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): February 3, 1995
Champion Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation)
1-9751 38-2743168
(Commission File Number) (IRS Employer Identification No.)
2701 University Drive, Suite 320, Auburn Hills, Michigan 48326
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (810) 340-9090
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On February 3, 1995, (i) CHI Acquisition Corp. ("CHI
Acquisition"), a wholly owned subsidiary of Champion Enterprises,
Inc. (the "Company"), acquired substantially all of the assets and
business of Chandeleur Homes, Inc. ("Chandeleur"), and (ii) CRHI
Acquisition Corp. ("CRHI Acquisition"), a wholly owned subsidiary
of Champion Enterprises, Inc. (the "Company"), acquired
substantially all of the assets and business of Crest Ridge Homes,
Inc. ("Crest Ridge"), in related transactions. Chandeleur and
Crest Ridge are separate privately-held manufactured housing
companies with significant common ownership. In connection with
the acquisition, CHI Acquisition changed its corporate name to
"Chandeleur Homes, Inc." and CRHI Acquisition changed its corporate
name to "Crest Ridge Homes, Inc." The acquisitions were completed
pursuant to the Asset Purchase Agreement, dated as of January 5,
1995, by and among the Company, CHI Acquisition, Chandeleur, and
the shareholders of Chandeleur (the "Chandeleur Asset Purchase
Agreement") and the Asset Purchase Agreement, dated as of January
5, 1995, by and among the Company, CRHI Acquisition, Crest Ridge
and the shareholders of Crest Ridge (the "Crest Ridge Asset
Purchase Agreement"). The Chandeleur Asset Purchase Agreement and
the Crest Ridge Asset Purchase Agreement are referred to
collectively herein as the "Asset Purchase Agreements." The
Chandeleur Asset Purchase Agreement is attached hereto as Exhibit
2.1 and the Crest Ridge Asset Purchase Agreement is attached
hereto as Exhibit 2.2.
In consideration of the sale of the assets and businesses of
Chandeleur and Crest Ridge, CHI Acquisition and CRHI Acquisition,
assumed certain liabilities of Chandeleur and Crest Ridge,
respectively, and delivered to Chandeleur the purchase price of
$32,500,000 and to Crest Ridge the purchase price of $14,400,000 in
cash, subject to certain adjustments as set forth in the Asset
Purchase Agreements. The acquisitions were financed from available
cash and an amended $60,000,000 revolving credit facility with
Comerica Bank. The acquired assets were used by Chandeleur and
Crest Ridge to manufacture and assemble manufactured housing. The
Company expects to continue to operate the acquired businesses and
use the acquired assets as they had been under the ownership of
Chandeleur and Crest Ridge.
Prior to the execution of the Asset Purchase Agreements, there
was no material relationship between the Company and either
Chandeleur or Crest Ridge or between any officers or directors of
the Company and the officers, directors or shareholders of
Chandeleur and Crest Ridge.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
It is impractical to provide financial statements of the
businesses acquired at this time. Financial statements of the
businesses acquired will be filed within sixty (60) days.
(b) Pro Forma Financial Information
It is impractical to provide pro forma financial information
at this time. Pro forma financial information will be filed within
sixty (60) days.
(c) Exhibits
Exhibit
Number
2.1 Asset Purchase Agreement, dated as of January 5,
1995, by and among Champion Enterprises, Inc., CHI
Acquisition Corp., Chandeleur Homes, Inc., and the
shareholders of Chandeleur Homes, Inc., omitting
exhibits and schedules.
2.2 Asset Purchase Agreement, dated as of January 5,
1995, by and among Champion Enterprises, Inc.,
CRHI Acquisition Corp., Crest Ridge Homes, Inc.,
and the shareholders of Crest Ridge Homes, Inc.,
omitting exhibits and schedules.
99.1 Press Release issued January 6, 1995 (filed as
Exhibit 99.1 to the Company's Current Report on Form
8-K dated January 6, 1995 and incorporated by
reference)
99.2 Press Release issued February 3, 1995.
<PAGE>
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.
CHAMPION ENTERPRISES, INC.
/s/ A. JACQUELINE DOUT
A. Jacqueline Dout, Executive Vice President
- Treasurer and Chief Financial Officer
February 16, 1995
INDEX TO EXHIBITS
Exhibit No. Description
2.1 Asset Purchase Agreement, dated as of January 5,
1995, by and among Champion Enterprises, Inc.,
CHI Acquisition Corp., Chandeleur Homes, Inc., and
the shareholders of Chandeleur Homes, Inc., omitting
exhibits and schedules.
2.2 Asset Purchase Agreement, dated as of January 5,
1995, by and among Champion Enterprises, Inc.,
CRHI Acquisition Corp., Crest Ridge Homes, Inc., and
the shareholders of Crest Ridge Homes, Inc., omitting
exhibits and schedules.
99.1 Press Release issued January 6, 1995 (filed as
Exhibit 99.1 to the Company's Current Report on
Form 8-K dated January 6, 1995 and incorporated by reference).
99.2 Press Release issued February 3, 1995.
ASSET PURCHASE AGREEMENT
By And Among
Champion Enterprises, Inc.,
CHI Acquisition Corp.,
Chandeleur Homes, Inc.
And
The Shareholders Identified Herein
Dated January 5, 1995
<PAGE>
TABLE OF CONTENTS
Page
1. SALE AND PURCHASE OF THE PURCHASED ASSETS . . . . . . . . . . . . . . 2
1.1 Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Assignment of Rights by Sellers . . . . . . . . . . . . . . . 4
2. PURCHASE PRICE; ADJUSTMENT; ASSUMPTION OF CERTAIN
LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Allocation of Purchase Price. . . . . . . . . . . . . . . . . 12
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . 12
3. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . 14
3.1 Organization; Good Standing . . . . . . . . . . . . . . . . . 14
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 15
3.4 Authorization Relative to this Agreement. . . . . . . . . . . 15
3.5 Consents and Approvals; No Violation. . . . . . . . . . . . . 15
3.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . 16
3.7 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . 16
3.8 Absence of Certain Changes or Events. . . . . . . . . . . . . 17
3.9 Contracts and Commitments . . . . . . . . . . . . . . . . . . 18
3.10 Real Property . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.12 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . 21
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.14 Employees; Benefit Plans. . . . . . . . . . . . . . . . . . . 23
3.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.16 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.17 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . 25
3.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . 25
3.19 Product Liability . . . . . . . . . . . . . . . . . . . . . . 28
3.20 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.21 Insider and Inter-Company Transactions. . . . . . . . . . . . 29
3.22 Bank Accounts and Powers of Attorney. . . . . . . . . . . . . 29
3.23 Progress Payments . . . . . . . . . . . . . . . . . . . . . . 29
3.24 Information in the HSR Act Notification and Report Form . . . 29
3.25 Sufficiency of Purchased Assets . . . . . . . . . . . . . . . 29
3.26 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.27 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.28 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.29 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.30 Patents and Trademarks. . . . . . . . . . . . . . . . . . . . 30
3.31 Corporate Minute Books. . . . . . . . . . . . . . . . . . . . 31
3.32 Suppliers and Customers . . . . . . . . . . . . . . . . . . . 31
3.33 Illegal Payments. . . . . . . . . . . . . . . . . . . . . . . 31
3.34 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 32
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND CHAMPION. . . . . . . . . 32
4.1 Organization; Good Standing . . . . . . . . . . . . . . . . . 32
4.2 Authority Relative to this Agreement. . . . . . . . . . . . . 32
4.3 Consents and Approvals; No Violation. . . . . . . . . . . . . 32
4.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 33
5. CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . 33
5.2 Certain Changes or Events . . . . . . . . . . . . . . . . . . 33
5.3 Access to Information . . . . . . . . . . . . . . . . . . . . 35
5.4 Additional Agreements . . . . . . . . . . . . . . . . . . . . 36
5.5 Communications With Agencies. . . . . . . . . . . . . . . . . 36
5.6 Financials. . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.7 Takeover Proposals. . . . . . . . . . . . . . . . . . . . . . 37
6. CERTAIN AGREEMENTS AND UNDERSTANDINGS OF THE PARTIES. . . . . . . . . 37
6.1 Permitted Dividend. . . . . . . . . . . . . . . . . . . . . . 37
6.2 Employment Agreements . . . . . . . . . . . . . . . . . . . . 37
6.3 Option Agreements . . . . . . . . . . . . . . . . . . . . . . 38
6.4 Noncompetition Agreements . . . . . . . . . . . . . . . . . . 38
6.5 Security Deposits . . . . . . . . . . . . . . . . . . . . . . 38
6.6 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . 38
6.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.8 Post Closing Receipts . . . . . . . . . . . . . . . . . . . . 39
7. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . 39
7.2 Deliveries by Sellers . . . . . . . . . . . . . . . . . . . . 39
7.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . 40
7.4 Certain Closing Expenses. . . . . . . . . . . . . . . . . . . 40
8. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 40
8.1 Conditions to Obligations of Buyer and
Champion. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Conditions to Obligations of Sellers. . . . . . . . . . . . . 43
9. SURVIVAL; INDEMNIFICATION AND RELATED MATTERS . . . . . . . . . . . . 45
9.1 Survival Past Closing . . . . . . . . . . . . . . . . . . . . 45
9.2 Indemnification by Sellers. . . . . . . . . . . . . . . . . . 45
9.3 Indemnification by Buyer and Champion . . . . . . . . . . . . 45
9.4 Certain Agreements with Respect to Unknown Liabilities,
Limitation on Indemnification and Apportionment as Between
Sellers and CRHI
Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 49
10.1 Events of Termination . . . . . . . . . . . . . . . . . . . . 49
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 49
10.3 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11. ACTIONS AFTER CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 50
11.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . 50
11.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.3 Name of Company . . . . . . . . . . . . . . . . . . . . . . . 50
12. BROKER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.2 Assignment and Succession . . . . . . . . . . . . . . . . . . 52
14.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 52
14.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 52
14.5 Section and Paragraph Headings. . . . . . . . . . . . . . . . 52
14.6 Governing Law and Choice of Forum . . . . . . . . . . . . . . 52
14.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 52
14.8 Certain References. . . . . . . . . . . . . . . . . . . . . . 53
14.9 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . 53
14.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 53
14.11 Champion Guarantee. . . . . . . . . . . . . . . . . . . . . . 53
14.12 Action by Sellers . . . . . . . . . . . . . . . . . . . . . . 53
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made
and entered into as of this 5th day of January, 1995, by and
among CHAMPION ENTERPRISES INC., a Michigan corporation
("Champion"), CHI ACQUISITION CORP., a Michigan corporation
and a wholly owned subsidiary of Champion ("Buyer"),
CHANDELEUR HOMES, INC., an Alabama corporation (the
"Company"), and the shareholders of the Company whose names
are listed at the end of this Agreement (herein called the
"Shareholders") (the Company and the Shareholders are
sometimes herein collectively called the "Sellers").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business (the
"Business") of the design, manufacture, sale and service of
manufactured housing, and desires to sell to Buyer all of the
Business and all of its assets relating to the Business as
more specifically set forth herein; and
WHEREAS, the Shareholders own of record and beneficially
100% of the outstanding capital stock of the Company and,
intending to be parties to the undertakings, covenants,
representations and warranties of the Company contained
herein, have agreed to cause the Company to enter into this
Agreement and consummate the transactions contemplated hereby,
and, in their capacity as shareholders, to enter into this
Agreement and consummate the transactions contemplated hereby;
and
WHEREAS, the Buyer desires to purchase from the Company
all of the Business and such assets and in that connection
will assume certain specified obligations related to the
Business on the terms and conditions set forth herein; and
WHEREAS, contemporaneously herewith Champion, CRHI
Acquisition Corp., a Michigan corporation ("CRHI Buyer"),
Crest Ridge Homes, Inc., a Texas corporation ("CRHI") and
shareholders of CRHI ("CRHI Shareholders" and together with
CRHI the "CRHI Sellers") are entering into an Asset Purchase
Agreement (the "CRHI Purchase Agreement") pursuant to which
CRHI Buyer will purchase from CRHI the business and assets of
CRHI and will assume certain of the liabilities of CRHI; and
WHEREAS, the terms and conditions of this Agreement and
the CRHI Purchase Agreement are similar in all material
respects except for provisions relating to the specific
transactions contemplated thereunder (including, by way of
example and not of limitation, the purchase price, hold back,
earn-out targets and similar matters); and
WHEREAS, certain provisions of this Agreement and the
CRHI Purchase Agreement pertaining to the assumption of
liabilities and baskets and caps with respect to
indemnification are interdependent; and
WHEREAS, it is fundamental to Champion's, Buyer's and
CRHI Buyer's willingness to enter into this Agreement and the
CRHI Purchase Agreement that the Company, the Shareholders,
CRHI and the CRHI Shareholders agree to the provisions of this
Agreement or the CRHI Purchase Agreement, as applicable,
including, but not limited to, the assumption of liabilities
and indemnification provisions; and
WHEREAS, it is a condition to the consummation of the
transactions contemplated in this Agreement and in the CRHI
Purchase Agreement that all such transactions close
simultaneously.
NOW, THEREFORE, in consideration of the foregoing
premises and the covenants and agreements herein contained and
other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. SALE AND PURCHASE OF THE PURCHASED ASSETS
1.1 Purchased Assets. Subject to the terms
and conditions of this Agreement, and to the accuracy of the
representations and warranties herein contained, on the
Closing Date (as defined in Section 7.1 below), Sellers shall
sell, assign, convey, transfer and deliver to Buyer, and Buyer
shall purchase, receive and accept, as they exist on the
Closing Date, all of the Business and goodwill of the Company
and all of the assets and properties owned by, leased to or
otherwise used by the Company, whether tangible or intangible,
and wherever located (the "Purchased Assets"), it being
understood that the Purchased Assets include, and as of the
Closing Date shall include, all of the assets necessary for
the conduct by Buyer of the Business as it is now and on the
Closing Date shall be conducted by the Company. Without
limiting the generality of the foregoing, the Purchased Assets
shall include:
(a) All equipment (as defined in the Uniform
Commercial Code of the State of Alabama, Sec. 7-1-101 et seq.,
Code of Alabama, 1975 (the "UCC")) and, to the extent not
otherwise constituting equipment as defined above, all other
items of tangible personal property, in each case whether or
not capitalized on the Company's books (including, without
limitation, the items listed on Exhibit 1(a) hereto)
(collectively, the "Equipment").
(b) All inventory (as defined in the UCC)
whether on hand or in transit and including consigned
inventory (the "Inventory").
(c) All accounts, chattel paper, documents and
instruments (all as defined in the UCC), including all accrued
interest receivable and also including any security held by
the Company for the payment thereof (including, without
limitation, the items described on Exhibit 1(c) hereto) (the
"Receivables") and all general intangibles (as defined in the
UCC) of the Company and, to the extent not otherwise
constituting general intangibles as defined above, any
interest of the Company in any and all claims by the Company
against any other person, whether now accrued or hereafter to
accrue, contingent or otherwise, known or unknown, including,
but not limited to, all rights under express or implied
warranties from manufacturers, vendors and suppliers (except
as they may pertain to liabilities of the Company other than
the Assumed Liabilities (as defined in Section 2.3 below)),
claims for collection or indemnity, claims in bankruptcy, and
choses in action.
(d) The real property described on
Exhibit 1(d) hereto together with all tenements, hereditaments
and appurtenances thereto, and all improvements thereon.
(e) All cash, cash equivalents and amounts
held on deposit in all savings, checking, money market,
investment and other accounts of any nature or character
(including, without limitation, the accounts listed on Exhibit
1(e) hereto).
(f) All right, title, benefit and interest of
the Company in and to (i) all patents, patent rights, patent
licenses and patent applications (including any patents
issuing on such applications), (ii) trademarks, trademark
rights, trademark licenses, trademark registrations and
applications (including any trade marks issuing on such
registrations and applications), (iii) trade names and trade
name rights, assumed names and other forms of business
identification, (iv) copyrights, copyright licenses, copyright
registrations and applications (including any copyrights
issuing on such registrations and applications), (v)
inventions, discoveries, improvements, designs and prototypes
(whether patentable or unpatentable), (vi) trade secrets,
manufacturing and engineering drawings, process sheets,
specifications, bills of material, formulae and secret and
confidential processes, know-how, shop rights, technology and
other industrial property, (vii) contracts with employees or
other persons relating in whole or in part to disclosure,
assignment or patenting of any of the items described in (v)
and (vi) above, and (viii) logos, in each case presently owned
or held, in whole or in part, by the Company or as to which
the Company has any interest of any kind (including, without
limitation, the items listed on Exhibit 1(f) attached hereto).
(g) The full benefit of (i) any and all
purchase orders placed with, and accepted by, the Company on,
or prior to, the Closing Date, and which have not been
completely performed, or filled, prior to the Closing Date,
covering the purchase from the Company of products to be
supplied by the Company, or covering the rendition by the
Company of service on products supplied by the Company
(including all deposits, progress payments and credits)
(including, without limitation, those items, if any, listed on
Exhibit 1(g) hereto); (ii) the purchase orders placed by the
Company prior to the Closing Date in the ordinary course of
business which have not been completely performed prior to the
Closing Date, covering the purchase by the Company of supplies
or materials entered into by the Company in the ordinary
course of business; and (iii) the leases of real and personal
property and other agreements listed in Exhibit 1(g) hereto
(collectively, the "Contracts and Commitments").
(h) All policies of insurance and rights to
make claims and other rights thereunder (whether now or at
anytime heretofore in force and effect and including, without
limitation, all insurance covering the Company, the Business,
the Purchased Assets and all keyman and other insurance on the
lives of the Shareholders and any other person in which the
Company has any interest and further including, without
limitation, the policies of insurance listed on Exhibit 1(h)
hereto).
(i) All books and records which pertain
directly or indirectly, in whole or in part, to the operation
of the Business, including without limitation, those relating
to the Purchased Assets, the Assumed Liabilities, customers,
suppliers, advertising, promotional material, sales, services,
delivery, internal organization, employees, accounting and
financial matters and/or operations of the Company.
(j) All security deposits, prepaid expenses,
credits and similar items.
(k) All transferable local, state and federal
franchises, licenses, bonds, permits and similar items
pertaining to the Business and/or the Purchased Assets
(including, without limitation, the items described in Exhibit
1(k) hereto) (the "Permits").
(l) The Business conducted by the Company as
a going concern, including any and all goodwill connected
therewith, telephone and facsimile numbers, yellow page
advertisements, and the Company's right to use the name
"Chandeleur Homes, Inc." and all related names and derivations
thereof.
(m) All other property, assets, and rights,
real or personal, tangible or intangible owned by the Company
or in which the Company has any interest and any kind
whatsoever.
All Exhibits described in this Section 1.1
(except 1.1(g)(ii) and (iii)) shall be updated by Sellers as
of the Closing Date. Exhibit 1(g) may be updated by Sellers
as of the Closing Date to add items described in
Section 1.1(g)(ii) and (iii) with the written consent of
Buyer.
1.2 Assignment of Rights by Sellers. On the
Closing Date, without limiting the generality of Section 1.1
hereof, Sellers shall assign to Buyer all of the Sellers'
rights under the Contracts and Commitments (and, as provided
in Section 2.3, Buyer shall assume and agree to perform the
unexecuted portion of the Company's obligations thereunder).
1.2.1 Absence of Consent.
Notwithstanding the foregoing, there shall not be assigned to
Buyer any Contract or Commitment if an attempted assignment
thereof without the consent of the other party or parties
thereto would constitute a breach thereof or in any way
adversely affect the rights of the Company thereunder and such
consent is not obtained, or if an attempted assignment would
be ineffective or would affect the rights of the Company
thereunder so that Buyer would not, in fact, receive the
benefits thereof. Sellers covenant and agree that the
beneficial interest in and to any such agreement shall, to the
extent permitted by the relevant agreement and/or by law, pass
to Buyer, and Sellers covenant and agree: (a) that they will
hold and declare that they hold all such agreements in trust
for the benefit of Buyer, its successors and assigns, from and
after the Closing Date; (b) to use best efforts to obtain and
secure any and all consents and approvals that may be
necessary to effect such assignment or assignments of the
same; (c) to make or complete such assignment or assignments
as soon as reasonably possible; and (d) to cooperate with
Buyer in any other reasonable arrangement designed to provide
for actions necessary to enable the Company to fulfill any
such agreements until an effective assignment thereof to Buyer
can be obtained, and the parties agree to cooperate and take
all necessary actions, including accountings between parties,
to assure that Buyer shall receive all of such benefits,
rights, obligations and duties under such agreements. The
provisions of this Section 1.2.1 do not constitute a waiver of
the conditions to Closing contained in Section 8.1(c) hereof.
2. PURCHASE PRICE; ADJUSTMENT; ASSUMPTION OF CERTAIN
LIABILITIES
2.1 Purchase Price. The purchase price for
the Purchased Assets (the "Purchase Price") shall, in addition
to the Assumed Liabilities, be an amount equal to Thirty Two
Million Five Hundred Thousand and 00/100 ($32,500,000.00)
Dollars as adjusted as provided in Section 2.1.5 hereof.
2.1.1 Payment of Purchase Price. The
Purchase Price shall be paid on the Closing Date (as
hereinafter defined) by certified or cashiers check payable to
the Company or by wire transfer in immediately available funds
to an account designated by the Company in an amount equal to
the Purchase Price, less the Hold Back Amount and the Earn-out
Payment (as those terms are defined in Sections 2.1.2 and
2.1.3 below).
2.1.2 Hold Back Amount. Buyer shall
retain from the Purchase Price the amount of $2,000,000 (the
"Hold Back Amount") to be applied and paid by Buyer as
provided in this Section 2.1.2. The Hold Back Amount less the
Final Shortfall Amount (as defined in Section 2.1.5), if any,
shall be paid by Buyer to the Company within thirty (30) days
after final determination of the Audited Closing Stockholders
Equity and the Audited 1994 EBIT and resolution of all
questions and disputes with respect thereto as provided in
Section 2.1.5, but subject in any event to the rights of Buyer
and Champion under Sections 2.1.4 and 2.1.5. The Hold Back
Amount less the Final Shortfall Amount, if any, shall be paid
by certified or cashiers check payable to the Company or by
wire transfer to an account designated by the Company.
2.1.3 Earn-out Payment. Buyer shall
retain from the Purchase Price the amount of $5,500,000 (the
"Earn-out Payment") to be applied and paid by Buyer only as
provided in this Section 2.1.3 and Section 2.1.4.
(a) If, and only if, Buyer shall meet
one of the three Alternative EBIT Tests
described below, the Earn-out Payment together
with interest thereon at an annual rate of seven
percent (7%) from the Closing Date until paid
shall be paid by Buyer, on behalf and at the
direction of the Company, directly to the
Shareholders in pro rata amounts equal to each
such person's respective percentage ownership of
the common stock of the Company as reflected in
Exhibit 3.2 hereto, subject to Buyer's and
Champion's rights set forth below in Section
2.1.4 and 2.1.5. Payment of the Earn-out
Payment to the persons entitled thereto shall be
made within thirty (30) days after the
determination by Champion of EBIT (as defined
below) for the period in question by check
payable to the applicable person or by wire
transfer in immediately available funds to an
account designated by such person. Interest
shall be computed on the basis of a year of 365
or 366 days as the case may be for the actual
number of days elapsed.
(b) The "Alternative EBIT Tests" are as
follows:
Total EBIT Period of Time
Test 1 $ 7,425,000 12 Months Ended December 30, 1995
Test 2 $12,350,000 24 Months Ended December 28, 1996
Test 3 $ 9,000,000 36 Months Ended January 3, 1998
Buyer need only achieve one of the Alternative
EBIT Tests to be required to pay the Earn-out
Payment. The Total EBIT levels are to be
determined for the entire applicable period.
(c) For purposes of this Section 2.1.3,
"EBIT" means earnings before interest and
federal and State of Alabama income taxes and
before payment and accrual of all bonuses under
the Employment Agreements to be entered into by
Buyer and Terrell R. Bridges and John J. McKone
referred to in Section 6.2 hereof. In computing
EBIT, there shall be no deduction for allocation
of corporate overhead of Champion and its
affiliates and there shall be no effect given to
accounting adjustments relating to Champion's
acquisition of the Purchased Assets, but there
shall be deducted any and all expenses of Buyer,
including reasonable expenses incurred by
Champion on behalf of Buyer and billed by
Champion to Buyer for outside accounting and
legal services, and for insurance coverage if
the cost thereof is not greater than that which
would be obtainable by Buyer, separately, for
similar coverage, and for such similar matters
as may be agreed to from time to time by
Champion and Buyer's President. In the event
that Champion determines in its discretion that
it is appropriate to provide a special one-time
warranty reserve in addition to the $800,000
warranty reserve to be included in the Audited
Closing Financial Statements pursuant to
Section 2.1.5 hereof, such special warranty
reserve will not be taken into account in
determining EBIT for purposes of this Section
2.1.3. However, other changes in warranty
reserves based on operations of Buyer will be
taken into account in determining EBIT. For
purposes of EBIT calculation, the EBIT of the
Company for the period from January 1, 1995 to
the Closing Date shall be taken into account.
EBIT shall be determined by the internal
accounting staff of Champion in accordance with
GAAP (as hereinafter defined) from the books and
records of Buyer. Sellers shall have thirty
(30) days after receipt of the calculation of
EBIT to deliver to Buyer and Champion notice of
any objections thereto. Any such notice of
objections shall be in writing and shall state,
in reasonable detail, the basis for each
objection and the amount of adjustment Sellers
believe is required in respect thereto. In the
event that Buyer, Champion and Sellers cannot
agree with respect to the calculation of EBIT
within thirty (30) days after the delivery of a
notice of objections or such later date as may
be agreed upon by Buyer, Champion and Sellers,
the dispute shall be resolved by binding
arbitration by Ernst & Young, LLP or if Ernst &
Young, LLP is unable or unwilling to so serve
any other independent accounting firm agreed
upon by Buyer, Champion and Sellers (the
"Independent Accounting Firm"). Any items not
in dispute shall be deemed stipulated by Buyer,
Champion and Sellers and shall not be determined
by the Independent Accounting Firm. The
determination of the Independent Accounting Firm
shall be binding and conclusive upon the matters
determined thereby and may be entered as a
judgment by any court of competent jurisdiction.
All costs and expenses relating to the services
provided by the Independent Accounting Firm
shall be paid equally by Buyer and Sellers.
(d) The Shareholders and the Company
have entered into certain arrangements with
respect to the distribution of the net assets of
the Company to the Shareholders upon dissolution
of the Company, which dissolution is expected to
occur shortly after the Closing Date. Pursuant
to such arrangements, the Company and the
Shareholders hereby irrevocably direct Buyer to
disburse the Earn-out Payment pursuant to the
provisions of this Section 2.1.3 on behalf of
the Company directly to the Shareholders. The
amount of the Earn-out Payment shall be subject
to, and reduced by, all rights of Champion and
Buyer under Sections 2.1.4 and 2.1.5.
2.1.4 Offset and Liquidated Damages.
(a) Subject to the further provisions of
this Section 2.1.4, Buyer and/or Champion shall
have the right at any time and from time to time
to apply all or any portion of the Hold Back
Amount and/or the Earn-out Payment against the
amount of any claim Buyer or Champion may have
against any of the Sellers for indemnification
under Section 9.2 hereof or otherwise under this
Agreement. Buyer and/or Champion shall give
Sellers written notice of the intention to
exercise its or their rights under this Section
2.1.4, which notice shall describe, in
reasonable detail, the claim asserted by Buyer
and/or Champion against any of Sellers for
indemnification under Section 9.2 or otherwise
under this Agreement. Sellers shall have forty-
five (45) days, or such shorter or longer period
as may be agreed upon by Buyer, Champion and
Sellers, to fully cure and resolve such claim to
the reasonable satisfaction of Buyer and/or
Champion as applicable. If the claim is so
cured and resolved within such time, Buyer
and/or Champion shall not exercise its or their
rights under the first sentence of this Section
2.1.4. If the claim is not so cured and
resolved within such time, Buyer and/or Champion
may exercise such rights. Payment of the Hold
Back Amount and Earn-out Payment by Buyer shall
be extended during any period in which Buyer
and/or Champion shall have given a written
notice to Sellers under this Section 2.1.4 and
for an additional period of 10 days after the
expiration of the period during which Sellers
shall have been afforded the opportunity to cure
and resolve the claim described in such notice.
The rights available to Buyer and Champion under
this Section 2.1.4 shall be supplementary and in
addition to any and all other rights and
remedies available to Buyer and to Champion
under this Agreement or otherwise under
applicable law.
(b) In addition, in the event that the
employment of any of the Executives (as defined
in Section 6.2 hereof) that is a Shareholder is
terminated by Buyer for cause (as defined in the
applicable Employment Agreement executed by the
applicable Executive pursuant to Section 6.2
hereof) or by the Executive for any reason
(other than as a result of death or disability
as defined in such Employment Agreement) or in
the event that any Shareholder shall breach any
of such Shareholder's respective obligations
under the Non-Competition Agreement executed and
delivered by such Shareholder pursuant to
Section 6.4 hereof, Buyer may retain the
proportionate amount of the Hold Back Amount and
the Earn-Out Payment otherwise payable to such
person as partial liquidated damages. In the
event the Company shall breach any of its
obligations under the Non-Competition Agreement
executed and delivered by it pursuant to
Section 6.4 hereof, Buyer may retain the entire
amount of the Hold Back Amount and the Earn-Out
Payment otherwise payable to any of the
Shareholders as partial liquidated damages.
(c) Each of the Sellers acknowledges and
agrees that the execution and delivery by each
of the Executives that is a Shareholder of the
Employment Agreements and the execution and
delivery by the Company and each of the
Shareholders of the Non-Competition Agreements,
and the terms thereof, are material inducements
to the willingness of Buyer and Champion to
execute and deliver this Agreement and to
consummate the transactions contemplated herein.
Each of Sellers further acknowledges and agrees
that the termination of employment of one or
more of the Executives by the Company for cause
or by the Executive for any reason (other than
death or disability) and/or breach by one or
more of the Sellers of such Seller's obligations
under the Non-Competition Agreements will cause
irreparable injury to Buyer and Champion and
that money damages, in themselves, will not
provide an adequate remedy. Accordingly, each
of the Sellers further acknowledges and agrees
that the right of Buyer to retain the Hold Back
Amount and the Earn-Out Payment as provided in
this Section 2.1.4 is reasonable as partial
compensation for the damages and injury that
will be suffered by Buyer and Champion in such
events. The rights available to Buyer and
Champion under this Section 2.1.4 shall be
supplementary and in addition to any and all
other rights and remedies available to Buyer
and/or Champion under this Agreement, the
Employment Agreements, the Non-Competition
Agreements or otherwise under applicable law in
respect of any of the matters referred to
herein.
2.1.5 Purchase Price Adjustments.
(a) Sellers shall prepare and deliver to
Champion and Buyer as promptly as practicable an
unaudited balance sheet as of December 30, 1994 (the
"Preliminary 1994 Balance Sheet") and a related statement
of income of the Company of and for the year ended
December 30, 1994 (together with the Preliminary 1994
Balance Sheet, the "Preliminary 1994 Financial
Statements"). Buyer shall be entitled to appoint
representatives, which may be members of its internal
accounting staff or its independent certified public
accountants, to participate in and observe the
preparation of the Preliminary 1994 Financial Statements.
The Preliminary 1994 Financial Statements (u) shall
contain line items substantially consistent with the line
items in the audited financial statements of the Company
of and for the period ended December 31, 1993; (v) shall
be prepared in accordance with generally accepted
accounting principles consistently applied ("GAAP"),
except to the extent the requirements of clause (x) shall
not be in accordance with GAAP; (w) shall fairly present
the financial position of the Company as of the date
indicated and the results of its operations for the
period indicated; (x) shall contain accruals for (1) the
Permitted Dividend (as defined in Section 6.1 hereof);
(2) all expenses to be borne by the Company in connection
with the transactions contemplated herein; and (3) a
warranty reserve of $800,000; (y) shall be accompanied by
a certificate of the President of the Company to the
effect of clause (v), (w) and (x) above; and (z) shall be
accompanied by a calculation of the Preliminary 1994
Stockholders Equity and Preliminary 1994 EBIT (as defined
below) certified by the President of the Company. Prior
to the Closing the Preliminary 1994 Financial Statements
and such calculations shall have been delivered by
Sellers to Champion and Buyer and any questions or
disputes with respect thereto shall have been resolved to
the satisfaction of Champion and Buyer.
(b) In the event that the Preliminary
1994 Stockholders Equity is less than $1,975,000 or the
Preliminary 1994 EBIT is less than $6,050,000, Champion
and Buyer may terminate this Agreement.
