EXHIBIT 2.1(i)
PURCHASE AGREEMENT
By and Among
AMERICAN FIREPLACE COMPANY AND
HEARTH & HOME, INC., as SELLERS,
HEARTH TECHNOLOGIES INC., as BUYER, and
HON INDUSTRIES INC.
Dated as of January 28, 2000
TABLE OF CONTENTS
Page
ARTICLE I. PURCHASE AND SALE 1
1.1 Purchase and Sale of Assets 1
(a) [Intentionally omitted] 1
(b) Prepaids 2
(c) Inventory 2
(d) Accounts Receivable 2
(e) Fixed Assets 2
(f) [Intentionally omitted] 2
(g) Leased Property 2
(h) Intellectual Property Rights 2
(i) Business Records 3
(j) Rights Under Confidentiality
Agreements and Warranties 3
(k) Customer List 3
(l) Catalogs and Advertising Materials 3
(m) Purchase Orders 3
(n) Contracts 3
(o) Permits 3
(p) [Intentionally omitted] 3
(q) Goodwill 3
(r) Miscellaneous 4
1.2 Retained Assets 4
(a) Designated Assets 4
(b) Non-Assigned Contracts 4
(c) Employee Plan Assets 4
(d) Corporate Records 4
(e) Shares in H&H 4
(f) Insurance 5
1.3 [Intentionally omitted] 5
1.4 Assignability and Consents 5
(a) Required Consents 5
(b) Nonassignable Items 5
ARTICLE II. LIABILITIES 6
2.1 Assumption of Liabilities 6
(a) [Intentionally omitted] 6
(b) Accrued Liabilities 6
(c) Contracts 6
(d) Warranty Commitments 6
2.2 Retained Liabilities 6
(a) Pre-Closing 7
(b) Liabilities Relating to the Sale of
(c) Employee-Related Liabilities 7
(d) Litigation 7
(e) Product, Environmental and Safety
Liability 7
(f) Taxes 8
(g) [Intentionally omitted] 8
(h) Liabilities Relating to Retained 8
Assets
(i) Post-Closing Date 8
(j) Shutdown Costs 8
(k) Acquisition Payments 9
ARTICLE III. PURCHASE PRICE 9
3.1 Payment 9
3.2 [Intentionally omitted] 9
3.3 [Intentionally omitted] 9
3.4 [Intentionally omitted] 9
3.5 Satisfaction of Indebtedness 9
3.6 Purchase Price Allocation 10
ARTICLE IV. CLOSING 10
4.1 General 10
4.2 Documents to be Delivered by Asset Seller 10
4.3 [Intentionally omitted] 12
4.4 Documents to be Delivered by Buyer 12
4.5 Documents to be Delivered by Buyer and
Sellers 13
4.6 Other Documents to be Delivered 13
ARTICLE V. REPRESENTATIONS AND WARRANTIES 14
5.1 Joint and Several Representations and
Warranties of Sellers 14
(a) Organization and Standing; Power and
Authority 14
(b) Articles and By-Laws 15
(c) Conflicts; Defaults 15
(d) Acquired Assets; Title to the
Acquired Assets 16
(e) Real Property 17
(f) Leases 17
(g) Contracts 17
(h) Financial Statements 18
(i) Liabilities 20
(j) Accounts Receivable; Collection;
Trade Payables 21
(k) Inventories 21
(l) Litigation 21
(m) Customers and Suppliers 22
(n) Regulatory Compliance 22
(o) Brokers, Finders and Agents 22
(p) Intellectual Property 22
(q) Permits 23
(r) Employee Relations; Collective
Bargaining Agreements 24
(s) Employees and Employee Plans 24
(t) Environmental and Safety Compliance 27
(i) General 27
(ii) Specific Environmental
Representations and Warranties 27
(iii) Definitions 28
(u) Changes in Circumstances 30
(v) Taxes 30
(w) Product Warranties 33
(x) Insurance 33
(y) Approvals 34
(z) Absence of Certain Commercial
Practices 34
(aa) Bank Accounts 34
(ab) Books and Records 34
(ac) Warranty Costs 35
(ad) Penalties and Renegotiation of
Contracts 35
(ae) Pricing Practices 35
(af) Copies of Documents 35
(ag) [Intentionally omitted] 35
(ah) Insider Interests; Advances 36
(ai) Year 2000 Compliance 36
(aj) Disclosure 37
5.2 [Intentionally omitted] 37
5.3 Representations and Warranties of HON 37
(a) Organization and Standing; Power and
Authority 37
(b) Conflicts; Defaults 37
(c) Brokers, Finders and Agents 37
(d) Consents 38
5.4 Representations and Warranties Relating
to Buyer 38
(a) Organization and Standing; Power and
Authority 38
(b) Capitalization 38
(c) Articles and By-Laws 39
(d) Conflicts; Defaults 39
(e) Compliance with Other Instruments,
etc. 39
(f) Financial Statements 39
(g) Litigation 39
(h) Absence of Certain Changes or Events 40
(i) Brokers, Finders and Agents 40
(j) Consents 40
(k) Ability to Pay Cash Amount 40
5.5 General 40
ARTICLE VI. CONDITIONS TO CLOSING 40
6.1 Conditions to Buyer's Obligations 40
(a) Representations and Warranties 40
(b) Covenants 41
(c) Material Adverse Change 41
(d) Consents 41
(e) No Proceeding or Litigation 41
(f) Legal Matters 42
(g) Certificate of Seller 42
(h) Certificate; Documents 42
(i) Tax Certificates 42
(j) Lender Consents 42
(k) Other Closing 42
6.2 Conditions to Sellers' Obligations 42
(a) Representations and Warranties 42
(b) Covenants 43
(c) Material Adverse Change 43
(d) Consents 43
(e) No Proceeding or Litigation 43
(f) Legal Matters 43
(g) Certificates of Buyer and HON 43
(h) Certificates; Documents 43
(i) LaSalle Loan 43
(j) Other Closing 43
ARTICLE VII. COVENANTS OF SELLER 44
7.1 Conduct of Businesss 44
(a) Obligations for Borrowed Money 44
(b) Employee Matters 44
(c) Sale of Assets 44
(d) Commitments 44
(e) Leased Facilities 45
(f) Encumbrances 45
(g) Insurance 45
(h) Litigation 45
(i) Representations and Warranties 45
(j) Commitments 45
7.2 Disclosure Supplements 45
7.3 Closing 46
7.4 Confidentiality 46
7.5 Maintenance of Insurance 46
7.6 Inventories 46
7.7 Maintenance of, and Access to, Records 46
7.8 Non-Competition 46
(a) Period and Conduct 46
(b) Territory 47
(c) Definition 47
(d) Remedies 47
(e) Subsidiaries, Divisions and 47
Affiliates
(f) Severability 48
7.9 Accounts Receivable 48
7.10 Name Change Filings 48
7.11 No Shopping 48
7.12 Plant Closing Obligations 48
7.13 Further Assurances; Customer and Supplier
Relationships; Assertion of Claims 49
7.14 Appointment of Representative 49
7.15 Payment of Indebtedness; Releases 49
ARTICLE VIII. COVENANTS OF BUYER AND HON 50
8.1 Covenants of Buyer 50
(a) Maintenance of, and Access to,
Records 50
(b) Closing 50
(c) Disclosure Supplements 50
(d) Copies 50
(e) Insurance 50
(f) Supply of Products 50
(g) Further Assurances 50
8.2 Covenants of HON 51
(a) Closing 51
(b) IRB Consents 51
(c) Buyer Note 51
ARTICLE IX. CERTAIN ADDITIONAL COVENANTS 51
9.1 Access to Records and Properties 51
9.2 Expenses; Transfer Taxes 51
9.3 Bulk Transfer Laws 52
9.4 Press Releases and Disclosure 52
9.5 Cooperation in the Defense of Claims 52
9.6 Regulatory Approvals 52
9.7 Employee Matters 53
9.8 [Intentionally omitted] 54
9.9 Product Warranty Work 54
ARTICLE X. TERMINATION 55
10.1 Termination 55
(a) Mutual Consent 55
(b) Termination Date 55
(c) Sellers Misrepresentation or Breach 55
(d) Buyer Misrepresentation or Breach 55
(e) Court Order 55
(f) Material Adverse Change 55
(g) Buyer's Conditions 55
(h) Sellers' Conditions 55
10.2 Effect of Termination 56
ARTICLE XI. INDEMNIFICATION 56
11.1 Indemnification by Buyer 56
11.2 Indemnification by Sellers 56
(I) General 56
(II) Environmental Indemnification 57
11.3 Notice of Claim; Right to Participate in
and Defend Third Party Claim 57
11.4 Setoff 58
11.5 Time Limitations on Claims for
Indemnification 59
11.6 Maximum and DeMinimis Amounts 59
11.7 Exclusions 60
11.8 Dispute Resolution 60
ARTICLE XII. MISCELLANEOUS 62
12.1 Amendments 62
12.2 Entire Agreement 62
12.3 Governing Law 62
12.4 Notices 62
12.5 Counterparts 63
12.6 Assignment 63
12.7 Waivers 63
12.8 Third Parties 63
12.9 Schedules 63
12.10 Headings 64
12.11 Certain Definitions 64
12.12 Remedies Not Exclusive 64
12.13 Gender and Number 64
12.14 Attorney's Fees 64
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") dated as of
January 28, 2000, is among AMERICAN FIREPLACE COMPANY, a Maryland
corporation ("AFC") formerly known as ▇▇▇▇▇▇▇ Eastern Corporation
(as so known, "TEC"), HEARTH & HOME, INC., a Maryland corporation
("H&H") (collectively, "Sellers" or the "Companies"), HEARTH
TECHNOLOGIES INC., an Iowa corporation ("Buyer"), and HON
INDUSTRIES INC., an Iowa corporation ("HON").
W I T N E S S E T H:
WHEREAS, the Companies carry on the business (the
"Business") of (1) designing, manufacturing, distributing,
marketing, selling and installing hearth and fireplace products,
including gas and wood burning fireplaces, inserts, stoves, logs,
mantels, surrounds, fascia, cabinetry, venting parts and
accessories ("Hearth Products") and (2) distributing, marketing,
selling and installing spas, outdoor kitchens, barbecues and
grills, and related products, such as outdoor and patio
furniture, shelving and garage doors ("Other Products," and
together with Hearth Products, the "Products");
WHEREAS, the Companies (each, an "Asset Seller" and
collectively, the "Asset Sellers") desire to sell substantially
all of their respective assets, properties, rights and interests
to Buyer; and
WHEREAS, Buyer desires to purchase and acquire from
each Asset Seller substantially all of such assets, properties,
rights and interests of such Asset Seller in consideration of
certain payments by Buyer and the assumption by Buyer of certain
liabilities and obligations of such Asset Seller specifically
disclosed in this Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter contained and other good and
valuable consideration had and received, HON, Buyer and the Asset
Sellers, on the basis of, and in reliance upon, the
representations, warranties, covenants, obligations and
agreements set forth in this Agreement, and upon the terms and
subject to the conditions contained herein, hereby agree as
follows:
ARTICLE I. PURCHASE AND SALE
1.1 Purchase and Sale of Assets. At the Closing (as
hereinafter defined) and effective as of the Closing Date (as
hereinafter defined), Buyer shall purchase and acquire from each
Asset Seller, and each Asset Seller shall sell, transfer, convey,
assign and deliver to Buyer, on a going concern basis, all of the
assets, properties, rights and interests owned, used, occupied or
held by or for the benefit of such Asset Seller wherever
situated, as the same shall exist as of the Closing Date, and
wherever situated, including, without limitation, the following:
(a) [Intentionally omitted];
(b) Prepaids. All prepaid expenses, advance payments,
deposits, surety accounts and other similar assets,
including, without limitation, prepaid deposits with
landlords, suppliers and utilities;
(c) Inventory. All inventories of products,
work-in-process, finished goods, raw materials, supplies and
parts (collectively, "Inventory" or "Inventories"),
including, without limitation, all Inventories located at
the facilities listed on the Schedule entitled "Real Estate
and Leases";
(d) Accounts Receivable. All accounts receivable, any
payments received with respect thereto after the Closing
Date, unpaid interest accrued on any such accounts
receivable and any security or collateral relating thereto
(collectively, "Accounts Receivable");
(e) Fixed Assets. All tangible personal property,
plant and equipment, including, without limitation,
buildings, structures, fixtures, machinery and equipment,
dies, jigs, molds, patterns, tools, tooling, production
fixtures, maintenance machinery and equipment, office
furniture and office equipment, other furnishings, trucks,
automobiles and other vehicles and transportation equipment,
leasehold improvements and construction-in-process, and all
tangible personal property set forth on the Schedule
entitled "Fixed Assets" attached hereto (collectively, the
"Fixed Assets");
(f) [Intentionally omitted];
(g) Leased Property. All rights and interests under
the lease agreements (the "Lease Agreements") more
particularly described under the heading "Leased Property"
on the Schedule entitled "Real Estate and Leases" attached
hereto, which descriptions are incorporated herein by
reference (the premises subject to the Lease Agreements
being hereinafter collectively referred to as the "Leased
Property");
(h) Intellectual Property Rights. All inventions,
discoveries, trademarks, patents, trade names, copyrights,
know-how, intellectual property, software, shop rights,
licenses, developments, research data, designs, technology,
discoveries, trade secrets, test procedures, processes,
research data, formulas and other confidential information,
intellectual and similar intangible property rights, whether
or not patentable (or otherwise subject to legally
enforceable restrictions or protections against unauthorized
third party usage), and any and all applications for, and
extensions, divisions and reissuances of, any of the
foregoing, and rights therein, including, without
limitation, (i) the names "American Fireplace Company" and
"Hearth & Home, Inc." and all related trade and business
names and trademarks, (ii) the intellectual and intangible
property rights described on the Schedule entitled
"Intellectual Property" attached hereto, (iii) the
production methods, formulas, know-how and technical
expertise relating to the Products and (iv) any and all
domain names, World Wide Web sites and related content and
software, including electronic commerce and ordering
software, rights of use and access to related computer
servers and programs, and rights under related contracts,
agreements and licenses (collectively, the "Intangibles");
(i) Business Records. All books and records,
including, without limitation, all files, invoices, forms,
accounts, correspondence, production records, technical,
accounting, manufacturing and procedural manuals, employment
records, studies, reports or summaries relating to any
Environmental Requirements (as hereinafter defined), and
other books and records relating to the operation of the
Business or other assets or properties, and any confidential
information which has been reduced to writing or other
tangible medium;
(j) Rights Under Confidentiality Agreements and
Warranties. All rights, claims and benefits of such Asset
Seller in, to or under any (i) (A) employee confidentiality
agreements entered into by such Asset Seller and (B)
confidentiality or secrecy agreements entered into by such
Asset Seller with third parties that relate to the use or
disclosure of information; (ii) express or implied
warranties from the suppliers of goods or services
(including any coverage rights under product liability or
other insurance maintained by any of such suppliers for the
benefit of such Asset Seller); and (iii) non-competition or
non-solicitation agreements, restrictive covenants and
similar agreements;
(k) Customer List. Lists of all of the Persons to
whom or to which such Asset Seller has sold or otherwise
furnished Products, directly or indirectly (individually, a
"Customer" and collectively, the "Customers," such terms to
include any assignee or successor of any such Person,
whether by consolidation, merger, sale of assets or
otherwise), including related information as to the unit and
dollar volume of such sales, the type of Products so sold or
furnished, the method of distribution and other relevant
marketing and product information for each Customer (the
"Customer Lists"), which Customer Lists will be delivered at
Closing via electronic means;
(l) Catalogs and Advertising Materials. All
promotional and advertising materials, including, without
limitation, all catalogs, brochures, plans, supplier lists,
manuals, handbooks, equipment and parts lists, dealer and
distributor lists, and labels and packaging materials;
(m) Purchase Orders. All unfilled purchase and sale
orders (including releases of quantities pursuant thereto);
(n) Contracts. Subject to Sections 1.2(b) and 1.4,
all rights, benefits and interests of such Asset Seller in
and to all licenses, leases, contracts, agreements,
commitments and undertakings;
(o) Permits. All licenses, permits, approvals,
variances, waivers or consents (collectively, the
"Permits"), to the extent transferable, issued by any
foreign, United States, state or local governmental entity
or municipality or subdivision thereof or any authority,
department, commission, board, bureau, agency, court or
instrumentality (collectively, "Governmental Authorities");
(p) [Intentionally omitted];
(q) Goodwill. The goodwill of such Asset Seller as a
going concern; and
(r) Miscellaneous. Except for the Retained Assets (as
hereinafter defined), all other assets, properties, rights
and interests of such Asset Seller, of every kind, nature
and description, whether tangible or intangible, real,
personal or mixed, and wherever situated, including, without
limitation, those assets, properties, rights and interests
set forth on the Unaudited Balance Sheet (as hereinafter
defined), all of which are to be sold, transferred,
conveyed, assigned and delivered to Buyer at the Closing
pursuant to this Agreement.
All of the assets, properties, rights and interests owned, used,
occupied or held by or for the benefit of such Asset Seller,
which are to be sold, transferred, conveyed, assigned and
delivered by such Asset Seller to Buyer at the Closing as
contemplated herein, including without limitation, those
described in clauses (a) through (r) above, but excluding the
Retained Assets, are referred to herein collectively as the
"Acquired Assets".
1.2 Retained Assets. Anything in Section 1.1 to the
contrary notwithstanding, the following assets (collectively, the
"Retained Assets") shall be retained by each Asset Seller, and
Buyer shall in no way be construed to have purchased or acquired
(or to be obligated to purchase or to acquire) any interest
whatsoever in any of the following:
(a) Designated Assets. The assets, properties, rights
and/or interests, owned, used, occupied or held by or for
the benefit of such Asset Seller that are listed on Schedule
1.2 as not being included within, or constituting a part of,
the Acquired Assets (collectively, the "Designated Assets");
(b) Non-Assigned Contracts. All of the rights and
interests, and all of the liabilities and obligations, of
each Asset Seller in, under or pursuant to any license,
lease, contract, agreement, commitment or undertaking set
forth on the Schedule entitled "Non-Assigned Contracts"
(collectively, the "Non-Assigned Contracts");
(c) Employee Plan Assets. Except as otherwise
provided in Section 9.7, the rights of such Asset Seller
under, and any funds and property held in trust or any other
funding vehicle pursuant to, any "employee benefit plan"
(within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA")) or any other bonus, stock option, stock
appreciation, stock purchase, severance, termination, lay-
off, leave of absence, disability, workers compensation,
pension, profit sharing, retirement, vacation or holiday
pay, insurance, deferred compensation or other employee or
welfare benefit plan, agreement or arrangement of such Asset
Seller applicable to such Asset Seller's past, present or
future employees (collectively, "Employee Plans"); and
(d) Corporate Records. Such Asset Seller's minute
books, stock books, stock ledger and corporate seal;
(e) Shares in H&H. All issued and outstanding shares
of capital stock, or other equity interests, including
limited liability company interests, of H&H, TEC-USA, Inc.
and HSA, L.L.C. held by AFC; and
(f) Insurance. All rights, claims and benefits of
such Asset Seller in, to or under all insurance policies
maintained by such Asset Seller, or by any Affiliate of such
Asset Seller for the Business or the Acquired Assets.
1.3 [Intentionally omitted]
1.4 Assignability and Consents.
(a) Required Consents. The Schedule entitled
"Assignments and Consents" sets forth a list of all material
Acquired Assets, including material Contracts, Permits and
Lease Agreements, which are non-assignable or
non-transferable or cannot be subleased to Buyer without, or
with respect to which the transactions contemplated by this
Agreement would require, a consent, novation, approval,
authorization, waiver, agreement, or satisfaction of any
other requirement (including filing and registration
requirements) of or from some other individual, partnership,
corporation, association, joint stock company, trust, joint
venture, limited liability company or Governmental Authority
(each, a "Person") ("Consents"). Each Seller has commenced
and shall continue to take, or cause to be taken by others,
all necessary actions required to obtain or satisfy, at the
earliest practicable date, all Consents, from any Persons
necessary to authorize, approve or permit, and to consummate
and make effective, the transactions contemplated by this
Agreement, including full and complete sale, conveyance,
assignment, sublease or transfer of the Acquired Assets, and
to continue such efforts as may be required after the
Closing Date; provided, however, that (i) the Sellers shall
not be required to take any such action with respect to
contracts with home builders specified on the Schedule
entitled "Builder Contracts" ("Builder Contracts"), and
(ii) Sellers shall only be required under this Section 1.4,
as a condition precedent to Buyer's obligations to
consummate the transactions provided for by this Agreement,
to obtain consents to the assignment of material Lease
Agreements (the "Required Consents").
(b) Nonassignable Items. Anything in this Agreement
to the contrary notwithstanding, this Agreement shall not
constitute, or be deemed to constitute, an Agreement to
sell, convey, assign, sublease or transfer any Acquired
Assets, including Contracts, Permits and Lease Agreements,
if an attempted or deemed sale, conveyance, assignment,
sublease or transfer thereof, without the Consent of another
party thereto or a Governmental Authority would constitute a
breach of, or in any way affect the rights of, any Seller or
Buyer with respect thereto ("Nonassignable Items"). Each
Seller shall use its best efforts, and Buyer shall cooperate
in all reasonable respects with Sellers, to obtain and
satisfy all Consents and to resolve all impracticalities of
sale, conveyance, assignment, sublease or transfer necessary
to convey to Buyer all Nonassignable Items. If any such
Consents are not obtained and satisfied or if an attempted
sale, conveyance, assignment, sublease or transfer would be
ineffective, each Seller and its appropriate Affiliate, and
Buyer, shall, at and after the Closing (i) enter into such
arrangements (including related written agreements) as Buyer
may reasonably request to provide Buyer the benefit of any
such Nonassignable Items (it being acknowledged that such
arrangement may include obligations imposed on Sellers and
such Affiliates promptly to pay to Buyer when received all
monies and other items of value received by Sellers and such
Affiliates under any such Nonassignable Item) in exchange
for the performance by Buyer of Sellers' obligations in
respect of such Nonassignable Items under Section 2.1(c) and
(ii) use their reasonable best efforts to assure that the
Companies' current customers and suppliers shall continue to
do business with Buyer in accordance with the terms and for
the periods of time set forth in any Nonassignable Item.
