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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) June 12, 1998
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AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-25634 87-0365268
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
755 Boardman-Canfield Road, Building G West, Boardman, Ohio 44512
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 965-9910
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NOT APPLICABLE.
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 12, 1998, American Architectural Products Corporation, a
Delaware corporation (the "Company"), acquired from Louisiana-Pacific
Corporation ("Louisiana-Pacific") certain assets which previously constituted an
operating division of Louisiana-Pacific known as Weather-Seal ("Weather-Seal").
The acquisition of Weather-Seal was consummated by Weather-Seal Acquisition
Corporation, a wholly owned subsidiary of the Company. The aggregate
consideration paid to Louisiana-Pacific in connection with this transaction
consisted of the following: (a) approximately $32,500,000 in cash (including a
$1,000,000 deposit paid upon execution of a letter of intent in February 1998);
(b) a promissory note in the principal amount of $7,500,000 bearing interest at
a rate per annum equal to LIBOR plus 1.5% and due and payable in full upon the
earlier of (i) an offering of common stock by the Company in an amount equal to
or greater than $15,000,000, (ii) a debt offering by the Company in an amount
equal to or greater than $50,000,000, or (iii) June 30, 1999; and (c) the
assumption of certain liabilities in the approximate aggregate amount of
$2,585,000 (estimated as of the closing date). The primary business of
Weather-Seal is the manufacture and distribution of a wide range of wood and
vinyl windows and doors, insulated glass and aluminum and vinyl extrusions
(including related research, engineering, customer service, sales and trucking
operations).
A portion of the cash consideration paid by the Company in
connection with the acquisition of Weather-Seal was provided pursuant to loans
made under a Credit Agreement dated as of June 9, 1998 (the "Credit Agreement")
among the Company, certain subsidiaries of the Company, the institutions from
time to time party thereto as lenders (the "Lenders") and BankBoston, N.A., as
agent for the Lenders. Under the Credit Agreement, the Lenders have agreed to
provide up to $25 million of financing to the Company on a secured basis. As of
the date of closing of the Weather-Seal acquisition, the Lenders under the
Credit Agreement consisted solely of BankBoston, N.A.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Pursuant to Item 7(a)(4) of Form 8-K, any required financial statements of
Weather-Seal, and any required pro forma financial information, will be
filed pursuant to an amendment to this Form 8-K as soon as practicable
(but not later than 60 days following the date on which this report was
required to have been filed).
(b) PRO FORMA FINANCIAL INFORMATION.
See (a) above.
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(c) EXHIBITS.
2 Asset Purchase Agreement dated as of June 5, 1998 by and
between Louisiana Pacific Corporation and Weather-Seal
Acquisition Corporation
(The text of all Schedules and Exhibits to the
aforementioned Asset Purchase Agreement have been
omitted in accordance with Item 601(b)(2) of
Regulation S-K, and the Company agrees to furnish
supplementally to the Commission upon request a
copy of any omitted schedule or exhibit)
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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.
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
Date: June 26, 1998 By /s/ Frank J. Amedia
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Frank J. Amedia
President and Chief Executive Officer
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Exhibit 2
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
June 5, 1998, is between Weather-Seal Acquisition Corporation, a Delaware
corporation ("WAC") and a wholly-owned subsidiary of American Architectural
Products Corporation, a Delaware corporation ("AAPC"), and Louisiana-Pacific
Corporation, a Delaware corporation ("L-P").
BACKGROUND INFORMATION
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A. L-P, through its Weather-Seal Division ("WEATHER-SEAL"), is
engaged in, among other things, the business of manufacturing and selling
premium wood, vinyl and vinyl- clad windows and patio doors (the "WEATHER-SEAL
BUSINESS") at and from the facilities listed on Schedule 5.1.4 (the
"WEATHER-SEAL PREMISES").
B. L-P desires to sell the Weather-Seal Business and
substantially all of its assets, properties, rights and interests relating to
the Weather-Seal Business to WAC.
C. Buyer desires to purchase and acquire from L-P, upon the
terms and subject to the conditions set forth in this Agreement, substantially
all of such assets, properties, rights and interests of L-P, in consideration of
certain payments by WAC and the assumption by WAC of substantially all of the
liabilities and obligations of L-P relating to the Weather-Seal Business.
STATEMENT OF AGREEMENT
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NOW, THEREFORE, WAC and L-P hereby agree as follows:
ARTICLE 1. PURCHASE AND SALE OF ASSETS
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1.1 SALE AND TRANSFER OF ASSETS. Upon the terms and subject to
the conditions contained in this Agreement, at the Closing (as defined in
SECTION 4.1) and effective as of the Closing Date (as defined in SECTION 4.1),
WAC shall purchase and acquire from L-P, and L-P shall Transfer (as defined in
SUBSECTION 11.10.9) to WAC, all of L-P's right, title and interest in, to or
arising under the following, and only the following, assets, properties, rights
and interests, as the same shall exist as of the Closing Date, that are owned,
used, occupied or held by or for the benefit of L-P exclusively or primarily in
the operation of the Weather-Seal Business, wherever situated, as described in
this SECTION 1.1, but excluding the Retained Assets (collectively, the "ACQUIRED
ASSETS"):
1.1.1 INVENTORY. The inventories of products, work-in-process,
finished goods, scrap, raw materials, supplies and parts relating
solely to the Weather-Seal Business and
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located at, or in route to or from, the Weather-Seal Premises
(collectively, the "INVENTORY");
1.1.2 ACCOUNTS RECEIVABLE. Accounts receivable relating to the
Weather-Seal Business, existing as of the Closing Date (collectively,
the "ACCOUNTS RECEIVABLE");
1.1.3 PREPAIDS. All prepaid expenses, advance payments,
deposits, surety accounts and similar assets (excluding insurance as
set forth in SUBSECTION 1.2.7 and SECTION 8.9) relating exclusively to
the Weather-Seal Business, including, without limitation, prepaid
deposits with suppliers and utilities;
1.1.4 FIXED ASSETS. The tangible personal property and
equipment of or primarily relating to the Weather-Seal Business,
whether owned, used, occupied or held by or for the benefit of or
otherwise employed in the Weather-Seal Business, and located at, or
normally located at, the Weather-Seal Premises, including, without
limitation, fixtures, machinery and equipment (including, without
limitation, all machinery and equipment under construction), molds,
tools, spare parts, furniture, furnishings, including any and all
tangible personal property listed on SCHEDULE 1.1.4, but excluding
Inventory (collectively, the "FIXED ASSETS");
1.1.5 REAL PROPERTY. All real property described under the
heading "Weather-Seal Business Real Property" on SCHEDULE 5.1.4, and
all improvements and fixtures located thereon (the "WEATHER-SEAL
BUSINESS REAL PROPERTY"), including, without limitation, the following:
(a) the land (the "LAND") more particularly described
on SCHEDULE 5.1.4;
(b) the buildings, structures, fixtures and
improvements and other items of value, including, without
limitation, all of the electrical, heating, plumbing, air
conditioning, air compression, machinery apparatus and
equipment that are located on the Weather-Seal Business Real
Property, and all appurtenances thereto (collectively, the
"STRUCTURES");
(c) the appurtenant rights, privileges and easements
belonging to or appertaining to the Land, including, without
limitation, all rights of way, access rights, surface and
subsurface rights and air rights; and
(d) all right, title and interest in and to all
public and private streets, roads, avenues, alleys or
passageways (open or proposed) on or abutting the Land;
1.1.6 LEASED PROPERTY. All rights and interests under the
lease agreements for the Premises (the "LEASE AGREEMENTS") more
particularly described under the heading "WEATHER-SEAL BUSINESS LEASED
PROPERTY" on SCHEDULE 5.1.4, and all appurtenances thereto (the
Premises subject to the Lease Agreements and all such appurtenances
being collectively referred to in this Agreement as the "WEATHER-SEAL
BUSINESS LEASED
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PROPERTY"; and together with the Weather-Seal Business Real Property,
the "WEATHER-SEAL BUSINESS PROPERTY");
1.1.7 INTELLECTUAL PROPERTY RIGHTS. The rights, title and
interest in and to the inventions, patents, patent disclosures,
trademarks, service marks, trade dress, trade names, brand names,
logos, copyrights, know-how, software, plans, technology, trade
secrets, test procedures, processes, formulae, improvements, technical
and computer data, marketing materials that are used primarily in the
conduct of the Weather-Seal Business, including, without limitation,
the intellectual and intangible property rights described on SCHEDULE
5.1.10, together with the goodwill associated therewith (collectively,
the "INTELLECTUAL PROPERTY RIGHTS");
1.1.8 BUSINESS RECORDS. All books and records relating
exclusively to the Weather-Seal Business (copies of which may be
retained by L-P to the extent L-P has a legitimate need to retain such
copies), including, without limitation, all such files, invoices,
customer lists, forms, accounts, correspondence, production records,
engineering data, procedures, systems, computer software and programs,
data stored in computers, models, instructions, designs,
specifications, equipment lists, parts lists, art work, drawings,
patterns, blueprints, plans, technical, accounting, manufacturing and
procedural manuals, employment records, studies, and any confidential
information that has been reduced to writing or other tangible medium
relating solely to or arising solely out of the Weather-Seal Business;
1.1.9 RIGHTS UNDER CONFIDENTIALITY AGREEMENTS AND WARRANTIES.
All rights, claims and benefits of L-P in, to or under any (a) (i)
employee confidentiality agreements entered into by L-P relating to the
Weather-Seal Business and (ii) confidentiality or secrecy agreements
entered into by L-P with third parties that relate to the use or
disclosure of information, in each case to the extent concerning or
otherwise relating to the Weather-Seal Business; and (b) express or
implied warranties from the suppliers of goods or services relating to
the Weather-Seal Business;
1.1.10 CATALOGS AND ADVERTISING MATERIALS. Subject to SECTION
8.3, all promotional and advertising materials relating exclusively to
the Weather-Seal Business, including, without limitation, all such
catalogs, brochures, plans, supplier lists, manuals, handbooks,
equipment and parts lists, dealer and distributor lists, labels and
packaging materials;
1.1.11 PURCHASE ORDERS. All open purchase and sale orders to
the extent relating to the Weather-Seal Business;
1.1.12 CONTRACTS. All rights, benefits and interests of L-P
under the Contracts (as defined in SUBSECTION 5.1.5);
1.1.13 PERMITS. All licenses, permits, approvals, variances,
waivers or consents (collectively, "PERMITS"), issued by any foreign,
United States, state or local governmental entity or municipality or
subdivision thereof or any authority, department, commission, board,
bureau, agency, court or instrumentality (collectively, "GOVERNMENTAL
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AUTHORITIES"), used solely in, or necessary to the operation of, the
Weather-Seal Business, including the Permits that are listed on
SCHEDULE 5.1.11, unless the Transfer thereof is prohibited by
applicable Law;
1.1.14 OTTAWA 401(K) PLAN. All rights, benefits and interests
of L-P under the Ottawa 401(k) Plan (as defined in SUBSECTION 8.5.4)
maintained for certain Represented Employees at the Weather-Seal
Premises located at Ottawa, Ohio, and all rights, benefits and
interests of L-P, relating only to the Unrepresented Employees eligible
to participate in the L-P 401(k) Plan (as defined in SUBSECTION 8.5.4);
and
1.1.15 MISCELLANEOUS. Except for the Retained Assets (as
defined in SECTION 1.2), the other assets, properties, rights and
interests of L-P otherwise employed exclusively or used exclusively in
or related exclusively to the operation of the Weather-Seal Business,
of every kind, nature and description, whether tangible or intangible,
real, personal or mixed, and wherever situated, including, without
limitation, those assets, properties, rights and interests reflected on
the Last Balance Sheet (as defined in SUBSECTION 5.1.6).
1.2 RETAINED ASSETS. The following assets of the Weather-Seal
Business (the "RETAINED ASSETS") shall be retained by L-P and shall not be
Transferred to WAC on the Closing Date:
1.2.1 CASH. All cash and cash equivalents or similar types of
investments of the Weather-Seal Business, such as certificates of
deposit, treasury bills and other marketable securities.
1.2.2 RETAINED NAMES. The name "Louisiana-Pacific" and other
trademarks or trade names of L-P, including the trade name L-P or any
variation thereof (collectively, the "RETAINED NAMES") and any rights
or interests therein, except that WAC has the right to use the Retained
Names and product designations after the Closing pursuant to SECTION
8.3, but only to the extent provided therein;
1.2.3 RECORDS. All records and other data that relate solely
to the Retained Assets or Retained Liabilities (as defined in SECTION
2.2);
1.2.4 DESIGNATED ASSETS. Any other assets, properties, rights
and/or interests that are specifically described on SCHEDULE 1.2.4;
1.2.5 TAX REFUNDS. All rights to any refunds of all Taxes paid
with respect to the Weather-Seal Business for the period prior to the
Effective Time (as described in SECTION 4.1). For the purposes of this
Agreement "TAX" or "TAXES" means all federal, state, local or foreign
net income, gross income, gross receipts, sales, use, ad valorem,
transfer, real estate and special assessments, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, customs duties
or other taxes, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or
foreign);
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1.2.6 EMPLOYEE PLAN ASSETS. Except as provided in SUBSECTION
1.1.14, the rights of L-P under, and any funds and property held in
trust or otherwise pursuant to, L-P's Employee Plans;
1.2.7 INSURANCE. Any and all policies of insurance with
respect to the Acquired Assets or the Weather-Seal Business that are
presently maintained by or managed through L-P, including, without
limitation, general liability, property, casualty, product liability
and workers' compensation insurance (other than workers' compensation
insurance covering employees at the Weather-Seal Premises that are
insured under any state workers' compensation insurance program); and
1.2.8 ALL OTHER ASSETS. All other assets, properties, rights
and interests of L-P.
1.3 NONASSIGNABLE ITEMS. Anything contained in this Agreement
to the contrary notwithstanding, this Agreement is not an agreement to Transfer
(as defined in SUBSECTION 11.10.6) any Acquired Asset, if an attempted Transfer
thereof, without the Consent (as defined in SUBSECTION 5.1.17 ) of another party
thereto or a Governmental Authority (as defined in SUBSECTION 1.1.13) would
constitute a breach of, or in any way affect the rights of L-P or WAC with
respect to or otherwise reduce the value to WAC of, such Acquired Asset (a
"NONASSIGNABLE ITEM").
