EXHIBIT 10(h)
AGREEMENT OF PURCHASE AND SALE OF ASSETS
AGREEMENT dated July 1, 2002 by and among XXXXXXX ASSOCIATES OF NEW YORK,
INC., a New York corporation having its principal office at 0 Xxxxxxx Xxxxxx,
Xxxxxx Xxxxxxx, Xxx Xxxx 00000 ("Seller"), and UNIVERSAL SUPPLY GROUP, INC., a
New York corporation having its principal office at 000 Xxxxxxx Xxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000 ("Purchaser").
W I T N E S S E T H:
IN CONSIDERATION of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
1. PURCHASE AND SALE.
(a) Subject to and upon the terms and conditions set forth in this
Agreement, Seller will sell, transfer, convey, assign and
deliver to Purchaser, and Purchaser will purchase, at the
Closing hereunder, the following assets (hereinafter sometimes
collectively called "Seller's Assets") of or relating to
Seller's HVAC business in the "Territory." The term
"Territory" means New Jersey and the areas in New York that
are indicated in the attached map. The term "Business" means
Seller's HVAC business in the Territory:
(i) Usable accessories (hereinafter collectively referred to as
"Accessories") listed on Seller's disclosure schedule dated as
of this date (the "Disclosure Schedule");
(ii) The accounts receivable ("Receivables") related to HVAC and
accessory sales in the Territory that are listed in the
Disclosure Schedule;
(iii) All customer orders with respect to the Business;
(iv) Supplier records and files;
(v) Customer records, lists and files, and purchase and sales
history and pricing, in "software" form if possible, and other
customer property;
(vi) Employee lists, files, papers, books, records;
(vii) sales and advertising materials and records, sales and
purchase correspondence; and
(viii) The goodwill of Seller relating to the Business.
(b) Seller's Assets shall be conveyed free and clear of all
liabilities, obligations, liens and encumbrances.
2. PURCHASE PRICE; LIMITED ASSUMPTION OF LIABILITIES; RETURN OF
CONSIGNED GOODS, ETC.
(a) Purchase Price.
(i) In full payment for the Seller's Assets, Purchaser will pay to
Seller the following:
(A) On or about June 18, 2002 (i) $100,000 for customer lists and
records and goodwill and the other assets listed in Sections
2(a)(iii) through (vii), plus (ii) towards the Accessories, an
amount (approximately $80,000) equal to the lower (the
"Accessories Price") of Seller's costs of the Accessories or
Purchaser's costs for equivalent Accessories
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(B) On or about June 25, 2002 $200,000 for Receivables in that
face amount.
(C) At the Closing:
(1) An amount equal to 15% of the total face amount of the
Receivables, by note in the form of an exhibit to this
Agreement
(2) An amount payable in cash equal to the excess of (i) the
Accessories Price over the amount paid theretofore under
clause (A), plus (ii) the amount by which the face amount of
the Receivables exceeds $200,000, minus (iii) the face amount
of the Note and the price allocable to any Accessories that
were used by Seller after June 18, 2002 or any Receivables
that were collected by Seller after June 25, 2002.
(ii) If on or before July 15, 2002 there has been no Closing for
whatever reason, then Seller shall forthwith refund to
Purchaser all cash amounts theretofore paid by Purchaser,
Seller shall return the promissory note aforesaid to Purchaser
for cancellation, and the parties shall be restored to the
status quo immediately preceding the signing of this
Agreement.
(b) Purchaser assumes the specific liabilities that are designated
as "Assumed Liabilities" in the Disclosure Schedule. Purchaser
assumes no other liabilities or obligations of Seller
whatsoever, whether under contracts or orders assigned by
Seller to Purchaser or otherwise.
(c) Seller will promptly transfer and deliver to Purchaser any
cash or other property which Purchaser may receive in respect
of the Receivables.
