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EXHIBIT 2.1
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
BRILLIANT HOLDING CORPORATION,
THE SECURITYHOLDERS OF
BRILLIANT HOLDING CORPORATION
AND
AMERICAN HOMESTAR CORPORATION
MARCH 6, 1997
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TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE II.
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 2.02. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 2.03. POST-CLOSING PURCHASE PRICE ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 2.04. PRE-CLOSING ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 2.05. ENVIRONMENTAL STUDY COST ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 2.06. FURTHER ENVIRONMENTAL ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 2.07. SHAREHOLDER AGREEMENT TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. ORGANIZATION AND GOOD STANDING; QUALIFICATION . . . . . . . . . . . . . . . . . . . . -6-
SECTION 3.02. CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 3.03. CORPORATE RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
SECTION 3.04. AUTHORIZATION AND VALIDITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
SECTION 3.05. WHOLLY-OWNED SUBSIDIARIES AND PARTIALLY-OWNED ENTITIES . . . . . . . . . . . . . . . -7-
SECTION 3.06. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.07. CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.08. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.09. LIABILITIES AND OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 3.10. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 3.11. EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 3.12. ABSENCE OF CERTAIN CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
SECTION 3.13. TITLE; LEASED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
SECTION 3.14. COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
SECTION 3.15. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
SECTION 3.16. PROPRIETARY RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
SECTION 3.17. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
SECTION 3.18. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 3.19. FINDER'S FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 3.20. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 3.21. ACCURACY OF INFORMATION FURNISHED . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 3.22. INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 3.23. BOOKS OF ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 3.24. BACKLOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
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SECTION 3.25. DISTRIBUTIONS AND REPURCHASES . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 3.26. CUSTOMERS AND SUPPLIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 3.27. PRODUCT WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 3.28. BANKING RELATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 3.29. OWNERSHIP INTERESTS OF INTERESTED PERSONS . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 3.30. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 3.31. CERTAIN PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 3.32. GOVERNMENT INQUIRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 3.33. DEALER INCENTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 3.34. OSHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 3.35. D&T POOLING LETTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 3.36. D&T SEPTEMBER AUDIT DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
ARTICLE III-A
REPRESENTATIONS AND WARRANTIES OF THE SECURITYHOLDERS
SECTION 3.01-A. OWNERSHIP OF THE STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 3.02-A. AUTHORIZATION AND VALIDITY . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 3.03-A. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 3.04-A. CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 3.05-A. TAX RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 3.06-A. FINDER'S FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 3.07-A. STATUS OF SECURITYHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 4.01. ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 4.02. AUTHORIZATION AND VALIDITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 4.03. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 4.04. FINDER'S FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
SECTION 4.05. AUTHORIZATION FOR AHC SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
SECTION 4.06. SEC REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
SECTION 4.07. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
SECTION 4.08. STATUS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
SECTION 4.09. ACCURACY OF INFORMATION FURNISHED . . . . . . . . . . . . . . . . . . . . . . . . . -25-
ARTICLE V.
THE CORPORATION'S AND SECURITYHOLDERS' COVENANTS
SECTION 5.01. CONSUMMATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
SECTION 5.02. BUSINESS OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
SECTION 5.03. ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 5.04. ENVIRONMENTAL AUDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 5.05. MATERIAL CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 5.06. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 5.07. EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
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SECTION 5.08. CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 5.09. CAPITAL ASSETS; PAYMENTS OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 5.10. MORTGAGES, LIENS AND GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 5.11. NO NEGOTIATION WITH OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 5.12. HSR ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
ARTICLE VI.
PURCHASER'S COVENANTS
SECTION 6.01. CONSUMMATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 6.02. HSR ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 6.03. DUE DILIGENCE REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
ARTICLE VII.
PURCHASER'S CONDITIONS PRECEDENT
SECTION 7.01. PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 7.02. HSR ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 7.03. APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 7.04. ESCROW DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 7.05. ABSENCE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 7.06. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 7.07. CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
ARTICLE VIII.
THE CORPORATION'S AND SECURITYHOLDERS' CONDITIONS PRECEDENT
SECTION 8.01. PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 8.02. HSR ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
SECTION 8.03. CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
SECTION 8.04. AHC STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
SECTION 8.05. CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
ARTICLE IX.
CLOSING DELIVERIES
SECTION 9.01. DELIVERIES OF THE CORPORATION AND SECURITYHOLDERS . . . . . . . . . . . . . . . . . -30-
SECTION 9.02. DELIVERIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
ARTICLE X.
REMEDIES
SECTION 10.01. INDEMNIFICATION BY SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.02. INDEMNIFICATION BY PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
SECTION 10.03. CONDITIONS OF INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
SECTION 10.04. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 10.05. INDEMNIFICATION EXCLUSIVE REMEDY . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 10.06. COSTS, EXPENSES AND LEGAL FEES . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 10.07. SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
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SECTION 10.08. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 10.09. SEPTEMBER INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 10.10. POOLING LETTER NONDELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
ARTICLE XI.
TERMINATION
SECTION 11.01. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
SECTION 12.02. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
SECTION 12.03. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . -36-
SECTION 12.04. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 12.05. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 12.06. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . -37-
SECTION 12.07. FEES, EXPENSES AND OTHER PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 12.08. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
SECTION 12.09. CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
SECTION 12.10. GENDER AND NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
SECTION 12.11. CONFIDENTIALITY; PUBLICITY AND DISCLOSURES . . . . . . . . . . . . . . . . . . . . -38-
SECTION 12.12. NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
SECTION 12.13. FURTHER INSTRUMENTS OF TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . . -39-
SECTION 12.14. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
SECTION 12.15. FORM OF INDEMNIFICATION PAYMENT BY PURCHASER . . . . . . . . . . . . . . . . . . . -39-
SECTION 12.16. KNOWLEDGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement"), dated as of
March 6, 1997, is by and among Brilliant Holding Corporation, a Delaware
corporation (the "Corporation"), the holders of all of the outstanding
securities of the Corporation as set forth as Schedule 3.02 (collectively, the
"Securityholders"), and American Homestar Corporation, a Texas corporation
("Purchaser").
W I T N E S S E T H :
WHEREAS, Securityholders hold all of the issued and outstanding
securities of the Corporation, which securities are listed on Schedule 3.02
(the "Securities"), and desire to sell, and Purchaser desires to purchase, the
Securities (other than the Corporation Options (as defined herein), which shall
be exchanged for AHC Options (as defined herein));
NOW, THEREFORE, in consideration of the mutual representations and
warranties and covenants contained in the Agreement, and on the terms and
subject to the conditions set forth herein, the parties agree to the following:
ARTICLE I.
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "AHC Options" shall have the meaning set forth in Section
2.02.
(b) "AHC Shares" shall have the meaning set forth in Section 2.02.
(c) "AHC Stock" shall mean the common stock, par value $0.05 per
share, of Purchaser.
(d) "AHC Securities" shall have the meaning set forth in Section
2.02.
(e) "Cash Compensation" shall have the meaning set forth in
Section 3.10(a).
(f) "Closing" shall mean the closing of the transactions
contemplated by this Agreement, which shall occur at 10:00 a.m., local time, on
the Closing Date in the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Suite 6000, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other time and place as shall be
mutually agreed in writing by the parties hereto.
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(g) "Closing Date" shall mean the day of the Closing, which shall
be on June 1, 1997, or such other date as may be mutually agreed in writing by
the parties hereto.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(i) "Commitments" shall have the meaning set forth in Section
3.14(a).
(j) "Compensation Plans" shall have the meaning set forth in
Section 3.10(b).
(k) "Confidential Information" shall mean all trade secrets and
other confidential and/or proprietary information of the particular person,
including information derived from reports, investigations, research, work in
progress, codes, software, marketing and sales programs, financial projections,
cost summaries, pricing formula, contract analyses, financial information,
projections, maps, confidential filings with any state or federal agency, and
all other concepts, know-how, methods of doing business, ideas, materials or
information prepared or performed for, by or on behalf of such person by its
employees, officers, directors, agents, representatives, or consultants.
(l) "Controlled Group" shall have the meaning set forth in Section
3.11(d).
(m) "Corporation Options" shall have the meaning set forth in
Section 2.02.
(n) "Damages" shall have the meaning set forth in Section 10.01.
(o) "Employee Benefit Plan" shall have the meaning set forth in
Section 3.11(a).
(p) "Employee Policies and Procedures" shall have the meaning set
forth in Section 3.10(d).
(q) "Employment Agreements" shall have the meaning set forth in
Section 3.10(c).
(r) "Environmental Laws" shall have the meaning set forth in
Section 3.30.
(s) "Escrow Agreement" shall mean that certain Escrow Agreement,
by and among Purchaser, the Corporation, the Securityholders and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the form of which is set forth in Exhibit A
attached hereto.
(t) "Financial Statements" shall have the meaning set forth in
Section 3.08.
(u) "GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board and Securities and
Exchange Commission or in such other statements by such
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other entity or other practices and procedures as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
(v) "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
(w) "Indemnification Escrow Agreement" shall mean that certain
Indemnification Escrow Agreement, by and among Purchaser, the Securityholders
and the escrow agent named therein, the form of which is attached hereto as
Exhibit C.
(x) "Ordinary course of business" means the usual and customary
way in which the Corporation has conducted its business in the past.
(y) "Personal Property" shall have the meaning set forth in
Section 3.13(b).
(z) "Proprietary Rights" shall have the meaning set forth in
Section 3.16(a).
(aa) "Purchaser" has the meaning set forth in the preamble.
(bb) "Purchase Price" shall have the meaning set forth in Section
2.02.
(cc) "Real Property" shall have the meaning set forth in Section
3.13(a).
(dd) "Registration Rights Agreement" shall mean that certain
Registration Rights Agreement, by and among the Purchaser and the
Securityholders, the form of which is attached hereto as Exhibit B.
(ee) "Remediation Estimate" shall have the meaning set forth in
Section 2.06.
(ff) "September Balance Sheet" shall mean the audited consolidated
balance sheet of the Corporation as at September 30, 1996.
(gg) "Securities" has the meaning set forth in the preamble.
(hh) "Securityholders" has the meaning set forth in the preamble.
(ii) "Subsidiary" shall have the meaning set forth in Section 3.05.
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ARTICLE II.
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE OF SECURITIES. Subject to and upon
the terms and conditions contained herein, at the Closing, Securityholders
shall sell, transfer, assign, convey and deliver to Purchaser, free and clear
of all adverse claims, security interests, liens, claims and encumbrances and
Purchaser shall purchase, accept and acquire from Securityholders, the
Securities. The parties hereto agree that they intend for the transactions
described herein to qualify for a pooling of interests. Deloitte & Touche
L.L.P. ("D&T") and KPMG Peat Marwick L.L.P. ("KPMG") have delivered to
Purchaser as of the date hereof opinion letters confirming that, in the case of
the letter from D&T that the Corporation is a poolable entity and in the case
of the letter from KPMG that the transactions contemplated hereby qualify for
pooling of interest accounting treatment (the "Pooling Letters"), which letters
Purchaser acknowledges are satisfactory.
SECTION 2.02. PURCHASE PRICE. Subject to adjustments as provided in
this Agreement, the aggregate purchase price for the Securities (the "Purchase
Price") shall be equal to 568,919 shares (the "AHC Shares") of AHC Stock, and
options to purchase 31,081 shares of AHC Stock, which options shall be in the
form of Exhibit D attached hereto (the "AHC Options") and shall be exchanged
for all currently outstanding stock options of the Corporation (the
"Corporation Options"), which Corporation Options shall be deemed to be
canceled as of the Closing. The AHC Shares shall be divided among the
Securityholders as provided in Schedule 2.02 under the heading Stock Recipients
and the AHC Options shall be issued to the individuals as set forth on Schedule
2.02 under the heading Option Recipients. The AHC Shares and AHC Options are
sometimes collectively referred to herein as the "AHC Securities".
SECTION 2.03. POST-CLOSING PURCHASE PRICE ADJUSTMENTS.
(a) Subject to paragraph (c) below and the Indemnification Escrow
Agreement, at the Closing, 56,892 AHC Shares and 3,108 AHC Options
(representing up to 10% of the Purchase Price, subject to adjustment as
provided in Sections 2.05, 2.06, 7.06 and 12.07) shall be delivered to the
Escrow Agent (as defined in the Indemnification Escrow Agreement) to indemnify
Purchaser for the matters set forth on Schedule 2.03(a), which Schedule shall
set forth the specific matters to be indemnified against (including, without
limitation, pending litigation matters, environmental matters, classes of
defects in homes under Subpart I of the National Manufactured Housing Code or
such other classes of defects), the number of AHC Securities from the Purchase
Price allocated to each matter and the period of indemnification. The parties
acknowledge that claims made under the Indemnification Escrow Agreement with
respect to AHC Securities held as a result of this Section 2.03(a) will be made
by the respective dates (with respect to the indicated amounts) set forth on
Schedule 2.03(a).
