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Exhibit 10.10
EXECUTION COPY
TERMINATION AND TRANSACTION AGREEMENT
THIS TERMINATION AND TRANSACTION AGREEMENT (this "Agreement") is dated as
of the 6th day of December, 2005 by and among
AV SUPPLY GROUP 2001 LIMITED, a New Zealand limited liability entity
registered in the New Zealand Companies Office under No. 1545956 ("AV Supply"),
XXXXXX XXXX BULCRAIG ("Bulcraig") contracting personally and in his
capacity as a trustee of THE HAPPY VALLEY TRUST created by Deed dated August 17,
2004 (the "Trust"),
XXXXXX XXXXX XXXXXX ("Independent Trustee") (in his such capacity as a
trustee of the Trust only and not personally),
DECADE INDUSTRIES, INC., a Minnesota corporation doing business as Sanus
Systems (the "Company"),
CSAV ASIA PACIFIC LIMITED, a Hong Kong corporation ("CSAV AP"), and
CSAY HOLDING CORP., a Delaware corporation ("Holdings").
Bulcraig and AV Supply are referred to herein collectively as the
"Sellers", and each is singly, a "Seller". Bulcraig and the Independent Trustee
being referred to together in this Agreement as the "Trustees".
Capitalized terms used herein without definition shall have the meanings
assigned to such terms in Section 13.
WHEREAS, AV Supply and Bulcraig are engaged in the business of
manufacturing, sourcing, procuring and arranging for the delivery to customers
of mounting solutions, furnishings and products (including (but by way of
limitation) furniture, mounts, lifts, stands, racks supports and accessories and
systems) for the Pro AV, home theater, residential and work-station audiovisual
markets, designed primarily to be used with audio and video components and
systems (the "Business");
WHEREAS, Bulcraig is the sole director and is (together with the
Independent Trustee) the holder of all the issued and outstanding shares of AV
Supply;
WHEREAS, AV Supply and the Company are parties to that certain Master
Services and Master Supply Agreement dated as of September 14, 2004 (the "Supply
Contract"), whereby AV Supply provides to the Company certain supply component
procurement services and manufactured wall mounts and furniture designed
primarily to be used with audio and video components and systems;
WHEREAS, the parties desire to terminate the Supply Contract and enter into
the other transactions contemplated hereby, on the terms and conditions set
forth herein; and
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WHEREAS, Bulcraig will derive substantial direct and indirect benefits from
the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, Holdings, the Company and CSAV AP (collectively, the "Buyers") and
the Sellers and the Independent Trustee agree as follows:
1. TERMINATION OF CONTRACT.
1.1 Termination. Except to the extent set forth in Section 1.2 below, as of
the Closing, the Supply Contract shall terminate and be of no further force and
effect and the rights and obligations of the Company and AV Supply thereunder
shall be terminated and discharged in full.
1.2 Survival of Certain Provisions: joint and Several Obligations.
Notwithstanding the provisions of Section 1.1 above, (i) the Supply Contract
shall remain in full force and effect in all respects until June 1, 2007 (the
"Final Supply Contract Termination Date") with respect to (a) all accepted
purchase orders outstanding on the Closing Date (a list of which is attached
hereto as SCHEDULE 1.2), and all products with respect thereto, (b) the
obligations of the parties under Article 6 (Indemnification; Limitation of
Liability; Insurance) and (c) the parties' obligations arising under the Supply
Contract prior to the Closing Date and (ii) Article 8 (Confidentiality) and
Article 10 (Miscellaneous) shall survive indefinitely. If a written claim in
respect of any obligation or liability under the Supply Contract that survived
the Closing Date pursuant to clause (i) of the previous sentence is made on or
prior to the Final Supply Contract Termination Date, then such obligation or
liability shall survive until the final resolution of such claim. AV Supply and
Bulcraig shall be jointly and severally liable for any obligations of AV Supply
under the Supply Contract that survive the Closing Date in accordance with this
Section 1.2.
1.3 Transferred Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing, AV Supply shall sell, assign, transfer and
deliver to CSAV AP all of its right, title and interest in and to the following
assets (collectively, the "Transferred Assets"):
(a) all of the contracts or agreements described on SCHEDULE 1.3(A)
(the "Transferred Contracts"); and
(b) all of the copyrights, designs and other intellectual property
described on SCHEDULE 1.3(B) (the "Intellectual Property").
1.4 Assumed Obligation: Excluded Liabilities. At the Closing, CSAV AP shall
assume, and agree to pay, perform, fulfill and discharge all obligations and
liabilities of AV Supply which arise after the Closing and which relate to
events occurring subsequently to the Closing, or to periods commencing on or
after the Closing Date, under the Transferred Contracts (the "Assumed
Obligations"). Anything to the contrary notwithstanding, neither Holdings, the
Company nor CSAV AP shall assume, nor shall any of them be deemed to have
assumed, any liability or obligation of any type or nature whatsoever of AV
Supply not expressly included in the Assumed Obligations (the "Excluded
Liabilities").
2. CONSIDERATION.
(a) Consideration. In consideration for the termination of the Supply
Contract, and certain of the other covenants and agreements of the AV Supply set
forth in this Agreement, but excluding those set out in Section 11:
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(i) At the Closing, the Company shall pay to AV Supply the sum of
six hundred fifty thousand United States dollars (US$650,000.00) in
accordance with the wire transfer instructions set forth on SCHEDULE
2.1(A).
(ii) On September 1, 2006, the Company shall pay to AV Supply the
sum of one hundred thousand United States dollars (US$100,000.00) (the
"Deferred Payment") in accordance with the wire transfer instructions of AV
Supply received by the Company at least three (3) business days prior to
the payment date.
(iii) At the Closing, Holdings shall issue to the Trustees (as
the nominee of AV Supply) one thousand six hundred and seventy one (1,671)
shares of Holdings' Class B Non-Voting Common Stock, US$0.001 par value
per share (the "Shares").
(iv) One June 1, 2007, the Company shall pay to AV Supply the sum
of one hundred and fifty thousand United States dollars (US$150,000.00)
(the "Second Deferred Payment") so long as Bulcraig is employed by CSAV AP
(or another Subsidiary of Holdings) on such date (it being agreed that the
obligation of the Company to make this payment shall automatically
terminate if Bulcraig ceases to be employed by CSAV AP (or another
Subsidiary of Holdings) for any reason whatsoever (other than as a result
of an unlawful termination by the employer) prior to June 1, 2007). The
Second Deferred Payment shall be made in accordance with the wire transfer
instructions of Bulcraig received by the Company at least three (3)
business days prior to the payment date.
(b) Consideration. In consideration for the transfer of the
Transferred Assets, on the Closing Date, the Company shall pay to AV Supply at
the Closing the sum of twenty five thousand United States dollars (US$25,000) in
accordance with the wire transfer instructions set forth on SCHEDULE 2.1.(A).
(c) Consideration. In consideration for the covenants and agreements
of Bulcraig set forth in this Agreement (including, without limitation, the
covenants and agreements set forth in Section 11 below (other than the covenants
and agreements of Bulcraig set forth in Section 11 below relating to
restrictions on activities in the United States and its territories and
possessions)), at the Closing, the Company shall pay to Bulcraig the sum of
sixty thousand United States dollars (US$60,000.00) in accordance with the wire
transfer instructions set forth on SCHEDULE 2.1(A)
(d) Consideration. In consideration for the covenants and agreements
of Bulcraig set forth in Section 11 below relating to restrictions on activities
in the United States and its territories and possessions, at the Closing, the
Company shall pay to Bulcraig the sum of fifteen thousand United States dollars
(US$15,000.00) in accordance with the wire transfer instructions set forth on
Schedule 2.1(a).
