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EXHIBIT 10.177
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as of April 26,
2000, is made and entered into by and among Wilshire Technologies, Inc., a
California corporation ("Seller"), and Foamex Asia Co., Ltd., a limited company
organized and existing under the laws of the Kingdom of Thailand ("Buyer").
1. Recitals.
1.1. Seller desires to sell, and Buyer desires to purchase,
substantially all of the assets of Seller's Wilshire Contamination Control
Division (the "Division") for the consideration and on the terms set forth in
this Agreement.
1.2. The assets to be purchased are defined below as the
"Assets", and are listed in Exhibit A to this Agreement. In connection with the
purchase of the Assets, Buyer will assume certain liabilities of the Division
(the "Assumed Liabilities") as set forth in Exhibit C.
2. Sale and Transfer of Assets. Seller will sell, assign and deliver,
free and clear of all liens, security interests, pledges, mortgages or
encumbrances ("Encumbrances") other than those items designated as Permitted
Encumbrances in Exhibit B to this Agreement, to Buyer and Buyer will purchase
from Seller at the Closing all of Seller's right, title and interest in and to
those assets of the Division described in Exhibit A to this Agreement (including
without limitation Seller's rights to the name "Wilshire Contamination Control"
and its other trademarks and tradenames described in Exhibit A) as the same may
exist on the Closing Date (collectively, the "Assets").
3. The Closing.
3.1. Place and Date. The closing of the sale and purchase of the
Assets (the "Closing") shall take place at such time or place as agreed to by
the parties, but not later than May 19, 2000. The date of the Closing in this
Agreement is referred to as the "Closing Date."
3.2. Deliveries; Transfer of Assets.
3.2.1. At the Closing, Seller shall deliver to Buyer the
following, and simultaneously with such delivery, Seller shall take such action
as may be necessary or reasonably requested by Buyer to place Buyer in
possession and control of the Assets (provided that any costs of transportation
or storage shall be the responsibility of Buyer):
3.2.1.1. such bills of sale, assignments or other
instruments of transfer and assignment as shall be necessary (as reasonably
required by and in form and
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substance reasonably acceptable to Buyer and/or Buyer's counsel) to vest in
Buyer title to the Assets to be sold and assigned under this Agreement free and
clear of all Encumbrances (other than Permitted Encumbrances);
3.2.1.2. a copy of the resolutions of the board of
directors and shareholders of Seller authorizing the execution, delivery and
performance of this Agreement by Seller, and a certificate of its Secretary or
Assistant Secretary, dated the Closing Date, that such resolutions were duly
adopted and are in full force and effect;
3.2.1.3. restrictive covenant agreements executed
by Xxxxx Xxxxxxxxx, Xxxxxxxx Xxxxx and Xxxx Xxxxxxxx in favor of and for the
benefit of Buyer in the form attached hereto as Exhibit D.
3.2.1.4. such other certificates or other documents
or instruments as the Buyer or Buyer's counsel may reasonably request for the
purpose of documenting and effecting the transactions contemplated by this
Agreement.
3.2.2. At the Closing, the Buyer shall deliver to Seller
the following:
3.2.2.1. instruments pursuant to which Buyer
assumes the Assumed Liabilities (as defined in Section 3.5) in form and
substance reasonably satisfactory to Seller;
3.2.2.2. a copy of resolutions of the boards of
directors of Buyer authorizing the execution, delivery and performance of this
Agreement by Buyer, and a certificate of its Secretary or Assistant Secretary,
dated the Closing Date, that such resolutions were duly adopted and are in full
force and effect;
3.2.2.3. the Security Agreement, as defined in
Section 3.7 hereof, and other appropriate instruments pursuant to which the
Assets are pledged as security for Buyer's obligation to pay the Purchase Price
under this Agreement, including UCC-1 Financing Statements, all in form
reasonably acceptable to Seller;
3.2.2.4. such other certificates or other documents
or instruments as Seller or Seller's counsel may reasonably request for the
purpose of documenting the transactions contemplated by this Agreement.
3.3. Purchase Price; Payment of Purchase Price. In addition to
assuming the Assumed Liabilities listed in Exhibit C, and subject to the terms
and conditions of this Agreement, Buyer shall pay the following to Seller as
consideration for the sale of the Assets:
3.3.1. An amount equal to 20% of all of Buyer's United
States sales of the swab, wiper, roller and other contamination control products
designated in Schedule 3.3.1 hereof ("Covered Products") and 5% of all of
Buyer's other sales of Covered Products during the period
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beginning on the Closing Date and ending twelve months after the beginning of
the first three calendar month period during which sales of Covered Products
exceed $750,000 ("Period One").
3.3.2. An amount equal to 18% of Buyer's United States
sales of Covered Products and 8% of Buyer's other sales of Covered Products
during the one year period ("Period Two") immediately following the conclusion
of Period One.
3.3.3. An amount equal to 16% of Buyer's United States
sales of Covered Products and 8% of Buyer's other sales of Covered Products
during the one year period ("Period Three") immediately following the conclusion
of Period Two.
3.3.4. If aggregate payments from Buyer to Seller during
Period One, Period Two and Period Three aggregate at least $2,500,000, no
further payments shall be made. If such aggregate payments are less than
$2,500,000 and Buyer does not elect to pay the shortfall to Seller, Buyer shall
be obligated to pay to Seller an amount equal to 16% of Buyer's United States
sales of Covered Products and 8% of Buyer's other sales of Covered Products
during the one year period ("Period Four") commencing at the end of Period
Three, provided that Buyer's payment obligation under this Paragraph 3.3.4 shall
cease when a total of $2,500,000 has been paid to Seller under Paragraphs 3.3.1
through 3.3.4.
3.3.5. All payments to be made under Paragraphs 3.3.1,
3.3.2, 3.3.3 and 3.3.4 shall be made on a quarterly basis within 60 days after
the end of the applicable three calendar month period in cash, provided that if
in Period One, Operating Cash Flow is not sufficient to fully pay the calculated
amount, Buyer will have the option to defer the amount by which the calculated
payment would otherwise cause an Operating Cash Flow deficit (the "Deficit"),
and the Deficit will be paid in Period Two, in equal quarterly installments or
as and to the extent that Period Two Operating Cash Flow allows it to be paid
sooner. For purposes of this Paragraph 3.3.5, Operating Cash Flow means revenues
derived from sales of Covered Products, less cost of such sales (each determined
on an accrual basis) less general and administrative, marketing and selling
expenses allocable to such sales (determined on a cash basis). Expenses utilized
in calculating Operating Cash Flow shall in no event include depreciation,
principal on indebtedness, income or other taxes (except taxes and custom duties
on Covered Products), or capital expenditures.
3.3.6. In order to permit Seller to review the calculation
of Purchase Price payments, the Buyer will provide the Seller with unaudited
quarterly balance sheets and statements of income for each fiscal quarter (based
upon Buyer's normal fiscal year) during the period that Buyer is obligated to
make Purchase Price payments to Seller hereunder within 60 days after each such
fiscal quarter certified by the Buyer's Chief Financial Officer, which financial
statements shall be prepared in accordance with generally accepted accounting
principles applied consistently during the periods covered thereby and shall be
complete and correct and present fairly the financial condition of Buyer at the
dates of said statements and the results of its operations for the periods
covered thereby. In addition, Buyer will provide Seller with reasonable access
at any time to confirm the calculation of Purchase Price payments. In the event
of a dispute with respect to the calculation of Purchase Price payments, Buyer
and Seller
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will engage KPMG Peat Marwick, LLP to review the calculations. Adjustments, if
any, proposed by KPMG Peat Marwick, LLP based on such review will be paid or
refunded, as appropriate, without dispute, within five working days. The fees of
KPMG Peat Marwick, LLP for such review will be borne by the party making the
payment or refund for the adjustment of the Purchase Price payment. If, after
completion of its review, no adjustment is proposed by KPMG Peat Marwick, LLP,
the party initially requesting the review will be responsible for such fees.
3.4. Allocation of Purchase Price. The Parties will endeavor to
agree to an allocation of the Purchase Price in writing prior to the Closing. In
the event that the Parties are unable to reach such an agreement, the Parties
shall agree to the allocation of the Purchase Price in writing within thirty
(30) days following the Closing. If the Parties are unable to agree upon the
allocation of the Purchase Price within such thirty (30) day period, the
allocation shall be determined by KPMG Peat Marwick, LLP, within sixty (60) days
of the Closing. Immediately following the expiration of the thirty (30) day
period, but in no event later than ten (10) days thereafter, the Parties shall
jointly engage KPMG Peat Marwick, LLP, to determine the allocation of the
Purchase Price. Within five (5) days following such engagement, the Parties
shall submit position papers to KPMG Peat Marwick, LLP. The decision of KPMG
Peat Marwick, LLP shall be final and conclusive. All tax returns filed by the
Parties shall be consistent with such allocation. Seller and Buyer shall each
prepare IRS Form 8594 in accordance with such allocation and consistent with one
another in accordance of all applicable law and regulations.
3.5. Assumption of Specific Liabilities. At the Closing, Buyer
shall assume and shall subsequently pay, honor and discharge when due and
payable and otherwise in accordance with the relevant governing agreements as
the same shall exist on the Closing Date:
3.5.1. any and all liabilities, obligations and
commitments of Seller for unfilled Division purchase orders entered into by
Seller in the ordinary course of business;
3.5.2. any and all liabilities, obligations and
commitments of Seller accruing after Closing under those contracts, leases,
arrangements and agreements listed on Exhibit C (the "Assumed Liabilities").
3.6. Limitation on Assumption of Liabilities. Except as
specifically provided in this Agreement, Buyer shall not assume or have any
liability for any liabilities or obligations of Seller, and Seller shall pay,
perform and discharge all its liabilities and obligations which are not so
assumed by Buyer.
3.7. Security; Late Payment. Buyer's obligation to make payments
to Seller under this Agreement and the Ongoing Agreement, as hereinafter
defined, shall be secured by a security interest in the Assets pursuant to a
security agreement (the "Security Agreement") to be mutually agreed to by Buyer
and Seller and delivered at the Closing. In the event any payment required to be
made under this Agreement or the Ongoing Agreement is not made within five days
after the due date of such payment, the unpaid portion of the payment amount
shall thereafter bear interest at the rate of 10% per annum.
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4. Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows both as of the date of this Agreement and as of the
date of Closing:
4.1. Organization and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has all requisite power and authority to own, operate and lease
its properties and to carry on its business as now being conducted. To the
knowledge of Seller, Seller is duly licensed or qualified to do business and is
in good standing in each jurisdiction where the failure to be so qualified or
licensed would have a material adverse effect on the business or financial
condition of the Division.
4.2. Authorization of Agreement. Seller has the power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by Seller
has been duly authorized by all necessary corporate action on the part of Seller
and its directors and shareholders. This Agreement has been duly executed and
delivered by Seller and constitutes the legal, valid and binding obligation of
Seller.
4.3. No Conflicts. The execution, delivery and performance of
this Agreement and the consummation of all of the transactions contemplated
hereby: (i) do not and will not require the consent, waiver, approval, license,
designation or authorization of, or declaration with, any person or public
authority, except as set forth on Schedule 4.3; (ii) do not and will not with or
without the giving of notice or the passage of time or both, violate or conflict
with or result in a breach or termination of any provision of, or constitute a
default under, or accelerate or permit the acceleration of the performance
required by the terms of, or result in the creation of any mortgage, security
interest, claim, lien, charge or other encumbrance upon any of the Assets
pursuant to, or otherwise give rise to any violation of or liability or
obligation under, any agreement, mortgage, deed of trust, indenture, license,
permit or any other agreement or instrument or any order, judgment, decree,
constitution, statute, regulation or any other restriction of any kind or
description to which Seller is a party or by which Seller or any of the Assets
may be bound; and (iii) will not terminate or result in the termination of any
such agreement or instrument, or in any way affect or violate the terms and
conditions of, or result in the cancellation, modification, revocation or
suspension of, any rights included in the Assets.
4.4. Financial Statements. Attached to this Agreement as Schedule
4.4 is Seller's balance sheet as of November 30, 1999 and the related statement
of operations for the periods then ended, together with all notes related
thereto (collectively, the "Seller's Financial Statements"). Seller's Financial
Statements have been examined and reported upon by independent auditors, whose
report with respect to such year is included in Schedule 4.4.
4.4.1. For the relevant periods, Seller's Financial
Statements: (1) are complete and correct in all material respects; (2) present
fairly the financial position of Seller at such dates and the results of
operations for the respective periods ended on such dates; and (3) were prepared
in accordance with GAAP, consistently applied during the periods, except as
indicated in the report or notes thereto and are in accordance with the books
and records maintained by Seller, with no differences between such Seller's
Financial Statements and the
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financial records maintained and accounting methods applied by Seller for tax
purposes, except as disclosed in the notes to the Financial Statements.
4.4.2. To Seller's knowledge and the knowledge of its
Chief Executive Officer and its Chief Financial Officer, the value at which any
or all of the Assets are carried on Seller's Financial Statements is not
overstated.
4.5. No Adverse Changes. Except as set forth on Schedule 4.5,
since November 30, 1999 (i) the business of the Division has been conducted only
in the ordinary course; (ii) there has been no change in the condition
(financial or otherwise), assets, liabilities, inventory, business, operations,
prospects, or affairs of the Division, other than changes in the ordinary course
of business, none of which singly and no combination of which in the aggregate
has been materially adverse; and (iii) there has been no damage, destruction or
loss or other occurrence or development, whether or not insured against, which
either singly or in the aggregate materially adversely affects, and Seller has
no knowledge of any threatened occurrence or development which would materially
adversely affect, the condition (financial or otherwise), assets, liabilities,
business, operations, prospects or affairs of the Division.
4.6. Conduct of Business. Except as disclosed on Schedule 4.6,
since November 30, 1999, the Division has not: (i) created or incurred any
liability (absolute, accrued, contingent or otherwise) of the Division except
unsecured current liabilities incurred in the ordinary course of business
consistent with past practice; (ii) mortgaged, pledged or subjected to any lien
or otherwise encumbered any of the Assets, (iii) entered into any settlement,
compromise or consent with respect to any claim, proceeding or investigation
against the Division; (iv) made or become a party to, or become bound by, any
contract, lease, license or commitment affecting the Division or renewed,
extended, amended, modified or terminated any contract, lease, license or
commitment affecting the Division which in any one case involves an amount in
excess of $10,000 (or in the aggregate an amount in excess of $25,000); (v) made
or announced any change in the terms, including but not limited to price, of the
sale of the Division's Products; (vi) paid any legal expenses not in the
ordinary course of business; or (vii) entered into any contract, lease, license
or commitment to do any of the foregoing.
4.7. Title to Purchased Assets. Except as disclosed on Schedule
4.7, Seller has, and on the Closing Date will convey to Buyer, good and
marketable title to all of the Assets, free and clear of all Encumbrances,
except Permitted Encumbrances. To Seller's knowledge, no instrument, easement,
license or grant of record, applicable zoning or building law, ordinance or
administrative regulation or other impediment of any kind prohibits or
interferes with, limits or impairs, or would, if not permitted by any prior
nonconforming use, prohibit or interfere with or limit or impair, the use,
operation, maintenance of, or access to, the Assets. The Assets are sufficient
and adequate to carry on the business of the Division as now conducted.
4.8. Inventory. Within seven business days prior to the Closing
Date, Seller shall take an inventory of the Division's raw materials, work in
process, finished goods and material commitments (the "Inventory") under Buyer's
supervision. The Inventory shall have a value (as agreed to by Buyer and Seller)
of approximately $950,000. The Inventory will be, at Closing, in
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good condition, merchantable, and of a quantity and quality useable and saleable
in the ordinary course of Seller's business, and will not be obsolete, damaged
or defective.
4.9. Contracts. Except as disclosed in Schedule 4.9 to this
Agreement, the Seller (in a manner which would bind the purchaser of the
Division and/or the Assets), the Division or the Assets are not parties to, is
not a party to or bound by or in any way subject to any oral or written
contracts, obligations or commitments, including without limitation any:
4.9.1. contract, commitment or arrangement involving in
any one case, $10,000 or more;
4.9.2. contract, commitment or arrangement relating to new
products;
4.9.3. contract, commitment or arrangement relating to the
sale or rental of customer or mailing lists;
4.9.4. contract with a term of, or requiring performance,
more than three (3) months from its date;
4.9.5. commitment, contract or undertaking which is not
terminable upon notice of thirty (30) days or less without penalty, cost or
liability to Seller or, after the Closing Date to the Buyer;
4.9.6. lease or lease purchase agreement, mortgage,
conditional sale or title retention agreement, indenture, security agreement,
credit agreement, pledge or option with respect to any interest in any property,
real or personal (tangible or intangible), in any capacity;
4.9.7. commitment, contract or undertaking for the
purchase or use of services, materials, supplies, inventory, machinery or
equipment;
4.9.8. commitment, contract or undertaking for the sale or
use (other than sales of inventory in the ordinary course of business) of
Seller's products;
4.9.9. employment contract;
4.9.10. contract or agreement with any labor union or
other collective bargaining group;
4.9.11. bonus, pension, savings, welfare, profit sharing,
stock option, retirement, commission, executive compensation, hospitalization,
insurance or similar plan providing for employee benefits;
4.9.12. note, loan, credit or financing agreement or other
contract for money borrowed, and all related security agreements and collateral
documents, including any agreement for any commitment for future loans, credit
or financing;
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4.9.13. guarantee;
4.9.14. contract or understanding regarding any capital
expenditures;
4.9.15. agency (sales or otherwise), distribution,
brokerage (including, without limitation, any brokerage or finder's agreement or
arrangement with respect to any of the transactions contemplated by this
Agreement) or advertising agreement;
4.9.16. contract with investment bankers, accountants,
attorneys, consultants or other independent contractors;
4.9.17. contract with any director or officer of Seller or
any Affiliate of such person;
4.9.18. contract, commitment or arrangement which would
restrain the Buyer or any Affiliate of the Buyer from engaging or competing in
any business or to maintain the confidentiality of any matter;
4.9.19. license, permit, franchise or royalty agreement;
4.9.20. any agreement concerning a partnership or joint
venture.
Seller has delivered to the Buyer correct and complete copies of:
(a) all of the contracts, agreements, licenses, permits and other documents
listed in Schedule 4.9 which are to be assigned to Buyer and all amendments
thereto and waivers granted thereunder (the "Assigned Contracts"); and (b) any
such contracts, agreements and documents evidencing or representing the Assumed
Liabilities. The rights and interests of Seller in all Assigned Contracts may be
assigned to the Buyer without the consent of any other person, except as
otherwise disclosed on Schedule 4.9 and at the Closing the Buyer will acquire
all such rights and interests. The Company enjoys satisfactory working
relationships under all Assigned Contracts, and no unresolved disputes are
pending or, to the best of Company's knowledge, threatened under or in respect
of any such Assigned Contracts.
4.10. Intellectual Property.
4.10.1. Schedule 4.10.1 sets forth a true and complete
list of all of Seller's trademarks, trade names, copyrights, patents and similar
rights, and any applications in respect thereto, (the "Intellectual Property")
used by Seller in whole or in part for the conduct of the business of the
Division as now conducted. Except as disclosed on Schedule 4.10.1, all the
Intellectual Property is owned by Seller free and clear of any and all licenses,
liens, claims, security interests, charges or other encumbrances or restrictions
of any kind, and no licenses for the use of any of such rights under or with
respect to the Intellectual Property have been granted by Seller to any third
parties. Except as set forth in Schedule 4.10.1, all of such Intellectual
Property will be acquired by Buyer at the Closing, and (a) the transfer of such
rights to, and use
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by buyer will not require the consent of any other person, and (b) Buyer shall
have the exclusive rights to and/or ownership of the Intellectual Property.
4.10.2. Seller has not interfered with, infringed upon,
misappropriated, or violated any material intellectual property rights of third
parties in any material respect, and none of the Seller's directors or officers
has ever received any charge, compliant, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation. To the
knowledge of Seller and its directors and officers, no third party has
interfered with, infringed upon, misappropriated, or violated any material
rights under or with respect to the Intellectual Property in any material
respect.
