ASSET PURCHASE AGREEMENT
among
XXXXXXX MANUFACTURING CORPORATION
a Texas corporation,
d/b/a ROYAL DOOR COMPANY, INC.
XXXXX XXXXXXX and XXXX XXXXXXX
and
BMCW, LLC
a Delaware limited liability company
dated as of October 13, 1999
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS......................................................1
1.1 Business...........................................................1
1.2 Closing............................................................1
1.3 Closing Date.......................................................1
1.4 Contracts..........................................................1
1.5 Due Diligence Period...............................................1
1.6 Environmental Laws.................................................2
1.7 Equipment..........................................................2
1.8 Excluded Assets....................................................2
1.9 Financial Statements...............................................2
1.10 Hazardous Material.................................................2
1.11 Inventory..........................................................2
1.12 Leased Locations...................................................3
1.13 Leases.............................................................3
1.14 Noncompete Agreement...............................................3
1.15 Purchased Assets...................................................3
1.16 Purchase Price.....................................................3
1.17 Reserve............................................................3
1.18 Seller's Liabilities...............................................3
1.19 Subcontractor Accounts.............................................3
1.20 Termination Date...................................................4
1.21 Trade Accounts Receivable..........................................4
1.22 Trade Names and Trademarks.........................................4
ARTICLE II - DUE DILIGENCE...................................................4
2.1 Due Diligence......................................................4
2.2 Due Diligence Activities...........................................4
2.3 Confidentiality During Due Diligence...............................5
2.4 Termination of Agreement...........................................5
2.5 Exclusive Dealing..................................................6
ARTICLE III - PURCHASE AND SALE..............................................6
3.1 Purchase and Sale..................................................6
ARTICLE IV - DETERMINATION OF PURCHASE PRICE.................................6
4.1 Determination......................................................6
4.1.1 Inventory.....................................................6
4.1.2 Equipment.....................................................8
4.1.3 Trade Accounts Receivable.....................................8
4.1.4 Premium/Noncompete Agreement..................................8
4.2 Allocation of Value................................................8
4.3 Assumption of Liabilities..........................................8
4.3.1 Customer Deposits.............................................8
4.3.2 Sales Commissions.............................................8
4.3.3 Nonassumption of the Seller's Liabilities.....................8
ARTICLE V - TERMS OF PAYMENT.................................................9
5.1 Payment Due at Closing.............................................9
5.2 Reserve............................................................9
5.3 Returns and Allowances............................................10
5.4 Post Closing Adjustments..........................................10
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ARTICLE VI - BUILDING MATERIALS HOLDING CORPORATION COMMON STOCK............10
6.1 Stock Delivered at Closing........................................10
6.2 Registration of Stock.............................................11
6.3 Stock Transfer Restrictions.......................................11
6.4 Access to Data....................................................11
ARTICLE VII - REPRESENTATIONS AND WARRANTIES OF SELLER......................12
7.1 Authorization.....................................................12
7.2 Tax Matters.......................................................12
7.3 Compliance with Laws, Licenses, and Permits.......................12
7.4 Financial Statements; Undisclosed Liabilities.....................12
7.5 Legal Proceedings.................................................13
7.6 Contracts and Leases..............................................13
7.7 Trade Accounts Receivable.........................................13
7.8 Equipment.........................................................13
7.9 Labor Matters.....................................................13
7.10 Brokers and Finders...............................................14
7.11 Environmental Laws................................................14
7.12 Operating Restrictions............................................14
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES OF BUYER......................14
8.1 Corporate Status..................................................14
8.2 Corporate Authority...............................................14
8.3 Legal Proceedings.................................................15
8.4 Brokers and Finders...............................................15
ARTICLE IX - COLLECTION OF RECEIVABLES......................................15
9.1 Guaranty of Collectibility........................................15
9.2 Guaranty of Collectibility of Subcontractor Accounts..............15
ARTICLE X - LEASED LOCATIONS................................................15
10.1 Warranty of Leased Locations......................................15
10.2 Landlord's Consent................................................16
ARTICLE XI - EMPLOYEES......................................................16
11.1 Definition........................................................16
11.2 Termination.......................................................16
11.3 Buyer's Offer of Employment.......................................16
11.4 Labor Contracts...................................................16
11.5 Pension Plans.....................................................16
11.6 Employee Claims...................................................17
11.7 Nonassumption of Obligations Owed Employees.......................17
ARTICLE XII - NONCOMPETE AGREEMENT..........................................17
12.1 Noncompete........................................................17
ARTICLE XIII - INDEMNITIES..................................................17
13.1 Seller............................................................17
13.2 Xxxxxxxx..........................................................17
13.3 Buyer.............................................................18
ARTICLE XIV - TAXES AND UTILITIES...........................................18
14.1 Transfer Taxes....................................................18
14.2 Utilities, Personal Property or Real Estate Taxes.................18
ARTICLE XV - CONDUCT OF OPERATIONS PRIOR TO CLOSING.........................18
15.1 Conduct of Operations.............................................18
15.2 Cooperation.......................................................18
ARTICLE XVI - CLOSING.......................................................19
16.1 Closing...........................................................19
16.2 Time is of the Essence............................................19
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ARTICLE XVII - CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE................19
17.1 Continued Truth of Warranties.....................................19
17.2 Performance of Obligations........................................19
17.3 Delivery of Closing Documents.....................................19
17.4 Litigation........................................................19
17.5 Government Approvals..............................................20
17.6 Material Adverse Change...........................................20
17.7 Assignment of Leases..............................................20
17.8 Customers of Business.............................................20
17.9 Consent of Buyer's Lenders........................................20
17.10 Approval of Board.................................................20
17.11 Subcontractor Accounts............................................20
ARTICLE XVIII - CONDITIONS PRECEDENT TO SELLER'S AND SELLING
SHAREHOLDERS' DUTY TO CLOSE ..............................................20
18.1 Continued Truth of Warranties.....................................21
18.2 Performance of Obligations........................................21
18.3 Delivery of Closing Documents.....................................21
18.4 Litigation........................................................21
ARTICLE XIX - ITEMS TO BE DELIVERED AT CLOSING BY SELLER....................21
19.1 Xxxx of Sale......................................................21
19.2 Assignment and Assumption Agreements..............................21
19.3 Assignment and Assumption of Leases...............................21
19.4 Landlord Consents; Lessor Estoppel................................21
19.5 Title Certificates................................................22
19.6 Certified Resolution..............................................22
19.7 Representations and Warranties....................................22
19.8 Incumbency Certificate............................................22
19.9 UCC Termination Statements........................................22
19.10 Noncompete Agreement...........................................22
ARTICLE XX - ITEMS TO BE DELIVERED AT CLOSING BY BUYER......................22
20.1 Certified Resolution..............................................22
20.2 Representations and Warranties....................................23
20.3 Purchase Price....................................................23
20.4 Assignment and Assumption Agreements..............................23
20.5 Assignment and Assumption of Leases...............................23
20.6 Compensation Agreements for Xxxxxxxx..............................23
ARTICLE XXI - MISCELLANEOUS.................................................23
21.1 Change of Name....................................................23
21.2 Further Assurances................................................23
21.3 No Other Agreements...............................................23
21.4 Waiver............................................................24
21.5 Public Announcements..............................................24
21.6 Notices...........................................................24
21.7 Third-Party Beneficiary...........................................25
21.8 Confidential Information..........................................25
21.9 Assignment........................................................25
21.10 Choice of Law..................................................25
21.11 Paragraph Headings.............................................25
21.12 Rules of Interpretation........................................25
21.13 Counterparts...................................................26
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EXHIBITS
Exhibit 1.7 Equipment
Exhibit 1.8 Excluded Assets
Exhibit 1.12 Leased Location
Exhibit 1.13 Leases
Exhibit 1.14 Noncompete Agreement
Exhibit 4.1 Pro Forma Purchase Price
Exhibit 5.1.1 Form of Note
Exhibit 7.5 Litigation and Claims
Exhibit 20.6 Compensation Agreements for Selling Shareholders
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated as of October ____, 1999, is among
XXXXXXX MANUFACTURING CORPORATION d/b/a ROYAL DOOR COMPANY, INC., a Texas
corporation (the "Seller"), XXXXX XXXXXXX and XXXX XXXXXXX (collectively
"Xxxxxxxx"), and BMCW, LLC, a Delaware limited liability company ("Buyer").
