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EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
MASTERVIEW WINDOW COMPANY LLC
AND
ATRIUM COMPANIES, INC.
DATED AS OF
MARCH 4, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.4 Assumption of Liabilities by Buyer; Discharge of Excluded Liabilities by Seller . . . . . . . . . . 16
2.5 Deemed Assignment of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.6 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties Regarding Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.3 Representations and Warranties of Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 5
ADDITIONAL AGREEMENTS OF SELLER
5.1 No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.3 Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.4 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.5 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(i)
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5.6 Deposit of Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.7 Name Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.8 Seller Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.9 Stockholder Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.10 Publicker Environmental Matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6
COVENANTS OF BUYER
6.1 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 7
MUTUAL COVENANTS
7.1 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.3 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.5 Warn Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.6 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.7 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 8
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Conditions to Obligation of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.3 Conditions to Obligations of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 9
CLOSING
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Actions to Occur at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(ii)
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ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.2 Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.3 Defense of Third-Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4 Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.5 Limitations on Indemnified Representation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.6 Recourse for Publicker Environmental Matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.7 Minimum Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.8 Instructions to Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 12
GENERAL PROVISIONS
12.1 Survival of Representations, Warranties, and Covenants . . . . . . . . . . . . . . . . . . . . . . . 49
12.2 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.3 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.4 Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.7 Expenses and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.8 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.13 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.14 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.15 Director and Officer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.16 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.17 No Waiver Relating to Claims for Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(iii)
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EXHIBITS:
*Exhibit A -- Form of Bill of Sale and Assignment
*Exhibit B -- Form of Assumption Agreement
*Exhibit C -- Form of Closing Escrow Agreement
*Exhibit D -- Form of Opinion of Bingham Dana LLP
*Exhibit E -- Form of Opinion of Vinson & Elkins L.L.P.
* The above exhibits have been omitted. The Company will provide them
to the Securities and Exchange Commission supplementally upon request.
(iv)
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SCHEDULES:
*Schedule 2.2(e) -- Excluded Choses in Action
*Schedule 2.2(g) -- Excluded Personal Property
*Schedule 2.2(h) -- Excluded Contracts
*Schedule 3.1(a) -- Qualification to do Business and Good Standing
*Schedule 3.1(b) -- Subsidiaries
*Schedule 3.1(e) -- Unrecorded Liabilities and Conduct of Business
*Schedule 3.1(f) -- Material Licenses
*Schedule 3.1(g) -- Litigation
*Schedule 3.1(h) -- Insurance
*Schedule 3.1(i) -- Owned Real Property
*Schedule 3.1(j) -- Real Property and Personal Property Leases
*Schedule 3.1(k) -- Personal Property
*Schedule 3.1(l) -- Liens and Encumbrances
*Schedule 3.1(m) -- Environmental Matters
*Schedule 3.1(o) -- Certain Agreements
*Schedule 3.1(p) -- Employee Benefit Matters; Labor
*Schedule 3.1(q) -- Intellectual Property
*Schedule 3.1(r) -- Affiliate Relationships
*Schedule 3.1(s) -- Assets
*Schedule 3.1(v) -- Customers and Sales
*Schedule 3.1(w) -- Warranty Matters
*Schedule 4.1 -- Employee Benefit Modifications
*Schedule 7.5 -- Terminated Employees
*Schedule 8.2(d) -- Real Estate Title Commitment
* The above exhibits have been omitted. The Company will provide them
to the Securities and Exchange Commission supplementally upon request.
(v)
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of March 4, 1998, between Masterview Window Company LLC, a Delaware
limited liability company ("Seller"), and Atrium Companies, Inc., a Delaware
corporation ("Buyer").
R E C I T A L S
A. Seller desires to sell and Buyer desires to buy substantially
all the assets used or held for use by Seller, both tangible and intangible,
excluding the Excluded Assets (as hereinafter defined), and, in connection
therewith, Buyer will assume substantially all of the liabilities of the Seller
described in this Agreement, excluding the Excluded Liabilities (as hereinafter
defined), and by so doing to acquire Seller's window and door manufacturing,
sale, distribution and installation business (the "Business") upon the terms
and conditions hereinafter set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means all of Seller's accounts
receivable (as would be classified as accounts receivable on the asset side of
a balance sheet of the Seller prepared in accordance with GAAP) which are
unpaid as of the close of business on the Closing Date.
"Affiliate" means, with respect to any person, any other
person controlling, controlled by or under common control with such person.
For purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
"Applicable Laws" means all laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions, and writs of
any Governmental Entity having jurisdiction over the Seller, its subsidiaries,
the Assets or the Business, as may be in effect on or prior to the Closing.
"Assets" means all the tangible and intangible assets owned,
leased or licensed by Seller, whether or not reflected on the Financial
Statements or Balance Sheet of Seller, but specifically excluding therefrom the
Excluded Assets.
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"Assumed Contracts" means all of the Seller's rights under all
Contracts, including the contracts listed on Schedule 3.1(o) hereto, and any
such other contracts entered into by the Seller prior to the Closing consistent
with the Seller's obligations under Section 4.1 hereof (but excluding any
rights or obligations thereunder which constitute an Excluded Asset or Excluded
Liability).
"Assumption Agreement" means the Assumption Agreement between
Buyer and Seller substantially in the form of Exhibit B.
"Balance Sheet" has the meaning set forth in Section 3.1(e).
"Balance Sheet Date" has the meaning set forth in Section
3.1(e).
"Benefit Program or Agreement" has the meaning set forth in
Section 3.1(p)(i).
"Bill of Sale and Assignment" means the Bill of Sale and
Assignment executed by Seller substantially in the form of Exhibit A.
"Business" has the meaning set forth in the first recital to
this Agreement.
"Business Day" means any other day than (i) a Saturday or
Sunday or (ii) a day on which commercial banks in New York, New York or Dallas,
Texas are authorized or required to be closed.
"Buyer" has the meaning set forth in the first paragraph of
this Agreement and includes its permitted successors and assigns.
"Buyer Indemnified Costs" means (a) Buyer Indemnified
Representation Costs; (b) any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) incurred by any of the Buyer
Indemnified Parties resulting from any of the Excluded Liabilities (other than
those identified in subsection (iv) and (viii) of the definition thereof); (c)
Buyer Indemnified Covenant Costs which do not constitute Buyer Indemnified
Representation Costs; (d) any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) that any of the Buyer Indemnified
Parties incurs and that arise out of the Publicker Environmental Matter; (e)
the items indemnified against pursuant to Section 2.3(c), Section 7.3, Section
7.5 or Section 7.7; and (f) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing; provided, however,
that insofar as the items in this clause (f) relate to the items in clause (a)
above, such items shall constitute Buyer Indemnified Representation Costs.
"Buyer Indemnified Covenant Costs" means any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or
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proceeding) that any of the Buyer Indemnified Parties incurs and that arise out
of any breach or default by Seller of any covenant or agreement under this
Agreement (including Seller's agreement to discharge the Excluded Liabilities
as set forth in Section 2.4), the other Transaction Documents or any agreement
or document executed in connection herewith.
"Buyer Indemnified Parties" means Buyer and each officer,
director, employee, consultant, stockholder, and Affiliate of Buyer.
"Buyer Indemnified Representation Costs" means (i) any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and reasonable attorneys' fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) that any of the Buyer Indemnified Parties incurs and that arise out
of any breach or default by Seller of any of the representations or warranties
under this Agreement, (ii) any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) that any of the Buyer Indemnified
Parties incurs resulting from the Excluded Liabilities described in subsection
(iv) of the definition thereof and (iii) if the Closing occurs, Buyer
Indemnified Covenant Costs arising from a breach by Seller of any covenant or
agreement to have been performed or complied with by Seller prior to Closing.
"CERCLA" has the meaning set forth in the definition of
Environmental Laws contained in this Section 1.1.
"Choses in Action" means a right to receive or recover
property, debt, or damages on a cause of action, whether pending or not and
whether arising in contract, tort or otherwise. The term shall include rights
to indemnification, damages for breach of warranty or any other event or
circumstance, judgments, settlements, and proceeds from judgments or
settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article 9.
"Closing Date" means the date of the Closing specified in
Article 9.
"Closing Escrow Agreement" means the Closing Escrow Agreement
among Seller, Buyer and Escrow Agent substantially in the form attached hereto
as Exhibit C.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Commonly Controlled Entity" has the meaning set forth in
Section 3.1(p)(iii).
"Company Reports" has the meaning set forth in Section 3.1(e).
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"Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and
other modifications thereto), to which Seller is a party or is otherwise bound
and which affect or relate to the Assets or the Business.
"Debt", without duplication, means (a) all indebtedness
(including the principal amount thereof, or, if applicable, the accreted amount
thereof and the amount of accrued and unpaid interest thereon) of Seller and
its subsidiaries, whether or not represented by bonds, debentures, notes or
other securities, for the repayment of money borrowed, (b) all deferred
indebtedness of Seller and its subsidiaries for the payment of the purchase
price of property or assets purchased, (c) all obligations of Seller and its
subsidiaries to pay rent or other payment amounts under a lease of real or
personal property which is required to be classified as a capital lease or a
liability on the face of a balance sheet prepared in accordance with GAAP, (d)
any outstanding reimbursement obligation of Seller and its subsidiaries with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of Seller, (e) any payment obligation of Seller and its
subsidiaries under any interest rate swap agreement, forward rate agreement,
interest rate cap or collar agreement or other financial agreement or
arrangement entered into for the purpose of limiting or managing interest rate
risks, (f) all indebtedness for borrowed money secured by any Lien existing on
any of the Assets, whether or not indebtedness secured thereby shall have been
assumed, (g) all guaranties, endorsements, assumptions and other contingent
obligations of Seller and its subsidiaries in respect of, or to purchase or to
otherwise acquire, indebtedness for borrowed money of others, and (h) all
premiums, penalties and change of control payments required to be paid in
respect of any of the foregoing as a result of the consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing, as
used in this Agreement, Debt will not include any current liabilities to the
extent that such current liabilities are considered in the calculation of
Estimated Working Capital.
"Employee Benefit Plans" means any "employee benefit plan"
within the meaning of Section 3(3) of ERISA and any bonus, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, vacation, severance, disability, death benefit,
hospitalization or insurance plan providing benefits to any present or former
employee or contractor of Seller or any member of the ERISA Group maintained by
any such entity or as to which any such entity has any liability or obligation.
"Environmental Costs or Liabilities" has the meaning set forth
in Section 3.1(m)(iv).
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.)
("CERCLA"), the Emergency Planning and Community Right to Know Act and the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act of 1976, the Hazardous and Solid Waste Amendments Act of 1984,
the Clean Air Act, the Clean Water Act, the Federal Water Pollution Control
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act of 1970, the Oil Pollution Act of 1990, the
Hazardous Materials Transportation Act, and any similar or analogous statutes,
regulations and
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decisional law of any Governmental Authority, as each of the foregoing may be
amended and in effect on or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Group" shall mean the collective reference to Seller
and any other trades or businesses under common control with Seller within the
meaning of Section 4001(b)(1) of ERISA.
"Escrow Agent" means Norwest Bank Texas, N.A. and includes its
successors and assigns.
"Estimated Working Capital" has the meaning set forth in
Section 2.3(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Contracts" has the meaning set forth in Section
2.2(h).
"Extraordinary Payments" means payments or other distributions
required to be made, pursuant to any oral or written contracts or other
agreements, to any directors, officers, employees or agents of the Seller or
its subsidiaries as a result of the transactions contemplated by the
Transaction Documents, including all severance payments, termination payments
or other amounts payable (including, without limitation, the estimated costs of
benefits required to be provided) under the terms of any employment agreement
determined as if the employee's employment with the Seller or its subsidiaries
was terminated after the occurrence of a "change of control" or other similar
event (whether such payments or other distributions are paid on or before the
Closing Date or are payable on or after the Closing Date); provided, however,
that no such payments or distributions shall be deemed to be Extraordinary
Payments to the extent that the obligation to make such payment or distribution
is accrued on the Final Balance Sheet.
"Final Adjustment" has the meaning set forth in Section
2.3(f).
"Final Balance Sheet" has the meaning set forth in Section
2.3(d).
"Final Working Capital" has the meaning set forth in Section
2.3(d).
"Financial Statements"has the meaning set forth in Section
3.1(e).
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any state, county, parish or municipality, jurisdiction, or other
political subdivision thereof.
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"Hazardous Substances" has the meaning set forth in Section
3.1(m).
"HSR Act" has the meaning set forth in Section 3.1(d).
"Indemnification Holdback Amount" has the meaning set forth in
Section 2.3(e).
"Indemnified Costs" means the Buyer Indemnified Costs or the
Seller Indemnified Costs, as the case may be.
"Indemnified Covenant Costs" means the Buyer Indemnified
Covenant Costs or the Seller Indemnified Covenant Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or
the Seller Indemnified Parties, as the case may be.
"Indemnifying Party" means any person who is obligated to
provide indemnification hereunder.
"Initial Adjustment" has the meaning set forth in Section
2.3(d)(i).
"Intellectual Property" means all Trademarks, Know-how,
copyrights, copyright registrations and applications for registration, Patents,
business names (including the right to use the name "Masterview Window Company,
Inc.," or derivatives thereof) and all other intellectual property rights
(including Internet Domain Names), whether registered or not, licensed to or
owned by Seller, including the goodwill related to the foregoing.
"Inventory" means all inventory owned by Seller, including,
without limitation, all inventory of raw materials or supplies, components,
work in process and finished products.
"Know-how" means all plans, design drawings, specifications
and performance criteria, operating instructions and maintenance manuals,
manufacturing information (including production documentation, methods, layouts
and supplier and cost information), copies of on-site computer software and
related documentation (including, without limitation, source and object code to
the extent available), prototypes, models or samples, ideas, concepts and data,
research records, all promotional literature, customer and supplier lists and
similar data and information and all other confidential or proprietary
technical and business information owned by or licensed to Seller.
"Knowledge" means, with respect to a specified party hereto,
the actual knowledge of such party. With respect to Seller, "Knowledge" shall
mean the actual knowledge of Fred Bengtson, Robert Deakin or Michael Easterly.
With respect to Buyer, "Knowledge" shall mean the actual knowledge of Randall
S. Fojtasek or Jeff Hull.
"Leased Real Property" means all of the Seller's leasehold
interests, easements, licenses, rights to access and rights-of-way, including
those interests which are identified in
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Schedule 3.1(j), as modified by any addition or deletion thereto permitted by
Section 4.1 between the date hereof and the Closing Date.
"Licenses" means all licenses, permits, or authorizations
issued to Seller by any Governmental Entity, including those listed on Schedule
3.1(f), with any additions thereto between the date hereof and the Closing
Date.
"Liens" has the meaning set forth in Section 3.1(l).
"Material Adverse Effect" means a material adverse effect on
the business, operations, properties (taken as a whole), condition (financial
or otherwise), results of operations, assets (taken as a whole), liabilities,
or prospects of the Seller.
"Minimum Loss" has the meaning set forth in Section 11.5(a).
"Owned Real Property" means those parcels of real property
owned in fee by Seller as listed on Schedule 3.1(i), and all buildings,
structures, improvements, and fixtures thereon, together with all rights of
way, easements, privileges, and appurtenances pertaining or belonging thereto,
including any right, title, and interest of Seller in and to any street or
other property adjoining any portion of such property.