(e) Lowest Price. The parties acknowledge that for the purposes of
Section EW 32 of the Income Tax Xxx 0000 (New Zealand), the consideration
referred to in this Section 2 is the lowest price that the parties would have
agreed on at the time this Agreement was entered into, if payment had been
required in full at the time the first right in the property was or is to be
transferred (i.e., the Closing Date). For the purposes of this clause, the term
"right" has the same meaning as in section OB 1 of the Income Tax Act 2004 (New
Zealand).
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3. CLOSING.
3.1 Time and Place. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held at the offices of Xxxxxxx XxXxxxxxx LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 1:00 p.m. on December 6, 2005, or at such
other place as the Buyers and the Sellers may agree. The date on which the
Closing is held hereunder is sometimes referred to herein as the "Closing Date".
3.2 Transactions at Closing. At the Closing, in addition to any other
instruments or documents referred to herein:
(a) AV Supply shall duly execute and deliver to CSAV AP, a Xxxx of
Sale and Assignment with respect to the Transferred Assets in the form agreed so
as to vest in CSAV AP all of its right, title, and interest in and to the
Transferred Assets, in each case free and clear of all Encumbrances.
(b) The Buyers shall make the payments contemplated by Sections
2(a)(i), 2(b) and 2(c) in accordance with the wire transfer instructions set
forth on SCHEDULE 2.1(A).
(c) Holdings shall deliver to the Trustees a certificate evidencing
the Shares which will have been registered in the books and records of Holdings
as shares held by the Trustees. The Shares will be issued to the Trustees free
of any Encumbrance other than Encumbrances arising under this Agreement, the
Stockholder Agreement (as defined below), the Registration Rights Agreement (as
defined below), the Stock Repurchase Agreement (as defined below) and any other
restrictions on transfer as may be imposed by applicable law.
(d) Each of the parties hereto shall execute and deliver each of the
other agreements required to be signed and delivered by such party pursuant to
Sections 7 and 8.
No party shall be bound to any of the Transaction Documents until all
parties to each of them has signed all the Transaction Documents to which they
are a party, and each such document shall be fully effective.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. AV Supply and Bulcraig,
jointly and severally, represent and warrant to each Buyer as follows:
4.1 Organization of AV Supply; Authority. AV Supply is a limited liability
entity duly organized, validly existing and in good standing under the laws of
New Zealand. AV Supply has all requisite power and authority to execute and
deliver this Agreement and the other documents, instruments and agreements
contemplated hereby (collectively, the "Transaction Documents") to which it is a
party and to carry out all actions required of it pursuant to the terms of the
Transaction Documents.
4.2 Corporate Approval; Binding Effect. AV Supply has obtained all
necessary authorizations and approvals from its Board of Directors, or other
equivalent governing body and stockholders required for the execution and
delivery of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby. Each of the
Transaction Documents to which AV Supply is a party has been duly executed and
delivered by AV Supply and constitutes the legal, valid and binding obligation
of AV Supply enforceable against AV Supply in accordance with its terms, except
to the extent such enforceability is subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other law affecting or
relating to creditors' rights generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
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4.3 Non-Contravention. The execution and delivery by AV Supply of the
Transaction Documents to which it is a party and the consummation by AV Supply
of the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provision of the Certificate of Incorporation or By-Laws of AV
Supply, or its equivalent governing documents, each as amended to date; or (b)
constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any Encumbrance upon
any of the Transferred Assets pursuant to (i) any agreement or instrument to
which AV Supply is a party or by which AV Supply or any of the Transferred
Assets is bound, or to which AV Supply or any of such properties is subject, or
(ii) any statute, judgment, decree, order, regulation or rule of any court or
governmental or regulatory authority to which AV Supply is subject.
4.4 Consents. No consent, including, without limitation, spousal consents
in the case of Bulcraig, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority or any other
Person is required for the execution and delivery by each Seller of the
Transaction Documents to which it is a party or for the consummation by each
Seller of the transactions contemplated hereby or thereby.
4.5 Litigation, Etc. No action, suit, proceeding or investigation is
pending or, to the knowledge of each Seller, threatened, relating to or
affecting any of the Transferred Assets, or which questions the validity of the
Transaction Documents or challenges any of the transactions contemplated hereby
or thereby, nor, to the knowledge of Bulcraig or AV Supply, is there any basis
for any such action, suit, proceeding or investigation.
4.6 Conformity to Law. Each Seller is in (a) compliance in all material
respects with all laws, statutes, governmental regulations and all judicial or
administrative tribunal orders, judgments, writs, injunctions, decrees or
similar commands applicable to it, or any of the Transferred Assets of each
Seller (including, without limitation, any labor, environmental, occupational
health, zoning or other law, regulation or ordinance) and (b) compliance in all
material respects with all unwaived terms and provisions of all contracts,
agreements and indentures to which it is a party, or by which it or any of the
Transferred Assets is subject.
4.7 Title to Transferred Assets. AV Supply owns the Transferred Assets, and
has the full right to sell, convey, transfer, assign and deliver the Transferred
Assets, without the need to obtain the consent or approval of any third party.
All of the Transferred Assets are entirely free and clear of any security
interests, liens, claims, charges, options, mortgages, debts, leases (or
subleases), conditional sales agreements, title retention agreements,
encumbrances of any kind, material defects as to title or restrictions against
the transfer or assignment thereof (collectively, "Encumbrances"). At and as of
the Closing, AV Supply will convey the Transferred Assets to CSAV AP in the
manner specified in Section 3.2(a) above and CSAV AP will have good and valid
record and marketable title to all of the Transferred Assets, free and clear of
all Encumbrances.
4.8 [Intentionally Omitted.]
4.9 Insurance. SCHEDULE 4.9 hereto lists the policy of liability and other
insurance owned or held by AV Supply (the "Policy"). AV Supply has provided the
Company with a true, correct and complete copies of the Policy, together with
all modifications, riders and endorsements thereto. The Policy (a) is in full
force and effect, (b) is sufficient for material compliance by AV Supply with
all requirements of law and the Supply Contract, (c) provides that it will
remain in full force and effect through the date set forth in such SCHEDULE, and
(d) will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. AV Supply is not in default with
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respect to any material obligations under the Policy nor has AV Supply received
any notification of cancellation of the Policy.
4.10 Broker. No Seller has retained, utilized or been represented by any
broker, agent, finder or intermediary in connection with the negotiation or
consummation of the transactions contemplated by this Agreement.
4.11 Indebtedness. Except as set forth on SCHEDULE 4.11, AV Supply has no
Indebtedness outstanding at the date hereof.
4.12 Solvency. Immediately prior to, and as of the Closing Date after
giving effect to the transactions contemplated hereunder, AV Supply will not be
insolvent within the meaning of any applicable federal, state or foreign debtor
and creditor, bankruptcy or fraudulent conveyance laws.
4.13 Subsidiaries. AV Supply does not have any Subsidiaries and does not
own any legal and/or beneficial interests in any corporation, limited liability
companies, partnerships, business trusts or joint ventures or in any other
unincorporated trade or business enterprise.
4.14 Contracts. AV Supply has delivered to the Buyers true, correct and
complete copies of all contracts listed on SCHEDULE 1.3(A), together with all
modifications and supplements thereto. Each of the contracts listed on SCHEDULE
1.3(A) is in full force and effect, AV Supply is not in breach of any of the
provisions of any such contract, nor, to the knowledge of each Seller, is any
other party to any such contract in default thereunder, nor does any event or
condition exist which with notice or the passage of time or both would
constitute a default thereunder. AV Supply has in all material respects
performed all obligations required to be performed by it to date under each such
contract. Subject to obtaining any necessary consents by the other party or
parties to any such contract (the requirement of any such consent being
reflected on SCHEDULE 1.3(A) hereto), no contract of AV Supply listed in
Schedule 1.3(a) includes any provision the effect of which may be to enlarge or
accelerate any obligations of CSAV AP to be assumed thereunder or give
additional rights to any other party thereto or will in any other way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by any of the Transaction Documents.
