation of insurance and administrative services shall
not affect the allocation of liabilities and obligations as set forth in
this Article 9. Purchaser shall use all reasonable efforts to arrange for
such administrative services and insurance coverage as promptly as possible
in order to avoid using Seller's services under this Section.
9.12 Collective Bargaining Agreements. Purchaser shall assume the collective
bargaining agreements listed on the DISCLOSURE SCHEDULE.
9.13 No Third Party Beneficiaries. No provision of this Article shall create any
third party beneficiary or other rights in any employee or former employee
(including any beneficiary or dependent thereof) of Seller or of any of its
subsidiaries in respect of continued employment (or resumed employment)
with either Purchaser or the Business or any of their affiliates and no
provision of this Article 9.0 shall create any such rights in any such
Persons in respect of any benefits that may be provided, directly or
indirectly, under any Employee Plan or Benefit Arrangement or any plan or
arrangement which may be established by Purchaser or any of its affiliates.
No provision of this Agreement shall constitute a limitation on rights to
amend, modify or terminate after the Closing Date any such plans or
arrangements of Purchaser or any of its affiliates.
45
9.14 Union Contracts. Subject to the rights afforded employees under the
National Labor Relations Act, Purchaser will recognize the Steelworkers as
the exclusive bargaining unit for the Little Rock, Arkansas unionized
employees, the Teamsters as the exclusive bargaining unit for the
Marysville, California unionized employees and xxx Xxxxxxxxxx as the
exclusive bargaining unit for the Aurora, Illinois unionized employees
(collectively the "Unions") and will either assume the collective
bargaining agreements in effect as of the Closing Date (the "Union
Contracts") or negotiate in good faith with the Unions for adoption of new
contracts. Purchaser will indemnify and hold Seller harmless, and shall
immediately reimburse Seller upon demand for, any and all loss, liability,
damage or expense arising from failure by Purchaser to assume the
obligations of Seller under the Union Contracts.
9.15 WARN. If any employee of the Business suffers or may be deemed to have
suffered an "employment loss," as defined in 29 U.S.C. ss. 2101(a)(6)
("Employment Loss") as a result of the transactions contemplated by this
Agreement, or if Purchaser takes any action after the Closing Date which
independently, or in connection with, any Employment Losses occurring
within the ninety-day period prior to the Closing Date, which could be
construed as a "plant closing" or "mass layoff," as those terms are defined
in the Workers Adjustment and Retraining Notification Act, 29 U.S.C. xx.xx.
2101-2109 ("WARN"), Purchaser shall be solely responsible for providing any
notices required by WARN and for making payments, if any, and paying all
penalties and costs, which may result from any failure to provide such
notice. Seller has not taken any actions, and will not prior to the Closing
take any actions, which, independently or in connection with any Employment
Loss, could be construed as a "plant closing" or "mass layoff." Prior to
Closing, Seller shall provide to Purchaser lists, by facility, of all
employees terminated or laid off within 90 days of the Closing.
10.0 AUTHORIZATIONS. Seller and Purchaser, as promptly as practicable after the
date hereof, each shall (a) make, or cause to be made, all such filings and
submissions under laws, rules and regulations applicable to it and its
affiliates, as may be required for it to consummate the transfer of the
Purchased Assets contemplated hereby in accordance with the terms of this
Agreement, including but not limited to the required filing under the HSR
Act, (b) use commercially reasonable efforts to obtain, or cause to be
obtained, all authorizations, approvals, consents and waivers from all
Persons, employee groups and governmental authorities necessary to be
obtained by it or its affiliates
46
in order for it to consummate such transactions, and (c) use commercially
reasonable efforts to take, or cause to be taken, all other actions
necessary, proper or advisable in order to fulfill its obligations
hereunder and to carry out the intentions of the parties expressed herein.
Seller and Purchaser will coordinate and cooperate with one another in
exchanging such information and supplying such reasonable assistance as may
be reasonably requested by each in connection with the foregoing.
11.0 CONSENTS AND APPROVALS. This Agreement shall not constitute an agreement to
assign or transfer any interest in any instrument, contract, lease, permit
or other agreement or arrangement or any claim, right or benefit arising
thereunder or resulting therefrom, if an assignment or transfer or an
attempt to make such an assignment or transfer without the consent of a
third party would constitute a breach or violation thereof or would affect
adversely the rights of Purchaser or Seller thereunder; and any transfer or
assignment to Purchaser by Seller of any interest under any such
instrument, contract, lease, permit or other agreement or arrangement that
requires the consent of a third party shall be made subject to such consent
or approval being obtained. In the event any such consent or approval is
not obtained on or prior to the Closing Date, Seller and Purchaser shall
continue to use commercially reasonable efforts to obtain any such approval
or consent after the Closing Date until such time as such consent or
approval has been obtained and Seller will cooperate with Purchaser in any
lawful and economically feasible arrangement to provide that Purchaser
shall receive Seller's interest in the benefits under any such instrument,
contract, lease, permit or other agreement or arrangement, including
performance by Purchaser as agent for Seller, if economically feasible,
provided that Purchaser shall pay or satisfy and shall indemnify and hold
Seller harmless from and against, any and all liabilities incurred as a
result of the enjoyment of such benefit to the extent Purchaser would have
been responsible therefor it such consent or approval had been obtained.
12.0 WARRANTY SERVICE. At Closing, Purchaser shall assume Seller's warranty
service obligations for all products manufactured and sold by the Business.
13.0 COLLECTION OF RECEIVABLES. From and after the Closing, Purchaser shall have
the right and authority to collect for its own account all accounts and
notes receivable (the "Purchased Receivables") and other items that are
included in the Purchased Assets and to endorse with the name of
47
Seller or the Company any checks or drafts received with respect to any
such Purchased Receivables, and Seller agrees promptly to deliver to
Purchaser any cash or other property received by it with respect to any
such Purchased Receivable, including any amounts paid as interest thereon.
14.0 FURTHER ASSURANCES. After the Closing and for no further consideration,
Seller shall (a) perform all acts (including without limitation, the use of
Seller's commercially reasonable efforts to enable Purchaser to accomplish
transfer registrations, permits, approvals, and the like as contemplated by
this Agreement), and (b) execute, acknowledge and deliver such assignments,
transfers, consents and other documents and instruments as Purchaser may
reasonably request, in each case, to vest in Purchaser or protect
Purchaser's right, title and interest in, and enjoyment of, the Purchased
Assets. Seller agrees to provide reasonable assistance to ensure a smooth
transition to Purchaser of all telecommunications arrangements currently
utilized by the Business, including Seller's K-II Telecommunications
arrangements.
