ASSET PURCHASE AGREEMENT
BY AND BETWEEN
FVFN ACQUISITION CORP.
as Purchaser,
AMERICAN COIN MERCHANDISING, INC.
as Guarantor,
▇▇▇▇ VENDING CO., INC.
and
▇▇▇▇ NOVELTY CO., INC.
as Sellers,
THE ▇▇▇▇▇ ▇▇▇▇ REVOCABLE TRUST
and
▇▇▇▇▇ ▇▇▇▇
Dated: March 14, 2003
EXHIBIT A
TABLE OF CONTENTS
Page
1. DEFINITIONS ............................................................... 1
2. PURCHASE OF ACQUIRED ASSETS ............................................... 13
3. THE CLOSING AND CERTAIN COVENANTS ......................................... 21
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS, THE
STOCKHOLDER AND ▇▇. ▇▇▇▇ .................................................. 26
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER AND GUARANTOR .. 49
6. POST-CLOSING COVENANTS .................................................... 50
7. CONDITIONS TO CLOSING; CLOSING DELIVERIES ................................. 56
8. SIMULTANEOUS TRANSACTIONS ................................................. 61
9. INDEMNIFICATION ........................................................... 62
10. GUARANTY .................................................................. 67
11. PUBLIC ANNOUNCEMENTS ...................................................... 67
12. BROKERS ................................................................... 67
13. TERMINATION ............................................................... 68
14. NOTICES ................................................................... 68
15. MISCELLANEOUS ............................................................. 70
EXHIBIT 10.72
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of the 14th day of March,
2003 (the "AGREEMENT"), by and among FVFN ACQUISITION CORP., a Delaware
corporation (the "PURCHASER"), AMERICAN COIN MERCHANDISING, INC., a Delaware
corporation ("GUARANTOR"), ▇▇▇▇ VENDING CO., INC., a New York corporation ("▇▇▇▇
VENDING") and ▇▇▇▇ NOVELTY CO., INC., a New York corporation ("▇▇▇▇ NOVELTY,"
and together with ▇▇▇▇ Vending collectively the "SELLERS") THE ▇▇▇▇▇ ▇▇▇▇
REVOCABLE TRUST (the "TRUST," or the "STOCKHOLDER"), which is the sole
stockholder of ▇▇▇▇ Vending and the majority stockholder of ▇▇▇▇ Novelty, and
▇▇▇▇▇ ▇▇▇▇, an individual and the grantor of the Trust ("▇▇. ▇▇▇▇").
R E C I T A L:
Subject to the terms and conditions of this Agreement, the Purchaser
desires to purchase, and the Sellers desire to sell, the Business and the
Acquired Assets (each as defined below) for the aggregate consideration set
forth below and the assumption by the Purchaser of certain of the Sellers'
liabilities set forth below.
In consideration of the foregoing and the mutual promises made herein, and
to specify the terms and conditions under which the transactions contemplated
hereby will be consummated, the parties hereto do hereby agree as follows:
A G R E E M E N T
1. DEFINITIONS Except as otherwise expressly provided in this Agreement or
unless the context otherwise requires, the following terms, for all purposes of
this Agreement, shall have the respective meanings hereinafter specified:
"ACCOUNTS RECEIVABLE" means all trade and other accounts receivable
and notes and loans receivable or any other similar instruments.
"ACQUIRED ASSETS" means, with respect to the Business, all right,
title and interest in and to all of the following assets, properties and rights
whether real, personal, tangible or intangible, of every kind, nature and
description and wherever located, of the Sellers existing as of the Closing Date
including, without limitation:
(a) all inventories including but not limited to, finished goods,
raw materials, work in process, supplies, packing material, and similar items;
(b) current assets (other than cash and cash equivalents);
(c) all cash in vending machines as of the Closing Date;
(d) all Real Property as listed with the corresponding address of
such Real Property and otherwise identified on Schedule A-1;
(e) all machinery (including without limitation all vending
machines), equipment, tools and dies, hand tools, vehicles, computers and other
data processing hardware (and all software related thereto or used therewith)
and other tangible personal property of similar nature, including but not
limited to all items set forth on the Sellers' fixed asset ledgers attached to
this Agreement on Schedule A-2. (collectively, the "MACHINERY AND EQUIPMENT");
(f) all office furniture, office equipment, fixtures and other
tangible personal property of similar nature (collectively, the "FURNITURE AND
FIXTURES"), except that Furniture and Fixtures shall not include the office
furniture, office equipment, fixtures and other tangible property, or the
telephone system located within the Plant, all as described on Schedule A-3,
which shall be leased to the Purchaser pursuant to the Plant Lease;
(g) to the extent not included above, all contracts, agreements,
options, commitments, understandings, licenses, leases and instruments,
including, without limitation, customer and supplier contracts, sales
representative and distributor contracts and commission contracts with respect
thereto, and licenses related to Intellectual Property, each listed on Schedule
A-4 (collectively, the "ASSIGNED CONTRACTS");
(h) all customer and supplier lists, mailing lists, catalogs,
brochures and handbooks;
(i) all Books and Records including, but not limited to, files,
contracts, plans, notebooks, production and sales data and other data of the
Sellers, whether or not in tangible form or in the form of intangible computer
storage media such as optical disks, magnetic disks, tapes and all similar
storage media;
(j) all leases, agreements and other rights to use, occupy or
possess, or otherwise, with respect to machinery, equipment, vehicles and other
tangible personal property of similar nature to which Sellers are a party, and
all rights arising under or pursuant to such leases, agreements and rights;
(k) the names ▇▇▇▇ Vending Co., Inc. and ▇▇▇▇ Novelty Co., Inc. and
all variations thereof and all similar names (including, without limitation,
such variations and similar names used by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and all other
Affiliates of the Sellers operating in the United States) and the goodwill
associated therewith, together with all trademarks, service marks and trade
names, if any;
(l) all assets, properties and rights relating to the Microvend
Technology;
(m) all telephone and telecopier numbers, and all post office boxes
and post office box numbers owned or leased by the Sellers including all such
numbers listed on Schedule A-5;
(n) all domain names and websites used in connection with the
Business as identified on Schedule A-6.
