Exhibit 2.1
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AGREEMENT OF PURCHASE
AND SALE OF ASSETS
by and among
OLDCASTLE MATERIALS, INC.,
OLDCASTLE MMG, INC. AND
OLDCASTLE MATERIALS SOUTHEAST, INC.
as the Buyers
and
U.S. AGGREGATES, INC.
AND CERTAIN AFFILIATES AS LISTED
ON SCHEDULE I HERETO
as the Sellers
March 8, 2002
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TABLE OF CONTENTS
PAGE
PREAMBLE ..................................................................... 1
RECITALS ..................................................................... 1
AGREEMENT ................................................................... 1
1. Purchase and Sale of Assets ........................................... 1
1.1. Acquired Assets ................................................ 1
1.2. Excluded Assets ................................................ 3
1.3. Purchase Price ................................................. 5
1.4. Adjustments to the Purchase Price .............................. 5
1.5. Assumption of Certain Leases and Contracts ..................... 7
1.6. Closing Date ................................................... 9
2. Liabilities ........................................................... 9
2.1. Liabilities Assumed by Buyer ................................... 9
2.2. Liabilities Not Assumed by Buyer ............................... 10
3. Allocation of Purchase Price .......................................... 11
4. Representations and Warranties of the Sellers ......................... 11
4.1. Organization and Qualification ................................. 11
4.2. Authority ...................................................... 11
4.3. Financial Condition ............................................ 12
4.3.1. Financial Statements ................................. 12
4.3.2. Absence of Certain Changes ........................... 13
4.3.3. Projections .......................................... 14
4.4. Tax Matters .................................................... 14
4.4.1. Tax Returns; Disputes ................................ 14
4.4.2. Section 168 .......................................... 14
4.4.3. FIRPTA ............................................... 15
4.4.4. Tax Definitions ...................................... 15
4.5. Litigation and Claims .......................................... 15
4.5.1. Litigation Pending or Threatened ..................... 15
4.5.2. Operations Enjoined .................................. 15
4.5.3. Violation of Law; Permits ............................ 15
4.6. Properties and Assets of the Sellers ........................... 16
4.6.1. Title to Real Property ............................... 16
4.6.1.1. Maintenance ............................... 19
4.6.1.2. Assessments ............................... 19
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PAGE
4.6.1.3. Binding Commitments ....................... 19
4.6.1.4. Title Documents ........................... 20
4.6.1.5. No Breach or Event of Default;
Property Leases ........................... 20
4.6.1.6. Violation of Law .......................... 20
4.6.1.7. Site #126 - Pride Quarry .................. 20
4.6.2. Personal Property .................................... 21
4.7. Insurance ...................................................... 21
4.8. Labor and Employment Matters ................................... 21
4.8.1. Labor and Employment Definitions ..................... 21
4.8.2. Employee Benefit Plans ............................... 22
4.8.3. Benefit Obligations .................................. 23
4.8.4. Performance .......................................... 23
4.8.5. Compensation ......................................... 23
4.8.6. Employees ............................................ 23
4.8.7. Collective Bargaining Agreements ..................... 23
4.9. Compensation of and Indebtedness to and from Employees ......... 24
4.9.1. Employee Compensation ................................ 24
4.9.2. Indebtedness ......................................... 24
4.10. Contracts 24
4.11. Environmental Matters .......................................... 25
4.11.1. Hazardous Materials .................................. 25
4.11.2. Environmental Requirements ........................... 25
4.11.3. Notice of Violations ................................. 26
4.11.4. Potentially Responsible Party ........................ 26
4.11.5. Environmental Reports ................................ 26
4.11.6. Definitions .......................................... 26
4.12. Agreement Not in Breach of Other Instruments ................... 27
4.13. Regulatory Approvals ........................................... 28
4.14. Inventories .................................................... 28
4.15. Ownership of Capital Stock ..................................... 28
4.16. Brokerage 28
4.17. Customers 28
4.18. Product Liability .............................................. 29
4.19. Sufficiency of Assets .......................................... 29
4.20. Preservation of Documents ...................................... 29
4.21. Names .......................................................... 29
4.22. Software ....................................................... 29
4.23. Subsidiaries ................................................... 30
5. Representations and Warranties of the Buyer ........................... 30
5.1. Organization and Qualification ................................. 30
5.2. Authority ...................................................... 30
5.3. Brokerage ...................................................... 30
5.4. Financing ...................................................... 30
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PAGE
6. Employees ............................................................. 30
6.1. Obligation to Employ ........................................... 30
6.2. Offers to Employ ............................................... 31
7. Covenants and Agreements of the Parties ............................... 31
7.1. Filing of Bankruptcy Cases, Sale Motion, APA Approval Motion
and Release; Entry of Buyer Protection and Bidding Procedures
Order; Additional Sellers ...................................... 31
7.2 Governmental Authority Approvals: Consents to Assignment ....... 33
7.3. Bankruptcy Filings ............................................. 34
7.4. Operations ..................................................... 34
7.5. Certain Actions ................................................ 35
7.6. Access to and Provision of Additional Information .............. 36
7.7. Tax Matters .................................................... 36
7.8. Notification ................................................... 37
7.9. Notification to Creditors ...................................... 37
7.10. Submission for Bankruptcy Court Approval ....................... 37
7.11 Partial Expense Reimbursement .................................. 41
7.12. Termination of Employment ...................................... 41
7.13. Publicity ...................................................... 41
7.14. DeKalb Stone, Inc .............................................. 41
8. Termination and Abandonment ........................................... 41
8.1. Termination .................................................... 41
8.2. Procedure and Effect of Termination ............................ 43
8.3. Expense Reimbursement Repayment ................................ 43
9. The Buyer's Closing Conditions ........................................ 43
9.1. Closing Documents .............................................. 43
9.2. Permits, Approvals and Authorizations .......................... 45
9.3. Assumed Agreements Assignment .................................. 45
9.4. No Challenge or Violation of Orders ............................ 45
9.5. Evidence of Title .............................................. 45
9.6. Orders ......................................................... 46
9.7. Representations and Warranties and Covenants ................... 46
9.8. Force Majeure .................................................. 46
9.9. WARN Act Notices ............................................... 46
9.10. Mineral and Water Rights ....................................... 47
10. Buyer Closing Deliveries .............................................. 47
10.1. The Sellers' Closing Conditions ................................ 47
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PAGE
10.2. Permits, Approvals and Authorizations .......................... 48
10.3. No Challenge or Violation of Orders ............................ 48
11. Actions After the Closing Date ........................................ 48
11.1. Cooperation .................................................... 48
11.2. Further Assurances ............................................. 48
11.3. Non-Compete and Non-Solicitation ............................... 49
11.4. Use of Names ................................................... 50
12. Indemnification ....................................................... 50
12.1.1. Indemnification of the Buyer ........................ 50
12.1.2. Indemnification of the Sellers ...................... 51
12.2. Survival ....................................................... 52
12.2.1. General Claims ...................................... 52
12.3. Defense by the Indemnifying Party .............................. 52
12.4. Notice ......................................................... 53
12.5. Waiver ......................................................... 53
12.6. Accounts Receivable ............................................ 53
12.7. Payment ........................................................ 54
12.8. Threshold ...................................................... 54
13. Miscellaneous Provisions .............................................. 54
13.1. Submission to Jurisdiction ..................................... 54
13.2. Notices ........................................................ 54
13.3. Payment of Expenses ............................................ 56
13.4. Assignment ..................................................... 56
13.5. Amendments and Waiver .......................................... 57
13.6. Survival ....................................................... 57
13.7. Counterparts ................................................... 57
13.8. Headings ....................................................... 57
13.9. Governing Law .................................................. 57
13.10. Binding Nature of Agreement .................................... 57
13.11. Complete Agreement ............................................. 57
13.12. Drafting Presumption ........................................... 58
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LIST OF ANNEXES*
---------------
Annex A Assumed Agreements
Annex B Real Property
LIST OF EXHIBITS*
----------------
Exhibit A Escrow Agreement
Exhibit B Buyer Protections and Bidding Procedures Order
Exhibit C Release Order
Exhibit D Sale Order
Exhibit E Contract Assignment
Exhibit F Lease Assignment
Exhibit G ▇▇▇▇ of Sale
LIST OF SCHEDULES*
-----------------
Schedule I Sellers
Schedule II Southeastern Operations
Schedule III Western Operations
Schedule 1.1(a)(viii) Software Licenses
Schedule 1.1(a)(ix) Intellectual Property
Schedule 1.1(b) Material Sites Bankruptcy Permitted Encumbrances
Schedule 1.2(f) Causes of Action
Schedule 1.2(i) Other Excluded Assets
Schedule 2.1 Assumed Liabilities
Schedule 2.1(b) Assumed Liabilities
Schedule 2.2(h) Back Log Orders
Schedule 3 Purchase Price Allocation
Schedule 4.1 Sellers Organization Chart
Schedule 4.3.2 Absence of Any Change
Schedule 4.3.2(a) Material Transactions Changes
Schedule 4.3.2(b) Material Financial Changes
Schedule 4.3.2(c) Material Loss Changes
Schedule 4.3.2(d) Material Accounting Changes
Schedule 4.3.2(e) Material Operations Changes
Schedule 4.3.2(f) Material Acquisition Changes
Schedule 4.3.2(g) Material Encumbrance Changes
Schedule 4.3.2(h) Material Disposition Changes
Schedule 4.3.2(i) Material Compensation Changes
Schedule 4.3.2(j) Material Expenditure Changes
Schedule 4.3.2(k) Other Material Changes
Schedule 4.4.1 Tax Returns; Disputes
Schedule 4.5.1 Litigation Pending or Threatened
Schedule 4.5.3(a) Material Violation of Law
Schedule 4.5.3(b) Permits Required but not Held by Seller
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Schedule 4.5.3(c) Permits of Seller
Schedule 4.5.3(d) Non-Transferable Permits
Schedule 4.5.3(e) Non-Conforming Use
Schedule 4.6.1(b)(i) Permitted Encumbrances
Schedule 4.6.1(b)(ii) Material Sites
Schedule 4.6.1(c) Zoning; Land Use
Schedule 4.6.1(d) Eminent Domain
Schedule 4.6.1(g) Taxes; Assessments
Schedule 4.6.1(h) Strips; Gores
Schedule 4.6.1(j) Water Rights
Schedule 4.6.1(k) Mineral Rights
Schedule 4.6.1.1 Maintenance
Schedule 4.6.1.2 Assessments
Schedule 4.6.1.4 Title Documents
Schedule 4.6.1.5 Breach or Event of Default; Property Leases
Schedule 4.6.1.6 Violation of Law
Schedule 4.6.2 Personal Property
Schedule 4.7 Insurance
Schedule 4.8.2(a) Employee Benefit Plans
Schedule 4.8.2(b) Multiemployer Plans
Schedule 4.8.2(c) Pension Plans
Schedule 4.8.6 Employees
Schedule 4.8.7(a) Collective Bargaining Agreements
Schedule 4.8.7(b) Labor Claims; Controversies
Schedule 4.8.8 Employees Not to be Terminated
Schedule 4.9.1(a) Key Employee Compensation
Schedule 4.9.1(b) Changes in Key Employee Compensation
Schedule 4.9.2(a) Indebtedness of Sellers to Related Party
Schedule 4.9.2(b) Indebtedness of Related Party to Sellers
Schedule 4.10(a) Material Contracts
Schedule 4.10(b) Seller Breach or Default
Schedule 4.10(c) Contracts Requiring Consent
Schedule 4.11.1 Hazardous Materials
Schedule 4.11.2 Environmental Requirements
Schedule 4.11.3 Notice of Violations
Schedule 4.11.4 Potentially Responsible Party
Schedule 4.13 Regulatory Approvals
Schedule 4.16 Brokerage
Schedule 4.17 Customers
Schedule 4.18 Product Liability
Schedule 4.21 Names
Schedule 4.22 Software
Schedule 7.1(d) Retention Plan
Schedule 7.1.1(c) Bankruptcy Permitted Encumbrances
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Schedule 7.10(b)(i)(x) Western Assets
Schedule 7.10(b)(i)(y) Southeastern Assets
Schedule 7.5 Actions Requiring Buyers Consent
Schedule 9.5 Evidence of Title
* Annexes, Exhibits and Schedules have been omitted and will be provided in
accordance with Item 601(b)(2) of Regulation S-K upon request.
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
------------ -------
Acquired Assets Section 1.1(a)
Actual Accounts Receivable Section 12.8
Actual Working Capital Section 1.4(a)
Additional Expense Reimbursement Section 7.10(a)(i)
Affiliate Section 11.3(a)(iii)
Agreement Preamble
Assets Recitals
Assumed Agreements Section 1.1(a)(v)
Assumed Liabilities Section 2.1(b)
Auction Section 7.10(b)(ii)
Balance Sheet Section 4.3.1(a)
Balance Sheet Date Section 4.3.1(a)
Bankruptcy Cases Section 7.1.1(a)
Bankruptcy Court Section 7.1.1(a)
Bankruptcy Permitted Encumbrances Section 7.1.1(c)
Bid Procedures Section 7.10(b)
▇▇▇▇ of Sale Section 9.1(c)
Break-Up Fee Section 7.10(a)(i)
Buyers Preamble
Buyer Protections Section 7.10(a)
Buyer Protections and Bid Procedures Order Section 7.1.1(b)
Closing Section 1.6
Closing Balance Sheet Section 1.4(a)
Closing Date Section 1.6
COBRA Section 6.1
Code Section 4.4.2
Competing Proposal Section 7.10(b)(i)
Contract Assignment Section 9.1(a)
Contract Counter-Party Section 1.5(a)
Contracts Section 1.1(a)(v)
Cure Costs Section 1.5(b)
Customer Section 11.3(a)(iii)
Designated Assumed Agreements Section 1.5(a)(ii)
Effective Date Preamble
Employee Benefit Plan Section 4.8.1
Employees Section 4.8.6
Encumbrances Section 4.6
Environmental Damages Section 4.11.6(i)
Environmental Requirements Section 4.11.6(ii)
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ERISA Section 4.8.1
ERISA Affiliate Section 4.8.1
ERISA Plan Section 4.8.1
Escrow Account Section 1.3(a)(i)
Escrow Agent Section 1.3(a)(i)
Escrow Agreement Section 1.3(a)(i)
Excluded Agreements Section 1.2(g)
Excluded Assets Section 1.2
Excluded Liabilities Section 2.2
Expense Reimbursement Section 7.10(a)(i)
Filing Date Section 7.1.1
Final Order Section 9.6(b)
Financial Statements Section 4.3.1(a)
Governmental Authority Section 4.11.6(iv)
Hazardous Materials Section 4.11.6(v)
HSR Section 7.2(b)
Idaho Asset Sale Section 4.3.2(a)
Idaho Holdback Section 1.3(a)(i)
Idaho Sale Agreement Section 1.3(a)(i)
Independent Accountants Section 1.4(c)
Initial Minimum Incremental Bid Amount Section 7.10(b)(v)
Interest Section 1.4(d)
Inventories Section 1.1(a)(iv)
Key Employees Section 4.9.1
Lease Assignment Section 9.1(b)
Leased Property Section 4.6.1(a)
Material Sites Section 4.6.1(b)
Multiemployer Plan Section 4.8.1
Non-Debtor Party Section 1.5(a)
Notice of Disagreement Section 1.4(c)
Operations Recitals
Outside Date Section 8.1(c)
Owned Property Section 4.6.1(a)
Owned Water Rights Section 4.6.1(j)
Partial Expense Reimbursement Section 7.12
Pension Plan Section 4.8.1
Permits Section 1.1(a)(vi)
Permitted Encumbrances Section 4.6.1(b)
Personal Property Section 1.1(a)(i)
Plan Section 7.10(a)(i)
Prior Asset Sale Agreement Section 1.3(a)(i)
Projections Section 4.3.3
Property Leases Section 4.6.1.4
Purchase Price Section 1.3
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Qualified Bid Section 7.10(b)(iii)
Qualified Bidder Section 7.10(b)(iv)
Real Property Section 4.6.1(a)
Release Section 7.1.1(e)
Release Order Section 7.1.1(e)
Retention Plan Section 7.1.1(d)
Sale Motion Section 7.1.3
Sale Motion Exhibit A Section 1.5(a)
Sale Motion Exhibit B Section 1.5(a)
Sale Order Section 7.1.3
Section 1 Section 1.5(a)
Section 2 Section 1.5(a)
Section 363 Sale Section 7.10(a)(i)
Sellers Preamble
Southeastern Assets Section 7.10(b)(i)
Stockholder Preamble
Subsidiaries Preamble
tax return Section 4.4.4
taxes Section 4.4.4
Title Documents Section 4.6.1.4
Transactions Section 2.1
Transfer Taxes Section 7.7(b)
Utah Sale Agreement Section 1.3(a)(i)
WARN Act Section 6.1
WARN Act Notice Section 6.1
Water Rights Section 4.6.1(j)
Welfare Plan Section 4.8.1
Western Assets Section 7.10(b)(i)
Working Capital Statement Section 1.4(b)
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AGREEMENT OF PURCHASE AND SALE OF ASSETS
This AGREEMENT (this "Agreement") is made this 8th day of March, 2002 (the
"Execution Date") by and among OLDCASTLE MATERIALS, INC., a Delaware corporation
("Oldcastle") OLDCASTLE MMG, INC., a Utah corporation ("Oldcastle MMG") and
OLDCASTLE MATERIALS SOUTHEAST, INC., a Delaware corporation ("Oldcastle
Southeast", and together with Oldcastle, Oldcastle MMG, the "Buyers"), on the
one hand, and U.S. AGGREGATES, INC., a Delaware corporation (the "Stockholder"),
and the subsidiaries of the Stockholder (whether directly, indirectly, wholly or
partially owned) as listed on SCHEDULE I hereto (the "Subsidiaries", and
together with the Stockholder, the "Sellers"), on the other hand.
RECITALS
A. The Sellers operate certain businesses located in the southeastern
United States as set forth on Schedule II (the "Southeastern Operations") and
certain business in the western United States as set forth on Schedule III (the
"Western Operations, and together with the Southeastern Operations, the
"Operations"), and the Sellers own, lease or have the right to use the assets
and property used in, necessary for or related to the Operations as currently
conducted by the Sellers or otherwise owned or used by the Sellers (the
"Assets").
B. The Sellers desire to sell certain of the Assets and to assign
certain contracts, agreements, real or personal property leases, commitments,
understandings or instruments pertaining to the Operations free and clear of all
liens and encumbrances, and the Buyers desire to purchase substantially all of
the Assets and assume certain Contracts. The Buyers do not wish to purchase
those Assets described in SECTION 1.2, or assume the Excluded Agreements or
assume those liabilities set forth in SECTION 2.2 hereof.
C. The Sellers have provided, and the Buyers acknowledge receipt of,
the Partial Expense Reimbursement, which may be retained by the Buyers in
accordance with this Agreement.
AGREEMENT
In consideration of the foregoing and the mutual covenants contained in
this Agreement and for other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Buyers and the Sellers agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1. ACQUIRED ASSETS.
