<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 5, 1997
FIBREBOARD CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-016951 94-0751580
- ---------------------------- ----------------------- -------------------
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification No.)
2200 ROSS AVE., SUITE 3600, DALLAS, TX 75201
---------------------------------------------
(Address of principal executive offices)
(214) 954-9500
---------------------------------------------------
(Registrant's telephone number, including area code)
None
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 5, 1997, Fibreboard Corporation ("Fibreboard") acquired all of the
outstanding capital stock of Fabwel, Inc. ("Fabwel"), an Indiana Subchapter S
Corporation headquartered in Elkhart, Indiana. Fibreboard purchased the stock
from a consortium of investors among Fabwel's management. Fabwel produces and
supplies customized exterior components for the recreational vehicle,
manufactured housing, building and construction and transportation/cargo
industries. Operations are conducted from eight plant locations in Indiana,
Georgia, Florida and Texas.
The initial purchase price was approximately $120 million and is subject to
adjustment based on the amount of Fabwel's net assets reflected on the audited
closing balance sheet. Fibreboard funded the purchase with available cash on
hand and funds provided under its revolving credit facility. Further
information concerning the purchase is set forth in Fibreboard's May 6, 1997
press release, which is attached hereto as an exhibit and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF FABWEL, INC.:
The following Financial Statements of Fabwel, Inc. are included herewith:
Independent Auditor's Report
Balance sheets as of December 31, 1996 and 1995
Statements of income for the years ended December 31, 1996 and 1995
Statements of stockholders' equity for the years ended December 31, 1996
and 1995
Statement of cash flows for the years ended December 31, 1996 and 1995
Notes to financial statements
Consent of Independent Certified Public Accountants
(B) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information required by this item will be filed
when practicable, but in no event later than July 18, 1997.
(C) EXHIBITS.
The following Exhibits are included herewith:
10.1 Share Purchase Agreement dated May 5, 1997, among Fibreboard
Corporation, Fabwel, Inc. and the shareholders of Fabwel.
99.1 Press release dated May 5, 1997, issued by Fibreboard.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Fibreboard Corporation
-----------------------
(Registrant)
Dated: May 6, 1997 By: /s/ Garold E. Swan
------------------------------------
Garold E. Swan
Vice President, Finance
<PAGE>
FABWEL, INC.
FINANCIAL REPORT
DECEMBER 31, 1996
<PAGE>
Contents
- ------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT 1
- ------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance sheets 2
Statements of income 3
Statements of stockholders' equity 4
Statements of cash flows 5
Notes to financial statements 6-13
- ------------------------------------------------------------------------------
<PAGE>
[logo]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
FABWEL, INC.
Elkhart, Indiana
We have audited the accompanying balance sheets of FABWEL, INC. as of December
31, 1996 and 1995, and the related statements of income, stockholders' equity,
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FABWEL, INC. as of December 31,
1996 and 1995, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
Elkhart, Indiana
February 18, 1997
<PAGE>
FABWEL, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- ------------------------------------------------------------------------------
1996 1995
- ------------------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 586,164 $ 1,143,606
Accounts receivable 11,754,359 12,073,839
Inventories 29,875,153 24,851,241
Prepaid expenses 156,377 122,296
------------ ------------
TOTAL CURRENT ASSETS 42,372,053 38,190,982
Property and Equipment, at depreciated cost 22,534,989 17,930,078
Other Assets 18,087,494 17,792,021
------------ ------------
$ 82,994,536 $ 73,913,081
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 3,019,867 $ 3,013,091
Accounts payable 11,249,014 11,966,399
Accrued compensation 2,819,274 1,975,784
Other accrued expenses 1,124,816 816,707
------------ ------------
TOTAL CURRENT LIABILITIES 18,212,971 17,771,981
------------ ------------
Long-Term Debt, less current maturities 34,972,832 32,801,546
------------ ------------
Executive Benefit Obligation 4,154,656 3,656,579
------------ ------------
Commitments and Contingencies
Stockholders' Equity
Preferred shares, no par value; 10,000,000
shares authorized; none issued - -
Common shares, no par value; 30,000,000 shares
authorized; 1996 4,776,000 shares issued; 1995
4,761,000 shares issued 8,155,143 8,050,143
Retained earnings 17,498,934 11,632,832
------------ ------------
25,654,077 19,682,975
------------ ------------
$ 82,994,536 $ 73,913,081
------------ ------------
------------ ------------
See Notes to Financial Statements.
2
<PAGE>
FABWEL, INC.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Net sales $194,178,303 $173,780,012
Cost of goods sold 165,245,847 150,934,392
-----------------------------
GROSS PROFIT 28,932,456 22,845,620
Selling, general, and
administrative expenses 14,990,465 12,363,804
-----------------------------
OPERATING INCOME 13,941,991 10,481,816
Interest expense 2,918,256 3,141,211
-----------------------------
NET INCOME $ 11,023,735 $ 7,340,605
-----------------------------
-----------------------------
See Notes to Financial Statements.
3
<PAGE>
<TABLE>
FABWEL, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Preferred Common Retained
Stock Stock Earnings Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $ - $7,984,143 $ 8,796,181 $16,780,324
Issuance of 65,113 shares
of common stock - 274,136 - 274,136
Repurchase and retirement of
54,113 shares of common stock - (208,136) - (208,136)
Net income - - 7,340,605 7,340,605
S Corporation distributions - - (4,503,954) (4,503,954)
--------------------------------------------------
Balance, December 31, 1995 - 8,050,143 11,632,832 19,682,975
Issuance of 15,000 shares of
common stock - 105,000 - 105,000
Net income - - 11,023,735 11,023,735
S Corporation distributions - - (5,157,633) (5,157,633)
--------------------------------------------------
Balance, December 31, 1996 $ - $8,155,143 $17,498,934 $25,654,077
--------------------------------------------------
--------------------------------------------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
FABWEL, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- ------------------------------------------------------------------------------
1996 1995
- ------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net income $ 11,023,735 $ 7,340,605
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,353,421 1,867,666
Amortization 737,620 737,620
Loss on sale of assets 239,997 106,650
Change in assets and liabilities, net of effects
of sale of assets
Decrease (increase) in:
Accounts receivable 319,480 (1,671,197)
Inventories (5,023,912) (3,403,693)
Other (34,081) 54,844
Increase in accounts payable
and accrued expenses 434,214 1,260,152
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,050,474 6,292,647
------------ ------------
Cash Flows From Investing Activities
Marketable securities:
Maturities 1,196,506 314,716
Purchases (1,788,349) (882,098)
Purchase of property and equipment (7,238,408) (4,452,658)
Proceeds from sale of assets 40,079 2,144,278
Other 56,827 (128,051)
------------ ------------
NET CASH (USED IN) INVESTING ACTIVITIES (7,733,345) (3,003,813)
------------ ------------
Cash Flows From Financing Activities
Net borrowings on line of credit agreement 5,266,153 2,259,767
Proceeds from long-term borrowings - 119,482
Principal payments on long-term borrowings (3,088,091) (995,080)
Proceeds from issuance of common stock 105,000 274,136
Repurchase and retirement of common stock - (208,136)
S Corporation distributions (5,157,633) (4,503,954)
------------ ------------
NET CASH (USED IN) FINANCING ACTIVITIES (2,874,571) (3,053,785)
------------ ------------
INCREASE (DECREASE) IN CASH (557,442) 235,049
Cash, beginning 1,143,606 908,557
------------ ------------
Cash, ending $ 586,164 $ 1,143,606
------------ ------------
------------ ------------
See Notes to Financial Statements.
5
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1. NATURE OF BUSINESS, USE OF ESTIMATES, AND SIGNIFICANT ACCOUNTING
POLICIES
NATURE OF BUSINESS:
Fabwel, Inc. is engaged in the design, fabrication, and distribution of
aluminum, steel, vinyl, and fiberglass exterior coverings for the building and
construction, manufactured housing, recreational vehicle, and other markets.
Credit is generally granted on an unsecured basis for terms of 30 days.
Periodic credit evaluations of customers are conducted and appropriate
allowances are established.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
SIGNIFICANT ACCOUNTING POLICIES:
CASH:
The Company has cash on deposit at various financial institutions which, at
times, may be in excess of FDIC insurance limits.
ACCOUNTS RECEIVABLE:
Accounts receivable in the accompanying balance sheets at December 31, 1996 and
1995 are stated net of an allowance for doubtful accounts of $250,000 and
$300,000 respectively.
INVENTORIES:
Inventories are stated at the lower of cost determined by use of the first-in,
first-out (FIFO) method or market.
MARKETABLE SECURITIES:
Marketable securities consist primarily of U.S. Government Agency debt
securities and are classified as held-to-maturity and carried at amortized cost.
DEPRECIATION:
Depreciation of property and equipment is computed by the straight-line method
over the estimated useful lives of the assets.
6
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
AMORTIZATION:
Loan fees incurred in connection with long-term debt financing are amortized by
the straight-line method over the six-year average term of the related debt.
Goodwill, the excess of cost over the fair value of net assets acquired, is
amortized by the straight-line method over 10 to 40 year periods. At each
balance sheet date, management assesses whether there has been a permanent
impairment in the value of goodwill. In the event that an impairment is
evident, the Company records an expense for the impairment. Factors considered
by management include current operating results, anticipated future cash flows,
trends and prospects, as well as the effects of obsolescence, demand,
competition, and other economic factors.
WARRANTIES:
The Company follows the policy of accruing estimated liabilities for warranties
at the time the warranted products are sold.
REVENUE RECOGNITION:
The Company ships product based on specific orders from customers. Shipments
are generally made by the Company only after receiving authorization from the
customer. Revenue is recognized upon delivery.
NOTE 2. BALANCE SHEET INFORMATION
INVENTORIES:
The composition of inventories at December 31, 1996 and 1995 is as follows:
1996 1995
------------- -------------
Raw materials $ 26,084,612 $ 20,834,221
Work in process and finished goods 3,790,541 4,017,020
------------- -------------
$ 29,875,153 $ 24,851,241
------------- -------------
------------- -------------
7
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT:
The cost of property and equipment and the related accumulated depreciation at
December 31, 1996 and 1995 are as follows:
1996 1995
------------- -------------
Land $ 798,032 $ 126,005
Buildings and improvements 8,128,765 4,877,750
Leasehold improvements 874,166 729,305
Machinery and equipment 16,411,473 13,899,473
Transportation equipment 641,714 555,324
Furniture and fixtures 2,037,683 1,852,918
------------- -------------
28,891,833 22,040,775
Less accumulated depreciation 6,356,844 4,110,697
------------- -------------
$ 22,534,989 $ 17,930,078
------------- -------------
------------- -------------
OTHER ASSETS:
Other assets at December 31, 1996 and 1995 consist of the following:
1996 1995
------------- -------------
Intangible assets:
Loan fees $ 510,709 $ 510,709
Goodwill 14,175,389 14,175,389
------------- -------------
14,686,098 14,686,098
Less accumulated amortization 2,379,326 1,641,706
------------- -------------
12,306,772 13,044,392
Cash value of life insurance 3,023,874 2,582,624
Marketable securities 2,756,848 2,165,005
------------- -------------
$ 18,087,494 $ 17,792,021
------------- -------------
------------- -------------
8
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 3. PLEDGED ASSETS AND LONG-TERM DEBT
Long-term debt at December 31, 1996 and 1995 consists of the following:
<TABLE>
1996 1995
----------- -----------
<S> <C> <C>
Term note, unsecured, interest at 9.36%, due in annual in-
stallments of $2,388,889 commencing December 15,
1996 with interest payable quarterly, final payment due
December 15, 2004 $19,111,111 $21,500,000
Line of credit, unsecured, maximum borrowing not to ex-
ceed $20,000,000, final payment due April 30, 1999 13,100,000 7,833,847
Subordinated notes, stockholders, unsecured, interest at
one-year U.S. Treasury Bill rate (5.56% at December
21, 1996) plus 3.75%, due December 22, 2004 4,550,000 4,625,000
Subordinated note, individual, unsecured, interest at one-
year U.S. Treasury Bill rate (5.54% at October 28,
1996), due in quarterly installments of $137,500 plus
interest, final payment due December 1, 1998 1,100,000 1,650,000
Other 131,588 205,790
----------- -----------
37,992,699 35,814,637
Less current maturities 3,019,867 3,013,091
----------- -----------
$34,972,832 $32,801,546
----------- -----------
----------- -----------
</TABLE>
The term note and line of credit note include covenants relating to cash flow,
debt, tangible net worth, and dividends and restrict certain interest and
principal payments on the subordinated notes and common stock redemptions, in
the event that certain income levels are not attained, or in any event of
default.