3. CLOSING. The Closing shall take place on July 1, 2002 at the
offices of Seller's attorney, but only if on before such date
Xxxxxxx Manufacturing Company, L.P. ("Goodman") has agreed to
cause Purchaser to succeed Seller as a consignee for HVAC
products on the same terms and conditions as heretofore
applied to Seller, except that the territory for such
consignment arrangement shall exclude Brooklyn and Long
Island. The day on which the Closing actually takes place is
herein sometimes referred to as the Closing Date.
4. OTHER TRANSACTIONS AT CLOSING; FURTHER ASSURANCES.
(a) At the Closing:
(i) Seller will deliver to Purchaser a Xxxx of Sale duly executed
by Seller in the form of an Exhibit to this Agreement.
(ii) The parties will enter into a lease or sublease at $1/sq/ft/mo
for premises in Pine Brook in the form attached to this
Agreement, it being understood that in consideration for such
lease payments, lessor shall also provide normal warehouse
services, including shipping, receiving and storage.
(iii) Seller will irrevocably arrange for the forwarding and
transfer to 973-427-3320 (or to any other telephone number
that is hereafter designated by notice by Purchaser to Seller)
of all telephone calls to the Business.
(b) From and after the Closing, Seller shall forward to Purchaser
all mail and other correspondence that Seller from time to
time receives with respect to the Business.
(c) At or before the Closing, Seller shall introduce Purchaser's
representatives to the public warehouses heretofore used by
the Business in Brooklyn and Albany, and Seller shall assist
Purchaser in entering into arrangements with these warehouses
on the same terms and conditions as applied prior to the
Closing between the Business and these warehouses.
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(d) Effective as of the Closing, Seller shall return to Goodman
all goods then held by the Business that is on consignment
from Goodman, and Purchaser will in turn take these goods on
consignment from Goodman on the same terms and conditions.
(e) At or before the Closing, Seller shall facilitate the hiring
at Purchaser's discretion of not more than three employees of
Seller at the same salaries as were paid by the Business,
provide that non-salary benefits will be in accordance with
Purchaser's normal practices and policy manuals.
(f) At any time and from time to time after the Closing, at
Purchaser's request and without further consideration, Seller
will execute and deliver such other instruments of sale,
transfer, conveyance, assignment and confirmation and take
such action as Purchaser may reasonably deem necessary or
desirable in order to more effectively transfer, convey and
assign to Purchaser, and to confirm Purchaser's title to, all
of Seller's Assets, to put Purchaser in actual possession and
operating control thereof and to assist Purchaser in
exercising all rights with respect thereto.
(g) For two years after the Closing, at reasonable times and on
reasonable notice, Purchaser shall have access to Seller's
books and records pertaining to the operations of the Business
prior to the Closing.
5. REPRESENTATIONS AND WARRANTIES BY SELLER AND SHAREHOLDER.
Seller represents and warrants to Purchaser as follows:
(A) ORGANIZATION, STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the
laws of New York.
(B) AUTHORIZATION AND APPROVAL OF AGREEMENT. All proceedings or
corporate action required to be taken by Seller relating to
the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
taken.
(C) EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT; AUTHORITY.
Neither the execution, delivery nor performance of this
Agreement by Seller will, with or without the giving of notice
or the passage of time, or both, conflict with, result in a
default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance
pursuant to, any provision of Seller's certificate of
incorporation or by-laws or any franchise, mortgage, deed of
trust, lease, license, agreement, understanding, law, rule or
regulation or any order, judgment or decree to which Seller is
a party or by which any of them may be bound or affected.
Seller has the full power and authority to enter into this
Agreement and to carry out the transactions contemplated
hereby, all proceedings required to be taken by them or their
stockholders to authorize the execution, delivery and
performance of this Agreement and the agreements relating
hereto have been properly taken and this Agreement constitutes
a valid and binding obligation of Seller.
(D) PRO FORMA OPERATING STATEMENT. The pro forma operating
statement of the Business for 2001 that is set forth in the
Disclosure Schedule is true and correct, and in 2002 to date
the Business has not experienced a deterioration in its sales
or gross profit margin.
