Exhibit 2.1
MERGER AGREEMENT
THIS AGREEMENT, dated June 4, 1997, is made by and between
1) Modu-Line Windows, Inc.,
a Wisconsin corporation (hereafter
sometimes called "Modu-Line" and sometimes
"Surviving Corporation"),
and
its Shareholders
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Trust
▇▇▇ ▇. ▇▇▇▇, III
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Trust Beneficiary")
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Trust Beneficiary")
(hereinafter called collectively "Shareholders" and
individually, "Shareholder")
and
2) Vistawall Windows, Inc., a Wisconsin corporation
(hereinafter sometimes called "Vistawall")
and
▇▇▇▇▇▇ Manufacturing Company, a Delaware corporation
(hereinafter sometimes called "▇▇▇▇▇▇").
Modu-Line and Vistawall are hereinafter sometimes collectively
called the "Constituent Corporations".
PREAMBLE
WHEREAS, ▇▇▇▇▇▇ and Shareholders wish to effect a triangular merger of
Vistawall and Modu-Line with ▇▇▇▇▇▇ becoming the sole shareholder of the
Surviving Corporation; and
WHEREAS, Vistawall is a corporation organized and existing under the
laws of the State of Wisconsin, having been incorporated on March 25, 1997, and
has authorized capital stock consisting of 900 shares of which 100 shares
designated as Common Stock of no par value are issued and outstanding; and
WHEREAS, Vistawall is a wholly owned subsidiary of ▇▇▇▇▇▇ Manufacturing
Company, a Delaware corporation, with principal offices in Kansas City, Missouri
(hereinafter called "▇▇▇▇▇▇"); and
WHEREAS, ▇▇▇▇▇▇ has authorized capital stock consisting of 20,000,000
shares of Common Stock of which 9,088,200 shares designated as Common Stock of
no par value are issued; and
WHEREAS, Modu-Line is a corporation organized and existing under the
laws of the State of Wisconsin, having been incorporated on December 29, 1971
and has authorized capital stock consisting of 80,000 shares of which 66,187.5
shares designated as Common Stock of no par value each are issued and
outstanding; and
WHEREAS, Shareholders (except the Trust Beneficiaries) together own all
of the issued and outstanding stock of Modu-Line; and
WHEREAS, the Trust Beneficiaries own the beneficial interest of the
Modu-Line stock registered in the name of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust and ▇▇▇▇▇▇▇
▇. ▇▇▇▇ Trust; and
WHEREAS, ▇▇▇▇▇▇ and the Shareholders shall cause each of the
Constituent Corporations to adopt this Agreement and the Plan of Merger attached
hereto as Exhibit A; and
WHEREAS, it is the intention of the parties that the issuance of ▇▇▇▇▇▇
common stock in connection with merger shall qualify as a transaction exempt
from registration or qualification under the Securities Act of 1933, as amended,
and under the applicable securities laws of the states or jurisdictions where
the Shareholders reside.
NOW THEREFORE, the Constituent Corporations, the Shareholders and
▇▇▇▇▇▇ hereby agree that Vistawall shall be merged into Modu-Line which shall
continue under the laws of Wisconsin as the Surviving Corporation, that
Modu-Line shares shall be converted into ▇▇▇▇▇▇ common stock and cash, and that
the terms and conditions of the merger and the mode of carrying the same into
effect and the manner and basis of converting shares shall be as set out herein
and in the Plan of Merger (hereinafter sometimes called the "Plan") at Exhibit
A. If there is any conflict between this Agreement and the Plan of Merger, this
Agreement shall govern.
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ARTICLE I
SURVIVOR, ARTICLES OF INCORPORATION, ETC.
1.1 Governing Law
Vistawall shall be merged into Modu-Line in accordance with the
applicable laws of the State of Wisconsin. Modu-Line shall be the
Surviving Corporation and shall be governed by the laws of the
State of Wisconsin.
1.2 Name of Surviving Corporation
The name of the Surviving Corporation shall be Modu-Line Windows,
Inc.
1.3 Articles of Incorporation
No changes in the Articles of Incorporation of the Surviving
Corporation shall be effected by the merger.
ARTICLE II
CONVERSION OF SHARES
2.1 Manner and Basis
The manner and basis of converting the shares of Modu-Line into
shares of ▇▇▇▇▇▇ and into cash shall be as set forth in this
Article II.
2.2 Shares of Surviving Corporation
On the Effective Date of the merger each share of common stock of
Modu-Line then issued and outstanding shall be automatically
converted into the number of shares of ▇▇▇▇▇▇ common stock and the
right to receive the amount of cash as determined under Paragraph
2.3 hereof and as further provided in Section 2.4. On the
Effective Date of the Merger each of the issued and outstanding
shares of Vistawall common stock held by ▇▇▇▇▇▇ shall be
automatically converted into 661.875 shares of common stock of
Modu-Line.
2.3 Basis for Conversion
The basis for converting Modu-Line common stock into ▇▇▇▇▇▇ Common
Stock or cash shall be as follows:
(a) ▇▇▇▇▇▇ Common Stock Available for Conversion
The total number (rounded to the nearest whole share) of
▇▇▇▇▇▇ common stock
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will be determined by dividing Seven Million Dollars
($7,000,000), by the last sale price of ▇▇▇▇▇▇ common
stock on the last business day prior to the Closing Date
as reported by the New York Stock Exchange, provided that
in no event shall the total number of ▇▇▇▇▇▇ shares to be
exchanged for Modu-Line common stock be greater than
225,000 shares or less than 175,000 shares.
(b) Basis of Converting Modu-Line Stock into ▇▇▇▇▇▇ Common
Stock
The number of shares of ▇▇▇▇▇▇ common stock to be
exchanged for each share of Modu-Line common stock shall
be determined by dividing the total number of shares of
▇▇▇▇▇▇ Common Stock to be exchanged for shares of
Modu-Line common stock as determined according to
paragraph 2.3 (a), by the number of Modu-Line shares which
are outstanding on the Closing Date the quotient resulting
therefrom to be rounded to the nearest one thousandth.
(c) Basis of Converting Modu-Line Stock Into Cash
The amount of cash to be exchanged for each share of
Modu-Line common stock shall be determined by dividing
$350,000 by the number of Modu-Line shares which are
outstanding on the Closing Date, the quotient resulting
therefrom to be rounded to the nearest one thousandth.
2.4 Manner of Converting Modu-Line Common Stock
On the Effective Date, each outstanding share of Modu-Line common
stock will be automatically converted into the number of shares of
▇▇▇▇▇▇ common stock and the right to receive the amount of cash as
determined under Paragraph 2.3 hereof. Such cash amount ("Cash
Consideration"), less any amounts due Vistawall or ▇▇▇▇▇▇ under
this Agreement plus interest on such balance from the Closing Date
to the date of payment shall be paid not later than February 28,
2000. The interest rate shall be the two-year CD rate as published
by Nations Bank on the last business day prior to the Closing
Date.
(a) No Fractional Shares
No fractional shares of ▇▇▇▇▇▇ common stock and no scrip
certificates therefor will be issued to former holders of
Modu-Line common stock in connection with the merger. At
the Closing (as defined in Paragraph 3.1 herein),
Modu-Line shareholders receiving fractional interests
shall receive cash for such fractional interest based on
the price of ▇▇▇▇▇▇ common stock used in the calculation
at Paragraph 2.3 (a).
(b) Modu-Line Shares to be treated as ▇▇▇▇▇▇ shares until
surrendered
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Until certificates evidencing Modu-Line shares which have
been converted into ▇▇▇▇▇▇ common stock are surrendered,
they shall be deemed for all corporate purposes, except
the payment of dividends, to evidence ownership of the
number of whole shares of Common Stock of ▇▇▇▇▇▇
Manufacturing Company into which such Modu-Line shares
have been converted. Unless and until such outstanding
certificates formerly representing Common Stock of
Modu-Line are so surrendered, no dividend payable to
holders of record of Common Stock of ▇▇▇▇▇▇ as of any date
subsequent to the Effective Date of the Merger shall be
paid to the holders of such outstanding certificates in
respect thereof.
Upon surrender of such outstanding certificates, however, there
shall be paid to the holders of the certificates of Common Stock
of ▇▇▇▇▇▇ issued in exchange therefor the amount of dividends
which theretofore became payable with respect to such full shares
of Common Stock of ▇▇▇▇▇▇. No interest shall be payable with
respect to the payment of such dividends on surrender of
outstanding certificates. The holder of a fractional share
interest shall not be entitled to any dividends or to any
distribution in the event of a liquidation or to any voting or
other privileges of a shareholder of ▇▇▇▇▇▇ in respect to such
fractional share interest.
2.5 Shares to be Delivered
On the Closing Date, ▇▇▇▇▇▇ shall issue to each Shareholder the
number of shares of ▇▇▇▇▇▇ common stock due each Shareholder for
his/her/its Modu-Line common stock, plus any cash representing
fractional shares as provided in Paragraph 2.4(a). Simultaneous
therewith each Shareholder shall deliver to ▇▇▇▇▇▇ the number of
shares of Modu-Line common stock owned by him/her/it as set out on
Exhibit E hereto.
2.6 Cash to be Paid
The Cash Consideration (less any amounts due ▇▇▇▇▇▇ as provided in
this Agreement) due each Shareholder shall be paid by ▇▇▇▇▇▇ by
check on February 28, 2000.
2.7 Closing of Merged Corporation's Stock Transfer Books
On the last business day before the Closing Date the stock
transfer books of Modu-Line shall be closed and no transfer of
shares of Modu-Line shall thereafter be made or recognized.
ARTICLE III
CLOSING DATE AND EFFECTIVE DATE
3.1 Closing
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The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on June 10, 1997 (the "Closing
Date") at 9:00 a.m., local time, at the corporate offices of
▇▇▇▇▇▇ at the BMA Tower, Kansas City, Missouri.
3.2 Transfers to Surviving Corporation
On the Effective Date of the merger, the separate existence of
Vistawall Windows, Inc. shall cease, except to the extent, if any,
continued by statute. All the property, real, personal, and mixed,
and franchises of each of the Constituent Corporations and all
amounts receivable on whatever account by either of them,
including causes of action, and every other asset belonging to
either of them, shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed.
The Surviving Corporation shall be responsible for all the
liabilities and obligations of the Constituent Corporations.
3.3 Further Action
Prior to the Closing Date, ▇▇▇▇▇▇ and the Shareholders shall cause
the Constituent Corporations to take all such action as shall be
necessary or appropriate to effect the merger. If, at any time
after the Closing Date of the Merger, the Surviving Corporation
shall determine that any further conveyance, assignment, or other
documents or any further action is necessary or desirable to vest
in or confirm to the Surviving Corporation full title to all the
properties, assets, rights, privileges, and franchises of the
Constituent Corporations, the officers and directors of the
Constituent Corporations, at the expense of the Surviving
Corporation, shall execute and deliver all such instruments and
take all such action as the Surviving Corporation may determine to
be necessary or desirable in order to vest in and confirm to the
Surviving Corporation title to and possession of all such
properties, assets, rights, privileges, and franchises, and
otherwise to carry out the purposes of this Plan.
