ASSET PURCHASE AGREEMENT
between
XXXX FURNITURE, INC.,
and
LEA LUMBER & PLYWOOD, LLC
Dated as of November 6, 1995
TABLE OF CONTENTS
Page
ARTICLE 1: SALE AND PURCHASE OF PROPERTIES...................................................... 1
1.1 Sale and Purchase of Properties...................................................... 1
1.2 Closing Date......................................................................... 3
1.3 Purchase Price....................................................................... 3
1.4 Assumption of Liabilities............................................................ 3
1.5 Closing Date Deliveries.............................................................. 4
1.6 Further Assurances................................................................... 5
ARTICLE 2: REPRESENTATIONS AND WARRANTIES....................................................... 5
2.1 Representations and Warranties as to the Company..................................... 5
2.1.1 Corporate Status............................................................ 6
(a) Corporate existence................................................. 6
(b) Authorization, etc.................................................. 6
2.1.2 Conflicts, Consents......................................................... 6
(a) Conflicts........................................................... 6
(b) Consents............................................................ 7
2.1.3 Financial Information, Material Adverse Change.............................. 7
(a) Financial Statements................................................ 7
(b) Material Adverse Change............................................. 7
2.1.4 No Liens.................................................................... 8
2.1.5 Inventories................................................................. 8
2.1.6 Real Property............................................................... 8
2.1.7 Insurance................................................................... 8
2.1.8 Litigation.................................................................... 9
2.1.9 Compliance with Laws, Permits................................................. 9
(a) Compliance with Laws................................................ 9
(b) Permits............................................................. 9
2.1.10 Tax Matters.................................................................. 9
2.1.11 Brokers, Finders............................................................. 10
2.1.12 Absence of Certain Changes................................................... 10
2.1.13 Material Agreements.......................................................... 12
2.1.14 Intellectual Property........................................................ 13
2.1.15 Labor Matters................................................................ 14
2.1.16 No Judgments or Orders....................................................... 14
2.1.17 Affiliate Transactions....................................................... 14
2.1.18 Environmental................................................................ 15
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2.1.19 Suppliers and Customers...................................................... 17
2.1.20 Disclosure................................................................... 17
2.2 Representations and Warranties of Purchaser.......................................... 17
2.2.1 Purchaser's Status.......................................................... 17
2.2.2 Authorization, etc.......................................................... 17
2.2.3 Conflicts, Consents......................................................... 18
(a) Conflicts........................................................... 18
(b) Consents............................................................ 18
2.2.4 Brokers, Finders............................................................ 18
ARTICLE 3: CERTAIN COVENANTS PENDING AND FOLLOWING THE
CLOSING....................................................................................... 18
3.1 Access and Information; Confidentiality.............................................. 18
3.2 Conduct of Business of the Company................................................... 19
3.3 Efforts to Consummate Transaction.................................................... 20
3.4 Employee Matters..................................................................... 20
3.5 Consents and Approvals; Releases..................................................... 21
3.6 Collection of Receivables............................................................ 21
3.7 Non-Competition...................................................................... 21
ARTICLE 4: CONDITIONS PRECEDENT................................................................. 23
4.1 Conditions to Obligations of Purchaser............................................... 23
4.1.1 Representations, Performance, etc........................................... 23
4.1.2 Opinion of Counsel.......................................................... 23
4.1.3 Certain Approvals, etc...................................................... 23
4.1.4 No Injunction; Other Litigation............................................. 24
4.1.5 No Material Adverse Changes................................................. 24
4.1.6 Title Insurance; Survey..................................................... 24
4.1.7 Environmental Remediation................................................... 24
4.2 Conditions to Obligations of XXXX.................................................... 25
4.2.1 Representations, Performance, etc........................................... 25
4.2.2 Opinion of Counsel.......................................................... 25
4.2.3 Certain Approvals, etc...................................................... 25
4.2.4 No Injunction............................................................... 26
4.2.5 Purchase Price.............................................................. 26
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ARTICLE 5: TERMINATION.......................................................................... 26
5.1 Grounds for Termination.............................................................. 26
5.1.1 Termination by XXXX......................................................... 26
5.1.2 Termination by Purchaser.................................................... 26
5.2 Effect of Termination................................................................ 27
ARTICLE 6: INDEMNIFICATION...................................................................... 27
6.1 Indemnification by XXXX.............................................................. 27
6.2 Indemnification by Purchaser......................................................... 31
6.3 Notice of Claims..................................................................... 32
6.4 Third Party Claims................................................................... 33
ARTICLE 7: MISCELLANEOUS........................................................................ 35
7.1 Survival............................................................................. 35
7.2 Expenses............................................................................. 35
7.3 Assignment; Successors; Parties in Interest.......................................... 35
7.4 Amendment, Waiver and Modification................................................... 36
7.5 Notices.............................................................................. 36
7.6 Access After Closing................................................................. 37
7.7 Best Efforts......................................................................... 38
7.8 Knowledge............................................................................ 38
7.9 Sales and Transfer Taxes............................................................. 38
7.10 Severability......................................................................... 38
7.11 Arbitration.......................................................................... 38
7.12 Schedules and Exhibits............................................................... 39
7.13 Bulk Sales Law....................................................................... 39
7.14 Allocation of Purchase Price......................................................... 39
7.15 Definitions.......................................................................... 39
7.16 Confidential Nature of Information................................................... 43
7.17 Public Announcement.................................................................. 43
7.18 Captions............................................................................. 43
7.19 Entire Agreement..................................................................... 44
7.20 Counterparts......................................................................... 44
7.21 Governing Law........................................................................ 44
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SCHEDULES AND EXHIBITS
Schedule 1.1 Asset List
Schedule 2.1.2 Required Consents
Schedule 2.1.3 Financial Statements/Material Changes
Schedule 2.1.4 Liens
Schedule 2.1.6 Real Property (Owned and Leased)
Schedule 2.1.7 Insurance
Schedule 2.1.8 Litigation
Schedule 2.1.9 Noncompliance with Laws
Schedule 2.1.10 Tax Matters
Schedule 2.1.12 Absence of Certain Changes
Schedule 2.1.13 Material Agreements
Schedule 2.1.14 Intellectual Property
Schedule 2.1.15 Labor Matters
Schedule 2.1.17 Affiliate Transactions
Schedule 2.1.18 Environmental
Schedule 2.1.19 Suppliers and Customers
Schedule 3.2 Conduct of Business
Schedule 3.7(b) Current Customer List
Schedule 7.8 Knowledge
Schedule 7.15 Permitted Liens
Exhibit A Xxxx of Sale, Assignment and Assumption Agreement
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 6, 1995 (the
"Agreement"), by and among XXXX Furniture, Inc., a North Carolina corporation
("XXXX"), and Lea Lumber & Plywood, LLC, a Delaware limited liability company
(the "Purchaser").
W I T N E S S E T H
WHEREAS, XXXX is engaged in the business of manufacturing and
selling cut-to-size plywood, veneer, and wood laminated parts through its
division, Lea Lumber & Plywood (the "Company" and the business conducted by the
Company being referred to herein as the "Business"); and
WHEREAS, XXXX desires to sell to Purchaser, and Purchaser
desires to purchase from XXXX, on a going concern basis, substantially all of
the assets, properties and business of the Business, all on the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises made
herein and of the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
ARTICLE 1
SALE AND PURCHASE OF PROPERTIES
1.1 Sale and Purchase of Properties. Upon the terms and
subject to the conditions of this Agreement, on the Closing Date, XXXX shall
sell, transfer, assign, convey and deliver to Purchaser, and Purchaser shall
purchase from XXXX, on a going concern basis, free and clear of all Liens
(except for Permitted Liens), all tangible and intangible assets, real and
personal properties and business owned or held or used primarily in the conduct
of the Business by the Company as the same shall exist on the Closing Date
(herein collectively called the "Properties" and individually called a
"Property"), including, without limitation, all right, title and interest of
XXXX and the Company in, to and under:
(a) All raw materials, supplies, work-in-process,
finished products and other materials included in the
inventory of the Company;
(b) The real property, together with the buildings
and improvements erected thereon and appurtenant rights,
listed or described in Schedule 2.1.6;
(c) The real property leases and leasehold
improvements listed or described in Schedule 2.1.6;
(d) Timber tracts listed or described in Schedule
2.1.13;
(e) The machinery, equipment, vehicles, furniture and
other personal property of the Company as more particularly
described in Schedule 1.1;
(f) The personal property leases listed in Schedule
2.1.13;
(g) The contracts, agreements or understandings
listed or described in Schedule 2.1.13 or assumed by Purchaser
pursuant to Section 1.4(a);
(h) All mailing lists, customer lists, subscriber
lists, patents, patent applications, processes, trade secrets,
know-how, trade names, trademarks, service marks, copyrights
and other proprietary or confidential information or
intellectual property used in or relating exclusively to the
Business, including, without limitation, the name "Lea Lumber
& Plywood" and all variants thereof;
(i) All assignable or transferrable permits,
licenses, authorizations, registrations, consents and
approvals relating to the Business or any Property, whether
governmental or otherwise; and
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(j) All books and records of the Company relating
exclusively to the Business or any of the Properties.
1.2 Closing Date. Subject to the satisfaction or waiver of all
of the conditions to each party's obligation to close, the purchase and sale of
the Properties provided for in Section 1.1 (the "Closing") shall be consummated
at 10:00 A.M., local time, on December 17, 1995 or such later date no later than
the date set forth in Section 5.1.3 which is the third business day after the
date on which the conditions set forth in Article 4 have been satisfied, at the
offices of Xxxxxx Xxxxxxxx, L.L.P., 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx-Xxxxx Xxxxx
Xxxxxxxx 00000, or such other place or other time as shall be agreed upon by
Purchaser and XXXX (such date and time being hereinafter called the "Closing
Date").
