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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 20, 1998
UNIVERSAL FOREST PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
MICHIGAN 000-22684 381465835
(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
2801 EAST BELTLINE, N.E., GRAND RAPIDS, MICHIGAN 49525
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(616) 364-6161
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 20, 1998, the Registrant, through a wholly-owned subsidiary,
Universal Forest Products Southwest Co., Inc., closed an agreement to purchase
certain assets of Advanced Component Systems, Inc., T.F. Investments, L.L.C. and
F.T.G. Leasing, Inc. (together, "ACS") for approximately $27.0 million in cash.
The transaction was effected pursuant to a definitive Purchase Agreement dated
February 18, 1998. The determination of the purchase price paid by the
subsidiary of the Registrant resulted from extensive negotiations between it and
ACS.
ACS manufactures and distributes roof trusses, floor trusses, and
lumber to builders of residential housing and commercial structures in the
Denver and surrounding metropolitan area. The Registrant intends to continue to
employ all of the assets acquired from ACS in the business.
The following assets were acquired (represents historical net book
values of ACS):
Accounts receivable $ 5,635,788
Inventory 3,944,359
Prepaids and other assets 60,504
Property, plant and equipment, net 4,987,255
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Total assets acquired $14,627,906
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The funds used to purchase the assets were obtained through credit
facilities maintained by the Registrant with Michigan National Bank and First
Chicago NBD. Prior to the consummation of the transaction, there were no
material relationships between the Registrant, its subsidiary and ACS, or any of
its respective affiliates, directors, officers or associates of any such
directors or officers.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Financial statements of ACS are not required to be filed
pursuant to Regulation S-X.
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(b) Pro Forma Financial Information.
Pro forma financial information is not required to be filed
pursuant to Regulation S-X.
(c) Exhibits.
2.1 Purchase Agreement dated as of February 18, 1998, by and
among Universal Forest Products Southwest Company, Inc., Advanced
Component Systems, Inc., T.F. Investments, L.L.C., and F.T.G. Leasing,
Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
UNIVERSAL FOREST PRODUCTS, INC.
By: /s/ Elizabeth A. Bowman
---------------------------------
Elizabeth A. Bowman
Chief Financial Officer
Date: May 1, 1998
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EXHIBIT INDEX
Exhibit 2.1 - Purchase Agreement dated as of February 18, 1998, by and
among Universal Forest Products Southwest Company, Inc.,
Advanced Component Systems, Inc., T.F. Investments, L.L.C., and
F.T.G. Leasing, Inc.
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EXHIBIT 2.1
PURCHASE AGREEMENT
THIS AGREEMENT made as of the 18th day of February, 1998
between UNIVERSAL FOREST PRODUCTS SOUTHWEST COMPANY, INC., a Michigan
corporation of 2801 East Beltline, N.E., Grand Rapids, Michigan 49525 (the
"Buyer"), and ADVANCED COMPONENT SYSTEMS, INC., T.F. INVESTMENTS, L.L.C., and
F.T.G. LEASING, INC. (individually, "Advanced," "TFI," and "FTG," collectively
the "Seller"). This Agreement is based upon the following:
1. Seller is in the business of designing, engineering,
manufacturing, and/or selling various building materials and
components, including but not limited to wood trusses and
similar products, from its facility located in Lafayette,
Colorado (the "Business").
2. Buyer desires to purchase from Seller substantially all of
Seller's assets used in connection with the Business, on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises, the mutual promises
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, the parties agree as follows:
1. PURCHASE AND SALE OF ASSETS. On the Closing Date, as
hereinafter defined (or on such later date as may be
explicitly provided in this Section 1), Seller shall sell,
transfer, and convey to Buyer, free and clear of all liens and
encumbrances (other than those arising under the Assumed
Liabilities, as hereafter defined), by appropriate bill of
sale, assignment, and/or other instrument, all of the
following (the "Purchased Assets"):
A. All machinery, equipment, furniture, tools, and
similar property, used or useable in connection with
the Business, including but not limited to the
property described on Appendix 1.A, (the "Machinery
and Equipment"), together with an assignment of all
warranties related to such property.
B. All accounts receivable (the "Accounts").
C. All inventory (including raw materials,
work-in-process, finished goods, and connector
plates) (the "Inventory") and supplies, together with
an assignment of all warranties related to such
property.
D. Customer lists, vendor lists, price lists, job
costing software and hardware, customer order files,
blueprints, and drawings, and similar property, but
only to the extent owned and transferable by Seller.
