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EXHIBIT 10.24
ASSET PURCHASE AGREEMENT
ACQUISITION OF ASSETS OF
A & G, INC.
BY
SOUTHERN ENERGY HOMES, INC.
DATED: AS OF DECEMBER 3, 1997
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE 1. PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets 6
1.2 Assumed and Retained Liabilities 8
1.3 Purchase Price and Payments at Closing 10
1.4 Lease of Retained Real Estate 11
1.5 Purchase and Sale of Buildings 11
1.6 Time and Place of Closing 12
1.7 Payment and Assumption of Liabilities 12
1.8 Transfer of Purchased Assets and the Buildings; Delivery
of the Real Estate Lease Agreement 12
1.9 Delivery of Records and Contracts 12
1.10 Additional Adjustments 13
1.11 Further Assurances 13
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL STOCKHOLDERS
2.1 Organization and Qualification of the Seller 14
2.2 Stock Ownership of the Seller 14
2.3 Authorization of Transaction 14
2.4 Present Compliance with Obligations and Laws 14
2.5 No Conflict of Transaction With Obligations and Laws 14
2.6 Financial Statements 15
2.7 Absence of Certain Changes 15
2.8 Payment of Taxes 15
2.9 Title to Properties; Liens; Condition of Properties 15
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2.10 Inventories 16
2.11 Intellectual Property Rights 16
2.12 Contracts and Commitments 16
2.13 Employee Benefits and ERISA 17
2.14 Environmental Matters 18
2.15 Permits 19
2.16 Warranty or Other Claims 19
2.17 Litigation 19
2.18 Finder's Fee 19
2.19 Transactions with Interested Persons 20
2.20 Disclosure of Material Information 20
2.21 Representations and Warranties 20
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization of the Buyer 20
3.2 Authorization of Transaction 20
3.3 No Conflict of Transaction With Obligations and Laws 20
3.4 Litigation 21
3.5 Finder's Fee 21
ARTICLE 4. CONDITIONS TO OBLIGATIONS OF BUYER
4.1 Representations; Warranties; Covenants 21
4.2 Opinion of the Seller's Counsel. 21
4.3 Non-Competition Agreements 21
4.4 No Adverse Change 21
4.5 Approval of Documentation 22
4.6 Absence of Certain Litigation 22
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4.7 Due Diligence 22
ARTICLE 5. CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE STOCKHOLDER
5.1 Representations; Warranties; Covenants 22
5.2 Opinion of the Buyer's Counsel 22
5.3 Approval of Documentation 23
5.4 Absence of Certain Litigation 23
ARTICLE 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
6.1 Survival of Warranties 23
6.2 Collection of Assets 23
6.3 Payment of Debts 23
ARTICLE 7. INDEMNIFICATION
7.1 Definitions 24
7.2 Indemnification by the Seller and Principal Stockholders 24
7.3 Indemnification by the Buyer 26
7.4 Defense of Third Party Actions 26
7.5 Miscellaneous 27
7.6 Payment of Indemnification 27
ARTICLE 8. REGISTRATION.
8.1 Required Registration 27
8.2 Conditions of Buyer's Obligations to Register Shares 28
8.3 Expenses 29
8.4 Financial Information 29
8.5 Exclusive Obligation to Register 29
8.6 State Securities Laws 29
8.7 Indemnification 29
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ARTICLE 9. MISCELLANEOUS
9.1 Fees and Expenses 31
9.2 Notices 31
9.3 Publicity and Disclosures 32
9.4 Entire Agreement 32
9.5 Assignability 32
9.6 Amendment 32
9.7 Governing Law 33
9.8 Counterparts 33
9.9 Effect of Table of Contents and Headings 33
SIGNATURES 34
LIST OF SCHEDULES AND EXHIBITS
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ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of the 3rd day of December, 1997, among SOUTHERN
ENERGY HOMES, INC., a Delaware corporation with its principal place of business
in Addison, Alabama ("the Buyer"), A & G, INC., a South Carolina corporation,
with its principal place of business in Charleston, South Carolina (the
"Seller") and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ who is the sole stockholder of the Seller (the
"Stockholder").
RECITALS:
WHEREAS, the Seller is engaged in the retail marketing and sales of new
and used manufactured homes at several retail lot locations (the "Business");
and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Buyer wishes to acquire the Business as a going concern and
substantially all of the properties and assets of the Seller and is prepared to
assume certain liabilities and obligations of the Seller, and the Seller wishes
to convey the Business as a going concern and such assets to the Buyer, subject
to such liabilities.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE 1. PURCHASE AND SALE OF ASSETS.
1.1 Purchase and Sale of Assets
(a) Purchased Assets. Subject to the provisions of this
Agreement and except as expressly excluded in paragraph (b), the Seller agrees
to sell and the Buyer agrees to purchase, at the Closing (as defined in Section
1.6 hereof), all of the properties, assets and business of the Seller of every
kind and description, tangible and intangible, wherever located, as the same may
exist on the date of the Closing (collectively, the "Purchased Assets")
including without limitation the following:
(i) all of the Seller s inventories of new and used
manufactured homes;
(ii) all of the Seller s steps, tools, decorator
kits, equipment, furniture, computer hardware and software and other personal
property;
(iii) all leasehold improvements and all leasehold
interests created by, and all rights of the Seller under those leases listed on
Schedule 1.1(a) hereto (the "Leases");
(iv) all customer purchase orders, purchase contracts
and purchase commitments which are outstanding as of the date of the Closing
relating to the purchase of manufactured homes;
(v) all of the Seller s rights under manufacturer
and/or supplier product warranties, guarantees and similar rights and assurances
which have been provided with respect to manufactured home inventories and other
personal property included among the Purchased Assets;
(vi) all rights with respect to prepaid amounts
received by the Seller prior to the Closing under dealer volume incentive or
rebate programs, to the extent that such prepaid amounts relate to manufactured
homes included in inventory and purchased by the Buyer at Closing ("Prepaid
Volume Incentive Amounts");
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(vii) all rights with respect to amounts payable
following the Closing under the Greentree Financial Retail Volume Bonus Program
(the "Greentree Bonus Program"), to the extent that such amounts relate to
manufactured homes sold by the Buyer following the Closing (the "Buyer s
Pro-Rata Share of the Greentree Bonus Amount"):
(viii) all authorizations, consents, approvals,
licenses, orders, permits, exemptions, concessions, grants, franchises, filings
or registrations issued to the Seller by any governmental authority or agency in
connection with the operation of the Business, to the extent the same are
legally transferable;
(ix) all books, records, manuals and other materials
(excluding the Seller s corporate and stock records) related to or used in
connection with the Business or the Purchased Assets, including mailing lists,
customer lists, sales contracts and/or orders, marketing materials, market
research data and business files; and
(x) all of the Seller s goodwill, trade secrets,
proprietary information, designs, styles, trademarks, trademark applications,
and retail location trade names.
(b) Retained Assets. The following assets shall be excluded from the
Purchased Assets and retained by the Seller (the "Retained Assets"):
I. all cash and cash equivalents held by the
Seller as of the date of the Closing, other than Prepaid Volume
Incentive Amounts;
II. all installment contracts receivable and
other accounts receivable of the Seller in existence and outstanding as
of the date of the Closing;
III. the real estate listed and described on
Schedule 1.1(b) hereto (the "Retained Real Estate");
IV. all rights with respect to amounts
payable following the Closing under dealer volume incentive or rebate
programs, to the extent that such amounts relate to manufactured homes
sold by the Seller prior to the Closing ("Post-Closing Volume Incentive
Amounts");
V. all rights with respect to amounts
payable following the Closing under the Greentree Bonus Program, to the
extent that such amounts relate to manufactured homes sold by the
Seller prior to the Closing (the "Seller s Pro Rata Share of the
Greentree Bonus Amount");
VI. all rights arising with respect to
refunds due from federal, state and/or local taxing authorities related
to taxes paid by the Seller or the Stockholder;
VII. the Seller's corporate and stock
records and such other records as have to do exclusively with the
Seller's organization or stock capitalization; and
VIII. certain items of personal property.
1.2 Assumed and Retained Liabilities.
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(a) Assumed Liabilities. Upon the sale and purchase of the
Purchased Assets, the Buyer shall assume, pay, perform or discharge when due
those liabilities and obligations (and only those liabilities and obligations)
of the Seller which are listed and described as follows:
IX. those liabilities of the Seller shown on
Schedule 1.2(a) hereto and those liabilities of the Seller arising
under contracts and commitments shown on Schedule 2.12 attached hereto,
in each case to the extent that such liabilities are outstanding at the
time of the Closing; and
X. those obligations of the Seller which
arise from and after the date of the Closing under the Leases. The
liabilities to be assumed by the Buyer under this Agreement are
hereinafter sometimes referred to as the "Assumed Liabilities".
