EXHIBIT 10.19
EXECUTION COPY
CONFIDENTIAL
ASSET PURCHASE AGREEMENT
BETWEEN
PGT INDUSTRIES, INC.
AS BUYER
AND
BINNINGS BUILDING PRODUCTS, INC.
AS SELLER
DATED AS OF
OCTOBER 24, 2002
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS........................................................1
1.1 Definitions................................................1
ARTICLE 2 SALE AND PURCHASE OF THE ASSETS....................................2
2.1 Transferred Assets.........................................2
2.2 Excluded Assets............................................3
2.3 Assumption of Liabilities..................................5
2.4 Excluded Liabilities.......................................5
ARTICLE 3 THE CLOSING; PURCHASE PRICE........................................6
3.1 Place and Date.............................................6
3.2 Purchase Price.............................................7
3.3 Deposit....................................................7
3.4 Allocation of Purchase Price...............................7
3.5 Deliveries.................................................8
3.6 Working Capital Adjustment.................................8
3.7 Consents of Third Parties.................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER..........................11
4.1 Organization, Standing, Etc. of Seller....................11
4.2 Corporate Authorization...................................11
4.3 Enforceability............................................11
4.4 Governmental Authorizations and Consents..................11
4.5 Financial Statements......................................12
4.6 Absence of Certain Changes or Events......................
4.7 Title to Transferred Assets...............................
4.8 Transferred Intellectual Property.........................
4.9 Assumed Contracts.........................................
4.10 Licenses and Permits......................................14
4.11 Environmental Compliance..................................
4.12 Benefit Plans.............................................
4.13 Brokers...................................................17
4.14 Taxes.....................................................17
4.15 No Other Representations and Warranties...................19
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER...........................19
5.1 Organization and Standing of Buyer........................19
5.2 Authorization.............................................19
5.3 Enforceability............................................19
5.4 Compliance with Other Instruments and Laws................19
5.5 Governmental Authorizations and Consents..................19
5.6 Access....................................................20
5.7 Brokers...................................................20
5.8 Buyer Awareness...........................................20
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ARTICLE 6 COVENANTS RELATING TO PERSONNEL ARRANGEMENTS......................20
6.1 Transferee Employees......................................20
6.3 Plans, Benefits and Policies..............................21
ARTICLE 7 COVENANTS OF SELLER...............................................21
7.1 Conduct of Business.......................................21
7.2 Access....................................................22
ARTICLE 8 COVENANTS OF BUYER................................................23
8.1 Investigation.............................................23
8.2 Assistance with Respect to Excluded Assets................23
8.3 Post Closing Bankruptcy Related Assistance................
ARTICLE 9 COVENANTS OF BOTH PARTIES.........................................23
9.1 Commercially Reasonable Efforts...........................23
9.2 Governmental Filings......................................24
9.3 Public Announcements......................................24
9.4 Use of Business Names by Buyer............................24
9.5 Consents; Cooperation.....................................25
9.6 Communications with Customers and Suppliers...............25
9.7 Liability for Transfer Taxes..............................25
9.8 Books and Records.........................................26
9.9 Tax Matters...............................................26
9.10 Confidentiality...........................................27
9.11 Transition Period Assistance..............................28
ARTICLE 10 BUYER PROTECTIONS: OVERBIDDING PROCEDURES
AND BREAK-UP FEES..........................................28
10.1 Bankruptcy Court Approvals................................28
10.2 Bidding Procedures........................................29
ARTICLE 11 CONDITIONS TO OBLIGATIONS OF BUYER TO CLOSE......................32
11.1 Accuracy of Representations and Warranties................32
11.2 Performance...............................................32
11.3 No Conflict...............................................32
11.4 Certificate...............................................32
11.6 Consents..................................................32
11.7 Transfer Documents........................................33
11.8 Transaction Documents.....................................33
11.9 Further Instruments.......................................33
11.10 [Transition Services Agreement]...........................
ARTICLE 12 CONDITIONS TO OBLIGATIONS OF Seller TO CLOSE.....................33
12.1 Accuracy of Representations and Warranties................34
12.2 Performance...............................................34
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12.3 No Conflict...............................................34
12.4 Certificate...............................................34
12.5 Bankruptcy Court Approval.................................34
12.6 Consents..................................................34
12.7 Assumption Agreement......................................34
12.8 Transaction Documents.....................................34
12.9 Further Instruments.......................................34
12.10 Payment...................................................35
12.11 [Transition Services Agreement.]..........................
ARTICLE 13 TERMINATION......................................................35
13.1 Right to Terminate Agreement..............................35
ARTICLE 14 MISCELLANEOUS....................................................36
14.1 Expiration of Representations, Warranties and Covenants...36
14.2 Disclaimer of Projections, Etc............................36
ARTICLE 15 AGREEMENT CONVENTIONS............................................37
15.1 Further Assurances........................................37
15.2 Notices...................................................37
15.3 Assignment................................................39
15.5 Consent to Jurisdiction...................................39
15.6 Severability..............................................40
15.7 Reliance on Counsel and Other Advisors....................40
15.8 Exhibits and Schedules....................................40
15.9 Rules of Construction.....................................40
15.10 Counterparts..............................................41
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SCHEDULES
Schedule Subject Matter
-------- --------------
2.1(c) Owned and Leased Real Property
2.1(d) Transferred Intellectual Property
2.2(c) Collateral
2.2(g) Excluded Litigation Rights
2.3(c) Assumed Liabilities
2.4(j) Other Excluded Liabilities
4.6 Subsequent Events
4.7 Title to Transferred Assets
4.9 Assumed Contracts
4.10 Licenses and Permits
4.11 Environmental Compliance
4.12(a) Employees
4.12(b) Benefit Plans
4.12(c) Labor Relations
4.14 Tax Matters
4.16 Litigation
4.17 Accounts Receivable
4.20 Products Warranties
5.5 Government Authorizations and Consents Required By Buyer
7.1 Conduct of Business
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EXHIBITS
A. Definitions
B. Escrow Agreement
C. Sample Working Capital calculation
D. Bidding Procedures Motion
E. Sale Motion
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
October ___, 2002, by and between PGT INDUSTRIES, INC., a Florida corporation
("BUYER"), on the one hand, and BINNINGS BUILDING PRODUCTS, INC., a Delaware
corporation ("BBP" or "SELLER"), on the other hand.
RECITALS
WHEREAS, Seller, among others, filed a bankruptcy petition under
Chapter 11 of the United States Bankruptcy Code ("BANKRUPTCY CODE") on December
18, 2000 (the "FILING DATE") in the United States Bankruptcy Court for the
Northern District of Ohio ("BANKRUPTCY COURT") which case is being jointly
administered as Case No.
00-43726 ("BANKRUPTCY CASE");
WHEREAS, BBP is a wholly owned subsidiary of American Architectural
Products Corporation ("AAPC");
WHEREAS, BBP is engaged in the business of manufacturing, selling and
installing aluminum and vinyl windows, doors and related products for
residential, institutional and commercial markets;
WHEREAS, BBP is known as the "BUSINESS";
WHEREAS, Buyer wishes to purchase and acquire from Seller, and Seller
wishes to sell, assign and transfer to Buyer, the Transferred Assets (as defined
in Section 2.1), and Seller wishes to assume and assign to Buyer and Buyer has
agreed to assume the Assumed Liabilities (as defined in Section 2.3), with the
approval of the Bankruptcy Court pursuant to Sections 363 and 365 of the
Bankruptcy Code, all for the Purchase Price (as defined in Section 3.2), and
upon the terms and subject to the conditions herein set forth; and
WHEREAS, the transactions contemplated by this Agreement involve a
sale, other than in the ordinary course of business, of certain of Seller's
assets and properties out of Seller's bankruptcy estate pursuant to Bankruptcy
Code Sections 363 and 365.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and covenants hereinafter set forth, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The definitions set forth in Exhibit A are
incorporated herein by reference.
ARTICLE 2
SALE AND PURCHASE OF THE ASSETS
2.1 TRANSFERRED ASSETS. Subject to and upon the terms and conditions
set forth in this Agreement, at the Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer, free and clear of all Liens (other than
Permitted Encumbrances and the Assumed Liabilities) and Buyer shall purchase and
acquire from Seller, all right, title and interest in and to the properties,
assets, contracts and rights of Seller used in the Business, other than the
Excluded Assets (collectively, the "TRANSFERRED ASSETS"). The Transferred Assets
include, without limitation, the following:
(a) all of the Fixed Assets specific to the Business;
(b) all of the Accounts Receivable, other than Inter-company
Receivables, specific to the Business;
(c) all rights and ownership interest of Seller in the owned and
leased real property listed on SCHEDULE 2.1(C);
(d) rights or ownership interest in the Transferred Intellectual
Property, including but not limited to those items identified on SCHEDULE
2.1(D);
(e) to the extent transferable, all of Seller's rights under the
Assumed Contracts;
(f) all inventories of raw materials, work in progress and finished
goods, office and other supplies, including any consigned inventories, wherever
located;
(g) all of the prepaid expenses and security deposits that relate
to any of the Assumed Contracts;
(h) customer lists, files and all of the Books and Records of the
Business;
(i) to the extent their transfer is permitted by Applicable Law,
all Consents and Permits specific to the Transferred Facilities, the Transferred
Assets or the Business;
(j) to the extent transferable, all rights under express or implied
warranties from or rights against Seller's suppliers with respect to the
Transferred Assets or the Assumed Contracts;
(k) all rights to causes of action, lawsuits, claims and demands of
any nature available to Seller that are specific to the Transferred Assets, the
Assumed Liabilities or to the Business, other than (i) avoidance actions under
the Bankruptcy Code and (ii) causes of action, lawsuits, claims and demands
referred to in SCHEDULE 2.2(G);
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(l) to the extent transferable, all guarantees, warranties,
indemnities, bonds, letters of credit and similar arrangements that run in favor
of Seller in connection with the Transferred Assets;
(m) the retentions and advances that relate to the Assumed
Contracts;
(n) additional assets of the Business acquired in the ordinary
course of business between the date hereof and the Closing Date;
(o) business names of the Business;
(p) telephone and facsimile numbers of the Business;
(q) e-mail addresses and web sites of the Business;
(r) to the extent transferable, software used in the Business;
(s) all of Seller's rights and interests under all outstanding
purchase orders entered into by Seller for the purchase of goods or services
used in the Business;
(t) all assets to the extent transferable and used in connection
with the operation of the Business, all other or additional privileges, rights,
interests, properties and assets of Seller of every kind and description and
wherever located, that are used or intended for use in connection with, or that
are necessary to the continued conduct of, the Business as presently being
conducted; and
(u) all goodwill of the Business.
2.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section 2.1
hereof to the contrary, the Transferred Assets do not include, and Buyer shall
not purchase or acquire any right, title or interest of Seller in or to any of
the following (herein referred to collectively as the "EXCLUDED ASSETS"):
(a) except to the extent expressly set forth in the Transaction
Documents, the names and marks "American Architectural Products Corporation" and
"AAPC" and any name or xxxx derived from or including the foregoing, including
all corporate symbols or logos incorporating "American Architectural Products
Corporation" or "AAPC" (the "EXCLUDED INTELLECTUAL PROPERTY");
(b) any rights of Seller in intellectual property, intangible
property rights, license agreements and software licenses not used in connection
with the Business;
(c) all collateral of Seller or its Affiliates set forth on
SCHEDULE 2.2(C) associated with any bonds, letters of credit and similar
arrangements provided by Seller that run in favor of third parties;
(d) Inter-company Receivables and payables arising between or among
the Business and the balance of AAPC's business from the conduct of the Business
prior to the
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Closing Date (including without limitation any prepaid assets associated with
AAPC's property, general liability and automobile insurance policies) including,
but not limited to any Receivables or promissory note associated with the
operation or sale of the Binnings Pan American Business;
(e) any asset of the Binnings Pan American Business not otherwise
transferred pursuant to Section 2.1;
(f) all books and records relating to or used in the business of
Seller and not specific to the Business, Seller's corporate franchise and stock
record books, corporate seal, corporate record books containing minutes of
meetings of directors and stockholders, tax returns and records;
(g) all Policies maintained by Seller, and all rights of action,
lawsuits, claims and demands, rights of recovery and set-off, and proceeds,
under or with respect to such Policies provided however, that, if following the
Closing, the Business incurs any liability for an insured event under such
Policy, Buyer shall be entitled to receive the proceeds, if any, received by
Seller;
(h) all rights to causes of action, lawsuits, claims and demands
listed on SCHEDULE 2.2(G) and any rights accruing under this Agreement;
(i) all right, title and interest of Seller in and to and any
claims for any refund, credit, rebate or abatement with respect to Taxes of the
Business for any period or portion thereof prior to the Closing Date, but only
to the extent such corresponding tax liability is not assumed by Buyer;
(j) all assets relating to Benefit Plans;
(k) all prepaid expenses and security deposits other than those
transferred pursuant to Sections 2.1(g) and (m);
(l) all claims against third parties for Losses suffered in
connection with Excluded Assets and Excluded Liabilities;
(m) all cash and cash equivalents and similar type investments
specific to the Business, such as certificates of deposit, treasury bills and
other marketable securities, except those transferred pursuant to Sections
2.1(g) and (m);
(n) the services available to Seller that are not specific to the
Business as conducted prior to the Closing Date (such as accounting, legal or
administrative services);
(o) except to the extent transferable or specific to the
Transferred Assets, permits related to the conduct of the Business;
(p) all contracts and leases rejected pursuant to Section 365 of
the Bankruptcy Code by Seller prior to the Closing Date;
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(q) any properties, assets, contracts and rights of Seller not
constituting a part of the Transferred Assets;
(r) the assets and properties used in the Business which have been
disposed of since the date of this Agreement, provided such disposition has been
made in accordance with the terms hereof and in the ordinary course of business;
(s) any shares of capital stock or debenture of Seller; and
(t) any projections, descriptive brochures or other sales related
documentation prepared in connection with the sale of the Transferred Assets.