4.15 Intellectual Property. Except for the rights granted to the Company
under the Supply Contract, AV Supply owns and has the sole and exclusive right
to use the Intellectual Property, and the consummation of the transactions
contemplated hereby will not alter or impair any such right. No claims have been
asserted to the knowledge of AV Supply or Bulcraig, and no claims are pending,
by any Person regarding the use of any Intellectual Property, or challenging or
questioning the validity or effectiveness of any license or agreement concerning
any Intellectual Property, and to the actual knowledge of AV Supply and Bulcraig
there is no basis for any such claim. To Bulcraig's knowledge after reasonable
inquiry, the use by AV Supply of the Intellectual Property in the ordinary
course of its business (including in the production of the Manufactured Products
(as defined in the Supply Contract) does not, and the use by CSAV AP in that
same manner will not, infringe on the rights of any Person.
4.16 Trustees Warranties. The representations and warranties of the
Trustees set forth in Section 15 below are true and correct in all respects.
5. REPRESENTATIONS AND WARRANTIES OF BULCRAIG. Bulcraig represents and
warrants as follows:
5.1 Authority; Title. Bulcraig has the authority and legal capacity to
enter into each of the Transaction Documents to which he is a party and to carry
out all actions required of him pursuant to the
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terms of the Transaction Documents. Between them, Bulcraig and the Independent
Trustee have sole record and legal ownership of all of the issued and
outstanding shares of AV Supply.
5.2 Approval; Binding Effect. Bulcraig has obtained all necessary
authorizations and approvals, including, without limitation, any required
spousal consent or approval, required for the execution and delivery of the
Transaction Documents to which he is a party and the consummation of the
transactions contemplated hereby and thereby. Each of the Transaction Documents
to which Bulcraig is a party has been duly executed and delivered by Bulcraig
and constitutes the legal, valid and binding obligation of Bulcraig enforceable
against Bulcraig in accordance with its terms, except to the extent such
enforceability is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other law affecting or relating to
creditors' rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3 Non-Contravention. The execution and delivery by Bulcraig of the
Transaction Documents to which he is a party and the consummation by Bulcraig of
the transactions contemplated hereby and thereby will not (a) constitute a
violation of, or be in conflict with, or constitute or create a default under,
or result in the creation or imposition of any Encumbrance upon any property of
Bulcraig pursuant to (i) any agreement or instrument to which Bulcraig is a
party or by which Bulcraig or any of his properties is bound or to which
Bulcraig or any of his properties is subject, or (ii) any statute, judgment,
decree, order, regulation or rule of any court or governmental or regulatory
authority to which Bulcraig is subject.
6. REPRESENTATIONS AND WARRANTIES OF BUYERS. Holdings, CSAV AP and the
Company, jointly and severally, represent and warrant to each Seller and to the
Trustees as follows:
6.1 Organization of Buyers; Authority. Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota. CSAV AP is a corporation
duly organized, validly existing and in good standing under the laws of Hong
Kong. Holdings owns all of the issued and outstanding shares of capital stock of
CSAV, Inc., which owns all of the issued and outstanding shares of capital stock
of each of the Company and CSAV AP. Each Buyer has all requisite power and
authority to execute and deliver the Transaction Documents to which it is a
party and to carry out all of the actions required of it pursuant to the terms
thereof.
6.2 Corporate Approval; Binding Effect. Each Buyer has obtained all
necessary authorizations and approvals from its Board of Directors, or
equivalent governing body and stockholders required for the execution and
delivery of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby. Each of the
Transaction Documents to which each Buyer is a party has been duly executed and
delivered by such Buyer and constitute the legal, valid and binding obligation
of such Buyer, enforceable against such Buyer in accordance with its terms,
except to the extent such enforceability is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other law
affecting or relating to creditors' rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
6.3 Non-Contravention. The execution and delivery by each Buyer of the
Transaction Documents to which it is a party and the consummation by such Buyer
of the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the Certificate of Incorporation or By-Laws, or
equivalent governing documents, of such Buyer, each as amended to date; or (b)
constitute a violation of, or be in conflict with, constitute or create a
default under, or result in the creation or imposition of any Encumbrance upon
any property of such Buyer pursuant to (i) any agreement or instrument to which
such Buyer is a party or by which such Buyer or any of its properties is bound
or to
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which such Buyer or any of its properties is subject, or (ii) any statute,
judgment, decree, order, regulation or rule of any court or governmental
authority to which such Buyer is subject.
6.4 Consents. No consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority or any other
Person is required for the execution and delivery by each Buyer of the
Transaction Documents to which it is a party or for the consummation by such
Buyer of the transactions contemplated hereby or thereby.
6.5 Broker. The Buyers have not retained, utilized or been represented by
any broker, agent, finder or other intermediary in connection with the
negotiation or consummation of the transactions contemplated by this Agreement.
6.6 Capitalization. Holdings represents and warrants that, after giving
effect to the issuance of the Shares effected hereby, (i) the authorized capital
of Holdings consists of (A) 300,000 shares of Class A Common Stock, no shares of
which are issued and outstanding on the date hereof, (B) 250,000 shares of Class
B Common Stock, 141,695.86 shares of which are issued and outstanding on the
date hereof, and (C) 100,000 shares of Class C Common Stock, 52,996.01 shares of
which are issued and outstanding on the date hereof, (ii) all such outstanding
capital stock (other than the Shares) is owned as set forth on SCHEDULE 6.6
hereto and is validly issued and outstanding, fully paid and non-assessable, and
(iii) there are no commitments for the purchase or sale of, and no options,
warrants or other rights to subscribe for or purchase, any securities of the
Company other than (x) as set forth in the Stockholder Agreement (as defined
below), and (y) as set forth on SCHEDULE 6.6 hereto. At the Closing, the Trust
will acquire the Shares free and clear of all Encumbrances, other than
Encumbrances arising under this Agreement, the Stockholder Agreement (as defined
below), the Registration Rights Agreement (as defined below), the Repurchase
Agreement (as defined herein) and restrictions on transfer as may be imposed by
applicable law.
6.7 Prohibited Registrations of Transfers. Holdings shall refuse to
register any transfer of the Shares not made in accordance with the provisions
of Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to registration under the Securities Act, or pursuant to an
available exemption from registration.
7. CONDITIONS PRECEDENT TO BUYERS' OBLIGATIONS. The obligation of the
Buyers to consummate the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by the Buyers):
7.1 Representations and Warranties True at Closing. The representations and
warranties made by each Seller in or pursuant to this Agreement shell be true
and correct at and as of the Closing Date.
7.2 Compliance with Agreement. Each Seller shall have performed and
complied with all of its obligations under this Agreement to be performed or
complied with by it at, or prior to, the Closing Date.
7.3 Approvals; Consents. All corporate and other approvals in connection
with the transactions contemplated by this Agreement and the form and substance
of all certificates and other documents delivered hereunder shall be reasonably
satisfactory in form and substance to the Buyers and their counsel.
7.4 No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement, and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be, or is sought to, restrain, prohibit or obtain damages
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or other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
7.5 Consents of Third Parties. Each Seller will have obtained the consent,
in form and substance satisfactory to the Buyers and their counsel, to the
consummation of the transactions contemplated by this Agreement by each party to
any contract under which such transactions would constitute a default, would
accelerate obligations of such Seller or would permit cancellation of any such
contract.
7.6 Employment Agreement. Bulcraig shall have executed and delivered to
CSAV AP an employment and non-competition agreement substantially in the form of
EXHIBIT A (as amended or replaced from time to time, the "Employment
Agreement"), and such Employment Agreement shall be in full force and effect
commencing and contingent upon the Closing.
