Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4 Registration of Securities Issued in a 226 1.17M
Business-Combination Transaction
2: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 8 32K
Liquidation or Succession
3: EX-3.1 Articles of Incorporation/Organization or By-Laws 9 40K
4: EX-3.2 Articles of Incorporation/Organization or By-Laws 1 15K
5: EX-3.3 Articles of Incorporation/Organization or By-Laws 16 62K
6: EX-4.1 Instrument Defining the Rights of Security Holders 101 472K
7: EX-4.5 Instrument Defining the Rights of Security Holders 6 26K
8: EX-10.1 Material Contract 46 184K
13: EX-10.10 Material Contract 1 18K
14: EX-10.11 Material Contract 1 18K
15: EX-10.12 Material Contract 3 24K
16: EX-10.13 Material Contract 18 66K
17: EX-10.14 Material Contract 2± 18K
18: EX-10.15 Material Contract 1 18K
19: EX-10.16 Material Contract 3 24K
20: EX-10.17 Material Contract 20 90K
21: EX-10.18 Material Contract 12 61K
22: EX-10.19 Material Contract 19 82K
9: EX-10.2 Material Contract 11 43K
23: EX-10.20 Material Contract 16 78K
24: EX-10.21 Material Contract 5 27K
25: EX-10.22 Material Contract 1 15K
26: EX-10.23 Material Contract 17 81K
27: EX-10.24 Material Contract 13 61K
28: EX-10.25 Material Contract 6 30K
29: EX-10.26 Material Contract 4 25K
30: EX-10.27 Material Contract 5 25K
31: EX-10.28 Material Contract 22 70K
32: EX-10.29 Material Contract 10 42K
33: EX-10.30 Material Contract 15 52K
34: EX-10.33 Material Contract 6 37K
35: EX-10.34 Material Contract 2 20K
36: EX-10.35 Material Contract 46 179K
37: EX-10.36 Material Contract 3 19K
38: EX-10.37 Material Contract 3 18K
39: EX-10.38 Material Contract 13 35K
40: EX-10.47 Material Contract 16 59K
41: EX-10.51 Material Contract 13 59K
42: EX-10.52 Material Contract 13 59K
43: EX-10.53 Material Contract 18 57K
44: EX-10.54 Material Contract 13 59K
45: EX-10.55 Material Contract 16 61K
46: EX-10.56 Material Contract 13 59K
47: EX-10.57 Material Contract 13 59K
48: EX-10.58 Material Contract 13 59K
49: EX-10.59 Material Contract 14 58K
50: EX-10.60 Material Contract 16 60K
51: EX-10.61 Material Contract 14 56K
52: EX-10.62 Material Contract 15 58K
53: EX-10.63 Material Contract 14 56K
54: EX-10.64 Material Contract 14 58K
10: EX-10.7 Material Contract 63 253K
11: EX-10.8 Material Contract 48 217K
12: EX-10.9 Material Contract 16 64K
55: EX-12.1 Statement re: Computation of Ratios 2± 18K
56: EX-21.1 Subsidiaries of the Registrant 1 15K
57: EX-23.1 Consent of Experts or Counsel 1 15K
58: EX-25.1 Statement re: Eligibility of Trustee 8 37K
Exhibit 10.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ATRIUM COMPANIES, INC., AS SELLER
AND
WOODGRAIN MILLWORK, INC., AS BUYER
AUGUST 30, 2000
TABLE OF CONTENTS
PAGE
Article 1 - Definitions......................................................1
1.1 Definitions................................................1
1.2 Other Definitional Matters.................................9
Article 2 - Purchase and Sale of Assets.....................................10
2.1 Purchased Assets..........................................10
2.2 Excluded Assets...........................................10
2.3 Excluded Liabilities......................................10
2.4 Assumed Liabilities.......................................11
Article 3 - Consideration...................................................12
3.1 Purchase Price............................................12
3.2 Purchase Price Allocation.................................12
3.3 Inventory Adjustment......................................13
3.4 Accounts Receivable.......................................13
3.5 Vacation Liability........................................14
3.6 Home Depot Adjustment.....................................14
3.7 Warranty Claims...........................................14
Article 4 - Representations and Warranties of the Seller....................14
4.1 Corporate Organization....................................15
4.2 Authority.................................................15
4.3 Effect of Agreement; Consents.............................15
4.4 Financial Statements......................................16
4.5 Business Records..........................................16
4.6 Tax Matters...............................................17
4.7 No Undisclosed Liabilities................................17
4.8 Legal Proceedings; Orders.................................17
4.9 Compliance with Legal Requirements; Governmental..........17
4.10 Title to Properties; Encumbrances.........................18
4.11 Condition of Purchased Assets; Inventory..................18
4.12 Defective Product Warranties..............................19
4.13 Employee Relations and Liabilities........................19
4.14 Labor Relations; Compliance...............................20
4.15 Employee Benefits.........................................20
4.16 Absence of Certain Changes and Events.....................21
4.17 Environmental Matters.....................................22
4.18 Intangible Property.......................................23
4.19 Supplies and
Customers.................................................24
4.20 Full Disclosure...........................................24
Article 5 - Representations and Warranties of Buyer.........................24
5.1 Organization and Good Standing............................24
5.2 Authority; No Conflict....................................24
5.3 Certain Proceedings.......................................25
Article 6 - Additional Covenants and Agreements of the Parties..............25
6.1 Environmental Matters.....................................25
6.2 Employee Matters..........................................26
Article 7 - Closing.........................................................28
7.1 Closing...................................................28
7.2 Deliveries by the Seller..................................88
7.3 Deliveries by the Buyer...................................29
Article 8 - Costs and Expenses..............................................30
8.1 Brokers...................................................30
8.2 Expenses..................................................30
8.3 Taxes and Fees............................................30
Article 9 - Post-Closing Agreements.........................................31
9.1 Further Actions...........................................31
9.2 Tax Cooperation...........................................31
9.3 Information Services......................................31
9.4 Extrusion Supply..........................................31
9.5 UCC-3Filings..............................................32
9.6 Copies of Business........................................32
9.7 Assistance With Warranty Claims...........................32
Article 10 - Survival of Representations and Indemnification................32
10.1 Survival..................................................32
10.2 Indemnification of the Buyer..............................33
10.3 Indemnification of the Buyer and Payment of Damages.......34
10.4 Procedure for Indemnification of the Seller..............34
10.5 Procedure for Indemnification --Third Party Claims........35
10.6 Procedures for Indemnification--Other Claims..............36
Article 11 - Notices........................................................36
Article 12 - Miscellaneous..................................................37
12.1 Entire Agreement; Amendment...............................37
12.2 Successors and Assigns; No Third-Party Rights.............38
12.3 Waiver....................................................38
12.4 Governing Law; Attorneys' Fees............................38
12.5 Dispute Resolution........................................38
12.6 Severability .............................................40
12.7 Counterparts..............................................40
LIST OF EXHIBITS
EXHIBIT A Accounts Receivable Schedule
EXHIBIT B Assigned Contracts
EXHIBIT C Form of Assignment and Assumption of Contracts
EXHIBIT D Form of Bill of Sale
EXHIBIT E Form of Facility Lease
EXHIBIT F Fixed Asset Schedule
EXHIBIT G Form of Non-Competition Agreement
EXHIBIT H Form of Trademark License
EXHIBIT I Intentionally Omitted
EXHIBIT J Inventory Type and Class Summary,
dated July 31, 2000
EXHIBIT K Accrued Vacation Liability
EXHIBIT L Operation and Maintenance Plan
EXHIBIT M Excluded Employees
EXHIBIT N Form of Seller's Closing Certificate
EXHIBIT O Form of Buyer's Closing Certificate
EXHIBIT P Form of Information Services Agreement
EXHIBIT Q Procedure for Indemnification of Buyer and Payment of
Damages for Environmental Liabilities
EXHIBIT R Quality Standards - Metal
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of the 30th day of August, 2000, by and between ATRIUM COMPANIES, INC.,
a Delaware corporation (the "SELLER"), and WOODGRAIN MILLWORK, INC., an Oregon
corporation (the "BUYER").
R E C I T A L S:
- - - - - - - -
A. The Seller, doing business as Atrium Wood Patio Doors, is in the
business, INTER ALIA, of manufacturing and distributing wood patio doors at its
Facility located at 1001 Ed Rutherford Drive, Greenville, Texas (such business
at such Facility being referred to herein as the "BUSINESS").
B. The Buyer desires to purchase substantially all of Seller's assets
used in or by the Business (other than assets used in any other business of the
Seller) and to assume certain specified liabilities in connection therewith, and
the Seller desires to sell such assets to Buyer on the terms and conditions set
forth in this Agreement.
C. The Seller has heretofore delivered to Buyer certain "DISCLOSURE
SCHEDULES" (herein so called) of even date herewith. The Disclosure Schedules
and the Exhibits referred to herein are a part of, and are incorporated by
reference into, this Agreement.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein set forth, the parties hereby covenant and agree
as follows:
ARTICLE 1 - DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following terms
have the meanings specified in this SECTION 1.1:
"ACCOUNTS RECEIVABLE" means all accounts receivable, whether designated
as an account or a note, representing the obligation of any Person to make
payment to the Seller in connection with the purchase by such Person of products
or services of the Business prior to the Closing Date; EXCLUDING, HOWEVER, any
accounts receivable generated from inter-company sales or transfers between the
Seller and its Affiliates. An aged summary Accounts Receivable Schedule as of
August 28, 2000 is attached hereto as EXHIBIT A. Seller shall provide to Buyer
the day after the Closing a detailed aged Accounts Receivable Schedule as of the
Closing Date.
"ACCOUNTS RECEIVABLE ADJUSTMENT DATE" means the date which is ninety
(90) days from the Closing Date.
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"ACCOUNTS RECEIVABLE CREDIT AMOUNT" means the sum of $1,500,000.
"AFFILIATE" means, with respect to a specified Person, any other Person
which directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified; and the term
"CONTROL" (including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means, as applied to any Person, the possession, directly or
indirectly, of the power to vote more than fifty percent (50%) of the securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or otherwise.
"APPLICABLE CONTRACT" means any Contract as of the Closing relating to
the Business (a) under which the Seller has or may acquire any rights, (b) under
which the Seller has or may become subject to any obligation or liability, or
(c) by which the Seller or any of the assets owned or used by it in connection
with the Business is or may become bound.
"ASSIGNED CONTRACTS" means the forklift operating leases and the Home
Depot advertising allowance agreement identified on EXHIBIT B hereto, and the
other Applicable Contracts, if any, identified on EXHIBIT B; any Applicable
Contract which is not identified on EXHIBIT B is an Excluded Contract for
purposes of this Agreement.
"ASSIGNMENT AND ASSUMPTION OF CONTRACTS" means an Assignment and
Assumption of Contracts, in the form of EXHIBIT C hereto, pursuant to which the
Seller shall assign the Assigned Contracts to Buyer at Closing.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 2.4 of this
Agreement.
"BEST EFFORTS" means the efforts that a reasonably prudent Person
desirous of achieving a result would use in similar circumstances to attempt to
achieve such result in a reasonably expeditious manner; PROVIDED, HOWEVER, that
such Best Efforts shall not require any party to expend any funds or incur any
liability.
"BILL OF SALE" means a Bill of Sale, in the form of EXHIBIT D hereto,
pursuant to which the Seller shall sell, transfer and deliver the Purchased
Assets to the Buyer at Closing.
"BREACH" means that a "Breach" of a representation, warranty, covenant,
obligation or other provision of this Agreement or any Related Agreement will be
deemed to have occurred if there is or has been any material inaccuracy in or
material breach of, or any material failure to perform or comply with, such
representation, warranty, covenant, obligation or other provision.
"BUSINESS DAY" means any day of the year other than (a) any Saturday or
Sunday or (b) any other day on which banks located in Boise, Idaho or Dallas,
Texas generally are closed for business.
"BUSINESS RECORDS" means the Seller's books of account, financial
operating data, files,
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documents and accounts relating specifically to the Business, including (without
limitation) customer and vendor lists, financial, accounting and credit records,
marketing information, business correspondence, budgets, invoices and other
similar documents and records pertaining to services or products delivered by
the Business to customers of or suppliers to the Business or delivered to the
Business by customers of or suppliers to the Business.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C.ss.9601 ET. SEQ., and its implementing regulations
and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"CLOSING" and "CLOSING DATE" have the meanings set forth in SECTION 7.1
of this Agreement.
