PURCHASE AND SALE AGREEMENT
AGREEMENT dated March 14, 1997, between SPECIALTY WINDOW COVERINGS CORP. an
Indiana corporation, with its principal office in Elkhart, Indiana ("Seller")
and joined in and consented to by XXXXXX XXXXX and XXXXXX X. XXXXX, sole
shareholders of Seller ("Shareholders")
A
N
D
DECORATOR INDUSTRIES, INC., a Pennsylvania corporation with its principal office
in Pembroke Pines, Broward County, Florida ("Buyer");
WITNESSETH:
WHEREAS, Seller and Shareholders desire to sell and Buyer wishes to
purchase certain of the business and assets, free and clear of any and all
liabilities, of Seller on the terms and conditions hereinafter set forth in this
Purchase and Sale Agreement ("Agreement");
NOW, THEREFORE, in consideration of their respective undertakings
hereunder, the parties hereto, each intending to be legally bound, do covenant,
warrant and agree as follows:
1. PURCHASE AND SALE OF PURCHASE ASSETS
1.1 PURCHASE AND SALE. On March 15, 1997, the Effective Date, and
subject to the terms and conditions contained herein, Seller hereby sells,
assigns, transfers and delivers to Buyer, and Buyer hereby purchases and accepts
from Seller, all of Seller's assets and property rights of every kind and
description whatsoever, personal, tangible or intangible, as a going concern
("Purchase Assets") with the exception of the following assets:
(a) Treasury stock, the corporate seal, minute books, charter
documents, capital stock record books and such of the other
books and records as have to do with the organization,
existence and share capitalization of Seller;
(b) Rights which accrue or will accrue to Seller under this
Agreement;
(c) Cash; and
(d) Retained inventory in the amount of approximately One
Hundred Twenty-five Thousand Dollars ($125,000) ("Retained
Inventory"), the amount to be finally determined promptly
after the Effective Date and set forth on Appendix I. Buyer
will buy at cost from Seller on an as needed basis from the
Retained Inventory to fulfill customer orders with payment
to be made by the 15th of the next succeeding month.
Without in any way limiting the scope of the assets being
transferred to Buyer hereunder, said assets include all security deposits,
accounts receivable, machinery, equipment and vehicles (including those listed
on Appendix II), fixtures, stock in trade, inventories of merchandise (raw,
processed and finished materials), supplies, tools, furniture, designs and
drawings, patents, trade marks, options, contractual rights, franchises, trade
names and corporate names (including "Specialty Window Coverings"; Seller shall
change its corporate name at the Closing to a dissimilar name), know-how, trade
secrets, customer lists and all other tangible assets of Seller (other than the
excluded assets referred to above) whether or not carried at value on the books
of Seller and whether or not in the possession of Seller or others.
Title to all assets to be conveyed pursuant hereto shall be good
and marketable, free and clear of any and all liabilities, obligations, liens,
claims, security interests and encumbrances whatsoever, except the liabilities
hereinafter specifically assumed by Buyer.
1.2 CLOSING; XXXX OF SALE; ETC.
(a) The closing of the transactions provided for in this
Agreement ("Closing") shall take place at the office of the
Buyer, Suite 201, 00000 Xxxxx Xxxxxxxxx, Xxxxxxxx Xxxxx,
Xxxxxxx 00000, or at such other place as Seller and Buyer
shall mutually agree, at 10 o'clock a.m., local time, on or
before April 6, 1997, or at such other date as may be
mutually agreed upon in writing by Seller and Buyer.
(b) At the Closing, Seller shall deliver to Buyer the following
instruments of conveyance in recordable form:
(i) Xxxx of Sale substantially in the form of Exhibit
1.2(b)(i) hereto;
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(ii) Assignment of Trademarks and trade names substantially
in the form of Exhibit 1.2(b)(ii) hereto.
(c) Seller agrees to execute and deliver to Buyer such
additional instruments, bills of sale, assignments and the
like, as may be reasonably requested by Buyer, in order to
more fully perfect in Buyer title to the Purchase Assets.
2. LIABILITIES OF SELLER ASSUMED BY BUYER.
2.1 At the Closing, but effective as of the Effective Date, Seller
shall assign and transfer to Buyer its rights, liabilities and obligations and
Buyer shall assume, pursuant to an assignment and assumption agreement
substantially in the form of Exhibit 2.1 hereto for purchase orders commitments
and contracts for inventory.
