<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-21226
SEAMAN FURNITURE COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2751205
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
300 CROSSWAYS PARK DRIVE 11797
WOODBURY, NEW YORK (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 496-9560
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ----------------------
<S> <C>
Common Stock, $.01 Par Value Nasdaq National Market
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the securities exchange act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [X] No [_]
As of July 15, 1997, the aggregate market value of voting stock held by non-
affiliates of the registrant was $20,578,012 based on the last reported sale
price of the registrant's Common Stock on the Nasdaq National Market System.
4,536,839 SHARES OF COMMON STOCK WERE OUTSTANDING ON JULY 15, 1997.
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<PAGE>
PART IV.
- --------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 10-K
------------------------
(a) Financial Statements
--------------------
See Index to Financial Statements and Schedules which appears on page
F-1 hereof.
(b) Reports on Form 8-K
-------------------
The Company filed a report on Form 8-K on July 10, 1997 regarding the
proposal by the Company's senior management and majority stockholders to take
the company private for $24 a share pursuant to Item 5 of Form 8-K.
The Company filed a report on Form 8-K on August 15, 1997 regarding the
sale of the customer accounts receivables pursuant to Item 2 of Form 8-K and the
execution of the Merger Agreement pursuant to Item 5 of Form 8-K.
(c) Exhibits
--------
The exhibits listed on the Exhibit index following the signature page
hereof are filed herewith in response to this Item.
2
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 159d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SEAMAN FURNITURE COMPANY, INC.
By: /s/ Alan Rosenberg
------------------------------------
Alan Rosenberg, President and
Chief Executive Officer
Date: November 21, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Alan Rosenberg
- --------------------------------------------------
Alan Rosenberg, President, Chief Executive Officer Date: November 21, 1997
and Director
/s/ Peter McGeough
- --------------------------------------------------
Peter McGeough, Executive Vice President Date: November 21, 1997
and Director
/s/ Steven H. Halper
- --------------------------------------------------
Steven H. Halper, Executive Vice President Date: November 21, 1997
Chief Operating Officer and Secretary
/s/ Coleen A. Colreavy
- --------------------------------------------------
Coleen A. Colreavy, Vice President, Date: November 21, 1997
Corporate Controller
and Chief Accounting Officer
3
<PAGE>
SIGNATURES
----------
/s/ Barry J. Alperin
- ------------------------------
Barry J. Alperin, Director November 21, 1997
/s/ Kim Z. Golden
- ------------------------------
Kim Z. Golden, Director November 21, 1997
/s/ Leo Peraldo
- ------------------------------
Leo Peraldo, Director November 21, 1997
/s/ James B. Rubin
- ------------------------------
James B. Rubin, Director November 21, 1997
/s/ Robert C. Ruocco
- ------------------------------
Robert C. Ruocco, Director November 21, 1997
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----------- -----------
<C> <S>
*2.1 First Amended Joint Plan of Reorganization dated July 21, 1992.
2.2 Agreement and Plan of Merger dated as of August 13, 1997 by and
between the Company and SFC Merger Company (incorporated by
reference to Exhibit 2.1 to the Current Report on Form 8-K filed
by the Company on August 13, 1997).
*3.1 Amended and Restated Certificate of Incorporation effective as of
February 12, 1993.
*3.2 Amended and Restated By-Laws effective as of February 12, 1993.
4.1(a) Article IV and VI of the Amended and Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.1 filed as
part of the Registration Statement on Form 10 filed by the Company
on February 13, 1993) and Articles II and VI of the Amended and
Restated By-Laws (incorporated by reference to Exhibit 3.2 filed
as part of the Registration Statement on Form 10 filed by the
Company on February 13, 1993).
4.3 Amended and Restated 1992 Stock Option Plan (incorporated by
reference to Exhibit 4.3 filed as part of the Registration
Statement on Form S-8 filed by the Company on February 4, 1994).
**10.1 (a) Delivery Service Agreement dated as of September 12, 1994
between the Company and Merchants Home Delivery Service, Inc.
(b) Delivery Service Agreement dated as of May 12, 1993 between
the Company and Joseph Eletto Transfer, Inc.
**10.2 Lease Agreement dated June 14, 1991 between the Company and Mack
Woodbridge Industrial.
***10.3 (a) Employment Agreement dated as of May 1, 1995 between the
Company and Alan Rosenberg.
(b) Employment Agreement dated as of May 1, 1995 between the
Company and Steven H. Halper.
(c) Employment Agreement dated as of May 1, 1995 between the
Company and Peter McGeough.
*10.4 1992 Stock Option Plan.
10.5 Form of Nonqualified Stock Option Agreement.
10.6 **(a) Agreement dated as of August 16, 1994 between the Company
and Local 875 affiliated with the International Brotherhood
of Teamster, Warehousemen and Helpers of America.
**(b) Agreement dated as of January 1995 between the Company and
Local 875 affiliated with the International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America
(unsigned).