Seller, Xxxxxxxx and Buyer agree as follows:
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 BUSINESS.
The term "Business" means the Seller's business operations of
assembly, sale, and installation of doors, millwork, hardware and other building
materials to customers primarily in multi-family projects and in some light
commercial projects:
1.2 CLOSING.
The term "Closing" means the exchange of closing documents and
the payment of the Purchase Price to the Seller by Buyer;
1.3 CLOSING DATE.
The term "Closing Date" means the date on which Closing
occurs;
1.4 CONTRACTS.
The term "Contracts" means all contracts and agreements of any
form or nature Seller entered into prior to Closing in the ordinary course of
the Business and which relate exclusively to the Business, including, but not
limited to, contracts to supply and/or install doors, leases of real and
personal property used in the Business, credit agreements, guaranties of
payment, performance and payment bonds, software license agreements for software
licensed to be used specifically on computer hardware at the Leased Locations,
contracts for the lease of equipment and motor vehicles and contracts for the
purchase or sale of Inventory;
1.5 DUE DILIGENCE PERIOD.
The term "Due Diligence Period" means the period of time
commencing on the date of this Agreement, and expiring 45 days later and any
written extension thereof;
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1.6 ENVIRONMENTAL LAWS.
"Environmental Laws" means federal or state laws or
regulations relating to pollution, or the protection of human health or the
environment, including, but not limited to, the Clean Air Act, the Federal Water
Pollution Control Act (as amended by the Clean Water Act of 1977 and the Water
Quality Act of 1987), the Resource Conservation and Recovery Act of 1976 (as
amended by the Hazardous and Solid Waste Amendments of 1984), the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (as amended by
the Superfund Amendments and Reauthorization Act of 1986), the Hazardous
Materials Transportation Act, the Toxic Substances Control Act, and the Federal
Insecticide Fungicide & Rodenticide Act, all as in effect on the Closing Date
or, with respect to the representations and warranties, in effect on the date
hereof;
1.7 EQUIPMENT.
The term "Equipment" means all tools, equipment, supplies,
spare parts, motor vehicles, rolling stock, office furniture, and equipment and
other pieces of tangible personal property owned by the Seller and used
exclusively by it in the Business at the Leased Locations, including but not
limited to those items described on the depreciation schedule set forth on
EXHIBIT 1.7;
1.8 EXCLUDED ASSETS.
The term "Excluded Assets" means those items listed on EXHIBIT
1.8 attached hereto;
1.9 FINANCIAL STATEMENTS.
The term "Financial Statements" means the financial statements
of the Business as of ___________;
1.10 HAZARDOUS MATERIAL.
"Hazardous Material" means any hazardous or toxic substance
regulated or subject to cleanup authority under any Environmental Laws;
1.11 INVENTORY.
The term "Inventory" means all finished goods, raw materials
and work in process which are owned by Seller and held for sale in the Business
as of Closing;
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1.12 LEASED LOCATIONS.
The term "Leased Locations" means the real property on which
the Business is carried out located at 0000 Xxxx Xxxx, Xxxxxx, Xxxxx, 0000
Xxxxxxx Xxxxxx, Xxxx 00, Xxx Xxxxx, Xxxxxx, and 000 Xxxxxxxxxx, #000, X.
Xxxxxxxxxx, Xxxxxxxxxx;
1.13 LEASES.
The term "Leases" means those leases of real and/or personal
property involving the Business, as identified in the attached EXHIBIT 1.13;
1.14 NONCOMPETE AGREEMENT.
The term "Noncompete Agreement" means the agreement by each of
the Xxxxxxxx to not compete with the Business following the Closing Date, the
form of which is attached hereto as EXHIBIT 1.14;
1.15 PURCHASED ASSETS.
The term "Purchased Assets" means the Equipment, Contracts,
Inventory, Trade Accounts Receivable, Trademarks and Tradenames, Leases and all
intangible assets of the Business including customer lists, manuals, procedures
and proprietary know-how;
1.16 PURCHASE PRICE.
The term "Purchase Price" means the total consideration to be
paid in cash and in a note from Buyer for the Purchased Assets to be calculated
pursuant to Section 4.1 herein;
1.17 RESERVE.
The term "Reserve" shall mean $200,000 set aside from the
Purchase Price for Post Closing Adjustments as provided for in Section 5.2;
1.18 SELLER'S LIABILITIES.
The term "Seller's Liabilities" means the obligations of the
Business to make payment to third parties owed, including those owed but not yet
due, as of Closing for goods or services sold to the Business in the ordinary
course of the Business prior to Closing and the obligations owed to employees of
the Business for services rendered up to the Closing Date;
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1.19 SUBCONTRACTOR ACCOUNTS.
The term "Subcontractor Accounts" means the accounts
maintained by Seller on its books and records which reflect offsets by Seller
against sales commissions to sales representatives and amounts owed to Seller by
subcontractors for cost over-runs;
1.20 TERMINATION DATE.
The term "Termination Date" means the last business day
immediately preceding the Closing Date;
1.21 TRADE ACCOUNTS RECEIVABLE.
The term "Trade Accounts Receivable" means the Seller's right
to receive payment on obligations, including those owed but not yet due, as of
Closing, of all customers and other third-party purchasers of goods and services
from the Business in the ordinary course of the Business prior to Closing,
including any and all past due accounts and notes receivable taken in collection
of routine receivables, together with all deeds of trust, mortgages, mechanics'
liens, materialmen's liens and other security interests securing such
obligations and which are assignable as permitted by law, but excluding any such
obligations which have been written off the books prior to Closing. At Closing,
a complete list of the Trade Accounts Receivable shall be delivered by the
Seller to the Buyer; and
1.22 TRADE NAMES AND TRADEMARKS.
The term "Trade Names" and "Trademarks" mean the terms "Royal
Door," "Royal Door Corporation" and any derivatives thereof.
