SECURITIES PURCHASE AGREEMENT
AMONG
XXXXX BROTHERS, INC.,
XXXXXXXX X. XXXXX,
BUILDING MATERIALS HOLDING CORPORATION,
AND
BMHC FRAMING, INC.
DATED AS OF MARCH 23, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS..................................................... 2
1.1 BMHC ASSETS........................................................ 2
1.2 BMHC EQUIPMENT..................................................... 2
1.3 BMHC INVENTORY..................................................... 3
1.4 BMHC STOCK......................................................... 3
1.5 BUSINESS........................................................... 3
1.6 CLOSING............................................................ 3
1.7 CLOSING BALANCE SHEET.............................................. 3
1.8 CLOSING DATE....................................................... 3
1.9 CONFIDENTIALITY AGREEMENT.......................................... 3
1.10 CPA PROCEDURE................................................... 3
1.11 DUE DILIGENCE PERIOD............................................ 4
1.12 ENVIRONMENTAL COSTS............................................. 4
1.13 ENVIRONMENTAL LAWS.............................................. 4
1.14 ENVIRONMENTAL MATTER............................................ 4
1.15 EXCLUDED ASSETS AND EXCLUDED LIABILITIES........................ 5
1.16 FINANCIAL INFORMATION........................................... 5
1.17 HAZARDOUS SUBSTANCES............................................ 5
1.18 INTERESTS....................................................... 5
1.19 INVENTORY....................................................... 5
1.20 KNOWLEDGE....................................................... 5
1.21 LOCATIONS....................................................... 5
1.22 MATERIAL........................................................ 6
1.23 NET WORTH ADJUSTMENT............................................ 6
1.24 OPERATING AGREEMENT............................................. 6
1.25 PUT AGREEMENT................................................... 6
1.26 PRELIMINARY CLOSING BALANCE SHEET............................... 6
1.27 REFERENCE BALANCE SHEET......................................... 6
1.28 SELLER.......................................................... 6
1.29 TRADE ACCOUNTS PAYABLE.......................................... 7
1.30 TRADE ACCOUNTS RECEIVABLE....................................... 7
1.31 TRADE NAMES AND TRADEMARKS...................................... 7
ARTICLE II - DUE DILIGENCE.................................................. 7
2.1 DUE DILIGENCE...................................................... 7
2.2 DUE DILIGENCE ACTIVITIES........................................... 8
2.3 CONFIDENTIALITY DURING DUE DILIGENCE............................... 9
2.4 TERMINATION OF AGREEMENT........................................... 9
2.5 EXCLUSIVE DEALING.................................................. 9
ARTICLE III - PURCHASE AND SALE............................................. 10
3.1 Purchase and Sale.................................................. 10
ARTICLE IV - DETERMINATION OF PURCHASE PRICE................................ 10
4.1 DETERMINATION...................................................... 10
4.1.1 INVENTORY.................................................... 10
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4.1.1.1 VALUATION................................................. 10
4.1.1.2 VALUATION OF FINISHED PRODUCT............................. 10
4.1.1.3 VALUATION OF MISCELLANEOUS INVENTORY ITEMS................ 11
4.1.1.4 FINAL INVENTORY DETERMINATION............................. 11
4.1.1.5 INDEPENDENT ACCOUNTANT FEES............................... 11
4.2 ALLOCATION OF PURCHASE PRICE....................................... 11
ARTICLE V - TERMS OF PAYMENT................................................ 12
5.1 PAYMENT DUE AT CLOSING............................................. 12
5.2 POST CLOSING ADJUSTMENT............................................ 12
ARTICLE VI - CAPITAL CONTRIBUTIONS; BMHC EMPLOYEES.......................... 12
6.1 CAPITAL CONTRIBUTIONS AT CLOSING................................... 12
6.2 VALUATION OF BMHC CAPITAL CONTRIBUTION............................. 13
6.2.1 BMHC EQUIPMENT............................................... 13
6.2.2 THE BMHC INVENTORY........................................... 13
6.2.2.1 VALUATION OF FINISHED PRODUCT............................. 13
6.2.2.2 VALUATION OF MISCELLANEOUS INVENTORY ITEMS................ 13
6.2.2.3 FINAL INVENTORY DETERMINATION............................. 13
6.2.2.4 INVENTORY COSTS........................................... 14
6.3 EMPLOYEES OF BMHC.................................................. 14
6.3.1 DEFINITION................................................... 14
6.3.2 TERMINATION.................................................. 14
6.3.3 EMPLOYMENT................................................... 14
6.3.4 LIABILITIES.................................................. 14
ARTICLE VII - [INTENTIONALLY OMITTED]....................................... 14
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES OF THE SELLERS............... 14
8.1 ORGANIZATION AND CORPORATE POWER................................... 15
8.2 CONDUCT OF BUSINESS................................................ 15
8.3 CAPITAL ACCOUNTS AND RELATED MATTERS............................... 15
8.4 SUBSIDIARIES; AFFILIATES........................................... 15
8.5 CONDUCT OF BUSINESS; LIABILITIES................................... 15
8.6 FINANCIAL STATEMENTS............................................... 16
8.7 NO UNDISCLOSED LIABILITIES......................................... 16
8.8 ABSENCE OF CERTAIN CHANGES......................................... 16
8.9 TITLE AND RELATED MATTERS.......................................... 17
8.10 LITIGATION...................................................... 17
8.11 TAX MATTERS..................................................... 18
8.12 COMPLIANCE WITH LAWS............................................ 18
8.13 NO BROKERS...................................................... 18
8.14 INSURANCE....................................................... 18
8.15 EMPLOYEES AND LABOR RELATIONS MATTERS........................... 19
8.16 DISCLOSURE...................................................... 19
8.17 POWER OF ATTORNEY............................................... 20
8.18 TRADE ACCOUNTS RECEIVABLE AND TRADE ACCOUNTS PAYABLE............ 20
8.19 AGREEMENTS AND COMMITMENTS...................................... 20
8.20 PERSONAL PROPERTY............................................... 21
8.21 REAL PROPERTY................................................... 21
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8.22 PERSONNEL....................................................... 21
8.23 PATENTS, TRADEMARKS, TRADE NAMES, ETC........................... 22
8.24 ERISA AND RELATED MATTERS....................................... 22
8.25 ENVIRONMENTAL MATTERS........................................... 22
ARTICLE IX - REPRESENTATIONS AND WARRANTIES OF BMHC AND BUYER............... 24
9.1 LEGAL STATUS....................................................... 24
9.2 AUTHORITY.......................................................... 24
9.3 TITLE AND RELATED MATTERS.......................................... 24
9.4 LITIGATION......................................................... 24
9.5 COMPLIANCE WITH LAWS............................................... 25
9.6 NO BROKERS......................................................... 25
9.7 EMPLOYEES AND LABOR RELATIONS MATTERS.............................. 25
9.8 DISCLOSURE......................................................... 26
9.9 AGREEMENTS AND COMMITMENTS......................................... 26
9.10 PERSONAL PROPERTY............................................... 26
9.11 REAL PROPERTY................................................... 27
9.12 PERSONNEL....................................................... 27
9.1 ERISA AND RELATED MATTERS.......................................... 28
9.14 ENVIRONMENTAL MATTERS........................................... 28
ARTICLE X - COLLECTION OF RECEIVABLES; CUSTOMER CLAIMS...................... 29
10.1 COLLECTION...................................................... 29
10.2 CUSTOMER CLAIMS AND RETURNS..................................... 30
ARTICLE XI - BMHC'S COVENANTS............................................... 30
ARTICLE XII - [RESERVED].................................................... 30
ARTICLE XIII - INDEMNITY.................................................... 30
13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................... 30
13.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS................... 30
13.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BMHC AND BUYER........ 31
13.4 INDEMNIFICATION PROCEDURE....................................... 32
13.5 COOPERATION..................................................... 33
ARTICLE XIV - CONDUCT OF OPERATIONS PRIOR TO CLOSING/GOVERNMENT APPROVALS.. 34
14.1 CONDUCT OF OPERATIONS........................................... 34
14.2 REQUISITE GOVERNMENT APPROVALS.................................. 34
ARTICLE XV - CLOSING........................................................ 34
15.1 CLOSING......................................................... 34
15.2 TIME IS OF THE ESSENCE.......................................... 34
ARTICLE XVI - CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE................. 34
16.1 CONTINUED TRUTH OF WARRANTIES................................... 34
16.2 SUPPLEMENTS TO SCHEDULES........................................ 35
16.3 PERFORMANCE OF OBLIGATIONS...................................... 35
16.4 DELIVERY OF CLOSING DOCUMENTS................................... 35
16.5 LITIGATION...................................................... 35
16.6 GOVERNMENT APPROVALS............................................ 35
16.7 DUE DILIGENCE PERIOD............................................ 35
16.8 APPROVAL BY BOARD OF DIRECTORS.................................. 36
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16.9 PRELIMINARY CLOSING BALANCE SHEET............................... 36
16.10 EMPLOYMENT, CONFIDENTIALITY, AND NONCOMPETITION AGREEMENTS...... 36
16.11 LEASES FOR LOCATIONS............................................ 36
16.12 OPERATING AGREEMENT............................................. 36
16.13 PUT AGREEMENT................................................... 36
16.14 BONUS PLAN...................................................... 36
16.15 MATERIAL ADVERSE CHANGE......................................... 36
16.15 LENDER APPROVALS................................................ 36
ARTICLE XVII - CONDITIONS PRECEDENT TO THE SELLERS'DUTY TO CLOSE............ 37
17.1 CONTINUED TRUTH OF WARRANTIES................................... 37
17.2 SUPPLEMENTS TO SCHEDULES........................................ 37
17.3 PERFORMANCE OF OBLIGATIONS...................................... 37
17.4 DELIVERY OF CLOSING DOCUMENTS................................... 37
17.5 LITIGATION...................................................... 37
17.6 LEASE FOR PHOENIX LOCATION...................................... 37
17.7 OPERATING AGREEMENT............................................. 37
17.8 PUT AGREEMENT................................................... 38
17.9 GOVERNMENT APPROVALS............................................ 38
17.10 MATERIAL ADVERSE CHANGE......................................... 38
ARTICLE XVIII - ITEMS TO BE DELIVERED AT CLOSING BY SELLERS................ 38
18.1 OPINION OF COUNSEL.............................................. 38
18.2 CERTIFICATE OF INCUMBENCY....................................... 38
18.3 CERTIFICATES OF GOOD STANDING................................... 38
18.4 REPRESENTATIONS AND WARRANTIES.................................. 38
18.5 AGREEMENTS...................................................... 38
ARTICLE XIX - ITEMS TO BE DELIVERED AT CLOSING BY BMHC AND BUYER............ 39
19.1 CERTIFIED RESOLUTION............................................ 39
19.2 REPRESENTATIONS AND WARRANTIES.................................. 39
19.3 OPINION OF COUNSEL.............................................. 39
19.4 INCUMBENCY CERTIFICATE.......................................... 39
19.5 PURCHASE PRICE.................................................. 39
19.6 CERTIFICATE OF GOOD STANDING.................................... 39
19.7 XXXX OF SALE.................................................... 40
19.8 AGREEMENTS...................................................... 40
ARTICLE XX - MISCELLANEOUS.................................................. 40
20.1 EXPENSES........................................................ 40
20.2 FURTHER ASSURANCES; CONSENTS.................................... 40
20.3 NO OTHER AGREEMENTS............................................. 40
20.4 WAIVER.......................................................... 40
20.5 PUBLIC ANNOUNCEMENTS............................................ 40
20.6 NOTICES......................................................... 41
20.7 BOOKS AND RECORDS............................................... 41
20.8 BMHC TRADE ACCOUNTS RECEIVABLE.................................. 42
20.9 THIRD-PARTY BENEFICIARY......................................... 42
20.10 ASSIGNMENT...................................................... 42
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20.11 CHOICE OF LAW................................................... 42
20.12 PARAGRAPH HEADINGS.............................................. 42
20.13 TIME IS OF THE ESSENCE.......................................... 42
20.14 ATTORNEY FEES................................................... 42
20.15 RULES OF INTERPRETATION......................................... 42
20.16 COUNTERPARTS AND FACSIMILE SIGNATURES........................... 43
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EXHIBITS AND SCHEDULES
EXHIBIT 1.2 BMHC EQUIPMENT
EXHIBIT 1.21 LOCATIONS OWNED OR LEASED BY THE COMPANY IN THE
CONDUCT OF THE BUSINESS
EXHIBIT 1.23 NET WORTH ADJUSTMENT
EXHIBIT 18.1 OPINION OF COMPANY'S COUNSEL
EXHIBIT 19.3 OPINION OF BUYER'S COUNSEL
EXHIBIT A OPERATING AGREEMENT
EXHIBIT B PUT AGREEMENT
SCHEDULE 1.15 EXCLUDED ASSETS AND EXCLUDED LIABILITIES
SCHEDULE 6.3.3 EMPLOYMENT
SCHEDULE 8.8 ABSENCE OF CERTAIN CHANGES
SCHEDULE 8.9 TITLE AND RELATED MATTERS
SCHEDULE 8.10 LITIGATION
SCHEDULE 8.11 TAX MATTERS
SCHEDULE 8.14 INSURANCE
SCHEDULE 8.19 AGREEMENTS AND COMMITMENTS
SCHEDULE 8.20 PERSONAL PROPERTY
SCHEDULE 8.21 REAL PROPERTY
SCHEDULE 8.24 ERISA AND RELATED MATTERS
SCHEDULE 9.3 TITLE AND RELATED MATTERS
SCHEDULE 9.4 LITIGATION
SCHEDULE 9.6 BROKERS
SCHEDULE 9.7 EMPLOYEES AND LABOR RELATIONS MATTERS
SCHEDULE 9.9 AGREEMENTS AND COMMITMENTS
SCHEDULE 9.10 PERSONAL PROPERTY
SCHEDULE 9.11 REAL PROPERTY
SCHEDULE 9.12 PERSONNEL
SCHEDULE 9.13 ERISA AND RELATED MATTERS
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SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT dated as of March 23, 1999, is among XXXXX BROTHERS,
INC., an Arizona corporation ("KBI"), XXXXXXXX X. XXXXX, an individual
("Xxxxx"), and BUILDING MATERIALS HOLDING CORPORATION, a Delaware corporation
("BMHC"), and BMHC FRAMING, INC., a Delaware corporation ("Buyer").