4.10.3. Schedule 4.10.3 of the Disclosure Schedule
identifies each material item of Intellectual Property that any third party owns
and that the Seller uses in connection with the division's business pursuant to
a license, sublicense, agreement or permission. Seller has delivered to Buyer
correct and complete copies of all such licenses, sublicenses, agreements and
permissions (as amended to date), and with respect to each such item of
Intellectual Property that Seller uses in connection with the Division's
business pursuant to a license, sublicense, agreement or permission: (i) the
license, sublicense, agreement or permission covering the item is legal, valid,
binding, enforceable, and in full force and effect in all material respects;
(ii) no party to the license, sublicense, agreement or permission is in material
breach or default, an no event has occurred which with notice or lapse of time
would constitute a material breach or default or permit termination,
modification, or acceleration thereunder; (iii) no party to the license,
sublicense, agreement or permission has repudiated any material provision
thereof; (iv) Seller has not granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission; and (v) all of such
rights under or with respect to any such license, sublicense, agreement or
permission will be acquired by Buyer at the Closing, and the transfer of such
rights to, and use by buyer will not require the consent of any other person.
4.10.4. No items constituting the Intellectual Property,
including without limitation, any individual item thereof, are subject to any
outstanding injunction, judgment, order, decree, ruling or charge. No action,
suit, proceeding, hearing, investigation, charge, compliant, claim demand is
pending or the knowledge of Seller, including, without limitation, its Chief
Executive Officer and Chief Financial Officer, is threatened, which challenges
the legality, enforceability, use, or ownership of any items of Intellectual
Property.
4.11. Customer Relationships. Attached as Schedule 4.11 is a
complete and correct list of the Division's ten largest customers for the fiscal
year ended November 30, 1999, showing the sales to each. Except as disclosed in
such Schedule, Seller has no knowledge that any customer listed in such Schedule
has terminated or expects to terminate a material portion of its normal business
with Seller.
4.12. Employees. Attached as Schedule 4.12 is a list of all of
the employees of the Division employed by Seller on the date of this Agreement
with a description of their job designations, compensation (including a
designation of those persons paid on an hourly or
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salaried basis and those persons paid pursuant to a collective bargaining
agreement) and benefits (including termination pay and bonuses).
4.13. Litigation, Compliance.
4.13.1. There are no actions, suits, proceedings or
arbitrations or governmental investigations pending or, to the knowledge of
Seller, or its Chief Executive Officer and Chief Financial Officer, threatened
against Seller in which, individually or in the aggregate, an unfavorable
determination could materially affect the Division's business or any of the
Assets or impede the execution and performance of this Agreement or any of the
transactions or events contemplated hereby or could declare this Agreement
unlawful or cause the rescission of any of the transactions hereunder or require
Buyer to divest itself of the Assets to be acquired pursuant hereto.
4.13.2. Except as set forth on Schedule 4.13.2, Seller has
all governmental licenses, permits, approvals or other authorizations required
for the conduct of the Division's business as now conducted. There is no action
pending or, to the knowledge of Seller or its Chief Executive Officer and Chief
Financial Officer, threatened to terminate rights under any such governmental
licenses, permits or authorizations.
4.13.3. Seller has complied with all applicable laws
(including statutes, constitutions, rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (including, without limitation,
all agencies thereof) in connection with the Division, the operation of the
Division's business and the ownership of the Assets.
4.14. Brokers, Finders, etc. Seller has not employed any finder,
broker, agent or other intermediary in connection with the negotiation or
consummation of this Agreement or any of the transactions contemplated hereby.
4.15. Tangible Assets. The machinery, equipment, and other
tangible assets constituting the Assets are free from material defects (patent
and latent), have been maintained in accordance with normal industry practice,
and are in good operating condition and repair (subject to normal wear and
tear), except for the automatic swab machine, which is serviceable but currently
requires repairs to become serviceable.
4.16. Tax Matters. There are no unpaid taxes, additions to tax,
penalties or interest payable by Sellers or by any other person that are or
could become a lien on any of the Assets, or otherwise adversely affect the
business or properties of the Division, or could result in any liability to
Buyer, and no taxing authority has asserted any claim for the assessment of any
such tax liability (including additions to tax, penalties and interest).
4.17. Product Liability. Seller does not have any material
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due)
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arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Seller in connection with the Division.
4.18. Undisclosed Liabilities. Seller does not have any material
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any liability for
taxes) which could adversely affect Buyer's ownership of the Assets or operation
of the business of the Division, except for (i) liabilities set forth in the
Financial Statements and (ii) liabilities which have arisen after the date of
the Financial Statements in the ordinary course of business and (iii)
liabilities which have otherwise been disclosed in the Schedules to this
Agreement.
4.19. Disclosure. The representations and warranties contained in
this Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows both as of the date of this Agreement and as of
the date of Closing:
5.1. Corporate Status. Buyer is a limited company duly organized,
validly existing and in good standing under the laws of the Kingdom of Thailand,
with full corporate power and authority to carry on its business as now
conducted and to fulfill its obligations under this Agreement.
5.2. Authority for Agreements. Buyer has the power and authority
to execute and deliver this Agreement and to carry out its obligations
hereunder. Buyer has the power and authority to execute and deliver the Ongoing
Agreement and to carry out is obligations thereunder. The execution, delivery
and performance by Buyer of this Agreement and the Ongoing Agreement and the
consummation of the transactions contemplated hereby or thereby have each been
duly authorized by all necessary action on the party of Buyer, as the case may
be, and constitute or will, when executed and delivered, constitute the valid
and legally binding obligation of Buyer, as the case may be, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally now or hereafter in
effect and subject to the application of equitable principles and the
availability of equitable remedies.
5.3. Brokers, Finders, etc. Buyer has employed no finder, broker,
agent or other intermediary in connection with the negotiation or consummation
of this Agreement or any of the transactions contemplated hereby.
6. Covenants.
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6.1. Accounts Receivable. The accounts receivable of the Division
at the Closing Date (a list of which will be delivered at Closing) are being
retained by Seller. If any account debtors make payment in satisfaction of the
accounts receivable to Buyer, such amounts shall be received and held by Buyer
in trust for the benefit of Seller and immediately paid to Seller without offset
or deduction. Buyer shall, at the request of Seller, endorse to the order of
Seller all checks, drafts and other instruments received by Buyer in
satisfaction of the accounts receivable. The first payments made by any customer
with an outstanding account receivable at the Closing Date shall be paid over to
Seller until the account receivable is paid in full.
6.2. Sales Taxes. Buyer shall pay any state or local sales or use
taxes payable in connection with the sale of the Assets pursuant to this
Agreement.
6.3. Employees and Facilities Agreement. The labor, facilities,
services, personnel, and other items to be provided by Seller to Buyer in
connection with Buyer's ongoing operations in Carlsbad, California shall be
agreed to in writing by Buyer and Seller, and Buyer and Seller shall each
execute and deliver such written agreement ("Ongoing Agreement") to the other at
Closing. Subsequent to closing, Buyer and Seller agree to abide by and honor the
terms of the Ongoing Agreement.
6.4. Buyer's Additional Asset Purchases. As a material inducement
to Seller's entering into this Agreement and consummating the sale contemplated
by this Agreement, Buyer agrees to purchase from third parties the additional
assets listed in Schedule 6.4 for the estimated price and/or prices set forth in
Schedule 6.4 to be utilized in the production of contamination control product
by Buyer following the Closing. The purchase of all such additional assets will
be completed no later than 270 days following the Closing.
6.5. Further Assurances. At any time and from time to time after
the Closing, each party shall, without further consideration, execute and
deliver to the other such other instruments of transfer and assumption and shall
take such other action as the other may reasonably request to carry out and
effectuate the transfer of the Assets, the confirmation of Buyer's title to and
interest in the Assets, the assumption of the specific liabilities and any such
other transactions contemplated by this Agreement.
6.6. Exclusivity. Seller shall not during the period commencing
with the date of this Agreement until the Closing, directly or indirectly,
solicit, engage in negotiations for, accept or extend offers for the sale of the
Assets.
6.7. Conduct of Division Business. From the date of this
Agreement until the Closing, Seller shall conduct the business of the Division
in the ordinary course consistent with past practice and shall use its best
efforts to preserve intact its relationships with third parties and to keep
available the services of its present officers and employees who devote
significant attention to the affairs of the Division.
6.8. Non-Competition. For a period of five years following the
Closing, Seller will not, directly or indirectly, whether through an affiliate,
a subsidiary, a parent company, the
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succeeding entity of merger or other reorganization involving Seller or
otherwise, engage in the business of manufacturing, distributing or selling
Covered Products or products which are Competing Products (as hereinafter
defined) to the Covered Products, provided that this covenant shall not be
applicable (a) in the event of an uncured (beyond all applicable cure periods
and if no cure period is specified, then the cure periods specified in Section 7
of the Security Agreement shall be deemed to be applicable in connection with
any such material default) material default by Buyer under this Agreement, in
the Security Agreement or the Ongoing Agreement or (b) if Buyer is no longer
engaged in the business of the manufacture or sale of Covered Products.
"Competing Products" shall for all purposes set forth herein mean paper, fabric
or foam based wiping products used or manufactured or sold for use in Clean Room
(as hereinafter defined) uses or applications in the electronics, medical or
pharmaceutical industries. "Clean Room" shall for all purposes set forth herein
mean any confined area in which the humidity, temperature, particulate matter,
and contamination are precisely controlled within specified parameters. Clean
room classes are defined in Federal Standard 209, Airborne Particulate
Cleanliness Classes in Clearness and Clean Zones (SEMI E70).
6.9. Product and Technique Innovations. Seller shall transfer to
Buyer at Closing all rights to all product and technique developments,
improvements, and trade secrets (collectively "Innovations") which were made or
developed by Seller and/or Seller's employees prior to Closing in connection
with the Covered Products and/or the Division's business, research and
developments, and proposed products. Further, Seller shall thereafter promptly
transfer to Buyer the exclusive rights to all Innovations which were made or
developed by Seller and/or Seller's employees after Closing but before the
expiration of the term of the Ongoing Agreement in connection with the Covered
Products and/or the Division's business, research and developments, and proposed
products.
6.10 Covenants in Connection with Automatic Swab Machine. Buyer
agrees that during the period commencing upon the Closing and ending on August
1, 2005 not to use the Automatic Swab Machine included within the Assets set
forth in Exhibit A hereto, which are being purchased by Buyer pursuant to the
provisions hereof, to manufacture a foam-tipped cosmetic applicator.
7. Conditions Precedent.
7.1. Conditions to Obligations of Buyer. The obligation of Buyer
to close shall be subject to the fulfillment (or waiver by Buyer) at or prior to
the Closing, of the following additional conditions:
7.1.1. Representations, Performance. The representations
and warranties contained in Section 4 of this Agreement shall be true at and as
of the Closing Date, except as affected by the transactions contemplated hereby.
Seller shall have duly performed and complied with all agreements, covenants and
conditions required by this Agreement to be performed or complied with prior to
or on the Closing Date.
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7.1.2. Consents. Any required consent (as determined by
Buyer, in the exercise of buyer's reasonable discretion) to the transfer of the
Assets under any law, regulation, agreement, lease or contract shall have been
obtained.
7.1.3. U.C.C. and Lien Search. Buyer shall have received
(at its expense) copies of reports of Uniform Commercial Code search and tax and
judgment lien searches in the State of California and all such other
jurisdictions as Buyer shall deem appropriate, searching the name of Seller and
such other names as Buyer shall deem appropriate, reasonably satisfactory in
form and substance to Buyer, and Buyer shall be satisfied with the results of
all such lien searches.
7.1.4. Corporate Proceedings. All corporate and other
proceedings of Seller in connection with the transactions contemplated by this
Agreement, and all documents and instruments incident to such corporate
proceedings, shall be satisfactory in substance and form to Buyer and Buyer's
counsel, and Buyer and Buyer's counsel have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
7.1.5. Ongoing Agreement. Buyer and Seller shall have
entered into the Ongoing Agreement.
7.1.6. Litigation. No action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent consummation of any of the transactions contemplated by this Agreement,
(b) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (c) affect adversely the right of the Buyer to own
the Assets or to operate the former businesses of the Division.
7.1.7. Operating Cashflow Agreement. Buyer and Seller
shall have agreed in writing upon the method for allocating indirect expenses
for Buyer for purposes of calculating Operating Cashflow pursuant to the
provisions of Section 3.3.5 hereof.
7.1.8. Intentionally Deleted.
7.2. Conditions to Obligations of Seller. The obligation of
Seller to close hereunder shall be subject to the fulfillment, on or prior to
the Closing Date (or waiver by Seller), of the following conditions:
7.2.1. Representations, Performance, etc. The
representations and warranties of Buyer contained in Section 5 of this Agreement
shall be true at and as of the Closing Date. Buyer shall have duly performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
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7.2.2. Consents. Any required consent to the transfer of
the Assets under any law, regulation, agreement, lease or contract shall have
been obtained.
7.2.3. Corporate Proceedings. All corporate and other
proceedings of the Buyer in connection with the transactions contemplated by
this Agreement, and all documents and instruments incident thereto, shall be
satisfactory in substance and form to Seller and Company's counsel, and Seller
and Company's counsel shall have received all such documents and instruments, or
copies thereof, certified if requested, as may be reasonably requested.
7.2.4. Ongoing Agreement. Buyer and Seller shall have
entered into the Ongoing Agreement.
8. Indemnification and Survival.
8.1. Indemnification.
8.1.1. From and after the Closing, Seller will indemnify
Buyer against, and hold Buyer harmless from any and all liability, damage,
deficiency, loss, cost or expense (including reasonable attorneys' fees)
("Buyer's Indemnification Damages") that are based upon or that arise out of (i)
any misrepresentation or breach of any representation, warranty, covenant or
agreement made by Seller in this Agreement, (ii) any obligation, debt or
liability of Seller to the extent that the same is not included in the Assumed
Liabilities, or (iii) the ownership of the Assets and operation of the Division
prior to the Closing Date other than those included in the Assumed Liabilities.
8.1.2. Buyer will indemnify Seller against, and hold
Seller harmless from, any and all liability, damage, deficiency, loss, cost or
expense (including reasonable attorneys' fees) that are based upon or that arise
out of (i) any misrepresentation or breach of any representation, warranty,
covenant or agreement made by Buyer in this Agreement, (ii) the failure by Buyer
to discharge any and all liabilities, obligations and commitments of Seller to
the extent that the same are included in the Assumed Liabilities, or (iii) the
ownership of the Assets and operation of the Division's business from and after
the Closing Date.
8.1.3. Each party entitled to an indemnification under
this Agreement (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party receives notice of any claim, action or proceeding for which
indemnification may be requested hereunder. Such Indemnifying Party shall have
the right (at its expense) to assume the defense of any claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be reasonably
satisfactory to the Indemnified Party, and the Indemnified Party may participate
in such defense, but only at such Indemnified Party's expense, and provided,
further, that the omission by any Indemnified Party to give notice as provided
in this Agreement shall not relieve the Indemnifying Party of its
indemnification obligations under this Agreement except to the extent that the
omission results in a failure of actual notice to the Indemnifying Party and
that such Indemnifying Party is damaged as a result of the failure to give
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notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. Notwithstanding the foregoing, the Indemnified Party shall have the
right at all times to take over and assume control of the defense, settlement,
negotiations or lawsuit relating to any claim or demand; provided, however, that
if the Indemnified Party does so take over and assume control, the amount of the
indemnity by the Indemnifying Party shall be limited to the amount which the
Indemnifying Party has immediately prior to such time indicated it would be
willing to pay to adjust and settle such claim or demand. In the event that the
Indemnifying Party does not accept the defense of any matter as above provided
or if the counsel selected by the Indemnifying Party to defend such claim or
litigation has a conflict of interest in representing the Indemnified Party (in
the judgment of such counsel or counsel for the Indemnified Party), the
Indemnified Party shall have the full right to defend against any such claim or
demand at the expense of the Indemnifying Party (including reasonable attorney's
fees and costs of investigation), and shall be entitled to settle or agree to
pay in full such claim or demand, in its sole discretion. In any event, Seller,
its officers, directors and shareholders, and Buyer shall cooperate in the
defense of such action and the records of each shall be available to the other
with respect to such defense.
8.2. Time and Manner of Claims. Buyer or Seller shall be liable
for damages arising from misrepresentations or breaches of representations and
warranties only to the extent notice of a claim therefor is asserted in writing
and delivered, in the case of representations and warranties relating to payment
of taxes, prior to the expiration of the relevant statutes of limitation with
respect to such taxes and, in the case of all other representations and
warranties, prior to the expiration of two (2) years from the Closing Date. Any
notice of a claim by reason of any of the representations and warranties
contained in this Agreement shall state specifically the representation or
warranty with respect to which the claim arose, and the amount of liability
asserted against the other party by reason of the claim. Subject to the
foregoing, the representations, warranties, agreements and indemnities contained
in this Agreement shall survive the execution and delivery of this Agreement,
any examination by or on behalf of such parties, and the completion of the
transactions contemplated in this Agreement.
8.3. Limitations on Seller's Indemnifications. Seller's
indemnification obligations hereunder shall be further limited as follows:
8.3.1. Buyer shall not be entitled to indemnification
hereunder unless and until the aggregate amount of Buyer's Indemnification
Damages exceeds $50,000 and then only to the extent of such excess; and
8.3.2. Seller's maximum liability under this Section 8
shall not exceed the aggregate Purchase Price.
9. General.
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9.1. Consent of Third Parties. This Agreement shall not
constitute an agreement to assign any interest in any instrument, contract,
lease, permit or other agreement or arrangement of Seller or any claim, right or
benefit arising thereunder or resulting therefrom, if an assignment without the
consent of a third party would constitute a breach or violation thereof or
adversely affect the rights of the Buyer or Seller thereunder. If a consent of a
third party which is required in order to assign any instrument, contract,
lease, permit or other agreement or arrangement or any claim, right or benefit
arising thereunder or resulting therefrom, which consent Seller and Stockholder
shall use their respective best efforts to obtain prior to the Closing, is not
obtained prior to the Closing, or if an attempted assignment would be
ineffective or would adversely affect the ability of Seller to convey its
interest to the Buyer, then (if Buyer waives the condition to Closing contained
in Section 7.1.2 of this Agreement) Seller will cooperate with the Buyer in any
lawful and economically feasible arrangement to provide that the Buyer shall
receive Seller's interest in the benefits under any such instrument, contract,
lease, permit or other agreement or arrangement; and any transfer or assignment
to the Buyer by Seller of any interest under any such instrument, contract,
lease, permit or other agreement or arrangement that requires the consent of a
third party shall be made subject to such consent or approval being obtained.
9.2. Expenses. Each of the parties hereto shall bear its own
expenses, costs and fees (including attorneys' and auditors' fees) in connection
with the transactions contemplated hereby including the preparation and
execution of this Agreement and compliance herewith, whether or not the
transactions contemplated hereby shall be consummated.
9.3. Severability. If any term or provision of this Agreement
shall be held or deemed to be held or shall, in fact be inoperative or
unenforceable as applied in any particular case because it conflicts with any
other provision or provisions of this Agreement or any constitution or statute
or rule of public policy, or for any other reason, such circumstances shall not
have the effect of rendering the term or provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions contained in this Agreement invalid, inoperative, or
unenforceable to any extent whatsoever, but such term or provision shall be
deemed modified or deleted as or to the extent required by applicable law. The
invalidity of one or more phrases, sentences, clauses, sections or subsections
of this Agreement shall not affect the remaining portions of this Agreement.
9.4. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing. Notice
is duly given to another party upon: (a) hand delivery to the other party, (b)
receipt by the other party when sent by facsimile to the address and number for
such party set forth below (provided, however, that the Notice is not effective
unless a duplicate copy of the facsimile Notice is promptly given by one of the
other methods permitted under this paragraph), or (c) the second business day
after the Notice has been deposited with a reputable overnight delivery service,
postage prepaid, addressed to the party as set forth below with at least
second-business-day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery-service-provider.