Interest on the components of the line of credit note vary with prime and LIBOR.
The rates on this note at December 31, 1996 range from 6.8477% (LIBOR plus
1.25%) to 8.25% (prime).
Aggregate maturities of long-term debt for the years ending December 31, 1998
through 2001 and thereafter are as follows:
1998 $ 2,989,499
1999 15,488,889
2000 2,388,889
2001 2,388,889
Thereafter 11,716,666
-----------
$34,972,832
-----------
-----------
9
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
In December 1994, the Company completed an in-substance defeasance of notes
payable, which have therefore been excluded from long-term debt. This
defeasance was accomplished by irrevocably placing U.S. Government obligations
in trust to be used solely for satisfying scheduled payments of both interest
and principal of the respective debt. The note balance at December 31, 1996 was
$750,000.
NOTE 4. INCOME TAXES
The Company, with the consent of its stockholders, has elected to be taxed as an
S Corporation. In lieu of federal and state corporation income taxes, the
stockholders account for their proportionate shares of the Company's items of
income, deductions, losses and credits. Therefore, the financial statements do
not include any provision for corporation income taxes.
The Company pays quarterly S Corporation distributions in amounts which are at
least sufficient to cover the stockholders' tax obligations with respect to S
Corporation earnings. On January 7, 1997, the Company paid $1,312,390.
NOTE 5. COMPENSATION PLANS
401(k) PROFIT-SHARING PLAN:
The Company has a qualified employee 401(k) profit-sharing plan covering
substantially all full-time employees. Contributions to the plan are at the
discretion of the Board of Directors. Generally, participants may contribute
up to 10% of their annual wages. Profit-sharing expense for the years ended
December 31, 1996 and 1995 was $1,002,688 and $908,552 respectively.
INCENTIVE PAY:
The Company has an incentive plan pursuant to which certain officers and other
employees of the Company receive discretionary incentive pay principally based
upon the achievement by the Company of annual performance goals. Historically,
bonus arrangements have been informal and determined annually. For the years
ended December 31, 1996 and 1995, discretionary incentive pay amounted to
$2,703,020 and $1,303,957 respectively.
STOCK OPTION PLANS:
The Company has established stock option plans for the benefit of its employees
and outside directors. Under the plans, the options must be granted at the
current market price of the stock on the date of the grant. The Company has
reserved 599,000 shares for issue under the plans.
10
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Following is a summary of stock option transactions for the years ended
December 31, 1996 and 1995:
1996 1995
-------- -------
Outstanding, beginning of year 214,116 213,700
Granted during the year:
Exercisable at $7.00 per share 15,000 -
Exercisable at $6.00 per share - 25,116
Canceled during the year (214,116) (13,700)
Exercised during the year (15,000) (11,000)
-------- -------
Outstanding, end of year - 214,116
-------- -------
-------- -------
Eligible, end of year for exercise
currently at:
$11.00 per share - 200,000
$6.00 per share - 14,116
-------- -------
- 214,116
-------- -------
-------- -------
NOTE 6. COMMITMENTS AND CONTINGENCIES
The Company leases certain office and manufacturing facilities and equipment
under operating leases which expire through December 2003. The agreements
contain renewal options and provide for minimum annual rentals plus the payment
of property taxes, insurance, and normal maintenance. Certain of the leases are
with an affiliated company.
The future minimum rental commitment under the leases at December 31, 1996 is
due as follows:
1997 $1,908,302
1998 1,534,968
1999 1,084,548
2000 883,864
2001 657,153
Thereafter 802,715
----------
$6,871,550
----------
----------
Rental expense under all operating leases was $2,053,275 and $1,899,777 for the
years ended December 31, 1996 and 1995 respectively, of which $216,856 and
$201,398 respectively was paid to the affiliate.
11
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The Company is involved in various routine legal proceedings and environmental
matters which are incidental to the conduct of its business. Management
believes that the Company is not a party to any pending legal or governmental
proceedings which, if decided adversely to the Company, would individually or in
the aggregate be expected to have a material adverse effect on the Company.
NOTE 7. EXECUTIVE BENEFIT PLAN
The Company has contracts with certain executives which provide for fixed
retirement benefits to be paid over a ten-year period beginning at retirement.
Benefits are at amounts determined by the Board of Directors and are not
directly tied to compensation. The cost of these agreements is being accrued
over the executives' service periods prior to retirement. Vesting is at age 55
with a minimum of 15 years of service.
Projected and accumulated benefit obligations at December 31, 1996 and 1995
attributed to services already performed are reflected below. In computing the
obligations, a 7.5% discount rate was used.
1996 1995
------------ ------------
Vested benefit obligation $ 2,004,198 $ 1,727,110
------------ ------------
------------ ------------
Accumulated benefit obligation $ 4,331,355 $ 3,696,341
------------ ------------
------------ ------------
Projected benefit obligation $ 4,331,355 $ 3,696,341
Unrecognized net (loss) (176,699) (39,762)
------------ ------------
Liability on balance sheets $ 4,154,656 $ 3,656,579
------------ ------------
------------ ------------
Expense components for the years ended December 31, 1996 and 1995 were as
follows:
1996 1995
------------ ------------
Service cost $ 307,411 $ 273,847
Interest on projected benefit obligation 305,423 261,002
Amortization of unrecognized net loss 25,243 5,680
------------ ------------
$ 638,077 $ 540,529
------------ ------------
------------ ------------
The Company is the beneficiary of life insurance policies on certain covered
executives. In the event of death, insurance proceeds are available to help pay
the Company's obligation under the plan. The cash value of the policies is
included in the accompanying balance sheets.
The Company has contributed marketable securities with an amortized cost of
$2,756,848 and $2,165,005 as of December 31, 1996 and 1995 respectively to a
"Rabbi" trust for the purpose of funding the Executive Benefit Plan.
12
<PAGE>
FABWEL, INC.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The amortized cost and fair value of debt securities, by contractual maturity,
as of December 31, 1996 are as follows:
Amortized Fair
Cost Value
------------ ------------
Due within one year $ 747,740 $ 744,726
Due after one year through three years 812,419 825,442
Due after three years through five years 246,328 263,165
Due after five years 859,961 847,488
Mortgage-backed securities 90,400 90,434
------------ ------------
$ 2,756,848 $ 2,771,255
------------ ------------
------------ ------------
NOTE 8. STOCK REPURCHASE AGREEMENTS
Under the terms of its stock repurchase agreements, the Company has the option
to purchase the shares of any stockholder in the event of death, disability, or
termination of employment of the stockholder. The purchase price for the stock
is based on a price as specified in the agreement. As explained in Note 3,
terms of the term note and line of credit restrict aggregate payments under
these agreements.
NOTE 9. CASH FLOWS INFORMATION
Supplemental information relative to the statements of cash flows for the years
ended December 31, 1996 and 1995 is as follows:
1996 1995
----------- ----------
Supplemental disclosures of cash flows information:
Cash payments for interest $ 3,071,019 $ 3,302,273
----------- ----------
----------- ----------
13
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement (File Nos. 33-60412, 33-26449, 33-26450, 333-16551, and 333-25305) on
Form S-8 of our report, dated February 18, 1997, with respect to the financial
statements of Fabwel, Inc. for the year ended December 31, 1996, which are
included in the Current Report on Form 8-K of Fibreboard Corporation dated May
5, 1997.
/s/ McGLADREY & PULLEN, LLP
Elkhart, Indiana
May 6, 1997
<PAGE>
SHARE PURCHASE AGREEMENT
BETWEEN
FIBREBOARD CORPORATION
AS PURCHASER
AND
SHAREHOLDERS OF FABWEL, INC.
AS SELLERS
Dated as of
May 5, 1997
<PAGE>
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (the "Agreement") is made and entered into
effective as of the 5th day of May, 1997, by and among Fibreboard Corporation, a
Delaware corporation, as the purchaser (the "Purchaser"), Edward P. Welter
("Welter"), Raymond M. Stout ("Stout"), John W. Gardner ("Gardner"), Roger H.
Gowdy and Utah G. White as the key selling shareholders (the "Key
Shareholders"), those individuals listed on Exhibit "A" and executing this
Agreement as the remaining selling shareholders (the "Remaining Shareholders")
(the Key Shareholders and Remaining Shareholders are holders of an aggregate of
4,776,000 issued and outstanding common shares, no par value (the "Shares") of
Fabwel, Inc., an Indiana corporation (the "Company")), and the Company for
certain limited purposes.
R E C I T A L S:
A. The Key Shareholders and the Remaining Shareholders (collectively, the
"Shareholders") own all of the issued and outstanding capital shares of the
Company (as further defined in Section 3.2 (the "Shares")).
B. The Purchaser desires to purchase the Shares from the Shareholders,
and the Shareholders desire to sell the Shares to the Purchaser, on the terms
and conditions set forth in this Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises, representations and
covenants set forth in this Agreement, and intending to be legally bound, the
Purchaser, the Shareholders and the Company agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 PURCHASE OF SHARES. At the Closing (defined below), subject to the
terms and conditions, and on the basis of the representations, warranties,
covenants and agreements set forth in this Agreement, the Shareholders shall
sell the Shares to the Purchaser, and the Purchaser shall purchase the Shares
from the Shareholders (the "Purchase").
1.2 PURCHASE PRICE. In consideration of the Shareholders' sale of the
Shares to the Purchaser, the Purchaser shall pay to the Shareholders an amount
in cash in the aggregate equal to $119 million, as adjusted pursuant to Sections
1.4 and 1.5 (the "Purchase Price"). The Purchase Price shall be allocated among
the Shareholders pro rata based upon the number of Shares sold by each
Shareholder to the Purchaser ("Pro Rata").
<PAGE>
1.3 PAYMENT AT CLOSING.
(a) Three (3) business days prior to the Closing Date, the
Shareholder Representative (defined in Section 1.8 below) shall provide to
the Purchaser a good faith estimate of the adjustments to the Purchase
Price required by Section 1.4 together with the detail utilized by the
Shareholder Representative in making his calculation (the "Good Faith
Estimate"). The Good Faith Estimate shall be calculated in a manner
consistent with Schedule 1.4 and shall be certified by the Chief Financial
Officer of the Company.
(b) At the Closing, the Purchase Price, as adjusted pursuant to the
Good Faith Estimate (the "Closing Payment"), shall be retained and
distributed as follows:
(i) the Purchaser shall make a contribution to the capital of
the Company in an amount equal to the Company's Funded Debt, and shall
cause the Company to pay the Funded Debt in full at Closing. For
purposes of this Agreement, "Funded Debt" shall mean all indebtedness
of the Company, including accrued interest thereon and any prepayment
penalties, except for the items described in Sections 1.4(a) (i)
through (iv) below under the definition of Net Assets.
(ii) an amount sufficient to pay the entire tax liability of the
Company attributable to its recognition of taxable gain under Section
1374 of the Internal Revenue Code of 1986, as amended as a result of
the election under Section 338(h)(10) of the Code to be made pursuant
to Section 5.1 of this Agreement [estimated currently to be $6
million] shall be withheld from the Purchase Price and used by the
Purchaser to pay such tax on behalf of the Company and the
Shareholders (the "Tax Payment Amount");
(iii) an amount equal to the sum of the fees payable to
McDonald & Company (in the amount of $1,062,500) and the amount
payable to Carleton/McCreary (in the amount of $1,617,500) shall be
withheld from the Purchase Price and paid to such companies;
(iv) an amount equal to $1,000,000 shall be deposited into
escrow and shall be administered and distributed in accordance with
the terms of the Escrow Agreement attached as Exhibit "B" in order to
fund the payment of any liability of the Key Shareholders and the
Shareholders to the Purchaser under Section 12.1 of this Agreement;
and
(v) the balance of the Closing Payment, after deducting the
amounts as set forth in (i) through (iv) above, shall be paid to the
Shareholders Pro Rata, by wire transfer or certified check in
immediately available funds; provided, however, the Purchaser shall
pay the balance of the Closing Payment to the Shareholder
Representative on behalf of the Shareholders, and the Shareholder
Representative will be responsible for distributing such amount among
the Shareholders in
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accordance with this Agreement. Payment to the Shareholder
Representative shall be deemed to be payment to each of the
Shareholders.