ARTICLE II. LIABILITIES
2.1 Assumption of Liabilities. On the terms and
subject to the conditions set forth in this Agreement, Buyer
shall assume, at the Closing and effective as of the Closing
Date, and shall thereafter pay, perform and discharge as and when
due, except as otherwise provided in Section 9.7, the following,
and only the following, liabilities and obligations of each Asset
Seller with respect to its operation of its Business
(collectively, the "Assumed Liabilities"):
(a) [Intentionally omitted];
(b) Accrued Liabilities. All accounts payable,
accrued expenses and other liabilities referred to under the
caption "Assumed" on Schedule 2.1(b) in the amounts set
forth thereon or such greater amounts as may arise or accrue
after the date of such Schedule in the ordinary and normal
course and consistent with the representations, warranties,
covenants, obligations and agreements set forth in this
Agreement;
(c) Contracts. All ordinary and normal liabilities
and obligations of Sellers arising under the terms of the
Contracts disclosed on the Schedule entitled "Contracts"
other than contracts that constitute Non-Assigned Contracts
or are included in the Designated Assets (the "Assumed
Contracts") but only to the extent such liabilities and
obligations arise or accrue after the Closing Date in the
ordinary and normal course and consistent with the
representations, warranties, covenants, obligations and
agreements set forth in this Agreement; provided, however,
that Buyer shall not assume or be responsible for any such
liabilities or obligations that (i) arise from breaches
thereof or defaults thereunder by Sellers (other than any
breach of any Builder Contract deemed to arise solely as a
result of the assignment of any such Builder Contract to
Buyer pursuant to this Agreement), (ii) require any payment
or other consideration including any earn-out or contingent
purchase price, in connection with any merger, acquisition
or similar transaction, or (iii) arise under instruments or
agreements evidencing indebtedness of Sellers (other than
those installment contracts, capital leases or vehicle sales
contracts that are disclosed on the Schedule entitled
"Contracts" and pursuant to which Acquired Assets are being
purchased or leased by any Company), all of which
liabilities and obligations shall constitute Retained
Liabilities (as hereinafter defined); and
(d) Warranty Commitments. The Ordinary Warranty
Commitments (as defined in Section 5.1(w)).
2.2 Retained Liabilities. Except to the extent
assumed as provided in Section 2.1 or Section 9.7, each Asset
Seller shall retain, and Buyer shall not assume, or be
responsible or liable with respect to, any liabilities or
obligations of such Asset Seller, whether or not of, associated
with, or arising from, any of the Acquired Assets, and whether
fixed, contingent or otherwise, known or unknown (collectively
referred to hereinafter as the "Retained Liabilities"),
including, without limitation, the following:
(a) Pre-Closing. All liabilities and obligations
relating to, based in whole or in part on events or
conditions occurring or existing in connection with, or
arising out of, the Business as operated prior to the
Closing Date, or the ownership, possession, use, operation
or sale or other disposition prior to the Closing Date of
any Products or any of the Acquired Assets (or any other
assets, properties, rights or interests associated, at any
time prior to the Closing Date, with the Business);
(b) Liabilities Relating to the Sale of Acquired
Assets. All liabilities and obligations of such Asset
Seller or any of its Affiliates, or their respective
directors, officers, shareholders or agents, arising out of,
or relating to, this Agreement or the transactions
contemplated hereby, whether incurred prior to, at, or
subsequent to the Closing Date, including, without
limitation, all liabilities to shareholders or former
shareholders of any Seller, finder's or broker's fees and
expenses, and any and all fees and expenses of any
attorneys, accountants or other professionals retained by or
on behalf of such Asset Seller or any of its Affiliates;
(c) Employee-Related Liabilities. All liabilities and
obligations to any persons at any time employed by such
Asset Seller or its Affiliates or their respective
predecessors-in-interest in the Business or otherwise, at
any time or to any such person's spouse, children, other
dependents or beneficiaries, with respect to incidents,
events, exposures or circumstances occurring at any time
during the period or periods of any such persons' employment
by such Asset Seller or its Affiliates or their respective
predecessors-in-interest, whenever such claims mature or
are asserted, including, without limitation, all liabilities
and obligations arising (i) under any Employee Plans,
(ii) under any employment, wage and hour restriction, equal
opportunity, discrimination, plant closing or immigration
and naturalization laws, (iii) under any collective
bargaining Laws, agreements or arrangements, or (iv) in
connection with any workers' compensation or any other
employee health, accident, disability or safety claims;
(d) Litigation. All liabilities and obligations
relating to any litigation, action, suit, claim,
investigation or proceeding pending on the date hereof, or
constituted hereafter, based in whole or in part on events
or conditions occurring or existing in connection with, or
arising out of, or otherwise relating to, the Business as
operated by such Asset Seller or any of its Affiliates (or
any of their respective predecessors-in-interest), or the
ownership, possession, use, operation, sale or other
disposition prior to the Closing Date of any Products or any
of the Acquired Assets (or any other assets, properties,
rights or interests associated, at any time prior to the
Closing Date, with such Asset Seller);
(e) Product, Environmental and Safety Liability.
Without limiting the rights of Sellers against any third
party, all liabilities and obligations relating to the
Business, any Products or the Acquired Assets (or any other
assets, properties, rights or interests associated, at any
time prior to the Closing Date, with the Business, Products
or the Acquired Assets), based in whole or in part on events
or conditions occurring or existing prior to the Closing
Date and connected with, arising out of or relating to (i)
any dispute for services rendered or goods manufactured,
including, without limitation, product warranty claims
(other than Ordinary Warranty Commitments) and product
liability claims, and claims for refunds (other than
customer deposits), returns, personal injury and property
damage, (ii) Hazardous Materials, Environmental Requirements
or Environmental Damages (all as hereinafter defined)
including costs to obtain permits required to be, but not
obtained, prior to Closing and to document hazardous waste
disposals, (iii) claims relating to employee health and
safety, including claims for injury, sickness, disease or
death of any Person, or (iv) compliance with any statutes,
laws, rules, regulations, orders, ordinances, codes and
decrees of Governmental Authorities (collectively, "Laws")
relating to any of the foregoing;
(f) Taxes. All liabilities and obligations of such
Asset Seller or any of its Affiliates (or any of their
respective predecessors-in-interest) for any Taxes (as
hereinafter defined) due or becoming due by reason of
(i) the conduct of the Business, or (ii) the ownership,
possession, use, operation, purchase, acquisition, sale or
disposition, of any Products or any of the Acquired Assets,
including, without limitation, (1) Taxes attributable to the
sale of inventory and employee withholding tax obligations;
(2) Taxes imposed on, or accruing as a result of the
purchase and sale of the Acquired Assets (except state sales
or other similar transfer taxes arising in connection with
the transfer of assets to Buyer as provided in Section 9.2);
and (3) Taxes attributable to, or resulting from, recapture
of depreciation, other tax benefit items, or otherwise
arising from the transactions contemplated by, this
Agreement;
(g) [Intentionally omitted];
(h) Liabilities Relating to Retained Assets. All
liabilities and obligations relating to, based in whole or
in part on events or conditions occurring or existing in
connection with, or arising out of, any and all assets,
properties, rights and interests that are not being acquired
by Buyer hereunder, including, without limitation, the
Retained Assets;
(i) Post-Closing Date. All liabilities and
obligations incurred by such Asset Seller or its Affiliates
or their respective directors, officers, shareholders,
agents or employees, other than on behalf of Buyer or its
Affiliates, after the Closing Date;
(j) Shutdown Costs. Any liabilities or obligations
relating to, based in whole or in part on events or
conditions occurring or existing in connection with, or
arising out of, the shutdown prior to the Closing of any of
the operations and facilities utilized by such Asset Seller,
including, without limitation, any action which could be
construed as a "plant closing" or "mass layoff," as those
terms are defined in the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Sections 2101-2109 ("WARN"), or any
"employment loss," as defined in WARN, which any employee of
such Asset Seller or any of its Affiliates may suffer;
provided, however, that, for purposes of this
Section 2.2(j), employees of the Asset Sellers immediately
prior to the Closing shall be deemed to be employees of
Buyer as of the Closing Date; and
(k) Acquisition Payments. All liabilities and
obligations of any Company to make any payment or provide
consideration in connection with any merger, acquisition or
similar transaction.
ARTICLE III. PURCHASE PRICE
3.1 Payment. In full consideration for the transfer
of the Acquired Assets, at the Closing Buyer shall:
(i) deliver and pay to Sellers Thirty-eight Million
Seven Hundred Fifty Thousand Dollars ($38,750,000)
(the "Cash Amount") in immediately available funds
by bank wire transfer to an account designated in
writing for this purpose by McGuire, Woods,
Battle & ▇▇▇▇▇▇ LLP, special counsel to Sellers
("Sellers' Counsel"), on behalf of Sellers to
Buyer prior to the Closing;
(ii) execute and deliver to Sellers a Promissory Note
(the "Buyer Note"), dated as of the Closing Date,
payable in the original principal amount of Two
Million Two Hundred Fifty Thousand Dollars
($2,250,000) to Sellers, and in substantially the
form of Schedule 3.1(ii) hereto; and
(iii)execute and deliver to Sellers Convertible
Debentures with a combined face amount of
$26,500,000, dated as of the Closing Date,
payable in such denominations and in such amounts to
such payees as set forth in, and in substantially
the form of, Schedule 3.1(iii) hereto
("Convertible Debentures", and collectively with the Cash
Amount and the Buyer Note, the "Purchase Price").
3.2 [Intentionally omitted]
3.3 [Intentionally omitted]
3.4 [Intentionally omitted]
3.5 Satisfaction of Indebtedness. At or prior to the
Closing, each Company shall take such actions (including without
limitation paying, or directing Buyer to apply a portion of the
Cash Amount to pay to, the creditors of such Company) as may be
required to fully pay, satisfy and discharge all of the
indebtedness of such Company, including the promissory notes and
other evidence of indebtedness listed or described on the
Schedule entitled "Existing Indebtedness to be Discharged by
Closing," and to obtain and deliver to Buyer copies of all
executed releases, in form and substance reasonably satisfactory
to Buyer, necessary to secure the release of all Liens other than
Permitted Liens (as hereinafter defined) on the Acquired Assets
relating thereto (all of which releases Sellers shall cause to be
filed promptly, but no later than two (2) business days, after
payment of the related indebtedness and in any event promptly
after the Closing Date).
3.6 Purchase Price Allocation. The Purchase Price
represents the amount agreed upon by the parties to be the
aggregate value of the Acquired Assets and shall be allocated
among the Acquired Assets, in accordance with their respective
fair market values, which the parties have agreed are or shall be
as set forth on the Schedule entitled "Agreed Allocation of
Purchase Price" attached hereto. Any excess of the Purchase
Price over the fair market value of the Acquired Assets shall be
allocated to goodwill. Each of the parties shall report the
purchase and sale of the Acquired Assets, including, without
limitation, in all federal, foreign, state, local and other Tax
returns and reports prepared and filed by or for any Seller or
Buyer, in accordance with the basis of allocation described in
this Section 3.6.
ARTICLE IV. CLOSING
4.1 General. As used in this Agreement, the "Closing"
shall mean the time at which Sellers consummate the sale,
assignment, transfer and delivery of the Acquired Assets to Buyer
as provided herein by the execution and delivery by Sellers of
the documents and instruments referred to in Section 4.2 against
delivery by Buyer of the documents and payments provided in
Sections 3.1 and 4.4, and Sellers, Buyer and the other Persons
referred to herein deliver the additional documents referred to
in Sections 4.5 and 4.6. In the absence of a prior termination
of this Agreement by one of the parties in accordance with
Article X, the Closing shall take place at the offices of ▇▇▇▇▇,
Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at 10:00 A.M. on the second business day
following the day on which the waiting periods under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 (the "H-S-R Act")
shall have expired or been terminated (the "HSR Approvals"), or
at such other time and place and on such other day as shall be
mutually agreed upon in writing by the parties hereto (the
"Closing Date"). Legal title, equitable title and risk of loss
with respect to the Acquired Assets shall not pass to Buyer until
the Acquired Assets are transferred at the Closing, which
transfer, once it has occurred, shall be deemed effective for
tax, accounting and other computational purposes as of 12:01 A.M.
(Central Time) on the Closing Date.
4.2 Documents to be Delivered by Asset Seller. At the
Closing, each Asset Seller shall deliver to Buyer:
(a) Copies of (i) the resolutions of the Boards of
Directors and shareholders of such Asset Seller, including,
in the case of H&H, AFC as the sole shareholder of H&H,
authorizing and approving this Agreement and all other
transactions and agreements contemplated hereby, (ii) such
Asset Seller's respective Articles of Incorporation, and
(iii) such Asset Seller's respective Bylaws, all certified
by the respective corporate Secretary or Assistant Secretary
of such Asset Seller to be true, correct, complete and in
full force and effect and unmodified as of the Closing Date;
(b) A ▇▇▇▇ of sale transferring such Asset Seller's
Acquired Assets to Buyer, free and clear of any and all
liens, equities, claims, prior assignments, mortgages,
charges, security interests, pledges, conditional sales
contracts, collateral security arrangements and other title
retention arrangements, restrictions (including, in the case
of real property, rights of way, use restrictions, and other
variances, reservations or limitations of any nature) or
encumbrances whatsoever (collectively, "Liens") except for
Permitted Liens and subject to filing of those releases and
documents referred to in Sections 3.5 and 4.2(k);
(c) An opinion, dated as of the Closing Date, of
Sellers' Counsel, addressed to Buyer, substantially in the
form attached hereto as Schedule 4.2(c);
(d) Copies of all Required Consents, together with the
related estoppel certificate from such landlord with respect
to each such Lease Agreement for which a Required Consent is
provided;
(e) Instruments of assignment to Buyer of all of such
Asset Seller's trademarks, trade names, service marks and
patents (and all applications for, and extensions and
reissuances of, any of the foregoing and rights therein)
identified on the Schedule entitled "Intellectual Property";
(f) The certificate required by Section 6.1(g);
(g) Good standing or status certificates for such
Asset Seller from the appropriate state authorities in each
jurisdiction in which such Asset Seller is either
incorporated or qualified to do business as a foreign
corporation, each dated not more than thirty (30) days prior
to the Closing, together with facsimiles or telegrams, if
available, or, if not, oral advice as to good standing as of
the Closing from each of such jurisdictions;
(h) Evidence of the due filing by each Asset Seller's
ultimate parent with the Federal Trade Commission ("FTC")
and the Antitrust Division of the United States Department
of Justice ("DOJ") pursuant to the H-S-R Act and the
expiration or early termination of the waiting periods
thereunder;
(i) An incumbency certificate of the officers of each
Asset Seller;
(j) Instruments of assignment of each Lease Agreement
to which such Asset Seller is a party;
(k) Copies of executed releases, in form and substance
reasonably satisfactory to Buyer, including, without
limitation, termination statements under the Uniform
Commercial Code of any financing statements filed against
any Acquired Assets, evidencing discharge, removal and
termination of all Liens (other than Permitted Liens) to
which the Acquired Assets are subject including, without
limitation, Liens securing the indebtedness described in the
Schedule entitled "Existing Indebtedness to be Discharged by
Closing", together with evidence satisfactory to Buyer that
the indebtedness described on such Schedule shall have been
satisfied and extinguished, which releases Sellers shall
cause to be filed upon payment of the related indebtedness
and in any event promptly after the Closing Date;
(l) A receipt from each of the Asset Sellers
acknowledging receipt of the Purchase Price allocable to the
Acquired Assets and the Assumed Liabilities of such Asset
Seller;
(m) Such other deeds, bills of sale, endorsements,
assignments, affidavits, and other good and sufficient
instruments of sale, assignment, conveyance and transfer in
form and substance satisfactory to Buyer and its counsel, as
are required to effectively vest in Buyer good and
marketable title in and to all of the Acquired Assets
(including such certificates of title or other documents as
are so required with respect to any vehicles included in the
Acquired Assets), free and clear of any and all Liens except
Permitted Liens, and subject to filing of those releases and
documents referred to in Sections 3.5 and 4.2(k);
(n) Copies of resolutions transferring sponsorship of
the Assumed Plan (as hereinafter defined) to Buyer, the
Assignment Agreement dated as of the Closing transferring
sponsorship of the Assumed Plan, and amendments to the
Assumed Plan pursuant to Section 9.7 reflecting the transfer
of sponsorship of the Assumed Plan to Buyer; and
(o) Joinder agreements executed by each Additional
Securityholder (as defined below) party to the
Securityholders' Agreement, dated as of the Closing Date
(the "Securityholders' Agreement"), among HON, Buyer,
Sellers, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Madison Fire
Place, Inc., a Wisconsin corporation ("Madison"), Fireplace
& Spa, Inc., a Wisconsin corporation ("FPSI"), The Minocqua
Fireplace Company, a Wisconsin corporation ("Minocqua"), and
each of the Persons listed on Schedule 1.1(b) thereto as an
Additional Securityholder (the "Additional
Securityholders").
4.3 [Intentionally omitted]
4.4 Documents to be Delivered by Buyer. At the
Closing, Buyer shall deliver or cause to be delivered to Sellers:
(a) A copy of (i) the resolutions of the Board of
Directors of Buyer and HON authorizing and approving this
Agreement and all other transactions and agreements
contemplated hereby, (ii) HON's Articles of Incorporation,
(iii) Buyer's Articles of Incorporation, as amended to
increase the number of authorized shares of common stock of
Buyer to 10,000,000, and (iv) HON's and Buyer's respective
Bylaws, all certified by the Secretary or an Assistant
Secretary of Buyer or HON to be true, correct, complete and
in full force and effect as of the Closing Date;
(b) The certificate required by Section 6.2(g);
(c) Evidence of the payment of the Cash Amount in the
manner and the amount set forth in Section 3.1;
(d) the Buyer Note, duly executed on behalf of Buyer,
and in substantially the form attached hereto as Schedule
3.1(ii);
(e) evidence of the due filing by Buyer's ultimate
parent, HON, with the FTC and the DOJ pursuant to the H-S-R
Act and the expiration or early termination of the waiting
period thereunder;
(f) An opinion, dated the Closing Date, of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Vice President and General Counsel of HON,
addressed to Sellers, substantially in the form attached
hereto as Schedule 4.4(f);
(g) Good standing and tax certificates for Buyer and
HON from the Secretary of State of Iowa, each dated not more
than thirty (30) days prior to the Closing, together with
facsimiles or telegrams, if available, or, if not, oral
advice, as to good standing as of the Closing from each of
such jurisdictions;
(h) An Incumbency Certificate of the officers of each
of Buyer and HON;
(i) An Instrument of Assumption of the Assumed
Liabilities, substantially in the form attached hereto as
Schedule 4.4(i);
(j) The Convertible Debentures, in substantially the
form attached hereto as Schedule 3.1(iii), duly executed on
behalf of Buyer and issued to the persons set forth on
Schedule 3.1(iii);
(k) A Guaranty, in substantially the form attached
hereto as Schedule 4.4(k), duly executed on behalf of HON
(the "HON Guaranty"); and
(l) Resolutions accepting the transfer of sponsorship
of the Assumed Plan from AFC, and the Assumption Agreement
dated as of the Closing transferring sponsorship of the
Assumed Plan.
4.5 Documents to be Delivered by Buyer and Sellers.
At the Closing, Buyer and Sellers shall execute and deliver (i) a
letter of credit in support or a guaranty of Sellers' obligations
under the loan to be made to Sellers referred to in Section
6.2(i), (ii) a reimbursement agreement, in form and substance
satisfactory to Buyer, obligating Sellers to reimburse Buyer for
any liabilities, obligations and costs it incurs, including
amounts paid to LaSalle Bank N.A., related to the transactions
contemplated by this Section 4.5, and (iii) a pledge agreement,
in form and substance satisfactory to Buyer, pledging such amount
of Convertible Debentures to Buyer as may be necessary to fully
secure Sellers' obligations under the documents described in this
Section 4.5.
4.6 Other Documents to be Delivered. At the Closing:
(a) Buyer shall execute and deliver an Employment and
Non-Competition Agreement with each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇ (the "Key Employees") in substantially the form
attached hereto as Schedule 4.6(a) (each, an "Employment and
Non-Competition Agreement").
(b) Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, L. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall execute and deliver a Non-
Competition Agreement to the effect set forth in Section 7.8
(each, a "Non-Competition Agreement".
(c) Each shareholder of the Asset Sellers shall
execute and deliver a Guaranty Agreement substantially in
the form attached hereto as Schedule 4.6(c) (each, a
"Shareholder Guaranty").
(d) [Intentionally omitted]
(e) [Intentionally omitted]
(f) ▇▇▇▇▇ ▇▇▇▇▇▇▇, president of H&H, shall execute and
deliver to Buyer a consent to the assignment of the license
agreement dated April 21, 1999 between ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
AFC.
(g) Sellers shall deliver such instruments of
satisfaction, release, waiver and settlement relating to the
acquisition and related agreements and instruments,
including promissory notes and rights of first refusal, to
which the Companies are a party as described on
Schedule 4.6(g), including (i) payment of all promissory
notes, (ii) payment and satisfaction of contingent purchase
price agreements, (iii) releases of Liens on any Assets, and
(iv) waiver of right of first refusal provisions.
