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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): March 30, 1998
UNIVERSAL FOREST PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)
Michigan 000-22684 381465835
(State or other Jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
2801 East Beltline, N.E., Grand Rapids, Michigan 49525
(Address of Principal Executive Offices) (Zip Code)
(616) 364-6161
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
Effective March 30, 1998, the Registrant, through its wholly owned
subsidiary UFP Acquisition Corp. II, acquired Shoffner Industries, Inc., a North
Carolina corporation. Shoffner Industries, Inc. is a supplier of roof and floor
trusses to the site-built residential housing market with 14 facilities in 7
states. The assets of Shoffner Industries, Inc. include property, plant and
equipment which the Registrant intends to continue to use for the manufacture
and supply of roof and floor trusses.
The acquisition was effected pursuant to an Agreement and Plan of
Reorganization and accompanying Plan of Merger, both dated as of March 30, 1998,
by and among the Registrant, UFP Acquisition Corp. II, Shoffner Industries,
Inc., Mr. Carroll Shoffner and the shareholders of Shoffner Industries, Inc.
Pursuant to the Agreement and Plan of Reorganization, Shoffner Industries, Inc.
was merged with and into UFP Acquisition Corp. II, a Michigan corporation and a
wholly owned subsidiary of the Registrant (the "Merger"). On March 30, 1998, UFP
Acquisition Corp. II changed its name to Shoffner Industries, Inc.
Pursuant to the Agreement and Plan of Reorganization and the Plan of
Merger, the aggregate outstanding shares of Shoffner Industries, Inc. common
stock that were outstanding immediately prior to the effective time of the
Merger were converted into the right to receive an aggregate of three million
(3,000,000) shares of the Registrant's common stock and approximately $41.2
million in cash, subject to certain potential post-closing adjustments pursuant
to the Agreement and Plan of Reorganization. Funding for the cash portion of the
purchase price was obtained through a credit facility maintained by the
Registrant with Michigan National Bank and with First Chicago NBD.
The terms of the Merger and the establishment of the purchase price were
arrived at as a result of arm's length negotiations between the management of
the Registrant and the management and shareholders of Shoffner Industries, Inc.
Prior to the consummation of the Merger, there were no material relationships
between the Registrant and Shoffner Industries, Inc., or any of their respective
affiliates, directors, officers or associates of any such directors or officers.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
At the time of this report, it is not practicable to provide the required
financial statements for Shoffner Industries, Inc., the business acquired. Such
statements will be filed as an amendment to this Form 8-K Report, as soon as
practicable and not later than June 13, 1998.
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(b) Pro Forma Financial Information.
At the time of this report, it is not practicable to provide the required
pro forma financial information for the transaction that is the subject of this
Report. Such information will be filed as an amendment to this Form 8-K Report,
as soon as practicable and not later than June 13, 1998.
(c) Exhibits.
2.1 Agreement and Plan of Reorganization dated as of March 30, 1998, by and
among Universal Forest Products, Inc., UFP Acquisition Corp. II, Shoffner
Industries, Inc. and the Shareholders of Shoffner Industries, Inc., together
with the Annexes thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
UNIVERSAL FOREST PRODUCTS, INC.
By /s/ Elizabeth A. Bowman
Elizabeth A. Bowman
Chief Financial Officer
Date: April 13, 1998
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EXHIBIT INDEX
Exhibit 2.1 - Agreement and Plan of Reorganization dated as of March 30,
1998, by and among Universal Forest Products, Inc., UFP
Acquisition Corp. II, Shoffner Industries, Inc. and the
Shareholders of Shoffner Industries, Inc., together with the
Annexes thereto.
EXHIBIT 2.1
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
dated as of the 30th day of March, 1998
by and among
UNIVERSAL FOREST PRODUCTS, INC.,
UFP ACQUISITION CORP. II,
SHOFFNER INDUSTRIES, INC.,
and
the SHAREHOLDERS of
Shoffner Industries, Inc.
- -------------------------------------------------------------------------------
LOCATION OF DEFINED TERMS IN AGREEMENT
"Acquisition Proposal" - as defined in Section 6.15
"Affiliate" - as defined in Section 4.19
"Affiliate Contracts" - as defined in Section 4.19
"Agreement" - as defined in the first paragraph on Page 1
"Balance Sheet Date" - as defined in Section 4.3
"Benefit Plans" - as defined in Section 4.13
"Bonus Expenses" - as defined in Section 1.2(f)(ii)
"Certificates" - as defined in Section 1.3(b)
"Charter Documents" - as defined in Section 3.1
"Claim Notice" - as defined in Section 9.3(a)
"Claims" - as defined in Section 9.1(a)(i)
"Closing" - as defined in Section 2 "Closing Date" - as defined in Section 2
"Code" - as defined in the second Whereas clause
"Company" - as defined in the first paragraph on Page 1
"Company Financial Statements" - as defined in Section 4.3
"Company Stock" - as defined in Section 1.2(b)
"Conversion Ratio" - as defined in Section 1.2(d)
"Controlled Group Member" - as defined in Section 4.13
"Effective Time" - as defined in Section 2
"Environmental Laws" - as defined in Section 4.7
"ERISA" - as defined in Section 4.13
"Excluded Operations" - as defined in Section 10.1
"February 1998 Balance Sheet" as defined in Section 4.3
"Final Company Shares" - as defined in Section 1.2(d)
"Financial Adjustment Notice" - as defined in Section 1.2(f)(i)(B)
"GAAP" - as defined in Section 4.3
ii
"HSR Act" - as defined in Section 6.5
"Indemnification Threshold" - as defined in Section 9.1(c)
"Indemnified Party" - as defined in Section 9.3(a)
"Indemnifying Party" - as defined in Section 9.3(a)
"Interests" - as defined in Section 4.2
"Knowledge" - as defined in the introductory paragraph of Section 4.
"Leased Property Purchase Agreement" - as defined in Section 7.12.
"Liabilities" - as defined in Section 4.4(a)
"Life Insurance Policies" - as defined in Section 6.8
"Material Adverse Effect" - as defined in Section 4.16
"Merger" - as defined in the first Whereas clause
"Net Worth" - as defined in Section 1.2(f)(i)
"Newco" - as defined in the first Whereas clause
"Notice Period" - as defined in Section 9.3(a)
"Permits" - as defined in Section 4.7
"Per Share Cash Amount" - as defined in Section 1.2(e).
"Person" - as defined in Section 3.3
"Plan of Merger" - as defined in the first Whereas clause
"Pledged Securities" - as defined in Section 1.4(a)(i)
"Real Property" - as defined in Section 4.10
"Restricted Shares" - as defined in Section 11.2(b)
"Saw Mill Assets" - as defined in Section 7.13
"Saw Mill Purchase Agreement" - as defined in Section 7.13
"Shareholder" - as defined in the first paragraph on Page 1
"Shareholder Affiliate" - as defined in Section 4.8
"Shareholders" - as defined in the first paragraph on Page 1
"Shareholders' Representatives" - as defined in Section 12.17
"Split-dollar Plans" - as defined in Section 6.8
"Subject Party" - as defined in Section 1.2(f)(i)
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"Subject Parties" - as defined in Section 1.2(f)(i)
"Subsidiaries" - as defined in Section 4.2
"Suit" - as defined in Section 12.11
"Surviving Corporation" - as defined in Section 1.1(a)
"Tax" - as defined in Section 4.15
"Tax Returns" - as defined in Section 4.15
"Termination Date" - as defined in Section 12.1(b)
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TABLE OF CONTENTS
1. PLAN OF REORGANIZATION................................................1
1.1 The Merger...................................................1
1.2 Conversion of Securities.....................................2
1.3 Exchange of Certificates.....................................5
1.4 Pledge of Stock..............................................6
1.5 Anti-Dilution Provisions.....................................8
2. CLOSING...............................................................8
3. REPRESENTATIONS AND WARRANTIES OF SUBJECT PARTIES.....................8
3.1 Due Organization.............................................8
3.2 Authorization................................................8
3.3 Capitalization and Share Ownership...........................9
4. REPRESENTATIONS AND WARRANTIES OF SUBJECT PARTIES.....................9
4.1 No Conflicts................................................10
4.2 Subsidiaries................................................10
4.3 Financial Statements........................................10
4.4 Liabilities and Obligations.................................11
4.5 Accounts and Notes Receivable...............................11
4.6 Permits and Intangibles.....................................11
4.7 Environmental Matters.......................................12
4.8 Personal Property and Leases................................13
4.9 Significant Customers; Contracts and Commitments............13
4.10 Real Property...............................................14
4.11 Insurance...................................................15
4.12 Compensation: Employment Agreements.........................16
4.13 Employee Benefit Plans......................................16
4.14 Conformity with Law, Litigation.............................18
4.15 Taxes.......................................................18
4.16 Absence of Changes..........................................19
4.17 Bank Accounts, Powers of Attorney...........................20
4.18 Disclosure..................................................20
4.19 Contracts with Affiliates...................................21
4.20 Absence of Claims Against Company...........................21
4.21 Inventory...................................................21
4.22 Product Warranty and Liability..............................21
5. REPRESENTATIONS OF UFP AND NEWCO.....................................22
5.1 Due Organization............................................22
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5.2 UFP Stock...................................................22
5.3 Authorization, Validity of Obligations......................22
5.4 No Conflicts................................................22
5.5 Adverse Financial Changes...................................22
6. COVENANTS AND OTHER AGREEMENTS.......................................23
6.1 Access and Cooperation......................................23
6.2 Conduct of Business Pending Closing.........................23
6.3 Prohibited Activities.......................................24
6.4 Amendment of Schedules......................................25
6.5 Cooperation in Obtaining Required Consents and Approvals....25
6.6 Notification of Certain Matters.............................25
6.7 Removal of Liens............................................25
6.8 Life Insurance Policies.....................................26
6.9 Employee Bonuses............................................26
6.10 Guaranties and Loans........................................26
6.11 Board Position..............................................26
6.12 Employment Arrangement......................................26
6.13 Non-Shop Provisions.........................................26
6.14 Reorganization for Tax Purposes.............................27
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF UFP AND NEWCO.................27
7.1 Representations and Warranties; Performance of Obligations..27
7.2 No Litigation...............................................28
7.3 Employment Agreement........................................28
7.4 Opinion of Counsel..........................................28
7.5 Consents and Approvals......................................28
7.6 Insurance...................................................28
7.7 No Material Adverse Change..................................28
7.8 No Convertible Securities...................................28
7.9 Investment Agreement........................................28
7.10 Noncompete Agreement........................................28
7.11 Leased Property Purchase Agreement..........................29
7.12 Saw Mill Purchase Agreement.................................29
7.13 Ancillary Real Estate Agreement.............................29
7.14 Saw Mill Services Agreement.................................29
7.15 Termination of Affiliate Agreements.........................29
7.16 Employment and Noncompetition Agreements....................29
7.17 Waiver and Acknowledgement by Mr. Wright....................29
7.18 Split-dollar Plans and Life Insurance Policies..............29
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDERS..................30
8.1 Representations and Warranties, Performance of Obligations..30
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8.2 No Litigation...............................................30
8.3 Employment Agreement........................................30
8.4 Consents and Approvals......................................30
8.5 Reports and Proxy Statements of UFP.........................30
8.6 Investment Agreement........................................30
8.7 Leased Property Purchase Agreement..........................30
8.8 Saw Mill Purchase Agreement.................................31
8.9 CPA Determination...........................................31
8.10 No Material Adverse Change..................................31
8.11 Opinion of Counsel..........................................31
9. INDEMNIFICATION......................................................31
9.1 Indemnification.............................................31
9.2 Survival....................................................32
9.3 Indemnification Procedure...................................33
9.4 Indemnification Payments by Shareholders: Adjustments.......34
9.5 Release by Shareholders.....................................35
9.6 Third Party Beneficiaries...................................35
10. NONDISCLOSURE OF CONFIDENTIAL INFORMATION............................35
10.1 Shareholders................................................35
10.2 UFP.........................................................35
10.3 Damages.....................................................36
11. FEDERAL SECURITIES ACT REPRESENTATIONS...............................36
11.1 Economic Risk; Sophistication...............................36
11.2 Sales of Stock..............................................36
12. GENERAL..............................................................37
12.1 Termination.................................................37
12.2 Effect of Termination.......................................38
12.3 Cooperation.................................................38
12.4 Successors and Assigns......................................39
12.5 Entire Agreement............................................39
12.6 Counterparts................................................39
12.7 Brokers and Agents..........................................39
12.8 Expenses....................................................40
12.9 Specific Performance, Remedies..............................40
12.10 Notices.....................................................40
12.11 Governing Law...............................................41
12.12 Absence of Third Party Beneficiary Rights...................42
12.13 Mutual Drafting.............................................42
12.14 Further Representation......................................42
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12.15 Amendment; Waiver...........................................42
12.16 Severability................................................42
12.17 Shareholders' Representatives...............................42
12.18 Shareholder Authorization...................................43
viii
ANNEXES and SCHEDULES
Annex I - Plan of Merger
Annex II - Shareholders and Stock Ownership of the Company
Annex III - Form of Opinion of Counsel to the Company and Shareholders
Annex IV - Form of Opinion of Counsel to UFP
Annex V - Form Investment Agreement
Annex VI - Form Noncompetition Agreement
Annex VII - Shoffner Employment Agreement
Annex VIII - Leased Property Purchase Agreement
Annex IX - Saw Mill Purchase Agreement
Annex X - Ancillary Real Estate Agreement
Annex XI - Saw Mill Services Agreement
Annex XII - List of Non-Shareholder Employees to sign Employment and
Noncompetition Agreements
Annex XIII - Assignment and Assumption Agreement (Insurance)
Schedule 1.2 - Adjustments to Aggregate Cash Amount
Schedule 1.4 - Pledged Securities
Schedule 3.1 - Due Organization and Charter Documents
Schedule 3.3 - Capital Stock of the Company
Schedule 4.1 - No Conflicts
Schedule 4.2 - Subsidiaries and Interests
Schedule 4.3 - Financial Statements
Schedule 4.4 - Liabilities and Obligations
Schedule 4.5 - Accounts and Notes Receivable
Schedule 4.6 - Permits and Intangibles
Schedule 4.6A - Exception to Permits and Intangibles
Schedule 4.7 - Environmental Matters
Schedule 4.8 - Personal Property and Leases
Schedule 4.9 - Customers and Contracts
Schedule 4.10 - Real Property
Schedule 4.11 - Insurance
Schedule 4.12 - Compensation; Employment Agreements
Schedule 4.13 - Employee Benefit Plans
Schedule 4.14 - Conformity with Law; Litigation
Schedule 4.15 - Taxes
Schedule 4.16 - Absence of Changes
Schedule 4.17 - Bank Accounts; Powers of Attorney
Schedule 4.19A - Affiliates of the Company
Schedule 4.19B - Contracts with Affiliates
Schedule 4.21 - Inventory
Schedule 4.22 - Product Warranty and Liability
Schedule 9.1 - Indemnifiable Matters
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
30th day of March, 1998, by and among UNIVERSAL FOREST PRODUCTS, INC., a
Michigan corporation ("UFP"), UFP ACQUISITION CORP. II, a Michigan corporation
and wholly owned subsidiary of UFP ("Newco"), SHOFFNER INDUSTRIES, INC., a North
Carolina corporation (the "Company") and the shareholders of the Company (each a
"Shareholder" and collectively the "Shareholders").
BACKGROUND
WHEREAS, the respective Boards of Directors of Newco and the Company (which
together are sometimes referred to as the "Constituent Corporations") deem it
advisable and in the best interests of the Constituent Corporations and their
respective shareholders that the Company merge with and into Newco (the
"Merger") pursuant to this Agreement, the Plan of Merger substantially in the
form attached as Annex I (the "Plan of Merger") and the applicable provisions of
the laws of the State of Michigan and the State of North Carolina; and
WHEREAS, the Boards of Directors of each of the Constituent Corporations
have approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, there are 500,000 issued and outstanding shares of common stock of
the Company as of the date of this Agreement, all of which are held by the
Shareholders and in the amounts listed in attached Annex II.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. PLAN OF REORGANIZATION
1.1 The Merger.
(a) Merger. At the Effective Time, the Company shall be merged with
and into Newco pursuant to this Agreement and the Plan of Merger and the
separate corporate existence of the Company shall cease. Newco, as it
exists from and after the Effective Time, is sometimes hereinafter referred
to as the "Surviving Corporation."
(b) Effects of the Merger. The Merger shall have the effects provided
therefor by the Michigan Business Corporation Act, as amended (the
"Michigan Statute") and the North Carolina Business Corporation Act (the
"North Carolina Statute"). Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time (i) all the rights,
privileges, powers and franchises, of a public as well as of a private
nature, and all property,
real, personal and mixed, and all debts due on whatever account, including,
without limitation, subscriptions to shares, and all other chooses in
action, and all and every other interest of or belonging to or due to the
Company or Newco shall be taken and deemed to be transferred to, and vested
in, the Surviving Corporation, without further act or deed; all property,
rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation, as they were of the Company and Newco and (ii) all debts,
liabilities, duties and obligations of the Company and Newco shall become
the debts, liabilities and duties of the Surviving Corporation and the
Surviving Corporation shall thenceforth be responsible and liable for all
the debts, liabilities, duties and obligations of the Company and Newco and
neither the rights of creditors nor any liens upon the property of the
Company or Newco shall be impaired by the Merger, and may be enforced
against the Surviving Corporation.
(c) Articles of Incorporation; Bylaws; Directors and Officers. The
Articles of Incorporation of the Surviving Corporation from and after the
Effective Time shall be the Articles of Incorporation of Newco immediately
prior to the Effective Time, continuing until thereafter amended in
accordance with the provisions therein and as provided by the Michigan
Statute. The Bylaws of the Surviving Corporation from and after the
Effective Time shall be the Bylaws of Newco as in effect immediately prior
to the Effective Time, continuing until thereafter amended in accordance
with their terms and the Articles of Incorporation of the Surviving
Corporation and as provided by the Michigan Statute. The initial directors
of the Surviving Corporation shall be the directors of Newco and Carroll M.
Shoffner, who shall serve as Chairman of the Board, in each case until
their successors are elected and qualified, and the initial officers of the
Surviving Corporation shall be the officers of Newco immediately prior to
the Effective Time, and Gary Wright, who shall serve as President, in each
case until their successors are duly elected and qualified.
1.2 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of UFP, Newco, the Company or any
Shareholder, the shares of capital stock of each of the Constituent Corporations
shall be converted as follows:
(a) Shares of Newco Stock. Each share of common stock, no par value
per share of Newco, which is outstanding immediately prior to the Effective
Time shall continue to be outstanding, without any change, as an
outstanding share of capital stock of the Surviving Corporation immediately
after the Effective Time. Each stock certificate of Newco evidencing
ownership of any such shares shall continue to evidence ownership of such
shares of capital stock of the Surviving Corporation.
(b) Conversion of Company Stock. Subject to the terms and conditions
of this Agreement, each share of common stock of the Company ("Company
Stock") which is outstanding immediately prior to the Effective Time shall
automatically be canceled and extinguished and converted, without any
action on the part of the holder thereof, into (i) the number of shares of
UFP common stock equal to the Conversion Ratio and (ii) the right to
2
receive the Per Share Cash Amount. All shares of Company Stock, when so
converted, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of UFP Stock
and the Per Share Cash Amount to be issued and paid in consideration
therefor upon the surrender of such certificate in accordance with Section
1.3 of this Agreement.
(c) Average Price of UFP Stock. The "Average Price of UFP Stock" shall
equal the per share average of the last reported sale price of a share of
common stock, no par value, of UFP ("UFP Stock"), as quoted on the NASDAQ
National Market System for each of the twenty (20) consecutive full trading
days in which such shares are traded as listed and reported on the NASDAQ
system (or such other securities exchange on which the UFP stock is listed
if no longer listed and reported on NASDAQ) ending on the close of trading
on the trading day immediately prior to the Closing Date.
(d) Conversion Ratio. The "Conversion Ratio" shall equal 3,000,000,
divided by the number of shares of Company Stock which are outstanding
immediately prior to the Effective Time (the "Final Company Shares") if the
Average Price of UFP Stock is both (i) greater than or equal to $13.00 and
(ii) less than or equal to $17.00. Notwithstanding the foregoing and
subject to Subsection 1.2(h), if the Average Price of UFP Stock is less
than $13.00, then the Conversion Ratio shall be equal to (i) $39,000,000
divided by the Average Price of UFP Stock, divided by (ii) the number of
Final Company Shares, or if the Average Price of UFP Stock is greater than
$17.00, then the Conversion Ratio shall be equal to (i) $51,000,000 divided
by the Average Price of UFP Stock, divided by (ii) the number of Final
Company Shares.
(e) Per Share Cash Amount. The Per Share Cash Amount shall equal (i)
the Aggregate Cash Amount divided by (ii) the number of Final Company
Shares. The Aggregate Cash Amount shall equal Forty Three Million Eight
Hundred Thousand Dollars ($43,800,000), subject to adjustments as provided
in Section 1.2(f).
(f) Adjustments to Consideration.
(i) The Company and the Shareholders (collectively, the "Subject
Parties" and individually a "Subject Party") jointly and severally
represent and warrant to and covenant with UFP that, as determined in
accordance with the Company's historical accounting principles, the
stockholders' equity accounts of the Company as of the close of
business on the day immediately prior to the Closing Date ("Net
Worth") will be at least Twenty Million Seven Hundred Fifty Three
Thousand Dollars ($20,753,000) (the "Minimum Net Worth"). For purposes
of calculating the Net Worth, any loss to the Company resulting from
the sale of the Saw Mill Assets (to the extent the Book Value of the
Saw Mill Assets exceeds the Purchase Price of the Saw Mill Assets,
pursuant to the Saw Mill Purchase Agreement
3
attached as Annex IX) shall be deemed not to reduce the Net Worth. For
purposes of calculating the Net Worth, the stockholders' equity
accounts shall be computed based upon the Company's election to be
treated as an S corporation still being in effect and no accrual shall
be made for accrued vacation, holiday, or personal time and associated
payroll taxes or for deferred taxes. In addition, for purposes of
calculating the Net Worth, the Bonus Expenses (as defined in
subsection 1.2(f)(ii)(b) below) as of December 31, 1997, rather than
actual bonus expenses incurred, shall be deducted.
(A) In the event the Minimum Net Worth exceeds the Net
Worth, as preliminarily determined as of the Closing Date (after
giving effect to the actual tax liability, but not the deferred
tax liability for the "C short year" referenced in Item 1 on
Schedule 4.15), the Aggregate Cash Amount shall be reduced by
that excess (the "Reduction Amount"). Any Reduction Amount or
additional Reduction Amount determined under Section 1.2(f)(i)(B)
and (c) below, shall be payable under the indemnification
provisions of Section 9 of this Agreement.
(B) Not later than sixty (60) days following the Effective
Time, UFP shall cause Deloitte & Touche LLP (or another "big six
accounting firm" selected by UFP) to determine whether there has
been any breach of the representation, warranty or covenant set
forth in Section 1.2(f)(i). In the event that Deloitte & Touche
LLP (or such other accounting firm) determines that there has
been any such breach, then UFP shall deliver a written notice
(the "Financial Adjustment Notice") to the Shareholders setting
forth UFP's determination that Section 1.2(f)(i) has been
breached, and the basis and details of that determination (the
"Preliminary Reduction Amount").
(C) The Shareholders' Representatives shall have 30 days
from the receipt of the Financial Adjustment Notice to notify UFP
if the Shareholders dispute such Financial Adjustment Notice and
the basis therefor. If UFP has not received such notice within
such 30-day period, the Preliminary Reduction Amount shall become
the Reduction Amount. If, on the other hand, UFP has received
such notice within such 30-day period, then UFP and the
Shareholders shall mutually agree on an independent accounting
firm to resolve the dispute to determine the amount, if any, owed
by the Shareholders pursuant to Section 1.2(f)(i). In the event
that UFP and the Shareholders cannot agree on an independent
accounting firm within 15 days after UFP's receipt of the notice
from the Shareholders' Representatives, Deloitte & Touche LLP and
Arthur Andersen LLP shall select another "big six accounting
firm" to act as the independent accounting firm. The
determination of such independent accounting firm shall be final
and binding on the parties hereto. The costs of the independent
accounting firm shall be
4
borne by the party (either UFP or the Shareholders as a group)
whose determination of the Reduction Amount (if any) was furthest
from the determination of the independent accounting firm, or
equally by UFP and the Shareholders in the event that the
determination by the independent accounting firm is equidistant
between the determinations of the parties.
(ii) In the event that the sum of (a) the amount of bonus paid
pursuant to Section 6.9 plus (b) the sum of the corresponding FICA,
OASDI, other employer payroll taxes and employer matching 401(k)
contributions (all determined as if such bonuses were paid on December
31, 1997) (collectively, the sums under this clause (ii)(b) as of
December 31, 1997, are referred to as the "Bonus Expenses"), exceed
$3,200,000, the Aggregate Cash Amount shall be reduced by the amount
of that excess, on a dollar-for-dollar basis.
(iii) In the event that the Book Value of the Saw Mill Assets
(which shall not be less than Four Million Eight Hundred Sixty-six
Thousand Dollars ($4,866,000), less the amount of the depreciation of
the equipment of the saw mill for the month of March) exceeds the
Purchase Price of the Saw Mill Assets (as determined and defined in
the Saw Mill Purchase Agreement), the Aggregate Cash Amount shall be
reduced by the amount of that excess, on a dollar-for-dollar basis.
Any adjustments pursuant to this Section 1.2(f) shall be set
forth in Schedule 1.2.
1.3 Exchange of Certificates.
(a) UFP to Provide Common Stock. As soon as practicable after the
Effective Time and upon receipt of the Certificates and/or other documents
referred to in Section 1.3(b), UFP shall cause to be made available the
shares of UFP Stock issuable pursuant to Section 1.2 in exchange for
outstanding shares of capital stock of the Company, and, if applicable,
cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.2(g).
(b) Certificate Delivery Requirements. At the Effective Time, the
Shareholders shall deliver to UFP the certificates representing Company
Stock (the "Certificates"), duly endorsed in blank by the Shareholders, or
accompanied by blank stock powers, and with all necessary transfer tax and
other revenue stamps, acquired at the Shareholders' expense, affixed and
canceled immediately. The Shareholders shall promptly cure any deficiencies
with respect to the endorsement of the Certificates or other documents of
conveyance with respect to the stock powers accompanying the Certificates.
Until delivered as contemplated by this Section 1.3(b), each Certificate
shall be deemed at any time after the Effective Time to represent the right
to receive upon such surrender the number of shares of UFP Stock and Cash
as provided by Section 1.2 and the provisions of the Michigan Statute.
5
(c) No Further Ownership Rights in Capital Stock of the Company. All
UFP Stock and Cash delivered upon the surrender for exchange of shares of
Company Stock in accordance with the terms hereof shall be deemed to have
been delivered in full satisfaction of all rights pertaining to such shares
of Company Stock, and following the Effective Time, the Certificates
(whether or not delivered) shall have no further rights to, or ownership
in, shares of capital stock of the Company. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Section 1.3.
(d) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Company Stock shall have been lost,
stolen or destroyed, UFP shall cause payment to be made in exchange for
such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of UFP Stock and
Cash as may be required pursuant to Section 1.2; provided, however, that
UFP may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates
to deliver a bond in such sum as it may reasonably direct as indemnity
against any claim that may be made against UFP with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.3, none of the Surviving Corporation or any party hereto shall be
liable to any holder of shares of Company Stock for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Withheld Amount. Upon the Closing, shares of UFP Stock issuable to
the Shareholders pursuant to Section 1.2 in an amount equal to (i) ten
percent (10%) of the aggregate value of UFP Stock and Cash issuable and
payable to the Shareholders, divided by (ii) the per share value of UFP
Stock determined under Section 1.2(c) above, shall be pledged to UFP in
accordance with Section 1.4.
1.4 Pledge of Stock.
(a) As collateral security for the payment of any indemnification
obligations of the Shareholders pursuant to Section 9, at the Closing each
Shareholder (excluding the Carroll M. Shoffner Charitable Remainder Annuity
Trust, the shares of which shall be pledged by Carroll M. Shoffner) shall,
and by execution hereof does hereby transfer, pledge, and assign to UFP,
for the benefit of UFP, a security interest in the following assets:
(i) the number of shares of UFP Stock set forth beside such
Shareholder's name on Schedule 1.4 hereto (collectively, with respect
to all Shareholders, the "Pledged Securities"), certificates and
instruments representing or evidencing such
6
Shareholder's Pledged Securities at any time received, and other
property at any time received or otherwise distributed in respect of
or in exchange for any or all of such Shareholder's Pledged
Securities; and in the event such Shareholder receives any such
certificates or property, such Shareholder shall immediately deliver
such certificates or property to UFP to be held hereunder as Pledged
Securities;
(ii) all securities hereafter delivered to such Shareholder in
substitution for any of the foregoing, all certificates and
instruments representing or evidencing such securities and other
property at any time received, receivable or otherwise distributed in
exchange for any or all thereof, and in the event such Shareholder
receives any such property, such Shareholder shall immediately deliver
such property to UFP to be held hereunder as Pledged Securities; and
(iii) all cash and non-cash proceeds of all the foregoing
property and all rights, titles, interests, privileges and preferences
appertaining or incident to the foregoing property.