(c) Notwithstanding anything to the contrary contained in this
Section 1.3, the amounts withheld by the Purchaser from the Closing Payment
as set forth in Section 1.3(b)(i), (ii) and (iii) above are and will be
used by the Purchaser to pay direct obligations of the Company which the
Shareholders agreed to pay or cause to be paid before Closing (such that
any deduction attributable thereto shall be deemed to occur prior to
Closing). As a matter of convenience, these amounts are being withheld by
the Purchaser from the Closing Payment to pay these obligations. However,
under all circumstances, if the amounts withheld are not sufficient to pay
the entire amounts owed, the Shareholders are obligated to pay, and shall
pay timely, any deficit.
1.4 PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be increased by
an amount equal to the excess of the Net Assets as of the Closing Date over $63
million. If the Net Assets are less than $63 million, the Purchase Price shall
be reduced by such deficit. The "Net Assets" shall be an amount equal to the
excess of the value of all of the assets of the Company less the sum of (i) the
Company's Current Liabilities (as shown on the Closing Balance Sheet, excluding
the Current Portion of Long Term Debt, but including all accrued and unpaid
expenses attributable to the Purchase such as legal fees, accounting fees, and
anticipated costs required to prepare the Closing Balance Sheet), (ii) the
liabilities accrued on the Closing Balance Sheet relating to the Company's 1985
Executive Benefit Plan, (iii) the financial obligations of the Company under
that certain equipment lease between the Company and IBM Credit Corp. governing
the IBM AS400 computer with monthly payments of approximately $12,032, and (iv)
the outstanding balance of the Sullivan Note (including all accrued but unpaid
interest and any prepayment penalty). A calculation of the Company's Net Assets
as reflected on the Company's 1996 Estimated Balance Sheet is attached hereto as
Exhibit "C." The value of the Company's assets and the sum of its liabilities
shall be the amounts set forth in the Closing Balance Sheet as defined and
provided for in Section 1.5(a).
Notwithstanding anything to the contrary, the assets acquired, the Funded
Debt incurred, if any, and the expenditures incurred, by the Company in
conjunction with the Laminating Start-Up Operation (as defined in Section 14.1),
shall be disregarded for the purposes of, and shall not have an affect on, the
calculation of the Net Assets and Funded Debt of the Company.
1.5 ADJUSTMENT SCHEDULE.
(a) As soon as practical after the Closing Date (but in any event not
more than 60 days after the Closing Date), the Shareholder Representative
shall cause to be prepared and delivered to the Purchaser a balance sheet
for the Company as of the Closing Date with related information and
supporting detail (the "Closing Balance Sheet") and a schedule with
supporting detail which shows the calculation of the Tax Payment Amount and
the adjustments required by Section 1.4 (the "Adjustment Schedule"). The
Closing Balance Sheet shall be prepared in accordance with generally
accepted accounting principles consistently applied utilizing the same
methodology and adjustments as were used in
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preparing the Company's 1996 Estimated Balance Sheet. The Closing Balance
Sheet and the Adjustment Schedule (collectively, the "Closing Adjustments")
shall be audited by the Company's accounting firm (McGladrey & Pullen,
L.L.P.) at the Company's expense (any unpaid portion of which will be
accrued on the books of the Company and reflected on the Closing Balance
Sheet).
(b) The Purchaser shall have 30 days from its receipt of the Closing
Adjustments to examine the Closing Adjustments and notify the Shareholder
Representative of any good faith objections it has to it. The objections
shall be made in writing with a reasonably specific description of the
objections and the dollar amount of each objection.
(c) The Purchaser and the Shareholder Representative shall attempt to
resolve the objections within ten days of the Shareholder Representative's
receipt of them. If the Shareholder Representative and the Purchaser are
unable to resolve all of the objections within such 10-day period, they
shall jointly appoint a mutually acceptable independent certified public
accounting firm (or if they cannot agree, their respective accounting firms
shall select such firm) within five days of the end of such 10-day period.
The selected accounting firm shall resolve all remaining objections. Such
firm's resolution of the objections shall be conclusive and binding upon
the Purchaser and the Shareholders. The fees of such selected firm shall be
shared equally between the Purchaser and the Shareholders, as a group.
(d) The Closing Adjustments shall be deemed complete and the final
Purchase Price established upon the earlier of (i) the 31st day after the
Shareholder Representatives's delivery of the Closing Adjustments to the
Purchaser, unless prior to such day the Purchaser has notified the
Shareholder Representative of an objection, pursuant to Section 1.5(b), and
(ii) the resolution of all objections pursuant to Section 1.5(c). Within
five business days following the completion of the Closing Adjustments and
the establishment of the final Purchase Price, either
(i) the Purchaser shall pay to the Shareholders, Pro Rata, the
amount by which the Purchase Price, as adjusted pursuant to Sections
1.4 and 1.5, exceeds the Closing Payment; or
(ii) the Shareholders shall pay to the Purchaser the amount by
which the Closing Payment exceeds the Purchase Price as adjusted
pursuant to Sections 1.4 and 1.5.
All payments pursuant to this Section 1.5 shall be by wire transfer or
certified check in immediately available funds. Notwithstanding the
provisions of subsection (d)(i), the Purchaser shall pay the balance of the
Purchase Price, if any, to the Shareholder Representative on behalf of the
Shareholders, and the Shareholder Representative will be responsible for
distributing such amount among the Shareholders in accordance with this
Agreement.
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1.6 TIME AND PLACE OF CLOSING. The closing of the Purchase (the
"Closing") will take place at the offices of Warrick & Boyn, Suite 400, 121 West
Franklin Street, Elkhart, Indiana at 10:00 a.m. (Elkhart, Indiana time) on May
5, 1997, or at such other time and place as may be mutually agreed upon by the
Purchaser and the Shareholder Representative (the "Closing Date").
1.7 DELIVERY OF CERTIFICATES. At the Closing, the Shareholders shall
deliver to the Purchaser share certificates representing the Shares duly
endorsed to the Purchaser, in form sufficient to vest record and beneficial
title of the Shares fully in the Purchaser with the signatures either notarized
or guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange. Against such delivery, the Purchaser shall deliver to the
Shareholders the Purchase Price in accordance with Section 1.3. The
Shareholders and the Purchaser will cause to be delivered all other documents
required by such party pursuant to Article X, and all other appropriate and
customary documents as may reasonably be requested by a party for the purpose of
consummating the transactions contemplated by this Agreement. All actions taken
at the Closing shall be deemed to have been taken simultaneously at the time the
last of any such actions is taken or completed.
1.8 APPOINTMENT OF SHAREHOLDER REPRESENTATIVE. Each Shareholder hereby
irrevocably constitutes and appoints, collectively and not individually, Welter,
Stout and Gardner (collectively, the "Shareholder Representative") as such
Shareholder's attorney-in-fact and representative, to (i) do any and all things
specifically provided for in this Agreement and the other documents contemplated
hereby, and (ii) negotiate, execute and deliver any and all documents
contemplated by this Agreement and necessary to close the Purchase, including,
without limitation, the Section 338(h)(10) election to be filed with the
Internal Revenue Service, Shareholder resolutions of the Company, the Escrow
Agreement contemplated in Section 1.3(b)(iv), consents, certificates, stock
powers to convey the Shares to the Purchaser and other conveyance documents.
The Purchaser and any other third party shall be entitled to rely upon any
document or other writing executed by the Shareholder Representative pursuant to
the authority granted in this Section 1.8, as being binding upon each
Shareholder, and neither the Purchaser nor any other party shall be liable to
any Shareholder for any action taken or omitted to be taken in reliance upon
this Section 1.8. If any person so appointed as the Shareholder Representative
dies or becomes incapacitated, the remaining persons so appointed as
Shareholder Representatives shall act as Shareholder Representative. The death
or incapacity of any other Shareholder shall not terminate the authority or
agency of the Shareholder Representative. This power of attorney is irrevocable
and coupled with an interest.
1.9 EMPLOYEE BENEFITS. Purchaser covenants and agrees as follows:
(a) MEDICAL BENEFITS PROGRAM. The Purchaser shall cause the Company
to maintain and continue until January 1, 1998, the Company's medical
benefits programs, which include benefits for medical expenses, disability,
dental expenses and group life insurance. At any time after January 1,
1998, the Company may adopt the medical benefits program of the Purchaser,
which provides substantially similar benefits, and, correspondingly, may
terminate its existing programs; provided, that such plan adoption does not
result in a loss of coverage or a pre-existing condition limitation for any
covered
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employee. Nothing in this provision prohibits the Purchaser from
subsequently amending all or any of its benefit plans.
(b) SECTION 401(k) PLAN. The Purchaser shall cause the Company to
maintain and continue until January 1, 1998, the Company's 401(k) benefit
plan. At any time after January 1, 1998, the Company may merge its 401(k)
profit sharing plan with the Purchaser's 401(k) plan. If the plans are
merged, the Purchaser will amend its 401(k) employee benefit plan effective
as of the merger date to permit the Company to elect the option to have the
Company contribute the same or substantially similar combination of
matching and employer contributions equivalent to the Company's current
100% match of the employee contribution, up to the 10% cap currently in the
Company's plan. Except as provided in subsections 1.9(c) and (d), nothing
in this provision prohibits the Purchaser from subsequently amending all or
any of its employee benefit plans.
(c) EXECUTIVE BENEFIT PLAN. The Purchaser intends to continue in
effect the Company's Executive Benefit Plan, as evidenced by separate
Executive Benefit Agreements with each participating employee of the
Company (the "Executive Benefit Agreements"), the separate Trust Agreement
dated January 31, 1994, with NBD Bank, N.A., as Trustee, as amended by that
certain Amendment to Trust Under Fabwel, Inc. Executive Benefit Plan
adopted prior to the execution of this Agreement (collectively, the
"Trust") and the separate life insurance policies owned by the Company on
the lives of each participating employee (the "Life Insurance"). The
Purchaser agrees to cause the Company to assume the obligations and
liabilities under the separate Executive Benefit Agreements with the
participating employees as of the Closing Date for as long as the Executive
Benefit Agreements, or any of them, remain in full force and effect. The
Purchaser further agrees to cause the Company to provide sufficient
funding, whether through the funds held in the Trust, the Life Insurance or
otherwise, for timely payment of any and all financial obligations under
the Executive Benefit Agreements, or any of them, for as long as the
Executive Benefit Agreements, or any of them, remain in full force and
effect. Nothing herein shall be construed so as to prohibit the Purchaser
or the Company from exercising any rights of the Company under the
Executive Benefit Agreements after Closing, nor shall the Purchaser or the
Company be required to continue funding obligations under any of the
Executive Benefit Agreements once said Agreements have been terminated and
all benefits paid in accordance with their respective terms.
(d) ACCRUED BONUSES. At the Closing, the Company shall pay all l997
incentive bonuses due employees through the Closing Date, except that the
Company's Christmas Bonus to employees shall be paid in December l997 in
accordance with standard company practice. All bonuses, including without
limitation, the l997 Christmas bonus, allocable to the period of the fiscal
year occurring prior to Closing, shall be accrued as an expense on the
books of the Company and reflected on the Closing Balance Sheet.
1.10 EMPLOYEES. It is the Purchaser's intention not to engage in a
sufficient number of employment terminations after the Closing of persons who
were employees of the Company at the
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Closing Date such that prior notice by the Company would be required prior to
Closing under the Worker Adjustment and Retraining Notification Act. Nothing
in the preceding sentence shall, however, be deemed to limit in any way the
right of the Company or Purchaser to terminate the employment of any person
after the Closing Date, to limit the rights of the Company or the Purchaser
to change its intentions in the future, or to create any rights to continued
employment in favor of any such persons, and no such person shall be deemed
to be a third party beneficiary of this Section.
1.11 TAX MATTERS. After Closing, the Company will timely provide all
information reasonably required by the Shareholders to prepare and file their
federal, state and local tax returns and filings with respect to the operations
of the Company prior to the Closing Date. The Company shall take such actions,
provide such information and make available such personnel as are reasonably
necessary for the Shareholders to prepare and file their individual tax returns.
