Execution Copy
STOCK PURCHASE AGREEMENT
by and among
RELIANT BUILDING PRODUCTS, INC.
("Buyer")
and
THE STOCKHOLDERS, WARRANT HOLDERS AND
OPTION HOLDERS OF CFA HOLDING COMPANY
("Sellers")
December 17, 1997
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions
1.1 Definitions
1.2 Accounting Terms
ARTICLE 2 Purchase and Sale
2.1 Purchase and Sale
2.2 Purchase Price
2.3 Allocation of Purchase Price
2.4 Net Closing Date Indebtedness; Working Capital Adjustment
ARTICLE 3 Sellers' Representations and Warranties Concerning
the Transaction
3.1 Authority and Capacity
3.2 Ownership of Securities
3.3 Execution and Delivery; Enforceability
3.4 Noncontravention
3.5 Brokerage
ARTICLE 4 Sellers' Representations and Warranties Concerning
the Acquired Companies
4.1 Organization and Good Standing of Acquired Companies
4.2 Capital Stock of Acquired Companies
4.2.1 The Company
4.2.2 Subsidiaries
4.3 Other Ventures
4.4 Noncontravention
4.5 Financial Statements
4.6 Absence of Undisclosed Liabilities
4.7 Absence of Certain Changes or Events
4.8 Taxes
4.9 Employees
4.10 Employee Benefit Plans
4.11 Environmental, Health and Safety Matters
4.12 Permits; Compliance with Laws
4.13 Real and Personal Properties
4.14 Accounts Receivable
4.15 Inventories
4.16 Intellectual Properties
4.17 Contracts
4.18 Litigation
4.19 Brokerage
4.20 Customers
4.21 Disclosure
ARTICLE 5 Representations and Warranties of Buyer
5.1 Organization; Authorization
5.2 Execution and Delivery; Enforceability
5.3 Governmental Authorities; Consents
5.4 Brokerage
5.5 Investment Intent
ARTICLE 6 Conditions to Closing
6.1 Conditions to Buyer's Obligation to Close
6.2 Conditions to Sellers' Obligation
ARTICLE 7 The Closing
ARTICLE 8 Additional Covenants and Agreements
8.1 Pre-Closing Covenants and Agreements
8.1.1 Conductof Business
8.1.2 Access
8.1.3 Satisfaction of Closing Conditions
8.1.4 Termination
8.1.5 Specific Performance
8.2 Miscellaneous Covenants
8.2.1 Publicity
8.2.2 Expenses
8.2.3 No Assignments
8.2.4 Confidentiality
8.2.5 Exclusivity
8.2.6 Access by Sellers
8.2.7 Continuation of Indemnification
8.2.8 Sellers' Representative
8.2.9 Section 338 Election
8.2.10 Noncompetition
8.2.11 Bacon Note
ARTICLE 9 Indemnification
9.1 Indemnification of Buyer
9.2 Limitations on Indemnification of Buyer
9.3 Indemnification of Sellers
9.4 Limitations on Indemnification of Sellers
9.5 Third-Party Claims
ARTICLE 10 Certain Definitions
ARTICLE 11 Construction; Miscellaneous Provisions
11.1 Notices
11.2 Entire Agreement
11.3 Modification and Waiver
11.4 Survival
11.5 Jurisdiction and Venue
11.6 Binding Effect
11.7 Headings
11.8 Number and Gender
11.9 Counterparts
11.10 Third Parties
11.11 Schedules and Exhibits
11.12 Time Periods
11.13 Governing Law
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
the 17th day of December, 1997, by and among Reliant Building Products, Inc.,
a Delaware corporation, as purchaser ("Buyer"), and each of the Persons
identified on Schedule 4.2.1 to this Agreement, as sellers (each, a "Seller,"
and collectively, the "Sellers").
RECITALS:
A. CFA Holding Company, a Delaware corporation (the "Company"), owns
directly or indirectly all of the issued and outstanding shares of the capital
stock of each of Care Free Aluminum Products, Inc., a Michigan corporation
("Care Free"), Alpine Industries, Inc., a Washington corporation ("Alpine"),
and Ultra Building Systems, Inc., a New Jersey corporation ("Ultra," and
together with Care Free and Alpine, the "Subsidiaries").
▇. ▇▇▇▇▇▇▇ own, in the aggregate, all of the issued and outstanding
shares of capital stock of the Company (as more particularly defined herein,
the "Shares") and all of the issued and outstanding warrants and options to
purchase shares of capital stock of the Company (as more particularly defined
herein, the "Warrants" and the "Stock Options," respectively).
C. Buyer desires to purchase from Sellers, and Sellers desire to sell
to Buyer, all of the Shares, all of the Warrants and all of the Stock Options,
upon and subject to the terms and conditions set forth in this Agreement.
Now, therefore, in consideration of and in reliance upon the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, Buyer and Sellers hereby agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. Certain terms used in this Agreement shall have the
meanings set forth in Article 10, or elsewhere herein as indicated in Article
10.
1.2 Accounting Terms. Accounting terms used in this Agreement and
not otherwise defined herein shall have the meanings attributed to them under
GAAP except as may otherwise be specified herein.
ARTICLE 2
Purchase and Sale
2.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, at the Closing, each Seller shall sell, transfer and deliver to
Buyer, and Buyer shall purchase from each Seller, all of such Seller's right,
title and interest in and to all of the Shares, Warrants and Stock Options
owned by such Seller, as more specifically identified on Schedule 4.2.1 (as to
each Seller, respectively, the "Seller's Respective Securities").
2.2 Purchase Price. The aggregate purchase price for all of the
Shares, Warrants and Stock Options shall be an amount (the "Purchase Price")
equal to: (i) One Hundred Twenty-Three Million Dollars ($123,000,000) (the
"Enterprise Value"), minus (ii) the Net Closing Date Indebtedness minus (iii)
the Working Capital Adjustment. Subject to the terms and conditions of this
Agreement, at the Closing, Buyer shall pay and deliver the Purchase Price,
less Four Million Dollars ($4,000,000) (the "Escrow Amount"), to Sellers in
cash or its equivalent by means of a wire transfer of immediately available
funds to an account (the "Sellers' Account") designated by FNL Management
Corp. (the "Sellers' Representative") and to Bank One, N.A., Cleveland, Ohio,
as escrow agent, the Escrow Amount to be held pursuant to the Indemnification
Escrow Agreement attached hereto as Exhibit 2.2 (the "Escrow Agreement").
Payment by Buyer of the Purchase Price into the Sellers' Account and to such
escrow agent pursuant to the Escrow Agreement shall constitute payment by
Buyer to each Seller and satisfaction of Buyer's obligation to pay the
Purchase Price hereunder, and Sellers shall be solely responsible among
themselves for allocating and distributing to each Seller such Seller's
respective share of the Purchase Price from the Sellers' Account.
2.3 Allocation of Purchase Price. At the Closing, the Purchase Price
shall be allocated among the respective Sellers in accordance with the
provisions of Schedule 2.3. The portion of the Purchase Price so allocated to
each Seller shall be paid and distributed to such Seller in cash or its
equivalent by means of a wire transfer of immediately available funds to an
account designated by such Seller to the Seller's Representative prior to the
Closing.
2.4 Net Closing Date Indebtedness; Working Capital Adjustment. As
used in this Agreement, "Net Closing Date Indebtedness" means an amount equal
to (i) the sum of all of the Acquired Companies' indebtedness to institutional
lenders for borrowed money (including, without limitation, obligations in
respect of principal, accrued interest, and any applicable prepayment charges
or premiums, and any charges or premiums payable by an Acquired Company in
respect of the cancellation or termination of any outstanding interest rate
"swap" agreements or similar arrangements with such lenders), plus (ii) the
sum of the outstanding principal balance and all accrued but unpaid interest
under the Kinco Note, plus (iii) the maximum outstanding liability of the
Acquired Companies for additional purchase price payments pursuant to Section
3.2.5 and Exhibit A of the Windowman Purchase Agreement (which, as of the date
of this Agreement, aggregates $1,800,000), minus (iv) the sum of all cash,
cash equivalents and marketable securities held by the Acquired Companies; all
as determined in good faith by the Company on a consolidated basis as of the
close of business on the day immediately preceding the Closing Date, in
accordance with GAAP, and set forth in a certificate signed by the chief
financial officer of the Company and delivered to Buyer and Seller's
Representative (the "Company Certificate").
As used in this Agreement, the "Working Capital Adjustment" means Seven
Million Dollars ($7,000,000) minus the Closing Date Working Capital Amount.
If the foregoing calculation results in a negative number, the Working Capital
Adjustment shall be zero. As used herein, the "Closing Date Working Capital
Amount" shall mean the excess of Current Assets over Current Liabilities.
"Current Assets" shall mean the sum of the Company's and its consolidated
Subsidiaries':
(i) accounts receivable net of allowance for doubtful accounts;
(ii) other receivables;
(iii) inventory net of inventory reserves; and
(iv) prepaid expenses/other current assets;
each determined as of the close of business on the day immediately preceding
the Closing Date. "Current Liabilities" shall mean the sum of the Company's
and its consolidated Subsidiaries' accounts payable and other current
liabilities (including accrued expenses and other accrued current
liabilities), each determined as of the close of business on the day
immediately preceding the Closing Date. For purposes hereof, Current Assets
and Current Liabilities shall be determined in accordance with GAAP in a
manner consistent with the Company's accounting procedures used to prepare the
Interim Balance Sheet, and both shall be calculated without taking into
account the effects of any disposition or exercise of any Stock Options
hereunder or otherwise. The Working Capital Adjustment shall be determined in
good faith by the Company and set forth in the Company Certificate.
Sellers shall cause the Acquired Companies to perform a physical
inventory as of the close of business on the day immediately preceding the
Closing Date. Representatives of Buyer shall be permitted to observe each
such inventory. Within twenty (20) business days after the Closing, Sellers'
Representative shall deliver to Buyer a calculation of the value of the
Acquired Companies' inventories as of the close of business on the day
immediately preceding the Closing Date determined in accordance with GAAP in a
manner consistent with the Company's accounting procedures used to prepare the
Interim Balance Sheet, together with information sufficient to allow Buyer to
verify such valuation (the "Preliminary Inventory Valuation"). For purposes
of such calculation, Sellers' Representative shall have reasonable access to
such of the Acquired Companies' facilities, personnel and records as are
necessary or appropriate to complete the valuation of the Acquired Companies'
inventories in accordance with this paragraph.
As soon as practicable after receipt of the Preliminary Inventory
Valuation, Buyer shall cause the Company to prepare and deliver to Buyer and
to Sellers' Representative a calculation of Net Closing Date Indebtedness and
the Working Capital Adjustment. If either Buyer or Sellers' Representative
shall object to either calculation by written notice to the other and to the
Company delivered within twenty (20) days after delivery of said calculation,
Sellers' Representative and Buyer shall for sixty (60) days after such
delivery negotiate any differences between the calculations of Net Closing
Date Indebtedness and the Working Capital Adjustment. If the Sellers'
Representative and Buyer are unable to resolve the dispute, Sellers and Buyer
shall promptly retain a nationally recognized "big five" independent
accounting firm acceptable to both the Sellers' Representative and Buyer (the
"Independent Accountants"). The decision of the Independent Accountants shall
be final and binding on, and non-appealable by, Sellers and Buyer. The fees
and expenses of the Independent Accountants shall be paid by the party whose
estimates of Net Closing Date Indebtedness and the Working Capital Adjustment
are furthest from the Independent Accountants' calculations of Net Closing
Date Indebtedness and the Working Capital Adjustment. Sellers or Buyer, as
applicable, shall promptly pay any adjustment to the Purchase Price determined
by the foregoing procedures.
ARTICLE 3
Sellers' Representations and Warranties Concerning the
Transaction
Each Seller represents and warrants to Buyer that the following
statements contained in this Article 3 are true and correct at and as of the
date of this Agreement with respect to such Seller. No Seller makes any
representation or warranty as to the following matters with respect to any
other Seller.
3.1 Authority and Capacity. Seller possesses all requisite legal
right, power, authority and capacity (including, if Seller is a corporation,
partnership or trust, all requisite corporate, partnership or trust power and
authority) to execute, deliver and perform this Agreement, including, without
limitation, the authority and capacity to sell and transfer Seller's
Respective Securities to Buyer as provided by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Seller.
3.2 Ownership of Securities. Seller owns good, valid and marketable
title to all of such Seller's Respective Securities free and clear of all
Liens.
3.3 Execution and Delivery; enforceability. This Agreement and each
other document, instrument or agreement to be executed and delivered by Seller
in connection herewith has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by
principles of equity.