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(o) all rights related to any portion of the Acquired Assets,
including third party warranties and guarantees and other similar contractual
rights, as to third parties held by or in favor of the Sellers, and arising out
of, resulting from or relating to the Acquired Assets;
(p) all rights to insurance and condemnation proceeds relating to
any damage, destruction, taking or other similar impairment of any of the
Acquired Assets;
(q) all intangible properties and rights, including but not limited
to, UPC codes and Intellectual Property;
(r) to the extent assignable, all claims, security deposits (other
than the $60,000 deposit paid by Sellers under the Sellers' lease relating to
the Plant), prepayments, refunds (other than any refunds of insurance premiums
previously paid with respect to insurance policies canceled by the Sellers as of
the Closing Date), causes of action, choses in action, rights of recovery,
rights of setoff and rights of recoupment and all rights under warranties,
except to the extent that any of the foregoing arise in connection with or
relate to any matter that is a Retained Liability, including, without
limitation, the Retained Liabilities referred to in Section 2(b)(ii)(O) below;
(s) to the extent assignable, all Permits issued by or obtained from
any Governmental Body;
(t) all rights to enforce any confidentiality, invention assignment
and/or non-competition agreements between the Sellers and their respective
employees;
(u) all Accounts Receivable;
(v) all claims and defenses to the extent relating to any of the
foregoing or to the Assumed Liabilities; and
(w) except for Excluded Assets, all other assets and properties of
the Sellers that are used or useful in connection with the operation of the
Business, tangible and intangible, wherever located and whether or not carried
on the Sellers' Books and Records, including all goodwill, know-how and trade
secrets of the Sellers.
Notwithstanding the foregoing, under no circumstances shall the Acquired
Assets include any Excluded Assets.
"ADJUSTED WORKING CAPITAL" shall mean with respect to the Business
the current assets minus the current liabilities as at the date in question
determined in accordance with GAAP on a consistent basis with that used to
prepare the Financial Statements; provided, however, that for purposes of
determining Adjusted Working Capital:
(a) Excluded Assets, Retained Liabilities and indebtedness for
borrowed money shall be excluded; and
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(b) prepaid expenses and deferred assets not utilizable by the
Purchaser after Closing shall be excluded.
"ADJUSTMENT REPORT" shall have the meaning specified in Section
2(e)(iii) of this Agreement.
"AFFILIATE" means a Person, directly or indirectly, under the
control of, controlled by or under common control with another Person.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
"ALLOCATION SCHEDULE" shall have the meaning specified in Section
2(d) of this Agreement.
"ALTERNATIVE TRANSACTION" shall have the meaning specified in
Section 3(j) of this Agreement.
"ARBITRATOR" shall have the meaning specified in Section 2(e)(iv) of
this Agreement.
"ASSIGNED CONTRACTS" shall have the meaning set forth in subsection
(g) of the definition of Acquired Assets.
"ASSUMED LIABILITIES" means the following liabilities of the Sellers
solely relating to the Acquired Assets and no other liabilities:
(a) the liabilities of the Sellers incurred in connection with
the Acquired Assets only as and to the extent set forth on the face of (and not
solely in any notes to) the balance sheet included in the Interim Financial
Statements, to the extent they have not been paid or discharged prior to the
Closing Date;
(b) all such liabilities of the Sellers (other than
liabilities for Taxes for Pre-Closing Periods and all liabilities pursuant to
any Employee Benefit Plan) which have arisen after December 31, 2002 in the
Ordinary Course of Business of Sellers which are of the same type as those set
forth on the face of (and not solely in any notes to) the balance sheet included
in the Interim Financial Statements, to the extent such liabilities have not
been paid or discharged prior to the Closing Date; provided that this clause
shall not encompass any such liabilities or obligations which relate to any
breach of contract, breach of warranty, tort, infringement or violation of Law
or which arose out of any charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand;
(c) all obligations of the Sellers arising after the Closing
Date under the Assigned Contracts, other than obligations arising from a breach
or alleged breach of an Assigned Contract by Sellers prior to the Closing Date;
and
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(d) all liabilities or obligations for severance, termination
pay, redundancy pay, pay in lieu of notice, accrued vacation pay or other
benefits to any Continuing Employees who are terminated by the Purchaser or any
successor to the Purchaser following the Closing Date.
Notwithstanding the foregoing, under no circumstances shall the Assumed
Liabilities include any Retained Liabilities.
"ASSUMPTION NOTICE" shall have the meaning specified in Section
9(c)(ii) of this Agreement.
"AVERAGE ADJUSTED WORKING CAPITAL" shall mean the monthly average of
the Adjusted Working Capital for the consecutive twelve-month period ending with
the month immediately preceding the month in which this Agreement is signed.
"BASKET" shall have the meaning specified in Section 9(f)(ii) of
this Agreement.
"BOOKS AND RECORDS" means all records, invoices and other documents
and information (be it in paper or electronic data form) necessary to the
operation of the Business or the ownership and operation of the Acquired Assets
including, without limitation, all employment records and files, titles,
registrations, contracts, customer and vendor purchase orders, invoices,
marketing and statistical information pertaining to the products of the Sellers,
their respective licenses, permits and leases, and, to the extent in their
possession, all bills of sale and warranties received by the Sellers upon their
acquisition of Machinery and Equipment, but shall not include the documents
referred to in subsection (d) of the definition of Excluded Assets.
"BUSINESS" means the business of merchandising vended bulk items
through operating coin vending machines.
"CANADIAN VENDING MACHINES" shall have the meaning set forth in
subsection (k) of the definition of Excluded Assets.
"CHARITY AND NUT DIVISION" means merchandising vended bulk items
through operating coin vending machines, solely to non-chain and independent
outlets located in New York City and in the following counties in New York
State: Nassau, Suffolk and Westchester.
"CLAIMS" shall have the meaning specified in Section 4(w)(iv) of
this Agreement.
"CLOSING" means the consummation of the transactions contemplated by
this Agreement.
"CLOSING DATE" means a date to be mutually agreed by the parties
hereto that occurs within the three weeks immediately succeeding the date on
which all of the conditions specified in Section 7 are satisfied (subject to
fulfillment or waiver of such conditions), and on which the Closing takes place.
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"CLOSING DATE ADJUSTED WORKING CAPITAL" shall have the meaning
specified in Section 2(e)(ii) of this Agreement.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTINUING EMPLOYEE" means each employee of the Sellers who accepts
employment with the Purchaser from and after the Closing Date pursuant to
Section 6(d) of this Agreement.
"COVERED ACTION" shall have the meaning specified in Section
9(b)(iv) of this Agreement.
"DEFAULT" means an event of default, as defined in any contract or
other agreement or instrument, or any event which, with the passage of time or
the giving of notice or both, would constitute an event of default or other
breach under such contract or other agreement or instrument.
"ENCUMBRANCES" shall have the meaning specified in Section 4(e)(i)
of this Agreement.
"ENVIRONMENTAL LAWS" means, any federal, state, local or foreign
laws (including without limitation the common law), ordinance, rule, regulation,
decree, judgment, injunction, demand letter, Order, request for information, or
schedule or time table set forth in any federal, state, local or foreign law
(including without limitation the common law), ordinance, rule, regulation,
order, decree, judgment, injunction, demand letter or request for information
issued, promulgated, approved or entered thereunder relating to pollution or
protection of the environment or to occupational health or safety, including
without limitation laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land, surface or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means a corporation that is or was a member of a
controlled group of corporations with the Sellers within the meaning of Section
4001(a) or (b) of ERISA or Section 414(b) of the Code, a trade or business
(including a sole proprietorship, partnership, trust, estate or corporation)
that is under common control with the Sellers within the meaning of Section
414(m) of the Code, or a trade or business which, together with the Sellers, is
treated as a single employer under Section 414(o) of the Code.