"CODE" means the Internal Revenue Code of 1986, or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"COMPUTER-RELATED ASSETS" means the personal computers, and related
peripherals and personal productivity software, and the Local Area Network
equipment (servers, routers and hubs) used solely to operate the Business as of
the Closing Date; EXCLUDING, HOWEVER, Seller's MacPac software, AS400 computer
and Wide Area Network assets used by Seller.
"CONSENT" means any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
"CONTRACT" means any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied), including,
without limitation, any equipment or personal property lease, that is legally
binding.
"DAMAGES" has the meaning set forth in SECTION 10.2 of this Agreement.
"EMPLOYEE" has the meaning set forth in Section 4.13 of this Agreement.
"ENCUMBRANCE" means any mortgage, deed of trust, trust, pledge, lien
(choate or inchoate), assessment, charge, easement, covenant, restriction,
defect in title, encroachment or other burden, whether arising by contract or
under law, other than inchoate statutory liens for amounts not yet payable
(including any agreement to give any of the foregoing), any conditional sale or
other title retention agreement, any lease in the nature of any of the
foregoing, any claim, security interest, assignment or encumbrance of any kind,
and any negative lien; PROVIDED, HOWEVER, the term "Encumbrance" does not
include (a) any mechanic's, materialmen's or similar lien, (b) any lien for
taxes not yet due and payable or for taxes that the taxpayer is contesting in
good faith through appropriate channels, (c) any purchase money lien or lien
securing rental payments under capital lease arrangements, or (d) any other lien
arising in the Ordinary Course of Business and not incurred in connection with
the borrowing of money, which does not
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materially detract from the value of, or impair the use, occupancy or transfer
of, the Purchased Assets.
The terms "ENVIRONMENT," "RELEASE," "REMEDY," "REMEDIAL ACTION,"
"REMOVE," and "REMOVAL ACTION" shall have the meanings provided in CERCLA.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" means any liability
arising from a material violation of any Environmental Law or Occupational
Safety and Health Law that may reasonably be expected to result in an
Environmental Claim with respect to the Business or the Facility and consisting
of:
(a) fines, penalties, judgments, awards, complaints, actions,
settlements, judicial or administrative proceedings, damages, losses,
or written notices under any Environmental Law or Occupational Safety
and Health Law; or
(b) orders, judgments, settlements or agreements whereby a
Person is obligated to accept or undertake financial responsibility
under Environmental Law or Occupational Safety and Health Law for
cleanup costs or corrective action, including any investigations,
cleanup, Removal, containment, or Remedial Actions required by
applicable Environmental Law or Occupational Safety and Health Law.
"ENVIRONMENTAL CLAIM" means any claim, demand, complaint, action, suit,
proceeding, investigation or notice by any Person alleging potential liability
arising out of, based on or relating to Environmental Laws or the presence of
any Hazardous Material.
"ENVIRONMENTAL LAW" means any and all federal, state and local laws
(including but not limited to common law), statutes, ordinances, judgments,
decrees, licenses, permits, rules and regulations, or other binding requirement
relating to pollution or protection of human health and the environment,
including without limitation, laws (including but not limited to common law),
statutes, ordinances, judgements, decrees, licenses, permits, rules and
regulations or other binding requirements relating to emissions, discharges,
releases or threatened releases of any Hazardous Material, or otherwise relating
to the use, treatment, storage, disposal, transport or handling of any Hazardous
Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof. Additional defined terms relating to ERISA and the employee
benefit plans and programs of the Seller are set forth in SECTION 4.15 of this
Agreement.
"EXCLUDED ASSETS" has the meaning set forth in SECTION 2.2 of this
Agreement.
"EXCLUDED CONTRACTS" means any Applicable Contract which is not
specifically identified on EXHIBIT B hereto.
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"EXCLUDED EMPLOYEES" has the meaning set forth in SECTION 6.2(B) of
this Agreement.
"EXCLUDED LIABILITIES" has the meaning set forth in SECTION 2.2 of this
Agreement.
"FACILITY" means the Wing 3 warehouse and distribution facility
currently leased by the Seller from W.P. Carey and located at 1001 Ed Rutherford
Drive, Greenville, Texas 75401.
"FACILITY LEASE" means the Commercial Lease, in the form of EXHIBIT E
attached hereto, pursuant to which the Seller will sublease a portion of the
Facility to the Buyer as of the Closing Date pursuant to the terms thereof.
"FIXED ASSETS" means those items of machinery, equipment (including
office equipment), furniture, tools, the Computer-Related Assets, and any other
fixed assets owned by the Seller as of the Closing Date relating specifically
to, and used exclusively by, the Business including (without limitation) those
assets specifically listed on EXHIBIT F attached hereto.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4.4(a) of
this Agreement.
"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" means any:
(a) nation, state, county, city, town, village, district or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or
entity and any court or other tribunal); or
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.
"HAZARDOUS MATERIALS" means any waste or other substance that is
regulated under any Environmental Law, including, but not limited to, hazardous,
radioactive, or toxic material or materials designated as a pollutant or
contaminant under or pursuant to any Environmental Law, including any mixture or
solution thereof, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"INFORMATION SERVICES AGREEMENT" has the meaning set forth in SECTION
9.3 of this Agreement.
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"INTANGIBLE PROPERTY" means all patents, inventions, trade secrets,
designs (including, without limitation, the structural design of the doors
marketed and sold by the Business as of the date hereof), and all applications
and registrations therefor and licenses thereof; all know-how, confidential
information, software, technical information, data, process technology,
engineering, manufacturing and production manuals, methods, plans, drawings and
blue prints owned, used or licensed by the Seller as licensee or licensor
exclusively in connection with the Business, and all other intellectual property
and proprietary information exclusively relating to or exclusively connected
with the Purchased Assets and the Business; PROVIDED, HOWEVER, that the
Intangible Property shall not include the "Atrium" tradename and logo, and any
trademark or service mark containing the "Atrium" name, all of which shall
remain the sole property of the Seller; PROVIDED FURTHER, HOWEVER, that the
Atrium tradename and logo shall be licensed to Buyer exclusively for use in
connection with the Business following the Closing as specifically set forth in
the Trademark License.
"INVENTORY" means (i) all items of wood patio door inventory owned by
the Seller, related to the Business including any such items of finished goods
inventory which are owned by the Seller as of the Closing Date but which are in
transit to the Facility as of such date, and (ii) all work-in-process and lumber
and other raw materials which are owned by the Seller in the conduct of the
Business, including any items of Inventory which were delivered by the Seller in
the Ordinary Course of Business pursuant to terms whereby title has not yet
passed to the buyer thereof.
"INVENTORY SUMMARY" has the meaning given such term in SECTION 3.3 of
this Agreement.
"IRS" means the United States Internal Revenue Service, or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE" means an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter or should reasonably be aware of such fact or other matter.
The Seller will be deemed to have "KNOWLEDGE" of a particular fact or other
matter if any of Frank Sheeder, Jeff Hull, Randy Rice, or Richard Hatley has, or
at any time had, Knowledge of such fact or other matter.
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multi-national or other administrative order,
constitution, law, ordinance, code, rule, principle of common law, regulation,
statute or treaty.
"MATERIAL ADVERSE EFFECT" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, a material adverse change
in, or a material adverse effect upon, (a) the assets, liabilities, condition
(financial or otherwise) or results of operations of the Business or (b) the
ability of the Seller to perform its obligations under this Agreement and the
Related Agreements to which it is a party
6
or to consummate the Transactions. The term "MATERIAL" with respect to the
Seller shall mean with respect to the business operations and condition
(financial or otherwise) of the Purchased Assets and the Business taken as a
whole.
"NON-COMPETITION AGREEMENT" means the Non-Competition Agreement, in the
form of EXHIBIT G hereto, pursuant to which the Seller and its Affiliates will
agree, pursuant to the terms thereof, not to compete with the Business for a
period ending three and one-half (3-1/2) years after the Closing Date.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"ORDER" means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" means any action taken by a Person will
be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person or is taken in the ordinary course of the normal operations of
such Person; or
(b) such action is similar in nature and magnitude to actions
customarily taken in the ordinary course of the normal operations of
other Persons that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles or certificate of
incorporation (however denominated) and bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the certificate or articles of organization
(however denominated) and the operating agreement or other operative document of
a limited liability company; (e) any charter or similar document adopted or
filed in connection with the creation, formation or organization of a Person;
and (f) any amendments to any of the foregoing.
"PERSON" means any natural person, corporation (including any
non-profit corporation), general or limited partnership, joint venture, limited
liability company, bank, trust or unincorporated organization, joint-stock
company or other similar organization, Governmental Body, estate, trust,
organization, labor union or any other legal entity, whether acting in an
individual, fiduciary or other capacity.
"PRIME RATE" means the variable rate of interest published in the
"Money Rates" section
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of the WALL STREET JOURNAL (or the comparable section of
such newspaper) as the prime rate of interest on corporate loans at large United
States money center commercial banks.
"PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted, or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
"PURCHASED ASSETS" means those assets and properties of the Seller
which exist as of the Closing Date, exclusively pertaining to the Business,
including (without limitation) the following: (i) the Accounts Receivable, (ii)
the Inventory, (iii) the Fixed Assets, (iv) the Seller's supplies relating
exclusively to the Business (including, without limitation, supplies of fuel,
lubricants, tires, spare parts, office supplies and other consumable supplies
located at the Facility and relating exclusively to the Business), and (v) the
Intangible Property.
"RELATED AGREEMENTS" means the Assignment and Assumption of Contracts,
the Bill of Sale, the Non-Competition Agreement, the Facility Lease, the
Trademark License, and the Information Services Agreement.
"REPRESENTATIVE" means, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants and financial advisors.
"TAX" means all federal, state, local, foreign, and other net income,
gross income, gross receipts, sales, use, ad valorem, windfall profits,
value-added, transfer, franchise, profits, license, lease, service, withholding,
payroll, employment, excise, severance, business and occupation taxes, capital,
goods and services taxes, or similar charges of any kind whatsoever due any
Governmental Body having jurisdiction, for any period for which assessment of
tax liability is not yet barred by operation of law or by agreement, together
with any interest and any penalties, additions to tax, or additional amounts
with respect thereto.
"TAX RETURN" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE" means a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"THREATENED" means a claim, Proceeding, dispute, action or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made in writing or any notice has been given in writing.
"TRADEMARK LICENSE" means the license agreement in the form of EXHIBIT
H hereto
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pursuant to which Seller will grant to the Buyer, pursuant to the terms
thereof, an exclusive, royalty-free license to use the "Atrium" tradename and
logo, solely and exclusively for the purpose of marketing and selling wood patio
doors in the conduct of the Business following the Closing.
"TRANSACTIONS" means all of the transactions provided for in, and
contemplated by, this Agreement, including without limitation:
(a) the sale of the Purchased Assets by the Seller to the
Buyer;
(b) the assignment and assumption of the Assigned
Contracts; and
(c) the execution, delivery and performance of the
Related Agreements.
"UNAUDITED BALANCE SHEET AND UNAUDITED INCOME STATEMENT" means the
unaudited balance sheet of the Business as of July 31, 2000 and the related
unaudited income statement for the seven (7) months then ended.
"UNAUDITED BALANCE SHEET DATE" means July 31, 2000.
"WARN ACT" means the Worker Adjustment and Retraining Notification Act,
29 U.S.C.ss.2101 ET SEQ.
"WARRANTIES" shall have the meaning set forth in SECTION 4.12 of this
Agreement.
"WARRANTY CLAIMS" means returned goods and/or product warranty and
liability claims, credits, deductions, setoffs or chargebacks asserted to be
owed to any Person with respect to the Warranties or otherwise in connection
with products and services of the Business.
1.2 OTHER DEFINITIONAL MATTERS.
(a) REFERENCES. Unless otherwise indicated, references in this
Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
(b) USE OF DEFINED TERMS. All terms defined in this Agreement shall
have the same defined meanings when used in any of the Related Agreements,
unless otherwise defined therein or unless the context shall require otherwise.
(c) TERMINOLOGY. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement.
9
(d) RULE OF CONSTRUCTION. The parties to this Agreement acknowledge
that each party and its respective counsel have participated in the drafting and
revision of this Agreement and the Related Agreements. Accordingly, the parties
agree that any rule of construction which disfavors the drafting party shall not
apply in the interpretation of this Agreement and the Related Agreements.
(e) CONFLICT IN TERMS. Any terms and conditions contained in this
Agreement that may also be contained in the Related Agreements shall not, to the
extent reasonably practicable, be construed to be in conflict with each other,
but rather shall be construed as duplicative, confirming, additional or
cumulative provisions; PROVIDED, HOWEVER, to the extent that, in the
interpretation of this Agreement, any ultimate conflict between the terms and
conditions of this Agreement and those set forth in any Related Agreement is
determined to exist, the terms and conditions of this Agreement shall control.