7.7 Stock Repurchase Agreement; Stockholder Agreement and Registration
Rights Agreement. The Trustees shall have executed and delivered to Holdings (i)
a stock repurchase agreement substantially in the form of EXHIBIT B (a
"Repurchase Agreement"), and such Repurchase Agreement shall be in full force
and effect commencing and contingent upon the Closing and (ii) an instrument of
accession to each of (A) the Stockholder Agreement, dated as of August 29, 2003
(the "Stockholder Agreement"), among Holdings and its stockholders, as amended
and in effect from time to time, and (B) the Registration Rights Agreement,
dated as of August 29, 2003 (the "Registration Rights Agreement") among
Holdings and the Holders (as defined therein), as amended and in effect from
time to time.
7.8 Evidence of Insurance Required Under the Supply Contract. AV Supply
shall have delivered a certificate of insurance for the insurance coverage
required by Section 6.5 of the Supply Contract naming the Company as an
additional insured.
7.9 Transaction Documents. Each of the Sellers shall have executed and
delivered each of the Transaction Documents to which it is a party, and such
agreements shall be in full force and effect.
7.10 License Agreement. NZ Entity (as defined below) shall have executed
and delivered the License to Use Intellectual Property substantially in the form
of EXHIBIT C (the "License Agreement"), and the License Agreement shall be in
full force and effect.
7.11 Proceedings and Documents Satisfactory. All proceedings in connection
with the transactions contemplated by this Agreement and all certificates and
documents delivered to the Buyers in connection with the transactions
contemplated by this Agreement shall be satisfactory in all reasonable respects
to the Buyers and the Buyers' counsel, and the Buyers shall have received the
originals or certified or other copies of all such records and documents as the
Buyers may reasonably request.
8. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS. The obligation of the
Sellers and the Trustees to consummate the Closing shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(to the extent noncompliance is not waived in writing by the Sellers):
8.1 Representations and Warranties True at Closing. The representations and
warranties made by the Buyers in or pursuant to this Agreement shall be true and
correct at and as of the Closing Date.
8.2 Compliance with Agreement. Each Buyer shall have performed and complied
with all of its obligations under this Agreement to be performed or complied
with by it at, or prior to, the Closing.
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8.3 Approvals; Consents. All corporate and other approvals in connection
with the transactions contemplated by this Agreement and the form and substance
of all certificates and other documents delivered hereunder shall be reasonably
satisfactory in form and substance to the Sellers and their counsel.
8.4 No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreements and no action, suit or proceeding
shall be pending or threatened in writing before any court or administrative
body in which it will be, or is sought to, restrain, prohibit or obtain damages
or other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
8.5 Transaction Documents. Each of the Buyers shall have executed and
delivered each of the Transaction Documents to which it is a party, and such
agreements shall be in full force and effect. In addition, the Sellers' US
counsel Xxxxx & Xxxxxxx LLP has received the completed copy of Holdings'
Assistant Secretary's Certificate and all attachments and exhibits, in a form
acceptable to them.
8.6 License Agreement. CSAV AP shall have executed and delivered the
License Agreement, and the License Agreement shall be in full force and effect.
8.7 Proceedings and Documents Satisfactory. All proceedings in connection
with the transactions contemplated by this Agreement and all certificates and
documents delivered to the Sellers in connection with the transactions
contemplated by this Agreement shall be satisfactory in all reasonable respects
to the Sellers and their counsel, and the Sellers shall have received the
originals or certified or other copies of all such records and documents as the
Sellers may reasonably request.
9. CERTAIN COVENANTS.
9.1 Covenants of AV Supply.(a) At all times following the Closing until
the completion of the liquidation and dissolution of AV Supply, AV Supply shall:
(i) pay, discharge or otherwise satisfy when due all of AV
Supply's obligations of whatever nature, except when the amount or validity
thereof is being contested in good faith by appropriate proceedings; and
(ii) use all or a portion of the payments hereunder, along with
cash-on-hand, to pay the expenses and fees associated with the transactions
contemplated hereunder, including, without limitation, the payment of the
fees and expenses associated with winding down the affairs of and
dissolving AV Supply.
(b) At all times following the Closing until the completion of the
liquidation and dissolution of AV Supply, AV Supply shall not engage in any
business or activity (including, without limitation, any activity in violation
of Section 11 below), other than the wind-down of AV Supply's operations and the
activities reasonably associated therewith.
9.2 Covenants of the Trustees. Until such time as each Trustee's
obligations under this Agreement and the other Transaction Documents to which he
is a party as a trustee of the Trust has been duly performed, each Trustee
severally agrees:
(a) He will promptly give written notice to the other parties if he
retires or is removed as a trustee of the Trust; and
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(b) Each Trustee has, and will, not consent to the removal of the
right of indemnity from the assets of the Trust in respect of the obligations
incurred by him as a trustee of the Trust under this Agreement and the other
Transaction Documents to which he is a party as a trustee of the Trust. Bulcraig
agrees to not give any permission to any such removal.
10. INDEMNIFICATION.
10.1 Seller Indemnity. Each Seller jointly and severally, agrees to
indemnify and hold harmless each of the Buyers (and their directors, officers,
employees and affiliates) from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses, including, without limitation,
the reasonable fees and disbursements of counsel (collectively, the "Losses"),
arising directly or indirectly out of: (a) any breach by any Seller or any
Trustee of any representation or warranty, covenant, obligation or undertaking
made by such Seller or such Trustee in or pursuant to this Agreement (including
the Schedules hereto) or any other statement or certificate delivered by such
Seller or such Trustee pursuant hereto and (b) any Excluded Liabilities. For the
avoidance of doubt, in the event and to the extent of any conflict between the
terms of Article 6 of the Supply Contract and this Section 10.1 in respect of
any Loss, the terms of Article 6 of the Supply Contract shall prevail. Amounts
payable under this Section 10.1 shall be payable upon written demand therefore.
10.2 Buyer Indemnity. Each of Holdings and the Company, jointly and
severally, agrees to indemnify and hold harmless each of the Sellers (and their
directors, officers, employees, and affiliates), and the Trustees and the Trust
from any and all Losses arising directly or indirectly out of: (a) any breach by
any Buyer of any representation or warranty, covenant, obligation or undertaking
made by such Buyer in or pursuant to this Agreement (including the Schedules
hereto) or any other statement, or certificate delivered by such Buyer pursuant
hereto. For the avoidance of doubt, in the event and to the extent of any
conflict between the terms of Article 6 of the Supply Contract and this Section
10.2 in respect of any Loss, the terms of Article 6 of the Supply Contract shall
prevail. Amounts payable under this Section 10.2 shall be payable upon written
demand therefore.
10.3 Limitation of Indemnification. No indemnifying party shall be required
to indemnify any indemnified party under Sections 10.1 or 10.2 for any Losses
arising directly or indirectly out of any breach of a representation or warranty
made in or pursuant to this Agreement (such Losses being referred to herein as
the "Representation and Warranty Losses") except to the extent that (a) the
aggregate amount of such Representation and Warranty Losses with respect to any
claim or series of related claims for which the indemnified party is otherwise
entitled hereunder exceed US$1,000 and (b) the aggregate amount of such
Representation and Warranty Losses for which the indemnified party is otherwise
entitled to indemnification pursuant to this Section 10 exceeds $10,000. Any
party seeking indemnification hereunder under this Section 10 is referred to as
the "indemnified party" (which term shall include all indemnified parties if
there be more than one) and other party or parties hereto from and whom such
indemnified party is entitled to indemnification under this Section 10 is
referred to as the "indemnifying party" (which term shall include all
indemnifying parties if there be more than one).
10.4 Right of Setoff. Upon notice to the Sellers, the Buyers may set off
any amount to which any of them may be entitled under (a) the Supply Contract
(including, without limitation, Article 6 thereof) or (b) this Section 10,
against the Deferred Payment and/or the Second Deferred Payment. Neither the
exercise of, nor the failure to exercise, such right of setoff will constitute
an election of remedies or limit the Buyers in any manner from the enforcement
of any other remedies that may be available.
