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): March 29, 1994
NORTEK, INC.
- --------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-6112 05-0314991
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(State of incorporation (Commission (IRS Employer
or organization) File Number) Identification No.)
50 Kennedy Plaza, Providence, RI 02903-2360
- --------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (401) 751-1600
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N/A
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
-------------------------------------
On March 29, 1994, pursuant to a Stock Purchase Agreement between
the registrant and DLC Holdings, Inc. ("DLC"), the registrant sold to DLC
all of the outstanding common stock of its wholly-owned subsidiary,
Dixieline Lumber Company ("Dixieline"), for $18,780,000 in cash and 6,000
shares of preferred stock of DLC bearing an 8% dividend.
Dixieline, located in the greater San Diego, California area
consists of a chain of ten retail home centers, a contractor and a
wholesale lumber yard and truss manufacturing yard and markets a wide
assortment of lumber, plywood, building materials and home improvement
products serving the new residential construction and residential
replacement and remodeling markets, and also provides delivery and lumber
cutting and milling services.
A copy of the Agreement and registrant's press release dated April
4, 1994, are attached hereto as exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
(a)None.
(b)Pro Forma Information
(1)Unaudited Nortek, Inc. and Subsidiaries pro forma
condensed consolidated balance sheet as of December 31,
1993, together with Nortek, Inc. and Subsidiaries pro
forma condensed consolidated statement of operations from
continuing operations for the year ended December 31,
1993.
(c) Exhibits
2.1Stock Purchase Agreement dated March 29, 1994, among
Nortek, Inc. and DLC Holdings, Inc.
2.2Press release of Nortek, Inc. dated April 4, 1994.
SIGNATURE
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.
NORTEK, INC.
Dated: April 13, 1994 By: /s/Almon C. Hall
----------------------------
Almon C. Hall
Vice President-Controller
NORTEK, INC. AND SUBSIDIARIES
INTRODUCTION TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
The following unaudited pro forma condensed consolidated balance sheet as
of December 31, 1993 and the unaudited pro forma condensed statement of
operations from continuing operations for the year ended December 31, 1993,
give effect to the sale of Dixieline Lumber Company ("Dixieline"), a wholly-
owned subsidiary of Nortek, Inc. ("Nortek" or the "Company") to DLC
Holdings, Inc.
The unaudited pro forma condensed consolidated balance sheet assumes that
this transaction occurred as of December 31, 1993, while the unaudited pro
forma condensed consolidated statement of operations from continuing
operations assumes that this transaction occurred as of January 1, 1993.
The unaudited pro forma condensed consolidated financial statements
presented reflect the divestiture of Dixieline from the previously reported
unaudited consolidated balance sheet and results of operations of Nortek.
The unaudited pro forma condensed consolidated financial statements also
reflect certain pro forma adjustments based on the terms of the sale. In
addition, earnings from continuing operations exclude the net after tax
loss of approximately $14,900,000 on Dixieline (see Note C). The pro forma
data does not purport to be indicative of the results which would actually
have been reported had the disposition occurred on the dates assumed or
which may be reported in the future. These unaudited pro forma financial
statements should be read in conjunction with the accompanying notes and
the historical consolidated financial statements and related notes of
Nortek included in the Company's latest annual report on Form 10-K.
NORTEK, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1993
Nortek as Pro Forma Nortek
Previously Adjustments Pro
Reported Dr/(Cr) Forma
---------- ------- -----
(Amounts in Thousands)
ASSETS
Current Assets:
Unrestricted--
Cash and investments at cost which $18,780 (A)
approximates market $ 34,006 (2,887) (B) $49,899
Short-term investment held for
redemption of debentures 22,600 --- 22,600
Marketable securities 25,892 --- 25,892
Restricted--
Cash and investments at cost which
approximates market 6,687 --- 6,687
Accounts receivable, less allowances
of $4,198,000 84,843 --- 84,843
Inventories--
Raw materials 27,603 --- 27,603
Work in process 9,227 --- 9,227
Finished goods 45,183 --- 45,183
------- ------- -------
82,013 --- 82,013
------- ------- -------
Current assets of business held
for sale 23,736 (23,736) (A) ---
Insurance claims receivable 14,500 --- 14,500
Prepaid expenses and other current
assets 7,541 --- 7,541
U.S. Federal prepaid income taxes 17,000 --- 17,000
------- ------- -------
Total Current Assets 318,818 (7,843) 310,975
------- ------ -------
Property and Equipment, at cost:
Land 5,833 --- 5,833
Buildings and improvements 52,309 --- 52,309
Machinery and equipment 108,983 --- 108,983
------- ------- -------
167,125 --- 167,125
Less--accumulated depreciation 76,546 --- 76,546
------- ------- -------
Total Property and Equipment, net 90,579 --- 90,579
------- ------ -------
Other Assets:
Goodwill, less accumulated amortization
of $19,180,000 75,599 --- 75,599
Non-current assets of business held (14,874) (A)
for sale 11,987 2,887 (B) ---
Other 12,226 6,000 (A) 18,226
------- ------ ------
99,812 (5,987) 93,825
------- ------ -------
$509,209 $(13,830) $495,379
======= ====== ======
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
NORTEK, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1993
Nortek as Pro Forma Nortek
Previously Adjustments Pro
Reported (Dr)Cr Forma
- -------- ------- -----
(Amounts in Thousands)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Notes payable, current maturities of
long-term debt and other short-term
obligations $ 14,957 $ --- $ 14,957
11-1/2% Senior Subordinated
Debentures, net 22,582 --- 22,582
Accounts payable 46,923 --- 46,923
Accrued expenses and taxes, net 91,422 4,485 (A) 95,907
Current liabilities of business
held for sale 11,769 (11,769) (A) ---
Insurance claims advances 13,239 --- 13,239
------- ------ -------
Total Current Liabilities 200,892 (7,284) 193,608
------- ------- -------
Other Liabilities:
Deferred income taxes 18,000 2,000 (A) 20,000
Other 8,100 --- 8,100
------- ------- -------
26,100 2,000 28,100
------- ------- -------
Notes, Mortgage Notes and Debentures
Payable, Less Current Maturities 169,664 --- 169,664
------- ------- -------
Mortgage Notes Payable of business
held for sale 8,546 (8,546) (A) ---
------- ------- -------
Stockholders' Investment:
Preference stock, $1 par value;