(a) On the Closing Date (as defined in SECTION 1.6
below), the Sellers agree to sell, assign, convey, transfer and deliver
to Oldcastle MMG, free and clear of all Encumbrances except for the
Bankruptcy Permitted Encumbrances (as defined below), against payment
therefor as provided in SECTION 1.3, all of the rights, title and
interest that the Sellers possess and have the right to transfer in and
to all of the Assets of every kind used in, related to or necessary for
the conduct of the Western Operations or otherwise
owned or used by the Sellers in the Western Operations and the Sellers
also agree to sell, assign, convey, transfer and deliver to Oldcastle
Southeast, free and clear of all Encumbrances except for the Bankruptcy
Permitted Encumbrances (as defined below), against payment therefor as
provided in SECTION 1.3, all of the rights, title and interest that the
Sellers possess and have the right to transfer in and to all of the
Assets of every kind used in, related to or necessary for the conduct of
the Southeastern Operations or otherwise owned or used by the Sellers in
the Southeastern Operations (except for those Excluded Assets set forth
in SECTION 1.2 hereof), including, without limitation, the following
assets (all such assets and properties of the Sellers are collectively
referred to hereinafter as the "Acquired Assets"):
(i) all fixtures, vehicles, machinery, equipment,
rolling stock, tools, furniture, pallets, phones, office supplies
and other items of personal property (collectively, the "Personal
Property");
(ii) all Owned Property (as defined in SECTION
4.6.1(A));
(iii) all right, title and interest in and to all
Property Leases (as defined in SECTION 4.6.1.4) to the extent they
are Assumed Agreements;
(iv) all inventories, including materials, spare
parts, equipment, supplies and other similar items (collectively,
the "Inventories");
(v) the contracts, agreements, real or personal
property leases, commitments, understandings or instruments
pertaining to the Operations (the "Contracts") listed or described
on ANNEX A attached hereto as the same may be amended from time to
time by Buyers in accordance with SECTION 1.5 hereof but will
include the Contracts for which the Sellers have performance bonds
in place as of the Closing Date, PROVIDED such Contracts can be
operated profitably as reasonably determined by the Buyers (the
"Assumed Agreements");
(vi) the federal, state, local and foreign
licenses, permits, certificates of occupancy or use and other
governmental approvals or authorizations used in or related to the
Operations (collectively, "Permits") to the extent such Permits
may be transferred;
(vii) except as set forth in SECTIONS 1.2(F), (H)
AND (J) all rights and claims against third parties in respect of
the Acquired Assets or the Operations and all claims and rights of
offset under the Property Leases, except to the extent they are
primarily related to the Excluded Assets;
(viii) all computer hardware; all the software
licenses listed on SCHEDULE 1.1(A)(VIII); and all other software
used by any of the Sellers including all licenses to software
related to computers used by any of the Sellers to the
2
extent such software licenses may be transferred pursuant to
section 365 of the Bankruptcy Code or without consent of the
licensor;
(ix) all intellectual property used or owned by
the Sellers (including, but not limited to, the intellectual
property set forth on SCHEDULE 1.1(A)(IX)), together with all
income, royalties, damages and payments due or payable at the
Closing or thereafter (including, without limitation, damages and
payments for past or future infringements or misappropriations
thereof), the right to ▇▇▇ and recover for past infringements or
misappropriations thereof, any and all corresponding rights that,
now or hereafter, may be secured throughout the world and all
copies and tangible embodiments of any such intellectual property;
(x) all names, or variations thereof, used by the
Sellers and set forth on SCHEDULE 1.1(A)(X); and
(xi) all accounts and notes receivable of any of
the Sellers.
(b) "Bankruptcy Permitted Encumbrances" shall mean
encumbrances, with respect to any Acquired Asset, that are: (i) statutory
liens for current taxes or assessments not yet due or delinquent, (ii)
zoning, entitlement, conservation restriction and other land use and
environmental regulations by governmental authorities (collectively, the
"Bankruptcy Restrictions") which do not materially interfere with the
present use or operation of an Acquired Asset subject to such Bankruptcy
Restriction, (iii) all exceptions, restrictions, easements, charges,
rights-of-way and other Encumbrances set forth in any state, local or
municipal franchise (collectively, "Bankruptcy Exceptions") under which
the Operations is conducted which do not materially interfere with the
present use or operation of an Acquired Asset subject to such Bankruptcy
Exception, and (iv) such other imperfections in title, easements,
rights-of-way, encroachments, exceptions, restrictions and encumbrances
(collectively, the "Bankruptcy Imperfections") which do not materially
interfere with the present use or operation of an Acquired Asset subject
to such Bankruptcy Imperfections and neither secure indebtedness or the
payment of the deferred purchase price of property, nor individually or
in the aggregate materially interfere with the present use or operation
of an Acquired Asset subject to such Bankruptcy Imperfections. For the
Material Sites, Bankruptcy Permitted Encumbrances shall also mean those
Encumbrances, if any, with respect to a specific Material Site set forth
on SCHEDULE 1.1(B). Notwithstanding the above, with respect to Acquired
Assets that are not Material Sites, Bankruptcy Restrictions, Bankruptcy
Exceptions and Bankruptcy Imperfections which do not have, or could not
reasonably be expected to have, a material adverse effect on the
business, Operations, results of operations or condition of the Acquired
Assets taken as a whole shall be deemed to be a Bankruptcy Permitted
Encumbrance.
1.2. EXCLUDED ASSETS. Notwithstanding anything contained in
SECTION 1.1(A) hereof to the contrary, the Sellers are not selling, and the
Buyers are not purchasing, the
3
following assets of the Sellers, all of which shall be retained by the Sellers
(collectively, the "Excluded Assets"):
(a) the Sellers' originals of books and records relating
to the Acquired Assets and the Sellers' purchase and sales activities
relating to the Operations and the Acquired Assets prior to the Closing
Date, returns of taxes, including all supporting schedules, attachments,
work papers and similar documents, for taxes accruing on or before the
Closing Date; PROVIDED that the Sellers shall provide copies of all the
aforementioned documents to the Buyers at the Buyers' request, PROVIDED
further, HOWEVER, that the Sellers shall not be required to deliver any
information related solely to (and not affecting the Acquired Assets or
the Operations) the Excluded Assets;
(b) any cash, cash equivalents, short term investments,
▇▇▇▇▇ cash, deposit accounts in financial institutions, checks received
by the Sellers upon which collection has not been made, and long and
short term securities owned by the Sellers as of the Closing Date;
(c) the rights which accrue or will accrue to the
Sellers under this Agreement;
(d) the rights which accrue or will accrue to the
Sellers under the Retention Plan, any employment, noncompetition or
severance agreements between any of the Sellers and its employees or
former employees, to which any of the Sellers is a party, except for
those employment or severance agreements which are Assumed Agreements;
(e) the rights which accrue or will accrue to the
Sellers under any sales price or volume proposals or commitments, offers
to sell or sales negotiations entered into or made by employees of or
agents acting on behalf of the Sellers except if such commitment is
pursuant to an Assumed Agreement;
(f) the Sellers' causes of action, choses of action and
rights of recovery pursuant to section 544 through 550 and section 553,
and any other avoidance actions under any other applicable provisions, of
the Bankruptcy Code;
(g) other than the Assumed Agreements, any Contract to
which the Sellers are parties or by which the Sellers are bound (the
"Excluded Agreements");
(h) any pending or threatened litigation set forth on
SCHEDULE 4.5.1;
(i) any indebtedness owed to the Sellers by any employee
or agent of any of the Sellers, or any spouse, child or parent thereof;
and
(j) all those assets specifically listed in SCHEDULE
1.2(J) hereto.
4
1.3. PURCHASE PRICE. As consideration for the Acquired Assets,
the Buyers shall, jointly and severally, pay to the Sellers the aggregate sum of
$140,750,000, as adjusted pursuant to SECTION 1.4 (the "Purchase Price") payable
as hereinafter provided and the Buyers shall assume the Assumed Liabilities. The
Buyers shall also assume certain leases and other contracts and liabilities of
the Sellers as set forth in SECTION 2.1(A).
(a) On the Closing Date, the Buyers shall pay an amount
in cash to the Sellers equal to the Purchase Price less the sum of the
two items listed below:
(i) $4,500,000, which amount will be delivered to
an escrow agent, mutually acceptable to the parties (the "Escrow
Agent") to be deposited into an escrow account (the "Escrow
Account") to pay (x) any adjustments to the Purchase Price owed by
the Sellers pursuant to SECTION 1.4, (y) any Indemnity or other
amounts owed by the Sellers to the Buyers pursuant to SECTION 12.1
hereof or under the Agreement of Purchase and Sale of Assets,
dated March 30, 2001 between affiliates of the Buyers and certain
Sellers (the "Utah Sale Agreement") or under the Agreement of
Purchase and Sale of Assets, dated February 5, 2002, between
Oldcastle MMG and certain Sellers (the "Idaho Sale Agreement", and
together with the Utah Sale Agreement, the "Prior Asset Sale
Agreements"), all such indemnities to be accorded administrative
priority upon entry of the Sale Order, and (z) any amount owed
pursuant to SECTION 12.6 hereof. The funds in the Escrow Account
shall be held and disbursed by the Escrow Agent in accordance with
the terms and conditions of the escrow agreement, the form of
which is attached as EXHIBIT A (the "Escrow Agreement") after the
depletion of the $500,000 deferred payment holdback provided in
the Idaho Sale Agreement (the "Idaho Holdback"), and
(ii) the actual aggregate amount of the Cure Costs
(as defined in SECTION 1.5(B)(I)).
(b) The parties hereby acknowledge and agree that the
payment of the Purchase Price by the Buyers, including the payments
required by SECTIONS 1.3(A)(I) and (II) and the assumption of the Assumed
Liabilities, represent fair market value, based on actual, arms-length
transactions, in consideration for the acquisition of the Acquired
Assets.
1.4. ADJUSTMENTS TO THE PURCHASE PRICE.
(a) The Purchase Price shall be adjusted according to
whether the difference between the Actual Working Capital (as defined
below) of the Sellers is more or less than $26,000,000. The "Actual
Working Capital" shall be the sum of the book values of (i) saleable
inventory, (ii) accounts and notes receivable MINUS allowance for
doubtful accounts, and (iii) deposits in the nature of prepaid expenses
and prepaid expenses, in each case to the extent the Buyers receive the
foregoing as an Acquired Asset, as reflected on the Sellers' consolidated
balance sheet as of the Closing Date (the
5
"Closing Balance Sheet"), which shall be prepared by the Sellers in
accordance with generally accepted accounting principles and consistent
with past practice.
(b) The Actual Working Capital shall be determined by
the Sellers and a copy of the calculation thereof (the "Working Capital
Statement") shall be delivered by the Sellers to the Buyers as soon as
practicable following the Closing Date, but not later than fifteen (15)
calendar days thereafter. Representatives of the Buyers shall have the
right to participate with the representatives of the Sellers in the
process of preparing the Closing Balance Sheet and the Working Capital
Statement and shall have access to all data, schedules and work papers
used by the Sellers in preparing the Working Capital Statement.
(c) The determination of Actual Working Capital shall
become final and binding upon the parties on the thirtieth (30th)
calendar day following receipt thereof by the Buyers unless the Buyers
deliver written notice of their disagreement ("Notice of Disagreement")
to the Sellers prior to such date in accordance with SECTION 13.3 hereof.
Any Notice of Disagreement shall specify the amounts set forth on the
Working Capital Statement with which the Buyers disagree. If a Notice of
Disagreement is sent by the Buyers, then the Actual Working Capital (as
recalculated in accordance with clause (x) or (y) below) shall become
final and binding upon the parties on the earlier of (x) the date the
parties hereto resolve in writing any differences they have with respect
to any matter specified in the Notice of Disagreement or (y) the date any
disputed amounts are finally determined in accordance with the balance of
this paragraph. During the thirty (30) day period following the delivery
of a Notice of Disagreement, the Sellers and the Buyers shall seek in
good faith to resolve in writing any differences which they may have with
respect to any amount specified in the Notice of Disagreement or
identified by either parties during said thirty (30) day period. If, at
the end of such thirty (30) day period, the Sellers and the Buyers have
not reached agreement on such amounts, the amounts which remain in
dispute shall be recalculated by an accounting firm mutually agreed upon
by the Sellers and the Buyers which firm shall not have had a business
relationship with either party within the prior twenty-four (24) months
(the "Independent Accountants"). The Independent Accountants shall make a
ratable allocation of their charges for such work as a part of their
determination, based on the proportion by which the amount in dispute was
determined in favor of one party or the other. Any amounts so
recalculated shall be final and binding on the parties.
(d) If the Actual Working Capital is less than
$26,000,000, then the Buyers may recover such shortfall with interest
thereon at a fluctuating rate that is at all times equal to the prime
rate in effect from time to time at Citibank, N.A. (or similar financial
institution) in New York on ninety (90) day unsecured loans to
substantial and responsible customers, calculated on the basis of the
actual number of days elapsed from the Closing Date to the date of such
payment to the Buyers (interest calculated in the foregoing manner is
referred to herein as "Interest") from the Escrow Account in accordance
with the Escrow Agreement. In no event shall the Buyers attempt to
recover such shortfall beyond the later of (i) six (6) months after the
Closing Date or (ii) ten (10)
6
business days after the Independent Accountants make a determination
under SECTION 1.4(C); PROVIDED that such period shall be extended to the
extent that there have been delays outside of the Buyers' control.
(e) If the Actual Working Capital is greater than
$26,000,000, then the Buyers shall promptly deliver to the Sellers, as
Additional Purchase Price, the amount of such excess with Interest within
five (5) business days after the final determination of the Actual
Working Capital.
1.5. ASSUMPTION OF CERTAIN LEASES AND CONTRACTS. The Sale Order
shall provide for the assumption by the Sellers and assignment to the Buyers or
the Buyers' designee of the Assumed Agreements effective as of the Closing and
shall be set forth on a pleading submitted to the Bankruptcy Court on the
following terms and conditions:
(a) Subject to the provisions of SECTIONS 1.5(A)(I)-(V)
below, the Sellers shall (x) assume and assign to the Buyers or to
Buyers' designee, assuming Buyers' designee provides adequate assurance
of future performance, (A), as of the Closing, the Assumed Agreements
listed on section 1 ("Section 1") of the Exhibit A to the Sale Motion
("Sale Motion Exhibit A") and (B) as of the effective date of the
assumption and assignment which shall be no later than seventy-five (75)
calendar days after the date on which the Sale Order is entered, the
Assumed Agreements listed on section 2 ("Section 2") to the Sale Motion
Exhibit A and (y) shall reject the Excluded Agreements listed on Exhibit
B to the Sale Motion (the "Sale Motion Exhibit B"). Each of the Assumed
Agreements on Sale Motion Exhibit A shall also be identified by the date
of the Assumed Agreement (if available), the other non-debtor parties to
the Assumed Agreement (the "Contract Counter-Party") and the address of
such Contract Counter-Party. Sale Motion Exhibit A shall set forth any
monetary amounts believed by the Sellers to be necessary to cure defaults
pursuant to section 365(a) of the Bankruptcy Code as a condition to the
assumption and assignment of each such Assumed Agreement, if any, as
determined by the Sellers based on the Sellers' books and records,
subject to the amendment of such amounts by the Sellers from time to
time. Sale Motion Exhibit B shall set forth the Excluded Agreements which
shall be identified by the date of the Excluded Agreement (if available),
the Contract Counter-Party to the Excluded Agreement and such party's
address. ANNEX A attached hereto, Sale Motion Exhibit A and Sale Motion
Exhibit B shall be subject to amendment as follows:
(i) At any time and from time to time prior to
and including the commencement of the Sale Hearing, by delivery of
written notice to the Sellers in accordance with SECTION 13.2
hereof, the Buyers, in their discretion, may add Contracts to, or
remove Contracts from, ANNEX A attached hereto, Section 1 of the
Sale Motion Exhibit A, Section 2 of the Sale Motion Exhibit A and
the Sale Motion Exhibit B; PROVIDED that the Buyers shall use
their commercially reasonable efforts to finalize any additions
to, or deletions from, ANNEX A, Sale Motion Exhibit A and Sale
Motion Exhibit B as soon as possible; PROVIDED, FURTHER, that if
Contracts are added to Section 1 of the Sale Motion
7
Exhibit A after the commencement of the twenty-five (25) day
notice period, the assumption and assignment of such Contracts
shall be effected pursuant to a separate motion filed by the
Sellers.
(ii) Until seventy-five (75) days after the date
on which the Sale Order is entered, the Buyers, in their
discretion, by delivery of written notice to the Bankruptcy Court,
the Sellers in accordance with SECTION 13.2 hereof and the
respective Contract Counter-Parties, may designate (the
"Designation"), from time to time, any Contract listed on ANNEX A
attached hereto and Section 2 of the Sale Motion Exhibit A to be:
(x) assumed as an Assumed Agreement (the
"Post-Closing Assumption") and assigned to the Buyers, as
of the date of such notice;
(y) excluded from the Assumed Agreements and
thereby deemed an Excluded Agreement (the "Post Closing
Exclusion") as of the date of such notice; or
(z) excluded from the Assumed Agreements so
that it may be assigned to a designee of the Buyers named
in such written notice (the "Post-Closing Assignment", and
such Contracts designated pursuant to the Post Closing
Assignment shall be the "Designated Assumed Agreements").
The assumption and assignment of the Designated Assumed
Agreements is to be effected by separate motions filed by
the Sellers. If such assignment is not so authorized by the
Bankruptcy Court in accordance with the previous sentence,
then such Contract shall be deemed an Excluded Agreement.
(iii) Prior to the Designation of a Contract, the
Buyers shall have the right to operate or use, as a subcontractor
or a sublessee, the real or personal property or equipment subject
to such Contracts for their own account subject to the receipt of
the Contract Counter-Party's consent if such consent is required.
If the Contract Counter-Party's consent is required to subcontract
or sublease such Contract to the Buyers, but the Contract
Counter-Party does not consent to such subcontract or sublease
then the Buyers shall designate such Contract pursuant to SECTION
1.5(A)(II).
(iv) If the Contract Counter-Party consents to
sublease or subcontract a Contract under SECTION 1.5(A)(III) or if
such consent is not required, whether or not the Buyers operate or
use the real or personal property or equipment subject to such
Contract, then the Buyers shall pay to the Contract Counter-Party
the amounts that come due under such Contract from the Closing
Date until the Designation.
8
(v) Upon the Post-Closing Assumption or the
Post-Closing Assignment, the Buyers shall pay the Cure Costs for
such Contract to the Contract Counter-Party. Upon the Post-Closing
Exclusion, then Buyers shall pay Sellers the amount of the Cure
Cost for such Contract that was retained by the Buyers pursuant to
SECTION 1.3(A)(II) hereof.
(b) Notwithstanding anything to the contrary contained
in SECTION 1.5(A), (i) to the extent there exist any defaults related to
an Assumed Agreement listed on Sale Motion Exhibit A that is not a
Designated Assumed Agreement, the Buyers shall pay all monetary amounts
necessary to cure defaults pursuant to section 365(b) of the Bankruptcy
Code as a condition to the assumption and assignment of each such Assumed
Agreement as determined by an order of the Bankruptcy Court (the "Cure
Costs"); and (ii) to the extent there exist any defaults related to a
Designated Assumed Agreement, the Buyers shall pay the Cure Costs upon
the effectiveness of the assignment of the Designated Assumed Agreements
as a condition to the assumption and assignment of each such Assumed
Agreement as determined by an order of the Bankruptcy Court.
(c) The Buyers shall be responsible for all costs and
expenses necessary in connection with providing adequate assurance of
future performance and for the preparation of declarations of an
authorized person of the Buyers on behalf of the Buyers in connection
therewith pursuant to section 365(b) of the Bankruptcy Code with respect
to the Assumed Agreements listed on Sale Motion Exhibit A other than the
Designated Assumed Agreements.
(d) Nothing herein shall be construed as an admission by
any of the parties hereof that an Assumed Agreement or a Designated
Assumed Agreement is an executory agreement or unexpired lease as
interpreted under the Bankruptcy Code.
1.6. CLOSING DATE. The closing (the "Closing") of the purchase
and sale of the Acquired Assets shall be held at 10:00 a.m. Eastern time on the
business day immediately following the day when all closing deliverables and
conditions set forth in ARTICLES 9 and 10 have been delivered and satisfied, or
on any other date or time as is mutually agreed by the parties hereto (such date
and time being referred to herein as the "Closing Date"), but at a location
selected by the Buyers. The Closing shall be effective as of 12:01 a.m., New
York time, one business day following the Closing Date.