Sellers and Buyer agree as follows:
RECITALS
A. KBI and Xxxxx own, collectively, 100% of the Interests of Xxxxx
Brothers Industries, LLC, a Delaware limited liability company (the "Company").
B. On the Closing Date, (1) KBI will have contributed substantially
all of its assets to the Company and the Company and will have assumed
substantially all of the liabilities of KBI other than the Excluded Assets and
Excluded Liabilities; and (2) Buyer will contribute the BMHC Assets to the
Company.
C. On the Closing Date, (1) Xxxxx will sell, and Buyer will
purchase, all of Xxxxx'x Interests in the Company; (2) KBI will sell, and Buyer
will purchase, a portion of KBI's Interests in the Company; and (3) the Company
will sell, and Buyer will purchase, Interests in the Company, such that Buyer
will have acquired from KBI, Xxxxx and the Company a total of forty-nine percent
(49%) of the Interests in the Company.
D. Simultaneously with the Closing, the Company will amend and
restate its Operating Agreement in substantially the form attached hereto as
Exhibit A.
ARTICLE I - DEFINITIONS
For purposes of this Agreement, the terms identified in this Article
shall have the meanings assigned to them as follows:
1.1 BMHC ASSETS.
The term "BMHC Assets" shall mean the BMHC Inventory and BMHC Equipment
to be transferred to the Company at the Closing as an additional capital
contribution;
1.2 BMHC EQUIPMENT.
The term "BMHC Equipment" shall mean the personal property and
equipment described on EXHIBIT 1.2 attached hereto which is used by BMHC in the
conduct of its business in Phoenix, Arizona;
1.3 BMHC INVENTORY.
The term "BMHC Inventory" shall mean all goods, raw materials, work in
progress, inventory in transit, and finished goods not yet sold which are owned
by BMHC as of the Closing Date at its Phoenix, Arizona location;
1.4 BMHC STOCK.
The term "BMHC Stock" shall mean the common stock of BMHC, which is
publicly traded;
1.5 BUSINESS.
The term "Business" shall mean the framing, roof truss and panel
manufacturing business conducted by KBI and transferred to the Company on the
Closing;
1.6 CLOSING.
The term "Closing" shall mean the exchange of Closing documents; the
conveyance by KBI, the Company and Xxxxx to Buyer of forty-nine percent (49%) of
the Interests in the Company, and the payment by Buyer to Sellers of the
purchase price due under the terms of this Agreement;
1.7 CLOSING BALANCE SHEET.
The term "Closing Balance Sheet" shall mean the balance sheet of the
Company as of the Closing Date prepared by Buyer and KBI during the Post Closing
Adjustment Period in accordance with generally acceptable accounting principles
consistently applied and depreciation accounted for on a tax basis and adjusted
for Excluded Assets and Excluded Liabilities;
1.8 CLOSING DATE.
The term "Closing Date" shall mean the date on which Closing occurs;
1.9 CONFIDENTIALITY AGREEMENT.
The term "Confidentiality Agreement" means the agreement executed by
Buyer and Sellers dated May 26, 1998;
1.10 CPA PROCEDURE.
The term "CPA Procedure" means the dispute resolution procedure set
forth in Section 4.1.1.4;
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1.11 DUE DILIGENCE PERIOD.
The term "Due Diligence Period" shall mean the period of time
commencing on the date of execution of this Agreement and expiring no later than
April 15, 1999, and any written extension thereof;
1.12 ENVIRONMENTAL COSTS.
"Environmental Costs" means any actual cleanup costs, remediation,
removal, or other response costs, losses, liabilities, or obligations, payments,
damages, civil or criminal fines or penalties, judgments, and amounts paid in
settlement arising out of or relating to or resulting from any Environmental
Matter (including, without limitation, reasonable fees and disbursements of
counsel, but excluding any loss, cost or expenses with respect to which the
Company actually receives proceeds of any liability or other insurance policy,
to the extent of the excess of such proceeds received over the costs, if any,
incurred in connection with the collection of such proceeds);
1.13 ENVIRONMENTAL LAWS.
"Environmental Laws" means and includes the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. xx.xx. 9601 ET SEQ., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. xx.xx.
11001 ET SEQ., the Resource Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901
ET SEQ., the Toxic Substances Control Act, 15 U.S.C. xx.xx. 2601 ET SEQ., the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. xx.xx. 136 ET
SEQ., the Clean Air Act, 42 U.S.C. xx.xx. 7401 ET SEQ., the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. xx.xx. 1251 ET SEQ., the Safe
Drinking Water Act, 42 U.S.C. xx.xx. 300f ET SEQ., the Occupational Safety and
Health Act, 29 U.S.C. xx.xx. 651 ET SEQ., the Hazardous Materials Transportation
Act, 49 U.S.C. xx.xx. 5101 ET SEQ., as in effect from time to time, all rules
and regulations promulgated pursuant to any of the above statutes, and any other
foreign, federal, state or local law, statute, ordinance, rule or regulation
governing Environmental Matters, as in effect from time to time, including any
common law cause of action providing any right or remedy relating to
Environmental Matters;
1.14 ENVIRONMENTAL MATTER.
"Environmental Matter" means any matter or condition arising out of,
relating to, or resulting from pollution, contamination, protection of the
environment, human health or safety, health or safety of employees, sanitation,
and any matters relating to emissions, discharges, disseminations, releases or
threatened releases, of Hazardous Substances into the air (indoor and outdoor),
surface water, groundwater, soil, land surface or subsurface, buildings,
facilities, real property or fixtures, or otherwise arising out of, relating to,
or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, release or threatened release of
Hazardous Substances;
4
1.15 EXCLUDED ASSETS AND EXCLUDED LIABILITIES.
The terms "Excluded Assets" and "Excluded Liabilities" shall mean those
items described in SCHEDULE 1.15 attached hereto;
1.16 FINANCIAL INFORMATION.
The term "Financial Information" means the audited financial statements
for the years ended 1994, 1995, 1996, and 1997 and all other financial
statements or schedules delivered by Seller to Buyer;
1.17 HAZARDOUS SUBSTANCES.
"Hazardous Substances" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds, chemicals, natural or man-made elements or forces that are regulated
by, or form the basis of liability under, any Environmental Laws;
1.18 INTERESTS.
The term "Interests" shall mean the ownership Interests in the Company
as defined in the Operating Agreement;
1.19 INVENTORY.
The term "Inventory" shall mean all goods, raw materials, work in
process, inventory in transit, and finished goods not yet sold which are owned
by the Company as of the Closing Date at or for any of the Locations.
"Inventory" shall include goods not yet invoiced which the Company delivered or
caused to be delivered to contractor job sites in the ordinary course of the
Business but for which the customer has not paid;
1.20 KNOWLEDGE.
The term "Knowledge" shall mean that, with respect to KBI, [Redacted],
is actually aware of a fact or matter without independent investigation or
should have been aware of such fact or matter based on the standard of a
reasonably prudent business person with the same access to data and information;
1.21 LOCATIONS.
The term "Locations" shall mean the locations owned or leased by the
Company in the conduct of the Business described in EXHIBIT 1.21 attached
hereto;
Pursuant to a request for confidential treatment, selected information in this
document has been omitted and separately filed with the Securities and Exchange
Commission.
5
1.22 MATERIAL.
The term "Material" or "Materially" shall mean an economic impact or
change of $50,000 or more;
1.23 NET WORTH ADJUSTMENT.
The term "Net Worth Adjustment" shall mean forty-nine percent (49%) of
any increase in the consolidated net worth of the Business calculated by
comparing the Reference Balance Sheet to the Preliminary Closing Balance Sheet
of the Business, as illustrated in EXHIBIT 1.23 attached hereto. In determining
the Net Worth Adjustment, Excluded Assets and Excluded Liabilities shall be
subtracted from both the Reference Balance Sheet and the Preliminary Closing
Balance Sheet;
1.24 OPERATING AGREEMENT.
The term "Operating Agreement" means the amended and restated operating
agreement adopted by the Company at the Closing, in substantially the form
attached as EXHIBIT A;
1.25 PUT AGREEMENT.
The term "Put Agreement" shall mean the agreement between KBI and BMHC,
a copy of which is attached as EXHIBIT B;
1.26 PRELIMINARY CLOSING BALANCE SHEET.
The term "Preliminary Closing Balance Sheet" shall mean the estimated
balance sheet of the Company as of the Closing Date prepared by Buyer and
Sellers as provided in Article IV hereof;
1.27 REFERENCE BALANCE SHEET.
The term "Reference Balance Sheet" shall mean the balance sheet of KBI
as of December 31, 1997, prepared in accordance with generally accepted
accounting principles consistently applied and with depreciation accounted for
on a tax basis and adjusted for Excluded Assets and Excluded Liabilities;
1.28 SELLER.
The term "Sellers " means KBI and Xxxxx, jointly and severally.
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1.29 TRADE ACCOUNTS PAYABLE.
The term "Trade Accounts Payable" shall mean the obligations arising
out of the Business to make payment to third parties for goods and services
furnished to the Company at the Locations in the ordinary course of the Business
incurred prior to Closing;
1.30 TRADE ACCOUNTS RECEIVABLE.
The term "Trade Accounts Receivable" shall mean the obligations arising
out of the Business to make payment to the Company, including obligations owed
but not yet due, as of Closing by all third-party purchasers of goods and
services from the Company at the Locations in the ordinary course of the
Business prior to Closing; and
1.31 TRADE NAMES AND TRADEMARKS.
The terms "Trade Names" and "Trademarks" shall mean the terms "KBI" and
"Xxxxx Brothers" which are not registered marks with either the States of
Arizona or Nevada or the United States Patent and Trademark Office.
