UNITED STATES
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) January 27, 1995.
SHELTER COMPONENTS CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 1-9844 22-2825183
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
27217 C. R. 6, P. O. Box 4026, Elkhart, Indiana 46514
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (219) 262-4541
Not Applicable
(Former Name or Former Address, if Changed Since Last Report.)
Item 2. Acquisition or Disposition of Assets.
On January 27, 1995, Shelter Components Corporation (the "Registrant"),
through its newly formed wholly-owned subsidiary, Nubabsco, Inc. ("Nubabsco),
acquired the business operations and operating assets of BABSCO, Inc.
("BABSCO"), located in Elkhart, Indiana, and having additional operations in
Plymouth, Indiana; Warsaw, Indiana; and Mt. Joy, Pennsylvania. The total
purchase price, under terms of the Asset Purchase and Sale Agreement (the
"Agreement"), will approximate $18.4 million, consisting of cash and notes
totalling $7.3 million, 269,000 restricted shares of common stock with a market
value of $3 million, and $8.1 million assumed liabilities as of the closing
date. The acquisition was effective-dated January 1, 1995. Concurrent with the
acquisition of BABSCO, the Registrant also acquired certain real estate for $1.6
million from the sole shareholder of BABSCO for cash of $.5 million and the
assumption of a $1.1 million mortgage on the acquired real estate with Society
National Bank.
<PAGE>
The Registrant is funding the cash portion of the acquisition with funds
provided under a $15 million 10-year unsecured 9.24% term loan with Mass Mutual
Life Insurance Company.
BABSCO is a wholesale distributor of a full line of electrical products to
the recreational vehicle, manufactured housing and modular housing industries
and, to a lesser extent, to electrical contractors in the Northern Indiana and
Southern Michigan region. The Registrant currently intends to cause Nubabsco to
continue to use the acquired assets in the operation of BABSCO's present
business. The Registrant intends to change the name of Nubabsco to BABSCO, Inc.
Item 7. Financial Statements and Exhibits.
(a) - (b) Financial Statements of Business Acquired and Pro Forma Financial
Information. It is impracticable to provide the required financial statements
for BABSCO, Inc. and the pro forma financial information required by Article 11
of Regulation S-X with respect to the acquisition at the time of filing this
Report. The required financial statements and pro forma financial information
will be filed under cover of amended Form 8-K as soon as practicable, but not
later than 60 days after the due date of this Form 8-K (February 13, 1995).
<PAGE>
(c) Exhibits:
Number of Sequential
Exhibit in Numbering System
Regulation S-X Page Number
Item 601 Description of Exhibit of Exhibit
(1) Not Applicable
(2) 2.1 Asset Purchase and Sale Agreement
(Exhibits to the Asset Purchase
and Sale Agreement are not filed
herein. The Registrant agrees to
furnish supplementally a copy of
any omitted exhibit(s) to the
Commission upon request.) 5 - 38
(4) Not Applicable
(16) Not Applicable
(17) Not Applicable
(21) Not Applicable
(24) Not Applicable
(25) Not Applicable
(28) Not Applicable
<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.
SHELTER COMPONENTS CORPORATION
(Registrant)
Date: January 30, 1995 s/ Mark C. Neilson
Mark C. Neilson
Secretary-Treasurer
EXHIBIT 2.1
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN SHELTER COMPONENTS CORPORATION
AND NUBABSCO, INC. AND BABSCO, INC.,
STULTS PROPERTIES, INC. AND GERALD R. STULTS
January 12, 1995
<PAGE>
TABLE OF CONTENTS
Page
1.0 CLOSING DATE AND EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . 1
2.0 SALE AND PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Sale and Purchase of Personal Property . . . . . . . . . . . . . 1
2.2 Sale and Purchase of Real Estate . . . . . . . . . . . . . . . . 3
3.0 PURCHASER'S ASSUMPTION OF LIABILITIES AND
OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . 4
3.2. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Retained Liabilities. . . . . . . . . . . . . . . . . . . . . . 5
4.0 REAL ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Elkhart Industrial Parkway Parcel . . . . . . . . . . . . . . . . 5
4.2 2410 South Main Street Parcel . . . . . . . . . . . . . . . . . . 5
4.3 1314 South Main Street Parcel . . . . . . . . . . . . . . . . . . 6
4.4 Warsaw Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 Plymouth Parcel . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6 Mt. Joy Parcel . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.7 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.8 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.9 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.10 Taxes and Assessments . . . . . . . . . . . . . . . . . . . . . . 7
5.0 AGREEMENTS CONCERNING COMPETITION AND CONSULTING . . . . . . . . . . . 7
5.1 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Consideration for Non-Competition . . . . . . . . . . . . . . . . 8
5.3 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.0 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Purchase Price for Purchased Assets . . . . . . . . . . . . . . . 8
6.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . 8
6.3 Special Provisions Regarding Base Balance Sheet and Closing
Balance
Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Closing Adjustments . . . . . . . . . . . . . . . . . . . . . . . 10
6.5 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . 10
7.0 REPRESENTATIONS, COVENANTS AND WARRANTIES OF SELLER,
STULTS AND REAL ESTATE SELLER . . . . . . . . . . . . . . . . . . . . 10
7.1 Organization, Standing and Power: Ownership . . . . . . . . . . . 10
7.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Title to Property and Related Matters . . . . . . . . . . . . . . 12
7.7 Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 12
7.8 Labor Relations; Employees . . . . . . . . . . . . . . . . . . . 12
7.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 12
7.10 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 13
7.11 Real Estate Representations . . . . . . . . . . . . . . . . . . . 13
7.12 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . 14
7.13 No Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . 15
7.14 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
7.15 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . 15
7.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 16
7.18 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 16
7.20 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . 17
7.21 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . 17
7.22 Underground Storage Tanks . . . . . . . . . . . . . . . . . . . . 18
7.23 Good Working Order: Inventory . . . . . . . . . . . . . . . . . . 18
7.24 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.25 Securities Law Considerations . . . . . . . . . . . . . . . . . . 18
7.26 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.27 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.28 Leases Being Assigned . . . . . . . . . . . . . . . . . . . . . . 18
8.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
REAL ESTATE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . 19
8.1 Organization, Standing and Power . . . . . . . . . . . . . . . . 19
8.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Securities Law Considerations . . . . . . . . . . . . . . . . . . 19
9.0 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Indemnification of Purchaser and Real Estate Purchaser . . . . . 20
9.2 Indemnification of Seller, Stults and Real Estate Seller . . . . 20
9.3 Rules Regarding Indemnification . . . . . . . . . . . . . . . . . 21
10.0 CONDITIONS TO CLOSING: TERMINATION . . . . . . . . . . . . . . . . . . 21
10.1 Conditions to Seller's and Real Estate Seller's Obligations . . . 21
10.2 Conditions to Purchaser's and Real Estate Purchaser's
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.3 Termination if Conditions Not Satisfied . . . . . . . . . . . . . 22
11.0 CLOSING TRANSACTIONS: SELLER AND STULTS
AND REAL ESTATE SELLER . . . . . . . . . . . . . . . . . . . . . . . 22
11.1 Deeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.2 Bill of Sale. . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3 Lease and Assignments of Leases . . . . . . . . . . . . . . . . . 23
11.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.5 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . 23
11.6 Employment Agreement. . . . . . . . . . . . . . . . . . . . . . 23
11.7 Keys, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.8 Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.9 Articles of Amendment. . . . . . . . . . . . . . . . . . . . . 23
11.10 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . 24
11.11 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.0 CLOSING TRANSACTIONS: PURCHASER AND REAL ESTATE PURCHASER . . . . . . 24
12.1 Assumption Agreement. . . . . . . . . . . . . . . . . . . . . . 24
12.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . 24
12.3 Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.4 Lease and Assignments of Leases . . . . . . . . . . . . . . . . . 24
12.5 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13.0 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13.1 Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 24
13.2 Parties in Interest: Assignment . . . . . . . . . . . . . . . . . 25
13.3 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . 25
<PAGE>
13.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.6 Public Announcements: Confidentiality . . . . . . . . . . . . . . 26
13.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 26
13.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.9 Governing Law; Forum; No Jury . . . . . . . . . . . . . . . . . . 27
13.10 Hazard Insurance and Risk of Loss . . . . . . . . . . . . . 27
13.11 Termination of Representations . . . . . . . . . . . . . . . 27
EXHIBITS AND SCHEDULES
Exhibit 2.0 - Excluded Assets
Schedule 2.1.11- Leases of Vehicles and other Equipment
Exhibit 4.0 - Legal Descriptions
Exhibit 4.2 - Existing Lease of 2410 South Main Street
Parcel and form of Assignment
Exhibit 4.3 - Existing Lease of 1314 South Main Street
Parcel and form of Assignment
Exhibit 4.4 - Existing Lease of Warsaw Parcel
Exhibit 4.5 - Existing Lease of Plymouth Parcel and
Form of Assignment
Exhibit 4.6 - Existing Lease of Mt. Joy Parcel and
Form of Assignment
Exhibit 5.1 - Agreement Concerning Competition
Exhibit 5.3 - Employment Agreement
Exhibit 6.1 - Base Balance Sheet
Exhibit 6.2.2 - Form of [$5,500,000] Note
Exhibit 6.2.4 - Form of $1,000,000 Note
Schedule 6.5 - Allocation of Purchase Price
Exhibit 7.3 - Financials
Schedule 7.4 - Liabilities
Schedule 7.5 - Taxes
Schedule 7.7 - Litigation
Schedule 7.9 - Pension and other employee benefit plans
Schedule 7.11.1- Exceptions to Good Title to Real Estate
Schedule 7.15 - Proprietary Rights
Schedule 7.17 - Exceptions to Compliance with Laws
Schedule 7.18 - Contracts
Schedule 7.19 - Environmental Matters
Schedule 7.20 - Exceptions to Permits and Licenses
Schedule 7.21 - Changes
Schedule 7.22 - Underground Storage Tanks
Schedule 7.23 - Exceptions to Good Working Order and
Usability
Schedule 7.24 - Defaults Under Assumed Liabilities
Exhibit 11.2 - Bill of Sale
Exhibit 11.10 - Opinion of Seller's Counsel
Exhibit 12.1 - Assumption Agreement
Exhibit 12.6 - Opinion of Purchaser's Counsel
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
This ASSET PURCHASE AND SALE AGREEMENT is entered into as of January 12,
1995 ("Agreement"), between Babsco, Inc., an Indiana corporation with its
principal office located at 2200 Industrial Parkway, Elkhart, Indiana 46516
("Seller"), Stults Properties, Inc., an Indiana corporation with its principal
office located at 2200 Industrial Parkway, Elkhart, Indiana ("Real Estate
Seller"), Gerald R. Stults ("Stults") (the sole Shareholder of Seller and
majority shareholder of Real Estate Seller) and Shelter Components Corporation,
an Indiana corporation with principal offices at 27217 C.R. 6, Elkhart, Indiana
46514 ("Purchaser"), and Nubabsco, Inc., an Indiana corporation with principal
offices at 27217 C.R. 6, Elkhart, Indiana 46514 ("Real Estate Purchaser").
