exv10w1






Exhibit 10.1




 





ASSET PURCHASE AGREEMENT




between




FH Holding, Inc., as Purchaser,




Fleetwood Enterprises, Inc., as ParentCo and a Seller




and




The Other Sellers Listed on the Signature Page(s) Hereto




Dated as of July 21, 2009




 





 









 








Table of Contents




	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	1. Purchase and Sale
	 	 	2	 
	 
	 	 	 	 
	1.1 Assets to Be Transferred
	 	 	2	 
	1.2 Excluded Assets
	 	 	4	 
	1.3 Assumed Liabilities
	 	 	6	 
	1.4 Excluded Liabilities
	 	 	6	 
	1.5 Deposit
	 	 	8	 
	1.6 Purchase Price
	 	 	8	 
	1.7 Closing
	 	 	9	 
	1.8 Closing Deliveries by the Sellers
	 	 	9	 
	1.9 Closing Deliveries by the Purchaser
	 	 	9	 
	1.10 Assignment and Assumption of the Assumed Contracts
	 	 	10	 
	1.11 Net Working Capital Adjustment
	 	 	10	 
	1.12 Valuation and Treatment of Uncollectable Accounts Receivable
	 	 	13	 
	1.13 Valuation of Inventory
	 	 	13	 
	1.14 Allocation of Proceeds
	 	 	13	 
	1.15 Debtor In Possession Accounts
	 	 	14	 
	 
	 	 	 	 
	2. Conveyance of Owned Real Property
	 	 	14	 
	 
	 	 	 	 
	2.1 Real Property Escrow
	 	 	14	 
	2.2 Real Property Escrow Opening and Closing Dates
	 	 	14	 
	2.3 Seller’s Real Property Transfer Documents
	 	 	14	 
	2.4 Purchaser’s Real Property Transfer Documents
	 	 	15	 
	2.5 Recording of Title
	 	 	15	 
	2.6 Title Commitments and Surveys
	 	 	15	 
	2.7 Title Policies
	 	 	16	 
	2.8 Real Property Escrow Cancellation Charges
	 	 	16	 
	2.9 Closing Costs and Recording Fees
	 	 	16	 
	2.10 Apportionments
	 	 	17	 
	 
	 	 	 	 
	3. Representations and Warranties of the Seller
	 	 	17	 
	 
	 	 	 	 
	3.1 Due Incorporation and Authority
	 	 	18	 
	3.2 No Conflicts
	 	 	18	 
	3.3 Organizational Documents
	 	 	19	 
	3.4 Compliance with Laws
	 	 	19	 
	3.5 Permits
	 	 	19	 
	3.6 Contracts
	 	 	19	 
	3.7 Owned Real Property
	 	 	20	 
	3.8 Environmental Matters
	 	 	21	 
	3.9 Intellectual Property
	 	 	22	 
	3.10 Litigation
	 	 	22	 
	 
	 	 	 	 
	(i)







 









 






	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	3.11 Title to Assets
	 	 	22	 
	3.12 Inventory
	 	 	23	 
	3.13 Employees
	 	 	23	 
	3.14 Affiliated Transactions
	 	 	23	 
	3.15 Product Liability; Product Warranties
	 	 	23	 
	3.16 Absence of Certain Developments
	 	 	24	 
	3.17 Affiliate Ownership of Assets
	 	 	24	 
	3.18 Brokers
	 	 	24	 
	3.19 Disclaimer
	 	 	24	 
	 
	 	 	 	 
	4. Representations and Warranties of the Purchaser
	 	 	25	 
	 
	 	 	 	 
	4.1 Due Incorporation and Authority
	 	 	25	 
	4.2 No Conflicts
	 	 	25	 
	4.3 Litigation
	 	 	25	 
	4.4 Purchaser’s Financial Capability
	 	 	26	 
	4.5 Brokers
	 	 	26	 
	4.6 Acknowledgement of Sellers’ Disclaimer
	 	 	26	 
	4.7 Purchaser Disclaimer
	 	 	26	 
	 
	 	 	 	 
	5. Covenants and Agreements
	 	 	26	 
	 
	 	 	 	 
	5.1 Operation of the Business
	 	 	26	 
	5.2 Confidentiality
	 	 	27	 
	5.3 Expenses
	 	 	28	 
	5.4 Access to Information; Preservation of Records; Litigation Support
	 	 	28	 
	5.5 Regulatory and Other Authorizations; Consents
	 	 	30	 
	5.6 Further Action; Additional Assignments of Transferred Intellectual Property
	 	 	30	 
	5.7 Assignment of Internet Domain Names
	 	 	30	 
	5.8 Bankruptcy Court Approval
	 	 	31	 
	5.9 Books and Records
	 	 	31	 
	5.10 Tax Matters
	 	 	31	 
	5.11 Notification of Certain Matters
	 	 	32	 
	5.12 Knowledge of Breach
	 	 	32	 
	5.13 Employment Arrangements
	 	 	32	 
	5.14 Insurance
	 	 	34	 
	5.15 Licensed Computer Software; Consents
	 	 	34	 
	5.16 IT System Configuration
	 	 	34	 
	5.17 Co-Existence Agreement
	 	 	35	 
	 
	 	 	 	 
	6. Conditions Precedent to the Obligation of the Purchaser to Close
	 	 	35	 
	 
	 	 	 	 
	6.1 Representations and Warranties; Covenants
	 	 	35	 
	6.2 No Intervening Law
	 	 	35	 
	6.3 Bankruptcy Filing
	 	 	35	 
	 
	 	 	 	 
	(ii)







 









 






	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	6.4 Closing Documents
	 	 	35	 
	6.5 No Purchaser Objection to Initial Net Working Capital Adjustment
	 	 	35	 
	6.6 No Material Adverse Effect
	 	 	36	 
	 
	 	 	 	 
	7. Conditions Precedent to the Obligation of the Sellers to Close
	 	 	36	 
	 
	 	 	 	 
	7.1 Representations and Warranties; Covenants
	 	 	36	 
	7.2 No Intervening Law
	 	 	36	 
	7.3 Sale Approval Order
	 	 	36	 
	7.4 Closing Documents
	 	 	36	 
	 
	 	 	 	 
	8. Termination of Agreement
	 	 	36	 
	 
	 	 	 	 
	8.1 Termination Prior to Closing
	 	 	36	 
	8.2 Refund of Deposit
	 	 	38	 
	8.3 Break-up Fee; Expense Reimbursement
	 	 	38	 
	8.4 Purchaser Payment for Delay in Closing
	 	 	39	 
	8.5 Survival After Termination
	 	 	39	 
	 
	 	 	 	 
	9. Miscellaneous
	 	 	39	 
	 
	 	 	 	 
	9.1 Certain Definitions
	 	 	39	 
	9.2 Consent to Jurisdiction; Service of Process; Waiver of Jury Trial
	 	 	47	 
	9.3 Notices
	 	 	47	 
	9.4 Entire Agreement
	 	 	48	 
	9.5 Non- survival of Representations, Warranties and Covenants
	 	 	48	 
	9.6 Amendments
	 	 	49	 
	9.7 Waiver
	 	 	49	 
	9.8 Governing Law
	 	 	49	 
	9.9 Binding Effect; Assignment
	 	 	49	 
	9.10 Interpretation; Headings
	 	 	49	 
	9.11 Severability of Provisions
	 	 	50	 
	9.12 Counterparts
	 	 	50	 
	9.13 No Third Party Beneficiaries
	 	 	50	 






SCHEDULES




	 	 	 
	Schedule 1.1(a)

	 	Assumed Contracts
	Schedule 1.1(c)

	 	Transferred IP
	Schedule 1.1(d)

	 	Equipment
	Schedule 1.1(e)

	 	Personal Property
	Schedule 1.1(g)

	 	Transferred Permits
	Schedule 1.1(i)

	 	Transferred IT and Telephone Systems
	 
	 	 
	(iii)







 









 






	 	 	 
	Schedule 1.1(l)

	 	Other Transferred Assets
	Schedule 1.1(o)

	 	Claims of Sellers Related to Transferred Assets and Assumed Liabilities
	Schedule 1.1(p)

	 	Transferred Licensed Computer Software
	Schedule 1.2(c)

	 	Certain Excluded Assets
	Schedule 1.2(e)

	 	Excluded IP
	Schedule 1.3(b)

	 	Pre-Petition Volume Incentive Program Accruals
	Schedule 1.3(c)

	 	Seller Plants
	Schedule 2.7

	 	Title Policies






DISCLOSURE SCHEDULES




	 	 	 
	Schedule 3.4

	 	Compliance with Laws
	Schedule 3.5

	 	Permits
	Schedule 3.6(a)

	 	Specified Contracts
	Schedule 3.7(a)

	 	Owned Real Properties
	Schedule 3.8

	 	Environmental Matters
	Schedule 3.9(a)

	 	Specified Intellectual Property
	Schedule 3.9(b)

	 	Specified Licenses
	Schedule 3.9(c)

	 	Intellectual Property Infringement
	Schedule 3.9(d)

	 	Intellectual Property Defaults
	Schedule 3.10

	 	Litigation
	Schedule 3.13(b)

	 	Employee Grievances
	Schedule 3.15

	 	Product Liability; Product Warranties
	Schedule 3.16

	 	Absence of Certain Developments
	Schedule 3.18

	 	Brokers






EXHIBITS




	 	 	 
	Exhibit A

	 	Form of Bill of Sale
	Exhibit B

	 	Form of Assignment and Assumption Agreement
	Exhibit C

	 	Form of Assignment of Intangible Property
	Exhibit D

	 	Form of Transition Services
	Exhibit E

	 	Co-Existence Assignment and Assumption Agreement
	Exhibit F

	 	Bidding Procedures Order
	Exhibit G

	 	Form of Sale Approval Order
	Exhibit H

	 	Product Warranties
	 
	 	 
	(iv)







 









 








ASSET PURCHASE AGREEMENT




     THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of July
21, 2009, by and between Fleetwood Enterprises, Inc., a Delaware corporation (“ParentCo” ),
and each of its direct or indirect subsidiaries listed on the signature page(s) hereto (together
with ParentCo, each a “Seller” and collectively the “Sellers”), and FH Holding, Inc., a
Delaware corporation (the “Purchaser”). Capitalized terms used are defined or
cross-referenced in Section 9.1.



Recitals




     WHEREAS, on March 10, 2009 (the “Petition Date”), ParentCo and certain of its
Affiliates filed voluntary petitions for relief under chapter 11 of title 11 of the United States
Code (the “Bankruptcy Code”) with the United States Bankruptcy Court for the Central
District of California, Riverside Division (the “Bankruptcy Court”). ParentCo’s bankruptcy
case is being jointly administered with those of certain of its Affiliates under Case No.
09-14254-MJ (such case, together with all cases so jointly administered, being collectively
referred to herein as the “Bankruptcy Case”);



     WHEREAS, the Sellers are engaged in the business of the design, production, marketing, sale
and servicing of manufactured homes (other than military homes), to the extent conducted at
Sellers’ plants known as Plant 4, Plant 7, Plant 8, Plant 12-1, Plant 12-3/98, Plant 19-2, Plant
27-2 and Plant 48, each of which is more specifically described in Schedule 3.7(a) (the
“Business”);



     WHEREAS, the Purchaser desires to purchase certain assets of the Sellers and to assume certain
Liabilities of the Sellers, and the Sellers desire to sell such assets to the Purchaser and to
assign such Liabilities to the Purchaser, all on the terms and conditions set forth in this
Agreement and in accordance with sections 105, 363, 365 and other applicable provisions of the
Bankruptcy Code;



     WHEREAS, the Transferred Assets will be sold pursuant to an order of the Bankruptcy Court
approving such sale under section 363 of the Bankruptcy Code, and such sale will include the
assumption by the Seller and concurrent assignment to the Purchaser of the Assumed Contracts under
section 365 of the Bankruptcy Code and the terms and conditions of this Agreement; and



     WHEREAS, the Sellers desire to sell the Transferred Assets, including assigning the Assumed
Contracts, to further their reorganization efforts and to enable them to consummate a plan of
reorganization in the Bankruptcy Case.



     NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and
covenants herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:



 









 





Agreement




1. Purchase and Sale




     1.1 Assets to Be Transferred. On the terms and subject to the conditions set forth in
this Agreement, at the Closing, the Sellers shall sell, assign, transfer, convey and deliver (or
cause to be sold, assigned, transferred, conveyed and delivered) to the Purchaser, and the
Purchaser shall purchase, assume and accept from the Sellers, all right, title and interest in and
to all of the Sellers’ properties, assets and rights specifically set forth below, other than the
Excluded Assets (such rights, title and interests in and to such assets, properties and rights
being collectively referred to herein as the “Transferred Assets”), in accordance with, and
with all of the protections afforded by, sections 363 and 365 of the Bankruptcy Code:




          (a) all Contracts listed on Schedule 1.1(a), to the extent assumed and assigned in
accordance with Section 1.10 (collectively, the “Assumed Contracts”);




          (b) all Owned Real Properties, together in each case with the Sellers’ right, title and
interest in and to all structures, facilities, fixtures and improvements located thereon and all
easements, licenses, rights and appurtenances relating to the foregoing;




          (c) all Intellectual Property used exclusively in the Business or related exclusively to
the Transferred Assets, to the extent assignable or otherwise transferable, to the extent listed
on or described in Schedule 1.1(c), together with all income, royalties, damages and
payments due or payable to any Seller or Affiliate thereof as of the Closing Date or thereafter
(including damages and payments for past, present or future infringements or misappropriations
thereof, the right to sue and recover for past infringements or misappropriations thereof, and
any and all corresponding rights that, now or hereafter, may be secured throughout the world)
and all copies and tangible embodiments of any such Intellectual Property in the Sellers’
possession or control (collectively, the “Transferred IP”);




          (d) all machinery, tools, tooling, equipment, parts, spare parts, vehicles and similar
tangible personal property, together with any express or implied warranty (to the extent
transferable) given by any manufacturer or seller of any item or component part thereof and all
maintenance records and other documents relating thereto), wherever located, used by any Seller
exclusively in the conduct of the Business, including those items listed on Schedule
1.1(d), except for any such items on Schedule 1.1(d) disposed of in the ordinary
course of business prior to the date hereof (the “Equipment”);




          (e) all leasehold improvements, trade fixtures, signage, furniture, furnishings,
appliances, personal computer equipment and peripherals (excluding such equipment located at
ParentCo’s corporate offices in Riverside, California, the transfer of which is exclusively
governed by Section 1.1(i)), office equipment and supplies and similar tangible personal
property, together with any express or implied warranty (to the extent transferable), wherever
located, used by any Seller exclusively in the conduct of the Business, including those items
listed on Schedule 1.1(e), except for any such items on Schedule 1.1(e) disposed
of in the ordinary course of business prior to the date hereof (together with the Equipment, the
“Tangible Personal Property”);



2









 






          (f) all raw materials, work-in-progress, finished goods and semi-finished goods, supplies,
packaging materials and other inventories, wherever located, used or produced by any Seller, to
the extent exclusively used in the conduct of the Business, as the same exists on the Closing
Date (the “Inventory”);




          (g) all Permits and all pending applications therefor or renewals thereof relating
exclusively to the Business or any of the Transferred Assets, to the extent listed on
Schedule 1.1(g), in each case to the extent assignable or otherwise transferable at
Purchaser’s expense in accordance with their respective terms or under applicable Law (the
“Transferred Permits”);




          (h) originals or copies of all data, databases and records (whether in print, electronic or
other format) related primarily to the operation of the Business or the ownership or use of the
Transferred Assets or the Assumed Liabilities, including all books of account, general,
financial, accounting, engineering and legal records, unit and house files, invoices, customers’
and suppliers’ lists and records (including account histories), mailing lists, e-mail address
lists, other distribution lists, inventory and supply managements records, engineering designs
and related approvals of Governmental Bodies, self-regulatory organizations, and trade
associations, billing records, sales and promotional literature, creative materials, research
and development reports and records, production reports and records, employee health and safety
records, reports and logs for the Owned Real Properties (including OSHA reports and logs),
service and warranty records, product recall or withdrawal records, equipment logs, operating
guides and manuals, correspondence files relating exclusively to the Business (including
correspondence with customers, suppliers, landlords, tenants, licensors, licensees, Governmental
Bodies and legal, accounting and other professional advisors (except, in the case of legal
correspondence, any correspondence constituting privileged communication between any Seller and
its legal counsel)), Permits included in the Transferred Assets, Purchase Orders (both those
included in the Transferred Assets and, to the extent retained by any Seller, historic Purchase
Orders) and Assumed Contracts, but excluding any records of the Sellers described in Section
1.2 (the “Books and Records”);




          (i) (i) the telephone (landline and mobile) and facsimile numbers listed under Part 1 of
Schedule 1.1(i), (ii) subject to Section 5.16, all computer hardware and
peripherals, telephone systems and data systems used by any Seller at any Owned Real Property
exclusively in the conduct of the Business, including those items listed under Part 2 of
Schedule 1.1(i), except for any such items listed under Part 2 of Schedule
1.1(i) disposed of in the ordinary course of business prior to the date hereof, and (iii)
subject to Section 5.16, the computer hardware and peripherals, telephone systems and
data systems used by Sellers listed or described under Part 3 of Schedule 1.1(i);




          (j) all credits, deposits (including security or other deposits under any real property
lease included in the Assumed Contracts), prepaid expenses, claims for refunds (excluding Tax
refunds) and other similar financial assets, in each case, to the extent exclusively related to
the Business and included in current assets for purposes of the Net Working Capital;



3









 






          (k) any Account Receivable that is aged thirty (30) days or less from the date of invoice
(or equivalent payment due notice) as of the Effective Time, and all proceeds of the foregoing,
except for any such Account Receivable (and related proceeds) that is owing by an account debtor
that is bankrupt, in receivership or insolvent or has ceased to conduct business or is disputing
such Account Receivable;




          (l) all other properties, assets or rights of the Sellers or any of their Affiliates, if
any, listed on Schedule 1.1(l);




          (m) going concern value and goodwill with respect to the Transferred Assets and the
Business;




          (n) all insurance benefits, including rights and proceeds (i) to the extent relating to any
damage to or destruction or other loss of any of the Transferred Assets or other event affecting
the Business, in any such case occurring from and between the date hereof and the Closing Date,
whether received or receivable by or on behalf of any Seller on or after the date hereof, unless
expended on repairing or replacing any such Transferred Asset before the Closing Date, and (ii)
paid or payable under any Seller insurance policy with respect to any Warranty Liabilities
assumed by the Purchaser pursuant to Section 1.3(c);




          (o) claims of the Sellers (or any of them) against any Person relating to the Transferred
Assets, the Assumed Liabilities or the Business, solely to the extent listed or described on
Schedule 1.1(o) and not constituting a Pre-Closing Claim;




          (p) subject to Section 5.15, the licensed Computer Software listed or described on
Schedule 1.1(p), solely to the extent assignable at Purchaser’s sole expense; and




          (q) all Purchase Orders existing and outstanding on the Closing Date and any additional
Contracts to be transferred to Purchaser pursuant to Section 5.1(a).



