SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 28, 1996
TRIANGLE PACIFIC CORP.
(Exact name of registrant as specified in its charter)
Delaware 0-22138 94-2998971
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
16803 Dallas Parkway, Dallas, Texas 75248
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(214) 887-2000
Item 2. Acquisition or Disposition of Assets.
On June 28, 1996, Triangle Pacific Corp. (the "Company") acquired all the
outstanding stock of Hartco Flooring Company, a Tennessee corporation
("Hartco"), pursuant to the terms of a Stock Purchase Agreement (the "Stock
Purchase Agreement") dated as of June 28, 1996 between the Company and Premark
International Inc. ("Premark"), a Delaware corporation and the sole
stockholder of Hartco. Hartco manufactures hardwood flooring products at its
plants in Oneida, Tennessee and Somerset, Kentucky. The approximate $36
million cash portion of the purchase price paid by the Company to Premark
pursuant to the Stock Purchase Agreement was provided principally by the
Company's cash position, plus a modest amount borrowed under its bank credit
facility. For additional information regarding the acquisition, see the
Company's press release dated June 28, 1996 regarding the acquisition, a copy
of which is filed as Exhibit 99.1 to this report and incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
It is impracticable to provide at this time the financial statements
required by Item 7(a) of Form 8-K. Pursuant to Item 7(a)(4) of Form 8-K, such
financial statements will be filed as soon as they are available and on or
before September 13, 1996.
(b) Pro Forma Financial Information.
It is impracticable to provide at this time the pro forma financial
information required by Item 7(b) of Form 8-K. Pursuant to Item 7(b)(2) of
Form 8-K, such pro forma financial information will be filed as soon as it is
available and on or before September 13, 1996.
(c) Exhibits.
Exhibit 2.1 - Stock Purchase Agreement dated as of June 28,
1996 between the Company and Premark International
Inc. (The Exhibits and Schedules have been omitted
pursuant to Item 601(b)(2) of Regulation S-K. The
Company hereby undertakes to furnish to the
Commission a copy of any omitted Exhibit or
Schedule upon request.)
Exhibit 99.1 - Press release of Triangle Pacific Corp. dated
June 28, 1996 announcing the acquisition of
Hartco Flooring Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 11, 1996 TRIANGLE PACIFIC CORP.
By:/s/ FLOYD F. SHERMAN
----------------------------------
Floyd F. Sherman,
Chief Executive Officer
______________________________________________________________________________
STOCK PURCHASE AGREEMENT
between
TRIANGLE PACIFIC CORP.
and
PREMARK INTERNATIONAL, INC.
for the Stock of
HARTCO FLOORING COMPANY
June 28, 1996
______________________________________________________________________________
TABLE OF CONTENTS
Page
STOCK PURCHASE AGREEMENT................................................. 1
ARTICLE I................................................................ 1
TERMS OF THE TRANSACTION................................................. 1
1.1 Stock to be Transferred......................................... 1
1.2 Purchase Price and Payment...................................... 1
1.3 Definitions..................................................... 1
ARTICLE II............................................................... 1
CLOSING.................................................................. 1
2.1 Time and Place of Closing....................................... 1
2.2 Effectiveness................................................... 2
ARTICLE III.............................................................. 2
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY................. 2
3.1 Corporate Organization and Qualification...................... 2
3.2 Charter and Bylaws............................................ 2
3.3 Capitalization of the Company................................. 2
3.4 Authority Relative to This Agreement.......................... 3
3.5 Noncontravention.............................................. 3
3.6 Governmental Approvals........................................ 4
3.7 Exclusive Operation of Business............................... 4
3.8 Shares........................................................ 4
3.9 Financial Statements.......................................... 4
3.10 Conduct of Business........................................... 4
3.11 Books and Records............................................. 4
3.12 Tax Matters................................................... 5
3.13 Compliance With Laws.......................................... 6
3.14 Legal Proceedings............................................. 6
3.15 Illegal Payments.............................................. 6
3.16 Title to Properties........................................... 6
3.17 Real Property................................................. 7
3.18 Tangible Personal Property.................................... 7
3.19 Leased Property............................................... 7
3.20 Bank Accounts and Powers of Attorney.......................... 8
3.21 Brokerage Fees................................................ 8
3.22 Intellectual Property......................................... 8
3.23 Permits....................................................... 9
3.24 Contracts and Agreements...................................... 9
3.25 ERISA......................................................... 11
3.26 Labor Relations............................................... 13
3.27 Employees..................................................... 14
3.28 Insider Interests............................................. 14
3.29 Insurance..................................................... 14
ARTICLE IV............................................................... 15
REPRESENTATIONS AND WARRANTIES OF BUYER.................................. 15
4.1 Corporate Organization........................................ 15
4.2 Authority Relative to This Agreement.......................... 15
4.3 Noncontravention.............................................. 15
4.4 Governmental Approvals........................................ 15
4.5 Legal Proceedings............................................. 16
4.6 Brokerage Fees................................................ 16
4.7 Investment Intent............................................. 16
ARTICLE V................................................................ 16
ADDITIONAL AGREEMENTS.................................................... 16
5.1 Goodwill, Customers and Employees............................. 16
5.2 Employee and Employee Benefit Plan Matters.................... 18
5.3 Related Transactions.......................................... 19
5.4 Dispute Resolution............................................ 20
5.5 Bank Account Balances......................................... 20
ARTICLE VI............................................................... 20
CONDITIONS TO OBLIGATIONS OF SELLER...................................... 20
6.1 Opinion of Counsel to Buyer................................... 21
ARTICLE VII.............................................................. 21
CONDITIONS TO OBLIGATIONS OF BUYER....................................... 21
7.1 Certificate................................................... 21
7.2 Opinion of Counsel to Seller.................................. 21
7.3 Other Documents............................................... 21
ARTICLE VIII............................................................. 22
TAX MATTERS.............................................................. 22
8.1 Liability for Taxes........................................... 22
8.2 Preparation and Filing of Tax Returns......................... 23
8.3 Tax Refunds, Carryovers, Carrybacks........................... 24
8.4 Payments...................................................... 24
8.5 Termination of Tax Allocation Agreement....................... 24
8.6 Cooperation, Records.......................................... 25
8.7 Contests...................................................... 25
8.8 Resolution of Disagreements................................... 26
8.9 Tax-Affecting Payments........................................ 26
ARTICLE IX............................................................... 26
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION............................. 26
9.1 Survival...................................................... 26
9.2 Indemnification by Seller..................................... 27
9.3 Indemnification by Buyer...................................... 28
9.4 Procedure for Indemnification................................. 28
9.5 Indemnification Despite Negligence, Strict Liability
or Liability Without Fault.............................. 29
ARTICLE X................................................................ 29
MISCELLANEOUS............................................................ 29
10.1 Notices....................................................... 29
10.2 Entire Agreement.............................................. 30
10.3 Binding Effect; Assignment; No Third Party Benefit............ 30
10.4 Severability.................................................. 30
10.5 GOVERNING LAW................................................. 30
10.6 Descriptive Headings.......................................... 30
10.7 Gender........................................................ 30
10.8 References.................................................... 31
10.9 Further Assurances............................................ 31
10.10 Counterparts.................................................. 31
10.11 Consent to Jurisdiction; Waivers.............................. 31
ARTICLE XI............................................................... 32
DEFINITIONS.............................................................. 32
11.1 Certain Defined Terms......................................... 32
11.2 Certain Additional Defined Terms.............................. 34
LIST OF EXHIBITS AND SCHEDULES...........................................S-i
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of June 28,
1996, is between TRIANGLE PACIFIC CORP., a Delaware corporation ("Buyer"), and
PREMARK INTERNATIONAL, INC., a Delaware corporation ("Seller").
WHEREAS, Seller owns all the outstanding shares of Common Stock, par
value $1.00 per share (the "Shares") of HARTCO FLOORING COMPANY, a Tennessee
corporation and a wholly owned subsidiary of Seller (the "Company"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Buyer, Seller and the Company hereby agree as follows:
I.
TERMS OF THE TRANSACTION
1 Stock to be Transferred. At the closing of the transactions
contemplated by this Agreement (the "Closing"), and on the terms and subject
to the conditions set forth in this Agreement, Seller shall sell, assign,
transfer, deliver and convey (collectively, "transfer"), to Buyer, and Buyer
shall purchase and acquire from Seller, all of the Shares, free of all
Encumbrances (hereinafter defined). In acquiring the Shares, Buyer recognizes
that the Company is a going concern and will remain subject to all of its
liabilities, except as noted herein.
2 Purchase Price and Payment. In consideration of the transfer by
Seller to Buyer of the Shares, Buyer shall pay an aggregate purchase price
(the "Purchase Price") equal to $35,790,000. The Purchase Price shall be paid
by Buyer to Seller at the Closing, in immediately available funds by confirmed
wire transfer to the bank account designated by Seller.
3 Definitions. All capitalized terms used in this Agreement and not
otherwise defined are defined in Article XI of this Agreement.
II.
CLOSING
1 Time and Place of Closing. The Closing of the transactions
contemplated hereby shall take place (i) at the offices of Thompson & Knight,
P.C., 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201, at 10:00 a.m.,
local time, on June 28, 1996, or (ii) at such other time or place or on such
other date as Buyer and Seller shall agree. The date on which the Closing is
required to take place is herein referred to as the "Closing Date". All
Closing transactions shall be deemed to have occurred simultaneously.
2 Effectiveness. The transactions contemplated by this Agreement
shall all become effective at the time all of the conditions set forth in
Article VI and Article VII have been satisfied or waived as provided in this
Agreement.
III.
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
Seller represents and warrants to Buyer that:
1 Corporate Organization and Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and corporate authority to own, lease, and operate its properties and to
carry on its business as now being conducted. No actions or proceedings to
dissolve the Company are pending or threatened. The Company is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each of the jurisdictions set forth on Schedule 3.1, which are all the
jurisdictions in which the failure to be so qualified or licensed would have a
Material Adverse Effect.
2 Charter and Bylaws. The Company has delivered to Buyer accurate and
complete copies of (i) the Certificate of Incorporation and Bylaws of the
Company (certified by the secretary or an assistant secretary of the Company)
as currently in effect, including all amendments thereto, (ii) the stock
records of the Company, and (iii) the minutes of all meetings of the Company's
Board of Directors, any committees of such Board, and the Company's
shareholders (and all consents in lieu of such meetings) during the period
from December 2, 1988 through the date hereof (the "Premark Period"), and all
other minutes and consents in Seller's or the Company's possession. Such
records, minutes, and consents accurately reflect the stock ownership of the
Company and all actions taken by the Company's Board, any committees of such
Board, and the Company's shareholders during the Premark Period. The Company
is not in violation of any provision of its Certificate of Incorporation or
Bylaws.