3.4 Definition of Effective Date
At least five (5) business days prior to the Closing, Articles of
Merger as prescribed by Wisconsin statutes shall be signed and, on
the Closing Date, shall be delivered to the Department of
Financial Institutions. The "Effective Date" of the merger shall
be, and such term as used herein shall mean, the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.0 Knowledge
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As used herein, a party shall be deemed to have knowledge of a
particular fact or matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual in similar circumstances could be
expected to discover or otherwise become aware of such
fact or other matter in the course of conducting a
reasonable investigation concerning the existence of such
fact or other matter.
If the party is an entity, then "individual" shall mean an
executive officer or director of the entity.
4.1 Modu-Line and Shareholders' Representations and Warranties
Modu-Line and each Shareholder, jointly and individually,
represents and warrants as follows:
(a) Organization and Good Standing
Modu-Line is duly organized, validly existing and in good
standing under the laws of Wisconsin. The copies of
Modu-Line's Articles of Incorporation, and all amendments
thereto certified by the Department of Financial
Institutions of Wisconsin and Modu-Line's Bylaws, as
amended to date, certified by Modu-Line's secretary, which
have been delivered to Vistawall, are complete and correct
as of the date hereof. Modu-Line is not licensed or
qualified as a foreign corporation in any State. The
Shareholders are, and will be on the Closing Date, the
sole owners, of record and beneficially, of all of the
issued and outstanding shares of Modu-Line's capital
stock. Each Shareholder individually represents and
warrants that the Modu-Line shares owned by him/her/it are
free and clear of all liens and encumbrances. Modu-Line
has no subsidiaries and no investments in other firms,
corporations or partnerships.
(b) No Outstanding Options
Modu-Line has no outstanding options or rights to
subscribe to, or contracts or commitments to issue and
sell (upon conversion or otherwise) any shares of its
Common Stock.
(c) Financial Statements
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Modu-Line has delivered to Vistawall copies of the
following financial statements, including, in each case,
the notes thereto and financial information, all of which
fairly state in accordance with generally accepted
accounting principles consistently applied the financial
condition and results of operations of Modu-Line (the
"Financials"):
(1) The balance sheet, related statement of earnings
and shareholders' equity of Modu-Line as of the
fiscal years ended 1996, 1995, 1994, 1993, and
1992 certified by ▇▇▇▇▇▇▇ & Associates, Wausau,
Wisconsin, Certified Public Accountants.
(2) The unaudited balance sheet, related statement of
earnings and shareholders' equity of Modu-Line as
of April 30, 1997.
(3) The balance sheet of the Modu-Line defined
contribution money purchase profit sharing plan
as of April 30, 1997.
(d) Financial Condition and Net Worth
(1) The Financials fairly present the financial
condition and the results of operation of
Modu-Line in accordance with generally accepted
accounting principles applied on a basis
consistent with prior year-ends as of the
respective dates and periods; represent actual,
bona fide transactions; and reflect all claims
and debts and liabilities of Modu-Line whether
accrued, fixed, contingent or otherwise, subject,
in the case of interim financial statements, to
normal recurring year end adjustments. Subject to
the foregoing proviso, Modu-Line and each
Shareholder have no knowledge of any material
liabilities, whether accrued, absolute,
contingent or otherwise of Modu-Line, other than
those reflected on Modu-Line's balance sheet as
of April 30, 1997, including the notes thereto,
if any.
(2) Modu-Line's Net Worth as of May 31, 1997 shall be
at least $2,100,000. If it is not, then the Cash
Consideration shall be reduced dollar for dollar
by the amount by which the Net Worth is less than
$2,100,000. Net Worth shall be determined by
▇▇▇▇▇▇▇ & Co., CPAs, Wausau, Wisconsin,
Modu-Line's auditors within sixty (60) days after
the Closing Date in accordance with generally
accepted accounting principles consistently
applied to Modu-Line's year-end Closings with
respect to Modu-Line's operations. If Modu-Line's
Net Worth as of May 31, 1997 is at least
$2,100,000, ▇▇▇▇▇▇▇ & Co.'s fees shall be borne
by ▇▇▇▇▇▇; if not, they shall be borne by the
Shareholders and deducted from the Cash
Consideration.
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(e) Taxes and Tax Returns
Except as disclosed to ▇▇▇▇▇▇ in writing by Shareholders,
Modu-Line has timely filed all income, payroll, sales and
use, tax and other tax returns required to be filed. Such
returns are true and complete and all taxes shown thereon
have been paid or Modu-Line has set up an adequate reserve
for the payment of, all income taxes and other taxes
required to be paid by it with respect to the periods
covered by such returns and has set up an adequate reserve
for the payment of all income taxes or other taxes
anticipated to be payable in respect of the periods
subsequent to the last of such periods prior to the
Closing Date of the merger. Modu-Line is not delinquent in
the payment of any tax, assessment or material
governmental charge. The federal income tax returns of
Modu-Line have never been audited by the Internal Revenue
Service and no deficiencies for federal income tax have
been assessed or asserted which have not been paid or
settled.
(f) No Material Changes
Since December 31, 1996, except as described on Schedule
4.1 (q) of Exhibit D there has not been (1) any material
change in Modu-Line's financial condition, assets,
liabilities (contingent or otherwise), or business, other
than changes in the ordinary course of business, none of
which has been materially adverse, or (2) any material
increase in the compensation payable or to become payable
by Modu-Line to its directors, officers or key employees,
or any material increase in any bonus, insurance, pension,
or other employee benefit plan, payment, or arrangement
made to, or with any such officers or key employees or (3)
any material change in its labor relations or (4) any
dividends declared or paid on shares of its outstanding
common stock or any other distribution of assets to the
holders thereof as such except director's fees paid in the
ordinary course consistent with Modu-Line's past practices
or (5) any commitments involving capital expenditures,
loans, or advances for more than $5,000 except with regard
to office refurbishing and extrusion dies (neither of
which exceed $25,000) or a crimping machine for $17,000.
(g) Title to Property; Encumbrances; Condition of Assets
Schedules 4 and 12 contain complete and accurate lists of
all real property, leaseholds or other interests therein
owned by Modu-Line. Modu-Line has delivered or made
available to ▇▇▇▇▇▇ copies of the deeds and other
instruments (as recorded) by which Modu-Line acquired such
real property and interests and copies of all title
insurance policies, opinions, abstracts, and surveys in
the
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possession of Modu-Line and relating to such property or
interests. Modu-Line owns (with good and marketable title
in the case of real property, subject only to the matters
permitted by the following sentence) all the properties
and assets (whether real, personal, or mixed and whether
tangible or intangible) including all of the properties
and assets reflected in the Financials (except for assets
held under capitalized leases). Except for rights of the
Bank of America, all properties and assets reflected in
the Financials are free and clear of all Encumbrances and
are not, in the case of real property, subject to any
rights of way, building use restrictions, exceptions,
variances, reservations or limitations of any nature
except, with respect to all such properties and assets,
(a) mortgages or security interests shown on the
Financials as securing specified liabilities or
obligations, with respect to which no default (or event
that, with notice or lapse of time or both, would
constitute a default) exists, (b) liens for current taxes
not yet due, and (c) with respect to real property, (i)
minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value
or impairs the use of the property subject thereto, or
impairs the operations of Modu-Line, and (ii) zoning laws
and other land use restrictions that do not impair the
present or anticipated use of the property subject
thereto.
To the best of their knowledge, the buildings, plants,
structures and equipment of Modu-Line are structurally
sound, are in good operating condition and repair, and are
adequate for the uses to which they are being put, and
none of such buildings, plants, structures, or equipment
is in need of maintenance or repairs except for ordinary,
routine maintenance and repairs that are not material in
nature or cost. The building, plants, structures and
equipment are sufficient for the continued conduct of
Modu-Line's business after the Closing in substantially
the same manner as conducted prior to the Closing.
(h) Disclosures
Attached hereto as Exhibit D is a Disclosure Letter which
contains, inter alia, complete and correct Schedules of:
(1) Orders and Contracts with Customers
Schedule 1 is a list of all contracts with
customers and all purchase orders which Modu-Line
has received and accepted which by their terms
extend beyond the Closing Date.
(2) Proposals
Schedule 2 is a list of all proposals made by
Modu-Line offering to sell
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and/or install goods or provide services, which
proposals by their terms are open for acceptance
up to and after the Closing Date;
(3) Purchase Orders Issued by Modu-Line
Schedule 3 is a list of all purchase orders over
Five Thousand Dollars ($5,000) issued by
Modu-Line and contracts with suppliers which by
their terms extend beyond the Closing Date;
(4) Leases
Schedule 4 is a list of all leases of both real
estate and personal property, to which Modu-Line
is a party and a summary statement of the terms
thereof;
(5) Other Contracts
Schedule 5 is a list of all other contracts and
agreements not disclosed on Schedules 1, 2, 3, or
4, including but not limited to employment
contracts, severance agreements, union contracts,
health and welfare plans, pension or retirement
agreements and trusts, promissory notes,
mortgages and other loan agreements, guarantees
(other than product guarantees and warranties),
dealer agreements, manufacturer representative
agreements, manufacturing agreements, supply
agreements, consulting agreements and commitments
to which Modu-Line is a party, or has an
obligation;
(6) Patents, Trademarks, and Intellectual Property
Schedule 6 is a list of all patents, patent
applications; trademarks; service marks; trade
names; copyrights; trademark, service ▇▇▇▇,
patent and copyright licenses and registrations
presently owned or held by Modu-Line, all of
which are valid, current and in good standing,
and except as described in Schedule 5 of Exhibit
D, or subject to a Bank of America mortgage lien
encumbrance, are free and clear of all liens,
claims, mortgages, charges and encumbrances of
whatsoever kind and nature;
(7) Insurance
Schedule 7 is a list of all fire and other
casualty and liability insurance policies of
Modu-Line as of the date hereof, along with a
summary of
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such policies in force and of all claims, where
the individual amount claimed is in excess of
$5,000, made by Modu-Line on such policies since
1992;
(8) Compensation
Schedule 8 is a list of the names, positions, and
annual compensation, including bonuses of all
directors, officers and key employees of
Modu-Line for the years 1992 through 1996;
(9) Banking
Schedule 9 lists the name of each bank in which
Modu-Line has an account or safe deposit box, the
names of all persons authorized to draw thereon
or have access thereto, and the names of all
persons, if any, holding powers of attorney for
Modu-Line;
(10) Benefit Plans
Schedule 10 lists all Modu-Line pension and
welfare benefit plans (as defined in Section 3
(1) and (2) of the Employee Retirement income
Security Act of 1974 (ERISA)).
(11) Officers and Directors
Schedule 11 is a list of all officers and their
office and a list of all directors of Modu-Line
and of each of its subsidiaries.
(12) Real Estate
Schedule 12 reflects the complete legal
description of all real estate owned by
Modu-Line, as well as the identity, nature and
full amount of all corresponding liens, mortgages
and encumbrances thereon.
(13) Machinery and Equipment
Schedule 13 reflects a complete list of all
vehicles, machinery, equipment and other personal
property owned by Modu-Line, as well as the
identity, nature and full amount of all
corresponding liens, mortgages and encumbrances
thereon.
