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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) August 31, 1994
FIBREBOARD CORPORATION
----------------------
(Exact name of registrant as specified in its charter)
Delaware 0-016951 94-0751580
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(State or other jurisdic- (Commission (IRS Employer Iden-
tion of incorporation) file number) tification No.)
2121 NORTH CALIFORNIA BLVD., #560, WALNUT CREEK, CA 94596
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(Address of principal executive offices)
(510) 274-0700
--------------
(Registrant's telephone number, including area code)
NONE
----------------------------------------------------
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 31, 1994, Fibreboard Corporation ("Fibreboard") purchased all of
the stock of Norandex Inc., a wholly owned subsidiary of Noranda Aluminum, Inc.,
for a purchase price of approximately $115 million in cash. Norandex Inc.
manufactures vinyl siding products and distributes residential exterior building
products for the new construction and remodeling industries. It is Fibreboard's
intention that Norandex Inc. will continue to manufacture and distribute the
same or substantially similar products.
Fibreboard funded the acquisition using cash from operations and funds from
a $100 million revolving credit facility provided by a consortium of banks, with
Continental Bank and Bank of America National Trust and Savings Association
acting as co-agents. Further information concerning the acquisition is set
forth in Fibreboard's press release dated September 1, 1994, which is attached
hereto as an exhibit and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The financial statements of Norandex Inc. required by Regulation S-X will
be filed as soon as practicable but no later than sixty (60) days after the date
this report is filed.
(B) PRO FORMA FINANCIAL INFORMATION.
The pro forma combined financial information of Fibreboard Corporation and
Norandex Inc. required by Regulation S-X will be filed as soon as practicable
but no later than sixty (60) days after the date this report is filed.
(C) EXHIBITS.
10.1 Stock Purchase Agreement among Noranda Aluminum, Inc., Norandex Inc.
and Fibreboard Corporation dated as of August 31, 1994.
99.1. Press Release dated September 1, 1994 issued by Fibreboard
Corporation.
2
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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.
FIBREBOARD CORPORATION
----------------------
(Registrant)
Dated: September 15, 1994 By: /s/ Garold E. Swan
------------------------
Garold E. Swan
Vice President and Controller
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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
AMONG
NORANDA ALUMINUM, INC.,
NORANDEX INC.
AND
FIBREBOARD CORPORATION
DATED AS OF AUGUST 31, 1994
RELATING TO THE ACQUISITION
OF THE CAPITAL STOCK
OF NORANDEX INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
PURCHASE AND SALE OF SHARES; OTHER ACTIONS . . . . . . . . . . . . . . . . . 8
2.1 PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 PURCHASE PRICE.. . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 PRICE ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.1 ADJUSTED NET ASSETS EMPLOYED; CHANGES FROM UNAUDITED
DECEMBER 31 BALANCE SHEET. . . . . . . . . . . . . . . . 9
2.3.2 PENSION PLAN FUNDING DIFFERENTIAL. . . . . . . . . . . . 10
2.3.3 INTEREST ON PBGC REQUIRED FUNDING PAYMENT. . . . . . . . 10
2.3.4 INTEREST ON ADJUSTMENT PAYMENT . . . . . . . . . . . . . 10
2.4 CLOSING AND PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . 11
2.4.1 CLOSING DATE.. . . . . . . . . . . . . . . . . . . . . . 11
2.4.2 CLOSING DATE BALANCE SHEET AND ADJUSTED NET ASSETS
EMPLOYED AS OF THE CLOSING DATE. . . . . . . . . . . . . 11
2.4.3 CALCULATION OF PENSION PLAN FUNDING DIFFERENTIAL . . . . 11
2.4.4 TIME OF PAYMENTS AND TRANSFERS.. . . . . . . . . . . . . 12
2.4.5 TERMS OF PAYMENTS. . . . . . . . . . . . . . . . . . . . 13
2.5 OTHER ACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5.1 TRADEMARKS AND TRADE NAMES . . . . . . . . . . . . . . . 13
2.5.2 PENSION PLANS. . . . . . . . . . . . . . . . . . . . . . 13
2.5.3 NORANDA LIFE INSURANCE PLAN. . . . . . . . . . . . . . . 14
2.5.4 MEDICAL BENEFITS PROGRAMS. . . . . . . . . . . . . . . . 14
2.5.5 SECTION 401(K) PLANS . . . . . . . . . . . . . . . . . . 15
2.5.6 COLLECTIVE BARGAINING AGREEMENTS. . . . . . . . . . . . 15
2.5.7 DEFERRED COMPENSATION PLAN . . . . . . . . . . . . . . . 16
2.5.8 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.5.9 NO CHANGES TO CERTAIN EMPLOYEE BENEFIT PLANS . . . . . . 16
2.5.10 EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . 16
2.5.11 COBRA. . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.6 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.6.1 TAXES PRIOR TO, INCLUDING, AND AFTER THE CLOSING . . . . 17
2.6.2 COOPERATION. . . . . . . . . . . . . . . . . . . . . . . 20
2.6.3 AUDITS AND CONTESTS WITH RESPECT TO TAXES. . . . . . . . 20
2.6.4 AUDIT ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . 21
2.6.5 TERMINATION OF TAX AGREEMENTS. . . . . . . . . . . . . . 23
2.6.6 MINIMUM TAX CREDIT . . . . . . . . . . . . . . . . . . . 23
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TABLE OF CONTENTS
(Continued)
PAGE
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . 24
3.1 OWNERSHIP OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3 ORGANIZATION; SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . 25
3.4 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 INVESTMENTS IN OTHERS. . . . . . . . . . . . . . . . . . . . . . . 26
3.6 COMPLIANCE WITH LAWS AND PERMITS; NO CONFLICTS . . . . . . . . . . 26
3.7 BROKERS AND FINDERS. . . . . . . . . . . . . . . . . . . . . . . . 27
3.8 TAX RETURNS AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . 27
3.9 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 28
3.10 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . 28
3.11 ABSENCE OF CERTAIN CHANGES AND EVENTS. . . . . . . . . . . . . . . 28
3.12 INTERESTS IN REAL PROPERTY . . . . . . . . . . . . . . . . . . . . 30
3.13 PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . 31
3.14 DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . 31
3.15 CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 31
3.16 INTELLECTUAL PROPERTY, ETC.. . . . . . . . . . . . . . . . . . . . 32
3.17 LITIGATION AND OTHER PROCEEDINGS . . . . . . . . . . . . . . . . . 32
3.18 UNDERSTANDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.19 INSURANCE AND BANKING FACILITIES . . . . . . . . . . . . . . . . . 33
3.20 EMPLOYEE BENEFIT PLANS; PERSONNEL. . . . . . . . . . . . . . . . . 34
3.21 POWERS OF ATTORNEY AND SURETYSHIPS . . . . . . . . . . . . . . . . 34
3.22 MINUTES AND STOCK RECORDS. . . . . . . . . . . . . . . . . . . . . 34
3.23 GOVERNMENTAL CONSENTS. . . . . . . . . . . . . . . . . . . . . . . 35
3.24 COMPLIANCE WITH ERISA. . . . . . . . . . . . . . . . . . . . . . . 35
3.24.1 DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . 35
3.24.2 DETERMINATION LETTER . . . . . . . . . . . . . . . . . . 36
3.24.3 NO REPORTABLE EVENT. . . . . . . . . . . . . . . . . . . 37
3.24.4 NO PROHIBITED TRANSACTIONS . . . . . . . . . . . . . . . 37
3.24.5 FULLY FUNDED . . . . . . . . . . . . . . . . . . . . . . 37
3.24.6 NO TAX LIABILITY . . . . . . . . . . . . . . . . . . . . 38
3.24.7 CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.24.8 COBRA. . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.24.9 POST-EMPLOYMENT BENEFITS . . . . . . . . . . . . . . . . 39
3.24.10 TERMINATION AND AMENDMENT RIGHT. . . . . . . . . . . . . 39
3.24.11 PARACHUTE PAYMENTS . . . . . . . . . . . . . . . . . . . 39
3.25 LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.26 HAZARDOUS MATERIALS. . . . . . . . . . . . . . . . . . . . . . . . 41
3.27 PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.28 ACCURACY OF DOCUMENTS AND INFORMATION. . . . . . . . . . . . . . . 43
3.29 PRODUCT WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 43
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TABLE OF CONTENTS
(Continued)
PAGE
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . . . . . . . 44
4.1 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.2 COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. . . . . . . . . . . . . 44
4.3 AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.4 INVESTMENT PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . 44
4.5 BROKERS AND FINDERS. . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 5
COVENANTS OF SELLER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.1 ACCESS TO PROPERTIES AND RECORDS . . . . . . . . . . . . . . . . . 45
5.2 CONDUCT OF BUSINESS BEFORE CLOSING . . . . . . . . . . . . . . . . 45
5.3 NOTICE OF EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.4 COOPERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.5 KEY EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.6 NORANDEX FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . 48
5.7 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . 48
5.8 BEST EFFORTS TO CLOSE. . . . . . . . . . . . . . . . . . . . . . . 48
5.9 CONSENTS TO LEASE AND CONTRACTS. . . . . . . . . . . . . . . . . . 48
5.10 EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 6
COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.1 COOPERATION IN FILINGS . . . . . . . . . . . . . . . . . . . . . . 50
6.2 BEST EFFORTS TO CLOSE. . . . . . . . . . . . . . . . . . . . . . . 50
6.3 EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . . . 51
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING . . . . . . . . . . 51
7.2 PERFORMANCE OF COVENANTS . . . . . . . . . . . . . . . . . . . . . 51
7.3 CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.4 OPINION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . 51
7.5 RESIGNATIONS OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . 52
7.6 MATERIAL CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.7 CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.8 GOOD STANDING CERTIFICATES . . . . . . . . . . . . . . . . . . . . 52
7.9 NONCOMPETITION AGREEMENT . . . . . . . . . . . . . . . . . . . . . 52
7.10 NO MATERIAL ADVERSE CHANGES. . . . . . . . . . . . . . . . . . . . 52
7.11 CONSENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.12 TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . 53
7.13 PROCEEDINGS AND DOCUMENTS SATISFACTORY . . . . . . . . . . . . . . 53
7.14 INTERCOMPANY BALANCES. . . . . . . . . . . . . . . . . . . . . . . 53
7.15 ASSIGNMENT OF NORANDEX NOTE. . . . . . . . . . . . . . . . . . . . 53
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TABLE OF CONTENTS
(Continued)
PAGE
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ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF SELLER. . . . . . . . . . . . . . . . . . . 53
8.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. . . . . . . . . . 54
8.2 PERFORMANCE OF COVENANTS. . . . . . . . . . . . . . . . . . . . . 54
8.3 CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.4 GOOD STANDING CERTIFICATES. . . . . . . . . . . . . . . . . . . . 54
8.5 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.6 PROCEEDINGS AND DOCUMENTS SATISFACTORY. . . . . . . . . . . . . . 55
ARTICLE 9
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 55
9.2 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.2.1 INDEMNIFICATION OF SELLER . . . . . . . . . . . . . . . 55
9.2.2 INDEMNIFICATION OF BUYER. . . . . . . . . . . . . . . . 56
9.3 LIMITATION ON AMOUNT OF INDEMNITY . . . . . . . . . . . . . . . . 57
9.4 NOTICE OF CLAIMS; PROCEDURES. . . . . . . . . . . . . . . . . . . 57
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.2 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.3 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 59
10.4 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.5 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.6 MUTUAL CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . 60
10.7 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.8 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.9 BINDING EFFECT; ASSIGNMENT. . . . . . . . . . . . . . . . . . . . 61
10.10 NO THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . . . 62
10.11 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.12 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . 62
10.13 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.14 ARBITRATION AND PROCEDURE . . . . . . . . . . . . . . . . . . . . 62
EXHIBITS
EXHIBIT A Adjusted Net Assets Employed
EXHIBIT 2.5.1 Trademarks
EXHIBIT 2.3.2 PBGC Required Funding and Contractually Determined Funding
EXHIBIT 7.4 Form of Opinion of Seller's and Norandex's Counsel
EXHIBIT 7.9 Noncompetition Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated as of August 31, 1994,
and is entered into by and among Noranda Aluminum, Inc. ("Noranda" or "Seller"),
a Delaware corporation, Norandex Inc. ("Norandex"), a Delaware corporation and a
wholly-owned subsidiary of Seller, and Fibreboard Corporation, a Delaware
corporation ("Buyer").
A G R E E M E N T
THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
"Active Norandex Employee" means an individual who, on the Closing
Date, either (i) is actively working as an employee of Norandex (which shall be
deemed to include Robert Johnston) or who is on payroll continuation (including
short-term disability, vacation and similar payroll practices, but not severance
pay) or (ii) has a right of reemployment with Norandex by reason of approved
leave of absence or layoff, but excluding any individual on long-term
disability.
"Adjustment Payment" has the meaning set forth in Section 2.3.
"Adjusted Net Assets Employed" means Norandex's Adjusted Net Assets
Employed as set forth (i) on Exhibit A attached hereto with respect to Adjusted
Net Assets Employed as of December 31, 1993, and (ii) in a schedule to be
delivered by Seller to Buyer as described in Section 2.4.2 with respect to
Adjusted Net Assets Employed as of the Closing Date. Adjusted Net Assets
Employed at December 31, 1993 shall be derived from
<PAGE>
the balance sheet of Norandex included in the Unaudited December 31 Financial
Statements, utilizing the methodology and with the adjustments set forth on
Exhibit A attached hereto.
