Exhibit 10.7
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EXECUTION COPY
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STOCK PURCHASE AGREEMENT
BETWEEN
MATTRESS DISCOUNTERS CORPORATION
AND
MATTRESS WORLD, INC.
JUNE 14, 2002
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TABLE OF CONTENTS
1. Definitions. ............................................................ 3
2. Purchase and Sale of Target Shares. ..................................... 6
(a) Basic Transaction. .................................................. 6
(b) Purchase Price. ..................................................... 6
(c) Net Cash Payment to Seller. ......................................... 6
(d) Closing. ............................................................ 6
(e) Deliveries at Closing. .............................................. 7
(f) Excluded Assets. .................................................... 7
(g) Buyer Note. ......................................................... 7
(h) Supply Agreement. ................................................... 8
(i) Store Closings. ..................................................... 8
(j) Use of Warehouse. ................................................... 8
3. Representations and Warranties of Seller. ............................... 9
4. Representations and Warranties of Buyer. ................................ 15
5. Pre-Closing Covenants. .................................................. 17
(a) General. ............................................................ 17
(b) Notices and Consents. ............................................... 17
(c) Operation of Business. .............................................. 17
(d) Notice of Developments. ............................................. 17
(e) Employee Benefits. .................................................. 17
6. Post-Closing Covenants and Agreements. .................................. 19
(a) General. ............................................................ 19
(b) Allocation of Liabilities and Prorations. ........................... 19
(c) Litigation Support. ................................................. 20
(d) Right of First Offer. ............................................... 20
(e) Reservation of Rights. .............................................. 21
(f) Seller Leases. ...................................................... 21
(g) Seller's Non-Compete. ............................................... 22
(h) Buyer's Non-Compete. ................................................ 22
(i) Abandonment of Trademarks. .......................................... 22
(j) Certain Tax Matters. ................................................ 22
7. Conditions to Obligation to Close. ...................................... 23
(a) Conditions to Buyer's Obligation. ................................... 23
(b) Conditions to Seller's Obligation. .................................. 24
8. Remedies for Breaches of This Agreement. ................................ 24
(a) Survival of Representations and Warranties. ......................... 24
(b) Indemnification Provisions for Buyer's Benefit. ..................... 24
(c) Indemnification Provisions for Seller's Benefit. .................... 25
(d) Matters Involving Third Parties. .................................... 25
(e) Determination of Adverse Consequences. .............................. 26
(f) Other Remedies. ..................................................... 26
9. Termination. ............................................................ 26
(a) Termination of Agreement. ........................................... 26
(b) Effect of Termination. .............................................. 27
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10. Miscellaneous. ......................................................... 27
(a) Further Assurances. ................................................. 27
(b) Press Releases and Public Announcements; Confidentiality. ........... 27
(c) No Third-Party Beneficiaries. ....................................... 28
(d) No Codess.338 Election. ............................................. 28
(e) Entire Agreement. ................................................... 28
(f) Succession and Assignment. .......................................... 28
(g) Counterparts. ....................................................... 28
(h) Headings. ........................................................... 28
(i) Notices. ............................................................ 28
(j) Governing Law. ...................................................... 29
(k) Amendments and Waivers. ............................................. 29
(l) Severability. ....................................................... 29
(m) Expenses. ........................................................... 29
(n) Construction. ....................................................... 30
(o) Incorporation of Exhibits, Annexes, and Schedules. .................. 30
(p) Waiver of Jury Trial. ............................................... 30
(q) Obligations of Target. .............................................. 30
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Exhibit 10.7
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STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement (this "Agreement") is entered into as of June
14, 2002, by and among Mattress World, Inc., an Illinois corporation ("Buyer"),
and Mattress Discounters Corporation, a Delaware corporation ("Seller"), and,
for purposes of ss.2(g), the Owners (as defined below). Buyer and Seller are
referred to collectively herein as the "Parties."
Seller owns all of the outstanding capital stock of The Bedding Experts,
Inc., an Illinois corporation ("Target").
This Agreement contemplates a transaction in which Buyer will purchase from
Seller, and Seller will sell to Buyer, all of the outstanding capital stock of
Target in return for cash and the Buyer Note.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court costs and
reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code ss.1504(a).
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in ss.2(g).
"Buyer Share" means any share of the common stock, no par value per share,
of Buyer.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP.
"Closing" has the meaning set forth in ss.2(d).
"Closing Date" has the meaning set forth in ss.2(d).
"Code" means the Internal Revenue Code of 1986, as amended.
"Excluded Assets" has the meaning set forth in ss.2(f).
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"GAAP" means United States generally accepted accounting principles as in
effect from time to time, consistently applied.
"Income Tax" means any federal, state, local, or foreign tax measured by or
imposed on net income, including any interest, penalty, or addition thereto,
whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Party" has the meaning set forth in ss.8(d).
"Indemnifying Party" has the meaning set forth in ss.8(d).
"Intellectual Property" means any of the following to the extent
specifically set forth on Schedule E (a) all of the trademarks, service marks,
trade dress, logos, slogans, trade names, corporate names, Internet domain
names, and rights in telephone numbers, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith ("Trademarks"), (b) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith, including but not limited to all of Target's website content
("Copyrights"), and (c) all mask works and all applications, registrations, and
renewals in connection therewith.
"Inventory Amount" means an amount in cash equal to (i) 100% of the
Seller's or Target's invoice cost of all new, in the bag/box Comfort Source
inventory, (ii) 100% of the Seller's or Target's invoice cost of all Comfort
Source floor samples, (iii) 100% of the Seller's or Target's invoice cost of any
other new, in the bag/box inventory for any pre-Closing sale that requires
post-Closing delivery and as Buyer otherwise agrees, (iv) 50% of the Seller's or
Target's regular invoice cost of all Sealy, Sealy Posturepedic and Xxxxxxx &
Xxxxxx mattress floor samples and (v) 50% of the manufacturers dealer list price
of all other out of the bag/box floor sample inventory and other agreed to
inventory (including without limitation all out of the bag/box headboards,
footboards, bed frames and day beds). For purposes of calculating the Inventory
Amount, on the day immediately preceding the Closing Date, the Parties shall
conduct a physical inventory in order to identify significantly damaged
merchandise. All such significantly damaged merchandise shall be deducted from
the inventory, and shall not be included in the calculation of the Inventory
Amount.
"Lease Deposit Amount" means $60,000.
"Leased Premises" means the premises covered by the Leases.
"Leases" means all leases, subleases, licenses, concessions and other
agreements (written or oral), including all amendments, extensions, renewals,
guaranties, and other agreements with respect thereto, pursuant to which Target
holds any leased real property as set forth on Schedule A and the Seller Leases.
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"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"License Agreement" has the meaning set forth in ss.6(e).
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest.
"Litigation" has the meaning set forth in ss.3(a)(v).
"Material Contracts" has the meaning set forth in ss.3(f).
"Obligors" mean, collectively, Buyer and Owners.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Property" means the real property described in Schedule C and owned
by Target.
"Owners" mean Xx. Xxx Xxxxxxx, Xxx. Xxxxxxxxx Xxxxxxx and Xx. Xxxx Xxxxxx,
the sole owners of all of the issued and outstanding Buyer Shares.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity or a
governmental entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" has the meaning set forth in ss.2(b).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Seller" has the meaning set forth in the preface above.