ARTICLE II - DUE DILIGENCE
2.1 DUE DILIGENCE.
Buyer shall have the Due Diligence Period to perform such inspections,
environmental assessments, and other tests and surveys of the Business as Buyer,
in Buyer's discretion, shall require for the purpose of determining the
suitability of the Business for Buyer's investment. Buyer shall deliver to KBI
copies of all reports received by Buyer from third party consultants regarding
the Locations within five (5) days of Buyer's receipt of such information. If
the transactions provided for in this Agreement do not occur because this
Agreement is terminated under Section 2.4, Sellers shall reimburse Buyer for the
reasonable cost of all such reports and the cost of reasonable attorney and
reasonable accounting fees incurred in preparation of this Agreement excluding
the expenses of or consultant fees for any studies made or caused to be made by
Buyer or BMHC to determine the feasibility of the Business. If the transactions
provided for in this Agreement do not occur because of a breach of this
Agreement by Buyer or a failure to perform by Buyer as required by this
Agreement, then Buyer shall reimburse Sellers for any reasonable attorney and
reasonable accounting fees incurred in preparation of this Agreement and the
attached schedules. Notwithstanding any other provisions of this Agreement, if
the transactions provided for in this Agreement do not occur because of the
failure of a party to meet a condition precedent including, but not limited to,
delivery of a document, such party shall have no liability to reimburse the
other for any fees under this Section, so long as such party has used its best
efforts to consummate the transactions.
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2.2 DUE DILIGENCE ACTIVITIES.
Due Diligence shall include, but not be limited to:
2.2.1 Review the status of title to the Locations,
including obtaining preliminary title insurance reports from a title insurer
selected by Buyer.
2.2.2 Obtain and review the Phase I environmental audits of
the Locations conducted by TRC Environmental Company. The cost of the Phase I
environmental audits shall be paid by Buyer.
2.2.3 Review and conduct surveys of the Locations.
2.2.4 Review any appraisals previously obtained by KBI or
Sellers of the Locations.
2.2.5 Review of the books and records of the Business
including the financial records and tax records and customer records. Review
procedures and policies for billing customers for work in progress.
2.2.6 Review and conduct a review of the Reference Balance
Sheet, including the underlying working papers.
2.2.7 Review of KBI's employee compensation, benefits, and
bonus plans;
2.2.8 Review of employee records of the Business including
health, workers' compensation, and other benefit records and conduct interviews
of key personnel.
2.2.9 Review of Equipment, Inventory, Trade Accounts
Receivable and trade accounts payable of the Business.
2.2.10 Review and conduct an audit of the liabilities
of KBI.
2.2.11 Obtain estoppel certificates from any lessors of real
or personal property to the Company.
2.2.12 Review and obtain copies of all insurance policies.
2.2.13 Review and analyze KBI's accounting principles.
2.2.14 Review terms of leases for the Locations.
2.2.15 Buyer and Sellers shall jointly prepare the list of
Excluded Assets and Excluded Liabilities to be included in SCHEDULE 1.15. Unless
identified as an Excluded Asset, all assets used in connection with the Business
shall be assets of the Company.
8
2.2.16 Contact key customers of the Company, in coordination
with the Company, regarding the status of contracts with KBI and impact, if any,
of KBI's assignment of contracts to the Company and Buyer's acquisition of
forty-nine percent (49%) of the Interest in the Company.
2.2.17 Sellers shall fully cooperate with Buyer and shall
promptly provide Buyer with all relevant information currently available that is
requested by Buyer during the Due Diligence Period. In the event this Agreement
is terminated for any reason, then all documents provided by Sellers to Buyer,
and all copies made thereof, shall be returned to Sellers pursuant to the terms
of the Confidentiality Agreement.
2.3 CONFIDENTIALITY DURING DUE DILIGENCE.
Buyer and Sellers acknowledge and agree that the parties desire to keep
this transaction confidential (except for disclosure to employees of Buyer or
Seller) until jointly announced or when required by law to be announced. Buyer
and Sellers agree to abide by the terms of the Confidentiality Agreement.
2.4 TERMINATION OF AGREEMENT.
If during the Due Diligence Period Buyer discovers any problem or
defect with respect thereto which constitutes a material impairment of the value
of the Business, then Buyer may advise Sellers in writing on or before the
expiration of the Due Diligence Period of the nature of each defect or problem
with respect to the Business with the request that Sellers remedy each problem
or defect prior to the Closing. Sellers may, within ten (10) days after receipt
of notice from Buyer, correct such problems or terminate the Agreement by
providing written notice to Buyer of termination.
Buyer's failure to give written notice of Buyer's exercise of Buyer's
right to cancel this Agreement in accordance with the foregoing provisions shall
constitute Buyer's acceptance of the Business subject to the warranties and
representations hereto and except for and limited to any problems or defects
specified in Buyer's notice.
2.5 EXCLUSIVE DEALING.
Sellers agree that upon execution of this Agreement and until the
Closing Date or termination of this Agreement, Sellers will not seek to sell the
Business to any other party nor will Sellers accept or entertain any offers to
acquire the Business from any other party.
9
ARTICLE III - PURCHASE AND SALE
3.1 PURCHASE, SALE AND ISSUANCE.
At Closing: (1) Xxxxx shall sell and convey to Buyer all of his
Interest in the Company (2) KBI shall sell and convey to Buyer a portion of its
Interests in the Company; and (3) the Company shall issue Interests in the
Company to Buyer such that Buyer will acquire, in total, 49% of the Interests in
the Company.
ARTICLE IV - DETERMINATION OF PURCHASE PRICE
4.1 DETERMINATION.
The Purchase Price to be paid by Buyer to Sellers shall be the total of
the following: (1) $[Redacted] to Xxxxx (2) an amount to KBI equal to forty nine
percent (49%) of the total capital of the Company, less the $[Redacted] paid to
Xxxxx, and less the value of the BMHC Assets under Section 6.1. The total
capital of the Company shall be the sum of : (1) $[Redacted]; (2) the Net Worth
Adjustment divided by .49; and (3) the value of the BMHC Assets, using the
Preliminary Closing Balance Sheet. For purposes of calculating the Preliminary
Closing Balance Sheet, the Buyer and Sellers shall cause the preparation of and
agree to the Preliminary Closing Balance Sheet on the Closing Date (subject to
post closing adjustments provided for in Section 5.2) utilizing estimates when
necessary which shall include the following asset values:
4.1.1 INVENTORY.
The Inventory value for the Closing Balance Sheet shall be the
value determined as follows:
4.1.1.1 VALUATION.
A physical inventory count and valuation shall be
jointly conducted by Buyer and Sellers immediately preceding the Closing Date.
The value of the Inventory (except as otherwise provided herein) shall be the
lower of KBI's average or actual cost (the sum paid for the items net of any
discounts or rebates taken or to be taken plus freight costs incurred to deliver
the items to the Locations). Any Inventory items defined as damaged or obsolete
shall be valued at net realizable value.
4.1.1.2 VALUATION OF FINISHED PRODUCT.
Finished trusses not yet delivered shall be jointly
counted by Buyer and Sellers immediately preceding the Closing Date and valued
at 81% of the invoice price. Buyer and Sellers shall jointly inspect the
finished trusses and any such items that are obsolete, damaged, cull lumber,
misordered or otherwise unsaleable shall be valued at the net realizable value
of such items.
Pursuant to a request for confidential treatment, selected information in this
document has been omitted and separately filed with the Securities and Exchange
Commission.
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4.1.1.3 VALUATION OF MISCELLANEOUS INVENTORY ITEMS.
Miscellaneous items, including non-wood commodities
such as plates, nails, or fasteners shall be jointly counted by Sellers and
Buyer immediately preceding the Closing Date, and valued at KBI's actual cost
from normal sources of supply (the sum paid for the items net of any discounts
or rebates taken or to be taken plus freight costs incurred to deliver the items
to the Locations). Buyer and Sellers shall jointly inspect the miscellaneous
inventory items, and such items that are obsolete or damaged shall be valued at
net realizable value.
4.1.1.4 FINAL INVENTORY DETERMINATION.
Any and all disputes regarding any aspect of the
Inventory count and valuation process shall be negotiated between the parties.
If an agreement cannot be reached, the dispute will be submitted to Xxxxxxxx X.
Xxxxx and Xxxxxxx X. Xxxxxxxxx, or their designated agents and their decision
shall be binding and conclusive. In the event said individuals cannot agree on
the value of any item or items, they shall refer the matter to their respective
outside certified public accountants to resolve. If the accountants cannot agree
on the value, the accountants shall select a third accountant ("CPA") who shall
be instructed based solely on the evidence of market value presented by the
accountants, to determine which party's market value most closely approximates
market value. The market value so selected shall be binding and conclusive. The
foregoing dispute resolution procedure is referred to as the CPA Procedure.
4.1.1.5 INDEPENDENT ACCOUNTANT FEES.
The actual costs incurred for any services by CPA
pursuant to paragraph 4.1.1.5 shall be paid by the party whose estimated value
is furthest from the value determined by CPA. Sellers and Buyer shall each pay
for the costs incurred by each party for counting the Inventory including any
payroll, overtime or travel expenses and for their own outside certified public
accountant.
4.2 ALLOCATION OF PURCHASE PRICE.
The parties shall mutually agree to the allocation of the Purchase
Price among the assets pursuant to Sections 755 and 1060 of the Internal Revenue
Code. Such allocation shall be made on a tax basis, except for real estate to
which Purchase Price shall be allocated based on fair market value. Any amounts
of Purchase Price in excess of that allocated to assets on a tax basis and on
the basis of fair market value of real estate shall be allocated to goodwill.
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ARTICLE V - TERMS OF PAYMENT
5.1 PAYMENT DUE AT CLOSING.
At Closing, Buyer shall pay to the Sellers an amount estimated to equal
the Purchase Price as determined in Article IV. Such payment shall consist of
immediately available funds.
5.2 POST CLOSING ADJUSTMENT.
Buyer and Sellers agree that during a period of one hundred twenty
(120) days following the Closing Date ("Post Closing Adjustment Period"), Buyer
and Sellers will determine the adjustments to be made to the Preliminary Closing
Balance Sheet to arrive at the Closing Balance Sheet and final determinations of
the Net Worth Adjustment based on the Closing Balance Sheet. Adjustments shall
include but not be limited to: (1) uncollected Trade Accounts Receivable
provided for in Section 10.1; (2) rebates received by KBI after Closing for
goods purchased prior to Closing; (3) returns and allowances for goods sold or
delivered prior to Closing; (4) changes in the liabilities of the Business as of
the Closing Date; and (5) changes in the tax reserves or other reserves of the
Business as of the Closing Date. Within one hundred twenty (120) days after the
Closing Date, Buyer and Sellers shall submit to the other all adjustments
(together with supporting detail) they believe should be made to the Estimated
Purchase Price determined at Closing in order to arrive at the Closing Balance
Sheet. Sellers and Buyer shall have forty-five (45) days after receipt of such
list of adjustments to object to any of the adjustments in writing to each
other. Any adjustments that are not objected to during such forty-five (45) day
period shall be deemed to be agreed to by the other party. Buyer and Sellers
agree to negotiate and attempt to resolve in good faith any adjustments to which
objections have been raised during the period of ten (10) days following receipt
of objections. Any adjustments to the Estimated Purchase Price that either party
has objected to and has not been resolved during the ten (10) day period
following the objection shall be settled in accordance with the CPA Procedure.
At the end of the Post Closing Adjustment Period, Buyer and Sellers agree to pay
to each other, in immediately available funds, the amounts owed, if any, by
either party to the other party to the other as a result of any differences
between the Preliminary Closing Balance Sheet and the Closing Balance Sheet;
provided that if the Post Closing Adjustment is less than $50,000 no adjustment
shall be made. The Post Closing Adjustment shall not be considered an item of
Damages for purposes of Article XIII.
ARTICLE VI - CAPITAL CONTRIBUTIONS; BMHC EMPLOYEES;
6.1 CAPITAL CONTRIBUTIONS AT CLOSING.
At Closing, BMHC shall (1) contribute to the Company the BMHC Assets;
(2) assign to the Company the leases for BMHC assets; and (3) provide a xxxx of
sale for other assets to be transferred to the Company.
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6.2 VALUATION OF BMHC CAPITAL CONTRIBUTION.
The BMHC Assets to be contributed to the Company at Closing shall be
valued as follows:
6.2.1 BMHC EQUIPMENT.
The BMHC Equipment value shall be the net book value of the
Equipment as of the Closing Date.
6.2.2 THE BMHC INVENTORY.
The BMHC Inventory shall be the value as determined as
follows:
6.2.2.1 VALUATION OF FINISHED PRODUCT.
A physical inventory count and valuation shall be
jointly conducted by Buyer and Sellers immediately preceding the Closing Date.
The value of the BMHC Inventory (except as otherwise provided herein) shall be
the lower of BMHC's average or actual cost (the sum paid for the items net of
any discounts or rebates taken or to be taken plus freight costs incurred to
deliver the items to the Property). Any Inventory items defined as damaged or
obsolete shall be valued at net realizable value.
