FIRST AMENDMENT
TO
STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT made this 30th day of
June, 1997 between CLOPAY CORPORATION, a Delaware corporation ("Purchaser"), and
MARCIA KAY RADELET and TIMOTHY P. HALOPOFF, as Co-Trustees of THE PAUL M.
HALOPOFF TRUST, dated September 30, 1975, TIMOTHY P. HALOPOFF, as Trustee of THE
HALOPOFF IRREVOCABLE TRUST, dated February 21, 1991, and MARCIA KAY RADELET, as
Trustee of THE HALOPOFF FAMILY TRUST, dated October 14, 1985 (together,
"Sellers"), and MARCIA KAY RADELET, individually.
RECITALS
WHEREAS, Purchaser, Sellers and MARCIA KAY RADELET entered into a certain
STOCK PURCHASE AGREEMENT, dated June 4, 1997, (the "Stock Purchase Agreement");
and
WHEREAS, Purchaser, Sellers and MARCIA KAY RADELET desire to amend the
STOCK PURCHASE AGREEMENT in part as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which the parties each acknowledge, the parties each agree as
follows:
DECLARATIONS
1. Section 1.2 of the Stock Purchase Agreement is hereby amended in its
entirety as follows:
"1.2 Purchase Price. The purchase price agreed upon for the Shares as
of May 31, 1996 was $39,500,000, based upon the net asset value of HHI as
shown on the May 31, 1996 Financial Statements as defined in 4.12.1,
subject to adjustment for the net asset value effect of the sale by HHI of
certain excluded assets identified in Schedule 1.2(a) (the "Excluded
Assets") to one or more of the Sellers as provided in 6.2.9(a).
Accordingly, the purchase price to be paid to Sellers as of the Closing
Date for the Shares (the "Purchase Price") shall be $39,500,000.00,
adjusted as follows:
(a) if the difference between (i) the Closing Net Asset Value (as
that term is defined in 4.12.4) of HHI as of the Closing Date (after the
sale of all of the Excluded Assets to one or more of the Sellers as
provided in 6.2.9(a)) and (ii) the net asset value of HHI as of May 31,
1996 (as shown on the May 31, 1996 Financial Statements) is a positive
number, then plus such difference; or if such difference is a negative
number, then less such difference; and
(b) subject to the "Purchase Price Adjustment", if any, provided
for in 2.4.
[To illustrate the parties' understanding of the method of calculation of
the Purchase Price, Schedule 1.2(b) provides an example of the Purchase
Price calculation, including the calculation of the Unadjusted Purchase
Price, as stated in 2.1 below.]"
2. Section 1.3 of the Stock Purchase Agreement is hereby amended in its
entirety as follows:
"1.3 Closing; Closing Date Payments of Unadjusted Purchase
Price; Escrow.
1.3.1 The closing of the transactions herein contemplated (the
"Closing") shall occur on Tuesday, July 1, 1997, ("the Closing Date") at
the offices of Anderson, Ablon, Lewis & Gale, LLP in Los Angeles,
California, unless the parties hereto agree in writing to a different date
and location. The effective time of the sale and purchase of the Shares and
the effective time of the Closing shall be as of the opening of business on
the Closing Date.
1.3.2 At the Closing:
(a) Purchaser shall deliver to the escrow agent (the "Escrow
Agent") under the escrow agreement among the Escrow Agent, Sellers,
Purchaser and MARCIA KAY RADELET (the "Escrow Agreement") in the form
attached hereto as Schedule 1.3.2 and entered into on or before the Closing
Date, the sum of Four Million Two Hundred Fifty Thousand Dollars
($4,250,000.00), (the "Escrow Funds") in immediately available U.S. funds
("Immediately Available Funds"), by wire transfer to an escrow account
("Escrow Account") in the name of the Escrow Agent; and
(b) Purchaser shall deliver to Sellers the balance of the
Unadjusted Purchase Price in Immediately Available Funds by wire transfer
to a bank account, designated in writing at least two (2) business days
prior to the Closing Date, by Sellers; and
(c) Sellers shall deliver certificates representing the
Shares, duly endorsed in blank, or accompanied by stock powers duly
executed in blank, in proper form for transfer to Purchaser with all
signatures notarized, unless executed or endorsed at the Closing."
