ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made September 16, 1996, between Preview Furniture
Corporation, a North Carolina corporation ("Seller"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Industries, Inc., a Delaware corporation, the sole shareholder of Seller
("Shareholder") and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLC, a North Carolina limited
liability company ("Purchaser").
R E C I T A L S
A. Shareholder owns all of the issued and outstanding shares of stock
of Seller.
B. Seller is in the business of manufacturing and selling furniture
(the "Business").
C. Seller and Shareholder desire to sell to Purchaser substantially
all of Seller's assets, properties and rights, other than the Excluded
Assets, as herein defined (the "Purchased Assets"), and Purchaser desires
to purchase the Purchased Assets, all on the terms and subject to the
conditions contained in this Agreement.
A G R E E M E N T S
Therefore, for good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 AGREEMENT TO PURCHASE AND SELL. On the terms and subject to the
conditions contained in this Agreement, Purchaser agrees to purchase from
Seller, and Seller agrees to sell to Purchaser, all of the Purchased Assets.
1.2 ENUMERATION OF PURCHASED ASSETS. The Purchased Assets shall
include the following assets owned by Seller:
(a) all inventory, including, without limitation, raw materials, work
in process, finished goods, service parts and supplies (collectively, the
"Inventory");
(b) all furniture, fixtures, equipment, machinery, parts, computer
hardware, tools, dies, jigs, patterns, molds, automobiles and trucks and
all other tangible personal property (other than the Inventory)
(collectively, the "Equipment");
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(c) all leasehold interests in personal property leased to Seller set
forth in Schedule 1.2(c) hereto (the "Leased Personalty");
(d) Seller's entire leasehold interest as lessee of the premises
commonly known as ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the
Showroom at Southern Furniture Exposition Center in High Point, North
Carolina and the premises commonly known as ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively the "Leased Premises") set forth in
Schedule 1.2(d) hereto;
(e) all sales orders and sales contracts, purchase orders and
purchase contracts, quotations and bids set forth in Schedule 1.2(e);
(f) all Intellectual Property (as herein defined), including, without
limitation the names Preview Furniture and Madison Furniture and Seller's
corporate name, and all goodwill;
(g) all license agreements, design agreements, distribution
agreements, sales representative agreements, service agreements, supply
agreements, franchise agreements, computer software agreements and
technical service agreements set forth in Schedule 1.2(g) to the extent
they are legally transferable by Seller;
(h) all customer lists, customer records and information;
(i) all rights in connection with deposits and prepaid expenses with
respect to the assets being sold hereunder, including customer deposits and
medical insurance deposits;
(j) all letters of credit issued to Seller for which goods had not
been shipped as of August 25, 1996;
(k) all computer software, including all documentation and source
codes with respect to such software and licenses and leases of software to
the extent they are legally transferable by Seller;
(l) all sales and promotional materials, catalogues and advertising
literature; and
(m) all telephone numbers of Seller;
(n) all accounts receivable of Seller for goods shipped during the
period from August 25, 1996 to closing (the "Interim Period"), including
proceeds thereof received prior to or after closing ("Assigned
Receivables");
1.3 EXCLUDED ASSETS. The Excluded Assets shall consist of the
following items:
(a) all cash on hand (except proceeds of Assigned Receivables) and
deposits with respect to assets in Section 1.2 and in banks, cash
equivalents (exclusive of deposits and letters of credit from customers of
Seller), and investments;
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(b) all trade accounts receivable except Assigned Receivables, notes
receivable, negotiable instruments and chattel paper (collectively the
"Seller's Accounts Receivable").
(c) Seller's bank accounts (including the lock box for the collection
of Seller's accounts receivable) checkbooks and cancelled checks;
(d) those contracts with Seller's Affiliates (as herein defined) set
forth on Schedule 1.3(d) hereto;
(e) claims (and benefits to the extent they arise therefrom) that
relate to liabilities other than the Assumed Liabilities (as herein
defined) and assets other than the Purchased Assets;
(f) insurance policies of Seller and rights in connection therewith,
unless prior to the Closing, Purchaser elects, by written notice delivered
to Seller prior to the Closing Date, to accept assignments of any of such
insurance policies;
(g) rights arising from prepaid deposits and expenses, if any, with
respect to assets not being sold hereunder;
(h) rights arising from any refunds due with respect to insurance
premium payments and tax refunds due from federal, state and local taxing
authorities;
(i) all rights of indemnification and claims which relate to the
conduct of the Business prior to the August 25, 1996;
(j) Seller's rights under this Agreement;
(k) Seller's corporate charter, minute and stock record books, and
corporate seal and tax returns;
(l) the agreements, if any, set forth on Schedule 1.3(1); and
(m) the assets, if any, described on Schedule 1.3(m).