E. All contract rights, general intangibles, claims and
similar property (the "Contract Rights"), to the
extent owned and transferable.
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F. Patents, trademarks, applications for same, and
similar property.
G. The name "Advanced Component Systems, Inc."
H. All telephone and facsimile numbers owned by or
assigned to the Seller.
I. Buyer desires to acquire the real estate located in
Boulder County, Colorado and generally known as 1201
South Boulder Road, Lafayette, CO 80026 and the
improvements and fixtures thereon ( the "Real
Estate"). TFI shall sell, transfer, and convey the
Real Estate to Buyer under separate Commercial
Contract to Buy and Sell Real Estate in the form
attached hereto as Appendix 1.I. ("Real Estate
Contract") and which shall be executed by Buyer and
TF at Closing (defined below). The purchase price for
the Real Estate shall be as agreed by the parties by
no later than March 31, 1998; provided that if the
parties are unable to agree, the purchase price for
the Real Estate shall be the fair market value of the
Real Estate as determined prior to Closing by an MAI
appraiser agreed to by the parties by no later than
April 3, 1998; provided further that if the parties
are unable to agree to an appraiser, the purchase
price shall be the fair market value as determined in
the appraisal of the Real Estate by William James
completed in 1996.
J. Utility deposits.
K. Business licenses, if any, which may have been issued
to Seller to the extent transferable.
L. All permits, business licenses, and similar property,
to the extent transferable.
M. All other assets owned by or in the possession of
Seller and used or usable in connection with the
Business, excepting only cash and certain other
assets listed on Appendix 1.M; provided that the
parties may further agree in writing prior to Closing
to additions to Appendix 1.M.
2. ASSUMED LIABILITIES.
A. Buyer agrees to assume or pay:
(i) Post-closing invoices for Inventory and
supplies ordered by Seller in the ordinary
course of business, but not yet received by
Seller as of the Closing;
(ii) Seller's customer orders entered in the
ordinary course of business; and
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(iii) The obligations arising under any
agreements assumed as provided in Section
2.B. (the "Assumed Liabilities").
Other than as expressly set forth in this Section 2,
Buyer assumes no liabilities of Seller relating to or
arising out of Seller's operation of the Business
prior to the Closing Date.
B. Within fourteen (14) days of execution of this
Agreement, Seller shall make available for inspection
and review by Buyer executory contracts (not
including customer orders) and leases, and shall
deliver to Buyer a written summary of all such
contracts and leases. Buyer shall advise Seller in
writing, not more than fourteen (14) days after
receipt of such summary, of its intention to assume
or reject each such obligation. Any obligation
properly disclosed by Seller as provided in this
Section 2.B. and not rejected by Buyer within
fourteen (14) days of disclosure as above provided
shall be deemed assumed by Buyer.
C. Within fourteen (14) days of execution of this
Agreement, TFI shall deliver to Buyer for its
inspection and review a copy of a title commitment
issued by First America Heritage Title Insurance
Company and a copy of the November 6, 1996 survey of
the Real Estate showing improvements, easements, and
the metes and bounds description of the Real Estate,
and a certification of Seller as to any new
improvements or easements from the date of the survey
to the date of its delivery to Buyer.
3. PURCHASE PRICE AND PAYMENT. In exchange for the transfer by
Seller to Buyer of the Purchased Assets, Buyer will pay to
Seller at Closing (or later if provided hereinbelow) the sum
of the following (the "Purchase Price"):
A. Seventeen Million Five Hundred Ten Thousand Dollars
($17,510,000.00);
B. The face value of the Accounts as of the Closing
Date;
C. The value of Inventory calculated as follows: (i)
commodity lumber materials in the possession of
Seller and work in process shall be valued as of the
day prior to Closing, at the lower of cost or market
(with market determined by the most current Random
Lengths published prior to Closing, plus an
applicable freight adder), on an item-by-item basis;
(ii) non-commodity wood inventory in the possession
of Seller, at the lower of cost or market (with
market determined by the price quote for each type of
inventory by the seller of such inventory on the
business day immediately preceding Closing); (iii)
prepaid inbound commodity lumber material, metal
hangers and connector plates, and other non-commodity
material as described on attached Appendix 3.C.,
whether in Seller's possession or prepaid inbound,
shall be valued at cost; (iv) finished goods (which
are completed but not yet shipped) shall be
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valued at 75% of net selling price to the customer.
For purposes of this subsection, net selling price
shall mean the invoice price less payment discounts,
rebates, promotions, and all similar credits to the
customer; and commodity lumber shall mean those types
of wood material which are included within Random
Lengths pricing.