RECITALS
Purchaser desires to buy and assume, and Seller desires to sell and
transfer, substantially all the assets and certain liabilities relating to the
business operated by Seller (the "Business"), including Seller's rights to the
corporate name "Babsco, Inc.," and Purchaser, Seller and Stults desire to
provide for covenants not to compete by Seller and Stults and for an employment
arrangement between Stults and Purchaser, all upon the terms and conditions set
forth in this Agreement. Real Estate Purchaser desires to lease or buy, and
Real Estate Seller desires to lease, sell and transfer, certain real estate
relating to the Business, as provided in this Agreement. Stults is the sole
shareholder of Seller and a majority shareholder of Real Estate Seller and
expects to benefit from the transactions provided for in this Agreement.
AGREEMENT
Therefore, in consideration of the premises and of the mutual promises of
the parties, the parties agree as follows:
1.0 CLOSING DATE AND EFFECTIVE DATE.
The completion of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Barnes & Thornburg, 305 Society
National Bank Bldg., 301 S. Main Street, Elkhart, Indiana 46516 on or before
January 31, 1995, or such later date as may be reasonably required or agreed to
in writing by the parties (the "Closing Date"), but upon the Closing, the
transactions contemplated by this Agreement shall be effective as of January 1,
1995 (the "Effective Date"), except for matters for which a different closing
date or effective date is specified in this Agreement. Time is of the essence
in this Agreement and in connection with the transactions contemplated by it.
2.0 SALE AND PURCHASE.
2.1 Sale and Purchase of Personal Property. On the Closing Date, in
reliance upon the representations, warranties and agreements of the parties
contained in this Agreement, Seller shall sell, assign, transfer, convey
and deliver to Purchaser effective as of the Effective Date, and Purchaser
shall buy from Seller, free and clear of all Encumbrances (as defined in
Section 7.6), all of the following assets and properties of the Business
including but not limited to the following, (the "Purchased Assets"), but
not including the assets specifically described on Exhibit 2.0 (the
"Excluded Assets").
<PAGE>
2.1.1 All Seller's rights to rebates from Seller's suppliers.
2.1.2 All of the accounts receivable of the Business as of
the Closing Date, except for accounts receivable shown on Exhibit 2.0.
2.1.3 All manufacturing machinery, equipment and tools
located in the Facilities or used in connection with the operations of
the Seller.
2.1.4 All furniture, office equipment, and other items of
personal property in the Facilities or used in connection with the
operations of the Seller.
2.1.5 All inventories of Seller except for those inventories
identified as Excluded Assets.
2.1.6 All open bids and purchase orders and accepted
contracts relating to the Business of the Seller.
2.1.7 All leases of vehicles and other equipment of the
Seller identified on Schedule 2.1.7.
2.1.8 All vehicles and rolling stock of the Seller.
2.1.9 All permits, licenses, franchises, authorizations and
other intangible rights of the Seller, and all product certifications
and agency approvals and applications relating to the products of the
Seller.
2.1.10 All proprietary techniques, know-how, processes,
copyrights, trade secrets, trademarks, service marks, tradenames, and
brand names to the business of the Seller including, without
limitation, Seller's interest in the name "Babsco, Inc." and telephone
numbers (219) 294-5478 and (219) 293-0631.
2.1.11 All signage and all supplies of advertising materials,
marketing materials and samples, literature and product manuals
relating to products of the Seller, and office supplies.
2.1.12 Lists of and records pertaining to all past, present
and prospective customers and suppliers of the Seller and all business
records relating to the Business of the Seller. Purchaser will
provide Seller with reasonable access to such business records as
necessary for the preparation of Seller's or Stults's tax returns and
other valid business reasons, for periods prior to the Closing, and
for reasonable purposes in connection with issues with persons other
than Purchaser for periods after the Closing (such as in connection
with collecting accounts receivable purchased by Seller under Section
7.12), and Seller and Stults shall keep all such records strictly
confidential except as required by law.
2.1.13 All claims, causes of action and other rights against
others of a commercial nature.
2.1.14 All assignable warranties in favor of Seller.
<PAGE>
2.1.15 All good will related to the Business of the Seller.
2.1.16 All contract rights of Seller, including but not
limited to Seller's rights under any noncompetition agreements, but
not including those incurred outside the ordinary course of business
as determined by Purchaser.
2.1.17 All corporate, business, tax and financial records of
Seller, except Seller's corporate minutes book, seal and corporate
stock register. Purchaser will provide Seller with reasonable access
to such records as necessary for the preparation of Seller's or
Stults's tax returns and other valid business reasons, for periods
prior to the Closing, and for reasonable purposes in connection with
issues with persons other than Purchaser for periods after the Closing
(such as in connection with collecting accounts receivable purchased
by Seller under Section 7.12), and Seller and Stults shall keep all
such records strictly confidential except as required by law.
2.1.18 All prepaid items and rights of Seller.
2.1.19 All other assets shown on the Base Balance Sheet
(defined in Section 6.3) which were not disposed of by Seller in the
ordinary course of business between the date of the Base Balance Sheet
and the Closing Date.
2.2 Sale and Purchase of Real Estate. In reliance upon the
representations, warranties and agreements of the parties contained in this
Agreement, Real Estate Seller or Stults, as the case may be, shall sell,
assign, transfer, convey and deliver to Real Estate Purchaser, and Real
Estate Purchaser shall buy from Real Estate Seller or Stults, as the case
may be, as provided below and in Section 4 of this Agreement, free and
clear of all Encumbrances (as defined in Section 7.6) all of the following
real estate and rights (the "Real Estate") as more particularly described
and in accordance with Section 4 of this Agreement:
2.2.1 Real Estate Seller shall sell, transfer and convey to
Real Estate Purchaser at the times provided in Section 4, the tract of
land located at 2200 Industrial Parkway and Stults shall sell,
transfer and convey to Real Estate Purchaser the tract of land
located at 2410 South Main Street, Elkhart, Indiana, generally
described on Exhibit 4.0 and more particularly described on the
surveys to be delivered to Buyer pursuant to paragraph 4.3 of this
Agreement, together with all rights and interests appurtenant,
including, but not limited to, all of Real Estate Seller's right,
title and interest in and to (i) all easements, tenements,
hereditaments, privileges, and appurtenances in any way belonging or
appertaining to the Land, (ii) any land lying in the bed of any
highway, street, road or avenue, open or proposed, in front of or
abutting or adjoining the Land, (iii) any strips or gores of real
estate adjacent to the Land, and (iv) the use of all strips and rights
of way, if any, abutting, adjacent, contiguous to or adjoining the
Land (all of the foregoing rights and appurtenances collectively
referred to as the "Land").
2.2.2 Real Estate Seller shall sell, transfer and convey to
Real Estate Purchaser along with the Land all "Improvements," which
means and includes the facility of the Real Estate Seller located on
<PAGE>
the Land in Elkhart, Elkhart County, Indiana, including, but not
limited to, all buildings, structures and other improvements presently
located upon the Land, all rights, titles and interests appurtenant to
the buildings, structures and other improvements ("Facilities")
located upon the Land; all fixtures of any kind attached to the Land
or the buildings, structures and other improvements located upon the
Land as of the date of this Agreement (or acquired by Real Estate
Seller prior to Closing), including but not limited to, all heating,
lighting, refrigeration, plumbing, drainage, electrical, air
conditioning and other mechanical fixtures and equipment and systems;
all elevators, pumps, generators, sprinklers, wiring, pipe, doors,
windows, compressors, cranes, dock levelers, motorized doors and
related motors and electrical equipment and systems; all hot water
heaters, furnaces, heating controls, motors and boiler pressure
systems and equipment, all cabinets, shelving and partitions, all
ventilating, incinerating and disposal equipment; and all other
property (real, personal or mixed) owned by Real Estate Seller and
relating to the ownership, use, maintenance or operation of the Land
or Improvements.
3.0 PURCHASER'S ASSUMPTION OF LIABILITIES AND OBLIGATIONS.
On the Closing Date, effective as of the Effective Date, Purchaser shall
assume and agree to pay, perform or otherwise discharge, certain obligations and
liabilities of Seller described in Section 3.1 (the "Assumed Liabilities") and
Seller shall retain the obligations and liabilities described in Section 3.3.