     1.2 Excluded Assets. The Sellers are not selling, and the Purchaser is not
purchasing, any assets other than those specifically set forth in Section 1.1, and without
limiting the generality of the foregoing, the term “Transferred Assets” shall expressly exclude the
following assets of the Sellers (including all of the Sellers’ right, title and interest therein
and thereto), all of which shall be retained by the Sellers (collectively, the “Excluded
Assets”):




          (a) except as provided in Section 1.1(j), all of the Sellers’ cash, bank deposits
and cash equivalents;




          (b) all of the Sellers’ bank accounts;




          (c) all of the assets of the Sellers, if any, listed or described in Schedule
1.2(c);




          (d) all of the Contracts of any Seller, except the Assumed Contracts;




          (e) except as specifically listed or referred to in Schedule 1.1(c), all
Intellectual Property not used exclusively in or related exclusively to the Business, including,



4









 







but not limited to, all trademarks, service marks, logos, slogans, trade names, and
corporate names (and all translations, adaptations, derivations and combinations of the
foregoing) and internet domain names, incorporating “Fleetwood Motor Homes,” brand names of the
ParentCo’s recreational vehicle products, “Fleetwood Enterprises” or “Fleetwood Travel Trailers”
or products of the travel trailer division, or any derivations therefrom together with all
income, royalties, damages and payments due or payable (and all goodwill associated with any of
the foregoing), and any and all corresponding rights that, now or hereafter, may be secured
throughout the world and all copies and tangible embodiments of any such Intellectual Property
in the Sellers’ possession or control, including all Intellectual Property listed on or
described in Schedule 1.2(e) (the “Excluded IP”);




          (f) except as provided in Section 1.1(n) or Section 5.14, all insurance
policies relating to the Business and rights, claims or causes of action thereunder;




          (g) all rights of the Sellers under this Agreement and any other Closing document entered
into or executed by the Sellers (or any of them) in connection with the transactions
contemplated hereby;




          (h) all IT Systems and Computer Software, except for any such items that (i) are referred
to in Section 1.1(i), or (ii) constitute a Transferred Asset pursuant to Section
1.1(p);




          (i) any interest or right to any refund of Taxes relating to the Business, the Transferred
Assets or the Assumed Liabilities for, or applicable to, any taxable period (or portion thereof)
ending prior to the Closing Date;




          (j) all corporate books and records, Tax Returns, board minutes and organizational
documents of the Sellers, and any other records that any Seller is required to retain by Law
(except that copies of such retained records shall be provided to the Purchaser at Closing if
such records would otherwise constitute a Transferred Asset pursuant to Section 1.1(h)),
all information held by any Seller prohibited from being transferred or disclosed pursuant to
applicable Law, all privileged communications or information of any Seller (including any
attorney work product), all non-public information primarily related to or prepared in
connection with the Bankruptcy Case, and the Sellers’ books and records relating to any Excluded
Assets;




          (k) any Account Receivable that is aged more than thirty (30) days from the date of invoice
(or equivalent payment due notice) as of the Effective Time or that is otherwise owing by an
account debtor that is bankrupt, in receivership or insolvent or has ceased to conduct business
or is disputing such Account Receivable;




          (l) all notes receivable due to any Seller that are not Accounts Receivable and that arose
or arise out of the operation of the Business prior to the Closing, together with any unpaid
interest or fees accrued thereon or other amounts due with respect thereto;




          (m) all of the rights and claims of the Sellers to avoidance actions available to any
Seller under chapter 5 of the Bankruptcy Code, of whatever kind or nature, including avoidance
actions under sections 544, 545, 547, 548, 549 and 553 of the Bankruptcy Code,



5









 







and any related claims and actions arising under such sections by operation of law or
otherwise, including any and all proceeds of the foregoing; and




          (n) the equity securities or other ownership interest of any Seller or the Sellers’
Affiliates.



     1.3 Assumed Liabilities. At the Closing, the Purchaser shall assume and in due course
pay, discharge, perform or otherwise fully satisfy in accordance with their respective terms the
following Liabilities of the Sellers exclusively arising out of, relating to or otherwise in
respect of the Business or the Transferred Assets (the “Assumed Liabilities”):




          (a) all Liabilities of the Sellers under the Assumed Contracts, the other Contracts
referred to in Section 1.1(q) and the Transferred Permits (to the extent assigned
hereunder) to be performed on or after, or in respect of periods following, the Closing Date;
provided, however, that such Liabilities shall not include any Liability based on or
relating to any Seller’s breach or violation of any Assumed Contract, any Contract referred to
in Section 1.1(q) or any Transferred Permit arising, occurring or existing before the
Closing Date, other than the Cure Costs that the Purchaser agrees to pay pursuant to Section
1.3(d);




          (b) the amounts of pre-petition volume incentive program accruals of the Sellers set forth
on Schedule 1.3(b), which amounts shall be paid by Purchaser to the third parties
described in such schedule within thirty (30) days after the Closing Date, subject to the
Sellers’s provision to the Purchaser of accurate and complete contact information for such third
parties prior to or promptly following the Closing Date; provided, however, that
the Purchaser’s assumed Liability under this Section 1.3(b) for purposes of the Net
Working Capital shall equal $250,000.00;




          (c) all Warranty Liabilities of the Sellers with respect to (and only with respect to)
products produced at any of the Seller plants listed on Schedule 1.3(c) (the “Seller
Plants”); and




          (d) all pre- or post-Petition Date costs and expenses required by the Sale Approval Order
to be paid to cure all monetary defaults under all applicable Assumed Contracts (the “Cure
Costs”).



     1.4 Excluded Liabilities. Notwithstanding anything in this Agreement to the contrary,
the parties expressly acknowledge and agree that the Purchaser shall not assume or be liable or
responsible for any Liability of the Sellers related to the Business or the Transferred Assets,
other than the Assumed Liabilities, except as required by applicable Law and not discharged in the
Bankruptcy Case (such Liabilities being collectively referred to herein as the “Excluded
Liabilities”). Without limiting the generality of the foregoing, the Excluded Liabilities
shall include (and shall not include Purchaser’s obligation to pay Cure Costs pursuant to
Section 1.3(d)):




          (a) any Liability under any Assumed Contract or any Contract referred to in Section
1.1(q) that arises from or relates to (i) any breach or violation of any Seller that
occurred before the Closing Date, or (ii) any outstanding obligation of any Seller that was



6









 







required to have been satisfied or performed by such Seller before the Closing Date, except
in either such case for the Purchaser’s obligation to pay Cure Costs;




          (b) any Liability under any Contract that is not an Assumed Contract or Contract referred
to in Section 1.1(q);




          (c) any account payable of any Sellers or any predecessor or Affiliate of any Seller;




          (d) any Liability of any Seller under any note, loan, borrowing arrangement, debt
financing, credit facility, capital lease (except as included in the Assumed Contracts),
financial or performance guaranty, surety, indemnity or bond, or any security interest related
to any of the foregoing;




          (e) except as expressly contemplated by this Agreement, any Liability for Taxes payable by
or assessed against any Seller or Affiliate thereof under applicable Law;




          (f) any Environmental, Health and Safety Liability arising out of or relating to the
Sellers’ operation of the Business prior to the Closing or the leasing, ownership or operation
of any asset (including any real property) by any Seller or Affiliate thereof, whether or not
included in the Transferred Assets;




          (g) any Liability arising out of or relating to any employee grievance or claim against any
Seller (including any director, officer or other employee of such Seller), whether or not such
employee involved with such grievance is a Transferred Employee;




          (h) any Liability of any Seller with respect to any of its employees or directors or any
former employees or directors, including (i) any Liability arising under any Benefit Plan or any
other employee program or arrangement at any time maintained, sponsored or contributed to by any
of the Sellers or any predecessor or Affiliate thereof or any ERISA Affiliate, or with respect
to which any of the Sellers or any predecessor or Affiliate thereof or any ERISA Affiliate has
any Liability, and (ii) any Liability under any employment, severance, retention, termination or
other similar agreement with any present or past employee or director of any Seller;




          (i) except for the Liabilities specifically referred to in Sections 1.3(b) and
(c), any Liability relating to or arising from any Seller’s manufacture or sale of any
product or performance of any service, including any Liability for death or injury to any Person
or damage to property;




          (j) any Liability of any Seller to defend, indemnify, hold harmless or reimburse any
Person, including any present or former employee, director, customer, vendor, contractor or
agent of any Seller, except to the extent such Liability is expressly included in an Assumed
Contract, and then only to the extent that such Liability arises in connection with acts,
omissions, facts, events or circumstances first existing, accruing or arising on or after the
Closing Date and not based on any breach or violation by any Seller prior to the Closing Date;



7









 






          (k) any Liability of any Seller arising out of or relating to (i) any past Claim or any
Claim underway or pending as of the Closing Date by or against any Seller, or (ii) any Claim
commenced on or after the Closing Date that relates to any act, omission, occurrence or event
happening, or any fact or circumstance existing, before the Closing Date, in each case to the
extent that the Liability for such act, omission, occurrence, event, fact or circumstance is not
expressly included in the Assumed Liabilities; and




          (l) any Liability of any Seller arising out of or resulting from non-compliance of such
Seller or any of its Affiliates with any applicable Law.



     1.5 Deposit. Concurrently with the parties’ execution and delivery of this Agreement,
the Purchaser shall pay to ParentCo by wire transfer of immediately available funds to an account
designated in a written notice from ParentCo to the Purchaser the sum of $2,100,000.00 (the
“Deposit”), which amount shall be credited towards payment of the Closing Payment at the
Closing. If the Closing does not occur and this Agreement is terminated, the Deposit shall be
handled in the manner provided in Section 8.2. The Deposit shall be held by ParentCo in a
segregated Debtor In Possession Account (the “Deposit Escrow Account”), until it is to be
paid out in connection with the Closing or the termination of this Agreement, as applicable.



     1.6 Purchase Price. Subject to the terms and conditions hereof, in full consideration
for the sale and purchase of the Transferred Assets, at the Closing, the Purchaser shall assume the
Assumed Liabilities and shall pay to ParentCo, on behalf of the Sellers, $18,000,000.00 (the
“Base Price”) plus the amount of positive Net Working Capital or minus the amount of
negative Net Working Capital (as the case may be) as determined pursuant to Section 1.11
(collectively, the “Purchase Price”). At the Closing, the Purchaser shall pay the Base
Price, as adjusted upwards or downwards (as applicable) by the Initial Net Working Capital
Adjustment referred to in Section 1.11(a) and by the Closing Apportionment payable to or by
the Sellers (as determined in accordance with Section 2.10) (the “Closing
Payment”), as follows:




          (a) the sum of $1,000,000.00 shall be paid by wire transfer of immediately available funds
to a segregated Debtor In Possession Account maintained by ParentCo (the “Adjustment Escrow
Account”) to secure the Sellers’ obligation, if any, under Section 1.11(f) to pay to
the Purchaser a Final Net Working Capital Adjustment amount, which funds shall remain in the
Adjustment Escrow Account until the earlier of (i) the determination of the Final Net Working
Capital Adjustment under Section 1.11 and the associated payment by ParentCo or the
Purchaser (as applicable) of the Final Net Working Capital Adjustment amount as provided under
Section 1.11(f), or (ii) one hundred five (105) days after the Closing Date (at which
date such funds shall be paid to ParentCo, subject to Section 1.11(c); provided
that any such payment shall not relieve ParentCo, on behalf of the Sellers, of its obligation to
pay to the Purchaser any subsequently determined Final Net Working Capital Adjustment amount
found to be due to the Purchaser in accordance with Section 1.11(f)); and




          (b) the balance, net of the Deposit and net of any Closing Apportionment payable to or by
the Sellers (as determined in accordance with Section 2.10), shall be paid by wire
transfer of immediately available funds to a bank account (or accounts) designated in a written
notice from ParentCo to the Purchaser at least two (2) Business Days prior to the Closing Date.



8









 




In addition, at the Closing, ParentCo shall be entitled to release the Deposit from the Deposit
Escrow Account and retain the Deposit for its own account as partial payment of the Closing
Payment.




     1.7 Closing. Subject to the terms and conditions of this Agreement and the Sale
Approval Order, the sale and purchase of the Transferred Assets and the assignment and assumption
of the Assumed Liabilities contemplated by this Agreement shall take place at a closing (the
“Closing”) to be held at the offices of Gibson, Dunn & Crutcher LLP, 3161 Michelson Drive,
Irvine, California at 10:00 A.M., California time, on the first (1st) Business Day following the
satisfaction or waiver of all conditions to the obligations of the parties set forth in
Sections 6 and 7 (other than those conditions which by their nature can only be
satisfied at the Closing), or at such other place or at such other time or on such other date as
ParentCo and the Purchaser may mutually agree upon in writing (the day on which the Closing takes
place being the “Closing Date”).



     1.8 Closing Deliveries by the Sellers. At the Closing, unless otherwise waived in
writing by the Purchaser, the Sellers shall deliver or cause to be delivered to the Purchaser:




          (a) a duly executed Bill of Sale substantially in the form of Exhibit A hereto;




          (b) a duly executed counterpart to the Assignment and Assumption Agreement substantially in
the form of Exhibit B hereto;




          (c) duly executed Assignment of Intangible Property substantially in the form of
Exhibit C hereto;




          (d) a duly executed counterpart to the Transition Services Agreement substantially in the
form of Exhibit D hereto;




          (e) a duly executed Sellers’ Certificate pursuant to Section 6.1;




          (f) a duly executed counterpart of the Co-Existence Assignment and Assumption Agreement
substantially in the form of Exhibit E hereto;




          (g) a receipt for the payment of the Purchase Price; and




          (h) such other duly executed bills of sale, assignments and other instruments of
assignment, transfer or conveyance, in form and substance reasonably satisfactory to the
Purchaser, as the Purchaser may reasonably request or as may be otherwise necessary or desirable
to evidence and effect the sale, assignment, transfer, conveyance and delivery of the
Transferred Assets to the Purchaser and to put the Purchaser in actual possession or control of
the Transferred Assets.



     1.9 Closing Deliveries by the Purchaser. At the Closing, unless otherwise waived in
writing by ParentCo, the Purchaser shall deliver or cause to be delivered to ParentCo or the other
applicable Persons specified herein:



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          (a) an amount equal to the Closing Payment, net of the Deposit and net of any Closing
Apportionment payable to or by the Sellers (as determined in accordance with Section
2.10), by wire transfer of immediately available funds to the accounts referred to in
Section 1.6;




          (b) a duly executed counterpart to the Assignment and Assumption Agreement substantially in
the form of Exhibit B hereto;




          (c) a duly executed counterpart to the Transition Services Agreement substantially in the
form of Exhibit D hereto;




          (d) a duly executed Purchaser’s Certificate pursuant to Section 7.1;




          (e) a duly executed counterpart of the Co-Existence Assignment and Assumption Agreement
substantially in the form of Exhibit E hereto; and




          (f) such other duly executed documents and instruments, in form and substance reasonably
satisfactory to ParentCo, as ParentCo may reasonably request or as may be otherwise necessary or
desirable to evidence and effect the assumption by the Purchaser of the Assumed Liabilities.



     1.10 Assignment and Assumption of the Assumed Contracts. Without limiting
Sections 1.1(a) and 1.3(a), (i) at the Closing, but effective as of the Effective
Time, the applicable Seller(s) shall assume pursuant to section 365(a) of the Bankruptcy Code and
concurrently assign to the Purchaser pursuant to sections 363(b), (f) and (m) and section 365(f) of
the Bankruptcy Code each of the Assumed Contracts that may be assumed pursuant to the Sale Approval
Order, and (ii) to the extent contemplated in Section 1.3(a) (and subject to Section
1.4(a)), the Purchaser shall assume and thereafter in due course pay, discharge, perform and
fully satisfy all of the obligations under such Assumed Contracts pursuant to section 365 of the
Bankruptcy Code from and after the Closing, and shall pay the Cure Costs so that all applicable
Assumed Contracts may be assigned to the Purchaser pursuant to section 365 of the Bankruptcy Code.