On or prior to Closing, Schedule 2.03(a) shall be amended by Purchaser
to include a specific allocation of AHC Securities to each specific contingency
and the period of time that the
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AHC Securities shall be maintained in escrow; provided, that if the Corporation
does not agree that the number of AHC Securities and period of time relating to
any such matter is reasonably related to the exposure of the Corporation
arising out of such matter or the period of time within which it is reasonably
expected that such matter should be resolved, the parties shall submit the
matter to D&T and KPMG for their determination by mutual agreement, unless such
matter is, or is in the process of being, determined under Section 2.06. If
D&T and KPMG are unable to resolve such matter within thirty (30) days
thereafter, they shall submit such matter to Price Waterhouse, LLP (the "Final
Arbitrator") for resolution, whose determination shall be final and binding on
the parties. The costs of D&T and fifty percent (50%) of the costs of the
Final Arbitrator shall be borne by the Securityholders, and the costs of KPMG
and fifty percent (50%) of the costs of the Final Arbitrator shall be borne by
Purchaser.
(b) Subject to paragraph (c) below and the Indemnification Escrow
Agreement, at the Closing an additional 56,892 AHC Shares and 3,108 AHC Options
(representing 10% of the Purchase Price, subject to adjustment as provided in
Sections 2.05, 2.06, 7.06 and 12.07) shall be delivered to the Escrow Agent to
indemnify Purchaser for breaches of covenants, agreements, representations and
warranties under this Agreement as provided in the Indemnification Escrow
Agreement.
(c) The maximum percentages of the AHC Securities to be escrowed
under the Indemnification Escrow Agreement shall be 20%, subject only to
Sections 7.06 and 12.07 below. For purposes of any adjustments pursuant to
this Section 2.03, Section 2.05 or Section 2.06, the AHC Securities held in
escrow shall be deemed to have a value of $19.20 per share or share equivalent
(as the case may be); for the purpose of any indemnification claims under the
Indemnification Escrow Agreement, AHC Securities held in escrow shall be deemed
to have the value as determined under the Indemnification Escrow Agreement.
SECTION 2.04. PRE-CLOSING ESCROW. Concurrent with the execution and
delivery of this Agreement by the parties hereto, the parties to the Escrow
Agreement shall have executed and delivered the same; and the Securityholders
shall have deposited with the escrow agent under the Escrow Agreement the items
described therein, including General Releases, in the form attached hereto as
Exhibit E, as executed by each Securityholder, and to be dated as of the
Closing Date.
SECTION 2.05. ENVIRONMENTAL STUDY COST ADJUSTMENT. In connection
with the transactions contemplated by this Agreement, the Purchaser has
retained Environmental Management & Engineers, Inc. ("EME") to prepare
environmental investigations with respect to the property owned and leased by
the Corporation (the "Initial Investigations") and has ordered or shall order
certain further environmental studies (the "Additional Investigations") if
recommended by EME and agreed to by the Corporation's environmental consultant,
▇▇▇▇▇▇▇▇ Engineering, Inc. ("▇▇▇▇▇▇▇▇"). The Purchase Price shall be reduced
by the amount equal to the costs for such Investigations and Additional
Investigations to the extent that such Investigations and Additional
Investigations go beyond the type of investigations that would typically be
considered Phase I investigations (with EME and ▇▇▇▇▇▇▇▇ determining what
portion of the Investigations and Additional Investigations exceed Phase I
investigations).
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SECTION 2.06. FURTHER ENVIRONMENTAL ADJUSTMENT. The Purchaser agrees
that it will allocate under Schedule 2.03(a) an amount equal to the cost or
estimated cost to remediate the environmental matters affecting the Corporation
(including all matters described in the documents listed on Schedule 3.30) (the
"Remediation Estimate") up to $500,000; provided, that if the Remediation
Estimate (which shall be determined prior to Closing) exceeds $500,000, the
Purchase Price shall be automatically reduced by the following amount: the
Remediation Estimate minus $500,000 (provided that the Purchase Price shall not
be reduced by more than $500,000 under this paragraph, except as may be agreed
to in the future as contemplated by Section 7.06). In the event that EME and
▇▇▇▇▇▇▇▇ do not agree on the Remediation Estimate, the final determination of
the Remediation Estimate shall be made by an environmental remediation firm
selected by EME and ▇▇▇▇▇▇▇▇ The parties acknowledge that EME and ▇▇▇▇▇▇▇▇
will be requested to assign to the Remediation Estimate a single dollar value
and not a dollar range.
SECTION 2.07. SHAREHOLDER AGREEMENT TERMINATION. Each of the
Securityholders and the Corporation hereby agree that upon the Closing, that
certain Shareholders Agreement, by and among the Corporation and each of the
capital stockholders of the Corporation effective as of October 19, 1994, shall
automatically terminate without the need for any further action and with such
termination effective immediately prior to the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants that the following are true
and correct as of the date hereof and will be true and correct through the
Closing Date as if made on that date:
SECTION 3.01. ORGANIZATION AND GOOD STANDING; QUALIFICATION. The
Corporation and each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation,
with all requisite corporate power and authority to carry on the business in
which it is engaged, to own the properties it owns, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
Corporation and each Subsidiary is duly qualified and licensed to do business
and is in good standing in all jurisdictions where the nature of its business
makes such qualification necessary, which jurisdictions are listed in Schedule
3.01, except where the failure to be qualified or licensed would not have a
material adverse effect on the business of the Corporation and the
Subsidiaries, taken as a whole. Neither the Corporation nor any Subsidiary has
any assets, employees or offices in any state other than the states listed in
Schedule 3.01.
SECTION 3.02. CAPITALIZATION. The authorized and issued capital
stock of the Corporation and the ownership interests of the Securityholders is
set forth on Schedule 3.02. No shares of the capital stock of the Corporation
are held in the treasury of the Corporation. All of issued and outstanding
shares of capital stock of the Corporation are duly authorized, validly issued,
fully
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paid and nonassessable. Except as set forth on Schedule 3.02, there exist no
options, warrants, subscriptions or other rights to purchase, or securities
convertible into or exchangeable for, the capital stock of the Corporation.
Except as set forth on Schedule 3.02, neither Securityholders nor the
Corporation are parties to or bound by, nor do they have any knowledge of, any
agreement (except this Agreement and the other agreements executed in
connection herewith), instrument, arrangement, contract, obligation, commitment
or understanding of any character, whether written or oral, express or implied,
relating to the sale, assignment, encumbrance, conveyance, transfer or delivery
of any capital stock of the Corporation. No shares of capital stock of the
Corporation have been issued or disposed of in violation of the preemptive
rights of any of the Corporation's shareholders. All accrued dividends on the
capital stock of the Corporation, whether or not declared, have been paid in
full.
SECTION 3.03. CORPORATE RECORDS. The copies of the Certificate of
Incorporation and the Bylaws of the Corporation and each Subsidiary that have
been delivered to Purchaser are true, correct and complete copies thereof, as
in effect on the date hereof. The minute books of the Corporation and each
Subsidiary, copies of which have been delivered to Purchaser, contain accurate
minutes of all meetings of, and accurate consents to all actions taken without
meetings by, the Board of Directors (and any committees thereof) and the
stockholders of the Corporation and its Subsidiaries since their formation.
SECTION 3.04. AUTHORIZATION AND VALIDITY. The execution, delivery
and performance by the Corporation of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by the Corporation. This
Agreement and each other agreement contemplated hereby to which it is a party
have been or will be as of the Closing Date duly executed and delivered by the
Corporation and constitute or will constitute legal, valid and binding
obligations of the Corporation, enforceable against the Corporation in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The sale of the Securities by the
Securityholders to Purchaser will not impair the ability or authority of the
Corporation or any Subsidiary to carry on their respective businesses as now
conducted in any respect.
SECTION 3.05. WHOLLY-OWNED SUBSIDIARIES AND PARTIALLY-OWNED ENTITIES.
(a) Except as set forth on Schedule 3.05 under the heading
"Subsidiaries," the Corporation does not have any wholly-owned subsidiaries
(each entity listed on Schedule 3.05 under the heading "Subsidiaries" shall be
deemed to be a "Subsidiary" and collectively, the "Subsidiaries"). Except as
set forth on Schedule 3.05 under the heading "Partially-Owned Entities" and
except for the Subsidiaries, the Corporation does not own, directly or
indirectly, any of the capital stock of any other corporation or any equity,
profit sharing, participation or other interest in any corporation,
partnership, joint venture or other entity (each entity listed on Schedule 3.05
under the heading "Partially-Owned Entities" shall be deemed a "Partially-Owned
Entity" and collectively the "Partially Owned Entities").
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(b) No securities of the Subsidiaries are held in the treasury of
the respective Subsidiaries. The securities of each Subsidiary were duly
authorized, validly issued, fully paid and nonassessable. Except as set forth
on Schedule 3.05, there exist no options, warrants, subscriptions or other
rights to purchase, or securities convertible into or exchangeable for, the
securities of any Subsidiary. None of the securities of the Subsidiaries were
issued in violation of the preemptive rights of any of the Subsidiaries'
securityholders. All accrued dividends on the securities of the Subsidiaries,
whether or not declared, have been paid in full. Except as set forth on
Schedule 3.05, neither the Securityholders nor the Corporation are parties to
or bound by, nor do they have any knowledge of, any agreement, instrument,
arrangement, contract, obligation, commitment or understanding of any
character, whether written or oral, expressed or implied, relating to the sale,
assignment, encumbrance, conveyance, transfer or delivery of any securities of
any of the Subsidiaries. Except as set forth on Schedule 3.05, the Corporation
has good, valid and marketable title to the securities of the Subsidiaries free
and clear of all liens, claims or encumbrances of any kind except for liens for
taxes not yet due and payable.
(c) To the knowledge of the Corporation and the Securityholders,
(i) no securities of the Partially-Owned Entities are held in the treasury of
the respective Partially-Owned Entities; (ii) the securities of each Partially-
Owned Entity were duly authorized, validly issued, fully paid and
nonassessable; (iii) except as set forth on Schedule 3.05, there exist no
options, warrants, subscriptions or other rights to purchase, or securities
convertible into or exchangeable for, the securities of any Partially-Owned
Entity; (iv) none of the securities of the Partially-Owned Entities were issued
in violation of the preemptive rights of any of the Partially-Owned Entities'
securityholders; and (v) all accrued dividends on the securities of the
Partially-Owned Entities, whether or not declared, have been paid in full.
Except as set forth on Schedule 3.05, neither the Securityholders nor the
Corporation are parties to or bound by, nor do they have any knowledge of, any
agreement, instrument, arrangement, contract, obligation, commitment or
understanding of any character, whether written or oral, expressed or implied,
relating to the sale, assignment, encumbrance, conveyance, transfer or delivery
of any securities of any of the Partially-Owned Entities. Except as set forth
on Schedule 3.05, the Corporation has good, valid and marketable title to the
securities of the Partially-Owned Entities free and clear of all liens, claims
or encumbrances of any kind except for liens for taxes not yet due and payable.
SECTION 3.06. NO VIOLATION. Neither the execution, delivery or
performance of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (a)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, the Certificate of Incorporation
or Bylaws of the Corporation or any Subsidiary or any agreement, indenture or
other instrument under which the Corporation or any Subsidiary is bound or to
which the Securities or any of the assets of the Corporation or any Subsidiary
are subject, or result in the creation or imposition of any security interest,
lien, charge or encumbrance upon the Securities or any of the assets of the
Corporation or any Subsidiary, or (b) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Corporation or any Subsidiary, the Securities or the assets of the Corporation
or any Subsidiary. The Corporation and each Subsidiary has complied with all
laws, regulations
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and licensing requirements and has filed with the proper authorities all
necessary statements and reports.
SECTION 3.07. CONSENTS. Except as set forth in Schedule 3.07, no
consent, authorization, approval, permit or license of, or filing with, any
governmental or public body or authority, any lender or lessor or any other
person or entity is required to authorize, or is required in connection with,
the execution, delivery and performance of this Agreement or the agreements
contemplated hereby on the part of the Corporation.
SECTION 3.08. FINANCIAL STATEMENTS. The Corporation has furnished to
Purchaser the audited consolidated balance sheet and related audited statements
of income, retained earnings and cash flows for each of the twelve-months ended
December 31 for the 1994 and 1995 fiscal years and the draft audited
consolidated balance sheet and related draft audited statements of income,
retained earnings and cash flows (attached hereto as Exhibit H) for the
twelve-months ended September 30, 1996, including in each case the notes
thereto, as well as unaudited consolidated balance sheets for and related
unaudited consolidated statements of income, retained earnings and cash flows
for the months of October and November, 1996 (collectively, the "Financial
Statements"). The Financial Statements are true, correct and complete, are in
accordance with the books and records of the Corporation and the Subsidiaries,
fairly present the consolidated financial condition and results of operations
of the Corporation and the Subsidiaries as of the dates and for the periods
indicated and have been prepared in conformity with GAAP applied on a
consistent basis with prior periods (except that unaudited statements may not
contain notes and are subject to normal non-material year-end audit adjustments
and accruals).
SECTION 3.09. LIABILITIES AND OBLIGATIONS. Except as set forth in
Schedule 3.09, the Financial Statements reflect all liabilities of the
Corporation and the Subsidiaries accrued, contingent or otherwise (known or
unknown and asserted or unasserted), arising out of transactions effected or
events occurring on or prior to the date thereof. All reserves shown in the
Financial Statements are appropriate, reasonable and sufficient to provide for
losses thereby contemplated. Except as set forth in the Financial Statements
or on Schedule 3.09 hereto, neither the Corporation nor any Subsidiary is
liable upon or with respect to, or obligated in any other way to provide funds
in respect of or to guarantee or assume in any manner, any debt, obligation or
dividend of any other person, corporation, association, partnership, joint
venture, trust or other entity.
