Exhibit 2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of May 14, 2003 by and among
VESTURE CORPORATION, a North Carolina corporation (the "Seller"), X. X. XXXXX
CORPORATION, an Ohio corporation ("Xxxxx"), and Vesture Acquisition Corp., a
North Carolina corporation (the "Buyer").
Recitals:
WHEREAS, Seller is engaged in the business of developing, producing,
selling and/or distributing products that utilize thermal (hot or cold)
retention technology for food or beverages or medical or self-care applications,
or any products utilizing hot or cold packs (together, the "Business;" and when
such term is used herein in reference to any period after the Closing (as herein
defined), the term "Business" refers to the business of developing, producing,
selling and/or distributing products that utilize thermal (hot or cold)
retention technology for food or beverages or medical or self-care applications,
or any products utilizing hot or cold packs); and
WHEREAS, Seller is a wholly-owned subsidiary of Xxxxx; and
WHEREAS, Buyer is a North Carolina corporation owned by Xxxxx Xxxxx
("Xxxxx") and Xxxxxx Xxxx ("Xxxx"); and
WHEREAS, Seller and Xxxxx wish to sell, and Buyer wishes to purchase,
certain assets of Seller and Xxxxx, all upon the terms and subject to the
conditions set forth below; and
WHEREAS, Buyer desires to assume certain liabilities of Seller upon the
terms and subject to the conditions set forth below;
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants of the parties herein made, and in consideration of the
representations, warranties and covenants herein contained, the parties agree as
follows:
SECTION 1. PURCHASE AND SALE OF ASSETS
1.1 Assets to be Transferred. Upon the terms and subject to the
conditions of this Agreement, and except as otherwise provided in Section 1.2,
at the closing provided for in Section 4 (the "Closing"), Seller shall sell,
assign, transfer and convey (collectively, "transfer") to Buyer, and Buyer shall
purchase and accept from Seller, all right, title and interest of Seller in and
to the following assets, as the same shall exist on the Closing Date (as also
defined in Section 4):
(i) all furnishings, trade fixtures, machinery,
equipment, furniture, computers, computer software (except as
described in Section 1.2 below) and office supplies owned by
Seller, including, without limitation, all trade fixtures,
machinery and equipment owned by Seller and currently located
at Seller's locations at Asheboro, North Carolina and
Randleman, North Carolina (collectively, the "Fixed Assets");
(ii) all inventories, including raw materials, packaging
materials, parts, work-in-process and finished products owned
by Seller (collectively, the "Inventory Assets"), including
any Inventory Assets currently located in Taiwan or China;
provided, however, that the Inventory Assets shall not include
any finished products which are not owned by Seller and are
being held by Seller or its agents for any customer of Seller
including, without limitation, Papa John's, which products
Buyer will continue to hold after the Closing Date on the
terms set forth in the contract between Seller and Papa John's
which is described in Exhibit 3.1(iii);
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(iii) all tools, shop supplies, tooling, patterns, dies,
molds and similar items owned by Seller;
(iv) all of Seller's books, records and computer systems
documentation (including, without limitation, all customer,
distributor, dealer and supplier lists) relating to the
Business (other than books and records kept for financial
reporting and tax purposes and Seller's minute books, a copy
of which shall be delivered to Buyer at Closing), together
with all of Seller's prints, sketches, drawings, routing
sheets, written specifications, work standards, and
manufacturing and process information relating to the
Business;
(v) any personal property owned by Seller which is not
described in paragraphs (i) through (iv) above if located at
Seller's locations at Asheboro, North Carolina or Randleman,
North Carolina;
(vi) all trademarks, patents, trade secrets and
proprietary know-how, licenses, and other intellectual and
intangible property of Seller used in connection with the
Business, including, without limitation, the name "Vesture";
(vii) all of Seller's rights arising after the Effective
Date (as defined in Section 4) under those customer orders,
leases, contracts and other agreements being assumed by Buyer
pursuant to paragraphs (i), (ii), and (iii) of Section 3.1
(collectively, the "Contracts");
(viii) all items of prepaid expense relating to the Business
as of the Closing Date ("Prepaid Expenses"); and
(ix) accounts receivable of Seller arising from the
operation of the Business after the Effective Date.
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All rights, properties and other assets referred to in paragraphs (i)
through (ix) above are herein collectively referred to as the "Transferred
Assets."
1.2 Excluded Assets. The parties to this Agreement expressly
understand and agree that Seller will not transfer to Buyer any assets or
properties of Seller not specifically referred to in Section 1.1, including,
without limitation, all cash of Seller and the accounts receivable of Seller as
of the Effective Date ("Excluded Assets"). Excluded Assets also include computer
software programs owned by Seller which Seller does not have the right to sell
or otherwise transfer to Buyer pursuant to an agreement with a third party and
which are set forth on Exhibit 1.2.
1.3 Transfer of Intellectual Property by Xxxxx.
(a) Upon the terms and subject to the conditions of this
Agreement, at the Closing, Xxxxx shall transfer to Buyer, and Buyer shall
purchase and accept from Xxxxx, all right, title and interest of Xxxxx in and to
the trademarks and patents listed on Exhibit 1.3 (the "Exhibit 1.3 Intellectual
Property") by transfer documents in form and substance reasonably acceptable to
Buyer; provided, however, that Buyer shall grant to Xxxxx at Closing a
non-exclusive, royalty-free, perpetual license (the "License") to use the
Exhibit 1.3 Intellectual Property for stadium-type cushions with high school
logos to be sold through any and all channels of distribution. The term of the
License shall terminate on the second anniversary of the Closing Date if Xxxxx
shall have not purchased from Buyer, as provided in Section 1.3(b), at least
50,000 units during the twelve-month period ending on such second anniversary or
paid to Buyer a license fee of $50,000 before the end of such second
anniversary. If the License does not terminate on the second anniversary of the
Closing Date, it will terminate on any subsequent anniversary of the Closing
Date if Xxxxx shall have not purchased from Buyer at least 50,000 units during
the
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twelve-month period immediately preceding such anniversary. The grant of the
License to Xxxxx on the terms set forth in this Section 1.3 shall be evidenced
by a license agreement to be executed and delivered by Buyer and Xxxxx at the
Closing in a form reasonably acceptable to Buyer and Xxxxx.
(b) Except as provided below, Xxxxx shall purchase all
products covered by the License from Buyer at a price equal to 115% of Buyer's
standard cost of production for the items produced and on Buyer's standard terms
and conditions. Xxxxx agrees to provide Buyer with written orders for such
products at least 120 days in advance of the desired delivery date or dates. If
Buyer cannot or will not produce and deliver the products in the amounts and at
the times required by Xxxxx, Xxxxx shall be permitted to source such products
through other means so long as Xxxxx provides Buyer with written evidence of an
alternative source that will supply the quantity of product desired by Xxxxx
within Barry's delivery requirements.
1.4 Instrument of Conveyance. In order to effectuate the transfers
of the Transferred Assets and the Exhibit 1.3 Intellectual Property contemplated
by this Section 1, at the Closing, Xxxxx shall execute and deliver to Buyer an
assignment of the Exhibit 1.3 Intellectual Property in form and substance
reasonably acceptable to Buyer and dated the Closing Date, and subject to
Section 1.5, Seller shall execute and deliver all such bills of sale and other
documents or instruments of assignment, transfer or conveyance, each dated the
Closing Date, as shall be reasonably necessary or appropriate to vest in or
confirm to Buyer all right, title and interest of Seller in and to the
Transferred Assets.
1.5 Assignment of Contracts. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any of the Contracts, or any claim, right or benefit arising under the
Contracts or resulting from the Contracts, if an
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attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach of such Contract or would be ineffective. If any such
consent has not been obtained as of the Closing Date, or if an attempted
assignment of any such Contract would be ineffective, Buyer shall perform the
obligations under such Contract in the name of Seller, and Seller will cooperate
with Buyer, without additional consideration, in any reasonable arrangement
designed to provide for Buyer the benefits under such Contract, including
enforcement for the benefit of Buyer (at Buyer's expense) of any and all rights
of Seller against a third party thereto arising out of the breach or
cancellation by such third party or otherwise. Buyer shall be responsible for
all liabilities and obligations of Seller arising in respect of any period after
the Effective Date with respect to the Contracts referred to in the preceding
sentence (and all such liabilities and obligations shall be Assumed Liabilities
for purposes of this Agreement), and shall indemnify Seller and Xxxxx and hold
each of them harmless from and against any and all loss, liability and expense
in connection with the performance by Buyer of such Contracts as if such
Contracts were assigned to Buyer hereunder without regard to the provisions of
this Section 1.5; provided, however, that Buyer shall not be required to
indemnify Seller or Xxxxx for any loss, liability, or expense relating to a
breach by Seller of any of the Contracts on or before the Effective Date or
which is incurred as a result of the assignment by Seller to Buyer of a Contract
without the consent of a third party.
SECTION 2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price.
(a) The purchase price (the "Purchase Price") for the Transferred
Assets, and the Exhibit 1.3 Intellectual Property, net of Assumed Liabilities,
shall be $76,000 (the "Closing Purchase Price"), plus or minus the purchase
price adjustment determined in accordance with
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Section 2.1(b). Buyer shall pay the Closing Purchase Price to Seller at the
Closing in immediately available funds. The amount of the Closing Purchase Price
shall be binding on Buyer, Seller and Xxxxx.
(b) The Purchase Price shall be adjusted as follows: If during the
Interim Period (as defined below) Xxxxx or Seller makes a Net Cash Disbursement
(as defined below), Buyer shall pay to Seller or Xxxxx the amount of such Net
Cash Disbursement in the manner provided in Section 2.2. If, during the Interim
Period, Xxxxx or Seller receives Net Cash Proceeds (as defined below), Seller
shall pay to Buyer the amount of such Net Cash Proceeds in the manner provided
in Section 2.2. As used in this Agreement, the capitalized terms in clauses (i),
(ii), (iii) and (iv) below have the meanings given to such terms in such
clauses.
(i) "Net Cash Disbursement" means the net amount of cash,
if any, disbursed by Xxxxx or Seller directly related to the
business activities of Seller after the Effective Date during
the Interim Period, including all checks or drafts of Seller
issued prior to the Effective Date for which there were
insufficient funds in Seller's bank account, which were funded
on or after the Effective Date, in the amount of $177,061. The
methodology for determining the amount of the "Net Cash
Disbursement" or the "Net Cash Proceeds" is set forth in
Exhibit 2 to this Agreement.
(ii) "Net Cash Proceeds" means the net amount of cash, if
any, received by Seller and Xxxxx during the Interim Period
directly related to the business activities of Seller
occurring after the Effective Date.
(iii) "Interim Period" means the period beginning on March
29, 2003 and ending on the day immediately preceding the
Closing Date.
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(iv) "Interim Period Adjustment" means the payment
required to be made by Buyer to Seller, or Seller to Buyer, to
reflect any Net Cash Disbursements or Net Cash Proceeds, as
the case may be, in accordance with this Section 2.1.