3 Capitalization of the Company. The authorized capital stock of the
Company consists of 200,000 shares of Common Stock, par value $1.00 per share,
of which 65,700 shares are issued and outstanding and no shares are held in
the Company's treasury. All outstanding shares of capital stock of the
Company have been validly issued and are fully paid and nonassessable, and no
shares of capital stock of the Company are subject to, nor have any been
issued in violation of, preemptive or similar rights. All issuances, sales,
and repurchases by the Company of shares of its capital stock have been
effected in compliance with all Applicable Laws, including without limitation
applicable federal and state securities laws. The Shares constitute all the
outstanding shares of capital stock of the Company. Except as set forth above
in this Section there are outstanding (i) no voting securities or other shares
of capital stock of the Company, (ii) no securities of the Company convertible
into or exchangeable for voting securities or other shares of capital stock of
the Company, (iii) no options or other rights to acquire from Seller or the
Company, and no obligation of Seller or the Company to issue or sell, any
voting securities or other shares of capital stock of the Company or any
securities of the Company convertible into or exchangeable for such voting
securities or capital stock, and (iv) no equity equivalents, interests in the
ownership or earnings, or other similar rights of or with respect to the
Company. There are no outstanding obligations of the Company to repurchase,
redeem, or otherwise acquire any of the foregoing shares, securities, options,
equity equivalents, interests, or rights. Neither Seller nor the Company is a
party to, and neither is aware of, any voting agreement, voting trust, or
similar agreement or arrangement relating to any class or series of the
Company's capital stock.
4 Authority Relative to This Agreement. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Seller has full corporate power and
corporate authority to execute, deliver, and perform this Agreement and the
Ancillary Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery, and performance by
Seller of this Agreement and the Ancillary Documents to which it is a party,
and the consummation by it of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action of
Seller. This Agreement has been duly executed and delivered by Seller and
constitutes, and each Ancillary Document executed or to be executed by Seller
has been, or when executed will be, duly executed and delivered by Seller and
constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of Seller, enforceable against Seller in accordance
with their respective terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting creditors' rights generally and (ii) equitable principles which
may limit the availability of certain equitable remedies (such as specific
performance) in certain instances.
5 Noncontravention. The execution, delivery, and performance by
Seller of this Agreement and the Ancillary Documents to which it is a party
and the consummation by it of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or result in a violation of any
provision of the charter or bylaws of or other governing instruments of Seller
or the Company, (ii) conflict with or result in a violation of any provision
of, or constitute (with or without the giving of notice or the passage of time
or both) a default under, or give rise (with or without the giving of notice
or the passage of time or both) to any right of termination, cancellation, or
acceleration under, or require any consent, approval, authorization, or waiver
of, or notice to, any party to, any bond, debenture, note, mortgage,
indenture, lease, contract, agreement, or other instrument or obligation to
which Seller or the Company is a party or by which Seller or the Company, or
any of their respective properties, may be bound or any Permit held by Seller
or the Company, (iii) result in the creation or imposition of any Encumbrance
upon the properties of Seller or the Company, (iv) result in the loss of any
benefit to, or privilege or right of, the Company or otherwise attributable to
the Business or any of the Assets, or (v) violate any Applicable Law binding
upon Seller or the Company except, in the case of clause (ii) above, for (A)
such consents, approvals, authorizations, and waivers that have been obtained
and are unconditional and in full force and effect and such notices that have
been duly given, and (B) such consents, approvals, authorizations, waivers,
and notices disclosed on Schedule 3.5.
6 Governmental Approvals. Except as disclosed on Schedule 3.6, no
consent, approval, order, or authorization of, or declaration, filing, or
registration with, any Governmental Entity is required to be obtained or made
by Seller or the Company in connection with the execution, delivery, or
performance by Seller and the Company of this Agreement and the Ancillary
Documents to which either of them is a party or the consummation by them of
the transactions contemplated hereby or thereby, other than (i) compliance
with any applicable requirements of the Securities Act or the Exchange Act;
(ii) compliance with any applicable state securities laws; (iii) filings with
Governmental Entities to occur in the ordinary course following the
consummation of the transactions contemplated hereby; and (iv) such consents,
approvals, orders, or authorizations which, if not obtained, and such
declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a Material Adverse Effect.
7 Exclusive Operation of Business. Seller does not have any direct or
indirect equity or ownership interest in any corporation, partnership, joint
venture or other entity which is involved, directly or indirectly, in the
conduct of the Business, other than the Company, and the Business is conducted
solely and exclusively by the Company. The Company has no subsidiaries. In
addition, the Company does not own, directly or indirectly, any capital stock
or other securities of any corporation or have any direct or indirect equity
or ownership interest in any other person.
8 Shares. Seller is the sole record and beneficial owner of, and upon
consummation of the transactions contemplated hereby Buyer will acquire good
and marketable title to, the Shares, free and clear of all Encumbrances, other
than (i) those that may arise by virtue of any actions taken by or on behalf
of Buyer or its affiliates or (ii) restrictions on transfer that may be
imposed by federal or state securities laws.
9 Financial Statements. Seller has delivered to Buyer copies of (i)
the Company's unaudited balance sheets as of December 31, 1994 and December
30, 1995, (the "1995 Balance Sheet") and the related unaudited statements of
income, stockholders' equity and cash flows for each of the years then ended
(the "Annual Financial Statements"), and (ii) the Company's unaudited balance
sheets as of May 26, 1995 and May 24, 1996 (the "Latest Balance Sheet", a copy
of which is attached hereto as Schedule 3.9), and the related unaudited
statements of income, stockholders' equity and cash flows for the five-month
periods, then ended (the "Interim Financial Statements" and together with the
Annual Financial Statements, the "Financial Statements").
10 Conduct of Business. Between June 20, 1996 and the Closing, the
Business has been operated in the ordinary course of business consistent with
past practices.
11 Books and Records. All the books and records of the Company,
including all personnel files, employee data, and other materials relating to
employees, are substantially complete and correct, and have been maintained in
all material respects in accordance with all Applicable Laws.
12 Tax Matters. Except as disclosed on Schedule 3.12:
(a) Seller and the Company each has duly filed all federal, state,
local, and foreign Tax Returns required to be filed by or with respect to it
with the IRS or other applicable Taxing authority with respect to the Company
and its Business, and no extensions with respect to such Tax Returns have been
requested or granted;
(b) Seller and the Company each has paid, or properly accounted for
in the Financial Statements, all Taxes due, or claimed or asserted by any
Taxing authority to be due, from or with respect to the Company;
(c) there has been no issue raised or adjustment proposed (and none
is pending) by the IRS or any other Taxing authority with respect to
liabilities for Taxes of the Company;
(d) to the best knowledge of Seller, the Company has made all
deposits and payments required with respect to Taxes;
(e) Seller has not filed a consent under Section 341(f) of the Code
with respect to the Company or any of the Company's assets;
(f) there are no liens with respect to Taxes (except for liens with
respect to real property Taxes not yet due) upon any of the assets of the
Company;
(g) for all open tax years through the Closing Date, the Company
has been or will be included in a consolidated federal income Tax Return which
includes Seller. The Company has not filed a consolidated income tax return
with any corporation, other than the consolidated federal and state income Tax
Returns with Seller, for any taxable period which is not now closed by the
applicable statute of limitations;
(h) neither Seller nor the Company has entered into any closing
agreement (within the meaning of Section 7121 of the Code or any analogous
provision of state or local Tax law) which will have any continuing effect
with respect to the Company after the Closing Date;
(i) the U.S. federal income Tax Returns of the Company and the
Affiliated Group of which the Company is or has been a member have been
audited or examined through 1990 by the IRS, and the statute of limitations
has expired for all years through 1988;
(j) the Tennessee and Kentucky state income Tax Returns of the
Company have been audited or examined through the years 1990 and 1994,
respectively. The statute of limitations has expired for all state income
taxes of the Company for all years through 1988; and
(k) the Company has not agreed to and is not required to make any
adjustment pursuant to Section 481(a) of the Code and there is no application
pending with any Taxing authority requesting permission for any changes in any
accounting method of the Company.
13 Compliance With Laws. To the best knowledge of Seller and the
Company, except for any noncompliance as would not have a Material Adverse
Effect, the Company is in compliance with all Applicable Laws relating to the
ownership or operation of the Assets or the operation of the Business
(including without limitation Applicable Laws relating to securities,
properties, business operations, products, manufacturing processes,
advertising and sales practices, employment practices, terms and conditions of
employment, wages and hours, safety, occupational safety, health,
environmental protection, product safety, and civil rights) and, to the best
knowledge of Seller and the Company, the Company has complied with all such
laws. The Company is not charged or, to the best knowledge of Seller and the
Company, threatened with, or, to the best knowledge of Seller and the Company,
under investigation with respect to, any alleged violation of any Applicable
Law relating to any aspect of the ownership or operation of the Business.
14 Legal Proceedings. Except as set forth on Schedule 3.14, (i) there
are no Proceedings pending of which Seller or the Company has been notified
or, to the best knowledge of Seller and the Company, which are threatened
against or involving the Company (or any of its directors or officers in
connection with the business or affairs of the Company) and (ii) no judgment,
order, writ, injunction, or decree of any Governmental Entity has been issued
or entered against the Company or any of its affiliates which continues to be
in effect with respect to or affecting the Assets or the operation of the
Business. There are no Proceedings pending or, to the best knowledge of
Seller and the Company, threatened seeking to restrain, prohibit, or obtain
damages or other relief in connection with this Agreement or the transactions
contemplated hereby.
15 Illegal Payments. To the best knowledge of Seller and the Company,
none of Seller or the Company or any director, officer, employee, or agent of
Seller or the Company has, directly or indirectly, paid or delivered any fee,
commission, or other sum of money or item of property however characterized to
any broker, finder, agent, government official, or other person, in the United
States or any other country, in any manner related to the business or
operations of the Company, which Seller or the Company or any such director,
officer, employee, or agent knows or has reason to believe to have been
illegal under any Applicable Law.