SECTION 3.10. EMPLOYEE MATTERS.
(a) CASH COMPENSATION. Schedule 3.10(a) contains a complete and
accurate list of the names, titles and cash compensation, including without
limitation wages, salaries, bonuses (discretionary and formula) and other cash
compensation (the "Cash Compensation") of all executive management of the
Corporation and each Subsidiary, regardless of compensation levels, and all
salaried employees of the Corporation and each Subsidiary. In addition,
Schedule 3.10(a) contains a complete and accurate description of (i) all
increases in Cash Compensation of such employees during the current and
immediately preceding fiscal years of the Corporation and each Subsidiary
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and (ii) any promised increases in Cash Compensation of such employees that
have not yet been effected.
(b) COMPENSATION PLANS. Schedule 3.10(b) contains a complete and
accurate list of all compensation plans, arrangements or practices (the
"Compensation Plans") sponsored by the Corporation and each Subsidiary or to
which the Corporation or any Subsidiary contributes on behalf of its employees,
other than Employee Benefit Plans listed in Schedule 3.11(a). The Compensation
Plans include without limitation plans, arrangements or practices that provide
for severance pay, deferred compensation, incentive, bonus or performance
awards, and stock ownership or stock options. Attached hereto as part of
Schedule 3.10(b) is a list of each written Compensation Plan, each of which has
been provided to Purchaser, and a written description of each unwritten
Compensation Plan. Each of the Compensation Plans can be terminated or amended
at will by the Corporation or the Subsidiaries (as the case may be).
(c) EMPLOYMENT AGREEMENTS. Schedule 3.10(c) contains a complete
and accurate list of all employment agreements (the "Employment Agreements") to
which the Corporation or any Subsidiary is a party with respect to its
employees. The Employment Agreements include without limitation employee
leasing agreements, employee services agreements and noncompetition agreements.
The Corporation has provided Purchaser a copy of each written Employment
Agreement and a written description of each unwritten Employment Agreement.
(d) EMPLOYEE POLICIES AND PROCEDURES. Schedule 3.10(d) contains a
complete and accurate list of all employee manuals, policies, procedures and
work-related rules (the "Employee Policies and Procedures") that apply to
employees of the Corporation or the Subsidiaries. The Corporation has provided
Purchaser a copy of all written Employee Policies and Procedures and a written
description of all unwritten Employee Policies and Procedures. Each of the
Employee Policies and Procedures can be amended or terminated at will by the
Corporation or the Subsidiaries (as the case may be).
(e) UNWRITTEN AMENDMENTS. No unwritten amendments have been made,
whether by oral communication, pattern of conduct or otherwise, with respect to
any Compensation Plans, Employment Agreements or Employee Policies and
Procedures.
(f) LABOR COMPLIANCE. The Corporation and each Subsidiary (i)
has been and is in compliance with all laws, rules, regulations and ordinances
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and (ii) is not liable for any arrears of wages
or penalties for failure to comply with any of the foregoing. Neither the
Corporation nor any Subsidiary has engaged in any unfair labor practice or
discriminated on the basis of race, color, religion, sex, national origin, age
or handicap in its employment conditions or practices. There are no (i) unfair
labor practice charges or complaints or racial, color, religious, sex, national
origin, age or handicap discrimination charges or complaints pending or, to the
knowledge of the Corporation, threatened against the Corporation or any
Subsidiary before any federal, state or local court, board, department,
commission or agency nor does any basis therefor exist or (ii) existing or, to
the knowledge of the Corporation,
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threatened labor strikes, disputes, grievances, controversies or other labor
troubles affecting the Corporation or any Subsidiary nor does any basis
therefor exist.
(g) UNIONS; ALIENS. Neither the Corporation nor any Subsidiary
has ever been a party to any agreement with any union, labor organization or
collective bargaining unit. No employees of the Corporation or any Subsidiary
are represented by any union, labor organization or collective bargaining unit.
To the best knowledge of the Corporation, the employees of the Corporation and
the Subsidiaries have no intention to and have not threatened to organize or
join a union, labor organization or collective bargaining unit. All employees
of the Corporation and each Subsidiary are citizens of, or are authorized to be
employed in, the United States.
SECTION 3.11. EMPLOYEE BENEFIT PLANS.
(a) IDENTIFICATION. Schedule 3.11(a) contains a complete and
accurate list of all employee benefit plans (the "Employee Benefit Plans")
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) sponsored by the Corporation and any
Subsidiary or to which the Corporation or any Subsidiary contributes on behalf
of its employees and all Employee Benefit Plans previously sponsored or
contributed to on behalf of its employees within the three years preceding the
date hereof. The Corporation has provided Purchaser with copies of all plan
documents, determination letters, pending determination letter applications,
trust instruments, insurance contracts, administrative services contracts,
annual reports, actuarial valuations, summary plan descriptions, summaries of
material modifications, administrative forms and other documents that
constitute a part of or are incident to the administration of the Employee
Benefit Plans. In addition, the Corporation has provided Purchaser a written
description of all existing practices engaged in by the Corporation that
constitute Employee Benefit Plans. Each of the Employee Benefit Plans can be
terminated or amended at will by the Corporation or any Subsidiary (as the case
may be). No unwritten amendment exists with respect to any Employee Benefit
Plan. Neither the Corporation, any Subsidiary nor any member of a Controlled
Group is or ever has been obligated to contribute to a multiemployer plan
within the meaning of Section 3(37) of ERISA.
(b) ADMINISTRATION. Each Employee Benefit Plan has been
administered and maintained in compliance with all laws, rules and regulations.
No Employee Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state or
federal agency. No prohibited transactions (within the meaning of Section 4975
of the Code) have occurred with respect to any Employee Benefit Plan. No
threatened or pending claims, suits or other proceedings exist with respect to
any Employee Benefit Plan other than normal benefit claims filed by
participants or beneficiaries.
(c) QUALIFICATION. The Corporation has received a favorable
determination letter or ruling from the Internal Revenue Service for each
Employee Benefit Plan intended to be qualified within the meaning of Section
401(a) of the Code and/or tax-exempt within the meaning of Section 501(a) of
the Code. No proceedings exist or have been threatened that could result in
the revocation of any such favorable determination letter or ruling.
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(d) FUNDING STATUS. No accumulated funding deficiency (within the
meaning of Section 412 of the Code), whether waived or unwaived, exists with
respect to any Employee Benefit Plan or any plan sponsored by any member of a
controlled group (within the meaning of Section 412(n)(6)(B) of the Code) in
which the Corporation is a member (a "Controlled Group"). With respect to each
Employee Benefit Plan subject to Title IV of ERISA, the assets of each such
plan are at least equal in value to the present value of accrued benefits
determined on an ongoing basis as of the date hereof. With respect to each
Employee Benefit Plan described in Section 501(c)(9) of the Code, the assets of
each such plan are at least equal in value to the present value of accrued
benefits as of the date hereof. To the Corporation's knowledge, none of the
Employee Benefit Plans are subject to actuarial assumptions.
(e) EXCISE TAXES; PBGC. Neither the Corporation, any Subsidiary
or any member of a Controlled Group has any liability to pay excise taxes with
respect to any Employee Benefit Plan under applicable provisions of the Code or
ERISA. No facts or circumstances exist that would result in the imposition of
liability against Purchaser by the Pension Benefit Guaranty Corporation as a
result of any act or omission by the Corporation, any Subsidiary or any member
of a Controlled Group. No reportable event (within the meaning of Section 4043
of ERISA) for which the notice requirement has not been waived has occurred
with respect to any Employee Benefit Plan subject to the requirements of Title
IV of ERISA.
(f) MEDICAL AND DENTAL CARE CLAIMS; RETIREES. The Corporation has
provided to Purchaser summary claim information and reports prepared by Blue
Cross Blue Shield of Alabama ("Blue Cross"), the carrier of medical and dental
coverage offered by the Corporation and the Subsidiaries to employees, over
certain periods indicated therein. To the Corporation's knowledge, none of the
reports prepared by Blue Cross contains inaccurate information. Neither the
Corporation nor any Subsidiary has any obligation or commitment to provide
medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired from
employment with the Corporation or any Subsidiary.
SECTION 3.12. ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 3.12, since September 30, 1996, neither the Corporation nor any
Subsidiary has
(a) suffered any material adverse change, whether or not caused
by any deliberate act or omission of the Corporation, any Subsidiary or any
Securityholder, in its condition (financial or otherwise), operations, assets,
liabilities, business or prospects;
(b) contracted for the purchase of capital assets having a cost
in excess of $100,000 (individually or in the aggregate) or paid capital
expenditures in excess of $100,000 (individually or in the aggregate);
(c) incurred any indebtedness for borrowed money or issued or
sold any debt securities except in the ordinary course of business;
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(d) incurred or discharged any liabilities or obligations except
in the ordinary course of business;
(e) paid any amount on any indebtedness prior to the due date,
forgiven or cancelled any debts or claims or released or waived any rights or
claims except in the ordinary course of business;
(f) mortgaged, pledged or subjected to any security interest,
lien, lease or other charge or encumbrance any of its properties or assets
except in the ordinary course of business;
(g) suffered any damage or destruction to or loss of any assets
(whether or not covered by insurance) that has materially and adversely
affected, or could materially and adversely affect, its business;
(h) acquired or disposed of any assets except in the ordinary
course of business;
(i) written up or written down the carrying value of any of its
assets;
(j) changed the costing system or depreciation methods of
accounting for its assets;
(k) knowingly waived any material rights or forgiven any material
claims;
(l) lost or terminated any salaried employee, customer or
supplier, the loss or termination of which has materially and adversely
affected, or could materially and adversely affect, its business or assets;
(m) increased the compensation of any director or officer;
(n) increased the compensation of any employee except in the
ordinary course of business;
(o) made any payments to or loaned any money to any person or
entity referred to in Section 3.29;
(p) formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(q) redeemed, purchased or otherwise acquired, or sold, granted
or otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to change the terms and conditions of any such rights;
(r) entered into any agreement with any person or group, or
modified or amended in any material respect the terms of any such existing
agreement except in the ordinary course of business;
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(s) entered into, adopted or amended any Employee Benefit Plan; or
(t) entered into any other commitment or transaction or
experienced any other event that has materially and adversely affected, or that
could reasonably be expected to materially and adversely affect, the condition
(financial or otherwise), operations, assets, liabilities, business or
prospects of the Corporation.
SECTION 3.13. TITLE; LEASED ASSETS.
(a) REAL PROPERTY. A description of all interests in real
property owned by the Corporation or any Subsidiary (collectively, the "Real
Property") is set forth in Schedule 3.13(a). Except as set forth in Schedule
3.13(a), the Corporation or a Subsidiary (as the case may be) has good, valid
and marketable title to all the Real Property. The Real Property and the
leased real property referred to in Section 3.13(c) constitute the only real
property used in the conduct of the business of the Corporation and the
Subsidiaries.
(b) PERSONAL PROPERTY. Except as set forth in Schedule 3.13(b),
the Corporation or a Subsidiary has good, valid and marketable title to all
tangible and intangible personal property owned by it, except for liens for
taxes not yet due and payable (collectively, the "Personal Property"). The
Personal Property and the leased personal property referred to in Section
3.13(c) constitute the only personal property used in the conduct of the
business of the Corporation and the Subsidiaries.
(c) LEASES. A list and brief description of all leases of real
and personal property to which the Corporation or any Subsidiary is a party,
either as lessor or lessee, are set forth in Schedule 3.13(c). All such leases
are valid and enforceable in accordance with their respective terms except as
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
(d) RIGHT TO USE ASSETS. All tangible and intangible assets used
in the conduct of the businesses of the Corporation and the Subsidiaries are
reflected in the Financial Statements in a manner that is in conformity with
GAAP applied on a consistent basis with prior periods. The Corporation and the
Subsidiaries own, lease or otherwise possess a right to use all assets used in
the conduct of their businesses which will not be impaired by the consummation
of the transactions contemplated hereby.
SECTION 3.14. COMMITMENTS.
(a) COMMITMENTS; DEFAULTS. Except as set forth in Schedule 3.14,
neither the Corporation nor any Subsidiary has ever entered into, nor are the
Securities, the assets or the business of the Corporation or any Subsidiary
bound by, whether or not in writing, any
(i) partnership or joint venture agreement;
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(ii) deed of trust or other security agreement in
respect of any obligation in excess of $5,000;
(iii) guaranty or suretyship, indemnification or
contribution agreement or performance bond in respect of any
obligation in excess of $5,000;
(iv) employment, consulting or compensation agreement or
arrangement (other than those for normal employer/employee
relationships which are terminable at will), including the election or
retention in office of any director or officer;
(v) labor or collective bargaining agreement;
(vi) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be
lent to another;
(vii) deed or other document evidencing an interest in or
contract to purchase or sell real property;
(viii) agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or attorneys;
(ix) lease of real or personal property, whether as
lessor, lessee, sublessor or sublessee (excluding the leases disclosed
on Schedule 3.13(c)) providing for payments in excess of $10,000 in
any year;
(x) agreement between the Corporation or any Subsidiary
and any affiliate of the Corporation or any Subsidiary;
(xi) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is
an affiliate of the Corporation or any Subsidiary;
(xii) any agreement for the acquisition of services,
supplies, equipment or other personal property and involving more than
$10,000 in the aggregate;
(xiii) powers of attorney;
(xiv) contracts containing noncompetition covenants;
(xv) any other contract or arrangement that involves
either an unperformed commitment in excess of $10,000 or that
terminates more than 30 days after the date hereof;
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(xvi) agreement relating to any material matter or
transaction in which an interest is held by any person or entity
referred to in Section 3.29;
(xvii) agreement providing for the purchase from a supplier
of all or substantially all of the requirements of the Corporation or
any Subsidiary of a particular product or service; or
(xviii) any other agreement or commitment not made in the
ordinary course of business providing for payments in amounts or the
provisions of services having a value in excess of $5,000.