2. LIABILITIES.
2.1. LIABILITIES ASSUMED BY BUYERS. As further consideration for
consummation of the transactions contemplated in this Agreement (the
"Transactions"), the Buyers hereby assume:
(a) the obligations under the Assumed Agreements which
are not Designated Assumed Agreements to the extent that such obligations
arise in and are related to periods after the Closing Date;
9
(b) the liability of the Sellers, if any, to pay
accumulated vacation time for those employees hired by the Buyers
immediately after the Closing; PROVIDED, THAT, the Buyers shall pay no
more than $1,000,000 pursuant to such obligation and in accordance with
the Buyers' policies regarding vacations; and
(c) the liabilities listed on SCHEDULE 2.1(C) hereto
(collectively, the "Assumed Liabilities").
2.2. LIABILITIES NOT ASSUMED BY BUYERS. Except for the Assumed
Liabilities, the Buyers are not assuming (and the Acquired Assets shall not be
subject to) any debts, obligations or liabilities of the Sellers whatsoever,
whether known or unknown, actual or contingent, matured or unmatured, currently
existing or arising in the future, including, but not limited to the liabilities
set forth below, whether such liabilities have been disclosed on the Financial
Statements or the Schedules hereto or not (collectively, the "Excluded
Liabilities"), which shall remain the sole responsibility of the Sellers
(whether or not the Buyers are alleged to have liability as a successor to the
Sellers):
(a) the fees and expenses of legal counsel, auditors,
accountants, brokers, environmental consultants and environmental
engineers or any other professional retained or employed by the Sellers
for services rendered in connection with the preparation, negotiation,
execution, delivery and performance of this Agreement and the
Transactions;
(b) except as expressly provided in SECTION 7.7(B), any
liability of the Sellers for taxes (as hereinafter defined) which arise,
are assessed or become payable or due as of or prior to the Closing Date
or arise out of the consummation of the Transactions or become payable by
the Sellers as a result of purchases, sales or transfers as of or prior
to the Closing Date, or other taxes of any kind or description except
current real estate and personal property taxes with respect to the
Acquired Assets to the extent such taxes relate to periods after the
Closing Date;
(c) any liability or obligation to third parties
(contingent or otherwise) of the Sellers related to periods prior to the
Closing Date arising out of any claim or litigation;
(d) any liability or obligation for Environmental
Damages related to periods prior to the Closing Date;
(e) any trade or other accounts payable related to
periods prior to the Closing Date;
(f) any liability or obligation of the Sellers under
those leases, contracts and agreements which are Acquired Assets
(including the Property Leases and the Assumed Agreements) related to
periods prior to the Closing except as set forth in SECTION 1.5 or on
SCHEDULE 2.1(C);
10
(g) any liability or obligation of the Sellers under any
employment, noncompetition or severance agreements between the Sellers
and their employees or former employees, to which the Sellers are
parties, except for those employment, noncompetition or severance
agreements which are Assumed Agreements;
(h) any liability or obligation of the Sellers under any
sales price or volume proposals or commitments, offers to sell or sales
negotiations entered into or made by employees of or agents acting on
behalf of the Sellers except if pursuant to an Assumed Agreement;
(i) all pending or threatened litigation set forth on
SCHEDULE 4.5.1;
(j) any collective bargaining agreement; and
(k) any liability or obligation of the Sellers under
those leases, contracts and agreements which are Excluded Agreements or
are primarily related to the Excluded Assets as set forth in SECTION 1.2.
3. ALLOCATION OF PURCHASE PRICE. The parties agree that the amount of
the Purchase Price and the Assumed Liabilities that are liabilities for federal
income tax purposes shall be allocated for federal income tax purposes among the
Acquired Assets in accordance with SCHEDULE 3. Subject to the requirements of
applicable law, such allocation (and any amendments thereto by reason of
adjustments to the Purchase Price hereunder) shall be binding upon the parties
for the purposes of filing any return, report or schedule regarding taxes. The
parties shall use reasonable efforts prior to the Closing to allocate such
amounts among each of the Sellers and between the Buyers.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each Seller,
jointly and severally, represents and warrants to the Buyers, as of the date
hereof and as of the Closing Date, as follows:
4.1. ORGANIZATION AND QUALIFICATION. Each Seller is duly formed
and validly existing as a corporation in good standing under the laws of the
relevant state of organization and has all power and authority to own or lease
and operate its properties and assets and to carry on its business in the manner
in which such business is now being conducted. Each Seller is duly qualified to
do business as a foreign corporation and is in good standing in every
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties or assets owned or leased by it makes
qualification necessary and material to the Sellers. SCHEDULE 4.1 sets forth the
organization chart of the Sellers and all their affiliates. Such chart shall
state the stock or membership ownership for each entity.
4.2. AUTHORITY. Each Seller has full power and authority to
enter into this Agreement and to consummate the Transactions subject to
Bankruptcy Court approval of the Sale Order. This Agreement and all other
agreements to be executed in connection herewith by the Sellers have been duly
executed and delivered by each of the Sellers, have been duly
11
authorized by all necessary corporate action by each of the Sellers (including,
without limitation, any required authorization by the board of directors and
shareholders of each of the Sellers) and constitute legal, valid and binding
obligations of each of the Sellers enforceable in accordance with their
respective terms. If the board of directors of DeKalb Stone, Inc. has not
authorized the Transactions, this Agreement or the other agreements to be
executed in connection herewith on the Execution Date, such authorization shall
be received prior to the Closing Date.
4.3. FINANCIAL CONDITION.
4.3.1. FINANCIAL STATEMENTS.
(a) The Sellers have provided to the Buyers
copies of the following (collectively, the "Financial Statements"): (i)
the unaudited consolidated financial statements for the year ended
December 31, 2001 (the "Balance Sheet Date"), including a balance sheet
as of the Balance Sheet Date (the "Balance Sheet"); and (ii) the related
statements of income and of changes in financial position for the fiscal
year then ended.
(b) At or prior to the Closing Date, the Sellers
shall have provided to the Buyers audited consolidated Financial
Statements for the year ended on the Balance Sheet Date, if available on
the Closing Date, which shall be included in the definition of Financial
Statements for the purposes hereunder.
(c) The Financial Statements: (i) are correct and
complete in all material respects; (ii) have been prepared in accordance
with generally accepted accounting principles, consistently applied
throughout the periods covered; (iii) present fairly the results of
operations included in such Financial Statements for the periods included
therein; and (iv) do not omit any information necessary to make such
Financial Statements not misleading.
(d) Since January 1, 2001, the Sellers have kept
books, records and accounts relating to the Operations that, in
reasonable detail, accurately and fairly reflect (A) the transactions and
dispositions of assets of the Sellers and (B) the value of inventory.
Neither the Sellers nor any employee, agent or shareholder of the
Sellers, directly or indirectly, has made any payment of funds of any
such entity or received or retained any funds relating to the Acquired
Assets or the Operations in violation of any applicable law, rule or
regulation.
(e) If the Sellers deliver to the Buyers audited
Financial Statements pursuant to SECTION 4.3.1(B), the Sellers shall be
deemed to have made the representations set forth in SECTIONS 4.3.1(C)
and (D) with respect to the audited and unaudited Financial Statements as
of the Closing Date; PROVIDED, HOWEVER, the audited Financial Statements
shall not be considered an amendment or exception to the unaudited
Financial Statements.
12
4.3.2. ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet
Date and except directly as a result of commencement of the Bankruptcy Cases,
each of the Sellers has used its reasonable best efforts to preserve the
business organization of the Operations intact, to keep available to the Buyers
the services of all current employees of the Operations and to preserve the
goodwill of the suppliers, customers, employees and others having business
relations with the Operations. Since the Balance Sheet Date and except directly
as a result of commencement of the Bankruptcy Cases, or as set forth on SCHEDULE
4.3.2, the Sellers have conducted the Operations in the ordinary course, have
maintained the Acquired Assets in at least as good order and condition as
existed on the Balance Sheet Date (other than wear and tear as may be accounted
for by reasonable use) and as is necessary to continue to conduct the
Operations.
Since the Balance Sheet Date there has not been, except
directly as a result of commencement of the Bankruptcy Cases:
(a) any material transactions by the Sellers relating to
the Operations not in the ordinary and usual course of business, other
than pursuant to the Idaho Sale Agreement (the "Idaho Asset Sale"),
except as set forth on SCHEDULE 4.3.2(A);
(b) any material adverse change in the business,
Operations, results of operations, conditions or prospects of the
Acquired Assets, taken as a whole, except as set forth on SCHEDULE
4.3.2(B);
(c) any damage, destruction or loss, whether or not
covered by insurance, affecting the Acquired Assets or the Operations,
except as set forth on SCHEDULE 4.3.2(C);
(d) any material alteration in the manner in which the
Sellers keep their books, accounts or records relating to the Operations,
or in the accounting principles and practices therein reflected, except
as set forth on SCHEDULE 4.3.2(D);
(e) a termination, substantial modification or, to the
knowledge of any of the Sellers, threatened termination or substantial
modification of the Sellers' relationship with a material customer of the
Operations (other than jobs completed in the ordinary course of business)
or supplier or adverse event affecting any product or process used in
connection with the Operations, except as set forth on SCHEDULE 4.3.2(E);
(f) a lease of, or commitment to acquire or lease, any
realty or any substantial item of machinery or equipment which would
constitute an Acquired Asset, except as set forth on SCHEDULE 4.3.2(F);
(g) any mortgage, pledge or lien, charge or other
encumbrance placed upon any of the Acquired Assets, except as set forth
on SCHEDULE 4.3.2(G);
(h) any sale, assignment or transfer of any asset,
property or business relating to the Operations or cancellation of any
debt or claim or waiver of any right
13
relating to the Acquired Assets or the Operations, except in the ordinary
course of business other than the Idaho Asset Sale and except as set
forth on SCHEDULE 4.3.2(H);
(i) any increase in the salary or other compensation
payable or to become payable to any employee, officer or director of the
Sellers, or the declaration, payment or commitment of any kind for the
payment of a bonus or other compensation or benefit to any employee,
officer or director whose total compensation is more than $50,000, except
as set forth on SCHEDULE 4.3.2(I);
(j) any commitment for capital expenditures relating to
the Operations, except as may have been necessary for ordinary repair,
maintenance and replacement, except as set forth on SCHEDULE 4.3.2(J); or
(k) in general, any material change in the financial
condition, operations, business, properties, assets, business prospects
or manner of conducting the Operations, other than changes in the
ordinary and usual course of business consistent with prior practice,
except as set forth on SCHEDULE 4.3.2(K).
4.3.3. PROJECTIONS. The Sellers' projected budget including
income statement for the fiscal year ending December 31, 2002 provided to the
Buyers (the "Projections"), was produced in the ordinary course of Sellers'
business by their management in good faith in the ordinary course of Sellers'
regular budgeting process. The Projections were not produced for the purposes of
selling the Sellers or marketing the Operations or the Assets.
4.4. TAX MATTERS.
4.4.1. TAX RETURNS; DISPUTES. Except as set forth on
SCHEDULE 4.4.1, the Sellers have filed or have had filed on their behalf, within
the time and in the manner prescribed by law, all federal, and all material
state and local tax returns and reports required to be filed by them with
respect to the Acquired Assets, and have paid all taxes shown to be due thereon.
All such returns were true, accurate and complete in all material respects.
There are no outstanding assessments or taxes otherwise due that if not paid on
a timely basis would result, on or after the Closing Date, in any liens for
taxes on any of the Acquired Assets. There are no pending or, to the knowledge
of any of the Sellers, threatened United States federal or applicable state tax
audits involving any of the Sellers, the adverse determination of which could
result in a lien upon the Acquired Assets.
4.4.2. SECTION 168. None of the Acquired Assets is
tax-exempt use property within the meaning of section 168(h) of the Internal
Revenue Code of 1986, as amended (the "Code"). None of the Acquired Assets is
property that is or will be required to be treated as being owned by another
person pursuant to the provisions of section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986.
14
4.4.3. FIRPTA. None of the Sellers is a foreign person
within the meaning of section 1445(f)(3) of the Code.
4.4.4. TAX DEFINITIONS. As used in this Agreement, the term
"tax return" includes any material report, statement, form, return or other
document or information required to be supplied to a taxing authority in
connection with taxes. As used in this Agreement, the term "taxes" means any
federal, state, local and foreign income or gross receipts tax, alternative or
add-on minimum tax, sales and use tax, customs duty and any other tax, charge,
fee, levy or other assessment, including, without limitation, property,
transfer, occupation, service, license, payroll, franchise, excise, withholding,
ad valorem, severance, documentary stamp, gains, premium, windfall profit,
employment, rent or other tax, governmental fee or like assessment or charge of
any kind whatsoever, together with any interest, fine or penalty thereon,
addition to tax, additional amount, deficiency, assessment or governmental
charge imposed by any federal, state, local or foreign taxing authority which is
payable by any of the Sellers.
4.5. LITIGATION AND CLAIMS.
4.5.1. LITIGATION PENDING OR THREATENED. Except as set
forth on SCHEDULE 4.5.1, there is no action, suit, claim, arbitration,
proceeding or investigation pending or threatened before any court, tribunal,
panel, master or governmental agency, authority or body in which any of the
Sellers is a party or which might affect the Acquired Assets or the Operations.
SCHEDULE 4.5.1 sets forth all material litigation which any of the Sellers is a
party.
4.5.2. OPERATIONS ENJOINED. None of the Sellers, nor any
employee, manager or agent of any of the Sellers has been permanently or
temporarily enjoined by any order, judgment or decree of any court or tribunal
or any other agency from engaging in or continuing any conduct or practice in
connection with the Operations.
4.5.3. VIOLATION OF LAW; PERMITS. Except as disclosed on
SCHEDULE 4.5.3(A), the Sellers are not in material violation of any provision of
any law, decree, order or regulation applicable to the Operations or the
Acquired Assets, including, without limitation, those relating to antitrust or
other anticompetitive practices, to employment practices (such as
discrimination, health and safety), and to minority business enterprises. Except
as disclosed on SCHEDULE 4.5.3(B), the Sellers have all Permits required with
respect to the Acquired Assets or in the conduct of the Operations and the
operation of the Real Property, all of which Permits are set forth on SCHEDULE
4.5.3(C), and have satisfied all material bonding requirements pertaining to the
Operations or the Acquired Assets under federal, state, local and foreign laws,
rules and regulations. Except as disclosed on SCHEDULE 4.5.3(D) and except for
Bankruptcy Court approval, all such Permits may be transferred in accordance
with applicable law and assigned to the Buyers without the approval or consent
of any third party. Except as disclosed on SCHEDULE 4.5.3(E), the present
conduct of the Operations is not dependent upon any so-called "non-conforming
use" exception nor based upon any zoning variance. To the extent the operation
of any Real Property is subject to any non-conforming use or zoning variance,
the Buyers will have
15
the right to continue such operation after the Closing Date in the manner such
was conducted by the Sellers immediately prior to the Closing.
4.6. PROPERTIES AND ASSETS OF THE SELLERS. Upon consummation of
the Transactions, the Buyers will acquire good and marketable title to the
Acquired Assets, free and clear of all mortgages, security interests, claims,
equities, liens, charges, imperfections of title, encroachments, encumbrances,
leases, shares, easements, rights-of-way, squatters' rights, covenants, purchase
or sales options, conditions and restrictions (collectively, "Encumbrances"),
except for Bankruptcy Permitted Encumbrances; PROVIDED that, notwithstanding any
other provision of this Agreement or any deed delivered in connection with this
Agreement, the Sellers do not warrant title to mineral rights, oil, gas or other
hydrocarbon substance rights or water rights except as set forth in SECTIONS
4.6.1(J) and 4.6.1(K).
4.6.1. TITLE TO REAL PROPERTY.
(a) Set forth on ANNEX B is (i) a complete list
and description of all real property that is owned by any of the Sellers,
or in which any of the Sellers has legal or equitable title and which is
an Acquired Asset (such real property, together with all rights, title,
privileges and appurtenances pertaining thereto, including, without
limitation, all of the Sellers' right, title and interest, if any, in and
to any unpaid award for any taking by condemnation or any damage to the
premises by reason of a change of grade of any street or highway, shall
be collectively referred to as the "Owned Property") and (ii) a
description of each lease of real property under which the Sellers,
either individually or collectively is a lessee, lessor, sublessee or
sublessor, licensee or sublicensee (the "Leased Property"). The Owned
Property and the Leased Property are sometimes collectively referred to
as the "Real Property."
(b) Except for Permitted Encumbrances (as defined
below) and those Encumbrances that will be released pursuant to the Sale
Order, the Sellers have (i) good and marketable title in fee simple to
the Owned Property and to all plants, buildings and improvements thereon
and (ii) good and marketable leasehold title to the Leased Property and
to all plants, buildings and improvements thereon and the Sellers'
interests therein are free and clear in each case of all Encumbrances.
"Permitted Encumbrances" means with respect to any Acquired Assets (i)
statutory liens for current taxes or assessments not yet due or
delinquent, (ii) liens securing statutory obligations (including workers'
compensation, unemployment insurance or other social security
legislation), (iii) zoning, entitlement, conservation restriction and
other land use and environmental regulations by governmental authorities
(collectively, the "Restrictions") which do not materially interfere with
the present use or operation of an Acquired Asset subject to such
Restriction, (iv) all exceptions, restrictions, easements, charges,
rights-of-way and other Encumbrances set forth in any state, local or
municipal franchise (collectively, "Exceptions") under which the
Operations is conducted which do not materially interfere with the
present use or operation of an Acquired Asset subject to such Exception,
and (v) such other liens, imperfections in title, charges, easements,
rights-of-way, encroachments, exceptions, restrictions and encumbrances
(collectively,
16
the "Liens") which do not materially interfere with the present use or
operation of an Acquired Asset subject to such Lien and neither secure
indebtedness or the payment of the deferred purchase price of property,
nor individually or in the aggregate materially interfere with the
present use or operation of an Acquired Asset subject to such Lien. For
the Material Sites, Permitted Encumbrances shall also mean those
Encumbrances, if any, with respect to a specific Material Site set forth
on SCHEDULE 4.6.1(B)(I). Notwithstanding the above, with respect to
Acquired Assets that are not Material Sites (as defined below),
Restrictions, Exceptions or Liens that do not have, or could not
reasonably be expected to have, a material adverse effect on the
business, Operations, results of operation or condition of the Acquired
Assets taken as a whole shall be deemed to be Permitted Encumbrances. For
purposes of this Agreement, "Material Sites" are those real property
parcels listed on SCHEDULE 4.6.1(B)(II).
(c) Except as disclosed on SCHEDULE 4.6.1(C), the
buildings and improvements owned or leased by the Sellers, either
individually or collectively, and the operation or maintenance thereof as
operated and maintained by the Sellers prior to the Closing Date do not
(i) contravene any zoning or building law or ordinance or other
administrative regulation (including but not limited to those relating to
zoning, land division, building, fire, health and safety) or (ii) violate
any restrictive covenant or any provision of federal, state, local or
foreign law, PROVIDED that, in the event the use and operation of any
Real Property by any of the Sellers is a non-conforming use as of the
Closing Date, except as disclosed on SCHEDULE 4.6.1(C), (A) the right to
continue such non-conforming use will not be restricted or terminated
upon the consummation of the Transactions, and (B) such non-conforming
use does not impose conditions or limitations on the continued use and
operation of such property, or on the restoration, alteration or
expansion thereof, and does not impose costs, expenses or improvements as
a condition to or required in connection with such use and operation. The
foregoing representations and warranties expressly supersede and survive
the delivery of the special warranty deed to any Real Property,
notwithstanding the terms of any such special warranty deed.
(d) Except as listed on SCHEDULE 4.6.1(D)
attached hereto, there is no pending or, to the best knowledge of any of
the Sellers, threatened condemnation or eminent domain proceeding with
respect to, or that could affect, any Real Property.