ARTICLE II
ASSUMPTION OF LIABILITIES; RETAINED LIABILITIES,
REIMBURSEMENT OF INTERIM EXPENSES
2.1 AGREEMENT TO ASSUME. At the Closing (as herein defined),
Purchaser shall assume and agree to discharge and perform when due, the
following liabilities and obligations of Seller (the "Assumed Liabilities").
(a) Those liabilities of Seller disclosed to Purchases prior to
closing and resulting from the operations of Seller in the usual and
regular course of it's business during the Interim Period, except those
which have been discharged prior to closing, and
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except those as to which there is a breach of Seller's representations,
warranties or covenants in this Agreement.
(b) All liabilities of Seller incurred during the Interim Period
which are disclosed to Purchaser and which Purchaser expressly agrees to
assume, prior to closing.
(c) Seller's liabilities under the Leases and Contracts set out in
Schedule 1.2, hereto;
2.2 RETAINED LIABILITIES. Notwithstanding the foregoing or any other
provision of this Agreement, except to the extent that the Purchaser
expressly assumes obligations under the Disclosure Schedule or under Section
2.4 of this Agreement, the Purchaser shall be or become responsible for the
following ("Retained Liabilities:): any debts, obligations or liabilities
of the Seller, whether known or unknown, fixed or contingent, including
without limitation any product liability claims; notes payable, any
liabilities or obligations of Sellers under any agreements, leases or other
instruments to which they are parties or by which they may be bound (except
the Leases and Contracts assigned as is part of Purchased Assets), any
Employee Obligations (as defined in Section ARTICLE VIII); any Claims and
Litigation (as defined in Section 4.2(m); any liabilities of obligations
relating to breaches by Seller or Shareholder of any of their
representations, warranties or covenants in this Agreement; and any
liabilities of obligations of Seller or Shareholder pursuant to this
Agreement or the agreements and documents delivered pursuant hereto.
2.3 NO EXPANSION OF THIRD PARTY RIGHTS. The assumption by Purchaser of
the Assumed Liabilities shall not expand the rights or remedies of any third
party against the Purchaser or the Seller as compared to the rights and
remedies which such third party would have had against the Seller had the
Purchaser not assumed the Assumed Liabilities.
2.4 REIMBURSEMENT OF INTERIM EXPENSES. Those direct expenses disclosed
to Purchase prior to closing and resulting from the operations of Seller in
the usual and regular course of it's business during the Interim Period shall
be reimbursed by Purchaser to Seller within the later of closing or five days
from disclosure.
ARTICLE III
PURCHASE PRICE, MANNER OF PAYMENT AND CLOSING
3.1 PURCHASE PRICE. The "Purchased Price" of the Purchased Assets
shall be $2,715,940. Of this amount $2,000,000 shall be paid in cash (the
"Cash Portion") and the balance of 715,940 shall be paid by the execution
and delivery of a Promissory Note of Buyer (the Note"),000 shall be paid in
cash (the "Cash Portion") all in the form of the Note hereto, as Exhibits A.
3.2 TIME AND PLACE OF CLOSING. The transaction contemplated by this
Agreement shall be consummated (the "Closing") at 10:00 a.m. at the
offices of the Seller at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ on September 17, 1996 or on such other date, or at such other time or
place, as be mutually agreed upon by Seller and Purchaser; provided, however,
that the date of the Closing shall be automatically extended from time to
time for so long as any of the
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conditions set forth in Article VI shall not be satisfied or waived, subject,
however, to the provisions of Section 10.1. The date on which the Closing
occurs in accordance with the preceding sentence is referred to in this
Agreement as the "Closing Date". The Closing shall be deemed to be
effective as of 12:01 a.m. on the Closing Date at Chicago, Illinois.
3.3 MANNER OF PAYMENT OF THE PURCHASE PRICE. At the Closing, Purchaser
shall (i) assume the Assumed Liabilities, pay $2,000,000 being the Cash
Portion to Seller, by wire transfer to such account as Seller shall designate
by written notice delivered to Purchaser on or prior to the Closing Date and
(ii) deliver the Note to Seller.
3.4 CLOSING DELIVERIES. At the Closing, the parties shall execute and
deliver such bills of sale, assignments, documents of title, assumption
agreements, closing certificates, searches, and other documents as are
reasonably required in order to effectuate the consummation of the
transaction contemplated hereby. All documents to be delivered by a party
shall be in form and substance reasonably satisfactory to the other party.
3.5 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets in the manner required by Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code") and in
accordance with Schedule 3.5 hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents
and warrants to Seller that:
(a) Purchaser is a limited liability company duly organized, existing
and in good standing, under the laws of the State of North Carolina;
(b) Purchaser has full corporate power and authority to enter into
and perform (x) this Agreement and (y) all documents and instruments to be
executed by Purchaser pursuant to this Agreement (collectively,
"Purchaser's Ancillary Documents"). This Agreement has been, and
Purchaser's Ancillary Documents will be, duly executed and delivered by
duly authorized officers of Purchaser.