authorized 7,000,000 shares, none
issued --- --- ---
Common stock, $1 par value;
authorized 40,000,000 shares,
15,758,974 shares issued 15,759 --- 15,759
Special common stock, $1 par value;
authorized 5,000,000 shares,
849,575 shares issued 849 --- 849
Additional paid-in capital 134,627 --- 134,627
Accumulated deficit (17,034) --- (17,034)
Cumulative translation, pension and
other adjustments (2,143) --- (2,143)
Less--treasury common stock at cost,
3,795,028 shares (26,371) --- (26,371)
--treasury special common stock at
cost, 271,574 shares (1,680) --- (1,680)
------- ------ -------
Total Stockholders' Investment 104,007 --- 104,007
------- ------ -------
$509,209 $(13,830) $495,379
======= ======= =======
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
NORTEK, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FROM CONTINUING OPERATIONS
DECEMBER 31, 1993
Exclude
Dixieline Exclude
Nortek as Lumber Loss on Nortek
Previously Operating Dixieline Pro
Reported Results Investment Forma
-------- ------- ------- -----
(Amounts in Thousands)
Net Sales $744,113 $83,205 $ --- $660,905
------- ------- ---- -------
Costs and Expenses:
Cost of products sold 532,488 62,640 --- 469,848
Selling, general, and
administrative expense 181,279 20,752 --- 160,524
------- ------ ---- -------
713,767 83,392 --- 630,372
------- ------ ---- -------
Operating earnings (loss) 30,346 (187) --- 30,533
Interest expense (26,519) (429) --- (26,090)
Interest and dividend income 3,223 16 --- 3,207
Net gain on investment and
marketable securities 1,650 --- --- 1,650
Loss on business held for
sale (20,300) --- 20,300 (C) ---
------- ------ ------ -------
Earnings (loss) from continuing
operations before provision
for income taxes (11,600) (600) 20,300 9,300
Provision (credit) for income
taxes 1,000 (200) 5,400 (C) 6,600
------- ------ ---- -------
Earnings (loss) from continuing
operations $(12,600) $ (400) $14,900 $ 2,700
======= ====== ======== =======
Earnings (Loss) Per Share:
Continuing Operations--
Primary $(1.00) $.21
==== ===
Fully diluted $(1.00) $.21
==== ===
Weighted Average Number of Shares:
Primary 12,622 12,622
====== ======
Fully diluted 13,362 13,362
====== ======
The accompanying notes are an integral part of these unaudited pro
forma condensed consolidated financial statements.
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
(A) Entry necessary to reflect the sale of Dixieline as if the
disposition had occurred on December 31, 1993 for approximately
$18,780,000 in cash, approximately $6,000,000 of preferred stock
of the buyer and to accrue for expenses and other.
(B) Cash transferred to Dixieline for the period from January 1, 1994
to March 29, 1994.
(C) In October 1993, the Company decided to sell Dixieline and
provided a pre-tax valuation reserve of approximately $20,300,000
($1.19 per share, net of tax) in the third quarter of 1993 to
reduce the Company's net investment in such business to estimated
net realizable value. At December 31, 1993, the Company
reflected Dixieline's current assets, non-current assets, current
liabilities and long-term mortgage notes payable separately in
its consolidated balance sheet.
(D) Loss per share calculations for the actual results do not include
the effect of common stock equivalents or convertible debentures
(and the reduction in related interest expense) because the
assumed exercise of stock options and conversion of debentures is
anti-dilutive.
(E) Fully diluted earnings per share calculations for the pro forma
results do not include the effect of convertible debentures (and
the reduction in related interest expense) because the assumed
conversion of debentures is anti-dilutive.
-21-
Exhibit 2.1
STOCK PURCHASE AGREEMENT
between
DLC HOLDINGS, INC. a
California corporation
("Buyer")
and
NORTEK, INC.,
a Delaware corporation
("Seller")
dated as of
March 29, 1994
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated
as of the 29th day of March, 1994, by and between DLC Holdings,
Inc., a California corporation (the "Buyer") and Nortek, Inc.,
a Delaware corporation (the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller owns all 1,000 of the shares (the
"Company Shares") of the common stock (the "Common Stock"), par
value $1 per share of Dixieline Lumber Company, a Delaware
corporation (the "Company"); and
WHEREAS, the Seller desires to sell, and the Buyer desires
to purchase, all of the Company Shares owned by the Seller so
that, upon completion of such purchase, the Buyer would own all
of the outstanding capital stock of the Company;
NOW, THEREFORE, in consideration of the mutual promises
and agreements set forth herein, the Buyer and the Seller agree
as follows:
1. PURCHASE AND SALE OF COMPANY SHARES.
1.1 Basic Transaction. On and subject to the terms
and conditions of this Agreement, the Buyer agrees to purchase
from the Seller, and the Seller agrees to sell to the Buyer,
all of the Company Shares for the consideration specified below
in this Section 1.
1.2 Purchase Price. The Buyer agrees:
(a) to pay to the Seller, within 24 hours of
the Closing, $18,780,000, by wire transfer of immediately
available federal funds, in accordance with written wire
instructions delivered by Seller, and
(b) to issue and deliver to the Seller, at the
Closing, 6,000 shares of its Preferred Stock (the "Preferred
Stock"), having rights, powers and privileges acceptable to the
Seller (the "Preferred Stock Terms").
The above consideration is hereinafter referred to
collectively as the "Purchase Price".
As of the Closing Date, all net intercompany liabilities
between the Seller and the Company shall be deemed to be a
capital contribution and satisfied (if the Seller holds a net
receivable from the Company) or shall be deemed a dividend by
the Company to the Seller and satisfied (if the Company holds a
net receivable from the Seller).
1.3 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the headquarters of the Company, commencing at 9:00 a.m.
local time on the date hereof, or at such other time and place
as the Buyer and Seller mutually agree upon (the "Closing
Date").
1.4 Deliveries at the Closing. At the Closing, (i)
the Seller will deliver to the Buyer the various certificates,
instruments and documents referred to in Section 5 below, (ii)
the Buyer will deliver to the Seller the various certificates,
instruments and documents referred to in Section 6 below, and
(iii) the Seller will deliver to the Buyer a stock certificate
representing all of the Company Shares, endorsed in blank or
accompanied by a duly executed assignment document.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER
CONCERNING THE TRANSACTION. The Seller represents and warrants
to the Buyer that the statements contained in this Section 2
are true, correct and complete as of the date of this
Agreement.
