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