ARTICLE 2 - PURCHASE AND SALE OF ASSETS
2.1 PURCHASED ASSETS. On the terms and subject to the conditions
contained herein, and on the basis of the representations, warranties, covenants
and agreements set forth herein, at the Closing, the Seller will sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer will purchase from the
Seller, all of the Seller's right, title and interest in, under and to the
Purchased Assets, free and clear of all Encumbrances. The parties acknowledge
and agree that the Purchased Assets shall NOT include the Excluded Assets.
2.2 EXCLUDED ASSETS. For purposes of this Agreement, "EXCLUDED ASSETS"
means all assets and properties of the Seller not identified as part of the
Purchased Assets in this Agreement, including (without limitation): (i) all cash
and cash equivalents of the Seller, (ii) all real property owned by the Seller,
(iii) any net operating loss carrybacks and carryforwards and other Tax assets
of the Seller, (iv) the cash consideration to be paid to the Seller by the Buyer
hereunder and the Seller's rights under this Agreement and any Related
Agreement, (v) any prepaid expenses of the Seller, (vi) the Seller's corporate
minute books, stock books and corporate seal, (vii) the "salvage dealer - doors
at Wing 2" as specifically referenced in the Inventory Summary, (viii) Seller's
MacPac software, AS400 computer, and Seller's assets relating to its Wide Area
Network, (ix) any phone system in place at the Facility, (x) any items of
tangible or intangible property owned or held for use by the Seller used in
connection with or relating to any business of the Seller other than the
Business and (xi) all other items of tangible or intangible property, if any,
owned or held for use by the Seller and not identified as part of the Purchased
Assets.
2.3 EXCLUDED LIABILITIES. Except as specifically set forth in SECTION
2.4 below, the Buyer assumes NO liabilities, debts or obligations of the Seller
of any nature whatsoever, whether absolute, accrued, contingent or otherwise, or
whether due or to become due (collectively, the "EXCLUDED LIABILITIES"). The
Seller covenants and agrees that it shall cause, at no expense or cost to the
Buyer, all Excluded Liabilities to be fully paid, discharged and satisfied as of
the Closing Date or shall fully pay, discharge and satisfy such Excluded
Liabilities when due and payable after the Closing Date, as applicable, at no
expense or cost to the Buyer. Without
10
limiting the generality of the foregoing, the parties specifically acknowledge
and agree that the Excluded Liabilities shall include (but not be limited to),
and Buyer shall assume no liability, debt or obligation of the Seller for, (i)
any and all obligations and liabilities under the Excluded Contracts arising
before or after the Closing; (ii) any Warranty Claims in respect of goods or
services sold by the Business prior to the Closing which are requested, demanded
or imposed by any customer of the Business prior to or within twelve (12) months
following the Closing; (iii) any rebates earned by customers prior to the
Closing (iv) any and all debts, liabilities and obligations relating to, arising
out of or resulting from (A) the Seller's employment of the Employees prior to
the Closing (including, without limitation, all obligations, if any, for payment
of salary, bonus and commission amounts, severance payments, or other amounts
accrued as of the Closing Date), other than the vacation benefit liability set
forth on EXHIBIT K hereto, the payment of which shall be the obligation of the
Buyer and (C) the Seller's sponsorship, funding or management of the Seller
Plans and Other Benefit Obligations of the Seller; and (v) any and all other
liabilities and obligations arising out of the conduct and ownership of the
Purchased Assets and the Business by the Seller prior to the Closing Date.
2.4 ASSUMED LIABILITIES. The Buyer expressly agrees to assume ONLY the
following liabilities and obligations of the Seller (collectively, the "ASSUMED
LIABILITIES"): (a) obligations for performance under the Assigned Contracts to
the extent such performance is due on or after the Closing Date; (b) Buyer's
share of all real and personal property taxes, utilities and other charges
relating to the Purchased Assets, apportioned as of the Closing Date, as
provided in SECTION 8.3(b) hereof; (c) all rebates relating to the HOME DEPOT
advertising allowance program earned after the Closing Date; (d) all Warranty
Claims (as determined in accordance with SECTION 3.7 below, including the
exclusions set forth therein) in respect of goods or services sold by the
Business on or after the Closing Date or, without regard to when such goods or
services were sold, which are requested, demanded or imposed by any customer of
the Business after the first anniversary of the Closing Date; (e) all transfer,
sales, use or other taxes, including any filing or recording fees payable on or
with respect to the Purchased Assets or the Transactions, as provided in SECTION
8.3(a) hereto; and (f) all liabilities arising out of or related to the conduct
and ownership of the Business and/or the Purchased Assets on or after the
Closing Date, other than the Excluded Liabilities.
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ARTICLE 3 - CONSIDERATION
3.1 PURCHASE PRICE.
(a) PURCHASE PRICE. At Closing, in consideration of the Purchased
Assets, the Buyer will pay to the Seller in cash for the Purchased Assets the
amount of Three Million Eight Hundred Sixty-Nine Thousand Five Hundred and
No/100 Dollars ($3,865,000) (as the same may be adjusted following the Closing
in accordance with this SECTION 3, the "PURCHASE PRICE"). The Purchase Price
will be adjusted (i) to reflect the valuation of Accounts Receivable, as
provided in SECTION 3.4 below, (ii) to deduct therefrom the amount of the
vacation benefit obligation being assumed by Buyer hereunder, as provided in
SECTION 3.5 below, and (iii) to reflect the adjustment, if any, for HOME DEPOT
purchase orders, as provided in SECTION 3.6 below.
(b) ESCROW OF PURCHASE PRICE. Buyer and Seller agree that in the event
Seller is unable to deliver to Buyer at Closing a copy of a fully signed
amendment to Seller's October 2, 1998 credit facility releasing the lien of
Seller's lenders on the Purchased Assets, the amount of the Purchase Price will
be placed into escrow with BankBoston, pursuant to a standard bank escrow
agreement, which will provide that the Purchase Price funds will be released to
Seller automatically at such time as such a signed amendment is delivered to
BankBoston as escrow agent and Buyer.
3.2 PURCHASE PRICE ALLOCATION.
(a) ALLOCATION. Subject to the adjustments contemplated in this SECTION
3, the Purchase Price shall be allocated among the Purchased Assets as follows:
Accounts Receivable: $1,500,000
Inventory: $1,684,000
Fixed Assets: $ 630,000
Intangibles: $ 1,000
Trade Name License: $ 50,000
----------
TOTAL: $3,865,000
(b) ADJUSTMENTS TO ALLOCATION. If and to the extent there is an
adjustment to that portion of the Purchase Price which is allocated in SECTION
3.2(a) above to Accounts Receivable, such adjustments to be made in accordance
with SECTION 3.4, the amount allocated to the Purchased Assets in SECTION
3.2(a)
above shall be correspondingly adjusted upward or downward.
(c) REPORTING. Unless otherwise required by law, the parties agree to
act in accordance with the foregoing allocations in any relevant tax returns or
filings (including any forms or reports required to be filed pursuant to section
1060 of the Code, the Treasury regulations promulgated thereunder or any
provisions of local, state and foreign law (the "1060
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FORMS"), and to cooperate in the preparation of any 1060 Forms and to file such
1060 Forms in the manner required by applicable law.
3.3 INVENTORY ADJUSTMENT.
(a) INVENTORY SUMMARY AND PHYSICAL COUNT. Attached as EXHIBIT J hereto
is an Inventory Type and Class Summary, dated as of July 31, 2000 (the
"INVENTORY SUMMARY"), prepared by Seller, which sets forth the type and quantity
of Inventory relating to the Business which will be transferred to Buyer at
Closing. As soon as practicable following Closing, representatives of each party
shall jointly commence a physical count ("PHYSICAL COUNT") of the Inventory at
the Facility. The parties promptly and in good faith will endeavor to resolve
any differences which may arise with respect to the calculation of Inventory
quantities at the Facility. If Buyer and Seller cannot agree on the Physical
Count, such quantity calculation, and payment obligation of the parties based
thereon, shall be determined in the manner set forth in SECTION 3.3(c) below.
(b) INVENTORY ADJUSTMENT. If the quantity of Inventory determined by
the Physical Count is less than $3,076,403, Seller shall promptly provide to
Buyer a vendor credit in connection with the supply of aluminum extrusion raw
material described in Section 9.4 hereof, in an amount equal to the difference
between $3,076,403 and the Physical Count. The valuation of the Inventory by the
Physical Count shall be at the same prices and using the same procedures as
Seller's July 31, 2000 inventory valuation.
(c) SETTLEMENT PROCEDURE. If the parties cannot agree on the Physical
Count of the Inventory, the Buyer and Seller shall promptly select an
independent certified public accountant ("CPA") to make such determination,
which determination shall be conclusive and binding on Buyer and Seller. If
Buyer and Seller cannot mutually agree on a CPA, then Buyer's regular certified
public accountants and Seller's regular certified public accountants shall
jointly select a third CPA to make such determination. The determination of the
third CPA so selected shall be conclusive and binding on the parties. The CPA
shall have access to all work papers of the parties reasonably necessary to
review and resolve questions regarding the issues in dispute. The CPA so
selected shall complete its review of the dispute and render its written
determination to the parties within thirty (30) days after the date on which the
dispute is presented to it for determination. The fees and expenses of the
parties' regular certified public accountants shall be borne by them,
respectively, and the fees and expenses of the third CPA chosen pursuant to this
SECTION 3.3(c) shall be borne equally by Buyer and Seller.
3.4 ACCOUNTS RECEIVABLE. Following the Closing, Buyer and Seller will
cooperate in collecting any Accounts Receivable relating to the Business. Any
Accounts Receivable collected on or prior to the Accounts Receivable Adjustment
Date up to the Accounts Receivable Credit Amount shall be collected by the
Seller and remitted to the Buyer by wire transfer within 48 hours of the date of
collection. The obligation of Seller to remit collected Accounts Receivable to
Buyer pursuant to the preceding sentence shall not be subject to any right of
offset or credit, regardless of Woodgrain's indemnification obligations under
Article 10 of this Agreement. If the total of Accounts Receivable collected as
of the Accounts Receivable
13
Adjustment Date exceeds the Accounts Receivable Credit Amount, the Seller shall
retain any such excess; if the total of Accounts Receivable collected as of the
Accounts Receivable Adjustment Date is less than the Accounts Receivable Credit
Amount, the Seller shall remit any such deficiency to the Buyer on the day after
the Accounts Receivable Adjustment Date. Following the Accounts Receivable
Adjustment Date, any uncollected Accounts Receivable shall thereafter be
collected and retained by the Seller.
3.5 VACATION LIABILITY. The parties acknowledge that Buyer shall
receive a credit for, and there shall be deducted (as set forth in clause (ii)
of SECTION 3.1) from the Purchase Price the amount of, the earned but unvested
and the accrued but unpaid vacation liability relating to Transferred Employees
which is being assumed by Buyer hereunder, which vacation liability is described
on EXHIBIT K hereto.
3.6 HOME DEPOT ADJUSTMENT. As additional consideration for the
Purchased Assets, if, on or prior to December 1, 2000, the purchase prices
identified in the Disclosure Schedule to this Section 3.6 are achieved in
connection with the purchase orders issued by HOME DEPOT to the Business, the
Buyer will promptly pay to Seller the additional amount of One Hundred
Thirty-Five Thousand and No/100 Dollars ($135,000).
3.7 WARRANTY CLAIMS. For a period of twelve (12) months following the
Closing, the Buyer shall process and resolve, for the account of Seller, any
Warranty Claims relating to goods or services sold by the Business prior to
Closing, in accordance with the Warranty Claims procedure utilized by Seller in
the Ordinary Course of Business prior to Closing. The Seller shall have the
right to review the Buyer's processing of such Warranty Claims to ensure such
processing is consistent with the Seller's past practice in the Ordinary Course
of Business. The Seller shall reimburse the Buyer for all costs associated with
processing such Warranty Claims. Such reimbursement shall be paid by the Seller
to Buyer within five (5) Business Days following receipt of Buyer's invoice
relating to the costs associated with processing Warranty Claims for the account
of Seller. For purposes of the foregoing, Buyer's "costs" shall mean the actual
cost of materials used in processing Warranty Claims, plus a labor rate charge
for Buyer's personnel, as set forth in a labor rate schedule provided to Seller
as of the Closing Date. The Disclosure Schedule to this SECTION 3.7 lists the
Field Service Cost Guideline associated with processing Warranty Claims of the
Business in the Ordinary Course of Business prior to Closing. The Buyer shall be
solely responsible for all Warranty Claims in respect of goods or services sold
by the Business on or after the Closing Date or, without regard to when such
goods or services were sold, which are requested, demanded or imposed by any
customer of the Business after the first anniversary of the Closing Date.
