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EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of
February __, 1997 among AMRE, Inc. ("AMRE"), Facelifters Home Systems, Inc.
("Facelifters") American Remodeling, Inc. ("ARI") (collectively, AMRE,
Facelifters and ARI are sometimes referred to herein as "Seller"), and U.S.
Remodelers, Inc. ("Purchaser").
W I T N E S S E T H:
WHEREAS, Sellers are the subject of Chapter 11 bankruptcy proceedings
jointly administered with other affiliate cases under Case No.
397-30567-SAF-11, pending before the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division (the "Court"); and
WHEREAS, AMRE, Facelifters and Purchaser previously entered into an
agreement, evidenced by the Letter Agreement dated January 27, 1997 (the
"Interim Agreement"), providing for the interim operation by Purchaser of a
portion of the cabinet refacing business of AMRE conducted through Facelifters
and such terms were approved by the Court on January 27, 1997; and
WHEREAS, Sellers desire to sell, subject to Court approval, and
Purchaser desires to acquire certain assets utilized in and related to the
Business as more particularly described herein, such assets to be sold to
Purchaser free and clear of all liens, claims and encumbrances;
NOW, THEREFORE, in consideration of the representations and promises
contained herein and such other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
SECTION 1 DEFINITIONS.
The following capitalized terms used in this Agreement shall have the
following definitions:
1.1 "Application" shall have the meaning set forth in Section
2.1(a).
1.2 "Assets" shall have the meaning set forth in Section 3.1.
1.3 "Business" shall mean the kitchen remodeling and cabinet
refacing business of Seller conducted through Seller at the Sale Offices, the
Telemarketing Centers and the Xxxx City Factory.
1.4 "Xxxx City Factory" shall mean the factory leased and operated
by Facelifters located at 000 Xxxxxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx Xxxx,
Xxxxxxxx.
1.5 "Court" shall have the meaning set forth in the first recital
paragraph.
1.6 "FF&E" shall have the meaning set forth in Section 3.1(a).
1.7 "Inventory" shall have the meaning set forth in Section
3.1(b).
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1.8 "Las Colinas Offices" shall mean the sales office of
Facelifters located at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxxx, Xxxxx, 00000.
1.9 "Leases" shall have the meaning set forth in Section 3.3(b).
1.10 "Order" shall have the meaning set forth in Section 2.1(f).
1.11 "Purchase Price" shall have the meaning set forth in Section
3.2.
1.12 "Sales Offices" shall have the meaning set forth in Section
3.1(a).
1.13 "Telemarketing Center" shall mean the telemarketing centers
located at 0000 Xxxxxxxxx Xxxx., Xxxxx Xxxxxxxxxx, Xxxxxxx and 0000 Xxxxx Xxxxx
Xxxx, Xxxx Xxxxx, Xxxxxxx.
1.14 "Trademarks" shall have the meaning set forth in Section
3.1(c).
SECTION 2 CONDITIONS PRECEDENT
2.1 Bankruptcy Court Approval. The obligations of Seller and
Purchaser to close the transactions and sale of assets contemplated by this
Agreement are subject to the following conditions precedent:
(a) Application. An Application (the "Application")
shall have been filed with the Court requesting approval of:
(1) the assumption by AMRE and Facelifters and
assignment by Seller to the Purchaser, free and clear of all
liens, claims and encumbrances (except for those, if any,
which Purchaser may agree to assume pursuant to Section
3.2(a)), of each of the Leases and cure by the Seller of all
defaults under the Leases up through the date of the Closing;
(2) the sale by Seller to the Purchaser, free and
clear of all liens, claims and encumbrances (except for those,
if any, which Purchaser may agree to assume pursuant to
Section 3.2(a)), of the Assets (defined herein); and
(3) a break-up fee to be paid to Purchaser if the
Court fails to approve this Agreement because another offer
for the Business or any part thereof has been approved by the
Court as a higher and better offer, to be paid immediately
upon the closing of the transaction resulting from such other
offer, with such break-up fee to be in the amount of $30,000
for reimbursement of Purchaser's costs and expenses in
connection with the negotiation of and activities incident to
this Agreement.
(b) Findings. The Application shall have requested a
finding that, with respect to each of the Leases:
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(1) AMRE, Facelifters or ARI, which ever is
lessee, is not in default under the Lease, or if a default
exists under such Lease, the Application shall set forth the
amount required to be paid by AMRE, Facelifters or ARI to cure
such default prior to assumption or assignment of such Lease;
and
(2) assignment of such Lease to Purchaser does
not violate or constitute a breach of such lease.
(d) Good Faith. The Application shall request a finding
that Purchaser is a good faith purchaser pursuant to Section 363(m) of
the United States Bankruptcy Code, and that this Agreement constitutes
an arms-length transaction between the Seller and the Purchaser.