(b) Each certificate evidencing a Shareholder's Pledged Securities
issued in a Shareholder's name in the Merger shall be delivered to UFP
immediately after such Shareholder receives such certificate, together with
a stock power duly signed in blank by such Shareholder, such certificate
bearing no restrictive or cautionary legend other than those imprinted by
UFP's transfer agent at UFP's request (or, in the alternative, UFP may
retain such securities without first delivering them to the Shareholders).
(c) UFP shall deliver the Pledged Securities (less those shares
retained by UFP in satisfaction of any adjustment made pursuant to Section
9, and less the number of shares whose aggregate UFP Closing Share Price
equals the amount of the Pending Claim), to the Shareholders'
Representative on or before the second anniversary of the Closing Date, and
the Shareholders' Representative shall distribute to each Shareholder its
pro rata share of such shares. A "Pending Claim" is any claim or demand for
an indemnification payment pursuant to Section 9 or which is included in a
Claim Notice (as hereinafter defined) which has not been finally determined
and paid.
(d) UFP shall deliver any Pledged Securities retained pursuant to
Section 1.4(c) to the Shareholders' Representative within 30 days after the
date when all Pending Claims, if any, are finally judicially determined or
settled and the Shareholders' Representative shall distribute to each
Shareholders its pro rata share of such remaining shares.
(e) The Shareholders, if not in breach of this Agreement at the time
in question, shall be entitled to exercise any voting powers incident to
the Pledged Securities and to receive and retain all cash dividends paid
thereon, to the extent such Pledged Securities have not been foreclosed
upon, or set-off against, by UFP or its designee.
7
1.5 Anti-Dilution Provisions. In the event that UFP changes the number of
shares of UFP stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend or similar recapitalization and the
record date therefor shall be after the date of this Agreement and prior to the
Effective Time, then the Conversion Ratio, the $13.00 and $17.00 amounts
referenced in Section 1.2(d) and the $11.00 and $19.00 amounts referenced in
Sections 1.2(h) and 12.1(e) shall be proportionately adjusted.
2. CLOSING
The consummation of the Merger and the other transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Wishart,
Norris, Henninger & Pittman, P.A., in Burlington, North Carolina, on March 30,
1998, or at such other time and date as UFP and the Shareholders'
Representatives may mutually agree. The date on which the Closing occurs shall
be referred to hereinafter as the "Closing Date." On the Closing Date, a
Certificate of Merger shall be filed with the Michigan Department of Consumer
and Industry Services in accordance with the provisions of the Michigan Statute,
a Certificate of Merger shall be filed with the Secretary of State of North
Carolina in accordance with the provisions of the North Carolina statute and the
Merger shall become effective upon such filing (the "Effective Time").
3. REPRESENTATIONS AND WARRANTIES OF SUBJECT PARTIES REGARDING
ORGANIZATION, AUTHORIZATION AND CAPITALIZATION
To induce UFP to enter into this Agreement and consummate the transactions
contemplated in this Agreement, each Subject Party, jointly and severally,
represents and warrants to UFP as follows:
3.1 Due Organization. Each of the Company and the Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, all as more particularly described on
attached Schedule 3.1, and each is duly authorized and qualified to do business
in the places and in the manner as now conducted. Schedule 3.1 contains a true,
correct and complete list of all jurisdictions in which the Company and each
Subsidiary is authorized or qualified to do business. True, complete and correct
copies of the Articles of Incorporation and By-laws, each as amended, of the
Company and each Subsidiary are attached as Schedule 3.1 (the "Charter
Documents"). The minute books and other corporate books and records of the
Company and each Subsidiary as heretofore made available to UFP (and as shall be
delivered to UFP at Closing) are true, correct and complete in all respects.
3.2 Authorization. Each Subject Party has the right, power and
authority to execute, deliver and perform this Agreement and the Company has the
right, power and authority to execute, deliver and perform the Plan of Merger.
Each of this Agreement and the Plan of Merger is a legal, valid and binding
obligation of each Subject Party who is a party thereto, enforceable in
accordance with its terms. Each of this Agreement and the Plan of Merger has
been duly approved and the
8
performance by each of the Subject Parties of this Agreement and the Plan of
Merger have been duly authorized by all necessary corporate and shareholder
action.
3.3 Capitalization and Share Ownership.
(a) The authorized capital stock of the Company consists of 100,000
shares of Class A voting common stock, par value $.10 per share, of which
50,000 shares are issued and outstanding, and 1,900,000 shares of Class B
nonvoting common stock, par value $.10 per share, of which 450,000 shares
are issued and outstanding. All of the issued and outstanding shares of the
capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and are owned of record and beneficially
by the Shareholders in the amounts set forth in Schedule 3.3, free and
clear of all liens, encumbrances and claims of every kind. All of the
issued and outstanding shares of the capital stock of the Company and the
Subsidiaries were offered, issued, sold and delivered by the Company or the
applicable Subsidiary, as the case may be, in compliance with all
applicable state and federal laws concerning the issuance of securities.
Further, none of such shares was issued in violation of the preemptive
rights of any Person. Schedule 3.3 contains a complete and accurate list of
the names of the Shareholders, and such Shareholders constitute all of the
shareholders of the Company. "Person" means any natural person,
corporation, limited liability company, partnership, joint venture, trust,
unincorporated organization or Governmental Entity. "Governmental Entity"
means any federal, state, or local court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign.
(b) No option, warrant, call, subscription right, conversion right or
other contract or commitment of any kind exists which could obligate the
Company or any Subsidiary to issue, sell or otherwise cause to become
outstanding any shares of capital stock not outstanding on the date hereof.
Neither the Company nor any Subsidiary has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof. Except as referenced in Schedule 3.3, there has been no
transaction or action taken with respect to the ownership of the Company or
any Subsidiary within the preceding two years. None of the shares of
Company Stock was issued pursuant to awards, grants or bonuses.
4. REPRESENTATIONS AND WARRANTIES OF SUBJECT PARTIES
To induce UFP to enter into this Agreement and consummate the transactions
contemplated in this Agreement, each Subject Party, jointly and severally,
represents and warrants to UFP as follows, to the Knowledge of such Subject
Party (each of the representations and warranties contained in this Section 4
shall be limited to the Knowledge of such Subject Party where, for purposes of
this Agreement, "Knowledge" means actual awareness of a particular fact or other
matter or awareness that a prudent individual could be expected to obtain in the
course of conducting a reasonably comprehensive investigation concerning the
existence of such facts or other matter to the
9
extent that such investigation would be undertaken under the circumstances.
Knowledge of a corporate entity is deemed to include actual knowledge of its
officers and directors and information contained in the files and records of the
entity):
4.1 No Conflicts. Except as disclosed on Schedule 4.1, the execution,
delivery and performance of this Agreement by each Shareholder and the
execution, delivery and performance of the Plan of Merger by the Company will
not: (a) conflict with, or result in a breach or violation of the Charter
Documents; (b) conflict with, or result in a default (or would constitute a
default but for any requirement of notice or lapse of time or both), or require
any notice, consent or approval under any agreement, contract, commitment,
understanding, document or instrument to which the Company or a Subsidiary is a
party or is otherwise subject; (c) violate, require any filing, consent or
approval under, or result in the creation or imposition of any lien, charge or
encumbrance on any of the Company's or any Subsidiary's properties pursuant to
any law, rule, regulation, judgment, order or decree; or (d) result in
termination or any impairment of any permit, license, franchise, contractual
right or other authorization of the Company or any Subsidiary.
4.2 Subsidiaries. The Company owns no Interests (beneficially or of record)
in any Person other than the Persons listed on attached Schedule 4.2 (the
"Subsidiaries") and the Interests listed on such Schedule. "'Interests" means
any capital stock, securities convertible into capital stock or any other equity
or ownership interest in any Person. Schedule 4.2, lists the number of issued
and outstanding shares and class of authorized capital stock of each Subsidiary.
The Interests are owned by the Company, free and clear of all liens,
encumbrances and claims of every kind.
4.3 Financial Statements. Schedule 4.3 includes true, complete and correct
copies of (i) the Company's and the Subsidiaries' audited consolidated balance
sheets as of December 31, 1996, and December 31, 1997, and consolidated audited
statements of income, cash flows and retained earnings of the Company and the
Subsidiaries for each of the years ended December 31, 1996, and December 31,
1997, (ii) a management-prepared consolidated balance sheet of the Company and
the Subsidiaries as of February 28, 1998 (February 28, 1998 is hereinafter
referred to as the "Balance Sheet Date" and the balance sheet as of such date is
referred to herein as the "February 1998 Balance Sheet"), and (iii) a
management-prepared consolidated statement of income for the Company and the
Subsidiaries for the period ended February 28, 1998 (collectively, the "Company
Financial Statements"). The Company Financial Statements have been prepared, in
accordance with generally accepted accounting principles, consistently applied
("GAAP"), except for those matters identified in Schedule 4.3. Each of the
consolidated balance sheets included in the Company Financial Statements
presents fairly the financial condition of the Company and the Subsidiaries as
of the dates indicated thereon, and each of the consolidated statements of
income, cash flows and retained earnings included in the Company Financial
Statements presents fairly the results of their consolidated operations for the
periods indicated thereon.
10
4.4 Liabilities and Obligations.
(a) Except as disclosed on Schedule 4.4, neither the Company nor any
Subsidiary is liable for or subject to any liabilities except for:
(i) those liabilities reflected on the February 1998 Balance
Sheet and not heretofore paid or discharged;
(ii) those liabilities, arising in the ordinary course of its
respective business consistent with past practice, under any contract,
commitment or agreement specifically disclosed on any Schedule to this
Agreement or not required to be disclosed thereon because of the
amount involved; and
(iii) those liabilities incurred since the Balance Sheet Date in
the ordinary course of business, consistent with past practice, which
liabilities are not individually or in the aggregate, material.
For purposes of this Section 4.4 and Section 9.1, the term
"liabilities" shall include, without limitation, any direct or indirect
liability, indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, either
accrued, absolute, contingent or otherwise and whether known or
unknown, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured.
(b) The Company has delivered to UFP, in the case of those liabilities
which are not fixed or contested, a reasonable estimate of the maximum
amount which may be payable. For each such liability for which the amount
is not fixed or is contested, the Company has provided to UFP (i) a summary
description of the liability together with (A) copies of all relevant
documentation relating thereto, (B) amounts claimed and any other action or
relief sought and (c) name of claimant; (ii) names of all other parties to
the claim, suit or proceeding and the name of each court or agency before
which such claim, suit or proceeding is pending; and (iii) the date such
claim, suit or proceeding was instituted.
4.5 Accounts and Notes Receivable. Schedule 4.5, sets forth an accurate
list, as of a date not more than two business days prior to the date of this
Agreement, of the accounts and notes receivable of the Company and each
Subsidiary (including, without limitation, receivables from and advances to
employees and the Shareholders), which includes an aging of all accounts and
notes receivable showing amounts due in 30-day aging categories.
4.6 Permits and Intangibles. The Company and each Subsidiary owns or holds
all licenses, franchises, permits and other authorizations of any Governmental
Entity, including, without limitation, permits, titles (including, without
limitation, motor vehicle titles and current registrations), fuel permits,
licenses, franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights (the "Permits") necessary or useful to own its
assets or operate its
11
business. Schedule 4.6 sets forth an accurate list and summary description, as
of the date hereof, of all Permits. The Permits are valid, and neither the
Company nor any Subsidiary has received any notice that any Governmental Entity
intends to modify, cancel, terminate or not renew any Permit. The Company and
each Subsidiary has conducted and is conducting its business in compliance with
the requirements, standards, criteria and conditions set forth in the Permits
and other applicable orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing. Except as set forth on Schedule 4.6A,
the transactions contemplated by this Agreement will not result in a default
under or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company or any Subsidiary by, any Permit.
4.7 Environmental Matters. Except as disclosed on Schedule 4.7:
(a) The Company and each of the Subsidiaries has at all times complied
with and is currently in compliance with, and the respective businesses of
the Company and each Subsidiary have at all times been owned and operated
in compliance with all federal, state, local and foreign statutes (civil
and criminal ), common laws, ordinances, regulations, rules, notices,
permits, judgments, orders and decrees applicable to each of the Company
and its Subsidiaries and their respective properties, assets, operations
and businesses relating to environmental protection (collectively
"Environmental Laws"), including, without limitation, Environmental Laws
relating to air, water, land and the generation, storage, use, handling,
transportation, treatment or disposal of any Contaminants. "Contaminant"
shall mean any of the following: (i) any substance, solid, liquid or
gaseous matter, microorganism, sound, vibration, ray, heat, odor,
radiation, energy vector, plasma, waste, organic or inorganic matter,
whether animate or inanimate, which is deemed by any Governmental Entity or
any Environmental Law to be hazardous, toxic, a pollutant, a deleterious
substance or a source of pollution, (ii) any nuclear materials, and (iii)
any fuel.
(b) The Company and each of the Subsidiaries has obtained and adhered
to all necessary permits and other approvals necessary to treat, transport,
store, dispose of and otherwise handle Contaminants, and has reported, to
the extent required by all Environmental Laws, all past and present sites
owned, operated or leased by the Company or any Subsidiary where
Contaminants have been treated, stored, disposed of or otherwise handled.
(c) All Persons hired to remove, store, handle, transport, dispose,
bury, incinerate, recover or treat any Contaminant in connection with the
operation of the businesses of the Company and the Subsidiaries have
obtained and have at all times adhered to all franchises, permits,
licenses, certificates of compliance, consents, approvals and
authorizations of, and registrations with all Governmental Entities
necessary to perform the services for which they have been hired.
(d) There have been no releases or threats of releases at, from, in,
on under or adjacent to any property owned, operated, leased or used by the
Company or any Subsidiary, except as permitted by Environmental Laws.
12
(e) There is no on-site or off-site location to which the Company or
any Subsidiary has transported or disposed of Contaminants or arranged for
the transportation of Contaminants which site is the subject of any
federal, state, local or foreign enforcement action or any other
investigation which could lead to any claim against the Company, any
Subsidiary, UFP or Newco for any clean-up cost, remedial work, damage to
natural resources or personal injury, including, without limitation, any
claim under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
(f) There is no past or present fact, condition or circumstance
relating to the Company, any Subsidiary, the businesses of each, or any
real property currently or formerly owned or leased by the Company or any
Subsidiary that has either resulted or would result in liability under any
Environmental Law.
4.8 Personal Property and Leases. Schedule 4.8 sets forth an accurate list
of all personal property included in "depreciable plant, property and equipment"
on the February 1998 Balance Sheet and all other personal property owned or
leased by the Company or any Subsidiary with a value in excess of $50,000, (a)
as of the Balance Sheet Date, or (b) acquired since the Balance Sheet Date, and
all real property leased by the Company or any Subsidiary within the past three
years, including in each case true, complete and correct copies of leases for
material equipment and all real properties (or a reference to those leases
previously provided to UFP) and also including an indication as to which assets
are currently owned, or were formerly owned, by any shareholder of the Company
or any Subsidiary or any Shareholder Affiliate. The Company and the Subsidiaries
have good, valid and marketable title to all of such owned property, free of any
liens or encumbrances. For purposes of this Agreement, "Shareholder Affiliate"
shall mean any sibling, spouse, parent, child, in-law or other relative, or any
Affiliate, of any Shareholder. All of the trucks and other material machinery
and equipment of the Company and the Subsidiaries listed on Schedule 4.8 , which
are currently in service, are in good working order and condition, ordinary wear
and tear excepted. Except as set forth on Schedule 4.8, all leases set forth on
Schedule 4.8 are in full force and effect and constitute valid and binding
agreements of the Company or any Subsidiary and the other parties thereto in
accordance with their respective terms. All fixed assets used by the Company or
any Subsidiary are either owned by the Company or any Subsidiary or leased under
an agreement listed on Schedule 4.8. Schedule 4.8 also includes a summary
description of all plans or projects involving the opening of new operations,
expansion of any existing operations or the acquisition of any real property or
existing business, to which management of the Company or any Subsidiary has made
any material expenditure in the two-year period prior to the date of this
Agreement, which if pursued by the Company, any Subsidiary, the Surviving
Corporation or any subsidiary of the Surviving Corporation would require
additional material expenditures of capital. The rents payable by the Company
and the Subsidiaries under the leases listed on Schedule 4.8 are at fair market
value and all other terms of such leases are commercially reasonable as though
negotiated in arm's length transactions.
4.9 Significant Customers; Contracts and Commitments. Schedule 4.9 contains
an accurate list of (a) all significant customers (i.e., each of those customers
for which the revenues of
13
such customer represents 5% or more of the revenue of the Company, any one or
more Subsidiary or any combination thereof for the 12 months ending on December
31, 1997, of the Company or Subsidiary, or any customer who has paid to any one
or more of the Subject Companies, any one or more Subsidiary or any combination
thereof individually or in the aggregate, $25,000 or more in any of the past
four fiscal quarters ended December 31, 1997) and (b) all contracts,
commitments, leases, instruments, agreements, licenses or permits to which the
Company or any Subsidiary is a party or by which it or its properties are bound
(including, without limitation, contracts with significant customers, joint
venture or partnership agreements, contracts with any labor organizations, loan
agreements, indemnity or guaranty agreements, bonds, mortgages, options to
purchase land, liens, pledges or other security agreements) (i) as of the
Balance Sheet Date and (ii) entered into since the Balance Sheet Date
(collectively, the "Subject Contracts"). True, complete and correct copies of
the Subject Contracts have previously been delivered to UFP. Except to the
extent set forth on Schedule 4.9, (x) none of the significant customers of the
Company or any Subsidiary have canceled or substantially reduced purchases of
service, or are currently attempting or threatening to cancel or substantially
reduce purchases of service, (y) the Company and the Subsidiaries have compiled
with all of their respective commitments and obligations and are not in default
under any Subject Contracts and no notice of default has been received with
respect to any thereof and (z) there are no Subject Contracts that were not
negotiated at arm's length with third parties not affiliated with the Company or
any Subsidiary, or any officer, director or Shareholder of the Company or any
Subsidiary. Neither the Company nor any Subsidiary is bound by or subject to
(and none of its respective assets or properties is bound by or subject to) any
arrangement with any labor union. Except as disclosed in Schedule 4.9, no
employees of the Company or any Subsidiary are represented by any labor union or
covered by any collective bargaining agreement and no campaign to establish such
representation is in progress. Except as disclosed on Schedule 4.9, there is no
pending or threatened labor dispute involving the Company or any Subsidiary nor
has the Company or any Subsidiary experienced any labor interruptions over the
past three years and each of the Company and the Subsidiaries considers its
relationship with its employees to be good. Neither the Company nor any
Subsidiary is a party to any governmental contracts subject to price
redetermination or renegotiation.
4.10 Real Property. Schedule 4.10 lists and describes briefly all real
property owned by the Company or any of its subsidiaries (the "Real Property").
With respect to each parcel of real property listed on Schedule 4.10:
(a) Except as disclosed on Schedule 4.10, either the Company or its
Subsidiaries has good and marketable title to the parcel of real property,
free and clear of all mortgages, pledges, security interests, encumbrances,
charges or other liens, easements and other restrictions, other than (i)
installments of special assessments not yet delinquent, and (ii) recorded
easements, covenants and restrictions which do not impair the current use,
occupancy or the marketability of title, of the property subject thereto;
(b) The legal description for the parcel contained in the deed thereof
describes such parcel fully and adequately and except as described in
Schedule 4.10, the buildings and
14
improvements are located within the boundary lines of the described parcels
of land, are not in violation of applicable setback requirements, zoning
laws and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted nonconforming use" or
"permitted nonconforming structure" classifications) and do not encroach on
any easement which may burden the land;
(c) All facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection with
the ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules and regulations;
(d) There are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties the right to
use or occupancy of any portion of the parcel of real property;
(e) There are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein;
(f) There are no parties (other than the Company and its Subsidiaries)
in possession of the parcel of real property other than tenants under any
leases disclosed in Schedule 4.10 who are in possession of space to which
they are entitled;
(g) All facilities located on the parcel of real property are supplied
with utilities and other services necessary for the operation of such
facilities, all of which services are adequate in accordance with all
applicable laws, ordinances, rules and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements
benefitting the parcel of real property; and
(h) Except as disclosed on Schedule 4.10, each parcel of real property
abuts on and has direct vehicular access to a pubic road or access to a
public road via a permanent, irrevocable, appurtenant easement benefitting
the parcel of real property.
There are no (i) pending or threatened condemnation proceedings, litigation
or administrative actions relating to the Company's or its Subsidiaries' owned
or leased properties, or (ii) other matters affecting adversely the current use
or occupancy thereof.
4.11 Insurance. Schedule 4.11 sets forth an accurate list, as of the
Balance Sheet Date, of all insurance policies carried by the Company and the
Subsidiaries, and the Company has provided to UFP all insurance loss runs or
workmen's compensation claims received for the past two policy years. True,
complete and correct copies of all current insurance policies, all of which are
in full force and effect, have previously been delivered to UFP.
15
4.12 Compensation: Employment Agreements. Schedule 4.12 sets forth an
accurate list of all officers, directors and key employees (which shall mean all
department heads, sales managers, and plant managers) of the Company and the
Subsidiaries, listing all employment agreements with such officers, directors
and key employees and the rate of compensation (and the portions thereof
attributable to salary, bonus and other compensation, respectively) of each of
such persons as of (a) the Balance Sheet Date and (b) the date hereof. The
Company has provided to UFP true, complete and correct copies of all employment
contracts, commitments and arrangements with persons listed on Schedule 4.12.
Except as otherwise set forth in Schedule 4.12, neither the Company nor any
Subsidiary is a party to any agreement, or has established any policy or
practice, requiring it to make a payment or provide any other form of
compensation or benefit to any person performing services for the Company or any
Subsidiary upon termination of such services which would not be payable or
provided in the absence of the commitments of the transactions contemplated by
this Agreement.
4.13 Employee Benefit Plans. All employee benefit plans, programs and
policies (whether formal or informal, and whether maintained for the benefit of
a single individual or more than one individual) maintained or contributed to by
the Company or any Subsidiary for the benefit of any current or former employee
of the Company or any Subsidiary or in which such employees are entitled to
participate or which has been so maintained or contributed to within six years
prior to the Closing Date, are listed in Schedule 4.13 (the "Benefit Plans"),
and copies of all such written plans and policies, written descriptions of all
such oral plans and policies, and all other documentation relating to such plans
and policies including, where applicable, the most recent Form 5500 and Summary
Plan Description, have been delivered or made available to UFP. Except as
disclosed on Schedule 4.13: (a) each Benefit Plan and the administration thereof
complies, and has at all times complied. in all material respects with the
provisions thereof and the requirements of all applicable law, including,
without limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Code, and each Benefit Plan intended to qualify under
section 401 (a) of the Code so qualifies, has received a favorable determination
letter from the Internal Revenue Service regarding such qualified status, and
has not, since receipt of the most recent favorable determination letter, been
amended or operated in a way which would adversely affect such qualified status;
(b) as to any Benefit Plan subject to Title IV of ERISA, there has been no event
or condition which presents a material risk of Plan termination, no accumulated
funding deficiency, whether or not waived, within the meaning of section 302 of
ERISA or section 412 of the Code has been incurred, no reportable event within
the meaning of section 4043 of ERISA (for which the disclosure requirements of
Regulation ss.2615.3 promulgated by the Pension Benefit Guaranty Corporation
("PBGC") have not been waived) has occurred, no notice of intent to terminate
the Plan has been given under section 4041 of ERISA, no proceeding has been
instituted under section 4042 of ERISA to terminate the Plan, no liability to
the PBGC has been incurred, and the assets of the Plan equal or exceed the
actuarial present value of the benefit liabilities, within the meaning of
section 4041 of ERISA, under the Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC; (c) with
respect to any employee benefit plan, within the meaning of section 3(3) of
ERISA, which is not listed in Schedule 4.13 but which is sponsored, maintained
or contributed to, or has been sponsored, maintained or contributed to within
six years prior to the Closing Date, by any corporation, trade, business or
entity under common control with
16
the Company or any Subsidiary, within the meaning of section 414(b), (c) or (m)
of the Code or section 4001 of ERISA ("Controlled Group Member"), (i) no
withdrawal liability, within the meaning of section 4201 of ERISA, has been
incurred, which withdrawal liability has not been satisfied, (ii) no liability
to the PBGC has been incurred by any Controlled Group Member, which liability
has not been satisfied, (iii) no accumulated funding deficiency, whether or not
waived, within the meaning of section 302 of ERISA or section 412 of the Code
has been incurred, and (iv) all contributions (including installments) to such
plan required by section 302 of ERISA and section 412 of the Code have been
timely made; (d) no act, omission or transaction has occurred which would result
in imposition on the Company or any Subsidiary of (i) breach of fiduciary duty
liability damages under section 409 of ERISA, (ii) a civil penalty assessed
pursuant to subsections (c), (i) or (1) of section 502 of ERISA or (iii) a tax
imposed pursuant to Chapter 43 of Subtitle D of the Code; (e) as to any Benefit
Plan intended to qualify under section 401 of the Code, there has been no
termination or partial termination of the Benefit Plan within the meaning of
section 411 (d)(3) of the Code; (f) no Benefit Plan is a multiemployer plan
within the meaning of section 3(37) of ERISA; (g) no Benefit Plan provides
health or death benefit coverage beyond the termination of an employee's
employment, except as required by Part 6 of Title I of ERISA section 4980B of
the Code or other applicable laws; (h) each trust funding a Benefit Plan, which
trust is intended to be exempt from federal income taxation pursuant to section
501 (c)(9) of the Code, satisfies the requirements of such section and has
received a favorable determination letter from the Internal Revenue Service
regarding such exempt status and has not, since receipt of the most recent
favorable determination letter, been amended or operated in a way which would
adversely affect such exempt status; (i) there is no matter pending (other than
routine qualification determination filings) with respect to any of the Benefit
Plans before the Internal Revenue Service, the Department of Labor or the PBGC;
(c) the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not, except as may arise due to the
Bonuses payable under Section 6.9 and the Bonus Expenses, (i) require the
Company or any Subsidiary to make a larger contribution to, or pay greater
benefits under, any Benefit Plan than it otherwise would or (ii) create or give
rise to any additional vested rights or service credits under any Benefit Plan;
(k) no suit. actions or other litigation (excluding claims for benefits incurred
in the ordinary course of plan activities) have been brought against or with
respect to any Benefit Plan; (1) all contributions to Benefit Plans that were
required to be made under such Benefit Plans have been made as of the Balance
Sheet Date, and all benefits accrued under any unfunded Benefit Plan will have
been paid, accrued or otherwise adequately reserved in accordance with GAAP as
of such date and the Company and the Subsidiaries will have performed by the
Closing Date all material obligations required to be performed as of such date
under Benefit Plans; and (m) no employee of the Company or any Subsidiary is
represented by a labor union or organization, no labor union or organization has
been certified or recognized as a representative of any such employee, there are
no pending or threatened representation campaigns concerning union
representation involving any employee or efforts of any labor union or
organization (or representatives thereof) to organize any employees. Accurate
and complete copies of all collective bargaining agreements to which the Company
is a party have been provided to UFP prior to the date of this Agreement.
17
4.14 Conformity with Law, Litigation. Except as set forth on Schedule 4.14,
neither the Company nor any Subsidiary is in violation of any law or regulation
or any order of any Governmental Entity having jurisdiction over it; and except
to the extent set forth on Schedule 4.14, there are no claims, actions, suits or
proceedings, pending or threatened against or affecting the Company or any
Subsidiary, at law or in equity, or before or by any Governmental Entity having
jurisdiction over it and no notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received.
4.15 Taxes. Except as set forth in Schedule 4.15, (a) each of the Company
and its Subsidiaries has timely filed, or has timely applied for extensions of
time to file, all tax returns, reports, statements and other documents ("Tax
Returns") required to be filed, distributed, or prepared by any of them, prior
to the date hereof, relating to any Taxes, and all such Tax Returns which have
been filed are accurate and complete in all respects; (b) each of the Company
and its Subsidiaries has paid (or there has been paid on its behalf, or has set
up an adequate reserve for the payment of), all Taxes required to be paid,
withheld, or deducted, or for which any of the Company or its Subsidiaries are
liable, in respect of the fiscal periods covered by such Tax Returns, and with
respect to each Tax, from the end of the fiscal period covered by the most
recently filed Tax Return to the date hereof; (c) the 1998 Balance Sheet
reflects an adequate reserve for all Taxes (whenever determined) payable, or
required to be withheld and remitted, by the Company or any of its Subsidiaries,
or for which the Company or any of its Subsidiaries is liable, for all fiscal
periods through the Balance Sheet Date; (d) neither the Company nor any of its
Subsidiaries is delinquent in the payment of any Tax, assessment or governmental
charge; (e) there are no Tax examinations in progress involving the Company or
any of the Subsidiaries for any fiscal period or periods, and no notice of any
claim for Taxes, whether pending or threatened, has been received, and no
requests for waivers of the time to assess any such Taxes are pending; (f) the
Company and each Subsidiary has a taxable year ended in December in each year;
(g) the Company and each Subsidiary currently utilizes the accrual method of
accounting for income Tax purposes and such method of accounting has not changed
in the past five years; (h) the federal income tax returns of the Company and
its Subsidiaries have been examined by and settled with the Internal Revenue
Service, or are otherwise closed by operation of the applicable statutes of
limitation, for all years through December 31, 1994; and (i) none of the Company
or its Subsidiaries (i) has filed a consent under section 341 (f) of the Code,
(ii) has made, or is obligated or may become obligated to make, any material
payments that will not be deductible by reason of section 280G of the Code, or
(iii) has been a member of an affiliated group of corporations which has filed a
consolidated federal income tax return (other than the group of which the
Company is the common parent) or otherwise has any liability for the Taxes of
any Person (other than the Company and its Subsidiaries) under Treas. Reg. ss.