1.3 Purchase Price. The purchase price for the Properties (the
"Purchase Price") shall be $4,200,000 plus an amount equal to the then currently
saleable and useable inventory (raw materials, work-in-process and finished
goods) of the Company on hand as of the Closing Date, valued at the lower of
cost (FIFO) or market, based upon a physical inventory and valuation to be
conducted by selected officers of XXXX and Purchaser immediately prior to
Closing and decreased by the fair market value of any Property destroyed and any
timber cut from the Company's land or timber tracts between September 30, 1995
and the Closing Date. In the event XXXX and Purchaser are unable to agree upon
such inventory valuation or such fair market value, such amount will be
determined by KPMG Peat Marwick, LLP or another nationally recognized firm of
independent certified public accountants acceptable to XXXX and Purchaser, whose
determination will be final and binding upon the parties.
1.4 Assumption of Liabilities. (a) On the Closing Date,
Purchaser shall deliver to XXXX an undertaking and assumption, in the form of
Exhibit A, pursuant to which Purchaser shall assume and agree to discharge all
liabilities and obligations of the Company arising after the Closing Date under
or in connection with (i) the Material Agreements, (ii) the other leases,
contracts and other agreements of XXXX relating to the Company not required by
the terms of Section 2.1.13 to be listed in a Schedule to this Agreement and
entered into in the ordinary
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course of the Business, (iii) the leases, contracts and other agreements entered
into by XXXX with respect to the Company after the date hereof consistent with
the terms of this Agreement and approved by Purchaser, except in each case, to
the extent such liabilities and obligations would have been paid, performed or
discharged on or prior to the Closing Date had XXXX performed strictly in
accordance with the terms thereof, or to the extent that the same arise out of
any breach or default thereof by XXXX, (iv) the Permitted Liens, (v) the
Severance Agreement dated July 21, 1995, between XXXX and Xxxxxx X. Upfield, as
more fully described in Schedule 2.1.13 attached hereto, and (vi) all
liabilities and obligations arising from the operation of the Business by
Purchaser after Closing. All of the foregoing to be assumed by Purchaser
hereunder (excepting any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities."
(b) Purchaser shall not assume or be obligated for any
liability or obligation of XXXX relating to the Company, direct or indirect,
known or unknown, absolute or contingent, not expressly assumed by Purchaser
under Section 1.4(a) (all of such liabilities and obligations not being assumed
being herein called the "Excluded Liabilities").
1.5 Closing Date Deliveries. (a) On the Closing Date, XXXX
shall deliver to Purchaser (i) a xxxx of sale, assignment and assumption
agreement, in the form of Exhibit A, collectively covering all of the non real
estate Properties, (ii) deeds conveying to Purchaser the parcels of real estate
identified in Schedule 2.1.6 in form reasonably satisfactory to Purchaser and
(iii) all of the documents, instruments and opinions required to be delivered by
XXXX pursuant to Article 4.
(b) On the Closing Date, Purchaser shall deliver to XXXX (i)
by bank wire transfer of immediately available funds to XXXX'x account, account
number 000-000-000 at NationsBank, N.A. (Carolinas), High Point, North Carolina,
an amount equal to the Purchase Price, and (ii) all of the documents,
instruments and opinions required to be delivered by Purchaser pursuant to
Section 1.3 and Article 4.
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(c) All ad valorem taxes and utilities related to the
Properties will be prorated as of Closing.
1.6 Further Assurances. On the Closing Date, XXXX shall (i)
deliver to Purchaser such other bills of sale, deeds, endorsements, assignments
and other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Purchaser and its counsel, as Purchaser may
reasonably request or as may be otherwise reasonably necessary to vest in
Purchaser all the right, title and interest of XXXX in, to or under any or all
of the Properties, and (ii) take all steps as may be reasonably necessary to put
Purchaser in actual possession and control of all the Properties. From time to
time following the Closing, XXXX shall execute and deliver, or cause to be
executed and delivered, to Purchaser such other instruments of conveyance and
transfer as Purchaser may reasonably request or as may be otherwise necessary to
more effectively convey and transfer to, and vest in, Purchaser and put
Purchaser in possession of, any part of the Properties, and, in the case of
approvals, agreements, contracts, leases, easements and other commitments
included in the Properties which cannot be transferred or assigned effectively
without the consent of third parties which consent has not been obtained prior
to the Closing, to use its best efforts (without any obligation to make any
payment or concession to any third party) to obtain such consent.
Notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to assign any approval, agreement, contract, lease,
easement or other commitment included in the Properties if an attempted
assignment thereof without the consent of a third party thereto would constitute
a breach thereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties as to the Company and XXXX.
XXXX represents and warrants to the Purchaser as of the date hereof (and to the
extent provided for by Section 4.1.1 as of the Closing Date) as follows:
5
2.1.1 Corporate Status. (a) Corporate existence. XXXX is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of North Carolina and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted. XXXX is duly qualified and in good standing as a foreign
corporation duly authorized to do business in all jurisdictions in which the
failure to be so qualified would have a Material Adverse Effect on the Business.
(b) Authorization, etc. XXXX has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and to perform its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate and shareholder action on the part of XXXX and its shareholders. This
Agreement has been duly executed and delivered by XXXX and constitutes the
legal, valid and binding obligation of XXXX, enforceable against it in
accordance with its terms.
2.1.2 Conflicts, Consents. (a) Conflicts. Except as set forth
on Schedule 2.1.2, the execution and delivery of this Agreement by XXXX, and the
consummation by XXXX of the transactions contemplated hereby in the manner
contemplated hereby, will not conflict with or result in any violation of or
default under (or any event that, with notice or lapse of time or both, would
constitute a default under), require any consent under, or result in the
acceleration or required prepayment of any indebtedness pursuant to the terms
of, any provision of (i) the Articles of Incorporation or Bylaws of XXXX, (ii)
any mortgage, indenture, loan agreement, note, bond, deed of trust, other
agreement, commitment or obligation for the borrowing of money or the obtaining
of credit, material lease or other material agreement, contract, license,
franchise, permit or instrument to which XXXX is a party or by which XXXX or any
of the Property may be bound, or (iii) any judgment, order, decree, law,
statute, rule or regulation applicable to XXXX with respect to the Company or
the Property which conflict, breach, or failure to receive such consent would
have a Material Adverse Effect on the Business or any of the Property.
6
(b) Consents. Except as set forth in Schedule 2.1.2, no
consent, approval, authorization, permit, order, filing, registration or
qualification of or with any court, governmental authority or third person is
required to be obtained by XXXX in connection with the execution and delivery of
this Agreement or the consummation by XXXX of the transactions contemplated
hereby in the manner contemplated hereby, which failure of XXXX to make or
obtain would have a Material Adverse Effect on the Business or any of the
Property.
2.1.3 Financial Information, Material Adverse Change. (a)
Financial Statements. XXXX has delivered to the Purchaser unaudited statements
of earnings before interest and income taxes of the Company for the fiscal years
ended January 1, 1994 and December 31, 1994 and unaudited balance sheets of the
Company as of such dates (the "Annual Financials"), in each case prepared from
and in accordance with the books and records of the Company as of, and for the
period ended on, such date. XXXX also has delivered to the Purchaser an
unaudited statement of earnings before interest and income taxes for the nine
(9) month period ended September 30, 1995 and an unaudited balance sheet of the
Company as of September 30, 1995 (the "Interim Financials"), prepared from and
in accordance with the books and records of the Company as of, and for the
period ended on, such date. The Annual Financials and Interim Financials are set
forth in Schedule 2.1.3. The Annual Financials and the Interim Financials have
been prepared in accordance with generally accepted accounting principles
("GAAP") and accounting practices utilized by subsidiaries and divisions of XXXX
consistently applied throughout the periods indicated and present fairly the
financial condition of the Company at the respective dates indicated and (in the
case of the Annual Financials) the results of operations of the Company for the
respective periods indicated, except that the Interim Financials are subject to
year-end audit adjustments.
(b) Material Adverse Change. Except as disclosed on Schedule
2.1.3, since September 30, 1995, there has been no change in the business,
financial condition or prospects of the Company that could reasonably be
expected to have a Material Adverse Effect on the Business.
7
2.1.4 No Liens. Except for Permitted Liens, the Company owns
free and clear of any liens, claims, charges, options or encumbrances all of the
personal property reflected in the Annual Financials and the Interim Financials,
and all personal property acquired by the Company since September 30, 1995,
except such personal property as has been disposed of between such date and the
date hereof in the ordinary course of business and without violation of this
Agreement. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY PROVIDED
FOR HEREIN, ALL OF THE TANGIBLE ASSETS INCLUDED IN THE PROPERTIES ARE SOLD TO
PURCHASER "AS IS" WITHOUT IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR
INTENDED USE OR OTHERWISE.
2.1.5 Inventories. The inventories of the Company were
acquired in the ordinary course of business and are free and clear of any liens,
claims, charges, options, or encumbrances and are of a quality useable and
salable in the ordinary course of business.
2.1.6 Real Property. The Company has good and marketable title
in fee simple to the real property, including the plants, buildings and other
improvements thereon, set forth and described in Schedule 2.1.6 hereto (the
"Owned Real Property"), free and clear of any liens, claims, charges, options,
encumbrances or encroachments, except for Permitted Liens. The Owned Real
Property constitutes all of the real property reflected in the Annual Financials
and the Interim Financials and all real property acquired by the Company since
September 30, 1995. Schedule 2.1.6 sets forth all leasehold interests in real
property and interests in timber tracts held by the Company at the Closing Date.