All of the foregoing (whether identified on Schedule 3.14 or not) are
hereinafter collectively referred to as the "Commitments." True, correct and
complete copies of the written Commitments, and true, correct and complete
written descriptions of the oral Commitments, have heretofore been delivered or
made available to Purchaser. There are no existing defaults, events of default
or events, occurrences, acts or omissions that, with the giving of notice or
lapse of time or both, would constitute defaults by the Corporation or any
Subsidiary, and no penalties have been incurred nor are amendments pending,
with respect to the Commitments, except as described in Schedule 3.14. The
Commitments are in full force and effect and are valid and enforceable
obligations of the Corporation, and to the knowledge of the Corporation and the
Securityholders they are valid and enforceable obligations of the other parties
thereto, in accordance with their respective terms, and no defenses, off-sets
or counterclaims have been asserted or, to the best knowledge of the
Corporation, may be made by any party thereto, nor has the Corporation or any
Subsidiary waived any rights thereunder, except as described in Schedule 3.14.
Neither the Corporation nor any Subsidiary has received notice of any default
with respect to any Commitment.
(b) NO CANCELLATION OR TERMINATION OF COMMITMENT. Except as
contemplated hereby, neither the Corporation nor any Subsidiary has received
notice of any plan or intention of any other party to any Commitment to
exercise any right to cancel or terminate any Commitment, and the Corporation
does not know of any fact that would justify the exercise of such a right.
Neither the Corporation nor any Subsidiary currently contemplates, or has
reason to believe any other person or entity currently contemplates, any
amendment or change to any Commitment. Except as listed in Schedule 3.14, none
of the customers or suppliers of the Corporation or any Subsidiary has refused,
or communicated that it will or intends to refuse, to purchase or supply goods
or services, as the case may be, or has communicated that it will or intends to
substantially reduce the amounts of goods or services that it is willing to
purchase from, or sell to, the Corporation or any Subsidiary.
SECTION 3.15. INSURANCE. The Corporation and each Subsidiary
carries property, liability, workers' compensation and such other types of
insurance as is customary in the industry of the insured. A list and brief
description of all insurance policies of the Corporation and each Subsidiary
are set forth in Schedule 3.15. All of such policies are valid and enforceable
policies, issued by insurers of recognized responsibility in amounts and
against such risks and losses as is
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customary in the industry of the insured. Such insurance shall be outstanding
and duly in force without interruption up to and including the Closing Date.
True, complete and correct copies of all such policies have been provided to
Purchaser on or prior to the date hereof.
SECTION 3.16. PROPRIETARY RIGHTS.
(a) OWNERSHIP. The Corporation and each Subsidiary own all
patents, trade-marks, service marks, copyrights, technology, know-how, trade
secrets, customer lists and other proprietary information (collectively, the
"Proprietary Rights"), if any, necessary to conduct their respective
businesses, or possess adequate licenses or other rights, if any, therefor,
without conflict with the rights of others. Set forth in Schedule 3.16 is a
true and correct description of the Proprietary Rights.
(b) CONFLICTING RIGHTS OF THIRD PARTIES. The Corporation or a
Subsidiary (as the case may be) has the sole and exclusive right to use the
Proprietary Rights without infringing or violating the rights of any third
parties. Use of the Proprietary Rights does not require the consent of any
other person and the Proprietary Rights are freely transferable. No claim has
been asserted against the Corporation or any Subsidiary by any person to the
ownership of or right to use any Proprietary Right or challenging or
questioning the validity or effectiveness of any license or agreement
constituting a part of any Proprietary Right, and neither the Corporation nor
any Securityholder knows of any valid basis for any such claim. Each of the
Proprietary Rights is valid and subsisting, has not been cancelled, abandoned
or otherwise terminated and, if applicable, has been duly issued or filed.
(c) CLAIMS OF OTHER PERSONS. Neither the Corporation nor any
Subsidiary has any knowledge of any claim that, or inquiry as to whether, any
product, activity or operation of the Corporation or any Subsidiary infringes
upon or involves, or has resulted in the infringement of, any proprietary right
of any other person, corporation or other entity; and no proceedings have been
instituted, are pending or, to the knowledge of the Corporation, are threatened
that challenge the rights of the Corporation or any Subsidiary with respect
thereto. Neither the Corporation nor any Subsidiary has given nor are they
bound by any agreement of indemnification for any Proprietary Right as to any
property manufactured, used or sold by it.
SECTION 3.17. TAXES.
(a) TAXES AND TAX RETURNS. The representations made in this
Section 3.17(a) are modified in their entirety by the disclosure contained in
Schedule 3.17. The Corporation and each Subsidiary has duly and timely filed
with the appropriate governmental agencies all income, excise, corporate,
franchise, property, sales, use, payroll, withholding and other tax returns
(including information returns) and reports required to be filed with the
United States or any state or any political subdivision thereof or any foreign
jurisdiction. All such tax returns or reports are complete and accurate and
properly reflect the taxes of the Corporation and the Subsidiaries for the
periods covered thereby. The Corporation and each Subsidiary has paid or
accrued all taxes, penalties and interest which have become due with respect to
any returns that it has filed and any
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assessments of which it is aware. Neither the Corporation nor any Subsidiary
is delinquent in the payment of any tax, assessment or governmental charge. No
tax deficiency or delinquency has been asserted against the Corporation or any
Subsidiary. There is no unpaid assessment, proposal for additional taxes,
deficiency or delinquency in the payment of any of the taxes of the Corporation
that could be asserted by any taxing authority. There is no taxing authority
audit of the Corporation or any Subsidiary pending, or to the knowledge of the
Corporation or any Subsidiary threatened, and the results of any completed
audits are properly reflected in the Financial Statements. Neither the
Corporation or any Subsidiary has violated any federal state, local or foreign
tax law. Neither the Corporation nor any Subsidiary has granted an extension
to any taxing authority of the limitation period during which any tax liability
may be assessed or collected. All monies required to be withheld by the
Corporation or the Subsidiaries and paid to governmental agencies for all
income, social security, unemployment insurance, sales excise, use and other
taxes have been (i) collected or withheld and either paid to the respective
governmental agencies or set aside in accounts for such purpose or (ii)
properly reflected in the Financial Statements. The liabilities (including
deferred taxes) shown in the Financial Statements as of September 30, 1996, and
to be accrued on the books and records of the Corporation and the Subsidiaries
through the Closing Date for taxes, interest and penalties are and will be
adequate accruals and have been and will be accrued in a manner consistent with
the practices utilized for accruing tax liabilities in the tax year ended
December 31, 1995 and take into account net operating losses, investment
credits and other carryovers for periods ended prior to the Closing Date.
(b) TAX RELATED MATTERS. None of the assets of the Corporation or
any Subsidiary constitute property that Purchaser, or any affiliate of
Purchaser, will be required to treat as being owned by another person pursuant
to the "Safe Harbor Lease" provisions of Section 168(f)(8) of the Code prior to
repeal by the Tax Equity and Fiscal Responsibility Act of 1982. None of the
assets of the Corporation or any Subsidiary are or will be subject to a lease
to a "tax exempt entity" as such term is defined in Section 168(h)(2) of the
Code. Neither the Corporation nor any Subsidiary has at any time consented to
have the provisions of Section 341(f)(2) of the Code apply to it. Neither the
Corporation nor any Subsidiary has voluntarily or involuntarily changed a
method of accounting resulting in the Corporation's or such Subsidiary's
inclusion of amounts in income pursuant to adjustments under Section 481 of the
Code. The Corporation is not currently and has not been since its inception an
S corporation as such term is defined in Section 1361(a) of the Code.
SECTION 3.18. COMPLIANCE WITH LAWS. To the Corporation's knowledge,
the Corporation and each Subsidiary has complied with all laws, regulations and
licensing requirements and has filed with the proper authorities all necessary
statements and reports. To the Corporation's knowledge, there are no existing
violations by the Corporation or any Subsidiary of any federal, state or local
law or regulation that could reasonably be expected to adversely affect the
property or businesses of the Corporation or any Subsidiary. The Corporation
and each Subsidiary possess all necessary licenses, franchises, permits and
governmental authorizations to conduct their businesses as now conducted, all
of which are listed in Schedule 3.18.
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SECTION 3.19. FINDER'S FEE. Except as set forth on Schedule 3.19,
neither the Corporation nor any Subsidiary has incurred any obligation for any
finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
SECTION 3.20. LITIGATION. Except as described in Schedule 3.20,
there are no legal actions or administrative proceedings or investigations
instituted, or to the best knowledge of the Corporation threatened, against, or
that could reasonably be expected to adversely affect, the Corporation or any
Subsidiary, any of the Securities, or the businesses of the Corporation and the
Subsidiaries. Neither the Corporation nor any Subsidiary is (a) subject to any
continuing court or administrative order, writ, injunction or decree applicable
specifically to the Corporation or any Subsidiary or to their respective
businesses, assets, operations or employees or (b) in default with respect to
any such order, writ, injunction or decree.
SECTION 3.21. ACCURACY OF INFORMATION FURNISHED. All information
furnished in writing to Purchaser by the Corporation, any Subsidiary or any
Securityholder hereby or in connection with the transactions contemplated
hereby, when taken as a whole, do not contain any untrue statement of a
material fact or, to the knowledge of the Corporation, omit any material fact
necessary in order to make the statements, in light of the circumstances under
which they were made, not misleading.
SECTION 3.22. INVENTORY. The inventory included on the September
Balance Sheet is valued in accordance with GAAP, with appropriate reserves.
The Corporation and each Subsidiary has presently, and at the Closing Date will
have, the types and quantities of inventories appropriate, taken as a whole, to
conduct its business consistently with past practices.
SECTION 3.23. BOOKS OF ACCOUNT. The books of account of the
Corporation and each Subsidiary have been kept accurately in the ordinary
course of business, the transactions entered therein represent bona fide
transactions and the revenues, expenses, assets and liabilities of the
Corporation and the Subsidiaries have been properly recorded in such books.
SECTION 3.24. BACKLOG. Schedule 3.24 sets forth the backlog of the
business of the Corporation and each Subsidiary as of November 30, 1996 and has
been accurately derived from the internal records of backlog of unfilled firm
orders for products manufactured or sold by the Corporation and the
Subsidiaries as of such date.
SECTION 3.25. DISTRIBUTIONS AND REPURCHASES. Since September 30,
1996, no distribution, payment or dividend of any kind has been declared or
paid by the Corporation on any of its capital stock. Since September 30, 1996,
no repurchase of any of the capital stock of the Corporation has been approved
or effected by the Corporation.
SECTION 3.26. CUSTOMERS AND SUPPLIERS. Set forth in Schedule 3.26
is (a) a complete and accurate list of the five largest customers of the
Corporation and each Subsidiary in terms of sales for each of the last two
fiscal years and the current fiscal year through January 31, 1997, showing,
with respect to each, the name, address and aggregate volume of sales to each
customer; and (b)
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a complete and accurate list of the five largest suppliers of the Corporation
and each Subsidiary in terms of dollar volume of transactions for each of the
last two fiscal years and the current fiscal year through January 31, 1997,
showing, with respect to each, the name, address and aggregate dollar volume of
purchases from such supplier. The Corporation has provided to Purchaser its
standard pricing information contained in the Corporation and each Subsidiary's
cost books, as maintained in the ordinary course of business.
SECTION 3.27. PRODUCT WARRANTIES. Schedule 3.27-I, which
incorporates a separate annex to this Agreement, contains a copy of all
warranty work orders of the Corporation or any Subsidiary as of February 21,
1997. Except as set forth in Schedule 3.27-I or Schedule 3.20, as of February
21, 1997, there is no claim asserted, or to the knowledge of the Corporation
threatened, against the Corporation or any Subsidiary on account of product
warranties or with respect to the manufacture, sale or rental of defective
products. Schedule 3.27-II outlines the warranty reserve of the Corporation and
the Subsidiaries for each manufacturing facility, and the methodology used to
establish such reserve. The warranty reserve is in accordance with GAAP. The
parties have reviewed and agreed upon the methodology and actual warranty
experience used by the Corporation in establishing its warranty reserve on the
Financial Statements. So long as the Corporation's actual warranty claims
asserted or, to the knowledge of any employee of the Corporation or any
employee of any Subsidiary, threatened against the Corporation or any
Subsidiary as of February 21, 1997, in quantity and severity, are not
materially in excess of the claims set forth in Schedule 3.27-I, there shall be
no claims for Damages by Purchaser under Section 10.01 by reason of actual
warranty claims exceeding or not reaching the amount reserved on the Financial
Statements. There is no liability of, or claim asserted against, the
Corporation resulting from the existence of a "substantial class of homes
defect" that may require remediation (including, without limitation,
remediation under Subpart I of the National Manufactured Housing Code of the
Department of Housing and Urban Development).
