EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CHESAPEAKE BUILDING PRODUCTS COMPANY
AND
UNIVERSAL FOREST PRODUCTS, INC.
September 24, 1993
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
1.1 Agreement . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Assets . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Books and Records . . . . . . . . . . . . . . . . . . 2
1.4 Buyer . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Buyer's Closing Certificate . . . . . . . . . . . . . 2
1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Closing Date . . . . . . . . . . . . . . . . . . . . 3
1.8 Contracts . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Effective Time of Closing . . . . . . . . . . . . . . 3
1.10 Escrow Agreement . . . . . . . . . . . . . . . . . . 3
1.11 Equipment . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Intangibles . . . . . . . . . . . . . . . . . . . . . 3
1.13 Inventory . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Inventory Cost . . . . . . . . . . . . . . . . . . . 4
1.15 Knowledge of Buyer . . . . . . . . . . . . . . . . . 4
1.16 Knowledge of Seller . . . . . . . . . . . . . . . . . 4
1.17 Law . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Leases . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Non-Competition Agreement . . . . . . . . . . . . . . 4
1.20 Opinion of Buyer's Counsel . . . . . . . . . . . . . 4
1.21 Opinion of Seller's Counsel . . . . . . . . . . . . . 5
1.22 Permitted Liens . . . . . . . . . . . . . . . . . . . 5
1.23 Plants . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Purchase Price . . . . . . . . . . . . . . . . . . . 5
1.25 Required Consents . . . . . . . . . . . . . . . . . . 5
1.26 Seller . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Seller's Closing Certificate . . . . . . . . . . . . 6
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . 6
2.2 Payment of the Purchase Price . . . . . . . . . . . . 6
2.3 Determination of Inventory . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization of Seller . . . . . . . . . . . . . . . 8
3.2 Authorization; Enforceability . . . . . . . . . . . . 9
3.3 No Violation or Conflict by Seller . . . . . . . . . 9
3.4 Title to Assets . . . . . . . . . . . . . . . . . . . 10
(i)
Page
3.5 No Litigation . . . . . . . . . . . . . . . . . . . . 10
3.6 Condition of Equipment . . . . . . . . . . . . . . . 11
3.7 Books and Records . . . . . . . . . . . . . . . . . . 11
3.8 Contracts . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . 11
3.10 No Broker . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization . . . . . . . . . . . . . . . . . . . . 12
4.2 Authorization; Enforceability . . . . . . . . . . . . 12
4.3 No Violation or Conflict . . . . . . . . . . . . . . 13
4.4 No Litigation . . . . . . . . . . . . . . . . . . . . 13
4.5 No Broker . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
CERTAIN MATTERS PENDING THE CLOSING
5.1 Carry on in Regular Course . . . . . . . . . . . . . 14
5.2 Access . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Cooperation . . . . . . . . . . . . . . . . . . . . . 15
5.4 Publicity . . . . . . . . . . . . . . . . . . . . . . 15
5.5 Confidentiality . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
6.1 Compliance with Agreement . . . . . . . . . . . . . . 16
6.2 Proceedings, Instruments and Due Diligence Satisfactory
16
6.3 No Litigation . . . . . . . . . . . . . . . . . . . . 16
6.4 Representations and Warranties . . . . . . . . . . . 17
6.5 Material Damage to Assets . . . . . . . . . . . . . . 17
6.6 Deliveries at Closing . . . . . . . . . . . . . . . . 17
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
7.1 Compliance with Agreement . . . . . . . . . . . . . . 18
7.2 Proceedings and Instruments Satisfactory . . . . . . 18
7.3 No Litigation . . . . . . . . . . . . . . . . . . . . 18
7.4 Representations and Warranties . . . . . . . . . . . 18
7.5 Deliveries at Closing . . . . . . . . . . . . . . . . 18
ARTICLE VIII
INDEMNITIES AND ADDITIONAL COVENANTS
8.1 Seller's Indemnity . . . . . . . . . . . . . . . . . 19
8.2 Buyer's Indemnity . . . . . . . . . . . . . . . . . . 21
8.3 Employment Matters . . . . . . . . . . . . . . . . . 23
(ii)
Page
8.4 Allocation of Purchase Price . . . . . . . . . . . . 24
8.5 No Use of Name . . . . . . . . . . . . . . . . . . . 25
8.6 Bulk Sales Compliance . . . . . . . . . . . . . . . . 25
8.7 Pocomoke Assets . . . . . . . . . . . . . . . . . . . 25
ARTICLE IX
TERMINATION
9.1 Termination . . . . . . . . . . . . . . . . . . . . . 26
9.2 Rights on Termination; Waiver . . . . . . . . . . . . 27
ARTICLE X
MISCELLANEOUS
10.1 Transfer Taxes and Fees . . . . . . . . . . . . . . . 27
10.2 Entire Agreement; Amendment . . . . . . . . . . . . . 28
10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . 28
10.4 Governing Law . . . . . . . . . . . . . . . . . . . . 29
10.5 Assignment . . . . . . . . . . . . . . . . . . . . . 29
10.6 Notices . . . . . . . . . . . . . . . . . . . . . . . 29
10.7 Counterparts; Headings . . . . . . . . . . . . . . . 30
10.8 Interpretation . . . . . . . . . . . . . . . . . . . 30
10.9 Severability . . . . . . . . . . . . . . . . . . . . 30
10.10 No Reliance . . . . . . . . . . . . . . . . . . . . . 31
(iii)
EXHIBITS
Exhibit 1.5 Buyer's Closing Certificate
Exhibit 1.8 Contracts
Exhibit 1.10 Escrow Agreement
Exhibit 1.11 Equipment
Exhibit 1.12 Intangibles
Exhibit 1.14 Inventory Valuation
Exhibit 1.15 Knowledge of Buyer
Exhibit 1.16 Knowledge of Seller
Exhibit 1.18 Form of Lease
Exhibit 1.19 Non-Competition Agreement
Exhibit 1.20 Opinion of Buyer's Counsel
Exhibit 1.21 Opinion of Seller's Counsel
Exhibit 1.22 Permitted Liens
Exhibit 1.25 Required Consents
Exhibit 1.27 Seller's Closing Certificate
Exhibit 6.6 Chesapeake Corporation Guaranty
Exhibit 7.5 Universal Companies Guaranty
Exhibit 8.3A Retained Employees
Exhibit 8.3B Severance Benefits
Exhibit 8.4 Allocation of Purchase Price
(iv)
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made as of the 24th day of
September, 1993, by and between CHESAPEAKE BUILDING PRODUCTS
COMPANY, a Virginia corporation, and UNIVERSAL FOREST PRODUCTS,
INC., a Michigan corporation.
