Exhibit 10.Z
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 23rd day of January, 2004 ("Effective Date") by and between Fleetwood
Homes of Georgia, Inc., a Georgia corporation with its principal offices in
Douglas, Georgia ("Seller") and Decorator Industries, Inc., a Pennsylvania
corporation with its principal offices in Pembroke Pines, Florida ("Buyer").
W I T N E S S E T H:
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WHEREAS, Seller owns and operates a window covering and bed covering
and other decor related manufacturing business from a manufacturing plant and
other facilities located at 2118 and 2122 Broxton Road, Hwy. 441 North in
Douglas, Georgia, the operation of which is referred to as the "Business"; and
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer, the Purchased Assets (as defined in Section 1.1) on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE 1
1.1 Purchased Assets. Subject to the terms and conditions set forth in
this Agreement and on the basis of and in reliance upon the representations,
warranties, covenants and other obligations of Seller and Buyer in this
Agreement, at the Closing (as defined in Section 3.1), Seller shall sell,
convey, transfer, assign and deliver to Buyer, and Buyer shall purchase from
Seller all of Seller's rights, title and interest in and to the Purchased
Assets, free and clear of all liens, charges, claims, pledges, security
interests and encumbrances of any nature whatsoever (collectively, "Liens"),
except for those Liens set forth on Exhibit A as "Permitted Encumbrances." For
purposes of this Agreement, "Purchased Assets" shall mean and include all of
those personal, tangible and intangible properties, and the real property and
improvements of Seller, used in connection with the operation of the Business,
other than the Excluded Assets (as defined in Section 1.3 below), including,
without limitation, the following assets, properties and rights owned, leased,
used or held for use by Seller and used in connection with the operation of the
Business:
Without in any way limiting the scope of the assets being transferred
to Buyer hereunder, said assets include the real estate set forth on Appendix I
located at 2118 Broxton Road, Highway 441 North, Douglas, Georgia, including all
buildings, improvements, structures, easements, hereditaments and appurtenances,
all machinery, equipment and vehicles (including those listed on Appendix II),
fixtures, stock in trade, inventories of merchandise (raw and processed
materials), supplies, tools, furniture, designs and drawings.
1.2 Excluded Assets. Notwithstanding the generality of Section 1.1,
Seller shall retain from and after the Closing all of its rights, title and
interest in and to, and shall exclude from the sale, conveyance, assignment and
transfer to Buyer, all of the following assets, properties and rights
(collectively, the "Excluded Assets"):
(a) Any and all cash or investments owned or held by Seller;
(b) Any and all security deposits;
(c) Accounts receivable;
(d) any and all contracts;
(e) Rights which accrue or will accrue to Seller under this
Agreement;
(e) excess inventory, if any, referred to in Section 2.1;
(f) Subject to Section 6.1(h), two buildings located at 2122
Broxton Road, Highway 441 North, Douglas, Georgia;
(g) Oracle system software and connectivity rights;
(h) Any signs or other items with Fleetwood name, logo or
other Fleetwood identification;
(i) Employee files and all documents, reports, files and
computer data (hard copies and electronic data) pertaining to the business or
its operation, except that Fleetwood will provide, at Decorator's expense, if so
requested, copies of any or all vendor and customer invoices dated up to 12
months prior; and
(j) Sony digital handycam.
1.3 Liabilities of Seller Assumed by Buyer. Buyer will not assume, or
in any way be liable or responsible for any debts, claims, demands, liabilities
or obligations of Seller (whether or not referred to in any Exhibit and/or
appendix hereto), except as specifically provided in this Section 1.3, and
Seller represents, warrants and agrees that Buyer shall not be or become liable
for any debts, claims, demands, liabilities or obligations of Seller not
expressly assumed in this Section 1.3 of any kind whatsoever, whether fixed or
contingent, known or unknown. Without limiting the generality of the foregoing,
Buyer shall not assume (i) any purchase or sale commitments, contracts, leases,
licenses, permits, supply arrangements or any other agreements or arrangements
to which Seller is a party or by which it is bound, except as set forth on
Schedule 1.3, or unless Buyer at Closing expressly assumes any of same in
writing; (ii) any liability or obligation of Seller for any personal injury or
property damage claim heretofore or hereafter made for occurrences prior to the
Closing (iii) any liability or obligation of Seller for any claim heretofore or
hereafter made in respect of any express or implied representation, warranty,
agreement or guarantee made (or claimed to have been made) by Seller, or imposed
or asserted to be imposed by operation of law, in respect of any product sold
and delivered on or before the Closing; or (iv) any unpaid taxes; interest
and/or penalties due or owing by Seller to any taxing or governmental authority
for all periods prior to the Closing.
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ARTICLE 2
2.1 Purchase Price. In reliance upon the representations, warranties,
covenants and agreements of Seller contained herein, and in exchange for the
Purchased Assets, and the covenants contained herein, at Closing, Buyer shall
pay or cause to be paid to Seller the purchase price (the "Purchase Price") of
Five Million Dollars ($5,000,000), which price includes One Million Dollars
($1,000,000) of inventory, but which price will be adjusted for the agreed upon
value of the inventory, as set forth below.
(a) Buyer shall pay Four Million Dollars ($4,000,000) of the
Purchase Price to Seller at Closing in immediately available funds by wire
transfer to such account or accounts as shall be designated in writing by
Seller.