2.1 Authorization. The Seller has full power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Seller, enforceable
in accordance with its terms.
2.2 Noncontravention. Neither the execution and
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government,
governmental agency, or court to which the Seller is subject,
or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or
require any notice or consent under, any material contract,
lease, sublease, license, sublicense, franchise, permit,
indenture, agreement, mortgage, instrument of indebtedness or
other arrangement to which the Seller is a party or by which it
is bound or to which any of its assets is subject.
2.3 Broker's Fees. The Seller has no liability or
obligation to pay any fees or commissions to any broker, finder
or agent with respect to the transactions contemplated by this
Agreement for which the Buyer or the Company could become
liable or obligated.
2.4 Company Shares. The Seller holds of record and
owns beneficially the Company Shares, free and clear of any
restrictions on transfer (other than customary restrictions to
comply with federal and state securities laws), claims, taxes,
liens, options or other demands or liabilities. The Company
Shares represent all of the issued and outstanding shares of
capital stock of the Company and no other shares of capital
stock of the Company of any class are issued and outstanding.
The Seller is not a party to any option, warrant, right,
contract, call, put or other agreement or commitment providing
for the disposition or acquisition of any capital stock of the
Company (other than this Agreement). The Seller is not a party
to any voting trust, proxy, or other agreement or understanding
with respect to voting of any capital stock of the Company.
After delivery to the Buyer at the Closing, the Buyer will hold
of record and beneficially the Company Shares, free and clear
of any restrictions on transfer (other than customary
restrictions to comply with federal and state securities laws),
claims, taxes, liens, options or other demands or liabilities.
2.5 Investment Intent. The Seller is
purchasing the Preferred Stock for Seller's own account without
a view to any distribution thereof in violation of the
Securities Act of 1933, as amended (the "Securities Act"). The
Seller has been informed and understands that the Preferred
Stock has not been registered pursuant to the provisions of
Section 5 of the Securities Act and must be held indefinitely
unless such Preferred Stock is subsequently registered under
the provisions of the Securities Act or an exemption from such
registration is available. The Seller has been furnished with,
or has had access to, all information concerning the Buyer as
the Seller has deemed necessary or appropriate in order to
enable the Seller to make an informed investment decision with
respect to the acquisition of the Preferred Stock; provided,
however, that such representation by the Seller does not in any
way limit or modify the representations and warranties of the
Buyer contained in Section 4 or the right of the Seller to rely
thereon. The Seller has such knowledge and experience in
financial matters that the Seller is capable of evaluating the
merits and risks of the Seller's investment in the Preferred
Stock. The Seller's financial condition is such that the
Seller is able to bear all economic risks of investment in the
Preferred Stock. The Seller is an "accredited investor" within
the meaning of Rule 501(a) promulgated under the Securities
Act. The Seller understands and agrees that the Preferred
Stock shall bear a customary Securities Act legend restricting
the transfer thereof.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
CONCERNING THE COMPANY. The Seller represents and warrants to
the Buyer that the statements contained in this Section 3 are
true, correct and complete as of the date of this Agreement,
except as set forth in the disclosure schedule accompanying
this Agreement (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3.
As used in these representations and warranties, "to Seller's
knowledge" or similar phrase means the actual knowledge of
Richard L. Bready, Almon C. Hall, Richard J. Harris or Kevin W.
Donnelly, each without independent investigation.
3.1 Organization, Qualification and Corporate Power.
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 power and authority to
carry on its business as now conducted (retail home center
stores, wholesale lumberyards, truss manufacturing yard) and to
own or lease and to operate its properties. As currently
operated, the Company is not required to be (and is not)
qualified as a foreign corporation in any jurisdiction, except
where the failure to be so qualified would not have a material
adverse effect upon the Company's assets, business or financial
condition. Section 3.1 of the Disclosure Schedule lists the
directors and officers of the Company. Attached hereto as
Exhibits A and B, respectively, are true, correct and complete
copies of the charter and by-laws of the Company (as amended to
date). The minute books containing the records of meetings of
the stockholders, the board of directors, the stock certificate
books, and the stock record books of the Company are correct
and complete.
3.2 Capitalization. The entire authorized capital
stock of the Company consists of 1,000 shares of Common Stock,
of which 1,000 shares are issued and outstanding. All of the
issued and outstanding shares of Common Stock have been duly
authorized, are validly issued, fully paid and nonassessable,
and are held of record by the Seller. Except as contemplated
by this Agreement, there are no outstanding or authorized
options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights, or other agreements or
commitments to which the Company is a party or which are
binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital
stock. There are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the
capital stock of the Company.
3.3 Dixieline Builders Fund Control, Inc. The
Company is the legal and beneficial owner all of the
outstanding capital stock of Dixieline Builders Fund Control,
Inc. ("DBFC"). DBFC is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite power and
authority to carry on its business as now conducted and to own
or lease and to operate its properties. As currently operated,
DBFC is duly qualified, licensed and in good standing as a
foreign corporation in all jurisdictions in which DBFC owns or
leases real property or the nature of its activities makes such
qualification necessary, except where the failure to be so
qualified would not have a material adverse effect upon DBFC's
assets, business or financial condition. All of the shares of
common stock of DBFC owned by the Company are fully paid and
non-assessable and are owned of record and beneficially by the
Company. No subscriptions, agreements, options, warrants, call
or put rights of any kind to purchase or otherwise acquire, and
no securities convertible into, capital stock of DBFC are
outstanding. The Company has good and valid title to all
shares of DBFC's capital stock owned by it, free and clear of
any lien, security interest or other encumbrance or restriction
on transfer. Section 3.3 of the Disclosure Schedule lists
DBFC's directors and officers. The original certificate
representing all of the Company's shares of capital stock of
DBFC has been lost or destroyed and cannot be found by the
Seller after diligent search (but has not been delivered,
transferred, assigned, endorsed, hypothecated or in any way
alienated by the
Company). Attached hereto as Exhibits C and D, respectively,
are true, correct and complete copies of the charter and by-
laws of DBFC (as amended to date).
3.4 Governmental Consent. No consent, approval or
authorization of, or registration, qualification or filing
with, any governmental agency or authority must be obtained or
satisfied by Seller for the execution and delivery of this
Agreement or for the consummation of the transactions
contemplated hereby.