(c) No consent, authorization, order or approval of, or filing or
registration with, any governmental authority or other person is required
for the execution and delivery by Purchaser of this Agreement and
Purchaser's Ancillary Agreements, and the consummation by Purchaser of
the transaction contemplated by this Agreement and Purchaser's Ancillary
Documents.
(d) Neither the execution and delivery of this Agreement and
Purchaser's Ancillary Documents by Purchaser, nor the consummation by
Purchaser of the transaction contemplated hereby, will conflict with or
result in a breach of any of the terms, conditions
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or provisions of Purchaser's Certificate of Incorporation or By-laws, or
of any statute or administrative regulation, or of any order, writ,
injunction, judgment or decree of any court or governmental authority or
of any arbitration award.
(e) Purchaser is not a party to any unexpired, undischarged or
unsatisfied written or oral contract, agreement, indenture, mortgage,
debenture, note or other instrument under the terms of which performance by
Purchaser according to the terms of this Agreement will be a default, or
whereby timely performance by Purchaser according to the terms of this
Agreement may be prohibited, prevented or delayed.
(f) Neither Purchaser, nor any of its Affiliates has dealt with any
person or entity who is or maybe entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment for arranging
the transaction contemplated hereby or introducing the parties to each
other. As used herein, as "Affiliate" is any person or entity which
controls a party to this Agreement, which that party controls, or which is
under common control with that party. In the case of Seller, an Affiliate
shall include ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Industries, Inc. and its subsidiaries.
"Control" means the power, direct or indirect, to direct or cause the
direction of the management and policies of a person or entity through
voting securities, contract or otherwise.
(g) Purchaser agrees that the value of the Seller's inventories were
accurately reflected by Seller's Inventory Audit taken on August 25, 1996
("Inventory Audit").
4.2 SELLER'S AND SHAREHOLDER'S REPRESENTATIONS AND WARRANTIES. Seller
and Shareholder represent and warrant to Purchaser that, except as set forth
in the schedule delivered by Seller to Purchaser concurrently herewith and
identified as the "Disclosure Schedule":
(a) Seller is a corporation duly organized, existing and in good
standing, under the laws of the State of North Carolina. Seller has all
necessary corporate power and authority to conduct the Business as the
Business is now being conducted.
(b) Seller has qualified as a foreign corporation, and is in good
standing, under the laws of all jurisdictions where the nature of the
Business or the nature or location of its assets requires such
qualification and where the failure to so qualify would have a "Material
Adverse Effect" (as herein defined). For the purposes of this Agreement,
"Material Adverse Effect" means a material adverse effect on the assets,
liabilities, financial condition or results of operations of the Business,
taken as a whole.
(c) Seller has full corporate power and authority to enter into and
perform (x) this Agreement and (y) all documents and instruments to be
executed by Seller pursuant to this Agreement (collectively, "Seller's
Ancillary Documents"). This Agreement has been, and Seller's Ancillary
Documents will be, duly executed and delivered by duly authorized officers
of Seller.
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(d) No consent, authorization, order or approval of, or filing or
registration with, any governmental authority or other person is required
for the execution and delivery of this Agreement and Seller's Ancillary
Documents and the consummation by Seller of the transaction contemplated by
this Agreement and Seller's Ancillary Documents.
(e) Neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation by Seller of
the transaction contemplated hereby, will conflict with or result in a
breach of any of the terms, conditions or provisions of Seller's
Certificate of Incorporation or By-laws, or of any statute or
administrative regulation, or of any order, writ, injunction, judgment
or decree of any court or any governmental authority or of any arbitration
award.
(f) Seller has furnished Purchaser with copies of the unaudited
balance sheets, statements of income and retained earnings, and statements
of cash flows as of and for each of the four years ending December 31,
1992, 1993, 1994 and 1995, as well as the interim balance sheets as of June
30, 1996, (the "Financial Statements"). Said financial statements present
fairly, in all material respects, the financial position of Seller as of
the dates thereof, and the results of operations and cash flow of Seller
for the periods covered by said statements, in accordance with generally
accepted accounting principles ("GAAP"), consistently applied, except for
the omission of footnote disclosures required by GAAP.
(g) Seller has good title to, and the corporate power to sell, the
Purchased Assets, free and clear of any liens, claims, encumbrances and
security interests. The foregoing representation and warranty shall not
apply to the Leased Premises.
(h) Since December 31, 1995 Seller has not:
(i) sold or transferred any material portion of its assets or
property, except for (A) sales of Inventory and (B) cash applied in
payment of Seller's liabilities, in the usual and ordinary course of
business;
(ii) suffered any material loss or any material interruption in
use, of any material assets or property (whether or not covered by
insurance), on account of fire, flood, riot, strike or other hazard or
Act of God;
(iii) made or, suffered any change in the conduct or nature of
the Business which would have a Material Adverse Effect;
(iv) waived any material rights other than in the ordinary
course of business;
(v) incurred any liability or obligation of any kind, other than
in the ordinary course of business; or
(vi) without limitation by the enumeration of any of the
foregoing, entered into any material transaction other than in the
usual and ordinary course of business.