(d) Overbids. The Application shall have included an
express requirement that the first overbid, if any, offered in
competition with the offer represented by this Agreement, offer at
least $35,000 more in cash consideration than the total consideration
offered by Purchaser under this Agreement, and that each subsequent
competing bid represent at least an additional $5,000 in cash more
than the immediately preceding bid.
(e) Hearing. The Application shall have been brought on
for hearing on March 19, 1997, at which time the Application shall
have been subject to higher and better bids.
(f) Order. An order by the Court in form satisfactory to
counsel to Purchaser shall have been entered granting the relief
requested pursuant to the Application, including assignment of all of
the Leases (the "Order"), ten days shall have passed from the entry of
the Order, and no stay of such Order shall be in effect.
2.2 Defaults Under Leases. Provided Purchaser has paid all
reimbursement of operating expenses required under the Interim Agreement,
Seller shall have cured all defaults under each of the Leases up through the
date of the Closing.
SECTION 3 ASSET PURCHASE
3.1 Conveyance of Assets. Subject to and upon the terms and
conditions contained herein, on the Closing Date, Seller shall sell, convey,
transfer and assign to Purchaser, free and clear of liens, claims and
encumbrances (except for those, if any, Purchaser agrees to assume pursuant to
Section 3.2(a)), and Purchaser shall purchase all of Seller's right, title and
interest in and to all items of personal property used exclusively in
connection with the Business (collectively, the "Assets"). Without limitation,
the Assets include:
(a) FF&E. All of the personal property located at the
sales offices listed on Exhibit A hereto (the "Sales Offices"), the
Telemarketing Centers, the Xxxx City Factory, and the Las Colinas
Sales Office, including but not limited to the items listed on Exhibit
B attached hereto and incorporated herein by reference (collectively,
the "FF&E").
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(b) Inventory. All of Sellers' inventory for use in
connection with the Business remaining as of the Closing Date located
at the Sales Offices and the Xxxx City Factory, other than obsolete,
damaged and scrap inventory or inventory subject to a valid claim for
reclamation (the "Inventory").
(c) Trademark and Trade Name. All right, title and
interest in the trademarks, service marks and trade names
"Facelifters," "Facelifters Home Systems" and all related trademarks
and trade names, and any goodwill of the business associated therewith
(collectively, "Trademarks").
(d) Contracts and Leads. All right, title and interest of
the Seller in any kitchen remodeling or cabinet refacing contracts
which Purchaser has undertaken performance of pursuant to the Interim
Agreement, and any leads generated by the Seller from any of the Sales
Offices. All work performed under such contracts shall be performed
in the name of Purchaser and not on behalf of Seller, and Purchaser
shall obtain an acknowledgement from each customer that Purchaser is
responsible for the work to be performed and warranties to be given
and Seller shall not be liable for any of the work performed by
Purchaser.
(e) Books and Records. All books and records, customer
lists and customer telephone numbers, marketing data and materials
(including without limitation television commercials and promotional
videos), of AMRE and Facelifters relating to the Assets, all of which
shall be delivered to Purchaser.
3.2 Purchase Price. Purchaser shall pay the following amounts to
AMRE on the Closing Date (the "Purchase Price"):
(a) An amount equal to 125% of the liquidation value of
the FF&E as determined by a qualified appraiser selected by AMRE and
reasonably acceptable to Purchaser. If Purchaser agrees to assume or
take any of the FF&E subject to any indebtedness or other liability
secured by any of the FF&E, the consideration to be paid by Purchaser
for the FF&E shall be reduced by the amount of that indebtedness, not
to exceed the value of the assets securing the indebtedness or other
liability assumed. Costs and expenses of the appraiser shall be the
sole responsibility of and shall be paid by AMRE. If Purchaser
reasonably objects to the valuation set forth by the appraiser, the
Purchaser may, at Purchaser's sole cost and expense, retain a
qualified appraiser reasonably acceptable to AMRE and the Court, and
the liquidation in value shall be the average of the values determined
by the two appraisers; and
(b) An amount equal to 30% of AMRE's actual cost of raw
materials for the Inventory.
3.3 Additional Consideration. In addition to the Purchase Price,
Purchaser shall provide addition consideration to AMRE and Facelifters as
follows:
(a) Payment on Certain Contracts. With respect to
contracts and purchase orders originated in the name of AMRE or
Facelifters prior to the bankruptcy filing by
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AMRE and Facelifters but assigned to Purchaser, Purchaser shall pay to
AMRE on the last day of each week a cash amount equal to four percent
(4%) of the total amount actually collected by Purchaser on such
contracts (excluding applicable sales taxes) during the preceding
week. Purchaser shall also pay to AMRE, on the last day of each week,
three percent (3%) of amounts actually collected during the preceding
week from contracts resulting from leads provided to Purchaser by AMRE
during the Interim Agreement.