"Affiliate" means, with respect to any corporation, any person or
entity which controls, is controlled by or is under common control with such
corporation.
The "business of Norandex" shall be deemed to include the business of
Norandex and its Subsidiaries, taken together.
"Buyer" means Fibreboard Corporation, a Delaware corporation.
"Buyer 401(k) Plan" has the meaning set forth in Section 2.5.5.
"Claims" means any claims (including without limitation claims made
within the last three years which have not resulted in further actions or
proceedings being filed or otherwise initiated), disputes, demands,
investigations, actions, arbitrations, hearings, litigation or other proceedings
of whatever nature, whether civil, criminal, administrative or otherwise.
"Closing" means the completion of the purchase of the Shares by Buyer
from Seller and the transfer of title to the Shares from Seller to Buyer.
"Closing Date Balance Sheet" means the audited balance sheet as of the
Closing Date with a report thereon by Ernst & Young, as described in greater
detail in Section 2.4.2.
"Closing Date" means the date the Closing takes place.
"Closing Payment" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contractually Determined Funding Amount" has the meaning set forth in
Section 2.3.2 and Exhibit 2.3.2.
2
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"Disclosure Schedule" means the Disclosure Schedule and Schedule of
Exceptions of Seller attached to the Agreement.
"Employee Benefit Plans" means all written or unwritten employment,
collective bargaining, compensation, bonus, severance, profit sharing, stock
option, stock purchase, incentive compensation, pension, retirement, life
insurance, health, medical, hospitalization, disability, dental, dependent care,
fringe or other benefit plans, agreements, contracts, insurance policies,
programs, policies, practices, commitments or other arrangements of any type
(including without limitation those included or referred to in or covered by any
collective bargaining agreement), respecting, affecting or in effect for any
officer, employee or director of a company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plan" means "employee pension benefit plans" and all "employee
welfare benefit plans" (within the meaning of ERISA) of Norandex or a Subsidiary
or in which any employees of Norandex or any Subsidiary (whether or not covered
by collective bargaining agreements) participate or have participated since
January 1, 1988.
"GAAP" means generally accepted accounting principles and practices as
promulgated by the Accounting Research Board, Accounting Principles Board and
Financial Accounting Standards Board or any superseding or supplemental
documentation of equal authority promulgating generally accepted accounting
principles and practices, all as in effect from time to time. When used in this
Agreement with reference to unaudited financial information, "GAAP" is qualified
to the extent that such unaudited financial information does not include notes
required by GAAP and is subject to normal year-end
3
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adjustments which will not be material, and does not include accruals for
vacation pay and warranty claims that might otherwise be required by GAAP.
"Hart-Scott-Rodino" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations adopted by the Federal
Trade Commission under that Act.
"Hazardous Material" means any material, substance, waste or component
thereof (whether a liquid, solid, or gas) that is prohibited, controlled, or
regulated by any governmental entity having jurisdiction as a contaminant,
pollutant, dangerous substance, toxic substance, hazardous waste, hazardous
substance, hazardous material, dangerous good or petroleum, its derivatives, by-
products or other hydrocarbons, pursuant to any United States, state, or local
environmental or health and safety law, rule, or regulation.
"Intellectual Property Rights" means any and all patents, patent
applications, patent licenses, unpatented inventions, trademark registrations,
trademark applications, unregistered trademarks, trade names, registered or
unregistered service marks, service mark applications, service names, registered
or unregistered copyrights, copyright applications, and any licenses to or
rights in any of the foregoing.
"Law" means any United States, state, or local statute, law,
ordinance, rule or regulation or any decree or order of any governmental body
thereof
"Life Insurance Plan" means the Noranda Post-Retirement Life Insurance
Plan in substantially the form previously delivered to Buyer.
"Loss" means any and all losses, liabilities, judgments, settlements,
damages, injuries, costs and expenses of any nature whatsoever (including all
reasonable fees and disbursements of attorneys, accountants, or other
professional advisors relating to investigation, prosecution, negotiation,
defense, settlement or appeal, with the normal billing
4
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rates of such attorneys, accountants or other professional advisers not being a
ground for excluding any portion of such fees or disbursements as unreasonable),
and any fees, penalties, interest and other governmental charges of any nature
whatsoever related to any Loss or Claim.
"Noranda" means Noranda Aluminum, Inc., a Delaware corporation.
"Noranda Pension Plan" means the Noranda Finance, Inc., Subsidiaries,
and Affiliates Pension Plan in which Norandex or a Subsidiary is a participating
employer, in substantially the form previously delivered to Buyer, which is the
pension plan applicable at the date of the Agreement to Norandex or Subsidiary
employees.
"Norandex" means Norandex Inc., a Delaware corporation.
"Norandex Financial Statements" means the audited financial statements
of Norandex as of and for the three years ended December 31, 1991, 1992 and
1993, prepared by Seller at its expense, together with a report thereon by Ernst
& Young, to be delivered by Seller to Buyer within 60 days after the Closing
Date.
"Norandex Medical Benefits Program" shall mean the medical benefits
program covering Norandex employees as described in the Noranda Group Medical
Benefit Plan previously delivered by Seller to Buyer.
"Norandex Note" shall mean the promissory note of Norandex dated
August 31, 1994, in the form delivered by Norandex at the Closing, evidencing
Norandex's obligation to Noranda for amounts previously advanced by Noranda to
Norandex.
"Norandex Pension Plan" means the pension plan established by Buyer at
or immediately after the Closing Date for Active Norandex Employees, as further
described in Section 2.5.2.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"PBGC Required Funding" has the meaning set forth in Section 2.4.3.
"Pension Plan Funding Differential" has the meaning set forth in
Section 2.4.3.
"Permit" means any license, permit, franchise, authorization or
approval of any federal, state, or local governmental body, agency or other
authority.
"Proprietary Information" means any information, document, matter, or
thing of a secret, confidential or private nature relating to or connected with
the business of a company, any of its suppliers or customers, or any third party
from whom the company acquires Proprietary Information or other confidential or
proprietary information of any kind. Without limiting the foregoing, included
within the meaning of Proprietary Information are information, documents or
matters relating to or connected with inventions, know-how, formulae, programs,
improvements, discoveries, designs, documentation, methods, processes, machines,
existing or new products, research projects, prices, costs, profits, business
plans, budgets, unpublished financial information, markets, sales, customers,
potential customers, suppliers, employees, plans for further development,
marketing and selling, licenses, and the identities, skills and compensation of
employees, and any other information that is protectable under applicable state
law as a trade secret or confidential information of a company.
"Relevant Employees" shall mean the following current or former
employees of Norandex: Robert Johnston; Barry Virostek; Lynn Kovalcheck; and
Paul Borders.
"Shares" means all of the issued and outstanding shares of Common
Stock of Norandex, all of which are owned by Seller.
"Subsidiaries" means any other corporation or other entity in which
Norandex (or, if used with express reference to Seller, then Seller)
beneficially owns, directly or
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indirectly, 50% or more of any class of outstanding capital stock (or other
similar interests in a partnership or other entity).
"Tax" or "Taxes" has the meaning set forth in Section 2.6.1.
"Unaudited Financial Statements" means the financial statements of
Norandex as of and for the seven months ended July 31, 1994, which need not be
audited but which shall be certified by the Chief Financial Officer of Seller as
having been prepared in a manner consistent with GAAP and using Norandex's and
Seller's current accounting practices.
"Unaudited Balance Sheet" means the unaudited balance sheet of
Norandex included in the Unaudited Financial Statements.
"Unaudited December 31 Financial Statements" means the unaudited
balance sheet and income statement of Norandex as of and for the year ended
December 31, 1993, in the form delivered by Seller to Buyer before the date of
this Agreement.
"Understanding" means any contract, agreement or understanding
(whether written or oral) to which Norandex or a Subsidiary is a party or by
which Norandex or a Subsidiary or any of their properties or assets are bound
which (i) involves the payment or receipt by Norandex or a Subsidiary of more
than $100,000 over the remaining term of the contract, agreement or
understanding; (ii) is a financing document, loan or credit agreement or
promissory note with an unpaid principal balance in excess of $100,000; (iii) is
a collective bargaining agreement; (iv) is an Employee Benefit Plan; (v) has a
remaining term of more than one year from the date of this Agreement; (vi) is a
mortgage or lease relating to an interest in real property; (vii) is a
distribution or other similar agreement relating to the marketing of products;
(viii) is a license or other agreement which relates in whole or in part to any
patent, trademark, trade name, service mark or copyright or to any Proprietary
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Information used in the business of Norandex, or which provides for the payment
of royalties or similar payments to Norandex or by Norandex; (ix) restrains or
limits Norandex from engaging in any business or competing in any manner; or (x)
is otherwise material to the business of Norandex.
ARTICLE 2
PURCHASE AND SALE OF SHARES; OTHER ACTIONS
2.1 PURCHASE AND SALE. Seller agrees to sell the Shares to Buyer, and
Buyer agrees to purchase the Shares from Seller, in consideration of the payment
of the purchase price for the Shares by Buyer to Seller and on the other terms
and conditions contained in this Agreement. Seller agrees to assign and
transfer the Norandex Note to Buyer, and Buyer agrees to purchase the Norandex
Note from Seller, in consideration of the payment by Buyer to Seller set forth
in Section 2.2 and on the other terms and conditions contained in this
Agreement.
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2.2 PURCHASE PRICE. The purchase price shall consist of $112,500,000 (the
"Closing Payment"), subject to increase or decrease by the Adjustment Payment.
The purchase price shall be allocated between the Norandex Note and the Shares
as follows: the principal amount of the Norandex Note shall consist of the
amount of Norandex's obligation as of the Closing Date to Noranda for amounts
previously advanced by Noranda to Norandex, and shall be calculated after the
Closing Date in connection with the preparation of the Closing Date Balance
Sheet. As provided in the Norandex Note, the Payee under the Norandex Note
shall set forth the principal amount so calculated on Exhibit A to the Norandex
Note once that amount has been calculated. Buyer shall purchase the Norandex
Note for an amount equal to the principal amount of the Norandex Note. The
purchase price for the Shares shall consist of $112,500,000 minus the purchase
price for the Norandex Note, subject to increase or decrease by the Adjustment
Payment.
2.3 PRICE ADJUSTMENTS. After the Closing the purchase price shall be
increased or decreased, as the case may be, by the Adjustment Payment. The
Adjustment Payment shall be the sum of the amounts, if any, calculated under
Sections 2.3.1 and 2.3.2.
2.3.1 ADJUSTED NET ASSETS EMPLOYED; CHANGES FROM UNAUDITED
DECEMBER 31 BALANCE SHEET. The purchase price shall be increased in the amount,
if any, by which Adjusted Net Assets Employed at the Closing Date exceed
Adjusted Net Assets Employed at December 31, 1993 as set forth on Exhibit A; and
the purchase price shall be decreased in the amount, if any, by which the amount
of Adjusted Net Assets Employed at the Closing Date are less than Adjusted Net
Assets Employed at December 31, 1993 as set forth on Exhibit A.
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2.3.2 PENSION PLAN FUNDING DIFFERENTIAL. Seller shall cause the
assets (in cash) and liabilities relating to all Active Norandex Employees to be
transferred from the Noranda Pension Plan to the Norandex Pension Plan in the
amount required by Section 414(l)(1) of the Code (the "PBGC Required Funding"),
calculated as provided in Exhibit 2.3.2 attached hereto. The purchase price
shall be increased in the amount, if any, by which the PBGC Required Funding
exceeds the Contractually Determined Funding Amount (as determined in accordance
with the procedures and assumptions set forth in Exhibit 2.3.2 attached hereto);
and the purchase price shall be decreased in the amount, if any, by which the
PBGC Required Funding is less than the Contractually Determined Funding Amount.
The amount by which the PBGC Funding Amount is greater than or less than the
Contractually Determined Funding Amount shall be the "Pension Plan Funding
Differential."
2.3.3 INTEREST ON PBGC REQUIRED FUNDING PAYMENT. When the PBGC
Funding Amount is delivered to the Norandex Pension Plan, Seller shall at the
same time pay to Buyer an amount equal to interest on the PBGC Funding Amount at
a rate per annum equal to the one month London Interbank Offered Rate in effect
on the Closing Date as reported in the WALL STREET JOURNAL ("LIBOR"), plus .75%,
from the Closing Date (or, if later, the date of adoption of the Norandex
Pension Plan) until the date the PBGC Funding Amount is delivered to the
Norandex Pension Plan.
2.3.4 INTEREST ON ADJUSTMENT PAYMENT. When the Adjustment Payment
is delivered, the party making the Adjustment Payment shall at the same time pay
to the party entitled to receive the Adjustment Payment an amount equal to
interest on the Adjustment Payment at a rate per annum equal to LIBOR plus .75%,
from the Closing Date until the date the Adjustment Payment is delivered.
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2.4 CLOSING AND PAYMENT.
2.4.1 CLOSING DATE. The Closing shall take place on August 31,
1994, at the offices of Thompson, Hine and Flory in Cleveland, Ohio, at 11:00
a.m. local time, or at such other date, time or place as the parties may agree
(the date of the Closing referred to as the "Closing Date"). The Closing shall
be deemed to be effective at the close of business on the Closing Date.
2.4.2 CLOSING DATE BALANCE SHEET AND ADJUSTED NET ASSETS EMPLOYED
AS OF THE CLOSING DATE. Within 60 days after the Closing Date, Seller shall
deliver to Buyer (i) the Closing Date Balance Sheet and (ii) a schedule showing
Adjusted Net Assets Employed as of the Closing Date. Seller shall prepare the
Closing Date Balance Sheet in accordance with GAAP consistently applied.