3.1 Assumed Liabilities. Except as provided in Section 3.3,
Purchaser shall assume the obligations of Seller on the Closing Balance
Sheet (as defined in Section 6.3), but which shall include up to a maximum
of $3,000,000 for working capital debt and a maximum of $600,000 in long
term debt, and all obligations of the Business (except for those relating
to Excluded Assets) incurred after the date of the Closing Balance Sheet in
the ordinary course of business consistent with good business practices and
approved by Purchaser. Provided that neither Seller nor Stults have
breached any representation, warranty or agreement contained in this
Agreement relating to the Assumed Liabilities, after the Closing Purchaser
will (i) hold Seller harmless from the Assumed Liabilities, and (ii) use
its best efforts to cause the release of Stults from his existing guaranty
to Society National Bank, Indiana ("Bank") concerning up to $1,000,000 in
liabilities of Seller to the Bank, and will hold Stults harmless from any
claim by the Bank under that Guaranty.
3.2. Employees. Purchaser shall have no obligation to offer
employment to any employees of Seller.
3.3 Retained Liabilities. Seller shall retain (i) legal and
accounting expenses and other costs of Seller relating to this Agreement
and the transactions provided for in it, including costs of environmental
investigation and remediation, title insurance and survey relating to the
2410 South Main Street Parcel (defined in Section 4.0); (ii) all
obligations of Seller under this Agreement; (iii) all obligations relating
to Seller's Galleries operations or to Excluded Assets; and (iv) all
obligations and liabilities, not specifically assumed by Purchaser under
Section 3.1 of this Agreement.
<PAGE>
4.0 REAL ESTATE.
Real Estate Seller or Stults owns four parcels of real estate, as follows:
(i) Real Estate Seller owns the parcel located at 2200 Industrial Parkway,
Elkhart, Elkhart County, Indiana, described on Exhibit 4.0 ("Elkhart Industrial
Parkway Parcel"); (ii) Stults owns the parcel located at 1314 South Main Street,
Elkhart, Elkhart County, Indiana, described on Exhibit 4.0 (the "1314 South Main
Street Parcel"); (iii) Stults owns the parcel located at 2410 South Main Street,
Elkhart, Elkhart County, Indiana, described on Exhibit 4.0 (the "2410 South Main
Street Parcel"); (iv) Stults owns a parcel located at 2120 N. Shelby Drive,
Warsaw, Kosciusko County, Indiana, described on Exhibit 4.0 (the "Warsaw
Parcel"), (v) Langfeldt & Payne, Inc. owns a parcel located at 14198 Lincoln
Highway, Plymouth, Indiana, described on Exhibit 4.0 (the "Plymouth Parcel") and
(vi) Rapho Associates owns a parcel located at Building 5, Lot 12, Rapho
Industrial Park, Rapho Township, Lancaster County, Pennsylvania, described on
Exhibit 4.0 (the "Mt. Joy Parcel"). The following provisions relate to those
parcels of real estate.
4.1 Elkhart Industrial Parkway Parcel. The Elkhart Industrial
Parkway Parcel shall be sold and transferred to Real Estate Purchaser at
the Closing. The purchase price for the Elkhart Industrial Parkway Parcel
shall be $1,562,273 payable at closing.
4.2 2410 South Main Street Parcel. The 2410 South Main Street Parcel
shall be sold and transferred to Real Estate Purchaser on a date on or
before January 15, 1996 (the "Transfer Date") selected by Stults on at
least forty (40) days' prior written notice to Real Estate Purchaser. The
purchase price for the 2410 South Main Street Parcel shall be the fair
market value as determined by Purchaser and Stults or, if they cannot agree
within 30 days before the Transfer Date, then each of Stults and Real
Estate Purchaser shall employ a qualified commercial real estate appraiser
at their respective expense to appraise the 2410 South Main Street Parcel.
If the two appraisers agree on the value, that appraised value shall be the
purchase price for the 2410 South Main Street Parcel. If the appraised
values of the two appraisers are within 10% of each other, the average of
the two appraisals shall be the purchase price. If the appraised values
shown on the two appraisals are not within 10% of each other, the two
appraisers shall designate a third appraiser, who shall appraise the 2410
South Main Street Parcel (and whose fees and expenses shall be borne 1/2
by Stults and 1/2 by the Real Estate Purchaser) and whose appraised value
shall be the purchase price for the 2410 South Main Street Parcel. The
Transfer Date shall be deferred as necessary to permit the appraisals
provided for in this Section. Until the closing of the sale and transfer
to Real Estate Purchaser of the 2410 South Main Street Parcel, Real Estate
Purchaser shall lease the 2410 South Main Street Parcel from Stults under
an assignment of the lease. The lease and form of assignment are attached
as Exhibit 4.2 to this Agreement. The assignment shall be executed and
delivered at the Closing.
4.3 1314 South Main Street Parcel. The 1314 South Main Street Parcel
shall be leased to Real Estate Purchaser by Stults beginning on the Closing
Date and continuing until terminated by either Stults or Real Estate
Purchaser on 30 days' written notice. At the Closing of the transactions
provided for in this Agreement, Stults and Seller shall execute and deliver
an assignment of the lease of that 1314 South Main Street Parcel. The
Seller's lease and the form of assignment are in the form attached as
Exhibit 4.3 to this Agreement.
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4.4 Warsaw Parcel. At the Closing, Real Estate Purchaser will lease
the Warsaw Parcel on the same terms and conditions as Seller's present
lease of the Warsaw Parcel, a copy of which is attached as Exhibit 4.4.
4.5 Plymouth Parcel. At the Closing, Seller and Real Estate
Purchaser shall execute and deliver an assignment of the lease of that
Plymouth Parcel. The lease and form of assignment are in the form attached
as Exhibit 4.5 to this Agreement.
4.6 Mt. Joy Parcel. At the Closing, Seller and Real Estate Purchaser
shall execute and deliver an assignment of the lease of that Mt. Joy
Parcel. The lease and form of assignment are in the form attached as
Exhibit 4.6 to this Agreement.
4.7 Environmental. Stults shall cause at Stults's cost a favorable
Phase I environmental investigation of and report on the 2410 South Main
Street Parcel as of a recent date to be performed by a firm approved by
Real Estate Purchaser, and shall provide the report of that firm to Real
Estate Purchaser. Real Estate Purchaser may at its cost arrange an
environmental investigation of the 2410 South Main Street Parcel. Stults
and Real Estate Purchaser agree to maintain the results of the
environmental audits and the reports of the environmental audit firms in
strict confidence if this Agreement is terminated or the transactions
provided for in it do not close. Stults will comply with all legal
requirements applicable to the transfer of the Elkhart Industrial Parkway
Parcel and the 2410 South Main Street Parcel including compliance with the
provisions of the Indiana Responsible Property Transfer Law, IND. CODE
SECTION 13-7-22.5-1.5 to 22 ("IRPTL"), including providing the disclosure
document if required under IRPTL. Real Estate Purchaser agrees that if a
disclosure statement is required under the IRPTL, Stults may deliver it to
Real Estate Purchaser at any time at least three business days before the
Closing Date.
4.8 Title Insurance. Stults shall at least 15 days before the
transfer of the 2410 South Main Street Parcel, provide Real Estate
Purchaser with a commitment on ALTA Form B for owner's policy of title
insurance insuring merchantable title to the 2410 South Main Street Parcel
in the amount of its purchase price free and clear of liens or encumbrances
except liens for taxes not yet payable, liens which shall be released as of
the transfer of the respective parcels, and standard title exceptions or
liens or encumbrances accepted by Real Estate Purchaser. Stults shall pay
the premium for such title insurance relating to the 2410 South Main Street
Parcel. Real Estate Purchaser may obtain title insurance at its expense
relating to the Elkhart Industrial Parkway Parcel.
4.9 Survey. At least 15 days before the transfer of the 2410 South
Main Street Parcel, Stults shall deliver to Real Estate Purchaser a survey
of the 2410 South Main Street Parcel prepared by a registered and licensed
surveyor showing the location of all easements, utilities, streets,
buildings, and improvements and parking lots, accompanied by a Minimum
Standard Detail Certificate and depicting no encroachments, overlaps or
other problems. The surveyor shall certify the survey to Real Estate
Purchaser, Real Estate Purchaser's lender (if any) and the title insurance
company and shall certify that the Land is not located within a flood plain
according to the federal flood plan maps. Stults shall bear the cost of
the survey and certifications relating to the 2410 South Main Street
Parcel. Real Estate Purchaser may obtain surveys and certifications at its
expense relating to the Elkhart Industrial Parkway Parcel.
<PAGE>
4.10 Taxes and Assessments. Real property taxes and assessments, if
any, with respect to the Purchased Assets shall be prorated as of the
Closing Date, or, as to the 2410 South Main Street Parcel, shall be
prorated as of January 15, 1996 or the actual date of transfer of that
parcel to Purchaser, except to the extent provided in the Closing Balance
Sheet.