(c) Agreement dated as of January 3, 1997 between the Company
and Local 875 affiliated with the International Brotherhood
of Teamsters, Warehousemen and Helpers of America.
(d) Agreement dated as of March 1, 1997 between the Company and
Local 875 affiliated with the International Brotherhood of
Teamsters, Warehousemen and Helpers of America (unsigned).
*10.7 Form of Indemnification Agreement.
10.8 Pooling and Servicing Agreement dated as of March 15, 1995, among
Seaman Receivables Corporation, as transferor, Seaman Furniture
Company, Inc. as servicer, and The Bank of New York, as trustee.
(Incorporated by reference to Exhibit 10.1 filed as part of the
Current Report on Form 8-K filed by the Company on April 22, 1995.)
10.9 Revolving credit and Security Agreement dated as of April 29, 1995
with the Bank of New York Credit Corp. and NatWest Bank N.A. as
Co-Lenders. (Incorporated by reference to Exhibit 7 filed as part
of the current report on form 8-11 filed by the Company 5/14/96.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--------- -----------
<C> <S>
10.10 Form of Severance Agreement dated as of February 24, 1997 entered
into between the Company and Lawrence A. Winslow, Donald S.
Liebowitz, Robert N. Webber, Coleen A. Colreavy, Thomas A. Martinez,
William J. Kelly, Mario Tomiatti and Maria Infante.
****10.11 Purchase and Sale Agreement dated as of August 1, 1997 by and
between the Company and Household Bank (Nevada), N.A., a national
banking association.
21 Subsidiaries
</TABLE>
- --------
* Incorporated by reference to the exhibit with the corresponding exhibit
number filed as part of the Registration Statement on Form 10 filed by
the Company on February 13, 1993.
** Incorporated by reference to the exhibit with the corresponding exhibit
number filed as part of the 10-K filed by the Company on July 28, 1995.
*** Incorporated by reference to the exhibit with the corresponding exhibit
number filed as part of the 10-K filed by the Company on July 30, 1996.
**** Filed herewith. Confidential treatment requested pursuant to Rule 24b-2.
<PAGE>
EXHIBIT 10.11
PURCHASE AND SALE AGREEMENT
---------------------------
This Purchase and Sale Agreement is made and entered into this first day of
August, 1997 by and between Household Bank (Nevada), N.A. a national banking
association ("Buyer") and Seaman Furniture Company, Inc., a Delaware corporation
("Seller").
W I T N E S S E T H
-------------------
WHEREAS, Seller is engaged in, among other businesses, the business of
selling furniture, bedding, accessories and related products and services and in
connection therewith provides financing to customers purchasing its products and
services by making and servicing credit card accounts;
WHEREAS, Buyer is a national banking association engaged in the business of
making, acquiring and servicing credit card accounts of the type contained in
Seller's portfolio;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of the credit card accounts contained in Seller's
portfolio pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the mutual agreements set
forth herein, the benefits to be derived here from, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
---------
DEFINITIONS AND TERMS
Section 1.1 Definitions.
-----------
Whenever used in this Agreement, the following words when capitalized and
unless otherwise expressly provided or unless the context otherwise requires,
shall have the following meanings (capitalized terms not defined herein shall
have the meanings assigned to them in the Merchant Agreement entered into by the
parties on this date):
<PAGE>
Account: ***
-------
Account Assets: means all of the following: (i) the Accounts; (ii) all
--------------
outstanding Credit Cards issued to Accountholders; (iii) the Processing Rights
with respect to such Accounts; (iv) the Customer Structure; and (v) Seller's
Further Assistance.
Account Documents: means, to the extent they exist in Seller's account
-----------------
files, all of Seller's agreements with Accountholders, and all of the following,
for any Account which Seller transfers to Buyer pursuant to this Agreement: all
applications, Sales Slips, correspondence, file maintenance information, payment
histories, records reflecting actions taken to cure any delinquency, and
notices, including such data stored on microfilm, microfiche, magnetic tape, or
computer disc, or stored in any other form.
Account Marks: means the name, trademarks, and service marks used by Seller
-------------
in connection with the Accounts.
Account Receivables: means the net balance shown on Seller's records as
-------------------
owing by an Accountholder on any Account, including without limitation, amounts
payable for purchases of goods or services, finance charges, administrative
fees, late payment fees, unpaid credit insurance premiums, and all other fees
but shall not include any accrued finance charges on credit promotions.
Accountholder: means an applicant and/or co-applicant in whose name an
-------------
Account was established.
Accountholder Agreement: means an agreement between an Accountholder and
-----------------------
Seller which contains the terms and conditions of an Account.
Affiliate: means any entity that controls, is controlled by, or is under
---------
common control with Buyer or Seller, as the case may be.
Agreement: means this Purchase and Sale Agreement, including all addenda,
---------
exhibits, and schedules hereto.