RECITALS
WHEREAS, Seller owns the Assets and is a party to the
Contracts, which Assets and Contracts are employed by Seller in
the operation of its wood treating business; and
WHEREAS, Seller desires to sell the Assets and assign the
Contracts to Buyer, and Buyer desires to purchase the Assets and
accept the assignment of the Contracts from Seller.
NOW, THEREFORE, in consideration of the Recitals and of the
mutual covenants, conditions and agreements set forth herein and
for other good and valuable consideration, the receipt and suffi-
ciency of which hereby are acknowledged, it hereby is agreed
that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have
the meanings specified:
1.1 Agreement. "Agreement" shall mean this Asset Purchase
Agreement, together with the Exhibits attached hereto, as the
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same may be amended from time to time in accordance with the
terms hereof.
1.2 Assets. "Assets" shall mean the Books and Records, the
Equipment, the Intangibles and the Inventory.
1.3 Books and Records. "Books and Records" shall mean
original or true and complete copies of all of the books,
records, data and information relating primarily to Seller's
business operations at, or related to, the Plants, including,
without limitation, all customer lists, financial and accounting
records, correspondence and miscellaneous records with respect to
customers and supply sources and all other general
correspondence, records, books and files now or hereafter owned
by Seller with respect to the operation of Seller's business
operations at, or related to, the Plants; provided, however, that
Books and Records shall not include books, records or other
materials that, in Seller's reasonable judgment, are subject to
the attorney-client privilege or disclose attorney work product,
or that relate (i) to outdated matters without relevance to the
ongoing business operations at the Plants or Buyer's use
following Closing of the Assets or performance under the
Contracts or (ii) primarily to business operations of Seller
other than at, or related to, the Plants.
1.4 Buyer. "Buyer" shall mean Universal Forest Products,
Inc., a Michigan corporation.
1.5 Buyer's Closing Certificate. "Buyer's Closing Certifi-
cate" shall mean the certificate of Buyer in the form of Exhi-
bit 1.5 attached hereto.
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1.6 Closing. "Closing" shall mean the conference held at
10:00 a.m., local time, on the Closing Date, at the offices of
Seller, James Center II, 1021 East Cary Street, Richmond,
Virginia.
1.7 Closing Date. "Closing Date" shall mean October 4,
1993, or such other date as the parties may mutually agree in
writing.
1.8 Contracts. "Contracts" shall mean those contracts,
agreements, leases, sales orders, blanket and other purchase
orders and guaranteed product commitments and invoices related
thereto, to which the Seller is a party or by which it is bound,
that are specifically identified on Exhibit 1.8 attached hereto.
1.9 Effective Time of Closing. "Effective Time of Closing"
shall mean 12:01 a.m., local time, on the Closing Date.
1.10 Escrow Agreement. "Escrow Agreement" shall mean the
Escrow Agreement by and among Buyer, Seller and NationsBank,
N.A., as escrow agent, in the form of Exhibit 1.10 attached
hereto.
1.11 Equipment. "Equipment" shall mean those items of
tangible personal property specifically identified on Exhibit
1.11 attached hereto.
1.12 Intangibles. "Intangibles" shall mean those
trademarks, tradenames, service marks and trademark and service
mark registrations that are specifically listed on Exhibit 1.12
attached hereto.
1.13 Inventory. "Inventory" shall mean all inventories of
raw materials, stores, supplies, treating chemicals, work in
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process, semi-finished goods and finished goods set forth on the
inventory sheets prepared pursuant to Section 2.3.
1.14 Inventory Cost. "Inventory Cost" shall mean for each
item of Inventory the lower of (i) Seller's actual cost for such
item, or (ii) the wholesale market price of such item, in each
case determined as of the Closing Date in accordance with Exhibit
1.14 attached hereto.
1.15 Knowledge of Buyer. "Knowledge of Buyer" shall mean
the actual knowledge of any person listed on Exhibit 1.15
attached hereto.
1.16 Knowledge of Seller. "Knowledge of Seller" shall mean
the actual knowledge of any person listed on Exhibit 1.16
attached hereto.
1.17 Law. "Law" shall mean any federal, state, local or
other law or governmental requirement of any kind, and the rules,
regulations and orders promulgated thereunder.
1.18 Leases. "Leases" shall mean the Lease and Purchase
Agreements between Buyer and Seller in the form of Exhibit 1.18
attached hereto with respect to, among other things, Buyer's
lease from Seller of the real property and improvements located
thereon associated with each of the Plants except Seller's
Pocomoke, Maryland Plant.