5.0 AGREEMENTS CONCERNING COMPETITION AND CONSULTING.
In connection with the purchase and sale of the Business, Purchaser, Seller
and Stults agree as follows:
5.1 Competition. Seller and Stults shall execute and deliver to the
Purchaser at Closing an agreement in the form of Exhibit 5.1, providing
that for a period of three (3) years beginning on the termination of the
employment agreement referred to in Section 5.3, Seller and Stults each
agrees not to compete in any manner, directly or indirectly, as owner,
shareholder, director, officer, employee, partner, proprietor, consultant,
lender or other capacity with the Business as operated as of the Closing
Date in the geographic area described on Annex 1 to Exhibit 5.1 (the
"Restricted Area") and that Stults' affiliate CopperCon, LLC will conduct
business with Purchaser on as favorable business terms as are available to
Purchaser from other sources for like product. This provision will not be
violated by (i) the ownership by Seller or Stults of less than a one
percent (1%) interest in a publicly held company which engages in business
competing with the Business in the Restricted Area; (ii) the ownership or
operation by Seller or Stults of Seller's Galleries division; (iii) the
real estate leasing business of Real Estate Seller; or (iv) Stults' 16%
ownership interest in CopperCon, LLC.
5.2 Consideration for Non-Competition. The consideration for
Seller's and Stults's promises not to compete as provided in Section 5.1,
includes Purchaser's agreement to enter into this Agreement, and
Purchaser's agreement to obtain Stults' release from certain guaranties or
alternatively to hold Stults harmless from claims under those guaranties.
5.3 Employment. Purchaser (or at Purchaser's option, Real Estate
Purchaser) and Stults shall execute at the Closing an employment agreement
in the form of Exhibit 5.3 providing for the employment of Stults by
Purchaser (or at Purchaser's option, Real Estate Purchaser) on the terms
and conditions contained in that employment agreement.
6.0 PURCHASE PRICE.
Purchaser shall deliver to Seller as the purchase price for the Purchased
Assets the following consideration (the "Purchase Price"), payable as follows:
6.1 Purchase Price for Purchased Assets. The Purchase Price for the
Purchased Assets shall be Eleven Million and 00/100 Dollars ($11,000,000)
plus the assumption of the obligations referred to in Section 3.1 with such
adjustments as provided in this Agreement.
6.2 Payment of Purchase Price. The Purchase Price shall be payable
as follows:
<PAGE>
6.2.1 Purchaser shall pay Seller the sum of One Million Five
Hundred Thousand and 00/100 Dollars ($1,500,000) at the Closing.
6.2.2 Purchaser shall pay Seller the sum of Five Million Five
Hundred Thousand and 00/100 Dollars ($5,500,000) (subject to
adjustment as provided in Section 6.4) on January 5, 1996. To
evidence that obligation, Purchaser shall execute and deliver Seller a
promissory note in the form of Exhibit 6.2.2 in the principal amount
of $5,500,000 (subject to adjustment as provided in Section 6.4),
providing for interest at the rate of 1% under the interest rate
payable by Purchaser on its principal line of credit (LIBOR plus .15),
such interest to accrue from the Effective Date and to be payable on
the last day of each quarterly period after the Closing Date until
January 5, 1996.
6.2.3 On the Closing Date, Purchaser shall issue to Seller
that number of shares of common capital stock of Purchaser which has a
value of $3,000,000, based on the daily closing price for Shelter
Components Corporation common stock registered on the American Stock
Exchange for each trading day during the month of December, 1994,
divided by the number of trading days in the month of December, 1994,
provided, however, that the per share price of the shares to be issued
to Seller under this subsection shall not be less than $9 nor more
than $14.
6.2.4 Purchaser shall pay Seller the sum of One Million and
00/100 Dollars ($1,000,000) in twenty consecutive quarterly
installments of Fifty Thousand and 00/100 Dollars ($50,000) payable on
the first day of each calendar quarter beginning April 1, 1995. At
the Closing, Purchaser shall execute and deliver to Seller a
promissory note in the form attached as Exhibit 6.2.3 evidencing the
payments provided for in this Section, and providing for no interest,
but to the extent Seller is required to report imputed interest on
those payments for federal and Indiana tax purposes, Purchaser will
pay Seller an additional amount with each quarterly payment equal to
the difference between the tax on such payments Seller would have
incurred had the payments been treated as capital gains, and the tax
on such payments Seller incurred due to treating part of the payments
as imputed interest. For purposes of this provision, "Seller"
includes Seller's shareholders during any period in which Seller has
effectively elected to be treated as an "S Corporation" for tax
purposes.
6.3 Special Provisions Regarding Base Balance Sheet and Closing
Balance Sheet. The Base Balance Sheet shall be the balance sheet of Seller
as of November 30, 1994, prepared in accordance with this Agreement and
shall be attached as Exhibit 6.1 to this Agreement (the "Base Balance
Sheet"). The Closing Balance Sheet shall be the balance sheet of Seller as
of December 31, 1994, prepared in accordance with this Agreement (the
"Closing Balance Sheet"). The Closing Balance Sheet will be audited by
Seller's certified public accounting firm. The Base Balance Sheet and the
Closing Balance Sheet shall be prepared by Seller, confirming to
Purchaser's and Seller's mutual satisfaction that the Purchased Assets and
Assumed Liabilities are as presented and that the financial information
submitted has been prepared in accordance with generally accepted
accounting principles consistently applied, except as adjusted by
agreement. The following transactions shall not be reflected on the
<PAGE>
Closing Balance Sheet as an asset or a liability: (i) the Excluded Assets
and obligations and liabilities relating to the Excluded Assets and matters
relating to Seller's Galleries division or its operations; (ii) Seller's
expenses, including attorneys' and accountant's fees, relating to this
Agreement and the transactions provided for in it, and (iii) all
liabilities not being assumed by Purchaser under this Agreement. The
parties recognize that the assets and liabilities set forth on the Base
Balance Sheet will change due to operations in the ordinary course of
business between November 30, 1994, and the Closing Date.
6.4 Closing Adjustments. The following adjustment shall be made as
of the Closing Date: the Purchase Price shall be reduced at the Closing if
and to the extent Seller's net worth is less than $2,900,000 as shown on
the Closing Balance Sheet of Seller. Any such adjustment shall first be
made to the payment obligations and the promissory note provided for in
Section 6.2.2.
6.5 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets as provided in Schedule 6.5.
7.0 REPRESENTATIONS, COVENANTS AND WARRANTIES OF SELLER, STULTS AND REAL
ESTATE SELLER.
Seller and Stults jointly and severally represent, covenant and warrant to
Purchaser and Real Estate Purchaser as follows, and Real Estate Seller jointly
and severally joins in making all the following representations and warranties
to the extent they relate to Real Estate Seller or to the Land or Improvements
owned by Real Estate Seller:
7.1 Organization, Standing and Power: Ownership. Seller is a
corporation duly organized and validly existing under the laws of Indiana
and is duly qualified to transact business in all jurisdictions where such
qualification is required except where lack of such qualification will not
have a material adverse effect on Seller or its business or operations.
Seller has all requisite corporate power and authority to execute, deliver
and perform this Agreement. Seller has all requisite corporate power and
authority to own, lease and operate its properties and to carry on the
Business as now being conducted. Stults owns 100% of the issued and
outstanding shares of capital stock of Seller.
Real Estate Seller is a corporation duly organized and validly
existing under the laws of Indiana and is duly qualified to transact
business in all jurisdictions where such qualification is required except
where lack of such qualification will not have a material adverse effect on
Real Estate Seller or its business or operations. Real Estate Seller has
all requisite corporate power and authority to execute, deliver and perform
this Agreement. Real Estate Seller has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. Stults owns a majority of the issued and
outstanding shares of capital stock of Real Estate Seller.
7.2 Authorization. This Agreement constitutes the valid and binding
obligation of Seller and Real Estate Seller enforceable in accordance with
its terms except as enforceability may be affected by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors' generally or the application of general
<PAGE>
principles of equity. As of the Closing Date, the execution, delivery and
performance of this Agreement will have been duly and validly authorized by
action of Seller's and Real Estate Seller's Board of Directors and by
action of Seller's and Real Estate Seller's shareholders. Neither the
execution and delivery of this Agreement nor any writing relating to it,
nor the consummation by Seller and Real Estate Seller of the transactions
contemplated in it, nor the compliance with any of its provisions will:
(i) conflict with or result in a breach of the Articles of Incorporation or
By-Laws of Seller and Real Estate Seller; (ii) violate any statute, law,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority; or (iii) violate or conflict with or constitute a
default under (or give rise to any right of termination, cancellation or
acceleration under) any agreement or writing of any nature or restriction
of any kind to which Seller and Real Estate Seller is a party, or which
would adversely affect any of the assets or properties to be sold or the
contracts to be assumed, except for agreements concerning which consents
will be obtained by Seller and Real Estate Seller as of the Closing Date.
No consent or approval of or notification to any governmental authority is
required in connection with the execution and delivery by Seller and Real
Estate Seller of this Agreement or the consummation of the transactions
contemplated under this Agreement.
7.3 Financial Statements. Seller has delivered to Purchaser the
audited balance sheets and related statements of operations of Seller as at
and for the periods ending on December 31, 1993, and December 31, 1992
copies of which are attached as Exhibit 7.3 and the Base Balance Sheet, and
Seller will deliver to Purchaser the Closing Balance Sheet at least 5
business days before the Closing Date (the "Financials"). The Financials
are and will be as customarily prepared by Seller and are and will be true
and correct and present fairly the financial position of the Seller and the
results of its operations as of the dates and for the periods covered by
them in conformity with generally accepted accounting principles,
consistently applied, except that the Closing Balance Sheet shall not
include matters relating to Seller's Galleries division or its operations
or the Excluded Assets. Purchaser shall make no claims under this Section
7.3 unless and until the amount of such claims in the aggregate exceed Ten
Thousand Dollars ($10,000). Purchaser shall make no claims under this
Section 7.3 more than one (1) year after the Closing Date.