3.4 Noncontravention. Except for the applicable requirements of the
HSR Act, and other than restrictions arising under the Stockholders'
Agreement, Seller is not required to submit any notice, report or other filing
with any governmental authority in connection with Seller's execution,
delivery or performance of this Agreement or any other document, instrument or
agreement to be executed and delivered by Seller in connection herewith, and
such execution, delivery and performance will not violate or conflict with, or
result in any violation of, any Law by which Seller is bound or result in a
default under any agreement, order, writ, injunction, judgment or decree to
which Seller is a party. No consent, approval or authorization of any
governmental authority or any other Person is required to be obtained by
Seller in connection with Seller's execution, delivery and performance of this
Agreement or any other document, instrument or agreement to be executed and
delivered by Seller in connection herewith.
3.5 Brokerage. No Person is or will become entitled, by reason of
any agreement or arrangement entered into or made by or on behalf of Seller,
to receive any commission, brokerage, finder's fee or other similar
compensation in connection with the consummation of the transactions
contemplated by this Agreement, except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co.,
whose fees and expenses will be paid by Sellers.
ARTICLE 4
Sellers' Representations and Warranties Concerning the Acquired
Companies
Each Seller represents and warrants to Buyer that the following
statements contained in this Article 4 are true and correct at and as of the
date of this Agreement.
4.1 Organization and Good Standing of Acquired Companies. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Care Free is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Michigan. Alpine is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington. Ultra is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New Jersey. Schedule 4.1 contains a complete and
accurate copy of the Certificate of Incorporation and the By-Laws of the
Company, including all amendments thereto, and the Articles of Incorporation
and the By-Laws of each of the Subsidiaries, including all amendments thereto.
Each of the Acquired Companies has all requisite corporate power and authority
to own and lease its assets and to operate its business as now being owned,
leased and operated. Each Acquired Company is duly qualified or licensed to
do business as a foreign corporation in, and is in good standing in, each
jurisdiction in which the nature of its business or its ownership of its
properties requires it to be so qualified or licensed, except where the
failure to be so qualified or licensed would not reasonably be likely to
result in a Material Adverse Effect.
4.2 Capital Stock of Acquired Companies.
4.2.1 The Company. The total authorized capital stock of the
Company consists of Two Thousand Three Hundred Seventy-Five (2,375) shares of
common stock, $.001 par value per share, which are classified as follows: (a)
1,000 shares of Class A Common Stock; (b) 500 shares of Class B Common Stock;
(c) 250 shares of Class C Common Stock; (d) 125 shares of Class D Common
Stock; and (e) 500 shares of Class E Common Stock. Of such authorized shares,
a total of One Thousand One Hundred Fifty-Four and 5,475/10,000ths
(1,154.5475) are issued and outstanding and are owned of record by the Sellers
in the respective amounts and in the respective classes set forth on Schedule
4.2.1. All of the Shares have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights. Except for the
Warrants and the Stock Options, and except for the Stockholders' Agreement,
there does not exist nor is there outstanding any right or security granted or
issued by the Company to any Person to cause the Company to issue, deliver or
sell any shares of capital stock of the Company to any Person or any
securities convertible into or evidencing the right to purchase or subscribe
for any shares of capital stock (including, without limitation, any warrant,
stock option, convertible debt obligation, subscription for stock or
securities convertible into stock of the Company, or any other similar right,
security, instrument or agreement). Other than this Agreement and the
Stockholders Agreement, there are no agreements, understandings or
arrangements with respect to the dividend rights, voting, sale or transfer of
shares of capital stock of the Company. As of the Closing, immediately after
giving effect to the sale to Buyer of all of the Shares, Warrants and Stock
Options, all of the issued and outstanding shares of the capital stock of the
Company will be owned by Buyer free and clear of all Liens other than such as
may be created by Buyer effective as of the Closing.
4.2.2 Subsidiaries. Schedule 4.2.2 sets forth, for each
Subsidiary, the number of shares of authorized capital stock of each class of
its capital stock, and the number of issued and outstanding shares of each
class of its capital stock. The Company owns, beneficially and of record, all
of the issued and outstanding shares of the capital stock of Care Free and
Alpine, and Care Free owns all of the issued and outstanding shares of the
capital stock of Ultra, free and clear of any Liens other than Liens
identified on Schedule 4.13(c). All of the issued and outstanding stock of
the Subsidiaries (the "Subsidiary Stock") has been duly authorized and validly
issued and is fully paid, nonassessable and free of preemptive rights. There
does not exist nor is there outstanding any right or security granted or
issued by the Company or any Subsidiary to any Person to cause the Company or
any Subsidiary to issue or sell any shares of capital stock of any Subsidiary
to any Person or any securities convertible into or evidencing the right to
purchase or subscribe for any share of capital stock (including, without
limitation, any warrant, stock option, convertible debt obligation,
subscription for stock or securities convertible into stock of any Subsidiary,
or any other similar right, security, instrument or agreement). There are no
agreements, understandings or arrangements with respect to the dividend
rights, voting, sale or transfer of shares of the capital stock of any of the
Subsidiaries.
4.3 Other Ventures. Except for the Subsidiary Stock, none of the
Acquired Companies possesses any equity ownership interest exceeding two
percent (2%) in any other business entity or is a member of any partnership or
joint venture.
4.4 Noncontravention. Except as set forth in Schedule 4.4, and
assuming that all filings required by the HSR Act are duly made and all
applicable waiting periods thereunder have expired or been terminated, the
execution and delivery of this Agreement by Sellers and the consummation of
the transactions contemplated hereby: (a) will not violate any provision of
the Certificate of Incorporation or the By-Laws of the Company; (b) will not
violate any Law; and (c) will not result in a breach or violation of, or
constitute a default under, or give rise to a right of any party to
accelerate, modify or terminate, any contract, agreement, instrument or
indenture to which any of the Acquired Companies is a party or by which any
assets of an Acquired Company are bound, except where such breach or
violation, default, acceleration, modification or termination would not
reasonably be likely to result in a Material Adverse Effect.
Except for compliance with the HSR Act, no consent, approval, order or
authorization of, or registration, declaration or filing with, any national,
state or local governmental or regulatory agency or authority is required to
be made or obtained by the Acquired Companies in connection with the
transactions contemplated hereby.
4.5 Financial Statements. Schedule 4.5 sets forth correct and
complete copies of the audited consolidated financial statements of the
Company as of and for the fiscal years ended December 31, 1994, 1995 and 1996
(collectively, the "Audited Financial Statements"). The Audited Financial
Statements have been prepared in accordance with GAAP, and present fairly, in
all material respects, the financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the results of their
operations for the periods then ended. Schedule 4.5 also sets forth correct
and complete copies of the unaudited consolidated balance sheet of the Company
as at October 31, 1997 (the "Interim Balance Sheet") and unaudited
consolidated income statement of the Company for the ten-month period then
ended, each as prepared by the Company (collectively, the "Interim Financial
Statements"). The Interim Financial Statements have been prepared in
accordance with GAAP applied on a basis consistent with the Audited Financial
Statements and present fairly, in all material respects, the financial
position of the Company and its consolidated subsidiaries as of such date and
the results of their operations for the ten-month period then ended, subject
to customary year-end adjustments which would not in the aggregate have a
Material Adverse Effect, and except for the absence of footnote disclosure,
prior period comparative data and other presentation items which are required
by GAAP, and except with respect to any items disclosed on Schedule 4.5. The
Audited Financial Statements and the Interim Financial Statements shall be
deemed to include any notes and schedules thereto which are included as part
of Schedule 4.5.
4.6 Absence of Undisclosed Liabilities. None of the Acquired
Companies has any debts, liabilities or obligations whatsoever, whether
currently due, accrued, contingent or otherwise, other than: (a) liabilities
reflected or reserved against on the Interim Balance Sheet, in the notes to
the Audited Financial Statements for the fiscal year ended December 31, 1996,
or otherwise disclosed on any Schedule to this Agreement; (b) liabilities
incurred in the ordinary course of business since the date of the Interim
Financial Statements; (c) liabilities pursuant to any contract under which the
Company is not in material default and which is required to be disclosed on
any Schedule to this Agreement; and (d) other liabilities none of which will
exceed $25,000 individually.
4.7 Absence of Certain Changes or Events. Except as and to the
extent disclosed on Schedule 4.7, since the date of the Interim Financial
Statements, the Acquired Companies have been operated only in the ordinary
course of business, and:
(a) other than circumstances or events affecting the Acquired
Companies and their competitors generally, there has not
occurred any change in the business or financial condition
of the Acquired Companies that has resulted or is
reasonably likely to result, in a Material Adverse Effect;
(b) there has not been any change in the accounting policies or
practices of any Acquired Company, including practices with
respect to the payment of accounts payable or the collection
of accounts receivable;
(c) the Company has not declared or paid any dividend or other
distribution on or in respect of, and has not repurchased,
any shares of its capital stock or any options or warrants
to purchase such stock;
(d) the Acquired Companies have not sold, transferred or
subjected to any Lien, and have not committed to sell,
transfer or subject to any Lien, any tangible or intangible
assets having a current book value in excess of $50,000
individually or in excess of $100,000 in the aggregate,
exceptfor (i) sales of inventory in the ordinary course of
business, (ii) Liens for current taxes and assessments not
yet due and payable or being contested in good faith by
appropriate proceedings, (iii) Liens imposed by law and
incurred in the ordinary course of business for obligations
not yet due to carriers, warehousemen, laborers, materialmen
or the like or being contested in good faith by appropriate
proceedings, and (iv) Liens in respect of pledges or
deposits under workers' compensation laws;
(e) the Acquired Companies have not purchased or leased, and
have not committed to purchase or lease, any asset for more
than $50,000 individually;
(f) the Acquired Companies have not canceled any debts owed to
them or released any claims possessed by them other than in
the ordinary course of business, except for any debts or
claims for which adequate reserves have been established in
the Audited Financial Statements or in the Interim
Financial Statements;
(g) the Acquired Companies have not suffered any theft, damage,
destruction or loss of or to any tangible asset or assets
which, whether or not covered by insurance, has resulted
in a Material Adverse Effect; and
(h) none of the Acquired Companies has made, granted, or
committed to make or grant any bonus or any wage, salary or
compensation increase to any director, officer, employee or
consultant or any increase in any employee benefit plan or
arrangement, and none of the Acquired Companies has amended
or terminated any existing employee benefit plan or
arrangement or adopted any new employee benefit plan or
arrangement.
4.8 Taxes. All Tax returns, reports and declarations (collectively,
"Tax Returns") required by any governmental authority of any jurisdiction to
be filed by any Acquired Company in connection with the properties, business,
income, expenses, net worth and corporate status of any Acquired Company have
been timely filed, except where the failure so to file would not have a
Material Adverse Effect, and the returns which have been filed are accurate
and complete in all material respects. All taxes and governmental charges,
including, without limitation, interest and penalties and franchise taxes
(collectively, "Taxes") due pursuant to the Tax Returns or otherwise due in
connection with the properties, business, income, expenses, net worth and
corporate status of each Acquired Company have been paid, other than Taxes
which are not yet due or which, if due, are not delinquent, or are being
contested in good faith, or have not been finally determined and for which
adequate reserves have been established in the Interim Financial Statements.
Except as set forth on Schedule 4.8, there are no Tax claims, audits or
proceedings pending or, to Sellers' knowledge, threatened in connection with
the properties, business, income, expenses, net worth or corporate status of
any Acquired Company. There are not currently in force any extensions of time
with respect to the date on which any Tax Return is or was due to be filed by
any Acquired Company, or any waivers or agreements for the extension of time
for the assessment or payment of any Tax. There are no outstanding waivers or
agreements extending the statute of limitations for any period with respect to
any Taxes of the Acquired Companies. No consent under Section 341(f) of the
Code has been filed with respect to any of the Acquired Companies. The
reserves and allowances for Taxes on the Interim Financial Statements are
adequate to satisfy all liabilities of the Acquired Companies for Taxes
through the end of the period covered thereby.
4.9 Employees. Each of the Acquired Companies has withheld or
collected from its employees the amount of all Taxes required to be withheld
or collected therefrom and has paid the same when due to the proper
governmental authorities. Except as set forth on Schedule 4.9, there are no
pending or, to Sellers' knowledge, threatened controversies, grievances or
claims by any employee or former employee of any Acquired Company with respect
to his or her employment or any benefits incident thereto which would have a
Material Adverse Effect, including, but not limited to, claims of sexual
harassment, unlawful discrimination or claims arising under workers'
compensation laws. Except as set forth on Schedule 4.9, none of the Acquired
Companies is a party to any collective bargaining agreement and, to Sellers'
knowledge, there is not pending or underway any union organizational
activities or proceedings with respect to employees of any Acquired Company.