1.19 Non-Competition Agreement. "Non-Competition Agreement"
shall mean the Non-Competition Agreement between Buyer and Seller
in the form of Exhibit 1.19 attached hereto.
1.20 Opinion of Buyer's Counsel. "Opinion of Buyer's Coun-
sel" shall mean the opinion of Clary, Nantz, Wood, Hoffius,
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Rankin & Cooper, counsel to Buyer and The Universal Companies,
Inc., in the form of Exhibit 1.20 attached hereto.
1.21 Opinion of Seller's Counsel. "Opinion of Seller's
Counsel" shall mean the opinion of Hunton & Williams, counsel to
Seller and Chesapeake Corporation, in the form of Exhibit 1.21
attached hereto.
1.22 Permitted Liens. "Permitted Liens" shall mean those
liens, encumbrances, mortgages, charges, claims, restrictions,
pledges, security interests, impositions and other matters
affecting the Assets or Contracts that are listed on Exhibit 1.22
attached hereto.
1.23 Plants. "Plants" shall mean Seller's operating
locations used in the production of treated lumber located in:
Fredericksburg, Virginia; Pocomoke, Maryland; North East,
Maryland; Stockertown, Pennsylvania; Elizabeth City, North
Carolina; and Holly Hill, South Carolina.
1.24 Purchase Price. "Purchase Price" shall mean $850,000,
plus an amount equal to the aggregate Inventory Cost for all
items of Inventory.
1.25 Required Consents. "Required Consents" shall mean
those consents of governmental authorities and other parties
required to give effect to the transactions contemplated herein,
as identified on Exhibit 1.25 attached hereto.
1.26 Seller. "Seller" shall mean Chesapeake Building
Products Company, a Virginia corporation.
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1.27 Seller's Closing Certificate. "Seller's Closing
Certificate" shall mean the certificate of Seller in the form of
Exhibit 1.27 attached hereto.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale. (a) Seller hereby agrees that at
the Closing, and upon all of the terms and subject to all of the
conditions of this Agreement, it shall sell, transfer, assign,
convey and deliver or cause to be delivered to Buyer by bill of
sale, assignment or other appropriate instrument, free and clear
of all liens, claims, mortgages or encumbrances except Permitted
Liens, the Assets and the Contracts.
(b) Buyer hereby agrees that at the Closing, and upon all
of the terms and subject to all of the conditions of this
Agreement, it shall purchase the Assets and assume all of
Seller's rights and obligations under the Contracts, and in full
payment therefor shall pay to Seller the Purchase Price as
provided in this Article.
2.2 Payment of the Purchase Price. Buyer shall pay the
Purchase Price to Seller by wire transfer of immediately
available funds as follows: (a) $350,000 at Closing to an
account designated by Seller at a U.S. bank; (b) $500,000 at
Closing to the account contemplated in the Escrow Agreement; and
(c) the balance of the Purchase Price (representing the aggregate
Inventory Cost) in three equal installments due on the 30th, 60th
and 90th day after
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Closing, to an account designated by Seller at a U.S. bank. The
Purchase Price shall in no event exceed $14.9 million in the
aggregate.
2.3 Determination of Inventory. (a) The Inventory to be
purchased by Buyer and considered for the purposes of calculating
the Purchase Price shall be determined based on an itemized
physical count taken within seven days before the Closing Date,
of all inventories of raw materials, stores, supplies, treating
chemicals, work in progress, semi-finished goods and finished
goods owned by Seller and held for processing or sale at each of
the Plants. The count shall be conducted by Seller and Buyer,
and shall be tallied and reconciled to Seller's perpetual
inventory system, with the physical tallies controlling any
discrepancy. Upon such reconciliation, duplicate inventory
reports shall be generated showing the quantity of each item, the
Inventory Cost of each item and the aggregate Inventory Cost of
all such items. Such inventory reports shall be updated by Buyer
and Seller through the Closing Date to reflect purchases and
sales of Inventory and, as so updated, shall reflect the
Inventory conveyed at Closing and the aggregate Inventory Cost
thereof.
(b) All items that are found to be damaged or defective or
otherwise obsolete, unusable or unmerchantable, based upon
industry standards, shall be excluded from Inventory. All
disputes regarding valuation, useability or merchantability of
inventory items shall be resolved within five working days after
the physical count by Buyer and Seller. If the Closing Date
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occurs before such five business day period has expired and
certain inventory items remain the subject of a dispute, such
items shall be excluded from the Inventory that is conveyed at
Closing; provided, however, that upon resolution of any such
disputes, such items shall be included in Inventory, shall be
deemed to have been conveyed by Seller to Buyer as of the Closing
Date and the Inventory Cost thereof shall be included in the
Purchase Price payable pursuant to Section 2.2 hereof.
(c) All items that are the subject of good faith unresolved
disputes following such five business day period, and all stores
and supplies that bear the name "Chesapeake", the "rolling C"
logo or any variation thereof, shall be excluded from Inventory.
Seller shall remove from the Plants at its expense all such items
that are excluded from Inventory within 30 days after the Closing
Date. Until such items are removed by Seller, Buyer shall
segregate and store such items at no charge to Seller at the
Plants under the same conditions as it would store its own
inventory, provided that risk of loss with respect to such items
shall be borne by Seller. Buyer and Seller shall bear the
expense of their own employees' participation in the physical
count.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that:
3.1 Organization of Seller. Seller is a corporation duly
incorporated, validly existing and in good standing under the
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laws of the Commonwealth of Virginia and has full corporate power
to enter into this Agreement and the documents and instruments
required hereby from Seller and to otherwise to perform its
obligations hereunder and thereunder. Seller is duly qualified
as a foreign corporation to do business and is in good standing
under the laws of Maryland, Pennsylvania, North Carolina and
South Carolina.