(c) Sellers shall cause Stewart, Cochran
and Wheeler, P.C., certified public accountants (the
"Auditor") to prepare audits ("Audits") of (i) the
balance sheet and related statements of income, retained
earnings and cash flows of the Company of and for the
year ending December 30, 1994 (as adjusted as provided
below, the "Audited 1994 Financial Statements"), and (ii)
a balance sheet of the Company as of the Closing Date
(the "Audited Closing Balance Sheet") and a related
statement of income of the Company for the period of
December 31, 1994 to the Closing Date (collectively, the
"Audited Closing Date Financial Statements") (the Audited
Closing Date Financial Statements, together with the
Audited 1994 Financial Statements, are referred to herein
as the "Audited Closing Financial Statements"). In
connection with the preparation of the Audited Closing
Financial Statements, the Company shall conduct physical
inventories as of December 30, 1994 and the Closing Date,
which physical inventories shall be observed by the
Auditor. A copy of such inventories shall be delivered
to Buyer and Champion with the Audited Closing Financial
Statements. Buyer and Champion shall be entitled to
appoint representatives, which may be members of their
internal accounting staff or their independent certified
public accountants, to participate in and observe the
preparation of the Audited Closing Financial Statements
and in such inventory. The Audited Closing Financial
Statements (w) shall contain line items substantially
consistent with the line items in the audited financial
statements of the Company of and for the period ended
December 31, 1993, (x) shall be prepared in accordance
with GAAP except to the extent the requirements of clause
(z) below shall not be in accordance with GAAP, (y) shall
fairly present the financial position of the Company as
of the dates indicated and the results of its operations
for the periods indicated, and (z) shall contain accruals
for (1) the Permitted Dividend, (2) all expenses to be
borne by the Company in connection with such
transactions, and (3) a warranty reserve of $800,000.
(d) In preparation of the Audits, the
Auditor shall conduct the examination of the Company in
accordance with generally accepted auditing standards.
The Auditor shall use its best efforts to complete the
Audits as soon as possible after the Closing Date and the
Audited Closing Financial Statements shall be delivered
to Buyer and Sellers immediately upon completion thereof,
together with a calculation of the Audited Closing
Stockholders Equity and the Audited 1994 EBIT (as those
terms are defined below) of the Company and its work
papers, and its opinion that the foregoing were prepared
in accordance with this Section. Sellers, Buyer and
Champion shall have thirty (30) days after receipt by
them of the Audited Closing Financial Statements, the
calculation of the Audited Closing Stockholders Equity
and the Audited 1994 EBIT of the Company and the
Auditor's work papers to deliver a written notice to the
other of any objections thereto. Any such notice of
objections shall be in writing and shall state, in
reasonable detail, the basis for each objection and the
amount of adjustment which the party giving the notice
believes is required in respect thereto. In the event
that Buyer, Champion and Sellers cannot agree with
respect to the Audited Closing Financial Statements or
the calculation of the Audited Closing Stockholders
Equity or the Audited 1994 EBIT within thirty (30) days
after the delivery of a notice of objections or such
later date as may be agreed upon by Buyer, Champion and
Sellers, the dispute shall be resolved by arbitration by
the Independent Accounting Firm. Any items not in
dispute shall be deemed stipulated by Buyer, Champion and
Sellers and shall not be determined by the Independent
Accounting Firm. The determination of the Independent
Accounting Firm shall be binding and conclusive upon the
matters determined thereby and may be entered as a
judgment by any court of competent jurisdiction. All
costs and expenses relating to the services provided by
the Independent Accounting Firm shall be paid equally by
Buyer and Sellers.
(e) In the event that the Audited Closing
Stockholders Equity and/or the Audited 1994 EBIT of the
Company is less than the amounts specified below, then
the aggregate of the amount(s) of the difference(s) times
the multiplier(s) set forth below (the "Final Shortfall
Amount") shall be deducted from the Hold Back Amount and
if the Shortfall Amount exceeds the Hold Back Amount, the
Sellers shall immediately repay to Buyer the amount of
the difference together with interest at an annual rate
of seven percent (7%) from the Closing Date until paid in
full, and, to the extent not paid in full, Buyer may
deduct such amount from the Earn-out Payment in addition
to exercising any other rights available to Buyer under
this Agreement or applicable law.
Item<PAGE>
Amount Multiplier Audited Closing
Stockholders Equity<PAGE>
$1,975,000 1.0 Audited 1994 EBIT $6,050,000 5.0
(f) For purposes hereof the following terms
shall have the following meanings:
"Audited 1994 EBIT" and "Preliminary 1994 EBIT"
mean, respectively, earnings before interest and federal
income taxes for the twelve month period ended
December 30, 1994, which shall be based upon the Audited
1994 Financial Statements or the Preliminary 1994
Financial Statements, as applicable, as the same may be
adjusted upon resolution of any questions or disputes
with respect thereto pursuant to Section 2.1.5 above.
"Audited Closing Stockholders Equity" and
"Preliminary 1994 Stockholders Equity" mean,
respectively, an amount equal to the stockholders equity
account reflected in the Audited Closing Balance Sheet or
the Preliminary 1994 Balance Sheet, as applicable, as the
same may be adjusted upon resolution of any questions or
disputes with respect thereto pursuant to Section 2.1.5
above.
2.2 Allocation of Purchase Price. The
allocation of the Purchase Price among the Purchased Assets
will be mutually agreed to by Champion, Buyer and the Company
in accordance with the applicable provisions of the Code (as
hereinafter defined) as promptly as practicable after the
receipt of the Audited Closing Balance Sheet and resolution of
all questions or disputes with respect thereto and Buyer and
the Company will thereupon execute and deliver duplicate IRS
Forms 8594, with an allocation of the Purchase Price in
accordance with such determination and will file all other
returns and reports in a manner consistent with the
allocations in this Section.
2.3 Assumed Liabilities.
2.3.1 On the Closing Date, and subject to
the terms and conditions of this Agreement, Buyer shall assume
the Assumed Liabilities. Sellers agree that, except only for
the Assumed Liabilities pursuant to this Section 2.3.1 and the
Unknown Company Liabilities pursuant to Section 9.4(b) in an
amount not exceeding the Sellers Basket Amount (as those terms
are defined and as determined pursuant to Section 9.4 hereof),
neither Buyer nor Champion is assuming any liabilities of any
of the Sellers, whether accrued, absolute, contingent, known
or unknown, or otherwise, and whether due or to become due.
2.3.2 For the purposes of this Agreement,
the "Assumed Liabilities" shall include only (a) those trade
payables and other liabilities of the Company identified in
the Preliminary 1994 Balance Sheet in an amount not exceeding
that indicated therein together with changes therein
identified in the Audited Closing Balance Sheet and agreed
upon by Champion and Buyer, (b) any executory obligations of
continued performance of the Company arising in the ordinary
course of business under any Contracts and Commitments which
become performable or payable on, or subsequent to, the
Closing Date, (c) Warranty Obligations (as defined below),
(d) the recourse liability of the Company under the repurchase
and floor plan financing agreements identified on Exhibit 2.3
hereto, (e) the other liabilities, if any, specifically
identified on Exhibit 2.3 hereto in a maximum amount not
exceeding the amount indicated thereon, and (f) liabilities
arising from the litigation identified on Exhibit 3.16 hereto
(the "Assumed Litigation"). For purposes of clarity, and
without limiting Section 2.3.3, it is agreed that neither
Buyer nor Champion is assuming any obligation or liability of
any Shareholder or any Taxes (or liability therefor) of any of
the Sellers except only to the extent specifically accrued on
the Audited Closing Balance Sheet and as expressly assumed
pursuant to Section 2.3.2(a) above. Included as part of
Exhibit 3.20 hereto are copies of all forms of warranty of the
Company presently in force with respect to any product of the
Company. At Buyer's request, Sellers shall furnish to Buyer
any and all documents and information available to any of them
relative to any warranty or claimed warranty. As used herein,
"Warranty Obligations" shall mean the obligations set forth
and detailed in Exhibit 3.20 regarding the Company's
obligations to repair or replace the Company's products sold
by the Company to the purchaser thereof or the original retail
buyer, and such obligations of the Company under any implied
warranties that may be imposed by operation of law.
2.3.3 Neither Buyer nor Champion shall
assume or have any liability or obligation whatsoever for any
liabilities or obligations whatsoever of the Company, whether
accrued, absolute, contingent, known or unknown, or otherwise,
and whether due or to become due, other than the Assumed
Liabilities pursuant to Section 2.3.1 and the Unknown Company
Liabilities pursuant to Section 9.4(b) but not in excess of
the Sellers Basket Amount (as determined in accordance with
Section 9.4) (the "Excluded Liabilities"). The Sellers agree
to discharge, promptly when due, Excluded Liabilities up to
the Sellers Cap Amount (as that term is defined and as
determined in accordance with Section 9.4). For purposes of
clarity, neither Buyer nor Champion shall assume or have any
liabilities or obligations whatsoever for any liabilities or
obligations whatsoever of any of the Shareholders, whether
accrued, absolute, contingent, known or unknown, or otherwise,
and whether due or to become due (collectively, the
"Shareholder Liabilities"). Each Shareholder agrees to
discharge, promptly when due, such Shareholder's Shareholder
Liabilities.
2.3.4 Any instruments executed and
delivered by Buyer in connection with the assumption of the
Assumed Liabilities shall contain express and specific
provisions to the effect that in respect of any Assumed
Liabilities:
(a) Buyer shall have the right to resist,
contest, defend against, litigate, compromise and/or
otherwise dispose of any and all Assumed Liabilities to
such extent and in such manner as Buyer, in its sole
discretion shall deem desirable, advisable, and for its
best interest, and Buyer shall be deemed to have
performed its obligations pursuant to such instruments
notwithstanding such resistance, contest, defense
against, litigation, compromise or other disposition, so
long as, and to the extent that, Sellers shall not be
required to pay, satisfy, discharge or perform any of the
Assumed Liabilities; and
(b) Nothing contained in any such
instrument or in this Agreement shall be construed:
(1) as enlarging or extending
in any manner, or to any extent (i) the
statute of limitations applicable to any of
the Assumed Liabilities or (ii) the rights
which any owner, holder or obligee of any
of the Assumed Liabilities had or may have
in respect thereto against Sellers;
(2) as rendering valid or
enforceable against Buyer any of the
Assumed Liabilities which, for any reason
whatsoever, would not have been valid and
enforceable against Sellers; or
(3) as rendering valid and
enforceable against Buyer to a greater
extent, or in a different manner, any of
the Assumed Liabilities which would have
been valid, or enforceable against Sellers
only partially, conditionally, contingently
or to a limited extent, or in a limited
manner.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers hereby represent, warrant and agree, as of
the date of this Agreement and as of the Closing Date, as
follows, each of which shall be deemed to be independently
material and to have been relied upon by Buyer and Champion:
3.1 Organization; Good Standing. The Company
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Alabama, has full
power and authority, corporate and other, to own and operate
its property including the operation of leased property), and
to carry on the Business as it is now being conducted, and is
duly qualified or licensed as a foreign corporation to do
business and is in good standing in any other jurisdictions
(all of which other jurisdictions, if any, are listed on
Exhibit 3.1 hereto) in which the character of the property
owned or the nature of the Business transacted by it makes
such qualification or licensing necessary. Except as set
forth on Exhibit 3.1 hereto, the Company has not used or
assumed any other name in connection with the Business during
the past five years.
3.2 Capitalization. The Company's authorized
capital stock consists solely of 1,000 shares of common stock,
$1.00 par value, of which 1,000 shares of common stock are
validly issued and outstanding, fully paid and non-assessable.
The Shareholders own of record and beneficially 100% of the
outstanding capital stock of the Company in the respective
amounts set forth in Exhibit 3.2 hereto. There are no
outstanding options, rights, warrants or other commitments
entitling any person to purchase or otherwise subscribe for or
acquire any shares of capital stock of the Company, nor is
there presently outstanding any security convertible into or
exchangeable for shares of capital stock of the Company, nor
has the Company or any Shareholder entered into any agreement
with respect to any of the foregoing.
3.3 Subsidiaries. The Company has no
subsidiaries and does not own, directly or indirectly, any
interest or investment in any other corporation, partnership
or other entity whatsoever.
3.4 Authorization Relative to this Agreement.
The Sellers have the full legal right and power and all
authority and approval required by law to enter into this
Agreement and the documents and instruments to be executed and
delivered by them pursuant hereto, and to perform fully their
obligations hereunder and thereunder. The execution, delivery
and performance by the Company of this Agreement and the
documents and instruments to be executed and delivered by it
pursuant hereto have been duly and effectively authorized by
all requisite corporate action (including the approval of its
board of directors and Shareholders). No corporate
authorization is necessary on the part of the Company for the
entry into this Agreement by the Shareholders and consummation
by the Shareholders of the transactions contemplated hereby.
This Agreement and the documents and instruments to be
executed and delivered pursuant hereto are and will be duly
executed and delivered by the Sellers and are and will be the
legal, valid and binding obligations of the Sellers,
enforceable against each of them in accordance with their
terms, except to the extent to which enforcement may be
limited by bankruptcy, insolvency, moratorium or similar laws
relating to the enforcement of creditors rights and by general
principles of equity (regardless whether brought in an action
at law or in equity).
3.5 Consents and Approvals; No Violation.
Except as disclosed on Exhibit 3.5 hereto, the execution,
delivery and performance by the Sellers of this Agreement and
the documents and instruments to be executed and delivered by
any of them pursuant hereto do not and will not: (a) violate
any provision of the Company's articles of incorporation or
by-laws; (b) require any consent, approval, authorization or
action by, notice or disclosure to, or filing or registration
with, or permit of, any governmental body, agency or official,
court or any other person except for the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and the filing of a
certificate of amendment to the articles of incorporation of
the Company and other filings required under the Alabama
Business Corporation Act to change the Company's name as
contemplated in Section 11.3 hereof; (c) contravene or
constitute a default under any indenture, mortgage, lease or
other agreement to which the Sellers (or any one of them) is
a party or is bound, or by which any of the properties or
assets of the Sellers (or any one of them) may be bound or
affected; or (d) result in a violation of any law, statute,
ordinance, regulation, judgment, injunction, order, decree or
award of any court or governmental authority or body having
jurisdiction over the Sellers (or any one of them) or is
bound, or by which any of the properties or assets of the
Sellers (or any one of them) may be bound or affected.
3.6 Financial Statements.
3.6.1 Exhibit 3.6 hereto contains (a) the
balance sheets of the Company as of December 27, 1991,
January 1, 1993 and December 31, 1993, and the related
statements of income, retained earnings and cash flows for the
fiscal years then ended, together with the notes thereto,
reviewed in the case of 1991 and 1992, and audited in the case
of 1993, by the firm of Stewart, Cochran and Wheeler, P.C.,
certified public accountants and (b) the unaudited balance
sheet of the Company as of December 2, 1994, and the related
statement of income for the period then ended (collectively,
the "Financial Statements"). The Financial Statements are
true and correct in all material respects, have been prepared
in conformity with GAAP applied on a consistent basis
throughout the periods involved and fairly present the
financial position of the Company as of the dates indicated
and the results of its operations for the periods then ended.
The financial statements referred to in Section 3.6.1(a) have
been prepared in accordance with and comply with the
requirements of Regulation S-X promulgated by the Securities
and Exchange Commission.
3.6.2 The Audited Closing Financial
Statements and the Preliminary 1994 Financial Statements, when
delivered, will comply with Section 2.1.5 hereof.
3.7 Absence of Undisclosed Liabilities.
Except as and to the extent reflected or reserved against in
the Financial Statements, or disclosed in any Exhibit hereto,
the Company had no liabilities or obligations, as of the dates
thereof (other than obligations of continued performance under
the Contracts and Commitments and other than commitments and
arrangements incident to the normal conduct of business which
are terminable at will), known or unknown, secured or
unsecured (whether accrued, absolute, contingent or
otherwise), including, without limitation, Tax liabilities due
or to become due. Except as and to the extent reflected or
reserved against in the balance sheet included in the Closing
Audited Financial Statements or disclosed in any Exhibit
hereto, the Company will have incurred no liabilities or
obligations since December 2, 1994 other than current
liabilities incurred in the ordinary course of business or in
connection with the transactions contemplated hereby.
3.8 Absence of Certain Changes or Events.
Since December 31, 1993, except as described in Exhibit 3.8
hereto, there has not occurred any event or condition which
has or may be expected to have an adverse effect on the
properties, assets, liabilities (whether absolute, contingent,
accrued or otherwise), condition (financial or otherwise),
results of operations, business, affairs or prospects of the
Company, and, without limiting the generality of the
foregoing, the Company has not (a) incurred any obligation or
liability, secured or unsecured (whether accrued, absolute,
contingent or otherwise), whether due or to become due, except
current liabilities in the ordinary course of business; (b)
discharged or satisfied any lien or encumbrance, or paid any
obligation or liability, except current liabilities becoming
due in the ordinary course of business; (c) mortgaged,
pledged, or subjected to any Encumbrance (as defined in
Section 3.12 below) any of the Purchased Assets; (d) sold,
transferred, licensed or otherwise disposed of any of the
Purchased Assets other than in the ordinary course of business
consistent with past practice; (e) suffered any damage,
destruction or loss (whether or not covered by insurance)
adversely affecting the Purchased Assets; (f) acquired any
capital stock or other securities of any corporation or any
interest in any business enterprise, or otherwise made any
loan or advance to or investment in any person, firm or
corporation; (g) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or
governmental body affecting its financial condition, its
property or its business operations involving a claim in
excess of $10,000; (h) entered into any transaction other than
in the ordinary course of business; (i) changed the authorized
or issued capital stock of the Company, increased its funded
indebtedness, or made any declaration, setting aside or
payment of any dividend or any other distribution in respect
of its capital stock (other than the Permitted Dividend);
(j) experienced any labor disturbance; (k) varied, canceled or
allowed to expire any insurance coverage; (l) terminated or
received any notice of termination of any contract, lease,
trademark, patent, copyright or trade name protection or other
agreement; (m) suffered any taking or seizure of all or any
part of the Purchased Assets by condemnation or eminent
domain; (n) made any change in accounting principles or
methods, or in the manner of keeping books, accounts and
records of the Company; (o) failed to maintain the Purchased
Assets in the ordinary course of business consistent with past
practice; (p) made any payment or other distribution or
disbursement of moneys or property to or on behalf of any
officer, director or Shareholder of the Company or any member
of their immediate families, or any affiliate thereof, other
than payment of compensation or reimbursement of expenses in
accordance with past practice and other than described in
clause (i) above; or (q) entered into any agreement or made
any commitment to do any of the things described in the
preceding subsections (a) through (p) of this Section 3.8.
3.9 Contracts and Commitments.
3.9.1 Exhibit 1(g) hereto contains true,
complete and correct lists of all of the Contracts and
Commitments, other than purchase orders placed by or with the
Company covering the payment or receipt by the Company of
$250,000 or less or which, regardless of amount, will not be
fully performed within six months of the date of the purchase
order. All Contracts and Commitments are in full force and
effect without amendment thereto (unless such amendments are
clearly noted) and the Company is and shall be entitled to all
benefits thereunder.
3.9.2 Concurrent with the delivery of
Exhibit 1(g) hereto, and included as a part of such Exhibit,
Sellers have delivered to Buyer true, complete and correct
copies of all Contracts and Commitments. All Contracts and
Commitments are the result of bona fide, arms-length
transactions and are legal, valid and binding obligations of
the parties thereto enforceable in accordance with their
respective terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, moratorium and similar laws
relating to the enforcement of creditors rights and by general
principles of equity (whether brought in a proceeding at law
or in equity).
3.9.3 Except as set forth in Exhibit 3.9
hereto, no default or alleged default exists on the part of
the Company, nor, to the best knowledge of Sellers, on the
part of any other party, under any Contract or Commitment and
there exists no state of facts which, after notice or lapse of
time, or both, would constitute a default or breach in
connection with any Contract or Commitment. For purposes of
this subsection, the word "default" includes, but is not
limited to, the failure to comply with any condition precedent
under the provisions of any such Contract or Commitment.
Except as set forth in Exhibit 3.9 hereto, Sellers have
received no information which might reasonably indicate that
any party to a Contract or Commitment is unable or unwilling
to perform under such Contract or Commitment.
3.9.4 Except only as set forth in
Exhibits 1(g) or 3.9 or any other Exhibit to this Agreement,
the Company is not a party to any other written or oral
contract, including, but not limited to, any:
(a) contract not made in the ordinary
course of business other than this Agreement;
(b) employment (including any agreement
with respect to leased employees) or consulting contract
which is not terminable without cost or other liability
to the Company, or any successor thereof, upon notice of
thirty (30) days or less;
(c) contract with any labor union;
(d) bonus, pension, profit-sharing,
retirement, stock purchase, hospitalization, insurance or
similar plan providing for employee benefits or other
Plan (as defined in Section 3.14 below);
(e) lease with respect to any property,
real or personal, whether as lessor or lessee;
(f) contract for the future purchase of
materials, supplies, merchandise or equipment which is in
excess of the requirements of the Business of the Company
now booked or the requirements of the Company for its
normal operating inventories;
(g) contract, other than a purchase order
placed by or with the Company, for the performance of
services for or by the Company which is not terminable
without cost or other liability to the Company, or any
successor thereof, upon notice of thirty (30) days or
less;
(h) insurance policy or contract;
(i) contract, other than a purchase order
placed by or with the Company, continuing for a period of
more than six (6) months from its date, which is not
terminable by the Company without cost or other liability
to the Company, or any other successor thereof, upon
notice of thirty (30) days or less;
(j) loan agreement or other contract for
money borrowed;
(k) agreement or arrangement for the sale
of any kind of its assets, property or rights or the
grant of any preferential rights to purchase any of its
assets, properties, or rights, including, without
limitation, customer bids and orders, terms and
conditions of sale, warranties, franchises, dealer or
distributor agreements or requiring the consent of any
party to the transfer or assignment of any such assets,
property or rights;
(l) agreement restricting in any manner
the conduct of the Business or the ownership or use of
the Purchased Assets;
(m) agency, sales representative or
similar agreement;
(n) warranties relating to the Equipment
or any of the other Purchased Assets;
(o) license agreements (including
computer software licenses), agreements relating to the
Intellectual Property (as defined in Section 3.30) or the
intellectual property of any other person and franchise
agreements;
(p) return policy and product warranties
relating to products manufactured or distributed by the
Company and rebate, credit or allowance arrangements;
(q) contracts, agreements or other
understandings or arrangements between the Company and
any Shareholder, director, officer or employee (including
any leased employee), or any member of their immediate
families, or any affiliate thereof, which may affect the
Business, the Purchased Assets or the Assumed
Liabilities; or
(r) any purchase order placed by or with
the Company covering the payment or receipt by the
Company of $250,000 or more or which, regardless of
amount, will not be fully performed within six months of
the date of the purchase order.
3.10 Real Property.
3.10.1 Exhibit 1(d) hereto contains a
true and complete list of all real property that is owned,
leased or subleased by the Company or as to which the Company
has any interest of any kind including, without limitation,
all office, manufacturing and warehouse facilities (the "Real
Estate"). True and complete copies of all deeds, leases,
subleases and other agreements and instruments relating to the
Real Estate have been delivered to Champion and Buyer. All
buildings and other improvements on the Real Estate are
located within the boundaries of each particular parcel of
Real Estate and do not encroach upon such boundaries. No
building or other improvement situated on any adjacent real
estate is encroaching upon any of the boundaries of the Real
Estate.
3.10.2 Except as described in
Exhibit 3.10 hereto, the use of the Real Estate by the Company
and the conduct therein of its Business have not violated, and
are not expected to violate, in any material respect, any
federal, state or local law, ordinance, rule or regulation.
The Real Estate has an adequate water supply and sewage and
waste disposal, or facilities therefor, as are sufficient for
the operation of existing business of the Company.
3.10.3 The buildings and improvements
located on the Real Estate and the ownership, operations and
maintenance thereof as now owned, operated and maintained, do
not (i) contravene in any material respect any ordinances,
statutes, regulations, covenants, or deed restrictions,
including those relating to zoning, building use, air or water
pollution, waste disposal, sanitation and noise control, or
(ii) violate in any material respect any provision of federal,
state or local law. Consummation of the transactions
contemplated herein will not cause the zoning for any of the
Real Estate to become non-complying by virtue of elimination
of a grandfather clause or for any other reason.
3.10.4 The buildings and other
improvements on the Real Estate, including the plumbing,
electrical, mechanical, water, water pumping and sewage
systems are in good operating condition and repair, sufficient
for the uses intended and not in violation in any material
respect of any applicable governmental rule or regulation or
any other legal requirements, including health and fire codes
and other similar regulations.
3.10.5 The Real Estate has sufficient and
adequate vehicular and pedestrian access rights to and from
public streets and rights-of-way contiguous to the Real Estate
and adequate parking is available and in compliance with all
applicable zoning ordinances and laws.
3.10.6 There exists no pending or, to the
best knowledge of the Sellers, threatened condemnation or
similar proceeding with respect to, or which could affect, the
Real Estate.
3.10.7 Except as described in
Exhibit 3.10 hereto, the Company has not contracted for the
furnishing of labor or materials to the Real Estate which will
not be paid in full prior to the Closing Date.
3.11 Licenses. Except as disclosed on Exhibit
3.11, the Company possesses all patents, franchises, permits,
licenses, certificates and consents required from any
governmental authority or any other person necessary to enable
the Company to carry on its Business as now conducted and to
own and operate its properties (including leased property) as
now owned and operated and all such patents, franchises,
permits, licenses, certificates and consents will remain in
full force and effect following consummation of the
transactions contemplated by this Agreement. Attached hereto
as Exhibit 3.11 is a true and complete list of all patents,
franchises, permits, licenses, certificates and consents used
in connection with or applicable to the Business.
3.12 Title to Assets. Except as disclosed on
Exhibit 3.12 hereto, the Company has good and marketable title
to all of the Purchased Assets, free, clear and discharged of
and from all mortgages, liens, security interests, pledges,
demands, claims, charges, leases, subleases, licenses,
easements or other rights of use or occupancy of another
person and other encumbrances whatsoever ("Encumbrances"), and
the sale to Buyer of the Purchased Assets will not give rise
to any Encumbrance thereon. At the Closing, Buyer will
receive good and marketable title to the Purchased Assets
free, clear and discharged of and from all Encumbrances other
than any Encumbrances that Buyer may grant to its lenders.
3.13 Taxes.
3.13.1 For the purposes hereof, "Tax" or
"Taxes" shall mean all federal, state, county, local, and
other taxes (including, without limitation, income taxes,
premium taxes, single business taxes, excise taxes, sales
taxes, use taxes, value added taxes, gross receipts taxes,
franchise taxes, ad valorem taxes, severance taxes, capital
levy taxes, transfer taxes, stamp taxes, employment,
unemployment and payroll related taxes, withholding taxes,
governmental charges and assessments), and includes interest,
additions to tax and penalties with respect thereto.
3.13.2 The Company has made a valid
election pursuant to section 1362(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code") to which the
persons who were shareholders of the Company on the date of
that election have made valid consents pursuant to section
1362(a)(2) of the Code, effective not later than the taxable
year of the Company commencing January 1, 1990 (the "First S
Year"), to be treated as an S Corporation within the meaning
of section 1361(a)(1) of the Code, and the Company and its
shareholders have made a similarly effective election and
consents under the comparable provisions of the laws of the
State of Alabama (the "S State"). For the First S Year and
all subsequent taxable years of the Company, the Company at
all times qualified as an S Corporation and incurred no
liability for federal income tax (including under sections
1374 and 1375 of the Code) and no liability for any tax of the
S State based on income.
3.13.3 Each of the Sellers (a) has filed
all federal, state and local Tax returns required by law in
the legally prescribed time and manner, and paid all Taxes due
and payable; (b) has made all payments required by any
governmental program of workers' social security or
unemployment compensation; (c) has withheld and paid over to
the appropriate governmental authority all amounts required by
law to be withheld from the wages or salaries of employees;
(d) is not liable for any arrears of wages or any Taxes or
penalties for failure to comply with any of the foregoing; and
(e) has paid or will pay over to the appropriate governmental
authority all sales or use Taxes referable to such Seller, and
has made or will make provisions for payment of all such Taxes
accrued as of such date, but not yet due. There are no claims
pending or, to the best knowledge of the Sellers, threatened
against any of the Sellers for past due Taxes, nor are there
any outstanding waivers or agreements by any of the Sellers
for the extension of the time for the assessment of any Tax.
No election has been made by any of the Sellers under section
341(f) of the Code.
3.13.4 The sale by the Sellers of the
Purchased Assets and the acquisition thereof by Buyer, are
exempt from, and will not result in the imposition of or
liability for, any sales, use, transfer or similar Taxes
except in connection with the transfer of any motor vehicles
constituting a portion of the Purchased Assets. Sellers
acknowledge and agree that if for any reason the sale of all
or any portion of the Purchased Assets (other than any motor
vehicles) is determined not to be exempt from such Taxes, the
Purchase Price includes and is inclusive of any and all such
Taxes and that Buyer has paid such Taxes to Seller and Sellers
have collected such Taxes from Purchasers.
3.13.5 Within the time required by
applicable law, Sellers shall file Tax returns with the
Internal Revenue Service, the State of Alabama and all other
taxing authorities and shall pay any Taxes that are due.
Sellers shall request confirmation from the Tax Commissioner
of the State of Alabama, or the Commissioner's designated
representative, to the effect that all Tax returns required to
be filed by the Company have been filed and all Taxes shown on
such returns have been paid. Sellers shall promptly deliver
the original copy of such confirmation to Buyer.
3.13.6 The Sellers hereby waive all
confidentiality regarding any Taxes that are payable to the
State of Alabama and agrees that the Tax Commissioner of the
State of Alabama may release to Buyer the Sellers' known Tax
liability. The Sellers agree to execute any separate waivers
of confidentiality as may be required by Buyer or the Tax
Commissioner to implement the terms of this paragraph.
3.14 Employees; Benefit Plans.
3.14.1 Attached hereto as Exhibit 3.14 is
a true and complete list of the names and current compensation
rates of all present directors, officers and employees of the
Company whose annual compensation is $50,000 or more, together
with a summary showing as to each such person the salary,
bonuses, additional compensation and other like benefits, if
any, paid or payable to such persons for the fiscal year ended
December 30, 1994.
3.14.2 Exhibit 3.14 also contains a true
and complete list of all bonus, profit sharing, stock
purchase, stock option, pension, retirement, health, welfare,
severance pay or any other current or deferred remuneration or
compensation plan, arrangement or practice (sometimes herein
collectively called the "Plans") for the employees (including
leased employees) of the Company, salaried and nonsalaried,
union and non-union, including any formal or informal plans,
and the funding arrangements with regard thereto. Accurate
and complete descriptions of all Plans have been provided to
Buyer. Except as described in the Financial Statements, or as
disclosed on Exhibit 3.14, the Company has no Plan currently
in existence which is subject to the requirements of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"). No retired employee (including leased employees)
of the Company is receiving or is entitled to receive any
payments, health or other benefits from the Company.
3.14.3 None of the Company's employees
(including leased employees) is covered by a collective
bargaining agreement and there is no union or other
organization seeking or claiming to represent any such
employees.
3.14.4 There is not now, nor has there
been in the past, any strike, lock-out, sit-down, slow-down,
grievance or other labor dispute or trouble of any nature
whatsoever pending or threatened against the Company. The
Company is and has been in compliance in all material respects
with all laws regulating wages and/or hours and other
conditions of employment of employees.
3.14.5 All accrued obligations of the
Company, Skilstaf/Stafco and each former employee leasing
company that has leased or otherwise furnished any employees
to the Company at any time in the past (each, a "Former
Employee Leasing Company") relating to employees (including
leased employees) and agents of the Company, whether arising
by operation of law, by contract, or by past service, for
payments to trusts or other funds or to any governmental
agency, or to any individual employee or agent (or his heirs,
legatees, or legal representatives) with respect to
unemployment compensation benefits, profit sharing or
retirement benefits, or social security or other benefits have
been paid by the Company, Skilstaf/Stafco or such Former
Employee Leasing Company, as applicable. All obligations of
the Company, Skilstaf/Stafco and each Former Employee Leasing
Company as an employer or principal relating to employees
(including leased employees) or agents, whether arising by
operation of law, by contract, or by past practice, for
vacation and holiday pay, bonuses, and other forms of
compensation which are or may become payable to such employees
(including leased employees) or agents prior to the Closing
Date, have been and will be paid by them prior to the Closing
Date.