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 and the Purchased Assets as Buyer, in Buyer's discretion, shall require
for the purpose of determining the suitability of the Business and the Purchased
Assets for Buyer's acquisition.
2.2 DUE DILIGENCE ACTIVITIES.
Due Diligence shall include, but not be limited to:
2.2.1 Review the status of the Leases including
obtaining an estoppel certificate from each lessor confirming the lease terms
and that there are no defaults or facts that constitute a default under the
terms of the Leases.
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2.2.2 Obtain and review the Phase I environmental
audit of the Leased Locations conducted by TRC Environmental Corporation. This
audit is for the benefit of the Buyer. The cost of the Phase I environmental
audit shall be paid by Buyer.
2.2.3 Review of the books and records of the
Business including the financial records and customer records.
2.2.4 Completion and attachment of any amendments
to the Exhibits to this Agreement.
2.2.5 Review of the Business's employee and
outside sales representatives compensation, benefits, and bonus plans.
2.2.6 Review of employee records including health,
workers' compensation, and other benefit records of employees or representatives
of the Business and conduct interviews of key personnel in coordination with
Seller so as to not disrupt the Business.
2.2.7 Review and audit of the Purchased Assets.
2.2.8 Review of the Seller's Liabilities and
review of all of Seller's labor subcontracts and insurance coverage for same.
2.2.9 In concert with Seller, interview key
customers of and suppliers to the Business.
2.2.10 Seller and Xxxxxxxx shall provide to Buyer
and Buyer's representatives access to and copies of all existing studies,
reports, and records, including financial, customer and employee records,
relating to the Business and the Purchased Assets. Seller and Xxxxxxxx shall
fully cooperate with Buyer and shall promptly provide Buyer with all relevant
information currently available to Seller and requested by Buyer during the Due
Diligence Period.
2.3 CONFIDENTIALITY DURING DUE DILIGENCE.
Buyer, Seller, and Xxxxxxxx acknowledge and agree that the
parties desire to keep this potential transaction and the negotiations regarding
it confidential until jointly announced or when required by law to be announced.
2.4 TERMINATION OF AGREEMENT.
During the Due Diligence Period, Seller and Xxxxxxxx shall be
provided access to Buyer's public financial statements and Buyer will make other
managers available to Seller and Xxxxxxxx to discuss Buyer's business practices.
5
If during the Due Diligence Period Buyer, in Buyer's sole
discretion, shall determine that for any reason whatsoever the Purchased Assets
are not suitable for Buyer's acquisition, then Buyer may cancel this Agreement
by giving written notice to the Seller not later than the expiration of the Due
Diligence Period.
If the Business and the Purchased Assets are otherwise
suitable for Buyer's intended use but Buyer discovers any problem or defect with
respect thereto which constitutes a material impairment of the value of the
Business, then Buyer may advise Seller in writing on or before the expiration of
the Due Diligence Period of the nature of each defect or problem with respect to
the Purchased Assets with the request that Seller remedy each problem or defect
prior to the Closing. Seller may correct such problems or cancel the Agreement
by providing written notice to Buyer of cancellation.
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 approval of the suitability and condition of
the Business and the Purchased Assets, except for and limited to any problems or
defects specified in Buyer's notice.
Seller may, upon notice to Buyer cancel this Agreement during
the Due Diligence Period. If Seller fails to cancel this Agreement during the
Due Diligence Period but fails to deliver the documents required by Article XIX
and the preconditions to Closing set forth in Article XVIII have been satisfied,
then Seller should be liable to Buyer for all costs and expenses incurred by
Buyer during the Due Diligence Period and up to Seller's failure to perform.
2.5 EXCLUSIVE DEALING.
Seller and Xxxxxxxx agree that upon execution of this
Agreement and until the Closing Date or termination of this Agreement, Seller
and Xxxxxxxx will not seek to sell the Business to any other party nor will
Seller or Xxxxxxxx accept any offers to acquire the Business from any other
party.
ARTICLE III - PURCHASE AND SALE
3.1 PURCHASE AND SALE.
At Closing, the Seller agrees to sell and convey to Buyer, and
Buyer agrees to purchase and accept from Seller, the Purchased Assets for the
Purchase Price on the terms and conditions contained herein.
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ARTICLE IV - DETERMINATION OF PURCHASE PRICE
4.1 DETERMINATION.
The Purchase Price shall be calculated on the Closing Date as
follows and summarized as set forth on EXHIBIT 4.1 attached hereto. EXHIBIT 4.1
will be updated on the Closing Date with the then current values of the
Purchased Assets and attached to this Agreement at Closing:
4.1.1 INVENTORY.
The Inventory shall be valued as follows:
4.1.1.1 GENERAL INVENTORY VALUATION.
A joint physical inventory count and
valuation shall be conducted by Buyer and Seller immediately preceding Closing.
The value of the Inventory (except as otherwise provided herein) shall be the
lower of the Seller's actual cost (the sum paid for the items) less 1% which the
parties hereby agree is a reasonable estimate of the value of discounts and
rebates which have been earned or taken by Seller (and which remain the property
of Seller as an Excluded Asset) or market. Any Inventory items identified as
damaged or obsolete shall remain the property of Seller and shall be removed
from the Leased Locations within 30 days following Closing.
4.1.1.2 VALUATION OF WINDOWS.
Wood, aluminum and vinyl windows ("windows")
shall be jointly counted by Seller and Buyer on the weekend immediately
preceding Closing, and valued at Seller's actual cost from normal sources of
supply (the sum paid for the items net of any discounts less 1% plus freight
costs incurred to deliver the items to the Leased Location). Only windows for
which there is a written purchase order from a customer will be purchased by
Buyer. Buyer and Seller shall jointly inspect the windows and any such items
that are obsolete or damaged shall remain the property of Seller and shall be
removed from the Leased Locations within 30 days following Closing.
4.1.1.3 FINAL INVENTORY DETERMINATION.
Any and all disputes regarding any aspect of
the inventory count and valuation process including determination of cost shall
be negotiated between the parties. In the event the parties cannot agree on the
cost of any item or items, then each party shall promptly submit such evidence
of market values as such party deems appropriate to a mutually agreed upon
accounting firm ("CPA"), who shall be instructed based solely on the evidence
presented by the parties, to determine which party's value most closely
approximates the Cost of the disputed items. The value determined by the CPA
shall be binding and conclusive.
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4.1.1.4 INVENTORY COSTS.