(E) ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the
extent set forth on the Disclosure Schedule, there are no
liabilities or obligations that attach or relate to or are
secured by any of Seller's Assets. None of the employees of
the Business is now or, will by the passage of time hereafter
become, entitled to receive any vacation time, vacation pay or
severance pay attributable to services rendered prior to the
Closing Date.
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(F) LITIGATION. Except as set forth in Seller's Disclosure
Schedule, there is no claim, legal action, suit, arbitration,
governmental investigation or other legal or administrative
proceeding, nor any order, decree or judgment in progress,
pending or in effect, or to the knowledge of Seller
threatened, against or relating to the Business, and Seller
does not know or have reason to be aware of any basis for the
same.
(G) TITLE TO PROPERTIES. Seller has good, marketable and insurable
title to Seller's Assets. None of such properties and assets
are subject to any mortgage, pledge, lien, charge, security
interest, encumbrance, restriction, lease, license, easement,
liability or adverse claim of any nature whatsoever, direct or
indirect, whether accrued, absolute, contingent or otherwise.
(H) SCHEDULES. Seller's Disclosure Schedule includes a separate
schedule containing an accurate and complete list and
description of:
(i) Seller's Assets.
(ii) All receivables of the Business, including the Receivables.
(iii) All sales agency or route distributorship agreements or
franchises or agreements providing for the services of an
independent contractor to which Seller is a party or by which
it is bound.
(iv) All contracts, agreements, commitments or other understandings
or arrangements to which Seller is a party with respect to the
Business or by which it or any of its property is bound or
affected.
(I) ACCESSORIES. All items of Accessories are current and are
merchantable or suitable and usable for the production or
completion of merchantable products, for sale in the ordinary
course of business as first quality goods at normal xxxx-ups,
none of such items is obsolete or below standard quality.
(J) RECEIVABLES. The Receivables have arisen only from bona fide
transactions in the ordinary course of the Business, and each
receivable shall be fully collected within 90 days after it
arose, without resort to litigation and without offset or
counterclaim, in the aggregate face amounts thereof.
(K) CERTAIN REPRESENTATIONS
(i) No supplier or customer is considering termination,
non-renewal or adverse modification of its agreement with the
Business, and the transactions contemplated by this Agreement
will not have a material adverse effect on Seller's
relationships with its suppliers and customers.
(ii) Within the past five years Seller has not entered into any
agreement with, or been investigated by, any governmental
authority, community group or other third party that could
restrict the operation of the Business.
(iii) No employee of the Business has indicated that he or she is
considering terminating his employment.
(L) DISCLOSURE. The representations and warranties contained in
this Section shall not be affected or deemed waived by reason
of the fact that Purchaser and/or its representatives knew or
should have known that any such representation or warranty is
or might be inaccurate in any respect.
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6. REPRESENTATIONS AND WARRANTIES BY PURCHASER. Purchaser
represents and warrants to Seller as follows:
(A) ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of New
York. Purchaser is a wholly-owned subsidiary of Colonial
Commercial Corp., a New York corporation.
(B) LITIGATION. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative
proceeding, nor any order, decree or judgment in progress,
pending or in effect, against or relating to Purchaser in
connection with or relating to the transactions contemplated
by this Agreement.
(C) CURRENT FINANCIAL STATUS. Purchaser has advised Seller of
Purchaser's current financial difficulties, including its
technical insolvency .
7. NON-COMPETE. Seller will not for two years directly or
indirectly engage in the States of New York and New Jersey in
any aspect of the HVAC business in which the Business engaged
prior to the Closing. The provisions of this Section shall be
enforceable by decrees of specific performance (without
posting bond or other security) in addition to other remedies.