3. Section 2.1.1 of the Stock Purchase Agreement is hereby amended in its
entirety as follows:
"2.1.1 "Unadjusted Purchase Price" means a calculation of the Purchase
Price (determined in accordance with 1.2) on the basis of the 1996
Financial Statements as defined in 4.12.3 (less the $2,774,540 net asset
value of CASI, including the Excluded Stock, as of September 30, 1996, but
not otherwise adjusted for the net asset value effect of the sale by HHI of
the Excluded Assets to the Sellers as provided in 6.2.9(a)). Purchaser and
Sellers hereby agree that the Unadjusted Purchase Price is $38,031,199, as
computed in Schedule 1.2(b)."
4. Section 2.4 of the Stock Purchase Agreement is hereby amended in its
entirety as follows:
"2.4 Purchase Price Adjustment. If the Gross Margin (i.e., the Net
Sales less Cost of Goods Sold) of HHI for the period from October 1, 1996
through the Closing Date, as reflected in the Closing Statements, is less
than Twenty and Eight-Tenths percent (20.8%), then the Purchase Price shall
be adjusted downwards, but not to exceed a maximum adjustment of Eight
Million One Hundred Fifty One Thousand Two Hundred Thirty Five Dollars
($8,151,235.00), as provided in Schedule 2.4, such Purchase Price
adjustment referred to as the "Purchase Price Adjustment." For purposes of
this 2.4, "Gross Margin", "Net Sales" and "Cost of Goods Sold" will be
calculated and determined consistent with the accounting methods,
procedures and practices reflected in the 1996 Financial Statements."
5. Section 7.1.1(e)(ii) of the Stock Purchase Agreement is hereby amended
in its entirety as follows:
"(ii) any Environmental Claim arising with respect to the matters
identified on Schedule 7.1.1(e); and"
6. A new Section 7.1.1(g) is hereby added to the Stock Purchase Agreement,
which reads in its entirety as follows:
"(g) Notwithstanding anything to the contrary contained hereinabove in
Section 7.1.1(a), Sellers shall have no obligation to indemnify the
Purchaser Group, or any of them, for any Claims and Losses which arise out
of or based upon any or all of the following matters:
(i) lost customers and/or lost sales; and
(ii) change of mix of customers (including, large versus small)
and/or sales (retail and wholesale sales versus manufacturing); and
(iii) profit overstatements arising from deferred spending
(including reduction of spending for supplies), depreciation and other
impact of deferred investment (including re: the "sandwich door"), and
spring and hardware price reductions for The Home Depot; and
(iv)change in pricing structure for the Holmes Door division;and
(v) loss of employment of Gary Singley; and
(vi) employee relations (i.e., extensive employee turnover at
Tempe, and unionization threat at Holmes Door division); and
(vii) the salability and technical performance of the
"Clypenglyde" product line, except as provided in Section 4.30.4.
7. Purchaser hereby agrees that the matters listed in Section 7.1.1(g) of
the Stock Purchase Agreement as hereinabove stated shall not constitute or give
rise to a breach by Sellers under or pursuant to Sections 6.1 and/or 6.2 of the
Stock Purchase Agreement.
8. Except as herein expressly amended, the Stock Purchase Agreement is
and shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to the Stock Purchase Agreement to be executed as of the day and year
first above written.
SELLERS: PURCHASER:
THE PAUL M. HALOPOFF TRUST CLOPAY CORPORATION
By: /s/ Marcia Kay Radelet By:/s/ George A. Strutz, Jr.
Marcia Kay Radelet, Co-Trustee George A. Strutz, Jr., President
By:/s/Timothy P. Halopoff
Timothy P. Halopoff, Co-Trustee
SIGNATURES CONTINUED ON NEXT PAGE
SIGNATURES CONTINUED FROM PRIOR PAGE
THE HALOPOFF IRREVOCABLE TRUST,
DATED FEBRUARY 21, 1991
By:/s/ Timothy P. Halopoff
Timothy P. Halopoff, Trustee
THE HALOPOFF FAMILY TRUST,
DATED OCTOBER 14, 1985
By:/s/Marcia Kay Radelet
Marcia Kay Radelet, Trustee
Solely with respect to Sections 7.1 and 9.3
(Indemnities and Non-Competition Covenant)
/s/ Marcia Kay Radelet
Marcia Kay Radelet, Individually