Adjusted Net Assets Employed at the Closing Date shall be derived from the
Closing Date Balance Sheet, utilizing the same methodology and with the same
categories of adjustments as were used in calculating Adjusted Net Assets
Employed at December 31, 1993 (and as are set forth on Exhibit A attached
hereto), except as provided in the next sentence. Buyer and Seller acknowledge
that the Closing Date Balance Sheet and Adjusted Net Assets Employed as of the
Closing Date shall include accruals for Norandex as of the Closing Date
(calculated in accordance with GAAP) for vacation pay and warranty claims.
Seller shall provide to Buyer and its accountants all relevant information and
documents used in preparing the Closing Date Balance Sheet, and Buyer and its
accountants shall be afforded reasonable opportunities to consult with Seller
and Seller's accountants regarding the preparation of the Closing Date Balance
Sheet.
2.4.3 CALCULATION OF PENSION PLAN FUNDING DIFFERENTIAL. The
amount of PBGC Required Funding and the Contractually Determined Funding Amount
shall be
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computed by Noranda's regular actuaries within 60 days after the Closing Date
based upon employee data and the market value of Noranda Pension Plan assets as
of the Closing Date and in accordance with the procedures and assumptions set
forth in Exhibit 2.3.2 attached hereto. Seller and its actuaries shall provide
to Buyer and its actuaries all relevant information and documents used in
computing the PBGC Required Funding and the Contractually Determined Funding
Amount, and Buyer and its actuaries shall be afforded reasonable opportunities
to consult with Seller and Seller's actuaries, both before and after the Closing
Date, regarding the determination of such amounts and the preparation of the
Closing Date Balance Sheet.
2.4.4 TIME OF PAYMENTS AND TRANSFERS. The Closing Payment shall
be paid by Buyer to Seller at the Closing. The Adjustment Payment shall be paid
by Buyer or Seller, as the case may be, within 30 days after delivery of the
Closing Date Balance Sheet. Noranda shall cause the transfer to the Norandex
Pension Plan of the assets (in cash) and liabilities representing the PBGC
Required Funding, plus interest in accordance with Section 2.3.3, no later than
30 business days after the amounts of the PBGC Required Funding and the
Contractually Determined Funding Amount have been computed as described in
Section 2.4.3 upon (i) receipt from Buyer of either an opinion of counsel that
the Norandex Pension Plan and trust meet the requirements of Sections 401(a) and
501(a) of the Code or a written commitment from Buyer (A) to apply, in a timely
manner, for a determination letter that the Plan and trust meet such
requirements and (B) to make any amendments to such Plan and trust required to
obtain such a determination letter and (ii) receipt by Buyer from Seller of a
similar opinion or commitment with respect to the Noranda Pension Plan.
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2.4.5 TERMS OF PAYMENTS. The Closing Payment shall be made by
means of wire transfer to an account specified in writing by Seller to Buyer not
less than three business days before the Closing Date. The Adjustment Payment,
and the transfer of cash constituting the PBGC Required Funding, shall be made
by means of wire transfer to an account specified in writing by the party
entitled to receive the Adjustment Payment to the other party not less than
three business days before such funds are to be transferred.
2.5 OTHER ACTIONS.
2.5.1 TRADEMARKS AND TRADE NAMES. Noranda agrees that neither it
nor its Affiliates will use the trademark and trade name "Norandex," and any
other trademarks or trade names identified in Exhibit 2.5.1 attached hereto, in
any manner after the Closing Date; provided, however, that use of the trademarks
and tradename "Noranda" and other trademarks and/or tradenames derived from or
including "Noranda" (other than "Norandex" and any other trademarks or trade
names identified in Exhibit 2.5.1 attached hereto) shall not be a violation of
this Section 2.5.1.
2.5.2 PENSION PLANS. At or immediately after the Closing, Buyer
will adopt or will cause Norandex to adopt a pension plan for Active Norandex
Employees (the "Norandex Pension Plan") which, except to the extent otherwise
required by law or necessary to reflect the change in ownership of Norandex,
will have the same vesting and benefits provisions as the existing Noranda
Pension Plan. Seller agrees to retain after the Closing Date all responsibility
and liability under the Noranda Pension Plan for all participants other than
Active Norandex Employees and their beneficiaries, agrees to pay such persons
the amounts to which they are entitled under the Noranda Pension Plan, and
agrees that Buyer shall have no responsibility or liability to any such person
for retirement, pension or similar payments.
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2.5.3 NORANDA LIFE INSURANCE PLAN. Seller shall retain all
liability and responsibility for the Noranda Life Insurance Plan as it applies
to Norandex and Subsidiary employees whose employment has terminated before or
at the Closing and each Active Norandex Employee who, as of December 31, 1995,
would have attained age 55 and rendered at least five (5) years of service with
Norandex or Subsidiaries if such employee remained employed with Norandex
through December 31, 1995. Seller acknowledges that Buyer intends, at or
immediately after the Closing, to terminate or cause Norandex to terminate all
post-termination and post-retirement life insurance (other than that for which
Seller retains liability and responsibility pursuant to the preceding sentence)
for all persons who are Active Norandex Employees. Buyer and Norandex shall
cooperate with Seller after the Closing to provide all documents and information
reasonably requested by Seller that are necessary for Seller to carry out its
obligations and responsibilities under this Section with respect to post-
retirement life insurance benefits and provisions. Persons who are Active
Norandex Employees immediately after the Closing Date will be treated similarly
to Buyer's other salaried employees with respect to eligibility for life
insurance under Buyer's life insurance programs offered to its employees,
without distinguishing between hourly and salaried employees of Norandex for
such purpose.
2.5.4 MEDICAL BENEFITS PROGRAMS. Persons who continue as Norandex
employees after the Closing shall be covered by a health plan which provides
benefits that are substantially equivalent to the benefits provided to such
persons by Seller immediately before the Closing (except as otherwise required
by law or necessary to reflect the change in ownership of Norandex), including a
provision that the maximum out-of-pocket expense to Active Norandex Employees
for a family not eligible for a managed care program will be $2,000 per year.
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2.5.5 SECTION 401(K) PLANS. Buyer agrees to adopt or cause
Norandex to adopt a section 401(k) plan (the "Buyer 401(k) Plan") which, to the
extent not otherwise required by law or necessary to reflect the change in
ownership of Norandex, shall provide for the same contributions and benefits as
the Section 401(k) plan previously delivered by Seller to Buyer and in effect at
the date of this Agreement, for Norandex employees at the Closing Date. Buyer
and Seller shall cooperate with each other and with the third party
administrator of the plan to implement such adoption. Seller agrees to take all
steps necessary before and after the Closing to remedy any administrative
failure either to properly and timely invest participant and beneficiary
accounts under Seller's 401(k) plan, to the extent attributable to contributions
made on or before the Closing Date or to adequately communicate with
participants and beneficiaries regarding the investment of such accounts and
Seller agrees to indemnify and hold Norandex and Buyer harmless from any Claims
or Losses arising out of or relating to any such failure. Seller and Buyer
agree to effect a transfer of the accounts under Seller's 401(k) plan maintained
for Norandex employees to the Buyer 401(k) Plan established by Buyer for such
employees, such transfer to occur as soon as practicable after the Closing Date
and after full remedy of the administrative features set forth above.
2.5.6 COLLECTIVE BARGAINING AGREEMENTS. All obligations under
the collective bargaining agreement with the Construction, Building Material,
Ice and Coal Drivers, Helpers and Inside Employees Union, Local 221,
International Brotherhood of Teamsters, applicable to employees at the
Minneapolis, Minnesota office of Norandex, including the pension plan applicable
to such employees that is included in such collective bargaining agreement,
shall continue to be the obligation of Norandex after the Closing Date.
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2.5.7 DEFERRED COMPENSATION PLAN. Buyer agrees that effective the
Closing Date, Norandex shall assume and be responsible for deferred compensation
payments to the current and former Norandex employees previously disclosed to
Buyer under the Noranda Aluminum, Inc. Deferred Compensation Plan in the form
delivered to Buyer before the Closing Date to the extent attributable to
compensation that would have been paid currently by Norandex but for its
deferral under such plan, except as may be set forth in a separate letter
agreement between Buyer and Seller.
2.5.8 TAXES. Buyer and Seller shall each be responsible for one-
half of the sales, use or other similar taxes incurred in connection with the
transactions contemplated hereby.
2.5.9 NO CHANGES TO CERTAIN EMPLOYEE BENEFIT PLANS. Buyer agrees
not to make or permit Norandex to make any significant change to the Norandex
Pension Plan, the Buyer 401(k) Plan or the health plan described in
Section 2.5.4, before January 1, 1996, other than changes that may be required
by law or are beneficial to participants thereunder.
2.5.10 EMPLOYEES. It is Buyer's intention not to engage in any
employment terminations after the Closing of persons who were employees of
Norandex or a Subsidiary at the Closing Date such that prior notice would be
required under the Worker Adjustment and Retraining Notification Act. Nothing
in the preceding sentence shall, however, be deemed to limit in any way the
right of Norandex or Buyer to terminate the employment of any person after the
Closing Date, to limit the rights of Norandex or Buyer to change its intentions
in the future, or to create any rights to continued employment in favor of any
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such persons, and no such person shall be deemed to be a third party beneficiary
of this Section.
2.5.11 COBRA. Norandex will continue to administer and be
responsible for COBRA continuation coverage on and after the Closing Date with
respect to current and former Norandex employees and their dependents.
2.6 TAX MATTERS.
2.6.1 TAXES PRIOR TO, INCLUDING, AND AFTER THE CLOSING.
(a) RESPONSIBILITY FOR TAXES. Noranda shall be responsible for,
and shall indemnify Buyer for, and hold Buyer harmless against, any Tax imposed,
accrued, or assessed in respect of (i) any Tax period that ends on or before the
Closing Date and (ii) any other Tax period to the extent of the Tax attributable
to the portion of the period that begins before the Closing Date and ends on the
Closing Date. The liability for any Taxes of Norandex and its Subsidiaries
imposed, accrued, or assessed in respect of (i) periods beginning after the
Closing Date and (ii) any other tax period to the extent of the Tax attributable
to the portion of the period that begins after the Closing Date and ends after
the Closing Date shall be borne by Buyer, and Buyer will indemnify Noranda for,
and hold Noranda harmless against, any such Taxes. For purposes of this
Agreement, "Tax" and "Taxes" mean any federal, state, or local income or
franchise taxes, and interest, additions, and penalties (civil or criminal)
imposed in connection with any Tax, and any interest in respect of any such
additions or penalties.
(b) FEDERAL INCOME TAX LIABILITY. Noranda will include Norandex
and its Subsidiaries in Noranda's consolidated federal income Tax return for the
short taxable year of Norandex and its Subsidiaries ending on the Closing Date.
Buyer will cause Norandex to provide to Noranda on or before November 30, 1994
all information
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reasonably requested by Noranda necessary to the preparation of such return.
Norandex and its Subsidiaries shall close their books and records (including
workpapers) as of the close of business on the Closing Date in accordance with
Treasury Regulations Section 1.1502-76(b)(4)(i) in order to report their annual
income as determined on the basis of income shown on their permanent books and
records (including workpapers). Noranda and Noranda Finance Inc. shall, jointly
and severally, indemnify Buyer for and hold Buyer harmless against any liability
for Taxes asserted against Norandex or its Subsidiaries for any period by reason
of the consolidation of Norandex or its Subsidiaries with Noranda, or any other
corporation consolidated with Noranda, for federal income tax purposes. Noranda
Finance is not aware of any federal income Tax issue or issues affecting the
group of corporations consolidated with Noranda Finance for federal income Tax
purposes (excluding Norandex and its Subsidiaries) for any period ending on or
before the Closing Date that would in the aggregate, together with interest and
any penalties, if resolved unfavorably to such group of corporations, create a
liability in excess of 30 percent of the aggregate assets of such group.
(c) STATE AND LOCAL FRANCHISE AND INCOME TAX LIABILITY. Noranda
shall prepare and file all state and local franchise and income Tax returns for
Norandex and its Subsidiaries for all periods ending on or before the Closing
Date and shall pay any Taxes due thereon. Norandex shall have an accrued
liability or receivable on its balance sheet as of the Closing Date for state
and local income and franchise Taxes of Norandex and its Subsidiaries that will,
without limitation, reflect the required state and local income and franchise
Tax balances through and including the Closing Date; Buyer will reimburse
Noranda for payments by Noranda of any such Taxes to the extent that those Taxes
are accrued on such balance sheet. Noranda and Noranda Finance Inc. shall,
jointly and
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severally, indemnify Buyer for and hold Buyer harmless against any liability for
Taxes asserted against Norandex or its Subsidiaries for any period by reason of
the consolidation or combination of Norandex or its Subsidiaries with Noranda,
or any other corporation consolidated or combined with Noranda for state income
or franchise tax purposes. Buyer will cause Norandex to provide to Noranda on
or before November 30, 1994 all information reasonably requested by Noranda
necessary to the preparation of such returns. Buyer shall prepare and file all
state and local franchise and income Tax returns for Norandex and its
Subsidiaries for all periods ending after the Closing Date and shall pay any
Taxes due thereon. In the case of any state or local franchise or income Tax
return in respect of a period beginning before and ending after the Closing
Date, Buyer shall submit the return to Noranda for review as to consistency with
prior returns at least 25 business days before the last day for filing such
return and Noranda shall have completed such review and consulted as necessary
with Buyer no later than the tenth business day before such filing day.