8. INDEMNIFICATION.
(a) Seller hereby undertakes and agrees to indemnify Purchaser and
hold it harmless against and in respect of (and shall on
demand reimburse Purchaser for) the following:
(i) All claims, debts, liabilities and obligations of Seller
whether absolute or contingent arising on or prior to the
Closing Date;
(ii) The full face amount of Receivables that are not collected in
the ordinary course (without resort to litigation) within 90
days they arose, but only to the extent that aggregate amount
of such unpaid Receivables exceed the principal amount of the
promissory note referred to in Section 2;
(iii) any and all loss, liability or damage suffered or incurred by
Purchaser by reason of any untrue representation, breach of
warranty or non-fulfillment of any covenant by Seller
contained herein or in any certificate, document or instrument
delivered to Purchaser pursuant hereto or in connection
herewith;
(iv) any and all loss, liability or damage suffered or incurred by
Purchaser by reason of or in connection with any claim for
finder's fee or brokerage or other commission arising by
reason of any services alleged to have been rendered to or at
the instance of Seller with respect to this Agreement or any
of the transactions contemplated hereby;
(v) any and all loss, liability or damage suffered or incurred by
Purchaser by reason of any claim for severance pay accruing or
incurred at any time on or after the date hereof; and
(vi) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including,
without limitation, legal fees and expenses, incident to any
of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
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(b) Purchaser hereby agrees to indemnify and hold Seller harmless
from, against and in respect of (and shall on demand reimburse
it for):
(i) All claims, debts, liabilities and obligations of the Business
whether absolute or contingent arising after the Closing Date;
(ii) Any and all loss, liability or damage resulting from any
untrue representation, breach of warranty or non-fulfillment
of any covenant or agreement by Purchaser contained herein or
in any certificate, document or instrument delivered to Seller
hereunder;
(iii) any and all loss, liability or damage suffered or incurred by
Seller by reason of or in connection with any claim for
finder's fee or brokerage or other commission arising by
reason of any services alleged to have been rendered to or at
the instance of Purchaser with respect to this Agreement or
any of the transactions contemplated hereby; and
(iv) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid
the same or to oppose the imposition thereof, or in enforcing
this indemnity.
9. BULK SALES COMPLIANCE. Purchaser hereby waives compliance by
Seller with the provisions of the Bulk Sales Law of any state,
and Seller warrants and agrees to pay and discharge when due
all claims of creditors which could be asserted against
Purchaser by reason of such non-compliance to the extent that
such liabilities are not specifically assumed by Purchaser
under this Agreement. Seller indemnifies and agrees to hold
Purchaser harmless from, against and in respect of (and shall
on demand reimburse Purchaser for) any loss, liability, cost
or expense, including, without limitation, attorneys' fees,
suffered or incurred by Purchaser by reason of the failure of
Seller to pay or discharge such claims.
10. NOTICES. Any and all notices or other communications required
or permitted to be given under any of the provisions of this
Agreement shall be in writing and shall be deemed to have been
duly given when personally delivered or when forwarded for
priority delivery by Federal Express or other recognized
courier, addressed to the parties at the addresses set forth
above (or at such other address as any party may specify by
notice to all other parties given as aforesaid), together with
a copy to their respective counsel. Seller's counsel is Xxxxxx
Xxxxxx, 000 Xxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxx Xxxx 00000.
Purchaser's counsel is Xxxxx Xxxxxx, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
11. MISCELLANEOUS.
(a) This writing constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be
modified, amended or terminated except by a written agreement
specifically referring to this Agreement signed by all of the
parties hereto.
(b) All statements, representations, warranties indemnities,
covenants and agreements made by each of the parties hereto
shall survive the Closing.
(c) In the event of any controversy, claim or dispute between the
parties hereto arising out of or relating to this Agreement or
any of the documents provided for herein, or the breach
thereof, the prevailing party shall be entitled to recover
from the losing party reasonable attorney's fees, expenses and
costs.
(d) No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or
similar nature.
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(e) This Agreement shall be binding upon and inure to the benefit
of each corporate party hereto, its successors and assigns,
and each individual party hereto and his heirs, personal
representatives, successors and assigns.
(f) The paragraph headings contained herein are for the purposes
of convenience only and are not intended to define or limit
the contents of said paragraphs.
(g) Each party hereto shall cooperate, shall take such further
action and shall execute and deliver such further documents as
may be reasonably requested by any other party in order to
carry out the provisions and purposes of this Agreement.
(h) This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed one original.