3.5 Insurance. Fire, liability and other forms of
insurance applicable to the Company's business are currently
provided by policies maintained by the Seller or the Company in
such amounts and against such risks as are customarily
maintained by companies engaged in similar lines of business.
Such policies are in full force and effect and no notice of
cancellation or termination, or of increase in premiums, has
been received with respect to any such policy. Schedule 3.5 of
the Disclosure Schedule contains a complete and accurate list
of all such material policies in force on the date of this
Agreement. All of such policies are maintained by the Seller
and coverage of the Company thereunder will cease as of the
Closing Date for occurrences after such date.
3.6 Taxes. During Seller's ownership of the
Company, all necessary state and federal income and franchise
tax returns required to be filed in respect of the Company or
DBFC have been filed (or the filing deadline properly extended)
and the Company, DBFC or the Seller has paid all state and
federal income and franchise taxes required to paid in respect
of the periods covered by such returns or is contesting such
taxes in good faith. To the knowledge of Seller, all other
necessary state and federal income and franchise tax returns
required to be filed in respect of the Company or of DBFC have
been filed (or the filing deadline properly extended) and the
Company, DBFC or the Seller has paid all state and federal
income and franchise taxes required to be paid in respect of
the periods covered by such returns or is contesting such taxes
in good faith.
3.7 No Encumbrances. The Seller has taken no action
to transfer or encumber the Company_s machinery or equipment.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The
Buyer represents and warrants to the Seller that the statements
contained in this Section 4 are true, correct and complete as
of the date of this Agreement.
4.1 Investment Intent. The Buyer is purchasing the
Company Shares for Buyer's own account without a view to any
distribution thereof in violation of the Securities Act. The
Buyer has been informed and understands that none of the
Company Shares has been registered pursuant to the provisions
of Section 5 of the Securities Act and must be held
indefinitely unless such Company Shares are subsequently
registered under the provisions of the Securities Act or an
exemption from such registration is available. The Buyer has
been furnished with, or has had access to, all information
concerning the Company as the Buyer has deemed necessary or
appropriate in order to enable the Buyer to make an informed
investment decision with respect to the acquisition of the
Company Shares; provided, however, that such representation by
the Buyer does not in any way limit or modify the
representations and warranties of the Seller contained in
Sections 2 and 3 or the right of the Buyer to rely thereon.
The Buyer has such knowledge and experience in financial
matters that the Buyer is capable of evaluating the merits and
risks of the Buyer's investment in the Shares. The Buyer's
financial condition is such that the Buyer is able to bear all
economic risks of investment in the Shares. The Buyer is an
"accredited investor" within the meaning of Rule 501(a)
promulgated under the Securities Act. The Buyer understands
and agrees that the Company Shares shall bear a customary
Securities Act legend restricting the transfer thereof.
4.2 Organization, Qualification and Corporate Power.
The 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 power and authority to
carry on its business as now conducted and to own or lease and
to operate its properties. As currently operated, the Buyer is
not required to be qualified as a foreign corporation in any
jurisdiction, except where the failure to be qualified would
not have a material adverse effect upon the Buyer's assets,
business or financial condition. The Buyer is a newly-formed
corporation, has carried on no business activities except in
connection with the acquisition of the Company, and has no
liabilities except those incurred in connection with such
acquisition. Section 4.2 of the Disclosure Schedule lists the
directors and officers of the Buyer. The Buyer has delivered
to the Seller true, correct and complete copies of the charter
and by-laws of the Buyer (as amended to date).
4.3 Capitalization. The entire authorized capital
stock of the Buyer is as described in Section 4.3 of the
Disclosure Schedule. All of the issued and outstanding shares
of capital stock of the Buyer have been duly authorized, are
validly issued, fully paid and nonassessable, and are held of
record and beneficially by the individuals indicated in Section
4.3 of the Disclosure Schedule. There are no outstanding or
authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights, or other agreements or
commitments to which the Buyer is a party or which are binding
upon the Buyer for the issuance, disposition or acquisition of
any of its capital stock. Except as contemplated by this
Agreement, there are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the
capital stock of the Buyer.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The
obligation of the Buyer to consummate the Closing shall be
subject to the satisfaction at or prior to the Closing of each
of the following conditions:
5.1 Opinion of Seller's General Counsel. Kevin W.
Donnelly, Vice President and General Counsel of the Seller,
shall have delivered to the Buyer a legal opinion, subject to
customary qualifications and in form and substance reasonably
satisfactory to Buyer and its counsel, to the effect that:
(a) The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware.
(b) The capitalization and ownership of the
Company (prior to the consummation of the transactions
contemplated hereby) is as set forth in this Agreement.
(c) This Agreement has been duly executed and
delivered by the Seller and constitutes its legal, valid,
binding and enforceable obligation.
5.2 Financing. The Buyer shall have received
financing for the transactions contemplated by this Agreement,
and for the operation of the Company's business, on terms and
conditions satisfactory to the Buyer.
5.3 Resignations of Board Members and Certain
Officers. The Buyer shall have received the resignations,
effective as of the Closing Date, of Richard L. Bready and
Richard J. Harris as directors and officers of the Company and
DBFC and of Kevin W. Donnelly as an officer of the Company and
DBFC.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The
obligation of the Seller to consummate the Closing shall be
subject to the satisfaction, at or prior to the Closing, of
each of the following conditions:
6.1 Establishment and Issuance of Preferred Stock.
The Buyer shall have duly and properly amended its charter to
establish the Preferred Stock having the Preferred Stock Terms
(and shall have provided satisfactory evidence thereof to the
Seller) and shall have duly authorized the issuance thereof to
the Seller.
6.2 Custody Agreement and Irrevocable Proxy; Key-Man
Life Insurance. William S. Cowling, II ("Cowling") shall have
executed and delivered to the Seller a Custody Agreement and
Irrevocable Proxy (the "Custody Agreement") in a form
satisfactory to Seller. The Buyer shall have provided the
Seller the key-man life insurance on Cowling required by the
Preferred Stock Terms.
6.3 Closing Certificate. Cowling and Hamid Daudani,
as officers of the Company, shall have confirmed in writing to
the Seller, to their actual knowledge without independent
investigation, the truthfulness of the Seller's representations
and warranties contained in Seller's letter to Greyhound
Financial Capital Corporation.
6.4 Opinion of Buyer's Counsel. Buyer's counsel
shall have delivered to the Seller a legal opinion, subject to
customary qualifications and in form and substance reasonably
satisfactory to Seller and its counsel, to the effect that:
(a) This Agreement has been duly executed and
delivered by Cowling and the Buyer and constitutes his and its
legal, valid, binding and enforceable obligation.