Notwithstanding any other provision of this Agreement to the contrary, Buyer
shall have no responsibility of any nature whatsoever (including any
responsibility to process such claims on Seller's behalf during the 12 months
following the Closing), for: (i) any Warranty Claims made within 10 years of the
applicable sale of goods or services of the Business (which 10-year period shall
in all events end no later than December 31, 2007) relating to Flexicron, or
(ii) any Warranty Claims related to any goods or services not related to the
Business, including, without limitation, wood windows manufactured by Seller.
14
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to Buyer as follows:
4.1 CORPORATE ORGANIZATION.
(a) CORPORATE ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Seller (i) has the corporate power and authority to own or lease all of its
properties and assets, to carry on its business as it is now being conducted and
to perform all its obligations under all Applicable Contracts, and (ii) is duly
licensed or qualified to do business and in good standing in the State of Texas.
(b) NO JOINT VENTURES, ETC.. The Seller does not participate in any
joint venture or similar arrangement with any Person relating to the Business.
4.2 AUTHORITY. This Agreement is and the Related Agreements will be
(upon execution and delivery thereof by the Seller) the legal, valid, and
binding obligations of the Seller enforceable against it in accordance with
their respective terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer and conveyance, moratorium, reorganization, receivership and
similar laws relating to or affecting the enforcement of the rights and remedies
of creditors generally and (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law) (collectively, the
"PERMITTED EXCEPTIONS"). The Seller has full corporate power and authority to
execute and deliver this Agreement and the Related Agreements and to perform its
obligations under this Agreement and the Related Agreements, as applicable, and
to consummate the Transactions.
4.3 EFFECT OF AGREEMENT; CONSENTS.
(a) EFFECT OF AGREEMENT. Neither the execution and delivery of this
Agreement and the Related Agreements, nor the consummation of the Transactions:
(i) contravenes, conflicts with, results in a violation or
breach of, or constitutes a default under, any provisions of the
Organizational Documents of the Seller;
(ii) to the Knowledge of Seller, except as set forth in the
Disclosure Schedule to this SECTION 4.3(a), results in a Breach of any
Governmental Authorization; PROVIDED, HOWEVER, that this provision
shall not apply to any Governmental Authorization that is not by its
terms transferable or assignable to Buyer as part of the Transactions;
(iii) to the Knowledge of Seller, contravenes, conflicts with,
results in Breach of, or a default under, or gives any Governmental
Body the right to revoke, withdraw, suspend, cancel or terminate any
Governmental Authorization that is held by the Seller and is
transferred or assigned to Buyer as part of the Transactions, except
where such result would not have a Material
15
Adverse Effect; PROVIDED, HOWEVER, that the foregoing representation
and warranty shall apply only if such Governmental Authorization by its
terms is transferable or assignable to Buyer;
(iv) to the Knowledge of Seller, contravenes, conflicts with,
or results in a violation or breach of, any provision of, or gives any
Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Assigned Contract, except where such result would not
have a Material Adverse Effect or except as would not be the case upon
receipt of the Seller Consents; or
(v) to the Knowledge of Seller, results in the imposition or
creation of any Encumbrance upon or with respect to any of the
Purchased Assets.
(b) REQUIRED CONSENTS. The Disclosure Schedule to this SECTION 4.3(b)
lists all Consents of, or filings with, any Person (including any Governmental
Body), required in connection with the Seller's valid execution, delivery and
performance of this Agreement and the Related Agreements and the consummation of
the Transactions (collectively, the "SELLER CONSENTS"), including, but not
limited to (i) any Consents required under any Assigned Contracts, and (ii) and
any Consents of, or filings required in connection with, any Governmental
Authorizations; PROVIDED, HOWEVER, that in no event shall the Seller be required
to obtain any consent in connection with any Governmental Authorization that is
not, by its terms, transferable or assignable to Buyer.
4.4 FINANCIAL STATEMENTS.
(a) FINANCIAL STATEMENTS. Attached as part of the Disclosure Schedule
to this SECTION 4.4(a) are (i) an unaudited balance sheet of the Business as of
the fiscal year ended December 31, 1999, together with an unaudited income
statement as of such fiscal year end, (ii) and the Unaudited Balance Sheet and
Unaudited Income Statement (the "FINANCIAL STATEMENTS").
(b) CONTENT OF FINANCIAL STATEMENTS. The Financial Statements and notes
thereto, if any: (i) present fairly in all material respects the financial
condition and the results of operations of the Business as of the respective
date of and for the periods referred to therein, subject to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, have any Material Adverse Effect) and the absence of notes; (ii)
reflect only assets and liabilities and results of operations and transactions
of the Business; and (iii) are within a materiality level of not greater than
$150,000 for any given fiscal period.
4.5 BUSINESS RECORDS. The Seller's Business Records have been
maintained in the Ordinary Course of Business in accordance with customary
business practices in the Seller's industry.
16
4.6 TAX MATTERS. There are no liens for Taxes encumbering any of the
Purchased Assets, the Facility or the Business. None of the Purchased Assets (i)
is property which is required to be treated as being owned by any other Person
pursuant to the so-called "safe harbor lease" provisions of former Section
168(f)(8) of the Code; (ii) directly or indirectly secures any debt the interest
on which is tax exempt under Section 103(a) of the Code; or (iii) is "tax-exempt
use property" within the meaning of Section 168(h) of the Code.
4.7 NO UNDISCLOSED LIABILITIES. Except as set forth in any of the
Disclosure Schedules hereto, to the Knowledge of the Seller, the Seller has no
material liabilities, debts or obligations (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) affecting the Business or the
Purchased Assets, except for (i) liabilities reflected or reserved against in
the Financial Statements, (ii) liabilities, debts or obligations incurred in the
Ordinary Course of Business since the respective dates thereof, (iii)
liabilities, debts or obligations for performance under contractual or Legal
Requirements, (iv) liabilities, debts or obligations affecting the Seller and
its assets as a whole, and (v) liabilities, debts or obligations which would
not, individually or in the aggregate, have a Material Adverse Effect.
4.8 LEGAL PROCEEDINGS; ORDERS.
(a) LEGAL PROCEEDINGS. Except as set forth in the Disclosure Schedule
to this SECTION 4.8(a), there is no pending Proceeding:
(i) against or affecting the Seller or any of its properties
or assets, that are reasonably likely, singly or in the aggregate, to
have a Material Adverse Effect; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any of the Transactions.
To the Knowledge of the Seller, no such Proceeding has been Threatened.
The Seller has heretofore made available to the Buyer copies of all pleadings
relating to each Proceeding listed in the Disclosure Schedule to this SECTION
4.8(a).
(b) ORDERS. Except as set forth in the Disclosure Schedule to this
SECTION 4.8(b), none of the Seller or any officer, director, agent or employee
of the Seller is subject to any Order that is reasonably likely to, singly or in
the aggregate, have a Material Adverse Effect. The Seller is, and at all times
since January 1, 1999 has been, in full compliance with all of the terms and
requirements of any Order, noncompliance with which could have a Material
Adverse Effect.
4.9 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) COMPLIANCE WITH LEGAL REQUIREMENTS. The Seller has complied with
all applicable material Legal Requirements of Governmental Bodies which affect
the Business or
17
the Purchased Assets, except where the failure to comply would
not, in the aggregate, have a Material Adverse Effect.
(b) GOVERNMENTAL AUTHORIZATIONS. The Disclosure Schedule to this
SECTION 4.9(b) contains a complete and accurate list of each of the material
Governmental Authorizations held by the Seller in connection with the Business.
Except as set forth in the Disclosure Schedule to this Section, the Seller holds
all Governmental Authorizations necessary to permit the Seller to lawfully
conduct and operate the Business in the manner in which it is currently
conducted and operated, and to permit the Seller to own and use the Purchased
Assets and the Facility in the manner in which it currently owns and uses such
assets and properties, the failure of which to hold such Governmental
Authorizations would have a Material Adverse Effect. To the Knowledge of the
Seller, none of such Governmental Authorizations will be voided, revoked or
terminated, or are voidable, revocable or terminable, upon and by reason of the
Transactions (assuming each of the Seller Consents is obtained); PROVIDED,
HOWEVER, that the foregoing representation and warranty shall apply only with
respect to Governmental Authorizations which by their terms are transferable or
assignable to Buyer.
4.10 TITLE TO PROPERTIES; ENCUMBRANCES. The Seller has good, valid and
marketable title, or a valid leasehold interest in, all the Purchased Assets,
free and clear of any and all Encumbrances, except as set forth on the
Disclosure Schedule to this SECTION 4.10.
4.11 CONDITION OF PURCHASED ASSETS; INVENTORY. Except as set forth in
the Disclosure Schedule to this SECTION 4.11:
(a) PURCHASED ASSETS. All of the Fixed Assets which are depreciable are
in good operating condition and repair (subject to ordinary wear and tear). At
Closing, the Seller shall transfer to the Buyer all of its rights under
warranties for the various pieces of equipment which are part of the Fixed
Assets, to the extent that any such warranties exist and to the extent that they
are, by their terms, assignable or transferable to Buyer. The Purchased Assets
and the Facility constitute, in the aggregate, all of the material property and
assets necessary for the conduct of the Business in the manner in which and to
the extent to which the Business has been conducted by Seller prior to the
Closing Date, except for the Excluded Assets, certain assets related to
administration, billing, accounting, management information services, treasury
management and human resources, and Seller's financial and employee records
related to the Business.
(b) INVENTORY. Seller represents and warrants that since the date of
the Inventory Summary, Seller has managed the Inventory in the Ordinary Course
of Business. For purposes of this SECTION 4.11(b), "managing the Inventory in
the Ordinary Course of Business" means Seller: (A) has not canceled or delayed
purchases of raw materials outside the Ordinary Course of Business; (B) has
continued to issue purchase orders for raw materials in the Ordinary Course of
Business; (C) has not returned Inventory to vendors outside of the Ordinary
Course of Business consistent with past practice; (D) has made no inter-company
transfers of Inventory; and (E) except as to the specific reference in the
Inventory Summary to "salvage dealer - doors at Wing 2," has made no sales of
Inventory in bulk to any salvage dealers.
18
4.12 DEFECTIVE PRODUCT WARRANTIES. The Disclosure Schedule to this
SECTION 4.12 sets forth a complete description of all defective product warranty
provisions in effect on products sold and/or distributed by the Seller in
connection with the Business since January 1, 1998 and prior to the date hereof
("WARRANTIES"). Except as set forth in the Disclosure Schedule to this Section,
to the Knowledge of Seller, there are no material, written product or service
guarantees, agreement of guarantees, indemnifications, assumptions or
endorsements or quality guarantees, or customer volume incentive programs or
rebate policies or other customer support committed by the Seller related to the
Business which are legally binding on the Seller. The Disclosure Schedule to
this Section 4.12 also contains all architectural manuals, warranty books,
installation instructions and labels, if any, used by Seller for any products
relating to the Business.
4.13 EMPLOYEE RELATIONS AND LIABILITIES.
(a) LIST OF EMPLOYEES. Attached as part of the Disclosure Schedule to
this SECTION 4.13(a) is a complete and accurate list as of August 30, 2000,
which sets forth the name, job title, social security number, date of hire,
annual compensation, wage, or hourly rate of each active employee of the Seller
employed in connection with the Business (each, an "EMPLOYEE"), and the amount
and date of the last compensation increase granted to each such Employee. In
addition, such Disclosure Schedule accurately lists (i) the vacation time that
the Seller owes to each such Employee as of such date, (ii) service credited to
each such Employee for purposes of vesting and eligibility to participate under
any Seller Plan or Other Benefit Obligation of the Seller and (iii) all accrued
and unpaid commissions or bonus payments due to each such Employee. Except as
disclosed in the Disclosure Schedule to this SECTION 4.13(a), the Seller does
not have any contract with any of its Employees which cannot be terminated
without penalty payable to such Employee on thirty (30) days' notice. Except as
disclosed in the Disclosure Schedule to this SECTION 4.13(a), no Employee of the
Seller will become entitled to any bonus, retirement, severance, job security or
Other Benefit Obligation of the Seller solely as a result of the Transactions.