15.0 CONDITIONS TO OBLIGATIONS OF THE PARTIES.
15.1 Conditions to Obligations of Each Party. The respective obligations of
Seller and Purchaser to consummate the transactions contemplated by this
Agreement are subject to the following conditions:
(a) No judgment, decree, ruling, injunction or other order of any court or
governmental authority shall have been issued and remain in effect
which prohibits, restrains, enjoins or otherwise restricts the
consummation of the transactions contemplated hereby. 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 (A) prevent consummation of any of the transactions contemplated
by this Agreement or any of the Seller Related Instruments, (B) cause
any of the transactions contemplated by this Agreement or the Seller
Related Instruments to be rescinded following consummation, or (C)
affect adversely the right of the Purchaser to own the Purchased
Assets or to operate the Business following the Closing in the same
manner as currently conducted by Seller.
48
(b) The parties will have received all necessary approvals and clearances,
or all applicable waiting periods will have expired or have been
waived, pursuant to the HSR Act.
15.2 Conditions Precedent to Purchaser's Obligations. All obligations of
Purchaser at the Closing are subject, at the option of Purchaser, to the
fulfillment of each of the following conditions at or prior to the Closing
Date (any one or more of which may be waived by Purchaser), and Seller
shall exert reasonable commercial efforts to cause each such condition to
be so fulfilled as soon as reasonably possible but no later than the
Closing Date:
(a) All representations and warranties of Seller contained herein or in
any document delivered pursuant hereto qualified as to materiality
shall be true and correct in all respects, and those not so qualified
shall be true and correct in all material respects, as of the date
when made and as of the Closing Date, as though such representations
and warranties were made at and as of the Closing Date; provided,
however, that, subject to the provisions of Section 7.0(c),
disclosures may be amended or supplemented to reflect events and
circumstances that occur between the date of this Agreement and the
Closing Date.
(b) All covenants, agreements and obligations required by the terms of
this Agreement to be performed by Seller at or before the Closing
shall have been duly and properly performed.
(c) There shall be delivered to Purchaser a certificate dated as of the
Closing Date by an executive officer of Seller reasonably satisfactory
in form and substance to Purchaser.
(d) Purchaser shall have received an opinion of Seller's counsel, dated as
of the Closing Date, reasonably satisfactory in form and substance to
Purchaser, as to certain matters reasonably requested by Purchaser.
(e) Seller shall have obtained and delivered to Purchaser written consents
to the transfer or assignment to the Purchaser of all agreements,
licenses, leases and other Contracts relating to the Business (other
than immaterial purchase and sales orders in the ordinary course of
business and any other items which are not, individually or in the
aggregate, material to the continued operation of the Business), or
shall have
49
arranged for Purchaser to enjoy the economic benefit of such
contracts. No such consent or approval (a) shall be conditioned on the
modification, cancellation or termination of any Contract, or (b)
shall impose on Purchaser or any of its Affiliates any material
condition or provision or requirement with respect to the Business or
its operation that is more restrictive than or different from the
conditions imposed upon such operation prior to Closing, unless
Purchaser gives its prior written approval.
(f) Seller shall have executed and delivered to Purchaser at the Closing
the Xxxx of Sale and Assignment, bargain and sale deeds with covenants
against grantor's acts in recordable form and otherwise reasonably
acceptable to Purchaser, and all other reasonable and customary
documents, certificates and agreements requested by Purchaser
necessary to transfer to Purchaser good, indefeasible, fee simple
title to the Purchased Assets, free and clear of any and all liens
thereon, except for Encumbrances permitted hereunder or pursuant to
liabilities expressly assumed by Purchaser pursuant to the Liabilities
Undertaking, and such other instruments, affidavits or documents as
Purchaser may reasonably request or as may be reasonably required by
Purchaser's title insurers.
(g) All corporate and other proceedings of Seller in connection with the
transactions contemplated by this Agreement, and all documents and
instruments incident to such corporate proceedings, shall be
reasonably satisfactory in form and substance to Purchaser and its
counsel.
(h) Since the date of this Agreement, there shall not have occurred any
material adverse change in the Business Condition of the Company.
(i) Purchaser shall have obtained a commitment for the issuance of
standard ALTA fee owner's title insurance policies from Chicago Title
Insurance Company (the "Title Policies"), in such amounts as the
Purchaser reasonably may determine is the fair market value of such
Real Property (including all improvements located thereon), insuring
that title to each parcel of the Real Property and improvements
thereon shall be good indefeasible, fee simple and free and clear of
all liens, assessments, restrictions, encumbrances, easements, leases,
tenancies, claims or rights of use or possession and other title
objections, except for
50
(i) utility and other easements that do not adversely affect the
intended use or value of the Real Property; and (ii) the standard
exceptions normally contained in an ALTA owners policy and any
exceptions that are standard in the states in which the Real Property
is located for all properties similarly used; provided, however, that
Seller, at Purchaser's request, shall provide such affidavits to the
title company or take such other actions as may be reasonably
requested that would enable the title company to remove any of such
standard exceptions. Purchaser shall also have obtained surveys of the
Real Property made by a registered land surveyor bearing a certificate
addressed to Purchaser and Purchaser's title insurance company, signed
by the surveyor, certifying that the survey was actually made on the
ground and that there are no encumbrances except as shown, and
complying with the minimum detail requirements for land title surveys
as adopted by the American Land Title Association. The survey shall
show, among other things, the following items (whether covered by the
minimum detail requirements specified above or not): (i) all courses
and distances of the boundaries and the legal description of the Real
Property; (ii) the location and dimensions of all improvements and
their relation to lot lines, set back and building line requirements
(whether such requirements are imposed by law, deed or plat); and
(iii) the location of all utilities, rights of way, water courses,
drains, sewers and easements, whether above or under ground. Purchaser
shall pay all premiums and other expenses relating to such survey and
title insurance policy commitment including, without limitation, the
title insurance premium.
(j) Seller shall have delivered to Purchaser audited balance sheets of the
Company as of December 31, 1995 and 1996 and the related audited
statements of operations, stockholders' equity and cash flows for each
of the years ended December 31, 1995 and 1996, and an audited balance
sheet as of September 30, 1997, and the related audited statements of
operations, stockholders, equity and cash flows for the nine-month
period ended September 30, 1997, prepared by the Company's independent
accountants, KPMG (the "Audited Financial Statements"). The Audited
Financial Statements shall be prepared from the books and records of
the Company in accordance with GAAP, consistently applied. Purchaser
acknowledges that the Audited Financial Statements shall have been
prepared at its request in order to satisfy Purchaser's reporting
51
requirements under the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, and agrees that
the Audited Financial Statements shall not be the basis for a claim
under this Agreement for any differences between the Audited Financial
Statements and the Historical Financial Statements.
