1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
HMTF ACQUISITION CORP.,
ATRIUM CORPORATION
AND
THE SELLING SECURITYHOLDERS NAMED HEREIN
DATED AS OF
NOVEMBER 7, 1996
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE PURCHASE; THE REDEMPTIONS; OTHER ACTIONS
1.1. Charter Amendment; Conversion . . . . . . . . . . . . . . . . 2
1.2. Bylaw Amendment . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Purchase and Sale of Purchase Shares . . . . . . . . . . . . . 3
1.4. Redemption of New Common Stock. . . . . . . . . . . . . . . . 3
1.5. Warrant Redemption . . . . . . . . . . . . . . . . . . . . . . 4
1.6. Partial Redemption of Substitute Options; Replacement Options 4
1.7. Escrows . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8. Other Actions . . . . . . . . . . . . . . . . . . . . . . . . 8
1.9. Withholding of Redemption Price Payable to Heritage . . . . . 10
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of the Company . . . . . . . . 11
2.2. Representations and Warranties of the Selling Securityholders 27
2.3. Representations and Warranties of Buyer . . . . . . . . . . . 28
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
3.1. Covenants of the Company and the Selling Securityholders other
than the Xxxxxx Indemnitors . . . . . . . . . . . . . . . . . 30
ARTICLE IV
ADDITIONAL AGREEMENTS OF THE COMPANY AND
THE SELLING SECURITYHOLDERS
OTHER THAN THE XXXXXX INDEMNITORS
4.1. No Solicitation of Transactions . . . . . . . . . . . . . . . 32
4.2. Access and Information . . . . . . . . . . . . . . . . . . . . 33
4.3. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.4. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . 34
4.5. Notification of Certain Matters . . . . . . . . . . . . . . . 35
4.6. Third Party Consents . . . . . . . . . . . . . . . . . . . . . 35
4.7. Stockholders Agreement . . . . . . . . . . . . . . . . . . . . 35
(i)
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PAGE
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4.8. Monitoring and Oversight Agreement . . . . . . . . . . . . . . 35
4.9. Financial Advisory Agreement . . . . . . . . . . . . . . . . . 35
4.10. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . 35
4.11. Termination Agreement . . . . . . . . . . . . . . . . . . . . 35
4.12. Repayment of Indebtedness for Borrowed Money . . . . . . . . . 36
4.13. Indemnification Agreement . . . . . . . . . . . . . . . . . . 36
4.14. Board of Directors; Officers . . . . . . . . . . . . . . . . . 36
4.15. Stockholder Loans . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IV.A
ADDITIONAL AGREEMENTS OF THE XXXXXX INDEMNITORS
4A.1 No Solicitation of Transactions . . . . . . . . . . . . . . . 36
4A.2 Termination Agreement . . . . . . . . . . . . . . . . . . . . 37
4A.3 Buy-Sell Agreements . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
COVENANTS OF BUYER
5.1. Notification of Certain Matters . . . . . . . . . . . . . . . 37
ARTICLE VI
MUTUAL COVENANTS
6.1. Governmental Consents . . . . . . . . . . . . . . . . . . . . 37
6.2. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . 38
6.3. Additional Agreements . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation . . . . . . . . . . . . 38
7.2. Conditions to Obligation of Buyer . . . . . . . . . . . . . . 39
7.3. Conditions to Obligations of the Company and the Selling
Securityholders . . . . . . . . . . . . . . . . . . . . . . . 40
(ii)
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ARTICLE VIII
CLOSING
8.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . . 41
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X
INDEMNIFICATION
10.1. Indemnification of Buyer Indemnified Parties . . . . . . . . . 45
10.2. Indemnification of the Seller Indemnified Parties . . . . . . 47
10.3. Defense of Third-Party Claims . . . . . . . . . . . . . . . . 47
10.4. Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . 48
10.5. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.6. Recourse against Escrowed Funds . . . . . . . . . . . . . . . 50
10.7. Instructions to Escrow Agent . . . . . . . . . . . . . . . . . 54
10.8. Appointment of Atrium Indemnitor Representative . . . . . . . 55
10.9. Appointment of Xxxxxx Indemnitor Representative . . . . . . . 56
10.10. No Contribution . . . . . . . . . . . . . . . . . . . . . . . 57
10.11. Rights Under Xxxxxx Agreements . . . . . . . . . . . . . . . . 57
ARTICLE XI
GENERAL PROVISIONS
11.1. Survival of Representations, Warranties, and Covenants . . . . 58
11.2. Amendment and Modification . . . . . . . . . . . . . . . . . . 58
11.3. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . 58
11.4. Specific Performance . . . . . . . . . . . . . . . . . . . . . 58
11.5. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.6. Expenses and Obligations . . . . . . . . . . . . . . . . . . . 59
11.7. Parties in Interest . . . . . . . . . . . . . . . . . . . . . 60
11.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.9. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 61
11.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 61
(iii)
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11.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 61
11.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 62
11.13. Public Announcements . . . . . . . . . . . . . . . . . . . . . 62
11.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.15. Further Assurances . . . . . . . . . . . . . . . . . . . . . . 62
11.16. Director and Officer Liability . . . . . . . . . . . . . . . . 62
11.17. Certain Definitions . . . . . . . . . . . . . . . . . . . . . 62
11.18. No Waiver Relating to Claims for Fraud. . . . . . . . . . . . 64
(iv)
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EXHIBITS:
Exhibit A -- Form of Charter Amendment
Exhibit B -- Form of Bylaw Amendment
Exhibit C -- Form of Replacement Option Agreement
Exhibit D -- Form of Atrium Indemnification Escrow
Agreement
Exhibit E -- Form of Xxxxxx Indemnification Escrow
Agreement
Exhibit F -- Form of Seller Escrow Agreement
Exhibit G -- Form of Disposition Option Redemption
Agreement
Exhibit H -- The Atrium Corporation 1996 Stock Purchase
Plan
Exhibit I -- Form of Exercise Agreement
Exhibit J -- Form of Xxxxxx Buy-Sell Amendment
Exhibit K -- Form of Xxxxxxxx Escrow Amendment
Exhibit L -- Existing Plan Amendment
Exhibit M -- Atrium Corporation 1996 Stock Option Plan
Exhibit N -- Form of Stockholders Agreement
Exhibit O -- Form of Monitoring and Oversight Agreement
Exhibit P -- Form of Financial Advisory Agreement
Exhibit Q-1 -- Form of Xxxxxx Buy-Sell Agreement
Exhibit Q-2 -- Form of Xxxxxxxxxx Buy-Sell Agreement
Exhibit R -- Form of Termination Agreement
Exhibit S -- Form of Indemnification Agreement
Exhibit T -- Form of Opinion of Xxxxxxx, Xxxx & Xxxxx LLP
SCHEDULES:
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Schedule I -- Selling Securityholders
Schedule II -- Stockholders
Schedule III -- Option Holders
Schedule IV -- Common Stockholders and Results of
Redemption
Schedule V -- Indemnitors
Schedule VI -- Disposition Option Holders
Schedule VII -- Key Employees
Schedule VIII -- Selling Securityholders Who Will be Parties
to Certain Agreements
Schedule 2.1(a) -- Qualification to do Business and Good
Standing
Schedule 2.1(b) -- Subsidiaries
Schedule 2.1(c) -- Capital Structure
Schedule 2.1(e) -- Conflicts, Filings and Consents
Schedule 2.1(f) -- Unrecorded Liabilities and Conduct of
Business
Schedule 2.1(g) -- Licenses and Permits
Schedule 2.1(h) -- Litigation
Schedule 2.1(i) -- Insurance
Schedule 2.1(j) -- Real Estate
Schedule 2.1(k) -- Personal Property
Schedule 2.1(l) -- Liens
(v)
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Schedule 2.1(m) -- Environmental Matters
Schedule 2.1(o) -- Certain Agreements
Schedule 2.1(p) -- Employee Benefit Plans
Schedule 2.1(q) -- Patents, Trademarks; Etc.
Schedule 2.1(r) -- Affiliate Relationships
Schedule 2.1(u) -- Recent Monthly Balance Sheet
Schedule 2.1(v) -- Inventories
Schedule 2.1(w) -- Long-Term Indebtedness for Borrowed Money
(vi)
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of November 7, 1996, by and among Atrium Corporation, a Delaware
corporation (the "Company"), each of the persons identified on Schedule I (the
"Selling Securityholders") and HMTF Acquisition Corp., a Texas corporation
("Buyer").
R E C I T A L S
A. Each Selling Securityholder identified on Schedule II
(collectively, the "Stockholders") owns the number of shares of the Company's
Class A Voting, Class B Non-Voting and/or Class C Voting Common Stock, par
value $0.01 per share (collectively, the "Common Stock"), and/or Preferred
Stock, par value $1.00 per share ("Preferred Stock"), set forth opposite such
Stockholder's name in Column A of Schedule II.
B. Each Selling Securityholder identified on Schedule III
(collectively, the "Option Holders") holds options and/or warrants to purchase
the number of shares of Common Stock set forth opposite such Selling
Securityholder's name in Column A of Schedule III.
C. Buyer desires to purchase from the Company, and the Company
desires to issue and sell to Buyer, 32,000,000 shares (the "Purchase Shares")
of New Common Stock (hereinafter defined) in consideration for the Purchase
Price (hereinafter defined), upon the terms and subject to the conditions set
forth herein.
D. In connection with the contemplated issuance and sale of the
Purchase Shares to Buyer (the "Purchase"), the Company and the Stockholders
desire to amend and restate the Company's Certificate of Incorporation in order
to, among other things, (i) increase the number of shares of capital stock
which the Company is authorized to issue, (ii) effect a subdivision of the
outstanding shares of Common Stock, (iii) convert all authorized, issued and
outstanding shares of Common Stock into a single class of common stock, par
value $0.01 per share ("New Common Stock"), and (iv) convert all issued and
outstanding shares of Preferred Stock into the right to receive a cash payment,
upon the terms and subject to the conditions set forth herein.
E. In connection with the Purchase, the Company desires to redeem
from the Stockholders, and the Stockholders desire to sell to the Company,
certain shares of New Common Stock and all of the Preferred Stock owned by them
at the Closing (hereinafter defined), upon the terms and subject to the
conditions set forth herein.
F. In connection with the Purchase, (i) the Company and the Option
Holders desire to cancel certain options and all warrants held by such Option
Holders for cash and, with respect to options not so cancelled, effect certain
amendments thereto, and (ii) the Company desires to issue to certain Selling
Securityholders and certain other individuals options to purchase New Common
Stock after the Closing.
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A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:
ARTICLE I
THE PURCHASE; THE REDEMPTIONS; OTHER ACTIONS
1.1. Charter Amendment; Conversion.
(a) Charter Amendment. Upon the terms and subject to the
conditions set forth herein, prior to the Closing the Company shall take all
actions necessary to amend and restate its Certificate of Incorporation by
filing with the Delaware Secretary of State an Amended and Restated Certificate
of Incorporation in the form of Exhibit A hereto (the "Charter Amendment"),
executed by a duly authorized officer of the Company. By his, her or its
execution and delivery of this Agreement, each Stockholder hereby consents (in
his, her or its capacity as a stockholder of the Company) to the approval of
the Charter Amendment and to the execution and filing of the Charter Amendment
with the Delaware Secretary of State, and agrees that such Stockholder will not
withdraw, revoke, rescind or alter such consent in any way without the prior
written consent of Buyer.
(b) Conversion of Common Stock. Each share of Common Stock
shall, upon the filing of the Charter Amendment and without any further action
by the Company, any Stockholder or any other party, be converted into the right
to receive 602.8555 shares of New Common Stock, and as a result thereof each
Stockholder named in Part 1 of Schedule II shall have the right to receive the
number of shares of New Common Stock set forth opposite such Stockholder's name
in Column B of Part 1 of Schedule II, subject to the provisions of the Charter
Amendment relating to the cancellation of fractional shares upon such
conversion. As a result of their conversion upon the filing of the Charter
Amendment, all such converted shares of Common Stock (collectively, the
"Converted Common Shares") shall cease to be outstanding, and each certificate
previously evidencing the Converted Common Shares shall be deemed for all
purposes to evidence solely the right to receive shares of New Common Stock as
described in this Section 1.1(b).
(c) Conversion of Preferred Stock. The 11,000 shares of the
Company's Preferred Stock outstanding immediately prior to the filing of the
Charter Amendment, all of which are owned by Heritage Fund I, L.P.
("Heritage"), shall, upon the filing of the Charter Amendment and without any
further action by the Company, any Stockholder or any other party, be converted
into the right to receive the sum of (i) $12,397,150.68, plus (ii) $2,863.01
for each day from (but excluding) November 1, 1996 through (and including) the
Closing Date (the "Preferred Redemption Price"), and as a result of their
conversion upon the filing of the Charter Amendment, all such converted shares
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of Preferred Stock (collectively, the "Converted Preferred Shares") shall cease
to be outstanding, and each certificate previously evidencing the Converted
Preferred Shares shall be deemed for all purposes to evidence solely the right
to receive the pro rata amount of the Preferred Redemption Price represented
thereby as described in this Section 1.1(c). The Preferred Redemption Price
shall be paid (subject to Sections 1.7 and 1.9) by or on behalf of the Company
by wire transfer of immediately available funds to an account of Heritage
designated in writing to the Company prior to the Closing Date or, if not so
designated, by certified or official bank check payable in immediately
available funds to the order of Heritage. Heritage shall deliver to the
Company at the Closing, against payment (subject to Sections 1.7 and 1.9) of
the Preferred Redemption Price as provided herein, one or more share
certificates representing the Converted Preferred Shares.
1.2. Bylaw Amendment. Upon the terms and subject to the conditions
set forth herein, prior to the Closing the Company shall take all actions
necessary to amend and restate its Bylaws by causing Amended and Restated
Bylaws in the form of Exhibit B hereto (the "Bylaw Amendment") to be adopted by
the Company and to become the Company's Bylaws, and to be inserted into and
kept with the corporate records of the Company by a duly authorized officer of
the Company. By his, her or its execution and delivery of this Agreement, each
Stockholder hereby consents (in his, her or its capacity as a stockholder of
the Company) to the approval of the Bylaw Amendment, and agrees that such
Stockholder will not withdraw, revoke, rescind or alter such consent in any way
without the prior written consent of Buyer.
1.3. Purchase and Sale of Purchase Shares.
(a) Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, at Closing the Company shall issue and
sell to Buyer, and Buyer shall purchase from the Company, the Purchase Shares,
free and clear of all liens, security interests, claims, rights of another and
encumbrances of any kind or character. The Company shall deliver the Purchase
Shares to Buyer at the Closing by delivering to Buyer, against payment of the
Purchase Price as provided herein, a share certificate representing the total
number of Purchase Shares to be purchased by Buyer hereunder, executed by a
duly authorized officer of the Company.
(b) Purchase Price. The purchase price payable by Buyer to
the Company in consideration for the issuance and sale of the Purchase Shares
shall be $1.00 per share, for an aggregate purchase price equal to $32,000,000
(the "Purchase Price"). Payment of the Purchase Price shall be made at the
Closing by or on behalf of Buyer by wire transfer of immediately available
funds to an account of the Company designated in writing to Buyer prior to the
Closing Date or, if not so designated, by certified or official bank check
payable in immediately available funds to the order of the Company.
1.4. Redemption of New Common Stock. Upon the terms and subject to
the conditions set forth herein, at Closing the Company shall redeem (the
"Common Stock Redemption") from each Stockholder identified on Schedule IV, and
each such Stockholder shall sell, assign, transfer and convey to the Company,
the number of shares of New Common Stock set forth opposite such
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Stockholder's name in Column B of Schedule IV (collectively, the "Redeemed
Common Shares") in exchange for the amount set forth opposite such
Stockholder's name in Column C of Schedule IV (which represents a redemption
price of $1.00 per share for an aggregate of $48,068,776.53 (the "Common
Redemption Price")). Each such Stockholder's share of the Common Redemption
Price (as set forth opposite such Stockholder's name in Column C of Schedule
IV) shall be paid (subject to Sections 1.7 and 1.9) by or on behalf of the
Company to each such Stockholder at Closing by wire transfer of immediately
available funds to an account of such Stockholder designated in writing to the
Company prior to the Closing Date or, if not so designated, by certified or
official bank check payable in immediately available funds to the order of such
Stockholder. Each of the Stockholders named on Schedule IV shall deliver the
Redeemed Common Shares held by them to the Company at the Closing by delivering
to the Company, against payment (subject to Sections 1.7 and 1.9) of the Common
Redemption Price as provided herein, one or more share certificates
representing (as described in Section 1.1(b)) the right to receive the total
number of shares of New Common Stock set forth opposite the name of such
Stockholder in Column A of Schedule IV. Upon receipt of such stock
certificates, the Company shall issue to each such Stockholder a certificate
representing the total number of shares of New Common Stock set forth opposite
such Stockholder's name in Column D of Schedule IV, executed by a duly
authorized officer of the Company.
1.5. Warrant Redemption. Pursuant to the Warrant dated September 30,
1996, granted by the Company in favor of Heritage (the "Warrant"), Heritage has
been granted the right to acquire, under certain circumstances, 8,780,300.99
shares (assuming conversion as contemplated in Section 1.1(b)) of Common Stock
(the "Underlying Warrant Shares"). Upon the terms and subject to the
conditions set forth herein, at the Closing the Company shall redeem (the
"Warrant Redemption") from Heritage, and Heritage shall sell, assign, transfer
and convey to the Company, the Warrant in exchange for $1.00 per Underlying
Warrant Share, for an aggregate redemption price of $8,780,300.99 (the "Warrant
Redemption Price"). The Warrant Redemption Price shall be paid (subject to
Sections 1.7 and 1.9) at the Closing by or on behalf of the Company by wire
transfer of immediately available funds to an account of Heritage designated in
writing to the Company prior to the Closing Date or, if not so designated, by
certified or official bank check payable in immediately available funds to the
order of Heritage. Upon receipt by Heritage of the Warrant Redemption Price
(subject to Sections 1.7 and 1.9), the Warrant shall terminate and be of no
further force and effect and Heritage shall deliver to the Company at the
Closing the Warrant marked "CANCELLED" by a duly authorized representative of
Heritage.
1.6. Partial Redemption of Substitute Options; Replacement Options .
The Company and each Option Holder listed in Part 2 of Schedule III agree that
the sale of the Purchase Shares to Buyer and the consummation of the other
transactions contemplated in this Agreement constitute a "Disposition Event,"
as such term is defined in the Agreement(s) (each, a "Substitute Option
Agreement"), pursuant to which each such Option Holder has been granted the
right (each, a "Substitute Option") to acquire, under certain circumstances,
the number of shares of Common Stock (assuming conversion as contemplated in
Section 1.1(b)) set forth opposite such Option Holder's name in Column A of
Schedule III (collectively, the "Underlying Substitute Option Shares"). Upon
the terms and subject to the conditions set forth herein, at the Closing the
Company shall redeem (the
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"Substitute Option Redemption") from each Option Holder listed in Part 2 of
Schedule III, and each such Option Holder shall sell, assign, transfer and
convey to the Company, such Option Holder's right to acquire the number of
Underlying Substitute Option Shares set forth opposite such Option Holder's
name in Column C of Schedule III in exchange for the amount (subject to
Sections 1.7) set forth opposite such Option Holder's name in Column C of
Schedule III (which represents a redemption price of $1.00 for each such
Underlying Substitute Option Share, for an aggregate redemption price of
$1,825,922.24 (the "Substitute Option Redemption Price")). The Preferred Stock
Redemption, the Common Stock Redemption, the Warrant Redemption and the
Substitute Option Redemption are sometimes collectively referred to herein as
the "Redemptions." The Preferred Redemption Price, the Common Redemption
Price, the Warrant Redemption Price and the Substitute Option Redemption Price,
when added together, are collectively referred to herein as the "Redemption
Price." Each such Option Holder's share of the Substitute Option Redemption
Price (as set forth opposite such Option Holder's name in Column C of Schedule
III) shall be paid (subject to Section 1.7 and any applicable withholding
requirements) at Closing by or on behalf of the Company by wire transfer of
immediately available funds to an account of such Option Holder designated in
writing to the Company prior to the Closing Date or, if not so designated, by
certified or official bank check payable in immediately available funds to the
order of such Option Holder. At the Closing and simultaneously with such
Option Holder's receipt of the portion of the Substitute Option Redemption
Price set forth opposite such Option Holder's name in Column C of Schedule III,
the Company and each such Option Holder shall execute and deliver a Replacement
Option Agreement in the form of Exhibit C (each, a "Replacement Option
Agreement") pursuant to which, among other things, such Option Holder's
Substitute Option Agreement shall be amended and restated to provide that the
number of shares of New Common Stock which such Option Holder shall be entitled
to acquire upon exercise of such option shall be equal to the number of shares
of New Common Stock set forth opposite such Option Holder's name in Column D of
Schedule III.
1.7. Escrows.
(a) Atrium Indemnitors. Pursuant to Article X hereof, the
Selling Securityholders listed on Part 1 of Schedule V (the "Atrium
Indemnitors") have jointly and severally agreed to indemnify the Buyer
Indemnified Parties (hereinafter defined) from and against certain Buyer
Indemnified Costs (hereinafter defined). On or prior to Closing, Heritage, the
Atrium Indemnitor Representative (hereinafter defined) (on behalf of the Atrium
Indemnitors other than Heritage), Buyer and Citibank, N.A. (or such other
person as Buyer, Heritage and the Atrium Indemnitor Representative shall
mutually select) (the "Escrow Agent") shall enter into an Indemnification
Escrow Agreement in the form of Exhibit D, subject only to the comments, if
any, of the Escrow Agent as to its rights and obligations thereunder (the
"Atrium Indemnification Escrow Agreement"). Notwithstanding any other
provision in this Agreement to the contrary, in order to secure the indemnity
obligations of the Atrium Indemnitors to the Buyer Indemnified Parties under
this Agreement, a portion of the Redemption Price which would otherwise be
delivered to the Atrium Indemnitors at Closing equal to $2,000,000 (the "Atrium
Escrowed Amount") shall be deposited into and held in escrow pursuant to the
terms of the Atrium Indemnification Escrow Agreement. The Company is directed
by each Atrium Indemnitor to deposit the amount set forth opposite such
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Atrium Indemnitor's name in Column A of Schedule V with the Escrow Agent at the
Closing and the Company shall make such deposit as directed.