(e) There is not and has not been, during any
period through and including the Closing Date, any substance placed on
the Real Property by any of the Sellers, or to the knowledge of any of
the Sellers, placed by any other person (including any lessor or
predecessor thereto with respect to Leased Property) the presence of
which on any Real Property causes or caused a nuisance upon any Real
Property or to adjacent properties, except such substances as could not
reasonably be expected to have a material adverse effect on the business,
business prospects, financial condition or results of operations of the
Sellers, either individually or collectively.
17
(f) To the knowledge of any of the Sellers, there
is not and has not been during any period through and including the
Closing Date, any substance, the presence of which on properties adjacent
to any Real Property constitutes or constituted a trespass by any of the
Sellers, except such substances as could not reasonably be expected to
have a material adverse effect on the business, business prospects,
financial condition or results of operations of the Sellers, either
individually or collectively.
(g) Except as set forth on SCHEDULE 4.6.1(G)
attached hereto, to the knowledge of any of the Sellers, there are no
special taxes or assessments, or any planned public improvements that may
result in a special tax or assessment, with respect to any Real Property,
and there is no special proceeding pending or threatened in which any
taxing authority having jurisdiction over any of the Real Property is
seeking to increase the assessed value thereof. Except as set forth on
SCHEDULE 4.6.1(G) attached hereto, each Seller represents and warrants
that it has not received any written or oral notice or communication and,
to the knowledge of any of the Sellers, there has been no public
disclosure nor any notice or disclosure in any official record (including
any land records), with respect to any such special tax or assessment,
planned public improvement, or special proceeding pending or threatened.
The foregoing representations and warranties expressly supersede and
survive the delivery of the special warranty deed to any Real Property,
notwithstanding the terms of any such special warranty deed.
(h) Except as set forth on SCHEDULE 4.6.1(H),
there are no strips or gores with respect to or affecting any parcel of
Real Property (or portion thereof) which cause any related parcels of
land to be non-contiguous. Except as set forth on SCHEDULE 4.6.1(H), each
parcel of Real Property has a right of access to and from such parcel.
Except as set forth on SCHEDULE 4.6.1(H), the Real Property is not
situated in a flood hazard area as defined by the Federal Insurance
Administration. Except as set forth on SCHEDULE 4.6.1(H), to the best
knowledge of any of the Sellers, no portion of the Real Property is
located on or adjacent to navigable waters and no portion of the Real
Property consists of filled-in land.
(i) All utilities required for the operation of
each parcel of Real Property either enter such Real Property through
adjoining streets or, if they pass through adjoining land, do so in
accordance with valid public easements or irrevocable private easements,
and all of such utilities are installed and operating.
(j) SCHEDULE 4.6.1(J) is a true and correct list
of all water rights which are used by any of the Sellers in connection
with the Acquired Assets or the Operations or are necessary to conduct
the Operations (the "Owned Water Rights"). The Sellers, either
individually or collectively, are the record or beneficial owners of the
Owned Water Rights. The Owned Water Rights and the other water rights the
Sellers, either individually or collectively, have pursuant to contract
rights (together, the "Water Rights") have been of sufficient quantity
and quality to supply the business needs of the Operations at each of the
locations of the Operations as conducted prior to the Closing
18
Date. To the extent the Water Rights include shares of stock or other
ownership interests in water or irrigation companies, such Water Rights
are being and have been put to use by the Sellers in accordance with all
bylaws or other water or irrigation company requirements and all
assessments on such shares of stock or ownership interests have been paid
in full and are presently paid current. The Water Rights have received
all necessary governmental and regulatory approvals for the uses to which
they are presently employed in the Operations. None of the Sellers has
reason to believe that the Water Rights will not be sufficient, in both
quantity and quality, for the future business needs of the Operations if
conducted in accordance with the past practices of the Sellers. The Water
Rights have been put to beneficial use by the Sellers and have not been
forfeited or abandoned by the Sellers, in whole or in part, under
applicable law.
(k) Except as listed on SCHEDULE 4.6.1(K), each
parcel of Owned Real Property which has been used by any of the Sellers
for, or which any of the Sellers has anticipated using for, mining and
extraction of minerals or other materials, includes all right, title and
interest in and to such minerals and materials being extracted or located
upon or under such parcel of Owned Real Property and the right to extract
and sell or use the same without the obligation to pay royalties or other
compensation to any person. Except as listed on SCHEDULE 4.6.1(K), each
parcel of Leased Property which has been used by any of the Sellers for,
or which any of the Sellers has anticipated using for, mining and
extraction of minerals or other materials, includes the right of the
Sellers or their successors in interest to remove from such parcel of
Leased Property such minerals and materials being extracted or located
upon or under such parcel of Leased Property and the right to extract and
sell or use the same without the obligation to pay royalties or other
compensation to any person, except as may be provided in the respective
lease assumed by the Buyers with respect to such parcel of Leased
Property.
4.6.1.1. MAINTENANCE. Except as set forth on
SCHEDULE 4.6.1.1, all of the plants, buildings, material fixtures and other
improvements situated on the Real Property and all other material items of
property are in adequate and useable condition and in a reasonable state of
repair, and maintenance of such items has not been deferred beyond a reasonable
time period.
4.6.1.2. ASSESSMENTS. Except as set forth on
SCHEDULE 4.6.1.2, there is no special proceeding pending or, to the knowledge of
any of the Sellers, threatened, in which any taxing authority having
jurisdiction over any of the Real Property is seeking to increase the assessed
value thereof.
4.6.1.3. BINDING COMMITMENTS. No binding commitment
has been made by any of the Sellers to any governmental authority, utility
company or any other organization, group or individual relating to the Real
Property or any part thereof which imposes upon or could impose upon any of the
Sellers an obligation to make any contribution or dedication of money or land or
to construct, install or maintain any improvements of a public or private nature
on or off such Real Property.
19
4.6.1.4. TITLE DOCUMENTS. True and complete copies
of (a) all leases to which any of the Sellers is a party respecting any Real
Property and all other instruments granting such leasehold interests, rights,
options or other interests (the "Property Leases") (including all amendments,
modifications, extensions and supplements thereto), (b) all deeds, title
insurance commitments and policies, maps, plats, surveys, mortgages, agreements
and other documents granting to any of the Sellers title to or otherwise
affecting or evidencing the state of title with respect to any Real Property,
and (c) any supplements thereto (collectively, the "Title Documents") have been
delivered to the Buyers. With respect to the Title Documents, except as
disclosed on SCHEDULE 4.6.1.4, no breach or event of default on the part of the
Sellers, either individually or collectively, or with respect to the Operations,
to the knowledge of any of the Sellers, no breach or event of default on the
part of any other party thereto and no event that, with the giving of notice or
lapse of time or both, would constitute such breach or event of default under
any term, covenant or condition of such Title Documents, have occurred and are
continuing unremedied that could materially adversely affect the business,
business prospects, financial condition or results of any of the Operations or
any Real Property.
4.6.1.5. NO BREACH OR EVENT OF DEFAULT; PROPERTY
LEASES. With respect to the Property Leases, except as disclosed on SCHEDULE
4.6.1.5, no breach or event of default on the part of any of the Sellers (or to
the knowledge of any of the Sellers, any other party) under the Property Leases
and no event that, with the giving of notice or lapse of time or both would
constitute such a breach or event of default, has occurred and is continuing.
All the Property Leases are in full force and effect and are valid and
enforceable against the parties thereto in accordance with their terms. All
rental and other payments due under each of the Property Leases have been duly
paid in accordance with the terms of such Property Leases. Except as set forth
in SCHEDULE 4.6.1.5 hereto and except for the Bankruptcy Court's approval of the
Sale Order, the assignment of all of the Sellers' right, title and interest in
and to the Property Leases pursuant to this Agreement does not require the
consent of any party to and will not constitute an event of default under or
permit any party to terminate or change the existing terms of any Property
Lease.
4.6.1.6. VIOLATION OF LAW. Except as set forth on
SCHEDULE 4.6.1.6, none of the Real Property or any condition or activity
thereon, any plants, buildings, fixtures, or improvements located thereon, or
the current use, operation or maintenance thereof is in violation of any law,
rule, regulation, code or ordinance or is in violation of the terms of any
restrictive covenant or other encumbrance.
4.6.1.7 SITE #126 - PRIDE QUARRY. Reference is
hereby made to that certain Repurchase Option Agreement by and between Black
Eagle Minerals, L.C. and Georgia Power Company, dated September 30, 1996 and
recorded on Ficse 9622, Frames 355-361 (the "Repurchase Option") and to the
provisions contained therein. No portion of the property defined therein as the
"Developed Portion of the Property" which is subject to a right of repurchase in
favor of Georgia Power Company constitutes a portion of the "Leased Property,"
as defined in Section 2.1 of that certain Lease Option Agreement and Lease
Agreement, dated May 6, 1998 between Black Eagle Minerals, LC and Southern Ready
Mix, Inc., as amended."
20
4.6.2. PERSONAL PROPERTY. Each Seller has good and
marketable title to each item of Personal Property, held by such Seller, free
and clear of all Encumbrances except Bankruptcy Permitted Encumbrances. Except
as set forth on SCHEDULE 4.6.2, all material items of Personal Property are in
adequate and useable condition and in a reasonable state of repair, reasonable
wear and tear excepted, and material maintenance on such items has not been
deferred beyond a reasonable time period.
4.7. INSURANCE. There are no outstanding requirements or
recommendations by any insurance company that issued any such policy or by any
Board of Fire Underwriters or other similar body exercising similar functions or
by any governmental authority exercising similar functions which requires or
recommends any repairs or other work of a material amount or nature to be done
on or with respect to any of the Acquired Assets insured in any of said
policies. Except as set forth on SCHEDULE 4.7, none of the Sellers has received
any notice or other communication from any such insurance company within two (2)
years preceding the date hereof canceling or materially amending any of said
insurance policies relating to the Sellers, the Operations or the Acquired
Assets, and to the knowledge of any of the Sellers, no such cancellation or
amendment is threatened. There was no material inaccuracy in any application for
any such insurance coverage.
4.8. LABOR AND EMPLOYMENT MATTERS.
4.8.1. LABOR AND EMPLOYMENT DEFINITIONS. Capitalized terms
used in this SECTION 4.8 which are not otherwise defined in this Agreement shall
have the respective meanings as set forth below:
"Employee Benefit Plan" shall mean each ERISA Plan
and each other pension, profit sharing, retirement, bonus, deferred
compensation, stock option, stock purchase, severance pay or insurance
plan for officers or employees, which currently is, or within the
immediately preceding six years was, established, maintained, contributed
to or legally obligated to be contributed to (i) by any of the Sellers or
(ii) solely with respect to potential liability of and through any
current or former ERISA Affiliate arising or continuing in respect of
such plan under section 302 or Title IV of ERISA or section 412 of the
Code while such entity was an ERISA Affiliate, by such current or former
ERISA Affiliate.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any corporation which
is a member of a controlled group of corporations with the Sellers within
the meaning of section 414(b) of the Code, a trade or business (including
a sole proprietorship, partnership, trust, estate or corporation) which
is under common control with any of the Sellers within the meaning of
section 414(c) of the Code or a member of an affiliated service group
with any of the Sellers within the meaning of section 414(m) or (o) of
the Code.
21
"ERISA Plan" shall mean any Pension Plan and any
Welfare Plan.
"Multiemployer Plan" shall mean a plan as defined in
section 3(37) of ERISA.
"Pension Plan" shall mean each employee pension
benefit plan within the meaning of section 3(2) of ERISA which is
established, maintained or as to which there is an obligation to
contribute by or on behalf of any of the Sellers or any ERISA Affiliate,
or under which the employees of any of the Sellers or any ERISA Affiliate
receive any benefits.
"Welfare Plan" shall mean each employee welfare
benefit plan within the meaning of section 3(1) of ERISA which is
established, maintained or to which there is an obligation to contribute
by or on behalf of any of the Sellers or any ERISA Affiliate, or under
which the employees of any of the Sellers or any ERISA Affiliate receive
any benefits.
4.8.2. EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.8.2(A) lists each Employee Benefit
Plan and clearly identifies each as a Pension Plan, Welfare Plan or other
type of Employee Benefit Plan in which employees of the Sellers
participate.
(b) Except as disclosed on SCHEDULE 4.8.2(B),
none of the Sellers nor any ERISA Affiliate has an obligation to
contribute to any Multiemployer Plan and has had no such obligation
during the six years preceding the Closing Date.
(c) Except as disclosed on SCHEDULE 4.8.2(C),
none of the Sellers nor any ERISA Affiliate maintains or contributes to
or has an obligation to contribute to any Pension Plan (other than a
Multiemployer Plan) covered by Title IV of ERISA or described as a
defined benefit plan (in accordance with ERISA section 3(35)), and has
not maintained or contributed to any such plan during the six years
preceding the Closing Date.
(d) The Sellers have delivered to the Buyers true
and correct copies of the following:
(i) each ERISA Plan listed on SCHEDULE
4.8.2(A) and all amendments thereto; and
(ii) each trust agreement pertaining to any
of the ERISA Plans, including all amendments to such documents.
(e) Except as disclosed on Schedule 4.8.2(e), no
event has occurred in connection with any Employee Benefit Plan which has
resulted, or will or
22
may result in any fine, penalty, assessment or other liability for which
any of the Sellers or a transferee of assets from any of the Sellers may
be responsible, whether by reason of operation of law or contract.
(f) Neither the execution and delivery of this
Agreement, including, without limitation, all other agreements to be
executed in connection herewith, by any of the Sellers nor the
consummation of the Transactions will result in the acceleration or
creation of any rights of any person entitled to any benefits under any
Employee Benefit Plan.
4.8.3. BENEFIT OBLIGATIONS. All accrued material
obligations for payments to any entity, plan or person with respect to any forms
of compensation or benefits for employees of any of the Sellers or any ERISA
Affiliate have been paid, unless expressly prohibited by the Bankruptcy Code or
the Bankruptcy Court (in which case, Sellers shall promptly notify the Buyers of
such prohibition), or are otherwise not the liability of the Buyers unless
specifically noted otherwise in this Agreement.
4.8.4. PERFORMANCE. Each Seller has withheld and paid to
the appropriate governmental authorities or is withholding for payment not yet
due to such authorities all amounts required to be withheld from the employees
of each Seller, unless expressly prohibited by the Bankruptcy Code or the
Bankruptcy Court (in which case, Sellers shall promptly notify the Buyers of
such prohibition), and none of the Sellers is liable for any arrears of such
amounts or penalties thereon for failure to comply with any of the foregoing.
4.8.5. COMPENSATION. All reasonably anticipated material
obligations of each Seller for salaries, bonuses and other forms of compensation
(excluding vacation, holiday and sick pay) payable to the employees of the
relevant Seller in respect of the services rendered by any of them have been
paid or will be paid in accordance with the Sellers' policies, unless expressly
prohibited by the Bankruptcy Code or the Bankruptcy Court (in which case,
Sellers shall promptly notify the Buyers of such prohibition).
4.8.6. EMPLOYEES. SCHEDULE 4.8.6 lists all employees of
each Seller (the "Employees"), his or her duties, hourly or weekly wage and any
bonus paid to such employee during the year ended December 31, 2001.
4.8.7. COLLECTIVE BARGAINING AGREEMENTS.
(a) Except as disclosed on SCHEDULE 4.8.7(A),
none of the Sellers is, or since December 31, 1999 has been, a party to a
collective bargaining agreement with any labor organization. No
organization or representation question is pending regarding the
employees of any of the Sellers, and no such question has been raised
since December 31, 1999.
(b) Except as disclosed on SCHEDULE 4.8.7(B),
there is no pending or, to the knowledge of any of the Sellers,
threatened claim, grievance,
23
arbitration, negotiation, suit, action or charge of or by any employee of
any of the Sellers. Except as disclosed on SCHEDULE 4.8.7(B), no
complaint is pending against any of the Sellers before the National Labor
Relations Board or any state or local agency. Each Seller has complied,
in respect of its employees, in all material respects with all applicable
statutes, regulations, orders and restrictions of the United States of
America, all states and other subdivisions thereof, and all agencies and
instrumentalities of the foregoing, including those relating to wages,
hours, collective bargaining and the payment and withholding of taxes and
other sums as required by appropriate governmental authorities.
(c) The Sellers have furnished the Buyers with
copies of all claims, complaints, reports or other documents in the
Sellers' files concerning any of the Sellers or the employees thereof
made by or against any of the Sellers during the past three years
pursuant to workers' compensation laws, Title VII of the Civil Rights Act
of 1964, the Occupational Safety and Health Act of 1970, the National
Labor Relations Act of 1935 or any other federal or state laws relating
to employment of labor. To the extent that any of the documents the
Sellers have provided to the Buyers pursuant to this SECTION 4.8.7(C)
include information protected by the attorney-client privilege or work
product doctrine, none of the Sellers waive such privilege or application
of the attorney work product doctrine to such documents.
4.9. COMPENSATION OF AND INDEBTEDNESS TO AND FROM EMPLOYEES.
4.9.1. EMPLOYEE COMPENSATION. SCHEDULE 4.9.1(A) is a true
and complete list of the names and annual compensation (whether in the form of
salary, bonus, commission, pension or profit-sharing contributions or other
supplemental compensation now or hereafter payable) of the ten (10) highest
compensated full time employees of the Sellers (the "Key Employees"). Since the
Balance Sheet Date, except as disclosed on SCHEDULE 4.9.1(B), there has been no
material change in the rate of total compensation for services rendered,
including, without limitation, bonuses and deferred compensation, for any of the
employees listed on SCHEDULE 4.9.1(A), and the bonuses and deferred compensation
established for the year ending December 31, 2001 were consistent with the past
practices of each of the Sellers for similar employees in similar situations.
4.9.2. INDEBTEDNESS. Except as set forth on SCHEDULE
4.9.2(A), none of the Sellers is indebted to any employee or agent of any of the
Sellers, nor any spouse, child or parent thereof, in any amount whatsoever other
than for compensation for services rendered since the start of the Sellers'
current pay period generally utilized for their employees and for business
expenses, vacation or sick pay, or any amount owed pursuant to an Employment
Benefits Plan. Except as set forth on SCHEDULE 4.9.2(B), no employee or agent of
any of the Sellers is indebted to any of the Sellers except for advances made in
the ordinary course of business.
4.10. CONTRACTS. Set forth on SCHEDULE 4.10(A), are all of the
written or oral Contracts which are material to the Operations or the Acquired
Assets. The Sellers have
24
furnished the Buyers with a true and complete copy of all Contracts set forth on
SCHEDULE 4.10(A), and with accurate descriptions of all oral Contracts set forth
on SCHEDULE 4.10(A), in each case which are material to the Sellers, either
individually or in the aggregate, the Operations or the Acquired Assets.
SCHEDULE 4.10(A) also sets forth all proposed Cure Costs, proposed in good
faith, pursuant to the Sellers' books and records. Except as set forth on
SCHEDULE 4.10(B), (i) none of the Sellers is in breach of or in default under
any of the contracts, obligations or commitments and, (ii) to the knowledge of
any of the Sellers, no event has occurred that, with the giving of notice or
lapse of time or both, would constitute such a breach or default which could
reasonably be expected to have a material adverse effect on the Sellers, either
individually or in the aggregate, or the Acquired Assets, either individually or
in the aggregate. Except as set forth on SCHEDULE 4.10(C), the execution and
delivery of this Agreement and the consummation of the Transactions will not
require the consent of any party (other than each of the Sellers and the
Bankruptcy Court) to any contract taking into account section 365 of the
Bankruptcy Code.
4.11. ENVIRONMENTAL MATTERS.
4.11.1. HAZARDOUS MATERIALS. Except as set forth in
SCHEDULE 4.11.1: (i) none of the Sellers, nor, to the knowledge of any of the
Sellers, any prior owner, tenant, occupant or user of the Real Property, nor any
other person or concern, has engaged in or permitted any operations or
activities upon, or any use or occupancy of, such property or any portion
thereof for the purpose of or the handling, manufacture, treatment, storage,
use, generation, release, discharge, refining, dumping or disposal of any
Hazardous Materials (whether legal or illegal, accidental or intentional,
excluding de minimis quantities of Hazardous Materials that are commonly used in
connection with the Operations and which were used and disposed of in accordance
with Environmental Requirements) on, under, in or about any such property or
transported any Hazardous Materials to, from or across any such property; and
(ii) to the knowledge of any of the Sellers, no Hazardous Materials have
migrated or are threatening to migrate from any Real Property upon or beneath
other properties, and no Hazardous Materials have migrated or are threatening to
migrate from other properties upon, about or beneath any Real Property.