3.14.6 The Company has entered into a
certain Client Service Agreement with Skilstaf/Stafco
("Skilstaf/Stafco") dated September 15, 1993, a true copy of
which is included as part of Exhibit 1(g) hereto (the "Leased
Employees Agreement"). The Leased Employees Agreement is one
of the Contracts and Commitments and all representations,
warranties and covenants of Sellers contained herein with
respect to the Contracts and Commitments (including, but not
limited to, Section 3.9 hereof) apply as well to the Leased
Employees Agreement. The Company is not now and will not be
as of the Closing liable under any of the provisions of
Section 8 (Hold Harmless) of the Leased Employees Agreement
and no state of facts exists or will exist as of the Closing
Date that may give rise to any such liability.
3.14.7 Notwithstanding anything to the
contrary contained herein, all representations, warranties,
covenants and indemnities of the Sellers set forth in this
Agreement with respect to employees, employment arrangements,
benefit plans, Taxes and similar matters shall be deemed to
be representations, warranties, covenants and indemnities with
respect to such matters whether employees or leased employees
and whether under the Leased Employees Agreement or otherwise.
3.15 Insurance. Attached hereto as Exhibit 1(h)
is a true and complete list of all insurance policies in force
with respect to the Purchased Assets and the Business of the
Company and the annual premiums payable thereon. True and
complete copies of such insurance policies have been delivered
to Champion and Buyer. All such policies are adequate to
insure the risks covered thereby. The Company is not in
default in any respect under any such policy.
3.16 Litigation. Except as disclosed on Exhibit
3.16 hereto, there are no legal actions, suits, arbitrations,
or other legal or administrative proceedings or investigations
before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality, pending or, to the best knowledge of Sellers,
threatened against or otherwise affecting the Company or
involving any properties, assets or business of the Company
(including the Purchased Assets). To the best knowledge of
Sellers, there is no fact or facts existing which might result
in, nor is there any basis for, any such action, suit,
arbitration, or other proceeding or investigation. None of
the Sellers is a party to or subject to any order, writ,
injunction, decree, judgment or other restriction of any
federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality which
has or could have an adverse effect on the Business, the
Purchased Assets or the Assumed Liabilities or on any of the
Sellers' ability to enter into this Agreement or consummate
the transactions contemplated hereby.
3.17 Compliance with Laws. Except as disclosed
in this Agreement or in any Exhibit hereto, the Company has
complied with and is in compliance with, and has not received
notice of any violation of, any and all applicable laws,
rules, regulations and ordinances regulating or relating to
the Company's Business, the Purchased Assets or the Assumed
Liabilities in effect from time to time. All of the Company's
products are and have been, at the time of sale, in compliance
with all construction, safety and other standards imposed on
the Business by statute, rule or regulation of any
governmental authority (federal, state or local) or industry
association.
3.18 Environmental Matters.
(a) The following terms used in this
Section 3.18 have the meanings set forth below:
(i) "Environmental Laws" means
the (1) Toxic Substance Control Act, 15
U.S.C. Sec. 2601 et seq., (2) National
Historic Preservation Act, 16 U.S.C. Sec.
470 et seq., (3) Coastal Zone Management
Zone Act of 1972, 16 U.S.C. Sec. 1451 et
seq., (4) Rivers and Harbors Act of 1899,
33 U.S.C. Sec. 401 et seq., (5) Clean Water
Act, 33 U.S.C. Sec. 1251 et seq., (6) Flood
Disaster Protection Act, 42 U.S.C. Sec.
4001 et seq., (7) National Environmental
Policy Act, 42 U.S.C. Sec. 4321 et seq.,
(8) Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Sec. 6901 et seq.
("RCRA"), (9) Clean Air Act, 42 U.S.C. Sec.
7401 et seq., (10) Comprehensive
Environmental Response Compensation and
Liability Act, 42 U.S.C. Sec. 9601 et seq.
("CERCLA"); (11) Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 1801 et
seq., (12) Safe Drinking Water Act, 42
U.S.C. Sec. 300f et seq., (13) Emergency
Planning and Community Right-to-Know Act,
42 U.S.C. Sec. 11001 et seq., (14) Federal
Insecticide, Fungicide and Rodenticide Act,
7 U.S.C. Sec. 136 et seq.,
(15) Occupational Safety and Hygiene Act,
29 U.S.C. Sec. 685 et seq., and (16) all
other federal, state, county, municipal and
local, foreign and other statutes, laws,
regulations and ordinances which relate to
or deal with protection of human health or
the environment, all as may be from time to
time amended.
(ii) "Hazardous Substance(s)"
means (1) any flammable or combustible
substance, explosive, and/or radioactive
material, hazardous waste, toxic substance,
pollutant, contaminant and/or any related
materials or substance identified in and/or
regulated by any of the Environmental Laws,
and (2) asbestos, polychlorinated
biphenyls, urea formaldehyde, chemicals
and/or chemical wastes, explosives, known
carcinogens, petroleum products and by-
products (including fraction thereof) and
radon.
(iii) "Property" means any
parcel of real estate now or heretofore
owned by the Company or in which the
Company has or had any interest, including
any lessee's interest, any interest held as
security for an obligation and all Formerly
Owned Property.
(iv) "Formerly Owned Property"
means all Property owned, leased or
operated by the Company or any of their
respective Subsidiaries at any time in the
past, but not owned as of the Closing Date.
A true and correct list, including the
address and the county in which such
property is located, is set forth in
Exhibit 3.18 hereto.
(b) Except as described in Exhibit 3.18
hereto, the Company is now and has at all times been in
compliance with all Environmental Laws. Except as
described in Exhibit 3.18 hereto, no Hazardous Substances
have been released, emitted or disposed of, or otherwise
deposited, on or in the Property. A true and correct
list of all Hazardous Substances now or heretofore used
or generated by the Company is set forth in Exhibit 3.18
hereto.
(c) Except as described in Exhibit 3.18
hereto, no activity has been undertaken on the Property
that would cause or contribute to:
(i) the Property becoming a
treatment, storage or disposal facility
within the meaning of RCRA or any similar
state law or local ordinance;
(ii) a release or threatened
release of any Hazardous Substances; or
(iii) the discharge of
pollutants or effluents into any water
source or system or into the air, or the
dredging or filling of any waters, that
would require a permit under the Federal
Water Pollution Control Act, 33 U.S.C. Sec.
1251 et seq., the Clean Air Act, as
amended, 42 U.S.C. Sec. 7401 et seq., or
any similar foreign or state law or local
ordinance.
(d) Except as described in Exhibit 3.18
hereto, there are no substances or conditions in or on
the Property that may support a claim or cause of action
under any Environmental Law.
(e) Except as described in Exhibit 3.18
hereto, there are not, and never have been, any
underground storage tanks located in or under the
Property.
(f) The Company has obtained all material
Permits required by all applicable Environmental Laws,
and all such Permits are in full force and effect.
Except as described in Exhibit 3.18 hereto, the Company
is and has at all times been in compliance in all
material respects with all such Permits.
(g) Except as described in Exhibit 3.18
hereto, neither the Company nor its directors, officers,
employees or agents have generated or transported any
Hazardous Substances at any time which have been
transported to or disposed of in any landfill, waste
processing facility or other facility, which
transportation or disposal could create liability to any
unit of government or any third party. The Company has
not received any request for response action,
administrative or other order (or request therefor),
judgment, complaint, claim, investigation, request for
information or other request for relief in any form
relating to any facility where Hazardous Substances
generated or transported by the Company have been
disposed of, placed or located. A true and correct list
of all transporters, landfills and other facilities now
or heretofore used by the Company and its directors,
officers, employees or agents is set forth in
Exhibit 3.18. In addition, the Company has provided
Buyer or its agents copies of, or access to, all
manifests and records maintained by the Company relating
to such transporters, landfills and other facilities.
(h) Except as described in Exhibit 3.18
hereto, there are no pending or threatened claims,
investigations, administrative proceedings, litigation,
regulatory hearings or requests or demands for remedial
or response actions or for compensation, with respect to
the Property, alleging noncompliance with or violation of
any Environmental Law or seeking relief under any
Environmental Law.
(i) Except as described in Exhibit 3.18,
the Property is not and never has been listed on the
United States Environmental Protection Agency's National
Priorities List of Hazardous Waste Sites or any other
list, schedule, log, inventory or record of hazardous
waste sites maintained by any federal, state or local
agency.
(j) The Company has disclosed and
delivered to Buyer all environmental reports and
investigations which the Company has ever obtained or
ordered with respect to the Property.
3.19 Product Liability. The Company has
adequate insurance against loss or damage arising out of
product liability or similar claims, copies of the insurance
policies of which have been delivered to Buyer and Champion
and are listed on Exhibit 1(h) hereto. Such insurance covers
all incidents of loss which have occurred prior to the date
hereof or which may occur resulting from products sold by the
Company prior to the Closing. Each claim made against the
Company (whether or not covered by insurance) for loss or
damage arising out of product liability or similar claims for
the period from and including January 1, 1992 to the date
hereof and which individually is $10,000 or more is described
in Exhibit 3.19.
3.20 Warranties. There are no oral or written
warranties on the products sold by the Company, whether
express or implied, other than as set forth in Exhibit 3.20
hereto and any implied warranties that may be imposed by
operation of law.
3.21 Insider and Inter-Company Transactions.
(a) A true and complete list and brief
description of all contracts or other transactions
involving the Company with respect to which any officer,
director, employee or Shareholder, any member of their
immediate families, or any affiliate thereof, has any
interest is set forth in Exhibit 3.21 hereto.
(b) Except as set forth in Exhibit 3.21
hereto the Company is not indebted to any of its
officers, directors, employees or Shareholders, or any
member of their immediate families, or any affiliate
thereof, except for amounts due as normal salary,
bonuses, wages, commissions, reimbursements of ordinary
business expenses or ordinary business advances of the
Company in accordance with past practice.
3.22 Bank Accounts and Powers of Attorney.
Exhibit 3.22 hereto contains a true and complete list of the
names and locations of all banks or other financial
institutions which are depositories of funds of the Company,
the names of all persons authorized to draw or sign checks or
drafts upon such accounts and the number of such accounts and
the names and locations of any institutions in which the
Company has safe deposit boxes and the names of the
individuals having access thereto, and all outstanding powers
of attorney granted by or on behalf of the Company.
3.23 Progress Payments. Exhibit 3.23 hereto
contains a true and complete list and description of all
security deposits, progress payments, credits and the like the
Company has received relating in any way to any purchase
orders, leases or other agreements which are part of the
Purchased Assets.
3.24 Information in the HSR Act Notification and
Report Form. None of the information supplied (or to be
supplied) by the Company or the Shareholders for inclusion or
incorporation by reference in the Notification and Report Form
to be filed with the Federal Trade Commission ("FTC") and the
Department of Justice ("DOJ") in connection with the
transactions contemplated hereby (the "HSR Form") will, at the
time the HSR Form is filed with the FTC and DOJ and at all
relevant times thereafter, contain any untrue statement of a
material fact or omit to state any material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The
HSR Form will comply in all material respects with the HSR Act
and the rules and regulations thereunder.
3.25 Sufficiency of Purchased Assets. The
Purchased Assets constitute all of the property and assets,
real, personal and mixed, tangible and intangible, as are used
or useful in or are necessary for the conduct of the Business
in accordance with present practices.
3.26 Guaranties. There are no outstanding
obligations or liabilities currently owed by the Company
pursuant to the guaranties listed in Exhibit 2.3, nor any
current recourse liabilities or obligations under any of the
repurchase or floor plan financing agreements identified in
Exhibit 2.3, and no claims have been made, and the Company is
not aware of any basis for any claims to be made, against the
Company pursuant thereto.
3.27 Equipment. The Equipment is in good
operating condition and in a state of good repair sufficient
for the conduct of normal operations without the necessity of
any known capital expenditure in excess of $50,000 in the
aggregate. The Company's assets and properties (including
leased property) are adequate to enable the Company to conduct
its Business as now being conducted. Sellers are not aware of
any major capital expenditure that will be required on the
part of the Company within one year from the date of this
Agreement.
3.28 Inventory. The Inventory of the Company
shown on the latest of the Financial Statements and the
Inventory that will be shown on the Preliminary 1994 Financial
Statements, the Audited 1994 Financial Statements and the
Audited Closing Balance Sheet consists and will consist of raw
materials, work in process, and finished goods of a quality
and quantity usable or salable in the normal course of the
Business of the Company, except for any slow moving, obsolete
inventory or inventory of below-standard quality all of which
has been written off or written down to realizable value. The
valuation at which the Inventory is carried reflects and will
reflect the normal inventory valuation policy of the Company
of stating inventory at the lower of cost (first-in-first-out-
method) or market and its regular costing standards with
respect to work in process and finished goods inventory.
3.29 Receivables. The Receivables shown on the
latest of the Financial Statements and which will be shown on
the Preliminary 1994 Financial Statements, the Audited 1994
Financial Statements and the Audited Closing Balance Sheet
result from and will result from bona fide sales made by the
Company in the ordinary course of business and have been
collected or will be collectible in the ordinary course after
provision for doubtful accounts as shown on the latest of the
Financial Statements and to be shown on the Preliminary 1994
Financial Statements, the Audited 1994 Financial Statements
and the Audited Closing Balance Sheet. The amounts due, or to
become due, in respect of the Receivables are not in dispute
and there are no and will not be any setoffs or counterclaims
asserted against any of the Receivables.
3.30 Patents and Trademarks. Attached hereto as
Exhibit 1(f) is a true and complete list of all trademarks,
trademark applications, service marks, and the United States
Federal or State registrations thereof and any such foreign
registrations, trade names, United States and foreign patents
and patent applications, and copyrights (the "Intellectual
Property") used in connection with the Business of the Company
owned by or licensed to the Company, all of which are in full
force and effect. Patent applications, if any, shall be
disclosed to Buyer on a separate confidential list. Except as
disclosed on Exhibit 3.30, (a) the Company is the sole and
exclusive owner or licensee of the Intellectual Property and
has the sole and exclusive right to use the Intellectual
Property on or with respect to the products of the Company in
the same manner in which they have been or are now being used,
(b) there are no claims, demands or proceedings pending, or to
the best knowledge of Sellers, threatened, that pertain to or
challenge the right of the Company to use such Intellectual
Property, and (c) the Company has not granted any licenses or
other rights and has no obligation to grant licenses or other
rights with respect thereto.
3.31 Corporate Minute Books. The minute books
of the Company (true copies of which have been provided to
Champion and Buyer) contain complete and accurate records of
all meetings and other corporate actions of its stockholders
and directors and committees of directors (if any).
3.32 Suppliers and Customers.
3.32.1 A true and complete list of all
suppliers or vendors of products or services to the Company
aggregating more than $500,000 (at cost) annually for calendar
years 1993 and 1994, the address of each such supplier or
vendor, and the amount sold to the Company during such period
is set forth in Exhibit 3.32 hereto.
3.32.2 A true and complete list of each
customer of the Company aggregating more than $500,000 in
revenues annually during calendar years 1993 and 1994, the
address of each such customer, and the amount purchased by
each such customer from the Company during such periods are
set forth in Exhibit 3.32 hereto. True and correct copies of
all dealer and other agreements relating to such customers
have been delivered to Champion and Buyer.
3.32.3 To the best knowledge of the
Sellers, none of the customers or suppliers of the Company
described in Exhibit 3.32 hereof intends to cease purchasing
from, selling to or dealing with the Company, alter in any
material respect the amount of such purchases, sales or the
extent of dealings with the Company or alter in any material
respect the amount of such purchases, sales or dealings in the
event of the consummation of the transactions contemplated
hereby.
3.33 Illegal Payments. Neither the Company nor
any of its directors, officers, agents, or employees, or other
persons acting on behalf of the Company have, directly or
indirectly, (a) used any corporate funds of the Company for
unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity, (b) made any
unlawful payments on behalf of the Company to foreign or
domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds,
(c) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, (d) knowingly made any false or
fictitious entry on the books or records of the Company, or
(e) made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment on behalf of the Company.
3.34 Disclosure. Neither this Agreement nor any
Exhibit hereto, nor any schedule, certificate, statement,
writing, financial statement or document furnished or to be
furnished to the Buyer, its agents or representatives, by or
on behalf of the Sellers in connection with this Agreement or
any of the transactions contemplated hereby contains or will
contain, as of the date thereof, any untrue statement of a
material fact or omits or will omit to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they are made, not false or misleading.
No fact is known to any of the Sellers which materially and
adversely affects the Company's Business or any of the
Company's assets which has not been set forth in the Exhibits
hereto. The Sellers shall from time to time, up to and
including the Closing, promptly provide to the Buyer any and
all information concerning the Business which might materially
affect the accuracy or completeness of information contained
herein or otherwise furnished to the Buyer.
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND
CHAMPION
Buyer and Champion, jointly and severally, hereby
represent and warrant, as follows, each of which shall be
deemed to be independently material and to have been relied
upon by the Sellers:
4.1 Organization; Good Standing. Buyer and
Champion are corporations duly organized, validly existing and
in good standing under the laws of the State of Michigan.
4.2 Authority Relative to this Agreement.
Buyer and Champion each have the full legal right and power
and all authority and approval required by law to enter into
this Agreement and the documents and instruments to be
executed and delivered by it pursuant hereto, and to perform
fully their respective obligations hereunder and thereunder.
The execution and delivery of this Agreement and the documents
and instruments to be executed and delivered by it pursuant
hereto have been duly authorized by all necessary corporate
action on the part of Buyer and Champion. This Agreement and
the documents and instruments to be executed and delivered by
it pursuant hereto are and will be the legal, valid and
binding obligations of Buyer and Champion, enforceable against
each of them in accordance with their terms, except to the
extent to which enforcement may be limited by laws relating to
bankruptcy and insolvency, moratorium and similar laws
relating to the enforcement of creditors rights and by general
principles of equity (regardless of whether in an action at
law or in equity).
4.3 Consents and Approvals; No Violation. The
execution, delivery and performance by Buyer and Champion of
this Agreement and the documents and instruments to be
executed and delivered by it pursuant hereto will not: (a)
violate any provision of Buyer's or Champion's articles of
incorporation or by-laws; (b) contravene or constitute a
default under any indenture, mortgage, lease or other
agreement to which Buyer or Champion is a party or is bound,
or by which any of the properties or assets of Buyer or
Champion may be bound or affected; or (c) result in a
violation of any law, statute, ordinance, regulation,
judgment, injunction, order, decree or award of any court or
governmental authority or body having jurisdiction over Buyer
or by which either of them is bound. On or before the
Closing, Buyer and Champion shall cause or effect any action
by, or notice or disclosure to, or filing or registration
with, any governmental body, agency or official as Buyer or
Champion may be required by law to do in connection with the
transactions contemplated hereby.
4.4 Litigation. There are no legal actions,
suits, arbitrations, or other legal or administrative
proceedings or investigations before any federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality, pending or, to the best
knowledge of Buyer and Champion, threatened against or
affecting Buyer or Champion which, if adversely determined,
would materially affect the Buyer's or Champion's ability to
perform its obligations under this Agreement.
5. CERTAIN COVENANTS
5.1 Conduct of Business. From the date hereof
until the Closing, Sellers shall conduct the Business and
operations of the Company in accordance with past practice and
in the ordinary course of business, shall maintain the
Company's current business organization and goodwill, shall
use their best efforts to continue to retain the services of
the Company's present officers, employees and consultants,
shall preserve the Company's relationships with dealers,
customers, suppliers and others having business dealings with
the Company, and shall not enter into any transaction or
perform any act which would constitute a breach of the
representations, warranties, covenants and agreements
contained herein. Sellers will, consistent with this Section
5.1 and Section 5.2, continue to conduct the business of the
Company only in the ordinary course in accordance with past
practice and will take no action which could reasonably be
expected to result in the Purchased Assets not fully
reflecting the earnings of the Company for such period.
5.2 Certain Changes or Events. From the date
hereof until the Closing, except as specifically provided
herein, as described in Exhibit 5.2 or with the prior written
consent of Buyer and Champion, Sellers shall not:
(a) take any action to amend the
Company's articles of incorporation or by-laws,
(b) issue, sell or otherwise dispose of
any of its authorized but unissued capital stock,
(c) declare or pay any dividend or make
any other distribution in cash or property on its capital
stock (other than the Permitted Dividend) or redeem or
otherwise acquire any of its capital stock,
(d) merge or consolidate with or into any
corporation,
(e) make or become liable for any wage or
salary increase, bonus, profit-sharing or incentive
payment to any of its officers, directors, employees or
stockholders,
(f) sell or otherwise dispose of or
encumber any of its properties or assets other than in
sales or dispositions in the ordinary course of business
or in connection with normal repairs, renewals and
replacements,
(g) modify, amend or cancel any of its
existing leases or enter into any commitments, contracts,
agreements, leases, warranties, guarantees or
understandings other than in the ordinary course of
business,
(h) fail to operate the Business in the
customary manner and in the ordinary and regular course
of business and to maintain in good condition its
business premises, plant, fixtures, furniture and
equipment, reasonable wear and tear excepted,
(i) cancel or compromise any debt or
claim related to its assets, other than in the ordinary
course of business,
(j) waive or release any rights of value
relating to its assets, other than in the ordinary course
of business,
(k) transfer or grant any rights in or
under any concessions, leases, licenses, agreements,
patents, inventions, trademarks, trade names, service
marks, brand marks, brand names or copyrights, or with
respect to any know-how, processes or formulas, relating
to its assets, other than in the ordinary course of
business,
(l) enter into any employment contract
with any officer or employee, or make any loan to, or
enter into any transaction of any other nature with any
of its directors, officers or employees, the Shareholders
or any member of their immediate families or any
affiliate thereof,
(m) enter into any transaction, contract
or commitment with respect to its assets, other than in
the ordinary course of business,
(n) suffer any casualty loss or damage
(whether or not such loss or damage shall have been
covered by insurance) of $250,000 or more singly or in
the aggregate for all casualty losses and damage,
(o) suffer any material adverse change in
its financial condition, results of operations, Purchased
Assets, liabilities or business prospects,
(p) take any other action which might
adversely affect the interest of Buyer hereunder or
diminish the value of the Company as a going concern,
(q) alter the manner of keeping the
Company's books, accounts or records or the accounting
practices therein reflected, including any change in the
costing standards reflected in the Financial Statements,
(r) fail to maintain the corporate
existence of the Company,
(s) fail to maintain in full force and
effect all policies of insurance now in effect,
(t) fail to duly and timely file all
reports and returns required to be filed with any
governmental agency and promptly pay all Taxes unless
diligently contested in good faith by appropriate
proceedings,
(u) alter the physical contents or
character of any of its inventories so as to affect the
nature of the Business or result in a change in the total
dollar valuation thereof or otherwise take any action or
refrain from taking action as would result in any change
in the Purchased Assets or the Assumed Liabilities other
than in the ordinary course of business consistent with
past practice, or
(v) enter into any contract, agreement or
commitment with respect to, or propose or authorize, any
of the actions described in the foregoing clauses (a)
through (u).
5.3 Access to Information. Between the date
hereof and the Closing Date, Sellers shall (i) afford Buyer,
Champion and their representatives access, during normal
business hours, to all of the Company's business operations,
properties, financial statements, books, past and present
insurance policies, files, records, work papers, schedules,
financial data and all financial information and documents
furnished to the Company's auditors in connection with the
audits of the Company's Financial Statements and the Audited
Closing Financial Statements, (ii) cooperate with Buyer and
Champion and their representatives in the examination thereof,
(iii) furnish Buyer, Champion and their representatives with
all information with respect to the Business, the Purchased
Assets and the Assumed Liabilities as Buyer or Champion may
reasonably request, and (iv) furnish Buyer, Champion and their
representatives with copies of such documents as may be
reasonably requested. The Sellers shall cause the Company's
auditors to give to Champion's auditors, Price Waterhouse,
full access to all work papers, schedules, financial data and
all financial information and documents relating to the audits
of the Company's Financial Statements and the Audited Closing
Financial Statements. Between the date hereof and the Closing
Date, all such information furnished to the Buyer and/or
Champion shall be subject to the terms of the letter between
the Company and Champion dated November 15, 1994. Buyer,
Champion and their representatives shall have the right to
discuss the affairs of the Company with the directors,
officers, employees, consultants, auditors, advisors and
agents of the Company. No such examination, however, shall
constitute a waiver or relinquishment by Buyer or Champion of
their rights to rely upon Sellers' representations,
warranties, covenants and agreements as made herein or
pursuant hereto.
5.4 Additional Agreements. Subject to the
terms and conditions herein provided, each of the parties
hereto agrees to use its best efforts to take promptly, or
cause to be taken, all actions and to do promptly, or cause to
be done promptly, all things necessary, proper or advisable
under applicable laws to consummate and make effective the
transactions contemplated by this Agreement, and to satisfy
all of the conditions to the Closing to be satisfied by such
party, including using its best efforts to obtain all
necessary actions or non-actions, extensions, waivers,
consents and approvals from all applicable governmental
entities and third parties, and effecting all necessary
registrations and filings. Without limiting the generality of
the foregoing, the parties shall, as promptly as practicable
after the date hereof file appropriate HSR Forms with the FTC
and DOJ as required by the HSR Act and such HSR Forms shall be
accompanied by a request for early termination of the
applicable waiting period under the HSR Act. Each of the
parties hereto agrees not to take any action or fail to take
any action that would be likely to cause any representation or
warranty contained in this Agreement to cease to be true or
accurate or that would be reasonably likely to prevent the
performance of any covenant or the satisfaction of any
condition contained in this Agreement. Sellers shall
immediately advise Buyer and Champion in writing in the event
that any of the representations or warranties of Sellers shall
be untrue or incorrect in any respect or any of them shall
become aware of the occurrence of any event or state of facts
which results in any of such representations and warranties
not being true or correct as if then being made by them.
5.5 Communications With Agencies. Sellers
will promptly transmit to Buyer and Champion copies of any
communications with any federal or state regulatory agencies
received after the date hereof which relate to the Business.
5.6 Financials. (a) Sellers shall cause to be
prepared and will deliver to Buyer and Champion promptly after
the same are prepared the monthly financial statements of the
Company. All such monthly statements shall be prepared on a
basis consistent with the Financial Statements.
(b) Sellers shall cause the 1992 Financial Statements
referred to in Section 3.6.1 to be audited by the Auditor in
accordance with generally accepted auditing standards as
promptly as practicable under the circumstances. The audited
1992 Financial Statements shall be prepared in accordance with
and shall comply with the requirements of Regulation S-X
promulgated by the Securities and Exchange Commission. Such
audited 1992 Financial Statements shall be delivered to Buyer
and Champion at the same time as they are delivered to
Sellers.
5.7 Takeover Proposals. Sellers will not
authorize or permit any of the officers, directors or
employees of the Company or any investment banker, financial
advisor, attorney, accountant or other representative or agent
retained by any of the Sellers to, solicit or encourage the
making of, or agree to or endorse any Takeover Proposal (as
defined below), or participate in any discussions or
negotiations, or provide third parties with any nonpublic
information, relating to any such proposal. The Sellers will
promptly advise Buyer and Champion orally and in writing of
any such proposals. As used in this Agreement, "Takeover
Proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination
involving the Company or any proposal or offer to acquire in
any manner any equity interest in, or any portion of the
assets (other than in the ordinary course of business
consistent with past practice) of, the Company other than the
transactions contemplated or permitted by this Agreement.
6. CERTAIN AGREEMENTS AND UNDERSTANDINGS OF THE
PARTIES
6.1 Permitted Dividend.
6.1.1 Buyer and Champion acknowledge
that, in light of the fact that the Company has elected to be
treated as an S Corporation under the Code, the Company may
declare on or prior to December 30, 1994 and pay on or prior
to the Closing Date a cash dividend in an amount which would
not reduce Preliminary 1994 Stockholders Equity below
$1,975,000 and may declare on or after December 31, 1994 and
prior to the Closing Date an additional cash dividend in an
amount which would not reduce Audited Closing Stockholders
Equity below $1,975,000 (collectively, the "Permitted
Dividend"). The Preliminary 1994 Balance Sheet and the
Audited Closing Balance Sheet shall include accruals for the
Permitted Dividend. Sellers acknowledge that the accrual and
payment of such Permitted Dividend shall not relieve Sellers
of any of their duties or obligations under this Agreement
including, but not limited to, the Preliminary 1994
Stockholders Equity or the Audited Closing Stockholders Equity
standards of Section 2.1.5.
6.2 Employment Agreements. At the Closing,
Terrell R. Bridges and John J. McKone shall each enter into an
employment agreement with the Buyer in the form attached
hereto as Exhibit 6.2(1) and David Bridges, Sam Bridges, Bruce
Thompson and Garrett McKone shall each enter into an
Employment Agreement in the form attached hereto as Exhibit
6.2(2) (collectively, the "Employment Agreements"). The
foregoing persons are sometimes referred to herein as the
"Executives." The provisions of this Section 6.2 (including
the forms of Exhibits 6.1 and 6.2) and Section 6.3 (including
the form of Exhibit 6.3) shall be modified in such manner as
may be mutually agreed upon by Buyer, Champion and the Company
to account for the leased employee arrangements with
Skilstaf/Stafco and the termination thereof and/or changes
therein pursuant to Section 8.1(z) hereof.
6.3 Option Agreements. At the Closing,
Terrell R. Bridges, John J. McKone, David Bridges, Sam Bridges
and Bruce Thompson and Champion shall enter into a stock
option agreement in the form attached hereto as Exhibit 6.3
(collectively, the "Option Agreements").
6.4 Noncompetition Agreements. At the Closing
each of the Sellers shall enter into a noncompetition
agreement with Buyer and Champion, which agreement will be in
the form attached hereto as Exhibit 6.4(1) in the case of the
Company and Exhibit 6.4(2) in the case of the Shareholders
(collectively, the "Noncompetition Agreements").
6.5 Security Deposits. All security deposits,
progress payments, credits and the like which the Company has
received pursuant to any purchase orders, leases or agreements
assigned to or assumed by Buyer pursuant to this Agreement
shall be paid to Buyer at the Closing. All security deposits
which have been paid by the Company to third parties under any
leases or agreements assigned to or assumed by Buyer pursuant
to this Agreement are a part of the Purchased Assets and at
the Closing shall become the property of Buyer for the payment
of no additional consideration.
6.6 Power of Attorney. Without limitation of
any provision of this Agreement, effective upon the Closing,
the Company constitutes and appoints each of Buyer and
Champion and their respective successors and assigns the true
and lawful attorney of the Company, with full power of
substitution, in the name of Buyer or in the name of the
Company, but for the benefit of Buyer, (i) to collect for the
account of Buyer all items transferred or intended to be
transferred to Buyer hereunder, (ii) to institute and
prosecute all proceedings which Buyer may deem proper in order
to collect, assert or enforce any claim, right or title of any
kind in or to the Purchased Assets, and to do all such acts
and things in relation thereto as Buyer shall deem advisable;
and (iii) to take all actions which Buyer may deem proper in
order to provide to Buyer the benefits under any claims,
contracts, agreements, arrangements, licenses, leases,
commitments, sales orders, purchase orders or other documents
or instruments of the Company transferred or intended to be
transferred to Buyer hereunder. Each of the Sellers
acknowledges that these powers are coupled with an interest
and, upon the Closing, shall not be revocable in any manner or
for any reason. Buyer shall be entitled to retain for its own
account any amounts collected pursuant to the foregoing power,
including any amount payable as interest in respect thereof.
6.7 Employees. Buyer shall offer employment
to all active employees of the Company as of the Closing Date
(other than the Executives) on an at-will basis, at their
current wage levels and with hospitalization insurance, sick
time, holiday and vacation benefits substantially equivalent
to that described in the Exhibit 6.7 hereto, provided,
however, that nothing contained herein shall preclude Buyer
from offering additional or different benefits or terms of
employment in the future. Immediately prior to the Closing
Date, Sellers shall terminate all active employees of the
Company. Sellers agree to cooperate and encourage such
employees to become employees of Buyer. The provisions of
this Section 6.7 shall be modified in such manner as may be
mutually agreed upon by Buyer, Champion and the Company to
account for the leased employee arrangements with
Skilstaf/Stafco and the termination thereof and/or changes
therein pursuant to Section 8.1(z).
6.8 Post Closing Receipts. After the Closing,
Sellers will immediately notify and transfer to Buyer any
payments or other receipts any of them receives in respect of
any Purchased Assets intended to be transferred to Buyer,
including by way of example and not of limitation, any
Receivables. Pending any such transfer Sellers will segregate
any such payments from their other assets and will clearly
mark or designate them as the property of Buyer.
7. CLOSING
7.1 Closing Date. The closing of the
transaction contemplated by this Agreement (herein called the
"Closing") shall take place at the offices of Miller,
Canfield, Paddock and Stone, P.L.C., 1400 North Woodward
Avenue, Suite 100, Bloomfield Hills, Michigan 48303-2014, at
10:00 a.m. (local time) on February 3, 1995 or such other
date, time and place as Champion, Buyer and the Company may
mutually agree. The date on which the Closing actually occurs
is referred to herein as the "Closing Date."