ARTICLE 2. LIABILITIES
----------------------
2.1 ASSUMPTION OF LIABILITIES. Except as otherwise provided in
SECTION 2.2, on the Closing Date, WAC shall assume and shall thereafter pay,
perform and discharge when due all debts, liabilities and obligations, that
arise out of or relate to the Weather-Seal Business or the Acquired Assets, on
or after the Closing and whether known or unknown, fixed or contingent
including, without limitation, the following (the "ASSUMED LIABILITIES"):
2.1.1 TRADE PAYABLES; ACCRUED EXPENSES. All liabilities and
obligations of L-P that constitute trade account payables to the extent
relating to the Weather-Seal Business and included in the Final Closing
Working Capital (as defined in SUBSECTION 3.4.3) (the "TRADE PAYABLES")
and all other expenses accrued as of the Closing Date in the operation
of the Weather-Seal Business or otherwise in connection with the
Acquired Assets, but only to the extent such other expenses are not
incurred in violation of the provisions of SECTION 5.1 ;
2.1.2 CONTRACTS. All liabilities and obligations of L-P
arising under the terms of the Contracts;
2.1.3 CURRENT LIABILITIES. To the extent not included in
SUBSECTION 2.2.1 OR SUBSECTION 2.1.1 above, all liabilities that, as of
the Closing, constitute negative items of Working Capital (as defined
in SUBSECTION 3.4.1) but only to the extent (a) relating to the
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Weather-Seal Business; and (b) in the amounts as of the Closing Date
specified in the Final Closing Working Capital (as defined in
SUBSECTION 3.4.3);
2.1.4 OPEN ORDERS. All purchase orders not included in
SUBSECTION 2.1.2 OR SUBSECTION 2.1.3 entered into by L-P prior to the
Closing to the extent relating to the Weather-Seal Business, under
which goods and services have not been delivered by the Closing;
2.1.5 PROPERTY TAXES. Any Taxes assessed against the
Weather-Seal Business Property for the period following the Effective
Time;
2.1.6 PERMITS. All liabilities and obligations of L-P under
any Permits listed on SCHEDULE 5.1.11 that are to be assigned or
transferred to WAC under the provisions of this Agreement (but, in each
case, only to the extent such liabilities and obligations relate
exclusively to the Weather-Seal Business and to performance after the
Closing Date);
2.1.7 EMPLOYEE-RELATED LIABILITIES. Except as provided in
SUBSECTIONS 2.2.4 AND 2.2.7, all liabilities and obligations of L-P on
and after the Closing Date to any Persons who are employees at the
Weather-Seal Premises as of the Closing Date, or to any such Person's
spouses, children, other dependents or beneficiaries, or to any
participant, or beneficiary under the Ottawa 401(k) Plan (as defined in
SUBSECTION 8.5.4(A)), the sponsorship of which WAC will assume pursuant
to SUBSECTION 8.5.4 (A);
2.1.8 PRODUCT LIABILITY. All liabilities and obligations
relating to the Weather-Seal Business, any products of the
Weather-Seal Business or the Acquired Assets (or any other assets,
properties, rights or interests associated with the Weather-Seal
Business, products of the Weather-Seal Business or the Acquired
Assets), arising out of or relating to the operation of the
Weather-Seal Business on and after the Closing, including (i) product
liability claims, and claims for personal injury and property damage,
(ii) claims relating to employee health and safety, including claims
for injury, sickness, disease or death of any Person, or (iii)
compliance with any Laws relating to any of the foregoing;
2.1.9 PRODUCT WARRANTY LIABILITY. All liabilities and
obligations relating to any products of the Weather-Seal Business,
arising out of or relating to any dispute for services rendered or
goods manufactured (including, without limitation, product warranty
claims and claims for refunds and returns) on or after the Closing or,
to the extent of any reserve therefor set forth on the Last Balance
Sheet, prior to the Closing;
2.1.10 ENVIRONMENTAL CLAIMS. All liabilities and obligations
relating to the Weather-Seal Business and the Weather-Seal Premises on
or after the Closing, arising out of or relating to any Environmental
Law whether arising under contract, by Law or otherwise;
2.1.11 SHUTDOWN COSTS. Any liabilities or obligations relating
to, based in whole or in part on events or conditions occurring or
existing in connection with, or arising out of, the shutdown, at or
after the Closing, of the Weather-Seal Business or any of the
Weather-Seal Premises, including in each case, without limitation, any
action that could
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be construed as a "plant closing" or "mass layoff," as those terms are
defined in the Worker Adjustment and Retraining Notification Act, 29
U.S.C. Section 2101-2109, as amended ("WARN"), or any "employment
loss," as defined in WARN, that any Transferred Employee (as defined in
SUBSECTION 8.5.1) may suffer or may be deemed to suffer; and
2.1.12 OTTAWA 401(K) PLAN, ASSUMED WEATHER-SEAL CBA AND
MULTIEMPLOYER PLANS. All liabilities and obligations of L-P under the
Ottawa 401(k) Plan, the Assumed Weather-Seal CBA and the Multiemployer
Plans (as defined in SUBSECTION 7.2.6).
2.2 RETAINED LIABILITIES. Except as provided in SECTION 2.1,
L-P will retain, and WAC will not assume, or be responsible or liable with
respect to, the following, and only the following, liabilities or obligations of
L-P relating to the Weather-Seal Business (collectively, the "RETAINED
LIABILITIES"):
2.2.1 LIABILITIES RELATING TO THE SALE OF ACQUIRED ASSETS. The
liabilities and obligations of L-P arising out of, or relating to, the
negotiation and preparation of this Agreement, the liabilities and
obligations of L-P under this Agreement and the Transfer of the
Acquired Assets to WAC including, without limitation, all finder's or
broker's fees and expenses, and any and all fees and expenses of any
attorneys, accountants or other professionals retained by or on behalf
of L-P;
2.2.2 TAXES. Subject to SUBSECTION 2.1.5, the liabilities and
obligations of L-P for any unpaid income Taxes for any taxable periods
ending on or before the Closing Date;
2.2.3 LIABILITIES RELATING TO RETAINED ASSETS. All liabilities
and obligations relating to, based in whole or in part on events or
conditions occurring or existing in connection with, or arising out of
the Retained Assets;
2.2.4 EMPLOYEE-RELATED LIABILITIES. Except as provided in
SUBSECTION 8.5.4, all liabilities and obligations of L-P through the
Closing Date to any Persons who were employees of the Weather-Seal
Business prior to the Closing Date or to any such Person's spouses,
children, other dependents or beneficiaries, whether known or unknown,
filed or unfiled, matured or unmatured, under the Employee Plans (as
defined in SUBSECTION 5.1.13), and under the Retained Weather-Seal CBAs
(as defined in SUBSECTION 5.1.12);
2.2.5 PRODUCT AND SAFETY LIABILITY. Except as provided in
SUBSECTION 2.1.9, all liabilities and obligations relating to any
products of the Weather-Seal Business or the Acquired Assets (or any
other assets, properties, rights or interests associated with the
Weather-Seal Business, products of the Weather-Seal Business or the
Acquired Assets) arising out of or relating to the operation of the
Weather-Seal Business, whether known or unknown, filed or unfiled,
matured or unmatured, prior to the Closing;
2.2.6 ENVIRONMENTAL CLAIMS. All liabilities and obligations
relating to the Weather-Seal Business or the Weather-Seal Premises
prior to the Closing, whether
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known or unknown, filed or unfiled, matured or unmatured, arising out
of or relating to any Environmental Law whether arising under contract
by Law or otherwise; and
2.2.7 NLRA LIABILITY. All liabilities and obligations relating
to, based in whole or in part on events or conditions occurring or
existing in connection with, or arising out of, any action or claim
that L-P, while operating the Weather-Seal Business prior to the
Closing Date, violated the National Labor Relations Act, 29 U.S.C.
Section 151 et seq.
ARTICLE 3. PURCHASE PRICE
-------------------------
3.1 DEPOSIT. In accordance with the terms of the Letter of
Intent (as defined in SECTION 11.2) AAPC has previously deposited $1,000,000 as
a security deposit (together with interest thereon, the "DEPOSIT") with the
Escrow Agent (as defined in that certain escrow agreement among AAPC, L-P and
the Escrow Agent, dated as of even date with the Letter of Intent (the "ESCROW
AGREEMENT")). The Deposit shall be held and disbursed in accordance with the
terms of the Escrow Agreement and SECTION 3.2 or SECTION 9.3 of this Agreement,
as the case may be.
3.2 TOTAL CONSIDERATION. In full consideration for L-P's
obligations under this Agreement and the Transfer of the Acquired Assets by L-P
to WAC:
3.2.1 WAC PAYMENT. WAC shall pay L-P at the Closing,
$28,000,000 in immediately available funds by bank wire transfer; PLUS
the aggregate amount of the Preclosing Working Capital (as defined in
SECTION 3.3) as follows: (i) $7,500,000 by execution and delivery of a
Subordinated Promissory Note of AAPC for such amount, dated the date
hereof (the "NOTE"), in the form attached hereto as EXHIBIT A; and (ii)
the balance in immediately available funds by bank wire transfer
(collectively, the "WAC CLOSING PAYMENT").
3.2.2 ESCROW PAYMENT. The Escrow Agent shall pay L-P at the
Closing the Deposit in immediately available funds by bank wire
transfer (the WAC Closing Payment and the Deposit, collectively, the
"CLOSING PAYMENT").
3.2.3 ADJUSTMENTS. The balance of the Note and the Closing
Payment shall be subject to adjustment pursuant to SECTION 3.3 (the
Closing Payment, as adjusted pursuant to SECTION 3.3, or, after the
Closing, pursuant to SECTION 3.4, the "PURCHASE PRICE").
3.3 PRECLOSING WORKING CAPITAL. At least two (2) business days
prior to the Closing, L-P shall prepare and deliver to WAC a schedule (the
"PRECLOSING WORKING CAPITAL SCHEDULE") prepared on a basis consistent with the
Last Balance Sheet (as defined in SUBSECTION 5.1.6) (as demonstrated by the work
papers created in connection with the preparation of the Last Balance Sheet),
and with L-P's normal accounting policies, cost allocation procedures and
accounting practices for divisional operations to the extent said procedures and
practices are not materially inconsistent with U.S. generally accepted
accounting principles ("GAAP") consistently applied, and showing the Working
Capital as at the end of the then most recent
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calendar month for which such information is available with respect to the
Weather-Seal Business (the "PRECLOSING WORKING CAPITAL").
3.4 ADJUSTMENT OF PURCHASE PRICE.
3.4.1 CLOSING WORKING CAPITAL SCHEDULE. As soon as
practicable, but in no event later than forty-five (45) days after the
Closing Date, L-P shall prepare and deliver, or cause to be delivered,
to WAC a schedule of the current assets and current liabilities of the
Weather-Seal Business (the "CLOSING WORKING CAPITAL SCHEDULE") setting
forth L-P's respective calculations of the current assets and current
liabilities of the Weather-Seal Business as of the Closing Date; and
(b) the Working Capital as of such date; except that there will be no
adjustments to reflect changes to the property, plant and equipment
resulting from ordinary depreciation and minor capital additions or
disposals in the ordinary course of business through the Closing. The
Closing Working Capital Schedule must be prepared, and the current
assets and current liabilities must be calculated, on a basis
consistent with the preparation of the Last Balance Sheet (as
demonstrated by the work papers created in connection with the
preparation of the Last Balance Sheet), and with L-P's normal
accounting policies, cost allocation procedures and accounting
practices for divisional operations to the extent that said procedures
and practices are not materially inconsistent with GAAP consistently
applied. As used in this Agreement, the term "WORKING CAPITAL" means,
as of any time, the sum of all current assets (that is, all assets
included in the Acquired Assets other than Fixed Assets and
Weather-Seal Business Real Property) LESS the sum of all current
liabilities (except that Closing Working Capital and Final Closing
Working Capital will not include any items of negative Working Capital
not required to be assumed by WAC pursuant to this Agreement).
3.4.2 REVIEW OF CLOSING WORKING CAPITAL SCHEDULE. Not later
than thirty (30) days following delivery to WAC of the Closing Working
Capital Schedule, WAC must notify L-P in writing of any adjustments to
such Schedule that WAC reasonably believes are necessary for the
Closing Working Capital Schedule to fairly present the Working Capital
as of the Closing Date in accordance with SUBSECTION 3.4.1 (the
"ADJUSTMENT REQUEST"). The Adjustment Request must specify (a) the
amount of the proposed adjustment; (b) the item to which such proposed
adjustment relates; and (c) the facts and circumstances supporting the
adjustment. Unless WAC gives notice as required by this SUBSECTION
3.4.2, the Closing Working Capital Schedule is binding upon L-P and
WAC. For fifteen (15) days after the delivery to L-P of any Adjustment
Request, WAC and L-P shall discuss WAC's proposals in the Adjustment
Request in order to reach agreement upon appropriate adjustments to the
Closing Working Capital Schedule. If WAC and L-P do not reach agreement
as to the content or preparation of the Closing Working Capital
Schedule during such fifteen (15) day period, then WAC and L-P shall
jointly engage KPMG Peat Marwick LLP or another mutually acceptable,
internationally recognized, independent public accounting firm (the
"INDEPENDENT AUDITOR") to resolve the dispute in a manner consistent
with this SECTION 3.3. The fees and expenses of the Independent
Auditor are to be paid fifty percent (50%) by WAC and the remaining
fifty percent (50%) by L-P.
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3.4.3 DECISION OF INDEPENDENT AUDITOR. WAC and L-P shall have
thirty (30) days after the date of engagement of the Independent
Auditor pursuant to SUBSECTION 3.4.2 to prepare a presentation to the
Independent Auditor. At the end of such period, each party shall make
its presentation to the Independent Auditor, which shall make its
determination based solely upon presentations by WAC and L-P and in
accordance with GAAP. As soon as practicable, but in any event within
thirty (30) days following the end of the presentations of WAC and L-P,
the Independent Auditor shall notify WAC and L-P in writing of any
adjustments that are required to the Closing Working Capital Schedule.
The Closing Working Capital as shown on the Closing Working Capital
Schedule, with such adjustments as may be agreed upon by WAC and L-P
pursuant to this SECTION 3.4 or determined by the Independent Auditor
in a manner consistent with this SECTION 3.4, is the "FINAL CLOSING
WORKING CAPITAL."
3.4.4 PAYMENT PROCEDURES. If the amount of the Final Closing
Working Capital is greater than the sum of the Preclosing Working
Capital, the Purchase Price shall be adjusted upward, dollar for
dollar, and WAC shall pay L-P the amount of the difference by wire
transfer of immediately available funds to an account designated in
writing by L-P. If the amount of the Final Closing Working Capital is
less than the sum of the Preclosing Working Capital, the Purchase Price
shall be adjusted downward, dollar for dollar, and the balance of the
Note shall be adjusted downward accordingly. Any payment or adjustment
required to be made under this SECTION 3.4 shall be made within five
(5) days of the determination of the Final Closing Working Capital.
3.5 ALLOCATION. The Purchase Price shall be allocated among
the Acquired Assets in accordance with SCHEDULE 3.5. WAC and L-P shall report
the purchase and sale of the Acquired Assets in all reports and returns
(including Tax returns) prepared and filed with any Governmental Authority
consistently with this SECTION 3.5.