To: Wilshire Technologies, Inc.
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0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
(000) 000-0000 (facsimile)
with a copy to: Wilshire Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
(000) 000-0000 (facsimile)
with a copy to: Xxxxxxx Xxxx Seidenwurm & Xxxxx, LLP
000 X Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
(000) 000-0000 (facsimile)
Buyer: Foamex Asia Co., Ltd.
000 Xxxxxxx Xxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxxxxx Road
Thungmahamek, Sathorn
Bangkok, Thailand 10120
Attention: Xxxxxxx X. Xxxxxxxx, Xx., President
000-000-000-0000 (facsimile)
with a copy to: XxXxxxx Xxxx, a Professional Corporation
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
(000) 000-0000 (facsimile)
Each party shall make a reasonable, good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
9.5. Amendment. This Agreement may not be amended except by an
instrument in writing duly executed and delivered on behalf of each of the
parties hereto.
9.6. Waiver. Any party may waive compliance by another with any
of the provisions of this Agreement. No waiver of any provisions shall be
construed as a waiver of any other provision. Any waiver must be in writing.
9.7. Publicity. No party hereto shall issue any press release or
public announcement of any kind concerning the transactions contemplated by this
Agreement without
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consulting with the other; provided, however, that Seller shall be permitted to
distribute to its shareholders a disclosure circular and related materials
concerning the transactions contemplated hereby and issue such other
announcements as may be required by applicable law.
9.8. Form of Documents. Unless specifically otherwise provided in
this Agreement, all documents to be delivered by one party to another party to
this Agreement or any affiliate thereof shall be in form and substance
reasonably satisfactory to such other party.
9.9. Drafting Ambiguities. Each party to this Agreement and its
legal counsel have reviewed and revised this Agreement. The rule of
construction that ambiguities are to be resolved against the drafting party or
in favor of the party receiving a particular benefit under an agreement may not
be employed in the interpretation of this Agreement or any amendment to this
Agreement.
9.10. Bulk Sales Compliance. The parties hereto hereby waive
compliance with the provisions of the bulk sales laws of the State of California
and any other applicable jurisdiction, and Seller covenants and agrees to pay
and discharge when due all claims of any governmental entities and creditors of
Seller that could be asserted against Buyer by reason of such non-compliance.
Seller will indemnify Buyer against, and hold Buyer harmless from and will on
demand reimburse Buyer for any and all liability, damage, deficiency, loss, cost
or expense (including reasonable attorneys' fees) that are based upon or that
arise out of any and all losses suffered by Buyer by reason of (a) Seller's
failure to pay and discharge any such claims, or (b) the failure to comply with
the bulk sales laws of the State of California and any other applicable
jurisdiction. The right of indemnification contained in this Section 9.10 shall
be in addition to any such indemnification rights contained in Section 8 of this
Agreement.
9.11. Miscellaneous. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement may be executed in several counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
instrument. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of California,
applicable to contracts made and to be performed in California. This Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
the parties hereto. Nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement. In the event any legal
action is taken to enforce or interpret the terms of this Agreement, the
prevailing party or parties in such action shall be entitled to recover its
reasonable attorneys' and expert witness fees and costs as established by the
Court. This Agreement may not be assigned without the prior written consent of
the nonassigning parties. Unless the context requires otherwise, all words used
in this Agreement in the singular number shall extend to and include the plural,
all words in the plural number shall extend to and include the singular, and all
words in any gender shall extend to and include all genders. Unless otherwise
specified, all references to contracts, agreements, leases or other
understandings or
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arrangements shall refer to oral as well as written matters. The specificity of
any representation or warranty contained herein shall not be deemed to limit the
generality of any other representation or warranty contained herein.
9.12. No Reliance. No third party is entitled to rely on any of
the representations, warranties and agreements contained in this Agreement.
Buyer and Seller assume no liability to any third party because of any reliance
on the representations, warranties and agreements of Buyer or Seller contained
in this Agreement.
9.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any party shall fail or refuse to consummate
the transactions contemplated by this Agreement or if any default under, or
breach of, any covenant of this Agreement shall have occurred that results in
the failure to consummate the transactions contemplated in this Agreement.
Accordingly, the parties hereby agree that, in addition to any other remedy at
law or equity, the non-defaulting party shall be entitled to seek an order of
specific performance of the consummation of the transactions contemplated in
this Agreement. In addition, the non-defaulting party shall be entitled to
obtain its costs and expenses, including without limitation, reasonable
attorneys' fees, in enforcing its rights under this Section. As a condition to
seeking specific performance hereunder, Buyer shall not be required to have
tendered the Purchase price but shall be ready, willing, and able to do so.
9.14. Termination. Time is of the essence of this Agreement. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned as follows: (a) at any time before the Closing Date by mutual written
agreement of Seller and Buyer; or (b) by Buyer on or after the Closing Date if
any of the conditions set forth in Section 7.1 of this Agreement shall not have
been fulfilled by the Closing Date; or (c) by Seller on or after the Closing
Date if any of the conditions set forth in Article 7.2 of this Agreement shall
not have been fulfilled by the Closing Date.
9.15 Access to Information. Between the date of this Agreement
and the Closing Date and upon reasonable prior notice, Seller shall: (a) give
Buyer and its authorized representatives reasonable access during normal
business hours to the Assets and all books, records, employees, and accountants
having knowledge thereof; (b) permit Buyer to make such inspections concerning
the business of the Division and the Assets as it may reasonably require; and
(c) cause its officers to furnish Buyer with such financial and operating data
and other information with respect to the business of the Division and Assets as
Buyer may from time to time reasonably request (the "Information"). All such
Information shall be kept confidential by Buyer through and including the
Closing Date. In the event that this Agreement is terminated without Closing,
Buyer shall promptly return to Seller all Information, without reproduction
thereof, and Buyer shall not thereafter use any such Information for any
purpose. The term "Information" does not include information which (i) was or
becomes generally available to the public other than as a result of a disclosure
to Buyer, (ii) was available to Buyer on a non-confidential basis prior to its
disclosure to Buyer by the Seller or their respective representatives or agents,
or (iii) becomes available to Buyer on a non-confidential basis from a source
other than the Seller or its respective representatives or agents.
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[SIGNATURES APPEAR ON FOLLOWING PAGE]
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
Wilshire Technologies, Inc.,
a California corporation
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Title: President and Chief Executive Officer
-------------------------------------
Foamex Asia Co., Ltd., a limited company
organized and existing under the laws of the
Kingdom of Thailand
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
23
INDEX TO SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule 3.3.1 - Covered Products
Schedule 4.3 - No Conflicts
Schedule 4.4 - Seller's Balance Sheet
Schedule 4.5 - No Adverse Changes
Schedule 4.6 - Conduct of Business
Schedule 4.7 - Title to Purchased Assets
Schedule 4.9 - Contracts
Schedule 4.10.1 - Intellectual Property
Schedule 4.10.3 - Intellectual Property Owned by Third Party
Schedule 4.11 - Largest Customers
Schedule 4.12 - Employees
Schedule 4.13.2 - Governmental Licenses, Permits and Approvals
Schedule 6.4 - Buyer's Additional Asset Purchases
EXHIBITS:
Exhibit A - Assets
Exhibit B - Permitted Encumbrances
Exhibit C - Assumed Liabilities
Exhibit D - Restrictive Covenants Agreement
24
SCHEDULE 3.3.1 - COVERED PRODUCTS
25
SCHEDULE 4.3 - NO CONFLICTS.
The execution, delivery and performance of this Agreement and the
consummation of all of the transactions contemplated hereby: do not and will not
require the consent, waiver, approval, license, designation or authorization of,
or declaration with, any person or public authority, except as set forth below:
BOARD OF DIRECTORS OF WILSHIRE TECHNOLOGIES INC.
26
SCHEDULE 4.4 - SELLER'S BALANCE SHEET
SCHEDULE 4.4
FOAMEX
----------------
SALE OF ASSETS AND LIABILITIES
16-MAY-00
ASSETS FIXED ASSETS $ 77,438.00
INVENTORY-RAW MATERIAL /WIP/FG
000-000 000,601.39
461-R30 360,643.81 824,245.20
MATERIAL COMMITMENTS 160,109.88
RESERVES $ (33,951.32)
------------
$ 950,403.76 $ 950,403.76
------------
PATENTS 96,133.23
-------------
ASSETS $1,123,974.99
-------------
LIABILITIES TRADE PAYABLES 179,083.43
------------
LIABILITIES 179,083.43
------------
NET $ 944,891.56
------------
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SCHEDULE 4.5 - NO ADVERSE CHANGES
Since November 30, 1999, the Seller maintains that (i) the business of the
Division has been conducted only in the ordinary course; (ii) there has been no
change in the condition (financial or otherwise), assets, liabilities, business,
operations, prospects, or affairs of the Division, other than changes in the
ordinary course of business, none of which singly and no combination of which in
the aggregate has been materially adverse; and (iii) there has been no damage,
destruction or loss or other occurrence or development, whether or not insured
against, which either singly or in the aggregate materially adversely affects,
and Seller has no knowledge of any threatened occurrence or development which
would materially adversely affect, the condition (financial or otherwise),
assets, liabilities, business, operations, prospects or affairs of the Division.
28
SCHEDULE 4.6 - CONDUCT OF BUSINESS.
Since November 30, 1999, the Division has not: (i) created or incurred any
liability (absolute, accrued, contingent or otherwise) of the Division except
unsecured current liabilities incurred in the ordinary course of business
consistent with past practice; (ii) mortgaged, pledged or subjected to any lien
or otherwise encumbered any of the Assets, (iii) entered into any settlement,
compromise or consent with respect to any claim, proceeding or investigation
against the Division; (iv) made or become a party to, or become bound by, any
contract, lease, license or commitment affecting the Division or renewed,
extended, amended, modified or terminated any contract, lease, license or
commitment affecting the Division which in any one case involved an amount in
excess of $10,000 (or in the aggregate an amount in excess of $25,000); (v) made
or announced any change in the terms, including but not limited to price, of the
sale of the Division's Products; (vi) paid any legal expenses of the Division
not in the ordinary course of business; or (vii) entered into any contract or
commitment to do any of the foregoing.
29
SCHEDULE 4.7 - TITLE TO PURCHASED ASSETS.
Seller has, and on the Closing Date will convey to Buyer, valid title to
all of the Assets, free and clear of all Encumbrances, except Permitted
Encumbrances. To Seller's knowledge, no instrument, easement, license or grant
of record, applicable zoning or building law, ordinance or administrative
regulation or other impediment of any kind prohibits or interferes with, limits
or impairs, or would, if not permitted by any prior nonconforming use, prohibit
or interfere with or limit or impair, the use, operation, maintenance of, or
access to, the Assets. The Assets are sufficient and adequate to carry on the
business of the Division as now conducted.
30
SCHEDULE 4.9 - CONTRACTS
Except as disclosed below to this Agreement, the Seller (in a
manner which would bind the purchaser of the Division and/or the Assets), the
Division or the Assets are not parties to, is not a party to or bound by or in
any way subject to any oral or written contracts, obligations or commitments,
including without limitation any:
4.9.1. contract, commitment or arrangement involving in
any one case, $10,000 or more;
- EXCLUSIVE PRODUCT SUPPLY AGREEMENT DATED JULY 28, 1998 BETWEEN THE
COMPANY AND TIME RELEASE SCIENCES, INC.
- SPECIAL CUSTOMER PRICING AGREEMENTS LISTED ON EXHIBIT E.
4.9.2. contract, commitment or arrangement relating to new
products;
NONE.
4.9.3. contract, commitment or arrangement relating to the sale or rental of
customer or mailing lists;
NONE.
4.9.4. contract with a term of, or requiring performance, more than three (3)
months from its date;
NONE.
4.9.5. commitment, contract or undertaking which is not
terminable upon notice of thirty (30) days or less without penalty, cost or
liability to Seller or, after the Closing Date to the Buyer;
- ADDENDUM AGREEMENT DATED JULY 26, 1996 TO THE MANUFACTURING AND SUPPLY
AGREEMENT DATED APRIL 11, 1996 BETWEEN ADVANCED BARRIER TECHNOLOGIES,
INC. AND THE COMPANY
- SALES REPRESENTATIVE AGREEMENT DATED DECEMBER 1, 1998 BETWEEN THE
COMPANY AND EASTERN SCIENTIFIC, INC.
- SALES REPRESENTATIVE AGREEMENT DATED FEBRUARY 9, 2000 BETWEEN THE
COMPANY AND PTI TECHNICAL SALES
31
- SALES REPRESENTATIVE AGREEMENT DATED JUNE 1, 1998 BETWEEN THE COMPANY
AND EXXUSTECH, INC.
- SALES REPRESENTATIVE AGREEMENT DATED DECEMBER 1, 1998 BETWEEN THE
COMPANY AND XXXXXXXX SOUTHWEST.
- EXCLUSIVE PRODUCT SUPPLY AGREEMENT DATED JULY 28, 1998 BETWEEN THE
COMPANY AND TIME RELEASE SCIENCES, INC.
4.9.6. lease or lease purchase agreement, mortgage,
conditional sale or title retention agreement, indenture, security agreement,
credit agreement, pledge or option with respect to any interest in any property,
real or personal (tangible or intangible), in any capacity;
- ALL ASSETS SECURED BY TRILON DOMINION PARTNERS, LLC TO BE RELEASED ON
CLOSING
4.9.7. commitment, contract or undertaking for the purchase or use of services,
materials, supplies, inventory, machinery or equipment;
- ADDENDUM AGREEMENT DATED JULY 26, 1996 TO THE MANUFACTURING AND SUPPLY
AGREEMENT DATED APRIL 11, 1996 BETWEEN ADVANCED BARRIER TECHNOLOGIES,
INC. AND THE COMPANY.
- EXCLUSIVE PRODUCT SUPPLY AGREEMENT DATED JULY 28, 1998 BETWEEN THE
COMPANY AND TIME RELEASE SCIENCES, INC.
4.9.8. commitment, contract or undertaking for the sale or
use (other than sales of inventory in the ordinary course of business) of
Seller's products;
NONE. WILSHIRE TO RETAIN ALL EMPLOYMENT OBLIGATIONS SUBJECT TO BUYER'S AGREEMENT
TO SHARE EXPENSE UNDER THE ONGOING AGREEMENT.
4.9.9. employment contract;
NONE. WILSHIRE TO RETAIN ALL EMPLOYMENT OBLIGATIONS SUBJECT TO BUYER'S AGREEMENT
TO SHARE EXPENSE UNDER THE ONGOING AGREEMENT.
4.9.10. contract or agreement with any labor union or
other collective bargaining group;
NONE. WILSHIRE TO RETAIN ALL EMPLOYMENT OBLIGATIONS SUBJECT TO BUYER'S AGREEMENT
TO SHARE EXPENSE UNDER THE ONGOING AGREEMENT.
4.9.11. bonus, pension, savings, welfare, profit sharing,
stock option, retirement, commission, executive compensation, hospitalization,
insurance or similar plan providing for employee benefits;
32
NONE. WILSHIRE TO RETAIN ALL EMPLOYMENT OBLIGATIONS SUBJECT TO BUYER'S AGREEMENT
TO SHARE EXPENSE UNDER THE ONGOING AGREEMENT.
4.9.12. note, loan, credit or financing agreement or other
contract for money borrowed, and all related security agreements and collateral
documents, including any agreement for any commitment for future loans, credit
or financing;
NONE.
4.9.13. guarantee;
NONE.
4.9.14. contract or understanding regarding any capital
expenditures;
- ANY PURCHASE ORDERS RELATING TO THE CONSTRUCTION OF THE NEW MANUAL SWAB
MACHINE THAT HAVE NOT BEEN CLOSED BY THE CLOSE DATE.
4.9.15. agency (sales or otherwise), distribution, brokerage (including, without
limitation, any brokerage or finder's agreement or arrangement with respect to
any of the transactions contemplated by this Agreement) or advertising
agreement;
NONE.
4.9.16. contract with investment bankers, accountants, attorneys, consultants or
other independent contractors;
NONE.
4.9.17. contract with any director or officer of Seller or any Affiliate of such
person;
NONE.
4.9.18. contract, commitment or arrangement which would restrain the Buyer or
any Affiliate of the Buyer from engaging or competing in any business or to
maintain the confidentiality of any matter;
- SETTLEMENT AGREEMENT, MUTUAL RELEASE, AND INJUNCTION, DATED JULY 31,
1997, BETWEEN XXXXXX PRODUCTS, INC. AND THE REGISTRANT.
4.9.19. license, permit, franchise or royalty agreement;
NONE.
33
4.9.20. any agreement concerning a partnership or joint venture.
34
SCHEDULE 4.10.1 - INTELLECTUAL PROPERTY.
PATENTS & TRADEMARKS
PATENT COUNTRY REG. NO. REG. DATE
HYDROPHILIC FOAM ARTICLE AND USA 5,460,655 10/24/95
SURFACE-CLEANING METHOD FOR CLEAN
ROOM
HYDROPHILIC FOAM ARTICLE AND USA 6,004,640 12/21/99
SURFACE-CLEANING METHOD FOR
CLEANROOM
ABRASIVE ARTICLE AND METHOD FOR USA 6,004,363 12/21/99
MAKING THE SAME
TRADEMARK COUNTRY REG. NO. REG. DATE RENEWAL DATE
POLYCLEAN USA 1896267 5/30/95 5/30/05
ULTRASORB USA 1804523 11/16/93 11/16/03
ULTRASORB GERMANY 2066144 05/30/94 01/28/03
ULTRASORB JAPAN 0000000 08/30/96 08/30/06
ULTRASORB MALAS 93/00481 01/29/93 01/29/00
ULTRASOLV USA 2205519 11/24/98 11/24/08
ULTRASOLV KORSO 435157 12/23/98 12/23/08
ULTRASOLV THALN KOR85474 09/24/97 09/23/07
XXXXXXXXX XXXXX 000000 11/30/98 11/30/08
ULTRASOLV JAPAN PENDING REVIEW AND APPROVAL
ULTRASOLV MALAS PENDING REVIEW AND APPROVAL
ULTRASOLV SINGP PENDING REVIEW AND APPROVAL
35
SCHEDULE 4.10.3 - INTELLECTUAL PROPERTY OWNED BY THIRD PARTY
NONE
36
SCHEDULE 4.11 - LARGEST CUSTOMERS
37
SCHEDULE 4.13.2 - GOVERNMENTAL LICENSES, PERMITS AND APPROVALS
4.13.2 Except as set forth below, Seller has all governmental licenses,
permits, approvals or other authorizations required for the conduct of
the Division's business as now conducted. There is no action pending or,
to the knowledge of Seller or its Chief Executive Officer and Chief
Financial Officer, threatened to terminate rights under any such
governmental licenses, permits or authorizations.
NONE
38
SCHEDULE 6.4 - BUYER'S ADDITIONAL ASSET PURCHASES
39
EXHIBIT A - ASSETS
EXHIBIT A TO ASSET PURCHASE AGREEMENT
LIST OF ASSETS
ASSETS
Swab Equipment See attached Schedule A to Exhibit A
for detail
Inventory Raw Material, WIP, FG See attached Schedule F to Exhibit A
for detail
Material Commitments See attached Schedule F to Exhibit A
for detail
Inventory Reserves See attached Schedule F to Exhibit A
for detail
Intellectual Property/ See Schedule 4.10.1 for detail
Patents/Trademarks
Other Items/Rights:
1. All customer and other records and materials of or related to the Division.
2. Contracts - see Schedule G to Exhibit C.
NOTES:
1) Swab equipment and Patents and trademarks to be transferred at net book value
on date of close.
2) Material Commitments represent non-cancelable open POs at date of close.
40
SCHEDULE G, EXHIBIT C
CONTRACTS
- EXCLUSIVE PRODUCT SUPPLY AGREEMENT DATED JULY 28, 1998 BETWEEN THE COMPANY
AND TIME RELEASE SCIENCES, INC.
- Sales Representative Agreement dated December 1, 1998 between the Company
and Eastern Scientific, Inc.