SECTION 3.28. BANKING RELATIONS. Set forth in Schedule 3.28 is a
complete and accurate list of all arrangements that the Corporation or any
Subsidiary has with any bank or other financial institution, indicating with
respect to each relationship the type of arrangement maintained (such as
checking account, borrowing arrangements, safe deposit box, etc.) and the
person or persons authorized in respect thereof.
SECTION 3.29. OWNERSHIP INTERESTS OF INTERESTED PERSONS. To the
knowledge of the Corporation, no officer, supervisory employee, director or
stockholder of the Corporation or any Subsidiary, or their respective spouses
or children, owns directly or indirectly, on an individual or joint basis, any
material interest in, or serves as an officer or director of, any customer or
supplier of the Corporation or any Subsidiary, or any organization that has a
material contract or arrangement with the Corporation or any Subsidiary.
SECTION 3.30. ENVIRONMENTAL MATTERS. Except as set forth in
Schedule 3.30, neither the Corporation nor any Subsidiary is currently in
violation of, or subject to any existing, pending or threatened investigation
or inquiry by any governmental authority or any remedial obligations under, any
laws or regulations pertaining to health or the environment (hereinafter
sometimes
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collectively called "Environmental Laws"), and this representation and warranty
would continue to be true and correct following disclosure to the applicable
governmental authorities of all relevant facts, conditions and circumstances,
if any, pertaining to the assets and operations of the Corporation and each
Subsidiary. To the best knowledge of the Corporation, the assets of the
Corporation and the Subsidiaries have never been used in a manner that would be
in violation of any of the Environmental Laws. Except as set forth in Schedule
3.30, neither the Corporation nor any Subsidiary has obtained and is not
required to obtain, and neither the Corporation nor any Subsidiary has
knowledge of any reason Purchaser will be required to obtain, any permits,
licenses or similar authorizations to construct, occupy, operate or use any
buildings, improvements, fixtures and equipment owned or leased by the
Corporation or any Subsidiary by reason of any Environmental Laws. To the best
knowledge of the Corporation and each Subsidiary, none of the assets owned or
leased by the Corporation or any Subsidiary are on any federal or state
"Superfund" list or subject to any environmentally related liens.
SECTION 3.31. CERTAIN PAYMENTS. Neither the Corporation nor any
Subsidiary nor any director, officer or employee of the Corporation or any
Subsidiary has paid or caused to be paid, directly or indirectly, in connection
with the business of the Corporation or any Subsidiary: (a) to any government
or agency thereof or any agent of any supplier or customer any bribe, kick-back
or other similar payment; or (b) any contribution to any political party or
candidate (other than from personal funds of directors, officers or employees
not reimbursed by their respective employers or as otherwise permitted by
applicable law).
SECTION 3.32. GOVERNMENT INQUIRIES. Since January 1, 1996, there
have been no inspection reports, questionnaires, inquiries, demands or requests
for information received by the Corporation or any Subsidiary from, or any
material statement, report or other document filed by the Corporation or any
Subsidiary with, the federal government or any federal administrative agency
(including but not limited to, the Commission, Justice Department, Internal
Revenue Service, Department of Labor, Occupational Safety and Health
Administration, Federal Trade Commission, National Labor Relations Board, and
Interstate Commerce Commission), any state securities administrator or any
local or state taxing authority, with respect to an alleged violation of,
non-compliance with, any law, rule or regulation, including without limitation,
under Subpart I of the National Manufacturing Housing Code of the Department of
Housing and Urban Development.
SECTION 3.33. DEALER INCENTIVES. The September Balance Sheet
includes all accruals that will be paid as dealer incentives based on projected
annualized volumes of such dealer; but no warranty is made regarding the
accuracy of any such projected annualized volumes.
SECTION 3.34. OSHA. Other than as disclosed on Schedule 3.34, no
claim has been asserted against the Corporation claiming noncompliance by the
Corporation with any prior or current regulations promulgated by the
Occupational Safety and Health Administration ("OSHA").
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SECTION 3.35. D&T POOLING LETTER. On the Closing Date, D&T has
delivered to Purchaser an opinion letter confirming that as of such date the
Corporation is a poolable entity substantially in the form of the pooling
letter D&T delivered to Purchaser on the date hereof.
SECTION 3.36. D&T SEPTEMBER AUDIT DELIVERY. Prior to the Closing
Date, D&T has delivered to Purchaser the Corporation's audited consolidated
balance sheet and related audited statements of income, retained earnings and
cash flows for the twelve-months ended September 30, 1996, including the notes
thereto.
ARTICLE III-A
REPRESENTATIONS AND WARRANTIES OF THE SECURITYHOLDERS
Each Securityholder, as to itself, represents and warrants that the
following are true and correct as of the date hereof and will be true and
correct through the Closing Date as if made on that date:
SECTION 3.01-A. OWNERSHIP OF THE STOCK. Such Securityholder owns,
beneficially and of record, good and marketable title to the Stock set forth
opposite such Securityholders name on Schedule 3.02 attached hereto, free and
clear of all security interests, liens, adverse claims, encumbrances, equities,
proxies, options or shareholders' agreements, except as set forth on Schedule
3.01-A. At the Closing, such Securityholder will convey to Purchaser good and
marketable title to such Securityholder's Securities, free and clear of any
security interests, liens, adverse claims, encumbrances, equities, proxies,
options, shareholders' agreements or restrictions, except as set forth on
Schedule 3.01-A.
SECTION 3.02-A. AUTHORIZATION AND VALIDITY. The execution, delivery
and performance by such Securityholder of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by such
Securityholder. This Agreement and each other agreement contemplated hereby to
which such Securityholder is a party have been duly executed and delivered by
the Securityholder and constitute legal, valid and binding obligations of such
Securityholder, enforceable against such Securityholder in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
SECTION 3.03-A. NO VIOLATION. Neither the execution, delivery or
performance of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (a)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, any organizational or governance
document of such Securityholder or any agreement, indenture or other instrument
under which such Securityholder is bound or to which any Securities held by
such Securityholder are subject, or result in the creation or imposition of any
security interest, lien, charge or encumbrance upon
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the Securities held by such Securityholder, or (b) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over such
Securityholder or the Securities held by such Securityholder.
SECTION 3.04-A. CONSENTS. Except as set forth in Schedule 3.04-A, no
consent, authorization, approval, permit or license of, or filing with, any
governmental or public body or authority, any lender or lessor or any other
person or entity is required to authorize, or is required in connection with,
the execution, delivery and performance of this Agreement or the agreements
contemplated hereby on the part of such Securityholder.
SECTION 3.05-A. TAX RELATED MATTERS. Such Securityholder is not a
foreign person, as such term is referred to in Section 1445(b)(2) of the Code.
Such Securityholder will not permit the Corporation to elect to have the
provisions of Section 341(f)(2) of the Code apply to it.
SECTION 3.06-A. FINDER'S FEE. Such Securityholder has not incurred
any obligation for any finder's, broker's or agent's fee in connection with the
transactions contemplated hereby.
SECTION 3.07-A. STATUS OF SECURITYHOLDER. Such Securityholder is
knowledgeable in making investments and is able to bear the economic risk of
loss of its investment in Purchaser. Except as provided in Schedule 3.07-A
attached hereto, such Securityholder is an "accredited investor", as that term
is defined in Rule 501(a) of Regulation D under the Securities Act. Such
Securityholder is acting on its own behalf in connection with the investigation
and examination of Purchaser and its decision to execute this Agreement and all
related documents, instruments and agreements. Such Securityholder is
purchasing the AHC Shares for its own account, and not with a view of
distribution. Such Securityholder acknowledges that the AHC Shares are
unregistered and may not be sold or transferred in the absence of registration
under the Securities Act and applicable state securities laws, unless an
exemption exists therefor.
Such Securityholder acknowledges Purchaser has made all documents
pertaining to the transactions contemplated herein and in the Exhibits and
Schedules attached hereto available to such Securityholder and/or such
Securityholder's representative and has allowed such Securityholder and/or its
representative an opportunity to ask questions and receive answers thereto and
to verify and clarify any information contained in such documents. Such
Securityholder has relied upon advice of its representative and/or independent
investigation made by such Securityholder and/or such Securityholder's
representative, and acknowledges that no representations or agreements other
than those set forth in this Agreement and the other agreements included in the
Exhibits attached hereto have been made to such Securityholder in respect
thereto. For any Securityholder who is not an accredited investor, such
Securityholder, by reason of its business or financial experience and/or that
of its representative who is unaffiliated with Purchaser and who is not
compensated by Purchaser or any affiliate of Purchaser, such Securityholder has
the capacity to protect such Securityholder's own interest in connection with
the transactions contemplated by this Agreement and the issuance of the
consideration to such Securityholder with respect to the transactions
contemplated herein. Such Securityholder expressly acknowledges and confirms
that such Securityholder has evaluated and understands the risks and terms of
investing in the securities of Purchaser to be issued to such Securityholder
pursuant to
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this Agreement, and/or such Securityholder and its representative have, such
knowledge and experience in financial and business matters in general and in
particular with respect to this type of investment that such Securityholder is,
or they are, capable of evaluating the merits and risks of an investment in the
AHC Shares to be issued to such Securityholder in connection with the
transactions contemplated herein.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants that the following are true and
correct as of the date hereof and will be true and correct through the Closing
Date as if made on that date:
SECTION 4.01. ORGANIZATION AND GOOD STANDING. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Texas, with all requisite corporate power and authority to
carry on the business in which it is engaged, to own the properties it owns, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
SECTION 4.02. AUTHORIZATION AND VALIDITY. The execution, delivery
and performance by Purchaser of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Purchaser. This Agreement and
each other agreement contemplated hereby have been or will be as of the Closing
Date duly executed and delivered by Purchaser and constitute or will constitute
legal, valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally or the availability of equitable remedies.
SECTION 4.03. NO VIOLATION. Neither the execution, delivery or
performance of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (a)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Amended and Restated Articles
of Incorporation or Amended and Restated Bylaws of Purchaser or any agreement,
indenture or other instrument under which Purchaser is bound or (b) violate or
conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body having
jurisdiction over Purchaser or the properties or assets of Purchaser.
SECTION 4.04. FINDER'S FEE. Except as set forth in Schedule 4.04,
Purchaser has not incurred any obligation for any finder's, broker's or agent's
fee in connection with the transactions contemplated hereby.
SECTION 4.05. AUTHORIZATION FOR AHC SHARES. The authorized and
issued capital stock of the Purchaser is set forth on Schedule 4.05. No shares
of the stock of Purchaser are held in the
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treasury of the Purchaser. Except as set forth on Schedule 4.05, there exists
no options, warrants, subscriptions or other rights to purchase, or securities
convertible into or changeable for, the stock of the Purchaser. Except as set
forth on Schedule 4.05, there exists no rights in favor of any third party to
require the Purchaser to register securities owned by or to be issued to such
third party. No shares of capital stock of the Purchaser have been issued or
disposed of in violation of the preemptive rights of any of the Purchaser's
shareholders. Purchaser has taken all action necessary to permit it to issue
the AHC Shares. The AHC Shares issued pursuant to this Agreement will, when
issued, be duly authorized, validly issued, fully paid and nonassessable, free
and clear of any liens, claims, charges or security interests (except as
created herein or in the Indemnification Escrow Agreement) and no shareholder
of Purchaser will have any preemptive right of subscription or purchase in
respect thereof.
SECTION 4.06. SEC REPORTS. Since May 31, 1995, Purchaser has filed
all forms, documents and reports with the Securities and Exchange Commission
(the "SEC") required to be filed by it pursuant to federal securities laws and
the SEC rules and regulations thereunder (the "SEC Reports"), all of which
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934, as amended. The SEC Reports do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein to make the statements contained therein not misleading.
SECTION 4.07. FINANCIAL STATEMENTS. The consolidated balance sheets
and the related statements of income, shareholders' equity and cash flow
(including the related notes thereto) of Purchaser and its consolidated
subsidiaries included in the SEC Reports complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP applied on a basis consistent with prior periods (except as otherwise
noted therein) and present fairly the consolidated financial position of
Purchaser and its consolidated subsidiaries as of their respective dates, and
the results of their operations and their cash flow for the periods presented
therein.
SECTION 4.08. STATUS OF PURCHASER. Purchaser is knowledgeable and
experienced in making venture capital investments, is able to bear the economic
risk of loss of its investment in the Corporation. Purchaser is an "accredited
investor," as that term is defined in Rule 501(a) of Regulation D under the
Securities Act. Purchaser is acting on its own behalf in connection with the
investigation and examination of the Corporation and its decision to execute
these documents. Purchaser is purchasing the Securities for its own account,
and not with a view of distribution. Purchaser acknowledges that the
Securities are unregistered and may not be sold or transferred in the absence
of registration under the Securities Act and applicable state securities laws,
unless an exemption exists therefor.