2.2 Determination and Payment of Interim Period Adjustment.
(a) On or before the fifteenth day following the Closing Date,
Seller shall prepare and deliver to Buyer a statement of the Interim Period
Adjustment, setting forth in reasonable detail the method of computation (the
"Interim Period Statement"). The Interim Period Statement shall also set forth
the amount payable by Buyer to Seller or by Seller to Buyer, as the case may be.
On or before the fifteenth day following its receipt of the Interim Period
Statement, Buyer shall notify Seller in writing if it disagrees (stating in
detail the nature of any disagreement) with the manner in which the Interim
Period Statement has been prepared or the amount of the Interim Period
Adjustment reflected in the Interim Period Statement. If Buyer fails to give
such notice to Seller within such 15-day period, Buyer shall be deemed to have
accepted the Interim Period Statement in the form submitted to Buyer by Seller.
(b) In connection with Buyer's review of the Interim Period
Statement, Seller shall give Buyer access to all work papers and other materials
and documents used or produced in connection with the preparation of the Interim
Period Statement. In the event that there shall be a dispute as to the manner in
which the Interim Period Statement has been prepared or as to the amount of the
Interim Period Adjustment, the parties shall use their best efforts to resolve
such dispute within ten (10) days of Seller's receipt of Buyer's statement of
disagreement with the Interim Period Statement. Any unresolved dispute shall be
submitted promptly for determination by the parties to the accounting firm of
Xxxxx Xxxx PLLC (the "Accountants"), and the determination by the Accountants
shall be made within 60 days following the submission to
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them of such dispute and shall be binding upon Seller and Buyer. Seller and
Buyer shall share in equal amounts the fees and expenses of the Accountants.
Absent manifest error, any such determination by the Accountants shall be final
and binding upon the parties for purposes of determining the Interim Period
Statement, and the final Purchase Price.
(c) Within ten (10) days following the date on which the amount of
the Interim Period Adjustment has been determined (either by agreement of the
parties or by the Accountants), Buyer shall pay to Seller an amount equal to the
Net Cash Disbursements if there has been a Net Cash Disbursement during the
Interim Period, and Seller shall pay to Buyer the amount of Net Cash Proceeds if
there have been Net Cash Proceeds during the Interim Period. All such amounts
shall be paid in cash or immediately available funds together with interest
thereon at the rate of nine percent (9%) per annum from the Closing Date through
the date of payment. At the election of Buyer, Buyer may deliver to Seller, as
partial payment of the Interim Period Adjustment owing by Buyer to Seller, a
promissory note evidencing a principal amount not to exceed the lesser of
$290,000 or the Interim Period Adjustment less $124,000. Any such promissory
note will have the following terms and conditions: (i) such note shall be due
and payable in full on December 1, 2004, (ii) interest shall accrue at the rate
of nine percent (9%) per annum, and (iii) if at the end of any calendar month
prior to November 2004, Buyer has cash or cash equivalents in excess of the sum
of the outstanding balance under its bank credit agreement plus $300,000, Buyer
shall make a prepayment of the indebtedness under the note in the amount of such
excess within 30 days of the end of such month. From the date of this Agreement
through the date on which such promissory note is paid in full, Buyer will
supply Seller and Xxxxx with balance sheets of Buyer as of the last day of each
calendar quarter, which will be delivered to Seller and Xxxxx within 45 days
after the end of each such quarter.
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2.3 [RESERVED]
2.4 Allocation of Purchase Price. Within thirty (30) days after
the Closing Date, Seller, Xxxxx and Buyer will decide on the appropriate
allocation of the Purchase Price among the Transferred Assets and the Exhibit
1.3 Intellectual Property for purposes of reporting such allocation on their
respective federal income tax returns. The parties will file any statements
required by the Internal Revenue Code of 1986, as amended (the "Code")
(including an Asset Acquisition Statement under Section 1060 of the Code on Form
8594) within the time periods provided by the Code.
2.5 Additional Consideration. As additional consideration for the
Transferred Assets and the Exhibit 1.3 Intellectual Property, Buyer shall pay to
Seller (i) an amount equal to ten percent (10%) of the net sales of Buyer in
excess of $4.5 million for each of the twelve month periods ending on December
31, 2004 (the "2004 Period") and December 31, 2005 (the "2005 Period"), (ii) an
amount equal to four percent (4%) of the net sales of Buyer in excess of $4.5
million for the twelve month period ending on December 31, 2006 (the "2006
Period"), and (iii) an amount equal to ten percent (10%) of the net sales of
Buyer for the period commencing on the first day following the Effective Date
and ending on December 31, 2003 (the "2003 Period") in excess of the difference
between $4.5 million and the net sales of Seller from December 29, 2002 through
the Effective Date. For purposes of this Section 2.5, the "net sales" of Buyer
shall mean the gross sales of products related to the Business by Buyer and all
subsidiaries and other affiliates of Buyer less returns and discounts on such
sales and shall be determined in accordance with generally accepted accounting
principles ("GAAP") and Seller's historical accounting practices. Within 30 days
after the completion of the 2003 Period and within 30 days after the completion
of each six-month period during the 2004 Period, the 2005 Period and the 2006
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Period, Buyer shall furnish to Seller a statement in writing (a "Reporting
Statement") showing Buyer's net sales for the applicable reporting period and
the method by which such net sales were determined, including a breakdown of
sales by customer, products sold and product price and accompanied by a
statement, certified by the chief accounting officer of Buyer, confirming, to
the best knowledge of such officer, the accuracy of the information furnished to
Seller. The Reporting Statements shall also be accompanied by payment in full of
the amount of the additional consideration owed to Seller for the relevant
reporting period, if any. Seller shall have the right, exercisable at any time
within 30 days following its receipt of a Reporting Statement, to review the
books and records of Buyer and its subsidiaries and other affiliates, if any, to
confirm the accuracy of the information presented in the Reporting Statement and
the accuracy of the amount of any payment accompanying such Reporting Statement.
Seller and Xxxxx agree that any information provided under this Section 2.5
shall be kept strictly confidential and only used for the purpose provided for
herein.
SECTION 3. ASSUMPTION OF LIABILITIES
3.1 Liabilities Assumed by Buyer. As additional consideration for
the Transferred Assets, except as provided in Section 3.2, Buyer agrees, upon
the terms and subject to the conditions set forth herein, to assume, at the
Closing, the following liabilities, obligations and contingent and future
liabilities and obligations of Seller:
(i) Seller's obligations under all agreements or
commitments to purchase materials, supplies or services listed
on Exhibit 3.1(i) hereto and all other agreements or
commitments to purchase materials, supplies or services which
are in effect on the Closing Date and which have been entered
into in the Ordinary
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Course of Business (as defined below) from April 29, 2003
through the Closing Date;
(ii) Seller's obligations in respect of the customer
orders listed on Exhibit 3.1(ii) hereto together with all
other customer orders outstanding or being held for shipment
on the Closing Date which have been entered into in the
Ordinary Course of Business from April 29, 2003 through the
Closing Date;
(iii) All liabilities and obligations arising after the
Effective Date under all contracts, agreements and commitments
relating to the Business to which Seller is a party and which
are set forth on Exhibit 3.1(iii) and under all other
contracts, agreements and commitments entered into by Seller
in the Ordinary Course of Business from the date of this
Agreement through the Closing Date;
(iv) All current liabilities of Seller, excluding state
and federal income tax receivables or payables, as of the
Effective Date, as reflected on the calculation of closing
purchase price in the form attached hereto as Exhibit 3.1(iv)
(the "Calculation of Closing Purchase Price"), and which have
not been paid in full as of the Closing Date plus all current
liabilities of Seller (determined in accordance with GAAP and
Seller's historical accounting practices), excluding state and
federal income tax receivables or payables and severance or
other liabilities relating to the termination of Seller's
employees, incurred by Seller after the Effective Date in the
Ordinary Course of Business and outstanding on the Closing
Date (collectively, the "Current Liabilities");
(v) All payroll and other employee-related expenses and
liabilities as of the Effective Date, as reflected on the
Calculation of Closing Purchase Price under
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the current liabilities heading and which have not been paid
or settled in full as of the Closing Date, plus all such
employee obligations incurred or accrued after the Effective
Date in the Ordinary Course of Business and outstanding on the
Closing Date (collectively, the "Employee Obligations");
(vi) All accrued and unpaid sales commissions reflected on
the books of Seller as of the Effective Date, as reflected on
the Calculation of Closing Purchase Price under the current
liabilities heading and which have not been paid in full as of
the Closing Date plus all such commission obligations incurred
after the Effective Date in the Ordinary Course of Business
and outstanding on the Closing Date (collectively, the
"Commission Obligations");
(vii) The Litigation Liabilities (as defined in and subject
to the limitations of Section 12) as and when incurred by
Seller or Xxxxx; and
(viii) All liabilities and obligations of Seller for
warranty claims for product replacement or repair asserted on
or after the Effective Date with respect to products produced
by Seller, other than liabilities arising from claims for (a)
personal injury (including death) or (b) damage to tangible
property (except damage to products produced by Seller) or
claims relating to products shipped directly by Xxxxx.
All of the liabilities, obligations and contingent and future
liabilities and obligations of Seller referred to in paragraphs (i) through
(viii) above are herein collectively referred to as the "Assumed Liabilities."
For purposes of this Section 3.1, a liability, expense or obligation will be
deemed to have been incurred by Seller in the "Ordinary Course of Business" or
any other action will be deemed to have been taken by Seller in the "Ordinary
Course of Business" if the liability,
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expense or obligation was incurred, or any other action was taken, by or with
the knowledge of Xxxxx Xxxxx or any employee of Seller, except for such
liabilities, expenses or obligations incurred, or other actions taken, by an
employee of Seller at the direction of Xxxxx and without the knowledge of Xxxxx
Xxxxx.
3.2 Liabilities Not Assumed by Buyer. Buyer shall not assume or
take title to the Transferred Assets subject to, or in any way be liable or
responsible for, any liabilities or obligations of Seller except as specifically
provided in Section 3.1. Without limiting the generality of the foregoing, Buyer
shall not assume or take title to the Transferred Assets subject to any
liability or obligation of Seller arising from claims for personal injury
(including death) or damage to tangible property (except damage to products
produced by Seller and covered by Seller's repair and replacement warranties)
with respect to products produced by Seller and shipped prior to the Effective
Date. Buyer shall not assume any intercompany payables to the extent such
payables are owed by Seller to Xxxxx.
SECTION 4. CLOSING AND CLOSING DATE
The Closing of the purchase and sale of the Transferred Assets and the
Exhibit 1.3 Intellectual Property shall take place at the offices of Seller at
10:00 A.M. local time on May 21, 2003, or such other place, time or date as the
parties may mutually agree in writing (such time and date being referred to
herein as the "Closing Date"). Notwithstanding the foregoing, it is the
intention of the parties that the closing of the purchase and sale of the
Transferred Assets and the Exhibit 1.3 Intellectual Property under this
Agreement shall be deemed to have occurred "as of" the close of business on
March 29, 2003 (such date and time, the "Effective Date"), and that, if the
Closing occurs, the operation of the Business from and after the Effective Date
shall be for Buyer's account, subject to the terms of this Agreement.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the statements
contained in this Section 5 are true and correct as of the date of this
Agreement or, if made as of a specified date, as of such date, except as
modified by Seller's Disclosure Schedule attached hereto as Exhibit 5.