"Patents" means all patent and patent applications (including
all reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by Seller or for which Seller has applied.
"PBGC" has the meaning set forth in Section 3.1(p)(iii).
"Permits" has the meaning set forth in Section 3.1(m).
"Permitted Encumbrances" has the meaning set forth in Section
8.2(d).
"Permitted Liens" has the meaning set forth in Section 3.1(k).
"Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization, or
other entity.
"Personal Property" means all of the machinery, equipment,
computer programs, computer software, installations, tools, motor vehicles,
fixtures, furniture, furnishings, leasehold improvements, office equipment,
inventories, supplies, plant, spare parts, fittings, tractors, trailers, and
other tangible or intangible personal property which are owned or leased by
Seller, including the personal property which is listed on Schedule 3.1(k)
hereto, together with any additions thereto between the date hereof and the
Closing Date less any dispositions made in accordance with Section 4.1. The
term Personal Property includes all of the capital stock of Seller's
wholly-owned subsidiary, Masterview of California, Inc., a Delaware
corporation. The term Personal Property shall not include any of the Excluded
Assets.
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"Plan" has the meaning set forth in Section 3.1(p)(i).
"Publicker Asset Purchase Agreement" means that certain asset
purchase agreement dated August 16, 1996 among Masterview Window Company, Inc.,
Publicker Industries Inc., Hanten Acquisition Co. and Masterview Acquisition
Corp., pursuant to which Seller acquired the Business.
"Publicker Environmental Escrow Agreement" means that certain
environmental escrow agreement dated as of October 31, 1996 among Masterview
Acquisition LLC, Publicker Industries Inc., Hanten Acquisition Co., Masterview
Window Company, Inc. and Citizens Trust Company, as escrow agent.
"Publicker Environmental Matter" means the matter disclosed on
Schedule 3.1(m).
"Publicker Escrow Agreement" means that certain escrow
agreement dated as of October 31, 1996 among the Seller, Publicker Industries
Inc., Hanten Acquisition Co., Masterview Window Company, Inc. and Citizens
Trust Company, as escrow agent.
"Purchase Price" means the consideration payable by Buyer to
Seller as provided in Section 2.3 hereof.
"Real Property" means the Leased Real Property and the Owned
Real Property.
"Reductions" has the meaning set forth in Section 2.3(c).
"Reductions Notice" has the meaning set forth in Section
2.3(c).
"Referee" has the meaning set forth in Section 2.3(d).
"Schedules" means the Schedules attached hereto.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of
this Agreement.
"Seller Indemnified Costs" means (a) Seller Indemnified
Representation Costs; (b) any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) incurred by any of the Seller
Indemnified Parties resulting from any Assumed Obligation or from Buyer's
ownership of the Assets or operation or control of the Business on and after
the Closing Date, including any and all liabilities arising under the Licenses
or the Assumed Contracts which relate to events occurring after the Closing
Date; (c) Seller Indemnified Covenant Costs; (d) the items indemnified against
pursuant to Section 5.3 or Section
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7.5; and (e) any and all actions, suits, proceedings claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees
and expenses, incident to any of the foregoing; provided, however, that insofar
as the items in this clause (e) relate to the items in clause (a) above, such
items shall constitute Seller Indemnified Representation Costs.
"Seller Indemnified Covenant Costs" means any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding) that
any of the Seller Indemnified Parties incurs and that arise out of any breach
or default by Buyer of any covenant or agreement under this Agreement, the
other Transaction Documents or any agreement or document executed in connection
herewith.
"Seller Indemnified Parties" means Seller and each officer,
director, employee, consultant, stockholder, member and Affiliate of Seller.
"Seller Indemnified Representation Costs" means any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and reasonable attorneys' fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) that any of the Seller Indemnified Parties incurs and that arise
out of any breach or default by Buyer of any of the representations or
warranties under this Agreement or any agreement or document executed in
connection herewith.
"Seller Transaction Costs" means the aggregate amount of all
fees, costs and expenses of the Seller (whether incurred on behalf of the
Seller or on behalf of any of Seller's stockholders) incurred in connection
with this Agreement or the transactions contemplated hereby (whether incurred
before or after the Closing Date), including, without limitation, any
investment banking, accounting, advisory, brokers, finders, escrow agent or
legal fees paid to any Governmental Entity or third party (but only to the
extent that such fees, costs and expenses have not been paid by the Seller
before the Closing Date).
"Stockholder" means BancBoston Ventures Inc., a Massachusetts
corporation.
"subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns or
has rights to acquire, directly or indirectly, 50% or more of the capital stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity.
"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
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"Tax Returns" means any return, report, statement, information
return or other document (including any related or supporting information)
filed or required to be filed with any Governmental Entity in connection with
the determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
"Trademarks" means (a) trademarks, service marks, trade names,
trade dress, labels, product configurations, logos, and all other names and
slogans associated with, or embodying the goodwill of, Seller or the Business,
whether or not registered, and any applications or registrations therefor and
(b) any goodwill or common law rights associated therewith owned by Seller.
"Transaction Documents" has the meaning set forth in Section
3.1(c).
"Warranty Deed" means an Arizona general warranty deed in form
and substance reasonably acceptable to the Title Company pursuant to which
Seller conveys to Buyer the Owned Real Property at the Closing.
"Working Capital" means, as of the close of business on the
Closing Date, the sum of all current assets of Seller and its consolidated
subsidiaries (excluding the Excluded Assets) minus the sum of all current
liabilities of Seller and its consolidated subsidiaries (excluding the
liabilities identified in the Reductions Notice and any deferred revenue
liabilities), each as determined in accordance with GAAP applied on a basis
consistent with the Balance Sheet (provided that no liabilities or reserves
reflected on the Balance Sheet shall be increased or reduced except in the
ordinary course of business and consistent with past practices).
Notwithstanding the foregoing, for purposes of calculating Working Capital any
Accounts Receivable that fail to conform with the representations and
warranties set forth in Section 3.1(u) shall not be considered current assets.
"Working Capital Holdback Amount" has the meaning set forth in
Section 2.3(b).
"Working Capital Statement" has the meaning set forth in
Section 2.3(d).
1.2 REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language contained
therein. The words "this Agreement," "herein," "hereby," "hereunder," " and
"hereof," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "this
Section," "this subsection," and words of similar import, refer only to the
Sections or subsections hereof in which such words occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation." Pronouns in masculine, feminine, or neuter genders shall
be construed to state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
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requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 AGREEMENT TO SELL AND BUY. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, assign,
transfer and deliver to Buyer on the Closing Date, and Buyer hereby agrees to
purchase on the Closing Date, all of the Assets, free and clear of any Liens or
liabilities (except for Permitted Liens and liabilities assumed by Buyer in
accordance with Section 2.4). The Assets to be assigned, transferred and
delivered by Seller hereunder shall include the following:
(a) All Personal Property;
(b) All Leased Real Property;
(c) All Owned Real Property;
(d) All Licenses and Permits;
(e) All Assumed Contracts;
(f) All Intellectual Property;
(g) All Accounts Receivable;
(h) All technical information and data, machinery and
equipment warranties (to the extent such warranties are assignable), if any,
maps, plans, diagrams, blueprints and schematics of Seller, if any, and
goodwill relating to the foregoing;
(i) All books and records of Seller (excluding those
included in the Excluded Assets), including executed copies of the Assumed
Contracts;
(j) To the extent assignable, all computer programs and
software, and all rights and interests of Seller in and to any computer
programs and software;
(k) Except for claims relating to Taxes, and the Choses
in Action described in Schedule 2.2(e), all Choses in Action of Seller; and
(l) All intangible assets of Seller not specifically
described above, including goodwill of the Business, and all other assets
owned, leased or licensed by Seller, other than the Excluded Assets.
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2.2 EXCLUDED ASSETS. The Excluded Assets shall consist of the
following:
(a) Seller's books and records relating solely to
internal corporate matters;
(b) Any claims, rights and interest of Seller in and to
any refunds of Taxes which relate solely to any period ending prior to the
Closing Date;
(c) Except as contemplated in Section 7.4(c), all
insurance contracts, including the cash surrender value thereof, and all rights
to make any claims or receive any proceeds thereunder;
(d) All Employee Benefit Plans and all assets or funds
held in trust, or otherwise, associated with or used in connection with the
Employee Benefit Plans, except to the extent provided in Section 7.7(c);
(e) All Choses in Action, if any, of Seller (i) relating
to Taxes or (ii) described in Schedule 2.2(e);
(f) All tangible and intangible personal property
disposed of or consumed in the ordinary course of business between the date of
this Agreement and the Closing Date as permitted pursuant to Section 4.1
hereof;
(g) The personal effects and other personal property, if
any, identified on Schedule 2.2(g);
(h) Any rights or obligations of the Seller under the
Contracts listed on Schedule 2.2(h) (the "Excluded Contracts");
(i) Any of the Seller's cash, marketable securities,
commercial paper and cash equivalents or other investments, on hand or in bank
accounts and intercompany accounts;
(j) The consideration received by the Seller pursuant to
this Agreement; and
(k) The rights of the Seller under this Agreement and the
other Transaction Documents.
2.3 PURCHASE PRICE.
(a) General. The Purchase Price for the Assets is
$25,500,000 (the "Purchase Price"); provided, however, that the Purchase Price
shall be adjusted as hereinafter provided to reflect (i) any Reductions, as
described in Section 2.3(c), and (ii) the Final Working Capital as described in
Sections 2.3(d) and 2.3(f).
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(b) Working Capital Holdback Amount. At the Closing,
Buyer shall deposit pursuant to the Closing Escrow Agreement $250,000 of the
Purchase Price pending the Final Adjustment (the "Working Capital Holdback
Amount").
(c) Reductions to the Purchase Price.
(i) The Purchase Price payable to the Seller
shall be reduced by (A) any Debt of Seller or its subsidiaries
outstanding as of the Closing Date (to the extent that such Debt is
not included in the determination of the Estimated Working Capital),
(B) any Extraordinary Payments payable by Seller or its subsidiaries
as a result of the transactions contemplated by this Agreement, and
(C) any Seller Transaction Costs payable whether incurred before or
after the Closing Date (the amounts described in clauses (A), (B) and
(C) being hereinafter referred to, collectively, as the "Reductions").
(ii) No later than 10:00 a.m. (Dallas, Texas time)
on the Closing Date, Seller shall deliver to Buyer a written notice
(the "Reductions Notice") setting forth (A) the aggregate amount of
the Reductions, which amount shall include (1) the payments required
to be made in order for the Debt to be repaid in full and retired as
of the Closing Date, and (2) the amount of each Extraordinary Payment
and Seller Transaction Cost to be made, (B) the names of the persons
to whom such payments are to be made; and (C) wiring instructions for
the recipients of such payments. At the Closing, an amount of the
Purchase Price equal to the sum of the Reductions shall be applied by
the Buyer, on behalf of the Seller, to the payment and retirement in
full of the Debt and the payment of any Extraordinary Payments and
Seller Transaction Costs identified in such notice. The Seller shall
indemnify Buyer pursuant to the provisions of Article 11 for the
amount of any Reductions not set forth in the Reductions Notice.
(d) Working Capital Adjustments.
(i) No later than the close of business on the
Business Day immediately prior to the scheduled Closing Date, Seller
shall deliver to Buyer (A) a statement containing a good faith
estimate of Working Capital as of the close of business on the Closing
Date (the "Estimated Working Capital") and (B) a certificate of the
chief executive officer and the chief financial officer of Seller
certifying that the Estimated Working Capital has been calculated in
accordance with this Agreement. The Estimated Working Capital shall
be calculated by Seller in accordance with GAAP applied on a basis
consistent with the Balance Sheet, except as otherwise contemplated by
this Agreement. Seller shall, and Seller shall request Coopers &
Lybrand L.L.P., accountants for Seller, to consult in good faith with
Buyer and Coopers & Lybrand L.L.P., accountants for Buyer, when
calculating the Estimated Working Capital. The inventory valuation
reflected on the statement of Estimated Working Capital shall be based
on a physical inventory to be conducted by Seller on February 28, 1998
rolled forward to the Closing Date. Buyer and its representatives
shall have the right to observe the physical inventory. If the
Estimated Working Capital exceeds $2,945,000, then the Purchase Price
payable by Buyer on the Closing Date will be increased by an amount
equal to the amount by which Estimated Working Capital exceeds
$2,945,000. If
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the Estimated Working Capital is less than $2,945,000, then the
Purchase Price payable by Buyer on the Closing Date will be decreased
by an amount equal to the amount by which $2,945,000 exceeds Estimated
Working Capital. Any adjustment to the Purchase Price payable by the
Buyer on the Closing Date is referred to as the "Initial Adjustment"
and shall be subject to subsequent adjustment as described in Section
2.3(f) below.
(ii) No later than 45 days after the Closing Date,
Buyer shall cause to be prepared and delivered to the Seller (A) a
balance sheet for the Company as of 11:59 p.m. on the Closing Date
(but giving effect to the payments that have been made pursuant to
Section 2.3(c)), which shall be audited by Coopers & Lybrand L.L.P.,
accountants for Buyer, together with the related report of such firm
(the "Final Balance Sheet") and (B) a statement of Working Capital as
determined from the Final Balance Sheet (the "Working Capital
Statement"). The Final Balance Sheet shall be prepared in accordance
with GAAP, applied in a manner consistent with the preparation of the
Closing Balance Sheet, except as otherwise contemplated by this
Agreement, and shall fairly present the financial position of the
Business as of the close of business on the Closing Date (but giving
effect to the payments that have been made pursuant to Section
2.3(c)). If within fifteen days following delivery of the Working
Capital Statement to the Seller, the Seller has not given the Company
written notice of its objection to the Working Capital Statement (such
notice to contain a statement describing the basis of such objection),
then the Working Capital reflected on the Working Capital Statement
shall be deemed final and conclusive and shall be the "Final Working
Capital." If the Seller gives such written notice of objection within
such fifteen day period and the Buyer and the Seller are unable to
resolve the dispute within the five day period following such notice
of objection, then the issues in dispute will be submitted for
resolution to a "big six" accounting firm to be selected jointly by
the Seller and Buyer within the following fifteen days or, if they
fail to agree, such accounting firm shall be Deloitte & Touche LLP,
Dallas, Texas (it being understood that Deloitte & Touche LLP, Dallas,
Texas was chosen because of representations made that neither Buyer
and its Affiliates nor the Seller and its Affiliates have a material
relationship with such office, and if such parties, prior to the
calculation of the Final Working Capital, develop a material
relationship with such office, the party having such relationship
shall promptly notify the other party of such relationship and the
parties will select another office of Deloitte & Touche LLP or another
"big 6" accounting firm with which none of such parties has a material
relationship to serve as the accountants) (the "Referee"). The
Referee shall determine the Final Working Capital within thirty days
after the dispute is submitted to it. If issues in dispute are
submitted to the Referee for resolution, (1) each party will furnish
to the Referee such work papers and other documents and information
relating to the disputed issues as the Referee may request and are
available to that party (or its independent public accountants) and
will be afforded the opportunity to present to the Referee any
material relating to the determination of Final Working Capital and to
discuss such determination with the Referee; (2) the determination by
the Referee of Final Working Capital, as set forth in a written notice
delivered to both parties by the Referee, will be binding and
conclusive on the parties; and (3) the Seller and the Buyer will each
bear one-half of the fees and expenses of the Referee for such
determination; provided, that if the difference between the Final
Adjustment (as defined below) and the Final Adjustment that would have
resulted from the use of the proposed
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calculations of one of the parties hereto (the "Erroneous Party") is
more than twice as great as the difference between the Final
Adjustment and the Final Adjustment that would have resulted from the
use of the other party's proposed calculations, the Erroneous Party
shall pay all of the fees and expenses of the Referee.