(14) Claims and Suits
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Schedule 14 lists all actions, claims, and suits
pending against and in favor of Modu-Line
involving matters where the amount claimed is or
was in excess of twenty-five thousand dollars
($25,000) and of all actions, claims and suits
resolved since January 1, 1992 involving matters
where the amount claimed is or was in excess of
twenty-five thousand dollars ($25,000), and
claims in Modu-Line's credit memo file since
January 1, 1992 in excess of five thousand
dollars ($5,000).
(15) Tax Returns
Schedule 15 lists all Federal and Wisconsin
Income and Wisconsin Franchise and Business and
Occupation Tax Returns filed by Modu-Line with
respect to the years ending 1992 through 1996.
Except as disclosed on Schedule 15, no tax
returns have been filed with any other states
with respect to the years ending 1992 through
1996. All payroll tax documentation including
941's and W-2's for such years have been made
available to ▇▇▇▇▇▇.
(16) Standard Product Warranties
Schedule 16 sets out true copies of all standard
product warranties and guarantees now in effect
or outstanding with respect to products of
Modu-Line.
(17) Accounts Receivable
Schedule 17 contains an accurate list of all
accounts receivable of Modu-Line as of April 30,
1997 which list sets forth the aging of such
Accounts Receivable.
(18) Environmental Matters
Schedule 18 sets forth a ten (10) year history of
all environmental matters within the knowledge of
Modu-Line or its Shareholders and all Hazardous
Substances presently being used by Modu-Line.
(i) Claims, Suits and Legal Proceedings
There is no material claim, suit, or legal proceeding
pending, or to the best of their knowledge threatened
against or relating to Modu-Line, its properties or
business, or any officer, director or shareholder, nor do
Shareholders or Modu-Line know of any governmental
investigation of any kind or nature relative to
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Modu-Line, its properties, or business or any officer,
director or shareholder except as listed and described in
Schedule 14 of Exhibit D.
(j) Compliance With Laws and Regulations
To the best of their knowledge, Modu-Line and its
properties are in material compliance in all respects with
all laws, regulations and orders applicable to it or its
business or properties. With respect to Modu-Line's
operations, Modu-Line has not received written
notification of any asserted past or present failure to
comply with the Federal Occupational Safety and Health Act
except as described in Schedule 18 of Exhibit D.
(k) Shareholders and Shareholding
The list at Exhibit E contains the names and last known
addresses of all the shareholders of the Common Stock of
Modu-Line and the number of shares owned by each. The
shares referred to in the Preamble constitute all of the
issued and outstanding shares of common stock of
Modu-Line, and have been validly issued, are fully paid
and non-assessable.
(l) Books and Records
Modu-Line's Minute Books and Stock Ledger delivered to
▇▇▇▇▇▇ are true and correct and reflect accurately the
minutes and stock transactions of Modu-Line for the period
of time indicated.
(m) Obligations to Officers and Employees
To the best of their knowledge, no current or former
officer or employee of Modu-Line has any claim or claims
against Modu-Line, and Modu-Line is not obligated or
liable to any of such persons in any way or for any
amounts, except current salaries or wages or employees and
reimbursable business expenses incurred in the ordinary
course of business.
(n) Inventory
Subject to normal and periodic scrapping procedures
customarily practiced by Modu-Line in the ordinary course
of its business, all inventory of Modu-Line, whether or
not reflected in the Financials, consists of a quality and
quantity usable and salable in the ordinary course of
business, except for obsolete items of below standard
quality, all of which have been written off or written
down to net realizable value in the Financials or on the
accounting records of Modu-Line as of the Closing Date, as
the case may be. All inventories not written off have
14
been priced at the lower of cost or market (1) on a last
in, first out, basis in the case of purchased extrusions
and (2) on a first in, first out basis with respect to all
other items. The quantities of each item of inventory
(whether raw materials, work-in-process, or finished goods)
are not excessive, but are reasonable in the present
circumstances of Modu-Line and the quantities on hand at
the Closing Date will be consistent with its past levels of
inventory for each major classification of inventory
(extrusion, hardware, work-in-process, glass, etc.).
(o) Accounts Receivable
All accounts receivable of Modu-Line reflected on the
Financials or on its accounting records as of the Closing
Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations
arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid
prior to the Closing Date, the Accounts Receivable are or
will be as of the Closing Date current and collectible net
of the respective reserves shown on the April 30, 1997
Balance Sheet or on its accounting records as of the
Closing Date which reserve as of the Closing Date, will
not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve
reflected in the April 30, 1997 Balance Sheet. The
Accounts Receivable reflected in the Financials as of the
Closing Date will not represent a material adverse change
in the composition of such Accounts Receivable in terms of
aging. Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full,
without any set-off, within 150 days after the day on
which it first becomes due and payable. Except as set out
on Schedule 14 of Exhibit D, there is no contest, claim,
or right of set-off, other than returns in the ordinary
course of business, under any contract with any obligor of
an Accounts Receivable relating to the amount or validity
of such Accounts Receivable. The parties hereto
acknowledge that some of Modu-Line's customers may also be
customers of ▇▇▇▇▇▇'▇ Vistawall Division. In the event any
common customer of Vistawall and Modu-Line alleges to have
a claim against ▇▇▇▇▇▇'▇ Vistawall Division (hereinafter
referred to as a "Vistawall Claim") and, based solely on
the Vistawall Claim, such customer attempts, after the
Closing Date, to set off any or all of such a Vistawall
Claim against any Accounts Receivable such customer owes
Modu-Line, such amount so set off shall not constitute a
Loss, as hereinafter defined, and ▇▇▇▇▇▇ will not have a
right to reimbursement by set off against the Shareholders
under the indemnification provisions of this Agreement
with respect to the amount so set off on account of the
Vistawall Claim. Provided, however, if such customer does
not prevail in its assertion of its Vistawall Claim and
its right to the set off of the amount of the Vistawall
Claim, and provided ▇▇▇▇▇▇ presents an actual notice to
the Shareholders of such
15
attempted set off based on the alleged existence of the
Vistawall Claim on or prior to February 28, 2000, then any
Loss, as hereinafter defined, suffered by Modu-Line as to
which such customer is not entitled to a set off on account
of the Vistawall Claim, shall fall within the
indemnification provisions of this Agreement, subject to the
limitations thereof. Similarly, in the event that any common
customer of Vistawall and Modu-Line alleges to have a claim
against Modu-Line (hereinafter referred to as a "Modu-Line
Claim") and based solely on the Modu-Line Claim such
customer attempts, after the Closing Date, to set off any or
all of such a Modu-Line Claim against any Accounts
Receivable it owes the Vistawall Division, such amount so
set off shall constitute a Loss, as hereinafter defined, and
▇▇▇▇▇▇ shall have the right to be reimbursed by set off
against the Shareholders under the indemnification
provisions of this Agreement with respect to the amount so
set off on account of the Modu-Line Claim. Provided,
however, if such common customer does not prevail in its
assertion of said Modu-Line Claim, it shall not constitute a
Loss, as hereinafter defined, and ▇▇▇▇▇▇ will have no right
to reimbursement by set off against the Shareholders under
the indemnification provisions of this Agreement with
respect thereto and ▇▇▇▇▇▇ shall promptly pay to the
Shareholders the amount set off in connection with such
Modu-Line Claim against the Cash Consideration. The parties
hereto acknowledge that disclosure of the existence of this
provision could promote common customers of the Vistawall
Division and Modu-Line to assert such a right of set off
without good faith and, therefore, it is essential that the
existence of this provision be kept strictly confidential.
(p) No Default
Modu-Line has complied in all material respects with the
provisions of and is not in default under any contract,
agreement, commitment, or instrument of lease to which it
is a party.
(q) No Material Adverse Change
To the best of their knowledge, there has been no material
fact or situation which would adversely affect Modu-Line,
its properties, assets or business in any manner, except
as set out on Schedule 4.1 (q) of Exhibit D.
To the best of their knowledge, all Modu-Line products
currently being manufactured and sold by it conform with
all applicable governmental standards, rules and
regulations which, because of non-conformance therewith,
would
16
restrict the manufacture, sale or use of such products and
they know of nothing which would prevent or restrict the
manufacture, sale or use of said products, except as set
out on Exhibit D.
To the best of their knowledge, there is no design or
defect in any Modu-Line product or system manufactured
within five (5) years prior to the date hereof which would
have a material adverse effect on Modu-Line's business,
except as set forth in Exhibit D.
Modu-Line has set up adequate reserves, in an amount set
out on Schedule 4.1(q) to Exhibit D, for known and
acknowledged warranty work to be performed in accord with
outstanding warranties on products shipped and/or services
performed prior to the Closing Date ("Warranty Reserves").
In addition, in accord with ordinary and customary
operating procedures, Modu-Line anticipates expending up
to $300,000 through December 31, 1999 on warranty work,
whether or not under contract to do so.
(r) No Infringement
Except as disclosed at Schedule 6, no claim has been made,
nor does Modu-Line know of any claim which could be made
that Modu-Line is infringing or contributorily infringing
any patent, trade name, trademark, service ▇▇▇▇,
copyright, or other intellectual property rights belonging
to another. Similarly, to the best of their knowledge no
person or firm has infringed or is infringing any patent,
trade name, trademark service ▇▇▇▇, copyright, or other
intellectual property rights of Modu-Line.
(s) Representations and Warranties Accurate
To the best of their knowledge, no representation or
warranty by Modu-Line herein nor any statement,
certificate, contract or other material or document
furnished or to be furnished to ▇▇▇▇▇▇ pursuant hereto, or
in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a
material fact, or collectively omit or will omit to state
a material fact expressly called for herein.
(t) Transaction will not Constitute Default
Except as provided in the Bank of America loan documents,
copies of which have been furnished to ▇▇▇▇▇▇, at the
Closing Date the consummation of the transactions
contemplated by this Agreement and the Plan of Merger will
not
17
result in the breach of any term or provision of or
constitute a default under any indenture, mortgage, deed
of trust, other agreement or instrument to which Modu-Line
is a party.
(u) No Consents Required
Except as provided in the Bank of America loan documents,
all properties, interests in properties, assets and rights
of Modu-Line are fully transferable pursuant to this
Agreement and the Plan of Merger without the necessity of
consents by any others of if required, have been obtained
except as disclosed on Exhibit D.
(v) No Broker
Neither Modu-Line nor any Shareholder has retained any
broker, agent or finder or paid or agreed to pay any
brokerage fee or commission or any finder's fee to any
broker, agent or finder on account of this Agreement or
Plan of Merger or any matters contemplated thereby.
(w) Pension and Welfare Benefit Plans
Modu-Line's only Pension and Welfare Benefit plans (as
defined in Section 3(i) and (2) of the Employee Retirement
Income Security Act of 1974 (ERISA)) are listed on Exhibit
D. There has been no reportable event (as defined in
Section 4043 of the Employee Retirement Income Security
Act of 1974 ("ERISA", no event described in Section
4062(e) or Section 4063 of ERISA and no termination or
partial termination with respect to any pension plan
established or maintained by Modu-Line which is subject to
ERISA, and no accumulated funding deficiency (as defined
in Section 302 of ERISA) exists with respect to any such
plan. Modu-Line has made all contributions to fund pension
benefits required to have been made and has had all
required audits performed.