(b) Retained Liabilities. Except to the extent expressly
assumed pursuant to Section 1.2(a) above, the Buyer does not assume and shall
not be liable for any debt, obligation, responsibility or liability of the
Seller, or any Affiliate (as defined below), or any claim against any of the
foregoing, whether known or unknown, contingent or absolute, or otherwise.
Without limiting the foregoing sentence, the Buyer shall have no responsibility
or liability with respect to the following, whether or not disclosed in the Base
Balance Sheet or a schedule hereto:
XI. liabilities and obligations related to
or arising from any transactions with any officer, director or
stockholder of the Seller or any person or organization controlled by,
controlling, or under common control with any of them (an "Affiliate");
XII. liabilities and obligations for taxes
of the Seller or the Stockholder of any kind, including taxes related
to or arising from the transfers contemplated hereby (except transfer
taxes specifically allocated to the Buyer under applicable state law),
and liabilities and obligations with respect to the administration or
termination of any employee benefit plan;
XIII. liabilities and obligations for damage
or injury to person or property based upon events occurring prior to
the date of Closing;
XIV. liabilities and obligations to
employees of the Seller, whether for accident, disability, or workers
compensation insurance or benefits, benefits under employee benefit
plans, back pay, or obligations related to or resulting from severance
of employment by the Seller;
XV. liabilities of the Seller with respect
to any options, warrants, agreements or convertible securities or other
rights to acquire any shares of its capital stock of any class;
XVI. liabilities and obligations of the
Seller which have arisen prior to the date of the Closing under the
Leases;
XVII. liabilities and obligations related to
group health insurance claims with respect to medical expenses incurred
prior to the Closing;
XVIII. liabilities and obligations with
respect to warranty claims or product liability claims for injuries,
losses or damages which arise out of or relate to manufactured homes
sold by the Seller prior to the Closing;
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XIX. liabilities and obligations resulting
from or arising out of any governmental or third party claims for
damages or clean-up costs pursuant to any environmental law existing
and in effect on the date hereof with respect to events occurring or
conditions existing prior to the Closing Date; or
XX. liabilities and obligations for wholesale floor plan interest with
respect to manufactured home contracts in transit.
(c) Rights of Third Parties. The assumption of Assumed
Liabilities by the Buyer hereunder shall be treated as independent of the
Buyer's existing business and shall not enlarge any rights of third parties
under contracts or arrangements with the Buyer or the Seller or any of their
respective subsidiaries. Nothing herein shall prevent the Buyer from contesting
in good faith any of the Assumed Liabilities.
1.3 Purchase Price and Payments at Closing.
(a) Payments at Closing. In consideration of the sale by the
Seller to the Buyer of the Purchased Assets, the Buyer shall assume the Assumed
Liabilities and pay to the Seller at Closing the aggregate amount of Two Million
One Hundred Seventy Two Thousand Dollars ($2,172,000) (the "Aggregate Closing
Amount") as follows:
XXI. One Million Three Hundred Three
Thousand Two Hundred Dollars ($1,303,200) (the "Net Asset Cash Amount")
shall be paid by certified check or by wire transfer of immediately
available federal funds; and
XXII. Eight Hundred Sixty-Eight Thousand
Eight Hundred Dollars ($868,800) (the "Net Asset Stock Amount") shall
be paid in the form of duly authorized, validly issued, fully paid and
nonassessable shares of the Common Stock of the Buyer, the number of
such shares to be issued to the Seller to be determined by dividing (x)
the Net Asset Stock Amount by (y) the average closing price per share
of the Buyer s Common Stock, as reported by the Nasdaq National Market,
for the five (5) trading days immediately preceding the third business
day prior to the Closing (the "Closing Price Per Share").
The Net Asset Cash Amount shall be subject to adjustment at the Closing
in accordance with Section 1.3(b) below.
(b) Determination of Net Inventory Value; Adjustment of the
Net Asset Cash Amount.
XXIII. At the Closing, the Seller shall
prepare an inventory statement (the "Inventory Statement") of the
Seller s net inventory value as of the Closing (the "Net Inventory
Value") which shall be equal to the difference between (x) the net book
value of the Seller s new and used manufactured home inventories as of
the Closing, determined on a basis consistent with the valuation of
inventories in preparation of the Base Balance Sheet (as defined in
Section 2.6 hereof), and (y) the outstanding balance due under the
floor plan financing liabilities and obligations to be assumed by the
Buyer as provided under Section 1.2(a) hereof. The Seller shall deliver
the Inventory Statement to the Buyer at the Closing, together with such
inventory statements and other related work papers as the Buyer may
reasonably request, and shall also deliver to the Buyer pay-off letters
from each of those lenders providing floor plan financing to the
Seller, which letters shall confirm the outstanding balances due under
those floor plan financing arrangements.
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XXIV. In the event that the Net Inventory
Value is less than One Hundred Seventy-Two Thousand Dollars ($172,000)
(the "Inventory Base Amount"), then (x) the Net Asset Cash Amount shall
be adjusted and reduced on a dollar-for-dollar basis by an amount equal
to the difference between the Inventory Base Amount and the Net
Inventory Value.
XXV. In the event that the Net Inventory
Value is greater than the Inventory Base Amount, then the Net Asset
Cash Amount shall be adjusted and increased by an amount equal to the
difference between the Net Inventory Value of the Inventory Base
Amount.
XXVI. In the event that the Net Inventory
Value equals the Inventory Base Amount, then there shall be no further
adjustment of the Net Asset Cash Amount.
1.4 Lease of Retained Real Estate. Subject to the provisions of this
Agreement, the Seller agrees to lease to the Buyer, and the Buyer agrees to
lease from the Seller, at the Closing, the Retained Real Estate under and in
accordance with the terms of a Real Estate Lease Agreement in the form attached
hereto as Exhibit A (the "Real Estate Lease Agreement").
1.5 Purchase and Sale of Buildings. Purchase and Sale of Buildings.
Subject to the provisions of this Agreement, the Stockholder agrees to sell and
the Buyer agrees to purchase, at the Closing, those manufactured home buildings
(the "Buildings") which are listed and described on Schedule 1.5 hereof and
which are used by the Seller as retail sales offices in connection with the
operation of the Business. The purchase price for the Buildings shall be One
Hundred Ten Thousand Dollars ($110,000) (the "Buildings Purchase Price"), which
shall be paid by the Buyer to the Stockholder at the Closing by certified check
or by wire transfer of immediately available federal funds.
1.6 Time and Place of Closing. The closing of the purchase and sale
provided for in this Agreement (herein called the "Closing") shall be held at
the offices of the Seller s counsel, Buist, Moore, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at 10:00 a.m. on December 3, 1997 or
at such other place, date or time as may be fixed by mutual agreement of the
parties, such Closing to be effective as of 12:01 a.m. E.S.T. on December 3,
1997.
1.7 Payment and Assumption of Liabilities. At the Closing, the Buyer
shall pay the Aggregate Closing Amount to the Seller as provided in Section 1.3
hereof and the Buildings Purchase Price to the Stockholder as provided in
Section 1.5 hereof. At the Closing, the Buyer shall also deliver to the Seller
an Instrument of Assumption to assume the Assumed Liabilities substantially in
the form attached hereto as Exhibit B.