(h) Deutsche Bank Securities Inc. shall deliver an
executed commitment letter obligating it or one of its
Affiliates to purchase the Buyer Note from Sellers on the
Closing Date.
(i) HON, Buyer, Sellers, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Madison, FPSI, Minocqua, and the other parties
listed on the signature page thereto shall execute and
deliver a Securityholders' Agreement, in substantially the
form attached hereto as Schedule 4.6(i).
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.1 Joint and Several Representations and Warranties
of Sellers. Subject only to those exceptions and qualifications
listed and described (including an identification by section
reference to the representations and warranties to which such
exceptions and qualifications relate) on the Schedules referred
to in this Section 5.1 and attached to this Agreement, Sellers
hereby jointly and severally represent and warrant to Buyer that:
(a) Organization and Standing; Power and Authority.
Each Company is a corporation duly organized, validly
existing and in good standing under the laws of the states
described on Schedule 5.1(a), and has full corporate power
and authority to operate its business, to own or lease its
assets, to carry on its business as now being conducted, and
to enter into and perform this Agreement and the
transactions and other agreements and instruments
contemplated by this Agreement. Except as disclosed on the
Schedule entitled "Affiliate Companies", the Companies have
no subsidiary corporations, own no interest, direct or
indirect, in any other business enterprise, firm or
corporation, and are the only business enterprises, firms or
corporations through which the Business (or any business
competing with or similar to the Business) is conducted, or
which owns, leases or uses assets related to the Business.
Each Company is duly qualified or licensed to do business as
a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have,
or might reasonably be expected to have, individually or in
the aggregate, a material adverse effect upon the condition
(financial or otherwise), business, assets, properties or
operations (a "Material Adverse Effect") of the Companies,
taken as whole. This Agreement and all other agreements and
instruments executed and delivered or to be executed and
delivered by any Person in connection herewith
(collectively, the "Transaction Documents") to which any
Seller is party have been, or upon execution thereof will
be, duly executed and delivered by such Seller. This
Agreement and the transactions and other agreements and
instruments contemplated hereby have been duly approved by
the Directors and shareholders of each such Company, and
constitute the valid and binding obligations of each Seller,
enforceable in accordance with their respective terms. Each
Asset Seller represents and warrants that it has been duly
authorized by its shareholders to make the agreements set
forth in Section 7.8 and to bind all of its shareholders
thereto.
(b) Articles and By-Laws. The copies of the Articles
of Incorporation and Bylaws of each Company heretofore
delivered to Buyer are true, correct and complete.
(c) Conflicts; Defaults. Neither the execution and
delivery of this Agreement and the other agreements and
instruments executed or to be executed in connection
herewith by any Seller, nor the performance by Sellers of
the transactions contemplated hereby or thereby, will
(i) violate, conflict with, or constitute a default under,
any of the terms of any Company's Articles of Incorporation
or By-Laws, (ii) except for any default arising solely from
the failure to obtain any Consent other than any Required
Consent, violate, conflict with, or constitute a default
under any provisions of, or result in the acceleration of
any obligation under, (x) the Contracts, (y) any order,
judgment or decree, relating to the Business or the Acquired
Assets, or by which any Company or the Acquired Assets are
bound, or (z) any contract, sales commitment, license,
purchase order, security agreement, mortgage, note, deed,
lien, lease, agreement or instrument, relating to the
Business or the Acquired Assets, or by which any Company or
the Acquired Assets are bound, which violation, conflict,
default or acceleration described in this clause (z) would
result in a Material Adverse Effect upon the Companies,
taken as a whole, (iii) result in the creation or imposition
of any Liens or restrictions, liens, encumbrances, claims
(including any "adverse claim" as such term is defined in
the Uniform Commercial Code), options, calls, pledges,
trusts and other commitments, agreements or arrangements
(collectively, "Claims") in favor of any third Person or
entity upon any of the Acquired Assets, (iv) violate any
law, statute, judgment, decree, order, rule or regulation of
any Governmental Authority, (v) constitute an event which,
after notice or lapse or time or both, would result in such
violation, conflict, default, acceleration, or creation or
imposition of Liens or Claims, (vi) constitute an event
which, after notice of lapse of time or otherwise would
create, or cause to be exercisable or enforceable, any
option, agreement or right of any kind to purchase any of
the Acquired Assets. Except as set forth in the Schedule
entitled "Assignment and Consents", no consent, novation,
approval, filing or authorization will be required to be
obtained or satisfied for the continued performance by Buyer
following the Closing of any contract, agreement, commitment
or undertaking included in the Acquired Assets. No Company
is in violation of or in default under its Articles of
Incorporation or Bylaws. No Company is in violation of or
in default under or any provision of (x) the Contracts, (y)
any order, judgment or decree, relating to the Business, or
the Acquired Assets, or by which any Company, or the
Acquired Assets are bound, or (z) any contract, sales
commitment, license, purchase order, security agreement,
mortgage, note, deed, lien, lease, agreement or instrument,
including without limitation, the Contracts, or any order,
judgment or decree, relating to the Business or the Acquired
Assets, or by which Sellers or the Acquired Assets is bound
described in this clause (z), which violation or default
would result in a Material Adverse Effect upon the
Companies, taken as a whole, or in the payment of any
monetary obligations or debts relating to the Business, and
there exists no condition or event which, after notice or
lapse of time or both, would result in any such violation or
default.
(d) Acquired Assets; Title to the Acquired Assets.
Except for the Retained Assets, the Acquired Assets are the
only assets, properties, rights and interests used by the
Companies in connection with the Business. The Acquired
Assets to be conveyed to Buyer under this Agreement,
together with cash, constitute all of the assets,
properties, rights and interests necessary to conduct the
Business in substantially the same manner as conducted by
the Companies prior to the date of this Agreement. None of
the Acquired Assets have any material defects or are in need
of maintenance or repair, except for ordinary maintenance
and repairs. Each Company has good, marketable and
exclusive title to, and the valid and enforceable power and
unqualified right to use and transfer to Buyer, each of
their respective Assets, including, without limitation, all
dies, molds or other tooling or equipment use in the
Business, whether located at the Companies' facilities or at
the facilities of their Customers or suppliers, and the
Acquired Assets (henceforth also referred to as the
"Assets") are free and clear of all Liens and Claims of any
kind or nature whatsoever, except for Permitted Liens and
the Liens required to be released under Sections 3.2 and
4.2(k). The consummation of the transactions contemplated
by this Agreement (including, without limitation, the
transfer or assignment of the Acquired Assets, and all
rights and interests therein, to Buyer as contemplated
herein) will not adversely affect such title or rights, or
any terms of the applicable agreements (whether written or
oral) evidencing, creating or granting such title or rights.
Except as otherwise disclosed in the Schedule entitled
"Contracts", none of the Assets are subject to, or held
under, any lease, mortgage, security agreement, conditional
sales contract or other title retention agreement, or are
other than in the sole possession and under the sole control
of the Companies. Each Company has the right under valid
and existing leases to occupy, use or control all properties
and assets leased by it. The delivery to Buyer of the
instruments of transfer of ownership contemplated by this
Agreement will vest good, marketable and exclusive title (as
to all Acquired Assets owned by an Asset Seller) or full
right to possess and use (as to all Acquired Assets not
owned by an Asset Seller) to the Acquired Assets in Buyer,
free and clear of all Liens and Claims of any kind or nature
whatsoever, except for current real estate Taxes or
governmental charges or levies which are a Lien but not yet
due and payable and Liens securing obligations under those
installment contracts, capital leases or vehicle sales
contracts that are disclosed on the Schedule entitled
"Contracts" and that will be assumed by Buyer (collectively,
"Permitted Liens"). The Schedule entitled "Fixed Assets"
attached hereto contains true, correct and complete lists of
all fixed assets with an individual net book value in excess
of $10,000 used in connection with the Business as of the
dates specified therein. No Company owns or holds any
marketable Securities.
(e) Real Property. The Schedule entitled "Real Estate
and Leases" attached hereto contains a true, correct and
complete list of all instruments and agreements creating any
interest or right in real property relating to the Business,
or leased or occupied by any Company. No Seller owns or has
any rights to any fee interest in real property. True,
correct and complete copies of the instruments and
agreements identified in such Schedule have been delivered
to Buyer. Each such instrument and agreement is in full
force and effect and is a legal, binding, and enforceable
obligation of the applicable Seller. Each Company has the
right to quiet enjoyment of all real property subject to
leaseholds under any such instruments, for the full term of
each such lease and, subject to proper exercise thereof, any
renewal option related thereto. There has been no
disturbance of or challenge to any Company's quiet
possession under each such lease, and no leasehold or other
interest of any Company in such real property is subject to
or subordinate to any Liens except Permitted Liens.
Neither the whole nor any portion of any real property
leased or occupied by any Company has been condemned,
requisitioned or otherwise taken by any Governmental
Authority, and, to Sellers' knowledge, no such condemnation,
requisition or taking is threatened or contemplated. To
Sellers' knowledge, no building, structure, fixture or
appurtenance comprising part of the real properties of any
Company has any material defects or is in need of
maintenance or repair, except for ordinary maintenance and
repairs.
(f) Leases. Each Lease Agreement described on the
Schedule entitled "Real Estate and Leases" has not been
modified, altered, terminated or revoked, and is in full
force and effect. No Company, as the present tenant under
its respective Lease Agreements, is in default under any of
the terms of such Lease Agreements, and there are no
existing facts or conditions which could give rise to any
such default. To Sellers' knowledge, the present lessors
under the Lease Agreements, are not in default thereunder,
or in breach thereof, and there are no existing facts or
conditions which could give rise to any such breach or
default.
(g) Contracts. The Schedule entitled "Contracts"
attached hereto contains a complete list or summary
description of (i) each license, contract, agreement,
commitment and undertaking (whether written or oral)
(A) relating to the Business or to which any Company is a
party (1) which involves the purchase of inventories or the
sale of products, and involves aggregate future payments in
excess of $50,000, or which extends for a period of more
than one year, or (2) which does not involve the purchase of
inventories or the sale of products, and involves aggregate
future payments in excess of $50,000 or extends for a period
of more than one year, (B) between any Company and any
distributor, manufacturers' agent or selling agent used or
retained in connection with the Business, or pursuant to
which any Company sells or distributes Products, in each
case described in this subsection (B) regardless of the size
or term or such licenses, contracts, agreements, commitments
and undertakings, (ii) each loan or credit agreement,
promissory note, security agreement, guaranty, indenture,
mortgage, pledge or other agreement or instrument evidencing
indebtedness of any Company, or to which any Company is a
party, (iii) any conditional sale or other title retention
agreement, equipment obligation, or lease purchase agreement
involving (in the aggregate) amounts annually in excess of
$25,000 relating to any Company or the Business, or to which
any Company is a party, (iv) any power of attorney given by
any Company to any Person, firm or corporation or otherwise
relating to the Business or the Assets, (v) any non-
competition, restrictive covenant or other agreement that
restricts any Company or any employee, consultant, agent or
director of any Company from conducting the Business
anywhere in the world, (vi) each contract, agreement,
commitment or undertaking presently in effect, whether or
not fully performed, between any Company and any current or
former officer, director, consultant or other employee (or
group thereof) retained or employed in connection with the
Business, or any current or former shareholder (or group of
shareholders) of any Company, (vii) any contract, agreement,
commitment or undertaking evidencing the acquisition or
disposition by any Company of any business, all or
substantially all assets (other than Inventories in the
normal and ordinary course of business), or shares of
capital stock of any Person during the past five years or as
to which any material obligation or liability (contingent or
not) still exists, and (viii) any other contract, agreement,
commitment or undertaking that is material to the condition
(financial or otherwise), results of operations, properties,
assets, liabilities or business of any Company or the
Business (the items described in clauses (i) through (viii)
being herein collectively referred to as the "Contracts").
Each Company has performed all obligations required to be
performed by it to date under the Contracts, and neither any
Company nor, to Sellers' knowledge, any other party to any
Contract has breached or improperly terminated any Contract
by which it is bound, and there exists no condition or event
which after notice or lapse of time or both, would
constitute any such breach, termination or default by
Sellers or, to Sellers' knowledge, by any other party. No
Company is a party to, and the Business does not involve,
any contracts, agreements, commitments or undertakings which
are subject to the Federal Acquisition Regulations,
Chapter 48 of the Code of Federal Regulations and all agency
supplements thereto, the Cost Accounting Standards set forth
in Chapter 4 of the Code of Federal Regulations, or the Cost
Principles set forth in Chapter 31 of the Code of Federal
Regulations. Each of the Contracts is in full force and
effect, and is a legal, binding and enforceable obligation
of or against Sellers, except as such enforceability may be
limited by (i) bankruptcy, insolvency or similar laws
affecting creditors' rights generally or (ii) general
principles of equity, whether considered in a proceeding in
equity or at law.
(h) Financial Statements. Each Company has heretofore
delivered to Buyer the following financial statements
(collectively, together with the notes thereto and the
financial statements to be delivered pursuant to
Section 7.2(b), the "Financial Statements"):
(i) the unaudited Balance Sheet of such Company
(the "Unaudited Balance Sheet") as of
November 30, 1999 (the "Balance Sheet Date"),
and the unaudited Statement of Income of such
Company for the eleven (11) months ended
November 30, 1999 (collectively, the
"Unaudited Financial Statements");
(ii) (A) the unaudited Balance Sheet of AFC as of
November 30, 1999, and the unaudited
Statement of Income for the eleven months
ended November 30, 1999; and the unaudited
Balance Sheet of H&H, and the unaudited
Statement of Income for the eleven months
ended November 30, 1999 (which includes
interim periods for predecessor companies,
Hearth & Home, Distributors, Inc. and
Hearth & Home Doors LLC); the audited Balance
Sheet of AFC as of December 31, 1998, the
audited Statement of Income for the year
ended December 31, 1998, and the audited
Statement of Cash Flows for the year ended
December 31, 1998, together with the
footnotes thereto and the report thereon by
▇.▇. ▇▇▇▇ and Company LLC, certified public
accountants; the audited Balance Sheet of AFC
as of December 31, 1997, the audited
Statement of Income for the year ended
December 31, 1997, and the audited Statement
of Cash Flows for the year ended December 31,
1997, together with the footnotes thereto and
the report thereon by ▇.▇. ▇▇▇▇ and Company
LLC, certified public accountants; and the
audited Balance Sheet of AFC as of
December 31, 1996, the audited Statement of
Income for the year ended December 31, 1996,
and the audited Statement of Cash Flows for
the year ended December 31, 1996, together
with the footnotes thereto and the report
thereon by ▇.▇. ▇▇▇▇ and Company LLC,
certified public accountants, and (B) the
audited Balance Sheet of Hearth & Home
Distributors, Inc. as of March 31, 1998, the
audited Statement of Income for the year
ended March 31, 1998, and the audited
Statement of Cash Flows for the year ended
March 31, 1998, together with the footnotes
thereto and the report thereon by Weil,
Akman, Baylin & ▇▇▇▇▇▇▇, P.A.; the audited
Balance Sheet of Hearth & Home Distributors,
Inc. as of March 31, 1997, the audited
Statement of Income for the year ended
March 31, 1997, and the audited Statement of
Cash Flows for the year ended March 31, 1997,
together with the footnotes thereto and the
report thereon by Weil, Akman, Baylin &
▇▇▇▇▇▇▇, P.A.; and the audited Balance Sheet
of Hearth & Home Doors, LLC as of
December 31, 1996, the audited Statement of
Income for the year ended December 31, 1996,
and the audited Statement of Cash Flows for
the year ended December 31, 1996, together
with the footnotes thereto and the report
thereon by Weil, Akman, Baylin & ▇▇▇▇▇▇▇,
P.A.; and
(iii)Each of the Financial Statements was prepared
from the books and records kept by each
Company for the Business, and fairly
presents the financial position of each Company
as of such dates, and the results of each
Company's operations and each Company's cash flows
for the periods then ended in accordance
with generally accepted accounting principals
("GAAP") consistently applied (except,
in the case of the Unaudited Financial Statements,
for normally recurring year-end adjustments, which
adjustments will not be material, either individually
or in the aggregate) and without footnote disclosures,
and the related internal accounting practices and
policies of such Company disclosed on the Schedule
entitled "Financial Statements" or in the notes to
the Audited Financial Statements (the "Accounting
Practices"). Except as set forth in the Schedule
entitled "Changes in Circumstances" or the Financial
Statements, since the Balance Sheet Date, (x) the
Companies' business, working capital and cash
flow have been managed and operated in
the ordinary and normal course of business
consistent with past practice, (y) neither
the Companies nor any of their affiliates
have accelerated or materially altered the
collection or management of any Accounts
Receivable, or extended the payment term of
or materially altered any Assumed Liabilities,
including, without limitation, account payables
and expenses of the Companies, and (z) there has
been no material adverse change in the condition
(financial or otherwise), results of operations,
properties, assets, liabilities or business
of any Company or the Business, nor has there
been any event or condition of any character
which has materially and adversely affected,
or which would reasonably be expected to
materially and adversely affect, the
condition (financial or otherwise), results
of operations, properties, assets, liabilities or
business of any Company (other than as a result
of any matter set forth in the proviso to
Section 6.1(c)). The Unaudited Balance Sheet
reflects all properties and assets, real, personal or
mixed, that are currently used in connection
with each Company's Business and which would
be required under GAAP to be shown in the
Financial Statements, except for (A) inventory
purchased or sold consistent with past practice
and in the ordinary and normal course of business
since the Balance Sheet Date, (B) other immaterial
properties and assets (other than capital assets)
purchased or sold since the Balance Sheet
Date consistent with past practice and in the
ordinary and normal course of business,
(C) capital assets purchased since the
Balance Sheet Date in the ordinary course of
business consistent with past practice, and
(D) purchase commitments that are for
immaterial properties and assets or are
disclosed on the Schedule entitled "Liabilities".
(i) Liabilities. Except as disclosed in paragraphs 1
or 4 of the Schedule entitled "Changes in Circumstances",
no Company has any liabilities or obligations of any nature
whatsoever, whether absolute, accrued, contingent or
otherwise, and whether known or unknown, including, without
limitation, liabilities for Taxes, forward or long-term
commitments, or unrealized or anticipated losses from any
unfavorable conditions or occurrences, or from write-downs
or write-offs of assets (including Inventories and Accounts
Receivable), except for those (i) reflected or reserved on
the Unaudited Balance Sheet, (ii) incurred or accrued since
the Balance Sheet Date in the ordinary and normal course of
the Companies' business in transactions in the ordinary and
normal course, consistent with past practice, which
transactions are consistent with the representations,
warranties, covenants, obligations and agreements contained
in this Agreement, (iii) arising, in the ordinary course of
business, under Contracts (exclusive of any liabilities or
obligations arising from breaches or defaults by any
Company), or (iv) set forth on Schedule 2.1(b) attached
hereto.
(j) Accounts Receivable; Collection; Trade Payables.
Except for Accounts Receivable with respect to which
applicable reserves are set forth on the Unaudited Balance
Sheet, all Accounts Receivable included in the Assets and
outstanding as of the Closing Date will represent sales
actually made in the ordinary and normal course of business.
To Sellers' knowledge, other than as provided for in
reserves as contemplated above, there are no counterclaims
or setoffs against (or any basis therefor), or any other
matter or condition likely to interfere with full and timely
collection of, any of such Accounts Receivable. The
Schedule entitled "Accounts Receivable" sets forth an aged
listing by Customer of the Accounts Receivable included in
the Assets that are outstanding as of January 6, 2000. No
Company has experienced or suffered undue delay in its
payment of its liabilities and obligations to its trade
creditors (including suppliers) or trade debt.
(k) Inventories. Except as set forth in the Schedule
entitled "Financial Statements", the value at which the
Inventory included in the Assets is carried on the Unaudited
Balance Sheet reflects the lower of cost or market value or
as otherwise described in the notes to the Financial
Statements and reflects writeoffs or writedowns for damaged
or obsolete items, or items of below standard quality, in
accordance with the historical inventory policy and
practices of the Companies, a complete and accurate
description of which is included in the description of the
Accounting Practices set forth in the Schedule entitled
"Financial Statements". The Inventory, taken as a whole,
included in the Assets is not (as of the date hereof) and
will not be (as of the Closing Date) excessive in kind or
amount in light of the ordinary and normal course of conduct
and reasonably anticipated needs of the Business.
(l) Litigation. Except as set forth on the Schedule
entitled "Litigation", no Company is subject to any order
of, or written agreement or memorandum or understanding
with, any Governmental Authority, and there exists no
litigation, action, suit, claim or proceeding pending, or,
to Sellers' knowledge, any litigation, action, suit,
investigation, claim or proceeding threatened against or
affecting any Company, the Business or the Assets, or which
would affect the transactions contemplated by this
Agreement, at law or in equity or before any Governmental
Authority, including, without limitation, claims for product
warranty, product liability, antitrust, unfair competition,
price discrimination or other liability or obligation
relating to Products, whether manufactured, installed or
sold by any Company, any of its Affiliates or any of their
respective predecessors-in-interest in respect of the
Business, or which would adversely affect the transactions
contemplated by this Agreement, and, to Sellers' knowledge,
no one has grounds to assert any such litigation, action,
suit, claim or proceeding. Set forth on the Schedule
entitled "Litigation" is a description of (i) all
litigation, actions, suits, investigations, claims and
proceedings asserted, brought or threatened against any
Company or its Affiliates or predecessors-in-interest in
respect of the Business during the three-year period
preceding the date hereof, together with a description of
the outcome or present status thereof, and (ii) all
judgments, orders, decrees, writs or injunctions entered
into by, in favor of, or against any Company.