Except for matters which individually and in the aggregate will not have a
Material Adverse Effect, the buildings and operations of the Company are in
compliance with all applicable ordinances, regulations and zoning laws and do
not encroach on property of others.
2.1.7 Insurance. The assets, properties and business of the
Company are insured under the various policies of general liability and other
forms of insurance, as set forth on Schedule 2.1.7 hereof. No notice of
cancellation or non-renewal with respect to, or disallowance of any claim under,
any such policy has been received by the Company.
8
2.1.8 Litigation. Except as set forth in Schedule 2.1.8, there
are no actions, suits or proceedings pending or, to the knowledge of XXXX,
threatened or any basis for any such actions, suits or proceedings against or
affecting the Company or its respective properties, assets or business which
would, individually or in the aggregate, if adversely decided against XXXX, have
a Material Adverse Effect on the Business or any of the Property or which would
prevent or hinder the consummation of the transactions contemplated hereby.
2.1.9 Compliance with Laws, Permits. (a) Compliance with Laws.
Except as set forth on Schedule 2.1.9, XXXX is not, nor previously has it been,
in violation of any applicable laws or regulations or any applicable orders,
rules, writs, judgments, injunctions, decrees or ordinances applicable to the
business or operations of the Company, the violation of which individually or in
the aggregate would have a Material Adverse Effect on the Company.
(b) Permits. All necessary licenses, permits or orders with
respect to the conduct of the Business, the absence of which would individually
or in the aggregate have a Material Adverse Effect on the Business, have been
obtained by XXXX and are in effect as of the date hereof. All permits, licenses,
orders, registrations, or other approvals of all federal, state, local or
foreign governmental or regulatory bodies, the failure to obtain which would
individually or in the aggregate have Material Adverse Effect on the Business,
have been obtained, are set forth on Schedule 2.1.9 hereto, are in full force
and effect, and, there has been neither any violation, suspension or
cancellation thereof nor any basis for any such claim.
2.1.10 Tax Matters. XXXX has timely filed all federal,
foreign, state and local tax returns and other tax reports required to be filed
and has paid, or set up an adequate reserve for the payment of, all federal,
foreign, state and local income taxes and other taxes with respect to the
Business (including, without limitation, all franchise, property, sales, use,
excise, intangible, employment taxes, and all such other taxes along with all
federal, foreign, state and local income taxes with respect to the Business
being defined collectively as "Taxes") required to be paid in respect of the
periods covered by such returns, has set up an adequate reserve for the payment
of all Taxes anticipated to be payable in respect of the period subsequent to
the last
9
of such periods. XXXX is not delinquent in the payment of any Taxes, has not
waived any statute of limitations in respect of Taxes, and has not requested or
agreed to any extension of time within which to file any tax return or report or
with respect to a tax assessment or deficiency. No deficiencies for Taxes have
been assessed or asserted, and XXXX knows of no unresolved questions or claims
concerning the Tax liability relating to the Company.
2.1.11 Brokers, Finders. The Company and XXXX have not
retained any broker or finder in connection with the transactions contemplated
hereby so as to give rise to any claim against the Purchaser for any brokerage
or finder's commission, fee or similar compensation, except that Xxxxx Financial
Corporation and Xxxxx & Company have acted as financial advisor to XXXX and
their fees and expenses will be paid by XXXX.
2.1.12 Absence of Certain Changes. Except as set forth in
Schedule 2.1.12, since September 30, 1995, XXXX has not with respect to the
Company:
(a) mortgaged, pledged or subjected to any lien, lease,
security interest or other charge or encumbrance any of the Properties, except
in the ordinary course of business and the same shall nevertheless be discharged
on or before the Closing Date;
(b) acquired or disposed of any assets or properties, or
entered into any agreement or other arrangements for any such acquisition or
disposition, which individually or collectively are material;
(c) increased the wages, salaries, compensation, pension or
other benefits payable to any employee other than in accordance with the normal
compensation and benefits policies of the Company, or granted any severance or
termination pay, or entered into any employment, severance or consulting
agreement or arrangement with any officer or salaried employee that is not
terminable by the employer without cause and without penalty;
10
(d) forgiven or cancelled any material debts or claims or
waived any material rights of value other than intercompany debts, claims or
rights and other than in the ordinary course of business and regular course
intercompany dividends and transfers;
(e) suffered any damage, destruction or loss (whether or not
covered by insurance) affecting the Properties that could reasonably be expected
to have a Material Adverse Effect on the Business;
(f) suffered any strike or other labor trouble affecting its
business or operations that could reasonably be expected to have a Material
Adverse Effect on the Business;
(g) suffered or experienced any change in relations with or
loss of any employees or customers that could reasonably be expected to have a
Material Adverse Effect on the Business;
(h) changed any method of accounting or accounting practice or
policy of the Company;
(i) conducted its business other than in the ordinary course,
except as required by this Agreement;
(j) settled or compromised any claim, suit or cause of action
involving more than $35,000;
(k) materially altered its collection practices with respect
to accounts receivable;
(l) materially altered its payment practices with respect to
accounts payable; or
11
(m) made any capital expenditures or commitments therefor
outside the ordinary course of business in excess of $35,000.
2.1.13 Material Agreements. Except for the contracts,
franchises, agreements, plans, leases and licenses described in Schedule 2.1.13
hereto, the Company is not a party to or subject to:
(a) any written employment contract or any other agreement
relating to compensation or severance payments with any officer, consultant, or
employee;
(b) any plan or contract or arrangement providing for bonuses,
pensions, options, deferred compensation, retirement payments, profit sharing or
health or other benefits for employees, and none of these listed in Schedule
2.1.13 is a "multi-employer plan" within the meaning of ERISA section
4001(a)(3);
(c) any contract or agreement with any labor union;
(d) any lease (other than leases of real property described in
Schedule 2.1.6 hereto) involving payment of annual rentals in excess of $35,000;
(e) any contract or agreement for the purchase of any
materials, services, or supplies involving annual payments in excess of $35,000
and of more than one year in duration;
(f) any contract or agreement for the purchase of equipment or
any construction or other contract or agreement, not otherwise covered by this
Section 2.1.13, involving annual payments in excess of $35,000 or of more than
one year in duration;
(g) any contract or agreement for the sale of its products
exceeding $35,000 on an annual basis and of more than one year in duration;
12
(h) any contract or agreement with an agent, sales
representative, dealer or other distributor of products of the Company;
(i) any contract or agreement, not otherwise covered by this
Section 2.1.13, containing covenants limiting the freedom of the Company to
compete in any line of business or with any person or in any geographic area;
(j) any license or franchise agreement in which the Company is
the licensor or franchisor;
(k) any license or franchise agreement in which the Company is
the licensee or franchisee;
(l) any contract or agreement, not of the type covered by any
of the other items of this Section 2.1.13, which, with respect to the Company,
involves the payment or receipt by XXXX of $35,000 or more in any one year or
which by its terms is either (i) not to be fully performed by XXXX prior to one
year from the date hereof, or (ii) does not terminate, or is not terminable, by
and without penalty to XXXX prior to one year from the date hereof.
All contracts, franchises, agreements, plans, leases and
licenses described in Schedule 2.1.13 (the "Material Agreements") are valid and
in full force and effect and XXXX (or, to the knowledge of XXXX, any other party
to such Material Agreements) has not breached any material provision of, and is
not in default in any material respect under the terms of, any such Material
Agreement. Schedule 2.1.13 correctly identifies and specially designates thereon
each Material Agreement which is or might be terminable by any other party upon
the change of control of the Company.
2.1.14 Intellectual Property. Schedule 2.1.14 contains a list
of all trademarks, service marks, patents and patent applications, trade names
and copyrights, whether registered or not, owned by XXXX or in which it has an
interest by license, agreement, shop right,
13
common law, or otherwise and which are used by the Company or material to the
conduct of the Business, and XXXX owns and will convey all such rights as are
necessary for the conduct of the Business as it is now being conducted. There
are no claims or proceedings pending or, to the knowledge of XXXX, threatened
against XXXX or the Company asserting that XXXX or the Company has or is
infringing any patent, trademark, service xxxx, copyright or trade name of any
third party. Nor, to the knowledge of XXXX is there any basis for any such
claim to be asserted.
2.1.15 Labor Matters. Except as set forth on Schedule 2.1.15,
there has been no work stoppage or slowdown or other labor difficulties relating
to the Company that has had or could reasonably be expected to have a Material
Adverse Effect on the Business. Except as set forth on Schedule 2.1.15, XXXX is
not a party to any collective bargaining agreement with any labor union or
similar organization with respect to the Business, nor does XXXX know of any
such organization which represents or claims to represent any of the Company's
employees or is currently seeking to represent or organize any employees of the
Company. Schedule 2.1.15 contains a complete and accurate list of all employees
of the Business and their rates of compensation as of the date of this
Agreement.
2.1.16 No Judgments or Orders. With respect to the Business,
XXXX is not a party to or subject to any judgment, order or decree entered in
any action or proceeding brought by any governmental agency or any other party
enjoining it in respect of any business practice or the conduct of business in
any area or the acquisition of any property.
2.1.17 Affiliate Transactions. Except as reflected in the
Annual Financials, the Interim Financials or otherwise set forth in Schedule
2.1.17, there are no transactions involving XXXX arising out of any transaction
with the Company (other than for services as employees, officers and directors),
including, without limitation, any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from XXXX
or any affiliate of XXXX.