5.1 Organization, Power and Authority. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of North Carolina, and is duly qualified to do business as a foreign
corporation in every other state in respect of which the conduct of its business
would require such qualification, except where failure to so qualify would not
have a materially adverse effect upon its assets or business. Seller has full
corporate power and authority to own and operate the Transferred Assets and to
carry on the Business as now being conducted. Seller has full corporate power
and authority to enter into, and be bound by the terms and conditions of, this
Agreement, and to transfer the Transferred Assets to Buyer pursuant to this
Agreement.
5.2 Due Authority; No Breach. The execution, delivery and
performance by Seller of this Agreement and of every other agreement or
instrument to be executed and delivered by Seller pursuant to this Agreement,
and the performance by Seller of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action. This
Agreement is a legal, valid and binding obligation of Seller, and each other
agreement or instrument to be executed and delivered by Seller pursuant to this
Agreement, when executed and delivered by Seller, in accordance with the
provisions hereof and thereof, will be a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
from time to time in effect which affect the enforcement of creditors' rights in
general and by
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general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). All persons who have executed
this Agreement on behalf of Seller, or who will execute on behalf of Seller any
agreement or instrument contemplated by this Agreement, have been duly
authorized to do so by all necessary corporate action. Assuming receipt by Xxxxx
and Seller of the consents of the Huntington National Bank and Metropolitan Life
Insurance Company to the transactions contemplated by this Agreement, the
receipt of which consents are conditions to Buyer, Seller and Barry's
obligations under this Agreement and except as otherwise disclosed in Exhibit 5
to this Agreement, neither the execution and delivery of this Agreement or any
other agreement or instrument to be executed or delivered by Seller pursuant to
this Agreement nor the consummation by Seller of the transactions contemplated
hereby or thereby will (i) conflict with or result in any violation of or
constitute a default under any provision of the charter (articles) or by-laws
(regulations) of Seller or any mortgage, bond, indenture, agreement, franchise
or other instrument or obligation to which Seller is a party or by which Seller
is bound, (ii) result in the creation of any lien or other encumbrance upon any
of the Transferred Assets pursuant to the terms of any such mortgage, bond,
indenture, agreement, franchise or other instrument or obligation, or (iii)
violate any judgment, order, injunction, decree or award of any court,
administrative agency or government body against, or binding upon, Seller, or
upon the securities, property or business of Seller; or (iv) constitute a
violation by Seller of any law or regulation of any jurisdiction as such law or
regulation relates to Seller, or to the securities, property or business of
Seller.
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5.3 Ownership of Transferred Assets.
(a) On the Closing Date, Seller will be the owner of, and
will have good title to, the Transferred Assets described in paragraphs (i),
(ii) and (iii) of Section 1.1, free and clear of any liens or other
encumbrances, other than (i) liens or encumbrances that will terminate upon
payment of an Assumed Liability, or (ii) liens for personal property taxes or ad
valorem taxes not yet payable ("Permitted Liens"). At the Closing, Seller will
transfer good title to such Transferred Assets described in paragraphs (i), (ii)
and (iii) of Section 1.1 to Buyer free and clear of any liens or other
encumbrances, other than Permitted Liens.
(b) On the Closing Date, Xxxxx will be the owner of, and
will have good title to, the Exhibit 1.3 Intellectual Property. At the Closing,
Xxxxx will transfer the Exhibit 1.3 Intellectual Property to Buyer free and
clear of any liens or other encumbrances, other than Permitted Liens.
5.4 Governmental Approval. No material consent, approval, waiver,
order or authorization of, or registration, declaration or filing with, any
governmental authority is required in connection with the execution and delivery
of this Agreement by Seller or the consummation by Seller of the transactions
contemplated hereby.
5.5 No Undisclosed Liabilities. To Seller's Knowledge (as defined
in Section 15.12), other than the Assumed Liabilities, Seller has no liabilities
or obligations of any kind, whether accrued, absolute, contingent or otherwise,
which will become liabilities or obligations of Buyer after the Closing.
5.6 Patents, Trademarks, Etc. Exhibit 5 hereto sets forth all
material patents, trademarks, copyrights, service marks and trade names of
Seller, all applications for any of the foregoing, and all permits, grants and
licenses or other rights running to or from Seller relating to
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any of the foregoing. Except for the Exhibit 1.3 Intellectual Property and the
items listed in Exhibit 5, to Seller's Knowledge, there are no patents,
trademarks, copyrights, service marks or trade names, or licenses of any
thereof, necessary to operate the Business as presently conducted. Except for
the patents which are the subject of the Litigation (as defined in Section 12.1)
as to which no representation is given, to Seller's Knowledge, Seller and Xxxxx
have, and immediately following the Closing the Buyer will have, the right to
use, free and clear of any claims or rights of others, all patents, trademarks,
copyrights, service marks, trade names, trade secrets, know-how, processes,
designs and other technology (including all inventions) or information utilized
in or incident to the Business as presently conducted, and such use does not
infringe or violate any patent, trademark, copyright, service xxxx, trade name
or any other right of any other person or other entity.
5.7 Compliance with Law. To Seller's Knowledge, Seller has
conducted the Business, currently and at all times during the past five (5)
years, in material compliance with all federal, state and local laws, rules,
regulations, permits, licenses and authorizations.
5.8 Environmental Compliance. To Seller's Knowledge, Seller is
currently operating the Business, and at all times during the past five (5)
years has operated the Business, in material compliance with all federal, state
and local laws, rules, regulations, permits, licenses and authorizations
relating to environmental protection and conservation ("Environmental Laws").
Seller is not aware of, nor has it received notice of during the past three
years, any asserted past or present violation of Environmental Laws or any
circumstances that (a) may interfere with or prevent continued compliance, or
(b) may give rise to any liability, or (c) may form the basis of any claim under
any Environmental Laws relating to the operation of the Business.
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5.9 Labor Matters. Exhibit 5 contains a list of all current
employees of Seller, together with the present salary or hourly wages of each.
To Seller's Knowledge, except as set forth on Exhibit 5, there are no
controversies pending or threatened between Seller and any of its employees,
former employees, or job applicants and Seller has not taken or failed to take
any action which would provide a reasonable basis for such a controversy. To
Seller's Knowledge, Seller has complied in all material respects with all laws
applicable to it relating to the employment of labor, including any provisions
thereof relating to wages, hours, collective bargaining and the payment of
social security, unemployment compensation and similar taxes.
5.10 Employee Benefit Plans. There exist no facts or circumstances
regarding any employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which may give
rise pursuant to ERISA or any other federal or state law, or pursuant to any
contract or agreement, (i) to any tax, penalty, liability, debt, obligation or
reporting requirement upon Buyer or any of its affiliated corporations,
directors, officers or employees (other than taxes associated with the receipt
of benefits), or (ii) to any lien or encumbrance upon any of the properties or
assets of Seller being acquired by Buyer pursuant to this Agreement, to the
Pension Benefit Guaranty Corporation, the IRS, the United States Department of
Labor or any other governmental agency or to any other person or entity,
including, without limitation, to any such employee benefit plan. Neither Buyer
nor any of its affiliated corporations, directors, officers or employees shall
incur any tax, penalty, liability, debt or obligation for failing to provide
health care continuation coverage to any of the following persons who are
participating as of the Closing Date in any group health plan(s), as that term
is defined in Code Section 5000(b)(1), of Seller: (i) any of Seller's employees,
or former employees, who are not hired by Buyer; (ii) the spouses, former
spouses, dependents or
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former dependents of such employees; or (iii) any of Seller's employees, or
former employees, who are hired by Buyer, or their spouses, former spouses,
dependents or former dependents, who have preexisting conditions which are not
covered by the group health insurance plan(s), if any, offered by Buyer. Buyer
shall have no liability as a result of any failure of Seller to offer or provide
continuation coverage to any M&A qualified beneficiary, as defined in Treas.
Reg. Sec. 54.4980B-9, Q&A 4(a). Exhibit 5 contains a listing of all employee
benefit plans, as defined in Section 3(3) of ERISA, maintained by Seller or
Xxxxx and in which employees of the Seller participate.
5.11 Seller Products. To Seller's Knowledge, (a) there are no
statements, citations or decisions by any governmental or regulatory body
specifically stating that any product designed, manufactured, marketed or
distributed during the past three (3) years by the Seller ("Seller Product(s)")
is defective or unsafe or fails to meet any standards promulgated by any
governmental or regulatory body, and (b) except as set forth in Exhibit 5, there
have been no recalls ordered by any such governmental or regulatory body with
respect to any Seller Product. To Seller's Knowledge, (i) no fact exists
relating to any Seller Product that may impose upon the Seller a duty to recall
any Seller Product or a duty to warn customers of a defect in any Seller
Product, (ii) there is no latent or overt design, manufacturing or other defect
in any Seller Product, and (iii) there is no liability for warranty claims or
returns with respect to any Seller Product in excess of the Seller's reserve for
warranty claims as of the Effective Date.
5.12 Contracts. To Seller's Knowledge, other than the Contracts,
Seller is not a party to any contracts, agreements or other binding commitments
that are material to the Business.
5.13 No Other Representations. Except as set forth in this Section
5, Seller makes no representation or warranty whatsoever, either express or
implied, including, without limitation,
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NO WARRANTY AS TO FITNESS FOR USE, FOR A PARTICULAR PURPOSE, OPERABILITY OR
MERCHANTABILITY as to any of the Transferred Assets or the Exhibit 1.3
Intellectual Property and, in that respect, the Transferred Assets and the
Exhibit 1.3 Intellectual Property shall be transferred to Buyer, except as set
forth in this Section 5, "AS IS, WHERE IS AND WITH ALL FAULTS." Except as set
forth in Section 5.6, Seller makes no representation or warranty to Buyer with
respect to whether or not the Transferred Assets described in Section 1.1(vi) or
the Exhibit 1.3 Intellectual Property, or any activities, operations or
practices using the Transferred Assets described in Section 1.1(vi) or the
Exhibit 1.3 Intellectual Property, infringe or violate any patent, trademark or
other intellectual property rights of any other person, or whether the continued
use or operation of the Business of Seller as it is presently conducted or the
conduct of the Business with variations or changes will infringe or violate any
patent, trademark or other intellectual property rights of any other person.
Except as set forth in Section 5.6, Seller also makes no representation or
warranty with respect to whether or not Buyer will have the right to use or
practice the Transferred Assets described in Section 1.1(vi) or the Exhibit 1.3
Intellectual Property free and clear of patent, trademark or other intellectual
property claims or rights of other persons.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx hereby represents and warrants to Buyer that the statements
contained in this Section 6 are true and correct as of the date of this
Agreement or, if made as of a specified date, as of such date, except as
modified by Barry's Disclosure Schedule attached hereto as Exhibit 6.