(x) True Copies
True copies of each contract, agreement, lease or other
instrument listed in all Schedules and Exhibits hereto
have been furnished to Vistawall or ▇▇▇▇▇▇. No material
modifications of such documents shall be made prior to
Closing without the prior written approval of ▇▇▇▇▇▇.
(y) Environmental Matters
Except as set forth in Exhibit D:
18
(1) To the best of their knowledge, Modu-Line is, and
at all time has been, in material compliance
with, and has not been and is not in violation of
or liable under, any Environmental law which
would materially affect its business. Modu-Line
and its Shareholders do not have any knowledge
of, nor has any of them or any other person for
whose conduct they are or may be held to be
responsible, received, any actual or threatened
order, notice, or other communication from (i)
any governmental body or private citizen acting
in the public interest, or (ii) the current or
prior owner or operator of any real estate
previously owned by Modu-Line or with respect to
which Modu-Line has had an interest of any actual
or potential violation or failure to comply with
any environmental law, or of any actual or
threatened obligation to undertake or bear the
cost of any environmental, health, and safety
liabilities with respect to any such real estate
or any other properties or assets (whether real,
personal, or mixed) in which Modu-Line has had an
interest, or with respect to any property at or
to which Hazardous Materials (as defined by any
federal or state law or regulation) were
generated, manufactured, refined, transferred,
imported, used, or processed by Modu-Line, or any
other person for whose conduct Modu-Line might be
held responsible, or from which Hazardous
Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or
received.
(2) There are no pending or, to their knowledge any
threatened claims, encumbrances, or other
restrictions of any nature, resulting from any
environmental, health, and safety liabilities or
arising under or pursuant to any environmental
law, with respect to or affecting any of the real
estate or any other properties and assets
(whether real, personal, or mixed) in which
Modu-Line has or had an interest.
(3) They have no knowledge of, nor has any of them or
any other person for whose conduct they are or
may be held responsible, received, any citation,
directive, inquiry, notice, order, summons,
warning, or other communication from any
governmental body including those administering
or enforcing any environmental law or other owner
of any real property that relates to the
distribution, generation, handling, management,
processing, release, storage, transfer,
transportation, treatment or use (herein
"Hazardous Activity"), Hazardous Materials, or
any alleged, actual, or potential violation or
failure to comply with any environmental law, or
of any alleged, actual, or potential obligation
to undertake or bear the cost of any
environmental, health, and safety liabilities
with respect to any of the Modu-Line real estate
or any other
19
properties or assets (whether real, personal, or
mixed) in which Modu-Line had an interest, or
with respect to any property to which hazardous
materials generated, manufactured, refined,
transferred, imported, used, or processed by
Modu-Line, or any other person for whose conduct
they are or may be held responsible, have been
transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(4) Except as disclosed on Schedule 18, Modu-Line and
the Shareholders have no knowledge of any
Hazardous Materials present on or in the
Modu-Line real estate or at any geologically or
hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above
or underground storage tanks, landfills, land
deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or
permanent, and deposited or located in land,
water, sumps, or any other part of the said real
estate or such adjoining property, or
incorporated into any structure therein or
thereon. Neither they or any other person for
whose conduct they are or may be held
responsible, or to the best of their knowledge,
any other person, has permitted or conducted, or
is aware of, any Hazardous Activity conducted
with respect to the real estate or any other
properties or assets (whether real, personal, or
mixed) in which Modu-Line has or had an interest
except in material compliance with all applicable
Environmental Laws.
(5) To the best of their knowledge, there has not
been any release or threat of release of any
Hazardous Materials at or from Modu-Line real
estate or at any other locations where any
Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used,
or processed from or by the said real estate, or
from or by any other properties and assets
(whether real, personal, or mixed) in which
Modu-Line has or had an interest, or any
geologically or hydrologically adjoining
property, whether by Modu-Line or any other
person.
(6) There has been delivered to ▇▇▇▇▇▇ true and
complete copies and results of any reports,
studies, analyses, tests, or monitoring possessed
or initiated by Modu-Line pertaining to Hazardous
Materials or Hazardous Activities in, on, or
under any real estate presently owned by
Modu-Line or concerning compliance by Modu-Line
or any other person for whose conduct it may be
held responsible with environmental laws.
4.2 Vistawall's and ▇▇▇▇▇▇'▇
Representations and Warranties
Vistawall and ▇▇▇▇▇▇ each jointly and individually represent and
warrant as follows:
20
(a) Organization and Good Standing of Vistawall Windows, Inc.
Vistawall is duly organized, validly existing and in good
standing under the laws of the state of Wisconsin, and its
authorized capital is as stated in the preamble to this
agreement and all of its issued and outstanding shares of
capital stock are owned by ▇▇▇▇▇▇.
(b) Organization and Good Standing of ▇▇▇▇▇▇ Manufacturing
Company
Vistawall's parent, ▇▇▇▇▇▇ Manufacturing Company, is duly
organized, validly existing and in good standing under the
laws of the state of Delaware. ▇▇▇▇▇▇'▇ capitalization is
as stated in the preamble to this agreement and ▇▇▇▇▇▇ has
over 2,000 owners of its issued and outstanding common
stock. Each outstanding share is validly issued, fully
paid, non-assessable and is entitled to one vote.
(c) Due Authorization
The execution and delivery of this Agreement and the Plan
of Merger to Modu-Line and the merger contemplated hereby
have been duly authorized by Vistawall's board of
directors and its sole shareholder, ▇▇▇▇▇▇, and by
▇▇▇▇▇▇'▇ board of directors, and no further authorizations
by shareholders or directors are required to enable
Vistawall and ▇▇▇▇▇▇ to consummate the contemplated
merger.
(d) ▇▇▇▇▇▇ Shares Duly Issued
All shares of ▇▇▇▇▇▇ common stock into which the common
stock of Modu-Line is to be converted, will be,
immediately after the Effective Date of the merger, duly
and validly authorized and issued and fully paid and
non-assessable and no shareholder of ▇▇▇▇▇▇ or of
Vistawall will have any pre-emptive right of subscription
or purchase in respect thereof.
(e) Financial Statements
▇▇▇▇▇▇ has furnished Modu-Line copies of the following
financial statements and financial information, all of
which fairly state in accordance with generally accepted
accounting principles consistently applied throughout the
periods indicated the financial condition and results of
operations of ▇▇▇▇▇▇:
(1) The balance sheet, related statement of earnings
and shareholders' equity of ▇▇▇▇▇▇ as of the
fiscal years ended 1996, 1995, 1994, 1993, and
1992 certified by KPMG Peat Marwick, Certified
Public Accountants.
21
(2) Unaudited balance sheet, related statement of
earnings and shareholders equity of ▇▇▇▇▇▇ as of
March 31, 1997.
(f) No Material Changes
Except as disclosed on Exhibit 4.2(f), since December 31,
1996, there has not been any material change in ▇▇▇▇▇▇'▇
or Vistawall's financial condition, assets, liabilities
contingent or otherwise, or business, other than changes
in the ordinary course of business, none of which has been
materially adverse.
(g) No Broker
Neither Vistawall nor ▇▇▇▇▇▇ has retained any broker,
agent or finder or paid or agreed to pay any brokerage fee
or commission or any finder's fee to any broker, agent or
finder on account of this Agreement or the Plan of Merger
or any matters contemplated thereby.
(h) SEC 10-K; Annual Report; Proxy Statement
▇▇▇▇▇▇ has heretofore delivered to Modu-Line and each
Shareholder a copy of its Form 10-K for the fiscal year
ended December 31, 1996, and of its Form 10Q for the
quarter ended March 31, 1997 and of Form 8K dated April
15, 1997, which it has filed with the SEC (the "▇▇▇▇▇▇
Reports"). The ▇▇▇▇▇▇ Reports incorporate by reference
therein the ▇▇▇▇▇▇ 1997 NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT (the "Proxy Statement")
and certain parts of ▇▇▇▇▇▇'▇ 1996 Annual Report to
Stockholders (the "Annual Report"), which incorporated
documents have also been delivered to Modu-Line and the
Shareholders. To the knowledge of ▇▇▇▇▇▇, the ▇▇▇▇▇▇
Reports do not contain, as of the date of such Report, any
untrue statement of a material fact nor does it omit to
state a material fact required to be stated therein or
necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading.
Furthermore, except as otherwise disclosed in the ▇▇▇▇▇▇
Reports, to the knowledge of ▇▇▇▇▇▇, ▇▇▇▇▇▇ has
experienced no material adverse change in its financial
condition, properties, business or prospects since the
date thereof. To the best of its knowledge the ▇▇▇▇▇▇
Reports have been prepared in material compliance with all
applicable securities laws, rules and regulations, and
that the financial statements included therein have been
prepared in accordance with general accepted accounting
principles, consistently applied, and represent fairly the
financial condition and results of operations of ▇▇▇▇▇▇ as
of the dates and for the periods covered thereby.
22
4.3 Right of Inspection
Each Constituent Corporation and ▇▇▇▇▇▇ grants to the other, and
its officers, employees, attorneys, and agents, the right, during
normal business hours, to inspect its records and to consult with
its officers, employees, attorneys, and agents for the purpose of
determining the accuracy of the representations and warranties
hereinabove made. In order to facilitate such inspection and
consultation and to conclude other arrangements incident or
related to the transaction each Constituent Corporation and ▇▇▇▇▇▇
will compile and furnish such information as the other may
reasonably request.
ARTICLE V
COVENANTS
5.1 Modu-Line's and Shareholder's Covenants
Modu-Line and the Shareholders agree that from the date hereof to
the Closing Date of the merger Modu-Line will:
(a) Operate Business in Ordinary Manner
Operate its business only in the usual, regular, and
ordinary manner so as to maintain the goodwill it now
enjoys and, to the extent consistent with such operation,
it will use all reasonable efforts to preserve intact its
present business organization, keep available the services
of its present principal officers and employees, and
preserve its relationships with its suppliers, jobbers,
distributors, and others having business dealings with it.
(b) Maintain Property
At its expense, maintain all its property in customary
repair, order, and condition, reasonable wear and use and
damage by fire or unavoidable casualty excepted (subject,
however, to the provisions of Paragraph 5.1(h)).
(c) Employment Contracts
Not enter into any management contracts of employment
except in accordance with a plan or procedure approved by
▇▇▇▇▇▇.
(d) Borrowings
Not make any new borrowings pursuant to its existing line
of credit with Bank
23
of America or otherwise in excess of the Borrowing Base
limitations as provided in the Bank documents without
▇▇▇▇▇▇'▇ prior written consent.
(e) Capital Expenditures
Not enter into commitments involving capital expenditures,
loans, or advances, and not voluntarily incur any
contingent liability except with regard to office
refurbishing and extrusion dies (neither of which shall
exceed $25,000) or a crimping machine for $17,000, 85% of
which will be financed through Modu-Line's existing loan
facility or as may be mutually agreed to by ▇▇▇▇▇▇.