(b) OUTSIDE CONFIDENTIALITY AGREEMENTS. Except as set forth as part of
the Disclosure Schedule to this SECTION 14.3(b), no officer, employee or
independent contractor engaged by the Seller in connection with the Business, to
the Knowledge of the Seller, is, or is expected to be, in violation of any term
of any contract, proprietary information agreement, non-competition agreement,
or any other agreement or any restrictive covenant or any other common law
obligation to a former employer relating to the right of any such person to be
engaged by the Seller in connection with the Business or to the use of trade
secrets or proprietary information of others (an "OUTSIDE CONFIDENTIALITY
AGREEMENT"), and, to the Knowledge of the Seller, the engagement of such persons
by the Seller in connection with the Business does not subject the Seller to any
liability, debt or obligation with respect thereto. Except as set forth as part
of the Disclosure Schedule to this SECTION 14.3(b), there are neither pending,
nor to the Knowledge of the Seller Threatened, any Proceedings nor, to the
Knowledge of the Seller, is there any basis therefor with respect to any Outside
Confidentiality Agreement. The Disclosure Schedule to this
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SECTION 4.13(b) lists every Outside Confidentiality Agreement of which the
Seller has Knowledge.
(c) WORKERS' COMPENSATION. The Seller subscribes to, or is otherwise
insured under, the workers' compensation or similar statute in the State of
Texas. The Disclosure Schedule to this SECTION 4.13(c) describes all claims
filed by Employees of the Seller in respect of employment-related injury or
illness in connection with the Business since April 1, 1998. Since October 1,
1999, the Seller has not received any written report or notice from the
Occupational Safety and Health Administration relating to the ownership or
operation of the Business.
4.14 LABOR RELATIONS; COMPLIANCE. Except as set forth in the Disclosure
Schedule to this SECTION 4.14, the Seller does not have any employment,
collective bargaining, or union agreements of any kind whatsoever affecting the
Business nor does the Seller have any Knowledge that organizing efforts have
occurred at any time since October 1, 1999. Since October 1, 1999, there is not
presently pending or existing and, to the Knowledge of the Seller, there is not
Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process or (b) any Proceeding against or affecting the Business
relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting the Business
or the Facility, which, in each case, would have a Material Adverse Effect with
respect to the Business, or (c) any application for certification of a
collective bargaining agent. There is no lockout of any Employees by the Seller,
and no such action is contemplated by the Seller. The Seller has complied in all
material respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, collective
bargaining, the payment of income, social security and similar Taxes,
occupational safety and health, and plant closings in connection with the
Business, except where any failure to comply could not reasonably be expected to
have a Material Adverse Effect. The Seller is not liable for the payment of any
compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements,
except where the payment in question would not have a Material Adverse Effect.
4.15 EMPLOYEE BENEFITS.
(a) DEFINITIONS. As used in this SECTION 4.15, the following terms have
the following meanings: (i) "OTHER BENEFIT OBLIGATION OF THE SELLER" means any
Other Benefit Obligation owed or adopted by the Seller; (ii) "SELLER PLAN" means
all Plans of which the Seller is a Plan Sponsor, or to which the Seller
otherwise contributes or in which the Seller otherwise participates; (iii)
"ERISA AFFILIATE" means, with respect to the Seller, any other Person that,
together with the Seller, would be treated as a single employer under Section
414 of the Code; (iv) "MULTIEMPLOYER PLAN" has the meaning given in Section
3(37)(A) of ERISA; (v) "OTHER BENEFIT OBLIGATION" means all legally binding
obligations, arrangements or customary practices to provide benefits, other than
salary, as compensation for services rendered, to present or former
20
directors or employees other than obligations, arrangements, and practices that
are Plans; (vi) "PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto; (v) "PENSION PLAN" has the meaning given in Section 3(2)(A)
of ERISA; (vi) "PLAN" has the meaning given in Section 3(3) of ERISA; (vii)
"PLAN SPONSOR" has the meaning given in Section 3(16)(B) of ERISA; (viii)
"QUALIFIED PLAN" means any Plan that meets or purports to meet the requirements
of Section 401(a) of the Code; (ix) "TITLE IV PLANS" means all Pension Plans
that are subject to Title IV of ERISA, 29 U.S.C. ss. 1301 ET SEQ., other than
Multiemployer Plans; and (x) "WELFARE PLAN" has the meaning given in Section
3(1) of ERISA.
(b) LIST OF PLANS. The Disclosure Schedule to this SECTION 4.15(b)
contains a complete and accurate list of all material Seller Plans and Other
Benefit Obligations of the Seller.
(c) DELIVERY OF PLAN DOCUMENTS. The Seller has heretofore delivered, or
made available to Buyer, the following: (i) the most recent summary plan
description and most recent IRS determination letter relating to the Seller's
401(k) plan; and (ii) all personnel, payroll and employment manuals and policies
of the Seller distributed to Seller's Employees.
(d) REPRESENTATIONS AND WARRANTIES. Except as provided in the
Disclosure Schedule to this SECTION 4.15(d): (i) the Seller's 401(k) Plan has
received a "determination letter" from the Internal Revenue Service and, to the
Knowledge of the Seller, nothing has occurred since the date of such
determination letter which would cause the tax disqualification of Seller's
401(k) Plan; (ii) the Seller does not sponsor any Title IV Plan and does not
have, and has not had, an obligation to contribute to a Multiemployer Plan; and
(iii) the Seller provides no benefits described in Section 3(1) of ERISA to any
retired or former employees nor is Seller obligated to provide such benefits to
any active Employee following such Employee's retirement or other termination of
service.
4.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in the
Disclosure Schedule to this SECTION 4.16 (which Schedule may make reference to
any other Disclosure Schedule hereto or to any other document(s) referred to in
this Agreement which has heretofore been delivered to Buyer), since the
Unaudited Balance Sheet Date, the Seller has conducted the operations of the
Business only in the Ordinary Course of Business and the Seller has not:
(a) incurred any damage to or destruction or loss of any of the
Purchased Assets, whether or not covered by insurance, which would have a
Material Adverse Effect;
(b) entered into, terminated or received notice of termination of any
Applicable Contract;
(c) Entered into, amended, or terminated any employment agreement with
any Employee, except in the Ordinary Course of Business; entered into, amended,
or terminated any agreement with a labor union or association representing any
Employee; adopted, entered into, or amended any Seller Plan or Other Benefit
Obligation of the Seller which materially affects the Business; or
21
other than in the Ordinary Course of Business, made any wage or salary increase,
bonus, or increased any other direct or indirect compensation, for or to any of
the Employees, or any accrual for or commitment or agreement to make or pay the
same;
(d) Other than in the Ordinary Course of Business, entered into any
lease (as lessor or lessee), sold, abandoned, or made any other disposition of
any of the Purchased Assets except for Inventory and other assets sold in the
Ordinary Course of Business; other than in the Ordinary Course of Business
granted any Encumbrance on any of the Purchased Assets; incurred or assumed any
debt, obligation, or liability (whether absolute or contingent or whether or not
currently due and payable) affecting the Purchased Assets or the Business,
except for debts, obligations or liabilities of the type described in clause
(ii), (iii) or (iv) of SECTION 4.7; or paid, directly or indirectly, any of its
material liabilities affecting the Purchased Assets or the Business other than
in the Ordinary Course of Business; or
(e) Transferred, granted or licensed any rights under, or permitted to
lapse, any Intangible Property other than in the Ordinary Course of Business.
4.17 ENVIRONMENTAL MATTERS. Except as set forth in the Disclosure
Schedule to this SECTION 4.17 and to the nowledge of Seller:
(a) The Seller is, and at all times has been, in material compliance
with, and has not been found liable under, any Environmental Law relating to the
Business or its operation of the Facility, except for such noncompliance which
would not have a Material Adverse Effect. The Seller has not received, any
actual or Threatened order, written notice, or other written communication with
respect to the Business and the Facility from (i) any Governmental Body or
private citizen acting in the public interest, or (ii) the current or prior
owner or operator of the Facility, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to the Facility.
(b) The Seller has not received any written notice that the Facility
has been identified on any current or proposed (i) National Priorities List
under 40 C.F.R. ss. 300 or (ii) any list arising from a state voluntary cleanup
or hazardous waste remediation law.
(c) There are no pending or Threatened Encumbrances resulting from any
Environmental, Health and Safety Liabilities relating to the Business or its
operations at the Facility, or arising under or pursuant to any Environmental
Law, with respect to the Facility or the Business.
(d) The Seller has not received any written citation, directive,
inquiry, notice, Order, summons, warning, or other communication in writing
regarding its potential liability relating to the Business, the Purchased Assets
or its operations at the Facility that relates to (i) its
22
handling, storage or use of Hazardous Materials, or any alleged, actual, or
potential violation or failure to comply by Seller with any Environmental Law,
or (ii) any alleged, actual, or potential obligation of the Seller to undertake
or bear the cost of any Environmental, Health and Safety Liabilities.
(e) The Seller has no Environmental, Health and Safety Liabilities with
respect to the Facility or the Purchased Assets, except for such liabilities as
could not reasonably be expected to have a Material Adverse Effect.
(f) Other than in material compliance with all applicable Environmental
Laws, and except as would not create a Material Adverse Effect, Seller has not
stored or used Hazardous Materials at the Facility.
(g) There has been no Release or Threat of Release, of any Hazardous
Materials at or from the Facility that may be reasonably attributable to the
operations of the Seller, except for such Releases or Threats of Release as
could not be expected to have a Material Adverse Effect.
(h) The Seller has heretofore delivered to the Buyer true and complete
copies and results of all available reports, studies, analyses, tests, or
monitoring undertaken on behalf of the Seller or within the Seller's authority
to deliver, custody and control, pertaining to Hazardous Materials in, on, or
under the Facility, or concerning material aspects of Seller's compliance with
Environmental Laws or in connection with any Environmental, Health and Safety
Liabilities with respect to the Facility or the Purchased Assets.
4.18 INTANGIBLE PROPERTY. The Disclosure Schedule to this SECTION 4.18
sets forth a correct and complete list of all material Intangible Property of
the Seller relating to the Business. Except as disclosed in the Disclosure
Schedule to this Section or as would not otherwise have a Material Adverse
Effect: (a) to the Seller's Knowledge, the Seller owns or possesses adequate
licenses or other valid rights to use all Intangible Property necessary to the
conduct of the Business as presently conducted; (b) the validity of such items
and the Seller's title thereto of the Seller have not been questioned in any
Proceeding to which the Seller is a party nor, to the Knowledge of the Seller,
is any such Proceeding Threatened; (c) to the Seller's Knowledge, all such
Intangible Property to be transferred is fully assignable to the Buyer without
the consent of any other Person; and (d) to the Seller's Knowledge, the conduct
of the Business as now conducted by the Seller does not and will not conflict
with any patents, trademarks, trade names, service marks or copyrights of any
other Person in any way. To the Seller's Knowledge, no other Person has
heretofore used or now uses any Intangible Property owned by the Seller in
connection with the Business, except a Person duly licensed by the Seller to use
the same under an agreement disclosed in the Disclosure Schedule to this SECTION
4.18 or a Person who is a direct or indirect parent company or subsidiary of the
Seller. Except as set forth in the Disclosure Schedule to this SECTION 4.18, to
the Seller's Knowledge, there has been no material infringement of any
Intangible Property right owned by, or licensed by or to, the Seller in
connection with the Business.
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4.19 SUPPLIERS AND CUSTOMERS. The relationship of Seller with suppliers
to and customers of the Business are customary commercial working relationships
and Seller is engaged in no material disputes with any such suppliers or
customers. To the Seller's Knowledge, no supplier or customer of the Business
has notified Seller that such supplier or customer intends to cancel or
otherwise modify its relationship with the Business for any reason, including,
without limitation, by reason of the Transactions contemplated by this
Agreement. Set forth in the Disclosure Schedule to this SECTION 4.19 is a
schedule of all customers with and/or for which Seller is dealing or providing
services or products relating to the Business as of the Unaudited Balance Sheet
Date, whose purchases individually have accounted for more than five percent
(5%) of the sales of Seller from the Business during the preceding 12-month
period.
4.20 FULL DISCLOSURE. No representation or warranty of Seller contained
in this Agreement or in any Related Agreement or other document or instrument
delivered pursuant hereto contains any untrue statement of a material fact.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Seller as follows:
5.1 ORGANIZATION AND GOOD STANDING. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Oregon and has full corporate power and authority to conduct its business as it
is presently being conducted and to own and lease its properties and assets.
5.2 AUTHORITY; NO CONFLICT.
(a) AUTHORITY. This Agreement is and the Related Agreements will be
(upon execution and delivery thereof by the Buyer) the legal, valid, and binding
obligations of the Buyer, enforceable against the Buyer in accordance with their
respective terms, subject to the Permitted Exceptions. The Buyer has full
corporate power and authority to execute and deliver this Agreement and the
Related Agreements and to perform its obligations under this Agreement and the
Related Agreements, as applicable, and to consummate the Transactions.