Assignment and Assumption Agreement: means an agreement to be executed by
-----------------------------------
the Parties and delivered at Closing substantially in the form of Exhibit A,
attached hereto, which agreement shall convey to Buyer all of the right, title,
and interest of Seller in and to the Account Assets and Account Receivables, and
under which Buyer shall assume all obligations of Seller under the terms of the
Accountholder Agreements.
- ----------
*** Confidential treatment requested pursuant to Rule 24b-2.
2
<PAGE>
Closing: means the transfer of the Account Assets and/or Account
-------
Receivables from Seller to Buyer in exchange for payment of the Purchase Price.
Closing Date: means the date on which the Closing takes place which date
------------
shall be August 5, 1997 or such other date as is mutually agreed upon by Buyer
and Seller.
Closing Tape: means a standard master file tape as of the Cut-Off Time,
------------
which tape shall include at least the following for each Account identified on
such Closing Tape: Account number; Accountholder's name and address; origination
date; interest rate; maximum credit limit; current balance.
Contractual Delinquency Terms: means the method of determining delinquency
-----------------------------
using the payment due dates under the Accountholder agreement. An account is
contractually delinquent if a payment equal to 90% or more of the scheduled
payment is not received by its due date.
Conversion Date: means the date processing of the Accounts is transferred
---------------
from Servicer to Buyer.
Credit Balance: means the balance on an Account that reflects a net credit
--------------
in favor of the Accountholder.
Customer Structure: means all rights and privileges accruing under the
------------------
Accountholder Agreements on and after the Cut-Off Time and all Account
Receivables posted to the Accounts after such Cut-Off Time.
Cut-Off Time: shall be 12:01 a.m., C.D.T. on August 5, 1997.
------------
Effective Time: means close of business on the Closing Date.
--------------
Excluded Account: means any Seaman account that is not an Account.
----------------
Final Closing Statement: means the final closing statement described in
-----------------------
Section 3.4, satisfactory in form and substance to Buyer and Seller, which
closing statement reflects all adjustments from the Preliminary Closing
Statement, the Closing Tape, or other changes in the Purchase Price through the
date of the Final Closing Statement.
Further Assistance: means the assistance to be provided by each Party
------------------
pursuant to Article VI.
Preliminary Closing Statement: means a draft closing statement that is
-----------------------------
prepared by Seller and presented to Buyer pursuant to Section 2.2 of this
Agreement. A form of the Preliminary Closing Statement, showing the manner in
which the Purchase Price is to be calculated for such statement, is attached as
Exhibit B.
3
<PAGE>
Processing Rights: means any and all rights to process the Accounts
-----------------
transferred from Seller to Buyer.
Purchase Price: means the aggregate amount to be paid by Buyer to Seller
--------------
based upon the pricing calculation set forth in Section 2.2 of this Agreement.
Seller's Credit Card Business: means Seller's business with respect to the
-----------------------------
Account Assets that relate to such Accounts and the related Account Receivables
including all servicing of the Account Receivables by Servicer.
Servicer: ***
--------
ARTICLE II
----------
PURCHASE OF ACCOUNT ASSETS
Section 2.1 Purchase. On the Closing Date, effective as of the Cut-Off
--------
Time, and subject to the terms and conditions of this Agreement, Seller hereby
agrees to sell, assign, transfer and convey to Buyer all of Seller's right,
title and interest in Seller's Account Assets and Account Receivables as of the
Cut-Off Time. The Accounts shall be identified on the Closing Tape. Subject to
the terms herein, commencing on the Cut-Off Time and continuing thereafter,
Buyer shall assume the obligations of Seller, and Seller shall assign its rights
with respect to the Account Assets. Except as expressly set forth in this
Agreement, Buyer shall not be deemed to have assumed any other liability or
obligation of Seller. Buyer shall pay to Seller on the Closing Date the Purchase
Price. All payments hereunder shall be in good and immediately available funds.
Section 2.2 Purchase Price. (a) The Purchase Price of the Account Assets
--------------
shall be *** of the outstanding Account Receivables, net of Credit Balances,
and excluding finance charges on credit promotions which are accrued but not yet
payable as of the Cut-Off Time.
(b) The Purchase Price shall initially be as reflected on the
Preliminary Closing Statement and shall be subject to post-closing adjustments
in accordance with Section 3.4 of the Agreement.
(c) ***
Section 2.3 Transfer of Processing. On the Conversion Date, Seller shall
----------------------
transfer to Buyer the processing with respect to the Accounts, including but not
limited to Seller's right to receive all payments on the Accounts after the Cut-
Off Time and all processing rights. To the extent necessary,
- ----------
*** Confidential treatment requested pursuant to Rule 24b-2.
4
<PAGE>
Seller shall provide Servicer with all documents and other materials reasonably
required by Servicer in order to effect the conversion on such date as the
parties mutually agree.
ARTICLE III
-----------
THE CLOSING AND POST-CLOSING ADJUSTMENTS
Section 3.1 Place and Time of Closing. The Closing shall take place on
-------------------------
the Closing Date at such place and time as may be mutually agreed to by Buyer
and Seller.