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(i) The Disclosure Schedule lists and describes all material
contracts, leases, and agreements to which Seller is a party and which
relate to the conduct of the Business, including, without limitation:
employment and employment related agreements; covenants not to compete;
loan agreements; notes; security agreements; sales representative,
design, distribution, franchise, advertising and similar agreements;
leases and subleases of Leased Personalty or the Leased Premises;
license agreements; purchase orders and purchase contracts and sales
orders and sales contracts. All contracts, leases, subleases and other
instruments referred to in this paragraph 4.3(i) are binding upon the
parties thereto. No default by Seller has occurred thereunder and, to
Seller's knowledge, no default by the other contracting parties has
occurred thereunder, which default would have a Material Adverse Effect.
(j) Seller is not a party to, or bound by, any unexpired,
undischarged or unsatisfied written contract, agreement, indenture,
mortgage, debenture, note or other instrument under the terms of which
performance by Seller according to the terms of this Agreement will be a
default or an event of acceleration, which default or acceleration would
have a Material Adverse Effect, or whereby timely performance by Seller
according to the terms of this Agreement may be prohibited, prevented or
delayed.
(k) Seller possesses all licenses, permits, registration and
governmental approvals (the "Permits") (other than Environmental
Permits) which are required in order for the Seller to conduct the
Business as presently conducted where the failure to possess such
Permits would have a Material Adverse Effect.
(l) With respect to employees of Seller:
(i) Seller maintains, administers or contributes to only
those employee welfare benefit plans (as defined in Section 3(l)
of ERISA, whether or not excluded from coverage under specific
Titles or Subtitles of ERISA) for the benefit of employees of the
Seller which are described in the Disclosure Schedule (the
"Welfare Plans");
(ii) neither Seller nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") as
a result of the voluntary or involuntary termination of any
Pension Plan subject to Title IV of ERISA; there is currently no
active filing by Seller or any ERISA Affiliate with the PBGC (and
no proceeding has been commenced by the PBGC) to terminate any
Pension Plan subject to Title IV of ERISA maintained or funded, in
whole or in part, by Seller or any ERISA Affiliate; and neither
Seller nor any ERISA. Affiliate has made a complete or partial
withdrawal from a multi-employer plan, as such term is defined in
Section 3(37) of ERISA, resulting in "withdrawal liability", as
such term is defined in Section 4201 of ERISA (without regard to
subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(m) There is no litigation or proceeding, in law or in equity, and
there are no proceedings or governmental investigations before any
commission or other administrative authority, pending, or, to Seller's and
Shareholder's knowledge, overtly threatened, against Seller or its
Affiliates, or with respect to the consummation of the transaction
contemplated
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hereby, or the use of the Purchased Assets (whether used by Purchaser
after the Closing or by Seller prior thereto) which if decided adversely
to Seller would have a Material Adverse Effect (Claims and Litigation").
(n) Except for laws, rules and regulations relating to the
environment (which are exclusively provided for in Section 4.3 (o)
hereof), Seller is not in violation of, or delinquent in respect to, any
decree, order or arbitration award or law, statute, or regulation of or
agreement with, or Permit from, any Federal, state or local governmental
authority (or to which its properties, assets, personnel, business
activities or the Real Estate or Leased Premises are subject or to which
it, itself, is subject), including, without limitation, laws, statutes
and regulations relating to equal employment opportunities, fair
employment practices, and discrimination, which violation or delinquency
would have a Material Adverse Effect.
(o) Seller (including, without limitations the Purchased Assets and
the Business) is not in violation of any Environmental Laws (as herein
defined), which violation would have a Material Adverse Effect. Seller
possesses and is in compliance with all Environmental Permits (as herein
defined) which are required for the operation of the Business, where the
failure to possess or comply with such Environmental Permits would have a
Material Adverse Effect. A copy of any notice, citation, inquiry or
complaint which Seller has received in the past three years of any
alleged violation of any Environmental Law or Environmental Permit is
contained in the Disclosure Schedule. For the purposes of this Agreement:
(i) "Environmental Laws" means all federal, state and local statutes,
regulations, ordinances, rules, regulations and policies, all court
orders and decrees and arbitration awards, and the common law, which
pertain to environmental matters or contamination of any type whatsoever;
and (ii) "Environmental Permits" means licenses, permits, registrations,
governmental approvals, agreements and consents which are required under
or are issued pursuant to Environmental Laws.
(p) The Leased Premises are leased to Seller pursuant to written
leases, copies of which are attached to the Disclosure Schedule. Seller
is not in default under any material term of any agreement relating to
the Leased Premises nor, to Seller's knowledge, is any other party
thereto in material default thereunder.