(e) Payments at Closing. At the Closing, subject to the
satisfaction of the other terms and conditions of this Agreement, Buyer shall:
(i) pay or cause to be paid to the Seller cash,
via wire transfer of immediately available funds to an account
designated by the Seller, in an amount equal to the Purchase Price, as
adjusted in accordance with the provisions of Sections 2.3(c) and
2.3(d)(i), minus the sum of (A) the Working Capital Holdback Amount
and (B) $1,000,000 (the "Indemnification Holdback Amount");
(ii) wire transfer such amounts required to repay
in full any Debt and to make any Extraordinary Payments and pay any
Seller Transaction Costs in accordance with the Reductions Notice;
(iii) deposit or cause to be deposited the Working
Capital Holdback Amount with the Escrow Agent; and
(iv) deposit or cause to be deposited the
Indemnification Holdback Amount with the Escrow Agent.
(f) Final Adjustment. Once the dollar amount of the
Final Working Capital has been finally determined, as described in Section
2.3(d)(ii), the Purchase Price shall be recalculated pursuant to the formula
contained in Section 2.3(d)(i) using the Final Working Capital as determined
pursuant to Section 2.3(d)(ii) in lieu of the Estimated Working Capital used in
the Initial Adjustment. If the Purchase Price as adjusted pursuant to this
paragraph 2.3(f) (the "Final Adjustment") is greater than the Purchase Price as
adjusted pursuant to the Initial Adjustment, the Buyer shall pay such excess to
the Seller in cash and Seller and Buyer shall promptly (but in any event no
later than the third Business Day following the determination of the Final
Working Capital) instruct the Escrow Agent to release the Working Capital
Holdback Amount to Seller pursuant to the terms of the Closing Escrow
Agreement. If the Purchase Price as adjusted pursuant to the Final Adjustment
is less than the Purchase Price as adjusted pursuant to the Initial Adjustment
and the amount of such excess is less than the Working Capital Holdback Amount,
Seller and Buyer shall promptly (but in any event no later than the third
Business Day following the determination of the Final Working Capital) instruct
the Escrow Agent to release the amount of such excess to Buyer and to release
the remaining portion of the Working Capital Holdback Amount to Seller in
accordance with the terms of the Closing Escrow Agreement. If the Purchase
Price as adjusted pursuant to the Final Adjustment is less than the Purchase
Price as adjusted pursuant to the Initial Adjustment and the Amount of such
excess is more than the Working Capital Holdback Amount, Seller and Buyer shall
promptly (but in any event no later than the third Business Day following the
determination of the Final Working Capital) instruct the Escrow Agent to
release the Working Capital Holdback Amount to Buyer in accordance with the
terms of the Closing Escrow Agreement and Seller shall pay the
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remaining portion of such excess to Buyer in cash. Any cash amount required to
be paid by Buyer or Seller pursuant to this Section 2.3(f) shall be paid by the
Buyer or the Seller, as the case may be, on the third Business Day following
the determination of Final Working Capital, in immediately available funds by
wire transfer to such bank account as the Buyer or the Seller, as applicable,
shall specify.
2.4 ASSUMPTION OF LIABILITIES BY BUYER; DISCHARGE OF EXCLUDED
LIABILITIES BY SELLER. (a) As of the Closing Date, Buyer shall assume and
undertake to pay, discharge and perform all of Seller's obligations and
liabilities of any nature, fixed or contingent, known or unknown, including
liabilities for product warranty claims and product returns, excluding however:
(i) any liabilities for Debt of the Seller or its
subsidiaries;
(ii) liabilities and obligations of the Seller or
its subsidiaries under the Excluded Contracts;
(iii) any unpaid Taxes which are not accrued on the
Final Balance Sheet;
(iv) any Employee Benefit Plan obligations which
are not accrued on the Final Balance Sheet; provided, however, that in
no event shall the liabilities relating to the costs of employee
bonuses, incentive compensation and related payroll Taxes that Seller
is required to pay pursuant to Section 7.7 be assumed by Buyer;
(v) any liability or obligation of the Seller or
its subsidiaries with respect to any uncleared checks issued by Seller
which are outstanding on the Closing Date (all of which will be paid
by Seller);
(vi) any liability with respect to any of the
matters disclosed on Schedule 3.1(g) and Part I of Schedule 3.1(m);
(vii) any obligation of the Seller or its
subsidiaries to any of Seller's stockholders or any of their
subsidiaries or affiliates; and
(viii) any liabilities or obligations of Seller
under this Agreement or the other Transaction Documents.
The liabilities and obligations to be assumed by Buyer under this Agreement are
hereinafter sometimes referred to as the "Assumed Liabilities" and the
liabilities and obligations that are not assumed by Buyer under this Agreement
are hereinafter sometimes referred to as "Excluded Liabilities". This Section
2.4 is not intended to and shall not benefit any person other than Seller and
Buyer. Nothing in this Section 2.4 shall create or be construed as creating
any third party beneficiary right in any person.
(b) All of the Excluded Liabilities shall remain and be
the obligations and liabilities of Seller, and Buyer shall have no liability or
responsibility for any of the obligations
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arising therefrom. Seller hereby covenants and agrees with Buyer that it
shall, subject to the terms and conditions set forth herein (including those
set forth in Article 11), perform and discharge all of its obligations relating
to Excluded Liabilities.
2.5 DEEMED ASSIGNMENT OF CONTRACTS. To the extent that the
assignment hereunder of any of the Assumed Contracts shall require the consent
of any other party (or in the event that any of the same shall be
non-assignable), neither this Agreement nor any actions taken hereunder shall
constitute an assignment or an agreement to assign if such assignment or
attempted assignment would constitute a breach thereof or result in a loss or
diminution thereof; provided, however, that Seller shall cooperate, at Buyer's
expense, with Buyer to establish a reasonable arrangement designed to provide
Buyer with the benefits and burdens of any Assumed Contract, including
appointing Buyer to act as its agent to perform all of Seller's obligations
under such Assumed Contract and to collect and promptly remit to Buyer all
compensation received by Seller pursuant to such Assumed Contract and to
enforce, for the account and benefit of Buyer, any and all rights of Seller
against any other person arising out of the breach or cancellation of such
Assumed Contract by such other person or otherwise (any and all of which
arrangements shall constitute, as between the parties hereto, a deemed
assignment or transfer); provided, that from and after Closing, the Seller
shall have no liability to the Buyer in the event that any Assumed Contract
requiring consent to assignment hereunder (or which by its terms is
non-assignable) is terminated.
2.6 ALLOCATION. On or before the date (the "Allocation Date")
that is the later of (a) 30 days after the Closing Date or (b) ten days after a
determination of Final Working Capital pursuant to Section 2.3(d), Seller and
Buyer shall negotiate in good faith an allocation of the Purchase Price among
the Assets (as well as any liabilities assumed by Buyer) that complies with
Section 1060 of the Code with respect to the allocation of the Purchase Price.
If the allocation is not agreed upon on or before the Allocation Date, then
Buyer and Seller agree that the allocation shall be made and consistently
reported by Buyer and Seller in compliance with Section 1060 based upon an
asset valuation supplied by an appraiser to be jointly selected by Buyer and
Seller. The cost of such appraisal shall be divided equally between the Seller
and the Buyer. Buyer will order such appraisal from the selected appraiser as
soon as practicable after such date such appraiser is selected. The appraisal,
if required, shall be provided to Seller within 45 days after the date of such
order.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying on such representations and warranties in entering into and
performing this Agreement):
(a) Organization, Good Standing, Etc. Seller is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware, has all requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted and is duly qualified and in good standing to do business in
each state listed
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on Schedule 3.1(a). Seller has delivered to Buyer true and complete copies of
its Certificate of Formation and Operating Agreement, as in effect at the date
of this Agreement. Seller is not in violation of any provisions of its
Certificate of Formation or Operating Agreement.
(b) Subsidiaries of Seller. Schedule 3.1(b) sets forth a
true and complete list of all of the Seller's subsidiaries, together with the
jurisdiction of incorporation or organization of each such subsidiary and the
percentage of each such subsidiary's outstanding capital stock or other equity
interests owned the Company or another subsidiary of the Company. Except as
disclosed on Schedule 3.1(b), Seller does not own, directly or indirectly, any
equity interest in, any other corporation, partnership, or other person or have
the right, pursuant to a contract or otherwise, to acquire any capital stock,
equity interest or other similar investment in any corporation, partnership, or
other person. Schedule 3.1(b) also sets forth the capitalization of the
subsidiary of the Company listed on Schedule 3.1(b), including the number of
authorized shares of each class of capital stock and the par value (if any)
thereof, the number of shares of each class of capital stock held in the
treasury of the subsidiary, and the number of issued and outstanding shares of
each class of capital stock and the names of (and number of shares held by) the
record owners thereof. All issued and outstanding shares of capital stock of
each such subsidiary of the Company are duly authorized, validly issued, fully
paid and non-assessable and have not been issued in violation of any preemptive
or similar rights. There are no outstanding options, warrants or other
securities convertible into or exchangeable for capital stock of any such
subsidiary.
(c) Authority. Seller has all requisite power and
authority to enter into this Agreement, the Bill of Sale and Assignment, the
Closing Escrow Agreement and each other agreement, document, and instrument
required to be executed by the Seller in accordance herewith (collectively,
the "Transaction Documents") to which Seller is a party and to consummate the
transactions contemplated hereby or thereby. The execution and delivery of the
Transaction Documents by Seller and the consummation by Seller of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of Seller. The Transaction Documents have been,
or upon execution and delivery will be, duly executed and delivered and
constitute, or upon execution and delivery will constitute, the valid and
binding obligations of Seller enforceable against Seller in accordance with
their terms, subject as to enforceability to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(d) No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement and the other Transaction Documents by
Seller do not and the performance by Seller of the transactions contemplated
hereby or thereby will not, subject to obtaining the consents, approvals,
authorizations, and permits and making the filings described in this Section
3.1(d) or with respect to the contracts listed on Schedule 3.1(o), (A) violate,
conflict with, or result in any breach of any provision of Seller's Certificate
of Formation or Operating Agreement, (B) violate, conflict with, or result in a
violation or breach of, or constitute a default (with or without due notice or
lapse of time or both) under, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate (whether as a result of a
change of control of Seller or otherwise) any obligation, or result in the loss
of any benefit, or give any person the right to require any security to be
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repurchased, or give rise to the creation of any Lien, upon any of the Assets
under any of the terms, conditions, or provisions of any loan or credit
agreement, note, bond, mortgage, indenture, or deed of trust, or any license,
lease, agreement, or other instrument or obligation to which Seller or any of
its subsidiaries is a party or by which or to which it or any of the Assets may
be bound or subject, other than where such violation, conflict, default or
other occurrence would not have a Material Adverse Effect, or (C) violate any
order, writ, judgment, injunction, decree, statute, law, rule, or regulation of
any Governmental Entity applicable to Seller or any of its subsidiaries or by
which or to which any of the Assets is bound or subject, other than where such
violation, conflict, default or other occurrence would not have a Material
Adverse Effect. No Consent of any Governmental Entity is required by or with
respect to Seller or any of its subsidiaries in connection with the execution
and delivery of this Agreement or any of the other Transaction Documents by
Seller or the consummation of the transactions contemplated hereby or thereby,
except for the filing of a premerger notification report under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and the expiration or termination of any waiting period in connection
therewith.
(e) Reports; Financial Statements; Absence of Certain
Changes or Events.
(i) Seller and its subsidiaries have filed timely
all material forms, reports, statements, and other documents required
to be filed with any and all Governmental Entities (collectively, the
"Company Reports"). The Company Reports were prepared in all material
respects in accordance with the requirements of all Applicable Laws.
(ii) Seller has delivered to Buyer copies of (A)
the audited balance sheets of Seller as of December 31, 1996, together
with the audited statements of income and cash flows of Seller for the
two month period then ended, and the notes thereto, accompanied by the
reports thereon of Coopers & Lybrand L.L.P., independent public
accountants, and (B) the unaudited balance sheet of Seller as of
December 31, 1997, together with the related unaudited statements of
income and cash flows for the periods then ended (such audited and
unaudited financial statements collectively referred to as the
"Financial Statements"). The Financial Statements, including the
notes thereto, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except to the
extent disclosed therein or required by changes in GAAP) and present
fairly the information purported to be presented therein as of such
dates and for the periods then ended.
(iii) Except as disclosed in Schedule 3.1(e), there
is no liability or obligation of any kind, whether accrued, absolute,
fixed, contingent, or otherwise, of Seller that is not reflected or
reserved against in the balance sheet of Seller as of December 31,
1997 (the "Balance Sheet"), other than (A) liabilities incurred in the
ordinary course of business in a manner consistent with past practice
since December 31, 1997 (the "Balance Sheet Date"), or (B) any such
liability or obligation which would not be required to be presented in
financial statements or the notes thereto prepared in conformity with
GAAP applied, in a manner consistent with past practice, in the
preparation of the Financial Statements.
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(iv) Except as disclosed in Schedule 3.1(e), since
the Balance Sheet Date, Seller has conducted its business only in the
ordinary course consistent with past practice. Since the Balance
Sheet Date, except as disclosed in Schedule 3.1(e), there has not been
(A) any material change by Seller in its accounting methods,
principals or practices; (B) any entry by the Seller into any
commitment or transaction material to the Seller, except in connection
with the negotiation and execution and delivery of this Agreement and
other Transaction Documents; (C) any increase in, amendment to, or
establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing for other Employment
Benefit Plans; (D) any general increase in the compensation, bonus or
other benefits payable to employees of Seller, except for increases
occurring in the ordinary course of business in accordance with its
customary practice; (E) any bonus paid to the employees of Seller
except for bonuses, incentive compensation and related payroll Taxes
accrued on the Balance Sheet; or (F) any loan, advance or capital
contribution to or investment in any person by Seller. Since the
Balance Sheet Date, there has not occurred, and Seller has not
incurred or suffered, any event, circumstance, or fact that has
resulted or could reasonably be expected to result in a Material
Adverse Effect.
(f) Compliance with Applicable Laws.