ARTICLE 4. CLOSING
------------------
4.1 GENERAL. The "CLOSING" means the time when the Acquired
Assets are Transferred by L-P to WAC. The Closing will take place at the offices
of Jones, Day, Reavis & Pogue, 901 East Ninth Street, Cleveland, Ohio, 44114 at
10:00 A.M. on the date that is the later to occur of (i) five (5) business days
following the day on which the last of the regulatory approvals, consents or
clearances is received, and any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), expires or is
earlier terminated or, (ii) ten (10) business days after the date of this
Agreement, or at such other time and place and on such other day as is mutually
agreed upon in writing by the parties hereto (the "CLOSING DATE"). Legal title,
equitable title and risk of loss with respect to the Acquired Assets will not
pass to WAC until the Acquired Assets are Transferred at the Closing, which
Transfer, once it has occurred, is effective for tax, accounting and other
computational purposes as of 12:01 A.M. (Eastern Time) on the day following the
Closing Date (the "EFFECTIVE TIME"). Taxes assessed against the Weather-Seal
Business Real Property shall be prorated as of the Effective
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Time (or in the case of real estate Taxes, paid current by L-P through the
Closing Date based upon a proration derived from the most recent tax
assessment).
4.2 DELIVERIES BY L-P. At the Closing, L-P shall deliver to
WAC:
4.2.1 A quit claim deed or deeds relating to the Weather-Seal
Business Real Property;
4.2.2 A bill of sale, in the form attached hereto as EXHIBIT
B, transferring the Acquired Assets to WAC;
4.2.3 Instruments of Assignment to WAC of all registered and
unregistered Intellectual Property Rights (and all applications for,
and extensions and reissuances of, any of the foregoing and rights
therein), in the form attached hereto as EXHIBIT C;
4.2.4 The certificate required by SUBSECTION 6.1.6;
4.2.5 An assignment and assumption of leases assigning all of
L-P's right, title and interest in the Weather-Seal Business Leased
Property to WAC in the form attached hereto as EXHIBIT D;
4.2.6 ALTA (Form 10-17-92) or equivalent owner's policies of
title insurance issued by Lawyers Title Insurance Corporation (or a
binding commitment to issue such policies) for each Weather-Seal
Business Real Property (the "TITLE INSURANCE") in the amount equal to
the market value for Tax purposes for each such property, insuring
that, at Closing, WAC owns fee simple title to each Weather-Seal
Business Real Property free of all Liens except the so-called "standard
exceptions" (except that L-P shall execute an affidavit in form
acceptable to the title company to remove the standard mechanics lien
and party in possession exceptions) and any Permitted Liens (as defined
in SUBSECTION 5.1.3(D));
4.2.7 Certificates of title with respect to owned motor
vehicles that constitute part of the Acquired Assets; and
4.2.8 Short-form good standing certificate for L-P from the
Secretary of State of the State of Delaware, dated not more than
fifteen (15) days prior to the Closing.
4.3 DELIVERIES BY WAC. At the Closing, WAC shall deliver to
L-P the following:
4.3.1 The WAC Closing Payment (including the Note);
4.3.2 The certificate required by SUBSECTION 6.2.5;
4.3.3 Short-form good standing certificate for WAC from the
Secretary of State of the State of Delaware, dated not more than
fifteen (15) days prior to the Closing;
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4.3.4 An Instrument of Assumption of the Assumed Liabilities
in the form attached hereto as EXHIBIT E;
4.3.5 Resale and exemption certificates for the Inventory and
the exempt Fixed Assets, respectively; and
4.3.6 A copy of the bond issued, proof of an established
escrow account or approved variance issued by the trustees of a
multiemployer plan required by Section 7.2.6 for each multiemployer
plan listed on Schedule 5.1.13.
4.4 OTHER DELIVERIES. At the Closing, the Escrow Agent shall
deliver the Deposit to L-P in immediately available funds.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
-----------------------------------------
5.1 REPRESENTATIONS AND WARRANTIES OF L-P. L-P hereby
represent and warrants to WAC that:
5.1.1 ORGANIZATION AND STANDING; POWER AND AUTHORITY. L-P is a
corporation duly organized, validly existing and in good standing under
the Laws of the State of Delaware. L-P has full corporate power and
authority to operate the Weather-Seal Business, to own or lease the
Acquired Assets, to carry on the Weather-Seal Business as now being
conducted, and to enter into and perform this Agreement, the
transactions and other agreements and instruments contemplated by this
Agreement. SCHEDULE 5.1.1 lists all of the jurisdictions in which the
ownership or lease of the Acquired Assets or the operation of the
Weather-Seal Business requires L-P to be qualified or licensed to do
business as a foreign corporation, and L-P is duly qualified or
licensed to do business as a foreign corporation and is in good
standing in each such jurisdiction except where the failure to be so
qualified or licensed would not reasonably be expected to result in a
Material Adverse Change (as defined in SUBSECTION 11.10.6). This
Agreement and all other agreements and instruments executed and
delivered or to be executed and delivered by L-P in connection
herewith (collectively, the "TRANSACTION DOCUMENTS") have been, or upon
execution thereof will be, duly and validly executed and delivered by
L-P. This Agreement and the Transaction Documents have been duly and
validly authorized by all necessary corporate action in respect thereof
on the part of L-P and constitute legal, valid and binding obligations
of L-P, enforceable against L-P in accordance with their respective
terms, except to the extent that enforcement thereof is affected by
Laws pertaining to bankruptcy, reorganization, insolvency and
creditors' rights and by the availability of injunctive relief,
specific performance and other equitable remedies.
5.1.2 CONFLICTS; DEFAULTS. Except as disclosed on SCHEDULE
5.1.2, neither the execution and delivery of this Agreement and the
Transaction Documents, nor the performance by L-P of the transactions
contemplated hereby or thereby, will (a) violate, conflict with, result
in the breach of or constitute a default under, any of the terms of
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L-P's Certificate of Incorporation or By-Laws, (b) to the best of L-P's
knowledge, violate any provisions of, or result in the (or give rise to
any right of) termination, cancellation or acceleration of any
obligation under, any contract, sales commitment, license, purchase
order, security agreement, mortgage, note, deed, lien, lease, agreement
or instrument constituting an Acquired Asset or an Assumed Liability,
including, without limitation, the Contracts or any other material
agreement to which L-P is a party, or any order, judgment or decree,
relating to the Weather-Seal Business or the Acquired Assets, or by
which L-P, the Weather-Seal Business, the Acquired Assets or any other
material portion of L-P's assets are bound; (c) result in the creation
or imposition of any Liens in favor of any third Person or entity upon
the Weather-Seal Business or any of the Acquired Assets; (d) to the
best of L-P's knowledge, violate any Law or judgment of any
Governmental Authority; (e) to the best of L-P's knowledge, constitute
an event that, after notice or lapse of time or both, would result in
such violation, conflict, breach, default, termination, cancellation,
acceleration, or creation or imposition of Liens; (f) constitute an
event that, after notice or lapse of time would create, or cause to be
exercisable or enforceable, any option, agreement or right of any kind
to purchase the Weather-Seal Business or any of the Acquired Assets,
except, in the case of clauses (b)-(f), for such violations, consents,
approvals, notices, breaches, lapses, cancellations, terminations,
defaults, or accelerations that could not, individually or in the
aggregate, be reasonably expected to result in a Material Adverse
Change.
5.1.3 ACQUIRED ASSETS; TITLE TO THE ACQUIRED ASSETS.
(a) The Acquired Assets to be Transferred to WAC under this
Agreement and the rights to be granted to WAC here together constitute
all of the assets, properties, rights and interests necessary to
conduct the Weather-Seal Business in substantially the same manner as
conducted by L-P prior to the date of this Agreement, except for assets
used to supply the services listed on SCHEDULE 5.1.3(A) supplied to the
Weather-Seal Business by L-P at its corporate headquarters at 111 S.W.
Fifth Avenue, Portland, or at L- P's facilities other than the
Weather-Seal Premises.
(b) LP has exclusive title to, and the unqualified right to
use and Transfer to WAC, each of the Acquired Assets other than the
Weather-Seal Business Real Property, free and clear of all Liens other
than the Permitted Liens. The consummation of the transactions
contemplated by this Agreement and the Transaction Documents
(including, without limitation, the Transfer of the Acquired Assets,
and all rights and interests therein, to WAC as contemplated in this
Agreement) will not adversely affect such title or rights.
(c) Except as disclosed on SCHEDULE 5.1.3(C), none of the
Acquired Assets other than the Weather-Seal Business Real Property are
subject to, or held under, any lease, mortgage, security agreement,
conditional sales contract or other title retention agreement, or will
be located on the Closing Date at any location other than the Weather-
Seal Premises. L-P has the enforceable right under valid and existing
leases to occupy, use or control all properties and assets leased by it
under leases included in the Acquired Assets.
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(d) The delivery to WAC of the instruments of Transfer
contemplated by this Agreement will vest exclusive title (as to all
Acquired Assets owned by L-P) or full right to possess and use (as to
all Acquired Assets not owned by L-P) to the Acquired Assets, other
than the Weather-Seal Business Real Property, in WAC, free and clear of
all liens, equities, claims, prior assignments, mortgages, charges,
security interests, pledges, conditional sales contracts, adverse
claims, collateral security arrangements and other title retention
arrangements, restrictions (including any rights of way, use
restrictions, and other variances, reservations or limitations of any
nature) or encumbrances whatsoever ("LIENS"), other than (i) zoning
ordinances, (ii) liens for current Taxes not yet due and payable, (iii)
such other encumbrances that do not secure indebtedness and do not
materially detract from the value of, or interfere with the present or
future use of, the property subject thereto and affected thereby, and
(iv) those items identified on SCHEDULE 5.1.3(D) (collectively, the
"PERMITTED LIENS").
5.1.4 REAL PROPERTY.
(a) L-P has the right to quiet enjoyment and the exclusive use
of the Weather-Seal Business Real Property subject to the Permitted
Liens. There has been no disturbance or challenge to L-P's quiet
possession of the Weather-Seal Business Real Property.
(b) L-P has good and marketable title to, and the unqualified
right to use and Transfer to WAC, the Weather-Seal Business Real
Property, free and clear of all Liens other than the Permitted Liens.
(c) L-P has not received any notice that any portion of the
Weather-Seal Business Real Property is subject to any pending
condemnation proceeding or any other proceeding by any Governmental
Authority adverse to such property or such portion and, to L-P's
knowledge, there is no threatened condemnation or other proceeding with
respect thereto.
(d) There are no Persons (other than L-P) in possession of the
Weather-Seal Business Real Property.
(e) L-P has an enforceable leasehold interest in the
Weather-Seal Business Leased Property, free and clear of all Liens
except the Permitted Liens. Except as disclosed on SCHEDULE 5.1.4, to
the best of L-P's knowledge, each Lease Agreement will continue to be
enforceable and in full force and effect in accordance with its terms.
(f) L-P has not assigned, transferred, conveyed, mortgaged,
granted a deed of trust or encumbered any interest in any Weather-Seal
Business Leased Property.
5.1.5 CONTRACTS. SCHEDULE 5.1.5 includes a list of all
contracts, agreements, commitments, options, leases, licenses,
mortgages, other security interests, understandings and promises,
relating exclusively to the Weather-Seal Business, to which L-P is a
party or by which it is bound in any respect, that is:
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(a) a license or a lease requiring the payment of
more than $100,000 per annum;
(b) for the purchase or sale of materials, inventory,
equipment, real or personal property, capital assets or
supplies requiring the payment of more than $100,000 per
annum;
(c) a management, advisory or consulting contract for
the performance of services that is not terminable at will by
L-P without cost and that may require payments of amounts
after the Closing Date in excess of $100,000 per annum;
(d) with an agent, dealer, distributor, sales
representative or franchisee;
(e) with an employee or officer of L-P that is not
terminable at will by L-P without cost and that may require
payments of amounts after the Closing Date in excess of
$100,000 per annum;
(f) a contract or agreement for the storage,
transportation, treatment or disposal of any Hazardous
Substance (as defined in SUBSECTION 11.10.3), or a contract
for the storage, transportation, treatment or disposal of any
waste or by-product requiring the payment of more than
$100,000 per annum;
(g) an agreement granting to any Person a
first-refusal, first-offer or similar preferential right to
purchase or acquire any right, asset or property of the
Weather-Seal Business that is an Acquired Asset; or
(h) any license or royalty agreement including, but
not limited to, a license under or any agreement with respect
to an Intellectual Property Right (the items described in
clauses (a) through (h), and any other contracts, agreements,
commitments, obligations, undertakings or understandings
listed on SCHEDULE 5.1.5 (collectively, the "CONTRACTS");
PROVIDED, HOWEVER, that no Employee Plans or Employee Plan
documents are Contracts under this Agreement).
Each Contract is in full force and effect. L-P has performed all
material obligations required to be performed by L-P under the
Contracts through the date hereof, and neither L-P nor, to the best of
L-P's knowledge, any other party to any Contract has breached,
defaulted under or improperly terminated or canceled any Contract or is
in breach of or default under any Contract, and, to the best of L-P's
knowledge, there exists no condition or event (including the assignment
of any such Contract, after obtaining Consent (as defined in SUBSECTION
5.1.17) if necessary) that after notice or lapse of time or both, would
constitute a breach, termination or cancellation of default under any
Contract.
5.1.6 LAST BALANCE SHEET. L-P has heretofore delivered to WAC
a true and complete copy of an unaudited Statement of Assets and
Liabilities of the Weather-Seal Business as of December 31, 1997 (the
"LAST BALANCE SHEET"). The Last Balance Sheet was prepared from the
books and records maintained by L-P for the Weather-Seal
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Business, and fairly presents, in all material respects, the financial
position of the Weather-Seal Business as of December 31, 1997 (the
"BALANCE SHEET DATE"), and the results of the Weather-Seal Business'
operations for the period then ended in accordance with L-P's normal
accounting practices, cost allocation procedures and accounting
practices for divisional operations with Inventories valued on a "first
in-first out" "FIFO" basis as reflected on the books and records of the
Weather-Seal Business. Except as disclosed on SCHEDULE 5.1.6, the Last
Balance Sheet was prepared in accordance with GAAP consistently
applied. Except as set forth in this Agreement or the Schedules
delivered pursuant to this Agreement, since the Balance Sheet Date,
there has been no event, condition or operation that has resulted in
or, to the best of L-P's knowledge, is reasonably expected to result in
a Material Adverse Change.
5.1.7 LITIGATION. SCHEDULE 5.1.7 lists all litigation,
actions, suits, investigations, claims and proceedings, including any
unfair labor practice charges, pending or, to the best of L-P's
knowledge, threatened against L-P in respect of the Weather-Seal
Business or the Acquired Assets that have not been finally resolved,
together with a description of the present status thereof. Except as
disclosed on SCHEDULE 5.1.7, L-P is not subject to any order, judgment
or decree of any Governmental Authority with respect to any litigation,
action, suit, investigation, claim or proceeding asserted, brought or,
to the best of L-P's knowledge, threatened against L-P in respect of
the Weather-Seal Business or the Acquired Assets.