For the avoidance of doubt, and in those instances where certain categories of
Transferred Assets are expressly described as those being specific either to the
Business or to any other assets otherwise transferred hereby, or as otherwise
specified, the term "Excluded Assets" shall include properties, assets,
contracts and rights related to the Business which are not used in the Business.
Notwithstanding the foregoing, it is the intention of the parties that Buyer is
buying and shall have the benefit of all assets of any kind currently used or
which have been used to operate the Business.
2.3 ASSUMPTION OF LIABILITIES. Subject to the terms and conditions set
forth herein, at the Closing, Buyer shall assume and agree to pay, honor,
perform and discharge when due only the Liabilities specifically set forth
below:
(a) Liabilities and obligations of Seller to be performed from and
after the Closing Date under or relating to the Transferred Assets, Assumed
Contracts or Transferred Facilities provided that such liability or obligation
is not a cure of default otherwise required under Section 365 of the Bankruptcy
Code;
(b) all Liabilities and obligations relating to or arising out of
the conduct of the Business on or after the Closing Date provided that such
liability or obligation is not a cure of default otherwise required under
Section 365 of the Bankruptcy Code;
(c) all Liabilities identified on SCHEDULE 2.3(C) and reflected on
the Financial Statements but only to the extent incurred on or after the Filing
Date; and
(d) all Liabilities with respect to express and/or implied warranty
claims for sales in the ordinary course of business made by Seller on or after
the Filing Date, excluding liabilities for personal injury or to property other
than the products manufactured and sold by Seller.
The Liabilities and obligations described in clauses (a) through (d) are
collectively referred to as the "ASSUMED LIABILITIES."
2.4 EXCLUDED LIABILITIES. Except as specifically set forth in Section
2.3 and elsewhere in this Agreement, Buyer shall not assume or in any way be
responsible for, and Seller shall remain responsible for, any Liabilities,
including but not limited to the following debts,
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claims, commitments, liabilities and obligations of Seller and the Business (the
"EXCLUDED LIABILITIES"):
(a) all Tax Liabilities, including penalties and interest, in
respect of periods or portions of periods prior to the Closing Date;
(b) all indebtedness for borrowed money;
(c) all Liabilities of any kind or nature arising directly out of
the Excluded Assets;
(d) all Liabilities with respect to express and/or implied warranty
claims that are not part of the Assumed Liabilities;
(e) any Environmental Liabilities relating to or arising out of (1)
the acts or omissions of Seller, (2) the acts or omissions of any person prior
to the Closing Date related to Seller, the Business or the Transferred Assets,
or (3) the use, handling, storage, treatment or disposal of any Hazardous
Materials related to Seller, the Business or the Transferred Assets prior to the
Closing Date;
(f) Inter-company payables and receivables between or among the
Business and the balance of AAPC's business arising from the conduct of the
Business prior to the Closing Date;
(g) Any Liabilities and obligations under Benefit Plans whether or
not owed to an employee or the Benefit Plans;
(h) all trade payables and obligations incurred prior to the Filing
Date;
(i) all amounts owing to employees of Seller under any Key Employee
Retention Program, as approved and described by a Bankruptcy Court Order
including but not limited to Orders dated June 11, 2001 and June 12, 2002 ;
(j) the Liabilities, if any, listed on SCHEDULE 2.4(J);
(k) any Liabilities relating to the Bankruptcy Case and transaction
expenses of Seller; and
(l) any workers compensation claims relating to the Business for
any period prior to the Closing Date.
ARTICLE 3
THE CLOSING; PURCHASE PRICE
3.1 PLACE AND DATE. The closing of the sale and purchase of the
Transferred Assets (the "CLOSING") and the assumption of the Assumed Liabilities
shall take place at 10:00 a.m. local time, at such place upon which the parties
may agree, not later than (i) five business days
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following the satisfaction or waiver of the conditions referred to in Articles
11 and 12, or (ii) seven business days after the Sale Order is entered,
whichever is later, or (iii) as otherwise agreed between Buyer and Seller. The
day on which the Closing actually occurs is sometimes referred to herein as the
"CLOSING DATE." Notwithstanding the actual time of Closing on the Closing Date,
the Closing shall be deemed to have occurred as of 12:01 a.m., local time, on
the Closing Date (the "EFFECTIVE TIME").
3.2 PURCHASE PRICE. On the terms and subject to the conditions set
forth in this Agreement, the purchase price for the Transferred Assets shall be
Five Million Five Hundred Fifty Thousand Dollars ($5,950,000) (the "CASH
PORTION") plus the assumption of the Assumed Liabilities plus or minus, as
applicable, the Working Capital Adjustment (collectively the "PURCHASE PRICE").
3.3 DEPOSIT. Simultaneously with the execution of this Agreement, Buyer
shall deliver to National City Bank (the "ESCROW AGENT"), an amount equal to Two
Hundred Thousand Dollars ($200,000) (the "DEPOSIT") as a deposit toward the Cash
Portion of the Purchase Price. The Deposit shall be held and invested pursuant
to the terms and conditions of the Escrow Agreement dated as of the date hereof
(the "ESCROW AGREEMENT"), among Buyer, Seller and the Escrow Agent, in
substantially the form attached hereto as EXHIBIT B. The Deposit, together with
interest earned thereon (the "ESCROWED DEPOSIT") shall be credited towards the
Cash Portion of the Purchase Price at the Closing. If this Agreement is
terminated pursuant to Section 13.1(c)(ii) solely as a result of the failure to
satisfy the conditions set forth in Section 12.1, 12.2, 12.4 (except as it
relates to 12.3), 12.7, 12.8, 12.9 or 12.10 (unless such failure to satisfy
Section 12.2, 12.4, 12.7, 12.8, 12.9 or 12.10 results from a failure of any
condition set forth in Article 11), then the Escrow Agent shall pay the Escrowed
Deposit to Seller and if this Agreement is terminated pursuant to Section 13.1
for any other reason, then the Escrow Agent shall pay the Escrowed Deposit to
Buyer.
3.4 ALLOCATION OF PURCHASE PRICE.
(a) The parties shall allocate the aggregate consideration received
by Seller with respect to the Transferred Assets and the assumption of the
Assumed Liabilities, in accordance with Section 1060 of the Tax Code, as
mutually agreed to by the parties within seven (7) business days following the
parties' agreement with respect to the Working Capital Adjustment pursuant to
the procedure described below. Subject to the requirements of any applicable Tax
law or election, all such mutually agreed to allocations shall be used by each
party in preparing any filings required pursuant to Section 1060 of the Tax Code
or any similar provisions of state or local law and all relevant Income Tax
Returns. Neither Buyer nor Seller will take any position before any taxing
authority or in any judicial proceeding with respect to Income Taxes that is
inconsistent with such mutually agreed to allocations without the prior written
consent of the other party, in the consenting party's commercially reasonable
discretion. The parties shall exercise commercially reasonable efforts to
support such mutually agreed to reported allocations in any audit proceedings
initiated by any taxing authority.
(b) Within 30 days after the date the parties agree to the Working
Capital Adjustment, Buyer will provide to Seller copies of IRS Form 8594 and any
required exhibits thereto with Buyer's proposed allocation of the consideration
received by Seller with respect to
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the Transferred Assets for Seller's approval, which shall not be unreasonably
withheld. If Seller fails to respond to Buyer within 30 days of Seller receiving
such IRS Form 8594, then Seller shall be deemed to have approved Buyer's
allocation.
3.5 DELIVERIES. At the Closing: (a) Buyer shall deliver to, or as
directed by Seller, the Cash Portion of the Purchase Price, less an amount equal
to Two Hundred Thousand Dollars ($200,000) (the "PURCHASE PRICE ESCROW AMOUNT"),
less the Escrowed Deposit, and the agreements, instruments of assumption,
certificates and other documents required to be delivered by Buyer pursuant to
Article 12; (b) Buyer shall deliver to the Escrow Agent the Purchase Price
Escrow Amount and $200,000 (the "BUYER ESCROW AMOUNT", and collectively with the
Purchase Price Escrow Amount, together with interest earned thereon, the
"WORKING CAPITAL ESCROW AMOUNT"), which sum shall be disbursed in accordance
with the adjustment described in Section 3.6(c) below and the Escrow Agreement;
(c) Seller shall deliver to Buyer the agreements, instruments of transfer,
certificates and other documents required to be delivered by Seller pursuant to
Article 11; and (d) Seller shall deliver to Buyer such other documents
reasonably requested by Buyer to memorialize the Contemplated Transactions.
3.6 WORKING CAPITAL ADJUSTMENT.
(a) If as of the Effective Time, Current Assets of the Business
that are included as Transferred Assets minus Current Liabilities of the
Business that are included as Assumed Liabilities (the foregoing calculation
referred to as "WORKING CAPITAL") exceed $3,408,192 ("TARGET WORKING CAPITAL"),
the Cash Portion of the Purchase Price shall be increased dollar for dollar by
the amount of such excess. If the Working Capital as of the Effective Time is
less than the Target Working Capital, the Cash Portion of the Purchase Price
shall be reduced dollar for dollar by the amount of such deficiency. The
foregoing adjustment to the Cash Portion of the Purchase Price shall be referred
to as the "WORKING CAPITAL ADJUSTMENT". A sample Working Capital calculation is
attached hereto as Exhibit C. The calculation of Working Capital as of the
Effective Time, shall be done in accordance with the past practices of Seller
and shall be applied on a consistent basis throughout all the periods identified
and consistent with the preparation of the Financial Statements.
(b) The Working Capital Adjustment shall be determined as follows:
(i) As soon as reasonably practicable after the
Closing Date, but in no event later than the twenty-first (21st)
day following the Closing Date, Seller (with the cooperation of
Buyer) shall prepare and deliver to Buyer a schedule detailing the
amount and computation of the Working Capital Adjustment and final
Purchase Price ("CLOSING SCHEDULE"). Buyer will give Seller
reasonable access to the Books and Records for the purpose of
preparing the Closing Schedule and reasonable access to the
appropriate personnel of Buyer for the purpose of calculating the
amounts set forth in the Closing Schedule.
(ii) Unless Buyer notifies Seller in writing ("DISPUTE
NOTICE") that Buyer disagrees with the amount of the Working
Capital Adjustment contained in the Closing Schedule no later than
ten (10) days after receipt of the Closing
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Schedule, the Closing Schedule shall be conclusive and binding on Buyer and
Seller and deemed final.
(iii) If Buyer delivers a Dispute Notice to Seller,
Buyer and Seller shall attempt to amicably resolve their
differences with respect thereto in good faith. If Buyer and Seller
are unable to resolve any disputed item within ten (10) days of
delivery of the Dispute Notice, then the parties shall submit the
issues in dispute to an accounting firm (the "RESOLVING
ACCOUNTANTS") mutually acceptable to both parties or, in the
absence of agreement, to an accounting firm of national reputation
selected by lot after eliminating the parties' principal outside
accountants and one additional firm designated as objectionable by
each of Buyer and Seller. If the disputed issues are submitted to
the Resolving Accountants, each party shall furnish to the
Resolving Accountants such work papers and other documents and
information relating to the disputed issues as the Resolving
Accountants may request and are available to such party, and each
will be afforded the opportunity to present to the Resolving
Accountants any material relating to the determination and to
discuss the determination with the Resolving Accountants. Each
party shall be entitled to request and receive information from the
other which the Resolving Accountants determine is or may be
relevant to the resolution of the disputed issues. The Resolving
Accountants shall be required to make a decision within thirty (30)
days of the date of their acceptance of their appointment as the
Resolving Accountants. The determination of the Resolving
Accountants, as set forth in a written notice delivered to the
parties by the Resolving Accountants (the "NOTICE OF
DETERMINATION"), shall be binding and conclusive on the parties
absent fraud or manifest error. The fees and expenses of the
Resolving Accountants shall be shared equally by Buyer and Seller.
(iv) Upon resolution of such disputed issues, whether
by agreement of the parties or by determination of the Resolving
Accountants, Buyer and the Seller Parties shall promptly jointly
execute a direction letter to the Escrow Agent directing the Escrow
Agent to release the Working Capital Escrow Amount, to Buyer or
Seller, or both, as the case may be, in accordance with Section
3.6(c).
(c) The Working Capital Adjustment and the Working Capital Escrow
Amount shall be paid as follows:
(i) If the Working Capital as set forth on the final
Closing Schedule equals the Target Working Capital, then one-half
(1/2) of the Working Capital Escrow Amount shall immediately be
disbursed to Seller and one-half (1/2) of the Working Capital
Escrow Amount shall immediately be disbursed to Buyer.
(ii) If the Working Capital as set forth on the final
Closing Schedule exceeds the Target Working Capital, then:
(x) an amount equal to $200,000 plus such
excess, together with interest actually earned on such
sum, shall immediately be disbursed from the Working
Capital Escrow Amount to Seller, and
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(y) the balance of the Working Capital
Escrow Amount, if any, shall immediately be disbursed
to Buyer;
PROVIDED, HOWEVER, that if such excess exceeds
$200,000, (i) all of the Working Capital Escrow Amount
shall immediately be disbursed to Seller, and (ii) an
amount equal to such excess less $200,000 shall be
paid by Buyer to Seller. Any amount to be paid by
Buyer to Seller shall be paid by wire transfer of same
day funds within two (2) business days after the
Closing Schedule shall have become final and binding
pursuant to Section 3.6(b)(ii) or (iii).