10.5 No Special Damages. IN NO EVENT WILL ANY PARTY TO THIS AGREEMENT BE
LIABLE TO ANOTHER PARTY UNDER THIS AGREEMENT FOR LOST PROFITS OR LOST
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SAVINGS, OR PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES
(collectively, "Special Damages"), OTHER THAN FOR A BREACH OF ANY OF THE
COVENANTS OR AGREEMENTS SET FORTH IN SECTION 11 HEREOF. The foregoing limitation
shall not restrict or limit the ability of any party to recover Losses otherwise
recoverable hereunder that constitute reimbursement of Special Damages that are
paid or payable by such party to a third party.
11. NON-COMPETITION AND NON-SOLICITATION.
(a) Non-Competition. Bulcraig hereby agrees that during the Designated
Period he will not within the Prohibited Area and whether on his own behalf or
in conjunction with or on behalf of any other person, firm, company or other
organization (and whether as an employee, director, principal, agent, consultant
or in any other capacity whatsoever (other than as a holder of less than two
percent (2%) of the common stock of any publicly traded corporation)) engage in
competition with Holdings or any of its subsidiaries (the "Companies") directly
or indirectly, or (i) be employed or engaged in, or (ii) perform services in
respect of, or (iii) be otherwise concerned with:
(i) the research into, development, sourcing, procuring,
manufacture, supply, sale or marketing of any product which is of the same
or similar type to any product researched, or developed, or sourced, or
procured, or manufactured, or supplied, or sold, or marketed by any of the
Companies (including, without limitation, providing any product that is the
same or substantially similar to products researched, or developed, or
sourced, or procured, or manufactured, or supplied, or sold, or marketed by
AV Supply prior to the Closing Date) during Bulcraig's employment by any of
the Companies (except that after the Termination Date this clause (i) shall
only apply to products that are the same or similar to products researched,
or developed, or sourced, or procured, or manufactured, or supplied, or
sold, or marketed by any of the Companies during the 12 months immediately
preceding the Termination Date);
(ii) the development or provision of any services (including, but
not limited to technical and product support, or consultancy or customer
services) which are of the same or similar type to any services provided by
any of the Companies (including, without limitation, any services that are
the same or substantially similar to the business of AV Supply prior to the
Closing Date) during Bulcraig's employment by any of the Companies (except
that after the Termination Date this clause (ii) shall only apply to
services which are of the same or similar type to any services provided by
any of the Companies during the 12 months immediately preceding the
Termination Date);
provided, however, that, solely for purposes of the restrictions on the
activities of Bulcraig in Hong Kong after the Termination Date, the provisions
of this paragraph (a) shall apply only in respect of products or services which
Bulcraig was either personally concerned or for which he was responsible for
while employed by AV Supply, CSAV AP or any of the Companies during the 12
months immediately preceding the Termination Date.
(b) Non-Solicitation of Customers. Bulcraig hereby agrees that during
the Designated Period he will not, whether on his own behalf or in conjunction
with or on behalf of any person, company, business entity or other organization
(and whether as an employee, director, principal, agent, consultant or in any
other capacity whatsoever (other than as a holder of less than two percent (2%)
of the common stock of any publicly traded corporation)), directly or indirectly
(i) solicit or, (ii) assist in soliciting, or (iii) accept, or (iv) facilitate
the acceptance of, or (v) deal with, in competition with the Companies, the
business of any Customer or Prospective Customer, provided, however, that,
solely for purposes of the restrictions on the activities of Bulcraig in Hong
Kong, the provisions of this paragraph (b) shall apply only to Customers or
Prospective Customers:
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(i) with whom he has had material contact or dealings on behalf
of any of the Companies (as an employee or representative of one of the
Companies or AV Supply); or
(ii) for whom Bulcraig was, in a client management capacity on
behalf of any of the Companies
(c) Non-Solicitation of Employees. Bulcraig hereby agrees that during
the Designated Period he will not, whether on his own behalf or in conjunction
with or on behalf of any person, company, business entity or other organization
(and whether as an employee, director, principal, agent, consultant or in any
other capacity whatsoever (other than as a holder of less than two percent (2%)
of the common stock of any publicly traded corporation)), directly or
indirectly:
(i) (a) induce, or (b) solicit, or (c) entice or (d) procure, any
person who is a Company Employee to leave any of the Companies employment
(as applicable) where that person is a Company Employee; or
(ii) be personally involved to a material extent in (a) accepting
into employment or (b) otherwise engaging or using the services of, any
person who is a Company Employee.
(d) Interference with Suppliers. Bulcraig hereby agrees that he will
not (i) during the Designated Period and (ii) in relation to any contract or
arrangement which any of the Companies has with any Supplier for the exclusive
supply of goods or services to the Companies or any one of them for the duration
of such contract or arrangement, whether on his own behalf or in conjunction
with or on behalf of any person, company, business entity or other organization
(and whether as an employee, director, principal, agent, consultant or in any
other capacity whatsoever (other than as a holder of less than two percent (2%)
of the common stock of any publicly traded corporation)), directly or
indirectly:
(i) interfere with the supply of goods or services to any of the
Companies from any Supplier; or
(ii) induce any Supplier of goods or services to any of the
Companies to cease or decline to supply such goods or services in the
future.
(e) The obligations undertaken by Bulcraig pursuant to this Section 11
shall, with respect to each of the Companies, constitute a separate and distinct
covenant and the invalidity or unenforceability of any such covenant shall not
affect the validity or enforceability of the covenants in favor of each of the
Companies.
(f) Holdings contracts as trustee and agent for the benefit of each of
the Companies as well as for itself. Bulcraig agrees that, if required to do so
by Holdings, he will enter into covenants in the same terms as those set out in
sub-paragraphs (a), (b), (c), and (d) hereof directly with all or any of such
Companies, mutatis mutandis. If Bulcraig fails, within fifteen (15) days of
receiving such a request from Holdings, to sign the necessary documents to give
effect to the foregoing, Holdings shall be entitled, and is hereby irrevocably
and unconditionally authorized by Bulcraig, to execute all such documents as are
required to give effect to the foregoing, on his behalf.
(g) Bulcraig acknowledges that the provisions of this Section 11 are
essential to protect the business and goodwill of each of the Companies.
Bulcraig will continue to be bound by the provisions of this Section 11 until
their expiration. If at any time the provisions of this Section 11 shall be
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determined to be invalid or unenforceable by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 11 shall be
considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter, and
Bulcraig agrees that this Section 11 as so amended shall be valid and binding as
though any invalid or unenforceable provision had not been included herein.
Bulcraig acknowledges that this Section 11 is a specific and material aspect of
this Agreement and that none of the Buyers would have entered into this
Agreement or any of the transactions contemplated hereby if this Section 11 were
not a part of this Agreement. Bulcraig further acknowledges and agrees that, in
the event of a breach or threatened breach by him, or any of his affiliates of
his obligations under this Section 11 the Companies will have no adequate remedy
at law, and accordingly, will be entitled, without the requirement of posting
any bond, to injunctive or other appropriate equitable remedies against such
breach or threatened breach in addition to any other remedies which they or any
of them may have.
(h) Definitions. For the purposes of this Section 11, the following
words and expressions shall have the meanings set out below:
(i) "Agreed Jurisdiction" means:
(1) New Zealand and the Pacific Islands in respect of all
Specified Products; and
(2) All the states of Australia in the case of the CSAV
Product known as PFFPb.
(ii) "Company Employee" means any person who was employed by (i)
CSAV AP, or (ii) any of the Companies, provided, however, that for purposes
of the restrictions of Bulcraig in Hong Kong after the Termination Date
such person must have been employed by the Companies for at least three
months prior to and on the Termination Date and (X) with whom Bulcraig had
material contact or dealings in performing his duties of his employment; or
(Y) who had material contact with customers or suppliers of the Companies
in performing his or her duties of employment with the any of the
Companies; or (Z) who had access to confidential information during his
employment with any of the Companies.
