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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) July 1, 1996
FIBREBOARD CORPORATION
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(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
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 1, 1996, Fibreboard Corporation ("Fibreboard") acquired all of the
outstanding capital stock of Stone Products Corporation, a California
corporation headquartered in Napa, California. Fibreboard purchased the stock
from a consortium of investors, including several limited partnerships. Stone
Products Corporation produces manufactured stone building products at two
facilities located in Napa, California and Navarre, Ohio.
The initial purchase price was approximately $52 million, including the
assumption of debt. The purchase price is subject to adjustment based on the
amount of Stone's consolidated net worth reflected on the audited closing
balance sheet.
Fibreboard funded the purchase with available cash on hand and funds provided
under its revolving loan facility co-agented by Bank of America, N.A.
Further information concerning the purchase is set forth in Fibreboard's press
release dated July 2, 1996, which is attached hereto as an exhibit and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The financial statements required by this item will be filed as
soon as practicable, but in no event later than September 14,
1996.
(B) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information required by this item will be
filed as soon as practicable, but in no event later than September
14, 1996.
(C) EXHIBITS.
The following Exhibits are included herewith:
10.1 Stock Purchase Agreement dated June 5, 1996 among Fibreboard
Corporation, Stone Products Corporation and the shareholders of Stone
Products Corporation.
10.2 Amendment No. 1 to the Stock Purchase Agreement dated June 26, 1996 among
Fibreboard Corporation, Stone Products Corporation and the shareholders
of Stone Products Corporation.
99.1. Press Release dated July 2, 1996 issued by Fibreboard Corporation.
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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
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(Registrant)
Dated: July 15, 1996 By: /s/Garold E. Swan
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Garold E. Swan
Vice President and Controller
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 5th day
of June, 1996, by and among Fibreboard Corporation, a Delaware corporation
("Buyer"), Stone Products Corporation, a California corporation (ACompany@),
Donald G. Castle, on behalf of First Albany Corporation as custodian for Donald
G. Castle ("First Albany"), Donald G. Castle Revocable Living Trust dated
January 1, 1990 ("Castle Trust"), Charles G. Davis, Jr., an individual resident
in the State of California ("Davis"), Charles G. Davis, Jr. Revocable Living
Trust dated January 27, 1990 ("Davis Trust"), James S. Fetherston, an individual
resident in the State of California ("Fetherston"), Alexander D. Smith, an
individual resident in the State of Michigan ("A. Smith"), Gregory C. Smith, an
individual resident in the State of Michigan ("G. Smith"), Gregory C. Smith, on
behalf of Huntington Bank of Michigan as Custodian for Gregory C. Smith
("Huntington"), Julie E. Smith, an individual resident in the State of Michigan
("J. Smith"), Advent International Investors Limited Partnership ("AILP"),
Advent Omnibus Limited Partnership ("AOLP"), Advent UNO, C.V. ("AUCV"), Advent
UNO., S.A. ("AUSA"), International Network Fund Limited Partnership ("INFLP")
and Kowa Company, Ltd., a Japanese corporation ("Kowa")(First Albany, Castle
Trust, Davis, Davis Trust, Fetherston, A. Smith, G. Smith, Huntington, J. Smith,
AILP, AOLP, AUCV, AUSA, INFLP and Kowa, collectively referred to herein as the
"Sellers", individually as a "Seller").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the issued
and outstanding shares (the "Stock") of capital stock of the Company, for the
consideration and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto do hereby agree as follows:
ARTICLE 1. SALE OF STOCK.
1.1 SALE OF THE STOCK. Subject to the terms and conditions hereof,
each Seller, severally but not jointly, agrees to sell, assign, transfer and
deliver or cause to be delivered to Buyer and Buyer agrees to buy from each
Seller (but only if the Sellers so sell, assign, transfer and deliver or cause
to be delivered, in the aggregate, the Stock) at the Closing (as such term is
defined in Section 1.4) the number of shares of Stock listed opposite such
Seller's name on EXHIBIT A hereto.
1.2 PURCHASE PRICE.
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(1) PURCHASE PRICE. The aggregate purchase price (the APurchase
Price@) to be paid to the Sellers by the Buyer for the Stock shall be forty-
eight million five hundred thousand dollars ($48,500,000.00) less the following
costs and expenses (ASale Costs and Expenses@) which shall be calculated and
paid by the Company at the Closing hereunder:
(1) payment obligations of the Company in connection with a sale
of the Company pursuant to its long-term incentive compensation
agreements with each of Peter Borst, Daniel Brown, Richard Brown,
Steven Brown, and Robert Heath, and pursuant to its phantom stock
arrangement with Lawrence Massey and all other payment obligations
arising from a termination or full performance of any and all
incentive compensation, severance, noncompete, phantom stock and/or
management agreement and any and all employment agreements currently
in effect of the Company or CHSC which Buyer requests to be terminated
prior to the Closing Date; provided, however, that Buyer may not
request termination of the existing employment agreements of Messrs.
Cassedy and Massey;
(2) attorneys= fees and expenses of the Company and the Sellers
in connection with the transaction contemplated by this Agreement;
(3) accountants= fees and expenses of the Company and the
Sellers in connection with the transaction contemplated by this
Agreement (including the audit required by Section 1.2 (c) below); and
(4) fees and expenses payable to Dillon, Read & Co. Inc pursuant
to that certain letter agreement with the Company dated January 17,
1996.
The Purchase Price shall be divided among the Sellers as set forth on EXHIBIT A
hereto.
(2) ADJUSTMENT AMOUNT. On the tenth (10th) business day following
the final determination of the Adjustment Amount (as defined below) through the
Adjustment Procedure set forth in Section 1.2 (c), if the Adjustment Amount is
negative, Sellers will pay the Adjustment Amount to Buyer, and if the Adjustment
Amount is positive, Buyer will pay the Adjustment Amount to Sellers. All
payments will be made together with interest at eight percent (8%) per annum
compounded daily beginning on the Closing Date (as defined below) and ending on
the date of payment. Payments to Sellers must be by wire transfer of
immediately available funds to the respective accounts specified by Sellers or
if no such account is specified by a Seller a certified or cashier's check
payable to the account of such Seller in immediately available funds in the
proportions set forth in EXHIBIT A. Payments to Buyer must be made by wire
transfer to such bank account as Buyer will specify in immediately available
funds. The AAdjustment Amount@ (which may be a positive or negative number) will
be equal to (i) the total consolidated stockholders= equity of the
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Company as of June 30, 1996 (or, if applicable, in accordance with Section
1.2(d) below) determined in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods but adjusted so
that there is no reduction of consolidated stockholders= equity for Sale Costs
and Expenses (AAdjusted Equity@), minus (ii) thirteen million nine hundred
fifty-seven thousand dollars ($ 13,957,000.00).
(3) ADJUSTMENT PROCEDURE.
(1) At Sellers= expense, the Company will prepare and will cause
Price Waterhouse LLP, the Company's certified public accountants, to
audit consolidated financial statements ("Closing Financial
Statements") of the Company as of June 30, 1996 and for the period
from March 31, 1996 through June 30, 1996, including a computation of
Adjusted Equity. The Company will deliver the Closing Financial
Statements to Buyer and Sellers within sixty (60) days after the
Closing Date. If within thirty (30) days following delivery of the
Closing Financial Statements, no party has given the other parties
notice of its objection to the Closing Financial Statements (such
notice must contain a statement of the basis of objection), then the
Adjusted Equity reflected in the Closing Financial Statements will be
used in computing the Adjustment Amount. If a party gives such notice
of objection, then the issues in dispute will be submitted to Deloitte
& Touche LLP, certified public accountants (the "Accountants"), for
resolution. If issues in dispute are submitted to the Accountants for
resolution, (i) Buyer and Sellers shall use their best efforts to
cause the resolution of all objections to the Closing Financial
Statements within forty-five (45) days following delivery of said
statements; (ii) each party will furnish to the Accountants such work
papers and other documents and information relating to the disputed
issues as the Accountants may request and are available to that party
or its affiliates (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material
relating to the determination and to discuss the determination with
the Accountants; (iii) the determination by the Accountants, as set
forth in a notice delivered to both parties by the Accountants, will
be binding and conclusive on the parties; and (iv) Buyer and Sellers
will each bear fifty percent (50%) of the fees of the Accountants for
such determination.
(4) CHANGE OF CLOSING DATE. If the Closing hereunder occurs on a
date other than July 1, 1996 Adjusted Equity shall be further adjusted by adding
(or subtracting) one-thirty-first (1/31) of the Company=s consolidated net
income (or loss) for the month of July, 1996 for each day from and including
July 1, 1996 through and including the Closing Date adjusted to eliminate the
effect of any changes in the business or financial condition following the
Closing Date.
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1.3 TRANSFER OF CERTIFICATES. Each certificate representing all or
any part of the Stock to be transferred pursuant to this Agreement shall be duly
endorsed in blank (or accompanied by a duly executed stock power) by the related
Seller with the signature(s) guaranteed by a commercial bank or by a member firm
of the New York Stock Exchange. Prior to Closing, each Seller agrees to cure
any deficiencies with respect to the endorsement of the certificates
representing the Stock to be transferred by such Seller.
1.4 CLOSING. The sale and purchase of the Stock referred to in
Section 1.1 above, hereinafter referred to as the "Closing," shall take place at
9:00 a.m. on July 1, 1996 at the offices of Manwell & Milton, 20 California
Street, Third Floor, San Francisco, California 94111 or at such other time, date
and place as Buyer and Sellers shall agree to. Such time and date are herein
referred to as the "Closing Date."
1.5 SELLERS' REPRESENTATIVE.
(1) The Sellers irrevocably make, constitute and appoint James S.
Fetherston as their agent (the "Sellers' Representative") and authorize and
empower him to fulfil the role of Sellers' Representative hereunder. In the
event of the resignation of a Sellers' Representative, the resigning Sellers'
Representative shall appoint a successor from among the Sellers and who shall
agree in writing to accept such appointment, and the resigning Sellers'
Representative's resignation shall not be effective until such a successor shall
exist. If a Sellers' Representative should die or become incapacitated, his
successor shall be appointed within thirty (30) days of his death or incapacity
by a majority in interest of the Sellers, and such successor either shall be a
Seller or shall otherwise be acceptable to the Buyer. The choice of a successor
Sellers' Representative appointed in any manner permitted above shall be final
and binding upon the Sellers. The decisions and actions of any successor
Sellers' Representative shall be, for all purposes, those of a Sellers'
Representative as if originally named herein.
(2) Each Seller has made, constituted and appointed and by execution
of this Agreement hereby irrevocably makes, constitutes and appoints the
Sellers' Representative as such person's true and lawful attorney in fact and
agent, for such person and in such person's name, (1) to receive all notices and
communications directed to such Seller under this Agreement and to take such
action (or to determine to take no action) with respect thereto as he may deem
appropriate as effectively as such Seller could act for himself or itself,
including without limitation, the settlement or compromise of any dispute or
controversy, and (2) to execute and deliver all instruments and documents of
every kind incident to the foregoing to all intents and purposes and with the
same effect as such Seller could do personally, and each such Seller hereby
ratifies and confirms as his or its own act, all that the Sellers'
Representative shall do or cause to be done pursuant to the provisions hereof.