2.2 Buyer will not assume, or in any way be liable or responsible for
any debts, claims, demands, liabilities or obligations of Seller or Shareholders
(whether or not referred to in any Exhibit and/or appendix hereto), except as
specifically provided in Section 2.1 above, and Seller and Shareholders
represent, warrant and agree that Buyer shall not be or become liable for any
debts, claims, demands, liabilities or obligations of Seller or Shareholders not
expressly assumed in Section 2.1 of any kind whatsoever, whether fixed or
contingent, known or unknown. Without limiting the generality of the foregoing,
Buyer shall not assume (i) any purchase or sale commitments, contracts, leases,
licenses, permits, supply arrangements or any other agreements or arrangements
to which Seller is a party or by which it is bound, not terminable by Buyer
within thirty (30) days, without premium or penalty, except as set forth on
Exhibit 2.2 hereto, or unless Buyer at Closing expressly assumes any of same in
writing; (ii) any liability or obligation of Seller for any personal injury or
property damage claim heretofore or hereafter made for occurrences prior to the
Effective Date; (iii) any liability or obligation of Seller for any claim
heretofore or hereafter made in respect of any express or implied
representation, warranty, agreement or guarantee made (or claimed to have been
made) by Seller, or imposed or asserted to be imposed by operation of law, in
respect of any product sold or committed to be sold by Seller at any time on or
before the Effective Date; or (iv) any unpaid taxes; interest and/or penalties
due or owing by Seller to any taxing or governmental authority for all periods
prior to the Effective Date.
3. PURCHASE PRICE AND PAYMENT.
3.1 As consideration for the purchase of the Purchase Assets and the
undertakings of Seller hereunder, Buyer shall pay Seller as follows:
(a) Two Hundred Eighty Thousand Dollars ($280,000) upon
execution of this Agreement to be held in escrow by the
attorneys for Buyer and Seller
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pursuant to an Escrow Agreement substantially in the form of
Exhibit 3.1(a).
(b) On the Closing, the sum of Two Million Eight Hundred
Thousand Dollars ($2,800,000) adjusted for the following:
(i) less the amount of the escrow in 3.1(a) above;
(ii) less the amount of the Retained Inventory;
(iii) less the inventory reserve in the amount of
approximately Three Hundred Eighty-seven Thousand
Dollars ($387,000) ("Inventory Reserve") as set
forth on Appendix III promptly after the Effective
Date;
(iv) the amount by which the actual inventory taken on
March 15, 1997 less the Retained Inventory and the
Inventory Reserve is more or less than $560,521;
and
(v) the amount by which Accounts Receivable on the
Effective Date are more or less than $216,346;
(c) On the Additional Consideration Dates, Buyer shall pay to
Seller (or if the Seller has been liquidated, to a joint
bank account designated by Seller for the benefit of the
Shareholders) additional consideration not to exceed an
aggregated total of One Million Five Hundred Thousand and
00/100s Dollars ($1,500,000). If the Purchase Price,
Additional Consideration, adjustments, purchase of Retained
Inventory and bonus to Shareholders in the aggregate exceeds
Three Million Eight Hundred Thousand Dollars ($3,800,000),
such excess may be paid in Buyer's stock at the option of
Buyer. Seller shall be entitled to receive additional
consideration ("Additional Consideration") based upon the
Profit of the business of Specialty ("Specialty") determined
on the basis of generally accepted accounting principles,
consistently applied, calculated before federal and state
income taxes, inter Company charges, management fees or
corporate overhead of Buyer, but after bonuses, interest
charges for loans or advances by Buyer calculated at two
percent (2%) above the "Prime Rate" as quoted in the WALL
STREET
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JOURNAL, allocable share of bank charges and fees of
certified public accountants and attorneys (percentage of
such costs to sales shall not exceed the percentage of such
costs to sales of Seller for the year ending December 31,
1996), and, in addition, shall include extraordinary
attorneys' fees incurred by Specialty and not by Buyer or
its other subsidiaries and depreciation of fixed assets used
by Specialty (which annual charge shall not exceed $32,353
on existing fixed assets, plus depreciation on new fixed
assets, maintenance, operating and insurance costs, rent and
real estate taxes attributable to the existing building and
the building being built and to be leased by Specialty, plus
a charge for expenses paid by Buyer on behalf of Specialty
provided such payment is no greater than would have been
paid by Specialty, during the 12-month periods ending April
4, 1998 and April 3, 1999 ("Periods of Operation").
For the purpose of this Section 3.1(b), the term Specialty,
shall mean the subsidiary, division or other entity to be
formed or used by Buyer for the purpose of operating the
business of Seller with the assets being purchased
hereunder. Buyer may withdraw from working capital sums
equal to the quarterly profit of Specialty. At its option
Buyer shall lend funds to Specialty for operations.
Interest shall be charged by Buyer on the amount by which
Specialty's operating account is in excess of a negative
$150,000.