(iii) If the Working Capital as set forth on the final
Closing Schedule is less than the Target Working Capital, then:
(x) an amount equal to $200,000 plus such
deficiency, together with interest actually earned on
such sum, shall immediately be disbursed from the
Working Capital Escrow Amount to Buyer, and
(y) the balance of the Working Capital
Escrow Amount, if any, shall immediately be disbursed
to Seller;
PROVIDED, HOWEVER, that if such deficiency exceeds
$200,000, (i) all of the Working Capital Escrow Amount
shall immediately be disbursed to Buyer, and (ii) an
amount equal to such deficiency less $200,000 shall be
paid by Seller to Buyer. Any amount to be paid by
Seller to Buyer shall be paid by wire transfer of same
day funds within two (2) business days after the
Closing Schedule shall have become final and binding
pursuant to Section 3.6(b)(ii) or (iii).
3.7 CONSENTS OF THIRD PARTIES. Notwithstanding anything to the contrary
in this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Consent from a Governmental Authority, instrument, contract
(including the Assumed Contracts), lease, or other agreement or arrangement or
any claim, right or benefit arising thereunder or resulting therefrom, to the
extent that such assignment or transfer or an attempt to make such an assignment
or transfer cannot be made pursuant to Section 365 of the Bankruptcy Code
without the consent or approval of a third party. In the event any such consent
or approval is not obtained on or prior to the Closing Date, Seller shall, in
any lawful arrangement, provide Buyer with the benefits under any such Consent,
instrument, contract, lease or other agreement or arrangement, PROVIDED that
Buyer shall undertake to pay, perform, discharge or satisfy the corresponding
liabilities and obligations for the enjoyment of such benefit to the extent
Buyer would have been responsible therefore if such consent or approval had been
obtained.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedule delivered to Buyer
contemporaneously herewith (the "DISCLOSURE SCHEDULE"), of which the Schedules
referred to below are a part, and in the documents and other materials
identified in the Disclosure Schedule (it being agreed that any matter disclosed
in the Disclosure Schedule with respect to any section of this Agreement shall
be deemed to have been disclosed with respect to all other sections of this
Agreement), and subject to the limitations contained in Section 14.1, as of the
date of this Agreement, Seller makes to Buyer the following representations and
warranties.
4.1 ORGANIZATION, STANDING, ETC. OF SELLER. Seller is a corporation
duly incorporated and validly existing under the laws of the jurisdiction where
it is organized and has all requisite corporate power and authority to carry on
the Business as currently conducted and to own or lease and to operate the
properties of the Business. Seller is in good standing and is qualified to do
business in each jurisdiction in which it conducts the Business and that
requires such qualification and where the failure to so qualify would have a
Material Adverse Effect on the Business. For the purposes of the Transaction
Documents, a "MATERIAL ADVERSE EFFECT ON THE BUSINESS" means any material
adverse change in, or material adverse effect on, the assets, liabilities,
business or operations of the Transferred Assets or the Business taken as a
whole. Seller is currently a debtor-in-possession in the Bankruptcy Case
pursuant to the Bankruptcy Code, and retains full authority and power to operate
its business and affairs pursuant to Sections 1107 and 1108 of the Bankruptcy
Code, with no trustee, examiner, facilitator or other officer or agent with
similar authority or powers to a trustee, examiner or facilitator having been
appointed in such Bankruptcy Case.
4.2 CORPORATE AUTHORIZATION. Subject to approval by the Bankruptcy
Court, the execution, delivery and performance of this Agreement and all other
documents executed or to be executed pursuant to this Agreement by Seller, and
the consummation of the Contemplated Transactions, have been duly authorized by
all necessary corporate action on the part of Seller. Subject to approval by the
Bankruptcy Court, this Agreement has been duly executed and delivered by a duly
authorized officer of Seller.
4.3 ENFORCEABILITY. Subject to approval by the Bankruptcy Court, this
Agreement constitutes the valid and legally binding obligation of Seller,
enforceable in accordance with its terms.
4.4 GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. No consents, licenses,
approvals or authorizations of, or registrations or declarations with, any
Governmental Authority or any other Person are required to be obtained or made
by Seller in connection with the execution, delivery, performance, validity and
enforceability of this Agreement, other than (a) bankruptcy court approval, and
(b) other consents, licenses, approvals, authorizations, registrations or
declarations, where the failure to obtain such would have a Material Adverse
Effect on the Business.
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4.5 FINANCIAL STATEMENTS. Seller has delivered to Buyer the following:
(a) audited financial statements of the Business, as of and for the twelve month
period ending December 31, 2001; (b) 2002 monthly income statements of the
Business for the months available through the date this Agreement is executed;
and c) 2002 monthly balance sheets for the Business for the months available
through the date this Agreement is executed (collectively, such audited
financial statements, income statements and balance sheets hereinafter being
referred to as the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with past practices applied on a consistent basis
throughout the periods indicated and fairly present in all material respects the
financial condition and results of operation of the Business as of the dates
thereof and for the periods covered therein.
4.6 SUBSEQUENT EVENTS. Except as set forth on SCHEDULE 4.6, since June
30, 2002, there has not been:
(a) any change in the condition (financial or otherwise) or in the
properties, assets, liabilities or business of the Business, except normal and
usual changes in the ordinary course of business consistent with past practice;
(b) any material breach or material default by Seller or, to the
Knowledge of Seller, by any other party thereto, under any Assumed Contract or
obligation under a Assumed Contract included in the Transferred Assets or by
which Seller is bound;
(c) any damage, destruction or loss (whether or not covered by
insurance) that has had a Material Adverse Effect on the Business;
(d) any cancellation of any material indebtedness with respect to
the Business (individually or in the aggregate) or waiver of any claims or
rights of substantial value outside the ordinary course of business;
(e) any sale, lease, license or other disposition of any assets
held by Seller or used in the Business, other than inventory sold in the
ordinary course of business consistent with past practice;
(f) any change in the business relationship or any dispute with any
Major Customer or Major Supplier, which indirectly or in the aggregate has had a
Material Adverse Effect on the Business;
(g) any notice received by Seller that any Major Customer intends
to materially reduce its purchases from Seller or that a Major Supplier intends
to materially reduce the sale of goods or services to Seller; or
(h) any occurrence or occurrences, event or events, or condition or
conditions that has/have adversely affected the Transferred Assets or the
Business, which individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Business.
4.7 TITLE TO TRANSFERRED ASSETS. Seller owns or has the right to use
(pursuant to a valid lease or license) all assets and properties necessary for
Seller to conduct the Business in the manner presently conducted by Seller, and,
except for the Excluded Assets, all of such assets and
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properties are included in the Transferred Assets. Except as set forth on
SCHEDULE 4.7, Seller has good and marketable title to all the Transferred
Assets, and pursuant to the Sale Order, Buyer shall receive good and marketable
title to all the Transferred Assets, free and clear of all Liens, except for
Permitted Encumbrances. The plants, structures, equipment, vehicles and other
tangible properties included in the Transferred Assets and the tangible property
leased by Seller under leases included in the Transferred Assets are in good
operating condition and repair, normal wear and tear excepted, and are capable
of being used for their intended purpose in the Business as now conducted,
except where such condition or capability would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Business. The Transferred Assets include all existing warranties and service
Contracts with respect to any of the Transferred Assets. All plants, structures,
equipment, vehicles and other tangible properties included in the Transferred
Assets, and the present use of all such items, conform to all Applicable Laws,
except where the failure to conform or such violation would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Business, and no notice of any violation of any Applicable Laws relating to
such assets or their use has been received by Seller. The Transferred Assets
include all easements, rights of ingress and egress, and utilities and services
necessary for the conduct of the Business except where the failure to possess
such easements, rights of ingress and egress and utilities and services would
not reasonably be expected to have a Material Adverse Effect on the Business.
Neither the whole nor any portion of any real property subject to leases
included in the Transferred Assets has been condemned or otherwise taken by any
public authority, nor, to the Knowledge of Seller, is any such condemnation or
taking threatened or planned.
4.8 INTANGIBLE PROPERTY. SCHEDULE 2.1(D) lists all of the patents,
inventions, trademarks, trade names, brand names, service marks, copyrights,
Internet addresses, sites and domain names used or held for use in the Business
as of the date of this Agreement. Except as set forth on SCHEDULE 2.1(D), the
operation of the Business as now conducted by Seller does not require the use of
any rights under any patents, inventions, trademarks, trade names, brand names,
service marks or copyrights. Except as set forth on SCHEDULE 2.1(D), Seller owns
and has the full and exclusive right to use in connection with the Business all
of the items listed on SCHEDULE 2.1(d). All of the Transferred Intellectual
Property listed on SCHEDULE 2.1(D) has been duly registered in, filed in or
issued by the appropriate state or federal Governmental Authority where such
registration, filing or issuance is necessary for the conduct of the Business.
Seller has not transferred, encumbered or licensed to any Person any rights to
own or use any portion of the items listed on SCHEDULE 2.1(D) or any other
intangible property included in the Transferred Assets. To the Knowledge of
Seller, neither (a) the items listed on SCHEDULE 2.1(D), (b) any other
intangible property included in the Transferred Assets, nor (c) the operation of
the Business as presently conducted, violates or infringes upon any patents,
inventions, trademarks, trade names, brand names, service marks, copyrights, or
Internet addresses, sites or domain names owned by others. To the Knowledge of
Seller, none of the items listed on SCHEDULE 2.1(D) or any other intangible
property included in the Transferred Assets is being infringed upon by any
Person.
4.9 ASSUMED CONTRACTS. SCHEDULE 4.9 includes a list of all Assumed
Contracts. Except as disclosed on SCHEDULE 4.9, all Assumed Contracts are in
full force and effect. Seller has performed or is performing in all material
respects all obligations required to be performed by it under each Assumed
Contract. Neither Seller, nor, to the Knowledge of Seller, any other
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Person, is (with or without notice or lapse of time or both) in breach or
default in any material respect under any Assumed Contract, and to the Knowledge
of Seller, no event has occurred which (with or without notice or lapse of time,
or both) would permit termination, modification or acceleration thereunder.
Seller has not received any notice that, nor to the Knowledge of Seller does,
any party to any Assumed Contract intend to cancel, terminate or refuse to renew
such Assumed Contract.
4.10 LICENSES AND PERMITS. SCHEDULE 4.10 includes a list of all
permits, licenses and other authorizations from Governmental Authorities
necessary for the conduct of the Business substantially as currently conducted.
Seller has all licenses, permits and other authorizations from Governmental
Authorities necessary for the conduct of the Business as conducted by Seller
prior to the date hereof (collectively "PERMITS"), except where the failure to
have such Permits could not reasonably be expected to result in a Material
Adverse Effect on the Business. Except as set forth on SCHEDULE 4.10, (a) each
of said Permits is in full force and effect, (b) the Business is in compliance
with the terms, provisions and conditions thereof, except where the failure to
be so in compliance could not reasonably be expected to result in a Material
Adverse Effect on the Business, (c) to Seller's Knowledge, there are no
outstanding violations, notices of noncompliance, judgments, consent decrees,
orders or judicial or administrative actions, investigations or proceedings
adversely affecting any of said Permits, and (d) to Seller's Knowledge, no
condition exists and no event has occurred which (whether with or without
notice, lapse of time or the occurrence of any other event) would permit the
suspension or revocation of any material Permits other than by expiration of the
term set forth therein. Seller makes no representation or warranty with respect
to the transferability of the Permits to Buyer.
4.11 ENVIRONMENTAL COMPLIANCE. Except as set forth in SCHEDULE 4.11:
(a) Seller has at all times operated the Business and the
Transferred Assets in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws and any related orders of any court or other Governmental
Authority, except where the failure to be in compliance would not reasonably be
expected to have a Material Adverse Effect on the Business.
(b) There are no existing, pending or, to the Knowledge of Seller,
threatened actions, suits, claims, investigations, inquiries or proceedings by
or before any court or any other Governmental Authority directed against Seller
with respect to the Business or the Transferred Assets that pertain or relate to
(i) any Liabilities under any applicable Environmental Law, (ii) violations of
any Environmental Law or (iii) personal injury or property damage claims
relating to the use, release or disposal of Hazardous Materials, except where
such matters would not reasonably be expected to have a Material Adverse Effect
on the Business.
(c) Seller is not currently operating or required to be operating
the Business or the Transferred Assets under any compliance order, schedule,
decree or agreement, any consent decree, order or agreement, or any corrective
action decree, order or agreement issued or entered into under, or pertaining to
matters regulated by, any Environmental Law.
(d) To the Knowledge of Seller (i) Seller does not own or operate
any underground storage tanks that are a part of or related in any manner to the
Transferred Assets,
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and (ii) no underground storage tanks are located on or under property relating
to any Transferred Facility.
(e) There has been no use, handling, storage, treatment, disposal
or release of Hazardous Materials by Seller or related in any manner to the
Business or the Transferred Assets that will cause Buyer to incur any
Environmental Liability which would reasonably be expected to have a Material
Adverse Effect on the Business.
(f) Seller has provided Buyer with copies of all environmental
audits, assessments or other evaluations of the Business or the Transferred
Assets prepared by or on behalf of Seller or otherwise in the possession of
Seller.