1.1502-6, any similar provision of state, local or foreign law, or by reason of
its status as a transferee, successor, indemnitor or otherwise.
Except as set forth on Schedule 4.15, (a) each of the Shareholders has
timely filed, or has timely applied for extensions of time to file, all Tax
Returns required to be filed, distributed or prepared by any of them, prior to
the date hereof, relating to any Taxes owed on Company income attributed to
them, and all such tax returns have been filed and are accurate and complete in
all
18
respects and (b) each of the Shareholders has paid all Taxes required to be
paid, withheld or deducted, or for which such Shareholder is liable as set forth
on such Tax Returns.
For purposes of this Agreement, the term "Tax" shall include any tax or
similar governmental charge, impost or levy (including, without limitation,
income taxes, franchise taxes, transfer taxes or fees, sales or use taxes, gross
receipts taxes, value added taxes, employment taxes, excise taxes, ad valorem
taxes, property taxes, withholding taxes, payroll taxes, unemployment taxes,
social security taxes, minimum taxes or windfall profit taxes) together with any
related penalties, fines, additions to tax or interest imposed by the United
States or any state, county, local or foreign government or subdivision or
agency thereof
4.16 Absence of Changes. Since January 1, 1997, except for the consummation
of the transactions contemplated hereby or as set forth on Schedule 4.16, there
has not been:
(a) any event that by itself or together with other events, has had or
will have a Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of the
Company or any Subsidiary;
(c) any change in the authorized capital of the Company or any
Subsidiary or in its outstanding securities or any change in its ownership
interests or any grant of any options, warrants, calls, conversion rights
or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of the Company or any
Subsidiary;
(e) any increase in the compensation, bonus, sales commissions or fee
arrangement payable or to become payable by the Company or any Subsidiary
to any of its officers, directors, shareholders, employees, consultants,
independent contractors or agents, except for ordinary and customary
bonuses and salary increases for employees in accordance with past
practice;
(f) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, materially adversely affecting
the business or prospects of the Company or any Subsidiary;
(g) except in the ordinary course of business, any sale or transfer,
or any agreement to sell or transfer, any assets, property or rights of the
Company or any Subsidiary to any Person, including, without limitation, the
Shareholders and Shareholder Affiliates;
19
(h) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company or any Subsidiary, including, without
limitation, any indebtedness or obligation of any Shareholder or
Shareholder Affiliate thereof, provided that the Company and the
Subsidiaries may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or any Subsidiary or requiring the consent of any
party to the transfer and assignment of any such assets, property or
rights;
(j) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the
ordinary course of business of the Company and the Subsidiaries consistent
with past practice;
(k) any waiver of any rights or claims of the Company or any
Subsidiary that has had or would give rise to a Material Adverse Effect;
(l) any breach, amendment or termination of any contract, agreement,
license, permit or other right to which the Company or any Subsidiary is a
party or subject or to which any of their respective assets is subject that
has had or would give rise to a Material Adverse Effect;
(m) any negotiation, conclusion of an agreement or any other
transaction between the Company or any Subsidiary, on the one hand, and any
Shareholder, Shareholder Affiliate or Affiliate of the Company or a
Subsidiary; or
(n) any transaction by the Company or any Subsidiary outside the
ordinary course of businesses.
"Material Adverse Effect" shall mean a material adverse effect on the
business, operations, affairs, prospects, properties, assets, profits or
condition (financial or otherwise) of the Company and the Subsidiaries taken as
a whole.
4.17 Bank Accounts, Powers of Attorney. Schedule 4.17 sets forth an
accurate list of: (a) the name of each financial institution in which the
Company or any Subsidiary has any account or safe deposit box; (b) the names in
which the accounts or boxes are held; (c) the type of account; and (d) the name
of each person authorized to draw thereon or have access thereto. Schedule 4.17
also sets forth the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Company or any
Subsidiary and a description of the terms of such power.
4.18 Disclosure. No representation or warranty by any Subject Party
contained in this Agreement, and no representation, warranty or statement
contained in any list, certificate, Annex,
20
Schedule or other instrument, document, agreement or writing furnished or to be
furnished to, or made with, UFP or Newco pursuant hereto or in connection with
the negotiation, execution or performance hereof, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary to make any statement herein or therein not misleading.
4.19 Contracts with Affiliates. Schedule 4.19A sets forth the names and
addresses of all of the affiliates of the Company, as that term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations of
the Securities and Exchange Commission under the 1933 Act. Except those
contracts set forth on Schedule 4.19B (the "Affiliate Contracts"), neither the
Company nor any of its Subsidiaries is party to or is otherwise bound by any
contract, agreement or commitment with an Affiliate or Shareholder Affiliate.
Each party to any Affiliate Contract has in all respects performed the
obligations required to be performed and has complied in all respects with its
obligations thereunder. "Affiliate" shall mean, with respect to any Person, any
other Person that directly or indirectly controls, is controlled by, or is under
common control with such Person. For purposes of this definition, "control" of a
Person shall mean the power, directly or indirectly, either to (i) vote 10% or
more of the securities having ordinary voting, power for the election of
directors of such Person or (ii) direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
4.20 Absence of Claims Against Company. Except as set forth in Schedule
4.20, no Shareholder has any claim against the Company except for (a) items
specifically identified on Schedules 4.4 and 4.9 as being claims of or
obligations to the Shareholders and (b) continuing obligations to Shareholders
relating to their employment by the Company.
4.21 Inventory. All inventory on the February 1998 Balance Sheet was, with
immaterial exceptions, valued at its then lower of cost (as determined on a
first-in, first-out basis) or market value. Except as set forth on Schedule
4.21, the Company's finished goods inventories are or shall be, with immaterial
exceptions, saleable in the ordinary course of business consistent with past
practice. Except as set forth on Schedule 4.21, the Company's work-in-process,
raw materials and supplies can or shall be, with immaterial exceptions, used or
consumed in the ordinary course of business as now conducted.
4.22 Product Warranty and Liability. Except as set forth on Schedule 4.22,
since January 1, 1996, there: (a) have been no product or service warranty
claims asserted in writing against the Company that has had or would give rise
to a Material Adverse Effect; (b) have been no material product recalls by the
Company; and (c) are no express product or service warranties outstanding or
currently being offered by the Company. Except as set forth on Schedule 4.22,
since January 1, 1995, no material product liability or other material
product-related tort claim has been made or threatened in writing against the
Company relating to products sold or services performed by the Company. The
Company has delivered or made available, or will deliver or make available on or
before the Closing Date, to UFP copies of all product liability insurance
policies purchased by the Company since January 1, 1995.
21
5. REPRESENTATIONS OF UFP AND NEWCO
To induce the Shareholders to enter into this Agreement and consummate the
transactions contemplated in this Agreement, UFP and Newco, jointly and
severally, represent and warrant to the Shareholders as follows:
5.1 Due Organization. Each of UFP and Newco is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, and each is duly authorized and
qualified to do business in the places and in the manner as now conducted except
where the failure to be so authorized or qualified would not have a material
adverse effect on UFP and Newco taken as a whole. Copies of the Certificate of
Incorporation and the By-laws, each as amended, (collectively, the "UFP Charter
Documents") of UFP and Newco will be delivered, upon request, to the Company.
Neither UFP nor Newco is in violation of any UFP Charter Document.
5.2 UFP Stock. The UFP Stock to be issued in accordance with this Agreement
and the Plan of Merger will be duly authorized, validly issued shares of UFP
Stock, fully paid and nonassessable.
5.3 Authorization, Validity of Obligations. UFP has the right, power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by UFP has been duly authorized by
all necessary corporate action. This Agreement is a legal, valid and binding
obligation of UFP enforceable in accordance with its terms. The Plan of Merger
has been approved and the performance by Newco of the Plan of Merger has been
duly authorized by all necessary corporate and stockholder action.
5.4 No Conflicts. The execution, delivery and performance of this Agreement
by UFP and the execution, delivery and performance of the Plan of Merger by
Newco will not: (a) conflict with, or result in a breach or violation of the UFP
Charter Documents; (b) materially conflict with, or result in a material default
(or would constitute a default but for any requirement of notice or lapse of
time or both), or require any notice, consent or approval under any agreement,
contract, commitment, understanding, document or instrument to which UFP or
Newco is a party or is otherwise subject; (c) violate, require any filing,
consent or approval under, or result in the creation or imposition of any lien,
charge or encumbrance on any of UFP's or Newco's properties pursuant to any law,
rule, regulation, judgment, order or decree; or (d) result in termination or any
impairment of any material permit, license, franchise, contractual right or
other authorization of UFP or Newco.
5.5 Adverse Financial Changes. Since the last date of the public release of
the statements of the UFP's financial condition and results of operations, and
except for the transactions contemplated hereby, there have not been any changes
in UFP's financial condition or results of operations that has had a Material
Adverse Effect (as defined in Section 4.16 below), as applied to UFP.
22
6. COVENANTS AND OTHER AGREEMENTS
6.1 Access and Cooperation. From and after the date of this Agreement and
until the Closing, the Subject Parties jointly and severally agree to cause the
Company to afford to the employees and representatives of UFP access to all of
the sites, properties, employees, representatives, books and records of the
Company and the Subsidiaries and will furnish UFP with such additional financial
and operating data and other information as to the business and properties of
the Company and the Subsidiaries as UFP may from time to time reasonably
request. The Subject Parties jointly and severally agree to cooperate with UFP,
its representatives, engineers, auditors and counsel in the preparation of any
documents or other material which may be required in connection with this
Agreement.
6.2 Conduct of Business Pending Closing. Except for the transactions
contemplated in this Agreement, from and after the date hereof and until the
Closing, the Subject Parties jointly and severally agree to cause the Company
and each Subsidiary to:
(a) carry on and operate its business in the ordinary course of and
manner consistent with past practices and will not introduce any new method
of management, operation or accounting (except as contemplated by the
transactions described herein or as may be requested by UFP);
(b) maintain its properties and facilities, including, without
limitation, those held under leases, in as good working order and condition
as at present, ordinary wear and tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights;
(d) keep in full force and effect present insurance policies or
comparable insurance coverage;
(e) use best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its
relationships with suppliers, customers and others having business
relations with it;
(f) comply with all permits, laws, rules and regulations, consent
orders, and all other orders of Governmental Entities;
(g) maintain present debt and lease instruments and not enter into new
or amended debt or lease instruments; and
(h) file, on a timely basis, all reports and forms required by federal
regulations with respect to any Benefit Plan.
23
6.3 Prohibited Activities. Except for the transactions contemplated by this
Agreement, from and after the date of this Agreement and until the Closing, the
Subject Parties jointly and severally represent, warrant and agree that the
Company and each Subsidiary has not and from the date hereof, without the prior
written consent of UFP, will not:
(a) make any change in its Articles of Incorporation or By-laws;
(b) issue any securities or issue any options, warrants, calls,
conversion rights or commitments relating to its securities of any kind or
make any dividends or other distributions to the Shareholders;
(c) enter into any contract or commitment or incur or agree to incur
any liability or make any expenditure, except if it is in the ordinary
course of business (consistent with past practice) and involves an amount
not in excess of $50,000 or $150,000 in the aggregate, including, without
limitation, contracts to provide services to customers;
(d) except for the Bonuses payable under Section 6.9 below, increase
the compensation payable or to become payable to any officer, director,
Shareholder, employee or agent, or make any bonus or management fee payment
to any such Person except ordinary and customary bonuses and periodic
salary increases to employees;
(e) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance, except for the items listed on Schedule 4.10 hereto,
upon any assets or properties whether now owned or hereafter acquired;
(f) sell assign, lease or otherwise transfer or dispose of any assets,
properties or rights except in the ordinary course of business (consistent
with past practice);
(g) negotiate for the acquisition of any business or the start-up of
any new business;
(h) merge, consolidate or combine with or into any other Person;
(i) waive any rights or claims, provided that bills may be negotiated
and adjusted in the course of good faith disputes with customers in a
manner consistent with past practice;
(j) commit a breach of, or amend or terminate, any agreement, permit,
license or other right;
(k) enter into any other transaction (i) that is not negotiated at
arms length or (ii) outside the ordinary course of business consistent with
past practice or (iii) prohibited hereunder;
24
(l) negotiate or conclude any agreement or enter into any other
transaction with a Shareholder, Shareholder Affiliate, or an Affiliate of
the Company or a Subsidiary;
(m) terminate or take any action that would cause to be terminated the
Company's status as an "S corporation" pursuant to Section 1361, et. seq.
of the Code more than two days prior to the Closing Date; or
(n) enter into any discussions or agreements with respect to, or
otherwise facilitate or attempt to facilitate, any of the foregoing.
6.4 Amendment of Schedules. From and after the date hereof and until the
Closing, the Subject Parties jointly and severally agree that they will promptly
disclose to UFP in writing any information set forth in the Schedules to this
Agreement that is not true, correct and complete and any information of the
nature set forth in the Schedules that arises after the date hereof and that
would have been required to be included in the Schedules if such information had
been obtained on the date hereof. Such disclosure shall not limit or affect any
of UFP's or the Surviving Corporations rights hereunder for or with respect to
any misrepresentation or breach of warranty by any Subject Party or any Subject
Party's failure to fulfill any agreement, covenant or condition contained in
this Agreement.
6.5 Cooperation in Obtaining Required Consents and Approvals. Each party
hereto shall cooperate in obtaining all consents and approvals required by
Section 7.5 hereof (which shall nonetheless continue to be the responsibility of
the Subject Parties) and Section 8.4 hereof (which shall nonetheless continue to
be the responsibility of UFP). In connection therewith, if required, the
Company, the Shareholders and UFP shall file all notices and other information
and documents required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations promulgated thereunder (the "HSR Act"), as
promptly as practicable after the date hereof.
6.6 Notification of Certain Matters. Each party hereto shall give prompt
notice to the other parties hereto of (a) the occurrence or non-occurrence of
any event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of such party contained herein to be untrue or
inaccurate in any material respect at or prior to the Closing and (b) any
material failure of such party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by such party hereunder. The
delivery of any notice pursuant to this Section 6.6 shall not be deemed to (x)
modify the representations or warranties hereunder of the party delivering such
notice, (y) modify the conditions set forth in Sections 7 and 8 hereof or (z)
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
6.7 Removal of Liens. Except for the liens of First Union National Bank,
the Subject Parties jointly and severally agree, prior to Closing, to (a) cause
all liens, mortgages, deeds of trust, financing statements and other
encumbrances against any property of the Company or any
25
Subsidiary to be removed, and (b) deliver evidence to such effect that is
reasonably satisfactory to UFP.
6.8 Life Insurance Policies. Schedule 4.11 sets forth an accurate list and
description of all life insurance policies insuring the life of Mr. Carroll M.
Shoffner ("Mr. Shoffner") (the "Life Insurance Policies") and all the
split-dollar life insurance plans for the benefit of Mr. Shoffner's children and
trusts established by Mr. Shoffner (the "Split-dollar Plans"). At the Closing,
the Split- dollar Plans shall be assumed by Shoffner Forest Products, Inc.
("SFP") and the Life Insurance Policies shall be purchased by SFP. The purchase
price shall be equal to the "cash surrender value of life insurance, net" as
reflected on the Company's balance sheet, dated December 31, 1997, plus premiums
paid on the Life Insurance Policies and policies subject to the Split-dollar
Plans after December 31, 1997 through the Closing Date, and all loans and
obligations under the Life Insurance Policies and policies maintained under the
Split-dollar Plans shall be assumed by SFP.
6.9 Employee Bonuses. Within two (2) business days prior to the Closing
Date, the Company may pay bonuses to certain employees of the Company (other
than Mr. Shoffner) in excess of regular bonus plans in an amount not to exceed
Three Million Two Hundred Thousand Dollars ($3,200,000) in the aggregate.
6.10 Guaranties and Loans. The parties shall cooperate in obtaining a
release effective as of the Closing Date of Mr. Shoffner and his spouse from any
personal guaranties of the debt of the Company. The Company shall pay any loans
made by Mr. Shoffner to the Company in full, in immediately available funds at
the Closing.
6.11 Board Position. After the Closing, UFP's directors will nominate Mr.
Shoffner to serve as a director of UFP.
6.12 Employment Arrangement. After the Closing, the compensation
arrangement between Gary Wright ("Mr. Wright") and the Company as set forth in
his Employment Agreement, dated January 1, 1997 (the "Wright Agreement"), (an
accurate copy of which has been provided to UFP prior to the execution of this
Agreement) and as otherwise provided by the Company shall be maintained in
effect following the Closing, provided that UFP receives the Waiver and
Acknowledgement referenced in Section 7.17 below. Mr. Wright shall be eligible
to participate in any stock related incentive plans maintained by UFP for which
other senior-level executives of UFP are eligible to participate, subject to the
respective terms of such plans.
6.13 Non-Shop Provisions. Neither the Company nor the Shareholders will
initiate or solicit, directly or indirectly, any inquiries or the making of any
proposal with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets of
stock of, the Company (an "Acquisition Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or
26
implement an Acquisition Proposal at any time prior to the termination of this
Agreement pursuant to the terms of this Agreement. In the event that prior to
the termination of this Agreement as permitted by this Agreement, the
Shareholders abandon the transactions contemplated by this Agreement and enter
into a transaction with another party for the disposition of substantially all
of the Company's stock or assets within a period of one year after such
termination, Mr. Shoffner shall pay to UFP a "break-up" fee of 5% of the
aggregate consideration to by paid by UFP to the Shareholders pursuant to this
Agreement payable upon entering into such a transaction. The "breakup" fee is a
personal obligation of Mr. Shoffner and his estate and will not be imposed upon
any subsequent holder of Mr. Shoffner's Company Stock unless that obligation is
not paid if full by Mr. Shoffner or his estate. The "break-up" fee shall be in
addition to any legal or equitable remedies that UFP or Newco may have under
this Agreement and/or applicable law.
6.14 Reorganization for Tax Purposes. UFP and Newco each agree and covenant
to use their respective best efforts to cause the Merger to qualify as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code, and
each agree that it will not at any time intentionally take any action that would
cause the Merger to fail to so qualify. The Company and the Shareholders intend
to elect to have the "normal tax accounting rules" (an interim closing of the
books method) under Code Section 1362(e)(3) apply to the S short year (as
defined by the Code) of the Company, ending on March 26, 1998. UFP and Newco
agree to cooperate with the Company and the Shareholders in effectuating such
election. The federal and state income tax returns for the S short year shall be
prepared by a certified public accounting firm selected by the Shareholders,
which returns shall be subject to review and approval by UFP's accountants prior
to their filing on or before March 15, 1999 (whereby any disputes between the
respective certified public accountants shall be resolved by another certified
public accounting firm mutually selected by those firms, the fees of which shall
be shared equally by the Shareholders, as a group, and UFP), and UFP shall cause
an officer of the Surviving Corporation to execute and file such tax returns on
or before March 15, 1999, together with any necessary Shareholder or corporate
consents.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF UFP AND NEWCO
The obligations of UFP and Newco to effect the Merger is subject to the
satisfaction, at or before the Effective Time, of the following conditions:
7.1 Representations and Warranties; Performance of Obligations. All of the
representations and warranties of the Subject Parties contained in this
Agreement shall be true, correct and complete on the date of this Agreement and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date; all of the terms,
covenants, agreements and conditions of this Agreement to be complied with,
performed or satisfied by the Subject Parties on or before the Closing Date
shall have been duly complied with, performed or satisfied; and UFP shall have
received a certificate dated the Closing Date and signed by each of the Subject
Parties to the foregoing effects.
27
7.2 No Litigation. No action or proceeding before a court or any other
Governmental Entity shall have been instituted or threatened to restrain or
prohibit the merger of Newco with and into the Company, and no action or
proceeding shall have been instituted or threatened to restrain or prohibit
UFP's acquisition of the Company Stock or the Shareholders' acquisition of UFP
Stock and no Governmental Entity shall have taken any other action or made any
request of UFP as a result of which the management of UFP reasonably deems it
inadvisable to proceed with transactions hereunder.
7.3 Employment Agreement. Mr. Carroll M. Shoffner shall have entered into
the Employment Agreement with the Company, in the form of Employment Agreement
attached hereto as Annex VII.
7.4 Opinion of Counsel. UFP shall have received an opinion from counsel to
the Company and the Shareholders, dated the Closing Date, in the form annexed
hereto as Annex III.
7.5 Consents and Approvals. All necessary consents and approvals of and
filings with any Governmental Entity or other third Person (with respect to
Subject Contracts), relating to the consummation by the Company and the
Shareholders of the transactions contemplated hereby shall have been obtained
and made and shall be in full force and effect, and all waiting periods
applicable under the HSR Act shall have expired or been terminated.
7.6 Insurance. The Life Insurance Policies and Split-dollar Plans shall
have been assumed and purchased for the purchase prices specified in Section 6.8
of this Agreement.
7.7 No Material Adverse Change. No material adverse change in the business,
operations, affairs, prospects, properties, assets, existing and potential
liabilities, obligations, profits or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, shall have occurred; and UFP
shall have received a certificate dated the Closing Date and signed by each of
the Subject Parties to such effect.
7.8 No Convertible Securities. At the Effective Time, there shall not be
any securities, rights, warrants, options or other instruments which, after
consummation of the Merger, would be convertible into or exercisable for
securities of the Surviving Corporation.
7.9 Investment Agreement. Each Shareholder and UFP shall have executed an
Investment Agreement, in the form of attached Annex V (the "Investment
Agreement"), whereby each Shareholder shall acknowledge his or her investment
intent with respect to the receipt of shares of UFP Stock and his or her
commitment to hold such shares for a period of not less than twelve (12) months
after the Effective Time.
7.10 Noncompete Agreement. Each of the Shareholders of the Company shall
have executed and delivered to the Company, Noncompetition Agreements in the
form of attached Annex VI.
28
7.11 Leased Property Purchase Agreement. Shoffner Investments, LLC shall
have executed, delivered and performed its obligations under the "Leased
Property Purchase Agreement" in the form of attached Annex VIII. The closing of
the transactions contemplated by the Leased Property Purchase Agreement shall
occur on the Closing Date for the transactions contemplated by this Agreement.
7.12 Saw Mill Purchase Agreement. SFP shall have executed, delivered and
performed his obligations under the "Saw Mill Purchase Agreement" in the form of
attached Annex IX which provides for the transfer of certain real estate,
equipment and inventory which are used in a saw mill operation (the "Saw Mill
Assets"), all as more specifically provided for in the Saw Mill Purchase
Agreement. The closing of the transactions contemplated by the Saw Mill Purchase
Agreement shall occur on the Closing Date for the transactions contemplated by
this Agreement.
7.13 Ancillary Real Estate Agreement. The Shareholders (excluding the
Carroll M. Shoffner Charitable Remainder Annuity Trust) and Newco shall have
entered into the Ancillary Real Estate Agreement in the form attached as Annex
X, providing for the completion of the survey and title work relating to the
Company's real property and the real property to be acquired under the Saw Mill
Purchase Agreement and Leased Property Purchase Agreement.
7.14 Saw Mill Services Agreement. SFP and Newco shall have entered into the
Saw Mill Services Agreement, attached in the form of Annex XI, providing for the
provision of certain management services by Newco to SFP.
7.15 Termination of Affiliate Agreements. UFP shall have received written
confirmation of the termination of (a) all agreements between or among the
Shareholders and the Company regarding the disposition of shares of Company
Stock, and (b) those plans and agreements of or by the Company which provide for
benefits or compensation to Mr. Shoffner including, but not limited to, the
Deferred Compensation Agreement, dated August 2, 1990, and the Disability Wage
Continuation Agreement, dated August 2, 1990, including the release by Mr.
Shoffner of any claims for any payments or benefits under the foregoing.
7.16 Employment and Noncompetition Agreements. UFP shall have received
Employment and Noncompetition Agreements from each of the three employees of the
Company listed on attached Annex XII.
7.17 Waiver and Acknowledgement by Mr. Wright. UFP shall have received a
written waiver from Mr. Wright of his right to terminate the Wright Agreement
under paragraph 7(d) thereof, the written acknowledgement of the satisfaction
and payment in full of the bonus payable under paragraph 3(b)(iii) thereof, and
the modification of the severance obligation.
7.18 Split-dollar Plans and Life Insurance Policies. The Company, SFP and
the owners of the policies subject to the Split-dollar Plans shall have executed
and delivered and performed all
29
of their obligations under the Assignment and Assumption Agreement in the form
of Annex XIII attached hereto.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDERS
The obligation of the Shareholders to cause the Company to effect the
Merger and to perform the obligations of the Shareholders hereunder is subject
to the satisfaction, at or before the Effective Time, of the following
conditions:
8.1 Representations and Warranties, Performance of Obligations. All of the
representations and warranties of UFP contained in this Agreement shall be true,
correct and complete on the date of this Agreement and as of the Closing Date
with the same effect as though such representations and warranties had been made
as of the Closing Date; all of the terms, covenants, agreements and conditions
of this Agreement to be complied with, performed or satisfied by UFP on or
before the Closing Date shall have been duly complied with, performed or
satisfied; and the Shareholders shall have received a certificate dated the
Closing Date and signed by the President or any Vice President of UFP to the
foregoing effects.
8.2 No Litigation. No action or proceeding before a court or any other
Governmental Entity shall have been instituted or threatened to restrain or
prohibit the merger of Newco with and into the Company.
8.3 Employment Agreement. The Company shall have entered into an Employment
Agreement with Mr. Shoffner, in the form of Employment Agreement attached hereto
as Annex VII.
8.4 Consents and Approvals. All necessary consents and approvals of and
filings with any Governmental Entity or other third Person relating to the
consummation by UFP and Newco of the transactions contemplated herein shall have
been obtained and made and shall be in full force and effect, and all waiting
periods applicable under the HSR Act shall have expired or been terminated.
8.5 Reports and Proxy Statements of UFP. Upon the written request of
Shareholders, UFP shall provide, at no cost to the Shareholders, copies of
reports and Proxy Statements previously filed with or furnished to the
Securities and Exchange Commission, and such other information as the
Shareholders may reasonably request regarding the business of UFP.
8.6 Investment Agreement. Each of the Shareholders and UFP shall have
executed the Investment Agreements described in Section 7.10.
8.7 Leased Property Purchase Agreement. UFP or its designee shall have
executed, delivered and performed its obligations under the Leased Property
Purchase Agreement in the form of attached Annex VIII. The closing of the
transactions contemplated by the Leased Property
30
Purchase Agreement shall occur on the Closing Date for the transactions
contemplated by this Agreement.
8.8 Saw Mill Purchase Agreement. The Company shall have executed, delivered
and performed its obligations under the Saw Mill Purchase Agreement in the form
of attached Annex IX. The closing of the transactions contemplated by the Saw
Mill Purchase Agreement shall occur on the Closing Date for the transactions
contemplated by this Agreement.
8.9 CPA Determination. The Shareholders shall have received a favorable
determination from their certified public accounts (after consultation with
UFP's certified public accountants if such favorable determination will not be
rendered) that the receipt of UFP Stock pursuant to the Merger will be a
non-taxable event to the Shareholders (which determination may be based in part
upon an appraisal secured by the Shareholders).
8.10 No Material Adverse Change. No material adverse change in the
business, operations, affairs, prospects, properties, assets, existing and
potential liabilities, obligations, profits or condition (financial or
otherwise) of UFP and its subsidiaries, taken as a whole, shall have occurred;
and the Shareholders shall have received a certificate dated the Closing Date
and signed by UFP to such effect.
8.11 Opinion of Counsel. The Company and the Shareholders shall have
received an opinion of counsel to UFP and Newco, dated the Closing Date, in the
form attached hereto as Annex IV.
9. INDEMNIFICATION
9.1 Indemnification.
(a) Each Shareholder severally, based upon percentage share ownership
of the Company (provided that the percentage of ownership of the Carroll M.
Shoffner Charitable Remainder Annuity Trust shall be attributable to Mr.