(b) Assumption of Leases and Certain Liabilities.
Purchaser will take assignment of and will assume the obligations
arising from the Closing Date forward under the real property leases
listed on Exhibit C for each of the Sales Offices, the Telemarketing
Centers and the Xxxx City Factory, and will take assignment of and
will assume the obligations arising from the Closing Date forward
under the equipment leases listed on Exhibit C (collectively, the
"Leases"). Provided that Purchaser has satisfied its obligations to
reimburse Seller for certain operating expenses under the Interim
Agreement, all obligations due and unpaid prior to the Closing Date
arising under the Leases, or those obligations which have accrued but
are not yet due and payable thereunder, including without limitation
any taxes or tax escrow payments, common area assessments or rental
payments, shall be paid by AMRE, Facelifters or ARI prior to the
closing. The Application shall set forth all due and unpaid
obligations relating to the Leases to be paid by AMRE or Facelifters
prior to closing. Prior to the closing of the transactions
contemplated by this Agreement, Purchaser may negotiate with lessors
regarding real estate and equipment leases on an ongoing basis.
3.4 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur in Dallas, Texas, on the fifth business
day following the later of (a) the date on which the Order becomes final and is
no longer subject to possibility of stay, appeal or reconsideration, (b) the
date on which the value of the FF&E is finally determined pursuant to Section
3.2(a), or (c) such other date agreed upon by Seller and Purchaser (the
"Closing Date").
3.5 Utilities. Subject to Purchaser's obligations under the
Interim Agreement to reimburse AMRE and Facelifters for certain operating
expenses, AMRE and Facelifters shall remain responsible for payment for utility
service related to the Leases up to the Closing Date.
3.6 Liability Under Interim Agreement. Purchaser shall remain
liable for any and all amounts due and unpaid to AMRE or Facelifters under the
Interim Agreement.
3.7 Retained Liabilities. Except for the obligations
expressly assumed pursuant to the Interim Agreement and this Agreement,
Purchaser shall not assume or agree to pay, perform or discharge any other
liabilities or obligations of Seller, and Seller shall retain such liabilities
and obligations, whether accrued, absolute, contingent or otherwise, including
without limitation liabilities based on or arising out of or in connection with
(a) any defects in work performed by AMRE, Facelifters or ARI, (b) any implied
or express warranties relating to such work on, or (c) any pension, benefit or
other liability relating to AMRE's, Facelifters' or ARI's employees.
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3.8 Competition Waiver. AMRE and Facelifters acknowledge and
agree that Xxxxxx Xxxxx is not bound by any covenant against competition with
AMRE or Facelifters and Purchaser may perform and undertake all actions
contemplated by this Agreement.
3.9 No Warranty/As Is-Where Is. Any and all Assets of the
Business purchased by Purchaser shall be, without exception, without warranty
of any kind, express or implied, and shall be in all respects in "as is-where
is" condition.
3.10 Purchaser's Option to Terminate. In the event (a) the Closing
Date has not occurred by April 10, 1997, or (b) the Court has ruled that any of
the Leases underlying the Telemarketing Centers or the Xxxx City Factory cannot
be assigned to Purchaser or (c) less than seven of the leases underlying the
nine Sales Offices can be assigned to Purchaser, then Purchaser, at its sole
option, may elect to terminate this Agreement with no further obligation
hereunder.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF AMRE AND FACELIFTERS
AMRE, Facelifters and ARI, jointly and severally, hereby represent and
warrant to Purchaser as follows:
4.1 Corporate Existence and Good Standing. Each of AMRE,
Facelifters and ARI is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware, and each of AMRE and
Facelifters has all necessary corporate power and authority to execute, deliver
and perform this Agreement and all other documents executed and delivered or to
be executed and delivered by it pursuant to this Agreement.
4.2 Title. Either AMRE, Facelifters or ARI, as the case may be,
owns good and marketable title to the FF&E and the Inventory.
4.3 Intellectual Property. Neither AMRE, Facelifters nor ARI has
transferred or conveyed any interest in or to the Trademarks, and has not
granted any right of use to the Trademarks, to any party other than Purchaser
pursuant to the Interim Agreement, since the merger of Facelifters and AMRE
Acquisition, Inc. on April 26, 1996.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Corporate Existence and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and that it has all necessary corporate power
and authority to execute, deliver and perform this Agreement and all other
documents executed and delivered or to be executed and delivered by it pursuant
to this Agreement.
5.2 Authority. The execution, delivery and performance by
Purchaser of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Purchaser, and no other corporate proceedings on the part of Purchaser are
necessary to authorize the execution, delivery and performance by it of this
Agreement and the consummation by Purchaser of the transactions contemplated
hereby. This
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Agreement has been duly executed and delivered by Purchaser and constitutes a
valid and legally binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms.