For purposes of this Agreement, "ENVIRONMENTAL LAWS" shall mean all Applicable
Laws pertaining to (a) air and water quality, (b) Hazardous Materials, (c)
disposal, (d) the control of any potential pollutant, protection of human health
or protection of the environment, including air, water or land, (e) the
generation, handling, treatment, storage, disposal or transportation of waste
materials, (f) the regulation of or exposure to hazardous, toxic or other
substances alleged to be harmful or (g) other environmental matters, including
the Clean Water Act, the Clean Air Act, the Federal Water Pollution Control Act,
the Solid Waste Disposal Act, the Resource Conservation Recovery Act, the
Occupational Health and Safety Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Emergency Planning and Community Right to
Know Act, the Toxic Substances Control Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Safe Drinking Water Act, the Hazardous Materials
Transportation Act and the rules, regulations and ordinances of the cities and
other jurisdictions in which the Business is located, the Environmental
Protection Agency and all other applicable Governmental Authorities.
4.12 EMPLOYEE MATTERS.
(a) SCHEDULE 4.12(A) sets forth a true and complete list of the
names of and current compensation paid by Seller to each employee of Seller
utilized in connection with the operation of the Business as of the date of this
Agreement, including (i) with respect to each non-salaried employee, his or her
current hourly wage rate, and (ii) with respect to each salaried employee, his
or her current annual salary.
(b) SCHEDULE 4.12(B) contains a true and complete list as of the
date of this Agreement of (i) all employee welfare benefit and employee pension
benefit plans as defined in Sections 3(1) and 3(2) of ERISA, including, but not
limited to, plans that provide retirement income or result in a deferral of
income by employees for periods extending to termination of employment or
beyond, and plans that provide medical, surgical, or hospital care benefits or
benefits in the event of sickness, accident, disability, death or unemployment
and (ii) all other material employee benefit agreements or arrangements,
including without limitation deferred compensation plans, management bonus
plans, profit sharing plans, incentive plans, bonus plans or arrangements, stock
option plans, stock purchase plans, stock award plans, golden parachute
agreements, severance pay plans, dependent care plans, cafeteria plans, employee
assistance programs, scholarship programs, employment contracts, retention
incentive agreements, consulting agreements, vacation policies, and other
similar plans, agreements and arrangements
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that are currently in effect or were maintained within three (3) years of the
date of this Agreement, or have been approved before this date but are not yet
effective, for the benefit of directors, officers, employees or former employees
(or their beneficiaries) of Seller, or with respect to which Seller may have any
Liability (collectively referred to as "BENEFIT PLANS").
(c) Except as set forth in SCHEDULE 4.12(C): (i) since June 30,
2002 there has not been any labor strike, dispute, work stoppage or lockout
pending, or, to the Knowledge of Seller, threatened, against the Business; (ii)
to the Knowledge of Seller, no union organizational campaign is in progress with
respect to the employees of the Business; (iii) Seller is not engaged in any
unfair labor practice in connection with the conduct of the Business; (iv) there
are not any unfair labor practice charges or complaints against Seller pending,
or, to the Knowledge of Seller, threatened, before the National Labor Relations
Board in connection with the conduct of the Business; (v) there are not any
pending, or, to the Knowledge of Seller, threatened, union grievances against
Seller in connection with the conduct of the Business; (vi) there are not any
pending, or, to the Knowledge of Seller, threatened, charges in connection with
the conduct of the Business against Seller or any current or former employee of
the Business before the Equal Employment Opportunity Commission or any state or
local agency responsible for the prevention of unlawful employment practices;
and (vii) Seller has not received notice since the Filing Date of the intent of
any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation of the Business and, to the
Knowledge of Seller, no such investigation is in progress.
(d) Neither Seller nor any entity (whether or not incorporated)
that was at any time during the five-year period ending on the date of this
Agreement treated as a single employer together with Seller under Section 414 of
the Tax Code has ever maintained, had an obligation to contribute to,
contributed to, or incurred any liability with respect to, a pension plan that
is or was subject to Title IV of ERISA or Section 412 of the Tax Code.
(e) Neither Seller nor any other entity has engaged in a
transaction that could result in the imposition upon Seller of a civil penalty
under Section 409 or 502(i) of ERISA or a Tax under Section 4972, 4975, 4976,
4980B or 6652 of the Tax Code with respect to any Benefit Plan, and no fact or
event exists that could give rise to any such liability.
(f) Each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and Applicable Laws, including
but not limited to ERISA and the Tax Code.
(g) (i) The terms of all Benefit Plans that are intended to qualify
under Section 401(a) of the Tax Code have been determined by the IRS to qualify
under Section 401(a) of the Tax Code or (ii) the applicable remedial amendment
periods under Section 401(b) of the Tax Code with respect to such Benefit Plans
will not have expired prior to the Closing Date. No event or circumstance has
occurred that could cause the IRS to disqualify any Benefit Plan that is
intended to qualify under Section 401(a) of the Tax Code.
(h) No Benefit Plan provides medical, surgical, hospitalization, or
life insurance benefits (whether or not insured by a third party) for employees
or former employees of Seller for periods extending beyond their retirement or
other terminations of service, other
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than (i) coverage mandated by Applicable Law, (ii) death benefits under any
pension benefit plan as defined in Section 3(1) of ERISA, or (iii) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary).
(i) The consummation of the Contemplated Transactions, either alone
or in conjunction with another event (such as a termination of employment), will
not (i) entitle any current or former employee or officer of Seller to severance
pay, or any other payment under a Benefit Plan, (ii) accelerate the time of
payment or vesting of benefits under a Benefit Plan (except as specifically
contemplated by this Agreement), or (iii) increase the amount of compensation
due any such employee or officer.
(j) There is no litigation, action, proceeding, audit, examination
or claim pending, or to the Knowledge of Seller, threatened or contemplated
relating to any Benefit Plan (other than routine claims for benefits).
4.13 BROKERS. With the exception of fees and expenses payable to
Xxxxxx, Del Genio, Xxxxx & Co., LLC, which shall be paid by Seller and are not
assumed by Buyer, all negotiations relating to this Agreement and the
Contemplated Transactions, have been carried on without the participation of any
Person acting on behalf of Seller or its Affiliates in such manner as to give
rise to any valid claim against Buyer for any brokerage or finder's commission,
fee or similar compensation upon consummation of the Contemplated Transactions.
4.14 TAXES. Except as set forth on SCHEDULE 4.14, with respect to
Taxes:
(a) Seller has properly completed and filed or caused to be filed
or shall properly complete and file or cause to be filed, within the time
prescribed by law, including extensions, all Tax Returns with respect to the
Transferred Assets that are or were required to be filed under federal, state,
local or any foreign laws on or prior to the Closing Date or which relate to any
period prior to the Closing Date.
(b) Seller has, within the time and in the manner prescribed by
law, paid or caused to be paid (and until the Closing will, within the time and
in the manner prescribed by law, pay or cause to be paid) all Taxes that are
shown to be due and payable on Tax Returns filed prior to the Closing or which
relate to periods prior to the Closing. The Business has paid or, in the case of
Taxes not due or being contested in good faith, has made adequate provisions for
the payment of all Taxes for which the Business is or may reasonably become
liable for payment.
4.15 EFFECT OF AGREEMENT. The execution and delivery of this Agreement
and the consummation of the Contemplated Transactions will not (a) conflict with
or result in any violation or breach of any of the terms or conditions of, or
constitute a default under, the Certificate of Incorporation or other charter
documents or bylaws of Seller, or any Contract to which Seller is now a party or
by which Seller or any of its properties or assets may be bound or affected; (b)
result in any violation of any Applicable Law applicable to Seller, the
Transferred Assets or the Business; (c) cause Buyer to lose the benefit of any
right or privilege included in the Transferred Assets; or (d) relieve any Person
of any obligation (whether contractual or otherwise) or enable any Person to
terminate any such obligation or any right or benefit enjoyed
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by Seller or to exercise any right under any agreement in respect of the
Transferred Assets or the Business.
4.16 SUITS, ACTIONS AND CLAIMS. Except as set forth in SCHEDULE 4.16
there are no pending, or to the Knowledge of Seller, threatened, suits, actions,
claims, inquiries, investigations or legal, administrative or arbitration
proceedings against or affecting Seller or any of its properties, assets or
business reasonably estimated to be in excess of $50,000, including any such
suits, actions, claims, inquiries, investigations or proceedings that question
the validity or legality of the Contemplated Transactions, and there is no
outstanding order, writ, injunction or decree of any Governmental Authority
against or affecting Seller or any of its properties, assets or business.
4.17 INVENTORY. The inventory of Seller, taken as whole, whether
reflected on the balance sheet or subsequently acquired is (a) in good and
usable condition, consistent with past practice, and (b) stated on the books and
records of Seller at the lesser of cost and fair market value, with adequate
reserves, all as determined in accordance with past accounting practices of
Seller. Since June 30, 2002, there have not been any write-downs of the value
of, or establishment of any reserves against, any inventory of the Business,
except for write-downs and reserves in the ordinary course of business
consistent with past practice.
4.18 ACCOUNTS RECEIVABLE. All notes and accounts receivable of Seller
that are reflected on the Financial Statements or that have arisen since June
30, 2002 ("ACCOUNTS RECEIVABLE") have arisen from bona fide transactions in the
ordinary course of business. Seller has not factored or discounted or agreed to
factor or discount any Accounts Receivable. The values at which the Accounts
Receivable are carried reflect the accounts receivable valuation policy of
Seller which is consistent with Seller's past practice consistently applied.
SCHEDULE 4.18 sets forth a true, correct and complete list of all Accounts
Receivable written off by Seller, in whole or in part, as uncollectible during
the two (2) years preceding the date hereof. SCHEDULE 4.18 also sets forth a
true, correct and complete aging of the Accounts Receivable of Seller as of the
most recent practicable date, and, except as specifically noted on SCHEDULE
4.18, all of such Accounts Receivable (other than Inter-company Receivables) are
included in the Transferred Assets.
4.19 COMPLIANCE WITH LAW. To the Knowledge of Seller, Seller is in
compliance with all Applicable Laws. To the Knowledge of Seller, Seller has not
received any notice of any violation or alleged violation of any Applicable
Laws.
4.20 PRODUCT WARRANTIES. SCHEDULE 4.20 contains a true, correct and
complete copy of Seller's standard warranties and return policies for its
products, and except as stated therein or provided for under any Applicable Law,
there are no warranties, commitments or obligations with respect to the return,
repair or replacement of Seller's products. To the Knowledge of Seller, there
are no defects in design, construction or manufacture of Seller's products which
would reasonably be expected to have a Material Adverse Effect on the Business.
None of Seller's products sold within the last two years have been the subject
of any recall campaign, and to the Knowledge of Seller, no facts exist which
would reasonably be expected to result in such a recall campaign.
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4.21 NO OTHER REPRESENTATIONS AND WARRANTIES. Except as expressly set
forth in this Agreement, the Schedules and Exhibits hereto, and any certificate
or instrument delivered pursuant to the terms hereof, Seller makes no
representations or warranties with respect to the Business or Seller's
operations, assets (including, without limitation, the Transferred Assets),
liabilities (including, without limitation, the Assumed Liabilities) or
condition, including, with respect to the Transferred Assets, and representation
or warranty of merchantability, suitability or fitness for a particular purpose,
or quality as to the Transferred Assets, or any part thereof, or as to the
condition or workmanship thereof, or the absence of any defects therein, whether
latent or patent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as set forth below as of the
date of this Agreement:
5.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction where it is organized and has all requisite corporate power and
authority to enter into this Agreement, to carry out the Contemplated
Transactions and to perform its obligations hereunder. Buyer is a domestic
corporation within the meaning of Section 7701 of the Tax Code.
5.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement and all other documents executed or to be executed by Buyer pursuant
to this Agreement, and the consummation of the Contemplated Transactions have
been duly authorized by all necessary corporate and other action on the part of
Buyer. This Agreement has been duly executed and delivered by a duly authorized
officer of Buyer.
5.3 ENFORCEABILITY. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms, except as
such enforceability may be limited by equitable principles and by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws
relating to or affecting the rights of creditors generally.
5.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution, delivery
and performance of this Agreement and the consummation of the Contemplated
Transactions will not conflict with or result in any violation of or default
under any provision (a) of the charter or bylaws of Buyer, or (b) of any
mortgage, indenture, trust, lease, partnership or other agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Buyer or any
of its properties or assets, the result of which, with respect to items
identified in clause (b) would (either individually or in the aggregate) have a
material adverse effect on the operations or financial condition of Buyer or
would materially impair Buyer's ability to consummate the Contemplated
Transactions (a "MATERIAL ADVERSE EFFECT ON Buyer").
5.5 GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. Except as set forth on
SCHEDULE 5.5, no consents, licenses, approvals or authorizations of, or
registrations or declarations with,
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any Governmental Authority, bureau, agency or commission, or any third party,
are required to be obtained or made by Buyer in connection with the execution,
delivery, performance, validity and enforceability of this Agreement other than
(a) Bankruptcy Court approval, and (b) other consents, licenses, approvals,
authorizations, registrations or declarations, where the failure to obtain such
would not have a Material Adverse Effect on Buyer.
5.6 ACCESS. Buyer has received and reviewed the Financial Statements
and is acquainted with the Business. Buyer has had an opportunity to review the
assets, books, records and contracts of the Business, and has been given the
opportunity to meet with officers and other representatives of Seller for the
purpose of investigating and obtaining information regarding the Business
operations and its financial and legal affairs.