6.2.2.2 VALUATION OF MISCELLANEOUS INVENTORY ITEMS.
Miscellaneous items, including non-wood commodities
such as plates, nails, or fasteners shall be jointly counted by Sellers and
Buyer immediately preceding the Closing Date, and valued at BMHC's actual cost
from normal sources of supply (the sum paid for the items net of any discounts
or rebates taken or to be taken plus freight costs incurred to deliver the items
to the Property). Buyer and Sellers shall jointly inspect the miscellaneous
inventory items, and such items that are obsolete or damaged shall be valued at
net realizable value.
6.2.2.3 FINAL INVENTORY DETERMINATION.
Any and all disputes regarding any aspect of the
Inventory count and valuation process shall be negotiated between the parties.
If an agreement cannot be reached, the dispute will be submitted to Xxxxxxxx X.
Xxxxx and Xxxxxxx X. Xxxxxxxxx, or their designated agents and their decision
shall be binding and conclusive. In the event said individuals cannot agree on
the value of any item or items, they shall resolve the dispute in accordance
with the CPA Procedure.
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6.2.2.4 INVENTORY COSTS.
The actual costs incurred for any services by CPA
pursuant to paragraph 4.1.1.5 shall be paid by the party whose estimated value
is furthest from the value determined by CPA. Sellers and Buyer shall each pay
for the costs incurred by each party for counting the Inventory including any
payroll, overtime or travel expenses and for their own outside certified public
accountant.
6.3 EMPLOYEES OF BMHC.
6.3.1 DEFINITION .
BMHC has provided to Sellers a list of all persons employed by
BMHC's subsidiary at its location in Phoenix, Arizona ("Employees").
6.3.2 TERMINATION.
On the day immediately preceding the Closing Date, BMHC shall
cause all of the Employees to be terminated from employment. BMHC shall be
solely responsible for any liabilities arising out of termination of the
Employees.
6.3.3 EMPLOYMENT.
The Company shall offer employment to all of the terminated
Employees listed on SCHEDULE 6.3.3 at the same base rate of compensation which
said persons were paid by BMHC's subsidiary immediately prior to termination and
upon the same terms and conditions as the Company's current employees, including
immediate inclusion of the Employees in all of the Company's employment benefit
plans. The term "base rate of compensation" shall mean the hourly wage rate or
monthly salary paid to each employee and shall not include any bonus, profit
sharing, or supplemental pay. The Company shall credit each Employee who becomes
the Company's employee with the years of service recognized by BMHC for each
employee for purposes of the Company's employee policies.
6.3.4 LIABILITIES.
BMHC shall retain responsibility for all liabilities arising
out of the operation of the Phoenix location prior to the Closing.
ARTICLE VII - [INTENTIONALLY OMITTED]
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Sellers hereby represent and warrant to Buyer as follows, and the
warranties and representations contained in this Article or elsewhere in this
Agreement shall be deemed remade as of Closing that the following matters
regarding the business are true and correct:
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8.1 ORGANIZATION AND CORPORATE POWER.
The Company is a limited liability company duly formed and validly
existing under the laws of the state of Delaware and the Company is qualified to
do business in every jurisdiction in which its ownership of property or conduct
of business requires it to qualify. The Company has all requisite corporate
power and authority and all material licenses, permits, and authorizations
necessary to own and operate its properties and to carry on its business as now
conducted. The copies of the Company's charter documents and operating agreement
that have been furnished to Buyer reflect all amendments made thereto at any
time prior to the date of this Agreement and are correct and complete.
8.2 CONDUCT OF BUSINESS.
Prior to the Closing, the Company has not conducted any business nor
has it incurred any material liability.
8.3 CAPITAL ACCOUNTS AND RELATED MATTERS.
As of the Closing, the Interests in the Company which are issued and
outstanding are owned, beneficially and of record, by KBI and Xxxxx and no other
Interests in the Company are issued and outstanding as of the Closing. The
Company does not have outstanding and has not agreed, orally or in writing, to
issue any Interests or securities convertible or exchangeable for any Interests,
nor does it have outstanding nor has it agreed, orally or in writing, to issue
any Interests or rights to purchase or otherwise acquire its Interests except as
provided in the Operating Agreement. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its Interests. The Company has not violated any applicable
securities laws or regulations in connection with the offer or sale of its
Interests other than violations that have been, or will before the Closing have
been, corrected by post-issuance filings. All of the outstanding Interests are
validly issued, fully paid, and nonassessable except with respect to additional
capital contributions. Sellers have, and upon purchase thereof pursuant to the
terms of this Agreement Buyer will have, good and indefeasible title to the
Company's Interests as of the Closing Date, free and clear of all security
interests, liens, encumbrances, or other restrictions or claims, subject only to
restrictions as imposed by securities laws and the Operating Agreement.
8.4 SUBSIDIARIES; AFFILIATES
The Company does not own or hold any rights to acquire any shares of
stock or any other security or interest in any other company or entity.
8.5 CONDUCT OF BUSINESS; LIABILITIES.
The Business is not in default, no condition exists that with notice or
lapse of time would constitute a default under (1) any mortgage, loan agreement,
evidence of indebtedness, or other instrument evidencing borrowed money to which
the Business is a party or by which the Business or the properties of the
Business are bound or (2) any judgment, order, or injunction of
15
any court, arbitrator, or governmental agency that would reasonably be expected
to affect materially and adversely the Business, financial condition, or results
of operations of the Business.
8.6 FINANCIAL STATEMENTS.
The Financial Statements fairly present the financial position of the
Business and the results of operations for the period then ended and have been
prepared in accordance with generally accepted accounting principles
consistently applied and depreciation is accounted for on a tax basis. Except as
contemplated by or permitted under this Agreement, there are no adjustments that
would be required on audit of the Financial Statements that would, individually
or in the aggregate, have a material adverse effect upon the Business's reported
financial condition or results of operations.
8.7 NO UNDISCLOSED LIABILITIES.
The Business does not have any material liabilities or obligations of
any nature (absolute, accrued, contingent, or otherwise) except (1) as set forth
or reflected on the Reference Balance Sheet (or described in the notes thereto),
(2) liabilities incurred in the ordinary course of the Business and consistent
with past practices since the date of the Reference Balance Sheet, or (iii) as
set forth in SCHEDULE 8.8.
8.8 ABSENCE OF CERTAIN CHANGES.
Except as contemplated or permitted by this Agreement or as described
in SCHEDULE 8.8, with respect to KBI and the Company, since the date of the
Reference Balance Sheet there has not been:
8.8.1 Any material adverse change in the Business,
prospects of the Business, financial condition, operations, or assets;
8.8.2 Any damage, destruction, or loss, whether covered by
insurance or not materially adversely affecting the Business or its properties;
8.8.3 Any sale or transfer of any tangible or intangible
asset other than in the ordinary course of the Business, any mortgage or pledge
or the creation of any security interest, lien, or encumbrance on any such asset
of the Business, or any lease of property, including equipment, other than tax
liens with respect to taxes not yet due and contract rights of customers in
inventory;
8.8.4 Any declaration, setting aside, or payment of a
distribution in respect of or the redemption or other repurchase by the Business
of any equity securities of the Business;
8.8.5 Any material transaction to which KBI or the Company
is a party not in the ordinary course of the Business;
16
8.8.6 The lapse of any material trademark, assumed name,
trade name, service xxxx, copyright, or license or any application with respect
to the Business;
8.8.7 Without prior notice to Buyer and Buyer consenting
thereto, a grant of any increase in the compensation of officers or employees of
the Business (including any such increase pursuant to any bonus, pension,
profit-sharing, or other plan) other than customary increases on a periodic
basis or required by agreement or understanding in the ordinary course of the
Business and in accordance with past practice;
8.8.8 The discharge or satisfaction of any material lien or
encumbrance or the payment of any material liability other than current
liabilities in the ordinary course of the Business;
8.8.9 The making of any material loan, advance, or guaranty
to or for the benefit of any person except the creation of accounts receivable
in the ordinary course of the Business and the shareholder loans; or
8.8.10 An agreement to do any of the foregoing.
8.9 TITLE AND RELATED MATTERS.
Except as set forth in SCHEDULE 8.9, the Business will have on the
Closing Date good and indefeasible title to all of its property, real and
personal, and other assets included in the Reference Balance Sheet (except
properties and assets sold or otherwise disposed of subsequent to the date of
Reference Balance Sheet in the ordinary course of the Business or as
contemplated in this Agreement), free and clear of all security interests,
mortgages, liens, pledges, charges, claims, or encumbrances of any kind or
character, except (1) statutory liens for property taxes not yet delinquent or
payable subsequent to the date of this Agreement and statutory or common law
liens securing the payment or performance of any obligation of the Company, the
payment or performance of which is not delinquent, or that is payable without
interest or penalty subsequent to the date on which this representation is
given, or the validity of which is being contested in good faith by the Company;
(2) the rights of customers of the Business with respect to inventory under
orders or contracts entered into by the Business in the ordinary course of
business; and (3) claims, easements, liens, and other encumbrances of record
pursuant to filings under real property recording statutes.
8.10 LITIGATION.
Except as set forth in SCHEDULE 8.10, there are no material actions,
suits, proceedings, orders, investigations, or claims pending or overtly
threatened against the Business or the Company or any property of the Company,
at law or in equity, or before or by any governmental department, commission,
board, bureau, agency, or instrumentality; the Company
17
is not subject to any arbitration proceedings under collective bargaining
agreements or otherwise or any governmental investigations or inquiries; and, to
the best knowledge of Sellers , there is no basis for any of the foregoing.
8.11 TAX MATTERS.
Except as set forth on SCHEDULE 8.11, (1) KBI has correctly prepared in
all material respects and has filed all federal, state, local, and foreign tax
returns and reports heretofore required to be filed with respect to KBI's
operations and activities and all taxes have been paid shown as due thereon; (2)
no taxing authority has asserted any deficiency in the payment of any tax or
informed the Company or KBI that it intends to assert any such deficiency or to
make any audit or other investigation of the Business for the purpose of
determining whether such a deficiency should be asserted against the Company;
(3) KBI has made provision in the Reference Balance Sheet for payment of all
federal, state and local taxes that have been incurred but are not currently
due; and (4) KBI has properly elected to be treated as a subchapter S
corporation for tax purposes and has complied with all requirements to be taxed
as a subchapter S corporation. "Taxes" means all taxes, charges, fees, levies,
or other assessments of any nature, including, but not limited to, income,
excise, gross receipts, property, sales, use, AD VALOREM, transfer, franchise,
profits, license, withholding, payroll, employment, severance, stamp,
occupation, windfall profits, social security, and unemployment or other taxes
imposed by the United States or any agency or instrumentality thereof, any
state, county, local or foreign government, or any agency or instrumentality
thereof, and any interest or fines, and any and all penalties or additions
relating to such taxes, charges, fees, levies, or other assessments.
8.12 COMPLIANCE WITH LAWS.
The conduct of the Business is in substantial compliance with all laws,
statutes, ordinances, regulations, orders, judgments, or decrees applicable to
it. Neither Sellers nor the Company has received any notice of any asserted
present or past failure by the Business to comply with such laws, statutes,
ordinances, regulations, orders, judgments, or decrees, including Environmental
Laws or ERISA.
8.13 NO BROKERS.
There are no claims for brokerage commissions, finders' fees, or
similar compensation in connection with the purchase based on any arrangement or
agreement binding upon any of the parties hereto.
8.14 INSURANCE.
SCHEDULE 8.14 contains a list of each insurance policy maintained on
the Business with respect to its properties and assets, and each such policy is
in full force and effect. The Business is not in material default with respect
to its obligations under any such policy maintained by it. The Business has not
been notified of the cancellation of any of the insurance policies listed on
SCHEDULE 8.14 or of any material increase in the premiums to be charged for such
insurance policies.
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8.15 EMPLOYEES AND LABOR RELATIONS MATTERS.