1.8 Transfer of Purchased Assets and the Buildings; Delivery of the
Real Estate Lease Agreement.
(a) At the Closing, the Seller shall deliver to the Buyer good
and sufficient instruments of transfer transferring to the Buyer title to all
the Purchased Assets including a ▇▇▇▇ of sale in the form attached hereto as
Exhibit C, assignments of the Leases, together with any and all lessor consents,
and such other instruments of transfer as may be required. Such instruments of
transfer (i) shall be in the form and will contain the warranties, covenants and
other provisions (not inconsistent with the provisions hereof) which are usual
and customary for transferring the type of property involved under the laws of
the jurisdictions applicable to such transfers, (ii) shall be in form and
substance satisfactory to counsel for the Buyer, and (iii) shall effectively
vest in the Buyer good and marketable title to all the Purchased Assets, free
and clear of all liens, restrictions and encumbrances.
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(b) At the Closing, the Stockholder shall deliver to the Buyer
good and sufficient instruments of transfer transferring to the Buyer title to
all of the Buildings. Such instruments of transfer (i) shall be in the form and
will contain the warranties, covenants and other provisions (not inconsistent
with the provisions hereof) which are usual and customary for transferring the
Buildings under the laws of the jurisdictions applicable to such transfers, (ii)
shall be in the form and substance satisfactory to counsel for the Buyer, and
(iii) shall effectively vest in the Buyer good and marketable title to all of
the Buildings, free and clear of all liens, restrictions and encumbrances.
(c) At the Closing, the Buyer and the Seller shall also
execute and deliver the Real Estate Lease Agreement.
1.9 Delivery of Records and Contracts. At the Closing, the Seller shall
also deliver to the Buyer all of the Seller s equipment and other operating
leases, contracts, commitments and rights, with such assignments thereof and
consents to assignments as are necessary to assure the Buyer of the full benefit
of the same. The Seller shall also deliver to the Buyer at the Closing all of
the Seller's business records, books and other data relating to its assets,
business and operations (except corporate records and other property of the
Seller excluded or relating to assets excluded under Section 1.1(b)) and the
Seller shall take all requisite steps to put the Buyer in actual possession and
operating control of the assets and the Business. After the Closing the Buyer
shall afford to the Seller and its accountants and attorneys reasonable access
to the books and records of the Seller delivered to the Buyer under this Section
1.9 and shall permit the Seller to make extracts and copies therefrom for the
purpose of preparing such tax returns of the Seller as may be required after the
Closing and for other proper purposes approved by the Buyer.
1.10 Additional Adjustments . At the Closing, the Seller and the Buyer
shall identify and agree upon the aggregate of any Prepaid Volume Incentive
Amounts to be credited to the Buyer as part of the Purchased Assets and the
Seller shall either (i) pay such aggregate amount to the Buyer by certified
check or by wire transfer of immediately available federal funds or (ii)
authorize the Buyer to take a credit for such amount against the Net Asset Cash
Amount otherwise payable to the Seller at the Closing under Sections 1.3 and 1.7
hereof. At the Closing, the Seller and the Buyer shall also identify and agree
upon the aggregate of any Post-Closing Volume Incentive Amounts to be credited
to the Seller. If such amounts cannot be accurately determined as of the date of
the Closing, the Seller and the Buyer shall, in the alternative, agree upon the
methodology by which such amounts shall be determined. Thereafter, as
Post-Closing Incentive Amounts are received by the Buyer from manufacturers who
offer deal volume incentive or rebate programs, the Buyer shall promptly remit
such Post-Closing Incentive Amounts to the Seller. At the Closing, the Seller
and the Buyer shall also agree upon the methodology by which the Buyer s Pro
Rata Share of the Greentree Bonus Amount and the Seller s Pro Rata Share of the
Greentree Bonus Amount shall be determined and thereafter, as amounts are
received following the Closing by either the Seller or the Buyer under the
Greentree Bonus Program, such amounts shall be allocated between the Seller and
the Buyer in proportion to Buyer s Pro Rata Share of the Greentree Bonus Amount
and the Seller s Pro Rata Share of the Greentree Bonus Amount. Further, at the
Closing, the Buyer shall reimburse the Seller for expenses incurred by the
Seller with respect to those manufactured home sale transactions which are
pending as of the Closing, the rights with respect to which are included among
the Purchased Assets. The Seller and the Buyer acknowledge and agree that, since
the amount of such expenses may be difficult to calculate precisely, such
expenses shall be reimbursed at an estimated and assumed rate of Two Thousand
Dollars ($2,000) per transaction. Finally, at the Closing, the Buyer shall
reimburse the Seller for any amounts paid by the Seller under the Leases with
respect to any period following the Closing, the amount of such reimbursement to
be calculated on a per diem basis and paid by certified check or by wire
transfer of immediately available federal funds.
1.11 Further Assurances. The Seller from time to time after the Closing
at the request of the Buyer and without further consideration shall execute and
deliver further instruments of transfer and assignment (in
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addition to those delivered under Section 1.8) and take such other action as the
Buyer may reasonably require to effectively transfer and assign to, and vest in,
the Buyer each of the Purchased Assets
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL STOCKHOLDERS.
The Seller and the Stockholder hereby jointly and severally represent
and warrant to the Buyer as follows:
2.1 Organization and Qualification of the Seller. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of South Carolina, with full power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. The
copies of the Seller s Certificate of Incorporation or equivalent document as
amended to date ("Charter"), certified by the South Carolina Secretary of State,
and of the Seller's by-laws as amended to date, certified by the Seller's
Secretary (or the equivalent), and previously delivered to the Buyer's counsel,
are complete and correct. To the Seller's knowledge, the Seller is not required
to be licensed or qualified to conduct its business or own its property in any
other jurisdiction, except for licenses in other jurisdictions disclosed in
Schedule 2.15.
2.2 Stock Ownership of the Seller. All of the issued and outstanding
shares of the capital stock of the Seller are held by the Stockholder. There are
no (a) outstanding warrants, options or other rights granted by the Seller or
the Stockholder to purchase or acquire, or pre-emptive rights with respect to
the issuance or sale of, the capital stock of the Seller, or (b) other
securities of the Seller directly or indirectly convertible into or exchangeable
for shares of capital stock of the Seller.
2.3 Authorization of Transaction. All necessary action, corporate or
otherwise, has been taken by the Seller and the Stockholder to authorize the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, and the Agreement is the valid and binding obligation of
the Seller and the Stockholder, enforceable in accordance with its terms.
2.4 Present Compliance with Obligations and Laws. The Seller is not:
(a) in violation of its Charter or by-laws; (b) in material default of or
material breach of (with or without the passage of time or the giving of notice)
any material contract or lease to which it is a party or by which it or any of
the Purchased Assets are bound and has not received notice from any party to any
such contract or lease of such a material default or breach; or (c) to the
Seller's knowledge in violation of any law, regulation, administrative order or
judicial order applicable to it or its business or the Purchased Assets.
2.5 No Conflict of Transaction With Obligations and Laws.
(a) Neither the execution, delivery and performance of this
Agreement, nor the performance of the transactions contemplated hereby, will:
(i) constitute a breach or violation of the Charter or by-laws of the Seller;
(ii) to the Seller's knowledge, conflict with or constitute (with or without the
passage of time or the giving of notice) a material breach of, or material
default under, any debt instrument to which the Seller or the Stockholder is a
party, or give any person the right to accelerate any material indebtedness or
terminate any material right; (iii) to the Seller's knowledge, constitute (with
or without the passage of time or giving of notice) a default under or breach of
any other material agreement, instrument or obligation to which the Seller or
the Stockholder is a party or by which the Seller, the Stockholder or any of the
Purchased Assets are bound; or (iv) to the Seller's knowledge, result in a
violation of any law, regulation, administrative order or judicial order
applicable to the Seller or its business or the Purchased Assets.