(i) This Agreement and all amendments thereof shall be governed by
and construed in accordance with the law of the State of New
York applicable to contracts made and to be performed therein.
(j) The partiers hereby consent to the jurisdiction of the State
and Federal courts sitting in New York in any action arising
out of or connected in any way with this Agreement, and the
parties further agree that the service of process or of any
other papers upon them or any of them in the manner provided
for notices hereunder shall be deemed good, proper and
effective service upon them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
XXXXXXX ASSOCIATES OF NEW YORK, INC.
By:
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President
UNIVERSAL SUPPLY GROUP, INC.
By:
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President
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Exhibit _
XXXX OF SALE
THIS XXXX OF SALE (this "Xxxx of Sale") is executed by XXXXXXX
ASSOCIATES OF NEW YORK, INC.., a New York corporation ("Seller"), pursuant to
the Agreement (the "Agreement"), dated _______ 2002, by and among Seller and
UNIVERSAL SUPPLY GROUP, INC., a New York corporation (the "Purchaser").
Seller, for good and valuable consideration, receipt of which is hereby
acknowledged, does hereby sell, assign, convey, transfer and deliver to
Purchaser, the Seller's Assets as defined in the Agreement.
The representations, warranties, covenants and indemnities contained in
the Agreement shall not merge into but shall survive this Xxxx of Sale and
become a part hereof and shall continue in full force and effect as though set
forth herein at length.
Seller hereby represents to Purchaser that Seller has good title, right
and full authority to sell and transfer the property to Purchaser against all
persons. This instrument shall be binding upon and shall inure to the benefit of
the respective parties, their successors, assigns and personal representatives.
IN WITNESS WHEREOF, Seller has duly executed this Xxxx of Sale this
___________________, 2002.
XXXXXXX ASSOCIATES OF NEW YORK, INC.
By
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Exhibit--Promissory Note
Date
$
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For value received, UNIVERSAL SUPPLY GROUP, INC., a New York corporation
("Purchaser") promises to pay $____ to XXXXXXX ASSOCIATES OF NEW YORK, INC., a
New York corporation ("Seller") on [120 days after Closing], together with
interest accruing at 3% per annum. Purchaser may offset against amounts payable
under this Note the amount of any Receivables [as defined in this Agreement]
which have not been collected by such 120th day and which Purchaser has on or
prior to such 120th day reassigned to Seller without recourse. This Note may not
be changed or terminated orally
1. Event of Default, Acceleration of the Note, Etc.
(a) A default with respect to this Note shall exist if any of the
following shall occur if Purchaser shall fail to make any
payment of interest or principal when due of this Note, or
Purchaser shall breach or fail to comply with any other
provision of this Note, and such breach or failure shall
continue for five days after written notice by Seller to
Purchaser.
(b) If a default shall occur, Seller may by written notice to
Purchaser, declare the principal amount of this Note, together
with all interest accrued thereon, to be due and payable
immediately.
2. Miscellaneous.
(a) All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by
delivery in person, by telegram, by facsimile, recognized
overnight mail carrier, telex or other standard form of
telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as
follows: (a) if to the Seller, to such address as such Seller
shall furnish to Purchaser in accordance with this Section, or
(b) if to Purchaser, to it at its headquarters office, or to
such other address as Purchaser shall furnish to the Seller in
accordance with this Section.
(b) This Note shall be governed and construed in accordance with
the laws of the State of New York applicable to agreements
made and to be performed entirely within such state.
(c) Seller shall be entitled to recover its reasonable legal and
actual costs of collecting on this Note, and such costs shall
be deemed added to the principal amount of this Note.
(d) Purchaser waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand.
(e) The waiver of any event of default or the failure of the
Seller to exercise any right or remedy to which it may be
entitled shall not be deemed a waiver of any subsequent event
of default or of the Seller's right to exercise that or any
other right or remedy to which the Seller is entitled.
IN WITNESS WHEREOF, Purchaser has caused this Note to be duly executed on the
date set forth below
Dated:
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UNIVERSAL SUPPLY GROUP, INC.
By:
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