4.11.2. ENVIRONMENTAL REQUIREMENTS. Except as set forth in
SCHEDULE 4.11.2: (i) each Seller, the Real Property and the existing and, to the
knowledge of any of the Sellers, prior uses and activities thereon, including
but not limited to the use, maintenance and operation of any such property, and
all activities and conduct of business related thereto, comply and have at all
times complied in all material respects with all Environmental Requirements, and
no activity on or condition of the Real Property has constituted or constitutes
a nuisance or has constituted or constitutes a tortious condition with respect
to any third party; and (ii) none of the Sellers, nor, to the knowledge of any
of the Sellers, any prior owner or occupant of the Real Property, pursuant to
any existing or proposed law or regulation, is required now or in the
foreseeable future to take any remedial action related to any such property or
make any capital improvements in order to place such property or the
improvements located thereon in compliance with such law or regulation.
25
4.11.3. NOTICE OF VIOLATIONS. Except as set forth in
SCHEDULE 4.11.3, to the knowledge of any of the Sellers: (i) none of the Sellers
nor any prior owner or occupant of the Real Property has received notice or
other communication concerning or has any knowledge of (A) any violation or
alleged violation of Environmental Requirements relating to the Real Property,
whether or not corrected or (B) any alleged liability for Environmental Damages
(as defined below) relating to the Real Property, and there exists no basis for
any lawsuit, claim, proceeding, citation, directive, summons or investigation
related to either (A) or (B) being instituted or filed; (ii) no writ,
injunction, decree, order or judgment related to the foregoing is outstanding;
and (iii) none of the Sellers nor any prior owner or occupant of any such
property has been ordered or requested by any regulatory authority to take any
step to remedy any condition on any such property whether or not constituting a
violation of Environmental Requirements, and no such person or entity has been
named a "potentially responsible party" with respect thereto.
4.11.4. POTENTIALLY RESPONSIBLE PARTY. Except as set forth
in SCHEDULE 4.11.4, neither the Environmental Protection Agency nor any other
federal, state or local authority, nor any other person, corporation,
partnership, joint venture, association, trust, estate or other entity or
organization has identified any of the Sellers, or, to the knowledge of any of
the Sellers, any prior owner or occupant of any of the Real Property as a
"potentially responsible party" or as a party liable in any way for remediation
or clean-up activities relating to the Real Property, or notified any of the
Sellers or any prior owner or occupant of any such property that it may in the
future identify any of the Sellers or any prior owner or occupant as a
"potentially responsible party" or as a party liable in any way for remediation
or clean-up activities relating to the Real Property.
4.11.5. ENVIRONMENTAL REPORTS. The Sellers have furnished
the Buyers with true and complete copies of all claims, complaints, reports
assessments, audits, investigations and other documents in the possession of any
of the Sellers made by, on behalf of or against any of the Sellers relating to
the release of Hazardous Material at the Real Property or any potential or
actual Environmental Damages incurred by any of the Sellers relating to the Real
Property.
4.11.6. DEFINITIONS. For the purposes of this Agreement:
(i) "Environmental Damages" means all claims,
judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, liens, costs and expenses of defense of
a claim (whether or not such claim is ultimately defeated), good faith
settlements of judgment and costs and expenses of reporting,
investigating, removing and/or remediating Hazardous Materials, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable
attorney's fees and disbursements and consultants' fees, any of which are
incurred at any time arising out of, based on or resulting from (i) the
release of Hazardous Materials into the environment, on or prior to the
Closing, upon, beneath, or from any Real Property, or other location
(whether or not owned by any of the Sellers) where any of the Sellers
conducted operations or generated, stored, sent,
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transported, or disposed of Hazardous Materials, and (ii) any violation
of Environmental Requirements by any of the Sellers on or prior to the
Closing.
(ii) "Environmental Requirements" means all
applicable statutes, regulations, rules, ordinances, codes, policies,
advisories, guidance, actions, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises and similar items of all
Governmental Authorities and all applicable judicial and administrative
and regulatory decrees, judgments and orders and all covenants running
with the land that relate to: (A) occupational health or safety; (B) the
protection of human health or the environment; (C) the treatment,
storage, disposal, handling, release or remediation of Hazardous
Materials; or (D) exposure of persons to Hazardous Materials.
(iii) "Governmental Authority" means any
governmental agencies, departments, commissions, boards, bureaus,
instrumentalities, courts or tribunals of the United States, the states
and political subdivisions thereof.
(iv) "Hazardous Materials" means any substance:
(A) the presence of which requires reporting, investigation, removal or
remediation under any Environmental Requirement; (B) that is defined as a
"hazardous waste," "hazardous substance" or "pollutant" or "contaminant"
under any Environmental Requirement; (C) that is toxic, explosive,
corrosive, flammable, ignitable, infectious, radioactive, reactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated under any
Environmental Requirement; (D) the presence of which causes or threatens
to cause a nuisance, trespass or other tortious condition or poses a
hazard to the health or safety of persons; (E) that contains gasoline,
diesel fuel or other petroleum hydrocarbons, PCBs, asbestos or urea
formaldehyde foam insulation.
4.12. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.
(a) PROVIDED that the consents referenced in SECTION
4.5.3 and SECTION 4.6.1.5 are obtained, the execution and delivery by
each of the Sellers of this Agreement does not, and the consummation of
the Transactions will not, result in the creation of any lien, security
interest, charge or encumbrance upon the Acquired Assets or the
Operations under, conflict with or result in a breach of, create an event
of default (or event that, with the giving of notice or lapse of time or
both, would constitute an event of default) under, or give any third
party the right to accelerate any obligation under, any Contract,
mortgage, license, lease, indenture, instrument, order, arbitration
award, judgment or decree to which any of the Sellers is a party or by
which any of the Sellers, the Acquired Assets or the Operations is bound
or affected.
(b) PROVIDED that the consents referenced in SECTION
4.5.3 and SECTION 4.6.1.5 are obtained, the execution and delivery by
each of the Sellers of this Agreement does not, and the consummation of
the Transactions will not, result in a violation of, or require any
authorization, approval, consent or other action by, or registration,
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declaration or filing with or notice to, any court or administrative or
governmental body pursuant to, any statute, law, rule, regulation or
ordinance applicable to any of the Sellers taking into account section
365 of the Bankruptcy Code. There is no pending or threatened action,
suit, proceeding or investigation before or by any court or governmental
body or agency, to restrain or prevent the consummation of the
Transactions or that might affect the right of the Buyers to own the
Acquired Assets or to operate the Operations.
4.13. REGULATORY APPROVALS. Except as set forth on SCHEDULES
4.5.3(A), (B), (C) and (D), each of the Sellers have obtained all consents,
approvals, authorizations and other requirements prescribed by any law, rule or
regulation which must be obtained or satisfied by the Sellers and, prior to the
Closing Date, shall have obtained all such consents, approvals, authorizations
and other requirements which are necessary for the Sellers to consummate the
Transactions. Set forth on SCHEDULE 4.13 is a true and complete list of all
consents, approvals, authorizations and other requirements referenced in this
SECTION 4.13.
4.14. INVENTORIES. The Inventories as of the Closing Date are
good and merchantable, and the quantities of Inventories are reasonable and
consistent with past practice of such Seller. The Inventories set forth in the
Balance Sheet have been valued in accordance with generally accepted accounting
principles consistently applied throughout the period covered and consistent
with past practices. The Inventories of each Seller reported on the Balance
Sheet were valued in the same manner employed by such Seller to report inventory
in the Financial Statements for the fiscal year ended December 31, 2001. The
Inventories of each Seller are usable in the ordinary course of business at a
value which is no less than the value at which such inventories are carried by
such Seller. The Inventory is adequate for the conduct of the business of each
Seller and Inventory levels are not in excess of normal operating requirements
of such Seller and such levels are limited to the prior twelve (12) months sales
and the following twelve (12) month sales.
4.15. OWNERSHIP OF CAPITAL STOCK. The organization chart set
forth in SCHEDULE 4.1 is true and correct. The Sellers, other than the
Stockholder and DeKalb Stone, Inc. are wholly owned, either directly or
indirectly, by the Stockholder. The Sellers control DeKalb Stone, Inc. subject
to the requirements of the DeKalb Stone, Inc. Bylaws which require unanimity of
board of director approval for certain transactions.
4.16. BROKERAGE. Except as set forth on SCHEDULE 4.16, none of
the Sellers, nor any employee or agent of any of the Sellers, has dealt with any
finder or broker in connection with any of the Transactions or the negotiations
looking toward the consummation of such Transactions who may be entitled to a
fee in connection therewith. Any fees payable to any finder or broker engaged by
the Sellers or with whom the Sellers have dealt, shall be the sole
responsibility of each of the Sellers and in no circumstance shall the Buyers
have any liability therefor.
4.17. CUSTOMERS. Set forth on SCHEDULE 4.17 is a list of the ten
(10) largest customers of each of Western Aggregates Holding Corporation and its
Subsidiaries in the
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aggregate and SRM Holdings Corporation and its Subsidiaries in the aggregate for
the fiscal year ended December 31, 2001. None of the customers of any of the
Sellers set forth on SCHEDULE 4.17 or which represent more than 10% of such
Seller's annual revenue has terminated or, to the knowledge of any of the
Sellers, indicated an intention or plan to terminate all or a material part of
the services performed for or orders historically placed by such customers, and
none of the Sellers has any reason to believe that any of such customers may
terminate all or a material part of such services or orders, whether by reason
of the acquisition of the Acquired Assets by the Buyers or for any other reason.
None of the Sellers has received notice of, and there is no reasonable basis
for, any material complaint by any of such customers with respect to services
provided or products delivered by any of the Sellers since January 1, 2001. None
of the employees primarily responsible for servicing customers listed on
SCHEDULE 4.17 has indicated an intention or plan to terminate his or her
employment with any of the Sellers or to otherwise be unavailable to the Buyers.
4.18. PRODUCT LIABILITY. Except as set forth on SCHEDULE 4.18,
there are no pending or, to the knowledge of any of the Sellers, threatened
product liability, warranty, material backcharge, material additional work,
field repair or other claims by any third party (whether based on contract or
tort and whether relating to personal injury, including death, property damage
or economic loss) arising from (A) services rendered by any of the Sellers
during periods through and including the Closing Date, (B) the sale,
distribution, erection or installation of products by any of the Sellers on or
prior to the Closing Date, or the manufacture of products by any of the Sellers
whether delivered to a customer before or after the Closing Date (except with
respect to any liability or obligation arising out of any action of the Buyers
after the Closing Date) or (C) the Operations or the ownership of the Acquired
Assets during the period through and including the Closing Date.
4.19. SUFFICIENCY OF ASSETS. The Acquired Assets and the Excluded
Assets constitute (a) all of the assets and rights that are used in the
Operations as they are being conducted as of the date hereof and (b) all the
property, real and personal, tangible and intangible, necessary for the conduct
by the Buyers of the Operations as they are being conducted as of the date
hereof. The Acquired Assets are sufficient and adequate to allow the Buyers to
continue the Operations immediately following the Closing Date if conducted in
accordance with the past practices of the Sellers. No affiliate of the Sellers,
who is not itself a Seller, owns or has rights to any assets, properties, or
rights of the Acquired Assets.
4.20. PRESERVATION OF DOCUMENTS. Consummation of the Transactions
does not impose upon the Buyers any obligation to preserve any of the business
records of any of the Sellers except as may be required by this Agreement or to
the extent required by HSR or Utah state law.
4.21. NAMES. The names, and the variations thereof, set forth on
SCHEDULE 4.21 are all the names used by the Sellers in the Operations.
4.22. SOFTWARE. The software set forth on SCHEDULE 4.22 is all
the material software used by the Sellers and which is necessary to the
Operations.
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4.23. SUBSIDIARIES. The Subsidiaries, A-Block Company, Inc., an
Arizona corporation, Mohave Concrete and Materials, Inc. NV, a Nevada
corporation and Grove Materials, Corp., a Georgia corporation do not hold or own
any Assets and are not parties to any Assumed Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYERS. The Buyers represent
and warrant to the Sellers, as of the date hereof and as of the Closing Date, as
follows:
5.1. ORGANIZATION AND QUALIFICATION. The Buyers are duly formed
and validly existing as a corporation in good standing under the laws of the
State of Delaware.
5.2. AUTHORITY. The Buyers have full power and authority to
enter into this Agreement and to consummate the Transactions. This Agreement and
all other agreements to be executed in connection herewith by the Buyers have
been duly executed and delivered by the Buyers, have been duly authorized by all
necessary corporate action by the Buyers (including, without limitation, any
required authorization by the board of directors and shareholders of the Buyers)
and constitute legal, valid and binding obligations of the Buyers enforceable in
accordance with their respective terms.
5.3. BROKERAGE. None of the Buyers, nor any of their employees
or agents, has dealt with any finder or broker in connection with any of the
Transactions contemplated by this Agreement or the negotiations looking toward
the consummation of such Transactions who may be entitled to a fee in connection
therewith. Any fees payable to any finder or broker engaged by the Buyers or
with whom the Buyers have dealt, shall be the sole responsibility of the Buyers
and in no circumstance shall the Sellers have any liability therefor.
5.4. FINANCING. The Buyers have the financial capacity to
consummate the Transactions and purchase the Acquired Assets on the terms
specified in the Agreement.
6. EMPLOYEES.
6.1. OBLIGATION TO EMPLOY. Nothing in this Agreement shall be
construed as an obligation or commitment of the Buyers to hire, or offer to
hire, any employee, officer, former employee or director of any of the Sellers
or otherwise assume any liability relating in any way to the employees, former
employees, officers or directors of any of the Sellers including but not limited
to liabilities for salary payments or Employee Benefit Plans or arising under
the Worker Adjustment Retraining and Notification Act ("WARN Act"), the
Consolidated Omnibus Budget Reconciliation Act ("COBRA") or any collective
bargaining agreement. The Sellers, however, do not assume any liability relating
in any way to the Sellers' employees, former employees, officers or directors
hired after the Closing, including liability under any employee benefit plans
sponsored by the Buyers or arising under the WARN Act, COBRA or any collective
bargaining agreement to which the Buyers is a party to the extent any such
liability arises from the Buyers' acts or omissions after the Closing Date. The
Sellers shall indemnify the Buyers with respect to WARN Act liabilities arising
as a result of the Transactions as provided in SECTION 12. The Sellers shall
provide, within ten (10) business days after the Filing Date, appropriate WARN
Act
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notices (the "WARN Act Notices") describing the Transactions to all employees,
appropriate union representatives and appropriate governmental officials with
respect to the Sellers' facilities subject to the WARN Act.
6.2. OFFERS TO EMPLOY. The Buyers shall make any former
employees of the Sellers that it hires immediately eligible for benefit plans
comparable to plans that it makes available to other employees and shall provide
COBRA benefits if such employees are later terminated by the Buyers. With
respect to such former employees of the Sellers hired by the Buyers after the
Closing Date, the Buyers shall recognize such employee's employment service with
the Sellers solely for participation, vesting and benefit eligibility purposes
(but not pension benefit accrual purposes) under any employee benefit plans it
may provide to such employee. Upon the Buyers' request and the written consent
of the applicable employees and former employees of the Sellers, the Sellers
shall, to the extent permitted by applicable law, reasonably provide to the
Buyers information from the employment records of employees and former employees
of the Sellers to assist the Buyers in deciding whether to hire any such
individuals.
7. COVENANTS AND AGREEMENTS OF THE PARTIES.
7.1. FILING OF BANKRUPTCY CASES, SALE MOTION, APA APPROVAL
MOTION AND RELEASE; ENTRY OF BUYER PROTECTION AND BIDDING PROCEDURES ORDER;
ADDITIONAL SELLERS.
7.1.1. Promptly following, but no later than three (3)
business days after the date hereof (the "Filing Date"):
(a) each of the Sellers shall file with the
Bankruptcy Court voluntary bankruptcy cases under chapter 11 of the
Bankruptcy Code (the "Bankruptcy Cases") in the District of Nevada, Reno
Division (the "Bankruptcy Court") and file the appropriate pleadings
requesting that the Bankruptcy Court set hearings on the motions seeking
the Buyer Protection and Bid Procedures Order and the order approving the
Retention Plan on shortened and limited notice and shall also file the
appropriate pleadings requesting that the Bankruptcy Court set hearings
on the motions seeking the Release Order on normal notice;
(b) the Sellers shall file with the Bankruptcy
Court a motion or motions, in form and substance satisfactory to the
Buyers, requesting an order, substantially in the form attached as
EXHIBIT B hereto, approving the Buyer Protections and Bid Procedures
described in SECTION 7.10 (the "Buyer Protections and Bid Procedures
Order");
(c) the Sellers shall file with the Bankruptcy
Court a motion or motions, in form and substance satisfactory to the
Buyers, seeking approval of a retention plan that is satisfactory to the
Buyers, Sellers and the Pre-Petition Secured Lenders (the "Retention
Plan"); and
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(d) the Sellers shall file a motion or motions,
in form and substance satisfactory to the Buyers, requesting that the
Bankruptcy Court enter an order, substantially in the form attached as
EXHIBIT C hereto (the "Release Order") authorizing and approving the
release of the Buyers or any of their subsidiaries or Affiliates from any
and all avoidance actions that the Sellers, the Sellers' estate, the
creditors' committee, any trustee appointed in the Bankruptcy Cases or
other successor to the Sellers may have against the Buyers, the Buyers'
subsidiaries or Affiliates or their representatives and assigns (the
"Release") Notwithstanding the foregoing, the Release shall not affect
Sellers' right to enforce this Agreement.
7.1.2. As promptly as practicable after the Filing Date,
the Sellers shall file such other motions as are necessary to implement the
Transactions, which are not otherwise set forth in SECTIONS 7.1.1 AND 7.1.3.
7.1.3 Within one (1) business day after entry of the Buyer
Protection and Bid Procedure Order, each of the Sellers shall file with the
Bankruptcy Court:
(a) a motion or motions, in form and substance
satisfactory to the Buyers (the "Sale Motion"), pursuant to the
provisions of sections 363 and 365 of the Bankruptcy Code, in the
Bankruptcy Cases, among other things, to obtain an order of the
Bankruptcy Court, substantially in the form attached as EXHIBIT D hereto,
that approves the Transactions and authorizes the assumption and
assignment of the Assumed Agreements and the sale of the Acquired Assets,
free and clear of liens and Encumbrances (other than the Bankruptcy
Permitted Encumbrances), to the Buyers, (the "Sale Order");
(b) the appropriate pleadings requesting that the
Bankruptcy Court set a hearings on the Sale Motion on normal notice on or
promptly after the date scheduled for the Auction;
7.1.4. Sellers shall request a hearing relative to, and
shall use their respective best efforts to obtain entry of the Buyer Protection
and Bidding Procedures Order, an order approving the Retention Plan, the Sale
Order and Release Order so as to permit the Closing to occur no later than
ninety (90) days after the Filing Date.
7.1.5. From and after the date hereof, to the extent that
any Subsidiary acquires, owns or holds any portion of the Assets, conducts any
portion of the Operations or is a party to a Contract that the Buyer wants to
include as an Assumed Agreement pursuant to SECTION 1.5 hereto but initially is
not a party hereto, Sellers shall cause each such Subsidiary to become a party
to this Agreement as an additional Seller. In addition, Sellers shall, and shall
cause each such subsidiary to, execute and deliver such further documents and
instruments and take such further actions as may be necessary to file a
bankruptcy case in the Bankruptcy Court for each such Subsidiary as, in the
reasonable judgment of the Buyers after consultation with the Sellers, are
necessary to consummate the Transactions. Sellers shall not transfer any Asset
to the Stockholder's majority stockholder or any of its affiliates or
subsidiaries.