6.1 Organization, Power and Authority. Xxxxx is a corporation duly
organized, validly existing and in good standing under the laws of its state of
organization, and is duly qualified to do business as a foreign corporation in
every other state in respect of which the
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conduct of its business would require such qualification, except where failure
to so qualify would not have a materially adverse effect upon its assets or
business. Xxxxx has full corporate power and authority to enter into, and be
bound by the terms and conditions of, this Agreement, and to transfer the
Exhibit 1.3 Intellectual Property to Buyer pursuant to this Agreement.
6.2 Due Authority; No Breach. The execution, delivery and
performance by Xxxxx of this Agreement and of every other agreement or
instrument to be executed and delivered by Xxxxx pursuant to this Agreement, and
the performance by Xxxxx of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action. This Agreement is a
legal, valid and binding obligation of Xxxxx, and each other agreement or
instrument to be executed and delivered by Xxxxx pursuant to this Agreement,
when executed and delivered by Xxxxx in accordance with the provisions hereof
and thereof, will be a legal, valid and binding obligation of Xxxxx, in each
case enforceable against Xxxxx in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
from time to time in effect which affect the enforcement of creditors' rights in
general and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each
individual who has executed this Agreement on behalf of Xxxxx, or who will
execute on behalf of Xxxxx any agreement or instrument contemplated by this
Agreement, has been duly authorized to do so by all necessary corporate action.
Assuming receipt by Xxxxx and Seller of any required consents of the Huntington
National Bank and Metropolitan Life Insurance Company to the transactions
contemplated by this Agreement, the receipt of which consents, if required, are
conditions to Buyer, Seller and Barry's obligations under this Agreement and
except as otherwise disclosed in Exhibit 6 to this Agreement, neither the
execution and delivery of this Agreement or any other agreement or instrument to
be
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executed or delivered by Xxxxx pursuant to this Agreement nor the consummation
by Xxxxx of the transactions contemplated hereby or thereby will (i) conflict
with or result in any violation of or constitute a default under any provision
of the charter (articles) or by-laws (regulations) of Xxxxx or any mortgage,
bond, indenture, agreement, franchise or other instrument or obligation to which
Xxxxx is a party or by which it is bound, (ii) result in the creation of any
lien or other encumbrance upon the Exhibit 1.3 Intellectual Property pursuant to
the terms of any such mortgage, bond, indenture, agreement, franchise or other
instrument or obligation, or (iii) violate any judgment, order, injunction,
decree or award of any court, administrative agency or government body against,
or binding upon, Xxxxx, or upon the securities, property or business of Xxxxx;
or (iv) constitute a violation by Xxxxx of any law or regulation of any
jurisdiction as such law or regulation relates to Xxxxx or to the securities,
property or business of Xxxxx.
6.3 Ownership of Exhibit 1.3 Intellectual Property
(a) On the Closing Date, Seller will be the owner of, and
will have good title to, the Transferred Assets described in paragraphs (i),
(ii) and (iii) of Section 1.1 free and clear of any liens or other encumbrances,
other than Permitted Liens. At the Closing, Seller will transfer good title to
such Transferred Assets described in paragraphs (i), (ii) and (iii) of Section
1.1 to Buyer free and clear of any liens or other encumbrances, other than
Permitted Liens.
(b) On the Closing Date, Xxxxx will be the owner of, and
will have good title to, the Exhibit 1.3 Intellectual Property. At the Closing,
Xxxxx will transfer the Exhibit 1.3 Intellectual Property to Buyer free and
clear of any liens or other encumbrances, other than Permitted Liens.
6.4 Accuracy of Representations and Warranties of Seller. Except
as set forth in Exhibit 5 regarding the representations and warranties of
Seller, to Barry's Knowledge (as
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defined in Section 15.12), the representations and warranties made by Seller in
Section 5 are true and correct.
6.5 Xxxxx Ownership of Assets in Asheboro and Randleman. None of
the trade fixtures, machinery or equipment located at Seller's locations in
Asheboro, North Carolina and Randleman, North Carolina is owned by Xxxxx.
6.6 No Other Representations. Except as set forth in this Section
6, Xxxxx makes no representation or warranty whatsoever, either express or
implied, including, without limitation, NO WARRANTY AS TO FITNESS FOR USE, FOR A
PARTICULAR PURPOSE, OPERABILITY OR MERCHANTABILITY as to any of the Transferred
Assets or the Exhibit 1.3 Intellectual Property and, in that respect, the
Transferred Assets and the Exhibit 1.3 Intellectual Property shall be
transferred to Buyer "AS IS, WHERE IS AND WITH ALL FAULTS." Anything in this
Agreement or elsewhere to the contrary notwithstanding, Xxxxx makes no
representation or warranty to Buyer with respect to whether or not the
Transferred Assets described in Section 1.1(vi) or the Exhibit 1.3 Intellectual
Property, or any activities, operations or practices using the Transferred
Assets described in Section 1.1(vi) or the Exhibit 1.3 Intellectual Property,
infringe or violate any patent, trademark or other intellectual property rights
of any other person, or whether the continued use or operation of the Business
of Seller as it is presently conducted or the conduct of the Business with
variations or changes will infringe or violate any patent, trademark or other
intellectual property rights of any other person. Xxxxx also makes no
representation or warranty with respect to whether or not Buyer will have the
right to use or practice the Transferred Assets described in Section 1.1(vi) or
the Exhibit 1.3 Intellectual Property free and clear of patent, trademark or
other intellectual property claims or rights of other persons.
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SECTION 7. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and Xxxxx that the
statements contained in this Section 7 are true and correct as of the date of
this Agreement or, if made as of a specified date, as of such date, except as
modified by Buyer's Disclosure Schedule attached hereto as Exhibit 7.
7.1 Organization, Power and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina. Buyer has full power and authority to enter into, and be bound
by, the terms and conditions of, this Agreement.
7.2 Due Authority; No Breach. The execution, delivery and
performance by Buyer of this Agreement and of every other agreement or
instrument to be executed and delivered by Buyer pursuant to this Agreement, and
the performance by Buyer of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action. This Agreement is a
legal, valid and binding obligation of Buyer, and each other agreement or
instrument to be executed and delivered by Buyer pursuant to this Agreement,
when executed and delivered by Buyer, will be a legal, valid and binding
obligation of Buyer, in each case enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws from time to time in effect which affect the
enforcement of creditors' rights in general and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). All persons who have executed this Agreement on behalf of
Buyer, or who will execute on behalf of Buyer any agreement or instrument
contemplated by this Agreement, have been duly authorized to do so by all
necessary corporate action. Neither the execution and delivery by Buyer of this
Agreement or
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any other agreement or instrument to be executed and delivered by Buyer pursuant
to this Agreement nor the consummation by Buyer of the transactions contemplated
hereby or thereby will (i) conflict with or result in any violation of, or
constitute a default under, any provision of the charter or by-laws of Buyer or
any mortgage, bond, indenture, agreement, franchise or other instrument or
obligation to which Buyer is a party or by which it or its assets are bound;
(ii) violate any judgment, order, injunction, decree or award of any court,
administrative agency or governmental body against, or binding upon, Buyer or
upon the securities, property or business of Buyer; or (iii) constitute a
violation by Buyer of any law or regulation of any jurisdiction as such law or
regulation relates to Buyer or the securities, property or business of Buyer.
7.3 Governmental Approval. No material consent, approval, waiver
or order or authorization of, or registration, declaration or filing with, any
governmental authority is required in connection with the execution and delivery
of this Agreement by Buyer, or the consummation by Buyer of the transactions
contemplated hereby.
SECTION 8. CONDITIONS TO THE OBLIGATIONS OF SELLER AND XXXXX
The obligations of Seller and Xxxxx to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or before the
Closing Date, of the following conditions (subject to the right of Seller and
Xxxxx to waive any such condition):
8.1 Representations and Warranties True. All of the
representations and warranties of Buyer contained in this Agreement or in any
certificate, document or instrument delivered pursuant hereto shall be true and
correct in all material respects on and as of the Closing Date as if made on and
as of the Closing Date.
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8.2 Covenants and Agreements Performed. Buyer shall have performed
or complied with or delivered all covenants, agreements, conditions or documents
required by this Agreement to be performed, complied with or delivered by Buyer
prior to or on the Closing Date.
8.3 Delivery of Payments. Buyer shall have delivered to Seller and
Xxxxx at the Closing the Closing Purchase Price.
8.4 Assumption Agreement. Buyer shall have executed and delivered
to Seller at the Closing an assignment and assumption agreement in a form
reasonably acceptable to Buyer and Seller (the "Assumption Agreement").
8.5 Consent of Barry's Lenders and Release of Security Interests.
Xxxxx and Seller shall have obtained, on or before the Closing, from the
Huntington National Bank and the Metropolitan Life Insurance Company (the
"Lenders") written consent, if required, of each of the Lenders to the
transactions provided for in this Agreement and their complete and unconditional
release of any and all security interests in the Transferred Assets and the
Exhibit 1.3 Intellectual Property held by them.
8.6. Officers' Certificate. Seller and Xxxxx shall have been
furnished at the Closing with a certificate executed on behalf of Buyer by its
President or a Vice President and attested by its Secretary, dated the Closing
Date, representing and certifying, in such detail as Seller and Xxxxx may
reasonably request, that the conditions set forth in Sections 8.1, 8.2 and 8.7
have been fulfilled at or prior to the Closing Date, and that Buyer is not in
default under any provision of this Agreement.
8.7 No Actions, Suits or Proceedings. Except for the Litigation
(as defined in Section 12.1), no action, suit or proceeding shall be pending or,
to the knowledge of Seller, Xxxxx or Buyer, threatened, before any court or
governmental body to restrain or prohibit, or to obtain
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damages or a discovery order in respect of, this Agreement or the consummation
of the transactions contemplated hereby.
8.8 Waiver of Severance by Employees. Seller shall have obtained a
waiver of all rights to severance payments from Seller from each of the
employees who intend to accept employment with Buyer following the Closing.
8.9 Assignment of Papa John's Agreement. Buyer shall have obtained
the consent of Papa John's Support Services, Inc. ("Papa John's") to Seller's
assignment to Buyer of the Third Amended Purchase Agreement between Seller and
Papa John's (the "Papa John's Agreement").
SECTION 9. CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, on or before the Closing Date, of
the following conditions (subject to the right of Buyer to waive any such
condition):
9.1 Representations and Warranties True. All of the
representations and warranties of Seller and of Xxxxx contained in this
Agreement or in any certificate, document or instrument delivered by them
pursuant hereto shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of the Closing Date.
9.2 Covenants and Agreements Performed. Each of Seller and Xxxxx
shall have performed or complied with or delivered all covenants, agreements,
conditions or documents required by this Agreement to be performed, complied
with or delivered by it prior to or on the Closing Date.