(b) Xxxxxx Indemnitors. Pursuant to Article X hereof, the
Selling Securityholders listed on Part 2 of Schedule V (the "Xxxxxx
Indemnitors") have agreed to indemnify the Buyer Indemnified Parties from and
against certain Buyer Indemnified Costs. Pursuant to (i) the Stock Purchase
Agreement (the "Xxxxxx Purchase Agreement") dated as of August 22, 1996 by and
among Xxxxxxxx Companies, Inc. and the Xxxxxx Indemnitors and (ii) the
Securities Exchange Agreement (the "Xxxxxx Exchange Agreement", and
collectively with the Xxxxxx Purchase Agreement, the "Xxxxxx Agreements") dated
as of August 22, 1996 by and among the Company, FCI Holding Corp., the Xxxxxx
Indemnitors and the FCI Holders (as defined in the Xxxxxx Exchange Agreement),
the Xxxxxx Indemnitors have also agreed to indemnify the Company, FCI Holding
Corp., the FCI Holders (as defined in the Xxxxxx Exchange Agreement), Xxxxxxxx
Companies, Inc., the Xxxxxx Subsidiaries (hereinafter defined) and their
respective directors, officers, employees and affiliates (collectively, the
"Xxxxxx Indemnitees") from and against certain "Losses" (as defined in Section
13.1 of the Xxxxxx Purchase Agreement and Section 11.1 of the Xxxxxx Exchange
Agreement, also referred to herein as "Losses"). On or prior to Closing, the
Company, the Xxxxxx Indemnitor Representative (hereinafter defined) (on behalf
of the Xxxxxx Indemnitors), Buyer and Escrow Agent shall enter into, and the
Company shall cause Xxxxxxxx Companies, Inc. to enter into, an Indemnification
Escrow Agreement in the form of Exhibit E, subject only to the comments, if
any, of Escrow Agent as to its rights and obligations thereunder (the "Xxxxxx
Indemnification Escrow Agreement") and the Company and the Xxxxxx Indemnitor
Representative shall enter into, and the Company shall cause Xxxxxxxx
Companies, Inc. to enter into, and use its best efforts to cause Xxxxxxx, Xxxx
& Xxxxx LLP to enter into, the Xxxxxx Buy-Sell Amendment referred to in Section
1.8(c). Notwithstanding any other provision in this Agreement to the contrary,
in order to secure (i) the indemnity obligations of the Xxxxxx Indemnitors to
the Buyer Indemnified Parties under this Agreement, and (ii) the indemnity
obligations of the Xxxxxx Indemnitors to the Xxxxxx Indemnitees under the
Xxxxxx Agreements, a portion of the Redemption Price which would otherwise be
delivered to the Xxxxxx Indemnitors at Closing equal to $3,000,000 (the "Xxxxxx
Escrowed Amount") shall be deposited into and held in escrow pursuant to the
terms of the Xxxxxx Indemnification Escrow Agreement. The Company is directed
by each Xxxxxx Indemnitor to deposit the amount set forth opposite such Xxxxxx
Indemnitor's name in Column A of Schedule V with the Escrow Agent at the
Closing, and the Company shall make such deposit as directed. Subject to the
provisions of this Section 1.7(b) and the provisions of Section 1.7(c) below,
the remaining portion of each Xxxxxx Indemnitor's share of the Common
Redemption Price shall be paid by the Company to such Xxxxxx Indemnitor at
Closing upon the terms and conditions set forth in Section 1.4.
(c) Selling Securityholders. On or prior to the Closing,
Heritage, the Selling Securityholder Representative (hereinafter defined) and
State Street Bank and Trust Company (or such other person as Heritage and the
Selling Securityholder Representative shall mutually select) (the "Seller
Escrow Agent") shall enter into an Atrium Corporation Selling Securityholders'
Escrow Agreement in the form of Exhibit F, subject only to the comments, if
any, of the Seller Escrow Agent as to its rights and obligations thereunder
(the "Seller Escrow Agreement"). Notwithstanding any
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other provision in this Agreement to the contrary, a portion of the Redemption
Price which would otherwise be delivered to the Selling Securityholders at
Closing equal to $400,000 (the "Seller Expense Holdback Amount") shall be
utilized for the payment of those fees and expenses of the Company and the
Selling Securityholders resulting from or related to the transactions
contemplated hereby which are to be borne by and are payable by the Selling
Securityholders pursuant to Section 11.6 below, and the amount (the "Seller
Escrowed Amount") by which the Seller Expense Holdback Amount exceeds the
aggregate amount of such fees and expenses paid at Closing shall be deposited
into and held in escrow pursuant to the terms of the Seller Escrow Agreement in
order to secure the payment of any such fees and expenses not paid at Closing.
The Company is directed by each Selling Securityholder to pay at Closing such
fees and expenses (including fees and expenses previously incurred by the
Company and its subsidiaries which the Selling Securityholders are required to
bear pursuant to Section 11.6) as Heritage and the Selling Securityholder
Representative may direct in instructions to be delivered in writing prior to
the Closing Date, and to deposit the Seller Escrowed Amount (if any) with the
Seller Escrow Agent, and the Company shall make such payments and deposits as
directed; provided that the aggregate amount so paid or deposited by the
Company shall not exceed the Seller Expense Holdback Amount.
By execution and delivery of this Agreement, each Selling Securityholder
(other than Heritage) hereby irrevocably constitutes and appoints Xxxxxxx X.
Xxxxxxxx as the true and lawful agent and attorney-in-fact (the "Selling
Securityholder Representative") of such Selling Securityholder with full power
of substitution to act in the name, place and stead of such Selling
Securityholder with respect to (a) the power to execute the Seller Escrow
Agreement and any amendment thereto as the Selling Securityholder
Representative shall deem necessary or appropriate in his sole discretion, (b)
delivery of written instructions to the Seller Escrow Agent to release the
Seller Escrowed Amount, and (c) the performance of the obligations and rights
of such Selling Securityholder under the Seller Escrow Agreement, including,
without limitation, the power to do or refrain from doing all such further acts
and things, and to execute, deliver and receive all such documents, waivers,
extensions and amendments as such Selling Securityholder Representative shall
deem necessary or appropriate in his sole discretion in connection with the
administration of the Seller Escrow Agreement (and any such actions shall be
binding on such Selling Securityholder).
Buyer, the Company, Heritage and any other person may conclusively and
absolutely rely, without inquiry, upon any action of the Selling Securityholder
Representative as the action of each Selling Securityholder (other than
Heritage) in all matters referred to in this Section 1.7(c), and each such
Selling Securityholder confirms all that the Selling Securityholder
Representative shall do or cause to be done by virtue of his appointment as
Selling Securityholder Representative. All actions taken by the Selling
Securityholder Representative are acknowledged by the parties hereto to be
taken by it solely as agent and attorney-in-fact for each Selling
Securityholder (other than Heritage). By the execution of this Agreement,
Xxxxxxx X. Xxxxxxxx has accepted his appointment as Selling Securityholder
Representative and in consideration for Xxxxxxx X. Xxxxxxxx'x agreement to act
as the Selling Securityholder Representative, each Selling Securityholder
(other than Heritage) hereby agrees to indemnify and hold Xxxxxxx X. Xxxxxxxx
harmless from and against all damages, losses, liabilities, charges, penalties,
costs and expenses (including court costs and attorneys' fees and
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expenses, if any) incurred by him in connection with his performance as Selling
Securityholder Representative. Each Selling Securityholder (other than
Heritage) covenants and agrees that he or she will not voluntarily revoke the
power of attorney conferred in this Section 1.7(c). If any Selling
Securityholder dies or becomes incapacitated, disabled or incompetent (such
deceased, incapacitated, disabled or incompetent Selling Securityholder being a
"Former Selling Securityholder") and, as a result, the power of attorney
conferred by this Section 1.7(c) is revoked by operation of law, it shall not
be a breach under this Agreement if the heirs, beneficiaries, estate,
administrator, executor, guardian, conservator or legal representative of such
Former Selling Securityholder (each a "Successor Selling Securityholder")
confirms the appointment of the Selling Securityholder Representative as agent
and attorney-in-fact for such Successor Selling Securityholder. If at any time
Xxxxxxx X. Xxxxxxxx dies or resigns from his position as the Selling
Securityholder Representative, the other Selling Securityholders (other than
Heritage) shall designate a successor to Xxxxxxx X. Xxxxxxxx as soon as
practicable.
1.8. Other Actions.
(a) Disposition Option Redemption. The Company and each
person listed in Schedule VI (each, a "Disposition Option Holder") have
previously entered into an Agreement (each, a "Disposition Option Agreement"),
pursuant to which each such Disposition Option Holder has been granted the
right (each, a "Disposition Option") to acquire, under certain circumstances,
the number of shares of Common Stock set forth opposite such Disposition Option
Holder's name in Column A of Schedule VI (collectively, the "Underlying
Disposition Option Shares"). The Company represents and warrants to Buyer that
the Company and each of the Disposition Option Holders listed in Schedule VI
have entered into a Redemption Agreement in the form of Exhibit G (each, a
"Disposition Option Redemption Agreement"), pursuant to which the Company has
agreed to redeem (the "Disposition Option Redemption") from each such
Disposition Option Holder, and each such Disposition Option Holder has agreed
to sell, assign, transfer and convey to the Company, the Disposition Option
owned by such Disposition Option Holder in exchange for the amount (subject to
applicable withholding) set forth opposite such Disposition Option Holder's
name in Column B of Schedule VI, for an aggregate redemption price of $742,500
(the "Disposition Option Redemption Price")). The Company agrees that it shall
not, and shall not agree to, terminate, amend, modify, supplement or otherwise
alter any of the Disposition Stock Option Redemption Agreements, or waive any
provision thereunder, prior to Closing without the prior written consent of
Buyer. The Company shall comply with, and will use its best efforts to cause
the Disposition Option Holders to comply with, all covenants, obligations or
undertakings made by any of them under the Disposition Option Redemption
Agreements.
(b) Employee Stock Purchases.
(i) Atrium Corporation 1996 Stock Purchase Plan.
Attached to this Agreement as Exhibit H is the Atrium Corporation 1996 Employee
Stock Purchase Plan (the "1996 Stock Purchase Plan"). By his, her or its
execution and delivery of this Agreement, each Stockholder (in his, her or its
capacity as a stockholder of the Company) hereby consents to the adoption of
the
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1996 Stock Purchase Plan and agrees that such Stockholder will not withdraw,
revoke, rescind or alter such consent in any way without the prior written
consent of Buyer. The Company and each of the Selling Securityholders agree
that they shall not amend, modify, supplement or otherwise alter the 1996 Stock
Purchase Plan prior to Closing without the prior written consent of Buyer.
(ii) Exercise Agreements. The Company represents and
warrants to Buyer that the Company and each of the individuals named on
Schedule VII (the "Key Employees") have, pursuant to the 1996 Stock Purchase
Plan, entered into an Exercise Agreement in the form of Exhibit I hereto (each,
an "Exercise Agreement"), pursuant to which the Company has agreed to issue and
sell to each Key Employee, and each Key Employee has agreed to purchase from
the Company, the number of shares of New Common Stock set forth opposite such
Key Employee's name on Schedule VII (collectively, the "Key Employee Shares")
in exchange for an exercise price of $1.00 per share, for an aggregate exercise
price of $375,000 (the "Key Employee Purchase Price"). The Company agrees that
it shall not, and shall not agree to, terminate, amend, modify, supplement or
otherwise alter, or waive any provision under, any of the Exercise Agreements
prior to Closing without the prior written consent of Buyer. The Company shall
comply with, and will use its best efforts to cause the Key Employees to comply
with, all covenants, obligations or undertakings made by any of them under the
Exercise Agreements.
(c) Amendment to Xxxxxx Buy-Sell Agreement. The Company,
Xxxxxxxx Companies, Inc., the Xxxxxx Indemnitors and Xxxxxxx, Xxxx & Xxxxx LLP
have entered into the Buy-Sell Agreement (the "Xxxxxx Buy-Sell Agreement")
dated as of September 30, 1996. At the Closing, the Company and each of the
Xxxxxx Indemnitors shall, and the Company shall cause Xxxxxxxx Companies, Inc.
to, and the Company and the Xxxxxx Indemnitors shall use their best efforts to
cause Xxxxxxx, Xxxx & Xxxxx LLP to, execute and enter into an amendment to the
Xxxxxx Buy-Sell Agreement in the form of Exhibit J hereto (the "Xxxxxx Buy-Sell
Amendment").
(d) Xxxxxxxx Escrow Amendment. Pursuant to the Stock Purchase
Agreement (the "Xxxxxxxx Purchase Agreement") dated as of July 3, 1995 by and
between Xxxxxxxx/Heritage Acquisition Company and the stockholders listed on
Part 3 of Schedule V hereto (collectively, the "Xxxxxxxx Indemnitors"), the
Xxxxxxxx Indemnitors have agreed to indemnify Xxxxxxxx/Heritage Acquisition
Company, Xxxxxxxx Companies, Inc. and their respective directors, officers,
employees and affiliates (collectively, the "Xxxxxxxx Indemnitees") from
certain Damages (as defined in the Xxxxxxxx Purchase Agreement). To secure the
obligations of the Xxxxxxxx Indemnitors under the Xxxxxxxx Purchase Agreement,
Xxxxxxxx/Heritage Acquisition Company, the Xxxxxxxx Indemnitors and The First
National Bank of Boston, as escrow agent, entered into that certain Escrow
Agreement dated as of July 3, 1995 (the "Xxxxxxxx Escrow Agreement"). In order
to secure certain specific indemnity obligations of the Atrium Indemnitors to
the Buyer Indemnified Parties under this Agreement and to limit continuing
indemnity obligations of the Xxxxxxxx Indemnitors to the Xxxxxxxx Indemnitees
under the Xxxxxxxx Purchase Agreement, at the Closing the Company, Buyer and
the Xxxxxxxx Indemnitors shall, and the Company shall cause Xxxxxxxx Companies,
Inc. to, and the Company, Buyer and the Xxxxxxxx Indemnitors shall use their
best efforts to cause State Street Bank and Trust Company, as successor to The
First National Bank of Boston (the "Xxxxxxxx Escrow
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Agent") to, amend and restate the Xxxxxxxx Escrow Agreement in the form of
Exhibit K hereto, subject only to the comments, if any, of the Xxxxxxxx Escrow
Agent as to its rights and obligations thereunder (the "Xxxxxxxx Escrow
Amendment").
(e) Atrium Corporation 1996 Original Stock Option Plan.
Attached to this Agreement as Exhibit L is an amendment and restatement of the
Atrium Corporation 1996 Stock Option Plan (the "Existing Plan Amendment"). By
his, her or its execution and delivery of this Agreement, each Stockholder (in
his, her or its capacity as a stockholder of the Company) and each Option
Holder named in Part 2 of Schedule III hereto (in his, her or its capacity as a
holder of Substitute Options) hereby consents to the adoption of the Existing
Plan Amendment and agrees that such Stockholder or Option Holder will not
withdraw, revoke, rescind or alter such consent in any way without the prior
written consent of Buyer. The Company and each of the Selling Securityholders
agree that they shall not amend, modify, supplement or otherwise alter the
Existing Plan Amendment prior to Closing without the prior written consent of
Buyer.
(f) Atrium Corporation 1996 Employee Stock Option Plan.
Attached to this Agreement as Exhibit M is the Atrium Corporation 1996 Employee
Stock Option Plan (the "1996 Option Plan"). By his, her or its execution and
delivery of this Agreement, each Stockholder (in his, her or its capacity as a
stockholder of the Company) hereby consents to the adoption of the 1996 Option
Plan and agrees that such Stockholder will not withdraw, revoke, rescind or
alter such consent in any way without the prior written consent of Buyer. The
Company and each of the Selling Securityholders agree that they shall not
amend, modify, supplement or otherwise alter the 1996 Option Plan prior to
Closing without the prior written consent of Buyer. At the Closing the Company
will issue to each person listed in Part 3 of Schedule III (each, a "Grantee")
an option (each, a "1996 Option") to purchase the number of shares of New
Common Stock set forth opposite the name of such Grantee in Column E of
Schedule III (collectively, the "Underlying 1996 Option Shares"). At the
Closing the Company and each Grantee shall execute and enter into a Stock
Option Agreement in the form attached to the 1996 Option Plan (each, a "1996
Option Agreement"), each of which shall provide that (i) each Grantee shall
receive the right to acquire the number of Underlying 1996 Option Shares set
forth opposite such Grantee's name in Column E of Schedule III, (ii) the
exercise price per Underlying 1996 Option Share shall be as set forth opposite
such Grantee's name in Column F of Schedule III, and (iii) such option shall
vest (and have such other terms) as described in Column G of Schedule III.
1.9. Withholding of Redemption Price Payable to Heritage. The Board
of Directors of the Company has agreed to pay to Xxxxxxx X. Xxxxxxxx a bonus of
$3,000,000. Heritage has agreed to provide a portion of the funds necessary to
pay such bonus. Notwithstanding any other provision in this Agreement to the
contrary, Heritage and the Company agree with Buyer that a portion of the
Redemption Price which would otherwise be delivered to Heritage at Closing
equal to $2,000,000 shall be withheld by the Company for the purpose of
permitting the Company to fund a portion of such bonus. The Company agrees
with Heritage and Buyer that such amount (subject to applicable withholding)
shall be paid to Xxxxxxx X. Xxxxxxxx at Closing. By his, her or its execution
and delivery of this Agreement, each Stockholder (in his, her or its capacity
as a stockholder of the
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Company) hereby consents to the payment by the Company to Xxxxxxx X. Xxxxxxxx
of a $3,000,000 bonus at Closing and agrees with Buyer and Heritage that such
Stockholder will not withdraw, revoke, rescind or alter such consent in any
way.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of the Company. The Company and
each Atrium Indemnitor hereby jointly and severally represent and warrant to
Buyer as follows (with the understanding that Buyer is relying on such
representations and warranties in entering into and performing this Agreement):
(a) Organization, Good Standing, Etc. Each of the Company and
its subsidiaries (as defined in Section 11.17) is a corporation or other entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (or organization), has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted and is duly qualified and in good standing
to do business in each state listed on Schedule 2.1(a), which states represent
every jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure to so qualify or be in good standing has not had, or could not be
reasonably expected to have, a Material Adverse Effect. The Company has
delivered to Buyer true and complete copies of the Certificates or Articles of
Incorporation and Bylaws (or equivalent organizational documents) of the
Company and each of its subsidiaries, as in effect at the date of this
Agreement. Neither the Company nor any subsidiary is in violation of any
provisions of its Certificate or Articles of Incorporation, Bylaws or
equivalent organizational documents.
(b) Subsidiaries of the Company. Schedule 2.1(b) sets forth a
true and complete list of all of the Company's subsidiaries, together with the
jurisdiction of incorporation or organization of each such subsidiary and the
percentage of each such subsidiary's outstanding capital stock or other equity
interests owned by the Company or another subsidiary of the Company. Except as
disclosed on Schedule 2.1(b), the Company does not own, directly or indirectly,
any subsidiaries or own, or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other similar
investment in any corporation, partnership, joint venture, association, limited
liability company, trust or other entity.
(c) Capital Structure. Immediately prior to the Closing and
the consummation of the transactions described in Article I hereof, the
authorized capital stock of the Company consists of (i) 350,000 shares of
Common Stock, 150,000 of which are designated "Class A Voting Common Stock,"
150,000 of which are designated "Class B Non-Voting Common Stock" and 50,000 of
which are designated "Class C Voting Common Stock," and (ii) 50,000 shares of
Preferred Stock. There are 30,545.40 shares of Class A Voting Common Stock,
29,709.78 shares of Class B Non-Voting
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Common Stock, 30,386.4 shares of Class C Voting Common Stock and 11,000 shares
of Preferred Stock issued and outstanding. No shares of Common Stock or
Preferred Stock are held by the Company in its treasury. Except for 34,770.5
shares of Class B Non-Voting Common Stock which are reserved for issuance upon
the exercise of the options and warrants listed on Schedule 2.1(c), no shares
of capital stock of the Company are reserved for issuance for any other
purpose. As of the date hereof, there are no bonds, debentures, notes or other
indebtedness issued or outstanding having the right to vote ("Voting Debt") on
any matters on which holders of Common Stock or Preferred Stock may vote. All
of the issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive or similar rights. Except as disclosed
on Schedule 2.1(c), there are no options, warrants, calls, rights, commitments
or agreements of any character to which the Company or any of its subsidiaries
is a party or by which any of them is bound obligating the Company or any of
its subsidiaries to issue, deliver, or sell, or cause to be delivered or sold,
additional shares of capital stock or any Voting Debt of the Company or any of
its subsidiaries, or obligating the Company or any of its subsidiaries to
grant, extend or enter into any such option, warrant, call, right, commitment
or agreement. Except as disclosed on Schedule 2.1(c), there are no outstanding
contractual obligations of the Company or any subsidiary to repurchase, redeem
or otherwise acquire any shares of Common Stock, Preferred Stock or other
capital stock of the Company or any capital stock of, or any equity interest
in, any subsidiary listed on Schedule 2.1(b). Schedule 2.1(c) also sets forth
the capitalization of each subsidiary of the Company listed on Schedule 2.1(b),
including the number of authorized shares of each class of capital stock and
the par value (if any) thereof, the number of shares of each class of capital
stock held in the treasury of the subsidiary, and the number of issued and
outstanding shares of each class of capital stock and the names of (and number
of shares held by) the record owners thereof. All the issued and outstanding
shares of capital stock of each subsidiary of the Company are duly authorized,
validly issued, fully paid and nonassessable and have not been issued in
violation of any preemptive or similar rights.
(d) Authority. The Company, and each subsidiary of the
Company, if applicable, has all requisite corporate power and authority to
enter into this Agreement and each other agreement, document and instrument
required to be executed in accordance herewith, including, without limitation,
each of the documents the forms of which are attached as Exhibits hereto
(collectively, the "Transaction Documents"), to which the Company or such
subsidiary is to be a party and to consummate the transactions contemplated
hereby or thereby. The execution and delivery of the Transaction Documents by
the Company, and each subsidiary of the Company, if applicable, and the
consummation by the Company and each such subsidiary of the transactions
contemplated thereby have been duly authorized by all necessary corporate
action on the part of the Company and each such subsidiary. This Agreement has
been, and at Closing each of the other Transaction Documents to which the
Company or any subsidiary of the Company, if applicable, is to be a party will
be, duly executed and delivered by the Company and each such subsidiary, and
this Agreement constitutes, and upon execution and delivery thereof by the
Company or any such subsidiary, the other Transaction Documents to which the
Company or any such subsidiary is to be a party will constitute, the valid and
binding obligations of the Company and each such subsidiary, enforceable
against it in accordance with its respective terms, subject to applicable
bankruptcy,
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insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). Without limiting
the other representations and warranties set forth in this Section 2.1(d), (i)
the Charter Amendment has been unanimously approved by the members of the
Company's Board of Directors and by each holder of the Company's capital stock
entitled to vote on the approval of the Charter Amendment, (ii) the Bylaw
Amendment has been unanimously approved by the members of the Company's Board
of Directors and by each holder of the Company's capital stock entitled to vote
on the approval of the Bylaw Amendment, (iii) the 1996 Option Plan has been
unanimously approved by the members of the Company's Board of Directors and by
each holder of the Company's capital stock entitled to vote on the approval of
the 1996 Option Plan, (iv) the 1996 Stock Purchase Plan has been unanimously
approved by the members of the Company's Board of Directors and by each holder
of the Company's capital stock entitled to vote on the approval of the 1996
Stock Purchase Plan, (v) the 1996 Option Plan shall automatically become
effective at the Closing without any further action by any party, and (vi) no
other consents or approvals are required from any person in order to approve
the Charter Amendment, the Bylaw Amendment, the 1996 Option Plan or the 1996
Stock Purchase Plan.
(e) No Conflict; Required Filings and Consents. Except as
disclosed on Schedule 2.1(e), the execution and delivery of the Transaction
Documents by the Company and its subsidiaries, as applicable, do not, and the
performance by the Company and its subsidiaries, as applicable, of the
transactions contemplated hereby or thereby will not, subject to making the
filings and obtaining the consents, approvals, authorizations and permits
described in this Section 2.1(e), (i) violate, conflict with, or result in any
breach of any provision of the Certificates or Articles of Incorporation or
Bylaws or equivalent organizational documents, in each case as amended or
restated, of the Company or any of its subsidiaries, (ii) violate, conflict
with, or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under, or permit the termination
of, or result in the acceleration of, or entitle any party to accelerate
(whether as a result of a change in control of the Company or any of its
subsidiaries or otherwise) any obligation, or result in the loss of any
benefit, or give any person the right to require any security to be
repurchased, or give rise to the creation of any lien, charge, security
interest or encumbrance upon any of the properties or assets of the Company or
any of its subsidiaries under any of the terms, conditions, or provisions of,
any loan or credit agreement, note, bond, mortgage, indenture or deed of trust,
or any license, lease, agreement or other instrument or obligation to which any
of them is a party or by which any of them or any of their properties or assets
may be bound or subject, except for such violations, conflicts, breaches,
defaults, terminations, accelerations, losses or other such events as have not
had, or could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, or (iii) violate any order, writ,
judgment, injunction, decree, statute, rule or regulation of any court or any
federal, state or local administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity") applicable
to the Company or any of its subsidiaries or by which or to which any of their
respective properties or assets is bound or subject ("Applicable Laws"), except
for such violations as have not had, or could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. No consent,
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approval, order, or authorization of, or registration, declaration, or filing
with, any Governmental Entity is required by or with respect to the Company or
any of its subsidiaries in connection with the execution and delivery of the
Transaction Documents by the Company or the consummation of the transactions
contemplated hereby or thereby, except for (A) the filing of a premerger
notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and (B) applicable requirements, if any, of
the Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and state
securities or blue sky laws.