The Additional Consideration shall be determined as follows:
An amount equal to that which Profits, as determined above,
for each of the 12 month periods exceeds the $250,000
threshold amount shall be paid as Additional Consideration.
Profit of less than $250,000 for the 12 months ending April
4, 1998 will be considered a deficiency to be added to the
threshold amount for the 12 months ending April 3, 1999.
Notwithstanding anything herein to the contrary, the
aggregate Additional Consideration shall not exceed
$1,500,000.
The Additional Consideration shall be separately determined
for each of the above Periods of Operation and shall be paid
on May 18, 1998 and May 17, 1999 ("Additional Consideration
Dates").
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All calculations of Profit shall be prepared in accordance
with the provisions hereof and in accordance with generally
accepted accounting principles applied on a consistent
basis. No additional employees will be hired without the
written mutual approval of Buyer and Seller. No bonuses or
increases or decreases in compensation shall be made which
are inconsistent with past practices without the written
mutual approval of Buyer and Seller. The Seller shall be
entitled to receive copies of the calculations of Profit so
prepared by Buyer. In the event of any disagreement by
Seller with respect to any determination of Profit, Seller
may, at its cost, designate its present Certified Public
Accountants to attempt to adjust such disagreement with
Buyer's Certified Public Accountant; in the event Seller's
and Buyer's Certified Public Accountants cannot amicably
adjust such disagreement, then Seller's and Buyer's
Certified Public Accountants shall designate a third
independent Certified Public Accountant, acceptable to both
of them. to arbitrate the disagreement, and the decision of
such arbitrator thereon shall be final and binding on the
parties. All fees and expenses relating to the services of
the arbitrator shall be paid by the party against whom the
arbitrator's decision is made, or pro rated in accordance
with a determination which is allocated between the parties.
3.2 The Purchase Price shall be allocated among the Purchase Assets
in accordance with the allocation statement (the "Allocation Statement")
attached hereto as Exhibit 3.2 which parties acknowledge is in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code").
Buyer and Seller each agree to prepare and file on a timely basis the Internal
Revenue Service Form 8594, setting forth an allocation of such Purchase Price,
pursuant to the Allocation Statement. Buyer and Seller further agree to report
this transaction for federal income tax purposes in accordance with the
Allocation Statement and each party agrees to act in accordance with such
Allocation Statement in the course of any tax audit, tax review or tax
litigation concerning such party and relating thereto. Neither Seller nor
Buyer will assert that the allocation set forth in the Allocation Statement was
not separately bargained for at arm's length and in good faith.
No later than ten (10) days prior to the filing of their
respective Forms 8594 relating to this transaction, each party shall deliver to
the other party a copy of its Form 8594.
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4. FINANCIAL STATEMENTS.
4.1 Seller has heretofore submitted to Buyer its Financial Statements
for the fiscal year ended December 31, 1996, certified by the President of
Seller, attached as Appendix IV hereto. Said Financial statement was prepared
by Seller in accordance with generally accepted accounting principles, applied
on a consistent basis. In the preparation of said Financial statement:
(a) only non-contested, bona fide fully collectible accounts
receivable incurred in the ordinary course of business was
included, less normal allowance for doubtful accounts.
Seller shall prepare a detailed list of all such receivables
as of the Effective Date, in conformity with the foregoing,
which list shall be delivered to Buyer promptly after the
Effective Date as Appendix V hereto;
(b) inventory of merchandise which is of quality, usable and
saleable in the normal course of the business of Seller,
valued at its cost or market, whichever is lower, and the
value of all items heretofore written off or not presently
specified or deemed by Seller to be obsolete or below
standard shall be excluded. Representatives of Seller and
Buyer shall take inventory commencing March 15, 1997, and
shall prepare a list and value thereof as Appendix VI to
this Agreement promptly after the Effective Date.
4.2 In the event of any disagreement by Buyer with respect to any
determination of the inventory and/or accounts receivable, Buyer may, at its
cost, designate its present Certified Public Accountants to attempt to adjust
such disagreement with Seller's Certified Public Accountants; in the event
Seller's and Buyer's Certified Public Accountants cannot amicably adjust such
disagreement, then Seller's and Buyer's Certified Public Accountants shall
designate a third independent Certified Public Accountant, acceptable to both of
them, to arbitrate the disagreement, and the decision of such arbitrator thereon
shall be final and binding on the parties. All fees and expenses relating to
the services of the arbitrator shall be paid by the party against whom the
arbitrator's decision is made, or pro rated in accordance with a determination
which is allocated between the parties.