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"ESCROW AGENT" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP.
"ESTIMATE" shall have the meaning specified in Section 2(e)(ii) of
this Agreement.
"EXCLUDED ASSETS" means:
(a) the consideration described in Section 2(c) hereof and to
be delivered to the Sellers pursuant to this Agreement for the Acquired Assets
to be sold to the Purchaser hereunder and the rights of the Sellers to such
consideration hereunder;
(b) all assets primarily used by ▇▇▇▇ Canada and the Charity
and Nut Division as of the Closing Date and listed on Schedule B-1 hereto;
(c) the Plant, and the $60,000 deposit paid by Sellers under
the Sellers' lease relating to the Plant;
(d) the accounting ledgers, certificate of incorporation,
corporate seals, minute books, stock books, Tax and supporting data prepared
expressly in connection therewith, and other records prepared directly in
connection with the corporate organization and capitalization of the Sellers and
their respective operations as a corporation under applicable Law, as
applicable;
(e) the shares of the capital stock of the Sellers;
(f) the cash and cash equivalents held by the Sellers as of
the Closing Date, provided, however, that all cash in vending machines as of the
Closing Date shall be transferred to the Purchaser as an Acquired Asset;
(g) all receivables due from ▇▇▇▇▇ ▇▇▇▇ and his affiliates,
and any and all claims, actual or contingent, against the foregoing;
(h) the life insurance policies on the life of ▇▇▇▇▇ ▇▇▇▇
listed on Schedule B-2 hereto and all related cash surrender values;
(i) Tax refunds owed to Sellers;
(j) all Sellers' Employment Agreements;
(k) the vending machines that are owned by the Sellers and are
leased to ▇▇▇▇ Canada as of the Closing Date, set forth on Schedule B-3 (the
"CANADIAN VENDING MACHINES");
(l) all claims of the Sellers primarily relating to any of the
Excluded Assets or otherwise unrelated to the Acquired Assets; and
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(m) the works of art, memorabilia, furniture, furnishings and
other assets of the Sellers identified on Schedule B-4.
"EXECUTIVE EMPLOYMENT AGREEMENTS" means the employment agreements to
be entered into between the Purchaser on the one hand, and each of ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ on the other hand, in the forms
annexed to this Agreement as Exhibit C-1, Exhibit C-2, Exhibit C-3, and Exhibit
C-4, respectively.
"FINAL ADJUSTED WORKING CAPITAL" shall have the meaning specified in
Section 2(e)(v) of this Agreement.
"FINANCIAL STATEMENTS" means the audited combined balance sheets of
the Sellers as at December 31, 2001, 2000 and 1999, and the statement of income,
statement of retained earnings and statement of cash flows of the Sellers for
the respective years then ended, and the unaudited combining balance sheet and
income statement of the Sellers as at December 31, 2002 (the unaudited Financial
Statements for the year ended on and as at December 31, 2002 are hereinafter
referred to as the "INTERIM FINANCIAL STATEMENTS"); in each case, prepared in
accordance with GAAP consistently applied.
"▇▇▇▇ CANADA" means ▇▇▇▇ Vending Co., Limited, an Ontario
corporation.
"FUNDAMENTAL FINANCING AGREEMENT" means that certain Financing
Agreement, dated as of March 6, 2000, by and between ▇▇▇▇ Vending and
Fundamental Dynamics Inc., as modified by the letter agreement, dated March 13,
2003, by and among ▇▇▇▇ Vending, Fundamental Dynamics Inc. and ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" (or "GAAP") shall have
the meaning ascribed to it from time to time by the American Institute of
Certified Public Accountants.
"GOVERNMENTAL BODY" means any federal, state, provincial, municipal
or other governmental department, commission, board, bureau, authority, court,
agency or instrumentality, domestic or foreign.
"HAZARDOUS SUBSTANCE" shall have the meaning specified in Section
4(q)(v) of this Agreement.
"IMPROVEMENTS" shall have the meaning specified in Section 4(f)(vi)
of this Agreement.
"INDEBTEDNESS" means with respect to any Person, all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind (including amounts by reason of overdrafts and amounts owed by reason of
letters of credit), all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, all obligations of such Person under
conditional sale or other title retention agreements relating to property
purchased by such Person, all obligations of such Person issued or assumed as
the deferred purchase price
8
of property or services (other than accounts payable to creditors for goods and
services incurred in the Ordinary Course of Business of such Person), all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any lien or
security interest on property owned or acquired by such Person, whether or not
the obligations secured thereby have been assumed, all obligations of such
Person under leases required to be accounted for as capital leases under GAAP,
and all guaranties by such Person. Trade payables and check endorsements of a
Person arising in the Ordinary Course of Business shall not be deemed to be
Indebtedness.
"INDEMNIFICATION CAP" shall have the meaning specified in Section
9(f)(i) of this Agreement.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
9(c)(i) of this Agreement.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
9(c)(i) of this Agreement.
"INDEMNITY ESCROW AGREEMENT" means the agreement substantially in
the form attached hereto as Exhibit B among the Purchaser, the Sellers, the
Stockholder, ▇▇. ▇▇▇▇ and the Escrow Agent.
"INDEMNITY ESCROW AMOUNT" means $1,500,000.
"INTELLECTUAL PROPERTY" has the meaning specified in Section 4(w)(i)
of this Agreement.
"INTERIM FINANCIAL STATEMENTS" shall have the meaning specified
within the definition of Financial Statements.
"LAW" or "LAWS" means statutes, rules, regulations and ordinances of
any Governmental Body.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, the
occurrence of a materially adverse effect on the business, customers, assets,
operations, properties, or condition, financial or otherwise, of the Person to
which it refers, or an effect which could reasonably foreseeably materially
impair or delay the ability of such Person to perform any obligation under this
Agreement and "MATERIAL ADVERSE EFFECT ON THE SELLERS" shall mean a Material
Adverse Effect on either Seller individually, or the Sellers collectively.
"MICROVEND PURCHASE AGREEMENT" means that certain Asset Purchase
Agreement, dated as of December 20, 2001, by and between Fundamental Dynamics
Industries, Inc. and ▇▇▇▇ Vending.
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"MICROVEND TECHNOLOGY" means all of the assets acquired by ▇▇▇▇
Vending pursuant to the Microvend Purchase Agreement, and any Intellectual
Property and other technology related thereto.
"OBJECTION NOTICE" shall have the meaning set forth in Section
2(e)(iv) of this Agreement.
"ORDER" means any order, writ, injunction, decree, stipulation,
judgment, award, determination, direction or demand of a Governmental Body.