16 Title to Properties. The Company (i) owns and has good and
marketable title, and in the case of real property insurable title, to all
properties (real, personal, and mixed, tangible and intangible) it owns or
purports to own, including without limitation the properties reflected in its
books and records and in the Latest Balance Sheet, free and clear of all
Encumbrances, except the Permitted Encumbrances and as disclosed on Schedule
3.16, and (ii) owns or has a valid leasehold interest in all assets and
properties used in the normal operation of the Business, as presently
conducted. Except as disclosed on Schedule 3.16, no financing statement (or
other instrument sufficient or effective as a financing statement) under the
Uniform Commercial Code with respect to any properties of the Company has been
filed and is effective in Tennessee or Kentucky, and neither Seller nor the
Company has signed any such financing statement (or other instrument) or any
mortgage or security agreement granting any security interest in any of the
Assets or authorizing any secured party thereunder to file any such financing
statement (or other instrument). Any interest of Seller or any of its
affiliates in any Intellectual Property or other Assets owned or used by the
Company has been assigned by Seller or such affiliate to the Company prior to
the Closing.
17 Real Property.
(A) Set forth on Schedule 3.17 is a list, by street address of all
real property owned or leased by the Company (for purposes of this Section,
the "Real Property"). The Real Property is all the real property owned or
leased by the Company and used or held for use in connection with the
operation of the Business. There are no persons (other than the Company) in
possession of any portion of the Real Property as lessees, tenants at
sufferance, or trespassers, nor does any person (other than the Company) have
a lease, tenancy, or other right of occupancy or use of any portion of the
Real Property, except as specified on Schedule 3.17.
(b) To the best knowledge of Seller and the Company, all the Real
Property is zoned for the various purposes for which such Real Property is
being used.
(c) Seller and the Company have delivered to Buyer accurate and
complete copies of all title insurance commitments, other title documents,
surveys, certificates of occupancy, and Permits in the possession of Seller or
the Company relating to the Real Property.
(d) Seller is not a "foreign person" within the meaning of Sections
1445 and 7701 of the Code.
18 Tangible Personal Property. Attached hereto as part of Schedule
3.18 is a recent list prepared by Seller or the Company for use in calculating
depreciation. Except as set forth on Schedule 3.18, the motor vehicles and
rolling stock owned or leased by the Company are utilized solely for the
transportation by the Company, for its own account and not for the account of
others, of inventories, supplies, and other items relating to the operation of
the Company's Business, and such activities do not require the obtainment of
any Permit.
19 Leased Property. Set forth on Schedule 3.19 is a list of all leases
under which the Company is the lessee of real or personal property. Except as
set forth on Schedule 3.19, the Company has good and valid leasehold interests
in all such properties held by it under lease. The Company has been in
peaceable possession (or remedied any claims relating thereto) of the property
covered by each such lease since the commencement of the original term of such
lease. No waiver, indulgence, or postponement of the Company's obligations
under any such lease has been granted by the lessor or of the lessor's
obligations thereunder by the Company. The Company is not in breach of or in
default under, nor has any event occurred which (with or without the giving of
notice or the passage of time or both) would constitute a default by the
Company under, any of such leases, and the Company has not received any notice
from, or given any notice to, any lessor indicating that the Company or such
lessor is in breach of or in default under any of such leases. To the best
knowledge of Seller and the Company, none of the lessors under any of such
leases is in breach thereof or in default thereunder. The Company has full
right and power to occupy or possess, as the case may be, all the property
covered by each such lease.
20 Bank Accounts and Powers of Attorney. Set forth on Schedule 3.20
are (i) the name and address of each bank or other financial institution with
which the Company has an account or safe deposit box or vault, the account and
safe deposit box and vault numbers thereof, the purpose of each thereof, and
the names of all persons authorized to draw thereon or to have access thereto,
(ii) the names of all persons authorized to borrow funds on behalf of the
Company and the names and addresses of all entities from which they are
authorized to borrow funds, and (iii) the names of all persons, if any,
holding proxies, powers of attorney, or other like instruments from the
Company. No such proxies, powers of attorney, or other like instruments are
irrevocable.
21 Brokerage Fees. Neither Seller nor any of its affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby. Seller shall indemnify and
hold harmless Buyer from and against any and all losses, claims, damages, and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission, or similar payment in connection
with any transaction contemplated hereby asserted by any person on the basis
of any act or statement made or alleged to have been made by Seller or any of
its affiliates.
22 Intellectual Property.
(a) Set forth on Schedule 3.22 is (i) a list of all patents and
trademarks owned, held or used by the Company; (ii) the owner of each such
patent and each such trademark that is registered; (iii) the jurisdictions, if
any, by or in which each such patent or trademark has been issued or
registered or in which an application for such issuance or registration has
been filed, including the respective registration or application numbers; and
(iv) all licenses, sublicenses, and other agreements to which the Company is a
party and pursuant to which the Company or any other person is authorized to
use any item of Intellectual Property owned, held or used by the Company,
including the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty, and the term thereof.
(b) To the best knowledge of Seller and the Company, (i) the
Company has good and marketable title to or is validly licensed to use all
Intellectual Property necessary for the operation of the Business as presently
conducted, (ii) each item of such Intellectual Property is in full force and
effect, (iii) the Company is in compliance with all its obligations with
respect thereto, and (iv) no event has occurred which permits, or upon the
giving of notice or the passage of time or otherwise would permit, the
revocation or termination of any thereof. To the best knowledge of Seller and
the Company, none of such Intellectual Property is being infringed upon by any
other person. None of such Intellectual Property is subject to any agreement,
arrangement, or understanding, written or oral, restricting the scope or use
thereof. To the best knowledge of Seller and the Company, the conduct of the
Business at any time prior to the Closing Date did not, and the conduct of the
Business as of the date hereof does not, infringe upon or otherwise
misappropriate any Intellectual Property of any other person.
23 Permits. Set forth on Schedule 3.23 is a list of all Permits held
by the Company, which are all the Permits necessary or required for the
ownership and operation of the Assets and the conduct of the Business of the
Company as currently conducted, except for any Permits as to which the
Company's failure to have such Permit would not have a Material Adverse
Effect. Each of such Permits is in full force and effect, the Company is in
compliance with all its obligations with respect thereto, and, to the best
knowledge of Seller and the Company, no event has occurred which permits, or
with or without the giving of notice or the passage of time or both would
permit, the revocation or termination of any thereof. Except as disclosed on
Schedule 3.23, no notice has been issued by any Governmental Entity with
respect to any alleged failure by the Company to have any Permit or any
alleged failure by the Company to comply with any Permit.
24 Contracts and Agreements.
(a) Except as disclosed on another Schedule to this Agreement, set
forth on Schedule 3.24 is a list of all the following leases, contracts,
agreements, arrangements, and understandings (collectively, for purposes of
this Section, "agreements") to which the Company is a party or by which the
Company, the Business or any of the Assets is otherwise bound:
(i) collective bargaining agreements, labor union contracts and
similar agreements with employees as a group;
(ii) employee benefit agreements, trusts, plans, funds, or other
arrangements of any nature;
(iii) agreements with any current or former owner, director,
officer, employee, consultant, or advisor or any of such person's affiliates;
(iv) agreements between or among the Company and any of its
affiliates;
(v) indentures, mortgages, security agreements, notes, loan or
credit agreements, or other agreements relating to the borrowing of money by
the Company, the direct or indirect guarantee or assumption by the Company of
any obligation of others, or the direct or indirect guarantee or assumption by
any party of any obligation of the Company;
(vi) agreements relating to the acquisition or disposition of
assets, other than in the ordinary course of business;
(vii) agreements relating to the acquisition or disposition of any
interest in any business enterprise;
(viii) agreements concerning the management or operation of any
real
property (other than routine maintenance contracts);
(ix) long-term supply agreements and purchase commitments;
(x) broker, distributor, dealer, manufacturer's representative,
sales, agency and research and development agreements;
(xi) sales promotion, advertising, market research, marketing,
consulting, maintenance, service, and repair agreements (except any such
agreements that can be terminated by the Company without penalty on thirty
(30) days notice);
(xii) partnership, joint venture, and profit sharing agreements;
(xiii) agreements with any Governmental Entity;
(xiv) agreements relating to the release or disposal of hazardous
material (as such term is defined in Section 11.1);
(xv) agreements in the nature of a settlement or a conciliation
agreement arising out of any claim asserted by any other person, and either
(A) entered into in the last five (5) years and requiring a payment by the
Company of $10,000 or more, or (B) under which the Company has any continuing
obligations;
(xvi) agreements containing any covenant limiting the freedom of
the Company to engage in any line of business or compete with any other person
in any geographic area or during any period of time;
(xvii) powers of attorney granted by the Company in favor of any
person; and
(xviii) other agreements, whether or not made in the ordinary course
of business, that are material to the Business, Assets, results of operations,
condition (financial or otherwise), or prospects of the Company.
(b) Either Seller or the Company has delivered to Buyer accurate and
complete copies of the agreements listed on Schedule 3.24. Each of such
agreements is a valid and binding agreement of the Company, enforceable in
accordance with its terms. The Company is not in breach of or in default
under, nor has any event occurred which (with or without the giving of notice
or the passage of time or both) would constitute a default by the Company
under, any material provision of any of such agreements, and the Company has
not received any notice from, or given any notice to, any other party
indicating that the Company is in breach of or in default under any such
provision of any of such agreements. To the best knowledge of Seller and the
Company, no other party to any of such agreements is in breach of or in
default under such agreements, nor has any assertion been made by Seller or
the Company of any such breach or default.
(c) Except for the exercise of any right or any amendment or change that
would not have a Material Adverse Effect, (i) neither Seller nor the Company
has received notice of any plan or intention of any other party to any
agreement to exercise any right of offset with respect to, or any right to
cancel or terminate, any agreement, and neither Seller nor the Company know of
any fact or circumstance that would justify the exercise by any such other
party of such a right other than the automatic termination of such agreement
in accordance with its terms, and (ii) neither Seller nor the Company
currently contemplate, or have reason to believe any other person currently
contemplates, any amendment or change to any agreement.
25 ERISA.
(a) Set forth on Schedule 3.25 is a list identifying each "employee
benefit plan", as defined in Section 3(3) of ERISA, in which any one or more
employees or former employees of the Company participate or under which the
Company has any liability. The Company has delivered to Buyer accurate and
complete copies of such plans (and, if applicable, the related trust
agreements) and all amendments thereto and written interpretations thereof
(such as summary plan descriptions), together with the three most recent
annual reports (Form 5500 including, if applicable, Schedule B thereto)
prepared in connection with any such plan. Such plans are referred to in this
Section as the "Employee Plans". For purposes of this Section only, an
"affiliate" of any person means any other person which, together with such
person, would be treated as a single employer under Section 414 of the Code.