Schedule 4.9 sets forth a complete list of all exempt, salaried employees of
the Acquired Companies who, as of December 31, 1996, received or accrued total
employment compensation of $50,000 or more in respect of the fiscal year then
ended (the "Scheduled Employees"). To Sellers' knowledge without having made
(or being required hereby to make) any inquiry, except as set forth on
Schedule 4.9, since December 31, 1996, no Scheduled Employee has terminated or
has notified any officer of an Acquired Company that such Scheduled Employee
intends to terminate his employment relationship with the Acquired Companies.
4.10 Employee Benefit Plans.
(a) Schedule 4.10 sets forth a list of all of the following
arrangements which any of the Acquired Companies
maintains or to which it contributes:
(i) any nonqualified deferred compensation, retirement or
severance plans, contracts or arrangements;
(ii) any qualified defined contribution plans (as defined
in Section 3(34) of ERISA or Section 414(i) of
the Code);
(iii) any qualified defined benefit plans (as defined in
Section 3(35) of ERISA or Section 414(l) of the
Code);
(iv) any employee welfare benefit plans (as defined in
Section 3(1) of ERISA); and
(v) any employment, severance, "golden parachute" or
termination or compensation agreements, consulting, agency or representation
agreements, executive compensation plans, bonus plans, deferred compensation
agreements, employee pension plans or retirement plans, retiree benefit or
compensation plans, severance pay arrangements, employee profit-sharing plans,
employee stock purchase and stock option plans, collective bargaining
agreements, agreements with labor unions or other collective bargaining
organizations with respect to employees of the Acquired Companies, and group
life insurance, hospitalization insurance or other plans or arrangements
providing for benefits for the officers, directors or employees of the
Acquired Companies.
(b) All employee benefit plans (as defined in Section 3(2) of
ERISA) which an Acquired Company maintains or to which it contributes
(collectively, the "Plans") comply with the requirements of all applicable
Laws, including, without limitation, ERISA and the Code, except as set forth
on Schedule 4.10 or except where the failure so to comply would not have a
Material Adverse Effect. Each Plan that is intended to be qualified under
Sections 401(a) or (k) of the Code has received a favorable determination
letter from the Internal Revenue Service after 1985.
(c) Seller has made available to Buyer true and complete copies
of (i) each of the plans, contracts or arrangements listed in Schedule 4.10,
including any amendments thereto; (ii) the most recent determination letter,
if any, received by any Acquired Company from the Internal Revenue Service
regarding the Plans which such Acquired Company maintains or to which it
contributes; (iii) the most recent financial statements and annual report or
return for the Plans; and (iv) the most recently prepared actuarial valuation
reports for the Plans.
(d) None of the Acquired Companies has ever contributed to any
multi-employer plan (as defined in Section 3(37) of ERISA) nor do any of the
Acquired Companies have any actual or potential liability to contribute to any
such plan, except as relates to employees of the Acquired Companies covered by
the collective bargaining agreements identified on Schedule 4.10. None of the
Acquired Companies has actual or potential liabilities under Section 4201 of
ERISA for any complete or partial withdrawal from a multi-employer plan. None
of the Acquired Companies has actual or potential liability for death or
medical benefits after separation from employment, other than (i) death
benefits under the employee benefit plans or programs (whether or not subject
to ERISA) set forth on Schedule 4.10 and (ii) health care continuation
benefits described in Section 4980B of the Code. None of the Acquired
Companies has incurred any liability for any tax or civil penalty or any
disqualification of any employee benefit plan (as defined in Section 3(3) of
ERISA)imposed by Sections 4980(b) and 4975 of the Code and Part 6 of Title I
and Section 502(i) of ERISA.
(e) There has been no prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan
that could reasonably be expected to have a Material Adverse Effect. None of
the Acquired Companies has incurred any liability for any excise tax arising
under Sections 4971, 4972, 4980 or 4980B of the Code and no fact or event
exists which could give rise to any such liability. None of the Acquired
Companies has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or
(ii) the withdrawal from any multiemployer plan or multiple employer plan, and
no fact or event exists which could give rise to any such liability. No
complete or partial termination has occurred within the five years preceding
the date hereof with respect to any Plan. No reportable event (within the
meaning of Section 4043 of ERISA) has occurred or is expected to occur with
respect to any Plan subject to Title IV of ERISA. No Plan had an accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412
of the Code), whether or not waived, as of the most recently dated plan year
of such Plan. None of the properties or assets of the Acquired Companies is
the subject of any lien arising under Section 302(f) of ERISA or Section
412(n) of the Code; none of the Acquired Companies has been required to post
any security under Section 307 of ERISA or Section 401(a)(29) of the Code; and
no fact or event exists which could give rise to any such lien or requirement
to post any such security.
(f) All contributions, premiums or payments required to be made
with respect to any Plan have been made on or before their due dates. All
such contributions have been fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by any governmental authority
and no fact or event exists which could give rise to any such challenge or
disallowance. As of the Closing Date, no Plan which is subject to Title IV of
ERISA will have an "unfunded benefit liability" (within the meaning of Section
4001(a)(18) of ERISA).
(g) Each of the guaranteed investment contracts and other
funding contracts with any insurance company that are held by any of the Plans
and any annuity contracts purchased by (i) any of the Plans or (ii) any
pension benefit plans (as defined in Section 3(2) of ERISA) that provided
benefits to any current or former employees of any of the Acquired Companies
was issued by an insurance company which received the highest rating from each
of Duff & ▇▇▇▇▇▇ Credit Rating Co., Standard & Poor's Insurance Rating
Services, A.M. Best Company and ▇▇▇▇▇'▇ Investors Service, as of the date such
contract was issued, the date hereof and the Closing Date.
(h) Each of the Acquired Companies is in compliance with the
requirements of the Americans with Disabilities Act.
(i) Each of the Acquired Companies is in compliance with the
requirements of the Workers Adjustment and Retraining Notification Act
("WARN") and has no liabilities pursuant to WARN.
(j) Except as set forth on Schedule 4.10, none of the plans,
contracts or arrangements disclosed thereon provides for payments in
connection with any change in
control of the Acquired Companies and no amount will become due to any
employee, consultant, officer or director of the Acquired Companies solely as
a result of the consummation of the transactions contemplated by this
Agreement.
4.11 Environmental, Health and Safety Matters.
(a) As used in this Section 4.11, the following terms shall
have the following meanings:
(i) "Hazardous Material" means any hazardous or toxic
substance, waste or material, any pollutant or contaminant (including
petroleum) or any other similar substance which is regulated under the
Environmental, Health and Safety Laws.
(ii) "Environmental, Health and Safety Laws" means and
includes the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the regulations thereunder; the Resource
Conservation and Recovery Act of 1976, as amended, and the regulations
thereunder; the Occupational Safety and Health Act of 1970, as amended, and
the regulations thereunder; and any other applicable federal, state, or local
Law concerning pollution or protection of the environment, public health and
safety or employee health and safety, including laws relating to the
discharge, use, generation, transportation, storage, treatment, disposal,
removal or recovery of Hazardous Materials.
(b) The Acquired Companies and the Real Property are in
substantial compliance with all applicable Environmental, Health and Safety
Laws.
(c) The Acquired Companies have obtained, maintain in full force
and effect and are operating in substantial compliance with all permits,
licenses, certificates of compliance, approvals and other authorizations which
are required under Environmental, Health and Safety Laws except where the
failure to do so would not have a Material Adverse Effect.
(d) During the Period of Sellers' Ownership and, to Seller's
knowledge prior thereto, except as set forth on Schedule 4.11, (i) no
Hazardous Materials have been generated, treated, contained, handled, located,
used, manufactured, processed, buried, incinerated, deposited, stored, or
released on or under any part of the Real Property except in accordance with
all applicable Environmental, Health and Safety Laws or except where the
failure to do so would not have a Material Adverse Effect, (ii) the Real
Property and the improvements thereon contain no asbestos, and (iii) no
aboveground or underground storage tanks are located on or under the Real
Property.
(e) During the Period of Sellers' Ownership and, to Seller's
knowledge prior thereto, except as set forth on Schedule 4.11, no Acquired
Company has received any written notice alleging in any manner that it is or
might be potentially responsible for any release of Hazardous Materials, or
any costs arising under or violation of Environmental, Health or Safety Laws.
(f) Except as Set forth on Schedule 4.11, no Acquired Company
has been named as a potentially responsible party at any federal superfund
site or a similar state site by any governmental agency or third party.
4.12 Permits; Compliance with Laws. Except as set forth on
Schedule 4.12, (a) each of the Acquired Companies is in compliance with all
applicable Laws, and possesses all licenses, permits, authorizations and
certificates from any governmental authority which are required under any Law
with respect to the operation of its business as presently conducted
(collectively, "Permits"), except where the failure so to comply or to possess
such a Permit would not have a Material Adverse Effect, and (b) none of the
Acquired Companies has received within the three-year period preceding the
date of this Agreement any written notice from any governmental authority
alleging with respect to any Acquired Company any noncompliance with any
applicable Law which could result in a Material Adverse Effect.
4.13 Real and Personal Properties.
(a) Schedule 4.13(a) identifies (i) all of the real property
owned by any of the Acquired Companies (collectively, the "Owned Real
Property"), and (ii) all of the real property demised by leases or subleases
(collectively, the "Leases") to any of the Acquired Companies (collectively,
the "Leased Real Property," and together with the Owned Real Property, the
"Real Property").
(b) The Leases are in full force and effect, and an Acquired
Company holds a valid and existing leasehold interest under each of the Leases
for the terms set forth therein, respectively. No Acquired Company is in
default under any Lease, and, to Sellers' knowledge, no events have occurred
and no circumstances exist which, if unremedied, and whether with or without
notice or the passage of time or both, would result in such a default, except
in each case for such defaults as would not have a Material Adverse Effect.
Sellers have made available to Buyer a complete and accurate copy of each of
the Leases, including all amendments thereto.
(c) Each Acquired Company owns, with good, valid and marketable
title, each parcel of Owned Real Property identified on Schedule 4.13(a) as
being owned by such Acquired Company, and an Acquired Company owns, with good
and valid title, each of the items of tangible personal property reflected on
the Interim Balance Sheet (except for assets disposed of since the date of the
Interim Balance Sheet), free and clear of all Liens, except for Liens
identified or described on Schedule 4.13(c), and except for Permitted Liens.
(d) To Sellers' knowledge, except as set forth on Schedule
4.13(d), the buildings, equipment and other tangible assets used by each
Acquired Company in the conduct of its business are, in all material respects,
adequate and suitable for the purposes for which they are currently being
used.
4.14 Accounts Receivable. The accounts receivable reflected on the
Interim Balance Sheet and accounts receivable arising after the date of the
Interim Balance Sheet and reflected on the books and records of the Acquired
Companies as of the date of this Agreement represent valid obligations arising
from sales actually made or services actually performed. The accounts
receivable reflected on the Interim Balance Sheet are stated thereon in
accordance with GAAP, including allowances for doubtful accounts. To Sellers'
knowledge, such accounts receivable are subject to no contest, claim or right
of setoff other than returns and cash discounts in the ordinary course of
business. Notwithstanding any other provision of this Agreement, Sellers make
no representation or warranty with regard to the collectibility of any account
or accounts receivable.
4.15 Inventories. The inventories of raw materials, work-in-process
and finished goods of the Acquired Companies reflected on the Interim Balance
Sheet are stated thereon in accordance with GAAP, including reserves for
obsolete, slow-moving or below-standard-quality items.
4.16 Intellectual Properties.
(a) Schedule 4.16 sets forth a complete list of all patents,
trademarks, service marks, trade names, copyrights and proprietary trade
secrets (collectively, "Intellectual Properties") which are owned or used by,
or are licensed to, any of the Acquired Companies and which are material to
the conduct of the business of any Acquired Company, including any
registrations or registration applications owned or filed by any Acquired
Company in any jurisdiction with respect to any Intellectual Properties.
Except as set forth on Schedule 4.16, the Acquired Companies have not received
any written notice of alleged infringement, violation or misappropriation by
an Acquired Company with respect to any Intellectual Properties of any third
party.
(b) Each of the Acquired Companies owns or is licensed to use
all patents, trade names, trademarks, service marks, copyrights, know-how and
processes (collectively, "Proprietary Rights") necessary for the conduct of
its business as presently conducted or intended to be conducted, except for
know-how and those processes nonproprietary in nature. There are no
Proprietary Rights that are necessary for the conduct of the business of the
Companies as now conducted, except as listed on Schedule 4.16 hereto. To
Sellers' knowledge, except as listed on Schedule 4.16 hereto, (i) no other
person has any rights to any of the Proprietary Rights owned by any of the
Acquired Companies, (ii) no other person is infringing upon any such
Proprietary Right and (iii) no Proprietary Right is subject to any litigation.