(f) Reports; Financial Statements; Absence of Certain Changes
or Events.
(i) The Company and its subsidiaries have filed all
forms, reports, statements and other documents required to be filed with
any and all Governmental Entities (all such forms, reports, statements
and other documents being referred to herein, collectively, as the
"Company Reports"), other than those which the failure to file has not
had, or could not reasonably be expected to have, a Material Adverse
Effect. The Company Reports were prepared in accordance with the
requirements of Applicable Law.
(ii) The Company has delivered to Buyer copies of (A)
the audited consolidated balance sheets of FCI Holding Corp. ("FCI") as
of December 31, 1995, December 31, 1994 and December 31, 1993, together
with the related audited consolidated statements of income,
stockholders' equity and cash flows of FCI for the periods then ended,
and the notes thereto, accompanied by the report thereon of Xxxxxx
Xxxxxxxx LLP, independent public accountants (collectively, the "Audited
Financial Statements"), (B) the unaudited consolidated balance sheet of
FCI as of September 30, 1996 (the "Balance Sheet"), together with the
related unaudited consolidated statement of income and stockholder's
equity of FCI for the six months then ended (collectively, the
"Unaudited Financial Statements," and together with the Audited
Financial Statements, the "Financial Statements"). The Financial
Statements, including the notes thereto, were prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered
thereby (except to the extent disclosed therein or required by changes
in GAAP) and present fairly the consolidated financial position, results
of operations, stockholders' equity and cash flows of FCI as of such
dates and for the periods then ended.
(iii) Except as disclosed in Schedule 2.1(f), there is no
liability or obligation of any kind, whether accrued, absolute, fixed,
contingent or otherwise, of FCI or its subsidiaries that is not
reflected or reserved against in the Balance Sheet, other than (A)
liabilities incurred in the ordinary course of business in a manner
consistent with past practice since September 30, 1996 (the "Balance
Sheet Date"), or (B) any such liability or obligation which would not be
required to be presented in financial statements prepared in conformity
with GAAP, applied in a manner consistent with past practice, in the
preparation of the Financial Statements.
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(iv) Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date, the Company and its subsidiaries have conducted
their respective businesses only in the ordinary course consistent with
past practice and nothing has occurred that would have been prevented by
Section 3.1 if the terms of such section had been in effect as of and
after the Balance Sheet Date. Since the Balance Sheet Date, there has
been no material adverse change in the business, operations, properties,
condition (financial or otherwise), results of operations, assets,
liabilities or prospects of the Company or its subsidiaries.
(g) Compliance with Applicable Laws.
(i) Except as set forth in Part I of Schedule 2.1(g),
the businesses of the Company and its subsidiaries have been conducted
in compliance with each applicable law, ordinance, regulation, judgment,
decree, injunction, rule or order of any Governmental Entity binding on
the Company or any of its subsidiaries or their respective properties or
assets ("Applicable Laws"), except for such failures to comply as have
not had, or could not reasonably be expected to have, a Material Adverse
Effect. No investigation or review by any Governmental Entity with
respect to the Company or any of its subsidiaries is pending or, to the
Knowledge of the Company, threatened.
(ii) Part II of Schedule 2.1(g) lists all material
licenses, permits, permissions or authorizations issued to the Company
or any of its subsidiaries by any Governmental Entities and held by them
as of the date of this Agreement. Such licenses, permits, permissions
and authorizations, and all applications for modification, extension, or
renewal thereof or for new licenses, permits, permissions or
authorizations are collectively referred to herein as the "Licenses."
Part II of Schedule 2.1(g) lists the legally authorized holder(s) of the
Licenses, each of which is in full force and effect. The businesses of
the Company and its subsidiaries have been operated in all material
respects in accordance with the terms of the Licenses. There are no
proceedings pending or, to the Knowledge of the Company, threatened with
respect to the Company or any of its subsidiaries which reasonably may
be expected to result in the revocation, material adverse modification,
non-renewal or suspension of any of the Licenses, the denial of any
pending applications for Licenses, the issuance against the Company or
any of its subsidiaries of any cease and desist order, or the imposition
of any administrative actions by any Governmental Entity with respect to
the Licenses, or which reasonably may be expected to materially
adversely affect the ability of the Company and its subsidiaries to
operate as currently operated.
(h) Absence of Litigation. Except as set forth on Schedule
2.1(h), there is no claim, action, suit, inquiry, judicial or administrative
proceeding, grievance or arbitration pending or, to the Knowledge of the
Company, threatened against the Company or any of its subsidiaries or any of
their respective properties or assets by or before any arbitrator or
Governmental Entity, nor to the Knowledge of the Company are there any
investigations relating to the Company or any of its subsidiaries or any of
their respective properties or assets pending or threatened by or before any
arbitrator or Governmental Entity. Except as set forth in Schedule 2.1(h),
there is no judgment,
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decree, injunction, order, determination, award, finding or letter of
deficiency of any Governmental Entity or arbitrator outstanding against the
Company or any of its subsidiaries or any of their respective properties or
assets. There is no action, suit, inquiry, judicial or administrative
proceeding pending or, to the Knowledge of the Company, threatened against the
Company or any of its subsidiaries relating to the transactions contemplated by
this Agreement and the other Transaction Documents. Except as set forth on
Schedule 2.1(h), there are no unfunded settlements or other settlements or
letters of commitment or conciliation agreements that the Company has entered
into with any party, including any Governmental Entity.
(i) Insurance. During each of the past five calendar years
the Company and each of its subsidiaries have been insured against such risks
as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured. Schedule 2.1(i) sets forth a
summary of all fire, general liability, malpractice liability, theft and other
forms of insurance and all fidelity bonds held by or applicable to the Company
or any of its subsidiaries. No event has occurred, including the failure by
the Company or any of its subsidiaries to give any notice or information or the
delivery of any inaccurate or erroneous notice or information, which limits or
impairs the rights of the Company or any of its subsidiaries under any such
insurance policies in such a manner as could have a Material Adverse Effect.
Excluding insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled within the
last two years prior to the date hereof.
(j) Real Estate. Each of the Company and its subsidiaries has
good and marketable title in fee simple to all real properties owned by it and
valid leaseholds in all real estate leased by it, except to the extent
marketability may be affected by the existence of Permitted Liens (as defined
in Section 2.1(l)). Schedule 2.1(j) contains a complete and accurate list of
each lease agreement relating to parcels of real property leased by the Company
or any of its subsidiaries, true and complete copies of which have previously
been delivered to Buyer. Each such lease is valid, without default thereunder
by the lessee or, to the Knowledge of the Company, the lessor. Schedule 2.1(j)
lists (i) the street address of each parcel of real property owned by the
Company or any of its subsidiaries, and (ii) the street address for each parcel
of real property leased by the Company or any of its subsidiaries under leases
with a term other than month-to-month.
(k) Personal Property. Except for property held under capital
leases, the Company and its subsidiaries have good title to all the items of
machinery, equipment, furniture, fixtures, inventory, receivables and other
tangible or intangible personal property reflected on the Balance Sheet and all
such property acquired by the Company or its subsidiaries since the Balance
Sheet Date, except for any such property or assets sold or otherwise disposed
of in the ordinary course of business and consistent with past practices since
the Balance Sheet Date. Except as disclosed in Schedule 2.1(k), to the
Knowledge of the Company there are no material defects in any tangible personal
property or fixtures owned or used by the Company or any of its subsidiaries
that are necessary for the operation of their respective businesses. The
Company or any of its subsidiaries owns or holds under valid leases all of the
tangible personal property and fixtures necessary to conduct the businesses of
the Company and its subsidiaries as presently conducted.
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(l) Liens and Encumbrances. Except as disclosed on Schedule
2.1(l), all properties and assets, including leases, owned by the Company and
its subsidiaries are free and clear of all liens, pledges, claims, security
interests, restrictions, mortgages, tenancies and other possessory interests,
conditional sale or other title retention agreements, assessments, easements,
rights of way, covenants, restrictions, rights of first refusal, defects in
title, encroachments, and other burdens, options or encumbrances of any kind
(collectively, "Liens") except (i) statutory Liens securing payments not yet
delinquent or the validity of which are being contested in good faith by
appropriate actions, (ii) purchase money Liens arising in the ordinary course,
(iii) Liens for taxes not yet delinquent, (iv) Liens reflected in the Balance
Sheet (which have not been discharged), (v) Liens which in the aggregate do not
materially detract from the value or materially impair the present and
continued use of the properties or assets subject thereto in the usual and
normal conduct of the business of the Company and its subsidiaries, (vi) Liens
on leases arising from the provisions of such leases, and (vii) Liens on real
property owned by the Company and its subsidiaries which are described in the
commitments to issue title insurance listed on Schedule 2.1(l) (the Liens
referred to in clauses (i) through (vii) being "Permitted Liens").
(m) Environmental Matters. Except as disclosed on Schedule
2.1(m):
(i) The real property and facilities owned, operated,
and leased by the Company or its subsidiaries and the operations of the
Company or its subsidiaries thereon comply in all material respects
with, and have at all times complied in all material respects with, all
applicable federal, state and local laws, statutes, codes, rules,
regulations, ordinances, orders, determinations and rules of common law
pertaining to the environment, natural resources and public or employee
health and safety including, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Clean
Air Act, as amended, the Federal Water Pollution Control Act, as
amended, The Oil Pollution Act of 1990, as amended, the Safe Drinking
Water Act, as amended, the Hazardous Materials Transportation Act, as
amended, the Toxic Substances Control Act, as amended, and other
environmental conservation or protection laws (collectively
"Environmental Laws"); provided, that the Occupational Safety and Health
Act of 1970, as amended, shall not be deemed to be an "Environmental
Law" for purposes of this Agreement;
(ii) No judicial proceedings are pending or, to the
Knowledge of the Company, threatened against the Company or its
subsidiaries (other than the Xxxxxx Subsidiaries) alleging the violation
of any Environmental Laws, and there are no administrative proceedings
pending or, to the Knowledge of the Company, threatened against the
Company or its subsidiaries (other than the Xxxxxx Subsidiaries),
alleging the violation of any Environmental Laws and no notice from any
Governmental Entity or any private or public person has been received by
the Company or its subsidiaries (other than the Xxxxxx Subsidiaries)
claiming any violation of any Environmental Laws in connection with any
real property or facility owned, operated or leased by the Company or
its subsidiaries (other than
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the Xxxxxx Subsidiaries), or requiring any remediation, clean-up,
modification, repairs, work, construction, alterations or installations
on or in connection with any real property or facility owned, operated
or leased by the Company or its subsidiaries (other than the Xxxxxx
Subsidiaries) that are necessary to comply with any Environmental Laws
and that have not been complied with or otherwise resolved to the
satisfaction of the party giving notice;
(iii) to the Company's Knowledge
(A) no judicial proceedings are pending or
threatened against any of the Xxxxxx Subsidiaries alleging the violation
of any Environmental Laws,
(B) there are no administrative proceedings
pending or threatened against any of the Xxxxxx Subsidiaries alleging
the violation of any Environmental Laws, and
(C) no notice from any Governmental Entity or
any private or public person has been received by any of the Xxxxxx
Subsidiaries claiming any violation of any Environmental Laws in
connection with any real property or facility owned, operated or leased
by the Xxxxxx Subsidiaries, or requiring any remediation, clean-up,
modification, repairs, work, construction, alterations or installations
on or in connection with any real property or facility owned, operated
or leased by any of the Xxxxxx Subsidiaries that are necessary to comply
with any Environmental Laws and that have not been complied with or
otherwise resolved to the satisfaction of the party giving notice;
(iv) All material permits, registrations, licenses,
authorizations, and the like ("Environmental Permits") required to be
obtained or filed by each of the Company and its subsidiaries under any
Environmental Laws in connection with the Company's and its
subsidiaries' operations, including those activities relating to the
generation, use, storage, treatment, disposal, release or remediation of
Hazardous Substances (as such term is defined in Section 2.1(m)(v)
hereof), have been duly obtained or filed, and each of the Company and
its subsidiaries are and have at all times complied in all material
respects with the terms and conditions of all such Environmental
Permits;
(v) All Hazardous Substances used or generated by the
Company or its subsidiaries or any of their predecessors on, in, or
under any of the owned, operated or leased real property or facilities
are and have at all times been generated, stored, used, treated,
disposed of and released by such persons or on their behalf in such
manner as not to result in any Environmental Costs or Liabilities.
"Hazardous Substances" means (A) any hazardous materials, hazardous
wastes, hazardous substances, toxic wastes, and toxic substances as
those or similar terms are defined under any Environmental Laws; (B) any
asbestos or any material which contains any hydrated mineral silicate,
including chrysolite, amosite, crocidolite, tremolite, anthophylite
and/or actinolite, whether friable or non-friable; (C) PCBs, or PCB-
containing materials or fluids; (D) radon; (E) any other hazardous,
radioactive, toxic or noxious substance, material, pollutant,
contaminant, constituent, or
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solid, liquid or gaseous waste; (F) any petroleum, petroleum
hydrocarbons, petroleum products, crude oil and any fractions or
derivatives thereof, any oil or gas exploration or production waste, and
any natural gas, synthetic gas and any mixtures thereof; (G) any
substance that, whether by its nature or its use, is subject to
regulation under any Environmental Laws or with respect to which any
Environmental Laws or Governmental Entity requires environmental
investigation, monitoring or remediation; and (H) any underground
storage tanks, dikes, or impoundments as defined under any Environmental
Laws. "Environmental Costs or Liabilities" means any losses,
liabilities, obligations, damages, fines, penalties, judgments,
settlements, actions, claims, costs and expenses (including, without
limitation, reasonable fees, disbursements and expenses of legal
counsel, experts, engineers and consultants, and the costs of
investigation or feasibility studies and performance of remedial or
removal actions and cleanup activities) arising from or under any
Environmental Laws, order of, or contract of the Company or its
subsidiaries with, any Governmental Entity or any private or public
persons;
(vi) There are not now, nor have there been in the past,
on, in or under any property or facilities when owned, leased, or
operated by the Company or its subsidiaries or when owned, leased, or
operated by any of their predecessors, any Hazardous Substances that are
in a condition that materially violates any Environmental Law or that
reasonably could be expected to require remediation under any
Environmental Laws;
(vii) The Company and its subsidiaries have not received,
and, to the Knowledge of the Company, do not expect to receive, any
notification from any source advising the Company or such subsidiaries
that: (A) it is a potentially responsible party under CERCLA or any
other Environmental Laws; (B) any real property or facility currently or
previously owned, operated, or leased by it is identified or proposed
for listing as a federal National Priorities List ("NPL") (or state-
equivalent) site or a Comprehensive Environmental Response, Compensation
and Liability Information System ("CERCLIS") list (or state-equivalent)
site; and (C) any facility to which it has ever transported or otherwise
arranged for the disposal of Hazardous Substances is identified or
proposed for listing as an NPL (or state-equivalent) site or CERCLIS (or
state-equivalent) site; and
(viii) Notwithstanding any other provision set forth in
this Agreement, the representations and warranties of the Company and
the Atrium Indemnitors set forth in this Section 2.1(m) relating to the
condition, operation or maintenance of real property or facilities
owned, operated or leased by the Company or its subsidiaries shall not
be deemed to have been made by the Company or any of the Atrium
Indemnitors with respect to the aluminum extrusions and window
manufacturing facility in Woodville, Texas which is leased by Xxxxxxxx
Companies, Inc. from the Tyler County Industrial Corporation.
(n) Taxes. Each of the Company and its subsidiaries has
timely filed all tax returns, reports, statements and other documents ("Tax
Returns"') required to be filed with all Governmental Entities, except for any
such Governmental Entity, the failure to file with which has
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27
not had, or could not reasonably be expected to have, a Material Adverse
Effect, and all such Tax Returns which have been filed are accurate and
complete in all material respects. No extension of time within which to file
any Tax Return which has not been filed has been requested or granted. Each of
the Company and its subsidiaries has paid (or there has been paid on its
behalf), or has set up an adequate reserve for the payment of, all taxes
required to be paid, withheld, or deducted, or for which the Company or any of
its subsidiaries are liable, in respect of the periods covered by such Tax
Returns, and with respect to each tax, from the end of the period covered by
the most recently filed Tax Return to the date hereof, and the Balance Sheet
reflects an adequate reserve for all taxes payable, or required to be withheld
and remitted, by the Company or any of its subsidiaries, or for which the
Company or any of its subsidiaries are liable, accrued through the Balance
Sheet Date. No deficiencies for any taxes have been proposed, asserted or
assessed against the Company or any of its subsidiaries and are pending, and no
requests for waivers of the time to assess any such taxes are pending. The
federal income tax Returns of the Company and its subsidiaries have not been
examined by the Internal Revenue Service. None of the Company or its
subsidiaries (i) has filed a consent under section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) has made, or is obligated
or may become obligated to make, any payments that will not be deductible by
reason of section 280G of the Code, (iii) has been a member of an affiliated
group of corporations which has filed a consolidated federal income tax return
(other than the group of which the Company is the common parent) or otherwise
has any liability for the taxes of any person (other than the Company and its
subsidiaries) under Treas. Reg. Section 1.1502-6, any similar provision of
state, local, or foreign law, or by reason of its status as a transferee,
successor, indemnitor or otherwise, (iv) is a party to or bound by (nor will
become a party to or bound by) any tax indemnity, tax sharing or tax allocation
agreement, except as disclosed on Schedule 2.1(n), or (v) has agreed to make,
nor is required to make, any adjustment under Section 481 of the Code by reason
of a change in accounting method or otherwise. For the purposes of this
Agreement, the term "taxes" shall include all federal, state, local, foreign
and other income, gross receipts, use, ad valorem, transfer, franchise,
profits, license, payroll, severance, occupation, property, sales, excise,
withholding, unemployment compensation, social security and other taxes and
charges of any nature whatsoever (including interest, penalties and additions
to tax relating to any of the specified items).
(o) Certain Agreements. Except as set forth in Part I of
Schedule 2.1(o), neither the Company nor any of its subsidiaries (other than
the Xxxxxx Subsidiaries) is a party to any oral or written agreement, plan or
arrangement with any officer, director or employee of the Company or its
subsidiaries (i) the benefits of which are contingent, or the terms of which
are materially altered, upon, or result from, the occurrence of a transaction
involving the Company or any of its subsidiaries of the nature of any of the
transactions contemplated by the Transaction Documents, (ii) providing
severance benefits or other benefits after the termination of employment or
other contractual relationship regardless of the reason for such termination
and regardless of whether such termination is before or after a change of
control, (iii) under which any person may receive payments subject to the tax
imposed by Section 4999 of the Code, or (iv) any of the benefits of which may
be increased, or the vesting of benefits of which may be accelerated, by the
occurrence of any of the transactions contemplated by the Transaction Documents
or the value of any of the benefits of which may be calculated on the basis of
any of the transactions contemplated by the Transaction
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Documents. Part I of Schedule 2.1(o) hereto lists each oral or written (A)
agreement, contract, indenture, or other instrument relating to the borrowing
of money or the guarantee of any obligation for the borrowing of money, (B)
Employee Benefit Plan (as defined in Section 2.1(p)), (C) employment or
consulting contract, or (D) contract, agreement or commitment under which any
party thereto remains obligated to provide goods or services having a value, or
to make payments aggregating, in excess of $50,000 per year, in any such case
to which the Company or any of its subsidiaries (other than the Xxxxxx
Subsidiaries) is a party or bound and which is not terminable without liability
or penalty to the Company or any of its subsidiaries on 30 days or less notice.
Each such agreement, contract or obligation described in Part I of Schedule
2.1(o) or required to be so described is a valid and binding obligation of the
Company or one of its subsidiaries, as the case may be, and is in full force
and effect without amendment, except where not being a valid and binding
obligation or in full force and effect without amendment would not have a
Material Adverse Effect. The Company or one of its subsidiaries (other than
the Xxxxxx Subsidiaries), as the case may be, and, to the Knowledge of the
Company, each other party to such contracts, has performed the obligations
required to be performed by it under the agreements described in Part I of
Schedule 2.1(o) and is not (with or without lapse of time or the giving of
notice, or both) in material breach or default thereunder. Except as disclosed
in Part I of Schedule 2.1(o), neither the Company nor any of its subsidiaries
(other than the Xxxxxx Subsidiaries) has received (i) any notice, written or
otherwise, of default by the Company or such subsidiary under any contract
listed on Schedule 2.1(o),or (ii) any notice, written or otherwise, that any
other party to any such contract has terminated or cancelled, or intends to
terminate or cancel, such contract. Schedule 2.1(o) identifies, as to each
agreement, contract or obligation listed thereon, whether the consent of the
other party thereto is required in order for such agreement, contract or
obligation to continue in full force and effect upon the consummation of the
transactions contemplated hereby and by the other Transaction Documents or
whether such agreement, contract or obligation can be cancelled by the other
party without liability to such other party due to the consummation of the
transactions contemplated in the Transaction Documents. A copy of each written
agreement, contract, obligation, plan or arrangement and a description of each
oral agreement, contract, obligation, plan or arrangement set forth in Schedule
2.1(o) has been provided to Buyer.
Part II of Schedule 2.1(o) contains a complete and accurate list
of (i) all contracts which were listed on Schedule 4.15 to the Xxxxxx Purchase
Agreement and other material contracts listed in the other schedules thereto,
and (ii) any agreement, contract or obligation to which any Xxxxxx Subsidiary
has become a party since September 30, 1996 that would otherwise be required to
be disclosed in Part I of Schedule 2.1(o) if the Xxxxxx Subsidiaries were
considered "subsidiaries" for purposes of this Section 2.1(o) (the "Material
Xxxxxx Agreements"). Part II of Schedule 2.1(o) identifies, as to each
Material Xxxxxx Agreement listed thereon, whether the consent of the other
party thereto is required in order for such Material Xxxxxx Agreement to
continue in full force and effect upon the consummation of the transactions
contemplated hereby and by the other Transaction Documents and whether such
Material Xxxxxx Agreement can be cancelled by the other parties thereto without
liability to such other party due to the consummation of the transactions
contemplated in the Transaction Documents.
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(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested
and unvested) under all the "employee pension benefit plans" as such term is
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which the Company or any other trades or businesses under
common control within the meaning of Section 4001(b)(1) of ERISA with the
Company (collectively, the "ERISA Group") maintains, or to which the Company or
any member of the ERISA Group is obligated to contribute (the "Pension Plans"),
did not, as of the respective last annual valuation dates for such Pension
Plans, exceed the value of the assets of such Pension Plan allocable to such
benefits. None of the Pension Plans subject to Section 302 of ERISA has
incurred any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA (whether or not waived) since the effective date of such
Section 302. Neither the Company nor any member of the ERISA Group, nor any
officer of the Company or any member of the ERISA Group, or any trustee or
administrator of any Employee Benefit Plan or trust created thereunder, has
engaged in a "prohibited transaction," as such term is described in Section
4975 of the Code, which has subjected or which could subject the Company or any
member of the ERISA Group, any officer of the Company or any of its
subsidiaries or any of such plans or any trust to any tax or penalty on
prohibited transactions imposed by such Section 4975. The ERISA Group does not
maintain any Pension Plans subject to Title IV of ERISA. Except as set forth
on Schedule 2.1(p), neither the Company nor any member of the ERISA Group has
contributed or been obligated to contribute to any "multiemployer plan" as such
term is defined in Section 3(37) or Section 4001(a)(3) of ERISA. Neither the
Company nor any member of the ERISA Group would be subject to any withdrawal
liability under Title IV of ERISA in the event that either the Company or any
member of the ERISA Group completely or partially withdrew from any such
multiemployer plan as of Closing. Except as set forth on Schedule 2.1(p),
there are no "employee benefit plans" within the meaning of Section 3(3) of
ERISA or any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
insurance, or other plan or arrangement or understanding providing benefits to
any present or former employee or contractor of the Company or as to which the
Company or any member of the ERISA Group has any liability or obligation
(collectively, "Employee Benefit Plans").