(i) Except as set forth on Schedule 3.1(f), the
business of Seller and its subsidiaries has been conducted in
compliance in all material respects with Applicable Laws. Except as
set forth on Schedule 3.1(f), no investigation or review by any
Governmental Entity with respect to Seller or its subsidiaries is
pending or, to the Knowledge of Seller, threatened. Notwithstanding
the representations and warranties contained in this Section 3.1(f),
all representations and warranties with respect to the Seller's and
its subsidiaries' compliance with Environmental Laws shall be governed
exclusively by Section 3.1(m) hereof and all representations and
warranties with respect to the Seller's and its subsidiaries'
compliance with any other Applicable Laws specified in any other
Section of this Section 3.1 shall be governed exclusively by such
applicable Section.
(ii) Schedule 3.1(f) is a complete and accurate
list of all material Licenses issued to Seller and its subsidiaries by
any other Governmental Entities and held by it as of the date of this
Agreement. The Licenses listed on Schedule 3.1(f) constitute all of
the material licenses, permits and authorizations required for the
operation of the Business, and each such License is in full force and
effect. The Business has been operated in all material respects in
accordance with the terms of such Licenses and each of the Seller and
its subsidiaries is otherwise in compliance in all material respects
with, and has conducted its business so as to comply in all material
respects with, the terms of such Licenses. There are no proceedings
pending or, to the Knowledge of Seller, threatened which reasonably
may be expected to result in the revocation, material adverse
modification, non-renewal, or suspension of any of such Licenses, the
denial of any pending applications for any such Licenses, the issuance
against Seller or its subsidiaries of any cease and desist order, or
the imposition of any administrative actions (which shall include the
proposed assessment of any fines or penalties) by any Governmental
Entity with respect to any such Licenses, or which reasonably may be
expected to materially and adversely affect Seller's ability to
operate the
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Business as currently operated or Buyer's ability to operate the
Business as currently operated after the Closing.
(g) Absence of Litigation. Except as set forth on
Schedule 3.1(g), there is no claim, action, suit, inquiry, judicial, or
administrative proceeding, grievance, or arbitration pending or, to the
Knowledge of Seller, threatened against Seller, any of its subsidiaries, the
Business or any of the Assets by or before any arbitrator or Governmental
Entity, nor are there, to the Knowledge of Seller, any investigations relating
to Seller, any of its subsidiaries, the Business or any of the Assets pending
or threatened by or before any arbitrator or Governmental Entity which could
have a Material Adverse Effect. Except as set forth in Schedule 3.1(g), there
is no judgment, decree, injunction, order, determination, award, finding, or
letter of deficiency of any Governmental Entity or arbitrator outstanding
against Seller, any of its subsidiaries, the Business or any of the Assets
which could have a Material Adverse Effect. There is no action, suit, inquiry
or judicial or administrative proceeding pending or, to the Knowledge of
Seller, threatened against Seller or its subsidiaries relating to the
transactions contemplated by this Agreement and the other Transaction
Documents. Notwithstanding the foregoing, no representation or warranty is
made in this Section 3.1(g) as to product warranty claims or matters, such
claims and matters being covered exclusively by the representations and
warranties contained in Section 3.1(w) hereof.
(h) Insurance. Since October 31, 1996, Seller and its
subsidiaries have been insured against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured. Schedule 3.1(h) sets forth a complete and accurate list of all
fire, general liability, malpractice liability, theft, and other forms of
insurance and all fidelity bonds held by or applicable to Seller, the Business,
the Assets or any of Seller's subsidiaries. No event has occurred, including
the failure by Seller or its subsidiaries to give any notice or information or
the delivery of any inaccurate or erroneous notice or information, which limits
or impairs the rights of Seller or its subsidiaries under any such insurance
policies in such a manner as could have a Material Adverse Effect. Excluding
insurance policies that have expired and been replaced in the ordinary course
of business, no insurance policy held by or applicable to Seller or any of
Seller's subsidiaries has been canceled since October 31, 1996.
(i) Owned Real Property. Schedule 3.1(i) contains a
complete and accurate list of all the Owned Real Property. Seller has good and
marketable, fee simple, title in and to the Owned Real Property. Seller has
sufficient title to such easements, rights of way and other rights appurtenant
to each of the Owned Real Properties as are necessary to permit ingress and
egress to and from the Owned Real Property to a public way, and the
improvements on the Owned Real Property have access to such sewer, water, gas,
electric, telephone and other utilities as are necessary to allow the business
of the Seller operated thereon to be operated in the ordinary course. There is
no pending condemnation or similar proceeding affecting the Owned Real Property
or any portion thereof, and to the Knowledge of Seller, no such action is
threatened. Except as set forth on Schedule 3.1(i), there are no lessees or
tenants at will in possession of any portion of any of the Owned Real Property
other than Seller, whether as lessees, tenants at will, trespassers or
otherwise. Except as set forth on Schedule 3.1(i), no zoning or building law,
ordinance, regulation or restriction is violated in any material respect by the
continued maintenance, operation or use of the Owned Real Property or any tract
or portion thereof or interest therein in its present manner. The current use
of
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the Owned Real Property and all parts thereof does not violate any restrictive
covenants of record affecting any of the Owned Real Property. All necessary
Licenses by any Governmental Entity with respect to the Owned Real Property
have been obtained and are in full force and effect.
(j) Leased Real Property. 3.1(j) contains a complete and
accurate list of all the leasehold interests relating to the Business as now
conducted. Each lease described in Schedule 3.1(j) is a valid and binding
obligation of Seller and is in full force and effect without amendment other
than as described in Schedule 3.1(j). Except as otherwise disclosed on
Schedule 3.1(j), Seller is not, and to the Knowledge of the Seller, no other
party is, in default under any lease described in Schedule 3.1(j). Subject to
obtaining the consents disclosed in Schedule 3.1(j), Seller has the full legal
power and authority to assign its rights under the leases listed in Schedule
3.1(j) to Buyer.
(k) Personal Property. Schedule 3.1(k) contains a
description of the items of Personal Property (having a replacement cost of not
less than $10,000 for each item). All such Personal Property is located at the
locations listed on Schedule 3.1(k). Except as set forth on Schedule 3.1(k),
Seller has good title to, or a valid leasehold or license interest in, all
Personal Property and none of the Personal Property is subject to any Lien or
other encumbrances, except for Liens that (i) arise out of Taxes not in default
and payable without penalty or interest or the validity of which is being
contested in good faith by appropriate proceedings, (ii) represent the right of
customers, lenders, suppliers and subcontractors in the ordinary course of
business under contracts or general principles of commercial law, (iii)
individually and in the aggregate could not reasonably be expected to interfere
materially with the use of the Assets in the conduct of the Business as
presently conducted or materially detract from the value such Assets; or (iv)
relate to restriction on transfer embodied in the terms of any agreement or
instrument constituting part of the Assets (the Liens referred to in clauses
(i), (ii), (iii) and (iv) of this Section 3.1(k) are, together with the
Permitted Encumbrances, referred to in this Agreement as "Permitted Liens").
Seller is not, and to the Knowledge of the Seller, no other party is, in
default under any of the leases, licenses and other Contracts relating to the
Personal Property.
(l) Liens and Encumbrances. All of the Assets, including
leases, are free and clear of all liens, pledges, claims, security interests,
restrictions, mortgages, deeds of trust, tenancies, and other possessory
interests, conditional sale or other title retention agreements, assessments,
easements, rights of way, covenants, restrictions, rights of first refusal,
defects in title, encroachments, and other burdens, options or encumbrances of
any kind (collectively, "Liens") except (i) Permitted Liens and (ii) Liens set
forth on Schedule 3.1(l). At the Closing, all of the Assets shall be free and
clear of all Liens other than Permitted Liens.
(m) Environmental Matters. Except as disclosed on
Schedule 3.1(m):
(i) The real property and facilities owned,
operated, and leased by Seller and its subsidiaries and the operations
of Seller and its subsidiaries thereon comply in all material respects
with all Environmental Laws;
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(ii) No judicial proceedings are pending or, to
the Knowledge of Seller, threatened against Seller or any of its
subsidiaries alleging the violation of any Environmental Laws, and
there are no administrative proceedings pending or, to the Knowledge
of Seller, threatened against Seller or any of its subsidiaries,
alleging the violation of any Environmental Laws and no written or, to
Seller's Knowledge, verbal notice from any Governmental Entity or any
private or public person has been received by Seller or any of its
subsidiaries claiming any violation of any Environmental Laws in
connection with any real property or facility owned, operated or
leased by Seller or any of its subsidiaries, or requiring any
remediation, clean-up, modification, repairs, work, construction,
alterations, or installations on or in connection with any real
property or facility owned, operated or leased by Seller or any of its
subsidiaries that are necessary to comply with any Environmental Laws
and that have not been complied with or otherwise resolved to the
satisfaction of the party giving notice;
(iii) All permits, registrations, licenses,
authorizations, and the like required to be obtained or filed by
Seller or any of its subsidiaries under any Environmental Laws in
connection with Seller's and its subsidiaries' operations ("Permits"),
including those activities relating to the generation, use, storage,
treatment, disposal, release, or remediation of Hazardous Substances
(as such term is defined in Section 3.1(m)(iv) hereof), have been duly
obtained or filed (except for those Permits the failure of which to
obtain would not have a Material Adverse Effect), and each of Seller
and its subsidiaries is and has at all times complied in all material
respects with the terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by
Seller or any of its subsidiaries on, in, or under any of the owned,
operated, or leased real property or facilities are and have at all
times been generated, stored, used, treated, disposed of, and released
by such persons or on their behalf in such manner as not to result in
any Environmental Costs or Liabilities. "Hazardous Substances" means
(A) any hazardous materials, hazardous wastes, hazardous substances,
toxic wastes, and toxic substances as those or similar terms are
defined under any Environmental Laws; (B) any asbestos or any material
which contains any hydrated mineral silicate, including chrysolite,
amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or non-friable; (C) PCBs, or PCB-containing materials,
or fluids; (D) radon; (E) any other hazardous, radioactive, toxic or
noxious substance, material, pollutant, contaminant, constituent, or
solid, liquid or gaseous waste; (F) any petroleum, petroleum
hydrocarbons, petroleum products, crude oil and any fractions or
derivatives thereof, any oil or gas exploration or production waste,
and any natural gas, synthetic gas and any mixtures thereof; (G) any
substance that, whether by its nature or its use, is subject to
regulation under any Environmental Laws or with respect to which any
Environmental Laws or Governmental Entity requires environmental
investigation, monitoring or remediation; and (H) any underground
storage tanks, dikes, or impoundments as defined under any
Environmental Laws. "Environmental Costs or Liabilities" means any
losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions, claims, costs and expenses
(including, without limitation, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and consultants, and the
costs of investigation or feasibility studies and performance of
remedial or removal actions and cleanup activities)
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arising from, under or in connection with (1) any Environmental Laws,
(2) any order of any Governmental Entity or (3) any exposure of any
person or property to Hazardous Substances;
(v) There are not now on, in or under any
property or facilities owned, leased, or operated by Seller and its
subsidiaries, any Hazardous Substances that are in a condition or
location that violates any Environmental Law or that reasonably could
be expected to require remediation under any Environmental Laws or
give rise to a claim for damages or compensation by any affected
person or to any Environmental Costs or Liabilities; and
(vi) Neither Seller nor any of its subsidiaries
has received, and to the Knowledge of Seller, does not expect to
receive, any notification from any source advising Seller or any of
its subsidiaries that: (A) it is a potentially responsible party
under CERCLA or any other Environmental Laws; (B) any real property or
facility currently or previously owned, operated, or leased by it is
identified or proposed for listing as a federal National Priorities
List ("NPL") (or state-equivalent) site or a Comprehensive
Environmental Response, Compensation and Liability Information System
("CERCLIS") list (or state-equivalent) site; and (C) any facility to
which it has ever transported or otherwise arranged for the disposal
of Hazardous Substances is identified or proposed for listing as an
NPL (or state-equivalent) site or CERCLIS (or state- equivalent) site.
(n) Taxes. Each of Seller and its subsidiaries has
timely filed or caused to be timely filed all Tax Returns which are required to
be filed by Seller and its subsidiaries, all such Tax Returns which have been
filed are accurate and complete in all material respects, and each of Seller
and its subsidiaries has timely paid all Taxes shown on such returns or on any
Tax assessment received by Seller or any of its subsidiaries to the extent that
such Taxes have become due. Neither Seller nor any of its subsidiaries is
currently the beneficiary of any extension of time within which to file any Tax
Return. There are no Liens for Taxes upon the Assets except for the Permitted
Encumbrances. Neither Seller nor any of its subsidiaries has received any
written or, to Seller's Knowledge, verbal notice of any Tax deficiency or
delinquency. No Internal Revenue Service audit of Seller or any of its
subsidiaries is pending or, to the Knowledge of Seller, threatened, and the
results of any completed audits are properly reflected in the Financial
Statements. Neither Seller nor any of its subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to any Tax assessment or deficiency. All monies required to be
withheld by Seller or any of its subsidiaries from employees or collected from
customers for Taxes and the portion of any Taxes to be paid by Seller or any of
its subsidiaries to governmental agencies or set aside in accounts for such
purposes have been so paid or set aside, or such monies have been reserved
against and entered upon the books and are reflected in the Balance Sheet.
There are no legal, administrative, or tax proceedings pending against Seller
or any of its subsidiaries pursuant to which Seller or any of its subsidiaries
is or could be made liable for any taxes, penalties, interest, or other
charges, the liability for which could extend to Buyer as transferee of the
Business or the Assets. None of the Assets directly or indirectly secures any
debt the interest on which is exempt from tax under Section 103(a) of the
Code, and none of the Assets is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.
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(o) Certain Agreements.
(i) Schedule 3.1(o) hereto lists each (A)
employment or consulting Contract which is not terminable by Seller or
its assignees without liability or penalty on 30 days or less notice,
(B) Contract under which any party thereto remains obligated to
provide goods or services having a value, or to make payments
aggregating, in excess of $50,000 per year in the aggregate, (C) other
Contract that is material to the Seller or the Assets or the conduct
of the Business, (D) Contracts set forth on Schedule 3.1(j) (relating
to leasehold interests), and (E) Contracts set forth on Schedule
3.1(r) (relating to agreements with Affiliates), in any such case to
which Seller is a party or by which or to which Seller or the Assets
is bound or subject, other than purchase orders or other Contracts
entered into by the Seller in the ordinary course of business and
which are terminable by the Seller and its assignees on no more than
30 days' notice without payment of any termination fee or penalty.
Each such Contract listed in Schedule 3.1(o) is a valid and binding
obligation of Seller and is in full force and effect without
amendment. Seller and, to the Knowledge of Seller, each other party
to such Contracts, has performed in all material respects the
obligations required to be performed by it under such Contracts and is
not (with or without lapse of time or the giving of notice, or both)
in breach or default thereunder. Except as disclosed in Schedule
3.1(o), the Seller has not received (1) any written or, to Seller's
Knowledge, verbal notice, of defaults by Seller under any contract
listed in Schedule 3.1(o), or (2) any written or, to Seller's
Knowledge, verbal notice, that any other party to any such contract
has terminated or cancelled, or intends to terminate or cancel, such
contract. Notwithstanding the foregoing, no representation or
warranty is made in this Section 3.1(o) as to product warranty claims
or matters, such claims and matters being covered exclusively by the
representations and warranties contained in Section 3.1(w) hereof. In
addition, no representation or warranty is made herein with respect to
the assignability of any contract or with respect to any third party's
willingness to continue doing business with the Buyer subsequent to
Closing. A complete copy of each written Contract and a summary of
each oral Contract set forth in Schedule 3.1(o) has been provided to
Buyer prior to the date of this Agreement.