(f) Maintain Books and Records
Maintain its books of account and records in the usual,
regular, and ordinary manner, in accordance with generally
accepted accounting principles applied on a consistent
basis.
(g) Comply With Law
Duly comply with all laws applicable to it and to the
conduct of its business.
(h) Insurance
Maintain insurance upon all its properties and with
respect to the conduct of its business in such amounts and
of such kinds as are in effect as of the date of this
Agreement, or as the same may be added to from time to
time in Modu-Line's discretion; provided, that in the
event that during the period from the date hereof to and
including the Closing Date any of the property or assets
of Modu-Line are damaged or destroyed by fire or other
casualty, the obligations of ▇▇▇▇▇▇, the Shareholders and
of the Constituent Corporations under this Plan shall not
be affected thereby, but Modu-Line shall promptly notify
▇▇▇▇▇▇ and Vistawall in writing thereof and proceed with
the repair or restoration thereof in such manner and to
such extent as may be approved by ▇▇▇▇▇▇, and, upon the
Closing Date, all proceeds of insurance and claims of
every kind arising as a result of any such change or
destruction shall become the property of the Surviving
Corporation.
(i) Disposal of Assets
Not sell or dispose of any property or assets or engage in
any activity or transaction, or encumber any property or
assets, except in the usual and ordinary course of
business.
(j) Changes to Articles of Incorporation
24
Not amend its Articles of Incorporation or Bylaws or merge
or consolidate with or into any other corporation or
change in any manner the rights of its Common Stock or
other securities or the character of its business.
(k) Stock Options
Not issue, reissue, or sell, or issue options or rights to
subscribe to, or enter into any contract or commitment to
issue, reissue, or sell (upon conversion or otherwise),
any shares of its capital stock, or subdivide or in any
way reclassify any shares of its capital stock, or
acquire, or agree to acquire, any shares of its capital
stock.
(l) Dividends
Not declare or pay any dividends on shares of its
outstanding Common Stock or make any other distribution of
assets to the holders thereof as such except directors'
fees paid in the ordinary course consistent with
Modu-Line's past practices.
(m) Material Adverse Changes
Promptly advise Vistawall and ▇▇▇▇▇▇ in writing of any
material adverse change in the financial condition,
business, or affairs of Modu-Line.
5.2 Vistawall's and ▇▇▇▇▇▇'▇ Covenants
Vistawall and ▇▇▇▇▇▇ agree that from the date hereof to the
Effective Date of the Merger it will:
(a) Material Adverse Changes
Promptly advise Modu-Line in writing of any material
adverse change in the financial condition, business or
affairs of Vistawall or ▇▇▇▇▇▇.
ARTICLE VI
CONDITIONS
6.1 Conditions to Vistawall's and ▇▇▇▇▇▇'▇ Obligation to Effect the
Merger
The obligation of Vistawall and ▇▇▇▇▇▇ to consummate and effect
the merger hereunder
25
shall be subject to the following conditions:
(a) Representations and Warranties True As of Close; Other
Obligations Met
The representations and warranties of Shareholders and
Modu-Line herein contained shall be true as of and at
Closing Date with the same effect as though made at such
date; Shareholders and Modu-Line shall have performed all
obligations and complied with all covenants required by
this Agreement and the Plan of Merger to be performed or
complied with prior to the Closing Date of the merger;
there shall not have been any development which, in the
reasonable judgment of ▇▇▇▇▇▇, threatens to disturb the
management of the Surviving Corporation; each Shareholder
and Modu-Line shall have delivered to ▇▇▇▇▇▇ a certificate
dated the Closing Date of such merger to the foregoing
effect.
(b) Director Approval
▇▇▇▇▇▇ shall have received a certified copy of the
resolution adopting this Agreement and the Plan of Merger
adopted by the unanimous vote of the directors of
Modu-Line.
(c) Shareholder Approval
Subject to the provisions of Article VIII hereof, the
holders of all of the outstanding shares of Common Stock
of Modu-Line shall have voted in favor of the adoption of
this Agreement and the Plan of Merger contemplated hereby.
(d) Transactions Acceptable to Counsel
All transactions contemplated hereby, and the form and
substance of all legal proceedings and of all papers used
or delivered hereunder, shall be reasonably acceptable to
counsel for ▇▇▇▇▇▇.
(e) Consents Obtained
The holders of any indebtedness of Modu-Line and the
lessors of any property of substantial value leased by
Modu-Line and the other parties to, any material
agreements to which Modu-Line is a party, shall, when and
to the extent necessary, in the opinion of ▇▇▇▇▇▇ or its
counsel, have consented to the merger contemplated hereby
or have waived any breach or default resulting from the
consummation of the merger or any preferential or other
rights they would otherwise have by reason of the merger.
In determining the materiality of any agreement, ▇▇▇▇▇▇
may take into consideration the cumulative effect of
similar
26
and related agreements.
(f) Registration of ▇▇▇▇▇▇ Stock Not Required
▇▇▇▇▇▇ shall be furnished with an opinion from its counsel
that the issuance of ▇▇▇▇▇▇'▇ Common Stock pursuant to
this Plan will not require registration under the
Securities Act of 1933.
(g) Opinion of Counsel
▇▇▇▇▇▇ shall have received a favorable opinion, dated as
of the Closing Date from The Law Offices of ▇▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, S.C., counsel to Modu-Line, in form and substance
reasonably satisfactory to ▇▇▇▇▇▇ and its counsel, to the
effect that the corporate existence, good standing, and
authorized and issued stock of Modu-Line are as stated or
referred to in this Agreement and the Plan of Merger; that
Modu-Line has taken all corporate actions which are
conditions precedent to Modu-Line's obligations under this
Agreement and the Plan of Merger; that, except as may be
specified by said counsel, they do not know of any
undisclosed material litigation, proceeding, or
governmental investigation or labor dispute or labor
trouble pending or threatened against or relating to
Modu-Line or its properties or business; that all
corporate and other proceedings required to be taken by or
on the part of Modu-Line to authorize and to carry out
this Agreement and the Plan of Merger and to effect the
merger contemplated hereby have been duly and properly
taken; and that this Agreement and the Plan of Merger is
the valid obligation of Modu-Line, legally binding upon it
in accordance with its terms.
▇▇▇▇▇▇ shall also have received such opinion of counsel as
to titles to Modu-Line's properties, property interests,
and assets on the Closing Date as ▇▇▇▇▇▇'▇ counsel shall
reasonably require. The opinions referred to in this
paragraph shall also cover such other matters incident to
the transaction herein contemplated as ▇▇▇▇▇▇ and its
counsel may reasonably request, including the form of all
papers, the validity of all proceedings, and, if
requested, shall include a statement with respect to
counsel's knowledge of the practices followed by Modu-Line
in acquiring title to real property. In rendering such
opinion with respect to title to property, The Law Offices
of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, S.C., may rely upon title
certificates, opinions and other counsel, or other
evidence which they deem satisfactory.
(h) Approvals Obtained
Any and all permits, approvals, and other actions of any
authority reasonably
27
required in the opinion of counsel for ▇▇▇▇▇▇ for the
lawful consummation of the merger as contemplated by this
Agreement and the Plan of Merger shall have been obtained,
and no such permit, approval, or other action shall
contain any provision which in the judgment of ▇▇▇▇▇▇
shall be unduly burdensome.
(i) Dissenters Rights Relinquished
Shareholders shall have relinquished all dissenters rights
available to them under Wisconsin law.
(j) Investor Representation Letter
Each Shareholder shall have signed and delivered to ▇▇▇▇▇▇
an Investor Representation Letter in the form set out at
Exhibit F.
(k) Plan of Merger
The Plan of Merger at Exhibit A has been approved by
Shareholders representing all of the issued and
outstanding shares of Modu-Line.
(l) Documents Delivered
Each of the following documents shall have been delivered
to ▇▇▇▇▇▇:
(1) Written resignations as officers and/or directors
of Modu-Line of the individuals whose names are
set out on Exhibit C.
(2) Title insurance policies brought down to the
Closing Date of a title insurance company
satisfactory to ▇▇▇▇▇▇ or opinions of Modu-Line's
counsel as provided in Paragraph 6.1(g)
evidencing the fee simple title of Modu-Line in
and to the real estate described on Schedule 12.
(3) Non-compete agreements from each Shareholder, as
individuals, in the form of Exhibit G.
6.2 Conditions to Modu-Line's and Shareholders' Obligation to Effect
the Merger
The obligation of Modu-Line and of the Shareholders to consummate
and effect the merger hereunder shall be subject to the following
conditions:
28
(a) Representations and Warranties True As of Close; Other
Obligations Met
The representations and warranties of Vistawall and ▇▇▇▇▇▇
herein contained shall be true as of the Closing Date of
the merger with the same effect as though made at such
date; Vistawall and ▇▇▇▇▇▇ shall have performed all
obligations and complied with all promises required by
this Agreement and the Plan of Merger to be performed or
complied with by it prior to the Closing Date of the
merger; there shall not have been any development which,
in the reasonable judgment of Modu-Line or its
Shareholders, threatens to materially disturb the business
of ▇▇▇▇▇▇ or Vistawall; and Vistawall and ▇▇▇▇▇▇ shall
have delivered to Modu-Line a certificate dated the date
of the consummation of such merger and signed by its
President, or one of its Vice Presidents and by its
Secretary or its Treasurer to the foregoing effect.
(b) Director Approval
Modu-Line shall have received a certified copy of the
resolution approving this Agreement and the Plan of Merger
adopted by at least a majority vote of the Directors of
Vistawall and of ▇▇▇▇▇▇.
(c) Shareholder Approval
Subject to the provisions of Article VIII hereof, ▇▇▇▇▇▇,
the sole shareholder of Vistawall, shall have voted in
favor of the adoption of this Agreement and the Plan of
Merger and the merger contemplated hereby.
(d) Transactions Acceptable to Counsel
All transactions contemplated hereby, and the form and
substance of all legal proceedings and of all papers used
or delivered hereunder, shall be reasonably acceptable to
counsel for the Shareholders and for Modu-Line to the
extent reasonably requested by Modu-Line and the
Shareholders.
(e) Opinion of Counsel
Shareholders and Modu-Line shall have received a favorable
opinion, dated as of the Closing Date, from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, Esquire, counsel for ▇▇▇▇▇▇, in form and
substance reasonably satisfactory to Modu-Line and the
Shareholders and their counsel, to the effect that the
corporate existence, good standing, and authorized and
issued stock of Vistawall and ▇▇▇▇▇▇ and its consolidated
subsidiaries are as stated or referred to in this
Agreement and Plan of Merger;
29
that Vistawall and ▇▇▇▇▇▇ have taken all corporate actions
which are conditions precedent to their obligations under
this Agreement and the Plan of Merger; that the ▇▇▇▇▇▇
Common Stock which is to be issued pursuant to the terms
of this Agreement and the Plan of Merger has been duly
authorized and, when issued and delivered pursuant to the
terms hereof and the Plan of Merger will have been legally
and validly issued and will be fully paid and
non-assessable and no shareholder of Vistawall or ▇▇▇▇▇▇
will have any preemptive right of subscription or purchase
in respect thereof; that all corporate and other
proceedings reasonably required to be taken by or on the
part of Vistawall and ▇▇▇▇▇▇ to authorize and to carry out
this Agreement and the Plan and to effect the merger
contemplated hereby have been duly and properly taken;
that this Agreement and the Plan is the valid obligation
of Vistawall and ▇▇▇▇▇▇, legally binding upon it in
accordance with its terms.