     1.11 Net Working Capital Adjustment. The adjustment to the Base Price with respect to
Net Working Capital shall be determined in accordance with the following provisions:




          (a) At least five (5) Business Days prior to the Closing Date, ParentCo shall deliver to
the Purchaser a report setting forth (i) a good faith estimate of the Net Working Capital, based
on current information then reasonably available to the Sellers and broken down on a line-item
basis, together with reasonable documentation in support of such estimate (including at a
minimum a complete aging report of all Accounts Receivable and a report of all Inventory, with
such Accounts Receivable and Inventory reports being the most recently available weekly accounts
receivable report and monthly inventory report before such date of delivery by ParentCo) and,
based thereon, the upwards or downwards adjustment to be made to the Base Price for purposes of
determining the Closing Payment (the “Initial Net Working Capital Adjustment”). The
Initial Net Working Capital Adjustment shall be subject to the review and approval of the
Purchaser upon receipt, acting reasonably and in good faith (which approval shall be for Closing
purposes only and shall not constitute



10









 







the Purchaser’s acceptance of the Initial Net Working Capital Adjustment as the definitive
determination of the Net Working Capital), and the Purchaser shall have two (2) Business Days to
submit any objection to the Initial Net Working Capital Adjustment to ParentCo; provided that
such objection must be submitted in writing setting forth in reasonable detail the Purchaser’s
objection; and provided further that such objection may only be based on (i) the failure of
ParentCo to provide adequate back-up information or documentation for the Initial Net Working
Capital Adjustment, (ii) a deviation from available financial information on which the Initial
Net Working Capital Adjustment is to be based, (iii) the failure of the Initial Net Working
Capital Adjustment to be calculated in accordance with the requirements of this Agreement, (iv)
the failure of the Initial Net Working Capital Adjustment to be calculated in accordance with
GAAP (except as such failure is expressly permitted or required pursuant to this Agreement), or
(v) calculation error.




          (b) Within forty-five (45) days after the Closing Date, the Purchaser shall deliver to
ParentCo a report showing (i) the Purchaser’s determination of the actual Net Working Capital
based on the Purchaser’s review of the Transferred Assets and Assumed Liabilities existing as of
the Effective Time, which report shall be in reasonable detail and broken down on a line-item
basis, together with reasonable documentation in support of such determination (including at a
minimum a complete aging report of all Accounts Receivable and a report of all Inventory, with
such Accounts Receivable and Inventory reports having been prepared as of the Effective Time)
and, based thereon, the upwards or downwards adjustment to be made to the Base Price for
purposes of determining the Purchase Price (the “Post-Closing Net Working Capital
Adjustment”). ParentCo shall have thirty (30) days (or more, if mutually agreed upon by
ParentCo and Purchaser) after its receipt of the Post-Closing Net Working Capital Adjustment to
give written notice (an “Objection Notice “) to the Purchaser of any objection to the
Post-Closing Net Working Capital Adjustment. Any Objection Notice must specify in reasonable
detail the objections of ParentCo and may only be based on (i) the failure of the Purchaser to
provide adequate back-up information or documentation for the Post-Closing Net Working Capital
Adjustment, (ii) a deviation from available financial information on which the Post-Closing Net
Working Capital Adjustment is to be based, (iii) the failure of the Post-Closing Net Working
Capital Adjustment to be calculated in accordance with the requirements of this Agreement, (iv)
the failure of the Post-Closing Net Working Capital Adjustment to be calculated in accordance
with GAAP (except as such failure is expressly permitted or required pursuant to this
Agreement), or (v) calculation error. During such thirty (30)-day (or more, if mutually agreed
upon by ParentCo and Purchaser) period, the Purchaser shall provide ParentCo and its
Representatives with access to the relevant books, records and personnel of the Purchaser
reasonably requested by ParentCo to assist ParentCo in its review of the Post-Closing Net
Working Capital Adjustment.




          (c) If, within the thirty (30)-day (or more, if mutually agreed upon by ParentCo and
Purchaser) period referred to in Section 1.11(b), an Objection Notice that meets the
requirements of Section 1.11(b) is delivered by ParentCo to the Purchaser,
Representatives of ParentCo and the Purchaser shall confer in good faith for up to ten (10) days
(or such longer period as they may agree) after the date of the Purchaser’s receipt of the
Objection Notice to resolve the objections raised by ParentCo. If such parties are unable to
resolve all such objections within such period, then at any time thereafter, ParentCo or the



11









 







Purchaser may require that the objection raised by ParentCo be immediately submitted to the
Bankruptcy Court for resolution, whereupon the parties shall cooperate reasonably and in good
faith to establish fast-track procedures for presenting their respective positions to the
Bankruptcy Court. In any such submission to the Bankruptcy Court, the Purchaser may request
that the Bankruptcy Court toll the remainder of the one hundred five (105)-day time period for
holding of funds in the Adjustment Escrow Account pending the Bankruptcy Court’s determination
of the matter in question. Any determination of the Bankruptcy Court with respect to the
matters that are the subject of ParentCo’s objection shall be final, binding and conclusive on
the parties hereto.




          (d) Upon the first (1st) to occur of, (i) the written agreement between ParentCo
and the Purchaser as to the Post-Closing Net Working Capital Adjustment, including any amendment
to be made thereto, (ii) the passage of the thirty (30)-day (or more, if mutually agreed upon by
ParentCo and Purchaser) period after ParentCo has received the Post-Closing Net Working Capital
Adjustment without ParentCo’s delivery of an Objection Notice (in which case ParentCo shall be
deemed to have accepted and agreed to the Post-Closing Net Working Capital Adjustment), or (iii)
the determination of the Bankruptcy Court of all matters that are the subject of an Objection
Notice, the Net Working Capital, as finally determined pursuant to one or more of the foregoing
(the “Final Net Working Capital Adjustment”) shall be final, binding and conclusive on
the parties hereto.




          (e) For purposes of calculating the Initial Net Working Capital Adjustment, the
Post-Closing Net Working Capital Adjustment and the Final Net Working Capital Adjustment, the
Warranty Liabilities assumed by the Purchaser pursuant to Section 1.3(d) shall be deemed to
constitute a current liability in an aggregate amount equal to the lesser of (A) such amount
determined (in each case, based on and using the Sellers’ historical warranty information) (i)
in accordance with GAAP and (ii) the accounting methodologies used to calculate warranty
reserves by Cavco Industries, Inc., a Delaware corporation, and (B) $9,500,000.00, and the
parties shall prepare and settle such adjustments using such lesser amount.




          (f) If the amount of the Final Net Working Capital Adjustment exceeds the amount of the
Initial Net Working Capital Adjustment, then, within five (5) Business Days after the
determination of the Final Net Working Capital Adjustment Amount, the Purchaser shall pay to
ParentCo, on behalf of the Sellers, the amount of such excess by wire transfer of immediately
available funds to the bank account to which the Purchaser wire transferred the portion of the
Closing Payment referred to in Section 1.6(b). If the amount of the Final Net Working
Capital Adjustment Amount is less than the amount of the Initial Net Working Capital Adjustment,
then, within five (5) Business Days after the determination of the Final Net Working Capital
Adjustment, ParentCo, on behalf of the Sellers, shall refund to the Purchaser the amount of such
shortfall by wire transfer of immediately available funds to a bank account specified by the
Purchaser in writing to ParentCo. Such payment shall first be made by ParentCo from and up to
the Adjustment Escrow Account, with any additional amount due not capable of being satisfied by
funds in the Adjustment Escrow Account being paid directly by the Sellers.



12









 






          (g) If, after final payment of amounts due under Section 1.11(f), any funds remain
in the Adjustment Escrow Account, ParentCo shall be entitled to release such funds from the
Adjustment Escrow Account and retain them for its own account.



     1.12 Valuation and Treatment of Uncollectable Accounts Receivable.




          (a) For purposes of calculating the Net Working Capital and any adjustment to the Base
Price as contemplated in Section 1.11, the Accounts Receivable included in the
Transferred Assets shall be valued by the parties in the following manner:




          (i) subject to Section 1.12(a)(ii), one hundred percent (100%) of the amount of
any Account Receivable shall be counted if such Account Receivable is aged thirty (30) or
less days from the date of issuance as of the Effective Time;




          (ii) no value shall be given to any Account Receivable that is owing by an account
debtor that is bankrupt, in receivership or insolvent or has ceased to conduct business or
is disputing such Account Receivable.




          (b) If, within thirty (30) days after the Closing Date, the Purchaser has been unable to
collect any Account Receivable (or portion thereof) referred to in Section 1.12(a)(i),
the Purchaser may, prior to or concurrently with its delivery to ParentCo of the Post-Closing
Net Working Capital Adjustment, assign such uncollected Account Receivable (or portion thereof)
back to the applicable Seller. The stated amount of any such uncollectible Account Receivable,
to the extent included in the calculation of the Initial Net Working Capital Adjustment, shall
not be counted in the current assets included in the calculation of the Post-Closing Net Working
Capital Adjustment and the Final Net Working Capital Adjustment.



     1.13 Valuation of Inventory. For purposes of calculating the Net Working Capital and
any adjustment to the Base Price as contemplated in Section 1.11, the Inventory included in
the Transferred Assets shall be valued by the parties at ninety percent (90%) of the GAAP value
thereof.



     1.14 Allocation of Proceeds. The Purchaser shall within one hundred twenty (120) days
after the Closing Date prepare and deliver to ParentCo a schedule reasonably allocating the
Purchase Price among the Transferred Assets in accordance with Section 1060 of the Code (such
schedule, the “Allocation”). The Purchaser shall permit ParentCo to review and provide
comments on the Allocation and shall consult with ParentCo with respect to any such comments.
However, the Allocation shall be finally determined in the Purchaser’s sole discretion. The
Purchaser and the Sellers shall report and file all Tax Returns (including amended Tax Returns and
claims for refund) in all respects and for all purposes in a manner consistent with the Allocation.
Neither the Purchaser nor the Sellers shall take any position contrary thereto or inconsistent
therewith (including in any audits or examinations by any Governmental Body or any other
proceeding) unless otherwise required by applicable law; provided, however, that (i) each party to
this Agreement shall notify the other parties in the event that any Governmental Body takes or
proposes to take a position for Tax purposes that is inconsistent with such Allocation and (ii)
ParentCo and its Affiliates shall not be bound by the Allocation for purposes



13









 







of allocating the Purchase Price in connection with proceeds of the sale of the Transferred
Assets and any claims related thereto under the Bankruptcy Case. The Purchaser and the Sellers
shall cooperate in the filing of any forms (including Form 8594 under Section 1060 of the Code)
with respect to the Allocation.



     1.15 Debtor In Possession Accounts. The rights and claims of any Debtor In Possession
lender to the Sellers in connection with the Bankruptcy Case with respect to the Debtor In
Possession Accounts referred to in Sections 1.5 and 1.6 shall be subordinated in
all respects to the rights of the Purchaser in such Debtor In Possession Accounts (and their
contents) under this Agreement.



2.     Conveyance of Owned Real Property. In addition to the Closing procedures and documentation
referred to in Sections 1.7 through 1.10, the following procedures and requirements
set forth in this Section 2 shall apply to the Sellers’ conveyance of the Owned Real
Properties to the Purchaser on the Closing Date.



     2.1 Real Property Escrow. Immediately after the Bankruptcy Court’s entry of the Sale
Approval Order as a Final Order, or at such earlier time as ParentCo and the Purchaser may agree,
the Sellers and the Purchaser shall establish an escrow (the “Real Property Escrow”) for
the sale and purchase of the Owned Real Properties pursuant to this Agreement with the Title
Company. The provisions of this Section 2 shall constitute escrow instructions to the
Title Company, and a copy of this Agreement shall be deposited with the Title Company for such
purpose.



     2.2 Real Property Escrow Opening and Closing Dates. The Real Property Escrow shall be
deemed open on the date on which a fully executed original copy of this Agreement shall have been
delivered to the Title Company. The Closing of the sale and purchase of the Owned Real Properties
and the Real Property Escrow shall occur on the Closing Date and following the delivery to the
Title Company of a copy of the Sale Approval Order as a Final Order. At the Closing, the
applicable Sellers shall transfer fee title to, and possession and control of, the Owned Real
Properties to Purchaser free and clear of all Encumbrances other than Permitted Encumbrances.



     2.3 Seller’s Real Property Transfer Documents. Subject to the Bankruptcy Court’s
entry of the Sale Approval Order as a Final Order, on or before the Closing Date, the Sellers shall
deposit into the Real Property Escrow for delivery to the Purchaser at the Closing the following
documents and instruments, each of which shall have been duly executed and, where appropriate,
acknowledged:




          (a) an individual closing statement for each Owned Real Property, prepared by the Title
Company and approved by the parties hereto (collectively, the “Closing Statements”);




          (b) a bargain and sale deed for Owned Real Property in Oregon, and special warranty deeds
(or state law equivalent) for each other Owned Real Property (collectively, the “Deeds”)
in form and substance satisfactory to the Purchaser (acting
reasonably) for conveyance by the applicable Seller to the Purchaser of such Owned Real
Property;



14









 






          (c) to the extent reasonably necessary or required by the Title Company to effectuate the
conveyance of the Owned Real Property to the Purchaser, a Tax certificate with respect to each
Owned Real Property obtained by the Title Company;




          (d) to the extent reasonably necessary or required by the Title Company to effectuate the
conveyance of any Owned Real Property to the Purchaser, change of ownership certificates for
such Owned Real Property, as required by applicable Law;




          (e) a non-foreign certification or affidavit from each applicable Seller, if and as
required by applicable Law, in form and substance satisfactory to the Purchaser (acting
reasonably); and




          (f) such other documents and instruments as may be necessary or appropriate for the
applicable Sellers to transfer and convey the Owned Real Properties to the Purchaser in
accordance with the terms of this Agreement; provided, however, that the Purchaser acknowledges
and agrees that the Sellers shall have no obligation to provide the Purchaser or the Title
Company any affidavit, certificate or similar instrument for purposes of removing the general
survey exception from any of the Title Policies.



     2.4 Purchaser’s Real Property Transfer Documents. Subject to the Bankruptcy Court’s
entry of the Sale Approval Order as a Final Order, on or before the Closing Date, the Purchaser
shall deposit into the Real Property Escrow for delivery to the applicable Sellers at Closing the
following documents and instruments, each of which shall have been duly executed and, where
appropriate, acknowledged:




          (a) the Closing Statements;




          (b) an affidavit of value for each Owned Real Property, as required by applicable Law; and




          (c) such other documents and instruments as may be necessary or appropriate for the
applicable Sellers to transfer and convey the Owned Real Properties to the Purchaser in
accordance with the terms of this Agreement.



     2.5 Recording of Title. At the Closing, the Title Company shall record or file, as
applicable, the Special Warranty Deeds in the office of the County Clerk or other applicable
Governmental Body for each Owned Real Property.



     2.6 Title Commitments and Surveys. At least ten (10) days prior to the scheduled
Closing Date, ParentCo shall, at the Purchaser’s sole cost and expense, for each individual Owned
Real Property, cause to be delivered to the Purchaser a commitment for a policy of title insurance
(each a “Title Commitment” and collectively, the “Title Commitments”), together
with copies of all documents identified in such Title Commitment, issued by the Title Company. The
Purchaser shall also have the option of ordering a survey (each a “Survey” and
collectively, the “Surveys”) to be performed at each Owned Real Property. If the Title
Commitments or the




15












 




Surveys show any Encumbrances on any Owned Real Property, other than Permitted Encumbrances,
the Sellers shall be obligated to cure and or remove of record such Encumbrances at or prior to the
Closing so that the Purchaser shall be able to obtain a policy of title insurance from the Title
Company at the Closing insuring title to such Owned Real Property in the condition required
hereunder. In the event that the Title Commitment or Survey for any Owned Real Property reveals
any Encumbrance that is not a Permitted Encumbrance, and it becomes apparent that the Sellers
cannot or will not cure or remove of record such Encumbrance at or prior to Closing, the Purchaser
shall have the option to elect to consummate the transactions contemplated hereby with a downward
adjustment to the Purchase Price in an amount necessary to cure or remove such Encumbrance at the
Closing, which amount shall not in any event exceed, in the aggregate, $50,000 for such
Encumbrances.




          2.7 Title Policies. At the Closing, the Sellers shall deliver to the Purchaser an
owner’s ALTA policy of extended title insurance issued by the Title Company (or the unconditional
commitment of the Title Company to issue such policy) for each Owned Real Property (i.e., one such
policy for each Owned Real Property) effective as of the Closing Date (collectively, the “Title
Policies”), with each Title Policy being in the amount specified in Schedule 2.7. The
Title Policies shall insure the Purchaser that fee simple interest in and to the Owned Real
Properties is vested in the Purchaser, subject only to the printed terms and provisions of such
Title Policies (as such terms and provisions may be modified by endorsements purchased by the
Purchaser), the Permitted Encumbrances expressly set forth on the final commitments for issuance of
the Title Policies and any other matters approved in writing by the Purchaser. The Sellers shall
pay the portion of the premium for each Title Policy that would be equal to a standard owner’s
policy of title insurance on the Owned Real Property covered by such Title Policy in the same face
amount, and the Purchaser shall pay any additional premium for the extended coverage and for any
endorsement on such Title Policy requested by the Purchaser. The Purchaser shall be solely
responsible for satisfying, at its cost, any requirement of the Title Company for any Title Policy
endorsement requested by the Purchaser.




          2.8 Real Property Escrow Cancellation Charges. If the Closing does not occur because
of the termination of this Agreement by the Sellers (or any of them) pursuant to
Section 8.1(c) or (e), the Purchaser shall be liable for all customary Real
Property Escrow cancellation charges. If the Closing does not occur because of the termination of
this Agreement by the Purchaser pursuant to Section 8.1(c) or (e), ParentCo shall
be liable for all customary Real Property Escrow cancellation charges. If the Close of Escrow does
not occur for any other reason, ParentCo and the Purchaser shall each be liable for one-half (1/2)
of all customary Real Property Escrow cancellation charges.