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2.1.18 Environmental. Except as set forth on Schedule 2.1.18,
with respect to the Business:
(i) (A) XXXX is not in violation in any material respect of
any Environmental Laws; (B) no lien has been attached to any real or personal
property of the Company pursuant to any Environmental Laws; (C) there has been
no treatment, storage, disposal or release of any Hazardous Materials by XXXX on
any property currently owned, operated, or leased by XXXX that could reasonably
be expected to lead to a material liability; (D) there are no sites, locations
or operations at which XXXX is currently undertaking, or has completed, or has
been advised to undertake, any remedial or response action relating to any such
disposal or release, as required by Environmental Laws; (E) XXXX has obtained,
and is in compliance with, all permits, licenses, authorizations, registrations
and other governmental consents required by applicable Environmental Laws
("Environmental Permits"), and all such Environmental Permits are transferable
under the circumstances presented by the current transaction; (F) XXXX has not
received notice of any civil, criminal or administrative claims, actions, suits,
hearings, investigations, or proceedings pending or threatened that are based on
or related to any Environmental Laws; (G) all underground storage tanks and
solid waste disposal facilities owned or operated by the Company are used and
operated in compliance in all material respects with Environmental Laws; (H)
there are no polychlorinated biphenyls ("PCBs") in any equipment on, about,
under or within any of such properties; and (I) there is no friable asbestos or,
to XXXX'x knowledge, other Hazardous Materials at, on, about, under or within
any of such properties other than those Hazardous Materials utilized in the
ordinary course of the Business in compliance with Environmental Laws.
(ii) Schedule 2.1.18 sets forth every site that is listed on
either the Comprehensive Environmental Response, Compensation and Liability Act
Information System ("CERCLIS") data base or a similar state, provincial,
regional, territorial, municipal, local or foreign law list with respect to
which XXXX has received notice from the United States Environmental Protection
Agency or a state, provincial, regional, territorial, municipal, local or
foreign agency that it is or may be considered to be a potentially responsible
party under any
15
Environmental Law. XXXX has not received any notice from any governmental agency
of any violation of Environmental Laws or any condition on any property where
the Company has caused Hazardous Materials to be disposed of which would require
any remedial action or removal action, as such terms are defined in applicable
Environmental Laws.
(iii) For purposes of this Section 2.1.18, the term
"Environmental Laws" shall mean any federal, state, provincial, regional,
territorial, municipal, local or foreign statute, code, ordinance, rule,
regulation, policy, guideline, permit, consent, approval, license, judgment,
order, writ, decree, injunction or other authorization, including the
requirement to register underground storage tanks, relating to: (A) emissions,
discharges, releases or threatened releases at any time of Hazardous Materials
into the natural environment, including, without limitation, into ambient air,
soil, sediments, land surface or subsurface, buildings or facilities, surface
water, groundwater, publicly-owned treatment works, septic systems or land; (B)
the generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Materials; or (C) otherwise relating to
pollution or the protection of health or safety or the environment, solid waste
handling, treatment or disposal or operation or reclamation of mines.
(iv) For purposes of this Section 2.1.18, the term "Hazardous
Materials" shall mean: (1) hazardous materials, contaminants, constituents,
hazardous wastes and hazardous substances as those terms are defined in any of
the following statutes and their implementing regulations: the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. ss. 9601 et seq., the
Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Toxic Substance Control Act, 15
U.S.C. ss. 2601 et seq., (2) petroleum, including crude oil and any fractions
thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4) asbestos
and/or asbestos-containing materials, (5) PCBs, or PCB-containing materials or
fluids, (6) any other substances with respect to which any federal, state or
local agency or other governmental authority may require either an environmental
16
investigation or environmental remediation, and (7) any other hazardous or
noxious substance, materials, pollutant or solid or liquid waste that is
regulated by any Environmental Laws.
2.1.19 Suppliers and Customers. Each customer accounting for
more than five (5) percent of the sales of the Business in any of the last two
years, and each material supplier of the Business is listed on Schedule 2.1.19.
XXXX has not been notified that any such customer or supplier has indicated that
it intends to materially reduce the amount of business it will do with XXXX or
with the Purchaser as the successor owner of the Business.
2.1.20 Disclosure. To XXXX'x knowledge, this Agreement, the
Schedules hereto and the certificates and other documents furnished by XXXX to
the Purchaser pursuant hereto, taken as a whole, do not as of their respective
dates contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained herein and therein not
misleading. No officer, director or employee of XXXX or any other person except
those named in Schedule 7.8 has been authorized to give any information or to
make any representation in connection with the transactions contemplated hereby
other than those contained herein and in any certificates or documents furnished
pursuant hereto and, if given or made, such information or representation may
not be relied upon as having been authorized by XXXX.
2.2 Representations and Warranties of Purchaser. The Purchaser
represents and warrants to XXXX as of the date hereof as follows:
2.2.1 Purchaser's Status. The Purchaser is a limited liability
company duly formed and validly existing under the laws of the State of
Delaware.
2.2.2 Authorization, etc. The Purchaser has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and to perform its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by
17
the Purchaser and constitutes the legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms.
2.2.3 Conflicts, Consents. (a) Conflicts. The execution and
delivery of this Agreement by the Purchaser, and the consummation by the
Purchaser of the transactions contemplated hereby in the manner contemplated
hereby, do not and will not conflict with or result in any violation of, or
default under (or any event that, with notice or lapse of time or both, would
constitute a default under), any provision of (i) the Certificate of Formation
or Operating Agreement of the Purchaser, (ii) any material mortgage, indenture,
loan agreement, note, bond, deed of trust, other agreement, commitment or
obligation for the borrowing of money or the obtaining of credit, material lease
or other material agreement, contract, license, franchise, permit or instrument
to which the Purchaser is a party or by which it may be bound, or (iii) any
judgment, order, decree, law, statute, rule or regulation applicable to the
Purchaser.
(b) Consents. No consent, approval, authorization, permit,
order, filing, registration or qualification of or with any court, governmental
authority or third person is required to be obtained by the Purchaser in
connection with the execution and delivery by the Purchaser of this Agreement or
the consummation by the Purchaser of the transactions contemplated hereby in the
manner contemplated hereby.
2.2.4 Brokers, Finders. The Purchaser has not retained any
broker or finder in connection with the transactions contemplated hereby so as
to give rise to any valid claim against XXXX or the Company for any brokerage or
finder's commission, fee or similar compensation.
ARTICLE 3
CERTAIN COVENANTS PENDING AND FOLLOWING THE CLOSING
3.1 Access and Information; Confidentiality. Prior to the
Closing, XXXX will, with respect to the Business, (a) give to the Purchaser and
its representatives full and free access to its properties, books, records,
contracts and commitments upon reasonable notice during
18
normal business hours, (b) furnish all such information and documents relating
to the Properties and Business as the Purchaser may reasonably request, and (c)
allow the Purchaser to discuss matters relating to the Company with the outside
auditors, attorneys and such other representatives of XXXX as are reasonably
requested by the Purchaser. Unless and until the transactions contemplated
hereby are consummated, the Purchaser shall use its best efforts to cause all
information obtained by it or its representatives pursuant to this Agreement or
in connection with the negotiation hereof to be treated as confidential, and
except for such disclosure as is reasonably necessary to be made in connection
with Purchaser's financing activities, Purchaser shall not use or disclose, or
knowingly permit others to use or disclose, any such information in a manner
detrimental to the Business. In the event of the termination of this Agreement,
the Purchaser will use its best efforts cause to be kept confidential all
information obtained from the Company.
3.2 Conduct of Business of the Company. Except as set forth in
Schedule 3.2, or as is otherwise specifically permitted or required by this
Agreement, from the date hereof to the Closing, XXXX will, with respect to the
Business, (a) conduct its business only in the ordinary course in substantially
the same manner as heretofore, (b) maintain and keep its properties and
equipment in such repair, working order and condition as is sufficient for the
operation of the Business in the ordinary course, (c) keep in full force and
effect insurance comparable in amount and scope of coverage to that now
maintained by it (to the extent available on commercially reasonable terms in
the case of any renewal or replacement policies), (d) perform in all material
respects all of its obligations under all contracts and commitments applicable
to the Business or Properties, (e) use its best efforts to maintain and preserve
the Company's business organization intact, and maintain satisfactory
relationships with employees, suppliers, distributors and customers so that they
will be preserved after the Closing, (f) maintain its books of account and
records in the usual and regular manner, (g) comply in all material respects
with all laws and regulations applicable to it and to the conduct of the
Business, (h) not make any material commitments or expenditures other than those
previously disclosed to and approved by Purchaser, (i) promptly advise the
Purchaser in writing of any emergency or other change in the normal course of
business or in the operations of the Business and of any governmental or any
19
other third party complaints, investigations or hearings (or communications
indicating that the same may be contemplated), (j) promptly advise the Purchaser
of any material adverse change in the business, operations or financial
condition of the Business, (k) use its best efforts to insure that the
representations and warranties contained in Section 2 hereof shall be true and
correct as of the Closing Date and (l) not take any action described in Section
2.1.12 hereof.
3.3 Efforts to Consummate Transaction. Subject to the terms
and conditions herein provided, each of the parties agrees to perform each of
its express covenants in this Agreement and to use its best efforts to take, 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 and
otherwise to consummate and make effective the transactions contemplated hereby
in accordance with the terms of this Agreement.