5.1.8 REGULATORY COMPLIANCE. Except as disclosed on SCHEDULE
5.1.8 or SCHEDULE 5.1.14, to the best of L-P's knowledge, the
Weather-Seal Business has been conducted and the Acquired Assets have
been maintained in compliance with all applicable laws, except to the
extent of violations that would not reasonably be expected to result in
a Material Adverse Change. L-P is not, with respect to the Weather-Seal
Business, in violation of or default under and, to the best of L-P's
knowledge, no event has occurred that with the lapse of time or action
by a third party, would result in the violation of or default under the
terms of any judgment, decree, order, writ or injunction of any
Governmental Authority, whether at law or in equity made in connection
with any legal proceeding or investigation against, or of, the
Weather-Seal Business or any Acquired Assets or affecting L-P in
respect of the transactions contemplated by this Agreement or the
Transaction Agreements.
5.1.9 BROKERS, FINDERS AND AGENTS. L-P is not directly or
indirectly obligated to anyone acting as a broker, finder or in any
other similar capacity in connection with this Agreement or the
transactions contemplated hereby.
5.1.10 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 5.1.10 contains
a list (with an identification of the record owner and identifying
number) of all registered Intellectual Property Rights. SCHEDULE 5.1.5
lists, under the heading "INTELLECTUAL PROPERTY RIGHT AGREEMENTS", all
licenses and other rights (including any amendments thereto) granted by
L-P to, or received by L-P from, any Person under or with respect to
any Intellectual Property Rights. Except as described on SCHEDULE
5.1.10, L-P is the sole owner of and has the right, title and interest
in and to, and the right to use, free and clear of any Liens
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or payment obligations, the Intellectual Property Rights. Except as
disclosed on SCHEDULE 5.1.10, there are no proceedings pending or, to
the best of L-P's knowledge, threatened, that challenge the validity or
enforceability of, or the use by or the ownership or exclusive rights
of L-P in, the Intellectual Property Rights. Except as described on
SCHEDULE 5.1.7 or SCHEDULE 5.1.5 under the heading "INTELLECTUAL
PROPERTY RIGHT AGREEMENTS," no Intellectual Property Right is subject
to any outstanding order, ruling, decree, judgment or stipulation by or
with any Governmental Authority or any contract or agreement with any
Person. Except as described on SCHEDULE 5.1.10, L-P has not received
any written notices of, any infringement or misappropriation by, or
dispute with, any Person with respect to any Intellectual Property
Right.
5.1.11 PERMITS. L-P is in compliance with all material Permits
that are necessary for the operation of the Weather-Seal Business as it
is currently being conducted. SCHEDULE 5.1.11 lists all such material
Permits issued to L-P in connection with the Weather-Seal Business. All
such Permits are in full force and effect and any applications for
renewal for currently-held Permits have been submitted on a timely
basis.
5.1.12 EMPLOYEE RELATIONS; COLLECTIVE BARGAINING AGREEMENTS.
There are no strikes, work stoppages or material disputes pending, or
to the best of L-P's knowledge, threatened that involve any employees
of the Weather-Seal Business. With respect to the Weather-Seal
Business, to the best of L-P's knowledge, L-P is in compliance with all
Laws relating to the employment of labor. SCHEDULE 5.1.12 contains a
true, correct and complete list of all collective bargaining agreements
and union contracts relating to the Weather-Seal Business (and all
modifications and amendments thereto) (the "WEATHER-SEAL CBAS")
including the Weather-Seal CBA to be assumed by WAC in accordance with
SUBSECTION 2.1.12 and SUBSECTION 8.5.3 of this Agreement (the "ASSUMED
WEATHER SEAL CBA") listed on SCHEDULE 5.1.12 under the heading "Assumed
Weather-Seal CBA" and the Weather-Seal CBAs to be retained by L-P in
accordance with SECTION 2.2 and SUBSECTION 8.5.3 (the "RETAINED
WEATHER-SEAL CBAS") listed under the heading "Retained Weather-Seal
CBAs." Except as listed on SCHEDULE 5.1.12, there are no legally
recognizable collective bargaining agreements or union contracts that
cover any current employees of the Weather-Seal Business. SCHEDULE
5.1.12 lists all pending grievances and claims under the Weather-Seal
CBAs. L-P has performed all material obligations required to be
performed by L-P under the Weather-Seal CBAs through the date hereof,
and that neither L-P nor, to the best of L-P's knowledge, any other
party to the Weather-Seal CBAs has breached, defaulted under or
improperly terminated or canceled, or is in breach of or default under,
any of the Weather-Seal CBAs. To the best of L-P's knowledge, there
exists no condition or event that after notice or lapse of time or
both, would constitute a breach, termination or cancellation or default
under any of the Weather-Seal CBAs prior to the Closing Date.
5.1.13 EMPLOYEE PLANS. (a) SCHEDULE 5.1.13 contains a true and
complete list of all Employee Plans covering employees of or relating
to the Weather-Seal Business to which L-P contributes. L-P has
delivered or made available to WAC (a) all current plan documents for
each L-P Employee Plan relating to the Weather-Seal Business or, in the
case of an unwritten L-P Employee Plan relating to the Weather-Seal
Business, a written
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description thereof and (b) any other documents, forms or other
instruments relating to any L-P Employee Plan relating to the
Weather-Seal Business reasonably requested by WAC. As used in this
Agreement, "EMPLOYEE PLAN" means any "employee benefit plan" (within
the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), or any other bonus, stock option,
stock appreciation, stock purchase, severance, termination, lay-off,
leave of absence, disability, workers compensation, pension (including,
but not limited to, any multiemployer plan within the meaning of
Section 3(37)(A) of ERISA)), health care, profit sharing, retirement,
vacation or holiday pay, insurance, deferred compensation or other
employee or welfare benefit plan, agreement or arrangement.
(b) To the best of L-P's knowledge, except as set
forth on SCHEDULE 5.1.13, with respect to the Ottawa 401(k)
Plan (as defined in SUBSECTION 8.5.4) and the L-P 401(k) Plan
(as defined in SUBSECTION 8.5.4), (i) for each Plan, L-P has
obtained a favorable determination letter from the Internal
Revenue Service ("IRS") to the effect that such Plan satisfies
the provisions of Section 401(a) of the Internal Revenue Code
as amended (the "CODE"); (ii) none of the determination
letters have been revoked by the IRS, nor has the IRS given
any indication to L-P that it intends to revoke any such
determination letter; (iii) no material liability under Title
IV or Section 301(a) of ERISA has been incurred by L-P that
has not been satisfied in full; and (iv) no reportable event
within the meaning of Section 4043 of ERISA or prohibited
transaction within the meaning of Section 406 of ERISA has
occurred with respect to any Employee Plan and no tax has been
imposed pursuant to Section 4975 or 4976 of the Internal
Revenue Code in respect thereof.
(c) There are, to the best of L-P's knowledge, no
claims pending by or on behalf of any of either the Ottawa
401(k) Plan or the L-P 401(k) Plan by any employee or
beneficiary covered under any such Employee Plan, or otherwise
involving any such Employee Plan (other than routine claims
for benefits).
(d) To the best of L-P's knowledge, each of the
Ottawa 401(k) Plan and the L-P 401(k) Plan has been, and is
being, operated and administered in all material respects, in
accordance with its terms and in compliance with applicable
Laws, including, but not limited to, ERISA and the Code.
(e) Except as set forth on SCHEDULE 5.1.13, to the
best of L-P's knowledge, L-P has no formal plan or commitment
to create any additional Employee Plan or modify or change any
existing Employee Plan that would materially affect any
employee or terminated employee of the Weather-Seal Business.
(f) With respect to the Ottawa 401(k) Plan and the
L-P 401(k) Plan, to the best of L-P's knowledge, no amounts
payable under any Employee Plan will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the
Code.
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(g) With respect to each Multiemployer Plan (as
defined in SUBSECTION 7.2.6) in which L-P participates or has
participated with respect to the Weather-Seal Business to the
best of L-P's knowledge, (1) L-P has not withdrawn, partially
withdrawn, or received any notice of any claim or demand for
withdrawal liability or partial withdrawal liability; (2) L-P
has not received any notice that any such Multiemployer Plan
is in reorganization, that increased contributions may be
required to avoid a reduction in Multiemployer Plan benefits
or the imposition of any excise tax, or that any such
Multiemployer Plan may become insolvent; (3) L-P has not
failed to make any required contributions; and (4) L-P does
not have (or will not have as a result of the transactions
contemplated hereby) any withdrawal liability by reason of a
sale of assets pursuant to Section 4204 of ERISA, other than
disclosed on SCHEDULE 5.1.13.
(h) SCHEDULE 5.1.13 includes for each Multiemployer
Plan, as of the date requested by L-P, the amount of potential
withdrawal liability of L-P, calculated by the Multiemployer
Plans, and identifies the specific obligor. To the best of
L-P's knowledge, nothing has occurred or is expected to occur
that would materially increase the amount of the total
potential withdrawal liability of a specific obligor for any
such Multiemployer Plan over the amount shown in SCHEDULE
5.1.13. SCHEDULE 5.1.13 includes the amount of the annual
contributions made by L-P with respect to the Weather-Seal
Business under each Multiemployer Plan for each of the three
plan years prior to the Closing Date.
5.1.14 ENVIRONMENTAL MATTERS. (i) To the best of L-P's
knowledge, SCHEDULE 5.1.14 contains a list of all Environmental Permits
previously obtained by L-P relating to the Weather-Seal Business. To
the best of L-P's knowledge, except as set forth in SCHEDULE 5.1.14 or
except as will not result in a Material Adverse Change,
(a) L-P has obtained all Environmental Permits that
are required for the ongoing operation of the Weather-Seal
Business;
(b) L-P has not received any written notice, within
the last twenty-four (24) months, from any Governmental
Authority alleging a violation of any such Environmental
Permit, and no proceeding is pending to revoke any such
Environmental Permit;
(c) L-P is in compliance with all relevant and
applicable Environmental Laws in connection with the operation
of the Weather-Seal Business; and
(d) L-P has not received written notice, within the
last twenty-four (24) months, from any Governmental Authority,
alleging a failure of L-P to comply with any applicable
Environmental Law in connection with the operation of the
Weather-Seal Business and no proceeding alleging such a
failure is pending.
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For purposes of this Agreement, "ENVIRONMENTAL LAWS" means
federal, state, local and foreign statutes and ordinances, and
regulations promulgated thereunder, in effect prior to Closing and
intended to provide protection for public health or the Environment,
including, without limitation, the Clean Air Act, the Federal Water
Pollution Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Emergency Planning and
Community Right to Know Act, the Solid Waste Disposal Act (including
the Resource Conservation and Recovery Act), the Toxic Substances
Control Act, the Safe Drinking Water Act and other substantially
similar state or foreign statutes and regulations, as amended from time
to time; and "ENVIRONMENTAL PERMITS" means federal, state and local
permits, licenses, and authorizations issued to L-P under Environmental
Law in connection with the operation of the Weather-Seal Business.
5.1.15 CHANGES IN CIRCUMSTANCES. Except as disclosed on
SCHEDULE 5.1.15, since the Balance Sheet Date, L-P has not taken any
action that would not be permitted under SUBSECTION 7.1.1.
5.1.16 PRODUCT WARRANTIES. Except for written product
warranties in respect of the products of the Weather-Seal Business made
by L-P on its standard terms and conditions of sale, true, correct and
complete copies of the material terms of which have been included in
SCHEDULE 5.1.16, and any warranties implied under applicable Law, L-P
makes no express or implied product warranties in connection with the
sale of such products.
5.1.17 CONSENTS AND APPROVALS. Except as disclosed on SCHEDULE
5.1.17, no consent, notation, approval, filing, authorization, waiver
or agreement of any third party (collectively, "CONSENT") is required
to be obtained or satisfied by L-P for the consummation of the
transactions contemplated by this Agreement and the Transaction
Documents.
5.1.18 NON-SOLICITATION PERIOD. L-P has taken no action since
February 18, 1998, which would otherwise constitute a violation of
8.7.2.
5.2 REPRESENTATIONS AND WARRANTIES OF WAC. WAC represents and
warrants to L-P that:
5.2.1 ORGANIZATION AND STANDING; POWER AND AUTHORITY. WAC is a
corporation duly organized, validly existing and in good standing under
the Laws of the State of Delaware, and has full power and authority to
enter into and perform this Agreement and the transactions and other
agreements and instruments contemplated by this Agreement. This
Agreement and all other agreements and instruments executed and
delivered or to be executed and delivered by WAC in connection herewith
have been, or upon execution thereof will be, duly and validly executed
and delivered by WAC. This Agreement and the other agreements
contemplated by this Agreement to be executed and delivered by WAC, and
the transactions contemplated hereby and thereby, have been duly and
validly authorized by all necessary corporate action in respect thereof
on the part of WAC and constitute the legal, valid and binding
obligations of WAC, enforceable against WAC in
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accordance with their respective terms, except to the extent that
enforcement thereof is affected by laws pertaining to bankruptcy,
reorganization, insolvency and creditors' rights and by the
availability of injunctive relief, specific performance and other
equitable remedies.
5.2.2 CONFLICTS; DEFAULTS. Except as disclosed on SCHEDULE
5.2.2, neither the execution and delivery of this Agreement and the
other agreements and instruments executed or to be executed in
connection herewith by WAC, nor the performance by WAC of the
transactions contemplated hereby or thereby, will (a) violate, conflict
with, result in the breach of or constitute a default under WAC's
Certificate of Incorporation or WAC's By-Laws, (b) violate any
provisions of, or result in the (or give rise to any right of)
termination, cancellation or acceleration of any obligation under, any
contract, sales commitment, license, purchase order, security
agreement, mortgage, note, deed, lien, lease, agreement or instrument,
or any order, judgment or decree by which WAC or its assets are bound;
(c) violate any Law or judgment of any Governmental Authority; or (d)
constitute an event that, after notice or lapse of time or both, would
result in such violation, conflict, breach, default, termination,
cancellation or acceleration.
5.2.3 BROKERS, FINDERS AND AGENTS. WAC is not directly or
indirectly obligated to anyone acting as a broker, finder or in any
other similar capacity in connection with this Agreement or the
transactions contemplated hereby.
5.2.4 FINANCIAL CAPACITY. WAC has sufficient funds from WAC's
immediately available internal organization funds and currently
established lines of credit with financial institutions to pay the cash
portion of the Purchase Price pursuant to ARTICLE 3. As of and
following the Closing, WAC will have and continue to have the financial
capacity to pay and otherwise perform all of its liabilities and
obligations, including without limitation the obligations under the
Note, any Lease Agreements and the other Assumed Liabilities.