The Acquired Companies own or have valid licenses to use all management
information systems necessary for the operations of the Companies.
4.17 Contracts. Schedule 4.17 lists all of the following written
agreements to which any of the Acquired Companies is a party and which are
currently in effect:
(i) contracts or group of related contracts with the same
party providing for the purchase of goods or services by an Acquired Company
and under which the undelivered balance of such goods or services has a
purchase price in excess of $100,000;
(ii) contracts or group of related contracts with the same
party providing for the sale of goods or services by an Acquired Company and
under which the undelivered balance of such goods or services has a sale price
in excess of $100,000;
(iii) contracts relating to the borrowing of money by an
Acquired Company, to the granting by any Acquired Company of a Lien on any of
its assets, or any guaranty by an Acquired Company of any obligation in
respect of borrowed money or otherwise;
(iv) contracts with dealers, distributors or sales
representatives;
(v) contracts for the employment or engagement of any
employee, officer, consultant or management advisor;
(vi) contracts limiting the freedom of any Acquired Company
to engage in any business anywhere in the world, or which require an Acquired
Company to maintain the confidentiality of information;
(vii) contracts pursuant to which an Acquired Company is a
lessor or a lessee of, or holds or operates any tangible personal property
owned by another Person, for which the aggregate annual rent or lease payments
exceed $50,000;
(viii) contracts pursuant to which an Acquired Company is a
licensor or licensee of Intellectual Properties identified on Schedule 4.16;
(ix) stock option contracts and warrants for the purchase
of stock of any Acquired Company;
(x) contracts restricting the transfer of stock of any
Acquired Company, obligating any Acquired Company to repurchase shares of its
stock, or relating to the voting of stock or the election of directors of any
Acquired Company;
(xi) contracts or commitments for the purchase or sale of
capital assets in excess of $50,000 individually; and
(xii) contracts not otherwise described above in this
Section 4.17 with any stockholder, officer or director of an Acquired Company,
or any Affiliate of any such Person. To Sellers' knowledge, except as set
forth on Schedule 4.17, none of the Acquired Companies is bound by any
unwritten executory contract which (i) is not a contract relating to
employment and (ii) provides for payments by or to an Acquired Company in
excess of $100,000 ("Material Oral Agreements"). The Company has made
available to Buyer correct and complete copies of each written contract
identified on Schedule 4.17, including amendments thereto. Each Acquired
Company has performed all obligations required to be performed by it in
connection with such written contracts and Material Oral Agreements, except
where the failure so to perform would not have a Material Adverse Effect, and,
to Sellers' knowledge, there is no existing or threatened default under or
violation of any of such contracts by any party thereto.
4.18 Litigation. Except as set forth on Schedule 4.18, there are no
actions, suits at law or in equity, arbitrations, proceedings or
investigations pending or, to Sellers' knowledge, threatened in writing
against any Acquired Company. Except as set forth on Schedule 4.18, there is
no judgment, decree, injunction, rule or order of any court, national, state
or local governmental or regulatory agency or authority or arbitrator
outstanding against any of the Acquired Companies or by which any of the
Acquired Companies are bound which could reasonably be expected to have a
Material Adverse Effect.
4.19 Brokerage. No Person is or will become entitled, by reason of
any agreement or arrangement entered into or made by or on behalf of any
Acquired Company, to receive any commission, brokerage, finder's fee or other
similar compensation in connection with the consummation of the transactions
contemplated by this Agreement, except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co.,
whose fees and expenses will be paid by Sellers.
4.20 Customers. Except as set forth on Schedule 4.20, no officer of
an Acquired Company has actual knowledge that a customer of any Acquired
Company which accounted for more than $500,000 in revenues during the 12-month
period ended October 31, 1997, intends to discontinue or reduce significantly
its business with any Acquired Company.
4.21 Disclosure. The representations and warranties contained in
this Agreement, considered together with the written statements, certificates
and documents furnished by or on behalf of Sellers to Buyer in connection with
this Agreement, do not, taken as a whole, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which such statements were made, not misleading.
ARTICLE 5
Representations and Warranties of Buyer
Buyer represents and warrants to each Seller that the following
statements contained in this Article 5 are true and correct at and as of the
date of this Agreement.
5.1 Organization; Authorization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Buyer has all requisite corporate power and authority to
execute, deliver and perform this Agreement and each other agreement,
instrument and document to be executed and delivered by or on behalf of Buyer
in connection herewith.
5.2 Execution and Delivery; Enforceability. This Agreement and each
other document, instrument or agreement to be executed and delivered by Buyer
in connection herewith has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by
principles of equity.
5.3 Governmental Authorities; Consents. Except for the applicable
requirements of the HSR Act, Buyer is not required to submit any notice,
report or other filing with any governmental authority in connection with
Buyer's execution, delivery or performance of this Agreement or any other
document, instrument or agreement to be executed and delivered by Buyer in
connection herewith, and such execution, delivery and performance will not
violate any Law by which Buyer is bound. No consent, approval or
authorization of any governmental authority or any other Person is required to
be obtained by Buyer in connection with Buyer's execution, delivery and
performance of this Agreement or any other document, instrument or agreement
to be executed and delivered by Buyer in connection herewith.
5.4 Brokerage. No Person is or will become entitled, by reason of
any agreement or arrangement entered into or made by or on behalf of Buyer, to
receive any commission, brokerage, finder's fee or other similar compensation
in connection with the consummation of the transactions contemplated by this
Agreement.
5.5 Investment Intent. Buyer is acquiring the Shares, Warrants and
Stock Options for its own account, for investment purposes, and not with any
present intention of reselling or otherwise distributing such securities or
dividing its participation herein with others. Buyer will refrain from
transferring or otherwise disposing of any of the securities being acquired
hereunder or any interest therein in such manner as to cause Sellers to be in
violation of the 1933 Act or any applicable state securities Laws.
ARTICLE 6
Conditions to Closing
6.1 Conditions to Buyer's Obligation to Close. The obligation of
Buyer to perform this Agreement is subject to the satisfaction, at or before
the Closing, of the following conditions set forth in this Section 6.1
(unless waived by Buyer in writing):
(i) any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement shall have expired
or been terminated, and all filings, authorizations and approvals and consents
necessary to permit the Closing shall have been duly made with or obtained
from all applicable governmental authorities or other Persons;
(ii) there shall be no suit, action, investigation or
proceeding pending or threatened before any court, agency or other
governmental authority by which it is sought to restrain, delay, prohibit,
invalidate, set aside or impose any conditions upon the Closing, in whole or
in part;
(iii) the representations and warranties of Sellers
contained in Article 3 and Article 4 shall be true and correct in all material
respects (and those representations and warranties (or portions thereof) in
Article 4 which are qualified by reference to a Material Adverse Effect shall
be true and correct in all respects) on and as of the date when made and on
and as of the Closing Date, and Sellers shall have performed or caused to have
been performed in all material respects all of the covenants and agreements
required by this Agreement to be performed by Sellers or the Acquired
Companies prior to the Closing;
(iv) Sellers shall have executed and delivered to Buyer a
certificate as to the satisfaction of the conditions described in the
foregoing paragraph 6.1(iii) and stating that, as of the Closing and except as
set forth in such certificate, Sellers do not have actual knowledge of facts
or circumstances constituting a breach of any representation, warranty or
covenant of Buyer contained in this Agreement;
(v) the agreements listed on Schedule 6.1 shall have been
terminated, and Sellers shall have delivered evidence of such termination to
Buyer;
(vi) the Lenders (as defined in the Commitment Letter)
shall not have failed, by reason of a material disruption of or material
adverse change in financial, banking or capital market conditions, to make
available to Buyer the financing described in the Commitment Letter;
(vii) Buyer shall have received the written opinion of
counsel for Sellers, addressed to Buyer and dated as of the Closing Date, and
reliance letters in favor of the Lenders;
(viii) Buyer shall have received from each Seller all stock
certificates, warrants, and stock option agreements evidencing or representing
such Seller's Respective Securities, in each case duly endorsed for transfer
or accompanied by duly executed stock power or other appropriate instrument of
assignment and transfer;
(ix) Buyer shall have received the written resignation,
effective as of the Closing, of each director and officer of each Acquired
Company whom Buyer shall have requested to resign;
(x) Buyer shall have received the certificate of the chief
financial officer of the Company as to the Net Closing Date Indebtedness and
the Working Capital Adjustment as described in Section 2.4;
(xi) Buyer shall have received each other document required
to be delivered to Buyer pursuant to this Agreement;
(xii) Buyer shall have performed reasonable and customary
environmental audits of the Acquired Companies' operations and properties and
Buyer shall be satisfied with the results thereof; provided, however, that
unless Buyer notifies Sellers' Representative in writing on or before December
19, 1997, that Buyer is not satisfied with the results of such environmental
audits as have been conducted up to that date, then the condition contained in
this paragraph (xii) shall be deemed irrevocably waived by Buyer;
(xiii) No action, suit, investigation or legal or
administrative claim or proceeding shall be pending or threatened before any
court, governmental agency or regulatory authority which may result in the
restraint, prohibition or the obtaining of damages or other relief in respect
of, or which is related to or arises out of, this Agreement or the
transactions contemplated hereby;
(xiv) No Material Adverse Effect shall have occurred from
the date hereof to the Closing Date; and
(xv) The outstanding principal balance and all accrued but
unpaid interest under the Bacon Note shall have been paid to Care Free in
full, and Sellers shall have delivered evidence of such payment to Buyer.
Any agreement or document to be delivered to Buyer pursuant to this Section
6.1, the form of which is not attached to this Agreement as an exhibit, shall
be in form and substance reasonably satisfactory to Buyer.
6.2 Conditions to Sellers' Obligation. The respective obligations of
Sellers to perform this Agreement are subject to the satisfaction, at or
before the closing, of the following conditions set forth in this Section 6.2
(unless waived by the Sellers' Representative in writing):
(i) any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement shall have expired
or been terminated, and all filings, authorizations and approvals and consents
necessary to permit the Closing without a Material Adverse Effect shall have
been duly made with or obtained from all applicable governmental authorities
or other Persons;
(ii) there shall be no suit, action, investigation or
proceeding pending or threatened before any court, agency or other
governmental authority by which it is sought to restrain, delay, prohibit,
invalidate, set aside or impose any conditions upon the Closing, in whole or
in part;
(iii) the representations and warranties of Buyer contained
in Article 5 shall be true and correct in all material respects on and as of
the date when made and on and as of the Closing Date, and Buyer shall have
performed in all material respects all of the covenants and agreements
required by this Agreement to be performed by Buyer prior to the Closing;
(iv) Buyer shall have executed and delivered to Sellers a
certificate as to the satisfaction of the conditions described in the
foregoing paragraph 6.2(iii) and stating that, as of the Closing and except as
set forth in such certificate, Buyer does not have actual knowledge of facts
or circumstances constituting a breach of any representation, warranty or
covenant of Sellers or of any Seller contained in this Agreement;
(v) Sellers shall have received the written opinion of
counsel for Buyer, addressed to Sellers and dated as of the Closing Date;
(vi) Sellers, through Sellers' Representative, shall have
received the Purchase Price in accordance with Section 2.2; and
(vii) Sellers shall have received each other document
required to be delivered to Sellers pursuant to this Agreement.
Any agreement or document to be delivered to Buyer pursuant to this Section
6.1, the form of which is not attached to this Agreement as an exhibit, shall
be in form and substance reasonably satisfactory to Buyer.
ARTICLE 7
The Closing
If the conditions, set forth in Article 6, to Buyer's and Sellers'
respective obligations hereunder are satisfied, then the consummation of the
transactions contemplated by this Agreement (the "Closing") shall take place
at the offices of ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ L.L.P., at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇ January 30, 1998, or if the applicable waiting period
under the HSR Act shall not have expired or been terminated by such date, then
within five (5) days after such expiration or termination occurs, or on such
other date as Buyer and Sellers' Representative may agree in writing (the
"Closing Date"). The transfers and deliveries described in Article 6 shall be
mutually interdependent and shall be regarded as occurring simultaneously,
and, notwithstanding any other provision of this Agreement, no such transfer
or delivery shall become effective or shall be deemed to have occurred until
all of the other transfers and deliveries provided for in Article 6 shall also
have occurred. Such transfers and deliveries shall be deemed to have occurred
and the Closing shall be effective as of the close of business on the Closing
Date.