(ii) Except as set forth in Schedule 3.1(o),
neither Seller nor any of its subsidiaries is a party to any oral or
written agreement, plan or arrangement with any employee, consultant
or an independent contractor of Seller (A) the benefits of which are
contingent, or the terms of which are materially altered, upon, or
result from, the occurrence of a transaction involving Seller or any
of its subsidiaries of the nature of any of the transactions
contemplated by the Transaction Documents, (B) providing severance
benefits longer than forty-five days or other benefits after the
termination of employment or other contractual relationship regardless
of the reason for such termination and regardless of whether such
termination is before or after a change of control, (C) under which
any person may receive payments subject to the tax imposed by Section
4999 of the Code or (D) any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by the
Transaction Documents or the value of any of the benefits of which
will be calculated on the basis of any of the transactions
contemplated by this Agreement.
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(p) Employee Benefit Matters; Labor.
(i) Schedule 3.1(p)(i) provides a complete and
accurate list of each of the following which is sponsored, maintained
or contributed to by Seller and its subsidiaries for the benefit of
the employees of Seller and its subsidiaries, or has been so
sponsored, maintained or contributed to since October 31, 1996 for the
benefit of such individuals:
(A) each "employee benefit plan," as
such term is defined in section 3(3) of ERISA (including, but
not limited to, employee benefit plans, such as foreign plans,
which are not subject to the provisions of ERISA) ("Plan");
and
(B) each personnel policy, stock option
plan, stock purchase plan, stock appreciation rights plan,
phantom stock plan, collective bargaining agreement, bonus
plan or arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, consulting
agreement, employment agreement and each other employee
benefit plan, agreement, arrangement, program, practice or
understanding which is not described in Section 3.1(p)(i)
("Benefit Program or Agreement").
(ii) True, correct and complete copies of each of
the Plans, related trusts, insurance or group annuity contracts and
each other funding or financing arrangement relating to any Plan,
including all amendments thereto, have been furnished to Buyer. True,
correct and complete copies or descriptions of all Benefit Programs
and Agreements and the most recent IRS Forms 5500 for each of the
Plans have also been furnished to Buyer.
(iii) Except as otherwise set forth on Schedule
3.1(p)(iii),
(A) As to any Plan subject to Title IV
of ERISA, there has been no event or condition which presents
the risk of Plan termination, no accumulated funding
deficiency, whether or not waived, within the meaning of
section 302 of ERISA or section 412 of the Code has been
incurred, no reportable event within the meaning of section
4043 of ERISA (for which the disclosure requirements of
Regulation section 4043.1 et seq., promulgated by the Pension
Benefit Guaranty Corporation ("PBGC") have not been waived)
has occurred, no notice of intent to terminate the Plan has
been given under section 4041 of ERISA, no proceeding has been
instituted under section 4042 of ERISA to terminate the Plan,
no liability to the PBGC has been incurred, and the assets of
the Plan equal or exceed the actuarial present value of the
benefit liabilities, within the meaning of section 4041 of
ERISA, under the Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established by
the PBGC;
(B) With respect to any employee benefit
plan, within the meaning of section 3(3) of ERISA, which is
not listed in Schedule 3.1(p)(i) but which is sponsored,
maintained or contributed to, or has been sponsored,
maintained or
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contributed to since October 31, 1996, by any corporation,
trade, business or entity under common control with Seller,
within the meaning of section 414(b), (c) or (m) of the Code
or section 4001 of ERISA ("Commonly Controlled Entity"), (1)
no withdrawal liability, within the meaning of section 4201 of
ERISA, has been incurred, which withdrawal liability has not
been satisfied, (2) no liability to the PBGC has been incurred
by any Commonly Controlled Entity, which liability has not
been satisfied, (3) no accumulated funding deficiency, whether
or not waived, within the meaning of section 302 of ERISA or
section 412 of the Code has been incurred, and (4) all
contributions (including installments) to such plan required
by section 302 of ERISA and section 412 of the Code have been
timely made.
(iv) Except as otherwise set forth on Schedule
3.1(p)(iv), each of Seller and its subsidiaries has substantially
performed all obligations, whether arising by operation of law or by
contract, required to be performed by it in connection with the 401(k)
Plan maintained by the Seller ("Seller's Savings Plan"), and to the
Knowledge of Seller there have been no defaults or violations by any
other party with respect to Seller's Savings Plan.
(v) Except as disclosed in Schedule 3.1(o),
neither Seller nor any of its subsidiaries is a party to any
collective bargaining agreement, neither Seller nor any of its
subsidiaries has agreed to recognize any union or other collective
bargaining representative, nor has any union or other collective
bargaining representative been certified as the exclusive bargaining
representative of any of Seller's or its subsidiaries' employees. To
the knowledge of Seller no union organizational campaign or
representation petition is currently pending with respect to any of
the employees of Seller or its subsidiaries. There is no labor strike
or labor dispute, slowdown, work stoppage or lockout pending or, to
the Knowledge of Seller, threatened against or affecting Seller and
its subsidiaries, and neither Seller nor any of its subsidiaries has
experienced any labor strike or labor dispute, slowdown, work stoppage
or lockout since October 31, 1996. Except as set forth on Schedule
3.1(p), each of Seller and its subsidiaries (A) is, and has always
been since October 31, 1996, in substantial compliance with all
applicable laws and regulations regarding labor and employment
practices, including, without limitation, terms and conditions of
employment, equal employment opportunity, employee compensation,
employee benefits, affirmative action, wages and hours, plant closing
and mass layoff, occupational safety and health, immigration, workers'
compensation, disability, unemployment compensation, whistleblower
laws or other employment or labor relations laws, (B) is not engaged,
nor has it since October 31, 1996, engaged, in any unfair labor
practices, and has no, and has not had since October 31, 1996, any,
unfair labor practice charges or complaints before the National Labor
Relations Board pending or, to the Knowledge of Seller threatened
against it, (C) has no, and has not had since October 31, 1996, any,
grievances, arbitrations, or other proceedings arising or asserted to
arise under any collective bargaining agreement, pending or, to the
Knowledge of Seller threatened, against it and (D) has no, and has not
had since October 31, 1996, any, charges, complaints, or proceedings
before the Equal Employment Opportunity Commission, Department of
Labor or any other Governmental Entity responsible for regulating
labor or employment practices, pending, or, to Seller's Knowledge,
threatened against it.
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(vi) Schedule 3.1(p) contains a true and complete
list of all persons employed by Seller and its subsidiaries, including
the respective dates of hire of each, and such person's current hourly
wage.
(q) Intellectual Property. Schedule 3.1(q) is a true and
complete list of all material trademarks, service marks, trade names, business
names and copyright or patent registrations and applications for registration
which are owned by or licensed to Seller or its subsidiaries. True and complete
copies of all license agreements or Contracts pertaining to any Intellectual
Property, have previously been provided to Buyer. Except as disclosed in
Schedule 3.1(q):
(i) Each of Seller and its subsidiaries has the
right to use or has good title, free and clear of all Liens, to each
item of Intellectual Property that is material to the conduct of the
Business as presently conducted;
(ii) For each United States and foreign patent,
patent application, design patent, design patent application, utility
model and industrial model listed in Schedule 3.1(q) as owned by the
Seller and its subsidiaries, all maintenance fees, renewal fees or
other fees required to be paid to avoid abandonment have been timely
paid, and any applicable working requirements have been timely met;
(iii) For each United States and foreign registered
trademark, registered service mark and registered trade name listed in
Schedule 3.1(q) as owned by Seller and its subsidiaries, all
appropriate affidavits and associated fees necessary to show continued
use, and all renewals and associated fees, have been timely filed with
the appropriate administrative or governmental office;
(iv) Each United States and foreign patent
application and design patent application, and each United States and
foreign application for registration of a trademark, service mark,
trade name or copyright listed in Schedule 3.1(q) as owned by Seller
and its subsidiaries, remains pending and has not been abandoned;
(v) Each license agreement or Contract under
which each of Seller and its subsidiaries has any license, right or
interest in any Intellectual Property material to the operation of the
Business is listed on Schedule 3.1(q) and is a valid, binding and
enforceable agreement;
(vi) To the knowledge of Seller, no product used,
sold or manufactured by Seller and its subsidiaries, nor the conduct
of the Business by Seller and its subsidiaries as it is currently
conducted, infringes on or otherwise violates the patent, design
patent, trademark, service mark, trade name, copyright, industrial
model, utility model, trade secret or other intellectual property
rights of any third party;
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(vii) To the Knowledge of Seller, no third party is
challenging or infringing or otherwise violating any of the
Intellectual Property owned by Seller or any of its subsidiaries;
(viii) To the Knowledge of Seller, no third party is
challenging or infringing or otherwise violating the Intellectual
Property under which the Seller or any of its subsidiaries has any
right, license, or interest; and
(ix) To the Knowledge of Seller, there are no
restrictions that would materially impair the use of any United States
or foreign trademark, service mark or trade name listed in Schedule
3.1(q) by Buyer or the transfer of any United States or foreign
trademark, service mark or trade name listed in Schedule 3.1(q) to
Buyer.
(r) Affiliate Relationships. Schedule 3.1(r) sets forth
a complete list of all contracts or other arrangement involving the Assets or
the Business in which Seller or any of its officers, directors, stockholders or
Affiliates have a financial interest, including indebtedness owed to Seller.
(s) Assets. The Assets constitute all of the assets
(real, personal, or mixed, tangible or intangible), properties, licenses,
permits, Contracts and other agreements which are used or held for use in the
operation of the Business as presently conducted by Seller and its subsidiaries
(other than the Excluded Assets) and include all assets, properties, licenses,
permits, Contracts and agreements which are necessary to permit Buyer to
conduct the Business after Closing in substantially the same manner as it has
been conducted by Seller and its subsidiaries prior to the date hereof,
utilizing a labor force substantially similar to that utilized by the Seller
and its subsidiaries on the date hereof. Except as otherwise disclosed in
Schedule 3.1(s), the Personal Property and the improvements located on the
Owned Real Property (taken as a whole) are in sufficiently good condition
(except for ordinary wear and tear) to allow the Business to be operated in
substantially the same manner as it is presently operated by Seller and its
subsidiaries.
(t) No Dispositions. Since the Balance Sheet Date, there
has not occurred any sale, lease, transfer, assignment, abandonment or other
disposition of any of Assets other than any disposition of (i)
obsolete property, (ii) property in connection with the acquisition of
replacement property of equal value, (iii) inventory in the ordinary course of
business, or (iv) assets having, in the aggregate, a value of less than
$100,000 disposed of in the ordinary course of business and consistent with
past practices.
(u) Accounts Receivable. Each of the Accounts Receivable
arose from bona fide sales of goods or services in the ordinary course of
business.
(v) Customers and Sales. Schedule 3.1(v) contains a
true, correct and complete list of all of Seller's and its subsidiaries'
customers during the period from October 31, 1996 through December 31, 1997,
which have had purchases in excess of One Hundred Thousand Dollars ($100,000)
in the aggregate (the "Significant Customers"). Except as indicated in
Schedule 3.1(v), neither Seller nor any of its subsidiaries has received
written notice that, and Seller has no
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Knowledge that, any of the Significant Customers intends to cease doing
business with the Business or materially decrease the amount of its purchases
from the Business.
(w) Warranty Matters. Except as disclosed on Schedule
3.1(w), there is no litigation pending or, to Seller's Knowledge, threatened
against Seller or any of its subsidiaries for services or products furnished by
Seller and its subsidiaries which are defective or fail to meet any service or
product warranties. Schedule 3.1(w) also sets forth the forms of all express
warranties and guaranties customarily made by Seller and its subsidiaries to
third parties with respect to the Assets, the Business and the products
manufactured by Seller and its subsidiaries in the conduct of the Business.
Except as set forth on Schedule 3.1(w), no litigation with respect to any
breach of product or service warranty to any customer is pending against Seller
or any of its subsidiaries with respect to products produced in the conduct of
the Business nor, to the Knowledge of Seller, is any such litigation
threatened.
(x) Disclosure. No representation or warranty by Seller
contained in this Agreement or in any exhibit or schedule hereto contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was or will be made, in order to make the statements herein or therein not
misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows (with the understanding that Seller is relying on
such representations and warranties in entering into and performing this
Agreement):
(a) Organization, Standing and Power. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its
business as now being conducted.
(b) Authority. Buyer has all requisite corporate power
and authority to enter into this Agreement and the other Transaction Documents
to which it will be a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of such Transaction Documents
by Buyer and the consummation by Buyer of the transactions contemplated hereby
or thereby have been duly authorized by all necessary corporate action on the
part of Buyer. The Transaction Documents to which Buyer will be a party have
been, or upon execution and delivery will be, duly executed and delivered and
constitute, or upon execution and delivery will constitute, the valid and
binding obligations of Buyer, enforceable against Buyer in accordance with
their terms, subject as to enforceability to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(c) No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement and the other Transaction Documents to
which Buyer will be a party do not and the performance by Buyer of the
transactions contemplated hereby or thereby will not, subject to obtaining the
consents, approvals, authorizations, and permits and making the filings
described in
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this Section 3.2(c), (A) violate, conflict with, or result in any breach of any
provisions of Buyer's Certificate of Incorporation and Bylaws, (B) violate,
conflict with, or result in a violation or breach of, or constitute a default
(with or without due notice or lapse of time or both) under, or permit the
termination of, or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of Buyer or otherwise)
any obligation, or result in the loss of any benefit, or give any person the
right to require any security to be repurchased, under any of the terms,
conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which Buyer is a party or by which or to
which it may be bound or subject, or (C) violate any order, writ, judgment,
injunction, decree, statute, law, rule or regulation of any Governmental Entity
applicable to Buyer. No Consent of any Governmental Entity is required by or
with respect to Buyer in connection with the execution and delivery of any
Transaction Documents by Buyer or the consummation by it of the transactions
contemplated hereby or thereby, except for the filing of a premerger
notification report under the HSR Act and the expiration or termination of any
waiting period in connection therewith.
(d) Litigation. As of the date hereof, there is no
claim, action, suit, inquiry, judicial or administrative proceeding, grievance,
or arbitration pending or, to the Knowledge of Buyer, threatened against Buyer
relating to the transactions contemplated by this Agreement.
(e) Disclosure. No representation or warranty by Buyer
contained in this Agreement or in any exhibit or schedule hereto contains or
will contain any untrue statement of material fact, or omits or will omit to
state a material fact necessary, in the light of the circumstances under which
it was or will be made, in order to make the statements herein or therein not
misleading.