- Sales Representative Agreement dated February 9, 2000 between the Company
and PTI Technical Sales
- Sales Representative Agreement dated June 1, 1998 between the Company and
Exxustech, Inc.
- Sales Representative Agreement dated December 1, 1998 between the Company
and Xxxxxxxx Southwest
41
EXHIBIT B - PERMITTED ENCUMBRANCES
NONE
42
EXHIBIT C
LIST OF ASSUMED LIABILITIES
LIABILITIES
Trade Accounts Payable and Accrued See attached Schedule C to Exhibit C
Liabilities to be Assumed for detail
Contracts See attached Schedule G to Exhibit C
for detail
43
EXHIBIT D - RESTRICTIVE CONVENANTS AGREEMENT
44
RESTRICTIVE COVENANTS AGREEMENT
THIS RESTRICTIVE COVENANTS AGREEMENT (the or this "Agreement") is made
as of May 17, 2000 (the "Agreement"), by and between __________, an individual
residing at _______________, California (the "Individual") and Foamex Asia Co.,
Ltd., a limited company organized and existing under the laws of the Kingdom of
Thailand (the "Company").
RECITALS
A. Pursuant to an Asset Purchase Agreement dated as of April 26, 2000
(the "Asset Purchase Agreement"), by and among Wilshire Technologies, Inc.
("Wilshire"), a California corporation and the Company, Wilshire agreed to sell,
and the Company agreed to purchase, substantially all of the assets (the
"Assets") of Wilshire's Contamination Control Division (the "Division").
B. The Individual is a party to an employment agreement with Wilshire,
which contains certain non-compete, non-solicitation and confidentiality
restrictive covenants in favor of Wilshire (the "Wilshire Restrictive
Covenants"), which benefit Wilshire's business, including, without limitation,
the business conducted by the Division.
C. Pursuant to the Asset Purchase Agreement, the Company and Wilshire
have entered into that certain Employees and Facilities Agreement dated May 17,
2000 (the "Ongoing Agreement") pursuant to which the Individual will, as an
employee of Wilshire, render services to and/or for the benefit of the Company
through the term of the Ongoing Agreement.
D. The Individual has, prior to the date of this Agreement, and/or will
have, during the term of the Ongoing Agreement, significant and close contact
with confidential information of the Division and the Division's customers and
employees and confidential information of the Company and the Company's
customers and employees.
E. The Individual has derived and/or will derive, directly or
indirectly, certain benefits in connection with the purchase and sale of the
Assets as specified in the Asset Purchase Agreement and/or with the Ongoing
Agreement;
F. In order to induce the Company to enter into and to consummate the
transactions contemplated by the Asset Purchase Agreement and the Ongoing
Agreement, the Individual has agreed to enter into this Agreement to confirm,
acknowledge, and agree that and to specify the terms pursuant to which the
Company shall have the benefit of those Wilshire Restrictive Covenants, which
benefit the Division, upon the Company's purchase of the Assets of the Division.
45
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Term.
The term the "Term" as used in this Agreement shall mean the time period
commencing on May 17, 2000 and ending on the earlier to occur of November 30,
2000 or the date of the termination of the Individual's employment with
Wilshire. The Individual's employment with Wilshire shall not be deemed to be
terminated in the event that he or she thereafter provides services to Wilshire
as an independent contractor, a consultant or otherwise.
2 Restrictive Covenants.
2.1 The Individual acknowledges that: (i) he or she has had, and will
continue to have during the term of the Ongoing Agreement, significant
involvement in the administration, development and growth of the Division's
business; (ii) his or her work for the Division has brought him or her, and will
continue to bring him or her during the term of the Ongoing Agreement, into
close contact with confidential information of the Division and its customers
and employees and/or the Company and its customers and employees; and (iii) the
agreements and covenants contained in this Section 2 are essential to protect
the business interests of the Division and the Company. Accordingly, the
Individual covenants and agrees as follows:
2.1.a Except as otherwise provided for in this Agreement, during
the Term, the Individual shall not, directly or indirectly, within any state,
province or other political subdivision of the United States or any other
country in which the Division is conducting business, compete with respect to
any services or products of the Division which are either offered or are being
developed by the Division or the Company (the "Division's Business"), or,
without limiting the generality of the foregoing, be or become, or agree to be
or become, interested in or associated with, in any capacity (whether as
partner, shareholder, owner, officer, director, employee, principal, agent,
creditor, trustee, consultant, co-venturer or otherwise), any individual,
corporation, firm, association, partnership, joint venture or other business
entity, which competes with the Division's Business; provided, however, that
Individual may own, solely as an investment, not more than one (1%) percent of
any class of securities of any publicly owned corporation.
2.1.b During the Term, the Individual shall not, directly or
indirectly: (i) induce or attempt to influence any employee of the Company who
shall have been employed in connection with the Division during the Term to
leave its employ; (ii) aid or agree to aid any competitor, customer or suppliers
of the Division in any attempt to hire any person who shall have been employed
by the Company in connection with the Division during the Term; or (iii) induce
or attempt to influence any person or business entity who was a customer or
supplier of the Division during any portion of said period to transact business
with a competitor of the Division.
46
2.1.c During the Term and thereafter, Individual shall not
disclose to anyone any information about the affairs of the Division or the
Company, including, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
policies, marketing plans, sales plans, identity of suppliers or customers,
sales, profits or other financial information, which is confidential to the
Division or the Company or is not generally known in the relevant trade, nor
shall Individual make use of any such information for his or her own benefit.
2.2 Individual acknowledges and agrees that in the event of a violation
or threatened violation of any of the provisions of Section 2.1 (the
"Restrictive Covenants"), the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other rights and remedies which may
be available at law or in equity.
2.3 If any of the Restrictive Covenants, or any part thereof, is held to
be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination shall
have the power to reduce the duration and/or scope and/or area of such provision
and, in its reduced form, such provision shall then be enforceable.
2.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the provisions of this Agreement upon the state and federal courts of
the State of California.
3. Miscellaneous.
3.1 The Company shall have the right to assign this Agreement to any
successor of substantially all of its or the Division's business or assets.
3.2 EACH NOTICE AND OTHER COMMUNICATION REQUIRED OR PERMITTED TO
BE GIVEN UNDER THIS AGREEMENT ("NOTICE") MUST BE IN WRITING. NOTICE IS DULY
GIVEN TO ANOTHER PARTY UPON: (i) HAND DELIVERY TO THE OTHER PARTY; (ii) RECEIPT
BY THE OTHER PARTY WHEN SENT BY FACSIMILE TO THE ADDRESS AND NUMBER FOR SUCH
PARTY SET FORTH BELOW (PROVIDED, HOWEVER, THAT THE NOTICE IS NOT EFFECTIVE
UNLESS A DUPLICATE COPY OF THE FACSIMILE NOTICE IS PROMPTLY GIVEN BY ONE OF THE
OTHER METHODS PERMITTED UNDER THIS PARAGRAPH); OR (iii) THE SECOND BUSINESS DAY
AFTER THE NOTICE HAS BEEN DEPOSITED WITH A REPUTABLE OVERNIGHT DELIVERY SERVICE,
POSTAGE PREPAID, ADDRESSED TO THE PARTY AS SET FORTH BELOW WITH AT LEAST
SECOND-BUSINESS-DAY DELIVERY GUARANTEED, PROVIDED THAT THE SENDING PARTY
RECEIVES A CONFIRMATION OF DELIVERY FROM THE DELIVERY-SERVICE-PROVIDER.
If to the Company: Foamex Asia Co., Ltd.
47
175 Sathorn City Tower
20th Floor
South Sathorn Road
Thungmahamek, Sathorn
Bangkok, Thailand 10120
Attention: Xxxxxxx X. Xxxxxxxx, Xx., President
If to the Individual:
3.3 This Agreement may not be changed, amended, terminated or superseded
except by an agreement in writing, nor may any of the provisions hereof be
waived except by an instrument in writing, in any such case signed by the party
against whom enforcement of any change, amendment, termination, waiver,
modification, extension or discharge is sought.
3.4 Except as otherwise provided herein, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of California, without giving any effect to the principles of conflicts of laws.
3.5 All descriptive headings of the several sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
3.6 If any provision of this Agreement, or part thereof, is held to be
unenforceable, the remainder of this Agreement or provision, as the case may be,
shall nevertheless remain in full force and effect.
3.7 Each of the parties hereto shall at any time and from time to time
hereafter, upon the reasonable request of the other, take such further action
and execute, acknowledge and deliver all such instruments of further assurance
as may be necessary to carry out the provisions of this Agreement.
3.8 The parties hereto hereby acknowledge that this agreement is not an
employment agreement and does not confer any employment rights on the
Individual.
3.9 Wilshire has caused this Agreement to be duly executed for the sole
purpose of acknowledging that the Agreement does not conflict with Individual's
rights or obligations under his or her employment agreement with Wilshire and
that Wilshire consents to this Agreement.
3.10 The term the "Division" shall for all purposes herein be deemed to
include and also refer to: (i) the Division, as and when operated by Wilshire;
and (ii) the Company's operation of the business of the Division following the
Company's purchase of the Assets of the Division. Further, the Division shall
for all purposes be deemed to continue in existence, without interruption, upon
and following Wilshire's sale and the Company's purchase of the Assets of the
Division.
48
SIGNATURE PAGE TO RESTRICTIVE COVENANTS AGREEMENT
IN WITNESS HEREOF, the parties hereto have executed this Agreement as of
the date herein above written.
Foamex Asia Co., Ltd., a limited company
organized and existing under the laws of the
Kingdom of Thailand
By:
-----------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
Individual: (SEAL)
---------------------------
Wilshire Technologies, Inc., a California
corporation
By:
-----------------------------------------
Title:
--------------------------------------
49
XXXX OF SALE
THIS XXXX OF SALE, made as of May 19, 2000, by WILSHIRE TECHNOLOGIES,
INC., a California corporation ("Seller") provides:
RECITALS:
Seller has entered into an Asset Agreement dated April 26, 2000 (the
"Agreement") pursuant to which Seller has agreed to sell certain Assets to
FOAMEX ASIA CO., LTD., a limited company organized and existing under the laws
of the Kingdom of Thailand ("Buyer"), and Buyer has agreed to purchase from
Seller such Assets. Pursuant to the terms and conditions of the Agreement,
Seller has caused this Xxxx of Sale to be executed to make a formal conveyance
of the tangible Assets of Seller, contemplated by the Agreement, to Buyer.
Unless otherwise defined herein or the context otherwise requires, capitalized
terms used herein shall have the respective meanings given to them in the
Agreement.
NOW, THEREFORE, for and in consideration of certain future payments
based on Buyer's sales of Covered Products and the assumption by Buyer of the
Assumed Liabilities and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller hereby sells, transfers,
assigns, delivers and conveys to Buyer all of Seller's right, title and interest
in and good and marketable title, free and clear of all liabilities, security
interests, liens (including tax liens), mortgages, encumbrances, claims and
rights of others of any kind whatsoever, to the tangible Assets of Seller,
contemplated by the Agreement, including, without limitation, those tangible
Assets listed on Schedule 1 hereto (the "Tangible Assets").
Seller agrees to execute and deliver, or cause to be executed and
delivered, and to do or make, or cause to be done or made, any and all
instruments, papers, acts or things, supplemental, confirmatory or otherwise, as
reasonably may be required by Buyer for the purposes of perfecting and
completing the sale, transfer and conveyance to Buyer of the Tangible Assets.
Seller further agrees to warrant and defend Buyer's title to the Tangible Assets
against the lawful claims and demands of all persons.
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be executed
and delivered in a manner sufficient to bind it, as of the day and year first
above written.
WILSHIRE TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Title: President and CEO
----------------------------------
50
WILSHIRE TECHNOLOGIES
SCHEDULE 1 - TANGIBLE ASSETS
51
SCHEDULE 1 TO XXXX OF SALE
LIST OF ASSETS
1. CAPITAL ASSETS OF THE WILSHIRE CONTAMINATION CONTROL DIVISION,
INCLUDING:
a. MANUAL SWAB MACHINE
Gem Tool 32 up trim die, mold foam and trim
Pallets
Rework cutter for press (larger cylinder)
Filter Regulator Lubricator
Varsane Modifications
Injection Molding Die (at CNC)
b. HEAT SEALER FOR SWAB MACHINE
Vertrod Corp. Model 14pc-3/16 Heat Sealer
Packaging & Freight
c. AUTOMATIC SWAB MACHINE
Franklin Automation Automated Swab Machine
Gem Tool Cutters & Brackets
Knife & Foam Stripper
Foam Guides
Wire Harness plus 4" heater
d. CONSTRUCTION IN PROGRESS:
Manual Swab Machine
2. INVENTORY OF THE WILSHIRE CONTAMINATION CONTROL DIVISION, INCLUDING,
WITHOUT LIMITATION:
all Inventory related to the manufacture and production of Wilshire
Contamination Control Products including all Raw Materials, Work in
Process, Material Commitments for Open PO's and Finished Goods. See
Schedule F, incorporated herein by reference, for further detail.
52
3. INTELLECTUAL PROPERTY OF THE WILSHIRE CONTAMINATION CONTROL DIVISION,
INCLUDING, WITHOUT LIMITATION, THE FOLLOWING PATENTS, TRADEMARKS AND
TRADENAMES:
PATENTS COUNTRY REG. NO. REG. DATE
------- ------- -------- ---------
HYDROPHILIC FOAM ARTICLE AND USA 5,460,655 10/24/95
SURFACE-CLEANING METHOD FOR
CLEAN ROOM
HYDROPHILIC FOAM ARTICLE AND USA 6,004,640 12/21/99
SURFACE-CLEANING METHOD FOR
CLEANROOM
ABRASIVE ARTICLE AND METHOD USA 6,004,363 12/21/99
FOR MAKING THE SAME
TRADEMARK COUNTRY REG. NO. REG. DATE RENEWAL DATE
--------- ------- -------- --------- ------------
POLYCLEAN USA 1896267 05/30/95 05/30/05
ULTRASORB USA 1804523 11/16/93 11/16/03
ULTRASORB GERMANY 2066144 05/30/94 01/28/03
ULTRASORB JAPAN 0000000 08/30/96 08/30/06
ULTRASORB MALAS 93/00481 01/29/93 01/29/00
ULTRASOLV USA 2205519 11/24/98 11/24/08
ULTRASOLV KORSO 435157 12/23/98 12/23/08
ULTRASOLV THALN KOR85474 09/24/97 09/23/07
XXXXXXXXX XXXXX 000000 11/30/98 11/30/08
ULTRASOLV JAPAN PENDING REVIEW AND APPROVAL
ULTRASOLV MALAS PENDING REVIEW AND APPROVAL
ULTRASOLV SINGP PENDING REVIEW AND APPROVAL
TRADENAME
WILSHIRE CONTAMINATION CONTROL
53
4. OTHER ASSETS OF THE WILSHIRE CONTAMINATION CONTROL DIVISION:
a. CONTRACTS:
- Exclusive Product Supply Agreement dated July 28, 1998
between the Company and Time Release Sciences, Inc.
- Sales Representative Agreement dated December 1, 1998
between the Company and Eastern Scientific, Inc.
- Sales Representative Agreement dated February 9, 2000
between the Company and PTI Technical Sales
- Sales Representative Agreement dated June 1, 1998 between
the Company and Exxustech, Inc.
- Sales Representative Agreement dated December 1, 1998
between the Company and Xxxxxxxx Southwest
b. ALL CUSTOMER AND OTHER BUSINESS RECORDS OF THE DIVISION.
54
[REPLACE WITH SCHEDULE F, EXHIBIT A]
55
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is dated as of this 19th day of
May, 2000, and is by and between WILSHIRE TECHNOLOGIES, INC., a California
corporation ("Seller"), and FOAMEX ASIA CO., LTD., a limited company organized
and existing under the laws of the Kingdom of Thailand ("Buyer").
RECITALS:
Seller and Buyer have entered into an Asset Purchase Agreement (the
"Agreement"), dated as of April 26, 2000. Pursuant to the Agreement by and
between Seller and Buyer, Seller has agreed to assign to Buyer all of the
Seller's right, title and interest in and to the Assets, and Buyer has agreed to
(a) make certain future payments to Seller based upon Buyer's sale of Covered
Products and (b) assume the Assumed Liabilities in accordance herewith. Unless
otherwise defined herein or the context otherwise requires, capitalized terms
used herein shall have the respective meanings given to them in the Agreement.
NOW, THEREFORE, in consideration of the foregoing and other fair and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Seller hereby assigns, transfers and conveys unto Buyer all of
Seller's right, title and interest in and good and marketable title, free and
clear of all liabilities, security interests, liens (including tax liens),
mortgages, claims and rights of others of any kind whatsoever, in the intangible
Assets of Seller, contemplated by the Agreement, including, without limitation,
all of Seller's right, title and interest in and to any such contracts,
agreements, leases and/or purchase orders included within the Assets and
excepting the Intellectual Property (the "Intangible Assets"), and
2. Buyer hereby assumes the Assumed Liabilities.
3. SELLER AGREES TO EXECUTE AND DELIVER, OR CAUSE TO BE EXECUTED AND
DELIVERED, AND TO DO OR MAKE, OR CAUSE TO BE DONE OR MADE, ANY AND ALL
INSTRUMENTS, PAPERS, ACTS OR THINGS, SUPPLEMENTAL, CONFIRMATORY OR
OTHERWISE, AS REASONABLY MAY BE REQUIRED BY BUYER FOR THE PURPOSES OF
PERFECTING AND COMPLETING THE SALE, TRANSFER AND CONVEYANCE TO BUYER OF
THE INTANGIBLE ASSETS. SELLER FURTHER AGREES TO WARRANT AND DEFEND
BUYER'S TITLE TO THE INTANGIBLE ASSETS AGAINST THE LAWFUL CLAIMS AND
DEMANDS OF ALL PERSONS.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the day and year above written.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
56
SIGNATURE PAGE TO ASSIGNMENT AND ASSUMPTION AGREEMENT
WILSHIRE TECHNOLOGIES, INC., a California
corporation
By: /s/ Xxxxx Xxxxxxxxx
----------------------------
Title: President and CEO
FOAMEX ASIA CO., LTD., a limited company organized and existing under
the laws of the Kingdom of Thailand
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
-----------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
57
ASSIGNMENT OF INTELLECTUAL PROPERTY
Pursuant to the Asset Purchase Agreement executed between the parties
concurrently herewith ("Purchase Agreement"), in exchange for the covenants
exchanged therein and for other good and valuable consideration, the receipt and
sufficiency of which each party acknowledges, Foamex Asia Co., Ltd., a limited
company organized and existing under the laws of the Kingdom of Thailand
("Foamex" or "Assignee"), and Wilshire Technologies, Inc., a California
corporation ("Assignor"), do hereby agree and covenant as follows as of this
19th date of May, 2000 ("Effective Date"):
1. Assigned Subject Matter. The subject matter of this Assignment consists of:
the works of authorship, work product, test data, inventions, discoveries,
processes, methods, techniques, improvements, programs, ideas, concepts,
confidential information, or other creative works or know how of any type held
by, used in connection with or relating to the business of Assignor's Wilshire
Communications Control Division, (in all forms and manifestations, whether or
not reduced to practice, and whether or not otherwise patentable); all
associated patent, copyright, trademark, service xxxx, trade name, trade secret
and other intellectual property rights therein; all associated letters patent,
patent applications, divisionals, continuations, continuations-in-part,
re-examinations, re-issues, improvement patents, and foreign counterparts
thereof; all associated copyright applications and registrations; all associated
58
trademark and service xxxx applications and registrations, and all goodwill
associated with the business of any of the foregoing; all trade secrets and
confidential information associated therewith; all causes of action and rights
of recovery of any type associated with or arising from any of the foregoing;
and all licenses and rights thereunder arising from or relating to the Assigned
Subject Matter (collectively, "Assigned Subject Matter"). The Assigned Subject
Matter includes but is not necessarily limited to the intellectual property
interests, registrations and applications for registration listed in Exhibit A
hereto. Notwithstanding the foregoing, the Assignment Subject Matter does not
include Class 1, Class 10 and Class 100 Cleaning Systems for the following
polyurethane products: (i) UltraSOLV; (ii) UltraSORB; and (iii) CleanWIPE.