(b) Buyer shall pay for up to One Million Six Hundred Fifty
Thousand Dollars ($1,650,000) of "usable" raw material and work in process
inventory, defined as any inventory that is clearly not spoiled or obsolete or
of below-standard quality. Such inventory shall be priced at the lower of cost
or fair market value, on a First-In, First-Out basis, in accordance with GAAP.
Any inventory in excess of that identified for purchase by the Buyer will be
retained by the Seller, but Buyer will purchase, at a price equal to the lower
of Seller's cost or current market price of new material, on an as needed basis,
any such excess material that meets Seller's current requirements for product.
(c) If usable inventory as determined by the parties is valued
at One Million Dollars ($1,000,000) to One Million Six Hundred Fifty Thousand
Dollars ($1,650,000), Buyer shall pay Seller the value of the inventory one (1)
year from Effective Date plus interest at four percent (4%) per annum from
Closing in immediately available funds by wire transfer to such account or
accounts as determined in writing by Seller.
(d) If usable inventory as determined by the parties is valued
at less than One Million Dollars ($1,000,000), the Purchase Price shall be
reduced by a sum equal to the value by which the inventory is less than One
Million Dollars ($1,000,000), with the balance of the Purchase Price in excess
of Four Million Dollars ($4,000,000) payable one (1) year from the Effective
Date at four percent (4%) interest per annum in immediately available funds by
wire transfer to such account or accounts as determined in writing by Seller.
(e) Any significant inventory remaining on December 31, 2004,
will be retuned to Fleetwood and the price of purchased inventory will be
adjusted accordingly.
Representatives of the Seller and Buyer shall take inventory on Friday,
January 23 and Saturday, January 24, 2004, and shall prepare a list and value
thereof. The settlement date for the determination and valuation of usable
inventory shall take place on or before February 23, 2004. The Buyer shall pay
Seller, on January 23, 2005, for inventory valued and determined usable on or
before February 23, 2004 as usable. Seller shall retain the excess inventory.
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2.2 Allocation of Purchase Price. Seller and Buyer agree that the
Purchase Price shall be allocated among the Purchased Assets, real, tangible and
intangible, as set forth on Appendix i and Appendix II attached hereto. Seller
and Buyer agree: (a) to report the sale and purchase of the Purchased Assets for
federal, state, municipal, local and foreign income tax purposes in accordance
with the Allocation (b) not to take any position inconsistent with the
Allocation on any of their respective income tax returns, reports, information
returns or similar documents required to be filed with any Authority (including
without limitation IRS Form 8594); and (c) to comply with the applicable
information reporting requirements of Section 1060 of the Internal Revenue Code
of 1986, as amended and the Treasury Regulations promulgated thereunder.
ARTICLE 3
3.1 Closing Date. The sale and purchase of the Purchased Assets shall
be consummated at a closing (the "Closing") to be held on January 23, 2004 or at
such other time, date and location as agreed upon by the parties (the "Closing
Date"). Notwithstanding the foregoing, the Closing must occur on or before
January 25, 2004 unless the parties have mutually agreed to extend this date. If
the Closing does not occur by January 25, 2004 or such other date that the
parties have mutually agreed upon, then this Agreement shall terminate
automatically.
3.2 Deliveries of Seller. At the Closing, Seller shall deliver to
Buyer, in form and substance satisfactory to Buyer, the following:
(a) physical control of all of the Purchased Assets;
(b) duly executed originals of such bills of sale, general
warranty deed, assignments and other instruments of sale, conveyance, transfer
and assignment as are necessary or appropriate to sell, convey, transfer and
assign to Buyer all of Seller's rights, title and interest in and to all of the
Purchased Assets, in form and substance reasonably satisfactory to the parties;
(c) a certificate of the Seller dated as of the Closing Date,
certifying:
(i) that all conditions specified in Section 6.2 have been
fulfilled or that the satisfaction of any of such conditions has been
waived; and
(ii) the signatures and authority of the persons/entities,
executing this Agreement and all agreements and documents contemplated hereby;
and that attached to such certificates are true, correct and complete copies of:
the resolutions of Seller authorizing the execution, delivery and performance of
this Agreement and the execution, delivery and performance of all agreements,
documents and transactions contemplated hereby and the consummation of all
transactions and other commitments and obligations contemplated by this
Agreement.
3.3 Deliveries of Buyer. At the Closing, Buyer shall deliver or cause
to be delivered to Seller, in form and substance satisfactory to Seller, the
following:
(a) the Purchase Price in the manner set forth in Article 2
above;
(b) a certificate of Buyer, dated as of the Closing Date,
certifying:
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(i) that all conditions specified in Section 6.1 have been
fulfilled or that the satisfaction of any of such conditions has been waived;
(ii) the signatures and authority of the persons executing
this Agreement and all agreements and documents contemplated hereby; and that
attached to such certificate are true, correct and complete copies of: the
resolutions of Buyer which authorize the execution, delivery and performance by
Buyer of this Agreement and the execution, delivery and performance of all
agreements, documents and transactions contemplated hereby and the consummation
of all transactions and other commitments and obligations contemplated by this
Agreement.