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7.1.6. Sellers shall promptly make any filings, take all
actions, and use their respective best efforts to obtain any and all other
approvals and orders necessary or appropriate for consummation of the
Transactions, subject to their obligations to comply with any order of the
Bankruptcy Court.
7.1.7. In the event an appeal is taken, or a stay pending
appeal is requested, from the Buyer Protection and Bidding Procedures Order, the
Sale Order, the Release Order, or the order approving the Retention Plan,
Sellers shall immediately notify Buyers of such appeal or stay request and shall
provide to the Buyers within one (1) business day a copy of the related notice
of appeal or order of stay. Sellers shall also provide Buyers with written
notice of any motion or application filed in connection with any appeal from any
of such orders and copies of all pleadings filed in connection with any such
appeals.
7.1.8. The Sellers shall take all steps necessary under the
Bankruptcy Code to assume and assign all the Assumed Agreements to the Buyers
and the Designated Assumed Agreements to Buyers' designees, subject to SECTION
1.5, and to obtain the Sale Order, the Buyer Protection and Bidding Procedures
Order, and the Release Order.
7.1.9. Buyers shall cooperate in providing such information
and evidence as is necessary to obtain the orders described in this SECTION 7.1.
7.2. GOVERNMENTAL AUTHORITY APPROVALS: CONSENTS TO ASSIGNMENT.
(a) From the date hereof until the Closing Date, each
Seller and each Buyer shall (i) promptly apply for and use their
respective commercially reasonable efforts to obtain prior to Closing all
consents, approvals, authorizations and clearances of governmental
authorities, including the Bankruptcy Court, required of it to consummate
the Transactions, (ii) provide such information and communications to
governmental authorities as the other party or such persons or entities
may reasonably request, and (iii) assist and cooperate with other parties
to obtain all Permits and clearances of governmental authorities that the
other parties reasonably deem necessary or appropriate, and to prepare
any document or other information reasonably required of it by any such
persons or entities to consummate the Transactions.
(b) Within ten (10) calendar days following the Filing
Date, each of the parties, if and to the extent required by law, all
reports or other documents required or requested by governmental
authorities under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, as amended ("HSR")
concerning the purchase and sale of the Acquired Assets and comply
promptly with any requests by the governmental authorities for additional
information concerning the purchase and sale of the Acquired Assets, so
that the waiting period specified in HSR with respect to those Assets
will expire as soon as reasonably possible after the date hereof. Each of
the parties shall furnish to the other parties such information as the
other parties reasonably require to perform their obligations under HSR
and shall exchange drafts of the relevant portions of each other's report
forms prior to filing.
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7.3 BANKRUPTCY FILINGS. From and after the date hereof until the
Closing Date, Sellers shall deliver to Buyers promptly (a) copies of all
pleadings, motions, notices, statements, schedules, applications, reports and
other papers that Sellers file in the Bankruptcy Cases, but with respect to any
such papers that relate, in whole or in part, to this Agreement, the
Transactions, or the Buyers, their constituent members or their agents or
representatives, Sellers shall use all their respective reasonable efforts to
provide such prior notice as may be reasonable under the circumstances before
the filing of such papers and (b) copies of all pleadings, motions, notices,
statements, schedules, applications, reports and other papers filed in the
Bankruptcy Cases.
7.4. OPERATIONS. Until the Closing Date, except as otherwise expressly
provided in this Agreement and subject to the obligations of Sellers to commence
the Bankruptcy Cases and comply with any applicable order of the Bankruptcy
Court and the provisions of the Bankruptcy Code and taking into account Sellers'
current financial condition and the Bankruptcy Cases, once commenced, Sellers
will:
(a) perform when due all obligations under the Assumed
Agreements relating to or affecting the Acquired Assets or the
Operations;
(b) carry on the Operations in the ordinary course of
business and in substantially the same manner as they have heretofore;
(c) maintain the Acquired Assets in good working order
and condition, ordinary wear and tear excepted;
(d) take all actions necessary and appropriate to
deliver to the Buyers title to the Acquired Assets free and clear of all
Encumbrances (except for the Bankruptcy Permitted Encumbrances) and to
obtain appropriate releases, consents, estoppels, certificates, opinions
and other instruments as the Buyers may reasonably request;
(e) keep in full force and effect present insurance
policies or other comparable insurance benefiting the Assets and the
conduct of the Operations;
(f) maintain and preserve their business organizations
and operations substantially intact; use their respective commercially
reasonable efforts to retain the present employees for the conduct of
Operations (subject to the right of Sellers, after consultation with the
Buyers, to discharge any employee, whose total compensation exceeds
$50,000, in the ordinary course of the Sellers' business); maintain their
relationships with contractors, subcontractors, suppliers, customers and
other persons or entities doing business with Sellers; and take such
actions as are reasonably necessary and achievable to cause the smooth,
efficient and successful transition to the Buyers of the Operations at
Closing; and
34
(g) permit and allow reasonable access by Buyers to
discuss and make offers of post-Closing employment with any of Sellers'
personnel, to advertise for post-Closing employment, and to establish
relationships with contractors, subcontractors, suppliers and other
persons or entities or entities having business relations with Sellers.
7.5. CERTAIN ACTIONS. Until the Closing Date, except as
otherwise expressly provided in this Agreement or as set forth on SCHEDULE 7.5,
Sellers shall not take any of the following actions without first obtaining the
consent of the Buyers:
(a) amend or terminate any Assumed Agreement;
(b) enter into or assume any Contract not in the
ordinary course of business and consistent with past practice; PROVIDED
that the Sellers have provided a copy of such Contract to the Buyers
prior to the Sale Hearing;
(c) make offers to any employee for employment with any
person or entity or make any material change in personnel, operations,
finances, accounting policies, or real or personal property not in the
ordinary course of business and consistent with past practice;
(d) increase compensation payable or become payable to,
make a bonus or severance payment to, or otherwise enter into one or more
bonus or severance agreements with, any Employee or agent of any Seller
except in the ordinary course of business and consistent with past
practice or pursuant to the Retention Plan;
(e) create, assume or permit to exist any new
Encumbrance upon any of the Acquired Assets;
(f) sell, assign, distribute or otherwise transfer or
dispose of any property, plant or equipment of any Seller having an
original cost in excess of $50,000, individually or in the aggregate;
(g) take any action (other than those required under
SECTION 7.1 hereof and such other actions required to be performed by the
Bankruptcy Code, the rules promulgated thereunder or the Bankruptcy
Court) outside the ordinary course of the Sellers' business;
(h) amend or agree to amend the articles or certificate
of incorporation or other organizational documents or the bylaws or other
governing documents of any Seller or otherwise take any action relating
to any liquidation or dissolution of any Seller;
(i) create, incur, assume, guarantee or otherwise become
liable for any liability, or agree to do any of the foregoing except that
the Sellers may create, incur, assume, guarantee or otherwise become
liable for obligations in their ordinary course of business solely with
respect to ordinary course accounts payable or with respect to
administrative expenses incurred in the Bankruptcy Cases;
35
(j) cancel, forgive, release, discharge or waive any
receivable or any similar Asset or right with respect to the Operations,
or agree to do any of the foregoing except in the ordinary course of
business and consistent with past practices;
(k) change any accounting method, policy or practice in
the Financial Statements; or
(l) terminate, amend or otherwise modify any Employee
Benefit Plan.
7.6. ACCESS TO AND PROVISION OF ADDITIONAL INFORMATION.
(a) From the date hereof until the Closing Date, to the
extent permitted by law, the Sellers shall cause their respective
officers and employees to confer on a regular and frequent basis with one
or more representatives of the Buyers, as requested by the Buyers, and to
answer Buyers' questions regarding matters relating to the conduct of the
Operations and the status of the Transactions. Sellers shall notify the
Buyers in writing of any material changes in the operations, or financial
condition of the Operations and of any complaints, investigations,
hearings or adjudicatory proceedings (or communications indicating that
the same may be contemplated) of any person or entity and shall keep the
Buyers reasonably informed of such matters.
(b) The exercise by the Buyers of any right of access
granted herein shall not materially interfere with the business
operations of Sellers.
7.7. TAX MATTERS.
(a) COOPERATION ON TAX MATTERS. The Buyers and the
Sellers agree to furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information and assistance
relating to the Business and the Acquired Assets (including, without
limitation, access to books and records) as is reasonably necessary for
the preparation and filing of all tax returns in connection with matters
relating to or affected by the operations of the Sellers prior to the
Closing, including the making of any election relating to taxes, the
preparation for any audit by any taxing authority, the making of any
voluntary disclosures, and the prosecution or defense of any claim, suit
or proceeding relating to any tax. Notwithstanding anything to the
contrary herein, the Buyers and the Sellers shall retain all books and
records with respect to taxes pertaining to the Acquired Assets for a
period of at least six (6) years following the Closing Date. At the end
of such period, each party shall provide the other with at least thirty
(30) days prior written notice before destroying any such books and
records, during which period the party receiving such notice can elect to
take possession, at its own expense, of such books and records. The
Sellers and the Buyers shall cooperate with each other in the conduct of
any audit or other proceeding relating to Taxes involving the Acquired
Assets or the Business.
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(b) TRANSFER TAXES. All excise, sales, use, transfer,
value added, registration stamp, recording, documentary, conveyancing,
franchise, property, transfer, gains and similar taxes, levies, charges
and recording, filing and other fees (collectively, "Transfer Taxes")
incurred in connection with the Transactions contemplated by this
Agreement shall be paid by the Buyers. The Buyers shall, at their own
expense, file all necessary tax returns and other documentation with
respect to all such Transfer Taxes and, if required by applicable law,
the Sellers will join in the execution of any tax returns and other
documentation at the Buyers' request. Notwithstanding the foregoing, the
Sellers shall seek in the Sale Order a decretal paragraph which provides
that, in accordance with section 1146(c) of the Bankruptcy Code, the
Transactions are steps in the formulation or anticipation of the
formulation of a Chapter 11 plan for the Sellers and, as such, the making
or delivery of any instrument of transfer to effectuate the Transactions
shall not be taxed under any law imposing a stamp tax or similar tax.
7.8. NOTIFICATION. The Sellers shall notify the Buyers and keep
them advised of (a) the occurrence, of (i) any litigation or administrative
proceeding pending or, to the knowledge of any of the Sellers, threatened
against any of the Sellers; (ii) any material damage or destruction of any of
the Acquired Assets; or (iii) any material adverse change in the financial
condition of the Operations or the Acquired Assets, either individually or in
the aggregate; or (b) any matter hereafter arising or any information obtained
after the date hereof of which, if existing, occurring or known at or prior to
the date hereof, would have been required to be set forth or described in a
disclosure schedule or which is necessary to complete or correct any information
in such schedule or in any representation or warranty of the Seller which has
been rendered inaccurate thereby.
7.9. NOTIFICATION TO CREDITORS. The Sellers shall notify, as
required by the Bankruptcy Code and all rules promulgated thereunder, all
parties entitled to notice, including, but not limited to, all holders of
Encumbrances whose Encumbrances can be relieved by the Sale Order, of all
motions, notices and orders referenced in this Agreement, as modified by any
orders issued by the Bankruptcy Court as well as all counterparties to the
Assumed Agreements and Excluded Agreements. The Sellers shall timely notify all
parties to the Assumed Agreements of the cure amounts for each such agreement,
so as to enable any such party to object to the proposed cure amounts and to
permit the Bankruptcy Court to decide any such objections prior to the Closing.
Furthermore, the Sellers shall give notice to any other person or entity upon
request of the Buyers within a reasonable time from such request.
7.10. SUBMISSION FOR BANKRUPTCY COURT APPROVAL.
(a) The "Buyer Protections" that shall be included in
the Buyer Protection and Bid Procedures Order are as follows:
(i) without duplication, if (A) the Buyers have
not materially breached any of the provisions of this Agreement,
(B) either party terminates this Agreement in accordance with
ARTICLE 8 excluding SECTIONS 8.1(A), (D), (E) and (G) and (C) any
of the following occurs (I) the Sellers accept a Competing
Proposal,
37
(II) an order is entered by the Bankruptcy Court approving the
sale of the Acquired Assets to a party other than the Buyers
pursuant to section 363 of the Bankruptcy Code (a "Section 363
Sale") after the date of such termination and such Section 363
Sale is later consummated or (III) a plan of reorganization
involving the sale, exchange or distribution of all or
substantially all of the Acquired Assets or a sale of all or
substantially all of the capital stock of the Sellers to a party
other than the Buyers is confirmed by the Bankruptcy Court (a
"Plan") after the date of such termination and, in each such
instance, is later substantially consummated, then the Buyers
shall be entitled to up to a maximum of $1,500,000 for the Buyers'
actually incurred reasonable out-of-pocket, reasonably documented
expenses in connection with the Transactions, including the HSR
filing and similar fees, in the aggregate (the "Expense
Reimbursement") which shall include the Partial Expense
Reimbursement paid to the Buyers on the Execution Date and an
additional $750,000, to the extent such expenses exceed the
Partial Expense Reimbursement (the "Additional Expense
Reimbursement") in addition to a break-up fee in the amount of
$4,500,000 (the "Break-Up Fee");
(ii) without duplication, if (A) the Buyers have
not materially breached any of the provisions of this Agreement
and (B) either party terminates this Agreement in accordance with
ARTICLE 8 hereof but none of the conditions in SECTION 7.10(A)(I)
above has occurred, then the Buyers shall be entitled to the
Expense Reimbursement;
(iii) the Break-Up Fee or the Additional Expense
Reimbursement payable to the Buyers under this Section shall be
paid by the Sellers to the Buyers within two (2) business days
after the last event which shall have caused the Break-Up Fee or
the Expense Reimbursement to become payable;
(iv) the Break-Up Fee and the Additional Expense
Reimbursement payable to the Buyers shall be entitled to
super-priority allowed administrative claim treatment under
section 503(b)(1)(A) and 507(a)(1) of the Bankruptcy Code, senior
to all other super-priority claims in the Bankruptcy Cases; and
(v) to the extent that the Buyers are entitled to
the Expense Reimbursement but the Buyers' actually incurred
reasonable out-of-pocket, reasonably documented expenses in
connection with the Transactions in the aggregate are less than
$750,000, then the Buyers shall return to the Sellers the
difference between $750,000 and the Buyers' aggregate actually
incurred reasonable out-of-pocket, reasonably documented expenses
in connection with the Transactions within forty-five (45)
calendar days of the date on which the Agreement's termination
pursuant to ARTICLE 8.
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(b) The "Bid Procedures" that shall be included in the
Buyer Protection and Bid Procedures Order are as follows:
(i) The Sellers shall promptly notify the Buyers
of any expression of interest or bids (each a "Competing
Proposal") received by the Sellers from any person or entity
relating to any bids or offers (a) for the purchase or acquisition
of all or substantially all of the assets of the Sellers or the
Acquired Assets, all or substantially all of the capital stock of
the Sellers, all or substantially all the Sellers' assets located
in the Western United States as described on SCHEDULE
7.10(B)(I)(X) (the "Western Assets"), or all or substantially all
the Seller's assets located in the Southeastern United States as
described on SCHEDULE 7.10(B)(I)(Y) (the "Southeastern Assets"),
in each case, whether in a separate transactions or as part of a
Plan of the Sellers or any of them, (b) for any merger,
consolidation, liquidation, dissolution, or similar transactions
involving the Sellers or any of them, or (c) to provide debt or
equity financing to the Sellers or any of them. The Sellers shall,
within two (2) business days after receipt of any such written
Competing Proposal provide a copy to the Buyers.
(ii) The Sellers shall establish and seek court
approval of a date by which competing bidders (the "Auction") must
submit in writing Competing Proposals to purchase either (a)
substantially all the assets of the Sellers, (b) the Western
Assets, or (c) the Southeastern Assets, but in no event shall the
Auction be after May 15, 2002.
(iii) An initial qualified bid must contain the
following to be considered a "Qualified Bid":
(1) with respect to any Competing Proposal
for substantially all the Assets of the Sellers, such
Competing Proposal (a) must provide for consideration for
value that is greater than the sum of (i) the Purchase
Price, (ii) the amount of the Break-Up Fee and the maximum
Additional Expense Reimbursement and (iii) the Initial
Minimum Incremental Bid Amount (as defined below), (b) have
substantially the same terms and conditions as the
agreement between the Buyers and the Sellers, and (c) be
accompanied by satisfactory evidence of committed financing
or other ability to perform. For avoidance of doubt, this
Agreement shall be deemed to be a Qualified Bid for
substantially all of Sellers' assets;
(2) with respect to any Competing Proposal
for only the Western Assets, such Competing Proposal (a)
must provide for consideration for value that is greater
than the sum of (i) the Purchase Price MINUS the value of
the highest initial Qualified Bid for the Southeastern
Assets without regard to the Break-Up Fee or the maximum
Additional Expense Reimbursement, (ii) the amount of the
Break-Up Fee
39
and the maximum Additional Expense Reimbursement and (iii)
the Initial Minimum Incremental Bid Amount (as defined
below), (b) has substantially the same terms and conditions
as the agreement between the Buyers and the Sellers, and
(c) be accompanied by satisfactory evidence of committed
financing or other ability to perform. Notwithstanding the
foregoing, in order for any Competing Proposal for the
Western Assets to be considered a Qualified Bid, at least
one Qualified Bid for the Southeastern Assets must have
been submitted which together with such Competing Proposal
for the Western Assets meets the Qualified Bid requirements
required in (1) above; or
(3) with respect to any Competing Proposal
for only the Southeastern Assets, such Competing Proposal
(a) must provide for consideration for value that is
greater than the sum of (i) the Purchase Price MINUS the
value of the highest initial Qualified Bid for the Western
Assets without regard to the Break-Up Fee or the maximum
Additional Expense Reimbursement, (ii) the amount of the
Break-Up Fee and the maximum Additional Expense
Reimbursement and (iii) the Initial Minimum Incremental Bid
Amount (as defined below), (b) have substantially the same
terms and conditions as the agreement between the Buyers
and the Sellers, and (c) be accompanied by satisfactory
evidence of committed financing or other ability to
perform. Notwithstanding the foregoing, in order for any
Competing Proposal for the Southeastern Assets to be
considered a Qualified Bid, at least one Qualified Bid for
the Western Assets must have been submitted which together
with such Competing Proposal for the Southeastern Assets
meets the Qualified Bid requirements required in (1) above.
(iv) Any entity intending to submit a competing
bid may qualify as a Qualified Bidder only if (a) the competing
bidder delivers to the Sellers an executed confidentiality
agreement in form and substance substantially the same as any
confidentiality agreement by and between the Buyers and the
Sellers (except that, prior to submission of a Qualified Bid,
disclosure of the Qualified Bidder's interest and proposal but not
identity shall be permitted), (b) the competing bidder delivers to
the Sellers a bid that in good faith and upon the advice of their
independent financial advisors, the Sellers, in consultation with
the creditors' committee (if any is functioning, willing and
available to consult on a timely basis), believe is reasonably
likely to lead to a higher and better offer for the subject
assets, (c) the competing bidder is one whom the Sellers, in
consultation with the creditors' committee (if any is functioning,
willing and available to consult on a timely basis), in good faith
determine is reasonably likely (based on the availability of
financing and proof of financial wherewithal, experience and other
relevant considerations) to be able to consummate a transaction
based on the competing bid, if selected as the successful bidder
for the subject assets and (d) the competing bidder may not seek
to use a credit bid under
40
section 363(k) of the Bankruptcy Code (a "Qualified Bidder"). For
avoidance of doubt, the Buyers shall be deemed to be a Qualified
Bidder.