3.2 Authorization; Enforceability. The execution, delivery
and performance by Seller of this Agreement and the documents and
instruments required hereby from Seller are within the corporate
power of Seller and have been duly authorized by all necessary
corporate action of Seller. This Agreement is, and the other
documents and instruments required hereby will be, when executed
and delivered by the parties hereto, the valid and binding
obligations of Seller, enforceable against Seller in accordance
with their respective terms.
3.3 No Violation or Conflict by Seller. The execution,
delivery and performance by Seller of this Agreement and the
documents and instruments required hereby from Seller do not and
will not conflict with or violate any Law, judgment, order or
decree binding on Seller or the Articles of Incorporation or
Bylaws of Seller or any contract or agreement to which Seller is
a party or by which it is bound, the breach of which could have a
material adverse effect on the Assets or the Contracts following
the Closing or Seller's ability to perform its obligations
hereunder or under any document or instrument contemplated herein
(except that Seller makes no representation or warranty with
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respect to compliance with the bulk sales laws of any state).
Except for the Required Consents, no consent of any other person,
and no notice to, filing or registration with, or authorization,
consent or approval of, any governmental, regulatory or self-
regulatory agency is necessary or is required to be made or
obtained by Seller in connection with the execution and delivery
of this Agreement by Seller or the performance by Seller of its
obligations under this Agreement.
3.4 Title to Assets. Seller owns good, valid and
marketable title to the Assets, free and clear of any and all
mortgages, liens, encumbrances, charges, claims, restrictions,
pledges, security interests or impositions, except Permitted
Liens, and, upon delivery of the Assets to Buyer at Closing and
upon Buyer's payment of the Purchase Price in accordance with
Section 2.2 hereof, good and valid title to the Assets, free and
clear of all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests or impositions, except
Permitted Liens, will pass to Buyer.
3.5 No Litigation. There is no litigation, arbitration
proceeding, governmental investigation, citation or action of any
kind pending or, to the Knowledge of Seller, proposed or
threatened, against Seller or relating to the business, assets or
properties of Seller which, if adversely determined, would
materially and adversely affect the Assets or the Contracts after
the Closing or the ability of Seller to perform its obligations
hereunder or any document or instrument required hereby from
Seller.
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3.6 Condition of Equipment. The Equipment has been
inspected by Buyer and is accepted by Buyer "as is and where is".
3.7 Books and Records. The Books and Records are true,
complete and correct in all material respects.
3.8 Contracts. Seller has previously delivered to Buyer
true and correct copies of each of the Contracts. Seller has
performed each material term, covenant and condition of each of
the Contracts that is to be performed by Seller at or before the
date hereof. No event has occurred that would, with the passage
of time or compliance with any applicable notice requirements,
constitute a default by Seller or, to the Knowledge of Seller,
any other party under any of the Contracts, and, to the Knowledge
of Seller, no party to any of the Contracts intends to cancel,
terminate or exercise any option under any of the Contracts.
3.9 Intangibles. Seller owns the entire right, title and
interest in and to the Intangibles, subject only to the Permitted
Liens. To the Knowledge of Seller, there are no claims, demands
or proceedings instituted, pending or threatened by any third
party pertaining to or challenging Seller's right to use any of
the Intangibles, and there is no trademark, tradename, patent or
copyright owned by a third party (other than those intangibles
that are the subject of Section 8.6 hereof) that Seller is using
without a license to do so. Seller does not own any patents or
patent applications that relate to its wood treating business as
conducted at the Plants.
3.10 No Broker. Seller has retained no broker or other
intermediary to act on its behalf in connection with the
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transactions contemplated by this Agreement except Dillon, Read &
Co. Inc. ("Dillon Read") and has, pursuant to a separate
agreement, agreed to pay Dillon Read a fee if the transactions
contemplated by the Agreement are consummated. Seller agrees to
indemnify and hold Buyer harmless from and against all amounts
payable to Dillon Read in connection with the transactions
contemplated herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.1 Organization. Buyer is a corporation duly
incorporated, validly existing and in good standing under the
laws of Michigan and has full corporate power to enter into this
Agreement and the documents and instruments required hereby from
Buyer and to otherwise perform its obligations hereunder and
thereunder.
4.2 Authorization; Enforceability. The execution, delivery
and performance by Buyer of this Agreement and the documents and
instruments required hereby from Buyer are within the corporate
power of Buyer and have been duly authorized by all necessary
corporate action of Buyer. This Agreement is, and the other
documents and instruments required hereby will be, when executed
and delivered by the parties hereto, the valid and binding
obligations of Buyer, enforceable against Buyer in accordance
with their respective terms.
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4.3 No Violation or Conflict. The execution, delivery and
performance by Buyer of this Agreement and the documents and
instruments required hereby from Buyer do not and will not
conflict with or violate any Law, judgment, order or decree
binding on Buyer or the Articles of Incorporation or Bylaws of
Buyer or any contract or agreement to which Buyer is a party or
by which it is bound, the breach of which could have a material
adverse effect on Buyer's ability to perform its obligations
hereunder or under any document or instrument contemplated
herein. Except for the Required Consents, no consent of any
other person, and no notice to, filing or registration with, or
authorization, consent or approval of, any governmental, regu-
latory or self-regulatory agency is necessary or is required to
be made or obtained by Buyer in connection with the execution and
delivery of this Agreement by Buyer or the performance by Buyer
of its obligations under this Agreement.