Notwithstanding the foregoing, if all the conditions to each party's
obligation to consummate the transactions contemplated hereby have
been satisfied or waived other than delivery of the Audited Financial
Statements, then Purchaser will waive the condition that the Audited
Financial Statements be delivered prior to the Closing if Purchaser
receives reasonable assurances from KPMG that the Audited Financial
Statements will be completed within 45 days following the Closing Date
and if Seller deposits $3,000,000 of the Purchase Price (the
"Deposit") with First Union National Bank, as escrow agent, pursuant
to a mutually agreeable escrow agreement providing that the Deposit
will be delivered (i) to Seller if the Audited Financial Statements
are delivered to Purchaser no later than 60 days after the Closing
Date and (ii) to Purchaser if the Audited Financial Statements are not
delivered to Purchaser within 60 days after the Closing Date (it being
understood that Purchaser shall give KPMG full access to all records
necessary to prepare the Audited Financial Statements and the full
cooperation of Purchaser's employees). All interest earned on the
Deposit shall be delivered with the principal.
15.3 Conditions Precedent to Seller's Obligations. All obligations of Seller at
the Closing are subject, at the option of Seller, to the fulfillment of
each of the following conditions at or prior to the Closing Date (any one
or more of which may be waived by Seller), and Purchaser shall exert its
reasonable commercial efforts to cause each such condition to be so
fulfilled as soon as reasonably possible but no later than the Closing
Date:
(a) All representations and warranties of Purchaser contained herein or in
any document delivered pursuant hereto qualified as to materiality
shall be true and correct in all respects, and those not so qualified
shall be true and correct in all material respects, as of the date
when made and as of the Closing Date, as though such representations
and warranties were made at and as of the Closing Date; provided,
however, that disclosures may be amended or supplemented to reflect
52
events and circumstances that occur between the date of this Agreement
and the Closing Date.
(b) All covenants, agreements and obligations required by the terms of
this Agreement to be performed by Purchaser at or before the Closing
shall have been duly and properly performed.
(c) There shall be delivered to Seller a certificate executed by an
executive officer of Purchaser dated as of the Closing Date,
reasonably satisfactory in form and substance to Seller.
(d) Seller shall have received an opinion of legal counsel to Purchaser,
dated as of the Closing Date, reasonably satisfactory in form and
substance to Seller.
(e) All corporate and other proceedings of Purchaser in connection with
the transactions contemplated by this Agreement, and all documents and
instruments incident thereto shall be reasonably satisfactory in form
and substance to Seller and its counsel, and Seller and its counsel
shall have received all such documents and instruments, or copies
thereof (certified if requested) as they may reasonably request.
(f) Purchaser's parent, American Buildings Company, shall have executed
and delivered to Seller an unconditional guarantee of Purchaser's
obligations under this Agreement and all documents executed by
Purchaser in connection herewith (including without limitation the
Liabilities Undertaking), reasonably satisfactory in form and
substance to Seller.
16.0 INDEMNIFICATION.
16.1 Seller's Indemnification. Seller hereby agrees to indemnify and hold
Purchaser and its officers, directors, successors and assigns harmless
from, against and in respect of (and shall on demand reimburse Purchaser
for):
(a) any and all claims, costs, losses, liabilities, or damages
(collectively "Damages") suffered or incurred by Purchaser by reason
of any untrue representation, breach of warranty or non-fulfillment of
any covenant or agreement by Seller contained herein or in any
certificate, document or instrument delivered to Purchaser pursuant
hereto or in connection herewith;
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(b) any and all Damages suffered or incurred by Purchaser in respect of or
in connection with any liabilities or obligations of Seller not
expressly assumed by Purchaser pursuant to the terms of the
Liabilities Undertaking;
(c) any and all Damages suffered or incurred by Purchaser by reason of or
in connection with any claim for finder's fee or brokers or other
commission arising by reason of any services alleged to have been
rendered to or at the instance of Seller with respect to this
Agreement or any of the transactions contemplated hereby; and
(d) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
16.2 Purchaser's Indemnification. Purchaser hereby agrees to indemnify and hold
Seller and its officers, directors, successors and assigns harmless from,
against, and in respect of (and shall on demand reimburse Seller for):
(a) any and all Damages suffered or incurred by Seller by reason of any
untrue representation, breach of warranty or non-fulfillment of any
covenant or agreement by Purchaser contained herein or in any
certificate, document or instrument delivered to Seller pursuant
hereto or in connection herewith;
(b) any and all Damages suffered or incurred by Seller in respect of or in
connection with any liabilities or obligations expressly assumed by
Purchaser pursuant to the Liabilities Undertaking or arising by reason
of or in connection with the operation of the Business by Purchaser
subsequent to the Closing Date;
(c) any and all Damages suffered or incurred by Seller by reason of or in
connection with any claim for finder's fee or brokers or other
commission arising by reason of any services alleged to have been
rendered to or at the instance of Purchaser with respect to this
Agreement or any of the transactions contemplated hereby; and
(d) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses,
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including, without limitation, reasonable legal fees and expenses,
incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or oppose the imposition thereof, or in
enforcing this indemnity.
16.3 Limitations on Indemnification.
(a) Except as set forth in subsection (d) below, Seller shall not be
liable to indemnify Purchaser for Purchaser's Damages and Purchaser
shall not be liable to indemnify Seller for Seller's Damages, arising
from or relating to a breach of a representation or warranty set forth
in this Agreement unless the indemnified party notifies the
indemnifying party in writing of its claim or potential claim for
indemnification not later than the day which is eighteen (18) months
after the Closing Date, in which case survival shall continue (but
only with respect to, and to the extent of, such claim).
(b) The aggregate liability of the Seller to the Purchaser for
indemnification for breaches of representations and warranties
pursuant to Section 16.1(a) of this Agreement shall not exceed an
amount equal to 15% of the cash Purchase Price. Similarly, the
aggregate liability of the Purchaser to the Seller for indemnification
for breaches of representations and warranties pursuant to Section
16.2(a) of this Agreement shall not exceed an amount equal to 15% of
the cash Purchase Price.
(c) Neither the Seller nor the Purchaser shall be liable to indemnify the
other for its or their Damages for breaches of representations and
warranties pursuant to Sections 16.1(a) and 16.2(a), respectively,
until such time as the aggregate amount of otherwise indemnifiable
Damages exceeds an amount equal to 1% of the cash Purchase Price, and
thereafter the indemnification obligations of each party shall apply
to Damages in excess of such amount.
(d) All representations and warranties made herein shall survive the
Closing for a period of eighteen (18) months thereafter except for the
first sentence of Section 5.7, which shall survive indefinitely,
Section 5.12, which shall survive until the expiration of the
applicable statute of limitations, and Sections 5.20, 9.2 and 9.5(g),
which shall survive for five (5) years
55
after the Closing Date and, to the extent a claim is made, survival
shall continue past such period (but only with respect to, and to the
extent of, such claim). All indemnities and agreements contained
herein shall survive for the period expressly indicated or, if not so
indicated, indefinitely.