7.4 Liabilities. Except as listed on Schedule 7.4, all the
liabilities of the Seller are shown on the Financials and consist solely of
obligations and liabilities incurred in the ordinary course of business of
the Seller. Purchaser will have no liability for any obligations or
liabilities of Seller other than the Assumed Liabilities.
7.5 Tax Matters. To Seller's knowledge after due inquiry (including
inquiry of Seller's accounting firm), except as described on Schedule 7.5,
all federal, state, local and foreign tax returns and tax reports, if any,
required to be filed with respect to the Seller through the date of this
Agreement have been filed, or will be filed when they are due, with the
appropriate governmental agencies in all jurisdictions in which such
returns and reports are required to be filed; all of such returns and
reports are or will be true, correct and complete, and all amounts shown as
owing have been paid or, in the case of tax returns and tax reports not yet
due, will be paid or disputed in good faith by Seller, except for such
matters disclosed on Schedule 7.5 concerning which Seller intends in good
faith to dispute. Except as described on Schedule 7.5, all federal, state,
<PAGE>
local and foreign income, profits, franchise, sales, use, occupation,
property, excise and other taxes (including interest and penalties), if
any, which if not paid would result in a lien or charge against the
Purchased Assets have been accrued and will be set forth on the Closing
Balance Sheet. Seller's taxes have been audited through 1985, and all
liabilities resulting from audits have been satisfied except as disclosed
on Schedule 7.5.
7.6 Title to Property and Related Matters. Seller has good and
marketable title to all the Purchased Assets to be transferred to Purchaser
under this Agreement, and will at the Closing transfer such properties and
assets to Purchaser free and clear of all the following (collectively
referred to as "Encumbrances"): security interests, liens, pledges,
claims, charges, escrows, encumbrances, options, rights of first refusal,
mortgages, indentures, security agreements or other agreements,
arrangements, contracts, commitments, understandings or obligations,
whether written or oral, other than this Agreement, except liens for
current taxes not yet due and payable or which are identified on Schedule
7.5 as being contested in good faith by appropriate proceedings or
Encumbrances shown on the Financials or in this Agreement or in any
Schedule or Exhibit to this Agreement, and accepted by Purchaser.
7.7 Litigation, Etc. Except as set forth on Schedule 7.7 there are
no actions, suits, claims, investigations or legal or administrative or
arbitration proceedings pending or, to the knowledge of Seller or Stults,
threatened against or involving Seller or Stults relating to the Business
or the Seller's assets or products, whether at law or in equity, or before
or by any foreign or United States federal, state, municipal or other
governmental instrumentality.
7.8 Labor Relations; Employees. Seller has paid or will provide for
payment in full through the Effective Date, all wages, salaries, bonuses,
severances, and other payments and sales commissions and allowances earned
by all employees, agents or consultants of the Seller, and such amounts
will be set forth on the Closing Balance Sheet. Seller is in compliance
with all applicable laws and regulations concerning employment practices,
terms and conditions of employment, wages and hours. There is no unfair
labor practice or similar complaint against Seller pending before the
National Labor Relations Board or similar authority or strike, dispute,
slowdown or stoppage pending or threatened against or involving the Seller.
No representation question exists respecting the employees of the Seller
and no collective bargaining agreement is currently being negotiated
concerning the employees of the Seller. No notice is required under nor
shall there be any liability to Purchaser or Seller under the provisions of
the Worker Adjustment and Retraining Notification Act,
29 Section 2101 et seq.
7.9 Employee Benefit Plans. Schedule 7.9 contains a list of each
pension or other employee benefit plan (as that term is defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
program or arrangement maintained by Seller for employees or not maintained
by Seller but to which Seller is required to contribute pertaining to
employees of the Seller ("Employee Benefit Plans"). Complete and correct
copies of all the Employee Benefit Plans have been delivered to Purchaser.
Purchaser shall have no liability or obligation under or relating to any of
the Employee Benefit Plans, and no lien or claim against the Purchased
Assets or any of them shall exist or be asserted under or relating to any
of the Employee Benefit Plans.
<PAGE>
7.10 Conduct of Business. From the date of this Agreement through the
Closing Date, Seller shall conduct the Business in the ordinary course of
business of the Business, consistent with good business practices. The
operation of the Business has not involved payments in money or in kind to
any person or entity in exchange, directly or indirectly, for favorable
treatment.
7.11 Real Estate Representations.
7.11.1 Title to the Land and Improvements. Real Estate Seller
or Stults as the case may be has good and marketable fee simple title
to the Land and Improvements, free and clear of all charges, claims,
equities, liens, mortgages, restrictions, security interests, options,
preferential purchase rights, rights of first refusal, prior
assignments or conveyances, conditions, assessments, restrictions,
rights of way, easements, encroachments, concession rights, leases,
and other encumbrances of any kind or nature whatsoever, except as
disclosed on Schedule 7.11.1 and for inchoate liens for taxes not yet
payable.
7.11.2 Asbestos. To the best of Seller's and Stults' and Real
Estate Seller's knowledge, the Land, Improvements and Facilities do
not contain any friable asbestos or other materials that may, if
released into the ambient air, constitute a health hazard for
individuals.
7.11.3 Condemnation. There is no pending condemnation
proceeding with regard to all or part of the Land or Improvements or
Facilities and, to the best of Seller's and Stults' and Real Estate
Seller's knowledge, no such proceeding is contemplated by any
governmental authority.
7.11.4 Utilities. To the best knowledge of Seller and Stults
and Real Estate Seller, all public utilities, including without
limitation, water, sanitary and storm sewer, electricity, gas, and
telephone, presently used in the operation of the Land and
Improvements and Facilities enter through adjoining public streets or,
if they pass through adjoining private land, do so in accordance with
valid easements permitting said use and satisfactory to the applicable
utility; and all public utilities are installed, operating, and
available in sufficient capacities to serve adequately the Land and
Improvements and Facilities for the purposes for which Seller, Stults
and Real Estate Seller are using the Land and Improvements and
Facilities as of the Closing and all installation and connection
charges necessary for them have been paid in full.
7.11.5 Utility Reservation. To the best knowledge of Seller
and Stults and Real Estate Seller, Real Estate Seller or Stults
currently holds all utilities, utility systems and utility
connections, including, but not limited to, the right to receive
immediately and continuously consume water service, sanitary and storm
sewer service, electrical service, gas service, and telephone service
on and for the Land and Improvements and Facilities in capacities that
are adequate to operate at full occupancy and operational capacity the
Land and Improvements and Facilities for the purposes for which Seller
and Real Estate Seller are using the Land and Improvements and
Facilities as of the Closing free and clear of all qualifications and
<PAGE>
encumbrances other than the obligation to pay the applicable utility
company the published rate for utility consumption (the "Utility
Reservations") applicable to the Land and Improvements and Facilities;
and Seller, Stults and Real Estate Seller have not transferred,
modified or encumbered any present or future interest, if any, of the
Utility Reservations; the Utility Reservations currently held by
Seller or Stults or Real Estate Seller and to be transferred to
Purchaser at Closing with respect to the Improvements and Land and
Facilities are freely transferrable to Purchaser and are in amounts
and capacities that are sufficient to operate the Facilities at full
occupancy for the purposes for which Seller, Stults and Real Estate
Seller are using the Land and Improvements and Facilities as of the
Closing.
7.11.6 Governmental Agreement. There is no agreement made by
Seller, Stults or Real Estate Seller with any governmental agency
burdening the Improvements or the Land or binding on the owner of the
Improvements or the Land or Facilities respecting construction of any
easements, roads, sidewalks, or street lighting; there are no
donations of land or payments (other than general real estate taxes)
for schools, parks, fire stations or other public facilities required
of Seller, Stults or Real Estate Seller or any future owner of the
Land or Facilities that were agreed to by Seller, Stults or Real
Estate Seller.
7.11.7 Limitation. There is no existing, pending or
threatened (i) change in limitations on use of streets or roads
abutting the Land or Facilities or (ii) special tax or assessment to
be levied against any part of the Land or Facilities.
7.12 Accounts Receivable. All of Seller's accounts receivable and
notes receivable reflect valid transactions and Seller and Stults represent
and warrant to Purchaser that the Accounts Receivable and notes receivable
assigned to Purchaser pursuant to the terms of this Agreement shall be good
and collectible in full. To the extent that any of the Accounts Receivable
remain outstanding within one hundred twenty (120) days following the
Closing, or to the extent any amount payable under any note receivable
remains outstanding for 60 or more days following the date it is due,
Purchaser shall be entitled to sell any and/or all such Accounts Receivable
and/or notes receivable to Seller and Seller shall purchase such Accounts
Receivable and/or notes receivable from Purchaser at their outstanding face
amounts, within ten (10) days after such Accounts Receivable are tendered
to Seller by Purchaser. Such amounts shall at Purchaser's option be off-
set against any amounts owed by Purchaser to either or both of Seller or
Stults. Purchaser shall deliver to Seller all business records pertaining
to Accounts Receivable and notes receivable repurchased by Seller under
this Section.
7.13 No Brokers' Fees. Seller has incurred no brokers' fees, sales
commissions, finders' fees, financial advisory fees or other fees or
expenses for which Purchaser shall be liable.
7.14 Books and Records. Seller's accounting books and records now are
and will be maintained in accordance with good business practices.