9.3 Consent of Barry's Lenders and Release of Security Interests.
Xxxxx and Seller shall have obtained, on or before the Closing, from each of the
Lenders the written consent, if required, of each of the Lenders to the
transactions provided for in this Agreement and their
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complete and unconditional release of any and all security interests in the
Transferred Assets and the Exhibit 1.3 Intellectual Property held by them.
9.4 No Actions, Suits or Proceedings; No Adverse Material Event.
Except for the Litigation (as defined in Section 12.1), (a) no action, suit or
proceeding shall be pending or, to the knowledge of Buyer, Seller or Xxxxx,
threatened, before any court or governmental body to restrain or prohibit, or to
obtain damages or a discovery order in respect of, this Agreement or the
consummation of the transactions contemplated hereby or which has had or may
have, in the reasonable judgment of Buyer, a materially adverse effect on the
Transferred Assets, the Exhibit 1.3 Intellectual Property or the Business and
(b) no other event shall have occurred which has had or may have, in the
reasonable judgment of Buyer, a materially adverse effect on the Transferred
Assets, the Exhibit 1.3 Intellectual Property or the Business.
9.5 Instruments of Conveyance. Seller and Xxxxx shall have
executed and delivered to Buyer the instruments of conveyance contemplated by
Section 1.4 and the Assumption Agreement, in form and substance reasonably
satisfactory to Buyer, together with executed copies of all consents, if any, of
third parties which have been obtained by Seller or Xxxxx in connection with any
assignment, transfer, conveyance or recording contemplated hereby.
9.6 Officers' Certificates. Buyer shall have been furnished with a
certificate executed on behalf of Seller by its President or any Vice President
and attested by its Secretary, dated the Closing Date, representing and
certifying, in such detail as Buyer may reasonably request, that the conditions
set forth in Sections 9.1, 9.2, 9.3 and 9.4 (as applicable to Seller only) have
been fulfilled at or prior to the Closing Date, and that Seller is not in
default under any provision of this Agreement. In addition, Buyer shall have
been furnished with a certificate executed on behalf of Xxxxx by its President
or any Vice President and attested by its Secretary, dated the
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Closing Date, representing and certifying, in such detail as Buyer may
reasonably request, that the conditions set forth in Sections 9.1, 9.2, 9.3 and
9.4 (as applicable to Xxxxx only) have been fulfilled at or prior to the Closing
Date, and that Xxxxx is not in default under any provision of this Agreement.
9.7 Financing. Buyer shall have secured financing to finance the
acquisition of the Transferred Assets and the Exhibit 1.3 Intellectual Property
and to conduct its business thereafter on terms reasonably satisfactory to
Buyer.
9.8 Assignment of Papa John's Agreement. Seller shall have
obtained the consent of Papa John's to Seller's assignment of the Papa John's
Agreement to Buyer.
SECTION 10. COVENANTS AND AGREEMENTS OF THE PARTIES
10.1 Access. Until the Closing, Seller shall give the officers,
attorneys, accountants and other authorized representatives of Buyer full
access, during normal business hours and upon reasonable notice, to all of the
historical records, properties and personnel of Seller relating to the
Transferred Assets, the Exhibit 1.3 Intellectual Property and the Business.
Seller and Xxxxx shall cause their employees, accountants and attorneys to
cooperate fully with such representatives in connection with such review and
examination; provided, however, that Buyer will hold in strict confidence and
not use for its own benefit the documents and information furnished concerning
Seller, Xxxxx, the Transferred Assets, the Exhibit 1.3 Intellectual Property and
the Business; and, if the transactions contemplated by this Agreement shall not
be consummated, such confidence shall be maintained and all such documents and
all copies thereof shall immediately thereafter be returned to Seller and Xxxxx.
No such investigation by the representatives of Buyer of the historical records,
properties and personnel of Seller and Xxxxx shall affect the continuing
validity or effect of, or prejudice or constitute a waiver of any right of
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Buyer with respect to, the representations and warranties of Seller and Xxxxx
contained in this Agreement.
10.2 Litigation. Until the Closing, each of Buyer, Seller and Xxxxx
shall promptly notify the other parties of any action, suit, proceeding, claim
or investigation as to which they have knowledge which is threatened or
commenced after the date of this Agreement against Buyer, Seller or Xxxxx, as
the case may be, or against any of their respective officers, employees, agents,
consultants or directors, which involves the Transferred Assets, the Exhibit 1.3
Intellectual Property, the Business, this Agreement or the transactions
contemplated by this Agreement.
10.3 Expenses of Sale. Seller and Xxxxx, on the one hand, and
Buyer, on the other hand, shall bear their own direct and indirect expenses
incurred in connection with the negotiation and preparation of this Agreement
and the consummation and performance of the transactions contemplated hereby.
Such expenses of Seller and Xxxxx will not be Assumed Liabilities and shall not
be reflected in the Interim Period Adjustment. Buyer shall be liable for all
applicable sales and use taxes payable in connection with the transfer of the
Transferred Assets and the Exhibit 1.3 Intellectual Property to Buyer, and Buyer
and Seller agree to cooperate to obtain all available exemptions from such
taxes.
10.4 Consents. Buyer, Seller and Xxxxx shall use their best efforts
to obtain prior to the Closing all requisite consents of third parties required
to be received by each of them in connection with the consummation of the
transactions contemplated hereby.
10.5 Publicity. The parties agree that no publicity release or
public announcement concerning the transactions contemplated hereby shall be
issued without the advance approval of the form and substance thereof by Buyer,
Seller and Xxxxx; except that this Section 10.5 shall not
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be applicable to any public announcement or regulatory filing by Xxxxx which its
legal counsel determines is required under applicable securities laws and
regulations or the rules of the New York Stock Exchange.
10.6 Books and Records. Seller agrees that all of Seller's books
and records not transferred to Buyer shall be removed by Seller promptly after
the Closing Date. Xxxxx, Seller and Buyer shall have the right, at their own
expense, at any time or from time to time after the Closing Date 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 Transferred
Assets, the Exhibit 1.3 Intellectual Property and to the operation of the
Business prior to the Closing Date in the possession of the other or others.
None of such books and records in the possession of Seller, Buyer or Xxxxx, as
the case may be, shall be destroyed prior to December 31, 2008, without the
consent of the other parties unless first reproduced by microfilm or any other
similar process.
10.7 Employees. Immediately prior to the Closing, Seller shall
terminate the employment of all employees of Seller who are employed in
connection with the Business. Buyer agrees to offer employment to all of such
employees immediately after the Closing. Such employment in each case shall be
at wage and benefit levels comparable (without preexisting condition
limitations) to those maintained by Seller for such employees. In the event that
any employee of Seller declines to sign a waiver of severance benefits from
Seller, as contemplated by Section 8.8, Buyer agrees, on behalf of itself and
its affiliates, to the extent permitted by applicable law and to the extent it
will not create successor liability for Buyer, that it will not retain such
individual, as an employee or consultant, for a period of twelve months from the
Closing Date.
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10.8 Third Party Claims. Buyer agrees to cooperate with and assist
Seller in connection with any claim, suit, proceeding, governmental
investigation or other matter relating to the conduct of the Business prior to
the Closing Date by using its reasonable efforts to make available at reasonable
times and places, at no material cost to the Buyer, such records, books,
contracts documents, engineering specifications and other information, and such
personnel of Buyer, as Seller may reasonably request.
10.9 Covenants Not to Compete. Each of Seller and Xxxxx agrees that
it will not, for a period of three (3) years after the date hereof, directly or
indirectly, for itself or with or on behalf of any individual, partnership,
firm, corporation or other entity, engage in, own any interest in, manage,
operate, control, loan money to, be employed or engaged by, render consulting or
advisory services to, represent, or participate in or be connected in the
management or control of, any business that is then engaged within the
Restricted Area (as defined below) in the Business (other than in connection
with the stadium cushions referred to in Section 1.3). For purposes of this
Agreement, the term "Restricted Area" shall mean the United States of America;
provided, however, that for the business of producing, selling or distributing
products that use thermal retention technology in connection with pizza
products, the Restricted Area shall mean the United States of America and all
countries in which Seller has sold or distributed products in the one-year
period prior to the Closing.
Seller agrees that the time limits, geographic scope and limitations
of activities set forth above are reasonable and necessary to protect the
legitimate interests of Buyer. If any court determines that any provision of
this paragraph is unenforceable because of the duration or geographic scope of
such provision, such court shall have the power to reduce the duration of
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scope of such provision, as the case may be, and, in its reduced form, such
provision shall then be enforceable.
Anything contained in this Section 10.9 to the contrary
notwithstanding, in the event of the "Sale" of Xxxxx, Xxxxx and Seller shall
have the right to terminate the non-competition restrictions of this Section
10.9 by delivering to Buyer a written agreement, executed by Seller and Xxxxx,
to forego receipt of any additional consideration for the Transferred Assets
under Section 2.5. For purposes of this paragraph, a "Sale" of Xxxxx shall mean
(i) any merger or consolidation of Xxxxx in which Xxxxx is not the continuing or
surviving corporation or pursuant to which shares of Xxxxx are converted into
cash, securities or other property, other than a transaction in which the
holders of Barry's voting stock immediately prior to the transaction shall, upon
consummation of the transaction, own at least 50% of the voting stock of the
continuing or surviving corporation, (ii) any sale or other transfer of all or
substantially all of the assets of Xxxxx to an unaffiliated third party or
parties or (iii) a transaction or series of transactions in which any person or
persons become the beneficial owner, directly or indirectly, of securities of
Xxxxx representing a majority of the voting power of all of then outstanding
securities of Xxxxx having the right under ordinary circumstances to vote in the
election of the Board of Directors.
10.10 Indemnification of Brokerage. Xxxxx agrees to indemnify and
save Buyer harmless from any claim or demand for commission or other
compensation by any broker, finder, agent or similar intermediary employed by
Xxxxx, either on its own behalf or on behalf of Seller, to sell the assets of
Seller.
10.11 Exclusive Dealing. From the date hereof through the earlier of
the Closing Date or termination of this Agreement pursuant to Section 13, Seller
and Xxxxx agree that they will
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not, directly or indirectly, encourage, initiate or engage in discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group, other than Buyer, concerning any purchase of
any equity interest in the Seller, or any merger, sale of substantial assets or
similar transaction involving the Seller.
10.12 Company Name. Immediately after the Closing Date, Seller and
Xxxxx shall take such action as is necessary to change the corporate name of
Seller to delete any use of the word "Vesture," and shall cooperate with Buyer's
efforts to obtain and use such name. Notwithstanding the foregoing, Buyer agrees
to allow Seller to use the name "Vesture" for a period of 90 days after the
Closing solely for the limited purpose of collecting its accounts receivable and
otherwise to wind-up its business.
10.13 Bulk Transfer Laws. Buyer hereby waives compliance by Seller
with the provisions of any so-called bulk transfer laws of any jurisdiction in
connection with the sale of the Transferred Assets to Buyer. Seller shall,
without adjustment for any tax benefit, indemnify and hold harmless Buyer
against any and all liabilities which may be asserted by third parties against
Buyer as a result of Seller's noncompliance with any such bulk transfer law
(except for those liabilities assumed by Buyer hereunder or in the Assumption
Agreement).