Such opinion shall also cover such other matters incident
to the transaction herein contemplated as Modu-Line and
Shareholders and its counsel may reasonably request,
including the form of all papers, and the validity of all
proceedings.
(f) Approvals Obtained
Any and all permits, approvals, and other actions of any
authority required in the opinion of counsel for
Shareholders and for Modu-Line for the lawful consummation
of the merger as contemplated by this Agreement and the
Plan shall have been obtained, and no such permit,
approval, or other action shall contain any provision
which in the reasonable judgment of Shareholders and
Modu-Line shall be unduly burdensome.
(g) Plan of Merger
The Plan of Merger at Exhibit A has been approved by all
of the shares of Vistawall.
(h) Accountants Opinion
There shall have been received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Certified Public Accountants, an opinion reasonably
satisfactory to Shareholders and Modu-Line to the effect
that Modu-Line shareholders receiving ▇▇▇▇▇▇ common stock
pursuant to Article II hereof will receive the same as a
tax-free exchange under Section 368 of the Internal
Revenue Code of 1954, as amended.
30
ARTICLE VII
SHAREHOLDER APPROVAL; FILINGS; EXPENSES
7.1 Submission to Shareholders
Prior to the Closing, Vistawall and Modu-Line agree that this
Agreement and the Plan of Merger signed by the parties hereto
shall be submitted to the shareholders of each of the Constituent
Corporations, as provided by law, at separate meetings called and
held on such date as the Boards of Directors of the Constituent
Corporations shall approve. If this Agreement and the Plan is
adopted and approved at such meetings, or any adjournment or
adjournments thereof, by the affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock, then such
documents as may be required by law to accomplish the merger shall
(if this Agreement and the Plan shall not have been terminated or
abandoned pursuant to the provisions of Article VIII hereof) be
delivered or filed with the Department of Financial Institutions
of the State of Wisconsin with an Effective Date to be not later
than the Closing Date. ▇▇▇▇▇▇, Shareholders and the Constituent
Corporations shall then do all such further acts or things which
may be required to accomplish the merger or which may be required
by law. If this Agreement and Plan is not so adopted and approved,
then this Agreement and the Plan shall terminate.
7.2 Expenses
If the merger contemplated hereby is consummated, ▇▇▇▇▇▇ shall pay
the fees and expenses of the Constituent Corporations' as well as
the Shareholders' counsel (The Law Offices of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
S.C. up to an aggregate of $50,000) and of their accountants
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) up to an aggregate of $10,000) and all expenses
of carrying this Agreement and the Plan of Merger into effect and
of accomplishing the merger. If the merger contemplated hereby is
not consummated and made effective, then each Constituent
Corporation, ▇▇▇▇▇▇ and Shareholders shall bear their expenses and
the fees of their respective counsel, accountants and other
representatives incurred in connection with this Agreement and the
Plan and in connection with all things required to be done by each
of them hereunder.
ARTICLE VIII
TERMINATION
8.1 Causes for Termination
Anything contained in this Agreement and the Plan to the contrary
notwithstanding, each
31
may be terminated and the merger abandoned at any time (whether
before or after the approval and adoption thereof by the
shareholders of Vistawall or Modu-Line or of both) prior to the
Closing Date of the merger:
(a) By mutual consent of ▇▇▇▇▇▇ and the Shareholders and of
the Constituent Corporations.
(b) By ▇▇▇▇▇▇ and Vistawall, if any of the conditions set
forth in Paragraph 6.1 hereof has not been met and has not
been waived.
(c) By Shareholders and Modu-Line, if any of the conditions
set forth in Paragraph 6.2 hereof has not been met and has
not been waived.
(d) By ▇▇▇▇▇▇ and Vistawall or by Shareholders and Modu-Line,
if any suit, action, or other proceeding shall be pending
or threatened which, in the opinion of its counsel,
materially and adversely affects the prospects of the
merger.
(e) By ▇▇▇▇▇▇ and Vistawall, if in its opinion there shall
have occurred or been threatened, for any reason, any
material adverse change in the condition, financial or
otherwise, of Modu-Line.
(f) By Shareholders and Modu-Line, if in its opinion there
shall have occurred or been threatened, for any reason,
any material adverse change in the condition, financial or
otherwise, of Vistawall or ▇▇▇▇▇▇.
(g) By ▇▇▇▇▇▇ and Vistawall or by Shareholders and Modu-Line,
if the merger shall not have become effective on or before
the Closing Date, unless such date is extended by the
mutual consent of ▇▇▇▇▇▇ and Shareholders.
(h) By ▇▇▇▇▇▇ and Vistawall, if in its opinion, any of the
matters listed on Exhibit D would have a material adverse
effect on the business of the Surviving Corporation or
would cause the Surviving Corporation to be exposed to
material contingent liabilities.
8.2 Board of Directors to Act
An election by a Constituent Corporation to terminate this
Agreement or the Plan and abandon the merger as hereinabove
provided shall be exercised on behalf of such corporation by its
Board of Directors and written notice to that effect shall then be
given to all other parties not less than three (3) business days
thereafter. An election by ▇▇▇▇▇▇ shall be exercised by its
Chairman of the Board and by the Shareholders by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
32
8.3 Agreement and Plan Void
In the event of the termination and abandonment of this Agreement
and the Plan pursuant to the provisions of Paragraphs 7.1 and 8.1
hereof, the same shall become void and have no effect, without any
liability on the part of ▇▇▇▇▇▇, Shareholders or either of the
Constituent Corporations or its directors or officers or
shareholders in respect thereof except as expressly provided
herein and except with regard to any confidentiality and
non-disclosure agreement between the parties.
8.4 Waiver
Any of the terms or conditions of this Agreement and the Plan may
be waived, at any time prior to the filing of the Plan with the
Department of Financial Institutions of the State of Wisconsin, by
any party entitled to the benefit thereof by action taken by its
Board of Directors, the Executive Committee of its Board of
Directors, its Chairman of the Board or its President or, in the
case of the Shareholders by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
ARTICLE IX
INDEMNIFICATION BY SHAREHOLDERS
9.1 Nature and Survival of Representations
Except as otherwise expressly provided in this Agreement, the
representations, warranties, obligations and agreements made by
Modu-Line and by its Shareholders in this Agreement, or pursuant
hereto, shall be deemed individual and joint and shall survive the
Closing, the merger and any investigation at any time made by or
on behalf of Vistawall or ▇▇▇▇▇▇.
9.2 Indemnification
Shareholders, individually and jointly, shall defend, indemnify
and hold Modu-Line, Vistawall and ▇▇▇▇▇▇, its agents, offices,
directors, shareholders and employees harmless from and against,
and will reimburse them on demand for, the amount of any loss,
liability, claim, damage (including incidental and consequential
damages, expenses including attorneys' fees, and costs incurred in
investigating and defending against such payment or claim therefor
or diminution of value, whether or not involving a third party
claim (individually "Loss" and collectively "Losses") at any time
after the Closing Date arising directly or indirectly out of or in
connection with:
(a) Misrepresentation and Breaches
Any misrepresentation, omission, breach of warranty or
nonfulfillment of any covenant, obligation or agreement on
the part of Shareholders or Modu-Line under this
Agreement, any Schedule, Exhibit, certificate or other
instrument or document furnished or to be furnished
pursuant to this Agreement, and
(b) Unrecorded Liabilities
Any Loss arising out of any liabilities of Modu-Line of
any
33
nature whatsoever, whether accrued, fixed, contingent or
otherwise existing at, occurring prior to, or arising out
of facts occurring prior to the Closing Date, to the
extent not reflected or fully reserved against in
Modu-Line's balance sheet prepared as of December 31, 1996
and/or April 30, 1997, or not reflected in any Exhibit or
Schedule to this Agreement, and except for expenses
incurred by Modu-Line after April 30, 1997 arising in the
ordinary course of business.
(c) Taxes
Any Loss incurred by ▇▇▇▇▇▇, Vistawall or Modu-Line
arising out of Modu-Line's failure or alleged failure to
pay any tax or file any tax return with respect to the
conduct of its business prior to the Closing Date.
9.3 Limitations on Amount of Shareholders' Liability
Except as provided in paragraph 9.5, Shareholders shall have no
liability to ▇▇▇▇▇▇ or Vistawall (for indemnification or
otherwise) hereunder until the total of all Losses incurred by
▇▇▇▇▇▇, Vistawall or Modu-Line exceed in the aggregate $30,000. If
such Losses exceed such amount then Shareholders shall be liable
for all Losses incurred up to a maximum of $350,000, the Cash
Consideration.
9.4 Time Limitations
If the Closing occurs, Shareholders shall have no liability to
▇▇▇▇▇▇ or Vistawall (for indemnification or otherwise) hereunder
after December 31, 1999 unless ▇▇▇▇▇▇ or Vistawall notifies
Shareholders of a claim prior to such date. The notice shall
indicate the factual basis of any claim(s) in reasonable detail to
the extent then known to ▇▇▇▇▇▇ or Vistawall.
9.5 Circumstances in which Limitations Do No Apply
(a) The limitations of Paragraph 9.3 do not apply to an
individual Shareholder with respect to claims for Losses
incurred by ▇▇▇▇▇▇, Vistawall or Modu-Line arising out of
any willful, fraudulent, or intentional breach by such
Shareholder of any
34
representations and warranties or of any covenant or
obligation hereunder, and such Shareholder will be
individually liable for all Losses incurred by ▇▇▇▇▇▇,
Vistawall or Modu-Line with respect to such breaches up to
the value of such Shareholder's proportionate share of the
$7,350,000 of ▇▇▇▇▇▇ stock and cash consideration received
for such Shareholders Modu-Line shares (less the
Shareholders' aggregate liability for Losses as to which
the Shareholders are obligated to reimburse ▇▇▇▇▇▇ by set
off against the $350,000 Cash Consideration, which
otherwise is to be paid by ▇▇▇▇▇▇ on December 31, 1999)
but in no event more than $1 million.
(b) The limitations of Paragraph 9.3, 9.4 or 9.5 (a) do not
apply with respect to any Shareholder's indemnification
obligations under Paragraph 10.2 (c).
9.6 Accounts Receivable and Warranty Obligations
In addition to the obligations at Paragraph 9.2, but subject to
Paragraph 9.3, Shareholders jointly and individually agree to
reimburse ▇▇▇▇▇▇ by set-off against the Cash Consideration for:
(a) Accounts Receivable
The amount of any Accounts Receivable of Modu-Line as of
the Closing Date, less bad debt reserves, to the extent
not fully collected after reasonable and customary
collection efforts within 150 days after it first becomes
due and payable. Reasonable and customary collection
efforts shall not require the filing of any suit or
proceeding or the placement of the account with an
attorney or other professional collector. With respect to
Accounts Receivable on jobs covered by a payment bond,
Modu-Line shall attempt to collect on the bond. Upon such
reimbursement by set-off, ▇▇▇▇▇▇ shall cause Modu-Line to
assign such uncollected accounts, and payment bonds, if
applicable, to Shareholders, jointly
.