ARTICLE 8
Additional Covenants and Agreements
8.1 Pre-Closing Covenants and Agreements.
8.1.1 Conduct of Business. From the date of this Agreement
until the Closing, except to the extent Buyer otherwise consents, Sellers
shall cause each Acquired Company to be operated substantially as presently
operated and only in the ordinary course of business, and shall cause the
Acquired Companies to use all reasonable efforts to preserve intact their
respective business organizations and relationships with Persons doing
business with the Acquired Companies. Consistent with the foregoing, Sellers
agree that, except pursuant to the prior written consent of Buyer or as set
forth on Schedule 8.1.1, during the period commencing on the date hereof and
ending on the Closing Date, they will cause the Acquired Companies to:
(a) Take all actions reasonably necessary and appropriate to
preserve, protect and maintain all of their assets other than disposable
assets in customary repair, order and condition, reasonable wear and tear
excepted;
(b) Make no disposition, other than the disposition of obsolete
and otherwise unusable assets, including any sale or transfer, of their
assets, other than sales in the ordinary course of business consistent with
past practice,
(c) Make no amendment to their charter or bylaws in any manner;
(d) Make no change in the number of shares of their capital
stock issued and outstanding, and grant or give no option, warrant or any
other right to purchase or to convert any obligation into shares of their
capital stock;
(e) Not declare, pay or make a dividend or other distribution or
payment in respect of shares of their capital stock or purchase or redeem any
of such shares or dispose of any evidence of indebtedness or other securities
of any other person;
(f) Not merge or consolidate with any other corporation, sell
all or substantially all of their assets, or acquire any stock or, except in
the ordinary course of business consistent with past practice, any property or
assets of any other person, firm, association, corporation or other business
organization, or enter into any contract or agreement or other commitment to
effect any of the foregoing except in the ordinary course of business;
(g) Not incur any indebtedness for borrowed money except in
accordance with the Acquired Companies' revolving line of credit or vary the
terms of any existing debt securities, nor issue or sell any debt securities,
nor enter into any other material transaction or commitment;
(h) Not mortgage, pledge or subject to any lien, lease, security
interest or other charge or encumbrance (other than Permitted Liens) any of
its properties or assets, tangible or intangible, other than in the ordinary
course of business consistent with prior practice;
(i) Except as may occur in the ordinary course of business, not
discharge or satisfy any lien or encumbrance or pay or satisfy any material
obligation or liability (fixed or contingent) or compromise, settle or
otherwise adjust any material claim or litigation;
(j) Not grant to any director, officer, employee or consultant
any increase in compensation in any form (other than pursuant to the Company's
collective bargaining agreements), or any severance or termination pay, or
enter into or vary the terms of any employment agreement with any such person;
(k) Not make any capital expenditures, or enter into any
commitment to make, on any particular capital item or series of related items
that exceed(s) $100,000; and
(l) Not adopt, amend in any material respect or terminate, any
Plan or other employee benefit program of general applicability.
Notwithstanding the foregoing, it is understood and agreed that
prior to the Closing, the Company will make payments of a special bonus
arising from the transactions contemplated by this Agreement to its Chief
Financial Officer pursuant to the Employment Agreement referenced at item
(v)(c) on Schedule 4.17 hereto, which agreement has been delivered to Buyer.
8.1.2 Access. From the date of this Agreement until the
Closing, Sellers shall cause the Acquired Companies to provide to Buyer and
its representatives reasonable access to the Acquired Companies' personnel,
facilities and records and to permit Buyer and its representatives to conduct
engineering, environmental and workplace condition surveys and such other
reasonable physical inspections as Buyer may request. In addition, Sellers
agree to furnish or cause to be furnished to Buyer such financial and
operating data and other documents and information with respect to the
Acquired Companies as Buyer may reasonably request.
8.1.3 Satisfaction of Closing Conditions. Subject to the terms
and conditions of this Agreement, Sellers, on the one hand, and Buyer, on the
other hand, will use all reasonable efforts to take or cause to be taken all
actions and to do or cause to be done all things necessary under the terms of
this Agreement or under applicable Laws to consummate the transactions
contemplated by this Agreement. The parties shall cooperate with each other
and shall endeavor to obtain all necessary regulatory or other consents,
clearances, authorizations and approvals required under Article 6 as soon as
practicable after the date hereof. Within ten (10) days after the date of
this Agreement, Sellers and Buyer shall prepare and submit any filings
required by the HSR Act in connection with the transactions contemplated by
this Agreement. Buyer shall pay all fees required by the HSR Act to be paid
in connection with such filings.
8.1.4 Termination. This Agreement may be terminated:
(a) by mutual written agreement of Buyer and Sellers'
Representative;
(b) by Seller's Representative, upon delivery to Buyer of
written notice of termination at any time after January 30, 1998, if by that
date, without fault on the part of Sellers, the Closing shall not have
occurred on or before such date other than due to the waiting period under the
HSR Act not having expired or been terminated;
(c) by Buyer, upon delivery to Sellers' Representative of
written notice of termination at any time after January 30, 1998, if, by that
date, without fault on the part of Buyer, the Closing shall not have occurred
on or before such date other than due to the waiting period under the HSR Act
not having expired or been terminated;
(d) by Buyer, upon delivery to Sellers' Representative of
written notice of termination at any time at or before 5:00 p.m. Eastern
Standard Time on December 19, 1997, if Buyer is not satisfied with the results
of such environmental audits of the Acquired Companies as have been conducted
up to that time;
(e) by the Sellers' Representative or Buyer if at any time
there has been a material breach of any representation or warranty made by the
other party or parties, as applicable, herein or in any certificate or other
document delivered pursuant hereto or if there has been any failure by the
other party or parties, as applicable, to perform its material obligations or
to comply with all covenants on its part to be performed hereunder; or
(f) by the Sellers' Representative or Buyer, if there shall
have been any statute, rule, order or regulation enacted, issued or
promulgated or deemed applicable to the transactions contemplated hereby by
any government or governmental agency in the United States of America that, in
the reasonable judgment of Buyer or of the Sellers' Representative, as the
case may be, (w) restrains the consummation of the transactions contemplated
hereby, (x) renders the parties unable to consummate the transactions
contemplated hereby, (y) makes such consummation illegal, or (z) otherwise
results in a Material Adverse Effect; provided, however, no party may
terminate this Agreement pursuant to clause 8.1.4(b), (c) or (e) if such party
is then in material breach of any of its obligations under this Agreement.
If this Agreement is terminated pursuant to any of the foregoing paragraphs
8.1.4(a), 8.1.4(d) or 8.1.4(f), then all provisions of this Agreement except
Sections 8.2.2, 8.2.3 and 8.2.4(a) and except Articles 10 and 11 shall
thereupon become void without any liability on the part of any party hereto to
any other party hereto. If this Agreement is terminated pursuant to the
foregoing paragraphs 8.1.4(b), 8.1.4(c) or 8.1.4(e), such termination will not
affect any right or remedy which accrued hereunder or under applicable Laws
prior to or on account of such termination, and the provisions of this
Agreement shall survive such termination to the extent required so that each
party may enforce all rights and remedies available to such party hereunder or
under applicable Laws in respect of such termination and so that any party
responsible for any breach or nonperformance of its obligations hereunder
prior to termination shall remain liable for the consequences thereof.
8.1.5 Specific Performance. Each party to this Agreement
acknowledges and agrees that such party's obligations hereunder are unique,
and that, should any party breach or default in the performance of his or its
obligations hereunder, such breach or default would cause irreparable harm to
the other parties for which money damages alone would not be an adequate
remedy. Accordingly, each party agrees that the nondefaulting party or
parties, in addition to any other rights and remedies that may be available to
them at law, may ▇▇▇ in equity for injunctive relief, specific performance of
this Agreement, or both, and each party hereby expressly waives any defense
that a remedy consisting solely of money damages would be adequate.
8.2 Miscellaneous Covenants.
8.2.1 Publicity. Any public disclosures or public announcements
relating to this Agreement or the transactions contemplated hereby will be
made only as may be agreed upon by the Sellers' Representative and Buyer, or
as may be required by Law. Sellers will coordinate with Buyer regarding any
communication with customers of the Company respecting the transactions
contemplated hereby.
8.2.2 Expenses. Buyer shall pay all fees and expenses incident
to the transactions contemplated by this Agreement which are incurred by Buyer
or its representatives or are otherwise expressly allocated to Buyer
hereunder, and Sellers shall pay all fees and expenses incident to the
transactions contemplated by this Agreement which are incurred by Sellers or
their representatives or are otherwise expressly allocated to Sellers
hereunder. It is expressly agreed that no such expenses shall be paid by the
Acquired Companies. Buyer shall pay, or cause the Acquired Companies to pay,
any compensation, severance or other amounts, including but not limited to
workers' compensation claims, unpaid vacation pay, severance or other
benefits, which may be due or become due to any employee whose employment is
terminated following the Closing, and any payments which may be required under
the Worker Adjustment and Retraining Notification Act.
8.2.3 No Assignments. No assignment of any part of this
Agreement or any right or obligation hereunder may be made by any party hereto
without the prior written consent of all other parties hereto, and any
attempted assignment without such consent shall be void and of no force or
effect.
8.2.4 Confidentiality.
(a) That certain confidentiality letter-agreement dated
August 25, 1997, delivered by Buyer in favor of Sellers and the Acquired
Companies (the "Confidentiality Letter"), shall survive the execution and
delivery of this Agreement and, should the Closing not occur, shall continue
to be binding upon Buyer hereafter in accordance with its terms. Should the
Closing occur, the Confidentiality Letter shall thereupon expire.
(b) From and after the Closing, Sellers agree, and will use
reasonable effort to cause their Affiliates: (i) not to use Confidential
Information for any purpose, and (ii) not to disclose Confidential Information
to any third party, other than as necessary to their respective accountants,
representatives and advisors.
(c) For purposes of this Agreement, "Confidential
Information" shall mean any information, know how, data, process, technique,
design, drawing, formula or test data relating to any research project, work
in process, future development, engineering, manufacturing, marketing,
business plan, financial or personnel matter relating to the business or
assets of any of the Acquired Companies, their present or future products,
sales, suppliers, distributors, customers, employees, investors or business,
whether in oral, written, graphic or electronic form.
(d) Confidential Information shall not include any
information which (i) is or becomes public knowledge without breach of this
Agreement, (ii) which is or becomes publicly available without a
confidentiality restriction and without breach of this Agreement from a source
other than the acquired Companies or Buyer, (iii) the recipient can
demonstrate was known by the recipient without a confidentiality restriction
at the time of the receipt of such information, or (iv) was independently
developed by the recipient by persons who did not have access to the disclosed
information.
(e) Notwithstanding anything to the contrary contained
herein, Sellers shall not be deemed to have violated this Section 8.2.4 by the
making of any disclosure required by valid legal process.
8.2.5 Exclusivity. Until the close of business on the later of
(i) January 30, 1998, or (ii) expiration or termination of the waiting period
under the HSR Act, neither Sellers nor any of the Acquired Companies shall,
directly or indirectly, through any officer, director, agent, representative
(including, without limitation, investment bankers, attorneys and accountants)
or otherwise, (i) solicit, initiate or encourage submission of inquiries,
proposals or offers from any person, corporation, partnership or other entity
or group other than Buyer (a "Third Party"), relating to any acquisition or
purchase of all or a portion of the assets of, or any equity interest in, any
of the Acquired Companies; or (ii) participate in any discussions or
negotiations regarding, or furnish to any Third Party any information with
respect to, or otherwise cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any Third Party to do or
seek any of the foregoing.
8.2.6 Access by Sellers. Buyer shall, for a period of five (5)
years after the Closing Date, during normal business hours, provide Sellers'
Representative and its designees with such access to the books and records of
the Acquired Companies as may reasonably be requested by Sellers'
Representative, who shall be entitled, at its expense, to make extracts and
copies of such books and records. Notwithstanding the foregoing provisions,
Buyer shall not be obligated hereunder to provide access to any material
relating to any period subsequent to the Closing or developed by Buyer at its
expense or for its benefit, including, without limitation, tax returns for
such subsequent periods. Buyer agrees that it shall not, during such 5-year
period, destroy or cause or permit to be destroyed any material books or
records without first obtaining the consent of Sellers' Representative.
8.2.7 Continuation of Indemnification. Buyer agrees that after
the Closing the Acquired Companies shall each continue to indemnify and hold
harmless each of its present and former directors, officers, employees and
agents, in their capacities as such (the "Indemnified Persons"), from and
against all damages, costs and expenses actually incurred or suffered in
connection with any threatened or pending action, suit or proceeding at law or
in equity by any Person or any arbitration or administrative or other
proceeding relating to the business of the Acquired Companies prior to the
Closing, to the fullest extent provided in the Certificate of Incorporation
and the By-Laws of the Company and the Articles of Incorporation and the
By-Laws of the Subsidiaries, in each case as in effect on the date of this
Agreement. If any Acquired Company merges into, consolidates with or transfers
substantially all of its assets to another Person, then and in each such case,
proper provision shall be made so that the transferee shall assume the
obligations of the Acquired Companies under this Section 8.2.7. This Section
8.2.7 is intended to benefit each of the Indemnified Persons, each of whom
shall be entitled to enforce the provisions hereof.