The only Employee Plans which individually or collectively would constitute an
"employee pension benefit plan" as defined in Section 3(2) of ERISA are
identified as such on Schedule 3.25.
(b) Except as otherwise identified on Schedule 3.25, (i) no Employee
Plan constitutes a "multiemployer plan", as defined in Section 3(37) of ERISA
(for purposes of this Section, a "Multiemployer Plan"), (ii) no Employee Plan
is maintained in connection with any trust described in Section 501(c)(9) of
the Code, (iii) no Employee Plan is subject to Title IV of ERISA or to the
minimum funding standards of ERISA or the Code, and (iv) during the past five
years, the Company has not made or been required to make contributions to any
Multiemployer Plan. There are no accumulated funding deficiencies as defined
in Section 412 of the Code (whether or not waived) with respect to any plan
maintained, administered or contributed to by Seller or its affiliates. The
fair market value of the assets held with respect to each Employee Plan which
is an employee pension benefit plan, as defined in Section 3(2) of ERISA,
equals the value of all benefit liabilities accrued under such Employee Plan
(whether or not vested). Neither Seller nor any of its affiliates have
incurred any material liability under Title IV of ERISA arising in connection
with the termination of, or complete or partial withdrawal from, any plan
covered or previously covered by Title IV of ERISA. The Company and all of
the affiliates of the Company have paid and discharged promptly when due all
liabilities and obligations arising under ERISA or the Code of a character
which if unpaid or unperformed might result in the imposition of a lien
against any of the assets of the Company. Nothing done or omitted to be done
and no transaction or holding of any asset under or in connection with any
Employee Plan has or will make the Company or any director or officer of the
Company subject to any liability under Title I of ERISA or liable for any Tax
pursuant to Section 4975 of the Code. There are no claims pending or to the
knowledge of Seller or its affiliates threatened by any participant in the
Employee Plans alleging a breach or breaches of fiduciary duties or violations
of the terms of the plans or Applicable Laws which could result in liability
on the part of such Employee Plans, under ERISA or any other Applicable Law
and to the best knowledge of Seller there is no basis for any such claim as it
relates to the employees of the Company.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified since the date of
its adoption, and each trust forming a part thereof is exempt from Tax
pursuant to Section 501(a) of the Code. Seller has provided to Buyer copies
of the most recent IRS determination letters with respect to any such Plans.
Each Employee Plan has been maintained in all material respects in compliance
with its terms and with the requirements prescribed by all Applicable Laws,
including but not limited to ERISA and the Code, which are applicable to such
Plans.
(d) To the extent not listed on Schedule 3.24, there is set forth on
Schedule 3.25 a list of each employment, severance, or other contract,
arrangement, or policy, and each plan or arrangement (written or oral)
providing for employee benefit insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, or other forms of incentive
compensation or post-retirement insurance, compensation, or benefits which is
not an Employee Plan, and which covers any one or more employees or former
employees of the Company or under which the Company has any liability. Such
contracts, plans, and arrangements as are described in the preceding sentence
are referred to for purposes of this Section as the "Benefit Arrangements".
Each Benefit Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by Applicable Laws.
(e) Neither the Company nor any affiliate of the Company has performed
any act or failed to perform any act, and there is no contract, agreement,
plan, or arrangement covering any employee or former employee of the Company
or any affiliate of the Company, that, individually or collectively, could
give rise to the payment of any amount by the Company that would not be
deductible pursuant to the terms of Section 162(a)(1), 162(m) or 280G of the
Code, or could give rise to any penalty or excise tax pursuant to Section
4980B or 4999 of the Code.
(f) Except as disclosed on Schedule 3.25, there has been no amendment,
written interpretation, or announcement (whether or not written) by the
Company or any affiliate of the Company of or relating to, or change in
coverage under, any Employee Plan or Benefit Arrangement which would increase
the expense of maintaining such Employee Plan or Benefit Arrangement as it
applies to the employees of the Company above the level of the expense
incurred in respect thereof for the fiscal year ended December 31, 1995.
(g) Except as set forth on Schedule 3.25, the Company is not obligated
to provide to any employee or former employee of the Company or any other
employer, or the spouse, family members or beneficiaries of any such employee
or former employee, any post-employment or post-retirement health, life
insurance, accident or other welfare-type benefits, other than as required by
Part 6 of Title I of ERISA or Section 4980B of the Code.
26 Labor Relations. Except as disclosed on Schedule 3.26, (i) there
are no collective bargaining agreements, labor union contracts or similar
agreements applicable to any employees to or by which the Company is a party
or is bound, no such agreement or contract has been requested by any employee
or group of employees of the Company, and no discussions have occurred with
respect thereto by management of the Company with any such employees; (ii) no
employees of the Company are represented by any labor organization, collective
bargaining representative, or group of employees; (iii) no labor organization,
collective bargaining representative, or group of employees claims to
represent a majority of the employees of the Company in an appropriate unit of
the Company; (iv) the Company is not aware of or involved with any
representational campaign or other organizing activities by any union or other
organization or group seeking to become the collective bargaining
representative of any of the employees of the Company; (v) the Company is not
obligated to bargain collectively with respect to wages, hours, and other
terms and conditions of employment with any recognized or certified labor
organization, collective bargaining representative, or group of employees
representing employees of the Company; and (vi) since January 1, 1994, there
have been no significant labor disputes, strikes, work stoppages, work
slowdowns, lockouts, or similar matters involving any such employees.
27 Employees.
(a) Set forth on Schedule 3.27 is a list of all directors and officers
of the Company.
(b) Except as disclosed on Schedule 3.27, no severance payment, stay-on
or incentive payment, or similar obligation will be owed by the Company to any
of its directors, officers, or employees upon consummation of, or as a result
of, the transactions contemplated by this Agreement, nor will any such
director, officer, or employee be entitled to severance payments or other
benefits as a result of the transactions contemplated by this Agreement in the
event of the subsequent termination of his or her employment.
28 Insider Interests. Except as disclosed on Schedule 3.28, no Insider
is presently directly, or to the best knowledge of Seller and the Company
indirectly, a party to any transaction or agreement with the Company,
including, without limitation, any agreement, arrangement, or understanding,
written or oral, providing for the employment of, furnishing of services by,
rental of real or personal property from, use of real or personal property by,
or otherwise requiring payments to, any Insider. As used herein, "Insider"
means any director, officer, or management employee of the Company or Seller
or any former owner of an interest in the Company. Also set forth on Schedule
3.28 is a complete list of all agreements relating to Seller's acquisition of
the Company, accurate and complete copies of which have been delivered to
Buyer. To the best knowledge of Seller and the Company, no director, officer,
or management employee of the Company or Seller owns any interest in, or
serves as a director, officer, or management employee of, any customer,
supplier, or competitor of the Company (other than an interest in a public
corporation which does not exceed one percent (1%) of its outstanding
securities). All intercompany accounts, agreements and understandings between
the Company and Seller or any direct or indirect subsidiary of Seller (other
than the Company) shall be terminated effective as of the Closing, except for
those created in connection with Seller's purchase of $5,400,000 aggregate
principal amount of Kentucky Rural Economic Development Authority Taxable
Revenue Bonds (Tibbals Flooring Co. Project) dated November 9, 1989, maturing
on November 9, 2014 and bearing interest at the rate of 10% per annum (the
"KREDA Bonds") and existing pursuant to that certain Bond Purchase Agreement
dated November 9, 1989 by and among KREDA, Seller and the Company.
29 Insurance. During the past three years, no application for
insurance with respect to the Business or any of the Assets has been denied
for any reason, and no policy for any such insurance has been cancelled by the
insurer.
IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
1 Corporate Organization. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and corporate
authority to own, lease, and operate its properties and to carry on its
business as now being conducted.
2 Authority Relative to This Agreement. Buyer has full corporate
power and corporate authority to execute, deliver, and perform this Agreement
and the Ancillary Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance by Buyer of this Agreement and the Ancillary Documents to which it
is a party, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action of
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes, and each Ancillary Document executed or to be executed by Buyer
has been, or when executed will be, duly executed and delivered by Buyer and
constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of Buyer, enforceable against Buyer in accordance
with their respective terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting creditors' rights generally and (ii) equitable principles which
may limit the availability of certain equitable remedies (such as specific
performance) in certain instances and (iii) public policy considerations with
respect to the enforceability of rights of indemnification.
3 Noncontravention. The execution, delivery, and performance by Buyer
of this Agreement and the Ancillary Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby do not
and will not (i) conflict with or result in a violation of any provision of
the charter or bylaws of Buyer, (ii) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization, or waiver of any party to, any bond, debenture, note, mortgage,
indenture, lease, contract, agreement, or other instrument or obligation to
which Buyer is a party or by which Buyer or any of its properties may be bound
or any Permit held by Buyer, (iii) result in the creation or imposition of any
Encumbrance upon the properties of Buyer, or (iv) violate any Applicable Law
binding upon Buyer.
4 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by Buyer in connection
with the execution, delivery, or performance by Buyer of this Agreement and
the Ancillary Documents to which it is a party or the consummation by it of
the transactions contemplated hereby or thereby, other than (i) compliance
with any applicable requirements of the Exchange Act; (ii) as set forth on
Schedule 4.4; (iii) filings with Governmental Entities to occur in the
ordinary course following the consummation of the transactions contemplated
hereby; and (iv) such consents, approvals, orders, or authorizations which, if
not obtained, and such declarations, filings, or registrations which, if not
made, would not, individually or in the aggregate, have a material adverse
effect on the business, assets, results of operations, condition (financial or
otherwise), or prospects of Buyer and its subsidiaries considered as a whole
or on the ability of Buyer to consummate the transactions contemplated hereby.
5 Legal Proceedings. There are no Proceedings pending or, to the best
knowledge of Buyer, threatened seeking to restrain, prohibit, or obtain
damages or other relief in connection with this Agreement or the transactions
contemplated hereby.
6 Brokerage Fees. Neither Buyer nor any of its affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby. Buyer shall indemnify and
hold harmless Seller and the Company from and against any and all losses,
claims, damages, and liabilities (including legal and other expenses
reasonably incurred in connection with investigating or defending any claims
or actions) with respect to any finder's fee, brokerage commission, or similar
payment in connection with any transaction contemplated hereby asserted by any
person on the basis of any act or statement made or alleged to have been made
by Buyer or any of its affiliates.