5.2.5 CONSENTS AND APPROVALS. Except as disclosed on SCHEDULE
5.2.5, no Consent is required to be obtained or satisfied by WAC for
the consummation of the transactions contemplated by this Agreement and
the other agreements contemplated by this Agreement to be executed and
delivered by WAC. All Consents listed on SCHEDULE 5.2.5 have been, or
by the Closing, will have been, made, obtained and satisfied by WAC.
5.2.6 INVESTIGATIONS. WAC has concluded whatever inspections,
studies, tests and investigations WAC desired to conduct related to the
Weather-Seal Business and the Weather-Seal Business Real Property,
including economic reviews and analyses, soils tests, engineering
analyses, environmental analyses and analyses of any applicable records
of any Governmental Authority having or asserting jurisdiction over
L-P. With respect to the subject matter of this Agreement, WAC is
relying solely on its own investigation of the Weather-Seal Business
and the Weather-Seal Business Real Property and on L-P's
representations and warranties set forth in Section 5.l and is assuming
the risk that adverse physical, economic or other conditions or
circumstances (including soil and groundwater conditions) may not have
been revealed by such investigations.
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<PAGE> 22
5.3 NO OTHER REPRESENTATIONS. Notwithstanding anything to the
contrary contained in this Agreement, it is the explicit intent and
understanding of each party hereto that no party is making any representation or
warranty whatsoever, express or implied, except those representations and
warranties contained in this ARTICLE 5 and in any certificate delivered pursuant
to SUBSECTIONS 6.1.6 or 6.2.5, as the case may be. In particular, L-P makes no
representation or warranty to WAC with respect to (a) the information set forth
in the Confidential Descriptive Memorandum delivered by L-P to WAC or (b) any
financial projection or forecast relating to the business, financial conditions,
results of operations or prospects of the Weather-Seal Business. With respect to
any projection or forecast delivered by or on behalf of L-P to WAC, WAC
acknowledges that (i) there are uncertainties inherent in attempting to make
such projections and forecasts, (ii) it is familiar with such uncertainties,
(iii) it is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all such projections and forecasts furnished to it and
(iv) it shall have no claim against L-P with respect thereto.
ARTICLE 6. CONDITIONS TO CLOSING
--------------------------------
6.1 CONDITIONS TO WAC'S OBLIGATIONS. WAC's obligation to
consummate this Agreement is subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which (except for
those contained in SUBSECTIONS 6.1.3 and 6.1.4) may be waived by WAC:
6.1.1 REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of L-P contained in this Agreement will
be true and correct in all material respects both on the date of this
Agreement and on the Closing Date;
6.1.2 COVENANTS. L-P shall have performed and complied in all
material respects with all covenants and agreements required to be
performed or complied with by it at or prior to the Closing Date;
6.1.3 CONSENTS. All Consents of Governmental Authorities and
third parties described in SUBSECTION 5.1.17 and necessary to
consummate the transactions contemplated pursuant to this Agreement
will have been obtained and the HSR waiting period shall have expired
or been earlier terminated;
6.1.4 COURT ORDER. The absence of any non-appealable final
order, decree or judgment of any Governmental Authority having
competent jurisdiction regarding the matters covered by this Agreement
or the transactions contemplated hereby;
6.1.5 NO MATERIAL ADVERSE CHANGE. Since December 31, 1997,
there shall not have been any Material Adverse Change provided that
none of the events, circumstances or developments set forth on SCHEDULE
6.1.5 (or related thereto) shall be used by WAC as a basis for
asserting any failure of this condition.
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<PAGE> 23
6.1.6 CERTIFICATE OF L-P. At the Closing, L-P shall have
delivered to WAC a Certificate of L-P's Secretary or an Assistant
Secretary, and dated the Closing Date (a) certifying the incumbency of
the officers signing the Transaction Documents; and (b) certifying the
general signing resolutions of the Boards of Directors of L-P and L-P's
organizational documents to be true, complete and in full force and
effect and unmodified as of the Closing Date.
6.1.7 CERTIFICATE; DOCUMENTS. L-P and the other Persons shall
have executed and delivered to WAC the documents required by SECTION
4.2.
6.1.8 ENVIRONMENTAL AUDITS. Phase I environmental audits,
conducted by ERM Southeast, Inc.(the "ENVIRONMENTAL AUDITS"), shall
have been completed at each Weather-Seal Business Real Property.
6.2 CONDITIONS TO L-P'S OBLIGATIONS. L-P's obligations to
consummate this Agreement is subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which (except for
those contained in SUBSECTIONS 6.2.3 and 6.2.4) may be waived by L-P:
6.2.1 REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of WAC contained in this Agreement will
be true and correct in all material respects both on the date of this
Agreement and on the Closing Date.
6.2.2 COVENANTS. WAC shall have performed and complied in all
material respects with all covenants and agreements required to be
performed or complied with by it at or prior to the Closing Date.
6.2.3 CONSENTS. All Consents of Governmental Authorities
described in SUBSECTION 5.1.17 and necessary to consummate the
transactions contemplated pursuant to this Agreement will have been
obtained and the HSR waiting period shall have expired or been earlier
terminated.
6.2.4 COURT ORDER. The absence of any non-appealable final
order, decree or judgment of any Governmental Authority having
competent jurisdiction regarding the matters covered by this Agreement
or the transactions contemplated hereby;
6.2.5 CERTIFICATE OF WAC. At the Closing, WAC shall have
delivered to L-P a Certificate of WAC's Secretary or an Assistant
Secretary, and dated the Closing Date, (a) certifying the incumbency of
the officers signing the Transaction Documents to be executed and
delivered by WAC; and (b) certifying the general signing resolutions of
the Board of Directors of WAC and WAC's organizational documents to be
true, complete and in full force and effect and unmodified as of the
Closing Date.
6.2.6 CERTIFICATES; DOCUMENTS AND CLOSING PAYMENT. WAC shall
have executed and delivered to L-P the documents required by SECTION
4.3 and shall have delivered its portion of the Closing Payment as
required by SUBSECTION 4.3.1.
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6.2.7 DEPOSIT. The Escrow Agent shall have delivered the
Deposit as required by SECTION 4.4.
6.2.8 ENVIRONMENTAL AUDITS. The Environmental Audits shall
have been completed at each Weather-Seal Business Real Property.
6.3 WAIVER OF CONDITIONS. Consummation of the transactions
contemplated in this Agreement shall constitute a waiver by each L-P and WAC of
all conditions to Closing benefitting such party.
ARTICLE 7. PRE-CLOSING COVENANTS
--------------------------------
7.1 COVENANTS OF L-P.
7.1.1 CONDUCT OF THE WEATHER-SEAL BUSINESS. Except as set
forth on SCHEDULE 7.1.1, as contemplated in this Agreement or as
otherwise consented to by WAC in writing (which consent shall not be
unreasonably withheld or delayed), during the period from the date of
this Agreement through the Closing Date, L-P shall conduct the
Weather-Seal Business in the ordinary and normal course of business and
consistent in all material respects with past practice. Without
limiting the generality of the foregoing and except as otherwise
expressly permitted in this Agreement or otherwise required by Law,
during the period from the date of this Agreement through the Closing
Date, L-P shall not:
(a) OBLIGATIONS FOR BORROWED MONEY. In connection
with the Weather-Seal Business or the Acquired Assets (a)
create, incur or assume any debt that would, in whole or in
part, constitute "Assumed Liabilities" under this Agreement or
that would not be fully repaid prior to the Closing; (b)
assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for
the obligation of any other Person that would, in whole or in
part, constitute "Assumed Liabilities" under this Agreement or
result in Liens on the Acquired Assets; or (c) make any loans,
advances or capital contributions to any other Person other
than Trade Payables;
(b) EMPLOYEE MATTERS. (i) Increase in any manner the
rate of compensation of, or grant bonuses to, any of the
employees at the Weather-Seal Premises except pursuant to
existing commitments or policies; (ii) enter into or modify
any collective bargaining agreement relating to the
Weather-Seal Business, or employment or consulting agreement
with an employee at the Weather-Seal Premises, or (iii) commit
itself to any additional Employee Plan relating to the
Weather-Seal Business;
(c) SALE OF ASSETS. Transfer any Acquired Assets,
except Inventory in the ordinary and normal course of
business;
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(d) CONTRACTS. Amend, modify, terminate, waive any
rights under, or cancel any Contract; or
(e) ACCOUNTING. Introduce any new method of
accounting in respect of the Weather-Seal Business or any of
the Acquired Assets.
7.1.2 AMENDMENTS TO SCHEDULES; DISCLOSURES. From time to time
prior to the Closing, L-P may (but will not be required to) supplement
or amend the Schedules to this Agreement to reflect new or additional
information, and any such supplement or amendment of any Schedule will
be effective to cure and correct for all purposes any breach of any
representation, warranty or covenant which would have existed by reason
of L-P not having made such supplement or amendment.
7.1.3 NO SOLICITATION. From the date hereof through and until
the earlier of the termination of this Agreement pursuant to ARTICLE 9
or the Closing, neither L-P, nor any of its Affiliates, employees,
officers, agents, advisors or representatives, shall do any of the
following:
(a) PROHIBITION OF CERTAIN TRANSACTIONS. Solicit or
initiate any proposals or offers from any Person relating to
any acquisition of the Acquired Assets or the Weather-Seal
Business (other than sales in the ordinary course of
business).
(b) PROHIBITION OF CERTAIN DISCUSSIONS. With respect
to any effort or attempt by any other Person to do or attempt
to do anything contemplated by SUBSECTION 7.1.3(A),
participate in any negotiations.
7.2 CERTAIN ADDITIONAL COVENANTS OF WAC AND L-P.
7.2.1 ACCESS TO RECORDS AND PROPERTIES. Prior to the Closing,
L-P shall permit WAC or its representatives, during normal business
hours and after obtaining L-P's prior written consent (a) to conduct
such investigation of the condition (financial or otherwise), business
or operations of the Weather-Seal Business as WAC reasonably deems
appropriate; and (b) (i) full and complete access to the Business
Property, and all of the facilities, offices and personnel of the
Weather-Seal Business, and to all of the books and records of L-P with
respect to the Weather-Seal Business and the Acquired Assets; and (ii)
to make such inspections and copies thereof as WAC reasonably may
require. Investigations will be conducted in such a manner as not to
interfere unreasonably with the operation of the businesses of L-P.
7.2.2 PRESS RELEASES AND DISCLOSURE. Except as otherwise
required by securities Laws or applicable stock exchange rules, none of
L-P, WAC, nor their Affiliates, shall issue or cause publication of any
press release or other announcement or public communication with
respect to this Agreement or the transactions contemplated hereby, or
otherwise disclose this Agreement or the transactions contemplated
hereby to any third party (other than the attorneys, advisors and
accountants to, and the lenders of, L-P or
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WAC) without the consent of the other party hereto. If any party is
required by securities Laws or applicable stock exchange rules to issue
or cause the issuance of any public announcement or other communication
with respect to this Agreement or the transactions contemplated hereby,
such party shall notify the other party in writing as far in advance as
practicable which is, in all events, to be at least one business day
prior to such announcement or communication.
7.2.3 CLOSING. L-P and WAC shall use their commercially
reasonable efforts to satisfy by the Closing Date the conditions set
forth in ARTICLE 6 to be satisfied by such party.
7.2.4 OBTAINING CONSENTS.
(a) WAC and L-P shall continue to take, or cause to
be taken by others, all commercially reasonable steps, to
obtain or satisfy, at the earliest practicable date, all
Consents from any individual, partnership, corporation,
association, joint stock company, trust, joint venture,
limited liability company or any Governmental Authority
(collectively, a "PERSON") necessary to authorize, approve or
permit the full and complete Transfer of the Acquired Assets,
and to consummate and make effective the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that L-P
shall not be required to incur (unless indemnified by WAC) any
financial or other obligation in connection therewith other
than normal and customary transaction costs and filing fees.
(b) L-P and WAC shall use their commercially
reasonable efforts to obtain any authorizations, consents,
orders and approvals of any Governmental Authority necessary
for the performance of its respective obligations pursuant to
this Agreement and any of the other Transaction Documents, and
the consummation of the transactions contemplated hereby and
thereby, and will cooperate with each other in all reasonable
respects in promptly seeking to obtain such authorizations,
consents, orders and approvals. Neither WAC nor L-P will take
any action that will have the effect of delaying, impairing or
impeding the receipt of any required regulatory approvals.
Without limiting the generality of the foregoing, L-P and WAC
promptly will (i) file or cause to be filed with the Federal
Trade Commission and the Antitrust Division of the Department
of Justice, Notification and Report Forms and documentary
materials in respect of the transactions contemplated by this
Agreement that substantially comply with the provisions of the
HSR Act and the rules thereunder; (ii) file any additional
information requested as soon as practicable after receipt of
a request for additional information. WAC and L-P will use
their commercially reasonable efforts to obtain early
termination of the applicable waiting period under the HSR
Act. The parties hereto will coordinate and cooperate with one
another in exchanging such information and providing such
reasonable assistance as may be requested in connection with
such filing.
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7.2.5 CONSENTS FOR NONASSIGNABLE ITEMS. L-P shall use its
commercially reasonable efforts and WAC shall cooperate in all
reasonable respects with L-P to obtain and satisfy all Consents and to
resolve all impracticalities of Transfer necessary to convey to WAC all
Nonassignable Items, provided that L-P shall not be required to incur
(unless indemnified by WAC) any financial or other obligation in
connection therewith other than normal and customary transaction costs
and filing fees.
7.2.6 MULTIEMPLOYER PENSION PLAN. With respect to the Central
States, Southeast and Southwest Areas Pension Fund, the Ohio State
Carpenters Pension Plan and any other multiemployer plan (as defined in
Section 3(37)(A) of ERISA) to which L-P contributes on behalf of any
employees employed in the Weather-Seal Business as of the Closing Date
(individually, a "MULTIEMPLOYER PLAN" and collectively, the
"MULTIEMPLOYER PLANS"), L-P and WAC intend to satisfy the requirements
of Section 4204 of ERISA to avoid a withdrawal by L-P from the
Multiemployer Plans as a result of the transactions contemplated in
this Agreement in respect of the Weather-Seal Business employees
covered by this Agreement and one or more such Multiemployer Plans. In
this regard, the following provisions shall apply:
(a) At the Effective Time, WAC shall become a
successor employer contributing to the Multiemployer Plans on
behalf of the employees of Weather-Seal acquired by WAC
participating in such Multiemployer Plans pursuant to the
terms of the applicable collective bargaining agreements, and
WAC shall make contributions after the Closing Date to the
Multiemployer Plans for substantially the same number of
contribution base units (as defined in Section 4001(a)(11) of
ERISA) that L-P had an obligation to contribute to the
Multiemployer Plans immediately prior to the Closing Date.