(q) Each material (i) trademark, service ▇▇▇▇, slogan, trade name,
trade dress and the like (collectively with the associated goodwill of
each, "Trademarks"), including information regarding each registration
and pending application to register any such Trademarks; (ii) common law
Trademark; (iii) patent on and pending application to patent any
technology or design; (iv) registration of and application to register
any copyright; and (v) license of rights in computer software,
Trademarks, patents, copyrights, unpatented formulations, and know-how,
whether to or by Seller, is listed in the Disclosure Schedule. The
scheduled rights are referred to herein collectively as the "Intellectual
Property".
(r) Seller and Shareholder have no knowledge: (i) that any other
person or entity claims the right to use in connection with similar or
closely related goods and in the same geographic area, any ▇▇▇▇ which is
identical or confusingly similar to any of the Trademarks; (ii) of any
claim that any third party asserts ownership rights in any of the
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Intellectual Property; (iii) of any claim that Seller's use of any
Intellectual Property infringes any right of any third party; and (iv)
that any third party is infringing any of Seller's rights in any of the
Intellectual Property.
(s) Neither Seller, nor any of its Affiliates, has dealt with any
person or entity who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment from Purchaser
for arranging the transaction contemplated hereby or introducing the
parties to each other.
(t) The Inventory Audit taken accurately reflects the Seller's
inventories as of August 25, 1996, except no warranty of such inventories
values is made. The inventories of Seller as reflected in the Inventory
Audit, or acquired since the date thereof, shall exist at closing in the
same condition as of the date of the Inventory Audit, except as disposed
of in the ordinary course of business.
4.3 LIMITATION ON WARRANTIES. Except as expressly set forth in Section
4.2, Seller makes no express or implied warranty of any kind whatsoever,
including, without limitation, any representation as to physical condition or
value of any of the Purchased Assets or the future profitability or future
earnings performance of the Business. ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
4.4 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, the
knowledge of Seller or Shareholder shall be deemed to be limited to the actual
knowledge as of the Closing Date of any of their Officers, Directors or
Employers, without giving effect to imputed knowledge.
ARTICLE V
CONDUCT PRIOR TO THE CLOSING
5.1 GENERAL. Between the date hereof and the Closing Date:
(a) Seller shall give to Purchaser's officers, employees,
attorneys, consultants, accountants and lenders reasonable access during
normal business hours to all of the properties, books, contracts,
documents, records and personnel of Seller and shall furnish to Purchaser
such information as Purchaser may at any time and from time to time
reasonably request.
(b) Seller shall use reasonable efforts and make every good faith
attempt (and Purchaser shall cooperate with Seller) to obtain the
consents to the assignment of, or alternate arrangements satisfactory to
Purchaser with respect to, those contracts, leases, or other instruments,
which are enumerated in Exhibit B attached hereto (the "Consents").
(c) Seller shall carry on the Business in the usual and ordinary
course of business, consistent with past practices.
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(d) Purchaser shall not disclose to any third party or use for any
purpose other than evaluating and carrying out the transaction
contemplated hereby, any Confidential Information (as defined herein)
regarding seller and the Business. Intending that the terms shall be
broadly construed to include anything protectable under applicable law,
"Confidential Information" means all information, and all documents and
other tangible items which record information, which at the time or times
concerned is protectable as a trade secret under applicable law. The
preceding portions of this paragraph (e) shall not apply to information
(i) which was in the public domain, (ii) which was previously known by
Purchaser, or (iii) to the extent that disclosure is required by law.
(e) Without implication that such laws apply to the transaction
contemplated hereby, Seller and Purchaser shall not comply with the laws
of any states relating to bulk sales.
(f) No party shall intentionally perform any act which, if
performed, or omit to perform any act which, if omitted to be performed,
would prevent or excuse the performance of this Agreement by any party
hereto or which would result in any representation or warranty herein
contained of said party being untrue in any material respect as if
originally made on and as of the Closing Date.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of Seller to
consummate the transaction contemplated hereby is subject to the fulfillment
of all of the following conditions on or prior to the Closing Date, upon the
non-fulfillment of any of which his Agreement may, at Seller's option, be
terminated pursuant to and with the effect set forth in
Article X:
(a) Each and every representation and warranty made by Purchaser
shall have been true and correct in all material respects when made and
shall be true and correct in all material respects as if originally made
on and as of the Closing Date.
(b) All obligations of Purchaser to be performed hereunder through,
and including on, the Closing Date (including, without limitation, all
obligations which Purchaser would be required to perform at the closing
if the transaction contemplated hereby was consummated) shall have been
performed.
(c) No suit or proceeding shall have been commenced by any
governmental authority on any grounds to restrain, enjoin or hinder the
consummation of the transaction contemplated hereby.
(d) The Seller has been released from any obligations under the
leases for the Leased Premises arising after the Closing Date.