"Seller Leases" mean the leases set forth on Schedule B for which Seller is
an obligor.
"Seller Payment Amount" means (i) if the Closing Date is in June 2002, the
aggregate of July's rent for all of the Leases (i.e., Seller shall pay directly
to the landlord under each of such Leases the rent due for July), or (ii) if the
Closing Date is not in June 2002, the portion of the aggregate of the month's
rent for all of the Leases for the period from and including the Closing Date to
and including the last day of the month in which the Closing Date occurs, in
each case as increased or decreased, to the extent applicable, pursuant to
ss.6(b); it being understood that "rent" includes all net charges (including
CAM, taxes, and insurance).
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"Seller Personal Property Leases" mean the leases for personal property set
forth on Schedule D under which Seller is lessee.
"Supply Agreement" has the meaning set forth in ss.2(h).
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the common stock, no par value per share,
of Target.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto.
"Third Party Claim" has the meaning set forth in ss.8(d).
"Transfer" has the meaning set forth in ss.6(d).
2. Purchase and Sale of Target Shares.
(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell to
Buyer, all of its Target Shares for the consideration specified below in this
ss.2.
(b) Purchase Price. Buyer agrees to pay to Seller at the Closing $100 by
delivery of a wire transfer or delivery of other immediately available funds or
a check, and to deliver to Seller at Closing the Buyer Note (as set forth in
ss.2(g)), and to assume all of Seller's obligations under the Seller Leases and
the Seller Personal Property Leases (collectively, the "Purchase Price").
(c) Net Cash Payment to Seller. Immediately prior to the Closing, Seller
shall cause Target to pay Seller an aggregate amount equal to Seller's good
faith estimate of the excess (if any) of (i) the consolidated Cash of Target as
of the Closing over (ii) the aggregate liability of Target for unpaid Income
Taxes as of the Closing (computed in accordance with the past custom and
practice of Target in filing their Income Tax Returns) plus the aggregate of all
other known Liabilities. Seller may cause Target to make any such payment to it
in the form of a dividend or a redemption.
(d) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of X'Xxxxxx & Xxxxxx
LLC, located at 000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx commencing at
9:00 a.m. local time on the second business day following the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
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the respective Parties will take at the Closing itself) or such other date as
Buyer and Seller may mutually determine (the "Closing Date").
(e) Deliveries at Closing. At the Closing, (i) Seller shall deliver to
Buyer the various certificates, instruments, and documents referred to in
ss.7(a), (ii) Buyer will deliver to Seller the various certificates,
instruments, and documents referred to in ss.7(b), (iii) Seller will deliver to
Buyer stock certificates representing all of its Target Shares, endorsed in
blank or accompanied by duly executed assignment documents, and (iv) Buyer will
deliver to Seller the Purchase Price.
(f) Excluded Assets. The Owned Property and all inventory, equipment,
furniture, fixtures and personalty located thereon will remain the property of
the Seller and, prior to Closing, Seller shall cause Target to transfer the
Owned Property to Seller. Seller shall remove, prior to Closing, from the Leased
Premises (i) all computers and Point Of Sale equipment, which are owned by the
Seller, (ii) all inventory (other than inventory included in the calculation of
the Inventory Amount) and leased property and equipment not set forth on
Schedule D and (iii) all "The Nation's Largest Mattress Retailer" neon signs
(collectively referred to as the "Excluded Assets").
(g) Buyer Note. Buyer agrees to deliver to Seller at Closing a promissory
note in substantially the form attached hereto as Exhibit I (the "Buyer Note")
in an aggregate principal amount equal to the sum of the Inventory Amount, the
Lease Deposit Amount and the Seller Payment Amount. Buyer hereby pledges to
Seller, and grants to Seller a security interest in, all of the Target Shares,
and Owners hereby pledge to Seller, and grant to Seller a security interest in,
all of the issued and outstanding Buyer Shares (collectively, the "Pledged
Shares") as security for the prompt and complete payment when due of the unpaid
principal of and interest on the Buyer Note. Upon the Closing, Obligors shall
deliver to Seller the certificates representing the Pledged Shares, together
with duly executed forms of assignment sufficient to transfer title thereto to
Seller. If, prior to payment in full of principal of and interest on the Buyer
Note, Obligors become entitled to receive or receives any securities or other
property as an addition to, in substitution of, or in exchange for any of the
Pledged Shares (whether as a distribution in connection with any
recapitalization, reorganization or reclassification, a stock dividend or
otherwise), Obligors shall accept such securities or other property on behalf of
and for the benefit of Seller as additional security to Seller for Buyer's
obligations under the Buyer Note and shall promptly deliver such additional
security to Seller together with duly executed forms of assignment, and such
additional security shall be deemed to be part of the Pledged Shares hereunder.
If Buyer defaults in the payment of the principal or interest under the Buyer
Note when it becomes due (whether upon demand, acceleration or otherwise) and
such default has continued for a period of thirty days after Seller has
delivered written notice of such default to Buyer, Seller may exercise any and
all the rights, powers and remedies of any owner of the Pledged Shares
(including the right to vote the shares and receive dividends and distributions
with respect to such shares) and shall have and may exercise without demand any
and all the rights and remedies granted to a secured party upon default under
the Uniform Commercial Code or otherwise available to Seller under applicable
law. Without limiting the foregoing, Seller is authorized to sell, assign and
deliver at its discretion, from time to time, all or any part of the Pledged
Shares at any private sale or public auction, on not less than thirty days
written notice to Buyer, at such price or prices and upon such terms as Seller
may deem advisable. Obligors shall have no right to redeem the Pledged Shares
after any such sale or assignment. At any such sale
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or auction, Seller may bid for, and become the purchaser of, the whole or any
part of the Pledged Shares offered for sale. In case of any such sale, after
deducting the costs, attorneys' fees and other expenses of sale and delivery,
the remaining proceeds of such sale shall be applied to the principal of and
accrued interest on the Buyer Note; provided that after payment in full of the
indebtedness evidenced by the Buyer Note, the balance of the proceeds of sale
then remaining shall be paid to Buyer and Obligors shall be entitled to the
return of any of the Pledged Shares remaining in the hands of Seller. All costs
and expenses (including reasonable attorneys' fees) incurred in exercising any
right, power or remedy conferred under this ss.2(g) or the Buyer Note or in the
enforcement thereof, shall become part of the indebtedness secured hereunder and
shall be paid by Buyer or repaid from the proceeds of the sale of the Pledged
Shares hereunder. Upon payment in full of the indebtedness evidenced by the
Buyer Note, Seller shall surrender the Pledged Shares to Obligors together with
all necessary forms of assignment. Buyer hereby represents and warrants that it
will (subject to and in reliance on the accuracy of Seller's representations and
warranties contained in this Agreement), upon the Closing, have good and valid
title to all of the Target Shares, free and clear of all Liens, security
interests and other encumbrances, and Buyer hereby covenants that, until such
time as all of the outstanding principal of and interest on the Buyer Note has
been paid, Buyer shall not (i) create, incur, assume or suffer to exist any
pledge, security interest, encumbrance, Lien or charge of any kind against the
Target Shares or Buyer's rights or a holder thereof, or (ii) sell or otherwise
transfer any Target Shares or any interest therein. Owners hereby represent and
warrant that they have good and valid title to all of the issued and outstanding
Buyer Shares, free and clear of all Liens, security interests and other
encumbrances, and Owners hereby covenant that, until such time as all of the
outstanding principal of and interest on the Buyer Note has been paid, Owners
shall not (i) create, incur, assume or suffer to exist any pledge, security
interest, encumbrance, Lien or charge of any kind against the Buyer Shares or
Owners' rights or a holder thereof, or (ii) sell or otherwise transfer any Buyer
Shares or any interest therein. In addition, Obligors hereby covenant that,
until such time as all of the outstanding principal of and interest on the Buyer
Note has been paid, they will not sell, assign or otherwise transfer any
material assets of Buyer or Target, other than the sale of inventory in the
Ordinary Course of Business. Obligors agree that at any time and from time to
time upon the written request of Seller, Obligors shall execute and deliver such
further documents (including UCC financing statements) and do such further acts
and things as Seller may reasonably request in order to effect the purposes of
this Section.