7 Investment Intent. Buyer is acquiring the Shares for its own
account for investment and not with a view to, or for sale or other
disposition in connection with, any distribution of all or any part thereof,
except in compliance with applicable federal and state securities laws.
V.
ADDITIONAL AGREEMENTS
1 Goodwill, Customers and Employees.
(a) Seller acknowledges that in consideration of the payment of the
Purchase Price, Buyer is acquiring the goodwill of the Company and the
Business, including complete ownership and control thereof and of all
appurtenant rights and interests. Therefore, Seller agrees that for a period
commencing upon the Closing Date and ending upon the tenth anniversary
thereof, unless otherwise extended pursuant to the terms of this Section 5.1,
Seller will not, directly or indirectly, engage or participate in the
manufacture or distribution of natural hardwood flooring as that business is
currently conducted by the Company, in the United States, Canada or Mexico.
Seller further agrees, that for a period commencing upon the Closing Date and
ending on the fifth anniversary thereof, unless otherwise extended pursuant to
the terms of this Section 5.1, Seller will not, directly or indirectly, use a
natural hardwood veneer as a decorative surface layer in other types of
flooring. The provisions of Section 5.1(a) shall not apply to (i) any
flooring products in which the decorative surface layer is composed of
materials other than natural hardwood, (ii) any flooring products employing
photographic or other reproductions or simulations of wood; or (iii) natural
hardwood accessories such as moldings and edges.
(b) Notwithstanding the foregoing, the provisions of Section 5.1(a)
shall not apply to the acquisition by Seller of the business of an existing
company which, at the time of the acquisition, operates a hardwood flooring
business which is secondary to its primary product lines; provided that, in
the event of such a hardwood flooring acquisition, Seller agrees to meet with
Buyer to discuss in good faith the possible sale of such business to Buyer;
provided further, Seller will, if possible, attempt to initiate such
discussions prior to completing the acquisition.
(c) In addition, Seller shall not, directly or indirectly, for a
period commencing upon the Closing Date and ending upon the tenth anniversary
thereof, either directly or indirectly, (i) make known to any person the names
and addresses of any of the customers of the Company or contacts of the
Company within the industry or any other information pertaining to such
customers or contacts, or (ii) make any use, for its or any other person's
benefit, or disclose to any person any of the Company's Intellectual Property,
or (iii) call on, solicit, or take away, or attempt to call on, solicit, or
take away, any of the customers of the Company whether for the benefit of
Seller or of any other person; provided, Buyer recognizes that Seller owns
Florida Tile Industries, Inc. and Wilsonart International, Inc., and agrees
that the provisions of this Section 5.1(c)(i) and (iii) shall not prohibit
Florida Tile or Wilsonart from making use of knowledge (x) obtained by them
prior to Closing in the ordinary course of business or (y) obtained by them
after the Closing other than through the Company.
(d) Seller agrees that, for a period of two (2) years from and
after the Closing Date, neither Seller nor any of its affiliates will solicit
to employ (as an employee, consultant, independent contractor or otherwise)
any employee of the Company.
(e) Seller agrees that a breach or violation of this Section 5.1 by
Seller shall entitle Buyer, as a matter of right, to an injunction issued by
any court of competent jurisdiction, restraining any further or continued
breach or violation hereof. Such right to an injunction shall be cumulative
and in addition to, and not in lieu of, any other remedies to which Buyer may
show itself justly entitled. Further, during any period in which Seller is in
breach of any of the covenants set forth in this Section 5.1, the time period
of such covenant shall be extended for an amount of time equal to that during
which Seller is in breach thereof.
(f) The covenants and agreements contained in this Section 5.1 on
the part of Seller will be construed as ancillary to and independent of any
other provision of this Agreement, and the existence of any claim or cause of
action of Seller against the Company or Buyer or any officer, director, or
shareholder of the Company or Buyer, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Buyer of the
covenants and agreements of Seller contained in this Section 5.1.
(g) If Seller violates any covenant or agreement contained in this
Section 5.1 and Buyer brings legal action for injunctive or other relief,
Buyer shall not, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full period of any such covenant or agreement.
Accordingly, the covenants and agreements of Seller contained in this Section
5.1 shall be deemed to have durations as specified above, which periods shall
not include any period of noncompliance.
(h) The parties to this Agreement agree that the limitations
contained in this Section 5.1 with respect to time, geographical area, and
scope of activity are reasonable. However, if any court shall determine that
the time, geographical area, or scope of activity of any covenant or agreement
in this Section 5.1 is unenforceable, it is the intention of the parties that
such provision shall not thereby be terminated but shall be reformed and
deemed amended to the extent required to render it valid and enforceable.
(i) The covenants and agreements of Seller contained in this
Section 5.1 may be assigned by Buyer to any person to whom the business and
assets of the Company are transferred substantially as an entirety, it being
the intention of the parties hereto that such covenants and agreements shall
inure to the benefit of any successor to the business and assets of the
Company, with the same force and effect as if such covenants and agreements
had been made directly to such successor or successors.
2 Employee and Employee Benefit Plan Matters.
(a) Certain salaried and hourly non-union employees of the Company
currently participate in the Premark International, Inc. Retirement Savings
Plan (the "Non-Union Plan"). Prior to June 28, 1996, Buyer agrees, or will
cause the Company, to take all action as may be necessary and appropriate to
establish a similar plan and related trust for employees and former employees
of the Company who participate in the Non-Union Plan ("Participants"). Seller
agrees to take all such action as may be necessary or appropriate to cause the
trustee of the Premark International, Inc. Master Defined Contribution Trust
to effect a transfer of cash equal to the value of the Participants' account
balances in the Non-Union Plan as of the close of business on June 28, 1996
(including any earnings for periods through the close of business on June 28,
1996 and contributions deducted from, and matching contributions related
thereto, payrolls issued on or before June 28, 1996, but not yet credited as
of the close of business on June 28, 1996) to the new trust established by the
Buyer, with such transfer to be effected on or before July 1, 1996.
(b) The bargaining unit employees of the Company currently
participate in the Hartco Flooring Company Bargaining Employees' Retirement
Savings Plan (the "Bargaining Employees' Plan"). Buyer and Seller agree to
take all such action as may be necessary or appropriate to cause the Company
to assume said Bargaining Employees' Plan and be substituted for Seller,
including being named as the sponsoring employer, effective as of the Closing
Date. Seller agrees to cause the trustee under the Premark International,
Inc. Master Defined Contribution Trust Agreement to transfer to a new trust
established to fund the Bargaining Employees' Plan cash equal to the value of
the assets of the Bargaining Employees' Plan, as of the Closing Date. Not
later than July 1, 1996, a transfer of the estimated value of the assets will
be made to said new trust. As soon as practicable thereafter, but not later
than July 31, 1996, the actual value of the assets as of June 28, 1996
(including any earnings for periods through the close of business on June 28,
1996 and contributions deducted from, and matching contributions related
thereto, payrolls issued on or before June 28, 1996, but not yet credited as
of the close of business on June 28, 1996) will be determined and cash equal
to the value of the balance of the assets will be transferred to the new
trust. Seller agrees to make available to the Company and Buyer all such data
and other information as may be necessary or appropriate for Buyer and the
Company to properly maintain and administer the Bargaining Employees' Plan on
and after the Closing Date.
(c) Buyer agrees that with respect to all employee benefit plans,
programs and policies of the Company from and after June 28, 1996, the Company
shall recognize employees' service before the Closing Date for purposes of
vesting and eligibility, and with respect to welfare plans, shall to the
extent practicable provide benefits without interruption solely as a result of
the transfer of the Company to Buyer. Buyer agrees to cause the benefit plans
adopted by the Company on or after the Closing to assume any and all
obligations arising from and after the Closing Date for pending claims
attributable to employees and retirees of the Company under employee welfare
benefit plans (including claims incurred, but not reported) and all
obligations to provide post-retirement or post-employment medical, health,
dental or life insurance coverage for employees of the Company who terminate
employment on or before the Closing Date.
(d) Except as provided above, Seller agrees to take all such action
and to cause the Company to take all such action as may be necessary or
appropriate to withdraw from or terminate all other employee benefit plans,
agreements and arrangements covering employees of the Company effective as of
the Closing Date. Seller agrees to assume any and all costs, expenses
(including reasonable attorneys fees), damages, losses and other liabilities
arising directly or indirectly from actions or inactions of Seller, the
Company and their affiliates on or prior to the Closing with respect to the
Non-Union Plan and the Bargaining Employees' Plan, including but not limited
to costs, expenses (including reasonable attorneys fees), damages, losses and
other liabilities resulting from a violation of ERISA or failure to comply
with the requirements applicable to tax-qualified employee benefit plans under
the Code. Seller agrees to make available to the Company and Buyer all such
data and information as may be necessary or appropriate for Buyer and the
Company to effect a proper transition of employee benefits for the employees
of the Company on and after the Closing Date.
3 Related Transactions. Seller shall sell the KREDA Bonds to Buyer at
the Closing for a purchase price equal to the aggregate amount of principal
and accrued interest payable on the KREDA Bonds as of the Closing Date and
recorded as a liability of the Company as of such date, upon payment by Buyer
of such purchase price in immediately available funds by confirmed wire
transfer to the bank account designated by Seller.
4 Dispute Resolution. If any dispute or disagreement arises between
Buyer and Seller under this Agreement (any such dispute or disagreement being
referred to as a "Dispute"), and Buyer and Seller are unable to resolve such
Dispute within the time period prescribed elsewhere in this Agreement (or if
no such time period is prescribed, within thirty (30) days after the date
written notice of the Dispute is given by Buyer or Seller), an arbitrator
agreed upon by Buyer and Seller (the "Arbitrator") shall be employed hereunder
to settle such Dispute as soon as practicable. In the event that the parties
are unable to agree upon the appointment of such an arbitrator within five (5)
business days, then each party shall within three (3) calendar days appoint an
independent arbitrator of its choice, which independent arbitrators shall
agree within three (3) business days on the appointment of a third independent
arbitrator to whom the Dispute shall be submitted. Buyer and Seller shall
submit the Dispute to the Arbitrator within three (3) business days of its
appointment and shall cooperate with each other and otherwise use their
reasonable best efforts to cause the Arbitrator to make its decision within
sixty (60) days after referral of a Dispute to it. The Arbitrator shall have
access to all documents and facilities necessary to perform its function as
arbitrator. The Arbitrator's determination with respect to any Dispute shall
be final and binding upon the parties hereto. Seller, Buyer or both shall pay
the fees and expenses of the Arbitrator for its services, as determined by the
Arbitrator, based on the relative merits of their positions.