All notices and communications directed to Sellers under this Agreement shall be
given to the Sellers' Representative.
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(3) The death or incapacity of any Seller shall not terminate the
authority and agency of the Sellers' Representative.
(4) The Sellers hereby jointly and severally agree to indemnify the
Sellers' Representative and to hold him harmless against any loss, cost,
liability, damage or expense incurred without grossly negligent conduct or bad
faith on the part of the Sellers' Representative and arising out of or in
connection with his duties as Sellers' Representative, including the costs and
expenses, including reasonable attorneys' fees, incurred by such Sellers'
Representative in defending against any claim of liability in connection
herewith.
1.6 WAIVER OF RIGHT OF FIRST OFFER. Each Seller hereby waives any
and all rights such Seller may have, and hereby releases each other Seller from
any obligations such Sellers may have pursuant to Section 3 of the Agreement
dated as of August 27, 1991, as amended, by and among Saxum House Limited, a
California corporation, and the persons defined therein as AShareholders,@ in
connection with the sale by each Seller and purchase by Buyer of the Stock
pursuant to this Agreement; provided, however, that this waiver and release
shall not be effective for any purpose other than the purchase by Buyer
hereunder and if this Agreement should be terminated this Section shall be of no
force or effect.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY.
The Sellers and the Company, severally but not jointly, represent and
warrant to the Buyer that, at and as of the date of this Agreement, the
following statements are and shall be true and correct in all respects:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company and
Carriage Hill Stone Company (ACHSC@) are, respectively, corporations duly
organized and existing in good standing under the laws of the State of
California and the State of Ohio and each has the power to own its properties
and to carry on its businesses as now being conducted. Each of the Company and
CHSC are duly qualified to do business and in good standing in the jurisdictions
listed on SCHEDULE 2.1 hereto, which include every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect, respectively, on the Company or CHSC.
2.2 SELLERS. Sellers are (except as set forth in EXHIBIT A) and will
be on the Closing Date the record and beneficial owners of the Stock, free and
clear of all liens and encumbrances. Each Seller is (except as set forth in
EXHIBIT A) and will be on the Closing Date the record and beneficial owner of
the shares of Stock listed opposite such Seller's name on EXHIBIT A hereto free
and clear of all liens, encumbrances and claims of any kind. No legend or other
reference to any encumbrance or lien appears upon the certificates representing
the Stock. Upon execution and delivery by Sellers, this Agreement will
constitute the legal, valid, and binding obligation of each Seller, enforceable
in accordance with its terms. Each
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Seller has full legal right, power and authority to enter into this Agreement
and to sell, assign, transfer and deliver the shares of Stock owned by such
Seller to Buyer. The delivery of the shares of Stock owned by each Seller to
Buyer pursuant to the provisions of this Agreement, upon registration in the
books of the Company, will transfer record title to Buyer, free and clear of all
liens and encumbrances.
2.3 CAPITAL STRUCTURE AND OWNERSHIP.
(1) The authorized capital stock of the Company consists of (1)
twenty million (20,000,000) shares of Common Stock, of which shares twenty-four
thousand (24,000) are issued and outstanding, and (2) one million (1,000,000)
shares of Preferred Stock, of which shares fifty-six thousand (56,000) shares of
Series A Convertible Preferred Stock and eight thousand eight hundred and
eighty-eight (8,888) shares of Series B Convertible Preferred Stock are issued
and outstanding.
(2) The Stock constitutes all of the issued and outstanding capital
stock of the Company. Each share of the Stock is duly and validly authorized
and issued, fully paid and nonassessable, and was not issued in violation of any
federal or state securities law, shareholders= agreement or preemptive right.
(3) There are no outstanding warrants, options, rights, calls or
commitments of any kind relating to, or restrictions on the transfer of, any of
the capital stock of the Company. The Company has no liability for dividends
declared but unpaid.
(4) Upon consummation of the transactions contemplated by this
Agreement, the Buyer shall be the holder of one hundred percent (100%) of the
issued and outstanding capital stock of the Company.
2.4 SUBSIDIARIES OF THE COMPANY; INVESTMENTS. Except as set forth in
SCHEDULE 2.4, the Company does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, limited
liability company, limited partnership, business, trust, joint venture, or other
entity. The authorized capital stock of CHSC consists of seven hundred and
fifty (750) shares of Common Stock, of which shares sixty are issued and
outstanding. Each share of the capital stock of CHSC is duly and validly
authorized and issued, fully paid and nonassessable, and was not issued in
violation of any federal or state securities law, shareholders= agreement or
preemptive right. Each such outstanding share is owned of record and
beneficially by the Company. There are no outstanding warrants, options,
rights, calls or commitments of any kind relating to, or restrictions on the
transfer of, any of the capital stock of CHSC. CHSC has no liability for
dividends declared but unpaid.
2.5 FINANCIAL STATEMENTS. Sellers have delivered to Buyer the
following financial statements of the Company audited by Price Waterhouse LLP,
the Company's independent public accountants:
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(1) Consolidated Balance Sheet as of March 31, 1995;
(2) Balance Sheets as of March 31, 1994, and 1993;
(3) Consolidated Statements of Income and Retained Earnings for the
year ended March 31, 1995;
(4) Statements of Income and Retained Earnings for the years ended
March 31, 1994, and 1993;
(5) Consolidated Statements of Cash Flows for the year ended March
31, 1995; and
(6) Statements of Cash Flows for the years ended March 31, 1994, and
1993.
In addition, Sellers have delivered to Buyer the unaudited Consolidated
Balance Sheet of the Company as of March 31, 1996 together with the related
unaudited Consolidated Statement of Income and Retained Earnings and
Consolidated Statement of Cash Flows for the period ending on that date.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis and fairly present
the financial condition of the Company (and CHSC in the consolidated financial
statements delivered) as of the respective dates of the balance sheets and the
results of operations of the Company (and CHSC in the consolidated financial
statements delivered) for the respective periods indicated subject, in the case
of the March 31, 1996 statements, to the absence of footnotes and normal
recurring year end adjustments.
2.6 OBLIGATIONS AND LIABILITIES. Sellers have delivered to Buyer a
complete and accurate list, appended hereto as SCHEDULE 2.6, of all liabilities
of the Company and CHSC as of March 31, 1996, listing material liabilities of
any kind, character and description, whether accrued, absolute, conditional or
otherwise, including potential liabilities under the Company's and CHSC=s
employee benefit plans, together with, in the case of those liabilities which
are not fixed, an estimate of the maximum amount which may be payable. Except
for debts, liabilities or obligations listed on SCHEDULE 2.6, debts, liabilities
or obligations incurred in the ordinary course of business between March 31,
1996 and the date of this Agreement and debts, liabilities or obligations
incurred after the date of this Agreement in accordance with the terms of this
Agreement, at the Closing the Company and CHSC will not have any material debt,
liability, or obligation of any nature. Except as expressly provided herein,
all such debts, liabilities and obligations incurred after March 31, 1996 shall
be incurred only in the ordinary course of business, and shall be usual and
normal in amount both individually and in the aggregate and shall be provided
for, reflected on or reserved against in the books of account of the Company and
CHSC in accordance with generally accepted accounting principles.
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2.7 RECEIVABLES. Sellers have delivered to Buyer a complete and
accurate list, appended hereto as SCHEDULE 2.7, of the accounts, notes, and
other receivables of the Company and CHSC as of March 31, 1996. Except to the
extent of the reserve for bad debts reflected in SCHEDULE 2.7, such accounts,
notes and other receivables are collectible by the Company and CHSC in the
amounts shown on SCHEDULE 2.7 and except for Aother receivables@ listed on
SCHEDULE 2.7 represent valid and binding obligations arising from sales actually
made. There are no rights of set-off applicable to any such receivables.
2.8 PERMITS AND LICENSES. Sellers have delivered to Buyer a complete
and accurate list and summary description, appended hereto as SCHEDULE 2.8, of
all permits, licenses, franchises, authorizations and certificates owned or held
by the Company and CHSC necessary to conduct the business of the Company and
CHSC as presently conducted, all of which are valid, effective and in good
standing.
2.9 FIXED ASSETS. Sellers have delivered to Buyer a complete and
accurate list and complete description, appended hereto as SCHEDULE 2.9, of all
material fixed assets of the Company and CHSC as of March 31, 1996 including
without limitation a complete and accurate list and complete description of all
assets located on the Company's and CHSC=s property which are Sellers' personal
property (the "Sellers' Personal Property") and which shall be removed from the
Company's and CHSC=s property by the Closing Date. All of the trucks, machinery
and other equipment of the Company and CHSC are in good working order and
condition, ordinary wear and tear excepted. All assets used by the Company and
CHSC in the operation of its businesses are either owned by the Company or CHSC
or leased under an agreement reflected on SCHEDULE 2.27 hereto.
2.10 CONTRACTS AND AGREEMENTS. Sellers have delivered to Buyer a
complete and accurate list, appended hereto as SCHEDULE 2.10, of all material
contracts and agreements to which the Company or CHSC is a party or by which it
or any of its properties is bound as of the date hereof, including, but not
limited to, joint venture or partnership agreements, contracts with employees,
officers, directors, consultants and any labor organizations, loan agreements,
bonds, mortgages, liens, pledges or other security agreements, but not including
any purchase orders issued or accepted by the Company or CHSC in the ordinary
course of business. Except as set forth on SCHEDULE 2.10, neither the Company
nor CHSC is in default under any material contract or agreement to which it is a
party or by which any of its properties is bound as of the date hereof and to
its knowledge neither is any other party to such contract. For purposes of this
Section 2.10, any contract or agreement which requires or may require the
performance of services or the delivery of goods in an amount exceeding fifty
thousand dollars ($50,000) individually or in the aggregate, shall be deemed
material.
2.11 INTELLECTUAL PROPERTY. Sellers have delivered to Buyer a complete
and accurate list, appended hereto as SCHEDULE 2.11, of all trade names,
registered trademarks, unregistered trademarks, service marks, copyrights,
patents, patent applications, and patent rights licensed to, applied for, used
by, owned by, or registered in the name of, or in which
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the Company or CHSC has any rights (the "Listed Intellectual Property"),
together with a brief description of each. The Company and CHSC owns or
possesses adequate licenses or other rights to use all Listed Intellectual
Property and any other intellectual property rights (including, without
limitation, drawings, trade secrets, know-how and confidential information)
necessary to permit the Company and CHSC to conduct its business in all material
respects as now operated (the Listed Intellectual Property and the other
intellectual property rights hereinafter collectively referred to herein as the
"Intellectual Property"). Except as set forth on SCHEDULE 2.11, no claim (i) has
been made in the last three (3) years, (ii) is pending, or (iii) to the present
knowledge of any Seller, is threatened to the effect that the present or past
operations of the Company or CHSC infringes upon or conflicts with the rights of
any other person in respect of any Intellectual Property, and no claim is
pending, or to the present knowledge of any Seller, threatened to the effect
that any Intellectual Property is invalid or unenforceable. No contract,
agreement or understanding between the Company or CHSC and any party exists
which would impede or prevent the continued use by the Company or CHSC of the
entire right, title and interest of the Company or CHSC in and to the
Intellectual Property.