(collectively, "Excluded Subject Matter"), all right, title and interest in
which shall remain owned by Assignor, subject to the license granted in
Paragraph 5 below.
2. Warranties and Representations of Assignor. Assignor represents
and warrants that, except as is expressly stated to the contrary in Exhibit A:
a) the Assigned Subject Matter constitutes and comprises all
intellectual property interests of any type used by or necessary for or
dedicated for use in the business of Assignor's Wilshire Contamination
Control Division as of immediately prior to the execution of this
59
Agreement, and that nothing in the execution of this Agreement or the
assignment effectuated thereby shall terminate, limit, impair or alter
the ability of Assignee to use and exploit the Assigned Subject Matter
as Assignor has been entitled to use and exploit the Assigned Subject
Matter;
b) it owns all right, title and interest, including all
intellectual property interests, in and to the Assigned Subject Matter
(including but not limited to the items listed in Exhibit A), free and
clear of any third-party claims, joint ownership interests, liens,
judgments, security interests, or other encumbrances, except as is noted
to the contrary in Exhibit A pursuant to Section 2(k);
c) except as is stated to the contrary in Exhibit A pursuant to
Section 2(k), the Assigned Subject Matter was created entirely by
persons who either: (1) at the time of creation, were the employees of
Assignor acting within the scope of their employment or; (2) have
executed valid and enforceable assignments to Assignor of all right,
title and interest, including all intellectual property interests, in
their work product comprising the Assigned Subject Matter;
d) it did not create the Assigned Subject Matter, in whole or in
part, pursuant to any "work for hire" or similar agreement with another,
or any agreement, arrangement or
60
commitment, written or oral, to assign, transfer, convey or license the
Assigned Subject Matter;
e) it has not assigned, transferred or pledged any interest in
the Assigned Subject Matter to any other;
f) it has not licensed or authorized any other, excepting only
those persons and entities identified in Exhibit A as "Licensees," to
possess, use or exploit in any manner any of the Assigned Subject
Matter, and no third party other than the Licensees identified in
Exhibit A possesses, is using or exploiting in any manner any of the
Assigned Subject Matter;
g) it has taken reasonable precautions to prevent the
unauthorized use or disclosure to third parties of trade secrets and
confidential information comprising the Assigned Subject Matter, and to
the best of its knowledge no third party is using or has possession of
trade secrets or confidential information comprising the Assigned
Subject Matter;
h) any patents or registrations, or applications for same made
with respect to the Assigned Subject Matter are true and accurate and
(with respect to issued patents and registrations), to the best of
Assignor's knowledge, are valid, subsisting and enforceable;
61
i) the manufacture, use, sale, reproduction, modification,
distribution, display or other exploitation of the Assigned Subject
Matter by Assignee or its successors, assigns or licensees shall not
infringe, misappropriate, dilute, violate or impair the patent,
copyright, trademark, trade secret, rights of publicity or privacy or
other legal rights of any third party;
j) to the knowledge of Assignor and its directors and officers,
no third party is infringing or otherwise using without its
authorization the Assigned Subject Matter or any associated intellectual
property interest;
k) to whatever extent the Assigned Subject Matter includes or is
derived from third-party subject matter, (i) such third-party subject
matter, the owner(s) of rights in such subject matter, and the license
of other authorization for use are identified with specificity as "Third
Party Content and Rights" in Exhibit A, (ii) Assignor has valid,
enforceable and fully transferable perpetual licenses to use, in all
manners, as if it were the owner, any such third-party material
comprising the Assigned Subject Matter, (iii) Assignor is not in breach
or default of such licenses; (iv) it properly conveys those licenses or
rights to Assignee; and (v) it has obtained all necessary licensees,
releases (whether right of publicity, right of privacy,
62
performance right or otherwise) necessary for Assignee, its assigns and
authorized users to make unrestricted use and exploitation of the
Assigned Subject Matter; and
l) the Assigned Subject Matter is not the subject of any
judgment, lien, administrative action, agreement, pending actions,
demand or other challenge that does or may affect the ownership,
validity or enforceability of rights in the Assigned Subject Matter,
affect the nature, scope or extent of rights in the Assigned Subject
Matter, or subject the possession or use of the Assigned Subject Matter
to any license fee or other obligation, and Assignor knows of no threat
of or basis for any such action demand or challenge.
3. Assignment. The Assigned Subject Matter shall be the sole and
exclusive property of Assignee. Assignor hereby assigns and agrees to assign to
Assignee all right, title and interest in and to all Assigned Subject Matter,
including all associated patent, copyright, trade secret and other intellectual
property rights, therein, and including further without limitation the interests
listed in Exhibit A. To whatever extent moral rights, rights of publicity or
other intellectual property rights in the Assigned Subject Matter are, by their
nature, incapable of assignment, Assignor hereby irrevocably waives, surrenders
and forfeits all such rights Assignor may hold in any Assigned Subject Matter.
Assignor agrees to execute additional
63
assignments and documents and take such additional steps as Assignee may
reasonably request in order to convey, transfer, assign, register, record in the
name of Assignee or waive Assignor's interests in Assigned Subject Matter and
all intellectual property interests therein. Assignor agrees to provide Assignee
or its assigns and successors with reasonable nonmonetary assistance in the
enforcement or defense of its rights in the Assigned Subject Matter.
4. Power of Attorney. In the event that, after reasonably diligent
efforts, Assignee has not secured Assignor's signature on any document needed to
accomplish any of the purposes set forth in Section 3 above, Assignor hereby
appoints any and all officers of Assignee as his/her or his attorney-in-fact for
the sole purpose of doing any of the acts of Assignor called for by Section 3
above
5. License of Excluded Subject Matter. Assignor grants to Assignee a
fully paid-up, royalty-free, nonexclusive license in perpetuity to use and
exploit the Excluded Subject Matter, and to authorize others to do so, in all
manners as if it were the owner of all right, title, and interest in and to the
Excluded Subject Matter. Assignor makes all warranties and representations in
Paragraph 2 with respect to the Excluded Subject Matter as with respect to the
Assigned Subject Matter, except that any warranty concerning the power and right
to assign shall, with respect to
64
the Excluded Subject Matter, constitute a warranty of the power and right to
license. Further, Assignor shall deliver the Excluded Subject Matter to Assignee
as provided for with respect to the Assigned Subject Matter in Paragraph 6, and
shall indemnify Assignee with respect to the Excluded Subject matter as provided
for with respect to the Assigned Subject Matter in Paragraph 9.
6. Delivery. Within seventy-two (72) hours of the execution of this
Assignment, Assignor shall deliver to Assignee or its designee all documents and
things in his possession, custody or control constituting, comprising, referring
to or relating to the Assigned Subject Matter and associated intellectual
property interests.
7. Beneficiaries. This Agreement shall inure to the benefit of the
parties and their heirs, successors, assigns, insurers and reinsurers.
8. Covenant Not to Use or Infringe. Assignor agrees that it shall not
contest or challenge Assignee's sole ownership or and rights in the Assigned
Subject Matter, that it shall not infringe or misappropriate Assignee's rights
in the Assigned Subject Matter, and that it shall not take any action
inconsistent with Assignee's sole ownership of or rights in the Assigned Subject
Matter. Assignor agrees not to publish or disclose to any third party without
Assignee's express prior
65
written consent any portion of the Assigned Subject Matter that may constitute a
trade secret or confidential information (including but not limited to the
subject matter of any yet-to-be issued patents).
9. Indemnity. Assignor shall indemnify Assignee and hold it harmless
against all claims, causes of action, liability, judgment, damages, fines or
expenses (including reasonable attorneys fees) suffered by Assignee, or is
successors, assigns, affiliates, representatives, officers, employees or agents,
in connection with an actual or threatened third-party claim arising from: (i) a
breach by Assignor of any of its warranties or representations in this
Assignment Agreement; or (ii) claims that the Assigned Subject Matter or the
exploitation thereof infringes, misappropriates or otherwise violates the
intellectual property or contractual rights of such third party.
10. General Terms. This Agreement constitutes the entire agreement
between the parties with respect to its subject matter, and this Agreement
supersedes all prior agreements and understandings relating to the subject
matter of this Agreement. This Agreement can be modified only by a written
instrument signed by both parties. In the event any provision of this Agreement
or portion thereof is finally determined by a court of competent jurisdiction to
be void, unenforceable, invalid or otherwise contrary to law or equity, the
parties agree to reform
66
(or as necessary, authorize such tribunal to reform) this Agreement to the
extent necessary to cure (of, if necessary, delete) such offending term, or
portion thereof, and that the remainder of this Agreement that can be given
effect without the benefit of such term shall be given effect. This Agreement
shall be governed and construed in accordance with the substantive law of the
State of California, without regard to its conflict of law rules. Terms of this
Agreement that, by their nature, survive the termination of this Agreement,
shall so survive.
SIGNATURE PAGE TO ASSIGNMENT OF INTELLECTUAL AGREEMENT
IN WITNESS WHEREOF, the parties so agree.
ASSIGNOR: WILSHIRE TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------
Title: President and CEO
--------------------
Acknowledgment
STATE OF _____________ )
CITY/COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this _____ day of May, 2000,
by _________________________, ____________________ of Wilshire Technologies,
Inc., a California corporation.
------------------------
Notary Public
67
My commission expires:
-------------------------
ASSIGNEE: FOAMEX ASIA CO., LTD.
By:/s/ Xxxxxxx X. Xxxxxxxx, Xx.
------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
Acknowledgment
STATE OF ________________ )
CITY/COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this _____ day of May, 2000,
by Xxxxxxx X. Xxxxxxxx, Xx., President of Foamex Asia Co., Ltd., a limited
company organized and existing under the laws of the Kingdom of Thailand.
----------------------------
Notary Public
My commission expires:
---------------------
68
Exhibit A
To
Assignment of Intellectual Property
Description of Assigned Subject Matter Subject to Assignment, pursuant to
Section 1
Description of Assigned Subject Matter
All intellectual property interests in, held by and/or used in
connection with the Assignor's Wilshire Contamination Control Division.
Patents and Patent Applications (No., Title, Juris., Issue/Filing Date)
No. Title Jurisdiction Issue/Filing Date
5,460,655 HYDROPHILIC FOAM USA 10/24/95
ARTICLE AND
SURFACE-CLEANING
METHOD FOR CLEAN ROOM
6,004,640 HYDROPHILIC FOAM USA 12/21/99
ARTICLE AND
SURFACE-CLEANING
METHOD FOR CLEAN ROOM
6,004,363 ABRASIVE ARTICLE AND USA 12/21/99
METHOD FOR MAKING THE
SAME
Copyright Registrations and Applications for Registration (Filing or
Regis. Date, No.)
None.
Trademarks, Service Marks, Trade Names, Combination Marks and Associated
Registrations and Applications for
69
Registration (No., Filing/Issue Date, Xxxx, Goods or Services,
Jurisdiction).
Xxxx Jurisdiction Reg./App. No. Reg./App. Date Renewal Date
---- ------------ ------------- -------------- ------------
POLYCLEAN USA 1896267 5/30/95 5/30/05
ULTRASORB USA 1804523 11/16/93 11/16/03
ULTRASORB GERMANY 2066144 05/30/94 01/28/03
ULTRASORB JAPAN 0000000 08/30/96 08/30/06
ULTRASORB MALAS 93/00481 01/29/93 01/29/00
ULTRASOLV USA 2205519 11/24/98 11/24/08
ULTRASOLV KORSO 435157 12/23/98 12/23/08
ULTRASOLV THALN KOR85474 09/24/97 09/23/07
XXXXXXXXX XXXXX 000000 11/30/98 11/30/08
ULTRASOLV JAPAN PENDING
ULTRASOLV MALAS PENDING
ULTRASOLV SINGP PENDING
70
Third Party Content and Rights in Assigned Subject Matter
None
Licensees of Assigned Subject Matter, pursuant to Section 2(k);
None
71
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is executed effective May 19, 2000 between
Wilshire Technologies, Inc. ("Secured Party"), 0000 Xxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, Attention: Chief Executive Officer, and Foamex Asia Co., Ltd.
("Debtor"), 175 Sathorn City Tower, 20th Floor, South Sathorn Road,
Thungmahamek, Sathorn, Bangkok, Thailand 10120, Attention: Xxxxxxx X. Xxxxxxxx,
Xx., President, who agree as follows:
1. RECITALS. THIS AGREEMENT IS MADE WITH REFERENCE TO THE FOLLOWING RECITALS OF
ESSENTIAL FACTS:
1.1. Pursuant to an Asset Purchase Agreement dated as of April
26, 2000 (the "Purchase Agreement"), Secured Party is selling certain assets
defined therein as the "Assets" to Debtor. The consideration to be received by
Secured Party for the Assets consists of (a) future payments, based on Debtor's
sales of Covered Products and (b) the assumption by Debtor of the Assumed
Liabilities.
1.2. Debtor is also obligated to make payments to Secured Party
under the Employees and Facilities Agreement dated as of the date hereof (the
"Ongoing Agreement").
1.3. In order to secure Debtor's payment obligations under the
Purchase Agreement and the Ongoing Agreement, Debtor has agreed to grant Secured
Party a security interest in the Collateral described in Exhibit A to this
Security Agreement (the "Collateral").
2. GRANT OF SECURITY INTEREST. TO SECURE DEBTOR'S FAITHFUL PERFORMANCE OF ITS
OBLIGATIONS TO SECURED PARTY UNDER THE PURCHASE AGREEMENT, THE ONGOING AGREEMENT
AND THIS SECURITY AGREEMENT, DEBTOR PLEDGES, ASSIGNS AND GRANTS TO SECURED PARTY
A SECURITY INTEREST IN (a) THE COLLATERAL, WHETHER NOW OWNED OR HEREAFTER
ACQUIRED BY THE DEBTOR, (b) ALL IMPROVEMENTS, REPLACEMENTS, ACCESSIONS, AND
ADDITIONS TO THE COLLATERAL, AND (c) ANY PROCEEDS ARISING FROM THE COLLATERAL.
3. DEFENSE OF ACTIONS. DEBTOR AGREES TO DEFEND ANY PROCEEDING WHICH SEEKS OR
THREATENS TO AFFECT, CHALLENGE, OR IMPAIR SECURED PARTY'S SECURITY INTEREST IN
THE COLLATERAL, AND SHALL INDEMNIFY AND HOLD SECURED PARTY HARMLESS FROM AND
AGAINST ALL COSTS AND EXPENSES INCURRED IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING, INCLUDING REASONABLE ATTORNEYS FEES.
4. NEGATIVE COVENANTS. UNTIL ALL OBLIGATIONS SECURED BY THIS SECURITY AGREEMENT
SHALL HAVE BEEN FULLY AND FINALLY PERFORMED, DEBTOR SHALL NOT WITHOUT THE PRIOR
WRITTEN CONSENT OF SECURED PARTY: (i) CREATE OR SUFFER TO EXIST ANY FURTHER
SECURITY INTEREST IN ANY OF THE COLLATERAL; OR (ii) SELL OR OTHERWISE DISPOSE OF
ANY OF THE COLLATERAL EXCEPT THAT THE COMPANY MAY (a) SELL AND USE INVENTORY IN
THE ORDINARY COURSE OF BUSINESS, (b) USE AND CONSUME, IN THE ORDINARY COURSE OF
BUSINESS, ANY RAW MATERIALS, SUPPLIES AND MATERIALS, AND (c) SELL EQUIPMENT AND
MACHINERY THAT HAS BECOME, IN THE REASONABLE BUSINESS JUDGMENT OF DEBTOR,
72
OBSOLETE OR WORN OUT, PROVIDED HOWEVER THAT THE REPLACEMENT SHALL CONTINUE TO BE
SUBJECT TO THIS SECURITY AGREEMENT AS COLLATERAL.
5. Affirmative Covenants. Until all obligations secured by this Security
Agreement shall have been fully and finally performed, Debtor shall:
5.1. Pay when due all existing or future charges, liens, taxes
and assessments, if any, now or hereafter imposed upon or affecting the
Collateral.
5.2. Execute any financing statement or other instrument, now or
hereafter, required to reflect or perfect the security interest created by this
Security Agreement. Any such financing statement shall be in a form approved by
the California Secretary of State or the relevant authority in any state or
jurisdiction in which the Collateral is located, at Secured Party's election,
and Debtor shall pay the filing fees required to file such financing statement
in the manner prescribed by the California Uniform Commercial Code or the
Uniform Commercial Code in effect in such other state, or the applicable law in
such other jurisdiction, as Secured Party determines.
6. REPRESENTATIONS AND WARRANTIES OF DEBTOR. DEBTOR REPRESENTS AND WARRANTS THAT
EXCEPT (a) FOR THE SECURITY INTEREST CREATED BY THIS SECURITY AGREEMENT AND (b)
FOR ANY LIEN INTERESTS GRANTED BY SECURED PARTY, WHICH ARE TO BE RELEASED
CONTEMPORANEOUSLY WITH THE EXECUTION OF THIS AGREEMENT, NO PERSON OR ENTITY HAS
ANY RIGHT, TITLE, INTEREST, OR CLAIM IN OR TO THE COLLATERAL OR ANY PART OF THE
COLLATERAL.
7. EVENTS OF DEFAULT. DEBTOR SHALL BE IN DEFAULT UNDER THIS SECURITY AGREEMENT
UPON THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS:
7.1. Debtor's default of any term or provision of this Security
Agreement.
7.2. The occurrence of any default by Debtor under the Purchase
Agreement or the Ongoing Agreement.
Notwithstanding the preceding provisions of this Xxxxxxx 0, Xxxxxx shall not be
deemed to be in default under this Security Agreement unless and until all
applicable cure periods for such default (whether provided in this Security
Agreement, the Purchase Agreement or the Ongoing Agreement) shall have expired.
In the event that no such cure period is specified in this Security Agreement,
the Purchase Agreement or the Ongoing Agreement, as the case may be, with
respect to a default in the performance of a specific obligation or covenant
hereunder or thereunder, then Debtor shall not be deemed to be in default under
this Security Agreement in connection therewith unless and until Debtor shall
have failed to cure (a) any such non-payment default within fifteen (15) days
following written notice of such default given by Secured Party to Debtor in
accordance with the notice provisions hereof or (b) any such payment default
within five (5) days of the due date for such payment.
73
8. RIGHTS OF SECURED PARTY UPON DEFAULT. SHOULD A DEFAULT OCCUR UNDER THE
PARAGRAPH ABOVE ENTITLED "EVENTS OF DEFAULT", THEN, FOLLOWING THE EXPIRATION OF
ALL APPLICABLE CURE PERIODS, IN ADDITION TO ANY OTHER REMEDY AFFORDED BY LAW OR
EQUITY, SECURED PARTY MAY EXERCISE ALL RIGHTS AND REMEDIES AVAILABLE TO A
SECURED CREDITOR AFTER DEFAULT, INCLUDING WITHOUT LIMITATION ALL RIGHTS AND
REMEDIES AFFORDED TO SECURED PARTIES UNDER THE CALIFORNIA UNIFORM COMMERCIAL
CODE, OR THE UNIFORM COMMERCIAL CODE OR OTHER APPLICABLE LAW IN EFFECT IN SUCH
OTHER JURISDICTION IF MANDATORY PROVISIONS OF LAW REQUIRE THAT THE LAW OF SUCH
OTHER JURISDICTION GOVERNS NOTWITHSTANDING THE CHOICE OF LAW PROVISIONS
CONTAINED IN THIS AGREEMENT. ALL OF SECURED PARTY'S RIGHTS AND REMEDIES SHALL BE
CUMULATIVE AND MAY BE EXERCISED SINGULARLY OR CONCURRENTLY.
9. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
10. FURTHER ASSURANCES. EACH PARTY TO THIS SECURITY AGREEMENT SHALL EXECUTE ALL
INSTRUMENTS AND DOCUMENTS AND TAKE ALL ACTIONS AS MAY BE REASONABLY REQUIRED TO
EFFECTUATE THIS SECURITY AGREEMENT.