5 Bank Account Balances.
(a) Seller shall be entitled to all cash balances as of the close
of business on June 28, 1996, including, without limitation, cash balances
representing deposited checks or drafts for which only a provisional credit
has been allowed in the depository accounts of the Company.
(b) Seller shall be responsible for all checks or drafts issued up
to the close of business on June 28, 1996, against the disbursement accounts
of the Company, which checks or drafts have not been charged against said
disbursement accounts on or prior to the close of business on June 28, 1996.
On the Closing Date, Seller shall deposit into the payroll disbursement
account an amount equal to the aggregate amount of all such outstanding checks
and drafts issued against it prior to Closing.
VI.
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
1 Opinion of Counsel to Buyer. Seller shall have received an opinion
of Thompson & Knight, P.C., legal counsel to Buyer, dated the Closing Date, in
form and substance reasonably satisfactory to counsel for Seller.
VII.
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
1 Certificate. Buyer shall have received a certificate executed by
Seller, and on behalf of the Company by the chief executive and chief
financial officers of the Company, dated the Closing Date, representing and
certifying that (i) all the representations and warranties of Seller contained
in this Agreement, and in any agreement, instrument, or document delivered
pursuant hereto or in connection herewith on or prior to the Closing Date are
true and correct on and as of the Closing Date and (ii) Seller has performed
and complied with all covenants and agreements required by this Agreement to
be performed or complied with by it on or prior to the Closing Date.
2 Opinion of Counsel to Seller. Buyer shall have received an opinion
of John Costigan, General Counsel of Seller, dated the Closing Date, in form
and substance reasonably satisfactory to counsel for Seller.
3 Other Documents. Buyer shall have received the certificates,
instruments, and documents listed below:
(a) The certificate in Seller's name representing the Shares duly
endorsed for transfer to Buyer accompanied by an appropriate stock power.
(b) The minute books, stock records, and corporate seal of the
Company, certified as complete and correct as of the Closing Date by the
secretary or an assistant secretary of the Company.
(c) All the Company's books and records, including without
limitation minute books, corporate charter, bylaws, stock records, bank
account records, accounting and tax records, computer records, and all
contracts with third parties.
(d) The written resignation from the Board of Directors of the
Company of each member of such Board, such resignation to be effective
concurrently with the Closing on the Closing Date.
(e) The written resignation as an officer of the Company of each of
the officers named on Schedule 7.3, such resignation to be effective
concurrently with the Closing on the Closing Date.
VIII.
TAX MATTERS
1 Liability for Taxes.
(a) Taxable Periods Ending on or Before the Closing Date. Seller
shall be solely liable for all Taxes of the Company due for all Taxable years
and periods ending on or before the Closing Date; provided, however, Seller
shall not be liable for any Taxes resulting from any action by the Company or
the Buyer taken after the Closing, including without limitation, any election
made by the Buyer under Section 338(g) of the Code. Federal income Taxes for
any Short Period shall be computed in accordance with Applicable Laws,
including Treasury Regulation Section 1.1502-76. Buyer hereby agrees to take
no position inconsistent with treating the Company as a member of the
Affiliated Group of which Seller is a member for all periods ending on or
before the Closing Date. Seller shall be liable for, and shall indemnify and
hold harmless Buyer and the Company, against, all Taxes that may be imposed
under Treasury Regulation Section 1.1502-6 attributable to any Affiliated
Group of which the Company was a member prior to the Closing Date.
(b) Taxable Periods Commencing After the Closing Date. The Company
shall be solely liable for all Taxes of the Company for all Taxable years and
periods commencing after the Closing Date. Buyer shall indemnify and hold
harmless Seller against, any and all Taxes for any Taxable year or Taxable
period commencing after the Closing Date due or payable by the Company.
Federal income Taxes for any Short Period shall be computed in accordance with
Applicable Laws, including Treasury Regulation Section 1.1502-76.
(c) Taxable Periods Commencing Before and Ending After the Closing
Date. Buyer shall cause the Company to pay all Taxes due for any Taxable year
or Taxable period commencing before and ending after the Closing Date (the
"Straddle Period"). Seller shall pay to the Company an amount equal to the
excess, if any, of (i) the Taxes that would have been due if the Straddle
Period had ended on the Closing Date (using an interim-closing-of-the-books
method except that exemptions, allowances, and deductions that are otherwise
calculated on an annual basis (such as deductions for real estate Taxes,
depreciation, and depletion) shall be apportioned on a per diem basis) over
(ii) the sum of the Taxes for the Straddle Period (A) which have been
specifically reserved for on the Closing Balance Sheet or (B) paid prior to
the Closing Date by the Company or by Seller or an affiliate thereof with
respect to the Company; provided, however, if (ii) is greater than (i), the
difference between (ii) and (i) shall be paid to the Seller.
(d) Inter-Period Tax Adjustment. If the Seller incurs an increase
in income Tax as a result of an examination by a Taxing authority for any
Taxable period ending after 1990 and on or before the Closing Date, and such
increase in Tax is a result of an adjustment originating in such Taxable
period, then to the extent the adjustment results in a depreciation or
amortization deduction in the Tax Return of the Buyer or the Company for any
of the 10 Taxable periods beginning after the Closing Date, the Buyer or the
Company shall make a payment to the Seller for each taxable year in an amount
equal to the actual Tax benefit of the depreciation or amortization deductions
to Buyer or the Company in such year. Any such payment shall be made by Buyer
to Seller no later than 30 days after the filing of the Tax Return on which
Buyer claims the depreciation or amortization deduction (or if no such Tax
Return is required to be filed, within 30 days of receiving such Tax benefit).
Within 30 days of filing its Tax Return, (or otherwise receiving such Tax
benefit) for each of the ten (10) Taxable periods beginning after the Closing
Date, Buyer shall provide Seller with a calculation of the amount of the
payment required (if any), under this Section 8.1(d), or a certificate signed
by an officer of the Buyer that no such payment is required.
2 Preparation and Filing of Tax Returns.
(a) Taxable Periods ending On or Before the Closing Date. Seller
shall prepare and file all consolidated federal income Tax Returns, and all
state joint income and franchise Tax Returns required to be filed with respect
to the Company for all Taxable periods ending on or before the Closing Date.
Seller shall also prepare all separate 1995 state and local income Tax Returns
with respect to the Company for all taxable periods ending on or before
Closing Date. Seller shall either present such returns to Buyer for filing,
accompanied by an officer's certification that such returns are true and
accurate, or Buyer shall give Seller an appropriate power of attorney to
enable Seller to file such returns. With respect to all 1995 Tax Returns
which have not been filed as of the Closing Date, Buyer shall provide Seller
with true and correct federal, state, and local income tax workpapers no later
than July 31, 1996. With respect to 1996 Tax Returns for periods ending on or
before the Closing Date, Buyer agrees to provide Seller with true and correct
federal, state, and local income tax workpapers no later than April 30, 1997.
Such workpapers shall include information to compute the Short Period Taxes as
described in Section 8.1(a).
(b) Taxable Periods Commencing After the Closing Date. Buyer shall
cause to be prepared and duly filed all Tax Returns of the Company for Taxable
periods commencing after the Closing Date. Buyer shall pay or cause to be
paid all Taxes shown on such Tax Returns for all periods covered by such Tax
Returns.
(c) Taxable Periods Commencing Before and Ending After the Closing
Date. Buyer shall cause to be prepared and duly filed all separate state and
local income Tax Returns for periods commencing before and ending after the
Closing Date. To the extent any additional Taxes are due by Seller, for such
periods, payment shall be made in accordance with Section 8.4. Buyer shall
provide Seller with copies of the final Tax Returns, and true and correct
workpapers which include information to compute the Straddle Period Taxes as
described in Section 8.1(c) at least 30 days prior to the due date for filing
such returns. Seller shall have the right to review such returns. Seller and
the Buyer agree to consult and resolve in good faith any issues arising as a
result of the review of such returns. Buyer shall cause to be prepared and
duly filed all other Tax Returns, if any, for periods commencing before and
ending after the Closing Date.
(d) Consistency of Accounting Methods. Any Short Period or
Straddle Period Tax Returns shall be prepared in accordance with past Tax
accounting practices used with respect to the Tax Returns in question (unless
such past practices are no longer permissible under the Code or other
applicable laws). In the event the party preparing a Short Period or Straddle
Period Tax Return reports items in a manner inconsistent with that used in
such past Tax accounting practices, then the other party shall only be
responsible for the amount of Taxes that would have been owed if such Tax
Returns had been prepared in a manner consistent with such past Tax accounting
practices.
3 Tax Refunds, Carryovers, Carrybacks.
(a) Refunds. Seller shall be entitled to any refund or overpayment
of Taxes attributable to the Company with respect to periods ending on or
before the Closing Date. Refunds or overpayments for periods commencing
before and ending after the Closing Date shall be allocated between the Buyer
and the Seller in accordance with the Straddle Period provision in Section
8.1(c). Refunds or overpayments (or portions thereof) due Seller shall be
remitted to Seller within 30 days after receipt.
(b) Carryovers, Carrybacks. Buyer shall be entitled to any refunds
of Taxes attributable to carryovers of losses, credits, etc. from separate
state income tax returns for periods ending on or before the Closing Date.
Seller shall be required to pay to the Buyer or the Company any refund or
overpayment of Taxes that result from the carryback to any taxable period
beginning prior to the Closing Date of any net operating loss, capital loss or
tax credit attributable to the Company in any taxable period beginning after
the Closing Date.
4 Payments. With respect to any Tax Returns filed under this Article
VIII, the party that is not responsible for filing such returns will make any
payment required under this Article VIII to the party filing such Tax Return
within 30 days of receiving the Tax Return as filed.
5 Termination of Tax Allocation Agreement. Effective as of the
Closing Date, all liabilities and obligations between the Company and the
other members of the former Affiliated Group of which Seller was a member
under any Tax allocation agreement or other similar arrangement in effect
prior to the Closing Date shall be extinguished in full and any liabilities or
rights existing under any such agreement or arrangement shall terminate and
shall no longer be enforceable. Seller shall indemnify and hold harmless
Buyer and the Company for any claim under any Tax allocation agreement or
other similar arrangement.