7.2 Deliveries by Sellers. At the Closing,
Sellers shall deliver to Buyer the reports, resolutions,
schedules, contracts, leases, agreements and other papers
required pursuant to this Agreement, and executed warranty
deeds, bills of sale, endorsements, assignments, registrations
and other instruments of transfer and conveyance, all in form
and substance satisfactory to counsel for Buyer, as shall be
effective to vest in Buyer all of the right, title and
interest of Sellers in and to the Purchased Assets, free and
clear of all Encumbrances. Sellers shall take all such steps
as may be necessary to put Buyer in actual possession and
operating control of the Purchased Assets, and Sellers agree
that at any time or from time to time after the Closing Date,
upon request of Buyer or Champion, Sellers will execute,
acknowledge and deliver such other and further instruments of
conveyance and transfer and take such other action as Buyer
may reasonably require to vest more effectively in Buyer title
to any of the Purchase Assets.
7.3 Deliveries by Buyer. At the Closing,
Buyer shall pay the Purchase Price in accordance with Section
2.1 and shall deliver to Sellers the instruments of assumption
of the Assumed Liabilities, reasonably satisfactory in form
and substance to Sellers' counsel.
7.4 Certain Closing Expenses. Buyer shall be
liable for and shall pay all state and local sales, use and
excise taxes, documentary stamp taxes, land transfer taxes,
recording and filing fees and like charges properly payable
upon and in connection with the conveyance and transfer of the
Purchased Assets to Buyer and Sellers shall be liable for and
shall pay all Taxes referred to in Section 11.2.
8. CONDITIONS TO CLOSING
8.1 Conditions to Obligations of Buyer and
Champion. The obligations of Buyer and Champion to close the
transactions contemplated by this Agreement are subject to the
prior fulfillment of each of the following conditions;
provided; however, that Buyer and Champion may waive any one
or more of such conditions:
(a) Sellers shall have complied with and
performed all the terms, covenants and conditions of this
Agreement required to be complied with and performed by
Sellers on or prior to the Closing Date, and shall have made
all of the deliveries required to have been made hereunder by
Sellers on or prior to the Closing Date.
(b) All of the representations and warranties
made by Sellers contained in this Agreement shall be true and
correct on the Closing Date, as if made on the Closing Date.
(c) All necessary governmental approvals and
consents of third parties to the transactions contemplated by
this Agreement shall have been obtained and the same shall be
in form and substance reasonably acceptable to Buyer and
Champion and the applicable waiting period under the HSR Act
shall have expired or been terminated.
(d) Sellers shall have delivered to Buyer and
Champion the resolutions of the Company's Board of Directors
and Shareholders authorizing the execution, delivery and
performance by the Company of this Agreement and the
transactions contemplated hereby, certified by the Secretary
of the Company.
(e) Sellers shall have furnished Buyer and
Champion with a favorable opinion, dated the Closing Date, of
Messrs. Gullahorn & Hare, counsel for the Shareholders and the
Company, addressed to Buyer, in form and substance customary
for transactions of the character contemplated in this
Agreement and otherwise reasonably acceptable to Buyer and
Champion.
(f) Sellers shall have furnished Buyer and
Champion with a certificate, executed by the President of the
Company and by the Shareholders, certifying that each of the
conditions set forth in Section 8.1(a), (b), (c), (j), (k),
(q), (v) and (ad) has been satisfied.
(g) All legal matters in connection with this
Agreement and the Closing hereunder shall be approved by
Messrs. Miller, Canfield, Paddock and Stone, P.L.C., counsel
for Buyer and Champion; and there shall have been furnished to
such counsel by the Sellers such corporate and other records
and information as they may reasonably have requested for such
purpose.
(h) Buyer and Champion shall have received
assurances from their auditors, Price Waterhouse, that the
Financial Statements referred to in Section 3.6.1(a) comply
with the requirements of the Securities Act of 1933, as
amended (the "1933 Act") and the Securities Exchange Act of
1934, as amended (the "1934 Act") and the rules promulgated
thereunder with respect to the financial statements of the
Company which would be required to be included in registration
statements or reports that may be filed or are required to be
filed by Champion, Buyer, the Company or any of their
respective affiliates under the 1933 Act or the 1934 Act.
(i) Buyer and Champion shall have received all
permits necessary in Buyer's opinion to operate the Business
after the Closing.
(j) Prior to the Closing Date, the Company
shall not have incurred, or be threatened with, a material
liability or casualty which would materially impair the value
of the Purchased Assets.
(k) No action, suit, proceeding or
investigation shall have been instituted before any court or
governmental body, or instituted by any governmental agency,
to restrain or prevent the carrying out of the transactions
contemplated by this Agreement or which might affect the right
of Buyer to own, operate and control the Business or the
Purchased Assets after the Closing Date.
(l) Buyer and Champion shall have received
written report(s) of a site assessment and environmental
audit, in scope, form and substance, and prepared by an
independent, competent and qualified engineer, satisfactory to
Buyer and Champion, and any updates thereof deemed necessary
or appropriate by Buyer and Champion, and Buyer and Champion
shall be satisfied, in their sole and absolute discretion,
that there will not be at and after the Closing any basis for
the imposition on Buyer or Champion of any liability under any
Environmental Law. The Company shall pay the cost of any such
reports.
(m) Sellers shall have provided to Buyer or
Champion confirmation from the Tax Commissioner of the State
of Alabama showing that all Tax returns and reports required
to be filed by the Company prior to the Closing have been
filed and that all Taxes shown on such returns have been paid.
(n) Sellers shall have provided to Buyer and
Champion a statement certified by the Commissioner of the
Alabama Department of Industrial Relations certifying the
status of the Company's, Skilstaf/Stafco's and each Former
Employee Leasing Company's contribution liability under the
Alabama Industrial Relations Act.
(o) Buyer and Champion shall have received
Uniform Commercial Code lien searches with respect to the
Purchased Assets and A.L.T.A. commitments for owner's policies
of title insurance for the real property described in
Exhibit 1(d) hereto (the "Title Commitments"), and an A.L.T.A.
survey of such real property in form and content satisfactory
to Buyer and Champion.
(p) Buyer and Champion shall have reviewed,
investigated, ascertained and verified to their sole, complete
and unfettered satisfaction all aspects of the financial
statements, business, properties, assets, contracts, past and
present insurance arrangements, employment arrangements
(leased or otherwise), customer and dealer relations and
affairs of the Company, the Purchased Assets, the Assumed
Liabilities, the Excluded Liabilities, all facts, information,
and other matters regarding the Company referred to in this
Agreement or given or provided in connection with this
Agreement, and other due diligence reviews and investigations
of the Company and the Sellers as Champion and Buyer may deem
advisable or appropriate, and the results of such
investigations shall be satisfactory to Buyer and Champion in
all respects in each of their sole, complete and unfettered
discretion.
(q) No fire or other casualty shall have
destroyed (i) $250,000 or more in replacement cost of the
Purchased Assets, or (ii) any part of the Purchased Assets
which would have an adverse effect on the Business (whether or
not in excess of $250,000) whether or not such casualty is
covered by insurance, and no event shall have occurred which
has or reasonably may have an adverse effect upon the
Business, the Purchased Assets, the Assumed Liabilities or
business prospects of the Business.
(r) Sellers shall have provided to Buyer and
Champion the requisite certification required under Code
Section 1445 relating to foreign sellers of U.S. real estate.
(s) Sellers shall have delivered to Buyer and
Champion an affidavit, in form acceptable to the title company
issuing the Title Commitments certifying that the real
property is free from claims for mechanic, materialmen and
laborer's liens or any other liens or assessments.
(t) The Executives shall have executed and
delivered to Buyer and Champion the Employment Agreements and
the Option Agreements.
(u) The Sellers other than the Executives
shall have executed and delivered to Buyer and Champion the
Noncompetition Agreements.
(v) Sellers shall have taken such corporate
action as may be appropriate to change the name of the Company
to a name which is not confusingly similar to its present name
and shall have delivered such instruments as may be required
to be filed with all governmental authorities to so change the
Company's name.
(w) The transactions contemplated in the CRHI
Purchase Agreement shall be consummated simultaneously with
the Closing.
(x) Sellers shall have delivered to Buyer and
Purchaser the Preliminary 1994 Financial Statements and the
certified calculations of the Preliminary 1994 Stockholders
Equity and Preliminary 1994 EBIT and any questions or disputes
with respect thereto shall have been resolved to the
satisfaction of Buyer and Purchaser.
(y) The consulting agreements between the
Company and J.D. Chandler, John G. Davis and Donnie Russell
shall have been terminated and each shall have released the
Company from any liability thereunder on terms and conditions
satisfactory to Buyer and Champion.
(z) If desired by Champion and Buyer in their
discretion, Buyer shall have entered into new or revised
arrangements with Skilstaf/Stafco relating to employees leased
to the Company which are to be leased to, or employed by,
Buyer on terms reasonably acceptable to Champion and Buyer.
(aa) Buyer and Champion shall be satisfied in
their sole discretion with the amount of the potential
liability associated with the Assumed Litigation.
(ab) Buyer, Champion and the Company shall have
agreed upon changes requested by Buyer and Champion pursuant
to Section 6.2 and 6.7 hereof.
(ac) Buyer, Champion and the Company, and if
requested by Buyer and Champion the other Sellers, shall have
entered into agreements with respect to the defense of the
Assumed Litigation and the defense of other third party claims
that may be the subject of indemnification claims under this
Agreement upon terms and conditions reasonably acceptable to
Buyer and Champion.
(ad) Buyer shall have received all necessary
approvals and consents of third parties, including, without
limitation, all appropriate governmental authorities,
commissions, agencies and bodies (including The Industrial
Development Board of the City of Boaz, Alabama (the "IDB") and
the Alabama Department of Revenue) so that Buyer receives, no
later than the Closing Date, all of those tax abatement
benefits previously received by the Company, in amounts not
less than those received by the Company or to be received by
the Company, pursuant to the issuance of bonds by the IDB in
connection with the facilities operated by the Company,
including, without limitation, an abatement of noneducational
ad valorem taxes on industrial development property.
8.2 Conditions to Obligations of Sellers. The
obligations of Sellers to close the transaction contemplated
by this Agreement are subject to the prior fulfillment of each
of the following conditions; provided, however, that the
Company may waive any one or more of such conditions:
(a) Buyer and Champion shall have complied
with and performed all the terms, covenants and conditions of
this Agreement required to be complied with and performed by
Buyer and Champion on or prior to the Closing Date, and shall
have made all of the deliveries required to have been made
hereunder by Buyer and Champion on or prior to the Closing
Date.
(b) All of the representations and warranties
made by Buyer and Champion contained in this Agreement shall
be true and correct on the Closing Date, as if made on the
Closing Date.
(c) All necessary governmental approvals and
consents of third parties to the transactions contemplated by
this Agreement shall have been obtained, and the waiting
period under the HSR Act shall have expired or been
terminated.
(d) Buyer and Champion shall have delivered to
Sellers the resolutions of its respective Board of Directors
authorizing the execution, delivery and performance by Buyer
and Champion of this Agreement and the transactions
contemplated hereby, certified by the Secretaries of Buyer and
Champion.
(e) Buyer and Champion shall have furnished
Sellers with a favorable opinion, dated the Closing Date, of
counsel for Buyer and Champion, addressed to Sellers, in form
and substance customary for transactions of the character
contemplated in this Agreement and otherwise reasonably
acceptable to the Company.
(f) Buyer and Champion shall have furnished
Sellers with a certificate, executed by the president of Buyer
and of Champion, certifying that each of the conditions set
forth in Section 8.2(a) and (b) has been satisfied.
(g) All legal matters in connection with this
Agreement and the Closing hereunder shall be approved by
Messrs. Gullahorn & Hare, counsel for the Sellers; and there
shall be furnished to such counsel for the Sellers such
corporate and other records and information as they may
reasonably have requested for such purposes.
(h) Buyer and Champion, as applicable, shall
have executed and delivered the Employment Agreements, the
Option Agreements and the Noncompetition Agreements to be
executed by them.
(i) The personal guarantees executed by
certain Shareholders of the obligations of the Company
identified on Exhibit 8.2(i) hereto shall have been released
or Buyer shall have agreed to indemnify the Shareholders from
liability thereunder.
9. SURVIVAL; INDEMNIFICATION AND RELATED MATTERS
9.1 Survival Past Closing. Any investigation
or examination by Buyer or Champion of the Business,
properties or affairs, of the Company or the Shareholders
shall not affect the representations and warranties of the
Sellers herein contained, and the respective representations
and warranties of the parties herein contained shall survive
the Closing.
9.2 Indemnification by Sellers. Subject to
Section 9.4 hereof, Sellers shall indemnify, defend and hold
Buyer, Champion and their respective officers, directors,
parent, subsidiaries and affiliates (collectively "Buyer
Indemnified Parties") harmless from and against any and all
liabilities, losses, damages, claims, fines, penalties, costs
and expenses (including, without limitation, reasonable
attorneys and accounting fees) ("Damages") incurred by any of
the Buyer Indemnified Parties arising out of or resulting
from:
(a) All debts, liabilities and obligations of
any of the Sellers, whether accrued, absolute, contingent,
known or unknown, or otherwise, including, without limitation,
the Excluded Liabilities and excluding only the Assumed
Liabilities and the Unknown Company Liabilities (but only up
to an amount not exceeding the Sellers Basket Amount as
determined pursuant to Section 9.4).
(b) Any inaccuracy in any representation or
breach of any warranty of any of the Sellers contained in this
Agreement.
(c) Any failure by any of the Sellers to
perform or observe, or to have performed or observed, in full
any covenant, agreement or condition to be performed or
observed by any of them under this Agreement.
(d) Any fraud by any of the Sellers.
9.3 Indemnification by Buyer and Champion.
Subject to Section 9.4 hereof, Buyer and Champion, jointly and
severally, shall indemnify, defend and hold Sellers harmless
from and against any and all Damages incurred by Sellers
arising out of or resulting from:
(a) Any inaccuracy in any representation or
breach of any warranty of Buyer or Champion contained in this
Agreement.
(b) Any failure by Buyer or Champion to
perform or observe, or to have performed or observed, in full
any covenant, agreement or condition to be performed or
observed by it under this Agreement.
9.4 Certain Agreements with Respect to Unknown
Liabilities, Limitation on Indemnification and Apportionment
as Between Sellers and CRHI Sellers.
(a) For the purposes of this Agreement
the following terms have the following meanings:
"Sellers Basket Amount" means a maximum
aggregate of $1,000,000 for (i) all Unknown
Liabilities to be assumed by Buyer or CRHI Buyer
pursuant to Section 9.4(b) of this Agreement and
Section 9.4(b) of the CRHI Purchase Agreement
and (ii) Damages as to which Champion, Buyer,
CRHI Buyer or any other person entitled to
indemnification may claim against Sellers
pursuant to Section 9.2 of this Agreement or
against CRHI Sellers pursuant to Section 9.2 of
the CRHI Purchase Agreement. The Sellers Basket
Amount shall be apportioned between the Sellers
and the CRHI Sellers pursuant to Section 9.4(i)
hereof.
"Sellers Cap Amount" means a maximum
aggregate of $10,000,000 for (i) all Excluded
Liabilities and CRHI Excluded Liabilities
assumed and paid by the Shareholders and CRHI
Shareholders pursuant to Section 9.4(b) of this
Agreement or Section 9.4(b) of the CRHI Purchase
Agreement and (ii) Damages as to which Sellers
actually pay pursuant to Section 9.2 of this
Agreement or CRHI Sellers actually pay pursuant
to Section 9.2 of the CRHI Purchase Agreement
(but excluding from the calculation of the
Sellers Cap Amount Damages and other amounts not
subject to the Sellers Cap Amount pursuant to
the last sentence of Section 9.4(d) or otherwise
under this Agreement). The Sellers Cap Amount
shall be apportioned between the Sellers and the
CRHI Sellers pursuant to Section 9.4(i) hereof.
"CRHI Excluded Liabilities" has the same
meaning as "Excluded Liabilities" set forth in
Section 2.3.3 of the CRHI Purchase Agreement.
"Unknown Company Liabilities" means
liabilities of the Company existing at the
Closing Date which have arisen in the ordinary
course of business of the Company up to the
Closing Date and which are not (i) otherwise
expressly assumed by Buyer under
Section 2.3.1,(ii) known to any of Sellers or
which should have been known to any of Sellers
with a reasonable investigation, (iii) owed to
any Shareholder, member of the immediate family
of a Shareholder, or any affiliate thereof, or
(iv) any Taxes (other than expressly assumed by
Buyer pursuant to Section 2.3.2(a) hereof).
"Unknown CRHI Liabilities" means
liabilities of CRHI existing at the Closing Date
which have arisen in the ordinary course of
business of CRHI up to the Closing Date which
are not (i) otherwise expressly assumed by the
CRHI Buyer under Section 2.3.2 of the CRHI
Purchase Agreement (ii) known to any of the CRHI
Sellers or which should have been known to any
of the CRHI Sellers with a reasonable
investigation, or (iii) owed to any CRHI
Shareholder, member of the immediate family of
CRHI Shareholder, or any affiliate thereof, or
(iv) any Taxes (other than expressly assumed by
CRHI Buyer pursuant to Section 2.3.2(a) of the
CRHI Purchase Agreement).
"Unknown Liabilities" means,
collectively, all liabilities constituting
Unknown Company Liabilities and Unknown CRHI
Liabilities.
(b) The parties intend that Buyer under
this Agreement will assume, and Buyer hereby assumes, and
agrees to pay, Unknown Company Liabilities and that CRHI
Buyer under the CRHI Purchase Agreement will assume and
agree to pay Unknown CRHI Liabilities in a maximum
aggregate amount of Unknown Liabilities so assumed not
exceeding the Sellers Basket Amount. The parties further
intend that Sellers under this Agreement will assume, and
hereby assume, and agree to pay, Excluded Liabilities and
that CRHI Sellers under the CRHI Purchase Agreement will
assume and agree to pay CRHI Excluded Liabilities,
whether or not constituting Unknown Liabilities, up to
the Sellers Cap Amount. The parties further intend that
Buyer and Champion will indemnify the Shareholders (but
not the Company), but will not assume, any Excluded
Liabilities in excess of the Sellers Cap Amount. For
purposes of clarity, the parties intend that neither
Buyer nor Champion shall assume or indemnify any of the
Sellers in respect of any of the Shareholder Liabilities
and that each Shareholder will indemnify Buyer and
Champion in respect of such Shareholder's Shareholder
Liabilities.
(c) Sellers shall not be obligated to pay
any amount pursuant to Section 9.2 until the Buyer
Indemnified Parties incur aggregate Damages in excess of
the Sellers Basket Amount. At such time as the aggregate
Damages incurred by the Buyer Indemnified Parties shall
exceed the Sellers Basket Amount, Buyer Indemnified
Parties shall be entitled to the amount of Damages which
exceed the Sellers Basket Amount, subject to the
provisions of Section 9.4(d) below. The Sellers Basket
Amount shall not be applicable to (i) the obligation of
the Sellers to indemnify (x) under Section 9.2(b) for
breach of any representation or warranty under Sections
3.1, 3.2, 3.4, or Section 3.13 to the extent such breach
relates to any of the Taxes described in Section 11.2, or
any representation or warranty which any Seller knew or
with a reasonable investigation should have known was
false or incomplete or (y) in respect of any fraud.
(d) Sellers shall not be obligated to pay
any amount pursuant to Section 9.2 in excess of the
Sellers Cap Amount. The Sellers Cap Amount shall not be
applicable to any matter described in the last sentence
of Section 9.4(c).
(e) Reserved.
(f) For purposes of determining whether
the Sellers Basket Amount or the Sellers Cap Amount have
been exceeded and the amount thereof, all nonduplicative
Damages and/or liabilities shall be aggregated. In
addition, such amounts shall be net of any insurance
proceeds covering the matter in question actually
received by Champion or Buyer.
(g) Written notice of any claim by
Champion or Buyer for indemnification under Section 9.2
hereof must be received by the person required to make
such indemnity not later than the third anniversary of
the Closing Date, except such time limit shall not apply
in respect to (i) any claim related to the items
described in the last sentence of Section 9.4(c) above.
For purposes of clarity, the time limit of this Section
9.4(g) shall not apply in respect of a claim against a
Shareholder in respect of such Shareholder's Shareholder
Liabilities.
(h) The parties expressly intend and
agree that each and every liability, covenant,
obligation, representation and warranty of the Sellers
under this Agreement shall be joint and several with the
intention that Buyer and/or Champion may recover the
entire amount of damages, or enforce this Agreement in
its entirety against, and/or obtain other remedies that
may be available under applicable law in connection
therewith from any one or more of the Sellers in their
discretion without any requirement to join or to
otherwise proceed against any other Seller; except that
each Shareholder shall be responsible for such
Shareholder's Shareholder Liabilities and the other
Shareholders shall have no responsibility therefor.
(i) As of any date of determination, the
Sellers Basket Amount and the Sellers Cap Amount shall be
apportioned between Sellers and the CRHI Sellers based
upon the aggregate Damages, Unknown Liabilities, Excluded
Liabilities and/or CRHI Excluded Liabilities, as
applicable, attributable to the Company or CRHI as of
such date by applying a percentage, the numerator of
which shall be the aggregate amount of Damages, Unknown
Liabilities, Excluded Liabilities and/or CRHI Excluded
Liabilities attributable to the Company or CRHI as of
such date, as applicable, and the denominator shall be
the aggregate amount of Damages, Unknown Liabilities,
Excluded Liabilities and/or CRHI Excluded Liabilities as
of such date. Exhibit 9.4 hereto sets forth
illustrations as to the operation of such apportionment.
10. TERMINATION OF AGREEMENT
10.1 Events of Termination. This Agreement may
be terminated, and the transactions contemplated hereby may be
abandoned, at any time prior to the Closing Date:
(i) by the mutual consent of the Company
and Buyer;
(ii) by Buyer and Champion, if any of the
Sellers breach in any material respect any of their
representations, warranties, covenants or agreements
contained in this Agreement;
(iii) by Sellers, if Buyer or Champion
breaches in any material respect any of its
representations, warranties, covenants or agreements
contained in this Agreement;
(iv) by either Buyer, Champion or Sellers,
if any of the conditions to Closing is not fulfilled (or
waived by the party for whose benefit the conditions
exist) on or prior to the Closing Date;
(v) by either Buyer, Champion or Sellers,
if the Closing has not occurred on or prior to
11:59 p.m., local time, on March 1, 1995, provided that
a party may not terminate this Agreement pursuant to this
provision if such party is in material breach of any of
its covenants or agreements contained in this Agreement;
(vi) by Buyer and Champion pursuant to
Section 2.1.5(b).
10.2 Effect of Termination. In the event that
either party shall elect to terminate this Agreement pursuant
to any provision contained herein expressly giving such party
the right to terminate this Agreement, this Agreement shall
forthwith terminate and have no further effect, and neither
party shall have any further obligation or liability (except
with respect to those provisions hereof which expressly
survive any termination of this Agreement). Notwithstanding
the foregoing, the termination of this Agreement pursuant to
any provision hereof shall not relieve any party of any
liability for a breach of any representation or warranty, or
nonperformance of any covenant or obligation hereunder, and
any such termination shall not be deemed to be a waiver of any
available remedy for any such breach or nonperformance.
10.3 Employees. Buyer and Champion, on the one
hand, and the Sellers on the other hand, each hereby warrants
and agrees that if this Agreement is terminated, each party
will not, during the one-year period following such
termination, directly or indirectly, solicit to leave the
employment of the other party or its subsidiaries, any
employee of the other party or its subsidiaries as of the date
of such termination.
11. ACTIONS AFTER CLOSING
11.1 Books and Records. From the Closing Date,
Buyer shall maintain such books and records of the Business as
having been delivered to it by Sellers until the time for the
taking of any federal tax audit of the Company for its fiscal
year 1994 shall have expired and shall provide Sellers and
their representatives reasonable access thereto in order to
enable the Company to (a) prepare its financial statements,
(b) prepare its tax returns, and (c) perform any other acts
reasonably related to Sellers' former interest in the
Business.
11.2 Taxes. Sellers shall duly and timely file
all federal, state and other Tax returns required to be filed
by any of them with respect to the operation of the Business
prior to the Closing and shall pay and discharge, and shall
indemnify and hold Buyer harmless with respect to, all
federal, state and local income, franchise and similar Tax
liabilities for Taxes based on income (including specifically,
but not limited to, any such Taxes of the Company as a result
of an invalid or termination of election to be treated as an
S Corporation under the Code or the laws of the S State or
"built in gains" or similar Taxes arising as a result of the
fact that the Company did not elect to be treated as an
S Corporation until the First S Year) arising out of (a) the
operation of the Business and (b) the transactions provided
for as contemplated by this Agreement. The indemnity
obligations of this Section shall not be subject to the
Sellers Basket or Sellers Cap or the time limitation of
Section 9.4(g). Any such indemnity obligation relating to
personal Tax liability of any Shareholder shall be borne
solely by such Shareholder.
11.3 Name of Company. Immediately after the
Closing, the Sellers shall change the name of the Company to
another name not confusingly similar to its present name, and
shall take all other action as may be required to permit Buyer
to adopt the name "Chandeleur Homes, Inc." or any similar
name.
12. BROKER
Each of the Sellers, Buyer and Champion represent and
warrant to each other that he/she/it has not dealt with any
broker or finder in connection with this transaction. Each of
the Sellers, Buyer and Champion hereby each agree to indemnify
and hold the others harmless from and against all liabilities
(including but not limited to reasonable attorneys' fees),
incurred by the others by reason of any claims or suits by any
person or persons for brokerage commission, finder's fees or
other compensation on account of the transactions contemplated
herein. The indemnity obligations of this Section shall not
be subject to the Sellers Basket or Cap or the time limitation
of Section 9.4(g).
13. NOTICES
All notices, requests, demands and other communications
which are required or may be given under this Agreement shall
be in writing and shall be deemed to have been duly given if
personally delivered, forwarded by overnight express
(including but not limited to Federal Express, Airborne or
similar service) and receipted for by the recipient or an
agent of the recipient or mailed by registered or certified
United States mail, postage prepaid and return receipt
requested, or sent by facsimile transmission, to the following
addresses or facsimile numbers (or to such other address or
facsimile number of a party as shall have been specified to
the other parties to this Agreement by notice):
In the case of Buyer or Champion:
Champion Enterprises Inc.
2701 University Drive
Suite 320
Auburn Hills, Michigan 48326-2566
Attention: President and Chief Executive
Officer
Facsimile number: (810) 340-9345
With a copy to:
John J. Collins, Esq.
Miller, Canfield, Paddock and Stone,
P.L.C.
1400 North Woodward Avenue
Suite 100
Bloomfield Hills, Michigan 48303-2014
Facsimile number: (810) 258-3036
In the case of Sellers:
240 Denson Road
Boaz, Alabama 35957
Facsimile number: (205) 593-9206
With a copy to:
Charles R. Hare, Esq.
Gullahorn & Hare
310 West Main
P.O. Box 1669
Albertville, Alabama 35950
Facsimile number: (205) 878-1965
14. MISCELLANEOUS
14.1 Expenses. Except as stated herein, the
parties hereto shall each pay their own expenses in connection
with this Agreement and the transactions contemplated hereby
and the Shareholders shall pay all such expenses incurred by
the Company. The expenses of furnishing documents required
under this Agreement shall be borne by the party who is
obligated to furnish the same.
14.2 Assignment and Succession. Champion and
Buyer shall have the right to assign this Agreement and their
rights and obligations hereunder, but no such assignment shall
relieve Champion or the Buyer of their obligations hereunder.
Except as provided in the preceding sentence, this Agreement
may not be assigned by any party without the prior written
consent of the others. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, legatees, personal representatives and
permitted successors and assigns, and no other person
whatsoever except that Article IX shall inure to the benefit
of each of the Buyer Indemnified Parties. Without limiting
the generality of the foregoing, the parties expressly intend
and agree that this Agreement shall not inure to the benefit
of any creditor or employee (including any leased employee) of
the Company or any of the other Sellers. For the purposes of
this Agreement, the term "party" shall mean Buyer, Champion,
the Company or the Shareholders as the context indicates.
14.3 Entire Agreement. This Agreement
represents the entire understanding and agreement between the
parties hereto with respect to the subject matter hereof,
supersedes all prior negotiations between such parties, and
cannot be amended, supplemented or modified orally, but only
by an agreement in writing signed by the party against whom
enforcement of any such amendment, supplement or modification
is sought and making specific reference to this Agreement,
except (i) that this Agreement in the case of Sellers may be
amended as provided in Section 14.12 and (ii) that Sections
6.2 and 6.7 may be amended as provided therein.
14.4 Counterparts. This Agreement may be
executed in one or more counterparts, all of which taken
together shall constitute one and the same instrument.
14.5 Section and Paragraph Headings. The
section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way
the meaning and interpretation of this Agreement.
14.6 Governing Law and Choice of Forum. This
Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan, without regard to its
conflict of laws rules. Any and all actions concerning any
dispute arising under this Agreement shall be filed and
maintained only in the Circuit Court for the County of
Oakland, Michigan or the U.S. District Court for the Eastern
District of Michigan. BUYER AND EACH SELLER HEREBY SUBMIT TO
THE JURISDICTION OF SUCH COURTS AND EACH WAIVES THE RIGHT TO
TRIAL BY JURY AND ANY OBJECTION TO VENUE BASED ON FORUM NON
CONVENIENCE.
14.7 Severability. If any provisions of this
Agreement as applied to any part or to any circumstance shall
be adjudged by a court to be invalid or unenforceable, the
same shall in no way affect any other provision of this
Agreement, the application of such provision in any other
circumstances or the validity or enforceability of this
Agreement.
14.8 Certain References. The term "herein",
"hereof" or "hereunder" or similar terms used in this
Agreement refer to this entire Agreement and not to the
particular provision in which the term is used. Unless
otherwise stated, all references herein to Articles, Sections,
subsections or other provisions are references to Articles,
Sections, subsections or other provisions of this Agreement.
14.9 Interpretation. This Agreement shall be
construed reasonably to carry out its intent without
presumption against or in favor of either party.
14.10 Confidentiality. Prior to the Closing,
neither party to this Agreement shall directly or indirectly
make or cause to be made any public announcement or issue any
public notice in any form with respect to this Agreement or
the transactions contemplated hereby, without the consent of
the other party except if in the opinion of either party's
counsel it is required by law to make such disclosure. If the
Closing of the transactions contemplated hereby does not occur
for any reason, Buyer shall return to the Sellers all reports,
documents, work papers and other materials obtained from the
Sellers (and all copies of summaries and extracts thereof) and
will keep the same confidential and not disclose their
contents to anyone but its attorneys, accountants and
executive officers.
14.11 Champion Guarantee. Champion hereby
unconditionally guarantees to Sellers the prompt payment and
performance by Buyer of all of its obligations under this
Agreement.
14.12 Action by Sellers. In each place in this
Agreement and the Exhibits hereto where consent or agreement
of the Sellers (including, without limitation, any amendment
or waiver to this Agreement) is required or permitted, such
consent or agreement (including, without limitation, any
amendment or waiver to this Agreement) shall be deemed for all
purposes to be effective if the Company and the Shareholders
owning a majority of the issued and outstanding common stock
of the Company as of the date the consent or agreement is to
be effective (or if to be effective after the Closing Date, as
of the Closing Date) shall so consent and/or agree.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above
written.
COMPANY:
CHANDELEUR HOMES, INC.
By_____________________________
Its _______________________
SHAREHOLDERS:
________________________________
Terrell R. Bridges
________________________________
Frances B. Bridges
________________________________
John J. McKone
________________________________
Ina Ruth Toms
________________________________
Catherine F. Davis
________________________________
David M. Bridges
________________________________
Samuel B. Bridges
________________________________
John G. Davis
________________________________
J.D. Chandler
________________________________
Mary Jo Chandler
________________________________
Joe D. Chandler
________________________________
Cheryl E. Chandler
________________________________
Donnie Russell
________________________________
Virginia A. Davis
BUYER:
CHI ACQUISITION CORP.
By _____________________________
Its _______________________
CHAMPION:
CHAMPION ENTERPRISES INC.
By _____________________________
Its _______________________
ASSET PURCHASE AGREEMENT
By And Among
Champion Enterprises, Inc.,
CRHI Acquisition Corp.,
Crest Ridge Homes, Inc.