SECTION 4.09. ACCURACY OF INFORMATION FURNISHED. All information
furnished to the Corporation or any Securityholder by the Purchaser hereby or
in connection with the transactions contemplated hereby, when taken as a whole,
do not contain any untrue statement of a material fact or, to the knowledge of
the Purchaser, omit any material
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fact necessary in order to make the statements, in light of the circumstances
under which they were made, not misleading.
ARTICLE V.
THE CORPORATION'S AND SECURITYHOLDERS' COVENANTS
The Corporation and Securityholders agree that between the date
hereof and the Closing:
SECTION 5.01. CONSUMMATION OF AGREEMENT. The Corporation and
Securityholders shall use their reasonable best efforts to cause the
consummation of the transactions contemplated hereby in accordance with their
terms and conditions.
SECTION 5.02. BUSINESS OPERATIONS. The Corporation and each
Subsidiary shall operate its business in the ordinary course and will not
introduce any new, material method of management or operation other than as
contemplated hereby. The Corporation, the Subsidiaries and the Securityholders
shall use their reasonable best efforts to preserve the business of the
Corporation and the Subsidiaries intact, to retain the present customers and
suppliers so that they will be available to Purchaser after the Closing.
Neither the Corporation, the Subsidiaries nor the Securityholders shall take
any action that could reasonably be expected to adversely affect the condition
(financial or otherwise), operations, assets, liabilities, business or
prospects of the Corporation or any Subsidiary without the prior written
consent of Purchaser or take or fail to take any action that would cause or
permit the representations made in Article III or III-A to be inaccurate on the
Closing Date or preclude the Corporation and Securityholders from making such
representations and warranties as of the Closing Date.
The Corporation, each Subsidiary and the Securityholders shall (i) use
their best efforts to keep the Purchaser informed on a timely basis of the
ongoing operations of the Corporation and its Subsidiaries and (ii) cooperate
with the Purchaser in implementing operational and procedural changes in the
Corporation and each Subsidiary, to the extent the parties hereto agree, in
order to facilitate the transition to the operation of the Corporation and each
Subsidiary by the Purchaser upon consummation of the transactions contemplated
by this Agreement.
Except as contemplated herein, without the prior written consent of
Purchaser, the Corporation will not, and will cause the Subsidiaries not to:
(a) declare, pay or make any dividends or distributions on its capital stock;
(b) enter into any agreement (oral or written) with its directors, officers or
salaried employees; (c) increase the compensation of its directors, officers or
employees, except as provided in Schedule 5.02; (d) make capital expenditures
(or enter into commitments to make capital expenditures) in excess of $100,000
(either individually or in the aggregate); (e) issue any capital stock or
capital stock equivalents (including options and warrants) to purchase its
capital stock (except for shares of capital stock of the Corporation upon
exercise by ▇▇▇▇▇▇ Financial Corporation of its warrant or to employees upon
exercise of existing options); (f) incur indebtedness or other liabilities
other than in the ordinary course of business and
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consistent with past practice; (g) redeem any of its capital stock; or (h) take
any action that could adversely affect the pooling of interests treatment for
the transactions contemplated by this Agreement.
SECTION 5.03. ACCESS. The Corporation shall permit Purchaser and its
authorized representatives for any reasonable purpose access to, and make
available for inspection at all reasonable times, all of the assets and
business of the Corporation and the Subsidiaries, including (after consultation
with the Corporation) their employees, customers and suppliers, and permit
Purchaser and its authorized representatives to inspect and make copies of all
documents, records and information with respect to the affairs of the
Corporation and the Subsidiaries as Purchaser and its representatives may
request, all for the sole purpose of permitting Purchaser to become familiar
with the business and assets and liabilities of the Corporation and the
Subsidiaries.
SECTION 5.04. ENVIRONMENTAL AUDITS. The Corporation shall, and shall
cause each Subsidiary to, cooperate with and provide reasonable assistance to
Purchaser in obtaining any environmental studies or audits with respect to the
property owned and leased by the Corporation and the Subsidiaries as requested
by Purchaser.
SECTION 5.05. MATERIAL CHANGE. The Corporation shall promptly inform
Purchaser in writing of any material adverse change in the condition (financial
or otherwise), operations, assets, liabilities, business or prospects of the
Corporation or any Subsidiary which occurs between the date hereof and the
Closing Date. Notwithstanding the disclosure to Purchaser of any such material
adverse change, the Corporation and Securityholders shall not be relieved of
any liability for, nor shall the providing of such information by the
Corporation to Purchaser be deemed a waiver by Purchaser of, the breach of any
representation or warranty of the Corporation and Securityholders contained in
this Agreement.
SECTION 5.06. EMPLOYEE MATTERS. The Corporation shall not, and shall
not permit any Subsidiary to, without the prior written approval of Purchaser,
except as required by law: (a) adopt, amend or terminate any Compensation
Plan, Employment Agreement or Employee Policies and Procedures; (b) institute,
settle or dismiss any employment litigation; (c) enter into, modify, amend or
terminate any agreement with any union, labor organization or collective
bargaining unit; or (d) take or fail to take any action with respect to any
past or present employee of the Corporation or any Subsidiary that could
adversely affect the business of the Corporation or any Subsidiary; provided
that the Corporation may, from time to time, settle workers compensation claims
that do not exceed $10,000 in settlement amount.
SECTION 5.07. EMPLOYEE BENEFIT PLANS. The Corporation shall not, and
shall not permit any Subsidiary to, without the prior written approval of
Purchaser, except as required by law: (a) adopt, amend or terminate any
Employee Benefit Plan; (b) take any action that would deplete the assets of any
Employee Benefit Plan, other than payment of benefits in the ordinary course to
participants and beneficiaries; (c) fail to pay any premium or contribution due
or with respect to any Employee Benefit Plan; (d) fail to file any return or
report with respect to any Employee
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Benefit Plan; or (e) take or fail to take any action that could adversely
affect any Employee Benefit Plan.
SECTION 5.08. CONTRACTS. Except with Purchaser's prior written
consent, the Corporation shall not, and shall cause each Subsidiary not to,
waive any right or cancel any contract, debt or claim or assume or enter into
any contract, lease, license, obligation, indebtedness, commitment, purchase or
sale except in the ordinary course of business.
SECTION 5.09. CAPITAL ASSETS; PAYMENTS OF LIABILITIES. The
Corporation shall not, and shall not permit any Subsidiary to, without the
prior written approval of Purchaser (a) acquire or dispose of any capital asset
having an initial cost of $25,000 or more, or (b) discharge or satisfy any lien
or encumbrance or pay or perform any obligation or liability other than (i)
liabilities and obligations reflected in the Financial Statements or (ii)
current liabilities and obligations incurred in the ordinary course of business
since September 30, 1996 and, in either case (i) or (ii) above, only as
required by the express terms of the agreement or other instrument pursuant to
which the liability or obligation was incurred.
SECTION 5.10. MORTGAGES, LIENS AND GUARANTIES. The Corporation
shall not, and shall not permit any Subsidiary to, without the prior written
approval of Purchaser, enter into or assume any mortgage, pledge, conditional
sale or other title retention agreement, permit any security interest, lien,
encumbrance or claim of any kind to attach to any of its assets, whether now
owned or hereafter acquired, or guarantee or otherwise become contingently
liable for any obligation of another, except obligations arising by reason of
endorsement for collection and other similar transactions in the ordinary
course of business, or make any capital contribution or investment in any
corporation, business or other person.
SECTION 5.11. NO NEGOTIATION WITH OTHERS. Neither the Corporation
nor any Securityholder shall solicit or participate in negotiations with (and
the Corporation and the Securityholders shall use their best efforts to prevent
any affiliate, stockholder, director, officer, employee or other representative
or agent of the Corporation or any Subsidiary from negotiating with, soliciting
or participating in negotiations with) any third party with respect to the sale
of the business of the Corporation or any Subsidiary or any transaction
inconsistent with those contemplated hereby.
SECTION 5.12. HSR ACT. The Corporation and Securityholders shall
use their reasonable best efforts to file as soon as possible, and to effect
early termination of all applicable waiting periods, under the HSR Act,
including without limitation complying promptly with all requests thereunder
for additional information, unless the parties determine that such a filing is
not required under the HSR Act. The Corporation and Securityholders
acknowledge that Purchaser will be responsible for paying any filing fee in
connection with such filing under the ▇▇▇ ▇▇▇.
-▇▇-
▇▇
▇▇▇▇▇▇▇ ▇▇.
PURCHASER'S COVENANTS
Purchaser agrees that between the date hereof and the Closing:
SECTION 6.01. CONSUMMATION OF AGREEMENT. Purchaser shall use its
reasonable best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
SECTION 6.02. HSR ACT. Purchaser shall use its best efforts to file
as soon as possible, and to effect early termination of all applicable waiting
periods, under the HSR Act, including without limitation complying promptly
with all requests thereunder for additional information, unless the parties
determine that such a fling is not required under the HSR Act. Purchaser
acknowledges that it will be responsible for paying one filing fee in
connection with such filing under the HSR Act.
SECTION 6.03. DUE DILIGENCE REVIEW. Between the date hereof and the
Closing, the Purchaser shall permit the Corporation and its authorized
representatives for any reasonable purpose access to, and make available for
inspection, at all reasonable times, all of the assets and business of the
Purchaser and its subsidiaries, including their employees (after consultation
at with the Corporation), customers and suppliers, and permit the Corporation
and its authorized representatives to inspect and make copies of all documents,
records and information with respect to the affairs of the Purchaser and its
subsidiaries as the Corporation and its representatives may reasonably request,
all for the sole purpose of permitting the Corporation to become familiar with
the business and assets and liabilities of the Purchaser and its subsidiaries;
subject to a confidentiality agreement entered into between the Purchaser and
the Corporation prior to the date hereof.
ARTICLE VII.
PURCHASER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing
Date of each of the following conditions:
SECTION 7.01. PROCEEDINGS. No action, proceeding or order by any
court or governmental body or agency shall have been instituted or entered to
restrain or prohibit the carrying out of the transactions contemplated hereby.
SECTION 7.02. HSR ACT. All applicable waiting periods under the HSR
Act, if any, shall have expired or been terminated.
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SECTION 7.03. APPROVALS. The authorizations, approvals, consents and
waivers set forth on Schedule 3.07 shall have been obtained and shall not be
terminated, suspended or withdrawn as of the Closing Date.
SECTION 7.04. ESCROW DELIVERIES. All deliveries required to be made
by the Corporation and the Securityholders upon execution of the Escrow
Agreement shall have been made.
SECTION 7.05. ABSENCE OF DEFAULTS. Receipt by the Purchaser of
letters from Deutsche Financial Services Corporation ("Deutsche") and ▇▇▇▇▇▇
Financial, Inc. ("▇▇▇▇▇▇"), respectively, confirming to the best of their
knowledge the absence as of the Closing Date of any default, acceleration or
foreclosure event or of any act, omission or event that may have occurred
which, with the lapse of time or the giving of notice or both, would constitute
a default or acceleration or foreclosure event under any loan documents or
related ancillary agreements the Corporation or any of its Subsidiaries has
with ▇▇▇▇▇▇ or Deutsche other than (i) default or acceleration or foreclosure
events that have been waived, (ii) with respect to default or acceleration or
foreclosure events relating to environmental matters, default or acceleration
or foreclosure events for which ▇▇▇▇▇▇ or Deutsche, as applicable, has agreed
not to pursue any remedies so long as the Corporation is actively investigating
with a view toward remediating, or remediating, such environmental matters, or
(iii) such default or acceleration or foreclosure events relating to financial
covenants or financial ratios resulting from the deterioration of the
Corporation's business, operated in the ordinary course of business, that did
not exist as of the date of this Agreement.
SECTION 7.06. ENVIRONMENTAL MATTERS. If the Remediation Estimate
exceeds $1 million, the agreement by the Corporation and the Securityholders
owning at least ninety percent (90%) of the fully-diluted common stock, par
value $.001 per share of the Corporation (which consent may be withheld at
their discretion) to reduce the Purchase Price by the amount the Remediation
Estimate exceeds $1 million (which reduction shall not be made without such
agreement).
SECTION 7.07. CLOSING DELIVERIES. Purchaser shall have received all
items, duly executed in form reasonably satisfactory to Purchaser and its
counsel, referred to in Section 9.01.
ARTICLE VIII.
THE CORPORATION'S AND SECURITYHOLDERS' CONDITIONS PRECEDENT
Except as may be waived in writing by the Corporation and
Securityholders, the obligations of the Corporation and Securityholders
hereunder are subject to fulfillment at or prior to the Closing Date of each of
the following conditions:
SECTION 8.01. PROCEEDINGS. No action, proceeding or order by any
court or governmental body or agency shall have been instituted or entered to
restrain or prohibit the carrying out of the transactions contemplated hereby.
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SECTION 8.02. HSR ACT. All applicable waiting periods under the HSR
Act shall have expired or been terminated.
SECTION 8.03. CLOSING DELIVERIES. The Corporation or
Securityholders, as the case may be, shall have received all items referred to
in Section 9.02.
SECTION 8.04. AHC STOCK. AHC Stock shall continue to be listed and
traded on the Nasdaq National Market at all times prior to and through the
Closing Date.