6 Cooperation, Records.
(a) Buyer and Seller shall furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information (including
access to books and other records) and assistance as is reasonably necessary
for the filing of any return, amended return or claim for refund, for the
preparation for or conduct of any audit, and for the prosecution or defense of
any claim, suit, or proceeding relating to any proposed Tax adjustment. Buyer
and Seller shall cooperate with each other in the conduct of any audit or
other similar proceedings and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out this intent.
(b) Buyer and Seller shall each promptly give written notice to the
other of any examination, audit, inquiry, or proposed or actual assessment by
a federal, state, or local Taxing authority covering any potential liability
for Taxes where a right may exist of one party to demand payment for such Tax
from, or be indemnified by, the other party.
(c) Buyer and Seller shall keep in their possession all Tax Records
relating to Taxes for which the other party may have liability under this
Agreement, until the expiration of any applicable statute of limitations and
as otherwise required by law.
(d) Buyer and Seller shall provide the other with all relevant
portions of returns, amended returns, and claims for refund which each files
on behalf of its own consolidated group for any periods which are reasonably
requested.
(e) Buyer and Seller agree that any information furnished one
another is confidential and, except as, and to the extent, required during the
course of resolving a dispute, an audit, or litigation, shall not be disclosed
to persons other than their own Tax advisors, or persons entitled to such
information.
(f) Notwithstanding anything in this Agreement to the contrary, if
either party fails to comply with the requirements of this Section 8.6, the
party failing so to comply shall be liable for, and shall hold the other party
harmless from, any Taxes (including without limitation, penalties for failure
to comply with record retention requirements of the Code) and other costs
resulting from such party's failure to comply.
7 Contests. Whenever any Taxing authority informs Buyer of a claim,
assessment, or other dispute concerning an amount of Taxes for which Seller is
or may be liable under this Agreement, Buyer shall promptly inform Seller, and
Seller shall have the right to control any resulting proceedings and to
determine whether and when to settle any such claim, assessment, or dispute to
the extent such proceedings or determinations affect the amount of Taxes for
which Seller is liable under this Agreement. Whenever any Taxing authority
informs Seller of a claim, assessment, or other dispute concerning an amount
of Taxes for which Buyer is or may be liable under this Agreement, Seller
shall promptly inform Buyer, and Buyer shall have the right to control any
resulting proceedings and to determine whether and when to settle any such
claim, assessment, or dispute to the extent such proceedings or determinations
affect the amount of Taxes for which Buyer is liable under this Agreement.
Each party hereto agrees to give the other party the right of reasonable
consultation regarding the matters subject to this Section 8.7 which could
affect the other.
With respect to returns filed under Section 8.2(c), Buyer shall control
the proceeding. The Seller may participate. Such participation may include,
but is not limited to (i) attendance at all conferences and meetings with the
Taxing authority, (ii) participation in all appearances before any court and
(iii) participation in the submission and determination of content of
protests, briefs and similar documents.
8 Resolution of Disagreements. If Seller and Buyer disagree as to
the amount of Taxes for which each is liable under this Agreement, Seller and
Buyer shall promptly consult each other in an effort to resolve such dispute.
If any such dispute cannot be resolved within thirty (30) days after the
initial date of consultation, Seller and Buyer shall cause such dispute to be
resolved pursuant to Section 5.4.
9 Tax-Affecting Payments. With respect to any payment made under
Sections 8.4, 9.2 or 9.3, such payment in each case shall be made net of any
tax benefit to the person receiving such benefit and grossed-up for any income
tax due for the receipt of such payment. The amount of any tax benefit or tax
incurred as a result of a payment received under Sections 8.4, 9.2 or 9.3
shall be deemed to equal the product obtained by multiplying (i) the amount of
any deduction or inclusion in income resulting from such payment by (ii) the
highest applicable marginal tax rate for such period under Code Section 11.
IX.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
1 Survival.
(a) The representations and warranties of the parties hereto
contained in this Agreement or in any certificate, instrument, or document
delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party, for a period of eighteen (18)
months following the Closing Date; provided, however, that the representations
and warranties of Seller and the Company contained in Sections 3.5
("Noncontravention"), 3.12 ("Tax Matters"), 3.21 ("Brokerage Fees"), 3.23
("Permits") and 3.25 ("ERISA") shall survive until the expiration of the
limitation period under the applicable statute of limitations; provided
further that the representations and warranties of Seller and the Company
contained in Section 3.16 ("Title to Properties") shall survive for a period
of fifteen (15) years following the Closing Date (each such anniversary and
time of expiration, a "Survival Date"); and provided further that the
representations and warranties of Seller and the Company contained in Section
3.8 ("Shares") shall survive without contractual limitation. From and after a
Survival Date, no party hereto or any shareholder, director, officer,
employee, or affiliate of such party shall be under any liability with respect
to any representation or warranty to which such Survival Date relates, except
with respect to matters as to which notice has been received in accordance
with Section 9.1(b).
(b) No party hereto shall have any indemnification obligation
pursuant to this Article IX in respect of any representation or warranty to
which a Survival Date relates unless before the Survival Date for such
representation or warranty it shall have received from the party seeking
indemnification written notice of the existence of the claim for or in respect
of which indemnification in respect of such representation or warranty is
sought.
(c) The provisions of this Section 9.1 shall have no effect upon
any other obligation of the parties hereto under this Agreement, whether to be
performed before, at, or after the Closing.
2 Indemnification by Seller. Subject to the terms and conditions of
this Article IX, Seller shall indemnify, defend, and hold harmless Buyer, the
subsidiaries and parent corporations of Buyer, each director, officer,
employee, representative or agent of Buyer or any of its subsidiaries or
parent corporations, and each affiliate thereof, and their respective heirs,
legal representatives, successors, and assigns (collectively, the "Buyer
Group"), from and against any and all claims, actions, causes of action,
demands, assessments, losses, damages, liabilities, judgments, settlements
(including any sanction paid to the Internal Revenue Service in consideration
for an agreement to avoid disqualification of an employee benefit plan
intended to qualify pursuant to Section 401(a) of the Code or a cash or
deferred arrangement intended to qualify pursuant to Section 401(k) of the
Code), penalties, costs, and expenses (including reasonable attorneys' fees
and expenses), of any nature whatsoever, whether denominated as actual,
consequential or otherwise (collectively, "Damages"), asserted against,
resulting to, imposed upon, or incurred by any member of the Buyer Group,
directly or indirectly, by reason of or resulting from any of the following
(collectively "Buyer Claims"):
(a) any inaccuracy in or breach of any of the representations,
warranties, covenants, or agreements made by Seller contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto; and
(b) any liability or obligation arising from or relating to offsite
disposal of hazardous materials between December 2, 1988 and the Closing Date
at the Scott County Landfill, which may constitute or serve as a basis of any
liability or obligation under common law or any Applicable Laws pertaining to
health, safety, or the environment currently in effect;
provided, however, that Seller shall not be obligated to provide such
indemnification (i) with respect to any claim if the Damages arising out of,
based upon or resulting from such claim do not exceed $5,000 ("Small Claims"),
(ii) unless and until the Buyer Group's cumulative aggregate Damages (other
than Damages from Small Claims and claims under Section 9.2(b)) exceed
$400,000 (the "Basket Amount"), in which case Seller shall be obligated to
indemnify the Buyer Group for all Damages incurred by the Buyer Group (other
than Small Claims), in excess of the Basket Amount, and (iii) with respect to
claims under Section 9.2(b), (A) unless and until the Buyer Group's cumulative
aggregate Damages from claims thereunder exceed $500,000, and thereafter only
to the extent such Damages exceed $500,000, (B) to the extent such Damages
exceed $500,000, with respect to 50% of all such Damages in excess of
$500,000, and (C) Seller shall not be obligated to provide further
indemnification under Section 9.2(b) after amounts paid by it thereunder
exceed $1 million. Seller shall not be obligated to provide indemnification
under Section 9.2(b) for any claim first raised by a third party after June
28, 1999. If the Closing shall have occurred, Seller shall not be entitled to
any contribution or reimbursement from the Company with respect to payments
made by Seller under this Article IX.
3 Indemnification by Buyer. Subject to the terms and conditions of
this Article IX, Buyer shall indemnify, defend, and hold harmless Seller, the
subsidiaries and parent corporations of Seller, each director, officer,
employee, representative or agent of Seller or any of its subsidiaries or
parent corporations, and each affiliate thereof, and their respective heirs,
legal representatives, successors, and assigns (collectively, the "Seller
Group"), from and against any and all Damages asserted against, resulting to,
imposed upon, or incurred by Seller, directly or indirectly, by reason of or
resulting from any inaccuracy in or breach by Buyer of any of its
representations, warranties, covenants, or agreements contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto (collectively, "Seller Claims").
4 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 9.2 or 9.3 of notice of the commencement of
any action, or after an indemnified party's otherwise becoming aware of facts
or circumstances giving rise to any Damages, such indemnified party shall, if
a claim in respect thereof is to be made against an indemnifying party under
such Section, give written notice to the indemnifying party of the
commencement thereof, but the failure so to notify the indemnifying party
shall not relieve it of any liability that it may have to any indemnified
party except to the extent the indemnifying party demonstrates that the
defense of such action is prejudiced thereby. In case any such action shall
be brought against an indemnified party and it shall give written notice to
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may wish,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. If the indemnifying party elects to assume the defense of
such action, the indemnified party shall have the right to employ separate
counsel at its own expense and to participate in the defense thereof. If the
indemnifying party elects not to assume (or fails to assume) the defense of
such action, the indemnified party shall be entitled to assume the defense of
such action with counsel of its own choice, at the expense of the indemnifying
party. If the action is asserted against both the indemnifying party and the
indemnified party and there is a conflict of interests which renders it
inappropriate for the same counsel to represent both the indemnifying party
and the indemnified party, the indemnifying party shall be responsible for
paying for separate counsel for the indemnified party; provided, however, that
if there is more than one indemnified party, the indemnifying party shall not
be responsible for paying for more than one separate firm of attorneys to
represent the indemnified parties, regardless of the number of indemnified
parties. If the indemnifying party elects to assume the defense of such
action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's written consent (which
shall not be unreasonably withheld) unless the sole relief provided is
monetary damages that are paid in full by the indemnifying party and (b) the
indemnifying party shall have no liability with respect to any compromise or
settlement thereof effected without its written consent (which shall not be
unreasonably withheld).