8.15.1 To Sellers' best knowledge, no executive or key
employee of the Business or any group of employees of the Business has any plans
to terminate employment with the Business;
8.15.2 The Business has complied in all material respects
with all labor and employment laws, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining, Americans With
Disabilities Act, and the payment of social security and other taxes;
8.15.3 There is no unfair labor practice charge, complaint,
or other action against the Business pending or, to Sellers' best knowledge,
threatened before the National Labor Relations Board and the Business is not
subject to any order to bargain by the National Labor Relations Board;
8.15.4 No questions concerning collective bargaining
representation have been raised or, to Sellers' best Knowledge, are threatened
with respect to employees of the Business;
8.15.5 No grievance that might have a material adverse
effect on the Business and no arbitration proceeding arising out of or under any
collective bargaining agreement is pending, and, to Sellers' best Knowledge, no
basis exists for any such grievance or arbitration proceeding; and
8.15.6 No employee of the Business is subject to any
noncompetition, nondisclosure, confidentiality, employment, consulting, or
similar agreements with persons other than the Company relating to the present
business activities of the Business.
8.15.7 All employees of the Business have provided
documentation required by the Immigration and Naturalization Act and regulations
and such documentation is on file with the Business.
8.16 DISCLOSURE.
Neither this Agreement nor any of the schedules, attachments, written
statements, documents, certificates, or other items prepared or supplied to
Buyer with respect to this Agreement contain any untrue statement of a material
fact or omit a material fact necessary to make each statement contained herein
or therein not misleading. Sellers have not intentionally concealed any fact
known by such person to have a material adverse effect upon the Business's
existing or expected financial condition, operating results, assets, customer
relations, employee relations, or business prospects taken as a whole.
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8.17 POWER OF ATTORNEY.
There are no powers of attorney except with respect to tax matters or
similar authorization given by the Company is presently in effect.
8.18 TRADE ACCOUNTS RECEIVABLE AND TRADE ACCOUNTS PAYABLE.
All Trade Accounts Receivable that are reflected on the Reference
Balance Sheet or the Preliminary Closing Balance Sheet represent valid and
collectible obligations arising from sales actually made or services actually
performed in the ordinary course of the Business. There is no material contest,
claim, or right of set-off, other than returns in the ordinary course of
Business with any obligor of a Trade Account Receivable relating to the amount
or validity of such Trade Account Receivable.
All Trade Accounts Payable that are reflected on the Reference Balance
Sheet or the Preliminary Closing Balance Sheet represent valid obligations of
the Business arising from the acquisition of goods and services by the Business
in the ordinary course of the Business. There is no material contest or claim
with respect to the amount or validity of such Trade Accounts Payable.
8.19 AGREEMENTS AND COMMITMENTS.
SCHEDULE 8.19 contains a complete list of each customer master contract
and each other contract to which the Business is a party that provides for
payments in excess of $5,000 per year or whose term is in excess of one year and
is not cancelable upon 30 or fewer days' notice without any liability, penalty,
or premium, other than a nominal cancellation fee or charge. Except as otherwise
set forth in SCHEDULE 8.19:
8.19.1 The Business has no collective bargaining or union
contracts agreement in effect or being negotiated;
8.19.2 There is no labor strike, dispute, request for
representation, slowdown, or stoppage pending or, to Sellers' best Knowledge,
threatened against the Business;
8.19.3 The Business is not in material default under any
such agreements, nor does there exist any event that, with notice or the passage
of time or both, would constitute a material default or event of default by the
Business under any such agreement.
8.19.4 The change of control of the Business will not be a
breach of or default under any such agreements.
8.19.5 No third party consents are required or needed in
order to make these representations after consummation of the transactions
provided for in this Agreement.
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8.20 PERSONAL PROPERTY.
Without material exception, SCHEDULE 8.20 contains lists of all
tangible personal property and assets used in the conduct of the Business.
Except as set forth in SCHEDULE 8.20, the Company on the Closing Date will own
and have good title to such properties and none of such properties is subject to
any security interest, mortgage, pledge, conditional sales agreement, or other
lien or encumbrance (except for liens for current taxes, assessments, charges,
or other governmental levies not yet due and payable). Sellers have delivered to
Buyer copies of all leases and other agreements relating to property described
in SCHEDULE 8.20 (including any and all amendments and other modifications to
such leases and other agreements) all of which are valid and binding, and the
Business is not in material default under any such leases or agreements in any
material respects, which are described on SCHEDULE 8.20. Except as set forth in
SCHEDULE 8.20, all material properties listed therein are generally in good
operating condition and repair (ordinary wear and tear excepted), are performing
satisfactorily, and are available for immediate use in the conduct of the
Business and operations of the Company. All such tangible personal property is
in compliance in all material respects with all applicable statutes, ordinances,
rules, and regulations. The properties listed in SCHEDULE 8.20 include
substantially all such properties necessary to conduct the Business.
8.21 REAL PROPERTY.
Without material exception, SCHEDULE 8.21 contains a list of all real
property currently owned or leased and used or useful in the conduct of the
Business other than Excluded Assets. Except as set forth in SCHEDULE 8.21, the
Company on the Closing Date will have good and marketable fee simple title to
all of the real property listed as owned in SCHEDULE 8.21, except liens for real
estate taxes, assessments, charges, or other governmental levies not yet due and
payable and except for easements, rights of way, and restrictions of record as
evidenced in title insurance policies to be issued on or prior to the Closing
Date. Sellers have delivered to Buyer copies of all leases listed in SCHEDULE
8.21 (including any and all amendments and other modifications of such leases),
which leases are valid and binding in all material respects. The Business is not
in material default under any such leases. All property listed in SCHEDULE 8.21
(including improvements thereon) is in satisfactory condition and repair
consistent with its present use and is available for immediate use in the
conduct of the Business. Except as set forth in SCHEDULE 8.21, none of the
property listed in SCHEDULE 8.21 or subject to leases listed in SCHEDULE 8.21
violates in any material respect any applicable building or zoning code or
regulation of any governmental authority having jurisdiction. The property and
leases described in SCHEDULE 8.21 include all such property or property
interests necessary to conduct the Business.
8.22 PERSONNEL.
Sellers have provided to Buyer a true and complete list of:
8.22.1 The names, title, and current salaries of all
officers of the Business as of the Closing Date;
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8.22.2 The wage rates (or ranges, if applicable) for each
class of exempt and nonexempt, salaried and hourly employees of the Business;
8.22.3 All scheduled or contemplated increases in
compensation or bonuses; and
8.22.4 All scheduled or contemplated employee promotions.
8.23 PATENTS, TRADEMARKS, TRADE NAMES, ETC.
Sellers have no patents, trademarks, trade names, service marks, and
copyrights, presently owned or held subject to license by the Company as of the
Closing Date. The Business has not been operated and is not operating in a
manner that materially infringes the proprietary rights of any other person in
any patents, trademarks, trade names, service marks, copyrights, or confidential
information. The Sellers have not received any written notice of any
infringement or unlawful use of such property.
8.24 ERISA AND RELATED MATTERS.
SCHEDULE 8.24 sets forth a description of all "Employee Welfare Benefit
Plans" and "Employee Pension Benefit Plans" (as defined in xx.xx. 3(1) and 3(2),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) existing on the date hereof that are or have been maintained or
contributed to by KBI. Except as listed on SCHEDULE 8.24, KBI does not maintain
any retirement or deferred compensation plan, savings, incentive, stock option
or stock purchase plan, unemployment compensation plan, vacation pay, severance
pay, bonus or benefit arrangement, insurance or hospitalization program or any
other fringe benefit arrangement for any employee, consultant or agent of the
Business, whether pursuant to contract, arrangement, custom or informal
understanding, which does not constitute an "Employee Benefit Plan" (as defined
in ss. 3(3) of ERISA), for which the Company may have any ongoing material
liability after Closing. KBI does not maintain nor has ever contributed to any
Multiemployer Plan as defined by ss. 3(37) of ERISA. KBI does not currently
maintain any Employee Pension Benefit Plan subject to Title IV of ERISA. There
have been no nonexempt "prohibited transactions" (as described in ss. 406 of
ERISA or ss. 4975 of the Code) with respect to any Employee Pension Benefit Plan
or Employee Welfare Benefit Plan maintained by KBI as to which KBI has been a
party. As to any employee pension benefit plan listed on SCHEDULE 8.24 and
subject to Title IV of ERISA, there have been no reportable events (as such term
is defined in ss. 4043 of ERISA).
8.25 ENVIRONMENTAL MATTERS.
8.25.1 KBI has at all times been operated, and is, in
compliance in all material respects, with all Environmental Laws, including all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in all applicable Environmental
Laws;
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8.25.2 KBI has obtained and will assign to the Company at
Closing, and is materially in compliance with, all permits required by all
Environmental Laws ("Environmental Permits"), including, without limitation,
those regulating emissions, discharges, or releases of Hazardous Substances, or
the use, storage, treatment, transportation, release, emission and disposal, of
raw materials, by-products, wastes, and other substances used or produced by the
Business, and the Business has made all appropriate material filings for
issuance or renewal of such Environmental Permits;
8.25.3 There are no claims, notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries, or
proceedings pending or, to Sellers' best Knowledge, threatened against the
Business that are based on or related to any Environmental Matters or the
failure of the Business to have any required Environmental Permits;
8.25.4 There are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions or
plans that may: (1) interfere with or prevent continued compliance by the
Company with Environmental Laws and the requirements of Environmental Permits;
(2) give rise to any liability or other obligation under any Environmental Laws
that may require the Business to incur any actual Environmental Costs; or (3)
form the basis of any claim, action, suit, proceeding, hearing, investigation or
inquiry against or involving the Company based on or related to any
Environmental Matter or which could require the Company to incur any
Environmental Costs;
8.25.5 KBI has not received any notice or other
communication that KBI is or may be a potentially responsible person or
otherwise liable in connection with any waste disposal site used or maintained
or that is otherwise related to the Business allegedly containing any Hazardous
Substances, or other location used for the disposal of any Hazardous Substances,
or notice of any failure of the Business to comply with any Environmental Law or
the requirements of any Environmental Permit;
8.25.6 KBI has not been at any time requested or required by
any governmental entity having jurisdiction under any Environmental Laws to
perform any investigative or remedial activity or other action in connection
with any Environmental Matter in respect of the Business;
8.25.7 To the best Knowledge of Sellers, KBI has not used
any waste disposal site, or otherwise disposed of or transported any Hazardous
Substances. KBI has not arranged for the transportation of any Hazardous
Substances to any place or location, in violation of any Environmental Laws;
8.25.8 There has been no release of any Hazardous Substances
at, on, about, under, or within any assets or properties currently or formerly
owned, leased, or controlled by the Business (other than pursuant to and in
accordance with Environmental Permits held by the Business) and all of the
assets and real property owned or leased by KBI are free of any Hazardous
Substances.
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ARTICLE IX - REPRESENTATIONS AND WARRANTIES OF BMHC AND BUYER
Buyer hereby represents and warrants to the Sellers as follows, and the
warranties and representations contained in this Article or elsewhere in this
Agreement shall be deemed remade as of Closing:
9.1 LEGAL STATUS.
Each of BMHC and Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and prior
to Closing, it will be qualified or licensed to do business in all states in
which failure to do so would have a material adverse effect on BMHC.
9.2 AUTHORITY.
Each of BMHC and Buyer has full power and authority to execute and
perform this Agreement and all action necessary to confirm such authority has
been duly and lawfully taken. Upon execution hereof, this shall be a valid and
legally binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. Neither the execution nor the performance of this Agreement will
violate the terms or any provision of BMHC's or Buyer's Certificate of
Incorporation, or any note, loan agreement, commitment agreement, lease or other
material contract or agreement to which BMHC or Buyer is a party, including any
loan agreement which it will become a party to as a result of or in connection
with this transaction.
9.3 TITLE AND RELATED MATTERS.
BMHC or its subsidiary, BMC West Corporation, will have on the Closing
Date good and indefeasible title to all of the BMHC Assets to be transferred to
the Company, free and clear of all security interests, mortgages, liens,
pledges, charges, claims, or encumbrances of any kind or character, except for
the rights of customers of the BMHC's business conducted in Phoenix, Arizona,
with respect to inventory under orders or contracts entered into by the BMHC's
business conducted in Phoenix, Arizona, in the ordinary course of business.
9.4 LITIGATION.
There are no material actions, suits, proceedings, orders,
investigations, or claims pending or overtly threatened against BMHC or the
Buyer involving BMHC's operation in Arizona or any of the BMHC Assets, at law or
in equity, or before or by any governmental department, commission, board,
bureau, agency, or instrumentality; BMHC and the Buyer are not subject to any
arbitration proceedings under collective bargaining agreements or otherwise or
any governmental investigations or inquiries; and, to the best knowledge of each
of them, there is no basis for any of the foregoing.