That portion of the Purchase Price attributable to Inventory
shall be reserved by Buyer, and shall be paid (in whole or in
part) to Seller thirty (30) days after the Closing Date, after
deducting prompt payment discounts actually taken from the
Accounts. That portion of the amount described in Section 3.A.
attributable to the Real Estate (as the parties may agree)
shall be paid on June 2, 1998 upon delivery to Buyer of the
deed and title insurance to the Real Estate.
4. NON-COMPETITION AND EMPLOYMENT AGREEMENTS. In consideration of
a portion of the Purchase Price and the payments separately
provided in the Non-Competition and Employment Agreements,
including the incentive compensation, Seller shall cause
Stephen Anderson, Jeff Higgs, and Brian Volkman to each
deliver to Buyer Non-Competition and Employment Agreements at
Closing, in substantially the form set forth in Appendix 4.
Advanced shall also agree to not compete with Buyer for five
(5) years and within five hundred (500) miles of any of
Buyer's locations. The parties acknowledge and agree that the
value of the assets purchased hereunder is enhanced by such
Non-Competition and Employment Agreements, and that delivery
of same is an integral part of this Agreement.
5. CLOSING AND PRE-CLOSING INSPECTION.
A. The Closing of the transaction contemplated by this
Agreement (the "Closing") shall be held at a time and
place which are mutually agreeable to the parties,
but in no event later than April 30, 1998 (the
"Closing Date"). At the Closing, the parties to this
Agreement will execute and deliver to each other the
instruments, documents, certificates, and payments
provided for herein.
B. Immediately prior to Closing, at times agreed by the
parties, Buyer shall be permitted to conduct a final
physical inspection and inventory of the Purchased
Assets and the Real Estate.
6. DELIVERIES AT CLOSING.
A. Seller's Deliveries. At the Closing, or later if
explicitly provided in this Section 6, Seller shall
execute, acknowledge, and deliver to Buyer:
(1) A duly executed bill of sale which transfers
and conveys title to the Purchased Assets
other than the Real Estate (free and clear
of all liens
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and encumbrances other than those arising
under the Assumed Liabilities) to Buyer.
(2) A certificate of title endorsed to Buyer
with respect to each vehicle and trailer
which is, or is required to be, titled, with
an appropriate lien release for each
certificate, if any lien is noted on such
certificate.
(3) The Real Estate Contract and a Lease of the
Real Estate for the period of time from the
Closing to June 2, 1998, in the form
attached as Appendix 6.A.(3) the ("Lease").
(4) To the extent assumed by Buyer:
(i) Assignments of any leases for
Machinery and Equipment; and
(ii) Assignments of any Contract Rights to
the extent assignable.
(5) "No lien certifications" as follows:
(i) Colorado Uniform Commercial Code
searches (certified through the Closing
Date, or the latest date prior to the
Closing Date to which the Secretary of State
will so certify, the "Certification Date")
and, to the extent liens are disclosed by
such searches, originally executed lien
termination statements or discharges, or a
payoff statement and instructions from any
creditor holding a lien, with respect to
each and every lien described in such
searches, other than a lien arising under an
Assumed Liability.
(ii) In the event the Uniform Commercial
Code searches are not dated through the
Closing Date, Seller's certification that no
liens were created or permitted between the
Certification Date and the Closing Date.
(6) Evidence of the payment of all taxes which
are a lien or claim, or both, against the
Purchased Assets; or alternatively, a credit
will be allowed against the Purchase Price
for the accrual of such items through the
Closing Date. With respect to sales and/or
transfer taxes or levies on the Purchased
Assets or the Real Estate, Seller shall pay
one half (1/2) of such taxes or levies at
Closing.
(7) Seller shall cause to be executed and
delivered the Non-Competition and Employment
Agreements.
(8) Certified copy of the Resolutions of the
Boards of Directors of Advanced and FTG, and
the consents of all Shareholders of
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Advanced and FTG, and the members of TFI,
authorizing this transaction.
(9) Settlement statements and other customary
Closing documents.
B. Buyer's Deliveries at Closing. At the Closing, Buyer
shall execute, acknowledge, and deliver:
(1) That portion of the Purchase Price which is
payable at Closing in cash or certified
funds, cashiers check or wire transfer to
Seller's designated account.
(2) One or more assumptions of liabilities under
which Buyer assumes all of the Assumed
Liabilities.