          2.9 Closing Costs and Recording Fees. Upon the Closing, each of ParentCo and the
Purchaser agrees to pay one-half (1/2) of all Real Property Escrow charges and recording fees,
other than with respect to the Title Policies, which shall be paid for as described in Section
2.7. On or before the Closing Date, each of ParentCo and the Purchaser shall deposit with the
Title Company cash in an amount sufficient to pay each such party’s share of Title Policy premiums
and other Real Property Escrow-related costs; provided, however that ParentCo may instruct
Purchaser to pay ParentCo’s share of such costs and deduct the same amount from the Closing
Payment.




16









 








          2.10 Apportionments. The following apportionments shall be made between the Sellers
and the Purchaser as of the Effective Time (the “Closing Apportionments”) based on the
latest available information, and the amounts derived therefrom shall be (as applicable) added to
or deducted from the Closing Payment in accordance with Section 1.6(b):





          (a) Taxes and Assessments. Real estate Taxes, ad valorem Taxes, personal property
Taxes, transaction privilege Taxes, and other similar Taxes related to the ownership and/or
operation of each Owned Real Property shall be prorated between the applicable Seller and the
Purchaser and set forth on the Closing Statement applicable to such Owned Real Property. The
Sellers shall be responsible for all Taxes attributable to the Owned Real Properties through and
including the day immediately preceding the Closing Date and the Purchaser shall be responsible
for such Taxes attributable to the Owned Real Properties from and after the Closing Date. If
any current assessments, statements or other necessary information on any such amounts are not
available before the Closing Date, the Sellers and the Purchaser shall agree upon reasonable
estimates of such amounts based on prior amounts assessed against or paid by the applicable
Sellers.




          (b) Utilities. The Purchaser and the Sellers agree to use their respective
reasonable efforts to arrange, before the Closing Date, for separate billing to the applicable
Sellers of all charges attributable to the period up to and including the date immediately
preceding the Closing Date for electricity, water, gas and any other utilities servicing the
Owned Real Properties, and for separate billing to the Purchaser for all such charges
attributable to the period running from and after the Closing Date. If any such separate
billing cannot be arranged by the Closing Date, such charges shall be equitably prorated on the
basis of the most recent ascertainable invoices or statements for such services. With respect
to any utilities in place and servicing the Owned Real Properties as of the Closing Date, the
Sellers shall endeavor to have the respective utility providers read the meters for the
utilities such that the prorations can be made based on such final meter readings. If such
meter readings cannot be obtained in such manner, charges for utilities shall be prorated by
good faith estimation as of the Closing Date based on the per diem rate obtained by using the
last available billing period and associated bills for such utilities. Once all applicable
utility billings have been delivered after the Closing Date and an accurate proration of utility
charges can be determined therefrom, the net amount payable to the Sellers or the Purchaser (as
applicable) after combining such prorations shall be paid concurrently with the payment due
under Section 1.11(f) after determining the Final Net Working Capital Adjustment.




          (c) Form 1099-B. If applicable to the sale and purchase of the Owned Real
Properties as contemplated herein, the Title Company is hereby authorized and instructed to file
as the “Reporting Person” Internal Revenue Service Form 1099-B, Proceeds from Real Estate,
Broker, and Barter Exchange Transactions, as required by § 6045(d) of the Internal Revenue Code
of 1986, as amended.


3. Representations and Warranties of the Seller. Except as set forth in the Disclosure Schedules
to this Agreement (the “Disclosure Schedules”) delivered by ParentCo, which shall specify
the Section to which each exception or disclosure relates and shall be deemed to qualify the
representations and warranties contained in such Section as well as all other representations and
warranties in this Section 3 to which the applicability of such exception or disclosure is




17









 




reasonably ascertainable on its face (regardless of whether such Disclosure Schedule is
referenced in the applicable representation and warranty). The Sellers jointly and severally
represent and warrant to the Purchaser that each of the statements contained in this Section
3 are true and correct as of the date of this Agreement. The specification of any dollar
amount in the representation or warranties contained in this Agreement or the inclusion of any
specific item in any Section of the Disclosure Schedules is not intended to imply that such
amounts, or higher or lower amounts or the items so included or other items, are or are not
material, or do or do not violate or breach, any applicable Law or Contract, and no party shall use
the fact of the setting of any such amounts or the inclusion of any such item in any dispute or
controversy as to whether any obligation, item or matter not described herein or included in the
Disclosure Schedules is or is not material, or does or does not violate or breach, any applicable
Law or Contract, for purposes of this Agreement. In no event shall the inclusion of any item or
other matter in the Disclosure Schedules be deemed or interpreted to broaden or otherwise amplify
the Sellers’ representations and warranties or covenants or agreements contained in this Agreement.




          3.1 Due Incorporation and Authority. Each Seller is a corporation or a limited
partnership duly organized, validly existing and in good standing under the laws of the State of
its organization and has all necessary corporate or limited partnership power and authority to own,
lease and operate the Transferred Assets such Seller owns and to carry on the Business as it is now
being conducted by such Seller. Subject to the entry of the Sale Approval Order, (a) each Seller
has all requisite corporate or limited partnership power and authority to enter into this
Agreement, carry out its obligations hereunder and consummate the transactions contemplated hereby
and (b) the execution and delivery by such Seller of this Agreement, the performance by such Seller
of its respective obligations hereunder and the consummation by such Seller of the transactions
contemplated hereby have been duly authorized by all requisite corporate or limited partnership
action on the part of such Seller. This Agreement has been duly executed and delivered by each
Seller, and, upon entry of the Sale Approval Order (assuming the due authorization, execution and
delivery hereof by the Purchaser and satisfaction of all conditions to the Closing), this Agreement
will constitute the legal, valid and binding obligation of each Seller, enforceable against each
Seller in accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors rights generally or by
general principles of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).




          3.2 No Conflicts. Subject to the entry of the Sale Approval Order, the execution and
delivery by the Sellers of this Agreement, the consummation of the transactions contemplated
hereby, and the performance by the Sellers of this Agreement in accordance with its terms will not:





          (a) violate the certificate of incorporation or by-laws (or comparable instruments) of any
Seller or contravene any resolution adopted by the directors or shareholders of any Seller;




          (b) violate any Law to which any of the Sellers, the Business or any of the Transferred
Assets is bound or subject;



18









 






          (c) result in the imposition or creation of any Encumbrance (other than a Permitted
Encumbrance) on any of the Transferred Assets; or




          (d) violate, result in any breach of, constitute a default (or an event that, with notice
or lapse of time or both, would become a default) under, or require any consent of any Person
(including Governmental Bodies) pursuant to, any Assumed Contract, Contract referred to in
Section 1.1(q), Purchase Order included in the Transferred Assets or Transferred Permit,
except for consents, approvals or authorizations of, or declarations or filings with, the
Bankruptcy Court;


provided, however, that each of the cases set forth in clauses (b), (c) and (d)
above is subject to exceptions that (i) would not reasonably be expected, either individually or in
the aggregate, to prevent or materially delay the consummation by the Sellers of the transactions
contemplated by this Agreement, (ii) arise as a result of any facts or circumstances relating to
the Purchaser or any of its Affiliates or (iii) will be (or have been) remedied or otherwise
accounted for pursuant to the Sale Approval Order.




          3.3 Organizational Documents. ParentCo has previously made available to the Purchaser
true, accurate and complete copies of the certificate of incorporation and bylaws, or comparable
instruments, of the Sellers as in effect on the date hereof.




          3.4 Compliance with Laws. To the Knowledge of the Sellers, the Business is and has
been (within the past 2 years) conducted in all material respects in compliance with all applicable
Laws. To the Knowledge of Sellers, except for the Bankruptcy case and other matters contained in
the docket related thereto, within the past two (2) years, no Claim has been made in writing by any
Governmental Body to any Seller or Affiliate thereof to the effect that the Business or any
Transferred Asset fails to comply in any material respect with any Law.




          3.5 Permits. Schedule 3.5 sets forth a list of all of the Sellers’ material
licenses, franchises, permits, variances, exemptions, orders, approvals and authorizations of
Governmental Bodies, including any applications therefor, that are used for the conduct of the
Business as currently conducted (collectively, the “Permits”). Each Seller is in
compliance, in all material respects, with the terms of all material Transferred Permits, and such
material Transferred Permits are valid and in full force and effect.




          3.6 Contracts.





          (a) Schedule 3.6(a) contains an accurate and complete list, and the Sellers have
delivered to the Purchaser accurate and complete copies, of the following outstanding Contracts
(including all amendments and supplements thereto) to which any Seller is a party or by which
any Seller is bound:




          (i) each Contract for the sale of goods or performance of services by any Seller having
(or expected to have) an actual or anticipated value to such Seller of at least $5,000.00 in
any twelve (12)-month period;




          (ii) each Contract for the purchase of goods or services by any Seller or Affiliate
thereof from any vendor or supplier of the Business having (or expected to
have) an actual or anticipated cost to the Sellers (or any of them) of at least
$5,000.00 in any twelve (12)-month period;



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          (iii) each real property lease, sublease, license or other agreement pursuant to which
any Seller grants to any other Person any right of possession or use of, or access to, any
Owned Real Property;




          (iv) each equipment lease, lease-purchase agreement, installment sale contract or other
similar contract or agreement relating to any equipment used exclusively in the conduct of
the Business (including any of the equipment of the type referred to in Sections
1.1(d) and (e);




          (v) each Contract relating to capital expenditures on any Owned Real Property or with
respect to any other Transferred Asset under which any Seller has warranty, service or other
similar rights; and




          (vi) each management, consulting, advertising, marketing, promotion, technical
services, advisory or other Contract relating to the design, marketing, promotion,
management or operation of the Business having (or expected to have) an actual or
anticipated cost to the Sellers (or any of them) of at least $25,000 in any twelve
(12)-month period.




          (b) Each Assumed Contract is valid and binding on the applicable Seller and, to the
Knowledge of the Sellers, the counterparties thereto, and is in full force and effect, other
than exceptions that will be remedied or otherwise accounted for pursuant to the Sale Approval
Order. The applicable Seller party to each Assumed Contract is not in material breach of, or
default under, any such Assumed Contract and, to the Knowledge of the Sellers, there is no valid
basis for any claim of material breach or default by any Seller under any such Assumed Contract,
except in each case to the extent that any such breach, default or claim of breach or default is
cured, remedied or otherwise accounted for pursuant to the Sale Approval Order.



          3.7 Owned Real Property.





          (a) Schedule 3.7(a) lists the street address (and references the legal description
in the Title Commitments) of each parcel of real property owned by any Seller (including for
purposes of this Agreement Plant #27-1 in Lafayette, Tennessee, which shall be owned by a Seller
prior to Closing) and used or held for use exclusively in the Business (each, an “Owned Real
Property” and collectively, the “Owned Real Properties”). Upon the entry of the
Sale Approval Order, at the Closing, the applicable Sellers shall have fee simple title to all
Owned Real Properties, which shall be transferred to the Purchaser at the Closing free and clear
of all Encumbrances, other than Permitted Encumbrances.




          (b) To the Knowledge of the Sellers, the Sellers’ use of the Owned Real Properties for the
various purposes for which they are presently being used are permitted as of right under all
applicable Laws (including zoning laws).



20









 






          (c) To the Knowledge of the Sellers, (i) all of the Owned Real Properties, including
buildings, fixtures and other improvements thereon, are in good operating condition and repair,
ordinary wear and tear excepted, and no Owned Real Property is in need of repair other than as
part of routine maintenance in the ordinary course of business, and (ii) all buildings,
structures, improvements and fixtures on each Owned Real Property are in compliance in all
material respects with all applicable Laws, including Occupational Safety and Health Laws.



          3.8 Environmental Matters





          (a) The Sellers are currently, and for the past five (5) years have been, in compliance in
all material respects with all applicable Environmental Laws applicable to the Business and the
Transferred Assets. There are no Claims pursuant to any Environmental Law pending or, to the
Knowledge of the Sellers, threatened against any Seller in connection with the conduct or
operation of the Business or the ownership or use of any of the Transferred Assets. To the
extent applicable to any Owned Real Property, within the past five (5) years, no Seller has
received any actual or threatened order, notice or other written communication from any
Governmental Body or other Person of any actual or potential violation or failure of any Seller
to comply with any Environmental Law or of any actual or threatened obligation on the part of
any Seller to undertake or bear the cost of any Environmental, Health and Safety Liabilities
with respect to any Owned Real Property.




          (b) To the Knowledge of the Sellers, no Seller is currently required to undertake any
corrective or remedial obligation under any Environmental Law with respect to the Business or
the Transferred Assets.




          (c) The Sellers have made available to the Purchaser all Phase I and Phase II, if any,
environmental reports, other engineering reports and any other material documents relating to
any environmental or health or safety matters, relating to the Transferred Assets. Except to
the extent disclosed in such environmental and engineering reports, to the Knowledge of the
Sellers, there are no Hazardous Materials present on or in the Environment at any Owned Real
Property, including any Hazardous Materials contained in barrels, aboveground or underground
storage tanks, landfills, land deposits, dumps, equipment (whether movable or fixed) or other
containers, either temporary or permanent, and deposited or located in land, water, sumps, or
any other part of any Owned Real Property, or incorporated into any structure therein or
thereon, except in material compliance with all applicable Environmental Laws.




          (d) No Seller or Affiliate thereof has conducted or knowingly permitted any Hazardous
Activity on or with respect to any Owned Real Property.




          (e) The representations and warranties contained in this Section 3.8 are the only
representations and warranties being made with respect to compliance with or liability under any
Environmental Law or with respect to any environmental, health or safety matter, including
natural resources, related to the Business, the Transferred Assets or the Sellers’ ownership or
operation thereof.



21









 





          3.9 Intellectual Property.





          (a) Schedule 3.9(a) contains a complete and accurate list of the following items of
intellectual property of each Seller used by such Seller exclusively in the conduct of the
Business: (i) all Patents; (ii) all Marks; (iii) all registered Copyrights; and (iv) all
licenses and sublicenses held by any Seller as licensee pertaining to Intellectual Property of
any other Person, including in the case of such Patents, Marks and Registered Copyrights,
details of registration and/or application filings with the United States Patent and Trademark
Office or similar Governmental Bodies in other jurisdictions. No Seller owns any proprietary
Computer Software.




          (b) Schedule 3.9(b) contains a complete and accurate list of all licenses,
sublicenses or other arrangements (written or oral, formal or informal) pursuant to which any
Seller is currently granting any right of use of any Intellectual Property used by any Seller
exclusively in the conduct of the Business to any Person, including any Affiliate that is not a
Seller, including in the case of any arrangement that is not documented under a written
agreement, the specific terms of such arrangement.




          (c) To the Knowledge of the Sellers, (i) no item of Intellectual Property used by any
Seller exclusively in the conduct of the Business is currently being infringed or overtly
challenged or threatened in any way, (ii) none of the products or services sold or trade secrets
used by any exclusively in the conduct of the Business infringes or has been alleged in any
written notice to any Seller to infringe any intellectual property right of any other Person,
(iii) no Mark included in the Intellectual Property used by any Seller exclusively in the
conduct of the Business has been or is now involved in any opposition, invalidation or
cancellation Claim, and no such action is threatened with respect to any such Mark; and (iv)
there is no potentially interfering trademark or trademark application of any other Person in
use or pending.




          (d) Except as disclosed on Schedule 3.9(d), no Seller is in default of its
obligations under any license, sublicense or other arrangement referred to in Section
3.9(a) or (b), except where such default is cured, remedied or otherwise accounted
for pursuant to the Sale Approval Order.



          3.10 Litigation. Except for the Bankruptcy Case and other matters on the docket
related thereto (including information included in the Sellers’ Schedules of Assets and Liabilities
and Statements of Financial Affairs filed with the Bankruptcy Court), (i) there are no material
Claims (including with respect to products liability Claims) pending or, to the Knowledge of the
Sellers, threatened against any Seller with respect to the Business, any of the Transferred Asset
or any of the Assumed Liabilities, and (ii) there are no Claims pending or, to the Knowledge of the
Sellers, threatened that question the validity of this Agreement or any of the transactions
contemplated hereby or thereby.




          3.11 Title to Assets. Upon the entry of the Sale Approval Order, at the Closing, the
Sellers shall have good and marketable title to the Transferred Assets, which shall be transferred
to the Purchaser free and clear of all Encumbrances, other than Permitted Encumbrances.




22









 








          3.12 Inventory. The Inventory substantially consists of, and as of the close of
business on the day immediately preceding the Closing Date the Inventory will substantially consist
of, items which are free of any material defect and, subject to inventory reserves set forth in the
Sellers’ (or their Affiliate’s consolidated) financial statements, of a quality and quantity usable
and salable in the Ordinary Course of Business.




          3.13 Employees.





          (a) The Sellers have provided to the Purchaser a detailed list of all employees employed
exclusively in the conduct of the Business, including the following information for each such
employee: (i) name; (ii) part-time or full-time status; (iii) title and/or job description; (iv)
employment commencement date; (v) annual base salary or hourly wage; (vi) available bonus or
other contingent compensation; (vii) accrued and unused vacation days; (viii) accrued and unused
sick days; (ix) if on leave, the status of such leave (including reason for leave and expected
return date); and (x) whether such employee is employed under an employment contract or on an
at-will basis.




          (b) Except as set forth on Schedule 3.13(b), since January 1, 2007, with respect to
the employees of the Business, there has not been, there is not presently pending or existing,
and, to the Knowledge of the Sellers, there is not overtly threatened any material charge,
grievance proceeding or other claim against or affecting any Seller (or any director, officer,
manager or employee thereof) relating to the actual or alleged violation of any applicable Law
pertaining to labor relations or employment matters, including any charge or complaint filed by
an employee or union with the National Labor Relations Board, the Equal Employment Opportunity
Commission or any comparable Governmental Body.