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9.5 COMPLIANCE WITH LAWS.
The conduct of BMHC's business at its location in Phoenix, Arizona is
in substantial compliance with all laws, statutes, ordinances, regulations,
orders, judgments, or decrees applicable to it. BMHC has not received any notice
of any asserted present or past failure by it to comply with such laws,
statutes, ordinances, regulations, orders, judgments, or decrees, including
Environmental Laws or ERISA.
9.6 NO BROKERS.
There are no claims for brokerage commissions, finders' fees, or
similar compensation in connection with this transaction based on any
arrangement or agreement binding upon any of the parties hereto.
9.7 EMPLOYEES AND LABOR RELATIONS MATTERS.
9.7.1 To BMHC's best Knowledge, no key employee of BMHC's
business operations in Phoenix, Arizona or any group of such employees has any
plans to terminate employment with the Business;
9.7.2 BMHC's business operation in Phoenix, Arizona has
complied in all material respects with all labor and employment laws, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining, Americans With Disabilities Act, and the payment of social security
and other taxes;
9.7.3 There is no unfair labor practice charge, complaint,
or other action against BMHC's business operation in Phoenix, Arizona pending
or, to BMHC's best knowledge, threatened before the National Labor Relations
Board and BMHC's business operation in Phoenix, Arizona is not subject to any
order to bargain by the National Labor Relations Board;
9.7.4 No questions concerning representation have been
raised or, to BMHC's best Knowledge, are threatened with respect to employees of
BMHC's business operation in Phoenix, Arizona.
9.7.5 No grievance that might have a material adverse
effect on BMHC's business operation in Phoenix, Arizona and no arbitration
proceeding arising out of or under any collective bargaining agreement is
pending, and, to BMHC's best Knowledge, no basis exists for any such grievance
or arbitration proceeding;
9.7.6 No employee of BMHC's business operation in Phoenix,
Arizona is subject to any noncompetition, nondisclosure, confidentiality,
employment, consulting, or similar agreements with persons other than BMHC and
its subsidiary; and
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9.7.7 All employees of BMHC's business operation in
Phoenix, Arizona have provided documentation on file with BMHC required by the
Immigration and Naturalization Act and regulations.
9.8 DISCLOSURE.
Neither this Agreement nor any of the schedules, attachments, written
statements, documents, certificates, or other items prepared or supplied to
Sellers with respect to this Agreement contain any untrue statement of a
material fact or omit a material fact necessary to make each statement contained
herein or therein not misleading. BMHC has not intentionally concealed any fact
known by such person to have a material adverse effect upon the Business's
existing or expected financial condition, operating results, assets, customer
relations, employee relations, or business prospects taken as a whole.
9.9 AGREEMENTS AND COMMITMENTS.
SCHEDULE 9.9 contains a complete and accurate list of each contract,
instrument, and commitment (including license agreements) to which BMHC's
business operation in Phoenix, Arizona is a party that provides for payments in
excess of $5,000 per year or whose term is in excess of one year and is not
cancelable upon 30 or fewer days' notice without any liability, penalty, or
premium, other than a nominal cancellation fee or charge. Except as otherwise
set forth in SCHEDULE 9.9.
9.9.1 BMHC's business operation in Phoenix, Arizona has no
collective bargaining or union contracts agreement in effect or being
negotiated;
9.9.2 There is no labor strike, dispute, request for
representation, slowdown, or stoppage pending or, to BMHC's best Knowledge,
threatened against the BMHC's business operation in Phoenix, Arizona;
9.9.3 BMHC's business operation in Phoenix, Arizona is not
in material default under any such agreements, nor does there exist any event
that, with notice or the passage of time or both, would constitute a material
default or event of default by BMHC's business operation in Phoenix, Arizona
under any such agreement.
9.9.4 The change of control of BMHC's business operation in
Phoenix, Arizona will not be a breach of or default under any such agreements.
9.9.5 No third party consents are required or needed in
order to make these representations after consummation of the transactions
provided for in this Agreement.
9.10 PERSONAL PROPERTY.
Without material exception, SCHEDULE 9.10 contains lists of all
tangible personal property and assets used in the conduct of BMHC's business
operation in Phoenix, Arizona. Except as set forth in SCHEDULE 9.10, BMHC or its
subsidiary, BMC West Corporation, on the
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Closing Date will own and have good title to such properties and none of such
properties is subject to any security interest, mortgage, pledge, conditional
sales agreement, or other lien or encumbrance (except for liens for current
taxes, assessments, charges, or other governmental levies not yet due and
payable). BMHC has delivered to Seller copies of all leases and other agreements
relating to property described in SCHEDULE 9.9 (including any and all amendments
and other modifications to such leases and other agreements) all of which are
valid and binding, and BMHC's business operation in Phoenix, Arizona is not in
material default under any such leases or agreements in any material respects,
which are described on SCHEDULE 9.10. Except as set forth in SCHEDULE 9.10, all
material properties listed therein are generally in good operating condition and
repair (ordinary wear and tear excepted), are performing satisfactorily, and are
available for immediate use in the conduct of BMHC's business operation in
Phoenix, Arizona. All such tangible personal property is in compliance in all
material respects with all applicable statutes, ordinances, rules, and
regulations. The properties listed in SCHEDULE 9.10 include substantially all
such properties necessary to conduct BMHC's business operation in Phoenix,
Arizona.
9.11 REAL PROPERTY.
Without material exception, SCHEDULE 9.11 contains a list of all real
property currently owned or leased and used or useful in the conduct of BMHC's
business operation in Phoenix, Arizona. BMHC has delivered to Sellers copies of
all leases listed in SCHEDULE 9.11 (including any and all amendments and other
modifications of such leases), which leases are valid and binding in all
material respects. BMHC's business operation in Phoenix, Arizona is not in
material default under any such leases. All property listed in SCHEDULE 9.11
(including improvements thereon) is in satisfactory condition and repair
consistent with its present use and is available for immediate use in the
conduct of BMHC's business operation in Phoenix, Arizona. Except as set forth in
SCHEDULE 9.11, none of the property listed in SCHEDULE 9.11 or subject to leases
listed in SCHEDULE 9.11 violates in any material respect any applicable building
or zoning code or regulation of any governmental authority having jurisdiction.
The property and leases described in SCHEDULE 9.11 include all such property or
property interests necessary to conduct BMHC's business operation in Phoenix,
Arizona.
9.12 PERSONNEL.
SCHEDULE 9.12 sets forth a true and complete list of:
9.12.1 The names, title, and current salaries of all
employees of BMHC's business operation in Phoenix, Arizona as of the Closing
Date;
9.12.2 The wage rates (or ranges, if applicable) for each
class of exempt and nonexempt, salaried and hourly employees of BMHC's business
operation in Phoenix, Arizona.
9.12.3 All scheduled or contemplated increases in
compensation or bonuses; and
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9.12.4 All scheduled or contemplated employee promotions.
9.13 ERISA AND RELATED MATTERS.
SCHEDULE 9.13 sets forth a description of all "Employee Welfare Benefit
Plans" and "Employee Pension Benefit Plans" (as defined in xx.xx. 3(1) and 3(2),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) existing on the date hereof that are or have been maintained or
contributed to by BMHC or its subsidiary. Except as listed on SCHEDULE 9.13,
BMHC or its subsidiary does not maintain any retirement or deferred compensation
plan, savings, incentive, stock option or stock purchase plan, unemployment
compensation plan, vacation pay, severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any other fringe benefit arrangement for
any employee, consultant or agent of the business operated by BMHC in Phoenix,
Arizona, whether pursuant to contract, arrangement, custom or informal
understanding, which does not constitute an "Employee Benefit Plan" (as defined
in ss. 3(3) of ERISA), for which the business operated by BMHC in Phoenix,
Arizona may have any ongoing material liability after Closing. BMHC or its
subsidiary does not maintain nor has it ever contributed to any Multiemployer
Plan as defined by ss. 3(37) of ERISA. BMHC or its subsidiary does not currently
maintain any Employee Pension Benefit Plan subject to Title IV of ERISA. BMHC or
its subsidiary has no nonexempt "prohibited transactions" (as described in ss.
406 of ERISA or ss. 4975 of the Code) with respect to any Employee Pension
Benefit Plan or Employee Welfare Benefit Plan maintained by BMHC or its
subsidiary as to which BMHC or its subsidiary has been a party. As to any
employee pension benefit plan listed on SCHEDULE 9.13 and subject to Title IV of
ERISA, there have been no reportable events (as such term is defined in ss. 4043
of ERISA).
9.14 ENVIRONMENTAL MATTERS.
9.14.1 The business operated by BMHC in Phoenix, Arizona has
at all times been operated, and is, in compliance in all material respects, with
all Environmental Laws, including all limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and timetables
contained in all applicable Environmental Laws;
9.14.2 The business operated by BMHC in Phoenix, Arizona has
obtained and will assign to the Company at Closing, and is materially in
compliance with, all permits required by all Environmental Laws ("Environmental
Permits"), including, without limitation, those regulating emissions,
discharges, or releases of Hazardous Substances, or the use, storage, treatment,
transportation, release, emission and disposal, of raw materials, by-products,
wastes, and other substances used or produced by the business operated by BMHC
in Phoenix, Arizona and it has made all appropriate material filings for
issuance or renewal of such Environmental Permits;
9.14.3 There are no claims, notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries, or
proceedings pending or, to BMHC's best Knowledge, threatened against the
business operated by BMHC in Phoenix, Arizona that are based on or related to
any Environmental Matters or the failure of it to have any required
Environmental Permits;
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9.14.4 There are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions or
plans that may: (1) interfere with or prevent continued compliance by the
business operated by BMHC in Phoenix, Arizona with Environmental Laws and the
requirements of Environmental Permits; (2) give rise to any liability or other
obligation under any Environmental Laws that may require it to incur any actual
Environmental Costs; or (3) form the basis of any claim, action, suit,
proceeding, hearing, investigation or inquiry against or involving it based on
or related to any Environmental Matter or which could require it to incur any
Environmental Costs;
9.14.5 The business operated by BMHC in Phoenix, Arizona has
not received any notice or other communication that it is or may be a
potentially responsible person or otherwise liable in connection with any waste
disposal site used or maintained or that is otherwise related to it allegedly
containing any Hazardous Substances, or other location used for the disposal of
any Hazardous Substances, or notice of any failure of it to comply with any
Environmental Law or the requirements of any Environmental Permit;
9.14.6 The business operated by BMHC in Phoenix, Arizona has
not been at any time requested or required by any governmental entity having
jurisdiction under any Environmental Laws to perform any investigative or
remedial activity or other action in connection with any Environmental Matter in
respect of it.
9.14.7 To BMHC's best Knowledge, the business operated by
BMHC in Phoenix, Arizona has not used any waste disposal site, or otherwise
disposed of or transported, any Hazardous Substances. BMHC has not arranged for
the transportation of any Hazardous Substances to any place or location, in
violation of any Environmental Laws;
9.14.8 There has been no release of any Hazardous Substances
at, on, about, under, or within any assets or properties currently or formerly
owned, leased, or controlled by the business operated by BMHC in Phoenix,
Arizona(other than pursuant to and in accordance with Environmental Permits held
by the Business) and all of the assets and real property owned or leased by it
are free of any Hazardous Substances.
ARTICLE X - COLLECTION OF RECEIVABLES; CUSTOMER CLAIMS
10.1 COLLECTION.
KBI guarantees to Buyer the collectibility of all of the Trade Accounts
Receivable. During the Post Closing Adjustment Period, the Company shall use its
best efforts to collect the Trade Accounts Receivable. If any of the Trade
Accounts Receivable are determined to be uncollectible during the Post Closing
Adjustment Period , Sellers shall pay to Buyer the amount of such uncollected
Trade Accounts Receivable at the end of the Post Closing Adjustment Period.
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10.2 CUSTOMER CLAIMS AND RETURNS.
During the Post Closing Adjustment Period, the Company shall honor any
reasonable claims by customers of the Company for returns of goods relating to
invoices issued prior to the Closing Date. The Company shall report any such
returns to KBI and Buyer. Any returns of goods relating to invoices issued prior
to the Closing Date that are of a quality resalable in the ordinary course of
business shall result in a payment by KBI to Buyer in the amount of the gross
profit margin on the goods. KBI shall pay to the Company the total amount of
credits in excess of any reserves as of the Closing Date for returned goods.