(m) Customers and Suppliers. No Company is involved
in any material controversy with any of the customers or
suppliers to the Business. The Schedule entitled "Customers
and Suppliers" sets forth a true, correct and complete list
of each of the Companies' (i) 20 largest customers in terms
of sales during the twelve (12)-month period ended December,
1999 and (ii) suppliers that, during the twelve (12) months
ended December, 1999, individually accounted for $200,000 or
more of orders for the purchase of raw materials, supplies,
equipment or parts. Except for the customers and suppliers
named in the Schedule entitled "Customers and Suppliers",
the Companies have not had any customer who accounted for
more than 5% of the Companies' sales during the period from
January to December 1999, or any supplier from whom the
Companies purchased more than 5% of the goods or services
purchased during the period from January to December 1999.
Except as otherwise disclosed in the Schedule entitled
"Contracts", no Company has been advised by any such
customer or supplier, that such customer or supplier was or
is intending to terminate its relationship with such Company
or would not continue to purchase supplies or services for
future periods on account of any dissatisfaction with such
Company's performance. All business placed by all employees
of each Company has been placed in the name of such Company,
and all fees on such business have been paid to and are the
property of such Company.
(n) Regulatory Compliance. Except as set forth on the
Schedule entitled "Litigation", the Business has been
conducted, all Assets have been maintained and each Company
is currently in compliance with all applicable Laws
(including, without limitation, all laws relating to zoning,
building codes, civil rights, occupational health and
safety, antitrust, consumer protection, currency exchange,
equal opportunity, pensions, securities and trading-with-the-
enemy), except to the extent that failure to comply would
not, individually or in the aggregate, result in a Material
Adverse Effect upon the Companies, taken as a whole, and no
material expenditures are or will be required to comply with
any such laws, regulations and orders of Governmental
Authorities. No Company is in default under, and no event
has occurred which, with the lapse of time or action by a
third party, could result in default under, the terms of any
judgment, decree, order, writ or injunction of any
Governmental Authority, whether at law or in equity, to
which such Company is a party.
(o) Brokers, Finders and Agents. No Company is
directly or indirectly obligated to anyone acting as a
broker, finder or in any other similar capacity in
connection with this Agreement or the transactions
contemplated hereby, except as provided in Section 9.2.
(p) Intellectual Property. The Schedule entitled
"Intellectual Property" attached hereto sets forth a
complete and correct list (with an indication of the record
owner and identifying number) of all patents, trademarks,
service marks, trade names, domain names and copyrights for
which registrations have been obtained (and all applications
for, or extensions or reissuances of, any of the foregoing)
which are or have been used in the conduct of, or which
relate to, the Business or which are owned by any Company.
True, correct and complete copies of such patents,
trademarks, service marks, trade names, domain names and
copyrights (and all applications for, or extensions or
reissuances of, any of the foregoing) identified on such
Schedule have been delivered to Buyer. Except as otherwise
disclosed in the Schedule entitled "Intellectual Property",
each Company is the sole owner and has the exclusive right
to use, free and clear of any payment, restriction or
encumbrance, all such patents, trademarks, service marks,
trade names, domain names and copyrights listed on such
Schedule under such Company's name. Except patents and
trademarks owned by R. ▇▇▇▇▇ ▇▇▇▇▇▇▇ and licensed to Sellers
pursuant to the license agreement to be assigned to Buyer
pursuant to Section 4.6(f), no patents, trademarks, service
marks, trade names, domain names and copyrights (or
applications for, or extensions or reissuances of any of the
foregoing) which are or have been used in the conduct of, or
which relate to, the Business are owned otherwise than by
such Company. There is no claim or demand of any Person
pertaining to, or any proceedings which are pending or, to
Sellers' knowledge, threatened, which challenge (i) the
exclusive rights of the Companies in respect of any patents,
trademarks, service marks, trade names, domain names or
copyrights (or applications for, or extensions or
reissuances of, any of the foregoing) which are or have been
used in the conduct of, or which relate to, the Business or
which are owned by such Company, or (ii) the rights of any
Company in respect of any processes, formulas, confidential
information, trade secrets, know-how, engineering data,
technology or other intellectual property (including the
Intangibles) which are or have been used in the conduct of,
or which relate to, the Business or which are owned by such
Company. No patent, trademark, service ▇▇▇▇, trade name,
domain name, copyright, process, formulas, confidential
information, trade secret, know-how, engineering data,
technology or other intellectual property (including the
Intangibles) which is owned by any Company or which is or
has been used in the conduct of, or which relates to, the
Business is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any Governmental
Authority or any contract, agreement, commitment or
undertaking with any Person, or infringes or, to Sellers'
knowledge, is being infringed by others or is used by others
(whether or not such use constitutes infringement). To
Sellers' knowledge, the Business does not involve employment
of any Person in a manner which violates any non-competition
or non-disclosure agreement which such Person entered into
in connection with any former employment. Except patents
and trademarks owned by R. ▇▇▇▇▇ ▇▇▇▇▇▇▇ and licensed to
Sellers pursuant to the license agreement to be assigned to
Buyer pursuant to Section 4.6(f), all patents, trademarks,
service marks, trade names, domain names or copyrights (or
applications for, or extensions or reissuances of, any of
the foregoing) or processes, formulas, confidential
information, trade secrets, know-how, engineering data,
technology or other intellectual property, or rights
thereto, owned or held, directly or indirectly by any
officer, director, shareholder, employee or any Affiliate of
any Company or any Seller have been, or prior to the Closing
Date will have been, duly and effectively transferred to the
Companies. Set forth on the Schedule entitled "Intellectual
Property" is a description all litigation, actions, suits,
investigations, claims and proceedings, asserted, brought or
threatened against the Company within the three (3) years
preceding the date hereof, together with a description of
the outcome or present status thereof, relating to any
patent, trademark, service ▇▇▇▇, trade name, domain name,
copyright, process, formula, confidential information, trade
secret, know-how, engineering data, technology or other
intellectual property.
(q) Permits. The Schedule entitled "Permits" attached
hereto contains a true, correct and complete list of all
Permits issued to any Company. Each Company has, and is in
full compliance with, all Permits which are necessary or
required for the operation of the Business as it is
currently being operated and its present activities on its
properties and facilities, all of which Permits are in full
force and effect, except to the extent (i) detailed on the
Schedule entitled "Permits" (all of which such Permits not
in full force and effect at Closing will be obtained, at
Sellers' sole cost and expense, within ninety (90) days of
Closing) or (ii) that failure to obtain such Permits or so
comply would not, individually or in the aggregate, result
in a Material Adverse Effect upon the Companies, taken as a
whole. No Company's operation of the Business during the
pendency of its applications, if any, for Permits violates
any law, regulation or order of any Governmental Authority.
(r) Employee Relations; Collective Bargaining
Agreements. There are no material controversies, including
strikes, disputes, slowdowns or work stoppages, pending, or
to Sellers' knowledge, threatened which involve any
employees of any Company. Each Company has complied and is
complying with all Laws relating to the employment of labor,
including, without limitation, any provision thereof
relating to wages, hours, collective bargaining, employee
health, safety and welfare, and the payment of social
security and similar taxes, except to the extent that
failure to comply would not, individually or in the
aggregate, result in a Material Adverse Effect upon the
Companies, taken as a whole. No Company has experienced any
material labor difficulties, including, without limitation,
strikes, slowdowns, or work stoppages, within the five-year
period preceding the date hereof. No Company is a party to
any collective bargaining or union contract, and to Sellers'
knowledge, there exists no current union organizational
effort with respect to any Company's employees.
(s) Employees and Employee Plans. (1) Except as set
forth on Schedule 5.1(s)(2), no Company is or was a party
to, maintains or has maintained, or contributes or has
contributed to, any (A) severance or employment agreement
with any current or former director, officer or employee,
(B) severance plan, program, policy or arrangement, (C) plan
or arrangement relating to its current or former directors,
officers or employees which contains change in control
provisions, (D) any Employee Plan, or (E) any collective
bargaining agreement or consulting agreement (clauses (A)
through (E) are, collectively, the "Company Plans"), nor has
any such Company or any officers or directors of any such
Company, taken any action directly or indirectly which
obligates such Company to institute or modify or change any
such Company Plan, any change in any actuarial or other
assumption used to calculate funding obligations with
respect to any Company Plan, or any change in the manner in
which contributions to any Company Plan are made or the
basis on which such contributions are determined.
(2) Schedule 5.1(s)(2) lists each Company Plan.
True, complete and correct copies of each Company Plan
and summary plan description, the most recent Internal
Revenue Service determination letters, the most recent
annual reports on Internal Revenue Service Form 5500
and actuarial reports, if applicable, and if not
applicable, statement of trust assets, have been made
available and delivered to Buyer.
(3) With respect to each Company Plan, and to any
other employee benefit plan, program, agreement or
arrangement to which a Company or any other trade or
business, whether or not incorporated (an "ERISA
Affiliate"), that together with such Company would be
deemed a "single employer" within the meaning of
Section 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986, as amended (the "Code"), has made, or was
required to make, contributions at any time prior to
the date hereof, no event has occurred, and to Seller's
knowledge there exists no condition or set of
circumstances, in connection with which any such
Company could be subject to any liability under ERISA,
the Code or any other applicable law.
(4) Each Company Plan has been administered in
accordance with its terms, and each Company Plan has
been operated and is in compliance with the applicable
provisions of ERISA, the Code and all other applicable
laws. Each Company Plan that is intended to be
qualified under Section 401(a) or 401(k) of the Code is
so qualified and has received a favorable determination
letter from the Internal Revenue Service (the "IRS")
with respect to its qualified status covering the Tax
Reform Act of 1986 and any other legislation for which
the applicable remedial amendment period has expired,
and each trust established in connection with any
Company Plan that is intended to be exempt from federal
income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that such
trust is so exempt, and no fact or event has occurred
since the date of any determination letter from the IRS
which is reasonably likely to adversely affect the
qualified status of any such Company Plan or the exempt
status of any such trust. There are no pending or
threatened or anticipated claims, investigations or
audits under or with respect to any Company Plan by or
on behalf of any current or former director, officer or
employee, or dependent or beneficiary thereof, or
otherwise (other than routine claims for benefits).
All contributions required to be made by each Company
under applicable Law or the terms of any Company Plan
or collective bargaining agreement as of the Closing
Date have been made as of such date.
(5) No Company Plan is, and no Company or ERISA
Affiliate has ever maintained or contributed to, (i) a
"defined benefit plan"(as defined in Section 3(35) of
ERISA), (ii) a "multiemployer plan" within the meaning
of Section 3(37) of ERISA, (iii) a "multiple employer
plan" within the meaning of Code Section 413 or a
"multiple employer welfare arrangement" within the
meaning of Section 3(40) of ERISA, or (iv) a "welfare
benefit fund" as defined in Section 419(e) of the Code.
(6) Except as disclosed on Schedule 5.1(s)(2), no
Company Plan provides medical, life or other welfare
benefits (whether or not insured), with respect to any
current or former employee of any Company after
retirement or other termination of service (other than
coverage mandated by applicable law). With respect to
any contract or arrangement with an insurance company
providing funding under any Company Plan, there is no
material liability for any retroactive rate adjustment.
Each Company has the right to amend or terminate its
participation with respect to each Company Plan which
it maintains or in which participates. Each Company
Plan that is a "group health plan," as defined in
Section 5000 of the Code has been operated in
compliance with Section 4980B of the Code and the
secondary payor requirements of Section 1862(b) of the
Social Security Act.
(7) Except as disclosed on Schedule 5.1(s)(2), no
current or former employee of any Company will be
entitled to any payment, additional benefits or any
acceleration of the time of payment or vesting of any
benefits under any Company Plan as a result of the
transactions contemplated by this Agreement (either
alone or in conjunction with any other event such as a
termination of employment) and no trustee under any
"rabbi trust" or similar arrangement in connection with
any Company Plan will be entitled to any payment as a
result of the transactions contemplated by this
Agreement.
(8) None of the Companies or any of their current
or former directors, officers, employees or any other
"fiduciary", as such term is defined in Section 3(21)
of ERISA, has committed any breach of fiduciary
responsibility imposed by ERISA or any other applicable
law with respect to the Company Plans which would
subject Buyer, any Company or any of their respective
directors, officers or employees to any material
liability under ERISA or any applicable law.
(9) None of the Companies has incurred any
liability under Title IV of ERISA, any lien under Code
Section 401(a)(29) or any material liability for any
tax or civil penalty imposed by Sections 4971, 4975 or
4976 of the Code or Section 502 of ERISA and no
condition or set of circumstances exists that presents
a risk to any of the Companies of incurring any such
lien or liability.
(10) Each Company (A) is in compliance in all
material respects with all applicable laws respecting
employment, employment practices, terms and conditions
of employment and wages and hours (including, but not
limited to, WARN, the Age Discrimination in Employment
Act, as amended, the Civil Rights Act of 1964, as
amended, the Equal Pay Act, the Occupational Safety and
Health Act, the Fair Labor Standards Act, the Americans
with Disability Act of 1990, the Family and Medical
Leave Act of 1993, the Immigration and Nationality Act
of 1952, as amended by the Immigration Reform and
Control Act of 1986 and the regulations promulgated
thereunder, and any other federal, state or local law
regulating employment or protecting employee rights),
in each case, with respect to current and former
employees and independent contractors of the Company,
(B) has withheld all material amounts required by
applicable laws or by agreement to be withheld from the
wages, salaries and other payments to such current and
former employees and independent contractors, (C) is
not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the
foregoing, and (D) is not liable for any payment to any
trust or other fund or to any governmental entity with
respect to unemployment compensation benefits, workers
compensation, social security or other benefits for
current or former employees and independent contractors
of any Company.
(11) Except as provided on Schedule 5.1(s)(2),
each Company Plan covers only those employees who are
employed by a Company (and their eligible spouses and
beneficiaries), except for persons covered for medical
benefits under an employee welfare benefit plan
pursuant to COBRA (as hereinafter defined).
(t) Environmental and Safety Compliance.
(i) General. Except as disclosed on the Schedule
entitled "Environmental Matters", no Company, nor, to
Sellers' knowledge, any other previous owner, tenant,
occupant or user of the real property, including Leased
Property, listed on the Schedule entitled "Real Estate
and Leases," (hereinafter collectively referred to as
the "Property") nor, to Sellers' knowledge, any other
Person, has engaged in or permitted any operations or
activities upon, or any use or occupancy of the
Property, or any portion thereof, resulting in the
emission, release, discharge, transport, dumping or
disposal of any Hazardous Materials (as hereinafter
defined) on, from, under, in or about the Property,
nor, to Sellers' knowledge, have any Hazardous
Materials migrated or been transported from the
Property to, upon, about or beneath other properties,
nor, to Sellers' knowledge, have any Hazardous
Materials migrated or been transported or threatened to
migrate or be transported from other properties to,
upon, about or beneath the Property.
(ii) Specific Environmental Representations and
Warranties. Except as specified in the Schedule
entitled "Environmental Matters":
(A) To Sellers' knowledge, there is not, nor has there
been, constructed, placed, deposited, stored,
disposed of or located on the Property any
asbestos in any form which has become friable.
(B) To Sellers' knowledge, no underground
improvements, including but not limited to
treatment or storage tanks, sumps, or water, gas
or oil ▇▇▇▇▇, are or have been located on the
Property.
(C) To Sellers' knowledge, there are no
polychlorinated biphenyls (PCBs) or transformers,
capacitors, ballasts, or other equipment which
contains dielectric fluid containing PCBs at
levels in excess of fifty parts per million
(50ppm) constructed, placed, deposited, stored,
disposed of or located on the Property.
(D) The Property and its existing uses and activities
and, to Sellers' knowledge, its prior uses and
activities, comply and have at all times complied
in all material respects with all Environmental
Requirements (as hereinafter defined), and each
Company has obtained all Permits necessary under
applicable Environmental Requirements, except to
the extent that failure to comply or obtain such
Permits would not, individually or in the
aggregate, result in a Material Adverse Effect
upon the Companies, taken as a whole.
(E) No Company, nor to Sellers' knowledge, any prior
owner or occupant of the Property, has received
any notice or other communication concerning any
alleged violation of Environmental Requirements,
whether or not corrected to the satisfaction of
the appropriate authority, nor any notice or other
communication concerning alleged liability for
Environmental Damages in connection with the
Property, and there exists no judgment, decree,
order, writ or injunction outstanding, nor any
litigation, action, suit, claim (including
citation or directive) or proceeding pending or,
to the Sellers' knowledge, any litigation, action,
suit, investigation, claim or proceeding
threatened, relating to the ownership, use,
maintenance or operation of the Property by any
Person, or from the alleged violation of
Environmental Requirements, or from the suspected
presence of quantities of Hazardous Material
thereon or potential migration thereto, nor, to
Sellers' knowledge, are there any existing facts
or conditions which could give rise to any such
violation or liabilities.
(iii)Definitions.
(A) For purposes of this Section 5.1(t), the term
"Hazardous Material" means any substance:
(1) the presence of which requires investigation
or remediation under any federal, state or
local statute, regulation, ordinance, order,
action, policy or common law; or
(2) which is or has been identified as a
potential "hazardous waste," "hazardous
substance," pollutant or contaminant under
any federal, applicable state or local
statute, regulation, rule or ordinance or
amendments thereto including, without
limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42
U.S.C. Sections 9601 et seq.) and/or the Resource
Conservation and Recovery Act (42 U.S.C.
Sections 6901 et seq.); or
(3) which is toxic, explosive, corrosive,
flammable, infectious, radioactive,
carcinogenic, mutagenic, reactive, or
otherwise hazardous and has been identified
as regulated by any Governmental Authority.
(B) For purposes of this Section 5.1(t) the term
"Environmental Requirements" means all applicable
Laws, Permits and similar items of all
Governmental Authorities and all applicable
judicial, administrative, and regulatory
judgments, decrees, orders, writs or injunctions
relating to the protection of human health or the
environment, including, without limitation:
(1) All requirements pertaining to reporting,
licensing, permitting, investigation, and
remediation of emissions, discharges,
releases, or threatened releases of Hazardous
Materials;
(2) All requirements pertaining to the protection
of the health and safety of employees or the
public; and
(3) All other limitations, restrictions,
conditions, standards, prohibitions,
obligations, schedules and timetables
contained therein or in any notice or demand
letter issued, entered, promulgated or
approved thereunder.
(C) For purposes of this Section 5.1(t), the term
"Environmental Damages" means any and all
Liabilities (as defined in Section 11.1) which are
incurred at any time as a result of the existence
or disposal prior to Closing of Hazardous Material
upon, about, from, beneath the Property or
migrating or threatening to migrate to or from the
Property, or the existence of a violation of
Environmental Requirements pertaining to the
Property, regardless of whether the existence of
such Hazardous Material or the violation of
Environmental Requirements arose prior to the
present ownership or operation of the Property,
and including without limitation:
(1) Damages for personal injury, or injury to
property or natural resources occurring upon
or off of the Property, foreseeable or
unforeseeable, including, without limitation,
lost profits, consequential damages, the cost
of demolition and rebuilding of any
improvements on real property, interest and
penalties;
(2) Fees incurred for the services of attorneys,
consultants, contractors, experts,
laboratories and all other costs incurred in
connection with the investigation or
remediation of such Hazardous Materials or
violation of Environmental Requirements
including, but not limited to, the
preparation of any feasibility studies or
reports or the performance of any cleanup,
remediation, removal, response, abatement,
containment, closure, restoration or
monitoring work required by any Governmental
Authority, or reasonably necessary to make
full economic use of the Property or any
other property in a manner consistent with
its intended use or otherwise expended in
connection with such conditions, and
including without limitation any attorneys'
fees, costs and expenses incurred in
enforcing this Agreement or collecting any
sums due hereunder;
(3) Liability to any third Person or Governmental
Authority to indemnify such Person or agency
for costs expended in connection with the
items referenced in subparagraph (C)(2) of
this Section 5.1(t); and
(4) Diminution of the value of the Property, and
damages for the loss of business and
restriction on the use of or adverse impact
on the marketing of rentable or usable space
or of any amenity of the Property.
(u) Changes in Circumstances. Except as disclosed in
the Schedule entitled "Changes in Circumstances", since the
Balance Sheet Date no Company has (i) sold, transferred or
otherwise disposed of any properties or assets (including
the Assets) outside the ordinary and normal course of
business or to any Affiliate of any Company; (ii) mortgaged,
pledged or subjected to any Lien, any of the Assets;
(iii) acquired any property or assets (including the Assets)
outside the ordinary and normal course of business or from
any Affiliate of any Company; (iv) sustained any material
damage, loss or destruction of or to the Assets (whether or
not covered by insurance); (v) entered into any transaction
or otherwise conducted the Business other than in the
ordinary and normal course; (vi) except as disclosed on the
Schedule entitled "Employee Benefits", granted any salary
increase or bonus or permitted any advance to any officer,
director or employee, instituted or granted any general
salary increase to the employees of any Company or entered
into any new, or altered or amended any existing, Employee
Plan or any employment or consulting agreement; (vii) made
any borrowing, whether or not in the ordinary and normal
course of business, issued any commercial paper or
refinanced any existing borrowings (other than Retained
Liabilities representing amounts drawn on existing lines of
credit or similar extensions of credit disclosed on the
Schedule entitled "Changes in Circumstances"); (viii) paid
any obligation or liability (fixed or contingent), other
than in the ordinary and normal course of business,
discharged or satisfied any Lien, or settled any claim,
liability or suit pending or threatened; (ix) entered into
any licenses or leases other than in the ordinary and normal
course of business; (x) made any loans or gifts other than
in the ordinary and normal course of business;
(xi) modified, amended, canceled or terminated any contracts
or commitments under circumstances that have had or could
reasonably be expected to have, a Material Adverse Effect
upon the Companies, taken as a whole; (xii) declared or
paid, or become obligated to declare or pay, any dividend or
disbursed or become obligated to disburse cash except in the
ordinary and normal course; (xiii) made capital expenditures
or commitments other than in the ordinary course of business
consistent with past practice for additions to property,
plant or equipment; (xiv) written down the value of any
Inventory or written off as uncollectible any notes or
Accounts Receivable or any portion thereof; (xv) canceled
any other debts or claims or waived any rights of
substantial value; (xvi) made any material change in any
method of accounting or accounting practice; (xvii) paid,
accrued or incurred any management or similar fees to any
Related Party (as hereinafter defined) or made any other
payment or incurred any other liability to a Related Party
or paid any amounts to or in respect of, or sold or
transferred any assets to, any company or other entity, a
substantial portion of the equity ownership interest of
which is owned by any Company, any Seller or a Related Party
individually or as a group; (xviii) taken or omitted to take
any action which would cause to be breached, or might result
in a breach of, any of the representations, warranties,
covenants, obligations and agreements of any Seller
contained in Sections 5.1(e), (f), (g), (s) or (z) if the
same were made anew immediately after such act or omission;
or (xix) agreed to, or obligated itself to, do anything
identified in (i) through (xviii) above. For purposes of
this Agreement, a "Related Party" is any trust, corporation,
partnership, limited liability company or other entity in
which any Seller or any of their Affiliates has a material
interest.