"ORDINARY COURSE OF BUSINESS" means, with respect to any Person, the
ordinary course of business, of such Person, consistent with its past custom and
practice (including with respect to frequency and amount).
"OSHA LAWS" shall mean any applicable past, present or future
federal, state, territorial, provincial, foreign or local law, common law
doctrine, rule, order, decree, judgment, injunction, license, Permit or
regulation relating to public or employee health or safety or any other like
matter, together with any other laws (federal, state, territorial, provincial,
foreign or local) including, without limitation, the Occupational Safety and
Health Act (29 U.S.C. 651 et seq.), as such laws have been, or are, amended,
modified or supplemented heretofore or from time to time hereafter and any
analogous future federal, or present or future state or local laws, statutes and
regulations promulgated thereunder.
"OTHER EMPLOYMENT AGREEMENTS" means the employment agreements to be
entered into between the Purchaser on the one hand, and each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ on the other hand, in the form annexed
to this Agreement as Exhibit D.
"PBGC" shall have the meaning specified in Section 4(n)(ii) of this
Agreement.
"PAST DUE PAYABLES" shall have the meaning specified in Section
4(j)(ix)(B) of this Agreement.
"PERMITS" shall have the meaning set forth in Section 4(g).
"PERSON" means any natural person, sole proprietorship, corporation,
limited liability company, partnership, joint venture, unincorporated
association, firm, trust or other entity.
"PLANS" shall have the meaning specified in Section 4(n)(i) of this
Agreement.
"PLANT" shall mean the building and premises located at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"PLANT LEASE" means the lease relating to the Plant to be entered
into by the Purchaser and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. LLC, in the form annexed to this
Agreement as Exhibit E.
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"POST-CLOSING PERIODS" means (i) all tax periods beginning after the
Closing Date and (ii) with respect to a tax period that includes, but does begin
after, the Closing Date, the portion of such period which begins on, but does
not include, the Closing Date.
"PRE-CLOSING PERIODS" means (i) all tax periods ending on or before
the Closing Date and (ii) with respect to a tax period that includes, but does
not end on, the Closing Date, the portion of such period which ends on and
includes the Closing Date.
"PRODUCT WARRANTY" shall have the meaning specified in Section
4(bb)(ii) of this Agreement.
"PURCHASE PRICE" shall mean $22,000,000, as may be adjusted pursuant
to Section 2(e) hereof.
"PURCHASER" shall have the meaning specified in the opening
paragraph of this Agreement.
"PURCHASER'S COVERED ACTION" shall have the meaning set forth in
Section 9(a)(iv) of this Agreement.
"PURCHASER'S EMPLOYMENT AGREEMENTS" means the Executive Employment
Agreements and the Other Employment Agreements.
"PURCHASER'S LOSSES" shall have the meaning specified in Section
9(a) of this Agreement.
"REAL PROPERTY" shall have the meaning specified in Section 4(f)(v)
of this Agreement.
"RESTRICTED BUSINESS" shall have the meaning specified in Section
3(g)(i) of this Agreement.
"RETAINED LIABILITIES" shall have the meaning specified in Section
2(b)(ii) of this Agreement.
"SELLERS" shall have the meaning set forth in the opening paragraph
of this Agreement.
"SELLERS' COVERED ACTION" shall have the meaning specified in
Section 9(b)(iv) of this Agreement.
"SELLERS' EMPLOYMENT AGREEMENTS" means agreements, understandings,
arrangements or contracts (written or oral) with any Person to which the Sellers
are a party relating to employment, management, agency or consulting including
with respect to the payment of salary, bonuses, severance benefits, retirement
benefits, or incentives.
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"SELLERS' LOSSES" shall have the meaning specified in Section 9(b)
of this Agreement.
"SELLERS' OR STOCKHOLDER'S KNOWLEDGE" or "OF WHICH THE SELLERS OR
STOCKHOLDER HAVE KNOWLEDGE" or "KNOWLEDGE OF SELLERS OR STOCKHOLDER" means the
knowledge or awareness, after a review of the representations and warranties set
forth in Section 4 below and all other representations and warranties of the
Sellers, the Stockholder and/or ▇▇. ▇▇▇▇ hereunder and due inquiry thereafter
(which review has been made prior to the Sellers', the Stockholder's and ▇▇.
▇▇▇▇'▇ execution and delivery of this Agreement) of any of ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, or, solely with respect to the representations and warranties set forth
in Sections 4(l) (No Default or Event of Default) and 4(bb) (Product
Warranties), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
"SOFTWARE PROGRAMS" shall have the meaning specified in Section
4(w)(i) of this Agreement.
"SPOUSAL CONSENT" shall have the meaning specified in Section 3(i)
of this Agreement.
"STOCKHOLDER" shall have the meaning specified in the opening
paragraph of this Agreement.
"SUBSIDIARY" means any Person more than 50% of the voting stock or
other voting power of which is owned, directly or indirectly, by another Person,
or which is otherwise directly or indirectly controlled by such other Person.
"SURVIVING REPRESENTATIONS" shall have the meaning set forth in
Section 9(h) of this Agreement.
"TAX" means any and all taxes, charges, fees, levies, deficiencies
or other assessments of whatever kind or nature including, without limitation,
all net income, gross income, profits, gross receipts, excise, real or personal
property, sales, ad valorem, withholding, social security, retirement, excise,
employment, unemployment, minimum, estimated, severance, stamp, property,
occupation, environmental, windfall profits, use, service, net worth, payroll,
franchise, license, gains, customs, transfer, recording and other taxes, customs
duty, fees assessments or charges of any kind whatsoever, imposed by any
Governmental Body, including any liability therefor as a transferee (including
without limitation under Section 6901 of the Code or any similar provision of
applicable Law), as a result of Treasury Regulation Section 1.1502-6 or any
similar provision of applicable Law, or as a result of any Tax sharing or
similar agreement, together with any interest, penalties or additions to Tax
relating thereto.
"TAXPAYER" shall have the meaning specified in Section 6(f)(ii) of
this Agreement.
"TAX PROCEEDINGS" shall have the meaning specified in Section
4(h)(i)(C) of this Agreement.
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"TAX RETURN" means any return, declaration, report, information
return or statement, and any amendment thereto, including without limitation any
consolidated, combined or unitary return or other document (including any
related or supporting information), filed or required to be filed with any
Taxing Authority in connection with the determination, assessment, collection,
payment, refund or credit of any federal, state, local or foreign Tax or the
administration of any Laws relating to any Tax or ERISA.
"TAXING AUTHORITY" means the United States Internal Revenue Service
or any other applicable Governmental Body.
"TECHNICAL DOCUMENTATION" shall have the meaning specified in
Section 4(w)(i) of this Agreement.
"TRADEMARKS" shall have the meaning specified in Section 4(w)(i) of
this Agreement.