(d) TAX ELECTIONS. Buyer agrees not to make any election under
either Section 338(h)(10) or Section 338(g) of the Code. Noranda, Norandex, and
Norandex's Subsidiaries have made no election under Section 341(f) of the Code
respecting Norandex or its Subsidiaries. Buyer agrees to cause Norandex and its
Subsidiaries to make an election to carry forward, and not carry back, losses
occurring after the Closing Date.
(e) TAX REFUNDS. In the event that Norandex or any of its
Subsidiaries receives a refund or credit of Taxes for which Noranda has made a
payment on behalf of Norandex or any of its Subsidiaries and not been reimbursed
by Buyer applicable to any period (i) ending on or prior to the Closing Date, or
(ii) ending after the Closing
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Date and including any period commencing prior to the Closing Date, then the
amount of such refund or credit shall promptly be paid by Buyer to Noranda.
2.6.2 COOPERATION. After the Closing, Buyer and Noranda shall, and
Buyer shall cause Norandex and its Subsidiaries to, cooperate fully with one
another and shall make available to one another, as reasonably requested,
records or documents relating to Tax liabilities of Norandex and its
Subsidiaries for all periods ending on or before the Closing Date. Buyer shall
use reasonable efforts to preserve all such information, records, and documents
in the possession of Norandex and its Subsidiaries on the Closing Date, until
the expiration of any applicable statutes of limitation, including extensions
thereof. Buyer, Noranda, and Norandex and its Subsidiaries shall also make
available to one another, as reasonably requested, personnel responsible for
preparing or maintaining information, records, and documents in connection with
Tax matters.
2.6.3 AUDITS AND CONTESTS WITH RESPECT TO TAXES. So long as taxable
periods of Norandex and its Subsidiaries ending on or before, or including, the
Closing Date remain open for an assessment of Tax, Buyer and Noranda shall
notify the other in writing within 15 business days after receipt by Buyer or
Noranda of written notice of (i) any pending or threatened audit or assessment
with respect to Taxes of Norandex and its Subsidiaries, and (ii) any pending or
threatened audit or assessment with respect to Taxes of Buyer that may affect
the Tax liabilities of Norandex and its Subsidiaries for taxable periods ending
on or before, or including, the Closing Date. Within 15 business days after
receipt of the first such notice respecting an item or items for which it is
responsible pursuant to Section 2.6.1, Noranda may elect, by written notice to
Buyer, to contest the audit or assessment in the name of Norandex and its
Subsidiaries. If Noranda so elects, it shall be solely responsible for, and
shall bear all costs of, the defense of the item or items at issue, except that
Buyer
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agrees to cooperate, and cause Norandex and its Subsidiaries to cooperate, in
the defense by making relevant documents and employees available to Noranda at
Noranda's expense, and to execute such documents as may be reasonably necessary
to allow Noranda to conduct the defense. If Noranda elects to conduct a
defense, then all decisions with respect to the negotiation, settlement, or
litigation of the item or items at issue shall be made by Noranda and shall be
binding upon Buyer, except that Noranda shall consult with Buyer before agreeing
to any adjustment, or making any Tax election, that will or may create an
increase in Taxes for Norandex and its Subsidiaries or Buyer in respect of any
period ending after the Closing Date and shall promptly indemnify Buyer for, and
hold Buyer harmless against, any such increase.
2.6.4 AUDIT ADJUSTMENTS.
(a) If as a result of the examination of the consolidated or
separate federal, state, or local franchise or income Tax returns of Noranda or
any of Norandex and its Subsidiaries, or any group of corporations that includes
Noranda or Norandex and its Subsidiaries for a taxable year ending on or before,
or including, the Closing Date, there shall be made after the Closing Date any
adjustment that increases deductions, losses, or credits against Taxes or that
decreases income, gain or recapture of credits against Taxes ("Tax Benefits") or
that increases income, gain, or recapture of credits against Taxes or decreases
deductions, losses or credits against Taxes ("Tax Detriments") for any taxable
year and that will permit Noranda or Norandex and its Subsidiaries (or any
corporation in an affiliated group that includes Buyer or Norandex and its
Subsidiaries) to increase the Tax Benefits or decrease the Tax Detriments to
which they would otherwise have been entitled for any taxable year beginning on
or after the Closing Date, Noranda will notify Buyer of such adjustment and
provide Buyer with such information as may be necessary for
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Buyer to take account of such increases or decreases through the filing of a
claim of refund or otherwise. Buyer shall take any reasonable actions necessary
to secure the benefit of such increases or decreases. In any taxable year in
which the net effect of such adjustments is a Tax Benefit to Norandex and its
Subsidiaries, Buyer shall indemnify Noranda for such benefit (plus any interest
actually received by Buyer from the relevant Tax authority, but less Buyer's
reasonable net expenses incurred in securing such benefit) within thirty
business days after the Tax return reflecting those net Tax Benefits is filed;
if the net effect is a Tax Detriment to Norandex and its Subsidiaries, Noranda
shall indemnify Buyer for such detriment (plus any reasonable expenses of Buyer
incurred in attempting to mitigate such detriment) to the extent that such
detriment is not indemnified pursuant to Section 2.6.3, within thirty business
days after the tax return reflecting those net Tax Detriments is filed. If,
after Buyer has made a payment to Noranda in respect of a Tax Benefit, there is
a subsequent decrease in the amount of such Tax Benefit as a result of an
examination by federal, state or local tax authorities, Noranda shall indemnify
Buyer for the amount of such decrease in such Tax Benefit, promptly after the
tax return reflecting such decrease is filed; Buyer agrees to use its reasonable
efforts to defend against any such decrease.
(b) In calculating any amount to be indemnified under Section
2.6.3 or under this Section 2.6.4, each party shall be deemed to be subject to
Tax at the maximum combined Tax rate for the type of Tax and for the taxable
period in question. By way of example, and without limitation of the foregoing
sentence, the maximum combined federal and state corporate income Tax rate is
currently 40%. Any payment pursuant to this Section 2.6.4 shall constitute an
adjustment to the Purchase Price under this Agreement.
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2.6.5 TERMINATION OF TAX AGREEMENTS. Except as otherwise
contemplated by this Agreement, any and all Tax-allocation, Tax-sharing, or
other similar agreements between Noranda and Norandex and its Subsidiaries shall
be terminated as of the Closing Date, and from and after such date, none of such
entities shall have any rights or liabilities thereunder.
2.6.6 MINIMUM TAX CREDIT. No later than the date on which the
Adjustment Payment is required to be delivered pursuant to Section 2.4.4, Buyer
shall pay to Seller the amount of $1,200,000, representing 60% of $2,000,000,
which is the estimated accumulated minimum tax credit carryover ("AMTCO")
available to Norandex and its Subsidiaries as of the Closing Date (other than
any AMTCO attributable to Master Shield, Inc. ("Master Shield")). Such amount
shall not be included on the Closing Date Balance Sheet or reflected in Adjusted
Net Assets Employed as of the Closing Date. Within 30 days after Noranda
Finance files each of its 1993 Consolidated Federal Income Tax Return and its
1994 Consolidated Federal Income Tax Return, Seller shall notify Buyer of the
actual AMTCO available to Buyer (other than any AMTCO attributable to Master
Shield). If such actual AMTCO exceeds such estimated AMTCO for either of
Seller's 1993 and 1994 taxable years, Buyer shall pay Seller 60 percent of the
excess within 30 days after such notification. If such actual AMTCO is less
than such estimated AMTCO for either of Seller's 1993 and 1994 taxable years,
Seller shall pay Buyer 60 percent of the amount of the deficit within 30 days
after such notification. Buyer shall pay Seller 60 percent of any Tax saving
actually realized by Buyer from AMTCO attributable to Master Shield and deriving
from Seller's 1993 and 1994 taxable years. Adjustments of AMTCO attributable to
periods ending on or before December 31, 1994 caused by Internal Revenue Service
audits or assessments shall be subject to Section 2.6.3 and 2.6.4, except that
indemnification
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of Tax Benefits and Tax Detriments attributable to such adjustments shall be 60
percent of the amount thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that except as set forth on the
Disclosure Schedule, (i) the representations and warranties set forth in
Sections 3.1 through 3.8 are true and correct, and (ii) to the best knowledge of
Seller, the representations and warranties set forth in Sections 3.9 through
3.29 are true and correct. The "knowledge" of Seller shall be deemed to include
the knowledge of directors and officers of Seller and the supervisory employees
of Seller with responsibilities relating to the representations and warranties
of Seller set forth in this Agreement. The "knowledge" of Seller shall also be
deemed to include such matters as are disclosed to Seller by the Relevant
Employees of Norandex before the Closing. Seller shall make such inquiries of
the Relevant Employees concerning the representations and warranties of Seller
set forth in this Agreement as are described in a separate letter from Seller to
Buyer dated before the date of this Agreement. A statement on the Disclosure
Schedule that qualifies or limits a representation or warranty, or that
constitutes an exception to a representation and warranty, shall specifically
identify the Section of this Agreement to which the statement relates.
Information, lists, documents, agreements or other matters set forth in the
Disclosure Schedule that are not described in the preceding sentence need only
be set forth once even if another Section calls for similar disclosure.
3.1 OWNERSHIP OF SHARES. Seller is the true and lawful owner of all of
the Shares free and clear of all claims, liens, security interests, pledges,
options and encumbrances.
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3.2 AUTHORIZATION. This Agreement has been duly authorized, executed and
delivered by Seller and constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
3.3 ORGANIZATION; SUBSIDIARIES. Norandex is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware.
Norandex has full power and authority to own or lease its respective properties
and to carry on its business as now being conducted. Norandex is qualified to
conduct business as a foreign corporation in the states indicated on the
Disclosure Schedule. Norandex is duly qualified to transact business and is in
good standing in each jurisdiction in which the failure to so qualify would have
a material adverse effect on its business or properties. To the best knowledge
of Seller, neither Seller nor Norandex has received any claim or notice, whether
formal or otherwise, from any jurisdiction to the effect that Norandex is or was
required to qualify to conduct business and was not so qualified, or that a
jurisdiction in which it is authorized to conduct business may withdraw such
authorization. Seller has caused to be delivered to Buyer complete and correct
copies of the articles of incorporation and bylaws of Norandex and each
Subsidiary, as in effect on the date of this Agreement. All Subsidiaries of
Norandex, other than those businesses included in the "Noranda Finance
Business," are listed on the Disclosure Schedule. Except as shown on the
Disclosure Schedule, Norandex (or a wholly-owned Subsidiary of Norandex) owns
all of the capital stock of each Subsidiary. No Subsidiary of Norandex has any
employees as of the date of this Agreement. The Disclosure Schedule identifies
each Subsidiary of Norandex that at any time during the last five years has had
any employees. Any entity that was a Subsidiary of Norandex since 1967 and, to
Seller's best knowledge, before 1967, at any time is listed on the Disclosure
Schedule.
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3.4 CAPITALIZATION. The authorized capital stock of Norandex consists of
110,000 shares of common stock, $.10 par value per share, of which 110,000
shares are issued and outstanding. All of the Shares were duly authorized and
validly issued, are fully paid and nonassessable and were issued in compliance
with all applicable securities laws. There are no outstanding options, warrants
or other rights to acquire, or commitments of any character whatsoever relating
to, any securities of Norandex, except those that will have been validly
terminated before the Closing Date and will be of no further force or effect
after the Closing Date.
3.5 INVESTMENTS IN OTHERS. Other than marketable securities reflected in
the Norandex Financial Statements or the Subsidiaries identified in the
Disclosure Schedule, each of Norandex and each Subsidiary does not own any stock
or other equity interests in any other person or entity, and has not made any
investment in, advance or loan to, guarantee of the obligations of, or any
commitment to make any investment in, advance or loan to, or guarantee of the
obligations of, any person or entity, other than investments, advances, loans or
guarantees made in the ordinary course of business for which the maximum
potential liability of Norandex does not exceed $100,000 in the aggregate.
3.6 COMPLIANCE WITH LAWS AND PERMITS; NO CONFLICTS. Norandex and each
Subsidiary have all Permits that are necessary for the lawful conduct of the
business of Norandex as it is now being conducted, except where the failure to
have such Permits would not have a material adverse effect on the business or
properties of Norandex. To the best knowledge of Seller, neither Norandex nor
any Subsidiary is in material violation of any Permit or Law. Neither the
execution and delivery of this Agreement by Seller or Norandex, nor the
performance by Seller or Norandex of any of their respective obligations under
this Agreement, will violate any provision of any Law or Permit or will conflict
with,
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result in the breach of any of the material terms or conditions of, constitute a
default under, permit any party to accelerate any right under or terminate,
constitute a waiver of any material right under, require consent of any party
under, or result in the creation of any lien, charge or encumbrance upon any of
the properties, assets or capital stock of Norandex or any Subsidiary pursuant
to, the articles of incorporation or bylaws of Norandex and its Subsidiaries or
any Understanding, other contract or agreement, policy of insurance, indenture,
mortgage, lease, or other similar instrument of any kind to which Seller,
Norandex or any Subsidiary is a party or by which Seller, Norandex or any
Subsidiary, or any of their respective properties or assets, are bound (except,
with respect to such other contracts, agreements, policies, indentures,
mortgages, leases or instruments, such as will not have a material adverse
effect on the business, properties or assets of Norandex).