(v) Taxes. Except as set forth on Schedule 5.1(v)
attached hereto:
(i) Each Company has prepared in good faith and
duly filed or caused to be duly filed all Tax
Returns (including without limitation in
respect of estimated Taxes) required to be
filed by it with the appropriate Governmental
Authorities, or requests for extensions to
file such Tax Returns have been timely filed
and granted and have not expired. All such
Tax Returns were at the time of filing and
are as of the date hereof true, correct and
complete in all material respects. All Taxes
owed by each Company have been paid within
the time and in the manner prescribed by law.
(ii) No claim has ever been made by a Taxing
authority in a jurisdiction where any Company
has never filed a Tax Return that any Company
is or may be subject to taxation by that
jurisdiction. The attached Schedule 5.1(v)
sets forth each state, local and foreign
jurisdiction in which each Company (i) filed
an income or franchise Tax Return, whether on
a consolidated, combined or separate return
basis, during the five year-period ended
December 31, 1998, or (ii) collected or
remitted any sales and/or use Taxes during
the five-year period ended December 31, 1998.
(iii)The Financial Statements reflect an adequate
reserve in accordance with GAAP consistently
applied for all Taxes payable by each Company
for all Taxable periods and portions thereof
accrued through the respective dates of such
Financial Statements. Any Taxes incurred or
accrued by each Company since the Balance
Sheet Date have arisen in the ordinary and
usual course of business determined in the
same manner as for the most recent taxable
period ending on or before such date. All
deficiencies for any Taxes that have been
assessed against each Company have been fully
paid, or are fully reflected as a liability
in such Financial Statements in accordance
with GAAP, or are being contested and an
adequate reserve therefor has been established
and is fully reflected in such Financial Statements.
(iv) No Company is a party to any pending audit,
examination, action or proceeding for the
assessment or collection of any Taxes, nor,
to Sellers' knowledge, is any such audit,
examination, action or proceeding threatened.
(v) There are no Liens for Taxes (other than for
current Taxes not yet due and payable) on the
assets of any Company.
(vi) No issue has been raised by the IRS or any
other applicable taxing authority in any
examination of the federal, state, local or
foreign income Tax Returns of any Company
which, by application of the same or similar
principles, reasonably could be expected to
result in a proposed deficiency for any other
period not so examined. No Company is
subject to any agreements, waivers or other
arrangements extending the statute of
limitations for the assessment, collection or
levy of any Taxes for any Taxable year or
other period. Copies of all income or
informational income Tax Returns of each
Company filed for each of the past three (3)
Taxable years have heretofore been delivered
to Buyer and all such Tax Returns are listed
on the attached Schedule 5.1(v).
(vii)Copies of all Tax agreements (including,
without limitation, agreements providing for
the allocation or sharing of or
indemnification with respect to Taxes) to
which any Company is a party, including any
novations, transfers or assignments thereof,
have heretofore been delivered to Buyer, and
all such agreements are listed on the
attached Schedule 5.1(v).
(viii)[Intentionally omitted]
(ix) No Company has made any payments, is
obligated to make any payments, or is a party
to any agreement that could obligate it to
make any payments, the deductibility of which
would be disallowed (in whole or in part)
under Section 280G of the Code.
(x) [Intentionally omitted]
(xi) To Sellers' knowledge, there are no matters
which give rise to a claim of any substantial
understatement of federal income Taxes within
the meaning of Section 6662 of the Code.
(xii)All Taxes that are required by law to be
withheld or collected by each Company have
been duly withheld or collected and, to the
extent required, have been paid to the proper
Governmental Authority or properly segregated
or deposited as required by applicable law.
(xiii)No Company (A) has been a member of an
affiliated group filing a consolidated
federal income Tax Return, and (B) has
any liability for the Taxes of any other
person under Treas. Reg. Section 1.1502-6
(or any similar provision of state, local, or
foreign law), as a transferee or successor, by
Contract or otherwise.
(xiv)No Company has executed or entered into any
closing agreement pursuant to Section 7121 of
the Code, or any predecessor provision
thereof, or any similar provision of state or
local law.
(xv) No Company has taken any action in
anticipation of the Closing not expressly
required by this Agreement, or not in
accordance with past practice, that would
have the effect of deferring any liability
for Taxes of any of the Companies to any
Taxable period (or portion thereof) ending
after the Closing Date.
(xvi)No Company is or will be required to include
any amount in its gross income or exclude any
amount of its deductions in any Taxable
period ending after the Closing Date by
reason of a change in accounting method in
any Taxable period ending on or before
the Closing Date.
(xvii)Except as may have been granted to the
Companies' attorneys or accountants (which
will be terminated at closing), no power
of attorney has been granted by any Company
with respect to any matter relating to Taxes
which is currently in force.
For purposes of this Agreement, (i) the term "Tax"
(including, with correlative meaning, the terms "Taxes" and
"Taxable") means all federal, state, local, and foreign net
income, gross income, profits, franchise, gross receipts,
payroll, sales, employment, use, occupation, license, value
added, property, ad valorem, withholding, excise, user,
fuel, excess or windfall profits, alternative or add-on
minimum, custom duties, gains, transfer, documentary, stamp,
and other taxes, duties, fees, assessments or charges of any
nature whatsoever, together with all interest, penalties,
fines and additions to tax or additional amounts imposed
with respect thereto, and (ii) the term "Tax Returns" means
any return, report, statement, election, information return
or other document (including schedules or any related or
supporting information) filed or required to be filed with
any Governmental Authority in connection with the
determination, assessment or collection of any Tax or the
administration of any laws, regulations or administrative
requirements relating to any Tax.
(w) Product Warranties. Except for (i) written
product or service warranties made by the Companies on their
sales order forms, packages and product catalogues, true,
accurate and complete copies of which have been provided to
Buyer, (ii) product warranties of manufacturers of the
Products, and (iii) minor Product service or Product
replacement work made by a Company at its sole discretion in
the ordinary course of business in furtherance of
maintaining customer satisfaction and the goodwill of such
Company which are not material, individually or in the
aggregate, no Company makes express product or service
warranties or commitments in connection with the sale of
Products or the performance of services related thereto,
including installation of Products. Except as otherwise
disclosed in the Schedule entitled "Warranty Costs", no
Company has received any notice of any claim that it is
under any warranty liability or obligation with respect to
the sale of Products or the performance of services related
thereto, including installation of Products other than
ordinary and normal warranty and service commitments
consistent with past practice which are neither
(a) material, individually or in the aggregate, or (b) of
the type described on the Schedule entitled "Litigation"
(such ordinary and normal commitments being referred to
herein as "Ordinary Warranty Commitments").
(x) Insurance. The Schedule entitled "Insurance"
contains a list of all insurance policies (specifying the
location, insured, insurer, amount of coverage, type of
insurance and policy number) maintained and in effect by
each Company. All premiums with respect to such policies
covering all periods up to and including the date of Closing
which have come due have been paid, and no notice of
cancellation or termination has been received with respect
to any such policy. Such policies (i) are, to Sellers'
knowledge, sufficient for compliance with all requirements
of law and of all agreements (including Lease Agreements) to
which any Company is a party; (ii) are, to Sellers'
knowledge, valid, outstanding and enforceable policies;
(iii) to Sellers' knowledge, provide adequate insurance
coverage for the assets and operations of the Companies; and
(iv) will not, to Sellers' knowledge, in any way be affected
by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. The Schedule entitled
"Insurance" identifies all risks which the Companies or its
officers have designated as being self insured. Except for
refusals or proposed coverage limitations occurring in the
normal course of renewing insurance coverages from time to
time, no Company has been refused any insurance with respect
to its assets or operations, nor has its coverage been
limited, by any insurance carrier to which it has applied
for any such insurance or with which it has carried
insurance during the last five years.
(y) Approvals. The Schedule entitled "Assignments and
Consents" attached hereto sets forth a list of all Consents,
which must be obtained or satisfied pursuant to the terms of
the related Contract, Lease Agreement or Permit. All
Required Consents have been, or shall by the Closing have
been, obtained.
(z) Absence of Certain Commercial Practices. No
Company nor, to Sellers' knowledge, any officer, director,
employee or agent of any Company (or any Person acting on
behalf of any of the foregoing) has given or agreed to give
(i) any gift or similar benefit of more than nominal value
to any Customer, supplier, Governmental Authority (including
any governmental employee or official) or any other Person
who is or may be in a position to help, hinder or assist any
Company, the Business or the Person giving such gift or
benefit in connection with any actual or proposed
transaction relating to the Business, which gifts or similar
benefits would individually or in the aggregate subject any
Company or any officer, director, employee or agent of any
Company to any fine, penalty, cost or expense or to any
criminal sanctions, (ii) receipts from or payments to any
governmental officials or employees, (iii) commercial bribes
or kick-backs, (iv) political contributions, or (v) any
receipts or disbursements in connection with any unlawful
boycott. No such gift or benefit is required in connection
with the operation of the Business to avoid any fine,
penalty, cost, expense or Material Adverse Effect upon the
Companies, taken as a whole.
(aa) Bank Accounts. The Schedule entitled "Bank
Accounts" attached hereto sets forth the names and locations
of all banks, trust companies, savings and loan associations
and other financial institutions at which any Company
maintains any safe deposit boxes or accounts (specifying the
identifying numbers), and the names of all persons
authorized to draw thereon, make withdrawals therefrom or
have access thereto.
(ab) Books and Records. The books and records of the
Companies maintained in connection with the Business
(including, without limitation, (i) books and records
relating to the purchase of materials and supplies,
manufacture or processing of products, sales of products,
dealings with customers, invoices, customer lists,
inventories, supplier lists, personnel records and taxes,
(ii) the stock books, stock ledgers and minute books of the
Companies, and (iii) computer software and data in computer
readable and human readable form used to maintain such books
and records together with the media on which such software
and data are stored and all documentation relating thereto)
accurately record all transactions relating to the Business
in all material respects, and have been maintained
consistent with good business practice.
(ac) Warranty Costs. Set forth on the Schedule
entitled "Warranty Costs" is a description of all
litigation, actions, suits, investigations, claims and
proceedings asserted, brought or threatened against the
Companies within the last three (3) years preceding the date
of this Agreement, together with a description of the
outcome or present status thereof, relating to any claim for
warranty costs involving amounts in excess of $10,000,
individually or in the aggregate. As used herein, "warranty
costs" means the costs and expenses of servicing, repairing,
returning and/or replacing, or allowances for service,
repair, return or replacement, of defective or allegedly
defective or improperly selected or shipped Products or the
performance of services related thereto, including
installation of Products or parts or components thereof
manufactured, installed or sold by the Companies and the
costs of materials and expenses of replacing materials or
correcting any jobs or materials inadequately performed or
manufactured by the Companies, together with such legal
liability, if any, as may exist in connection with sales of
Products or the performance of services related thereto,
including installation of Products, whether such costs and
expenses relate to or arise out of claims or causes of
action which assert causes sounding in tort, contract or
warranty, or any combination of the foregoing.
(ad) Penalties and Renegotiation of Contracts. Except
as otherwise specifically disclosed on the Schedule entitled
"Contracts", no Company has any liabilities or obligations
under any contracts providing for (i) penalties in the event
of misfeasance by it in the performance of its duties
thereunder, or (ii) the renegotiation or redetermination of
profits or prices, nor will any Company's costs which are
incurred or accruable prior to the Closing under contracts
or under subcontracts between the a Company and any other
Person, firm or corporation be subject to disallowance.
(ae) Pricing Practices. The prices to be received or
paid by the Companies under all outstanding contracts,
agreements, commitments and undertakings with its customers
and suppliers and others in connection with the Business
have been determined in accordance with the Companies'
established past pricing policies, and there are no
outstanding contracts, agreements, commitments or
undertakings relating to the Business that individually or
in the aggregate are expected to result in any material loss
to any Company or the Business.
(af) Copies of Documents. The Companies have delivered
to Buyer true, correct and complete copies of all contracts,
agreements and other documents listed in the Schedules to,
or referenced in, this Agreement, and all modifications and
amendments thereto.
(ag) [Intentionally omitted]
(ah) Insider Interests; Advances. Except as set forth
in the Schedule entitled "Insider Interests", no
shareholder, officer, director or employee of any Seller or
any Company has any material interest in any property, real
or personal, tangible or intangible, including without
limitation, inventions, patents, trademarks or trade names,
used in or pertaining to the Business or Seller. Except for
travel advances, and advances on accrued salary or bonuses
due or to become due in the ordinary and normal course of
business, which salary advances and bonuses are specifically
described in the Schedule entitled "Employees", there are no
receivables of any of the Companies owed by any director,
officer or employee of any of the Companies or owing by any
corporations, partnerships, firms or organizations in which
directors, officers or employees of any of the Companies
have any interest.
(ai) Year 2000 Compliance. (i) As to Systems used in
operating the Business:
(A) The Companies have conducted, and provided Buyer
with a description of, an inventory and assessment
of all of the Companies' software, computers,
network equipment, technical infrastructure,
production equipment and other equipment and
systems that are material to the operation of the
Business and that rely or utilize date or time
processing (collectively, "Systems");
(B) To Sellers' knowledge, all of such Systems are
"Year 2000 Compliant," as defined below;
(C) Schedule 5.1(ii) attached hereto sets forth the
nature and scope of the Companies' Year 2000
compliance strategy and program; and
(D) The Companies have complied with all applicable
Laws relating to Year 2000 Compliance, except in
the case where failure to comply would not,
individually or in the aggregate, have a Material
Adverse Effect upon the Companies, taken as a
whole.
(ii) "Year 2000 Compliant" means a System will at
all times:
(A) Consistently and accurately handle and process
date and time information and data with values
before, during and after January 1, 2000,
including but not limited to accepting date input,
providing date output, and performing calculations
on or utilizing dates or portions of dates;
(B) Function accurately and in accordance with its
specifications without interruption, abnormal
endings, degradation, change in operation or other
impact, or disruption of other systems, resulting
from processing data or time data with values,
before, during and after January 1, 2000;
(C) Respond to and process two-digit date input in a
way that resolves any ambiguity as to century; and
(D) Store and provide output of date information in
ways that are unambiguous as to century.
(aj) Disclosure. No representation or warranty made by
any Company or Seller contained in this Agreement, on any
Schedules or in any other agreement or certificate executed
by any Company or a Seller pursuant to Article IV contains
an untrue statement of a material fact or omits to state a
material fact necessary to make the statements and facts
contained herein or therein, in light of the circumstances
in which they were or are made, not false or misleading.
5.2 [Intentionally omitted]
5.3 Representations and Warranties of HON. HON (and
as used in this Section 5.3, neither HON nor Buyer shall be
deemed to include any Company or Seller or Allied Fireside, Inc.,
a Wisconsin corporation ("Allied"), Madison, Minocqua or FPSI, or
any of their respective assets, operations, properties, rights
or interests) represents and warrants to Sellers that:
(a) Organization and Standing; Power and Authority.
HON is a corporation duly organized, validly existing and in
good standing under the laws of the State of Iowa, and has
full corporate power and authority to operate its business,
to own or lease its assets and to enter into and perform
this Agreement and the transactions and other agreements and
instruments contemplated by this Agreement. HON is duly
qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in
which the ownership or lease of its assets or the operation
of its business requires such qualification, except where
the failure to be so qualified or licensed would not have a
Material Adverse Effect on HON. This Agreement and all
other Transaction Documents to be executed and delivered by
HON in connection herewith have been, or upon execution
thereof will be, duly executed and delivered by HON. This
Agreement and the transactions and other agreements and
instruments contemplated hereby have been duly approved by
the Board of Directors of HON, in accordance with applicable
law, and constitute the valid and binding obligations of
HON, enforceable in accordance with their respective terms.
(b) Conflicts; Defaults. Neither the execution and
delivery of this Agreement and the other agreements and
instruments executed or to be executed in connection
herewith by HON, nor the performance by HON of the
transactions contemplated hereby or thereby, will
(i) violate, conflict with, or constitute a default under,
any of the terms of HON's charter or By-Laws, or any
provisions of, or result in the acceleration of any
obligation under, any material contract, license, security
agreement, mortgage, note, deed, lease, agreement or
instrument, or any order, judgment or decree by which HON or
any of its assets are bound, or (ii) violate any Law.
(c) Brokers, Finders and Agents. HON is not directly
or indirectly obligated to anyone acting as a broker, finder
or in any other similar capacity in connection with this
Agreement or the transactions contemplated hereby, except
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated.
(d) Consents. Schedule 5.3(d) sets forth a list of
all consents, novations and waivers prescribed by Law or any
contract, agreement, commitment or undertaking and which
must be obtained or satisfied by HON in order for HON to
consummate the transactions contemplated by this Agreement
or the other agreements to be executed and delivered in
connection herewith. All such consents prescribed by any
Law or any contract, agreement, commitment or undertaking,
and which must be obtained or satisfied by HON for the
consummation of the transactions contemplated by this
Agreement, or for the continued performance by it of its
rights and obligations thereunder, have been, or shall by
the Closing have been, made, obtained and satisfied.
5.4 Representations and Warranties Relating to Buyer.
Buyer and HON (and as used in this Section 5.4, neither HON nor
Buyer shall be deemed to include any Company or Seller or Allied,
FPSI, Minocqua or Madison, or any of their respective assets,
operations, properties, rights or interests) hereby jointly and
severally represent and warrant to Sellers that:
(a) Organization and Standing; Power and Authority.
Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Iowa, and
has full corporate power and authority to operate its
business, to own or lease its assets and to enter into and
perform this Agreement and the transactions and other
agreements and instruments contemplated by this Agreement.
Buyer is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each
jurisdiction in which the ownership or lease of its assets
or the operation of its business requires such
qualification, except where the failure to be so qualified
or licensed would not have a Material Adverse Effect on
Buyer. This Agreement and all other Transaction Documents
to be executed and delivered by Buyer in connection herewith
have been, or upon execution thereof will be, duly executed
and delivered by Buyer. This Agreement and the transactions
and other agreements and instruments contemplated hereby
have been duly approved by the Board of Directors of Buyer,
in accordance with applicable law, and constitute the valid
and binding obligations of Buyer, enforceable in accordance
with their respective terms.
(b) Capitalization. The authorized capital stock of
Buyer on the date hereof consists of 100,000 shares of
common stock, $1.00 par value per share, of which
5,000 shares are issued and outstanding. The authorized
capital stock of Buyer at the time of Closing shall be as
set forth on Schedule 5.4(b)(i). All of the issued and
outstanding shares of Buyer are owned by HON. All issued
shares have been validly issued and are fully paid and
nonassessable. There are no outstanding obligations,
options, warrants, preemptive rights or other agreements or
commitments (whether oral or written) to which Buyer is a
party, or by which Buyer is otherwise bound, providing for
the issuance of any additional shares of capital stock of
Buyer, the repurchase of shares of capital stock of Buyer or
otherwise relating to capital stock of Buyer other than as
set forth on Schedule 5.4(b)(ii) pursuant to the 7%
Convertible Debentures due October 1, 1999, as amended, and
the Securityholders' Agreement dated as of October 2, 1996,
as amended, among HON, Buyer, D&K Family Limited
Partnership, LLP and the other parties listed on the
signature page thereto.
(c) Articles and By-Laws. The copy of the Articles of
Incorporation of Buyer, certified by the Secretary of State
of the State of Iowa, and the By-Laws of Buyer, furnished to
Sellers are true, correct and complete.
(d) Conflicts; Defaults. Neither the execution and
delivery of this Agreement and the other agreements and
instruments executed or to be executed in connection
herewith by Buyer, nor the performance by Buyer of the
transactions contemplated hereby or thereby, will
(i) violate, conflict with, or constitute a default under,
any of the terms of Buyer's charter or By-Laws, or any
provisions of, or result in the acceleration of any
obligation under, any material contract, license, security
agreement, mortgage, note, deed, lease, agreement or
instrument, or any order, judgment or decree by which Buyer
or any of its assets are bound, or (ii) violate any Law.
(e) Compliance with Other Instruments, etc. Buyer is
not in violation of any terms of (i) its charter or By-laws,
(ii) any agreement or instrument related to indebtedness for
borrowed money or any other agreement to which it is a party
or by which it is bound, (iii) any applicable Law or (iv)
any applicable order, judgment or decree of any court,
arbitrator or Governmental Authority, the consequences of
which violation, whether individually or in the aggregate,
have or would be reasonably expected (so far as can be
foreseen at the time) to (x) have a Material Adverse Effect
on Buyer, or (y) have the effect of preventing or materially
delaying the performance by Buyer of its obligations under
this Agreement.