3.3 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying on such representations and warranties in entering into and
performing this Agreement):
(a) Organization, Standing and Power. Stockholder is a
corporation duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(b) Authority. Stockholder has all requisite corporate
power and authority to enter into this Agreement and to consummate these
transactions contemplated hereby. The execution and delivery of this Agreement
by Stockholder and the consummation by Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Stockholder. This Agreement has been duly executed and
delivered and constitutes the valid and binding obligation of Stockholder,
enforceable against Stockholder in accordance with its terms, subject as to
enforceability to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
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(c) No Conflict, Required Filings Consents. The
execution and delivery of this Agreement by Stockholder do not and the
performance by Stockholder of the transactions contemplated hereby will not,
subject to obtaining the consents, approvals, authorizations, and permits in
making the filings described in this Section 3.3(c), (i) violate, conflict with
or result in any breach of any provision of Stockholder's Articles of
Organization or Bylaws, (ii) violate, conflict with, or result in a violation
of breach of, or constitute a default (with or without due notice of lapse of
time or both) under, or permit the termination of, or result in the
acceleration of, or entitle any party to accelerate any obligation, or result
in the loss of any benefit, or give any person the right to require any
security to be repurchased, under any of the terms, conditions or provisions of
any loan or credit agreement, note, bond, mortgage, indenture, or deed of
trust, or any license, lease, agreement or other instrument or obligation to
which Stockholder is a party or by which or to which it may be bound or
subject, or (iii) violate any order, writ, judgment, injunction, decree,
statute, law, rule or regulation of any Governmental Entity applicable to
Stockholder. No Consent of any Governmental Entity is required by or with
respect to Stockholder in connection with the execution and delivery of this
Agreement by Stockholder or the consummation by it of the transactions
contemplated hereby, except for the filing of a premerger notification report
under HSR Act and the expiration or termination of any waiting period in
connection therewith.
(d) Litigation. As of the date hereof, there is no
claim, action, suit, inquiry, judicial or administrative proceeding, grievance,
or arbitration pending or, to the Knowledge of Stockholder, threatened against
Stockholder relating to the transactions contemplated by this Agreement.
(e) Disclosure. No representation or warranty by
Stockholder contained in this Agreement or in any exhibit or schedule hereto
contains or will contain any untrue statement of material fact, or omits or
will omit to state a material fact necessary, in the light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF SELLER. Except as contemplated by this Agreement
or to the extent that Buyer shall otherwise consent in writing, from the date
of this Agreement until the Closing, Seller covenants and agrees that Seller
shall not, and shall cause each of its subsidiaries to not:
(a) conduct its business in any manner except in the
ordinary course consistent with past practice; or
(b) fail to use reasonable efforts to preserve intact its
present business organization and to keep available the services of its present
officers and executive managerial personnel (collectively, the "Management")
and key employees or independent contractors and preserve its relationships
with Significant Customers, suppliers and others having business dealings with
it; or
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(c) fail to use commercially reasonable efforts to
maintain the Assets in their current condition, except for ordinary wear and
tear and damage by casualty governed by Section 7.4 or fail to repair,
maintain, or replace any of the Assets in accordance with its standards of
maintenance in the ordinary course of business; or
(d) materially amend, terminate, or fail to use all
commercially reasonable efforts to renew any material Contract (i.e., a
contract or agreement of the type required to be described in Schedule 3.1(o))
(provided that Seller shall not be required to renew any material Contract on
terms that are less favorable to Seller) or enter into any new material
Contract, except for amendments, terminations (without payment of penalty or
damages), renewals, or failures to renew (without payment of penalty or
damages) of agreements in the ordinary course of business and consistent with
past practice; or
(e) merge or consolidate with or into any other legal
entity, dissolve, or liquidate; or
(f) except for Extraordinary Payments described in the
Reductions Notice, adopt or amend any Employee Benefit Plan or collective
bargaining agreement, or increase in any manner the compensation or fringe
benefits of any officer, director or employee or pay any benefit not by any
existing agreement, except in the ordinary course of business and consistent
with the past practices or as required by law; or
(g) terminate any officer, executive managerial personnel
or key employee of Seller or any of its subsidiaries without prior consultation
with Buyer regarding the basis for such termination; or
(h) acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) or sell
(whether by merger, consolidation, or the sale of an equity interest or
assets), lease, or dispose of any Assets except in the ordinary course of
business and consistent with past practice or, even if in the ordinary course
of business and consistent with past practices (other than sales of surplus or
obsolete equipment or sales of inventory in the ordinary course of business),
whether in one or more transactions, in no event involving an Asset or Assets
having an aggregate fair market value in excess of $100,000; or
(i) mortgage, pledge, or subject to any material Lien,
other than Permitted Liens, any of the Assets; or
(j) except as required by GAAP, Applicable Law, or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(k) change in any material respect its existing practices
and procedures with respect to the collection of accounts receivable; or
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(l) agree to or make any commitment, orally or in
writing, to take any actions prohibited by this Agreement.
ARTICLE 5
ADDITIONAL AGREEMENTS OF SELLER
5.1 NO SOLICITATION OF TRANSACTIONS. Each of Stockholder and
Seller hereby jointly and severally covenant and agree with Buyer that neither
Stockholder nor Seller shall, directly or indirectly, through any officer,
director, stockholder, employee, agent, financial advisor, banker or other
representative, or otherwise, solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase
of all or any material portion of the Assets or any equity interest in Seller
or any merger, consolidation, share exchange, business combination, or other
similar transaction relating to Seller, or participate in any negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate,
or encourage, any effort or attempt by any other person to do or seek any of
the foregoing. Each of Stockholder and Seller hereby jointly and severally
covenant and agree with Buyer that neither Stockholder nor Seller shall release
any third party from, or waive any provision of, any confidentiality or
standstill agreement to which Stockholder or Seller is a party. Each of
Stockholder and Seller hereby jointly and severally covenant and agree with
Buyer that Stockholder and Seller immediately shall cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
5.2 ACCESS AND INFORMATION. (a) Until the Closing, Seller shall
afford to Buyer and its representatives (including accountants and counsel)
full access, during normal business hours, upon reasonable notice and in such
manner as will not unreasonably interfere with the conduct of the business of
Seller, to all properties, books, records, and Tax Returns (including those
relating to Employee Benefit Plans) of Seller and all other information with
respect to its business, together with the opportunity to make copies of such
books, records, and other documents and to discuss the business of Seller with
such officers, directors, managerial personnel, accountants, consultants, and
counsel for Seller as Buyer deems reasonably necessary or appropriate for the
purposes of familiarizing itself with Seller and the Business, including the
right to visit the offices and facilities of the Seller. In furtherance of the
foregoing, Seller shall authorize and instruct its independent public
accountants to meet with Buyer and its representatives, including Buyer's
independent public accountants, to discuss the business and accounts of Seller
and to make available (with the opportunity to make copies) to Buyer and its
representatives, including its independent public accountants, all the work
papers of its accountants related to their audit of the consolidated financial
statements and Tax Returns of Seller. Notwithstanding any other provision set
forth in this Agreement, Buyer shall not , without the prior written consent of
Seller, directly or indirectly communicate with any customer of Seller at or
before the Closing regarding the transactions contemplated in this Agreement
and the other Transactions Documents.
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(b) Within 30 days after the end of each calendar month,
Seller shall deliver to Buyer monthly operating statements of Seller (in a form
consistent with the monthly operating statements previously supplied to Buyer)
prepared in the ordinary course of business for internal purposes, including
comparisons to comparable prior year periods and current year budget.
(c) Without duplication of Section 5.5(b), at such time
as Seller provides the same to its lenders, Seller shall, at the expense of
Buyer, provide Buyer with copies of the financial statements and other
information delivered by Seller to such lenders.
5.3 ASSISTANCE. If Buyer requests, Seller will, at the expense of
Buyer, cooperate, and will cause its accountants to cooperate, in all
reasonable respects with any financing efforts of Buyer or its Affiliates.
Buyer will indemnify and hold harmless Seller and its, officers, directors, and
controlling persons against any and all claims, losses, liabilities, damages,
costs, or expenses (including reasonable attorneys' fees and expenses) that may
arise out of or with respect to the financing efforts by Buyer or its
Affiliates, including any registration statement, prospectus, offering
documents, and other filings related thereto; provided, however, that subject
to the limitations and provisions of this Agreement, nothing herein shall
prevent Buyer from asserting any claim for breach of representation or warranty
under this Agreement.
5.4 COMPLIANCE WITH LAWS. If Seller (or its counsel) receives an
administrative or other order or notification relating to any violation or
claimed violation of any Applicable Law that could affect the Seller's ability
to consummate the transactions contemplated hereby and by the other Transaction
Documents, Seller shall promptly notify Buyer in writing and use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement
and by the other Transaction Documents.
5.5 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt
written notice to Buyer of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of Seller contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
hereof to the Closing Date, (b) the failure of Seller, or any officer,
director, employee, or agent of Seller, to comply with or satisfy in any
material respect any covenant, condition, or agreement to be complied with or
satisfied by it hereunder, and (c) the occurrence of any threat made to Seller
by any executive officer of Seller to resign or otherwise terminate their
employment relationship with Seller. No such notification shall affect the
representations or warranties of the parties or the conditions to their
respective obligations hereunder.
5.6 DEPOSIT OF CHECKS. From and after the Closing, Seller shall
cooperate with Buyer in making all arrangements which Buyer reasonably requests
to ensure that checks and other payments on Accounts Receivable are deposited
in Buyer's accounts.
5.7 NAME CHANGE. As of the Closing, Seller shall amend its
certificate of formation to change its name to a name not similar to
"Masterview Window Company, Inc."
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5.8 SELLER NONCOMPETITION. Except as expressly permitted herein,
Seller agrees that it shall not, until 11:59 p.m. on the fifth anniversary of
the date hereof:
(a) directly or indirectly own, engage in, manage,
operate, join, control or participate in the ownership, management, operation
or control of, or be involved as a stockholder, director, officer, employee,
agent, partner, joint venturer, member, beneficiary or otherwise with, any
corporation, limited liability company, partnership, sole proprietorship,
association, business, trust or other organization, entity or individual which
in any way competes with Buyer in the design, manufacture, sale, distribution
or installation of windows and doors in the Territory (as hereinafter
defined); provided, however, that Seller may own, directly or indirectly,
securities of any entity traded on any national securities exchange or listed
on the National Association of Securities Dealers Automated Quotation System if
Seller does not, directly or indirectly, individually own 5% or more of any
class of equity securities, or securities convertible into or exercisable or
exchangeable for 5% or more of any class of equity securities, of such entity;
(b) directly or indirectly aid, abet or otherwise assist
any individual, business or other organization or entity in the design,
manufacture, sale, distribution or installation of windows and doors in the
Territory;
(c) directly or indirectly request or advise any present
or future customers of Buyer to cancel any contracts with Buyer or curtail
their dealings with Buyer;
(d) directly or indirectly request or advise any present
or future service provider or financial resource of Seller or Buyer to
withdraw, curtail or cancel the furnishing of such service or resource to
Buyer;
(e) directly or indirectly disclose or communicate to any
other person, firm or corporation:
(i) the names of any past or present customers of
Seller; or
(ii) the names of any past or present employees of
Seller; or
(f) employ or directly or indirectly induce or attempt to
influence any employee of Buyer or its Affiliates to terminate his or her
employment.
As used herein, the "Territory" means any window and door market in Arizona,
California, Nevada and New Mexico. In no event shall the term "Seller" as used
in this Section 5.8 include any member of the Seller.
5.9 STOCKHOLDER NON-SOLICITATION. Except as expressly permitted
herein, Stockholder agrees that it shall not, until 11:59 p.m. on the third
anniversary of the date hereof, directly or indirectly through any entity
controlled by Stockholder (i) induce or attempt to influence any employee
listed on Schedule 3.1(p) to terminate his or her employment with Buyer or (ii)
employ
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any employee listed on Schedule 3.1(p) whose annual salary exceeds $40,000 per
year, unless such employee's employment with Buyer has previously been
terminated by Buyer.
5.10 PUBLICKER ENVIRONMENTAL MATTER. Seller shall use commercially
reasonable efforts to (i) cause Publicker Industries Inc. to promptly discharge
all of its duties and obligations to Seller under the Publicker Asset Purchase
Agreement and the Publicker Environmental Escrow Agreement with respect to the
Publicker Environmental Matter, and (ii) enforce Seller's right to
indemnification under the Publicker Asset Purchase Agreement and the Publicker
Environmental Escrow Agreement with respect to the Publicker Environmental
Matter. Seller shall use commercially reasonable efforts to provide Buyer with
the benefit of such rights under such agreements.
ARTICLE 6
COVENANTS OF BUYER
6.1 NOTIFICATION OF CERTAIN MATTERS. Buyer shall give to Seller
prompt written notice of (a) the occurrence, or failure to occur, of any event
of which it becomes aware that has caused or that would be likely to cause any
representation or warranty of Buyer contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date, and (b) the
failure of Buyer, or any officer, director, employee, or agent thereof, to
comply with or satisfy in any material respect any covenant, condition, or
agreement to be complied with or satisfied by it hereunder. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
6.2 COMPLIANCE WITH LAWS. If Buyer (or its counsel) receives an
administrative or other order or notification relating to any violation or
claimed violation of any Applicable Law that could affect the Buyer's ability
to consummate the transactions contemplated hereby and by the other Transaction
Documents, Buyer shall promptly notify Seller in writing and use its
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement
and by the other Transaction Documents.
6.3 CONFIDENTIALITY AGREEMENT. The Buyer acknowledges that it
shall at all times through the Closing remain bound by the terms of the
Confidentiality Agreement dated December 15, 1997 between the Stockholder,
Atrium Companies, Inc. and Hicks, Must, Tate & Furst Incorporated and
acknowledges that such agreement is and shall remain in full force and effect
through the Closing.
ARTICLE 7
MUTUAL COVENANTS
7.1 GOVERNMENTAL CONSENTS. Within three (3) Business Days after
the date of this Agreement, the parties shall proceed to prepare and file with
the appropriate Governmental Entities such requests, reports, or notifications
as may be required in connection with this Agreement and
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shall diligently and expeditiously prosecute, and shall cooperate fully with
each other in the prosecution of, such matters. Without limiting the
foregoing, within three (3) Business Days after the date of this Agreement, the
parties shall (a) file with the Federal Trade Commission and the Antitrust
Division of the Department of Justice the notifications and other information
(if any) required to be filed under the HSR Act with respect to the
transactions contemplated hereby and shall use their commercially reasonable
efforts to cause all applicable waiting periods under the HSR Act to expire or
be terminated as of the earliest possible date, including requesting early
termination of the waiting period thereunder, and (b) make all necessary
filings and, thereafter, promptly make any other required submissions with
respect to the transactions contemplated hereby under the Securities Act and
the rules and regulations thereunder and any other applicable federal or state
securities laws.
7.2 BROKERS OR FINDERS. Seller represents and warrants to Buyer
that no agent, broker, investment banker, or other person engaged by Seller is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee payable by Buyer or Seller in connection with any of the
transactions contemplated by this Agreement. Buyer represents and warrants to
Seller that Buyer has not engaged any broker, investment banker or other person
that will be entitled to any broker's or finder's fee or any other commissions
or fee from Seller in connection with any of the transactions contemplated by
this Agreement.