4.4 No Litigation. There is no litigation, arbitration
proceeding, governmental investigation, citation or action of any
kind pending or, to the Knowledge of Buyer, proposed or
threatened, against Buyer or relating to the business, assets or
properties of Buyer which, if adversely determined, would
materially and adversely affect the ability of Buyer to perform
its obligations hereunder or any document or instrument required
hereby from Buyer.
4.5 No Broker. Buyer has not had any dealings, negotia-
tions or communications with any broker or other intermediary in
connection with the transactions contemplated by this Agreement
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other than Dillon Read, and Buyer has not agreed to pay Dillon
Read any fee in connection with the transactions contemplated by
this Agreement.
ARTICLE V
CERTAIN MATTERS PENDING THE CLOSING
Seller covenants to Buyer that from and after the date of
this Agreement and until the Closing Date:
5.1 Carry on in Regular Course. Except for changes
incidental to the transactions contemplated herein, Seller shall
carry on its business at the Plants in the ordinary course and
substantially in the same manner as heretofore carried on and use
its reasonable best efforts to preserve the Assets and to perform
all material obligations and to preserve its rights under the
Contracts. Seller will advise Buyer promptly in writing of any
material adverse change in Seller's financial condition or
business affecting the Assets or the Contracts.
5.2 Access. At Buyer's expense, Buyer and Buyer's
authorized agents, officers and representatives shall have
reasonable access to the Plants, the Assets and the Contracts and
to any books, records and other materials to be retained by
Seller that have relevance to the Assets, the Contracts or the
operation of Seller's business at the Plants; provided, however,
that such examinations and investigations: (a) shall be conducted
only in the presence of a designated representative of Seller;
(b) shall be conducted during Seller's normal business hours; (c)
shall not unreasonably interfere with Seller's operations and
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activities; (d) shall be subject to the prior approval of Seller
if the information or documents requested are of a nature that
may compromise the competitive position of Seller in a line of
business other than the wood treatment industry; and (e) shall
not extend to any books, records or other materials that, in
Seller's reasonable judgment, are subject to the attorney-client
privilege or disclose attorney work product.
5.3 Cooperation. Buyer and Seller will cooperate in all
respects in connection with the giving of any notices to any
governmental authority or securing the permission, approval,
determination, consent or waiver of any governmental authority
required by Law in connection with the consummation of the
transactions contemplated by this Agreement.
5.4 Publicity. All general notices, releases, statements
and communications to employees, suppliers, distributors and
customers of Seller and to the general public and the press
relating to the transactions covered by this Agreement shall be
made only at such times and in such manner as may be mutually
agreed upon by Buyer and Seller; provided, however, that Seller
and Buyer shall be entitled to make a public announcement of the
proposed transaction if, in the opinion of its legal counsel,
such announcement is required to comply with Law or the rules and
regulations of the New York Stock Exchange.
5.5 Confidentiality. Notwithstanding any other provision
of this Agreement to the contrary, Buyer agrees that, unless and
until the transactions contemplated herein are consummated, Buyer
shall remain subject to all of the terms and conditions of the
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Confidentiality Agreement, dated July 14, 1992, between Dillon
Read, as representative of Seller, and Buyer, the terms of which
Confidentiality Agreement are incorporated herein by reference.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer to be performed on the
Closing Date shall be subject to the satisfaction prior to or at
the Closing of the following express conditions precedent:
6.1 Compliance with Agreement. Seller shall have performed
and complied in all material respects with all of its obligations
under this Agreement which are to be performed or complied with
by it prior to or on the Closing Date.
6.2 Proceedings, Instruments and Due Diligence
Satisfactory. All proceedings, corporate or other, to be taken
by Seller in connection with the transactions contemplated by
this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Buyer and
Buyer's counsel, and Seller shall have made available to Buyer
for examination the originals or true and correct copies of all
documents which Buyer may reasonably request in connection with
the transactions contemplated by this Agreement. Buyer, in its
sole discretion, shall be satisfied with the results of its due
diligence investigation of the Assets and Contracts.
6.3 No Litigation. No investigation, suit, action or other
proceeding shall be threatened or pending before any court or
governmental agency that seeks restraint, prohibition, damages or
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other relief in connection with this Agreement or the consumma-
tion of the transactions contemplated hereby.
6.4 Representations and Warranties. The representations
and warranties made by Seller in this Agreement shall be true and
correct in all material respects as of the Closing Date with the
same force and effect as though such representations and warran-
ties had been made on the Closing Date.
6.5 Material Damage to Assets. Between the date of this
Agreement and the Closing Date, neither the Assets nor the
premises and equipment that are the subject of the Leases shall
have been materially and adversely affected by reason of any
loss, taking, condemnation, destruction or physical damage,
whether or not insured against.
6.6 Deliveries at Closing. Seller shall have delivered to
Buyer the following documents, each properly executed and dated
as of the Closing Date: (a) the Opinion of Seller's Counsel; (b)
Seller's Closing Certificate; (c) the Escrow Agreement; (d) the
Non-Competition Agreement; (e) a guaranty by Chesapeake
Corporation of all of Seller's obligations hereunder and under
the Leases in the form of Exhibit 6.6 attached hereto; and (f)
the Leases.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller to be performed on the
Closing Date shall be subject to the satisfaction prior to or at
the Closing of the following express conditions precedent:
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7.1 Compliance with Agreement. Buyer shall have performed
and complied in all material respects with all of its obligations
under this Agreement which are to be performed or complied with
by it prior to or on the Closing Date.