7.15 Proprietary Rights. Schedule 7.15 to this Agreement constitutes
a full and complete list of (i) all patents or patent applications owned,
<PAGE>
filed by or on behalf of, or used by the Seller, (ii) all proprietary
technology owned or used by the Seller which is material to the business,
operations or financial condition of the Seller taken as a whole, (iii) all
trademarks, service marks and trade names owned or used by the Seller and
all applications filed by the Seller with respect to the registration of
such trademarks, service marks or trade names and (iv) all materials owned
or used by the Seller which are material to the business, operations or
financial condition of the Seller taken as a whole (collectively referred
to as the "Proprietary Rights"). To the best knowledge of Seller and
Stults, after due inquiry, all Proprietary Rights listed in Schedule 7.15
are valid and in full force and effect and are not subject to any taxes,
maintenance fees, or actions falling due within 90 days after the date of
this Agreement. There have not been any claims, actions or judicial or
other adversary proceedings involving the Seller concerning any item of the
rights and property referenced in Schedule 7.15; there is no basis for any
such action or proceeding; and no such action or proceeding is threatened.
To the best knowledge of Seller, the use of the Proprietary Rights in
connection with the conduct of the Seller's business has not and will not
conflict with, infringe upon, or violate any patent or other proprietary
right of any other person, and the Seller has not infringed and is not now
infringing any proprietary right belonging to any other person. There are
no outstanding and no threatened disputes or disagreements with respect to
any licenses or similar agreements or arrangements identified in Schedule
7.15. With respect to each trade secret referenced in Schedule 7.15 such
trade secret's documentation is current, accurate, and sufficient in detail
and content to identify and explain it, and to allow its full and proper
use without reliance on the special knowledge or memory of others. The
Seller has taken all reasonable security measures to protect the secrecy,
confidentiality and value of its trade secrets identified in Schedule 7.15.
All trade secrets of the Seller identified in Schedule 7.15 are presently
valid and protectable, and are not part of the public knowledge or
literature, nor have they been used, divulged, or appropriated for the
benefit of any person other than the Seller or to the detriment of the
Seller.
7.16 Disclosure. No representation or warranty by Seller in this
Agreement or in any of the Exhibits or Schedules to, or other statement in
writing or certificate furnished to Purchaser by or on behalf of Seller in
connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact, or omits to state a material fact
necessary to make the statements contained in them not misleading in light
of the circumstances in which they are made. There is no fact pertaining
particularly to the Purchased Assets or the obligations assumed by
Purchaser under this Agreement or the Business of the Seller which
materially and adversely affects, or in the future will materially and
adversely affect the Purchased Assets or the Business of the Seller which
is known to Seller and has not been disclosed to Purchaser. Purchaser
shall make no claim under this Section 7.16 more than one (1) year after
the Closing Date.
7.17 Compliance with Laws. To the best knowledge of Seller and
Stults, after due inquiry, except as disclosed on Schedule 7.17, Seller has
been and is in compliance with all applicable laws, ordinances, statutes,
rules, regulations and orders enacted, promulgated or entered by any
federal, state or local governmental body, court or agency relating to the
Seller or the operation of the Business.
<PAGE>
7.18 Contracts. Except as set out on Schedule 7.18, there are no
sales, purchase, service, utilities, water supply bonds, shipping, labor
and other contracts, agreements and arrangements of any type relating to
the Purchased Assets or the conduct of the Business of the Seller which are
not terminable without penalty on 30 days' notice to the other party, or
which exceed $5,000.
7.19 Environmental Matters. Except as provided on Schedule 7.19,
Seller, Stults or Real Estate Seller have obtained all Environmental
Permits (as defined below) that are required with respect to the Business,
operations and properties of Seller, Stults and Real Estate Seller, and the
Seller, Stults and Real Estate Seller and their respective properties have
been and are in compliance with all terms and conditions of all applicable
Requirements of Environmental Law (as defined below) and Environmental
Permits to the extent lack of such permits or noncompliance could have a
material adverse effect (as materiality is defined in Section 9.3(c)).
There are no Environmental Claims (as defined below) pending, or, to the
knowledge of Seller, Stults or Real Estate Seller, threatened, against
Seller, Stults or Real Estate Seller. Seller, Stults and Real Estate
Seller have not violated and have no liability under any Requirement of
Environmental Law, and Seller, Stults and Real Estate Seller have not
received any notice from any governmental authority of any violation or
liability arising under any Requirements of Environmental Law or
Environmental Permit in connection with the assets, the Business or
operations of the Seller, Stults or Real Estate Seller.
"Environmental Permit" means any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of
the United States or of any state, municipality or other subdivision
relating to pollution or protection of health or the environment, including
laws, regulations or other requirements relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or hazardous
substances or toxic materials or wastes into ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
hydrocarbons or chemical substances, pollutants, contaminants or hazardous
or toxic materials or wastes.
"Requirements of Environmental Law" means all requirements imposed by
any applicable law, rule, regulation, or order of any federal, state or
local executive, legislative, judicial, regulatory or administrative
agency, board or authority which relate to (i) noise; (ii) pollution or
protection of the air, surface water, groundwater or land; (iii) solid,
gaseous or liquid waste generation, treatment, storage, disposal or
transportation; (iv) exposure to hazardous or toxic substances; (v) the
safety or health of employees or (vi) regulation of the manufacture,
processing, distribution in commerce, use, or storage of chemical
substances.
"Environmental Claim" means any third party (including governmental
agencies and employees) action, lawsuit, claim or proceeding which seeks to
impose liability for (i) noise; (ii) pollution or contamination of the air,
surface water, groundwater or land; (iii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation; (iv)
exposure to hazardous or toxic substances; (v) the safety or health of
employees or (vi) the transportation, processing, distribution in commerce,
use, or storage of hydrocarbons or chemical substances. An Environmental
<PAGE>
Claim includes, but is not limited to, a common law action, as well as a
proceeding to issue, modify or terminate an Environmental Permit.
7.20 Permits and Licenses. Except as disclosed on Schedule 7.20,
Seller or Real Estate Seller has all licenses, permits and other
authorizations necessary for the Land and the Business
7.21 Absence of Certain Changes. Except as specifically set forth in
Schedule 7.21 there has not been since November 30, 1994:
(a) Any change in the condition (financial or other),
properties, assets, liabilities, business or prospects of the Seller
except normal and usual changes in the ordinary course of business
which have not been in any one case or in the aggregate materially
adverse; or
(b) Any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the Land or the
properties, assets, business or prospects of the Seller; or
(c) Any change since the date of the Financials (except for
changes required by this Agreement relating to the Base Balance Sheet)
in the accounting methods or practices followed by the Seller or any
change in depreciation, amortization or inventory evaluation policies
or rates previously used or adopted; or
(d) Any sale, lease, abandonment or other disposition by Seller
other than in the ordinary course of business, of any machinery,
equipment or other operating property, or any sale, assignment,
transfer, license or other disposition by the Seller of any patent,
trademark, servicemark, trade name, brand name, copyright (or pending
application for any patent, trademark, servicemark or copyright),
invention, process, know-how, formula, pattern, design, trade secret
or interest thereunder or other intangible assets; or
(e) Any other occurrence, event or condition pertaining to the
Land or the business of the Seller which to the best of Seller's
knowledge Seller, Stults or Real Estate Seller reasonably expect will
or may have an adverse effect on the Land or on the properties,
assets, business or prospects of the Seller; or
7.22 Underground Storage Tanks. Schedule 7.22 sets forth (i) the
number of underground storage tanks, if any, located or, to the best of
Seller's, Stults' or Real Estate Seller's knowledge, formerly located on
all Land owned or leased by Real Estate Seller, Stults or Seller; (ii) a
description of each tank (capacity, tank material, and products stored);
and (iii) any identification number for each tank.
7.23 Good Working Order: Inventory. The Purchased Assets are in good
working condition, and the inventory is usable and salable in the ordinary
course of Seller's business.
7.24 Defaults. Seller is not in default under any Assumed Liability,
except as disclosed on Schedule 7.24. All contract rights which are part
of the Purchased Assets are valid and enforceable against the obligors to
them without defense, counterclaim or offset, and there is no default by
<PAGE>
Seller or the obligors of such contract rights, except as disclosed on
Schedule 7.24.
7.25 Securities Law Considerations. Seller understands and agrees
that the common capital stock of Shelter Components Corporation to be
issued to Seller as part of the Purchase price under Section 6.2.3 will not
be registered under federal or any state securities law and cannot be
transferred by Seller unless registered by Seller or pursuant to an
applicable exception from registration requirements. Seller represents
that Seller is acquiring such common stock solely for Seller's own account
and for investment purposes and not with a view to distribution of such
stock. Seller represents that Seller is sophisticated and experienced in
financial and business matters and is an accredited investor as that term
is defined in federal and Indiana securities law; that Seller has had
access to all public information relating to Seller and an opportunity to
ask and have its questions about Purchaser answered by representatives of
Purchaser.
7.26 Net Worth. Seller's net worth (excluding Excluded Assets and
matters relating to Galleries) shall not be less than $2,900,000 as of
December 31, 1994.
7.27 Earnings. Seller's operating earnings without including the
Galleries operations or Excluded Assets, and before interest and income
taxes for calendar year 1994 shall be not less than $1,860,000.
7.28 Leases Being Assigned. The leases being assigned by Stults or
Real Estate Seller, or Seller, as the case may be, under Sections 4.2, 4.3,
4.5 and 4.6 are attached as Exhibits 4.2, 4.3, 4.5, and 4.6 to this
Agreement and have not been modified or terminated, and there is no default
or event with which the passing of time or giving of notice, or both, would
result in a default under any of those leases.
8.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND REAL ESTATE PURCHASER.
Purchaser and Real Estate Purchaser jointly and severally represent,
covenant and warrant to Seller:
8.1 Organization, Standing and Power. Purchaser and Real Estate
Purchaser are each a corporation duly organized, validly existing and in
good standing under the laws of Indiana, and are authorized to conduct
business in the State of Indiana. Purchaser and Real Estate Purchaser each
have all requisite corporate power and authority to own, lease and operate
its properties, to carry on its business as now being conducted and to
execute, deliver and perform this Agreement.