And
The Shareholders Identified Herein
Dated January 5, 1995
<PAGE>
TABLE OF CONTENTS
Page
1. SALE AND PURCHASE OF THE PURCHASED ASSETS . . . . . . 2
1.1 Purchased Assets. . . . . . . . . . . . . . . 2
1.2 Assignment of Rights by Sellers . . . . . . . 4
2. PURCHASE PRICE; ADJUSTMENT; ASSUMPTION OF CERTAIN
LIABILITIES . . . . . . . . . . . . . . . . . . . . . 5
2.1 Purchase Price. . . . . . . . . . . . . . . . 5
2.2 Allocation of Purchase Price. . . . . . . . 12
2.3 Assumed Liabilities . . . . . . . . . . . . 13
3. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . 15
3.1 Organization; Good Standing . . . . . . . . 15
3.2 Capitalization. . . . . . . . . . . . . . . 15
3.3 Subsidiaries. . . . . . . . . . . . . . . . 15
3.4 Authorization Relative to this Agreement. . 15
3.5 Consents and Approvals; No Violation. . . . 16
3.6 Financial Statements. . . . . . . . . . . . 16
3.7 Absence of Undisclosed Liabilities. . . . . 17
3.8 Absence of Certain Changes or Events. . . . 17
3.9 Contracts and Commitments . . . . . . . . . 18
3.10 Real Property . . . . . . . . . . . . . . . 20
3.11 Licenses. . . . . . . . . . . . . . . . . . 21
3.12 Title to Assets . . . . . . . . . . . . . . 22
3.13 Taxes . . . . . . . . . . . . . . . . . . . 22
3.14 Employees; Benefit Plans. . . . . . . . . . 23
3.15 Insurance . . . . . . . . . . . . . . . . . 25
3.16 Litigation. . . . . . . . . . . . . . . . . 25
3.17 Compliance with Laws. . . . . . . . . . . . 25
3.18 Environmental Matters . . . . . . . . . . . 26
3.19 Product Liability . . . . . . . . . . . . . 28
3.20 Warranties. . . . . . . . . . . . . . . . . 29
3.21 Insider and Inter-Company Transactions. . . 29
3.22 Bank Accounts and Powers of Attorney. . . . 29
3.23 Progress Payments . . . . . . . . . . . . . 29
3.24 Information in the HSR Act Notification
and Report Form . . . . . . . . . . . . . . 29
3.25 Sufficiency of Purchased Assets . . . . . . 30
3.26 Guaranties. . . . . . . . . . . . . . . . . 30
3.27 Equipment . . . . . . . . . . . . . . . . . 30
3.28 Inventory . . . . . . . . . . . . . . . . . 30
3.29 Receivables . . . . . . . . . . . . . . . . 30
3.30 Patents and Trademarks. . . . . . . . . . . 31
3.31 Corporate Minute Books. . . . . . . . . . . 31
3.32 Suppliers and Customers . . . . . . . . . . 31
3.33 Illegal Payments. . . . . . . . . . . . . . 32
3.34 Disclosure. . . . . . . . . . . . . . . . . 32
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND
CHAMPION. . . . . . . . . . . . . . . . . . . . . . 32
4.1 Organization; Good Standing . . . . . . . . 32
4.2 Authority Relative to this Agreement. . . . 32
4.3 Consents and Approvals; No Violation. . . . 33
4.4 Litigation. . . . . . . . . . . . . . . . . 33
5. CERTAIN COVENANTS . . . . . . . . . . . . . . . . . 33
5.1 Conduct of Business . . . . . . . . . . . . 33
5.2 Certain Changes or Events . . . . . . . . . 34
5.3 Access to Information . . . . . . . . . . . 35
5.4 Additional Agreements . . . . . . . . . . . 36
5.5 Communications With Agencies. . . . . . . . 37
5.6 Financials. . . . . . . . . . . . . . . . . 37
5.7 Takeover Proposals. . . . . . . . . . . . . 37
6. CERTAIN AGREEMENTS AND UNDERSTANDINGS OF THE
PARTIES . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Permitted Dividend. . . . . . . . . . . . . 37
6.2 Employment Agreements . . . . . . . . . . . 38
6.3 Option Agreements . . . . . . . . . . . . . 38
6.4 Noncompetition Agreements . . . . . . . . . 38
6.5 Security Deposits . . . . . . . . . . . . . 38
6.6 Power of Attorney . . . . . . . . . . . . . 38
6.7 Employees . . . . . . . . . . . . . . . . . 39
6.8 Post Closing Receipts . . . . . . . . . . . 39
7. CLOSING . . . . . . . . . . . . . . . . . . . . . . 39
7.1 Closing Date. . . . . . . . . . . . . . . . 39
7.2 Deliveries by Sellers . . . . . . . . . . . 40
7.3 Deliveries by Buyer . . . . . . . . . . . . 40
7.4 Certain Closing Expenses. . . . . . . . . . 40
8. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . 40
8.1 Conditions to Obligations of Buyer and
Champion. . . . . . . . . . . . . . . . . . 40
8.2 Conditions to Obligations of Sellers. . . . 44
9. SURVIVAL; INDEMNIFICATION AND RELATED MATTERS . . . 45
9.1 Survival Past Closing . . . . . . . . . . . 45
9.2 Indemnification by Sellers. . . . . . . . . 45
9.3 Indemnification by Buyer and Champion . . . 46
9.4 Certain Agreements with Respect to Unknown
Liabilities, Limitation on Indemnification
and Apportionment as Between Sellers and
CHI
Sellers . . . . . . . . . . . . . . . . . . 46
10. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . 49
10.1 Events of Termination . . . . . . . . . . . 49
10.2 Effect of Termination . . . . . . . . . . . 50
10.3 Employees . . . . . . . . . . . . . . . . . 50
11. ACTIONS AFTER CLOSING . . . . . . . . . . . . . . . 50
11.1 Books and Records . . . . . . . . . . . . . 50
11.2 Taxes . . . . . . . . . . . . . . . . . . . 50
11.3 Name of Company . . . . . . . . . . . . . . 51
12. BROKER. . . . . . . . . . . . . . . . . . . . . . . 51
13. NOTICES . . . . . . . . . . . . . . . . . . . . . . 51
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 52
14.1 Expenses. . . . . . . . . . . . . . . . . . 52
14.2 Assignment and Succession . . . . . . . . . 52
14.3 Entire Agreement. . . . . . . . . . . . . . 52
14.4 Counterparts. . . . . . . . . . . . . . . . 53
14.5 Section and Paragraph Headings. . . . . . . 53
14.6 Governing Law and Choice of Forum . . . . . 53
14.7 Severability. . . . . . . . . . . . . . . . 53
14.8 Certain References. . . . . . . . . . . . . 53
14.9 Interpretation. . . . . . . . . . . . . . . 53
14.10 Confidentiality . . . . . . . . . . . . . . 53
14.11 Champion Guarantee. . . . . . . . . . . . . 54
14.12 Waiver of Bulk Transfer Compliance. . . . . 54
14.13 Action by Sellers . . . . . . . . . . . . . 54
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made
and entered into as of this 5th day of January, 1995, by and
among CHAMPION ENTERPRISES INC., a Michigan corporation
("Champion"), CRHI ACQUISITION CORP., a Michigan corporation
and a wholly owned subsidiary of Champion ("Buyer"), CREST
RIDGE HOMES, INC., a Texas corporation (the "Company"), and
the shareholders of the Company whose names are listed at
the end of this Agreement (herein called the "Shareholders")
(the Company and the Shareholders are sometimes herein
collectively called the "Sellers").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business (the
"Business") of the design, manufacture, sale and service of
manufactured housing, and desires to sell to Buyer all of
the Business and all of its assets relating to the Business
as more specifically set forth herein; and
WHEREAS, the Shareholders own of record and
beneficially 100% of the outstanding capital stock of the
Company and, intending to be parties to the undertakings,
covenants, representations and warranties of the Company
contained herein, have agreed to cause the Company to enter
into this Agreement and consummate the transactions
contemplated hereby, and, in their capacity as shareholders,
to enter into this Agreement and consummate the transactions
contemplated hereby; and
WHEREAS, the Buyer desires to purchase from the Company
all of the Business and such assets and in that connection
will assume certain specified obligations related to the
Business on the terms and conditions set forth herein; and
WHEREAS, contemporaneously herewith Champion, CHI
Acquisition Corp., a Michigan corporation ("CHI Buyer"),
Chandeleur Homes, Inc., an Alabama corporation ("CHI") and
shareholders of CHI ("CHI Shareholders" and together with
CHI the "CHI Sellers") are entering into an Asset Purchase
Agreement (the "CHI Purchase Agreement") pursuant to which
CHI Buyer will purchase from CHI the business and assets of
CHI and will assume certain of the liabilities of CHI; and
WHEREAS, the terms and conditions of this Agreement and
the CHI Purchase Agreement are similar in all material
respects except for provisions relating to the specific
transactions contemplated thereunder (including, by way of
example and not of limitation, the purchase price, hold
back, earn-out targets and similar matters); and
WHEREAS, certain provisions of this Agreement and the
CHI Purchase Agreement pertaining to the assumption of
liabilities and baskets and caps with respect to
indemnification are interdependent; and
WHEREAS, it is fundamental to Champion's, Buyer's and
CHI Buyer's willingness to enter into this Agreement and the
CHI Purchase Agreement that the Company, the Shareholders,
CHI and the CHI Shareholders agree to the provisions of this
Agreement or the CHI Purchase Agreement, as applicable,
including, but not limited to, the assumption of liabilities
and indemnification provisions; and
WHEREAS, it is a condition to the consummation of the
transactions contemplated in this Agreement and in the CHI
Purchase Agreement that all such transactions close
simultaneously.
NOW, THEREFORE, in consideration of the foregoing
premises and the covenants and agreements herein contained
and other good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. SALE AND PURCHASE OF THE PURCHASED ASSETS
1.1 Purchased Assets. Subject to the terms
and conditions of this Agreement, and to the accuracy of the
representations and warranties herein contained, on the
Closing Date (as defined in Section 7.1 below), Sellers
shall sell, assign, convey, transfer and deliver to Buyer,
and Buyer shall purchase, receive and accept, as they exist
on the Closing Date, all of the Business and goodwill of the
Company and all of the assets and properties owned by,
leased to or otherwise used by the Company, whether tangible
or intangible, and wherever located (the "Purchased
Assets"), it being understood that the Purchased Assets
include, and as of the Closing Date shall include, all of
the assets necessary for the conduct by Buyer of the
Business as it is now and on the Closing Date shall be
conducted by the Company. Without limiting the generality
of the foregoing, the Purchased Assets shall include:
(a) All equipment (as defined in the Uniform
Commercial Code of the State of Texas, (the "UCC")) and, to
the extent not otherwise constituting equipment as defined
above, all other items of tangible personal property, in
each case whether or not capitalized on the Company's books
(including, without limitation, the items listed on Exhibit
1(a) hereto) (collectively, the "Equipment").
(b) All inventory (as defined in the UCC)
whether on hand or in transit and including consigned
inventory (the "Inventory").
(c) All accounts, chattel paper, documents
and instruments (all as defined in the UCC), including all
accrued interest receivable and also including any security
held by the Company for the payment thereof (including,
without limitation, the items described on Exhibit 1(c)
hereto) (the "Receivables") and all general intangibles (as
defined in the UCC) of the Company and, to the extent not
otherwise constituting general intangibles as defined above,
any interest of the Company in any and all claims by the
Company against any other person, whether now accrued or
hereafter to accrue, contingent or otherwise, known or
unknown, including, but not limited to, all rights under
express or implied warranties from manufacturers, vendors
and suppliers (except as they may pertain to liabilities of
the Company other than the Assumed Liabilities (as defined
in Section 2.3 below)), claims for collection or indemnity,
claims in bankruptcy, and choses in action.
(d) The real property described on
Exhibit 1(d) hereto together with all tenements,
hereditaments and appurtenances thereto, and all
improvements thereon.
(e) All cash, cash equivalents and amounts
held on deposit in all savings, checking, money market,
investment and other accounts of any nature or character
(including, without limitation, the accounts listed on
Exhibit 1(e) hereto).
(f) All right, title, benefit and interest
of the Company in and to (i) all patents, patent rights,
patent licenses and patent applications (including any
patents issuing on such applications), (ii) trademarks,
trademark rights, trademark licenses, trademark
registrations and applications (including any trade marks
issuing on such registrations and applications), (iii) trade
names and trade name rights, assumed names and other forms
of business identification, (iv) copyrights, copyright
licenses, copyright registrations and applications
(including any copyrights issuing on such registrations and
applications), (v) inventions, discoveries, improvements,
designs and prototypes (whether patentable or unpatentable),
(vi) trade secrets, manufacturing and engineering drawings,
process sheets, specifications, bills of material, formulae
and secret and confidential processes, know-how, shop
rights, technology and other industrial property, (vii)
contracts with employees or other persons relating in whole
or in part to disclosure, assignment or patenting of any of
the items described in (v) and (vi) above, and (viii) logos,
in each case presently owned or held, in whole or in part,
by the Company or as to which the Company has any interest
of any kind (including, without limitation, the items listed
on Exhibit 1(f) attached hereto).
(g) The full benefit of (i) any and all
purchase orders placed with, and accepted by, the Company
on, or prior to, the Closing Date, and which have not been
completely performed, or filled, prior to the Closing Date,
covering the purchase from the Company of products to be
supplied by the Company, or covering the rendition by the
Company of service on products supplied by the Company
(including all deposits, progress payments and credits)
(including, without limitation, those items, if any, listed
on Exhibit 1(g) hereto); (ii) the purchase orders placed by
the Company prior to the Closing Date in the ordinary course
of business which have not been completely performed prior
to the Closing Date, covering the purchase by the Company of
supplies or materials entered into by the Company in the
ordinary course of business; and (iii) the leases of real
and personal property and other agreements listed in
Exhibit 1(g) hereto (collectively, the "Contracts and
Commitments").
(h) All policies of insurance and rights to
make claims and other rights thereunder (whether now or at
anytime heretofore in force and effect and including,
without limitation, all insurance covering the Company, the
Business, the Purchased Assets and all keyman and other
insurance on the lives of the Shareholders and any other
person in which the Company has any interest and further
including, without limitation, the policies of insurance
listed on Exhibit 1(h) hereto).
(i) All books and records which pertain
directly or indirectly, in whole or in part, to the
operation of the Business, including without limitation,
those relating to the Purchased Assets, the Assumed
Liabilities, customers, suppliers, advertising, promotional
material, sales, services, delivery, internal organization,
employees, accounting and financial matters and/or
operations of the Company.
(j) All security deposits, prepaid expenses,
credits and similar items.
(k) All transferable local, state and
federal franchises, licenses, bonds, permits and similar
items pertaining to the Business and/or the Purchased Assets
(including, without limitation, the items described in
Exhibit 1(k) hereto) (the "Permits").
(l) The Business conducted by the Company as
a going concern, including any and all goodwill connected
therewith, telephone and facsimile numbers, yellow page
advertisements, and the Company's right to use the name
"Crest Ridge Homes, Inc." and all related names and
derivations thereof.
(m) All other property, assets, and rights,
real or personal, tangible or intangible owned by the
Company or in which the Company has any interest and any
kind whatsoever.
All Exhibits described in this Section 1.1
(except 1.1(g)(ii) and (iii)) shall be updated by Sellers as
of the Closing Date. Exhibit 1(g) may be updated by Sellers
as of the Closing Date to add items described in
Section 1.1(g)(ii) and (iii) with the written consent of
Buyer.
1.2 Assignment of Rights by Sellers. On the
Closing Date, without limiting the generality of Section 1.1
hereof, Sellers shall assign to Buyer all of the Sellers'
rights under the Contracts and Commitments (and, as provided
in Section 2.3, Buyer shall assume and agree to perform the
unexecuted portion of the Company's obligations thereunder).
1.2.1 Absence of Consent.
Notwithstanding the foregoing, there shall not be assigned
to Buyer any Contract or Commitment if an attempted
assignment thereof without the consent of the other party or
parties thereto would constitute a breach thereof or in any
way adversely affect the rights of the Company thereunder
and such consent is not obtained, or if an attempted
assignment would be ineffective or would affect the rights
of the Company thereunder so that Buyer would not, in fact,
receive the benefits thereof. Sellers covenant and agree
that the beneficial interest in and to any such agreement
shall, to the extent permitted by the relevant agreement
and/or by law, pass to Buyer, and Sellers covenant and
agree: (a) that they will hold and declare that they hold
all such agreements in trust for the benefit of Buyer, its
successors and assigns, from and after the Closing Date;
(b) to use best efforts to obtain and secure any and all
consents and approvals that may be necessary to effect such
assignment or assignments of the same; (c) to make or
complete such assignment or assignments as soon as
reasonably possible; and (d) to cooperate with Buyer in any
other reasonable arrangement designed to provide for actions
necessary to enable the Company to fulfill any such
agreements until an effective assignment thereof to Buyer
can be obtained, and the parties agree to cooperate and take
all necessary actions, including accountings between
parties, to assure that Buyer shall receive all of such
benefits, rights, obligations and duties under such
agreements. The provisions of this Section 1.2.1 do not
constitute a waiver of the conditions to Closing contained
in Section 8.1(c) hereof.
2. PURCHASE PRICE; ADJUSTMENT; ASSUMPTION OF
CERTAIN LIABILITIES
2.1 Purchase Price. The purchase price for
the Purchased Assets (the "Purchase Price") shall, in
addition to the Assumed Liabilities, be an amount equal to
Fourteen Million Four Hundred Thousand and 00/100
($14,400,000.00) Dollars as adjusted as provided in
Section 2.1.5 hereof.
2.1.1 Payment of Purchase Price. The
Purchase Price shall be paid on the Closing Date (as
hereinafter defined) by certified or cashiers check payable
to the Company or by wire transfer in immediately available
funds to an account designated by the Company in an amount
equal to the Purchase Price, less the Hold Back Amount and
the Earn-out Payment (as those terms are defined in
Sections 2.1.2 and 2.1.3 below).
2.1.2 Hold Back Amount. Buyer shall
retain from the Purchase Price the amount of $1,000,000 (the
"Hold Back Amount") to be applied and paid by Buyer as
provided in this Section 2.1.2. The Hold Back Amount less
the Final Shortfall Amount (as defined in Section 2.1.5), if
any, shall be paid by Buyer to the Company within thirty
(30) days after final determination of the Audited Closing
Stockholders Equity and the Audited 1994 EBIT and resolution
of all questions and disputes with respect thereto as
provided in Section 2.1.5, but subject in any event to the
rights of Buyer and Champion under Sections 2.1.4 and 2.1.5.
The Hold Back Amount less the Final Shortfall Amount, if
any, shall be paid by certified or cashiers check payable to
the Company or by wire transfer to an account designated by
the Company.
2.1.3 Earn-out Payment. Buyer shall
retain from the Purchase Price the amount of $3,400,000 (the
"Earn-out Payment") to be applied and paid by Buyer only as
provided in this Section 2.1.3 and Section 2.1.4.
(a) If, and only if, Buyer shall meet
one of the three Alternative EBIT Tests
described below, the Earn-out Payment together
with interest thereon at an annual rate of
seven percent (7%) from the Closing Date until
paid shall be paid by Buyer, on behalf and at
the direction of the Company, directly to the
Shareholders in pro rata amounts equal to each
such person's respective percentage ownership
of the common stock of the Company as reflected
in Exhibit 3.2 hereto, subject to Buyer's and
Champion's rights set forth below in Section
2.1.4 and 2.1.5. Payment of the Earn-out
Payment to the persons entitled thereto shall
be made within thirty (30) days after the
determination by Champion of EBIT (as defined
below) for the period in question by check
payable to the applicable person or by wire
transfer in immediately available funds to an
account designated by such person. Interest
shall be computed on the basis of a year of 365
or 366 days as the case may be for the actual
number of days elapsed.
(b) The "Alternative EBIT Tests" are as
follows:
Total EBIT Period of Time
Test 1 $ 3,500,000 12 Months Ended
December 30, 1995
Test 2 $ 6,000,000 24 Months Ended
December 28, 1996
Test 3 $ 5,000,000 36 Months Ended
January 3, 1998
Buyer need only achieve one of the Alternative
EBIT Tests to be required to pay the Earn-out
Payment. The Total EBIT levels are to be
determined for the entire applicable period.
(c) For purposes of this Section 2.1.3,
"EBIT" means earnings before interest and
federal income taxes and before payment and
accrual of all bonuses under the Employment
Agreement to be entered into by Buyer and
John E. Drake referred to in Section 6.2
hereof. In computing EBIT, there shall be no
deduction for allocation of corporate overhead
of Champion and its affiliates and there shall
be no effect given to accounting adjustments
relating to Champion's acquisition of the
Purchased Assets, but there shall be deducted
any and all expenses of Buyer, including
reasonable expenses incurred by Champion on
behalf of Buyer and billed by Champion to Buyer
for outside accounting and legal services, and
for insurance coverage if the cost thereof is
not greater than that which would be obtainable
by Buyer, separately, for similar coverage, and
for such similar matters as may be agreed to
from time to time by Champion and Buyer's
President. In the event that Champion
determines in its discretion that it is
appropriate to provide a special one-time
warranty reserve in addition to the $300,000
warranty reserve to be included in the Audited
Closing Financial Statements pursuant to
Section 2.1.5 hereof, such special warranty
reserve will not be taken into account in
determining EBIT for purposes of this Section
2.1.3. However, other changes in warranty
reserves based on operations of Buyer will be
taken into account in determining EBIT. For
purposes of EBIT calculation, the EBIT of the
Company for the period from January 1, 1995 to
the Closing Date shall be taken into account.
EBIT shall be determined by the internal
accounting staff of Champion in accordance with
GAAP (as hereinafter defined) from the books
and records of Buyer. Sellers shall have
thirty (30) days after receipt of the
calculation of EBIT to deliver to Buyer and
Champion notice of any objections thereto. Any
such notice of objections shall be in writing
and shall state, in reasonable detail, the
basis for each objection and the amount of
adjustment Sellers believe is required in
respect thereto. In the event that Buyer,
Champion and Sellers cannot agree with respect
to the calculation of EBIT within thirty (30)
days after the delivery of a notice of
objections or such later date as may be agreed
upon by Buyer, Champion and Sellers, the
dispute shall be resolved by binding
arbitration by Ernst & Young, LLP or if Ernst &
Young, LLP is unable or unwilling to so serve
any other independent accounting firm agreed
upon by Buyer, Champion and Sellers (the
"Independent Accounting Firm"). Any items not
in dispute shall be deemed stipulated by Buyer,
Champion and Sellers and shall not be
determined by the Independent Accounting Firm.
The determination of the Independent Accounting
Firm shall be binding and conclusive upon the
matters determined thereby and may be entered
as a judgment by any court of competent
jurisdiction. All costs and expenses relating
to the services provided by the Independent
Accounting Firm shall be paid equally by Buyer
and Sellers.
(d) The Shareholders and the Company
have entered into certain arrangements with
respect to the distribution of the net assets
of the Company to the Shareholders upon
dissolution of the Company, which dissolution
is expected to occur shortly after the Closing
Date. Pursuant to such arrangements, the
Company and the Shareholders hereby irrevocably
direct Buyer to disburse the Earn-out Payment
pursuant to the provisions of this Section
2.1.3 on behalf of the Company directly to the
Shareholders. The amount of the Earn-out
Payment shall be subject to, and reduced by,
all rights of Champion and Buyer under
Sections 2.1.4 and 2.1.5.
2.1.4 Offset and Liquidated Damages.
(a) Subject to the further provisions
of this Section 2.1.4, Buyer and/or Champion
shall have the right at any time and from time
to time to apply all or any portion of the Hold
Back Amount and/or the Earn-out Payment against
the amount of any claim Buyer or Champion may
have against any of the Sellers for
indemnification under Section 9.2 hereof or
otherwise under this Agreement. Buyer and/or
Champion shall give Sellers written notice of
the intention to exercise its or their rights
under this Section 2.1.4, which notice shall
describe, in reasonable detail, the claim
asserted by Buyer and/or Champion against any
of Sellers for indemnification under Section
9.2 or otherwise under this Agreement. Sellers
shall have forty-five (45) days, or such
shorter or longer period as may be agreed upon
by Buyer, Champion and Sellers, to fully cure
and resolve such claim to the reasonable
satisfaction of Buyer and/or Champion as
applicable. If the claim is so cured and
resolved within such time, Buyer and/or
Champion shall not exercise its or their rights
under the first sentence of this Section 2.1.4.
If the claim is not so cured and resolved
within such time, Buyer and/or Champion may
exercise such rights. Payment of the Hold Back
Amount and Earn-out Payment by Buyer shall be
extended during any period in which Buyer
and/or Champion shall have given a written
notice to Sellers under this Section 2.1.4 and
for an additional period of 10 days after the
expiration of the period during which Sellers
shall have been afforded the opportunity to
cure and resolve the claim described in such
notice. The rights available to Buyer and
Champion under this Section 2.1.4 shall be
supplementary and in addition to any and all
other rights and remedies available to Buyer
and to Champion under this Agreement or
otherwise under applicable law.
(b) In addition, in the event that the
employment of any of the Executives (as defined
in Section 6.2 hereof) that is a Shareholder is
terminated by Buyer for cause (as defined in
the applicable Employment Agreement executed by
the applicable Executive pursuant to
Section 6.2 hereof) or by the Executive for any
reason (other than as a result of death or
disability as defined in such Employment
Agreement) or in the event that any Shareholder
shall breach any of such Shareholder's
respective obligations under the Non-
Competition Agreement executed and delivered by
such Shareholder pursuant to Section 6.4
hereof, Buyer may retain the proportionate
amount of the Hold Back Amount and the Earn-Out
Payment otherwise payable to such person as
liquidated damages. In the event the Company
shall breach any of its obligations under the
Non-Competition Agreement executed and
delivered by it pursuant to Section 6.4 hereof,
Buyer may retain the entire amount of the Hold
Back Amount and the Earn-Out Payment otherwise
payable to any of the Shareholders as
liquidated damages.
(c) Each of the Sellers acknowledges
and agrees that the execution and delivery by
each of the Executives that is a Shareholder of
the Employment Agreements and the execution and
delivery by the Company and each of the
Shareholders of the Non-Competition Agreements,
and the terms thereof, are material inducements
to the willingness of Buyer and Champion to
execute and deliver this Agreement and to
consummate the transactions contemplated
herein. Each of Sellers further acknowledges
and agrees that the termination of employment
of one or more of the Executives by the Company
for cause or by the Executive for any reason
(other than death or disability) and/or breach
by one or more of the Sellers of such Seller's
obligations under the Non-Competition
Agreements will cause irreparable injury to
Buyer and Champion and that money damages, in
themselves, will not provide an adequate
remedy. Accordingly, each of the Sellers
further acknowledges and agrees that the right
of Buyer to retain the Hold Back Amount and the
Earn-Out Payment as provided in this
Section 2.1.4 is reasonable in view of the
damages and injury that will be suffered by
Buyer and Champion in such events. The rights
available to Buyer and Champion under this
Section 2.1.4 shall be supplementary and in
addition to any and all other rights and
remedies available to Buyer and/or Champion
under this Agreement, the employment
Agreements, the Non-Competition Agreements or
otherwise under applicable law in respect of
any of the matters referred to herein.
2.1.5 Purchase Price Adjustments.
(a) Sellers shall prepare and deliver
to Champion and Buyer as promptly as practicable an
unaudited balance sheet as of December 30, 1994 (the
"Preliminary 1994 Balance Sheet") and a related
statement of income of the Company of and for the year
ended December 30, 1994 (together with the Preliminary
1994 Balance Sheet, the "Preliminary 1994 Financial
Statements"). Buyer shall be entitled to appoint
representatives, which may be members of its internal
accounting staff or its independent certified public
accountants, to participate in and observe the
preparation of the Preliminary 1994 Financial
Statements. The Preliminary 1994 Financial Statements
(u) shall contain line items substantially consistent
with the line items in the audited financial statements
of the Company of and for the period ended December 31,
1993; (v) shall be prepared in accordance with
generally accepted accounting principles consistently
applied ("GAAP"), except to the extent the requirements
of clause (x) shall not be in accordance with GAAP; (w)
shall fairly present the financial position of the
Company as of the date indicated and the results of its
operations for the period indicated; (x) shall contain
accruals for (1) the Permitted Dividend (as defined in
Section 6.1 hereof); (2) all expenses to be borne by
the Company in connection with the transactions
contemplated herein; and (3) a warranty reserve of
$300,000; (y) shall be accompanied by a certificate of
the President of the Company to the effect of clause
(v), (w) and (x) above; and (z) shall be accompanied by
a calculation of the Preliminary 1994 Stockholders
Equity and Preliminary 1994 EBIT (as defined below)
certified by the President of the Company. Prior to
the Closing the Preliminary 1994 Financial Statements
and such calculations shall have been delivered by
Sellers to Champion and Buyer and any questions or
disputes with respect thereto shall have been resolved
to the satisfaction of Champion and Buyer.
(b) In the event that the Preliminary
1994 Stockholders Equity is less than $1,175,000 or the
Preliminary 1994 EBIT is less than $2,850,000, Champion
and Buyer may terminate this Agreement.
(c) Sellers shall cause Hart & Duggan,
certified public accountants (the "Auditor") to prepare
audits ("Audits") of (i) the balance sheet and related
statements of income, retained earnings and cash flows
of the Company of and for the year ending December 30,
1994 (as adjusted as provided below, the "Audited 1994
Financial Statements"), and (ii) a balance sheet of the
Company as of the Closing Date (the "Audited Closing
Balance Sheet") and a related statement of income of
the Company for the period of December 30, 1994 to the
Closing Date (collectively, the "Audited Closing Date
Financial Statements" and, together with the Audited
1994 Financial Statements, the "Audited Closing
Financial Statements"). In connection with the
preparation of the Audited Closing Financial
Statements, the Company shall conduct physical
inventories as of December 30, 1994 and the Closing
Date, which physical inventories shall be observed by
the Auditor. A copy of such inventories shall be
delivered to Buyer and Champion with the Audited
Closing Financial Statements. Buyer and Champion shall
be entitled to appoint representatives, which may be
members of their internal accounting staff or their
independent certified public accountants, to
participate in and observe the preparation of the
Audited Closing Financial Statements and in such
inventory. The Audited Closing Financial Statements
(w) shall contain line items substantially consistent
with the line items in the audited financial statements
of the Company of and for the period ended December 31,
1993, (x) shall be prepared in accordance with GAAP
except to the extent the requirements of clause (z)
below shall not be in accordance with GAAP, (y) shall
fairly present the financial position of the Company as
of the dates indicated and the results of its
operations for the periods indicated, and (z) shall
contain accruals for (1) the Permitted Dividend,
(2) all expenses to be borne by the Company in
connection with such transactions, and (3) a warranty
reserve of $300,000.
(d) In preparation of the Audits, the
Auditor shall conduct the examination of the Company in
accordance with generally accepted auditing standards.
The Auditor shall use its best efforts to complete the
Audits as soon as possible after the Closing Date and
the Audited Closing Financial Statements shall be
delivered to Buyer and Sellers immediately upon
completion thereof, together with a calculation of the
Audited Closing Stockholders Equity and the Audited
1994 EBIT (as those terms are defined below) of the
Company and its work papers, and its opinion that the
foregoing were prepared in accordance with this
Section. Sellers, Buyer and Champion shall have thirty
(30) days after receipt by them of the Audited Closing
Financial Statements, the calculation of the Audited
Closing Stockholders Equity and the Audited 1994 EBIT
of the Company and the Auditor's work papers to deliver
a written notice to the other of any objections
thereto. Any such notice of objections shall be in
writing and shall state, in reasonable detail, the
basis for each objection and the amount of adjustment
which the party giving the notice believes is required
in respect thereto. In the event that Buyer, Champion
and Sellers cannot agree with respect to the Audited
Closing Financial Statements or the calculation of the
Audited Closing Stockholders Equity or the Audited 1994
EBIT within thirty (30) days after the delivery of a
notice of objections or such later date as may be
agreed upon by Buyer, Champion and Sellers, the dispute
shall be resolved by arbitration by the Independent
Accounting Firm. Any items not in dispute shall be
deemed stipulated by Buyer, Champion and Sellers and
shall not be determined by the Independent Accounting
Firm. The determination of the Independent Accounting
Firm shall be binding and conclusive upon the matters
determined thereby and may be entered as a judgment by
any court of competent jurisdiction. All costs and
expenses relating to the services provided by the
Independent Accounting Firm shall be paid equally by
Buyer and Sellers.
(e) In the event that the Audited
Closing Stockholders Equity and/or the Audited 1994
EBIT of the Company is less than the amounts specified
below, then the aggregate of the amount(s) of the
difference(s) times the multiplier(s) set forth below
(the "Final Shortfall Amount") shall be deducted from
the Hold Back Amount and if the Shortfall Amount
exceeds the Hold Back Amount, the Sellers shall
immediately repay to Buyer the amount of the difference
together with interest at an annual rate of seven
percent (7%) from the Closing Date until paid in full,
and, to the extent not paid in full, Buyer may deduct
such amount from the Earn-out Payment in addition to
exercising any other rights available to Buyer under
this Agreement or applicable law.