The Company shall be given reasonable notice of the needs of the Shareholders
in this regard.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each Shareholder, severally and not jointly, represents to the Purchaser
that:
(a) such Shareholder has good and marketable title to his Shares;
(b) other than with respect to the Share Purchase and Buy Out
Agreement between the Company and each Shareholder (the "Repurchase
Agreement"), such Shareholder's Shares are free and clear of any lien,
claim, mortgage, pledge, purchase option, right of first refusal, voting
trust, shareholders' agreement, restriction on sale, proxy or encumbrance;
(c) such Shareholder has full power and authority to enter into and
perform this Agreement and to carry out the transactions contemplated
herein;
(d) this Agreement constitutes the legal, valid and binding
obligation of the Shareholder enforceable against him in accordance with
its terms, except as may be limited by equitable remedies or by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditor's rights generally; and
(e) other than as set forth on Schedule 2, neither the execution and
delivery by the Shareholder of this Agreement, nor the consummation by the
Shareholder of the transactions contemplated by this Agreement, will (i)
violate or conflict with, or constitute a default under (or give rise to
any right of termination, cancellation or acceleration under), or result in
the creation of any lien on any of the properties or assets of the
Shareholder's Shares to any agreement, indenture, mortgage or other
instrument to which the Shareholder
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is a party or by which the Shareholder or his or her assets may be bound
or affected, other than the Repurchase Agreement, (ii) violate any
statute, law, rule or regulation or any order, writ, injunction or decree
of any court or governmental authority, or (iii) require the approval,
authorization or consent of any third party other than as may be required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), applicable to such Shareholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE KEY SHAREHOLDERS
Except as set forth in the correspondingly numbered section of the
disclosure schedule attached to this Agreement as Schedule 3 (the "Disclosure
Schedule"), each of the Key Shareholders, severally and not jointly, represents
and warrants to the Purchaser the truth and accuracy of all of the matters set
forth in this Article III.
3.1 ORGANIZATION AND AUTHORITY TO CONDUCT BUSINESS. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Indiana and has full corporate power and authority to own,
license and lease its properties and to carry on its business as presently
conducted. The Company is duly qualified or otherwise authorized as a foreign
corporation to transact business and is in good standing in the respective
jurisdictions set forth on Schedule 3.1. No other jurisdiction has claimed, in
writing or otherwise, that the Company is required to qualify or otherwise be
authorized as a foreign corporation therein.
3.2 CAPITAL STRUCTURE. The authorized capital shares of the Company
consist solely of ten million (10,000,000) preferred shares, none of which are
issued and outstanding, and thirty million (30,000,000) common shares, no par
value per share, of which four million seven hundred seventy-six thousand
(4,776,000) shares are issued and outstanding and owned by the Shareholders
(the "Shares") in the amounts set forth opposite the Shareholders' names on
Exhibit "A." All of the Shares are duly authorized, validly issued, fully paid
and nonassessable. None of the Shares were issued in violation of the statutory
or contractual preemptive rights of any person. The Company does not have any
outstanding subscriptions, options, warrants, convertible debt, rights of first
refusal, rights or other agreements, commitments or understandings, including
options to acquire any of the foregoing, whether or not contingent or currently
exercisable, which obligate it to issue its capital shares or any securities
convertible into or having the right to purchase shares of its capital shares.
3.3 INVESTMENT IN OTHERS. Except as set forth on Schedule 3.3, the Company
does not own any shares, partnership interest, beneficial interest or equity
interest in any other entity. The Company has not made, nor is it obligated to
make, any investment, either in the form of debt or equity, directly or
indirectly, in any person, corporation or other entity. The Company is not a
party to any joint venture, partnership, or other arrangement or contract which
could be treated as a partnership for federal income tax purposes.
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3.4 AUTHORITY; NO BREACH. The Company has full power and authority to
enter into and perform the applicable provisions of this Agreement and to carry
out the transactions to be carried out by the Company in accordance with this
Agreement. The Company has taken all requisite action to approve the execution
and delivery of this Agreement and the applicable transactions contemplated
hereby. The applicable provisions of this Agreement constitute the legal, valid
and binding obligations of the Company, enforceable against it in accordance
with its terms, except as may be limited by the availability of equitable
remedies or by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally. Neither the execution and
delivery by the Company of this Agreement nor the consummation by it of the
transactions contemplated hereby will: (i) conflict with or result in a breach
of the articles of incorporation or bylaws of the Company; (ii) to the
knowledge of the Key Shareholders, violate any statute, law, rule or regulation
or any order, writ, injunction or decree of any court or governmental authority;
(iii) except as set forth in Schedule 3.4, violate or conflict with or
constitute a default under (or give rise to any right of termination,
cancellation or acceleration under), or result in the creation of any lien on
any of the properties or assets of the Company pursuant to, any material
agreement, indenture, mortgage or other instrument to which the Company is a
party or by which it or its assets may be bound or affected, or (iv) require the
approval, authorization or consent of any third party other than as may be
required under the HSR Act.
3.5 FINANCIAL STATEMENTS. The Key Shareholders have caused to be
delivered to the Purchaser the following financial statements of the Company
audited by McGladrey & Pullen, L.L.P., the Company's independent public
accountants:
(a) Balance Sheets as of December 31, 1996, 1995 and 1994;
(b) Statements of Income and Retained Earnings for the years ended
December 31, 1996, 1995 and 1994; and
(c) Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.
In addition, the Key Shareholders have delivered to the Purchaser the unaudited
Balance Sheet of the Company as of February 28, 1997 together with the related
unaudited Statement of Income and Retained Earnings and Statement of Cash Flows
for the period ending on that date (all the balance sheets and statements
referenced in this Section 3.5 are collectively referred to as the "Financial
Statements"). The 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 as of the respective dates
and for the respective periods indicated in the Financial Statements subject, in
the case of the February 28, 1997 statements, to the absence of footnotes and
normal recurring year end adjustments. The books and records of the Company
have been and are being maintained in accordance with normal and customary
business practice, are complete and correct in all material respects, subject to
normal year-end adjustments, and accurately reflect in all material respects the
basis for the financial condition of the Company set forth in the Financial
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Statements. Since December 31, 1996, there has been no change in accounting
principles applicable to, or methods of accounting utilized by, the Company.
3.6 OBLIGATIONS AND LIABILITIES. To the knowledge of the Key
Shareholders, Schedule 3.6 contains a complete and accurate list of all
liabilities of the Company as of December 31, 1996, listing material liabilities
of any kind, character and description, whether accrued, absolute or
conditional, including potential liabilities under the Company'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 3.6, debts, liabilities or
obligations incurred in the ordinary course of business between December 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, to the knowledge of the Shareholders, the Company
will not have any material debt, liability, or obligation of any nature. Except
as set forth on Schedule 3.6, all such liabilities and obligations incurred
after December 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 in accordance with generally accepted accounting
principles.
3.7 RECEIVABLES. Schedule 3.7 contains a complete and accurate list of
the accounts, notes, and other receivables of the Company as of December 31,
1996 (the "Receivables"). Except to the extent of the reserve for bad debts
reflected in Schedule 3.7, the Receivables are collectible by the Company in the
amounts shown on Schedule 3.7, and except for "other receivables" listed on
Schedule 3.7, the Receivables represent valid and binding obligations arising
from sales actually made. To the knowledge of the Key Shareholders, the Company
has not received any claims of set-off rights which would be material to the
amount of the receivables shown on its Financial Statements.
3.8 FIXED ASSETS. Schedule 3.8 contains a complete and accurate list and
complete description of all material fixed assets of the Company as of December
31, 1996. All material assets used by the Company in the operation of its
businesses are either owned by the Company or leased under an agreement
reflected on Schedule 3.16.
3.9 INVENTORIES. The Company'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 are not obsolete or defective,
except for inventory that is obsolete or defective in the ordinary course of
business. All items included in the inventories at December 31, 1996 are the
property of the Company, except for sales made in the ordinary course of
business since December 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, subject to established reserves. Except as set forth on
Schedule 3.9, no items included in the inventories have been pledged as
collateral or are held by the Company on consignment from others. The inventory
item in the unaudited Balance Sheet of the Company as of February 28, 1997 is
valued at the lower of cost or market value, on a first-in first-out basis.
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3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on Schedule
3.10, since December 31, 1996 through the date of this Agreement, the Company
has not:
(a) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, in a single transaction or series of
transactions, any assets or properties material to the operation of the
Company; or entered, or agreed to enter, into any agreement granting any
rights to purchase any of said material assets or properties or requiring
the consent of any party to the transfer and assignment of any such
material assets or properties, other than in the ordinary course of
business;
(b) canceled or compromised, or agreed to cancel or compromise, any
material debts owed to it or claims in favor of it;
(c) declared, set aside or paid, directly or indirectly, any dividend
or other distribution (excepting distributions to the Shareholders to pay
taxes) with respect to the Shares, redeemed any of the Shares, or made any
agreement to do so;
(d) granted any increase in or otherwise changed the compensation of
any of its directors or officers, paid or accrued any bonus or similar
payment to any of such persons or entered into a new or amended an existing
agreement, transaction or relationship with any of its officers, directors,
shareholders, employees or other affiliates outside the ordinary course of
business of the Company or in a manner inconsistent with the past
practices;
(e) changed any of its accounting policies, practices or methods;
(f) incurred or become subject to any direct, or to the knowledge of
the Key Shareholders, indirect or contingent obligation or liability, other
than current obligations or liabilities incurred in the ordinary course of
business or the Laminating Start-Up Operation;
(g) had any event or condition occur or exist which materially and
adversely affected, or which may have a materially adverse effect upon, the
assets, liabilities, business, financial condition, prospects or other
condition of the Company;
(h) mortgaged, pledged or consented to the filing of any lien, charge
or encumbrance on any portion of the Company's assets;
(i) to the knowledge of the Key Shareholders, waived or released any
right of any material value;
(j) entered into any material agreement outside the ordinary course
of business not terminable on thirty days or less notice without cause or
liability;
(k) accelerated, terminated, modified or canceled any material
contract, lease or other agreement or instrument outside the ordinary
course of business;
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(l) engaged in any other transaction or entered into any material
commitment other than in the ordinary course of business;
(m) revalued any of its assets for financial accounting purposes;
(n) suffered a material adverse change in the financial condition,
liabilities, assets, business, or prospects of the Company;
(o) suffered material destruction, damage to or loss of any material
asset of the Company (whether or not covered by insurance);
(p) had commenced against it, received notice of or, to the knowledge
of the Key Shareholders, had threatened against it the commencement of any
civil litigation or any government proceeding;
(q) had organized labor disputes, or a claim of wrongful discharge or
other unlawful labor practice or action levied against it;
(r) issued or sold any of its capital shares, or any other security;
(s) to the knowledge of the Key Shareholders, terminated or modified
any relationship or arrangement of the Company with any of its major
suppliers, distributors, customers or clients; or
(t) to the knowledge of the Key Shareholders, agreed to do any of the
things described in the preceding clauses (a) through (s).
3.11 LITIGATION.
(a) Except as set forth in Schedule 3.11, there are no claims,
actions, suits, proceedings or inquiries, investigations, pending or, to
the knowledge of the Key Shareholders, threatened against or affecting the
Company at law, 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.
(b) The Company is not in default with respect to any judgment,
order, writ, injunction, decree, award, or to the knowledge of the Key
Shareholders, rule or regulation of any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality.
3.12 GOVERNMENTAL AUTHORIZATIONS. To the knowledge of the Key
Shareholders, the Company has all charters, licenses, tariffs, permits and other
governmental authorizations and
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approvals legally required to conduct its business as it is presently
conducted. To the knowledge of the Key Shareholders, the Company has
complied in all material respects with all applicable federal, state and local
laws, rules, regulations and orders relating to the conduct of its business.
There are no actions or proceedings pending or, to the knowledge of the Key
Shareholders, threatened to revoke or rescind any of such charters,
authorizations, licenses, tariffs, permits or approvals. The execution,
delivery, and performance of this Agreement, and the consummation of the
Purchase and other transactions contemplated hereby will not violate any
material provision of, or constitute a default under, any license, charter,
tariff, permit or other governmental authorization, or any order, writ,
injunction or decree of any court or other governmental agency or
instrumentality applicable to or binding upon the Company or require any
additional governmental authorization or approval other than as may be
required under the HSR Act.