5.7 BROKERS. No agent, broker, Person or firm acting on behalf of Buyer
or its stockholders is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any Person controlling,
controlled by or under common control with any of the parties hereto, in
connection with any of the Contemplated Transactions.
5.8 BUYER AWARENESS. Buyer is not aware of any fact, circumstance or
condition which would constitute a breach of any representation or warranty of
Seller contained in this Agreement, or which could reasonably be expected to
have a Material Adverse Effect on the Business.
ARTICLE 6
COVENANTS RELATING TO PERSONNEL ARRANGEMENTS
6.1 TRANSFEREE EMPLOYEES. Effective as of the Closing Date, Seller
shall terminate the employment of the employees of the Business. Buyer shall
offer employment to all employees of the Business on the Closing Date on
substantially similar terms and conditions of employment as those previously
provided by Seller. All such employees offered and accepting employment with
Buyer shall be referred to herein as "TRANSFEREE EMPLOYEES." After the Closing
Date, Seller shall notify Buyer in advance of any intended communication with
any Transferee Employee and any communication to any Transferee Employee other
than the President, Controller, human resources manager or plant manager shall
require the consent of Buyer which shall not be unreasonably withheld. All W-2s
and any other similar documents shall be sent by Seller to Buyer for
distribution to Transferee Employees and Buyer shall timely deliver such W-2s
and any other similar document to Transferee Employees.
6.2 COBRA OBLIGATIONS.
(a) Buyer will be solely responsible for any obligations for
continuation coverage under Section 4980B of the Tax Code and part 6 of Subtitle
B of Title I of ERISA with respect to Transferee Employees.
(b) Seller will be solely responsible for any obligations for
continuation coverage under Section 4980B of the Tax Code and part 6 of Subtitle
B of Title I of ERISA with respect to all employees other than Transferee
Employees.
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6.3 PLANS, BENEFITS AND POLICIES.
(a) Buyer will, as of the Closing Date, adopt and provide a group
health plan for Transferee Employees.
(b) In performance of its obligations identified in (a) above, if
Buyer establishes any Pension Plan, Welfare Plan, or any vacation and severance
pay plans for Transferee Employees, or if Buyer includes Transferee Employees in
such plans already maintained by Buyer, Buyer will credit Transferee Employees
with service with Seller (and predecessors of Seller) for purposes of (i)
vesting for and eligibility to participate in any Pension Plan of Buyer, but not
for purposes of benefit accruals; (ii) any waiting periods, eligibility or
pre-existing condition limitations for any Welfare Plan of Buyer; and (iii)
eligibility and benefit computation for vacation and severance pay plans of
Buyer; PROVIDED, HOWEVER, that the foregoing shall not require Buyer to offer
any of such plans to Transferee Employees, except as provided in paragraph (a)
above.
(c) Except as otherwise provided herein, as of the Closing Date,
all Transferee Employees shall cease participation in Benefit Plans of Seller.
Except as set forth in Section 2.3, Seller shall retain all liabilities related
to its Benefit Plans.
(d) After Closing, Buyer and Seller will cooperate with each other
and provide each other such information as is required concerning Transferee
Employees in order to determine whether a Transferee Employee is entitled to
compensation from either party or benefits under any plan, program or
arrangement sponsored or maintained by either party.
(e) No provision in this Section 6.3 shall create any third-party
beneficiary rights in any employee, former employee or Transferee Employee
(including any beneficiary or dependent thereof) of Buyer, Seller or any of
their respective Affiliates.
(f) Buyer shall have no responsibility, liability or obligation
relative to the Benefit Plans, except as may be set forth in this Agreement.
ARTICLE 7
COVENANTS OF SELLER
7.1 CONDUCT OF BUSINESS.
(a) Except as set forth on SCHEDULE 7.1 or as may be otherwise
expressly permitted by this Agreement or with the prior written consent of
Buyer, and subject to any order of the Bankruptcy Court which shall take
precedence over any provision of this Agreement, from the date hereof and prior
to the Closing, Seller will: (i) operate the Business only in the ordinary
course; (ii) use commercially reasonable efforts to preserve intact the
organization of the Business; (iii) continue in full force and effect all
existing insurance policies (or comparable insurance) of or relating to the
Business; (iv) preserve relationships with suppliers, customers, licensors and
licensees and others having business dealings with Seller relating to the
Business; and (v) repair or replace any material Transferred Asset damaged or
destroyed.
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(b) Without limiting the generality of Section 7.1(a), and except
as may be otherwise expressly permitted by this Agreement or approved by the
Bankruptcy Court or with the prior written consent of Buyer, which shall not be
unreasonably withheld, delayed or conditioned, from the date hereof through the
Closing, Seller shall not, with respect to the Business:
(i) enter into any material transaction in connection
with the Business outside the ordinary course of business;
(ii) conduct the Business in a manner that departs
materially from the manner in which the Business was being
conducted prior to the date of this Agreement;
(iii) sell, lease, transfer, mortgage or assign any of
the Transferred Assets, tangible or intangible, other than in the
ordinary course of business;
(iv) cancel, compromise, knowingly waive or lease any
material right or claim (or series of related rights and claims)
under any Assumed Contract, outside the ordinary course of
business;
(v) make any material change in the rate of
compensation, commission, bonus or other direct or indirect
remuneration payable, to or in respect of any employee of the
Business, other than the increases and payments in the ordinary
course of business consistent with past practice since the Filing
Date;
(vi) enter into any contract or obligation related to
the Business or the Transferred Assets that can reasonably be
expected to create an obligation in excess of $25,000;
(vii) make or agree to make any capital expenditure in
excess of $25,000; or
(viii) agree to do any of the foregoing.
(c) In the event that Seller wishes to engage in any act which
falls within the provisions of Section 7.1(b), Seller shall provide notice
thereof to Buyer who shall advise Seller within five (5) business days of any
objection Buyer has with respect to such action. In the event that Buyer fails
to object within such period, Buyer shall be deemed to have waived any objection
to such act.
7.2 ACCESS. Subject to reasonable notice and as permitted by law,
Seller shall afford to Buyer and its accountants, counsel and other agents and
representatives full access during normal business hours throughout the period
prior to the Closing Date to all of the properties, books, contracts,
commitments and records of the Business and, during such period, Seller shall
furnish promptly to Buyer and its representatives in relation to the Business
access to all other information concerning the business, properties and
personnel of the Business as Buyer may reasonably request. Seller shall promptly
upon request provide Buyer access to a true, complete and correct copy of each
written agreement or other instrument, together with all amendments or
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clarifications thereto, and a true, complete and correct summary of the terms
and conditions of each oral agreement, identified in the Disclosure Schedule. If
access is restricted due to a term in the agreement or by Applicable Law, Seller
shall use its commercially reasonable efforts to secure consent from the other
party(ies) to the agreement to provide such access prior to Closing with
sufficient time for Buyer review. Buyer will treat the documents and other
material and information referred to in this Section 7.2 as confidential in
compliance with Section 9.10.
7.3 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt notice to
Buyer of (i) any breach by Seller of any of its representations or warranties at
any time from the date of this Agreement to the Closing Date, or (ii) any
failure of Seller to comply with or satisfy any of its covenants or conditions
in a timely manner under this Agreement. If Seller becomes aware of any event
requiring any change in the Disclosure Schedule, Seller will promptly deliver to
Buyer a supplement to the Disclosure Schedule specifying such change.
Notwithstanding the foregoing, no such notice or supplement to the Disclosure
Schedule shall have any effect for the purpose of determining the satisfaction
of the conditions set forth in Article 11.
ARTICLE 8
COVENANTS OF BUYER
8.1 INVESTIGATION. In conducting its review of the Business, Buyer
shall conduct itself so as to not unreasonably interfere with the Business or
with the performance of Seller's employees, representatives and agents.
8.2 ASSISTANCE WITH RESPECT TO EXCLUDED ASSETS. Following the Closing
Date, upon the request of Seller, Buyer will use its commercially reasonable
efforts to assist Seller at Seller's expense in connection with collection,
maintenance or liquidation of the Excluded Assets. If Buyer receives payment in
respect of such items following the Closing, Buyer shall promptly pay such
amounts to Seller and shall notify promptly each such payor that any and all
payments by that payor to Seller in the future should be made directly to
Seller.
ARTICLE 9
COVENANTS OF BOTH PARTIES
9.1 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each party will use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under Applicable Law and the terms of
this Agreement to consummate the Contemplated Transactions, including at any
time and from time to time after the Closing the execution and delivery of any
further instruments or documents which are reasonably requested by a party or
counsel to any party signatory hereto in order to evidence or facilitate the
consummation of the Contemplated Transactions.
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9.2 GOVERNMENTAL FILINGS. Buyer and Seller shall cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any Assumed
Contract, in connection with the consummation of the Contemplated Transactions
and (ii) in taking such actions or making any such filings, in furnishing such
information as may be required in connection therewith, and in seeking timely to
obtain any such actions, consents, approvals or waivers.
9.3 PUBLIC ANNOUNCEMENTS AND DISCLOSURE OF TRANSACTION. None of Buyer,
Seller nor any of their Affiliates will issue any press release or make any
public statement with respect to this Agreement or the Contemplated Transactions
to any Person or entity prior to the Closing and, after the Closing, will not
issue any such press release or make any such public statement without the prior
consent of the other party (which consent shall not be unreasonably withheld or
delayed), subject to disclosures required in connection with the Bankruptcy
Case. In addition and subject to Section 9.9(a), prior to the Closing Date: (1)
Seller may inform its employees of the Contemplated Transactions; and (2) Buyer
may engage in transitional discussions with Seller's employees in any reasonable
manner deemed appropriate and necessary by Buyer.
9.4 USE OF BUSINESS NAMES BY BUYER.
(a) Buyer acknowledges that Seller's Affiliate has asserted the
absolute and exclusive proprietary right to all names, marks, trade names,
trademarks, service names and service marks (collectively, "NAMES")
incorporating "American Architectural Products Corporation" or "AAPC" or any
similar Name and to all corporate symbols or logos (collectively, "LOGOS")
incorporating "American Architectural Products Corporation" or "AAPC" or any
similar Name. All rights of Seller and its Affiliates to the same and the
goodwill represented thereby and pertaining thereto are being retained by Seller
or its Affiliates. Buyer agrees that it will not, and will cause the Business
following the Closing not to, use the American Architectural Products
Corporation or AAPC Name or any similar Name or any Logo incorporating such Name
or any similar Name in any manner, including in connection with the sale of any
products or services or otherwise in the conduct of the Business, except as
expressly permitted by subsection (b) of this Section 9.4.
(b) For a period of six months from the Closing Date (the "WINDOW
PERIOD"), Seller shall and hereby irrevocably grants to Buyer, effective as of
the Closing Date, on a fully-paid, non-exclusive, royalty-free basis, the
non-exclusive right to use the American Architectural Products Corporation and
AAPC Logos and the American Architectural Products Corporation and AAPC Names in
connection with the operation of the Business as currently conducted including,
during the Window Period, (i) to market and sell all such services and products
produced by the Business and (ii) to use any other assets on hand included in
the Transferred Assets, including, without limitation, any catalogs, invoices,
packaging material or stationery, bearing the American Architectural Products
Corporation and AAPC Names or American Architectural Products Corporation and
AAPC Logos PROVIDED, HOWEVER, that Buyer shall use its commercially reasonable
efforts to cease its use of the American Architectural Products Corporation and
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AAPC Names and the American Architectural Products Corporation and AAPC Logos
within the Window Period. Immediately upon the expiration of the Window Period,
Buyer shall cease to use in any manner the American Architectural Products
Corporation and AAPC Names and the American Architectural Products Corporation
and AAPC Logos incorporating such Names and remove or obliterate such Names and
the American Architectural Products Corporation and AAPC Logos from any products
or other Assets and clearly and prominently xxxx the new name of the Business
thereon. Except as set forth in this Section 9.4, at all times following the
Closing, Buyer shall not indicate that Buyer or the Business is affiliated with
Seller or any of its Affiliates.
(c) On the Closing Date, Seller shall modify the formal corporate
or trade names, as the case may be, of Seller in all jurisdictions where those
names are registered and shall make such names available for Buyer's immediate
use.
9.5 CONSENTS; COOPERATION. Seller and Buyer will use their commercially
reasonable efforts:
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all authorizations, consents, orders, permits or
approvals of, or notices to, or filings, registrations or qualifications with,
all Governmental Authorities (including, without limitation, the approval of the
Bankruptcy Court) and any other Person or entity that are required on their
respective parts, for the consummation of the Contemplated Transactions;
(b) to defend, consistent with applicable principles and
requirements of law, any lawsuit or other legal proceeding, whether judicial or
administrative, whether brought derivatively or on behalf of third Persons
(including Governmental Authorities) challenging this Agreement or the
Contemplated Transactions;
(c) to furnish to each other such information and assistance as may
reasonably be requested in connection with the foregoing; and
(d) to reasonably assist each other as necessary with regard to the
determination of contract or order closeouts or other issues which affect the
Assumed Contracts, to notify Buyer of additional disallowances or potential
adverse audit findings, and to consult and reach agreement with respect to
advanced coordination of negotiating positions, offers of compromise, or final
agreements or settlements, all such cooperation to be at a reasonable charge to
the party receiving such cooperation.
9.6 COMMUNICATIONS WITH CUSTOMERS AND SUPPLIERS. Buyer may engage in
communications with suppliers and customers of the Business relating to this
Agreement and the Contemplated Transactions prior to the Closing Date.