5. ADJUSTMENTS.
5.1 Buyer shall have the right of Adjustment and setoff (i) against
the Additional Consideration to be paid pursuant to Section 3 for claims made by
reason of any breach of any covenant, representation or warranty of Seller and
Shareholders for all sums in excess of $10,000 in the aggregate; and (ii) by an
amount equal
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to any of the accounts receivable conveyed to Buyer by Seller which are not
collected by January 3, 1998. Accounts receivable not collected by Buyer as
above provided shall be assigned to Seller.
5.2 Buyer shall pay Shareholders a bonus equal to the Reserve
Inventory less the sum of such inventory and inventories acquired by Buyer
pursuant to Seller's purchase orders, commitments and contracts not used by
Buyer by January 3, 1998. Payments will be made no later than March 15, 1998.
5.3 Inventories not used by Buyer by January 3, 1998 but used by
Buyer prior to January 2, 1999 shall be paid for no later than March 15, 1999.
Any remaining inventory shall be returned to Seller which will be permitted to
dispose of said inventory provided Seller and/or Shareholders do not make
drapes, window blinds or shades and does not sell such inventory to Specialty's
customers. Specialty shall have the right of first refusal to purchase such
inventory.
6. COVENANTS, REPRESENTATION AND WARRANTIES OF SELLER AND SHAREHOLDERS.
Seller and Shareholders represent and warrant to Buyer now and as of
the Effective Date and the Closing Date as follows:
6.1 Seller has, and upon the execution and delivery of this Agreement
by the parties hereto, will on the Effective Date and Closing Date, transfer to
Buyer good, indefeasible and marketable title to all the Purchase Assets, free
and clear of any and all liabilities, obligations, liens, claims, charges,
pledges, title retention or other security arrangements, encumbrances or other
interests of third parties of any nature whatsoever, except as expressly assumed
by Buyer pursuant to Section 2 above.
6.2 The Seller is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; the Seller
has all requisite corporate power to enter into this agreement and to perform
its obligations hereunder; and the Seller has all requisite corporate power and
authority to own, lease and operate its properties as now owned, leased and
operated, to carry on its business as now being conducted and is duly qualified
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary.
6.3 The execution, delivery and performance by Seller of this
Agreement and the transactions contemplated hereunder have been and will on the
Effective and Closing Date be duly authorized by all necessary corporate action
on its part, and Seller has and on the Effective Date will have full right and
power to sell, assign, transfer and deliver the Purchase Assets to Buyer as
provided hereunder.
6.4 This Agreement has been duly executed by the Seller and is a
valid, legally binding and enforceable obligation of the Seller, except as the
same may be limited or otherwise affected by
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applicable bankruptcy, insolvency or other laws affecting creditors' rights or
contractual obligations generally.
6.5 The trademarks and trade names set forth on Exhibit 1.2(b)(ii)
are and will on the Effective Date and Closing Date be owned by Seller and
Seller has no knowledge of any claim which questions the ownership or validity
thereof.
6.6 Except as set forth in Exhibit 6.6 hereto, no license, permit,
order, adoption, consent or approval of any governmental or regulatory body
(collectively, the "Permits") is or will on the Effective Date and Closing Date
be required to conduct the business being acquired by Buyer hereunder as the
same is now being conducted. All Permits which are material to the conduct of
the business being acquired by Buyer hereunder are and will on the Effective
Date and Closing Date be in full force and effect assignable to Buyer and no
proceeding is pending or threatened to revoke or limit any such Permit.
6.7 Seller's relationship with its customers, employees and suppliers
in connection with the business being acquired by Buyer hereunder are and will
on the Closing Date be consistent with a commercially reasonable business
relationship in all material respects. No employee, supplier or customer,
individually or in the aggregate, material to such business, has or have
indicated any intention to terminate or modify any of such relationships.
Seller agrees to cooperate with Buyer to preserve for the benefit of Buyer the
relationships with Seller's employees, customers and suppliers and others having
business relations with it with respect to the business being acquired by Buyer.
It is understood and agreed that certain present employees of Seller may be
employed by Buyer after the Effective Date. Seller agrees that it will release
any of such employees so employed from any obligations any of them may then have
to serve as a director, officer and/or employee of Seller.
6.8 There are and will on the Effective Date be no unpaid taxes,
interest and/or penalties due, and Buyer is not assuming and Seller will
indemnify Buyer for any liability for any unpaid taxes, interest and/or
penalties due or owing, by Seller to any taxing or governmental authority as of
the Effective Date (including any sales taxes in respect of sales made through
the Effective Date).
6.9 Seller does not maintain any employee plans other than a health
plan as set forth in Exhibit 6.9.
6.10 Seller is not a party to nor threatened with any litigation or
judicial, administrative or arbitration proceeding.