The actual costs, if any, incurred for the
services of the CPA, pursuant to Section 4.1.1.3 shall be borne by the party
whose proposed value is furthest from the value determined by the CPA. In
conducting the inventory count, Buyer shall bear its own costs including wages
and overtime of its employees, lodging, meals, and transportation of its
employees and any other expenses incurred by Buyer. In conducting the inventory
count, Seller shall bear its own costs including wages and overtime of its
employees, lodging, meals, and transportation of its employees and any other
expenses incurred by Seller.
4.1.2 EQUIPMENT.
For the Equipment, Buyer shall pay to Seller the net
book value of the Equipment as of the Closing Date.
4.1.3 TRADE ACCOUNTS RECEIVABLE AND SUBCONTRACTOR
ACCOUNTS.
All Trade Accounts Receivable that are not older than
ninety (90) days past the due date as of the Closing Date shall be valued at
face value. All Trade Accounts Receivable that are older than ninety (90) days
from due date may, at the option of Buyer, be acquired by Buyer at face value
or, if not acquired, shall be retained by Seller. All Subcontractor Accounts
shall be valued at face value.
4.1.4 PREMIUM/NONCOMPETE AGREEMENT.
As a premium for the Purchased Assets and as
consideration for the Noncompete Agreement Buyer shall pay to Seller $6 million
of which $250,000 is allocated to the Noncompete Agreement for each of the
Xxxxxxxx and shall be paid over a five year period at a rate of $25,000 to each
of the Xxxxxxxx each year.
4.2 ALLOCATION OF VALUE.
Buyer shall not be liable to Seller for any tax ramifications
to Seller or Xxxxxxxx arising out of the purchase price allocation by Buyer.
4.3 ASSUMPTION OF LIABILITIES.
4.3.1 CUSTOMER DEPOSITS.
Buyer agrees to assume liability for customer
deposits as reflected on the books and records of Seller. The amount of the
customer deposits assumed shall be a reduction in the Purchase Price.
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4.3.2 SALES COMMISSIONS.
Seller shall pay any commissions owed to sales
representatives of Seller based upon its normal commission policies for sales of
products for which Seller receives the profit which occur prior to Closing. Any
unpaid commissions arising from sales prior to Closing for which Seller received
the profit which are paid by Buyer after Closing will be treated as Post Closing
Adjustments to be paid by Seller. Commissions for any sales for which Buyer
receives the profit shall be paid by Buyer.
4.3.3 NONASSUMPTION OF THE SELLER'S LIABILITIES.
Except as otherwise provided herein, the Seller's
Liabilities shall be retained by Seller and not assumed by Buyer. In the event
Buyer becomes liable for or has to pay any of the Seller's Liabilities, then
such liabilities, including any costs or expenses reasonably associated with
such liabilities (excluding consequential damages), shall be deducted from the
Reserve during the Post Closing Adjustment Period provided for in Article V or
shall be paid to Buyer under Article XIII.
ARTICLE V - TERMS OF PAYMENT
5.1 PAYMENT DUE AT CLOSING.
At Closing, Buyer shall pay to Seller an amount equal to the
estimated Purchase Price as determined in Article IV ("Estimated Purchase
Price") less the Reserve as follows:
5.1.1 A note in the form attached hereto as
EXHIBIT 5.1.1 in the face amount of $5 million;
5.1.2 At Buyer's discretion, common stock of
Building Materials Holding Corporation in an amount up to $1.5 million as
provided for in Article VI of this Agreement, and
5.1.3 The balance of the Estimated Purchase Price
less the Reserve in immediately available funds and less the amount allocated to
the Noncompete Agreement of $200,000 for years two through five.
5.2 RESERVE.
Seller agrees that Buyer shall withhold $200,000 from the cash
portion of the Purchase Price on the Closing Date (the "Reserve"), for a period
of one hundred and twenty (120) days following Closing ("Post Closing Adjustment
Period") as a reserve to be applied to the post closing adjustments, including
but not limited to satisfaction of: (i) any unpaid taxes, (ii) uncollected Trade
Accounts Receivable or discounts taken (including prompt payment discounts or
any other discounts the customer is entitled to take) on Trade Accounts
9
Receivable, (iii) any Subcontractor Accounts which Buyer is unable to offset or
receive payment on during the Post Closing Adjustment Period; (iv) unpaid Trade
Accounts Payable, (v) customer claims for returns and allowances, (vi) payment
of any amounts owing by Seller to Buyer at the end of the Post Closing
Adjustment Period (vii) honoring any customer reserve in excess of the amount of
reserve assumed, and (viii) paying any commissions reserved for in Section 4.3.2
in excess of the amount of the reserve. After deducting all amounts owed to
Buyer by Seller from the Reserve, Buyer shall release to Seller the net amount
of the Reserve within twenty (20) days from the end of the Post Closing
Adjustment Period. If Seller owes Buyer more than the amount of the Reserve,
such additional amount shall be paid to Buyer simultaneously with release of the
Reserve to Buyer or at the request of Seller, such additional amount shall be
credited to the principal amount of the note.
5.3 RETURNS AND ALLOWANCES.
During the Post Closing Adjustment Period, Buyer shall honor
any reasonable claims by customers of the Company for returns of goods relating
to invoices issued prior to the Closing Date. Buyer shall report any such
returns to Xxxxxxxx. Any returns of goods relating to invoices issued prior to
the Closing Date that are not of a quality resalable in the ordinary course of
business shall result in a reduction of the Purchase Price in the amount the
customer was credited for the return. 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 adjustments to the Purchase Price as follows:
If the returned resalable items are the subject of an unpaid
Trade Account Receivable, then the Trade Account Receivable corresponding to the
returned items shall be deemed collected in the amount of 75% of the invoiced
price of such items.
5.3.1 If the returned resalable item was paid for
prior to the Closing Date, the Buyer is entitled to a payment from the Xxxxxxxx
in the amount of 25% of the invoice amount for the item.
5.4 POST CLOSING ADJUSTMENTS.
During the Post Closing Adjustment Period, Buyer and Seller
shall jointly prepare an analysis of adjustments to be made to the payment made
at Closing, to reflect the actual Purchase Price.
If Buyer and Seller do not agree on the amount of the
adjusting payment required, then the dispute shall be resolved by the CPA, whose
responsibility shall be limited solely to an audit of the accuracy and
appropriateness of the adjusting entries. The decision of the CPA shall be
final, and its charges shall be borne equally by the parties.
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ARTICLE VI - BUILDING MATERIALS HOLDING CORPORATION
COMMON STOCK
6.1 STOCK DELIVERED AT CLOSING.
Buyer, at its election to be made prior to the Closing Date,
may pay up to $1,500,000 of the Purchase Price by issuing shares of common stock
of Building Materials Holding Corporation ("Issued Stock") to the Seller and
Xxxxxxxx. The number of shares of Issued Stock to be delivered shall be
calculated by dividing the portion of the Purchase Price to be paid in Issued
Stock by the Transaction Price Per Share. The term "Transaction Price Per Share"
shall mean the average market price per share for five (5) trading days
immediately preceding the Closing Date. The term "market price per share" shall
mean the closing price of the Issued Stock on the market on which the Issued
Stock is traded as published in the Wall Street Journal.