8.2.8 Sellers' Representative. Buyer and all Sellers
acknowledge and agree that the sole responsibility of Sellers' Representative,
in its capacity as such pursuant to this Agreement, shall be to act as
Sellers' agent for the receipt and distribution of the Purchase Price in
accordance with Section 2.3, for the receipt and forwarding of notices to
Sellers given in accordance with Section 11.1, and the taking of such other
actions and the exercise of such authority and discretion as are set forth or
conferred herein. Sellers' Representative shall have no liability or
obligation for indemnification of Buyer or otherwise to any Person hereunder
other than or in addition to such liability as it incurs in its capacity as a
Seller hereunder.
8.2.9 Section 338 Election. Buyer shall not, and shall not
permit any Acquired Company to, make an election under Section 338 of the Code
(or any corresponding election under state or local Laws) with respect to the
purchase and sale of the Shares, Warrants and Stock Options hereunder.
8.2.10 Noncompetition.
(a) ▇▇▇▇▇▇▇▇▇ Capital Partners Fund II, L.P. ("LinCap II")
hereby agrees that, for a period of three (3) years from the Closing Date,
LinCap II will not, acting alone or in conjunction with others, directly or
indirectly, as a sole proprietor, member of a partnership, or stockholder, or
as an officer or director of a corporation, or as an employee or agent or
consultant of any person, firm or corporation, and will use all reasonable
efforts to cause its Affiliates not to:
(i) induce or attempt to influence any distributor,
account, customer or client of the Acquired Companies at any time during the
three (3) year prior to the Closing Date to curtail or cancel its business or
relationship with the Acquired Companies;
(ii) induce or attempt to influence any employee of
the Acquired Companies to terminate such employee's employment with any of the
Acquired Companies; or
(iii) participate or engage, directly or indirectly,
in any business in which any of the Acquired Companies was engaged at any time
during the three (3) year period prior to the Closing Date, within any
metropolitan area or within a 100-mile radius of any metropolitan area in
which the Acquired Companies engaged in such business at any time during the
three (3) year period prior to the Closing Date; provided, however, that
nothing herein shall preclude LinCap II or any of its Affiliates from owning
an equity interest of 5% or less in any publicly traded entity, and nothing
herein shall preclude Lincap II or any of its Affiliates from hiring ▇▇▇▇ ▇.
▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ following any termination of their respective
employment with any of the Acquired Companies or their Affiliates.
(b) LinCap II and Buyer recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section 8.2.10. It is the intention of LinCap II and Buyer that the provisions
of this Section 8.2.10 be enforced to the fullest extent permissible under the
laws and policies of each jurisdiction in which enforcement may be sought, and
that the unenforceability (or the modification to conform to such laws or
policies) of any provision hereof shall not render unenforceable, or impair,
the remainder of the provisions hereof. Accordingly, if any provision of this
Section 8.2.10 shall be determined to be invalid or unenforceable, either in
whole or in part, this Section 8.2.10 shall be deemed amended to delete or
modify, as necessary, the offending provision in order to render this Section
8.2.10 valid and enforceable, such amendment to apply only with respect to the
operation of this Section 8.2.10 in the particular jurisdiction in which such
determination is made.
(c) Because the remedy at law for any breach of the
provisions of this Section 8.2.10 would be inadequate, LinCap II hereby
consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that any breach or threatened breach of such provisions may be effectively
restrained.
(d) LinCap II hereby agrees that the restraints imposed by
this Section 8.2.10 are reasonable as to time, scope and geographic coverage
and are reasonably necessary to preserve the legitimate business interests of
Buyer.
8.2.11 Bacon Note. If the condition set forth in Section
6.1(xv) shall not have been satisfied at or prior to the Closing, then (a)
Buyer shall deduct the outstanding principal balance and all accrued but
unpaid interest under the Bacon Note from the payment of the Purchase Price
pursuant to Section 2.2, and (b) the amount otherwise distributable at the
Closing pursuant to Section 2.3 in respect of the Shares held by ▇▇▇▇ ▇. ▇▇▇▇▇
shall be reduced by such amount, whereupon (c) the Bacon Note shall be
canceled and terminated in its entirety.
ARTICLE 9
Indemnification
9.1 Indemnification of Buyer. Subject to Sections 9.2 and 9.4, each
Seller shall, severally and not jointly, indemnify, defend and hold harmless
Buyer, its Affiliates, officers, directors, owners, employees, agents and
representatives against and in respect of the following, regardless of any
investigation performed by Buyer:
(a) any claim, demand, obligation, liability, loss, damage, cost
and expense, including reasonable attorneys' fees (collectively, "Losses"),
resulting from or arising out of any inaccuracy in or breach of any of the
representations and warranties made by such Seller in Article 3 or by
Sellers in Article 4; and
(b) any Losses resulting from or arising out of any Claim that
may be asserted against an Acquired Company in respect of any failure by an
Acquired Company to timely file any annual return/report (Form 5500 series)
that is required by ERISA or the Code to have been filed prior to the Closing
with respect to any Plan, notwithstanding any disclosure to Buyer hereunder;
and
(c) any Losses resulting from or arising out of any Claim that
may be asserted against an Acquired Company by SealMaster Industries, Inc. for
infringement by an Acquired Company of United States Patent No. 5,392,574 or
No. 5,660,010, notwithstanding any disclosure to Buyer hereunder; and
(d) any Losses resulting from or arising out of any Claim that
may be asserted against an Acquired Company for breach of its obligations
under the Buncombe Agreement, notwithstanding any disclosure to Buyer
hereunder; and
(e) any Losses resulting from or arising out of any breach or
nonperformance of any covenant or obligation made or incurred by Sellers
herein. Each Seller is responsible for only those representations and
warranties made by each Seller in Article 3, and no Seller shall be obligated
to indemnify Buyer for Losses resulting from or arising out of any inaccuracy
in or breach of any representation or warranty made by any other Seller in
Article 3. Sellers do not make and shall not be deemed to have made, nor is
Buyer relying upon, any representation, warranty or covenant other than those
representations, warranties and covenants which are expressly set forth in
this Agreement. Buyer's sole and exclusive remedy for any breach of any
representation or warranty of Sellers herein shall be to receive
indemnification in accordance with this Article 9 and pursuant to the Escrow
Agreement, except in cases of intentional fraud.
Notwithstanding that the indemnification obligations of Sellers
hereunder are several and not joint, and notwithstanding that a Seller shall
not be obligated to indemnify Buyer with respect to any breach of any
representation or warranty made by any other Seller in Article 3, Buyer shall
be entitled to make claims for indemnification against the Escrow Fund (as
defined in the Escrow Agreement) and receive indemnification out of the Escrow
Fund as though the obligations of Sellers under this Article 9 were joint and
several.
9.2 Limitations on Indemnification of Buyer. Notwithstanding any
other provisions of this Agreement, the indemnification of Buyer provided for
in this Agreement shall be subject to the limitations and conditions set forth
in this Section 9.2:
(a) Except for claims for indemnification resulting from or
arising out of inaccuracies in or breaches of representations and warranties
contained in Sections 3.1("Authority and Capacity"), 3.2 ("Ownership of
Securities"), 3.3 ("Execution and Delivery; Enforceability"), 4.8
("Taxes"), and the first sentence of Section 4.9 ("Employees"), which are
addressed in subsections (b) and (c) below, any claim by Buyer for
indemnification pursuant to this Agreement shall be required to be made by
delivering written notice to Sellers' Representative no later than March 31,
1999.
(b) Any claim for indemnification resulting from or arising out
of any inaccuracy in or breach of any representation or warranty made by any
Seller in Section 3.1 ("Authority and Capacity"), Section 3.2 ("Ownership of
Securities"), or Section 3.3 ("Execution and Delivery; Enforceability") shall
be required to be made on or prior to the fifth (5th) anniversary of the
Closing Date.
(c) Any claim for indemnification resulting from or arising out
of any inaccuracy in or breach of any representation or warranty made by
Sellers in Section 4.8 ("Taxes") or the first sentence of Section 4.9
("Employees") shall be required to be made by written notice to Sellers'
Representative delivered no later than the date of expiration of the
applicable statute of limitations governing claims by the applicable
governmental authority with respect to the subject matter of such claim.
(d) Buyer shall be entitled to indemnification only to the
extent that the aggregate amount of all of Buyer's claims for indemnification
exceeds an amount equal to $500,000; provided, however, that the foregoing
threshold shall not apply to claims respecting Section 2.4.
(e) The maximum aggregate indemnification amount to which Buyer
may be entitled in respect of all breaches of all representations, warranties
and covenants of Sellers contained in this Agreement (exclusive of the matters
contained in Section 2.4 ("Net Closing Date Indebtedness; Working Capital
Adjustment"), exclusive of the representations and warranties of Sellers
contained in Sections 3.1 ("Authority and Capacity"), 3.2 ("Ownership of
Securities"), and 3.3 ("Execution and Delivery; Enforceability"), and
exclusive of Special Tax Claims) shall be an amount equal to five percent (5%)
of the Enterprise Value. The maximum aggregate indemnification amount to
which Buyer may be entitled in respect of the matters contained in Section 2.4
and in respect of all breaches of the representations and warranties of
Sellers contained in Sections 3.1, 3.2 and 3.3 shall be an amount equal to the
Purchase Price. The maximum aggregate indemnification amount to which Buyer
may be entitled in respect of Special Tax Claims shall be Ten Million Dollars
($10,000,000). Notwithstanding any other provision of this Agreement (but
subject to the last paragraph of Section 9.1 hereof), (i) the maximum amount
which Buyer may recover from any individual Seller with respect to any
particular claim shall be limited to an amount equal to such Seller's
Percentage of such claim, and (ii) the maximum amount which Buyer may recover
from any individual Seller with respect to all claims asserted hereunder (in
the aggregate) shall be limited to such Seller's Percentage of the Aggregate
Indemnification Limit.
(f) Buyer's right to indemnification hereunder shall be reduced
to the extent the subject matter of the claim for such indemnification is
covered by a warranty from a third party or by insurance (including, but not
limited to, title insurance or general liability insurance), it being the
parties' intent that such recoveries, to the extent available, be pursued in
lieu of claims hereunder. Buyer's right to indemnification hereunder shall
also be reduced (i) to the extent of any tax deduction, credit, refund or
other benefit relating to the same or any other tax period and resulting from
the subject matter of such claim, and (ii) to the extent the Losses claimed by
Buyer may have been reduced or eliminated if Buyer had taken reasonable action
on a more prompt or timely basis to mitigate such Losses. Any dispute which
Buyer and Sellers' Representative are unable to resolve between themselves
concerning the amount or availability of a tax benefit pursuant to the
foregoing clause (i) shall be finally settled and determined by an independent
public accounting firm mutually selected by Buyer and Sellers' Representative
for such purpose, whose determination shall be final and binding upon
Buyer and Sellers and whose fees and expenses shall be paid by the party
(counting all Sellers as a single party) whose estimate of the amount of such
benefit at the time of submission of the dispute to such accountants is
further from the amount thereof as finally determined by such accountants.
(g) Any claim for indemnification by Buyer shall be made by
delivering to Sellers' Representative, no later than the last date (if any)
set forth in this Section 9.2 for making such claim, a written notice setting
forth in reasonable detail the alleged factual basis for such claim, the
provision or provisions of this Agreement on which such claim is based, and
the amount thereof.
(h) In no event shall Sellers be liable for incidental or
consequential damages arising out of or in connection with this Agreement,
including, without limitation, breach of any representation, warranty or
covenant made by or imposed on any Seller hereunder or in connection herewith.
9.3 Indemnification of Sellers. Buyer shall indemnify defend and
hold harmless Sellers, their respective Affiliates, officers, directors,
owners, employees, agents and representatives against and in respect of the
following, regardless of any investigation performed by Sellers:
(a) any Losses resulting from or arising out of any inaccuracy
in or breach of any of the representations and warranties made by Buyer in
Article 5; and
(b) any Losses resulting from or arising out of any breach or
nonperformance of any covenant or obligation made or incurred by Buyer herein.
Buyer does not make and shall not be deemed to have made, nor is any Seller
relying upon, any representation, warranty or covenant other than those
representations, warranties and covenants which are expressly set forth in
this Agreement. Each Seller's sole and exclusive remedy for any breach of any
representation or warranty of Buyer herein shall be to receive indemnification
in accordance with this Article 9 except in cases of intentional fraud.