6.11 The machinery, equipment, office equipment, fixtures, trucks and
autos presently being used in the business which is being acquired by Buyer
hereunder are and will on the Effective Date be in good operating condition and
repair, ordinary wear and tear excepted, and Seller has not received any notice
that any of the same is in violation of any existing law or any health,
pollution, safety or other ordinance, code or regulation.
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6.12 Except for losses, claims, damages and expenses adequately
covered by Seller's insurance and which losses, claims, damages and expenses are
disclosed on Exhibit 6.12, there are not (a) any liabilities of Seller, fixed or
contingent, asserted or unasserted, arising out of or based upon incidents
occurring on or before the date hereof with respect to any product liability,
breach of warranty or any similar claim that relates to any product sold by
Seller to others on or before the date hereof, or (b) any liabilities of Seller,
fixed or contingent, asserted or unasserted, arising out of or based upon
incidents occurring on or before the date hereof with respect to any claims for
the breach of any express or implied product warranty, outstanding recalls or
any other similar claim that relates to any product sold or manufactured by
Seller on or before the date hereof, or any product defects which could give
rise to any such liabilities, claims, or recalls. Exhibit 6.12 contains a
complete listing of product liability and breach of warranty claims against
Seller to the date hereof. Buyer shall notify Seller of any warranty claims
under this Section 6.12 and shall, to the extent possible, attempt to follow
Seller's policy in settling such claims.
6.13 Seller shall maintain all existing casualty and liability
insurance ("Insurance") until date of Closing. A list of such Insurance is
attached as Exhibit 6.13.
6.14 There is not pending or threatened any labor dispute, strike or
work stoppage involving employees of Seller which affects or which may affect
the business of Seller or which may interfere with its continued operations.
There is not pending or threatened any charge or complaint against Seller by the
National Labor Relations Board or any representative thereof. There have been no
strikes, walkouts or work stoppages involving employees of Seller in the last
three years.
6.15 Seller and the real properties referred to in Section 9(a) are in
compliance with all applicable federal, state and local laws and regulations
concerning the environment and occupational safety, including without
limitation, the United States Toxic Substances Control Act, the United States
Comprehensive Environment Response and Liability Act of 1980 (CERCLA), the
United States Resource Conservation Recovery Act (RCRA), the United States Clean
Water and Clear Air Acts and the Americans with Disability Act. There are no
environmental liens on any of the Purchase Assets or real properties of Seller
or Shareholders. No governmental actions have been taken or, to the best
knowledge of Seller and Shareholders, are in process. A list of all
environmental investigations, reports, studies, audits or technical reviews
which are in the possession of Seller or Shareholders or, to their knowledge in
relation to the real properties referred to in Section 9(a), is contained in
Exhibit 6.15. Seller or Shareholders shall furnish copies of all such
environmental materials listed in Exhibit 6.15 to Buyer on or before the
Effective Date.
6.16 None of the information and documents furnished or to be
furnished by Seller to Buyer or any of its representatives in
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connection with the execution, delivery and closing of this Agreement is or will
be on the Effective Date and Closing Date or thereafter be false or misleading
or contains or will contain any untrue statement of a fact or omits or will omit
to state any fact required to be stated to make the statements therein not
misleading.
7. REPRESENTATION AND WARRANTIES OF BUYER.
7.1 Buyer is and will on the Effective Date and Closing Date be a
corporation validly organized, existing and in good standing under the laws of
the Commonwealth of Pennsylvania.
7.2 The execution, delivery and performance by Buyer of this
Agreement and the transactions contemplated hereunder have been and will on the
Effective Date and Closing Date be duly authorized by all necessary corporation
action on its part, and Buyer has the full right and power to purchase and
receive the Purchase Assets from Seller as provided hereunder. This Agreement
constitutes the valid and binding obligation of Buyer enforceable in accordance
with its terms.
8. INVESTIGATION BY BUYER.
During the period from the date of this Agreement to three (3) years
after the Closing Date, Buyer shall be given free access to the offices, plants,
records, files, stock books, minute books, books of account and copies of tax
returns of the Seller and Seller's Public Accountants work papers for the
purpose of conducting an investigation of its financial condition, corporate
status, liabilities, contracts, business operations, property and title thereto,
litigation patents, trademarks, copyrights and all other matters relating to its
business, properties and assets, through its employees or independent public
accountants or outside business consultants, provided, however, that such
investigation shall be conducted in a manner that does not unreasonably
interfere with its normal operations and employee relationships. The Seller
shall cause its personnel to assist Buyer in making such investigation and shall
cause its counsel, accountants, engineers, employees and other representatives
to be available to Buyer for such purposes. During such investigation Buyer
shall have the right to make copies of such records, files, tax returns and
other materials as it may deem advisable. If this Agreement is not consummated
as provided herein, Buyer and its representatives shall treat all information
obtained in such investigation as confidential and shall return to the Seller
all copies made by Buyer and its representatives of material belonging to the
Seller.