(f) Financial Statements. Buyer has heretofore
delivered to Sellers (i) the unaudited Balance Sheet of
Buyer as of November 27, 1999, (ii) the unaudited Balance
Sheets of Buyer as of December 31, 1998, December 31, 1997,
December 31, 1996 and the eleven (11) months ended
November 27, 1999, (iii) the unaudited Statements of Income
of Buyer for the fiscal years ended December 31, 1998,
December 31, 1997 and December 31, 1996, and for the
eleven (11) months ended November 27, 1999 and (iv) the
Statement of Cash Flows of Buyer for the eleven (11) months
ended November 27, 1999 (collectively, the "Buyer Financial
Statements"). Each of the Buyer Financial Statements was
prepared from the books and records kept by Buyer, and
fairly presents the financial position of Buyer as of such
dates, and the results of operations of Buyer for the
periods then ended in accordance with the internal
accounting practices and policies of Buyer consistently
applied, except that the Buyer Financial Statements do not
contain normal year-end adjustments required by GAAP and the
Buyer Financial Statements omit footnote disclosures
required by GAAP.
(g) Litigation. There are no actions, suits,
investigations or proceedings pending or, to the knowledge
of Buyer, threatened against Buyer in any court or before
any arbitrator of any kind or before or by any Governmental
Authority, except actions, suits, investigations or
proceedings which, in the aggregate, do not have and would
not be reasonably expected (so far as can be foreseen at the
time) to (a) have a Material Adverse Effect on Buyer or
(b) have the effect of preventing or materially delaying the
performance by Buyer of its obligations under this
Agreement.
(h) Absence of Certain Changes or Events. During the
period since November 27, 1999, the business of Buyer has
been conducted only in the ordinary course, consistent with
past practice, and Buyer has not entered into any material
transaction other than in the ordinary course, consistent
with past practice, and there has not been (i) any change
(other than changes affecting generally the fireplace,
hearth products and building products industries as a whole,
including but not limited to, changes in or affecting
interest rates, housing markets, applicable Laws or
comparable events) in the business, financial condition,
results of operations, properties, assets or liabilities of
Buyer that, individually or in the aggregate, has or would
reasonably be expected to have (so far as can be foreseen at
the time) a Material Adverse Effect on Buyer, (ii) any
damage, destruction or loss (whether or not covered by
insurance) with respect to any property or asset of Buyer
which, individually or in the aggregate, has or would
reasonably be expected (so far as can be foreseen at the
time) to have a Material Adverse Effect on Buyer, or (iii)
any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Buyer, other
than intercompany advances between HON and Buyer.
(i) Brokers, Finders and Agents. Buyer is not
directly or indirectly obligated to anyone acting as a
broker, finder or in any other similar capacity in
connection with this Agreement or the transactions
contemplated hereby, except ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co.
Incorporated.
(j) Consents. Schedule 5.3(d) sets forth a list of
all consents, novations and waivers prescribed by Law or any
contract, agreement, commitment or undertaking and which
must be obtained or satisfied by Buyer in order for Buyer to
consummate the transactions contemplated by this Agreement
or the other agreements to be executed and delivered in
connection herewith. All such consents prescribed by any
Law or any contract, agreement, commitment or undertaking,
and which must be obtained or satisfied by Buyer for the
consummation of the transactions contemplated by this
Agreement, or for the continued performance by it of its
rights and obligations thereunder, have been, or shall by
the Closing have been, made, obtained and satisfied.
(k) Ability to Pay Cash Amount. On the Closing Date,
Buyer will have sufficient cash to pay the Cash Amount in
immediately available funds.
5.5 General. The representations and warranties of
the parties hereto made in this Agreement, subject to the
exceptions thereto, shall not be affected by any information
furnished to, or any investigation conducted by, any of them or
their representatives in connection with the subject matter of
this Agreement. The representations and warranties made in this
Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing for the respective periods
set forth in Section 11.5.
ARTICLE VI. CONDITIONS TO CLOSING
6.1 Conditions to Buyer's Obligations. The obligation
of Buyer to consummate the transactions provided for by this
Agreement is subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which
may be waived by Buyer except for the conditions set forth in
subsection (d) (as to Consents of Governmental Authorities) of
this Section 6.1:
(a) Representations and Warranties. Each of the
representations and warranties of Sellers made in
Section 5.1 of this Agreement shall be true and correct in
all material respects both on the date hereof and as of the
Closing Date as though made at such time except (excluding
the representations and warranties set forth in
Section 5.1(h)) where the failure to be so true and correct
(without giving effect to any limitations as to
"materiality," "substantial," "Material Adverse Effect," or
"material adverse change" set forth therein) (i) does not
have, and would not reasonably be expected to have, a
Material Adverse Effect on the Companies, taken as a whole,
or a material adverse impact on the ability of Sellers to
perform their obligations hereunder (other than as a result
of any matter set forth in the proviso to Section 6.1(c)),
and (ii) relates to a Retained Liability against which
Sellers have agreed to indemnify Buyers hereunder.
(b) Covenants. Sellers shall have performed and
complied with all covenants and agreements required to be
performed or complied with by each of them at or prior to
the Closing Date.
(c) Material Adverse Change. Since the date hereof,
there shall have occurred no material adverse change, or
condition or occurrence of any event which would reasonably
be expected to result in any such change, in the condition
(financial or otherwise), business, assets, properties or
operations of the Companies, taken as a whole, or the
Business; provided, however, that if and so long as Sellers
have performed their obligations under this Agreement, the
following shall not be deemed to be any such change:
(i) the inability of Buyer to reach an agreement with any of
the Companies' employees (other than the Key Employees)
regarding their employment by Buyer after the Closing or the
resignation of any of the Companies' employees (other than
the Key Employees) prior to the Closing, (ii) any actual or
projected decrease in dollar sales to any of its customers
or any change in the Companies' relations with any of their
suppliers, including without limitation, such changes
resulting from or related to the transactions contemplated
under this Agreement, or (iii) changes affecting generally
the fireplace, hearth products and building products
industries as a whole, including, but not limited to,
changes in or affecting interest rates, housing markets,
applicable laws or comparable events.
(d) Consents. All Consents of Governmental
Authorities and Required Consents of third parties described
in Sections 1.4, 5.1(y) and 9.6 and necessary to consummate
the transactions contemplated hereunder shall have been
obtained and satisfied and the applicable waiting period
under the H-S-R Act shall have expired or been terminated.
(e) No Proceeding or Litigation. No litigation,
action, suit, investigation, claim or proceeding challenging
the legality of, or seeking to restrain, prohibit or
materially modify, the transactions provided for in this
Agreement shall have been instituted and not settled or
otherwise terminated, except for any such litigation,
action, suit, claim or proceeding claiming breach of the
agreements described in paragraph III.7 of the Schedule
entitled "Contracts" or the paragraph entitled "CFM
Majestic" on the Schedule entitled "Non-Assigned Contracts"
as a result of the transactions contemplated hereby, other
than any action, litigation, suit, claim or proceeding
arising as a result of any other breach by any Seller of any
such agreements.
(f) Legal Matters. The form and substance of all
legal papers, instruments and documents delivered under
Section 4.2 (and not attached in form hereto) shall, in the
reasonable judgment of Buyer, be satisfactory to Buyer, and
if requested by Buyer, to ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇,
Buyer's counsel, in its reasonable judgment.
(g) Certificate of Seller. At the Closing, Sellers
shall have delivered to Buyer a Certificate signed by each
Company's President, and attested to by its Secretary or an
Assistant Secretary, and dated the Closing Date, to the
effect that to the best of the knowledge and belief of such
officers the conditions specified in Sections 6.1(a), (b),
(c) and (d) have been fulfilled.
(h) Certificate; Documents. Sellers and the other
Persons shall have delivered the certificates, opinion of
counsel and other documents required by Sections 4.2, 4.5
and 4.6.
(i) Tax Certificates. Sellers shall have delivered to
Buyer such forms and certificates as may be necessary to
exclude or reduce payment of state sales taxes otherwise
incurred as a result of Buyer's acquisition of the Acquired
Assets.
(j) Lender Consents. HON shall have received duly
executed consents from the holders of its industrial revenue
bonds, in form and substance reasonably satisfactory to HON.
(k) Other Closing. The closing of the transactions
contemplated by the Purchase Agreement of even date herewith
among HON, Buyer, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Madison, FPSI and Minocqua (the "Allied Agreement") shall
have been consummated.
6.2 Conditions to Sellers' Obligations. The
obligations of Sellers to consummate the transactions provided
for by this Agreement are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions,
any of which may be waived by Sellers except for the conditions
set forth in subsection (c) of this Section 6.2:
(a) Representations and Warranties. Each of the
representations and warranties of Buyer and HON made in
Sections 5.3 and 5.4 of this Agreement shall be true and
correct in all material respects both on the date hereof and
as of the Closing Date as though made at such time except
(excluding the representations and warranties set forth in
Section 5.4(f)) where the failure to be so true and correct
(without giving effect to any limitations as to
"materiality," "substantial," "Material Adverse Effect," or
"material adverse change" set forth therein) does not have,
and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on HON and
Buyer, taken as a whole, or a material adverse impact on the
ability of HON and Buyer to perform their obligations
hereunder.
(b) Covenants. Buyer shall have performed and
complied with all covenants and agreements required to be
performed or complied with by it at or prior to the Closing
Date.
(c) Material Adverse Change. Since the date hereof,
there shall have occurred no material adverse change, or
condition or occurrence of any event which would reasonably
be expected to result in any such change, in the condition
(financial or otherwise), business, assets, properties or
operations of Buyer; provided, however, that changes
affecting generally the fireplace, hearth products and
building products industries as a whole, including, but not
limited to, changes in or affecting interest rates, housing
markets, applicable laws or comparable events shall not be
deemed to be any such change.
(d) Consents. All Consents of Governmental
Authorities, including those described in Sections 5.3(d),
5.4(j) and 9.6, necessary to consummate the transactions
contemplated hereunder shall have been obtained and the
applicable waiting period under the H-S-R Act shall have
expired or been terminated.
(e) No Proceeding or Litigation. No litigation,
action, suit, investigation, claim or proceeding challenging
the legality of, or seeking to restrain, prohibit or
materially modify, the transactions provided for in this
Agreement shall have been instituted and not settled or
otherwise terminated.
(f) Legal Matters. The form and substance of all
legal papers, instruments and documents delivered under
Section 4.4 (and not attached in form hereto) shall, in the
reasonable judgment of Sellers, be satisfactory to Sellers,
and if requested by Sellers, to Sellers' Counsel, in its
reasonable judgment.
(g) Certificates of Buyer and HON. At the Closing,
Buyer and HON shall have delivered to Sellers a Certificate
signed by the respective Presidents or Vice Presidents of
Buyer and HON, and attested to by the respective Secretaries
or Assistant Secretaries of Buyer and HON, and dated the
Closing Date, to the effect that to the best of the
knowledge of such officers the conditions specified in
Section 6.2(a), (b) and (c) have been fulfilled.
(h) Certificates; Documents. Buyer shall have
delivered the certificates and other documents required by
Sections 4.4 and 4.5.
(i) LaSalle Loan. The Sellers shall have received a
term sheet or executed commitment letter from LaSalle Bank
N.A. obligating it to loan certain Sellers or Affiliates of
Sellers approximately $7,000,000 on the Closing Date.
(j) Other Closing. The closing of the transactions
contemplated by the Allied Agreement shall have been
consummated.
ARTICLE VII. COVENANTS OF SELLER
7.1 Conduct of Business. During the period from the
date hereof through the Closing Date, Sellers shall conduct the
Business and operate the Assets in the ordinary and normal course
and consistent with past practice (including, without limitation,
using their best efforts to preserve beneficial relationships
between the Companies and their distributors, agents, lessors,
suppliers and customers, as reasonably directed by Buyer) and
continue normal maintenance, marketing, advertising,
distributional and promotional expenditures in connection with
the Business. No Company shall engage in any transactions,
including transactions relating to the purchase or sale of goods,
raw materials, inventories or other operating or production
items, intracorporate or otherwise, with any of its Affiliates
from the date hereof until the Closing other than
(i) transactions approved by Buyer in writing, (ii) transactions
in the ordinary and normal course consistent with past practice
pursuant to the leases disclosed on the Schedule entitled "Real
Estate and Leases", or (iii) transactions on terms no more
favorable to the Companies or their Affiliates than would have
been obtainable in arm's-length dealing. Without limiting the
generality of the foregoing and except as otherwise expressly
provided in this Agreement, during the period from the date
hereof through the Closing Date, no Company shall:
(a) Obligations for Borrowed Money. (i) create, incur
or assume any debt (including obligations in respect of
capital leases) or any debt for money borrowed (whether
long- or short-term), other than trade payables incurred in
the ordinary course of business consistent with past
practice and amounts constituting Retained Liabilities drawn
on existing lines of credit or similar extensions of credit,
(ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise)
for the obligation of any other Person, or (iii) make any
loans, advances or capital contributions to any other Person
other than advances of expenses to employees in the ordinary
and normal course consistent with past practices;
(b) Employee Matters. (i) Increase in any manner the
rate of compensation of any of its officers or other
employees other than the increases for the persons and in
the amounts described on Schedule 7.1, (ii) make or agree to
make any payment pursuant to any Company Plan, including,
without limitation, any payment of any pension, retirement
allowance, severance or other employee benefit, except as
expressly required by any existing Company Plan disclosed on
the Schedules to this Agreement, to any such officers or
employees, whether past or present; (iii) enter into or
modify any collective bargaining agreement; or (iv) commit
itself to any additional Company Plan, or employment or
consulting agreement with a Person, or to amend any of such
Plans or agreements, except as required by Law;
(c) Sale of Assets. Sell, transfer, license or
otherwise dispose of or agree to sell, transfer, license or
otherwise dispose of any Assets, except Inventory in the
ordinary and normal course of business consistent with past
practice;
(d) Commitments. Enter into any other agreements,
commitments, contracts or undertakings, except agreements,
commitments, contracts or undertakings made in the ordinary
and normal course of business consistent with past practice
and the representations and warranties of Sellers contained
in this Agreement;
(e) Leased Facilities. Terminate, modify or amend the
Lease Agreements;
(f) Encumbrances. Encumber or grant or create a Lien
on any of the Assets other than Liens on after-acquired
assets arising as a result of security agreements disclosed
on the Schedule entitled "Contracts";
(g) Insurance. Cause any of the policies of insurance
referred to in Section 5.1(x) to terminate, lapse or be
canceled, unless equivalent replacement policies, without
lapse of coverage, shall be put in place;
(h) Litigation. Enter into any compromise or
settlement of any litigation, action, suit, claim,
proceeding or investigation, except settlements made in the
ordinary and normal course of business or by insurers,
involving amounts not in excess of $20,000;
(i) Representations and Warranties. Take any action
the taking of which, or omit to take any action the omission
of which, would cause any of the representations and
warranties contained in Sections 5.1(f), (g), (s), (u) or
(z) to fail to be true and correct as of the Closing as
though made at and as of the Closing; or
(j) Commitments. Agree or commit to do any of the
foregoing.
7.2 Disclosure Supplements.
(a) From time to time prior to the Closing, Sellers
shall promptly supplement or amend the Schedules to this
Agreement with respect to any matter (i) which may arise
hereafter and which, if existing or occurring at or prior to
the date hereof, would have been required to be set forth or
described in the Schedules to this Agreement, or (ii) which
makes it necessary to correct any information in the
Schedules to this Agreement or in any representation and
warranty of any Seller which has been rendered inaccurate
thereby. No supplement or amendment to the Schedules to
this Agreement or any delivery of Schedules after the date
hereof, unless expressly consented in writing by Buyer,
shall be deemed to cure any breach of any representation or
warranty made in this Agreement, or modify, affect or
diminish Buyer's right to terminate this Agreement pursuant
to Section 10.1(c).
(b) During the period from the date hereof to the
Closing, Sellers shall promptly (i) furnish or make
available to Buyer copies of all operating reports and
monthly, quarterly and year-end financial statements of each
Company as soon as they become available, all certified by
such Company's chief financial officer that such financial
statements fairly present the financial position and results
of operations of such Company for the periods covered by
such statements and for year-end financial statements in
accordance with GAAP consistently applied, and (ii) notify
Buyer of (A) any material change in the condition (financial
or otherwise), business, assets, properties, operations or
prospects of any Company or the Business, and (B) the
institution or settlement of any litigation, action, suit,
investigation, claim or proceeding and of any material
developments therein.
7.3 Closing. Sellers shall use their best efforts to
cause the conditions set forth in Section 6.1 to be satisfied by
the Closing Date.
7.4 Confidentiality. Sellers shall, and shall cause
their Affiliates, officers, employees, representatives,
consultants and advisors to, hold in confidence and not use all
confidential information which remains after Closing in the
possession of Sellers or such Affiliates or other persons,
including information concerning the Business and the Assets.
Sellers shall not release or disclose any such information to any
Person other than Buyer and its authorized representatives.
Notwithstanding the foregoing, the confidentiality obligations of
this Section shall not apply to information:
(a) which a Seller is compelled to disclose by
judicial or administrative process, or, in the opinion of
counsel, by other mandatory requirements of Law;
(b) which can be shown to have been generally
available to the public other than as a result of a breach
of this Section; or
(c) which can be shown to have been provided to a
Seller by a third party who obtained such information other
than from a Seller or any Company or other than as a result
of a breach of this Section.
7.5 Maintenance of Insurance. Each Seller will
(a) maintain all policies of insurance in effect on the date
hereof through and until the Closing; and (b) after the Closing
use its best efforts to maintain any policies of insurance which
cover liabilities associated with the operation of the Business
prior to the Closing; provided, that after the Closing Sellers
shall not be required to pay any additional premiums in respect
of such policies or maintain in effect any insurance coverage.
7.6 Inventories. Prior to the Closing, Sellers will
maintain levels of all Inventories, including materials and
supplies, at levels consistent with current practice in the
ordinary and normal course of business.
7.7 Maintenance of, and Access to, Records. After the
Closing Date, each Seller shall provide Buyer with access (with
an opportunity to make copies), during normal business hours, and
upon reasonable notice, to any records relating to the Business
which are retained by it. Each Seller shall preserve and
maintain any books and records relating to the Business and
retained by such Seller for at least five years after the Closing
Date.
7.8 Non-Competition.
(a) Period and Conduct. As further consideration for
the purchase and sale of the Acquired Assets and the
transactions contemplated by this Agreement, during the
period commencing on the Closing Date, and ending on the
date which is five years thereafter, no Seller shall:
(i) compete with Buyer in the manufacture,
production, design, engineering, importation, purchase,
marketing, sale, distribution, installation, research
or development of any Products;
(ii) solicit, or accept orders or business of any
kind relating to the manufacture, production, design,
engineering, importation, purchase, marketing, sale,
distribution, installation, research or development of
any Products from any customer or active prospect of
Buyer, or any former customer of any Company;
(iii)solicit any employee of Buyer or former
employee of any Company to terminate his or her
employment with Buyer; or
(iv) use, or incorporate or otherwise create any
business organization utilizing any name which uses any
words contained in any Company's corporate name or name
under which any Company conducted business prior to the
Closing ("Corporate Names") or which are confusingly
similar to such words.
(b) Territory. Each Seller shall refrain from
engaging in the activities described in this Section 7.8
during the period specified in Section 7.8(a) hereof in any
of the United States of America, Puerto Rico, the Virgin
Islands, Canada and Mexico.
(c) Definition. Sellers shall be deemed to be
competing with Buyer if any of them or any of their
respective Affiliates is engaged or participates in any
activity or activities described in subsection (a) of this
Section 7.8, directly or indirectly, whether for its own
account or for that of any other Person, firm or
corporation, and whether as a shareholder, partner or
investor controlling any such entity or as principal, agent,
representative, proprietor, or partner, or in any other
capacity.
(d) Remedies. Inasmuch as a breach, or failure to
comply with, Section 7.8 of this Agreement will cause
serious and substantial damage to Buyer, if any Seller or
any of its respective Affiliates should in any way breach,
or fail to comply with, the terms of this Section 7.8, Buyer
shall be entitled to an injunction restraining such Seller
and such Affiliates from any such breach or failure. All
remedies expressly provided for herein are cumulative of any
and all other remedies now existing at law or in equity.
Buyer shall, in addition to the remedies herein provided, be
entitled to avail itself of all such other remedies as may
now or hereafter exist at law or in equity for compensation,
and for the specific enforcement of the covenants contained
herein. Resort to any remedy provided for hereunder or
provided for by law shall not preclude or bar the concurrent
or subsequent employment of any other appropriate remedy or
remedies, or preclude the recovery by Buyer or monetary
damages and compensation.
(e) Subsidiaries, Divisions and Affiliates. For the
purpose of this Section 7.8, "Buyer" shall include its
subsidiaries, divisions and Affiliates as they may exist
from time to time, HON and any Person deriving title to the
goodwill of the Business or the Assets from Buyer.
(f) Severability. Each subsection of this Section 7.8
constitutes a separate and distinct provision hereof. In
the event that any provision of this Section 7.8 shall
finally be judicially determined to be invalid, ineffective
or unenforceable, such determination shall apply only in the
jurisdiction in which such adjudication is made and every
other provision of this Section 7.8 shall remain in full
force and effect. The invalid, ineffective or unenforceable
provision shall, without further action by the parties, be
automatically amended to effect the original purpose and
intent of the invalid, ineffective or unenforceable
provision; provided, however, that such amendment shall
apply only with respect to the operation of such provision
in the particular jurisdiction in which such adjudication is
made.
