ASSET PURCHASE AGREEMENT
This Agreement is made and entered into on February 25, 2002, by and
between Greenwood Forest Products, Inc., an Oregon corporation, of 15895 SW 72nd
Avenue, Suite 200, Portland, Oregon 97224 (herein referred to as "Greenwood"),
and Jewett-Cameron Lumber Corporation, an Oregon corporation, of 3275 NW
Hillcrest, North Plains, Oregon 97133 (herein referred to as "Jewett-Cameron").
Recitals
A. Greenwood owns and operates a business which purchases, processes
and sells industrial wood and other products, principally to original equipment
manufacturers, which it desires to sell, together with such of its assets as are
useful or convenient to the operation of the business.
B. Greenwood maintains its inventory at many locations throughout the
country in order to allow for prompt deliveries to its customers, and is willing
to stage the sale of its inventory to a purchaser of the business over a
two-year period to assist in the financing of the purchase of the business.
C. Jewett-Cameron is engaged in business as a manufacturer and
wholesale distributor of lumber and other building materials and desires to
acquire the business of Greenwood.
D. Greenwood is willing to sell the business and certain assets to
Jewett-Cameron and Jewett-Cameron is willing to purchase the business and such
assets on the terms provided herein.
Now therefore,
Agreement
For and in consideration of the mutual promises set forth herein the
parties agree as follows:
1. ACQUISITION TRANSACTION.
1.1. Sale of Equipment and Supplies. Greenwood agrees to sell
to Jewett-Cameron and Jewett-Cameron agrees to purchase from Greenwood certain
leasehold improvements, furniture, equipment and supplies as more fully set out
in Schedule 1, attached to this agreement and by this reference incorporated
herein, for the sum of $260,000 payable in good funds at closing. The conveyance
shall be by Bill of Sale, in the form attached hereto as Exhibit A, to be
executed by Greenwood and delivered to Jewett-Cameron at closing.
1.2. Assignment of Lease. Greenwood agrees to assign the lease
of the premises located at Suite 200, 15895 SW 72nd Avenue, Portland, Oregon,
where the business is principally conducted, to Jewett-Cameron at closing.
Jewett-Cameron agrees to fully perform the lease in every material respect
including the timely payment of rent and to hold Greenwood harmless from any
loss or expense on account of any failure by Jewett-Cameron or its assignee to
fully perform all of the material obligations under the lease. An assignment of
the lease in the form attached hereto as Exhibit B, shall be executed by
Greenwood and delivered to Jewett-Cameron at the closing.
1.3. License of Intellectual Property with Option to Purchase.
Greenwood agrees to grant a license to Jewett-Cameron to use all of the
intellectual property owned by Greenwood and useful to its business as more
fully set out in Schedule 2, attached to this agreement and by this reference
incorporated herein, for a period of two years from closing for $1,000, payable
in advance at closing, with an option to purchase all of such rights at the end
of the license term for $100, provided that Jewett-Cameron is not then in
material default under this agreement. The purchase price shall be payable upon
delivery by Greenwood of an assignment of such rights to Jewett-Cameron. The
license shall be in the form attached hereto as Exhibit C, to be executed by
Greenwood and delivered to Jewett-Cameron at closing.
1.4. Purchase of Inventories. Greenwood agrees to sell and
Jewett-Cameron agrees to purchase Greenwood's inventories, work in process, raw
materials and packaging (except the portions which are unusable as agreed by the
parties prior to transfer) in stages over a two year period following closing,
for a price equal to Greenwood's cost (including transportation, processing and
storage) plus a premium of 2%, as follows: immediately upon execution of this
agreement and prior to closing the parties will separate the inventory into
seven discrete units by location. Greenwood shall sell and Jewett-Cameron shall
purchase the first unit of inventory on May 31, 2002, and Greenwood shall sell
and Jewett-Cameron shall purchase an additional unit at the end of each three
month period thereafter until all of the units of inventory have been sold and
purchased. The specific unit of inventory to be sold at the end of each three
month period shall be selected by mutual agreement of the parties. Payment for
each unit of inventory shall be due 30 days after purchase. Conveyance shall be
by Bill of Sale.
1.5. Interim Services and Supply Agreement. During the
two-year inventory transition period Greenwood agrees to replenish, process, and
maintain inventories in keeping with its past practice at each of the locations
where the inventory has not yet been sold. Jewett-Cameron agrees
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to provide Greenwood with all management and administrative services associated
with purchasing, processing, and maintaining Greenwood's inventory at each such
location for a fee of $150 per month for each unit of the 7 units of inventory
described in Section 1.4 above that is retained by Greenwood. During the
inventory transition period Greenwood will also sell inventory from such
retained locations in the regular course of business exclusively to
Jewett-Cameron to allow Jewett-Cameron to fill customer orders. Jewett-Cameron
shall pay 102% of Greenwood's costs for all such purchases and payment shall be
due 30 days after invoice and shipping. Jewett-Cameron agrees to assume the
credit risk associated with its customers and to bear the loss of nonpayment.