3.4 Employee Matters. XXXX shall make no announcement or
general communication to its employees regarding this transaction except that
the parties shall make a joint announcement in a manner agreed upon by them at
an appropriate time prior to the Closing. Purchaser shall offer "at-will"
employment to each of the present employees of the Business, but with no express
or implied promise of continued employment. Purchaser shall afford or cause to
be afforded health, life, disability and severance pay benefits and
participation in bonus, savings, incentive and retirement plans of Purchaser to
such employees which, in the aggregate, are no less favorable to such employees
than the benefits applicable to Purchaser's similarly situated employees of
Springfield Forest Product and Xxxxxxxxxx Forest Products, taking into account
geographic and other similar relevant factors. Purchaser shall grant employees
credit for all service with XXXX and the affiliates hereof through the Closing
Date for purposes of vacation and all other existing benefit plans as described
above, to the extent permitted by the terms of such plans; provided, however,
that XXXX shall pay, and Purchaser shall have no liability for, all accrued and
untaken or unpaid vacation, sick leave, personal leave and similar accrued
entitlements of all its employees, including, without limitation,
post-retirement medical, health care, pension and other employee retirement
benefits. No employee is intended to be a
20
third party beneficiary of, and no employee may enforce, directly or indirectly,
the covenants of this Section 3.4 or any other provision of this Agreement.
3.5 Consents and Approvals; Releases. XXXX shall use its best
efforts (without the obligation to make any extraordinary payment or
extraordinary concession to any third party) promptly to obtain all consents
from parties to the Material Agreements, which are required by the terms
thereof, this Agreement or otherwise for the due and punctual consummation of
the transactions contemplated by this Agreement. Purchaser will cooperate with
XXXX in obtaining such consents and Agreements. XXXX shall also cooperate with
and assist Purchaser and its authorized representatives in order to provide an
efficient transfer of the control and management of the Business and to avoid
any undue interruption in the activities and operations of the Business
following the Closing Date.
3.6 Collection of Receivables. Purchaser is not acquiring any
of XXXX'x accounts receivable, but the parties wish to agree on a convenient and
fair method of collecting their respective accounts. Shortly before the Closing,
the parties shall agree upon and send to each customer of the Business a
notification of the impending sale and advising them where to direct their
payments and requesting them to designate on their payments the specific
invoices being paid. The parties shall apply payments in accordance with such
designation and shall hold in trust and pay over to each other amounts
erroneously directed. The parties may establish such other procedures as they
may desire with regard to the collection of receivables.
3.7 Non-Competition. (a) For a period of two years following
the Closing (the "Non-Competition Period"), XXXX will not in the continental
United States engage or participate in competition, directly or indirectly
(whether as a holder of an equity or debt investment, lender or in any other
manner or capacity) in any business which is in competition with the Business as
the same is conducted as of Closing.
(b) Notwithstanding the foregoing, the following shall not be
deemed a breach by XXXX of the prohibitions set forth in Section 3.7(a) above:
(i) ownership by XXXX for
21
investment of less than five percent (5%) of the outstanding shares of capital
stock of any corporation with one or more classes of its capital stock listed on
a national securities exchange or actively traded in the over-the-counter market
nor (ii) the manufacture, marketing and sale amongst XXXX and its affiliates of
lines of products currently manufactured, marketed and sold by XXXX or any of
its affiliates or lines of products reasonably similar to such current lines of
products, whether or not such lines of products compete directly or indirectly
with the Business. Further, XXXX shall not be prohibited from acquiring and
operating any business which is competitive with the Business provided that (x)
such acquired competitive business constitutes less than twenty-five percent
(25%) of the annual net sales of any entity acquired, (y) to the extent such
acquired business does not at the time of such acquisition serve or sell
products to those customers of the Business listed on Schedule 3.7(b) (the
"Customers"), such acquired entity will not deal in a competitive manner with
any of the Customers during the Non-Competition Period, and (z) to the extent
that such acquired business does at the time of such acquisition serve or sell
products to any Customers, XXXX will not increase such service or sales except
to the extent required by oral or written supply agreements or contracts in
existence prior to the date of acquisition.
(c) XXXX acknowledges that the covenants contained in this
Section 3.7 are reasonable and necessary to protect the legitimate interests of
Purchaser and that any breach or threatened breach of such covenants will result
in irreparable injury to Purchaser and that the remedy at law for such breach or
threatened breach would be inadequate. Accordingly, XXXX agrees that Purchaser
shall, in addition to any other rights or remedies which it may have, be
entitled to seek such equitable and injunctive relief as may be available from
any court of competent jurisdiction to restrain XXXX from any breach or
threatened breach of this Section 3.7. The arbitration provisions of Section
7.11 of this Agreement do not apply to contests or proceedings arising under
this Section 3.7. The prevailing party in any contest or proceeding under this
Section 3.7 shall be entitled to reasonable attorneys' fees from the
non-prevailing party in any such action or proceeding.
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ARTICLE 4
CONDITIONS PRECEDENT
4.1 Conditions to Obligations of Purchaser. The obligations of
the Purchaser under this Agreement are subject to the fulfillment, at or prior
to the Closing, of the following conditions, any one or more of which may be
waived by the Purchaser at its sole discretion:
4.1.1 Representations, Performance, etc. The representations
and warranties of the XXXX contained in Section 2.1 that are not conditioned as
to materiality shall be true and correct in all material respects at and as of
the Closing Date with the same effect as though made at and as of the Closing
Date, except as modified by transactions permitted by this Agreement, and all
representations and warranties of XXXX that are so qualified as to materiality
shall be true and correct at and as of the Closing Date with the same effect as
though made at and as of the Closing Date. XXXX shall have duly performed and
complied with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing
Date. XXXX shall have delivered to the Purchaser a certificate of XXXX signed by
an officer of XXXX familiar with the transactions contemplated by this
Agreement.
4.1.2 Opinion of Counsel. The Purchaser shall have received a
favorable opinion in form and substance reasonably acceptable to counsel to
Purchaser, addressed to the Purchaser and dated the Closing Date, of Xxxxxx
Xxxxxxxx, L.L.P., counsel to XXXX.
4.1.3 Certain Approvals, etc. All consents and approvals from
governmental authorities and third parties required to be obtained by XXXX or by
Purchaser to consummate the transactions contemplated hereby shall have been
obtained, other than any consents and approvals of third parties in respect of
any contract or agreement of the Company (not involving the borrowing of money)
in respect of which the failure to obtain such consent or approval, either in
any case or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Business.
23
4.1.4 No Injunction; Other Litigation. No injunction or other
order issued by a court of competent jurisdiction restraining or prohibiting the
consummation of the transactions contemplated by this Agreement shall be in
effect, and there shall be no other litigation, including any condemnation
action or eminent domain proceeding, filed or threatened with respect to this
transaction or any of the Property, which, if decided adversely, could
reasonably be expected to have a Material Adverse Effect on the Business or on
Purchaser.
4.1.5 No Material Adverse Changes. From the date hereof to the
Closing Date, there has been no material adverse change in the business, assets,
operations, prospects or financial condition of the Business, whether or not
insured.
4.1.6 Title Insurance; Survey. Purchaser shall have obtained,
at its expense, an ALTA Owners Form title insurance policy, or an irrevocable
commitment therefor, insuring good and marketable title in fee simple to the
Owned Real Property, free and clear of all liens, claims and encumbrances,
except only for Permitted Liens, utility easements and other encumbrances of
record that do not materially adversely affect title to the Owned Real Property
and which would be acceptable to a reasonable buyer. Correct surveys shall have
been prepared, at Purchaser's expense, and certified to Purchaser, showing the
boundaries of and the location of the Owned Real Property and the locations and
all improvements, which surveys shall be reasonably acceptable to Purchaser.
4.1.7 Environmental Remediation. XXXX shall use its best
efforts to complete remediation of Underground Storage Tank sites for petroleum
compounds and asbestos removal on the old boiler and the Xxx veneer dryer, as
more particularly described in the ERM-Southeast Report, and such remediation
shall have been completed at XXXX'x sole cost prior to the Closing, and if
completion prior to the Closing is not feasible, XXXX shall have established a
program for such completion satisfactory to Purchaser, including such assurances
as Purchaser may reasonably require of XXXX'x financial capacity to complete
such program. The provisions of this Section 4.1.9 shall supplement and not
reduce XXXX'x obligations under Section 6.1.
24
4.2 Conditions to Obligations of XXXX. The obligations of XXXX
under this Agreement are subject to the fulfillment, at or prior to the Closing,
of the following conditions, any one or more of which may be waived by XXXX in
its sole discretion:
4.2.1 Representations, Performance, etc. The representations
and warranties of the Purchaser contained in Section 2.2 that are not
conditioned as to materiality shall be true and correct in all material respects
at and as of the Closing Date with the same effect as though made at and as of
the Closing Date, except as modified by transactions permitted by this
Agreement, and all representations and warranties of the Purchaser that are so
qualified as to materiality shall be true and correct at and as of the Closing
Date with the same effect as though made at and as of the Closing Date. The
Purchaser shall have duly performed and complied with all agreements, covenants
and conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing Date. The Purchaser shall have delivered to XXXX a
certificate of the Purchaser signed by an officer of the Purchaser familiar with
the transactions contemplated by this Agreement, dated the Closing Date, to the
effect set forth above in this Section 4.2.1.
4.2.2 Opinion of Counsel. XXXX shall have received a favorable
opinion, addressed to it and dated the Closing Date, of Crosby, Heafey, Xxxxx &
May Professional Corporation, counsel for the Purchaser, in substantially the
form attached hereto as Exhibit 4.2.2.
4.2.3 Certain Approvals, etc. All consents and approvals from
governmental authorities and third parties required to be obtained by the
Purchaser or by XXXX, including, without limitation, those referred to in
Section 6.1(b)(vi), to consummate the transactions contemplated hereby shall
have been obtained, other than any consents and approvals of third parties in
respect of any contract or agreement of the Purchaser (not involving the
borrowing of money) in respect of which the failure to obtain such consent or
approval, either in any case or in the aggregate, could not reasonably be
expected to have a material adverse effect on the transactions contemplated
hereby.
25
4.2.4 No Injunction. No injunction or other order issued by a
court of competent jurisdiction restraining or prohibiting the consummation of
the transactions contemplated by this Agreement shall be in effect.