(b) NO CONFLICT. Neither the execution and delivery of this Agreement
or any Related Agreement by the Buyer nor the consummation or performance of any
of the Transactions by the Buyer, will, directly or indirectly (with or without
notice or lapse of time): (i) contravene, conflict with, or result in a
violation of any provision of the Organizational Documents of the Buyer; (ii)
violate, conflict with, result in a breach of or constitute a default under any
judgment, award or decree or any material mortgage, indenture, promissory note,
material agreement or other material instrument to which the Buyer is a party,
or by which it is bound, any court injunction, judgment, award or decree, or any
valid and enforceable order of a Governmental Body having jurisdiction over
Buyer or any other Legal Requirement.
24
(c) BUYER'S CONSENTS. The Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Transactions.
5.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Transactions and no such Proceeding has been Threatened.
ARTICLE 6 - ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 ENVIRONMENTAL MATTERS.
(a) ENVIRONMENTAL COMPLIANCE OF BUYER. Seller has current Governmental
Authorizations from the Texas Natural Resource Conservation Commission ("TNRCC")
under Environmental Laws regarding Seller's operation of the Business at the
Facility. These Governmental Authorizations consist of Seller's Air Permit No.
41592 and the stormwater authorization associated with the Facility
(collectively the "SELLER PERMITS"). During the period of time after the Closing
but before Seller ceases all of its operations at the Facility, Buyer shall be
the owner and operator of the Purchased Assets, and to the extent that such
Purchased Assets are included as emissions sources, regulated sources or
regulated operations under the Seller Permits, Seller and Buyer agree to take
the following actions:
(i) Buyer shall comply with all requirements in the Seller
Permits and shall not cause an exceedance of any limitations set forth
in any Seller Permit, nor shall Buyer cause any violation of any
provision in any of the Seller Permits during the period in which
Seller and Buyer are jointly operating at the Facility, and until such
time as TNRCC transfers the Seller Permits to Buyer or TNRCC revokes or
cancels the Seller Permits;
(ii) Without consideration of the provisions of SECTIONS 10.2,
10.3 or 10.4, Buyer shall indemnify and hold Seller harmless for any
liability arising from or related to any exceedance of any limitation
or violation of any provision of the Seller Permits caused by Buyer or
for which Seller is held liable or accountable by any Governmental Body
or any other Person relating in any way to compliance with any terms of
any of the Seller Permits during the period of time that Buyer operates
at the Facility under any Seller's Permit;
(iii) Seller agrees that, upon cessation of its operations at
the Facility, it will request that TNRCC transfer the Seller Permits to
Buyer to the extent that any of the Seller Permits by their terms are
assignable or transferable to Buyer, or, if Buyer determines that such
Seller Permits are not required for its operations, Seller shall
request that TNRCC cancel the Seller Permits. If assignment or transfer
of the Seller Permits is allowed under the terms thereof, and Buyer
chooses to accept such assignment or transfer of any of the Seller
25
Permits, Seller shall take reasonable steps to aid Buyer in negotiating
with the TNRCC for such assignment or transfer.
(b) COOPERATION OF BUYER AND NON-INTERFERENCE WITH ONGOING REMEDIAL
ACTIVITIES AT THE FACILITY. Buyer covenants and agrees that it shall not
interfere in any way and will cooperate fully with, including granting access to
the Facility to, Dow and The Gillette Company, and/or any of the foregoing's
Representatives in connection with the ongoing Remedial Activities at 1001 Ed
Rutherford Drive, Greenville, Texas as set forth in the Operation and
Maintenance Plan attached hereto as EXHIBIT L. Any Damages or liability
resulting from any failure by Buyer to grant such access, or from any action
taken by Buyer to interfere with the ongoing Remedial Activities, shall solely
be the responsibility of the Buyer and shall not be the basis for a claim for
indemnity under SECTION 10.2, 10.3 or 10.4 of this Agreement.
6.2 EMPLOYEE MATTERS.
(a) EMPLOYEE TERMINATION. As of the Closing, the Seller shall terminate
or cause to be terminated the employment of all Employees of the Seller whose
employment with the Seller is in connection with the Business and who are
offered employment by Buyer pursuant hereto, and the Seller shall discharge its
obligations under all the Seller Plans and Other Benefit Obligations of the
Seller arising from such termination of employment in accordance with applicable
plan provisions and all Legal Requirements. At Closing, the Seller shall pay
each Employee all salary, bonus and wage amounts due for the period through the
Closing Date. In the event it is not reasonably possible for the Seller to pay
to its Employees all of the amounts described in the preceding sentence as of
the Closing Date, because of administrative difficulties in determining such
amounts as of the Closing or for similar reasons, the Seller will pay such
amounts as soon as reasonably possible thereafter.
(b) EMPLOYMENT BY BUYER. The Buyer shall offer, from and after the
Closing Date, employment to each Employee who is set forth on the Disclosure
Schedule to SECTION 4.13(A) hereto, SUBJECT TO Buyer's customary drug screening
procedures; excluding, however, those specific Employees listed on EXHIBIT M
hereto (the "EXCLUDED EMPLOYEES"). Buyer covenants and agrees that the position,
salary and benefit package provided to each Employee shall be sufficiently
similar to that provided by Seller immediately prior to Closing to exempt the
parties hereto from any WARN Act notification requirements and Buyer agrees to
indemnify and hold harmless Seller from and against any and all Damages incurred
by Seller as a result of the Breach of the foregoing covenant. Buyer may refuse
to hire any non-Excluded Employee who fails Buyer's drug screening.
Notwithstanding the foregoing, this Agreement is being entered into solely for
the benefit of the parties hereto, and the parties do not intend that any
Employee or any other Person shall be a third-party beneficiary of the covenants
of the Buyer or the Seller hereunder. Any Employee who becomes an employee of
Buyer on the Closing Date (or such later date as the person becomes an Employee
of Buyer in the case of an Employee who is not actively at work on the Closing
Date) shall be considered a "TRANSFERRED EMPLOYEE." Buyer shall indemnify and
hold harmless Seller for any action (or failure to act) by Buyer in violation of
applicable law with respect to the hiring or terms of employment of any person
by or with Buyer who is Seller's Employee immediately before the Closing.
26
(c) EMPLOYEE BENEFITS. Except as specifically stated otherwise in this
Agreement, following the Closing, (i) the Seller will retain all liabilities,
debts and obligations, if any, under and with respect to the Seller Plans and
Other Benefit Obligations of the Seller and remain responsible for any and all
employee benefits and any amounts, if any, due and payable under any such plans
and obligations, including (without limitation) medical expenses incurred by
Transferred Employees prior to Closing but not processed by the Seller as of
Closing, and all bonuses, overtime, commissions, contributions and severance
payments, if any, earned or accrued by Employees up to and including the Closing
Date, and all liabilities relating to post-retirement medical benefits, if any,
and to Employees on long-term disability, if any, as of the Closing Date, and
(ii) the Buyer will assume all liabilities, debts and obligations under and with
respect to, and be responsible for, those vacation liabilities set forth in
EXHIBIT K hereto, and any and all employee benefits and any amounts due and
payable under any such employee benefit plans and obligations, including
(without limitation) medical expenses incurred by Transferred Employees on or
after the Closing, and all bonuses, overtime, commissions, vacation,
contributions and severance payments, if any, earned or accrued by Transferred
Employees after the Closing Date, and all liabilities relating to
post-retirement medical benefits and to Transferred Employees on long-term
disability arising after the Closing Date. The Seller shall be solely
responsible for informing the Employees and other applicable parties of their
rights and options, if any, with respect to the Seller Plans and Other Benefit
Obligations of the Seller (both in connection with the execution of this
Agreement and independent of this Agreement), and shall continue to be solely
responsible for all aspects of the administration and management of such the
Seller Plans and Other Benefit Obligations of the Seller as a result of or
independent of the Transactions, regardless of the date and timing of any such
matter, whether it be before, on or after the Closing Date.
(d) WORKERS' COMPENSATION CLAIMS. The Seller shall remain solely
responsible for liability arising from workers' compensation claims which are
based on injuries occurring on or prior to the Closing Date with respect to the
Employees, regardless of when such claim(s) may be filed. Buyer shall be solely
responsible for any such claim of a Transferred Employee based on injuries
occurring AFTER the Closing Date. Notwithstanding the provisions of SECTION
6.2(b) above, the Buyer will have no obligation to hire any Employees who are
receiving workers compensation benefits as of Closing until such Employees have
been certified for regular employment by a physician acceptable to the Buyer.
(e) COBRA. The Seller shall provide required notice of health care
continuation coverage rights pursuant to Section 4980B of the Code and Sections
601-608 of ERISA (collectively referred to as "COBRA") to all Employees, spouses
and dependents for whom the Transactions contemplated by this Agreement may be a
"qualifying event" (as defined in Sections 162(k)(3) and 4980B(f)(3) of the
Code). Except as set forth in the next succeeding sentence, the Seller shall
remain obligated with respect to all Employees, former employees, and their
spouses or dependents with respect to whom a "qualifying event" (as so defined)
occurred on or prior to the Closing Date. With respect to any Employee, former
employee, spouse, former spouse, dependent or former dependent who was covered
under a group health plan (as defined under COBRA) of the Seller and for whom
the Transactions contemplated by this Agreement
27
may be as "qualifying event" (as so defined), the Seller shall provide
continuation coverage for such individual in a manner that complies in all
respects with COBRA as if COBRA applied to the Seller with respect to such
individual and as if COBRA did not apply to Buyer with respect to such
individual, except with respect to any such individual who is covered under a
group health plan under sponsored by Buyer which constitutes satisfaction of any
health care continuation requirements that might be applicable to such
individual.
(f) INDEMNIFICATION. Subject to the provisions of ARTICLE 10, the
Seller shall assume, indemnify, defend, and hold harmless the Buyer Indemnitees
(as defined in SECTION 10.2(a) hereof) from and against any and all Damages,
including interest and penalties, imposed upon, incurred by, or assessed against
any Buyer Indemnitee and any of its employees arising by reason of or relating
to any failure by the Seller to comply with any requirements of ERISA or the
Code relating to the Seller Plans and Other Benefit Obligations of the Seller
sponsored, maintained, or participated in by the Seller (other than by reason of
Buyer's failure to comply with its obligations under this SECTION 6.2),
including, but not limited to, the health care continuation coverage
requirements of COBRA. Subject to the provisions of ARTICLE 10, the Buyer shall
assume, indemnify, defend and hold harmless the Seller Indemnitees (as defined
in SECTION 10.4(a)) from and against any and all Damages imposed upon, incurred
by, or assessed against any Seller Indemnitee and any of its employees arising
by reason of, or relating to any failure by the Buyer to comply with any
requirements of ERISA or the Code occurring on or after the Closing Date.
(g) LEASED EMPLOYEE. For a period of up to six months following
Closing, Seller will provide to Buyer the service of Rich Kettle, Seller's Vice
President of Sales, as a leased employee to perform a similar function with
respect to the Business following Closing. Buyer shall reimburse Seller for all
salary and benefits associated with such leased employee; provided, that direct,
out-of-pocket expenses incurred by the leased employee shall be invoiced
directly to Buyer.
ARTICLE 7 - CLOSING
7.1 CLOSING. The purchase and sale (the "CLOSING") provided for in this
Agreement will take place concurrently with the execution and delivery of this
Agreement (the "CLOSING DATE"), at the offices of the Seller, 1341 West
Mockingbird Lane, Suite 1200W, Dallas Texas 75247, or at such other time and
place as the parties may agree.
7.2 DELIVERIES BY THE SELLER. At Closing, the Seller will deliver or
cause to be delivered to the Buyer, and such delivery is a condition to Buyer's
obligation to consummate the Transactions, in form and substance reasonably
satisfactory to Buyer:
(a) RELATED AGREEMENTS. Executed originals of this Agreement and the
Related Agreements and such other endorsements, assignments, receipts and other
instruments as shall be sufficient to vest in Buyer good and marketable title to
the Purchased Assets, free and clear of all Encumbrances, except as otherwise
provided herein.
28
(b) THE SELLER CONSENTS. Copies of all the Seller Consents identified
in the Disclosure Schedule to SECTION 4.3(b) hereof. The parties agree that in
the event Seller is unable to deliver at Closing a copy of the fully signed
amendment to Seller's October 2, 1998 credit facility releasing the lien of
Seller's lenders on the Purchased Assets, such failure of delivery shall not
prevent the Closing, and the Purchase Price shall be placed into escrow in
accordance with the provisions of SECTION 3.1(b) hereof.