(v) The Sellers shall establish procedures for an
auction at which only Qualified Bidders who have previously
submitted a Qualified Bid may bid, that, among other things, set
the minimum incremental bid amount at $100,000 for the initial
incremental bid for all or any portion of the Assets (the "Initial
Minimum Incremental Bid Amount").
7.11 PARTIAL EXPENSE REIMBURSEMENT. On the date hereof as
partial consideration for the Buyers' entry in this Agreement, the Sellers shall
pay to the Buyers $750,000 (the "Partial Expense Reimbursement") which may be
retained by the Buyers except as set forth in SECTION 7.10(A).
7.12. TERMINATION OF EMPLOYMENT. Effective on the Closing Date,
the Sellers shall terminate the employment and the employment agreements, if
any, of all employees that the Buyers have informed Seller, at least ten (10)
calendar days prior to the Closing, that the Buyers will offer to employ
immediately following the Closing.
7.13. PUBLICITY. None of the parties shall issue an initial press
release, with respect to the execution of this Agreement and the Transactions
contemplated hereby, without the prior approval of the other party. In no event
shall such initial press release be issued before the Sellers file the
Bankruptcy Cases. Other than such initial press release, so long as this
Agreement is in effect, neither the Sellers, Buyers nor any of their respective
Affiliates shall issue or cause the publication of any press release or other
announcement with respect to this Agreement or the Transactions contemplated
hereby without the prior approval of the other party except as may be required
in the Bid Procedures and Buyer Protection Order or unless required by law upon
prior consultation with the other party.
7.14. DEKALB STONE, INC. Within twenty (20) calendar days from
the Execution Date, the board of directors of DeKalb Stone, Inc. shall have
authorized the execution and delivery of this Agreement and each agreement to be
executed in connection herewith as well as the consummation of the Transactions.
8. TERMINATION AND ABANDONMENT.
8.1. TERMINATION. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of the Sellers and the
Buyers;
(b) by the Buyers, if the Sellers have not filed the
Bankruptcy Cases within three (3) business days after the date hereof.
(c) by the Buyers, if the Closing shall not have
occurred on or before the date ninety (90) calendar days after the Filing
Date (the "Outside Date"); PROVIDED
41
that the Buyers shall not have the right to terminate this Agreement
pursuant to this SECTION 8.1(C) if the failure to close within such time
period results primarily from the Buyers' breach of any representation,
warranty or covenant contained in this Agreement;
(d) by the Buyers or the Sellers, if the applicable
waiting period under HSR has not expired prior to the Outside Date;
(e) by the Buyers, if the Federal Trade Commission or
the United States Department of Justice conditions HSR approval on
divestitures that the Buyers, in their discretion, believe are
unacceptable;
(f) by the Buyers, if there has been a material
violation or breach by the Sellers of any covenant, representation or
warranty made by it contained in this Agreement which has prevented the
satisfaction of any condition to the obligations of the Buyers to effect
the Closing and such violation or breach has not been cured by the
Sellers within five (5) business days of receipt of written notice
thereof, or waived by the Buyers;
(g) by the Sellers, if there has been a material
violation or breach by the Buyers of any covenant, representation or
warranty made by them contained in this Agreement which has prevented the
satisfaction of any condition to the obligations of the Sellers to effect
the Closing and such violation or breach has not been cured by the Buyers
within five (5) business days of receipt of written notice thereof, or
waived by the Sellers;
(h) by the Buyers, if the Buyer Protections and Bid
Procedures Order is not approved by the Bankruptcy Court on or prior to
twenty-five (25) calendar days following the Filing Date (i) PROVIDED
that the Buyers shall not be entitled to terminate this Agreement
pursuant to this SECTION 8.1(H) if the failure to obtain such approval
within such time period results primarily from the Buyers' breach of any
representation, warranty or covenant contained in this Agreement;
(i) by the Buyers, if, prior to or upon the approval of
the Buyer Protections and Bid Procedures Order by the Bankruptcy Court,
the Buyers have not received written consent or consent on the record at
the hearing on the Bid Procedures from Bank of America, as agent for the
prepetition lenders under the Third Amended and Restated Credit Facility,
dated June 5, 1988, and any amendments, modifications and replacements
thereto and Bank of America, as agent for any post-petition lending
(collectively, the "DIP Loan") pursuant to section 364 of the Bankruptcy
Code (collectively, the "Pre-Petition Secured Lenders") to a carve-out
from their liens and their administrative claims for the Break-Up Fee and
the Additional Expense Reimbursement which may be due to the Buyers under
this Agreement;
(j) by the Buyers, if the Sale Order has not been
entered by the Bankruptcy Court on or prior to the Outside Date; PROVIDED
that the Buyers shall not be
42
entitled to terminate this Agreement pursuant to this SECTION 8.1(J) if
the failure to obtain such approval within such time period results
primarily from the Buyers' breach of any representation, warranty or
covenant contained in this Agreement;
(k) by the Buyers, if the Auction has not occurred on or
prior to May 15, 2002;
(l) by the Buyers, if the Seller accepts a Competing
Proposal; and
(m) by the Buyers, if any lender under the DIP Loan
exercises any of its remedies after an event of default thereunder;
PROVIDED, HOWEVER that if the only remedy exercised was the charging of a
default rate of interest such an exercise of remedies would not entitle
the Buyers to terminate.
8.2. PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement and abandonment of the Transactions by either or
both of the parties pursuant to SECTION 8.1 (other than a termination pursuant
to SECTION 8.1(A)), written notice thereof, in accordance with SECTION 13.2,
shall forthwith be given by the terminating party to the other party and this
Agreement shall terminate and the Transactions shall be abandoned, without
further action by any of the parties hereto. If this Agreement is terminated as
provided herein:
(a) said termination shall be the sole remedy of the
parties hereto with respect to breaches of any covenant, representation
or warranty contained in this Agreement and none of the parties hereto
nor any of their respective trustees, directors, officers or Affiliates,
as the case may be, shall have any liability or further obligation to the
other party or any of their respective trustees, directors, officers or
Affiliates, as the case may be, pursuant to this Agreement, except in
each case as stated in this SECTION 8.2 and in SECTION 7.10 and ARTICLE
12 and upon a willful breach by a party in which case the non-breaching
party shall have all rights and remedies existing at law or in equity;
and
(b) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn
from the agency or other person, entity or agency to which they were
made.
8.3. EXPENSE REIMBURSEMENT REPAYMENT. If the Sellers have the
right to terminate this Agreement pursuant to SECTION 8.1(G) and they exercise
such right, the Buyers shall pay $750,000 to the Sellers within two (2) business
days after such termination.
9. THE BUYERS' CLOSING CONDITIONS. The obligations of the Buyers
hereunder shall be subject to the satisfaction, as of the Closing Date, of the
following conditions (any of which may be waived, in whole or in part, by the
Buyers):
9.1. CLOSING DOCUMENTS. The Sellers shall deliver to the Buyers:
(a) A duly executed assignment and assumption agreement
substantially in the form attached hereto as EXHIBIT E (the "Contract
Assignment")
43
providing for the transfer to the Buyers of all of the Sellers' right,
title and interest in and to and obligations under the Assumed
Agreements, excluding the Property Leases.
(b) A duly executed assignment and assumption agreement
substantially in the form attached hereto as EXHIBIT F (the "Lease
Assignment") providing for the transfer to the Buyers of all of the
Sellers' right, title and interest in and to and obligations under the
Property Leases.
(c) A duly executed ▇▇▇▇ of sale substantially in the
form attached hereto as EXHIBIT G (the "▇▇▇▇ of Sale") covering the
Personal Property included in the Acquired Assets.
(d) Duly executed special warranty deeds, in a form
reasonably acceptable to counsel for the Buyers, providing for the
transfer to the Buyers of all of the Sellers' right, title and interest
in and to the Owned Property included in the Acquired Assets, together
with such other usual and customary real property transfer documents as
the Buyers may request with respect to the transfer of such property.
(e) A duly executed assignment of title with respect to
each motor vehicle transferred to the Buyers hereunder.
(f) A copy of the Certificate or Article of
Incorporation or other organizational document of each of the Sellers,
certified by the state of organization of such Seller.
(g) A certificate, dated as of the day prior to the
Closing Date, as to the good standing of each of the Sellers and payment
of all applicable state taxes thereby, certified by the state of
organization of such Seller and each other state in which the Sellers are
qualified as a foreign corporation or entity.
(h) The originals, or copies certified to the
satisfaction of the Buyers, of all Property Leases and Title Documents
with respect to the Real Property.
(i) Duly executed originals of all consents, waivers,
approvals and authorizations required by law, statute, rule, regulation,
contract or agreement to be obtained by any of the Sellers in connection
with the consummation of the Transactions, including those consents
referenced being required in SCHEDULES 4.5.3(A), (B), (C), (D) and
4.6.1.5.
(j) A copy of the resolutions of the board of directors
of each of the Sellers authorizing the execution and delivery of this
Agreement and the performance of the Transactions, certified by the
secretary of each.
(k) A certificate as to the incumbency and signature of
the officers of each of the Sellers executed by an officer or director of
each Seller and by the secretary of each Seller.
44
(l) Evidence, satisfactory to the Buyers, of the
transfer to the Buyers of all Permits, other than those Permits
referenced as being non-transferable in SCHEDULE 4.5.3(D).
(m) A certificate of non-foreign status satisfying the
requirements of Treas. Reg. ss. 1.1445-2(b)(2) duly executed by the
Sellers.
(n) A legal opinion covering such customary matters as
the Buyers shall reasonably request.
(o) A duly executed Escrow Agreement.
(p) Audited Financial Statements, if any.
(q) All other documents required to be produced by the
Sellers under this Agreement.
9.2. PERMITS, APPROVALS AND AUTHORIZATIONS. Any and all
consents, waivers, permits and approvals from any governmental or regulatory
body, and of any corporation or other person or entity required in connection
with the execution, delivery or performance of this Agreement or necessary for
the Buyers to conduct the Operations or to use the Acquired Assets in the manner
in which they were conducted by the Sellers prior to the Closing Date shall have
been duly obtained and shall be in full force and effect on the Closing Date.
The applicable waiting period under HSR shall have expired.
9.3. ASSUMED AGREEMENTS ASSIGNMENT. The Bankruptcy Court has
authorized and approved the assumption and assignment of all the Assumed
Agreements to the Buyers.
9.4. NO CHALLENGE OR VIOLATION OF ORDERS. No investigation,
action, suit or proceeding by any governmental or regulatory commission, agency
or authority, and no action, suit or proceeding by any other person, firm,
corporation or entity, shall be pending on the Closing Date which challenges
this Agreement or the closing of the Transactions, or which claims damages in a
material amount as a result of the Transactions. No preliminary or permanent
injunction or other order by any court or governmental or regulatory authority,
and no statute, rule, regulation, decree or executive order promulgated or
enacted by any government or governmental or regulatory authority, that declares
this Agreement invalid in any respect or prevents the consummation of the
Transactions, shall be in effect. The Buyers hereby waive this SECTION 9.4
solely for an appeal of the Sale Order.
9.5. EVIDENCE OF TITLE. The Buyers shall have received a 1970
ALTA Extended Coverage Form Policy of Title Insurance for all of the Owned
Property and the Leased Property other than as set forth in SCHEDULE 9.5
(together with all endorsements and affirmative coverages required by the Buyers
and which are available in the applicable jurisdiction) issued by one or more
title insurance companies selected by the Buyers. The cost of such title
policies shall be borne solely by the Buyers.
45
9.6. ORDERS.
(a) The Bankruptcy Court shall have entered the Sale
Order, which Sale Order shall be in full force and effect and shall not
have been stayed, reversed, modified or amended in any respect, and all
conditions contemplated by the Sale Order to consummate the Transactions
shall have been satisfied.
(b) The Release Order shall be a Final Order. "Final
Order" shall mean an order of the Bankruptcy Court, the operation or
effect of which has not been stayed, and which is not subject to any
pending appeal, request for leave to appeal, request for reconsideration
or petition for certiorari and as to which the time for any such appeal,
request for leave to appeal, request for reconsideration or petition for
certiorari has expired.
9.7. REPRESENTATIONS AND WARRANTIES AND COVENANTS. Each Seller
shall have performed and complied with each of the covenants contained in this
Agreement which is required to be performed and complied with by each Seller on
or prior to the Closing Date, and each of the representations and warranties of
each Seller which is set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date (except to the extent that any such representation or warranty expressly
speaks as of a particular date in which case it must be true and correct as of
such date) as though made at and as of the Closing Date. Notwithstanding the
foregoing, the condition in this SECTION 9.7 shall not be satisfied if the
inaccuracies, in the aggregate, in the Seller's representations and warranties,
ignoring for purposes of this condition any reference to materiality or similar
qualifications, have resulted or could reasonably be expected to result in a
material adverse effect on the business, Operations, results of operations or
condition of the Acquired Assets taken as a whole.
9.8. FORCE MAJEURE. The following shall not have occurred prior
to the Closing Date: (i) any general suspension of trading in securities on any
national securities exchange or in the over-the-counter market for a period of
five (5) days, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks by a domestic governmental entity for a period of
five (5) days, (iii) any mandatory limitation by a domestic governmental entity
that materially and adversely effects the extension of credit by banks or other
financial institutions, (iv) a commencement of a war or armed hostilities or
other national or international calamity, including terrorist attacks, directly
or indirectly involving the United States, or (v) in the case of any of the
foregoing existing on the date hereof, a material acceleration or worsening
thereof; PROVIDED, however, that in the instances of (iv) and (v), such event
has resulted in, or could reasonably be expected to result in, a material
adverse effect on the business, Operations, results of operations or condition
of the Acquired Assets taken as a whole.
9.9. WARN ACT NOTICES. No less than sixty (60) days shall have
passed from the date the Sellers send the WARN Act Notices pursuant to SECTION
6.1.
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9.10. MINERAL AND WATER RIGHTS. All Owned Water Rights and all
mineral rights set forth on SCHEDULE 4.6.1(K) that are necessary for the Buyers
to conduct the Operations or to use the Acquired Assets in the manner in which
they were conducted by the Sellers prior to the Closing Date shall be in full
force and effect and shall be transferred to the Buyers at the Closing.
10. BUYERS CLOSING DELIVERIES. The obligations of the Sellers
hereunder shall be subject to the satisfaction, as of the Closing Date, of the
following conditions (any of which may be waived, in whole or in part, by the
Sellers):
10.1. THE SELLERS' CLOSING CONDITIONS. The Buyers shall deliver
to the Sellers or the Escrow Account, solely with respect to SECTION 10.1(I)
below in accordance with SECTION 1.3(A):
(a) A duly executed Contract Assignment providing for
the transfer to the Buyers of all of the Sellers' right, title and
interest in and to and obligations under the Contracts.
(b) A duly executed Lease Assignment providing for the
transfer to the Buyers of all of the Sellers' right, title and interest
in and to and obligations under the Property Leases.
(c) A copy of the Certificate of Incorporation of each
Buyers, certified by each Buyers' state of incorporation.
(d) Certificates, dated as of the day prior to the
Closing Date, as to the good standing of the Buyers and payment of all
applicable state taxes thereby, certified.
(e) A copy of the resolutions of the board of directors
of each of the Buyers authorizing the execution and delivery of this
Agreement and the performance of the Transactions, certified by the
secretary of each Buyer.
(f) A certificate as to the incumbency and signature of
the officers of the Buyers executed by an officer or director of each
Buyer and by the secretary of each Buyer.
(g) A duly executed Escrow Agreement.
(h) The Purchase Price in accordance with SECTION 1.3.
(i) A legal opinion covering such customary matters as
the Sellers shall reasonably request.
(j) All other documents required to be produced by the
Buyers under this Agreement.
47
10.2. PERMITS, APPROVALS AND AUTHORIZATIONS. The applicable
waiting period under HSR has expired.
10.3. NO CHALLENGE OR VIOLATION OF ORDERS. No investigation,
action, suit or proceeding by any governmental or regulatory commission, agency
or authority, and no action, suit or proceeding by any other person, firm,
corporation or entity, shall be pending on the Closing Date which challenges
this Agreement or the closing of the Transactions, or which claims damages in a
material amount as a result of the Transactions, except for an appeal of the
Sale Order. No preliminary or permanent injunction, temporary restraining order
or other order by any court or governmental or regulatory authority and no
statute, rule, regulation, decree or executive order promulgated or enacted by
any government or governmental or regulatory authority, that declares this
Agreement invalid in any respect or prevents the consummation of the
Transactions, shall be in effect. The Sellers hereby waive this SECTION 10.3
solely for an appeal of the Sale Order.
11. ACTIONS AFTER THE CLOSING DATE.
11.1. COOPERATION. Subject to any limitations that are required
to preserve any applicable attorney-client privilege, for a period of one (1)
year from and after the date hereof, each party agrees to furnish or cause to be
furnished to the other parties, its counsel and accountants, upon reasonable
request during normal business hours, after not less than three (3) business
days prior written notice, such information and assistance relating to such
party or its business (including, without limitation, the cooperation of
officers and employees and reasonable access to books, records and other data
and the right to make copies and extracts therefrom) as is reasonably necessary
to: (a) facilitate the preparation for or the prosecution, defense or
disposition of any suit, action, litigation or administrative, arbitration or
other proceeding or investigation (other than one by or on behalf of one party
to this Agreement against another party hereto); or (b) prepare and file any
other documents required by governmental or regulatory bodies. The party
requesting such information and assistance shall reimburse the other party for
all reasonable out-of-pocket costs and expenses incurred by such party in
providing such information and assistance.
11.2. FURTHER ASSURANCES.
(a) Each of the parties agrees to work diligently,
expeditiously and in good faith to consummate the Transactions. From time
to time after the Closing Date, (i) each of the parties shall execute and
deliver to the other relevant parties such instruments of sale, transfer,
conveyance, assignment, consent, assurance, power of attorney, and other
such instruments as may be reasonably requested by the Buyers in order to
vest in the Buyers all right, title, and interest in and to the Acquired
Assets; (ii) the parties hereto will execute and deliver such other
instruments of sale, transfer, conveyance, assignment, assurance, power
of attorney and other such instruments as may be reasonably required by
the other parties hereto in order to carry out the purpose and intent of
this Agreement and all other agreements to be executed in connection
herewith, and (iii) the Sellers shall provide such necessary transition
services as are reasonably
48
requested by the Buyers in order for the Buyers to achieve full
operational ability with respect to the Acquired Assets and the
Operations for the sixty (60) day period following the Closing.
(b) If a Seller is unable to assign an Assumed Agreement
to the Buyers or if an attempted assignment would be ineffective or would
impair the Buyers' rights under any such Contract or Permit so that the
Buyers would not receive all such rights, then the Sellers will (x) use
their reasonable best efforts to provide or cause to be provided to the
Buyers, to the extent permitted by applicable law, the full benefits of
any such Contract or Permit, (y) pay promptly or cause to be paid
promptly to the Buyers when received all monies and other properties
received by the Sellers with respect to any thereof and (z) enforce, at
the request of the Buyers and at the sole expense and for the account of
the Buyers, to the extent permitted by applicable law, any and all rights
of the Sellers arising from such Contract or Permit against the other
party or parties thereto or the issuer or grantor thereof (including the
right to elect to terminate such Contract or Permit in accordance with
the terms thereof). In addition, each party will take such other actions
(at its expense) as may reasonably be requested by the other party in
order to place each party, insofar as reasonably possible, in the same
position as if such Contract or Permit had been transferred as
contemplated hereby and so that all the benefits relating thereto,
including possession, use, risk of loss, potential for gain and dominion,
control and command, shall inure to the Buyers.
