November 4, 1997
Wickes Inc.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Re: Agreement for Acquisition of Operations
Ladies and Gentlemen:
This letter will set forth our mutual agreements with
respect to:
i. the transfer by Wickes Inc. ("Wickes") to
Riverside Group, Inc. ("Riverside") of the
Wickes Plus/xxxxxx.xxx Operations (as
hereinafter defined);
ii. the transfer by Wickes to Riverside of the
opportunity to invest in the MDF Plant (as
hereinafter defined); and
iii. the granting of a right of first refusal by
Wickes and certain purchase rights to
Riverside with respect to Wickes' interest in
Riverside International LLC ("RIC LLC").
1. Wickes Plus/xxxxxx.xxx Operations. (a) The Transfer.
On and subject to the terms and conditions of this Agreement,
Riverside agrees to acquire from Wickes, and Wickes agrees to
sell, transfer, convey, and deliver to Riverside, the Wickes
Plus/xxxxxx.xxx Operations for the consideration specified below.
The transfer shall be effective five days after notice from
Riverside of its determination to proceed, and shall occur, if at
all, no later than December 31, 1997. This acquisition, sale and
transfer will be accomplished through:
i. the assignment by Wickes to Riverside of all
of its right, title and interest in and to,
and the assumption by Riverside of all
Wickes' obligations under, the agreements
listed on Schedule 1 hereto (the "Wickes
Plus/xxxxxx.xxx Agreements");
ii. the transfer to Riverside by Wickes of the
assets listed on Schedule 2 the ("Wickes
Plus/xxxxxx.xxx Assets") hereto; and
iii. the transfer, to the extent possible, of
Wickes' parent-company and building center
positions in the multi-level marketing
programs established or being established by
Wickes with respect to the marketing of
natural gas, electricity, telephony and
internet services (the "MLM Programs") and
the continuation at least through March 31,
1998 (but not later than June 30, 1998) of
Wickes' involvement in the MLM Programs as
set forth on Schedule 3 hereto.
(b) Consideration. In addition to the assumption of
obligations set forth above, in consideration of the acquisition,
sale and transfer of the Wickes Plus/xxxxxx.xxx Operations,
Riverside agrees to pay to Wickes:
i. 10% of the gross payments received within one year
after the date of the transfer by the Wickes
Plus/xxxxxx.xxx Operations from end-user customers in
place September 28, 1997, payable on a monthly basis.
ii. An amount in cash, payable at the time of the transfer,
equal to the sum of (A) the book value of the Wickes
Plus/xxxxxx.xxx Assets shown on Wickes' financial
statements and (B) the operating expenses of the Wickes
Plus/xxxxxx.xxx Operations from October 1, 1997 through
the date of the transfer, reduced by the revenues
generated and future expense reductions (e.g., by
"Excel bonus" offsets under Wickes' Excel sponsorship
arrangements with certain of its employees) such
operations during such period.
iii. Installments (applied first to accrued and unpaid
interest described below at the date of payment)
payable in cash within 45 days after the end of each
calendar quarter equal to 10 percent of the net income
generated by the Wickes Plus/xxxxxx.xxx Operations
during such quarter; provided that aggregate amount of
such installments shall be limited to the cumulative
operating expenses of the Wickes Plus/xxxxxx.xxx
Operations prior to September 28, 1997, reduced by (I)
the revenues generated by such operations during such
period and (II) severance and related costs with
respect to persons hired or offered to be hired by
Riverside that would have been incurred by Wickes had
the Wickes Plus/xxxxxx.xxx Operations been terminated
on September 28, 1997 increased by interest on the
aggregate unpaid amount from September 28, 1997 at the
rate which Bankers Trust Company announces from time to
time as its prime lending rate, as in effect from time
to time. Should the payment with respect to any
quarter be insufficient to pay accrued and unpaid
interest at the end of such quarter, any unpaid
interest shall be added to the unpaid amount and bear
interest effective at the end of such quarter.
(c) Use of Name and Trademark. On the date of the
transfer, Riverside will, and Wickes will cause Lumber Trademark
Company to, enter into a Trademark License Agreement
substantially in the form of Exhibit A hereto.
(d) Employees. In connection with the transfer, Wickes
will permit Riverside to hire such of its employees whose
responsibilities are primarily related to the Wickes
Plus/xxxxxx.xxx Operations.
(e) Non-competition. Except as contemplated hereby, Wickes
will not, for a period of three years from the transfer, directly
or indirectly engage anywhere in the United States in the
marketing, sale or supply of natural gas, electricity, telephony,
internet access services, or third-party internet or third-party
World Wide Web content services.
(f) Conditions. Riverside's obligation to effect the
acquisition of the Wickes Plus/xxxxxx.xxx Operations is subject
to (i) the approval of Riverside's Board of Directors and (ii)
the obtaining by Riverside of financing for the continued
operation of the Wickes Plus/xxxxxx.xxx Operations satisfactory
to Riverside in its sole discretion, which Riverside agrees to
use reasonable efforts to obtain. Wickes' obligation to effect
the acquisition of the Wickes Plus/xxxxxx.xxx Operations is
subject to the required approval or non-disapproval of Wickes'
bank lenders.
(g) Termination. If the transfer has not been effected by
January 1, 1998, either Wickes or Riverside may unilaterally
terminate the provisions of this paragraph 1.