6.2 REGISTRATION OF STOCK.
Seller and Xxxxxxxx each acknowledge receipt of the Prospectus
dated August 12, 1998, as supplemented from Building Materials Holding
Corporation (the "Prospectus"). Upon expiration of the Issued Stock transfer
restrictions (Section 6.3), it is the intent of the parties that the Issued
Stock delivered to Seller and Xxxxxxxx hereunder shall not be subject to any
restrictions on trading other than general restrictions applicable to publicly
held stock under the Securities Act of 1933, as amended (the "Securities Act")
and the Securities Exchange Act of 1934. Immediately following the Closing Date,
Building Materials Holding Corporation ("BMHC") shall cause a supplement to the
Prospectus to be filed. Seller agrees to provide Buyer with information as to
its proposed distribution of the Issued Stock prior to commencing sale of the
Issued Stock.
6.3 STOCK TRANSFER RESTRICTIONS.
Seller and Xxxxxxxx jointly agree, for a period of twenty-one
(21) trading days following the receipt of the Issued Stock from Buyer
("Restricted Stock Transfer Period"), to not sell, transfer, assign, or in any
way dispose of the Issued Stock in a total collective amount in excess of 5,000
shares in any one trading day and Seller and Xxxxxxxx further agree for a period
of thirty (30) calendar days following the Restricted Stock Transfer Period to
not sell, transfer, assign, or in any way dispose of the Issued Stock in a total
collective amount in excess of 14,000 shares in any one day. Buyer reserves the
right, during the Restrictive Stock Transfer Period, to increase the number of
shares of Issued Stock that can be sold on any trading day and to proportionally
reduce the number of days in the Restricted Stock Transfer Period.
6.4 ACCESS TO DATA.
6.4.1 Buyer has furnished to Seller and Xxxxxxxx
copies of BMHC's latest annual and quarterly reports to the Securities and
Exchange Commission, acknowledges that Seller and Xxxxxxxx have relied on such
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reports in entering into this transaction, and represents to Seller and Xxxxxxxx
that (i) the financial statements contained or incorporated by reference therein
have been prepared in accordance with generally accepted accounting principles,
(ii) the balance sheets contained or incorporated therein fairly represent the
financial condition of BMHC at the dates thereof, and (iii) the statements of
profit and loss contained or incorporated therein present fairly the results of
BMHC's operations for the periods covered by such statements.
6.4.2 Seller and Xxxxxxxx have had an opportunity
to discuss BMHC's business, management, and financial affairs with Buyer's
management. Seller and Xxxxxxxx understand that such discussion, as well as any
written information issued by BMHC, was intended to describe the aspects of
BMHC's business and prospects which it believes to be material, but were not
necessarily a thorough or exhaustive description. Without limiting the
foregoing, Seller and Xxxxxxxx acknowledge that they have reviewed BMHC's annual
report for the year ended December 31, 1998, and quarterly financial statements
and reports through December 31, 1998. SELLER AND XXXXXXXX ACKNOWLEDGE THAT THEY
ARE NOT RELYING ON TAX INFORMATION OR ADVICE WITH RESPECT TO TAXES RECEIVED FROM
BUYER. SELLER AND XXXXXXXX HAVE SOUGHT THEIR OWN TAX AND OTHER COUNSEL IN
EVALUATING THIS TRANSACTION.
ARTICLE VII - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and Xxxxxxxx hereby, jointly and severally, 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 and shall survive and continue after Closing:
7.1 AUTHORIZATION.
The Seller and Xxxxxxxx have all requisite power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Seller and,
assuming the due authorization and execution of this Agreement by Buyer, is the
valid, binding obligation of Seller and Xxxxxxxx enforceable against Seller and
Xxxxxxxx in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors' rights, and (ii) the
remedies of specific performance and injunctive and other equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceedings thereafter may be brought.
7.2 TAX MATTERS.
7.2.1 Seller has timely filed all tax returns
required to be filed by the date of this Agreement with respect to taxes imposed
on the Business, and the Seller has paid all taxes shown to be due on such
returns.
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7.2.2 There are no liens for taxes upon the
Purchased Assets, except liens for current taxes not yet due.
7.2.3 Seller has withheld for its employees
applicable taxes for all pertinent periods in compliance with the tax
withholding provisions of all applicable laws.
7.3 COMPLIANCE WITH LAWS, LICENSES, AND PERMITS.
Seller is not in violation of (i) any applicable order,
judgment, injunction, award, or decree, or (ii) any ordinance, regulation, or
other requirement of any governmental entity, in either case that is material to
the Business. Seller has received all currently required permits that are
material to the Business.
7.4 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
Seller has previously delivered to Buyer copies of the
following financial statements of Seller for the period ending __________. The
Financial Statements present fairly the financial condition and results of the
operations of the Business as of the respective date and periods thereof and
have been prepared in accordance with generally acceptable accounting principles
consistently applied.
7.5 LEGAL PROCEEDINGS.
There are no outstanding lawsuits or, to Seller's knowledge,
any assertion of claims against or involving the Business or the Purchased
Assets, except as set forth in EXHIBIT 7.5 attached hereto.
7.6 CONTRACTS AND LEASES.
The Contracts and Leases are valid and in full force and
effect. Copies of all Contracts for acquisition of products or services from the
Seller have been provided to Buyer prior to Closing.
All the agreements with installers have been disclosed to
Buyer; there are no other agreements with installers not set forth in the
written agreements, and the installers all have workers compensation insurance
and policies of liability insurance.
7.7 TRADE ACCOUNTS RECEIVABLE.
All Trade Accounts Receivables reflected on the books of the
Seller as of the Closing Date, represent bona fide transactions made in the
ordinary course of the Business and, in the aggregate, are collectible in the
ordinary course of the Business.
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7.8 EQUIPMENT.
The Equipment listed in EXHIBIT 1.7 is a complete and accurate
list of the material Equipment utilized by the Business and all the Equipment
used in connection with the operation and conduct of the Business is being
transferred to Buyer.
7.9 LABOR MATTERS.
There are no material disputes, employee grievances, or other
disciplinary actions pending or threatened involving any of the present or
former employees of the Business. There is no labor strike, dispute, slowdown,
or stoppage pending or threatened against or affecting the Business, and the
Business has not experienced any work stoppage or labor difficulty within the
past twelve (12) months. Seller has no agreement, arrangement, or commitment to
create any additional plan or arrangement or to modify or amend any existing
employee benefit plan of the Business.