3.4 Tax Matters. Seller and Buyer shall respectively pay taxes, fees,
levies, duties, charges or similar assessments (including, without limitation,
interest, penalties and additions) imposed by or payable to any Authority as
follows:
(a) Seller and Buyer shall each pay one-half (1/2) of all
transfer, real property transfer, documentary stamp and other similar taxes and
all recording, filing and other fees and costs with respect to the sale and
purchase of any of the Purchased Assets;
(b) Buyer shall pay all sales and use taxes with respect to
the sale and purchase of any of the Purchased Assets; and
(c) Seller shall bear responsibility for all income, real
property, business and other income taxes and any other items or charges which
are properly apportionable under local law or custom shall be apportioned on a
per diem basis pro rata as of the Effective Date. Buyer shall bear
responsibility for all income, real property and other taxes associated with
ownership or use of the Purchased Assets or the Business arising with respect to
periods after the Closing Date.
3.5 Employees. Buyer covenants that it will continue to operate
Seller's Business at the current location, and to employ the plant's employees,
ON TERMS SET FORTH IN EXHIBIT C, and Buyer will comply with all applicable
requirements of the WARN Act in the event that it intends to terminate employees
or close the plant. If a "plant closing" or "mass layoff" within the meaning of
the WARN Act occurs after or as a result of the Closing, then Buyer will be
solely responsible and will comply with all applicable requirements of the WARN
Act. Buyer will hold Seller harmless from the results of Buyer's failure so to
comply with the WARN Act.
ARTICLE 4
Seller represents, warrants and agrees as follows:
4.1 Representations and Warranties of` Seller.
(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia and has the
requisite power and authority to own its properties and to carry on its business
as now being conducted. Seller is authorized to do business in the State of
Georgia.
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(b) Seller has the requisite power and authority to enter into
this Agreement and the documents and agreements contemplated herein
(collectively, the "Transaction Documents") and to consummate the transactions
contemplated herein and therein. The execution and delivery of this Agreement
and the Transaction Documents by Seller, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary action on the part of Seller. This Agreement and the Transaction
Documents have been duly executed and delivered by Seller and, assuming due
execution and delivery by Buyer, this Agreement and each of the Transaction
Documents constitutes a valid and binding obligation of Seller, enforceable
against Seller in accordance with their respective terms, and subject, as to
enforceability to: (i) bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization and other similar laws affecting creditors' rights generally; and
(ii) general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or equity). Neither the execution and delivery
of this Agreement and the Transaction Documents by Seller nor the consummation
of the transactions contemplated hereby constitutes a violation of any provision
of the articles of incorporation or bylaws of Seller or violates, or is in
conflict with, or constitutes a default under any material agreement or
commitment to which Seller is a party or by which Seller is bound, or violates
any statute or law or any judgment, decree, order, regulation or rule of any
court or governmental authority.
(c) The Books and Records and other books, records and work
papers of the Seller with respect to the Business and the Purchased Assets will
be made available to Buyer for inspection upon the written request of Buyer.
(d) Except as contemplated by Section 3.4(c), Buyer shall have
no liability to any Authority for or on account of any property, gross receipts,
franchise, ad volorem, capital gains, income, transfer, excise or other tax
(collectively "Taxes") imposed upon Seller and none of the Purchased Assets
shall be subject to any Liens with respect to any Taxes, other than Permitted
Encumbrances.
(e) Seller has good and marketable title to the Purchased
Assets owned by Seller and at the Closing will convey and assign them to Buyer
free and clear of Liens other than the Permitted Encumbrances as defined in
Schedule 4.1(e).
(f) There are not any controversies pending or, to the
knowledge of Seller, threatened between Seller and any of its employees which
might reasonably be expected to have a material adverse effect on the conduct of
the Business, or any unresolved labor union grievances or unfair labor practice
or labor arbitration proceedings pending or, to the knowledge of Seller,
threatened relating to the Business. Seller has not received notice of any claim
that Seller has not complied with any laws relating to the employment of an
individual or that Seller is liable for any arrears of wages or any Taxes or
penalties for failure to comply with any of the foregoing.
(g) All patents, trademarks, trade names, copyrights and
registrations of Seller constituting Purchased Assets, if any, are in good
standing, are valid and enforceable and are free from any default on the part of
Seller that would have a material adverse effect on Seller. Seller is not
licensor nor licensee with respect to any patents, trademarks, trade names,
copyrights or registrations or applications therefore that relate to the
Business. To the knowledge of Seller, Seller is not in violation of any patent,
patent license, trade name, trademark, or copyright of others that relate to the
Business.
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(h) No permits are held by Seller in connection with the
Business or any of the Purchased Assets except for a non-transferable
Professional Occupational License issued annually by the City of Douglas,
Georgia.
i) The conduct of the Business does not to seller's knowledge
violate or infringe any domestic laws, rules or regulations or any applicable
material ordinances, including, without limitation, any of the foregoing that
pertain to or regulate, or consumer protection, environmental protection,
pollution control, disposal of hazardous or toxic waste, health and safety,
occupational safety matters or zoning. To the knowledge of Seller, none of the
employees, officers, members, shareholders, managers or directors of Seller or
any agent of Seller acting in its capacity as such with respect to the
operations of the Business, have engaged in any activities which are prohibited
under any federal laws, or the regulations promulgated pursuant to such laws, or
state or local laws, statutes or regulations or which are prohibited by rules of
professional conduct.