Shoffner), covenants and agrees to indemnify, defend, protect, release and
hold harmless UFP, Newco and the Surviving Corporation from, against and in
respect of:
(i) all liabilities, obligations, losses, claims, damages,
actions, suits, proceedings, investigations, demands, assessments,
adjustments, settlement payments, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) and
deficiencies suffered, sustained, incurred or paid by UFP, Newco or
the Surviving Corporation in connection with, resulting from, relating
to or arising out of any of the following (collectively, "Claims"):
(A) any breach of any representation or warranty of the
Company or any Shareholder set forth in this Agreement or any
certificate or other
31
writing delivered by any Shareholder or the Company in connection
herewith;
(B) any nonfulfillment or breach of any covenant or
agreement on the part of any Shareholder or the Company set forth
in this Agreement; and
(C) those matters listed on attached Schedule 9.1 and the
Ancillary Real Estate Agreement; and
(ii) any and all actions, suits, claims, proceedings,
investigations, allegations, demands, assessments, audits, fines,
judgments, costs and other expenses (including, without limitation,
reasonable attorneys' fees and expenses) incident to any of the
foregoing or to the enforcement of this Section 9. 1.
(b) No loss, damage or expense shall be deemed to have been sustained
by UFP, Newco or the Surviving Corporation under this Section 9.1 to the
extent of insurance proceeds paid to UFP, Newco or the Surviving
Corporation as a result of the event giving rise to such right of
indemnification.
(c) Notwithstanding the foregoing, no Shareholder shall be obligated
to indemnify UFP, Newco or the Surviving Corporation with respect to any
Claim as to which UFP, Newco or the Surviving Corporation under Section 9.1
unless and until the aggregate amount of indemnification so asserted (the
"Indemnification Threshold") against all Shareholders together exceeds Five
Hundred Thousand Dollars ($500,000), and thereafter UFP, Newco and/or the
Surviving Corporation shall be entitled to indemnity hereunder for all such
Claims from the first dollar, including, but not limited to, the first Five
Hundred Thousand Dollars ($500,000). Notwithstanding anything in this
Agreement to the contrary, the Shareholders' maximum aggregate obligation
pursuant to Section 9.1 shall not exceed Twenty Million Dollars
($20,000,000) provided that, notwithstanding the foregoing, the
Shareholders' maximum aggregate obligation to UFP, Newco and the Surviving
Corporation in respect of any breach of the representations and warranties
contained in Section 3.3 shall be limited to the Purchase Price.
9.2 Survival. The representations, warranties and covenants given or made
by the Shareholders, Newco, or UFP in this Agreement or in any certificate or
other writing furnished in connection herewith shall survive the Closing until
the second anniversary of the Closing Date and shall thereafter terminate and be
of no further force or effect, except that (a) all representations and
warranties relating to Tax matters or compliance with Environmental Laws or
compliance with ERISA involving the Company or any Subsidiary shall survive the
Closing for the period of the applicable statutes of limitation plus any
extensions or waivers thereof, (b) all covenants of the Shareholders which are
to be performed as are performable after Closing (and the covenant of UFP and
Newco set forth in Section 6.15 above) shall survive the Closing without
limitation and (c) any representation, warranty or covenant as to which a claim
(including, without limitation, a contingent
32
claim) shall have been asserted during the survival period shall continue in
effect with respect to such claim until such claim shall have been finally
resolved or settled. Each party shall be entitled to rely upon the
representations and warranties of the other party or parties set forth herein
regardless of any investigation or audit conducted before or after the Closing
Date or the decision of any party to complete the Closing.
9.3 Indemnification Procedure. All claims for indemnification under Section
9.1 hereof shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which any Shareholder
(the "Indemnifying Party") would be liable to UFP, Newco and/or the
Surviving Corporation (an "Indemnified Party") is asserted against an
Indemnified Party by a third party, the Indemnified Party shall with
reasonable promptness notify the Indemnifying Party of such claim or demand
(the "Claim Notice"), specifying the nature of such claim or demand and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim or
demand). The Indemnifying Party shall have 30 days from the receipt of the
Claim Notice (the "Notice Period") to notify the Indemnified Party (i)
whether or not the Indemnifying Party disputes the Indemnifying Party's
liability to the Indemnified Party hereunder with respect to such claim or
demand and (ii) if the Indemnifying Party does not dispute such liability,
whether or not the Indemnifying Party desires, at the sole cost and expense
of the Indemnifying Party, to defend against such claim or demand, provided
that the Indemnified Party is hereby authorized (but not obligated) prior
to and during the Notice Period to file any motion, answer or other
pleading and to take any other action which the Indemnified Party shall
deem necessary or appropriate to protect the Indemnified Party's interests.
In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that the Indemnifying Party does not dispute the
Indemnifying Party's obligation to indemnify hereunder and desires to
defend the Indemnified Party against such claim or demand, except as
hereinafter provided, the Indemnifying Party shall have the right to defend
by appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by the Indemnifying Party to a final conclusion; provided that,
unless the Indemnified Party otherwise agrees in writing, the Indemnifying
Party may not settle any matter (in whole or in part) unless such
settlement includes a complete and unconditional release of the Indemnified
Party. If the Indemnified Party desires to participate in, but not control,
any such defense or settlement the indemnified Party may do so at its sole
cost and expense. If the Indemnifying Party elects not to defend the
Indemnified Party against such claim or demand, whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the
Indemnified Party, without waiving any rights against the Indemnifying
Party, may settle or defend against any such claim or demand in the
Indemnified Party's sole discretion and, if it is ultimately determined
that the Indemnifying Party is responsible therefor under this Section 9,
then the Indemnified Party shall be entitled to recover from the
Indemnifying Party the amount of any settlement or judgment and all
indemnifiable costs and expenses of the Indemnified Party with respect
33
thereto, including, without limitation, interest from the date such costs
and expenses were incurred.
(b) If at any time, in the reasonable opinion of the Indemnified
Party, notice of which shall be given in writing to the Indemnifying Party,
any such claim or demand seeks material prospective relief which could have
a materially adverse effect on the business, operations, prospects, assets,
liabilities or condition (financial or otherwise) of any Indemnified Party,
the Surviving Corporation or any subsidiary of the Surviving Corporation,
the Indemnified Party shall have the right to control or assume (as the
case may be) the defense of any such claim or demand and the amount of any
judgment or settlement and the reasonable costs and expenses of defense
shall be included as part of the indemnification obligations of the
Indemnifying Party hereunder. If the Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the right to
participate in, but not control, the defense of such claim or demand at the
sole cost and expense of the Indemnifying Party.
(c) In the event the Indemnified Party should have a claim against the
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected by a third party, the
Indemnified Party shall with reasonable promptness send a Claim Notice with
respect to such claim to the Indemnifying Party. If the Indemnifying Party
does not notify the Indemnified Party within the Notice Period that the
Indemnifying Party disputes such claim, the amount of such claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder.
(d) Nothing herein shall be deemed to prevent the Indemnified Party
from making (and an Indemnified Party may make) a claim hereunder for
potential or contingent claims or demands provided the Claim Notice sets
forth the specific basis for any such potential or contingent claim or
demand to the extent then feasible and the Indemnified Party has reasonable
grounds to believe that such a claim or demand may be made. The Indemnified
Party's failure to give reasonably prompt notice to the Indemnifying Party
of any actual, threatened or possible claim or demand which may give rise
to a right of indemnification hereunder shall not relieve the Indemnifying
Party of any liability which the Indemnifying Party may have to the
Indemnified Party except to the extent that the failure to give such notice
materially and adversely prejudiced the Indemnifying Party.
9.4 Indemnification Payments by Shareholders: Adjustments. Obligations of
the Shareholders under this Section 9 will be satisfied by the delivery to UFP
of cash, UFP Stock and/or, to the extent sufficient to satisfy any such
obligations, by UFP's exercise, in its sole discretion, of its rights to the
Pledged Securities, as set forth in Section 1.4 above. The parties hereto will
make appropriate adjustments for any insurance proceeds in determining the
amount of any indemnification obligation under this Section 9, provided that no
Indemnifying Party shall be obligated to seek any payment pursuant to the terms
of any insurance policy.
34
9.5 Release by Shareholders. Shareholders hereby release and discharge UFP
and Newco and each of its officers and directors from, and agrees and covenants
that in no event will the Shareholders commence any litigation or a legal or
administrative proceeding against UFP, Newco or the Surviving Corporation, or
any of their officers and directors, whether in law or in equity, relating to
any and all claims and demands, known and unknown, suspected or unsuspected,
disclosed and undisclosed, for damages, actual or consequential, past, present,
and future, arising out of or in any way connected with Shareholders' ownership
of Company Stock prior to the Effective Time, other than claims or demands
arising out of the transactions contemplated by this Agreement and the Plan of
Merger.
9.6 Third Party Beneficiaries. The Surviving Corporation shall be third
party beneficiaries of this Section 9, entitled to assert directly all rights in
connection herewith with the same effect as if it were a party to this
Agreement.
10. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.1 Shareholders. Each Shareholder recognizes and acknowledges that it had
in the past, currently has, and in the future may possibly have, access to
certain confidential information of the Company, the Subsidiaries (excluding the
Company's saw mill, grading, farming and cattle operation, collectively referred
to as the "Excluded Operations") and/or UFP, such as lists of customers,
operational policies and pricing and cost policies that are valuable, special
and unique assets of the Company's, the Subsidiaries' and/or UFP's respective
businesses. Except with respect to the Excluded Operations, each Shareholder
agrees (and prior to Closing the Company agrees) not to disclose confidential
information with respect to the Company, the Subsidiaries and/or UFP to any
Person for any purpose or reason whatsoever, except to authorized
representatives of UFP and to the Shareholders' counsel and their other
advisers, provided that such advisers agree to the confidentiality provisions of
this Section 10.1, unless (a) such information becomes known to the public
generally through no fault of any Shareholder or the Company, (b) disclosure is
required by law or the order of any Governmental Entity under color of law or
(c) the disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party, provided,
that prior to disclosing any information pursuant to clause (b) or (c) above,
the Shareholder shall, if possible, give prior written notice thereof to UFP and
provide UFP with the opportunity to contest such disclosure. In the event of a
breach or threatened breach by the Company or any Shareholder of the provisions
of this Section 10.1, UFP shall be entitled to an injunction restraining the
Company or such Shareholder from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting UFP
from pursuing any other available remedy for such breach or threatened breach,
including, without limitation, the recovery of damages.
10.2 UFP. UFP recognizes and acknowledges that it had in the past,
currently has, and in the future may possibly have, access to certain
confidential information of the Company and/or the Subsidiaries, such as lists
of customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company's and/or the Subsidiaries'
respective
35
businesses. UFP agrees that, prior to the Closing, or if there shall not be a
Closing, it will not disclose confidential information with respect to the
Company and/or the Subsidiaries to any Person for any purpose or reason
whatsoever, except to authorized representatives of the Company and to UFP's
counsel and UFP's other advisers, provided that such advisers agree to the
confidentiality provisions of this Section 10.2, unless (a) such information
becomes known to the public generally through no fault of UFP, (b) disclosure is
required by law or the order of any Governmental Entity under color of law or
(c) the disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party, provided,
that prior to disclosing any information pursuant to clause (b) or (c) above,
UFP shall, if possible, give prior written notice thereof to the Company and
provide the Company with the opportunity to contest such disclosure. In the
event of a breach or threatened breach by UFP of the provisions of this Section
10.2, the Company shall be entitled to an injunction restraining UFP from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the Company from pursuing any other available
remedy for such breach or threatened breach, including, without limitation, the
recovery of damages.
10.3 Damages. Because of the difficulty of measuring economic losses as a
result of the breach of the covenants in Sections 10.1 and 10.2 hereof, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenants may
be enforced against them by injunctions and restraining orders.
11. FEDERAL SECURITIES ACT REPRESENTATIONS
11.1 Economic Risk; Sophistication. The Shareholders jointly and severally
represent and warrant to UFP that each Shareholder (a) has not relied on any
purchaser representative, or on the Company or any other Shareholder, in
connection with the acquisition of shares of UFP Stock hereunder; (b) each
Shareholder (i) has such knowledge, sophistication and experience in business
and financial matters that it is capable of evaluating the merits and risks of
an investment in the shares of UFP Stock, (ii) fully understands the nature,
scope and duration of the limitations on transfer of UFP Stock contained in this
Agreement and (iii) can bear the economic risk of an investment in the shares of
UFP Stock and can afford a complete loss of such investment; (c) has had an
adequate opportunity to ask questions and receive answers from the officers of
UFP concerning any and all matters relating to the transactions described herein
including, without limitation, the background and experience of the officers and
directors of UFP, the plans for the operations of the business of UFP, the
business, operations and financial condition of UFP, and any plans for
additional acquisitions and the like; and (d) has asked any and all questions in
the nature described in the preceding sentence and all questions have been
answered to such Shareholder's satisfaction.
11.2 Sales of Stock.
(a) By execution and delivery of this Agreement, the Shareholders
jointly and severally represent and warrant to UFP that none of the
Shareholders has any contract,
36
undertaking, agreement or arrangement, written or oral, with any other
Person to sell, transfer, pledge, assign or grant participation in any
shares of UFP Stock to be acquired by such Shareholder.
(b) Each Shareholder agrees that prior to the first anniversary of the
Closing Date with respect to the shares of UFP Stock to be received by such
Shareholder in the Merger (the "Restricted Shares"), such Shareholder will
not, directly or indirectly, offer, sell, contract to sell, pledge or
otherwise dispose of such Restricted Shares.
(c) Each Shareholder acknowledges and agrees that UFP will not provide
such Shareholder with a prospectus for such Shareholder's use in selling
the shares of UFP Stock to be received by such Shareholder in the Merger,
and each Shareholder agrees to sell such shares only in accordance with the
requirements, if any, of Rule 145(d) promulgated under the Securities Act
of 1933, as amended (the "1933 Act").
(d) The certificate or certificates evidencing the Restricted Shares
will bear a legend substantially in the form set forth below and containing
such other information as UFP may deem necessary or appropriate:
The shares represented by this certificate are subject to a holding period
expiring on the first anniversary of the closing of the transactions
contemplated in that certain Agreement and Plan of Reorganization, dated
March 30, 1998, among the Issuer and the Shareholders of Shoffner
Industries, Inc., a north Carolina corporation (the "Merger Agreement").
Prior to the expiration of such holding period, such shares may not be
sold, transferred, pledged or assigned except as such shares may be pledged
to UFP in accordance with the Merger Agreement, and the Issuer shall not be
required to give effect to any attempted sale, transfer, pledge or
assignment. Upon the written request of the Holder of this Certificate, the
Issuer agrees to remove this restrictive legend (and any stop order placed
with the transfer agent) when the holding period has expired.
The shares represented by this Certificate were issued in a transaction to
which Rule 145 promulgated under the Securities Act of 1933, as amended,
applies. These shares may only be sold, transferred, pledged or assigned in
accordance with the terms of such Rule.
12. GENERAL
12.1 Termination. This Agreement may be terminated at any time prior to the
Closing solely:
(a) by mutual consent of the board of directors of UFP and the
Shareholders' Representatives acting on behalf of all of the Shareholders;
37
(b) by the Shareholders' Representatives acting on behalf of all of
the Shareholders, on the one hand, or by UFP (acting through its board of
directors) on the other hand, if the Closing shall not have occurred on or
before April 30, 1998 (the "Termination Date"); provided that the right to
terminate this Agreement under this Section 12.1(b) shall not be available
to either party (with the Shareholders and the Company deemed to be a
single party for this purpose) whose material misrepresentation, breach of
representation, covenant or warranty or failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date; or
(c) by the Shareholders' Representatives acting, on behalf of all of
the Shareholders, on the one hand, or by UFP (acting through its board of
directors), on the other hand, if there is or has been a material breach,
failure to fulfill or default on the part of the other party (with the
Shareholders and the Company deemed to be a single party for this purpose)
of any of the representations and warranties contained herein or in the due
and timely performance and satisfaction of any of the covenants, agreements
or conditions contained herein, and the curing of such default shall not
have been made or shall not reasonably be expected to occur before the
earlier to occur of (i) the Termination Date, or (ii) fifteen (15) days
after the defaulting party receives notice of such default; or
(d) by the Shareholders and the Company as a group, on the one hand,
or by UFP, on the other hand, if there shall be a final nonappealable order
of a federal or state court in effect preventing consummation of the
Merger; or there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to
the Merger by any Governmental Entity which would make the consummation of
the Merger illegal.
12.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 11.1 hereof, this Agreement shall forthwith become
void (except for this Section 12.2 and Sections 8, 12.8 and 12.11 hereof), and
there shall be no liability or obligation on the part of any party hereto
(except with respect to such excluded sections). Notwithstanding the foregoing,
if such termination is due to a material breach or material failure to fulfill
any of the representations, warranties, covenants or agreements set forth in
this Agreement on the part of either party hereto (with the Shareholders and the
Company deemed to be a single party for purposes of this Section 12.2), then
such party shall be liable to the other party hereto (a) to the extent of the
expenses (including, without limitation, attorneys' fees) incurred by such other
party in connection with this Agreement and the transactions contemplated hereby
and (b) in the case of a breach of any of the representations or warranties that
is known when made or should have been known with the exercise of reasonable
diligence or the willful failure to fulfill any of the covenants or agreements
set forth herein, also for damages in accordance with applicable law.
12.3 Cooperation. At any time and from time to time after the Closing, each
of the parties hereto shall upon the request of any other, perform, execute,
acknowledge and deliver such further acts, deeds, assignments, transfers,
conveyances and assurances as may be reasonably required for
38
the purpose of carrying out this Agreement. In connection therewith, if required
by UFP, the Shareholders shall cause the President and Chief Financial Officer
of the Company to execute any documentation reasonably required by UFP's
independent public accountants (in connection with such accountant's audit of
the Company) or the NASDAQ Stock Market. The Shareholders will also cooperate
and cause the present officers, directors and employees of the Company to
cooperate with UFP on and after the Closing Date in furnishing information,
evidence, testimony and other assistance in connection with any Return, filing
obligations, actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Closing Date.
12.4 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
UFP, and the heirs and legal representatives of the Shareholders.
12.5 Entire Agreement. This Agreement (which includes the Schedules and
Annexes hereto) sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby. It shall not be amended or
modified except by a written instrument duly executed by each of the parties
hereto. Any and all previous agreements and understandings between or among the
parties regarding the subject matter hereof, whether written or oral and
including, without limitation, the letter of intent dated February 17, 1998, are
superseded by this Agreement.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by fax) by the parties.
12.7 Brokers and Agents.
(a) UFP represents and warrants to the Shareholders that it has not
employed any broker or agent in connection with the transactions
contemplated by this Agreement and agrees to indemnify the Shareholders
against all loss, cost, damages or expense relating to or arising out of
claims for fees or commission of any broker or agent employed or alleged to
have been employed by such indemnifying party.
(b) The Subject Parties jointly and severally represent and warrant to
UFP that no Subject Party has employed any broker or agent in connection
with the transactions contemplated by this Agreement and agrees to
indemnify UFP (irrespective of the limitations set forth in Section 9.1(c)
of this Agreement) against all loss, cost, damages or expense relating to
or arising out of claims for fees or commission of any broker or agent
employed or alleged to have been employed by such indemnifying party.
39
12.8 Expenses. UFP has paid and will pay the fees, expenses and
disbursements of UFP and Newco and their agents, representatives, accountants
and counsel incurred in connection with the subject matter of this Agreement.
UFP has paid and will pay all costs incurred in connection with the due
diligence investigation of the Company by UFP including, without limitation,
appraisals and environmental assessments. If this Agreement is terminated, then
UFP shall reimburse Shoffner for the costs of the environmental assessments
within ten (10) business days of receipt of a written demand for payment. The
Shareholders (and not the Company) have paid and will pay the fees, expenses and
disbursements of the Shareholders, the Company, the Subsidiaries and their
agents, representatives, financial advisors, accountants and counsel incurred in
connection with the subject matter of this Agreement.
12.9 Specific Performance, Remedies. Each party hereto acknowledges that
the other parties will be irreparably harmed and that there will be no adequate
remedy at law for any violation by any of them of any of the covenants or
agreements contained in this Agreement. It is accordingly agreed that, in
addition to any other remedies which may be available upon the breach of any
such covenants or agreements, each party hereto shall have the right to obtain
injunctive relief to restrain a breach or threatened breach of, or otherwise to
obtain specific performance of, the other parties' covenants and agreements
contained in this Agreement. The remedies provided for in Section 9 hereof shall
be the exclusive remedies for UFP and the Surviving Corporation after Closing in
any action seeking damages or any other form of monetary relief brought by any
such party against any Shareholder, provided that, nothing in this Agreement
shall be construed to limit the right of a party to seek specific performance or
injunctive or other equitable relief for a breach or threatened breach of this
Agreement. Furthermore, nothing in this Agreement shall limit or restrict in any
manner any rights or remedies which any party has, or might have, at law, in
equity or otherwise, against any other party after Closing based on any willful
misrepresentation, willful breach of warranty or willful failure to fulfill any
covenant or agreement set forth herein. Except for the covenant of UFP and Newco
in Section 6.15 above, notwithstanding anything to the contrary, in the event
Closing occurs (a) neither the Surviving Corporation, the Subsidiaries nor UFP
shall have any liability to the Shareholders (including, without limitation, by
way of contribution, offset or otherwise) as a result of the Company's breach of
any representation, warranty or covenant in this Agreement or the failure of the
Company to fulfill any obligation or covenant hereunder and (b) any such breach
or failure referred to in (a) shall not in any way limit or reduce the
obligations of the Shareholders under this Agreement.
12.10 Notices. Any notice, request, claim, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given if delivered personally or sent by fax
(with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
40
If to UFP, Newco or with a required copy to:
the Surviving Corporation:
Universal Forest Products, Inc. Varnum, Riddering, Schmidt & Howlett LLP
2801 East Beltline, N.E. 333 Bridge Street, N.W., P.O. Box 352
Grand Rapids, MI 49505 Grand Rapids, MI 49501-0352
Attn: Matthew J. Missad Attn: Michael G. Wooldridge, Esq.
(Fax: 616-364-5558) (Fax: 616-336-7000)
If to the Company: with a required copy to:
Shoffner Forest Products, Inc. Wishart, Norris, Henninger & Pittman, P.A.
3231 Staley Store Road 3120 South Church Street
Liberty, NC 27298 Burlington, NC 27215
Attn: Carroll M. Shoffner Attn: Dorn Pittman, Esq.
(Fax: 910-584-3994)
If to any Shareholder to: with a required copy to:
Carroll M. Shoffner Wishart, Norris, Henninger & Pittman, P.A.
3063 Huffman Mill Road 3120 South Church Street
Burlington, NC 27215 Burlington, NC 27215
Attn: Dorn Pittman, Esq.
Gary A. Wright (Fax: 910-584-3994)
820 Kimberly Road
Burlington, NC 27215
Regina S. Trollinger
2808 Riley's Trail
Burlington, NC 27215
Cindy D. Shoffner
6418 Paw-Paw Trail
Ooltewah, TN 37363
or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, faxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
12.11 Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of Michigan.
41
12.12 Absence of Third Party Beneficiary Rights. Except as specifically
provided herein, no provision of this Agreement is intended, nor will be
interpreted, to provide or to create any third party beneficiary rights or any
other rights of any kind in any client, customer, affiliate, shareholder,
employee, partner of any party hereto or any other Person.
12.13 Mutual Drafting. This Agreement is the mutual product of the parties
hereto, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.
12.14 Further Representation. Each party to this Agreement acknowledges and
represents that it has been represented by its own legal counsel in connection
with the transactions contemplated by this Agreement, with the opportunity to
seek advice as to its legal rights from such counsel. Each party further
represents that it is being independently advised as to the tax consequences of
the transactions contemplated by this Agreement and is not relying on any
representation or statements made by the other party as to such tax
consequences.
12.15 Amendment; Waiver. This Agreement may be amended by the parties
hereto at any time prior to the Closing by execution or waiver of an instrument
in writing signed (subject to Section 12.17 below) on behalf of each of the
parties hereto. Any extension or waiver by any party of any provision hereto
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
12.16 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such Person or circumstance in any other jurisdiction or to other Persons or
circumstances in any jurisdiction, shall not be affected thereby, and to this
end the provisions of this Agreement shall be severable.
12.17 Shareholders' Representatives. The Shareholders hereby irrevocably
designate and appoint Carroll M. Shoffner for all of the Shareholders other than
those Shareholders holding their respective shares of Company Stock as trusts,
as to which John P. Gerlach, the Independent Special Trustee of each of those
Shareholders, shall be those Shareholders' Representative, or either of them, as
their agents and attorneys-in-fact ("Shareholders' Representatives") with full
power and authority (i) to execute, deliver and receive on their behalf all
notices, requests and other communications hereunder; (ii) to fix and alter on
their behalf the time, date and place of the Closing; (iii) to waive, amend, or
modify on their behalf any provisions of this Agreement; and (iv) to execute
such instruments and documents contemplated hereby and take such other action on
their behalf in connection with this Agreement, the Closing and the transactions
contemplated hereby as such agent or agents deem appropriate; provided, however,
that no such waiver, amendment, or modification may be made if it would decrease
the number of shares to be issued to the Shareholders hereunder or increase the
indemnification obligations of the Shareholders arising under Section 9 hereof.
42
12.18 Shareholder Authorization. The Shareholders, being all of the
shareholders of the Company, in accordance with Section 55-7-05 and Section
55-11-03 of the North Carolina Statute, do hereby consent in writing to the
following resolution, with the same force and effect as if adopted at a meeting
of the shareholders of the Company, duly called and held in accordance with law
and the Bylaws of the Company.
RESOLVED, that, in accordance with Section 55-11-03 of the North
Carolina Business Corporation Act, this Agreement, the Plan of Merger and
the transactions contemplated hereby and thereby be and hereby are approved
with any required notice as therein provided being expressly waived.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
UNIVERSAL FOREST PRODUCTS, INC.
By: /s/ Matthew J. Missad
Name: Matthew J. Missad
Title: Exec. Vice President
UFP ACQUISITION CORP. II
By: /s/ Matthew J. Missad
Name: Matthew J. Missad
Title: President
SHOFFNER INDUSTRIES, INC.
By: /s/ Gary A. Wright
Name: Gary A. Wright
Title: President
[SIGNATURES CONTINUED ON NEXT PAGE]
43
WITNESSES: SHAREHOLDERS:
/s/ Carroll M. Shoffner
Name: Carroll M. Shoffner
/s/ Gary A. Wright
Name: Gary A. Wright
/s/ Regina S. Trollinger
Name: Regina S. Trollinger
/s/ Cindy D. Shoffner
Name: Cindy D. Shoffner
/s/ John P. Gerlach
Name: Carroll M. Shoffner Charitable
Remainder Annuity Trust, by John P.
Gerlach, its Independent Special Trustee
/s/ John P. Gerlach
Name: Carroll M. Shoffner Charitable
Remainder Unitrust, by John P. Gerlach,
its Independent Special Trustee
For good and valuable consideration, including the mutual promises
contained in this Agreement, Shoffner Investments, LLC hereby executes this
Agreement as of the day and year first above written for the purpose of agreeing
to execute, deliver and perform the obligations of Shoffner Investments, LLC
pursuant to the Leased Property Purchase Agreement attached as Annex VIII
hereto.
SHOFFNER INVESTMENTS, LLC
By: /s/ Carroll M. Shoffner
Name: Carroll M. Shoffner
Title: Manager
44
PLAN OF MERGER
PLAN OF MERGER, dated as of March 30, 1998, by and among UNIVERSAL FOREST
PRODUCTS, INC., a Michigan corporation ("UFP"), UFP ACQUISITION CORP. II, a
Michigan corporation and a subsidiary of UFP ("Newco"), and SHOFFNER INDUSTRIES,
INC., a North Carolina corporation (the "Company") (Newco and the Company being
hereinafter collectively referred to as the "Constituent Corporations").
RECITALS
A. Prior to the execution of this Plan of Merger (the "Plan"), UFP, Newco,
the Company, and the Shareholders of the Company have entered into an Agreement
and Plan of Reorganization dated as of March 30, 1998 (the "Agreement")
providing for certain representations, warranties, and agreements in connection
with the contemplated transaction.
B. The Board of Directors of UFP, Newco, and the Company have approved the
merger of the Company with and into Newco (the "Merger") upon the terms and
subject to the conditions set forth herein and in the Agreement.
C. For federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization with the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
D. Immediately upon consummation of the Merger, the name of Newco shall be
changed to Shoffner Industries, Inc.
AGREEMENT
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
(a) At the Effective Time (as defined in Section 1.2 below) and
subject to the terms and conditions of this Plan and the Agreement, the
Company shall be merged with and into Newco, and the separate existence of
the Company shall thereupon cease, in accordance with the applicable
provisions of the Michigan Business Corporation Act ("MBCA") and the North
Carolina Business Corporation Act ("NCBCA").
ANNEX I
(b) Newco will be the surviving corporation in the Merger (sometimes
referred to herein as the "Surviving Corporation") and will continue to be
governed by the laws of the State of Michigan, and the separate corporate
existence of Newco and all of its rights, privileges, immunities and
franchises, public or private, and all its duties and liabilities as a
corporation organized under the MBCA will continue unaffected by the
Merger.
(c) The Merger will have the effects specified by the MBCA and the
NCBCA.
1.2 Effective Time. Following the satisfaction or waiver of the conditions
precedent set forth in Sections 7 and 8 of the Agreement, Newco and the Company
shall, subject to the terms and conditions of the Agreement, execute, deliver
and file a "Certificate of Merger" in the form as required by the MBCA and the
NCBCA. The Certificate of Merger shall be executed on and filed on or before the
Closing Date. The "Effective Time" shall be the date of filing of the
Certificate of Merger with the State of Michigan or, if later, the close of
business on the date specified in the Certificate of Merger, which shall not be
later than seven (7) days after the Closing.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of Incorporation of Newco as in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation after the Effective Time.