(3) Certified copy of the Resolution of the
Board of Directors of UFPI and the
Shareholder of Buyer, authorizing the
transaction, the Real Estate Contract and
the Lease.
(4) Certificates of Good Standing issued by the
Michigan Secretary of State, and a
certificate of Buyer's registration to do
business in Colorado.
(5) The Real Estate Contract and Lease.
(6) Settlement statements and other customary
Closing documents.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller
(and each of them individually) represents, warrants and
covenants with and to Buyer and shall certify to Buyer at
Closing that:
A. Advanced and FTG are corporations, and TFI is a
limited liability company, each of which is, duly
organized, validly existing, and in good standing
under the laws of the State of Colorado, with full
power to own property and to transact business as it
is now being transacted. Each Seller has full
authority of its Board of Directors or other managing
power to enter into and perform this Agreement in
accordance with its terms, without causing the breach
or default of any obligation or commitment of each
Seller to any other person. In addition, within
fourteen (14) days of execution of this Agreement,
each Seller shall obtain from its Shareholders or
Members (as the case may be) and its Board of
Directors or managing power written consents to and
resolutions approving of the sale contemplated in
this Agreement, and shall promptly provide copies of
such consents and resolutions to Buyer.
B. Seller is not a party to any agreement, contract, or
commitment, nor otherwise
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bound under any commitment or obligation, with or in
favor of any other person or party which conveys to
such person or party the right to purchase the
Purchased Assets, or in the case of TFI, the Real
Estate, other than sales of Inventory in the ordinary
course of business.
C. Other than as described in Appendix 7.C., Seller's
interest in the Purchased Assets will be transferred
to Buyer at Closing free and clear of all liens,
encumbrances, charges and adverse claims, contractual
or otherwise, except for the Assumed Liabilities.
Other than the Assumed Liabilities, Seller shall pay
or make appropriate accruals so as to pay all of its
liabilities in full as they fall due.
D. Other than as described in Appendix 7.D., there are
no suits, actions, or proceedings pending, or to the
best of Seller's knowledge and belief, threatened by
any person or party, including actions by any
governmental authority or agency, against or
involving the Purchased Assets or the operation of
the Business, and in the case of TFI, against or
involving the Real Estate.
E. During the interim period between the signing of this
Agreement and the Closing:
(1) Seller will continue to operate the Business
and maintain the Purchased Assets and Real
Estate in the same manner as Seller has
operated the Business and maintained the
Purchased Assets in the ordinary course, and
shall not without first obtaining the
written consent from Buyer enter into a new
contract or renew an existing contract
except for sales and purchases of Inventory
in the ordinary course of business in
accordance with ordinary business terms and
prices. Notwithstanding the foregoing, if
business necessity requires Seller to enter
into an agreement before it can obtain
Buyer's consent, Seller may do so subject to
Buyer's right to refuse to assume any such
contractual obligation.
(2) Seller will not commit any act which will
materially impair the going concern value of
the Business and Seller will not make any
assignment or grant of security interest or
other lien which will encumber the Purchased
Assets. For purposes of this Section, the
impairment shall be measured as if Seller is
a stand-alone business, and the materiality
of such impairment shall be based on Buyers
method of valuing Seller.
(3) Inventory shall be in good and merchantable
condition and be of the species, grade and
quantities normally used in operation of the
Business;
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(4) Seller shall maintain its financial books
and records in accordance with Generally
Accepted Accounting Principles (GAAP). All
assets, including the Inventory, shall be
accounted for in accordance with GAAP;
(5) Since at least January 1, 1997, Seller has
not transferred any fixed asset(s) in excess
of the aggregate amount of One Hundred
Thousand Dollars ($100,000.00), other than
Inventory sold in the ordinary course of
business.
F. Except as provided in Appendix 7.F., Seller has not
received any notices (written or oral) from any third
party alleging that Seller has violated any term of a
lease or contract, nor has Seller received any
notices from any governmental entity stating that it
is or may be in violation of any statute, ordinance,
regulation or governmental order related to the
Purchased Assets and the Real Estate. To the best of
Seller's knowledge, which shall include the knowledge
of the Officers and Directors of Advanced, formed
during the reasonable conduct of the ordinary course
of business, Seller's records are materially true,
accurate, complete and in compliance with all
applicable laws and governmental orders, and Seller
has materially complied with all laws, regulations,
ordinances, and other legal requirements relating to
the construction, development, and operation of the
Business, including pollution or protection of the
environment, including laws relating to emissions,
discharges, releases of pollutants, contaminants or
hazardous or toxic materials or wastes into ambient
air, surface water, ground water or land, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes.