(b) With respect to any Multiemployer Plans for which
L-P has disclosed on Schedule 5.1.13 an amount of potential
withdrawal liability in excess of zero, (1) WAC shall provide,
as soon as reasonably practicable following the Closing Date,
but in no event later than December 31, 1998, a copy of a bond
issued by a corporate surety company that is an acceptable
surety for purposes of Section 412 of ERISA with a term
extending to the last day of the fifth full calendar year
following the Closing Date (the "PROTECTED PERIOD") or proof
of the establishment of an escrow account with a bank or
similar financial institution until the last day of the
Protected Period, satisfactory to the trustees of the
Multiemployer Plans, in an amount equal to the greater of: (i)
the average of L-P's annual contributions to the Multiemployer
Plans with respect to the Weather-Seal Business for the three
plan years preceding the plan year in which the Closing Date
occurs, or (ii) L-P's contributions to the Multiemployer Plans
with respect to the Weather-Seal Business for the plan year
preceding the plan year in which the Closing Date occurs, or
(2) in lieu of providing a copy of a bond as provided above,
WAC may provide evidence of a variance obtained from the
trustees of the Multiemployer Plans (in accordance with the
procedures set forth in Section 4204(c) of ERISA and
procedures established by such Multiemployer Plan Trustees)
and a simultaneous written release from secondary liability in
favor
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of L-P executed by such Multiemployer Plan trustees pursuant
to Section 4204(a)(1)(C) of ERISA and this subparagraph (b).
Following the posting of such bond, or obtaining such
variance, at no time shall WAC fail, to satisfy the bond or
escrow requirements of Section 7.2.6(b) without the advance
written approval of L-P.
(c) If there is a partial or complete withdrawal (as
such terms are defined in Sections 4205(a) and 4203(a) of
ERISA, respectively) from either or both of the Multiemployer
Plans by WAC prior to the end of the Protected Period, L-P
shall, to the extent required by applicable law, rule or
regulation, be secondarily liable for any withdrawal liability
L-P would have had to the Multiemployer Plans as a result of
either a complete or partial withdrawal therefrom that is not
paid by WAC to the Multiemployer Plans in respect of such
withdrawal.
(d) Notwithstanding anything to the contrary, either
WAC or L-P shall promptly notify the other party of any
withdrawal or partial withdrawal or demand for payment of
withdrawal liability received by WAC or L-P, respectively from
either of the Multiemployer Plans. In addition, WAC shall
promptly notify L-P of any action taken to request a variance
from the requirements of Section 7.2.6(b). L-P agrees to take
all reasonable actions required pursuant to the procedures of
the trustees of the Multiemployer Plans to enable WAC to
secure a variance from the trustees of the Multiemployer Plans
from the bonding requirements set forth in this Section,
within the time period required by such trustees. It is
acknowledged that WAC's assumption of withdrawal liability
pursuant to this Section 7.2.6 is contingent upon L-P's
providing the assistance required in this subsection.
(e) L-P shall request from the sponsors of each of
the Multiemployer Plan a statement (the "ERISA STATEMENT")
setting forth the amount of withdrawal liability L-P would
incur as of the Closing Date, under Part 1 of Subtitle E of
Title IV of ERISA, if L-P withdrew or were deemed to have
withdrawn completely, from the Multiemployer Plan as of said
date. L-P hereby agrees to deliver each ERISA Statement to WAC
promptly upon the receipt thereof.
ARTICLE 8. POST-CLOSING COVENANTS AND OTHER AGREEMENTS
------------------------------------------------------
8.1 MAINTENANCE OF, AND ACCESS TO, RECORDS. WAC and L-P shall,
at the request of the other party, make available to such other party from time
to time on a reasonable basis the books and records relating to the Weather-Seal
Business (the "WEATHER-SEAL BOOKS AND RECORDS") in their possession. Such
Weather-Seal Books and Records shall be held by the party in possession thereof
for seven years after the Closing Date, and the other party shall have the
right, at its expense, to inspect and make copies of such Weather-Seal Books and
Records upon such party's request; provided, however, that (i) all such access
and copying shall be done in such a manner so as not to unreasonably interfere
with the normal conduct of the operations of
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the party requested to provide access to such Weather-Seal Books and Records,
and (ii) the party requesting access to such Weather-Seal Books and Records
shall treat the same and the content thereof as confidential and not disclose
such Weather-Seal Books and Records or the contents thereof to any Person except
as required by applicable law. Without limiting the generality of the foregoing,
the party in possession of Weather-Seal Books and Records responsive to document
requests from a Tax authority shall provide copies of all documents responsive
to such request to the other party within the deadline set forth in such
document requests, but in no event later than two (2) weeks from the date the
party in possession of such Weather-Seal Books and Records shall receive such
document requests from the other party. In addition, after the Closing Date, at
either party's request, the other party shall make available to the requesting
party such employees, representatives and agents of such party, as may be
reasonably requested in connection with any action, including to provide
testimony, to be deposed, to act as witnesses and to assist counsel; PROVIDED,
HOWEVER, that (x) access to such employees shall not unreasonably interfere with
the normal conduct of the operations of such party, and (y) the requesting party
shall reimburse the other party for the out-of-pocket costs reasonably incurred
by such party in making such employees available to the requesting party.
Neither WAC nor L-P shall dispose of any Weather-Seal Books and Records without
first offering in writing such Weather-Seal Books and Records to the other party
(and giving such other party thirty (30) days to accept such offer).
8.2 OBLIGATIONS FOR ACCOUNTS RECEIVABLES. In the event that
L-P receives any payment relating to any Accounts Receivable outstanding on or
after the Closing Date, L-P shall immediately forward and pay such amount to
WAC.
8.3 TRADE NAMES. To the extent the Retained Names appear on
(a) any plant, building or equipment or (b) any business form, packaging,
container, sign or other property (real or personal) included in the Acquired
Assets, L-P hereby grants a royalty free license to WAC to use the Retained
Names on such Acquired Assets until removal can be effected from such Acquired
Assets or until such materials are used and exhausted; PROVIDED, HOWEVER, that
WAC shall use reasonable efforts in a timely fashion to effect obliteration of
the Retained Names from all Acquired Assets, and cease, in any event, using the
Retained Names no later than February 28, 1999.
8.4 FURTHER ASSURANCES. L-P shall use its commercially
reasonable efforts to implement the provisions of this Agreement (including
continuing to obtain Consents in accordance with SUBSECTION 7.2.4) and to
Transfer legal title of the Acquired Assets to WAC, and for such purpose L-P, at
the request of WAC, at or after the Closing, shall, without further
consideration, promptly execute and deliver, or cause to be executed and
delivered, to WAC such documents prepared by WAC (at WAC's expense) as WAC may
reasonably deem necessary or desirable to better or more completely implement
the transactions contemplated by this Agreement. Notwithstanding any other
provision in this Agreement to the contrary, nothing herein shall release L-P
from its obligation to Transfer any Acquired Asset or use its commercially
reasonable efforts to obtain any Consent.
8.5 EMPLOYEE MATTERS.
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8.5.1 CERTAIN DEFINITIONS.
(a) REPRESENTED EMPLOYEES. The term "REPRESENTED
EMPLOYEES" means all of the employees of L-P at the
Weather-Seal Premises who are represented in collective
bargaining units pursuant to the Weather-Seal CBAs (including
those who are not actively at work but who retain seniority
rights under the Weather-Seal CBAs).
(b) UNREPRESENTED EMPLOYEES. The term "UNREPRESENTED
EMPLOYEES" means all employees of L-P normally officed at the
Weather-Seal Premises or exclusively associated with the
Weather-Seal Business other than Represented Employees.
(c) TRANSFERRED EMPLOYEES. The term "TRANSFERRED
EMPLOYEES" means all Represented Employees and Unrepresented
Employees.
8.5.2 EMPLOYMENT OF UNREPRESENTED EMPLOYEES.
Effective at the Closing, WAC shall offer employment to all of the
Unrepresented Employees and shall offer them compensation and benefits
substantially similar to the compensation and benefits provided to them
by L-P immediately prior to the Closing. WAC agrees, consistent with
the terms of its plans and policies, to recognize the Unrepresented
Employees' service with L-P for purposes of (a) eligibility for
participation and benefits and for computing the amount of the benefit
and (b) vesting service, as applicable, under all of WAC's employee
benefit plans, personnel policies and fringe benefit plans, programs
and arrangements established for or offered to Unrepresented Employees.
8.5.3 EMPLOYMENT OF REPRESENTED EMPLOYEES.
(a) GENERAL CONDITIONS. Effective at the Closing, WAC
has offered employment status to all Represented Employees who
are actively at work as of the Closing. Those Represented
Employees who are not actively at work as of the Closing have
been offered employment status consistent with the terms and
conditions of the Weather-Seal CBAs. Without limiting in any
manner the generality of the foregoing, nothing in this
Agreement prevents WAC from employing at any time subsequent
to the Closing any Represented Employee who does not accept
employment status with WAC effective at the Closing.
(b) ASSUMED WEATHER-SEAL CBA. At the Closing, WAC
shall also assume L-P's obligations under the Assumed
Weather-Seal CBA, other than with respect to L-P's Employee
Plans (it being acknowledged and agreed that L-P, except as
otherwise provided in SECTION 2.1, SUBSECTION 7.2.6 or
SUBSECTION 8.5.4(A) will remain liable to all Represented
Employees for benefits accrued to the Closing Date under L-P's
Employee Plans in which such employees are vested) as of the
Closing and that WAC will, subject to the terms of this
SUBSECTION 8.5.3, provide to Represented Employees the
pension, profit sharing and other employee benefits required
under the Assumed Weather-Seal CBA.
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(c) RETAINED WEATHER-SEAL CBAS. With respect to the
Retained Weather-Seal CBAs, effective at the Closing, WAC
agrees to offer employment to all Represented Employees
covered by the Retained Weather-Seal CBAs subject to WAC's
right, consistent with Law, to establish initial terms and
conditions of the employment of such employees.
(d) REPLACEMENT OF PLANS. To abide by the terms of
the Weather-Seal CBAs, WAC shall comply with SUBSECTION 7.2.6
and effective on the date immediately following the Closing
Date replace the L-P Employee Plans not assumed by WAC
hereunder covering the Represented Employees immediately prior
to the Closing. To the extent possible, any new employee
benefit plans will replicate L-P's Employee Plans that cover
Represented Employees. WAC agrees to recognize Represented
Employees' seniority and service with L-P for purposes of
eligibility for participation, benefits and vesting in
benefits accrued, but not for accrual of benefits, under all
of WAC's employee benefit plans (whether or not funded and
whether or not subject to ERISA).
8.5.4 CERTAIN EMPLOYEE PLAN ISSUES.
(a) OTTAWA 401(K).
(i) Effective as of the Closing, L-P will
amend the Louisiana- Pacific Corporation, Ottawa,
Ohio 401(k) Retirement Plan and Trust (the "OTTAWA
401(K) PLAN") and the accompanying trust document for
such Ottawa 401(k) Plan, so as to transfer the
sponsorship of, and the assets and liabilities of,
such Ottawa 401(k) Plan to WAC, so that, immediately
after the Closing, L-P is not the sponsor of such
Ottawa 401(k) Plan and has no liability or obligation
to contribute, administer or participate with respect
to such Ottawa 401(k) Plan. WAC shall prepare and
submit any reports, returns or notices to the
Internal Revenue Service required for such Ottawa
401(k) Plan for 1998. L-P will file any such reports
relating to the Ottawa 401(k) Plan for the 1997 plan
year.
(ii) From the Closing Date until the date of
transfer of sponsorship (the "TRANSFER OF SPONSORSHIP
DATE"), WAC shall cause to be made continuous payroll
deductions each pay period from the pay of each
participant in the Ottawa 401(k) Plan who has a
loan(s) outstanding from the Ottawa 401(k) Plan of
amounts sufficient to pay the installment payments of
principal and interest on each such loan as required
by the promissory note or other evidence of
indebtedness relating to such loan. Such deducted
amounts shall be paid to the trustee of the Ottawa
401(k) Plan and the trustee shall accept such
payments for a credit against such loans.
(iii) On or prior to the Transfer of
Sponsorship Date and subject to the requirements of
applicable law, L-P shall make a contribution to the
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Ottawa 401(k) Plan of the amounts of any salary
reduction contributions, employer matching
contributions, if any, and other contributions
attributable to or payable on account of each
participant under the terms of the Ottawa 401(k) Plan
for any time period ending on the Closing Date.
(b) L-P 401(K).
(i) Effective as of the Closing Date, L-P
will amend the Louisiana-Pacific Corporation 401(k)
Plan and Trust (the "L-P 401(K) PLAN") to cease
contributions to the L-P 401(k) on behalf of the
Unrepresented Employees and provide that the assets
and liabilities of the Unrepresented Employees held
in such L-P 401(k) Plan will be transferred to the
AAPC Plan as soon as reasonably practicable.
(ii) From the Closing Date until the date of
transfer of assets and liabilities (the "ASSET
TRANSFER DATE"), WAC shall cause to be made
continuous payroll deductions each pay period from
the pay of each Unrepresented Employee participating
in the L-P 401(k) Plan who has a loan(s) outstanding
from the L-P 401(k) Plan, if any, of amounts
sufficient to pay the installment payments of
principal and interest on each such loan as required
by the promissory note or other evidence of
indebtedness relating to such loan. Such deducted
amounts shall be paid to the trustee of the L-P
401(k) Plan and the trustee shall accept such
payments for a credit against such loans.
(iii) On or prior to the Asset Transfer
Date, and subject to the requirements of applicable
law, L-P shall make a contribution to the L-P 401(k)
Plan of the amounts of any salary reduction
contributions, employer matching contributions, if
any, and other contributions attributable to or
payable on account of each participant under the
terms of the L-P 401(k) Plan for any period of time
ending on the Closing Date.
(iv) Following the Closing, as soon as
reasonably practicable, L-P and WAC shall effectuate
a plan-to-plan transfer from the L-P 401(k) Plan to
the "AAPC 401(k)" Plan of the account balances of the
L-P Unrepresented Employees under the L-P 401(k)
Plan; PROVIDED, HOWEVER, that L-P agrees to provide
to WAC adequate information to effectuate the
transfer and PROVIDED, FURTHER, that WAC agrees to
preserve, with respect to such transfer, all benefits
protected under Section 411(d)(6) of the Code.
(c) Effective as of the Closing Date, WAC shall
provide each Transferred Employee with credit for his accrued
but unused vacation, based on the L-P vacation policy
applicable to such Transferred Employee in effect on the
Closing Date. For this purpose, "ACCRUED BUT UNUSED VACATION"
shall mean
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vacation accrued by the Transferred Employee but not yet taken
by such Transferred Employee, determined as of the Closing
Date.