(e) Purchaser and Seller each acknowledge and agree that its sole and
exclusive remedy with respect to any and all claims relating to the
subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in Article 16.0; provided,
however, that the parties hereto shall be entitled to an injunction or
other equitable relief to prevent breaches of this Agreement, to
enforce specifically the terms and provisions of this Agreement or to
seek any other equitable remedy to which they are entitled.
16.4 Procedure for Third Party Claims.
(a) In order for a party (the "indemnified party") to be entitled to any
indemnification provided under this Agreement in respect of, arising
out of or involving a claim made by any Person (other than another
party to this Agreement) against the indemnified party where the
amount in dispute exceeds Ten Thousand Dollars ($10,000) (a "Third
Party Claim"), such indemnified party must notify the other party (the
"indemnifying party") in writing of the Third Party Claim within
fifteen (15) business days after receipt by such indemnified party of
written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party can
demonstrate actual monetary prejudice as a direct or indirect result
of such failure. Thereafter, the indemnified party shall deliver to
the indemnifying party, within five business days after the
indemnified party's receipt thereof, copies of all notices and
documents (including court papers) received by the indemnified party
relating to the Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with
counsel and other experts selected by the indemnifying party and
reasonably satisfactory to the indemnified party so long as (i)
the indemnifying party notifies the
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indemnified party in writing within 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 Damages 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, and (iv) the indemnifying party conducts the defense
of the Third Party Claim actively and diligently. Should the
indemnifying party so elect to assume the defense of a Third Party
Claim, the indemnifying party will not be liable to the indemnified
party for any legal expenses subsequently incurred by the indemnified
party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right
to participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the indemnifying
party, it being understood that the indemnifying party shall control
such defense. The indemnifying party shall be liable for the fees and
expense of counsel employed by the indemnified party for any period
during which the indemnifying party has not assumed the defense
thereof (other than after the 15 business day period described in
Section 16.4(a) if the indemnified party shall have failed to give
notice of the Third Party Claim) or if any of the conditions specified
in the first sentence of this Section 16.4(b) is or becomes
unsatisfied. If the indemnifying party chooses to defend or prosecute
a Third Party Claim, all the parties hereto shall cooperate in the
defense or prosecution thereof. Such cooperation shall include the
retention and (upon the indemnifying party's request) the provision to
the indemnifying party of records and information that are reasonably
relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. If the indemnifying
party chooses to defend or prosecute any Third Party Claim, the
indemnified party will consent to any settlement, compromise or
discharge of such Third Party Claim that the indemnifying party may
recommend and that by its terms
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obligates the indemnifying party to pay the full amount of the
liability in connection with such Third Party Claim and does not
otherwise impose any material restriction on the indemnified party's
conduct of its business. In the event the indemnified party does not
desire for the indemnifying party to settle a Third Party Claim solely
for monetary damages agreeable to the Third Party, then the
indemnified party shall have the option of continuing to defend such
claim, but the liability of the indemnifying party shall be capped at
the amount of the proposed settlement that was agreeable to the Third
Party. If the indemnifying party shall have assumed the defense of a
Third Party Claim, the indemnified party shall not admit any liability
with respect to, or settle, compromise or discharge, such Third Party
Claim without the indemnifying party's prior written consent, which
shall not be unreasonably withheld or delayed.
(c) With respect to any claim by any Person against an indemnified party
where the amount in dispute is equal to or less than Ten Thousand
Dollars ($10,000) ("Small Claim"), then the foregoing provisions of
this Section 16.4 shall not apply, and the indemnified party may
investigate and defend such Small Claim without the assistance of the
indemnifying party; provided that the indemnifying party shall have no
liability for indemnification under this Article 16.0 with respect to
the settlement of such Small Claim unless the indemnifying party shall
have consented in writing to such settlement, which consent shall not
be unreasonably withheld or delayed. Failure by the indemnifying party
to consent or object to the proposed settlement of a Small Claim
within seven (7) business days after being requested for its consent
by the indemnified party shall be deemed to constitute its consent to
such settlement.
17.0 OTHER PROPOSALS. Between the date of this Agreement and Closing, Seller
will not, and will use reasonable commercial efforts to ensure that its
directors, officers, employees and advisers do not, institute, pursue, or
enter into any discussions, negotiations or agreements (preliminary or
definitive) contemplating or providing for, or furnish any information with
respect to, any merger, acquisition, purchase or sale involving any of the
Purchased Assets or any business that is part of the Business, or other
business combination or change in control of Seller that would in any way
impact a sale of the Business to Purchaser, with any person or entity other
than Purchaser or its affiliates. In
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the event Seller or any of its directors, officers, employees or advisors
receives any offer or proposal to enter into any such negotiations or other
communication with a party other than Purchaser prior to the closing,
Seller will provide prompt notice of the same to Purchaser. Nothing in this
section shall be construed to prohibit any party from seeking injunctive or
other equitable relief or damages for breach of contract or other lawful
termination pursuant to applicable law.
18.0 ARBITRATION.
(a) Any dispute, controversy or claim arising out of or in connection with
or relating to this Agreement, any breach or alleged breach hereof, or
the transaction contemplated hereby, shall be resolved and settled by
arbitration pursuant to the rules then in effect of the American
Arbitration Association, provided, however, that in the event the
dispute is pursuant to (i) Section 3.2 or Section 9.4(a) of this
Agreement the arbitration shall be conducted by an accounting expert
acceptable to both parties as set forth in subsection (b) below or
(ii) Section 9.5, the dispute shall be resolved as set forth in such
section. The arbitration shall be held at a mutually agreeable
location; provided, if the parties cannot agree on a location, the
arbitration shall be held in Charlotte, North Carolina if Purchaser
initiates the proceeding and in Atlanta, Georgia if Seller initiates
the proceeding.
(b) (i) In the event arbitration is required pursuant to Section 3.2 or
Section 9.4(a) of this Agreement in order to resolve disputes arising
with respect to the Closing Date Balance Sheet or to quantify
post-Closing adjustments, and only in either or both such events, the
parties shall agree on an accounting expert to arbitrate the dispute,
or if the parties are unable to reach agreement on an arbiter, the
partner-in-charge of Seller's account at KPMG in Charlotte and the
partner-in-charge of Purchaser's (or an affiliate of Purchaser's)
account at Xxxxxx Xxxxxxxx LLP in Atlanta (or in each case a
succeeding firm of auditors for such corporation) shall be instructed
by the parties to, and shall, together select an arbiter who is a
certified public accountant of recognized standing and who they
believe, in their joint discretion, is capable of arbitrating the
financial issues presented.
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(ii) Once an arbiter is selected and appointed, Seller and Purchaser
shall request that such arbiter resolve the matters in dispute
concerning the Closing Date Balance Sheet within sixty (60) days
after submission, in accordance with the procedures determined
appropriate by the arbiter and the provisions of Section 3.2 of
this Agreement. The arbiter's decision shall be rendered to the
parties in writing, and the parties shall, upon receipt thereof,
settle amounts due promptly after receipt of the arbiter's
decision.