SECTION 8.05. CONSENTS. The Corporation or Securityholders shall
have obtained all authorizations, consents, approvals, permits and licenses
referenced in Schedule 3.07, unless waived by Purchaser.
ARTICLE IX.
CLOSING DELIVERIES
SECTION 9.01. DELIVERIES OF THE CORPORATION AND SECURITYHOLDERS. At
the Closing, the Corporation and Securityholders shall deliver to Purchaser the
following, all of which shall be in form and content reasonably satisfactory to
Purchaser and its counsel and dated as of the Closing Date unless otherwise
specified:
(a) the Escrowed Items (as defined in the Escrow Agreement);
(b) a certificate of the Secretary of the Corporation, dated as of
the Closing Date, certifying (i) the incumbency of the directors and officers
of the Corporation and as to the signatures of such directors and officers who
have executed documents delivered at the Closing on behalf of the Corporation,
(ii) a copy of the resolutions of the Board of Directors of the Corporation
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements, as being true and correct copies of the
originals thereof subject to no modifications or amendments, (iii)
certificates, dated within fifteen days of the Closing Date, establishing that
the Corporation and each Subsidiary is in existence, has paid all franchise
taxes and otherwise is in good standing to transact business in its state of
incorporation issued by the Secretary of State of its state of incorporation,
and (iv) certificates, dated within fifteen days of the Closing Date, of the
Secretaries of State of the states in which the Corporation or any Subsidiary
is qualified to do business, to the effect that the Corporation and each
Subsidiary is qualified to do business and is in good standing as a foreign
corporation in each of such states;
(c) all authorizations, consents, approvals, permits and licenses
referenced in Schedule 3.07; provided, that the Securityholders will deliver to
the Purchaser as soon as practicable following the Closing all consents,
approvals, permits and licenses referenced in Schedule 3.07 that were not
delivered to the Purchaser at the Closing;
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(d) resignations of the officers and directors of the Corporation
as requested by Purchaser; and
(e) an opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to the
Corporation and Securityholders, substantially in the form attached as Exhibit
F.
SECTION 9.02. DELIVERIES OF PURCHASER. At the Closing, Purchaser
shall deliver the following to the Corporation or the appropriate party, each
of which shall be dated as of the Closing Date unless otherwise specified:
(a) certificates representing the AHC Securities constituting the
Purchase Price (deposited into escrow under the Indemnification Escrow
Agreement or delivered to the Securityholders, in accordance with Section
2.03);
(b) a certificate of the President of Purchaser, dated as of the
Closing Date, certifying (i) the performance of and compliance by Purchaser
with all covenants contained herein in all material respects on and as of the
Closing Date and (ii) certifying that all conditions precedent of Purchaser to
the Closing have been satisfied;
(c) a certificate of the Secretary of Purchaser, dated as of the
Closing Date, certifying (i) the incumbency of the directors and officers of
Purchaser and as to the signatures of such directors and officers who have
executed documents delivered at the Closing on behalf of Purchaser, (ii) a copy
of the resolutions of the Board of Directors of Purchaser authorizing the
execution, delivery and performance of this Agreement and all related documents
and agreements, as being true and correct copies of the subject to no
modifications or amendments, and (iii) a certificate, dated within fifteen days
of the Closing Date, of the Secretary of State of Texas, establishing that
Purchaser is in existence, has paid all state taxes and otherwise is in good
standing to transact business in such state.
(d) the Registration Rights Agreement, duly executed by Purchaser;
(e) the Indemnification Escrow Agreement duly executed by
Purchaser; and
(f) an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to Purchaser,
substantially in the form attached hereto as Exhibit G.
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ARTICLE X.
REMEDIES
SECTION 10.01. INDEMNIFICATION BY SECURITYHOLDERS. Subject to the
terms and conditions of this Article, Securityholders agree to indemnify,
defend and hold Purchaser and its directors, officers, agents, attorneys and
affiliates harmless from and against all losses, claims, causes of action,
obligations, demands, assessments, penalties, liabilities, costs, damages,
attorneys' fees and expenses (collectively, "Damages"), asserted against or
incurred by such indemnitees by reason of or resulting from: (a) a breach of
any representation, warranty, agreement or covenant of the Corporation or
Securityholders contained herein, in any exhibit, schedule, certificate or
financial statement delivered hereunder, or in any agreement executed in
connection with the transactions contemplated hereby; (b) any investigation,
testing, clean-up or remediation work on, or permits required for, the
properties owned or leased by the Corporation or any Subsidiary which is
necessary or advisable under or pursuant to Environmental Laws (including
without limitation, any investigation, testing or remediation work or permits
related to or arising out of the matters set forth in the reports provided or
obtained pursuant to Section 2.05; provided, however, that any testing and
studies undertaken prior to Closing shall not be indemnifiable under this
Section 10.01, but shall be a Purchase Price reduction as provided in Section
2.05); (c) any liabilities, contingent or otherwise (known or unknown and
asserted or unasserted) arising out of transactions effected or events
occurring on or prior to the Closing Date, except as set forth in the September
Balance Sheet (unless such liability is specifically a subject of
indemnification under (d) below) or incurred in the ordinary course of business
since September 30, 1996, except as disclosed herein, disclosed in a Schedule
to this Agreement, or as specifically permitted under Section 3.12 or Section
5.02 of this Agreement; (d) the matters described on Schedule 2.03(a); and (e)
any breach of the representations contained in Section 3.18 of this Agreement
after the elimination of any knowledge qualifiers contained therein; provided,
however, that (except for a claim made pursuant to Section 10.10) no claim
shall be made for indemnification under this Article X until, and such claims
may be made only to the extent that, the dollar amount of all such Damages
shall exceed in the aggregate $100,000 (the "Basket"). However, the aggregate
recovery by Purchaser from all Securityholders for Damages resulting from
breaches of this Agreement shall not exceed the securities, cash or other
property held pursuant to the Indemnification Escrow Agreement, except in the
case of claims finally adjudicated or settled for Damages exceeding,
individually or in the aggregate, $2 million that result from fraud, in which
event, the parties hereto agree that Purchaser's sole rights with respect
thereto shall be (i) rescission of this Agreement (with the Securityholders
obligations to reconvey limited to the consideration received under this
Agreement or cash equal to the proceeds obtained upon sale or transfer of such
consideration (or its fair market value if not transferred in exchange for its
fair market value)) or (ii) at the election of Securityholders that at the
Closing represented at least ninety percent (90%) of the fully-diluted common
stock, par value $.001 per share, of the Corporation, the payment to the
Purchaser pro rata by such Securityholders of shares of AHC Stock (valued in
accordance with the Indemnification Escrow Agreement) that represent (with the
amount of 2.03(b) Securities (as defined in the Indemnification Escrow
Agreement) that are available and not the subject of a Claim (as defined
therein)) an amount equal to such Damages (or if Securityholders do not have
AHC
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Stock, an amount of cash equal to such Damages). Further, indemnification for
breaches of representations or warranties contained in Article III-A of this
Agreement shall additionally be limited to the pro rata portion of the Purchase
Price attributable to the Securityholder that breached such representation or
warranty. The parties acknowledge that where a representation or warranty is
made in this Agreement regarding a fact that is the subject of a more
particularized representation or warranty made in this Agreement, the
limitations and qualifications of the more particularized representation or
warranty are not intended to be, and shall not be, overridden by such more
general representation or warranty. If there is a particularized
representation or warranty contained in this Agreement that specifically deals
with a fact and such representation or warranty has qualifying language,
indemnification under clause (c) of Section 10.01 of this Agreement shall only
be available after giving effect to such qualifying language.
SECTION 10.02. INDEMNIFICATION BY PURCHASER. Subject to the terms
and conditions of this Article, Purchaser hereby agrees to indemnify, defend
and hold Securityholders harmless from and against all Damages asserted against
or incurred by Securityholders by reason of or resulting from a breach of any
representation, warranty or covenant of Purchaser contained herein or in any
exhibit, schedule or certificate delivered hereunder, or in any agreement
executed in connection with the transactions contemplated hereby; provided,
however, that no claim shall be made for breaches of representations,
warranties, covenants or agreements of the Purchaser until, and such claims may
be made only to the extent that, the dollar amount of all such Damages shall
exceed in the aggregate $100,000. In addition, the aggregate liability of the
Purchaser for Damages resulting from breaches of this Agreement shall not
exceed 20% of the Purchase Price.
SECTION 10.03. CONDITIONS OF INDEMNIFICATION. The respective
obligations and liabilities of the Corporation and Securityholders and
Purchaser (the "indemnifying party") to the other (the "party to be
indemnified") under Sections 10.01 and 10.02 with respect to claims resulting
from the assertion of liability by third parties shall be subject to the
following terms and conditions:
(a) Within 20 days (or such earlier time as might be required to
avoid prejudicing the indemnifying party's position) after receipt of notice of
commencement of any action evidenced by service of process or other legal
pleading, the party to be indemnified shall give the indemnifying party written
notice thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing and at its own expense;
provided that the party to be indemnified may participate in the defense with
counsel of its own choice, the fees and expenses of which counsel shall be paid
by the party to be indemnified unless (i) the indemnifying party has agreed to
pay such fees and expenses, (ii) the indemnifying party has failed to assume
the defense of such action or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnifying party and the
party to be indemnified and the party to be indemnified has been advised by
counsel that there may be one or more legal defenses available to it that are
different from or additional to those available to the indemnifying party (in
which case, if the party to be indemnified informs the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of the party to be indemnified, it
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being understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for the party to be indemnified, which
firm shall be designated in writing by the party to be indemnified). Except as
set forth in Section 12.06, the failure to promptly deliver a notice of an
indemnity claim hereunder shall not relieve the indemnifying party of its
obligations to the indemnified party with respect to the such claim except to
the extent that the resulting delay is materially prejudicial to the defense of
such claim.
(b) In the event that the indemnifying party, by the 30th day
after receipt of notice of any such claim (or, if earlier, by the 10th day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the party to be indemnified will
(upon further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the
account and risk of the indemnifying party and at the indemnifying party's
expense, subject to the right of the indemnifying party to assume the defense
of such claims at any time prior to settlement, compromise or final
determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall
not settle any claim without the consent of the party to be indemnified unless
such settlement involves only the payment of money and the claimant provides to
the party to be indemnified a release from all liability in respect of such
claim. If the settlement of the claim involves more than the payment of money,
the indemnifying party shall not settle the claim without the prior consent of
the party to be indemnified.
(d) The party to be indemnified and the indemnifying party will
each cooperate with all reasonable requests of the other.
SECTION 10.04. WAIVER. No waiver by any party of any default or
breach by another party of any representation, warranty, covenant or condition
contained in this Agreement, any exhibit or any document, instrument or
certificate contemplated hereby shall be deemed to be a waiver of any
subsequent default or breach by such party of the same or any other
representation, warranty, covenant or condition. No act, delay, omission or
course of dealing on the part of any party in exercising any right, power or
remedy under this Agreement or at law or in equity shall operate as a waiver
thereof or otherwise prejudice any of such party's rights, powers and remedies.
All remedies, whether at law or in equity, shall be cumulative and the election
of any one or more shall not constitute a waiver of the right to pursue other
available remedies; provided, that this sentence shall not be deemed to expand
the recovery limitations set forth in Section 10.01 or the provisions of
Section 10.05.
SECTION 10.05. INDEMNIFICATION EXCLUSIVE REMEDY. Indemnification
pursuant to and as limited by the provisions of this Article X shall be the
exclusive remedy of any party for any misrepresentation or breach of any
warranty, representation, covenant or agreement contained herein or any other
agreement or closing document executed and delivered pursuant to the
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provisions hereof, except with respect to claims of fraud as provided in
Section 10.01 above. Notwithstanding anything contained in this Section 10.05,
the rights of any party shall not be impaired or otherwise affected in any
manner that would limit the pursuit by a party the remedy of specific
performance, injunctive relief or other equitable relief as a result of the
breach of any covenant or agreement contained herein or any other agreement or
closing document executed and delivered pursuant to the provisions hereof, as
specifically allowed under Section 10.07.
SECTION 10.06. COSTS, EXPENSES AND LEGAL FEES. Each party hereto
that is shown to have breached this Agreement or any other agreement
contemplated hereby agrees to pay the costs and expenses (including reasonable
attorneys' fees and expenses) incurred by any other party in successfully (a)
enforcing any of the terms of this Agreement against such breaching party or
(b) proving that another party breached any of the terms of this Agreement,
subject to the recovery limitations of Section 10.01.
SECTION 10.07. SPECIFIC PERFORMANCE. Each party hereto acknowledges
that a refusal by any other party hereto to consummate the transactions
contemplated hereby will cause irreparable harm to the other parties hereto,
for which there may be no adequate remedy at law and for which the
ascertainment of damages would be difficult. Therefore, each party hereto
shall be entitled, in addition to, and without having to prove the inadequacy
of, other remedies at law, to specific performance of this Agreement, as well
as injunctive relief (without being required to post bond or other security).
SECTION 10.08. INSURANCE. The amount of any Damages otherwise
payable hereunder will be reduced by the amount of any insurance proceeds
received as compensation for the damage or loss caused by the act, omission,
fact or circumstances giving rise to the Damages. Purchaser agrees to use
commercially reasonably efforts to pursue the recovery of such insurance
proceeds and to maintain insurance in amounts it determines is commercially
reasonable.