2.2 Bylaws. The Bylaws of Newco as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time.
2.3 Board of Directors. From and after the Effective Time, the Board of
Directors of Newco shall be the Board of Directors of Newco immediately prior to
the Effective Time and at the Effective Time, Carroll M. Shoffner shall be a
director of the Surviving Corporation.
2.4 Name of Corporation. From and after the Effective Time, the name of
Newco shall be Shoffner Industries, Inc.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion of IR Shares in the Merger. Pursuant to this Plan, at the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company:
2
(a) Shares of Newco Stock. Each share of common stock, no par value
per share of Newco, which is outstanding immediately prior to the Effective
Time, shall continue to be outstanding, without any change, as an
outstanding share of capital stock of the Surviving Corporation immediately
after the Effective Time. Each stock certificate of Newco evidencing
ownership of any such shares shall continue to evidence ownership of such
shares of capital stock of the Surviving Corporation.
(b) Conversion of Company Stock. Subject to the terms and conditions
of this Agreement, each share of common stock of the Company ("Company
Stock") which is outstanding immediately prior to the Effective Time shall
automatically be canceled and extinguished and converted, without any
action on the part of the holder thereof, into (i) the number of shares of
UFP Stock equal to the Conversion Ratio, and (ii) the right to receive the
Per Share Cash Amount. All shares of Company Stock, when so converted,
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of UFP Stock and the Per
Share Cash Amount to be issued and paid in consideration therefor upon the
surrender of such certificate in accordance with Section 3.3 of this Plan.
(c) Conversion Ratio. The Conversion Ratio shall equal 3,000,000,
divided by the number of shares of Company Stock which are outstanding
immediately prior to the Effective Time (the "Final Company Shares") if the
Average Price of UFP Stock (as defined in the Agreement) is both (i)
greater than or equal to $13.00 and (ii) less than or equal to $17.00. If
the Average Price of UFP Stock is less than $13.00, then the Conversion
Ratio shall be equal to (i) $39,000,000 divided by the Average Price of UFP
Stock, divided by (ii) the number of Final Company Shares, or if the
Average Price of UFP Stock is greater than $17.00, then the conversion
ratio shall be equal to (i) $51,000,000 divided by the Average Price of UFP
Stock, divided by (ii) the number of Final Company Shares.
(d) Per Share Cash Amount. The Per Share Cash Amount shall equal (i)
the Aggregate Cash Amount divided by (ii) the number of Final Company
Shares, whereby the Aggregate Cash Amount shall equal $43,800,000, subject
to the adjustment provisions of Section 1.2(f) of the Agreement.
3.2 Status of Newco Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of any holder of any capital stock of Newco,
each issued and outstanding share of common stock of Newco shall continue
unchanged and remain outstanding as a share of common stock of the Surviving
Corporation.
3.3 Exchange of Company Common Stock Certificates. As of the Effective
Time, certificates which represented shares of Company Stock which were
outstanding immediately prior to the Effective Time (hereinafter called "Old
Certificates") shall represent solely the right to receive UFP Common Stock and
cash as provided in this Plan and the Agreement. At the
3
Effective Time, Old Certificates shall be exchangeable by the Shareholders for
new stock certificates representing the number of shares of UFP Stock and cash
to which the Shareholders shall be entitled. As soon as practicable after the
Effective Time, UFP shall issue and deliver stock certificates representing UFP
Stock in the name and to the address of the Shareholders or as otherwise
provided to UFP prior to the Closing, in the amount determined under Section 3.1
of this Plan, and shall make the required payments based upon the Per Share Cash
Amounts; provided, that UFP shall have received all of the Old Certificates
together with properly executed transmittal materials, if any, and an executed
Form W-9 by the Shareholders of the Company.
ARTICLE IV
TERMINATION AND AMENDMENT
4.1 Termination. This Plan shall terminate in the event of and upon
termination of the Agreement.
4.2 Amendment. This Plan may be amended by the parties hereto at any time
before or after approval hereof by the shareholders of the Company. This Plan
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
4.3 Waiver. At any time prior to the Effective Time, the parties hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
4.4 Notices. All notices required or permitted to be given hereunder shall
be in writing and shall be deemed given when delivered in person or sent by
confirmed facsimile, or when received if given by Federal Express or other
nationally recognized overnight courier service, or five (5) business days after
being deposited in the United States mail, postage prepaid, registered or
certified mail, addressed to the applicable party as follows:
4.5 Entire Agreement. This Plan and the Agreement constitute the entire
agreement among the parties and shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives, successors and
permitted assigns. The parties and their respective affiliates make no
representations or warranties to each other, except as contained in the
Agreement, and any and all prior representations and statements made by any
party or its representatives, whether verbally or in writing, are deemed to have
been merged into this Plan and the Agreement.
4.6 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Plan, to exercise any right or privilege conferred in this Plan, or the waiver
by said party of any breach of any of the terms,
4
covenants, conditions, rights or privileges, but the same shall continue and
remain in full force and effect as if no such forbearance or waiver had
occurred. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.
4.7 Counterparts. This Plan may be executed in counterparts, each of which
shall be deemed to be an original, and all such counterparts shall constitute
but one instrument.
4.8 Severability. The invalidity of any provision of the Plan or portion of
a provision shall not affect the validity of any other provision of the Plan or
the remaining portion of the applicable provision.
4.9 Governing Law. This Plan and the Agreement shall be construed in
accordance with the laws of the State of Michigan, and to the extent applicable
to the consequences of the Merger of the Company, the laws of the State of North
Carolina.
4.10 Binding Effect; Benefit. This Plan shall inure to the benefit of and
be binding upon the parties hereto and their successors and permitted assigns.
Nothing in this Plan, express or implied, is intended to confer on any person
other than the parties hereto and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
the Plan, including, without limitation, third party beneficiary rights.
4.11 Assignability. This Plan shall not be assignable by any party without
the prior written consent of the other parties (which consent shall not be
unreasonably withheld), except that UFP may assign this Plan to a wholly owned
subsidiary of UFP but such assignment shall not relieve UFP of any of its
liabilities hereunder.
5
4.12 Headings. The headings contained in this Plan are for convenience of
reference only and shall not affect the meaning or interpretation of this Plan.
IN WITNESS WHEREOF, the parties have executed this Plan of Merger on the
date first above written.
UNIVERSAL FOREST PRODUCTS, INC.
By /s/ Matthew J. Missad
Its Executive Vice President
UFP ACQUISITION CORP. II
By /s/ Matthew J. Missad
Its President
SHOFFNER INDUSTRIES, INC.
By /s/ Gary A. Wright
Its President
6
ANNEX II
SHAREHOLDERS AND STOCK OWNERSHIP OF THE COMPANY
Shoffner Industries, Inc. Common Stock
Shareholder Class A Class B Total
Carroll M. Shoffner 17,887 314,863 332,750
Carroll M. Shoffner Charitable Remainder
Annuity Trust 863 16,387 17,250
Carroll M. Shoffner Charitable Remainder
Unitrust 5,000 95,000 100,000
Gary A. Wright 1,250 23,750 25,000
Regina S. Trollinger 0 12,500 12,500
Cindy Shoffner 0 12,500 12,500
------- ------- -------
Totals: 25,000 475,000 500,000
======= ======= =======
ANNEX III
[DELIVERED AT CLOSING]
VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP
ATTORNEYS AT LAW
BRIDGEWATER PLACE
POST OFFICE BOS 352 - GRAND RAPIDS, MICHIGAN 49501-0352
TELEPHONE 616/336-6000 - FAX 616/336-7000
March 30, 1998
Shoffner Industries, Inc.
5631 S. NC 62
Burlington, NC 27215
Each of the Shareholders of Shoffner Industries, Inc.,
Identified on Schedule 1
c/o Mr. Carroll M. Shoffner
5631 NC 62
Burlington, NC 27215
Re: Agreement and Plan of Reorganization
Ladies and Gentlemen:
We have acted as counsel to Universal Forest Products, Inc., a Michigan
corporation ("UFP") and UFP Acquisition Corp. II, a Michigan corporation
("Newco") in connection with the proposed merger of Shoffner Industries, Inc., a
North Carolina corporation (the "Company") with and into Newco, under the terms
of the Agreement and Plan of Reorganization, dated March 20, 1998, by and among
UFP, Newco, the Company and the shareholders of the Company (the "Agreement").
This opinion letter is provided to you at the request of UFP and Newco pursuant
to Section 8.11 of the Agreement. Terms defined in the Agreement shall have the
same meaning when used herein, unless otherwise defined herein.
This opinion letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). Accordingly, it is subject to a number of qualifications, exceptions,
limitations on coverage and other limitations, all as more particularly
described in the Accord. We have reviewed and examined such certificates of
public officials, corporate documents and records, and other certificates,
opinions, and instruments and made such other investigations as we deemed
appropriate in connection with the opinions set forth herein.
Based upon the foregoing and upon our review of such matters of fact and
law as we have deemed necessary in order to render this opinion, we advise you
that in our opinion:
1. UFP is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Michigan, and has the
corporate power to carry on its respective business as and where it is now
being conducted.
ANNEX IV
Shoffner Industries, Inc.
March 30, 1998
Page 2
2. Newco is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Michigan, and has the
corporate power to carry on its respective business as and where it is now
being conducted.
3. The Agreement and the Plan of Merger and the execution, delivery,
and performance of the Agreement and the Plan of Merger, and the
consummation of the Merger by UFP and Newco have been duly authorized,
approved, and adopted by all requisite corporate action of the Board of
Directors and shareholders of Newco and by the Board of Directors of UFP.
4. All other actions and proceedings required by law and the Agreement
to be taken by UFP and Newco at or prior to the Closing in connection with
the Agreement have been duly and validly taken in accordance with the
respective Articles of Incorporation and Bylaws of UFP and Newco and in
accordance with applicable law.
5. The Agreement and the Plan of Merger constitute valid and binding
obligations of UFP and Newco in accordance with their terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting creditors' rights and by the
exercise of judicial discretion in accordance with general principles
applicable to equitable and similar remedies;
6. The shares of UFP common stock to be issued to the Shareholders of
the Company pursuant to the Agreement and the Plan of Merger, when issued
as described in and pursuant to the Agreement and the Plan of Merger, will
be duly issued and outstanding, fully paid and nonassessable.
This opinion is limited to the laws of the State of Michigan and the
federal laws of the United States. This opinion is furnished to you in
connection with the Agreement, is solely for your benefit and may not be
relied upon by any person other than you or in connection with any other
transaction.
Very truly yours,
VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP
SCHEDULE 1
Shareholders of Shoffner Industries, Inc.:
Carroll M. Shoffner
3063 Huffman Mill Road
Burlington, NC 27215
Gary A. Wright
820 Kimberly Road
Burlington, NC 27215
Regina S. Trollinger
2808 Riley's Trail
Burlington, NC 27215
Cindy D. Shoffner
6418 Paw-Paw Trail
Ooltewah, TN 37363
UNIVERSAL FOREST PRODUCTS, INC.
UFP ACQUISITION CORP. II
Officer's Certificate Accompanying VRS&H Legal Opinion
The undersigned, Matthew J. Missad, the Secretary of Universal Forest
Products, Inc., a Michigan corporation ("UFP") and the President of UFP
Acquisition Corp. II, a Michigan corporation ("Newco") hereby certifies that he
has been duly elected and qualified and is acting in such capacities and that,
as such, he is familiar with the facts herein certified and is duly authorized
to certify the same, and hereby further certifies as follows, with the knowledge
that the law firm of Varnum, Riddering, Schmidt & Howlett LLP will be relying on
such certifications for purposes of rendering a legal opinion as to various
matters as contemplated by the Agreement and Plan of Reorganization dated as of
March 30, 1998, by and among Universal Forest Products, Inc., UFP Acquisition
Corp. II, Shoffner Industries, Inc. and the shareholders of Shoffner Industries,
Inc. (the "Merger Agreement") (defined terms not otherwise defined in this
Certificate shall have the meaning ascribed to such terms in the Merger
Agreement):
1. Attached hereto as Exhibit A are true and correct copies of all Board of
Directors minutes of UFP authorizing or otherwise concerning the Merger
Agreement and the transactions contemplated by the Merger Agreement, and such
resolutions remain in full force and effect.
2. Attached hereto as Exhibit B are true and correct copies of all Board of
Directors minutes and shareholder minutes of Newco authorizing or otherwise
concerning the Merger Agreement and the transactions contemplated by the Merger
Agreement, and such resolutions remain in full force and effect.
3. As of March 1, 1998, UFP had 40,000,000 authorized shares of UFP common
stock, of which 15,576,822 shares of UFP common stock were issued and
outstanding. UFP has authorized the issuance of and reserved for issuance
3,000,000 shares of UFP common stock to be issued as contemplated by the Merger
Agreement.
4. UFP owns all 1,000 issued and outstanding shares of Newco common stock,
free and clear of any liens, claims or encumbrances.
5. Neither UFP nor Newco nor any of their respective subsidiaries is a
party to or affected by any litigation, proceeding, or investigation before any
court or by or before any federal, state, municipal, or other governmental
department, commission, board, or agency, and, to the knowledge of the
undersigned, no such litigation, proceeding, or investigation has been
threatened against UFP, Newco, or any of their subsidiaries or their respective
properties or businesses, which challenges or seeks to enjoin or otherwise
prohibit the transactions contemplated by the Merger Agreement and related Plan
of Merger.
6. Neither UFP, Newco, nor any subsidiary of UFP or Newco is a party to or
bound by any judgment, decree, mortgage, agreement, indenture, or other
instrument which would be
violated by or breached, or would prevent the consummation by UFP and Newco of
the transactions contemplated by the Merger Agreement and related Plan of
Merger.
7. No consent of any third party which has not been obtained is required
for UFP or Newco to enter into the Merger Agreement and Plan of Merger or to
consummate the transactions contemplated thereby.
[signature appears on the following page]
IN WITNESS WHEREOF, this Certificate has been executed the 30th day of
March, 1998.
Matthew J. Missad
Secretary of Universal Forest Products, Inc.
President of UFP Acquisition Corp. II
Exhibit A: Minutes of UFP
Exhibit B: Minutes of Newco
INVESTMENT LETTER
March 30, 1998
Universal Forest Products, Inc.
2801 East Beltline, N.E.
Grand Rapids, Michigan 49505
Gentlemen:
The undersigned are parties to the Agreement and Plan of Reorganization
("Agreement") executed as of March 30, 1998, by and among Universal Forest
Products, Inc., a Michigan corporation ("UFP"), UFP Acquisition Corp. II, a
Michigan corporation ("Newco"), Shoffner Industries, Inc., a North Carolina
corporation (the "Company"), and each of the shareholders of the Company (the
"Shareholders"). The capitalized terms used in this Investment Letter (the
"Letter") shall have the meanings ascribed to them in the Agreement.
The undersigned Shareholders hereby represent and warrant to UFP that:
1. We have carefully read and understand this Letter and discussed with
counsel its requirements and other applicable limitations on the sale, transfer
or other disposition of the shares of UFP Stock to be received by the
undersigned under the terms of the Agreement (the "UFP Shares").
2. We do not presently have, and as of the Closing under the Agreement will
not have, any plan, intention or arrangement to sell, transfer or otherwise
dispose of any of the UFP Shares received pursuant to the Agreement.
3. All of the UFP Shares will be acquired by us only for investment and not
with a view to distribution or resale, and we agree that the UFP Shares may not
be distributed or otherwise transferred until the expiration of at least twelve
(12) months following the Effective Date (the "Restriction Period").
4. No UFP Shares may be sold or transferred without an effective
registration statement for such UFP Shares under the Securities Act of 1933 (the
"Act") or an opinion of legal counsel reasonably satisfactory to UFP that
registration is not required under the Act. In addition, during the one (1) year
period immediately following the first anniversary of the Effective Date, the
UFP Shares may not be distributed without an opinion from Wishart, Norris,
Henninger & Pittman, or other legal or accounting firm (reasonably satisfactory
to UFP) that such disposition will not disqualify the transaction contemplated
by the Agreement as a reorganization within the meaning of Section 368(a)(1)(A)
of the Internal Revenue Code. Nothing in this Letter shall prohibit us from
pledging any or all of the UFP Shares received by us as a result of the
Agreement as collateral to secure bona fide indebtedness to a financial
ANNEX V-A
Universal Forest Products, Inc.
March 30, 1998
Page 2
institution, provided that such institution agrees to be subject to restrictions
on sale, transfer or disposal of any such UFP Shares which are similar to those
set forth herein, and the terms of such indebtedness preclude any default by
borrower until the expiration of the Restriction Period.
5. We own 96.55% of the issued and outstanding shares of capital stock in
the Company. We agree that, prior to Closing under the Agreement, we will not
sell, transfer or otherwise dispose of any stock which we own in the Company.
6. We understand that, to enforce the foregoing commitments, stock transfer
instructions will be given to UFP's transfer agent with respect to the UFP
Shares and that there will be placed on the certificate(s) for the UFP Shares,
or any substitution therefor, a legend stating in substance:
The shares represented by this certificate are subject to a holding
period expiring on the first anniversary of the closing of the
transactions contemplated in that certain Agreement and Plan of
Reorganization, dated March 30, 1998, among the Issuer and the
Shareholders of Shoffner Industries, Inc., a North Carolina corporation
(the "Merger Agreement"). Prior to the expiration of such holding
period, such shares may not be sold, transferred, pledged or assigned
except as such shares may be pledged to UFP in accordance with the
Merger Agreement, and the Issuer shall not be required to give effect
to any attempted sale, transfer, pledge or assignment. Upon the written
request of the Holder of this Certificate, the Issuer agrees to remove
this restrictive legend (and any stop order placed with the transfer
agent) when the holding period has expired.
The shares represented by this Certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933, as
amended, applies. These shares may only be sold, transferred, pledged
or assigned in accordance with the terms of such Rule.
It is further understood and agreed that any such legend shall be removed
by delivery of substitute certificates without such legend and the related stock
transfer restriction shall be lifted forthwith if (a) the Shares shall have been
registered under the Act and applicable state securities laws for resale, or (b)
there shall have been delivered to UFP an opinion of legal counsel reasonably
satisfactory to UFP to the effect that an exemption from registration under the
Act and applicable state securities laws is available with respect thereto.
7. We acknowledge receipt of UFP's annual report to its shareholders for
the year ended December 28, 1996, UFP's annual report on Form 10-K for the year
ended December 28, 1997, UFP's Proxy Statement for the annual meeting of its
shareholders, held on April 23, 1997, and UFP's Form 10-Q Reports for each of
the first three quarters of the fiscal year ended December 27, 1997. We further
acknowledge that we have such knowledge and experience in
Universal Forest Products, Inc.
March 30, 1998
Page 3
financial and business matters that we are capable of evaluating alone or
together with our representative or representatives the merits and risks of an
investment in the UFP Shares and that we are able to bear the economic risk of
such investment.
8. This Letter may be executed in counterparts, each of which shall be
deemed to be an original, and all of such counterparts shall constitute but one
instrument.
Very truly yours,
Carroll M. Shoffner
Gary A. Wright
Regina S. Trollinger
Cindy D. Shoffner
Carroll M. Shoffner Charitable Remainder Unitrust
By
John P. Gerlach, its Independent Special Trustee
INVESTMENT LETTER
March 30, 1998
Universal Forest Products, Inc.
2801 East Beltline, N.E.
Grand Rapids, Michigan 49505
Gentlemen:
The undersigned is a party to the Agreement and Plan of Reorganization
("Agreement") executed as of March 30, 1998, by and among Universal Forest
Products, Inc., a Michigan corporation ("UFP"), UFP Acquisition Corp. II, a
Michigan corporation ("Newco"), Shoffner Industries, Inc., a North Carolina
corporation (the "Company"), and each of the shareholders of the Company (the
"Shareholders"). The capitalized terms used in this Investment Letter (the
"Letter") shall have the meanings ascribed to them in the Agreement.
The undersigned Shareholder hereby represents and warrants to UFP that:
1. I have carefully read and understand this Letter and discussed with
counsel its requirements and other applicable limitations on the sale, transfer
or other disposition of the shares of UFP Stock to be received by the
undersigned under the terms of the Agreement (the "UFP Shares").
2. I do not presently have, and as of the Closing under the Agreement will
not have, any plan, intention or arrangement to sell, transfer or otherwise
dispose of any of the UFP Shares received pursuant to the Agreement.
3. All of the UFP Shares will be acquired by the undersigned only for
investment and not with a view to distribution or resale, and I agree that the
UFP Shares may not be distributed, except for the transfer of such shares to
charitable organizations upon the termination of the trust, conditioned upon the
donee agreeing to be bound by the terms and conditions of this Investment
Letter.
4. No UFP Shares may be sold or transferred without an effective
registration statement for such UFP Shares under the Securities Act of 1933 (the
"Act") or an opinion of legal counsel reasonably satisfactory to UFP that
registration is not required under the Act. In addition, during the one (1) year
period immediately following the first anniversary of the Effective Date, the
UFP Shares may not be distributed without an opinion from Wishart, Norris,
Henninger & Pittman, or other legal or accounting firm (reasonably satisfactory
to UFP) that such disposition will not disqualify the transaction contemplated
by the Agreement as a reorganization within the meaning of Section 368(a)(1)(A)
of the Internal Revenue Code. Nothing in this Letter shall prohibit us from
pledging any or all of the UFP Shares received by
ANNEX V-B
us as a result of the Agreement as collateral to secure bona fide indebtedness
to a financial institution, provided that such institution agrees to be subject
to restrictions on sale, transfer or disposal of any such UFP Shares which are
similar to those set forth herein, and the terms of such indebtedness preclude
any default by borrower until the expiration of the Restriction Period.
5. I own 3.45% of the issued and outstanding shares of capital stock in the
Company. I agree that, prior to Closing under the Agreement, I will not sell,
transfer or otherwise dispose of any stock which I own in the Company.
6. I understand that, to enforce the foregoing commitments, stock transfer
instructions will be given to UFP's transfer agent with respect to the UFP
Shares and that there will be placed on the certificate(s) for the UFP Shares,
or any substitution therefor, a legend stating in substance:
The shares represented by this certificate are subject to a holding
period expiring on the first anniversary of the closing of the
transactions contemplated in that certain Agreement and Plan of
Reorganization, dated March 30, 1998, among the Issuer and the
Shareholders of Shoffner Industries, Inc., a North Carolina corporation
(the "Merger Agreement"). Prior to the expiration of such holding
period, such shares may not be sold, transferred, pledged or assigned
except as such shares may be pledged to UFP in accordance with the
Merger Agreement, and the Issuer shall not be required to give effect
to any attempted sale, transfer, pledge or assignment. Upon the written
request of the Holder of this Certificate, the Issuer agrees to remove
this restrictive legend (and any stop order placed with the transfer
agent) when the holding period has expired.
The shares represented by this Certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933, as
amended, applies. These shares may only be sold, transferred, pledged
or assigned in accordance with the terms of such Rule.
It is further understood and agreed that any such legend shall be removed
by delivery of substitute certificates without such legend and the related stock
transfer restriction shall be lifted forthwith if (a) the Shares shall have been
registered under the Act and applicable state securities laws for resale, or (b)
there shall have been delivered to UFP an opinion of legal counsel reasonably
satisfactory to UFP to the effect that an exemption from registration under the
Act and applicable state securities laws is available with respect thereto.
7. I acknowledge receipt of UFP's annual report to its shareholders for the
year ended December 28, 1996, UFP's annual report on Form 10-K for the year
ended December 28, 1997, UFP's Proxy Statement for the annual meeting of its
shareholders, held on April 23, 1997, and UFP's Form 10-Q Reports for each of
the first three quarters of the fiscal year ended
December 27, 1997. I further acknowledge that I have such knowledge and
experience in financial and business matters that I am capable of evaluating
alone or together with my representative or representatives the merits and risks
of an investment in the UFP Shares and that I am able to bear the economic risk
of such investment.
8. This Letter may be executed in counterparts, each of which shall be
deemed to be an original, and all of such counterparts shall constitute but one
instrument.
Very truly yours,
Carroll M. Shoffner
Charitable Remainder Annuity Trust
By
John P. Gerlach, its Independent Special Trustee
NONCOMPETITION AGREEMENT
AGREEMENT made this 30th day of March, 1998, by and between UNIVERSAL
FOREST PRODUCTS, INC., a Michigan corporation ("UFP"), UFP ACQUISITION CORP. II,
a Michigan corporation ("Newco"), and the undersigned shareholder of Shoffner
Industries, Inc. ("Shareholder").
RECITALS
A. All of the shares of stock of the Company owned by Shareholder are being
acquired pursuant to an Agreement and Plan of Reorganization, dated March 30,
1998, by and among UFP, Newco, Shoffner Industries, Inc. ("Shoffner"), and the
shareholders of Shoffner (the "Reorganization Agreement"), whereby Shoffner will
be merged with and into Newco.
B. By virtue of Shareholder's experience in the industry and his complete
knowledge of the business of Shoffner, the parties acknowledge and agree that
Shareholder is especially qualified to successfully compete with Newco as the
"Surviving Corporation" (as defined in the Reorganization Agreement).
C. In order to preserve and protect the value of the business of Shoffner,
being acquired in connection with the transaction that is subject to the
Reorganization Agreement, Newco and UFP wish to make certain that Shareholder
does not compete with Newco.
D. It is a condition precedent to closing of the Reorganization Agreement
that Shareholder enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained below, the parties hereby agree as follows:
1. Noncompetition Agreement.
(a) Covenant Not to Compete. In consideration of the consummation of
the Merger contemplated by the Reorganization Agreement and the receipt by
Shareholder of the consideration to be received as a result of the Merger,
Shareholder agrees that he will not, directly or indirectly, engage in any
business currently or formerly conducted by Shoffner or any of its
subsidiaries, excluding the Company's saw mill, farming, ranching, and
grading operations (collectively referred to as the "Excluded Operations"),
whether as an employee, proprietor, partner, stockholder (other than as a
holder of publicly traded shares), consultant, or otherwise, anywhere
within an area of five hundred (500) miles of any facility of UFP, during
the period beginning with the date of this Agreement and ending on the
third (3rd) anniversary of the date of this Agreement (the "Restricted
Period").
ANNEX VI
(b) Nonsolicitation. Except with respect to the Excluded Operations,
during the Restricted Period, Shareholder shall not induce or attempt to
induce any customer of Shoffner or Newco to reduce its business with Newco,
solicit any business for himself or others from any customer of Shoffner or
Newco, or attempt to solicit any employees of the Company to leave the
employ of Newco.
(c) Remedies. Shareholder acknowledges that the restrictions contained
in this Agreement, including but not limited to the geographic scope hereof
and the length of the Restricted Period, are reasonable and necessary to
protect the business and interests of Shoffner, Newco, and UFP and that any
violation of these restrictions will cause substantial and irreparable
injury to Shoffner, Newco, and UFP. Therefore, Shareholder agrees that
Newco is entitled, in addition to any other remedies, to injunctive relief
to secure the specific performance of this Agreement, and to prevent a
breach or contemplated breach of this Agreement.
(d) Severability. If any provision of this Agreement is held to be
invalid or unenforceable, such holding shall not affect the validity or
enforceability of any other provision of this Agreement, and if the claim
of invalidity or unenforceability of any provision is based on the length
of the term of the covenant contained herein or the area covered thereby,
such provision shall not be deemed invalid or unenforceable, but shall be
deemed modified to the maximum term of duration and maximum area as any
court of competent jurisdiction rules is reasonable and necessary and is
valid and enforceable.
2. Nondisclosure. Shareholder agrees not to disclose any of the
Confidential Business Information and/or trade secrets of Shoffner (excluding
the Excluded Operations) or Newco to any person or persons outside the employ of
Newco, nor use such information for Shareholder's own benefit, whether or during
or subsequent to the date of this Agreement. As used herein, Confidential
Business Information includes, but is not limited to, information learned by
Shareholder during the course of his ownership of stock of Shoffner, or any
predecessor of Shoffner (excluding the Excluded Operations) of the following
types relating to Shoffner or any predecessor or affiliated corporation or
entity: the identity of, or other pertinent information with respect to actual
or potential customers or customer contacts; bidding and pricing strategies and
policies; market studies, penetration data or other market information; sales
and marketing plans, programs and strategies; sales, costs, and other financial
data; research and development activities, information and plans; and plans for
new products or services. Shareholder acknowledges that this obligation to
maintain such confidentiality regarding any Confidential Business Information
shall extend until that item is made public by Newco or an affiliate.
3. Waiver of Breach. The waiver by any party of a breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach by that party. No waiver shall be valid unless
in writing and signed by the party giving the waiver.
2
4. Notices. Any notices required or appropriate to be given under this
Agreement shall be made in writing and shall be deemed to be given when
delivered personally or upon mailing by certified mail to the other party at
their addresses listed above.
5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Michigan.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
SHAREHOLDER:
UFP ACQUISITION CORP. II
By
Its
UNIVERSAL FOREST PRODUCTS, INC.