2.12 TITLE TO PROPERTIES. Other than as set forth on SCHEDULE 2.12,
the Company and CHSC have good and marketable title to all properties, assets
and leasehold estates, real and personal, owned and used in its business, which
are all the assets necessary to conduct the business of the Company and CHSC as
presently conducted (except as since sold or otherwise disposed of in the
ordinary course of business, it being understood that disposition of any asset
carried on the books of the Company or CHSC at more than ten thousand dollars
($10,000) is not in the ordinary course of business), free and clear of all
mortgages, pledges, liens, encumbrances, options, conditional sales agreements,
charges and assessments. The material assets of the Company and CHSC are in
good and usable condition, ordinary wear and tear excepted, and have been
maintained in accordance with good business and maintenance practice.
2.13 INSURANCE. Sellers have delivered to Buyer a complete and
accurate list and description (including effective dates, premiums and coverage
amounts), appended hereto as SCHEDULE 2.13, of all insurance policies carried by
the Company and CHSC as of the date hereof. All such insurance policies are in
full force and effect as of the date hereof.
2.14 OFFICERS AND DIRECTORS. Sellers have delivered to Buyer a
complete and accurate list of the officers and directors of the Company and CHSC
as of the date hereof, appended hereto as SCHEDULE 2.14, along with the rate of
compensation (in the portions thereof attributable to salary and bonuses,
respectively) of the officers of the Company and CHSC.
2.15 INVENTORIES. The Company's and CHSC=s inventories consist of
items of a quality and quantity usable and salable (according to industry
standards) in the ordinary course of business by the Company and CHSC. All
items included in the inventories at March 31, 1996 are the property of the
Company or CHSC, except for sales made in the ordinary
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course of business since March 31, 1996; for each of these sales either the
buyer has made full payment or the buyer's liability to make payment is
reflected in the books of the Company or CHSC, subject to established reserves.
Except as set forth in the Schedules hereto, no items included in the
inventories have been pledged as collateral or are held by the Company or CHSC
on consignment from others. The inventory item in the unaudited Balance Sheet
of the Company as of March 31, 1996 is valued at the lower of cost or market
value, on a LIFO basis.
2.16 NO DEFAULTS OR CONFLICTS. Neither the Company nor CHSC is in
violation of or default in any material respect under any law or regulation, or
any order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality or arbitrative
tribunal, wherever located and except to the extent set forth on SCHEDULE 2.16,
and there are no judgments or decrees or orders entered in any suit or
proceeding brought by any governmental agency or any other party enjoining the
Company or CHSC in respect of any business practice or the conduct of business
in any area. Other than as described in Section 2.19 below, there are no
violations or defaults, judgments, decrees or orders, or claims, actions, suits
or proceedings of the type described above or in SCHEDULE 2.19 below affecting
the Company or CHSC. The execution and delivery of this Agreement and any and
all other documents to be executed therewith and the performance by the Company
and Sellers of their obligations hereunder and thereunder do not and will not
(a) conflict with or result in a violation or breach of any provision of (i) any
law, statute, rule or regulation, (ii) the Articles of Incorporation or Bylaws
of the Company or CHSC or (iii) any agreement, judgment, license, order or
permit applicable to or binding upon the Company, CHSC or the Sellers, or (b)
result in the creation of any material lien, charge or encumbrance upon any
assets or properties of the Company or CHSC.
2.17 GOVERNMENT AND OTHER CONSENTS. Except for filings required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no consent, approval, authorization or order of any court or governmental
authority or third party is required in connection with the execution and
delivery by Sellers of this Agreement or the consummation of any transactions
contemplated hereby.
2.18 TAXES. The Company and CHSC have correctly prepared and timely
filed all federal, state and other tax returns that are or were required for all
fiscal periods ending on or before March 31, 1995, and have paid or made
provision for all taxes due and payable and have complied in all respects with
all applicable laws relating to the payment and withholding of taxes and there
are no claims against the Company or CHSC for federal, state and other taxes for
any period or periods ending on or before March 31, 1996. There are no
outstanding waivers or comparable consents given by the Company or CHSC
regarding the application of the statute of limitation with respect to any taxes
or returns. Except as set forth in SCHEDULE 2.18, with regard to any taxes or
returns of the Company or CHSC, there are no federal, state, local or foreign
audits or other administrative proceedings or court proceedings
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presently pending and there has not been any such audit or proceeding in the
last five (5) years.
2.19 LITIGATION. Except as set forth in SCHEDULE 2.19, there are no
claims, actions, suits, proceedings or inquiries, investigations, pending or to
the knowledge of Sellers threatened or which were instituted or settled within
the last three (3) years against or affecting the Company or CHSC, at law or in
equity or otherwise, or before or by any federal, state, foreign, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or arbitrative tribunal wherever located.
2.20 ORGANIZATION DOCUMENTS. The Articles of Incorporation and Bylaws
of the Company and CHSC, as amended, in the respective forms provided to Buyer
are complete and correct.
2.21 RECENT DEVELOPMENTS. Except as set forth in SCHEDULE 2.21, since
March 31, 1996, there has not been any:
(1) Transaction, contract or commitment by the Company or CHSC except
in the ordinary course of business as conducted on that date;
(2) Capital expenditure by the Company or CHSC exceeding $50,000
(other than in accordance with the Capital Expenditure Plan described in
Schedule 4.2(b);
(3) Material adverse change in the financial condition, liabilities,
assets, business, or prospects of the Company or CHSC;
(4) Material destruction, damage to, or loss of any material asset of
the Company or CHSC (whether or not covered by insurance);
(5) Change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization policies or rates) by the
Company or CHSC;
(6) Revaluation by the Company or CHSC of any of its assets;
(7) Declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of the Company or CHSC, or any
direct or indirect redemption, purchase, or other acquisition by the Company or
CHSC of any of its shares of capital stock;
(8) Increase in the salary or other compensation payable or to become
payable by the Company or CHSC to any of its officers, directors, or employees,
or the declaration, payment, or commitment or obligation of any kind for the
payment, by the Company or CHSC, of a bonus or other additional salary or
compensation to any such person;
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(9) Sale or transfer of any asset of the Company or CHSC, except in
the ordinary course of business;
(10) Amendment or termination of any contract, agreement, or license
to which the Company or CHSC is a party, except in the ordinary course of
business;
(11) Loan by the Company or CHSC to any person or entity, or guaranty
by the Company or CHSC of any loan;
(12) Mortgage, pledge, or other encumbrance of any asset of the
Company or CHSC;
(13) Waiver or release of any right or claim of the Company or CHSC,
except in the ordinary course of business;
(14) Commencement or notice or threat of commencement of any civil
litigation or any governmental proceeding against or investigation of the
Company, CHSC, or their affairs;
(15) Labor trouble or claim of wrongful discharge or other unlawful
labor practice or action;
(16) Issuance or sale by the Company or CHSC of any shares of their
capital stock of any class, or of any other of their securities;
(17) Termination or modification of any relationship or arrangement of
the Company or CHSC with any of their major suppliers, distributors, customers
or clients;
(18) Agreement by the Company or CHSC to do any of the things
described in the preceding clauses (a) through (q); or
(19) Other event or condition of any character that has or might
reasonably have a material and adverse effect on the financial condition,
business, assets, liabilities, or prospects of the Company or CHSC.
2.22 EMPLOYEES AND PLANS.
(1) SCHEDULE 2.22 is a list of all employment and consulting
contracts and collective bargaining agreements, and all pension, bonus,
profit-sharing, stock option, or other agreements or arrangements providing for
employee remuneration or benefits to which the Company or CHSC is a party or by
which the Company or CHSC is bound. Except as set forth in SCHEDULE 2.22, all
these contracts and arrangements are in full force and effect, and
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neither the Company, CHSC nor any other party is in default under them. There
have been no claims of defaults and, to the best knowledge of Sellers, there are
no facts or conditions that if continued, or on notice, will result in a
default, under these contracts or arrangements. There is no pending or, to
Sellers' knowledge, threatened labor dispute, strike, or work stoppage affecting
the Company's or CHSC=s business. The Company and CHSC have complied with all
applicable laws relating to its employees and for their employee benefit plans,
including the provisions of the Employee Retirement Income Security Act (ERISA)
if and to the extent applicable. There are no threatened or pending claims by or
on behalf of any employee or such benefit plan, by or on behalf of any employee
covered under any such plan, or otherwise involving any employee or such benefit
plan, that allege a breach of fiduciary duties or violation of other applicable
state or federal law, nor is there, to Sellers' knowledge, any basis for such a
claim. Except as set forth in SCHEDULE 2.22, the Company has not entered into
any severance or similar arrangement in respect of any present or former
employee that will result in any obligation, absolute or contingent, of Buyer or
the Company, to make any payment to any present or former employee following
termination of employment.
(2) SCHEDULE 2.22 contains a complete and accurate list of the
following information for each officer, director, and employee (by category) of
the Company and CHSC, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and any
change in compensation since March 31, 1996; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under any of the
Company=s or CHSC=s pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus, employee stock
ownership (including investment credit or payroll stock ownership), severance
pay, insurance, medical, welfare, or vacation plan or other employee benefit
plan or any director plan.
(3) No employee or director of the Company or CHSC is a party to, or
is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other person that in any way adversely affects or
will affect (i) the performance of his or her duties as an employee or director
of the Company or CHSC, or (ii) the ability of the Company or CHSC to conduct
its business. To Sellers= knowledge, no key employee of the Company or CHSC
intends to terminate his or her employment with the Company or CHSC.
(4) SCHEDULE 2.22 also contains a complete and accurate list (by
category) of the following information for each retired employee or director of
the Company or CHSC, or their dependents, receiving benefits or scheduled to
receive benefits in the future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance coverage, and other
benefits.
2.23 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
SCHEDULE 2.23, the Company and CHSC are and at all times during the past three
(3) years have been in material compliance with applicable federal, state and
local laws, statutes and regulations
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applicable to the conduct of their businesses and neither the Company nor CHSC
has received any notice or other communication regarding the actual, alleged or
potential violation of any such law, statute or regulation.
2.24 PRODUCT LIABILITY. Except as set forth in SCHEDULE 2.24, the
Company=s and CHSC=s products are made and manufactured in accordance with
applicable laws and contain no design defects. The Company and CHSC have
furnished Buyer with a copy or summary of all warranties, express or implied,
relating to the sale of their products during the past three (3) years.
2.25 FULL DISCLOSURE. No statement herein or other information
delivered herewith by or on behalf of the Sellers to the Buyer in connection
with the negotiation of this Agreement or in connection with any transaction
contemplated hereby contains any untrue statement of a material fact or omits to
state any material fact known to Sellers necessary to make the statements
contained herein or therein not misleading as of the date hereof.