(iii) The fees and disbursements of such arbiter shall be allocated
equally between Seller and Purchaser unless the arbiter
determines that the position of one of the parties on any
disputed issue was not supportable in good faith, in which case
the arbiter will allocate its fees and expenses to the parties
based on its view of the merits of the positions taken. Such
allocation shall be final and binding on the parties.
(iv) In the event the arbiter determines that legal issues are
presented by the dispute as to which the arbiter has no expertise
(e.g. statute of frauds, validity and construction of documents,
etc.), the arbiter shall submit such issues back to the parties,
who shall submit them to arbitration pursuant to subsection (a)
hereof.
(c) The expense of arbitration shall be borne equally by the parties to
the arbitration and each party shall bear and pay for the cost of its
own experts, witnesses, evidence, counsel and other costs in
connection with the preparation and presentation of its case;
provided, however, in the event either party alleges fraud or that the
position of the other party is not supportable in good faith, and the
arbiter finds that such fraud or bad faith exists, the arbiter shall
be free to award costs in such arbiter's discretion. The resolution of
the arbitration pursuant to subsection (a) or (b) shall be final and
binding on the parties hereto and enforceable inn a court of competent
jurisdiction. Any arbitration pursuant to subsection (b) shall be
governed by such procedural rules as shall be set by the arbiter. The
parties hereto hereby irrevocably submit to the nonexclusive
jurisdiction of the United States District Court for the Western
60
District of North Carolina for the purpose of enforcing any
arbitration award.
19.0 COVENANT NOT TO COMPETE; NONSOLICITATION OF EMPLOYEES. For a period of five
(5) years from and after the Closing Date, Seller will not engage directly
or indirectly in the manufacture and sale of residential garage doors in
North America; provided, however, that ownership of less than 1% of the
outstanding stock of any publicly traded corporation shall not be deemed to
be a violation of this Article 19.0. In addition, without the prior consent
of Purchaser, Seller will not for a period of one year after the Closing
Date, directly or indirectly, induce or solicit (or authorize or assist in
the taking of any such actions by any third party) any employee or
consultant of the Company to leave his or her business association with the
Purchaser. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Article 19.0 is invalid or
unenforceable, Seller and Purchaser agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as
so modified after the expiration of the time within which the judgment may
be appealed.
20.0 TAX MATTERS.
(a) Any agreement between the Seller and the Company regarding allocation
or payment of taxes or amounts in lieu of taxes shall be deemed
terminated at and as of the Closing.
(b) Seller will be responsible for the preparation and filing of all tax
returns for the Seller for all periods as to which tax returns are due
after the Closing Date (including the consolidated, unitary and
combined tax returns for the Seller which include the operations of
the Company for any period ending on or before the Closing Date).
Seller will make all payments required with respect to any such tax
return.
(c) Purchaser will be responsible for the preparation and filing of all
tax returns for the Company for all periods as to which tax returns
are due after the Closing Date (other than for taxes with respect to
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periods for which the consolidated, unitary and combined tax returns
of the Seller will include the operations of the Company). The
Purchaser will make all payments required with respect to any such tax
return; provided, however, that the Seller will reimburse the
Purchaser concurrently, therewith to the extent any payment the
Purchaser is making relates to the operations of the Company for any
period ending on or before the Closing Date.
21.1 NOTICES. Any and all notices or other communications required or permitted
to be given under any of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given when personally
delivered or sent by telecopy, receipt of which is confirmed, and mailed by
reputable overnight courier or first class registered or certified mail,
return receipt requested, addressed to the other party at the address set
forth below (or at such other address as a party may specify by notice to
the other party):
To Seller:
United Dominion Industries, Inc.
2300 One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Facsimile: 704/347-6915
Attention: Legal Department
To Purchaser:
c/o American Building Company
0000 Xxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
Facsimile: 000-000-0000
Attention: President
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx Xxxxxx, Esq.
22.0 BULK SALES COMPLIANCE. Purchaser hereby waives compliance by Seller with
the provisions of the bulk sales laws of any state, and Seller warrants and
agrees to pay and discharge when due all claims of creditors that could be
asserted against Purchaser by reason of such non-compliance to the extent
such liabilities are not specifically assumed by
62
Purchaser pursuant to the Liabilities Undertaking described in Article 2.0
hereof. Seller hereby agrees to indemnify and hold Purchaser harmless from,
against and in respect of (and shall on demand reimburse Purchaser for) any
loss, liability, cost or expense, including without limitation attorneys'
fees, suffered or incurred by Purchaser by reason of the failure of Seller
to pay or discharge any such claim.
23.0 TERMINATION. Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated and the transactions provided for herein
abandoned at any time prior to the Closing Date (unless otherwise agreed to
by the parties hereto):
(a) by mutual consent of Purchaser and Seller; or
(b) by Purchaser if any of the conditions set forth in Section 15.1 or
15.2 hereof (i) shall not have been fulfilled on or prior to December
15, 1997 (unless otherwise extended by the parties hereto), or (ii)
shall have become incapable of fulfillment, and shall not have been
waived; or
(c) by Seller if any of the conditions set forth in Section 15.1 or 15.3
hereof (i) shall not have been fulfilled on or prior to December 15,
1997 (unless otherwise extended by the parties hereto), or (ii) shall
have become incapable of fulfillment, and shall not have been waived;
or
(d) by Purchaser if Seller amends or supplements the DISCLOSURE SCHEDULE
in accordance with Section 7.0(c) hereof and such amendment or
supplement includes an item or matter that is, or in aggregate with
items or matters previously disclosed pursuant to any amendment or
supplement is, material and adverse to the Business, the Purchased
Assets, or the ability of Purchaser to operate the Business as
previously conducted by Seller; provided, that the Purchaser must
notify Seller in writing that it is terminating this Agreement
pursuant to this Section within five business days after receipt of
such amendment or supplement or it shall be deemed to have waived its
right to terminate with respect to such amendment or supplement. Any
such waiver shall not limit Purchaser's right to terminate this
Agreement pursuant to this Section as a result of any further
amendment or supplement to the DISCLOSURE SCHEDULE that includes an
item or matter that is, or in aggregate with items or matters
previously disclosed pursuant to any amendment or supplement is,
material or adverse to
63
the Business, the Purchased Assets, or the ability of Purchaser to
operate the Business as previously conducted by Seller; or
(e) by Purchaser if Seller withholds its consent to Phase II environmental
testing in accordance with Section 8.1 hereof, despite a reasonable
basis for such testing as set forth therein.
provided, however, that no party may seek termination pursuant to (b)
or (c) above if such party is in material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement. Upon termination of this Agreement pursuant to this Article
23.0, this Agreement shall become null and void and of no further force and
effect, provided, however, that nothing in this Article 23.0 shall be
deemed to release any part from any liability for any breach by such party
of the terms and provisions of this Agreement.