10.14 Financing. Buyer shall use commercially reasonable efforts to
obtain financing to satisfy the condition set forth in Section 9.7.
10.15 Nondisclosure of Proprietary Data. Following the date of this
Agreement, neither Seller nor Xxxxx shall, at any time, make use of, divulge or
otherwise disclose, directly or indirectly, any trade secrets or other
non-public, proprietary information concerning the Business. Notwithstanding the
foregoing, Seller or Xxxxx may disclose such information if required to do so by
law, by government regulation or order, by subpoena or by any other legal,
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administrative or legislative process. In such event, Xxxxx or Seller will use
its commercially reasonable efforts to provide Buyer with advance notice of any
request for disclosure as promptly as is feasible in order that Buyer may seek a
protective order or other appropriate remedy as Buyer deems necessary.
10.16 Computer System Access by Buyer. Until December 31, 2003,
Seller and Xxxxx shall give Buyer access to, and the right to copy and transfer,
business information stored on Barry's computer system to the extent such
information is related to the Business. Seller and Xxxxx will provide such
information in a transferable format if Seller or Xxxxx has the existing
capability to do so. Seller and Xxxxx will provide Buyer with information
regarding programs used by Xxxxx and Seller and the encryption keys,
identification numbers and passwords necessary to obtain access to the business
information. Until December 31, 2003, Seller and Xxxxx shall also give Buyer
access to substantially the same data processing services of Seller and Xxxxx
that are used by Seller on the Closing Date to the extent such access or use by
Buyer is not prohibited or otherwise restricted by an agreement between Seller
or Xxxxx with a third-party; provided, however, that Buyer shall be responsible
for reimbursing Seller or Xxxxx for any third-party costs and expenses incurred
by Seller or Xxxxx to provide the services and computer access described in this
Section 10.16, including but not limited to the cost of data lines.
10.17 Ad Valorem Taxes. Seller and Buyer agree that ad valorem taxes
on the Transferred Assets and the Exhibit 1.3 Intellectual Property for the year
2003 shall be prorated between Buyer and Seller as of the Effective Date. Seller
shall be responsible for all ad valorem taxes relating to any period prior to
the Effective Date, and Buyer shall be responsible for all ad valorem taxes
relating to any period after the Effective Date. To the extent readily
ascertainable as of the Closing Date, ad valorem taxes on the Transferred Assets
and the Exhibit 1.3
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Intellectual Property through the Effective Date shall be determined by the
parties and an appropriate Closing Date adjustment to the Closing Purchase Price
shall be made. To the extent such ad valorem taxes are not readily ascertainable
as of the Closing Date, and if either Buyer on the one hand, or Seller on the
other hand, pays or is required to pay ad valorem taxes for which the other
party is responsible, as set forth in the second sentence of this Section 10.17,
the responsible party shall, upon notice, promptly remit to the other party who
pays or is required to pay such taxes the amount of the ad valorem taxes for
which the remitting party is responsible.
10.18 COBRA Coverage. Seller shall retain all responsibility and
liability for providing COBRA coverage (pursuant to Code Section 4980B) and any
state-mandated continuation coverage under any group health plan(s), as defined
in Code Section 5000(b)(1), of Seller for each person who on the Closing Date
has existing continuation coverage with Seller, or has a right to continuation
coverage under Seller's group health plan(s), and for each "M&A qualified
beneficiary," as defined in Treas. Reg. Sec. 544980B-9, Q&A 4(a).
SECTION 11. ACCOUNTS RECEIVABLE
11.1 Buyer's Assistance to Collect Accounts Receivable. Seller
shall deliver to Buyer at Closing a schedule of the accounts receivable of
Seller as of the Effective Date (the "Accounts Receivable") which remain unpaid
showing, as to each sum receivable, the name of the account debtor, the amount
owed, the date of the creation of the receivable and any identifying number
assigned to such receivable. Upon its receipt of such Schedule, Buyer shall use
reasonable commercial efforts to cooperate with Seller's efforts to collect the
Accounts Receivable for the benefit of Seller and without any additional cost to
Seller. All customers will continue to remit payments of the Accounts Receivable
to a bank account designated by Seller which will be under the exclusive control
of Seller. If Buyer should receive any payments of the Accounts
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Receivable, it will promptly remit such amounts to Seller together with
information regarding the identity of the paying customer and the related
invoice. Buyer shall provide Seller with a written report on a bi-monthly basis
showing the efforts made to collect the Accounts Receivable and describing the
results of such efforts. If either Seller or Xxxxx receives any payments of
accounts receivable of Buyer, it will promptly remit such amounts to Buyer,
together with information regarding the identity of the paying customer and the
related invoice.
11.2 Purchase of Accounts Receivable. To the extent that Seller has
not received on the Qualified Accounts Receivable (as defined below) payments
equal to (i) the amount of the Qualified Accounts Receivable minus (ii) $50,000
(the "Threshold Amount") prior to the ninetieth (90th) day following the Closing
Date, Seller shall have the right (the "Put Right") to require Buyer to
purchase, for cash, the then uncollected Qualified Accounts Receivable, and all
rights related thereto, for an amount (the "Put Amount") equal to the difference
between the Threshold Amount and the actual amount collected by Seller on
account of the Qualified Accounts Receivable as of the date on which Seller
elects to exercise its Put Right. The Put Right may be exercised by Seller at
any time during the 30-day period following the end of the 90-day period
described above by delivery of a written notice of exercise to Buyer. Buyer
shall make payment to Seller of the Put Amount within 20 days of its receipt of
such written notice of exercise. If either Seller or Xxxxx receives any payments
on the Accounts Receivable after Seller has exercised the Put Right and has
received payment from Buyer of the Put Amount, it will promptly remit such
payments to Buyer. Furthermore, Seller and Xxxxx shall use reasonable commercial
efforts to cooperate with Buyer's efforts to collect the Qualified Accounts
Receivable purchased by Buyer pursuant to the Seller's exercise of the Put
Right. The term "Qualified Accounts Receivable" has the definition set forth in
Exhibit 11.2 hereof. In the event
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of the commencement of any proceeding under any bankruptcy or insolvency law by
or against the obligor of a Qualified Account Receivable (a "Bankruptcy Event"),
such Qualified Account Receivable shall be treated as having been collected in
full for purposes of determining the Put Amount. If (i) a Qualified Account
Receivable is purchased by Buyer as a result of Seller's exercise of the Put
Right and (ii) within one (1) year of Buyer's payment to Seller of the Put
Amount either the obligor of such Qualified Account Receivable has a Bankruptcy
Event or Buyer files suit against the obligor to collect the unpaid Qualified
Account Receivable and the obligor has a Bankruptcy Event while the suit is
pending (whether before or after such one (1) year period), then Seller shall
promptly return to Buyer the amount paid to Seller for such Qualified Account
Receivable in exchange for such Qualified Account Receivable.
SECTION 12. LITIGATION WITH COOKTEK AND THERMAL SOLUTIONS
12.1 Pending Litigation. Seller is currently a party to a lawsuit
(the "Litigation") which is pending in the United States District Court of the
Middle District of North Carolina (the "District Court") (Civil Action No.
1:01CV01006). The other parties to the Litigation include CookTek, Inc.
("CookTek") and Thermal Solutions, Inc. ("ThermalSolutions").
12.2 Assumption of Liability and Indemnification. Subject to the
conditions, limitations and other provisions of this Section 12, Buyer agrees to
reimburse and indemnify Seller and Xxxxx for (a) third-party service costs,
expenses and fees, including attorneys' fees, of Seller and Xxxxx incurred after
the Effective Date which arise out of, result from, or relate to the Litigation
or any of the claims asserted in the Litigation, regardless of whether such
claims are asserted in the District Court or in any other court, including any
appellate court, or in any arbitration proceeding (the "Litigation Costs"), and
(b) monetary damages assessed against Seller
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or an amount in settlement of the Litigation paid by Seller (the "Damages
Amount", and together with the Litigation Costs, the "Litigation Liabilities")
as set forth in this Section 12.
12.3 Payments of Litigation Liabilities by Buyer. From and after
the Effective Date, Buyer shall be obligated to reimburse Seller and Xxxxx for
all Litigation Liabilities until the aggregate amount of all payments by Buyer
for Litigation Liabilities equals $300,000 (the "Litigation Liability
Threshold"), except that if Seller accepts a Monetary Settlement (as defined in
Section 12.4) of the Litigation, Buyer shall not be required to contribute to
the Damages Amount in such settlement of the Litigation. Buyer shall reimburse
Seller for such Litigation Liabilities, up to the Litigation Liability
Threshold, in the manner provided in Section 12.8. In the event that suit is
filed by CookTek or ThermalSolutions against Buyer regarding the heat induction
technology at issue in the Litigation, (i) all third-party service costs,
expenses and fees, including attorneys' fees, paid by Buyer in defense of such
suit, and (ii) monetary damages assessed against Buyer or any amount in
settlement of such suit paid by Buyer (collectively, "Buyer Litigation
Expenses") shall be treated as Litigation Liabilities paid by Buyer solely for
purposes of determining whether the Litigation Liability Threshold has been met.
Buyer agrees to promptly provide Seller and Xxxxx with documentation showing all
Buyer Litigation Expenses incurred by Buyer. If, after adjustment for Buyer
Litigation Expenses as provided above, Buyer has paid to Seller an amount in
excess of the Litigation Liability Threshold, Seller shall promptly reimburse
Buyer in an amount equal to the Litigation Liabilities previously paid by Buyer
to Seller or Xxxxx or to Merchant & Xxxxx on behalf of Seller, but in no event
shall such reimbursement exceed $300,000.
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12.4 Offer of Settlement of Litigation and Notice of Settlement.
Any settlement of the Litigation, other than a Monetary Settlement (as defined
below) or a Non-Material Settlement (as defined below), shall require the
approval of Seller, Xxxxx and Buyer. If Seller or Xxxxx receives a bona fide
offer of settlement of the Litigation, other than an offer of a Monetary
Settlement or a Non-Material Settlement (such bona fide offer which is not a
Monetary Settlement or a Non-Material Settlement, a "Settlement Offer"), and
wishes to accept such Settlement Offer, Seller shall notify Buyer of the terms
of the Settlement Offer and its desire to accept such Settlement Offer (the
"Settlement Notice"). Buyer shall then have ten (10) days from the date of the
Settlement Notice to accept or reject the Settlement Offer. If Buyer does not
respond to the Settlement Notice within such ten (10) day period, it will be
deemed to have accepted the Settlement Offer. For purposes of this Section 12,
(a) a "Monetary Settlement" is a full and complete settlement of all claims in
the Litigation if the terms of the settlement provide only for the payment of
funds by Seller and do not contemplate any restriction on the use of patents
which are the subject of the Litigation or the requirement that Buyer make any
payment of any royalty or other amount for future use of any patents and (b) a
"Non-Material Settlement" is a full and complete settlement of all claims in the
Litigation which does not qualify as a Monetary Settlement so long as the only
restrictions on Buyer involve the payment of a royalty to use the patent rights
which are the subject of the Litigation at a rate not to exceed 5% of gross
sales and Buyer obtains the right to use such patent rights for a term of at
least three (3) years.