"TRADE SECRETS" shall have the meaning specified in Section 4(w)(i)
of this Agreement.
"TRANSACTION TAXES" shall have the meaning specified in Section 2(h)
of this Agreement.
"TRANSITIONAL SERVICES AGREEMENT" means the agreement between the
Purchaser and ▇▇▇▇ Canada relating to the provision of services by the Purchaser
to ▇▇▇▇ Canada after Closing, in the form annexed to this Agreement as Exhibit
A.
"TRUST" shall have the meaning specified in the opening paragraph of
this Agreement.
"UNLIMITED PURCHASER OBLIGATIONS" and "UNLIMITED SELLERS
OBLIGATIONS" each shall have the meaning specified in Section 9(f)(i) of this
Agreement.
"YEAR 2002 AUDITED FINANCIALS" means the audited combined balance
sheets of the Sellers as at December 31, 2002 and the statement of earnings,
statement of stockholders equity and statement of cash flows of the Sellers for
the twelve month period then ended.
2. PURCHASE OF ACQUIRED ASSETS.
(a) Purchase and Sale of the Acquired Assets. Subject to the terms
and conditions of this Agreement, the Purchaser shall purchase from the Sellers,
and the Sellers shall sell, transfer, convey, assign and deliver to the
Purchaser, for the consideration specified below in this Section 2 at the
Closing, all of the Acquired Assets.
(b) Assumption of Liabilities.
13
(i) Subject to the terms and conditions of this Agreement, the
Purchaser shall assume and become responsible for, from and after
the Closing Date, the Assumed Liabilities. On and after the Closing
Date, and subject to the provisions in Section 9 regarding
indemnification, the Purchaser shall have complete control over the
payment, settlement, or other disposition of, or any dispute
involving, any of the Assumed Liabilities, and the Purchaser shall
conduct and control all negotiations and proceedings with respect to
the Assumed Liabilities. The Purchaser's assumption of the Assumed
Liabilities shall in no way expand the rights or remedies of any
third party against the Sellers or the Purchaser as compared to the
rights and remedies which such third party would have had against
any of them if the Purchaser had not assumed the Assumed Liabilities
pursuant to this Agreement.
(ii) Notwithstanding anything to the contrary set forth
herein, the Purchaser shall not assume or become responsible for,
and the Sellers shall remain exclusively liable for, any and all
liabilities or obligations (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, whether
accrued or unaccrued, whether due or to be come due, and whether
claims with respect thereto are asserted before or after the Closing
Date) of the Sellers which are not Assumed Liabilities
(collectively, the "RETAINED LIABILITIES"). The Retained Liabilities
shall include, without limitation, the following:
A. all obligations and liabilities of the Stockholder
and ▇▇. ▇▇▇▇;
B. any obligation or liability of either Seller arising
from a breach of a representation or warranty herein on its part or
its failure to fully, faithfully and promptly perform any agreement
or covenant on its part contained herein;
C. any obligation or liability of the Sellers to the
extent that the Sellers shall be indemnified by an insurer; provided
that any insurance proceeds related to such obligation or liability
shall be an Excluded Asset;
D. all liabilities and obligations of the Sellers, the
Stockholder and ▇▇. ▇▇▇▇ for costs and expenses incurred in
connection with the preparation and negotiation of this Agreement or
the consummation of the transactions contemplated by this Agreement;
E. all liabilities and obligations of the Sellers under
this Agreement or any other agreement not entered into in the
Ordinary Course of Business, except for obligations incurred in
developing and
14
deploying the Microvend Technology in an amount no greater than
$95,000 (representing the aggregate of all remaining obligations of
▇▇▇▇ Vending pursuant to (i) that certain promissory note, dated
December 20, 2001, by ▇▇▇▇ Vending in favor of Fundamental Dynamics
Industries, Inc. in the original principal amount of $250,000
(pursuant to which as of the date of this Agreement there are three
remaining payments due in an amount of $25,000 each), and (ii) that
certain Consulting Agreement, dated as of January 1, 2002, by and
between ▇▇▇▇ Vending and Fundamental Dynamics Industries, Inc.);
F. all liabilities and obligations of the Sellers for
any Taxes (including without limitation those attributable to the
Acquired Assets for Pre-Closing Periods);
G. all liabilities and obligations of the Sellers under
any contract that is not an Assigned Contract;
H. all obligations of the Sellers arising and due to be
performed prior to the Closing Date under the Assigned Contracts
except to the extent that an accrual in respect of any such
obligation is included in the Closing Date Adjusted Working Capital
and reflected in the Adjustment Report, and all liabilities for any
breach, act or omission by the Sellers prior to the Closing Date
under any Assigned Contract;
I. all liabilities and obligations arising out of
events, conduct or conditions existing or occurring prior to the
Closing Date that constitute a violation of or noncompliance with
any Law, any Order, or Permit;
J. all liabilities and obligations (including without
limitation costs of cleanup and remediation) resulting from any
violation of any Environmental Law;
K. all liabilities and obligations of the Sellers with
respect to, and claims of, any acts of negligence or tort including
libel and slander, occurring prior to the Closing Date, including
without limitation any workers compensation claim;
L. all claims against, or liabilities or obligations of
or in connection with, any Employee Benefit Plans, including without
limitation any excise Taxes, penalties or other liabilities imposed
under ERISA or the Code;
M. except as specifically set forth in Section 6(d), all
liabilities and obligations of the Sellers to pay severance,
termination pay,
15
redundancy pay, pay in lieu of notice, accrued vacation pay or other
benefits to any current or former employee of the Sellers whose
employment is terminated (or treated as terminated) in connection
with the consummation of the transactions contemplated by this
Agreement (other than liabilities or obligations for severance,
termination pay, redundancy pay, pay in lieu of notice, accrued
vacation pay or other benefits to any Continuing Employees who are
terminated by the Purchaser or any successor to the Purchaser
following the Closing Date) and all liabilities resulting from the
termination of employment of employees of the Sellers prior to the
Closing Date, including without limitation any liabilities of the
Sellers pursuant to agreements and plans identified in Schedules
hereto;
N. all liabilities and obligations of the Sellers for
all compensation and benefits accrued or incurred prior to the
Closing Date in favor of employees of the Sellers, including without
limitation accrued vacation and personal time, premiums or benefits
under any Employee Benefit Plan and severance pay; provided,
however, that the Purchaser shall assume liability for accrued
vacation and personal time for Continuing Employees to the extent of
the accrual therefor set forth on Schedule 2(b)(ii)(N) hereto;
O. all liabilities and obligations of the Sellers
arising out of any claim, suit, action, arbitration proceeding,
investigation or other similar matter which commenced or relates to
the ownership and operation of the Acquired Assets on or prior to
the Closing Date; provided that, to the extent related to the
foregoing, any counterclaim or recovery shall be an Excluded Asset;
P. all liabilities and obligations of the Sellers under
any agreements relating to the disposition of material assets,
businesses or companies (whether by sale of assets, sale of stock,
merger or otherwise) entered into at any time prior to the Closing
Date;
Q. all liabilities and obligations of the Sellers
arising out of any events, conduct or conditions existing or
occurring prior to the Closing Date that constitute or allegedly
constitute an infringement or violation of, or constitute or
allegedly constitute a misappropriation of, any Intellectual
Property rights of any other Person;
R. all obligations for refunds, rebates, discounts,
promotional credits, warranty claims and the like not specifically
reserved or accrued for in the Financial Statements;
S. all Transaction Taxes, which shall be duly and timely
paid by the Sellers in accordance with Section 2(h) hereof;
16
T. all Indebtedness of the Sellers;
U. all liabilities and obligations identified on
Schedule 2(b)(ii)(U); and
V. all liabilities and obligations of the Sellers
relating to any of the Excluded Assets or otherwise unrelated to the
Acquired Assets.