By
Its
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of the 1st day of April, 1998, by and
between SHOFFNER INDUSTRIES, INC., a Michigan corporation, with its principal
offices at 3120 South Church Street, Burlington, North Carolina 27215 (the
"Company"), and CARROLL M. SHOFFNER, of 3063 Huffman Mill Road, Burlington,
North Carolina 27215 (the "Employee").
RECITALS:
The Company and the Employee have reached an understanding with respect to
the employment of the Employee by the Company, and the parties desire to set
forth their understanding with respect to such employment fully and completely
in writing.
NOW, THEREFORE, the parties agree as follows:
1. Employment. The Company shall employ the Employee, and Employee shall
work for the Company upon the terms and conditions set forth herein. All
business the Employee develops and secures during the term of this Agreement
shall be the exclusive property of the Company.
2. General Duties. The Employee shall serve as the Chairman of the Board of
the Company and shall perform such duties as were performed by Employee for
Shoffner Industries, Inc., a North Carolina corporation, immediately before the
commencement of this Agreement or as may otherwise be mutually agreed by the
parties from time to time. The Employee shall perform such duties and exercise
such powers as may from time to time be reasonably vested in or conferred on him
by the Board of Directors, and shall observe all such reasonable directions,
policies, restrictions, rules and regulations as may from time to time,
consistent with his position, be imposed upon him in such capacity by the Board.
Among other obligations imposed by this Agreement, Employee shall not be
involved, directly or indirectly, financially or otherwise, with any competing
business organization.
3. Employment Term. The Employee's term of employment by the Company (the
"Employment Term") shall be for a period expiring thirty-six (36) months from
the date of this Agreement (subject to earlier termination pursuant to Section 7
below) (the "Initial Term"); provided that the Employment Term shall be renewed
automatically for additional twelve (12) consecutive month periods ("Renewal
Term") at the end of the Initial Term and of each such Renewal Term, unless
either party notifies the other (in a written notice delivered at least thirty
(30) days prior to the end of the Initial Term or at any time during a Renewal
Term), that such party is terminating this Agreement effective as of the end of
such Initial Term or at such designated time during any Renewal Term that is at
least thirty (30) days subsequent to the date of notice.
ANNEX VII
4. Information. Employee acknowledges that the customer lists,
manufacturing processes, devices, techniques, plans, methods, drawings, data,
tables, calculations, letters or other paperwork, documents and know-how of the
Company were designed and developed by the Company at great expense over a
lengthy period of time, are secret, confidential and unique and constitute the
exclusive property and trade secrets of the Company. Employee acknowledges
further that any use of such property and trade secrets by Employee other than
for the sole benefit of the Company will be wrongful and cause irreparable harm
to the Company. Accordingly, Employee shall not, at any time during or
subsequent to his employment by the Company, without the express written consent
of the Company, publish, disclose or divulge to any person, firm or corporation,
or use, directly or indirectly, for his own benefit or for the benefit of any
person, firm or corporation, for use other than for the Company, any property,
trade secrets, Confidential Information (as defined below) of the Company and
its affiliates learned or obtained by him from the Company including, but not
limited to the information and items set forth above. Confidential Information
as used in this Agreement includes, but it not limited to, information not
generally known and proprietary to the Company and its affiliates, about the
Company's processes, products and services, including, but not limited to,
information relating to research, development, distribution, purchasing,
marketing and selling. All information disclosed to Employee or to which
Employee shall obtain during such employment with the Company which Employee has
a reasonable basis to believe to be Confidential Information, or which Employee
has a reasonable basis to believe the Company treats its Confidential
Information, shall be presumed to be Confidential Information.
5. Salary. The Company shall pay the Employee an annual salary of Two
Hundred Fifty Thousand Dollars ($250,000) ("Annual Salary") for each year of the
Employee's employment. The Employee's salary shall be paid by the Company in
accordance with the payroll practices of the Company.
6. Additional Benefits. In addition to the compensation described in
Section 5, the Employee shall be entitled during his term of Employment to
receive such other benefits as may be provided by Universal Forest Products,
Inc., the sole shareholder of the Company, to its senior executive officers,
provided that such benefits shall include major medical and disability insurance
coverage for Employee and his spouse.
7. Termination of Employment. Employee's employment by the Company shall
terminate immediately upon the death of the Employee or upon his inability, by
reason of a mental or physical condition, to perform his duties hereunder for a
period of more than ninety (90) days within any 12- month period, or for
"cause," as defined below. For purposes of this Agreement, "cause" for
termination shall be described in a written notice to the Employee and shall be
deemed to exist if: (a) the Employee is convicted of a felony involving an
intentional act of the Employee; (b) the Employee engages in dishonesty or
fraud; (c) the Employee breaches his obligations under this Agreement and fails
to cure such breach within thirty (30) days following notice by the Company to
Employee of such breach.
-2-
8. Duty of Employee Upon Termination. The Employee shall, upon termination
of this Agreement, return to the Company all the Company's records of any sort
and all literature, supplies, letters, written or printed forms, and/or
memoranda pertaining to the Company's business. Such property shall be
considered property of the Company at all times. Upon the termination of
Employee's employment by the Company, the Company shall promptly pay Employee
(or his legal representative) the amount of the Annual Salary attributable to
the period prior to termination of employment.
9. Breach by Employee. The Employee shall conduct himself at all times
according to the terms and conditions of this Agreement, and failure to do so
shall render the Employee liable for any loss or damage the Company may suffer
on account of such failure. With respect to the irreparable harm which the
Company would suffer if the Employee breaches this Agreement, the Employee
agrees that the Company may specifically enforce Employee's performance under
this Agreement by injunction or otherwise, and Employee shall be liable to
Company for the reasonable costs and attorney fees of any such action.
10. Benefit. This Agreement shall be binding upon and operate for the
benefit of the parties and their respective heirs, representatives, successors
and assigns.
11. Entire Agreement. The parties understand and agree that this Employment
Agreement is the entire Agreement between the parties regarding the terms and
conditions of the Employee's employment. The terms of this Agreement may not be
varied, modified, supplemented or in any other way changed by extraneous verbal
or written representations by the Company or its agents to the Employee.
12. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Michigan.
13. Survival. The Covenants of Sections 4 and 8 shall survive the
termination of this Agreement.
14. Notice. All notices, demands, requests, consents, reports, approvals,
or other communications which may be or are required to be given, served, or
sent pursuant to this Agreement shall be in writing and shall be mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by telegram or hand delivery. Each notice or
communication which shall be mailed or transmitted in the manner described above
shall be deemed sufficiently given, for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, or
the affidavit of messenger being deemed conclusive evidence of such delivery) or
at such time as delivery is refused by the addressee upon presentation.
-3-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
EMPLOYEE: CARROLL M. SHOFFNER
Carroll M. Shoffner
COMPANY: SHOFFNER INDUSTRIES, INC.
By
Its
LEASED PROPERTY PURCHASE AGREEMENT
THIS LEASED PROPERTY PURCHASE AGREEMENT (this "Agreement") is made as of
the 30th day of March, 1998, by and among SHOFFNER INVESTMENTS, LLC, a North
Carolina limited liability company ("Seller"), the members of Seller (each a
"Member" and collectively the "Members"), and SHOFFNER INDUSTRIES, INC., a
Michigan corporation ("Newco").
R E C I T A L S
WHEREAS, Universal Forest Products, Inc. ("UFP"), Newco, Shoffner
Industries, Inc. and the shareholders of Shoffner Industries, Inc. have entered
into an Agreement and Plan of Reorganization dated as of the 30th day of March,
1998 (the "Agreement and Plan of Reorganization") pursuant to which Shoffner
Industries, Inc. will be merged with and into Newco;
WHEREAS, Seller owns and leases to Shoffner Industries, Inc. certain real
property located in Hohenwald, Tennessee; Conway, South Carolina; and Talladega,
Alabama, which properties are legally described on the attached Schedule 3.4
(collectively, the "Land");
WHEREAS, Seller desires to sell to Newco and Newco desires to buy from
Seller the Land, together with the buildings and all fixtures thereon and all
other easements, appurtenances and improvements associated with the Land (the
"Real Property");
WHEREAS, the Members agree to guaranty the obligations of Seller pursuant
to this Agreement;
WHEREAS, the execution, delivery and performance of this Agreement is a
condition precedent to the closing of the transactions contemplated by the
Agreement and Plan of Reorganization, and the closing of the transactions
contemplated by this Agreement shall be simultaneous with the closing of the
transactions contemplated by the Agreement and Plan of Reorganization;
WHEREAS, capitalized terms in this Agreement shall have the meaning
ascribed to them in the Agreement and Plan of Reorganization, unless otherwise
defined herein;
ANNEX VIII
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. SALE AND PURCHASE.
1.1 Sale and Purchase. Seller agrees to sell to Newco and Newco agrees to
purchase from Seller the Real Property for the purchase price and according to
the terms and conditions set forth in this Agreement. Newco will pay to Seller
as the purchase price for the Real Property the amount of Six Million Four
Hundred Thousand Dollars ($6,400,000) (the "Purchase Price"), payable by Newco
in full in immediately available funds at the Closing.
1.2 Allocation of Purchase Price. The allocation of the Purchase Price
among the Real Property for purposes of Section 1060 of the Internal Revenue
Code of 1986, as amended, shall be as set forth on Schedule 1.2 to this
Agreement, or as otherwise mutually agreed to by Seller and Newco. Seller and
Newco agree to be bound by such determinations and allocation and to complete
and attach Internal Revenue Service Form 8594 to their respective tax returns
accordingly.
2. CLOSING.
The consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Wishart, Norris, Henninger &
Pittman, P.A. in Burlington, North Carolina, simultaneously with the closing of
the transactions contemplated by the Agreement and Plan of Reorganization if all
conditions to Closing shall have been satisfied or waived, or at such other time
and date as Newco and Seller may mutually agree. The date on which the Closing
occurs shall be referred to hereinafter as the "Closing Date." Seller shall
deliver exclusive possession of the Real Property to Newco at Closing.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
To induce Newco to enter into this Agreement and consummate the
transactions contemplated in this Agreement, Seller hereby represents and
warrants to Newco as follows (each of the representations and warranties
contained in Section 3.5 through 3.12 shall be limited to the Knowledge of
Seller where, for purposes of this Agreement, "Knowledge" means actual awareness
of a particular fact or other matter or awareness that a prudent individual
could be expected to obtain in the course of conducting a reasonably
comprehensive investigation concerning the existence of such facts or other
matter to the extent that such investigation would be undertaken under the
circumstances. Knowledge of Seller is deemed to include actual knowledge of its
officers and directors and information contained in the files and records of
Seller):
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3.1 Due Organization. Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, all as more particularly described on attached Schedule 3.1, and
is duly authorized and qualified to do business in the places and in the manner
as now conducted. Schedule 3.1 contains a true, correct and complete list of all
jurisdictions in which the Seller is authorized or qualified to do business.
True, complete and correct copies of the Articles of Organization and Operating
Agreement, each as amended, of the Seller are attached as Schedule 3.1 (the
"Charter Documents"). The minute books and other books and records of the Seller
as heretofore made available to Newco are true, correct and complete in all
respects. Schedule 3.1 contains and complete and accurate list of the names of
each of the members and managers of Seller, and such members constitute all of
the members of the Seller.
3.2 Authorization. Seller and each of the Members have the right, power and
authority to execute, deliver and perform their respective obligations under
Agreement and the transactions contemplated hereby. This Agreement is a legal,
valid and binding obligation of Seller and the Members, enforceable in
accordance with its terms. This Agreement and the performance of this Agreement
by Seller have been duly approved by Seller and all necessary limited liability
company and member action has been taken.
3.3 No Conflicts. Except as disclosed on Schedule 3.3, the execution,
delivery and performance of this Agreement by the Seller will not: (a) conflict
with, or result in a breach or violation of the Charter Documents; (b) conflict
with, or result in a default (or would constitute a default but for any
requirement of notice or lapse of time or both), or require any notice, consent
or approval under any agreement, contract, commitment, understanding, document
or instrument to which Seller is a party or is otherwise subject; (c) violate,
require any filing, consent or approval under, or result in the creation or
imposition of any lien, charge or encumbrance on any of Seller's properties
pursuant to any law, rule, regulation, judgment, order or decree; or (d) result
in termination or any impairment of any permit, license, franchise, contractual
right or other authorization of Seller.
3.4 Real Property. Schedule 3.4 contains a complete legal description of
the Real Property of Seller. With respect to each parcel of Real Property listed
on Schedule 3.4:
(a) Except as disclosed on Schedule 3.4, Seller has good and
marketable title to the parcel of Real Property, free and clear of all
mortgages, pledges, security interests, encumbrances, charges or other
liens, easements and other restrictions, other than (i) installments of
special assessments not yet delinquent, and (ii) recorded easements,
covenants and restrictions which do not impair the current use, occupancy
or the marketability of title, of the property subject thereto;
(b) The legal description for the parcel contained in the deed thereof
describes such parcel fully and adequately and except as described in
Schedule 3.4, the buildings and improvements are located within the
boundary lines of the described parcels of land, are not
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in violation of applicable setback requirements, zoning laws and ordinances
(and none of the properties or buildings or improvements thereon are
subject to "permitted nonconforming use" or "permitted nonconforming
structure" classifications) and do not encroach on any easement which may
burden the land;
(c) All facilities on the Real Property have received all approvals of
Governmental Authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been operated
and maintained in accordance with applicable laws, rules and regulations;
(d) There are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties the right to
use or occupancy of any portion of the parcel of Real Property (except the
leases between Seller and Shoffner Industries, Inc. identified on Schedule
3.4);
(e) There are no outstanding options or rights of first refusal to
purchase the parcel of Real Property, or any portion thereof or interest
therein;
(f) There are no parties (other than Seller and Shoffner Industries,
Inc.) in possession of the parcel of Real Property other than tenants under
any leases disclosed in Schedule 3.4 who are in possession of space to
which they are entitled;
(g) All facilities located on the parcel of Real Property are supplied
with utilities and other services necessary for the operation of such
facilities, all of which services are adequate in accordance with all
applicable laws, ordinances, rules and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements
benefitting the parcel of Real Property; and
(h) Each parcel of Real Property abuts on and has direct vehicular
access to a pubic road or access to a public road via a permanent,
irrevocable, appurtenant easement benefitting the parcel of Real Property.
There are no (i) pending or threatened condemnation proceedings, litigation
or administrative actions relating to the Real Property, or (ii) other matters
affecting adversely the current use or occupancy thereof.
3.5 Permits. Seller owns or holds all licenses, franchises, permits and
other authorizations of any Governmental Entity, including, without limitation,
permits, titles, licenses, franchises and certificates (the "Permits") necessary
or useful to own the Real Property. Schedule 3.5 sets forth an accurate list and
summary description, as of the date hereof, of all Permits. The Permits are
valid, and Seller has not received any notice that any Governmental Entity
intends to modify, cancel, terminate or not renew any Permit. Seller has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in the
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Permits and other applicable orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing. The transactions contemplated
by this Agreement will not result in a default under or a breach or violation
of, or adversely affect the rights and benefits afforded to Seller by, any
Permit.
3.6 Environmental Matters.
(a) Seller has at all times complied with and is currently in
compliance with, and the Real Property and the business of Seller has at
all times been owned and operated in compliance with all federal, state,
local and foreign statutes (civil and criminal), common laws, ordinances,
regulations, rules, notices, permits, judgments, orders and decrees
applicable to Seller and its properties, assets, operations and businesses
relating to environmental protection (collectively "Environmental Laws"),
including, without limitation, Environmental Laws relating to air, water,
land and the generation, storage, use, handling, transportation, treatment
or disposal of any Contaminants. "Contaminant" shall mean any of the
following: (i) any substance, solid, liquid or gaseous matter,
micro-organism, sound, vibration, my, heat, odor, radiation, energy vector,
plasma, waste, organic or inorganic matter, whether animate or inanimate,
which is deemed by any Governmental Entity or any Environmental Law to be
hazardous, toxic, a pollutant, a deleterious substance or a source of
pollution, (ii) any nuclear materials, and (iii) any fuel.
(b) Seller has obtained and adhered to all necessary permits and other
approvals necessary to treat, transport, store, dispose of and otherwise
handle Contaminants, and has reported, to the extent required by all
Environmental Laws, all past and present sites owned, operated or leased by
Seller where Contaminants have been treated, stored, disposed of or
otherwise handled.
(c) All Persons hired to remove, store, handle, transport, dispose,
bury, incinerate, recover or treat any Contaminant in connection with the
Real Property and the operation of the businesses of Seller have obtained
and have at all times adhered to all franchises, permits, licenses,
certificates of compliance, consents, approvals and authorizations of, and
registrations with all Governmental Entities necessary to perform the
services for which they have been hired.
(d) There have been no releases or threats of releases at, from, in,
on under or adjacent to any Real Property owned, operated, leased or used
by Seller, except as permitted by Environmental Laws.
(e) There is no on-site or off-site location to which Seller has
transported or disposed of Contaminants or arranged for the transportation
of Contaminants which site is the subject of any federal, state, local or
foreign enforcement action or any other investigation which could lead to
any claim against Seller or Newco for any clean-up cost, remedial work,
damage to natural resources or personal injury, including, without
limitation,
5
any claim under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
(f) There is no past or present fact, condition or circumstance
relating to Seller and the Real Property that has either resulted or would
result in liability under any Environmental Law.
3.7 Insurance. Schedule 3.7 sets forth an accurate list of all insurance
policies carried by Seller with respect to the Real Property. True, complete and
correct copies of all current insurance policies, all of which are in full force
and effect, have previously been delivered to Newco.
3.8 Conformity with Law, Litigation. Seller has not violated any law or
regulation or any order of any Governmental Entity having jurisdiction over it;
and except to the extent set forth on Schedule 3.8, there are no claims,
actions, suits or proceedings, pending or threatened against or affecting
Seller, at law or in equity, or before or by any Governmental Entity having
jurisdiction over it and no notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received.
3.9 Taxes. Except as set forth in Schedule 3.9, (a) Seller has timely
filed, or has timely applied for extensions of time to file, all tax returns,
reports, statements and other documents ("Tax Returns") required to be filed,
distributed, or prepared by any of them relating to any Taxes, and all such Tax
Returns which have been filed are accurate and complete in all respects; and (b)
Seller has paid (or there has been paid on its behalf, or has set up an adequate
reserve for the payment of), all Taxes required to be paid, withheld, or
deducted, or for which Seller is liable, in respect of the fiscal periods
covered by such Tax Returns, and with respect to each Tax, from the end of the
fiscal period covered by the most recently filed Tax Return to the date hereof.
For purposes of this Agreement, the term "Tax" shall have the meaning ascribed
to it in the Agreement and Plan of Reorganization.
3.10 No Violations. Seller is not (a) in violation of any Charter Document
or (b) in default under any material contract concerning the Real Property.
3.11 Absence of Changes. Since January 1, 1998, except for the consummation
of the transactions contemplated hereby or as set forth on Schedule 3.11, there
has not been: (a) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Real Property; or (b) any sale or
transfer, or any agreement to sell or transfer the Real Property to any Person.
3.12 Disclosure. No representation or warranty by Seller contained in this
Agreement, and no representation, warranty or statement contained in any list,
certificate, Annex, Schedule or other instrument, document, agreement or writing
furnished or to be furnished to, or made with Newco pursuant hereto or in
connection with the negotiation, execution or performance hereof, contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make any statement herein or therein not
misleading.
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4. REPRESENTATIONS AND WARRANTIES OF NEWCO.
To induce Seller to enter into this Agreement and consummate the
transactions contemplated in this Agreement, Newco represents and warrants to
Seller as follows:
4.1 Due Organization. Newco is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated, and is duly authorized and qualified to do business in the places
and in the manner as now conducted except where the failure to be so authorized
or qualified would not have a material adverse effect on Newco. Copies of the
Articles of Incorporation and the By-laws, each as amended, (collectively, the
"Newco Charter Documents") of Newco will be delivered, upon request, to Seller.
Newco is not in violation of any Newco Charter Document.
4.2 Authorization. Newco has the right, power and authority to execute,
deliver and perform this Agreement. The execution, delivery and performance of
this Agreement by Newco has been duly authorized by all necessary corporate
action. This Agreement is a legal, valid and binding obligation of Newco
enforceable in accordance with its terms.
4.3 No Conflicts. The execution, delivery and performance of this Agreement
by Newco will not: (a) conflict with, or result in a breach or violation of the
Newco Charter Documents; (b) materially conflict with, or result in a material
default (or would constitute a default but for any requirement of notice or
lapse of time or both), or require any notice, consent or approval under any
agreement, contract, commitment, understanding, document or instrument to which
Newco is a party or is otherwise subject; (c) violate, require any filing,
consent or approval under, or result in the creation or imposition of any lien,
charge or encumbrance on any of Newco's properties pursuant to any law, rule,
regulation, judgment, order or decree; or (d) result in termination or any
impairment of any material permit, license, franchise, contractual right or
other authorization of Newco.
5. COVENANTS AND OTHER AGREEMENTS.
5.1 Access and Cooperation. From and after the date of this Agreement and
until the Closing, Seller agrees to afford to the employees and representatives
of Newco access to the Real Property as Newco may from time to time reasonably
request. Seller agrees to cooperate with Newco, its representatives, engineers,
auditors and counsel in the preparation of any documents or other material which
may be required in connection with this Agreement.
5.2 Conduct Pending Closing. From and after the date hereof and until the
Closing, Seller agrees to:
(a) maintain the Real Property in as good working order and condition
as at present, ordinary wear and tear excepted;
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(b) perform all of its obligations under agreements relating to or
affecting the Real Property;
(c) keep in full force and effect present insurance policies or
comparable insurance coverage;
(d) comply with all permits, laws, rules and regulations, consent
orders, and all other orders of Governmental Entities; and
(e) maintain present lease instruments and not enter into new lease
instruments with respect to the Real Property.
5.3 Prohibited Activities. From and after the date of this Agreement and
until the Closing, Seller represents, warrants and agrees that Seller has not
and from the date hereof, without the prior written consent of Newco, will not:
(a) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance, except for the items listed on Schedule 3.4 hereto,
upon the Real Property;
(b) sell assign, lease or otherwise transfer or dispose of any of the
Real Property;
(c) commit a breach of, or amend or terminate, any agreement, Permit,
license or other right; or
(d) enter into any discussions or agreements with respect to, or
otherwise facilitate or attempt to facilitate, any of the foregoing.
5.4 Amendment of Schedules. From and after the date hereof and until the
Closing, Seller will promptly disclose to Newco in writing any information set
forth in the Schedules to this Agreement that is not true, correct and complete
and any information of the nature set forth in the Schedules that arises after
the date hereof and that would have been required to be included in the
Schedules if such information had been obtained on the date hereof. Such
disclosure shall not limit or affect any of Newco's rights hereunder for or with
respect to any misrepresentation or breach of warranty by Seller or the failure
of Seller to fulfill any agreement, covenant or condition contained in this
Agreement.
5.5 Cooperation in Obtaining Required Consents and Approvals. Each party
hereto shall cooperate in obtaining all consents and approvals required by
Section 6.8 hereof (which shall nonetheless continue to be the responsibility of
the Seller) and Section 7.2 hereof (which shall nonetheless continue to be the
responsibility of Newco).
5.6 Notification of Certain Matters. Each party hereto shall give prompt
notice to the other parties hereto of (a) the occurrence or non-
8
occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of such party contained herein to
be untrue or inaccurate in any material respect at or prior to the Closing and
(b) any material failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such party hereunder.
The delivery of any notice pursuant to this Section 5.6 shall not be deemed to
(x) modify the representations or warranties hereunder of the party delivering
such notice, (y) modify the conditions set forth in Sections 6 and 7 hereof or
(z) limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
5.7 Removal of Liens. Seller agrees, prior to Closing, to (a) cause all
liens, mortgages, deeds of trust, financing statements and other encumbrances
against the Real Property to be removed, and (b) deliver evidence to such effect
that is reasonably satisfactory to Newco.
5.8 No Public Announcement. No public announcements regarding this
Agreement will be made until after approval of this Agreement by UFP's Board of
Directors. Not less than three business days prior to any public announcement,
the party proposing to make such announcement shall furnish the content of the
announcement to the other parties to this Agreement and shall specify the date
that the announcement will be made. The parties shall jointly cooperate in the
preparation and content of any press release announcing the transaction.
5.9 Title Insurance. At Seller's expense, Seller shall provide Newco with
an owner's policy of title insurance for each parcel of Real Property, without
standard exceptions, in the amount of the Purchase Price allocated to such
parcel of Real Property, effective as of the date of Closing and shall provide
Newco with a commitment for the policy at least ten (10) days prior to the
Closing Date. If Newco notifies Seller of any easement, restriction, reservation
or encumbrance disclosed in the commitment for the policy that is unacceptable
to Newco ("Title Defect"), Seller shall have ten (10) days from the date of
Newco's notice to remove the Title Defect. If Seller does not remove the Title
Defect, Newco, in its discretion, may either (i) waive such defect and proceed
with the closing; or (ii) terminate this Agreement whereupon all liability under
this Agreement shall terminate.
5.10 Survey. At Seller's expense, Seller shall provide Newco with a new
staked land title ALTA survey of each parcel of Real Property prepared by a
licensed surveyor at least ten (10) days prior to the Closing Date. This survey
shall show all improvements and easements (visible or recorded), roads, and
means of physical and record ingress and egress to and from the Real Property,
shall be certified to Newco and any other parties named by Newco and shall be in
form adequate to enable the title company to remove its standard survey
exceptions. The survey shall state whether any parcel of Real Property is within
any recognized floodplain. Newco's obligation to close this transaction is
contingent upon Newco's approval of the survey.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF NEWCO.
The obligations of Newco to complete the Closing of the transactions
contemplated hereby is subject to the satisfaction, at or before Closing Date,
of the following conditions:
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6.1 Representations and Warranties; Performance of Obligations. All of the
representations and warranties of Seller contained in this Agreement shall be
true, correct and complete on the date of this Agreement and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date; all of the terms, covenants, agreements and
conditions of this Agreement to be complied with, performed or satisfied by
Seller on or before the Closing Date shall have been duly complied with,
performed or satisfied; and Newco shall have received a certificate dated the
Closing Date and signed by Seller to the foregoing effects.
6.2 No Litigation. No action or proceeding before a court or any other
Governmental Entity shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement and no Governmental
Entity shall have taken any other action or made any request of Newco as a
result of which the management of Newco reasonably deems it inadvisable to
proceed with transactions hereunder.
6.3 FIRPTA Affidavit. Newco shall have received an affidavit of Seller as
to Seller's status as a domestic entity in the form reasonably acceptable to
Newco.
6.4 Warranty Deed. Newco shall have received a warranty deed in the form of
Annex I for each parcel of Real Property executed in recordable form conveying
to Newco fee simple title to such parcel of Real Property.
6.5 Other Documentation. Seller shall also deliver a closing statement to
Newco, together with any other documents reasonably requested by Newco to
consummate the transactions contemplated by this Agreement.
6.6 Consents and Approvals. All necessary consents and approvals of and
filings with any Governmental Entity or other third Person, relating to the
consummation by Seller of the transactions contemplated hereby shall have been
obtained and made and shall be in full force and effect.
6.7 Due Diligence Review. Newco shall be fully satisfied in its sole
discretion with the results of its review of, and its other due diligence
investigations with respect to the Real Property.
6.8 No Material Adverse Change. No material adverse change in the Real
Property shall have occurred; and Newco shall have received a certificate dated
the Closing Date and signed by Seller to such effect.
6.9 Agreement and Plan of Reorganization. The parties to the Agreement and
Plan of Reorganization shall have completed the closing of the transactions
contemplated by the Agreement and Plan of Reorganization.
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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligation of Seller to complete the Closing of the transactions
contemplated hereby is subject to the satisfaction, on or before the Closing
Date, of the following conditions:
7.1 Representations and Warranties, Performance of Obligations. All of the
representations and warranties of Newco contained in this Agreement shall be
true, correct and complete on the date of this Agreement and as of the Closing
Date with the same effect as though such representations and warranties had been
made as of the Closing Date; all of the terms, covenants, agreements and
conditions of this Agreement to be complied with, performed or satisfied by
Newco on or before the Closing Date shall have been duly complied with,
performed or satisfied; and the Shareholders shall have received a certificate
dated the Closing Date and signed by the President or any Vice President of
Newco to the foregoing effects.
7.2 Consents and Approvals. All necessary consents and approvals of and
filings with any Governmental Entity or other third Person relating to the
consummation by Newco of the transactions contemplated herein shall have been
obtained and made and shall be in full force and effect.
7.3 Receipt of Purchase Price. Newco shall pay to Seller the Purchase Price
in full in immediately available funds at Closing.
7.4 Agreement and Plan of Reorganization. The parties to the Agreement and
Plan of Reorganization shall have completed the Closing of the transactions
contemplated by the Agreement and Plan of Reorganization.