(j) (i) Seller owns fee simple title to the Real Property;
(ii) the Real Property comprises all of the real property associated with or
employed in the Business; (iii) the Business conducted thereon, are in material
compliance with all applicable planning, zoning and building codes and
ordinances; the consummation of the transactions contemplated herein will not
result in a violation of any applicable planning, zoning or building code or
ordinance, or the termination of any applicable zoning variances or
"grandfathering" now existing; (iv) Seller has not received written notice of a
violation of any ordinance or other law, order, regulation or requirement
relating to or affecting all or any part of the Real Property, and Seller has
not received written notice of condemnation or similar proceedings relating to
any part of the Real Property; (v) to the knowledge of the Seller there are no
hazardous materials or toxic waste stored or disposed of or otherwise located
in, under, over or adjacent to the Real Property nor are there any aboveground
or underground storage tanks on or under the Real Property, and (vi) there are
no parties in possession of, and to the knowledge of the Seller no one claiming
any possession, adverse or not, to or other interest in, any portion of the Real
Property and there are no lessees, tenants or subtenants at sufferance,
trespassers or otherwise.
(k) No representation or warranty by Seller in this Article 4
or in any other Article or Section of this Agreement, or in any certificate or
other document furnished or to be furnished by or behalf of Seller as a
condition to Closing of this Agreement, contains or will contain any untrue
statement of a material fact.
4.2 Representations and Warranties of Buyer.
Buyer represents, warrant and agree as follows:
(a) Buyer is a duly organized, validly existing corporation in
good standing under the laws of the Commonwealth of Pennsylvania and has the
requisite corporate power and authority to own its properties and to carry on
its business as now being conducted. Buyer is qualified to do business in the
State of Georgia.
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(b) Buyer has the requisite corporate power and authority to
enter into this Agreement and the Transaction Documents to which it is a party
and to consummate the transactions contemplated herein and therein. The
execution and delivery of this Agreement and the Transaction Documents to which
it is a party, and the consummation of the transactions contemplated hereby and
thereby, have been (or will have been prior to the Closing Date) duly authorized
by all necessary corporate action on the part of Buyer. This Agreement and the
Transaction Documents have been duly executed and delivered by Buyer and,
assuming due execution and delivery by Seller, constitute a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their terms,
and subject, as to enforceability, to: (i) bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and other similar laws affecting creditors'
rights generally and the rights of creditors of insurance companies generally;
and (ii) general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or equity). Neither the execution and delivery
of this Agreement and the Transaction Documents by Seller nor the consummation
of the transactions contemplated hereby constitutes a violation of any provision
of the articles of incorporation or bylaws of Seller or violates, or is in
conflict with, or constitutes a default under any material agreement or
commitment to which Seller is a party or by which Seller is bound, or violates
any statute or law or any judgment, decree, order, regulation or rule of any
court or governmental authority.
ARTICLE 5
5.1 Operations. From the date hereof until the Closing Date, except as
otherwise expressly provided in this Agreement, Seller, with respect to the
Business and the Purchased Assets, shall use its reasonable best efforts to:
(i) carry on Business in substantially the same manner as
heretofore;
(ii) maintain the Purchased Assets and all parts thereof in
their current condition, ordinary wear and tear excepted; and
(iii) cooperate with Buyer by taking such actions as are
reasonably necessary to facilitate a smooth, efficient and successful transition
of the Purchased Assets and the Business to Buyer at Closing.
5.2 Consents and Approvals. Seller shall: (a) promptly apply for and
use its commercially reasonable efforts to obtain prior to Closing all consents,
approvals, authorizations and clearances from governmental and regulatory
Authorities and third parties required to consummate the transactions
contemplated hereby and/or to transfer to Buyer the Purchased Assets; (b)
provide such information and communications to Authorities as such Authorities
may reasonably request; and (c) prepare any document or other information
reasonably required by Buyer or reasonably requested of Seller by any such
Authorities or third parties, in order to consummate the transactions
contemplated hereby.
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5.3 Employees; Employee Benefit Plans. Seller shall retain all
liabilities and obligations for all benefits under the Seller's Employee Benefit
Plans, as of the date of closing, regardless of whether any such liabilities and
obligations are disclosed on the Financial Statements (including, without
limitation, any and all Workers' Compensation, COBRA, health, disability or
other benefits due to or for the benefit of any employees of Seller or their
covered dependents), but in no event shall Seller retain any liabilities or
obligations under the WARN Act for events occurring at or after the date of
Closing.