11. VENUE AND JURISDICTION. INTENTIONALLY DELETED.
12. TIME OF ESSENCE. TIME AND STRICT AND PUNCTUAL PERFORMANCE ARE OF THE ESSENCE
WITH RESPECT TO EACH PROVISION OF THIS SECURITY AGREEMENT.
13. ATTORNEY'S FEES. IN THE EVENT ANY LITIGATION, ARBITRATION, MEDIATION, OR
OTHER PROCEEDING ("PROCEEDING") IS INITIATED BY ANY PARTY AGAINST ANY OTHER
PARTY TO ENFORCE, INTERPRET OR OTHERWISE OBTAIN JUDICIAL OR QUASI-JUDICIAL
RELIEF IN CONNECTION WITH THIS SECURITY AGREEMENT, THE PREVAILING PARTY IN SUCH
PROCEEDING SHALL BE ENTITLED TO RECOVER FROM THE UNSUCCESSFUL PARTY ALL COSTS,
EXPENSES, AND ACTUAL ATTORNEY'S FEES RELATING TO OR ARISING OUT OF (a) SUCH
PROCEEDING (WHETHER OR NOT SUCH PROCEEDING PROCEEDS TO JUDGMENT), AND (b) ANY
POST-JUDGMENT OR POST-AWARD PROCEEDING INCLUDING WITHOUT LIMITATION ONE TO
ENFORCE ANY JUDGMENT OR AWARD RESULTING FROM ANY SUCH PROCEEDING. ANY SUCH
JUDGMENT OR AWARD SHALL CONTAIN A SPECIFIC PROVISION FOR THE RECOVERY OF ALL
SUCH SUBSEQUENTLY INCURRED COSTS, EXPENSES, AND ACTUAL ATTORNEY'S FEES.
14. MODIFICATION. THIS SECURITY AGREEMENT MAY BE MODIFIED ONLY BY A CONTRACT IN
WRITING EXECUTED BY THE PARTY TO THIS SECURITY AGREEMENT AGAINST WHOM
ENFORCEMENT OF SUCH MODIFICATION IS SOUGHT.
15. INTERPRETATION. WHENEVER THE CONTEXT SO REQUIRES IN THIS SECURITY AGREEMENT,
ALL WORDS USED IN THE SINGULAR SHALL BE CONSTRUED TO HAVE BEEN USED IN THE
PLURAL (AND VICE VERSA), EACH GENDER SHALL BE CONSTRUED TO INCLUDE ANY OTHER
GENDERS, AND THE WORD "PERSON" SHALL BE CONSTRUED TO INCLUDE A NATURAL PERSON, A
CORPORATION, A FIRM, A PARTNERSHIP, A JOINT VENTURE, A TRUST, AN ESTATE OR ANY
OTHER ENTITY. UNLESS OTHERWISE DEFINED HEREIN OR THE
74
CONTEXT OTHERWISE REQUIRES, CAPITALIZED TERMS USED HEREIN SHALL HAVE THE
RESPECTIVE MEANINGS GIVEN TO THEM IN THE PURCHASE AGREEMENT.
16. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL. UPON FULL AND
INDEFEASIBLE PAYMENT AND SATISFACTION OF ALL SECURED OBLIGATIONS, THE SECURITY
INTERESTS SHALL TERMINATE AND ALL RIGHTS TO THE COLLATERAL SHALL REVERT TO
DEBTOR. UPON SUCH TERMINATION OF THE SECURITY INTERESTS OR RELEASE OF ANY
COLLATERAL, SECURED PARTY WILL, AT THE EXPENSE OF DEBTOR, EXECUTE AND DELIVER TO
DEBTOR SUCH DOCUMENTS AS DEBTOR SHALL REASONABLY REQUEST TO EVIDENCE THE
TERMINATION OF THE SECURITY INTERESTS OR THE RELEASE OF SUCH COLLATERAL, AS THE
CASE MAY BE.
17. NOTICES. ALL NOTICES, APPROVALS, REQUESTS, DEMANDS AND OTHER COMMUNICATIONS
HEREUNDER SHALL BE GIVEN IN ACCORDANCE WITH THE NOTICE PROVISIONS OF THE
PURCHASE AGREEMENT.
18. PARTIAL INVALIDITY. EACH PROVISION OF THIS SECURITY AGREEMENT SHALL BE VALID
AND ENFORCEABLE TO THE FULLEST EXTENT PERMITTED BY LAW. IF ANY PROVISION OF THIS
SECURITY AGREEMENT OR THE APPLICATION OF SUCH PROVISION TO ANY PERSON OR
CIRCUMSTANCE SHALL, TO ANY EXTENT, BE INVALID OR UNENFORCEABLE, THE REMAINDER OF
THIS SECURITY AGREEMENT, OR THE APPLICATION OF SUCH PROVISION TO PERSONS OR
CIRCUMSTANCES OTHER THAN THOSE AS TO WHICH IT IS HELD INVALID OR UNENFORCEABLE,
SHALL NOT BE AFFECTED BY SUCH INVALIDITY OR UNENFORCEABILITY, UNLESS SUCH
PROVISION OR SUCH APPLICATION OF SUCH PROVISION IS ESSENTIAL TO THIS SECURITY
AGREEMENT.
19. SUCCESSORS-IN-INTEREST AND ASSIGNS. DEBTOR SHALL NOT ASSIGN OR DELEGATE TO
ANY OTHER PERSON THIS SECURITY AGREEMENT OR ANY RIGHTS OR OBLIGATIONS UNDER THIS
SECURITY AGREEMENT. SUBJECT TO ANY RESTRICTION ON TRANSFERABILITY CONTAINED IN
THIS SECURITY AGREEMENT, THIS SECURITY AGREEMENT SHALL BE BINDING UPON AND SHALL
INURE TO THE BENEFIT OF THE SUCCESSORS-IN-INTEREST AND ASSIGNS OF EACH PARTY TO
THIS SECURITY AGREEMENT. NOTHING IN THIS SECTION SHALL CREATE ANY RIGHTS
ENFORCEABLE BY ANY PERSON NOT A PARTY TO THIS SECURITY AGREEMENT, EXCEPT FOR THE
RIGHTS OF THE SUCCESSORS-IN-INTEREST AND ASSIGNS OF EACH PARTY TO THIS SECURITY
AGREEMENT, UNLESS SUCH RIGHTS ARE EXPRESSLY GRANTED IN THIS SECURITY AGREEMENT
TO OTHER SPECIFICALLY IDENTIFIED PERSONS.
20. WAIVER. ANY WAIVER OF A DEFAULT UNDER THIS SECURITY AGREEMENT MUST BE IN
WRITING AND SHALL NOT BE A WAIVER OF ANY OTHER DEFAULT CONCERNING THE SAME OR
ANY OTHER PROVISION OF THIS SECURITY AGREEMENT. NO DELAY OR OMISSION IN THE
EXERCISE OF ANY RIGHT OR REMEDY SHALL IMPAIR SUCH RIGHT OR REMEDY OR BE
CONSTRUED AS A WAIVER. A CONSENT TO OR APPROVAL OF ANY ACT SHALL NOT BE DEEMED
TO WAIVE OR RENDER UNNECESSARY CONSENT TO OR APPROVAL OF ANY OTHER OR SUBSEQUENT
ACT.
21. DRAFTING AMBIGUITIES. EACH PARTY TO THIS SECURITY AGREEMENT AND ITS LEGAL
COUNSEL HAVE REVIEWED AND REVISED THIS SECURITY AGREEMENT. THE RULE OF
CONSTRUCTION THAT ANY AMBIGUITIES ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY
SHALL NOT BE EMPLOYED IN THE
75
INTERPRETATION OF THIS SECURITY AGREEMENT OR OF ANY AMENDMENTS OR EXHIBITS TO
THIS SECURITY AGREEMENT.
22. JOINT AND SEVERAL LIABILITY. IF DEBTOR CONSISTS OF MORE THAN ONE PERSON, THE
OBLIGATIONS OF DEBTOR UNDER THIS AGREEMENT SHALL BE THE JOINT AND SEVERAL
OBLIGATIONS OF EACH PERSON COMPRISING DEBTOR.
23. SURVIVAL. THE COVENANTS, CONDITIONS, REPRESENTATIONS AND WARRANTIES OF
DEBTOR IN THIS SECURITY AGREEMENT SHALL SURVIVE THE EXECUTION OF THIS SECURITY
AGREEMENT.
76
SIGNATURE PAGE TO SECURITY AGREEMENT
SECURED PARTY: Wilshire Technologies, Inc., a
California corporation
By: /s/ Xxxxx Xxxxxxxxx
----------------------------
Title: President and CEO
DEBTOR: FOAMEX ASIA CO., LTD., A LIMITED COMPANY ORGANIZED
AND EXISTING UNDER THE LAWS OF THE KINGDOM OF THAILAND
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
----------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
77
EXHIBIT A - COLLATERAL
78
EXHIBIT A TO SECURITY AGREEMENT
LIST OF ASSETS
1. CAPITAL ASSETS:
a. MANUAL SWAB MACHINE
Gem Tool 32 up trim die, mold foam and trim
Pallets
Rework cutter for press (larger cylinder)
Filter Regulator Lubricator
Varsane Modifications
Injection Molding Die (at CNC)
b. HEAT SEALER FOR SWAB MACHINE
Vertrod Corp. Model 14pc-3/16 Heat Sealer
Packaging & Freight
c. AUTOMATIC SWAB MACHINE
Franklin Automation Automated Swab Machine
Gem Tool Cutters & Brackets
Knife & Foam Stripper
Foam Guides
Wire Harness plus 4" heater
d. CONSTRUCTION IN PROGRESS:
Manual Swab Machine
2. INVENTORY:
all Inventory related to the manufacture and production of Wilshire
Contamination Control Products including all Raw Materials, Work in
Process, Material Commitments for Open PO's and Finished Goods. See
Schedule F, incorporated herein by reference, for further detail.
79
3. INTELLECTUAL PROPERTY:
PATENTS COUNTRY REG. NO. REG. DATE
------- ------- -------- ---------
HYDROPHILIC FOAM ARTICLE AND USA 5,460,655 10/24/95
SURFACE-CLEANING METHOD FOR
CLEAN ROOM
HYDROPHILIC FOAM ARTICLE AND USA 6,004,640 12/21/99
SURFACE-CLEANING METHOD FOR
CLEANROOM
ABRASIVE ARTICLE AND METHOD USA 6,004,363 12/21/99
FOR MAKING THE SAME
TRADEMARK COUNTRY REG. NO. REG. DATE RENEWAL DATE
--------- ------- -------- --------- ------------
POLYCLEAN USA 1896267 05/30/95 05/30/05
ULTRASORB USA 1804523 11/16/93 11/16/03
ULTRASORB GERMANY 2066144 05/30/94 01/28/03
ULTRASORB JAPAN 0000000 08/30/96 08/30/06
ULTRASORB MALAS 93/00481 01/29/93 01/29/00
ULTRASOLV USA 2205519 11/24/98 11/24/08
ULTRASOLV KORSO 435157 12/23/98 12/23/08
ULTRASOLV THALN KOR85474 09/24/97 09/23/07
XXXXXXXXX XXXXX 000000 11/30/98 11/30/08
ULTRASOLV JAPAN PENDING REVIEW AND APPROVAL
ULTRASOLV MALAS PENDING REVIEW AND APPROVAL
ULTRASOLV SINGP PENDING REVIEW AND APPROVAL
TRADENAME
WILSHIRE CONTAMINATION CONTROL
80
4. OTHER ASSETS:
a. CONTRACTS:
- Exclusive Product Supply Agreement dated July 28, 1998
between the Company and Time Release Sciences, Inc.
- Sales Representative Agreement dated December 1, 1998
between the Company and Eastern Scientific, Inc.
- Sales Representative Agreement dated February 9, 2000
between the Company and PTI Technical Sales
- Sales Representative Agreement dated June 1, 1998 between
the Company and Exxustech, Inc.
- Sales Representative Agreement dated December 1, 1998
between the Company and Xxxxxxxx Southwest
b. ALL CUSTOMER AND OTHER BUSINESS RECORDS OF THE WILSHIRE
CONTAMINATION CONTROL DIVISION.
81
[REPLACE WITH SCHEDULE F, EXHIBIT A]
82
FINANCING STATEMENT
83
EXHIBIT A TO FINANCING STATEMENT
EXHIBIT IS BEING FINALIZED AND WILL BE FORWARDED IN A FEW DAYS.
84
FINANCING STATEMENT RELEASE
85
EMPLOYEES AND FACILITIES AGREEMENT
This Employees and Facilities Agreement (the "Ongoing Agreement" or the
"Agreement"), dated as of May 19, 2000, is made and entered into by and among
Wilshire Technologies, Inc., a California corporation ("Wilshire") and Foamex
Asia Co., Ltd., a limited company organized and existing under the laws of the
Kingdom of Thailand ("Foamex").
24. RECITALS.
24.1. Wilshire and Foamex entered into an Asset Purchase
Agreement (the "Purchase Agreement") dated April 26, 2000 whereby Wilshire
agreed to sell and Foamex agreed to purchase substantially all of the assets of
Wilshire's Wilshire Contamination Control Division (the "Division").
24.2. In the Purchase Agreement, Foamex and Wilshire agreed that
Wilshire would provide to Foamex for due consideration, following the closing
under the Purchase Agreement (which closing date will be the "Effective Date"
hereunder), certain labor, facilities, services, personnel and other items with
respect to Foamex's ongoing operation of the Division's business.
24.3. By this Agreement, the parties intend to memorialize the
terms of Wilshire's and Foamex's obligations to each other with respect to such
ongoing operation.
25. Personnel.
2.1. Personnel; Services. The individuals listed in Exhibit A
hereto shall provide services to Foamex consistent with the guidelines set forth
in Exhibit B hereto, which are incorporated herein by reference.
2.2. Compensation. During the Term of this Agreement, Foamex
agrees to pay to Wilshire one half of the total monthly compensation (including
salary, benefits, withholdings and car allowances) ("Foamex's Monthly
Contribution") paid to the key personnel identified below (the "Key Personnel"),
up to the maximum amount set forth below as Foamex's Maximum Monthly
Contribution. Foamex shall pay Foamex's Monthly Contribution within 5 business
days' after Foamex's receipt of Wilshire's statement identifying the total
monthly compensation paid to the Key Personnel.
Key Personnel Foamex's Maximum Monthly Contribution
------------- -------------------------------------
Xxxx Xxxxxxxx $ 7,625.00
Xxx Xxxx 3,183.00
Xxxx Xxxxxxxx 2,288.00
Xxxxx Xxxxxx 2,389.00
86
Xxxxx Xxxxxxxx 1,845.00
Xxxxx Xxxxxx 2,236.00
Xxxxx XxXxxxxx 1,528.00
Xxxxxxx Xxxxx 1,586.00
Xxxxx Xxxxxx 2,542.00
25.3. REPLACEMENT PERSONNEL. FOAMEX AGREES THAT WILSHIRE MAY
MAKE, IN ITS SOLE DISCRETION, SUBSTITUTIONS FOR THE EMPLOYMENT POSITIONS
OCCUPIED BY THE KEY PERSONNEL AND THE OTHER PERSONNEL LISTED IN EXHIBIT A HERETO
(THE "REPLACEMENT PERSONNEL") PROVIDED THAT THE REPLACEMENT PERSONNEL SHALL HAVE
SUBSTANTIALLY THE SAME QUALIFICATIONS AS SET FORTH IN THE JOB DESCRIPTION FOR
THE INDIVIDUAL BEING REPLACED, INCLUDING, WITHOUT LIMITATION, THE JOB
DESCRIPTIONS ATTACHED TO EXHIBIT B HERETO AS SCHEDULES 1, 2, 3, 4, 5, 6, 7, 8
AND 9 THAT SUCH REPLACEMENT PERSONNEL SHALL BE ABLE TO PERFORM HIS OR HER DUTIES
WITH SUBSTANTIALLY THE SAME LEVEL OF COMPETENCY AS THE INDIVIDUAL BEING
REPLACED. IN THE EVENT WILSHIRE HIRES REPLACEMENT PERSONNEL, FOAMEX WILL BE
OBLIGATED TO PAY ONE-HALF OF THE REPLACEMENT PERSONNEL'S TOTAL MONTHLY
COMPENSATION, DETERMINED AS PROVIDED ABOVE AND SUBJECT TO THE FOAMEX'S MAXIMUM
MONTHLY CONTRIBUTION FOR THE INDIVIDUAL BEING REPLACED.
2.4. No Employment Relationship or Liability. Wilshire's
employees, independent contractors performing services for Foamex pursuant to
the provisions of this Agreement shall not be and shall not be deemed to be
employed by Foamex, and Foamex shall not be deemed to be a joint employer for
any purpose. Wilshire shall be solely responsible for the payment of all
salaries, compensation, withholding taxes, unemployment and worker's
compensation insurance premiums, health and welfare benefits or similar charges
associated with the employment of its employees and all tax and other filings
and record keeping required in connection with its employees. Further, Wilshire
will indemnify Foamex against, and hold Foamex harmless from and will on demand
reimburse Foamex for any and all liability, damage, deficiency, loss, cost or
expense (including reasonable attorneys' fees) that are based upon or that arise
out of any and all losses suffered by Foamex by reason of any employment related
claims alleged or brought by or liability incurred in connection with any of the
employees, independent contractors or agents of Wilshire performing services to
Foamex pursuant to the terms of this Agreement. The right of indemnification
contained in this Section 2.4 shall be in addition to any such indemnification
rights contained in the Purchase Agreement.
26. Personnel Bonuses. Foamex agrees to pay to Wilshire up to fifty
percent (50%) of the actual amount of the bonuses listed below (each, a "Bonus")
paid to any or all of the following personnel who are employed by Wilshire and
in good standing as of December 31, 2000. Foamex's payment shall be due within 5
business days of Wilshire's receipt of Foamex's notice of payment of the
Bonuses.
Personnel Bonus
--------- -----
87
Xxxxx Xxxxxx $ 5,000.00
Xxxxx Xxxxxx 6,000.00
Xxxxx XxXxxxxx 2,000.00
Xxxxx Xxxxxxxx 4,000.00
Xxxxxxx Xxxxx 3,000.00
27. Facility License Agreement.
4.1. License. Subject at all times to the terms and conditions
contained herein, Wilshire grants to Foamex a non-exclusive license (the
"License") during the Term, as hereinafter defined, of this Agreement to operate
the Division at Wilshire's facility (the "Facility") located at 0000 Xxxxxx
Xxxxx, Xxxxxxxx, XX in a manner consistent with Wilshire's operation of the
Division prior to the Effective Date. Foamex shall use the Facility for the
operation of the Division, and any other uses of the Facility by Foamex, except
as shall be necessary to perform its obligations under this Agreement, are
expressly prohibited.
4.2. Regulatory and Legal Compliance. Foamex agrees it will
conduct its operations at the Facility in compliance with all applicable laws
and regulations of all governmental agencies in effect at the time of the
execution of the Agreement and as may be imposed during the Term thereof,
including, without limitation, building and safety codes, Occupational Safety
and Health regulations (OSHA), Department of Labor, Weights & Measures, tax
laws, and copyright, patent and trademark laws.
4.3. Systems & Utilities. During the term of this Agreement,
Wilshire agrees to furnish or cause to be made available to Foamex in the
Facility lighting, heating, air conditioning, electricity and other utility
services to the extent such utilities and facilities currently exist in the
Facility.
4.4. Maintenance. Wilshire will be responsible for all
maintenance of the Facility.
4.5. Compliance with Lease. Notwithstanding anything to the
contrary contained herein, this License (and all of its terms, conditions and
rights) is subject and subordinate to all of the terms, conditions and
obligations of the Wilshire's lease (the "Lease") to the Facility, as it may be
amended, extended or renewed from time to time, the terms of which are herein
incorporated by reference and made a part hereof. Notwithstanding anything
contained herein to the contrary, Foamex shall neither do nor permit anything to
be done, which would constitute a default, an Event of Default or a breach under
the Lease or otherwise cause the Lease to be terminated or forfeited by reason
of any right reserved to or vested in the landlord under the Lease.