Item<PAGE>
Amount Multiplier Audited Closing
Stockholders Equity<PAGE>
$1,175,000 1.0 Audited 1994 EBIT $2,850,000 5.0
(f) For purposes hereof the following terms
shall have the following meanings:
"Audited 1994 EBIT" and "Preliminary 1994 EBIT"
mean, respectively, earnings before interest and
federal income taxes for the twelve month period ended
December 30, 1994, which shall be based upon the
Audited 1994 Financial Statements or the Preliminary
1994 Financial Statements, as applicable, as the same
may be adjusted upon resolution of any questions or
disputes with respect thereto pursuant to Section 2.1.5
above.
"Audited Closing Stockholders Equity" and
"Preliminary 1994 Stockholders Equity" mean,
respectively, an amount equal to the stockholders
equity account reflected in the Audited Closing Balance
Sheet or the Preliminary 1994 Balance Sheet, as
applicable, as the same may be adjusted upon resolution
of any questions or disputes with respect thereto
pursuant to Section 2.1.5 above.
2.2 Allocation of Purchase Price. The
allocation of the Purchase Price among the Purchased Assets
will be mutually agreed to by Champion, Buyer and the
Company in accordance with the applicable provisions of the
Code (as hereinafter defined) as promptly as practicable
after the receipt of the Audited Closing Date Financial
Statements and resolution of all questions or disputes with
respect thereto and Buyer and the Company will thereupon
execute and deliver duplicate IRS Forms 8594, with an
allocation of the Purchase Price in accordance with such
determination and will file all other returns and reports in
a manner consistent with the allocations in this Section.
2.3 Assumed Liabilities.
2.3.1 On the Closing Date, and subject
to the terms and conditions of this Agreement, Buyer shall
assume the Assumed Liabilities. Sellers agree that, except
only for the Assumed Liabilities pursuant to this Section
2.3.1 and the Unknown Company Liabilities pursuant to
Section 9.4(b) in an amount not exceeding the Sellers Basket
Amount (as those terms are defined and as determined
pursuant to Section 9.4 hereof), neither Buyer nor Champion
is assuming any liabilities of any of the Sellers, whether
accrued, absolute, contingent, known or unknown, or
otherwise, and whether due or to become due.
2.3.2 For the purposes of this
Agreement, the "Assumed Liabilities" shall include only
(a) those trade payables and other liabilities of the
Company identified in the Preliminary 1994 Balance Sheet in
an amount not exceeding that indicated therein together with
changes therein identified in the Audited Closing Balance
Sheet and agreed upon by Champion and Buyer, (b) any
executory obligations of continued performance of the
Company arising in the ordinary course of business under any
Contracts and Commitments which become performable or
payable on, or subsequent to, the Closing Date, (c) Warranty
Obligations (as defined below), (d) the recourse liability
of the Company under the repurchase and floor plan financing
agreements identified on Exhibit 2.3 hereto, (e) the other
liabilities, if any, specifically identified on Exhibit 2.3
hereto in a maximum amount not exceeding the amount
indicated thereon and (f) liabilities arising from the
litigation identified on Exhibit 3.16 hereto (the "Assumed
Litigation"). For purposes of clarity, and without limiting
Section 2.3.3, it is agreed that neither Buyer nor Champion
is assuming any obligation or liability of any Shareholder
or any Taxes (or liability therefor) of any of the Sellers
except only to the extent specifically accrued on the
Audited Closing Balance Sheet and as expressly assumed
pursuant to Section 2.3.2(a) above. Included as part of
Exhibit 3.20 hereto are copies of all forms of warranty of
the Company presently in force with respect to any product
of the Company. At Buyer's request, Sellers shall furnish
to Buyer any and all documents and information available to
any of them relative to any warranty or claimed warranty.
As used herein, "Warranty Obligations" shall mean the
obligations set forth and detailed in Exhibit 3.20 regarding
the Company's obligations to repair or replace the Company's
products sold by the Company to the purchaser thereof or the
original retail buyer, and such obligations of the Company
under any implied warranties that may be imposed by
operation of law.
2.3.3 Neither Buyer nor Champion shall
assume or have any liability or obligation whatsoever for
any liabilities or obligations whatsoever of the Company,
whether accrued, absolute, contingent, known or unknown, or
otherwise, and whether due or to become due, other than the
Assumed Liabilities pursuant to Section 2.3.1 and the
Unknown Company Liabilities pursuant to Section 9.4(b) but
not in excess of the Sellers Basket Amount (as determined in
accordance with Section 9.4) (collectively, "Excluded
Liabilities"). The Sellers agree to discharge, promptly
when due, Excluded Liabilities up to the Sellers Cap Amount
(as that term is defined and as determined in accordance
with Section 9.4). For purposes of clarity, neither Buyer
nor Champion shall assume or have any liabilities or
obligations whatsoever for any liabilities or obligations
whatsoever of any of the Shareholders, whether accrued,
absolute, contingent, known or unknown, or otherwise, and
whether due or to become due (collectively, the "Shareholder
Liabilities"). Each Shareholder agrees to discharge,
promptly when due, such Shareholder's Shareholder
Liabilities.
2.3.4 Any instruments executed and
delivered by Buyer in connection with the assumption of the
Assumed Liabilities shall contain express and specific
provisions to the effect that in respect of any Assumed
Liabilities:
(a) Buyer shall have the right to
resist, contest, defend against, litigate, compromise
and/or otherwise dispose of any and all Assumed
Liabilities to such extent and in such manner as Buyer,
in its sole discretion shall deem desirable, advisable,
and for its best interest, and Buyer shall be deemed to
have performed its obligations pursuant to such
instruments notwithstanding such resistance, contest,
defense against, litigation, compromise or other
disposition, so long as, and to the extent that,
Sellers shall not be required to pay, satisfy,
discharge or perform any of the Assumed Liabilities;
and
(b) Nothing contained in any such
instrument or in this Agreement shall be construed:
(1) as enlarging or extending
in any manner, or to any extent (i) the
statute of limitations applicable to any
of the Assumed Liabilities or (ii) the
rights which any owner, holder or obligee
of any of the Assumed Liabilities had or
may have in respect thereto against
Sellers;
(2) as rendering valid or
enforceable against Buyer any of the
Assumed Liabilities which, for any reason
whatsoever, would not have been valid and
enforceable against Sellers; or
(3) as rendering valid and
enforceable against Buyer to a greater
extent, or in a different manner, any of
the Assumed Liabilities which would have
been valid, or enforceable against Sellers
only partially, conditionally,
contingently or to a limited extent, or in
a limited manner.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers hereby represent, warrant and agree, as of
the date of this Agreement and as of the Closing Date, as
follows, each of which shall be deemed to be independently
material and to have been relied upon by Buyer and Champion:
3.1 Organization; Good Standing. The
Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas,
has full power and authority, corporate and other, to own
and operate its property including the operation of leased
property), and to carry on the Business as it is now being
conducted, and is duly qualified or licensed as a foreign
corporation to do business and is in good standing in any
other jurisdictions (all of which other jurisdictions, if
any, are listed on Exhibit 3.1 hereto) in which the
character of the property owned or the nature of the
Business transacted by it makes such qualification or
licensing necessary. Except as set forth on Exhibit 3.1
hereto, the Company has not used or assumed any other name
in connection with the Business during the past five years.
3.2 Capitalization. The Company's
authorized capital stock consists solely of 1,000 shares of
common stock, $1.00 par value, of which 1,000 shares of
common stock are validly issued and outstanding, fully paid
and non-assessable. The Shareholders own of record and
beneficially 100% of the outstanding capital stock of the
Company in the respective amounts set forth in Exhibit 3.2
hereto. There are no outstanding options, rights, warrants
or other commitments entitling any person to purchase or
otherwise subscribe for or acquire any shares of capital
stock of the Company, nor is there presently outstanding any
security convertible into or exchangeable for shares of
capital stock of the Company, nor has the Company or any
Shareholder entered into any agreement with respect to any
of the foregoing.
3.3 Subsidiaries. The Company has no
subsidiaries and does not own, directly or indirectly, any
interest or investment in any other corporation, partnership
or other entity whatsoever.
3.4 Authorization Relative to this
Agreement. The Sellers have the full legal right and power
and all authority and approval required by law to enter into
this Agreement and the documents and instruments to be
executed and delivered by them pursuant hereto, and to
perform fully their obligations hereunder and thereunder.
The execution, delivery and performance by the Company of
this Agreement and the documents and instruments to be
executed and delivered by it pursuant hereto have been duly
and effectively authorized by all requisite corporate action
(including the approval of its board of directors and
Shareholders). No corporate authorization is necessary on
the part of the Company for the entry into this Agreement by
the Shareholders and consummation by the Shareholders of the
transactions contemplated hereby. This Agreement and the
documents and instruments to be executed and delivered
pursuant hereto are and will be duly executed and delivered
by the Sellers and are and will be the legal, valid and
binding obligations of the Sellers, enforceable against each
of them in accordance with their terms, except to the extent
to which enforcement may be limited by bankruptcy,
insolvency, moratorium or similar laws relating to the
enforcement of creditors rights and by general principles of
equity (regardless whether brought in an action at law or in
equity).
3.5 Consents and Approvals; No Violation.
Except as disclosed on Exhibit 3.5 hereto, the execution,
delivery and performance by the Sellers of this Agreement
and the documents and instruments to be executed and
delivered by any of them pursuant hereto do not and will
not: (a) violate any provision of the Company's articles of
incorporation or by-laws; (b) require any consent, approval,
authorization or action by, notice or disclosure to, or
filing or registration with, or permit of, any governmental
body, agency or official, court or any other person except
for the applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the filing of a certificate of amendment to the
articles of incorporation of the Company and other filings
required under the Texas Business Corporation Act to change
the Company's name as contemplated in Section 11.3 hereof;
(c) contravene or constitute a default under any indenture,
mortgage, lease or other agreement to which the Sellers (or
any one of them) is a party or is bound, or by which any of
the properties or assets of the Sellers (or any one of them)
may be bound or affected; or (d) result in a violation of
any law, statute, ordinance, regulation, judgment,
injunction, order, decree or award of any court or
governmental authority or body having jurisdiction over the
Sellers (or any one of them) or is bound, or by which any of
the properties or assets of the Sellers (or any one of them)
may be bound or affected.
3.6 Financial Statements.
3.6.1 Exhibit 3.6 hereto contains (a)
the balance sheets of the Company as of January 1, 1993 and
December 31, 1993, and the related statements of income,
retained earnings and cash flows for the fiscal years then
ended, together with the notes thereto, reviewed in the case
of 1992, and audited in the case of 1993, by the firm of
Hart & Duggan, certified public accountants and (b) the
unaudited balance sheet of the Company as of December 2,
1994, and the related statement of income for the period
then ended (collectively, the "Financial Statements"). The
Financial Statements are true and correct in all material
respects, have been prepared in conformity with GAAP applied
on a consistent basis throughout the periods involved and
fairly present the financial position of the Company as of
the dates indicated and the results of its operations for
the periods then ended. The financial statements referred
to in Section 3.6.1(a) have been prepared in accordance with
and comply with the requirements of Regulation S-X
promulgated by the Securities and Exchange Commission.
3.6.2 The Audited Closing Financial
Statements and the Preliminary 1994 Financial Statements,
when delivered, will comply with Section 2.1.5 hereof.
3.7 Absence of Undisclosed Liabilities.
Except as and to the extent reflected or reserved against in
the Financial Statements, or disclosed in any Exhibit
hereto, the Company had no liabilities or obligations, as of
the dates thereof (other than obligations of continued
performance under the Contracts and Commitments and other
than commitments and arrangements incident to the normal
conduct of business which are terminable at will), known or
unknown, secured or unsecured (whether accrued, absolute,
contingent or otherwise), including, without limitation, Tax
liabilities due or to become due. Except as and to the
extent reflected or reserved against in the balance sheet
included in the Closing Audited Financial Statements or
disclosed in any Exhibit hereto, the Company will have
incurred no liabilities or obligations since December 2,
1994 other than current liabilities incurred in the ordinary
course of business or in connection with the transactions
contemplated hereby.
3.8 Absence of Certain Changes or Events.
Since December 31, 1993, except as described in Exhibit 3.8
hereto, there has not occurred any event or condition which
has or may be expected to have an adverse effect on the
properties, assets, liabilities (whether absolute,
contingent, accrued or otherwise), condition (financial or
otherwise), results of operations, business, affairs or
prospects of the Company, and, without limiting the
generality of the foregoing, the Company has not
(a) incurred any obligation or liability, secured or
unsecured (whether accrued, absolute, contingent or
otherwise), whether due or to become due, except current
liabilities in the ordinary course of business; (b)
discharged or satisfied any lien or encumbrance, or paid any
obligation or liability, except current liabilities becoming
due in the ordinary course of business; (c) mortgaged,
pledged, or subjected to any Encumbrance (as defined in
Section 3.12 below) any of the Purchased Assets; (d) sold,
transferred, licensed or otherwise disposed of any of the
Purchased Assets other than in the ordinary course of
business consistent with past practice; (e) suffered any
damage, destruction or loss (whether or not covered by
insurance) adversely affecting the Purchased Assets; (f)
acquired any capital stock or other securities of any
corporation or any interest in any business enterprise, or
otherwise made any loan or advance to or investment in any
person, firm or corporation; (g) instituted, settled or
agreed to settle any litigation, action or proceeding before
any court or governmental body affecting its financial
condition, its property or its business operations involving
a claim in excess of $10,000; (h) entered into any
transaction other than in the ordinary course of business;
(i) changed the authorized or issued capital stock of the
Company, increased its funded indebtedness, or made any
declaration, setting aside or payment of any dividend or any
other distribution in respect of its capital stock (other
than the Permitted Dividend); (j) experienced any labor
disturbance; (k) varied, canceled or allowed to expire any
insurance coverage; (l) terminated or received any notice
of termination of any contract, lease, trademark, patent,
copyright or trade name protection or other agreement; (m)
suffered any taking or seizure of all or any part of the
Purchased Assets by condemnation or eminent domain; (n) made
any change in accounting principles or methods, or in the
manner of keeping books, accounts and records of the
Company; (o) failed to maintain the Purchased Assets in the
ordinary course of business consistent with past practice;
(p) made any payment or other distribution or disbursement
of moneys or property to or on behalf of any officer,
director or Shareholder of the Company or any member of
their immediate families, or any affiliate thereof, other
than payment of compensation or reimbursement of expenses in
accordance with past practice and other than described in
clause (i) above; or (q) entered into any agreement or made
any commitment to do any of the things described in the
preceding subsections (a) through (p) of this Section 3.8.
3.9 Contracts and Commitments.
3.9.1 Exhibit 1(g) hereto contains
true, complete and correct lists of all of the Contracts and
Commitments, other than purchase orders placed by or with
the Company covering the payment or receipt by the Company
of $250,000 or less or which, regardless of amount, will not
be fully performed within six months of the date of the
purchase order. All Contracts and Commitments are in full
force and effect without amendment thereto (unless such
amendments are clearly noted) and the Company is and shall
be entitled to all benefits thereunder.
3.9.2 Concurrent with the delivery of
Exhibit 1(g) hereto, and included as a part of such Exhibit,
Sellers have delivered to Buyer true, complete and correct
copies of all Contracts and Commitments. All Contracts and
Commitments are the result of bona fide, arms-length
transactions and are legal, valid and binding obligations of
the parties thereto enforceable in accordance with their
respective terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, moratorium and similar
laws relating to the enforcement of creditors rights and by
general principles of equity (whether brought in a
proceeding at law or in equity).
3.9.3 Except as set forth in
Exhibit 3.9 hereto, no default or alleged default exists on
the part of the Company, nor, to the best knowledge of
Sellers, on the part of any other party, under any Contract
or Commitment and there exists no state of facts which,
after notice or lapse of time, or both, would constitute a
default or breach in connection with any Contract or
Commitment. For purposes of this subsection, the word
"default" includes, but is not limited to, the failure to
comply with any condition precedent under the provisions of
any such Contract or Commitment. Except as set forth in
Exhibit 3.9 hereto, Sellers have received no information
which might reasonably indicate that any party to a Contract
or Commitment is unable or unwilling to perform under such
Contract or Commitment.
3.9.4 Except only as set forth in
Exhibits 1(g) or 3.9 or any other Exhibit to this Agreement,
the Company is not a party to any other written or oral
contract, including, but not limited to, any:
(a) contract not made in the ordinary
course of business other than this Agreement;
(b) employment (including any agreement
with respect to leased employees) or consulting
contract which is not terminable without cost or other
liability to the Company, or any successor thereof,
upon notice of thirty (30) days or less;
(c) contract with any labor union;
(d) bonus, pension, profit-sharing,
retirement, stock purchase, hospitalization, insurance
or similar plan providing for employee benefits or
other Plan (as defined in Section 3.14 below);
(e) lease with respect to any property,
real or personal, whether as lessor or lessee;
(f) contract for the future purchase of
materials, supplies, merchandise or equipment which is
in excess of the requirements of the Business of the
Company now booked or the requirements of the Company
for its normal operating inventories;
(g) contract, other than a purchase
order placed by or with the Company, for the
performance of services for or by the Company which is
not terminable without cost or other liability to the
Company, or any successor thereof, upon notice of
thirty (30) days or less;
(h) insurance policy or contract;
(i) contract, other than a purchase
order placed by or with the Company, continuing for a
period of more than six (6) months from its date, which
is not terminable by the Company without cost or other
liability to the Company, or any other successor
thereof, upon notice of thirty (30) days or less;
(j) loan agreement or other contract
for money borrowed;
(k) agreement or arrangement for the
sale of any kind of its assets, property or rights or
the grant of any preferential rights to purchase any of
its assets, properties, or rights, including, without
limitation, customer bids and orders, terms and
conditions of sale, warranties, franchises, dealer or
distributor agreements or requiring the consent of any
party to the transfer or assignment of any such assets,
property or rights;
(l) agreement restricting in any manner
the conduct of the Business or the ownership or use of
the Purchased Assets;
(m) agency, sales representative or
similar agreement;
(n) warranties relating to the
Equipment or any of the other Purchased Assets;
(o) license agreements (including
computer software licenses), agreements relating to the
Intellectual Property (as defined in Section 3.30) or
the intellectual property of any other person and
franchise agreements;
(p) return policy and product
warranties relating to products manufactured or
distributed by the Company and rebate, credit or
allowance arrangements;
(q) contracts, agreements or other
understandings or arrangements between the Company and
any Shareholder, director, officer or employee
(including any leased employee), or any member of their
immediate families, or any affiliate thereof, which may
affect the Business, the Purchased Assets or the
Assumed Liabilities; or
(r) any purchase order placed by or
with the Company covering the payment or receipt by the
Company of $250,000 or more or which, regardless of
amount, will not be fully performed within six months
of the date of the purchase order.
3.10 Real Property.
3.10.1 Exhibit 1(d) hereto contains a
true and complete list of all real property that is owned,
leased or subleased by the Company or as to which the
Company has any interest of any kind including, without
limitation, all office, manufacturing and warehouse
facilities (the "Real Estate"). True and complete copies of
all deeds, leases, subleases and other agreements and
instruments relating to the Real Estate have been delivered
to Champion and Buyer. All buildings and other improvements
on the Real Estate are located within the boundaries of each
particular parcel of Real Estate and do not encroach upon
such boundaries. No building or other improvement situated
on any adjacent real estate is encroaching upon any of the
boundaries of the Real Estate.
3.10.2 Except as described in
Exhibit 3.10 hereto, the use of the Real Estate by the
Company and the conduct therein of its Business have not
violated, and are not expected to violate, in any material
respect, any federal, state or local law, ordinance, rule or
regulation. The Real Estate has an adequate water supply
and sewage and waste disposal, or facilities therefor, as
are sufficient for the operation of existing business of the
Company.
3.10.3 The buildings and improvements
located on the Real Estate and the ownership, operations and
maintenance thereof as now owned, operated and maintained,
do not (i) contravene in any material respect any
ordinances, statutes, regulations, covenants, or deed
restrictions, including those relating to zoning, building
use, air or water pollution, waste disposal, sanitation and
noise control, or (ii) violate in any material respect any
provision of federal, state or local law. Consummation of
the transactions contemplated herein will not cause the
zoning for any of the Real Estate to become non-complying by
virtue of elimination of a grandfather clause or for any
other reason.
3.10.4 The buildings and other
improvements on the Real Estate, including the plumbing,
electrical, mechanical, water, water pumping and sewage
systems are in good operating condition and repair,
sufficient for the uses intended and not in violation in any
material respect of any applicable governmental rule or
regulation or any other legal requirements, including health
and fire codes and other similar regulations.
3.10.5 The Real Estate has sufficient
and adequate vehicular and pedestrian access rights to and
from public streets and rights-of-way contiguous to the Real
Estate and adequate parking is available and in compliance
with all applicable zoning ordinances and laws.
3.10.6 There exists no pending or, to
the best knowledge of the Sellers, threatened condemnation
or similar proceeding with respect to, or which could
affect, the Real Estate.
3.10.7 Except as described in
Exhibit 3.10 hereto, the Company has not contracted for the
furnishing of labor or materials to the Real Estate which
will not be paid in full prior to the Closing Date.
3.11 Licenses. Except as disclosed on Exhibit
3.11, the Company possesses all patents, franchises,
permits, licenses, certificates and consents required from
any governmental authority or any other person necessary to
enable the Company to carry on its Business as now conducted
and to own and operate its properties (including leased
property) as now owned and operated and all such patents,
franchises, permits, licenses, certificates and consents
will remain in full force and effect following consummation
of the transactions contemplated by this Agreement.
Attached hereto as Exhibit 3.11 is a true and complete list
of all patents, franchises, permits, licenses, certificates
and consents used in connection with or applicable to the
Business.
3.12 Title to Assets. Except as disclosed on
Exhibit 3.12 hereto, the Company has good and marketable
title to all of the Purchased Assets, free, clear and
discharged of and from all mortgages, liens, security
interests, pledges, demands, claims, charges, leases,
subleases, licenses, easements or other rights of use or
occupancy of another person and other encumbrances
whatsoever ("Encumbrances"), and the sale to Buyer of the
Purchased Assets will not give rise to any Encumbrance
thereon. At the Closing, Buyer will receive good and
marketable title to the Purchased Assets free, clear and
discharged of and from all Encumbrances other than any
Encumbrances that Buyer may grant to its lenders.
3.13 Taxes.
3.13.1 For the purposes hereof, "Tax"
or "Taxes" shall mean all federal, state, county, local, and
other taxes (including, without limitation, income taxes,
premium taxes, single business taxes, excise taxes, sales
taxes, use taxes, value added taxes, gross receipts taxes,
franchise taxes, ad valorem taxes, severance taxes, capital
levy taxes, transfer taxes, stamp taxes, employment,
unemployment and payroll related taxes, withholding taxes,
governmental charges and assessments), and includes
interest, additions to tax and penalties with respect
thereto.
3.13.2 The Company has made a valid
election pursuant to section 1362(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code") to which the
persons who were shareholders of the Company on the date of
that election have made valid consents pursuant to section
1362(a)(2) of the Code, effective not later than the taxable
year of the Company commencing July 9, 1992 (the "First S
Year"), to be treated as an S Corporation within the meaning
of section 1361(a)(1) of the Code. For the First S Year and
all subsequent taxable years of the Company, the Company at
all times qualified as an S Corporation and incurred no
liability for federal income tax (including under sections
1374 and 1375 of the Code).
3.13.3 Each of the Sellers (a) has
filed all federal, state and local Tax returns required by
law in the legally prescribed time and manner, and paid all
Taxes due and payable; (b) has made all payments required by
any governmental program of workers' social security or
unemployment compensation; (c) has withheld and paid over to
the appropriate governmental authority all amounts required
by law to be withheld from the wages or salaries of
employees; (d) is not liable for any arrears of wages or any
Taxes or penalties for failure to comply with any of the
foregoing; and (e) has paid or will pay over to the
appropriate governmental authority all sales or use Taxes
referable to such Seller, and has made or will make
provisions for payment of all such Taxes accrued as of such
date, but not yet due. There are no claims pending or, to
the best knowledge of the Sellers, threatened against any of
the Sellers for past due Taxes, nor are there any
outstanding waivers or agreements by any of the Sellers for
the extension of the time for the assessment of any Tax. No
election has been made by any of the Sellers under section
341(f) of the Code.
3.13.4 The sale by the Sellers of the
Purchased Assets and the acquisition thereof by Buyer, are
exempt from, and will not result in the imposition of or
liability for, any sales, use, transfer or similar Taxes
except in connection with the transfer of any motor vehicles
constituting a portion of the Purchased Assets. Sellers
acknowledge and agree that if for any reason the sale of all
or any portion of the Purchased Assets (other than any motor
vehicles) is determined not to be exempt from such Taxes,
the Purchase Price includes and is inclusive of any and all
such Taxes and that Buyer has paid such Taxes to Seller and
Sellers have collected such Taxes from Purchasers.
3.13.5 Pursuant to the provisions of
Sections 151.006, 151.151 and 151.302 of the Texas Tax Code
and 34 Texas Administrative Code Section 3.285 relating to
exemption for sales for resale, Buyer will deliver to the
Company at Closing a Texas Sales Tax Resale Certificate with
respect to the Inventory.
3.13.6 Within the time required by
applicable law, Sellers shall file Tax returns with the
Internal Revenue Service, the State of Texas and other
taxing authorities and shall pay any Taxes that are due.
Sellers shall request confirmation from the Comptroller of
the State of Texas, or the Comptroller's designated
representative, to the effect that all Tax returns required
to be filed have been filed by the Company and all Taxes
shown on such returns have been paid. Sellers shall
promptly deliver the original copy of such confirmation to
Buyer.
3.13.7 The Sellers hereby waive all
confidentiality regarding any Taxes that are payable to the
State of Texas and agrees that the Comptroller of the State
of Texas may release to Buyer the Sellers' known Tax
liability. The Sellers agree to execute any separate
waivers of confidentiality as may be required by Buyer or
the Comptroller of the State of Texas to implement the terms
of this paragraph.
3.14 Employees; Benefit Plans.
3.14.1 Attached hereto as Exhibit 3.14
is a true and complete list of the names and current
compensation rates of all present directors, officers and
employees of the Company whose annual compensation is
$50,000 or more, together with a summary showing as to each
such person the salary, bonuses, additional compensation and
other like benefits, if any, paid or payable to such persons
for the fiscal year ended December 30, 1994.
3.14.2 Exhibit 3.14 also contains a
true and complete list of all bonus, profit sharing, stock
purchase, stock option, pension, retirement, health,
welfare, severance pay or any other current or deferred
remuneration or compensation plan, arrangement or practice
(sometimes herein collectively called the "Plans") for the
employees (including leased employees) of the Company,
salaried and nonsalaried, union and non-union, including any
formal or informal plans, and the funding arrangements with
regard thereto. Accurate and complete descriptions of all
Plans have been provided to Buyer. Except as described in
the Financial Statements, or as disclosed on Exhibit 3.14,
the Company has no Plan currently in existence which is
subject to the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). No
retired employee (including leased employees) of the Company
is receiving or is entitled to receive any payments, health
or other benefits from the Company.
3.14.3 None of the Company's employees
is covered by a collective bargaining agreement and there is
no union or other organization seeking or claiming to
represent any such employees.
3.14.4 There is not now, nor has there
been in the past, any strike, lock-out, sit-down, slow-down,
grievance or other labor dispute or trouble of any nature
whatsoever pending or threatened against the Company. The
Company is and has been in compliance in all material
respects with all laws regulating wages and/or hours and
other conditions of employment of employees.
3.14.5 All accrued obligations of the
Company, Advanced Employment Concepts, Inc. and each former
employee leasing company that has leased or otherwise
furnished any employees to the Company at any time in the
past (each a "Former Employee Leasing Company") relating to
employees (including leased employees) and agents of the
Company, whether arising by operation of law, by contract,
or by past service, for payments to trusts or other funds or
to any governmental agency, or to any individual employee or
agent (or his heirs, legatees, or legal representatives)
with respect to unemployment compensation benefits, profit
sharing or retirement benefits, or social security or other
benefits have been paid by the Company, Advanced Employment
Concepts, Inc. or such Former Employee Leasing Company, as
applicable. All obligations of the Company, Advanced
Employment Concepts, Inc. and each Former Employee Leasing
Company as an employer or principal relating to employees
(including leased employees) or agents, whether arising by
operation of law, by contract, or by past practice, for
vacation and holiday pay, bonuses, and other forms of
compensation which are or may become payable to such
employees (including leased employees) or agents prior to
the Closing Date, have been and will be paid by them prior
to the Closing Date.
3.14.6 The Company has entered into a certain
Agreement for Services with Advanced Employment Concepts,
Inc. dated May 28, 1994, a true copy of which is included as
part of Exhibit 1(g) hereto (the "Leased Employees
Agreement"). The Leased Employees Agreement is one of the
Contracts and Commitments and all representations,
warranties and covenants of Sellers contained herein with
respect to the Contracts and Commitments (including, but not
limited to, Section 3.9 hereof) apply as well to the Leased
Employees Agreement. The Company is not now and will not be
as of the Closing liable under any of the provisions of
Section 4 (Indemnity) of the Leased Employees Agreement and
no state of facts exists or will exist as of the Closing
Date that may give rise to any such liability. No guarantee
or security agreement has been executed or delivered by any
of the Sellers under the Leased Employees Agreement and none
is required to be so executed or delivered notwithstanding
anything to the contrary contained in the Leased Employees
Agreement.
3.14.7 Notwithstanding anything to the contrary
contained herein, all representations, warranties, covenants
and indemnities of the Sellers set forth in this Agreement
with respect to employees, employment arrangements, benefit
plans, Taxes and similar matters shall be deemed to be
representations, warranties, covenants and indemnities with
respect to such matters whether employees or leased
employees and whether under the Leased Employee Agreement or
otherwise.
3.15 Insurance. Attached hereto as Exhibit
1(h) is a true and complete list of all insurance policies
in force with respect to the Purchased Assets and the
Business of the Company and the annual premiums payable
thereon. True and complete copies of such insurance
policies have been delivered to Champion and Buyer. All
such policies are adequate to insure the risks covered
thereby. The Company is not in default in any respect under
any such policy.
3.16 Litigation. Except as disclosed on
Exhibit 3.16 hereto, there are no legal actions, suits,
arbitrations, or other legal or administrative proceedings
or investigations before any federal, state, municipal or
other governmental department, commission, board, bureau,
agency or instrumentality, pending or, to the best knowledge
of Sellers, threatened against or otherwise affecting the
Company or involving any properties, assets or business of
the Company (including the Purchased Assets). To the best
knowledge of Sellers, there is no fact or facts existing
which might result in, nor is there any basis for, any such
action, suit, arbitration, or other proceeding or
investigation. None of the Sellers is a party to or subject
to any order, writ, injunction, decree, judgment or other
restriction of any federal, state, municipal or other
governmental department, commission, board, bureau, agency,
or instrumentality which has or could have an adverse effect
on the Business, the Purchased Assets or the Assumed
Liabilities or on any of the Sellers' ability to enter into
this Agreement or consummate the transactions contemplated
hereby.
3.17 Compliance with Laws. Except as
disclosed in this Agreement or in any Exhibit hereto, the
Company has complied with and is in compliance with, and has
not received notice of any violation of, any and all
applicable laws, rules, regulations and ordinances
regulating or relating to the Company's Business, the
Purchased Assets or the Assumed Liabilities in effect from
time to time. All of the Company's products are and have
been, at the time of sale, in compliance with all
construction, safety and other standards imposed on the
Business by statute, rule or regulation of any governmental
authority (federal, state or local) or industry association.
3.18 Environmental Matters.
(a) The following terms used in this
Section 3.18 have the meanings set forth below:
(i) "Environmental Laws"
means the (1) Toxic Substance Control Act,
15 U.S.C. Sec. 2601 et seq., (2) National
Historic Preservation Act, 16 U.S.C. Sec. 470
et seq., (3) Coastal Zone Management Zone
Act of 1972, 16 U.S.C. Sec. 1451 et seq.,
(4) Rivers and Harbors Act of 1899, 33
U.S.C. Sec. 401 et seq., (5) Clean Water Act,
33 U.S.C. Sec. 1251 et seq., (6) Flood
Disaster Protection Act, 42 U.S.C. Sec. 4001
et seq., (7) National Environmental Policy
Act, 42 U.S.C. Sec. 4321 et seq.,
(8) Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Sec. 6901 et seq.
("RCRA"), (9) Clean Air Act, 42 U.S.C.