(iii) "CSAV Products" means any products sold by Holdings or any
of its Subsidiaries.
(iv) "Customer" shall mean any person, firm, company or other
organization whatsoever to whom any of the Companies has supplied goods or
services.
(v) "Designated Period" means the period commencing on the
Closing Date and ending on the fourth anniversary of the Closing Date;
provided, that, for purposes of the duration of the restrictions set forth
in this Section 11 applicable to Bulcraig in Hong Kong, the Designated
Period shall mean the period commencing on the Closing Date and ending on
the second anniversary of the Closing Date. Notwithstanding the foregoing,
if following the occurrence of a Disposition Event (as defined in the
Stockholder Agreement) Bulcraig's employment is terminated by Holdings or
any of its Subsidiaries without Cause (as defined in the Employment
Agreement) the Designated Period for all jurisdictions shall end on the
earlier of (A) the date that the Designated Period would otherwise end in
accordance with the previous sentence and (B) (i) 180 days following the
Termination Date or (ii) one year following the Termination
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Date if Holdings or any of its Subsidiaries elects to extend the Severance
Period (as defined in the Employment Agreement) until the first anniversary
of the Termination Date.
(vi) "Pacific Islands" means Norfolk Island, New Caledonia, Fiji,
Tonga, Niue, Xxxx Islands, French Polynesia, Samoa, Easter Island, Tahiti,
Tokelau, Tuvalu, Vanuatu, Solomon Islands, Kiribati, Palau, Wallis and
Futuna, and Palau.
(vii) "Prohibited Area" means: (X) Hong Kong; (Y) the People's
Republic of China and (Z) any other country in the world, where on the
Termination Date, any of the Companies develop, sell, supply, source
manufacture or research its products or services or where any of the
Companies is intending within three (3) months following the Termination
Date to develop, sell, supply, source or manufacture its products or
services and in respect of which any of the Companies has been responsible
(whether alone or jointly with others), concerned or active on behalf of
the Companies during any part of the 12 months immediately preceding the
Termination Date.
(viii) "Prospective Customer" shall mean any person, firm,
company or other organization with whom any of the Companies has had any
negotiations or material discussions regarding the possible supply of goods
or services by any of the Companies prior to the Termination Date.
(ix) "Specified Customers" means wholesale and retail customers
physically located in New Zealand or the Pacific Islands in the case of the
Specified Products, and Pioneer (OEM) Australia in respect only of "Sanus"
product known as PFFPb.
(x) "Specified Products" means mounting solutions, furnishings
and products (including (but not by way of limitation) furniture, mounts,
lifts, units, stands, racks, supports, parts and accessories and systems)
for the ProAV, Home Theatre, Residential and Workstation audio-visual
markets, by whomever manufactured, including any CSAV Products.
(xi) "Supplier" means, at any date of determination, any person,
company, business entity or other organization whatsoever who (X) has
supplied goods or services to any of the Companies during any part of the
12 months immediately preceding such date; or (Y) has agreed prior to such
date to supply goods or services to any of the Companies to commence at any
time in the 12 months following such date; or (Z) as at such date, supplies
goods or services to any of the Companies under an exclusive contract or
arrangement between that Supplier and any of the Companies: provided,
however, that, solely for the purposes of the restrictions on the
activities of Bulcraig in Hong Kong, a Supplier under this Section 11 means
a person, company, business entity or other organization who: (X) has
supplied goods or services to any of the Companies during any part of the
12 months immediately preceding any Termination Date; or (Y) has agreed
prior to any Termination Date to supply goods or services to any of the
Companies to commence at any time in the 12 months following any
Termination Date; or (Z) as at any Termination Date, supplies goods or
services to any of the Companies under an exclusive contract or arrangement
between that Supplier and any of the Companies.
(xii) "Termination Date" means the date of termination of
Bulcraig's employment with the Company or its Subsidiaries for any reason,
including, without limitation, for resignation, death or disability, and
whether or not for Cause.
(i) Non-Violation. Anything to the contrary in any deed, agreement
(including this Agreement) or otherwise notwithstanding, neither:
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(i) the acquisition, holding and sale by Bulcraig and/or the
Trustees of the legal and/or beneficial ownership of the shares on issue by
AV Supply Group Limited, a New Zealand limited liability entity registered
in the New Zealand Companies Office under No. 1133246 or of another legal
entity whose principal business operations are located in New Zealand ("NZ
Entity"); nor
(ii) the association of Bulcraig (whether on his own behalf or in
conjunction with or on behalf of any other person, firm, company or other
organization) as a director or principal of (but not as an employee of or
consultant to) a NZ Entity;
during the Designated Period, shall violate the terms of this Section 11 so
long as:
(1) the only activity of the NZ Entity that would violate
the terms of this Section 11 is the designing, sourcing, importing,
distribution, and the sale of Specified Products only to Specified
Customers that have agreed in writing that any such Specific Products
will not be re-sold or further distributed by the Specified Customer
outside of the Agreed Jurisdiction; and
(2) Bulcraig is not personally actively involved in the day
to day operation of the business of the NZ Entity (other than in the
usual duties of a director of the entity); and
(3) any Specified Product that is a CSAV Product shall be
purchased by the NZ Entity from Holdings or one of its Subsidiaries.
(j) CSAV Products. The Company shall endeavor to provide AV Supply
Group Limited with a current list of CSAV Products and a current list of
services provided by Holdings and its Subsidiaries at least once a year prior to
the Termination Date. The Company shall provide AV Supply Group Limited with a
current list of CSAV Products and a current list of services provided by
Holdings and its Subsidiaries upon the reasonable request of AV Supply Group
Limited during the Designated Period.
12. GENERAL.
12.1 [INTENTIONALLY OMITTED]
12.2 Survival of Representations and Warranties. The representations and
warranties of the parties hereto contained in this Agreement or otherwise made
in writing in any certificate or instrument delivered pursuant to this Agreement
shall be deemed to have been relied on by the parties and shall survive the
Closing for two (2) years (other than the Specified Representations), except
that any such representation or warranty that has been made the subject of a
written claim for breach thereof prior the expiration of such two (2) year
period shall survive with respect to such claim until the final resolution of
such claim. The foregoing time limitations shall not apply to the Specified
Representations, as to which in each case the applicable statute of limitations
shall apply. EXCEPT AS SET FORTH IN THIS AGREEMENT, NO PARTY TO THIS AGREEMENT
MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, ARISING BY LAW
OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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12.3 Expenses. Any transfer and sales taxes payable with respect to the
sale and conveyance of the Transferred Assets to CSAV AP shall be paid (or
reimbursed to AV Supply if paid by AV Supply) by CSAV AP. All expenses of the
preparation, execution and consummation of this Agreement and of the
transactions contemplated hereby, including, without limitation, attorneys',
accountants' and outside advisers' fees and disbursements, shall be borne by the
party incurring such expenses.
12.4 Notices. All notices, demands and other communications hereunder shall
be in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if mailed by certified or registered mail,
return receipt requested, postage prepaid, or if sent by overnight courier, or
sent by written telecommunication, as follows:
If to any Seller or the Trustees, as follows:
Stuart Bulcraig
AV Supply Group 2001 Limited
Room 1006, Building C, BaiHeXingCheng
LuoGang,
BuJi Town,
Shenzhen
CHINA
Postcode: 518112
Fax: x00 000 0000 0000
With copies sent contemporaneously to
Xxxxxx Xxxxxxx Harford
Lawyers
XX Xxx 0000
Xxxxx 0
0 Xxxxxxxx
Xxxxxxxxx
Xxxxxxxx
XXX XXXXXXX
Attention: Xxxxxx X Xxxxxxx III
Fax: x00 0 000 0000
And to:
Prince and Partners
Chartered Accountants
XX Xxx 0000
Xxxxx 0
CustomHouse
00 Xxxxx Xxxxxx
Xxxxxxxx 0
XXX XXXXXXX
Attention: Xxxxxx Xxxxxx
Fax: x00 0 000 0000
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If to the Buyers, to:
CSAV, Inc.