4.6. Foamex's Facility License Fee. On the first day of each
calendar month during the Term of this Agreement, Foamex agrees to pay to
Wilshire the sum of $7,100.00,
88
which amount represents fifty percent (50%) ("Foamex's Share of Lease Expenses")
of the Division's current net monthly lease expenses. In the event the Effective
Date is other than the first day of a calendar month, Foamex's Share of Monthly
Lease Expenses due hereunder will be prorated based upon a 30-day calendar
month.
28. Administration Services Wilshire shall provide the following
administration services to Foamex during the term of this Ongoing Agreement:
28.1.1. Arranging meetings, visits, training and
consultations between Foamex and Wilshire concerning technical matters relative
to the Purchase Agreement.
28.1.2. Producing reports of Wilshire to aid in the
ownership transition contemplated under the Purchase Agreement.
28.1.3. Supervising submission and acceptance of all items
payable pursuant to this Ongoing Agreement.
29. Events of Default; Termination. Each of the following will
constitute an event of default ("Event of Default") and material breach of this
Agreement.
29.1. Failure to Pay. Foamex's failure to make a payment as
provided in this Agreement within five (5) days of the due date therefor will
automatically constitute a default.
29.2. Failure to Perform. Foamex's or Wilshire's failure to
perform or observe any other term, covenant or agreement contained in this
Agreement provided such failure is not cured within fifteen (15) days after
written notice from the non-defaulting party.
This Agreement may be terminated by a non-defaulting party upon the occurrence
of an Event of Default.
30. GENERAL.
30.1. Term. The Term of this Agreement will commence on the
Effective Date and will continue until December 31, 2000 ("Term"), unless
terminated sooner as provided herein.
30.2. Severability. If any term or provision of this Agreement is
held or deemed to be held or is, in fact be inoperative or unenforceable as
applied in any particular case because it conflicts with any other provision or
provisions of this Agreement or any constitution or statute or rule of public
policy, or for any other reason, such circumstances will not have the effect of
rendering the term or provision in question inoperative or unenforceable in any
other case or circumstance, or of rendering any other provision or provisions
contained in this Agreement invalid, inoperative, or unenforceable to any extent
89
whatsoever, but such term or provision will be deemed modified or deleted as or
to the extent required by applicable law. The invalidity of one or more phrases,
sentences, clauses, sections or subsections of this Agreement will not affect
the remaining portions of this Agreement.
30.3. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing. Notice
is duly given to another party upon: (a) hand delivery to the other party, (b)
receipt by the other party when sent by facsimile to the address and number for
such party set forth below (provided, however, that the Notice is not effective
unless a duplicate copy of the facsimile Notice is promptly given by one of the
other methods permitted under this paragraph), or (c) the second business day
after the Notice has been deposited with a reputable overnight delivery service,
postage prepaid, addressed to the party as set forth below with at least
second-business-day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery-service-provider.
To Wilshire: Wilshire Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
(000) 000-0000 (facsimile)
with a copy to: Wilshire Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
(000) 000-0000 (facsimile)
with a copy to: Xxxxxxx Xxxx Seidenwurm & Xxxxx, LLP
000 X Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
(000) 000-0000 (facsimile)
Foamex: Foamex Asia Co., Ltd.
000 Xxxxxxx Xxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxxxxx Road
Thungmahamek, Sathorn
Bangkok, Thailand 10120
Attention: Xxxxxxx X. Xxxxxxxx, Xx., President
000-000-000-0000 (facsimile)
with a copy to: XxXxxxx Xxxx, a Professional Corporation
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
00
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
(000) 000-0000 (facsimile)
Each party will make a reasonable, good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
30.4. Amendment. This Agreement may not be amended except by an
instrument in writing duly executed and delivered on behalf of each of the
parties hereto.
30.5. Waiver. Any party may waive compliance by another with any
of the provisions of this Agreement. No waiver of any provisions will be
construed as a waiver of any other provision. Any waiver must be in writing.
30.6. Drafting Ambiguities. Each party to this Agreement and its
legal counsel have reviewed and revised this Agreement. The rule of construction
that ambiguities are to be resolved against the drafting party or in favor of
the party receiving a particular benefit under an agreement may not be employed
in the interpretation of this Agreement or any amendment to this Agreement.
30.7. Miscellaneous. The headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement may be executed in several counterparts, each of which
will be deemed an original, and all of which will constitute one and the same
instrument. This Agreement will be governed in all respects, including validity,
interpretation and effect, by the laws of the State of California, applicable to
contracts made and to be performed in California. This Agreement will be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto. Nothing in this Agreement, express or implied, is intended to or will
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement. In the event any legal action
is taken to enforce or interpret the terms of this Agreement, the prevailing
party or parties in such action will be entitled to recover its reasonable
attorneys' and expert witness fees and costs as established by the Court. This
Agreement may not be assigned without the prior written consent of the
nonassigning party; provided, however, that any such merger or other
reorganization of Foamex shall not be deemed to be an assignment, and that
Foamex may assign this Agreement, without the consent of Wilshire, in connection
with any such sale of substantially all of the assets of Foamex. Unless the
context requires otherwise, all words used in this Agreement in the singular
number will extend to and include the plural, all words in the plural number
will extend to and include the singular, and all words in any gender will extend
to and include all genders. Unless otherwise defined herein or the context
otherwise
91
requires, capitalized terms used herein shall have the respective meanings given
to them in the Purchase Agreement. Wilshire will provide Foamex with reasonable
access during normal business hours to inspect the underlying books and records
used to determine and/or necessary to verify Foamex's Monthly Contribution under
Section 2 hereof, the calculation of Foamex's payment obligations for Stay
Bonuses pursuant to Section 3 hereof, and Foamex's Share of Lease Expenses
pursuant to Section 4 hereof.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
92
SIGNATURE PAGE TO EMPLOYEES AND FACILITIES AGREEMENT
WILSHIRE TECHNOLOGIES, INC.,
a California corporation
By: /s/ Xxxxx Xxxxxxxxx
---------------
Title:President and CEO
FOAMEX ASIA CO., LTD.,
a limited company organized and existing under the
laws of the Kingdom of Thailand
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
----------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
93
EXHIBIT A - LIST OF EMPLOYEES
Xxxx Xxxxxxxx
Xxx Xxxx
Xxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxxx XxXxxxxx
Xxxxxxx Xxxxx
Xxxxx Xxxxxx
Xxxxxxxx X. Xxxxx
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxx
94
EXHIBIT B - GUIDELINES FOR EMPLOYEES AND FACILITIES AGREEMENT
95
EXHIBIT B
GUIDELINES FOR EMPLOYEES AND FACILITIES AGREEMENT
A. GENERAL GUIDELINES AND CONFLICTS
1. GENERAL GUIDELINES
Individuals providing services to Foamex pursuant to the Ongoing
Agreement shall perform such services consistent with existing performance
standards and guidelines utilized by the Division prior to the date of the
Ongoing Agreement and their respective job descriptions, which are attached
hereto as Schedules 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10 as modified by these
guidelines and subsequent written direction received from Foamex. Such
individuals shall follow the direction of Xxxxxxx X. Xxxxxxxx, Xx., the
President, Phanarat Jiantnthanakanon, the Controller of Foamex, Xxxx Xxxxxxxx
and any such further employees, agents or contractors of Foamex designated
herein or subsequently by any of the foregoing individuals. In the event that
any such individual performing services for the Division under the Ongoing
Agreement encounters any such material conflicts in the performance of his or
her duties for Wilshire and Foamex, he or she should notify his or her direct
supervisor at Wilshire of such conflict. Wilshire and Foamex shall subsequently
agree to a resolution of such conflict in a writing endorsed by each, and then
provide the same to the affected individual. Except as otherwise specified
herein or in any subsequent written directive from Foamex, all individuals
performing services for the Division under the Ongoing Agreement shall report
directly to Xxxx Xxxxxxxx in connection with matters pertaining to the Division.
2. CONFLICTS
a. PRODUCT CONFLICTS
The introduction of a new product by the Division or by Wilshire could
impact the other if the product does not meet internal specifications or is
introduced too quickly into the marketplace; thus both companies agree to
maintain current company product standards for any and all new product
introductions. Further, Wilshire and Foamex shall agree to the appropriate
allocation of time spent by sales representatives on selling activities related
to products of the Division and Wilshire, respectively.
b. PUBLIC COMPANY REPORTING CONFLICTS
Foamex acknowledges that Wilshire is a public company and that the
quarterly and annual reporting deadlines that it must comply with in issuing SEC
dictated reports to the public could, at times, impact day-to-day
responsibilities of certain individuals (principally individuals who perform
accounting functions) during the time of quarterly close of the books. However,
Wilshire agrees to take any such reasonable and appropriate action such that any
such impact
96
does not materially affect the performance of any duties or obligations
performed by Wilshire employees for Foamex under the Ongoing Agreement.
B. SPECIFIC GUIDELINES
1. INVENTORY PURCHASES AND CONTROL
Xxxxx Xxxxxx, as the Materials Manager, shall continue to perform her
duties in connection with the Division consistent with these guidelines and her
job description attached hereto as Schedule 1.
a. PURCHASING
The Materials Manager shall have the authority to purchase inventory of
standard products to maintain a three-month inventory level. A rolling sales
forecast shall be prepared by Xxxx Xxxxxxxx and approved by Foamex on a
quarterly basis. That forecast shall be developed by Materials Manager into a
production forecast, which shall be used by the Materials Manager to drive
purchasing efforts.
The Materials Manager shall also be responsible for purchases of
non-inventory items for the Division as needed. Foamex shall provide the
Materials Manager with a spending authorization for non-inventory items, and the
Materials Manager shall obtain Foamex approval for all purchases which exceed
the authorization.
b. PRODUCT COSTS
The Materials Manager shall maintain all product costs for standard
inventory. The Materials Manager shall undertake all required tasks to update
standard costs within thirty (30) days of the effective date of the Ongoing
Agreement and thereafter as agreed by Foamex and Wilshire. All changes to
standard costs shall be reviewed and approved by both Phanarat Jiantnthanakanon
and Xxxx Xxxxxxxx. Upon their concurrence, the Materials Manager shall then roll
in the new standards.
c. SUBCONTRACT MANAGEMENT
The Materials Manager shall manage off-site vendor operations and
locations. The Materials Manager shall track, control and record inventory of
vendor locations and all movements from one location to another.
d. MANAGEMENT OF INVENTORY ACCURACY/SLOW MOVING AND OBSOLETE
INVENTORY
The Materials Manager shall review levels of inventory on a monthly
basis to identify slow moving inventory. Further, the Materials Manager shall be
responsible for maintaining a
97
cycle count program that periodically counts inventory parts on a rotating basis
and for coordinating any periodic physical inventories. The Materials Manager
shall also coordinate periodic inspections of certain items and determine
whether certain inventory items need to be disposed. Upon such a determination,
the Materials Manager shall create an inventory disposition request form which
lists the items (and value) to be scrapped. This form shall be approved and
signed by Phanarat Jiantnthanakanon and Xxxx Xxxxxxxx.
e. NEW PRODUCT DEVELOPMENT/R&D
The Materials Manager shall work closely with the Division's sales
representatives and staff to develop new products. The Materials Manager shall
maintain the control of the specifications as the products are being developed
and work directly with vendors. Xxxx Xxxxxxxx shall drive new product
development subject to the direction and control of Foamex.
f. QUALIFICATION OF NEW SUPPLIERS
The Materials Manager shall drive the qualification process for new
suppliers. The Materials Manager shall act pursuant to guidelines previously
utilized by the Division, subject to written amendments and changes from Foamex.
g. MAINTENANCE OF INVENTORY MANAGEMENT SOFTWARE SYSTEMS.
The Materials Manager drives all purchases and the manufacture and movement
of inventory through the manufacturing modules of Macola, which interface
directly with the accounting modules. The Division shall close its books
quarterly, and detailed trial balances shall be run and reviewed by Xxxxx Xxxxx
for accuracy. Xxxxx Xxxxx shall perform reconciliation of the GL to the
inventory costing systems subject to the review and approval of Phanarat
Jiantnthanakanon. Upon the establishment of reporting systems by Foamex, the
reconciliation of the accounting books to inventory may be reassigned to Foamex
personnel.
2. SALES SUPPORT AND CUSTOMER SERVICE
The Sales Support and Customer Service Person (the "SSCS Person"), Xxxxx
Xxxxxxxx, shall perform sales support and customer service functions consistent
with these Guidelines and the job description attached hereto as Schedule 2. The
SSCS Person shall have the authority to take a sales order and fill it. The SSCS
Person shall track the order to shipment. The SSCS Person shall have the
authority to issue samples upon request. The SSCS Person must obtain Foamex
authorization to use production materials as a non-charge sample. The SSCS
Person must also follow credit limits placed on a customer by the accounting
department of the Division or Foamex. If the credit limit is exceeded, approval
to ship must be received from Phanarat Jiantnthanakanon before shipment. The
SSCS Person shall also work with Phanarat Jiantnthanakanon to determine
appropriate credit terms for new customers. Phanarat Jiantnthanakanon shall set
the terms upon review of D&B and other appropriate references. The
98
SSCS Person does not have the authority to give special pricing or to divert on
any other way from standard price lists. Reviewing new customers, shall be
performed consistent with guidelines for extending credits terms adopted by
Foamex. The SSCS Person shall prepare a package with a minimum of two credit
references as well as a D&B on a customer, which shall be forwarded to Phanarat
Jiantnthanakanon for review and determination of credit terms.
The SSCS Person shall also work directly with the accounting department
to identify customers with delinquent and/or overdue accounts. Decisions to put
a credit hold on shipments shall come from financial management of the Division
or Foamex with communication to Xxxx Xxxxxxxx. The SSCS Person shall contact
Phanarat Jiantnthanakanon concerning any such maters. AR aging reports shall be
run monthly and sent to Phanarat Jiantnthanakanon for review. Phanarat
Jiantnthanakanon shall then determine which customers need collection calls and
work with Xxxxx Xxxxxx in accounting to accomplish those calls.
a. MATERIAL COORDINATOR/WAREHOUSE
Xxxxx XxXxxxxx shall perform the functions of Material Coordinator/Warehouse
consistent with these guidelines and the job description attached hereto as
Schedule 3, and he shall report discrepant materials and other items to the
Materials Manager.
b. QUALITY ASSURANCE
If so requested by Foamex, Xxxxxxx Xxxxx shall assist in the performance
of quality assurance functions consistent with these guidelines, the job
description and any such Foamex instructions, approved specifications and
testing procedures.
c. ACCOUNTING
Xxxxx Xxxxxx shall be responsible for all accounting duties of the Division.
Xxxxx shall be responsible for: (i) maintaining all account payable records;
(ii) entering AP and AR information into the Macola system; (iii) entering cash
receipts into Macola; (iv) and maintenance of fixed asset records. Payroll
responsibilities shall be jointly shared by Xxxxx and Xxxxx Xxxxx, and Xxxxx
Xxxxx shall handle all HR related issues. On a monthly basis, Xxxxx shall
prepare account reconciliations for key accounts, prepares sales and cost of
sales reports by product, and prepare the bank reconciliations.
3. SALES AND MARKETING
Xxxx Xxxxxxxx shall manage all aspects of the selling and marketing of
the Division's products.
99
RESTRICTIVE COVENANTS AGREEMENT
THIS RESTRICTIVE COVENANTS AGREEMENT (the or this "Agreement") is made
as of May 17, 2000 (the "Agreement"), by and between Xxxx Xxxxxxxx, an
individual residing at 0000 Xxxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the "Individual")
and Foamex Asia Co., Ltd., a limited company organized and existing under the
laws of the Kingdom of Thailand (the "Company").
RECITALS
A. Pursuant to an Asset Purchase Agreement dated as of April 26, 2000
(the "Asset Purchase Agreement"), by and among Wilshire Technologies, Inc.
("Wilshire"), a California corporation and the Company, Wilshire agreed to sell,
and the Company agreed to purchase, substantially all of the assets (the
"Assets") of Wilshire's Contamination Control Division (the "Division").
B. The Individual is a party to an employment agreement with Wilshire,
which contains certain non-compete, non-solicitation and confidentiality
restrictive covenants in favor of Wilshire (the "Wilshire Restrictive
Covenants"), which benefit Wilshire's business, including, without limitation,
the business conducted by the Division.
C. Pursuant to the Asset Purchase Agreement, the Company and Wilshire
have entered into that certain Employees and Facilities Agreement dated May 17,
2000 (the "Ongoing Agreement") pursuant to which the Individual will, as an
employee of Wilshire, render services to and/or for the benefit of the Company
through the term of the Ongoing Agreement.
D. The Individual has, prior to the date of this Agreement, and/or will
have, during the term of the Ongoing Agreement, significant and close contact
with confidential information of the Division and the Division's customers and
employees and confidential information of the Company and the Company's
customers and employees.
E. The Individual has derived and/or will derive, directly or
indirectly, certain benefits in connection with the purchase and sale of the
Assets as specified in the Asset Purchase Agreement and/or with the Ongoing
Agreement;
F. In order to induce the Company to enter into and to consummate the
transactions contemplated by the Asset Purchase Agreement and the Ongoing
Agreement, the Individual has agreed to enter into this Agreement to confirm,
acknowledge, and agree that and to specify the terms pursuant to which the
Company shall have the benefit of
100
those Wilshire Restrictive Covenants, which benefit the Division, upon the
Company's purchase of the Assets of the Division.
101
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Term.
The term the "Term" as used in this Agreement shall mean the time period
commencing on May 17, 2000 and ending on the earlier to occur of
November 30, 2000 or the date of the termination of the Individual's
employment with Wilshire. The Individual's employment with Wilshire
shall not be deemed to be terminated in the event that he or she
thereafter provides services to Wilshire as an independent contractor, a
consultant or otherwise.
2. Restrictive Covenants.
2.1 The Individual acknowledges that: (i) he or she has had, and will
continue to have during the term of the Ongoing Agreement, significant
involvement in the administration, development and growth of the Division's
business; (ii) his or her work for the Division has brought him or her, and will
continue to bring him or her during the term of the Ongoing Agreement, into
close contact with confidential information of the Division and its customers
and employees and/or the Company and its customers and employees; and (iii) the
agreements and covenants contained in this Section 2 are essential to protect
the business interests of the Division and the Company. Accordingly, the
Individual covenants and agrees as follows:
2.1.a Except as otherwise provided for in this Agreement, during
the Term, the Individual shall not, directly or indirectly, within any state,
province or other political subdivision of the United States or any other
country in which the Division is conducting business, compete with respect to
any services or products of the Division which are either offered or are being
developed by the Division or the Company (the "Division's Business"), or,
without limiting the generality of the foregoing, be or become, or agree to be
or become, interested in or associated with, in any capacity (whether as
partner, shareholder, owner, officer, director, employee, principal, agent,
creditor, trustee, consultant, co-venturer or otherwise), any individual,
corporation, firm, association, partnership, joint venture or other business
entity, which competes with the Division's Business; provided, however, that
Individual may own, solely as an investment, not more than one (1%) percent of
any class of securities of any publicly owned corporation.
2.1.b During the Term, the Individual shall not, directly or
indirectly: (i) induce or attempt to influence any employee of the Company who
shall have been employed in connection with the Division during the Term to
leave its employ; (ii) aid or agree to aid any competitor, customer or suppliers
of the Division in any attempt to hire any person who shall
102
have been employed by the Company in connection with the Division during the
Term; or (iii) induce or attempt to influence any person or business entity who
was a customer or supplier of the Division during any portion of said period to
transact business with a competitor of the Division.
2.1.c During the Term and thereafter, Individual shall not
disclose to anyone any information about the affairs of the Division or the
Company, including, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
policies, marketing plans, sales plans, identity of suppliers or customers,
sales, profits or other financial information, which is confidential to the
Division or the Company or is not generally known in the relevant trade, nor
shall Individual make use of any such information for his or her own benefit.