7.2 Proceedings and Instruments Satisfactory. All proceed-
ings, corporate or other, to be taken by Buyer in connection with
the transactions contemplated by this Agreement, and all docu-
ments incident thereto, shall be reasonably satisfactory in form
and substance to Seller and Seller's counsel, and Buyer shall
have made available to Seller for examination the originals or
true and correct copies of all documents which Seller may reason-
ably request in connection with the transactions contemplated by
this Agreement.
7.3 No Litigation. No investigation, suit, action or other
proceeding shall be threatened or pending before any court or
governmental agency that seeks restraint, prohibition, damages or
other relief in connection with this Agreement or the consumma-
tion of the transactions contemplated hereby.
7.4 Representations and Warranties. The representations
and warranties made by Buyer in this Agreement shall be true and
correct in all material respects as of the Closing Date with the
same force and effect as though such representations and warran-
ties had been made on the Closing Date.
7.5 Deliveries at Closing. Buyer shall have delivered to
Seller the following documents, each properly executed and dated
as of the Closing Date: (a) the Opinion of Buyer's Counsel; (b)
Buyer's Closing Certificate; (c) the Escrow Agreement; (d) the
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Non-Competition Agreement; (e) a guaranty by The Universal
Companies, Inc. of all of Buyer's obligations hereunder and under
the Leases in the form of Exhibit 7.5 attached hereto; and (f)
the Leases.
ARTICLE VIII
INDEMNITIES AND ADDITIONAL COVENANTS
8.1 Seller's Indemnity. (a) Seller hereby agrees to indem-
nify and hold Buyer harmless from and against, and agrees to
defend promptly Buyer from and to reimburse Buyer for, any and
all losses, damages, costs, expenses, liabilities, obligations
and claims of any kind, including, without limitation, reasonable
attorneys' fees and other legal costs and expenses (hereinafter
referred to collectively as "Losses"), that Buyer may at any time
suffer or incur, or become subject to, as a result of or in
connection with (i) any breach or inaccuracy of any of the
representations and warranties made by Seller in or pursuant to
this Agreement, (ii) any failure by Seller to perform any of its
covenants and obligations set forth in this Agreement or in any
document or instrument delivered pursuant hereto and (iii) any
claims by third parties against Buyer relating to the operation
and ownership by Seller of the Assets, the performance by Seller
under the Contracts or the conduct of Seller's business at any of
the Plants prior to the Effective Time of Closing (excluding any
such claims relating to environmental matters, which claims shall
be governed exclusively by the indemnification provisions set
forth in the Leases); provided, however, that Seller shall not be
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required to indemnify Buyer pursuant to Section 8.1(a)(i) hereof
in respect of the representations and warranties made by Seller
unless such right is asserted (whether or not such Losses have
actually been incurred) by written notice to Seller within one
year of the Closing Date describing with specificity the facts
giving rise to the asserted right; and provided, further, that
Seller shall not be required to indemnify Buyer pursuant to
Section 8.1(a)(i) in respect of the representations and
warranties made by Seller unless and until the amount of all
Losses for which indemnification is sought hereunder first
exceeds $25,000, in which event only Losses in excess of such
amount shall be subject to indemnification. Seller's aggregate
obligations pursuant to this Section 8.1(a) shall in no event
exceed $2.0 million.
(b) In the event a claim against Buyer arises that is
covered by the indemnity provisions of Section 8.1(a) hereof,
notice shall be given promptly by Buyer to Seller. Provided that
Seller admits in writing to Buyer that such claim is covered by
the indemnity provisions of Section 8.1(a) hereof, Seller shall
have the right to contest and defend by all appropriate legal
proceedings such claim and to control all settlements (unless
Buyer agrees to assume the cost of settlement and to forgo such
indemnity) and to select lead counsel to defend any and all such
claims at the sole cost and expense of Seller; provided, however,
that Seller may not effect any settlement that could result in
any cost, expense or liability to Buyer unless Buyer consents in
writing to such settlement and Seller agrees to indemnify Buyer
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therefor. Buyer may select counsel to participate in any
defense, in which event Buyer's counsel shall be at the sole cost
and expense of Buyer. In connection with any such claim, action
or proceeding, the parties shall cooperate with each other and
provide each other with access to relevant books and records in
their possession.
(c) Except as provided in Sections 3.10 and 8.6 hereof and
except as set forth in the Leases, this Section 8.1 shall be the
sole remedy of Buyer against Seller for any claim arising in
connection with the transactions contemplated herein. Seller's
representations and warranties made herein shall survive the
Closing, but only to the extent and for such time as is necessary
to enable Buyer to enforce its rights to indemnification under
this Section.
8.2 Buyer's Indemnity. (a) Buyer hereby agrees to indem-
nify and hold Seller harmless from and against, and agrees to
defend promptly Seller from and to reimburse Seller for, any and
all Losses that Seller may at any time suffer or incur, or become
subject to, as a result of or in connection with (i) any breach
or inaccuracy of any of the representations and warranties made
by Buyer in or pursuant to this Agreement, (ii) any failure by
Buyer to perform any of its covenants and obligations set forth
in this Agreement or in any document or instrument delivered
pursuant hereto and (iii) any claims by third parties against
Seller relating to the operation and ownership by Buyer of the
Assets, the performance by Buyer under the Contracts or the
conduct of Buyer's business at any of the Plants from and after
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the Effective Time of Closing (excluding any such claims relating
to environmental matters, which claims shall be governed
exclusively by the indemnification provisions set forth in the
Leases); provided, however, that Seller shall have no right to be
indemnified, held harmless from, defended or reimbursed pursuant
to Section 8.2(a)(i) hereof in respect of the representations and
warranties made by Buyer unless such right is asserted (whether
or not such Losses have actually been incurred) by written notice
to Buyer within one year of the Closing Date describing with
specificity the facts giving rise to the asserted right; and
provided, further, that Buyer shall not be required to indemnify
Seller under Section 8.2(a)(i) hereof in respect of the
representations and warranties made by Buyer unless and until the
amount of all Losses for which such indemnification is sought
hereunder first exceeds $25,000, in which event only Losses in
excess of such amount shall be subject to indemnification.