ARTICLE 6
6.1 Conditions to Closing of Buyer. All of the obligations of Buyer
under Articles 1, 2 and 3 of this Agreement are subject to the fulfillment prior
to or at the Closing of each of the following conditions, any of which Buyer may
waive in its sole discretion:
(a) Seller shall have performed and complied in all material
respects with all agreements, commitments, covenants and other obligations
required by this Agreement to be performed or complied with by Seller prior to
or at the Closing;
(b) Seller shall have delivered to Buyer all of the
deliverables referenced in Section 3.2;
(c) the representations and warranties of Seller contained in
this Agreement and the Schedules hereto shall be true and correct in all
material respects at and as of the Closing Date and Buyer shall have received a
certificate of Seller dated as of the Closing Date to such effect;
(d) all material authorizations, consents, waivers, approvals,
orders, registrations, qualifications, designations, declarations, filings or
other actions (collectively "Authorizations") required with or from any
governmental entity (including without limitation receipt of licenses (or
commitments to issue licenses) necessary for Buyer to own and operate the
Business as currently conducted, necessary in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, shall have been duly obtained and shall be
reasonably satisfactory to Buyer. No such consent or approval shall impose on
Buyer any condition or provision or requirement with respect to the Business
that is more restrictive in any material respect than or different in any
material respect from the conditions imposed upon such operation prior to
Closing, without Buyer's prior written approval;
(e) no suit, action, investigation, inquiry or other
proceeding by any Authority or other person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby. On the Closing Date, no
injunction or order shall be in effect prohibiting consummation of the
transactions contemplated hereby or which would make the consummation of such
transactions unlawful and no action or proceeding shall have been instituted and
remain pending before any Authority to restrain or prohibit the transactions
contemplated by this Agreement and no adverse decision shall have been made by
any such Authority which is reasonably likely to materially adversely affect the
Purchased Assets. No federal, state or local statute, rule or regulation shall
have been enacted the effect of which would be to prohibit, materially restrict,
impair or delay the consummation of the transactions contemplated hereby or
materially restrict or impair the ability of Buyer to own the Purchased Assets
or to conduct the Business relating thereto;
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(f) Buyer's receipt of standard ALTA fee Owner's title
insurance policy, at buyer's expense, insuring title (at standard market rates
for fee simple title) to the Real Property in Buyer, subject only to the
Permitted Encumbrances, in the aggregate amount of no more than the market value
of the Real Property, issued through Lawyers Title;
(g) there shall have been no material adverse change since the
date hereof in the Purchased Assets and subject to Section 3.4 Seller shall have
paid through the Closing Date, all obligations and liabilities of Seller when
due;
(h) Seller and Buyer will enter a lease agreement in the form
of Exhibit B for a portion of the buildings located at 2122 Broxton Road, which
is now being used for the manufacturing of product and warehousing of material;
and
(i) Buyer's Board of Directors shall have approved this
Agreement and the transactions contemplated hereunder.
6.2 Condition to Closing of Seller. All of the obligations of Seller
under Articles 1, 2 and 3 of this Agreement are subject to the fulfillment prior
to or at the Closing of each of the following conditions, any of which Seller
may waive in its sole discretion:
(a) Buyer shall have performed and complied in all material
respects with all agreements, commitments, covenants and other obligations
required by this Agreement to be performed or complied with by Buyer prior to or
at the Closing;
(b) Buyer shall have delivered to Seller all of the
deliverables referenced in Section 3.3;
(c) the representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date and Seller shall have received a certificate of Buyer dated as
of the Closing Date to such effect.
ARTICLE 7
7.1 Reasonable Efforts/Further Assurances. Each party shall use all
commercially reasonable efforts, to take or cause to be taken all actions and to
do or cause to be done all things necessary, proper or advisable under
applicable laws to consummate and make effective the transactions contemplated
by this Agreement. Upon the reasonable request of another party, each party
agrees to take any and all actions, including, without limitation, the execution
of certificates or instruments, necessary or appropriate to give effect to the
terms and conditions set forth in this Agreement or to more fully vest in Buyer,
Seller's rights, title and interest in and to the Purchased Assets.
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7.2 Publicity. No party shall issue any press release, public statement
or announcement or make any other disclosure relating to this Agreement or the
transactions contemplated by this Agreement without the written prior approval
of the other party in each instance, except to the extent such disclosure is
required by applicable law (in which case such party shall use all reasonable
efforts to give the other party prior notice thereof).
7.3 Expenses. Except as otherwise provided in this Agreement, Seller
and Buyer shall each bear their respective expenses incurred in connection with
the negotiation, execution, delivery and implementation of this Agreement or the
transactions contemplated by this Agreement, including, without limitation, all
accounting, legal, financial advisory and other expenses, whether or not the
transactions contemplated by this Agreement are consummated.
7.4 Relationship of the Parties. Nothing contained herein shall be
deemed to create a joint venture or other fiduciary relationship between Seller
and Buyer. Neither Seller nor Buyer, nor their respective officers, directors,
employees, representatives or agents, shall be deemed to be agent or servant of
the other party nor have the right or authority to enter into any contract,
agreement, commitment or other obligation in the name of or on behalf of the
other party or otherwise purport to bind the other party in any manner.
7.5 Confidentiality. Each party agrees that it will treat in confidence
all documents, materials and other information which it shall have obtained
regarding the other parties during the course of the negotiations leading to the
consummation of the transactions contemplated hereby (whether obtained before or
after the date of this Agreement), the investigation provided for herein and the
preparation of this Agreement and other related documents, and, in the event the
transactions contemplated hereby shall not be consummated, each party will
return to the other party all copies of non-public documents and materials which
have been furnished in connection therewith. The obligation of each party to
treat such documents, materials and other information in confidence shall not
apply to any information which: (a) such party can demonstrate was already
lawfully in its possession prior to the disclosure thereof by the other party;
(b) is known to the public and did not become so known through any violation of
a legal obligation; (c) became known to the public through no fault of such
party; or (d) is later lawfully acquired by such party from other sources.