          (c) No Seller or Affiliate thereof has been, nor is it now, a party to any collective
bargaining agreement or other labor contract with respect to the operation of the Business.
Since January 1, 2008, there has not been, there is not presently pending or existing, and to
the Knowledge of the Sellers, there is not threatened, any strike, slowdown, picketing, work
stoppage or employee grievance process involving any Seller or the Business. To the Knowledge
of the Sellers, there is no organizational activity or other labor dispute against or affecting
the Business, and no application or petition for an election of or for certification of a
collective bargaining agent is pending. There is not currently in effect any lock-out, relating
to a labor dispute, by any Seller of any employee (or group thereof), and no such action is
contemplated by any Seller.



          3.14 Affiliated Transactions. To the Knowledge of the Sellers, no Insider has any
interest in the Transferred Assets or is a party to any Contract used in or related to the
Business. To the Knowledge of the Sellers, no Insider has (i) any economic interest in any Person
which engages in competition with any Seller, or (ii) any economic interest in any Person that
purchases from or sells or furnishes to any Seller, any services or products.




          3.15 Product Liability; Product Warranties. Except as set forth on Schedule
3.15, to the Knowledge of the Sellers, the products sold or manufactured by the Sellers in
connection with the Business and the services provided by the Sellers in connection with the
Business have complied with and are in compliance with, in all material respects, all applicable
(i) Laws, (ii)




23









 




industry and self-regulatory organization standards, (iii) contractual commitments, and (iv)
express or implied warranties. Except as set forth on Schedule 3.15, Since January 1,
2007, no Seller or Affiliate thereof (including any predecessor entity) has initiated or otherwise
participated in any product recall or withdrawal with respect to any product produced,
manufactured, marketed, distributed or sold in connection with the Business. To the Knowledge of
the Sellers, there are not, and there have not been, any defects or deficiencies in any products or
services of the Business (including in the Inventory) that could reasonably be expected to give
rise to or serve as a basis for any product recall or withdrawal by any Seller.




          3.16 Absence of Certain Developments. Except as set forth on Schedule 3.16
and except as expressly contemplated by this Agreement, since April 26, 2009:





          (a) no Seller has suffered any theft, damage, destruction or casualty loss in excess of
$100,000 to any property or asset of a type that would be included in the Transferred Assets,
whether or not covered by insurance, or suffered any material damage to or destruction of its
Books and Records; and




          (b) no Seller has, exclusively with respect to the Business, sold, leased, licensed,
assigned or transferred (including, without limitation, transfers to stockholders, holders of
ownership interests or any Insider) any property or asset of a type that would be included in
the Transferred Assets, except for sales of Inventory in the Ordinary Course of Business, or
canceled without fair consideration any material debts or claims owing to or held by it, and no
Seller has committed to do any of the foregoing.



          3.17 Affiliate Ownership of Assets. No Affiliate of any Seller (other than an
Affiliate which is a Seller) has any ownership or other interest in any property, assets, rights,
titles or interests of any kind and nature that (i) are part of the Transferred Assets, or (ii) are
not part of the Transferred Assets but are used exclusively in connection with the conduct of the
Business.




          3.18 Brokers. Except for the fees payable by the Sellers to Greenhill & Co., LLC
(whose fees shall be payable solely by the Sellers), the Sellers have not paid or agreed to pay, or
received any Claim with respect to, any brokerage commissions, finders’ fees or similar
compensation in connection with the transactions contemplated hereby.




          3.19 Disclaimer. THE REPRESENTATIONS AND WARRANTIES MADE BY THE SELLERS IN THIS
AGREEMENT (INCLUDING THE DISCLOSURE SCHEDULES) AND IN ANY AGREEMENT, DOCUMENT OR INSTRUMENT TO BE
EXECUTED AND DELIVERED BY THE SELLERS (OR ANY OF THEM) AT THE CLOSING ARE THE EXCLUSIVE
REPRESENTATIONS AND WARRANTIES MADE BY THE SELLERS. THE SELLERS HEREBY DISCLAIM ANY OTHER EXPRESS
OR IMPLIED REPRESENTATIONS AND WARRANTIES. THE SELLERS DO NOT MAKE, AND HEREBY DISCLAIM, ANY
REPRESENTATIONS OR WARRANTIES REGARDING PRO-FORMA FINANCIAL INFORMATION, FINANCIAL PROJECTIONS OR
OTHER FORWARD-LOOKING STATEMENTS OF THE BUSINESS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT
(INCLUDING THE DISCLOSURE SCHEDULES) OR IN ANY AGREEMENT, DOCUMENT OR INSTRUMENT TO BE EXECUTED AND
DELIVERED BY THE SELLERS (OR ANY OF THEM) AT THE CLOSING, (A) THE




24









 




SELLERS ARE SELLING THE TRANSFERRED ASSETS HEREUNDER ON AN “AS IS, WHERE IS, WITH ALL FAULTS”
BASIS, AND (B) THE SELLERS MAKE NO REPRESENTATIONS OR EXPRESS OR IMPLIED WARRANTIES AS TO THE
BUSINESS, THE TRANSFERRED ASSETS OR THE ASSUMED LIABILITIES, INCLUDING AS TO THEIR PHYSICAL
CONDITION, USABILITY, MERCHANTABILITY, PROFITABILITY OR FITNESS FOR ANY PURPOSE.



4. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the
Seller as follows:




          4.1 Due Incorporation and Authority. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware and has all necessary
corporate power and authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Purchaser has all requisite corporate power and authority to enter
into this Agreement, carry out its obligations hereunder and consummate the transactions
contemplated hereby. The execution and delivery by the Purchaser of this Agreement, the
performance by the Purchaser of its obligations hereunder and the consummation by the Purchaser of
the transactions contemplated hereby have been duly authorized by all requisite corporate action on
the part of the Purchaser. This Agreement has been duly executed and delivered by the Purchaser,
and, assuming the due authorization, execution and delivery hereof by the Sellers, this Agreement
constitutes the legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors rights generally or by
general principles of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).




          4.2 No Conflicts. The execution and delivery by the Purchaser of this Agreement, the
consummation of the transactions contemplated hereby, and the performance by the Purchaser of this
Agreement in accordance with its terms will not:





          (a) violate the certificate of incorporation or by-laws (or comparable instruments) of the
Purchaser or contravene any resolution adopted by the directors or shareholders of the
Purchaser; or




          (b) violate any Law to which the Purchaser or its assets are bound or subject;


provided, however, that the case set forth in clause (b) above is subject to
exceptions that arise as a result of any facts or circumstances relating to the Sellers or any of
their Affiliates.




          4.3 Litigation. There are no Claims pending or, to the knowledge of the Purchaser,
threatened against the Purchaser before any Governmental Body that, either individually or in the
aggregate, would reasonably be expected to prevent or materially delay the consummation by the
Purchaser of the transactions contemplated by this Agreement.




25









 








          4.4 Purchaser’s Financial Capability. The Purchaser has, or as of the Closing Date
will have, available funds necessary to consummate the transactions contemplated by this
Agreement, including payment of the Purchase Price and assumption of the Assumed Liabilities.
Without limiting the foregoing, the Purchaser is (or, upon the Closing, will be) capable of
satisfying the conditions contained in sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy
Code with respect to each of the Assumed Contracts.




          4.5 Brokers. The Purchaser has not paid or agreed to pay, or received any Claim with
respect to, any brokerage commissions, finders’ fees or similar compensation in connection with the
transactions contemplated hereby.




          4.6 Acknowledgement of Sellers’ Disclaimer. THE PURCHASER REPRESENTS, WARRANTS AND
ACKNOWLEDGES THAT, EXCEPT AS SET FORTH IN THIS AGREEMENT (INCLUDING THE DISCLOSURE SCHEDULES) AND
IN ANY AGREEMENT, DOCUMENT OR INSTRUMENT TO BE EXECUTED AND DELIVERED BY THE SELLERS (OR ANY OF
THEM) AT THE CLOSING: (A) THE PURCHASER IS PURCHASING THE TRANSFERRED ASSETS ON AN “AS IS, WHERE
IS, WITH ALL FAULTS” BASIS BASED SOLELY ON THE PURCHASER’S OWN INVESTIGATION OF THE TRANSFERRED
ASSETS AND (B) NEITHER THE SELLERS NOR ANY OF THEIR REPRESENTATIVES HAVE MADE ANY REPRESENTATIONS,
WARRANTIES OR GUARANTEES, EXPRESS, IMPLIED OR STATUTORY, WRITTEN OR ORAL, WITH RESPECT TO THE
TRANSFERRED ASSETS (OR ANY PART THEREOF), THE FINANCIAL PERFORMANCE OF THE BUSINESS OR THE
TRANSFERRED ASSETS, OR THE PHYSICAL CONDITION OF THE TRANSFERRED ASSETS.




          4.7 Purchaser Disclaimer. THE REPRESENTATIONS AND WARRANTIES MADE BY THE PURCHASER IN
THIS AGREEMENT AND IN ANY AGREEMENT, DOCUMENT OR INSTRUMENT TO BE EXECUTED AND DELIVERED BY THE
PURCHASER AT THE CLOSING ARE THE EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY THE PURCHASER.
THE PURCHASER HEREBY DISCLAIMS ANY OTHER EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES.



5. Covenants and Agreements.




          5.1 Operation of the Business. Subject to any restrictions and obligations imposed by the
Bankruptcy Court, the Sellers will not engage in any practice, take any action or enter into any
transaction outside the Ordinary Course of Business between the date hereof and the Closing Date.
In particular (but without limitation), between the date hereof and the earlier of the Closing Date
or the date of termination of this Agreement pursuant to Section 8.1:





          (a) the Sellers shall not, in respect of the Transferred Assets or the operation of the
Business: (i) sell, transfer, lease (as lessor), encumber or otherwise dispose of any
Transferred Assets (except for the conveyance to a Seller prior to Closing of Plant #27-1 in
Lafayette, Tennessee) or any interest therein, other than immaterial dispositions and Inventory
sold or disposed of in the Ordinary Course of Business; (ii) terminate or modify the material
terms of any of the Assumed Contracts; (iii) enter into any Contract that would cause the
representation and warranty contained in Section 3.6(a) to be untrue had such Contract
been entered into prior to the date hereof, other than any such Contract entered into in the
Ordinary Course of Business having a value or cost to any Seller of less than



26









 







$10,000.00; or (iv) make any change in the compensation payable or to become payable to any
employee of the Business; provided, however, that, notwithstanding the
preceding, the Sellers may take any of such actions with the prior written consent of the
Purchaser; and




          (b) the Sellers shall (i) use commercially reasonable efforts to preserve intact the
goodwill of the Business and the relationships of the Sellers with their customers, vendors,
suppliers, creditors, agents, equipment lessors, service providers, employees and others having
business relations with the Sellers and the Business, (ii) continue to maintain, service and
protect the Transferred Assets in a commercially reasonable and prudent manner, including
maintaining security at any facilities where Transferred Assets are located as reasonably
sufficient to protect the Transferred Assets from material theft, loss or destruction, (iii)
not, without the approval of the Bankruptcy Court and the Purchaser, voluntarily terminate or
reject (whether pursuant to Section 365 of the Bankruptcy Code or otherwise) any Assumed
Contract, (iv) continue in full force and effect the Sellers’ insurance coverage on the
Transferred Assets as in effect on the date hereof, or substantially equivalent policies of
insurance, (v) continue to maintain the books and records related to the Business and the
Transferred Assets on a basis consistent with the Sellers’ past practice (since the Petition
Date), and in any event in a commercially reasonable and prudent manner; (vi) report
periodically to the Purchaser, as the Purchaser may reasonably request, concerning the status of
the Business, the Transferred Assets and the Assumed Liabilities, (vii) maintain compliance, in
all material respects, with all Laws that relate to the Business, the Transferred Assets and the
Assumed Liabilities (other than the reporting requirements of the Securities and Exchange
Commission), and (viii) pay all debts and obligations (including all trade payables) incurred by
it in the Ordinary Course of the Business.



          5.2 Confidentiality.





          (a) Until the Closing Date, each party hereto shall hold in confidence, and shall cause its
respective Affiliates and Representatives to hold in confidence, all Confidential Information
obtained by any of them from any other party or its Affiliates or Representatives relating to
such other party or the transactions contemplated hereby. Notwithstanding the foregoing, the
party receiving Confidential Information from the party disclosing such Confidential Information
may disclose such Confidential Information: (i) to the extent that such disclosure was
previously authorized in writing by the disclosing party; (ii) to any Governmental Body, with
valid and competent jurisdiction thereof, if the receiving party is directed to disclose such
Confidential Information to and by such Governmental Body, provided that the receiving
party shall provide written notice of such disclosure to the disclosing party; (iii) to the
receiving party’s Affiliates and Representatives who have a need to know such information solely
for purposes of assisting in regard to this Agreement and the transactions contemplated hereby,
and who are subject to confidentiality obligations to the receiving party; (iv) to the extent
that disclosure is required under any applicable Law; or (v) to the Bankruptcy Court or to any
Person in connection with the Bankruptcy Case (such instances described in clauses (i)-(iv)
above being referred to herein as “Permitted Disclosures”). Except as otherwise set
forth herein, no party shall disclose or make use of, and each party shall cause its respective
Affiliates and Representatives not to disclose or make use of, the other party’s Confidential
Information without the prior written consent of such other party. In the event that this
Agreement is terminated, each party shall, and shall



27









 







cause its respective Affiliates and Representatives to, promptly return to the other party
or destroy all documents (including all copies thereof) containing Confidential Information
obtained from such other party or its Affiliates or Representatives.




          (b) After the Closing, each Seller shall maintain as confidential and shall not use or
disclose (except as required by Law or as authorized in writing by the Purchaser in its sole
discretion) any Confidential Information of the Purchaser or any Confidential Information in any
way related to the Business, the Transferred Assets or the Assumed Liabilities, except for
Permitted Disclosures.




          (c) Each party further agrees to take all appropriate steps (and to cause each of its
Affiliates to take all appropriate steps) to safeguard such Confidential Information and to
protect it against disclosure, misuse, espionage, loss and theft. Each party agrees to be
responsible for enforcing the terms of this Section 5.2 as to its Representatives and to
take such action, legal or otherwise, to the extent necessary to cause them to comply with the
terms and conditions of this Section 5.2 and thereby prevent any disclosure of the
Confidential Information by any of its Representatives (including all actions that such party
would take to protect its own trade secrets and confidential information); provided that the
actual expenses of such action, legal or otherwise, shall be paid by the party whose
Confidential Information is being safeguarded in such action, unless such action is precipitated
by the failure of the party undertaking to protect such Confidential Information to comply with
its obligations under this Section 5.2(c). In the event any party is required by Law to
disclose any Confidential Information, such party shall promptly notify the other party in
writing, which notification shall include the nature of the legal requirement and the extent of
the required disclosure, and shall cooperate reasonably with such party to preserve the
confidentiality of such information consistent with applicable Law.



          5.3 Expenses. Except as otherwise specifically provided herein, the Purchaser and the
Sellers shall bear their respective expenses incurred in connection with the preparation, execution
and performance of this Agreement and the transactions contemplated hereby, including all fees and
expenses of their Representatives.




          5.4 Access to Information; Preservation of Records; Litigation Support.





          (a) From the date hereof until the earlier of the Closing or the termination of this
Agreement pursuant to Section 8.1, upon reasonable notice, the Sellers shall, subject to
ParentCo approval, not to be unreasonably withheld, (i) afford the Representatives of the
Purchaser reasonable access, during normal business hours, to the offices, plants, warehouses,
properties, books and records and employees of the Sellers relating to the Business, subject to
applicable Law and arrangements being made by and through one or more executive officers of
ParentCo, and (ii) furnish to the Representatives of the Purchaser such additional financial and
operating data and other information regarding the operations of the Business as the Purchaser
may from time to time reasonably request.




          (b) Following the Closing, the Purchaser shall, and shall cause its Affiliates to, preserve
and keep the records (including the Books and Records) held by them relating to the Business
prior to the Closing for a period of seven (7) years from the Closing



28









 







Date (or longer if required by applicable Law) and shall make such records and personnel
available to the Sellers as may be reasonably requested by any Seller in connection with, among
other things, the preparation of any Tax Returns, the Bankruptcy Case, any insurance claims by,
Claims or Tax audits against or governmental investigations of any Seller or any of their
Affiliates.




          (c) For a period of five (5) years from the Closing Date (or longer if required by
applicable Law), the Sellers shall preserve and keep the books and records that relate, in whole
or in part, to the Business, the Transferred Assets or the Assumed Liabilities and that are not
transferred and conveyed to the Purchaser pursuant to Section 1.1(h), and shall make
such books and records, or applicable portions thereof, available to the Purchaser as may be
reasonably requested by the Purchaser in connection with the post-Closing conduct of the
Business, including for the preparation of any Tax Returns, claims or other matters related to
the Bankruptcy Case, insurance claims, Claims involving the Purchaser or any Affiliate thereof
or Tax audits against or governmental investigations of the Purchaser or any Affiliate thereof.
If, for any reason (including the sale, dissolution or liquidation of any Seller), any Seller
intends during such five (5)-year period to transfer or otherwise dispose of any such books and
records, such Seller shall give the Purchaser at least sixty (60) days prior written notice of
such contemplated disposition so that the Purchaser may examine and copy relevant portions of
such books and records for its own retention and use before such transfer or other disposition
is completed. The applicable Sellers shall cooperate reasonably and promptly with the Purchaser
to permit such examination and copying of such books and records before such transfer or other
disposition is completed.