G. Seller has or will timely file all appropriate
returns, and except as provided with regard to the
sharing of sales and real estate transfer taxes and
levies, has paid or shall pay prior to Closing, all
personal property, income, withholding, sales, use,
business activity, FICA, FUTA, unemployment, and all
other taxes due prior to the Closing Date relating to
the Purchased Assets and the operation of the
Business.
H. All utility bills, including but not limited to gas,
electric, telephone, fuel oil, water and sewer bills,
and assessments shall be paid by Seller through
Closing. Seller shall arrange with all utility
providers to prepare cut-off statements as of the
Closing Date to be billed to Seller. Buyer shall
arrange for billing to be changed to Buyer after the
Closing Date.
I. Seller shall make available for inspection and review
by Buyer, as soon as possible after the date of this
Agreement, but in no event later than fourteen
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(14) days thereafter, copies of all agreements which
constitute Contract Rights and all real estate
leases.
J. Other than Rocky Mountain Business Brokers, whose fee
shall be paid by Seller, Seller has not employed a
broker or finder in connection with this transaction.
K. Seller has no knowledge or notice of any future loss
of customers or future business or of any business
conditions of Seller which may materially adversely
affect the Business subsequent to the Closing Date.
L. Seller shall pay prior to Closing, or accrue for
payment when due, all employee wages, benefits,
profit sharing and/or pension benefits, vacation pay,
workers compensation premiums, retirement agreements,
employment agreements or any payment whatsoever
accrued prior to the Closing Date and owed the
employees. Seller will indemnify and hold Buyer
harmless from any such claim made by any employee or
former employee regarding the above listed items
accruing prior to the Closing Date, including payment
of costs and attorney's fees which Buyer may incur in
defending such claim, provided that Buyer promptly
tenders defense of such actions to Seller.
M. Other than ancillary activities of FTG and/or TFI,
for at least the past five (5) years, the Business
has been conducted only under the name "Advanced
Component Systems, Inc."
N. Other than the individuals identified in Section 4
above, who shall enter into Non-Competition and
Employment Agreements with Buyer, there are no
present key employees who by competing alone with the
Business within six (6) months after the Closing
would materially reduce the value of the Business;
provided, however, that if Buyer fails to hire or
terminates any present employee of Seller, Seller
makes no such representation concerning such
employee.
O. Except as provided in Appendix 7.O., the Accounts are
free from claims for credits, defects, and all other
claims (other than early payment discounts, which are
subject to Section 3). In the event any Account is
subject to any such claim, or is not paid within one
hundred twenty (120) days of invoice, Buyer may
tender such Accounts to Seller and Seller shall
reimburse Buyer for such claim or the value of such
Account and actual costs incurred to attempt to
collect such Account. Buyer shall cooperate with
Seller regarding compliance with mechanics lien laws.
P. Seller will pay through the Closing Date when due all
accrued but unpaid taxes which become due in the
future, to the extent not otherwise paid through
credits against the Purchase Price at Closing as may
be agreed by the
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parties.
Q. Except for ANSI-TPI95 requirements, to the best of
Seller's knowledge, its engineering, designs,
drawings, plans and specifications used by the
Business were in compliance with applicable code
rules and regulations at the time used, but Seller
makes no representation or warranty that products
made post-closing according to such engineering,
designs, drawings, plans and specifications are free
from defect or non-compliance with code, nor that the
engineering, designs, drawings, plans and
specifications of its customers were or are free from
defect or non-compliance with code.
8. COVENANTS, REPRESENTATIONS AND WARRANTIES OF BUYER.
A. Buyer covenants that it will promptly proceed with
and diligently pursue to conclusion, before one (1)
day prior to the Closing Date, completion of all
inspections, physical inventories, and audits of the
Purchased Assets and Real Estate occupied by the
Business that it deems necessary.
B. Buyer represents and warrants to Seller and shall
certify to Seller at Closing that Buyer is a
corporation, duly organized, validly existing and in
good standing under the laws of the State of
Michigan, has all necessary power to own properties
and carry on its business as now owned and operated
by it, and has full, complete, and unrestricted power
and authority to enter into and consummate this
Agreement. Within fourteen (14) days of this
Agreement, Buyer shall obtain approval from its
shareholder and the UFP Board of Directors to
consummate the transaction contemplated by this
Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for claims
arising under ERISA and state, Federal or local environmental
law or regulation (which shall be subject to their own
applicable statutes or limitations), the representations and
warranties of the parties to this Agreement shall survive the
Closing for a period of three (3) years, and the act of
Closing shall not bar either party from bringing a claim
against the other based upon breach of a representation or
warranty. Any such claim shall be made within ninety (90) days
of discovery of such claim.