(c) CLOSING CERTIFICATE. A closing certificate signed by an officer of
the Seller to the effect that (i) all of the representations and warranties of
the Seller contained in ARTICLE 4 hereof are true and correct in all material
respects as of the Closing and (ii) the Seller has performed and complied in all
material respects with all of its covenants and agreements to be performed or
complied with at or prior to Closing. A form of the Seller's Closing Certificate
is attached as EXHIBIT N hereto.
(d) PROCEEDINGS AND DOCUMENTS. Copies, certified or otherwise
identified to the Buyer's satisfaction, of all corporate documents that the
Buyer shall reasonably request, including resolutions of the Board of Directors
of the Seller dated on or before the date hereof to authorize this Agreement,
the Related Agreements and the Transactions.
(e) RELEASES. Duly executed releases of all Encumbrances, if any,
pertaining to the Purchased Assets, subject to the provisions of SECTION 7.2(b)
above.
(f) ADDITIONAL ITEMS. Such other instruments, documents, certificates,
and other items as are required to be delivered hereunder or which may be
reasonably requested by the Buyer.
7.3 DELIVERIES BY THE BUYER. At Closing, the Buyer will deliver or
caused to be delivered to the Seller, and such delivery is a condition to
Seller's obligation to consummate the Transactions, the following, in form and
substance reasonably satisfactory to the Seller:
(a) PURCHASE PRICE PAYMENT. Subject to the provisions of SECTION
3.1(b)
hereof, the Purchase Price to the Seller. Payment of the Purchase Price shall be
made in the form of a certified or cashiers' check payable to the Seller or, at
the option of the Seller, by wire transfer to an account of the Seller
identified in writing to the Buyer not more than three (3) Business Days prior
to the Closing Date.
(b) CLOSING CERTIFICATE. A closing certificate signed by an officer of
the Buyer to the effect that (i) all of the representations and warranties of
Buyer contained in ARTICLE 5 hereof are true and correct in all material
respects as of Closing and (ii) the Buyer has performed and complied in all
material respects with all of its covenants and agreements to be performed or
complied with at or prior to the Closing. A form of Buyer's Closing Certificate
is set forth in EXHIBIT O hereto.
(c) RELATED AGREEMENTS. Executed originals of the Related Agreements to
which the Buyer is a party.
29
(d) PROCEEDINGS AND DOCUMENTS. Copies, certified or otherwise
identified to the Seller's satisfaction, of all corporate documents that the
Seller shall reasonably request, including resolutions of the Board of Directors
of the Seller dated on or before the date hereof to authorize this Agreement,
the Related Agreements and the Transactions.
(e) ADDITIONAL ITEMS. Such additional documents, instruments,
certificates and other items as are required to be delivered hereunder or as the
Seller may reasonably request.
ARTICLE 8 - COSTS AND EXPENSES
8.1 BROKERS. Each party represents and warrants to the other that no
broker, finder or agent has acted on its behalf in connection with the
Transactions and, no Person is entitled to any finder's fee, broker's
commission, or similar form of remuneration by reason of, or in connection with
the execution or performance of this Agreement or the Related Agreements. The
Buyer, on the one hand, and the Seller, on the other hand, shall hold harmless,
indemnify, and defend the other party from and against all claims by third
parties for any such commission or other fees which arise from or are based upon
the actions of the indemnifying party and which constitute a violation of the
indemnifying party's warranty in this Section.
8.2 EXPENSES. Each party to this Agreement shall pay as of the Closing
its own fees and expenses incident to the negotiation, preparation or execution
of this Agreement and the Related Agreements, and the closing of the
Transactions, including, but not limited to, the fees and expenses of its
counsel, accountants, investment bankers and other Representatives.
8.3 TAXES AND FEES.
(a) TRANSFER TAXES. Any transfer, sales, use or other tax, including
any filing or recording fees, payable on or with respect to the sale of the
Purchased Assets or the Transactions shall be borne by the Buyer.
(b) PROPERTY TAXES. All real property and ad valorem taxes, and all
personal property taxes, for the current tax year attributable to any of the
Purchased Assets shall be apportioned and prorated between the Seller and Buyer
as of the Closing Date. If, at the time of Closing, tax rates for the then
current year have not been published, then the proration of real and personal
property taxes shall be made on the basis of the tax rate for the preceding tax
year applied to the latest assessed valuation of the Purchased Assets, and when
the tax rate is fixed for the tax year in which the Closing occurs, the Seller
and the Buyer agree to adjust such prorations and, if necessary, to refund or
pay such sums to the other party as necessary to effect such readjustment.
(c) THE SELLER'S OBLIGATIONS. Except as provided above, all Taxes of
the Seller which are not yet due and payable and which relate solely to any
period or any portion of any period ending prior to the Closing Date shall be
paid by the Seller.
30
(d) THE BUYER'S OBLIGATIONS. Except as provided above, all Taxes
relating to the Purchased Assets which relate to any period (or portion thereof)
that ends on or after the Closing Date shall be paid by the Buyer.
ARTICLE 9 - POST-CLOSING AGREEMENTS
After the Closing, the Buyer and the Seller covenant and agree as
follows:
9.1 FURTHER ACTIONS. The Seller shall execute and deliver at the sole
expense of Buyer such further instruments of transfer and conveyance,
endorsements, documents and certificates as may be reasonably requested by the
Buyer in order to more effectively convey and transfer to the Buyer the
Purchased Assets, to aid and assist the Buyer in reducing to possession or
exercising rights with respect to the Purchased Assets, and to consummate the
Transactions.
9.2 TAX COOPERATION. After the Closing, the parties shall, and shall
cause their respective Affiliates to, cooperate with each other in the
preparation of all Tax Returns and shall provide, or cause to be provided, to
such other party any records and other information reasonably requested by such
party in connection therewith as well as access to, and the cooperation of, the
auditors of such other party and its Affiliates. After the Closing, the parties
shall, and shall cause their respective Affiliates to, cooperate with the other
party in connection with any Tax investigation, Tax audit or other Tax
proceeding relating to the Business; PROVIDED, HOWEVER, that Seller shall have
ultimate discretion with respect to any such investigation, audit or other
proceeding that relates to a pre-closing Tax period (or portion thereof). Any
information obtained pursuant to this SECTION 9.2 relating to Taxes shall be
kept confidential by the other party or parties.
9.3 INFORMATION SERVICES. At Closing, the parties will enter into the
Information Services Agreement, in the form attached as EXHIBIT P hereto (the
"INFORMATION SERVICES AGREEMENT"), pursuant to which Seller will provide
management information services to the Business for a period not to exceed six
(6) months following the Closing.
9.4 EXTRUSION SUPPLY. After the Closing, the Seller will provide
aluminum extrusion raw material to the Buyer, for a period of up to six (6)
months, in sufficient quantity to supply the reasonable requirements of the
Business (which shall in no event materially exceed the historical levels used
by the Business prior to the Closing), on the same terms and conditions
(including price and payment terms) as the Seller has purchased such materials
in the Ordinary Course of Business prior to Closing. The Buyer will use its Best
Efforts to secure its own source of aluminum extrusion supply as soon as
practicable following the Closing. The Buyer will have the right to receive
credit from the Seller for any material that does not meet Buyer's reasonable
specifications. Buyer will determine in good faith what materials do not meet
its reasonable specifications in accordance with the provisions of the Quality
Standards - Metal schedule attached as Exhibit R hereto. Woodgrain shall
physically segregate all material it deems defective, and Seller shall have the
opportunity to inspect such materials at the Facility during normal business
hours. The parties will use their Best Efforts to negotiate any difference with
respect to what constitutes defective materials.
31
9.5 UCC-3 FILINGS. As soon as practicable after the Seller receives the
amendment to its October 2, 1998 credit facility releasing the lenders' lien
against the Purchased Assets, the Seller will file or cause to be filed all
appropriate UCC-3 partial termination statements with all applicable
Governmental Bodies. The Seller will provide the Buyer with copies of such filed
UCC-3 statements.
9.6 COPIES OF BUSINESS RECORDS. From time to time following the
Closing, upon the Buyer's reasonable request, the Seller will provide copies of
the Business Records to the Buyer, including, without limitation, vendor and
customer historical data.
9.7 ASSISTANCE WITH WARRANTY CLAIMS. From time to time following the
Closing, upon the Seller's reasonable request, the Buyer will provide Seller
with assistance evaluating warranty claims associated with wood windows sold by
the Business prior to the Closing, including providing personnel to investigate
and evaluate the merit of an/or possible exposure from such warranty claims.
Seller will reimburse Buyer for its costs associated with evaluating such
warranty claims, based on the hourly rates set forth in Seller's Field Service
Cost Guidelines, a copy of which has been provided to Buyer, plus reasonable and
documented out-of-pocket costs for travel, meals and similar costs. In addition,
Buyer shall be reimbursed for reasonable and material general and administrative
time spent by Woodgrain management personnel in performing Woodgrain's
obligations under this Section 9.7, in accordance with the hourly rates set
forth in Seller's Field Service Cost Guidelines.
ARTICLE 10 - SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
10.1 SURVIVAL.
(a) CONTENTS OF THIS AGREEMENT. The representations, warranties,
covenants and agreements made in any Related Agreement or Disclosure Schedule
shall be deemed representations, warranties, covenants and agreements made
herein.
(b) NO EFFECT ON LIABILITY. None of (i) the consummation of the
Transactions, or (ii) the delay (except for such delays that would result in
prejudice to the indemnifying party) or omission of any party to exercise any of
its rights under this Agreement or any Related Agreement, or (iii) any
investigation or disclosure that any party makes, any notice that any party
gives, or any knowledge that any party obtains as a result thereof, or otherwise
(other than with respect to disclosure made in, or knowledge obtained from, this
Agreement, the Disclosure Schedules or the Related Agreements), shall (A) affect
the liability of the parties to one another for Breaches of this Agreement or
any Related Agreement or (B) prevent any party from relying on the
representations or warranties contained in this Agreement or any Related
Agreement.
(c) SURVIVAL. Except as set forth in SECTION 10.1(d) below, the
representations and warranties of the Buyer and the Seller made in this
Agreement or any Related Agreement
32
shall survive the Closing for a period of one year, at which time such
representations and warranties shall then expire.
(d) COMMENCING ACTIONS. If the Closing occurs, then any action against
any party hereto for any Breach, which action is not commenced pursuant to
SECTION 10.5 hereof within one (1) year of the Closing Date shall be deemed
waived, and no Person shall have any remedy against any party hereto for any
such Breach; PROVIDED, HOWEVER, that if the Buyer is subject to Damages (as
defined below) for Breaches of matters set forth in SECTION 4.17 (ENVIRONMENTAL
MATTERS), the Buyer may commence an action against the Seller to recover Damages
for such Breaches at any time within the applicable statute of limitations
relating to such matter during which the Seller is subject to Damages with
respect thereto, and the Buyer shall not be barred in such instance by the first
clause of this Section; PROVIDED FURTHER, HOWEVER, that the Buyer shall use its
Best Efforts to obtain (for itself and for the Seller) the benefit of any
statute of limitations applicable as against any third party.
10.2 INDEMNIFICATION OF THE BUYER.
(a) INDEMNIFIABLE DAMAGES. Subject to the terms and conditions of this
ARTICLE 10, the Seller shall defend, indemnify and hold harmless the Buyer and
its Representatives, stockholders, controlling persons and Affiliates
(collectively, the "BUYER INDEMNITEES") from and against, and will pay to the
Buyer Indemnitees, the amount of, any loss, liability, claim, damage or expense
(including interest, penalties, costs of investigation and defense and
reasonable attorneys' fees) (but specifically excluding any indirect or
consequential damage or other item), whether or not involving a third-party
claim (collectively, "DAMAGES"), arising, directly or indirectly, from or in
connection with:
(i) any Breach by the Seller of any representation or warranty
made by the Seller in this Agreement, the Disclosure Schedules, or any
other certificate or document delivered by the Seller pursuant to this
Agreement;
(ii) any Breach by the Seller of any covenant of the Seller in
this Agreement or in any Related Agreement (as applicable);
(iii) any employment-related claim asserted by or on behalf of
any current or former employee of the Seller directly related to any of
the Transactions other than any claim based on or relating to the
treatment or dismissal of such employee by the Buyer or any of its
Affiliates;
(iv) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with the
Seller (or any Person acting on its behalf in connection with any of
the Transactions);
(v) any Excluded Liability; or
33
(vi) any other liability or obligation arising out, resulting
from or relating to Seller's ownership and operation of the Business
prior to the Closing (other than with respect to the Assumed
Liabilities).