5.3 Financing. Purchaser has, and at the Closing Date will have,
such funds as are necessary for the consummation by Purchaser of the
transactions contemplated hereby.
SECTION 6 CLOSING DELIVERIES
6.1 Deliveries by AMRE and Facelifters to Purchaser. At Closing,
AMRE and Facelifters shall deliver to Purchaser the following, all of which
shall be in a form satisfactory to counsel to Purchaser:
(a) Xxxx of Sale. A xxxx of sale conveying the Assets to
Purchaser, signed by AMRE, Facelifters, and each of their affiliates.
(b) Assignment of Leases. An assignment and assumption
agreement with respect to each of the Leases.
(c) Assignment of Trademarks. Assignment of the
Trademarks and any additional notifications and documentation required
by each jurisdiction in which the Trademarks are registered to
evidence such assignment.
(d) Other Instruments of Transfer. Such other
instruments and documents as are reasonably requested by Purchaser to
carry out and effect the purpose and intent of this Agreement.
6.2 Deliveries by Purchaser to AMRE. At Closing, Purchaser shall
deliver to AMRE the following, all of which shall be in a form satisfactory to
counsel to AMRE:
(a) Purchaser Price. The Purchase Price in immediately
available funds.
(b) Assignment of Leases. An assignment and assumption
agreement with respect to each of the Leases.
(c) Other Instruments of Transfer. Such other
instruments and documents as are reasonably requested by AMRE to carry
out and effect the purpose and intent of this Agreement.
SECTION 7 GENERAL PROVISIONS.
7.1 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile and overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
if to AMRE or Facelifters, to
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AMRE or Facelifters
0000 X. Xxxxxxxx Xxxxxxx
0xx Xxxxx
Xxxxxx,Xxxxx, 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to
Akin, Gump, Strauss, Xxxxx and Xxxx, L.L.P.
0000 Xxxxxxx Xxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
if to Purchaser
U.S. Remodelers, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxx, President
Telecopy: (000) 000-0000
with a copy to
Xxxxxxx & Xxxxxx, L.L.P.
000 Xxxx Xx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Telecopy: (000) 000-0000
All such communications shall be deemed to have been delivered on the
date of hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
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7.2 Invalidity of Provisions. Each of the Provisions contained in
this Agreement is distinctive and severable and a declaration of invalidity or
unenforceability of any such provision by a court of competent jurisdiction
shall not affect the validity or enforceability of any other provision hereof.
7.3 Storage and Protection of Records. Purchaser agrees to store
and retain all books and records of Seller relating to the Assets and conveyed
to Purchaser and shall make such records available to Seller for inspection and
copying for eighteen months from the Closing Date.
7.4 Additional Documentation. Each of the parties hereto agrees
to execute such additional documents as may be necessary or appropriate to
consummate the transactions contemplated herein.
7.5 Entire Agreement. This Agreement and the Interim Agreement
constitute the entire understanding among the parties pertaining to the subject
matter hereof. There are no warranties, representations or agreements among
the parties in connection with such subject matter except as specifically set
forth or referred to in this Agreement.
7.6 No Release. Other than those releases expressly contained in
the Interim Agreement or this Agreement, the parties have, by execution of this
Agreement, not released any claims that they may assert against each other.
7.7 GOVERNING LAW. THIS AGREEMENT AND THE OBLIGATIONS OF THE
PARTIES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REGARD TO ANY CONFLICTS-OF-LAWS PROVISION THEREOF THAT
WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
7.8 Multiple Counterparts. This Agreement may be executed by
facsimile signature and in counterparts, each counterpart constituting an
original, but with all counterparts together constituting a single contract.
AMRE, INC.
By: /s/ J. XXXXX XXXXXXXXX
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Name: J. Xxxxx Xxxxxxxxx
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Title: President
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FACELIFTERS HOME SYSTEMS, INC.
By: /s/ J. XXXXX XXXXXXXXX
---------------------------------
Name: J. Xxxxx Xxxxxxxxx
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Title: President
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AMERICAN REMODELING, INC.
By: /s/ J. XXXXX XXXXXXXXX
---------------------------------
Name: J. Xxxxx Xxxxxxxxx
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Title: President
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U.S. REMODELERS, INC.
By: /s/ XXXXXX X. XXXXX
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
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OMITTED SCHEDULES
U.S. REMODELERS, INC.
ASSET PURCHASE AGREEMENT
SCHEDULE CONTENTS
Exhibit A Sales Offices of the Debtors from which
U.S. Remodelers, Inc. purchased assets.
Exhibit B Furniture, fixtures, and equipment purchased by
U.S. Remodelers, Inc. pursuant to the Asset
Purchase Agreement.
Exhibit C Real property and equipment leases to be
assumed by U.S. Remodelers, Inc.
The Registrant hereby agrees to provide supplemental copies of any and all of
the above omitted schedules should the Commission so request.