3.13 USE OF ASSETS. To the knowledge of the Key Shareholders, the
ownership and use of the assets of the Company are not in violation of any
existing material law, code, rule, regulation, ordinance, license or permit
applicable to the Company or building, zoning, environmental or employee health
and safety matters, and the ownership and use of such assets by the Company
following the consummation of the Purchase which is consistent with their
ownership and use prior to the purchase, will not violate any such law, code,
rule, regulation or ordinance or any law, code, rule, regulation or ordinance
known to the Company to be pending. No notice from any federal, state or local
governmental body or agency has been served upon the Company claiming
violations of such material laws, codes, rules, regulations, ordinances,
licenses or permits or requiring or calling attention to the need for any work,
repairs, construction, alteration or improvement of the assets of the Company
which are still pending. Neither the whole nor any portion of the assets of the
Company has been condemned, requisitioned or otherwise taken by any public
authority or pursuant to any power of eminent domain since December 31, l996,
and no such condemnation, requisition or taking is, to the knowledge of the Key
Shareholders, threatened or contemplated.
3.14 TITLE TO PROPERTIES AND ASSETS. The Company has good and legal title
to (or in the case of leased property, has leasehold interests that are valid,
effective and enforceable in accordance with their terms in) all properties and
assets (whether real or personal and whether tangible or intangible) material to
the conduct of the business of the Company. All such property and assets are
reflected in the Financial Statements or acquired since that date, except for
those assets disposed of in the ordinary course of business since December 31,
1996. Except for liens for taxes not yet due and payable, the assets and
properties owned by the Company are free and clear of all liens, mortgages,
pledges, encumbrances and charges of every kind except for liens set forth in
Schedule 3.14 ("Permitted Liens"). With respect to real property leased by the
Company, the Company has not received any notice or claim, nor are the Key
Shareholders aware of any notice or claim, that the rent, royalties, fees and
additional payments required to be paid under the leases for rights in such real
property have not been paid for all periods prior to the date of this Agreement
and to the knowledge of the Key Shareholders all other actions on the part of
the Company with respect to such real properties necessary to retain such leases
in full force and effect through the date of this Agreement have been performed.
3.15 TAX RETURNS; PAYMENTS.
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(a) The Company is an S corporation as defined in Section 1361 of the
Code. The Company's taxable year ends December 31.
(b) Except as set forth on Schedule 3.15, all tax returns and reports
required to be filed by or on behalf of the Company with respect to any
income, properties or operations of the Company with any taxing authority
have been timely and duly filed. Except as set forth on Schedule 3.15, all
taxes, including interest, penalties and additions to tax, shown to be
payable on any such returns or reports, or on subsequent assessments with
respect thereto have been paid in full on a timely basis. Except as set
forth on Schedule 3.15, no other taxes are payable by the Company with
respect to any such returns or with respect to any period prior to the date
of this Agreement, or adequate provision for the payment thereof has been
made on the books of the Company. All such returns and reports are true
and correct in all material respects. There are no agreements for the
extension of time with respect to the assessment of any tax deficiency
relating to any income, properties or operations of the Company. There is
no action, suit, proceeding, investigation, audit or claim now pending or
asserted against the Company, nor, except as set forth on Schedule 3.15,
has any claim for additional taxes, assessments, interest or penalties been
asserted by any tax authority against the Company. To the knowledge of the
Key Shareholders, there are no threatened federal, state or local tax
audits of, or assessments against, the Company, or of any other claims for
unpaid taxes or additions to tax which may be asserted against the Company.
There are no liens for federal, state or local taxes upon the assets of the
Company except for statutory liens for taxes or assessments not yet
delinquent. The Company is not a party to or bound by (nor will the
Company become a party to or bound by) any tax indemnity, tax sharing or
tax allocation agreement. Except as set forth on Schedule 3.15, the
Company is not a party to any agreement, contract, arrangement or plan that
has resulted or would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of
section 280G of the Code.
3.16 AGREEMENT AND COMMITMENTS. Schedule 3.16 contains a complete and
accurate list of all of the material contracts, agreements, debt instruments and
leases binding on the Company or to which the Company is a party, except for
purchase orders or commitments with customers, regular orders of the Company
placed with its suppliers and accounts payable incurred in the ordinary course
of business, but including the following categories of contracts and agreements
to which the Company is bound at the date hereof: (i) employee benefit plans,
employment agreements, consulting contracts or similar agreements; (ii)
contracts that involve remaining aggregate payments by the Company in excess of
$100,000 and which have a term in excess of one year; (iii) insurance policies;
(iv) contracts or commitments for the guaranty of any obligation for the
borrowing of money or otherwise, excluding endorsements made for collection;
(v) any collective bargaining agreement; (vi) guarantees, letters of credit, or
similar contracts or commitments providing for contingent liability of the
Company; (vii) contracts to purchase or sell securities of any type;
(viii) contracts or commitments for capital expenditures; (ix) contracts or
options to purchase, sell or lease any real property; or (x) contracts and
agreements other than the foregoing, which are material to the Company
(collectively the "Material Contracts"). For purposes of this Section 3.16, any
contract or agreement which requires or may require the performance of services
or the delivery
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of goods, except for purchase orders or commitments with customers, regular
orders of the Company placed with its suppliers and accounts payable incurred
in the ordinary course of business, in an amount exceeding $100,000,
individually or in the aggregate, shall be deemed material. True and complete
copies of the foregoing listed on the Disclosure Schedule have been furnished
to the Purchaser.
3.17 CONTRACT DEFAULTS. The Company is not in default under the terms of
any Material Contract binding upon it or to which it is a party, or under its
Articles of Incorporation or bylaws, and no event has occurred which, with
notice or lapse of time, or both, may be or becomes such a default on the part
of the Company under any Material Contract or under such Articles of
Incorporation or bylaws. To the knowledge of the Key Shareholders, none of the
other parties to the Material Contracts is in default thereunder or has
repudiated any of its obligations thereunder. Each Material Contract is valid,
binding and enforceable in accordance with its terms.
3.18 INTELLECTUAL PROPERTY. Schedule 3.18 sets forth a complete and
accurate list of each patent, patent application, trademark (whether or not
registered), trademark application, trade name, service mark, copyright and
proprietary intellectual property (collectively, "Intellectual Property") owned,
used or licensed by the Company and a description of whether such Intellectual
Property is owned or licensed by the Company. Except as set forth on Schedule
3.18, to the knowledge of the Key Shareholders, the Company has the right to use
such Intellectual Property and the current use by the Company of such
Intellectual Property does not infringe upon the rights of any other person. To
the knowledge of the Key Shareholders, no other person is materially infringing
upon the rights of the Company in any such Intellectual Property and no
proceedings have been instituted, are pending or have been threatened by the
Company, or except as set forth on Schedule 3.18, to the knowledge of the Key
Shareholders, by a person adverse to the Company, which challenge the validity,
enforceability, use or ownership thereof.
3.19 EMPLOYEES AND PLANS.
(a) Schedule 3.19(a) is a complete and accurate list of all
employment and consulting contracts not terminable at will, collective
bargaining agreements, and all pension, bonus, profit-sharing, share
option, or other agreements or arrangements providing for employee
remuneration or benefits to which the Company is a party or by which the
Company is bound. Except as set forth in Schedule 3.19, all of said
contracts and arrangements are in full force and effect, and neither the
Company nor to the knowledge of the Key Shareholders, any other party is in
default under them. There have been no claims of defaults and, to the
knowledge of the Key Shareholders, 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 the Key Shareholders' knowledge,
threatened labor dispute, strike, or work stoppage affecting the Company's
business. To the knowledge of the Key Shareholders, the Company has
complied in all material respects with all applicable laws relating to its
employee benefit plans, including the provisions of the Employee Retirement
Income Security Act (ERISA) if and to the extent applicable. There are no
pending, or to the knowledge of the Key Shareholders, threatened claims by
or on behalf of any employee
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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 the Key Shareholders' knowledge,
any basis for such a claim. Except as set forth in Schedule 3.19, 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 the Purchaser or the Company, to
make any payment to any present or former employee following the
termination of employment.
(b) To the knowledge of the Key Shareholders, no Key Employee
(defined below) is currently a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee and any other person
that in any way adversely affects or will affect (i) the performance of his
or her duties as an employee of the Company, or (ii) the ability of the
Company to conduct its business.
3.20 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.20:
(a) To the knowledge of the Key Shareholders, the Company has not
caused, is not causing, has not allowed and is not allowing, any disposal,
releases or threatened releases of any Hazardous Material on or under any
properties which it (i) owns, leases, occupies or operates, or (ii)
previously owned, leased, occupied or operated during the period the
Company owned, leased, occupied or operated its properties. Without
conducting an independent investigation, the Key Shareholders have no
actual knowledge that any such disposal or releases from Company
properties occurred before the Company took title to, or possession or
operation of, any of such properties, or that any such disposal or releases
are migrating or have migrated off of such properties in subsurface soils,
groundwater or surface waters;
(b) To the knowledge of the Key Shareholders, the Company has not (i)
arranged for or had arranged for it the disposal or treatment of Hazardous
Material at any facility or site owned or operated by another person from
which facility or site there has been a release or there is a release or
threatened release of a Hazardous Material, or (ii) accepted any Hazardous
Material for transport to disposal or treatment facilities or other sites
selected by the Company, from which facilities or sites there has been a
release or there is a release or, to the knowledge of the Key Shareholders,
threatened release of a Hazardous Material. Any facility or site to which
the Company arranged for the disposal or treatment of Hazardous Material
under (i) above was duly licensed in accordance with applicable laws and
has not been listed in connection with the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) by the United States
Environmental Protection Agency's National Priorities List (N.L.) or any
equivalent or like listing of sites under state or local law (whether for
potential releases of substances listed in CERCLA or other substances) or
for properties in jurisdictions other than the United States, any
equivalent or like listing of sites under the laws of such other
jurisdictions;
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(c) Without conducting an independent investigation, to the actual
knowledge of the Key Shareholders, there has not been any release or
threatened release of any Hazardous Material originating from a property
other than those owned, leased or operated by the Company that has or will
come to be located on or under properties owned, leased, occupied or
operated by the Company;
(d) The Company has not installed, used, buried or removed any
surface impoundment or underground tank or vessel or sump, drain or
pipeline which holds or held Hazardous Materials on properties owned,
leased, occupied or operated by the Company;
(e) To the knowledge of the Key Shareholders, the Company is, and has
been, in material compliance with all federal, state or local laws and
permits relating to air emissions, water, industrial hygiene and worker
health and safety, pollution, hazardous or toxic wastes, materials or
substances, pollutants or contaminants and discharge of Hazardous
Materials, and to the knowledge of the Key Shareholders, no condition
exists at any of the real property owned by, leased by or used in the
respective businesses of the Company that would constitute a material
violation of any such law or permit or that constitutes or threatens to
constitute a public or private nuisance; and
(f) There has been no claim, including without limitation any
litigation, administrative proceedings or investigations or any other
actions, claims, demands, notices of potential responsibility or requests
for information brought or threatened, against the Company or, to the
actual knowledge of the Key Shareholders without conducting an independent
investigation, against any predecessor owner or operator of any of the
properties referenced in subparagraph (i) above, alleging the presence,
disposal, release or threatened release of any Hazardous Material on, from
or under any of such properties or otherwise relating to potential
environmental liabilities, or any settlement reached by the Company
relating to any of the foregoing.
(g) The Company has not manufactured, assembled, sold, distributed,
installed or abated any product which contains or contained asbestos as a
component thereof, and is not currently doing so.
As used in this Agreement, "Hazardous Material" means any material, substance,
waste or component thereof (whether a liquid, solid, or gas) that is prohibited,
controlled, or regulated by any governmental entity having jurisdiction as a
contaminant, pollutant, dangerous substance, toxic substance, hazardous waste,
hazardous substance, hazardous material, dangerous good or petroleum, its
derivatives, by-products or other hydrocarbons, pursuant to any United States,
state, or local environmental or health and safety law, rule, or regulation.
3.21 LOSS OF CUSTOMERS OR SUPPLIERS. None of the customers of
the Company constituting more than $500,000 of the Company's total revenue as of
December 31, 1996, and none of the suppliers of the Company constituting more
than $500,000 of the Company's total purchases, has terminated its relationship
with the Company since December 31, l996 to the date of this
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Agreement. To the knowledge of the Key Shareholders, no such customers or
suppliers intend to terminate, or are considering terminating, its
relationship with the Company, other than as set forth on Schedule 3.21.