4.2.5 Purchase Price. XXXX shall have received from Purchaser
the Purchase Price.
ARTICLE 5
TERMINATION
5.1 Grounds for Termination. This Agreement may be terminated
at any time prior to the Closing Date in the circumstances set forth in this
Section 5.1 by delivering written notice of such termination.
5.1.1 Termination by XXXX. This Agreement may be terminated by
XXXX upon the happening of an occurrence or circumstance which will result in a
failure to satisfy any of the conditions set forth in Section 4.2 and the
Purchaser shall have failed to satisfy such a condition within 20 days after
notice by XXXX.
5.1.2 Termination by Purchaser. This Agreement may be
terminated by the Purchaser upon the happening of an occurrence or circumstance
which will result in the failure to satisfy any of the conditions set forth in
Section 4.1 and XXXX shall have failed to satisfy such a condition within 20
days after notice by the Purchaser.
5.1.3 Termination by Either Party. This Agreement may be
terminated by either the Purchaser or XXXX if (i) the representations and
warranties of the other party shall prove not to have been true in all material
respects as of the date when made, (ii) events shall have occurred subsequent to
the date hereof as a result of which the representations and warranties of the
other party could not be true in all material respects as of the Closing Date,
unless the occurrence of such events shall be due to the failure of the party
seeking to terminate this
26
Agreement to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by such party prior to the
Closing, or (iii) the Closing shall not have occurred prior to December 28, 1995
(or such other date as may be mutually agreed to by the parties) through no
fault of the terminating party.
5.2 Effect of Termination. If this Agreement is terminated as
permitted under Section 5.1 by a party without any breach of this Agreement by
the other, such termination shall be without liability of or to any party to
this Agreement or any shareholder, partner, director, officer, employee or agent
of such party. The provisions of Sections 3.1 and 5.2 shall survive any such
termination. If this Agreement is terminated a party as a result of a breach by
the other, the terminating party shall have all rights and remedies therefor
under this Agreement, at law or in equity. If, having a right to do so by reason
of the breach of the other, a party does not terminate this Agreement, but
nevertheless proceeds with the Closing, that party shall retain all its rights
and remedies against the breaching party.
ARTICLE 6
INDEMNIFICATION
6.1 Indemnification by XXXX. (a) XXXX agrees to indemnify and
hold harmless Purchaser and its affiliates, successors and assigns from and
against any and all (a) liabilities, losses, costs or damages ("Loss") and (b)
reasonable attorneys' and accountants' fees and expenses, court costs and all
other reasonable out-of-pocket expenses ("Expense") incurred by Purchaser, its
affiliates, successors and assigns in connection with or arising from:
(i) any breach by XXXX of any warranty or the
inaccuracy of any representation of XXXX contained in this
Agreement;
(ii) any breach by XXXX of any of its covenants in
this Agreement or in any agreement or instrument contemplated
hereby; and
27
(iii) any condition of any of the Properties
involving any Hazardous Materials or Environmental Law which
existed at the time of the Closing, whether or not such
condition is disclosed in any Schedule to this Agreement or
was otherwise known to Purchaser and particularly including
those conditions disclosed in Section 10 of ERM-Southeast,
Inc.'s report dated October 11, 1995 (the "ERM- Southeast
Report"), and items (1), (2)(a) and (2)(d) listed on Schedule
2.1.18.
provided, however, that XXXX shall be required to indemnify and hold harmless
under clauses (i) and (ii) of this Section 6.1 with respect to such Loss and
Expense incurred by Purchaser or its affiliates, successors and assigns only to
the extent that the aggregate amount of such Loss and Expense exceeds $50,000,
at which time claims hereunder may be asserted for all such claims in excess of
the initial $50,000. The indemnification with respect to clause (iii) of this
Section 6.1 shall not be so limited with respect to those items requiring
remediation pursuant to the ERM-Southeast Report, and, without limiting its
obligations hereunder, XXXX shall at its sole cost take all the actions
recommended in the ERM-Southeast Report, for which Purchaser shall provide all
necessary access to the Property. The indemnification provided for in this
Section 6.1 shall terminate eighteen (18) months after Closing Date (and no
claims shall be made by any party indemnified under this Section 6.2
thereafter), except that the indemnification shall continue as to any Loss or
Expense of which Purchaser or its affiliates, successors or assigns has notified
XXXX in accordance with the requirements of Section 6.3 on or prior to the date
such indemnification would otherwise terminate in accordance with this Section
6.1, as to which the obligation of XXXX shall continue until the liability of
XXXX shall have been determined pursuant to this Article 6, and XXXX shall have
reimbursed Purchaser, its affiliates, successors or assigns for the full amount
of such Loss and Expense in accordance with this Article 6.
(b) In the event of any claim for indemnification under
Section 6.1 with respect an Environmental Claim:
28
(i) Purchaser shall provide reasonable access to the
premises of such of the Company's properties as may be
necessary or appropriate to enable XXXX and its employees,
agents, attorneys, consultants and contractors to evaluate the
claim and take remedial or other appropriate action;
(ii) Purchaser shall make available to XXXX or its
representatives all information, records and other materials
in the possession or control of Purchaser which are reasonably
required by XXXX for its use in connection with any claim,
investigation or remedial action (it being understood that any
such materials that constitute Confidential Information will
be subject to the provisions of Section 7.16) and shall
otherwise cooperate and assist XXXX in connection with such
claim, investigation or remedial action (including, where
appropriate, providing testimony in connection with any
litigation; provided, that in the event of such provision,
XXXX shall reimburse Purchaser for any Expense incurred in
connection therewith);
(iii) XXXX shall have the right and responsibility of
defending, remedying, compromising and settling any
Environmental Claim and shall have the right to employ and
control its own counsel, consultants and contractors in
connection therewith. XXXX shall have full control over any
actions (including, without limitation, any remedial action,
negotiation or litigation) in connection with any such
Environmental Claim; provided, that (i) if a remedial or other
action proposed to be taken by XXXX in settlement of the
Environmental Claim would materially and adversely affect the
Purchaser's operations at a facility, such action shall not be
taken without the prior written consent of Purchaser (which
consent shall not unreasonably be withheld); (ii) XXXX shall
not compromise or settle any Environmental Claim without the
consent of Purchaser (which consent shall not unreasonably be
withheld); and (iii) in the event Purchaser shall unreasonably
refuse to consent to the taking of any remedial or other
action approved by applicable regulatory agencies in respect
of, or the compromise or
29
settlement of, any Environmental Claim, XXXX may
elect to take over the defense of such Environmental Claim,
and in any case, the liability of XXXX shall not exceed the
amount for which the Environmental Claim could have been
settled plus the amount of Expense incurred by Purchaser prior
to the time of the proposed settlement to which it is entitled
to indemnification;
(iv) The obligations of XXXX in respect of an
Environmental Claim (other than with respect to a claim for
damage to or loss by a third party) shall be limited to the
taking of such remedial actions as are necessary under the
circumstances giving rise to such Environmental Claim, and
reimbursement of any resulting Loss to Purchaser, and XXXX
shall not be liable for any effect upon the business
operations of any of the facilities included in the properties
(including without limitation, business interruption or loss
of profits) caused by or resulting from remedial or other
action taken by XXXX in furtherance of its obligations
hereunder, unless resulting from XXXX'x willful misconduct or
gross negligence and XXXX shall not be liable for any Loss or
Expense resulting from actions taken or omitted by Purchaser
on or after the Closing Date. Any Loss and Expense in respect
of a violation of Environmental Law occurring both before and
after the Closing Date shall be allocated between XXXX and
Purchaser on the basis of their relative participation in the
release or discharge, with all materials contained in or on
the Property sold hereunder at the time of the Closing to be
the sole responsibility of XXXX;
(v) Effective upon being indemnified as provided in
Section 6.1, Purchaser hereunder (A) transfers and assigns to
XXXX all rights and claims Purchaser has or may have against
third parties for reimbursement or contribution; (B) agrees to
execute such instruments and take such other actions as may be
necessary or appropriate to transfer and assign the foregoing
rights or claims to the latter; and (C) agrees to take such
reasonable actions when and as
30
necessary or appropriate to assist the latter to
obtain reimbursement or contribution from third parties, but
at the expense of XXXX;
(vi) The parties to this Agreement shall use
reasonable efforts and shall cooperate with each other to
obtain any necessary consent, transfer or reissuance of any
governmentally issued environmental permits, licenses and
registrations necessary to operate the Business as it was
operated as of the Closing Date. XXXX makes no representations
or warranties with respect to whether or when such consent,
transfer or reissuance will occur or whether such consent,
transfer or reissuance will be conditioned upon new or
additional requirements. XXXX shall not be required to incur
any liability or make any payment or concession to any third
party in order to obtain such consent, transfer or reissuance;
and
(vii) XXXX and Purchaser agree that their respective
rights and obligations in respect of liabilities in respect of
Environmental Laws as provided in this Agreement shall
supersede any such rights and obligations either may have
under any existing or future law.
6.2 Indemnification by Purchaser. Purchaser agrees to
indemnify and hold harmless XXXX and its respective affiliates, successors and
assigns from and against any and all Loss and Expense incurred by them in
connection with or arising from:
(i) any breach by Purchaser of any warranty or the
inaccuracy of any representation of Purchaser contained in
this Agreement or in any agreement or instrument contemplated
hereby;
(ii) any breach by Purchaser of any of its covenants
or agreements in this Agreement or any agreement or instrument
contemplated hereby; and
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(iii) any liability, Loss or Expense associated with
the business and operations of the Company by Purchaser
occurring or arising after Closing.