(h) Definition of "Wickes Plus/xxxxxx.xxx Operations." As
used herein, "Wickes Plus/xxxxxx.xxx Operations" means all of
Wickes' activities in furtherance of the Wickes Plus/xxxxxx.xxx
Agreements and activities directly related to the marketing, sale
or supply of natural gas, electricity, telephony, internet
services, or third-party internet or third-party World Wide Web
content services and advertising (including the operations
currently conducted or proposed to be conducted under the
xxxxxx.xxx, xxxxxx.xxx, and Wickes Energy names).
(i) Operations Pending Transfer. The parties acknowledge
that from and after the date hereof, Wickes will not hire
additional staff or acquire additional assets to support the
Wickes Plus/xxxxxx.xxx Operations and will take all reasonably
practicable steps to defer the acquisition of previously ordered
assets until the transfer has been effected.
2. MDF. Wickes agrees to transfer to Riverside Wickes's
opportunity, if any, to invest directly or indirectly in the
manufacturing plant (the "MDF Plant") currently proposed to built
by Xxx-Xxxx Fiber, Ltd. and its promoters ("Xxx-Xxxx");
provided, that Wickes shall have determined not to make such
investment itself and such determination shall have been reviewed
and approved by the Related Party Committee of Wickes' Board of
Directors. If there is no comparable investment offered by Xxx-
Xxxx to other investors, as determined by Wickes in its sole
discretion, at the time Riverside makes such an investment
Riverside shall pay Wickes such amount in cash as shall be
determined by Wickes to be fair at the time. In order to
effectuate the terms of this paragraph 2, Riverside agrees to
give Wickes at least 15 days prior notice before making any
direct or indirect investment in the MDF Plant.
3. RIC LLC. (a) Right of First Refusal. In consideration
of the payment of $10.00 by Riverside, Wickes hereby agrees:
i. not to dispose directly or indirectly of any
of its interest in RIC LLC other than to a
subsidiary of Wickes, within the meaning of
the indenture related to Wickes' 11-5/8%
Subordinated Notes (a "Wickes Subsidiary")),
or to permit any Wickes Subsidiary to effect
such a disposition, unless it shall have
given Riverside 30 days' advance notice of
the terms of such sale and Riverside shall
not have offered within such 30-day period to
acquire such interest on the terms described
in the notice; if Riverside shall have made
such an offer, Wickes or such Wickes
Subsidiary shall promptly accept such offer
and such purchase shall be promptly effected;
if Riverside shall not have made such an
offer, Wickes or such Wickes Subsidiary may
sell such interest on terms no less favorable
to Wickes; provided, that no such sale may be
completed after 180 days after Wickes' notice
to Riverside without repeating the procedures
set forth in this paragraph; and
ii. in connection with any Business Combination
(as hereinafter defined) effected within one
year after the date hereof, Wickes will use
reasonable efforts to determine the value
placed in such Business Combination on
Wickes' interest in RIC LLC in determining
the consideration to be paid in such Business
Combination and to cause at least Riverside's
pro rata interest (through Wickes) in RIC LLC
to be offered to Riverside for purchase prior
to or in connection with such Business
Combination at such value (or pro rata
portion thereof).
(b) Definition of "Business Combination." As used herein,
"Business Combination" means a transaction involving a merger,
consolidation or similar transaction involving Wickes in which
shareholders of Wickes prior to the merger hold less than a
majority of the voting interest in the surviving or acquiring
corporation, any sale by Wickes of substantially all of its
assets or the issuance by Wickes in a transaction or series of
related transactions of voting securities representing a majority
of the voting interest in Wickes.
Please indicate your agreement with the foregoing by signing
a copy of this letter agreement in the space provided below.
Very truly yours,
RIVERSIDE GROUP, INC.
By /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Vice Chairman
Agreed:
WICKES INC.
By /s/ Xxxxx X. Xxxxxxxx
---------------------
President & Chief Operating Officer
List of Schedules:
Schedule 1 - Wickes Plus/xxxxxx.xxx Agreements
Schedule 2 - Wickes Plus/xxxxxx.xxx Assets
Schedule 3 - MLM Programs
Schedule 1
Wickes Plus/xxxxxx.xxx Agreements
1. Agreement dated April 8, 1997 among Wickes, Riverside and
KeySpan Energy Services, Inc.
2. Agreement dated August 28, 1997 between Wickes Energy and
Power Alternatives, Inc.
3. Consulting agreements with Xxxx Xxxxx, Xxxxxx Xxxxx and
others related to energy marketing and supply.
4. All agreements and arrangements with Excel Communications,
Inc. related to marketing of telephony services.
5. All other agreements primarily involving the Wickes
Plus/xxxxxx.xxx Operations.
Schedule 2
Wickes Plus/xxxxxx.xxx Assets
1. All assets utilized primarily in the Wickes Plus/xxxxxx.xxx
Operations.
Schedule 3
MLM Programs
1. To the extent not unreasonably disruptive to Wickes'
operations, Riverside will be permitted conduct
enrollment and other meetings at Wickes' Headquarters
and building centers.
2. The building centers (including new roll-outs) will
continue their bonus pool programs other than
sponsorship on their current terms, with funds supplied
or arranged by Riverside.
3. Employees will be permitted to continue involvement
pursuant to procedures designed to ensure minimal
disruption of Wickes' normal operations..