3.22 TRANSACTIONS WITH AFFILIATES. At the time of the Closing and other
than as specifically contemplated by this Agreement or as set forth on
Schedule 3.22, no Shareholder nor any Affiliate of the Company will conduct
business with the Company, nor have any interest in or own any property or
right used principally in the conduct of the business or operations of the
Company. The term "Affiliate" shall mean the Shareholder, any partner of the
Shareholder, or any member of the immediate family (including brother, sister,
descendant, ancestor or in-law) of such persons, or any corporation,
partnership, trust or other entity in which the Shareholder or any such family
member has a substantial interest or is a director, officer, partner or
trustee.
3.23 REAL ESTATE.
(a) Schedule 3.23(a) contains a complete and accurate list of all
of the real property owned by the Company (the "Owned Property").
(b) Schedule 3.23(b) contains a complete and accurate list of the
addresses of all of the real property leased to the Company or otherwise
used by the Company and not listed in Schedule 3.23(a) (the "Leased
Property"). The Company is in possession of all of the Leased Property,
and all of the buildings, fixtures and leasehold improvements used by the
Company in its business are located on the Leased Property or the Owned
Property.
(c) (i) No claims have been asserted that any applicable zoning
ordinances do not permit the operation of the business on the Owned
Property and the Leased Property (collectively, the "Real Property");
(ii) the Company has not received notice of any pending or threatened
termination of any easement or right, including easements for all
utilities, services, roadways and other means of ingress and egress,
necessary to operate the business on the Real Property; (iii) neither the
whole nor any portion of the Owned Property listed on the December 31,
l996 Financial Statements, nor to the knowledge of the Key Shareholders,
the Leased Property, has been condemned, requisitioned or otherwise taken
by any public authority, and no notice of any such condemnation,
requisition or taking has been received. No such condemnation,
requisition or taking is, to the knowledge of the Key Shareholders,
threatened or contemplated. Except as set forth in Schedule 3.23, no
contract or agreement has been entered into by the Company granting
occupancy rights to a third party.
(d) The Key Shareholders have no knowledge of any material
violation of any zoning, building, health, fire, water, use or similar
statute, ordinance, law, regulation or code in connection with the Real
Property.
3.24 CONDITION OF ASSETS. To the knowledge of the Key Shareholders, all
of the Company's material assets are in good condition and working order,
ordinary wear and tear
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excepted, and are suitable for the uses for which intended, free from any
known defects except such minor defects as do not substantially interfere with
the continued use thereof.
3.25 LABOR RELATIONS. The employees of the Company are not represented
by any labor union, and the Company does not have any collective bargaining
agreements with any labor union or other representative of the employees.
There is no organizing activity pending, or to the knowledge of the Key
Shareholders, threatened by any labor organization or group of employees.
There is not, and has not been in the last two years, any pending, or to the
knowledge of the Key Shareholders, threatened (i) labor strike, dispute,
slowdown or work stoppage, (ii) unfair labor practice complaint, (iii)
grievance or arbitration proceeding attributable to a collective bargaining
agreement, or (iv) law, contract or other agreement which will obligate the
Company to make any severance payment as a result of this Agreement or the
transactions contemplated herein other than as set forth in Schedule 3.25.
3.26 INSURANCE. Schedule 3.26 contains a complete and accurate list and
description (including effective dates, premiums and coverage amounts) of all
insurance policies carried by the Company as of the date hereof. All such
insurance policies are in full force and effect as of the date hereof.
3.27 ORGANIZATIONAL DOCUMENTS. The Articles of Incorporation and Bylaws
of the Company, as amended, in the respective forms provided to the Purchaser
are complete and correct.
3.28 PRODUCT LIABILITY. To the knowledge of the Key Shareholders,
except as set forth in Schedule 3.28, the Company's products are made and
manufactured in accordance with applicable laws and contain no design defects.
The Company has furnished the Purchaser with a copy or summary of all
material, written, express warranties, relating to the sale of the Company's
products during the past three (3) years. Except as set forth on Schedule
3.28, there are no existing, or to the knowledge of the Key Shareholders,
threatened claims against the Company for services or products furnished by
the Company which are defective or fail to meet any service or product
warranties, which are not reflected on, or reserved for, on the Closing
Balance Sheet.
3.29 BROKERS AND FINDERS. Any agent's, broker's or finder's fee or
commission payable as the result of the consummation of the Purchase is or
will be payable by the Shareholders at Closing, or by the Company if such fee
or commission is accrued as an expense and reflected on the Closing Balance
Sheet.
3.30 ACCURACY OF DISCLOSURES; NOTICE. The representations and
warranties of the Company and Key Shareholders contained in this Agreement,
the Financial Statements, the Disclosure Schedule and the Exhibits attached
hereto do not contain any untrue statement of a material fact or omit to state
any material fact required to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Shareholders as
follows:
4.1 ORGANIZATION AND GOOD STANDING. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware.
4.2 DUE AUTHORIZATION. The Purchaser has full power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally or general
equitable principles.
4.3 EXECUTION AND DELIVERY. Neither the execution and delivery by the
Purchaser of this Agreement nor the consummation of the transactions
contemplated hereby will: (i) conflict with or result in a breach of the
Articles of Incorporation or Bylaws of the Purchaser; (ii) violate any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental authority; or (iii) violate or conflict with or
constitute a default under (or give rise to any right of termination,
cancellation or acceleration under) any agreement, indenture, mortgage, lease,
contract or other instrument to which the Purchaser is a party or by which it
is bound or affected.
4.4 LITIGATION. There is no order of any court, governmental agency or
authority and no action, suit, proceeding or investigation, judicial,
administrative or otherwise that is pending or, to the knowledge of the
Purchaser, threatened against or affecting the Purchaser which challenges the
validity or propriety of any of the transactions contemplated by this
Agreement.
4.5 CONSENTS. Except for the filings required under the HSR Act, no
consent, approval, authorization, license, exemption of, filing or
registration with any court, governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, is required by the
Purchaser in connection with the execution and delivery of this Agreement or
the consummation by it of any transaction contemplated hereby. No approval,
authorization or consent of any other third party is required in connection
with the execution and delivery by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby.
4.6 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Purchaser
directly with the Key Shareholders without the intervention of any person as
the result of any act by the Purchaser in such manner as to give rise to any
valid claim against any of the parties hereto for a brokerage commission,
finder's fee or like payment.
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4.7 INVESTMENT PURPOSE. The Purchaser is purchasing the Shares for
investment only and not with a view to resale in connection with any
distribution of Shares, except in compliance with the Securities Act of 1933,
as amended, and all other applicable securities laws.
4.8 AMOUNTS WITHHELD FROM CLOSING PAYMENT. The amounts withheld from
the Closing Payment by the Purchaser pursuant to Section 1.3, shall be applied
by the Purchaser in the manner stated in Section 1.3
ARTICLE V
338(H)(10) ELECTION; PAYMENT OF TAXES
5.1 SECTION 338(h)(10) ELECTION; RESULTING TAXES. The Purchaser, the
Shareholders and the Company shall cooperate in the filing of an election
under Section 338(h)(10) of the Code so that the Purchase will be treated as a
sale of assets by the Company for federal income tax purposes. The
Shareholders are solely responsible for the payment of, and shall pay, all
federal, state and local taxes (including sales and use taxes), penalties and
interest of the Company and the Shareholders attributable to the election
under Section 338(h)(10) of the Code.
5.2 RESPONSIBILITY FOR TAXES. The Shareholders are solely responsible
for all federal, state and local taxes (including sales and use taxes),
penalties and interest of the Company and the Shareholders attributable to, or
arising prior to Closing or from the Purchase. All such taxes, penalties and
interest shall be paid timely by the Shareholders; provided, however that, to
the extent such taxes, penalties and interest have been accrued on the books
of the Company and reflected on the Closing Balance Sheet, such taxes,
penalties and interest shall be paid by the Company.
ARTICLE VI
BEST EFFORTS
Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use their respective commercially reasonable best
efforts to fulfill the conditions set forth in Articles VII, VIII and IX over
which they have control or influence and to consummate and effect the
transactions contemplated by this Agreement. 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 action as
is reasonable and necessary to effect the transactions covered by this
Agreement. The parties will execute any additional instruments necessary to
consummate, perfect or evidence the transactions contemplated hereby.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF
THE PURCHASER AND THE SHAREHOLDERS
The obligations of the Purchaser and the Shareholders to consummate the
Purchase and the transactions contemplated in this Agreement will be subject
to the satisfaction on or before the Closing Date of all of the following
conditions, except as such party may waive such conditions in writing:
7.1 APPROVALS AND CONSENTS. 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. All orders, consents and approvals of all
other applicable governmental authorities, in form and substance reasonably
satisfactory to the parties hereto and their respective counsel, necessary for
consummation of the Purchase will have been obtained.
7.2 LITIGATION. On the Closing Date, there will not be pending or
threatened litigation in any court or any proceeding by any governmental
commission, board or agency, seeking to restrain or prohibit consummation of
the Purchase or in which it is sought to obtain divestiture, rescission or
damages in connection with the Purchase or the consummation of the Purchase,
and to the knowledge of the parties hereto, no investigation by any third
party will be pending or threatened which might result in any such suit,
action or other proceeding.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS
The obligation of the Shareholders to consummate the Purchase and other
transactions contemplated by this Agreement is subject to the satisfaction on
or before the Closing Date of all of the following conditions, unless the
Shareholders waive such conditions in writing:
8.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of the Purchaser contained in this Agreement will be true and correct on and
as of the Closing Date as if such representations and warranties were made on
and as of the Closing Date.
8.2 PERFORMANCE. The Purchaser will have performed all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Closing Date.
8.3 CLOSING DELIVERIES. The Shareholder's Representative shall have
received the cash and each of the documents or items required to be delivered
to them pursuant to Section 10.2.
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8.4 APPROVAL OF COUNSEL FOR THE COMPANY AND THE SHAREHOLDERS. All
actions and proceedings hereunder and all documents and other papers required
to be delivered by the Purchaser hereunder or in connection with the
consummation of the transactions contemplated hereby, and all other related
matters have been reasonably approved by counsel to the Company and the
Shareholders prior to Closing, as to their form and substance.
8.5 FURTHER AGREEMENTS. The offers of employment to the individuals
listed in Schedule 8.5, pursuant to the form of agreement attached as Exhibit
"D", have been made and have not been revoked by the Company.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to consummate the Purchase and the other
transactions contemplated by this Agreement is subject to the satisfaction on
or before the Closing Date of all of the following conditions, except as the
Purchaser may waive all or any part of such conditions in writing:
9.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of the Shareholders contained in this Agreement will be true and correct on
and as of the Closing Date as if such representations and warranties were made
on and as of the Closing Date.
9.2 ADVERSE CHANGES. There will have been no changes after December 31,
1996 in the results of operations, assets, liabilities, financial condition or
properties of the Company which, in the aggregate, are materially adverse in
the reasonable determination of the Purchaser.
9.3 SATISFACTION OF COVENANTS. The Company and each of the Shareholders
shall have satisfied each and every one of their covenants and obligations set
forth in this Agreement.
9.4 FURTHER AGREEMENTS. The terms of each of the agreements listed in
Schedule 8.5 shall have been agreed to and executed, as necessary, by the
Company, the Shareholders and the Purchaser.
9.5 DUE DILIGENCE. The Purchaser shall have approved, the results of
its legal, financial, and environmental due diligence review of the Company.
9.6. S CORPORATION STATUS. The Company will be an S corporation as such
term is defined under Section 1361 of the Code from the date of this Agreement
to Closing.
9.7 CLOSING DELIVERIES. The Purchaser has received each of the
documents or items required to be delivered to it pursuant to Section 10.1.
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9.8 CONSENTS. The Shareholders will have obtained all consents required
of third parties for its consummation of the Purchase and the other
transactions contemplated by this Agreement, including, without limitation,
all consents required under the Material Contracts.
9.9 TITLE INSURANCE. Purchaser, at its own expense, shall have obtained
an owner's title insurance policy dated the Closing Date covering the Owned
Property, insuring the fee simple estate of the Company in the Owned Property,
subject only to (i) the standard exceptions to title customarily contained in
such title policies, (ii) liens for current state and local property taxes
which are not delinquent or subject to penalty, (iii) liens and encumbrances
that do not materially detract from, or materially interfere with, the present
use of the Owned Property or affect the value thereof in any trial respect,
and (iv) the Permitted Liens, issued by a responsible title insurance company
(the "Title Company"); provided, however, that neither the Company not the
Shareholders shall have any obligation to cure any defects in title.