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8. INDEMNIFICATION
8.1 Indemnification.
(a) Seller covenants and agrees to indemnify, defend, protect, release
and hold harmless Newco from, against and in respect of:
(i) all liabilities, obligations, losses, claims, damages,
actions, suits, proceedings, investigations, demands, assessments,
adjustments, settlement payments, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) and
deficiencies suffered, sustained, incurred or paid by Newco (or its
successors) in connection with, resulting from, relating to or arising
out of any of the following (collectively, "Claims"):
(A) any breach of any representation or warranty of Seller
set forth in this Agreement or any certificate or other writing
delivered by Seller in connection herewith;
(B) any nonfulfillment or breach of any covenant or
agreement on the part of Seller set forth in this Agreement;
(C) the business, operations or assets of Seller prior to
the Closing Date, including, without limitation, all liabilities
arising or out of the actions or omissions of Seller's directors,
officers, members, employees or agents prior to the Closing Date;
or
(D) any Environmental Law to the extent that such Claim
relates to or arises out of, in whole or in part, any activity
occurring, condition existing, omission to act or other matter
existing prior to the Closing Date; and
(ii) any and all actions, suits, claims, proceedings,
investigations, allegations, demands, assessments, audits, fines,
judgments, costs and other expenses (including, without limitation,
reasonable attorneys' fees and expenses) incident to any of the
foregoing or to the enforcement of this Section 8. 1.
(b) No loss, damage or expense shall be deemed to have been sustained
by Newco or the Surviving Corporation under this Section 8.1 to the extent
of insurance proceeds paid to Newco or the Surviving Corporation as a
result of the event giving rise to such right of indemnification.
8.2 Survival. The representations, warranties and covenants given or made
by Seller in this Agreement or in any certificate or other writing furnished in
connection herewith shall survive
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the Closing until the second anniversary of the Closing Date and shall
thereafter terminate and be of no further force or effect, except that (a) all
representations and warranties relating to Tax matters or compliance with
Environmental Laws involving Seller shall survive the Closing for the period of
the applicable statutes of limitation plus any extensions or waivers thereof,
(b) all covenants of Seller which are to be performed as are performable after
Closing shall survive the Closing without limitation and (c) any representation,
warranty or covenant as to which a claim (including, without limitation, a
contingent claim) shall have been asserted during the survival period shall
continue in effect with respect to such claim until such claim shall have been
finally resolved or settled. Each party shall be entitled to rely upon the
representations and warranties of the other party or parties set forth herein
regardless of any investigation or audit conducted before or after the Closing
Date or the decision of any party to complete the Closing.
8.3 Indemnification Procedure. All claims for indemnification under Section
8.1 hereof shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which any Shareholder
(the "Indemnifying Party") would be liable to Newco and/or the Surviving
Corporation (an "Indemnified Party") is asserted against an Indemnified
Party by a third party, the Indemnified Party shall with reasonable
promptness notify the Indemnifying Party of such claim or demand (the
"Claim Notice"), specifying the nature of such claim or demand and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim or
demand). The Indemnifying Party shall have 30 days from the receipt of the
Claim Notice (the "Notice Period") to notify the Indemnified Party (i)
whether or not the Indemnifying Party disputes the Indemnifying Party's
liability to the Indemnified Party hereunder with respect to such claim or
demand and (ii) if the Indemnifying Party does not dispute such liability,
whether or not the Indemnifying Party desires, at the sole cost and expense
of the Indemnifying Party, to defend against such claim or demand, provided
that the Indemnified Party is hereby authorized (but not obligated) prior
to and during the Notice Period to file any motion, answer or other
pleading and to take any other action which the Indemnified Party shall
deem necessary or appropriate to protect the Indemnified Party's interests.
In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that the Indemnifying Party does not dispute the
Indemnifying Party's obligation to indemnify hereunder and desires to
defend the Indemnified Party against such claim or demand, except as
hereinafter provided, the Indemnifying Party shall have the right to defend
by appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by the Indemnifying Party to a final conclusion; provided that,
unless the Indemnified Party otherwise agrees in writing, the Indemnifying
Party may not settle any matter (in whole or in part) unless such
settlement includes a complete and unconditional release of the Indemnified
Party. If the Indemnified Party desires to participate in, but not control,
any such defense or settlement the indemnified Party may do so at its sole
cost and expense. If the Indemnifying Party elects not to defend the
Indemnified Party against such claim or demand, whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the
Indemnified Party, without
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waiving any rights against the Indemnifying Party, may settle or defend
against any such claim or demand in the Indemnified Party's sole discretion
and, if it is ultimately determined that the Indemnifying Party is
responsible therefor under this Section 8, then the Indemnified Party shall
be entitled to recover from the Indemnifying Party the amount of any
settlement or judgment and all indemnifiable costs and expenses of the
Indemnified Party with respect thereto, including, without limitation,
interest from the date such costs and expenses were incurred.
(b) If at any time, in the reasonable opinion of the Indemnified
Party, notice of which shall be given in writing to the Indemnifying Party,
any such claim or demand seeks material prospective relief which could have
a materially adverse effect on the business, operations, prospects, assets,
liabilities or condition (financial or otherwise) of any Indemnified Party,
the Surviving Corporation or any subsidiary of the Surviving Corporation,
the Indemnified Party shall have the right to control or assume (as the
case may be) the defense of any such claim or demand and the amount of any
judgment or settlement and the reasonable costs and expenses of defense
shall be included as part of the indemnification obligations of the
Indemnifying Party hereunder. If the Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the right to
participate in, but not control, the defense of such claim or demand at the
sole cost and expense of the Indemnifying Party.
(c) In the event the Indemnified Party should have a claim against the
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected by a third party, the
Indemnified Party shall with reasonable promptness send a Claim Notice with
respect to such claim to the Indemnifying Party. If the Indemnifying Party
does not notify the Indemnified Party within the Notice Period that the
Indemnifying Party disputes such claim, the amount of such claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder.
(d) Nothing herein shall be deemed to prevent the Indemnified Party
from making (and an Indemnified Party may make) a claim hereunder for
potential or contingent claims or demands provided the Claim Notice sets
forth the specific basis for any such potential or contingent claim or
demand to the extent then feasible and the Indemnified Party has reasonable
grounds to believe that such a claim or demand may be made. The Indemnified
Party's failure to give reasonably prompt notice to the Indemnifying Party
of any actual, threatened or possible claim or demand which may give rise
to a right of indemnification hereunder shall not relieve the Indemnifying
Party of any liability which the Indemnifying Party may have to the
Indemnified Party except to the extent that the failure to give such notice
materially and adversely prejudiced the Indemnifying Party.
8.4 Indemnification Payments by Seller: Adjustments. Obligations of the
Seller under this Section 8 will be satisfied by the delivery to Newco of cash
to the extent sufficient to satisfy any such obligations, by Newco's exercise,
in its sole discretion, of its rights to set off as described
14
in Section 8.5 hereof. The parties hereto will make appropriate adjustments for
any insurance proceeds in determining the amount of any indemnification
obligation under this Section 8, provided that no Indemnifying Party shall be
obligated to seek any payment pursuant to the terms of any insurance policy.
8.5 Right to Set Off. Newco shall have the right to set off, in whole or in
part, amounts owed, or amounts that Newco believes in good faith are or may be
owing by Seller under Section 8.1 hereof, or any other provision of this
Agreement, against any obligation of Newco to Seller under this Agreement.
8.6 Third Party Beneficiaries. The Surviving Corporation (as successor to
Newco) shall be third party beneficiaries of this Section 8, entitled to assert
directly all rights in connection herewith with the same effect as if it were a
party to this Agreement.
9. GENERAL
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing only if the Agreement and Plan of Reorganization is validly terminated
in accordance with its terms.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 hereof, this Agreement shall forthwith become
void (except for this Section 9.2 and Sections 8, 9.8 and 9.11 hereof), and
there shall be no liability or obligation on the part of any party hereto
(except with respect to such excluded sections). Notwithstanding the foregoing,
if such termination is due to a material breach or material failure to fulfill
any of the representations, warranties, covenants or agreements set forth in
this Agreement on the part of either party hereto, then such party shall be
liable to the other party hereto (a) to the extent of the expenses (including,
without limitation, attorneys' fees) incurred by such other party in connection
with this Agreement and the transactions contemplated hereby and (b) in the case
of a breach of any of the representations or warranties that is known when made
or should have been known with the exercise of reasonable diligence or the
willful failure to fulfill any of the covenants or agreements set forth herein,
also for damages in accordance with applicable law.
9.3 Cooperation. At any time and from time to time after the Closing, each
of the parties hereto shall upon the request of any other, perform, execute,
acknowledge and deliver such further acts, deeds, assignments, transfers,
conveyances and assurances as may be reasonably required for the purpose of
carrying out this Agreement. Seller will also cooperate and cause the present
officers, directors and employees of Seller to cooperate with Newco on and after
the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any Return, filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date.
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9.4 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Newco and Seller.
9.5 Entire Agreement. This Agreement (which includes the Schedules and
Annexes hereto) and the Agreement and Plan of Reorganization sets forth the
entire understanding of the parties hereto with respect to the transactions
contemplated hereby. It shall not be amended or modified except by a written
instrument duly executed by each of the parties hereto. Any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral (except the Agreement and Plan of
Reorganization) and including, without limitation, the letter of intent dated
February 17, 1998, are superseded by this Agreement.
9.6 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by fax) by the parties.
9.7 Brokers and Agents.
(a) Newco represents and warrants to Seller that it has not employed
any broker or agent in connection with the actions contemplated by this
Agreement and agrees to indemnify Seller against all loss, cost, damages or
expense relating to or arising out of claims for fees or commission of any
broker or agent employed or alleged to have been employed by such
indemnifying party.
(b) Seller represents and warrants to Newco that Seller has not
employed any broker or agent in connection with the transactions
contemplated by this Agreement and agrees to indemnify Newco against all
loss, cost, damages or expense relating to or arising out of claims for
fees or commission of any broker or agent employed or alleged to have been
employed by such indemnifying party.
9.8 Expenses. Newco has paid and will pay the fees, expenses and
disbursements of Newco and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. Newco has paid
and will pay all costs incurred in connection with the due diligence
investigation of the Real Property by Newco. Seller paid and will pay the fees,
expenses and disbursements of Seller and its agents, representatives, financial
advisors, accountants and counsel incurred in connection with the subject matter
of this Agreement. Seller shall pay all transfer taxes and recording fees with
respect to the transfer of the Real Property.
9.9 Specific Performance, Remedies. Each party hereto acknowledges that the
other parties will be irreparably harmed and that there will be no adequate
remedy at law for any violation by any of them of any of the covenants or
agreements contained in this Agreement. It is accordingly
16
agreed that, in addition to any other remedies which may be available upon the
breach of any such covenants or agreements, each party hereto shall have the
right to obtain injunctive relief to restrain a breach or threatened breach of,
or otherwise to obtain specific performance of, the other parties' covenants and
agreements contained in this Agreement. The remedies provided for in Section 8
hereof shall be the exclusive remedies for Newco and the Surviving Corporation
after Closing in any action seeking damages or any other form of monetary relief
brought by any such party against Seller, provided that, nothing in this
Agreement shall be construed to limit the right of a party to seek specific
performance or injunctive or other equitable relief for a breach or threatened
breach of this Agreement. Furthermore, nothing in this Agreement shall limit or
restrict in any manner any rights or remedies which any party has, or might
have, at law, in equity or otherwise, against any other party after Closing
based on any willful misrepresentation, willful breach of warranty or willful
failure to fulfill any covenant or agreement set forth herein.
9.10 Notices. Any notice, request, claim, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by fax (with
confirmation of receipt), by registered or certified mail, postage prepaid, or
by recognized courier service, as follows:
If to Newco: with a required copy to:
UFP Acquisition Corp. II Varnum, Riddering, Schmidt & Howlett LLP
2801 East Beltline, N.E. 333 Bridge St., N.W., P.O. Box 352
Grand Rapids, MI 49505 Grand Rapids, MI 49501-0352
Attn: Matthew J. Missad Attn: Michael G. Wooldridge, Esq.
(Fax: 616-364-5558) (Fax: 616-336-7000)
If to Seller or any Member: with a required copy to:
Shoffner Investments, LLC Wishart, Norris, Henninger & Pittman, P.A.
5631 S. NC 62 3120 South Church Street
Burlington, NC 27215 Burlington, NC 27215
Attn: Carroll M. Shoffner Attn: Dorn Pittman, Esq.
(Fax: 910-_____________) (Fax: 910-584-3994)
or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, faxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
9.11 Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of Michigan.
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9.12 Absence of Third Party Beneficiary Rights. Except as specifically
provided herein, no provision of this Agreement is intended, nor will be
interpreted, to provide or to create any third party beneficiary rights or any
other rights of any kind in any client, customer, affiliate, shareholder,
employee, partner of any party hereto or any other Person.
9.13 Mutual Drafting. This Agreement is the mutual product of the parties
hereto, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.
9.14 Further Representation. Each party to this Agreement acknowledges and
represents that it has been represented by its own legal counsel in connection
with the transactions contemplated by this Agreement, with the opportunity to
seek advice as to its legal rights from such counsel. Each party further
represents that it is being independently advised as to the tax consequences of
the transactions contemplated by this Agreement and is not relying on any
representation or statements made by the other party as to such tax
consequences.
9.15 Amendment; Waiver. This Agreement may be amended by the parties hereto
at any time prior to the Closing by execution or waiver of an instrument in
writing signed (subject to Section 9.17 below) on behalf of each of the parties
hereto. Any extension or waiver by any party of any provision hereto shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
9.16 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such Person or circumstance in any other jurisdiction or to other Persons or
circumstances in any jurisdiction, shall not be affected thereby, and to this
end the provisions of this Agreement shall be severable.
9.17 Members' Representatives. The Members hereby irrevocably designate and
appoint Carroll M. Shoffner, as their agents and attorneys-in-fact ("Members'
Representatives") with full power and authority (i) to execute, deliver and
receive on their behalf all notices, requests and other communications
hereunder; (ii) to fix and alter on their behalf the time, date and place of the
Closing; (iii) to waive, amend, or modify on their behalf any provisions of this
Agreement; and (iv) to execute such instruments and documents contemplated
hereby and take such other action on their behalf in connection with this
Agreement, the Closing and the transactions contemplated hereby as such agent or
agents deem appropriate; provided, however, that no such waiver, amendment, or
modification may be made if it would decrease the number of shares to be issued
to the Shareholders hereunder or increase the indemnification obligations of the
Shareholders arising under Section 8 hereof.
The parties have signed this Agreement as of the date first above written.
SELLER:
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SHOFFNER INVESTMENTS, LLC,
a North Carolina limited liability company
By:
Its:
NEWCO:
SHOFFNER INDUSTRIES, INC.
a Michigan corporation
By:
Its:
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GUARANTY
The undersigned Members of Shoffner Investments, LLC hereby jointly and
severally unconditionally and irrevocably guaranty to Newco the full and prompt
payment of all amounts to be paid by Seller to Newco pursuant to this Agreement.
In the event that Seller defaults in the prompt payment of any obligations of
Seller under this Agreement (the "Obligations"), each undersigned Member agrees,
jointly and severally, on demand by Newco, to pay all sums due to Newco by
Seller. Each of the undersigned Members hereby waives (i) any notice of
acceptance of this guaranty by Newco, (b) presentment for payment, notice of
nonpayment or dishonor, protest or notice of protest, or diligence in
collection, (c) any rights or defenses based upon the happening or failure to
happen from time to time of any one of the following events: (i) the forbearance
or delay in collecting the Obligations, (ii) the failure of Newco to pursue any
remedies Newco may have against Seller, or (iii) the change, modification or
extension of the terms of any of the Obligations. Notwithstanding anything to
the contrary set forth in this paragraph, Newco must comply with the notice
requirements and time limitations set forth in this Agreement.
MEMBERS OF SHOFFNER INVESTMENTS, LLC
Name:
Address:
Name:
Address:
Name:
Address:
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ANNEXES AND SCHEDULES
TO LEASED PROPERTY PURCHASE AGREEMENT
Annex I - Form of Warranty Deed
Schedule 1.2 - Allocation of Purchase Price
Schedule 3.1 - Due Organization and Charter Documents
Schedule 3.3 - No Conflicts
Schedule 3.4 - Legal Description of Real Property and Description of Leases
Schedule 3.5 - Permits
Schedule 3.7 - Insurance
Schedule 3.8 - Conformity with Law; Litigation
Schedule 3.9 - Taxes
Schedule 3.11 - Absence of Changes
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SAW MILL PURCHASE AGREEMENT
THIS SAW MILL PURCHASE AGREEMENT (this "Agreement") is made as of the 30th
day of March, 1998, by and among SHOFFNER INDUSTRIES, INC., a Michigan
corporation ("Seller") and SHOFFNER FOREST PRODUCTS, INC., a North Carolina
corporation ("Purchaser").
R E C I T A L S
WHEREAS, Universal Forest Products, Inc. ("UFP"), UFP Acquisition Corp. II
("Newco"), Seller, Purchaser, and the other shareholders of Seller have entered
into an Agreement and Plan of Reorganization dated as of the 30th day of March,
1998 (the "Merger Agreement") pursuant to which Seller will be merged with and
into Newco;
WHEREAS, Seller owns and operates certain real estate, equipment and
inventory used in a Saw Mill Operation located at the property described in
attached Schedule A (the "Saw Mill Operation").
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to buy
from Seller that certain real estate, equipment and inventory used in the Saw
Mill Operation;
WHEREAS, the execution, delivery and performance of this Agreement is a
condition precedent to the closing of the transactions contemplated by the
Merger Agreement, and the closing of the transactions contemplated by this
Agreement shall be simultaneous with the closing of the transactions
contemplated by the Merger Agreement;
WHEREAS, capitalized terms in this Agreement shall have the meaning
ascribed to them in the Merger Agreement, unless otherwise defined herein;
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. SALE AND PURCHASE.
1.1 Sale and Purchase. Seller agrees to sell to Purchaser and Purchaser
agrees to purchase from Seller for the Purchase Price and according to the terms
and conditions set forth in this Agreement all of Seller's right, title and
interest in and to the following assets, but specifically excluding the Excluded
Assets (collectively, the "Purchased Assets"):
ANNEX IX
(a) that land legally described on attached Schedule A, together with
the buildings and all fixtures thereon and all other easements,
appurtenances and improvements associated with such land (the "Saw Mill
Real Property");
(b) Seller's inventories of raw materials, work-in-process and
finished products and packaging materials located at the Saw Mill Real
Property and the timber deeds as of the Closing Date (the "Inventory");
(c) Seller's owned machinery, equipment, tooling office equipment and
other items of personal property located at the Saw Mill Real Property, as
identified on attached Schedule B (the "Equipment").
1.2 Excluded Assets. The Purchased Assets shall not include any of the
assets described on Schedule C (the "Excluded Assets").
1.3 Assumed Liabilities. Effective upon the Closing, Purchaser shall assume
all Liabilities (as defined in Section 4.4 of the Merger Agreement) arising
under or pursuant to any Environmental Laws (i) concerning, as a consequence of
or relating to the condition of the Saw Mill Real Property, including, but not
limited to, the contamination or pollution of any structure or the soil, surface
water and/or groundwater at or underlying the Saw Mill Real Property, (ii) as a
result of a release Contaminants from or onto the Saw Mill Real Property, or
(iii) as a result of the transport, disposal, treatment or storage off-site of
any Contaminants generated at or shipped from the Saw Mill Real Property
(collectively, the "Assumed Liabilities"). The Assumed Liabilities shall also
include any Liabilities described on Schedule D to this Agreement. Purchaser
shall pay Seller in cash at Closing the full dollar amount of the accrued
liabilities described on Schedule G.
1.4 Purchase Price. The "Purchase Price" for the Purchased Assets shall be
equal to the lesser of (i) the Final Book Value of the Purchased Assets, or (ii)
the Final Appraised Value of the Purchased Assets. The Purchase Price shall be
payable as follows:
(a) Closing Date Payment. On the Closing Date, Purchaser will pay to
Seller an amount equal to One Million Eight Hundred Ninety Eight Thousand
Two Hundred and Three Dollars ($1,898,203), plus the equipment deposits and
petty cash described on Schedule F to this Agreement, plus the estimated
value of the Inventory as of the Closing ("Proposed Inventory Value"),
determined in a manner utilizing Seller's historical financial statement
accounting principles, in immediately available funds (the "Preliminary
Purchase Price").
(b) Determination of Final Purchase Price. Within ten (10) days after
the Closing Date, Seller shall deliver to Purchaser and UFP the records
reflecting the determination of the Proposed Inventory Value. The records
and work papers of Seller shall be made available to Purchaser and UFP for
purposes of evaluating the Proposed Inventory Value, and the parties may
participate in any inventory used to determine such values. Unless
2
Purchaser or UFP gives Seller a written objection by the thirtieth (30th)
day after their respective receipt of the Proposed Inventory Value, the
Proposed Inventory Value becomes the Final Inventory Value. If Purchaser or
UFP objects to such determinations and the parties are unable to resolve
the dispute within thirty (30) days after either party's objection, then
the dispute will be resolved by an independent accounting firm selected by
Arthur Andersen and Deloitte & Touche, which shall act to determine the
Final Inventory Value as expeditiously as possible, which shall be final
and binding on all the parties. The fees and expenses of that firm shall be
shared equally by Purchaser and Seller.
(c) Post-Closing Adjustment. Within ten (10) days following the
determination of the Final Inventory Value pursuant to Section 1.4(b),
either (i) Seller shall pay to Purchaser an amount by which the Proposed
Inventory Value exceeds the Final Inventory Value, or (ii) Purchaser shall
pay to Seller an amount by which the Final Inventory exceeds the Proposed
Inventory Value, only to the extent that such excess exceeds the amount of
the adjustment referenced in Section 1.7 below.
1.5 Allocation of Purchase Price. The allocation of the Purchase Price
among the Purchased Assets for purposes of Section 1060 of the Internal Revenue
Code of 1986, as amended, shall be as set forth on Schedule E to this Agreement,
or as otherwise mutually agreed to by Seller, UFP, and Purchaser. Seller and
Purchaser agree to be bound by such determinations and allocation and to
complete and attach Internal Revenue Service Form 8594 to their respective tax
returns accordingly.
1.6 Prorations. On the Closing Date, or as promptly as practicable
following the Closing Date, but in no event later than sixty (60) days
thereafter, the real and personal property taxes, water, gas, electricity and
other utilities, local business or other license fees or taxes, and other
similar periodic charges concerning the Purchased Assets shall be prorated
between Purchaser and Seller, with Seller bearing the pro rata portion of such
taxes, charges and other amounts which relate to the period prior to the Closing
Date and Purchaser bearing the pro rata portion of such taxes, charges and other
amounts which relate to the period after the Closing Date. All such prorations
shall be based upon the most recent available assessed value of the Saw Mill
Real Property prior to the Closing Date.
1.7 Adjustment to Merger Consideration. If the Preliminary Purchase Price
is less than Four Million Eight Hundred Sixty-six Thousand Dollars ($4,866,000)
(less the depreciation of the equipment of the Saw Mill for the month of March),
an adjustment shall be made to the consideration payable pursuant to Section
1.2(f) of the Merger Agreement.
2. CLOSING.
The consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Wishart, Norris, Henninger &
Pittman, P.A., in Burlington, North Carolina, simultaneously with the closing of
the transactions contemplated by the Merger Agreement
3
if all conditions to Closing shall have been satisfied or waived, or at such
other time and date as Purchaser and Seller may mutually agree. The date on
which the Closing occurs shall be referred to hereinafter as the "Closing Date."
Seller shall deliver exclusive possession of the Saw Mill Real Property to
Purchaser at Closing.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Purchaser acknowledges and agrees that he is familiar with and has had an
opportunity to inspect the Saw Mill Real Property, the Equipment and the
Inventory. Except as otherwise expressly provided in this Agreement, Purchaser
is purchasing the Assets "AS IS" and "WHERE IS" in their present condition, with
all faults. Except as expressly provided herein, SELLER DISCLAIMS ALL WARRANTIES
AS TO THE PURCHASED ASSETS, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
Subject to the foregoing, to induce Purchaser to enter into this Agreement
and consummate the transactions contemplated in this Agreement, Seller hereby
represents and warrants to Purchaser as follows:
3.1 Due Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly authorized and qualified to do business in the places
and in the manner as now conducted.
3.2 Authorization. Seller has the right, power and authority to execute,
deliver and perform their respective obligations under Agreement and the
transactions contemplated hereby. This Agreement is a legal, valid and binding
obligation of Seller, enforceable in accordance with its terms. This Agreement
and the performance of this Agreement by Seller have been duly approved by
Seller.
3.3 No Conflicts. The execution, delivery and performance of this Agreement
by the Seller will not: (a) conflict with, or result in a breach or violation of
Seller's Articles of Incorporation or Bylaws; (b) conflict with, or result in a
default (or would constitute a default but for any requirement of notice or
lapse of time or both), or require any notice, consent or approval under any
agreement, contract, commitment, understanding, document or instrument to which
Seller is a party or is otherwise subject; (c) violate, require any filing,
consent or approval under, or result in the creation or imposition of any lien,
charge or encumbrance on any of the Purchased Assets pursuant to any law, rule,
regulation, judgment, order or decree; or (d) result in termination or any
impairment of any permit, license, franchise, contractual right or other
authorization of Seller concerning the Purchased Assets.
4
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
To induce Seller to enter into this Agreement and consummate the
transactions contemplated in this Agreement, Purchaser represents and warrants
to Seller as follows:
4.1 Authorization. Purchaser has the right, power and authority to execute,
deliver and perform this Agreement. This Agreement is a legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms.
5. COVENANTS AND OTHER AGREEMENTS.
5.1 Access and Cooperation. From and after the date of this Agreement and
until the Closing, Seller agrees to afford to the representatives of Purchaser
access to the Saw Mill Real Property as Purchaser may from time to time
reasonably request. Seller agrees to cooperate with Purchaser, its
representatives, engineers, auditors and counsel in the preparation of any
documents or other material which may be required in connection with this
Agreement.
5.2 Notification of Certain Matters. Each party hereto shall give prompt
notice to the other parties hereto of (a) the occurrence or non-occurrence of
any event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of such party contained herein to be untrue or
inaccurate in any material respect at or prior to the Closing and (b) any
material failure of such party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by such party hereunder. The
delivery of any notice pursuant to this Section 5.2 shall not be deemed to (x)
modify the representations or warranties hereunder of the party delivering such
notice, (y) modify the conditions set forth in Sections 6 and 7 hereof or (z)
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
5.3 Title Insurance. Purchaser shall at his own expense purchase an owner's
policy of title insurance for the Saw Mill Real Property in an amount equal to
or greater than the amount of the Purchase Price allocated to such Saw Mill Real
Property.
5.4 Personnel. Seller agrees to terminate the employment of those of its
employees who work at the Saw Mill Operation as of the Closing Date ("Saw Mill
Employees"), and Purchaser agrees to concurrently hire such Employees on the
same terms and conditions, and at the same levels of compensation as those Saw
Mill Employees received from Seller immediately prior to termination. Purchaser
agrees to either pay or otherwise provide those Saw Mill Employees with all
accrued holiday, sick pay, and vacation pay earned by those Saw Mill Employees,
as a result of their employment by Seller, through the Closing Date. Purchaser
agrees to indemnify and hold harmless Purchaser from any and all claims, costs,
expenses, and liabilities that may be incurred by Seller in connection with the
termination of employment of those Saw Mill Employees.
5
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to complete the Closing of the transactions
contemplated hereby is subject to the satisfaction, at or before Closing Date,
of the following conditions:
6.1 Representations and Warranties; Performance of Obligations. All of the
representations and warranties of Seller contained in this Agreement shall be
true, correct and complete on the date of this Agreement and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date; all of the terms, covenants, agreements and
conditions of this Agreement to be complied with, performed or satisfied by
Seller on or before the Closing Date shall have been duly complied with,
performed or satisfied; and Purchaser shall have received a certificate dated
the Closing Date and signed by Seller to the foregoing effects.
6.2 No Litigation. No action or proceeding before a court or any other
Governmental Entity shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement and no Governmental
Entity shall have taken any other action or made any request of Purchaser as a
result of which the management of Purchaser reasonably deems it inadvisable to
proceed with transactions hereunder.
6.3 FIRPTA Affidavit. Purchaser shall have received an affidavit of Seller
as to Seller's status as a domestic entity in the form reasonably acceptable to
Purchaser.
6.4 Limited Warranty Deed. Purchaser shall have received a limited warranty
deed in the form of Annex I for the Saw Mill Real Property executed in
recordable form conveying to Purchaser fee simple title to the Saw Mill Real
Property.
6.5 Bill of Sale. Purchaser shall have received a bill of sale transferring
title of the Equipment and Inventory from Seller to Purchaser.
6.6 Other Documentation. Seller shall also deliver a closing statement to
Purchaser, together with any other documents reasonably requested by Purchaser
to consummate the transactions contemplated by this Agreement.
6.7 Consents and Approvals. All necessary consents and approvals of and
filings with any Governmental Entity or other third Person, relating to the
consummation by Seller of the transactions contemplated hereby shall have been
obtained and made and shall be in full force and effect.
6.8 Merger Agreement. The parties to the Merger Agreement shall have
completed the closing of the transactions contemplated by the Merger Agreement.