9.4 Limitations on Indemnification of Sellers. Notwithstanding any
other provisions of this Agreement, (i) any claim by Sellers for
indemnification pursuant to this Agreement shall be required to be made on or
prior to the fifth (5th) anniversary of the Closing Date, and (ii) the maximum
aggregate indemnification amount to which Sellers may be entitled in respect
of all breaches of all representations, warranties and covenants of Buyer
contained in this Agreement shall be an amount equal to the Purchase Price.
9.5 Third-Party Claims. If any legal proceeding is instituted or any
claim asserted by any third party (a "Claim") in respect of which Sellers, on
the one hand, or Buyer, on the other hand, may be entitled to indemnification
hereunder, the party asserting such right to indemnification (the
"Indemnitee") shall give the party from whom indemnification is sought (the
"Indemnitor") prompt written notice thereof. A delay in giving such notice
shall relieve the Indemnitor of liability for the Claim to the extent the
Indemnitor suffers prejudice because of such delay. The Indemnitor shall have
the right, at its option and expense, to participate in the defense of such a
Claim, but not to control the defense, negotiation or settlement thereof,
which control shall at all times rest with the Indemnitee, unless the
Indemnitor irrevocably acknowledges, in writing, responsibility for such Claim
and agrees to indemnify the Indemnitee against the same (subject, in cases
where a Seller is an Indemnitor, to the limitations set forth in Section 9.2,
and in cases where Buyer is an Indemnitor, to the limitations set forth in
Section 9.4).
If the Indemnitor does not assume control of the defense of such
Claim, the entire defense of the Claim by the Indemnitee, any settlement made
in good faith by the Indemnitee, and any judgment entered in the Claim will be
deemed to have been consented to by, and will be binding upon, the Indemnitor
as fully as though it alone had assumed the defense thereof and a judgment had
been entered in the Claim in the amount of such settlement or judgment, except
that the right of the Indemnitor to contest the right of the Indemnitee to
indemnification under this Agreement with respect to the Claim will not be
extinguished. If the Indemnitor does assume control of the defense of such
Claim, it shall not, without the prior written consent of the Indemnitee,
settle such Claim or consent to entry of any judgment relating thereto which
does not include as an unconditional term thereof the giving by the claimant
to the Indemnitee of a release from all liability in respect of the Claim.
The parties hereto agree to cooperate fully with each other in connection with
the defense, negotiation or settlement of any such Claim.
ARTICLE 10
Certain Definitions
When used in this Agreement, the following terms in all of their tenses,
cases and correlative forms shall have the meanings assigned to them in this
Article 10, or elsewhere in this Agreement as indicated in this Article 10:
"1933 Act" means the Securities Act of 1933, as amended, and the
regulations thereunder.
"Acquired Company" means each of the Company, Alpine, Care Free, and
Ultra. "Acquired Companies" means all four of such corporations.
An "Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with the
referenced Person, and any officer, director or general partner of such
referenced Person.
"Aggregate Indemnification Limit" means (i) with respect to all breaches
of all representations, warranties and covenants of Sellers contained in
this Agreement exclusive of the matters contained in Section 2.4 ("Net
Closing Date Indebtedness") and exclusive of the representations and
warranties of Sellers contained in Sections 3.1 ("Authority and Capacity"),
3.2 ("Ownership of Securities"), and 3.3 ("Execution and Delivery;
Enforceability")), an amount equal to five percent (5%) of the Enterprise
Value, (ii) with respect to the matters contained in Section 2.4 and all
breaches of the representations and warranties of Sellers contained in
Sections 3.1, 3.2 and 3.3, an amount equal to the Purchase Price, and (iii)
with respect to Special Tax Claims, the amount of Ten Million Dollars
($10,000,000).
"Agreement" means this Stock Purchase Agreement.
"Alpine" means Alpine Industries, Inc., a Washington corporation.
"Audited Financial Statements" is defined in Section 4.5.
"Bacon Note" means that certain Amended and Restated Promissory Note
dated June 9, 1995, made by ▇▇▇▇ ▇. ▇▇▇▇▇ to Care Free in the original
principal amount of $214,734.15.
"Buncombe Agreement" means that certain Community Development Block Grant
Buncombe County/Care Free Agreement, dated August 28, 1995, by and between
Care Free and Buncombe County, North Carolina.
"Buyer" means Reliant Building Products, Inc., a Delaware corporation.
"Care Free" means Care Free Aluminum Products, Inc., a Michigan
corporation.
"Claim" is defined in Section 9.5.
"Closing Date" is defined in Article 7.
"Closing" is defined in Article 7.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and the regulations thereunder.
"Commitment Letter" means that certain letter-agreement dated December 5,
1997, by and among Buyer, The Chase Manhattan Bank and Chase Securities
Inc.
"Company" means CFA Holding Company, a Delaware corporation.
"Enterprise Value" means the amount of One Hundred Twenty-Three Million
Dollars ($123,000,000).
"Environmental, Health and Safety Laws" is defined in Section 4.11(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"Escrow Agreement" and "Escrow Amount" are defined in Section 2.2.
"GAAP" means generally accepted accounting principles, as in effect in
the United States from time to time and applied on a consistent basis.
"Hazardous Material" is defined in Section 4.11(a).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the regulations thereunder.
"Indemnification Threshold" is defined in Section 9.2(d).
"Indemnitee" and "Indemnitor" are defined in Section 9.3.
"Intellectual Properties" is defined in Section 4.15.
"Interim Balance Sheet" and "Interim Financial Statements" are defined in
Section 4.5.
"Kinco Note" means that certain Promissory Note dated December 30, 1994,
made by Care Free to the order of Kinco Corporation in the original
principal amount of $600,000.
"Law" means any common law and any federal, state, regional, local or
foreign law, statute, ordinance, rule, regulation or order.
"Leased Real Property" is defined in Section 4.13(a).
"Leases" is defined in Section 4.13(a).
"Lien" means any lien, mortgage, charge, easement, encumbrance, security
interest, adverse claim, or any other title defect or restriction of any kind.
"▇▇▇▇▇▇▇▇▇ Management Agreement" means that certain ▇▇▇▇▇▇▇▇▇ Management
Agreement, dated December 18, 1996, as amended, by and among Alpine, Care
Free, Ultra, and ▇▇▇▇▇▇▇▇▇ Capital Partners Fund I, Limited Partnership, an
Ohio limited partnership.
"Losses" is defined in Section 9.1.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition, results of operations, properties or prospects
of the Acquired Companies taken as a whole.
"Net Closing Date Indebtedness" is defined in Section 2.4.
"Owned Real Property" is defined in Section 4.13(a).
"Permits" is defined in Section 4.12.
"Person" means an individual, a corporation, a limited liability company,
a partnership, a trust, an unincorporated association, a government or any
agency, instrumentality or political subdivision of a government, or any other
entity or organization.
"Plans" is defined in Section 4.10.
"Period of Sellers' Ownership" means the period of time which ends at the
Closing and which began: (a) with respect to the Company and the Charlotte,
Mich., operations of Care Free, on February 3, 1992; (b) with respect to the
Asheville, N.C., operations of Care Free, on December 30, 1994; (c) with
respect to the Bothell, Wash., operations of Alpine, on March 17, 1994; (d)
with respect to the Walnut, Calif., operations of Alpine, on January 22, 1997;
and (e) with respect to Ultra, on August 1, 1995.
"Permitted Liens" means (i) Liens for current taxes and assessments not
yet due and payable or being contested in good faith by appropriate
proceedings, (ii) Liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers,
materialmen or the like or being contested in good faith by appropriate
proceedings, and (iii) Liens in respect of pledges or deposits under workers'
compensation laws.
"Purchase Price" is defined in Section 2.2.
"Real Property" is defined in Section 4.13(a).
"Seller's Respective Securities" is defined in Section 2.1.
"Seller" means each Person identified on Schedule 4.2.1 as an owner of
Shares, Warrants or Stock Options. "Sellers" means all twenty-six (26) of
such Persons.
"Sellers' Account" is defined in Section 2.2.
"Seller's Percentage" shall mean, with respect to each Seller, a
fraction, the numerator of which equals the portion of the Purchase Price that
is allocable to such Seller in accordance with Section 2.3, and the
denominator of which equals the Purchase Price.
"Sellers' Representative" means FNL Management Corp., an Ohio
corporation.
"Shares" means issued and outstanding shares, $.001 par value per share,
of the Company's Class A Common Stock, Class B Common Stock, Class C Common
Stock, Class D Common Stock, and Class E Common Stock.
"Special Tax Claims" means claims by Buyer for indemnification in respect
of breaches of the representations and warranties of Sellers in Section 4.8
("Taxes") and the first sentence of Section 4.9 ("Employees") to the extent
such claims arise from acts or omissions by Sellers or an Acquired Company
that constitute "fraud," either civil or criminal, for purposes of Chapters 68
and 75 of the Code, any similar provisions enacted in the future, and any
similar provisions of state or local law.
"Stock Option" means each of those twelve (12) certain "Stock Option
Agreements" identified on Schedule 4.2.1, and all rights of the respective
optionees thereunder. "Stock Options" means all of such "Stock Option
Agreements."
"Stockholders' Agreement" means that certain Stockholders' Agreement,
dated as of January 31, 1992, as amended, by and among the Company
and the stockholders of the Company identified therein.
"Subsidiary" means each of Alpine, Care Free, and Ultra. "Subsidiaries"
means all three of such corporations.
"Taxes" and "Tax Returns" are defined in Section 4.8.
The phrase "to Sellers' knowledge" means within the actual knowledge of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Ultra" means Ultra Building Systems, Inc., a New Jersey corporation.
"Warrant" means each of those two (2) certain "Warrants" identified on
Schedule 4.2.1, and all rights of the respective holders thereunder.
"Warrants" means all of such "Warrants."
"Windowman Purchase Agreement" means that certain Asset Purchase
Agreement dated May 21, 1997, by and among Ultra, USA Windowman, Inc., The
Windowman, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇.
"Working Capital Adjustment" is defined in Section 2.4.
ARTICLE 11
Construction; Miscellaneous Provisions
11.1 Notices. All notices required to be given or delivered pursuant
to this Agreement shall be in writing, and shall be given or delivered as
follows:
(a) If to Buyer, to:
Reliant Building Products, In.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Sellers or to any Seller, to Sellers or such Seller in
care of:
FNL Management Corp.
Four Commerce Park Square, Suite 445
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or in any case, to such other address for a party as to which notice shall
have been given to Buyer and Sellers' Representative in accordance with this
Section. Notices so addressed shall be deemed to have been duly given (i) on
the third business day after the day of registration, if sent by registered or
certified mail, postage prepaid, or (ii) on the next business day following
the documented acceptance thereof for next-day delivery by a national
overnight air courier service, if so sent. Otherwise, notices shall be deemed
to have been given when actually received.
11.2 Entire Agreement. This Agreement, the schedules and exhibits
hereto, and the Escrow Agreement constitute the exclusive statement of the
agreement among Buyer and each Seller concerning the subject matter hereof,
and supersede all other prior agreements, oral or written, among or between
any of the parties hereto concerning such subject matter. All negotiations
among or between any of the parties hereto are superseded by this Agreement
and the Escrow Agreement, and there are no representations, warranties,
promises, understandings or agreements, oral or written, in relation to the
subject matter hereof among or between any of the parties hereto other than
those expressly set forth or expressly incorporated herein or in the Escrow
Agreement.
11.3 Modification and Waiver. No amendment, modification, or waiver
of this Agreement or any provision hereof, including the provisions of this
sentence, shall be effective or enforceable as against a party hereto unless
made in a written instrument which specifically references this Agreement and
which is signed by the party waiving compliance. Except as may otherwise be
expressly provided herein, the failure of any Person to enforce at any time,
or for any period of time, any provision of this Agreement shall not be
construed as a waiver of any provision of this Agreement or of the right of
any such Person to enforce each and every provision of this Agreement, and no
single or partial exercise of any right hereunder shall preclude any other or
further exercise of that or any other right.
11.4 Survival. Notwithstanding any investigation conducted or notice
or knowledge obtained by or on behalf of any party hereto, the warranties,
representations, covenants and agreements contained in this Agreement and the
indemnities herein shall survive the execution and delivery of this Agreement
and the Closing of the transactions contemplated hereby as and to the extent
set forth in Article 9 hereof.
11.5 Jurisdiction and Venue. Any action, suit or proceeding at law,
in equity or otherwise which in any way arises out of or relates to this
Agreement must be brought in a state or federal court of competent
jurisdiction located New Castle County, Delaware, and all objections to
personal jurisdiction and venue in any action, suit or proceeding so commenced
are hereby expressly waived by all parties hereto.