The foregoing indemnification shall terminate eighteen (18) months after the
Closing Date (and no claims shall be made by any party indemnified under this
Section 6.2 thereafter) except that (y) the foregoing indemnification contained
in Section 6.2(iii) shall survive without termination, and (z) except that the
indemnification by Purchaser shall continue as to any Loss or Expense of which a
party indemnified pursuant to this Section 6.2 has notified Purchaser in
accordance with the requirements of Section 6.3 on or prior to the date such
indemnification would otherwise terminate in accordance with this Section 6.2,
as to which the obligation of Purchaser shall continue until the liability of
Purchaser shall have been determined pursuant to this Article 6, and Purchaser
shall have reimbursed such party for the full amount of such Loss and Expense in
accordance with this Article 6.
6.3 Notice of Claims. (a) If Purchaser or XXXX believes that
any of the persons indemnified under this Article 6 has suffered or incurred any
Loss or incurred any Expense, Purchaser or XXXX shall so notify the other
promptly in writing describing such Loss or Expense, the amount thereof, if
known, and the method of computation of such Loss or Expense, all with
reasonable particularity and containing a reference to the provisions of this
Agreement or other agreement, instrument or certificate delivered pursuant
hereto in respect of which such Loss or Expense shall have occurred. If any
action at law or suit in equity is instituted by or against a third party with
respect to which any of the indemnified persons intends to claim any liability
or expense as Loss or Expense under this Article 6, any such indemnified person
shall promptly notify the indemnifying party of such action or suit. The failure
to give such prompt notice, however, shall not bar a claim of indemnification
except to the extent the indemnitor was actually prejudiced by such delay.
(b) In calculating any Loss or Expense there shall be deducted
(i) any insurance recovery in respect thereof (and no right of subrogation shall
accrue hereunder to any insurer) and (ii) the amount of any actual net tax
benefit to the indemnified person with respect
32
to such Loss or Expense (after giving effect to the tax effect of receipt of the
indemnification payments). The amount of such tax benefit to the indemnified
person shall be conclusively evidenced by a certificate of the chief financial
officer of the indemnified person, absent manifest error.
(c) The amount to which an indemnified person shall be
entitled under this Article 6 shall be determined by the written agreement
between the indemnified person and the indemnifying party. If the parties are
unable to agree upon such amount, the indemnifying party shall pay that amount
agreed upon between the parties and the remainder shall be determined by a final
judgment or decree of any court of competent jurisdiction upon an award of an
arbitrator or arbitrators as provided in Section 7.11 or by any other means to
which the indemnified person and the indemnifying party shall agree. The
judgment or decree of a court shall be deemed final when the time for appeal, if
any, shall have expired and no appeal shall have been taken or when all appeal
taken have been finally determined.
6.4 Third Party Claims. (a) Subject to Section 6.1(b)(iii) and
6.4(b), the persons indemnified under Sections 6.1 and 6.2 shall have the right
to conduct and control, through counsel of their choosing, any third party
claim, action or suit, and the persons indemnified may compromise or settle the
same, provided that any of the indemnified persons shall give the indemnifying
party advance notice of any proposed compromise or settlement. The indemnified
persons shall permit the indemnifying party to participate in the defense of any
such action or suit through counsel chosen by it, provided that the fees and
expenses of such counsel shall be borne by the indemnifying party. Subject to
Section 6.1(b)(iii) and 6.4(b), any compromise or settlement with respect to a
claim for money damages effected after the indemnifying party, by notice to the
indemnified party, shall have disapproved such compromise or settlement and
shall have unconditionally admitted its indemnification obligation and
demonstrated its financial capacity to perform the same, shall discharge the
indemnifying party from liability with respect to the subject matter thereof,
and no amount in respect thereof shall be claimed as Loss or Expense under this
Article 6.
33
(b) If the remedy sought in any action or suit referred to in
Section 6.4(a) is solely money damages and will have no continuing effect on the
business of any indemnified person, the indemnifying party shall have 30
business days after receipt of the notice referred to in the first sentence of
Section 6.4(a) to notify the indemnified persons that it admits unconditionally
its indemnification obligation and that it elects to conduct and control such
action or suit. If the indemnifying party does not give the foregoing notice,
the indemnified persons shall have the right to defend, contest, settle or
compromise such action or suit in the exercise of their exclusive discretion,
and the indemnifying party shall, upon request from any of the indemnified
persons, promptly pay to such indemnified persons in accordance with the other
terms of this Article 6 the amount of any Loss resulting from its liability to
the third party claimant and all related Expense. If the indemnifying party
gives the foregoing notice, the indemnifying party shall have the right to
undertake, conduct and control, through counsel of its own choosing and
reasonably acceptable to the indemnified party and at the sole expense of the
indemnifying party, the conduct and settlement of such action or suit, and the
indemnified persons shall cooperate with the indemnifying party in connection
therewith; provided that (w) the indemnifying party shall not settle or
compromise any such action or suit without the indemnified party's prior written
consent, unless the terms of such settlement or compromise release the
indemnified party from any and all liability with respect to such action or
suit, (x) the indemnifying party shall not thereby permit to exist any lien,
encumbrance or other adverse charge upon any asset of any indemnified person;
(y) the indemnifying party shall permit the indemnified persons to participate
in such conduct or settlement through counsel chosen by the indemnified persons,
but the fees and expenses of such counsel shall be borne by the indemnified
persons except as provided in clause (z) below; and (z) the indemnifying party
shall agree promptly to reimburse to the extent required under this Article 6
the indemnified persons for the full amount of any Loss resulting from such
action or suit and all related Expense incurred by the indemnified persons,
except fees and expenses of counsel for the indemnified persons incurred after
the assumption of the conduct and control of such action or suit by the
indemnifying party. So long as the indemnifying party is contesting any such
action or suit in good faith, the indemnified persons shall not pay or settle
any such action or suit. Notwithstanding the foregoing, the indemnified persons
shall have the right to pay or settle any
34
such action or suit, provided that in such event the indemnified persons shall
waive the right to indemnity therefor by the indemnifying party, and no amount
in respect thereof shall be claimed as Loss or Expense under this Article 6
unless the indemnified party in good faith believed that the indemnifying party
might not be financially capable of performing in full its indemnification
obligation.
ARTICLE 7
MISCELLANEOUS
7.1 Survival. Only those agreements and covenants of Purchaser
and XXXX which by their express terms apply in whole or in part after the
Closing, including but not limited to the rights of indemnification contained in
Article 6, shall survive the Closing. Notwithstanding any otherwise applicable
statute of limitations, all other agreements, covenants, representations and
warranties of Purchaser and XXXX in this Agreement shall be conditions to the
Closing only and shall not survive the Closing.
7.2 Expenses. Each of XXXX and the Purchaser shall assume and
bear their own expenses, costs and fees incurred in the preparation and
execution of this Agreement and compliance herewith, including attorneys' and
accountants' fees, whether or not the purchase and sale provided for herein
shall be consummated. XXXX shall pay the fees and expenses of Xxxxx Financial
Corporation and Xxxxx & Company.
7.3 Assignment; Successors; Parties in Interest. This
Agreement shall not be assignable by any party hereto without the prior written
consent of all of the other parties and any attempt to assign this Agreement
without such consent shall be void and of no effect, except that Purchaser may
assign its rights hereunder to an affiliated entity which assumes in writing all
Purchaser's obligations, provided that no such assignment shall relieve
Purchaser of any of its obligations hereunder to XXXX. This Agreement shall
inure to the benefit of, and be binding on and enforceable against, each party
hereto and such permitted successors and assigns of the respective parties
hereto, and nothing in this Agreement, express or implied, is intended to
35
confer upon any employee or affiliate of either party or any other person any
rights or remedies of any nature whatsoever under this Agreement.
7.4 Amendment, Waiver and Modification. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated orally, but
only with the written consent signed by the party against which such change,
waiver, discharge or termination is sought to be enforced.
7.5 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal processes
in regard hereto shall be validly given, made or served, if in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by commercial courier or by telecopy (promptly confirmed in writing) to the
following addresses (or at such other addresses for such party as shall be
specified by like notice):
To XXXX:
XXXX Furniture, Inc.
Xxx Xxxxx Xxxxxx, Xxx XX-0
Xxxx Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Telecopy: 910/888-6344
With a copy to:
(which copy shall not constitute notice)
Xxxxxx Stockton, L.L.P.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Telecopy: 910/607-7505
Attention: Xxxxxx X. Xxxxxxx, Esq.
36
To the Purchaser:
Lea Lumber & Plywood, LLC
c/o The Springfield Group
00X Xxxxxxxxxx Xxxx, Xxxxx 0
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Vice President/CFO
Telecopy: 503/683-8758
With a copy to:
(which copy shall not constitute notice)
Crosby, Heafey, Xxxxx & May
Professional Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: 510/763-8898
Attention: Xxxx X. Xxxxxxxx, Esq.
7.6 Access After Closing. Each party shall retain for a period
of six years following Closing all books and records within its possession or
control which relate to the operation and conduct of the Business prior to
Closing. Each party will provide the other party, at the requesting party's
expense, with copies of documents reasonably needed by the requesting party,
including employee immigration forms, related to the operation of the Business,
subject to the proprietary rights of third parties and requirements of
confidentiality. Each party shall provide to the other party and its
representatives reasonable access during normal business hours to copies of all
such books and records upon request by the other party hereto. XXXX will
cooperate with Purchaser with respect to the continuation or transfer of the
following services upon mutually agreeable terms at market rates for a period
not to exceed one year unless mutually agreeable to the parties: payroll/human
resources, general ledger, accounts payable,
37
accounts receivable, fixed asset, medical claims processing, order processing,
cost accounting and applicable telephone linkages.