Section 3.2 Buyer's Delivery at Closing. On the Closing Date, Buyer shall
---------------------------
deliver to Seller: (i) the Assignment and Assumption Agreement and (ii) the
Purchase Price via wire transfer.
Section 3.3 Seller's Deliveries at Closing. On The Closing Date, Seller
------------------------------
shall deliver to Buyer: (i) the Assignment and Assumption Agreement; (ii) a
statement by facsimile of the Purchase Price as shown on the Closing Tape; and
(iii) all such additional instruments, documents, or certificates as may be
necessary for the consummation at such Closing of the transactions contemplated
by this Agreement. On the Closing Date, Seller shall also forward to Buyer, via
Servicer, the Closing Tape with respect to the Account Receivables being
transferred on the Closing Date, together with a format of such tape, and a
description of the fields on such tape.
Section 3.4 Final Closing. Within one hundred eighty (180) days after the
-------------
Closing Date, or such other time as is mutually agreed by the parties, Buyer
shall prepare and deliver to Seller a Final Closing Statement showing any
changes to the Closing Tape or the Purchase Price as set forth in this Section
3.4.
(a) If within one hundred eighty days after the Closing Date, it is
determined that the Purchase Price paid by Buyer on the Closing Date
differs from the Purchase Price as shown on the Closing Tape, the
benefited party shall reimburse the other for the difference upon
demand.
(b) Within one hundred eighty days after the Closing Date the Purchase
Price shall be subject to post-closing adjustments ("Adjustments"),
which adjustments shall include but not be limited to any adjustments
relating to the inclusion or exclusion of any Excluded Account that was
included or excluded, as the case may be, as an Account, adjustments
for goods that were delivered but not yet billed as of the Cut-Off
Time, and any bookkeeping, mathematical or other errors in computation,
including mistakes of Seller in stating the outstanding balance of each
Account set forth on the Closing Tape; the Adjustments shall be made
and paid on an ongoing basis as soon as determinable, and reflected in
the Final Closing Statement.
5
<PAGE>
(c) ***
(d) If after any Post Closing Adjustments the Final Closing Statement
establishes an increase in the Purchase Price for the Account Assets,
Buyer shall deliver the amount of such increase to Seller within ten
(10) Business Days. If after any Post Closing Adjustments including any
adjustments pursuant to Section 3.4(c) above, the Final Closing
Statement establishes a decrease in the Purchase Price, Seller shall
deliver the amount of such decrease to Buyer within ten (10) Business
Days. Within ten (10) Business Days of the Final Closing Statement,
Buyer shall return to Seller all Account Documents which relate to any
Excluded Account, and shall deliver any assignment, acknowledgment or
other document necessary to evidence Seller's continuing right, title
and interest in such Excluded Account.
Section 3.5 Power of Attorney. Effective upon the Closing Date, Seller
-----------------
hereby irrevocably names, constitutes, and appoints Buyer or any of Buyer's
officers, agents, employees, or representatives as Seller's duly authorized
attorney and agent with full power and authority to endorse in its name, any
checks, drafts, or other instruments of payment relating to the Accounts and/or
Account Receivables being transferred by Seller, including, but not limited to,
through the use of a rubber stamp with the signature of Seller thereon, to
receive and collect any and all monies due under such Accounts, and to enforce
performance of all Account Assets and Account Receivables purchased by Buyer
from Seller pursuant to this Agreement. The power of attorney granted by this
provision is coupled with an interest and is irrevocable.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
Section 4.1 General Representations and Warranties of Seller.
------------------------------------------------
With respect to each of the Accounts that relates to any Account
Receivables, and with respect to the Account Receivables for the period of time
within which Seller owned such Account Receivables, Seller represents and
warrants to Buyer that:
(a) Seller materially complied, to the extent required to do so, with all
applicable federal, state and local laws and regulations in connection
with the administration and collection of the Account Receivables, the
form and content of the applications and the Accountholder Agreement
and the conduct of its business;
- ----------
*** Confidential treatment requested pursuant to Rule 24b-2.
6
<PAGE>
(b) Seller sells the Accounts and related Account Receivables to Buyer free
and clear of any and all liens, claims, encumbrances or security
interest of any kind whatsoever placed on or caused to be placed on
such Accounts and related Account Receivables.
(c) Seller has full power and authority to enter into this Agreement and to
sell, assign, transfer and convey the Accounts and related Account
Receivables to Buyer, and all necessary proceedings on the part of
Seller have been duly taken to authorize this Agreement and the sale
and transfer of Seller's title to the Accounts and related Account
Receivables; and
(d) There are no actions, suits, claims proceedings or governmental
investigations or inquiries pending or to the actual knowledge of
Seller, threatened against Seller seeking to prevent or that if
successful would prevent the consummation of the transactions
contemplated by this Agreement or that would materially and adversely
affect the Account Assets.
Section 4.2 Representations and Warranties of Seller Regarding the
------------------------------------------------------
Accounts and Account Assets.