2.26 INTERESTED PERSONS. Except as set forth in SCHEDULE 2.26,
neither the Sellers nor any officer, director, employee of the Company or CHSC;
nor any spouse, child, or other relative of any of these persons has (i) any
interest in, directly or indirectly, nor any contractual relationship with, any
competitor, customer or supplier of the Company or CHSC or in any person from
whom or to whom the Company or CHSC leases any real or personal property, or in
any other person with whom the Company or CHSC is doing business, or (ii) except
as set forth in SCHEDULE 2.14 and for the fees paid and payable to Manwell &
Milton, of which Mr. Manwell is a member, engaged in any transaction with the
Company or CHSC in the last five (5) years.
2.27 LEASES. SCHEDULE 2.27 sets forth a list of every lease,
sublease, license and other agreement relating to real and personal property,
written or oral, to which the Company or CHSC is a lessee, sublessee or assignee
("Leases"). Originals or true, correct and complete copies of each Lease,
including all amendments and exhibits thereto, have been provided to the Buyer,
its representatives, accountants, appraisers or counsel for review. Each Lease
is in full force and effect and is a valid and binding agreement of the parties,
and there does not exist, nor would there exist as a result of any provision of
this Agreement, any default or event which with notice or lapse of time or both,
would constitute a default under the Leases. None of the Sellers, the Company
or CHSC has received any notice of any event or condition that would prevent
continuation of any of the Leases. There exists no violation of any building,
zoning or fire code or other statute, regulation or ordinance in connection with
any real property lease to which the Company or CHSC is a party.
2.28 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 2.28, the
Company and CHSC have complied and the property owned or leased by them complies
in all material respects with all federal, state, and local environmental
protection laws and regulations and no citation has been received in the last
three (3) years for any violation of any
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such law or regulation. Except as set forth in SCHEDULE 2.28, no material
capital expenditures or expenditures for remediation will be required for
compliance with any applicable federal, state or local laws or regulations now
in force relating to the protection of the environment. Except as set forth in
SCHEDULE 2.28, there is no past or pending audit or investigation known to
Sellers by any federal, state, or local governmental authority with respect to
groundwater, soil, or air; the use, storage, burial, release, transportation, or
disposal of hazardous substances, petroleum, or other materials or substances
harmful to the health and safety of the environment; or underground storage
tanks at the property or relating to the facilities owned or leased by the
Company or CHSC. Except as set forth in SCHEDULE 2.28, neither the Company nor
CHSC have an agreement with any third party or federal, state, or local
governmental authority relating to any environmental matter or any environmental
cleanup and there are no pending claims by third parties regarding any
environmental matters.
2.29 BROKERS OR FINDERS. Except for that certain letter agreement
dated January 17, 1996 between the Company and Dillon, Read & Co. Inc., Sellers
and the Company have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to each Seller that, at and as of the
date of this Agreement, the following statements are and shall be true and
correct in all respects:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Buyer is a
corporation duly organized and existing in good standing under the laws of the
State of Delaware, and has the power to own its properties and to carry on its
businesses as now being conducted. The Buyer is duly qualified to do business
and in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to so qualify would not have a material adverse effect on
Buyer.
3.2 NO DEFAULT OR CONFLICTS. Buyer is not in violation of or default
in any material respect under any law or regulation, or any order of any court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality or arbitrative tribunal, wherever
located. The execution and delivery of this Agreement and any and all documents
to be executed in connection therewith and the performance by Buyer of its
obligations hereunder and thereunder do not and will not (a) materially conflict
with any provision of (i) any law, statute, rule or regulation, (ii) the
Certificate of Incorporation or Bylaws of Buyer or (iii) any agreement,
judgment, license, order or permit applicable to or binding upon Buyer, or (b)
result in the creation of any material lien, charge or encumbrance upon any
assets or properties of Buyer.
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3.3 LITIGATION. There are no claims, actions, suits or proceedings
pending or, to the knowledge of Buyer, threatened against or affecting Buyer, at
law or in equity or otherwise, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or arbitrative tribunal wherever located that challenge or may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated hereby.
3.4 GOVERNMENT AND OTHER CONSENTS. Except for filings required under
the HSR Act, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with the
execution and delivery by Buyer of this Agreement or the consummation of any
transactions contemplated hereby.
3.5 DUE AUTHORIZATION. Except with respect to approval by the
Buyer=s board of directors, this Agreement has been duly authorized and, upon
execution and delivery, will be the legal, valid and binding obligation of
Buyer, enforceable in accordance with its terms.
3.6 FULL DISCLOSURE. No statement herein or other information
delivered herewith by or on behalf of Buyer in connection with the negotiation
of this Agreement or in connection with any transaction contemplated hereby
contains any untrue statement of a material fact or omits to state any material
fact known to Buyer necessary to make the statements contained herein or therein
not misleading as of the date hereof.
3.7 INVESTMENT INTENT. The Stock of the Company to be acquired by
Buyer pursuant to this Agreement are being acquired by Buyer for investment and
not with a view to the distribution thereof and Buyer has or will comply fully
with any applicable state or Federal law or regulation affecting the ownership
or distribution of such Stock.
3.8 BROKERS OR FINDERS. Buyer has incurred no obligations or
liabilities, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
ARTICLE 4. COVENANTS OF SELLERS AND COMPANY.
4.1 AFFIRMATIVE COVENANTS. The Sellers and the Company covenant and
agree that, from the date of this Agreement through the Closing Date:
(1) ACCESS. Sellers shall give, and shall cause the Company and CHSC
to give, to Buyer and Buyer's counsel and other representatives reasonable
access to all of the properties, books, leases, contracts, agreements,
commitments and records and to all employees and representatives of the Company
and CHSC, respectively, and shall furnish Buyer with all information concerning
the affairs of the Company and CHSC and copies of such records and other
documents as Buyer shall reasonably request.
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(2) ADVERSE CHANGE. Sellers shall cause the Company promptly to
notify Buyer in writing if (i) there is any material adverse change in the
assets, properties, business or condition (financial or otherwise) of the
Company and CHSC, taken as a whole, (ii) there is any substantial loss or damage
to any of the material assets or properties of the Company or CHSC, whether or
not covered by insurance, (iii) any litigation, proceeding or investigation is
instituted affecting the Company or CHSC or any of their respective assets or
properties, or (iv) any other event occurs which causes any of the
representations and warranties of Sellers contained herein to become untrue.
(3) OPERATIONS OF THE BUSINESS OF THE COMPANY AND CHSC. Sellers
shall cause the Company and CHSC to:
(1) carry on their business in substantially the same manner as
they have heretofore and not introduce any new method of management,
operation or accounting;
(2) maintain their properties and facilities in good working
order and condition, ordinary wear and tear excepted;
(3) perform all material obligations under agreements relating
to or affecting their assets, properties and rights;
(4) maintain in full force and effect present insurance policies
or other comparable insurance coverage; and
(5) use their best efforts to retain their present employees and
maintain their relationships with suppliers, clients, customers and
others having business relations with them.
(4) 401(k) PLAN. The Company covenants that, at the option of Buyer,
it will terminate its existing 401(k) plan effective upon Closing hereunder to
facilitate employee participation in Buyer=s 401(k) plan.
4.2 NEGATIVE COVENANTS. Sellers covenant and agree that, from the
date of this Agreement through the Closing Date, they shall cause the Company
and CHSC to comply with the following covenants:
(1) EMPLOYEE COMPENSATION. Except as may be required by law or as
set forth in SCHEDULE 2.22, neither the Company nor CHSC shall enter into,
adopt or amend any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock performance unit,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreements, trusts, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee, or (except, in the
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case of employees other than officers, for normal increases in the ordinary
course of business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company and CHSC, taken as a whole) increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan and arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units) or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(2) CAPITAL EXPENDITURES. Except as disclosed to Buyer, neither the
Company nor CHSC shall authorize or make any capital expenditures in excess of
fifty thousand dollars ($50,000) in the aggregate in respect of any project
except for obligations incurred prior to the date hereof and disclosed on
SCHEDULE 4.2(b) hereto.
(3) TAX ELECTIONS. The Company and CHSC shall not make any tax
elections or settle or compromise any income tax liability or, except as
required by law or applicable accounting standards, change any accounting
policies or procedures.
(4) CONTRACTS AND AGREEMENTS. Neither the Company nor CHSC shall
cancel, modify adversely, assign, terminate or encumber any contract, agreement,
arrangement, commitment or understanding which would materially and adversely
affect the business, operations or financial position of the Company and CHSC,
taken as a whole.
(5) SALE OF ASSETS. Neither the Company nor CHSC shall, except as
required in the ordinary course of business, sell, dispose of or agree to sell
or dispose of any of their real or personal property, rights, interests or other
assets.
(6) INSURANCE. The Company and CHSC shall not fail to maintain
insurance substantially in accordance with Section 2.13 hereof.
(7) ORDINARY COURSE OF BUSINESS. Except as required in connection
with the transactions contemplated hereby, neither the Company nor CHSC shall
enter into any transaction not in the ordinary course of business, or enter into
any contract or agreement not in the ordinary course of business.
(8) INDEBTEDNESS. Neither the Company nor CHSC shall incur any
indebtedness or make any loan or advance other than in the ordinary course of
business. Any assumption, guarantee or endorsement or the creating of any lien
or other charge on any assets shall be deemed an incurrence of indebtedness for
this purpose.
(9) SALE OF CAPITAL STOCK. Neither the Company nor CHSC shall issue,
sell, contract to sell or make any changes in any of its securities (including
options, warrants or
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convertible securities) or redeem, purchase or otherwise acquire any outstanding
shares of its securities.
(10) DIVIDENDS. Except as set forth in SCHEDULE 2.21, the Company
and CHSC shall not pay any dividends or make any other distributions with
respect to capital stock.
(11) ORGANIZATIONAL DOCUMENTS. The Company and CHSC shall not change,
amend or modify its Articles of Incorporation or By-laws.
(12) DEFAULTS. The Company and CHSC shall use its best efforts to not
allow to occur or exist any default by it under any contract, agreement,
arrangement, commitment or understanding, which default could have a material
adverse affect upon the business, operations or financial position of the
Company and CHSC, taken as a whole.
(13) LIENS. Except as described in SCHEDULE 2.12, neither the Company
nor CHSC shall create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or hereafter
acquired.
(14) MERGER OR CONSOLIDATION. Neither the Company nor CHSC shall
merge or consolidate or agree to merge or consolidate with or into any other
corporation.
(15) ACTION. Neither the Company nor CHSC shall take, or agree in
writing or otherwise to take, any of the foregoing actions or any action which
would make any representation or warranty contained in this Agreement untrue or
incorrect as of the date when made or as of such time.
4.3 ADDITIONAL COVENANTS. Each Seller agrees that for a period of
five (5) years from the date of Closing that he and his affiliates will not,
directly or indirectly, solicit any of the current employees of the Company or
any direct or indirect subsidiary to leave such employment or hire such
employee.
ARTICLE 5. BEST EFFORTS; HART-SCOTT-RODINO.