(h) Supply Agreement. On or before the Closing Date, the Parties shall
enter into a supply agreement (the "Supply Agreement") in substantially the form
attached to this Agreement as Exhibit II.
(i) Store Closings. Seller agrees that it shall, no later than 15 days
following the Closing, cease doing business under the name or xxxx "The Bedding
Experts" or any substantially similar or confusingly similar name or xxxx
(including, but not limited to, at the retail store located at 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 60638) other than in strict compliance with the terms
of the License Agreement.
(j) Use of Warehouse. Buyer agrees that (i) Seller shall be entitled to
use and have access to the Chicago Distribution property at 000 Xxxx Xxxxxxxxx,
Xxxxx Xxxxxx XX 00000 for 15
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days following the Closing Date to store certain personal property and (ii) such
personal property shall at all times remain the property of Seller.
3. Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer that the statements contained in this ss.3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ss.3), except as set
forth in Annex I attached hereto (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this ss.3; provided, however, that any
disclosure on the Disclosure Schedule shall apply to all representations and
warranties contained in this ss.3 to the extent applicable.
(a) Organization and Existence. Target is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois,
and is duly qualified or licensed to do business as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, results of operations or financial condition of
Target. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Target has full corporate
power and authority and all material licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Disclosure Schedule lists the directors
and officers of Target. Seller has delivered to Buyer correct and complete
copies of the charter and bylaws of Target (as amended to date). The minute
books (containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock certificate
books, and the stock record books of Target are correct and complete. Target is
not in default under or in violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of Target consists
of 1,000 Target Shares, of which 100 Target Shares are issued and outstanding
and no Target Shares are held in treasury. All of the issued and outstanding
Target Shares have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record and beneficially by Seller, free and clear
of all Liens, security interests and other encumbrances. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to Target. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of Target.
(c) Authorization of Transaction. Seller has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement, and all documents ancillary hereto, and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
board of directors of Seller has duly authorized the execution, delivery, and
performance of this Agreement, and all documents ancillary hereto, by Seller.
This Agreement, and all documents ancillary hereto, constitute the valid and
legally binding obligation of Seller, enforceable in accordance with their terms
and conditions.
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(d) Noncontravention. Neither the execution and the delivery of this
Agreement, or any document ancillary hereto, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in ss.2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which either of
Target or Seller is subject or any provision of the charter or bylaws of either
of Target or Seller or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
any of Target or Seller is a party or by which it is bound or to which any of
its assets is subject (or result in the imposition of any Lien upon any of its
assets), except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Lien would
not have a material adverse effect on the business, financial condition,
operations, results of operations, or future prospects of Target or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement. Neither Target nor Seller needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in ss.2 above), except where the failure to give notice, to file, or
to obtain any authorization, consent, or approval would not have a material
adverse effect on the business, financial condition, operations, results of
operations, or future prospects of Target or on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
(e) Absence of Undisclosed Liabilities. Neither Target nor any of its
assets are subject to any known Liens, material Liabilities or material
obligations of any nature whatsoever.
(f) Tax Matters.
(i) Target has filed all Tax Returns that it was required to file.
All such Tax Returns were correct and complete in all material respects.
All Taxes owed by Target (whether or not shown on any Tax Return) have been
paid. Target is not currently the beneficiary of any extension of time
within which to file any Tax Return.
(ii) There is no material dispute or claim concerning any Tax
liability of Target either (A) claimed or raised by any authority in
writing or (B) as to which any of Seller, Target or the directors and
officers of Target or Seller has knowledge based upon personal contact with
any agent of such authority.
(iii) The Disclosure Schedule lists all federal, state, local, and
foreign Income Tax Returns filed with respect to Target for taxable periods
ended on or after August 6, 1999, indicates those Income Tax Returns that
have been audited, and indicates those Income Tax Returns that currently
are the subject of audit. Target has not waived any statute of limitations
in respect of Income Taxes or agreed to any extension of time with respect
to an Income Tax assessment or deficiency.
(iv) Target has not filed a consent under Codess.341(f) concerning
collapsible
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corporations. Target has not made any material payments, is not obligated
to make any material payments, and is not a party to any agreement that
under certain circumstances could obligate it to make any material payments
that will not be deductible under Code ss.280G. Target has not been a
United States real property holding corporation within the meaning of Code
ss.897(c)(2) during the applicable period specified in Code
ss.897(c)(1)(A)(ii). Target is not a party to any tax allocation or sharing
agreement. Target has not been a member of an Affiliated Group filing a
consolidated federal Income Tax Return, and Target does not have any
liability for the taxes of any Person under Reg. ss.1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(v) Target will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any (A)
change in method of accounting for a taxable period ending on or prior to
the Closing Date under Code ss.481(c) (or any corresponding or similar
provision of state, local or foreign income Tax law); (B) "closing
agreement" as described in Code ss.7121 (or any corresponding or similar
provision of state, local or foreign income Tax law) executed on or prior
to the Closing Date; (C) deferred intercompany gain or any excess loss
account described in Treasury Regulations under Code ss.1502 (or any
corresponding or similar provision of state, local or foreign income Tax
law); (D) installment sale or open transaction disposition made on or prior
to the Closing Date; or (E) prepaid amount received on or prior to the
Closing Date.
(vi) S xxxxx represents that Target's participation or inclusion in
that certain Tax Sharing Agreement dated August 6, 1999 among Mattress
Discounters Holding L.L.C., Mattress Holding Corporation (f/k/a Mattress
Discounters Holding Corporation), Seller, Target, T.J.B., Inc. and Comfort
Source Mattress Company ("Tax Agreement") shall terminate upon the Closing.
Further, Seller represents that Target has no current liability and in the
future shall not have any liability under the Tax Agreement, and the Tax
Agreement shall not have any adverse effect on Target and Target shall not
suffer any adverse consequences following the Closing as a result of having
been a party to the Tax Agreement and shall have no obligations or
liabilities with respect to Taxes to any of the other parties to such Tax
Agreement.
(g) Contracts and Commitments. The Disclosure Schedule lists the following
contracts and agreements (other than the Leases, which are dealt with separately
under ss.3(k)) to which the Target is a party (other than the Leases, the
"Material Contracts"):
(i) any material agreement (or group of material related agreements)
for the lease of personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services;
(iii) any agreement concerning a partnership or joint venture;
12
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation or under which it has imposed a
Lien on any of its assets, tangible or intangible;
(v) any material agreement concerning confidentiality or
noncompetition;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement of Target for the benefit of its current or former directors,
officers, and employees;
(vii) any collective bargaining agreement;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $20,000 or providing material severance benefits;
(ix) any agreement under which it has advanced or loaned any amount
to any of its Affiliates, directors, officers, and employees outside the
Ordinary Course of Business; and
(x) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Target.