- ---------------------------
With respect to each Account and Account Asset purchased by Buyer, Seller
represents and warrants to Buyer that:
(a) All records and the Closing Tape relating to the Account Receivables to
be given to Buyer at the Closing and thereafter shall be Seller's
actual business records or true and accurate copies thereof.
(b) No cash payment on any Account was made by Seller or employees or
agents thereof where such person was not an obligor on the Account.
(c) No claims or defenses exist with respect to the Account Receivables,
including but not limited to set-offs, counterclaims, right of
cancellation, lack of consideration, fraud, forgery and alteration
(other than customer disputes concerning service or product
satisfaction, which shall be governed by the chargeback provisions of
the Merchant Agreement).
(d) The amounts shown on the Closing Tape to be owing and unpaid on the
respective Account represent the true and correct outstanding balances
thereon at the Cut-Off Time, subject to adjustment for payments and
other debits and credits being processed by Seller in the normal
course.
7
<PAGE>
(e) The information concerning the Accounts and related Account Receivables
and the security therefor, if any, and the person(s) shown as indebted
thereon which has been furnished by the Seller to the Buyer is correct
in all material respects.
(f) All taxes of any nature or description whatever owed or to be owed by
Seller which have or could become a lien on or defense to the Accounts
and related Account Receivables have been paid in full or will be paid
in full when due.
(g) There are no judgments against the Seller or any pending litigation,
suit or claim which could become a lien against the Accounts and
related Accounts Receivables.
(h) Seller has heretofore delivered to Buyer a true and complete copy of
each form of the Accountholder Agreements in effect as of the Cut-Off
Time.
(i) With respect to each such Account, at least one Accountholder is living
as of the Cut-Off Time;
(j) To the best of Seller's actual knowledge, each such Account and the
related Account Receivables is the legal, valid, and binding obligation
of the Accountholder and any guarantor named therein, and as of the
Closing Date Seller shall not have taken any legal collection action
with respect to the Accounts or the Account Receivables, and all
payments shown on the Closing Tape relating to the Account Receivables
as having been made to Seller were credited as of the date of receipt
by Seller;
(k) To the best of Seller's knowledge no such Account is a "commercial
loan" as that term is used in the federal Bank Holding Company Act of
1956, as amended;
(l) Seller has all permits, licenses, certificates of authority, orders,
and approvals of, and has, or will prior to the Closing Date have, made
all filings, applications and registrations with, federal, state and
local governmental or regulatory bodies that are required in order to
permit Seller to carry on Seller's credit card business as it is
presently conducted and all such permits, licenses, certificates of
authority, orders, and approvals are in full force and effect;
(m) Since February 3, 1997, when Seller delivered to Buyer the due
diligence computer tape (the "Due Diligence Computer Tape"), (i) there
has been no material adverse change in the results or operations of
Seller's Credit Card Business; (ii) Seller has carried on Seller's
Credit Card Business in the ordinary course of business, diligently and
in a manner consistent with its past practices and has not materially
changed its practices, policies and procedures with respect to the
operation of Seller's Credit Card Business; (iii) except in the
ordinary course of business, Seller has not disposed of or discontinued
any portion of Seller's Credit Card Business or any Accounts; and
8
<PAGE>
(iv) except for those transactions which have occurred on the Accounts
in the ordinary course of business since the time that the Due
Diligence Computer Tape and accompanying reports were delivered to
Buyer, the Accounts purchased as of the Cut-Off Time will be
reasonably similar to those which appeared on the Due Diligence
Computer Tape and the accompanying reports.
(n) The delinquency categories as they appear on the Due Diligence Computer
Tape and accompanying report are expressed in Contractual Delinquency
Terms, i.e. six months contractually delinquent, and are not expressed
in recency, or any combination of recency and contractual, or any other
delinquency method terms.
Seller agrees that if any warranty herein is breached other than a breach
of subparagraphs (d), (e), (i) or (j), and such breach is not cured promptly
after Buyer's notice to Seller, and the result of such breach is to prohibit
Buyer from collecting the Account Receivables, then Seller will repurchase such
Account and related Account Receivables on demand for the same percentage of the
then outstanding balance as was paid by Buyer. If any warranty set forth at
subparagraphs (d), (e), (i) or (j) is breached, Seller shall, promptly upon
notice, pay Buyer the amount required to make Buyer whole under the terms of
this Agreement in the form of an adjustment to the Purchase Price for the
affected Account Receivable(s). Buyer shall give Seller written notice of any
claim asserted by Buyer under this Agreement as soon as Buyer has knowledge of
any breach by Seller of any representation or warranty hereunder. Seller shall
not be responsible to Buyer for any breach of warranties in subparagraphs (d),
(e), (i) or (j) if Buyer's notice to Seller of such breach is sent to Seller
more than twenty-four (24) months after the Closing Date.
Section 4.3 Mutual Representations and Warranties of the Parties.