12.5 Acceptance by Buyer of Settlement. If, within ten (10) days of
receipt of the Settlement Notice, Buyer accepts the Settlement Offer, Buyer
shall be obligated to reimburse Seller for any Damage Amount due under the
Settlement Offer to the extent that the Litigation Liability Threshold has not
been met, and once such Litigation Liability Threshold is met, all
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additional Litigation Liabilities incurred by Seller shall be borne by Seller.
Buyer shall reimburse Seller for the amount provided in this Section 12.5 in the
manner provided by Section 12.8. Seller may accept a Monetary Settlement or a
Non-Material Settlement without obtaining the consent or approval of Buyer.
12.6 Rejection of Settlement Offer by Buyer. If Buyer declines to
accept a Settlement Offer and the Litigation is not settled because of Buyer's
failure to accept the Settlement Offer, Buyer shall be obligated to reimburse
Seller for all Litigation Liabilities until the aggregate amount of Litigation
Liability payments paid by Buyer equals the Litigation Liability Threshold, and
after such Litigation Liability Threshold is reached, all Litigation Liabilities
shall be divided equally between Seller and Buyer until the amount allocated to
Buyer equals $150,000 after which all additional Litigation Liabilities shall be
borne by Seller. Buyer shall reimburse Seller for the amounts provided in this
Section 12.6 in the manner provided in Section 12.8. Seller and Xxxxx hereby
represent to Buyer that neither of them is currently engaged in settlement
discussions with any of the other parties to the Litigation.
12.7 Participation in the Litigation. The parties agree that both
Seller and Buyer will have the right following the Closing to participate in the
defense of the Litigation on behalf of Seller. Seller and Buyer will keep one
another informed with respect to all significant developments in the Litigation,
and will cooperate with the other in regard to all actions to be taken by Seller
in connection with the Litigation. Notwithstanding its obligation to cooperate
with Buyer in the defense of the Litigation, Seller shall have final
decision-making authority with respect to all actions to be taken by Seller in
the Litigation, except that Seller shall not make or accept any Settlement Offer
without the prior approval of Buyer as set forth in this Section 12.
12.8 Reimbursement by Buyer of Seller's Litigation Liabilities.
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(i) With respect to all Litigation Liabilities for which
Buyer is obligated to reimburse Seller in accordance with this
Section 12, Buyer shall reimburse Seller for such Litigation
Liabilities within 30 days of Buyer's receipt of invoices or
other evidence thereof; provided, however, Buyer shall not be
required to begin reimbursing Seller for such Litigation
Liabilities until December 1, 2003, on which date Buyer shall
bring Seller current on all invoices or other evidence
previously submitted by Seller, and thereafter Buyer shall
reimburse Seller within 30 days after receipt of all invoices
or other evidence of reimbursable Litigation Liabilities.
(ii) Notwithstanding the provisions of Section 12.8(i),
but without affecting the limitations herein on Buyer's
responsibility for Litigation Liabilities, Seller may make
arrangements with Merchant & Xxxxx, Seller's attorneys in the
Litigation, for Merchant & Xxxxx to send invoices for legal
services rendered in the Litigation after the Effective Date
directly to Buyer so long as the due date for payment of the
invoices is no earlier than December 1, 2003.
12.9 Litigation Liability Reimbursement by Seller. In the event
that a final judgment is rendered against Seller in the Litigation that prevents
Buyer from using the heat induction technology at issue in the Litigation and
such judgment has not been appealed within the required time period or all
appeals have been exhausted (a "Final Litigation Judgment"), Seller and Buyer
shall determine the final amount of Litigation Liabilities owing from Buyer to
Seller under Section 12, which amount shall include all amounts previously paid
by Buyer to Seller or paid by Buyer to Merchant & Xxxxx on behalf of Seller
under this Section 12 (the "Preadjustment Liability Amount"). In such event, the
Preadjustment Liability Amount shall be
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reduced by $100,000, but not below zero (the "Adjusted Liability Amount"). If
Buyer has previously paid to Seller or paid to Merchant & Xxxxx on behalf of
Seller under this Section 12 amounts totaling more than the Adjusted Liability
Amount, Seller and/or Xxxxx shall promptly pay to Buyer the amount of such
excess. If Buyer has not paid Seller under this Section 12 amounts totaling the
Adjusted Liability Amount, Buyer shall promptly pay to Seller the difference
between the Adjusted Liability Amount and the total of the amounts previously
paid.
12.10 Additional Consideration Adjustment. In the event of a Final
Litigation Judgment and/or in the event that a final judgment (other than a
judgment pursuant to a settlement) is rendered against Buyer that prevents Buyer
from using the heat induction technology at issue in the Litigation and such
judgment has not been appealed within the required time period or all appeals
have been exhausted (a "Buyer Final Litigation Judgment"), as of the date of
such Final Litigation Judgment or Buyer Final Litigation Judgment, Section 2.5
above shall be superseded and replaced in its entirety with the following
Section 2.5A, and all references in this Agreement to Section 2.5 shall be
deemed to refer to Section 2.5A:
2.5A Additional Consideration.
(a) As additional consideration for the Transferred Assets and
the Exhibit 1.3 Intellectual Property, Buyer shall pay to
Seller (i) an amount equal to ten percent (10%) of the net
sales of Buyer in excess of $4.5 million for each of the
twelve month periods ending on December 31, 2004 (the "2004
Period") and December 31, 2005 (the "2005 Period"); (ii) an
amount equal to five percent (5%) of the net sales of Buyer in
excess of $4.5 million for the twelve month
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period ending on December 31, 2006 (the "2006 Period"); (iii)
an amount equal to four percent (4%) of the net sales of Buyer
in excess of $4.5 million for the twelve month period ending
on December 31, 2007 (the "2007 Period"), and (iv) an amount
equal to ten percent (10%) of the net sales of Buyer for the
period commencing on the first day following the Effective
Date and ending on December 31, 2003 (the "2003 Period") in
excess of the difference between $4.5 million and the net
sales of Seller from December 29, 2002 through the Effective
Date. For purposes of this Section 2.5A, the "net sales" of
Buyer shall mean the gross sales of products related to the
Business by Buyer and all subsidiaries and other affiliates of
Buyer less returns and discounts on such sales and shall be
determined in accordance with generally accepted accounting
principles ("GAAP") and Seller's historical accounting
practices. Within 30 days after the completion of the 2003
Period and within 30 days after the completion of each
six-month period during the 2004 Period, the 2005 Period, the
2006 Period and the 2007 Period, Buyer shall furnish to Seller
a statement in writing (a "Reporting Statement") showing
Buyer's net sales for the applicable reporting period and the
method by which such net sales were determined, including a
breakdown of sales by customer, products sold and product
price and accompanied by a statement, certified by the chief
accounting officer of Buyer, confirming, to the best knowledge
of such officer, the accuracy of the information furnished to
Seller. The Reporting Statements shall also be accompanied by
payment in full of the amount of the additional consideration
owed to Seller for the relevant reporting period, if any.
Seller shall have the right, exercisable at any time within 30
days following its receipt of a Reporting Statement, to review
the books and records of Buyer and its subsidiaries and other
affiliates, if any, to confirm the accuracy of the information
presented in the
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Reporting Statement and the accuracy of the amount of any
payment accompanying such Reporting Statement. Seller and
Xxxxx agree that any information provided under this Section
2.5A shall be kept strictly confidential and only used for the
purpose provided for herein.
(b) In the event that a Final Litigation Judgment or a Buyer
Final Litigation Judgment is rendered, any sales directly
related to products using the heat induction technology at
issue in the Litigation ("Excluded Products"), if any, shall
be subtracted from the net sales of Buyer in determining any
additional consideration due under Section 2.5A (a). In
addition, if Seller or Xxxxx has previously received payments
of additional consideration for net sales of Excluded Products
prior to the Final Litigation Judgment or a Buyer Final
Litigation Judgment pursuant to Section 2.5, Seller shall
promptly refund the amount of such additional consideration to
Buyer. Notwithstanding the foregoing, the total amount of
additional consideration that Seller is required to refund to
Buyer pursuant to the immediately preceding sentence plus the
amount of future additional consideration otherwise due under
Section 2.5A(a) which Buyer is not required to pay for net
sales of Excluded Products by virtue of this Section 2.5A(b)
shall not exceed, in the aggregate, the amount of the Buyer
Litigation Expenses.
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SECTION 13. TERMINATION; SURVIVAL
13.1. Termination. Anything herein to the contrary notwithstanding,
this Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing Date:
(i) by mutual consent of Seller, Xxxxx and Buyer;
(ii) by Seller and Xxxxx, if any of the conditions set
forth in Section 8 shall have become incapable of fulfillment
and shall not have been waived by Seller and Xxxxx;
(iii) by Buyer, if any of the conditions set forth in
Section 9 shall have become incapable of fulfillment and shall
not have been waived by Buyer; or
(iv) by Seller and Xxxxx or by Buyer, if the transactions
contemplated hereby are not consummated on or before May 23,
2003 and the party seeking termination is not then in material
breach of this Agreement.
13.2 Survival. If this Agreement is terminated and the transactions
contemplated hereby are not consummated in accordance with the provisions of
Section 13.1, this Agreement shall become void and of no further force and
effect, except for Section 10.1 relating to the obligation of Buyer to keep
confidential, to return and not to use certain information and data obtained by
it from Seller and Xxxxx.
SECTION 14. INDEMNIFICATION
14.1 Indemnification by Buyer. Buyer agrees to indemnify, defend
and hold each of Seller and Xxxxx and their respective successors and assigns
harmless from and against any and all losses, claims, demands, damages, costs
and expenses (including without limitation, reasonable attorneys' fees and
disbursements) of every kind, nature and description (collectively,
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"Claims") based upon, arising out of or otherwise in respect of (i) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of Buyer contained in this Agreement or in any certificate, document
or instrument delivered by Buyer pursuant to this Agreement, to the extent such
inaccuracy or breach has not been specifically waived in writing by Seller and
Xxxxx, (ii) any Assumed Liability or (iii) the Business as conducted by Buyer or
its affiliates (and any use of the Transferred Assets or the Exhibit 1.3
Intellectual Property) from and after the Closing Date; provided that the sum of
all Claims shall exceed $10,000 in the aggregate before Seller or Xxxxx shall be
entitled to indemnification under this Section 14.1 and then they shall be
entitled to indemnification hereunder in respect of any Claim only to the extent
that all unpaid Claims exceed, in the aggregate, $10,000.