(b) The Preferred Stock Terms have been duly
and properly adopted by the Buyer and duly and properly filed
with the California Secretary of State and the Preferred Stock
has been duly and properly issued to the Seller by the Buyer.
(c) The Custody Agreement has been duly
executed and delivered by Cowling and constitutes his legal,
valid, binding and enforceable obligation.
6.5 Replacement of DBFC Escrow Licensee Bond. Buyer
shall have replaced DBFC's escrow licensee bond, currently
issued by The Hartford Fire Insurance Company and on which the
Seller is contingently liable, or shall otherwise relieve the
Seller of all liability, contingent or otherwise, with respect
thereto.
7. OTHER COVENANTS AND AGREEMENTS.
7.1 Tax Matters.
(a) Federal and California Income Taxes. The
applicable income, deductions and credits with respect to the
Company and DBFC for the period beginning on January 1, 1994
and ending on the Closing Date will be included in the
consolidated federal income tax return of the affiliated group
having the Seller as its common parent and will be included in
the California unitary franchise tax return of the Seller. The
Seller shall be solely responsible for, and shall indemnify and
hold harmless the Buyer, the Company and DBFC with respect to,
all federal or California income and franchise taxes, and any
interest, penalty or additional amounts, with respect to any
taxable period of the Company and DBFC ending on or before the
Closing Date. The Buyer shall be responsible for, and shall
indemnify and hold harmless the Seller with respect to, all
such taxes for periods commencing after the Closing Date. The
Seller shall be entitled to all refunds of federal or
California income or franchise taxes accruing to the Company or
DBFC with respect to any taxable periods ending on or before
the Closing Date.
(b) Certain Contest Rights. The Buyer will
promptly inform the Seller as to the commencement of any audit
or proceeding with respect to the federal or California income
or franchise tax liability of the Company or DBFC for periods
ending on or prior to the Closing Date of which Buyer becomes
aware. The parties will reasonably cooperate with each other
with respect to such proceedings, taking into account, among
other things, the relevant provisions of this Section 7.1. The
Seller will reimburse the Buyer for all out-of-pocket expenses
reasonably incurred by the Buyer in connection with its
cooperation.
(c) Other Taxes. Except as provided in
paragraph (a) above, the Buyer shall be solely responsible for,
and shall indemnify and hold harmless the Seller with respect
to, all taxes, fees, duties or similar charges, including, but
not limited to, gross income, gross receipts, sales, use, ad
valorem, payroll, employment or real or personal property taxes
and any interest, penalties or additional amounts with respect
thereto imposed by any taxing authority with respect to the
Company or DBFC, including, without limitation, all transfer,
sales, use and other non-income taxes arising in connection
with the consummation of the transactions contemplated hereby,
but excluding any income or franchise taxes imposed on the
Seller as a result of any gain of the Seller upon the sale of
the Company.
(d) Termination of Prior Tax Sharing
Agreements. Effective as of the Closing Date, all tax sharing
agreements, whether or not written, to which the Seller and the
Company are parties shall be terminated and the provisions of
this Section 7.1 shall thereafter govern the obligations of the
Seller and the Company with respect to tax matters. The
foregoing provision and the other provisions of this Section
7.1 are not intended to reverse any prior tax payments made by
the Company to the Seller.
(e) Cooperation. The Buyer shall deliver to
the Seller, in a timely manner, such information and data as
the Seller shall reasonably request, including such information
required by the Seller's customary tax and accounting
questionnaires, in order to enable the Seller to fulfill its
obligations under this Section 7.1.
(f) Section 338(h)(10) Election. In order to
treat the sale of the Company hereunder as an asset sale for
tax purposes, the Seller and the Buyer agree that they shall
take all action necessary to join in making a timely election
pursuant to Section 338(h)(10) of the Internal Revenue Code of
1986, as amended (and any other relevant Section or related
regulation) and any similar state law provision in respect of
the purchase of the Company Shares. The Buyer shall pay all
transfer taxes, sales taxes and use taxes, if any, resulting
from the sale of the Company or such election.
(g) Allocation. The Buyer and the Seller shall
calculate gain, loss and basis for federal and state tax
purposes with reference to, and consistent with, the allocation
attached hereto as Schedule 7.1(g).
(h) Exclusivity. This Section 7.1 shall be the
sole provision governing tax matters and indemnities therefor
under this Agreement.
7.2 Preservation of Books and Records. The Buyer
and the Seller each agree that, unless otherwise consented to
in writing by the other party, neither the Buyer nor the Seller
will, for a period of ten (10) years following the Closing
Date, destroy or otherwise dispose of any of the books or
records relating to the Company without first offering to
surrender such books and records or any portion thereof which
such party may intend to destroy or dispose of to the other
party. In connection therewith, the Buyer and the Seller
further agree to allow the other party's representatives,
attorneys, and accountants, at the user's own expense, access
to such books and records upon reasonable notice and during
normal business hours for the purpose of examination and
copying to the extent reasonably required in connection with
litigation, the preparation of any required tax returns or
other filings or in connection with any tax procedure, any
obligation or duty hereunder, or compliance with any legal duty
or obligation.
7.3 Expenses. All expenses of the preparation,
execution and consummation of this Agreement and of the
transactions contemplated hereby, including, without
limitation, attorneys', accountants' and outside advisers' fees
and disbursements, shall be borne by the party incurring such
expenses. Without limiting the foregoing, the Buyer and the
Seller shall each pay the costs which it or they has incurred
in retaining any broker or finder in connection with this
transaction.
7.4 Compliance With Preferred Stock Terms. For so
long as the Preferred Stock remains outstanding, the Buyer
shall cause the Company to comply with all of the terms and
provisions of the Preferred Stock Terms.
7.5 Claims Under Seller Insurance Policies. The
Company has been covered for certain periods under insurance
policies maintained by the Seller and covering the Seller and
all of its subsidiaries. Coverage under these policies will
cease for occurrences after the Closing Date. The Seller will
allow the Buyer to continue to be covered by the Seller's
insurance policies for pre-Closing occurrences related to the
Company on the condition that the Buyer reimburse the Seller
for all charges to Seller after the Closing Date in connection
with claims under such policies (including, without limitation,
all retained or deductible amounts, legal fees, premium tax
payments and claim administration fees), to the extent not
already paid by the Company. Accordingly, the Buyer shall,
promptly after receipt of notice and supporting documentation
(and in any event within 30 days), reimburse the Seller for all
such amounts charged to Seller after the Closing Date. The
Seller will allow the Buyer to participate in the settlement of
any claims under such policies and to control exclusively the
settlement of any matters within the deductible limit of any
such policy. Any money recovered by Seller regarding the
Hargreaves litigation shall be paid to the Company.