7.10 BROKERS AND FINDERS.
Neither Seller nor Xxxxxxxx have taken any action that will
result in any third party becoming obligated to pay or entitled to receive any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
7.11 ENVIRONMENTAL LAWS.
The Business to the knowledge of Seller and Xxxxxxxx is in
material compliance with all Environmental Laws. To the knowledge of Seller and
Xxxxxxxx no notice has been received from any governmental entity alleging that
the Business is not in compliance with Environmental Laws, and there are no
circumstances known to Seller and Xxxxxxxx that may prevent or interfere with
material compliance in the future.
7.12 OPERATING RESTRICTIONS.
To the knowledge of Seller and Xxxxxxxx, there are no state or
local restrictions on operating hours of the Business, and there are no
agreements with or threats by neighbors or neighborhood associations of the
Leased Locations concerning operating hours.
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows, and
the warranties and representations contained in this Article or elsewhere in
this Agreement shall be deemed remade as of Closing:
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8.1 CORPORATE STATUS.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware and, prior to Closing, is
qualified or licensed to do business in the states of Texas, California and
Nevada and all other states in which Seller is doing business.
8.2 CORPORATE AUTHORITY.
Buyer has full power and authority to execute and perform this
Agreement and, all corporate action necessary to authorize the execution,
delivery and performance of this Agreement by Buyer has been duly and lawfully
taken. Upon execution hereof, this Agreement 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 Buyer's Certificate of Incorporation, Bylaws or
any standing resolution of its Board of Directors, or any note, loan agreement,
lease or other material contract or agreement to which Buyer is a party.
8.3 LEGAL PROCEEDINGS.
To Buyer's knowledge, there are no pending or threatened
lawsuits, actions or claims challenging the validity of this Agreement or the
consummation of the transactions contemplated hereby.
8.4 BROKERS AND FINDERS.
Buyer has not agreed to pay, nor has taken any action that
will result in any third party becoming obligated to pay or entitled to receive
any investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
ARTICLE IX - COLLECTION OF RECEIVABLES
9.1 GUARANTY OF COLLECTIBILITY OF TRADE ACCOUNTS
RECEIVABLE.
The Seller guarantees to Buyer the collectibility of all of
the Trade Accounts Receivable that Buyer acquires at Closing. During the Post
Closing Adjustment Period, Buyer shall collect such Trade Accounts Receivable.
Buyer shall consult with and obtain Seller's approval before accepting any
discounts from the face amount of the Trade Accounts Receivable as full payment.
Payments received shall be applied first to the oldest Trade Account Receivables
unless the customer specifically specifies otherwise. Buyer shall notify Seller
of any requests by customers to pay invoices other than the oldest first. Buyer
shall provide aging reports of the Trade Accounts Receivable to Seller. If any
of such Trade Accounts Receivable have not been collected by Buyer during the
Post Closing Adjustment Period, Buyer may assign those uncollected Trade
Accounts Receivable to Seller and deduct the amount of such uncollected Trade
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Accounts Receivable from the Reserve under Article V hereof. Any discounts taken
by customers (including prompt payment discounts) shall be taken into account
and the Purchase Price adjusted to reflect the actual collected value of the
Trade Accounts Receivable. Any payments received on invoices not acquired by
Buyer shall be transferred to Seller.
9.2 GUARANTY OF COLLECTIBILITY OF SUBCONTRACTOR ACCOUNTS.
The Seller guarantees to Buyer the collectibility or ability
to satisfy all of the Subcontractor Accounts the Buyer acquires at Closing.
Buyer shall, during the Post Closing Adjustment Period, attempt to resolve or
collect all Subcontractor Accounts. To the extent any Subcontractor Accounts are
not collected in full, Buyer may assign the uncollected portion of any
Subcontractor Accounts to Seller and deduct the amount of such uncollected
Subcontractor Accounts from the Reserve.
ARTICLE X - LEASED LOCATIONS
10.1 WARRANTY OF LEASED LOCATIONS.
Seller and Xxxxxxxx represent and warrant to Buyer that the
Lease for each of the Leased Locations is currently paid in full and there are
no defaults or facts that would constitute a default by either Seller or the
lessor under the terms of the Lease.
10.2 LANDLORD'S CONSENT.
Seller will obtain in cooperation with Buyer consent from each
of the lessors of the Leased Locations to assign the leases to Buyer, with no
change in lease terms and lessors' estoppels warranting that the rent due under
the Leases is paid in full as of the Closing Date and that there are no defaults
or facts which would constitute a default under the terms of the Leases.
ARTICLE XI - EMPLOYEES
11.1 DEFINITION.
Seller agrees on execution of this Agreement to furnish to
Buyer a list of all persons currently employed on either a part-time or
full-time basis by Seller in connection with the Business including their
current wage and salary rates. For purposes of this Article, the term
"Employees" shall mean all persons included on such list, including employees on
leave of absence, as well as those persons who become regularly employed by
Seller between the date of the list and the date immediately preceding the
Termination Date. Seller shall also provide to Buyer a list of all sales
representatives of Seller currently representing Seller.
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11.2 TERMINATION.
On the Termination Date, Seller shall terminate the employment
of all Employees and Seller shall pay and shall be responsible for: notice of
termination prior to Closing, payment of all accrued salary, wages, bonus or
vacation benefits, COBRA benefits, and other obligations, if any, owed to
Employees as of the Termination Date.
11.3 BUYER'S OFFER OF EMPLOYMENT.
Buyer may offer employment to the terminated Employees at
their current wage and salary rates of compensation (exclusive of bonus or other
incentive pay programs) as offered by Seller. All offers of employment shall be
"at will."
11.4 LABOR CONTRACTS.
Seller is not a party to any organized labor contracts with
respect to the Business.
11.5 PENSION PLANS.
Seller has no defined benefit or defined contribution plans
for its Employees. The only benefit provided to Employees is group health
insurance.
11.6 EMPLOYEE CLAIMS.
Seller agrees that all responsibility for liability arising
from claims by Employees, both medical and disability and workers' compensation
claims which have been filed at or prior to the time of Closing or which arise
out of incidents that occur prior to Closing shall remain claims against Seller.
Buyer shall be responsible for all claims by Employees which arise out of, or
are based upon, incidents which occur subsequent to Closing.
11.7 NONASSUMPTION OF OBLIGATIONS OWED EMPLOYEES.
Except as specified in this Article XI, Buyer assumes no
responsibility whatsoever for obligations and/or benefits owed by Seller to its
Employees, nor in any way adopts existing employment or benefit programs
currently offered by Seller.
ARTICLE XII - NONCOMPETE AGREEMENT
12.1 NONCOMPETE.
Xxxxxxxx agree for a period of five (5) years following the
Closing Date as set forth in the Noncompete Agreements executed and delivered to
the Xxxxxxxx not to engage in the manufacture or sale of millwork to retail
customers, dealers, professional builders and building contractors in
competition with Buyer. A separate noncompete agreement shall be executed at
Closing by Xxxxxxxx substantially in the form attached hereto as EXHIBIT 1.14.