Sec.7401 et seq., (10) Comprehensive
Environmental Response Compensation and
Liability Act, 42 U.S.C. Sec. 9601 et seq.
("CERCLA"); (11) Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 1801 et
seq., (12) Safe Drinking Water Act, 42
U.S.C. Sec. 300f et seq., (13) Emergency
Planning and Community Right-to-Know Act,
42 U.S.C. Sec. 11001 et seq., (14) Federal
Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. Sec. 136 et seq.,
(15) Occupational Safety and Hygiene Act,
29 U.S.C. Sec. 685 et seq., and (16) all
other federal, state, county, municipal
and local, foreign and other statutes,
laws, regulations and ordinances which
relate to or deal with protection of human
health or the environment, all as may be
from time to time amended.
(ii) "Hazardous Substance(s)"
means (1) any flammable or combustible
substance, explosive, and/or radioactive
material, hazardous waste, toxic
substance, pollutant, contaminant and/or
any related materials or substance
identified in and/or regulated by any of
the Environmental Laws, and (2) asbestos,
polychlorinated biphenyls, urea
formaldehyde, chemicals and/or chemical
wastes, explosives, known carcinogens,
petroleum products and by-products
(including fraction thereof) and radon.
(iii) "Property" means any
parcel of real estate now or heretofore
owned by the Company or in which the
Company has or had any interest, including
any lessee's interest, any interest held
as security for an obligation and all
Formerly Owned Property.
(iv) "Formerly Owned Property"
means all Property owned, leased or
operated by the Company or any of their
respective Subsidiaries at any time in the
past, but not owned as of the Closing
Date. A true and correct list, including
the address and the county in which such
property is located, is set forth in
Exhibit 3.18 hereto.
(b) Except as described in Exhibit 3.18
hereto, the Company is now and has at all times been in
compliance with all Environmental Laws. Except as
described in Exhibit 3.18 hereto, no Hazardous
Substances have been released, emitted or disposed of,
or otherwise deposited, on or in the Property. A true
and correct list of all Hazardous Substances now or
heretofore used or generated by the Company is set
forth in Exhibit 3.18 hereto.
(c) Except as described in Exhibit 3.18
hereto, no activity has been undertaken on the Property
that would cause or contribute to:
(i) the Property becoming a
treatment, storage or disposal facility
within the meaning of RCRA or any similar
state law or local ordinance;
(ii) a release or threatened
release of any Hazardous Substances; or
(iii) the discharge of
pollutants or effluents into any water
source or system or into the air, or the
dredging or filling of any waters, that
would require a permit under the Federal
Water Pollution Control Act, 33 U.S.C.
Sec. 1251 et seq., the Clean Air Act, as
amended, 42 U.S.C. Sec. 7401 et seq., or any
similar foreign or state law or local
ordinance.
(d) Except as described in Exhibit 3.18
hereto, there are no substances or conditions in or on
the Property that may support a claim or cause of
action under any Environmental Law.
(e) Except as described in Exhibit 3.18
hereto, there are not, and never have been, any
underground storage tanks located in or under the
Property.
(f) The Company has obtained all
material Permits required by all applicable
Environmental Laws, and all such Permits are in full
force and effect. Except as described in Exhibit 3.18
hereto, the Company is and has at all times been in
compliance in all material respects with all such
Permits.
(g) Except as described in Exhibit 3.18
hereto, neither the Company nor its directors,
officers, employees or agents have generated or
transported any Hazardous Substances at any time which
have been transported to or disposed of in any
landfill, waste processing facility or other facility,
which transportation or disposal could create liability
to any unit of government or any third party. The
Company has not received any request for response
action, administrative or other order (or request
therefor), judgment, complaint, claim, investigation,
request for information or other request for relief in
any form relating to any facility where Hazardous
Substances generated or transported by the Company have
been disposed of, placed or located. A true and
correct list of all transporters, landfills and other
facilities now or heretofore used by the Company and
its directors, officers, employees or agents is set
forth in Exhibit 3.18. In addition, the Company has
provided Buyer or its agents copies of, or access to,
all manifests and records maintained by the Company
relating to such transporters, landfills and other
facilities.
(h) Except as described in Exhibit 3.18
hereto, there are no pending or threatened claims,
investigations, administrative proceedings, litigation,
regulatory hearings or requests or demands for remedial
or response actions or for compensation, with respect
to the Property, alleging noncompliance with or
violation of any Environmental Law or seeking relief
under any Environmental Law.
(i) Except as described in
Exhibit 3.18, the Property is not and never has been
listed on the United States Environmental Protection
Agency's National Priorities List of Hazardous Waste
Sites or any other list, schedule, log, inventory or
record of hazardous waste sites maintained by any
federal, state or local agency.
(j) The Company has disclosed and
delivered to Buyer all environmental reports and
investigations which the Company has ever obtained or
ordered with respect to the Property.
3.19 Product Liability. The Company has
adequate insurance against loss or damage arising out of
product liability or similar claims, copies of the insurance
policies of which have been delivered to Buyer and Champion
and are listed on Exhibit 1(h) hereto. Such insurance
covers all incidents of loss which have occurred prior to
the date hereof or which may occur resulting from products
sold by the Company prior to the Closing. Each claim made
against the Company (whether or not covered by insurance)
for loss or damage arising out of product liability or
similar claims for the period from and including January 1,
1992 to the date hereof and which individually is $10,000 or
more is described in Exhibit 3.19.
3.20 Warranties. There are no oral or written
warranties on the products sold by the Company, whether
express or implied, other than as set forth in Exhibit 3.20
hereto and any implied warranties that may be imposed by
operation of law.
3.21 Insider and Inter-Company Transactions.
(a) A true and complete list and brief
description of all contracts or other transactions
involving the Company with respect to which any
officer, director, employee or Shareholder, any member
of their immediate families, or any affiliate thereof,
has any interest is set forth in Exhibit 3.21 hereto.
(b) Except as set forth in Exhibit 3.21
hereto the Company is not indebted to any of its
officers, directors, employees or Shareholders, or any
member of their immediate families, or any affiliate
thereof, except for amounts due as normal salary,
bonuses, wages, commissions, reimbursements of ordinary
business expenses or ordinary business advances of the
Company in accordance with past practice.
3.22 Bank Accounts and Powers of Attorney.
Exhibit 3.22 hereto contains a true and complete list of the
names and locations of all banks or other financial
institutions which are depositories of funds of the Company,
the names of all persons authorized to draw or sign checks
or drafts upon such accounts and the number of such accounts
and the names and locations of any institutions in which the
Company has safe deposit boxes and the names of the
individuals having access thereto, and all outstanding
powers of attorney granted by or on behalf of the Company.
3.23 Progress Payments. Exhibit 3.23 hereto
contains a true and complete list and description of all
security deposits, progress payments, credits and the like
the Company has received relating in any way to any purchase
orders, leases or other agreements which are part of the
Purchased Assets.
3.24 Information in the HSR Act Notification
and Report Form. None of the information supplied (or to be
supplied) by the Company or the Shareholders for inclusion
or incorporation by reference in the Notification and Report
Form to be filed with the Federal Trade Commission ("FTC")
and the Department of Justice ("DOJ") in connection with the
transactions contemplated hereby (the "HSR Form") will, at
the time the HSR Form is filed with the FTC and DOJ and at
all relevant times thereafter, contain any untrue statement
of a material fact or omit to state any material fact or
omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading. The HSR Form will comply in all material
respects with the HSR Act and the rules and regulations
thereunder.
3.25 Sufficiency of Purchased Assets. The
Purchased Assets constitute all of the property and assets,
real, personal and mixed, tangible and intangible, as are
used or useful in or are necessary for the conduct of the
Business in accordance with present practices.
3.26 Guaranties. There are no outstanding
obligations or liabilities currently owed by the Company
pursuant to the guaranties listed in Exhibit 2.3, nor any
current recourse liabilities or obligations under any of the
repurchase or floor plan financing agreements identified in
Exhibit 2.3, and no claims have been made, and the Company
is not aware of any basis for any claims to be made, against
the Company pursuant thereto.
3.27 Equipment. The Equipment is in good
operating condition and in a state of good repair sufficient
for the conduct of normal operations without the necessity
of any known capital expenditure in excess of $50,000 in the
aggregate. The Company's assets and properties (including
leased property) are adequate to enable the Company to
conduct its Business as now being conducted. Sellers are
not aware of any major capital expenditure that will be
required on the part of the Company within one year from the
date of this Agreement.
3.28 Inventory. The Inventory of the Company
shown on the latest of the Financial Statements and the
Inventory that will be shown on the Preliminary 1994
Financial Statements, the Audited 1994 Financial Statements
and the Audited Closing Balance Sheet consists and will
consist of raw materials, work in process, and finished
goods of a quality and quantity usable or salable in the
normal course of the Business of the Company, except for any
slow moving, obsolete inventory or inventory of below-
standard quality all of which has been written off or
written down to realizable value. The valuation at which
the Inventory is carried reflects and will reflect the
normal inventory valuation policy of the Company of stating
inventory at the lower of cost (first-in-first-out-method)
or market and its regular costing standards with respect to
work in process and finished goods inventory.
3.29 Receivables. The Receivables shown on
the latest of the Financial Statements and which will be
shown on the Preliminary 1994 Financial Statements, the
Audited 1994 Financial Statements and the Audited Closing
Balance Sheet result from and will result from bona fide
sales made by the Company in the ordinary course of business
and have been collected or will be collectible in the
ordinary course after provision for doubtful accounts as
shown on the latest of the Financial Statements and to be
shown on the Preliminary 1994 Financial Statements, the
Audited 1994 Financial Statements and the Audited Closing
Balance Sheet. The amounts due, or to become due, in
respect of the Receivables are not in dispute and there are
no and will not be any setoffs or counterclaims asserted
against any of the Receivables.
3.30 Patents and Trademarks. Attached hereto
as Exhibit 1(f) is a true and complete list of all
trademarks, trademark applications, service marks, and the
United States Federal or State registrations thereof and any
such foreign registrations, trade names, United States and
foreign patents and patent applications, and copyrights (the
"Intellectual Property") used in connection with the
Business of the Company owned by or licensed to the Company,
all of which are in full force and effect. Patent
applications, if any, shall be disclosed to Buyer on a
separate confidential list. Except as disclosed on Exhibit
3.30, (a) the Company is the sole and exclusive owner or
licensee of the Intellectual Property and has the sole and
exclusive right to use the Intellectual Property on or with
respect to the products of the Company in the same manner in
which they have been or are now being used, (b) there are no
claims, demands or proceedings pending, or to the best
knowledge of Sellers, threatened, that pertain to or
challenge the right of the Company to use such Intellectual
Property, and (c) the Company has not granted any licenses
or other rights and has no obligation to grant licenses or
other rights with respect thereto.
3.31 Corporate Minute Books. The minute books
of the Company (true copies of which have been provided to
Champion and Buyer) contain complete and accurate records of
all meetings and other corporate actions of its stockholders
and directors and committees of directors (if any).
3.32 Suppliers and Customers.
3.32.1 A true and complete list of all
suppliers or vendors of products or services to the Company
aggregating more than $500,000 (at cost) annually for
calendar year 1994, the address of each such supplier or
vendor, and the amount sold to the Company during such
period is set forth in Exhibit 3.32 hereto.
3.32.2 A true and complete list of each
customer of the Company aggregating more than $500,000 in
revenues annually during calendar year 1994, the address of
each such customer, and the amount purchased by each such
customer from the Company during such periods are set forth
in Exhibit 3.32 hereto. True and correct copies of all
dealer and other agreements relating to such customers have
been delivered to Champion and Buyer.
3.32.3 To the best knowledge of the
Sellers, none of the customers or suppliers of the Company
described in Exhibit 3.32 hereof intends to cease purchasing
from, selling to or dealing with the Company, alter in any
material respect the amount of such purchases, sales or the
extent of dealings with the Company or alter in any material
respect the amount of such purchases, sales or dealings in
the event of the consummation of the transactions
contemplated hereby.
3.33 Illegal Payments. Neither the Company
nor any of its directors, officers, agents, or employees, or
other persons acting on behalf of the Company have, directly
or indirectly, (a) used any corporate funds of the Company
for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity, (b) made
any unlawful payments on behalf of the Company to foreign or
domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate
funds, (c) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, (d) knowingly made any
false or fictitious entry on the books or records of the
Company, or (e) made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment on behalf of
the Company.
3.34 Disclosure. Neither this Agreement nor
any Exhibit hereto, nor any schedule, certificate,
statement, writing, financial statement or document
furnished or to be furnished to the Buyer, its agents or
representatives, by or on behalf of the Sellers in
connection with this Agreement or any of the transactions
contemplated hereby contains or will contain, as of the date
thereof, any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which
they are made, not false or misleading. No fact is known to
any of the Sellers which materially and adversely affects
the Company's Business or any of the Company's assets which
has not been set forth in the Exhibits hereto. The Sellers
shall from time to time, up to and including the Closing,
promptly provide to the Buyer any and all information
concerning the Business which might materially affect the
accuracy or completeness of information contained herein or
otherwise furnished to the Buyer.
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND
CHAMPION
Buyer and Champion, jointly and severally, hereby
represent and warrant, as follows, each of which shall be
deemed to be independently material and to have been relied
upon by the Sellers:
4.1 Organization; Good Standing. Buyer and
Champion are corporations duly organized, validly existing
and in good standing under the laws of the State of
Michigan.
4.2 Authority Relative to this Agreement.
Buyer and Champion each have the full legal right and power
and all authority and approval required by law to enter into
this Agreement and the documents and instruments to be
executed and delivered by it pursuant hereto, and to perform
fully their respective obligations hereunder and thereunder.
The execution and delivery of this Agreement and the
documents and instruments to be executed and delivered by it
pursuant hereto have been duly authorized by all necessary
corporate action on the part of Buyer and Champion. This
Agreement and the documents and instruments to be executed
and delivered by it pursuant hereto are and will be the
legal, valid and binding obligations of Buyer and Champion,
enforceable against each of them in accordance with their
terms, except to the extent to which enforcement may be
limited by laws relating to bankruptcy and insolvency,
moratorium and similar laws relating to the enforcement of
creditors rights and by general principles of equity
(regardless of whether in an action at law or in equity).
4.3 Consents and Approvals; No Violation.
The execution, delivery and performance by Buyer and
Champion of this Agreement and the documents and instruments
to be executed and delivered by it pursuant hereto will not:
(a) violate any provision of Buyer's or Champion's articles
of incorporation or by-laws; (b) contravene or constitute a
default under any indenture, mortgage, lease or other
agreement to which Buyer or Champion is a party or is bound,
or by which any of the properties or assets of Buyer or
Champion may be bound or affected; or (c) result in a
violation of any law, statute, ordinance, regulation,
judgment, injunction, order, decree or award of any court or
governmental authority or body having jurisdiction over
Buyer or by which either of them is bound. On or before the
Closing, Buyer and Champion shall cause or effect any action
by, or notice or disclosure to, or filing or registration
with, any governmental body, agency or official as Buyer or
Champion may be required by law to do in connection with the
transactions contemplated hereby.
4.4 Litigation. There are no legal actions,
suits, arbitrations, or other legal or administrative
proceedings or investigations before any federal, state,
municipal or other governmental department, commission,
board, bureau, agency or instrumentality, pending or, to the
best knowledge of Buyer and Champion, threatened against or
affecting Buyer or Champion which, if adversely determined,
would materially affect the Buyer's or Champion's ability to
perform its obligations under this Agreement.
5. CERTAIN COVENANTS
5.1 Conduct of Business. From the date
hereof until the Closing, Sellers shall conduct the Business
and operations of the Company in accordance with past
practice and in the ordinary course of business, shall
maintain the Company's current business organization and
goodwill, shall use their best efforts to continue to retain
the services of the Company's present officers, employees
and consultants, shall preserve the Company's relationships
with dealers, customers, suppliers and others having
business dealings with the Company, and shall not enter into
any transaction or perform any act which would constitute a
breach of the representations, warranties, covenants and
agreements contained herein. Sellers will, consistent with
this Section 5.1 and Section 5.2, continue to conduct the
business of the Company only in the ordinary course in
accordance with past practice and will take no action which
could reasonably be expected to result in the Purchased
Assets not fully reflecting the earnings of the Company for
such period.
5.2 Certain Changes or Events. From the
date hereof until the Closing, except as specifically
provided herein, as described in Exhibit 5.2 or with the
prior written consent of Buyer and Champion, Sellers shall
not:
(a) take any action to amend the
Company's articles of incorporation or by-laws,
(b) issue, sell or otherwise dispose of
any of its authorized but unissued capital stock,
(c) declare or pay any dividend or make
any other distribution in cash or property on its
capital stock (other than the Permitted Dividend) or
redeem or otherwise acquire any of its capital stock,
(d) merge or consolidate with or into
any corporation,
(e) make or become liable for any wage
or salary increase, bonus, profit-sharing or incentive
payment to any of its officers, directors, employees or
stockholders,
(f) sell or otherwise dispose of or
encumber any of its properties or assets other than in
sales or dispositions in the ordinary course of
business or in connection with normal repairs, renewals
and replacements,
(g) modify, amend or cancel any of its
existing leases or enter into any commitments,
contracts, agreements, leases, warranties, guarantees
or understandings other than in the ordinary course of
business,
(h) fail to operate the Business in the
customary manner and in the ordinary and regular course
of business and to maintain in good condition its
business premises, plant, fixtures, furniture and
equipment, reasonable wear and tear excepted,
(i) cancel or compromise any debt or
claim related to its assets, other than in the ordinary
course of business,
(j) waive or release any rights of
value relating to its assets, other than in the
ordinary course of business,
(k) transfer or grant any rights in or
under any concessions, leases, licenses, agreements,
patents, inventions, trademarks, trade names, service
marks, brand marks, brand names or copyrights, or with
respect to any know-how, processes or formulas,
relating to its assets, other than in the ordinary
course of business,
(l) enter into any employment contract
with any officer or employee, or make any loan to, or
enter into any transaction of any other nature with any
of its directors, officers or employees, the
Shareholders or any member of their immediate families
or any affiliate thereof,
(m) enter into any transaction,
contract or commitment with respect to its assets,
other than in the ordinary course of business,
(n) suffer any casualty loss or damage
(whether or not such loss or damage shall have been
covered by insurance) of $250,000 or more singly or in
the aggregate for all casualty losses and damage,
(o) suffer any material adverse change
in its financial condition, results of operations,
Purchased Assets, liabilities or business prospects,
(p) take any other action which might
adversely affect the interest of Buyer hereunder or
diminish the value of the Company as a going concern,
(q) alter the manner of keeping the
Company's books, accounts or records or the accounting
practices therein reflected, including any change in
the costing standards reflected in the Financial
Statements,
(r) fail to maintain the corporate
existence of the Company,
(s) fail to maintain in full force and
effect all policies of insurance now in effect,
(t) fail to duly and timely file all
reports and returns required to be filed with any
governmental agency and promptly pay all Taxes unless
diligently contested in good faith by appropriate
proceedings,
(u) alter the physical contents or
character of any of its inventories so as to affect the
nature of the Business or result in a change in the
total dollar valuation thereof or otherwise take any
action or refrain from taking action as would result in
any change in the Purchased Assets or the Assumed
Liabilities other than in the ordinary course of
business consistent with past practice, or
(v) enter into any contract, agreement
or commitment with respect to, or propose or authorize,
any of the actions described in the foregoing clauses
(a) through (u).
5.3 Access to Information. Between the date
hereof and the Closing Date, Sellers shall (i) afford Buyer,
Champion and their representatives access, during normal
business hours, to all of the Company's business operations,
properties, financial statements, books, past and present
insurance policies, files, records, work papers, schedules,
financial data and all financial information and documents
furnished to the Company's auditors in connection with the
audits of the Company's Financial Statements and the Audited
Closing Financial Statements, (ii) cooperate with Buyer and
Champion and their representatives in the examination
thereof, (iii) furnish Buyer, Champion and their
representatives with all information with respect to the
Business, the Purchased Assets and the Assumed Liabilities
as Buyer or Champion may reasonably request, and
(iv) furnish Buyer, Champion and their representatives with
copies of such documents as may be reasonably requested.
The Sellers shall cause the Company's auditors to give to
Champion's auditors, Price Waterhouse, full access to all
work papers, schedules, financial data and all financial
information and documents relating to the audits of the
Company's Financial Statements and the Audited Closing
Financial Statements. Between the date hereof and the
Closing Date, all such information furnished to the Buyer
and/or Champion shall be subject to the terms of the letter
between the Company and Champion dated November 15, 1994.
Buyer, Champion and their representatives shall have the
right to discuss the affairs of the Company with the
directors, officers, employees, consultants, auditors,
advisors and agents of the Company. No such examination,
however, shall constitute a waiver or relinquishment by
Buyer or Champion of their rights to rely upon Sellers'
representations, warranties, covenants and agreements as
made herein or pursuant hereto. In addition, as promptly as
practicable after the date hereof, Sellers will supplement
Exhibit 3.32 to include the information specified in
Sections 3.32.1 and 3.32.2 with respect to calendar year
1993.
5.4 Additional Agreements. Subject to the
terms and conditions herein provided, each of the parties
hereto agrees to use its best efforts to take promptly, or
cause to be taken, all actions and to do promptly, or cause
to be done promptly, all things necessary, proper or
advisable under applicable laws to consummate and make
effective the transactions contemplated by this Agreement,
and to satisfy all of the conditions to the Closing to be
satisfied by such party, including using its best efforts to
obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals from all applicable
governmental entities and third parties, and effecting all
necessary registrations and filings. Without limiting the
generality of the foregoing, the parties shall, as promptly
as practicable after the date hereof file appropriate HSR
Forms with the FTC and DOJ as required by the HSR Act and
such HSR Forms shall be accompanied by a request for early
termination of the applicable waiting period under the HSR
Act. Each of the parties hereto agrees not to take any
action or fail to take any action that would be likely to
cause any representation or warranty contained in this
Agreement to cease to be true or accurate or that would be
reasonably likely to prevent the performance of any covenant
or the satisfaction of any condition contained in this
Agreement. Sellers shall immediately advise Buyer and
Champion in writing in the event that any of the
representations or warranties of Sellers shall be untrue or
incorrect in any respect or any of them shall become aware
of the occurrence of any event or state of facts which
results in any of such representations and warranties not
being true or correct as if then being made by them.
5.5 Communications With Agencies. Sellers
will promptly transmit to Buyer and Champion copies of any
communications with any federal or state regulatory agencies
received after the date hereof which relate to the Business.
5.6 Financials. (a) Sellers shall cause to
be prepared and will deliver to Buyer and Champion promptly
after the same are prepared the monthly financial statements
of the Company. All such monthly statements shall be
prepared on a basis consistent with the Financial
Statements.
(b) Sellers shall cause the 1992 Financial
Statements referred to in Section 3.6.1 to be audited by the
Auditor in accordance with generally accepted auditing
standards as promptly as practicable under the
circumstances. The audited 1992 Financial Statements shall
be prepared in accordance with and shall comply with the
requirements of Regulation S-X promulgated by the Securities
and Exchange Commission. Such audited 1992 Financial
Statements shall be delivered to Buyer and Champion at the
same time as they are delivered to Sellers.
5.7 Takeover Proposals. Sellers will not
authorize or permit any of the officers, directors or
employees of the Company or any investment banker, financial
advisor, attorney, accountant or other representative or
agent retained by any of the Sellers to, solicit or
encourage the making of, or agree to or endorse any Takeover
Proposal (as defined below), or participate in any
discussions or negotiations, or provide third parties with
any nonpublic information, relating to any such proposal.
The Sellers will promptly advise Buyer and Champion orally
and in writing of any such proposals. As used in this
Agreement, "Takeover Proposal" shall mean any tender or
exchange offer, proposal for a merger, consolidation or
other business combination involving the Company or any
proposal or offer to acquire in any manner any equity
interest in, or any portion of the assets (other than in the
ordinary course of business consistent with past practice)
of, the Company other than the transactions contemplated or
permitted by this Agreement.
6. CERTAIN AGREEMENTS AND UNDERSTANDINGS OF THE
PARTIES
6.1 Permitted Dividend.
6.1.1 Buyer and Champion acknowledge
that, in light of the fact that the Company has elected to
be treated as an S Corporation under the Code, the Company
may declare on or prior to December 30, 1994 and pay on or
prior to the Closing Date a cash dividend in an amount which
would not reduce Preliminary 1994 Stockholders Equity below
$1,175,000 and may declare on or after December 31, 1994 and
prior to the Closing Date an additional cash dividend in an
amount which would not reduce Audited Closing Stockholders
Equity below $1,175,000 (collectively, the "Permitted
Dividend"). The Preliminary 1994 Balance Sheet and the
Audited Closing Balance Sheet shall include accruals for the
Permitted Dividend. Sellers acknowledge that the accrual
and payment of such Permitted Dividend shall not relieve
Sellers of any of their duties or obligations under this
Agreement including, but not limited to, the Preliminary
1994 Stockholders Equity or the Audited Closing Stockholders
Equity standards of Section 2.1.5.
6.2 Employment Agreements. At the Closing,
John E. Drake shall enter into an employment agreement with
the Buyer in the form attached hereto as Exhibit 6.2(1) and
Garland Gandy, William Garrett, Alan T. Robinson and
Sarah L. Clegg shall each enter into an Employment Agreement
in the form attached hereto as Exhibit 6.2(2) (collectively,
the "Employment Agreements"). The foregoing persons are
sometimes referred to herein as the "Executives." The
provisions of this Section 6.2 (including the forms of
Exhibits 6.1 and 6.2) and Section 6.3 (including the form of
Exhibit 6.3) shall be modified in such manner as may be
mutually agreed upon by Buyer, Champion and the Company to
account for the leased employee arrangements with Advanced
Employment Concepts, Inc. and the termination thereof and/or
changes therein pursuant to Section 8.1(z) hereof.
6.3 Option Agreements. At the Closing, each
of the Executives and Champion shall enter into a stock
option agreement in the form attached hereto as Exhibit 6.3
(collectively, the "Option Agreements").
6.4 Noncompetition Agreements. At the
Closing each of the Sellers other than Mr. and Mrs.
Silvertooth shall enter into a noncompetition agreement with
Buyer and Champion, which agreement will be in the form
attached hereto as Exhibit 6.4(1) in the case of the Company
and Exhibit 6.4(2) in the case of the Shareholders
(collectively, the "Noncompetition Agreements").
6.5 Security Deposits. All security
deposits, progress payments, credits and the like which the
Company has received pursuant to any purchase orders, leases
or agreements assigned to or assumed by Buyer pursuant to
this Agreement shall be paid to Buyer at the Closing. All
security deposits which have been paid by the Company to
third parties under any leases or agreements assigned to or
assumed by Buyer pursuant to this Agreement are a part of
the Purchased Assets and at the Closing shall become the
property of Buyer for the payment of no additional
consideration.
6.6 Power of Attorney. Without limitation
of any provision of this Agreement, effective upon the
Closing, the Company constitutes and appoints each of Buyer
and Champion and their successors and assigns the true and
lawful attorney of the Company, with full power of
substitution, in the name of Buyer or in the name of the
Company, but for the benefit of Buyer, (i) to collect for
the account of Buyer all items transferred or intended to be
transferred to Buyer hereunder, (ii) to institute and
prosecute all proceedings which Buyer may deem proper in
order to collect, assert or enforce any claim, right or
title of any kind in or to the Purchased Assets, and to do
all such acts and things in relation thereto as Buyer shall
deem advisable; and (iii) to take all actions which Buyer
may deem proper in order to provide to Buyer the benefits
under any claims, contracts, agreements, arrangements,
licenses, leases, commitments, sales orders, purchase orders
or other documents or instruments of the Company transferred
or intended to be transferred to Buyer hereunder. Each of
the Sellers acknowledges that these powers are coupled with
an interest and, upon the Closing, shall not be revocable in
any manner or for any reason. Buyer shall be entitled to
retain for its own account any amounts collected pursuant to
the foregoing power, including any amount payable as
interest in respect thereof.
6.7 Employees. Buyer shall offer employment
to all active employees of the Company as of the Closing
Date (other than the Executives) on an at-will basis, at
their current wage levels and with hospitalization
insurance, sick time, holiday and vacation benefits
substantially equivalent to that described in the
Exhibit 6.7 hereto, provided, however, that nothing
contained herein shall preclude Buyer from offering
additional or different benefits or terms of employment in
the future. Immediately prior to the Closing Date, Sellers
shall terminate all active employees of the Company.
Sellers agree to cooperate and encourage such employees to
become employees of Buyer. The provisions of this Section
6.7 shall be modified in such manner as may be mutually
agreed upon by Buyer, Champion and the Company to account
for the leased employee arrangements with Advanced
Employment Concepts, Inc. and the termination thereof and/or
changes therein pursuant to Section 8.1(z).
6.8 Post Closing Receipts. After the
Closing, Sellers will immediately notify and transfer to
Buyer any payments or other receipts any of them receives in
respect of any Purchased Assets intended to be transferred
to Buyer, including by way of example and not of limitation,
any Receivables. Pending any such transfer Sellers will
segregate any such payments from their other assets and will
clearly mark or designate them as the property of Buyer.
7. CLOSING
7.1 Closing Date. The closing of the
transaction contemplated by this Agreement (herein called
the "Closing") shall take place at the offices of Miller,
Canfield, Paddock and Stone, P.L.C., 1400 North Woodward
Avenue, Suite 100, Bloomfield Hills, Michigan 48303-2014, at
10:00 a.m. (local time) on February 3, 1995 or such other
date, time and place as Champion, Buyer and the Company
mutually agree. The date on which the Closing actually
occurs is referred to herein as the "Closing Date."
7.2 Deliveries by Sellers. At the Closing,
Sellers shall deliver to Buyer the reports, resolutions,
schedules, contracts, leases, agreements and other papers
required pursuant to this Agreement, and executed warranty
deeds, bills of sale, endorsements, assignments,
registrations and other instruments of transfer and
conveyance, all in form and substance satisfactory to
counsel for Buyer, as shall be effective to vest in Buyer
all of the right, title and interest of Sellers in and to
the Purchased Assets, free and clear of all Encumbrances.
Sellers shall take all such steps as may be necessary to put
Buyer in actual possession and operating control of the
Purchased Assets, and Sellers agree that at any time or from
time to time after the Closing Date, upon request of Buyer
or Champion, Sellers will execute, acknowledge and deliver
such other and further instruments of conveyance and
transfer and take such other action as Buyer may reasonably
require to vest more effectively in Buyer title to any of
the Purchase Assets.
7.3 Deliveries by Buyer. At the Closing,
Buyer shall pay the Purchase Price in accordance with
Section 2.1 and shall deliver to Sellers the instruments of
assumption of the Assumed Liabilities, reasonably
satisfactory in form and substance to Sellers' counsel.
7.4 Certain Closing Expenses. Buyer shall
be liable for and shall pay all state and local sales and
use taxes, documentary stamp taxes, land transfer taxes and
recording and filing fees properly payable upon and in
connection with the conveyance and transfer of the Purchased
Assets to Buyer and Sellers shall be liable for and shall
pay all Taxes referred to in Section 11.2.
8. CONDITIONS TO CLOSING
8.1 Conditions to Obligations of Buyer and
Champion. The obligations of Buyer and Champion to close
the transactions contemplated by this Agreement are subject
to the prior fulfillment of each of the following
conditions; provided; however, that Buyer and Champion may
waive any one or more of such conditions:
(a) Sellers shall have complied with and
performed all the terms, covenants and conditions of this
Agreement required to be complied with and performed by
Sellers on or prior to the Closing Date, and shall have made
all of the deliveries required to have been made hereunder
by Sellers on or prior to the Closing Date.
(b) All of the representations and
warranties made by Sellers contained in this Agreement shall
be true and correct on the Closing Date, as if made on the
Closing Date.
(c) All necessary governmental approvals and
consents of third parties to the transactions contemplated
by this Agreement shall have been obtained and the same
shall be in form and substance reasonably acceptable to
Buyer and Champion and the applicable waiting period under
the HSR Act shall have expired or been terminated.
(d) Sellers shall have delivered to Buyer
and Champion the resolutions of the Company's Board of
Directors and Shareholders authorizing the execution,
delivery and performance by the Company of this Agreement
and the transactions contemplated hereby, certified by the
Secretary of the Company.
(e) Sellers shall have furnished Buyer and
Champion with a favorable opinion, dated the Closing Date,
of Thomas R. Bevill, Esq., counsel for the Shareholders and
the Company, addressed to Buyer, in form and substance
customary for transactions of the character contemplated in
this Agreement and otherwise reasonably acceptable to Buyer
and Champion.
(f) Sellers shall have furnished Buyer and
Champion with a certificate, executed by the President of
the Company and by the Shareholders, certifying that each of
the conditions set forth in Section 8.1(a), (b), (c), (j),
(k), (q), (v), (aa) and (ab) has been satisfied.