7.6 Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants of
the parties hereto contained in this Agreement shall survive
the Closing and, except as otherwise provided, remain in full
force and effect forever. The representation and warranty of
the Seller contained in Section 3.6 shall expire and be of no
further force or effect with respect to any claim for breach
thereof not asserted in writing prior to the expiration of the
applicable tax statute of limitations. All of the other
representations and warranties of the Seller contained in
Sections 2 and 3 (other than Sections 2.4, 3.2 and 3.3) shall
expire and be of no further force or effect with respect to any
claim for breach thereof not asserted in writing within 2 years
of the Closing Date. All of the representations and warranties
of the Buyer contained in Section 4 shall expire and be of no
further force or effect with respect to any claim for breach
thereof not asserted in writing within 2 years of the Closing
Date.
7.7 Further Assurances. The Seller and the Buyer
shall execute and deliver to the appropriate other party such
other instruments as may be reasonably required in connection
with the performance this Agreement and each shall take all
such further actions as may be reasonably required to carry out
the transactions contemplated by this Agreement.
7.8 Satisfaction of Conditions Precedent. The
Seller and the Buyer will each use their best efforts to cause
the satisfaction of the conditions precedent contained in this
Agreement; provided, however, that nothing contained in this
Section 7.8 shall obligate any party hereto to waive any right
or condition under this Agreement.
7.9 Public Statements or Releases. The parties
hereto each agree that prior to the Closing neither the Company
nor any party to this Agreement will make, issue or release any
public announcement, statement or acknowledgment of the
existence of the transactions provided for herein, without
first obtaining the consent of the other parties hereto.
Nothing contained in this Section 7.9 shall prevent the Seller
from making such public announcements as the Seller may
consider necessary in order to satisfy its legal or contractual
obligations.
7.10 Non-Competition Covenant. The Seller hereby
covenants and agrees that the Seller and its subsidiaries will
not, at any time within 5 years after the Closing Date,
directly or through a subsidiary or affiliate, enter into or
engage in the business of operating one or more retail home
center stores, wholesale lumberyards or truss manufacturing
yards in San Diego County California. The foregoing covenant
shall terminate upon the occurrence of any payment default on
the Preferred Stock which is not cured within the applicable
cure period (except in the case of a payment default caused by
the Seller's breach of this covenant). The parties hereto
agree that the duration and geographic scope of this non-
competition provision are reasonable. In the event that any
court determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that
extent unenforceable, the parties hereto agree that the
provision shall remain in full force and effect for the
greatest time period and in the greatest area that would not
render it unenforceable. The parties hereto agree that damages
are an inadequate remedy for any breach of this provision and
that the Buyer shall, whether or not it is pursuing any
potential remedies at law, be entitled to equitable relief in
the form of preliminary and permanent injunctions without bond
or other security upon any actual or threatened breach of this
noncompetition provision.
7.11 Confidentiality. From and after the Closing
Date, the Seller shall not use and shall hold in confidence any
and all non-public information relating to the Buyer or the
Company, except to the extent that the Seller must disclose any
such information in order to satisfy its legal or current
contractual obligations.
7.12 Subsequent Sale of the Buyer. If, at any time
within 24 months after the Closing Date, the Buyer, or its
shareholders, publicly announce, enter into a letter of intent
relating to, enter into a definitive agreement providing for,
or consummate (the "Triggering Event"), a transaction (a
"Subsequent Transaction"), which, as announced, or as provided
in such letter or agreement or as consummated, provides for or
relates to the disposition of a controlling interest in the
Buyer, or the sale, transfer or other distribution of assets
constituting a majority (measured by fair market value) of the
consolidated assets of the Buyer, the Buyer and Cowling jointly
and severally agree, upon consummation of the Subsequent
Transaction, to pay to the Seller, in cash, securities or other
property in the same proportion paid in such transaction, an
amount equal to 40% (if the Triggering Event occurs within 12
months of the Closing Date) or 20% (if the Triggering Event
occurs on or after 12 months, but within 24 months, from the
Closing Date) of the increase in the initial value of Cowling's
equity interest in the Buyer as established by the Subsequent
Transaction. The foregoing shall not apply to a public
offering of the shares of the Buyer.
7.13 Arbitration. Except to the extent that a party
hereto seeks an injunction or other equitable relief, any
dispute, controversy or claim arising under this Agreement
(including, without limitation, any claim for indemnification
or damages for breach of covenants) shall be finally settled
under the Rules of the American Arbitration Association for
Commercial Arbitration then in force by one or more arbitrators
appointed in accordance with said Rules. If the dispute,
controversy or claim involves damages of $1,000,000 or more,
the arbitration panel shall consist of 3 arbitrators, each of
whom has experience in the matter in question. The place of
arbitration shall be either San Diego, California (if the
arbitration is commenced by the Seller) or Providence, Rhode
Island (if the arbitration is commenced by the Buyer or
Cowling) and the law applicable to the arbitration procedure
shall be determined by referring to the law of the place of
arbitration. The arbitrator(s) shall determine the matters in
dispute in accordance with the law of the State of California
as in force and effect on the date of this Agreement. The
parties agree that the award of the arbitrator(s): shall be the
sole and exclusive remedy between them regarding any claims,
counterclaims, issues or accountings presented or pled to the
arbitrator(s); that judgment on the award of the arbitrator(s)
may be entered in any court in any State of the United States
having jurisdiction over and venue with respect to the party
against which enforcement of the award is being sought; that it
shall be made and shall promptly be payable in United States
Dollars free of any tax, deduction or offset; that any costs
and attorneys fees incurred by the prevailing party, as
determined by the arbitrator(s), incident to the arbitration
shall be included as part of the award of the arbitrator(s);
and that any costs, fees or taxes incident to enforcing the
award shall, to the maximum extent permitted by law, be charged
against the party resisting such enforcement. The award shall
include interest from the date of any damages incurred for
breach or other violation of the contract, and from the date of
the award until paid in full, at a rate to be fixed by the
arbitrator(s), but in no event less than Bank of America's
prime rate.