7.9 Accounts Receivable. In the event that any Seller
or any of its Affiliates receives any payment relating to any
Account Receivable outstanding on or after the Closing Date, such
payment shall be the property of, and shall be immediately
forwarded and remitted to, Buyer. Sellers or such Affiliates
will promptly endorse and deliver to Buyer any cash, checks or
other documents received by any Seller on account of any such
Accounts Receivable. Sellers or such Affiliates shall advise
Buyer (promptly following any Seller's becoming aware thereof) of
any counterclaims or set-offs that may arise subsequent to the
Closing Date with respect to any Account Receivable.
7.10 Name Change Filings. Each Asset Seller shall,
within three (3) days following the Closing, deliver to Buyer
evidence of filing with the Secretary of State of its State of
incorporation of an amendment to such Sellers' Articles of
Incorporation to change its name to a name which is not
deceptively similar to its Corporate Names. Each Asset Seller
shall, within thirty (30) days after the Closing, take such
actions and file such documents as shall be necessary to
(a) reflect such name changes in all States in which each Asset
Seller is qualified to do business as a foreign corporation, and
shall deliver to Buyer copies of such documents evidencing such
name change filings, (b) discontinue the use of the trademarks
and trade names associated with any products available through
such Asset Seller, and (c) otherwise discontinue the use of such
trademarks and trade names in connection with Seller's business
operations.
7.11 No Shopping. From the date hereof through and
until the earlier of termination of this Agreement pursuant to
Article X or Closing, no Seller nor any of its Affiliates,
employees, officers, agents or advisors shall, directly or
indirectly, (a) solicit, initiate or encourage any inquiries,
proposals or offers from any Person relating to any acquisition
(or sublease as the case may be) of the Assets or the Business,
or any assets or securities of, or any merger, consolidation or
business combination with, any Company, or (b) with respect to
any effort or attempt by any other Person to do or seek any of
the foregoing, (i) participate in any discussions or
negotiations, (ii) furnish to any other Person any information
with respect to, or afford access to the properties, books or
records of or relating to, any Company, the Assets or the
Business, or (iii) otherwise cooperate in any way with, or assist
or participate in, or facilitate or encourage any such effort.
Sellers shall promptly notify Buyer if any such proposal or offer
or any inquiry or contact with any Person with respect thereto is
made.
7.12 Plant Closing Obligations. If any Seller or any
of its Affiliates takes any action which could be construed as a
"plant closing" or "mass layoff", or which results in any
employee retained or employed suffering or deeming to have
suffered any "employment loss", as those terms are defined in
WARN, Sellers and such Affiliates shall be solely responsible for
providing any notice required by WARN and for making payments, if
any, which may be required under WARN for failure to provide
appropriate notice; provided, however, that for purposes of this
Section 7.12, employees of the Sellers immediately prior to the
Closing shall be deemed to be employees of the Buyer as of the
Closing Date.
7.13 Further Assurances; Customer and Supplier
Relationships; Assertion of Claims. Sellers shall use their best
efforts to implement the provisions of this Agreement, and for
such purpose Sellers, at the request of Buyer, at or after the
Closing, shall, without further consideration, promptly execute
and deliver, or cause to be executed and delivered, to Buyer such
deeds, assignments, bills of sale, Required Consents and other
instruments in addition to those required by this Agreement, in
form and substance satisfactory to Buyer, and take all such other
actions, as Buyer may reasonably deem necessary or desirable to
implement any provision of this Agreement or to more effectively
transfer, convey and assign to Buyer good and marketable title
to, and to put Buyer in actual possession and operating control
of, all of the Assets, free and clear of all Liens other than
Permitted Liens, including, without limitation, such instruments
and documents as may be necessary or advisable to vest in Buyer
all of Sellers' benefits and interest in any Liens (including
mechanics' liens) obtained by any Seller on or in any assets or
properties of Sellers' customers.
7.14 Appointment of Representative. Each Seller hereby
designates and appoints ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") as the
Sellers' representative and attorney-in-fact (the
"Representative") to act for and on behalf of the Sellers as
provided in this Agreement and to serve in accordance with the
terms of this Agreement. The Representative hereby accepts such
appointment and agrees to be bound by the terms of this Agreement
and to act in furtherance of the interests of the Sellers
hereunder. In the event that ▇▇▇▇▇▇ is unable to serve as
Representative due to death or disability, or resigns (by
providing at least thirty (30) days' prior written notice to each
party to this Agreement), the Sellers shall select a successor
Representative. ▇▇▇▇▇▇'▇ rights and obligations under this
Agreement as the Representative shall be separate and distinct
from ▇▇▇▇▇▇'▇ other rights and obligations hereunder or as an
officer or director of any Company, and any reference to ▇▇▇▇▇▇
in his capacity as Representative shall not be deemed a reference
to ▇▇▇▇▇▇ in any other capacity.
7.15 Payment of Indebtedness; Releases. On or before
the Closing Date, each Seller will (a) pay, perform and discharge
any and all liabilities or obligations for indebtedness of each
Company, whether fixed, contingent or otherwise (including,
without limitation, notes payable to Affiliates of any Company),
and (b) obtain copies of all executed releases, in form and
substance reasonably satisfactory to Buyer, necessary to release
of any and all Liens relating to such indebtedness, including,
without limitation, the Liens described on the Schedule hereto
entitled "Liens" (in each case other than Liens that are
Permitted Liens). The Sellers will cause the releases referenced
in the foregoing clause (b) to be filed promptly, but no later
than two (2) business days, after payment of the related
indebtedness and in any event promptly after the Closing Date.
ARTICLE VIII. COVENANTS OF BUYER AND HON
8.1 Covenants of Buyer.
(a) Maintenance of, and Access to, Records. From and
after the Closing, Buyer shall, whenever reasonably
requested by the Representative, permit the Sellers to have
access to such business records turned over to Buyer
pursuant to this Agreement as may be reasonably requested by
such Seller in connection with any audit or investigation by
any Governmental Authority, or any matter relating to
insurance coverage or third party claims, in each such case
to the extent relating to the operation of the Business by
such Seller prior to the Closing. Buyer shall preserve and
maintain the records relating to the Business which are part
of the Assets for at least five (5) years after the Closing
Date.
(b) Closing. Buyer shall use its best efforts to
cause the conditions set forth in Section 6.2 to be
satisfied by the Closing Date.
(c) Disclosure Supplements. From time to time prior
to the Closing, Buyer shall promptly supplement or amend its
Schedules to this Agreement with respect to any matter
(i) which may arise hereafter and which, if existing or
occurring at or prior to the date hereof, would have been
required to be set forth or described in Buyer's Schedules
to this Agreement, or (ii) which makes it necessary to
correct any information in Buyer's Schedules to this
Agreement or in any representation and warranty of HON or
Buyer which has been rendered inaccurate thereby. No
supplement or amendment to the Schedules to this Agreement
or any delivery of Schedules after the date hereof, unless
expressly consented in writing by Sellers, shall be deemed
to cure any breach of any representation or warranty made in
this Agreement, or modify, affect or diminish Sellers' right
to terminate this Agreement pursuant to Section 10.1(d).
(d) Copies. During the period from the date hereof to
the Closing, Buyer shall promptly furnish or make available
to Seller copies of an income statement and balance sheet as
of each month-end after the date of this Agreement and prior
to Closing.
(e) Insurance. After the Closing Buyer will use its
best efforts to maintain any policies of insurance that
cover Buyer's assets and properties, including, without
limitation, Acquired Assets owned by Buyer, and the
liabilities associated with the operation of its business.
(f) Supply of Products. Buyer agrees to supply
Sellers, during the term of this Agreement and prior to
Closing, and upon request, with products manufactured or
sold by Buyer to the extent necessary to replace any
reduction in Sellers' supply of Products occurring after the
date of this Agreement, on terms and conditions similar to
those provided by Buyer to Sellers immediately prior to the
date of this Agreement, subject to sufficient availability
and capacity by Buyer.
(g) Further Assurances. Buyer, at the request of
Sellers and at or after the Closing, shall promptly execute
and deliver, or cause to be executed and delivered, such
other agreements, certificates, instruments and other
writings required by it by this Agreement to satisfy the
payment terms set forth in Section 3.1.
8.2 Covenants of HON.
(a) Closing. HON shall use its best efforts to cause
the conditions set forth in Section 6.2 to be satisfied by
the Closing Date.
(b) IRB Consents. HON shall use its reasonable best
efforts to obtain the consents referred to in Section
6.1(j)(i).
(c) Buyer Note. HON shall cause the Buyer Note to be
purchased by a financial institution at the face value
thereof, or shall repurchase the Buyer Note at the face
value thereof within ninety (90) days of the Closing.
ARTICLE IX. CERTAIN ADDITIONAL COVENANTS
9.1 Access to Records and Properties. Prior to the
Closing, (a) Buyer shall be entitled, and each Seller shall
permit Buyer, to conduct such investigation of the condition
(financial or otherwise), business, assets, properties or
operations of the Companies and the Business as Buyer shall
reasonably deem appropriate, and (b) each Seller shall
(i) provide Buyer and its agents and representatives, including
its independent accountants, internal auditors and attorneys,
full and complete access to all the facilities, offices and
management and supervisory personnel of the Companies, and to all
of the books and records of the Companies (including work papers
of any accountants), (ii) cause the Companies' officers,
employees and advisors to furnish Buyer with such financial and
operating data (including the data described in Section 7.2(b))
and other information with respect to the condition (financial or
otherwise), business, assets, properties or operations of the
Companies and the Business as Buyer shall reasonably request, and
(iii) permit Buyer to make such inspections and copies thereof as
Buyer may reasonably require, including without limitation, to
conduct such environmental assessments and investigations of the
Property and surrounding property as Buyer or its advisors and
consultants may deem necessary or appropriate, and sampling and
analysis of environmental media to detect the presence or confirm
the absence of contamination, including any contamination which
may be present in groundwater and the sources of any such
contamination. In addition, Buyer shall be provided with full
and complete access to the customers and suppliers of the
Business and the opportunity to make, in conjunction with
Sellers, cooperative calls on purchasers of Products.
9.2 Expenses; Transfer Taxes. Each party hereto will
bear the legal, accounting and other expenses incurred by such
party in connection with the negotiation, preparation and
execution of this Agreement, the Transaction Documents, and the
transactions contemplated hereby. Buyer shall be responsible for
all obligations to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated. Sellers
shall be responsible for all obligations to Bowles, Hollowell,
▇▇▇▇▇▇ and First Union Capital Markets Corporation and counsel to
the Sellers, or any of them. All sales, transfer, recordation
and documentary Taxes and fees which may be payable in connection
with the sale of the Acquired Assets shall be borne by Buyer;
provided, however, that Sellers will fully cooperate with Buyer
in preparing and filing all certificates and other documents the
filing of which will reduce the amount of Taxes and fees payable
in connection with the sale of the Acquired Assets.
9.3 Bulk Transfer Laws. Buyer hereby waives
compliance by Sellers with the laws of any jurisdiction relating
to bulk transfers which may be applicable in connection with the
transfer of the Acquired Assets to Buyer.
9.4 Press Releases and Disclosure. The parties agree
that neither Sellers, Buyer nor their respective Affiliates shall
issue or cause publication of any press release or other
announcement or public communication with respect to this
Agreement or the transactions contemplated hereby or otherwise
disclose this Agreement or the transactions contemplated hereby
to any third party (other than attorneys, advisors and
accountants to Sellers or Buyer) without the consent of the other
party hereto, which consent shall not be unreasonably withheld;
provided, that nothing herein shall prohibit any party from
issuing or causing publication of any press release, announcement
or public communication to the extent that such party deems such
action to be required by Law or stock exchange regulations;
provided further that such party shall, whenever practicable
consult with the other party concerning the timing and content of
such press release, announcement or communication before the same
is issued or published.
9.5 Cooperation in the Defense of Claims. In the
event that a claim is asserted against Buyer, any of its direct
or indirect subsidiaries or Affiliates, with respect to events or
conditions occurring or existing in connection with, or arising
out of, the operation of the Business prior to the Closing, or
the ownership, possession, use or sale of the Assets prior to the
Closing, Sellers shall cooperate with Buyer in the defense of any
such claim.
9.6 Regulatory Approvals. Sellers will, and will
cause its appropriate Affiliates to, and Buyer will, use, in each
case, its best efforts to obtain any authorizations, consents,
orders and approvals of any Governmental Authority necessary for
the performance of its respective obligations pursuant to this
Agreement and any of the other transaction documents, and the
consummation of the transactions contemplated hereby and thereby,
and will cooperate fully with each other in all reasonable
respects in promptly seeking to obtain such authorizations,
consents, orders and approvals. Neither Sellers nor Buyer will
take any action that will have the effect of delaying, impairing
or impeding the receipt of any required regulatory approvals.
Without limiting the generality of the foregoing, Sellers and
Buyer will promptly file or cause to be filed with the FTC and
the DOJ, Notification and Report Forms and documentary materials
that substantially comply with the provisions of the H-S-R Act
and the rules thereunder. Buyer shall pay all fees associated
with the filing of any such Notification and Report Forms or
related materials and information (other than the fees and
expenses of Buyer's legal, financial or other professionals
engaged to provide services in respect of such filing). Buyer
and Sellers will promptly file any additional information
requested as soon as practicable after receipt of a request for
additional information. Buyer and Sellers will use reasonable
efforts to obtain early termination of the applicable waiting
period under the H-S-R Act. The parties hereto will coordinate
and cooperate with one another in exchanging such information and
providing such reasonable assistance as may be requested in
connection with such filing. Sellers will supply Buyer with
copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between Sellers or
its representatives, on the one hand, and the FTC, the DOJ or any
other Governmental Authority or members of their respective
staffs, on the other hand, with respect to this Agreement or the
transactions contemplated hereby.
9.7 Employee Matters. (a) Buyer shall offer
employment as of the Closing Date to such currently active
employees employed in the Business by the Asset Sellers as of the
Closing Date as Buyer may determine (each a "Transferred
Employee").
(b) Immediately following the Closing Date, Buyer
shall provide to each Transferred Employee employee benefits
(including hospitalization, medical, prescription drug,
dental, disability, 401(k), pre-tax premium payment,
vacation, life and accidental death and dismemberment,
incentive, bonus, fringe benefits and other similar benefits
but excluding any plan or program (or feature thereof) which
provides any opportunity to, directly or indirectly, acquire
or invest in the equity of any Asset Seller) which are, in
the aggregate, substantially similar to the employee
benefits provided as of the date hereof to such Transferred
Employee, but only to the extent such Transferred Employee
is eligible for such benefits as of such date. Each
Transferred Employee shall be credited for eligibility,
benefit accrual and vesting purposes with their periods of
service with the Asset Sellers counted under a Company Plan
prior to the Closing Date under any similar employee benefit
plan, program or arrangement established, maintained,
continued or made available by Buyer after the Closing Date
in which such Transferred Employees are eligible to
participate (excluding for this purpose accruals under any
retirement plan for the period prior to Closing).
(c) Effective as of the Closing Date, Buyer shall
assume the sponsorship of the AFC Flexible Benefits Program
(the "Assumed Plan"), and, prior to Closing, AFC shall take
all action necessary to amend such plan to reflect the
change in sponsorship, to exclude participation by any
employees who are not Transferred Employees (except for
deferred vested participants) and make other conforming
changes and to transfer to Buyer the assets attributable to
the Assumed Plan. Effective as of the later of the Closing
Date or such date as AFC supplies Buyer with evidence
reasonably acceptable to Buyer that the Internal Revenue
Service has concluded its audit of the American Fireplace
Company Tax-Sheltered Thrift Plan and Trust ("AFC Plan") for
all years under audit as of the date hereof without
disqualifying the AFC Plan and without requiring any
correction, sanction or adjustment with respect to such AFC
Plan, Buyer shall assume the sponsorship of the AFC Plan,
and, prior to such transfer of sponsorship, AFC shall take
all action necessary to amend the AFC Plan to reflect the
change in sponsorship and make other conforming changes and
to transfer to Buyer the assets attributable to such AFC
Plan.
(d) The Asset Sellers shall be responsible for all
claims for welfare benefits which are incurred prior to the
Closing Date by any Transferred Employee (or the eligible
spouse or dependent of such Transferred Employee) that are
payable under the terms and conditions of any Company Plan,
except to the extent accrued for as a liability on
Schedule 2.1(b). The Asset Sellers shall cease to provide
any group health plan to any employees as of the Closing
Date, and therefore shall have no obligation to provide
medical continuation coverage to such employees. Pursuant
to the provisions of this Section 9.7, Buyer shall be
considered a successor employer within the meaning of
Prop. Treas. Reg. Section 54.4980B-9 and therefore shall be
responsible for providing medical continuation coverage
pursuant to COBRA to former employees of the Asset Sellers
(and their eligible spouses and dependents) who terminate
employment at or prior to the Closing Date. Buyer shall
recognize copayments and deductibles paid by each
Transferred Employee (or eligible spouse or dependent of
such Transferred Employee) under the Plans prior to the
Closing Date for the applicable period and shall not exclude
any Transferred Employee (or eligible spouse or dependent of
such Transferred Employee) from medical coverage based on
any preexisting condition.
(e) Nothing herein expressed or implied shall confer
upon any Transferred Employee (or any spouse or dependent of
such Transferred Employee) or legal representative thereof
any rights or remedies, including without limitation any
right to employment for any specified period, of any nature
or kind whatsoever under or by reason of this Agreement.
(f) Sellers shall be responsible for the claims for
workers compensation benefits which are incurred prior to
the Closing Date.
(g) To the extent assumed under Section 2.1(b), Buyer
shall assume liability for normal and ordinary vacation
accruals attributable to each Transferred Employee as a
result of such Transferred Employee's service with an Asset
Seller.
(h) In no event shall Buyer be liable for any
severance payments that may be payable to any employee of
the Business as a result of the transactions set forth in
this Agreement. The Asset Sellers shall use their best
efforts to assign to Buyer as of the Closing Date the
employment agreements currently in effect with their respect
to the employees and to obtain from each employee covered by
any such employment agreement in a form acceptable to Buyer
(a) an acknowledgment that the transactions contemplated by
this Agreement will not result in a termination of
employment for purposes of such employment agreement, and
(b) a waiver and release of any claim for payment or
benefits under such employment agreement based on the
transactions contemplated by this Agreement.
(i) On the Closing Date, each of the Asset Sellers
shall transfer the personnel files of the employees of the
Business, or copies thereof, to Buyer.
(j) Sellers shall pay all annual incentive bonuses
payable for 1999 and any prior years under any incentive
arrangements.
9.8 [Intentionally omitted]
9.9 Product Warranty Work. After the Closing Date,
Buyer shall perform, without recourse to Sellers, the Companies'
obligations under Ordinary Warranty Commitments. With respect to
warranty claims other than Ordinary Warranty Commitments, Buyer
may seek indemnification from Sellers for such Liability, as
provided in Article XI.
ARTICLE X. TERMINATION
10.1 Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the
Closing:
(a) Mutual Consent. By the Representative and Buyer;
(b) Termination Date. By Sellers, by the
Representative or by Buyer, if the Closing shall not have
occurred on or before March 31, 2000 (the "Termination
Date"); provided, however, that (i) if the HSR Approvals
shall not have been obtained by March 31, 2000, the
Termination Date shall be extended to May 31, 2000 and (ii)
the right to terminate this Agreement pursuant to this
Section 10.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the
Closing to occur on or before the Termination Date;
(c) Sellers Misrepresentation or Breach. By Buyer, if
there has been a breach by any Seller of any of its
representations, warranties, covenants, obligations or
agreements set forth in this Agreement or in any writing
delivered pursuant hereto by any Seller, which breach
(A) would give rise to a failure of a condition set forth in
Section 6.1, and (B) is incapable of being cured by Sellers
or is not cured within ten (10) business days of written
notice thereof;
(d) Buyer Misrepresentation or Breach. By Sellers or
by the Representative, if there has been a breach by Buyer
of any of its representations, warranties, covenants,
obligations or agreements set forth in this Agreement or in
any writing delivered pursuant hereto by Buyer, which breach
(A) would give rise to a failure of a condition set forth in
Section 6.2. and (B) is incapable of being cured by Buyer
and is not cured within the (10) business days of written
notice thereof;
(e) Court Order. By Sellers, by the Representative or
by Buyer, if consummation of the transactions contemplated
hereby shall violate any non-appealable final order, decree
or judgment of any court or Governmental Authority having
competent jurisdiction;
(f) Material Adverse Change. By Buyer, if since the
date of this Agreement there has been a material adverse
change, or the occurrence of a condition or event which
would reasonably be expected to result in a material adverse
change, in the condition (financial or otherwise), business,
assets, properties, or operations of the Companies, taken as
a whole (other than as a result of any matter set forth in
the proviso to Section 6.1(c));
(g) Buyer's Conditions. By Buyer, if any condition
precedent to Buyer's obligation to effect the Closing as set
forth in Section 6.1 is not satisfied, or shall have become
incapable of fulfillment, and such condition is not waived,
if waivable, by Buyer on or prior to the Termination Date;
and
(h) Sellers' Conditions. By Sellers or by the
Representative, if any condition precedent to Sellers'
obligation to effect the Closing as set forth in Section 6.2
is not satisfied, or shall have become incapable of
fulfillment, and such condition is not waived, if waivable,
by Sellers or by the Representative on or prior to the
Termination Date.
10.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1, written notice thereof shall
forthwith be given to the other parties and this Agreement shall
thereafter become void and have no further force and effect and
all further obligations of Sellers, HON and Buyer under this
Agreement shall terminate without further liability of Sellers,
HON or Buyer, except that (a) each party will return all
documents, workpapers and other material of any other party
relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to the party
furnishing the same, and all confidential information received by
any party hereto with respect to the business of any other party
shall be treated in accordance with Section 7.4 and the
Confidentiality Agreements (as hereinafter defined); (b) the
obligations of Sellers and Buyer under Section 9.2 shall survive
such termination; and (c) such termination shall not constitute a
waiver by any party of any claim it may have for damages caused
by reason of, or relieve any party from liability for, any breach
of this Agreement prior to termination under Section 10.1.