9. ADDITIONAL AGREEMENTS AT CLOSING.
At Closing, the parties shall enter into the following agreements:
(a) Two (2) lease agreements for real property owned solely by
the Shareholders in fee simple without liens or other
encumbrances except mortgages, which provide Tenant non-
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disturbance clauses, in form similar to that attached as
Exhibit 9(a) for the 20,000 square foot building at 0000
Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000, and the 15,000 square
foot adjacent building being built, each providing, INTER
ALIA, for a five (5) year term at a rental of $2.40 per
square foot. The Lease shall provide for two 5-year
options, the first at a rental rate of $2.60 per square
foot, and the second at a rental rate of $3.00 per square
foot. The Lease shall contain a right of first refusal and
an option to buy at $800,000.
(b) An Employment Agreement with each Shareholder for a term of
two (2) years at an annual salary of Sixty Thousand and
00/100s Dollars ($60,000) payable monthly, plus existing
medical insurance, which employment agreements are made a
part hereof and marked Exhibit 9(b).
(c) An Agreement by Seller and Shareholders not to compete for a
term of five (5) years after the expiration of the term of
the Employment in 9(b) above. The agreement shall be in the
form attached hereto, made a part hereof and marked Exhibit
9(c). The agreement not to compete by Seller and
Shareholders is a condition precedent to Buyer's entering
into this Purchase and Sale Agreement, forms a part of the
consideration being paid by Buyer therefor and is subject to
a right of setoff by Buyer in the event of a breach of
default hereunder.
10. CONDUCT OF BUSINESS PENDING CLOSING.
During the period from the date hereof to the Effective Date, Seller
shall conduct its operations according to its ordinary and usual course of
business and shall maintain its records and books of account in a manner that
fairly and correctly reflects its income, expenses and liabilities in accordance
with generally accepted accounting principles consistently applied, using the
accounting methods previously used by Seller. During such period Seller shall
not without the written consent of Buyer:
(a) Pay or incur any obligation or liability, absolute or
contingent, other than current liabilities incurred in the
ordinary and usual course of business;
(b) Incur any increased indebtedness for borrowed money (except
for endorsement, for collection or for deposit, of
negotiable instruments received in the ordinary and usual
course of
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business), assume, guarantee, endorse or otherwise as
accommodation become responsible for obligations of any
other individual, firm or corporation, or make any loans or
advances to any individual, firm or corporation;
(c) Declare or pay any dividends or make any payment or
distribution to stockholders as such, issue any capital
stock or purchase or otherwise acquire for value any of its
outstanding capital stock or grant options, warrants or
rights to purchase any shares of its capital stock;
(d) Mortgage, pledge or subject to lien or other encumbrance any
of its properties or assets;
(e) Sell or transfer any of its properties or assets except in
the ordinary course of business, or cancel, release or
assign any indebtedness owed to it or any claims held by it;
(f) Make any material change in its insurance, advertising,
franchise or sales representation commitments or
arrangements, or enter into (i) any sales agency agreement
not subject to termination without liability on notice of 60
days or less; (ii) any contract for the purchase or sale of
any materials, products or supplies other than such
contracts incurred in the ordinary and usual course of
business; (iii) any contract which contains an escalator,
renegotiation or redetermination clause or which commits it
for a fixed term; (iv) any management or consultation
agreement; (v) any lease, license or royalty agreement; or
(vi) any other agreement not in the usual and ordinary
course of business:
(g) Increase in any manner the compensation of any of its
officers or executive employees, or pay or agree to pay any
pension or retirement allowance to any of such officers or
employees; or
(h) Take any action which would materially interfere with the
ability of Seller to perform or which, would materially
prevent performance of this Agreement.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER.
The obligations of the Seller under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
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11.1 The representations and warranties of the Buyer herein contained
shall be true and correct on and as of the Effective Date, with the same force
and effect as though made on and as of such date, except as affected by the
transactions contemplated hereby.
11.2 The Buyer shall have performed all obligations and agreements
and complied with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Effective Date and Closing
Date.
11.3 The Seller shall have received an opinion of counsel for the
Buyer, dated the Closing Date, satisfactory in form and substance to the Seller
and its counsel, to the effect that:
(a) the Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and
authority to own, lease and operate its property, to carry
on its business and to enter into this Agreement and perform
its obligations hereunder.
(b) The execution, delivery and performance of this Agreement by
the Buyer and the consummation of the transactions
contemplated hereby have been duly and effectively
authorized and ratified by all necessary corporate action on
the part of the Buyer.