(g) All legal matters in connection with
this Agreement and the Closing hereunder shall be approved
by Messrs. Miller, Canfield, Paddock and Stone, P.L.C.,
counsel for Buyer and Champion; and there shall have been
furnished to such counsel by the Sellers such corporate and
other records and information as they may reasonably have
requested for such purpose.
(h) Buyer and Champion shall have received
assurances from their auditors, Price Waterhouse, that the
Financial Statements referred to in Section 3.6.1(a) comply
with the requirements of the Securities Act of 1933, as
amended (the "1933 Act") and the Securities Exchange Act of
1934, as amended (the "1934 Act") and the rules promulgated
thereunder with respect to the financial statements of the
Company which would be required to be included in
registration statements or reports that may be filed or are
required to be filed by Champion, Buyer, the Company or any
of their respective affiliates under the 1933 Act or the
1934 Act.
(i) Buyer and Champion shall have received
all permits necessary in Buyer's opinion to operate the
Business after the Closing.
(j) Prior to the Closing Date, the Company
shall not have incurred, or be threatened with, a material
liability or casualty which would materially impair the
value of the Purchased Assets.
(k) No action, suit, proceeding or
investigation shall have been instituted before any court or
governmental body, or instituted by any governmental agency,
to restrain or prevent the carrying out of the transactions
contemplated by this Agreement or which might affect the
right of Buyer to own, operate and control the Business or
the Purchased Assets after the Closing Date.
(l) Buyer and Champion shall have received
written report(s) of a site assessment and environmental
audit, in scope, form and substance, and prepared by an
independent, competent and qualified engineer, satisfactory
to Buyer and Champion, and any updates thereof deemed
necessary or appropriate by Buyer and Champion, and Buyer
and Champion shall be satisfied, in their sole and absolute
discretion, that there will not be at and after the Closing
any basis for the imposition on Buyer or Champion of any
liability under any Environmental Law. The Company shall
pay the cost of any such reports.
(m) Sellers shall have provided to Buyer or
Champion confirmation from the Tax Comptroller of the State
of Texas showing that all Tax returns and reports required
to be filed by the Company prior to the Closing have been
filed and that all Taxes shown on such reports have been
paid.
(n) Reserved.
(o) Buyer and Champion shall have received
Uniform Commercial Code lien searches with respect to the
Purchased Assets and A.L.T.A. commitments for owner's
policies of title insurance for the real property described
in Exhibit 1(d) hereto (the "Title Commitments"), and an
A.L.T.A. survey of such real property in form and content
satisfactory to Buyer and Champion.
(p) Buyer and Champion shall have reviewed,
investigated, ascertained and verified to their sole,
complete and unfettered satisfaction all aspects of the
financial statements, business, properties, assets,
contracts, past and present insurance arrangements,
employment arrangements (leased or otherwise), customer and
dealer relations and affairs of the Company, the Purchased
Assets, the Assumed Liabilities and the Excluded
Liabilities, all facts, information, and other matters
regarding the Company referred to in this Agreement or given
or provided in connection with this Agreement and other due
diligence reviews and investigations of the Company and the
Sellers as Champion and Buyer may deem advisable or
appropriate, and the results of such investigations shall be
satisfactory to Buyer and Champion in all respects in each
of their sole, complete and unfettered discretion.
(q) No fire or other casualty shall have
destroyed (i) $250,000 or more in replacement cost of the
Purchased Assets, or (ii) any part of the Purchased Assets
which would have an adverse effect on the Business (whether
or not in excess of $250,000) whether or not such casualty
is covered by insurance, and no event shall have occurred
which has or reasonably may have an adverse effect upon the
Business, the Purchased Assets, the Assumed Liabilities or
business prospects of the Business.
(r) Sellers shall have provided to Buyer and
Champion the requisite certification required under Code
Section 1445 relating to foreign sellers of U.S. real
estate.
(s) Sellers shall have delivered to Buyer
and Champion an affidavit, in form acceptable to the title
company issuing the Title Commitments certifying that the
real property is free from claims for mechanic, materialmen
and laborer's liens or any other liens or assessments.
(t) The Executives shall have executed and
delivered to Buyer and Champion the Employment Agreements
and the Option Agreements.
(u) The Sellers other than the Executives
shall have executed and delivered to Buyer and Champion the
Noncompetition Agreements.
(v) Sellers shall have taken such corporate
action as may be appropriate to change the name of the
Company to a name which is not confusingly similar to its
present name and shall have delivered such instruments as
may be required to be filed with all governmental
authorities to so change the Company's name.
(w) The transactions contemplated in the CHI
Purchase Agreement shall be consummated simultaneously with
the Closing.
(x) Sellers shall have delivered to Buyer
and Purchaser the Preliminary 1994 Financial Statements and
the certified calculations of the Preliminary 1994
Stockholders Equity and Preliminary 1994 EBIT and any
questions or disputes with respect thereto shall have been
resolved to the satisfaction of Buyer and Purchaser.
(y) Reserved.
(z) If desired by Champion and Buyer in
their discretion, Buyer shall have entered into new or
revised arrangements with Advanced Employment Concepts, Inc.
relating to employees leased to the Company which are to be
leased to, or employed by, Buyer on terms reasonably
acceptable to Champion and Buyer.
(aa) Buyer's receipt of all necessary
approvals and consents of third parties, including, without
limitation, all appropriate governmental authorities,
commissions, agencies and bodies, so that Buyer receives,
effective no later than the date of Closing, all of those
tax abatement benefits previously received by the Company,
in amounts not less than those received by the Company,
pursuant to that certain Agreement by and between the County
of Stephens, Texas and the Company dated as of March 8,
1993.
(ab) Buyer's receipt of all necessary
approvals and consents of third parties, including, without
limitation, all appropriate governmental authorities,
commissions, agencies and bodies, so that Buyer receives,
effective no later than the date of Closing, all of those
financial benefits previously received by the Company, in
amounts not less than those received by the Company, as a
result of the Company's designation as an "Enterprise Zone
Project" and that the Buyer receives the designation as an
"Enterprise Zone Project."
(ac) Buyer and Champion shall be satisfied in
their sole discretion with the amount of potential liability
associated with the Assumed Litigation.
(ad) Buyer, Champion and the Company, and if
requested by Buyer and Champion the other Sellers, shall
have entered into agreements with respect to the defense of
the Assumed Litigation and the defense of other third party
claims that may be the subject of indemnification claims
under this Agreement upon terms and conditions reasonably
acceptable to Buyer and Champion.
8.2 Conditions to Obligations of Sellers.
The obligations of Sellers to close the transaction
contemplated by this Agreement are subject to the prior
fulfillment of each of the following conditions; provided,
however, that the Company may waive any one or more of such
conditions:
(a) Buyer and Champion shall have complied
with and performed all the terms, covenants and conditions
of this Agreement required to be complied with and performed
by Buyer and Champion on or prior to the Closing Date, and
shall have made all of the deliveries required to have been
made hereunder by Buyer and Champion on or prior to the
Closing Date.
(b) All of the representations and
warranties made by Buyer and Champion contained in this
Agreement shall be true and correct on the Closing Date, as
if made on the Closing Date.
(c) All necessary governmental approvals and
consents of third parties to the transactions contemplated
by this Agreement shall have been obtained, and the waiting
period under the HSR Act shall have expired or been
terminated.
(d) Buyer and Champion shall have delivered
to Sellers the resolutions of its respective Board of
Directors authorizing the execution, delivery and
performance by Buyer and Champion of this Agreement and the
transactions contemplated hereby, certified by the
Secretaries of Buyer and Champion.
(e) Buyer and Champion shall have furnished
Sellers with a favorable opinion, dated the Closing Date, of
counsel for Buyer and Champion, addressed to Sellers, in
form and substance customary for transactions of the
character contemplated in this Agreement and otherwise
reasonably acceptable to the Company.
(f) Buyer and Champion shall have furnished
Sellers with a certificate, executed by the president of
Buyer and of Champion, certifying that each of the
conditions set forth in Section 8.2(a) and (b) has been
satisfied.
(g) All legal matters in connection with
this Agreement and the Closing hereunder shall be approved
by Thomas R. Bevill, Esq., counsel for the Sellers; and
there shall be furnished to such counsel for the Sellers
such corporate and other records and information as they may
reasonably have requested for such purposes.
(h) Buyer and Champion, as applicable, shall
have executed and delivered the Employment Agreements, the
Option Agreements and the Noncompetition Agreements to be
executed by them.
(i) The personal guarantees executed by
certain Shareholders of the obligations of the Company
identified on Exhibit 8.2(i) hereto shall have been released
or Buyer shall have agreed to indemnify the Shareholders
from liability thereunder.
(j) Buyer shall have delivered the Texas
Sales Tax Resale Certificate referred to in Section 3.13.5.
9. SURVIVAL; INDEMNIFICATION AND RELATED MATTERS
9.1 Survival Past Closing. Any
investigation or examination by Buyer or Champion of the
Business, properties or affairs, of the Company or the
Shareholders shall not affect the representations and
warranties of the Sellers herein contained, and the
respective representations and warranties of the parties
herein contained shall survive the Closing.
9.2 Indemnification by Sellers. Subject to
Section 9.4 hereof, Sellers shall indemnify, defend and hold
Buyer, Champion and their respective officers, directors,
parent, subsidiaries and affiliates (collectively "Buyer
Indemnified Parties") harmless from and against any and all
liabilities, losses, damages, claims, fines, penalties,
costs and expenses (including, without limitation,
reasonable attorneys and accounting fees) ("Damages")
incurred by any of the Buyer Indemnified Parties arising out
of or resulting from:
(a) All debts, liabilities and obligations
of any of the Sellers, whether accrued, absolute,
contingent, known or unknown, or otherwise, including,
without limitation, the Excluded Liabilities and excluding
only the Assumed Liabilities and the Unknown Company
Liabilities (but only up to an amount not exceeding the
Sellers Basket Amount as determined pursuant to Section
9.4).
(b) Any inaccuracy in any representation or
breach of any warranty of any of the Sellers contained in
this Agreement.
(c) Any failure by any of the Sellers to
perform or observe, or to have performed or observed, in
full any covenant, agreement or condition to be performed or
observed by any of them under this Agreement.
(d) Any fraud by any of the Sellers.
9.3 Indemnification by Buyer and Champion.
Subject to Section 9.4 hereof, Buyer and Champion, jointly
and severally, shall indemnify, defend and hold Sellers
harmless from and against any and all Damages incurred by
Sellers arising out of or resulting from:
(a) Any inaccuracy in any representation or
breach of any warranty of Buyer or Champion contained in
this Agreement.
(b) Any failure by Buyer or Champion to
perform or observe, or to have performed or observed, in
full any covenant, agreement or condition to be performed or
observed by it under this Agreement.
9.4 Certain Agreements with Respect to
Unknown Liabilities, Limitation on Indemnification and
Apportionment as Between Sellers and CHI Sellers.
(a) For the purposes of this Agreement
the following terms have the following meanings:
"Sellers Basket Amount" means a maximum
aggregate of $1,000,000 for (i) all Unknown
Liabilities to be assumed by Buyer or CHI Buyer
pursuant to Section 9.4(b) of this Agreement
and Section 9.4(b) of the CHI Purchase
Agreement and (ii) Damages as to which
Champion, Buyer, CHI Buyer or any other person
entitled to indemnification may claim against
Sellers pursuant to Section 9.2 of this
Agreement or against CHI Sellers pursuant to
Section 9.2 of the CHI Purchase Agreement. The
Sellers Basket Amount shall be apportioned
between the Sellers and the CHI Sellers
pursuant to Section 9.4(i) hereof.
"Sellers Cap Amount" means a maximum
aggregate of $10,000,000 for (i) all Excluded
Liabilities and CHI Excluded Liabilities
assumed and paid by the Shareholders and CHI
Shareholders pursuant to Section 9.4(b) of this
Agreement or Section 9.4(b) of the CHI Purchase
Agreement and (ii) Damages as to which Sellers
actually pay pursuant to Section 9.2 of this
Agreement or CHI Sellers actually pay pursuant
to Section 9.2 of the CHI Purchase Agreement
(but excluding from the calculation of the
Sellers Cap Amount Damages and other amounts
not subject to the Sellers Cap Amount pursuant
to the last sentence of Section 9.4(d) or
otherwise under this Agreement). The Sellers
Cap Amount shall be apportioned between the
Sellers and the CHI Sellers pursuant to Section
9.4(i) hereof.
"CHI Excluded Liabilities" has the same
meaning as "Excluded Liabilities" set forth in
Section 2.3.3 of the CHI Purchase Agreement.
"Unknown Company Liabilities" means
liabilities of the Company existing at the
Closing Date which have arisen in the ordinary
course of business of the Company up to the
Closing Date and which are not (i) otherwise
expressly assumed by Buyer under
Section 2.3.1,(ii) known to any of Sellers or
which should have been known to any of Sellers
with a reasonable investigation, (iii) owed to
any Shareholder, member of the immediate family
of a Shareholder, or any affiliate thereof, or
(iv) any Taxes (other than expressly assumed by
Buyer pursuant to Section 2.3.2(a) hereof).
"Unknown CHI Liabilities" means
liabilities of CHI existing at the Closing Date
which have arisen in the ordinary course of
business of CHI up to the Closing Date which
are not (i) otherwise expressly assumed by the
CHI Buyer under Section 2.3.2 of the CHI
Purchase Agreement (ii) known to any of the CHI
Sellers or which should have been known to any
of the CHI Sellers with a reasonable
investigation, (iii) owed to any CHI
Shareholder, member of the immediate family of
CHI Shareholder, or any affiliate thereof, or
(iv) any Taxes (other than expressly assumed by
CHI Buyer pursuant to Section 2.3.2(a) of the
CHI Purchase Agreement).
"Unknown Liabilities" means,
collectively, all liabilities constituting
Unknown Company Liabilities and Unknown CHI
Liabilities.
(b) The parties intend that Buyer under
this Agreement will assume, and Buyer hereby assumes,
and agrees to pay, Unknown Company Liabilities and that
CHI Buyer under the CHI Purchase Agreement will assume
and agree to pay Unknown CHI Liabilities in a maximum
aggregate amount of Unknown Liabilities so assumed not
exceeding the Sellers Basket Amount. The parties
further intend that Sellers under this Agreement will
assume, and hereby assume, and agree to pay, Excluded
Liabilities and that CHI Sellers under the CHI Purchase
Agreement will assume and agree to pay CHI Excluded
Liabilities, whether or not constituting Unknown
Liabilities, up to the Sellers Cap Amount. The parties
further intend that Buyer and Champion will indemnify
the Shareholders (but not the Company), but will not
assume, any Excluded Liabilities in excess of the
Sellers Cap Amount. For purposes of clarity, the
parties intend that neither Buyer nor Champion shall
assume or indemnify any of the Sellers in respect of
any of the Shareholder Liabilities and that each
Shareholder will indemnify Buyer and Champion in
respect of such Shareholder's Shareholder Liabilities
and such obligation shall not be subject to any of the
limitations set forth in this Section 9.4.
(c) Sellers shall not be obligated to
pay any amount pursuant to Section 9.2 until the Buyer
Indemnified Parties incur aggregate Damages in excess
of the Sellers Basket Amount. At such time as the
aggregate Damages incurred by the Buyer Indemnified
Parties shall exceed the Sellers Basket Amount, Buyer
Indemnified Parties shall be entitled to the amount of
Damages which exceed the Sellers Basket Amount, subject
to the provisions of Section 9.4(d) below. The Sellers
Basket Amount shall not be applicable to (i) the
obligation of the Sellers to indemnify (x) under
Section 9.2(b) for breach of any representation or
warranty under Sections 3.1, 3.2, 3.4, or Section 3.13
to the extent such breach relates to any of the Taxes
described in Section 11.2, or any representation or
warranty which any Seller knew or with a reasonable
investigation should have known was false or incomplete
or (y) in respect of any fraud.
(d) Sellers shall not be obligated to
pay any amount pursuant to Section 9.2 in excess of the
Sellers Cap Amount. The Sellers Cap Amount shall not
be applicable to any matter described in the last
sentence of Section 9.4(c).
(e) Reserved.
(f) For purposes of determining whether
the Sellers Basket Amount or the Sellers Cap Amount
have been exceeded and the amount thereof, all
nonduplicative Damages and/or liabilities shall be
aggregated. In addition, such amounts shall be net of
any insurance proceeds covering the matter in question
actually received by Champion or Buyer.
(g) Written notice of any claim by
Champion or Buyer for indemnification under Section 9.2
hereof must be received by the person required to make
such indemnity not later than the third anniversary of
the Closing Date, except such time limit shall not
apply in respect to (i) any claim related to the items
described in the last sentence of Section 9.4(c) above.
For purposes of clarity, the time limit of this Section
9.4(g) shall not apply in respect of a claim against a
Shareholder in respect of such Shareholder's
Shareholder Liabilities.
(h) The parties expressly intend and
agree that each and every liability, covenant,
obligation, representation and warranty of the Sellers
under this Agreement shall be joint and several with
the intention that Buyer and/or Champion may recover
the entire amount of damages, or enforce this Agreement
in its entirety against, and/or obtain other remedies
that may be available under applicable law in
connection therewith from any one or more of the
Sellers in their discretion without any requirement to
join or to otherwise proceed against any other Seller;
except that each Shareholder shall be responsible for
such Shareholder's Shareholder Liabilities and the
other Shareholders shall have no responsibility
therefor.
(i) As of any date of determination,
the Sellers Basket Amount and the Sellers Cap Amount
shall be apportioned between Sellers and the CHI
Sellers based upon the aggregate Damages, Unknown
Liabilities, Excluded Liabilities and/or CHI Excluded
Liabilities, as applicable, attributable to the Company
or CHI as of such date by applying a percentage, the
numerator of which shall be the aggregate amount of
Damages, Unknown Liabilities, Excluded Liabilities
and/or CHI Excluded Liabilities attributable to the
Company or CHI as of such date, as applicable, and the
denominator shall be the aggregate amount of Damages,
Unknown Liabilities, Excluded Liabilities and/or CHI
Excluded Liabilities as of such date. Exhibit 9.4
hereto sets forth illustrations as to the operation of
such apportionment.
10. TERMINATION OF AGREEMENT
10.1 Events of Termination. This Agreement
may be terminated, and the transactions contemplated hereby
may be abandoned, at any time prior to the Closing Date:
(i) by the mutual consent of the
Company and Buyer;
(ii) by Buyer and Champion, if any of
the Sellers breach in any material respect any of their
representations, warranties, covenants or agreements
contained in this Agreement;
(iii) by Sellers, if Buyer or Champion
breaches in any material respect any of its
representations, warranties, covenants or agreements
contained in this Agreement;
(iv) by either Buyer, Champion or
Sellers, if any of the conditions to Closing is not
fulfilled (or waived by the party for whose benefit the
conditions exist) on or prior to the Closing Date;
(v) by either Buyer, Champion or
Sellers, if the Closing has not occurred on or prior to
11:59 p.m., local time, on March 1, 1995, provided that
a party may not terminate this Agreement pursuant to
this provision if such party is in material breach of
any of its covenants or agreements contained in this
Agreement;
(vi) by Buyer and Champion pursuant to
Section 2.1.5(b).
10.2 Effect of Termination. In the event that
either party shall elect to terminate this Agreement
pursuant to any provision contained herein expressly giving
such party the right to terminate this Agreement, this
Agreement shall forthwith terminate and have no further
effect, and neither party shall have any further obligation
or liability (except with respect to those provisions hereof
which expressly survive any termination of this Agreement).
Notwithstanding the foregoing, the termination of this
Agreement pursuant to any provision hereof shall not relieve
any party of any liability for a breach of any
representation or warranty, or nonperformance of any
covenant or obligation hereunder, and any such termination
shall not be deemed to be a waiver of any available remedy
for any such breach or nonperformance.
10.3 Employees. Buyer and Champion, on the
one hand, and the Sellers, on the other hand, each hereby
warrants and agrees that if this Agreement is terminated,
each party will not, during the one-year period following
such termination, directly or indirectly, solicit to leave
the employment of the other party or its subsidiaries, any
employee of the other party or its subsidiaries as of the
date of such termination.
11. ACTIONS AFTER CLOSING
11.1 Books and Records. From the Closing
Date, Buyer shall maintain such books and records of the
Business as having been delivered to it by Sellers until the
time for the taking of any federal tax audit of the Company
for its fiscal year 1994 shall have expired and shall
provide Sellers and their representatives reasonable access
thereto in order to enable the Company to (a) prepare its
financial statements, (b) prepare its tax returns, and
(c) perform any other acts reasonably related to Sellers'
former interest in the Business.
11.2 Taxes. Sellers shall file duly and
timely all federal, state and other Tax returns required to
be filed by any of them with respect to the operation of the
Business prior to the Closing and shall pay and discharge,
and shall indemnify and hold Buyer harmless with respect to,
all federal, state and local income, franchise and similar
Tax liabilities for Taxes based on income (including
specifically, but not limited to, any such Taxes of the
Company as a result of an invalid or termination of election
to be treated as an S Corporation under the Code or the laws
of the S State or "built in gains" or similar taxes arising
as a result of the fact that the Company did not elect to be
treated as an S Corporation until the First S Year) arising
out of (a) the operation of the Business and (b) the
transactions provided for as contemplated by this Agreement.
The indemnity obligations of this Section shall not be
subject to the Sellers Basket or Sellers Cap or the time
limitation of Section 9.4(g). Any such indemnity obligation
relating to personal Tax liability of any Shareholder shall
be borne solely by such Shareholder.
11.3 Name of Company. Immediately after the
Closing, the Sellers shall change the name of the Company to
another name not confusingly similar to its present name,
and shall take all other action as may be required to permit
Buyer to adopt the name "Crest Ridge Homes, Inc." or any
similar name.
12. BROKER
Each of the Sellers, Buyer and Champion represent and
warrant to each other that he/she/it has not dealt with any
broker or finder in connection with this transaction. Each
of the Sellers, Buyer and Champion hereby each agree to
indemnify and hold the others harmless from and against all
liabilities (including but not limited to reasonable
attorneys' fees), incurred by the others by reason of any
claims or suits by any person or persons for brokerage
commission, finder's fees or other compensation on account
of the transactions contemplated herein. The indemnity
obligations of this Section shall not be subject to the
Sellers Basket or Cap or the time limitation of Section
9.4(g).
13. NOTICES
All notices, requests, demands and other communications
which are required or may be given under this Agreement
shall be in writing and shall be deemed to have been duly
given if personally delivered, forwarded by overnight
express (including but not limited to Federal Express,
Airborne or similar service) and receipted for by the
recipient or an agent of the recipient or mailed by
registered or certified United States mail, postage prepaid
and return receipt requested, or sent by facsimile
transmission, to the following addresses or facsimile
numbers (or to such other address or facsimile number of a
party as shall have been specified to the other parties to
this Agreement by notice):
In the case of Buyer or Champion:
Champion Enterprises Inc.
2701 University Drive
Suite 320
Auburn Hills, Michigan 48326-2566
Attention: President and Chief
Executive Officer
Facsimile number: (810) 340-9345
With a copy to:
John J. Collins, Esq.
Miller, Canfield, Paddock and Stone,
P.L.C.
1400 North Woodward Avenue
Suite 100
Bloomfield Hills, Michigan 48303-2014
Facsimile number: (810) 258-3036
In the case of Sellers:
John E. Drake
3700 Cactus Cove
P.O. Box 1516
Breckenridge, Texas 76424
With a copy to:
Thomas R. Bevill, Esq.
115 W. Walker Street
Breckenridge, Texas 76424
and
John Davis
124 Greenwood Drive
Dixie Hills Subdivision
Americus, Georgia 31709
14. MISCELLANEOUS
14.1 Expenses. Except as stated herein, the
parties hereto shall each pay their own expenses in
connection with this Agreement and the transactions
contemplated hereby and the Shareholders shall pay all such
expenses incurred by the Company. The expenses of
furnishing documents required under this Agreement shall be
borne by the party who is obligated to furnish the same.
14.2 Assignment and Succession. Champion and
Buyer shall have the right to assign this Agreement and
their rights and obligations hereunder, but no such
assignment shall relieve Champion or the Buyer of their
obligations hereunder. Except as provided in the preceding
sentence, this Agreement may not be assigned by any party
without the prior written consent of the others. This
Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs,
legatees, personal representatives and permitted successors
and assigns, and no other person whatsoever except that
Article IX shall inure to the benefit of each of the Buyer
Indemnified Parties. Without limiting the generality of the
foregoing, the parties expressly intend and agree that this
Agreement shall not inure to the benefit of any creditor or
employee (including any leased employee) of the Company or
any of the other Sellers. For the purposes of this
Agreement, the term "party" shall mean Buyer, Champion, the
Company or the Shareholders as the context indicates.
14.3 Entire Agreement. This Agreement
represents the entire understanding and agreement between
the parties hereto with respect to the subject matter
hereof, supersedes all prior negotiations between such
parties, and cannot be amended, supplemented or modified
orally, but only by an agreement in writing signed by the
party against whom enforcement of any such amendment,
supplement or modification is sought and making specific
reference to this Agreement, except (i) that this Agreement
in the case of Sellers may be amended as provided in Section
14.13 and (ii) that Sections 6.2 and 6.7 shall be amended as
provided therein.
14.4 Counterparts. This Agreement may be
executed in one or more counterparts, all of which taken
together shall constitute one and the same instrument.
14.5 Section and Paragraph Headings. The
section and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any
way the meaning and interpretation of this Agreement.
14.6 Governing Law and Choice of Forum. This
Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan, without regard to
its conflict of laws rules. Any and all actions concerning
any dispute arising under this Agreement shall be filed and
maintained only in the Circuit Court for the County of
Oakland, Michigan or the U.S. District Court for the Eastern
District of Michigan. BUYER AND EACH SELLER HEREBY SUBMIT
TO THE JURISDICTION OF SUCH COURTS AND EACH WAIVES THE RIGHT
TO TRIAL BY JURY AND ANY OBJECTION TO VENUE BASED ON FORUM
NON CONVENIENCE.
14.7 Severability. If any provisions of this
Agreement as applied to any part or to any circumstance
shall be adjudged by a court to be invalid or unenforceable,
the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other
circumstances or the validity or enforceability of this
Agreement.
14.8 Certain References. The term "herein",
"hereof" or "hereunder" or similar terms used in this
Agreement refer to this entire Agreement and not to the
particular provision in which the term is used. Unless
otherwise stated, all references herein to Articles,
Sections, subsections or other provisions are references to
Articles, Sections, subsections or other provisions of this
Agreement.
14.9 Interpretation. This Agreement shall be
construed reasonably to carry out its intent without
presumption against or in favor of either party.
14.10 Confidentiality. Prior to the Closing,
neither party to this Agreement shall directly or indirectly
make or cause to be made any public announcement or issue
any public notice in any form with respect to this Agreement
or the transactions contemplated hereby, without the consent
of the other party except if in the opinion of either
party's counsel it is required by law to make such
disclosure. If the Closing of the transactions contemplated
hereby does not occur for any reason, Buyer shall return to
the Sellers all reports, documents, work papers and other
materials obtained from the Sellers (and all copies of
summaries and extracts thereof) and will keep the same
confidential and not disclose their contents to anyone but
its attorneys, accountants and executive officers.
14.11 Champion Guarantee. Champion hereby
unconditionally guarantees to Sellers the prompt payment and
performance by Buyer of all of its obligations under this
Agreement.
14.12 Waiver of Bulk Transfer Compliance.
Buyer waives compliance with the provisions of the UCC and
comparable statutes of the State of Texas relating to bulk
transfers in connection with the sale of the Purchased
Assets hereunder, subject to the indemnities of Seller
contained in this Agreement. Nothing in this Section 14.12
shall estop or prevent Buyer or the Company from asserting
as a bar or defense to any action or proceeding brought
under those laws that they do not apply to the sale of the
Purchased Assets hereunder.
14.13 Action by Sellers. In each place in
this Agreement and the Exhibits hereto where consent or
agreement of the Sellers (including, without limitation, any
amendment or waiver to this Agreement) is required or
permitted, such consent or agreement (including, without
limitation, any amendment or waiver to this Agreement) shall
be deemed for all purposes to be effective if the Company
and the Shareholders owning a majority of the issued and
outstanding common stock of the Company as of the date the
consent or agreement is to be effective (or if to be
effective after the Closing Date, as of the Closing Date)
shall so consent and/or agree.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above
written.
COMPANY:
CREST RIDGE HOMES, INC.
By _____________________________
Its _______________________
SHAREHOLDERS:
________________________________
John E. Drake
________________________________
Sandra K. Drake
________________________________
David H. Silvertooth
________________________________
Rose Ann C. Silvertooth
________________________________
John G. Davis
________________________________
Maye Davis
________________________________
Catherine F. Davis
________________________________
Ina D. Toms
________________________________
Virginia A. Davis
________________________________
Terrell R. Bridges
________________________________
Frances B. Bridges
________________________________
John J. McKane
________________________________
Sara Jane McKane
________________________________
Donnie H. Russell
________________________________
J.D. Chandler
________________________________
Mary Jo Chandler
________________________________
Jouquine Baxley
________________________________
Imogene Baxley
________________________________
Byron Scott Baxley
________________________________
Carolyn Ann Baxley
________________________________
David Alan Baxley
________________________________
Nanci Renee Baxley
________________________________
Michael Don Baxley
________________________________
David M. Bridges
________________________________
Tami Bridges
________________________________
Sam B. Bridges
________________________________
Caroline Bridges
________________________________
Bruce A. Thompson
________________________________
Andrea Thompson
________________________________
William T. Garrett
________________________________
Donna Kay Garrett
________________________________
Garland Gandy
________________________________
Alan T. Robinson
________________________________
Deborah Ann Robinson
________________________________
Sarah L. Clegg
________________________________
Bernard W. Clegg, Jr.
BUYER:
CRHI ACQUISITION CORP.
By _____________________________
Its _______________________
CHAMPION:
CHAMPION ENTERPRISES INC.
By _____________________________
Its _______________________
FOR IMMEDIATE RELEASE:
Champion Enterprises Completes Acquisition of Chandeleur
Homes and Crest Ridge Homes; Comments on Expected Benefits,
Earnings Contribution in 1995
Auburn Hills, MI, February 3, 1995 -- Champion Enterprises,
Inc. (AMEX: CHB) announced today that it has completed the
purchase of all of the assets and assumption of certain
liabilities of Chandeleur Homes, Inc. and Crest Ridge Homes,
Inc. for approximately $47 million. The transaction was
financed with available cash and the company's recently
amended $60 million revolving credit facility.
Walter R. Young, Jr., chairman and chief executive
officer of Champion Enterprises, said, "These acquisitions
expand our geographic coverage in the important Southeast
and Texas markets."
Young noted, "While we have not yet reported our final
results for the fiscal year ended December 31, 1994, we
expect to report that our 1994 housing shipments rose more
than 65 percent to approximately 21,000 homes, due to the
Dutch Housing, Inc. acquisition and internal growth. With
Chandeleur and Crest Ridge shipping over 5,400 homes in
1994, our industry presence in 1995 will be even stronger."
"We welcome Chandeleur Homes and Crest Ridge management
and organizations to our family of companies in the
manufactured housing area. Under the direction of their
current management teams, Chandeleur and Crest Ridge will
continue to operate as separate Champion Enterprises
subsidiaries, as do our other housing operations, Champion
Home Builders Co., Moduline International, Inc. and Dutch
Housing, Inc.
"We will encourage Chandeleur and Crest Ridge to
continue the strategies that have made their growth so
impressive. With the timely completion of these
transactions and a continuing strong economy and a growing
industry, Chandeleur and Crest Ridge should contribute to
earnings in all four quarters this year, and should add at
least 25 cents per share to our earnings in fiscal 1995."
Chandeleur Homes was founded in 1988 by a team of
industry veterans seeking to provide the southeast with high
value, high quality homes. At present, the company has two
assembly facilities at its Boaz, Alabama complex. Crest
Ridge Homes was founded in 1992 by a number of Chandeleur
investors and currently has one assembly facility in
Breckenridge, Texas.
Both operations sell their homes, concentrated in the
single-wide segment of the market, to independent retailers
in their markets. Based on preliminary estimates, in 1994,
the combined companies should have generated revenues of
approximately $98 million and earnings before interest and
taxes of approximately $9.8 million, up from $54 million and
$4.8 million, respectively, in 1993.
Champion Enterprises, Inc., headquartered in Auburn
Hills, MI, is a holding company whose principal subsidiaries
are leading producers and national marketers of manufactured
homes and mid-size buses.
For more information about Champion Enterprises, Inc.,
free of charge via fax, dial 1-800-PRO-INFO and use company
code 033.