10. CONDITION OF THE PURCHASED ASSETS.
A. Risk of Loss. The parties acknowledge that Buyer
shall have no insurable interest, nor any duty to
insure, the Purchased Assets and Real Estate prior to
the Closing Date, and Seller shall have no such duty
after the Closing to insure the Purchased Assets or
the Real Estate, although TFI may insure the Real
Estate during the Lease.
B. Damage. In the event of loss or damage to the
Purchased Assets or Real
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Estate by fire or other casualty between the date of
this Agreement and the Closing, Seller shall
immediately give notice of loss or damage to Buyer.
Buyer shall have the right within ten (10) days after
receiving such notice from Seller, to terminate this
Agreement if the damage exceeds Two Million Dollars
($2,000,000.00) and is not insured, or whether
insured or not, will result in substantial
discontinuance of the Business for more than ten (10)
consecutive days. If such loss is not insured and
exceeds $500,000, Seller shall have the right to
terminate this Agreement on 10 days written notice,
unless Buyer agrees to Closing and deduct any unpaid
portion from the Purchase Price at Closing. If
neither Buyer nor Seller terminates this Agreement,
then Buyer may elect to have Seller repair the damage
or to waive the damage and take assignment of any
insurance proceeds at Closing by giving notice of
such election to Seller within thirty (30) days of
receipt of Seller's notice of loss or damage or prior
to Closing, whichever occurs first. If Buyer elects
to have Seller repair the damage, such repairs shall
be completed within ninety (90) days of such
election, the Closing shall not be extended nor
delayed and Buyer may withhold from the Purchase
Price at Closing the unpaid cost of such repairs, as
determined by Seller's property and casualty
insurance carrier, and shall pay such amount to
Seller upon timely completion of such repairs. If
such repairs are not timely completed, Seller shall
be paid that portion of such funds as are allocable
to the cost of repairs then made but shall forfeit
the balance of such funds necessary to complete such
repairs.
11. CONDITIONS PRECEDENT TO PERFORMANCE BY BUYER. The obligation
of Buyer to consummate the sale contemplated by this Agreement
is subject to the fulfillment, prior to Closing, of the
following conditions, which Buyer may waive (which shall
constitute a waiver of any claim by Buyer for breach of any
waived condition) in writing:
A. Each of the representations and warranties of Seller
shall be true and correct as though made again as of
the Closing Date, and no representation or warranty
shall be materially violated or breached by Seller
prior to the Closing Date.
B. Seller shall have performed and complied with all
covenants, agreements, obligations, and conditions
required by this Agreement to be performed or
complied with by Seller as of the Closing Date.
C. There shall be no material adverse change in the
Purchased Assets, the Business or the Real Estate,
and no encumbrance or lien upon title to the
Purchased Assets or the Real Estate shall arise from
the date of this Agreement to the Closing Date.
D. No action or proceeding to restrain, prohibit or
declare illegal the transaction
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contemplated by this Agreement shall be pending or
threatened. No order restraining or prohibiting the
transaction contemplated by this Agreement shall
be issued by any public authority, governmental
agency or court. No attachment, garnishment, levy or
lien shall be filed or shall be in effect regarding
the transaction contemplated by this Agreement, the
Purchased Assets, or the Real Estate; except that if
there is such a garnishment, levy or lien not in
excess of Two Hundred Fifty Thousand Dollars
($250,000.00), Buyer shall close this transaction
provided Seller, at Seller's election, has either
provided a payment and performance bond or reduced
the Purchase Price in an amount equal to such
garnishment, levy, or lien.
E. Seller shall have made the Business, the Purchased
Assets and the Real Estate accessible to Buyer and
its agents such that Buyer was able to undertake the
inspections, physical inventories, audits and
environmental assessments of the Purchased Assets and
the Real Estate which it performs pursuant to this
Agreement, or which it performs to verify the
representations and warranties of Seller, including
environmental inspection and audit to a degree deemed
appropriate by Buyer.
F. The Non-Competition and Employment Agreements
described in Section 4 delivered to Buyer at the
Closing.
G. The consummation of the transaction contemplated by
this Agreement will not violate any applicable
anti-trust law or regulation, including
Hart-Scott-Rodino. Seller shall timely make any
filing, and provide any information necessary to such
filing, at its expense, and Buyer shall cooperate
with the Seller in prepaying any such filing and
shall pay all filing fees imposed by the FTC or other
governmental authorities, if any.