ARTICLE XI - BMHC'S COVENANTS
BMHC covenants and agrees to take and shall take all actions necessary
to cause Buyer to comply with the terms of this Agreement and to cause Buyer to
carry out the obligations and transactions provided for in this Agreement.
ARTICLE XII - [RESERVED]
ARTICLE XIII - INDEMNITY
13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties of the Sellers contained in
Article VIII or made otherwise herein or in any documents delivered in
connection with the Closing shall survive the Closing and continue in full force
and effect for a period of two (2) years (the "Survival Period") provided that
the representations contained in Sections 8.1, 8.3, 8.11, and 8.24 shall survive
indefinitely. All representations and warranties of BMHC and Buyer contained in
this Agreement or in any documents delivered in connection with the Closing
shall continue in full force and effect for the Survival Period except the
representations in Sections 9.1 and 9.2 shall survive indefinitely.
13.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS.
Sellers will indemnify and hold harmless Buyer for, and will pay to
Buyer the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with the following provided that the aggregate
amount of Damages from all indemnification claims must exceed a threshold of
$100,000; provided that if Damages exceed $100,000, Seller shall be responsible
for all Damages:
13.2.1 any breach of any of the representations, warranties,
covenants or obligations in this Agreement by Sellers, or any other certificate
or document delivered by the Company or Sellers pursuant to this Agreement;
30
13.2.2 any product shipped or manufactured by, or any
services provided by the Business prior to the Closing Date;
13.2.3 any claims by any person for a brokerage or finder's
fee or commission or similar payment based upon any alleged agreement with the
Company or Sellers.
To the extent any claim for indemnification is covered by applicable insurance,
Buyer agrees that the Company must first seek recovery from such insurance and
the indemnification claim shall be reduced to the extent of any such insurance
proceeds actually paid to Buyer.
The party seeking indemnification shall be paid the amount of the claim
within ninety (90) days after submission of the claim. If there is any
disagreement on the right of the Indemnified Party to payment of the claim or
the amount of the claim, the parties shall submit the dispute to non-binding
mediation with CPA. Mediation shall occur within sixty (60) days after the
expiration of the payment date. If mediation does not result in resolution of
the claim, the parties may pursue any legal remedies available to them.
Except with respect to Damages resulting from (1) the breach of
Sections 8.1 or 8.11 or (2) fraudulent or deliberate misrepresentations, Damages
payable by Sellers shall in no event exceed $5,000,000. Damages, other than
those arising under (1) and (2) above, shall be payable solely by reducing the
Redemption Price (in the case of a Redemption, as defined in the Operating
Agreement) or the Purchase Price (as defined in the Put Agreement, in the case
of the exercise of the Put); provided that any such Damages shall bear interest
from the time they would otherwise have been payable in cash by the Sellers
until the closing of the Redemption or Put (as applicable) at the prime rate of
interest published in THE WALL STREET JOURNAL, plus 1%, compounded monthly.
Notwithstanding the preceding, Sellers at their option may at any time pay to
Buyer all or a portion of the amount otherwise payable under this Section, in
which case the amount of the reduction in the Redemption Price or the Purchase
Price, shall be reduced by such payment.
13.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BMHC AND BUYER.
BMHC and Buyer will indemnify and hold harmless Sellers, and will pay
to Sellers the amount of any Damages arising, directly or indirectly, from or in
connection with (a) any breach of any representation or warranty made by BMHC or
Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, or (b) any breach by BMHC or Buyer of any covenant or obligation
of Buyer in this Agreement provided that the aggregate amount of Damages from
all indemnification claims must exceed the aggregate threshold of $100,000;
provided that if Damages exceed $100,000, Sellers shall be responsible for all
Damages.
To the extent any claim for indemnification is covered by applicable
insurance, Sellers and the Company agree that the Company must first seek
recovery from such insurance, and the indemnification claim shall be reduced to
the extent of any such insurance proceeds paid to Sellers or the Company. The
party seeking indemnification shall be paid the amount of the claim within
ninety (90) days after submission of the claim. If there is any disagreement on
the
31
right of the Indemnified Party to payment of the claim or the amount of the
claim, the parties shall submit the dispute to non-binding mediation with CPA.
Mediation shall occur within sixty (60) days after the expiration of the payment
date. If mediation does not result in resolution of the claim, the parties may
pursue any legal remedies available to them.
Except with respect to Damages resulting from (1) the breach of
Sections 9.1 or 9.11 or (2) fraudulent or deliberate misrepresentations, Damages
payable by Buyers shall in no event exceed $5,000,000. Damages, other than those
arising under (1) and (2) above, shall be payable solely by increasing the
Redemption Price (in the case of a Redemption, as defined in the Operating
Agreement) or the Purchase Price (as defined in the Put Agreement, in the case
of the exercise of the Put); provided that any such Damages shall bear interest
from the time they would otherwise have been payable in cash by the Buyer until
the closing of the Redemption or Put (as applicable) at the prime rate of
interest published in THE WALL STREET JOURNAL, plus 1%, compounded monthly.
Notwithstanding the preceding, Buyer at its option may at any time pay to
Sellers all or a portion of the amount otherwise payable under this Section, in
which case the amount of the increase in the Redemption Price or the Purchase
Price, shall be reduced by such payment.
13.4 INDEMNIFICATION PROCEDURE.
13.4.1 Any party seeking indemnification, damages, or any
other recovery whatsoever (the "Indemnified Party") from another party or
parties (individually or collectively, the "Indemnifying Party") with respect to
any claim, demand, action, proceeding or other matter pursuant to this Agreement
or arising out of the transactions contemplated hereby (the "Claim") shall
notify the Indemnifying party of the existence of the Claim, setting forth in
reasonable detail the facts and circumstances pertaining thereto and the basis
for the Indemnified Party's right to indemnification (a "Notice of Claims"),
which Notice of Claim shall contain the following information to the extent it
is reasonably available to the Indemnified Party: (a) an estimate of the amount
then reasonably ascertainable of the alleged loss, expense or liability against
which the Indemnified Party is indemnified; (b) a description, in reasonable
detail, of the circumstances giving rise to the alleged loss, expense, or
liability; and (c) a statement identifying each party against whom a Claim is
asserted. In no event shall such notice be valid or enforceable if sent after
the Survival Period.
13.4.2 If any third party shall notify any Indemnified Party
with respect to any matter which may give rise to a Claim for indemnification
against the Indemnifying Party under this Agreement, then the Indemnified Party
shall notify the Indemnifying Party thereof, which notice shall set forth the
information required in Section 13.4.1 and be furnished within thirty (30) days
after the Indemnified Party's receipt of notice from the third party; provided,
however, that no delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any liability or
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is materially prejudiced by such failure to give notice. However,
in no event shall such notice be valid or enforceable if sent after the Survival
Period. If the Indemnifying Party notifies the Indemnified Party within thirty
(30) days that it will assume the defense thereof:
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(1) the Indemnifying Party shall defend the
Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party;
(2) the Indemnified Party may retain separate
counsel at its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate counsel to the extent the
Indemnified Party concludes based upon advice of counsel that a conflict of
interest exists between the Indemnified Party and Indemnifying Party that there
may be one or more legal defenses available to the Indemnified Party which are
not available to the Indemnifying Party, or available to the Indemnifying Party,
but the assertion of which would be adverse to the interest of the Indemnified
Party);
(3) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
matter without the written consent of the Indemnifying Party (not to be withheld
unreasonably); and
(4) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement which does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably);
13.4.3 If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) days that it will assume the defense
thereof, then the Indemnified Party may defend against, or enter into any
settlement with respect to, the matter in any manner it reasonably may deemed
appropriate, without prejudice to any of its rights hereunder;
13.4.4 The Indemnified Party shall be entitled to
reimbursement for reasonable expenses, included in damages with respect to any
Claim (including, without limitation, the cost of defense, preparation and
investigation relating to such Claim) as such expenses are incurred by the
Indemnified Party;
13.5 COOPERATION.
The Indemnified Party and the Indemnifying Party shall each use
commercially reasonable efforts to cooperate with the other such party in
connection with the defense of third-party Claims.
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ARTICLE XIV - CONDUCT OF OPERATIONS PRIOR TO CLOSING/GOVERNMENT APPROVALS
14.1 CONDUCT OF OPERATIONS.
From the date hereof until Closing, Sellers shall conduct the Business
in the ordinary course and consistent with its prior practices. KBI agrees not
to enter into any leases for personal or real property that cannot be canceled
without penalty upon thirty (30) days' notification. Sellers shall advise Buyer
of any material customer accounts that Sellers lose during the period between
January 11, 1999, and the Closing Date.
14.2 REQUISITE GOVERNMENT APPROVALS.
The parties shall make all other required filings and any requisite
notice to all government agencies and shall have received all required
government approvals for the transactions contemplated herein, including but not
limited to filings required by the Securities Act of 1933 and regulations
promulgated thereunder.
ARTICLE XV - CLOSING
15.1 CLOSING.
Closing shall occur on May 3, 1999, at the offices of Xxxxx and Xxxx
LLP in Phoenix, Arizona, effective as of the close of business on April 30,
1999, or at such other time or place as the parties may agree upon.
15.2 TIME IS OF THE ESSENCE.
Time is of the essence for the Closing of this transaction.
ARTICLE XVI - CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE
Buyer shall have no duty to Close unless and until each and every one
of the following conditions precedent have been fully and completely satisfied:
16.1 CONTINUED TRUTH OF WARRANTIES.
All of the representations and warranties of the Sellers contained
herein shall continue to be true and correct at Closing in all material
respects;
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16.2 SUPPLEMENTS TO SCHEDULES.
From time to time prior to the Closing, Sellers will promptly
supplement or amend the Schedules with respect to any matter hereafter arising
that, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in any Schedule and will promptly notify
Buyer of any breach that Sellers discover of any representation, warranty, or
covenant contained in this Agreement. No supplement or amendment of any Schedule
made pursuant to this section will be deemed to cure any breach of any
representation of or warranty made in this Agreement unless Buyer specifically
agrees thereto in writing; provided, however, that if this purchase is closed,
Buyer will be deemed to have waived its rights with respect to any breach of a
representation, warranty, or covenant or any supplement to any Schedule of which
it shall have been notified pursuant to this Section 16.2;
16.3 PERFORMANCE OF OBLIGATIONS.
Sellers shall have substantially performed or tendered performance of
each and every one of their obligations hereunder which by its terms is capable
of performance before Closing, including providing evidence to Buyer of the
transfer by KBI of substantially all of its assets to the Company and the
Company's assumption of substantially all of the liabilities of KBI, except for
the Excluded Assets and Excluded Liabilities;
16.4 DELIVERY OF CLOSING DOCUMENTS.
The Company and Sellers shall have tendered delivery to Buyer of all
the documents required to be delivered to Buyer by the Company at Closing;
16.5 LITIGATION.
No lawsuit, administrative proceedings or other legal action shall be
pending or threatened which seeks to restrain or enjoin the transactions
contemplated hereby;
16.6 GOVERNMENT APPROVALS.
The parties shall have received all other government approvals and
shall have made all necessary filings with government agencies required by the
transactions contemplated herein;
16.7 DUE DILIGENCE PERIOD.
The due diligence period shall have expired without Buyer terminating
this Agreement and the Sellers shall have satisfactorily cured any problems
raised by Buyer in the due diligence period;
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16.8 APPROVAL BY BOARD OF DIRECTORS.
The Board of Directors of Business shall have approved the transactions
provided for in this Agreement;
16.9 PRELIMINARY CLOSING BALANCE SHEET.
Buyer shall have agreed to the terms of the Preliminary Closing Balance
Sheet;
16.10 EMPLOYMENT, CONFIDENTIALITY, AND NONCOMPETITION AGREEMENTS.
The Company shall have entered into Employment, Confidentiality, and
Noncompetition Agreements with [Redacted] in a form reasonably acceptable to
Buyer and Sellers.
16.11 LEASES FOR LOCATIONS.
Sellers shall have caused the Company simultaneously with Closing to
enter into or assign leases for each of the Locations, including Buyer's Phoenix
location, on terms and conditions satisfactory to Buyer.
16.12 OPERATING AGREEMENT.
Buyer and KBI shall have executed and delivered the Operating
Agreement.