----------------------------------------------------
(a) Each party to this Agreement represents and warrants to the other party
that it: (i) is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its organization;
(ii) is duly qualified as a corporation and in good standing under the
laws of each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualifications; (iii) has the
requisite corporate power and authority and the legal rights to own,
pledge, mortgage, and operate its properties, to lease the properties
it operates under lease, and to conduct its business as now conducted
and hereafter contemplated to be conducted; (iv) has all necessary
licenses, permits, consents, or approvals from or by, has made all
necessary notices to, all authorities having jurisdiction, to the
extent required for such current ownership and operation or as proposed
to be conducted; and (v) is in compliance with its certificate of
incorporation and by-laws.
(b) Each party to this Agreement represents and warrants to the other party
that the execution, delivery and performance of this Agreement and all
instruments and
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documents to be delivered hereunder; (i) are within the party's
corporate power; (ii) have been duly authorized by all necessary or
proper corporate action; (iii) do not and will not contravene any
provisions of the party's certificate of incorporation or by-laws; (iv)
will not violate any law or regulation or any order or decree of any
court or governmental instrumentality; (v) will not conflict with or
result in the breach of, or constitute a default under any indenture,
mortgage, deed of trust, lease, agreement, or other instrument to which
it is a party by which any of its property is bound; and (vi) do not
require any filing or registration with or the consent or approval of
any governmental body, agency, authority, or any other person which has
not been made or obtained previously. This Agreement has been duly
executed and delivered, and constitutes a legal, valid and binding
obligation of each party, enforceable in accordance with its terms,
subject to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and
to the availability of equitable remedies.
ARTICLE V
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INDEMNIFICATION
Section 5.1 Indemnification.
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(a) Seller shall, to the fullest extent permitted by law, indemnify and
hold harmless Buyer and its directors, officers, employees, agents, and
representatives from and against any and all losses arising from any
third party claim including any claim brought by any Cardholder or any
governmental or regulatory authority, or arising out of, or resulting
from Seller's ownership of or actions with respect to the Account
Assets, unless such third party claim arises solely from Buyer's own
willful misconduct or negligence. The obligations of Seller under this
subsection shall survive the transfer and delivery of the Account
Assets to Buyer and the termination of this Agreement.
(b) Buyer shall, to the fullest extent permitted by law, indemnify and hold
harmless Seller and its directors, officers, employees, agents, and
representatives from and against any and all losses arising from any
third party claim including any claim brought by any Cardholder or any
governmental or regulatory authority, or arising out of or resulting
from, Buyer's ownership of or actions with respect to the Account
Assets, unless such third party claim arises solely from Seller's own
willful misconduct or negligence. The obligations of Buyer under this
subsection shall survive the transfer and delivery of the Account
Assets to Buyer and the termination of this Agreement.
Section 5.2 Procedure for Indemnification.
-----------------------------
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Within ten (10) days after receipt by a Party of a third party claim, the
indemnified Party shall, if any claim in respect thereof is to be made against
the indemnifying Party under this Agreement, deliver a claim notice to the
indemnifying Party; provided, however, that the omission so to notify the
-------- -------
indemnifying Party shall not relieve the indemnifying Party from any liability
which the indemnifying Party may have to the indemnified Party otherwise than
under this subsection. In the event that any third party claim is made against
the indemnified Party and the indemnified Party notifies the indemnifying Party
of the commencement thereof, the indemnifying Party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to the indemnified Party (who shall not,
except with the consent of the Party, be counsel to the indemnifying Party).
The indemnified Party shall have the right to employ separate counsel in any
action or claim and to participate in the defense thereof at the expense of the
indemnifying Party if the retention of such counsel has been specifically
authorized by the indemnifying Party, if such counsel is retained because the
indemnifying Party does not notify the indemnified Party within twenty (20) days
after receipt of a claim notice that it elects to undertake the defense thereof,
or if there is a reasonable basis on which the indemnified Party's interests may
differ from those of the indemnifying Party.
ARTICLE VI
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ADDITIONAL AGREEMENTS AND COVENANTS
Section 6.1. Additional Terms. In addition to the other terms and
----------------
conditions of this Agreement, Buyer and Seller covenant and agree as follows:
(a) At or before the Closing Date, Seller shall have executed and delivered
to Buyer such UCC financing statements, as are prepared by Seller for
filing, to assign to Buyer Seller's interest and to give notice of
Buyer's interest in the Account Assets and/or Account Receivables
transferred by Seller. Such financing statements will be filed by
Seller, at the appropriate place or places for the financing statements
to be filed for such purpose.
(b) It is hereby agreed that the Buyer does not assume or incur and shall
not in any manner become liable for any debt, obligation, or liability
of the Seller, except as provided herein or as a result of the
transactions contemplated by this Agreement.