(ii) True, correct, and complete copies of each of the
Employee Benefit Plans, and related trusts, if applicable, have been furnished
to Buyer, along with the most recent report filed on Form 5500 and summary plan
description with respect to each Employee Benefit Plan required to file Form
5500. All reports and disclosures relating to the Employee Benefit Plans
required to be filed with or furnished to governmental agencies or plan
participants or beneficiaries have been furnished in material compliance with
applicable law. Each Employee Benefit Plan has been maintained in material
compliance with ERISA and the Code, and each Employee Benefit Plan intended to
be qualified under Section 401 of the Code satisfies the requirements of such
Section and has received a favorable determination letter from the Internal
Revenue Service regarding its qualified status and has not, since receipt of
the most recent favorable determination letter, been amended or, to the
Knowledge of the Company, operated in a manner which would adversely affect
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such qualified status. There are no actions, suits, or claims pending (other
than routine claims for benefits) or, to the knowledge of the Company,
threatened against, or with respect to any of the Employee Benefit Plans. All
material contributions required to be made to the Employee Benefit Plans
pursuant to their terms have been timely made. To the knowledge of the
Company, there is no matter pending with respect to any of the Employee Benefit
Plans before the Internal Revenue Service, Department of Labor or the Pension
Benefit Guaranty Corporation. Except as required by applicable law or as set
forth on Schedule 2.1(p), none of the Employee Benefit Plans provides medical
insurance coverage following retirement. Except as set forth on Schedule
2.1(p), each Employee Benefit Plan which is an "employee welfare benefit plan,"
as defined in Section 3(1) of ERISA, by its terms provides that it may be
unilaterally amended or terminated in its entirety without liability except as
to benefits accrued prior to such amendment or termination.
(iii) Schedule 2.1(p) lists each collective bargaining
agreement to which the Company or any of its subsidiaries is a party. Except
for those unions which are parties to one or more of the listed collective
bargaining agreements or as otherwise listed on Schedule 2.1(p), neither the
Company nor any of its subsidiaries has agreed to recognize any union or other
collective bargaining representative, nor has any union or other collective
bargaining representative been certified as the exclusive bargaining
representative of any of their employees. Except as disclosed on Schedule
2.1(p), each of the Company and its subsidiaries (A) is, and has been since
January 1, 1993, in material compliance with all applicable laws regarding
labor, employment and employment practices, including but not limited to laws
regarding terms and conditions of employment, equal employment opportunity,
affirmative action, wages and hours, employee benefits, plant closing and mass
layoff, occupational safety and health, immigration and workers' compensation,
(B) is not engaged in any unfair labor practices, nor has it since January 1,
1993, engaged in any unfair labor practices, and has no, and has not had since
January 1, 1993, any, unfair labor practice charges or complaints before the
National Labor Relations Board initiated against it or, to the Knowledge of the
Company, threatened against it, (C) has no, and has not had since January 1,
1993, any, grievances, arbitrations, or other proceedings arising or asserted
to arise under any collective bargaining agreement, initiated or, to the
Knowledge of the Company, threatened against it, and (D) has no, and has not
had since January 1, 1993, any, charges, complaints or proceedings before the
Equal Employment Opportunity Commission, Department of Labor or any other
Governmental Entity responsible for regulating employment practices, initiated,
or, to the Knowledge of the Company, threatened against it. There is no labor
strike, slowdown, work stoppage or lockout pending or, to the Knowledge of the
Company, threatened against or affecting the Company or its subsidiaries, and
neither the Company nor its subsidiaries has experienced any labor strike,
slowdown, work stoppage or lockout since January 1, 1993. Except as set forth
on Schedule 2.1(p), to the Knowledge of the Company, no union organizational
campaign or representation petition is currently pending or threatened with
respect to the employees of the Company or its subsidiaries.
(q) Patents, Trademarks, Etc. Schedule 2.1(q) lists
each extant patent, patent application, design patent, design patent
application, industrial model, utility model, provisional or preliminary patent
application, trademark, registered trademark, application for registration of
trademark, service xxxx, registered service xxxx, application for registration
of
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service xxxx, trade name, registered trade name, application for registration
of trade name, copyright, registered copyright, application for registration of
copyright and any other proprietary intellectual property right, both United
States and foreign, (A) owned by the Company or any of its subsidiaries, or (B)
in which the Company or any of its subsidiaries has any right, license or
interest (collectively, "Intellectual Rights"). True and complete copies of
all such Intellectual Rights, and all license agreements or contracts
pertaining to any such Intellectual Rights, have previously been provided to
Buyer. Except as disclosed in Schedule 2.1(q):
(i) The Company or its subsidiaries has good title,
free and clear of all Liens, to each item of Intellectual Rights owned by the
Company or any of its subsidiaries;
(ii) For each United States and foreign patent, patent
application, design patent, design patent application, utility model and
industrial model listed in Schedule 2.1(q) as owned by the Company or any of
its subsidiaries, all maintenance fees, renewal fees or other fees required to
be paid to avoid abandonment have been timely paid, and any applicable working
requirements have been timely met;
(iii) For each United States and foreign registered
trademark, registered service xxxx and registered trade name listed in Schedule
2.1(q) as owned by the Company or any of its subsidiaries, all appropriate
affidavits and associated fees necessary to show continued use, and all
renewals and associated fees, have been timely filed with the appropriate
administrative or governmental office;
(iv) Each United States and foreign patent application
and design patent application, and each United States and foreign application
for registration of a trademark, service xxxx, trade name or copyright listed
in Schedule 2.1(q) as owned by the Company or any of its subsidiaries, remains
pending and has not been abandoned;
(v) Each license agreement or contract, under which the
Company or any of its subsidiaries has any license, right or interest in the
Intellectual Rights is a valid, binding and enforceable agreement which remains
in full force and effect, and for each such license agreement or contract, the
Company or its subsidiaries has a paid-up, royalty-free, perpetual license, and
no restrictions exist which would prohibit or impair the ability of the Company
or its subsidiaries to assign each such license agreement or contract to Buyer;
(vi) No product used, sold or manufactured by the
Company or any of its subsidiaries, nor the conduct of the business of the
Company or any of its subsidiaries as it is currently conducted, infringes on
or otherwise violates the patent, design patent, trademark, service xxxx, trade
name, copyright, industrial model, utility model, trade secret or other
intellectual property rights of any third party;
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(vii) To the Knowledge of the Company, no third party is
challenging or infringing or otherwise violating any of the Intellectual Rights
owned by the Company or any of its subsidiaries;
(viii) To the Knowledge of the Company, no third party is
challenging or infringing or otherwise violating the Intellectual Rights under
which the Company or any of its subsidiaries has any right, license, or
interest;
(ix) To the Knowledge of the Company and its
subsidiaries, there are no restrictions that would materially impair the use of
any United States or foreign trademark, service xxxx or trade name listed in
Schedule 2.1(q) by Buyer or the transfer of any United States or foreign
trademark, service xxxx or trade name listed in Schedule 2.1(q) to Buyer; and
(x) To the extent that the Company or any of its
subsidiaries has any trade secrets or confidential information regarding their
businesses, the Company and its subsidiaries have taken, and will continue to
take, commercially reasonable precautions to maintain the confidentiality of
such trade secrets and confidential information, including, without limitation,
obtaining appropriate confidentiality agreements from employees or third
parties to which such trade secrets or confidential information are disclosed.
(r) Affiliate Relationships. Schedule 2.1(r) sets forth a
complete list of all contracts or other arrangements involving the Company or
any of its subsidiaries in which any of their respective officers, directors,
stockholders or affiliates have a financial interest, including indebtedness
owed to the Company or its subsidiaries.
(s) Status of Purchase Shares. The issuance and sale of the
Purchase Shares have been duly authorized by all necessary corporate action on
the part of the Company, and such Purchase Shares, when delivered to Buyer at
the Closing against payment of the Purchase Price as provided herein, will be
validly issued, fully paid and non-assessable. The issuance and sale of the
Purchase Shares are not, and will not be, subject to preemptive rights of any
other holder of capital stock of the Company.
(t) Private Offering. Neither the Company nor any person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of the
Purchase Shares under the Securities Act) which might subject the offering,
issuance or sale of the Purchase Shares to Buyer to the registration
requirements of Section 5 of the Securities Act.
(u) Accounts Receivable. Subject to the reserves established
on the most recent monthly balance sheet prepared by the Company and attached
hereto as Schedule 2.1(u), to the Company's Knowledge each of the Company's and
its subsidiaries' accounts receivable will be collected in accordance with the
normal experience of the Company and its subsidiaries with respect to
collection of their accounts receivable, and the Company is not aware of any
event, condition,
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circumstance or fact the occurrence of which would impair the ability of the
Company or any of its subsidiaries to collect such accounts receivable in
accordance with such normal collection experience.
(v) Inventories. Except as disclosed in Schedule 2.1(v), the
inventory and supplies of the Company and its subsidiaries (other than the
Xxxxxx Subsidiaries) are adequate for present needs, and are in usable or
saleable condition in the ordinary course of business, subject only to reserves
for obsolescence reflected on the Company's most recent balance sheet attached
hereto as Schedule 2.1(u). Except as disclosed in Schedule 2.1(v), to the
Company's Knowledge, the inventory and supplies of the Xxxxxx Subsidiaries are
adequate for present needs, and are in usable or saleable condition in the
ordinary course of business, subject only to reserves for obsolescence
reflected on the Company's most recent balance sheet attached hereto as
Schedule 2.1(u)
(w) Indebtedness. Schedule 2.1(w) accurately sets forth the
amount of all of the Company's (and its subsidiaries) long-term indebtedness
for borrowed money as of the date of this Agreement. The repayment at the
Closing by the Company and/or any of its subsidiaries of all such indebtedness
will not create an obligation on the part of the Company or any of its
subsidiaries to pay any premium, prepayment penalty or similar payment under
any of the terms, conditions or provisions of any loan or credit agreement,
note, bond, mortgage, indenture, deed of trust, agreement or other instrument
or obligation relating to such indebtedness to be repaid.
(x) Disclosure. No representation or warranty by the Company
or the Selling Securityholders contained in this Agreement or in any
certificate furnished pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading.
(y) Business Relations. No supplier or customer of material
importance to the Company and its subsidiaries has cancelled or otherwise
terminated, or threatened to cancel or otherwise to terminate, its relationship
with the Company or any of its subsidiaries or has during the last twelve (12)
months decreased materially, or threatened to decrease or limit materially, its
services, supplies or materials for use by the Company or any of its
subsidiaries or its usage or purchase of the services or products except for
normal cyclical changes related to customers' businesses, and to the Company's
Knowledge, the consummation of the transaction contemplated herein will not
adversely affect the relationship of the Company or any of its subsidiaries
with any such supplier or customer.
(z) Breach of Representations, Warranties or Covenants. There
has occurred no failure to comply with, or breach of, any representation or
warranty, covenant, obligation or undertaking made by the Company under the
Xxxxxx Agreements and, to the Company's Knowledge, there has occurred no
failure to comply with, or breach of, any representation or warranty, covenant,
obligation or undertaking made under the Xxxxxx Agreements by any other party
thereto which would result in Losses (as defined in the Xxxxxx Agreements) that
would be subject to the $250,000
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deductible described in Section 13.5(a) of the Xxxxxx Purchase Agreement or
Section 11.6(b) of the Xxxxxx Exchange Agreement.
2.2. Representations and Warranties of the Selling Securityholders.
Each Selling Securityholder or, as applicable, the named Selling
Securityholder, severally as to him, her or it and not jointly, represents and
warrants to Buyer and the Company as follows:
(a) Owners of Redemption Shares, Options and Warrants. As of
the date hereof, each such Selling Securityholder identified on Schedule II is
the holder of record and beneficially owns and, immediately prior to the
effectiveness of the Charter Amendment, will be the holder of record and will
beneficially own, the number of shares of Common Stock set forth in Column A
opposite his, her or its name on Schedule II. At the Closing, each such
Selling Securityholder will transfer to the Company good and valid title to the
Redeemed Common Shares owned by such Selling Securityholder, free and clear of
all Liens.
As of the date hereof, each such Selling Securityholder
identified on Schedule III is the holder of record and beneficially owns and,
immediately prior to the effectiveness of the Charter Amendment, will be the
holder of record and will beneficially own, options or warrants to purchase
that number of shares of Class B Non-Voting Common Stock set forth opposite
such Selling Securityholder's name in Column B on Schedule III.
(b) Authority. (i) If such Selling Securityholder is an
entity (i.e., not a natural person), such Selling Securityholder has been duly
created and is validly existing under the laws of the jurisdiction of its
creation; such Selling Securityholder has all requisite power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to perform its obligations hereunder and thereunder, and the
execution, delivery and performance by such Selling Securityholder of this
Agreement and other Transaction Documents to which it is a party and the
consummation by such Selling Securityholder of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the
part of such Selling Securityholder.
(ii) Such Selling Securityholder has full legal capacity
to execute and deliver this Agreement and the other Transaction Documents to
which it is a party and to perform the obligations of such Selling
Securityholder hereunder and thereunder. This Agreement has been duly and
validly executed and delivered by such Selling Securityholder and, assuming
this Agreement constitutes a valid and binding obligation of Buyer and the
Company, constitutes a valid and binding obligation of such Selling
Securityholder, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith, and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity). Each consent, authorization, order, or approval of, or filing or
registration with, any Governmental Entity required by applicable law on or
before the Closing for or in connection with
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the execution and delivery by such Selling Securityholder of this Agreement, or
the performance by such Selling Securityholder of his, her or its obligations
hereunder or under any other Transaction Documents , will have been obtained or
made on or before the Closing, except where the failure to obtain any such
consent, authorization, order, approval, filing, or registration would not
affect such Selling Securityholder's ability to perform his, her, or its
obligations under this Agreement or under any other Transaction Documents in
any material respect.
(c) No Conflicts. The execution, delivery, and performance by
such Selling Securityholder of this Agreement and the other Transaction
Documents to which it is a party does not (i) violate or breach any provision
of any law or statute applicable to such Selling Securityholder (and, if such
Selling Securityholder is a legal entity, any provision of its organizational
or constituent documents), except where such violation or breach would not
affect such Selling Securityholder's ability to perform its obligations under
the Transaction Documents or (ii) violate, breach, cause a default under, or
result in the creation of a Lien pursuant to, any agreement or instrument to
which such Selling Securityholder is a party or to which it or any of its
properties may be subject, except where the violation, breach, default, or
creation of a Lien would not affect such Selling Securityholder's ability to
perform its obligations under the Transaction Documents.
(d) New Common Stock. Each Selling Securityholder listed on
Schedule IV represents and warrants to Buyer and the Company that such Selling
Securityholder has no plan or intention to sell or otherwise dispose of the
shares of New Common Stock to be held by such Selling Securityholder
immediately after the Closing.
(e) Breach of Representations, Warranties or Covenants. Each
of the Xxxxxx Indemnitors represents and warrants to Buyer that, to such Xxxxxx
Indemnitor's Knowledge, as of September 30, 1996, there had occurred no failure
to comply with, or breach of, any representation or warranty, covenant,
obligation or undertaking made under the Xxxxxx Agreements by any party
thereto, except for such failures to comply or breaches as (x) were disclosed
on the Schedules to the Xxxxxx Agreements, or (y) have been expressly waived in
writing by the parties to the Xxxxxx Agreements.
2.3. Representations and Warranties of Buyer. Buyer represents and
warrants to the Company and the Selling Securityholders as follows (with the
understanding that the Company and the Selling Securityholders are relying on
such representations and warranties in entering into and performing this
Agreement):
(a) Organization, Standing and Power. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of Texas
and has all requisite power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted.
(b) Authority. Buyer has all requisite corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which Buyer is to be a party and to
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consummate the transactions contemplated hereby and thereby. The execution and
delivery by Buyer of this Agreement and the other Transaction Documents to
which Buyer is to be a party and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed
and delivered and constitutes, and when duly executed and delivered by Buyer
the other Transaction Documents to which Buyer is to be a party will
constitute, the valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) No Conflicts. The execution and delivery of this
Agreement and the other Transaction Documents to which Buyer is to be a party
does not, and the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation, or acceleration of any material obligation or to a
loss of a material benefit under, any provision of any loan or credit
agreement, note, bond, mortgage, indenture, lease, or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule, or regulation applicable to Buyer or its
properties or assets, except for any such conflicts, violations, defaults,
terminations, cancellations, or accelerations which individually or in the
aggregate do not have a material adverse effect on Buyer's ability to perform
its obligations hereunder.
(d) Consents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Buyer in connection with the execution and
delivery by Buyer of this Agreement and the other Transaction Documents to
which Buyer is to be a party or the consummation by it of the transactions
contemplated hereby, except for (i) the filing of a premerger notification
report under the HSR Act, and (ii) applicable requirements, if any, of the
Securities Act and the Exchange Act and the rules and regulations thereunder
and state securities or blue sky laws.
(e) Litigation. As of the date hereof, there is no action,
suit, inquiry, judicial or administrative proceeding pending or, to the
Knowledge of Buyer, threatened against it relating to the transactions
contemplated by this Agreement or by the other Transaction Documents.
(f) Investment Intent. The Purchase Shares to be acquired by
Buyer hereunder are being acquired for its own account, for investment and with
no intention of distributing or reselling such Purchase Shares or any part
thereof or interest therein in any transaction which would be a violation of
the securities laws of the United States of America or any state or any foreign
country or jurisdiction.
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(g) Investment Status. (i) At the time Buyer was offered the
Purchase Shares, it was, (ii) at the date hereof, Buyer is, and (iii) at the
Closing Date Buyer will be, an "Accredited Investor" as defined in Rule 501
under the Securities Act, and Buyer has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the Company and an investment in the Purchase Shares, and is able to bear the
economic risks of such investment.
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
3.1. Covenants of the Company and the Selling Securityholders other
than the Xxxxxx Indemnitors. Except as set forth in Schedule 3.1 or as
otherwise contemplated by this Agreement, or to the extent that Buyer shall
otherwise consent in writing, from the date of this Agreement until the
Closing, the Company covenants and agrees with Buyer that the Company shall
not, and shall not permit any of its subsidiaries to, and each Selling
Securityholder other than the Xxxxxx Indemnitors covenants and agrees that such
Selling Securityholder will not permit the Company or any of its subsidiaries
to:
(a) conduct its business in any manner except in the ordinary
course consistent with past practice; or
(b) fail to use all commercially reasonable efforts to
preserve intact the Company's present business organization and to keep
available the services of its present officers and managerial personnel
(collectively, the "Management") and employees or independent contractors and
preserve its relationships with customers, suppliers and others having business
dealings with it to the end that its goodwill and ongoing business shall not be
materially impaired at the Closing Date; or
(c) split, combine, divide, distribute or reclassify any
shares of its capital stock, declare, pay or set aside for payment any dividend
or other distribution in respect of its capital stock (whether in cash, shares
of stock or otherwise), or directly or indirectly, redeem, purchase or
otherwise acquire any shares of its capital stock or other securities; provided
that nothing herein shall prevent any of its subsidiaries from paying dividends
or making other distributions to the Company; or
(d) issue, sell, pledge, dispose of, encumber or deliver
(whether through the issuance or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any securities convertible into or exercisable or exchangeable for
shares of stock of any class (other than the issuance of certificates in
replacement of lost certificates); or
(e) change or amend its charter documents or bylaws; or
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(f) enter into, materially amend, terminate or fail to use all
commercially reasonable efforts to renew any material contract (i.e., a
contract or agreement of the type required to be described in Schedule 2.1(o))
(provided that neither the Company nor its subsidiaries shall be required to
renew any material contract on terms that are less favorable to the Company or
its subsidiaries), or default in any material respect (or take or omit to take
any action that, with or without the giving of notice or passage of time, would
constitute a material default) under any material contract, except for
amendments, terminations (without payment of material penalty or damages),
renewals, or failures to renew (without payment of material penalty or damages)
of employment agreements in the ordinary course of business and consistent with
past practice (subject to prior consultation with Buyer reasonably in advance
thereof, provided that no contract of the Company or any of its subsidiaries
with any of their executive officers shall be amended or otherwise modified
without the prior written consent of Buyer); or
(g) merge or consolidate with or into any other legal entity,
dissolve, or liquidate; or
(h) incur or assume any debt (including obligations in respect
of capital leases and for interest), assume, guarantee, endorse, or otherwise
become liable or responsible (whether directly, contingently, or otherwise) for
the obligations of any other person (other than endorsements of checks in the
ordinary course) or make any loans, advances, or capital contributions to, or
investments in, any person (other than advances to employees in the ordinary
course of business); or
(i) adopt or amend any Employee Benefit Plan or collective
bargaining agreement, or increase in any manner the compensation or fringe
benefits of any director, officer or employee (whether employees or independent
contractors) or pay any benefit not by any existing agreement, except in the
ordinary course of business and consistent with past practices or as required
by law, provided that, before increasing or agreeing to increase the
compensation, bonuses or other benefits of any Management in the ordinary
course of business or as required by law, the Company shall first have
consulted in good faith with Buyer with respect to such increase or change in
compensation, bonuses, or other benefits; or
(j) acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) or sell
(whether by merger, consolidation, or the sale of an equity interest or
assets), lease or dispose of any assets except in the ordinary course of
business and consistent with past practice or, even if in the ordinary course
of business and consistent with past practices (other than sales of surplus or
obsolete equipment), whether in one or more transactions, in no event having a
fair market value in excess of $50,000; or
(k) mortgage, pledge, or subject to any material Lien any of
its properties or assets, tangible or intangible, other than in the ordinary
course of business consistent with past practice; or
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(l) except as required by GAAP, Applicable Law or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(m) make any settlement of or compromise any tax liability,
change any tax election or tax method of accounting or make any new tax
election or adopt any new tax method of accounting which settlement,
compromise, method, or election is material to the Company and its
subsidiaries, taken as a whole; or
(n) pay, discharge, or satisfy any material claims,
liabilities, or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business
consistent with past practice, or fail to pay or otherwise satisfy (except if
being contested in good faith) any material accounts payable, claims,
liabilities, or obligations on a basis, and within the time, consistent with
past practice; or
(o) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable and, except
with respect to good faith attempts consistent with past practice to obtain
payment of a past due receivable, or except in accordance with existing
practices, a contested receivable, offer to discount the amount of any
outstanding receivable or extend any other incentive (whether to the account
debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; or
(p) agree to or make any commitment, orally or in writing, to
take any actions prohibited by this Agreement.