5.1 BEST EFFORTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations or
otherwise to consummate and effect the transactions contemplated by this
Agreement, including without limitation, obtaining all required consents and
approvals, making all required filings and applications and complying with or
responding to any requests by governmental agencies. In case at any time after
the Closing any further action is necessary or desirable to carry out the
purposes of this Agreement, each party to this Agreement shall take all such
necessary or desirable action. The parties will execute any
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additional instruments necessary to consummate, perfect or evidence the
transactions contemplated hereby.
5.2 HART-SCOTT-RODINO. As soon as practicable, Buyer shall make, and
the Sellers shall cause the Company to make, all filings required under the HSR
Act covering the transactions contemplated hereby.
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer under this Agreement are subject to the
satisfaction of the following conditions on or prior to the Closing Date:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Seller contained in this Agreement shall be true and correct
in all material respects on the date of this Agreement and on the Closing Date
as though made on and as of the Closing Date and Buyer shall have received such
evidence thereof as it shall reasonably request.
6.2 PERFORMANCE OF EACH SELLER. Each Seller shall have performed in
all material respects all covenants and agreements required to be performed by
him under this Agreement prior to the Closing Date and Buyer shall be reasonably
satisfied that no defaults have occurred which would have a material adverse
effect upon the business, operations or financial position of the Company.
6.3 ABSENCE OF MATERIAL ADVERSE CHANGES. There shall have been no
material adverse change in the assets or liabilities of the Company or results
of operations or financial condition during the period from the date hereof, to
and including the Closing Date.
6.4 DELIVERIES. At or prior to the Closing Date, Sellers shall have
delivered to Buyer the following instruments and documents:
(1) stock certificates evidencing all of the Stock, duly endorsed for
transfer to Buyer in accordance with Section 1.1;
(2) resignations of all directors and officers of the Company and
CHSC effective on the Closing Date;
(3) all minute books, stock certificates and corporate records
(including unissued stock certificates and all canceled stock certificates), the
Articles of Incorporation (and all amendments thereto), By-laws and the
corporate seal of the Company;
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(4) all deeds, leases, certificates of title, contracts, agreements,
correspondence and documents of every character to which the Company is a party
and all amendments and modifications thereof;
(5) all books of account, records, files, documents and papers
relating to the Company and the conduct of its business;
(6) such other documents and instruments as Buyer shall have
reasonably requested as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by Sellers in this Agreement and
the other documents contemplated herein, the satisfaction of all conditions
contained herein or therein and all other matters pertaining hereto and thereto;
and
(7) an opinion of Manwell & Milton, counsel for Sellers, in form
satisfactory to Buyer in its reasonable discretion; and
(8) a tax clearance certificate and a certificate of the due
incorporation, valid existence and good standing of the Company in the State of
California and CHSC in the State of Ohio, issued by the appropriate authorities
of such jurisdictions; and
(9) at Sellers= expense, at the request of Buyer prior to the Closing
Date, all employment, incentive compensation, severance, management and/or
phantom stock agreements of the Company or CHSC currently in effect shall have
been terminated or fully performed and new employment agreements with such
persons as Buyer shall designate on terms and conditions satisfactory to Buyer
in its reasonable discretion shall have been executed and delivered; provided,
however, that Buyer may not request termination of the existing employment
agreements of Messrs. Cassedy and Massey;
(10) at Buyer=s option, all or any existing noncompete agreements
shall be terminated or fully performed at Sellers= expense, and at Buyer=s
option, new noncompete agreements with such persons as Buyer shall designate on
terms and conditions satisfactory to Buyer shall have been executed and
delivered; and
(11) the Buyer shall have received the approval of its Board of
Directors.
6.5 HART-SCOTT-RODINO WAITING PERIOD. The applicable waiting period,
including any extension thereof, under the HSR Act shall have expired or been
terminated and neither the Department of Justice nor the Federal Trade
Commission shall have instituted any litigation to enjoin or delay the
consummation of the transactions contemplated hereby.
6.6 APPROVALS; LITIGATION. All approvals of any governmental
authority and consents of other parties to the leases, agreements, licenses and
permits of the Company, which approval or consent is necessary to permit
consummation of the transaction and to
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permit the business and assets of the Company as presently conducted and owned
to continue to be so conducted and owned after consummation of the transaction,
shall have been obtained and on the Closing Date there shall be no litigation or
other proceedings pending or threatened against any of the parties hereto,
seeking to enjoin, prevent, set aside or otherwise challenge the consummation of
the transactions contemplated herein.
The conditions contained in this Article VI are included herein for the
benefit of Buyer and, without constituting a waiver of any of Buyer's rights
hereunder or at law or in equity, if Sellers shall be in default of any
agreement herein, may be waived as conditions to closing, in whole or in part,
and with or without notice; PROVIDED, HOWEVER, that if Buyer knowingly waives
any condition set forth in this Article VI, Buyer shall be precluded from
claiming a breach of any representation or warranty or covenant which shall have
been rendered false by the events beyond the control of Company and Sellers
which occur during the period from the date hereof, to and including the Closing
Date and cause the breach which has been waived.
ARTICLE 7. CONDITIONS TO OBLIGATIONS OF SELLERS.
The obligations of Sellers under this Agreement are subject to the
satisfaction of the following conditions on or prior to the Closing Date:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on the date of this Agreement and on the Closing Date as
though made on and as of the Closing Date and Sellers shall have received such
evidence thereof as they shall reasonably request.
7.2 PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer shall have performed
in all material respects all covenants and agreements required to be performed
by it under this Agreement on or by the Closing Date.
7.3 DELIVERIES. At or prior to the Closing Date, Buyer shall have
delivered the following instruments and documents:
(1) to the Sellers, payment of the Purchase Price less the Escrow
Amount (as such term is defined in Section 7.3(b)) by wire transfer of
immediately available funds to the respective accounts specified by Sellers no
less than forty-eight (48) hours prior to the Closing Date or if no such account
is specified by a Seller a certified or cashier's check payable to the account
of such Seller in immediately available funds;
(2) to First Trust of California (AEscrow Holder@), payment of two
million dollars ($ 2,000,000.00) (the AEscrow Amount@) by wire transfer of
immediately available funds with directions to retain, hold and dispose of these
funds in accordance with the terms of the Escrow Agreement among Buyer, the
Company and the Sellers which shall be
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in substantially the form of EXHIBIT B attached hereto (the AEscrow Agreement@)
to fund the payment of any liability of the Sellers to Buyer arising under
Section 9.2 of this Agreement;
(3) to the Sellers, a certificate of the due incorporation, valid
existence and good standing of Buyer in the State of Delaware, issued by the
appropriate authorities of such jurisdiction;
(4) to the Sellers, an opinion of Pillsbury Madison & Sutro LLP,
counsel for Buyer, in form satisfactory to Sellers in their reasonable
discretion; and
(5) such other documents and instruments as Sellers shall have
reasonably requested as to (i) the accuracy and validity of or compliance with
all representations, warranties and covenants made by Buyer in this Agreement
and the other documents contemplated herein, (ii) the satisfaction of all
conditions contained herein or therein and (iii) all other matters pertaining
hereto and thereto.
7.4 HART-SCOTT-RODINO WAITING PERIOD. The applicable waiting period,
including any extension thereof, under the HSR Act shall have expired or been
terminated and neither the Department of Justice nor the Federal Trade
Commission shall have instituted any litigation to enjoin or delay the
consummation of the transactions contemplated hereby.
7.5 APPROVALS; LITIGATION. All approvals of any governmental
authority and consents of other parties to the leases, agreements, licenses and
permits of the Company, which approval or consent is necessary to permit
consummation of the transaction and to permit the business and assets of the
Company as presently conducted and owned to continue to be so conducted and
owned after consummation of the transaction, shall have been obtained and on the
Closing Date there shall be no litigation or other proceedings pending or
threatened against any of the parties hereto, seeking to enjoin, prevent, set
aside or otherwise challenge the consummation of the transactions contemplated
herein.
The conditions contained in this Article VII are included herein for the
benefit of Sellers and, without constituting a waiver of any of Sellers rights
hereunder or at law or in equity, if Buyer shall be in default of any agreement
herein, may be waived by Sellers as conditions to closing, in whole or in part,
and with or without notice.
ARTICLE 8. TERMINATION.
The transactions contemplated by this Agreement may be terminated on or
before the Closing Date as follows:
8.1 MUTUAL AGREEMENT. By mutual written agreement of the Sellers and
Buyer.
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8.2 COURT ORDER. By the Sellers or Buyer if any court of competent
jurisdiction shall have issued an order restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement.
8.3 BREACH OF REPRESENTATION OF WARRANTY. By the Sellers or Buyer if
any representation or warranty made herein by the other was untrue or false in
any material respect as of the date made or as of the Closing Date.
8.4 CONDITIONS TO CLOSE. By the Sellers or Buyer if any condition
precedent to its obligation to close has not occurred as of the Closing Date,
unless the party seeking to terminate has failed to observe any covenant,
agreement or condition precedent to be observed or performed by such party on or
before the Closing Date.
8.5 FAILURE TO CLOSE. After July 31, 1996, by either the Sellers or
Buyer if the Closing has not occurred for any reason other than a breach of this
Agreement by the terminating party.
8.6 BUYER=S BOARD APPROVAL. After June 10, 1996, by either the
Sellers or Buyer if Buyer=s Board of Directors has not approved the execution
and delivery of this Agreement and the transactions contemplated hereby.
8.7 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to the provisions of Article VIII hereof, except as set forth below,
this Agreement shall forthwith become wholly void and of no force and effect and
there shall be no liability on the part of the parties hereto. If for any
reason on the Closing Date there has been non-fulfillment of an undertaking by
or condition precedent for the Sellers or Buyer not waived in writing by the
party in whose favor such undertaking or condition runs, the party in whose
favor such undertaking or condition runs may refuse to consummate the
transactions contemplated by this Agreement without any liability or obligation
on its part whatsoever and any such refusal by the Sellers or by Buyer to
consummate the transactions hereby contemplated because of non-fulfillment by
the other party shall not constitute an election of remedies and the non-
defaulting party may pursue whatever legal rights and remedies it may have at
law or in equity, including specific performance, by reason of such non-
fulfillment or failure by the other party.
ARTICLE 9. SURVIVAL; INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
respective representations and warranties of each Seller and Buyer contained
herein shall survive the Closing Date for a period of two (2) years after the
Closing Date and shall be effective regardless of any investigation that may
have been made or may be made at any time by or on behalf of the party to whom
such representations, warranties are made. After such two (2) year period, no
claim by Buyer for breach of such representations and warranties shall be
24
<PAGE>
commenced. Notwithstanding the foregoing, the representations and warranties
related to taxes shall survive until the expiration of the period during which
any government agency can assert a claim related to such taxes. Any
representation or warranty which is the subject of a claim or dispute asserted
prior to any expiration date shall survive with respect to such claim or dispute
until final resolution thereof. The parties hereto in executing and carrying
out the provisions of this Agreement are relying solely upon the
representations, warranties and agreements contained in this Agreement, in any
certificate or exhibit delivered pursuant to the provisions of this Agreement,
and the information provided to it in writing, which information is listed on
SCHEDULE 9.1, attached hereto and by this reference incorporated herein, and not
upon any representation, warranty, agreement, promise or information, written or
oral, made by any person (including the Company, the Sellers, or any
representative thereof), other than as specifically set forth herein and
therein.