(c) This Agreement has been duly executed by the Buyer and is a
valid, legally binding and enforceable obligation of the
Buyer, except as the same may be limited or otherwise
affected by applicable bankruptcy, insolvency or other laws
affecting creditors' rights or contractual obligations
generally.
12. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER.
The obligations of the Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions.
12.1 The representations and warranties of the Seller herein
contained shall be true and correct on and as of the Effective Date with the
same force and effect as though made on and as of such date, except as affected
by transactions contemplated hereby.
12.2 The Seller shall have performed all obligations and agreements
and complied with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Effective Date and Closing
Date.
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12.3 The Buyer shall have received an opinion of counsel for the
Seller, dated the Closing Date, in form and substance satisfactory to the Buyer
and its counsel, to the effect that:
(a) the Seller is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation; the Seller has all requisite corporate power
to enter into this Agreement and to perform its obligations
hereunder; and the Seller has all requisite corporate power
and authority to own, lease and operate its properties as
now owned, leased and operated, to carry on its business as
now being conducted and is duly qualified in each
jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes
such qualification necessary.
(b) The execution, delivery and performance of this Agreement by
the Seller and the consummation of the transactions
contemplated hereby have been duly and effectively
authorized by all necessary corporate action on the part of
the Seller.
(c) This Agreement has been duly executed by the seller and is a
valid, legally binding and enforceable obligation of the
Seller, except as the same may be limited or otherwise
affected by applicable bankruptcy, insolvency or other laws
affecting creditors' rights or contractual obligations
generally.
(d) There are no actions, suits or proceedings pending or, to
the best of its knowledge, threatened against or affecting
the Seller at law or in equity or before or by any United
States, state, municipal or other governmental or
non-governmental department, commission, board, bureau,
agency, or instrumentality, nor does such counsel know of
any facts which would provide a basis for any such action,
suit or proceeding.
(e) There are no material controversies pending or, to the best
of its knowledge, threatened between the Seller and any of
its employees.
(f) The documents and instruments delivered by the Seller on the
Closing Date are effective to sell, convey and assign good
and marketable title to the assets and property to be
purchased by the Buyer hereunder and assign to Buyer all of
the Seller's rights under the
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contracts and other agreements to be transferred and
assigned hereunder.
13. TERMINATION.
13.1 This Agreement may be terminated by Buyer under any of the
following circumstances by notice given to Seller on or before the Effective
Date:
(a) The Seller shall suffer any loss from fire, flood, explosion
or other casualty which substantially affects the conduct of
their business or, irrespective of insurance, the value of
their assets.
(b) Buyer shall learn of any fact or condition with respect to
the business, properties, assets or earnings of the Seller
which is materially at variance with one or more of the
warranties or representations of the Seller set forth in
this Agreement.
(c) Seller shall have failed to obtain prior to Closing any
Certificates or consents of third parties required
hereunder.
14. INDEMNIFICATION.
14.1 Seller and Shareholders shall indemnify and hold harmless Buyer
from and against and in respect of (i) any and all liabilities and obligations
to any creditors of the Seller or arising out of any transaction entered into by
Seller or other facts or circumstances arising prior to the Effective Date and
not expressly assumed by Buyer pursuant to Section 2, including without
limitation (a) claims arising under the Bulk Sales Act, (b) product liability
and breach of warranty claims with respect to inventory sold, manufactured or
shipped by Seller prior to the Effective Date, (ii) any and all loss, damage or
deficiency resulting from any misrepresentations, breach of warranty or
non-fulfillment of any covenant or agreement on the part of Seller under this
Agreement and (iii) all actions, suits, proceedings, demands ' assessments,
judgments, costs and expenses (including reasonable attorneys' fees) incident to
the foregoing.
14.2 Seller shall indemnify and hold Buyer harmless from and against
and in respect of liability to third parties or with respect to clean-up,
removal or abatement of hazardous material resulting from dumping, violation of
environmental laws or other condition existing on the Effective Date, including
reasonable attorneys' fees, costs and expenses.
14.3 Buyer shall indemnify and hold harmless Seller from and against
and in respect of any and all liabilities and obligations of Buyer arising out
of any transaction entered into by Buyer after the Effective Date, any and all
loss, damage or deficiency resulting from any misrepresentations, breach of
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warranty or nonfulfillment of any covenant or agreement on the part of Buyer
under this Agreement and any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses (including reasonable attorneys,
fees) incident to the foregoing.
14.4 No indemnification pursuant to Sections 14.1 and 14.2 shall be
required to be made unless written notice of a request for indemnification is
given on or before April 3, 1999.