8. INDEMNIFICATION.
8.1 Indemnification by the Buyer. The Buyer hereby
indemnifies and holds harmless the Seller, its subsidiaries and
affiliates, and each of their respective officers, directors,
employees and agents against all claims, damages, losses,
liabilities, costs and expenses (including, without limitation,
settlement costs and any legal expenses for investigating or
defending any actions or threatened actions) reasonably
incurred by any such party in connection with each and all of
the following:
(a) any breach by the Buyer of its
representations or warranties contained in Section 4 of this
Agreement;
(b) any breach by the Buyer of any covenant,
agreement or obligation of the Buyer or the Company contained
in this Agreement; and
(c) any Company Obligations (as hereinafter
defined).
As used in this Agreement, "Company Obligations"
means all liabilities and obligations of the Company or
pertaining to or arising out of the ownership or possession or
use or operation of any asset or property of the Company or the
operation of the business of the Company, whether known or
unknown, whether absolute or contingent, whether liquidated or
unliquidated, and whether due or to become due, including, but
not limited to, all liabilities and obligations of the Company:
(i) for transfer, sales, use and other non-
income taxes arising in connection with the consummation of the
transactions contemplated hereby;
(ii) under the Company's employee benefit
plans;
(iii) under all contracts, leases and other
agreements and arrangements entered into by the Company;
(iv) for products sold or services rendered
(including, without limitation, product liability, product
warranty liability, and liabilities in respect of credit
balances, credit memos and all other amounts due to its sales
representatives, dealers and customers);
(v) to pay for any products, goods, raw
materials, or services delivered or provided;
(vi) for making payments or providing benefits
of any kind to its employees or former employees (including,
without limitation, in connection with any discrimination,
harassment, or wrongful termination claim of any employee or
former employee);
(vii) arising out of litigation, claims,
investigations or proceedings pertaining to its business;
(viii) for taxes with respect to any period; and
(ix) pertaining to its business and arising out of
or resulting from noncompliance with any national, regional, or
local laws, statutes, ordinances, rules, regulations, orders,
determinations, judgments or directives, whether legislatively,
judicially or administratively promulgated (including, without
limitation, any environmental liabilities or obligations
whether or not arising out of or resulting from its
noncompliance with environmental laws or regulations);
provided, however, that Company Obligations shall not include
any obligations for which the Seller has provided indemnity
pursuant to Sections 7.1 or 8.2.
8.2 Indemnification by the Seller. The Seller
hereby indemnifies and holds harmless the Buyer, its
subsidiaries and affiliates, and each of their respective
officers, directors, employees and agents against all claims,
damages, losses, liabilities, costs and expenses (including,
without limitation, settlement costs and any legal expenses for
investigating or defending any actions or threatened actions)
reasonably incurred by any such party, in connection with each
and all of the following:
(a) any breach by the Seller of any of its
representations or warranties contained in Sections 2 or 3 of
this Agreement; and
(b) any breach by the Seller of any covenant,
agreement or obligation of the Seller contained in this
Agreement.
8.3 Claims for Indemnification. Whenever any claim
shall arise for indemnification hereunder the party seeking
indemnification (the "Indemnified Party") shall promptly notify
the party from whom indemnification is sought (the
"Indemnifying Party") of the claim in writing and, when known,
the facts constituting the basis for such claim (provided,
however, that failure to promptly give such notice shall not
relieve the Indemnifying Party of its obligations hereunder
except to the extent he or it is materially prejudiced
thereby). In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or
legal proceedings by a thirdparty, the notice to the
Indemnifying Party shall specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a
third party for which it is entitled to indemnification
hereunder without the prior written consent of the Indemnifying
Party, which shall not be unreasonably withheld, unless suit
shall have been instituted against it and the Indemnifying
Party shall not have taken control of such suit after
notification thereof as provided in Section 8.4 of this
Agreement.
8.4 Defense of Indemnifying Party. In connection
with any claim giving rise to indemnify hereunder resulting
from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to
the Indemnified Party, assume the defense of any such claim or
legal proceeding if it acknowledges to the Indemnified Party in
writing its obligations to indemnify the Indemnified Party with
respect to all elements of such claim. The Indemnified Party
shall be entitled to participate in (but not control) the
defense of any such actions, with its counsel and at its own
expense. If the Indemnifying Party does not assume the defense
of any such claim or litigation resulting therefrom within 30
days after the date such claim is made, (a) the Indemnified
Party may defend against such claim or litigation, in such
manner as it may deem appropriate, including, but not limited
to, settling such claim or litigation, after giving notice of
the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with its counsel and at
its own expense. If the Indemnifying Party thereafter seeks to
question the manner in which the Indemnified Party defended
such third party claim or the amount or nature of any such
settlement, the Indemnifying Party shall have the burden to
prove by a preponderance of the evidence that the Indemnified
Party did not defend or settle such third party claim in a
reasonably prudent manner.
8.5 Limitations on Indemnification.
(a) Neither the Buyer nor the Seller shall have
any obligation, in the absence of fraud, to indemnify the other
party pursuant to Section 8.1(a) or 8.2(a) hereof,
respectively, until the indemnified party shall have suffered
aggregate losses in excess of $500,000 (after which point the
indemnified party shall be entitled to indemnity from the first
dollar of loss).
(b) All recoveries hereunder shall be
appropriately adjusted for tax benefits and insurance proceeds
(reasonably certain of receipt and utility in each case). All
indemnification payments under this Section 8 shall be deemed
adjustments to the Purchase Price.
(c) The Seller shall have no obligation to
indemnify the Buyer or the Company pursuant to Section 8.2
hereof with respect to any material breach by the Seller of any
of its representations or warranties contained in Sections 2 or
3 of this Agreement if such breach involves a matter the
existence of which, prior to the Closing, is known to Cowling
(as regards Sections 2.1, 2.2, 2.3, 3.1, 3.4 and 3.5) or, with
reasonable investigation, should have been known to Cowling.
(d) The indemnification provisions in this
Section 8 shall be the sole remedy of the parties hereto for
any breach of Section 8.1(a) or 8.2(a).