9.7 LIABILITY FOR TRANSFER TAXES.
(a) The parties shall cooperate and use commercially reasonable
efforts to avail themselves of the exemption from transfer taxes contained in
Section 1146(c) of the Bankruptcy Code. Buyer shall pay in a timely manner all
title search, title policy, sales, use, value added, documentary, stamp, gross
receipts, foreign withholding, registration, transfer, conveyance, excise,
recording, license, property and other similar Taxes and fees (including without
limitation any goods and services tax) ("TRANSFER TAXES"), arising out of or in
connection
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with or attributable to the Contemplated Transactions. Each party hereto shall
prepare and timely file all Tax Returns required to be filed in respect of
Transfer Taxes that are the primary responsibility of such party under
Applicable Law, PROVIDED, HOWEVER, that such party's preparation of any such Tax
Returns shall be subject to the other party's approval which approval shall not
be unreasonably withheld, conditioned or delayed.
(b) The Transferred Assets are composed of (i) assets as to which
the "isolated, casual or occasional sale" exemption or similar exemption from
Transfer Taxes is or may be applicable and (ii) other assets as to which other
exemptions from Transfer Taxes are or may be applicable. In order to obtain any
exemption or favorable tax rate, Buyer shall, to the extent consistent with
Applicable Law, provide Seller with any exemption or resale certificate, permit,
license or such other documentation as may be required by any taxing authority
to establish the right to such exemption or tax rate.
9.8 BOOKS AND RECORDS. Subject to the confidentiality provisions
hereof, Seller shall have the right to retain copies of the Books and Records.
From and after the Closing and until the second anniversary thereof, (a) Seller
agrees to grant to Buyer, upon reasonable notice and during normal business
hours, reasonable access to any books and records that pertain to the Business,
but which are not Books and Records, to the extent it is operating and has books
and records in its possession, and (b) Buyer agrees to grant to Seller or its
estate, upon reasonable notice and during normal business hours, reasonable
access to any Books and Records included in the Transferred Assets that pertain
to the operations of the Business on or prior to the Closing Date.
9.9 TAX MATTERS.
(a) Seller and Buyer shall provide each other and their Affiliates
with such assistance and documents, without charge and in a timely fashion, as
may be reasonably requested by either of them in connection with (i) the
preparation of any Tax Return, (ii) the conduct of any procedure relating to
Taxes, or (iii) any other matter that is the subject of this Agreement. Such
assistance shall include, without limitation: (x) the provision on demand of
books, records, Tax Returns, documentation or other information relating to any
relevant Tax Return ("TAX DATA"); (y) the execution of any document that may be
necessary or reasonably helpful in connection with the filing of any Tax Return,
or in connection with any procedure relating to Taxes, including, without
limitation, the extensions of applicable statutes of limitations; and (z) the
use of reasonable efforts to obtain any documentation from any Governmental
Authority or other Person that may be necessary or reasonably helpful in
connection with the foregoing. Such cooperation shall include, without
limitation, making their respective employees and independent auditors
reasonably available on a mutually convenient basis for all reasonable purposes,
including, without limitation, to provide explanations and background
information and to permit the copying of books, records, schedules, workpapers,
notices, revenue agent reports, settlement or closing agreements and other
documents containing the Tax Data ("TAX DOCUMENTATION"). If a third party is
retained in connection with any review hereunder, the party retaining such third
party shall be responsible for any fees and expenses for such third party.
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(b) Seller and Buyer shall retain or cause to be retained the Tax
Data, the Tax Documentation, all Tax Returns, schedules and workpapers, and all
material records or other documents relating thereto, until one year after the
Closing Date or until the expiration of any additional period that either Buyer
or Seller, as the case may be, may reasonably request in writing with respect to
specifically designated material records or documents; PROVIDED, HOWEVER, that
in the event a party notifies the other party that an audit, examination,
investigation or other proceeding has been instituted prior to the first
anniversary of the Closing Date, the Tax Data and Tax Documentation relating
thereto shall be retained until there is a final determination thereof (and the
time for any appeal has expired). After the expiration of the time when the Tax
Data and the Tax Documentation must be retained pursuant to this Section 9.89,
then any such material may be destroyed. Seller shall give Buyer not less than
thirty (30) days' prior written notice before Tax Data or Tax Documentation, in
the possession or control of any member of the consolidated group of which AAPC
is the common parent, is destroyed and shall give Buyer an opportunity to copy
any such material during such thirty (30) day period.
9.10 CONFIDENTIALITY.
(a) Between the date of this Agreement and the Closing Date, Buyer
and Seller will maintain in confidence, and will cause their respective
Affiliates, directors, officers, employees, agents and advisors to maintain in
confidence, and not use to the detriment of another party any written, oral, or
other information obtained in confidence from another party in connection with
this Agreement or the Contemplated Transactions, unless (i) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(ii) the use of such information is necessary or appropriate in making any
filing or obtaining any consent or approval required for the consummation of the
Contemplated Transactions (including, without limitation, Bankruptcy Court
approval of any of the Contemplated Transactions), or (iii) the furnishing or
use of such information is required by legal proceedings, PROVIDED, HOWEVER,
that the party required to disclose the confidential information shall first
notify the other party of such order and afford the other party the opportunity
to seek a protective order relating to such disclosure. Notwithstanding anything
herein to the contrary, Seller shall not be under any restrictions with respect
to disclosures to the Committee, the Bankruptcy Court in the Bankruptcy Case or
any prospective purchaser of the Business (and their respective agents and
representatives) (provided that any such prospective purchaser enters into a
confidentiality agreement with terms substantially similar to the Prior
Confidentiality Agreement). Buyer acknowledges that Seller will file this
Agreement with the Bankruptcy Court in furtherance of obtaining the Sale Order
or other appropriate relief from the Bankruptcy Court.
(b) If the Contemplated Transactions are not consummated, each
party will immediately return or destroy all such confidential information and
any and all copies thereof, however stored, and, if requested by the other
party, shall certify conformity with this Section 9.9(b) in writing.
(c) The provisions of this Article 9.10 are in addition to, and not
in lieu of, the provisions of the Confidentiality Agreement dated March 15,
2002, between Buyer and Seller related to the Contemplated Transactions (the
"PRIOR CONFIDENTIALITY AGREEMENT"). From and after the Closing Date, the Prior
Confidentiality Agreement shall be of no further force or effect.
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9.11 TRANSITION PERIOD ASSISTANCE. Seller agrees that during the 30-day
period beginning on the Closing Date it will reasonably cooperate, and cause its
officers, directors and other representatives to reasonably cooperate, with
Buyer in transitioning to Buyer payroll and other general corporate services
pertaining to the Business.
ARTICLE 10
BUYER PROTECTIONS: OVERBIDDING PROCEDURES
AND BREAK-UP FEES
10.1 BANKRUPTCY COURT APPROVALS.
(a) The obligations of Buyer hereunder are subject to, and
conditioned upon (i) the entry of an order of the Bankruptcy Court, in form and
substance reasonably satisfactory to Buyer (the "BIDDING PROCEDURES ORDER"), (A)
approving and expressly incorporating the procedures and provisions set forth in
Section 10.2 hereof, including, without limitation, the provisions regarding the
payment of a Break-Up Fee, (B) authorizing the allowance and ordering the
payment of a Break-Up Fee in accordance with the provisions of Section 10.2(d)
(subject to any limitations imposed by the Bankruptcy Court), and (C) granting
Buyer a claim for such amount pursuant to Sections 503(b)(1), 507(a)(1), and 105
of the Bankruptcy Code, and (ii) the Bidding Procedures Order becoming final and
no longer subject to appeal (unless Buyer, in its sole discretion, shall elect
to waive some or all of the conditions set forth in this Section 10.1) (the
conditions set forth in this Section 10.1(a) being referred to herein as the
"BIDDING PROCEDURES ORDER APPROVAL").
(b) The obligations of Buyer and Seller to consummate the
Contemplated Transactions (other than the obligations of Seller under Section
10.2(d)) are subject to and conditioned upon (i) the hearing before the
Bankruptcy Court to approve the Sale Order (the "SALE HEARING") occurring on or
before December 13, 2002, (ii) the entry of an order (the "SALE ORDER") of the
Bankruptcy Court, in form and substance reasonably satisfactory to Buyer, (A)
approving this Agreement and the Contemplated Transactions, (B) transferring the
Transferred Assets to Buyer free and clear of all interests and Liens (except
Permitted Encumbrances), and subject to the Assumed Liabilities, pursuant to
Sections 105, 363 and 365 of the Bankruptcy Code, (C) authorizing Seller to
assign to Buyer and Buyer to assume all of the Assumed Contracts pursuant to
Section 365 of the Bankruptcy Code, (D) finding that good and sufficient notice
of the application for approval of the Sale Order has been given to all Persons
to whom such notice is required under the rules and procedures of the Bankruptcy
Court or otherwise to effectuate the Contemplated Transactions, and (E) finding
that this Agreement was entered into in good faith by the parties and was not
the result of any improper agreements or actions, such that the parties are
afforded the protections set forth in Section 363(m) of the Bankruptcy Code, and
(iii) such Sale Order becoming final and no longer subject to appeal on or
before December 24, 2002, or, if there shall be an appeal of the Sale Order,
such order shall not have been stayed pending such appeal (the conditions set
forth in this Section 10.1(b) being referred to herein as the "SALE ORDER
APPROVAL").
(c) Within five (5) business days after the date hereof, Seller
shall file with the Bankruptcy Court (i) a motion, notices and proposed order,
for the Bidding Procedures Order
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in accordance with Section 10.1(a) above (the "BIDDING PROCEDURES MOTION"),
substantially in the form of Exhibit D, and (ii) a motion, notices and proposed
order for the Sale Order as described in Section 10.1(b) above (the "SALE
MOTION"), substantially in the form of Exhibit E. Seller shall use commercially
reasonable efforts to obtain the Bidding Procedures Order Approval and Sale
Order Approval, and Buyer shall cooperate with Seller in obtaining such orders
and approvals. Seller shall give notice of the Bidding Procedures Motion and the
Sale Motion to all parties on the official service list as maintained in the
Bankruptcy Case and all non-debtor parties to Assumed Contracts and other
Persons to whom notice may be required under all applicable rules and orders of
the Bankruptcy Court to obtain the Bidding Procedures Order Approval and Sale
Order Approval, to render such orders valid and enforceable and to implement the
Contemplated Transactions.
10.2 BIDDING PROCEDURES. Seller acknowledges that this Agreement is the
culmination of an extensive process undertaken by Seller to identify and
negotiate a transaction with a bidder who was prepared to pay the highest and
best purchase price for the Transferred Assets while assuming or otherwise
satisfying certain liabilities in order to maximize the value of those assets.
Set forth below are the bidding procedures (the "BIDDING Procedures") to be
employed with respect to this Agreement concerning the sale of the Transferred
Assets to Buyer (the "SALE"). The Sale is subject to competitive bidding only as
set forth herein and approval by the Bankruptcy Court at the Sale Hearing under
Sections 105, 363, and 365 of the Bankruptcy Code. The following overbid
provisions and related bid protections are designed to compensate Buyer for its
efforts and agreements to date and to facilitate a full and fair process
designed to maximize the value of the Transferred Assets for the benefit of
Seller's creditors and stakeholders.
(a) BID DEADLINE. All Bids must be submitted to Seller, c/o
American Architectural Products Corporation, 000 Xxxxxxxx-Xxxxxxxx Xxxx, Xxxx
Xxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxx 00000, to the attention of its General
Counsel and to Seller's counsel, Squire, Xxxxxxx & Xxxxxxx L.L.P., and Xxxxxx,
Del Genio, Xxxxx & Co., LLC, Seller's financial advisor, so as to be received
not later than 11:00 a.m., prevailing Eastern time on the date which is five (5)
business days prior to the date scheduled by the Bankruptcy Court for the Sale
Hearing, which date may change from time to time (the "BID DEADLINE"). Seller
will immediately distribute by facsimile transmission, personal delivery or
reliable overnight courier service in accordance with the notice procedures set
forth in Section 16.2 a copy of each Bid upon receipt to (i) counsel to the
Committee and (ii) counsel to Buyer. For purposes of this Agreement, "BID" shall
mean a letter from a Person who the Board of Directors of Seller has determined
in the exercise of its fiduciary duty is financially able to consummate the
Contemplated Transactions (a "QUALIFIED BIDDER") stating that (A) such Qualified
Bidder offers to purchase the Transferred Assets upon the terms and conditions
set forth in this Agreement, together with all Schedules and Exhibits hereto
(the "DEFINITIVE SALE DOCUMENTATION"), marked to show those amendments and
modifications to the Definitive Sale Documentation, including, but not limited
to, price and the time of closing, that such Qualified Bidder proposes, (B) such
Qualified Bidder is prepared to enter into and consummate the Contemplated
Transactions within not more than eleven (11) days after approval by the
Bankruptcy Court of a sale order, subject to receipt of any Consents of
Governmental Authorities (which must be obtained within sixty (60) days of the
approval by the Bankruptcy Court of a sale order), and (C) such Qualified
Bidder's offer is irrevocable until the closing of a purchase of the Transferred
Assets.