All obligations, covenants and agreements of the parties contained in this
Agreement shall survive the Closing Date for such period as may be specified
herein or as appropriate to permit the performance thereof in accordance with
this Agreement.
9.2 SELLER'S INDEMNIFICATION OF BUYER.
(1) Sellers, agree to indemnify and hold Buyer harmless against any
loss, damage, penalty (civil or criminal), mandatory capital expenditure, or
expense (including reasonable attorneys' fees) suffered by Buyer resulting from
(i) any breach of any of the representations, warranties or covenants made by
Sellers herein, or in any schedule or certificate delivered pursuant hereto,
(ii) or caused by or arising out of any Environmental Condition which is
identified in (1) Sections 5 and 6 of the Preliminary Site Assessment: Carriage
Hill Stone Company, 9318 Erie S.W., Navarre, Ohio dated May 29, 1996 prepared by
Harza Consulting Engineers and Scientists (AHarza@), (2) Sections 5 and 6 of
Preliminary Site Assessment: Carriage Hill Stone Company, 10149 Navarre Road
S.W., Navarre, Ohio dated May 29, 1996 prepared by Harza, (3) Sections 5 and 6
of the Phase I Preliminary Site Assessment: Tower Road Property, Napa,
California dated May 24, 1996 prepared by Harza, and (4) the Preliminary Site
Assessment and Soil and Ground Water Quality Investigation: Tower Road Property,
Napa, California 94563 dated August, 1991 prepared by Kaldveer Associates,
Incorporated; or (iii) the mandatory requirement to comply with any federal,
state or local laws, statutes, ordinances, rules or regulations relating to
pollution or protection of health or the environment arising out of
Environmental Conditions existing or occurring prior to the Closing Date (except
that nothing herein shall require indemnification with respect to (X) expenses
already incurred or capital expenditures already made by the Company in
connection with past environmental compliance activities, (Y) expenses incurred
or capital expenditures made in connection with the post-Closing continuation of
environmental compliance activities currently engaged in by the Company, or (Z)
changes in federal, state or local environmental laws following the Closing
Date); PROVIDED, HOWEVER, that with respect to matters giving rise to
indemnification under clause (i) above (other than a breach of a representation
contained in Section 2.2 or 2.3 hereof) Sellers shall not be required to
25
<PAGE>
indemnify Buyer hereunder until the total amount of all such losses, damages or
expenses exceeds five hundred thousand dollars ($500,000.00), and then only for
the amount by which such losses, damages or expenses exceed five hundred
thousand dollars ($500,000.00). For purposes of this Section 9.2, Environmental
Condition shall mean: (i) the presence or disposal, or actual or threatened
emission, discharge, migration or release at or from the properties (owned or
leased) of the Company and CHSC of pollutants, contaminants (including without
limitation radioactive contaminants), toxic or hazardous substances, materials
or wastes into or in air, soil, surface water, groundwater, personal property,
equipment or structures; or (ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, toxic or hazardous substances, materials or wastes, on or from the
properties (owned or leased) of the Company and CHSC. Buyer shall use its
reasonable efforts to minimize the cost to remedy environmental conditions that
are subject to the indemnity provisions of this Section 9.2. In addition,
Sellers will be allowed to reasonably participate in Buyer=s planning process
with respect to the development of plans to remedy such condition;
(2) The liability of any Seller hereunder shall be several but not
joint and any Seller's liability with respect to any obligation hereunder shall
be limited to its or his proportionate share, based on the consideration
received upon the Closing; PROVIDED, HOWEVER, that liability of Sellers of any
kind, whether hereunder, under the Escrow Agreement, in contract or otherwise,
shall be limited to an aggregate of five million dollars ($5,000,000.00);
PROVIDED, FURTHER, HOWEVER, that each Seller shall be liable without respect to
the foregoing limitations concerning several liability and maximum limitations
on liability for a breach of a representation contained in Section 2.2 or in
Section 2.3 (but no Seller shall be liable with respect to a breach of such
representation by another Seller);
(3) Sellers shall in no event be required to indemnify Buyer for any
loss, damage or expense with respect to claims by third parties unless any such
claims(s) relate to events occurring prior to and including the Closing Date;
(4) With respect to any claim or demand set forth by Buyer relating
to a third party claim, for which Sellers are required to indemnify Buyer
hereunder, the Sellers shall assume the defense, using counsel reasonably
satisfactory to Buyer (it being understood that should Buyer reasonably
determine that there may be a conflict between the positions of the Sellers and
the Buyer in defending such claim or that there may be legal defenses available
to the Buyer different from or in addition to those available to the Sellers,
Buyer may engage its own separate counsel at the expense of Sellers), in good
faith and at their expense, of any such claim or demand, and the Buyer, at its
expense, shall have the right to participate in the defense of any such third
party claim at its sole expense. If a third party claim or demand is or may not
be subject in whole or in part to the indemnification by Sellers hereunder,
Buyer may defend, using counsel reasonably satisfactory to Sellers, in good
faith and at its expense, such claim or demand and Sellers, at their expense,
shall have the right to participate in the defense of any such third party
claim. So long as the party controlling the defense of the third
26
<PAGE>
party claim or demand is defending in good faith such third party claim, the
other party shall not settle or compromise such third party claim. The party
not controlling the defense shall make available to the other party and its
representative all records and other materials reasonably required by it for its
use in contesting any third party claim and shall cooperate fully with the party
controlling the defense of all such claims. The party controlling the defense
of such third party claim or demand shall not without the written consent of the
other party, which consent shall not be unreasonably withheld, settle or
compromise any third party claim or demand without the written consent of the
other party. If Sellers do not elect to defend any such third party claim for
which they are required to indemnify Buyer hereunder, Buyer shall have no
obligation to do so; and
(5) Provided that Sellers have fully satisfied their indemnity
obligations to Buyer with respect to any matter as to which the Company or CHSC
may have a right to indemnity from a third party, Buyer shall, at Sellers=
request, assign, or cause the Company to assign, such indemnity right to Sellers
and cooperate with Sellers to enforce such indemnity right against such third
party; provided, however, that Buyer=s obligation under this subparagraph shall
apply only to the extent that such assignment or enforcement would not affect
Buyer=s right to indemnification in the future from such third party or under
Section 9.2 of this Agreement.
9.3 BUYER'S INDEMNIFICATION OF SELLERS. Buyer agrees to indemnify
and hold Sellers harmless against any loss, damage or expense (including
reasonable attorneys' fees) resulting from a claim by a third party relating to
events arising or occurring after Closing and from the conduct of the business
of the Company following the Closing hereunder so long as such a claim did or
does not arise from or involve a breach of Sellers= representations and
warranties herein contained.
9.4 EXCLUSIVITY OF REMEDIES. From and after the Closing Date, except
for any claims relating to fraudulent misrepresentation, the parties' remedies
for breach of the representations, warranties and covenants herein contained and
all other rights and remedies of the parties for breach of this Agreement or in
connection with any dispute arising under this Agreement or the transactions
effected hereby or arising out of or relating to the business of the Company as
heretofore or hereafter conducted or as existing on the date hereof shall not be
cumulative and shall be exclusively governed by and exclusively limited to this
Article IX and the provisions of the Escrow Agreement.
ARTICLE 10. GENERAL PROVISIONS.
10.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Buyer recognizes and
acknowledges that it has and will have access to certain confidential
information of the Company (including, but not limited to, a list of customers
and costs) that are valuable, special and unique assets of its business. In the
event that the transactions contemplated by this Agreement are not concluded,
Buyer agrees that it will not use or disclose such confidential information to
any person, firm, corporation, association or other entity for any purpose or
27
<PAGE>
reason whatsoever, except to authorized representatives of Sellers, or as
required by law, unless such confidential information becomes publicly available
through no fault of Buyer. For purposes hereof, the term Aconfidential
information@ shall not include any information that was known to Buyer, was or
becomes available to Buyer on a non-confidential basis from a source other than
the Company, the Sellers, or their advisors or agents, provided that such source
is not known by the Buyer to be, or to have been, bound by a confidentiality
agreement with regard to the information. Buyer hereby agrees to notify the
Company promptly if it is requested to make a disclosure of any confidential
information in connection with any legal or administrative proceeding or
investigation (a "Disclosure") so that the Company may seek a protective order
or other remedy or waive Buyer's compliance with this Section 10.1. Buyer will
cooperate with the Company on a reasonable basis in its efforts to obtain a
protective order or other remedy, but, if a protective order or other remedy is
not obtained, Buyer may make such Disclosure without liability hereunder if it
is nevertheless compelled to make such Disclosure. In the event of a breach or
threatened breach by Buyer of this Section 10.1, the Sellers and the Company
shall be entitled to an injunction restraining such breaching party from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the Sellers or the Company from pursuing any
other available remedy for such breach or threatened breach, including the
recovery of damages.
10.2 PUBLIC ANNOUNCEMENTS. Sellers shall have the right of prior
approval of any press release issued by Buyer in connection with any termination
of this Agreement.
10.3 REFERENCES AND TITLES. All references in this Agreement to
Articles, Sections, Subsections and other subdivisions refer to corresponding
Articles, Sections, Subsections and other subdivisions of this Agreement unless
expressly provided otherwise. Titles appearing at the beginning of any
subdivision are for convenience only and do not constitute any part of such
subdivision and shall be disregarded in construing the language contained in
such subdivision. The words "this Agreement," "this instrument,"herein,"
"hereof," "hereby," "hereunder," and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited. Pronouns in masculine, feminine and neuter genders shall be construed
to include any other gender, and words in the singular form shall be construed
to include the plural and vice versa, unless the context otherwise requires.
10.4 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, each party to this Agreement shall be responsible for the
fees, expenses and disbursements of its agents, representatives, accountants and
counsel incurred in connection with the negotiation of this Agreement and the
transactions contemplated in connection herewith. Sellers represent that the
Sale Costs and Expenses are the only expenses incurred or to be incurred by or
on behalf of the Sellers or the Company in connection with the negotiation of
this Agreement and the transactions contemplated in connection herewith.
28
<PAGE>
10.5 CONSTRUCTION; ENTIRE AGREEMENT; AMENDMENT. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California irrespective of such state's choice of law principles. This
Agreement, together with schedules and exhibits attached hereto, contains the
entire agreement between the Sellers and Buyer with respect to the transactions
contemplated hereby and supersedes all prior arrangements and understandings
among them with respect thereto. This Agreement may not be amended, modified or
changed except by instruments in writing signed by all of the parties hereto.