          (d) After the Closing, each party to this Agreement and its Affiliates shall use reasonable
efforts to provide assistance to the other parties with respect to the Bankruptcy Case and any
Claims related to the Business and to make available to the other, upon written request (i) such
employees who have expertise or knowledge with respect to the Business or matters involved in
any such Claims, for the purpose of consultation and/or as a witness; and (ii) its directors,
officers, other employees and agents, as witnesses, in each case to the extent that the
requesting party believes any such Person may reasonably be useful or required in connection
with the Bankruptcy Case or any such Claim in which the requesting party may from time to time
be involved. The employing party agrees that such Person shall be made available to the
requesting party upon reasonable notice. The requesting party agrees to cooperate with the
employing party in giving consideration to business demands of such Persons and the employing
party shall not be obligated to comply with this Section 5.4(d) to the extent it
unreasonably interferes with the operation of its business. The obligation of the party or
Affiliate thereof that is the subject of any such request to provide the requested employees or
services shall be conditioned on the requesting party reimbursing the party or Affiliate that is
the subject of such request for (i) reasonable compensation costs of employees who provide such
consultation, witness testimony or other services, (ii) travel costs of such employees incurred
in connection with providing such services, (iii) reasonable costs of document retrieval, review
and/or delivery incurred in providing the requested services, and (iv) any other reasonable
costs incurred in providing such requested services.



29









 






          (e) After the Closing, to the extent requested by the Purchaser, the Sellers shall
cooperate reasonably with the Purchaser or any of its Affiliates in connection with any
Claim by the Purchaser against or otherwise involving any third party to enforce the
Purchaser’s rights in and to the Transferred Assets and its other rights under this Agreement,
which cooperation shall include supporting any Purchaser application to the Bankruptcy Court to
re-open the Bankruptcy Case in order to permit the Bankruptcy Court to have jurisdiction over
such Claim. Without limiting the foregoing, the Purchaser shall have the right (but not the
obligation) to have any Claim made by or against or otherwise involving the Purchaser related to
any Warranty Liability purported assumed by the Purchaser pursuant to Section 1.3(c) to
be adjudicated before the Bankruptcy Court, notwithstanding any venue or other dispute
resolution provision to the contrary in the applicable warranty documents.



          5.5 Regulatory and Other Authorizations; Consents.





          (a) Each of the parties hereto shall use its commercially reasonable efforts to (i) take,
or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under any Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement, (ii) obtain any consents, approvals or orders required to be
obtained or made in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and (iii) make all filings and
give any notice, and thereafter make any other submissions either required or reasonably deemed
appropriate by each of the parties, with respect to this Agreement and the transactions
contemplated hereby required under any applicable Law.




          (b) The parties hereto shall work closely and cooperatively and consult with each other in
connection with the making of all such filings and notices, including by providing copies of all
such documents to the non-filing party and its advisors a reasonable period of time prior to
filing or the giving of notice. Each party hereto shall pay for its own filing fees and other
charges arising out of the actions taken under this Section 5.5.



          5.6 Further Action; Additional Assignments of Transferred Intellectual Property. Each
of the parties hereto shall execute such documents and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof and give effect to the
transactions contemplated hereby. From time to time after the Closing, the Sellers shall, at the
Purchaser’s expense, execute all documents prepared by the Purchaser (and reviewed and approved by
ParentCo, such approval not to be unreasonably withheld, conditioned or delayed) and take all
actions reasonably necessary to further the sale and assignment of the Transferred IP to the
Purchaser hereunder.




          5.7 Assignment of Internet Domain Names. After the date hereof and for a period of
thirty (30) days after the Closing Date, the Sellers shall grant to the Purchaser access to the
Sellers’ administrative contact for the Sellers’ Internet domain names and make such Person
available to the Purchaser and its Representatives to effectuate the transfer to the Purchaser of
the Internet domain names included in the Transferred Assets.




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          5.8 Bankruptcy Court Approval.





          (a) Prior to the execution of this Agreement, the Bankruptcy Court entered an order
regarding the transactions contemplated by this Agreement, establishing notice and service
requirements to creditors and parties in interest with respect thereto, approving the Break-Up
Fee and the Expense Reimbursement, and approving the bidding procedures related thereto (the
“Bidding Procedures”) (such order being referred to herein as the “Bidding
Procedures Order”), The Bidding Procedures Order is attached as Exhibit F hereto.




          (b) On or before the fifth (5th) Business Day after the execution of this Agreement, the
Sellers shall file (or shall have filed) a motion or motions with the Bankruptcy Court seeking
entry of an order of the Bankruptcy Court approving the sale of the Transferred Assets pursuant
to this Agreement (the “Sale Approval Order”). The Sale Approval Order shall be
substantially in the form of Exhibit G hereto (with such changes thereto as the Sellers
and the Purchaser shall mutually approve, which approval shall not be unreasonably withheld,
conditioned or delayed).



          5.9 Books and Records. If, in order to properly prepare documents required to be
filed with Governmental Bodies or its financial statements, it is necessary that any party hereto
or any successors thereto be furnished with additional information relating to the Business, the
Transferred Assets or the Assumed Liabilities, and such information is in the possession of any
other party hereto or any successor thereto or any of their respective Affiliates, such party
agrees to use commercially reasonable efforts to furnish or cause to be furnished such information
to such other party, at the reasonable cost and expense of the party being furnished such
information.




          5.10 Tax Matters.





          (a) Sales, Use and Other Transfer Taxes. The Purchaser shall provide the Sellers
with resale exemption certificates as are appropriate and available to the Purchaser under
applicable Law. Any sales, use, purchase, transfer, deed, stamp, documentary stamp, use or
other similar Taxes and recording charges due and which may be payable by reason of the sale of
the Transferred Assets or the assumption of the Assumed Liabilities under this Agreement or the
transactions contemplated herein shall be borne and timely paid fifty percent (50%) by Sellers
and fifty percent (50%) by Purchaser. The Sellers shall be responsible for all income, profit
and similar Taxes incurred or imposed with respect to the sale of the Transferred Assets by the
Sellers. The parties hereto agree to cooperate in the filing of all necessary documentation and
all Tax Returns with respect to all such Taxes, including any available pre-sale filing
procedure.




          (b) Cooperation. The parties hereto shall cooperate reasonably with each other and
with each other’s respective Representatives, including accounting firms and legal counsel, in
connection with the preparation or audit of any Tax Return(s) and any Tax claim or litigation in
respect of the Transferred Assets and the Assumed Liabilities that include whole or partial
taxable periods, activities, operations or events on or prior to the Closing Date, which
cooperation shall include making available employees, if any, for the purpose of providing
testimony and advice, or original documents, or either of them, provided that such



31









 







cooperation shall be conditioned on the party requesting such cooperation reimbursing the
cooperating party or its Affiliate for (i) reasonable compensation costs of employees who
provide such cooperation, (ii) travel costs of such employees incurred in connection with
providing such cooperation, (iii) reasonable costs of document retrieval, review and/or delivery
incurred in providing such cooperation, and (iv) any other reasonable costs incurred in
providing such cooperation.



          5.11 Notification of Certain Matters. Until the earlier of the Closing or the
termination of this Agreement pursuant to Section 8.1, each party hereto shall promptly
notify the other party in writing of any fact, change, condition, circumstance or occurrence or
nonoccurrence of any event of which it is aware that will or is reasonably likely to result in any
of the conditions set forth in Section 6 or 7 of this Agreement becoming incapable
of being satisfied. In furtherance of the foregoing, ParentCo (on behalf of the Sellers) shall
give prompt notice to the Purchaser of (i) the occurrence or nonoccurrence of any event that would
cause either (A) any representation or warranty of the Sellers contained in this Agreement to be
untrue or inaccurate in any material respect at any time after the date hereof, or (B) directly or
indirectly, any material adverse effect on the Business, (ii) any material failure of the Sellers
to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by
them hereunder, or (iii) the termination of employment of any senior manager or the termination of
employment or furlough of any material number of employees, in each case, to the extent exclusively
related to the Business. Notwithstanding the foregoing, the delivery of any notice pursuant to
this Section 5.11 shall not (x) be deemed to amend or supplement any Schedule to this
Agreement, (y) be deemed to cure any breach of any representation, warranty covenant or agreement
or to satisfy any condition, or (z) limit or otherwise affect the remedies available hereunder to
the party receiving such notice.




          5.12 Knowledge of Breach. If prior to the Closing the Purchaser shall have reason to
believe that any breach of a representation or warranty of the Sellers has occurred (other than
through notice from ParentCo), the Purchaser shall promptly so notify ParentCo, in reasonable
detail. Nothing in this Agreement, including this Section 5.12, shall imply that the
Sellers are making any representation or warranty as of any date other than the date of this
Agreement and the Closing Date.




          5.13 Employment Arrangements.





          (a) Future Employment. On the Closing Date, the Purchaser may offer employment to
those of the Sellers’ current employees who are employed exclusively in the conduct of the
Business. All such offers of employment shall be subject to such compensation and other terms
of employment as the Purchaser shall determine in its sole discretion. Each such employee who
accepts the Purchaser’s offer of employment and is hired by the Purchaser is referred to herein
as a “Transferred Employee”. On the Closing Date, the applicable Sellers shall
terminate the employment of each Transferred Employee and the Purchaser shall commence its
employment of such Transferred Employee. If the Purchaser does not wish to offer employment to
any employee of a Seller or if the Purchaser offers such employment but any employee of a Seller
refuses to be employed by the Purchaser, the applicable Seller may elect to retain or terminate
such employee, but such



32









 







Seller shall be solely liable for all costs of any retention or termination of such
employee’s employment.




          (b) No Right to Employment. Notwithstanding Section 5.13(a), nothing
herein expressed or implied shall confer upon any of the employees of any Seller or any
Transferred Employees any right to employment or continued employment for any specified period,
of any nature or kind whatsoever under or by reason of this Agreement.




          (c) No Obligation. Neither the Purchaser nor any of its Affiliates shall have any
Liability whatsoever for (i) any compensation or other obligations purported to be owing to any
Transferred Employee by any Seller, including any severance, separation pay, change of control
payments or benefits, retention payments or any other payments or benefits arising in connection
with the termination of such employee’s employment by any Seller before, on or after the Closing
Date, or (ii) any Claim under the Worker Adjustment and Retraining Notification Act (Warn Act)
by any past or present employee of any Seller or Affiliate thereof (whether or not a Transferred
Employee) in connection with Seller’s conduct of the Business or any other business, including
any plant closing or mass layoff related to the Business or any such other business.




          (d) Sellers’ Cooperation in Review and Hiring of Employees. Subject to applicable
Law and prior approval and arrangements in advance by and through one or more executive officers
of ParentCo, not to be unreasonably withheld or delayed, the Sellers shall cooperate with the
Purchaser and shall permit the Purchaser a reasonable period during normal business hours prior
to the Closing Date, (i) to meet with employees of the Sellers (including managers and
supervisors) engaged exclusively in the conduct of the Business at such times as the Purchaser
shall reasonably request, (ii) to speak with such employees’ managers and supervisors (in each
case with appropriate authorizations and releases from such employees) who are being considered
for employment by the Purchaser, (iii) to distribute to such employees such forms and other
documents relating to potential employment by the Purchaser after the Closing; and (iv) subject
to any restrictions imposed under applicable Law, to permit the Purchaser, upon request, to
review personnel files and other relevant employment information regarding such employees.




          (e) Post-Closing Cooperation. Following the Closing, the Sellers and the Purchaser
shall cooperate reasonably with each other to provide an orderly administrative transition to
the Purchaser of the Transferred Employees, including (i) the provision by the Sellers to the
Purchaser of all necessary or appropriate documents, records, materials, accounting files and
Tax information with respect to each Transferred Employee, and (ii) the Sellers’ causing their
benefit providers to assist in the conversion and rollover of employee benefits for Transferred
Employees to the Purchaser’s applicable benefit plans, including medical, dental, short-term
disability, long-term disability, life insurance and 401(k) plans. ParentCo shall provide
Purchaser with Certificates of Credible Coverage for all health plan participants within thirty
(30) days following the Closing Date. The Sellers and the Purchaser agree to utilize the
standard procedure set forth in IRS Revenue Procedure 2004-53 with respect to wage reporting,
such that the Sellers shall be responsible for all reporting of wages and other compensation
paid by it to Transferred Employees before the Closing Date (including furnishing and filing of
Forms W-2 and W-3).



33









 






          (f) Sellers to Retain COBRA Liability. Following the Closing, the Sellers shall
retain all Liability to provide health care continuation coverage under Section 4980B of the
Code and Section 601 of ERISA for all M&A Qualified Beneficiaries (as that term is defined in
Treasury Regulations Section 54.4980B-9, Q&A-4) so that neither the Purchaser nor any of its
Affiliates is required by applicable Law to provide COBRA continuation coverage to any of such
M&A Qualified Beneficiaries.



          5.14 Insurance. Between the date hereof and the earlier of the Closing Date or the
date of termination of this Agreement pursuant to Section 8.1, the Sellers shall, at their
cost, keep in effect and in good standing all policies of insurance maintained by any of them to
insure the Business and the Transferred Assets (collectively, the “Sellers’ Insurance
Policies”). To the extent that any Sellers’ Insurance Policy insures against any loss,
Liability, Claim, damage or expense resulting from, arising out of, based on or relating to
occurrences arising on or after the date hereof and prior to the Closing with respect to the
Business or the Transferred Assets and permit claims to be made thereunder with respect to such
losses, Liabilities, claims, damages or expenses after the Closing, the Sellers shall use their
commercially reasonable efforts to obtain an insurance certificate naming the Purchaser as an
additional insured under the Sellers’ Insurance Policies.




          5.15 Licensed Computer Software; Consents. Prior to and (if necessary) following the
Closing, to the extent requested by the Purchaser, the Sellers shall cooperate reasonably and in
good faith to assist the Purchaser with obtaining any required third-party consent, waiver or
approval for the Sellers’ assignment and transfer to the Purchaser of the licensed Computer
Software to be included in the Transferred Assets, provided that no Seller shall be
required to pay any transfer fee or similar payment to obtain any such consent, waiver or approval.
If any such consent, approval or waiver which is required in order to assign any licensed Computer
Software to be included in the Transferred Assets is not obtained prior to the Closing Date, or if
an attempted assignment would be ineffective or would adversely affect the ability of any Seller to
convey its interest in question to the Purchaser, the Sellers will cooperate with the Purchaser in
good faith and in a reasonable manner in any lawful arrangement to provide that the Purchaser shall
receive the interests of any Seller in the benefits of such licensed Computer Software;
provided, however, that if such consent, waiver or approval is not obtained before the
Closing Date, it shall not be an impediment or condition to any party’s obligation to consummate
the Closing under this Agreement. For the avoidance of doubt, Purchaser shall be solely
responsible for obtaining any approvals, waivers or consents (and paying any fees or costs) related
to the assignment to (or permitted use by) Purchaser of any licensed Computer Software to be
included in the Transferred Assets.




          5.16 IT System Configuration. Within five (5) Business Days after ParentCo (or its
successor or assignee) ceases providing information technology services to Purchaser pursuant to
the Transition Services Agreement, Purchaser shall provide representatives of ParentCo (or its
successor or assignee) with reasonable access (with the supervision of Purchaser’s information
technology personnel) during normal business hours to any Owned Real Property-based network
equipment listed or described on Schedule 1.1(i) to remove or erase any custom or
proprietary network configuration information; provided, that ParentCo shall be responsible for any
damage or disruption to the Purchaser’s operations directly caused by such removal or erasing.




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          5.17 Co-Existence Agreement. Both prior to and following the Closing, (i) ParentCo
shall comply in all respects with its covenants and obligations under the Co-Existence and Limited
License Agreement dated as of July 17, 2009 between ParentCo and Fleetwood RV, Inc., as may be
amended (the “Co-Existence Agreement”), except to the extent such covenants and obligations
are assumed by the Purchaser at the Closing, and (ii) ParentCo shall not effectuate or otherwise
agree to any amendment to the Co-Existence Agreement without the Purchaser’s prior written consent
(which may be given or withheld in the Purchaser’s sole discretion).



6. Conditions Precedent to the Obligation of the Purchaser to Close. The obligation of the
Purchaser to consummate the transactions contemplated by this Agreement is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions, any one or more of
which (to the extent permitted by applicable Law) may be waived by the Purchaser:




          6.1 Representations and Warranties; Covenants. The representations and warranties of
the Sellers contained in this Agreement that are qualified by materiality shall be true and correct
and the representations and warranties of the Sellers contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case on and as of the Closing
Date with the same effect as though made on the Closing Date, except for changes expressly
contemplated by this Agreement and except for any particular representation or warranty that
specifically addresses matters only as of a particular date (which shall remain true as of such
date, to the extent required above), except where such failure to be true and correct has been or
will be cured, remedied or otherwise accounted for pursuant to the Sale Approval Order. The
covenants and agreements contained in this Agreement to be complied with by the Sellers at or
before the Closing shall have been complied with in all material respects. At Closing, the
Purchaser shall have received a certificate of the Sellers (the “Sellers’ Certificate”)
with respect to such truth and correctness of the Sellers’ representations and warranties and such
compliance by the Sellers with their covenants and agreements hereunder signed by a duly authorized
officer thereof.




          6.2 No Intervening Law. No Governmental Body shall have enacted, issued, promulgated,
enforced or entered any Law (whether temporary, preliminary or permanent) which is in effect and
has the effect of making the transactions contemplated by this Agreement illegal or otherwise
restraining or prohibiting consummation of such transactions and which is not satisfied or resolved
or preempted by the Sale Approval Order.




          6.3 Bankruptcy Filing. The Bankruptcy Case shall not have been dismissed or converted
to a proceeding under chapter 7 of the Bankruptcy Code and no trustee or examiner shall have been
appointed.