Buyer's aggregate obligations pursuant to this Section 8.2(a)
shall in no event exceed $2.0 million.
(b) In the event a claim against Seller arises that is
covered by the indemnity provisions of Section 8.2(a) hereof,
notice shall be promptly given by Seller to Buyer. Provided that
Buyer admits in writing to Seller that such claim is covered by
the indemnity provisions of Section 8.2(a) hereof, Buyer shall
have the right to contest and defend by all appropriate legal
proceedings such claim and to control all settlements (unless
Seller agrees to assume the cost of settlement and to forgo such
indemnity) and to select lead counsel to defend any and all such
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claims at the sole cost and expense of Buyer; provided, however,
that Buyer may not effect any settlement that could result in any
cost, expense or liability to Seller unless Seller consents in
writing to such settlement and Buyer agrees to indemnify Seller
therefor. Seller may select counsel to participate in any
defense, in which event such counsel shall be at the sole cost
and expense of Seller. In connection with any such claim, action
or proceeding, the parties shall cooperate with each other and
provide each other with access to relevant books and records in
their possession.
(c) Except as provided in Section 8.7 hereof and except as
set forth in the Leases, this Section 8.2 shall be the sole
remedy of Seller against Buyer for any claim arising in
connection with the transactions contemplated herein. Buyer's
representations and warranties made herein shall survive the
Closing, but only to the extent and for such time as is necessary
to enable Seller to enforce its rights to indemnification under
this Section.
8.3 Employment Matters. (a) As of the Effective Time of
Closing, Seller shall terminate the employment of all of the
persons employed by Seller at the Plants (and such persons shall
be treated as terminated employees under Seller's benefit plans).
Seller shall remain liable for all obligations to employees of
Seller and Chesapeake Corporation for periods prior to the
Effective Time of Closing including, without limitation, any and
all wages, benefits, profit sharing and/or pension benefits,
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vacation pay, workers compensation benefits and retirement
agreements.
(b) Buyer agrees that Buyer shall offer employment for a
six month probationary period to those persons specified on
Exhibit 8.3A attached hereto at one of Buyer's wood treating
facilities. Buyer represents and warrants to Seller that the
persons identified on Exhibit 8.3A have been selected to receive
offers of employment solely by Buyer, and that Buyer has not
received or relied upon any information from Seller as a basis
for making such employment decisions. Buyer agrees that each
person identified in Exhibit 8.3A who accepts employment with
Buyer (each, a "Retained Employee") shall be eligible to
participate in Buyer's employee welfare plans pursuant to the
terms and conditions thereof; provided, however, that Buyer's
medical benefits plan shall not include a waiting or eligibility
period for any such Retained Employee; and provided further,
however, that Buyer shall not be obligated to extend medical
benefits, or to assume any liability or expense, for any "pre-
existing medical condition" of any Retained Employee or his
dependents (as such term is currently defined in Buyer's medical
benefits plans). Seller agrees that for a period of six months
after Closing, Seller shall extend to each Retained Employee who
had been a salaried employee of Seller those severance benefits
described on Exhibit 8.3B attached hereto.
8.4 Allocation of Purchase Price. The Purchase Price shall
be allocated among the Assets, the Contracts and the Non-
Competition Agreement in accordance with Exhibit 8.4 hereto.
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This allocation is intended to comply with the allocation method
required by Section 1060 of the Internal Revenue Code of 1986, as
amended. The parties shall cooperate to comply with all
substantive and procedural requirements of Section 1060 and the
regulations thereunder and the allocation shall be adjusted only
if and to the extent necessary to comply with such requirements.
Buyer and Seller agree that they will not take nor will they
permit any affiliated person to take, for income tax purposes,
any position inconsistent with such allocation.
8.5 No Use of Name. Buyer agrees that without Seller's
consent, it will not make any use of the name "Chesapeake
Corporation", the word "Chesapeake" or the "rolling C" logo, or
any variation thereof in any manner.
8.6 Bulk Sales Compliance. Buyer hereby waives compliance
by Seller with the provisions of the bulk sales law of any
jurisdiction, and Seller covenants and agrees to pay and
discharge when due all claims of any governmental entities and
creditors of Seller and its subsidiaries that could be asserted
against Buyer by reason of such non-compliance. Seller agrees to
indemnify and hold Buyer harmless from and against and shall on
demand reimburse Buyer for any and all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind,
including, without limitation, reasonable attorneys' fees and
other legal costs and expenses, suffered by Buyer by reason of
Seller's failure to pay and discharge any such claims.
8.7 Pocomoke Assets. Exhibit 1.11 specifically identifies
certain items of Equipment that are located at Seller's Pocomoke,
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Maryland Plant (the "Pocomoke Assets"). Buyer will, at its own
expense and within 60 days after the Closing Date, remove all of
the Pocomoke Assets from the site of Seller's Pocomoke, Maryland
Plant. Such removal shall be done by Buyer in a good and
workmanlike manner, with the minimum practical damage to the
fixtures and improvements associated with the Pocomoke Plant and
in compliance with all applicable Laws; provided, however, that
Buyer's plans for such removal shall be subject to Seller's
reasonable approval in advance. Such plans will not require
Buyer to restore or repair fixtures or improvements that must be
dismantled or damaged to permit a workmanlike removal of the
Pocomoke Assets. Buyer shall indemnify and hold Seller harmless
from and against any Losses suffered by Seller that are solely
attributable to the negligence or willful misconduct of Buyer or
any of Buyer's employees or agents in connection with the removal
of the Pocomoke Assets. Until the Pocomoke Assets are removed by
Buyer in accordance with this Section, Seller shall permit Buyer
to store such assets without charge at the Pocomoke Plant,
provided that risk of loss with respect to such assets shall be
borne by Buyer.