The Material Contracts are in full force and binding upon the parties
thereto, and no consent of any other contracting parties is required in order to
consummate the transactions contemplated hereby. Buyer has been provided with
copies of each Material Contract. The copy of each such contract furnished to
Buyer is a true and complete copy of the document it purports to represent and
reflects all amendments thereto made through the date of this Agreement. Neither
Target nor Seller has received any notice that a default by Target or Seller has
occurred under any of the Material Contracts, and, to the knowledge of Seller,
no default by the other contracting parties has occurred thereunder. To the
knowledge of Seller, other than with respect to the transactions contemplated
hereby, no event, occurrence or condition exists which, with the lapse of time,
the giving of notice, or both, or the happening of any further event or
condition, would become a default by Target thereunder.
(h) Litigation. There are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Seller, threatened by or against
Target or otherwise affecting Target's business, at law or in equity or before
or by any court or federal, state, municipal or other governmental department,
commission, board, agency or instrumentality that could reasonably be expected
to have a material adverse effect on the business, results of operations or
financial condition of Target or delay, prevent, or hinder the consummation of
the Agreement or the full and timely performance of this Agreement.
(i) Brokers' Fees. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
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(j) Employee Relations. With respect to employees of the Target:
(i) there is no pending or threatened unfair labor practice charges
or employee grievance charges;
(ii) Target is not a party to or bound by any collective bargaining
agreement, and there is no request for union representation, and there are
no labor strikes, disputes, slowdowns or stoppages pending or, to the
knowledge of Seller, threatened against or directly affecting Target;
(iii) the employment of each of Target's employees is terminable at
will without cost to the Target except for payment of accrued salaries or
wages and vacation pay; and
(iv) the Disclosure Schedule contains a true and complete list of all
employees who are employed by Target, and said list correctly reflects
their salaries, wages, other compensation, dates of employment and
positions.
(k) Leases. Target is not a party to any lease or sublease of real
property, whether as lessor, sublessor, lessee or sublessee, other than the
Leases. True and correct copies of all of the Leases have been provided to Buyer
prior to the date hereof. Other than any default that may arise as a result of
the transactions contemplated by this Agreement, all of the Leases are in full
force and effect, and there are no existing defaults by the Target or Seller
under any Lease or, to the knowledge of Seller, by any other party to any Lease.
(l) Intellectual Property. With respect to the Intellectual Property set
forth on Schedule E, (i) Target owns or has a valid license to use free and
clear of any material restrictions, all such Intellectual Property, and the
transactions contemplated by this Agreement will not result in a breach or right
of early termination relating to any such Intellectual Property license and such
Intellectual Property will be owned or available for use by Buyer on identical
terms and conditions immediately subsequent to the Closing, (ii) no claim by any
third party contesting the validity, enforceability, use or ownership of any
such Intellectual Property has been made, is currently outstanding or, to the
knowledge of Seller, is threatened, (iii) Target has not interfered with,
infringed upon, misappropriated or otherwise violated any Intellectual Property
rights of third parties, and the Target has not ever received any written
charge, complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or violation, (iv) Target has not received any
notice or other information suggesting that any third party has interfered with,
infringed upon or misappropriated any Intellectual Property owned or used by
Target, (v) Target has not agreed to indemnify any third party other than Buyer
for or against any interference, infringement, misappropriation, or other
conflict, (vi) Target has the exclusive right to bring infringement actions with
respect to the Intellectual Property, (vii) no other Person has claimed the
right to use any Trademark set forth on Schedule E which is identical to or
confusingly similar to or dilutive of such Trademarks in the territory in which
such Trademarks are used or registered or proposed to be used, and (viii) the
Intellectual Property is owned or licensed free and clear of any Liens, claims,
encumbrances and security interests.
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(m) Employee Benefits.
(i) The Disclosure Schedule lists each "employee benefit plan" (as
such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and each other material
employee benefit plan, program or arrangement pursuant to which employees
of Target are entitled to receive benefits. All such plans, benefit
programs and arrangements shall be referred to collectively as "Plans"; and
any such plans which are employee pension benefit plans within the meaning
of Section 3(2) of ERISA shall be referred to as "Pension Plans"; and any
such plans which are employee welfare benefit plans within the meaning of
Section 3(1) of ERISA shall be referred to as "Welfare Plans".
(ii) Target has not incurred (and there are no circumstances under
which Target could be reasonably expected to incur) any liability under
Title IV of ERISA.
(iii) Seller and Target represent that all Plans in which Target's
employees participate are plans established and sponsored by Seller and
that, upon Closing, Target will no longer be a participating employer under
any of Seller's Plans, all such Plans will be terminated with respect to
Target and Target's employees will have no further rights under such Plans,
except as required by applicable law.
(iv) Seller and Target represent that (i) none of the Employees (as
defined in ss.5(e)(i)), including those on leaves of absence or who are
receiving disability benefits, if any, have been designated as eligible by
Seller under Section 3 of Seller's Severance Pay Plan (the "Severance
Plan"), and (ii) none of the Employees have been promised any severance
benefits, whether under the Severance Plan or otherwise, in connection with
this transaction, whether by specific reference to a transaction with Buyer
or by general reference to a change in control, sale of the stock or sale
of the assets of Target, or otherwise.
(n) Subsidiaries. Target does not have any subsidiaries.
(o) Powers of Attorney. There are no material outstanding powers of
attorney executed on behalf of Target.
(p) Bank Accounts. The Disclosure Schedule contains a list showing:
(i) the name of each bank, safe deposit company or other financial
institution in which Target has an account, lock box or safe deposit box;
(ii) the names of all persons authorized to draw thereon or to have
access thereto and the names of all persons and entities, if any, holding
powers of attorney from Target; and
(iii) all instruments or agreements to which Target is a party as an
endorser, surety or guarantor, other than checks endorsed for collection or
deposit in the Ordinary Course of Business.
15
(q) Absence of Changes or Events. Since January 1, 2002, there has not
been:
(i) any sale, transfer or other disposition of, or agreement to sell,
transfer or otherwise dispose of, any of the assets of Target other than in
the Ordinary Course of Business; or
(ii) any other transaction or event involving more than $5,000
entered into or affecting the Target other than in the Ordinary Course of
Business.
(r) Books and Records. All books and records of Target, and all books and
records of Seller relating solely to Target and its business, are true, correct
and complete in all material respects, have been maintained in accordance with
good business practice and in accordance in all material respects with all laws,
regulations and other requirements applicable to Target's business. All material
transactions to which Target is or has been a party are properly reflected on
the books and records of Target.
(s) Target is not obligated in any manner whatsoever to comply with, is
not bound by the terms of, nor is subject to or restricted by the terms of any
of the following: (i) that certain Final Judgment and Consent Decree dated June
30, 1994 in People of the State of Illinois v. The Bedding Experts, Inc. and
Xxxxxx X. X'Xxxxx, Xx. 00 XX 0000; (xx) that certain Settlement Agreement dated
November, 1993 in Xxxxxxx Co. v. The Bedding Experts, Inc., No. 92 C 5465; (iii)
that certain Settlement Agreement and Full and Final Release between The Bedding
Experts, Inc. and American Mattress Company; and (iv) that certain Permanent
Injunction against The Bedding Experts, Inc. issued in the U.S. District Court
for the Northern District of Illinois.
4. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller that the statements contained in this ss.4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ss.4), except as set
forth in Annex II attached hereto.
(a) Organization and Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois,
and is duly qualified or licensed to do business as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, results of operations or financial condition of
the Buyer.
(b) Capitalization of Buyer. The entire authorized capital stock of Buyer
consists of 10,000 Buyer Shares, of which 5,000 Buyer Shares are issued and
outstanding and no Buyer Shares are held in treasury. All of the issued and
outstanding Buyer Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record and beneficially by Owners, free
and clear of all Liens, security interests and other encumbrances. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Buyer to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar
16
rights with respect to Buyer. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Buyer.
(c) Authorization of Transaction. Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement, and all documents ancillary hereto, and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
board of directors of Buyer has duly authorized the execution, delivery, and
performance of this Agreement, and all documents ancillary hereto, by Buyer.
This Agreement, and all documents ancillary hereto, constitute the valid and
legally binding obligation of Buyer, enforceable in accordance with their terms
and conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, or any document ancillary hereto, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in ss.2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Buyer is
subject or any provision of the charter or bylaws of Buyer or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Lien upon any of its assets), except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, or Lien would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects of
Buyer or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. Buyer does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in ss.2 above), except where the failure to give notice,
to file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the business, financial condition, operations,
results of operations, or future prospects of Buyer or on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(e) Brokers' Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(f) Litigation. There are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Buyer, threatened by or against
Buyer or otherwise affecting Buyer's business, at law or in equity or before or
by any court or federal, state, municipal or other governmental department,
commission, board, agency or instrumentality that could reasonably be expected
to have a material adverse effect on the business, results of operations or
financial condition of Buyer or delay, prevent, or hinder the consummation of
the Agreement or the full and timely performance of this Agreement.
(g) Investment. Buyer is not acquiring the Target Shares with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act.
17
(h) Financial Information. Within two days following the date of this
Agreement, Buyer shall have delivered to Seller true, correct and complete
copies of financial statements of Buyer. Such financial statements fairly
present the financial position and operating results of Buyer. All such
information shall be deemed confidential, but may be given upon request to the
landlords under the Leases.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing conditions set forth in
ss.7).
(b) Notices and Consents. Seller will (or Seller will cause Target to)
send a notice to the landlord under each Lease on or prior to the Closing with
respect to the change of address of Target.
(c) Operation of Business. Nothing herein shall prohibit Seller from
selling inventory prior to the Closing Date. Seller shall cause Target to use
its commercially reasonable efforts to preserve its business and the goodwill of
its customers and others having business relations with Target, and shall
maintain all of the Leased Premises in good operating condition and repair,
ordinary wear and tear excepted.
(d) Notice of Developments. Each Party will give prompt written notice to
the others of any material adverse development causing a breach of any of its
own representations and warranties in ss.3 or ss.4 above. No disclosure by any
Party pursuant to this ss.5(d), however, shall be deemed to amend or supplement
Annex I or Annex II, or to prevent or cure any misrepresentation or breach of
warranty.
(e) Employee Benefits/Employees.
(i) Identification of Employees. Target and Seller have provided
Buyer with a true and complete list of all of Target's employees (the
"Employees"), wherever located, indicating the rate of pay of each such
Employee since January 1, 2002, the location of such Employee, and whether
such Employee is on leave of absence as of the date of this Agreement (such
list includes Seller's employees located at the Leased Premises as of the
Closing Date).
(ii) Pre-Closing Compensation and Benefits. Seller shall cause Target
to pay all Employees all amounts of wages, bonuses and other remuneration,
including but not limited to, discretionary benefits and bonuses,
commissions and sales awards, due and payable to such Employees with
respect to periods ending prior to the Closing Date.
(iii) Retained Employees. All Employees will be allowed to continue
their employment with Target following the Closing.
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(iv) Target/Seller Welfare Plans. All claims which have been incurred
prior to Closing, regardless whether reported, shall be processed through
and paid under Seller's Welfare Plans (including for this purpose, any
welfare-type benefit programs even if not covered by ERISA, such as
educational reimbursement or assistance programs, adoption assistance
programs, safety equipment programs, etc.). For this purpose, a claim shall
be deemed incurred (i) with respect to medical benefits, at the time
services or materials are provided; (ii) with respect to life or survivor
benefits, at the time of the death; (iii) with respect to short- or
long-term disability or accident and sickness benefits, at the time the
disability, accident or illness first commenced; (iv) with respect to
severance or similar benefits, at the time of termination of employment,
(v) with respect to tuition or educational reimbursements, at the time the
class or program commenced; and (vi) with respect to safety equipment
reimbursement programs, at the time that the safety equipment is acquired.
Seller shall remain responsible for and continue to provide any applicable
health care continuation coverage under section 4980B of the Code to
Employees or their dependents if the "qualifying event" (as defined in
section 4980B(f)(3) of the Code) occurred prior to the Closing Date.
Seller's group health plans shall issue coverage certificates to each
Employee in accordance with section 701 of ERISA and section 9801 of the
Code.
(v) Seller's Severance Plans. Notwithstanding anything contained
herein to the contrary, Seller shall be responsible for any severance or
other similar benefit payable to any Employee as a result of a termination
of employment prior to the Closing Date under any severance plans, programs
or arrangements which Seller may have maintained.
(vi) Buyer's Plans. Employees shall be eligible for participation in
any health coverage, insurance, retirement and other benefit arrangements
for which similarly situated employees of Buyer are eligible, in accordance
with Buyer `s normal policies. Buyer shall bear the full cost and expense
of any entitlement to benefits due to Employees under Buyer's plans.
Notwithstanding anything to the contrary contained in this Agreement, the
Parties expressly agree that in determining eligibility for employee
benefits (1) the Buyer shall treat Employees consistent with Buyer's
current employees in determining benefit qualification, provided that (A)
any Employee who had completed any eligibility waiting period and was
eligible to participate in Seller's Welfare Benefit Plans as of immediately
prior to the Closing shall be eligible to participate in such plans of
Buyer, if any, immediately upon Closing and (B) any Employee who had not
completed any eligibility waiting period, shall be credited with the number
of days of service as of the Closing and shall be eligible to participate
in such plans of Buyer upon completion of 60 days of service; and (2) for
purposes of Buyer's benefit plans, the Buyer shall fully credit the
Employees for vacation time accrued (as of the Closing) but not yet taken,
up to two weeks.
(vii) No Assumption of Plans. Notwithstanding anything contained
herein to the contrary, Buyer is not assuming any Plans or employee benefit
programs or arrangements of Seller and nothing in this Agreement shall give
rise to the assumption that Buyer is assuming any such Plans, programs or
arrangements or has any liability thereunder.
19
(viii) Non-solicitation. Except as set forth above in this ss.5(e),
for a period of three years following the Closing Date, Buyer and its
Affiliates shall not directly or indirectly through another entity induce
or attempt to induce any other employees of Seller and its subsidiaries to
leave the employ of Seller and its subsidiaries, or in any way interfere
with the relationship between Seller and its subsidiaries and any of their
employees. Any violation of the provisions of this ss.5(e)(viii) shall
automatically toll and suspend the three-year period set forth herein for
the duration of such violation.