          6.4 Closing Documents. The Seller shall have delivered to the Purchaser on the
Closing Date the documents required to be delivered pursuant to Sections 1.8 and
2.3.




          6.5 No Purchaser Objection to Initial Net Working Capital Adjustment. If the
Purchaser shall have timely delivered to ParentCo a good faith objection to the Initial Net Working
Capital Adjustment, as contemplated in Section 1.11(a), such objection shall have been
resolved or waived by the Purchaser in writing.





35












 





          6.6 No Material Adverse Effect. No event, occurrence, fact, condition, change, development or circumstance shall have
arisen or occurred since the date of this Agreement which has had or could reasonably be expected
to have a Material Adverse Effect.


7. Conditions Precedent to the Obligation of the Sellers to Close. The obligation of the Sellers to consummate the transactions contemplated by this Agreement
is subject to the fulfillment on or prior to the Closing Date of each of the following conditions,
any one or more of which (to the extent permitted by applicable Law) may be waived by ParentCo (on
behalf of the Sellers):




          7.1 Representations and Warranties; Covenants. The representations and warranties of the Purchaser contained in this Agreement that are
qualified by materiality shall be true and correct, and the representations and warranties of the
Purchaser contained in this Agreement that are not so qualified shall be true and correct in all
material respects, in each case at and as of the Closing Date with the same effect as though made
on the Closing Date, except for changes expressly contemplated by this Agreement and except for any
particular representation or warranty that specifically addresses matters only as of a particular
date (which shall remain true as of such date, to the extent required above), except where such
failure to be true and correct has been or will be cured, remedied or otherwise accounted for
pursuant to the Sale Approval Order. The covenants and agreements contained in this Agreement to
be complied with by the Purchaser at or before the Closing shall have been complied with in all
material respects. At Closing, ParentCo shall have received a certificate of the Purchaser (the
“Purchaser’s Certificate”) with respect to such truth and correctness of the Purchaser’s
representations and warranties and such compliance by the Purchaser with its covenants and
agreements hereunder signed by a duly authorized officer thereof.



          7.2 No Intervening Law. No Governmental Body shall have enacted, issued, promulgated, enforced or entered any Law
(whether temporary, preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting consummation of such transactions and which is not
satisfied or resolved or preempted by the Sale Approval Order.



          7.3 Sale Approval Order. The Bankruptcy Court shall have entered the Sale Approval Order, and the Sale Approval
Order shall have become a Final Order.



          7.4 Closing Documents. The Purchaser shall have delivered to ParentCo on the Closing Date the documents and
payments required to be delivered by it pursuant to Sections 1.9 and 2.4.



8. Termination of Agreement.




          8.1 Termination Prior to Closing. Notwithstanding anything in this Agreement to the contrary, this Agreement may be
terminated, and the transactions contemplated by this Agreement abandoned, at any time prior to the
Closing, upon notice by the terminating party to the other party as follows:



36









 






          (a) by the mutual written consent of ParentCo (on behalf of the Sellers) and the Purchaser;




          (b) by either ParentCo (on behalf of the Sellers) or the Purchaser if the Closing shall not
have occurred prior to the date that is one hundred eighty (180) days after the date hereof (the
“Termination Date”); provided, however, that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted
in, the failure of the Closing to occur prior to such date;




          (c) (i) by ParentCo (on behalf of the Sellers), if the Purchaser breaches or fails to
perform in any respect any of its representations, warranties or covenants contained in this
Agreement and such breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 7, (B) cannot be or has not been cured within ten (10)
Business Days following delivery of written notice of such breach or failure to perform, and (C)
has not been waived by ParentCo (on behalf of the Sellers); or (ii) by the Purchaser, if any
Seller breaches or fails to perform in any respect any of its representations, warranties or
covenants contained in this Agreement and such breach or failure to perform (X) would give rise
to the failure of a condition set forth in Section 6, (Y) cannot be or has not been
cured within ten (10) Business Days following delivery of written notice of such breach or
failure to perform, and (Z) has not been waived by the Purchaser.




          (d) (i) by ParentCo (on behalf of the Sellers), if any of the conditions set forth in
Section 7 shall have become incapable of fulfillment prior to the Termination Date, or
(ii) by the Purchaser, if any of the conditions set forth in Section 6 shall have become
incapable of fulfillment prior to the Termination Date; provided, however, that
the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be
available if the failure of the party so requesting termination to fulfill any obligation under
this Agreement shall have been the cause of the failure of such condition to be satisfied on or prior to the
Termination Date.




          (e) by either ParentCo (on behalf of the Sellers) or the Purchaser, if the Bankruptcy Court
approves a sale, transfer or other disposition by the Sellers of all or substantially all of the
Transferred Assets of the Seller relating to the Business to a Person (or group of Persons)
other than the Purchaser (a “Competing Transaction”); or




          (f) by the Purchaser (provided that the Purchaser is not then in material breach of
any provision of this Agreement), if any of the following shall occur:




          (i) the Bankruptcy Case is dismissed or converted to one or more proceedings under
chapter 7 of the Bankruptcy Code, a trustee or examiner is appointed for the Seller, or the
automatic stay under section 362 of the Bankruptcy Code is lifted as to any material
Transferred Asset; or




          (ii) the Sale Approval Order has not been entered by the Bankruptcy Court within ninety
(90) days after the date hereof; provided, however, that the Purchaser shall
not be entitled to exercise its rights under this clause (ii) later than five (5) Business



37









 







Days after such ninety (90)-day period has expired or if the Sale Approval Order has been
entered by the Bankruptcy Court prior to the Purchaser exercising such rights.



          8.2 Refund of Deposit. If, prior to the Closing, this Agreement is terminated for any reason other than by
ParentCo pursuant to Section 8.1(c) or pursuant to Section 8.1(d) based on the
Purchaser’s breach or failure to perform in respect of any of its representations, warranties or
covenants contained in this Agreement, the Deposit and all interest or other income accrued thereon
in the Deposit Escrow Account shall forthwith be paid by ParentCo to the Purchaser. If, prior to
the Closing, this Agreement is terminated by ParentCo pursuant to Section 8.1(c) or
pursuant to Section 8.1(d) based on the Purchaser’s breach or failure to perform in respect
of any of its representations, warranties or covenants contained in this Agreement, the Sellers
shall be entitled to retain the Deposit as liquidated damages, as their sole and exclusive remedy
for the breach by the Purchaser giving rise to such termination. Except with respect to the
foregoing rights of the Sellers and the Sellers’ rights under Section 8.4, the Sellers
shall have no set-off or other rights with respect to the Deposit or any interest or other income
accrued thereon.



          8.3 Break-up Fee; Expense Reimbursement.




          (a) In the event that this Agreement is terminated under Section 8.1(e), and
provided that (i) the Purchaser is not in material breach of any provision of this
Agreement prior to such termination and (ii) a Competing Transaction has been consummated, the
Seller shall pay to the Purchaser, in cash, the sum of $450,000.00 (the “Break-Up Fee”)
not later than ten (10) Business Days after the consummation of the Competing Transaction.




          (b) In the event that this Agreement is terminated under Section 8.1(e), and
provided that (i) the Purchaser is not in material breach of any provision of this
Agreement prior to such termination and (ii) a Competing Transaction has been
consummated, the Seller shall reimburse the Purchaser for reasonable, documented
out-of-pocket expenses actually incurred by the Purchaser in connection with this Agreement and
the transactions contemplated hereby, the amount of which shall not in the aggregate exceed
$400,000 (the “Expense Reimbursement”), not later than ten (10) Business Days after the
consummation of the Competing Transaction.




          (c) In the event that this Agreement is terminated under Section 8.1(e), the
Break-Up Fee, the Expense Reimbursement and the refund of the Deposit (as contemplated in
Section 8.2) shall be the Purchaser’s sole and exclusive remedy against the Seller (and
such remedies shall be available only if in accordance with this Section 8.3 and the
Bidding Procedures Order), in full satisfaction of all of the Sellers’ obligations hereunder.
For the avoidance of doubt, in the event of a breach or violation of any representation and
warranty or covenant or agreement of any Seller under this Agreement, Purchaser’s sole and
exclusive remedy against the Sellers or any Seller (whether in contract or tort, under statute,
rule, Law or otherwise) shall be to terminate this Agreement (only if such termination is in
accordance with Section 8.1) and receive the Break-Up Fee and Expense Reimbursement
(only if in accordance with this Section 8.3 and the Bidding Procedures Order) and the
refund of the Deposit (as contemplated in Section 8.2).



38









 





          8.4 Purchaser Payment for Delay in Closing. If, despite the satisfaction or waiver of the Closing conditions set forth in Sections
6 and 7, within three (3) Business Days after the date of entry of the Sale Approval
Order as final and non-appealable, (i) the Sellers are ready, willing and able to consummate the
Closing, (ii) the Purchaser is unable or unwilling to consummate the Closing, and (iii) such
unwillingness or inability on the Purchaser’s party to consummate the Closing is not based on the
Sellers’ breach of this Agreement or any other event or circumstance beyond the Purchaser’s
reasonable control, the Purchaser shall reimburse the Sellers for any net cash disbursements made
by any of them on account of the Transferred Assets between the Target Closing Date and the earlier
of the Closing Date or the date of termination of this Agreement pursuant to Section 8.1,
up to a maximum of $100,000 in the aggregate; which reimbursement shall constitute the Sellers’
sole and exclusive remedy for such delay if the Closing occurs. If the Closing occurs after such
payment is made, the Purchaser shall not receive credit for such payment against the Purchase
Price. If the Closing does not occur and this Agreement is terminated pursuant to Section
8.1, the Sellers shall be entitled to retain such payment.



          8.5 Survival After Termination. If this Agreement is terminated pursuant to Section 8.1 and the transactions
contemplated hereby are not consummated, or if the Bankruptcy Court does not approve this Agreement
or the transactions contemplated hereby, this Agreement shall become null and void and have no
further force or effect, except that any such termination shall be without prejudice to the rights
of any party on account of the non-satisfaction of the conditions set forth in Sections 6
and 7 resulting from fraud or intentional misconduct of another party under this Agreement.
Notwithstanding anything in this Agreement to the contrary, the provisions of Sections 5.2
(Confidentiality), 5.3 (Expenses), 8.2, 8.3, this Section 8.5 and
Section 9 (Miscellaneous) shall survive any termination of this Agreement.



9. Miscellaneous.




          9.1 Certain Definitions.




          (a) As used in this Agreement, the following terms have the following meanings:




          “Accounts Receivable” means all trade and other accounts receivable and other
rights to payment from past or present customers and other account debtors of any Seller
arising in connection with the conduct of the Business, and the full benefit of all security
for such accounts or rights to payment, including all trade, vendor and other accounts
receivable representing amounts receivable in respect of goods sold or services rendered to
customers of the Business or in respect of amounts refundable or otherwise due to any Seller
from vendors, suppliers or other Persons in connection with the Business.




          “Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such specified Person.



39









 






          “Assignment and Assumption Agreement” means the Assignment and Assumption
Agreement substantially in the form of Exhibit B hereto to be executed by the
Purchaser and the applicable Sellers on the Closing Date.




          “Assignment of Intangible Property” means the Assignment of Intangible Property
substantially in the form of Exhibit C hereto to be executed by the applicable
Sellers on the Closing Date.




          “Benefits Plans” means all employee benefit plans as defined in section 3(3) of
ERISA and all compensation, pay, severance pay, salary continuation, bonus, incentive, stock
option, retirement, pension, profit sharing or deferred compensation plans, Contracts,
programs, funds or arrangements of any kind and all other employee benefit plans, programs,
funds or arrangements (whether written or oral, qualified or nonqualified, funded or
unfunded, foreign or domestic, currently effective or terminated, and whether or not subject
to ERISA) and any trust, escrow or similar agreement related thereto, whether or not funded,
and, in each case, whether related to employees, directors, consultants or independent
contractors of any Seller or Affiliate thereof or the Business.




          “Bill of Sale” means Bills of Sale substantially in the form of Exhibit
A hereto to be executed by the applicable Sellers on the Closing Date.




          “Business Day” means any day that is not a Saturday, Sunday or other day on
which banks located in California or Arizona are authorized or obligated to close.




          “Claim” means a suit, claim, action, proceeding, inquiry, investigation,
litigation, legal proceeding, demand, charge, complaint, arbitration, indictment,
information, or grand jury subpoena, whether civil, criminal, administrative, judicial or
investigative and whether public or private, in each case, filed with, made by or
conducted or heard before a Governmental Body.




          “Code” means the Internal Revenue Code of 1986, as amended.




          “Co-Existence Assignment and Assumption Agreement” means the Co-Existence
Assignment and Assumption Agreement substantially in the form of Exhibit E hereto to
be executed by the applicable Sellers on the Closing Date.




          “Computer Software” means all computer software (including source code,
executable code, data, databases and documentation) owned by or licensed to any Sellers
which is used in or necessary for the conduct of the Business.




          “Confidential Information” means all information regarding a party’s business
or affairs, including business concepts, processes, methods, trade secrets, systems,
know-how, devices, formulas, product specifications, marketing methods, prices, customer
lists, supplier lists, methods of operation or other information, whether in oral, written
or electronic form, that is either: (i) designated in writing (including by electronic
mail) as confidential; (ii) is of a nature such that a reasonable Person would know that it
is confidential; or (iii) is disclosed under circumstances such that a reasonable Person
would know it is confidential. Notwithstanding the foregoing, the



40









 







following information
shall not be considered Confidential Information: (A) information that is or becomes
publicly available through no fault of the party obligated to keep it confidential (or such
party’s Affiliates or Representatives); (B) information with regard to the other party that
was rightfully known by a party prior to commencement of discussions regarding the subject
matter of this Agreement, as evidenced by documentation; (C) information that was
independently developed by a party without use of the Confidential Information, as evidenced
by documentation; and (D) information rightfully disclosed to a party by a third party
without continuing restrictions on its use or disclosure.




          “Contract” means any written or oral agreement, arrangement, understanding,
lease or instrument or other contractual or similar arrangement or commitment, but excluding
Purchase Orders.




          “Effective Time” means 11:59 p.m. on the day immediately preceding the Closing
Date.




          “Encumbrances” means all Liens, claims, conditional sales agreements, rights of
first refusal or options.




          “Environmental, Health and Safety Liabilities” means any and all Claims, costs,
damages, expenses, Liabilities and/or other responsibility or potential responsibility
arising from or under any Environmental Law or Occupational Safety and Health Law (including
compliance therewith).




          “Environmental Laws” means any Laws of any Governmental Body in effect as of
the date hereof relating to pollution or protection of the environment.




          “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.




          “ERISA Affiliate” means, with respect to any Person, any trade or business
(whether or not incorporated) (i) under common control within the meaning of section
4001(b)(1) of ERISA with such Person, or (ii) which together with such Person is treated as
a single employer under sections 414(b), (c), (m), (n) or (o) of the Code.




          “Final Order” means an order of the Bankruptcy Court or other court of
competent jurisdiction as to which: (i) no appeal, notice of appeal, motion to amend or
make additional findings of fact, motion to alter or amend judgment, motion for rehearing or
motion for new trial has been timely filed; (ii) the time for instituting or filing an
appeal, motion for rehearing or motion for new trial shall have expired; and (iii) if an
appeal has been timely filed no stay pending an appeal is in effect and the time for
requesting a stay pending appeal shall have expired; provided, however, that
the filing or pendency of a motion under Federal Rule of Bankruptcy Procedure 9024 shall not
cause an order not to be deemed a “Final Order” unless such motion shall be filed within ten
(10) days of the entry of the order at issue.



41









 






          “Governmental Body” means a domestic or foreign national, federal, state,
provincial, or local governmental, regulatory or administrative authority, department,
agency, commission, court, tribunal, arbitral body or self-regulated entity.




          “Hazardous Activity” means the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, release, storage, transfer,
transportation, treatment or use (including any withdrawal or other use of groundwater) of
any Hazardous Material in, on, under, about or from any Owned Real Property, whether or not
in connection with the conduct of the Business, except to the extent in material compliance
with applicable Environmental Law.




          “Hazardous Material” means any substance, material or waste which is regulated
by any Environmental Law, including any material, substance or waste which is defined as a
“hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,”
“restricted hazardous waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic substance”
under any provision of Environmental Law, and including petroleum, petroleum product,
asbestos, presumed asbestos-containing material or asbestos-containing material, urea
formaldehyde and polychlorinated biphenyls.




          “Insider” means any executive officer, director, governing body member,
majority equity holder, partner in a partnership or Affiliate, as applicable, of any Seller
or any predecessor or Affiliate of any Seller or any individual related by marriage or
adoption to any such individual.




          “Inventory” means all inventory of the Seller, including raw and packing
materials, work-in-progress, finished goods, supplies, parts and similar items related to,
used or held for use in connection with the Business.




          “Intellectual Property” means all of the following in any jurisdiction
throughout the world (i) trade names, trademarks and service marks, service names, brand
names, logos, Internet domain names, trade dress and similar rights, logos, slogans, and
corporate names (and all translations, adaptations, derivations and combinations of the
foregoing), and general intangibles of a like nature, together with all goodwill associated
with each of the foregoing and all registrations and applications to register any of the
foregoing (“Marks”); (ii) patents, patent applications and patent disclosures,
together with all reissuances, divisionals, continuations, continuations-in-part, revisions,
reissues, extensions and reexaminations thereof (“Patents”); (iii) copyrights
(whether registered or unregistered) and applications for registration and copyrightable
works (“Copyrights”); (iv) confidential and proprietary information, including trade
secrets and know-how (including ideas, research and development, engineering designs and
related approvals of Governmental Bodies, self-regulatory organizations, and trade
associations, inventions, formulas, compositions, manufacturing and production processes and
techniques, designs, drawings and specifications; and (vi) all licenses and sublicenses held
by any Seller as licensee pertaining to intellectual property of any other Person; and for
the avoidance of doubt, “Intellectual Property” shall exclude Computer Software.