ARTICLE XI. INDEMNIFICATION
11.1 Indemnification by Buyer. From and after the
Closing, Buyer and HON, jointly and severally, shall indemnify,
defend and hold Sellers, its Affiliates, and their respective
directors, officers, representatives, employees and agents
harmless from and against any and all claims, actions, suits,
demands, assessments, judgments, losses, liabilities, damages,
costs and expenses (including, without limitation, interest,
penalties, attorneys' fees to the extent permitted by law, and
accounting fees and investigation costs) (collectively,
"Liabilities") that may be incurred by any Seller or other such
persons resulting or arising from or related to, or incurred in
connection with: (a) the failure of Buyer to assume, pay,
perform and discharge the Assumed Liabilities, (b) the failure of
Buyer to report the purchase of the Acquired Assets in accordance
with the allocations required by Section 3.6, and (c) any breach
of any representation, warranty, covenant, obligation or
agreement of Buyer contained herein or in any other Transaction
Document.
11.2 Indemnification by Sellers.
(I) General. From and after the Closing, Sellers
shall jointly and severally indemnify, defend and hold Buyer, its
Affiliates, and their respective directors, officers,
representatives, employees and agents harmless from and against
any and all Liabilities that may be incurred by Buyer or other
such persons resulting or arising from, related to or incurred in
connection with: (a) the failure of Sellers to assume, pay,
perform and discharge the Retained Liabilities, (b) the failure
of Sellers to report the sale of the Acquired Assets in
accordance with the allocations required by Section 3.6, (c) any
breach of any representation, warranty, covenant, obligation or
agreement of Sellers contained herein or in any other Transaction
Document, (d) any failure to comply with the laws of any
jurisdiction relating to bulk transfers which may be applicable
in connection with the transfer of the Acquired Assets to Buyer,
(e) the litigation, actions, suits, investigations, claims,
Company Plan audits and proceedings described, or required to be
described, in the Schedules to this Agreement, (f) any failure to
obtain any Required Consent, and (g) the failure by AFC to obtain
all air quality permits required by Law for its facility
described on the Schedule entitled "Environmental Matters".
(II) Environmental Indemnification. Sellers jointly
and severally agree to indemnify, defend, reimburse and hold
harmless:
(A) Buyer, its Affiliates and their respective
directors, officers, representatives, employees
and agents; and
(B) any other Person who acquires a portion of the
Property in any manner, including but not limited
to, through purchase, at a foreclosure sale or
otherwise through the exercise of the rights and
remedies of Buyer under this Agreement; and
(C) the contractors, subcontractors, experts,
licensees, lessees, mortgagees, trustees, heirs,
devisees, successors, assigns and invitees of any
Persons referred to in subsections (A) or (B) of
this Section 11.2(II);
from and against any and all Environmental Damages (as
hereinafter defined) arising from the presence, use, generation,
storage, treatment, discharge, release or disposal (including off-
site disposal) of Hazardous Materials upon, about, from or
beneath the Property or migrating to or from the Property, or
arising in any manner whatsoever out of the violation of any
Environmental Requirements pertaining to the Property and the
activities thereon, in each case to the extent that such
Environmental Damages or violation of any Environmental
Requirements are attributable to, or the result of, any act or
omission by any Company prior to the Closing Date. This
obligation to indemnify shall include, but not be limited to, the
expense of defending all claims, suits and administrative
proceedings (with counsel reasonably approved by the indemnified
parties), even if such claims, suits or proceedings are
groundless, false or fraudulent, and paying and discharging, when
and as the same become due, any and all judgments, penalties or
other sums due against such indemnified Persons; provided,
however, that Buyer will be entitled to control any clean-up or
remediation, and any related proceeding, and, except as provided
in the following sentence, any other proceeding with respect to
which indemnity may be sought under this Section. The procedures
described in Section 11.3 shall apply to any claim solely for
monetary damages relating to a matter covered by this Section.
11.3 Notice of Claim; Right to Participate in and
Defend Third Party Claim.
(a) If any indemnified party receives notice of the
assertion of any claim, the commencement of any suit, action
or proceeding, or the imposition of any penalty or
assessment by a third party in respect of which indemnity
may be sought hereunder (a "Third Party Claim"), and the
indemnified party intends to seek indemnity hereunder, then
the indemnified party shall promptly provide the
indemnifying party with prompt written notice of the Third
Party Claim, but in any event not later than thirty (30)
calendar days after receipt of such notice of Third Party
Claim. The failure by an indemnified party to notify an
indemnifying party of a Third Party Claim shall not relieve
the indemnifying party of any indemnification responsibility
under this Article XI, unless such failure materially
prejudices the ability of the indemnifying party to defend
such Third Party Claim.
(b) The indemnifying party shall have the right to
control the defense or settlement of such Third Party Claim
with counsel of its choosing provided the indemnifying party
shall have acknowledged in writing its obligations to
indemnify the indemnified party with respect to such Third
Party Claim; provided, however, that the indemnifying party
shall not settle or compromise any Third Party Claim without
the indemnified party's prior written consent, unless the
terms of such settlement or compromise release the
indemnified party from any and all liability with respect to
the Third Party Claim. The indemnified party shall be
entitled (at the indemnified party's expense) to participate
in the defense of any Third Party Claim with its own
counsel.
(c) Any indemnifiable claim hereunder that is not a
Third Party Claim shall be asserted by the indemnified party
by promptly delivering notice thereof to the indemnifying
party.
11.4 Setoff. (a) In addition to any and all other
remedies hereunder or at law or in equity, Buyer shall be
entitled to recover any indemnification payment or other amounts
due from any Seller or Affiliate of a Seller hereunder, under an
Employment and Non-Competition Agreement or a Non-Competition
Agreement, or by a guarantor under a Shareholder Guaranty and (i)
which have not been duly and punctually paid, or (ii) with
respect to which any such Seller or Affiliate shall not have
acknowledged its indemnification obligations under Article XI, by
retaining and setting off the amounts (whether or not such
amounts are liquidated or reduced to judgment) against any
amounts due from Buyer to any Seller, Affiliate of a Seller or
guarantor under any such agreement or the Convertible Debentures
or any securities into which Convertible Debentures have been
converted; provided, however, that any setoff associated with a
breach or amounts due under any Employment and Non-Competition
Agreement or any Non-Competition Agreement shall be set off
solely against the Seller or Affiliate of Seller committing such
breach. Pending final judgment by a court of competent
jurisdiction (which shall, for purposes of this Agreement, be
deemed to include any decision of any mediator to which the
parties thereto have consented, and any arbitration decision
rendered, pursuant to Section 11.8) that Buyer is entitled to any
such payments or other amounts, the setoff amounts shall be
deposited into an interest bearing escrow account with a
financial institution designated by Buyer (the "Escrow Agent").
(b) (i) If such judgment holds that Buyer in whole or
in part wrongfully setoff, and that Buyer had reasonable
grounds for its assertion that such Seller, Affiliate or
guarantor was in breach of, or had otherwise failed to
comply with, the agreement under which setoff was claimed
and the amount setoff, Buyer shall pay the Person entitled
to such wrongfully setoff funds such wrongfully setoff funds
plus an amount equal to (x) 10% interest computed thereon
less (y) interest earned on the escrowed funds from the date
of the earlier of escrow deposit or setoff to the date of
payment and such person shall be entitled to such escrow
interest. (ii) If such judgment holds that Buyer in whole
or in part wrongfully setoff, and that Buyer did not have
reasonable grounds for its assertion that such Seller,
Affiliate or guarantor was in breach of, or had otherwise
failed to comply with, the agreement under which setoff was
claimed and the amount setoff, Buyer shall pay the Person
entitled to such wrongfully setoff funds an amount equal to
(x) such wrongfully setoff funds plus (y) interest actually
earned thereon as reflected in account statements from the
Escrow Agent, plus (z) an additional 15% interest computed
on the wrongfully setoff funds from the date of the earlier
of escrow deposit or setoff to the date of payment.
(c) If such judgment holds that Buyer in whole or in
part was entitled to setoff, the Person otherwise entitled
to any such setoff amount shall pay Buyer an amount equal to
(x) 10% interest computed on the amount of such judgment
less (y) interest earned on any escrowed amounts from the
date of setoff to the date of such judgment, and Buyer shall
be entitled to such escrow interest.
(d) Buyer's rights to set off amounts immediately
prior to the expiration of the period set forth in Section
11.5(e) with respect to any claim referred to in such
Section which is a Third Party Claim shall be conditioned
upon HTI or any Affiliate of HTI having received written
notice of such Claim, including, without limitation, any
such written notice from an insurance company asserting any
such Claim.
11.5 Time Limitations on Claims for Indemnification.
The right of Buyer to indemnification pursuant to
Sections 11.2(I)(a) and 11.2(I)(c), and the right of Sellers to
indemnification for breach of representations and warranties
pursuant to Section 11.1(c) or pursuant to the Securityholders'
Agreement, shall apply only to those claims for indemnification
which are given pursuant to this Agreement on or before the
respective dates set forth below:
(a) Any claim for indemnification relating to any
breach of the representations and warranties set forth in
Section 5.1(v) shall be made on or before the second
anniversary of the Closing Date;
(b) No time limit shall apply to any right to
indemnification with respect to any breach of any
representation or warranty contained in Sections 5.1(a),
(b), (d) or (e), Section 5.3(a) or (b), or Section 5.4(a),
(b) or (c);
(c) Any claim for indemnification relating to any
breach of the representations and warranties set forth in
Section 5.1(t) shall be made on or before the second
anniversary of the Closing Date;
(d) Any claim for indemnification with respect to any
breach of any representation or warranty set forth in any
subsection of Section 5.1, Section 5.3 or Section 5.4 not
referred to in subsections (a), (b) or (c) of this Section
11.5 shall be made on or before the day that is 455 days
after the Closing Date; and
(e) Any claim for indemnification made pursuant to
Section 11.2(I)(a) or (g) shall be made on or before the
third anniversary of the Closing Date.
11.6 Maximum and DeMinimis Amounts.
(a) The maximum amount of indemnification which can be
required of Sellers in the aggregate under Section
11.2(I)(c) for any breach of any representation or warranty
set forth in Section 5.1 (or any portion thereof), Section
11.2(II) and Section 11.2(I)(a) shall not exceed
$10,000,000.
(b) Sellers shall not be required to indemnify, defend
or hold Buyer harmless from and against any Liabilities
under Section 11.2(I)(c) with respect to any breach of any
representation or warranty (without giving effect to any
limitations as to "materiality," "substantial," "Material
Adverse Effect," or "material adverse change" set forth
therein) (other than a breach of any representation and
warranty described in Sections 5.1(d) or (l)), unless and
until the amount of such Liabilities equals $375,000 in the
aggregate (the "Threshold Amount") in which event Sellers
shall be obligated to indemnify Buyer, and Buyer may assert
its right to indemnification hereunder to the full extent of
all Liabilities relating to such breach, including
Liabilities that are less than the Threshold Amount.
11.7 Exclusions. No limitation set forth in
Sections 11.5 or 11.6 shall apply with respect to any
representations and warranties made by any Seller which any
Seller knew were untrue or false.
11.8 Dispute Resolution. (a) In the event that any
party to this Agreement or the Securityholders' Agreement has any
claim, right or cause of action against any other party to this
Agreement or the Securityholders' Agreement, which the parties
shall be unable to settle by agreement between themselves, such
claim, right or cause of action, to the extent that the relief
sought by such party is for monetary damages or awards, shall be
submitted to non-binding mediation, pursuant to clause (b) below,
and if not successfully mediated, determined by arbitration in
accordance with the provisions of this Section 11.8.
(b) The party or parties requesting mediation shall
serve upon the other or others a demand therefor, in
writing, specifying the matter to be submitted to mediation.
Within ten (10) business days after receipt of such written
demand, the parties shall agree in writing to the
appointment of a mutually acceptable mediator, who shall fix
a time and place of the mediation which shall be as soon as
conveniently possible (but in no event later than ten (10)
business days after the appointment of the mediator), at
which time and place the parties to the controversy shall
appear and be heard with respect to the right, claim or
cause of action. If the parties do not agree upon a
mediator within the time specified, the matter shall proceed
to arbitration under the procedures set forth in this
Section 11.8. At mediation, each party shall present such
testimony, examinations and investigations in accordance
with such procedures and regulations as may be determined by
the mediator and shall also recommend to the mediator a
monetary award to be adopted by the mediator. After hearing
the parties in regard to the matter in dispute, the mediator
shall adopt as his or her determination with respect to such
claim, right or cause of action, within ten (10) business
days of the completion of the examination, by decision
signed in writing (together with a brief written statement
of the reasons for adopting such recommendation), one of the
recommendations submitted by the parties to the dispute and
shall grant no other relief or remedy. The decision of said
mediator shall be non-binding and may be appealed by any
party to arbitration under the arbitration procedures set
forth in this Section 11.8 The expense and cost of
mediation, including fees and expenses of counsel to the
parties, shall be borne by the party or parties whose
recommendation was not adopted by the mediator.
(c) The party or parties requesting arbitration shall
serve upon the other or others a demand therefor, in
writing, specifying the matter to be submitted to
arbitration, and nominating a competent disinterested person
to act as an arbitrator. Within ten (10) business days
after receipt of such written demand and nomination, the
other party or parties shall, in writing, nominate a
competent disinterested person, and the two (2) arbitrators
so designated shall, within ten (10) business days
thereafter, select a third arbitrator. The three (3)
arbitrators shall give immediate written notice of such
selection to the parties and shall fix in said notice a time
and place of the meeting of the arbitrators which shall be
as soon as conveniently possible (but in no event later than
ten (10) business days after the appointment of the third
arbitrator), at which time and place the parties to the
controversy shall appear and be heard with respect to the
right, claim or cause of action.
(d) In case the notified party or parties shall fail
to make a selection upon notice within the time period
specified in Section 11.8(c), the party asserting such claim
shall appoint an arbitrator on behalf of the notified party.
In the event that the first two (2) arbitrators selected
shall fail to agree upon a third arbitrator within ten (10)
business days after their selection, then such arbitrator
may, upon application made by either of the parties to the
controversy, be appointed by any judge of any United States
court of record having jurisdiction in the State of
Maryland.
(e) At arbitration, each party shall present such
testimony, examinations and investigations in accordance
with such procedures and regulations as may be determined by
the arbitrators and shall also recommend to the arbitrators
a monetary award to be adopted by the arbitrators as the
complete disposition of such claim, right or cause of
action. After hearing the parties in regard to the matter
in dispute, the arbitrators shall adopt as their
determination with respect to such claim, right or cause of
action, within ten (10) business days of the completion of
the examination, by majority decision signed in writing
(together with a brief written statement of the reasons for
adopting such recommendation), one of the recommendations
submitted by the parties to the dispute and shall grant no
other relief or remedy. The decision of said arbitrators,
absent fraud, duress or manifest error, shall be final and
binding upon the parties to such controversy and may be
enforced in any court of competent jurisdiction.
(f) The expense and cost of arbitration, including
fees and expenses of counsel to the parties, shall be borne
by the party or parties whose recommendation was not adopted
by the arbitrator.
(g) Notwithstanding any other provisions of this
Section 11.8, in the event that a party against whom any
claim, right or cause of action is asserted commences, or
has commenced against it, bankruptcy, insolvency or similar
proceedings, the party or parties asserting such claim,
right or cause of action shall have no obligations under
this Section 11.8 and may assert such claim, right or cause
of action in the manner and forum it deems appropriate,
subject to applicable laws. No determination or decision by
the mediator or arbitrators pursuant to this Section 11.8
shall limit or restrict the ability of any party hereto to
obtain or seek in any appropriate forum, any relief or
remedy that is not a monetary award or money damages.
(h) Any reference to any judicial decision or
determination by any court contained herein, in the
Securityholders' Agreement, in the Debentures or in any
other agreement executed pursuant hereto, shall include any
decision of a mediator by which the parties have agreed to
be bound, and any decision of arbitrators reached pursuant
to this Section 11.8.
ARTICLE XII. MISCELLANEOUS
12.1 Amendments. This Agreement may be amended only by
a writing executed by Buyer and the Representative, acting on
behalf of Sellers.
12.2 Entire Agreement. This Agreement, the
Confidentiality Agreement dated September 14, 1999 between
Bowles, Hollowell, ▇▇▇▇▇▇ (on behalf of Sellers) and HON (the
"Seller Confidentiality Agreement"), the letter agreement
regarding confidentiality dated November 19, 1999 among HON,
Allied, AFC, Madison, Minocqua and Bowles, Hollowell, ▇▇▇▇▇▇
(together with the Seller Confidentiality Agreement, the
"Confidentiality Agreements") and the other agreements expressly
provided for herein and the Schedules hereto, set forth the
entire understanding of the parties hereto with respect to the
subject matter hereof, and supersede all prior contracts,
agreements, arrangements, communications, discussions,
representations and warranties, whether oral or written, between
the parties.
12.3 Governing Law. This Agreement shall in all
respects be governed by and construed in accordance with the laws
of the State of Maryland, without regard to its conflicts of law
doctrine. Each Seller hereby agrees to submit to the personal
jurisdiction of the state or federal courts located in the State
of Maryland, and hereby appoint the Representative, as its agent
for purpose of service of process in any such state or federal
court. Notwithstanding the foregoing, any party may initiate and
prosecute any legal proceeding or seek enforcement of any
judgment in any proper court having jurisdiction in the United
States or elsewhere.
12.4 Notices. Any notice, request or other
communication required or permitted hereunder shall be in writing
and shall be deemed to have been duly given (a) when received if
personally delivered, (b) within five (5) days after being sent
by registered or certified mail, return receipt requested,
postage prepaid, (c) within twelve (12) hours after being sent by
telecopy, with confirmed answerback, or (d) within one (1)
business day of being sent by priority delivery by established
overnight courier, to the parties at their respective addresses
set forth below.
To Sellers: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP
▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇'▇▇▇▇
To Buyer or HON: Hearth Technologies Inc.
c/o HON INDUSTRIES Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
With a copy to: HON INDUSTRIES Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
and: ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Any party by written notice to the others given in accordance
with this Section 12.4 may change the address or the Persons to
whom notices or copies thereof shall be directed.
12.5 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, and all of which together will constitute one and the
same instrument.
12.6 Assignment. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of each party
hereto, but no rights, obligations or liabilities hereunder shall
be assignable by (a) any Seller without the prior written consent
of Buyer, or (b) Buyer without the consent of the Representative.
12.7 Waivers. Except as otherwise provided herein, Buyer
or Sellers may waive in writing compliance by the other parties
hereto (to the extent such compliance is for the benefit of the
party giving such waiver) with any of the terms, covenants or
conditions contained in this Agreement or in any of the other
Transaction Documents (except such as may be imposed by law).
Any waiver by any party of any violation of, breach of, or
default under, any provision of this Agreement or any of the
other Transaction Documents, by any other party shall not be
construed as, or constitute, a continuing waiver of such
provision, or waiver of any other violation of, breach of or
default under any other provision of this Agreement or any of the
other Transaction Documents.
12.8 Third Parties. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or
give any Person or entity other than Buyer, Sellers and the
Representative any rights or remedies under or by reason of this
Agreement.
12.9 Schedules. The Schedules attached to this Agreement
are incorporated herein and shall be part of this Agreement for
all purposes.
12.10 Headings. The headings in this Agreement are solely
for convenience of reference and shall not be given any effect in
the construction or interpretation of this Agreement.
12.11 Certain Definitions.
(a) For purposes of this Agreement, the term "Affiliate"
shall mean any Person that directly, or indirectly through one
or more Persons, controls, is controlled by, or is under common
control with, the Person specified or, directly or indirectly,
is related to or otherwise associated with any such Person or
entity.
(b) For purposes of this Agreement and of any other
Transaction Document, the phrases, "to the best knowledge",
"knowledge", "Sellers' knowledge" or "Seller's knowledge" shall
be deemed to include all information that is actually known
after due inquiry or, in the exercise of reasonable diligence
in light of the scope of such person's authority and
responsibilities with any Company or Seller, should be known,
by any of the following individuals: ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇.
12.12 Remedies Not Exclusive. Except with respect to
matters for which a remedy is provided by Article XI, no remedy
conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy and each remedy
shall be cumulative and shall be in addition to every other
remedy given hereunder or hereafter existing at law or in equity
or by statute or otherwise. No remedy shall be deemed to be a
limitation on the amount or measure of damages resulting from any
breach of this Agreement. The election of any one or more
remedies shall not constitute a waiver of the right to pursue
other available remedies.
12.13 Gender and Number. The masculine, feminine or
neuter gender and the singular or plural number shall each be
deemed to include the others whenever the context so indicates.
12.14 Attorney's Fees. In the event of any dispute
among the parties hereto arising out of or related to this
Agreement involving mediation, arbitration and/or litigation, the
parties agree, except as may be otherwise agreed by the parties
or ordered by any mediator, arbitrator or court of competent
jurisdiction, that the party or parties against whom a final
determination is made will reimburse the other party or parties
for all fees, costs and expenses of counsel incurred by such
party or parties with respect to such mediation, arbitration
and/or litigation.
IN WITNESS WHEREOF, the parties have caused their duly
authorized representatives to execute this Agreement as of the
date first above written.
AMERICAN FIREPLACE COMPANY
By /s/ P.T. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
HEARTH & HOME, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By /s/ P.T. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as
Representative
HEARTH TECHNOLOGIES INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
HON INDUSTRIES INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Chief
Financial Officer