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(b) To the Seller's knowledge, the execution, delivery and
performance of this Agreement and the transactions contemplated hereby by the
Seller and the Stockholder do not require the consent, waiver, approval,
authorization, exemption of or giving of notice to any governmental authority.
2.6 Financial Statements. Attached as Schedule 2.6 hereto are the
following financial statements of the Seller, all of which statements are
complete and correct in all material respects and fairly present the financial
position of the Seller on the date of such statements and the results of its
operations on the applicable basis for the periods covered thereby: Financial
statements for the years ended December 31, 1995 and December 31, 1996 and
financial statements for the nine month period ended September 30, 1997. The
balance sheet dated September 30, 1997 included in the above financial
statements is sometimes referred to hereinafter as the "Base Balance Sheet".
2.7 Absence of Certain Changes. Since the date of the Base Balance
Sheet there has not been any material change in the financial condition,
properties, assets, liabilities or operations of the Seller which change by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has been materially adverse with respect to the
Seller. To the Seller's knowledge, there is no fact which materially adversely
affects, or may in the future (so far as can now be reasonably foreseen)
materially adversely affect, the business, properties, operations or condition
of the Seller which has not been specifically disclosed herein or in a schedule
furnished herewith.
2.8 Payment of Taxes. To the Seller's knowledge, each of the Seller and
the Stockholder has filed all federal, state, local, and foreign government
income excise or franchise tax returns, real estate and personal property tax
returns, sales and use tax returns and all other tax returns required to be
filed by the Seller or the Stockholder, and each of the Seller and the
Stockholder has paid all taxes owing by the Seller or the Stockholder, except
taxes which have not yet accrued or otherwise become due. All transfer, excise
and other taxes payable to any jurisdiction by reason of the sale and transfer
of the Purchased Assets pursuant to this Agreement shall be paid or provided for
by the Seller or the Stockholder after the Closing.
2.9 Title to Properties; Liens; Condition of Properties.
(a) Set forth on Schedule 2.9 hereto is a listing of (i) all
leases under which the Seller leases real property at the date hereof, (ii) a
description of substantially all of the machinery, equipment and other personal
property used or owned by the Seller as of the date hereof, and (iii) all leases
under which the Seller leases any personal property at the date hereof.
(b) Except as specifically disclosed in Schedule 2.9 hereto,
to the Seller's knowledge, the Seller has good and marketable title in fee
simple to the Retained Real Estate. Except as specifically disclosed in Schedule
2.9 hereto, the Seller has good title to all of its personal property, free and
clear of all liens, restrictions and encumbrances, and all of its leases are
valid and subsisting and fully assignable by the Seller and no material default
exists under any thereof. Except as specifically disclosed in Schedule 2.9
hereto, the Stockholder has good title to the Buildings, free and clear of all
liens, restrictions and encumbrances.
(c) Except as otherwise specified in Schedule 2.9 hereto, to
the Seller's knowledge, the Buildings and all machinery and equipment of the
Seller are in good repair and working order for their intended use and, to the
Seller's knowledge, substantially conform with all applicable ordinances,
regulations and zoning or other laws, and do not encroach on property of others.
2.10 Inventories. Except as shown on Schedule 2.10, all manufactured
homes contained in the inventories of the Seller reflected on the Base Balance
Sheet are, and those existing at the Closing will be, to the Seller's knowledge,
of a quality and quantity saleable in the ordinary course of the business of the
Seller at
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prevailing market prices without discounts. All inventory items shown on the
Base Balance Sheet are, and those are existing at the Closing will be, priced at
lower of cost or market, and, to the Seller's knowledge, reflect write-downs to
realizable values in the case of items which have become obsolete or unsaleable
in the ordinary course of the business of the Seller. Subject to write-downs
complying with the preceding sentence, the values of the inventories stated in
the Base Balance Sheet reflect the normal inventory valuation policies of the
Seller and were determined in accordance with generally accepted accounting
principles, practices and methods, consistently applied. Purchase commitments
for manufactured homes are not, to the Seller's knowledge, in excess of normal
requirements, and none are at prices materially in excess of current market
prices. Sales commitments for both new and used manufactured homes are all at
prices in excess of prices used in valuing inventory, after allowing for selling
expenses and a normal profit margin. Since the date of the Base Balance Sheet,
no new or used manufactured homes held in the Seller s inventory as of such date
have been sold or disposed of except through sales in the ordinary course of
business at prices no less than prevailing market prices, and in no event less
than cost.
2.11 Intellectual Property Rights. Set forth on Schedule 2.11 hereto is
a true and complete list of all trademarks, service marks, trademark and service
▇▇▇▇ applications, trade names, and copyrights (all of the foregoing
collectively referred to as "Intellectual Property") presently owned or held by
the Seller, and any material license of or right to any Intellectual Property.
2.12 Contracts and Commitments.
Except for contracts, commitments, plans, agreements and
licenses described in Schedule 2.12 hereto, the Seller is not a party to or
subject to:
(i) any contract or agreement for the purchase of new
or used manufactured homes;
(ii) any floor-plan financing or other similar loan
agreements or arrangements under which the Seller finances the purchase of new
or used manufactured homes;
(iii) any consumer loan or other similar loan or
credit agreements under which the Seller provides financing for the purchase by
retail customers or others for the purchase of new or used manufactured homes;
(iv) any dealer or sale representative agreements
with persons or entities engaged in the manufacture or distribution of
manufactured homes;
(v) any dealer volume incentive or rebate programs or
agreements under which the Buyer may be entitled to any Prepaid Volume Incentive
Amounts or under which the Seller may be entitled to receive any Post-Closing
Volume Incentive Amounts or any finance company volume incentive or rebate
programs or agreements other than the Greentree Bonus Program;
(vi) any contract or agreement for the purchase of
any materials, equipment or asset, other than purchase orders in the ordinary
course of business for less than $5,000 each, such orders not exceeding $20,000
in the aggregate;
(vii) any other contracts or agreements creating any
obligations of the Seller after the date of the Base Balance Sheet of $10,000 or
more with respect to any such contract or agreement, other than sales and
purchase commitments in the ordinary course of business;
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(viii) any contract or agreement creating obligations
of the Seller in excess of $10,000 which by its terms is not terminable without
penalty by the Seller (or its successor or assign) upon thirty (30) days notice;
(ix) any contract containing covenants limiting the
freedom of the Seller to compete in any line of business or with any person or
entity; or
(x) any license or franchise agreement (as licensor
or licensee or franchisor or franchisee).
2.13 Employee Benefits and ERISA.
There are no currently effective pension, deferred
compensation, stock purchase, option, bonus, profit sharing, or other employee
benefit plans (within the meaning of Section 3 of the Employment Retirement
Income Act of 1974, as amended ("ERISA"), severance pay or other material
benefits practices (each such plan, arrangement or practice being hereafter
referred to as "Benefit Plan") relating to the employees of the Seller. There
are no multi-employer plans (as defined within the meaning of Section 3 (37) and
4001(a)(3) of ERISA) relating to the employees of the Seller, nor has there been
any multi-employer plan relating to such employees within the last five years.
2.14 Environmental Matters.
To the Seller's knowledge:
(a) Any and all waste oil, hazardous waste, hazardous
substances, toxic substances or hazardous materials used or generated by the
Seller have always been and are being generated, used, stored or treated on or
at any of the properties or facilities owned or leased by the Seller (for the
purposes of this Section, a "Site") according to federal, state and local laws,
regulations and ordinances. Copies of any and all filings made or documents
prepared under applicable state and local laws, regulations and ordinances and
under Title III of the Superfund Amendments and Reauthorization Act of 1986,
including without limitation material safety data sheets and chemical lists,
have been provided to the Buyer.
(b) No petroleum, oil, hazardous waste, hazardous substances,
toxic substances or hazardous materials used or generated by the Seller have
ever been, are being, are intended to be or are threatened with being spilled,
released, discharged, disposed, placed, leaked, or otherwise caused to become
located in the air, soil or water in, under or upon a Site.