(c) Payment of the Purchase Price; Indemnity Escrow Amount. At the
Closing, the Purchaser shall pay to: (i) the Sellers or such other Person as the
Sellers shall direct in writing, an amount equal to the Purchase Price less the
Indemnity Escrow Amount, for the Acquired Assets by wire transfer of immediately
available funds; and (ii) the Escrow Agent, the Indemnity Escrow Amount to be
held by the Escrow Agent subject to the terms and conditions of the Indemnity
Escrow Agreement.
(d) Allocation of Purchase Price. The parties agree to allocate the
Purchase Price and the Assumed Liabilities among the Acquired Assets in
accordance with Schedule 2(d), which allocation complies with Section 1060(b) of
the Code (the "ALLOCATION SCHEDULE"). The Parties agree to file all Tax Returns
and other statements for Tax purposes consistently with the allocation set forth
on the Allocation Schedule and in particular to report the information required
by Section 1060(b) of the Code in a manner consistent with such allocation. Each
of the Purchaser, the Sellers, the Stockholder and ▇▇. ▇▇▇▇ shall notify the
other Parties if it receives notice that any Taxing Authority proposes any
allocation different from the Allocation Schedule.
(e) Working Capital Adjustment to Purchase Price.
(i) The Sellers have provided to the Purchaser on Schedule
2(e)(i) the Average Adjusted Working Capital which the Sellers, the
Stockholder and ▇▇. ▇▇▇▇ represent and warrant to the Purchaser has
been prepared in accordance with GAAP consistently applied period to
period and consistent with the methods used in preparing the
Financial Statements.
(ii) Three business days prior to the Closing, the Sellers
shall deliver to the Purchaser the Sellers' reasonable, good faith
estimate (the "ESTIMATE") of the Adjusted Working Capital as of the
Closing Date ("CLOSING DATE ADJUSTED WORKING CAPITAL"). During the
course of preparing the Estimate:
A. the Sellers shall provide the Purchaser with their
work papers and provide the Purchaser with access to their records
used in determining the Estimate; and
B. the personnel of the Sellers responsible for
preparation of the Estimate shall consult with the Purchaser's
personnel in
17
the preparation of the Estimate. The Sellers, the Stockholder and
▇▇. ▇▇▇▇ covenant that the Estimate will be prepared in good faith
by the Sellers in accordance with GAAP on a consistent basis with
that used in the preparation of the Financial Statements and the
Average Adjusted Working Capital as set forth on Schedule 2(e)(i)
and consistent with past practice. If the Closing Date Adjusted
Working Capital as set forth in the Estimate is less than the
Average Adjusted Working Capital as set forth on Schedule 2(e)(i),
the Purchase Price shall be reduced by the amount of such
difference. If the Closing Date Adjusted Working Capital as set
forth in the Estimate is greater than the Average Adjusted Working
Capital as set forth on Schedule 2(e)(i), the Purchase Price shall
be increased by the amount of such difference.
(iii) As soon as reasonably practicable after the Closing
Date, but not more than sixty (60) days after the Closing Date, the
Purchaser shall prepare and deliver to the Sellers as of the close
of business on the Closing Date a report sheet (the "ADJUSTMENT
REPORT") showing in reasonable detail its computation of the Closing
Date Adjusted Working Capital, prepared in accordance with GAAP
consistently applied.
(iv) Within fifteen (15) days after receipt of the Adjustment
Report, the Sellers by written notice to the Purchaser may object to
the Closing Date Adjusted Working Capital as set forth in the
Adjustment Report, setting forth in such notice (the "OBJECTION
NOTICE"), Sellers' objection in reasonable detail and the Sellers'
proposal or proposals with respect to the calculation of Closing
Date Adjusted Working Capital. Within thirty (30) days following
timely delivery of the Objection Notice, the Sellers and the
Purchaser shall attempt, in good faith, to resolve all disputes
between them concerning the Objection Notice. If the Purchaser and
the Sellers cannot resolve such disputes within such thirty (30) day
period, then the matters in dispute shall be determined by an
accounting firm mutually acceptable to the Purchaser and the Sellers
(such accounting firm, the "ARBITRATOR"). Promptly, but not later
than thirty (30) days after acceptance of this appointment, the
Arbitrator shall determine (based solely on presentation by the
Sellers and the Purchaser to the Arbitrator, and not by independent
review) only those items in dispute and will render its report as to
its resolution of such terms and resulting calculations of the
Closing Date Adjusted Working Capital. In determining each disputed
item, the Arbitrator may not assign a value to such item greater
than the greatest value for such item claimed by either party or
less than the lowest value for such term claimed by either party.
For the purposes of the Arbitrator's calculation of the Closing Date
Adjusted Working Capital, the amounts to be included shall be the
appropriate amounts from the Adjustment Report as to items that are
not in dispute, and the amounts determined by the Arbitrator as to
items from the Objection Notice that are
18
submitted for resolution by the Arbitrator. The Sellers and the
Purchaser shall cooperate with the Arbitrator in making its
determination and such determination shall be conclusive and binding
upon the parties. The losing party (as defined below) in any such
arbitration shall pay all costs and fees related to such
determination by the Arbitrator, including without limitation, the
costs relating to any negotiations with the Arbitrator with respect
to the terms and conditions of such Arbitrator's engagement. For
purposes of this Section 2(e)(iv), as between the Sellers and the
Stockholder on the one hand and the Purchaser on the other hand, the
"losing party" in any such determination shall mean the party whose
claimed Closing Date Adjusted Working Capital is farthest from the
calculation of the Closing Date Adjusted Working Capital as
determined by the Arbitrator.
(v) If the Sellers do not timely deliver an Objection Notice,
then the Sellers shall be deemed to have accepted the calculation of
the Closing Date Adjusted Working Capital as set forth in the
Adjustment Report. The term "FINAL ADJUSTED WORKING CAPITAL" shall
mean (i) the Closing Date Adjusted Working Capital as set forth in
the Adjustment Report if the Sellers accept the Adjustment Report as
delivered or do not timely deliver an Objection Notice, or (ii) the
Closing Date Adjusted Working Capital determined pursuant to Section
2(e)(iv) above, if the Sellers timely deliver an Objection Notice.