12. CONDITIONS PRECEDENT TO PERFORMANCE BY SELLER. The obligation
of the Seller to consummate the sale contemplated by this
Agreement is subject to the fulfillment, prior to Closing, of
the following conditions, which Seller may waive in writing:
A. Each of the representations, covenants, and
warranties of Buyer shall be true and correct as
though made again as of the Closing, and no
representation, covenant, or warranty shall be
violated or breached by Buyer prior to the Closing
Date.
B. Buyer shall have performed and complied with all
covenants, agreements, obligations and conditions
required by this Agreement to be performed or
complied with by Buyer as of the Closing Date.
13. SELLER'S EMPLOYEES.
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A. Seller shall terminate all employees prior to the
Closing Date. All claims of such employees, including
for wages, benefits, profit sharing, vacation pay,
workers compensation benefits, retirement agreements,
or any other claim whatsoever arising from work
performed or incidents occurring before the Closing
Date shall be the Seller's exclusive liability.
Seller shall indemnify Buyer against any such claim,
including costs and attorneys' fees incurred by Buyer
in any defense thereof, provided Buyer promptly
tenders defense of such claims to Seller.
B. Buyer shall have the opportunity to interview and
select employees to be hired as of the Closing Date.
14. BUYER'S RIGHT TO INSPECT AND AUDIT. Buyer shall have the right
to inspect the Purchased Assets and audit the books and
records of the company to verify their condition and the
condition of the Purchased Assets, the Real Estate and the
Business. All inspections, audits, and appraisals requested by
Buyer shall be at Buyer's expense, and Buyer shall indemnify
Seller for any costs of repair or replacement of any property
damaged in such inspection. Seller shall give all reasonable
assistance to Buyer, or Buyer's agents, in completing the
inspections, audits and appraisals. Buyer shall not
unreasonably interfere with the Business nor the employees of
Seller. Additionally, Buyer shall have the right to conduct
any environmental inspections of the Real Estate as it deems
necessary. In the event that Buyer's inspection reveals
contamination of the Real Estate, Buyer may request that
Seller remediate the contamination pursuant to a plan of
remediation acceptable to Buyer and at Seller's expense, but,
if the estimated cost of cleanup exceeds One Hundred Thousand
Dollars ($100,000.00), or the estimated time to complete such
remediation exceeds sixty (60) days, either party may
terminate this Agreement.
15. BUYER'S TRANSITION TEAM. Immediately upon Seller's acceptance
of this Agreement, and continuing thereafter until the Closing
Date, Seller shall make its books, records, employees,
officers and office space available to Buyer for the purpose
of allowing Buyer to become familiar with all aspects of the
Business, including Seller's customers, vendors, and trade
practices; provided, however, that Buyer shall not
unreasonably interfere with the Business, including Seller's
customers, vendors and trade practices. Such availability
shall be in addition to, and not in substitution for, Buyer's
right to inspect and audit. Unless Closing occurs, no
competitive use will be made by Buyer of any nonpublic
information concerning Seller obtained during the transition,
and all such information shall be treated strictly
confidentially. Prior to contacting any customer or vendor of
Seller, Buyer shall advise Seller of the names of such vendor
and/or customer so as to allow Seller to apprise Buyer of any
specific business issues with any such person and to allow
Seller to make appropriate introductions of Buyer to such
person.
16. INDEMNIFICATIONS AND GUARANTIES.
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A. Seller and its Shareholders shall indemnify and hold
Buyer and UFP harmless for any and all claims,
demands, actions, suits, proceedings, damages,
liabilities, costs, and expenses including reasonable
attorney's fees which relate to the Business or any
of its facilities arising prior to the Closing Date.
B. Buyer shall indemnify and hold Seller and its
shareholders harmless for any and all claims,
demands, actions, suits, proceedings, damages,
liabilities, costs, and expenses including reasonable
attorney's fees which relate to the Business or any
of its facilities arising on or after the Closing
Date.
D. Whenever Seller or Buyer is required by this
Agreement to make payment or provide indemnity, or in
the event of a breach of any warranty, representation
or covenant of this Agreement, such obligation or
liability shall be guaranteed by Seller's
Shareholders and Members (as the case may be) or
Universal Forest Products, Inc.
("UFP"), respectively.