15. BOOKS AND RECORDS.
The Parties shall each have the right, at their own expense, at any
time or from time to time after Closing, during reasonable business hours upon
reasonable notice, to inspect and make copies of or extracts from any of the
books and records relating to the business of Seller being acquired hereunder in
the possession of the other, including, without limitation, all books and
records relating to the Purchase Assets being acquired and the liabilities being
assumed by Buyer hereunder.
16. FINDERS' FEES.
The Parties each represent and warrant to the other that they have not
retained any broker or other representative or agreed to pay any fee or
commission to any agent, finder or broker, either in the nature of a finder's,
originator's or broker's fee or otherwise in connection with the subject matter
of this Agreement and the transactions contemplated hereunder.
17. COSTS.
Except as otherwise provided herein, the Parties agree that each of
them shall bear their own direct and indirect expenses, including attorneys' and
accountants' fees, incurred in connection with the negotiation and preparation
of this Agreement and the consummation and performance of the transactions
contemplated hereby.
18. APPORTIONMENTS.
18.1 All pay and other employee benefits attributable to employees of
Seller whom Buyer employs will be prorated over the period covered thereby
between the parties.
18.2 All other costs and expenses shall be prorated over the period
covered thereby between the parties.
18.3 Any amounts due from Seller in respect of such apportionment
shall be paid on the Closing Date.
19. ARBITRATION.
In the event of any dispute between the parties hereto respecting any
matter or thing having to do with this Agreement or the terms and provisions and
the payments required hereunder, the matter in dispute shall be submitted to an
expedited arbitration in
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the City of Indianapolis, State of Indiana, under the rules then in force of the
American Arbitration Association before a panel of three arbitrators, with
pre-arbitration discovery permitted. Judgment on any award rendered in favor of
either party shall be final and binding and may be entered into any court having
jurisdiction thereof from which there shall be no appeal. No arbitrator shall
have the power to alter, disregard or amend any of the provisions of this
Agreement. The costs, expenses and reasonable attorneys' fees of the successful
party incurred in connection with any such arbitration shall be included as part
of any such award. If the arbitrator shall determine that, under the
circumstances, it would be unfair or unreasonable for one party to bear all such
costs and expenses, the arbitrator may award a different allocation with respect
to the responsibility for the payment of such costs and expenses.
20. NOTICES.
Any notice, request or other communication to be given by either party
hereunder to the other shall be in writing and shall be given by certified or
registered mail, postage prepaid, return receipt requested, addressed (until
another address is supplied to the other party by the addressee) as follows:
If give by Buyer to:
Xxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
and
Xxxxxx Xxxxx
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxxx Xxxxxx, Esquire
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
If given by Seller to:
Decorator Industries, Inc.
00000 Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, President
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with a copy to:
Xxxxxx X. Xxxxxx, Esquire
XXXXX XXXXXX XXXXXX & XXXXXXXXX
00xx Xxxxx, Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
and shall be deemed delivered at the close of business on the date shown on the
receipt therefor as the date of the delivery to or rejection by the addressee
thereof.
21. MISCELLANEOUS
21.1 This Agreement shall not be assignable by either party hereto
without the written consent of the other party except that Buyer may assign this
Agreement, in whole or in part, to a wholly-owned subsidiary of Buyer without
the consent of Seller provided that Buyer shall continue to be bound hereby.
21.2 This Agreement shall be governed, interpreted, construed and
enforced in accordance with the internal laws of the State of Indiana.
21.3 The respective representations and warranties of the parties to
this Agreement shall survive the Closing Date.
21.4 On the Effective Date, Seller shall discontinue using the name
Specialty Window Coverings Corp. Seller shall cooperate and use its best
efforts to permit Buyer to use Seller's name as of the date hereof.
21.5 At any time and from time to time after the Closing Date, upon
request of Buyer, Seller and Shareholders will do, execute, acknowledge and
deliver, and will cause to be done, executed, acknowledged and delivered,
without further consideration, all such further acts, deeds, assignments,
transfers, conveyances, powers-of-attorney and assurances as may reasonably be
requested for the satisfactory consummation of the transactions contemplated
hereunder, including the aiding and assisting in the collection and reduction to
possession of any of the Purchase Assets to be sold, transferred, assigned and
delivered to Buyer as provided herein.
21.6 This Agreement, including the Appendices and Exhibits,
constitutes the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof. This
Agreement shall not be modified, amended or changed in any respect except in
writing duly signed by the authorized officers of the parties hereto.
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21.7 This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall have the force and effect of
any original.
ATTEST: SPECIALTY WINDOW COVERINGS CORP.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxx
----------------------------- --------------------------
Secretary President
WITNESS:
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxx
----------------------------- ------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx Xxxxx
----------------------------- ------------------------------
Xxxxxx Xxxxx
ATTEST: DECORATOR INDUSTRIES, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------- ------------------------------
Treasurer President
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