ARTICLE IV
ADDITIONAL AGREEMENTS OF THE COMPANY
AND THE SELLING SECURITYHOLDERS
OTHER THAN THE XXXXXX INDEMNITORS
4.1. No Solicitation of Transactions. The Company and each of the
Selling Securityholders other than the Xxxxxx Indemnitors hereby covenant and
agree with Buyer that the Company and such Selling Securityholder shall not,
nor shall they permit their respective subsidiaries or affiliates to, directly
or indirectly, through any officer, director, agent, or otherwise, solicit,
initiate, or encourage the submission of any proposal or offer from any person
relating to any acquisition or purchase of all or any material portion of the
assets of, or any equity interest in, the Company or any of its subsidiaries or
any merger, consolidation, share exchange, business combination, or other
similar transaction with the Company or any of its subsidiaries or participate
in any negotiations regarding, or furnish to any other person any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate, or encourage, any effort or attempt by any other
person to do or seek to do any of the foregoing. The Company and each of
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the Selling Securityholders other than the Xxxxxx Indemnitors shall promptly
communicate to Buyer the material terms of any such proposal (and the identity
of the party making such proposal) which the Company or such Selling
Securityholders may receive. The Company and each of the Selling
Securityholders other than the Xxxxxx Indemnitors agree not to release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which the Company or any such Selling Securityholder other than
the Xxxxxx Indemnitors is a party. The Company and each of the Selling
Securityholders immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
4.2. Access and Information. (a) Until the Closing, the Company shall
afford to Buyer and its representatives (including accountants and counsel)
full access, during normal business hours, upon reasonable notice and in such
manner as will not unreasonably interfere with the conduct of the business of
the Company or its subsidiaries, to all properties, books, records, and tax
returns of the Company and its subsidiaries and all other information with
respect to its business, together with the opportunity to make copies of such
books, records, and other documents and to discuss the business of the Company
and its subsidiaries with such corporate officers, managerial personnel,
accountants, consultants, and counsel for the Company as Buyer deems reasonably
necessary or appropriate for the purposes of familiarizing itself with the
Company and the business of the Company and its subsidiaries, including the
right to visit the offices and facilities of the Company and its subsidiaries.
In furtherance of the foregoing, the Company shall authorize and instruct
Xxxxxx Xxxxxxxx LLP to meet with Buyer and its representatives, including its
independent public accountants, to discuss the business and accounts of the
Company and to make available (with the opportunity to make copies) to Buyer
and its representatives, including its independent public accountants, all the
work papers of Xxxxxx Xxxxxxxx LLP related to their audit of the consolidated
financial statements and tax returns of the Company. The Company will provide
any indemnification required by Xxxxxx Xxxxxxxx LLP in connection with the
aforementioned work papers.
(b) Within 30 days after the end of each calendar month, the
Company shall deliver to Buyer, for the Company and its subsidiaries, monthly
operating statements (in a form consistent with the monthly operating
statements previously supplied to Buyer) prepared in the ordinary course of
business for internal purposes, including comparisons to comparable prior year
periods and current year budget. Further, within 45 days after the end of each
calendar quarter, the Company shall deliver to Buyer quarterly statements
prepared in the ordinary course for internal purposes.
(c) Without duplication of Section 4.2(b), at such time as the
Company provides the same to its lenders, the Company shall provide Buyer with
copies of the financial statements and other information delivered by the
Company to such lenders.
4.3. Assistance. If Buyer requests, the Company will cooperate and
will cause each of its subsidiaries to cooperate, and will cause Xxxxxx
Xxxxxxxx LLP to cooperate, in all reasonable respects with the efforts of Buyer
to finance the transactions contemplated by this Agreement
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(whether obtained through senior debt financing by the Company or any of its
subsidiaries from a commercial lender, the issuance of subordinated debt in a
private placement or otherwise), including providing assistance in the
preparation of one or more offering circulars, private placement memoranda,
registration statements or other offering documents relating to debt and/or
equity financing by the Company or any of its subsidiaries and any other
filings that may be made with the United States Securities and Exchange
Commission (the "SEC"). The Company shall, and shall cause its subsidiaries
to, (a) furnish to Xxxxxx Xxxxxxxx LLP, as independent accountants to the
Company, such customary management representation letters as Xxxxxx Xxxxxxxx
LLP may require of the Company as a condition to its execution of any required
accountants' consents or necessary in connection with the delivery of any
"comfort" letters requested by Buyer's financing sources, (b) furnish to Buyer
all financial statements (audited and unaudited) and other information in the
possession of the Company or its representatives or agents as Buyer shall
reasonably determine is necessary or appropriate for the preparation of such
offering documents, registration statements or filings, and (c) execute and
deliver such agreements, instruments and other documents as Buyer shall
reasonably request to effect the debt and/or equity financing of the
transactions contemplated by this Agreement. If all conditions precedent to
each party's obligation to effect the Purchase, the Redemptions, the
Disposition Option Redemption and the other transactions contemplated hereby
have been satisfied or waived, the Company will, and will cause its
subsidiaries to, simultaneously with the Closing, consummate such financing
upon terms acceptable to Buyer (and, if such financing is provided to one or
more subsidiaries of the Company, the Company shall cause such subsidiaries to
provide the proceeds of such financing to the Company upon terms acceptable to
Buyer, including, if requested by Buyer, causing one or more of such
subsidiaries to merge), and in consideration therefor, if the Closing does not
occur, Buyer will indemnify and hold harmless the Company and its officers,
directors and controlling persons against any and all claims, losses,
liabilities, damages, costs or expenses (including reasonable attorneys' fees
and expenses) that may arise out of or with respect to the efforts by Buyer to
finance the transactions contemplated hereby, including any registration
statement, prospectus, offering circular, private placement memoranda, offering
documents, and other filings related thereto; provided, however, that subject
to the limitations and provisions of this Agreement, nothing herein shall
prevent Buyer from asserting any claim for breach of representation or warranty
under this Agreement.
4.4. Compliance With Laws. The Company hereby covenants and agrees
with Buyer that the Company shall cause the businesses of the Company and its
subsidiaries to be operated in compliance with all Applicable Laws, except for
such failures to comply as would not have a Material Adverse Effect. If the
Company (or its counsel) receives an administrative or other order or
notification relating to any violation or claimed violation of any Applicable
Law that could affect the Company's ability to consummate the transactions
contemplated hereby and by the other Transaction Documents, the Company shall
promptly notify Buyer in writing and use its commercially reasonable efforts to
take such steps as may be necessary to remove any such impediment to the
transactions contemplated by this Agreement and by the other Transaction
Documents.
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4.5. Notification of Certain Matters. The Company shall give prompt
written notice to Buyer of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of the Company contained in this Agreement
to be untrue or inaccurate at any time from the date hereof to the Closing
Date, (b) the failure of the Company, or any officer, director, employee, or
agent thereof, to comply with or satisfy in any material respect any covenant,
condition, or agreement to be complied with or satisfied by it hereunder, and
(c) the occurrence of any threat by any officer of the Company or any of its
subsidiaries or any managerial personnel to resign or otherwise terminate their
employment or independent contractor relationship with the Company or its
subsidiaries. No such notification shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder.
4.6. Third Party Consents. The Company hereby covenants and agrees
with Buyer that after the date hereof and prior to the Closing, the Company
shall use all commercially reasonable efforts to obtain the written consent
from any party to an agreement or instrument identified in Schedule 2.1(o)
which is required to permit the consummation of the transactions contemplated
hereby.
4.7. Stockholders Agreement. At the Closing, the Company, Buyer and
the Selling Securityholders listed in Part 1 of Schedule VIII shall execute,
deliver and enter into the Stockholders Agreement in the form attached hereto
as Exhibit N (the "Stockholders Agreement").
4.8. Monitoring and Oversight Agreement. The Company hereby covenants
and agrees with Buyer that at the Closing, the Company shall, and shall cause
Xxxxxxxx Companies, Inc. to, execute, deliver and enter into a Monitoring and
Oversight Agreement with Xxxxx, Muse & Co. Partners, L.P. in the form attached
hereto as Exhibit O (the "Monitoring and Oversight Agreement").
4.9. Financial Advisory Agreement. The Company hereby covenants and
agrees with Buyer that at the Closing, the Company shall, and shall cause
Xxxxxxxx Companies, Inc. to, execute, deliver and enter into a Financial
Advisory Agreement with Xxxxx, Muse & Co. Partners, L.P. in the form attached
hereto as Exhibit P (the "Financial Advisory Agreement"). The Financial
Advisory Agreement will provide that at the Closing the Company shall pay
Xxxxx, Muse & Co. Partners, L.P. a transaction fee in the amount of $2,000,000
(the "Transaction Fee"). Payment of the Transaction Fee shall be made by the
Company to Xxxxx, Muse & Co. Partners, L.P. by wire transfer of immediately
funds to an account designated to the Company in writing prior to Closing Date,
or if not so designated, by certified or official bank check payable in
immediately available funds to the order of Xxxxx, Muse & Co. Partners, L.P.
4.10. [Intentionally Omitted].
4.11. Termination Agreement. The Company and the Selling
Securityholders listed in Part 2 of the Schedule VIII hereby covenant and agree
with Buyer that at the Closing, they shall, and
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the Company shall cause FCI Holding Corp. to, execute, deliver and enter into
the Termination Agreement in the form attached hereto as Exhibit R (the
"Termination Agreement").
4.12. Repayment of Indebtedness for Borrowed Money. The Company hereby
covenants and agrees with Buyer that at the Closing, upon receipt of the
proceeds from the financing contemplated in Section 4.3 and the Purchase, the
Company will repay, and will cause its subsidiaries to repay, all of the
indebtedness for borrowed money described in Schedule 2.1(w).
4.13. Indemnification Agreement. The Company hereby covenants and
agrees with Buyer that at the closing the Company shall execute and enter into
an Indemnification Agreement with each of the Company's executive officers and
directors in the form attached hereto as Exhibit S.
4.14. Board of Directors; Officers. At the Closing, the Company shall
deliver to Buyer letters from each director of the Company, other than Xxxxxxx
X. Xxxxxxxx and Xxxxxx Xxxxxxxx, pursuant to which such directors shall resign
from their positions on the Company's board of directors. The Company agrees
to deliver to Buyer at Closing letters from each executive officer of the
Company as Buyer may request, other than Xxxxxxx X. Xxxxxxxx, pursuant to which
such executive officers shall resign from their positions as executive officers
of the Company. The Company and each Selling Securityholder holding shares of
the Company's capital stock entitled to vote on the election of directors
covenant and agree with Buyer to cause to be elected to the Company's board of
directors such nominees as the Buyer shall designate, effective immediately
upon the consummation of the Purchase.
4.15. Stockholder Loans. All loans or advances made by the Company or
any of its subsidiaries to any of the Stockholders shall have been paid to the
Company or such subsidiary in full.
ARTICLE IV.A
ADDITIONAL AGREEMENTS OF THE XXXXXX INDEMNITORS
4A.1 No Solicitation of Transactions. Each of the Xxxxxx Indemnitors
hereby covenant and agree with Buyer that such Xxxxxx Indemnitor shall not,
directly or indirectly, solicit, initiate, or encourage the submission of any
proposal or offer from any person relating to any acquisition or purchase of
all or any material portion of the assets of, or any equity interest in, the
Company or any of its subsidiaries or any merger, consolidation, share
exchange, business combination, or other similar transaction with the Company
or any of its subsidiaries or participate in any negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate, or
encourage, any effort or attempt by any other person to do or seek to do any of
the foregoing. Each of the Xxxxxx Indemnitors shall promptly communicate to
Buyer the material terms of any such proposal (and the identity of the party
making such proposal) which the Company or such Xxxxxx Indemnitors may receive.
Each of the Xxxxxx Indemnitors agree not to release any third party from, or
waive any provision of, any confidentiality
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or standstill agreement to which such Xxxxxx Indemnitor is a party. Each of
the Xxxxxx Indemnitors immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing.
4A.2 Termination Agreement. The Company and the Xxxxxx Indemnitors
hereby covenant and agree with Buyer that at the Closing, they shall execute,
deliver and enter into the Termination Agreement in the form attached hereto as
Exhibit R (the "Termination Agreement").
4A.3 Buy-Sell Agreements. The Company and Xxxxxx X. Xxxxxx hereby
covenant and agree with Buyer that at the Closing, they shall execute, deliver
and enter into a Buy-Sell Agreement in the form attached hereto as Exhibit Q-1
(the "Xxxxxx Buy-Sell Agreement"). The Company and Xxxxx Xxxxxxxxxx hereby
covenant and agree with Buyer that at the Closing, they shall execute, deliver
and enter into a Buy-Sell Agreement in the form attached hereto as Exhibit Q-2
(the "Xxxxxxxxxx Buy-Sell Agreement," and collectively with the Xxxxxx Buy-Sell
Agreement, the "Buy-Sell Agreements").
ARTICLE V
COVENANTS OF BUYER
5.1. Notification of Certain Matters. Buyer shall give to the Company
prompt written notice of (a) the occurrence, or failure to occur, of any event
of which it becomes aware that has caused or that would be likely to cause any
representation or warranty of Buyer contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date, and (b) the
failure of Buyer, or any officer, director, employee or agent thereof, to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
ARTICLE VI
MUTUAL COVENANTS
6.1. Governmental Consents. Promptly following the execution of this
Agreement, the parties shall proceed to prepare and file with the appropriate
Governmental Entities such requests, reports or notifications as may be
required in connection with this Agreement, and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such matters. Without limiting the foregoing, the parties
shall (a) file promptly with the Federal Trade Commission and the Antitrust
Division of the Department of Justice the notifications and other information
(if any) required to be filed under the HSR Act with respect to the
transactions contemplated hereby and shall use their commercially reasonable
efforts to cause all applicable
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waiting periods under the HSR Act to expire or be terminated as of the earliest
possible date and (b) subject to the provisions of Section 11.6 hereof, make
all necessary filings, and thereafter make any other required submissions with
respect to the transactions contemplated hereby under the Securities Act and
the rules and regulations thereunder, and any other applicable federal or state
securities laws.
6.2. Brokers or Finders. (a) Buyer represents and warrants to the
Company and the Selling Securityholders other than the Xxxxxx Indemnitors, and
the Company and such Selling Securityholders represent and warrant to Buyer,
that, other than the Transaction Fee described in Section 4.9 and the fees and
commissions to be paid in connection with the financing of the transactions
contemplated by this Agreement, no agent, broker, investment banker or other or
person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
(b) Buyer represents and warrants to the Xxxxxx Indemnitors,
and the Xxxxxx Indemnitors represent and warrant to their best Knowledge to
Buyer, that, other than the Transaction Fee described in Section 4.9 and the
fees and commissions to be paid in connection with the financing of the
transactions contemplated by this Agreement, no agent, broker, investment
banker or other person is or will be entitled to any broker's or finder's fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement.
6.3. Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
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 to
consummate and make effective the transactions contemplated by this Agreement.
If at any time after the Closing Date, any further action is necessary to carry
out the purposes of this Agreement, the parties to this Agreement and their
duly authorized representatives shall take all such actions.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation. The respective
obligations of each party to effect the transactions contemplated hereby are
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Consents and Approvals. All authorizations, consents,
orders, or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, occurred or been obtained, including, without limitation, those required
by the HSR Act.
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(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction, or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the transactions contemplated by this Agreement shall be in
effect.
(c) No Action. No action shall have been taken nor any
statute, rule or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated by this Agreement
illegal.
7.2. Conditions to Obligation of Buyer. The obligation of Buyer to
effect the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Buyer:
(a) Representations and Warranties. The representations and
warranties of the Company and each of the Selling Securityholders set forth in
this Agreement shall be true and correct as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date, and Buyer
shall have received a certificate signed by the chief executive officer or by
the chief financial officer with respect to the Company and by each of the
Selling Securityholders with respect to such Selling Securityholder certifying
that the representations and warranties of the Company or such Selling
Securityholder, as the case may be, are true and correct as of the Closing Date
as though made on and as of the date hereof, except for changes contemplated in
this Agreement.
(b) Performance of Obligations. The Company and each Selling
Securityholder shall have performed in all material respects all obligations
required to be performed by it or each such Selling Securityholder under this
Agreement prior to the Closing Date, and Buyer shall have received a
certificate to such effect signed by the chief executive officer or by the
chief financial officer with respect to the Company and by each such Selling
Securityholder with respect to such Selling Securityholder.
(c) Consents Under Agreements. Buyer shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each person that is a party to a contract or agreement identified
in Schedule 2.1(o) whose consent or approval shall be required in order to
permit the consummation of the transactions contemplated by this Agreement.
(d) Legal Opinions. Buyer shall have received from Xxxxxxx,
Xxxx & Xxxxx LLP one or more opinions dated the Closing Date, in substantially
the form attached as Exhibit T hereto, which opinion shall expressly provide
that it may be relied upon by the lenders, underwriters or other sources of
financing with respect to the transactions contemplated by this Agreement.
(e) Financing. Financing contemplated by that certain letter
dated October 4, 1996 from Bankers Trust Company to Buyer, including a Rule
144A private placement of senior subordinated notes on terms which are
satisfactory to Buyer which generates gross proceeds to the
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Company or one or more of its subsidiaries of no less than $100,000,000, shall
have been consummated.
(f) Closing Deliveries. All documents and instruments
required to be delivered by the Company and the Selling Securityholders
pursuant to Section 8.2(b) shall have been delivered.
(g) Change in the Business of Xxxxxx Subsidiaries. No failure
to comply with, or breach of, any representation or warranty, covenant,
obligation or undertaking made under the Xxxxxx Agreements which has resulted,
or could reasonably be expected to result, in Losses to the Company in excess
of $3,000,000 shall have occurred; and there shall have been no material
adverse change in the business, operations, properties, condition (financial or
otherwise), results of operations, liabilities or assets of any of the Xxxxxx
Subsidiaries.
(h) Other Documents. All deliveries required to be made under
or pursuant to the Disposition Option Redemption Agreements and the Exercise
Agreements shall have been made, including, without limitation, the payment of
any amounts required to be made thereunder and the delivery of any stock
certificates, cancelled option agreements or other documents required to be
made thereunder.
7.3. Conditions to Obligations of the Company and the Selling
Securityholders. The obligation of the Company and the Selling Securityholders
to effect the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
the Company and the Selling Securityholders.
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, and the Company and the Selling Securityholders shall have
received a certificate signed by the chief executive officer or by the chief
financial officer of Buyer certifying that such representations and warranties
are true and correct as of the Closing Date as though made on and as of the
date hereof, except for changes contemplated in this Agreement.
(b) Performance of Obligations. Buyer shall have performed in
all material respects all obligations required to be performed by it under this
Agreement prior to the Closing Date, and the Company and the Selling
Securityholders shall have received a certificate signed on behalf of Buyer by
the chief executive officer or by the chief financial officer of Buyer to such
effect.
(c) Solvency Opinion. The Selling Securityholders shall have
received an opinion addressed to, and in form and substance reasonably
satisfactory to, the Selling Securityholders from an investment banker,
certified public accountant, appraiser or other similarly-qualified person
reasonably acceptable to the Selling Securityholders to the effect that the
Company is, and after giving effect to the transactions contemplated hereby
(including without limitation the payment of the Redemption Price) will be
solvent; provided, that if any such opinion is received and accepted
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by any underwriter, lender or other financial institution in connection with
the financing contemplated in Section 7.2(e) above, the Selling Securityholders
agree that the person giving such opinion shall be deemed to be acceptable to
the Selling Securityholders.
(d) Redemption Price. The Selling Securityholders shall have
received the Redemption Price.
(e) Closing Deliveries. All documents and instruments
required to be delivered by Buyer pursuant to Section 8.2(a) shall have been
delivered.
ARTICLE VIII
CLOSING
8.1. Closing. The closing of the Purchase, the Redemptions and the
other transactions contemplated by this Agreement (the "Closing") will take
place at the offices of Xxxxxx & Xxxxxx L.L.P., Dallas, Texas, at 10:00 a.m.,
local time, or at such other place and time as Buyer and the Company may agree,
on the 5th business day after the conditions specified in Article VII have been
satisfied or waived by the appropriate party. For purposes of this Agreement,
each and every event referred to in this Article VIII that is to occur on the
Closing Date shall be deemed to have occurred contemporaneously.
8.2. Actions to Occur at Closing.
(a) At the Closing, Buyer shall deliver to the Company the
following:
(i) the Purchase Price as provided in Section 1.3(b);
(ii) the certificates referenced in Sections 7.3(a) and
(b);
(iii) counterparts of the Atrium Indemnification Escrow
Agreement executed by Buyer;
(iv) counterparts of the Xxxxxx Indemnification Escrow
Agreement executed by Buyer;
(v) counterparts of the Stockholders Agreement executed
by Buyer;
(vi) counterparts of the Monitoring and Oversight
Agreement executed by Xxxxx, Muse & Co. Partners, L.P.; and
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(vii) counterparts of the Financial Advisory Agreement
executed by Xxxxx, Muse & Co Partners, L.P.; and
(viii) counterparts of the Xxxxxxxx Escrow Amendment
executed by Buyer.
(b) At the Closing:
(i) the Company and the Selling Securityholders shall
deliver to Buyer the certificates described in Sections 7.2(a)
and (b);
(ii) the Company and the Selling Securityholders shall
deliver to Buyer the opinions of counsel described in Section
7.2(d);
(iii) the Company shall deliver to Buyer one or more
stock certificates evidencing the Purchase Shares, executed by a
duly authorized officer of the Company;
(iv) the Company and the Selling Securityholders who are
to be signatories to the Stockholders Agreement shall deliver to
Buyer counterparts of the Stockholders Agreement executed by such
persons;
(v) the Atrium Indemnitors shall deliver to Buyer
counterparts of the Atrium Indemnification Escrow Agreement duly
executed by the Atrium Indemnitor Representative;
(vi) the Xxxxxx Indemnitors shall deliver to Buyer
counterparts of the Xxxxxx Indemnification Escrow Agreement duly
executed by the Xxxxxx Indemnitor Representative;
(vii) the Company shall deliver to Buyer counterparts of
the Monitoring and Oversight Agreement and the Financial Advisory
Agreement, duly executed by the Company;
(viii) each of the Company and the Selling Securityholders
who are signatories to the Termination Agreement shall deliver to
the Buyer counterparts of the Termination Agreement duly executed
by such persons;
(ix) the Company shall deliver to the Selling
Securityholders the Redemption Price as provided in Article I;
(x) the Company shall deliver to the Disposition Option
Holders the Disposition Option Redemption Price;
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(xi) the Company shall deliver to the Key Employees one
or more stock certificates evidencing the Key Employee Shares,
duly executed by an authorized officer of the Company, and the
Key Employees shall deliver the Key Employee Purchase Price to
the Company; and
(xii) the Selling Securityholders shall deliver to the
Company certificates representing the Converted Common Shares and
the Converted Preferred Shares accompanied by executed stock
transfer powers or otherwise endorsed for transfer to Buyer's
reasonable satisfaction;
(xiii) Heritage shall deliver to the Company the Warrant
marked "CANCELLED" by a duly authorized representative of
Heritage;
(xiv) the Company shall deliver to Buyer a fully-executed
copy of each Replacement Option Agreement;
(xv) the Selling Securityholders and the Company shall
deliver to Buyer a fully-executed copy of the Seller Escrow
Agreement;
(xvi) the Company shall deliver to Buyer a fully-executed
copy of the Xxxxxx Buy-Sell Amendment;
(xvii) the Company shall deliver to Buyer a fully-executed
copy of each of the Buy-Sell Agreements;
(xviii) the Xxxxxxxx Indemnitors shall deliver to
Buyer counterparts of the Xxxxxxxx Escrow Amendment duly executed
by each Xxxxxxxx Indemnitor;
(xix) the Company shall pay to Xxxxxxx X. Xxxxxxxx a
bonus in the amount of $3,000,000;
(xx) the Company shall pay to Xxxxx, Muse & Co.