(d) In connection with the implementation of this
SUBSECTION 8.5.4, WAC and L-P shall cooperate in the exchange
of information, the notification of Transferred Employees and
in the preparation of any documentation required to be filed
with the trustee, the record keeper, Internal Revenue Service,
the Department of Labor or any other applicable governmental
agency.
(e) L-P shall retain and shall assume, bear and
discharge all liabilities for claims incurred prior to the
Closing under its welfare benefit plans (as that term is
defined in Section 3(1) of ERISA) covering Transferred
Employees (and their dependents) (the "L-P WELFARE PLANS") and
L-P shall continue to retain and assume, bear and discharge
all liabilities incurred after the Closing (i) under its
retiree medical and life insurance plans covering those
Transferred Employees (and their dependents and beneficiaries)
that were eligible, prior to the Closing Date, for retirement
with L-P and (ii) under its group health plan as provided in
SUBSECTION 8.5.4(F).
Subject to the foregoing, WAC shall bear and
discharge all liabilities for claims incurred on and after the
Closing under its welfare benefit plans (as that term is
defined in Section 3(1) of ERISA) covering Transferred
Employees (and their dependents and beneficiaries) ("WAC
WELFARE PLANS").
For purposes of this SUBSECTION 8.5.4, a claim will
be deemed "incurred" on the date that the event that gives
rise to the claim occurs (for purposes of life insurance,
severance and sickness/accident/disability programs) or on the
date that treatment or services are provided (for purposes of
health care programs).
L-P shall provide all information reasonably
requested by WAC concerning the claim histories of Transferred
Employees under the L-P Welfare Plans for purposes of WAC
considering such prior claim histories in the administration
of the deductible and required maximum benefit provisions
under WAC's Welfare Plans.
(f) L-P and not WAC shall be liable for the payment
of any health expenses incurred for continuation coverage
under Section 4980B of the Code or Part 6 of Title I of ERISA
with respect to "qualifying events" (within the meaning of
Section 4980B(f)(3) of the Code or Section 603 of ERISA)
occurring before the Closing with respect to Transferred
Employees (or their dependents). After the Closing, L-P shall
cause any "qualified beneficiary" (within the meaning of
Section 4980B(g)(1) of the Code or Section 607 of ERISA) with
respect to such qualifying events to be covered under the
L-P's group health plan for the period of continuation
coverage. After the Closing, WAC shall be responsible and
liable for payments of any health care expenses for
continuation coverage that (i) are incurred by Transferred
Employees who terminate employment with or retire
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from WAC after the Closing and (ii) are covered and payable
under any group health plan of WAC in which Transferred
Employees participate (which group health plan shall cover
such Transferred Employees' preexisting medical conditions).
(g) L-P and not WAC shall be responsible for any
liabilities incurred prior to the Closing Date as a result of
the Health Insurance Portability and Accountability Act of
1996.
8.5.5 WORKERS' COMPENSATION CLAIMS. L-P shall be
responsible for and pay any and all workers' compensation and other
similar statutory claims asserted by or with respect to any Transferred
Employees in respect of any injury or other compensable event or
occupational illness or disease that occurred or is attributable to any
event, state of facts or condition that existed or occurred in whole
prior to the Closing. WAC shall be responsible for and pay any and all
workers' compensation and other similar statutory claims asserted by or
with respect to any Transferred Employees in respect of any injury or
any other compensable event or occupational illness or disease that
occurred or is attributable to any event, state of facts or condition
that existed or occurred in whole after the Closing. If any such injury
or other compensable event or occupational illness or disease of a
Transferred Employee who was employed by L-P prior to the Closing and
by WAC after the Closing is attributable in part to causes occurring
prior to the Closing and in part to causes subsequent to the Closing
and is the basis of a workers' compensation or other similar statutory
claim, the liability for any such claims will be shared by L-P and WAC
in the proportion of the periods of employment of such Transferred
Employee on or prior to the Closing and after the Closing,
respectively.
8.6 BULK TRANSFER LAWS. WAC hereby waives compliance by L-P
with the Laws of any jurisdiction relating to bulk transfers that may be
applicable in connection with the Transfer of the Acquired Assets to WAC.
8.7 NON-COMPETITION.
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8.7.1 NON-COMPETITION OBLIGATION. As further
consideration for the Transfer of the Acquired Assets pursuant to this
Agreement and the transactions contemplated by this Agreement, for a
period commencing on the Closing Date through the second (2nd)
anniversary of the Closing Date (the "NON-COMPETITION PERIOD"), L-P
shall not, and shall cause each of its Affiliates not to, engage in the
Weather-Seal Business or any other business activity that is the same
as or substantially similar to the Weather-Seal Business (a
"COMPETITIVE ACTIVITY") in the United States; PROVIDED, HOWEVER, that
nothing in this SECTION 8.7 prevents L-P from (a) selling and
distributing wood, vinyl and vinyl-clad windows and patio doors
manufactured by Persons other than L-P or its Affiliates, (b) owning
directly or indirectly (whether through Affiliates) less than five
percent (5%) of any class of securities of a company whose securities
are listed on a national securities exchange or are regularly quoted in
an over-the-counter market by one or more members of the National
Association of Securities Dealers that is engaged in any business that
is competitive with the Weather-Seal Business, or (c) acquiring a
company and continuing to operate any business of such company whose
sales attributable to a Competitive Activity constitute less than ten
percent (10%) of such company's total consolidated worldwide sales over
any fiscal year during or immediately preceding the Non-Competition
Period; PROVIDED, HOWEVER, that L-P, unless expressly permitted by
SUBSECTION 8.7.3, shall not sell or distribute wood, vinyl and
vinyl-clad windows or patio doors within the Restricted Territory (as
defined in SUBSECTION 11.10.8) during the Non-Competition Period.
8.7.2 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS.
During the Non-Competition Period, L-P shall not, and shall cause each
of its Affiliates not to (i) solicit for employment or employ any
individual who is engaged in employment directly or indirectly at the
Weather-Seal Premises in the Weather-Seal Business for employment with
L-P after the Closing Date; or (ii) solicit any current or prospective
customer, client or account of the Weather-Seal Business for any
Competitive Activity.
8.7.3. COOPERATION DURING NON-COMPETITION PERIOD.
During the Non-Competition Period, each of L-P and WAC shall negotiate
in good faith and use their respective commercially reasonable efforts
to permit WAC to become a supplier to L-P of wood, vinyl and vinyl-clad
windows and patio doors for distribution and sale by L-P. None of the
restrictions contained in SUBSECTION 8.7.1 shall apply to any
distribution and sale by L-P of wood, vinyl and vinyl-clad windows and
patio doors manufactured by WAC or its Affiliates.
8.8 TRANSFER TAXES. All transfer, sales, use, recordation and
documentary Taxes and fees that may be payable in connection with the Transfer
of the Acquired Assets and consummation of the transactions contemplated by this
Agreement (but excluding any income tax or other taxes on gains recognized by
L-P in connection with the sale of the Acquired Assets to WAC) shall be borne
fifty percent (50%) by L-P and fifty percent (50%) by WAC except for sales and
use taxes which shall be borne one hundred percent (100%) by WAC.
8.9 INSURANCE. The insurance policies maintained and
administered by L-P relating to the Weather-Seal Business or the Acquired Assets
will not continue to insure the Acquired Assets or the Weather-Seal Business
after the Closing Date and, WAC hereby agrees to obtain substitute
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policies of insurance that provide insurance coverage for the Acquired Assets
and the Weather-Seal Business from and after the Closing Date.
ARTICLE (9). TERMINATION
------------------------
9.1 TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing:
9.1.1 MUTUAL CONSENT. By mutual written consent of
L-P and WAC;
9.1.2 CLOSING DATE. By WAC or L-P if the Closing has
not occurred for any reason other than as a result of the terminating
party's default hereunder, on or before July 31, 1998 (the "TERMINATION
DATE");
9.1.3 L-P'S MISREPRESENTATION OR BREACH. By WAC, if
there is a material breach by L-P of any of their representations,
warranties, covenants, obligations or agreements set forth in this
Agreement;
9.1.4 WAC MISREPRESENTATION OR BREACH. By L-P, if
there is a material breach by WAC of any of its representations,
warranties, covenants, obligations or agreements set forth in this
Agreement;
9.1.5 WAC'S CONDITIONS. By WAC, if any condition
precedent to WAC's obligation to effect the Closing as set forth in
SECTION 6.1 is not satisfied in all material respects, or has become
incapable of fulfillment (and WAC did not cause such failure or
impossibility of satisfaction), and such condition is not waived, if
waivable, by WAC on or prior to the Termination Date; or
9.1.6 L-P'S CONDITIONS. By L-P, if any condition
precedent to L-P's obligation to effect the Closing as set forth in
SECTION 6.2 is not satisfied in all material respects, or has become
incapable of fulfillment (and L-P did not cause such failure or
impossibility of satisfaction), and such condition is not waived, if
waivable, by L-P on or prior to the Termination Date.
9.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to SECTION 9.1, written notice thereof must forthwith be given to the
other party and this Agreement, except as provided in SECTION 9.1 and in this
SECTION 9.2, will thereafter become void and have no further force and effect
and all further obligations of L-P and WAC under this Agreement will terminate
without further liability of L-P or WAC, except that (a) each party shall return
all documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same, and all confidential
information received by any party hereto with respect to the business of any
other party will be treated in accordance with the Nondisclosure Agreement,
dated January 9, 1998, between L-P and WAC (the "NONDISCLOSURE AGREEMENT"), and
(b) the obligations of L-P and WAC, as the case may be, under SECTION 9.3 and
under SECTION 11.13 will
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survive such termination, and (c) nothing herein shall relieve any party from
liability for any breach of this Agreement prior to termination under
SUBSECTIONS 9.1.3 or 9.1.4 or deprive any party its right of specific
performance on account of such breach.
9.3 TERMINATION FEE If WAC fails or refuses to effect the
Closing or terminates this Agreement in accordance with SUBSECTION 9.1.6 for any
reason other than the failure or impossibility of satisfaction of the conditions
to WAC's obligations set forth in SUBSECTIONS 6.1.3, 6.1.4 OR 6.1.5, the Escrow
Agent shall, as soon as practicable in accordance with the terms of the Escrow
Agreement, pay to L-P the Deposit as a termination fee (the "L-P TERMINATION
FEE") in consideration of L-P's efforts hereunder. The L-P Termination fee is
intended to reimburse L-P for its expenses hereunder and is not intended as a
measure of liquidated damages or to prevent L-P from pursuing any other remedy
it may have in the event of a breach of this Agreement by WAC.
ARTICLE (10). INDEMNIFICATION
-----------------------------
10.1 INDEMNIFICATION BY WAC. From and after the Closing, WAC
shall indemnify, defend and hold L-P, its Affiliates, and their respective
directors, officers, representatives, employees and agents (collectively the
"L-P INDEMNIFIED PARTIES") harmless from and against any and all claims,
actions, suits, demands, assessments, judgments, losses, liabilities, damages,
costs and expenses (including, without limitation, interest, penalties,
attorneys' fees to the extent permitted by law, disbursements, accounting fees
and investigation costs) ("DAMAGES") incurred by any of them as a result of:
(a) the attempted enforcement by any third party of
any of the Assumed Liabilities (including, without limitation,
any Damages related to the Assumed Liabilities arising from or
in connection with, or relating to: (i) WAC's operation of the
Weather-Seal Business or ownership of the Acquired Assets
(including the Weather-Seal Premises) after the Closing; (ii)
any Release of a Hazardous Substance at, on, under or from any
of the Weather-Seal Business Real Property after the Closing
Date; or (iii) any violation or alleged violation of
Environmental Laws involving the Weather-Seal Business or any
of the Weather-Seal Business Real Property after the Closing
Date); or
(b) any breach by WAC or AAPC, as the case may be,
of any of the representations or warranties made by WAC in
SECTION 5.2 or AAPC in the Note; or
(c) any breach by WAC or AAPC, as the case may be, of
any of the covenants or agreements of WAC contained in this
Agreement or AAPC in the Note;
(d) the attempted enforcement by any third party of
any of L-P's obligations or liabilities (including, without
limitation, any obligations or liabilities related to, arising
from or in connection with, or relating to: any claims
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asserted after the Closing Date which are based upon facts
alleged to have occurred before the Closing Date) under the
Retained Weather-Seal CBAs; or
(e) the collection of amounts owed under, and
enforcement of the terms of, the Note.
10.2 INDEMNIFICATION BY L-P. From and after the Closing,
subject to the further provisions of this ARTICLE 10, L-P shall indemnify,
defend and hold WAC, its Affiliates, and their respective directors, officers,
representatives, employees and agents (collectively the "WAC INDEMNIFIED
PARTIES") harmless from and against any and all Damages incurred by any of them
as a result of:
(a) the attempted enforcement by any third party (or,
in the case of Damages arising from or relating to any
Environmental Law, only by any Governmental Authority) of any
of the Retained Liabilities (including, without limitation,
any Damages related to the Retained Liabilities arising from
or in connection with, or relating to: (i) L-P's operation of
the Weather-Seal Business or ownership of the Acquired Assets
(including the Weather-Seal Premises) prior to the Closing;
(ii) any Release of a Hazardous Substance by L-P at, on, in,
under or from the Weather-Seal Business Real Property before
the Closing Date; or (iii) any violation or alleged violation
by L-P before the Closing Date of Environmental Laws involving
the Weather-Seal Business of any of the Weather- Seal Business
Real Property); or
(b) any breach by L-P of any of the representations
or warranties made by L-P in SECTION 5.1; or
(c) any breach by L-P of any of the covenants or
agreements of L-P contained in this Agreement.
10.3 NOTICE OF CLAIM; RIGHT TO PARTICIPATE IN AND DEFEND
THIRD PARTY CLAIM.
10.3.1 NOTICE OF CLAIM. If any indemnified party
receives notice of any claim, suit, action, proceeding or investigation
in respect of which indemnity may be sought pursuant to this Agreement
(a "THIRD PARTY CLAIM"), and the indemnified party intends to seek
indemnity pursuant to this Agreement, then the indemnified party (the
"BENEFICIARY") promptly shall provide the indemnifying party with
written notice of the Third Party Claim and the relevant facts and
circumstances to the extent known. The failure by the Beneficiary to
notify an indemnifying party of a Third Party Claim shall not relieve
the indemnifying party of any indemnification responsibility under this
ARTICLE 10, except to the extent (a) such failure materially prejudices
the ability of the indemnifying party to defend such Third Party Claim
or (b) the delay resulting from such failure increases the liability of
the indemnifying party.