11.3. NON-COMPETE AND NON-SOLICITATION. (a) In consideration of,
among other things, the Purchase Price set forth in this Agreement, during the
period from the date hereof through the fourth anniversary of the Closing Date,
except for operations performed pursuant to SECTIONS 1.5(A)(II) and (III), the
Sellers will not:
(i) directly or indirectly, engage or invest in,
own, manage, operate, finance, control or participate in the
ownership, management, operation, financing, or control of, be
associated with, or in any manner connected with, lend the credit
to, or render services or advice to, any business, firm,
corporation, partnership, association, joint venture or other
entity that engages or conducts any business engaged in or
conducted by the Operations as of the Closing Date anywhere within
100 miles of the business operations of either of the Buyers
anywhere in the United States; PROVIDED, HOWEVER, that the Sellers
may own less than 1% of the outstanding shares of any class of
securities of any enterprise (but without otherwise participating
in the activities of such enterprise) if such securities are
listed on any national or regional securities exchange or have
been registered under section 12(g) of the Securities Exchange Act
of 1934, as amended;
(ii) directly or indirectly, either for itself or
any other person or entity, hire any of the officers or directors
or other persons employed by the Buyers, their Affiliates or their
respective successors or assigns, or solicit or induce such
persons to leave the employ of the Buyers or their Affiliates;
49
(iii) directly or indirectly, approach or seek
business from any Customer (as defined below), refer business from
any Customer to any enterprise or business or be paid commissions
based on sales received from any Customer by any enterprise or
business. For purposes of this SECTION 11.3(A)(III), the term
"Customer" means any person, firm, corporation, partnership,
association or other entity located within 100 miles of the
Operations to which the Operations provided goods or services
during the 36-month period prior to the time at which any
determination shall be made that any such person, firm,
corporation, partnership, association or other entity is a
Customer; PROVIDED, HOWEVER, that the term Customer shall not
include any referral of business by the Sellers to the Buyers or
their Affiliates. For the purposes of this Agreement, the term
"Affiliate" shall mean any entity controlling, controlled by or
under common control with the named party.
11.4. USE OF NAMES. From and after the Closing, the Sellers shall
not use any of their names or any variation thereof in the conduct of any of
their businesses (except the winding up of their business) and the Sellers,
other than the Stockholder, shall change their names.
12. INDEMNIFICATION.
12.1.1. INDEMNIFICATION OF THE BUYERS. Each of the Sellers jointly
and severally indemnify and hold harmless the Buyers and their Affiliates in
respect of any and all claims, losses, diminutions in value, damages,
liabilities, and expenses (including, without limitation, settlement costs and
any legal or other expenses for investigating or defending any actions or
threatened actions) incurred by the Buyers or their Affiliates in connection
with each and all of the following together with Interest thereon:
(a) any misrepresentation made by any of the Sellers in
this Agreement (including any Schedules or Exhibits hereto) or any
condition or document described in ARTICLE 9 or any breach by any of the
Sellers of any representation or warranty contained in this Agreement
(including any Schedules or Exhibits hereto) or any condition or document
described in ARTICLE 9;
(b) the breach of any covenant, agreement or obligation
of any of the Sellers contained in this Agreement or any condition or
document described in ARTICLE 9; PROVIDED that, with respect to claims
arising out of SECTION 6.1, the Sellers agree to indemnify the Buyers
against all liabilities arising under the WARN Act except to the extent
such liabilities arise out of the Buyers' subsequent termination or
reduction of hours of former employees of the Sellers whom the Buyers
initially hired after the Closing;
(c) any liabilities or obligations (continuing or
otherwise) arising from the failure of the Buyers to obtain the
protections afforded by compliance with the notification and other
requirements of the bulk sales laws in force in the jurisdictions in
50
which such laws may be applicable to the Sellers, the Operations, the
Acquired Assets or the Transactions;
(d) any claims against or debts, liabilities or
obligations of any of the Sellers or relating to the Acquired Assets or
the Operations not specifically assumed by the Buyers pursuant to SECTION
2.1, whether known or unknown, including, without limitation, the
Excluded Liabilities;
(e) any and all Environmental Damages, whether or not
disclosed on Schedules hereto or otherwise known by the Buyers or the
Sellers;
(f) any and all taxes and assessments by any taxing
authority relating to periods prior to the Closing Date whether on not
such taxes or assessments are imposed or assessed prior to or after the
Closing Date; and
(g) any and all costs arising from Sellers' failure to
notify a party pursuant to SECTION 7.9 hereof.
Notwithstanding any other provision of this SECTION 12.1.1, the
Buyers agrees that any claims, losses, diminutions in value, damages,
liabilities and expenses for which the Buyers or their Affiliates seek
indemnification pursuant to this SECTION 12.1.1 shall be calculated after
subtracting any insurance proceeds net of premiums paid with respect to such
insurance proceeds and any tax benefits received by the Buyers or their
Affiliates on account of or relating to such claim, losses, diminution in value,
damages, liabilities and expenses. In connection with any claim for
indemnification made by the Buyers or their Affiliates, for which the Sellers
are obligated to indemnify the Buyers or their Affiliates pursuant to the terms
of this Agreement, the Sellers shall be liable for all punitive damages assessed
against the Buyers or their Affiliates in connection with any such claim;
PROVIDED that the Sellers shall not be liable for any claims for punitive
damages originated by the Buyers or their Affiliates.
Notwithstanding the above, the Buyers may only seek recovery for
any indemnification that arises under this SECTION 12.1.1 from the Escrow
Account or the Idaho Holdback; PROVIDED, HOWEVER, that any claims are first
satisfied from the Idaho Holdback.
12.1.2. INDEMNIFICATION OF THE SELLERS. The Buyers will indemnify
and hold harmless the Sellers in respect of any and all claims, losses,
diminution in value, damages, liabilities, and expenses (including without
limitation settlement costs, any legal or other expenses for investigating or
defending any actions or threatened actions) incurred by the Sellers in
connection with each and all of the following together with Interest thereon:
(a) any misrepresentation made by Buyers in this
Agreement (including any Schedules or Exhibits hereto) or any condition
or document described in ARTICLE 10 or any breach by the Buyers or any
representation or warranty contained in this Agreement (including any
Schedules or Exhibits hereto) or any condition or document described in
ARTICLE 10;
51
(b) any breach of any covenant, agreement or obligation
of the Buyers contained in this Agreement or any condition or document
described in ARTICLE 10; and
(c) any claims against or debts, liabilities or
obligations arising in and relating to the operations by Buyers of the
Acquired Assets or the Operations following the Closing.
Notwithstanding any other provision if this SECTION 12.1.2, the Sellers
agree that any claims, losses, diminutions of value, damages, liabilities and
expenses incurred by the Sellers for which they seek indemnification pursuant to
this SECTION 12.1.2 shall be calculated after subtracting any insurance proceeds
net of premiums paid in respect of such insurance proceeds and any tax benefits
received by the Sellers on account of or relating to such claim, loss,
diminution in value, damages, liabilities and expenses. In connection with any
claim for indemnification made by the Sellers pursuant to the terms of this
Agreement, the Buyers shall be liable for all punitive damages assessed against
the Sellers in connection with any such claim; PROVIDED, that, the Buyers shall
not be liable for any claims for punitive damages originated by the Sellers.
Indemnities provided in this SECTION 12.1.2 shall not exceed $4,500,000 in the
aggregate.
12.2. SURVIVAL. Any claim for indemnification shall survive the
Closing, but only for the periods of time set forth in this SECTION 12.2. Any
claim for indemnification shall survive the termination date if a party, prior
to such termination date, shall have notified the other party in writing,
specifying in reasonable detail, the facts that constitute or may give rise to
such claim, the basis under this Agreement for such claim and an estimate of the
amount of such claim (which estimate shall not be binding). No party will have
liability (for indemnification or otherwise) with respect to any claim for
indemnification unless the notice specified in the immediately prior sentence is
delivered to such party on or prior to the termination date specified in this
SECTION 12.2.
12.2.1. GENERAL CLAIMS. Any claim for indemnification
hereunder must be made on or prior to the one (1) year anniversary of the
Closing Date.
12.3. DEFENSE BY THE INDEMNIFYING PARTY. In connection with any
claim giving rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a person other than the indemnified party, the
indemnifying party at its sole cost and expense may, upon written notice to the
indemnified party received by the indemnified party within ten (10) calendar
days after the indemnifying party's receipt of notice of such claim, assume the
defense of any such claim or legal proceeding provided that the indemnifying
party acknowledges its obligation to indemnify the indemnified party in respect
of the entire amount of the claims asserted therein. If the indemnifying party
assumes the defense of any such claim or legal proceeding, the indemnifying
party shall select counsel reasonably acceptable to the indemnified party to
conduct the defense of such claims or legal proceedings and at its sole cost and
expense shall take all steps necessary in the defense or settlement thereof. The
indemnifying party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding, without the prior
written consent of the indemnified party (which
52
consent shall not be unreasonably withheld) unless the indemnifying party admits
in writing its liability and agrees to hold the indemnified party harmless from
and against any losses, damages, expenses and liabilities arising out of such
settlement and concurrently with such settlement the indemnifying party pays
into court the full amount of all losses, damages, expenses and liabilities to
be paid by the indemnifying party in connection with such settlement. The
indemnified party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense and
shall be entitled to any and all information and documentation relating thereto.
If the indemnifying party does not assume (or continue to diligently and
competently prosecute) the defense of any such claim or litigation resulting
therefrom in accordance with the terms hereof, the indemnified party may defend
against such claim or litigation in such manner as it may deem appropriate (and
the indemnifying party may participate at its own expense), including, but not
limited to, settling such claim or litigation, after giving notice of the same
to the indemnifying party but such settlement shall not be made without the
prior written consent of the indemnifying party (which consent will not be
unreasonably withheld) unless the indemnified party agrees that the indemnifying
party is not liable for such claim under this Agreement.
12.4. NOTICE. The parties hereto agree that in the event of any
occurrence which may give rise to a claim by an indemnified party hereunder the
indemnified party will give prompt notice thereof to the indemnifying party;
PROVIDED, HOWEVER, that failure to timely give the notice provided in this
Section shall not be a defense to the liability of the indemnifying party for
such claim, but the indemnifying party may recover any actual damages arising
from the indemnified party's failure to give such timely notice.
12.5. WAIVER. The indemnified party agrees that it will not waive
any statute of limitations or defense that would increase the liability of the
indemnifying party hereunder without (except in connection with pending
litigation in which the indemnifying party has not assumed the defense) the
consent of the indemnifying party.
12.6. ACCOUNTS RECEIVABLE. The Buyers shall receive from the
Idaho Holdback, and upon its depletion, from the Escrow Account the amount by
which Actual Accounts Receivable exceeds the sum of the amounts collected by the
Buyers in satisfaction of the Actual Accounts Receivable by the later of the due
date of such receivables or one hundred twenty (120) calendar days after the
Closing Date. The Buyers will make commercially reasonable efforts to collect
the Actual Accounts Receivable during such 120 days. If the Escrow Account is
depleted pursuant to SECTIONS 1.4 or 1.5 or ARTICLE 12, the Sellers shall
promptly pay such amount to the Buyers. The Buyers shall only seek such payment
from the Escrow Account or the Sellers within the six (6) months following the
Closing. In exchange for such reduction of the Escrow Account or payment, the
Buyers shall assign to the Sellers any such uncollected Actual Accounts
Receivable and all related documents. Amounts paid "on account" and not
designated by the payor to be paid in satisfaction of specific invoices or
clearly identifiable to specific invoices shall be presumed to have been paid in
satisfaction of the payor's oldest obligation to the Sellers and shall be so
applied on the books of the Buyers. "Actual Accounts Receivable" shall mean the
accounts and notes receivable minus allowance for doubtful accounts, as
reflected on the Closing Balance Sheet.
53
12.7. PAYMENT. Until the Idaho Holdback is depleted and the
Escrow Account is released to the Sellers, indemnification claims by the Buyers
or their Affiliates shall be satisfied by the (i) a reduction of the Idaho
Holdback, and once depleted, then (ii) a reduction of the Escrow Agreement by
the amount of such claim, PROVIDED, HOWEVER, the Buyers shall comply with the
procedures set forth in this ARTICLE 12.
12.8. THRESHOLD. Neither the Sellers nor the Buyers shall be
permitted to enforce any claims for indemnification pursuant to SECTIONS
12.1.1(A), 12.1.1(E), or 12.1.2(A) (but not to include claims based upon (a) any
misrepresentation with respect to SECTIONS 4.1, 4.2, 4.6.1(A), 4.6.1(B), 4.6.2,
5.1, 5.2; (b) any fraudulent or intentional misrepresentation of any of the
Sellers or the Buyers contained in this Agreement or any other document executed
by the Buyers or the Sellers in connection herewith, including any assessment by
a taxing authority alleged to arise from a willful, false or fraudulent intent
on the part of the Sellers to evade taxes, or from the failure by any of the
Sellers to file a return, none of which shall be subject to this limitation)
(each a "Limited Indemnity Claim"), until the aggregate of all Limited Indemnity
Claims due to the Sellers collectively or the Buyers collectively, as the case
may be, exceeds $200,000 (the "Threshold Amount"). Once the aggregate of Limited
Indemnity Claims in excess of the Threshold Amount have been asserted by the
Buyers collectively or by the Sellers collectively, all Limited Indemnity
Claims, including those below the Threshold Amount, may be pursued unless
otherwise limited by this Agreement.
13. MISCELLANEOUS PROVISIONS.
13.1. SUBMISSION TO JURISDICTION. The parties hereto irrevocably
submit to the exclusive jurisdiction of the Bankruptcy Court (or any court
exercising appellate jurisdiction over the Bankruptcy Court) over any dispute
arising out of or relating to this Agreement or any other agreement or
instrument contemplated hereby or entered into in connection herewith or any of
the transactions contemplated hereby or thereby. Each party hereby irrevocably
agrees that all claims in respect of such dispute or proceedings may be heard
and determined in such courts. The parties hereby irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum in connection therewith.
13.2. NOTICES. All notices, requests, demands and other
communications called for or contemplated hereunder shall be in writing and
shall be deemed to have been duly given when delivered to the party to whom
addressed or when sent by telegram, telex or wire (if promptly confirmed by
registered or certified mail, return receipt requested, prepaid and addressed)
to the parties, their successors in interest, or their assignees at the
following addresses, or at such other addresses as the parties may designate by
written notice in the manner aforesaid:
54
If to the Buyers: Oldcastle Materials, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Oldcastle MMG, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Oldcastle Materials Southeast, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ & Silver, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
55
If to the Sellers: U.S. Aggregates, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copies to: Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
1800 Republic Centre
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
13.3. PAYMENT OF EXPENSES. Except as expressly provided in
ARTICLE 7, the Buyers shall bear their own costs and expenses and the Sellers
shall bear their own costs and expenses (including, without limitation, legal
fees and expenses) incurred in negotiating, closing and carrying out the
Transactions contemplated by this Agreement. Real estate, business property and
personal property taxes, rentals, payments, receipts and other fees and costs
relating to the use of the Acquired Assets shall be prorated between the Sellers
and the Buyers as of the Closing Date.
13.4. ASSIGNMENT. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof nor any of the
documents executed in connection herewith may be assigned by any party without
the consent of the other parties hereto except that the Buyers shall have the
right to assign all or any portion of their rights and obligations under this
Agreement to any affiliate if such transferee corporation agrees to assume such
obligations under this Agreement, PROVIDED that such transfer shall not
discharge the Buyers from their obligations hereunder unless the Sellers consent
to such discharge, which consent shall not be unreasonably withheld. Nothing
contained herein, expressed or implied, is intended to confer upon any person or
entity other than the parties hereto and their successors in interest and
permitted assignees any rights or remedies under or by reason of this Agreement
unless so stated herein to the contrary.
56
13.5. AMENDMENTS AND WAIVER. This Agreement and all Annexes,
Exhibits and Schedules hereto set forth the entire understanding of the parties
and may be modified only by a written instrument duly executed by each party.
Except as herein expressly provided to the contrary, no breach of any covenant,
agreement, warranty or representation shall be deemed waived unless expressly
waived in writing by the party who might assert such breach.
13.6. SURVIVAL. Subject to the succeeding sentence, each and
every representation, warranty and covenant contained in this Agreement shall
expire with, and be terminated and extinguished by the consummation of the sale
of the Acquired Assets and the transfer of the Assumed Liabilities pursuant to
this Agreement, and such representations, warranties and covenants shall not
survive the Closing Date, and neither the Sellers, the Buyers nor any officer,
director, trustee or affiliate of any of them shall be under any liability
whatsoever with respect to any such representation, warranty or covenant.
Notwithstanding the foregoing, (a) the obligations of the Buyers with respect to
the Assumed Liabilities and of the Sellers with respect to the Excluded
Liabilities, the covenants contained in SECTIONS 1.4, 7.7 and 7.10 and ARTICLES
3, 11, 12 and 13 shall survive the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, and (b) the covenants
contained in SECTION 7.7 shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby until
thirty (30) days after the expiration of the applicable statutes of limitation
(including all periods of extension, whether automatic or permissive).
Notwithstanding the foregoing, the Buyers' and Sellers' recovery is limited to
any rights provided in ARTICLE 12 including the time limitations therein.
13.7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
13.8. HEADINGS. Headings in this Agreement are for reference
purposes only and shall not be deemed to have any substantive effect.
13.9. GOVERNING LAW. This Agreement and any controversies or
disputes hereunder shall be governed by and construed in accordance with the
laws of the state of New York (regardless of the laws that might otherwise
govern under applicable New York principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
13.10. BINDING NATURE OF AGREEMENT. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective executors, heirs, legal representations,
successors and permitted assigns.
13.11. COMPLETE AGREEMENT. This Agreement, the Annexes, Exhibits
and Schedules hereto and the documents delivered or to be delivered pursuant to
this Agreement contain or will contain the entire agreement between the parties
hereto with respect to the Transactions contemplated herein and shall supersede
all previous oral and written and all contemporaneous oral negotiations,
commitments, and understandings.
57
13.12. DRAFTING PRESUMPTION. Each party agrees that it
participated in the drafting of this Agreement and, in the event that any
dispute arises in the interpretation or construction of this Agreement, no
presumption shall arise that either one party or the other drafted this
Agreement.
(Signature page follows)
58
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
OLDCASTLE MATERIALS, INC.
By:___________________________________
Name:
Title:
OLDCASTLE MMG, INC.
By:___________________________________
Name:
Title:
OLDCASTLE MATERIALS SOUTHEAST, INC.
By:___________________________________
Name:
Title:
U.S. AGGREGATES, INC.
By:___________________________________
Name:
Title:
SRM HOLDINGS CORP.
59
By:___________________________________
Name:
Title:
BAMA CRUSHED CORP.
By:___________________________________
Name:
Title:
60
BHY READY MIX, INC.
By:___________________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & SAND, INC.
By:___________________________________
Name:
Title:
DEKALB STONE, INC.
By:___________________________________
Name:
Title:
MULBERRY ROCK CORP.
By:___________________________________
Name:
Title:
61
SRM AGGREGATES, INC.
By:___________________________________
Name:
Title:
WESTERN AGGREGATES HOLDING CORP.
By:___________________________________
Name:
Title:
A-BLOCK COMPANY, INC. (CA)
By:___________________________________
Name:
Title:
▇▇▇ ROCK PRODUCTS
By:___________________________________
Name:
Title:
62
▇▇▇ TRANSPORTATION CORP.
By:___________________________________
Name:
Title:
MOHAVE CONCRETE AND MATERIALS, INC. (AZ)
By:___________________________________
Name:
Title:
MONROC, INC.
By:___________________________________
Name:
Title:
SANDIA CONSTRUCTION, INC.
By:___________________________________
Name:
Title:
63
TRI-STATE TESTING LABORATORIES, INC.
By:___________________________________
Name:
Title:
VALLEY ASPHALT, INC.
By:___________________________________
Name:
Title:
WESTERN AGGREGATES, INC.
By:___________________________________
Name:
Title:
WESTERN ROCK PRODUCTS CORP.
By:___________________________________
Name:
Title:
64
▇▇▇▇▇▇ CONSTRUCTION AND DEVELOPMENT, INC.
By:___________________________________
Name:
Title:
65