24.0 MISCELLANEOUS.
24.1 Entire Agreement; Modification. The confidentiality agreement dated August
28, 1997 and this Agreement, including all Schedules and Exhibits hereto,
constitute the entire agreement of the parties with respect to the subject
matter hereof and may not be modified, amended or terminated except by
written agreement specifically referring to this Agreement and signed by
each party hereto.
24.2 Waiver. No waiver of any breach or default hereunder shall be considered
valid unless in writing and signed by the party giving such waiver, and no
such waiver shall be deemed a waiver of any subsequent breach or default of
the same or similar nature.
24.3 Binding Effect, Transfer. This Agreement shall be binding upon and inure to
the benefit of each party hereto and its respective successors and assigns.
This Agreement shall not be assigned by either party without the prior
written consent of the other; provided, however, that Purchaser may assign
its rights hereunder to a wholly-owned subsidiary of Purchaser, but no such
assignment shall relieve Purchaser of any of its duties or obligations
hereunder.
24.4 Numbers and Headings. The article, section and paragraph numbers and
headings contained herein are for the purpose of reference and convenience
only and are not intended to define or limit the contents of said
paragraphs or sections.
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References to an article shall refer to all sections under that article.
24.5 Exhibits and Schedules. The Exhibits and Schedules referred to herein are
hereby incorporated by reference as if set out herein in full and form an
integral part of this Agreement.
24.6 Further Actions. Each party hereto shall cooperate and shall take such
further action and shall execute and deliver such further documents as may
be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
24.7 Transaction Taxes; Transfer and Recording Fees; Prorations. Seller and
Purchaser shall divide and pay, with Seller paying half and Purchaser
paying half, all sales, use, stamp, value-added, transfer, recording and
other similar taxes (other than income taxes) and any transfer or recording
fees or other similar costs incurred or assessed (including interest and
penalties, if any) in connection with the sale or transfer of the Purchased
Assets or the transactions contemplated by this Agreement.
The following items shall be apportioned between the parties as of 11:59
p.m. of the day immediately preceding the Closing:
1. Taxes. General real estate taxes and special assessments required to
be paid shall be prorated as of the Closing on the basis of the actual
amount of the most recent tax xxxx. If any special assessment is
payable in installments, Purchaser and Seller will only adjust for
such special assessment on the basis of the minimum payment due on
such special assessment for the tax year in which the Closing occurs.
2. Utility and Fuel Charges. Seller shall cause all water, electricity,
gas and other utility meters to be read on the day preceding the
Closing, or as close thereto as may be possible, and shall pay all
bills rendered as a result of such readings. The cost of such
utilities for the period, if any, between the date of the meter
reading and the Closing shall be adjusted on the basis of the most
recently issued xxxx therefor.
3. Other Items of Expense or Receipt. All other customarily prorated
items of expense or receipt for properties similar to the Real
Property shall be prorated between Purchaser and Seller as of the
Closing Date.
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24.8 Counterparts. This Agreement may be executed in one or more counterparts
(including by facsimile transmission), all of which taken together shall
be deemed one original.
24.9 Expenses. Subject to Sections 18.0 and 24.7 of this Agreement, Purchaser
shall bear the expenses, costs and fees incurred by it and Seller shall
bear the expenses, costs and fees incurred by it in connection with the
transactions contemplated hereby, including the preparation and execution
of the Agreement and compliance herewith, whether or not the transactions
shall be consummated. Purchaser shall pay the filing fee required by the
HSR Act and, at Closing, shall receive a credit against the Purchase
Price for one-half of such fee.
24.10 Validity of Provisions. If any provision of this Agreement or any
agreement referenced herein shall be held or deemed to be or shall, in
fact, be inoperative or unenforceable as applied in any particular case
because it conflicts with any other provision or provisions hereof or any
constitution, statute, rule of public policy, or for any other reason,
such circumstances shall not have the effect of rendering the provision
in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to any extent whatsoever.
The invalidity of any one or more phrases, sentences, clauses, sections,
or subsections of this Agreement or any other agreements referenced
herein shall not affect the remaining portions thereof; provided,
however, that in the event the terms and conditions of this Agreement are
materially altered as a result of this section, the parties will
renegotiate the terms and conditions of this Agreement to resolve any
inequities.
24.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
made and to be performed therein.
24.12 Risk of Loss. The risk of any loss, damage, impairment, confiscation or
condemnation of the Purchased Assets, or any part thereof, shall be upon
the Seller at all times prior to the Closing Date. Beginning on the
Closing Date, any such risk relating to the Purchased Assets, or any part
thereof, shall be and remain at the risk of the Purchaser.
24.13 Publicity. So long as this Agreement is in effect, neither Seller nor
Purchaser shall issue or cause the publication of
66
any press release or other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the
other party, such consent not to be unreasonably withheld or delayed,
unless advised by counsel that disclosure may be required by applicable
law, in which case such party may disclose to the extent it reasonably
concludes disclosure is required only after providing reasonable prior
notice to the other party and an opportunity to review and comment on the
proposed disclosure.
24.14 Time is of the Essence. The parties hereto agree that in the performance
of this Agreement time shall be of the essence, it being understood and
agreed that the sole remedy with respect to this Section 24.14 shall be
termination of this Agreement pursuant to Section 23.0; provided, that
the foregoing shall not limit any right or remedy that either party may
otherwise have under any other section of this Agreement for breach of
this Agreement.
24.15 Certain Understandings. Purchaser acknowledges that neither Seller nor
any other Person have made any representations or warranties, express or
implied, as to the accuracy or completeness of any information regarding
the Company not included in this Agreement or the Exhibits or Schedules
hereto or provided to Purchaser pursuant to this Agreement, and neither
Seller nor any other Person will be subject to any liability to Purchaser
or any other Person resulting from the distribution to Purchaser, or
Purchaser's use of, any such information.
24.16 Third Party Beneficiaries. This Agreement is not intended, and shall not
be deemed, to confer upon or give any Person except Purchaser and Seller
and their respective successors and permitted assigns any remedy, claim,
liability, reimbursement, cause of action or other right under or by
reason of this Agreement.
24.17 XxXxx Sale. Seller and Purchaser acknowledge that Seller may consummate
the sale of certain assets which formerly comprised the XxXxx Door
operation in Aurora, Illinois, and that in the event such assets are sold
prior to Closing, said assets shall not be Purchased Assets and any
liabilities associated therewith shall not be Assumed Liabilities.
24.18 Future Business. Seller will encourage its businesses to continue to do
business with the Purchaser after the Closing; provided, Purchaser
acknowledges that this Section shall not be deemed to create any legal
obligation for
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Seller or any of its affiliates to do business with the Purchaser after
the Closing.