(f) Leases. Other than as contemplated by this Agreement, neither Target
nor Seller shall amend, modify, extend, renew or terminate any Lease, nor shall
either Target or Seller enter into any new lease, sublease, license or other
agreement for the use or occupancy of any real property for use by Target
requiring payments in excess of $5,000 annually as averaged over the term
thereof, without the prior written consent of the Buyer.
6. Post-Closing Covenants and Agreements. The Parties agree as follows
with respect to the period following the Closing.
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under ss.8).
(b) Allocation of Liabilities and Prorations. The Parties agree that all
Liabilities of Target with respect to periods prior to the Closing Date shall
remain Liabilities of the Seller, except as explicitly set forth herein to the
contrary or explicitly assumed by Buyer hereunder, and Seller hereby agrees to
indemnify, defend and save harmless Buyer against all such Liabilities. The
Parties further agree that all Liabilities of Target with respect to periods on
and after the Closing Date shall be Liabilities of Buyer, and Buyer hereby
agrees to indemnify, defend and save harmless Seller against all such
Liabilities. Other than with respect to salary, bonus and commission that have
accrued prior to the Closing Date, which Seller shall pay directly on or prior
to the Closing Date, the items of revenue and expense with respect to Target's
business, including, but not limited to, accounts receivable and payments due in
connection with utilities, Taxes, leases, contracts, licenses, permits, trade
payables, and all other items of income and expense customarily adjusted or
prorated upon the sale and purchase of a business similar to Target's business
shall be prorated between Seller and Buyer (the "Prorations") as of 11:59 p.m.
on the day preceding the Closing Date (the "Cut-Off Time"), so that the Closing
Date is a day of income and expense for Buyer. Buyer shall receive a credit for
any items of expense pursuant to this ss.6(b) to the extent the same are accrued
or due and payable but unpaid as of the Cut-Off Time and Buyer actually pays
such amounts (and Buyer shall be obligated to pay such expense), and Seller
shall receive a credit for any of the items of expense in this ss.6(b) which
have been paid prior to or at the Closing or will be paid by Seller after the
Closing to the extent such payment relates to any period of time after the
Cut-Off Time, provided, however, the rent due under the Leases shall be
apportioned in accordance with the definition of Seller Payment Amount and the
provisions of ss.2. To the extent either Party has made or makes a payment
covering a period other than during its ownership of the Target, such party
shall provide evidence
20
of such payment to the other party, and the Buyer Note shall be increased or
decreased, as the case may be, to reflect the proper proration of each such
payment, or, in the alternative, the other party shall pay to such party the net
amount due. Notwithstanding the foregoing, all Target accounts receivable,
deposits and payments relating to purchases made at any of the Leased Premises
with a delivery date that is on or after the Closing Date shall be credited to
and collected by Buyer, the amount of all such accounts receivable, deposits and
payments shall not be credited to Seller pursuant to this Section, and Buyer
shall be obligated to deliver to the customer the product related thereto (and
shall acquire the inventory from Seller which shall increase the Inventory
Amount) and any orders that have been paid in full prior to the Closing relating
to purchases with a delivery date that is on or after the Closing Date shall
reduce the Inventory Amount.
(c) Litigation Support. In the event and for so long as Seller actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving Target, Buyer shall (and shall cause Target to) cooperate with Seller
and its counsel in the defense or contest, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the defense or contest, all at Seller's sole cost
and expense. In the event and for so long as Buyer and/or Target actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or following the Closing
Date involving Target, Seller shall cooperate with Buyer and Target and their
counsel in the defense or contest, make available their personnel, and provide
such testimony and access to their books and records as shall be necessary in
connection with the defense or contest, all at Buyer's sole expense.
(d) Right of First Offer. At least 20 business days prior to any sale,
transfer, conveyance, assignment, pledge, hypothecation, gift, delivery or other
disposition (a "Transfer"), or series of related Transfers, of all or
substantially all of the Target Shares or of the assets of Target occurring
within five (5) years following the Closing Date, Buyer shall deliver a written
notice (the "Transfer Notice") to Seller specifying in reasonable detail the
identity of the Target Shares or assets to be transferred, and the terms and
conditions of the Transfer, including the proposed price (which price shall be
payable solely in cash at the closing of the transaction or in installments over
time). Seller (or its designee) may elect to purchase all of the Target Shares
or assets to be transferred, upon the same terms and conditions as those set
forth in the Transfer Notice, by delivering a written notice of such election to
Buyer within 10 business days after the Transfer Notice has been given to
Seller. The closing of the Seller's purchase pursuant to this ss.6(d) shall take
place within 45 calendar days after the expiration of the 10 business day period
referred to above. Notwithstanding the foregoing, if Seller (together with its
designees) does not elect to purchase all of the Target Shares or assets
specified in the Transfer Notice, then Buyer may Transfer such Target Shares or
assets to any Person (i) for a price no less than 95% of the price specified in
the Transfer Notice and (ii) upon other terms no more favorable in any material
respect to the transferee(s) thereof than specified in the Transfer Notice,
during the 180-day
21
period immediately following the date on which the Transfer Notice has been
given to Seller. Any Target Shares or assets not transferred within such 180-day
period will be subject to the provisions of this ss.6(d) upon subsequent
Transfer. The provisions of this ss.6(d) shall not apply to a Transfer to Buyer
or an Affiliate of Buyer; provided that such Affiliate transferee agrees to be
bound by this Agreement in a written agreement reasonably satisfactory to
Seller. If Seller (or its designee) purchases the Target Shares or assets to be
transferred, then the provisions of ss.6(g) shall terminate and be of no further
force or effect.
(e) Reservation of Rights. Buyer, Target and Seller shall enter into a
license agreement, substantially in the form attached hereto as Exhibit III (the
"License Agreement").
(f) Seller Leases.
(i) For each Seller Lease and Seller Personal Property Lease that
Seller remains obligated under at and after the Closing, Buyer will (and
will cause Target to) use its commercially reasonable efforts to obtain
from the landlord under such Seller Lease or lessor under such Seller
Personal Property Lease such landlord's or lessor's agreement to remove
Seller from such Seller Lease or Seller Personal Property Lease and release
Seller from its obligations under such Seller Lease or Seller Personal
Property Lease as soon as possible following the Closing. Seller will use
its commercially reasonable efforts to work together with Buyer and Target
in obtaining such consents. In addition, Seller and Target shall enter
into, at or prior to Closing, an assignment and assumption agreement in
substantially the form attached hereto as Exhibit V with respect to each
Seller Lease under which Seller is the sole tenant, and Buyer and Seller
shall, and Buyer shall cause Target to, prepare, execute and deliver on the
Closing Date to the landlords under the Seller Leases, a consent
substantially in the form attached hereto as Exhibit VI. Buyer covenants
and agrees that it will not (and it will cause Target not to) exercise any
option to extend or right to renew the term of any Seller Lease or Seller
Personal Property Lease under which Seller remains obligated.