E. If any third party shall assert a claim against Buyer
that, if successful, might result in a breach or
default by Seller of this Agreement, Seller shall be
given prompt written notice thereof and shall have
the right to participate in the defense thereof and
to have such claim defended, at its own expense, by
counsel to be selected by Seller, and Buyer agrees
not to compromise or settle such claim without the
prior agreement of Seller. If any third party shall
assert a claim against Seller that, if successful,
might result in a breach or default by Buyer of the
Agreement, Buyer shall be given prompt written notice
thereof and shall have the right to participate in
the defense thereof and to have such claim defended,
at its sole expense, by counsel to be selected by
Buyer, and Seller agrees not to compromise or settle
such claim without the prior agreement of Buyer.
17. DEFAULTS AND REMEDIES. Time is of the essence hereof. If any
note or check received herein or any other payment due herein
is not paid, honored, or tendered when due, or if any other
material obligation herein is not performed as herein
provided, there shall be the following remedies:
A. If Buyer is in Default. Seller may elect to treat
this Agreement as terminated, in which event all
payments and things of value received herein shall be
forfeited by Buyer and retained by Seller, and Seller
and Buyer shall then be released from any further
obligations herein. In the alternative, Seller may
elect to treat this Agreement as being in full force
and effect, and Seller shall have the right to an
action for specific performance or damages, or both.
In addition, Buyer shall be prohibited from
soliciting sales from any of Advanced's existing
customers, or hiring any of Advanced's existing
employees. This prohibition on competition shall
extend to the state of Colorado for a period of three
(3) years from the date of Buyer's default as
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herein provided.
B. If Seller is in Default. Buyer may elect to treat
this Agreement as terminated, in which case all
payments and things of value received herein shall be
returned to Buyer, and Buyer may recover such damages
as may be proper. In the alternative, Buyer may elect
to treat this Agreement as being in full force and
effect, and Buyer shall have the right to an action
for specific performance or damages, or both.
C. Fees and Costs. Anything to the contrary herein not
withstanding, in the event of any litigation or other
formal dispute resolution proceedings arising out of
or related to this Agreement, the court or tribunal
shall award to the prevailing party all reasonable
costs and expenses, including reasonable attorneys
fees.
18. MISCELLANEOUS.
A. Entire Agreement. This document and the exhibits and
appendices hereto, including the Non-Competition and
Employment Agreements set forth in Appendix 4, are
herein called the Agreement and constitute the entire
agreement between the parties.
B. Amendments. This Agreement may be amended or modified
only by a document in writing, signed by each of the
parties to this Agreement.
C. Successors and Assigns. This Agreement shall bind and
benefit the parties and their respective successors
and assigns.
D. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State
of Colorado.
E. Effective Date. This Agreement shall be effective as
of the date set forth in the first paragraph to this
Agreement.
F. Waiver. The failure of a party to insist upon strict
performance of any of the terms or provisions of this
Agreement or to exercise any option, right or remedy
herein contained or available pursuant to applicable
law, shall not be construed as a waiver or
relinquishment of such term, provision, option, right
or remedy, but the same shall continue and remain in
full force and effect. No waiver by a party of any
term or provision hereof shall be deemed to have been
made unless expressed in writing and signed by such
party.
G. Severability. If any provision of this Agreement or
its application to any party or circumstances shall
be determined by any court of competent
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jurisdiction to be invalid or unenforceable to any
extent, the remainder of this Agreement shall not be
affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent
permitted by law.
H. Counterparts. This Agreement and any attached
Consents or Exhibits requiring signatures may be
executed in counterparts, but all counterparts shall
constitute but one and the same document.
[Signatures follow on separate page.]
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Buyer:
UNIVERSAL FOREST PRODUCTS
SOUTHWEST COMPANY, INC.
By: Elizabeth A. Bowman
------------------------
Its: Treasurer
-----------------------
Seller:
ADVANCED COMPONENT
SYSTEMS, INC.,
By: Brian Volkman
------------------------
Its: Vice President
-----------------------
T.F. INVESTMENTS, L.L.C.
By: Brian Volkman
------------------------
Its: Member/Manager
-----------------------
F.T.G. LEASING, INC.
By: Jeff Higgs
------------------------
Its: Vice President
-----------------------
GUARANTORS:
UNIVERSAL FOREST PRODUCTS, INC.
By: Elizabeth A. Bowman
------------------------
Its: Treasurer
-----------------------
By: Stephen Anderson
------------------------
STEPHEN ANDERSON
By: Jeff Higgs
------------------------
JEFF HIGGS
By: Brian Volkman
------------------------
BRIAN VOLKMAN
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