Partners, L.P. the Transaction Fee;
(xxi) the Company shall deliver to Buyer resignation
letters duly executed by each director and/or executive officer
of the Company which Buyer requests pursuant to Section 4.14
hereof; and
(xxii) the Company and the Selling Securityholders shall
deliver to Buyer each and every other agreement, document or
instrument executed or entered to by any party to this Agreement
in connection with the transactions contemplated by this
Agreement, duly executed by all parties to such agreement,
including but not limited to those agreements the forms of which
are attached as exhibits to this Agreement.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer, the Company and Heritage;
(b) by any of Buyer, the Company or Heritage:
(i) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling, or other action shall have become final and
nonappealable;
(ii) if the Closing shall not have occurred by 5:00
p.m., Dallas, Texas time on December 20, 1996; provided, however, that the
right to terminate this Agreement under this clause (ii) shall not be available
to any party whose breach of this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by Buyer:
(i) if there shall have been any breach of any
representation or warranty or any material breach of any covenant or agreement
set forth in this Agreement on the part of the Company or a Selling
Securityholder, which breach shall not have been cured within 20 days following
receipt by the breaching party of written notice of such breach; and
(ii) if either of the Company or any Selling
Securityholder shall fail to perform any of their respective obligations under
Section 8.2(b);
(d) by the Company or Heritage:
(i) if Buyer shall breach any representation or
warranty or materially breach any covenant or agreement on the party of Buyer
set forth in this Agreement, which breach shall not have been cured within 20
days following receipt by Buyer of written notice to such breach; and
(ii) if Buyer shall fail to perform any of its
obligations under Section 8.2(a).
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The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
employees, accountants, consultants, legal counsel, agents or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other parties hereto who have the right to
terminate this Agreement.
9.2. Effect of Termination. In the event of a termination of this
Agreement as provided above, there shall be no liability on the part of any of
the Company, the Selling Securityholders or Buyer, except for liability arising
out of a breach of this Agreement.
ARTICLE X
INDEMNIFICATION
10.1. Indemnification of Buyer Indemnified Parties. Subject to the
overall limitations, minimum amounts and time limitations set forth in Section
10.5 below and the limitations on recourse set forth in Section 10.6 below:
(a) The Company and each Atrium Indemnitor, jointly and
severally, agree to indemnify and hold harmless Buyer and each officer,
director, employee, consultant, stockholder and affiliate of Buyer (which after
the Closing shall include the Company and its subsidiaries) (collectively, the
"Buyer Indemnified Parties") from and against any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs and expenses
(including court costs and attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively,
"Buyer Indemnified Costs") which any of the Buyer Indemnified Parties may
sustain, or to which any of Buyer Indemnified Parties may be subjected,
relating to or arising directly or indirectly out of:
(i) any claim, action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or which may
be brought against the Company or any of its subsidiaries, or any of
their respective properties or assets, arising out of, in connection
with or as a result of any facts or circumstances existing on or before
the Closing Date (regardless of whether such matters have been disclosed
to Buyer in the Schedules to this Agreement or otherwise, but
specifically excluding (A) all matters referred to in Section 2.1(m) or
disclosed on Schedule 2.1(m) and (B) all matters which are pending or
which may be brought against any of the Xxxxxx Subsidiaries, or any of
their respective properties or assets, arising out of, in connection
with or as a result of any facts or circumstances existing on or before
September 30, 1996) (such indemnified claims, matters, suits, inquiries,
proceedings, grievances or arbitrations are referred to herein as
"Litigation Matters");
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(ii) any claim, action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or which may
be brought against the Company or any of its subsidiaries, or any of
their respective properties or assets, arising out of, in connection
with or as a result of any environmental matters disclosed in Part I of
Schedule 2.1(m) (the "Pre-Existing Xxxxxxxx Environmental Matters"),
including, but not limited to, any costs and expenses which any Buyer
Indemnified Party may sustain in connection with any remediation, clean-
up, modification, repairs, work, construction, alterations or
installations on or in connection with any real property to which the
Pre-Existing Xxxxxxxx Environmental matters relate; and
(iii) any breach or default by the Company or any of the
Atrium Indemnitors of or under any of the representations, warranties or
other provisions of Section 2.1.
Buyer Indemnified Costs relating to or arising directly or indirectly out of
Litigation Matters are herein referred to as "Buyer Indemnified Litigation
Costs."
(b) Each Selling Securityholder other than the Xxxxxx
Indemnitors severally agrees to indemnify and hold harmless each of the Buyer
Indemnified Parties from and against any and all Buyer Indemnified Costs which
any of the Buyer Indemnified Parties may sustain, or to which any of the Buyer
Indemnified Parties may be subjected, arising out of any breach or default by
such Selling Securityholder of or under any of the representations, warranties,
covenants, agreements or provisions of this Agreement or any of the other
Transaction Documents, other than the representations, warranties or other
provisions of Section 2.1 (for which the Company and the Atrium Indemnitors
have agreed under Section 10.1(a) to indemnify the Buyer Indemnified Parties);
(c) The Company and each Selling Securityholder other than the
Xxxxxx Indemnitors, jointly and severally, agree to indemnify and hold harmless
each of the Buyer Indemnified Parties from and against any and all Buyer
Indemnified Costs which any of the Buyer Indemnified Parties may sustain, or to
which any of the Buyer Indemnified Parties may be subjected, arising out of any
breach or default by the Company of or under any of the representations,
warranties, covenants, agreements or provisions of this Agreement or any of the
other Transaction Documents, other than the representations, warranties or
other provisions of Section 2.1 (for which the Company and the Atrium
Indemnitors have agreed under Section 10.1(a) to indemnify the Buyer
Indemnified Parties); and
(d) Each Xxxxxx Indemnitor severally agrees to indemnify and
hold harmless each of the Buyer Indemnified Parties from and against any and
all Buyer Indemnified Costs which any of the Buyer Indemnified Parties may
sustain, or to which any of the Buyer Indemnified Parties may be subjected,
arising out of any breach or default by such Xxxxxx Indemnitor of or under any
of the representations, warranties, covenants, agreements or provisions of this
Agreement applicable to such Xxxxxx Indemnitor or of any of the Transaction
Documents to which such Xxxxxx Indemnitor is a party.
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10.2. Indemnification of the Seller Indemnified Parties. Buyer agrees
to indemnify and hold harmless each of the Selling Securityholders and each
officer, authorized representative, employee, consultant, limited partner,
general partner or affiliate of any Selling Securityholder which is not a
natural person (collectively, the "Seller Indemnified Parties" and together
with Buyer Indemnified Parties, the "Indemnified Parties") from and against any
and all damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs and expenses (including court costs and reasonable attorneys'
fees and expenses incurred in investigating and preparing for any litigation or
proceeding) (collectively, the "Seller Indemnified Costs" and together with
Buyer Indemnified Costs, the "Indemnified Costs") which any of the Seller
Indemnified Parties may sustain, or to which any of the Seller Indemnified
Parties may be subjected, arising out of or relating to any breach or default
by Buyer of or under any of the representations, warranties, covenants,
agreements or other provisions of this Agreement or any agreement or document
executed in connection herewith.
10.3. Defense of Third-Party Claims. An Indemnified Party shall give
prompt written notice to any entity or person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he or she may have to such Indemnified Party under this Article X
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as they deem appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at his, her or
its own expense, to participate in the defense of such third-party action
(provided, however, that the Indemnifying Parties shall pay the attorneys' fees
of the Indemnified Party if (i) the employment of separate counsel shall have
been authorized in writing by any such Indemnifying Party in connection with
the defense of such third-party action, (ii) the Indemnifying Parties shall not
have employed counsel reasonably satisfactory to the Indemnified Party to have
charge of such third-party action, or (iii) the Indemnified Party's counsel
shall have advised the Indemnified Party in writing, with a copy to the
Indemnifying Party, that there is a conflict of interest that could make it
inappropriate under applicable standards of professional conduct to have common
counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party;
(c) No Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by each claimant or
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plaintiff to each Indemnified Party of a release from all liability in respect
of such third-party action; and
(d) The Indemnifying Party shall not be entitled to control
(but shall be entitled to participate at their own expense in the defense of),
and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any third-
party action (i) as to which the Indemnifying Party fails to assume the defense
within a reasonable length of time or (ii) to the extent the third-party action
seeks an order, injunction, or other equitable relief against the Indemnified
Party which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article X and, in connection
therewith, shall furnish such records, information, and testimony and attend
such conferences, discovery proceedings, hearings, trials, and appeals as may
be reasonably requested.
10.4. Direct Claims. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 10.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The
failure of the Indemnified Party to exercise promptness in such notification
shall not amount to a waiver of such claim unless the resulting delay
materially prejudices the position of the Indemnifying Party with respect to
such claim.
10.5. Limitations. Subject to Section 11.18 hereof, the following
provisions of this Section 10.5 shall be applicable after the time of the
Closing:
(a) Minimum Loss.
(i) No Indemnifying Party shall be required to
indemnify an Indemnified Party under this Article X for a breach of any
representation or warranty except to the extent that the aggregate amount of
Indemnified Costs for which the Indemnified Party is otherwise entitled to
indemnification pursuant to this Article X exceeds $750,000 (the "Minimum
Loss"), whereupon the Indemnified Party shall be entitled to be paid the excess
of (A) the aggregate amount of such Indemnified Costs over (B) the Minimum
Loss, subject to the limitations on recovery and recourse set forth in this
Section 10.5 and in Section 10.6 below; provided, however, that the Buyer
Indemnified Costs relating to or arising directly or indirectly out of any
inaccuracies in any representation or warranty made by any of the Selling
Securityholders in Section 2.2 (other than the representations and warranties
made in Section 2.2(e)) (collectively, "Unlimited Claims") shall be indemnified
in their entirety by such Selling Securityholder or Selling Securityholders, as
applicable,
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and shall not be subject to either the Minimum Loss requirement described
above, the liability caps referred to in Section 10.5(d) or the limitations as
to recourse referred to in Sections 10.6 below. For purposes of determining
the aggregate amount of Minimum Loss suffered by an Indemnified Party, each
representation and warranty contained in this Agreement for which
indemnification can be or is sought hereunder shall be read (including, without
limitation, for purposes of determining whether a breach of such representation
or warranty has occurred) without regard to materiality (including Material
Adverse Effect) qualifications that may be contained therein. In addition, in
determining whether an Indemnifying Party shall be required to indemnify an
Indemnified Party under this Article X, once the Minimum Loss requirement set
forth in this clause (i) has been satisfied, each representation and warranty
contained in this Agreement for which indemnification can be or is sought
hereunder shall be read (including, without limitation for purposes of
determining whether a breach of such representation or warranty has occurred)
without regard to materiality (including Material Adverse Effect)
qualifications that may be contained therein. As used in the foregoing
provisions of this Section 10.5(a), an "Indemnified Party" refers to all of the
Buyer Indemnified Parties on the one hand and all of the Seller Indemnified
Parties on the other hand, and an "Indemnifying Party" refers to the Buyer on
the one hand and the Company and each of the Selling Securityholders, taken
together, on the other hand.
(ii) Notwithstanding the foregoing clause (i), no Buyer
Indemnified Litigation Costs shall be included in calculating the Minimum Loss
amount until the total amount of such Buyer Indemnified Litigation Costs
exceeds $450,000 (such amount, the "Litigation Deductible"), and no Buyer
Indemnified Litigation Costs shall be indemnifiable under this Article X unless
and until both (A) the total amount of Buyer Indemnified Litigation Costs
exceeds the $450,000 Litigation Deductible and (B) the $750,000 Minimum Loss
requirement set forth in clause (i) above has been satisfied (whether due to
the incurrence of Buyer Indemnified Litigation Costs or other Buyer Indemnified
Costs).
(b) Minimum Claim. Notwithstanding anything to the contrary
stated herein, if any third-party action or direct claim results in any
damages, losses, liabilities, charges, penalties, costs and expenses (including
court costs and attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) which do not in the aggregate
exceed $1,000, such damages, losses, liabilities, charges, penalties, costs and
expenses shall not be deemed to be Indemnified Costs.
(c) Limitation as to Time. No Indemnifying Party shall be
liable for any Indemnified Costs pursuant to this Article X unless a written
claim for indemnification in accordance with Section 10.3 or 10.4 is given by
the Indemnified Party to the Indemnifying Party with respect thereto within
eighteen (18) months after the Closing, except that this time limitation shall
not apply to any (i) claims for Indemnified Costs relating to or arising
directly or indirectly out of any Unlimited Claims, (ii) claims relating to
Pre-Existing Xxxxxxxx Environmental Matters or Pre-Existing Xxxxxxxx Litigation
Matters, or (iii) claims contemplated by Section 11.18. Nothing in this
Section 10.5(c) shall (x) extend or limit, or shall be deemed to extend or
limit the period of time during which claims may be bought by the Xxxxxx
Indemnitees for Losses which are indemnifiable
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under the Xxxxxx Agreements, as to which Losses, (including without limitation,
Losses arising from Unlimited Claims (as defined in Section 11.6(b) of the
Xxxxxx Exchange Agreement and in Section 13.5(a) of the Xxxxxx Purchase
Agreement (collectively, the "Xxxxxx Agreements Unlimited Claims")) and Cash
Tax Claims (as defined in Section 13.6 of the Xxxxxx Purchase Agreement, also
being referred to in this Agreement as "Cash Tax Claims")), the time limits set
forth in the Xxxxxx Agreements, if any, shall apply, or (y) affect any term of
the Xxxxxx Buy-Sell Agreement (as amended by the Xxxxxx Buy-Sell Amendment) or
the Xxxxxx Indemnification Escrow Agreement, including but not limited to the
provisions thereof which relate to the terms and conditions upon which, and the
time at which, the Xxxxxx Escrowed Amount shall be released.
(d) Liability Cap. Without limiting any of the foregoing
provisions of this Section 10.5, the parties hereto agree that (i) subject to
the separate and independent limitations referred to in Section 10.6(c) below
with respect to the Pre-Existing Xxxxxxxx Environmental Matters and the
litigation matters listed as arising pre-July 3, 1995 on the "Litigation
Schedule" attached to Schedule 2.1(h) (the "Pre-Existing Xxxxxxxx Litigation
Matters"), the Atrium Indemnitors shall be liable to the Buyer Indemnified
Parties for no more than $2,000,000 in Indemnified Costs, except for Buyer
Indemnified Costs arising from Unlimited Claims and claims contemplated in
Section 11.18; and (ii) the Xxxxxx Indemnitors shall be liable to the Buyer
Indemnified Parties and the Xxxxxx Indemnitees for no more than $3,000,000 in
the aggregate for Indemnified Costs under this Agreement and Losses under the
Xxxxxx Agreements, except for (x) Buyer Indemnified Costs arising from
Unlimited Claims and, if appplicable, claims contemplated in Section 11.18; and
(y) Losses arising from Xxxxxx Agreements Unlimited Claims and Cash Tax Claims.
10.6. Recourse against Escrowed Funds. Subject to Section 11.18
hereof, the following provisions of this Section 10.6 shall be applicable after
the time of the Closing.
(a) Atrium Indemnitors. With respect to any claim by a Buyer
Indemnified Party against any Atrium Indemnitor for Buyer Indemnified Costs
payable under this Article X (including, without limitation, Unlimited Claims),
the Buyer Indemnified Party shall first seek payment only out of the Atrium
Escrowed Amount for all amounts due to the Buyer Indemnified Party from such
Atrium Indemnitor with respect to such claim in an amount not to exceed the
Maximum Escrow Amount (as defined below) of such Atrium Indemnitor. In no
event shall the Buyer Indemnified Party be entitled to be paid out of the
Atrium Escrowed Amount in respect of claims against an Atrium Indemnitor an
amount in excess of such Atrium Indemnitor's Maximum Escrow Amount; provided,
that if such Atrium Indemnitor's Maximum Escrow Amount has been reduced to zero
pursuant to this Section 10.6(a), the Buyer Indemnified Party shall be
entitled, subject to the terms and conditions of this Agreement, to seek
payment from such Atrium Indemnitor directly for all amounts remaining due or
thereafter becoming due to the Buyer Indemnified Party from such Atrium
Indemnitor for Unlimited Claims under this Article X and for claims
contemplated in Section 11.18. In the event of any claim by a Buyer
Indemnified Party against one or more Atrium Indemnitors other than an
Unlimited Claim or a claim contemplated by Section 11.18, each Atrium
Indemnitor's Maximum Escrow Amount shall be reduced (but not below zero) by
such Atrium Indemnitor's pro rata portion, determined in accordance with the
percentage set forth opposite such Atrium
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Indemnitor's name in Column B on Schedule V, of the amount paid out of the
Atrium Escrowed Amount in respect of such claim (or, if applicable, such Atrium
Indemnitor's Maximum Escrow Amount shall be reduced (but not below zero), by
the portion of such Atrium Indemnitor's Maximum Escrow Amount as may be set
forth in written release instructions executed and delivered to the Escrow
Agent by Heritage or the Atrium Indemnitor Representative on behalf of any
Atrium Indemnitor other than Heritage, as the case may be), and, to the extent
that the portion of such claim for which such Atrium Indemnitor is liable
exceeds such Atrium Indemnitor's Maximum Escrow Amount as of the time of
payment of such claim out of the Atrium Escrowed Amount, then the Buyer
Indemnified Party shall not be entitled to seek payment from such Atrium
Indemnitor directly for such excess; provided, that the Buyer Indemnified Party
shall then be entitled to seek the remaining amount of such claim from such
other Atrium Indemnitors whose respective Maximum Escrow Amounts exceed zero,
pro rata based upon the Maximum Escrow Amounts of such Atrium Indemnitors as of
the time of payment of such claim, until such claim has been paid in full or
each Atrium Indemnitor's Maximum Escrow Amount has been reduced to zero. In
the event of any such claim against an Atrium Indemnitor by a Buyer Indemnified
Party which is an Unlimited Claim, such Atrium Indemnitor's Maximum Escrow
Amount shall be reduced (but not below zero) by the amount paid out of the
Atrium Escrowed Amount in respect of such claim, and to the extent that the
amount of such claim exceeds such Atrium Indemnitor's Maximum Escrow Amount as
of the time of payment of such claim out of the Atrium Escrowed Amount, the
Buyer Indemnified Party shall be entitled to seek payment from such Atrium
Indemnitor for such excess. For purposes of this Section 10.6(a), an Atrium
Indemnitor's "Maximum Escrow Amount" shall mean, at any time, such Atrium
Indemnitor's pro rata share of the Atrium Escrowed Amount, less any amounts
previously deducted from such Atrium Indemnitor's Maximum Escrow Amount in
accordance with this Section 10.6(a). The parties hereto intend and agree
that, notwithstanding anything to the contrary stated in any other paragraph of
this Article X, the Buyer Indemnified Parties' sole recourse against the Atrium
Indemnitors for indemnification hereunder (other than with respect to Unlimited
Claims (as to which no such recourse limitation shall apply), and with respect
to, Pre-Existing Xxxxxxxx Environmental Matters and Pre-Existing Xxxxxxxx
Litigation Matters (as to which the recourse limitations set forth in Section
10.6(c) shall apply)) shall be governed by, and subject to the terms and
provisions of, the Atrium Indemnification Escrow Agreement, and that the
maximum aggregate liability for the Atrium Indemnitors under this Article X
(other than in respect of Unlimited Claims, as to which no such limit shall
apply, and Pre-Existing Xxxxxxxx Environmental Claims, as to which the limit
set forth in Section 10.6(c)(i) shall apply) shall in no event exceed the
Atrium Escrowed Amount.
(b) Xxxxxx Indemnitors. With respect to any claim by a Buyer
Indemnified Party against any Xxxxxx Indemnitor for Buyer Indemnified Costs
payable under Article X of this Agreement (including, without limitation,
Unlimited Claims), the Buyer Indemnified Party shall first seek payment only
out of the Xxxxxx Escrowed Amount for all amounts due to the Buyer Indemnified
Party from such Xxxxxx Indemnitor with respect to such claim in an amount not
to exceed the Maximum Escrow Amount (as defined below) of such Xxxxxx
Indemnitor. In no event shall the Buyer Indemnified Party be entitled to be
paid out of the Xxxxxx Escrowed Amount in respect of claims for Buyer
Indemnified Costs under this Agreement against a Xxxxxx Indemnitor
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an amount in excess of such Xxxxxx Indemnitor's Maximum Escrow Amount;
provided, that if such Xxxxxx Indemnitor's Maximum Escrow Amount has been
reduced to zero pursuant to this Section 10.6(b), the Buyer Indemnified Party
shall be entitled, subject to the terms and conditions of this Agreement, to
seek payment from such Xxxxxx Indemnitor directly for all amounts remaining due
or thereafter becoming due to the Buyer Indemnified Party from such Xxxxxx
Indemnitor for Unlimited Claims under this Article X and for claims
contemplated in Section 11.18. In the event of any claim by a Buyer
Indemnified Party against one or more Xxxxxx Indemnitors other than an
Unlimited Claim or a claim contemplated by Section 11.18, each Xxxxxx
Indemnitor's Maximum Escrow Amount shall be reduced (but not below zero) by
such Xxxxxx Indemnitor's pro rata portion, determined in accordance with the
percentage set forth opposite such Xxxxxx Indemnitor's name in Column B on
Schedule V, of the amount paid out of the Xxxxxx Escrowed Amount in respect of
such claim, and, to the extent that the portion of such claim for which such
Xxxxxx Indemnitor is liable exceeds such Xxxxxx Indemnitor's Maximum Escrow
Amount as of the time of payment of such claim out of the Xxxxxx Escrowed
Amount, then the Buyer Indemnified Party shall not be entitled to seek payment
from such Xxxxxx Indemnitor directly for such excess; provided, that the Buyer
Indemnified Party shall then be entitled to seek the remaining amount of such
claim from such other Xxxxxx Indemnitors whose respective Maximum Escrow
Amounts exceed zero, pro rata based upon the Maximum Escrow Amounts of such
Xxxxxx Indemnitors as of the time of payment of such claim, until such claim
has been paid in full or each Xxxxxx Indemnitor's Maximum Escrow Amount has
been reduced to zero. In the event of any such claim against a Xxxxxx
Indemnitor by a Buyer Indemnified Party which is an Unlimited Claim, such
Xxxxxx Indemnitor's Maximum Escrow Amount shall be reduced (but not below zero)
by the amount paid out of the Xxxxxx Escrowed Amount in respect of such claim,
and to the extent that the amount of such claim exceeds such Xxxxxx
Indemnitor's Maximum Escrow Amount as of the time of payment of such claim out
of the Xxxxxx Escrowed Amount, the Buyer Indemnified Party shall be entitled to
seek payment from such Xxxxxx Indemnitor for such excess. For purposes of this
Section 10.6(b), a Xxxxxx Indemnitor's "Maximum Escrow Amount" shall mean, at
any time, such Xxxxxx Indemnitor's pro rata share of the Xxxxxx Escrowed
Amounts, less any amounts previously deducted from such Xxxxxx Indemnitor's
Maximum Escrow Amount in accordance with this Section 10.6(b). The parties
hereto intend and agree that, notwithstanding anything to the contrary stated
in any other paragraph of this Article X, (i) the Buyer Indemnified Parties'
sole recourse against the Xxxxxx Indemnitors for indemnification hereunder
(other than with respect to Unlimited Claims, as to which no such recourse
limitation shall apply) shall be governed by, and subject to the terms and
provisions of, the Xxxxxx Indemnification Escrow Agreement, and that the
maximum aggregate liability for the Xxxxxx Indemnitors under this Article X
(other than in respect of Unlimited Claims, as to which no such limit shall
apply) shall in no event exceed the Xxxxxx Escrowed Amount, and (ii) the
respective rights of the Xxxxxx Indemnitors and the Xxxxxx Indemnitees under
the Xxxxxx Agreements shall not be extended, limited, reduced or otherwise
affected in any way by any provisions set forth in this Agreement, including,
but not limited to, the provisions of this Article X; provided, that the Xxxxxx
Indemnitors shall be liable to the Buyer Indemnified Parties and the Xxxxxx
Indemnitees for no more than $3,000,000 in the aggregate for Indemnified Costs
under this Agreement and Losses under the Xxxxxx Agreements, except for (x)
Buyer Indemnified Costs arising from Unlimited Claims and claims contemplated
in Section 11.18; and (y) Losses arising from Xxxxxx Agreements Unlimited
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Claims and Cash Tax Claims. Notwithstanding any other provision set forth in
this Agreement or the Xxxxxx Agreements to the contrary, no Indemnified Party
may recover under this Agreement for any Indemnified Costs as to which such
Indemnified Party has already received, or is simultaneously receiving,
indemnification pursuant to the Xxxxxx Agreements and no Xxxxxx Indemnitee may
recover under the Xxxxxx Agreements for any Losses as to which such Xxxxxx
Indemnitee has already received, or is simultaneously receiving,
indemnification pursuant to this Agreement.