(c) All books and records relating to the Accounts and the related Account
Receivables shall be maintained and held by Seller for a period of
seven (7) years and shall be delivered by Seller to Buyer upon Buyer's
request within fifteen (15) Business Days after the date of such
request in accordance with the Buyer's instructions. Such books and
records shall include, on an Account by Account basis (from Seller's
microfilm records and/or master file): (i) the application and credit
agreement, (ii) the Sales Slip or invoice; (iii) the Account history;
(iv) any collection history and (v) any other records maintained by
Seller in its ordinary course of business. In the event that
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Seller does not have or does not deliver to Buyer a requested record on
an Account and Buyer suffers a loss that results from Seller's failure
to retain or deliver such record, then the Parties agree that Buyer may
treat the associated sales slip or sales transaction as a "Chargeback"
pursuant to the Merchant Agreement.
(d) Seller and Buyer shall cooperate fully with each other in connection
with any examination conducted by any tax or regulatory authority with
respect to the Accounts and related Account Receivables subsequent to
the Conversion Date.
(e) Seller and Buyer will use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to carry out all of their respective
obligations under this Agreement and to consummate and make effective
the transactions contemplated by this Agreement, including but not
limited to (i) taking such further action as may be necessary and
appropriate effectively to vest in Buyer the full legal and equitable
title to the Account Assets and Account Receivables; (ii) assisting
Buyer in the orderly transition of the operations being acquired by
Buyer; (iii) giving prompt notice to another Party regarding any
customer service or federal Fair Credit Billing Act complaints filed by
an Accountholder which affects such other Party; and (iv) delivering
such other information as Buyer may reasonably request in connection
with the processing of the Accounts. The Parties agree to execute and
deliver, or cause to be executed and delivered, such other and further
instruments or documents as may be necessary, convenient, or proper to
carry out effectively the transactions contemplated herein, and/or to
fulfill the purposes and intentions of this Agreement.
Section 6.2 Continued Processing.
--------------------
(a) Prior to the Conversion Date, Seller shall cooperate with all
reasonable requests of Servicer in Servicer's processing the Accounts
pursuant to the Interim Processing Agreement.
(b) Seller further agrees that after the Cut-Off Time, any payments
received by Seller on any Accounts shall be turned over and delivered
to the Buyer within five (5) Business Days after the receipt thereof by
Seller.
(c) Seller shall send all customer statements for the Accounts relating to
the period ending on the Closing Date, and after the Closing Date shall
direct the Accountholders to make their payments with respect to these
statements to Buyer.
(d) ***
(e) ***
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(f) ***
Section 6.3 Entire Agreement.
----------------
(a) This Agreement sets out the complete agreement of the parties with
respect to the matters discussed in this Agreement, and supersedes all
prior agreements between the parties, whether written or oral, which
apply to these matters. No provision of this Agreement may be changed
or waived except as expressly stated in a document executed by both
parties.
(b) This Agreement is binding upon the parties' respective successors and
assigns.
(c) The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiations.
(d) No person or entity is intended to be a third party beneficiary to this
Agreement.
(e) Neither party shall have any liability for lost profits or punitive
damages with respect to any claim arising out of or relating to this
Agreement.
Section 6.4 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will constitute an original, but all of which taken
together shall constitute one and the same instrument.
Section 6.5 Notices. Any notice under this Agreement shall be made in
-------
writing and shall be deemed received when either received or delivered in
person, by facsimile transmission, or by first class mail, postage prepaid, or
by a nationally recognized overnight delivery service, to the parties at the
address set forth below or at such other addresses as each party shall inform
the other in writing.
If to Buyer to: Household Bank (Nevada), N.A.
2700 Sanders Road
Prospect Heights, IL 60070
Facsimile Number: (847) 205-7441
Attn.: Charles A. Colip
with a copy to: Household Retail Services, Inc.
2700 Sanders Road
Prospect Heights, IL 60070
Facsimile Number (847) 564-6001
Attn.: General Counsel
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If to Seller to: Seaman Furniture Company, Inc.
300 Crossways Park Drive
Woodbury, NY 11797
Attn.: Chief Financial Officer
with a copy to: Seaman Furniture Company, Inc.
300 Crossways Park Drive
Woodbury, NY 11797
Attn.: General Counsel
Section 6.6 Expenses. Unless specifically stated to the contrary in this
--------
Agreement, each party will assume and pay for the expenses it incurs with
respect to the purchase and sale of the Accounts and the related Account
Receivables.
Section 6.7 No Broker. Each Party represents to the other that such Party
----------
has not, directly or indirectly, employed any broker, finder, financial advisor,
or intermediary in connection with the transactions contemplated by this
Agreement who might be entitled to a brokerage, finders', or other fee or
commission upon the execution of this Agreement or consummation of the
transactions contemplated hereby, other than a consultant previously disclosed
to Household, who was employed by Seller and whose fees shall be the sole
responsibility of Seller.
Section 6.8 Survival of Covenants, Representations and Warranties.