11.6 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of Buyer, each Seller, and the respective successors and
permitted assigns of Buyer and of each Seller.
11.7 Headings. The article and section headings used in this
Agreement are intended solely for convenience of reference, do not themselves
form a part of this Agreement, and may not be given effect in the
interpretation or construction of this Agreement.
11.8 Number and Gender. Whenever the context requires in this
Agreement, the masculine gender includes the feminine or neuter, the neuter
gender includes the masculine or feminine, the singular number includes the
plural, and the plural number includes the singular.
11.9 Counterparts. This Agreement may be executed and delivered in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
11.10 Third Parties. Except as may otherwise be expressly stated
herein, no provision of this Agreement is intended or shall be construed to
confer on any Person, other than the parties hereto, any rights hereunder.
11.11 Schedules and Exhibits. The schedules and exhibits referenced
in this Agreement constitute an integral part of this Agreement as if fully
rewritten herein. All references in this document to "this Agreement" and the
terms "herein," "hereof," "hereunder" and the like shall be deemed to include
all of such schedules and exhibits.
11.12 Time Periods. Any action required hereunder to be taken within
a certain number of days shall, except as may otherwise be expressly provided
herein, be taken within that number of calendar days; provided, however, that
if the last day for taking such action falls on a Saturday, a Sunday, or a
legal holiday, the period during which such action may be taken shall
automatically be extended to the next business day.
11.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the choice-of-laws or conflicts-of-laws provisions thereof.
{The remainder of this page is intentionally left blank.}
IN WITNESS WHEREOF, Buyer and Sellers have executed and delivered this
Stock Purchase Agreement, or have caused this Stock Purchase Agreement to be
executed and delivered by their duly authorized representatives, as of the
date first written above.
BUYER:
RELIANT BUILDING PRODUCTS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
(Title)
{Sellers' counterpart signature pages follow.}
SELLERS:
BT CAPITAL CORPORATION
By: /s/▇▇▇▇ ▇▇▇▇▇
--------------
(Title)
NATIONAL CITY CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
(Title)
KEY EQUITY CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. Given
---------------------
(Title)
FNL MANAGEMENT CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
(Title)
LANDER VALUE FUND, L.P.
By: , General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
(Title)
MID-WEST HOLDINGS LIMITED PARTNERSHIP
By: , General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
(Title)
VCM LIMITED PARTNERSHIP
By: , General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
(Title)
SGM INVESTORS LIMITED PARTNERSHIP
By: , General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------
(Title)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------
(Title)
THE ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
(Title)
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Solely for purposes of acknowledging and agreeing to the
provisions of Section 8.2.10 hereof:
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS FUND II, L.P.
By: Catawba Partners, L.P., as general partner
By: FNL Management Corp., as general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(Title)
Exhibit 2.2
to Stock Purchase Agreement
INDEMNIFICATION ESCROW AGREEMENT
This Indemnification Escrow Agreement is entered into as of January ____,
1998 (the "Closing Date"), by and among Reliant Building Products, Inc., a
Delaware corporation ("Buyer"), the persons and entities identified on Exhibit
A attached hereto (individually a "Seller" and collectively the "Sellers"),
FNL Management Corp., an Ohio corporation ("Sellers' Representative") and Bank
One Trust Company, N.A., a national banking association, as escrow agent
("Escrow Agent"). This is the Indemnification Escrow Agreement referred to in
the Stock Purchase Agreement dated December 17, 1997 (the "Purchase
Agreement"), by and among Buyer and Sellers, which concerns the sale to Buyer
of all of the outstanding capital stock, stock options and warrants of CFA
Holding Company, a Delaware corporation. Capitalized terms used in this
agreement without definition shall have the respective meanings given to them
in the Purchase Agreement.
The parties, intending to be legally bound, hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) Buyer is depositing with Escrow Agent, and Escrow Agent
acknowledges receipt of, an amount equal to Four Million Dollars ($4,000,000)
in immediately available funds, which amount, together with any Interest (as
hereinafter defined), shall be referred to herein as the "Escrow Fund".
(b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund, and any interest or earnings which may
accrue on or with respect to the Escrow Fund ("Interest"), pursuant to the
terms and conditions hereof.
2. INVESTMENT OF FUNDS
Except as Buyer and Sellers' Representative may from time to time jointly
instruct Escrow Agent in writing, the Escrow Fund and any Interest shall be
invested (and reinvested) from time to time in United States Treasury bills
having a remaining maturity of 90 days or less and repurchase obligations
secured by such United States Treasury Bills, with any remainder being
deposited and maintained in a money market deposit account with Escrow Agent,
until disbursement of the entire Escrow Fund. Escrow Agent is authorized to
liquidate in accordance with its customary procedures any portion of the
Escrow Fund consisting of investments to provide for payments required to be
made under this Agreement.
3. CLAIMS
From time to time on or before March 31, 1999 (the "Disbursement Date"),
Buyer may give notice (a "Notice") to Sellers and Escrow Agent specifying in
reasonable detail the nature and dollar amount of any claim (a "Claim") it may
have under Article 9 of the Purchase Agreement. If a Notice is given with
respect to a Claim, Escrow Agent shall make payment with respect thereto only
in accordance with: (i) joint written instructions of Buyer and Sellers'
Representative; or (ii) a final non-appealable order of a court of competent
jurisdiction. Any court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to Escrow Agent to the effect
that the order is final and non-appealable. Escrow Agent shall act upon and in
accordance with such order and legal opinion, or such joint written
instructions, as the case may be, without further question.
4. TERMINATION OF ESCROW
(a) On the Disbursement Date, Escrow Agent shall pay and distribute
to each Seller an Amount equal to (i) such Seller's Applicable Percentage (as
defined below), multiplied by (ii) the Interest earned on the Escrow Fund.
(b) On the Disbursement Date, Escrow Agent shall also pay and
distribute to each Seller an amount equal to (i) such Seller's Applicable
Percentage, multiplied by either (ii) if no Claims are then pending, the sum
of all amounts remaining in the Escrow Fund, or (iii) if Claims are then
pending, the sum of all amounts remaining in the Escrow Fund, minus the
aggregate dollar amount of all such pending Claims (as shown in the Notices of
such Claims) (the "Claims Amount"). The Claims Amount shall thereafter be
retained by Escrow Agent in the Escrow Fund until Escrow Agent receives joint
written instructions of Buyer and Sellers' Representative or an order
described in and delivered in accordance with the terms and provisions of
Section 3.
(c) "Applicable Percentage" means, with respect to each Seller, the
percentage set forth beside such Seller's name on Exhibit A attached hereto.
(d) All payments and distributions to each Seller pursuant to this Section
4 shall be made in immediately available funds by check delivered to the
address for such Seller set forth beside such Seller's name on Exhibit A
attached hereto, or in accordance with such other delivery instructions as
Sellers' Representative may deliver to Escrow Agent.
5. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall have the duty to give the Escrow Fund held by
it hereunder no lesser degree of care than it gives its own similar property,
but shall not be required to invest any funds held hereunder except as
directed in this Agreement. Uninvested funds held hereunder shall not earn or
accrue interest.
(b) Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out
of and in connection with this Agreement. Without limiting the foregoing,
Escrow Agent shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance
with the terms hereof, including, without limitation, any liability for any
delays (not resulting from its gross negligence or willful misconduct) in the
investment or reinvestment of the Escrow Fund, or any loss of interest
incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to
do so. Escrow Agent may conclusively presume that the undersigned
representative of any party hereto which is an entity other than a natural
person has full power and authority to instruct Escrow Agent on behalf of that
party unless written notice to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not be liable for
any action taken or omitted by it in good faith in accordance with such
advice.
(e) Escrow Agent does not have any interest in the Escrow Fund
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Sellers shall be responsible for the payment of taxes
related to Interest earned on the Escrow Fund. Any payments of income from
this Escrow Fund shall be subject to withholding regulations then in force
with respect to United States taxes. The parties hereto will provide Escrow
Agent with appropriate Internal Revenue Service Forms W-9 for tax
identification number certification, or non-resident alien certifications.
This Section 5(e) and Section 5(b) shall survive notwithstanding any
termination of this Agreement or the resignation of Escrow Agent.
(f) Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as to
the advisability of selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Escrow Fund to any successor Escrow Agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (a) the
appointment of a successor (including a court of competent jurisdiction) or
(b) the day which is 30 days after the date of delivery of its written notice
of resignation to the other parties hereto. If at that time Escrow Agent has
not received a designation of a successor Escrow Agent, Escrow Agent's sole
responsibility after that time shall be to retain and safeguard the Escrow
Fund until receipt of a designation of successor Escrow Agent or a joint
written disposition instruction by the other parties hereto or a final
non-appealable order of a court of competent jurisdiction.
(i) In consideration for its services hereunder, Sellers and Buyer
agree, jointly and severally, to pay all of the fees, costs, charges and
expenses of the Escrow Agent, including reasonable attorneys' fees, which are
incurred in connection with the performance of its duties and obligations
hereunder. The Escrow Agent shall submit written information (including
copies of receipts) to Sellers and Buyer with respect to the nature and amount
of all expenses which it may incur prior to payment of the same. As between
each other, Sellers and Buyer agree that all amounts which are to be paid to
or on behalf of Escrow Agent pursuant to this Escrow Agreement shall be paid
one-half by Sellers (in accordance with the percentages set forth on Exhibit
A) and one-half by Buyer. Sellers and Buyer each agree to indemnify the
other, and their respective subsidiaries and affiliates for any and all
liability, loss, damages, costs or expenses which the other may incur as a
result of or in connection with the failure or refusal of the other party to
satisfy its obligations hereunder. Amounts payable to Escrow Agent by Sellers
hereunder shall be paid out of the Escrow Fund and may be debited therefrom by
Escrow Agent upon notice to Sellers' Representative. Amounts payable to
Escrow Agent by Buyer hereunder shall be paid by Buyer upon Escrow Agent's
demand.
(j) No printed or other matter in any language (including, without
limitation, prospectuses, notices, reports and promotional material) that
mentions Escrow Agent's name or the rights, powers, or duties of Escrow Agent
shall be issued by the other parties hereto or on such parties' behalf unless
Escrow Agent shall first have given its specific written consent thereto.
(k) The other parties hereto authorize Escrow Agent, for any
securities held hereunder, to use the services of any United States central
securities depository it reasonably deems appropriate, including, without
limitation, the Depositary Trust Company and the Federal Reserve Book Entry
System.
6. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent
with respect toany and all matters pertinent hereto. No implied duties or
obligations shall be read into this agreement against Escrow Agent. Escrow
Agent shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement.
7. AGENCY OF SELLERS' REPRESENTATIVE; OWNERSHIP FOR TAX PURPOSES
Sellers hereby appoint Sellers' Representative to act as Sellers'
agent for the purposes and duties required of Sellers' Representative
hereunder. Sellers acknowledge and agree, however, that for purposes of
federal and other taxes based on income, each Seller shall be treated as the
owner of the percentage of the Escrow Fund set forth on Exhibit A,
respectively, and that each will report all income, if any, that is earned on,
or derived from, the Escrow Fund as its income, in such proportions, in the
taxable year or years in which such income is properly includible and pay any
taxes attributable thereto.
8. NOTICES
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt) provided that a copy is
mailed by certified or registered mail, return receipt requested, or (c) when
received at the address set forth below, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numb ersset forth below (or to such other
addresses and telecopier numbers as a party may design ate bynotice to the
other parties):
Sellers, any Seller, or Sellers' Representative:
▇/▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP
1400 ▇▇▇▇▇▇▇▇ Investment Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Buyer:
Reliant Building Products, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Escrow Agent:
Bank One Trust Company, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bank One Trust Company, N.A.
Corporate Trust Account Administration
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement shall be brought in the
federal or state courts of the Sta te ofDelaware, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue
laid therein. As long as service of process is effected as required by such
court, process in any action or proceeding so commenced may be served on any
party anywhere in the world.
10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original and all of which, when taken together,
will be deemed to constitute one and the same.
11. SECTION HEADINGS
The headings of sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.
12. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. 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 p art, bya 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.
13. EXCLUSIVE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
Buyer, the Sellers and the Escrow Agent.
14. GOVERNING LAW
This Agreement shall be governed by the laws of the State of
Delaware, without regard to conflicts of law principles.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Indemnification Escrow Agreement as of the date first written above.
BANK ONE TRUST COMPANY, N.A. RELIANT BUILDING
PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------- -----------------------
Its: AVP Its: President and CEO
--------------------- ----------------------
FNL MANAGEMENT CORP.,
as Sellers' Representative hereunder
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
{Sellers' counterpart signature pages follow.}