(c) No petroleum, oil, hazardous substances or hazardous waste
have ever been shipped by or for the Seller to other sites or facilities for
treatment, storage or disposal, and the Seller has not received any notice that
any sites or facilities to which any such wastes have been shipped or sent to
are subject to or threatened to become subject to any governmental response
action or clean up order. The Seller has provided the Buyer with copies of all
manifests documenting disposal of hazardous substances relating to operations of
the Seller.
(d) All hazardous materials and toxic substances have been
shipped by the Seller in accordance with all applicable federal, state and local
laws, regulations and ordinances, including The Hazardous Materials
Transportation Act, the regulations of the Department of Transportation, and any
corresponding state or local statute and regulations adopted pursuant to said
act.
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(e) All underground tanks and other underground storage
facilities located at any Site are listed in Schedule 2.14 hereto and copies of
all notifications made to federal, state or local authorities pursuant to the
Resource Conservation and Recovery Act relating to underground storage tanks
have been provided to the Buyer. As of the date hereof, none of such underground
tanks and other underground storage facilities are in violation of any federal,
state or local environmental law, regulation or ordinance.
(f) The Seller has all necessary and applicable air permits
and licenses, and has properly registered (for air pollution control purposes)
all air emitting devices used by and activities conducted by it, as required by
applicable federal, state or local law, regulation or ordinance. Copies of all
such permits have been provided to the Buyer.
(g) For purposes of this section, "hazardous waste",
"hazardous substances", "hazardous material", "oil", "petroleum", "toxic
substances", "manifest", "material safety data sheets", and "response action"
shall have the meaning set forth in the Resource Conservation and Recovery Act,
The Comprehensive Environmental Response, Compensation and Liability Act, The
Hazardous Materials Transportation Act, The Federal Water Pollution Control Act,
The Toxic Substances Control Act, and corresponding state and local statutes,
and ordinances and any amendments, or successor legislation to such Acts, or as
currently defined in any federal, state or local regulations adopted pursuant to
such Acts.
2.15 Permits. To the Seller's knowledge, the Seller holds all licenses,
permits and franchises which are required to permit it to conduct its businesses
as presently conducted, and all such licenses, permits and franchises are listed
on Schedule 2.15 hereto and are now, and will be after the Closing, valid and in
full force and effect, and the Buyer, to the extent permitted by applicable law,
shall have full benefit of the same.
2.16 Warranty or Other Claims. Schedule 2.18 constitutes a summary of
all pending claims against the Seller, of which the Seller has received notice,
which allege with respect to new or used manufactured homes sold by the Seller
defective workmanship or manufacture, breach of express or implied warranties,
product liability, or any combination thereof. All such claims have been
submitted in the ordinary course and are not materially different in type,
nature, or amount from those previously received by the Seller. The Seller has
reserved amounts against such claims consistent with its past practice and
historically such reserves have been adequate. There is no reason to believe
that such claims experience will not continue to be consistent with such past
experience.
2.17 Litigation. Except for matters described in Schedule 2.19 hereto,
there is no suit, action, proceeding or governmental investigation pending (or,
to the Seller's knowledge, threatened) against the Seller or the Stockholder,
and there are no outstanding court orders, court decrees, or court stipulations
to which the Seller or the Stockholder is a party or by which any of its or his
assets are bound, any of which (a) question this Agreement or affect the
transactions contemplated hereby, or (b) materially restrict the present
business properties, operations, prospects, assets or condition, financial or
otherwise, of the Seller, or (c) will result in any materially adverse change in
the business, properties, operations, prospects, assets or the condition,
financial or otherwise, of the Seller or the Stockholder. Neither the Seller nor
the Stockholder has any reason to believe that any such action, suit, proceeding
or investigation may be brought against the Seller or the Stockholder.
2.18 Finder's Fee. Neither the Seller nor the Stockholder has incurred
or become liable for any broker's commission or finder's fee relating to or in
connection with the transactions contemplated by this Agreement.
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2.19 Transactions with Interested Persons. Except to the extent
described in Schedule 2.19 hereto, none of any officer, supervisory employee, or
director of the Seller, the Stockholder or their respective spouses or children,
(i) owns, directly or indirectly, on an individual or joint basis, any material
interest in, or serves as an officer or director of, any customer, competitor or
supplier of the Seller, or any organization which has a material contract or
arrangement with the Seller, or (ii) has any contract or agreement with the
Seller.
2.20 Disclosure of Material Information. To the Seller's knowledge,
neither this Agreement nor any exhibit or schedule hereto or certificate issued
pursuant hereto contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements herein or therein not
misleading, relating to the business or affairs of the Seller.
2.21 Representations and Warranties. To the extent that any portion of
the representations and warranties made herein were made to the knowledge of the
Seller, such representation or warranty also contains a representation that the
Seller has made diligent and careful inquiry with respect thereto. When
representations and warranties are based on and qualified by and limited to the
knowledge of the Seller, such knowledge shall be limited to the actual knowledge
of any of the officers and directors of the Seller as well as the actual
knowledge of the Stockholder.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
The Buyer hereby represents and warrants to the Seller and the
Stockholder as follows:
3.1 Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full corporate power to own or lease its properties and to conduct
its business in the manner and in the places where such properties are owned or
leased or such business is conducted by it.
3.2 Authorization of Transaction. All necessary action, corporate or
otherwise, has been taken by the Buyer to authorize the execution, delivery and
performance of this Agreement, and the same is the valid and binding obligation
of the Buyer enforceable in accordance with its terms, subject to laws of
general application affecting creditor's rights generally.
3.3 No Conflict of Transaction With Obligations and Laws.
(a) Neither the execution, delivery and performance of this
Agreement, nor the performance of the transactions contemplated hereby, will:
(i) constitute a breach or violation of the Buyer's Charter or by-laws; (ii)
conflict with or constitute (with or without the passage of time or the giving
of notice) a breach of, or default under any material agreement, instrument or
obligation to which the Buyer is a party or by which it or its assets are bound
which would materially affect the performance by the Buyer of its obligations
under this Agreement; or (iii) result in a violation of any law, regulation,
administrative order or judicial order applicable to the Buyer.
(b) The execution, delivery and performance of this Agreement
and the transactions contemplated hereby by the Buyer do not require the
consent, waiver, approval, authorization, exemption of or giving of notice to
any governmental authority, except for such disclosure of the transactions
contemplated hereby which may be required by federal and state securities laws.
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3.4 Litigation. There is no litigation pending or, to the knowledge of
the Buyer, threatened against the Buyer which would prevent or hinder the
consummation of the transactions contemplated by this Agreement.
3.5 Finder's Fee. The Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
ARTICLE 4. CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of the Buyer to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article 4 will have been accomplished.
4.1 Representations; Warranties; Covenants. Each of the representations
and warranties of the Seller and the Stockholder contained in Article 2 shall be
true and correct as though made on and as of the Closing Date.
4.2 Opinion of the Seller's Counsel.
At the Closing, the Buyer shall have received from Buist,
Moore, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., counsel for the Seller, an opinion dated as of the
Closing, substantially in the form set forth as Exhibit D hereto.
4.3 Non-Competition Agreements . The Stockholder shall have executed
and delivered to the Buyer a non-competition agreement including substantially
the terms and conditions set forth in Exhibit E attached hereto.
4.4 No Adverse Change. During the period from the date of the Base
Balance Sheet to the Closing, there shall not have been any change in the
condition, financial or otherwise, the results of operation, or, to the
knowledge of the Seller, the future prospects of the Business other than changes
in the ordinary course of business, none of which has been materially adverse;
and the Seller shall not have sustained any loss or damage to its properties,
whether or not insured, which materially adversely affects its ability to
conduct the Business; and all liabilities of the Seller relating to its business
at the Closing which were not reflected on the Base Balance Sheet are
liabilities incurred in the ordinary course of the business subsequent thereto,
none of which was incurred in violation or contravention of any provisions of
this Agreement.