The terms of the attached Noncompete Agreement shall control over this
Agreement.
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ARTICLE XIII - INDEMNITIES
13.1 SELLER.
Seller shall indemnify and hold Buyer harmless against losses,
damages, taxes, penalties, costs and expenses (including accounting and legal
fees) incurred by Buyer arising out of or involving (i) any liability, cost or
expense that arises out of or involves the actions or operations of the Business
or actions or nonactions by Seller's officers, directors, shareholders or
employees with respect to the Business prior to the Closing Date; (ii) a breach
of any of the representations or warranties made by Seller in this Agreement,
(iii) the nonperformance of any covenant or agreement made in this Agreement by
Seller, or (iv) any claims or actions arising out of the Business filed or made
following the Closing Date but based on facts or occurrences prior to the
Closing Date. Buyer's remedies for indemnification include the right of set-off
provided in the note delivered at Closing.
13.2 XXXXXXXX.
Xxxxxxxx shall, jointly and severally, indemnify and hold
Buyer harmless from against any losses, damages, tax penalties, costs and
expenses (including reasonable accounting and legal fees) incurred by Buyer
arising out of or involving any liability, loss or expense arising out of the
breach of any of the representations or warranties made by Xxxxxxxx in this
Agreement.
13.3 BUYER.
Buyer agrees to hold harmless, indemnify and defend Seller and
Xxxxxxxx (by counsel reasonably satisfactory to Seller) from and against any and
all loss, claim, damage, liability or expense arising out of or occurring in
connection with any breach by Buyer of any of its covenants, representations or
warranties hereunder. Such indemnification shall include any claims pertaining
to any services or products shipped or sold after the Closing, including,
without limitation, any products liability, personal injury or property damage
claims pertaining to products shipped or sold after the Closing.
ARTICLE XIV - TAXES AND UTILITIES
14.1 TRANSFER TAXES.
All sales taxes, real estate transfer taxes, real estate
recording taxes and fees, excise taxes, use taxes and other taxes or fees of any
form or nature levied upon either party by any governmental entity by reason of
the transfer of the Purchased Assets or recording of such transfers, but
excluding any tax based on the income of either party, shall be shared equally
between Buyer and Seller.
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14.2 UTILITIES, PERSONAL PROPERTY OR REAL ESTATE TAXES.
All utilities, personal property taxes, or real property taxes
shall be prorated as of the Closing Date. Buyer and Seller agree that in the
event the actual utility or tax payments vary from the Closing estimates, the
parties will make any adjustments in accordance with Article V.
ARTICLE XV - CONDUCT OF OPERATIONS PRIOR TO CLOSING
15.1 CONDUCT OF OPERATIONS.
From the date hereof until Closing, Seller shall conduct its
operation of the Business in the ordinary course and consistent with its prior
practices. Seller agrees not to buy or sell any assets connected with the
Business, with a sales price in excess of $5,000, other than Inventory, without
the written consent of Buyer during the period from execution of this Agreement
until Closing.
15.2 COOPERATION.
Immediately after execution of this Agreement, Seller shall
provide Buyer and Buyer's representatives with reasonable access to all existing
studies, reports, and records, including financial, customer and employee
records and customer credit files, in each case, relating exclusively to the
Business and the Purchased Assets. Seller shall cooperate with Buyer and shall
promptly provide Buyer with all relevant information currently available to
Seller and reasonably requested by Buyer prior to the Closing.
ARTICLE XVI - CLOSING
16.1 CLOSING.
Closing shall occur on _________________, 1999, at the offices
of BMCW, LLC located at 000 Xxxxxxx Xxxxx in Coppell, Texas, or at such other
time or place or on such other date as the parties may agree upon.
16.2 TIME IS OF THE ESSENCE.
Time is of the essence for the Closing of this transaction.
ARTICLE XVII - 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:
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17.1 CONTINUED TRUTH OF WARRANTIES.
All of the representations and warranties of Seller and
Xxxxxxxx contained herein shall continue to be true and correct at Closing in
all material respects and Seller and Xxxxxxxx shall deliver a certificate to
that effect;
17.2 PERFORMANCE OF OBLIGATIONS.
Seller and Xxxxxxxx shall have substantially performed or
tendered performance of each and every one of its obligations hereunder which by
its terms is to be performed before Closing;
17.3 DELIVERY OF CLOSING DOCUMENTS.
Seller and Xxxxxxxx shall have tendered delivery to Buyer of
all the documents, other than the xxxx of sale, required to be delivered to
Buyer by Seller and Xxxxxxxx at Closing;
17.4 LITIGATION.
No lawsuit, administrative proceedings or other legal action
shall have been filed which seeks to restrain or enjoin the acquisition of the
Purchased Assets or the operation of such Purchased Assets in any material
respect. Buyer shall be satisfied, in its discretion, that the claims set forth
in EXHIBIT 7.5 will not have a material adverse affect on the Business or the
Purchased Assets;
17.5 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;
17.6 MATERIAL ADVERSE CHANGE.
There shall have occurred no material adverse change regarding
the Business or the Purchased Assets, taken as a whole; and
17.7 ASSIGNMENT OF LEASES.
Buyer shall have obtained a satisfactory assignment of the
Leases for the Leased Locations which meets Buyer's environmental requirements.
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17.8 CUSTOMERS OF BUSINESS.
Buyer shall have determined that the transfer of the Purchased
Assets and Business to Buyer will not adversely affect the on-going relationship
with the customers of the Business.
17.9 CONSENT OF BUYER'S LENDERS.
Buyer shall have obtained consent from Buyer's lenders to
completion of the transactions provided for in this Agreement.
17.10 APPROVAL OF BOARD.
Buyer shall have obtained approval of the transactions
provided for in this Agreement by the board of directors of Building Materials
Holding Corporation.
17.11 SUBCONTRACTOR ACCOUNTS; RETAINAGE ACCOUNTS.
Buyer must be satisfied that the Subcontractor Accounts and
the Retainage Accounts represent amounts due and owing to Seller that are
reasonably likely to be collected during the Post Closing Adjustment Period.
ARTICLE XVIII - CONDITIONS PRECEDENT TO SELLER'S AND
SELLING SHAREHOLDERS' DUTY TO CLOSE
Seller and Xxxxxxxx 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:
18.1 CONTINUED TRUTH OF WARRANTIES.
All of the representations and warranties of Buyer contained
herein shall continue to be true and correct at Closing in all material
respects, and Buyer shall deliver a certificate to that effect;
18.2 PERFORMANCE OF OBLIGATIONS.
Buyer shall have substantially performed or tendered
substantial performance of each and every one of its obligations hereunder which
by its terms is to be performed before Closing;
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18.3 DELIVERY OF CLOSING DOCUMENTS.