9. GENERAL.
9.1 Notices. All notices, demands and other
communications hereunder shall be in writing and shall be made
by hand delivery, first-class mail (registered or certified,
return receipt requested), telecopier, or reputable overnight
air courier guaranteeing next day delivery addressed as
follows:
(a) if to the Seller to:
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attention: Chairman
with a copy sent contemporaneously to the Seller's Vice
President and General Counsel;
(b) if to the Buyer or Cowling,to:
Dixieline Lumber Company
3250 Sports Arena Blvd.
San Diego, CA 92110
Attention: William S. Cowling II
and Hamid Daudani
with a copy sent contemporaneously to:
Emmanuel Savitch, Esq.
PROCOPIO, CORY, HARGREAVES & SAVITCH
2100 Union Bank Building
530 B Street
San Diego, CA 92101; or
(c) to such other address as the party receiving
such notice shall have properly designated to the other party
hereto in writing.
Each such notice shall be deemed given at the time
delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and the next business
day after timely delivery to the courier, if sent by reputable
overnight air courier guaranteeing next day delivery.
9.2 Entire Agreement. This Agreement contains the
entire understanding of the parties, supersedes all prior
agreements and understandings relating to the subject matter
hereof and shall not be amended except by a written instrument
hereafter signed by all of the parties hereto.
9.3 Interpretation. This Agreement has been
prepared, and negotiations in connection herewith have been
carried on, by the joint efforts of the parties hereto and
their respective counsel. This Agreement is to be construed
fairly and simply and not strictly for or against any of the
parties hereto.
9.4 Governing Law. The validity and construction of
this Agreement shall be governed by the internal substantive
laws of the State of California.
9.5 Table of Contents; Sections and Section
Headings. The table of contents hereto, and the headings of
sections and subsections are for reference only and shall not
limit or control the meaning thereof.
9.6 Assigns. This Agreement shall be binding upon
and inure to the benefit of the heirs and successors of each of
the parties. Neither this Agreement nor the obligations of any
party hereunder shall be assignable or transferable by such
party without the prior written consent of the other party
hereto; provided, however, that nothing contained in this
Agreement shall prevent the Buyer or the Company, without the
consent of the Seller, from transferring or assigning its
rights (but not its obligations) hereunder to its lenders as
security.
9.7 No Implied Rights or Remedies. Except as
otherwise expressly provided herein, nothing herein expressed
or implied is intended or shall be construed to confer upon or
to give any person, firm or corporation, other than the Seller
and the Buyer, any rights or remedies under or by reason of
this Agreement.
9.8 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
9.9 Amendments. This Agreement may not be changed
orally, but only by an agreement in writing signed by the
Seller, the Buyer and Cowling.
9.10 Waiver of Compliance. Any failure of the
Seller, on the one hand, or Cowling or the Buyer, on the other
hand, to comply with any obligation, covenant, agreement or
condition herein may be expressly waived in writing by the
Seller (in respect of failures by Cowling or the Buyer) or the
Buyer (in respect of failures by the Seller).
9.11 Assignment of Certain Rights Under Share
Acquisition Agreement. Effective as of the Closing Date, the
Seller hereby assigns to the Buyer (without representation or
warranty of any kind) all of the Seller's rights to
indemnification pursuant to the Share Acquisition Agreement,
dated as of October 7, 1985, between the Seller and
Weyerhaeuser Company; provided however, to the extent that such
rights are not assignable, Seller agrees to exercise such
rights for the benefit of Buyer and subject to the control and
direction of Buyer; except that the Seller shall retain and not
assign any rights under such agreement to seek indemnification
in connection with any claim made against the Seller.
IN WITNESS WHEREOF, and intending to be legally bound
hereby, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first above
written.
DLC HOLDINGS, INC.
By:/s/William S. Cowling, II
Title: President
NORTEK, INC.
By:/s/ Almon C. Hall
Title: Vice President Controller
The undersigned agrees to be bound by the provisions of
Section 7.12.
/s/ William S. Cowling, II
William S. Cowling, II
The undersigned agrees to be jointly and severally liable
for all of the Buyer's covenants in Sections 7 and 8.
DIXIELINE LUMBER COMPANY
By: /s/ William S. Cowling, II
Title: President
EXHIBITS AND SCHEDULES TO STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 29, 1994
BETWEEN
DLC HOLDINGS, INC. AND NORTEK, INC.
OMITTED ARE AS FOLLOWS:
EXHIBITS
Exhibit A Certificate of Incorporation of Dixieline
Lumber Company
Exhibit B Bylaws of Dixieline Lumber Company
Exhibit C Articles of Incorporation of Dixieline
Builders Fund Control, Inc.
Exhibit D Bylaws of Dixieline Builders Fund Control,
Inc.
SCHEDULES
Schedule 3.1 Directors and Officers of Dixieline Lumber
Company
Schedule 3.3 Directors and Officers of Dixieline Builders
Fund Control, Inc.
Schedule 3.5 Insurance Policies
Schedule 4.2 Directors and Officers of DLC Holdings, Inc.
Schedule 4.3 Capitalization and Stock Ownership of DLC
Holdings, Inc.
Schedule 7.1(g) Allocation of Purchase Price
Pursuant to Section 601(b)(2) of Regulation S-K, the
exhibits and schedules listed above have been omitted and
registrant agrees to furnish supplementally a copy of any such
schedule or exhibit to the Commission on request.
SALE OF SUBSIDIARY
Richard J. Harris, Vice President & Treasurer
(401) 751-1600
IMMEDIATE
NORTEK COMPLETES SALE OF SUBSIDIARY
PROVIDENCE, RI, April 4, 1994 -- Nortek, Inc. today
announced completion of the sale of Dixieline Lumber
Company, a wholly-owned California subsidiary, as the final
step in consolidating the company into three core operating
groups.
Nortek, in announcing plans in the third quarter of last
year to divest Dixieline, recorded a pre-tax valuation
reserve of $20.3 million ($14.9 million or $1.19 per share
net of tax) to reduce its investment in the subsidiary to
its estimated realiz-able value.
Dixieline, based in the Greater San Diego, CA, area,
includes a chain of 10 retail home centers, a contractor and
wholesale lumber yard and a truss manufacturing yard. Terms
of the sale were not announced.
Richard L. Bready, Chairman and Chief Executive Officer,
said the sale is in line with "our continuing strategy to
redeploy resources and direct management atten-tion to
businesses which better fit our long-range criteria."
Nortek, Inc. (NYSE:NTK) is a diversified Fortune 500
corporation, manufactur-ing and marketing residential and
commercial building products.
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