Following each quarter, ▇▇▇▇▇▇ will send a report to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ on behalf of the Shareholders detailing
the amounts of any Accounts Receivable of Modu-Line on its
books as of the Closing Date that are not fully collected.
(b) Warranty Obligations
All sums expended or reserved for by Modu-Line after the
Closing Date and prior to December 31, 1999 relating to
products shipped or services performed by Modu-Line prior
to the Closing Date with respect to product defects,
35
backcharges and claims whether or not under contract to do
so which exceed, in the aggregate, the sum of Modu-Line's:
(1) Warranty Reserves as defined in Paragraph 4.1 (q)
as of the Closing Date, plus
(2) $300,000.
For purposes of Paragraph 9.4, ▇▇▇▇▇▇ shall be deemed to
have notified the Shareholders of a claim under this
Paragraph 9.6 (b) arising from products shipped or
services performed by Modu-Line prior to the Closing Date
where such claim is asserted on or prior to December 31,
1999, provided ▇▇▇▇▇▇ presents an actual notice of such
claim to the Shareholders by February 28, 2000.
Following each quarter, ▇▇▇▇▇▇ will send a report to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ on behalf of Shareholders detailing the
sums expended by or reasonably reserved for by Modu-Line
during such quarter relating to products shipped or
services performed by Modu-Line prior to the Closing Date
with respect to product defects, backcharges and claims as
indicated above.
9.7 Security.
The Cash Consideration for Modu-Line stock to be paid on February
28, 2000 pursuant to Paragraphs 2.4 and 2.6 shall serve as
security for the Shareholders' obligations under this Article IX.
Subject to Article XI, at any time prior to payment of said Cash
Consideration to Shareholders, ▇▇▇▇▇▇ may apply all or any portion
of said amount to pay, settle or discharge any claim with respect
to such obligations, along with all reasonable costs and expenses
incident thereto.
Following each quarter, ▇▇▇▇▇▇ will send a report to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ on behalf of the Shareholders detailing the amounts of the
Cash Consideration applied pursuant to this Paragraph 9.7 to pay,
settle or discharge any claim with respect to the Shareholders'
obligations under this Article IX.
9.8 Exclusive Remedies
The remedies provided in this Article IX shall be the exclusive
remedies available to Vistawall and ▇▇▇▇▇▇ and all such remedies
shall be limited to monetary losses only, net of any insurance
proceeds or payments from any other responsible parties or sources
(after deduction of ▇▇▇▇▇▇'▇ and Vistawall's costs in collecting
such amounts and other costs due to such recoveries such as
premium adjustments and indemnification obligations). Nothing
herein however shall limit ▇▇▇▇▇▇'▇ rights with respect to the
Non-Competition Agreements delivered to ▇▇▇▇▇▇ at the Closing.
36
ARTICLE X
INDEMNIFICATION BY VISTAWALL AND ▇▇▇▇▇▇
10.1 Nature and Survival of Representations
All representations, warranties, obligations and agreements made by
Vistawall and ▇▇▇▇▇▇ in this Agreement, or pursuant hereto, shall be
deemed individual and joint and shall survive the closing, the merger
and any investigation at any time made by or on behalf of Modu-Line or
its Shareholders.
10.2 Indemnification
Vistawall and ▇▇▇▇▇▇, individually and jointly, shall defend, indemnify
and hold Shareholders harmless from and against, and will reimburse
them on demand for, the
amount of any loss, liability, claim, damage (including incidental and
consequential damages expense including attorneys' fees and costs
incurred in investigating and defending against such payment or claim
therefor or diminution of value, whether or not involving a third party
claim (individually "Loss" and collectively "Losses") at any time after
the Closing Date arising directly or indirectly out of or in connection
with:
(a) Misrepresentation and Breaches
Any misrepresentation, omission, breach of warranty or
nonfulfillment of any covenant, obligation or agreement on the
part of Vistawall or ▇▇▇▇▇▇ under this Agreement, any
Schedule, Exhibit, certificate or other instrument or document
furnished or to be furnished pursuant to this Agreement, and
(b) Unrecorded Liabilities
Any Loss arising out of any liabilities of Vistawall or ▇▇▇▇▇▇
of any nature whatsoever, whether accrued, fixed, contingent
or otherwise existing at, occurring prior to, or arising out
of facts occurring prior to the Closing Date, to the extent
not reflected or fully reserved against in Vistawall's or
▇▇▇▇▇▇'▇ audited balance sheet prepared as of December 31,
1996, or unaudited balance sheet as of March 31, 1997, or not
reflected in any Exhibit or Schedule to this Agreement, and
except for expenses incurred by ▇▇▇▇▇▇ or Vistawall after
December 31, 1996 arising in the ordinary course of business.
(c) Registration Statement Disclosures
37
With respect to Article XIII, ▇▇▇▇▇▇ agrees to indemnify and
hold harmless any selling Shareholder and each underwriter of
such Shares against any losses, claims, damages or
liabilities, joint or several, to which such selling
Shareholder or underwriter may become subject under the Act or
other securities laws, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement of any material
facts contained in the Registration as amended on the
effective date of such Registration or such amendment, or
arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to
make statements therein not misleading, and will reimburse
each selling Shareholder and each underwriter for any legal or
other expenses reasonably incurred by such selling Shareholder
or underwriter in connection with investigating or defending
against any such loss, claim, damage, liability or action;
provided, however, that ▇▇▇▇▇▇ shall not be liable in any such
case to a selling Shareholder or underwriter or other person
to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or
omission made in the Registration as amended in reliance upon
information furnished to ▇▇▇▇▇▇ by the Shareholder's agent or
by any selling Shareholder or underwriter. Each selling
Shareholder shall indemnify and hold harmless ▇▇▇▇▇▇, each
officer and director of ▇▇▇▇▇▇, and each person, if any, who
controls ▇▇▇▇▇▇ against any losses, claims, damages or
liabilities which ▇▇▇▇▇▇ or such underwriter or other person
may become subject under the Act or any securities laws,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any
untrue statements or omissions made in the Registration which
are furnished to ▇▇▇▇▇▇ by such selling Shareholder, his
underwriter(s) or his Agent(s) for use therein and with
respect to untrue statements or omissions made by such selling
Shareholder or his underwriter(s) in connection with the offer
or sale of the security and which are not contained in or
authorized by the current prospectus for such Registration,
and will reimburse ▇▇▇▇▇▇ and each such other person for any
legal or any other expenses reasonably incurred by ▇▇▇▇▇▇ or
such other person in connection with investigating or
defending against any such loss, claim, damage, liability or
action. Any person obligated hereunder to indemnify and hold
harmless another may participate with counsel of its choice in
the defense of any action relating thereto, and, with the
consent of such other person to the choice of counsel (which
shall not be unreasonably withheld), may assume and control
such defense; provided, that such person shall not be liable
for any settlement of any such claim or action affected
without a consent.
10.3 Limitations on Amount of Vistawall's and ▇▇▇▇▇▇'▇ Liability
Vistawall and ▇▇▇▇▇▇ shall have no liability to Shareholders (for
indemnification or
38
otherwise) hereunder until the total of all Losses incurred by
Shareholders exceeds in the aggregate $30,000. If such Losses exceed
such amount then Vistawall and/or ▇▇▇▇▇▇ shall be liable for all Losses
incurred up to a maximum of $350,000.
10.4 Time Limitations
If the Closing occurs, Vistawall and ▇▇▇▇▇▇ shall have no liability to
Shareholders (for indemnification or otherwise) hereunder after
December 31, 1999 unless Shareholders notify ▇▇▇▇▇▇ or Vistawall of a
claim prior to such date. The notice shall indicate the factual basis
of any claim(s) in reasonable detail to the extent then known to
Shareholders.
10.5 Circumstances in Which Limitations Do Not Apply
(a) The limitations of Paragraph 10.3 do not apply with respect to
claims for damages incurred by a Shareholder arising out of any
willful, fraudulent or intentional breach of any of the ▇▇▇▇▇▇ or
Vistawall's representations and warranties or of any covenant or
obligation, and ▇▇▇▇▇▇ and Vistawall will be jointly and
individually liable for all damages incurred by any Shareholder
at any time with respect to such breaches up to the value of such
Shareholder's proportionate share of the $7,350,000 of ▇▇▇▇▇▇
stock and cash consideration received for such Shareholder's
Modu-Line shares but in no event more than $1 million per
Shareholder.
(b) The limitations of Paragraph 10.3, 10.4 and 10.5 (a) do not apply
with respect to ▇▇▇▇▇▇'▇ indemnification obligations under
Paragraph 10.2 (c).
10.6 Exclusive Remedies
The remedies provided in this Article X shall be the exclusive remedies
available to Shareholders and all such remedies shall be limited to
monetary damages only, net of any insurance proceeds or payments from
any other responsible parties or sources (after deduction of ▇▇▇▇▇▇'▇
and Vistawall's costs in collecting such amounts and other costs due to
such recoveries such as premium adjustments and indemnification
obligations).
ARTICLE XI
PROCEDURE FOR INDEMNIFICATION
11.1 Third Party Claims
39
(a) Promptly after receipt by an indemnified party under
Paragraphs 9.2 or 10.2 of notice of any third party claim
against it, such indemnified party will, if a claim is to be
made against an indemnifying party under such Paragraph,
give notice as provided in Paragraph 14.3 to the
indemnifying party of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced
by the indemnifying party's failure to give such notice.
(b) If any claim referred to in Paragraph 11.1(a) is brought
against an indemnified party and it gives notice to the
indemnifying party of such claim, the indemnifying party
will be entitled to participate in such claim and, to the
extent that it wishes (unless (i) the indemnifying party is
also a party to such claim and the indemnified party
determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its
financial capacity to defend such claim and provide
indemnification with respect to such claim), to assume the
defense of such claim with counsel satisfactory to the
indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the
defense of such claim, the indemnifying party will not, as
long as it diligently conducts such defense, be liable to
the indemnified party for any fees of other counsel or any
other expenses with respect to the defense of such claim, in
each case subsequently incurred by the indemnified party in
connection with the defense of such claim, other than
reasonable costs of investigation. If the indemnifying party
assumes the defense of a claim, (i) it will be conclusively
established for purposes of this Agreement that the matters
alleged in that claim are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such
claims may be effected by the indemnifying party without the
indemnified party's consent (which consent shall not be
unreasonably withheld) unless (A) there is no finding or
admission of any violation of legal requirements or any
violation of the rights of any person and no effect on any
other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any
compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the
commencement of any claim with respect to which the
indemnifying party will be entitled to participate, and the
indemnifying party does not, within ten (10) days after the
indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of
such claim, the indemnifying party will be bound by any
determination made in such claim or any compromise or
settlement effected by the indemnified party but such
determination shall not establish that there is a right to
indemnification which right the indemnified party must
separately establish.