3.7 BROKERS AND FINDERS. Except for BA Securities, Inc., which is acting
as advisor to Seller, neither Seller nor Norandex has retained any broker or
finder in connection with the transactions contemplated by this Agreement.
3.8 TAX RETURNS AND PAYMENTS. All federal, state and local Tax returns,
reports and forms required to be filed by, or with respect to any activities or
income of, Norandex and its Subsidiaries have been or will be timely filed. All
Taxes which were shown to be due or claimed to be due on such returns, reports
and forms, or which otherwise may be owed, have been paid or adequate provision
for the payment thereof has been made and is reflected in the Unaudited
Financial Statements. Except as set forth in the Disclosure Schedule, there has
not been any assessment of deficiency or additional Tax relating to or affecting
Norandex or its business or affairs, or any completed, pending or threatened Tax
audit or investigation relating to or affecting Norandex or its business or
affairs by any taxing or other governmental authority. The amounts provided for
Taxes on the Unaudited
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Balance Sheet are sufficient for the payment of all unpaid Taxes, assessments
and deficiencies, other than federal Taxes, assessments and deficiencies,
relating to Norandex and its business for all periods before the date of the
Unaudited Balance Sheet.
3.9 FINANCIAL STATEMENTS. Each of the Norandex Financial Statements, the
Unaudited December 31 Financial Statements and the Unaudited Financial
Statements: (i) have been or will be prepared from the books and records of
Norandex, (ii) fairly present or will fairly present the consolidated financial
position of Norandex as of the dates and for the periods indicated therein, and
(iii) have been or will be prepared in accordance with GAAP consistently
applied.
3.10 ABSENCE OF UNDISCLOSED LIABILITIES. Norandex does not have
outstanding any indebtedness which is not reflected in the Unaudited Balance
Sheet. Except as set forth in the Disclosure Schedule, Norandex does not have
any other liability (absolute, contingent, asserted, unasserted, known or
unknown) which is not reflected in the Unaudited Balance Sheet other than
liabilities incurred in the ordinary course of business since the date of the
Unaudited Balance Sheet which do not adversely affect the business or financial
position of Norandex.
3.11 ABSENCE OF CERTAIN CHANGES AND EVENTS. Between December 31, 1993 and
the date of this Agreement, there has not been:
(i) any transaction entered into by Norandex or any Subsidiary other
than in the ordinary course of business or as contemplated by this
Agreement; any loss or damage to any of the manufacturing facilities of
Norandex or any Subsidiary due to fire or other casualty, whether or not
insured, amounting to more than $100,000 in aggregate replacement value;
any event that materially and adversely affects the ability of Norandex to
operate its business as a whole in a manner consistent with
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the way in which such business has been conducted before the Closing Date;
or any change in the financial position, assets, liabilities, results of
operations or business of Norandex other than changes in the ordinary
course of business which in the aggregate have not been materially adverse;
(ii) any lawsuit, proceeding or governmental investigation which
could have a material adverse effect on the business, financial condition,
or results of operations of Norandex;
(iii) any material adverse change to any of Norandex's assets, other
than normal wear and tear and depreciation;
(iv) any material adverse change in Norandex's business or financial
condition;
(v) any transfer or any disposition of any of Norandex's or any
Subsidiary's assets with a value in excess of $100,000, other than in the
normal course of business;
(vi) any merger or consolidation to which either Norandex or any
Subsidiary is or was a party;
(vii) any amendment by Norandex or any Subsidiary of their respective
articles of incorporation or bylaws;
(viii) any change in the Employee Benefit Plans and Understandings
applicable to Norandex employees, including without limitation any change
in any salary rates (other than normal merit increases or promotions), or
in any new employment or severance agreement or arrangement, or in any
amendment to an employment or severance agreement or arrangement, or in any
new collective bargaining or similar agreement, which in the aggregate
amount to more than a
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$100,000 per annum impact on Norandex's business except as listed on the
Disclosure Schedule;
(ix) any change by either Norandex or a Subsidiary in its authorized
or outstanding capital stock or otherwise in its capital structure;
(x) any incurrence by Norandex or a Subsidiary of any indebtedness
for borrowed money in excess of $100,000; or
(xi) any offer or sale by Norandex or any Subsidiary of any equity or
debt securities, debt instruments, or any options, warrants or other rights to
acquire any such securities or instruments.
3.12 INTERESTS IN REAL PROPERTY. Seller has previously delivered to Buyer
a complete and correct list and brief description of all real property that has
been owned or leased by Norandex or any Subsidiary, including all significant
plants and structures located on such properties. Norandex and each Subsidiary
have good and marketable title in fee simple to all real property shown as owned
by it on the Disclosure Schedule, including all fixtures and improvements. All
real property leases to which Norandex or a Subsidiary is a party are valid and
enforceable, and neither Norandex nor any Subsidiary, nor any other party
thereto, is in default of any material provision thereof. Except as shown on
the Disclosure Schedule, all real property shown as owned on the Disclosure
Schedule is free and clear of all easements, reservations, rights-of-way, liens,
mortgages, claims, encumbrances and other restrictions. Except as shown on the
Disclosure Schedule, (i) all improvements and fixtures on real properties owned
or leased by Norandex or a Subsidiary conform in all material respects to all
applicable health, fire, safety, environmental, zoning and building laws and
ordinances, and (ii) all materials, buildings, structures and fixtures used by
Norandex or a Subsidiary in the conduct of its business are in good operating
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condition and repair, ordinary wear and tear excepted, and are sufficient for
the type and magnitude of Norandex's operations.
3.13 PERSONAL PROPERTY. Norandex and each Subsidiary have good and
marketable title, free and clear of all title defects, security interests,
pledges, options, claims, liens, encumbrances and restrictions of any nature
whatsoever, to all inventory and receivables and to any item of machinery,
equipment, or tangible or intangible personal property owned by it. The
Disclosure Schedule sets forth a complete and correct schedule of all categories
of personal property used in the business of Norandex. All of the machinery,
equipment and other tangible personal property listed in the Disclosure Schedule
is in good operating condition and repair, normal wear and tear excepted.
3.14 DIRECTORS AND OFFICERS. The Disclosure Schedule includes a complete
and correct list of all present officers and directors of Norandex.
3.15 CERTAIN TRANSACTIONS. Except as set forth on the Disclosure Schedule,
neither Seller, Norandex, any Subsidiary, nor any Affiliate of Seller, Norandex
or any Subsidiary, is presently a party to any agreement or arrangement with
Norandex or a Subsidiary (i) providing for the furnishing of raw materials,
products or services to or by, or (ii) providing for the sale or rental of real
or personal property to or from, any such entity.
3.16 INTELLECTUAL PROPERTY, ETC. The Disclosure Schedule contains a
complete and correct list of all Intellectual Property Rights of Norandex.
Neither Norandex nor Seller has received any notice of any infringement of any
Intellectual Property Right or Proprietary Information of any third party.
Norandex owns (or licenses pursuant to Understandings set forth on the
Disclosure Schedule) all Intellectual Property Rights (including without
limitation the trademark "Norandex") and Proprietary Information which are used
in the business of Norandex in the manner in which it is presently conducted or
anticipated to be
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conducted immediately before the Closing. Neither Norandex, Seller nor any
Subsidiary has infringed or are infringing on any Intellectual Property Rights
or Proprietary Information of any third party.
3.17 LITIGATION AND OTHER PROCEEDINGS. Except as shown on the Disclosure
Schedule, neither Seller, Norandex or any Subsidiary, nor any of their officers
or directors, is a party to any pending or threatened Claim in the United States
or elsewhere relating to Norandex or its properties or assets, and there are no
facts or circumstances that could reasonably be expected to result in any such
Claim or threatened Claim, other than immaterial product warranty claims
received in the ordinary course of Norandex's business. Neither Norandex nor
any Subsidiary is subject to any order, writ, judgment, decree or injunction.
The Disclosure Schedule contains a complete list of all Claims (other than
immaterial product warranty claims received in the ordinary course of Norandex's
business) brought against Seller, Norandex or any Subsidiary for which Norandex
or a Subsidiary might be found liable or the assets of Norandex or a Subsidiary
may otherwise be bound, since January 1, 1989, together with a brief statement
of the nature and amount of the Claim, the court and jurisdiction in which the
Claim was brought, the resolution (if resolved), and the availability of
insurance to cover the Claim.
3.18 UNDERSTANDINGS. The Disclosure Schedule identifies and briefly
describes all Understandings. Seller has caused to be delivered to Buyer
complete and correct copies of any Understanding that Buyer has requested.
Norandex and all of the other parties to such Understandings are in compliance
with all material provisions of all such Understandings, and no fact exists
which is, or with the passage of time could become, a default by Norandex or any
other party under any of them.
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3.19 INSURANCE AND BANKING FACILITIES. Seller or Norandex maintains
insurance covering such risks and in such amounts as are adequate in relation to
the business and assets of Norandex. The Disclosure Schedule lists (i) all
contracts of insurance and indemnity of Norandex in force at the date of this
Agreement (including name of insurer or indemnitor, agent, annual charge,
coverage and expiration date); (ii) the names and locations of all banks in
which Norandex has accounts; and (iii) the names of all persons authorized to
draw on such accounts. All premiums and other payments due with respect to all
contracts of insurance or indemnity in force at the date hereof have been or
will be paid or accrued, and Seller knows of no circumstance (including without
limitation the consummation of the transactions contemplated by this Agreement)
that has caused or might cause any such contract to be canceled or terminated
(other than any cancellations or terminations requested by Seller in connection
with consummation of the transactions contemplated by this Agreement and
communicated to Buyer). Norandex has given notice or is in the process of
giving notice to insurers with respect to all known Claims which it believes to
be covered by insurance. The Disclosure Schedule contains a list of such Claims
made since January 1, 1991, including the nature and amount of the Claim, the
date the Claim arose and the date notice to insurers (if any) was given.
3.20 EMPLOYEE BENEFIT PLANS; PERSONNEL. The Disclosure Schedule comprises
a complete and correct list of all Employee Benefit Plans of Norandex and each
Subsidiary. Seller has delivered to Buyer with respect to each such Employee
Benefit Plan, each plan document, policy, procedure or other governing
instrument, including all amendments, supplements, collective bargaining
agreements, letters, memoranda, understandings and any other document reasonably
necessary to reflect the terms and conditions of each Employee Benefit Plan and
all trust agreements and other instruments under which the assets of any
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such plan are held or managed and benefits are provided. Norandex and each
Subsidiary has been and is in material compliance with all Employee Benefit
Plans. Seller has caused to be furnished to Buyer a list of all employees of
Norandex as of July 31, 1994.
3.21 POWERS OF ATTORNEY AND SURETYSHIPS. Norandex does not have any power
of attorney outstanding or any obligations or liabilities (absolute or
contingent) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise respecting the obligation of any other person.
3.22 MINUTES AND STOCK RECORDS. Seller has caused Buyer to be given access
to copies of the minute books and stock records of Norandex and each Subsidiary
containing all of the corporate proceedings and stock records of Norandex and
the Subsidiaries that are in Seller's possession or under Seller's control.
Such items contain a complete and correct record of all proceedings and actions
taken at all meetings of, and all actions taken by written consent by, the
holders of capital stock of Norandex, each Subsidiary and their respective
boards of directors, and all original issuances and subsequent transfers and
repurchases of their capital stock.
3.23 GOVERNMENTAL CONSENTS. The Disclosure Schedule sets forth all
consents, approvals, orders and authorizations from, and all registrations,
qualifications, designations, declarations and rulings with, any United States
or other federal, state, or local governmental authority, required by or with
respect to Norandex in connection with the consummation of the transactions
contemplated by this Agreement or necessary to enable Norandex to conduct its
business after the Closing as it was conducted immediately before the Closing.
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3.24 COMPLIANCE WITH ERISA.
3.24.1 DOCUMENTS. The Disclosure Schedule comprises a complete and
correct list of all ERISA Plans. True, correct and complete copies of the
following documents, in addition to any documents required and delivered
pursuant to Section 3.20, with respect to each of the ERISA Plans, have been
delivered to Buyer, except as noted in the Disclosure Schedule:
(a) GOVERNING INSTRUMENTS. Each current Plan document,
policy, procedure or other governing instrument relating to an
ERISA Plan or an Employee Benefit Plan, including all amendments,
supplements, collective bargaining agreements, letters,
memoranda, understandings and any other document reasonably
necessary to reflect the terms and conditions of each such Plan
and all trust agreements and other instruments under which the
assets of any ERISA Plan or Employee Benefit Plan that covers any
Norandex or Subsidiary employee are held or managed and benefits
are provided.
(b) SPDS. The most recent summary plan description ("SPD")
of each ERISA Plan for which an SPD is required under ERISA and
any summaries of material modifications thereto.
(c) FORMS 5500. The three (3) most recent Forms 5500,
5500-C or 5500-R required to be filed for each ERISA Plan.
(d) FINANCIAL STATEMENTS. The most recent annual financial
statements for each ERISA Plan, if not included with such
Forms 5500, 5500-C or 5500-R.
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(e) DETERMINATION LETTERS. With respect to each ERISA Plan
that has received a determination letter from the Internal
Revenue Service regarding its qualified status under
Section 401(a) or Section 501(c)(9) of the Code, the most recent
Internal Revenue Service determination letter, the application
submitted when requesting such determination letter and any
subsequently filed determination letter request.