10.3.2 RIGHT OF PARTICIPATION BY INDEMNIFYING PARTY.
The indemnifying party shall have the right to control the defense,
compromise or settlement of the Third
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Party Claim with its own counsel (reasonably satisfactory to the
Beneficiary) if the indemnifying party delivers written notice to the
Beneficiary, within seven (7) days following the delivery to the
indemnifying party of notice of the Third Party Claim from the
Beneficiary, acknowledging the indemnifying party's obligations to
indemnify the Beneficiary with respect to such Third Party Claim in
accordance with this ARTICLE 10. The indemnifying party shall not enter
into a settlement of any Third Party Claim that would impose any
financial or other liability on the Beneficiary. In its defense,
compromise or settlement of any Third Party Claim, the indemnifying
party shall timely provide the Beneficiary with such information with
respect to such defense, compromise or settlement as the Beneficiary
shall request, and shall not assume any position or take any action
that would impose an obligation on, or restrict the actions of, the
Beneficiary. The Beneficiary may (at the Beneficiary's expense)
participate in the defense by the indemnifying party of any Third Party
Claim with its own counsel.
10.3.3 DEFENSE BY THE BENEFICIARY. In the event that
the indemnifying party does not undertake the defense, compromise or
settlement of a Third Party Claim in accordance with SUBSECTION 10.3.2,
the Beneficiary shall have the right to control the defense or
settlement of such Third Party Claim with its own counsel. The
Beneficiary shall not settle or compromise any Third Party Claim
without the indemnifying party's prior written consent, which shall not
be unreasonably withheld or delayed. The indemnifying party shall be
entitled (at the indemnifying party's expense) to participate in the
defense of any Third Party Claim with its own counsel.
10.3.4 NON-THIRD PARTY CLAIMS. Any indemnifiable
claim under this Agreement that is not a Third Party Claim shall be
asserted by the Beneficiary, if at all, by promptly delivering notice
thereof to the indemnifying party. If the indemnifying party does not
respond to such notice within sixty (60) days of its delivery, it shall
have no further right to contest the validity of such claim.
10.4 LIMITATIONS ON CLAIMS FOR INDEMNIFICATION. Any claim for
indemnification pursuant or relating to this Agreement may only be made on or
before the date which is one (1) year following the Closing Date unless such
claim relates to (i) L-P's representations and warranties in SUBSECTION 5.1.14
(in which case such claim may only be made on or before the date which is two
(2) years following the Closing Date); or (ii) the enforcement by any third
party of any of the Assumed Liabilities against WAC or the Retained Liabilities
against L-P, as the case may be (in which case such claim may only be made on or
before the date which is four (4) years following the Closing Date); or (iii) a
breach of WAC's covenants in SUBSECTION 7.2.6 (in which case such claim may only
be made on or before the last day of the Protected Period (as defined in such
subsection)).
10.5 KNOWN BREACHES. No party shall be obligated to indemnify
any other party (and no amounts shall be attributed to the Deductible (as
defined in SECTION 10.6)) in respect of any breach of any representation or
warranty contained in this Agreement if (a) facts or circumstances resulting in
such breach were known to the party otherwise entitled to indemnification before
the execution of this Agreement, or (b) such facts or circumstances were
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known to the party otherwise entitled to indemnification before the Closing and
such party served no written notice of such discovery upon the other party
before the Closing.
10.6 LIMITATION OF LIABILITY. Notwithstanding any other
provision of this Agreement to the contrary or of any applicable Law, L-P shall
not be required to indemnify, defend or hold WAC harmless from and against any
Damages with respect to any breach of any representation or warranty set forth
in SECTION 5.1, unless and until such Damages equal or exceed $500,000 in the
aggregate (the "DEDUCTIBLE"). After WAC's Damages exceed the Deductible, L-P
shall pay all Damages over and above the Deductible; PROVIDED, HOWEVER, that the
aggregate liability of L-P in connection with its indemnification obligations
under this Agreement shall not exceed an amount equal to 10% of the Purchase
Price (except that such cap shall not apply to any Damages resulting from L-P's
breach of its representations and warranties contained in SUBSECTION 5.1.3).
Notwithstanding the foregoing, L-P shall not be required to indemnify, defend or
hold WAC harmless from and against any claim or series of related claims if the
Damages resulting therefrom suffered by WAC do not exceed $25,000.
10.7 EXCLUSIONS. Notwithstanding any provision in this
Agreement to the contrary, (a) no indemnification shall be available to WAC, and
WAC shall have no recourse after the Closing against L-P, with respect to any
breach of the representation set forth in SUBSECTION 5.1.4; (b) any
indemnification pursuant to this ARTICLE 10 shall exclude all incidental,
consequential, indirect, special and punitive damages (except to the extent that
such damages result from any indemnifying party's acts or omissions that
constitute negligence or intentional misconduct); and (c) no indemnification
that would otherwise be provided by this ARTICLE 10 shall be payable if and to
the extent that any insurance proceeds are paid or payable therefor to the
indemnified party (unless the insurance carrier has effectively denied liability
therefor).
10.8 NO SETOFF. Neither WAC nor AAPC shall not be entitled to
recover any indemnification payment for Damages or other amounts due from L-P
hereunder by retaining and setting off the amounts (whether or not such amounts
are liquidated or reduced to judgment) against any amounts due or to become due
from WAC or AAPC to L-P hereunder or under any document delivered pursuant
hereto or in connection herewith, including, without limitation, the Note.
10.9 MUTUAL RELEASE. Except for the indemnification provided
for in this ARTICLE 10, and L-P's remedies under the Note, as of the Closing,
each of L-P and WAC forever waives, releases and discharges the other party and
such party's respective Affiliates, successors and assigns from any and all
claims, liabilities, actions, whether known or unknown at the Closing Date,
which any such party has or incurs, or may in the future have or incur, against
the other party, arising out of or related to the physical, environmental,
economic or legal condition of the properties and assets currently, formerly, or
to be used in the future, in the Weather-Seal Business or operated, owned,
leased, controlled, possessed, occupied or maintained by either party in the
past, present or future and related to the Weather-Seal Business. Without
limiting the foregoing, except for the indemnification provided for in SECTION
10.2, WAC and its Affiliates hereby forever waive, release and discharge the L-P
Indemnified Parties and their successors and assigns from any and all claims for
cost recovery or contribution under any
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Environmental Law and under common law doctrines, including without limitation,
nuisance, waste, trespass and strict liability.
ARTICLE (11). MISCELLANEOUS
---------------------------
11.1 AMENDMENTS; WAIVERS. This Agreement may be amended or
supplemented only by a writing executed by WAC and L-P. WAC or L-P may waive
compliance by the other party with any of the terms, covenants or conditions
contained in this Agreement. No waiver will be effective unless in writing.
11.2 ENTIRE AGREEMENT. This Agreement, the Note, the Escrow
Agreement and the Nondisclosure Agreement (subsequent to the Closing only to the
extent such Nondisclosure Agreement covers Confidential Information (as defined
therein) not Transferred to WAC in this Agreement) set forth the entire
understanding of the parties hereto with respect to the subject matter of this
Agreement, the Escrow Agreement and the Nondisclosure Agreement, and supersede
all prior contracts, agreements, arrangements, communications, discussions,
representations and warranties, whether oral or written, between the parties,
including, but not limited to, the Letter of Intent, dated February 17, 1998
(the "LETTER OF INTENT"), which will have no further force nor effect from the
date hereof.
11.3 GOVERNING LAW. This Agreement must in all respects be
governed by and construed in accordance with the Laws of the State of Ohio,
without regard to its principles of conflicts of Law.
11.4 NOTICES. Any notice, request or other communication
required or permitted pursuant to this Agreement must be in writing and shall be
deemed duly given when received if (a) personally delivered (b) sent by
telecopy, with confirmed answer back or (c) sent by priority delivery by a
nationally recognized overnight courier service, to the parties at their
respective addresses set forth below.
If to L-P: Louisiana-Pacific Corporation
111 S.W. Fifth Avenue
Suite 4200
Portland, OR 97204
ATTENTION: General Counsel
Telecopy No: (503) 796-0105
With a copy to: Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, OH 44114
ATTENTION: Sean M. McAvoy, Esq.
Telecopy No: (216) 579-0212
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If to WAC or AAPC: Weather-Seal Acquisition Corporation or
American Architectural Products Corporation
755 Boardman Canfield Road
Southbridge Executive Park, Building G-West
Boardman, OH 44512
ATTENTION: Jonathan Schoenike, Esq.
Telecopy No: (330) 965-9915
Any party by written notice to the others given in accordance with this SECTION
11.4 may change the address or the Persons to whom notices will be directed.
11.5 COUNTERPARTS; FACSIMILES. This Agreement may be executed
in any number of counterparts, each of which will be deemed to be an original,
and all of which together will constitute one and the same instrument. This
Agreement shall be effective upon execution and exchange of facsimile copies of
the signature page hereof provided that the parties undertake to subsequently
exchange original signature pages via overnight courier service.
11.6 ASSIGNMENT. Neither this Agreement nor any obligation
under this Agreement may be assigned by any party without the prior written
consent of the other party (which consent shall not be unreasonably withheld).
11.7 THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended, or will be construed, to confer upon or give any Person
or entity other than WAC, AAPC and L-P any rights or remedies under or by reason
of this Agreement.
11.8 SCHEDULES AND EXHIBITS. The Schedules and Exhibits
attached to this Agreement are incorporated in this Agreement and are part of
this Agreement for all purposes.
11.9 HEADINGS. The headings in this Agreement are solely for
convenience of reference and will not be given any effect in the construction or
interpretation of this Agreement.
11.10 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the following meanings:
11.10.1 AFFILIATE. "AFFILIATE" means any Person that
directly, or indirectly through one or more Persons, controls, is
controlled by, or is under common control with, the Person specified.
11.10.2 CONTROL. "CONTROL" (including the terms
"controlled by" and "under common control with") means the possession,
directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ownership of stock, as trustee or executor,
by contract or credit arrangement or otherwise.
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11.10.3 HAZARDOUS SUBSTANCE. "HAZARDOUS SUBSTANCE"
means any hazardous material, hazardous substance, toxic substance or
words of similar import under any Environmental Law.
11.10.4 KNOWLEDGE. The phrase "TO THE BEST OF THE
L-P'S KNOWLEDGE" or words of similar effect are deemed to refer only to
information that is actually known by the officers or employees of L-P
listed on SCHEDULE 11.10.4.
11.10.5 LAW. "LAW" means any federal, state, local or
foreign law, statute, ordinance, rule, order or regulation of any
Governmental Authority.
11.10.6 MATERIAL ADVERSE CHANGE. "MATERIAL ADVERSE
CHANGE" means a material adverse change in the business, condition,
assets, liabilities and operations of the Weather-Seal Business
(quantified as an adverse change in excess of $500,000 in the
aggregate).
11.10.7 RELEASE. "RELEASE" means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, dumping or disposing of a Hazardous Substance into the
Environment, which (i) requires notification to a governmental
authority under an Environmental Law; or (ii) exceeds the reportable
quantity for such substance established under an Environmental Law.
11.10.8 RESTRICTED TERRITORY. "RESTRICTED TERRITORY"
means the states listed on SCHEDULE 11.10.9.
11.10.9 TRANSFER. The term "TRANSFER" (including the
term "TRANSFERRED"), with respect to any assets, properties, rights or
interests, means the sale, transfer, conveyance, setting over,
assignment and delivery of such assets, properties, rights or
interests.
11.11 REMEDIES EXCLUSIVE. After the Closing, the rights to
indemnification provided for in ARTICLE 10 and, in L-P's case, the additional
remedies under the Note, will be the exclusive remedies available to the parties
against each other in respect of this Agreement, the Note, the Transaction
Documents and the transactions contemplated under this Agreement or the
Transaction Documents.
11.12 INTERPRETATION. Unless the context of this Agreement
expressly indicates otherwise, (a) the masculine, feminine or neuter gender and
the singular or plural number will each be deemed to include the others; (b) all
references to Articles, Sections, Subsections or clauses will be deemed to be
references to Articles, Sections, Subsections or clauses of this Agreement; and
(c) all references to Schedules or Exhibits will be deemed to be references to
Schedules or Exhibits to this Agreement.
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11.13 EXPENSES. Each party shall bear its own costs and
expenses, including, without limitation, the fees of attorneys, accountants,
brokers, finders and other advisors, incurred at any time in connection with the
negotiation and consummation of the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that (i) neither WAC or L-P, as the terminating party as the
case may be, shall be prevented from seeking to recover such costs or
expenses in the event this Agreement is terminated in accordance with
SUBSECTIONS 9.1.3 OR 9.1.4, respectively (which termination, however, shall in
no way effect the L-P Termination Fee, the payment of which is governed solely
by SECTION 9.3), (ii) each of L-P and WAC shall bear fifty percent (50%) of the
cost of the Environmental Audits (capped in the case of WAC at $10,000) and
(iii) L-P shall bear the cost of the Title Insurance.
11.14 GUARANTEE OF AMERICAN ARCHITECTURAL PRODUCTS
CORPORATION. AAPC hereby guarantees the full and prompt performance of all the
covenants and agreements made by WAC hereunder or otherwise in connection with
the transactions contemplated hereby, and the prompt and full payment of all the
obligations and liabilities of WAC arising from or assumed under this Agreement
or arising from the transactions contemplated hereunder. The obligations of AAPC
under this guarantee are absolute, primary, direct and immediate and not
conditional or contingent upon pursuit by L-P of any prior action or proceeding,
or of any other remedies it may have, against WAC, or any other Person, and
shall be unaffected by any amendment, waiver or other modification of this
Agreement. AAPC hereby waives (a) promptness and diligence; (b) notice of
acceptance; and (c) all other notices, demands, protests and notice of protest
that may otherwise (without such waiver) be required by Law. Notwithstanding the
foregoing, AAPC retains all rights under this Agreement, any Transaction
Document or Law to which WAC is otherwise entitled.
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IN WITNESS WHEREOF, WAC, AAPC and L-P have caused their duly
authorized representatives to execute this Agreement the date first above
written.
WEATHER-SEAL ACQUISITION
CORPORATION
By: /s/ Frank J. Amedia
------------------------------------
Name: Frank J. Amedia
Title: President and Chief Executive Officer
Solely as to Sections 3.2, 10.8 and 11.14:
AMERICAN ARCHITECTURAL PRODUCTS
CORPORATION
By: /s/ Frank J. Amedia
------------------------------------
Name: Frank J. Amedia
Title: President and Chief Executive Officer
LOUISIANA-PACIFIC CORPORATION
By: /s/ William L. Hebert
------------------------------------
Name: William L. Hebert
Title: Director, Strategic Planning
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Schedule - 5.2.5 Conflicts (WAC)
Schedule - 6.1.5 No Material Adverse Change
Schedule - 7.1.1 Certain Actions
Schedule - 11.10.4 Knowledge
Schedule - 11.10.9 Restricted Territory
<PAGE> 47
EXHIBITS
Exhibit A - Subordinated Promissory Note
Exhibit B - Bill of Sale
Exhibit C - Intellectual Property Assignment
Exhibit D - Assignment and Assumption of Leases
Exhibit E - Assumption Agreement