Except as required by law or deemed advisable under applicable law in the
reasonable opinion of counsel, and except for disclosures to its directors,
officers, employees, counsel, accountants and other advisors involved in the
negotiations leading to the consummation of the transactions contemplated
hereby, who shall be advised of the confidentiality requirements herein, no
party hereto shall disclose to any person the Purchase Price, the terms or
provisions of this Agreement or the content of any discussions or communications
between the parties.
(7.6) Relief. The parties acknowledge that their failure to comply with
the provisions of Section 7.5 will give rise to damages which may be impossible
to measure accurately, and that injuries sustained from any such breach will be
incalculable and irremediable. Therefore, it is agreed that each of the parties
shall be entitled to, in addition to all other remedies at law, equitable
relief, including without limitation an injunction or order of specific
performance, in any court of competent jurisdiction, in the event of any breach
by the other parties of Section 7.5. Should litigation be necessary to enforce
any provision hereof, the prevailing party shall be entitled to recover all
costs, including reasonable attorney's fees, incurred prior to suit or after
suit, and in all court proceedings, including appellate courts.
11
7.7 Maintenance and Furnishing of Information.
(a) Seller and Buyer agree that, for a period of six (6) years
after the Closing Date (or such longer period as may be required by applicable
law), it shall not destroy, discard or otherwise render unavailable any books,
records, documents, data or other information relating principally to the
conduct of the Business or the ownership or operation of the Purchased Assets
prior to the Closing Date (the "Information"), without first offering the other
party in writing the opportunity to obtain possession thereof at such other
party's sole expense, provided however Seller may destroy or archive documents
in accordance with its standard practices applicable to its own documents.
(b) Subject to Section 7.7(a), Seller and Buyer agree to
maintain easy and ready access and to make available to the other party, at
reasonable times after reasonable request therefore and at the requesting
parties' sole expense, any Information for the purpose of: (i) preparing for,
prosecuting or defending any suit, action, litigation or administration,
arbitration or other proceeding or investigation (other than one by or against
the non-requesting party) by or against the requesting party; (ii) preparing and
filing any Tax return or election relating to the Purchased Assets, the Excluded
Assets or the Excluded Liabilities and/or preparing for or defending any
examination of Tax or Tax return by any Authority; or (iii) any other legitimate
purpose ("Authorized Purpose"). The party requesting such information shall
reimburse the party providing such Information for out-of-pocket costs and
expenses incurred by the party providing such Information.
7.8 Regulatory Approvals. From the date hereof until the Closing Date,
Buyer shall: (a) apply for all consents, licenses, permits, approvals,
authorizations and clearances of governmental and regulatory Authorities
required of it to consummate the transactions contemplated hereby; (b) provide
such information and communications to Authorities as such Authorities may
reasonably request; and (c) prepare any document or other information reasonably
required of Buyer by any such Authorities, in order to consummate the
transactions contemplated hereby.
7.9 Nature and Survival of Representations and Warranties;
Indemnification.
(a) Events of Default. A breach in any material respect of any
representation or warranty by a party, or a breach as a result of the failure of
any of such party to perform in any material respect any of its respective
agreements, covenants and obligations under this Agreement, shall be considered
a default hereunder giving rise to the indemnification set forth in Section
7.9(c) or Section 7.9(d) hereof, as the case may be.
(b) Survival of Representations, Etc. Except for
representations and warranties pertaining to title of the Purchased Assets and
environmental matters, all representations and warranties made by a party in
this Agreement or in any Appendix, Exhibit, Schedule, certificate, document or
instrument delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, and the remedies of the other party, shall
survive the Closing for one year. Representations and warranties with respect to
title to the Purchased Assets and environmental matters shall survive the
Closing to the extent provided by applicable statutes of limitations.
12
(c) Indemnification to Buyer. From and after the Closing Date,
Seller shall indemnify and hold Buyer harmless from and against any and all
claims, losses, expenses, damages or liabilities arising out of or relating to
any of the following: (i) the representations and warranties set forth in this
Agreement or in any other document, Schedule, instrument or certificate
furnished to Buyer by or on behalf of Seller in connection herewith not being
true and correct in all material respects on the Closing Date; (ii) any breach,
violation or nonperformance in any material respect of a covenant, agreement or
obligation to be performed hereunder on the part of Seller; (iii) any claims
against, or liabilities or obligations of Seller not specifically assumed by
Buyer pursuant to this Agreement; or (iv) any actions, judgments, costs and
expenses (including reasonable attorneys' fees and all other expenses incurred
in investigating, preparing or defending any litigation or proceedings,
commenced or threatened) incident to this Section 7.9(c) or the enforcement of
this Section 7.9(c).
(d) Indemnification to Seller. From and after the Closing
Date, Buyer shall, indemnify and hold Seller harmless from and against any and
all claims, losses, expenses, damages or liabilities arising out of or relating
to any of the following: (i) the representations and warranties set forth in
this Agreement or in any other document, Schedule, instrument or certificate
furnished to Seller by or on behalf of Buyer in connection herewith not being
true and correct in all material respects on the Closing Date; (ii) any breach,
violation or nonperformance in any material respect of a covenant, agreement or
obligation to be performed hereunder on the part of Buyer; or (iii) any actions,
judgments, costs and expenses (including reasonable attorneys' fees and all
other expenses incurred in investigating, preparing or defending any litigation
or proceedings, commenced or threatened) incident to this Section 7.9(d) or the
enforcement of this Section 7.9(d).