8.2 Authority. The execution, delivery and performance of this
Agreement and all other writings relating to it by Purchaser and Real
Estate Purchaser have been duly and validly authorized by all necessary
corporate action, including action by the Board of Directors of Purchaser
and Real Estate Purchaser. This Agreement constitutes the valid and binding
obligations of Purchaser and Real Estate Purchaser enforceable in
accordance with its terms except as enforceability may be affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors' generally, or the application of
general principles of equity. Neither the execution and delivery of this
<PAGE>
Agreement nor the consummation by Purchaser and Real Estate Purchaser of
the transactions contemplated in it, nor compliance by Purchaser and Real
Estate Purchaser with any of its provisions, will: (i) conflict with or
result in a breach of the Certificate of Incorporation or By-Laws of
Purchaser and Real Estate Purchaser; (ii) to the best of Purchaser's or
Real Estate Purchaser's knowledge, violate any statute, law, rule or
regulation or any order, writ, injunction or decree of any court or
governmental authority; or (iii) to the best of Purchaser's or Real Estate
Purchaser's knowledge, violate or conflict with or constitute a default
under (or give rise to any right of termination, cancellation or
acceleration under) any agreement or writing of any nature or restriction
of any kind to which Purchaser or Real Estate Purchaser is a party or by
which it or its assets or properties may be bound.
8.3 Securities Law Considerations. The shares of common stock to be
issued to Seller under Section 6.2.3 will not be registered under federal
or any state or other securities law, and Purchaser and Real Estate
Purchaser have no obligation to cause such stock to be registered, except
that if Purchaser registers with the Securities and Exchange Commission
additional shares of the same class of common stock within two (2) years
after the Closing Date, Purchaser will provide Seller with the option to
have Seller's shares of common stock of Purchaser which were issued under
Section 6.2.3 be registered at Purchaser's expense as part of that
registration, provided that no act or omission of Seller or Stults shall
have occurred rendering such registration more difficult or expensive.
9.0 INDEMNIFICATION.
9.1 Indemnification of Purchaser and Real Estate Purchaser. Seller
and Stults shall jointly and severally indemnify and save Purchaser and
Real Estate Purchaser and each of their respective shareholders,
subsidiaries, affiliates, officers and directors, employees and agents
harmless from, against, for and in respect of:
(a) any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions, or causes of action,
encumbrances and reasonable costs and expenses suffered, sustained,
incurred or required to be paid by any indemnified party because of
the untruth or breach of any representation, warranty, agreement or
covenant of Seller or Stults contained in this Agreement or resulting
from the failure to comply with the Bulk Sales provisions of the
Uniform Commercial Code or relating to the ownership or operation of
the Land or Business before the Closing Date, including product
liability claims not fully covered by insurance; and
(b) All costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by any indemnified
party in connection with any successful action, suit, proceeding,
demand, assessment or judgment incident to any of the matters
indemnified against in this Section.
(c) Claims by Purchaser and Real Estate Purchaser under this
Section 9.1 shall constitute "Reimbursable Liabilities" as that term
is defined in the Escrow Agreement referred to in Subsection 6.5 of
this Agreement, but Purchaser's or Real Estate Purchaser's claims or
right of recovery shall not be deemed limited to amounts held under
<PAGE>
the Escrow Agreement nor shall Purchaser or Real Estate Purchaser be
required to proceed first against amounts held under the Escrow
Agreement in connection with any claims by Purchaser or Real Estate
Purchaser under this Section 9.1.
9.2 Indemnification of Seller, Stults and Real Estate Seller.
Purchaser and Real Estate Purchaser shall jointly and severally indemnify
and save the Seller, Real Estate Seller, each of their respective
shareholders, subsidiaries, affiliates, officers and directors, and Stults,
harmless from, against, for and in respect of and shall pay on demand:
(a) Any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action,
encumbrances and reasonable costs and expenses suffered, sustained,
incurred or required to be paid by any indemnified party because of
the untruth or breach of any representation, warranty, agreement or
covenant of Purchaser or Real Estate Purchaser contained in or made
pursuant to this Agreement and any claim made by Society National
Bank, Indiana, against Stults under his guaranties of obligations of
Seller the release of which were to be attempted to be obtained by
Purchaser under Section 3.1; and
(b) All reasonable costs and expenses (including, without
limitation, attorneys' fees, interest and penalties) incurred by
Seller in connection with any successful action, suit, proceeding,
demand, assessment or judgment incident to any of the matters
indemnified against in this Section.
9.3 Rules Regarding Indemnification. The obligations and liabilities
concerning indemnification shall be subject to the following terms and
conditions:
(a) The party claiming indemnification under Section 9.1 or 9.2
("Indemnified Party") shall give prompt written notice to the party
against which indemnification is sought under Section 9.1 or 9.2
("Indemnifying Party") of any claim by a third party which might give
rise to a claim by the Indemnified Party against the Indemnifying
Party based on the indemnity agreements contained in Section 9.1 or
9.2, stating the nature and basis of such claims and the amount, to
the extent known.
(b) If, within thirty (30) days after receiving such notice, the
Indemnifying Party advises the Indemnified Party that the Indemnifying
Party will conduct the defense of such third party claim at the
expense of the Indemnifying Party, then so long as such defense is
being conducted, the Indemnified Party shall not settle or admit
liability with respect to the claim and shall afford to the
Indemnifying Party and defending counsel all reasonable assistance in
defending against the claims.
10.0 CONDITIONS TO CLOSING: TERMINATION.
10.1 Conditions to Seller's and Real Estate Seller's Obligations.
Seller's and Stults' obligations to close the transactions provided for in
this Agreement are conditioned on:
<PAGE>
10.1.1 the satisfaction of all of Purchaser's and Real Estate
Purchaser's obligations under this Agreement;
10.1.2 the correctness, as of the Closing Date, of all of
Purchaser's and Real Estate Purchaser's representations and warranties
contained in this Agreement; and
10.1.3 the Closing Date being no later than January 31, 1995,
or such later date as may be agreed to by Seller or provided for in
this Agreement. Time is of the essence.
10.2 Conditions to Purchaser's and Real Estate Purchaser's
Obligations. Purchaser's and Real Estate Purchaser's obligations to close
the transactions provided for in this Agreement are conditioned on:
10.2.1 Obtaining all necessary approvals by Purchaser's and
Real Estate Purchaser's respective Boards of Directors;
10.2.2 Seller's and Stults' and Real Estate Seller's
satisfaction of all of Seller's and Stults' and Real Estate Seller's
obligations under this Agreement;
10.2.3 The correctness, as of the Closing Date, of all of
Seller's and Stults's and Real Estate Seller's representations and
warranties contained in this Agreement;
10.2.4 The Purchased Assets and Land not being "substantially
damaged".
10.2.5 The Closing Date being no later than January 31, 1995,
or such later date as may be agreed to by the Purchaser or provided
for in this Agreement. Time is of the essence.
10.2.6 Real Estate Purchaser's satisfaction in Real Estate
Purchaser's sole discretion with the environmental condition of the
Land.
10.2.7 There shall have been no material adverse change in the
business or financial condition of the Seller which is caused by any
acts or omissions of Seller.
10.2.8 Seller's net worth (excluding Excluded Assets and the
Galleries assets) shall be not less than $2,900,000 on the Closing
Balance Sheet and at the Effective Date.
10.3 Termination if Conditions Not Satisfied. If the conditions to
Closing provided in Section 10.1 or 10.2 are not satisfied, this Agreement
may be terminated effective on written notice by the party entitled to
terminate. Upon such termination the parties shall have no further
obligation or liability to each other arising out of this Agreement and the
negotiations or transactions relating to it, provided, however, that the
provisions of this Agreement concerning confidentiality and public
announcements (Section 13.6) and governing law, forum and no jury trial
(Section 13.9) shall remain binding on the parties. Upon the termination
of this Agreement each party shall promptly return all copies of all
information received by it from the other party.
<PAGE>
11.0 CLOSING TRANSACTIONS: SELLER AND STULTS AND REAL ESTATE SELLER .
On the Closing Date Seller and Stults and Real Estate Seller shall deliver
or cause to be delivered to Purchaser:
11.1 Deeds. Duly executed warranty deed conveying the Elkhart
Industrial Parkway Parcel to Real Estate Purchaser.
11.2 Bill of Sale. Duly executed bills of sale and other instruments
of assignment, transfer and conveyance to Purchaser of the Purchased
Assets, in the form of Exhibit 11.2;
11.3 Lease and Assignments of Leases. Duly executed assignments of
(i) the lease of the 2410 South Main Street Parcel in the form attached as
Exhibit 4.2, (ii) the lease of the 1314 South Main Street Parcel in the
form attached as Exhibit 4.3, (iii) the lease of the Plymouth Parcel in the
form attached as Exhibit 4.5, (iv) the lease of the Mt. Joy Parcel in the
form attached as Exhibit 4.6 and (v) duly executed lease of the Warsaw
Parcel on the same terms and conditions as the lease in the form attached
as Exhibit 4.4.
11.4 Consents. All third party consents and releases necessary to
transfer the Purchased Assets to Purchaser as provided for in this
Agreement and to transfer the Elkhart Industrial Parkway Parcel, to assign
the leases of the 2410 South Main Street Parcel, the 1314 South Main Street
Parcel, the Plymouth Parcel and the Mt. Joy Parcel and to lease the Warsaw
Parcel to Real Estate Purchaser in accordance with the terms and conditions
of this Agreement;
11.5 Covenant Not to Compete. The covenant not to compete executed by
Seller and Stults in the form attached as Exhibit 5.1.