1.6. Purchase of Notes Receivable. Greenwood is carrying installment
notes receivable from suppliers with an approximate principal balance of $240
thousand. At such time during the inventory transition period that
Jewett-Cameron determines that the obligors on such notes are creditworthy it
shall offer to purchase such notes from Greenwood for the then outstanding
principal balance of such notes.
1.7. Liabilities; Claims; and Indemnification. Jewett-Cameron agrees to
assume no liabilities of Greenwood except for the accrued vacation of those
employees of Greenwood who accept employment with Jewett-Cameron. Any returns or
product liability claims for goods sold prior to the closing shall be the
responsibility of Greenwood. Greenwood agrees to indemnify and hold
Jewett-Cameron harmless from any such claims or liability or from claims for
events which occurred prior to the closing, which indemnification is to be
complete, and include all reasonable costs.
Jewett-Cameron agrees to indemnify and hold Greenwood harmless from any
claims resulting from its operation of the business being acquired, or from its
use of "Greenwood" or other trade name, which indemnification is to be complete,
and include all reasonable costs. The use of the name "Greenwood" by
Jewett-Cameron shall not create any joint venture, partnership, or other
liability sharing arrangement between the parties except as set forth in this
agreement.
1.8. Closing. The closing shall take place on February 28,
2002, or as soon thereafter as the parties shall mutually determine at the
office of Greenwood, 15895 SW 72nd Avenue, Suite 200, Portland, Oregon. At
closing, Greenwood will deliver to Jewett-Cameron a Bill of Sale in the form
attached hereto as Exhibit A; an Assignment of Lease in the form attached hereto
as Exhibit B, together with the consent of the landlord to the assignment; and a
License with an Option to Purchase in the form attached hereto as Exhibit C. At
closing Jewett-Cameron shall
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deliver to Greenwood $260,000 in good funds for the tangible assets plus $1,000
for the license of the intangible assets; and shall execute the Assignment of
Lease, as assignee. Greenwood shall deliver such other instruments of sale and
conveyance as Jewett-Cameron may reasonably request.
2. REPRESENTATIONS & WARRANTIES OF GREENWOOD. Greenwood represents and
warrants to Jewett-Cameron that:
2.1 Organization. Greenwood is a corporation duly organized,
validly existing and in good standing under the laws of Oregon.
2.2 Authorization. Greenwood has full power and authority to
execute and deliver this agreement and to perform its obligations hereunder.
Greenwood and the shareholders of Greenwood have duly authorized the execution,
delivery and performance of this agreement by Greenwood. This agreement
constitutes the valid and legally binding obligation of Greenwood enforceable in
accordance with its terms.
2.3. Noncontravention. Neither the execution and delivery of
this agreement nor the consummation of the transactions contemplated hereby will
(a) violate any rule, order or other restriction of any government, governmental
agency or court to which Greenwood is subject, or (b) any provision of the
articles or bylaws of Greenwood, or (c) conflict with, result in a breach of,
constitute a default under any agreement, contract, lease, license or other
arrangement to which Greenwood is a party or by which it is bound, which might
affect any of the assets subject to this agreement.
2.4. Permits. Greenwood has all requisite permits and licenses
required to conduct its business as presently conducted. Greenwood warrants that
all transferable operating licenses shall be transferred to Jewett-Cameron
immediately upon the closing to avoid any interruption of business.
2.5. Broker's Fees. Greenwood has no liability or obligation
to pay any fees or commissions to any broker, finder or agent with respect to
this transaction.
2.6. Title to Assets. Greenwood has a valid leasehold interest
in the premises to be assigned under this agreement. Greenwood has good and
marketable title to the fixtures, furnishings, equipment and supplies to be
sold, which will be free and clear of all liens and encumbrances upon transfer
to Jewett-Cameron.
3. REPRESENTATIONS & WARRANTIES OF JEWETT-CAMERON. Jewett-Cameron
represents and warrants to Greenwood that:.
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3.1. Organization. Jewett-Cameron is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Oregon.
3.2. Authorization. Jewett-Cameron has full power and
authority to execute and deliver this agreement and to perform its obligations
hereunder. This agreement constitutes a valid and legally binding obligation of
Jewett-Cameron, enforceable in accordance with its terms.