10.6 TIME. Time is of the essence hereof.
10.7 NOTICES. All notices, requests, demands, and other communications
required to or permitted to be given under this Agreement shall be in writing
and shall be conclusively deemed to have been duly given (1) when hand delivered
to the other party; or (2) when received when sent by telex or facsimile at the
address and number set forth below (provided, however, that notices given by
facsimile shall not be effective unless either (a) a duplicate copy of such
facsimile notice is promptly given by depositing same in a United States post
office with first-class postage prepaid and addressed to the parties as set
forth below, or (b) the receiving party delivers a written confirmation of
receipt for such notice either by facsimile or any other method permitted under
this paragraph; additionally, any notice given by telex or facsimile shall be
deemed received on the next business day if such notice is received after 5:00
p.m. (recipient's time) or on a nonbusiness day); or (3) three business days
after the same have been deposited in a United States post office with first
class or certified mail return receipt requested postage prepaid and addressed
to the parties as set forth below; or (4) the next business day after same have
been deposited with a national overnight delivery service reasonably approved by
the parties (Federal Express and DHL WorldWide Express being deemed approved by
the parties), postage prepaid, addressed to the parties as set forth below with
next-business-day delivery guaranteed, provided that the sending party receives
a confirmation of delivery from the delivery service provider.
If to Buyer:
Fibreboard Corporation
California Plaza
2121 North California Blvd., Suite 560
Walnut Creek, California 94596
Attention: Herbert M. Elliott, Vice President
Telephone: (510) 274-2717
Fax No.: (510) 274-0714
with copies to:
Fibreboard Corporation
29
<PAGE>
California Plaza
2121 North California Blvd., Suite 560
Walnut Creek, California 94596
Attention: Donald F. McAleenan, Deputy General Counsel
Telephone: (510) 274-2738
Fax No.: (510) 274-0714
and:
Pillsbury Madison & Sutro LLP
2700 Sand Hill Road
Menlo Park, California 94025-7020
Attention: Katharine A. Martin
Telephone: (415) 233-4586
Fax No.: (415) 233-4545
If to Sellers:
At the addresses, telephone and facsimile numbers
listed beneath their names on the signature pages hereof.
with a copy to:
Manwell & Milton
20 California Street, Third Floor
San Francisco, California 94111
Attention: Edmund R. Manwell
Telephone: (415) 362-2375
Fax No.: (415) 362-1010
Each party shall make any ordinary, good faith effort to ensure that it will
accept or receive notices that are given in accordance with this paragraph, and
that any person to be given notice actually receives such notice. A party may
change or supplement the addresses given above, or designate additional
addresses, for purposes of this section by giving the other party written notice
of the new address in the manner set forth above.
10.8 ATTORNEY'S FEES. In the event of any action or other proceeding,
including arbitration or other non-judicial proceedings, arising from, in, under
or concerning this Agreement and any amendment thereof, including, without
limiting the generality of the foregoing, any claimed breach hereof, the
prevailing party in such action or proceeding shall be entitled to recover from
the other party in such action or proceeding, such sum as the court shall fix as
reasonable attorney's fees incurred by such prevailing party.
30
<PAGE>
10.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
10.10 NO THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended to and nothing contained herein shall be interpreted to
confer on any party the rights of a third party beneficiary and this Agreement
shall be for the sole benefit of the parties hereto.
10.11 SEVERABILITY. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not effect the validity
of the remainder of this Agreement.
10.12 LANGUAGE. The language of this Agreement shall be construed as a
whole and in accordance with the fair meaning of the language used. The
language of this Agreement shall not be strictly construed against either party
based upon the fact that either party drafted or was principally responsible for
drafting this Agreement or any specific term or condition hereof.
10.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
31
<PAGE>
IN WITNESS WHEREOF, Buyer and Sellers have executed this Agreement on the
day and year first above written.
BUYER: COMPANY:
FIBREBOARD CORPORATION, STONE PRODUCTS CORPORATION,
a Delaware corporation a California corporation
By: By:
------------------------------ ------------------------------
Herbert M. Elliott James S. Fetherston
Vice President Chairman of the Board
SELLERS:
- ---------------------------------- ----------------------------------
James S. Fetherston Donald G. Castle, on behalf of
Address: Quantic Industries, Inc. First Albany Corporation as
990 Commercial Street custodian for Donald G. Castle
San Carlos, CA 94070 Address: 53 Overhill Road
Telephone: (415) 595-1100 Orinda, CA 94563
Fax: (415) 637-3093 Telephone: (510) 253-0441
Fax: (510) 253-0442
Charles G. Davis, Jr. Revocable Donald G. Castle Revocable
Living Trust dated January 27, 1990 Living Trust dated January 1, 1990
By: By:
------------------------------ ------------------------------
Charles G. Davis, Jr., Trustee Donald G. Castle, Trustee
Address: Quantic Industries, Inc. Address: 53 Overhill Road
990 Commercial Street Orinda, CA 94563
San Carlos, CA 94070 Telephone: (510) 253-0441
Telephone: (415) 595-1100 Fax: (510) 253-0442
Fax: (415) 637-3093
- ---------------------------------
Charles G. Davis, Jr.
Address: Quantic Industries, Inc.
990 Commercial Street
San Carlos, CA 94070
Telephone: (415) 595-1100
Fax: (415) 637-3093
32
<PAGE>
- ----------------------------------- -----------------------------------
Gregory C. Smith Julie E. Smith
- ----------------------------------- -----------------------------------
Alexander D. Smith Gregory C. Smith, on behalf of
Huntington Bank of Michigan
as custodian for Gregory C. Smith
Address for all above:
Gregory C. Smith
c/o New Center Stamping, Inc.
950 East Milwaukee
Detroit, Michigan 48211
Telephone: (313) 872-1722
Fax: (313) 872-0628
33
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International Network Fund Advent International Investors
Limited Partnership Limited Partnership
By: Advent International Corporation,
General Partner By:
--------------------------------
David M. Mussafer,
Attorney-in-Fact
By:
--------------------------------
David M. Mussafer,
Attorney-in-Fact
Advent Omnibus Limited Partnership Advent UNO, S.A.
By: Advent International Corporation,
General Partner
By: Advent International By:
--------------------------------
Limited Partnership, David M. Mussafer,
General Partner Attorney-in-Fact
By:
--------------------------------
David M. Mussafer,
Attorney-in-Fact
Advent UNO, C.V.
By: International Network Fund
Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By:
--------------------------------
David M. Mussafer,
Attorney-in-Fact
Address for all above:
101 Federal Street
Boston, Massachusetts 02110
Attention: David M. Mussafer
Telephone: (617) 951-9469
Fax: (617) 951-0566
34
<PAGE>
KOWA COMPANY, LTD.,
a Japanese corporation
By:
--------------------------------
Shiro Yamaji
Attorney-in-Fact for
Takayasu Miwa, Chairman
Address: 6-29, Nishiki 3-chome
Naka-ku, Nagoya
460 Japan
Telephone: (052) 963-3090
Fax: (052) 963-3093
35
<PAGE>
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment") is made
and entered into as of June 26, 1996, by and among FIBREBOARD CORPORATION, a
Delaware corporation ("Buyer"), STONE PRODUCTS CORPORATION, a California
corporation ("Company"), DONALD G. CASTLE, on behalf of First Albany Corporation
as custodian for Donald G. Castle ("First Albany"), DONALD G. CASTLE REVOCABLE
LIVING TRUST DATED JANUARY 1, 1990 ("Castle Trust"), CHARLES G. DAVIS, JR., an
individual resident in the State of California ("Davis"), CHARLES G. DAVIS, JR.
REVOCABLE LIVING TRUST DATED JANUARY 27, 1990 ("Davis Trust"), JAMES S.
FETHERSTON, an individual resident in the State of California ("Fetherston"),
ALEXANDER D. SMITH, an individual resident in the State of Michigan
("A. Smith"), GREGORY C. SMITH, an individual resident in the State of Michigan
("G. Smith"), GREGORY C. SMITH, on behalf of Huntington Bank of Michigan as
Custodian for Gregory C. Smith ("Huntington"), JULIE E. SMITH, an individual
resident in the State of Michigan ("J. Smith"), ADVENT INTERNATIONAL INVESTORS
LIMITED PARTNERSHIP ("AILP"), ADVENT OMNIBUS LIMITED PARTNERSHIP ("AOLP"),
ADVENT UNO, C.V. ("AUCV"), ADVENT UNO, S.A. ("AUSA"), INTERNATIONAL NETWORK FUND
LIMITED PARTNERSHIP ("INFLP") and KOWA COMPANY, LTD., a Japanese corporation
("Kowa") (First Albany, Castle Trust, Davis Trust, Fetherston, A. Smith,
G. Smith, Huntington, J. Smith, AILP, AOLP, AUCV, AUSA, INFLP and Kowa are
collectively referred to herein as the "Sellers" and individually as a
"Seller").
RECITALS:
A. Buyer, Company and Sellers are parties to a Stock Purchase Agreement
dated as of June 5, 1996 (the "Stock Purchase Agreement").
B. Buyer, Company and Sellers desire to amend the Stock Purchase Agreement
as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, Buyer, Company and Sellers agree as follows:
1. DEFINED TERMS; SECTION REFERENCES. Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the
Stock Purchase Agreement. References in this Amendment to numbered Articles and
Sections shall refer to the numbered Articles and Sections of the Stock Purchase
Agreement.
2. AMENDMENT OF STOCK PURCHASE AGREEMENT. The Stock Purchase Agreement is
hereby amended as follows:
-1-
<PAGE>
2.1 Section 1.2(a) shall be replaced in its entirety with the following:
(a) PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") to be paid to the Sellers by the Buyer for the Stock shall be
forty-eight million five hundred thousand dollars ($48,500,000.00) less the
following costs and expenses ("Sale Costs and Expenses") which shall be
calculated and paid by the Company at the Closing hereunder:
(1) payment obligations of the Company in connection with a sale
of the Company pursuant to its long-term incentive compensation
agreements with each of Peter Borst, Daniel Brown, Richard Brown,
Steven Brown, and Robert Heath, and pursuant to its phantom stock
arrangement with Lawrence Massey and all other payment obligations
arising from a termination or full performance of any and all
incentive compensation, severance, noncompete, phantom stock and/or
management agreement and any and all employment agreements which Buyer
requests to be terminated prior to the Closing Date currently in
effect of the Company or CHSC; provided, however, that Buyer may not
request termination of the existing employment agreements of Messrs.
Cassedy and Massey; and
(2) accountants' fees and expenses of the Company and the
Sellers in connection with the transaction contemplated by this
Agreement (including the audit required by Section 1.2(c) below).
The amount of Purchase Price reduction attributed to items (1) and (2)
above (as listed on the Purchase Price Schedule attached hereto as EXHIBIT
D) shall be one million four hundred thousand dollars ($1,400,000.00).
The Purchase Price shall be divided among the Sellers as set forth on
EXHIBIT A hereto, after payment of (i) attorneys' fees and expenses of the
Company and the Sellers in connection with the transaction contemplated by
this Agreement and (ii) fees and expenses payable to Dillon, Read & Co.,
Inc. pursuant to the certain letter agreement with the Company dated
January 17, 1996.