(vi) If the Final Adjusted Working Capital is less than the
Closing Date Adjusted Working Capital set forth in the Estimate,
such difference shall be payable by the Sellers to the Purchaser
within ten (10) days after the Final Adjusted Working Capital is
determined as provided in Section 2(e)(v) above, with interest at
the rate of 7% per annum from the Closing Date to the date of
payment. The payment provided for in this Section 2(e)(vi) is the
joint and several obligation of the Sellers, the Stockholder and ▇▇.
▇▇▇▇. If not paid when due the Purchaser may proceed against any of
the Sellers, the Stockholder and/or ▇▇. ▇▇▇▇ for payment in which
event the Sellers, the Stockholder and/or ▇▇. ▇▇▇▇ shall be liable
for all costs and expenses of collection including reasonable
attorneys' fees.
(vii) If the Final Adjusted Working Capital is greater than
the Closing Date Adjusted Working Capital set forth in the Estimate,
Purchaser shall pay to the Sellers such difference. Such payment
shall be due within ten (10) days after the Final Adjusted Working
Capital is determined as provided in Section 2(e)(v) with interest
as hereinabove provided. If not paid when due the Sellers may
proceed against the Purchaser for payment in which event the
Purchaser shall be liable for all costs and expenses of collection
including reasonable attorney's fees.
19
(f) Title. In the event for any reason good title to an Acquired
Asset is not obtained by the Purchaser, the Sellers shall hold any rights they
have in such Acquired Asset, for the sole use and benefit of the Purchaser.
Without limiting the foregoing, to the extent that any of the contracts or
Permits being assigned pursuant to this Agreement are not assignable without the
consent of another party and such consent has not been obtained on or prior to
the Closing Date, this Agreement shall not constitute an assignment or attempted
assignment of such contract or Permit if such assignment or attempted assignment
would constitute a breach thereof. With respect to contracts, the Sellers agree
to use their best efforts to obtain the consent of such other party to such an
assignment in all cases in which such consent is required or novation agreements
to contracts not so assignable. If such consent or novation is not obtained, the
Sellers agree to cooperate with the Purchaser to provide for the Purchaser to
obtain the benefits under any such contracts, including enforcement of any and
all rights of the Sellers against the other party thereto arising out of the
cancellation by such other party or otherwise. With respect to Permits, the
Sellers agree to cooperate with the Purchaser to provide for the Purchaser to
obtain the benefits under any such Permits for the duration of the current term
of such Permits, and the Sellers shall maintain each such Permit in full force
and effect until the expiration of the current term of such Permit. The Sellers
shall cooperate with the Purchaser in connection with the Purchaser's
application to renew or replace any such Permit upon expiration of the current
term of the applicable Permit.
(g) Further Assurances. At the Closing and at any time and from time
to time thereafter, at the request of the Purchaser and without further
consideration, the Sellers, the Stockholder and ▇▇. ▇▇▇▇ shall promptly execute
and deliver such instruments of sale, transfer, conveyance and assignment and
take all such other action as the Purchaser may reasonably determine to be
necessary to more effectively transfer, convey and assign to the Purchaser, and
to evidence and confirm the Purchaser's rights to, title in and ownership of,
the Acquired Assets to be purchased by Purchaser hereunder, to place the
Purchaser (through its ownership of the Acquired Assets) in actual possession
and operating control of the Business and the Acquired Assets being purchased by
the Purchaser hereunder, to assist the Purchaser in exercising all rights with
respect thereto and to carry out the purpose and intent of this Agreement.
(h) Transaction Taxes. Any and all federal, state, county or local
excise, stamp, use, transfer, sale, registration and other Taxes, fees and
duties (including any interest, additions to tax and penalties with respect
thereto) and any and all transfer, registration, recording or similar fees and
charges imposed in connection with the transfer of the Acquired Assets and the
consummation of the transactions contemplated by this Agreement (collectively,
"TRANSACTION TAXES") shall be borne by the Sellers and shall be a Retained
Liability which the Sellers shall pay on or after Closing when and as required
by applicable laws; provided, however, that any transfer, filing and/or permit
fees incurred in connection with the transfer of the Permits shall not be deemed
Transaction Taxes. The Sellers shall duly and timely file a Tax Return in
connection with such Transaction Taxes. The Sellers shall give a copy of each
such Tax Return to the Purchaser for its review with sufficient time for
incorporation of the Purchaser's comments prior to filing, and shall give the
Purchaser a copy of the Tax Return as filed, together with proof of payment of
the Tax shown thereof, promptly after filing.