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(b) QUALIFIED BID. Only Qualified Bids will qualify for
consideration at the Auction. For purposes of this Agreement, a "QUALIFIED BID"
is a Bid that:
(i) complies in all respects with Section 10.2(a);
(ii) has a cash component of at least an amount
sufficient to pay a Break-Up Fee to Buyer in accordance with
Section 10.2(d) and provides for payment, in full, of such Break-Up
Fee directly to Buyer at closing;
(iii) is a proposal that Seller determines, after
consultation with the independent financial advisor of Seller and
the Committee, is under all circumstances, on balance, a higher and
better Bid and has a value greater than or equal to the sum of (x)
the value, as reasonably determined by the independent financial
advisor of Seller, of Buyer's offer plus (y) the amount of the
Break-Up Fee payable to Buyer pursuant to Section 10.2(d) plus (z)
$200,000 over the preceding Qualified Bid;
(iv) is substantially on the same or better terms and
conditions as those set forth in the Definitive Sale Documentation;
(v) is accompanied by satisfactory evidence of
committed financing or other ability to perform; and
(vi) is accompanied by a deposit (by means of a
certified bank check from a U.S. bank or by wire transfer) equal to
the Deposit. Such deposit shall either be returned to the Qualified
Bidder in the event the Qualified Bidder's Bid is not determined to
be the best Qualified Bid, or retained by Seller at the closing for
the sale of the Transferred Assets and applied toward the Purchase
Price.
If Seller does not receive any Qualified Bids, no Auction will be
conducted, Seller will report the same to the Bankruptcy Court and will proceed
with a sale and assignment of the Transferred Assets to Buyer pursuant to the
terms of this Agreement. This Agreement executed by Buyer shall constitute a
Qualified Bid for all purposes.
(c) AUCTION, BIDDING INCREMENTS, AND BIDS REMAINING OPEN.
(i) If Seller receives a Qualified Bid, Seller will
conduct an auction (the "Auction") at the location designated by
Seller at least 3 business days prior to the Auction, on the date
that is one (1) business day prior to the date scheduled by the
Bankruptcy Court for the Sale Hearing, beginning at 11:00 a.m.,
prevailing Eastern time, or such later time or other place as
Seller shall notify all Qualified Bidders who have submitted
Qualified Bids. Only Buyer, its representatives, Seller,
representatives of the Committee, and a representative from the
U.S. Trustee's office (via telephone conference) and any Qualified
Bidders who have timely submitted Qualified Bids and their
respective counsel shall be entitled to attend the Auction, and
only Buyer and Qualified Bidders will be entitled to make any
subsequent Qualified Bids at the Auction. The opening bid, which
does not need to be re-submitted at the Auction, is the highest
Qualified Bid submitted
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before the Auction by a Qualified Bidder (the "OPENING BID"), which
must include (A) the Break-up Fee and (B) an incremental increase
in the Purchase Price of not less than $200,000 (the "OVERBID
INCREMENT"). Bidding at the Auction will continue until such time
as the highest and best Qualified Bid is determined. Seller may
announce at or prior to the Auction additional procedural rules
that are reasonable under the circumstances (e.g., the amount of
time allotted to make subsequent overbids) for conducting the
Auction so long as such rules are not inconsistent with these
Bidding Procedures.
(ii) After the Opening Bid, all subsequent bids must
exceed the previous bid by not less than the Overbid Increment. Any
bid by Buyer over the Opening Bid must be in an amount not less
than the last bid plus the Overbid Increment (giving Buyer non-cash
credit for the Break-Up Fee). For the duration of the Auction, all
bids by either a Qualified Bidder or Buyer shall include the
Break-Up Fee. If Buyer is the successful bidder at the close of the
Auction, Buyer's winning bid will be reduced by the Break-Up Fee.
(iii) At least one (1) business day prior to the
Auction, Seller will give Buyer and all other Qualified Bidders a
copy of the highest and best Qualified Bid received and copies of
all other Qualified Bids. In addition, Seller will inform Buyer and
each Qualified Bidder who has expressed its intention to
participate in the Auction of the identity of all Qualified Bidders
that may participate in the Auction.
(d) BREAK-UP FEE; EXPENSE REIMBURSEMENT.
(i) If this Agreement is terminated by Buyer or Seller
pursuant to Section 13.1(d) then Seller shall be obligated to pay
to Buyer, a break-up fee (a "BREAK-UP FEE") of $250,000, in order
to reimburse Buyer for its reasonable out-of pocket expenses in
connection with due diligence and the negotiation and preparation
of this Agreement (including, but not limited to, the expense of
accountants, consultants, and other experts, and the obtaining of
related financing), and the value added by Buyer (A) in
establishing a bid standard or minimum for other bidders, (B) in
placing Seller's estate property in a sales configuration mode
attracting other bidders to the Auction and (C) for serving, by its
name and expressed interest, as a catalyst for other potential or
actual bidders. If this Agreement is terminated by Buyer pursuant
to Section 13.1(c)(i) solely as a result of the failure to satisfy
the conditions set forth in Sections 11.1, 11.2, 11.4 (except as it
relates to 11.3), 11.7, 11.8, 11.9, 11.10 or 11.11 (unless such
failure to satisfy Sections 11.2, 11.4, 11.7, 11.8, 11.9 or 11.10
results from a failure of any condition set forth in Article 12),
then Seller shall be obligated to pay to Buyer an amount equal to
Buyer's reasonable out-of pocket expenses incurred in connection
with due diligence and the negotiation and preparation of this
Agreement (including, but not limited to, the expense of
accountants, consultants, attorneys and other experts, and the
obtaining of related financing) plus $50,000 ("Expense
Reimbursement"), provided, however, that the Expense Reimbursement
shall not exceed $250,000.
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(ii) If a Break-Up Fee is owed pursuant to the
provisions of this Section 10.2(d), it shall be allowed and paid as
an administrative expense of Seller under Section 503(b)(1) of the
Bankruptcy Code upon the termination of this Agreement.
ARTICLE 11
CONDITIONS TO OBLIGATIONS OF BUYER TO CLOSE
The obligations of Buyer to purchase the Business and the Transferred
Assets and otherwise consummate the transactions that are to be consummated at
the Closing are subject to the satisfaction, as of the Closing Date, of the
following conditions (any of which may be waived by Buyer, in its sole
discretion, in whole or in part):
11.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller set forth in Article 4 that are qualified as to
materiality shall be accurate and those not so qualified shall be accurate in
all material respects as of the Closing, as though made on and as of the Closing
Date, except to the extent that any of such representations and warranties
refers specifically to a date other than the Closing Date, in which case such
representations or warranties that are so qualified as to materiality shall have
been accurate as of such other date and those not so qualified shall have been
accurate in all material respects as of such other date.
11.2 PERFORMANCE. Seller shall have performed in all material respects
all obligations required by this Agreement to be performed by Seller on or
before the Closing Date.
11.3 NO CONFLICT. The Contemplated Transactions and the consummation of
the Closing shall not be illegal or prohibited under any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or any
competent Governmental Authority or any other legal restraint or prohibition
preventing the transfers contemplated hereby or the consummation of the Closing
shall be in effect, and there shall be no pending or threatened actions or
proceedings by any Governmental Authority (or determinations by any Governmental
Authority).
11.4 CERTIFICATE. Buyer shall have received from a duly authorized
officer of Seller a certificate dated the Closing Date confirming that the
conditions in Sections 11.1, 11.2 and 11.3 have been met.
11.5 BANKRUPTCY COURT APPROVAL. The Bankruptcy Court shall have entered
the Sale Order, in form and substance reasonably satisfactory to Buyer, and the
implementation, operation or effect of such order shall not be stayed or any
stay entered shall have been dissolved.
11.6 CONSENTS. All approvals, consents, waivers and authorizations
required to be obtained by Seller in connection with the Contemplated
Transactions shall have been obtained and shall be in full force and effect,
except where the failure to obtain such consents did not and would not
reasonably be expected to result in a Material Adverse Effect on the Business.
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11.7 TRANSFER DOCUMENTS. Seller shall have delivered to Buyer at the
Closing all documents, certificates and agreements necessary to transfer to
Buyer all of Seller's right and title to and interests in the Transferred Assets
free and clear of all Liens, except Permitted Encumbrances or those assumed by
Buyer, including, without limitation:
(a) bills of sale, assignments and general conveyances, in form and
substance reasonably satisfactory to Buyer, dated the Closing Date, with respect
to the Transferred Assets;
(b) assignments of all Assumed Contracts, to the extent
transferable, and entry of the Sale Order approving the assumption and
assignment of the Assumed Contracts and any other agreements and instruments
constituting Transferred Assets, dated the Closing Date, assigning to Buyer all
of Seller's right, title and interest therein and thereto;
(c) certificates of title to all owned motor vehicles, if any,
included in the Transferred Assets to be transferred to Buyer hereunder, duly
endorsed for transfer to Buyer as of the Closing Date; and
(d) quit claim real property deeds transferring all of Seller's
interest in the owned transferred real property to Buyer.
11.8 TRANSACTION DOCUMENTS. Buyer and Seller shall have entered into
the Transaction Documents.
11.9 FURTHER INSTRUMENTS. Seller shall deliver to Buyer such further
instruments of assignment, conveyance or transfer or other documents of further
assurance as Buyer may reasonably request.
11.10 CORPORATE APPROVAL. SELLER SHALL HAVE TAKEN OR CAUSED TO BE TAKEN
ALL NECESSARY OR DESIRABLE ACTIONS, STEPS AND CORPORATE PROCEEDINGS TO APPROVE
AND AUTHORIZE THE TRANSFER OF THE BUSINESS AND THE TRANSFERRED ASSETS BY SELLER
TO BUYER, TO APPROVE AND AUTHORIZE THE EXECUTION AND DELIVERY OF THIS AGREEMENT
BY SELLER AND DELIVERY TO BUYER AT CLOSING A CERTIFICATE TO ALL SUCH EFFECTS.
11.11 LIENS RELEASED. SELLER SHALL DELIVER TO BUYER A PAY-OFF LETTER(S)
SETTING FORTH THE AGREEMENT OF ALL LIEN HOLDER TO EXTINGUISH PROMPTLY AFTER THE
CLOSING ANY LIEN, OTHER THAN PERMITTED ENCUMBRANCES, RELATING TO THE TRANSFERRED
ASSETS.
ARTICLE 12
CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE
The obligation of Seller to sell the Transferred Assets and otherwise
consummate the transactions that are to be consummated at the Closing is subject
to the satisfaction, as of the Closing Date, of the following conditions (any of
which may be waived by Seller upon consultation with the Committee, in their
sole discretion, in whole or in part):
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12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer set forth in Article 5 that are qualified as to
materiality shall be accurate and those not so qualified shall be accurate in
all material respects as of the Closing, as though made on and as of the Closing
Date, except to the extent that any of such representations and warranties
refers specifically to a date other than the Closing Date, in which case such
representations or warranties that are qualified as to materiality shall have
been accurate as of such other date and those not so qualified shall have been
accurate in all material respects as of such other date.
12.2 PERFORMANCE. Buyer shall have performed in all material respects
all obligations required by this Agreement to be performed by Buyer on or before
the Closing.
12.3 NO CONFLICT. The Contemplated Transactions and the consummation of
the Closing shall not be illegal or prohibited under any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or any
competent Governmental Authority or any other legal restraint or prohibition
preventing the transfers contemplated hereby or the consummation of the Closing,
or imposing damages in respect thereto, shall be in effect, and there shall be
no pending or threatened actions or proceedings by any Governmental Authority
(or determinations by any Governmental Authority) that would reasonably be
expected to have a material adverse effect on the Contemplated Transactions.
12.4 CERTIFICATE. Seller shall have received from a duly authorized
officer of Buyer a certificate dated the Closing Date confirming that the
conditions in Sections 12.1, 12.2 and 12.3 have been met.
12.5 BANKRUPTCY COURT APPROVAL. The Bankruptcy Court shall have entered
the Sale Order, in form and substance reasonably satisfactory to Seller, and the
implementation, operation or effect of such order shall not be stayed or any
stay entered shall have been dissolved.
12.6 CONSENTS. All approvals, consents, waivers and authorizations
required to be obtained by Buyer in connection with the Contemplated
Transactions shall have been obtained and shall be in full force and effect,
except where the failure to obtain such consents did not and would not
reasonably be expected to have a material adverse effect on the Contemplated
Transactions.
12.7 ASSUMPTION AGREEMENT. Seller shall have received from Buyer an
assumption agreement, in form and substance reasonably satisfactory to Seller,
under which Buyer shall have assumed the Assumed Liabilities.
12.8 TRANSACTION DOCUMENTS. Buyer and Seller shall have entered into
the other Transaction Documents.
12.9 FURTHER INSTRUMENTS. Buyer shall deliver to Seller such further
instruments of assumption or other documents as Seller may reasonably request.
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12.10 PAYMENT. Seller shall have received immediately available funds
by wire transfer in accordance with Section 3.2 hereto in the amount of the Cash
Portion of the Purchase Price, less the Working Capital Escrow Amount, less the
Escrowed Deposit.
12.11 RELEASE OF DEPOSIT. BUYER SHALL DELIVER A DIRECTION LETTER TO THE
ESCROW AGENT AND SELLER DIRECTING THE ESCROW AGENT TO IMMEDIATELY DELIVER THE
ESCROWED DEPOSIT TO SELLER.