5 Indemnification Despite Negligence, Strict Liability or Liability
Without Fault. It is the express intention of the parties hereto that each
person to be indemnified pursuant to this Article IX shall be indemnified and
held harmless from and against all Damages as to which indemnity is provided
for under this Article IX notwithstanding that any such Damages arise out of
or result from the ordinary, strict, sole, or contributory negligence, strict
liability or other liability without fault of such person and regardless of
whether any other person (including another party to this Agreement) is or is
not also negligent or otherwise liable with respect to the matter in question.
X.
MISCELLANEOUS
1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall
be in writing and shall be deemed to have been duly given or made if delivered
personally, or transmitted by first class registered or certified mail,
postage prepaid, return receipt requested, or sent by prepaid overnight
delivery service, or sent by cable, telegram, telefax, or telex, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
If to Buyer:
Triangle Pacific Corp.
16803 Dallas Parkway
Dallas, Texas 75248
Attention: Mr. Darryl T. Marchand
Vice President and
General Counsel
Telefax: (214) 931-3284
If to Seller:
Premark International
1717 Deerfield Road
Deerfield, Illinois 60015
Attention: Mr. John M. Costigan
Senior Vice President and
General Counsel
Telefax: (847) 405-6381
Such notices, requests, demands, and other communications shall be effective
(i) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (ii) if mailed, upon the earlier of five days after
deposit in the mail or the date of delivery as shown by the return receipt
therefor, or (iii) if sent by telecopy or facsimile transmission, when the
answer back is received.
2 Entire Agreement. This Agreement, together with the Schedules,
Exhibits, Annexes, and other writings referred to herein or delivered pursuant
hereto, and that certain letter agreement of even date herewith between Buyer
and Seller, constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other party, except that Buyer
may assign to any affiliate of Buyer any of Buyer's rights, interests, or
obligations hereunder, upon notice to Seller, provided that no such assignment
shall relieve Buyer of its obligations hereunder. Except as provided in
Article XI, nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than the parties hereto, and their
respective successors and permitted assigns, any rights, benefits, or remedies
of any nature whatsoever under or by reason of this Agreement.
4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in
all other respects this Agreement shall remain in full force and effect;
provided, however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by Applicable Law.
5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
6 Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only, do not constitute a part of this Agreement,
and shall not affect in any manner the meaning or interpretation of this
Agreement.
7 Gender. Pronouns in masculine, feminine, and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context
otherwise requires.
8 References. All references in this Agreement to Articles, Sections,
and other subdivisions refer to the Articles, Sections, and other subdivisions
of this Agreement unless expressly provided otherwise. The words "this
Agreement", "herein", "hereof", "hereby", "hereunder", and words of similar
import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words "include",
"includes", and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Each reference
herein to a Schedule, Exhibit, or Annex refers to the item identified
separately in writing by the parties hereto as the described Schedule,
Exhibit, or Annex to this Agreement. All Schedules, Exhibits, and Annexes are
hereby incorporated in and made a part of this Agreement as if set forth in
full herein.
9 Further Assurances. From time to time following the Closing, at the
request of either party hereto and without further consideration, the other
party hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring
any financial obligation) as such requesting party may reasonably request in
order to consummate more fully and effectively the transactions contemplated
hereby.
10 Counterparts. This Agreement may be executed by the parties hereto
in any number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same agreement. Each counterpart
may consist of a number of copies hereof each signed by less than all, but
together signed by all, the parties hereto.
11 Consent to Jurisdiction; Waivers.
(a) The parties hereto hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the federal courts of
the United States of America located in Delaware, and appropriate appellate
courts therefrom, over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby and each party hereby
irrevocably agrees that all claims in respect of such dispute or proceeding
may be heard and determined in such courts. The parties hereby irrevocably
waive, to the fullest extent permitted by Applicable Law, any objection which
they may now or hereafter have to the laying of venue of any dispute arising
out of or relating to this Agreement or any of the transactions contemplated
hereby brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. This consent to
jurisdiction is being given solely for purposes of this Agreement and is not
intended to, and shall not, confer consent to jurisdiction with respect to any
other dispute in which a party to this Agreement may become involved.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action, or proceeding of
the nature specified in subsection (a) above by the mailing of a copy thereof
in the manner specified by the provisions of Section 10.1.
(c) Each of the parties hereto hereby waives any and all rights hereto
it may have to (i) demand a jury trial with respect to any dispute arising
under this Agreement, and (ii) to seek punitive damages in any lawsuit arising
from this Agreement.
XI.
DEFINITIONS
1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"affiliate" means, with respect to any person, any other person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such person. For the purposes
of this definition, "control", when used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities, by contract, or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliated Group" has the meaning set forth in Section 1504 of the
Code.
"Ancillary Documents" means each agreement, instrument, and document
(other than this Agreement) executed or to be executed by Seller or Buyer in
connection with the transactions contemplated by this Agreement.
"Applicable Laws" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to
which a specified person or property is subject.
"Assets" means all the assets and properties used or held for use in
connection with the operation of the Business.
"best knowledge" of Seller and the Company means the knowledge of
any officer of Seller or the Company.
"Business" means the business of manufacturing and distributing
hardwood flooring for sale under the Hartco trade name and all related
manufacturing, distribution and other activities.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions, easements, and other
encumbrances of every type and description, whether imposed by law, agreement,
understanding, or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Governmental Entity" means any court or tribunal in any
jurisdiction or any federal, state, municipal, or other governmental body,
agency, authority, department, commission, board, bureau, or instrumentality.
"hazardous material" means (i) any substance which is now listed,
defined, considered or classified as hazardous, toxic or a solid waste
pursuant to any Applicable Laws, (ii) petroleum (including crude oil and any
fraction thereof), natural gas, and natural gas liquids, (iii) asbestos and
asbestos containing materials, in any form, whether friable or non-friable,
and (iv) radon gas.
"Intellectual Property" means patents, trademarks, service marks,
trade names, service names, brand names, copyrights, trade secrets, know-how,
proprietary processes, inventions, computer software (including documentation
and object and source codes), and similar rights, and all registrations,
applications, licenses, claims, causes of action, and rights with respect to
any of the foregoing.
"IRS" means the Internal Revenue Service.
"Material Adverse Effect" means any change, development, or effect
(individually or in the aggregate) which is materially adverse to the Business
or to the ownership or operation of the Assets or any material portion
thereof.
"Permits" means licenses, permits, franchises, consents, approvals,
variances, exemptions, and other authorizations of or from Governmental
Entities.
"Permitted Encumbrances" means (i) Encumbrances created by Buyer,
(ii) liens for Taxes not yet due and payable, (iii) statutory liens (including
materialmen's, mechanic's, repairmen's, landlord's, and other similar liens)
arising in connection with the ordinary course of the Business securing
payments not yet due and payable, (iv) Encumbrances reflected on the title
commitment for the Real Property attached to Schedule 3.17, (v) Encumbrances
reflected on the UCC lien searches attached to Schedule 3.16, and (vi) such
imperfections or irregularities of title, if any, as (A) are not substantial
in character, amount, or extent and do not materially detract from the value
of the property subject thereto, (B) do not materially interfere with either
the present or intended use of such property, and (C) do not, individually or
in the aggregate, materially interfere with the conduct of the normal
operations of the Business; provided, however, that at the Closing "Permitted
Encumbrances" shall not include any liens for Taxes or statutory liens filed
of record against the Assets.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise, unincorporated
organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or Governmental
Entity.
"reasonable best efforts" means a party's reasonable best efforts in
good faith in accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Short Period" means any Tax period that either (i) ends on the
Closing Date or (ii) begins on the day following the Closing Date.
"Taxes" means any income taxes or similar assessments or any sales,
excise, occupation, use, ad valorem, property, production, severance,
transportation, employment, payroll, franchise, or other tax imposed by any
United States federal, state, or local (or any foreign or provincial) taxing
authority, including any interest, penalties, or additions attributable
thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
2 Certain Additional Defined Terms. In addition to such terms as are
defined in the opening paragraph of and the recitals to this Agreement and in
Section 11.1, the following terms are used in this Agreement as defined in the
Sections set forth opposite such terms:
Defined Term Section Reference
1995 Balance Sheet......................................Section 3.9
Annual Financial Statements.............................Section 3.9
Arbitrator..............................................Section 5.4
Buyer Claims............................................Section 9.2
Buyer Group.............................................Section 9.2
Closing.................................................Section 1.1
Closing Balance Sheet...................................Section 8.1(c)
Closing Date............................................Section 2.1
Damages.................................................Section 9.2
Dispute.................................................Section 5.4
Financial Statements....................................Section 3.9
hazardous material......................................Section 11.1
Interim Financial Statements............................Section 3.9
KREDA Bonds.............................................Section 3.28
Latest Balance Sheet....................................Section 3.9
Purchase Price..........................................Section 1.2
Real Property...........................................Section 3.17(a)
Seller Group............................................Section 9.3
Survival Date...........................................Section 9.1
transfer................................................Section 1.1
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
TRIANGLE PACIFIC CORP.
By:/s/ Floyd F. Sherman_____
Floyd F. Sherman,
Chairman of the Board and
Chief Executive Officer
PREMARK INTERNATIONAL, INC.
By:/s/ James M. Ringler____
James M. Ringler
President and
Chief Executive Officer
LIST OF EXHIBITS AND SCHEDULES
Contact: Robert J. Symon For Immediate Release
214-887-2000
TRIANGLE PACIFIC COMPLETES ACQUISITION OF HARTCO FLOORING
June 28, 1996
Dallas, Texas. Triangle Pacific Corp. (TRIP-NASDAQ) announced today that it
has completed the acquisition of Hartco Flooring Company, formerly a wholly-
owned subsidiary of Premark International Inc. The Company reported that the
total value of the transaction was approximately $63 million, consisting of
approximately $36 million in cash paid to Premark and the balance in existing
liabilities of Hartco, including about $15 million of very favorable
industrial revenue bond indebtedness. The cash portion of the price was
provided principally from the company's cash position plus a modest amount of
bank borrowings.
Commenting on the transaction, M. Joseph McHugh, President of Triangle Pacific
and of its Flooring Division, said "We are delighted to have added Hartco to
our growing line of hard-surfaced flooring products. We expect the combined
strengths of the distributors of Bruce Hardwood Floors, Hartco Flooring
Company, and Premier Wood Floors to enable hardwood flooring to continue to
strengthen its position in the highly-competitive floorcovering market."
Triangle Pacific is the world's largest manufacturer of hardwood flooring and
is a major producer of kitchen and bathroom cabinets. It markets its hardwood
flooring under the Bruce, Hartco and Premier brand names. Bruce also markets
high-pressure laminate flooring products under the name Traffic Zone.