16.13 PUT AGREEMENT.
Sellers shall have executed and delivered the Put Agreement with BMHC.
16.14 BONUS PLAN.
Sellers shall have prepared and adopted a bonus plan in a form
acceptable to Buyer providing for a payment to employees of the Company
designated by Xxxxx in the amount of $[Redacted] (including applicable payroll
and withholding taxes) upon transfer of KBI's remaining Interests in the
Company; provided that Xxxxx receives at least $[Redacted] in value for such
remaining Interests.
16.15 MATERIAL ADVERSE CHANGE.
There shall have been no material adverse change in the operations or
prospects of the Business.
16.16 LENDER APPROVALS.
BMHC shall have obtained approval of the transaction from its lenders.
Pursuant to a request for confidential treatment, selected information in this
document has been omitted and separately filed with the Securities and Exchange
Commission.
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ARTICLE XVII - CONDITIONS PRECEDENT TO THE SELLERS' DUTY TO CLOSE
Sellers shall have no duty to Close this transaction unless and until
each and every one of the following conditions precedent have been fully and
completely satisfied:
17.1 CONTINUED TRUTH OF WARRANTIES.
All of the representations and warranties of BMHC and Buyer contained
herein shall continue to be true and correct at Closing in all material
respects;
17.2 SUPPLEMENTS TO SCHEDULES.
From time to time prior to the Closing, Buyer will promptly supplement
or amend the Schedules with respect to any matter hereafter arising that, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in any Schedule and will promptly notify Sellers of
any breach that Buyer discovers of any representation, warranty, or covenant
contained in this Agreement. No supplement or amendment of any Schedule made
pursuant to this section will be deemed to cure any breach of any representation
of or warranty made in this Agreement unless Sellers specifically agree thereto
in writing; provided, however, that if this purchase is closed, Sellers will be
deemed to have waived their rights with respect to any breach of a
representation, warranty, or covenant or any supplement to any Schedule of which
they shall have been notified pursuant to this Section 17.2;
17.3 PERFORMANCE OF OBLIGATIONS.
BMHC and Buyer shall have substantially performed or tendered
substantial performance of each and every one of their respective obligations
hereunder which by its terms is capable of performance before Closing;
17.4 DELIVERY OF CLOSING DOCUMENTS.
BMHC and Buyer shall have tendered delivery to the Company of all the
documents required to be delivered to Sellers or the Company by BMHC and Buyer
at Closing pursuant to this Agreement;
17.5 LITIGATION.
No lawsuit, administrative proceedings or other legal action shall be
pending or threatened which seeks to restrain or enjoin the transactions
contemplated hereby.
17.6 LEASE FOR PHOENIX LOCATION
Buyer shall have caused the Company simultaneously with Closing to
enter into or assign a lease for its Phoenix location on terms and conditions
satisfactory to Sellers.
17.7 OPERATING AGREEMENT.
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Buyer and Sellers shall have executed and delivered the Operating
Agreement.
17.8 PUT AGREEMENT.
Buyer and Sellers shall have executed and delivered the Put Agreement.
17.9 GOVERNMENT APPROVALS.
The parties shall have received all other government approvals and
shall have made all necessary filings with government agencies required by the
transactions contemplated herein.
17.10 MATERIAL ADVERSE CHANGE.
There shall have been no material adverse change in BMHC's or Buyer's
financial condition or prospects.
ARTICLE XVIII - ITEMS TO BE DELIVERED AT CLOSING BY SELLERS
At Closing, Sellers shall, unless waived by Buyer, deliver the
following items to Buyer:
18.1 OPINION OF COUNSEL.
The opinion of Xxxxx and Roca LLP in the form attached hereto as
EXHIBIT 18.1.
18.2 CERTIFICATE OF INCUMBENCY.
A copy of KBI's certificate of incumbency certified by the secretary of
the KBI;
18.3 CERTIFICATES OF GOOD STANDING.
Certificates of good standing or due qualification from the Secretary
of State of Delaware, dated within a reasonable period before Closing;
18.4 REPRESENTATIONS AND WARRANTIES.
A certificate signed by the Sellers to the effect that all of the
representations and warranties contained herein by the Sellers are true and
correct in all material respects as of Closing.
18.5 AGREEMENTS.
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Sellers shall have executed and delivered in a form acceptable to BMHC
and Buyer the documents provided for in Sections 16.9, 16.10, 16.11, 16.12,
16.13 and 16.14.
ARTICLE XIX - ITEMS TO BE DELIVERED AT CLOSING BY BMHC AND BUYER
At Closing, BMHC and Buyer shall, unless waived by the Company or
Sellers, deliver the following items to Sellers and the Company:
19.1 CERTIFIED RESOLUTION.
A copy of the resolutions of the Board of Directors of BMHC and Buyer
authorizing the execution and performance of this Agreement, certified by the
Secretary of BMHC;
19.2 REPRESENTATIONS AND WARRANTIES.
A certificate signed by an officer of BMHC and Buyer to the effect that
all the representations and warranties of Buyer contained herein are true and
correct in all material respects as of Closing;
19.3 OPINION OF COUNSEL.
An opinion of BMHC and Buyer's counsel in the form attached hereto as
EXHIBIT 19.3.
19.4 INCUMBENCY CERTIFICATE.
A certificate signed by an officer of BMHC and the Buyer to the effect
that all persons having signed or signing documents pursuant to this Agreement
were authorized to do so and identifying the officers and directors of BMHC and
the Buyer and containing exemplar signatures of each such officer who has signed
documents delivered pursuant to this Agreement;
19.5 PURCHASE PRICE.
The Purchase Price to be paid at Closing shall be paid in immediately
available funds by wire transfer to such of the Sellers' bank accounts as they
may designate; and
19.6 CERTIFICATE OF GOOD STANDING.
Certificate of good standing or due qualification from the secretary of
state of Delaware, dated within a reasonable period before Closing.
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19.7 XXXX OF SALE.
A xxxx of sale for the tangible personal property to be transferred to
the Company.
19.8 AGREEMENTS.
Buyer and BMHC shall have executed and delivered in a form agreed to by
KBI and Xxxxx the documents provided for in Sections 16.12, 17.7 and 17.8.
ARTICLE XX - MISCELLANEOUS
20.1 EXPENSES.
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the contemplated
transactions, including all fees and expenses of agents, representatives,
counsel, and accountants.
20.2 FURTHER ASSURANCES; CONSENTS.
Each party shall, at any time after Closing, execute and deliver to the
other party all such additional instruments of conveyance and assignments,
certificates or similar documents as such other party may reasonably request.
The parties shall not unreasonably withhold consent for any actions or matters
necessary to carry out the terms of this Agreement.
20.3 NO OTHER AGREEMENTS.
This Agreement constitutes the entire agreement between the parties
with respect to its subject matter except for the Confidentiality Agreement. All
prior and contemporaneous negotiations, proposals and agreements between the
parties are included in this Agreement. Any changes to this Agreement must be
agreed to in writing by both parties.
20.4 WAIVER.
Either party may waive the performance of any obligation owed to it by
the other party hereunder for the satisfaction of any condition precedent to the
waiving party's duty to perform any of its covenants, including its obligations
to close. Any such waiver shall be valid only if contained in a writing signed
by the parties.
20.5 PUBLIC ANNOUNCEMENTS.
No public announcements of this Agreement shall be made unless BMHC and
the Sellers have mutually agreed on the timing, distribution, and contents of
such announcements, except as may be required by the security laws.
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20.6 NOTICES.
Any notices required or allowed in this Agreement shall be effectively
given if placed in a sealed envelope, postage prepaid, and deposited in the
United States mail, registered or certified, addressed as follows:
To Sellers: Xxxxxxxx X. Xxxxx
Xxxxx Brothers, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Copy To: Xxxxx and Xxxx LLP
00 X. Xxxxxxx Xxx.
Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Manch, Esq.
To Buyer: Building Materials Holding Corporation
Xxx Xxxxxx Xxxxx
Xxxxxxx Xxxxxx Tower
26th Floor, Suite 2650
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Senior Vice President -
Finance and Treasurer
Copy To: Building Materials Holding Corporation
000 Xxxx Xxxxxxxxx, Xxxxx 000
Post Office Box 70006
Xxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Street, Senior Vice President,
General Counsel and Secretary
20.7 BOOKS AND RECORDS.
After execution of this Agreement, and for the records retention period
of the subject records, and at such time and place mutually agreed upon by the
parties, Sellers, at their sole cost and expense, shall have the right to review
the records which pertain exclusively to the Company for periods of time prior
to the Closing Date and at their cost make any copies of such records. Buyer
shall be provided access to any books and records in the Sellers' possession
relating to or necessary for filing tax returns on behalf of the Company.
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20.8 BMHC TRADE ACCOUNTS RECEIVABLE.
The Company, at no expense to BMHC, shall collect the trade accounts
receivable of BMHC existing for the Phoenix operation of BMHC on the Closing
Date and remit the proceeds to BMHC. If the customer continues to purchase
products from the Company, payments received by the Company will first be
applied to the oldest invoice unless the customer specifically designates
otherwise. If it is necessary to retain legal counsel to collect any of the BMHC
trade accounts receivable, BMHC shall be responsible for all legal fees and
costs incurred.
20.9 THIRD-PARTY BENEFICIARY.
Nothing contained herein shall create or give rise to any third-party
beneficiary rights for any individual as a result of the terms and provisions of
this Agreement.
20.10 ASSIGNMENT.
Neither party shall assign this Agreement without the prior written
consent of the other party. Any attempt to assign this Agreement without prior
written consent shall be void.
20.11 CHOICE OF LAW.
This Agreement shall be governed by and interpreted in accordance with
the laws of the state of Arizona.
20.12 PARAGRAPH HEADINGS.
The Section and Article paragraph headings contained herein are for
convenience only and shall have no substantive bearing on the interpretation of
this Agreement.
20.13 TIME IS OF THE ESSENCE.
Time is of the essence in the performance and observance of all
obligations and duties under this Agreement.
20.14 ATTORNEY FEES.
In the event either party is required to file any action to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover its
reasonable costs and attorney fees.
20.15 RULES OF INTERPRETATION.
The following rules of interpretation shall apply to this Agreement,
the exhibits hereto and any certificates, reports or other documents or
instruments made or delivered pursuant to or in connection with this Agreement,
unless otherwise expressly provided herein or therein and unless the context
hereof or thereof clearly requires otherwise:
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A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in accordance
with its terms, and if a term is said to have the meaning assigned to such term
in another document or agreement and the meaning of such term therein is
amended, modified or supplemented, then the meaning of such term herein shall be
deemed automatically amended, modified or supplemented in a like manner.
References to the plural include the singular, the singular the plural
and the part the whole.
The words "include," "includes" and "including" are not limiting.
A reference to any law includes any amendment or modification to such
law which is in effect on the relevant date.
A reference to any person or entity includes its successors, heirs and
permitted assigns.
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for purposes of this Agreement or
any exhibit hereto or certificate, report or other document or instrument made
or delivered pursuant to or in connection with this Agreement, such
determination or computation shall be done in accordance with generally accepted
accounting principles at the time in effect, to the extent applicable, except
where such principles are inconsistent with the express requirement hereof or of
such exhibit, certificate, report, document or instrument.
The words "hereof," "herein," "hereunder" and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement.
All exhibits to this Agreement constitute material terms of this
Agreement and are incorporated fully into the terms of this Agreement.
20.16 COUNTERPARTS AND FACSIMILE SIGNATURES.
This Agreement may be executed in multiple counterparts, each of which
shall be an original, but which shall together constitute one agreement. The
parties agree that facsimile signatures attached to this Agreement shall be
valid and binding as an original signature.
[SIGNATURES FOLLOW ON NEXT PAGE]
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The parties have executed this Agreement on the day and year first
written above.
SELLERS:
XXXXX BROTHERS, INC.,
an Arizona corporation
By
-------------------------------------
XXXXXXXX X. XXXXX
President
---------------------------------------
XXXXXXXX X. XXXXX
BMHC:
BUILDING MATERIALS HOLDING
CORPORATION, a Delaware corporation
By
-------------------------------------
XXXXXX X. XXXXXX
President and Chief Executive Officer
BUYER:
BMHC FRAMING, INC.,
a Delaware corporation
By
-------------------------------------
XXXXXX X. XXXXXX
President and Chief Executive Officer