7.3 BULK SALES LAW. Buyer agrees to waive compliance by Seller
with the requirements of any bulk sales or fraudulent conveyance statute, and
Seller, in consideration of such waiver, agrees to indemnify and hold Buyer
harmless against any and all damages, losses, claims, liabilities, demands,
charges, suits, penalties, costs and expenses (including court costs and
reasonable attorneys' fees and expenses incurred in investigating and preparing
for any litigation or proceeding) resulting from or arising out of any failure
to comply with any such statute, other than those arising from the Buyer's
failure to perform any of its obligations hereunder from and after the Closing
Date including, without limitation, any failure by Buyer to perform and
discharge any of the Assumed Liabilities.
7.4 RISK OF LOSS.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing. In the event of
any material loss, damage, impairment, confiscation, or condemnation, whether
or not covered by insurance, Seller shall promptly notify Buyer of such loss,
damage, impairment, confiscation, or condemnation, which notice shall provide
an estimate of the costs to repair, restore or replace such Assets and shall
state whether Seller intends to repair, restore or replace such assets.
(b) If Seller, at its expense, repairs, replaces, or
restores such Assets to their prior condition to the reasonable satisfaction of
Buyer before the Closing, Seller shall be entitled to all insurance proceeds
and condemnation awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace lost,
damaged, impaired, confiscated or condemned Assets, Buyer may at its option:
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(i) terminate this Agreement by notice forthwith
without any further obligation hereunder if the replacement cost of
such assets exceeds $250,000 in the aggregate; or
(ii) proceed to the Closing of this Agreement
without Seller completing the restoration and replacement of such
Assets, provided that Seller shall assign all rights under applicable
insurance policies and condemnation awards, if any, to Buyer, and in
such event, Seller shall have no further liability with respect to the
condition of the Assets directly attributable to the loss, damage,
impairment, confiscation, or condemnation.
(d) Buyer will notify Seller of a decision under the
options described in Section 7.4(c)(i) or 7.4(c)(ii) above within ten business
days after Seller's notice to Buyer of the damage or destruction of Assets;
provided, however, that if Seller states that it intends to restore the damaged
Assets and if Seller has not restored such damaged Assets immediately prior to
the Closing Date, notwithstanding Buyer's prior delivery of a notice to proceed
pursuant to this Section 7.4(d), Buyer shall have the right to either postpone
the Closing or terminate this Agreement by notice forthwith.
7.5 WARN ACT. Both Seller and Buyer recognize their respective
responsibilities for complying with any requirements arising under the Worker
Adjustment Retraining Notification Act ("WARN") in connection with the
transactions contemplated by this Agreement. Seller hereby represents that it
has not incurred any liability under, and has not failed to comply in all
respects with, WARN as to its personnel actions occurring on or prior to the
date hereof. Seller hereby represents that Schedule 7.5 lists all of Seller's
employees terminated and/or laid off (with the date of such action indicated)
within ninety (90) calendars days prior to the date hereof. Seller shall
update Schedule 7.5 at the Closing. Seller shall indemnify, defend and hold
harmless the Buyer Indemnified Parties against any and all costs, expenses,
liabilities and losses arising as a result of any non-compliance with WARN
before Closing. Notwithstanding any provision of this Section 7.5 to the
contrary, should Buyer take any action from and after the Closing Date which
causes any liability under WARN relating to personnel actions of Seller
occurring at or before the Closing (including, without limitation, any failure
by Buyer to comply with Section 7.7 hereof or any constructive discharge of any
of the employees required to be retained by Buyer pursuant to Section 7.7
resulting from the failure of Buyer to offer such employees compensation and
benefits comparable to those currently payable to such employees by Seller
under the terms of their employment arrangements with Seller), Buyer shall
indemnify, defend and hold harmless the Seller Indemnified Parties against any
and all costs, expenses, liabilities and losses arising under WARN attributable
to Buyer's actions.
7.6 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under Applicable Laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date, any further action is
necessary to carry out the purposes of this Agreement, the parties to this
Agreement and their duly authorized representatives shall take all such action.
Without limiting the generality of the foregoing, if, after the Closing Date,
Buyer seeks indemnification or recovery from one or more other parties to an
Assumed Contract or otherwise
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seeks to enforce such Assumed Contract and, in order to obtain such
indemnification, recovery or enforcement, it is necessary for Seller to
initiate a suit, participate in any enforcement proceeding or otherwise provide
assistance to Buyer, then, at the request and the sole expense of Buyer, Seller
shall take such action as Buyer may reasonably request in connection with
Buyer's efforts to obtain such indemnification, recovery or enforcement.
7.7 EMPLOYEE BENEFITS. (a) Buyer shall offer employment,
commencing as of the Closing Date, to each employee of Seller listed on
Schedule 3.1(p). Seller shall assist Buyer in effecting an orderly change of
employment, as of the Closing Date, of all employees of Seller who accept
offers of employment by Buyer. Nothing contained in this Section 7.7 shall
confer upon any former, current or future employee of Seller or Buyer, or any
legal representative or beneficiary thereof, any rights or remedies, including
without limitations any right to employment or continued employment by Seller
or Buyer, of any nature, for any specified period, or cause the employment
status of any former, present or future employee of Buyer to be other than
terminable at will. Buyer shall offer to all employees of Seller who accept
offers of employment with Buyer benefits which are substantially similar to
those currently offered by Buyer to its similarly situated employees. Such
former employees of Seller shall, in connection with any such benefits, receive
credit for all periods of employment by Buyer and by Seller. Each employee of
Seller who accepts employment with Buyer at the Closing shall be eligible to
participate in the Employee Benefit Plans of the Buyer, provided such employee
was participating in a comparable Employee Benefit Plan of the Seller.
Eligibility in the Buyer's Employee Benefit Plans, for the applicable
employees, will begin no later than the first day of the month following the
Closing, except in the case of the qualified retirement plan maintained by the
Buyer ("Buyer's Savings Plan"). Eligibility in the Buyer's Savings Plan will
begin on the earlier of the April 1 and July 1 following or coinciding with the
Closing Date. Buyer shall waive (or cause to be waived by any plan
administrator or provider) any conditions or restrictions of any of Buyer's
Employee Benefit Plans for which such employees may be eligible as employees of
Buyer relating to pre- existing conditions, so long as such pre-existing
conditions are not excluded from coverage under Seller's Employee Benefit
Plans.
(b) Seller shall cause all participants in any plan that
is intended to be qualified under Section 401(a) of the Code who become
employees of Buyer in connection with the transactions contemplated by this
Agreement to become 100% vested in their accrued benefits under such plan as of
the Closing.
(c) With respect to those employees who accept an offer
of employment with Buyer in connection with the transactions contemplated by
this Agreement and become eligible to participate in the Buyer's Savings Plan
(each a "Transferred Employee"), the Buyer agrees to accept a rollover
contribution of an eligible rollover distribution, as defined in Section
402(c)(4) of the Code, made from the Seller's Savings Plan if such rollover
distribution qualifies as an eligible rollover distribution pursuant to Section
402(c) of the Code and a direct transfer pursuant to Section 401(a)(31) of the
Code. To the extent any Transferred Employee owes any amount to Seller's
Savings Plan pursuant to the terms of a loan from Seller's Savings Plan, a
transfer of such loan shall be made in lieu of a transfer of cash such that the
trustee of Buyer's Savings Plan becomes the obligee of the unpaid loan note in
place of the trustee of Seller's Savings Plan; further provided, however, that
only one such loan per plan participant shall be transferred.
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(d) Prior to the Closing, Seller will pay all costs of
employee bonuses, incentive compensation and related payroll Taxes relating to
the Business which are accrued, owed and vested as of 11:59 p.m. on December
31, 1997. Seller agrees that, with respect to all claims by employees of
Seller arising from claims incurred on or prior to the Closing Date under all
Employee Benefit Plans, whether insured or otherwise, Seller at its own expense
shall honor or cause to be honored such claims, whether made before or after
the date hereof, in accordance with the terms and conditions of such Employee
Benefit Plans. Except as expressly set forth in this Section 7.7, Buyer shall
not be obligated to pay, assume, perform or discharge any claim, demand,
liability or obligation of any kind whatsoever under any Employee Benefit Plan,
and Seller shall indemnify and hold harmless Buyer for any loss, cost, claim,
damage, liability or expense which Buyer may suffer or incur as a result
thereof.
(e) Buyer agrees that it will use reasonable efforts to
assure that the Seller's employees who accept employment with the Buyer at the
Closing and that have relevant knowledge regarding the administration of the
Seller's Savings Plan will reasonably assist Buyer, or an agent appointed by
the Buyer, in the termination of the Seller's Savings Plan.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of Buyer and Seller to effect the transactions contemplated hereby
are subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) Consents and Approvals. All authorizations,
consents, orders, or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity necessary
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred, or been obtained, including, without limitation,
those required by the HSR Act.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction, or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
8.2 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
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(a) Representations and Warranties. The representations
and warranties of Seller set forth in this Agreement shall be true and correct
in all material respects (provided that any representation or warranty of
Seller contained herein that is qualified by a materiality standard or a
Material Adverse Effect qualification shall not be further qualified hereby) as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date, and Buyer shall have received a certificate to such
effect signed by the chief executive officer or by the chief financial officer
of Seller.
(b) Performance of Obligations. Seller shall have
performed in all material respects (provided that any covenant or agreement of
Seller contained herein that is qualified by a materiality standard shall not
be further qualified hereby) all obligations required to be performed by it
under this Agreement prior to the Closing Date, and Buyer shall have received a
certificate to such effect signed by the chief executive officer or by the
chief financial officer of Seller.
(c) Legal Opinion. Buyer shall have received from
Bingham Dana LLP an opinion dated the Closing Date, in substantially the form
attached as Exhibit D hereto, which opinion shall expressly provide that they
may be relied upon by Buyer's lenders, underwriters, or other sources of
financing with respect to the transactions contemplated hereby.
(d) Real Estate Title Policy. Buyer shall have received,
at Buyer's sole cost, an ALTA owner's title insurance policy in the amount set
forth in Schedule 8.2(d) with such endorsements as Buyer may require insuring
Buyer's fee simple absolute interest of Seller in each parcel of Owned Real
Property and containing no exceptions other than those exceptions (the
"Permitted Encumbrances") contained in Schedule B, Part Two of the commitment
for title insurance issued by First American Title Insurance Company
(Commitment No. 200-000-1113654) attached hereto as Schedule 8.2(d) and all of
the requirements set forth therein shall have been satisfied.
(e) Financing. Financing contemplated by that certain
letter dated February 13, 1998 from Bankers Trust Company which generate gross
proceeds to Buyer or one or more of its Affiliates of no less than $37.5
million, shall have been consummated.
(f) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Seller pursuant to
Section 9.2 shall have been delivered.
8.3 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of
Seller to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Seller.
(a) Representations and Warranties. The representations
and warranties of Buyer set forth in this Agreement shall be true and correct
in all material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Seller shall
have received a certificate to such effect signed by the chief executive
officer or by the chief financial officer of Buyer.
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(b) Performance of Obligations of Buyer. Buyer shall
have performed in all material respects (provided that any covenant or
agreement of Buyer contained herein that is qualified by a materiality standard
shall not be further qualified hereby) the obligations required to be performed
by it under this Agreement prior to the Closing Date, and Seller shall have
received a certificate to such effect signed by the chief executive officer or
by the chief financial officer of Buyer.
(c) Legal Opinion. Seller shall have received from
Vinson & Elkins L.L.P. an opinion dated the Closing Date in substantially the
form attached as Exhibit E hereto.
(d) Closing, Deliveries. All documents and instruments
required to be delivered by Buyer pursuant to Section 9.2 shall have been
delivered.
ARTICLE 9
CLOSING
9.1 CLOSING. The Closing will take place at the offices of Vinson
& Elkins L.L.P., Dallas, Texas, at 10:00 a.m., local time, on the 3rd business
day after the conditions specified in Article 8 have been satisfied or waived
by the appropriate party, or at such other place and time as Buyer and Seller
may agree (the "Closing Date"). For purposes of this Agreement, each and every
event referred to in this Article 9 that is to occur on the Closing Date shall
be deemed to have occurred contemporaneously.
9.2 ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Buyer shall deliver to Seller (or to
the Escrow Agent, Stockholder or to the recipients of any amounts required to
pay any Debt, Extraordinary Payments or Transaction Costs, as indicated) the
following:
(i) Purchase Price. The Purchase Price, as
adjusted in accordance with the provisions of Section 2.3(c) and
2.3(d) (less the Working Capital Holdback Amount and the
Indemnification Holdback Amount) by wire transfer of immediately
available funds;
(ii) Reductions. Any amounts payable for any
Debt, Extraordinary Payments or Seller Transaction Costs by wire
transfer of immediately available funds to the persons designated in
the Reductions Notice;
(iii) Indemnification Holdback Amount. The
Indemnification Holdback Amount to the Escrow Agent by wire transfer
of immediately available funds;
(iv) Working Capital Holdback Amount. The Working
Capital Holdback Amount to the Escrow Agent by wire transfer of
immediately available funds.
(v) Certificates. The certificates referred to
in Section 8.3(a) and 8.3(b);
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(vi) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Buyer;
(vii) Closing Escrow Agreement. A counterpart of
the Closing Escrow Agreement executed by Buyer; and
(viii) Legal Opinion. The opinion of counsel
referred to in Section 8.3(c).
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) Certificates. The certificates described in
Section 8.2(a) and 8.2(b);
(ii) Bill of Sale and Other Transfer Documents. A
counterpart of the Bill of Sale executed by Seller, together with any
other assignments and other transfer documents as reasonably requested
by Buyer;
(iii) Closing Escrow Agreement. A counterpart of
the Closing Escrow Agreement executed by Seller;
(iv) Legal Opinion. The opinion of counsel
referred to in Section 8.2(c);
(v) Licenses, Permits, Contracts, Business
Records, Etc. To the extent they are in the possession of Seller,
copies of all Licenses, Permits, Assumed Contracts, blueprints,
schematics, working drawings, plans, projections, statistics and all
files and records used by Seller in connection with the Business,
which copies shall be available at the Closing or at Seller's
principal business offices;
(vi) Warranty Deed. A Warranty Deed executed by
Seller conveying fee simple title to the Owned Real Property to Buyer,
subject only to the Permitted Encumbrances, in proper statutory form
for recording together with documentary stamps affixed thereto; and
(vii) Reductions. Each of the persons designated
in the Reductions Notice shall have executed receipts, payoff letters
and UCC-3 termination statements, reasonably acceptable to Buyer,
whereby such recipients acknowledge receipt of amounts paid for any
Debt, Extraordinary Payments or Seller Transaction Costs.
(c) At the Closing, Buyer shall receive from the chief
executive officer or chief financial officer of Seller a non-foreign affidavit
within the meaning of section 1445(b)(2) of the Code.