6
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligation of Seller to complete the Closing of the transactions
contemplated hereby is subject to the satisfaction, on or before the Closing
Date, of the following conditions:
7.1 Representations and Warranties, Performance of Obligations. All of the
representations and warranties of Purchaser contained in this Agreement shall be
true, correct and complete on the date of this Agreement and as of the Closing
Date with the same effect as though such representations and warranties had been
made as of the Closing Date; all of the terms, covenants, agreements and
conditions of this Agreement to be complied with, performed or satisfied by
Purchaser on or before the Closing Date shall have been duly complied with,
performed or satisfied; and the Shareholders shall have received a certificate
dated the Closing Date and signed by the President or any Vice President of
Purchaser to the foregoing effects.
7.2 Consents and Approvals. All necessary consents and approvals of and
filings with any Governmental Entity or other third Person relating to the
consummation by Purchaser of the transactions contemplated herein shall have
been obtained and made and shall be in full force and effect.
7.3 Receipt of Purchase Price. Purchaser shall pay to Seller the
Preliminary Purchase Price in full in immediately available funds at Closing.
7.4 Other Documentation. Purchaser shall deliver to Seller any other
documents reasonably requested by Seller to consummate the transactions
contemplated by this Agreement.
7.5 Merger Agreement. The parties to the Merger Agreement shall have
completed the Closing of the transactions contemplated by the Merger Agreement.
8. GENERAL
8.1 Termination. This Agreement may be terminated at any time prior to the
Closing only if the Merger Agreement is validly terminated in accordance with
its terms.
8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith become
void (except for Sections 8.2 and 8.7 hereof), and there shall be no liability
or obligation on the part of any party hereto (except with respect to such
excluded sections). Notwithstanding the foregoing, if such termination is due to
a material breach or material failure to fulfill any of the representations,
warranties, covenants or agreements set forth in this Agreement on the part of
either party hereto, then such party shall be liable to the other party hereto
(a) to the extent of the expenses (including, without limitation, attorneys'
fees) incurred by such other party in connection with this Agreement and the
transactions contemplated hereby and (b) in the case of a breach of any of the
representations or warranties that is known when made or should have been known
with the exercise of reasonable diligence or the
7
willful failure to fulfill any of the covenants or agreements set forth herein,
also for damages in accordance with applicable law.
8.3 Cooperation. At any time and from time to time after the Closing, each
of the parties hereto shall upon the request of any other, perform, execute,
acknowledge and deliver such further acts, deeds, assignments, transfers,
conveyances and assurances as may be reasonably required for the purpose of
carrying out this Agreement. Seller will also cooperate and cause the present
officers, directors and employees of Seller to cooperate with Purchaser on and
after the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any Return, filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date.
8.4 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Purchaser and Seller.
8.5 Entire Agreement. This Agreement (which includes the Schedules and
Annexes hereto) and the Merger Agreement sets forth the entire understanding of
the parties hereto with respect to the transactions contemplated hereby. It
shall not be amended or modified except by a written instrument duly executed by
each of the parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral (except the Merger Agreement) and including, without limitation,
the letter of intent dated February 17, 1998, are superseded by this Agreement.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by fax) by the parties.
8.7 Expenses. Purchaser has paid and will pay the fees, expenses and
disbursements of Purchaser and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement.
Purchaser has paid and will pay all costs incurred in connection with the due
diligence investigation of the Saw Mill Real Property by Purchaser including,
without limitation, appraisals and environmental assessments. Seller paid and
will pay the fees, expenses and disbursements of Seller and its agents,
representatives, financial advisors, accountants and counsel incurred in
connection with the subject matter of this Agreement. Seller will pay the
transfer taxes and recording fees with respect to the transfer of the Saw Mill
Real Property.
8.8 Specific Performance, Remedies. Each party hereto acknowledges that the
other parties will be irreparably harmed and that there will be no adequate
remedy at law for any violation by any of them of any of the covenants or
agreements contained in this Agreement. It is accordingly agreed that, in
addition to any other remedies which may be available upon the breach of any
such
8
covenants or agreements, each party hereto shall have the right to obtain
injunctive relief to restrain a breach or threatened breach of, or otherwise to
obtain specific performance of, the other parties' covenants and agreements
contained in this Agreement. Nothing in this Agreement shall be construed to
limit the right of a party to seek specific performance or injunctive or other
equitable relief for a breach or threatened breach of this Agreement.
Furthermore, nothing in this Agreement shall limit or restrict in any manner any
rights or remedies which any party has, or might have, at law, in equity or
otherwise, against any other party after Closing based on any willful
misrepresentation, willful breach of warranty or willful failure to fulfill any
covenant or agreement set forth herein.
8.9 Notices. Any notice, request, claim, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by fax (with
confirmation of receipt), by registered or certified mail, postage prepaid, or
by recognized courier service, as follows:
If to Purchaser: with a required copy to:
Carroll M. Shoffner Wishart, Norris, Henninger & Pittman, P.A.
5631 S. NC 62 3120 South Church Street
Burlington, NC 27215 Burlington, NC 27215
Attn: Dorn Pittman, Esq.
(Fax: 910-584-3994)
If to Seller: with a required copy to:
UFP Acquisition Corp. II Varnum, Riddering, Schmidt & Howlett LLP
2801 East Beltline, N.E. 333 Bridge St. N.W., P.O. Box 352
Grand Rapids, MI 49505 Grand Rapids, MI 49501-0352
Attn: Matthew J. Missad Attn: Michael G. Wooldridge, Esq.
(Fax: 616-364-5558) (Fax: 616-336-7000)
or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, faxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
8.10 Mutual Drafting. This Agreement is the mutual product of the parties
hereto, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.
8.11 Further Representation. Each party to this Agreement acknowledges and
represents that it has been represented by its own legal counsel in connection
with the transactions
9
contemplated by this Agreement, with the opportunity to seek advice as to its
legal rights from such counsel. Each party further represents that it is being
independently advised as to the tax consequences of the transactions
contemplated by this Agreement and is not relying on any representation or
statements made by the other party as to such tax consequences.
8.12 Amendment; Waiver. This Agreement may be amended by the parties hereto
at any time prior to the Closing by execution or waiver of an instrument in
writing signed on behalf of each of the parties hereto. Any extension or waiver
by any party of any provision hereto shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
8.13 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such Person or circumstance in any other jurisdiction or to other Persons or
circumstances in any jurisdiction, shall not be affected thereby, and to this
end the provisions of this Agreement shall be severable.
The parties have signed this Agreement as of the date first above written.
SELLER:
SHOFFNER INDUSTRIES, INC.,
a Michigan corporation
By:
Its
PURCHASER:
SHOFFNER FOREST PRODUCTS, INC.,
a North Carolina corporation
By:
Its
10
ANNEXES AND SCHEDULES
TO SAW MILL PURCHASE AGREEMENT
Annex I - Form of Limited Warranty Deed
Schedule A - Legal Description of Saw Mill Real Property
Schedule B - Equipment
Schedule C - Excluded Assets
Schedule D - Assumed Liabilities
Schedule E - Allocation of Purchase Price
Schedule F - Equipment Deposits and Petty Cash
Schedule G - Accrued Liabilities
11
ANCILLARY REAL ESTATE AGREEMENT
THIS ANCILLARY REAL ESTATE AGREEMENT (this "Agreement") concerning post-
Closing real estate title and survey work is made as of the 30th day of March,
1998, by and among SHOFFNER INDUSTRIES, INC., a Michigan corporation (the
"Company"), SHOFFNER INVESTMENTS, LLC, a North Carolina limited liability
company ("Shoffner Investments") and CARROLL M. SHOFFNER, an individual
("Seller").
R E C I T A L S
WHEREAS, the Company was formerly named UFP Acquisition Corp. II and is the
surviving corporation of a merger between the Company and Shoffner Industries,
Inc., a North Carolina corporation ("SI");
WHEREAS, Universal Forest Products, Inc. ("UFP"), the Company, SI, Seller,
and the other shareholders of the Company have as of the effective date of this
Agreement closed the transactions contemplated by the Agreement and Plan of
Reorganization dated as of the 30th day of March, 1998 (the "Merger Agreement")
pursuant to which SI was merged with and into the Company;
WHEREAS, Shoffner Investments and the Company have as of the effective date
of this Agreement closed the transactions contemplated by the Leased Property
Purchase Agreement dated as of the 30th day of March, 1998 (the "Leased Property
Purchase Agreement") pursuant to which the Company purchased certain real
property from Shoffner Investments;
WHEREAS, with respect to the Real Property (as defined in the Merger
Agreement) and the Real Property (as defined in the Leased Property Purchase
Agreement), which collectively are referred to in this Agreement as the "Real
Property" and which are described on Exhibit A to this Agreement, the surveys
and title commitments are not expected to be ready by the Closing Date and the
parties to this Agreement therefore desire to enter into this Agreement to
provide for completion after the Closing Date of the surveys, title policies and
title insurance with respect to the parcels of Real Property; and
WHEREAS, capitalized terms in this Agreement shall have the meaning
ascribed to them in the Merger Agreement, unless otherwise defined herein;
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ANNEX X
1. Title Insurance.
At the Company's expense, the Company has ordered commitments for owner's
policies of title insurance for each parcel of Real Property to be conveyed
under the Merger Agreement, and Seller is obligated to obtain such title
insurance for each parcel of Real Property to be acquired under the Leased
Property Purchase Agreement, all without standard exceptions and/or opinions of
counsel for purposes of confirming the representations of SI set forth in
Section 4.10 of the Merger Agreement and Section 3.4 of the Leased Property
Purchase Agreement. If the Company notifies Seller of any easement, restriction,
reservation, encumbrance or other problem disclosed in any commitment for the
policies that adversely affects the use or value of the Real Property based on
that Real Property's current use, and that is unacceptable to the Company
("Title Defect"), Seller shall have thirty (30) days from the date of the
Company's notice to remove the Title Defect. If Seller does not remove the Title
Defect, the Seller shall upon demand by the Company pay to the Company the
amount by which the value of such parcel of Real Property is adversely affected
by the Title Defect (as determined by the Company) or, if the Company chooses to
remove or otherwise remedy the Title Defect, the Seller shall indemnify the
Company for the full cost of removing the Title Defect.
2. Surveys.
At the Company's expense, the Company has ordered a new staked ALTA land
title survey of each parcel of Real Property to be conveyed under the Merger
Agreement, prepared by a licensed surveyor, and Seller is obligated to obtain
such surveys under the Leased Property Purchase Agreement. Each survey shall
show all improvements and easements (visible or recorded), roads, and means of
physical and record ingress and egress to and from the Real Property, shall be
certified to the Company and any other parties named by the Company and shall be
in form adequate to enable the title company to remove its standard survey
exceptions. Each survey shall state whether any parcel of Real Property is
within any recognized floodplain. If the Company notifies Seller of any
easement, restriction, reservation, encumbrance or other problem disclosed in
any survey of any parcel of Real Property that adversely affects the use or
value of the Real Property based on that Real Property's current use and that is
unacceptable to the Company ("Survey Defect"), Seller shall have thirty (30)
days from the date of the Company's notice to remove the Survey Defect. If
Seller does not remove the Survey Defect, the Seller shall upon demand by the
Company pay to the Company the amount by which the value of such parcel of Real
Property is adversely affected by the Survey Defect (as determined by the
Company) or, if the Company chooses to remove or otherwise remedy the Survey
Defect, the Seller shall indemnify the Company for the full cost of removing the
Survey Defect.
3. Leased Property.
The Company is successor by merger with SI to lease agreements for real
property leased by the Company and located in Georgetown, Delaware, and Santee,
South Carolina (the "Leased Properties"). Seller agrees to obtain for the
Company's benefit (a) a consent of Weyerhaser to the Company's assumption of the
lease agreement for the
2
Santee, South Carolina Leased Property, and (b) an estoppel certificate from
Sussex County, Delaware, with respect to the Georgetown, Delaware Leased
Property and an estoppel certificate from Weyerhaser and from the County of
Orangeburg with respect to the Santee, South Carolina Leased Property, which
estoppel certificates shall be to the effect that SI has not breached any
obligations to it and that so long as the Company fulfills SI's covenants,
agreements and obligations under such leases, the Company will be entitled to
occupy the premises for the remainder of the lease term and to exercise all
rights of SI under the lease. Seller agrees to indemnify and hold the Company
harmless from any liability resulting from the failure to obtain the consent of
Weyerhaser or from the inability of the Company to occupy the Leased Properties
for the remainder of the lease terms and to exercise all rights of SI under the
leases.
4. Obligations.
The obligations of Seller pursuant to this Agreement to indemnify and
compensate Purchaser with respect to Title Defects and Survey Defects shall be
subject to the terms and conditions of indemnification, expressed as the
Indemnification Threshold, contained in Section 9.1(c) of the Merger Agreement,
provided that notwithstanding the provisions of Section 1 above, the Company
shall not assert that the existence of the railroad right-of-way listed on
attached Exhibit B (the "Bunn Property") adversely affects the value of the Bunn
Property and shall not be entitled to indemnification therefore, and provided
further that the Company shall have the right to request or reasonably obtain
the elimination or correction of that title defect.
5. Dispute Resolution.
Any disputes concerning the indemnification and other obligations created
by this Agreement which are not resolved by negotiation within thirty (30) days
after one party notifies the other party in writing of the nature of the dispute
shall be resolved by binding arbitration conducted in accordance with the rules
of the American Arbitration Association by an arbitrator mutually selected by
the parties. If the parties are unable to agree upon an arbitrator, a single
arbitrator shall be selected in accordance with the rules of the American
Arbitration Association. Any arbitration award shall be binding and enforceable
against the parties and judgment may be entered thereon in any court of
competent jurisdiction. Each party shall bear its own costs and expenses in
connection with the arbitration, and the cost of the arbitrator shall be split
equally between the parties.
6. Miscellaneous.
6.1 Cooperation. Each of the parties hereto shall upon the request of any
other, perform, execute, acknowledge and deliver such further acts, deeds,
assignments, transfers, conveyances and assurances as may be reasonably required
for the purpose of carrying out this Agreement.
6.2 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Seller and the Company.
3
6.3 Entire Agreement. This Agreement (which includes any Exhibits hereto)
and the Merger Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It shall not be
amended or modified except by a written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral
(except the Merger Agreement) and including, without limitation, the letter of
intent dated February 17, 1998, are superseded by this Agreement.
6.4 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by fax) by the parties.
6.5 Notices. Any notice, request, claim, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by fax (with
confirmation of receipt), by registered or certified mail, postage prepaid, or
by recognized courier service, as follows:
If to Seller: with a required copy to:
Carroll M. Shoffner Wishart, Norris, Henninger & Pittman, P.A.
3063 Huffman Mill Road 3120 South Church Street
Burlington, NC 27215 Burlington, NC 27215
Attn: Dorn Pittman, Esq.
(Fax: 910-584-3994)
If to the Company: with a required copy to:
Shoffner Industries, Inc.
c/o Universal Forest Products, Inc. Varnum, Riddering, Schmidt & Howlett LLP
2801 East Beltline, N.E. 333 Bridge St., N.W., P. O. Box 352
Grand Rapids, MI 49505 Grand Rapids, MI 49501-0352
Attn: Matthew J. Missad Attn: Michael G. Wooldridge, Esq.
(Fax: 616-364-5558) (Fax: 616-336-7000)
or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, faxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
4
6.6 Mutual Drafting. This Agreement is the mutual product of the parties
hereto, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.
6.7 Further Representation. Each party to this Agreement acknowledges and
represents that it has been represented by its own legal counsel in connection
with the transactions contemplated by this Agreement, with the opportunity to
seek advice as to its legal rights from such counsel.
6.8 Amendment; Waiver. This Agreement may be amended by the parties hereto
at any time prior to the Closing by execution or waiver of an instrument in
writing signed on behalf of each of the parties hereto. Any extension or waiver
by any party of any provision hereto shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
6.9 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such Person or circumstance in any other jurisdiction or to other Persons or
circumstances in any jurisdiction, shall not be affected thereby, and to this
end the provisions of this Agreement shall be severable.
The parties have signed this Agreement as of the date first above written.
SHOFFNER INDUSTRIES, INC.,
a Michigan corporation
(the "Company")
By
Its
SHOFFNER INVESTMENTS, LLC
a North Carolina limited liability company
By
Its
Carroll M. Shoffner
(the "Seller")
5
SAW MILL SERVICES AGREEMENT
THIS SAW MILL SERVICES AGREEMENT (this "Agreement") is made as of the 30th
day of March, 1998, by and among SHOFFNER INDUSTRIES, INC., a Michigan
corporation (the "Company") and SHOFFNER FOREST PRODUCTS, INC., a North Carolina
corporation ("SF"), SHOFFNER RANCH, INC., a North Carolina corporation ("SR"),
and SHOFFNER INVESTMENTS, LLC, a North Carolina limited liability company ("SL")
(SF, SR and SL are collectively referred to as the "Clients").
R E C I T A L S
WHEREAS, the Company was formerly named UFP Acquisition Corp. II and is the
surviving corporation of a merger between the Company and Shoffner Industries,
Inc., a North Carolina corporation ("Shoffner");
WHEREAS, Universal Forest Products, Inc. ("UFP"), the Company, Shoffner,
and the shareholders of Shoffner have, as of the effective date of this
Agreement, closed the transactions contemplated by the Agreement and Plan of
Reorganization dated as of the 30th day of March, 1998 (the "Merger Agreement")
pursuant to which Shoffner was merged with and into the Company;
WHEREAS, the Company and SF entered into a Saw Mill Purchase Agreement
dated March 30, 1998, pursuant to which certain assets and real property
specified in the Saw Mill Purchase Agreement were sold by the Company to SF;
WHEREAS, the Company and the desire to enter into this Agreement pursuant
to which the Company will provide certain services to the Clients;
WHEREAS, capitalized terms in this Agreement shall have the meaning
ascribed to them in the Merger Agreement, unless otherwise defined herein;
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment and Services
Clients hereby appoint and employ the Company, and the Company hereby
accepts such appointment and employment, to provide Clients with administrative
and other services (the "Services"). The Services shall include those services
as may be mutually agreed upon in writing from time to time by the Company and
Clients, which shall be attached as Exhibit A to this Agreement.
ANNEX XI
2. Term
The term of this Agreement shall commence on the date of this Agreement and
shall continue through September 30, 1998, and shall automatically renew for
successive one month terms unless the Company or Clients give written notice of
termination at least thirty (30) days prior to the renewal date. Either the
Company or Clients may terminate this Agreement at any time upon thirty (30)
days advance written notice to the other party.
3. Compensation
The Company will be reimbursed by the Clients at the rate of $30 per hour
and will be reimbursed for actual out-of-pocket expenses incurred in providing
the Services.
4. Billing
The Company will bill Clients monthly for the Services. Such bills will be
due and payable on receipt, with payment to be made within ten days of receipt
of invoice.
5. Financial Records
The Company and Clients shall each be given full access to each others
books, records and financial statements to the extent necessary perform the
Services and to confirm the direct and indirect actual costs and expenses of
providing the Services.
6. Waiver
Clients expressly waives all claims or indemnification rights with respect
to any claim that Clients have or will suffer damages or lost profits as a
result of any Services performed by the Company.
7. Independent Contractors
The Company and Clients are independent contractors with respect to each
other. The Company and Clients shall not be construed as joint venturers or
partners of each other and neither shall have the power to bind or obligate the
other except as set forth in this Agreement.
8. Miscellaneous
8.1 Cooperation. Each of the parties hereto shall upon the request of any
other, perform, execute, acknowledge and deliver such further acts, deeds,
assignments, transfers, conveyances and assurances as may be reasonably required
for the purpose of carrying out this Agreement.
2
8.2 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Clients and the Company.
8.3 Entire Agreement. This Agreement (which includes any Exhibits hereto)
and the Merger Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It shall not be
amended or modified except by a written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral
(except the Merger Agreement) and including, without limitation, the letter of
intent dated February 17, 1998, are superseded by this Agreement.
8.4 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by fax) by the parties.
8.5 Notices. Any notice, request, claim, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by fax (with
confirmation of receipt), by registered or certified mail, postage prepaid, or
by recognized courier service, as follows:
If to Clients: with a required copy to:
Carroll M. Shoffner Wishart, Norris, Henninger & Pittman, P.A.
3063 Huffman Mill Road 3120 South Church Street
Burlington, NC 27215 Burlington, NC 27215
Attn: Dorn Pittman, Esq.
(Fax: 910-584-3994)
If to the Company: with a required copy to:
Shoffner Industries, Inc.
c/o Universal Forest Products Varnum, Riddering, Schmidt & Howlett LLP
2801 East Beltline, N.E. 333 Bridge St. N.W., P.O. Box 352
Grand Rapids, MI 49505 Grand Rapids, MI 49501-0352
Attn: Matthew J. Missad Attn: Michael G. Wooldridge, Esq.
(Fax: 616-364-5558) (Fax: 616-336-7000)
or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered,
3
faxed, mailed or dispatched and, if given by any other means, shall be deemed
given only when actually received by the addressees.
8.6 Mutual Drafting. This Agreement is the mutual product of the parties
hereto, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.
8.7 Further Representation. Each party to this Agreement acknowledges and
represents that it has been represented by its own legal counsel in connection
with the transactions contemplated by this Agreement, with the opportunity to
seek advice as to its legal rights from such counsel.
8.8 Amendment; Waiver. This Agreement may be amended by the parties hereto
at any time prior to the Closing by execution or waiver of an instrument in
writing signed on behalf of each of the parties hereto. Any extension or waiver
by any party of any provision hereto shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
8.9 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such Person or circumstance in any other jurisdiction or to other Persons or
circumstances in any jurisdiction, shall not be affected thereby, and to this
end the provisions of this Agreement shall be severable.
The parties have signed this Agreement as of the date first above written.
The Company:
SHOFFNER INDUSTRIES, INC.,
a Michigan corporation
By
Its
The Clients:
SHOFFNER FOREST PRODUCT, INC.
a North Carolina corporation
By
Carroll M. Shoffner, President
[SIGNATURES CONTINUED ON NEXT PAGE]
4
SHOFFNER RANCH, INC.
By
Its
SHOFFNER INVESTMENTS, LLC
By
Its
5
LIST OF NON-SHAREHOLDER EMPLOYEES
TO SIGN EMPLOYMENT AND NONCOMPETE AGREEMENTS
1. Daniel Shoffner
2. Vincent Pal
3. Richard Vail
ANNEX XII
ANNEX XIII
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT made and entered into as of the
30th day of March, 1998 by and between SHOFFNER FOREST PRODUCTS, INC., a North
Carolina corporation (herein referred to as "SFP"); and SHOFFNER INDUSTRIES,
INC., a North Carolina corporation (herein referred to as "Industries"). GARY A.
WRIGHT, Trustee, CARROLL M. SHOFFNER, REGINA S. TROLLINGER and CINDY SHOFFNER as
the owners of certain policies subject to the Split-Dollar Plans hereinafter
described hereby execute this instrument for the purpose of consenting to the
Assignment and Assumption hereby made to the extent that such consent is
required.
W I T N E S S E T H:
WHEREAS, Industries has heretofore maintained those certain split dollar
plans and arrangements described on Exhibit A attached to this Agreement (the
"Split Dollar Plans") in order to provide a benefit to Mr. Carroll M. Shoffner;
and
WHEREAS, Industries is the owner of those certain life insurance policies
described on Exhibit A attached to this Agreement (the "Life Insurance
Policies"); and
WHEREAS, Industries, its shareholders, Universal Forest Products, Inc. and
UFP Acquisition Corp. II have entered into an
Agreement and Plan of Reorganization dated as of the 30th day of March, 1998
(the "Merger Agreement"); and
WHEREAS, pursuant to the terms of the Merger Agreement, SFP agreed to
acquire the Split Dollar Plans and the Life Insurance Policies; and
WHEREAS, there have been borrowings against the cash surrender value of
certain of the Life Insurance Policies and policies maintained under the Split
Dollar Plans (the "Policy Loans") and this assignment shall be made subject to
the Policy Loans; and
WHEREAS, Mr. Shoffner is a key employee of SFP and SFP desires to acquire
the Life Insurance Policies and to assume all of Industries, obligations under
the Split Dollar Plans in order to provide an incentive to Mr. Shoffner and to
induce his continued employment with SFP;
NOW, THEREFORE, in consideration of the premises and the mutual and
reciprocal promises and agreements set forth herein, it is hereby agreed as
follows:
1. Assignment of Plans. In consideration of the sum of $____________ paid
by SFP to Industries this date, Industries hereby sets over, transfers, assigns
and conveys unto SFP all of its
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right, title and interest in and to the Split Dollar Plans and the Life
Insurance Policies subject to the Policy Loans.
2. Assumption of Obligations. SFP hereby accepts the assignment hereby made
and hereby assumes all obligations of Industries under the Split Dollar Plans
and agrees to indemnify and hold Industries harmless from and against any and
all claims, demands, liabilities, costs and expenses relating to the Split
Dollar Plans and/or the Policy Loans.
3. Miscellaneous-Provisions. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina. After the
date hereof, the parties agree to execute and deliver such further instruments
of assignment and conveyance as may be requisite or desirable to vest title to
the Life Insurance Policies in SFP and to reflect the transfer to, and
assumption by, SFP of the obligations under the Split Dollar Plans. The owners
of the Policies hereby execute this instrument for the purpose of consenting to
the provisions hereof to the extent such consent is required.
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IN WITNESS WHEREOF, the parties have executed t his instrument as of the
day and year first above written.
SHOFFNER FOREST PRODUCTS, INC.
By: /s/ Carroll M. Shoffner
Carroll M. Shoffner, President
SHOFFNER INDUSTRIES, INC.
By: /s/ Gary A. Wright
Gary A. Wright, President
OWNERS:
/s/ Carroll M. Shoffner (SEAL)
CARROLL M. SHOFFNER
/s/ Gary A. Wright (SEAL)
GARY A. WRIGHT
/s/ Regina S. Trollinger (SEAL)
REGINA S. TROLLINGER
/s/ Cindy Shoffner (SEAL)
CINDY SHOFFNER
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EXHIBIT A
Split Dollar Plans
1. Split-Dollar Life Insurance Plan and Agreement dated February 11, 1997
between Shoffner Industries, Inc. (the "Company") and Gary A. Wright,
Trustee (the "Trustee") under Irrevocable Trust Agreement dated May 31,
1990 denominated as the Trust FBO Carroll M. Shoffner's Children (the
"Trust") relating to The Travelers Insurance Company policy number
7347085 insuring the lives of Carroll M. and Jacqueline S. Shoffner.
2. Split-Dollar Life Insurance Plan and Agreement dated February 12, 1997
between the Company and the Trustee relating to American General Life
Insurance Company policy number A10158219L insuring the lives of
Carroll M. and Jacqueline S. Shoffner.
3. Split Dollar Agreement (Collateral Assignment Method) Survivorship
Whole Life dated May 31, 1990 between the Company and the Trustee
relating to Sun Life Assurance Company of Canada policy number 9205514L
insuring the lives of Carroll M. and Jacqueline S. Shoffner.
4. Split Dollar Agreement dated June 15, 1977 between the Company and
Carroll M. Shoffner, as owner, relating to General American Life
Insurance Company policy number 1737979 insuring the life of Carroll M.
Shoffner.
5. Split-dollar arrangement between the Company and Carroll M. Shoffner,
as owner and insured, relating to The Phoenix Life Insurance Company
(formerly Confederation Life Insurance Company) policy number 5089851
(split dollar agreements are not available).
6. Split Dollar Life Insurance Agreement dated June 11, 1992 between the
Company, Carroll M. Shoffner, as insured, and Regina Shoffner
Trollinger, owner and beneficiary, relating to The Phoenix Life
Insurance Company (formerly Confederation Life Insurance Company)
policy number 5420960.
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7. Split Dollar Life Insurance Agreement dated June 11, 1992 between the
Company, Carroll M. Shoffner, as insured, and Cynthia Shoffner
(formerly Cynthia S. Lopez) relating to The Phoenix Life Insurance
Company (formerly Confederation Life Insurance Company) policy number
5420961.
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EXHIBIT B
Life Insurance Policies
Life Insurance Policies on Carroll M. Shoffner owned by and payable to the
Company:
(a) Confederation Life (Phoenix) Policy Number: 5 089 857 Face Amount:
$225,000
Owner: Shoffner Industries, Inc.
Beneficiary: Shoffner Industries, Inc.
(b) Northwestern Mutual Policy Number 6 068 334 Face Amount: $100,000
Owner: Shoffner Industries, Inc.
Beneficiary: Shoffner Industries, Inc.
(c) Confederation Life (Phoenix) Policy Number: 5 402 960 Face Amount:
$850,000
Owner: Shoffner Industries, Inc.
Beneficiary: Shoffner Industries, Inc.
(d) Southland Life (Phoenix) Policy Number: 06 0003 2489 Face Amount:
$500,000
Owner: Shoffner Industries, Inc.
Beneficiary: Shoffner Industries, Inc.
(e) Confederation Life (Phoenix) Policy Number: 300 5 723 621 Face Amount:
$750,000
Owner: Shoffner Industries, Inc.
Beneficiary: Shoffner Industries, Inc.
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