3.24.2 DETERMINATION LETTER. Except as indicated on the Disclosure
Schedule, each ERISA Plan intended to qualify under Section 401(a) or Section
501(c)(9) of the Code has received a favorable determination letter as to its
qualification and has been administered in compliance with ERISA and the Code
and no fact or circumstance exists which would preclude continuing, good faith
reliance on such determination letter or would adversely affect the qualified
status of any such ERISA Plan.
3.24.3 NO REPORTABLE EVENT. No fact or circumstance exists,
including, without limitation, any "reportable event" (within the meaning of
ERISA), in connection with any ERISA Plan which might constitute grounds for
termination of such ERISA Plan by the PBGC or of the appointment by a court of a
trustee to administer such ERISA Plan. Neither Norandex, any Subsidiary nor
Seller has incurred any liability to the PBGC (other than for payment of
premiums which have been timely paid) with respect to any ERISA Plan, and
Norandex, each Subsidiary and Seller have complied in full with the minimum
funding requirements and in all material respects with the reporting, disclosure
and fiduciary requirements of ERISA and the Code. All annual reports required
to be filed under ERISA with respect to any ERISA Plan have been timely filed
and each initial notification to the Department of Labor with respect to any
ERISA Plan that is intended to
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qualify for the alternative ERISA compliance alternative available under
Department of Labor Regulation section 2520.104-23 (relating to an exemption
from annual reporting for so-called "top-hat" plans) has been timely filed.
3.24.4 NO PROHIBITED TRANSACTIONS. None of the ERISA Plans or
their fiduciaries has engaged in a non-exempt "prohibited transaction" (within
the meaning of ERISA and the Code) or breached their fiduciary duties in a
manner which might, directly or indirectly, subject such ERISA Plan or Norandex,
any Subsidiary or Seller to liability for any losses, expenses, damages,
penalties or excise taxes.
3.24.5 FULLY FUNDED. As of January 1, 1994, all of the ERISA Plans
were fully funded on a termination basis using, with respect to the Noranda
Pension Plan, the assumptions set forth on Exhibit 2.3.2, and with respect to
any other ERISA Plan, the current interest rate and mortality assumptions
utilized by the PBGC and the other actuarial assumptions used in the most recent
actuarial valuations of the ERISA Plans. Except as set forth on the Disclosure
Schedule, neither Norandex nor any Subsidiary has "withdrawn" from any
"multiemployer plan" (within the meaning of ERISA). With respect to each
multiemployer plan listed on the Disclosure Schedule, neither Norandex nor any
Subsidiary would have incurred a withdrawal liability under ERISA if Norandex or
any Subsidiary or Noranda or any Affiliate of Noranda had withdrawn from any
such multiemployer plan during the calendar year 1993, except as noted in the
Disclosure Schedule. All contributions required to be made to any multiemployer
plan so listed have been made on or before their due dates.
3.24.6 NO TAX LIABILITY. None of the ERISA Plans, or any trust
related thereto, has incurred any federal, state or local tax liability.
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3.24.7 CLAIMS. There are no pending or threatened Claims, (other
than routine claims for benefits) that have been asserted or instituted against
any Employee Benefit Plan, the assets of any Employee Benefit Plan or against
the sponsor, administrator or any fiduciary of any Employee Benefit Plan with
respect to the operation of such Employee Benefit Plan that could subject
Norandex or any Subsidiary to any liability or expense, nor does Norandex, any
Subsidiary or Seller have any knowledge of any facts which could form the basis
for any such Claim or of any pending investigations by any governmental agency
that could result in any such liability or expense.
3.24.8 COBRA. With respect to the employees and former employees
of Norandex or any Subsidiary, their spouses and their dependents, Seller,
Norandex and each such Subsidiary are in compliance with the notice and
continuation coverage requirements of Section 4980B(f) of the Code and
regulations thereunder ("COBRA").
3.24.9 POST-EMPLOYMENT BENEFITS. Neither Norandex nor any Subsidiary
is obligated to provide any benefits under a "welfare benefit plan" (within the
meaning of ERISA) to former employees other than benefits under the Noranda Life
Insurance Plan and so-called "COBRA" health care continuation coverage. Seller
represents and warrants that there are no Employee Benefit Plans of Seller or
Norandex (or a Subsidiary or Affiliate of Seller) providing medical, dental,
health, life insurance, or similar benefits for terminated or retired employees
of Norandex, including early retirees, except under the Noranda Life Insurance
Plan, which Buyer intends to terminate (or cause Norandex to terminate) at or
immediately after the Closing Date, and such as may be required by COBRA.
3.24.10 TERMINATION AND AMENDMENT RIGHT. No action or communication
to employees or former employees of Norandex or a Subsidiary has occurred which
is inconsistent with any provision of any ERISA Plan that is a "welfare benefit
plan" (within
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the meaning of ERISA) that reserves the right of Norandex, a Subsidiary or
Seller (or an Affiliate of Seller) to amend or terminate such ERISA Plan.
3.24.11 PARACHUTE PAYMENTS. Except as otherwise expressly provided
herein or as disclosed in the Disclosure Schedule, no compensation that is
directly or indirectly conditioned upon the transactions contemplated by this
Agreement and no parachute payment, within the meaning of Section 280G of the
Internal Revenue Code, will become payable to any employee or director of
Norandex or any Subsidiary as a result of the execution or performance of this
Agreement, or on the termination of any such employee or director on or after
the Closing Date.
3.25 LABOR MATTERS. (i) Norandex and each Subsidiary is and has been in
material compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such Laws respecting employment
discrimination, occupational safety and health, and unfair labor practices; (ii)
there is no unfair labor practice complaint against Norandex or any Subsidiary
pending or threatened before the National Labor Relations Board or any
comparable state, local or foreign agency; (iii) there is no labor strike,
dispute, slowdown or stoppage actually pending, or threatened against or
directly affecting Norandex or any Subsidiary; (iv) no grievance or arbitration
proceeding is pending and no Claims therefor exist; (v) no agreement which is
binding on Norandex or any Subsidiary restricts Norandex or any Subsidiary from
relocating or closing any of its operations; (vi) Norandex and each Subsidiary
has not experienced any material work stoppage in the last 18 months; (vii)
neither Norandex nor any Subsidiary is delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them or amounts required to be
reimbursed to such employees; (viii) except
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as set forth in the Disclosure Schedule, neither Norandex nor any Subsidiary has
established, entered into or maintained any severance pay program, or any
payroll practice to make termination payments, or any other agreement to pay
severance or termination payments to any employee of Norandex or a Subsidiary on
or before the Closing Date; and (ix) there is no, and for the past two years
there has not been any, effort to organize any employees of Norandex or any
Subsidiary or representation campaign or election with respect to any employees
of Norandex or a Subsidiary. The collective bargaining agreement relating to
Norandex employees at its Minneapolis, Minnesota branch is the only collective
bargaining agreement to which Norandex or any Subsidiary is subject or by which
Norandex or any Subsidiary is bound, and Norandex has been and is in material
compliance with such agreement.
3.26 HAZARDOUS MATERIALS.
(i) Norandex and each Subsidiary have not caused, and are not
causing, any disposals, releases or threatened releases of any Hazardous
Material on or under any properties which any of them (A) own, lease,
occupy or operate or (B) previously owned, leased, occupied or operated;
and Seller has no knowledge, and has no reason to believe or suspect, that
any such disposals or releases occurred before Norandex or any Subsidiary
took title to, or possession or operation of, any of such properties, or
that any such disposals or releases are migrating or have migrated off of
such properties in subsurface soils, groundwater or surface waters;
(ii) Norandex and each Subsidiary have not either (A) arranged for the
disposal or treatment of Hazardous Material at any facility or site owned
or operated by another person from which facility or site there has been a
release or there is a release or threatened release of a Hazardous
Material, or (B) accepted any
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Hazardous Material for transport to disposal or treatment facilities or
other sites selected by Norandex or a Subsidiary, from which facilities or
sites there has been a release or there is a release or threatened release
of a Hazardous Material; any facility or site to which Norandex or a
Subsidiary arranged for the disposal or treatment of Hazardous Material
under (A) above was duly licensed in accordance with applicable laws and
has not been listed in connection with the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) by the United States
Environmental Protection Agency's National Priorities List (NPL) or any
equivalent or like listing of sites under state or local law (whether for
potential releases of substances listed in CERCLA or other substances) or,
for properties in jurisdictions other than the United States, any
equivalent or like listing of sites under the laws of such other
jurisdictions;
(iii) There has not been any release or threatened release of any
Hazardous Material originating from a property other than those owned,
leased or operated by Norandex that has or will come to be located on or
under properties owned, leased, occupied or operated by Norandex or any
Subsidiary;
(iv) Norandex and each Subsidiary have never installed, used, buried
or removed any surface impoundment or underground tank or vessel or sump,
drain or pipeline which holds or held Hazardous Materials on properties
owned, leased, occupied or operated by Norandex or any Subsidiary;
(v) Norandex and each Subsidiary are and have been in material
compliance with all federal, state or local Laws and Permits relating to
air, water, industrial hygiene and worker health and safety, anti-
pollution, hazardous or toxic wastes, materials or substances, pollutants
or contaminants, and no condition exists
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at any of the real property owned by or used in the business of Norandex
that would constitute a material violation of any such Law or Permit or
that constitutes or threatens to constitute a public or private nuisance;
and
(vi) There has been no Claim, including without limitation any
litigation, administrative proceedings or investigations or any other
actions, claims, demands, notices of potential responsibility or requests
for information brought or threatened, against Norandex or any Subsidiary
or against any predecessor owner or operator of any of the properties
referenced in subparagraph (i) above, alleging the presence, disposal,
release or threatened release of any Hazardous Material on, from or under
any of such properties or as otherwise relating to potential environmental
liabilities, or any settlement reached by Norandex or a Subsidiary relating
to any of the foregoing.
3.27 PROPERTY TAXES. The Disclosure Schedule sets forth a list of all real
property and personal property tax bills pertaining to any property owned or
used by Norandex or any Subsidiary for the current and two prior property tax
years except for leased properties where Seller, Norandex or a Subsidiary are
not responsible for payment of or reimbursement for such taxes. Seller is not
aware of any proposal by any taxing authority to change the assessed values or
assessment rate reflected in such bills.
3.28 ACCURACY OF DOCUMENTS AND INFORMATION. Neither the representations or
warranties made by Seller in this Agreement, nor those contained in any
document, written information, financial statement, other statement,
certificate, schedule or exhibit furnished or to be furnished (or caused to be
furnished) by Seller or Norandex to Buyer pursuant to this Agreement, taken
together as a whole, contain or will contain any untrue statement of a material
fact, or omit or will omit a material fact necessary to make the statements or
facts
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contained herein or therein not misleading. Seller is not aware of any fact
which Seller currently and reasonably believes has or will have a material and
adverse effect upon the financial position, results of operations or business of
Norandex, taken as a whole, that has not been disclosed to Buyer.
3.29 PRODUCT WARRANTIES. Attached to the Disclosure Schedule are copies of
the standard forms of agreements containing warranties or guarantees relating to
the products of Norandex.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
4.2 COMPLIANCE WITH LAW AND OTHER INSTRUMENTS. Neither the execution and
delivery of this Agreement by Buyer, nor the performance by Buyer of its
obligations under this Agreement, will violate any Law or Permit or will
conflict with, result in the breach of any of the terms or conditions of,
constitute a default under any charter document of Buyer, or any Understanding,
other contract or agreement, policy of insurance, indenture, mortgage, lease,
franchise, license, permit, authorization or other instrument of any kind to
which Buyer is a party or by which Buyer or any of the properties or assets of
Buyer is bound.
4.3 AUTHORIZATION. Buyer has duly and validly executed and delivered this
Agreement and this Agreement constitutes the valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
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4.4 INVESTMENT PURPOSE. Buyer is purchasing the Shares for investment
only and not with a view to resale in connection with any distribution of the
Shares, except in compliance with the Securities Act of 1933, as amended, and
all other applicable securities laws.
4.5 BROKERS AND FINDERS. Buyer has not retained any broker or finder in
connection with the transactions contemplated by this Agreement.
ARTICLE 5
COVENANTS OF SELLER
5.1 ACCESS TO PROPERTIES AND RECORDS. Subject to Section 9.2, from the
date of this Agreement through the Closing, Seller shall cause Norandex and its
Subsidiaries to give Buyer and its authorized officers, employees, attorneys,
in-house and independent public accountants and other representatives reasonable
access to information and documents relating to this Agreement, the Norandex
Financial Statements and the Unaudited Financial Statements, the business of
Norandex and its Subsidiaries, and the transactions contemplated by this
Agreement. No investigation by Buyer or its representatives made before or
after the date of this Agreement shall affect the representations or warranties
of Seller contained in this Agreement, and all such representations and
warranties shall survive any such investigation, subject to Article 9.