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(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable
probability that a claim may adversely affect it or its
affiliates other than as a result of monetary damages
for which it would be entitled to indemnification,
the indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise, or
settle such claim, but the indemnifying party will not be
bound by any determination of a claim so defended or any
compromise or settlement effected without its consent (which
may not be unreasonably withheld).
11.2 Other Claims.
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification
is sought. Each party shall make reasonable efforts to promptly notify
the other with respect to claims for indemnification but failure to
notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to
the extent that the indemnifying party demonstrates by clear and
convincing evidence that it has been prejudiced by the indemnifying
party's failure to give such notice.
ARTICLE XII
SHAREHOLDER AGREEMENTS
12.1 Covenant Not to Compete.
Modu-Line shall procure non-compete agreements from each Shareholder,
as individuals, in the form of Exhibit G. Said covenants have not been
separately bargained for and are incidental to this Agreement.
ARTICLE XIII
REGISTRATION RIGHTS
To provide all of the Shareholders (hereinafter in this Article XIII
"Shareholders" or "Shareholder") the opportunity under certain circumstances to
sell shares of ▇▇▇▇▇▇ Common Stock received by the Shareholders pursuant to the
Merger plus such additional shares or securities received for or acquired with
respect to such ▇▇▇▇▇▇ Common Stock pursuant to any stock split, stock dividend,
merger, reorganization, or similar transaction (hereinafter collectively
referred to as the "Shares"), ▇▇▇▇▇▇ agrees with the Shareholders as follows:
13.1 Registration
Within 10 business days after the Closing Date, ▇▇▇▇▇▇ shall use its
commercially reasonable efforts to cause a registration statement on
Form S-3 to be filed with the Securities
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and Exchange Commission (the "Registration") under the Securities Act
of 1933 (the "ACT"). The Registration will cover all of the Shares. The
offering described in the Registration will be such that the Shares may
be publicly sold within the United States in brokers' transactions
within the meaning of Section 4 (4) of the Act or in transactions
directly with a market maker at market prices prevailing at the time of
such sales plus or minus any usual or customary brokers' commissions or
discounts. The Registration shall contain such other information,
including information as to each of the Shareholders, as ▇▇▇▇▇▇ deems
necessary and appropriate to satisfy applicable law. ▇▇▇▇▇▇ shall use
its commercially reasonable efforts to keep the Registration current
until (a) one (1) year subsequemnt to the Effective Date, measured from
the Closing Date, at which time ▇▇▇▇▇▇ may terminate the Registration.
13.2 Shareholders' Agent
The Shareholders hereby appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ with full power of
substitution as Agent for all and each of the Shareholders for purposes
of this Article XIII. ▇▇▇▇▇▇ shall be entitled to rely upon, but shall
not be obligated to act upon, any advice, instruction, direction or
submission of information, whether written or oral, submitted by such
Agent for the purpose of filing and maintaining the Registration. If
the Agent resigns or otherwise refuses to act, ▇▇▇▇▇▇ shall give
written notice to each of the remaining Shareholders at their last
known address and ▇▇▇▇▇▇'▇ obligations hereunder shall be suspended
until the Shareholders appoint in writing another Agent who is willing
to act.
13.3 Cooperation from Shareholders and Agents
The obligations of ▇▇▇▇▇▇ to file and maintain the Registration as
herein specified are specifically subject to the obligations of the
Shareholders and their Agents to furnish to the Company such reasonable
information, documents, writings, covenants, agreements or assurances
which ▇▇▇▇▇▇ deems necessary or desirable to the fulfillment of its
obligations under this Article XIII.
13.4 Expenses
Expenses incurred by ▇▇▇▇▇▇ in connection with the filing and
maintenance of the Registration including registration and filing fees,
printing expenses, fees and disbursements of ▇▇▇▇▇▇ counsel and
accountants and Blue Sky filing fees for the filing in the states of
Texas, Kentucky, Indiana, Illinois, Kansas, Missouri and New York,
North Carolina and California (the "Specified States") shall be borne
by ▇▇▇▇▇▇. The Shareholders shall bear all other expenses in connection
with the Registration or subsequent distribution of the Shares,
including but not limited to, all fees and disbursements for their own
respective accountants, legal counsel, underwriting fees, underwriting
or brokerage discounts and commissions, any expenses of their brokers
or underwriters that are not borne directly or indirectly by such
42
brokers or underwritings, transfer taxes on the sale of the Shares, and
any Blue Sky filing fees for states other than the Specified States.
13.5 Non-assignability of Registration Rights
No registration rights granted under this Article shall, by operation
of law or otherwise, be transferable or assignable or subject to any
encumbrance, pledge, hypothecation or charge of any nature, except
that: (i) in the event of the death of a Shareholder, the Shareholder's
registration rights may pass, as provided by law, to the legal
representatives of the Shareholder; and (ii) any Shareholder may assign
the registration rights to a revocable trust of which he or she is the
sole grantor and sole beneficiary.
13.6 Notice Prior to Sale and Permitted Delays
The Shareholders agree that subsequent to the effective date of the
Registration, all sales thereunder shall only be made in accordance
with the provisions of a current prospectus or pursuant to an exemption
from registration under the Securities Act of 1933, as amended and any
applicable state Blue Sky law ("Exemption"). A Shareholder who wishes
to sell pursuant to an Exemption shall furnish to ▇▇▇▇▇▇ prior to such
sale such information, and if requested, an opinion of counsel, as may
be satisfactory to ▇▇▇▇▇▇ to the effect that Shareholder's proposed
transaction is exempt from registration under the Securities Act of
1933 as amended and any applicable state Blue Sky Law. Shareholders
further agree that each will deliver to ▇▇▇▇▇▇ ten (10) days in advance
of any sale pursuant to the Registration, a written notice of intent to
sell. The notice shall specify the number of shares to be sold, the
name and address and telephone number of the selling shareholder and
the name, address and telephone number of the broker to whom or through
whom the selling Shareholder intends to deal. ▇▇▇▇▇▇ shall use its best
efforts to respond to such notice immediately upon delivery. Should a
favorable response be received or should no response be received within
the ten (10) day period, then the selling Shareholder may proceed with
the contemplated sale; provided, however, the Shareholder shall
complete such sale within ten (10) days from the date of ▇▇▇▇▇▇'▇
advice, or if such advice is not received within the ten (10) days
following the delivery of the Shareholder's notice, within twenty (20)
days from the date of delivery of such notice. If ▇▇▇▇▇▇ has an
objection to the proposed sale by the selling Shareholder, ▇▇▇▇▇▇ will
specify the reason for the objection and deliver the same to the
selling Shareholder on or before the tenth (10th) day following the
date of delivery of the Shareholder's notice. Upon receipt of notice of
such objection, the Shareholder will delay the proposed sale until
▇▇▇▇▇▇ rescinds its objection. ▇▇▇▇▇▇ may issue an objection for any
valid business or legal reason; provided that ▇▇▇▇▇▇ agrees that it
shall use commercially reasonable efforts to remove the objection
within a reasonable period of time, consistent with the business or
legal reasons for the objection. All selling Shareholders will
immediately advise ▇▇▇▇▇▇ as soon as any sale is consummated.
13.7 Annual Reports
43
▇▇▇▇▇▇ agrees to timely file all annual and periodic reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended until the Third Anniversary of the Effective Date.
ARTICLE XIV
ENTIRE AGREEMENT
COUNTERPARTS, NOTICES
14.1 Entire Agreement
This Agreement and the Plan embody the entire agreement between the
parties and there are no agreements, understandings, representations,
or warranties between the parties other than those set forth herein or
herein provided for.
14.2 Counterparts
Any number of counterparts of this Agreement and the Plan may be
executed and each such counterpart shall be deemed to be an original
instrument but all such counterparts together shall constitute but one
instrument.
14.3 Notices
Any notice or other communication under or in connection with this
Agreement or the Plan shall be in writing and, if to Vistawall or
▇▇▇▇▇▇, shall be addressed, to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Corporate
Secretary, c/o Butler Manufacturing Company, BMA Tower, P. 0. ▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and shall be effective when delivered to
that address; and, if to Shareholders, shall be addressed to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to
Attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, S.C., P. O. ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and shall be effective as to each
Shareholder when delivered to those addresses; or, in the case of
notices or communications to either Constituent Corporation, to such
other address as it shall have designated by notice to the other.
14.4 Public Announcement
Any public announcement or similar publicity with respect to this
Agreement or the Plan will be issued, if at all, at such time and in
such manner as the parties so agree. Unless consented to by
Shareholders in advance or required by NYSE or SEC Regulations, all the
parties shall cause this Agreement to be kept strictly confidential and
may not make any disclosure of this Agreement to any person. The
parties will consult with each other concerning the means by which
Modu-Line's employees, customers and suppliers and others having
dealings with Modu-Line will be informed of the contemplated
transactions, and Vistawall and/or ▇▇▇▇▇▇ will have the right to be
present for any such communication.
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ARTICLE XV
ARBITRATION
15.1 Settlement of Disputes
If the parties hereto are unable to resolve any dispute by amicable
negotiation, such dispute shall be settled in the City of Chicago,
Illinois by binding arbitration in accordance with the rules of the
American Arbitration Association from time to time in force by three
arbitrators. The Shareholders as a group shall appoint one arbitrator,
and Vistawall/▇▇▇▇▇▇ shall appoint one arbitrator. The two arbitrators
thus appointed shall choose the third arbitrator, who shall act as the
presiding arbitrator. The parties hereto each hereby irrevocably waive
the right to submit such disputes, or to appeal, to any court. This
submission and agreement to arbitrate shall be specifically
enforceable. Any award rendered by an arbitration tribunal shall be
accompanied by findings of fact and conclusions of law and the award
shall be final and binding on the parties and the judgment upon the
award rendered may be entered in any court having jurisdiction thereof.
The arbitrators may find that the claim or defense of a party is
frivolous. In that case, all costs and expenses, including reasonable
attorney fees, shall be assessed against that party.
IN WITNESS WHEREOF, this Agreement and the Plan of Merger have been signed on
behalf of Vistawall and ▇▇▇▇▇▇ by its President or one of its Vice Presidents
and by its Secretary or an Assistant Secretary and on behalf of Modu-Line by its
President and by its Secretary or an Assistant Secretary, under their respective
corporate seals, and by each Shareholder individually as of the date and year
first above written.
Vistawall Windows, Inc. ("Vistawall") Modu-Line Windows, Inc. ("Modu-Line")
------------------------------- -----------------------------------------
President President
Attest: Attest:
------------------- ------------------------
Secretary Secretary
▇▇▇▇▇▇ Manufacturing Company ("▇▇▇▇▇▇") Shareholders
45
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
_______________________________ By -------------------------------
President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trustee
Attest: ----------------------------------
___________________ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Secretary
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Trust
By_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Trustee
---------------------------------
▇▇▇ ▇. ▇▇▇▇, III
---------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ hereby guarantees, without limitation, the obligations of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust under this Agreement.
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ hereby guarantees, without limitation, the obligations of the
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Trust under this Agreement.
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
46