7.7 Best Efforts. Each party agrees to perform each of its
covenants and obligations under this Agreement and otherwise to use its best
efforts to satisfy the conditions to the Closing set forth in this Agreement and
otherwise to consummate the transactions contemplated by this Agreement.
7.8 Knowledge. For the purposes of the representations and
warranties of XXXX contained in this Agreement, the knowledge of XXXX, shall be
deemed to consist solely of the actual knowledge of those individuals listed on
Schedule 7.8 after conducting such inquiry as is reasonable in the
circumstances.
7.9 Sales and Transfer Taxes. Any sales tax payable by reason
of the transfer and conveyance of the Properties hereunder and any documentary
stamps or transfer taxes payable by reason of the real estate or interests
therein included in the Properties shall be paid by XXXX.
7.10 Severability. If any term or provision of this Agreement
is held by a court or other authority of competent jurisdiction to be invalid,
void or unenforceable, the remaining terms and provisions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
7.11 Arbitration. The parties hereto agree to submit to
arbitration any and all matters in dispute or in controversy among them
concerning the terms and provisions of this Agreement. All such disputes and
controversies shall be determined and adjudged by the arbitrators, pursuant to
the Federal Arbitration Act and the hearing shall be held in Greensboro, North
Carolina. The selection of arbitrators and the procedure shall be in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
The parties shall be entitled to reasonable discovery as determined by the
arbitrators. Any award rendered shall be
38
final and conclusive upon the parties and a judgment thereon may be entered in
the highest court of the forum, state or federal, having jurisdiction. The
expenses of the arbitration shall be borne equally by the parties to the
arbitration, provided that each party shall pay for and bear the costs of their
own experts, evidence and counsel's fees, except that in the discretion of the
arbitrator, any award may include the costs of a party's counsel if the
arbitrator expressly determines that the party against whom such award is
entered has caused the dispute, controversy or claim to be submitted to
arbitration as a dilatory tactic.
7.12 Schedules and Exhibits. The Schedules and Exhibits are a
part of this Agreement as if fully set forth herein. All references to Sections,
subsections, Schedules and Exhibits shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require. Disclosure of any
factor items in any Schedule hereto referenced by a particular section in this
Agreement shall, should the existence of the fact or item or its contents be
relevant to any other section, be deemed to be disclosed with respect to that
other section whether or not an explicit cross-reference appears.
7.13 Bulk Sales Law. Purchaser hereby waives compliance by
XXXX with any applicable bulk sales law, and XXXX agrees to indemnify and hold
Purchaser harmless from and against any liability thereunder or from failure to
comply therewith; provided, however, that (i) this indemnity shall not affect
the obligation of Purchaser to pay and discharge the Assumed Liabilities and
(ii) no indemnity is made under this Section 7.13 with respect to the Assumed
Liabilities.
7.14 Allocation of Purchase Price. The parties shall negotiate
in good faith and agree to an allocation of the Purchase Price prior to Closing.
Each party will report this transaction under Section 1060 of the Code (on IRS
Form 8594) in accordance with this allocation of the Purchase Price.
7.15 Definitions. As used in this Agreement, the following
terms have the meaning specified or referred to in this Section 7.15:
39
(a) "Agreement" shall have the meaning set forth on Page 1 of
this Agreement.
(b) "Annual Financials" shall have the meaning set forth in
Section 2.1.3(a).
(c) "Assumed Liabilities" shall have the meaning set forth in
Section 1.4(a).
(d) "Business" shall have the meaning set forth in the
recitals to this Agreement.
(e) "CERCLIS" shall have the meaning set forth in Section
2.1.18(ii).
(f) "Closing" shall have the meaning set forth in Section 1.2.
(g) "Closing Date" shall have the meaning set forth in Section
1.2.
(h) "Company" shall have the meaning set forth on Page 1 of
this Agreement.
(i) "Customers" shall have the meaning set forth in Section
3.7(b) of this Agreement.
(j) "Environmental Claim" shall mean any claim with respect to
indemnification relating to any environmental matters.
(k) "Environmental Laws" shall have the meaning set forth in
Section 2.1.18(iii).
(l) "Environmental Permits" shall have the meaning set forth
in Section 2.1.18(i).
40
(m) "ERM-Southeast Report" shall have the meaning set forth in
Section 6.1(a)(iii).
(n) "Escrow Agent" means the escrow agent identified in
Section 1.5.
(o) "Excluded Liabilities" shall have the meaning set forth in
Section 1.4(b).
(p) "GAAP" shall have the meaning set forth in Section
2.1.3(a).
(q) "Hazardous Materials" shall have the meaning set forth in
Section 2.1.18(iv).
(r) "Interim Financials" shall have the meaning set forth in
Section 2.1.3(a).
(s) "XXXX" shall have the meaning set forth on Page 1 of this
Agreement.
(t) "Liens" means, with respect to any assets or properties
(whether real, personal or mixed or tangible or intangible), any mortgage,
pledge, option, escrow, hypothecation, lien, security interest, financing
statement, lease, charge, encumbrances, easement, conditional sale or other
title retention or security agreement or any other similar restriction, claim or
right of others, on, in, or with respect to such assets or properties, whether
arising by contract, operation of law or otherwise.
(u) "Loss and Expenses" shall have the meaning set forth in
Section 6.1.
(v) "Material Adverse Effect" shall mean a material adverse
effect on the business, properties, assets (tangible and intangible) or
financial condition or results of operations of the Business; provided that an
event, change or effect that arises from general economic conditions or that
otherwise affects the furniture industry generally shall not be considered
material or to have a material adverse effect on the Business.
41
(w) "Material Agreements" shall have the meaning set forth in
Section 2.1.13.
(x) "Non-Competition Period" shall have the meaning set forth
in Section 3.7(a).
(y) "Owned Real Property" shall have the meaning set forth in
Section 2.1.6.
(z) "PCBs" shall have the meaning set forth in Section
2.1.18(i).
(aa) "Permitted Liens" means (i) Liens for taxes not yet due
or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto have been deposited with Purchaser; (ii)
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
Liens arising in the ordinary course of the Business which are not overdue for a
period of more than 30 days or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto have been
deposited with Purchaser; (iii) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation; (iv)
deposits to secure the performance of any or all of the following: bids, trade
contracts (other than for borrowed money), leases (other than financing leases),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of the Business;
(v) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of the Business which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the Business; (vi) such imperfections or irregularities of title and
encumbrances, if any, as are not substantial in character, amount or extent so
as to materially detract from the value or interfere with the present use of the
properties affected thereby or otherwise materially impair present business
operations; and (vii) those liens or encumbrances described on Schedule 7.15
attached hereto.
(bb) "Properties" or "Property "shall have the meaning set
forth in Section 1.1.
42
(cc) "Purchase Price" shall have the meaning set forth in
Section 1.3.
(dd) "Purchaser" shall have the meaning set forth on Page 1 of
this Agreement.
(ee) "Taxes" shall have the meaning set forth in Section
2.1.10.
7.16 Confidential Nature of Information. Subject only to
necessary disclosure in connection with Purchaser's financing, each party agrees
that it will treat in confidence all documents, materials and other information
which it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other party all copies of nonpublic
documents and materials which have been furnished in connection therewith. The
obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (i) such
party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (ii) is known to the public and did not
become so known through any violation of a legal obligation, (iii) became known
to the public through no fault of such party or (iv) is later lawfully acquired
by such party from other sources, and following the Closing, Purchaser shall
have no obligation to treat documents, materials and other information
concerning the Company in confidence.
7.17 Public Announcement. Neither XXXX nor Purchaser will
make, directly or indirectly, any public announcement with respect to this
transaction without the prior written approval of the other party, except as
required by law.
7.18 Captions. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
43
7.19 Entire Agreement. This Agreement (including the Schedules
and Exhibits) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
7.20 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute one and the same instrument.
7.21 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of North Carolina, without giving effect to the conflict of laws rules
thereof. Each party hereto consents to the personal jurisdiction of such State
and voluntarily submits to the jurisdiction of the courts of such State in any
action or proceeding with respect to this Agreement, including the federal
courts located in such State without waiving its right to remove any matter to a
federal court sitting in North Carolina based on diversity or other grounds for
federal jurisdiction.
44
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
XXXX:
XXXX FURNITURE, INC.
By: (Signature of Xxxxxxx X. Xxxxx)
Chairman and Chief Executive
Officer
PURCHASER:
LEA LUMBER & PLYWOOD, LLC
By: (Signature of Xxxxxxx X. Xxxxxxx)
Title: Manager
President & CEO
The undersigned hereby absolutely and unconditionally (with
the exception of the conditions precedent to Purchaser's obligations to close
under the terms of the Asset Purchase Agreement described below) guarantees, as
primary obligor and not merely as a surety, the faithful and full payment and
performance of all obligations and liabilities of Lea Lumber & Plywood, LLC
("Purchaser") under the terms of the Asset Purchase Agreement dated as of
November 6, 1995, between Purchaser and XXXX Furniture, Inc. ("XXXX") (the
"Agreement"). The undersigned agrees that in the event Purchaser fails to
perform its obligations under such Agreement, XXXX will be entitled to pursue
its remedies against the undersigned regardless of whether XXXX has exhausted
any or all of its remedies against Purchaser. This guarantee shall terminate 60
days following the Closing Date of the sale of the Properties to Purchaser by
XXXX as contemplated in the Agreement.
FOREST PRODUCTS HOLDINGS LIMITED
PARTNERSHIP
By: SPRINGFIELD FOREST PRODUCTS, INC.
Its: General Partner
By: Xxxxxxx X. Xxxxxxx
Title: President & CEO
Dated: Nov. 6, 1995
45