11.6 Employment Agreement. The employment agreement executed by
Stults in the form attached as Exhibit 5.3.
11.7 Keys, etc. Such keys, lock and safe combinations and other
similar items as Purchaser shall require to obtain full occupation and
control of the Purchased Assets and the Facilities.
11.8 Resolutions. Certified copies of resolutions of Seller's Board
of Directors and Shareholders, approving the transactions contemplated by
this Agreement, and authorizing the execution, delivery and performance by
Seller and Real Estate Seller of this Agreement and a certificate as to the
incumbency of officers of Seller and Real Estate Seller executing any
instrument or other document delivered in connection with such
transactions.
11.9 Articles of Amendment. Duly executed and approved articles of
amendment to Seller's articles of incorporation, changing Seller's name to
a name not similar to "Babsco, Inc."
11.10 Legal Opinion. The opinion of Seller's and Real Estate
Seller's and Stults' counsel in the form attached as Exhibit 11.10.
11.11 Other. Any other documents which Purchaser may reasonably
request in order to transfer good and marketable title in and to the
<PAGE>
Purchased Assets and Land to Purchaser or Real Estate Purchaser as the case
may be, and to comply with governmental and tax requirements.
12.0 CLOSING TRANSACTIONS: PURCHASER AND REAL ESTATE PURCHASER.
On the Closing Date, Purchaser or Real Estate Purchaser, as appropriate,
shall deliver to Seller and Stults or Real Estate Purchaser, as the case may be:
12.1 Assumption Agreement. A duly executed Assumption Agreement in
the form of Exhibit 12.1 with respect to the Assumed Liabilities;
12.2 Purchase Price. The portion of the Purchase Price payable at the
Closing Date in cash and in unregistered common stock of Shelter Components
Corporation as provided in Section 6.0, and the payment to Real Estate
Seller by Real Estate Purchaser provided for in Section 4.1.
12.3 Resolutions. Certified resolutions of the Boards of Directors of
Purchaser and Real Estate Purchaser approving the transactions contemplated
by this Agreement, and authorizing the execution, delivery and performance
by Purchaser and Real Estate Purchaser of this Agreement, and a certificate
as to the incumbency of officers of Purchaser and Real Estate Purchaser
executing any instrument or other document delivered in connection with
such transactions.
12.4 Lease and Assignments of Leases. Duly executed assignments of
(i) the lease of the 2410 South Main Street Parcel in the form attached as
Exhibit 4.2, (ii) the lease of the 1314 South Main Street Parcel in the
form attached as Exhibit 4.3, (iii) the lease of the Plymouth Parcel in the
form attached as Exhibit 4.5, (iv) the lease of the Mt. Joy Parcel in the
form attached as Exhibit 4.6, and (v) a duly executed lease of the Warsaw
Parcel on the same terms and conditions as the lease in the form attached
as Exhibit 4.4.
12.5 Legal Opinion. The opinion of Purchaser's and Real Estate
Purchaser's counsel in the form attached as Exhibit 12.6.
13.0 MISCELLANEOUS.
13.1 Expenses, Etc. All costs, fees, or expenses (including, without
limitation, legal fees) incurred by Seller or Real Estate Seller in
connection with this Agreement and the transactions contemplated in it
shall be borne by the Seller or Real Estate Seller or Stults and shall be
an adjustment to the Base Balance Sheet and to the Purchase Price at
closing, and all costs, fees or expenses (including without limitation
legal fees) incurred by Purchaser or Real Estate Purchaser in connection
with this Agreement shall be borne by Purchaser or Real Estate Purchaser.
13.2 Parties in Interest: Assignment. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by Seller and Real Estate
Seller and their successors and assigns, and Purchaser and Real Estate
Purchaser and their successors and assigns and Stults and his heirs,
personal representative, estate, successors and assigns. No other person
or entity has any rights under this Agreement and no right or obligation
under this Agreement shall be assigned or delegated by any party except
<PAGE>
with the prior written consent of the other parties, except that Purchaser
may assign its rights and delegate its obligations under this Agreement to
Real Estate Purchaser, and Real Estate Purchaser shall then have the full
benefit of and the full right to all obligations, representations and
warranties and agreements under this Agreement.
13.3 Entire Agreement; Amendments. This Agreement and the other
writings referred to in it or delivered in connection with it contain the
entire understanding of the parties with respect to its subject matter.
This Agreement may be amended only by a written instrument duly executed by
the parties.
13.4 Headings. The section and subsection headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
13.5 Notices. All notices, claims, certificates, requests, demands
and other communications ("Communications") under this Agreement shall be
in writing and shall be deemed to have been duly given and received when
sent by telecopy or on the next business day after being sent by overnight
courier service, or on the third day after being sent by deposit into the
U.S. Mail of a copy sent by registered or certified mail, postage prepaid
as follows:
If to Purchaser or Nubabsco:
Shelter Components Corporation
27217 C.R. 6
P.O. Box 4026
Elkhart, Indiana 46514
Attention: Mr. Larry Renbarger, President
Telecopy: (219) 262-3936
If to Seller, Stults, or Real Estate Seller, to:
Babsco, Inc.
2200 Industrial Parkway
P.O. Box 30
Elkhart, Indiana 46516
Attention: Mr. Gerald R. Stults, President
Telecopy (219) 294-1687
With a Copy to:
Mr. Michael Cosentino
Cosentino, Walker, Shewmaker & Christofeno
115 W. Lexington Avenue
Elkhart, Indiana 46516
Telecopy (219) 522-5598
or to such other person's address and telecopy number within the United
State of America as the person to whom a Communication is to be given may
have furnished to the others in writing in accordance with this Section. A
Communication given by any other means shall be deemed duly given when
actually received by the addressees.
<PAGE>
13.6 Public Announcements: Confidentiality. All announcements
relating to this Agreement or the negotiations relating to it or
transactions contemplated in it, including announcements to employees, will
be made only as may be agreed upon jointly by representatives designated by
the parties, except as required by law or governmental regulation which
shall initially be the individuals mentioned in Section 13.5. Until the
Closing Purchaser agrees to keep, and to cause its respective
representatives, lenders and others to keep, all information pertaining to
Seller and Seller's Business strictly confidential, except as required by
law.
13.7 Further Assurances. After the Closing Date, without further
consideration, Seller, Real Estate Seller, Stults, Purchaser, and Real
Estate Purchaser shall execute and deliver such further instruments and
documents intended by this Agreement that any party shall reasonably
request to consummate the transactions contemplated by the Agreement and to
perfect Purchaser's title to the Purchased Assets and Real Estate
Purchaser's title to the Land and Improvements. On the Closing Date,
Seller shall amend its articles of incorporation to change its name to a
name not confusingly similar to "Babsco, Inc." Stults shall cause all
necessary approvals and actions by Seller's shareholders, directors and
officers to occur which are necessary to carry out the transactions
provided for in this Agreement.
13.8 Waiver. No waiver of any provision of this Agreement shall be
effective unless in writing signed on behalf of Seller and Purchaser. The
waiver by any party of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent, same or
different breach.
13.9 Governing Law; Forum; No Jury. This Agreement shall be governed
by the laws of the State of Indiana applicable to contracts made and to be
wholly performed in the State of Indiana. Any and all litigation between
the parties pertaining to or arising out of this Agreement or the
transactions provided for in it, shall be brought and maintained only in
the courts of the State of Indiana (including federal courts sitting in the
State of Indiana) and the parties irrevocably consent to the subject matter
and personal jurisdiction of such courts and waive all rights to a trial by
jury as to all or any part of any such litigation.
13.10 Hazard Insurance and Risk of Loss. Seller shall bear the
risk of loss until transfer of title to the Purchased Assets at the
Closing, at which time risk of loss shall pass to Purchaser. If any of the
Purchased Assets shall be substantially damaged or destroyed by fire,
casualty or other cause prior to the actual date of Closing, Seller shall
immediately notify Purchaser and furnish to Purchaser a written statement
of the amount of insurance, if any, payable on account. If the Assets are
substantially damaged, Purchaser may elect to terminate this Agreement as
provided in Section 10.3.
If some of the Purchased Assets are damaged or destroyed but are not
substantially damaged as defined above, the insurance proceeds shall be
assigned to Purchaser or at Purchaser's election, the damaged or destroyed
Purchased Assets shall be repaired or replaced prior to Closing with the
insurance proceeds or at Seller's expense to the extent insurance proceeds
are insufficient and the time for the Closing may be extended, if necessary
and if mutually agreed, for a reasonable period in order to permit such
<PAGE>
repairs or replacement. In such event, Seller shall be entitled to use
available insurance proceeds to repair the Assets.
13.11 Termination of Representations. The representations and
warranties made by the parties in this Agreement concerning states of fact
as of the date of this Agreement or as of the Closing Date, shall survive
after the Closing Date until the expiration of the applicable Indiana or
federal statute of limitations.
"SELLER"
BABSCO, INC.
By: /s/ Gerald R. Stults
Gerald R. Stults, President
"REAL ESTATE SELLER"
STULTS PROPERTIES, INC.
By: /s/ Gerald R. Stults
Gerald R. Stults, President
"STULTS"
/s/ Gerald R. Stults
Gerald R. Stults
"PURCHASER"
SHELTER COMPONENTS CORPORATION
By: /s/ Mark C. Neilson
Its: Secretary/Treasurer
"REAL ESTATE PURCHASER"
Nubabsco, Inc.
By: /s/ Richard E. Summers
Its: President
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