Buyer shall have tendered delivery to Seller and Xxxxxxxx of
all the documents required to be delivered to Seller and Xxxxxxxx by Buyer at
Closing pursuant to this Agreement;
18.4 LITIGATION.
No lawsuit, administrative proceedings or other legal action
shall be pending or threatened against Seller which seeks to restrain or enjoin
Seller or Xxxxxxxx' sale of the Purchased Assets; and
ARTICLE XIX - ITEMS TO BE DELIVERED AT CLOSING BY SELLER
At Closing, Seller and Xxxxxxxx shall, unless waived by Buyer,
deliver the following items to Buyer:
19.1 XXXX OF SALE.
A duly executed xxxx of sale conveying the Purchased Assets to
Buyer;
19.2 ASSIGNMENT AND ASSUMPTION AGREEMENTS.
An assignment and assumption agreement duly executed by Seller
under which Seller assigns and Buyer assumes and agrees to fully and faithfully
perform the Contracts and Leases;
19.3 ASSIGNMENT AND ASSUMPTION OF LEASES.
An assignment and assumption agreement duly executed by Seller
under which Seller assigns the Leases to Buyer and Buyer agrees to all
obligations under the Leases;
19.4 LANDLORD CONSENTS; LESSOR ESTOPPEL.
A written consent from the lessor for the Leased Locations,
agreeing to the assignment of the Leases to Buyer and fully executed Landlord
Estoppel certificates confirming that all rents due under the terms of the
Leases are paid in full and that there are no defaults or existing facts which
would constitute a default under the terms of the Leases as of the Closing Date;
19.5 TITLE CERTIFICATES.
A certificate of title for each registered motor vehicle to be
purchased hereunder which has been duly executed;
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19.6 CERTIFIED RESOLUTION.
A copy of the resolution of the Board of Directors of Seller
authorizing the execution and performance of this Agreement certified by the
secretary of Seller;
19.7 REPRESENTATIONS AND WARRANTIES.
A certificate signed by Xxxxxxxx and the President of Seller
to the effect that all of the representations and warranties of Seller and
Xxxxxxxx contained herein are true and correct in all material respects as of
Closing;
19.8 INCUMBENCY CERTIFICATE.
A certificate signed by an officer of Seller to the effect
that all persons having signed or signing documents pursuant to this Agreement
were authorized to do so and identifying the officers of Seller and containing
exemplar signatures of each such officer having signed documents delivered
pursuant to this Agreement;
19.9 UCC TERMINATION STATEMENTS.
All Uniform Commercial Code termination or release statements
necessary to transfer the Purchased Assets free and clear of all security
interests, liens or encumbrances;
19.10 NONCOMPETE AGREEMENT.
A fully executed noncompete agreement as required by this
Agreement.
ARTICLE XX - ITEMS TO BE DELIVERED AT CLOSING BY BUYER
At Closing, Buyer shall, unless waived by Seller, deliver the
following items to Seller:
20.1 CERTIFIED RESOLUTION.
A copy of the resolution of Buyer's Board of Directors
authorizing the execution and performance of this Agreement certified by the
secretary of Buyer;
20.2 REPRESENTATIONS AND WARRANTIES.
A certificate signed by an officer of 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;
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20.3 PURCHASE PRICE.
The Estimated Purchase Price to be paid at Closing in the form
of immediately available funds, the Note and the Issued Stock as provided in
Section 4.1;
20.4 ASSIGNMENT AND ASSUMPTION AGREEMENTS.
An assignment and assumption agreement duly executed by Buyer;
20.5 ASSIGNMENT AND ASSUMPTION OF LEASES.
An assignment and assumption agreement duly executed by Buyer
under which Buyer agrees to all obligations under the Lease for the Leased
Locations, and
20.6 COMPENSATION AGREEMENTS FOR XXXXXXXX.
Compensation Agreements for each of the Xxxxxxxx in the form
attached hereto as EXHIBIT 20.6.
ARTICLE XXI - MISCELLANEOUS
21.1 CHANGE OF NAME.
Seller agrees to change its name within thirty (30) days
following the Closing Date by filing articles of amendment with its state of
incorporation.
21.2 FURTHER ASSURANCES.
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 to carry out the purposes of this Agreement.
21.3 NO OTHER AGREEMENTS.
This Agreement together with all attached agreements
constitutes the entire agreement between the parties. 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.
21.4 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 party to be charged.
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21.5 PUBLIC ANNOUNCEMENTS.
No public announcements of this Agreement shall be made unless
Buyer and Seller have mutually agreed on the timing, distribution, and contents
of such announcements, except as may be required by applicable security laws.
21.6 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 Seller: Royal Door Corporation
c/o Xxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Copy To: Xxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx Xx.
Xxxxx, Xxxxx 00000
Copy To: C. Xxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxxxx, Xxxxx 00000
To Buyer: Building Materials Holding Corporation
Xxx Xxxxxx Xxxxx
Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx,
Senior V.P., Finance and Treasurer
Copy To: SouthCentral Division
BMC West Corporation
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, President
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Copy To: Building Materials Holding Corporation
000 Xxxx Xxxx., Xxxxx 000
P.O. Box 70008 (83707-0106)
Xxxxx, Xxxxx 00000-0000
Attn: Xxxx X. Street,
Senior Vice President,
General Counsel and Secretary
Any such notice shall be deemed delivered three days after deposited in the
United States mail.
21.7 THIRD-PARTY BENEFICIARY.
Nothing contained herein shall create or give rise to any
third-party beneficiary rights for any individual or entity as a result of the
terms and provisions of this Agreement.
21.8 CONFIDENTIAL INFORMATION.
The parties agree that all information acquired from the other
in connection with the negotiation, execution and consummation of this Agreement
is confidential and shall not be disclosed to any other party (other than
attorneys, accountants, lenders and agents of the party) without the written
consent of the other.
21.9 ASSIGNMENT.
No party shall assign this Agreement without the prior written
consent of the other party provided that Buyer may assign this Agreement to any
affiliate of Buyer. Any attempt to assign this Agreement without such prior
written consent shall be void.
21.10 CHOICE OF LAW.
This Agreement shall be governed by and interpreted in
accordance with the laws of the state of Texas.
21.11 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.
21.12 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 terms 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 requirements
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.
21.13 COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each
of which shall be an original, but which shall together constitute but one
agreement.
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The parties have executed this Agreement on the day and year
first written above.
SELLER:
XXXXXXX MANUFACTURING CORPORATION
d/b/a ROYAL DOOR COMPANY, INC.
By: /s/ XXXXX X. XXXXXXX
--------------------
President
XXXXXXXX:
/s/ XXXXX X. XXXXXXX
--------------------
Xxxxx Xxxxxxx
/s/ XXXX XXXXXXX
--------------------
Xxxx Xxxxxxx
BUYER:
BMCW, LLC,
a Delaware limited liability company,
by its Member,
BMC WEST CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. XXXXXX
---------------------------------------
Xxxxx X. Xxxxxx, Senior Vice President,
Finance and Treasurer
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