(b) LIMITATIONS ON DAMAGES. Except as set forth in SECTION 10.3 and
notwithstanding anything else in this Agreement to the contrary, the liability
of the Seller to the Buyer under this SECTION 10.2 shall not exceed, in the
aggregate, the amount of $1,750,000.
(c) REMEDIES EXCLUSIVE. The remedies provided in this SECTION 10.2 and
in SECTION 10.3 below, are exclusive, and shall limit and be in substitution
for, any other remedies that may be available to the Buyer (other than any
remedy of specific performance available under applicable legal or equitable
principles or injunctive or other relief); PROVIDED, HOWEVER, that the
limitation on damages set forth in paragraph (b) above shall not apply to the
Seller's obligations with respect to Accounts Receivable as set forth in SECTION
3.4 hereof.
10.3 INDEMNIFICATION OF BUYER AND PAYMENT OF DAMAGES FOR ENVIRONMENTAL
LIABILITIES. The Seller will indemnify and hold harmless the Buyer and the other
Buyer Indemnitees for, and will pay to the Buyer and the other Buyer Indemnitees
the amount of, any Damages (including costs of Removal or Remedial Action)
arising, directly or indirectly, from or in connection with any Environmental,
Health and Safety Liabilities solely in accordance with the provisions of
EXHIBIT Q attached hereto.
10.4 INDEMNIFICATION OF THE SELLER.
(a) INDEMNIFIABLE DAMAGES. Subject to the terms and conditions of this
ARTICLE 10, the Buyer will defend, indemnify and hold harmless the Seller and
its Representatives, stockholders, controlling persons and Affiliates
(collectively, the "SELLER INDEMNITEES"), from and against, and will pay to the
Seller Indemnitees the amount of any Damages arising, directly or indirectly,
from or in connection with:
(i) any Breach by the Buyer of any representation or warranty
made by the Buyer in this Agreement, in the Disclosure Schedules, or in
any other certificate or document delivered by the Buyer pursuant to
this Agreement;
(ii) any Breach by the Buyer of any covenant of the Buyer in
this Agreement or any Related Agreement (as applicable);
(iii) any employment-related claim asserted by or on behalf of
any current or former employee of the Seller relating to the treatment
or dismissal of such employee by the Buyer or any of its Affiliates.
(iv) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with the
Buyer (or any Person acting on its behalf) in connection with any of
the Transactions;
34
(v) any Assumed Liability; or
(vi) any other liability or obligation arising out of,
resulting from or relating to Buyer's ownership and operation of the
Business on or after the Closing (other than with respect to the
Excluded Liabilities).
(b) LIMITATIONS ON DAMAGES. Notwithstanding anything else in this
Agreement to the contrary, the liability of the Buyer to the Seller under this
SECTION 10.4 shall not exceed, in the aggregate, the amount of $1,750,000;
provided, however, that this limitation shall not apply to Buyer's liabilities
arising under or related to Section 6.1 hereof.
(c) REMEDIES EXCLUSIVE. The remedies provided in this SECTION 10.4 are
exclusive, and shall limit and be in substitution for, any other remedies that
may be available to the Seller (other than any remedy of specific performance
available under applicable legal or equitable principles or injunctive or other
relief).
10.5 PROCEDURE FOR INDEMNIFICATION --THIRD-PARTY CLAIMS.
(a) REQUIRED NOTICE. Promptly after receipt by an indemnified party
under SECTION 10.2, SECTION 10.3 (and EXHIBIT Q) or SECTION 10.4, of notice of a
claim or the commencement of any Proceeding against it, such indemnified party
will, if a claim is to be made against an indemnifying party under such Section,
give notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) PROCEDURE. If any Proceeding referred to in SECTION 10.5(a) is
brought against an indemnified party, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel satisfactory to the indemnified party and, after
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will not, as long
as it diligently conducts such defense, be liable to the indemnified party under
this ARTICLE 10 for any fees of other counsel or any other expenses with respect
to the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, no compromise or settlement of such claims may be effected by
the indemnifying party without the indemnified party's consent (which consent
shall not be unreasonably withheld) unless (A) there is no finding or admission
of any violation of Legal Requirements or any violation of the rights of any
Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief
35
provided is monetary damages that are paid in full by the indemnifying party,
and (iii) the indemnified party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If notice
is given to an indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten days after the indemnified party's
notice is given, give notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the indemnified party with the consent of the indemnifying party (which
consent will not be unreasonably withheld or delayed).
(c) OTHER PROCEEDINGS. Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a reasonable probability that a
Proceeding may materially adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to indemnification
under this Agreement, the indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise, or settle such
Proceeding, but the indemnifying party will not be bound by any determination of
a Proceeding so defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
10.6 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE 11 - NOTICES
Any notice or demand required or permitted to be given under the terms
of this Agreement shall be deemed to have been duly given or made if given by
any of the following methods:
(a) Deposited in the United States mail, in a sealed envelope, postage
prepaid, by registered or certified mail, return receipt requested, respectively
addressed as follows:
TO BUYER: Woodgrain Millwork, Inc.
ATTENTION Steven J. Atkinson
300 N.W. 16th Street
P.O. Box 566
Fruitland, Idaho 83619
Fax number 208/451-1434
WITH A COPY TO: Stoel Rives LLP
ATTENTION Paul M. Boyd, Esq.
101 S. Capitol Blvd., Suite 1900
Boise, Idaho 83702
Fax number 208/389-9040
36
IF TO THE
SELLER: Atrium Companies, Inc.
ATTENTION Jeff L. Hull
1341 West Mockingbird Lane, Suite 1200 West
Dallas, Texas 75247
Fax number 214/630-5058
WITH A COPY TO: Paul, Hastings, Janofsky & Walker LLP
ATTENTION Marie Censoplano, Esq.
Joel M. Simon, Esq.
399 Park Avenue
New York, New York 10022
Fax number 212/319-4090
(b) Hand-delivered or sent to the above address via an established
national overnight delivery service (such as Federal Express), charges prepaid,
or
(c) Sent via any electronic communications method provided the sender
obtains written confirmation of receipt of the communication by the electronic
communication equipment at the office of the address listed above.
Notices delivered by mail shall be deemed given five (5) Business Days
after being deposited in the United States mail, return receipt requested.
Notices delivered by hand, by facsimile, or by a nationally recognized private
carrier shall be deemed given on the first Business Day following receipt;
PROVIDED, HOWEVER, that a notice delivered by facsimile shall only be effective
if such notice is also delivered by hand, or deposited in the United States
mail, postage prepaid, registered or certified mail, on or before two (2)
Business Days after it is delivered by facsimile. Any party may hereinafter
designate other addresses to which notice may be sent, upon written notice sent
to the other parties at the address above designated, or subsequently designated
in accordance herewith.
ARTICLE 12 - MISCELLANEOUS
12.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Exhibits and Disclosure Schedules hereto), the Related Agreements and the other
documents delivered pursuant hereto and referenced herein, constitute the full
and entire understanding and agreement between the parties with respect to the
subject matter hereof and supersede, merge, and replace, all prior negotiations,
offers, promises, representations, warranties, agreements and writing with
respect to such subject matter, both written and oral. This Agreement supersedes
that certain undated, proposed Term Sheet prepared by Buyer. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated, except by a written instrument signed by the
parties hereto.
37
12.2 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY RIGHTS. Neither party may
assign any of its rights under this Agreement without the prior written consent
of the other party; PROVIDED, HOWEVER, that, without the consent of the other
party, either party may pledge this Agreement and the rights and obligations
hereunder to any of its lenders as security for indebtedness owing or to be owed
to such lenders. Subject to the preceding sentence, this Agreement will apply
to, be binding in all respects upon, and inure to the benefit of the successors
and permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement. Except as provided in ARTICLE
10 hereto, this Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
12.3 WAIVER. Except as set forth in SECTIONS 10.2(c) and 10.3(c), the
rights and remedies set forth herein of the parties to this Agreement are
cumulative and not alternative. Except as set forth in ARTICLE 10, neither the
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
12.4 GOVERNING LAW; ATTORNEYS' FEES.
(a) GOVERNING LAW. This Agreement and the Related Agreements shall be
governed by, construed, interpreted and applied in accordance with the laws of
the State of Delaware, without giving effect to any conflict of laws rules that
would refer the matter to the laws of another jurisdiction.
(b) ATTORNEYS' FEES. The prevailing party in any action or proceeding
relating to this Agreement or any Related Agreement shall be entitled to recover
reasonable attorneys' fees and other costs from the non-prevailing parties, in
addition to any other relief to which such prevailing party may be entitled.
12.5 DISPUTE RESOLUTION.
(a) ARBITRATION. All disputes and controversies of every kind and
nature between the parties hereto arising out of or in connection with this
Agreement (including without limitation this ARTICLE 12) or the Related
Agreements as to the construction, validity,
38
interpretation or meaning, performance, non-performance, enforcement, operation,
or breach, shall be submitted to arbitration pursuant to the following
procedures:
(i) After a dispute or controversy arises, either party may,
in a written notice delivered to the other party, demand such
arbitration. Such notice shall designate the name of the arbitrator
(who shall be an impartial person) appointed by such party demanding
arbitration, together with a statement of the matter in controversy.
(ii) Within thirty (30) days after receipt of such demand, the
other party shall, in a written notice delivered to the other party,
name such party's arbitrator (who shall be an impartial person). If
such party fails to name an arbitrator, then the second arbitrator
shall be named by the American Arbitration Association (the "AAA"). The
two arbitrators so selected shall name a third arbitrator (who shall be
an impartial person) within 30 days, or in lieu of such agreement on a
third arbitrator by the two arbitrators so appointed, the third
arbitrator shall be appointed by the AAA. If any arbitrator appointed
hereunder shall die, resign, refuse, or become unable to act before an
arbitration decision is rendered, then the vacancy shall be filled by
the methods set forth in this Section for the original appointment of
such arbitrator.
(iii) Each party shall bear its own arbitration costs and
expenses, including one-half of the fees and expenses of the
arbitrators. The arbitration hearing shall be held in the jurisdiction
of the respondent at a location designated by a majority of the
arbitrators. The Commercial Arbitration Rules of the American
Arbitration Association shall be incorporated by reference at such
hearing, the substantive laws of the State of Delaware (excluding
conflict of laws provisions) shall apply.
(iv) The arbitration hearing shall be concluded within ten
(10) days unless otherwise ordered by the arbitrators and the written
award thereon shall be made within fifteen (15) days after the close of
submission of evidence. An award rendered by a majority of the
arbitrators appointed pursuant hereto shall be final and binding on all
parties to the proceeding, shall resolve the question of costs of the
arbitrators and all related matters, and judgment on such award may be
entered and enforced by either party in any court of competent
jurisdiction.
(v) Except as set forth in SECTION 12.5(b) below, the parties stipulate
that the provisions of this Section shall be a complete defense to any
suit, action or proceeding instituted in any federal, state or local
court or before any administrative tribunal with respect to any
controversy or dispute arising out of this Agreement or any of the
Related Agreements. The arbitration provisions hereof shall with
respect to such controversy or dispute, survive the termination or
expiration of this Agreement or the Related Agreements.
39
Neither any party hereto nor the arbitrators may disclose the existence
or results of any arbitration hereunder without the prior written consent of the
other party; nor will any party hereto disclose to any third party any
confidential information disclosed by any other party hereto in the course of an
arbitration hereunder without the prior written consent of such other party.
(b) EMERGENCY RELIEF. Notwithstanding anything in this SECTION 12.5 to
the contrary, either party may seek from a court any provisional remedy that may
be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of the
controversy.
12.6 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Any counterpart may be delivered
by facsimile; PROVIDED, HOWEVER, that attachment thereof shall constitute the
representation and warranty of the person delivering such signature that such
person has full power and authority to attach such signature and to deliver this
Agreement. Any facsimile signature shall be replaced with an original signature
as promptly as practicable.
[Signature Page Follows]
40
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the day and year first above written.
SELLER: ATRIUM COMPANIES, INC.
By:_____________________________
Jeff L. Hull
President
BUYER: WOODGRAIN MILLWORK, INC.
By:_____________________________
Steven J. Atkinson
Chief Financial Officer
41
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-4’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/31/07 | | 19 | | | | | None on these Dates |
| Filed on: | | 1/22/01 |
| | 12/1/00 | | 19 |
| | 8/30/00 | | 1 | | 24 |
| | 8/28/00 | | 6 |
| | 7/31/00 | | 5 | | 18 |
| | 12/31/99 | | 21 |
| | 10/1/99 | | 25 |
| | 1/1/99 | | 22 |
| | 10/2/98 | | 17 | | 37 |
| | 4/1/98 | | 25 |
| | 1/1/98 | | 24 |
| List all Filings |
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