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6.2 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligation of Purchaser
to consummate the transaction contemplated hereby is subject to the
fulfillment of all of the following conditions on or prior to the Closing
Date, upon the non-fulfillment of any of which this Agreement may, at
Purchaser's option, be terminated pursuant to and with the effect set forth
in Article X:
(a) Each and every representation and warranty made by Seller shall
have been true and correct in all material respects when made and shall
be true and correct in all material respects as if originally made on and
as of the Closing Date.
(b) All obligations of Seller to be performed hereunder through,
and including on, the Closing Date (including, without limitation, all
obligations which Seller would be required to perform at the Closing if
the transaction contemplated hereby was consummated) shall have been
performed.
(c) All of the Consents shall have been obtained.
(d) No suit or proceeding shall have been commenced by any
governmental authority to restrain, enjoin or hinder the consummation of
the transaction contemplated hereby.
(e) ▇▇▇ ▇. ▇▇▇▇▇▇ executing a new employment agreement as set out
in Article VIII.
(f) Satisfactory environmental inspections by Purchaser of the
Leased Premises which disclose no violations.
ARTICLE VII
POST-CLOSING AGREEMENTS
7.1 POST-CLOSING AGREEMENTS. From and after the Closing, the parties
shall have the respective rights and obligations which are set forth in the
remainder of this Article VII.
7.2 INSPECTION OF RECORDS. Seller and Purchaser shall each make their
respective books and records (including work papers in the possession of
their respective accountants) available for inspection by the other party, or
by its duly accredited representatives, for reasonable business purposes at
all reasonable times during normal business hours, for a seven (7) year
period after the Closing Date, with respect to all transactions occurring
prior to and those relating to the Closing, the historical financial
condition, results of operations and cash flows of Seller, or the Assumed
Liabilities. As used in this Section 7.2, the right of inspection includes
the right to make extracts or copies. The representatives of a party
inspecting the records of the other party shall be reasonably satisfactory to
the other party.
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7.3 USE OF TRADEMARKS; REFERENCES TO SELLER. Seller shall cease to use
and shall not license or permit any third party to use the name "Preview
Furniture", or "Madison" or any name, slogan, logo or trademark which is
similar or deceptively similar to any of the Trademarks. Purchaser may refer
to its business as formerly being Seller's.
7.4 PAYMENTS OF ACCOUNTS RECEIVABLE. In the event Seller or Purchaser
shall receive any instrument of payment of any of the Accounts Receivable
owned by the other party, they shall forth with deliver it to other Party,
endorsed where necessary, without recourse. Any sums collected from customers
who are indebted to both Seller and Purchaser, shall be applied to the
accounts owed to Seller and Purchaser in the order in which said accounts
shall have become due.
7.5 CONTINUED ADMINISTRATION. Seller and Shareholder shall continue to
maintain Accounts Payable, Accounts Receivable and Payroll Functions for the
Business purchased hereunder for a period of up to 30 days after Closing Date
at no cost or expense to Purchaser except reimbursement by Purchaser of any
direct expenditures within which shall be made five days of delivery to
Purchaser of documentation of such expenditures.
7.6 NON-ASSIGNMENT. Notwithstanding any provision to the contrary
contained herein, Seller shall not be obligated to assign to Purchaser any
contract, purchase order, sales order, lease or other instrument which
provides that it may not be assigned without the consent of the other party
thereto and for which such consent is not obtained, but in any such event,
Seller shall cooperate with Purchaser in any reasonable arrangement designed
to provide the benefits thereof to Purchaser.
7.7 FURTHER ASSURANCES. The parties shall execute such further
documents, and perform such further acts, as may be necessary to transfer and
convey the Purchased Assets to Purchaser, on the terms herein contained, and
to otherwise comply with the terms of this Agreement and consummate the
transaction contemplated hereby.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
8.1 EMPLOYMENT OF SELLER'S EMPLOYEES. On or before the Closing Date,
Purchaser shall offer, to employ or to continue to employ as of the Closing
Date each of Seller's employees in positions, at compensation, and subject as
herein provided, which are each separately no less favorable to the employee
than the position, and compensation in effect on the date hereof. Each such
person who is employed by Purchaser is set out in 8.1 of the Disclosure
Schedule and is hereinafter referred to individually as an "Employee" and
collectively as the "Employees". Purchaser shall cover all Employees with
group medical benefits no less favorable than the group medical benefits
Seller currently provides its Employees, for which all waiting periods and
pre-existing conditions exceptions are waived. Except for voluntary
resignations and deaths, Purchaser shall continue to employ each Employee
until at least the last day of the second full calendar month commencing
after the Closing Date, but may at any time terminate any Employee for cause
or in connection with normal seasonal layoffs. It is understood that Purchaser
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shall employ ▇▇▇ ▇. ▇▇▇▇▇▇, President of Seller, from the closing date until
December 31, 1996, at a compensation to be agreed upon by Purchaser and
▇▇▇▇▇▇. The present Employment Agreement with ▇▇▇▇▇▇, as disclosed in Section
4.2(i) hereof, be terminated at closing.