00000 Xxxxxxx 00 Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxx 00000
Attention: President
Fax: (000)000-0000
with copies sent contemporaneously to:
Xxxxxxxx Xxxxxxxxx & Xxxx, LLC
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Fax: (000)000-0000
and
Xxxxxxx XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, (c) if mailed,
fourteen (14) days after being mailed as described above, and (d) if sent by
written telecommunication, when received.
12.5 Entire Agreement. This Agreement and the Transaction Documents contain
the entire understanding of the parties and supersede all prior agreements and
understandings relating to the subject matter hereof and thereof. This Agreement
shall not be amended except by a written instrument hereafter signed by all of
the parties hereto.
12.6 Governing Law. The validity and construction of this Agreement shall
be governed by the internal laws (and not the choice-of-law rules) of the State
of New York.
12.7 Sections and Section Headings. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
12.8 Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors and permitted
assigns. Neither this Agreement nor the obligations of any party hereunder shall
be assignable or transferable by such party without the prior written consent of
the other parties hereto; provided, however, that nothing contained in this
Section 12.8 shall prevent the Buyers, without the consent of the Sellers, (a)
from transferring or assigning this Agreement or its rights or obligations
hereunder to another entity controlling, under the control of, or under common
control with any of the Buyers or (b) from assigning all or part of its rights
or obligations hereunder by way of collateral assignment to any bank or
financing institution providing financing to the Buyers, but no such transfer or
assignment made pursuant to clauses (a) or (b) shall relieve the Buyers of their
obligations under this Agreement.
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12.9 Severability. In the event that any covenant, condition, or other
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair, or invalidate
any other covenant, condition, or other provision contained herein.
12.10 Further Assurances. From time to time after the Closing, at the
request of the Buyers and without further consideration, (i) the Sellers shall
execute and deliver such further instruments of conveyance and transfer and take
such other actions as the Buyers may reasonably require to more effectively
convey and transfer any of the Transferred Assets to the Buyers, and (ii) the
Sellers will use their reasonable best efforts to obtain and secure all consents
that may be necessary to effect a full and valid transfer of the Transferred
Assets. If any such consents cannot be obtained, (a) the beneficial interest in
and to all Transferred Asset that are the subject of such consents shall in any
event pass to the Buyers, and (b) each Seller covenants and agrees to hold any
and all such Transferred Assets in trust for the benefit of the Buyers and, to
the extent possible, to provide the Buyers with substantially the same benefits
that it would have enjoyed had such consents been obtained.
12.11 No Implied Rights or Remedies. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any person, firm or corporation, other than the Sellers
and the Buyers, any rights or remedies under or by reason of this Agreement.
12.12 Counterparts; Facsimiles. This Agreement may be executed in multiple
counterparts (including by facsimile), each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
12.13 Consent to Jurisdiction; Process Service Agent.
(a) Each party hereto hereby irrevocably submits to the jurisdiction
of any state or federal court sitting in New York, New York over any action,
claim, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and each party hereby irrevocably agrees that
all claims in respect of any such action, claim, suit or proceeding shall be
heard and determined in any such state or federal court. Each Seller and the
Buyers agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Nothing in this Section 12.13 shall affect the right of the Buyers
to serve legal process in any other manner permitted by law or affect the right
of the Buyers to bring any action or proceeding against any Buyer or any Seller
or its or his properties in the courts of any other jurisdiction.
(c) Each Seller and each Trustee hereby irrevocably and
unconditionally appoints Prince and Partners, Level 9, Custom House, 00 Xxxxx
Xxxxxx, Xxxxxxxx 0, Xxx Xxxxxxx, as his or its agent to receive copies of the
summons and complaint and any other process which may be served in any such
action or proceeding and agrees promptly to appoint a successor agent reasonably
satisfactory to Holdings prior to the termination for any reason of the
appointment of the person then serving as agent hereunder. Each Seller and each
Trustee shall cause the initial agent to accept its appointment hereunder, such
acceptance to be in form and substance reasonably satisfactory to the Buyers,
and prior to the termination for any reason of the appointment of the person
then serving as agent hereunder, each Seller and each Trustee shall cause the
successor agent to accept its appointment as agent for service of process, such
acceptance to be in form and substance reasonably satisfactory to the Buyers.
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12.14 Payments. All payments under this Agreement shall be made in U.S.
dollars in immediately available funds free of withholding taxes.
12.15 Overdue Payments. Any amount not paid when due hereunder shall bear
interest from the due date hereunder until paid in full at a per annum rate
equal to the Applicable Rate (as defined below). As used herein, the term
"Applicable Rate" shall mean the Prime Rate (as published from time to time in
the Wall Street Journal) plus 3%.
13. DEFINITIONS.
13.1 Certain Defined Terms. As used in this Agreement, the following terms
have the following respective meanings:
(a) "Indebtedness": As applied to any Person, all indebtedness of such
Person for borrowed money, whether current or funded, or secured or unsecured,
including, without limitation, (a) all indebtedness of such Person for the
deferred purchase price of property or services represented by a note or other
similar instrument, (b) all indebtedness of such Person created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of any of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (c) all indebtedness of such Person
secured by a purchase money mortgage or other lien to secure all or part of the
purchase price of property subject to such mortgage or lien, (d) all obligations
under leases which shall have been or must be, in accordance with generally
accepted accounting principles, recorded as capital leases in respect of which
such Person is liable as lessee, (e) any liability of such Person in respect of
banker's acceptances or letters of credit, (f) all interest, fees and other
expenses owed with respect to the indebtedness referred to above, and (g) all
indebtedness referred to above which is directly or indirectly guaranteed by
such Person or which such Person has agreed (contingently or otherwise) to
purchase or otherwise acquire or in respect of which it has otherwise assured a
creditor against loss.
(b) "Person": A corporation, an association, a partnership, an
organization, a business, a limited liability company, an individual, a
government or political subdivision thereof or a governmental agency.
(c) "Specified Representations" means (i) the second sentence of
Section 4.1, (ii) Section 4.2, (iii) Section 4.7, (iv) the first sentence of
Section 5.1, (v) Section 5.2, (vi) the last sentence of Section 6.1, (vii)
Section 6.2, (viii) Section 13, (ix) Section 14, (x) Section 15.1 and (xi)
Section 16.2.
(d) "Subsidiary": With respect to any Person, any corporation a
majority (by number of votes) of the outstanding shares of any class or classes
of which shall at the time be owned by such Person or by a Subsidiary of such
Person, if the holders of the shares of such class or classes (a) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or persons performing similar functions) of the
issuer thereof, even though the right so to vote has been suspended by the
happening of such a contingency, or (b) are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the issuer thereof, whether or not the right so
to vote exists by reason of the happening of a contingency.
14. REPRESENTATIONS BY THE SELLERS. Each of the Sellers, jointly and
severally, represents and warrants to each of the Buyers as follows:
14.1 Investment Representations. None of the Sellers is a "U.S. Person" as
such term is defined in Rule 902(k) of Regulation S promulgated under the
Securities Act. The Trustees are not acquiring the
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Page 21 of 39
Shares for the account or benefit of any U.S. Person, as such term is defined in
Rule 902(k) of Regulation S promulgated under the Securities Act. Each of the
Sellers has such knowledge and experience in financial and business matters that
he or it is capable of evaluating the merits and risks of the investment in the
Shares or has been advised by individuals with such knowledge and experience.
The Trust's financial condition is such that it is able to bear all economic
risks of investment in the Shares, including a complete loss of its investment.