2.2 Individual acknowledges and agrees that in the event of a violation
or threatened violation of any of the provisions of Section 2.1 (the
"Restrictive Covenants"), the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other rights and remedies which may
be available at law or in equity.
2.3 If any of the Restrictive Covenants, or any part thereof, is held to
be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination shall
have the power to reduce the duration and/or scope and/or area of such provision
and, in its reduced form, such provision shall then be enforceable.
2.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the provisions of this Agreement upon the state and federal courts of
the State of California.
3. Miscellaneous.
3.1 The Company shall have the right to assign this Agreement to any
successor of substantially all of its or the Division's business or assets.
3.2 Each notice and other communication required or permitted to be
given under this Agreement ("Notice") must be in writing. Notice is duly given
to another party upon: (i) hand delivery to the other party; (ii) receipt by the
other party when sent by facsimile to the address and number for such party set
forth below (provided, however, that the Notice is not effective unless a
duplicate copy of the facsimile Notice is promptly given by one of the other
methods permitted under this paragraph); or (iii) the second business day after
the Notice
103
has been deposited with a reputable overnight delivery service, postage prepaid,
addressed to the party as set forth below with at least second-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery-service-provider.
If to the Company: Foamex Asia Co., Ltd.
175 Sathorn City Tower
20th Floor
South Sathorn Road
Thungmahamek, Sathorn
Bangkok, Thailand 10120
Attention: Xxxxxxx X. Xxxxxxxx, Xx., President
If to the Individual: Xxxx Xxxxxxxx
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
3.3 This Agreement may not be changed, amended, terminated or superseded
except by an agreement in writing, nor may any of the provisions hereof be
waived except by an instrument in writing, in any such case signed by the party
against whom enforcement of any change, amendment, termination, waiver,
modification, extension or discharge is sought.
3.4 Except as otherwise provided herein, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of California, without giving any effect to the principles of conflicts of laws.
3.5 All descriptive headings of the several sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
3.6 If any provision of this Agreement, or part thereof, is held to be
unenforceable, the remainder of this Agreement or provision, as the case may be,
shall nevertheless remain in full force and effect.
3.7 Each of the parties hereto shall at any time and from time to time
hereafter, upon the reasonable request of the other, take such further action
and execute, acknowledge and deliver all such instruments of further assurance
as may be necessary to carry out the provisions of this Agreement.
3.8 The parties hereto hereby acknowledge that this agreement is not an
employment agreement and does not confer any employment rights on the
Individual.
3.9 Wilshire has caused this Agreement to be duly executed for the sole
purpose of acknowledging that the Agreement does not conflict with Individual's
rights or obligations under his or her employment agreement with Wilshire and
that Wilshire consents to this Agreement.
104
3.10 The term the "Division" shall for all purposes herein be deemed to
include and also refer to: (i) the Division, as and when operated by Wilshire;
and (ii) the Company's operation of the business of the Division following the
Company's purchase of the Assets of the Division. Further, the Division shall
for all purposes be deemed to continue in existence, without interruption, upon
and following Wilshire's sale and the Company's purchase of the Assets of the
Division.
105
Signature Page to Restrictive Covenants Agreement for Xxxx Xxxxxxxx
IN WITNESS HEREOF, the parties hereto have executed this Agreement as of
the date herein above written.
Foamex Asia Co., Ltd., a limited company organized
and existing under the laws of the Kingdom of
Thailand
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
` Individual: (SEAL)
---------------------------
Wilshire Technologies, Inc., a California
corporation
By: /s/ Xxxx Xxxxxxxx
-----------------
Title: VP-Sales and Marketing
106
RESTRICTIVE COVENANTS AGREEMENT
THIS RESTRICTIVE COVENANTS AGREEMENT (the or this "Agreement") is made
as of May 17, 2000 (the "Agreement"), by and between Xxxxx Xxxxxxxxx, an
individual residing at 00000 Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
(the "Individual") and Foamex Asia Co., Ltd., a limited company organized and
existing under the laws of the Kingdom of Thailand (the "Company").
RECITALS
F. Pursuant to an Asset Purchase Agreement dated as of April 26, 2000
(the "Asset Purchase Agreement"), by and among Wilshire Technologies, Inc.
("Wilshire"), a California corporation and the Company, Wilshire agreed to sell,
and the Company agreed to purchase, substantially all of the assets (the
"Assets") of Wilshire's Contamination Control Division (the "Division").
G. The Individual is a party to an employment agreement with Wilshire,
which contains certain non-compete, non-solicitation and confidentiality
restrictive covenants in favor of Wilshire (the "Wilshire Restrictive
Covenants"), which benefit Wilshire's business, including, without limitation,
the business conducted by the Division.
H. Pursuant to the Asset Purchase Agreement, the Company and Wilshire
have entered into that certain Employees and Facilities Agreement dated May 17,
2000 (the "Ongoing Agreement") pursuant to which the Individual will, as an
employee of Wilshire, render services to and/or for the benefit of the Company
through the term of the Ongoing Agreement.
I. The Individual has, prior to the date of this Agreement, and/or will
have, during the term of the Ongoing Agreement, significant and close contact
with confidential information of the Division and the Division's customers and
employees and confidential information of the Company and the Company's
customers and employees.
J. The Individual has derived and/or will derive, directly or
indirectly, certain benefits in connection with the purchase and sale of the
Assets as specified in the Asset Purchase Agreement and/or with the Ongoing
Agreement;
F. In order to induce the Company to enter into and to consummate the
transactions contemplated by the Asset Purchase Agreement and the
Ongoing Agreement, the Individual has agreed to enter into this
Agreement to confirm, acknowledge, and agree that and to specify the
terms pursuant to which the Company shall have the benefit of those
Wilshire Restrictive Covenants, which benefit the Division, upon the
Company's purchase of the Assets of the Division.
107
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
2. Term.
The term the "Term" as used in this Agreement shall mean the time period
commencing on May 17, 2000 and ending on the earlier to occur of
November 30, 2000 or the date of the termination of the Individual's
employment with Wilshire. The Individual's employment with Wilshire
shall not be deemed to be terminated in the event that he or she
thereafter provides services to Wilshire as an independent contractor, a
consultant or otherwise.
2 Restrictive Covenants.
2.1 The Individual acknowledges that: (i) he or she has had, and will
continue to have during the term of the Ongoing Agreement, significant
involvement in the administration, development and growth of the Division's
business; (ii) his or her work for the Division has brought him or her, and will
continue to bring him or her during the term of the Ongoing Agreement, into
close contact with confidential information of the Division and its customers
and employees and/or the Company and its customers and employees; and (iii) the
agreements and covenants contained in this Section 2 are essential to protect
the business interests of the Division and the Company. Accordingly, the
Individual covenants and agrees as follows:
2.1.a Except as otherwise provided for in this Agreement, during
the Term, the Individual shall not, directly or indirectly, within any state,
province or other political subdivision of the United States or any other
country in which the Division is conducting business, compete with respect to
any services or products of the Division which are either offered or are being
developed by the Division or the Company (the "Division's Business"), or,
without limiting the generality of the foregoing, be or become, or agree to be
or become, interested in or associated with, in any capacity (whether as
partner, shareholder, owner, officer, director, employee, principal, agent,
creditor, trustee, consultant, co-venturer or otherwise), any individual,
corporation, firm, association, partnership, joint venture or other business
entity, which competes with the Division's Business; provided, however, that
Individual may own, solely as an investment, not more than one (1%) percent of
any class of securities of any publicly owned corporation.
2.1.b During the Term, the Individual shall not, directly or
indirectly: (i) induce or attempt to influence any employee of the Company who
shall have been employed in connection with the Division during the Term to
leave its employ; (ii) aid or agree to aid any competitor, customer or suppliers
of the Division in any attempt to hire any person who shall
108
have been employed by the Company in connection with the Division during the
Term; or (iii) induce or attempt to influence any person or business entity who
was a customer or supplier of the Division during any portion of said period to
transact business with a competitor of the Division.
2.1.c During the Term and thereafter, Individual shall not
disclose to anyone any information about the affairs of the Division or the
Company, including, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
policies, marketing plans, sales plans, identity of suppliers or customers,
sales, profits or other financial information, which is confidential to the
Division or the Company or is not generally known in the relevant trade, nor
shall Individual make use of any such information for his or her own benefit.
2.2 Individual acknowledges and agrees that in the event of a violation
or threatened violation of any of the provisions of Section 2.1 (the
"Restrictive Covenants"), the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other rights and remedies which may
be available at law or in equity.
2.3 If any of the Restrictive Covenants, or any part thereof, is held to
be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination shall
have the power to reduce the duration and/or scope and/or area of such provision
and, in its reduced form, such provision shall then be enforceable.
2.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the provisions of this Agreement upon the state and federal courts of
the State of California.
3. Miscellaneous.
3.1 The Company shall have the right to assign this Agreement to any
successor of substantially all of its or the Division's business or assets.
3.2 Each notice and other communication required or permitted to
be given under this Agreement ("Notice") must be in writing. Notice is duly
given to another party upon: (i) hand delivery to the other party; (ii) receipt
by the other party when sent by facsimile to the address and number for such
party set forth below (provided, however, that the Notice is not effective
unless a duplicate copy of the facsimile Notice is promptly given by one of the
other methods permitted under this paragraph); or (iii) the second business day
after the Notice
109
has been deposited with a reputable overnight delivery service, postage prepaid,
addressed to the party as set forth below with at least second-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery-service-provider.
If to the Company: Foamex Asia Co., Ltd.
175 Sathorn City Tower
20th Floor
South Sathorn Road
Thungmahamek, Sathorn
Bangkok, Thailand 10120
Attention: Xxxxxxx X. Xxxxxxxx, Xx., President
If to the Individual: Xxxxx Xxxxxxxxx
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
3.3 This Agreement may not be changed, amended, terminated or superseded
except by an agreement in writing, nor may any of the provisions hereof be
waived except by an instrument in writing, in any such case signed by the party
against whom enforcement of any change, amendment, termination, waiver,
modification, extension or discharge is sought.
3.4 Except as otherwise provided herein, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of California, without giving any effect to the principles of conflicts of laws.
3.5 All descriptive headings of the several sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
3.6 If any provision of this Agreement, or part thereof, is held to be
unenforceable, the remainder of this Agreement or provision, as the case may be,
shall nevertheless remain in full force and effect.
3.7 Each of the parties hereto shall at any time and from time to time
hereafter, upon the reasonable request of the other, take such further action
and execute, acknowledge and deliver all such instruments of further assurance
as may be necessary to carry out the provisions of this Agreement.
3.8 The parties hereto hereby acknowledge that this agreement is not an
employment agreement and does not confer any employment rights on the
Individual.
3.9 Wilshire has caused this Agreement to be duly executed for the sole
purpose of acknowledging that the Agreement does not conflict with Individual's
rights or obligations under his or her employment agreement with Wilshire and
that Wilshire consents to this Agreement.
110
3.10 The term the "Division" shall for all purposes herein be deemed to
include and also refer to: (i) the Division, as and when operated by Wilshire;
and (ii) the Company's operation of the business of the Division following the
Company's purchase of the Assets of the Division. Further, the Division shall
for all purposes be deemed to continue in existence, without interruption, upon
and following Wilshire's sale and the Company's purchase of the Assets of the
Division.
111
Signature Page to Restrictive Covenants Agreement for Xxxxx Xxxxxxxxx
IN WITNESS HEREOF, the parties hereto have executed this Agreement as of
the date herein above written.
Foamex Asia Co., Ltd., a limited company organized
and existing under the laws of the Kingdom of
Thailand
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
-----------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
` Individual: (SEAL)
---------------------------
Wilshire Technologies, Inc., a California
corporation
By: /s/ Xxxxx Xxxxxxxxx
--------------------
Title: President and CEO
112
RESTRICTIVE COVENANTS AGREEMENT
THIS RESTRICTIVE COVENANTS AGREEMENT (the or this "Agreement") is made
as of May 17, 2000 (the "Agreement"), by and between Xxxxxxxx Xxxxx, an
individual residing at 00000 Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 (the
"Individual") and Foamex Asia Co., Ltd., a limited company organized and
existing under the laws of the Kingdom of Thailand (the "Company").
RECITALS
K. Pursuant to an Asset Purchase Agreement dated as of April 26, 2000
(the "Asset Purchase Agreement"), by and among Wilshire Technologies, Inc.
("Wilshire"), a California corporation and the Company, Wilshire agreed to sell,
and the Company agreed to purchase, substantially all of the assets (the
"Assets") of Wilshire's Contamination Control Division (the "Division").
L. The Individual is a party to an employment agreement with Wilshire,
which contains certain non-compete, non-solicitation and confidentiality
restrictive covenants in favor of Wilshire (the "Wilshire Restrictive
Covenants"), which benefit Wilshire's business, including, without limitation,
the business conducted by the Division.
M. Pursuant to the Asset Purchase Agreement, the Company and Wilshire
have entered into that certain Employees and Facilities Agreement dated May 17,
2000 (the "Ongoing Agreement") pursuant to which the Individual will, as an
employee of Wilshire, render services to and/or for the benefit of the Company
through the term of the Ongoing Agreement.
N. The Individual has, prior to the date of this Agreement, and/or will
have, during the term of the Ongoing Agreement, significant and close contact
with confidential information of the Division and the Division's customers and
employees and confidential information of the Company and the Company's
customers and employees.
O. The Individual has derived and/or will derive, directly or
indirectly, certain benefits in connection with the purchase and sale of the
Assets as specified in the Asset Purchase Agreement and/or with the Ongoing
Agreement;
F. In order to induce the Company to enter into and to consummate the
transactions contemplated by the Asset Purchase Agreement and the
Ongoing Agreement, the Individual has agreed to enter into this
Agreement to confirm, acknowledge, and agree that and to specify the
terms pursuant to which the Company shall have the benefit of those
Wilshire Restrictive Covenants, which benefit the Division, upon the
Company's purchase of the Assets of the Division.
113
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
3. Term.
The term the "Term" as used in this Agreement shall mean the time period
commencing on May 17, 2000 and ending on the earlier to occur of
November 30, 2000 or the date of the termination of the Individual's
employment with Wilshire. The Individual's employment with Wilshire
shall not be deemed to be terminated in the event that he or she
thereafter provides services to Wilshire as an independent contractor, a
consultant or otherwise.
2 Restrictive Covenants.
2.1 The Individual acknowledges that: (i) he or she has had, and will
continue to have during the term of the Ongoing Agreement, significant
involvement in the administration, development and growth of the Division's
business; (ii) his or her work for the Division has brought him or her, and will
continue to bring him or her during the term of the Ongoing Agreement, into
close contact with confidential information of the Division and its customers
and employees and/or the Company and its customers and employees; and (iii) the
agreements and covenants contained in this Section 2 are essential to protect
the business interests of the Division and the Company. Accordingly, the
Individual covenants and agrees as follows:
2.1.a Except as otherwise provided for in this Agreement, during
the Term, the Individual shall not, directly or indirectly, within any state,
province or other political subdivision of the United States or any other
country in which the Division is conducting business, compete with respect to
any services or products of the Division which are either offered or are being
developed by the Division or the Company (the "Division's Business"), or,
without limiting the generality of the foregoing, be or become, or agree to be
or become, interested in or associated with, in any capacity (whether as
partner, shareholder, owner, officer, director, employee, principal, agent,
creditor, trustee, consultant, co-venturer or otherwise), any individual,
corporation, firm, association, partnership, joint venture or other business
entity, which competes with the Division's Business; provided, however, that
Individual may own, solely as an investment, not more than one (1%) percent of
any class of securities of any publicly owned corporation.
2.1.b During the Term, the Individual shall not, directly or
indirectly: (i) induce or attempt to influence any employee of the Company who
shall have been employed in connection with the Division during the Term to
leave its employ; (ii) aid or agree to aid any competitor, customer or suppliers
of the Division in any attempt to hire any person who shall
114
have been employed by the Company in connection with the Division during the
Term; or (iii) induce or attempt to influence any person or business entity who
was a customer or supplier of the Division during any portion of said period to
transact business with a competitor of the Division.
2.1.c During the Term and thereafter, Individual shall not
disclose to anyone any information about the affairs of the Division or the
Company, including, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
policies, marketing plans, sales plans, identity of suppliers or customers,
sales, profits or other financial information, which is confidential to the
Division or the Company or is not generally known in the relevant trade, nor
shall Individual make use of any such information for his or her own benefit.
2.2 Individual acknowledges and agrees that in the event of a violation
or threatened violation of any of the provisions of Section 2.1 (the
"Restrictive Covenants"), the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other rights and remedies which may
be available at law or in equity.
2.3 If any of the Restrictive Covenants, or any part thereof, is held to
be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination shall
have the power to reduce the duration and/or scope and/or area of such provision
and, in its reduced form, such provision shall then be enforceable.
2.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the provisions of this Agreement upon the state and federal courts of
the State of California.
3. Miscellaneous.
3.1 The Company shall have the right to assign this Agreement to any
successor of substantially all of its or the Division's business or assets.
3.2 Each notice and other communication required or permitted to
be given under this Agreement ("Notice") must be in writing. Notice is duly
given to another party upon: (i) hand delivery to the other party; (ii) receipt
by the other party when sent by facsimile to the address and number for such
party set forth below (provided, however, that the Notice is not effective
unless a duplicate copy of the facsimile Notice is promptly given by one of the
other methods permitted under this paragraph); or (iii) the second business day
after the Notice
115
has been deposited with a reputable overnight delivery service, postage prepaid,
addressed to the party as set forth below with at least second-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery-service-provider.
If to the Company: Foamex Asia Co., Ltd.
175 Sathorn City Tower
20th Floor
South Sathorn Road
Thungmahamek, Sathorn
Bangkok, Thailand 10120
Attention: Xxxxxxx X. Xxxxxxxx, Xx., President
If to the Individual: Xxxxxxxx Xxxxx
00000 Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
3.3 This Agreement may not be changed, amended, terminated or superseded
except by an agreement in writing, nor may any of the provisions hereof be
waived except by an instrument in writing, in any such case signed by the party
against whom enforcement of any change, amendment, termination, waiver,
modification, extension or discharge is sought.
3.4 Except as otherwise provided herein, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of California, without giving any effect to the principles of conflicts of laws.
3.5 All descriptive headings of the several sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
3.6 If any provision of this Agreement, or part thereof, is held to be
unenforceable, the remainder of this Agreement or provision, as the case may be,
shall nevertheless remain in full force and effect.
3.7 Each of the parties hereto shall at any time and from time to time
hereafter, upon the reasonable request of the other, take such further action
and execute, acknowledge and deliver all such instruments of further assurance
as may be necessary to carry out the provisions of this Agreement.
3.8 The parties hereto hereby acknowledge that this agreement is not an
employment agreement and does not confer any employment rights on the
Individual.
3.9 Wilshire has caused this Agreement to be duly executed for the sole
purpose of acknowledging that the Agreement does not conflict with Individual's
rights or obligations under his or her employment agreement with Wilshire and
that Wilshire consents to this Agreement.
116
3.10 The term the "Division" shall for all purposes herein be deemed to
include and also refer to: (i) the Division, as and when operated by Wilshire;
and (ii) the Company's operation of the business of the Division following the
Company's purchase of the Assets of the Division. Further, the Division shall
for all purposes be deemed to continue in existence, without interruption, upon
and following Wilshire's sale and the Company's purchase of the Assets of the
Division.
117
Signature Page to Restrictive Covenants Agreement for Xxxxxxxx Xxxxx
IN WITNESS HEREOF, the parties hereto have executed this Agreement as of
the date herein above written.
Foamex Asia Co., Ltd., a limited company organized
and existing under the laws of the Kingdom of
Thailand
By:/s/ Xxxxxxx X. Xxxxxxxx, Xx.
----------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President
` Individual: (SEAL)
---------------------------
Wilshire Technologies, Inc., a California
corporation
By: /s/ Xxxxxxxx X. Xxxxx
---------------------
Title VP Finance and CFO