4.5 Approval of Documentation. All actions, proceedings, instruments
and documents required to carry out this Agreement and all related legal matters
contemplated by this Agreement shall have been approved by counsel for the
Buyer, provided that the approval of such counsel shall not be unreasonably
withheld.
4.6 Absence of Certain Litigation. There shall not be any (i)
injunction, restraining order or order of any nature issued by any court of
competent jurisdiction which directs that this Agreement or any material
transaction contemplated hereby shall not be consummated as herein provided,
(ii) suit, action or other proceeding by any federal, state, local or foreign
government (or any agency thereof) or pending before any court or governmental
agency, or threatened to be filed or initiated, wherein such complainant seeks
the restraint or prohibition of the consummation of any material transaction
contemplated by this Agreement or asserts the illegality thereof, or (iii) suit,
action or other proceeding by a private party pending before any court or
governmental agency, or threatened to be filed or initiated, which in the
reasonable opinion of counsel for the Buyer is likely to result in the restraint
or prohibition of the consummation of any material transaction contemplated
hereby or the obtaining of an amount in payment (or indemnification) of material
damages from
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or other material relief against any of the parties or against any directors or
officers of the Buyer, in connection with the consummation of any material
transaction contemplated hereby.
4.7 Due Diligence. The Buyer, acting through its own management and
personnel, counsel, accountants, engineers or other representatives designated
by it, shall have been afforded full and complete opportunity to examine,
investigate and review all aspects of the Seller's business, including, but not
limited to, the Seller's financial statements, contracts and leases, assets,
liabilities, inventory, accounts receivable, methods of accounting, financial
and other business records, customers and suppliers and the Seller's machinery
and equipment.
ARTICLE 5. CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE STOCKHOLDER
The obligations of the Seller and the Stockholder to consummate this
Agreement and the transactions contemplated hereby are subject to the condition
that on or before the Closing the actions required by this Article 5 will have
been accomplished.
5.1 Representations; Warranties; Covenants. Each of the representations
and warranties of the Buyer contained in Article 3 shall be true and correct as
though made on and as of the Closing; and the Buyer shall, on or before the
Closing, have performed all of its obligations hereunder which by the terms
hereof are to be performed on or before the Closing.
5.2 Opinion of the Buyer's Counsel At the Closing, the Seller shall
have received from Brown, Rudnick, Freed & Gesmer, counsel for the Buyer, an
opinion dated as of the Closing, substantially in the form of Exhibit F.
5.3 Approval of Documentation. All actions, proceedings, instruments
and documents required to carry out this Agreement and all related legal matters
contemplated by this Agreement shall have been approved by counsel for the
Seller, provided that the approval of such counsel shall not be unreasonably
withheld.
5.4 Absence of Certain Litigation. There shall not be any (i)
injunction, restraining order or order of any nature issued by any court of
competent jurisdiction which directs that this Agreement or any material
transaction contemplated hereby shall not be consummated as herein provided,
(ii) suit, action or other proceeding by any federal, state, local or foreign
government (or any agency thereof) or pending before any court or governmental
agency, or threatened to be filed or initiated, wherein such complainant seeks
the restraint or prohibition of the consummation of any material transaction
contemplated by this Agreement or asserts the illegality thereof, or (iii) suit,
action or other proceeding by a private party pending before any court or
governmental agency, or threatened to be filed or initiated, which in the
reasonable opinion of counsel for the Seller is likely to result in the
restraint or prohibition of the consummation of any material transaction
contemplated hereby or the obtaining of an amount in payment (or
indemnification) of material damages from or other material relief against any
of the parties or against any directors or officers of the Seller, in connection
with the consummation of any material transaction contemplated hereby.
ARTICLE 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
6.1 Survival of Warranties. All representations, warranties,
agreements, covenants and obligations herein or in any schedule, certificate or
financial statement delivered by any party to the other parties incident to the
transactions contemplated hereby are material, shall be deemed to have been
relied upon by the other parties and shall survive the Closing in accordance
with Article 8 hereof, regardless of any investigation and shall not merge in
the performance of any obligation by any party hereto, provided that the
covenants and agreements contained herein to be performed or complied with prior
to the Closing shall expire at the Closing.
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6.2 Collection of Assets. Subsequent to the Closing, the Buyer shall
promptly transfer or deliver to the Seller from time to time, any cash or other
property that the Buyer may receive with respect to installment contracts
receivable or other accounts receivables of any character or any other items
retained by the Seller pursuant to the provisions hereof. Subsequent to the
Closing, the Seller shall promptly transfer or deliver to the Buyer from time to
time, any cash or other property that the Seller may receive with respect to the
Purchased Assets or the operation of the Business from and after the Closing.
6.3 Payment of Debts. The Seller shall as promptly as possible after
the Closing pay any debts and obligations not to be assumed by the Buyer
hereunder, which debts would materially affect the transactions contemplated
hereby.
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ARTICLE 7. INDEMNIFICATION
7.1 Definitions. For purposes of this Article 7:
"Losses" means all losses, damages (including, without
limitation, punitive and consequential damages), liabilities, payments and
obligations, and all expenses related thereto. Losses shall include any legal
fees and costs incurred by any of the Indemnified Persons subsequent to the
Closing in defense of or in connection with any alleged or asserted liability,
payment or obligation, whether or not any liability or payment, obligation or
judgment is ultimately imposed against the Indemnified Persons and whether or
not the Indemnified Persons are made or become parties to any such action.
The "Buyer's Indemnified Persons" means the Buyer and any
person or entity that directly or indirectly controls, or is controlled by, or
is under common control with, the Buyer, and each of their respective directors,
officers, employees, stockholders and agents.
"Indemnified Person" means any person entitled to be
indemnified under this Article 7.
"Indemnifying Person" means any person obligated to indemnify
another person under this Article 7.
The "Seller's Indemnified Persons" means the Seller, any
entity under common control with the Seller, their respective directors,
officers, employees, stockholders and agents and the Stockholder.
"Third Party Action" means any written assertion of a claim,
or the commencement of any action, suit, or proceeding, by a third party as to
which any person believes it may be an Indemnified Person hereunder.
7.2 Indemnification by the Seller and Principal Stockholders.
(a) Subject to the limitations in paragraph (b) below, the
Seller and the Stockholder, jointly and severally, agrees to defend, indemnify
and hold harmless the Buyer's Indemnified Persons from and against all Losses
directly or indirectly incurred by or sought to be imposed upon any of them:
(i) resulting from or arising out of any breach of
any of the representations or warranties (other than those in Sections 2.1, 2.2,
2.8, 2.9(b) and 2.14) made by the Seller or the Stockholder in or pursuant to
this Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the Closing;
(ii) resulting from or arising out of any breach of
any of the representations or warranties made by the Seller or the Stockholder
pursuant to Sections 2.1, 2.2, 2.8 or 2.9(b);
(iii) resulting from or arising out of any breach of
any covenant or agreement made by the Seller or the Stockholder in or pursuant
to this Agreement;
(iv) in respect of any liability or obligation of the
Seller or the Stockholder not included in the Assumed Liabilities (other than
liabilities or obligations described in Section 1.2(b)(ix) and those liabilities
resulting from or arising out of any breaches of the representations or
warranties made by the Seller and the Stockholder pursuant to Section 2.14);
XXVII.resulting from or arising out
of any liability,
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payment or obligation arising out of any
litigation or similar matter required to be
described on Schedule 2.17; or
▇▇▇▇▇▇.▇▇ respect of any liability
or obligation of the Seller or the
Stockholder described in Section 1.2(b)(ix)
or resulting from or arising out of any
breach of any of the representations or
warranties made by the Seller or the
Stockholder pursuant to Section 2.14.
(b) The right to indemnification under paragraph (a) is
subject to the following limitations:
(i) Neither the Seller nor the Stockholder shall have
liability under paragraph (a) unless one or more of the Buyer's Indemnified
Persons gives written notice to the Seller asserting a claim for Losses,
including reasonably detailed facts and circumstances pertaining thereto, before
the expiration of the period set forth below:
(A) for claims under clause (i) of paragraph
(a) above, a period of two (2) years from the Closing Date;
(B) for all other claims, for so long as any
claim may be made in respect of such matters under any applicable statute of
limitations, and for which Buyer would have any claim for Loss.