(ii) Buyer shall (and shall cause Target to) immediately inform
Seller in writing of any uncured default under any Seller Lease or Seller
Personal Property Lease under which Seller remains an obligor. If Buyer or
Target fails to cure any material default within 30 days of such notice to
Seller, Seller may, at its option, at any time during which such default
continues, demand that the relevant Seller Lease or Seller Personal
Property Lease be assigned to Seller and that Buyer shall cause Target to
exit the relevant Leased Premises and relinquish to Seller the personal
property that is the subject of the relevant Seller Personal Property
Leases, in at least substantially the same order and condition as received
from Seller on the Closing Date. A material default is one that allows the
landlord or lessor to terminate the Seller Lease or Seller Personal
Property Lease and/or to pursue damage claims against the tenant or lessee
thereunder or against Buyer, Target or Seller and shall include any payment
default. Upon such demand, (i) Buyer shall (and shall cause Target to) take
all actions as are reasonably requested by Seller to effectuate such
assignment, including but not limited to executing assignment documentation
and exiting the relevant Leased Premises, and (ii) the provisions of
ss.6(g) shall automatically terminate and shall be of no further force or
effect. Any such assignment shall not relieve Buyer and
22
Target of their obligations with respect to Seller or the relevant landlord
or lessor. In addition, in the event of any material default by Buyer or
Target under any Seller Lease (other than as a result of the assignment of
such Seller Lease to Target at or prior to the Closing), Seller's
obligation to pay the Seller Payment Amount shall terminate and be of no
further force or effect. Whether or not Seller opts to acquire such Seller
Lease or Seller Personal Property Lease, Seller's other rights and remedies
under this Agreement or otherwise with respect to Buyer and Target shall
not be prejudiced in any way.
(iii) Buyer covenants and agrees to satisfy and to cause Target to
satisfy all obligations under the Seller Leases and the Seller Personal
Property Leases from and after the Closing and with respect to all Seller
Leases and Seller Personal Property Leases for which Seller remains an
obligor after Closing, for so long as Seller remains an obligor Buyer shall
maintain (or cause Target to maintain) in force the insurance coverages
required to be procured by Seller and/or Target under the relevant Seller
Leases and Seller Personal Property Leases and name Seller as an additional
insured and Buyer shall provide (or cause Target to provide) Seller a valid
certificate of insurance at Closing showing evidence of such insurance
coverages.
(g) Seller's Non-Compete. Subject to ss.6(d) and ss.6(f), for a period of
five (5) years following the Closing Date, neither Seller nor any subsidiary of
Seller shall own or operate any retail mattress store within 25 miles of any of
the Leased Premises or any of the premises currently operated by Buyer and set
forth on Schedule F attached hereto.
(h) Buyer's Non-Compete. For a period of five (5) years following the
Closing Date, none of Target, Buyer or any of their respective Affiliates shall
own or operate any retail mattress store within 25 miles of any retail mattress
store operated by Seller or by any Affiliate of Seller.
(i) Abandonment of Trademarks. Seller covenants and agrees that it shall
file, as soon as practicable following the Closing, an express abandonment of
the following trademark applications with the United States Patent and Trademark
Office:
--------------------------------------------------------------
Xxxx Serial Number
--------------------------------------------------------------
Where Dreams Come True and Design 76/334,754
--------------------------------------------------------------
Bedding Experts Where Dreams Come 76/323,090
True and Design
--------------------------------------------------------------
In addition, Seller shall send Buyer a copy of the document evidencing such
filings, as well as evidence from the United States Patent and Trademark Office
that such abandonment has been effectuated.
(j) Certain Tax Matters. Buyer shall not cause Target to take, and Target
shall not
23
take, any action on the Closing Date outside the Ordinary Course of Business
that would increase the Tax liability of Target or Seller. Seller shall not
cause Target to take, and Target shall not take, any action on the Closing Date
outside the Ordinary Course of Business that would increase the Tax liability of
Target or Buyer.
7. Conditions to Obligation to Close.
(a) Conditions to Buyer's Obligation. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth inss.3 above shall
be true and correct in all material respects at and as of the Closing Date;
(ii) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Seller shall have delivered to Buyer a certificate to the effect
that each of the conditions specified above inss.7(a)(i)-(iii) is satisfied
in all respects;
(v) Seller shall have delivered to Buyer evidence of the release of
all Liens on the Target Shares and Target's assets, Intellectual Property,
inventory, general intangibles, proceeds, equipment, etc. held by The Chase
Manhattan Bank, as Administrative Agent, and any other obligations that
Target may have had to any lender or creditor of Seller or any Affiliate of
Seller;
(vi) Seller shall have delivered to Buyer an executed copy of the
License Agreement;
(vii) Parent shall have delivered to Buyer executed copies of all
documents necessary to transfer the Intellectual Property, including but
not limited to a Domain Name Transfer Agreement in substantially the form
attached hereto as Exhibit IV;
(viii) Seller shall have received the resignations, effective as of
the Closing, of each director and officer of Target; and
(ix) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to Buyer.
Buyer may waive any condition specified in this ss.7(a) if it executes a writing
so stating at or prior to the Closing.
24
(b) Conditions to Seller's Obligation. The Seller's obligation to
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth inss.4 above shall
be true and correct in all material respects at and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Buyer shall have delivered to Seller a certificate to the effect
that each of the conditions specified above inss.7(b)(i)-(iii) is satisfied
in all respects;
(v) Buyer shall have delivered to Seller an executed copy of each of
the License Agreement and the Supply Agreement, and an assumption agreement
whereby Buyer and Target shall assume all of Seller's obligations under
each Seller Lease and Seller Personal Property Lease;
(vi) Seller shall have received from the lenders under its Credit
Agreement, dated as of August 6, 1999 and amended and restated as of
January 11, 2002, among Mattress Holding Corporation, Seller, the lenders
party thereto and JPMorgan Chase Bank, as Administrative Agent, a consent
and waiver with respect to the transactions contemplated in this Agreement;
and
(vii) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to Seller.
Seller may waive any condition specified in this ss.7(b) if it executes a
writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Parties contained in ss.3 and ss.4 above shall survive the
Closing (unless the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect forever thereafter (subject to any applicable statutes of
limitations).
(b) Indemnification Provisions for Buyer's Benefit. If Seller breaches any
of its representations, warranties, and covenants contained herein, and provided
that Buyer makes a written claim for indemnification against such Seller
pursuant toss.10(i), then Seller shall
25
indemnify, defend and save harmless Buyer from and against the entirety of any
Adverse Consequences Buyer shall suffer through and after the date of the claim
for indemnification caused proximately by such Seller breach. Notwithstanding
any provision of, or disclosure made in, this Agreement (or in any ancillary
agreement, schedule, Annex or Exhibit referred to in this Agreement) to the
contrary, Seller agrees to defend, indemnify and save harmless Buyer from and
against the entirety of (i) other than as explicitly set forth in this Agreement
to the contrary or explicitly assumed by Buyer and/or Target in this Agreement
(including any and all Liabilities and Adverse Consequences related to the
Leases and the Seller Personal Property Leases arising on or after the Closing
Date), any and all Liabilities and Adverse Consequences that Buyer may suffer,
or be subject to, through and after the date of any such claim or Liability, to
the extent and only to the extent relating to, arising, resulting or stemming
from any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction with
respect to Target existing prior to the Closing Date (and only to the extent
Seller did not leave Target with sufficient Cash on the Closing Date to cover
such Liabilities); (ii) any and all Liabilities and Adverse Consequences
relating to unpaid Taxes, through and after the date of any such claim or
liability, with respect to any Tax year or portion thereof ending before the
Closing Date (or for any Tax year beginning before and ending after the Closing
Date to the extent allocable to the portion of such period beginning before and
ending on the day prior to the Closing Date); and (iii) any Liability related to
the Excluded Assets.