(e) Limitation on Indemnities. Notwithstanding the foregoing,
and except with respect to claims for indemnity based on breaches of
representations and warranties with respect to title, inventory or with respect
to the Georgia bulk sales law, neither party shall be obligated to indemnify the
other party for any individual claim of less than $15,000, and not unless and
until the amount of all other claims for indemnification exceeds $150,000 in the
aggregate, and then only for amounts in excess of $150,000, and then only up to
a maximum of $2,500,000 in the aggregate.
ARTICLE 8
8.1 Bulk Sales Waiver. Buyer and Seller hereby waive any
compliance with applicable bulk sales transfer law. Seller represents and
warrants that the creditors with respect to the conduct of the Business or the
ownership or operation of the Purchased Assets have been paid in full prior to
the Closing Date, or within such other period as is normally permitted by such
creditors in the ordinary course of business.
8.2 Assignment, Waiver, Amendment. Neither party may assign
this Agreement, in whole or in part, without the prior written consent of the
other party. No assignment by Buyer pursuant to the first sentence of this
Section 8.2 shall have the effect of relieving Buyer of any of its obligations
under this Agreement. No waiver, termination or discharge of this Agreement, or
any of the terms or provisions hereof, shall be binding upon any party unless
confirmed in writing. No waiver by any party of any term or provision of this
Agreement or of any default hereunder shall affect such party's rights
thereafter to enforce such term or provision or to exercise any right or remedy
in the event of any other default, whether or not similar. This Agreement may
not be modified or amended except by a writing executed by the parties.
13
8.3 Interpretation; Headings. This Agreement shall not be construed
more strictly against any party hereto regardless of which party is responsible
for its preparation, it being agreed that this Agreement was fully negotiated by
the parties. The titles, captions and headings contained in this Agreement are
inserted for convenience of reference only and are not intended to be a part of
or to affect in any way the meaning or interpretation of this Agreement.
8.4 Binding Effect; Benefits. Subject to Section 8.2, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns. Notwithstanding anything to the
contrary, nothing in this Agreement, expressed or implied, is intended to confer
on any person or entity other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
8.5 Governing Law, Entire Agreement, Severability. This Agreement shall
be governed by and construed in accordance with the laws of the State of Georgia
without regard to the principles of conflicts of laws. This Agreement, together
with all Exhibits, Appendices and Schedules to this Agreement and the other
Transaction Documents contemplated hereby (all of which are incorporated herein
by this reference), contains the entire agreement and understanding concerning
the subject matter hereof between the parties and specifically supersedes any
other agreement or understanding among the parties related to the subject matter
hereof. If any provision of this Agreement shall be held void, voidable, invalid
or inoperative, no other provision of this Agreement shall be affected as a
result thereof, and, accordingly, the remaining provisions of this Agreement
shall remain in full force and effect as though such void, voidable, invalid or
inoperative provision had not been contained herein.
8.6 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given if delivered or
mailed, certified mail, postage prepaid as to each of the parties hereto or by
facsimile transmission, receipt acknowledged, at the respective addresses and
facsimile numbers set forth on Schedule 8.6 (or at such other address as to
which any such party may have notified the other parties pursuant to the terms
hereof).
14
8.7 Counterparts: Fax Signatures. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute the same Agreement and any telecopy or other
facsimile transmission of any signature shall be deemed an original and shall
bind such party.
IN WITNESS WHEREOF, the undersigned have caused their respective duly
authorized representatives to execute this Agreement as of the day and year
first above written.
ATTEST: FLEETWOOD HOMES OF GEORGIA, INC.
/s/ Larry A. Krepps By: /s/ Larry Mace
- ------------------------- --------------------------
Authorized Officer
DECORATOR INDUSTRIES, INC.
/s/ Michael K. Solomon By: /s/ William A. Bassett
- ------------------------- -------------------------
Authorized Officer
15
APPENDIX i
----------
REAL ESTATE
-----------
All that certain tract of parcel of land lying and being situate in the
City of Douglas, in Original Land Lot No. 190 in the 6th Land District
of coffee County, Georgia and being more particularly described as
follows:
Being all of that certain 3.79 acres as shown and depicted on a certain
plat prepared by Statewide Surveying Company, dated March 16, 1994 and
recorded in Plat Book 71, page 17, Public Records, Coffee County,
Georgia, which plat is incorporated herein by reference as a part of
this description.
The property is located at 2118 Broxton Road, Hwy. 441 North, Douglas,
Georgia
The following values are placed upon real estate of Fleetwood Drapery,
based upon cost or assessed value for property taxes:
Land $ 20,000
Building $540,000
--------
Total Real Estate $560,000
APPENDIX II
-----------
EQUIPMENT
---------
Note: Listing of Fixed Assets attached hereto.
- -----------------------------------------------
The listing of fixed assets provided herewith is subject to verification through
performance of a physical inventory, which is to be performed prior to January
24, 2004. Seller represents that this list represents, to the best of Seller's
knowledge, all machinery & equipment, vehicles and furniture & fixtures
currently being used at this operation in connection with the Business and that
no such equipment has been removed or sold since inception of discussions
regarding this sale.