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ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Seller or Buyer;
(i) in the event of a breach by the other party
of any representation, warranty, covenant or other agreement contained
in this Agreement which (A) would give rise to the failure of a
condition set forth in Sections 8.2(a) and 8.2(b) or Sections 8.3(a)
and 8.3(b), as applicable, and (B) cannot be or has not been cured
within 20 days (the "Cure Period") following receipt by the breaching
party of written notice of such breach;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or
taken any other action (which order, decree or ruling the parties
hereto shall use their reasonable efforts to lift), in each case
permanently restraining, enjoining, or otherwise prohibiting the
transactions contemplated by this Agreement and the other Transaction
Documents, and such order, decree, ruling, or other action shall have
become final and nonappealable;
(iii) if the Closing shall not have occurred within
30 days after the Buyer and Seller make the required filings under the
HSR Act as required by Section 7.1; provided, however, that the right
to terminate this Agreement under this clause (iii) shall not be
available to any party whose breach of this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or
before such date; provided, further, that so long as Buyer and Seller
have filed notifications under the HSR Act in accordance with Section
7.1 on or prior to the third Business Day following the execution of
this Agreement, the right to terminate this Agreement shall be tolled
until the third Business Day following the expiration or termination
of the waiting period provided by the HSR Act, but in any event no
longer than the earlier of the termination of the financing commitment
referenced in Section 8.2(e) and 60 days after the Buyer and the
Seller make the required filings under the HSR Act as required by
Section 7.1; or
(c) by Buyer:
(i) pursuant to the provisions of Section 7.4; or
(ii) if the Seller does not make the required
filings under the HSR Act within three (3) Business Days after the
date of this Agreement as required by Section 7.1 hereof.
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(d) By Seller if the Buyer does not make the required
filings under the HSR Act or pay the filing fees thereunder within three (3)
Business Days after the date of this Agreement as required by Section 7.1
hereof.
The right of any party hereto to terminate this Agreement pursuant to
this Section 10.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other party.
10.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement by either Seller or Buyer as provided above, there shall be no
liability on the part of either Buyer or Seller, except for liability arising
out of a breach of this Agreement. Articles 1, 11, and 12, Section 7.4, and
this Article 10 shall survive the termination of this Agreement.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION OF BUYER. (a) Subject to the provisions of
this Article 11, Seller agrees to indemnify and hold harmless the Buyer
Indemnified Parties from and against any and all Buyer Indemnified Costs.
(b) Subject to the provisions of this Article 11,
Stockholder agrees to indemnify and hold harmless the Buyer Indemnified Parties
from and against any and all Buyer Indemnified Costs arising from a breach by
the Seller of its covenants (i) in Section 2.3(f) relating to the Final
Adjustment, (ii) to discharge the Excluded Liabilities set forth in clauses
(i), (ii), (v), and (vii) of Section 2.4(a), (iii) in Section 5.10 relating to
the Publicker Environmental Matter and (iv) in Section 11.1(a) to indemnify the
Buyer Indemnified Parties from and against any and all Buyer Indemnified Costs
arising out of the Publicker Environmental Matter.
11.2 INDEMNIFICATION OF SELLER. Subject to the provisions of this
Article 11, Buyer agrees to indemnify and hold harmless the Seller Indemnified
Parties from and against any and all Seller Indemnified Costs.
11.3 DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall
give prompt written notice to any entity or person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article 11
except to the extent that the failure to give such notice materially and
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adversely prejudices such Indemnifying Party. The Indemnifying Party shall
have the right to assume control of the defense of, settle, or otherwise
dispose of such third-party action on such terms as it deems appropriate;
provided, however, that:
(a) The Indemnified Party shall be entitled, at its own
expense, to participate in the defense of such third-party action (provided,
however, that the Indemnifying Party shall pay the attorneys' fees of the
Indemnified Party if (i) the employment of separate counsel shall have been
authorized in writing by such Indemnifying Party in connection with the defense
of such third-party action, (ii) the Indemnifying Party shall not have employed
Bingham Dana LLP or counsel reasonably satisfactory to the Indemnified Party to
have charge of such third-party action, or (iii) the Indemnified Party's
counsel shall have advised the Indemnified Party in writing, with a copy
delivered to the Indemnifying Party, that there is a conflict of interest that
could make it inappropriate under applicable standards of professional conduct
to have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party;
(c) No Indemnifying Party shall consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such
third-party action; and
(d) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Party fails to assume the
defense within a reasonable length of time or (ii) to the extent the
third-party action seeks an order, injunction, or other equitable relief
against the Indemnified Party which, if successful, would materially adversely
affect the business, operations, assets, or financial condition of the
Indemnified Party; provided, however, that the Indemnified Party shall make no
settlement, compromise, admission, or acknowledgment that would give rise to
liability on the part of any Indemnifying Party without the prior written
consent of such Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article 11 and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4 DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The
failure of
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the Indemnified Party to exercise promptness in such notification shall not
amount to a waiver of such claim except to the extent that the resulting delay
materially prejudices the position of the Indemnifying Party with respect to
such claim.
11.5 LIMITATIONS ON INDEMNIFIED REPRESENTATION COSTS. Subject to
Sections 11.6, 11.8 and 12.17 hereof, the following provisions of this Section
11.5 shall be applicable after the time of the Closing:
(a) Minimum Loss. No Indemnifying Party shall be
required to indemnify any Indemnified Party for Indemnified Representation
Costs unless and until the aggregate amount of such Indemnified Representation
Costs for which the Indemnified Parties are otherwise entitled to
indemnification pursuant to this Article 11 exceeds $200,000 (the "Minimum
Loss"), whereupon the Indemnified Party shall be entitled to be paid the entire
amount of its Indemnified Representation Costs in excess of (but not including)
the Minimum Loss, subject to the limitations on recovery and recourse set forth
in this Section 11.5.
(b) Determination of Breach. For purposes of determining
(i) whether an Indemnifying Party shall be required to indemnify an Indemnified
Party under this Article 11 or (ii) the aggregate amount of Minimum Loss
suffered by an Indemnified Party, each representation and warranty contained in
this Agreement for which indemnification can be or is sought hereunder shall be
read (including for purposes of determining whether a breach of such
representation or warranty has occurred) without regard to materiality
(including Material Adverse Effect) qualifications that may be contained
therein.
(c) Limitation as to Time. No Indemnifying Party shall
be liable for any Indemnified Representation Costs pursuant to this Article 11
unless a written claim for indemnification in accordance with Section 11.3 or
11.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto on or before the date that is 15 months after the Closing Date, except
that this time limitation shall not apply to any claims for fraud pursuant to
Section 12.17.
(d) Recourse Against Escrowed Funds. A Buyer Indemnified
Party shall be entitled to payment only out of the Indemnification Holdback
Amount pursuant to the terms of this Article 11 and the Closing Escrow
Agreement for all amounts due to a Buyer Indemnified Party with respect to any
claim by a Buyer Indemnified Party against Seller for Buyer Indemnified
Representation Costs payable under this Article 11, except that this limitation
shall not apply to claims for fraud pursuant to Section 12.17.
(e) Other Indemnified Costs. The provisions of this
Section 11.5 shall only be applicable to Indemnified Representation Costs and
shall not be applicable to any other Indemnified Costs.
11.6 RECOURSE FOR PUBLICKER ENVIRONMENTAL MATTER. The parties
hereto intend and agree that, notwithstanding anything contained in this
Section 11 to the contrary, any Buyer Indemnified Party entitled to make a
claim for indemnification in accordance with Section 11.3 or
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Section 11.4 for Buyer Indemnified Costs arising from the Publicker
Environmental Matter shall have the option, at its sole discretion, of seeking
payment either (i) out of the Indemnification Holdback Amount pursuant to the
terms of this Article 11 and in the Closing Escrow Agreement, or (ii) directly
from the Stockholder; provided, however, that in no event shall Seller's and
Stockholder's liability for such Buyer Indemnified Costs relating to the
Publicker Environmental Matter exceed $450,000 in the aggregate.
11.7 MINIMUM CLAIM. Notwithstanding anything to the contrary
stated in this Agreement, if any third-party action or direct claim results in
any damages, losses, liabilities, charges, penalties, costs and expenses
(including court costs and attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) which do not in
the aggregate exceed $5,000, such damages, losses, liabilities, charges,
penalties, costs and expenses shall not be deemed to be Indemnified Costs.
11.8 INSTRUCTIONS TO ESCROW AGENT. Seller hereby covenants and
agrees that at any time Seller is or becomes obligated to indemnify a Buyer
Indemnified Party for Buyer Indemnified Costs under this Article 11, at Buyer's
request, Seller will execute and deliver to the Escrow Agent written
instructions to release to the Buyer Indemnified Party such portion of the
Indemnification Holdback Amount as is necessary to indemnify the Buyer
Indemnified Party for such Buyer Indemnified Costs.
ARTICLE 12
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing.
Except as otherwise provided in the next two sentences, the representations and
warranties set forth in this Agreement shall terminate on the date that is 15
months after the Closing Date, except that this time limitation shall not apply
to any claims for fraud pursuant to Section 12.17. Following the date of
termination of a representation or warranty, no claim can be brought with
respect to a breach of such representation or warranty, but such termination
shall not affect any claim for a breach of a representation or warranty that
was asserted before the date of termination. To the extent that such are
performable after the Closing, each of the covenants and agreements contained
in each of the Transaction Documents shall survive the Closing indefinitely.
12.2 FURTHER ACTIONS. After the Closing Date, Seller shall execute
and deliver such other certificates, agreements, conveyances, and other
documents, and take such other action, as may be reasonably requested by Buyer
in order to transfer and assign to, and vest in, Buyer the Assets pursuant to
the terms of this Agreement.
12.3 AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
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12.4 WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand,
or Seller, on the other hand, to comply with any obligation, covenant,
agreement, or condition contained herein may be waived only if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
12.5 SPECIFIC PERFORMANCE. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Buyer shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
In the event of any action to enforce this Agreement specifically, Seller
hereby waives the defense that there is an adequate remedy at law.
12.6 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
12.7 EXPENSES AND OBLIGATIONS. Except as otherwise expressly
provided in this Agreement or as provided by law, all costs and expenses
incurred by the parties hereto in connection with the consummation of the
transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. Notwithstanding the foregoing, (a) the
fee payable to the Escrow Agent shall be borne as provided in the Closing
Escrow Agreement, (b) all sales taxes arising out of the transactions
contemplated by this Agreement shall be paid by Seller and (c) the filing fee
with respect to the filing by Buyer under the HSR Act shall be paid by Buyer.
In the event of a dispute between the parties in connection with this Agreement
and the transactions contemplated hereby, each of the parties hereto hereby
agrees that the prevailing party shall be entitled to reimbursement by the
other party of reasonable legal fees and expenses incurred in connection with
any action or proceeding.
12.8 PARTIES IN INTEREST. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto
and their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
(other than the Indemnified Parties as provided in Article 11) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) or sent by telecopier
or by overnight courier to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
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(a) If to Buyer, to
Atrium Companies, Inc.
1341 West Mockingbird Lane
Suite 1200W
Dallas, Texas 75247
Attention: Randall S. Fojtasek
Facsimile: (214) 631-4231
with a copy to
Hick, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Facsimile: (214) 740-7313
and
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael D. Wortley
Facsimile: (214) 220-7716
(b) If to Seller, to
Masterview Window Company LLC
c/o BancBoston Ventures Inc.
175 Federal Street
Boston, Massachusetts 02110
Attention: Mr. John Cullinane, Jr.
Facsimile: (617) 434-1153
with a copy to
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110-1726
Attention: Robert M. Wolf
Facsimile: (617) 951-8736
All notices, requests or instructions given in accordance herewith
shall be deemed given (i) on the date of delivery, if hand delivered, (ii) on
the date of receipt, if telecopied, (iii) five
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business days after the date of mailing, if mailed by registered or certified
mail, return receipt requested, and (iv) one business day after the date of
sending, if sent by Federal Express or other recognized overnight courier.
12.10 COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.11 ENTIRE AGREEMENT. This Agreement (which term shall be deemed
to include the exhibits and schedules hereto and the other certificates,
documents and instruments delivered hereunder) constitutes the entire agreement
of the parties hereto and supersedes all prior agreements, letters of intent
and understandings, both written and oral, among the parties with respect to
the subject matter hereof. There are no representations or warranties,
agreements, or covenants other than those expressly set forth in this
Agreement.
12.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
12.13 PUBLIC ANNOUNCEMENTS. Prior to Closing, neither Buyer nor
Seller will issue any press release or otherwise make any public statements
regarding its business or the transactions contemplated in this Agreement,
except as may be required by applicable law or as may be agreed upon among the
parties, but in any event Seller and Buyer shall consult with each other before
issuing any press release or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby.
12.14 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Seller and without releasing Buyer from any of its obligations
or liabilities hereunder, Buyer may assign or delegate any or all of its rights
or obligations under this Agreement to any Affiliate of Buyer, and (b) nothing
in this Agreement shall limit Buyer's ability to make a collateral assignment
of its rights under this Agreement to any institutional lender that provides
funds to Buyer or Buyer's designee without the consent of Seller. Seller
shall execute an acknowledgment of such assignment(s) and collateral
assignments in such forms as Buyer or its institutional lenders may from time
to time reasonably request; provided, however, that in no event shall Seller be
required to execute an acknowledgment of any such assignment or collateral
assignment if such acknowledgment would require Seller to waive or otherwise
limit any of its rights or privileges under this Agreement or the other
Transaction Documents; provided, further, that unless written notice is given
to Seller that any such collateral assignment has been foreclosed upon, Seller
shall be entitled to deal exclusively with Buyer as to any matters arising
under this Agreement or any of the other agreements delivered pursuant hereto.
In the event of such an assignment, the provisions of this Agreement shall
inure to the benefit of and be binding on Buyer's assigns.
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12.15 DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of Buyer and its Affiliates shall not have any personal liability
or obligation arising under this Agreement (including any claims that Seller
may assert) other than as an assignee of this Agreement.
12.16 [INTENTIONALLY OMITTED].
12.17 NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any
party under Article 11 shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Section
11.5(a) (relating to Minimum Loss), 11.5(c) (relating to limitations on the
period of time during which a claim for indemnification may be brought),
11.5(d) (relating to recourse against escrowed funds), or 11.7 (relating to
minimum claims), shall be deemed a waiver by any party to this Agreement of any
right or remedy which such party may have at law or equity based on any other
party's fraudulent acts or omissions, nor shall any such provisions limit, or
be deemed to limit, (a) the amounts of recovery sought or awarded in any such
claim for fraud, (b) the time period during which a claim for fraud may be
brought, or (c) the recourse which any such party may seek against another
party with respect to a claim for fraud; provided, that with respect to such
rights and remedies at law or equity, the parties further acknowledge and agree
that none of the provisions of this Section 12.17, nor any reference to this
Section 12.17 throughout this Agreement, shall be deemed a waiver of any
defenses which may be available in respect of actions or claims for fraud,
including but not limited to, defenses of statutes of limitations or
limitations of damages.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed as of the date first written above.
SELLER:
MASTERVIEW WINDOW COMPANY LLC
By: /s/ Fred G. Bengtson
---------------------------------------
Name: Fred G. Bengtson
-------------------------------------
Title: President
------------------------------------
STOCKHOLDER, SOLELY FOR THE PURPOSES
OF SECTIONS 3.3, 5.1, 5.9, 11.1 AND 11.6
AND ARTICLE 12:
BANCBOSTON VENTURES INC.
By: /s/ John Cullinane
---------------------------------------
Name: John Cullinane
-------------------------------------
Title: Vice President
------------------------------------
BUYER:
ATRIUM COMPANIES, INC.
By: /s/ Randall S. Fojtasek
---------------------------------------
Randall S. Fojtasek
President
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
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