14.2 Indemnification by Seller. Seller agrees to indemnify, defend
and hold Buyer and its successors and assigns harmless from and against any and
all Claims based upon, arising out of or otherwise in respect of (i) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of Seller or Xxxxx contained in this Agreement or in any certificate,
document or instrument delivered by Seller or Xxxxx pursuant to this Agreement,
to the extent such inaccuracy or breach has not been specifically waived in
writing by Buyer, (ii) the Business (except for Assumed Liabilities or as
otherwise provided in this Agreement) as conducted by Seller prior to the
Effective Date, or (iii) any liability or obligation of Seller or Xxxxx other
than the Assumed Liabilities; provided that the sum of all Claims asserted by
Buyer against Seller pursuant to this Section 14.2 and Xxxxx pursuant to Section
14.3 shall exceed $10,000 in the aggregate before Buyer shall be entitled to
indemnification under this Section 14.2 and then Buyer shall be entitled to
indemnification hereunder in respect of any Claim only to the extent that all
unpaid Claims against Seller and Xxxxx exceed, in the aggregate, $10,000.
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14.3 Indemnification by Xxxxx. Xxxxx agrees to indemnify, defend
and hold Buyer and its successors and assigns harmless from and against any and
all Claims based upon, arising out of or otherwise in respect of (i) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of Xxxxx contained in this Agreement or in any certificate, document
or instrument delivered pursuant to this Agreement, to the extent such
inaccuracy or breach has not been specifically waived in writing by Buyer or
(ii) any liability or obligation of Seller or Xxxxx other than the Assumed
Liabilities; provided that the sum of all Claims asserted by Buyer against
Seller pursuant to Section 14.2 and Xxxxx pursuant to this Section 14.3 shall
exceed $10,000 in the aggregate before Buyer shall be entitled to
indemnification under this Section 14.3 and then Buyer shall be entitled to
indemnification hereunder in respect of any Claim only to the extent that all
unpaid Claims against Seller and Xxxxx exceed, in the aggregate, $10,000.
14.4 Notice and Opportunity to Defend. Any party claiming
indemnification under this Section 14 ("Claimant") shall deliver (by courier or
registered or certified mail, postage prepaid) to the party from whom indemnity
is sought ("Indemnitor") written notice (each such notice being herein called an
"Indemnity Notice") of any claim under this Section 14 (each such claim being
herein called an "Indemnification Claim") reasonably promptly after Claimant
shall become aware of its existence. Upon the written request of Indemnitor,
Claimant shall furnish to Indemnitor copies of any documents specifically
requested that (a) directly relate to any Indemnification Claim under this
Section 14 and (b) are in the possession or control of Claimant. If any such
Indemnification Claim shall relate to a claim against Claimant by a third person
or entity, Indemnitor shall have the right to negotiate, defend and/or settle
such claim; provided, however, that the Indemnitor shall pay any and all losses,
costs, damages, claims, liabilities, or expenses relating to such negotiation,
defense, or settlement.
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Indemnitor shall have 30 days after the receipt of an Indemnity Notice
to dispute the validity of an Indemnification Claim by delivering written notice
(by courier, overnight delivery, facsimile transmission (with receipt confirmed)
or registered or certified United States mail, postage prepaid) of its dispute
to Claimant (a "Dispute Notice"). If Indemnitor does not dispute the
Indemnification Claim by delivering such a Dispute Notice, it shall forthwith
pay to Claimant the amount of damage, loss, cost or expense set forth in the
Indemnity Notice (including, without limitation, any reasonable fees and
disbursements of Claimant or its agents set forth therein). If Indemnitor does
dispute the Indemnification Claim, and Claimant has received a Dispute Notice
within 30 days after the receipt by Indemnitor of the relevant Indemnity Notice,
the parties hereto shall refrain from commencing any action or proceeding in
connection with the disputed Indemnification Claim for a period of 60 days after
the receipt of the Dispute Notice and shall enter into and pursue with
reasonable diligence during such period good faith negotiations directed toward
the settlement or compromise of the disputed Indemnification Claim.
14.5 Limitations. The indemnification provided for in Sections
14.1, 14.2 and 14.3 shall be subject to the limitations that payments in respect
of any Indemnification Claim shall be computed net of any insurance proceeds and
any indemnity, contribution or other similar payment received by the Claimant
from any third party with respect to the loss, damage, expense or liability
resulting in such Indemnification Claim; provided, however, that the foregoing
limitation shall not limit or affect the right of subrogation of any insurance
company.
SECTION 15. MISCELLANEOUS
15.1 Survival of Representations and Warranties. All
representations and warranties of Seller and of Buyer made in this Agreement or
in any certificate, document or other instrument delivered pursuant hereto shall
survive the execution and delivery hereof and the Closing but
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shall expire and be of no further force or effect as to any claim or matter not
asserted in writing on or before the first anniversary of the Closing Date;
provided, however, that the representations and warranties of Seller contained
in Sections 5.1, 5.2 and 5.3, the representations and warranties of Xxxxx
contained in Sections 6.1, 6.2 and 6.3, and the representations and warranties
of Buyer contained in Section 7.1 and 7.2 shall survive and continue to be in
force for a period of five (5) years after the Closing Date. All covenants of
the parties set forth in this Agreement shall survive and continue to be in
force and effect for an indefinite period of time after the Closing Date.
15.2 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally or
mailed by United States certified or registered mail, postage prepaid or
delivered by courier or sent by facsimile transmission (with receipt confirmed).
Any such notice shall be deemed given upon its receipt at the following address:
(i) if to Seller or Xxxxx at:
X. X. Xxxxx Corporation
00000 Xxxxxxxx Xxxx, X.X.
Xxxxxxxxxxxx, Xxxx 00000
Attention: Chief Executive Officer
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
(ii)if to Buyer, at:
Vesture Acquisition Corp.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
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Any party may, by notice given in accordance with this Section 15.2 to the other
party or parties, designate another address or person for receipt of notices
hereunder.
15.3 Entire Agreement. This Agreement (including the Exhibits
referred to herein) and the collateral agreements and instruments executed in
connection with the consummation of the transactions contemplated hereby contain
the entire agreement between the parties with respect to the transfer of the
Transferred Assets and the Exhibit 1.3 Intellectual Property to Buyer and the
assumption by Buyer of the Assumed Liabilities and supersede all prior
agreements, written or oral, with respect thereto. Neither Seller, Xxxxx nor
Buyer has made any representation or warranty to the others in connection with
the transactions contemplated by this Agreement other than those contained
herein and in the collateral agreements and instruments referred to above.
15.4 Waiver and Amendments; Non-Contractual Remedies; Preservation
of Remedies. This Agreement may be amended, superseded, cancelled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, or any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any such right, power or privilege. The
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law or in equity. The
rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach of any representation, warranty, covenant
or agreement contained in this Agreement shall in no way be limited by the fact
that the act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject
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matter of any other representation, warranty, covenant or agreement contained in
this Agreement (or in any other agreement between the parties) as to which there
is no inaccuracy or breach.
15.5 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of North Carolina applicable to
agreements made and to be performed entirely within such State without regard to
such state's choice of law provisions.
15.6 Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable except by operation of
law. This Agreement shall not confer any rights or remedies upon any individual,
entity or other person other than the parties to this Agreement and their
respective successors and permitted assigns.
15.7 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts and by facsimile, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all, of
the parties hereto.
15.8 Further Assurances. Each of Seller and Xxxxx shall, at the
request and expense of Buyer, at any time and from time to time following the
Closing promptly execute, acknowledge (where appropriate) and deliver to Buyer
all such further instruments and take all such further action as, in Buyer's
reasonable judgment, may be necessary or appropriate to more effectively
transfer to Buyer, or to perfect or record Buyer's title to or interest in, or
to enable Buyer to use, the Transferred Assets and the Exhibit 1.3 Intellectual
Property or otherwise to confirm or carry out the provisions and intent of this
Agreement.
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15.9 Severability of Provisions. If any provision or any portion of
any provision of this Agreement or the application of any such provision or any
portion thereof to any person or circumstances, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
15.10 Exhibits. All Exhibits to this Agreement are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. All references in this Agreement to an "Exhibit" refer to an Exhibit to
this Agreement.
15.11 Captions. All Section titles or captions contained in this
Agreement or in any Exhibit annexed hereto or referred to herein are for
convenience only, shall not be deemed a part of this Agreement and shall not
affect the meaning or interpretation of this Agreement. All references in this
Agreement to a "Section" or to "Sections" shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.
15.12 Definition of Knowledge. For purposes of this Agreement,
Seller's Knowledge means the actual knowledge of any of the Xxxxx Officers (as
defined below) or any of the following employees of Vesture, so long as each
such employee of Vesture, prior to Closing, shall have provided Seller and Xxxxx
as of the Closing Date a certificate stating that such person has read the
representations and warranties made by Seller in this Agreement and that, to
such person's knowledge, as of the date of this Agreement and as of the Closing
Date such representations and warranties are true and correct: Xxxxx Xxxxxxx,
Xxxx Xxxx, Xxxxxx Xxxxxxx, Xxxx XxxXxx and Xxxxxxx Xxxxx. For purposes of this
Agreement, Barry's knowledge means
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the actual knowledge of Xxxxxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxx, Xxxxxxx
Xxxxxxx, Xxxx Xxxxxxxx and Xxx Xxx Xxxxx (the "Xxxxx Officers").
15.13 Arbitration. All disputes arising under this Agreement between
Seller and/or Xxxxx, on the one hand, and Buyer, on the other hand, shall be
submitted to binding arbitration to be conducted by one (1) arbitrator in
accordance with the Commercial Dispute Resolution Procedures of the American
Arbitration Association, but only after completion of the dispute resolution
procedures set forth in Section 14 of this Agreement (if required by Section
14). The award rendered in the arbitration shall be conclusive and binding upon
the parties hereto, and judgment upon the award may be entered in any court
having jurisdiction. The arbitration shall take place at a location selected by
the arbitrator. The arbitrator shall have no power to change any of the
provisions of this Agreement in any respect, and the jurisdiction of the
arbitrator is hereby expressly limited accordingly. No claims or defenses, legal
or factual, may be raised in the arbitration proceeding which were not presented
by the parties during the 90 day period during which they endeavored to resolve
such disputes. The parties agree that the party to an arbitrated dispute who
loses the dispute shall pay all reasonable legal and professional expenses
(including the legal fees and expert witness fees of the prevailing party)
relating to the arbitrated dispute; except that the party asserting the Claim
shall pay the arbitrator's fees and expenses. In the event that the arbitrator
does not rule entirely in favor of one party to the dispute, the arbitrator
shall determine to what extent each party shall pay such expenses (except as
aforesaid with respect to the arbitrator's fees and expenses).
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day, month and year first above written.
SELLER:
VESTURE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxxx
Secretary and Treasurer
XXXXX:
X. X. XXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxxx
Senior Vice President - Finance, Chief
Financial Officer, Secretary and Treasurer
BUYER:
VESTURE ACQUISITION CORP.
By: /s/ Xxxxx Xxxxx
-------------------------------------------
Xxxxx Xxxxx
President
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