2.2 The last sentence of Section 1.2(b) shall be replaced in its entirety
with the following:
The "Adjustment Amount" (which may be a positive or negative number) will
be equal to (i) the total consolidated stockholders' equity of the Company
as of June 30, 1996 (or, if applicable, in accordance with Section 1.2(d)
below) determined in accordance with generally accepted accounting
principles applied on a basis
-2-
<PAGE>
consistent with prior periods, plus (ii) one million four hundred thousand
dollars ($1,400,000.00), which represents Sale Costs and Expenses which
were a reduction to the Purchase Price (the sum of (i) and (ii) being
hereinafter referred to "Adjusted Equity"), minus (iii) thirteen million
nine hundred fifty-seven thousand dollars ($13,957,000.00). This
adjustment is predicated on the Company having accrued the full and final
amounts of Sale Costs and Expenses on its June 30, 1996 balance sheet as
audited. An example thereof is attached hereto as EXHIBIT E.
2.3 Section 1.2(c) shall be amended to add at the end thereof following:
(2) At Seller's expense, the Company will cause Price Waterhouse LLP
to deliver, at the time of its delivery of the Closing Financial Statements
to the Company, an opinion, in form satisfactory to Buyer in its reasonable
discretion, that payments made by the Company pursuant to the payment
obligations described in Section 1.2(a)(1) shall be deductible in full by
the Company in computing its taxable income for federal and California
state income tax purposes.
2.4 Section 7.3 shall be replaced in its entirety with the following:
Section 7.3 DELIVERIES. At or prior to the Closing Date, Buyer shall
have delivered the following instruments and documents:
(a) to the Sellers, payment of the Purchase Price less the Escrow
Amount and the Supplemental Escrow Amount (as such terms are defined in
Section 7.3(b) and (c) below) by wire transfer of immediately available
funds to the respective accounts specified by Sellers no less than forty-
eight (48) hours prior to the Closing Date or if no such account is
specified by a Seller a certified or cashier's check payable to the account
of such Seller in immediately available funds;
(b) to First Trust of California ("Escrow Holder"), payment of two
million dollars ($2,000,000.00) (the "Escrow Amount") by wire transfer of
immediately available funds with directions to retain, hold and dispose of
these funds in accordance with the terms of the Escrow Agreement among
Buyer, the Company and the Sellers which shall be in substantially the form
of EXHIBIT B attached hereto (the "Escrow Agreement") to fund the payment
of any liability of the Sellers to Buyer arising under Section 9.2 of this
Agreement;
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<PAGE>
(c) to First Trust of California ("Supplemental Escrow Holder"),
payment of one million one hundred thousand dollars ($1,100,000.00) (the
"Supplemental Escrow Amount") by wire transfer of immediately available
funds with directions to retain, hold and dispose of these funds in
accordance with the terms of the Supplemental Escrow Agreement among Buyer,
the Company and the Sellers which shall be in substantially the form of
EXHIBIT C attached hereto (the "Supplemental Escrow Agreement") to fund the
payment of certain liabilities of the Sellers to Buyer arising out of the
letter agreement among Buyer, the Company and the Sellers dated as of
June 26, 1996 (the "Letter Agreement");
(d) to the Sellers, a certificate of the due incorporation, valid
existence and good standing of Buyer in the State of Delaware, issued by
the appropriate authorities of such jurisdiction;
(e) to the Sellers, an opinion of Pillsbury Madison & Sutro LLP,
counsel for Buyer, in form satisfactory to Sellers in their reasonable
discretion; and
(f) such other documents and instruments as Sellers shall have
reasonably requested as to (i) the accuracy and validity of or compliance
with all representations, warranties and covenants made by Buyer in this
Agreement and the other documents contemplated herein, (ii) the
satisfaction of all conditions contained herein or therein and (iii) all
other matters pertaining hereto and thereto.
2.5 Section 9.2(a) shall be amended by adding the following subparagraph
(iv):
(iv) the termination by the Company of noncompete agreements at
Closing and the Company's payment obligations under long-term incentive
compensation agreements with each of Peter Borst, Daniel Brown, Richard
Brown, Steven Brown and Robert Heath and pursuant to its phantom stock
arrangement with Lawrence Massey;
2.6 Section 9.4 shall be replaced in its entirety with the following:
9.4 EXCLUSIVITY OF REMEDIES. From and after the Closing Date, except
for any claims relating to fraudulent misrepresentation, the parties'
remedies for breach of representations, warranties and covenants herein
contained and all other rights and remedies of the parties for breach of
this Agreement
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<PAGE>
or in connection with any dispute arising under this Agreement or the
transactions effected hereby or arising out of or relating to the business
of the Company as heretofore or hereafter conducted or as existing on the
date hereof shall not be cumulative and shall be exclusively governed by
and exclusively limited to this Article IX, the provisions of the Escrow
Agreement and the Supplemental Escrow Agreement.
2.7 Section 10.5 shall be replaced in its entirety with the following:
10.5 CONSTRUCTION; ENTIRE AGREEMENT; AMENDMENT. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California irrespective of such state's choice of law principles. This
Agreement, together with the schedules and exhibits attached hereto and the
Letter Agreement, contains the entire agreement between the Sellers and
Buyer with respect to the transactions contemplated hereby and supersedes
all prior arrangements and understandings among them with respect thereto.
This Agreement may not be amended, modified or changed except by
instruments in writing signed by all of the parties hereto.
3. NONCOMPETITION AGREEMENTS. The parties acknowledge that Buyer is
hereby requesting that the Company (or its subsidiary) terminate all existing
noncompete agreements between the Company (or its subsidiary) and any of their
respective employees effective at the Closing (except for the Non-Competition
Agreement between the Company (or its subsidiary) and Robert Owen dated March 2,
1995 and the Non-Competition Agreement between the Company (or its subsidiary)
and Ammon Troyer dated March 2, 1995) and that the costs associated with such
terminations shall be reduced from the Purchase Price at Closing in accordance
with Section 1.2(a) of the Stock Purchase Agreement.
4. GENERAL.
(a) FURTHER ASSURANCES. Buyer, Company and Sellers each agree that it
will execute and deliver such instruments and documents and take such other
action as may be necessary to give effect to the terms of this Amendment or the
Stock Purchase Agreement.
(b) GENERAL PROVISIONS. The terms of Article X of the Stock Purchase
Agreement are incorporated herein by this reference to refer to this Amendment.
(c) EFFECT OF AMENDMENT. Buyer, Company and Sellers acknowledge and agree
that except as amended by this Amendment,
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<PAGE>
the Stock Purchase Agreement has not been amended, modified or supplemented,
that this Amendment supersedes all prior documents and understandings, oral or
written, between the parties concerning its subject matter, and that, as amended
hereby, the Stock Purchase Agreement remains in full force and effect.
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<PAGE>
IN WITNESS WHEREOF, the Buyer, Company and Sellers have executed this
Amendment as of the date first above written.
BUYER: COMPANY:
FIBREBOARD CORPORATION, a Delaware STONE PRODUCTS CORPORATION, a
corporation California corporation
By /s/ Herbert M. Elliott By /s/ James S. Fetherston
-------------------------------- --------------------------------
Herbert M. Elliott James S. Fetherston
Vice President Chairman of the Board
SELLERS:
/s/ James S. Fetherston /s/ Donald G. Castle
-------------------------------- --------------------------------
James S. Fetherston Donald G. Castle, on behalf of
First Albany Corporation as
custodian for Donald G. Castle
CHARLES G. DAVIS, JR. REVOCABLE DONALD G. CASTLE REVOCABLE LIVING
LIVING TRUST DATED JANUARY 27, 1990 TRUST DATED JANUARY 1, 1990
By /s/ Charles G. Davis, Jr. By /s/ Donald G. Castle
-------------------------------- --------------------------------
Charles G. Davis, Jr., Trustee Donald G. Castle, Trustee
/s/ Charles G. Davis, Jr. /s/ Julie E. Smith
------------------------------------ --------------------------------
Charles G. Davis, Jr. Julie E. Smith
/s/ Gregory C. Smith /s/ Gregory C. Smith
------------------------------------ --------------------------------
Gregory C. Smith Gregory C. Smith, on behalf of
Huntington Bank of Michigan as
custodian for Gregory C. Smith
/s/ Alexander D. Smith
-----------------------------------
Alexander D. Smith
<PAGE>
INTERNATIONAL NETWORK FUND LIMITED ADVENT UNO, S.A.
PARTNERSHIP
By Advent International
Corporation,
General Partner By /s/ David M. Mussafer
------------------------------
David M. Mussafer
Attorney-in-Fact
By /s/ David M. Mussafer
------------------------------
David M. Mussafer
Attorney-in-Fact
ADVENT OMNIBUS LIMITED PARTNERSHIP ADVENT INTERNATIONAL INVESTORS
LIMITED PARTNERSHIP
By Advent International
Corporation, General Partner
By Advent International Limited
Partnership, General Partner By /s/ David M. Mussafer
-------------------------------
David M. Mussafer
Attorney-in-Fact
By /s/ David M. Mussafer
-------------------------------
David M. Mussafer
Attorney-in-Fact
ADVENT UNO, C.V. KOWA COMPANY, LTD., a Japanese
corporation
By International Network Fund
Limited Partnership, General
Partner
By Advent International By /s/ Shiro Yamaji
Corporation, General Partner ------------------------------
Name: Shiro Yamaji
Title: Attorney-in Fact for
Takayasu Miwa, Chairman
By /s/ David M. Mussafer
------------------------------
David M. Mussafer,
Attorney-in-Fact
<PAGE>
[LETTERHEAD]
NEWS RELEASE FIBREBOARD
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
At the Company: At Financial Relations Board:
Stephen L. DeMaria Hannah Bruce, General Information
(510) 274-0700 Sue Caulton Dooley, Investor Contact
(415) 986-1591
FIBREBOARD COMPLETES ACQUISITION OF STONE PRODUCTS CORPORATION
(WALNUT CREEK, CALIFORNIA, July 2, 1996) -- Fibreboard Corporation
(AMEX:FBD) announced today that it has successfully completed the acquisition
of Stone Products Corporation, the nation's leading domestic producer of
manufactured stone building products, for a purchase price of $52 million,
including the assumption of debt of this privately-held company. The Napa,
California based-company, with an additional manufacturing facility in Navarre,
Ohio, reported revenues of approximately $34 million in fiscal 1995.
John D. Roach, Fibreboard's Chairman and CEO, commented, "Stone Products'
manufactured CULTURED STONE -Registered Trademark- expands Fibreboard's
building products group and complements Fibreboard's line of vinyl siding
products. The acquisition reinforces our strategic growth objective focusing on
the building products industry in segments in which we can take a leadership
position. We look forward to the expanding markets and rapid growth
opportunities the Stone Products acquisition brings to Fibreboard."
Headquartered in Northern California, Fibreboard Corporation is a leader in
the building products industry, manufacturing residential vinyl products and
industrial insulation. Building products operating groups include Norandex,
Vytec and Pabco. Its vinyl products business operates an extensive multi-state
distribution network for exterior building products. The company also owns and
operates three California resorts: Northstar-at-Tahoe, an all season ski and
golf resort and conference center, and Sierra-at-Tahoe and Bear Mountain Ski
Resort, both day ski facilities.
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