The following values are placed upon machinery, equipment, furniture, fixtures,
vehicles, tools, and supplies, which are valued based upon cost, tax assessment
and/or fair market value: $440,000.
APPENDIX III
------------
INVENTORY
---------
A listing of raw material and work in process inventory will be prepared upon
completion of a physical inventory to be taken on Friday, January 23 and
Saturday, January 24, 2004 and agreed upon by both parties. The anticipated
value net of reserve for excess, obsolete or damaged inventory is $1,650,000.
SCHEDULE 4.1 (h)
----------------
PERMITTED ENCUMBRANCES
----------------------
For purposes of this Agreement, "Permitted Encumbrances" shall mean:
(i) any Lien for Taxes: (A) not yet delinquent or (B) being
contested in good faith by appropriate proceedings and, in each case, fully
reserved against Seller on the Financial Statements (notwithstanding the
forgoing, all amounts due with respect to such Liens shall remain Excluded
Liabilities);
(ii) all easements, covenants, conditions, assignments,
defects, restrictions, exceptions, reservations and other encumbrances, whether
recorded or unrecorded, disclosed by the title examination being obtained by
Buyer, which in Buyer's sole reasonable discretion do not interfere with the use
or operation of the Purchased Assets as the same are currently being used and
operated or which in Buyer's sole reasonable discretion do not render title to
any portion of the Real Property unmarketable;
(iii) any Liens, exceptions, objections or other matters which
are caused or created by or on behalf of Buyer or anyone acting by, through or
under Buyer;
(iv) any state of facts, encroachments, overlaps or title
defects which in Buyer's sole reasonable discretion do not interfere with the
use or operation of any Purchased Asset as the same is currently being used and
operated or which in Buyer's sole reasonable discretion do not render title to
any portion of the Real Property unmarketable.
EXHIBIT B
---------
LEASED BUILDING USED FOR MANUFACTURING
--------------------------------------
Portions of the leased buildings located next door at 2122 Broxton Road, Highway
441 North, Douglas, Georgia, is used for part of the manufacturing processes of
Fleetwood Drapery. Fleetwood will lease this facility to Decorator for an
initial period of six months for the amount of $1. This lease is renewable at
the option of Decorator for an additional 6 months for $1 if Decorator
determines it is necessary to be used for the manufacture of product for
Fleetwood.
Building A (Fleetwood Eastern Region office building): Metal building; 8,000
square feet; front half is office space with approximately 4,000 square feet in
back used for window covering production, wood shop and pillow blowing. No
sprinkler system. Building is about 35 years old.
Building B: Metal building, approximately 50,000 square feet; utilized for
fabric storage for the window coverings operation; other half used for
warehousing of Continental Imports product. Does have sprinkler system and has
fire alarm. Building is about 35 years old.
EXHIBIT C
---------
January 22, 2003
To: Fleetwood Drapery Associates
Decorator Industries, Inc. (DI) will be offering employment-at-will to Fleetwood
Drapery Associates in Douglas, Georgia. During your employment with DI, you will
be provided with the following benefits:
PAY RATE
- --------
Your pay rate with DI will remain the same as it was with Fleetwood Drapery.
Your conditions of employment will be as outlined in the attached Employee
Manual.
MEDICAL BENEFITS
- ----------------
If you are currently enrolled in Fleetwood's Medical Plan, your medical benefits
may continue under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
However, to continue receiving medical benefits with this plan, you must elect
coverage under COBRA.
Under the "COBRA" coverage, DI will continue to match any contribution Fleetwood
had been contributing to your medical plan. When you present a copy of your
COBRA election form DI will reimburse you for 75% of the monthly cost. In the
following months that you are employed with DI, we will reimburse you for 75% of
the cost when you present your monthly statement from Principal. You will be
responsible for mailing your payment directly to Principal.
HOLIDAYS
- --------
Employees who work the last scheduled work day prior to and the first scheduled
workday after the holidays, will be paid for the
following:
1. Memorial Day
2. Fourth of July
SEVERANCE/RETENTION BONUS
- -------------------------
Employees who continue their satisfactory employment with DI until their job is
terminated will be paid a severance/retention bonus based on the following
seniority:
EMPLOYED PAID
-------- ----
6 months - 5 years (2 weeks)
5 years + (3 weeks)
PLEASE NOTE, IF AN EMPLOYEE LEAVES THE COMPANY PRIOR TO THEIR JOB BEING
TERMINATED, THEY WILL NOT BE ELIGIBLE FOR THE SEVERANCE/RETENTION BONUS.
We greatly appreciate your support during this transition period.
- -----------------------------
William A. Bassett
President, CEO
Schedule 1.3
Liabilities of Seller Assumed by Buyer
There is one item of leased equipment, a copy machine. The lease expires in
March 2004. Monthly lease payments are $125. It is expected that the copy
machine will be returned to the leaser at the end of the lease term.
The software (other than the source code) used by the Business is owned by
Seller is being sold to Buyer, but Seller pays maintenance fees to Southeastern
Computer of $600 per month.
There is a month-to-month lawn service contract at $175 per month.