(c) Limitations with Respect to Certain Xxxxxxxx Matters. The
parties hereto intend and agree that, notwithstanding anything to the contrary
stated in any other paragraph of this Article X:
(i) the Buyer Indemnified Parties' sole recourse
against the Atrium Indemnitors for indemnification with respect to any
of the Pre-Existing Xxxxxxxx Environmental Matters shall be limited to
the $600,000 amount held pursuant to the Xxxxxxxx Escrow Agreement, as
amended by the Xxxxxxxx Escrow Amendment referred to in Section 1.8(d)
above (such amount, the "Retained Xxxxxxxx Escrow Amount"). Indemnified
Costs with respect to the Pre-Existing Xxxxxxxx Environmental Matters
shall not be subject to the time limitations or requirements of Minimum
Loss set forth in Section 10.5(a) and 10.5(c);
(ii) the Buyer Indemnified Parties shall not be entitled
to seek payment from the Atrium Indemnitors or from the Atrium Escrow
Amount for indemnification with respect to any Pre-Existing Xxxxxxxx
Litigation Matters until both of the following conditions shall have
been satisfied: (A) Buyer Indemnified Litigation Costs shall have
exceeded the Litigation Deductible, and (B) the Minimum Loss requirement
referred to in Section 10.5(a) shall have been satisfied (whether due to
the incurrence of Buyer Indemnified Litigation Costs or other Buyer
Indemnified Costs);
(iii) if the conditions described in Section 10.6(c)(ii)
have been satisfied, any Buyer Indemnified Party shall first seek
payment for Buyer Indemnified Costs arising in connection with the Pre-
Existing Xxxxxxxx Litigation Matters from the Retained Xxxxxxxx Escrow
Amount for all amounts due to the Buyer Indemnified Party from the
Atrium Indemnitors with respect to such claim, and to the extent that
the amount of any such claim(s) exceeds the remaining balance, if any,
of the Retained Xxxxxxxx Escrow Amount as of the time of payment of such
claim, the Buyer Indemnified Party shall be entitled to seek payment
from the Atrium Indemnitors for such excess; and
(iv) on the date which is 18 months after the Closing
Date, Buyer and the Atrium Indemnitor Representative (on behalf of the
Atrium Indemnitors) shall, and the Company shall cause Xxxxxxxx
Companies, Inc. to, execute and deliver to the Xxxxxxxx Escrow Agent
joint written instructions to release to the Atrium Indemnitor
Representative such amounts of the Retained Xxxxxxxx Escrow Amount as
Buyer shall determine (in Buyer's discretion after consultation with the
Atrium Indemnitor Representative) will not be
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necessary to compensate the Buyer Indemnified Parties for Buyer
Indemnified Costs relating to Pre-Existing Xxxxxxxx Environmental
Matters and Pre-Existing Xxxxxxxx Litigation Matters.
10.7. Instructions to Escrow Agent.
(a) Individual Atrium Indemnitors. Each Atrium Indemnitor
(other than Heritage) hereby covenants and agrees with Buyer that, if such
Atrium Indemnitor is or becomes obligated to indemnify a Buyer Indemnified
Party for Buyer Indemnified Costs under this Article X, such Atrium Indemnitor
hereby authorizes and directs the Atrium Indemnitor Representative (hereinafter
defined) to, on behalf of such Atrium Indemnitor, execute and deliver to the
Escrow Agent written instructions to release to such Buyer Indemnified Party
such amounts of the Atrium Escrowed Amount as are necessary to indemnify the
Buyer Indemnified Party for such Buyer Indemnified Costs. Each Atrium
Indemnitor (other than Heritage) hereby covenants and agrees with Buyer that,
if such Atrium Indemnitor is or becomes obligated to indemnify a Buyer
Indemnified Party for Buyer Indemnified Costs under this Article X with respect
to Pre-Existing Xxxxxxxx Environmental Matters or Pre-Existing Xxxxxxxx
Litigation Matters, such Atrium Indemnitor hereby authorizes and directs the
Atrium Indemnitor Representative to, on behalf of such Atrium Indemnitor,
execute and deliver to the Xxxxxxxx Escrow Agent written instructions to
release to such Buyer Indemnified Party such amounts of the Retained Xxxxxxxx
Escrow Amount as are necessary to indemnify such Buyer Indemnified Party for
such Buyer Indemnified Costs. Each Atrium Indemnitor (other than Heritage)
hereby covenants and agrees with Buyer that, if Heritage executes and delivers
to the Escrow Agent written instructions to release to a Buyer Indemnified
Party an amount no greater than Heritage's Maximum Escrow Amount from the
Atrium Escrowed Amount, such Atrium Indemnitor hereby authorizes and directs
the Atrium Indemnitor Representative to, on behalf of such Atrium Indemnitor,
execute and deliver to the Escrow Agent written instructions to release to such
Buyer Indemnified Parties such amounts as are set forth in the written
instructions executed by Heritage.
(b) Xxxxxx Indemnitors. Each Xxxxxx Indemnitor hereby
covenants and agrees with Buyer that, if such Xxxxxx Indemnitor is or becomes
obligated to indemnify a Buyer Indemnified Party for Buyer Indemnified Costs
under this Article X, such Xxxxxx Indemnitor hereby authorizes and directs the
Xxxxxx Indemnitor Representative (hereinafter defined) to, on behalf of such
Xxxxxx Indemnitor, execute and deliver to the Escrow Agent written instructions
to release to such Buyer Indemnified Party such amounts of the Xxxxxx Escrowed
Amount as are necessary to indemnify such Buyer Indemnified Party for such
Buyer Indemnified Costs.
(c) Heritage. Heritage hereby covenants and agrees with Buyer
that, if it is or becomes obligated to indemnify a Buyer Indemnified Party for
Buyer Indemnified Costs under this Article X, it shall execute and deliver to
the Escrow Agent or the Xxxxxxxx Escrow Agent, as applicable, written
instructions to release to such Buyer Indemnified Party such amounts of the
Atrium Escrowed Amount or the Retained Xxxxxxxx Escrow Amount, as applicable,
as are necessary to indemnify such Buyer Indemnified Party for such Buyer
Indemnified Costs. Heritage hereby covenants and agrees with Buyer that, if
the Atrium Indemnitor Representative executes and delivers
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to the Escrow Agent written instructions to release to a Buyer Indemnified
Party from the Atrium Escrowed Amount an amount not to exceed the Maximum
Escrow Amount for any Atrium Indemnitor, Heritage shall execute and deliver to
the Escrow Agent written instructions to release to such Buyer Indemnified
Party the amounts set forth in the written instructions executed by the Atrium
Indemnitor Representative.
10.8. Appointment of Atrium Indemnitor Representative. By the
execution and delivery of this Agreement, each Atrium Indemnitor (other than
Heritage) hereby irrevocably constitutes and appoints Xxxxxxx X. Xxxxxxxx as
the true and lawful agent and attorney-in-fact (the "Atrium Indemnitor
Representative") of such Atrium Indemnitor with full power of substitution to
act in the name, place and stead of such Atrium Indemnitor with respect to (a)
the power to execute any amendment to this Agreement as the Atrium Indemnitor
Representative shall deem necessary or appropriate in his sole discretion, (b)
delivery of the written instructions described in Section 10.7(a) on behalf of
such Atrium Indemnitor, and (c) the performance of the obligations and rights
of such Atrium Indemnitor under the Atrium Indemnification Escrow Agreement,
including, without limitation, the power to execute the Atrium Indemnification
Escrow Agreement and any amendments thereto on behalf of such Atrium
Indemnitor, to do or refrain from doing all such further acts and things, and
to execute, deliver and receive all such documents, waivers, extensions and
amendments as such Atrium Indemnitor Representative shall deem necessary or
appropriate in his sole discretion in connection with the administration of the
Atrium Indemnification Escrow Agreement (and any such actions shall be binding
on such Atrium Indemnitor).
Buyer, the other Buyer Indemnified Parties, and any other person, may
conclusively and absolutely rely, without inquiry, upon any action of the
Atrium Indemnitor Representative as the action of each Atrium Indemnitor (other
than Heritage) in all matters referred to herein, and each such Atrium
Indemnitor confirms all that the Atrium Indemnitor Representative shall do or
cause to be done by virtue of his appointment as Atrium Indemnitor
Representative. All actions by the Atrium Indemnitor Representative are
acknowledged by the parties hereto to be taken by it solely as agent and
attorney-in-fact for each Atrium Indemnitor (other than Heritage). By the
execution of this Agreement, Xxxxxxx X. Xxxxxxxx has accepted his appointment
as Atrium Indemnitor Representative and in consideration for Xxxxxxx X.
Xxxxxxxx'x agreement to act as the Atrium Indemnitor Representative, each
Atrium Indemnitor (other than Heritage) hereby agrees to indemnify and hold
Xxxxxxx X. Xxxxxxxx harmless from and against all damages, losses, liabilities,
charges, penalties, costs and expenses (including court costs and attorneys'
fees and expenses, if any) incurred by him in connection with his performance
as Atrium Indemnitor Representative. Each Atrium Indemnitor (other than
Heritage) covenants and agrees that he or she will not voluntarily revoke the
power of attorney conferred in this Section 10.8. If any Atrium Indemnitor
dies or becomes incapacitated, disabled or incompetent (such deceased,
incapacitated, disabled or incompetent Atrium Indemnitor being a "Former Atrium
Indemnitor") and, as a result, the power of attorney conferred by this Section
10.8 is revoked by operation of law, it shall not be a breach under this
Agreement if the heirs, beneficiaries, estate, administrator, executor,
guardian, conservator or other legal representative of such Former Atrium
Indemnitor (each a "Successor Atrium Indemnitor") confirms the appointment of
the Atrium Indemnitor Representative as agent and attorney-in-fact for
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such Successor Atrium Indemnitor. If the power of attorney conferred by this
Section 10.8 is revoked by operation of law and thereafter not reconfirmed by
the Successor Atrium Indemnitor prior to the Closing, such revocation shall not
be deemed a breach of any of the provisions of this Agreement provided that
such Successor Atrium Indemnitor executes and delivers such other certificates,
documents or instruments (including, without limitation, any amendments hereto
and the Atrium Indemnification Escrow Agreement) that would have been delivered
on its behalf by the Atrium Indemnitor Representative had such Successor Atrium
Indemnitor reconfirmed the agency and power of attorney conferred by this
Section 10.8. If at any time Xxxxxxx X. Xxxxxxxx dies or resigns from his
position as the Atrium Indemnitor Representative, the other Atrium Indemnitors
(other than Heritage) shall designate a successor to Xxxxxxx X. Xxxxxxxx as
soon as practicable.
10.9. Appointment of Xxxxxx Indemnitor Representative. By the
execution and delivery of this Agreement, each Xxxxxx Indemnitor hereby
irrevocably constitutes and appoints Xxxxxx X. Xxxxxx as the true and lawful
agent and attorney-in-fact (the "Xxxxxx Indemnitor Representative") of such
Xxxxxx Indemnitor with full power of substitution to act in the name, place and
stead of such Xxxxxx Indemnitor with respect to (a) the power to execute any
amendment to this Agreement as the Xxxxxx Indemnitor Representative shall deem
necessary or appropriate in his sole discretion, (b) delivery of the written
instructions described in Sections 10.7(b) on behalf of such Xxxxxx Indemnitor,
and (c) the performance of the obligations and rights of such Xxxxxx Indemnitor
under the Xxxxxx Indemnification Escrow Agreement, including, without
limitation, the power to execute the Xxxxxx Indemnification Escrow Agreement
and any amendments thereto on behalf of such Xxxxxx Indemnitor, to do or
refrain from doing all such further acts and things, and to execute, deliver
and receive all such documents, waivers, extensions and amendments as such
Xxxxxx Indemnitor Representative shall deem necessary or appropriate in his
sole discretion in connection with the administration of the Xxxxxx
Indemnification Escrow Agreement (and any such actions shall be binding on such
Xxxxxx Indemnitor).
Buyer, the other Buyer Indemnified Parties, and any other person, may
conclusively and absolutely rely, without inquiry, upon any action of the
Xxxxxx Indemnitor Representative as the action of each Xxxxxx Indemnitor in all
matters referred to herein, and each such Xxxxxx Indemnitor confirms all that
the Xxxxxx Indemnitor Representative shall do or cause to be done by virtue of
his appointment as Xxxxxx Indemnitor Representative. All actions by the Xxxxxx
Indemnitor Representative are acknowledged by the parties hereto to be taken by
it solely as agent and attorney-in-fact for each Xxxxxx Indemnitor. By the
execution of this Agreement, Xxxxxx X. Xxxxxx has accepted his appointment as
Xxxxxx Indemnitor Representative and in consideration for Xxxxxx X. Xxxxxx'x
agreement to act as the Xxxxxx Indemnitor Representative, each Xxxxxx
Indemnitor hereby agrees to indemnify and hold Xxxxxx X. Xxxxxx harmless from
and against all damages, losses, liabilities, charges, penalties, costs and
expenses (including court costs and attorneys' fees and expenses, if any)
incurred by him in connection with his performance as Xxxxxx Indemnitor
Representative. Each Xxxxxx Indemnitor covenants and agrees that he or she
will not voluntarily revoke the power of attorney conferred in this Section
10.9. If any Xxxxxx Indemnitor dies or becomes incapacitated, disabled or
incompetent (such deceased, incapacitated, disabled or incompetent Xxxxxx
Indemnitor being a "Former Xxxxxx Indemnitor") and, as a result, the power of
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attorney conferred by this Section 10.9 is revoked by operation of law, it
shall not be a breach under this Agreement if the heirs, beneficiaries, estate,
administrator, executor, guardian, conservator or other legal representative of
such Former Xxxxxx Indemnitor (each a "Successor Xxxxxx Indemnitor") confirms
the appointment of the Xxxxxx Indemnitor Representative as agent and
attorney-in-fact for such Successor Xxxxxx Indemnitor. If the power of
attorney conferred by this Section 10.9 is revoked by operation of law and
thereafter not reconfirmed by the Successor Xxxxxx Indemnitor prior to the
Closing, such revocation shall not be deemed a breach of any of the provisions
of this Agreement provided that such Successor Xxxxxx Indemnitor executes and
delivers such other certificates, documents or instruments (including, without
limitation, any amendments hereto and the Xxxxxx Indemnification Escrow
Agreement) that would have been delivered on its behalf by the Xxxxxx
Indemnitor Representative had such Successor Xxxxxx Indemnitor reconfirmed the
agency and power of attorney conferred by this Section 10.9. If at any time
Xxxxxx X. Xxxxxx dies, becomes incapacitated or resigns from his position as
the Xxxxxx Indemnitor Representative, the other Xxxxxx Indemnitors shall, as
soon as practicable, designate another person to serve as the Xxxxxx Indemnitor
Representative.
10.10. No Contribution. In the event the Closing occurs, the Selling
Securityholders, and not the Company, shall be fully liable for any Buyer
Indemnified Costs sustained by any Buyer Indemnified Parties; accordingly, the
Selling Securityholders shall not be entitled to contribution or any other
payments from the Company for any Buyer Indemnified Costs that the Selling
Securityholders are obligated to pay pursuant to this Agreement or under
applicable law.
10.11. Rights Under Xxxxxx Agreements. Notwithstanding any other
provision set forth in this Article X, none of the provisions set forth in this
Article X are intended to, nor shall they be deemed to, increase, decrease,
amend, modify, alter or otherwise affect in any way the indemnification
obligations of the Xxxxxx Indemnitors to the Xxxxxx Indemnitees under the
Xxxxxx Agreements; provided, that the Xxxxxx Indemnitors shall be liable to
the Buyer Indemnified Parties and the Xxxxxx Indemnitees for no more than
$3,000,000 in the aggregate for Indemnified Costs under this Agreement and
Losses under the Xxxxxx Agreements, except for (x) Buyer Indemnified Costs
arising from Unlimited Claims and claims contemplated in Section 11.18; and (y)
Losses arising from Xxxxxx Agreements Unlimited Claims and Cash Tax Claims.
Notwithstanding any other provision set forth in this Agreement or the Xxxxxx
Agreements to the contrary, no Indemnified Party may recover under this
Agreement for any Indemnified Costs as to which such Indemnified Party has
already received, or is simultaneously receiving, indemnification pursuant to
the Xxxxxx Agreements and no Xxxxxx Indemnitee may recover under the Xxxxxx
Agreements for any Losses as to which such Xxxxxx Indemnitee has already
received, or is simultaneously receiving, indemnification pursuant to this
Agreement.
57
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ARTICLE XI
GENERAL PROVISIONS
11.1. Survival of Representations, Warranties, and Covenants. Each
representation, warranty and covenant set forth in this Agreement shall survive
the Closing. Regardless of any investigation at any time made by or on behalf
of any party hereto or of any information any party may have in respect
thereof, each of the representations, warranties, covenants and agreements made
hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing. Each representation, warranty,
covenant and agreement made by any of the parties to this Agreement shall
expire on the last day, if any, that any claims for breaches of such
representation, warranty, covenant or agreement may be made pursuant to Section
10.5 hereof, except that any such representation, warranty, covenant or
agreement that has been made the subject of a third-party or direct claim prior
to such expiration date shall survive with respect to such claim until the
final resolution of such claim pursuant to Article X. Except as otherwise
specifically stated in this Agreement, all covenants and agreements in this
Agreement shall survive the Closing indefinitely.
11.2. Amendment and Modification. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
11.3. Waiver of Compliance. Any failure of Buyer on the one hand, or
the Company or the Selling Securityholders, on the other hand, to comply with
any obligation, covenant, Agreement, or condition contained herein may be
waived only if set forth in an instrument in writing signed by the party or
parties to be bound thereby, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, Agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any other failure.
11.4. Specific Performance. The parties recognize that in the event
the Company or the Selling Securityholders should refuse to perform under the
provisions of this Agreement, monetary damages alone will not be adequate.
Buyer shall therefore be entitled, in addition to any other remedies which may
be available, including monetary damages, to obtain specific performance of the
terms of this Agreement. In the event of any action to enforce this Agreement
specifically, the Company and the Selling Securityholders hereby waive the
defense that there is an adequate remedy at law.
11.5. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of applicable
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
58
66
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
11.6. Expenses and Obligations. Except as otherwise expressly provided
in this Agreement or as provided by law:
(a) In the event that the Closing does not occur, all costs
and expenses incurred by the parties hereto in connection with the transactions
contemplated in this Agreement or in the other Transaction Documents (including
the costs and expenses incurred by the parties hereto in connection with the
financing of such transactions) shall be borne solely and entirely by the party
which has incurred such expenses. For purposes of this Section 11.6(a), the
costs and expenses incurred by Buyer in connection with the transactions
contemplated in this Agreement shall be deemed to include the fees and expenses
of Xxxxxx & Xxxxxx L.L.P., the costs and expenses that Buyer or the Company
incurs in preparing, printing or reproducing any offering materials relating to
the financing of the transactions, any fees and expenses of Coopers & Xxxxxxx
L.L.P and Xxxxxx Xxxxxxxx LLP (other than fees and expenses of Xxxxxx Xxxxxxxx
LLP payable in respect of services performed for the Company in the ordinary
course of the Company's business, including services performed in connection
with regular audits of the Company's financial statements) and any fees of any
bond rating agencies or similar fees and expenses incurred in the marketing or
distribution of any bonds to be issued in connection with the financing of the
transaction. For purposes of this Section 11.6(a), the costs and expenses
incurred by the Company and Selling Securityholders in connection with the
transactions contemplated in this Agreement shall be the fees and expenses of
Xxxxxxx, Xxxx & Xxxxx LLP, Xxxxx, Xxxxxx & Xxxxxx, P.C. and Xxxxxx Xxxxxxxx LLP
(but only for the fees and expenses of Xxxxxx Xxxxxxxx LLP payable in respect
of services performed for the Company in the ordinary course of the Company's
business, including services performed in connection with regular audits of the
Company's financial statements) and any other fees and expenses specifically
authorized by the Company in connection with the transactions contemplated in
this Agreement; and
(b) If the Closing occurs, any and all costs and expenses
incurred by the Company and the Selling Securityholders in connection with the
consummation of the transactions contemplated in this Agreement or in the other
Transaction Documents (including the financing of the transactions contemplated
herein) shall be borne, or reimbursed to the Company, by the Selling
Securityholders, and any such costs and expenses incurred by the Buyer shall be
paid, or reimbursed to Buyer, by the Company.
Notwithstanding the foregoing, the filing fees incurred in connection with the
filings made pursuant to the HSR Act shall be borne by the Company. In the
event of a dispute between the parties in connection with this Agreement and
the transactions contemplated hereby, each of the parties hereto hereby agrees
that the prevailing party shall be entitled to reimbursement by the other party
of reasonable legal fees and expenses incurred in connection with any action or
proceeding.
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11.7. Parties in Interest. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
11.8. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Buyer, to
HMTF Acquisition Corp.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to
Xxxxxx & Xxxxxx L.L.P.
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(b) If to the Company, to
Atrium Corporation
0000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxx 0000X
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
60
68
with a copy to
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxx
Facsimile: (000) 000-0000
(c) If to a Selling Securityholder, to the address set forth
below such Selling Securityholder's name on Schedule I.
11.9. Interpretation. All references in this Agreement to Exhibits,
Schedules, Articles, Sections, subsections, and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections, and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any Articles, Sections, subsections or other
subdivision of this Agreement are for convenience only, do not constitute any
part of such Articles, Sections, subsections, or other subdivisions, and shall
be disregarded in construing the language contained therein. The words "this
Agreement," "herein," "hereby," "hereunder," and "hereof," and words of similar
import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "this Section" and "this
subsection" and words of similar import, refer only to the Sections or
subsections hereof in which such words occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation." Pronouns in masculine, feminine, or neuter genders shall be
construed to state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
11.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
11.11. Entire Agreement. This Agreement (which term shall be deemed to
include the exhibits and schedules hereto and the other certificates, documents
and instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
There are no representations or warranties, agreements or covenants other than
those expressly set forth in this Agreement.
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11.12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. ANY SUIT OR PROCEEDING
BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
LOCATED IN DELAWARE.
11.13. Public Announcements. Neither Buyer, the Company nor the Selling
Securityholders shall issue any press release or otherwise make any public
statements with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of, in the case of a release or
statement by Buyer, the Company and, in the case of a release or statement by
the Company or a Selling Securityholder, the Buyer, except as may be required
by applicable law. Prior to the Closing, the Company will not issue any press
release or otherwise make any public statements regarding any other matter
without the prior written consent of Buyer, except as may be required by
Applicable Law.
11.14. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to the Company and without releasing Buyer from any of its
obligations or liabilities hereunder, Buyer may assign or delegate any or all
of its rights or obligations under this Agreement to any affiliate thereof, and
(b) nothing in this Agreement shall limit Buyer's ability to make a collateral
assignment of its rights under this Agreement to any institutional lender that
provides funds to Buyer or Buyer's designee without the consent of the
Company. The Company or Buyer's designee shall execute an acknowledgment of
such assignment(s) and collateral assignments in such forms as Buyer or its
institutional lenders may from time to time reasonably request; provided,
however, that unless written notice is given to the Company that any such
collateral assignment has been foreclosed upon, the Company shall be entitled
to deal exclusively with Buyer as to any matters arising under this Agreement
or any of the other agreements delivered pursuant hereto. In the event of such
an assignment, the provisions of this Agreement shall inure to the benefit of
and be binding on Buyer's assigns.