The Trustees will acquire the Shares for investment purposes only, with no
present intention of distributing or reselling any of the Shares or any interest
therein. Each of the Sellers acknowledges that Holdings has given him or it the
opportunity to ask questions of the officers and management employees of
Holdings and its affiliates, to obtain additional information about the business
and financial condition of Holdings and its affiliates, and access to the
facilities, books and records relating to the business of Holdings and its
affiliates in order to evaluate the investment in the Shares contemplated
hereby. The Trustees (on behalf of themselves and any successors) will not
engage in any hedging transactions, with respect to the Shares unless such
transactions are in compliance with the Securities Act.
14.2 Resale Restrictions. Each of the Sellers acknowledges that the Shares
have not been, and will not be upon the Trustees' receipt, registered or
qualified under any securities laws, by reason of their transfer in a
transaction exempt from the registration or qualification requirements of such
laws, and the Shares must be held indefinitely unless a subsequent disposition
thereof is registered or qualified under all applicable securities laws or is
exempt from such registration or qualification, and, therefore, the Shares shall
bear, among other legends, the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO TRANSFER, SALE OR OTHER DISPOSITION OF
THESE SHARES MAY BE MADE UNLESS A REGISTRATION STATEMENT WITH RESPECT TO THESE
SHARES HAS BECOME EFFECTIVE UNDER SAID ACT, OR HOLDINGS HAS BEEN FURNISHED WITH
AN OPINION OF COUNSEL SATISFACTORY TO HOLDINGS THAT SUCH REGISTRATION IS NOT
REQUIRED."
15. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEES. The Trustees jointly
and severally represent and warrant to each Buyer as follows:
15.1 Authorization. They are authorized to enter into this Agreement, and
the other Transaction Documents to which they are parties, under the Deed of
Trust by which the Trust was established or under the Trustee Xxx 0000 (New
Zealand) and that all necessary resolutions have been passed and all necessary
things done to render this Agreement and each Transaction Document to which they
are party to a valid and binding obligation upon them as trustees of the Trust.
15.2 Non-Contravention. The execution and delivery by the Trustees of the
Transaction Documents to which they are parties and the consummation by the
Trustees of the transactions contemplated hereby and thereby will not (a)
violate or conflict with any provision of the Deed of Settlement creating the
Trust, or its equivalent governing documents, as amended to date; or (b)
constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any Encumbrance upon
any property of any of the Trustees and the Trust pursuant to (i) any agreement
or instrument to which any of the Trustees or the Trust is a party or by which
any of the Trustees or the Trust or any of their properties is bound, or to
which any of the Trustees or the Trust or any of such properties is subject, or
(ii) any statute, judgment, decree, order, regulation or rule of any court or
governmental or regulatory authority to which any of the Trustees or the Trust
is subject.
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Page 22 of 39
16. LIMITATION OF LIABILITY OF XXXXXX XXXXX XXXXXX, XXXXX XXXXX AND XXXXX
XXXXX XXXXXX
16.1 Independent Trustee. The parties acknowledge that Xxxxxx Xxxxx Xxxxxx
of Auckland, New Zealand, Chartered Accountant will enter into this Agreement
solely in his capacity as a trustee of the Trust and not in his personal
capacity, through his Delegates and Attorneys GRANT XXX XXXXX and XXXXX XXXXX
XXXXXX both of Auckland New Zealand, Chartered Accountants (the "Attorneys").
The Attorneys will themselves execute this Agreement solely in their capacity as
Delegatees and Attorney for Xxxxxx Xxxxx Xxxxxx and not in their personal
capacity.
16.2 Execution by and Limitation of Liability of Attorneys of Xxxxxx Xxxxx
Xxxxxx. Xxxxxx Xxxxx Xxxxxx represents to the Company that by deed dated the 4th
day of August 2005, Xxxxxx Xxxxx Xxxxxx in exercise of the powers contained in
Section 31 of the Trustee Act 1956 (New Zealand):
(a) Delegated to the Attorneys the execution or exercise of all of the
trusts, powers, authorities and discretions vested in the said Xxxxxx Xxxxx
Xxxxxx in accordance with the terms and the conditions set out in the Trust; and
(b) Appointed the Attorneys to be his attorneys to act for him in his
name and on his behalf in all matters connected with the affairs of the estates
and assets subject to the trusts of the Trust and in all matters in which any of
the said estates and assets may be interested as if the said Xxxxxx Xxxxx Xxxxxx
could if personally present, at the Attorneys' absolute discretion.
16.3 Independent Trustee and Attorneys not personally liable. The
Independent Trustee and the Attorneys together with the respective successors of
the Independent Trustee and the Attorneys shall be under no personal liability
under this Agreement. The liability of the Independent Trustee and the Attorneys
shall at all times and for all purposes be limited to the net value of the
assets for the time being of the Trust together with such amount as is
equivalent to the net value of the assets that the Trust would have had except
for the willful neglect or default of the Independent Trustee or the Attorneys.
16.4 Joint and Several Liabilities. Bulcraig and the Trustees shall be
jointly and severally liable and responsible for all obligations of the Trustees
and the Trust under this Agreement.
* * * * *
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Page 23 of 39
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as of the
date and year first above written.
CSAV HOLDING CORP.
By: /s/ XXXXXXX XXXXXXXXX
------------------------------------
Name: XXXXXXX XXXXXXXXX
Title: PRESIDENT
CSAV ASIA PACIFIC LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
DECADE INDUSTRIES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
AV SUPPLY GROUP 2001 LIMITED
By:
------------------------------------
Name: Xxxxxx Xxxx Bulcraig
Title: Director
SIGNED, SEALED and )
DELIVERED as a )
DEED by ) ----------------------------------------
XXXXXX XXXX BULCRAIG ) XXXXXX XXXX BULCRAIG, in his individual
capacity
----------------------------------------
XXXXXX XXXX BULCRAIG, solely in his
capacity as trustee of the Happy Valley
Trust created by Deed dated August 17,
2004
Page 24 of 39
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as of the
date and year first above written.
CSAV HOLDING CORP.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CSAV ASIA PACIFIC LIMITED
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: DIRECTOR
DECADE INDUSTRIES, INC.
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: PRESIDENT
AV SUPPLY GROUP 2001 LIMITED
By:
------------------------------------
Name: Xxxxxx Xxxx Bulcraig
Title: Director
SIGNED, SEALED and )
DELIVERED as a )
DEED by ) ----------------------------------------
XXXXXX XXXX BULCRAIG ) XXXXXX XXXX BULCRAIG, in his individual
capacity
----------------------------------------
XXXXXX XXXX BULCRAIG, solely in his
capacity as trustee of the Happy Valley
Trust created by Deed dated August 17,
2004
Page 25 of 39
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as of the
date and year first above written.
CSAV HOLDING CORP.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CSAV ASIA PACIFIC LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
DECADE INDUSTRIES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
AV SUPPLY GROUP 2001 LIMITED
By: /s/ Xxxxxx Xxxx Bulcraig
------------------------------------
Name: Xxxxxx Xxxx Bulcraig
Title: Director
SIGNED, SEALED and )
DELIVERED as a ) /s/ Xxxxxx Xxxx Bulcraig
DEED by ) ----------------------------------------
XXXXXX XXXX BULCRAIG ) XXXXXX XXXX BULCRAIG, in his individual
capacity
/s/ Xxxxxx Xxxx Bulcraig
----------------------------------------
XXXXXX XXXX BULCRAIG, solely in his
capacity as trustee of the Happy Valley
Trust created by Deed dated August 17,
2004
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Page 26 of 39
XXXXXX XXXXX XXXXXX, solely in his
capacity as trustee of the Happy Valley
Trust created by Deed dated August 17,
2004 by his Attorneys
/s/ GRANT XXX XXXXX
----------------------------------------
GRANT XXX XXXXX
And
/s/ COLIN XXXXX XXXXXX
----------------------------------------
COLIN XXXXX XXXXXX
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