ARTICLE X
DOCUMENTS TO BE DELIVERED AT CLOSING
10.1 TO PURCHASER. At the Closing, there shall be delivered to the
Purchaser:
(a) share certificates representing the Shares duly endorsed to the
Purchaser, in form sufficient to vest record and beneficial title of the
Shares fully in the Purchaser with the signatures notarized or guaranteed
by a commercial bank or by a member firm of the New York Stock Exchange
in form satisfactory to the Purchaser and its counsel;
(b) resignation of all directors and officers of the Company;
(c) a certificate of incorporation, certificate of existence and
good standing issued by the appropriate authorities in the State of
Indiana and such other states as the Purchaser may request;
(d) a certificate, signed by the President or chief executive
officer of the Company as to the fulfillment of the covenants and
conditions set forth in Articles VII and IX;
(e) opinions of counsel to the Key Shareholders, dated as of the
Closing Date, in form reasonably acceptable to Purchaser;
(f) a copy of all consents and approvals referred to in Section 7.1
and Article IX;
(g) the share books of the Company (including unissued and canceled
share certificates); and
(h) all other items reasonably requested by Purchaser.
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10.2 TO SHAREHOLDERS. At the Closing, there shall be delivered
to the Shareholder Representative on behalf of the Shareholders:
(a) the Closing Payment set forth in Section 1.3;
(b) a certificate, signed by an officer of the Purchaser, as to the
fulfillment of the conditions set forth in Articles VII and VIII;
(c) a copy of all consents referred to in Section 7.1; and
(d) all other items reasonably requested by the Shareholders.
ARTICLE XI
SURVIVAL
All representations, warranties, covenants and agreements made by any
party to this Agreement or pursuant hereto shall survive the Closing (unless
the Purchaser on the one hand, or the Shareholders on the other hand, actually
knew of any misrepresentation or breach of warranty of the Shareholders or the
Purchaser, as the case may be, at the time of Closing (except for the
representations set forth in Section 3.15(b) with respect to state sales, use
and franchise taxes), in which event the affected representations or warranties,
or relevant portions thereof, shall not survive the Closing) as follows:
(a) the representations, and warranties of the Key Shareholders
contained in Article III (excepting Section 3.15) shall survive the
execution and delivery of this Agreement and the Closing hereunder for a
period of twenty-four (24) months from the Closing Date;
(b) the representations and warranties of the Key Shareholders
contained in Section 3.15 and the covenants and agreements of each of
the parties dealing with tax matters, including without limitation
Sections 1.3(c), Article V and the covenants and agreements of the
Purchaser set forth in Section 1.9 shall survive the execution and
delivery of this Agreement and the Closing hereunder and shall continue
until all liability relating thereto is barred by all applicable statutes
of limitation;
(c) each and every other representation, warranty, covenant and
agreement made by the parties or any party shall survive the execution
and delivery of this Agreement and the Closing hereunder for a period of
three (3) years from the Closing Date.
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ARTICLE XII
INDEMNIFICATIONS
12.1 INDEMNIFICATION OF PURCHASER. Subject to the limitations set forth
in Articles XI and XIV:
(a) the Key Shareholders shall, to the extent not fully accrued on
the Closing Balance Sheet, severally (but not jointly) based upon their
Proportionate Share (defined below), indemnify, and hold the Purchaser
harmless from, against, for and in respect of any and all damages,
losses, costs (including reasonable attorney's fees, interest and
penalties), settlement payments, obligations, liabilities, claims,
actions or causes of action and encumbrances suffered, sustained,
incurred or required to be paid by the Purchaser with respect to (i) the
Funded Debt in excess of the amounts withheld at the Closing by the
Purchaser for payment of same, (ii) the breach of any representation,
warranty, agreement or covenant of the Key Shareholders contained in or
made in this Agreement; (iii) any and all federal, state and local taxes,
penalties and interest of the Company and the Shareholders arising from
or attributable to (A) the Purchase, (B) an adjustment to a tax return by
any government authority for a period ending prior to or at the time of
the Purchase, (C) the determination that the Company did not qualify as
an S corporation for Federal income tax purposes at the time of the
Purchase, (D) the period ending prior to or at the time of the Purchase,
(E) any deficit in the Tax Payment Amount, and (F) the election under
Section 338(h)(10) of the Code, and (iv) any action, suit, proceeding,
demand, assessment or judgment incident to any of the matters indemnified
against in this Section 12.1(a); and
(b) Each Shareholder shall severally (but not jointly), indemnify,
and hold the Purchaser harmless from, against, for and in respect of (i)
any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances
suffered, sustained, incurred or required to be paid by the Purchaser
attributable to the breach of any representation or warranty of such
Shareholder contained in or made in connection with Article II of this
Agreement; and (ii) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest and penalties) incurred
by the Purchaser in connection with any action, suit, proceeding, demand,
assessment or judgment incident to any of the matters indemnified against
in this Section 12.1(b).
For purposes of Section 12.1(a), "Proportionate Share" when used with respect to
the Key Shareholders, shall mean a percentage amount equal to the percentage
determined by dividing the total number of Shares sold by the subject Key
Shareholder to the Purchaser by the total number of Shares sold by all of the
Key Shareholders to the Purchaser. Thus, for example, Edward P. Welter's
Proportionate Share will be 81.44% (3,265,120 DIVIDED BY 4,006,537).
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12.2 INDEMNIFICATION OF SHAREHOLDERS. Subject to the limitations set
forth in Articles XI and XIV, the Purchaser shall indemnify and hold the
Shareholders harmless from, against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances
suffered, sustained, incurred or required to be paid by a Shareholder
because of the breach of any representation, warranty, agreement or
covenant of the Purchaser contained in or made in connection with this
Agreement;
(b) any and all liabilities, obligations, claims and demands (other
than the Funded Debt paid at Closing) arising out of the ownership and
operation of the Company after the Closing Date, except to the extent the
same arises from a breach of any representation, warranty, agreement or
covenant of the Company or the Shareholder contained in or made in
connection with this Agreement; and
(c) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest and penalties) incurred
by the Shareholder in connection with any action, suit, proceeding,
demand, assessment or judgment incident to any of the matters indemnified
against in this Section 12.2.
12.3 GENERAL RULES REGARDING INDEMNIFICATION. The obligations
and liabilities of each indemnifying party hereunder with respect to claims
resulting from the assertion of liability by the other party or indemnified
third parties shall be subject to the following terms and conditions:
(a) the indemnified party shall give prompt written notice to the
indemnifying party of any claim which might give rise to a claim by the
indemnified party against the indemnifying party based on the indemnity
agreements contained in this Article XII, stating the nature and basis of
said claims and the amounts thereof, to the extent known (although
failure to give prompt notice will under no circumstances affect the
rights of the indemnified party unless such delay in notice materially
prejudiced the indemnifying party;
(b) if any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity agreements contained in this Article XII,
the action, suit or proceeding shall, upon the written acknowledgment by
the indemnifying party that is obligated to indemnify under such
indemnity agreement, be defended (including all proceedings on appeal or
for review which counsel for the indemnified party shall deem
appropriate) by the indemnifying party. The indemnified party shall have
the right to employ its own counsel in any such case, and the fees and
expenses of such counsel shall be at the indemnified party's expense.
The indemnified party shall be kept fully informed of such action, suit
or proceeding at all stages thereof whether or not it is represented by
separate counsel.
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(c) The indemnified party shall make available to the indemnifying
party and its attorneys and accountants all books and records of the
indemnified party relating to such proceedings or litigation and the
parties hereto agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and
adequate defense of any such action, suit or proceeding.
(d) The indemnified party shall not make any settlement of any
claims without the written consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed.
(e) Except as herein expressly provided, the remedies provided in
Article XII shall be cumulative and shall not preclude assertion by any
party of any other rights or the seeking of any other rights or remedies
against any other party hereto.
12.4 LIMITATIONS ON INDEMNIFICATION. The indemnification
provided for in Section 12.1 shall be subject to the following limitations and
conditions:
(a) Except as provided in Sections 12.4(b) and (c), the
Shareholders shall not be obligated to pay the Purchaser any amounts for
indemnification under Section 12.1 unless and until the aggregate of all
such amounts due the Purchaser under Section 12.1 exceeds One Million
dollars ($1,000,000), at which time the Shareholders would be obligated
to pay only such amounts exceeding One Million Dollars ($1,000,000).
(b) Except as provided in Section 12.4(c), the Shareholders shall
not be obligated to pay any amounts for indemnification under Section
12.1, to the extent that such amount or amounts, alone or in the
aggregate, actually paid by the Shareholders, exceeds an amount equal to
Six Million Five Hundred Thousand Dollars. Additionally, no Shareholder
shall be obligated to pay any amount for indemnification under Section
12.1(b)(i) in excess of the amount of such Shareholders' Pro Rata Share
of the Purchase Price actually received by such Shareholder.
(c) The limitations set forth under Sections 12.4(a) and (b) shall
not apply to a breach of a representation or covenant contained in
Article II or Sections 3.15(a), 5.1 and 12.1(a)(i), 12.1(a)(iii)(C),
12.1(a)(iii)(E) and 12.1(a)(iii)(F).
(d) In determining any amount of indemnification for which the
Purchaser or the Company is entitled to payment or indemnification
pursuant to this Article XII or otherwise, the indemnification amount
shall be reduced by an amount equal to the present value of any net tax
benefit realized by the Purchaser or the Company which is attributable to
such loss or derived therefrom in the same or any past or subsequent
period.
(e) If the Purchaser or the Company receives or recovers any
proceeds from an insurance carrier in connection with a loss indemnified
hereunder, the Purchaser shall apply the proceeds against payment of the
loss or promptly repay to the indemnifying party the
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amount so recovered (less any taxes payable), up to an amount not
exceeding the amount theretofore paid by the indemnifying party to the
Purchaser.
(f) Any claim for indemnity pursuant to this Agreement must be made
in writing and delivered to the indemnifying party:
(i) on or prior to the second anniversary of the Closing Date,
as to claims for indemnity arising under Article XI, paragraph (a);
(ii) on or prior to the expiration of the applicable statute of
limitations as to claims for indemnity arising under Article XI,
paragraph (b); or
(iii) on or prior to the third anniversary of the Closing Date,
as to claims for indemnity arising under Article XI, paragraph (c).
(g) The Purchaser and the Company shall not, without prior written
consent of the Shareholder Representative, agree to any extension of a
statute of limitations, applicable to any claim or actions which may
result in a loss for which the Shareholders may be obligated to indemnify.
12.5 ASSIGNMENT OF RIGHTS. If the Purchaser or the Company has any
claims or rights ("Right") against any person for acts or omissions which give
rise to a loss which the Shareholders have indemnified, and all such losses
which the Shareholders have indemnified shall have been paid by the Shareholders
in accordance with the terms hereof, the Purchaser and the Company shall assign
such rights to the Shareholders to the extent that the Purchaser and the Company
shall have been fully compensated for any and all loss and expenses incurred in
connection with such act or omission. If, as a result of the Shareholders'
payment of any loss which the Shareholders have indemnified hereunder, the
Shareholders have any rights for reimbursements or contribution from or against
any person, the Purchaser shall assist and cooperate, and cause the Company to
assist and cooperate in a reasonable manner at the Shareholders' expense, with
the Shareholders in enforcing such rights.
12.6 MAINTENANCE OF INSURANCE. The Purchaser shall either cause the
Company to maintain its present level of insurance for the period of the
Shareholders' obligation to indemnify, or, if it chooses to reduce the present
level of insurance maintained by the Company, it shall reduce a Shareholder's
obligation to indemnify for a particular loss, cost, damage or obligation to
the extent such loss, cost, damage or obligation would have been paid with
insurance had the Company maintained the same level of insurance.
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ARTICLE XIII
TERMINATION RIGHTS
This Agreement may be terminated by either the Purchaser or the
Shareholder Representative without liability to the other parties hereto, upon
written notice to the other of the occurrence of any of the following:
(a) If the Closing has not occurred on or before June 15, 1997;
(b) By either the Purchaser or the Shareholder Representative so
long as it or they are not in Default at the time, if the other party is
in Default, and such Default is not cured before the earlier of (i) ten
(10) days following written notice thereof from the party which is not in
Default, or (ii) the Closing;
(c) By either the Shareholder Representative or the Purchaser if
any court of competent jurisdiction has issued an order restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement; or
(d) By mutual written consent of the Shareholder Representative and
the Purchaser.