(c) Indemnification Provisions for Seller's Benefit. In the event Buyer
breaches any of its representations, warranties, and covenants contained herein,
and provided that Seller makes a written claim for indemnification against Buyer
pursuant to ss.10(i), then Buyer and Target, jointly and severally, shall
indemnify, defend and save harmless Seller from and against the entirety of any
Adverse Consequences Seller shall suffer through and after the date of the claim
for indemnification caused proximately by such Buyer or Target breach.
Notwithstanding any provision of, or disclosure made in, this Agreement (or in
any ancillary agreement, schedule, Annex or Exhibit referred to in this
Agreement) to the contrary, Buyer and Target, jointly and severally, agree to
defend, indemnify and save harmless Seller from and against the entirety of (i)
any and all Liabilities and Adverse Consequences that Seller may suffer, or be
subject to, through and after the date of any such claim or Liability, to the
extent and only to the extent relating to, arising, resulting or stemming from
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction with respect
to Target arising on or after the Closing Date; and (ii) any and all Liabilities
and Adverse Consequences related to the Leases and the Seller Personal Property
Leases arising on or after the Closing Date.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this ss.8, then the Indemnified Party shall
promptly (and in any event within five business days after receiving notice
of the Third Party Claim) notify each Indemnifying Party thereof in
writing.
26
(ii) Any Indemnifying Party will have the right at any time to assume
and thereafter conduct the defense of the Third Party Claim with counsel of
its choice reasonably satisfactory to the Indemnified Party; provided,
however, that the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be
withheld unreasonably) unless the judgment or proposed settlement involves
only the payment of money damages and does not impose an injunction or
other equitable relief upon the Indemnified Party.
(iii) Unless and until an Indemnifying Party assumes the defense of
the Third Party Claim as provided in ss.8(d)(ii) above, however, the
Indemnified Party may defend against the Third Party Claim in any manner it
reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of each of the Indemnifying
Parties.
(e) Determination of Adverse Consequences. All indemnification payments
under this ss.8 shall be paid by the Indemnifying Party net of any Tax benefits
and insurance coverage that may be available to the Indemnified Party. All
indemnification payments under this ss.8 shall be deemed adjustments to the
Purchase Price.
(f) Other Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable, or common law
remedy any Party may have.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing (A) in the event Seller has
breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, Buyer has notified Seller of the
breach, and the breach has continued without cure for a period of 30 days
after the notice of breach or (B) if the Closing shall not have occurred on
or before June 30, 2002, by reason of the failure of any condition
precedent under ss.7(a) hereof (unless the failure results primarily from
Buyer itself breaching any representation, warranty, or covenant contained
in this Agreement); and
(iii) Seller may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing (A) in the event Buyer has breached
any material representation, warranty, or covenant contained in this
Agreement in any material respect, Seller has notified Buyer of the breach,
and the breach has continued without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall not have occurred
27
on or before June 30, 2002, by reason of the failure of any condition
precedent under ss.7(b) hereof (unless the failure results primarily from
Seller breaching any representation, warranty, or covenant contained in
this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to ss.9(a) above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party, except for any
liability of any Party then in breach.
10. Miscellaneous.
(a) Further Assurances. The Parties agree to execute other documents
reasonably necessary to further effect and evidence the terms of this Agreement,
as long as the terms and provisions of the other documents are fully consistent
with the terms of this Agreement.
(b) Press Releases and Public Announcements; Confidentiality.
(i) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of Buyer and Seller; provided, however, that any Party may make
any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its commercially
reasonable efforts to advise the other Parties prior to making the
disclosure).
(ii) Confidentiality. If this Agreement is terminated, the Parties
and their respective Affiliates shall hold any information obtained from
the other Parties in strict confidence, shall return to such disclosing
Party all written information obtained from them and shall not use any such
information in the conduct of their respective businesses, unless such
information (1) is or becomes generally available to the public other than
as a result of disclosure by the Party or any of its officers, directors,
owners or Affiliates, or by others to whom any of them have disclosed such
information, (2) was available to them on a non-confidential basis prior to
its disclosure to them by the disclosing Party, or (3) becomes available to
them on a non-confidential basis from a source other than the disclosing
Party, provided, however, that such source is not known by them to be bound
by a confidentiality agreement with the Party that provided the information
or otherwise prohibited from disclosing such information by a contractual,
legal or fiduciary obligation. Furthermore, the Parties and their
respective officers, directors, owners and Affiliates may disclose such
information to the extent they are required to do so to comply with a
governmental or judicial order or decree, but only to the extent they are
required to do so and upon receiving notice that any such order or decree
has been issued or is being sought, they will promptly notify the Party
whose information is at issue and will cooperate with the efforts of such
Party to contest the enforcement or issuance of such order or decree.
28
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) No Codess.338 Election. None of Buyer, Target or any of their
Affiliates shall make any election under Codess.338 with respect to the
transactions contemplated by this Agreement.
(e) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
(f) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of Buyer and Seller.
(g) Counterparts. This Agreement may be executed in one or more
counterparts (including by means of facsimile), each of which shall be deemed an
original but all of which together will constitute one and the same instrument.
(h) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) when delivered
personally to the recipient, (ii) one business day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) one
business day after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) four business days after being mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
and addressed to the intended recipient as set forth below:
If to Seller: Mattress Discounters Corporation
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx
Phone: (000) 000-0000 xxx 000
Facsimile: (000) 000-0000
Copy to: Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
29
If to Buyer: Mattress World, Inc.
0000 Xxxxx Xxxxxxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to: X'Xxxxxx & Xxxxxx LLC
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(j) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois.
(k) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any Party of any provision of this Agreement or of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver nor shall such waiver be deemed to extend
to any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(l) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(m) Expenses. Each of Buyer, Seller and Target will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby whether or not such
transactions are consummated; provided, however, that Seller will also bear all
of the costs and expenses of Target (including all of its legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby in the event that the transactions contemplated by this
Agreement are consummated.
30
(n) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(o) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(p) Waiver of Jury Trial. Each of Buyer and Seller, to the extent it may
legally do so, hereby expressly waives any right to trial by jury of any claim,
demand, action, cause of action, or proceeding arising under or with respect to
this Agreement, or in any way connected with, related to, or incidental to the
dealings of Seller and Buyer with respect to this Agreement or the transactions
related hereto and thereto. In each case, whether now existing or hereafter
arising, and irrespective of whether sounding in contract, tort or otherwise,
each of Buyer and Seller, to the extent it may legally do so, hereby agrees that
any such claim, demand, action, cause of action, or proceeding shall be decided
by a court trial without a jury and that either party may file an original
counterpart of this Section with any court as written evidence of the consent of
each party to the waiver of its right to trial by jury.
(q) Obligations of Target. From and after the Closing, Target covenants and
agrees to fulfill all obligations of Buyer hereunder, jointly and severally with
Buyer.
* * * * *
31
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
MATTRESS WORLD, INC.
By: /s/ Xxx X. Xxxxxxx
------------------
Name: Xxx X. Xxxxxxx
Title: President
MATTRESS DISCOUNTERS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
For purposes of ss.2(g):
/s/ Xxx Xxxxxxx
----------------
Xxx Xxxxxxx
/s/ Xxxxxxxx Xxxxxxx
--------------------
Xxxxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxx
---------------
Xxxx Xxxxxx
32