SECTION 10.09. SEPTEMBER INCOME STATEMENT. The parties agree that if
the Purchaser determines that an adjustment should have been made to the draft
audited consolidated statement of income for the twelve-months ended September
30, 1996 (which has been delivered to Purchaser prior to the date hereof and is
attached hereto as Exhibit H), of the Corporation, it shall submit the
adjustment to D&T and KPMG as soon as reasonably practicable, but in no event
after the Closing Date (other than a claim under Item 9 of the Schedule 10.09).
If D&T and KPMG do not agree with each other whether an adjustment should have
been made, they will submit the matter to Price Waterhouse, LLP for resolution,
whose determination will be binding for the purposes of this paragraph. In the
event that a determination is made under this paragraph that an adjustment
should have been made, for each dollar that the earnings before interest and
taxes ("EBIT") as of such date is determined (after giving effect to an
add-back of non-recurring, expenses of $853,511, which relate to the
Corporation's terminated initial public offering) to be less than $3.47
million, the Purchaser, for the purposes of Article X, shall be deemed to have
suffered (and the parties agree that Purchaser will have suffered) Damages
equal to five dollars. Further, the parties agree that if such a determination
is made that such an adjustment should have been made, it shall be deemed to be
a breach of Section 3.08 and as such Damages shall be
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satisfiable against the AHC Shares and AHC Options described in Section
2.03(b). The cost of D&T and 50% of the cost of Price Waterhouse, LLP shall be
borne by the Securityholders, and the cost of KPMG and 50% of the cost of Price
Waterhouse, LLP shall be borne by Purchaser. The parties agree that EBIT is
intended to be determined based on a statement of income prepared in accordance
with GAAP applied on a consistent basis with prior periods and that for the
purpose of determining whether, and to what extent, EBIT for the applicable
period is less than $3.47 million, EBIT shall be determined without regard to
materiality thresholds. The parties agree that for the purpose of this
Section, adjustment evaluation items shall be limited to those described on
Schedule 10.09.
SECTION 10.10. POOLING LETTER NONDELIVERY. In the event of a breach
of the representations made in Section 3.35, the Purchaser, for the purposes of
Article X, shall be deemed to have suffered (and the parties agree that
Purchaser will have suffered) Damages equal to 50,000 shares of AHC Stock.
ARTICLE XI.
TERMINATION
SECTION 11.01. TERMINATION. This Agreement may or shall be
terminated:
(a) At any time prior to the Closing Date by mutual agreement of
the Corporation and Purchaser.
(b) At any time after July 31, 1997 by the Corporation or
Purchaser if the Closing has not occurred, unless the reason the Closing has
not occurred is to allow time for compliance with the HSR Act; provided that
the terminating party or its affiliate is not directly or indirectly the cause
of the Closing not having occurred on or prior to such date.
(c) At any time after 21 days following the date of this Agreement
if the documents to be held under the Escrow Agreement (including, without
limitation, the outstanding securities of the Corporation with related executed
stock powers) have not been delivered to the Escrow Agent (as defined in the
Escrow Agreement).
In the event this Agreement is terminated pursuant to subparagraph (b) above,
Purchaser, the Corporation and Securityholders shall each be entitled to
pursue, exercise and enforce any and all remedies, rights, powers and
privileges available at law or in equity as limited hereby. In the event of a
termination of this Agreement under the provisions of this Article, a party not
then in material breach of this Agreement shall stand fully released and
discharged of any and all obligations under this Agreement.
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ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by Purchaser, the
Corporation and Securityholders owning at least ninety percent (90%) of the
fully- diluted common stock, par value $.001 per share, of the Corporation.
SECTION 12.02. ASSIGNMENT. Neither this Agreement nor any right
created hereby or in any agreement entered into in connection with the
transactions contemplated hereby shall be assignable by any party hereto,
except by Purchaser to an affiliate of Purchaser.
SECTION 12.03. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
SECTION 12.04. ENTIRE AGREEMENT. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding
the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
SECTION 12.05. SEVERABILITY. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 12.06. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations, warranties and covenants contained herein shall survive
the Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of the Corporation, Securityholders or
Purchaser pursuant to this Agreement shall be deemed to have been
representations and warranties by the Corporation and Securityholders or
Purchaser, as the case may be, and, notwithstanding any provision in this
Agreement to the contrary, shall (i) in the case of matters set forth on
Schedule 2.03(a), survive for the period of time set forth on such Schedule,
and (ii) in the case of all other matters shall survive the Closing until, and
including, December 31, 1997. Notwithstanding the above, if prior to any
expiration date the indemnifying
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party shall have been notified of a claim for indemnity hereunder and such
claim shall not have been finally resolved or disposed of at such date, any
representation or warranty that is the basis for such claim shall continue to
survive as to such claim and shall remain a basis for indemnity, to the extent
of such claim only, until such claim is finally resolved or disposed of.
SECTION 12.07. FEES, EXPENSES AND OTHER PAYMENTS. All Expenses (as
defined below) incurred by Purchaser will be borne solely and entirely by
Purchaser and all Expenses incurred by the Corporation and the Securityholders
will be borne solely and entirely by the Securityholders; it being agreed that
at the Closing, unless otherwise agreed to by all the Securityholders, all
Expenses of the Corporation shall be paid by the Corporation, but a
corresponding reduction will be paid in the number of AHC Securities issued at
the Closing (for purposes of which the number of AHC Securities deliverable to
the Securityholders will be reduced at a deemed price of $19.20 per share or
share equivalent (as the case may be)) unless at Closing the Securityholders
tender such amounts in cash. "Expenses" as used in this Agreement will include
all out-of-pocket expenses (including, without limitation, $22,500 in
discretionary bonuses as described on Schedule 3.10(a), all fees and expenses
of counsel, accountants, experts, investment bankers, advisors and consultants
to a party and its affiliates, HSR fees and finder's fees) incurred by a party
or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
solicitation of Securityholders approvals and all other matters related to the
consummation of the transactions contemplated by this Agreement (it being
agreed and understand that the Corporation shall be liable for all fees and
expenses of Williams, EME, Crane Pro Services, a division of ▇▇▇▇ ▇▇▇▇▇
International Corporation and Safe State, an agency associated with the
Department of Environmental and Industrial Programs of the University of
Alabama, subject to the Securityholders ultimately being responsible therefore
as provided in the first sentence of this Section (with the exception that the
Securityholders shall not be ultimately responsible for the Phase I
investigation costs, as described in Section 2.05, and that such costs, shall
remain the liability of the Corporation)).
SECTION 12.08. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICTS OF LAWS) OF THE STATE OF TEXAS.
SECTION 12.09. CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof.
SECTION 12.10. GENDER AND NUMBER. When the context requires, the
gender of all words used herein shall include the masculine, feminine and
neuter and the number of all words shall include the singular and plural.
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SECTION 12.11. CONFIDENTIALITY; PUBLICITY AND DISCLOSURES.
(a) All copies of any information delivered to Purchaser pursuant
to this Agreement shall, upon the written request of the Corporation, be
promptly returned to the Corporation in the event this Agreement is terminated,
and Purchaser agrees that it will use any information obtained from such review
which is confidential only for purposes of making its decision as to whether to
consummate the transactions contemplated herein and not for any other purposes.
For purposes of this Section 12.11(a), "confidential" information does not
include information which: (i) is or becomes generally available to the public
other than as a result of disclosure which is in violation of this Section;
(ii) was known by Purchaser on a nonconfidential basis prior to the disclosure
thereof; or (iii) is acquired by Purchaser from a third party who has no
confidential commitment to the Corporation with respect to the same.
(b) Each party shall keep this Agreement and its terms
confidential, and shall make no press release or public disclosure, either
written or oral, regarding the transactions contemplated by this Agreement
without the prior knowledge and consent of the other parties hereto; provided
that the foregoing shall not prohibit any disclosure (i) by press release,
filing or otherwise that is required by law (including, without limitation,
federal securities laws), regulation or court or administrative order, (ii) to
advisors, financiers or lenders of any party or to any party's directors,
officers, employees and representatives involved in the transactions
contemplated herein or (iii) by Purchaser in connection with conducting an
examination of the operations and assets of the Corporation. In addition, each
Securityholder agrees not to purchase or sell any AHC Stock until one business
day after a public announcement of the transactions contemplated herein has
been made by Purchaser.
SECTION 12.12. NOTICE. Any notice or demand which is permitted or
required hereunder will be deemed to have been received (except as otherwise
provided herein) (a) upon receipt when personally delivered, (b) or one day
after sent by overnight delivery by a nationally recognized courier or telecopy
providing confirmation or receipt of delivery, or (c) three days after being
sent by certified or registered mail, postage and charges prepaid, return
receipt requested to the addresses listed on Schedule 12.12 attached hereto, or
at any other address designated by any party hereto to all other parties hereto
in writing.
SECTION 12.13. FURTHER INSTRUMENTS OF TRANSFER. Following the
Closing, at the request of Purchaser, Securityholders shall deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to (a) vest in Purchaser good and marketable title to the
Securities and (b) carry out more effectively the provisions of this Agreement
and to establish and protect the rights created in favor of the parties
hereunder or thereunder.
SECTION 12.14. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
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SECTION 12.15. FORM OF INDEMNIFICATION PAYMENT BY PURCHASER. In the
event that the Purchaser is required to satisfy an indemnification claim made
pursuant to Section 10.02 of this Agreement, the parties agree that such
payment will be in the form of shares of AHC Stock (and AHC Options in the
event that there is also a pending claim by the Purchaser under the
Indemnification Escrow Agreement that would otherwise be satisfied by the
cancellation of AHC Options), with each share or underlying share valued at the
closing price of AHC Stock as quoted on the Nasdaq National Market on the
Closing Date (or if the Closing Date is not a day during which stock is traded
on the Nasdaq National Market, on the trading day immediately preceding the
Closing Date), with fractional shares paid in cash based on such closing price.
SECTION 12.16. KNOWLEDGE. Whether an entity has "knowledge" or has
acted intentionally shall be determined by reference to the knowledge or
conduct of the entity's directors (or in the case of entities without
directors, the persons that act in a similar capacity) and (a) in the case of
the Purchaser, its executive officers, and (b) in the case of the Corporation,
the Securityholders or the Subsidiaries, the following individuals (which
individuals are executive officers or key management employees of the
Corporation): ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇
▇▇▇▇.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
PURCHASER
---------
AMERICAN HOMESTAR CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
Its: PRESIDENT
-----------------------------------
CORPORATION
-----------
BRILLIANT HOLDING CORPORATION
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Its: PRESIDENT
-----------------------------------
Securityholders:
---------------
See the attached Signature Pages for
each Securityholder
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SIGNATURE PAGE OF
SECURITYHOLDER
TO SECURITIES PURCHASE AGREEMENT
This Signature Page to that certain Securities Purchase Agreement,
dated as provided therein, by and among American Homestar Corporation, a Texas
corporation, Brilliant Holding Corporation, a Delaware corporation (the
"Company"), and the securityholders of the Company (the "Purchase Agreement"),
is hereby executed by the undersigned, as a Securityholder (as defined
therein), as of the date of the Purchase Agreement.
In an individual:
/s/ ILLEGIBLE
----------------------------------------
Printed Name:
--------------------------
If a legal entity:
/s/ ILLEGIBLE
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
49
INDEX OF SCHEDULES
Schedule 2.02 Purchase Price
Schedule 2.03(a) Indemnification Matters
Schedule 3.01 Organization and Good Standing; Qualification
Schedule 3.02 Capitalization
Schedule 3.05 Subsidiaries
Schedule 3.07 Consents
Schedule 3.09 Liabilities and Obligations
Schedule 3.10(a) Cash Compensation
Schedule 3.10(b) Compensation Plans
Schedule 3.10(c) Employment Agreements
Schedule 3.10(d) Employee Policies and Procedures
Schedule 3.11(a) Employee Benefit Plans
Schedule 3.12 Absence of Certain Changes
Schedule 3.13(a) Real Property
Schedule 3.13(b) Personal Property
Schedule 3.13(c) Leases
Schedule 3.14 Commitments
Schedule 3.15 Insurance
Schedule 3.16 Proprietary Rights
Schedule 3.17 Taxes
Schedule 3.18 Compliance with Laws
Schedule 3.19 Finder's Fee
50
Schedule 3.20 Litigation
Schedule 3.24 Backlog
Schedule 3.26 Customers and Suppliers
Schedule 3.27-I Product Warranty Work Orders (separate annex)
Schedule 3.27-II Warranty Reserve
Schedule 3.27-III Claims Regarding "Substantial Class of Homes
Defect"
Schedule 3.28 Banking Relations
Schedule 3.30 Environmental Matters
Schedule 3.34 OSHA
Schedule 3.01-A Ownership of the Stock
Schedule 3.04-A Consents
Schedule 3.07-A Status of Securityholder
Schedule 4.04 Finder's Fee
Schedule 4.05 Authorization for AHC Shares
Schedule 5.02 Permitted Compensation Increases
Schedule 10.09 September Income Statement
Schedule 12.12 Addresses
51
INDEX OF EXHIBITS
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Indemnification Escrow Agreement
Exhibit D - Form of AHC Options
Exhibit E - Form of General Release
Exhibit F - Form of Opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Exhibit G - Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.