3.3. Noncontravention. Neither the execution and delivery of
this agreement nor the consummation of the transactions contemplated hereby will
(a) violate any rule or restriction of any government, governmental agency, or
court to which Jewett-Cameron is subject, or any provision of its articles or
bylaws; or (b) conflict with, result in a breach of, constitute a default under
any agreement, contract, lease or other arrangement to which Jewett-Cameron is a
party which would adversely affect the ability of Jewett-Cameron to fully
perform its obligations hereunder.
3.4. Broker's Fees. Jewett-Cameron has no liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to this transaction.
3.5. Inspection. Jewett-Cameron is familiar with the leasehold
improvements, furnishings, equipment and supplies it is purchasing, has
inspected the condition thereof to its satisfaction, and accepts such assets
without warranties, except as to title.
4. COVENANTS.
4.1. General. Between the execution of this agreement and the
closing each of the parties agrees to use its best efforts to take all action
and to do all things necessary or advisable in order to consummate and make
effective the transactions contemplated by this agreement. All further documents
reasonably requested will be promptly executed.
4.2 Notices, Requests, Consents & Waivers. Greenwood will give
such notices to third parties and will obtain such third party consents as may
be required to convey the assets free and clear of any encumbrance and to assign
the lease of the premises. Each of the parties will give any notices and make
such filings as may be required under the rules of any government or
governmental agency.
4.3 Operation of Business. Until the closing Greenwood will
continue to operate its business and to direct its work force. During such
period Greenwood will not take any action or enter into any transaction outside
the ordinary course of business or which might adversely affect its ability to
meet its obligations under this agreement, without the prior written consent of
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Jewett-Cameron. Greenwood will keep its business substantially intact, including
its present operations, physical facilities, and relationships with suppliers,
and customers.
4.4. Greenwood's Employees. Greenwood shall be responsible for
notifying its employees of this transaction. Greenwood shall be responsible for
any compensation or other amounts payable to any employee of Greenwood for
services rendered to Greenwood, including, but not limited to, bonus, salary,
fringe benefits, including premiums on medical insurance and medical insurance
coverage extending beyond the period of employment, pension and profit sharing
benefits, or severance pay payable to any employee of Greenwood for any period
or relating to service for Greenwood at any time prior to the closing.
Greenwood shall determine which, if any, of its employees it wishes to
retain after it has disposed of its principal business and shall terminate all
of its other employees on or before the closing. Greenwood shall indemnify and
hold Jewett-Cameron harmless from any and all liability concerning any action,
complaint, grievance, or proceeding filed by any employee for any act alleged to
have been committed before the closing.
Jewett-Cameron agrees to offer employment to all of the employees of
Greenwood, but not necessarily at the same rate of compensation or with
equivalent fringe benefits. Jewett-Cameron agrees to assume the obligation for
accrued vacation for those employees which accept its offer for employment.
4.5 Access to Premises and Records. Until the closing
Greenwood will permit representatives of Jewett-Cameron reasonable access to its
employees, premises and business records.
4.6. Exclusivity. Until the closing Greenwood will not solicit
or encourage the submission of any proposal or offer from any person relating to
the acquisition of any of the assets subject to this agreement or tolerate any
such effort or attempt. Greenwood will notify Jewett-Cameron immediately if any
person makes any such proposal or inquiry.
4.7. Restrictive Covenants. Greenwood agrees that it will not
solicit or accept orders from its customers during the term of this agreement
and for a period of one year after the completion of the purchase of the
inventory as provided in Section 1.4 hereof. The parties specifically
acknowledge the fairness and reasonableness of this restriction.
For $10 and other valuable consideration, payable at the closing, the
principal shareholder of Greenwood, James Dovenberg, agrees that he will not
engage in any business in competition with
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Jewett-Cameron in any capacity during the term of this agreement and for a
period of one year after the completion of the purchase of the inventory as
provided in Section 1.4 hereof.
4.9. Collection of Accounts. Jewett-Cameron agrees to assist
in collecting sums due Greenwood for accounts receivable of customers and notes
receivable of suppliers of the business purchased by Jewett-Cameron.
5. CONDITIONS TO OBLIGATION TO CLOSE. The obligation of each of the
parties to consummate the transactions to be performed by it in connection with
the first closing is subject to the following conditions:
(a) The representations and warranties of the other party as
set forth in sections 2 or 3 above shall be true and correct in all material
respects as of the closing;
(b) The other party shall have performed and complied with all
of its covenants hereunder in all material respects through the first closing;
(c) No action, suit or proceeding shall be pending before any
court, administrative agency, or arbitrator wherein an unfavorable order or
ruling would prevent consummation of this transaction or cause the transaction
to be rescinded following consummation;
(d) Any necessary consent or approval from any regulatory
agency shall have been received; and
(e) Jewett-Cameron shall have reached an agreement with each
of Cary Dovenberg and James Pattillo concerning the terms of their employment by
Jewett-Cameron. Either party may waive any condition specified in this
subsection if it does so in writing at or prior to the closing.