25.0 CERTAIN DEFINITIONS. The following terms used in this Agreement have the
definitions set forth in this Section 25.0 or in the indicated Section of
this Agreement unless otherwise clearly indicated:
(1) "Agreement" is this Agreement of Purchase and Sale of Assets by
and between Seller and Purchaser.
(2) "Assumed Liabilities" is defined in Article 2.0 of this Agreement.
(3) "Audited Financial Statements" is defined in Section 15.2(j) of
this Agreement.
(4) "Aurora Plant Lease" is defined in Section 1.1(m) of this
Agreement.
(5) "Benefit Arrangement" is defined in Section 9.1 of this Agreement.
(6) "Bonds" is defined in Section 5.22 of this Agreement.
(7) "Business" is defined in Background Statement A to this Agreement.
(8) "Business Condition of the Company" is defined in Section 5.1 of
this Agreement.
(9) "CERCLA" is defined in Section 5.20(c) of this Agreement.
(10) "Closing" is defined as the closing of the sale of the Purchased
Assets pursuant to this Agreement.
(11) "Closing Date" is the day on which the Closing shall take place.
(12) "Closing Date Balance Sheet" is defined in Section 3.2(c) of this
Agreement.
(13) "Code" is defined in Article 4.0 of this Agreement.
(14) "Company" is defined in Background Statement A to this Agreement.
(15) "Components Plant Lease" is defined in Section 1.1(m) of this
Agreement.
68
(16) "Contaminated Site List" is defined in Section 5.20(c) of this
Agreement.
(17) "Contract" is defined in Section 5.13(b) of this Agreement.
(18) "Damages" is defined in Section 16.1 of this Agreement.
(19) "DISCLOSURE SCHEDULE" is the schedule of disclosures attached to
this Agreement. The DISCLOSURE SCHEDULE will be arranged in
Sections corresponding to the Sections of this Agreement.
(20) "Employee Plan" is defined in Section 9.1 of this Agreement.
(21) "Employment Loss" is defined in Section 9.15 of this Agreement.
(22) "Encumbrances" is defined in Section 1.3 of this Agreement.
(23) "Environmental Conditions" is defined in Section 5.20(c) of this
Agreement.
(24) "Environmental Laws" is defined in Section 5.20(c) of this
Agreement.
(25) "Environmental Liabilities" is defined in Section 5.20(c) of this
Agreement.
(26) "Environmental Remediation Costs" is defined in Section 5.20(c) of
this Agreement.
(27) "ERISA" is defined in Section 9.1 of this Agreement.
(28) "ERISA Affiliate" is defined in Section 9.1 of this Agreement.
(29) "Excluded Assets" is defined in Section l.2 of this Agreement.
(30) "Excluded Liabilities" is defined in Article 2.0 of this
Agreement.
(31) "GAAP" is defined in Section 3.2(c) of this Agreement.
(32) "Hazardous Materials" is defined in Section 5.20(c) of this
Agreement.
69
(33) "Historical Financial Statements" is defined in Section 5.3 of
this Agreement.
(34) "HSR Act" is defined in Section 5.2 of this Agreement.
(35) The terms "indemnified party" and "indemnifying party" are defined
in Section 16.4(a) of this Agreement.
(36) "Intellectual Property" is defined in Section 1.1(i) of this
Agreement.
(37) "Inventories" is defined in Section 1.1(b) of this Agreement.
(38) "Know-How" is defined in Section 1.1(j) of this Agreement.
(39) "Liabilities Undertaking" is the undertaking to be executed by
Purchaser, the form of which is attached to this Agreement as
EXHIBIT 2.0.
(40) "Material Adverse Effect" is defined in Section 5.1 of this
Agreement.
(41) "Net Operating Working Capital" is defined in Section 3.2(b) of
this Agreement.
(42) "Offer" is defined in Section 5.13(b) of this Agreement.
(43) "PBGC" is defined in Section 9.1 of this Agreement.
(44) "Person" is defined to include all natural persons,
proprietorships, corporations, partnerships, and any and all other
entities or organizations, whether incorporated or not.
(45) "Product Liability" is defined in Section 5.24 of this Agreement.
(46) "Purchase Price" is defined in Section 3.2(a) of this Agreement.
(47) "Purchased Assets" is defined in Section 1.1 of this Agreement.
(48) "Purchased Receivables" is defined in Article 13.0 of this
Agreement.
70
(49) "Purchaser" is defined in the introductory sentence to this
Agreement.
(50) "Real Property" is defined in Section 1.1(a) of this Agreement.
(51) "Release" is defined in Section 5.20(c) of this Agreement.
(52) "Seller" is defined in the introductory sentence to this
Agreement.
(53) "Seller Related Instruments" is defined in Section 5.2 of this
Agreement.
(54) "Seller's Knowledge" is defined in Section 5.28 of this Agreement.
(55) "September 30 Balance Sheet" is defined in Section 5.7 of this
Agreement.
(56) "Small Claim" is defined in Section 16.4(c) of this Agreement.
(57) "Third Party Claim" is defined in Section 16.4(a) of this
Agreement.
(58) "Title Policies" is defined in Section 15.2(i) of this Agreement.
(59) "Transferred Employee" is defined in Section 9.3 of this
Agreement.
(60) "Unions" and "Union Contracts" are defined in Section 9.14 of this
Agreement.
(61) "WARN" is defined in Section 9.15 of this Agreement.
(Signatures on next page)
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PURCHASER
WINDSOR DOOR, INC.
By: /s/ XXXXXX XXXXXXXX
------------------------------
Its: Chief Executive Officer
-----------------------------
and
By: /s/ XXXXXXX XXXXXXXX
------------------------------
Its: Executive Vice President CFO
-----------------------------
SELLER:
UNITED DOMINION INDUSTRIES, INC.
By: /s/ XXXX CHILDRESS
------------------------------
Its: Vice President
-----------------------------
and
By: /s/ XXXX XXXXX
------------------------------
Its Vice President & Secretary
-----------------------------
WCGD, INC.
By: /s/ XXXX XXXXX
------------------------------
Its: Vice President
-----------------------------
and
By: /s/ X.X. XXXXXXXX
------------------------------
Its: Secretary
-----------------------------
72
EXHIBIT 1.1(a)
The Real Property consists of Seller's facilities located
at:
o 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx
o 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxx
EXHIBIT 1.3
XXXX OF SALE AND ASSIGNMENT
THIS XXXX OF SALE AND ASSIGNMENT, dated as of November ___ 1997, is made
by UNITED DOMINION INDUSTRIES, INC., a Delaware corporation ("United Dominion")
and WCGD, INC., a Canadian corporation ("WCGD") (United Dominion and WCGD are
hereinafter collectively, the "Seller") in favor of WINDSOR DOOR, INC., a
Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have entered into an Agreement of Purchase
and Sale of Assets dated as of October ___, 1997 (the "Agreement"), which
provides for the sale, transfer assignment and delivery by the Seller of all
right, title and interest in and to the Purchased Assets (as defined in the
Agreement) relating to or used or held for use primarily in connection with the
Business (as defined in the Agreement);
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller hereby sells, assigns, transfers and delivers to the
Purchaser all right, title and interest ~n and to the Purchased Assets, to have
and to hold to the Purchaser, its successors and assigns, forever.