          “IRS” means the United States Internal Revenue Service.



42









 






          “IT Systems” means the hardware (excluding any Computer Software) components of
the computer and accounting systems, networks and interfaces owned or leased by Sellers and
used in or necessary for the conduct of the Business.




          “Knowledge of the Sellers” means the actual knowledge of any of Elden L. Smith,
Andrew Griffiths, Leonard J. McGill, Todd Uhlick or Charles Lott, after reasonable
investigation or inquiry with their direct reports or other members of management who ought
reasonably know the subject matter of the statement or fact to which such terms is being
applied.




          “Law” means any federal, state or local statute, law, rule, regulation, order,
writ, ordinance, judgment, governmental directive, injunction, decree or other requirement
of any Governmental Body.




          “Liabilities” means any direct or indirect, primary or secondary, liability,
indebtedness, obligation, penalty, cost or expense (including costs of investigation,
collection and defense), claim, deficiency, guaranty or endorsement of or by any Person of
any type, whether known or unknown, accrued, absolute or contingent, liquidated or
unliquidated, choate or inchoate, matured or unmatured, disputed or undisputed, secured or
unsecured, joint or several, due or to become due, vested or unvested, executory,
determined, determinable or otherwise. Without limiting the foregoing, the term
“Liabilities” includes and refers to all liabilities and obligations for or with respect to
Taxes, including liabilities for Taxes of any Person under Treasury Regulation Section
1.1502-6 (or any similar provision of any applicable Law), as a transferee or successor, by
contract, or otherwise.




          “Lien” means any security interest, mortgage, pledge, lien, encumbrance, charge
or claim (as defined in section 101(5) of the Bankruptcy Code).




          “Material Adverse Effect” means any circumstance, occurrence, event or change
that has or could be reasonably expected to have a material adverse effect on (a) the
Transferred Assets, the Assumed Liabilities or the Business, in each case taken as a whole,
or (b) the ability of the Sellers to timely satisfy and perform their obligations under this
Agreement and consummate the transactions contemplated hereby; provided, however,
that in no event shall any of the following be deemed to constitute, nor shall any of the
following be taken into account in determining whether there has been or shall be, a
Material Adverse Effect: (i) general economic or business conditions or changes therein,
including changes in interest or currency rates, or acts of war, civil unrest or terrorism;
(ii) any change in Law; (iii) any occurrence or condition generally affecting the industry
in which the Business operates, including any change in such conditions; (iv) any occurrence
or condition arising out of the announcement of the transactions described in this Agreement
or the performance of the transactions contemplated hereby (including any occurrence or
condition arising out of the identity of or facts relating to the Purchaser); and (v) any
effect or result of a breach of this Agreement by the Purchaser.




          “Net Working Capital” means, as of the Effective Time, the amount by which the
sum of the current assets of the Sellers included in the Transferred Assets



43









 







exceeds the sum
of the current liabilities of the Sellers included in the Assumed Liabilities, in each case
as the terms “current assets” and “current liabilities” are used and calculated in
accordance with GAAP, subject to any specified valuation provisions or other exceptions set
forth in this Agreement. Net Working Capital may be a negative amount.




          “Occupational Safety and Health Law” means any applicable Law designed to
provide safe and healthful working conditions and to reduce occupational safety and health
hazards, including the Occupational Safety and Health Act, and any program, whether
governmental or private (such as those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.




          “Ordinary Course of Business” means the operation of the Business by the
Sellers in the usual and ordinary course in a manner substantially similar to the manner in
which the Sellers operated after the commencement of the Bankruptcy Case and as permitted
under the Bankruptcy Code and by the Bankruptcy Court.




          “Permitted Encumbrance” means: (i) Liens for Taxes and assessments not yet
payable; (ii) Liens that will be released at or prior to the Closing; and (iii) (A)
easements, rights-of-way, servitudes, permits, licenses, surface leases, ground leases to
utilities, municipal agreements, railway siding agreements and other similar rights, all as
reflected in the official records of the jurisdictions where any real property is located,
(B) conditions, covenants or other restrictions reflected in the official records of the
jurisdictions where any real property is located, and (C) easements for streets, alleys,
highways, telephone lines, gas pipelines, power lines, railways and other easements and
rights-of-way on, over or in respect of any real property, all as reflected in the
official records of the jurisdictions where any real property is located; in each case with
respect to clauses (i) through (iii) above, individually or in the aggregate, that do not or
would not reasonably be expected to materially and adversely affect the current use or value
of the property subject thereto or the operations of the Business as it is currently
conducted by the Sellers.




          “Person” means any individual, corporation, partnership, limited liability
company, limited liability partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or other entity.




          “Pre-Closing Claims” means (i) Claims asserted by or against a Seller prior to
the Closing Date, and (ii) counterclaims with respect to a Claim asserted by or against a
Seller prior to the Closing Date.




          “Purchase Order” means (i) any open purchase order (or equivalent document)
received and accepted by any Seller from any customer of the Business in the Ordinary Course
of Business for the production and sale of any finished goods Inventory capable of being
produced at an Owned Real Property (based on its current configuration), whether or not such
purchase order or equivalent document was originally intended for fulfillment at an Owned
Real Property, or (ii) any open purchase order (or



44









 







equivalent document) delivered by any
Seller to any third party vendor or supplier for the purchase by such Seller from such
vendor or supplier in the Ordinary Course of Business of raw materials, supplies or other
similar Inventory intended for use in the production of finished goods Inventory from any
Owned Real Property or for any other conduct of operations at any Owned Real Property.




          “Representative” means, with respect to a particular Person, any director,
officer, manager, partner, member, employee, agent, consultant, advisor or other
representative of such Person, including legal counsel, accountants, and financial advisors.




          “Tax” or “Taxes” means all taxes, charges, fees, imposts, levies or
other assessments, including all net income, franchise, profits, gross receipts, capital,
sales, use, ad valorem, value added, transfer, transfer gains, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment, excise, severance,
stamp, occupation, real or personal property, and estimated taxes, customs duties, fees,
assessments and charges of any kind whatsoever, together with any interest and any
penalties, fines, additions to tax or additional amounts thereon, imposed by any taxing
authority (federal, state, local or foreign) and shall include any transferee liability in
respect of Taxes.




          “Tax Returns” means all returns, declarations, reports, forms, estimates,
information returns and statements required to be filed in respect of any Taxes or to be
supplied to a taxing authority in connection with any Taxes.




          “Title Company” means First American Title Company, or such alternate title
company as ParentCo and the Purchaser shall agree.




          “Warranty Liabilities” means Liabilities arising under express written
warranties issued by any Seller (including Liabilities resulting from any failure by
Purchaser to honor or perform such express written warranties in accordance with their
terms) in connection with the sale of a Sellers’ products produced in the ordinary course of
business at any of the Seller Plants, the terms of which warranties are set forth in
Exhibit H attached hereto. Warranty Liabilities shall not include any Liability
arising under any other purported warranty obligation, including implied warranties (such
as, but not limited to, implied warranties of merchantability or fitness for particular
purpose).




          (b) The following capitalized terms are defined in the following Sections of this
Agreement:



	 	 	 
	Definition	 	Location
	Adjustment Escrow Account 
	 	1.6(a)
	Agreement 
	 	Preamble
	Allocation 
	 	1.14 
	Assumed Contracts 
	 	1.1(a)
	Assumed Liabilities 
	 	1.3 
	Bankruptcy Case 
	 	Recitals






45









 






	 	 	 
	Definition	 	Location
	Bankruptcy Code 
	 	Recitals
	Bankruptcy Court 
	 	Recitals
	Base Price 
	 	1.6 
	Bidding Procedures 
	 	5.8(a)
	Bidding Procedures Order 
	 	5.8(a)
	Books and Records 
	 	1.1(h)
	Break-Up Fee 
	 	8.3(a)
	Business 
	 	Recitals
	Closing 
	 	1.7 
	Closing Apportionments 
	 	2.10 
	Closing Date 
	 	1.7 
	Closing Payment 
	 	1.6 
	Closing Statements 
	 	2.3(a)
	Co-Existence Agreement 
	 	5.17 
	Competing Transaction 
	 	8.1(e)
	Cure Costs 
	 	1.3(d)
	Deeds 
	 	2.3(b)
	Deposit 
	 	1.5 
	Deposit Escrow Account 
	 	1.5 
	Disclosure Schedules 
	 	3 
	Equipment 
	 	1.1(d)
	Excluded Assets 
	 	1.2 
	Excluded IP 
	 	1.2(e)
	Excluded Liabilities 
	 	1.4 
	Expense Reimbursement 
	 	8.3(b)
	Final Net Working Capital Adjustment 
	 	1.11(d), 1.11(a)
	Inventory 
	 	1.1(f)
	Objection Notice 
	 	1.11(b)
	Owned Real Property 
	 	3.7(a)
	ParentCo 
	 	Preamble
	Permits 
	 	3.5 
	Permitted Disclosures 
	 	5.2(a)
	Petition Date 
	 	Recitals
	Post-Closing Net Working Capital Adjustment 
	 	1.11(b)
	Purchase Price 
	 	1.6 
	Purchaser 
	 	Preamble
	Purchaser’s Certificate 
	 	7.1 
	Real Property Escrow 
	 	2.1 
	Sale Approval Order 
	 	5.8(b)
	Seller Plants 
	 	1.3(c)
	Sellers 
	 	Preamble
	Sellers’ Certificate 
	 	6.1 
	Sellers’ Insurance Policies 
	 	5.14 
	Survey 
	 	2.6 
	Surveys 
	 	2.6 






46









 






	 	 	 
	Definition	 	Location
	Tangible Personal Property 
	 	1.1(e)
	Termination Date 
	 	8.1(b)
	Title Commitment 
	 	2.6 
	Title Commitments 
	 	2.6 
	Title Policies 
	 	2.7 
	Transferred Assets 
	 	1.1 
	Transferred Employee 
	 	5.13(a)
	Transferred IP 
	 	1.1(c)
	Transferred Permits 
	 	1.1(g)






          9.2 Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.




          (a) The parties hereto irrevocably and unconditionally consent to submit to the
jurisdiction of the Bankruptcy Court for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agree not to commence any litigation
relating hereto except in the Bankruptcy Court).




          (b) Any and all service of process and any other notice in any such Claim shall be
effective against any party if given personally or by registered or certified mail, return
receipt requested, or by any other means of mail that requires a signed receipt, postage
prepaid, mailed to such party as herein provided. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by Law or to commence
legal proceedings or otherwise proceed against any other party in any other jurisdiction.




          (c) If any Claim is brought by any party hereto to enforce its rights or another party’s
obligations under this Agreement or any other agreement, document or instrument to be delivered
by such party at the Closing, the substantially prevailing party in such Claim shall be entitled
to recover its reasonable attorneys’ fees and expenses and other costs incurred in such Claim,
in addition to any other relief to which it may be entitled.




          (D) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY.



          9.3 Notices. Any notice or other communication required or permitted hereunder shall be in writing and
shall be deemed to have been duly given (i) on the day of delivery if delivered in person, (ii) on
the day of delivery if delivered by facsimile upon confirmation of receipt (provided that
if delivery is completed after the close of business, then the next Business Day), (iii) on the
first (1st) Business Day following the date of dispatch if delivered using a next-day service by a
nationally recognized express courier service, or (iv) on the earlier of confirmed receipt or the
fifth (5th) Business Day following the date of mailing if delivered by registered or certified
mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered



47









 







as set
forth below, or pursuant to such other instructions as may be designated by notice given in
accordance with this Section 9.3 by the party to receive such notice:


(a) if to the Purchaser, to:



FH Holding, Inc.

c/o Cavco Industries, Inc.

1001 North Central Avenue, Suite 800

Phoenix, Arizona 85004-1935

Attention: James P. Glew, General Counsel

Facsimile: (602) 256-6189



with a copy (which shall not constitute notice to the Purchaser) to:



Snell & Wilmer L.L.P.

One Arizona Center

400 E. Van Buren

Phoenix, Arizona 85004

Attention: Garth D. Stevens

Facsimile: (602) 382-6070



(b) if to any of the Sellers, to:



Fleetwood Enterprises, Inc.

3125 Myers Street

Riverside, CA 92503

Attention: General Counsel

Facsimile: (951) 997-2097



with a copy (which shall not constitute notice to the Sellers) to



Gibson, Dunn & Crutcher LLP

3161 Michelson Drive

Irvine, California 92612

Attention: Craig Millet, Esq.

Facsimile: (949) 475-4651




          9.4 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto) and any other ancillary
agreements executed in connection with the consummation of the transactions contemplated hereby,
contain the entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, written or oral, with respect thereto.



          9.5 Non- survival of Representations, Warranties and Covenants. The respective representations, warranties and covenants of the Sellers and the Purchaser
contained in this Agreement and any certificate delivered pursuant hereto shall terminate at, and
not survive, the Closing; provided, that this Section shall not limit any covenant or agreement of
the parties that by its terms requires performance after the Closing.



48









 





          9.6 Amendments. This Agreement may be amended, superseded, canceled, renewed or extended only by a written
instrument signed by Purchaser and ParentCo (on behalf of the Sellers).



          9.7 Waiver. Each party hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered pursuant hereto, (c)
waive compliance with any of the agreements of the other party contained herein, or (d) waive
satisfaction of any condition to its obligations hereunder. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be bound thereby. No
delay on the part of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or
privilege, nor any single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or privilege. All
remedies, rights, undertakings, obligations, and agreements contained herein shall be cumulative
and not mutually exclusive.



          9.8 Governing Law. This Agreement and all Claims with respect thereto shall be governed by and construed in
accordance with the federal bankruptcy law, to the extent applicable, and, where state law is
implicated, the laws of the State of California without regard to any conflict of laws rules
thereof that might indicate the application of the laws of any other jurisdiction.



          9.9 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns. This Agreement is not assignable by any party without the prior
written consent of the other party, except that Sellers may assign this agreement, in whole or in
part, without the consent of Purchaser to a successor or successors under a plan or plans of
reorganization confirmed by the Bankruptcy Court.



          9.10 Interpretation; Headings. All pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require. All terms defined in this Agreement in their
singular or plural forms have correlative meanings when used herein in their plural or singular
forms, respectively. Unless otherwise expressly provided, the words “include,” “includes” and
“including” do not limit the preceding words or terms and shall be deemed to be followed by the
words “without limitation.” All references herein to Sections shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require. The Section headings in this
Agreement are for reference only and shall not affect the interpretation of this Agreement. The
parties acknowledge and agree that (a) each party and its counsel reviewed and negotiated the terms
and provisions of this Agreement and have contributed to its revision, (b) the rule of construction
to the effect that any ambiguities are resolved against the drafting party shall not be employed in
the interpretation of this Agreement, and (c) the terms and provisions of this Agreement shall be
construed fairly as to all parties, regardless of which party was generally responsible for the
preparation of this Agreement. Dates and times set forth in this Agreement for the performance of
the parties’ respective obligations hereunder or for the exercise of their rights hereunder shall
be strictly construed, time being of the essence of this Agreement. If the date specified or
computed under this Agreement for the performance, delivery, completion or observance of a
covenant, agreement, obligation or notice



49









 







by any party, or for the occurrence of any event provided
for herein, is a day other than a Business Day, then the date for such performance, delivery,
completion, observance or occurrence shall automatically be extended to the next Business Day
following such date.



          9.11 Severability of Provisions. If any provision or any portion of any provision of this Agreement shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining provisions of this
Agreement shall not be affected thereby. If the application of any provision or any portion of any
provision of this Agreement to any Person or circumstance shall be held invalid or unenforceable,
the application of such provision or portion of such provision to Persons or circumstances other
than those as to which it is held invalid or unenforceable shall not be affected thereby.



          9.12 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all such counterparts together shall
constitute one and the same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all, of the parties hereto.



          9.13 No Third Party Beneficiaries. Except as otherwise set forth in this Agreement, no provision of this Agreement is intended
to, or shall, confer any third party beneficiary or other rights or remedies upon any Person other
than the parties hereto.



[Remainder of Page Intentionally Left Blank]





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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	SELLERS:


Fleetwood Enterprises, Inc.

 	 
	 	By:  	/s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 
	 	Fleetwood Homes of Virginia, Inc.

 	 
	 	By:  	/s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 
	 	Fleetwood Homes of Georgia, Inc.

 	 
	 	By:  	/s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 
	 	Fleetwood Homes of Idaho, Inc.

 	 
	 	By:  	/s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 
	 	Fleetwood Homes of Oregon, Inc.

 	 
	 	By:  	/s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 
	 	Fleetwood Homes of Tennessee, Inc.

 	 
	 	By:  	/s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 



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Asset Purchase Agreement





 









 





	 	 	 	 	 
	 	Fleetwood Homes of Texas, L.P.

 	 
	 	By:  	Fleetwood General Partner of Texas, Inc.,
 	 
	 	 	its General Partner 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 



	 	 	 	 	 
	 	Fleetwood Homes of California, Inc.

 	 
	 	By:  	/s/ Elden L. Smith
 	 
	 	 	Name:  	Elden L. Smith 	 
	 	 	Title:  	President & CEO 	 
	 
	 	PURCHASER:


FH Holding, Inc.

 	 
	 	By:  	/s/ Joseph H. Stegmayer
 	 
	 	 	Name:  	Joseph H. Stegmayer 	 
	 	 	Title:  	President 	 
	 



Signature Page

to

Asset Purchase Agreement