8.2 PENSION AND WELFARE BENEFITS. Purchases shall be responsible for
claims of Employees for illness or injury occurring after the Closing Date
which are covered by Worker's Compensation, group medical insurance and any
other benefits plan offered by Purchaser to Employees. Additionally,
Purchaser shall assume the responsibility of any accrued vacation benefits of
the Employees.
Except as provided in Article VIII (the "Employee Obligations"),
Purchaser shall have no liability under the Welfare Plans. Seller shall be
responsible for providing the benefits, if any, required after the Closing
Date, under ERISA, including the contribution of benefits resulting from
illness or injury occurring prior to the Closing Date.
ARTICLE IX
INDEMNIFICATION
9.1 GENERAL. From and after the Closing, the parties shall indemnify
each other as provided in this Article IX. As used in this Agreement, the
term "Damages" shall mean all liabilities, demands, claims, actions or causes
of action, regulatory, legislative or judicial proceedings or investigations
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation thereof.
9.2 INDEMNIFICATION OBLIGATIONS OF SELLER AND SHAREHOLDER. Subject to
the provisions of Section 9.3, Seller and shareholder shall jointly and
severally indemnify, save and keep harmless Purchaser and its successors and
permitted assigns ("Purchaser Indemnitee") against and from all Damages
sustained or incurred by any of them resulting from or arising out of or by
virtue of:
(a) any material inaccuracy in or breach of any representation and
warranty made by Seller in this Agreement or in any closing document
delivered to Purchaser in connection with this Agreement;
(b) any material breach by Seller of, or failure by Seller to
comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Article IX);
and
(c) the failure to discharge any liability or obligation of Seller
other than the Assumed Liabilities.
9.3 LIMITATION ON SELLER'S AND SHAREHOLDER'S INDEMNIFICATION
OBLIGATIONS. Seller's and Shareholder obligations pursuant to the provisions
of Section 9.2 are subject to the following limitations:
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(a) the Purchaser Indemnitee shall not be entitled to recover under
Section 9.2 (a): (i) until the total amount which Purchaser would recover
under Section 9.2 (a), but for this Section 9.3 (a), exceeds $1,000, and
then only for the excess over $1,000; and (ii) unless a claim for Damages
has been asserted by written notice, specifying the details of the alleged
misrepresentation or breach of warranty, delivered to Seller on or prior
to December 31, 1997, except as to any matters arising out of Section
4.2(o), which shall be delivered on or prior to December 31, 2000.
(b) the Purchaser Indemnitee shall not be entitled to recover under
Section 9.2 (b) or (c) hereof if indemnification is also available under
Section 9.2 (a) hereof;
(c) the Purchaser Indemnities shall not be entitled to recover
under Section 9.2:
(i) with respect to title to the Leased Premises;
(ii) WITH RESPECT TO CONSEQUENTIAL DAMAGES, INCLUDING
CONSEQUENTIAL DAMAGES CONSISTING OF BUSINESS INTERRUPTION OR LOST
PROFITS, OR WITH RESPECT TO PUNITIVE DAMAGES;
(iii) to the extent the Damages are covered by insurance held
by Purchaser;
(iv) with respect to the nonassignable or nontransferable of
any of the Purchased Assets or Assumed Liabilities or the failure to
obtain any consent, or conditions imposed incident to the giving of
any consent, required in connection with, or as a consequence of, the
transfer of any of the Purchased Assets to, or the assertion of the
Assumed Liabilities by, Purchaser;
(d) the amount of any recovery pursuant to Section 9.2 shall be
net of any income tax benefits inuring to the Purchaser Indemnitee as a
result of the state of facts which entitled the Purchaser Indemnitee to
recover from Seller pursuant to Section 9.2.
9.4 PURCHASER'S INDEMNIFICATION COVENANTS. Purchaser shall indemnify,
save and keep harmless Seller and its successors and permitted assigns
against and from all Damages sustained or Incurred by any of them resulting
from or arising out of or by virtue of:
(a) any material inaccuracy in or breach of any representation and
warranty made by Purchaser in this Agreement or in any closing document
delivered to Seller in connection with this Agreement;
(b) any material breach by Purchaser of, or failure by Purchaser to
comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Article IX); or
(c) Purchaser's failure to pay, discharge and perform any of the
Assumed Liabilities.
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9.5 PROMISSORY NOTE; RIGHT OF OFFSET. If Seller or Shareholder become
liable pursuant to this agreement to indemnify Purchaser, then Purchaser
shall have the right to be indemnified from the Promissory Note and to offset
any amounts the Purchaser is obligated to pay Seller pursuant to this
agreement, the amount of any losses or damages for which Seller or
Shareholder is determined to be liable pursuant to this Article IX.
9.6 INDEMNIFICATION EXCLUSIVE REMEDY. Indemnification pursuant to the
provisions of this Article IX shall be the exclusive remedy of the parties
for any misrepresentation or breach of any warranty or covenant contained
herein or in any closing document executed and delivered pursuant to the
provisions hereof with respect to any matter which is the subject of this
Article IX. Without limiting the generality of the preceding sentence, no
legal action sounding in tort or strict liability may be maintained by any
party.
ARTICLE X
EFFECT OF TERMINATION/PROCEEDING
10.1 RIGHT TO TERMINATE. This Agreement and the transaction
contemplated hereby may be terminated at any time prior to the Closing by
prompt notice given in accordance with Section 11.4:
(a) by the mutual written consent of Purchaser and Seller; or
(b) by either of such parties if the closing shall not have
occurred at or before 11:59 p.m. on September 30, 1996; provided,
however, that the right to terminate this Agreement under this
Section 10.1 (b) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or prior to the
aforesaid date.
10.2 REMEDIES. In the event of a breach of this Agreement, the
nonbreaching party shall not be limited to the remedy of termination of this
Agreement, but shall be entitled to pursue all available legal and equitable
rights and remedies, and shall be entitled to recover all of its reasonable
costs and expenses incurred in pursuing them (including, without limitation,
reasonable attorneys fees.
ARTICLE XI
MISCELLANEOUS
11.1 SALES AND TRANSFER TAXES. Purchaser shall pay all sales, use,
transfer and conveyance taxes arising in connection with the sale and
transfer of the Purchased Assets to Purchaser pursuant to this Agreement.
11.2 PUBLICITY. Except as otherwise required by law, press releases
concerning this transaction shall be made only with the prior agreement of
the Seller and Purchaser.
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11.3 NOTICES. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by
mail shall be deemed given three (3) business days after being deposited in
the United States mail, postage prepaid, registered or certified mail.
Notices delivered by hand, by facsimile, or by nationally recognized private
carrier shall be deemed given on the first business day following receipt;
provided, however, that a notice delivered by facsimile shall only be effective
if such notice is also delivered by hand, or deposited in the United States
mail, postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by facsimile. All notices shall be addressed
as follows:
If to Seller and Shareholder
Addressed to
Preview Furniture Corporation
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Industries Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Purchaser
Addressed to
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLC
▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
Patton, Starnes, Thompson, Aycock, Teele, Ballew, PA
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
and/or to such other respective addresses and/or addresses as may be
designated by notice given in accordance with the provisions of this Section
11.4.
11.4 EXPENSES. Each party hereto shall bear all fees and expenses
incurred by such party in connection with, relating to or arising out of the
execution, delivery and performance of this Agreement and the consummation of
the transaction contemplated hereby,
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including, without limitation, attorneys', accountants and other professional
fees and expenses.
11.5 ENTIRE AGREEMENT. This Agreement and the instruments to be
delivered by the parties pursuant hereto constitute the entire agreement
between the parties. Each exhibit and the Disclosure Schedule shall be
considered incorporated into this Agreement. Any matter which is disclosed in
any portion of the Disclosure Schedule is deemed to have been disclosed for
the purposes of all relevant provisions of this Agreement. The inclusion of
any item in the Disclosure Schedule is not evidence of the materiality of
such item for the purposes of this Agreement and seller's Ancillary
Documents. The parties make no representations or warranties to each other,
except as contained in this Agreement. Purchaser acknowledges that it has
conducted an independent investigation of the financial condition, assets,
liabilities, properties and projected operations of the Business in making
its determination as to the propriety of the transaction contemplated by this
Agreement, and in entering into this Agreement has relied solely on the
results of said investigation and on the representations and warranties of
Seller expressly contained in this Agreement.
11.6 NON-WAIVER. The failure in any one or more instances of a party
to insist upon performance of any of the terms, covenants or conditions of
this Agreement, to exercise any right or privilege in this Agreement
conferred, or the waiver by said party of any breach of any of the terms,
covenants or conditions of this Agreement, shall not be construed as a
subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized representative
of the waiving party.
11.7 APPLICABLE LAW. This Agreement shall be governed and controlled
as to validity, enforcement, interpretation, construction, effect and in all
other respects by the internal laws of the State of North Carolina applicable
to contracts made in that State.
11.8 BINDING EFFECT; BENEFIT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended
to confer on any person other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, including, without
limitation, third party beneficiary rights.
11.9 ASSIGNABILITY. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
11.10 AMENDMENTS. This Agreement shall not be modified or amended
except pursuant to an instrument in writing executed and delivered on behalf
of each of the parties hereto.
11.11 HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
SELLER: PREVIEW FURNITURE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Its: President
SHAREHOLDER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INDUSTRIES, INC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Its: President
PURCHASER: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLC
By: /s/ F.L. ▇▇▇▇▇▇▇▇
-------------------------------
Its: President
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