This Xxxx of Sale and Assignment shall be binding upon, and shall inure to
the benefit of, the Purchaser, the Seller, and each of their respective
successors and assigns and shall be subject to the terms and conditions of the
Agreement. In the event of a conflict between any of the terms and provisions
hereof and the Agreement, the Agreement shall be deemed to control.
Seller hereby convenants and agrees, pursuant to Article 14.0 of the
Agreement, to execute and deliver all such other instruments and all such other
notices, releases, acquittances, consents and powers of attorney as may be
necessary more fully to sell, transfer, convey and assign to Purchaser, or its
successors and assigns, all of Sellers right, title and interest in and to the
Purchased Assets therein and hereby sold, transferred, conveyed and assigned to
Purchaser, and to take or cause to be taken such additional acts or things as
Purchaser may reasonably request in order to vest in Purchaser all right, title
and interest in and to the Purchased Assets; and in the case of conflict, such
specific instrument shall control with respect to the Purchased Assets sold,
transferred, conveyed or assigned thereby.
Seller hereby further convenants and agrees that in the event Purchaser
shall acquire title to any of the Purchased Assets subject to any Encumbrance,
other than those expressly permitted by the Agreement, Seller shall promptly
cause such Encumbrance to be terminated, released or otherwise discharged.
This Xxxx of Sale and Assignment, and the rights and obligations of the
parties hereunder, shall be governed by and construed in accordance with the
laws of the State of Delaware.
IN WITNESS WHEREOF, the Seller has caused this Xxxx of Sale and Assignment
to be executed by its duly authorized officers as of the day and year first
above written.
UNITED DOMINION INDUSTRIES, INC.
By:_________________________
Its: _______________________
and
By:_________________________
Its: _______________________
WCGD, INC.
By:_________________________
Its: _______________________
and
By:_________________________
Its: _______________________
2
EXHIBIT 2.0
LIABILITIES UNDERTAKING
This LIABILITIES UNDERTAKING dated as of ____________, 1997 by WINDSOR
DOOR, INC., a Delaware corporation (the "Purchaser") in favor of UNITED DOMINION
INDUSTRIES, INC., a Delaware corporation and WCG~, INC., a Canadian corporation
(collectively, the "Seller')
BACKGROUND STATEMENT
A. Pursuant to an Agreement of Purchase and Sale of Assets dated as of
October __, 1997 by and between Purchaser and Seller, (the "Agreement"),
Seller has concurrently herewith sold, assigned, transferred, conveyed and
delivered to Purchaser the Purchased Assets, and Purchaser has assumed and
agreed to pay, honor, perform and discharge all of the liabilities of
Seller relating to the Business specifically enumerated herein.
B. In partial consideration therefor, the Agreement requires Purchaser to
execute and deliver to Seller this Undertaking.
STATEMENT OF UNDERTAKING
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt by Purchaser of which is hereby
acknowledged, Purchaser hereby agrees as follows:
1. Capitalized terms shall have the same meanings as defined in the Agreement
except as otherwise provided herein.
2. Purchaser hereby undertakes, assumes and agrees, subject to the exceptions
and limitations contained herein, on the Closing Date, to pay, honor,
perform and discharge the following liabilities of Seller relating to the
Business:
(a) all unperformed and unfulfilled obligations that are required to be
performed and fulfilled by Seller on behalf of the Business under the
terms of all (i) contracts, agreements, leases and licenses included
in the Purchased Assets that are listed in the Disclosure Schedule
referred to in the Agreement and assigned to Purchaser or that are not
by the terms thereof required to be so listed and that, in all cases,
conform to the representations and warranties with respect thereto
contained in the Agreement (including without limitation the
employment protection agreements with management of the Business who
are Transferred Employees, but excluding the sales incentive for
Messrs. Xxxxx and Xxxxxx), and (ii) contracts, agreements, leases and
licenses that have been entered into by Seller on behalf of the
Business on or after the date of the Agreement and prior to the
Closing Date not in violation of the Agreement;
(b) all liabilities and obligations of the Business reflected on the
Closing Date Balance Sheet;
(c) except to the extent provided in Article 9.0 of the Agreement, all
liabilities and obligations to pay claims submitted for medical
services rendered to Transferred Employees on or after the Closing
Date;
(d) all liabilities and obligations resulting from governmental
compliance, enforcement or regulatory action, suit or claim by any
Person or entity based upon an actual or alleged failure of the
Business to comply on or after the Closing Date with, or an actual or
alleged violation by the Business on or after the Closing Date of, any
law, rule, regulation, statute, ordinance, permit, permit requirement,
judgment, injunction, order, decree, license or other governmental
authorization or approval applicable to the Business or the Purchased
Assets;
(e) all liabilities and obligations resulting from personal injury,
property damage or products liability claims (including, without
limitation, negligence, gross negligence, strict liability, implied
warranty and Restatement of Torts Second Section 402A claims and
derivative claims such as loss of consortium, contribution and
wrongful death claims) involving products of the Business shipped or
services performed on or after the Closing Date;
(f) all liabilities and obligations for warranty claims involving products
of the Business, whenever manufactured or shipped, whether for repair
or replacement of product or money damages; and
(g) all other liabilities and obligations arising from the operation of
the Business on or after the Closing Date.
3. Other than expressly set forth in this Liabilities Undertaking or the
Agreement, Purchaser assumes no liability or obligation of any kind,
character or description of Seller or any other Person. Without limiting
the foregoing, except as otherwise provided expressly in this Liabilities
Undertaking or the Agreement, Purchaser is not assuming any liabilities or
obligations arising out of the conduct of the Business prior to the Closing
Date, whether or not such liability or obligation was known on or prior to
the Closing Date and whether or not listed on the Disclosure Schedule,
including without limitation liabilities resulting from violation of any
law, Environmental Liabilities, liabilities for taxes an liabilities or
obligations arising out of any breach by Seller of any provision of any
agreement, contract, commitment or lease included in the Purchased Assets.
4. The assumption by Purchaser of the liabilities and obligations set forth in
this Liabilities Undertaking shall not be deemed to be a waiver of any
rights, claims or remedies that Purchaser may have under the Agreement for
breach of Seller's representations or warranties.
IN WITNESS WHEREOF, the undersigned has executed this Liabilities
Undertaking as of the date and year first above written.
WINDSOR DOOR, INC.
By:______________________________
Its: ____________________________