6. TERMINATION.
6.1. Manner of Termination. The parties may terminate this
Agreement by mutual written consent at any time prior to the closing. Either
party may terminate this Agreement by written notice to the other party at any
time prior to the closing if the other party has breached any material
representation, warranty or covenant contained in this Agreement in any material
respect, the aggrieved party has notified the other party of the breach, and the
breach has continued without cure for a period of ten (10) days following notice
of breach, or if the closing shall not have occurred by May 31, 2002, by reason
of the failure of any condition precedent under section 5 hereof.
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6.2. Effect of Termination. If this Agreement is terminated
pursuant to 6.1 above, all rights and obligations of the parties hereunder shall
terminate without any liability of either party to the other except for the
liability of any party for any breach.
6.3. Liquidated Damages. In the event this Agreement is
terminated by reason of a material breach of this agreement, the parties agree
that the aggrieved party shall be entitled to recover liquidated damages from
the other party in the amount of $25,000, immediately following the intended
closing date.
7. MISCELLANEOUS.
7.1. Press Releases & Announcements. No press release or
public announcement relating to the subject matter of this agreement shall be
made except as approved in advance in writing by both parties.
7.2. No Third Party Beneficiaries. This agreement shall not
confer any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
7.3. Succession and Assignment. This agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. Neither party may assign either
this agreement or any of its rights, interests or delegate its obligations
hereunder without the prior written approval of the other party; except that
Jewett-Cameron may assign this agreement to a wholly-owned subsidiary, provided
that any such assignment shall not relieve Jewett-Cameron from any liability for
non-performance of this agreement.
7.4. Notices. All notices hereunder will be in writing. Any
notice shall be deemed duly given if (and then two business days after) sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as follows:
If to Greenwood: If to Jewett-Cameron :
---------------- ---------------------
Mr. James Dovenberg. Mr. Donald Boone,
Greenwood Corporation Jewett-Cameron Lumber Corporation
15895 SW 72nd Avenue, Suite 200 P. O. Box 1010
Portland, Oregon 97224 North Plains, OR 97133
Telephone (503) 670-9663 Telephone (503) 647-0110
Telecopy (503) 670-7755 Telecopy (503) 647-2272
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Copy to Copy to
------- -------
Bruce D. Kayser Delbert Weaver, Esq.
1001 SW Fifth Avenue, Suite 1700 851 SW Sixth Avenue, Suite 1350
Portland, OR 97204 Portland, OR 97204
Telephone (503) 226-3031 Telephone (503) 227-2990
Telecopy (503) 774-7488 Telecopy (503) 224-7324
Either party may send any notice hereunder to the other party using any
other means but no such notice shall be deemed to have been duly given unless
and until it is actually received by the intended recipient. Any party may
change the address to which notices and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
7.5. Amendments & Waivers. No amendment of this agreement
shall be valid unless the same shall be in writing and signed by Greenwood and
Jewett-Cameron.
7.6. Expenses. Each party shall bear its own costs and
expenses, including legal fees, incurred in connection with this agreement and
transaction.
7.7. Specific Performance. Each party acknowledges and agrees
that the other party would be damaged irreparably in the event that any of the
provisions of this agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each party agrees that the other
party shall be entitled to an injunction to prevent breaches of the provisions
of this agreement and to enforce specifically this agreement and the terms and
provisions hereof in any action instituted in any court having jurisdiction over
the parties and the matter, in addition to any other remedy to which it may be
entitled at law or in equity.
7.8 Attorneys Fees. If suit or action is brought for breach of this
agreement or to enforce any of the provision hereof, the losing party agrees to
pay such sum as the trial court may adjudge reasonable as attorneys fees to be
allowed the prevailing party and if an appeal is taken the losing party on
appeal promises to pay such sum as the appellate court shall adjudge reasonable
as attorneys fees to be allowed the prevailing party on such appeal.
In witness whereof, the parties have caused this agreement to be
executed by their duly authorized officers on the day and year first above
written.
GREENWOOD FOREST PRODUCTS, INC.
by /s/James Dovenberg
--------------------------------
Chairman
JEWETT-CAMERON LUMBER CORPORATION
by /s/Donald Boone
--------------------------------
President
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