-----------------------------------------------------
Except as limited herein, it is understood and agreed that the representations
and warranties set forth in this Agreement, or in any certificate or instrument
delivered in connection with this Agreement, shall survive delivery and transfer
of the Account Assets and Account Receivables to Buyer, shall inure to the
benefit of Buyer or any assignee of Buyer, and shall survive any examination of
any Account Documents by Buyer. Seller hereby waives the benefit of any
applicable statute of limitations with respect to the aforesaid covenants,
representations, and warranties, except as to any limitations on the time to
bring an action after discovering of the alleged breach.
Section 6.9 Termination of Agreement. This Agreement may be terminated
------------------------
prior to the Closing Date by either Party upon notice to the other Party but
only if the other Party shall consent in writing; provided, however, that
notwithstanding the foregoing, (i) Seller may terminate this Agreement prior to
the Closing Date in the event that there occurs a material change in Seller's
ownership other than the change previously disclosed in writing to Buyer and
(ii) Seller may terminate this Agreement prior to the Closing Date in the event
that there occurs a material change in Buyer's ownership; provided further,
however, that in the event that Seller terminates this Agreement because of a
material change in Seller's ownership, then Seller shall be liable to Buyer for
all costs and expenses incurred by Buyer in connection with the investigation
and negotiation of this transaction. If this Agreement is terminated pursuant to
this section, then, except as provided above, all rights and obligations under
this Agreement shall terminate immediately.
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Section 6.10 In performing their duties or obligations pursuant to this
Agreement, Seller and Buyer are in the position of independent contractors, and
in no circumstances shall either party be deemed to be the agent or employee of
the other. This Agreement is not intended to create, nor does it create and
shall not be construed to create, a relationship of partner or joint venturer or
an association for profit between Seller and Buyer.
Section 6.11 Governing Law. This Agreement and the legal relations
-------------
between the parties shall be governed by and construed in accordance with the
laws of the State of Illinois applicable to contracts made and to be performed
entirely within the State of Illinois.
Section 6.12 Public Announcements. Neither party shall make any
--------------------
announcement or other public communication with respect to the transactions
contemplated by this Agreement without the permission of the other party, except
to its own employees.
IN WITNESS WHEREOF, this Agreement is hereby executed by the parties hereto
as of the date set forth on page one.
HOUSEHOLD BANK (NEVADA), N.A. SEAMAN FURNITURE COMPANY, INC.
By: /s/ J.W. Hoff By: /s/ Peter McGeough
-------------------------- ---------------------------
Print Name: J.W. Hoff Print Name: Peter McGeough
----------------- ------------------
Title: Vice President Title: Vice-President
---------------------- -----------------------
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EXHIBIT A
Assignment and Assumption Agreement
-----------------------------------
This Assignment and Assumption Agreement, dated this ___ day of _______,
199___ (this "Assignment"), is made and entered into pursuant to the Purchase
and Sale Agreement dated as of August 1, 1997 (the "Purchase and Sale
Agreement") by and between Seaman Furniture Company, Inc. ("Seller"); and
Household Bank (Nevada), N.A. ("Buyer"). The capitalized terms used herein
shall have the same meaning as defined in the Purchase and Sale Agreement.
Seller, for the consideration described in the Purchase and Sale Agreement,
the receipt of which is hereby acknowledged, does hereby give, grant, bargain,
sell, convey, set over, deliver, transfer, confirm, and assign to Buyer, and its
successors and assignees, all of Seller's right, title, and interest in and to
the Account Assets and the Account Receivables as of the Cut-Off Time, to have
and to hold such Account Assets and Account Receivables from and after the Cut-
Off Time for its own use and benefit forever.
From and after the date of execution of this Agreement, Seller covenants to
execute and deliver to Buyer such additional documents and instruments and to
take such action, all without further consideration, as Buyer shall reasonably
request, to effectuate the giving, granting, bargaining, sale, conveyance,
setting over, delivery, transfer, confirmation, and assignment provided for
herein, including, without limitation, such UCC financing statements as shall be
reasonably requested by Buyer, at no cost to Seller.
Buyer hereby assumes and agrees to perform all of, but only such of,
Seller's obligations accruing or arising on or after the Cut-Off Time as are
described in the Purchase and Sale Agreement, but except as otherwise provided
in the Purchase and Sale Agreement, Buyer does not assume any liabilities with
respect to such Accounts, Account Receivables, or Accountholder Documents that
accrued or arose prior to the Cut-Off Time.
This Agreement shall inure to the benefit of, and be binding upon, the
respective successors and assignees of Seller and Buyer and shall be governed by
and construed and interpreted in accordance
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with the Purchase and Sale Agreement and the laws of the State of Illinois,
without regard to such state's principles of conflicts of laws.
This Agreement may be executed by facsimile transmission in two
counterparts, each of which shall be an original, but together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
SEAMAN FURNITURE COMPANY, INC.
By: ________________________________
Print Name: _________________________
Title: _______________________________
HOUSEHOLD BANK (NEVADA), N.A.
By:_________________________________
Print Name: _________________________
Title: _______________________________
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