(ii) Indemnification for claims under clauses (i) and
(iii) of paragraph (a) above shall be payable by the Seller and the Stockholder
hereunder only if and to the extent that the aggregate amount of all of Losses
hereunder by the Buyer's Indemnified Persons with respect to such claims shall
exceed $50,000. The maximum aggregate liability of the Seller and the
Stockholder for claims under paragraph (a) above (other than under clauses
(a)(vi) shall be $2,000,000 and there shall be no maximum liability for claims
under paragraph (a)(vi).
(iii) Nothing herein shall accrue to the benefit of,
or enlarge the rights of, any third party.
7.3 Indemnification by the Buyer.
(a) Subject to the limitations in paragraph (b) below, from
and after the Closing Date, the Buyer shall indemnify and hold harmless the
Seller's Indemnified Persons from any and all Losses directly or indirectly
incurred by or sought to be imposed upon them:
(i) resulting from or arising out of any breach of
any of the representations or warranties made by the Buyer, in or pursuant to
this Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the Closing;
(ii) resulting from or arising out of any breach of
any covenant or agreement made by the Buyer in or pursuant to this Agreement;
and
(iii) in respect of any liability or obligation
included in the Assumed Liabilities.
(b) The right to indemnification under paragraph (a) above is
subject to the limitation that the Buyer shall have no liability under paragraph
(a) unless a Seller's Indemnified Person gives written notice to the Buyer
asserting a claim for Losses, including reasonably detailed facts and
circumstances pertaining thereto, before the expiration of the period set forth
below:
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(i) for claims under clause (a)(i) above, two (2)
years from the Closing Date; and
(ii) for all other claims, for so long as any claim
may be made in respect of such matters under any applicable statute of
limitations.
7.4 Defense of Third Party Actions.
(a) Promptly after receipt of notice of any Third Party
Action, any person who believes he or it may be an Indemnified Person will give
notice to the potential Indemnifying Person of such action. The omission to give
such notice to the Indemnifying Person will not relieve the Indemnifying Person
of any liability hereunder unless it was prejudiced thereby, nor will it relieve
it of any liability which it may have other than under this Article 7.
(b) Upon receipt of a notice of a Third Party Action, the
Indemnifying Person shall have the right, at its option and at its own expense,
to participate in and be present at the defense of such Third Party Action, but
not to control the defense, negotiation or settlement thereof, which control
shall remain with the Indemnified Person, unless the Indemnifying Person makes
the election provided in paragraph (c) below.
(c) By written notice within forty-five (45) days after
receipt of a notice of a Third Party Action, an Indemnifying Person may elect to
assume control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
Indemnifying Person agrees (i) to promptly indemnify the Indemnified Person for
its reasonable expenses to date, and (ii) to hold the Indemnified Person
harmless from and against any and all Losses caused by or arising out of any
settlement of the Third Party Action approved by the Indemnifying Person or any
judgment in connection with that Third Party Action. The Indemnifying Persons
shall not in the defense of the Third Party Action enter into any settlement
which does not include as a term thereof the giving by the third party claimant
of an unconditional release of the Indemnified Person, or consent to entry of
any judgment except with the consent of the Indemnified Person. The Indemnified
Person agrees to cooperate in the defense.
(d) If the Indemnifying Person does not elect to control the
defense of a Third Party Action under paragraph (c), the Indemnifying Person
shall promptly reimburse the Indemnified Person for expenses incurred by the
Indemnified Person in connection with defense of such Third Party Action, as and
when the same shall be incurred by the Indemnified Person.
(e) Any person who has not assumed control of the defense of
any Third Party Action shall have the duty to cooperate with the party which
assumed such defense.
7.5 Miscellaneous. (a) The Buyer's Indemnified Persons shall be
entitled to indemnification under Section 7.2 and the Seller's Indemnified
Persons shall be entitled to indemnification under Section 7.3, regardless of
whether the matter giving rise to the applicable liability, payment, obligation
or expense may have been previously disclosed to any such person.
(b) If any Loss is recoverable under more than one provision
hereof, the Indemnified Person shall be entitled to assert a claim for such Loss
until the expiration of the longest period of time within which to assert a
claim for Loss under any of the provisions which are applicable.
7.6 Payment of Indemnification. Claims for indemnification under this
Article 7 shall be paid or otherwise satisfied by Indemnifying Persons within
thirty (30) days after notice thereof is given by the Indemnified Person, and
the amount of the claim is ascertained.
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ARTICLE 8. REGISTRATION.
8.1 Required Registration. If at any time during the period beginning
on the date of the Closing and ending on the second anniversary of the Closing,
the Buyer receives a written request from the Seller to file a registration
statement under the Securities Act of 1933, as amended (the "1933 Act") for a
public offering of those shares of the Common Stock of the Buyer received in
payment of the Net Asset Stock Amount (the "Registrable Shares"), the Buyer will
promptly use its reasonable efforts to cause a registration statement to be
filed with the Securities and Exchange Commission with respect to the number of
such shares specified in the request, and will use its reasonable efforts to
cause such registration statement to become effective under the ▇▇▇▇ ▇▇▇. The
Buyer shall prepare and file with the Securities and Exchange Commission, as
soon as reasonably practicable, any necessary amendments to the Registration
Statement or supplements to the prospectus included therein. Buyer shall not be
required to cause more than one registration statement to be filed with respect
to any Shares pursuant to this Section 8.1.
8.2 Conditions of Buyer's Obligations to Register Shares. Buyer's
obligation under Section 8.1 to cause a registration statement or amendment to
be filed shall be subject to the following conditions:
(a) The Seller shall have provided such consents,
representations and information and executed such documents as may reasonably be
required in connection with such registration.
(b) The Buyer will be entitled to include any other shares of
its Common Stock to be offered either by it or by any of its stockholders in any
registration statement filed pursuant to Section 8.1.
(c) In no event will the Seller be entitled to request
registration under Section 8.1 within a period of ninety (90) days following the
effective date of any other registration statement filed by the Buyer (other
than a registration statement covering the offer and sale of Common Stock to its
employees and subsidiaries) regardless of whether or not the Seller participated
in such registration statement.
(d) Notwithstanding any other provision of this Agreement, to
the extent the provisions of subparagraph (c) of this Section 8.2 have the
effect of reducing the time period during which the Seller would otherwise be
entitled to request registration of its Registrable Shares under Section 8.1,
the period during which the Seller may request registration, and during which
the Buyer shall have a duty hereunder to register said Registrable Shares, shall
be extended by the number of days equal to the aforementioned reduction.
(e) All sales of the Buyer's Common Stock by the Seller in any
registered offering, other than a firm commitment underwritten offering, shall
be made through a coordinating broker acceptable to the Buyer which acceptance
by the Buyer shall not be unreasonably withheld.
(f) All sales of the Buyer's Common Stock by the Seller in any
registered firm commitment underwritten offering shall be made through an
underwriter acceptable to the Buyer which acceptance by the Buyer shall not be
unreasonably withheld.
(g) On and after the one hundredth eightieth day following the
effective date of any registration statement filed pursuant to Section 8.1, the
Buyer may, without further notice to the Seller, take action to deregister any
shares of its Common Stock registered by such registration statement and not yet
sold.
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(h) The Buyer shall at the time it is filing a registration
statement pursuant to a request made hereunder be eligible to file a
registration statement on either Form S-3 or Form S-1 (or any successor form to
any such forms). The Buyer shall not take or omit to take any action for the
purpose of rendering itself ineligible to file a registration statement on Form
S-1 or Form S-3.