ARTICLE XIV
MISCELLANEOUS
14.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
have the following meanings unless the context otherwise requires:
(a) "affiliate" means with respect to any person, any other person
controlling, controlled by or under common control with, or the parents,
spouse, lineal descendants or beneficiaries of such person,
(b) "condition of the Company" means the assets, liabilities,
properties, business, prospects, results of operations and financial
condition of the Company.
(c) "Key Employee" means any employee participating in the
Company's Executive Benefit Plan as of the Closing Date.
(d) "Laminating Start-Up Operation" means the operations and
activities of the Company undertaken in connection with the commencement
of the laminating operation in Elkhart County, Indiana.
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(e) "person" means any individual, corporation, partnership, firm
joint venture, association, joint-stock company, trust, unincorporated
organization, governmental or regulatory body or other entity.
(f) "property" means real, personal or mixed property, tangible
or intangible.
(g) "Sullivan Note" means that certain Promissory Note dated
October 28, l994 in the principal amount of $2,200,000.00 executed by
the Company and delivered to I.T.I. Tuco, Inc. (as part of the Company's
acquisition of assets of I.T.I. Tuco, Inc.) and subsequently distributed
to Todd A. Sullivan.
(h) "to the knowledge of the Key Shareholders" means the knowledge
of all the Key Shareholders. Thus, if any Key Shareholder has knowledge,
all of the Key Shareholders are deemed to have the same knowledge.
14.2 EXPENSES. Except as otherwise expressly provided herein, the
Purchaser shall pay the fees and expenses incurred by it in connection with
the transactions contemplated by this Agreement, and the Shareholders shall
pay the fees and expenses incurred by them and the Company in connection with
the transactions contemplated by this Agreement, including fees of their
respective counsel and fees of any broker or investment banker retained by
them, provided that such fees shall be paid by the Company so long as they
have been accrued through closing and reflected on the Closing Balance Sheet.
If any action is brought for breach of this Agreement or to enforce any
provision of this Agreement, the prevailing party shall be entitled to
recover court costs, arbitration expenses and reasonable attorneys' fees.
14.3 FURTHER ASSURANCES. Subject to the terms and upon satisfaction on
or before the Closing Date of all requirements of law and conditions
specified in this Agreement, the Purchaser, the Company and the Shareholders
will execute, acknowledge and deliver such other documents and instruments
and take such further action as may be necessary or appropriate to consummate
the Purchase and other transactions contemplated hereby.
14.4 AMENDMENT. This Agreement may be amended at any time but only by
written agreement of the parties hereto.
14.5 NOTICES. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by one party to
another pursuant to this Agreement shall be in writing and shall be mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, telegram or facsimile transmission
addressed to the Shareholders as set forth on the signature pages hereof,
with a copy to Cynthia S. Gillard, Warrick & Boyn, Suite 400, 121 West
Franklin Street, Elkhart, Indiana. Each party may designate by notice in
writing a new address to which any notice, demand, request or communication
may thereafter be so given, served or sent. Each notice, demand, request or
communication that is mailed, delivered or transmitted in the manner
described above shall be deemed sufficiently given, served, sent and received
for all purposes at such time as it is delivered to the addressee with the
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return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a facsimile transmission) the answer back being deemed conclusive
evidence of such delivery or at such time as delivery is refused by the
addressee upon presentation.
14.6 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the right, interests or
obligations hereunder shall be assigned by either party without the prior
written consent of the other party.
14.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.8 ENTIRE AGREEMENT. Except with respect to the Confidentiality
Agreement dated January 7, 1997 between the Purchaser and the Company (the
"Confidentiality Agreement"), this Agreement and the documents referred to
herein contain the entire understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein and the Confidentiality Agreement. This Agreement supersedes any
prior agreements and understandings between the parties with respect to the
subject matter other than the Confidentiality Agreement which agreement
remains in full force and effect until the Closing of the transactions
contemplated hereby.
14.9 WAIVER. No attempted waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
14.10 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA (EXCLUSIVE OF CONFLICTS
OF LAW PRINCIPLES) AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE DEEMED TO
CALL FOR PERFORMANCE IN ST. JOSEPH COUNTY, INDIANA OR ANY COUNTY CONTIGUOUS
TO ST. JOSEPH COUNTY OTHER THAN ELKHART COUNTY. COURTS WITHIN THE STATE OF
INDIANA SHALL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES
HERETO, WHETHER IN LAW OR EQUITY, INCLUDING, WITHOUT LIMITATION, ANY AND ALL
DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE PARTIES HEREBY
CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. FOR
CONVENIENCE, VENUE IN ANY SUCH DISPUTE WHETHER IN FEDERAL OR STATE COURT
SHALL BE LAID IN ST. JOSEPH COUNTY, INDIANA OR ANY COUNTY CONTIGUOUS TO ST.
JOSEPH COUNTY OTHER THAN ELKHART COUNTY, AND ALL PARTIES TO THIS AGREEMENT
HEREBY GRANT TO THE COURTS OF SUCH COUNTY PERSONAL JURISDICTION OVER THEM.
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14.11 NO THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended to, and nothing in this Agreement shall be interpreted
to infer on, any party the rights of a third party beneficiary, and this
Agreement shall be for the sole benefit of the parties hereto.
14.12 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 will 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.
14.13 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. If the Purchase does
not close for any reason, the parties shall remain bound by the terms of the
Confidentiality Agreement and shall hold in strict confidence all data and
information so obtained from each other. Each party agrees to either return
or destroy such data and respect the confidential nature of the information,
and will not use such confidential information. Filing or providing
information to any government agency or department on a confidential basis
shall not render such information "publicly known." As of the Closing, the
Confidentiality Agreement will terminate.
14.14 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. A specific reference to a schedule in
any Section of Article III of the Agreement should not be construed to
obliterate the general reference to the Disclosure Schedule at the beginning
of Article III. 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.
14.15 TIME. Time is of the essence.
14.16 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 affect the
validity of the remainder of this Agreement.
14.17 ARBITRATION. Except as provided in Section 14.18, all
dispute or other questions arising between the parties from this Agreement shall
be settled by arbitration in accordance with the commercial rules then in effect
of the American Arbitration Association, except as modified in this Section
14.17 and, except that the arbitrator(s) shall be selected in accordance with
the following procedure: such dispute or other question shall be referred to
and decided by a single arbitrator if the parties can agree upon one within
fifteen (15) days after either of the parties shall notify the other that it
wishes to avail itself of the provisions of this Section 14.17; otherwise, such
dispute or other question shall be referred to and decided by three arbitrators,
one to be appointed by the Purchaser
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and one to be appointed by the Shareholder Representative, each such
appointment to be made within ten (10) days after the expiration of the
fifteen (15) day period referred to above, and the third arbitrator to be
appointed by the first two arbitrators within ten (10) days after the
expiration of such ten (10) day period. If the first two arbitrators cannot
reach agreement on the third arbitrator within said ten (10) day period, the
third arbitrator shall be an impartial arbitrator appointed by the President
of the American Arbitration Association within twenty (20) days after the
expiration of said ten (10) day period. Hearings of the arbitrator(s) shall
be held in St. Joseph County, Indiana (or any contiguous county other than
Elkhart County), unless the parties agree otherwise. The presentations of
the parties in the arbitration proceeding shall be commenced and completed
within sixty (60) days after selection of the arbitration panel, and the
arbitration panel shall render its decision in writing within thirty (30)
days after completion of such presentations. Any decision concurred in by
any two (2) of the arbitrators shall constitute the decision of the
arbitration panel, and unanimity shall not be required. The arbitration
shall be conducted in accordance with the Indiana Rules of Evidence and the
Indiana Rules of Civil Procedure. The arbitration award shall be in writing
and shall contain findings of fact and conclusions of law to support the
award. Judgment upon an award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction, including without limitations, courts
in states where the parties reside. Any award so rendered shall be final and
binding upon the parties hereto. All costs and expenses of the arbitrator(s)
shall be paid as determined by such arbitrator(s), and all costs and expenses
of experts, witnesses and other persons retained by the parties shall be
borne by them respectively.
14.18 INJUNCTIONS. Notwithstanding, the provisions of Section 14.17,
the parties hereby agree that any of them may pursue a temporary restraining
order or injunction.
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IN WITNESS WHEREOF, this Agreement has been signed as of the 5th day of
May, 1997.
PURCHASER:
FIBREBOARD CORPORATION
a Delaware corporation
By:
----------------------------------
Name:
---------------------------------
Its:
---------------------------------
Address: 2200 Ross Avenue
Suite 3600
Dallas, Texas 75201
Attn:
-----------------
Facsimile: (214) 969-1832
THE COMPANY:
FABWEL, INC.
an Indiana corporation
By:
------------------------------------
Name: Edward P. Welter
Its: Chairman of the Board
Address: 1838 Middlebury Street
P.O. Box 1366
Elkhart, Indiana 46515-1366
Facsimile: (___) ____________________
THE KEY SHAREHOLDERS:
---------------------------------------
Edward P. Welter
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Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Raymond M. Stout
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
John W. Gardner
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Roger H. Gowdy
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Utah G. White
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
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REMAINING SHAREHOLDERS:
--------------------------------------
Dennis L. Weaver
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Sharie L. Johnson
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
---------------------------------------
John L. Drummond
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
---------------------------------------
Donald D. Weldy
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
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--------------------------------------
G. Bryan Silas
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
---------------------------------------
Lonny J. Whitley
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Theodore A. Brooks
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Michael A. Hahn
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Sharon K. Nusbaum
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
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---------------------------------------
Benjamin J. Davis
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Lawrence B. McArdle
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Mario A. Carrasco
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
Kiran Patel
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
--------------------------------------
James H. Mancil
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
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---------------------------------------
Larry Farver
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
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FOR IMMEDIATE RELEASE
At the Company: At Financial Relations Board:
Stephen L. DeMaria Hannah Bruce, General Information
Margaret Turbeville Lynn Chaffier, Investor Contact
(214) 954-9500 (415) 986-1591
FIBREBOARD COMPLETES ACQUISITION OF FABWEL
A LEADER IN GROWTH SEGMENTS OF BUILDING PRODUCTS INDUSTRY
(DALLAS, TEXAS, May 6, 1997) -- Fibreboard Corporation (AMEX:FBD) today
announced that the company has completed the purchase of the stock of Fabwel,
Inc. for approximately $120 million, subject to post closing adjustments.
Fabwel, headquartered in Elkhart, Indiana, is a major producer and supplier
of customized exterior components for the manufactured housing, recreational
vehicle, building and construction and transportation/cargo industries with
annual revenues of approximately $200 million. The expected incremental
contribution of this acquisition on an annualized basis is $0.45-$0.55 per
share. Fabwel is anticipated to contribute $0.30-$0.35 per share for the
remainder of 1997.
John D. Roach, Fibreboard's Chairman and CEO, said, "The addition of
Fabwel increases Fibreboard's annual revenues by 35-40% and boosts our future
growth potential. Our plans for Fabwel within Fibreboard's Residential
Building Products segment are to achieve expanded penetration of manufactured
housing and recreational vehicle markets while providing the capital to
support increased production. With Fabwel's market leadership, outstanding
management team, continued profitability and strong reputation for quality
customer service, Fibreboard has gained another strong platform for growth."
Fibreboard Corporation, headquartered in Dallas, Texas, is a leader in the
building products industry, manufacturing vinyl, aluminum, steel, fiberglass and
cast stone building products as well as industrial insulation. Building products
manufacturing groups include Norandex Vinyl Products Company, Vytec Corporation,
Fabwel, Stone Products Corporation and Pabco. Its Norandex Distribution Company
operates an extensive multi-state distribution network for building products.
Fibreboard has included forward-looking statements concerning its business
and operations in this press release. These forward-looking statements are
subject to certain risks and uncertainties,
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Fibreboard Corporation to Acquire Fabwel
Page 2 of 2
including those described in its 1996 Annual Report, that could cause actual
results to differ materially from those projected. These risks and
uncertainties include possible changes in the general economy and
economic conditions in various markets served by Fibreboard, the cyclical nature
of the building products industry, adverse weather conditions accentuating the
building product industry's seasonality, the level of housing starts, raw
material pricing, competitive activity and price pressures and the Company's
ability to make additional strategic acquisitions that are accretive to
earnings. Fibreboard expressly disclaims any obligation to release publicly any
updates or revisions to such forward-looking statements to reflect any change in
its expectations.
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