ARTICLE IX
TERMINATION
9.1 Termination. Time is of the essence of this Agreement.
This Agreement may be terminated and the transactions contem-
plated hereby may be abandoned as follows: (a) at any time prior
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to the Closing Date by mutual written agreement of Seller and
Buyer; or (b) by Buyer at any time within 20 business days
following Buyer's becoming aware of the occurrence of any event
set forth in Section 6.3 hereof or on the Closing Date if any of
the conditions set forth in Article VI of this Agreement shall
not have been fulfilled by the Closing Date; or (c) by Seller at
any time within 20 business days following the Seller's becoming
aware of the occurrence of any event set forth in Section 7.3
hereof or on the Closing Date if any of the conditions set forth
in Article VII of this Agreement shall not have been fulfilled by
the Closing Date; or (d) by Seller or Buyer on or after
October 5, 1993, if by that date Closing has not occurred.
9.2 Rights on Termination; Waiver. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of
the parties under or pursuant to this Agreement shall terminate
without further liability of either party to the other, provided
that Buyer's obligations contained in Section 5.5 of this Agree-
ment shall survive any such termination. If this Agreement is
terminated other than pursuant to Section 9.1, the parties hereto
shall retain all of their respective rights under applicable Law
resulting from such termination.
ARTICLE X
MISCELLANEOUS
10.1 Transfer Taxes and Fees. Seller shall pay all transfer
fees, transfer taxes, sales taxes and assessments (other than
local, state and federal income taxes, to which this Section does
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not apply) charged under applicable Law in connection with the
transfer of the Assets and Contracts to Buyer.
10.2 Entire Agreement; Amendment. Except as set forth in
Section 5.5 hereof, this Agreement, the Leases and the documents
referred to herein and therein and to be delivered pursuant
hereto and thereto constitute the entire agreement between the
parties pertaining to the subject matter hereof, and supersede
all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties, whether oral or
written, and there are no warranties, representations or other
agreements between the parties in connection with the subject
matter hereof, except as specifically set forth herein or
therein. No amendment, supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement,
whether or not similar, nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided. The
representations and warranties of each party hereto shall be
deemed to be material and to have been relied upon by the other
party, notwithstanding any investigation heretofore or hereafter
made by the other party.
10.3 Expenses. Whether or not the transactions contemplated
by this Agreement are consummated and except as provided in the
Leases, each of the parties hereto shall pay the fees and
expenses of its counsel, accountants and other experts and the
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other expenses incident to the negotiation and preparation of
this Agreement and consummation of the transactions contemplated
hereby.
10.4 Governing Law. This Agreement shall be construed and
interpreted according to the laws of the Commonwealth of
Virginia, without regard to the conflicts of law rules thereof.
10.5 Assignment. This Agreement and each party's respective
rights hereunder may not be assigned at any time by operation of
law or otherwise without the prior written consent of the other
party.
10.6 Notices. All communications, notices and disclosures
required or permitted by this Agreement shall be in writing and
shall be deemed to have been given at the earlier of the date
when actually delivered to an officer of the other party or when
deposited in the United States mail, certified or registered
mail, postage prepaid, return receipt requested and addressed as
follows, unless and until either of such parties notifies the
other in accordance with this Section of a change of address:
If to Seller: Chesapeake Building Products Company
2 James Center, 22nd Floor
1021 East Cary Street
P.O. Box 2350
Richmond, Virginia 23218-2350
Attention: Andrew J. Kohut
With a copy to: Chesapeake Corporation
2 James Center, 22nd Floor
1021 East Cary Street
P.O. Box 2350
Richmond, Virginia 23218-2350
Attention: J.P. Causey Jr., Esq.,
Vice President, Secretary
and General Counsel
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If to Buyer: Universal Forest Products, Inc.
2801 East Beltline, N.E.
Grand Rapids, Michigan 49505
Attention: R. Dale Lausch
With a copy to: The Universal Companies, Inc.
2801 East Beltline, N.E.
Grand Rapids, Michigan 49505
Attention: Matthew J. Missad
Vice President - Operations
Compliance
10.7 Counterparts; Headings. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
and the same Agreement. The Table of Contents and Article and
Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
10.8 Interpretation. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall
extend to and include the plural, all words in the plural number
shall extend to and include the singular and all words in any
gender shall extend to and include all genders. All references
to contracts, agreements, leases, employee benefit plans or other
understandings or arrangements shall refer to oral as well as
written matters.
10.9 Severability. If any provision, clause or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances, shall not be affected
thereby.
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10.10 No Reliance. No third party is entitled to rely on any
of the representations, warranties and agreements contained in this
Agreement. Buyer and Seller assume no liability to any third party because
of any reliance on the representations, warranties and agreements of Buyer
and Seller contained in this Agreement.
IN WITNESS WHEREOF, the parties have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
CHESAPEAKE BUILDING PRODUCTS COMPANY
By: /s/ J.P. Causey Jr.
Its: Secretary
UNIVERSAL FOREST PRODUCTS, INC.
By: /s/ William G. Currie
Its: Chief Executive Officer
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