11.15. Further Assurances. At the Closing or from time to time
thereafter, the parties hereto shall execute and deliver such other
instruments of assignment, transfer and delivery and shall take such other
actions as the other reasonably may request in order to consummate, complete
and carry out the transactions contemplated by this Agreement.
11.16. Director and Officer Liability. The directors, officers and
stockholders of Buyer and its affiliates shall not have any personal liability
or obligation arising under this Agreement (including any claims that the
Company or the Selling Securityholders may assert) other than as an assignee of
this Agreement.
11.17. Certain Definitions. For purposes of this Agreement, the term:
62
70
(a) "affiliate" of a specified person means a person who,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a
person who shall be deemed to be the beneficial owner of such shares (i) which
such person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or any person with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
such shares, or (iv) pursuant to Section 13(d) of the Exchange Act and any
rules or regulations promulgated thereunder;
(c) "Xxxxxx Subsidiaries" shall mean the collective reference
to Vinyl Building Specialties of Connecticut, Inc., a Connecticut corporation,
Xxxxxx Manufacturing Company, Incorporated, a Connecticut corporation, Xxxxxx
Manufacturing Company of New England, Inc., a Connecticut corporation, and
Xxxxxx Manufacturing Co. of New York, Inc., a Connecticut corporation.
(d) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which banks are
not required or authorized to close in New York, New York.
(e) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or
otherwise;
(f) "Knowledge" means, with respect to a specified party
hereto, the actual knowledge of such party. With respect to the Company,
"Knowledge" shall mean the actual knowledge of the following individuals:
Xxxxxxx X. Xxxxxxxx, Xxxx Xxxxxxxxx, Xxxx Xxxx, Xxx X. Xxxx, Xxxxxx X. Xxxxx,
Xxxxxx X. Xxxxx, Dow Pointer, Xxxxxx Xxxxxxxxx or Xxxxxxx Xxxxxxxxx;
(g) "Material Adverse Effect" means the occurrence of any
event, condition, circumstance or fact that has had, or could reasonably be
expected to have, a material adverse effect on the business, operations,
properties, condition (financial or otherwise), results of operations, assets
or liabilities of the Company and its subsidiaries, taken as a whole.
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(h) "person" means an individual, corporation, limited
liability company, partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in Section 13(d)(3) of
the Exchange Act), trust, association or other legal entity or government,
political subdivision, agency or instrumentality of a government; and
(i) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns or
has rights to acquire, directly or indirectly, 50% or more of the capital stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity; provided, the term "subsidiary" shall only
be deemed to include the Xxxxxx Subsidiaries for purposes of the provisions set
forth in Section 2.1 as follows: (i) for the representations and warranties set
forth in Sections 2.1(a), (b), (c), (d), (e), (u) and (w), the term
"subsidiaries" shall be deemed to include the Xxxxxx Subsidiaries for all
purposes and for all time periods, and (ii) for all other provisions in Section
2.1, the term "subsidiaries" shall be deemed to include the Xxxxxx Subsidiaries
only with respect to the occurrence of any event, condition, circumstance or
fact arising after September 30, 1996.
11.18. No Waiver Relating to Claims for Fraud. The liability of any
party under Article X shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omission. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Sections
10.5(a) (relating to Minimum Loss), 10.5(b) (relating to minimum claims),
10.5(c) (relating to limitations on the period of time during which a claim for
indemnification may be brought), 10.5(d) (relating to liability caps) or 10.6
(relating to recourse against escrowed funds), shall be deemed a waiver by any
party to this Agreement of any right or remedy which such party may have at law
or equity based on any other party's fraudulent acts or omissions, nor shall
any such provisions limit, or be deemed to limit, (i) the amounts of recovery
sought or awarded in any such claim for fraud, (ii) the time period during
which a claim for fraud may be brought, or (iii) the recourse which any such
party may seek against another party with respect to a claim for fraud;
provided, that with respect to such rights and remedies at law or equity, the
parties further acknowledge and agree that none of the provisions of this
Section 11.18, nor any references to this Section 11.18 throughout this
Agreement, shall be deemed a waiver of any defenses which may be available in
respect of actions or claims for fraud, including but not limited to, defenses
of statutes of limitations or limitations of damages.
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IN WITNESS WHEREOF, Buyer and the Company have caused this Agreement to
be signed, all as of the date first written above.
BUYER:
HMTF ACQUISITION CORP.
/s/ XXXXXX X. XXXXXXXXXXXX
---------------------------------------------
By: Xxxxxx X. Xxxxxxxxxxxx
-------------------------------------
Its: Vice President
-------------------------------------
COMPANY:
ATRIUM CORPORATION
/s/ XXXXXXX X. XXXXXXXX
--------------------------------------------
By: Xxxxxxx X. Xxxxxxxx
----------------------------------------
Its: President
----------------------------------------
SELLING SECURITYHOLDERS:
/s/ XXX XXXXXXXX
---------------------------------------------
Xxx Xxxxxxxx
/s/ XXXXXXX X. XXXXXXXX
---------------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
S-1
73
/s/ XXXXX X. XXXX, XX.
---------------------------------------------
Xxxxx X. Xxxx, Xx.
/s/ XXXXXX XXXXXXXX
---------------------------------------------
Xxxxxx Xxxxxxxx
/s/ XXX XXXXXX XXXXXXXX
---------------------------------------------
Xxx Xxxxxx Xxxxxxxx
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx, as Trustee of the Xxxxxxxx
Trusts
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx, as Trustee of the Xxxxxxxx
Trusts
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx, as Trustee of the Xxx
Xxxxxxxx Trust
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx, as Trustee of the Xxx
Xxxxxxxx Trust
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
S-2
74
/s/ O. XXXXXX XXXXXX, JR.
---------------------------------------------
O.Xxxxxx Xxxxxx, Jr., as Trustee of the Xxx
Xxxxxxxx XX Trust
/s/ O. XXXXXX XXXXXX, JR.
---------------------------------------------
O.Xxxxxx Xxxxxx, Jr., as Trustee of the P.
Xxxxxxx Xxxxxxxx Trust
/s/ XXX XXXXXXXX
---------------------------------------------
Xxx Xxxxxxxx, as custodian under the Texas
UTMA for Xxx Xxxxxxxx XX
/s/ XXX XXXXXXXX
---------------------------------------------
Xxx Xxxxxxxx, as custodian under the Texas
UTMA for P. Xxxxxxx Xxxxxxxx
/s/ XXXXXX X. XXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXXX XXXXXXXXX
---------------------------------------------
Xxxxxx Xxxxxxxxx
/s/ XXXXX XXXXXXXXXX
---------------------------------------------
Xxxxx Xxxxxxxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
S-3
75
SELLING SECURITYHOLDER:
HERITAGE FUND I, L.P.
By: HF Partners I, L.P., its general partner
By: /s/ XXXXXXX X. XXXXXXXX
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
----------------------------------------
Title: General Partner
---------------------------------------
76
/s/ XXX XXXXXX
---------------------------------------------
Xxx Xxxxxx
/s/ XXXXXX XXXXX
---------------------------------------------
Xxxxxx Xxxxx
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx
/s/ XXXX XXXXXXXXX
---------------------------------------------
Xxxx Xxxxxxxxx
/s/ XXXXXX XXXXX
---------------------------------------------
Xxxxxx Xxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
S-4
77
SCHEDULE I
SELLING SECURITYHOLDERS
Xxx Xxxxxxxx Xxxxxxx X. Xxxxxxxx Xxxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxxxx Xxxx 0000 Xxxxxxxxx Xxxxxx 0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000 Xxxxxx, XX 00000
Xxxxx X. Xxxx, Xx. Xxxxxx Xxxxxxxx Xxx Xxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxxxx X.X. Xxx 0000 X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000 Kapaauh, HI 76755-1302 Xxxxxx, XX 00000-0000
Xxxxxxx Xxxxxxxx Xxxxxxx X. and Xxxxxxx Xxxxxxxx, as Xxxxxxx X.and Xxxxxxx Xxxxxxxx,as Trustees of
0000 Xxxxxxxxx Xxxx Trustees of the Xxxxxxxx Trusts the Xxx Xxxxxxxx Trust
Xxxxxxxxxx, XX 00000 0000 Xxxxxxxxx Xxxxxx 0000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
O. Xxxxxx Xxxxxx, Jr., as Trustee O. Xxxxxx Xxxxxx, Jr., as Trustee Xxx Xxxxxxxx, as custodian under the Texas UTMA
of the Xxx Xxxxxxxx XX Trust of the P. Xxxxxxx Xxxxxxxx Trust for Xxx Xxxxxxxx XX
Xxxxx, Xxxxxx & Xxxxxx Xxxxx, Xxxxxx & Xxxxxx 0000 Xxxxxxx Xxxxxx Xxxx
0000 Xxxx Xxxxxx 0000 Xxxx Xxxxxx Xxxxxx, XX 00000
835 One Main Place 000 Xxx Xxxx Xxxxx
Xxxxxx, Xxxxx Dallas, Texas
Xxx Xxxxxxxx, as custodian under the Heritage Fund I, L.P. Xxxxxx X. Xxxxxx
Texas UTMA for P. Xxxxxxx Xxxxxxxx 00 Xxxxx Xxxxx, Xxxxx 000 60 Xxxxxx Place South
4005 Xxxxxxx Chapel Road Boston, MA 02110 Apt. 4JS
Xxxxxx, XX 00000 Xxx Xxxx, Xxx Xxxx 00000
78
Xxxxxx Xxxxxxxxx Xxxxx Xxxxxxxxxx Xxx Xxxxxx
000 Xxxxxxxxxxx Xxxxxx 0 Xxxxx Xxxxxx Xxxx 000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000 Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxx Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxxxx
X.X. Xxx 0000 825 Hyatt 000 XxxXxxxxx Xxxxx
Xxxxx, XX 00000 Xxxxxx Xxxxxx, XX 00000 Xxxxxx, XX 00000
Xxxx Xxxxxxxxx Xxxxxx Xxxxx
3313 Xxxxxxxx 0000 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
79
SCHEDULE II
STOCKHOLDERS
Column A Column B
-------------------------------- ------------------------------
Share of New Common Stock
Shares of Stock Owned Received Upon Effectiveness of
Name as of the Date of the Agreement Charter Amendment
---- -------------------------------- ------------------------------
PART 1. COMMON STOCK
a. Class A Voting Xxx Xxxxxxxx 17,727.80 10,687,302.03
Xxxxxxx X. Xxxxxxxx 8,959.90 5,401,525.14
Xxxxxxx Xxxxxxxx 3,122.60 1,882,476.64
Xxxxx X. Xxxx, Xx. 159.10 95,914.31
Xxxxxx Xxxxxxxx 84.00 50,639.86
Xxx Xxxxxx Xxxxxxxx 84.00 50,639.86
Xxxxxxx Xxxxxxxx 84.00 50,639.86
Xxxxxxxx Trusts 72.00 43,405.60
Xxx Xxxxxxxx Trust 12.00 7,234.27
Xxx Xxxxxxxx XX Trust 45.00 27,128.50
P. Xxxxxxx Xxxxxxxx
Trust 45.00 27,128.50
Xxx Xxxxxxxx, cust. for
Xxx Xxxxxxxx XX 75.00 45,214.16
Xxx Xxxxxxxx, cust. for
P. Xxxxxxx Xxxxxxxx 75.00 45,214.16
----------- ----------------
30,545.40 18,414,462.39
80
Column A Column B
-------------------------------- ------------------------------
Share of New Common Stock
Shares of Stock Owned Received Upon Effectiveness of
Name as of the Date of the Agreement Charter Amendment
---- -------------------------------- ------------------------------
b. Class B Non-Voting Heritage 19,613.60 11,824,166.96
Xxxxxx X. Xxxxxx 4,620.74 2,785,638.60
Xxxxxx Xxxxxxxxx 4,620.74 2,785,638.60
Xxxxx Xxxxxxxxxx 695.60 419,346.30
Xxx Xxxxxx 159.10 95,914.31
----------- ----------------
29,709.78 17,910,704.28
c. Class C Voting Heritage 30,386.40 18,318,608.87
PART 2. PREFERRED STOCK, $1.00 Heritage 11,000.00 N/A
par value
81
SCHEDULE III
OPTION HOLDERS
Column A Column B Column C Column D
---------------- ---------------------- ----------- -----------------
Underlying Shares
With Respect to Underlying
Underlying Which a Substitute Substitute
Option Shares as Option is to be Option Option Shares
of the Date of Redeemed Redemption Following
Name the Agreement (assuming conversion) Price ($) Closing
----------- ---------------- ---------------------- ----------- -----------------
PART 1. WARRANT
Heritage 14,564.52 8,780,301.23 8,780,301.23 --
PART 2. SUBSTITUTE OPTIONS
TO BE PARTIALLY REDEEMED
Xxxxxx Xxxxx 863,168.50 663,168.53 663,168.53 200,000
X. X. Xxxx 575,425.57 225,425.59 225,425.59 350,000
X. Xxxxxxxx 479,571.55 229,571.56 229,571.56 250,000
X. Xxxxxxxx 383,657.24 333,657.25 333,657.25 50,000
X. Xxxxxxxxx 286,356.36 186,356.37 186,356.37 100,000
X. Xxxxx 191,828.63 91,828.63 91,828.63 100,000
X. Xxxxxx 95,914.31 95,914.31 95,914.31 --
Column E Column F Column G
-------------- ------------- ----------
Underlying
1996 Exercise Vesting
Name Option Shares Price (A or B)*
----------- -------------- ------------- ----------
PART 3. 1996 OPTIONS
TO BE ISSUED AT CLOSING
Xxxxxx Xxxxxx 700,000.00 1.00/sh A
Xxx Xxxx 161,237.28 1.00/sh B
Xxxxxxx Xxxxxxxx 140,883.77 1.00/sh B
Xxxxxx Xxxxx 120,707.02 1.00/sh C
Xxxxxx Xxxxx 60,353.31 1.00/sh B
X. Xxxxxxxx 125,883.77 1.00/sh B
X. Xxxxxxxxx 60,353.51 1.00/sh B
X. Xxxxxxxxxx 30,176.75 1.00/sh B
X. Xxxxxxxxx 100,000.00 1.00/sh B
D. Pointer 100,000.00 1.00/sh B
Xxxx Xxxx 100,000.00 1.00/sh B
Xxxx Xxxxxx 30,176.50 1.00/sh B
Xxxxx Xxxxxx 30,176.50 1.00/sh B
Xxxxx Xxxxxxx 30,176.50 1.00/sh B
Xxxxx Xxxxxxx 65,088.38 1.00/sh B
Xxxxxxx Xxxxxx 15,088.38 1.00/sh B
Xxxxxx Xxxxx 15,088.38 1.00/sh B
Xxxx Xxxx 25,000.00 1.00/sh B
* A -- 1/1095 Options will vest each day during the first three years of
the option period and may be exercised at such time as the
Company's board of directors determines in good faith that an 8%
interest rate of return has been achieved on Buyer's investment
in the Shares. "Cause" under this Option Agreement will be
defined as in the Employment and Non-Competition Agreement dated
September 30, 1996 between the Company and Xxxxxx X. Xxxxxx. In
the event of a change of control or a termination of Xxxxxx X.
Xxxxxx'x employment with the Company, if the Company elects to
exercise its repurchase option, it must pay Xx. Xxxxxx in cash,
as opposed to a promissory note.
* B -- 20% of the Options will vest each year for the first 5 years of
the option period.
* C -- 20% of the Options will vest each year for the first 2 years of
the option period, with the remaining Options to vest at the end
of the third year.
82
SCHEDULE IV
NEW COMMON STOCKHOLDERS AND RESULTS OF REDEMPTION
Column A Column B
----------------------- ------------------------
Number of Shares of
New Common Stock Owned
Immediately After Charter Number of Shares of
Name Amendment and Prior to the New Common Stock to be
---- Common Stock Redemption Redeemed
----------------------- ------------------------
Xxx Xxxxxxxx 10,687,302.03 9,687,302.03
Xxxxxxx X. Xxxxxxxx 5,401,525.14 4,401,525.14
Xxxxxxx Xxxxxxxx 1,882,476.64 1,632,476.64
Xxxxx X. Xxxx, Xx 95,914.31 95,914.31
Xxxxxx Xxxxxxxx 50,639.86 50,639.86
Xxx Xxxxxx Xxxxxxxx 50,639.86 50,639.86
Xxxxxxx Xxxxxxxx 50,639.86 50,639.86
Xxxxxxxx Trusts 43,405.60 43,405.60
Xxx Xxxxxxxx Trust 7,234.27 7,234.27
Xxx Xxxxxxxx XX Trust 27,128.50 27,128.50
P. Xxxxxxx Xxxxxxxx Trust 27,128.50 27,128.50
Xxx Xxxxxxxx, cust. for Xxx Xxxxxxxx XX 45,214.16 45,214.16
Xxx Xxxxxxxx, cust. for P. Xxxxxxx Xxxxxxxx 45,214.16 45,214.16
Heritage 30,142,775.83 26,617,775.83
Xxxxxx X. Xxxxxx 2,785,638.60 2,035,638.60
Xxxxxx Xxxxxxxxx 2,785,638.60 2,785,638.60
Xxxxx Xxxxxxxxxx 419,346.30 369,346.30
Xxx Xxxxxx 95,914.31 95,914.31
------------------ --------------
Total 54,643,776.53 48,068,776.53
Column C D Column
---------------------------- --------------------
Number of Shares
Amount to be Paid to of New Common Stock
Common Stockholder Owned Immediately
Name Exchange for Redeemed After the Common
Common Shares ($1.00/share) Redemption Stock
---------------------------- --------------------
Xxx Xxxxxxxx $ 9,687,302.03 1,000,000
Xxxxxxx X. Xxxxxxxx 4,401,525.14 1,000,000
Xxxxxxx Xxxxxxxx 1,632,476.64 250,000
Xxxxx X. Xxxx, Xx 95,914.31 --
Xxxxxx Xxxxxxxx 50,639.86 --
Xxx Xxxxxx Xxxxxxxx 50,639.86 --
Xxxxxxx Xxxxxxxx 50,639.86 --
Xxxxxxxx Trusts 43,405.60 --
Xxx Xxxxxxxx Trust 7,234.27 --
Xxx Xxxxxxxx XX Trust 27,128.50 --
P. Xxxxxxx Xxxxxxxx Trust 27,128.50 --
Xxx Xxxxxxxx, cust. for Xxx Xxxxxxxx XX 45,214.16 --
Xxx Xxxxxxxx, cust. for P. Xxxxxxx Xxxxxxxx 45,214.16 --
Heritage 26,617,775.83 3,525,000
Xxxxxx X. Xxxxxx 2,035,638.60 750,000
Xxxxxx Xxxxxxxxx 2,785,638.60 --
Xxxxx Xxxxxxxxxx 369,346.30 50,000
Xxx Xxxxxx 95,914.31 --
------------------ ----------------
Total 48,068,776.53 6,575,000
83
SCHEDULE V
COLUMN B
COLUMN A PRO RATA PORTION OF
NAME ESCROWED AMOUNT INDEMNIFIABLE CLAIMS
---- --------------- --------------------
PART 1. ATRIUM INDEMNITORS Xxx Xxxxxxxx 364,615.17 18.23
Xxxxxxx X. Xxxxxxxx 165,666.64 8.28
Xxxxxxx Xxxxxxxx 61,443.91 3.07
Xxxxxx Xxxxx 24,960.64 1.25
Xxxxx Xxxx 12,094.74 .61
X. Xxxxxxxx 8,640.72 .43
X. Xxxxxxxx 12,558.35 .63
X. Xxxxxxxxx 7,014.17 .35
X. Xxxxx 3,456.29 .17
X. Xxxxxx 7,220.13 .36
Heritage 1,332,329.24 66.62
--------------- ---------------
2,000,000.00 100.00
PART 2. XXXXXX INDEMNITORS Xxxxxx Xxxxxx 1,395,000.00 46.50
Xxxxxx Xxxxxxxxx 1,395,000.00 46.50
Xxxxx Xxxxxxxxxx 210,000.00 7.00
--------------- ---------------
3,000,000.00 100.00
84
PART 3. XXXXXXXX INDEMNITORS Xxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx Xxx Xxxxxxxx
Xxxxxxx Xxxxx Xxxxxxxx
Xxx Xx Xxxxxxxx
85
SCHEDULE VI
DISPOSITION OPTION HOLDERS
COLUMN A COLUMN B
-------- --------
UNDERLYING OPTION
NAME OPTION SHARES REDEMPTION PRICE
---- ------------- ----------------
Xxxxxxx Xxxxxx 186,856.50 $ 15,000
Xxx Xxxxxxxx 720,412.32 59,750
Xxxxx Xxxx 90,428.33 7,500
Xxxxxx Xxxxx 90,428.33 7,500
Dow Pointer 150,713.88 12,500
Xxxxxx Xxxxx 708,355.21 58,750
Xxxxx X. Xxxxxxx 90,428.33 7,500
Xxxxx X. Xxxxxxxx 105,499.71 8,750
Xxxxxx X. Xxxxxx 319,513.42 26,500
Xxxxxx Xxxxx 75,356.94 6,250
Xxxxxxx X. Xxxxxxxxx 75,356.94 6,250
Xxxxx Xxxxx 60,285.55 5,000
Xxxxxx Xxxxx 60,285.55 5,000
Xxxxxxx X. Xxxxxxxx 3,060,697.37 253,850
Xxxxxx Xxxxx 391,856.08 32,500
Xxxxxxxx X. Xxxxx 105,499.71 8,750
X. X. Xxxxxxxx, Xx 319,513.42 26,500
86
COLUMN A COLUMN B
-------- --------
UNDERLYING OPTION
NAME OPTION SHARES REDEMPTION PRICE
---- ------------- ----------------
Xxxx X. Xxxxxxx 60,285.55 5,000
Xxxxxx X. Xxxxxxxx 90,428.33 7,500
Xxxxxxx X. Xxxxxxxx 972,405.92 80,650
Xxxxx X. Xxxx, Xx 741,512.27 61,500
Xxxxx Xxxxxx 90,428.33 7,500
Xxxxx Xxxxx 90,428.33 7,500
Xxxx Xxxxxxxxx 301,427.75 25,000
87
SCHEDULE VII
NAME KEY EMPLOYEES' SHARES TO BE PURCHASED
---- -------------------------------------
Xxxx Xxxxxxxxx 50,000
Dow Pointer 50,000
Xxxx Xxxx 50,000
Xxxx Xxxxx 50,000
Xxxxx Xxxxxx 50,000
Xxxxx Xxxxxxx 50,000
Xxxxx Xxxxxxx 25,000
Xxxxxxx Xxxxxx 25,000
Xxxxxx Xxxxx 25,000
--------
Total 375,000
88
SCHEDULE VIII
SELLING SECURITYHOLDERS WHO WILL BE PARTIES
TO THE CERTAIN AGREEMENTS
NAME
----
PART 1.
Heritage Fund I, L.P.
Xxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
PART 2. Heritage Fund I, L.P.
Xxxxxxx X. Xxxxxxxx
Xxx Xxxxxxxx (for himself and as
Custodian for Xxx Xxxxxxxx XX
and Xxxxxxx Xxxxxxx Xxxxxxxx)
Xxxxxxx X. Xxxxxxxx
Xxx Xxxxxx
Xxxxx X. Xxxx, Xx.
Xxxxxx Xxxxxxxx
89
NAME
----
Xxx Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxxx
