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EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
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AGREEMENT entered into as of the 7th day of April, 1998, among SOUTHERN
ENERGY HOMES S.C. RETAIL, CORP., INC., a Delaware corporation, with its
principal place of business in Addison, Alabama (the "Buyer"), RAINBOW HOMES,
INC., a Kentucky corporation, with its principal place of business in Hager
hill, Kentucky (the "Company"), and HAROLD D. WARD, who is the sole stockholder
of the Company (the "Stockholder").
R E C I T A L S:
WHEREAS, the Company is engaged in the retail marketing and sales of
new and used manufactured homes at several locations within the States of
Kentucky and West Virginia, including, but not limited to, retail lot locations
at Ashland, Winchester, Frankfort, South Williamson and Ivel, within the State
of Kentucky, and Chapmanville and Nitro, within the State of West Virginia, with
the hereinbefore specifically identified retail lot locations being hereafter
referred to as (the "Business"); and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Buyer wishes to acquire the sales centers operated by the Company
located at Ashland, Winchester, Frankfort, South Williamson and Ivel, within the
State of Kentucky, and Chapmanville and Nitro, within the State of West
Virginia, including substantially all of the properties and assets of the
Company at those locations and is prepared to assume certain liabilities and
obligations of the Company, and the Company 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, the Company agrees to sell and the Buyer agrees to purchase, at the
Closing (as defined in Section 1.4 hereof), the following assets which
collectively represent substantially all of the assets of the Business (the
"Purchased Assets"):
(i) the inventory of new manufactured homes listed on Exhibit A;
(ii) those fixtures, equipment items and furniture listed on
Exhibit B;
(iii) those customer purchase orders listed on Exhibit C; and
(iv) the inventory of used manufactured homes listed on Exhibit D
(the "Used Home Inventory"); and
(v) the other assets listed on Exhibit E.
1.2 ASSUMED AND RETAINED 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 Company which are listed on EXHIBIT F. The liabilities to be assumed by
the Buyer under this Agreement are hereinafter sometimes referred to as the
"Assumed Liabilities". Except to the extent expressly listed on EXHIBIT F, the
Buyer does not assume and shall not be liable for any debt, obligation,
responsibility or liability of the company, or any affiliate of the Company, or
any claim against any of the foregoing, whether known or unknown, contingent or
absolute, or otherwise.
1.3 PURCHASE PRICE.
(a) PAYMENTS AT CLOSING. In consideration of the sale by the
Company to the Buyer of the Purchased Assets, the Buyer shall assume the Assumed
Liabilities and pay to the Company at Closing the Following amount (the
"Purchase Price"):
(i) $1,150,000.00 plus;
(ii) $ 3,775,158.00 for New Home Inventory on hand at Closing
listed on Exhibit A;
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(iii) The sum of $32,393.00 for customer purchase orders listed
on Exhibit C;
(iv) The sum of $47,500 for the used home inventory listed on
Exhibit D;
(v) The sum of $73,117 for other assets listed on Exhibit E; and
(vi) Rent reimbursement for sales centers at Winchester, South
Williamson, and Ivel in Kentucky and at Nitro, West Virginia
as listed on Exhibit G in the amount of $8,200.
The purchase price shall be paid by the Buyer by certified check or by
federal funds wire transfer of immediately available federal funds.
1.4 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 Wells, Porter, Schmitt & Jones, 327 Main Street, Paintsville,
Kentucky 41240, at 10:00 A.M., on the date hereof or at such other place, date
or time as may be fixed by mutual agreement of the parties.
1.5 TRANSFER OF PURCHASED ASSETS. At the Closing, the Company shall
deliver to the Buyer good and sufficient instruments of transfer, transferring
to the Buyer title to all the Purchased Assets including a bill of sale 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 the 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.
1.6 FURTHER ASSURANCES. The Company 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 addition
to those delivered under Section 1.5) 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 THE COMPANY AND THE STOCKHOLDER
The Company and the Stockholder hereby jointly represent and warrant to
the Buyer as follows:
2.1 ORGANIZATION AND QUALIFICATION OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Kentucky, 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.
2.2 AUTHORIZATION OF TRANSACTION. All necessary action, corporate or
otherwise, has been taken by the Company 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 Company, enforceable in
accordance with its terms, subject to laws of general application affecting
creditor's rights generally.
2.3 PAYMENT OF TAXES. The Company 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 Company with respect to the
Business, and the Company has paid all taxes owing by the Company with respect
to the Business, except taxes which have not yet accrued or otherwise become
due.
2.4 TITLE TO PURCHASED ASSETS. The Company has good title to all of
the Purchased Assets property, free and clear of all liens, restrictions and
encumbrances.
2.5 INVENTORIES. All manufactured homes included in the New Home
Inventory and the Used Home Inventory are of a quality and quantity saleable in
the ordinary course of the business at prevailing market prices.
2.6 LITIGATION. There is no suit, action, proceeding or governmental
investigation pending (or, to the knowledge of the Company, threatened) against
the Company with respect to the Business, and there are no outstanding court
order, court decrees, or court stipulations with respect to the Business to
which the Company is a party or by which any of its assets are bound. The
Company does not have any reason to believe that any such action, suit,
proceeding or investigation may be brought against the Company.
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Company 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 the laws of
general application affecting creditor's rights generally.
3.3 INSPECTION OF INVENTORIES. The Buyer has inspected all
manufactured homes included in the New Home Inventory and the Used Home
Inventory and found them to be of merchantable quality saleable in the ordinary
course of business at prevailing market prices.
3.4 REFERRAL OF COMPLAINTS AND INQUIRIES. The Buyer shall refer all
customer complaints and inquiries concerning manufactured homes sold prior to
Closing date to the Company at its address at P.O. Box 232, Paintsville,
Kentucky 41240, and shall, in addition to referring any written communication to
the Company, report all complaints and inquiries to the Company at its corporate
office at Paintsville, Kentucky at Telephone No. (606) 789-1779.
3.5 STORAGE OF PROPERTY. The Buyer shall permit the Company to store
property not purchased hereunder on its leased premises for a period not to
exceed thirty (30) days.
ARTICLE 4. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of the Buyer to complete 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 NON-COMPETITION AGREEMENT. The Stockholder shall have executed
and delivered to the Buyer a non-competition agreement in the form and substance
reasonably satisfactory to the Buyer.
4.2 PROPERTY LEASE. The Buyer shall have either assumed the real
estate leases for the property listed on EXHIBIT H or shall have entered into
new leases with the landlords for the property.
ARTICLE 5. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
5.1 SURVIVAL OF WARRANTIES. All representations, warranties,
agreements, covenants and obligations set forth in this Agreement are material,
shall be deemed to have been relied upon by the other parties and shall survive
the Closing and shall not merge in the performance of any obligation by any
party hereto.
5.2 PAYMENT OF DEBTS. The Company shall as promptly as possible after
the Closing pay all debts and obligations not to be assumed by the Buyer
hereunder.
ARTICLE 6. GENERAL PROVISIONS
6.1 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.
6.2 ENTIRE AGREEMENT. This Agreement (including all exhibits 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. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision hereof.
6.3 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Kentucky.
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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 S.C. RETAIL, CORP.
By: /s/ Keith W. Brown
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Name: Keith W. Brown
Title: President
RAINBOW HOMES, INC.
By: /s/ Harold D. Ward
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Harold D. Ward, President
STOCKHOLDER:
/s/ Harold D. Ward
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Harold D. Ward
STATE OF KENTUCKY,
COUNTY OF JOHNSON, SCT.
The foregoing Instrument was acknowledged before me by Keith W. Brown,
President, for and on behalf of Southern Energy Homes S.C. Retail, Corp., this
7th day of April, 1998.
My Commission expires: November 30, 2000
WITNESS my hand and Notarial Seal, this 7th day of April, 1998.
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NOTARY PUBLIC
STATE OF KENTUCKY,
COUNTY OF JOHNSON, SCT.
The foregoing Instrument was acknowledged before me, this 7th day of
April, 1998 by Harold D. Ward, President of Rainbow Homes, Inc., for and on
behalf of said corporation.
My Commission expires: November 30, 2000
WITNESS my hand and Notarial Seal, this 7th day of April, 1998.
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NOTARY PUBLIC
I CERTIFY TO PREPARATION
OF THE FOREGOING ASSIGNMENT:
/s/ Michael J. Schmitt
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MICHAEL J. SCHMITT
ATTORNEY AT LAW
WELLS, PORTER, SCHMITT & JONES
P.O. DRAWER 1448
PAINTSVILLE, KY 41240-1448
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ASSET PURCHASE AGREEMENT
LIST OF EXHIBITS
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Exhibit A: New Home Inventory
Exhibit B: Fixtures, Equipment and Furniture
Exhibit C: Customer Purchase Orders
Exhibit D: Used Home Inventory
Exhibit E: Other Assets
Exhibit F: Assumed Liabilities
Exhibit G: Rent Reimbursement
Exhibit H: Real Estate Leases
The Registrant hereby agrees to furnish supplementally to the Securities and
Exchange Commission upon request a copy of any exhibit to the within Agreement.