5.2 CONDUCT OF BUSINESS BEFORE CLOSING. Seller agrees that, after the
date of this Agreement and before the Closing, except as otherwise permitted,
required or contemplated by this Agreement or expressly permitted by Buyer:
(i) The business of Norandex shall be conducted in the ordinary
course consistent with prior practices;
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(ii) Seller shall not cause the transfer or any disposition of any of
Norandex's or any Subsidiary's assets, other than in the normal course of
business;
(iii) Neither Norandex nor any Subsidiary shall merge with or into or
consolidate with any other corporation;
(iv) Neither Norandex nor any Subsidiary shall amend its articles of
incorporation or bylaws;
(v) Neither Norandex nor any Subsidiary shall change its Employee
Benefit Plans and Understandings applicable to Norandex employees in any manner
which in the aggregate amount to more than a $100,000 per annum impact on
Norandex's business;
(vi) Neither Norandex nor any Subsidiary shall make any change in its
authorized or outstanding capital stock or otherwise in its capital structure;
(vii) Neither Norandex nor any Subsidiary shall incur any
indebtedness for borrowed money in excess of $100,000;
(viii) Neither Norandex nor any Subsidiary shall offer or sell any
equity or debt securities, debt instruments, or any options, warrants or other
rights to acquire any such securities or instruments;
(ix) Norandex and each Subsidiary shall consult with Buyer before
making any material financial commitments or entering into any material binding
agreements extending beyond the Closing Date involving amounts in excess of
$100,000;
(x) Norandex shall maintain working capital on a seasonally
appropriate basis through the Closing Date;
(xi) Norandex shall continue existing capital projects on their
current schedule; and
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(xii) Seller shall continue in effect the insurance policies relating
to Norandex that are in effect at the date of this Agreement to be maintained
without any significant change.
Without limiting the generality of the foregoing, Seller shall cause
Norandex to continue to pay accounts payable and to collect accounts receivable
in the ordinary course of business in accordance with past practice, to maintain
and preserve customer relations and to maintain insurance; and Seller shall not
change or permit to be changed in any material respect the accounting or
valuation practices applicable to the assets or businesses of Norandex.
5.3 NOTICE OF EVENTS. Between the date of this Agreement and the Closing,
Seller shall promptly advise Buyer in writing of any material events and
developments concerning the financial position, assets, liabilities, results of
operations or business of Norandex or any of the items or matters covered by
Seller's representations and warranties contained in this Agreement.
5.4 COOPERATION. Seller shall cooperate, and cause the appropriate
parties to cooperate, with Buyer in preparing and making all filings or
submissions to governmental agencies required in connection with the
transactions contemplated by this Agreement, including, without limitation, all
filings and submissions under Hart-Scott-Rodino. Seller, at any time before or
after the Closing, shall execute, acknowledge and deliver any further
assignments, assurances, documents and instruments of transfer reasonably
requested by Buyer, and shall take any other action consistent with the terms of
this Agreement that may reasonably be requested by Buyer, for the purpose of
assigning and transferring and delivering the Shares to Buyer at the Closing.
Seller shall cooperate with Buyer in taking such actions as may reasonably be
requested by Buyer for the purpose of implementing
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post-Closing Date benefit arrangements for Norandex employees consistent with
this Agreement. Seller shall at any time after the Closing and at its expense
take such actions as may be necessary to deliver to Buyer all documents,
records, instruments, personal property, or other materials which Buyer may
request that relate to the business of Norandex, wherever located.
5.5 KEY EMPLOYEES. Seller shall use all reasonable efforts to assist
Buyer in retaining the continued services of Norandex's key employees.
5.6 NORANDEX FINANCIAL STATEMENTS. Seller shall at its expense prepare
and deliver to Buyer the Norandex Financial Statements no later than 60 days
after the Closing Date.
5.7 TRANSACTIONS WITH AFFILIATES. All transactions of the type and
between the parties described in Section 3.15 which are initiated after the date
of this Agreement shall be on terms and conditions, and at prices, no less
favorable to Norandex than could be obtained from independent third parties.
5.8 BEST EFFORTS TO CLOSE. Seller shall use, and shall cause Norandex to
use, their respective commercially reasonable best efforts to fulfill the
conditions set forth in Articles 7 and 8 of this Agreement over which they have
control or influence, and to complete the transactions contemplated by this
Agreement.
5.9 CONSENTS TO LEASE AND CONTRACTS. Seller shall use all reasonable
efforts and cooperate in good faith with Buyer before and after the Closing to
obtain the consents of any third parties which may be required by virtue of this
Agreement or the transactions contemplated by this Agreement (including, without
limitation, those consents that are necessary for the representations and
warranties set forth in Section 3.6 to be true and
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correct) under any leases, Understandings or other agreements to which Norandex
or a Subsidiary is a party or by which the assets of Norandex or a Subsidiary
are bound. Seller acknowledges that with respect to such leases, Understandings
or other agreements, it (or an Affiliate) may be required to continue as a party
to or guarantor under some or all of such leases, Understandings or agreements,
notwithstanding transfer of the Shares to Buyer. If Seller or an Affiliate of
Seller (other than Norandex) continues after the Closing as a party to or a
guarantor under some or all of such leases, Buyer shall cooperate with Seller in
good faith and use all reasonable efforts after the Closing to obtain the
agreement of the other party to any such leases to release Seller (or such
Affiliate) as a party to or a guarantor thereunder; provided, however, that the
foregoing shall not be deemed to require Norandex or Buyer to agree to economic
terms that are less favorable than the terms of such leases as they are in
effect on the Closing Date. If Seller or any landlord under any such lease so
requests, Buyer shall offer to become a guarantor, in replacement of Seller's
(or such Affiliate's) guaranties, or in order of priority ahead of Seller (or
such Affiliate), of such lease on the same terms and conditions as Seller's (or
such Affiliate's) existing guaranty, and to take such actions and execute such
guaranties or other instruments as are necessary to become such a guarantor.
Buyer agrees to indemnify Seller and hold Seller harmless from all guaranty
payments that Seller (or such Affiliate of Seller) may be required to pay after
the Closing Date by virtue of continuing after the Closing Date as guarantor of
any such lease, provided that there is no default under any such lease as of the
Closing Date. In the event that Norandex defaults under any such lease after
the Closing Date and Buyer defaults under any such guaranty and fails to provide
the indemnification set forth in the preceding sentence, and Noranda is required
to perform as a party to such lease or under its guaranty with respect thereto,
Buyer and Norandex will use all reasonable
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efforts to cooperate with Noranda in attempting to effect the sublease of the
premises to a sublessee designated by Noranda and will vacate the premises
thirty days after delivery of a written request from Noranda in order to
facilitate occupancy of the premises by a new tenant.
5.10 EXCLUSIVITY. Seller acknowledges that Buyer will spend substantial
funds in connection with its review of Norandex's business before the Closing
Date, and agrees that from the date of this Agreement through the Closing Date
(or until this Agreement is terminated), it will not authorize any of its or
Norandex's officers, directors or representatives to enter into negotiations
with any other party for purposes of selling or disposing of all or any part of
the stock, assets or business of Norandex.
ARTICLE 6
COVENANTS OF BUYER
6.1 COOPERATION IN FILINGS. Buyer shall cooperate with Seller and
Norandex in preparing and making all filings or submissions to governmental
agencies required in connection with the transactions contemplated by this
Agreement, including without limitation all filings and submissions under Hart-
Scott-Rodino.
6.2 BEST EFFORTS TO CLOSE. Buyer shall use its best efforts to fulfill
all of the conditions set forth in Articles 7 and 8 of this Agreement over which
it has control or influence, and to complete the transactions contemplated by
this Agreement.
6.3 EMPLOYMENT AGREEMENTS. Buyer shall offer to enter into employment
arrangements with the senior Norandex officers and regional branch managers
agreed upon by Buyer and Seller, on terms and conditions to be negotiated with
such persons. Buyer shall not, however, be obligated to enter into any such
agreements except upon mutually satisfactory terms and conditions.
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ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
fulfillment, at or before the Closing, of each and every one of the following
conditions, any one or more of which may be waived by Buyer. In the event that
one or more of the following conditions is not fulfilled by the Closing Date,
Buyer may at its option delay the Closing Date for a period of not more than 30
days to permit such condition or conditions to be satisfied.
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Seller contained in this Agreement shall be deemed to have
been made again at and as of the Closing with respect to the state of facts then
existing, and shall then be true and correct in all material respects, except
that if a representation is already limited to matters characterized as
"material," it shall be correct in all respects.
7.2 PERFORMANCE OF COVENANTS. All of the covenants required to be
performed by Seller at or before the Closing pursuant to the terms of this
Agreement shall have been duly performed.
7.3 CERTIFICATE. Buyer shall have received a certificate signed by Seller
to the effect that the conditions set forth in Sections 7.1 and 7.2 have been
satisfied.
7.4 OPINION OF COUNSEL. Buyer shall have received the opinion of
Thompson, Hine and Flory, counsel for Seller and Norandex, in form and substance
satisfactory to Buyer, dated as of the Closing Date, setting forth the
conclusions contained in Exhibit 7.4 to this Agreement.
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7.5 RESIGNATIONS OF DIRECTORS AND OFFICERS. All directors and officers of
Norandex from whom Buyer requests resignations shall have submitted their
written resignations to Norandex.
7.6 MATERIAL CHANGES. Seller's representation and warranty set forth in
Section 3.10 shall be true and correct in all respects as if made from the
period between December 31, 1993 through the Closing Date, and between the date
of this Agreement and the Closing there shall not have occurred any event or
transaction of the nature described in Section 3.10.
7.7 CONSENTS. Buyer shall have received, in writing and in form and
substance reasonably acceptable to Buyer, all necessary consents, approvals and
waivers with respect to the consummation of the transactions contemplated by
this Agreement that are indicated or required to be indicated on the Disclosure
Schedule (including without limitation the expiration of any waiting period
under Hart-Scott-Rodino).
7.8 GOOD STANDING CERTIFICATES. Seller shall have caused to be furnished
to Buyer good standing certificates from the jurisdictions in which Norandex is
qualified to conduct business, dated after August 15, 1994.
7.9 NONCOMPETITION AGREEMENT. Seller shall have entered into a
Noncompetition Agreement substantially in the form of Exhibit 7.9 hereto.
7.10 NO MATERIAL ADVERSE CHANGES. There shall have been no material
adverse changes in Norandex's financial condition, business, assets or
liabilities (actual or contingent) from either December 31, 1993 or the date of
the Unaudited Balance Sheet, through Closing.
7.11 CONSENTS. All consents described in Section 5.9 shall have been
obtained.
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7.12 TRANSFER OF SHARES. Seller and Norandex shall have delivered to Buyer
certificates representing the Shares and shall have executed, acknowledged and
delivered any assignments, assurances, documents and instruments of transfer
reasonably requested by Buyer, and shall have taken any other action consistent
with the terms of this Agreement that may reasonably be requested by Buyer
before the Closing Date, for the purpose of assigning and transferring the
Shares to Buyer at the Closing.
7.13 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings, corporate or
other, to be taken or conducted by Seller in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, as well as
the results of all due diligence investigations, shall be reasonably
satisfactory in form and substance to Buyer and its counsel. The due diligence
documentation provided by Seller must, to the reasonable satisfaction of Buyer
and its counsel, support the representations and warranties of Seller herein.
All documents required to be delivered to Buyer at or before the Closing shall
have been so delivered.
7.14 INTERCOMPANY BALANCES. All intercompany payables and intercompany
receivables between Norandex and Seller (or any Subsidiary of Seller other than
Norandex) (other than obligations represented by the Norandex Note) shall have
been eliminated, so that no such amounts are outstanding as of the Closing Date
or reflected in the Closing Date Balance Sheet.
7.15 ASSIGNMENT OF NORANDEX NOTE. Seller shall have executed and
delivered to Buyer an instrument, in form and substance reasonably satisfactory
to Buyer, assigning and transferring the Norandex Note to Buyer.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF SELLER
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The obligations of Seller under this Agreement are subject to the
fulfillment, at or before the Closing, of each and every one of the following
conditions, any one or more of which may be waived by Seller. In the event that
one or more of the following conditions is not fulfilled by the Closing Date,
Seller may at its option delay the Closing Date for a period of not more than 30
days to permit such condition or conditions to be satisfied.
8.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Buyer contained in this Agreement shall be deemed to have been
made again at and as of the Closing with respect to the state of affairs then
existing, and shall than be true in all material respects.
8.2 PERFORMANCE OF COVENANTS. All of the covenants required to be
performed by Buyer at or before the Closing pursuant to the terms of this
Agreement shall have been duly performed.
8.3 CERTIFICATE. At the Closing, Seller shall have received a certificate
signed on behalf of Buyer to the effect that the conditions set forth in
Sections 8.1 and 8.2 have been satisfied.
8.4 GOOD STANDING CERTIFICATES. Buyer shall have furnished Seller with a
good standing certificate for Buyer from the Delaware Secretary of State dated
after August 15, 1994.
8.5 CONSENTS. Seller shall have received the following necessary
consents, approvals and waivers with respect to the consummation of the
transactions contemplated by this Agreement: expiration of any waiting period
under Hart-Scott-Rodino.
8.6 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings, corporate or
other, to be taken or conducted by Buyer in connection with the transactions
contemplated
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by this Agreement, and all documents incident thereto, as well as the results of
all due diligence investigations, shall be reasonably satisfactory in form and
substance to Seller and its counsel. The due diligence documentation provided
by Buyer must, to the reasonable satisfaction of Seller and its counsel, support
the representations and warranties of Buyer herein. All documents required to
be delivered to Seller at or before the Closing shall have been so delivered.
ARTICLE 9
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Seller's and Buyer's
covenants contained in this Agreement shall survive the Closing. Seller's
representations and warranties set forth in Section 3.8 shall survive the
Closing through all applicable statutes of limitations periods. Seller's and
Buyer's representations and warranties, including those contained in the
exhibits, schedules and other documents delivered pursuant to this Agreement,
shall survive the Closing to the extent set forth in Section 9.2.