8.3 Expenses. The expenses of registration of the Registrable Shares of
the Seller pursuant to Section 8.1 will be shared equally between the Buyer and
the Seller. For purposes of this Section 8.3, the term "expenses" shall include
federal, state and other registration and qualification fees, legal fees and
expenses for the Buyer's counsel, auditing and accounting expenses incurred by
the Buyer in connection with the registration and printing and other related
expenses, but shall exclude any legal fees for counsel to the Seller and any
underwriting discounts and selling commissions relating to the Registrable
Shares sold by the Seller.
8.4 Financial Information. Notwithstanding the foregoing, in connection
with any registration provided for in this Agreement, the Buyer will not be
obligated to furnish any information, financial or otherwise, other than the
information required and in the form and format which is customarily required at
the time of the execution of this Agreement to accomplish any registration of
the type provided for in this Agreement, unless otherwise required by the
Securities and Exchange Commission; it being understood, that as of the date
hereof, it is not customary in connection with registrations of the type
provided for in this Agreement for the registrant to furnish audited financial
information for interim quarterly periods. In the event that additional
financial statements or other information is so otherwise required and is not
readily available, then the reasonable salary and related reasonable overhead
expenses of employees of the Buyer for time expended by such employees in the
preparation of such financial or other information will be reimbursed to the
Buyer by the Seller.
8.5 Exclusive Obligation to Register. Except as provided in this
Article 8, the Buyer will have no obligation to the Seller to register under the
1933 Act any Common Stock received by the Seller pursuant to this Agreement.
8.6 State Securities Laws. In connection with the registered offering
of any Registrable Shares pursuant to this Agreement, the Buyer will take such
action as may be necessary to qualify or register the shares to be sold under
the securities or "blue-sky" laws of such jurisdictions as may be reasonably
requested by the Seller; provided, however, that the Buyer will not be obligated
to qualify as a foreign corporation to do business under the laws of any such
jurisdiction in which it is not then qualified or to file any general consent to
service of process.
8.7 Indemnification. In connection with any registration statement
filed pursuant to this Article 8:
(a) To the extent permitted by law, the Buyer will indemnify
and hold harmless the Seller against any losses, claims, damages or liabilities,
joint or several, to which it may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained or incorporated by reference in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, and will reimburse the Seller for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 8.7(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the Buyer's consent (which consent
shall not be unreasonably withheld) nor shall the Buyer be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon an untrue statement or alleged untrue statement
or omission
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or alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by the Seller.
(b) To the extent permitted by law, the Seller will indemnify
and hold harmless the Buyer, each of its directors, each of its officers who
have signed such registration statement, each person, if any, who controls the
Buyer within the meaning of the 1933 Act, and any underwriter (within the
meaning of the 1933 Act) (in the case of an underwritten public offering)
against any losses, claims, damages or liabilities to which the Buyer or any
such director, officer, controlling person, or underwriter may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained or expressly
incorporated by reference in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendment or
supplement thereto, or arise out of or based upon the omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished by the Seller
expressly for use in connection with such registration; and the Seller will
reimburse any legal or other expenses reasonably incurred by the Buyer or any
such director, officer, controlling person, or underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action. It
is agreed that the indemnity agreement contained in this subsection 8.7(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Seller (which consent shall not be unreasonably withheld).
(c) Promptly after receipt by a party who may be indemnified
under this Section 8.7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8.7, notify the indemnifying party in
writing of the commencement thereof and the indemnifying part shall have the
right to participate in, and, to the extent the indemnifying party desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties. The failure
to promptly notify any indemnifying party of the commencement of any such
action, if prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the party eligible for indemnification
under this Section 8.7, but the omission so to notify the indemnifying party
will not relieve him of any liability which he may have to any indemnified party
other than under this Section 8.7.
ARTICLE 9. MISCELLANEOUS.
9.1 Fees and Expenses . Each of the parties will bear its own expenses
in connection with the negotiation and the consummation of the transactions
contemplated by this Agreement, and no expenses of the Seller or the Stockholder
relating in any way to the purchase and sale of the Purchased Assets hereunder
shall be charged to or paid by the Buyer or included in any account of the
Seller as of the Closing.
9.2 Notices . Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telegram or facsimile transmission) addressed as provided below and if either
(i) actually delivered electronically or physically at said address, or (ii) in
the case of a letter, three business days shall have elapsed after the same
shall have been deposited in the United States mail, postage prepaid and
registered or certified, return receipt requested:
If to the Seller or the Stockholder, to:
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A&G, Inc.
c/o ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Buist, Moore, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, to:
Southern Energy Homes, Inc.
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.
9.3 Publicity and Disclosures . No press releases or any public
disclosure, either written or oral, of the transactions contemplated by this
Agreement shall be made without the prior knowledge and written consent of both
the Buyer and the Seller, provided, however, that, notwithstanding the
foregoing, the Buyer shall be free to make such public announcements and
disclosure regarding the transactions contemplated hereby, in such form and at
such times, as the Buyer reasonably believes are necessary in order to comply
with applicable federal and state securities laws, without prior consent of the
Seller.
9.4 Entire Agreement . This Agreement (including all exhibits or
schedules appended to this Agreement and all documents delivered pursuant to or
referred to in this Agreement, all of which are hereby incorporated herein by
reference) constitutes the entire agreement between the parties, and all
promises, representations, understandings, warranties and agreements with
reference to the subject matter hereof and inducements to the making of this
Agreement relied upon by any party hereto, have been expressed herein or in the
documents incorporated herein by reference. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision hereof.
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9.5 Assignability . This Agreement may not be assigned otherwise than
by operation of law (i) by the Buyer without the prior written consent of the
Seller, or (ii) by the Seller without the prior written consent of the Buyer.
However, any or all rights of the Buyer to receive performance (but not the
obligations of the Buyer to the Seller hereunder) and rights to assert claims
against the Seller and the Stockholder in respect of breaches of
representations, warranties or covenants of the Seller or the Stockholder
hereunder and rights to be indemnified hereunder, may be assigned by the Buyer
to any direct or indirect subsidiary, parent or other affiliate of the Buyer,
but any assignee of such rights shall take such rights subject to any defenses,
counterclaims and rights of setoff to which the Seller and the Stockholder might
be entitled under this Agreement. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns.
9.6 Amendment . This Agreement may be amended only by a written
agreement executed by the Buyer, the Seller and the Stockholder.
9.7 Governing Law . This Agreement shall be governed by and construed
in accordance with the laws of the State of South Carolina, other than the
choice of law principles thereof.
9.8 Counterparts . This Agreement may be executed in multiple
counterparts, each of which shall be deemed in original but all of which
together shall constitute one and the same instrument.
9.9 Effect of Table of Contents and Headings . Any table of contents,
title of an article or section heading herein contained is for convenience of
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in multiple counterparts as of the date set forth above by their duly
authorized representatives.
SOUTHERN ENERGY HOMES, INC.
By:_____________________________
Name:
Title:
A & G, INC.
By:_____________________________
Name:
Title:
STOCKHOLDER:
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
30
ASSET PURCHASE AGREEMENT
List of Schedules and Exhibits
Schedule 1.1(a) - Leases
Schedule 1.2(a) - Assumed Liabilities
Schedule 1.5 - Buildings
Schedule 2.6 - Financial Statements
Schedule 2.9 - Leases, Equipment and Other Personal Property
Schedule 2.10 - Inventory and Building Title Exceptions
Schedule 2.11 - Intellectual Property Rights
Schedule 2.12 - Contracts and Commitments
Schedule 2.14 - Underground Storage Tanks
Schedule 2.15 - Permits
Schedule 2.16 - Warranty or Other Claims
Schedule 2.17 - Litigation
Schedule 2.19 - Transactions with Interested Persons
Exhibit A: Real Estate Lease Agreement
Exhibit B: Instrument of Assumption
Exhibit C: ▇▇▇▇ of Sale
Exhibit D: Legal Opinion of the Seller's Counsel
Exhibit E: Non-Competition Agreement
Exhibit F: Legal Opinion of the Buyer's Counsel
The Company hereby agrees to furnish supplementary, a copy of any of the
forgoing schedules and exhibits, to the Commission upon request.