ARTICLE 13
TERMINATION
13.1 RIGHT TO TERMINATE AGREEMENT. This Agreement may be terminated and
the Contemplated Transactions may be abandoned at any time prior to the Closing
(the actual date on which this Agreement is terminated being referred to herein
as the "TERMINATION DATE"):
(a) by Buyer or Seller, if the Closing has not occurred on or
before December 31, 2002 (the "OUTSIDE DATE"), unless such failure to close is
due to the failure of the party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement;
(b) by mutual written consent of Buyer and Seller, subject to any
necessary Bankruptcy Court approval;
(c) (i) by Buyer, if any condition in Article 11 has not been
satisfied or if satisfaction of any such condition is or becomes impossible as
of the Outside Date (other than through the failure of Buyer to comply with
Buyer's obligations under this Agreement), and Buyer has not waived such
conditions on or before the Outside Date; or
(ii) by Seller, if any condition in Article 12 has not been
satisfied or if satisfaction of any such condition is or becomes impossible as
of the Outside Date (other than through the failure of Seller to comply with
Seller's obligations under this Agreement), and Seller has not waived such
conditions on or before the Outside Date; or
(d) by Buyer or Seller, if the Bankruptcy Court shall have entered
an order approving a Competing Bid, following the earlier to occur of the
following: (i) the consummation of the transactions contemplated by the
Competing Bid; or (ii) 30 days after the sale hearing at which the Bankruptcy
Court entered the order approving such Competing Bid.
Notwithstanding anything to the contrary, any termination by Seller shall be
made only upon consultation with the Committee.
13.2 REMEDIES. Notwithstanding anything herein to the contrary, (a)
Buyer's exclusive remedy for any breach of this Agreement by the Seller Parties
prior to the Closing shall be its right to the Deposit as contemplated in
Section 3.3 and, if applicable, the Break-Up Fee or Expense Reimbursement as
contemplated by Section 10.2(d); provided, however, such amounts shall be due
and payable only under the terms and conditions described therein, and (b)
subject to Section 3.3, Seller's exclusive remedy for any breach of this
Agreement by Buyer (or against
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any of Buyer's Affiliates in conjunction with this Agreement) prior to the
Closing shall be its right to the Deposit as contemplated in Section 3.3;
provided, however, such amount shall be due and payable only under the terms and
conditions described therein. Notwithstanding anything in this Agreement to the
contrary, the provisions set forth in this Section 13.2 shall survive the
termination of this Agreement.
ARTICLE 14
MISCELLANEOUS
14.1 EXPIRATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties set forth in Articles 4 and 5 of this Agreement
shall terminate and expire, and shall cease to be of any force or effect, on the
Closing Date except with respect to any representations made in connection with
the calculation of the Working Capital Adjustment in which case the date the
Working Capital Adjustment is paid shall be the operative date of termination,
and all liability of the parties hereto with respect to such representations and
warranties shall thereupon be extinguished. Except as specifically provided for
in this Agreement, all covenants and agreements of the parties hereto set forth
shall continue in effect until such time as any such obligation has been
fulfilled or waived by the other party to this Agreement; PROVIDED HOWEVER, that
nothing in this sentence shall prevent Seller or any of its Affiliates from
consummating a complete liquidation.
14.2 DISCLAIMER OF PROJECTIONS, ETC. Seller makes no representation or
warranty to Buyer except as specifically made in this Agreement. In particular,
Seller makes no representation or warranty to Buyer with respect to the contents
of Seller's descriptive materials and management presentations to Buyer or the
data room made available to Buyer, including the certainty or accuracy of any
financial projection or forecast delivered by or on behalf of Seller to Buyer.
Buyer acknowledges that (a) there are uncertainties inherent in attempting to
make such projections and forecasts, (b) it is familiar with such uncertainties,
(c) it is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all such projections and forecasts so furnished to it,
and (d) it shall have no claim against Seller with respect thereto.
ARTICLE 15
POST-CLOSING COVENANTS
15.1 DELIVERY OF FUNDS AND OTHER ASSETS COLLECTED BY SELLER; POWER OF
ATTORNEY. Following the Closing, to the extent Seller receives any funds or
other assets in payment of accounts receivable, or in connection with any other
Transferred Assets, sold to Buyer pursuant hereto, Seller shall immediately
deliver such funds and assets to Buyer and take all steps necessary to vest
title to such funds and assets in Buyer. Seller hereby designates Buyer and its
officers as Seller's true and lawful attorney-in-fact, with full power of
substitution, to execute or endorse for the benefit of Buyer any checks, notes
or other documents included in the Transferred Assets or received by Seller in
payment of or in substitution or exchange for any of the Transferred Assets.
Seller hereby acknowledges and agrees that the power of attorney set forth in
the preceding sentence is coupled with an interest, and further agrees to
execute and
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deliver to Buyer from time to time any documents or instruments reasonably
requested by Buyer to evidence such power of attorney.
15.2 CHANGE OF NAME OF SELLER. Immediately upon the occurrence of the
Closing, Seller shall cease using, and thereafter refrain from using, the name
"Binnings Building Products, Inc." and all derivatives thereof, and as soon as
possible after the Closing, Seller will take all actions necessary to change
Seller's corporate name to a name other than "Binnings Building Products, Inc."
or any derivation thereof.
15.3 NON-SOLICITATION. Seller understands that Buyer shall be entitled
to protect and preserve the going concern value of the Business to the extent
permitted by Applicable Law and that Buyer would not have entered into this
Agreement absent the provisions of this Section 15.3 and, therefore, for a
period of one year from the Closing Date, Seller shall not, and shall cause each
of ita Affiliates not to, directly or indirectly solicit, recruit or hire any of
the Transferee Employees or encourage any of the Transferee Employees to leave
the Business.
ARTICLE 16
AGREEMENT CONVENTIONS
16.1 FURTHER ASSURANCES. Each party agrees, at any time and from time
to time after the Closing Date, upon reasonable request from the other party, to
do, execute, acknowledge and deliver, as appropriate, such further acts, deeds,
assignments, transfers, conveyances, assumptions, and powers of attorney as may
reasonably be required for (a) the better assigning, transferring, granting,
conveying, assuming, assuring and confirming to such other party, or its
successors and assigns, of any of the assets, properties or liabilities to be
assigned to it, or (b) the reassignment or return to Seller of assets that may
have been inadvertently assigned, transferred or delivered to Buyer but should
not have been so assigned, transferred or delivered, in each case as provided in
the Transaction Documents.
16.2 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under the Transaction Documents
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
courier or (d) sent by facsimile transmission. All such notices, requests,
demands, waivers and other communication shall be deemed to have been received
(i) if by personal delivery, upon delivery, (ii) if by certified or registered
mail, on the third business day after the mailing thereof, (iii) if by next-day
or overnight mail or courier, on the business day after such mailing, (iv) if by
facsimile, three hours after the sender receives a fax confirmation, unless the
fax is sent after 5:00 p.m. on a business day or on a non-business day, in which
case it shall be deemed received on the next business day.
If to Buyer:
PGT Industries, Inc.
Landerbrook Corporate Center Xxx
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Xxxxx 000
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Halter & Xxxxxxxx LLP
1400 XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Seller, to:
Binnings Building Products, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Binnings Building Products, Inc.
000 Xxxxxxxx-Xxxxxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxx
Xxxxxxxx, Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxx, Esq.
and
Squire, Xxxxxxx & Xxxxxxx L.L.P.
Two Renaissance Square
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Jordan X. Xxxxx, Esq.
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Tel: (000) 000-0000
Fax: (000) 000-0000
or, in each case, to such other address as may be specified in writing to the
other parties.
Any party may give any notice, instruction or communication in
connection with the Transaction Documents using any other means (including
telecopy or ordinary mail), but no such notice, instruction or communication
shall be deemed to have been delivered unless and until it is actually received
by the party to whom it was sent. Any party may change the address to which
notices, instructions, or communications are to be delivered by giving the other
parties to the Transaction Documents notice thereof in the manner set forth in
this Section 16.2.
16.3 ASSIGNMENT. This Agreement may not be assigned by any party
without the express written consent of the other party hereto provided that
Buyer may assign its rights and obligations hereunder to an entity formed by
Buyer to own or operate the Business. Subject to the foregoing, this Agreement
and the rights and obligations set forth herein shall inure to the benefit of,
and be binding upon, the parties hereto and each of their respective successors,
heirs and permitted assigns.
16.4 ENTIRE AGREEMENT; AMENDMENT; GOVERNING LAW. The Transaction
Documents (together with the Exhibits and Schedules thereto) embody the entire
agreement and understanding between the parties hereto with respect to the
subject matter thereof. The Transaction Documents may be amended, modified,
waived, discharged or terminated only by (and any consent hereunder shall be
effective only if contained in) an instrument in writing signed by the party
against which enforcement of such amendment, modification, waiver, discharge,
termination or consent is sought. The Transaction Documents shall be construed
in accordance with and governed by the laws of the State of Ohio as it applies
to contracts to be performed entirely within Ohio.
16.5 CONSENT TO JURISDICTION. THE BANKRUPTCY COURT SHALL HAVE
JURISDICTION OVER ALL MATTERS, INCLUDING, BUT NOT LIMITED TO, ANY LEGAL ACTION,
SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY RELATED
AGREEMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND THE
INTERPRETATION, IMPLEMENTATION AND ENFORCEMENT OF THIS AGREEMENT, AND THE
PARTIES HERETO IRREVOCABLY SUBMIT AND CONSENT TO SUCH JURISDICTION.
Each of Buyer and Seller further agree that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth in Section 16.2 of this Agreement shall be effective service
of process for any action, suit or proceeding with respect to any matters to
which it has submitted to jurisdiction as set forth above. Each of Buyer and
Seller irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement in the
Bankruptcy Court, and irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. In the
event that a court should find that subject matter jurisdiction is not available
in the
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Xxxxxxxxxx Xxxxx, Buyer and Seller hereby agree to submit any and all disputes
arising out of this Agreement to the jurisdiction and venue of the U.S. District
Court for the Northern District of Ohio.
Buyer and Seller each hereby waive any right to trial by jury of any
claim, demand, action, or cause of action arising under this Agreement, the
Contemplated Transactions or in any way connected with or related or incidental
to the dealings between the parties in respect to this Agreement or the
Contemplated Transactions whether existing or hereafter arising, and whether in
contract, tort, equity or otherwise.
16.6 SEVERABILITY. Any term or provision of the Transaction Documents
that is invalid or unenforceable in any jurisdiction, as to such jurisdiction,
shall be ineffective to the extent of such invalidity or unenforceability,
without rendering invalid or unenforceable the remaining terms and provisions of
the Transaction Documents or affecting the validity or enforceability of any of
the terms or provisions of the Transaction Documents in any other jurisdiction.
16.7 THIRD PARTY RIGHTS. NOTHING IN THIS AGREEMENT, EXPRESS OR IMPLIED,
SHALL CONFER UPON ANY PARTY OTHER THAN THE PARTIES HERETO OR THEIR RESPECTIVE
SUCCESSORS AND PERMITTED ASSIGNS, ANY RIGHTS, REMEDIES, OBLIGATIONS OR
LIABILITIES UNDER OR BY REASON OF THIS AGREEMENT, EXCEPT AS EXPRESSLY PROVIDED
IN THIS AGREEMENT.
16.8 RELIANCE ON COUNSEL AND OTHER ADVISORS. Each party has consulted
such legal, financial, technical or other experts as it deems necessary or
desirable before entering into the Transaction Documents. Each party represents
and warrants that it has read, knows, understands and agrees with the terms and
conditions of the Transaction Documents.
16.9 EXHIBITS AND SCHEDULES. Each of the Exhibits and Schedules
referred to in the Transaction Documents and attached thereto is an integral
part of the Transaction Documents and is incorporated in the respective
Transaction Documents by this reference.
16.10 RULES OF CONSTRUCTION. Unless the context otherwise requires: (a)
a term has the meaning assigned to it; (b) an accounting term not otherwise
defined has the meaning assigned to it in accordance with generally accepted
accounting principles; (c) references in the singular or to "him," "her," "it,"
"itself," or other like references, and references in the plural or the feminine
or masculine reference, as the case may be, shall also, when the context so
requires, be deemed to include the plural or singular, or the masculine or
feminine reference, as the case may be; (d) the use of the word "including"
shall mean including, without limitation, with regard to the items listed
thereafter; (e) provisions apply to successive events and transactions; (f)
references to Articles, Sections, Schedules and Exhibits in a Transaction
Document shall refer to Articles, Sections, Schedules and Exhibits of that
Transaction Document, unless otherwise specified; (g) the headings in the
Transaction Documents are for convenience and identification only and are not
intended to describe, interpret, define or limit the scope, extent, or intent of
the respective Transaction Documents or any provision thereof; (h) the
Transaction Documents shall be construed without regard to any presumption or
other rule requiring construction against the party that drafted and caused the
Transaction Documents to be drafted; (i) the use of the term "specific" in
relation to a subject means relating exclusively to that subject; and (j)
references to "commercially reasonable efforts" in the Transaction Documents
shall require the efforts that a
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prudent person desirous of achieving a commercially reasonable result would use
in similar circumstances to achieve a result within a commercially reasonable
time.
16.11 COUNTERPARTS. The Transaction Documents may be executed in
several counterparts (and by facsimile), each of which shall be an original, but
all of which shall constitute one instrument.
SIGNATURE PAGE TO FOLLOW
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IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed as of the date first above written.
PGT INDUSTRIES, INC.
By:
-----------------------------------
Name:
Title:
BINNINGS BUILDING PRODUCTS, INC.
By:
-----------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: President and Chief Executive Officer
BY EXECUTING THIS AGREEMENT, AMERICAN ARCHITECTURAL PRODUCTS
CORPORATION GUARANTEES THE PERFORMANCE BY SELLER OF ITS OBLIGATIONS SOLELY UNDER
SECTIONS 3.6, 10.1(C) AND 10.2(D) AND ARTICLES 9 AND 15 OF THIS AGREEMENT.
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
By:
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Name: Xxxxxx Xxxxxxxxxxx
Title: President and Chief Executive Officer
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