9.2 INDEMNITY.
9.2.1 INDEMNIFICATION OF SELLER. Buyer agrees that it shall
indemnify Seller for all Losses, as the same are incurred, arising out of or
relating to (i) any breach or inaccuracy of any representation or warranty of
Buyer, or any failure of Buyer to perform or comply with any covenant or
agreement, contained herein or in any document or other paper delivered pursuant
hereto or any Claim arising out of or relating to any such breach, inaccuracy or
failure, or (ii) any action by Buyer or Norandex taken after the Closing to
terminate or change the terms of employment of any Active Norandex Employee,
except to the extent that either (A) in the case of any change in the terms of
employment, such change is specifically contemplated by this Agreement or
(B) such Loss results in whole or
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in part from the failure to comply with, or a change in the terms of, any
Employee Benefit Plan applicable to an Active Norandex Employee if either such
Employee Benefit Plan was not listed on the Disclosure Schedule or Buyer was not
provided before the Closing Date with documents reasonably necessary to reflect
the terms and conditions of such Employee Benefit Plan; provided, however, that
Seller may not assert a claim for indemnification under this section after three
years from the Closing Date.
9.2.2 INDEMNIFICATION OF BUYER. Seller agrees that it shall
indemnify Buyer for all Losses, as the same are incurred, arising out of or
relating to (i) any breach of the representations and warranties set forth in
Section 3.8 relating to matters (if any) other than those addressed in Section
2.6, (ii) any Claim arising out of or relating to those businesses, activities
or operations conducted by or relating to the businesses listed under the
heading "Noranda Finance Business" in the Disclosure Schedule, (iii) any Claim,
benefit, payment, or other amount arising under any pension or life insurance
plan, policy or benefit relating to any person other than an Active Norandex
Employee, or (iv) any breach or inaccuracy of any representation or warranty of
Seller, or any failure of Seller to perform or comply with any covenant or
agreement, contained herein or in any document or other paper delivered pursuant
hereto or any Claim arising out of or relating to any such breach, inaccuracy or
failure; provided, however, that Buyer may not assert a claim for
indemnification under clause (iv) of this sentence after three years from the
Closing Date.
9.3 LIMITATION ON AMOUNT OF INDEMNITY. Buyer shall not be required to
indemnify Seller, and except with respect to the matters set forth in clauses
(i), (ii) and (iii) of Section 9.2.2 Seller shall not be required to indemnify
Buyer, under this Article 9 unless the aggregate amount of all Claims for which
indemnity is sought exceeds $250,000, in which case Seller or Buyer (as the case
may be) shall be responsible for the full amount of
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Losses. All liabilities arising out of or relating to any breach of clauses
(i), (ii) and (iii) of Section 9.2.2 shall be the responsibility of the Seller
regardless of amount. Any indemnifiable liability with respect to breach or
nonperformance by Seller of a representation, warranty or covenant shall be net
of any reserves specifically provided for such liability and reflected in
Adjusted Net Assets Employed at the Closing Date. Buyer shall not assert any
claim against Seller (or an Affiliate of Seller) for (i) contribution,
indemnification, or similar reimbursement of any kind as such rights are
provided under any federal, state or local environmental or health and safety
law, rule or regulation with respect to or relating to the subject matter of
Section 3.26 of this Agreement (provided, however, that the foregoing shall not
limit Buyer's rights under this Article 9 with respect to breaches of the
representations or warranties in Sections 3.26), or (ii) contribution,
indemnification or reimbursement of any kind for Taxes with respect to or
relating to the matters addressed in Section 2.6 hereof, except as provided in
Section 2.6.
9.4 NOTICE OF CLAIMS; PROCEDURES. For purposes of this Article 9, the
party required to provide indemnification under this Article 9 shall be the
"Indemnifying Party" and the party entitled to be indemnified under this
Article 9 shall be the "Indemnified Party." If an Indemnified Party makes any
claim against an Indemnifying Party for indemnification, such claim shall be in
writing and shall state in general terms the facts upon which the Indemnified
Party makes such claim. If any claim or demand is asserted against the
Indemnified Party by a third party and the Indemnified Party seeks to be
indemnified pursuant to this Article 9, the Indemnified Party promptly shall
give written notice to the Indemnifying Party. Failure of an Indemnified Party
to give prompt notice to the Indemnifying Party shall not relieve the
obligations of the Indemnifying Party under this Article 9 except to the extent
that such failure materially and irreparably prejudices the
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Indemnifying Party's ability to defend the Claim. Within 15 days after delivery
of such notice, the Indemnifying Party shall deliver a notice to the Indemnified
Party indicating whether the Indemnifying Party intends to assume the defense of
such claim or demand. Notwithstanding such assumption, the Indemnified Party
shall have the right to participate in such defense, provided that such
participation shall be at the expense of the Indemnified Party unless there is a
conflict of interest between the Indemnified Party and the Indemnifying Party or
different defenses are available to the Indemnified Party, in which case the
cost of such participation (including attorneys fees for counsel selected by the
Indemnified Party, which counsel must be reasonably satisfactory to the
Indemnifying Party) shall be reimbursed by the Indemnifying Party. The
Indemnifying Party shall not enter into any settlement of any Claim without the
written consent of the Indemnified Party, unless the settlement contains a
complete release of all claims and liability against the Indemnified Party. If
the Indemnified Party elects to participate in the defense of the Claim, the
parties shall cooperate in the defense of the proceeding, and neither party
shall settle the Claim without the consent of the other party, which consent
shall not be unreasonably withheld. If the Indemnifying Party elects not to
assume the defense, the Indemnified Party shall have the right to do so (at the
expense of the Indemnifying Party), and may settle the Claim without the consent
of the Indemnifying Party. Any Claims or Losses for Taxes which are covered by
the provisions of Section 2.6 hereof shall be governed by the procedures set
forth in Section 2.6 hereof rather than this Section 9.4.
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ARTICLE 10
MISCELLANEOUS
10.1 EXPENSES. Each party to this Agreement shall pay (or cause an
Affiliate to pay) its and its Affiliates' own costs and expenses (including all
legal, accounting, broker, finder and investment banker fees) relating to this
Agreement, the negotiations leading up to this Agreement and the transactions
contemplated by this Agreement.
10.2 AMENDMENT. This Agreement shall not be amended except by a
writing duly executed by Buyer and Seller.
10.3 ENTIRE AGREEMENT. This Agreement, including the exhibits,
schedules and other documents delivered pursuant to this Agreement and delivered
at the Closing, contains all of the terms and conditions agreed upon by the
parties relating to the subject matter of this Agreement and supersedes all
prior and contemporaneous agreements, negotiations, correspondence, undertakings
and communications of the parties, oral or written, respecting the subject
matter.
10.4 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio, excluding any laws
which direct the application of another jurisdiction's laws. Each party hereby
consents to the personal jurisdiction of any court located in Ohio for purposes
of any action (subject to the arbitration provisions of Section 10.14 below)
arising out of or related to this Agreement and agrees that any such court will
be a proper venue for such an action.
10.5 HEADINGS. The headings contained in this Agreement are intended
solely for convenience and shall not affect the rights of the parties to this
Agreement.
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10.6 MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision
of this Agreement shall be construed against any party on the ground that such
party drafted the provision or caused it to be drafted.
10.7 NOTICES. All notices, requests, demands and other communications
made in connection with this Agreement shall be in writing and shall be deemed
to have been duly given on the date of delivery, if delivered to the persons
identified below, or three days after mailing if mailed by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:
IF TO BUYER:
Fibreboard Corporation
California Plaza
2121 N. California Blvd., Suite 560
Walnut Creek, CA 94596
Attention: Donald F. McAleenan, Esq.
WITH A COPY TO:
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
Attention: Victor A. Hebert
IF TO SELLER:
Noranda Aluminum, Inc.
One Brentwood Commons, Suite 175
750 Old Hickory Boulevard
Brentwood, Tennessee 37027
Attention: Ronald T. Rowe, Vice President-Finance
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WITH A COPY TO:
Thompson, Hine and Flory
1100 National City Bank Building
629 Euclid Avenue
Cleveland, Ohio 44114-3070
Attention: Donald H. Messinger, Esq.
Such persons and addresses may be changed, from time to time, by means of a
notice given in the manner provided in this Section.
10.8 WAIVER. Waiver of any term or condition of this Agreement by any
party shall not be construed as a waiver of any subsequent breach or failure of
the same term or condition, or a waiver of any other term or condition of this
Agreement.
10.9 BINDING EFFECT; ASSIGNMENT. The parties agree that this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. No party to this Agreement may assign
or delegate, by operation of law or otherwise, all or any portion of its rights,
obligations or liabilities under this Agreement without the prior written
consent of all other parties to this Agreement, which they may withhold in their
absolute discretion; provided, however, that, without such consent, Buyer may
assign all or any portion of its rights, obligations or liabilities under this
Agreement to an affiliate of Buyer, which assignment shall not relieve Buyer of
its obligations or liabilities hereunder.
10.10 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person or entity which is not a party or an assignee
of a party to this Agreement.
10.11 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument. All counterparts shall be deemed an original of this
Agreement.
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10.12 FURTHER ASSURANCES. After the Closing the parties to this
Agreement shall take such further actions as they agree may be reasonably
necessary to carry out the transactions contemplated by this Agreement.
10.13 TERMINATION. This Agreement may be terminated at any time before
the Closing by means of the written consent of Buyer and Seller. This Agreement
may be terminated by Buyer alone or Seller alone, by written notice, if the
Closing shall not have taken place by October 31, 1994.
10.14 ARBITRATION AND PROCEDURE. All disputes arising out of or
related to this Agreement shall, at the option of either Buyer or Seller, be
resolved by and through an arbitration proceeding to be conducted in Cleveland,
Ohio under the auspices of and in accordance with the commercial arbitration
rules of the American Arbitration Association.) Both the foregoing agreement of
Buyer and Seller to arbitrate any and all such claims, and the results,
determination, findings, judgment and/or award rendered through such
arbitration, shall be final and binding upon each of Buyer and Seller. Such
arbitration may be initiated by written notice from either Buyer or Seller to
the other. The arbitration shall be conducted by a panel of three arbitrators.
Each of Buyer and Seller shall select one arbitrator from a list of arbitrators
provided by the American Arbitration Association, and the two arbitrators so
selected shall appoint the third arbitrator from such list. The costs of such
arbitrators and the arbitration shall be borne equally by Buyer and Seller.
Each of Buyer and Seller shall bear separately the cost of their respective
attorneys, witnesses and experts in connection with such arbitration. Time is
of the essence to this arbitration procedure, and the arbitrators shall be
instructed to render their decision within 30 days of completion of the
arbitration.
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IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement
as of the date first written above.
NORANDA ALUMINUM, INC.
By /s/ Ronald T. Rowe
------------------------------------------
Its
-------------------------------------
NORANDEX INC.
By /s/ Robert W. Johnston
------------------------------------------
Its President
FIBREBOARD CORPORATION
By /s/ James P. Donohue
------------------------------------------
Its Senior Vice President
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Stephen L. DeMaria
510-274-0700
FIBREBOARD COMPLETES ACQUISITION OF NORANDEX
(WALNUT CREEK, CALIFORNIA, September 1, 1994) - Fibreboard Corporation
(AMEX:FBD) today announced it has successfully completed its acquisition of
Norandex Inc., one of the nation's leading manufacturers of vinyl siding and
distributors of residential exterior building products for both the new
construction and remodeling markets.
For the first seven months of 1994 Norandex generated earnings before
interest and taxes of $9 million on revenues of $119 million, compared with $7
million on revenues of $102 million for the first seven months of 1993. For the
full year 1993 Norandex generated revenues of approximately $192 million and
earnings before interest and taxes of $17 million. The cash acquisition,
previously announced on a preliminary basis in late July, is valued at
approximately $115 million. It is being funded through internally generated
cash and funds from a recently secured $100 million financing facility provided
by a group of seven banks. The acquisition is expected to contribute to
earnings immediately and will be reported in Fibreboard's results of operations
beginning in September.
"The addition of Norandex, with its quality products and extensive 23
state distribution network, clearly transforms Fibreboard into a significant
building products company enhancing our ability to grow and prosper in this
important sector of the economy," said Chairman and Chief Executive Officer John
D. Roach. "Norandex
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is expected to make an immediate contribution to our net profitability, an
important step toward our goal of achieving consolidated net income of between
$3.50 and $5.00 per share within a short time after implementation of the
acquisition program we discussed at our 1994 Annual Shareholder's Meeting. We
are indeed pleased to welcome the Norandex team to our growing Fibreboard
family. While this significant step will increase our annual revenues by 75%,
we remain committed to achieving even further growth and earnings improvement in
our existing operations and through the acquisition of other attractive building
products opportunities," Roach said.
Norandex is a low-cost manufacturer of quality vinyl siding products which
continue to displace other materials as the product of choice for exterior
siding in both residential remodeling and new construction. Headquartered in
Macedonia, Ohio, with a manufacturing plant in Claremont, North Carolina, the
new Fibreboard subsidiary has 745 employees. Its 70 company-owned distribution
centers concentrated in the Midwestern and Eastern United States also distribute
other building products including windows, aluminum siding and building
accessories. The company was previously a subsidiary of Noranda Aluminum, Inc.
Fibreboard, headquartered in Walnut Creek, California, is a building
products company that also manufactures lumber, hardwood plywood, moulding and
millwork, precision molded industrial insulation and fireproofing materials.
The company owns approximately 80,000 acres of timberland in the Sierra Nevada
mountains in California. In addition its Resort Operations Group owns and
operates Northstar-at-Tahoe, an all-season resort featuring skiing, golf, and
conference facilities, and Sierra-at-Tahoe, a day ski facility, both located in
the Lake Tahoe recreational area in California.
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