20
3. THE CLOSING AND CERTAIN COVENANTS
(a) The Closing. The Closing shall take place on the Closing Date,
at 10:00 a.m., Eastern Standard Time, at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer &
▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
(b) Conduct of Business. During the period from the date hereof (or
earlier, as set forth below) through the Closing Date, the Sellers shall conduct
the Business in the Ordinary Course of Business, and in such manner that would
not result in a Material Adverse Effect on the Sellers. Without limiting the
generality of, and in addition to, the foregoing, prior to the Closing Date, the
Sellers shall not, except as the Purchaser may otherwise consent to in writing:
(i) amend their respective certificates of incorporation or
bylaws;
(ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting or of options, warrants; commitments, subscriptions, rights
to purchase or otherwise) any stock of any class or any other
securities;
(iii) incur or assume any Indebtedness other than in the
Ordinary Course of Business (it being understood that entering into
letters of credit providing payment for goods in transit or serving
as security for vehicle leases is within the Ordinary Course of
Business);
(iv) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for any
obligations of any other Person; or (iii) make any loans, advances
or capital contributions to, or investments in, any other Person
(other than loans or advances to employees in the Ordinary Course of
Business), except as would not have an adverse affect on, or change
in, the ability of the Sellers, the Stockholder and ▇▇. ▇▇▇▇ to
consummate the transactions contemplated hereby;
(v) other than in the Ordinary Course of Business, enter into,
adopt or amend any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreements, trusts,
plans, funds or other arrangements of or for the benefit or welfare
of any employee, increase in any manner the compensation or fringe
benefits of any employee or pay any benefit not required by any
existing plan and arrangement (including, without limitation, the
granting of stock options, stock appreciation rights, shares of
restricted stock or performance units),
21
or terminate the employment of any employees whose aggregate
compensation exceeds $200,000;
(vi) acquire, sell, lease, transfer or dispose of any
properties or assets except in the Ordinary Course of Business or
enter into any material commitment or transaction with respect to
any of the Acquired Assets other than in the Ordinary Course of
Business;
(vii) except as may be required by law, take any action to
terminate or materially amend any of their employee benefit plans
with respect to or for the benefit of employees;
(viii) other than in the Ordinary Course of Business, enter
into, modify any policy or procedure with respect to credit to
customers or collection of receivables with respect to any of the
Acquired Assets;
(ix) fail to pay any claim or liability of the Sellers in a
timely manner given the Sellers' prior practices with respect to any
of the Acquired Assets other than any such claim or liability which
is the subject of a bona-fide dispute that is being diligently
contested in good faith;
(x) waive any claims or rights of substantial value with
respect to the Acquired Assets;
(xi) except to the extent required by applicable law, change
any accounting principle or method or make any election for purposes
of foreign, federal, state or local income Taxes;
(xii) other than in the Ordinary Course of Business, take or
suffer any action that would result in the creation, or consent to
the imposition, of any Lien on any of the Acquired Assets that will
not be satisfied by the Sellers at or prior to the Closing;
(xiii) except as set forth in the capital budget in Schedule
3(b)(xiii), make or incur any capital expenditure, lease or
commitment for additions to property, plant, equipment or other
capital assets in excess of $10,000 with respect to the Acquired
Assets without the prior written approval of the Purchaser, which
approval will not be unreasonably withheld or delayed;
(xiv) except in the Ordinary Course of Business, amend, waive,
surrender or terminate or agree to the amendment, waiver, surrender
or termination of any material contract, Lease or approval;
22
(xv) except in the Ordinary Course of Business, exercise any
right or option under any Lease or extend or renew any material
contract or Lease;
(xvi) settle, cancel, compromise, waive or release any right,
claim, action or proceeding of substantial value to the Sellers, not
in the Ordinary Course of Business, involving (either singly or in
the aggregate) more than $10,000;
(xvii) except in the Ordinary Course of Business, delay or
postpone the payment of accounts payable and other liabilities in
connection with the Acquired Assets;
(xviii) enter into any transactions by and between or among
the Sellers and the Stockholder or any Affiliates of Sellers that
affect the Acquired Assets;
(xix) allow any material damage, destruction or loss (whether
or not covered by insurance) to the Acquired Assets;
(xx) except in the Ordinary Course of Business, remove cash
from vending machines; or
(xxi) enter into any commitment to do, or take, or agree in
writing or otherwise to take or consent to, any of the foregoing
actions.
(c) Access and Information. From the date hereof until the Closing
Date, the Sellers shall, and shall cause each of the Sellers' officers,
directors, employees, agents, accountants and counsel to, upon reasonable
notice, (i) afford the officers, employees and authorized agents, accountants,
counsel and representatives of the Purchaser reasonable access, during normal
business hours, to (A) the offices, properties, plants, other facilities, books,
contracts and records of the Sellers and any records concerning the Sellers
maintained and accumulated by their representatives, and (B) those officers,
directors, employees, agents, accountants and counsel of the Sellers who have
any knowledge relating to the Sellers or the Acquired Assets, and (ii) furnish
to the officers, employees and authorized agents, accountants, counsel and
representatives of the Purchaser such additional financial and operating data
and other information regarding the Acquired Assets (including, without
limitation, any contracts, licenses and patents in effect as of the date hereof
and any contracts or licenses being negotiated or entered into between the date
hereof and the Closing Date), properties and goodwill of the Sellers as the
Purchaser may from time to time reasonably request.
(d) Notice of Developments. Prior to the Closing Date, the Sellers
shall promptly notify the Purchaser in writing of (i) all events, circumstances,
facts and occurrences arising subsequent to the date of this
23
Agreement that could result in any material breach of a representation or
warranty or covenant of the Sellers, the Stockholder or ▇▇. ▇▇▇▇ in this
Agreement or which could have the effect of making any representation or
warranty of the Sellers, the Stockholder or ▇▇. ▇▇▇▇ in this Agreement untrue or
incorrect in any material respect, and (ii) all other material developments
affecting the Acquired Assets, liabilities, financial condition, operations,
results of operations, customer or supplier relations, employee relations,
projections or prospects of the Sellers.
(e) Non-Disclosure of Confidential Information. From and after the
date hereof, the Sellers, the Stockholder and ▇▇. ▇▇▇▇ agree not to, and none
shall permit any of their respective Affiliates to, divulge, communicate, use to
the detriment of the Purchaser or for the benefit of any other Person, or misuse
in any way, and the Sellers will use their respective best efforts to cause
their officers, directors, employees, accountants, counsel, consultants,
advisors and agents not to divulge, communicate, use to the detriment of the
Purchaser or for the benefit of any other Person, or misuse in any way, any
confidential documents or information concerning the Business or the Acquired
Assets including, without limitation, any confidential documents or information
provided to it pursuant to Section 6(c), any Trade Secrets or other proprietary
information forming a part of the Intellectual Property and any personnel
information, customer lists or other technical data.
(f) No Solicitation of Employees, Suppliers or Customers. None of
the Sellers, the Stockholder or ▇▇. ▇▇▇▇ shall, and none shall permit any of
their respective Affiliates to, from and after the Closing Date, and for a
period of five (5) years thereafter, directly or indirectly, for itself or on
behalf of any other Person, solicit, employ, engage or retain any Person who, at
any time during the preceding 12-month period (which period shall include the
Closing Date), shall have been a significant employee of the Purchaser, or
contact any supplier, customer or employee of the Purchaser for the purpose of
soliciting or diverting any such supplier, customer or employee from the
Purchaser for a competitive purpose. Notwithstanding the foregoing, none of the
Sellers, the Stockholder or ▇▇. ▇▇▇▇ shall be prohibited from (i) hiring or
engaging any ex-employee of the Purchaser after such employee's employment has
been terminated by the Purchaser, or (ii) consulting with ▇▇▇▇▇ ▇▇▇▇▇ following
the Closing Date with respect to the transactions contemplated by this
Agreement, provided that any such consultation does not interfere with ▇▇▇▇▇
▇▇▇▇▇'▇ performance of her duties on behalf of, and obligations owed to, the
Purchaser.
(g) Non-Competition.
(i) Until such date that is five (5) years from the Closing
Date, none of the Sellers, the Stockholder, ▇▇. ▇▇▇▇ or any
Affiliate of any of the foregoing shall, anywhere in the United
States of America, directly or indirectly, alone or in association
with any other Person, firm, corporation or other business
organization (i) acquire or own in any manner, any interest in any
Person that is engaged in any facet of the business conducted (A) by
or with the Acquired Assets, (B) by the Sellers on or prior to the
Closing Date and (C) by the Purchaser with respect to the Business
on or after the Closing Date (collectively, clauses (A), (B) and (C)
above, the "RESTRICTED BUSINESS"), or (ii) engage in any facet of
the
24
Restricted Business or compete in any way with the Restricted
Business, or (iii) sell any competitive product to any Person (other
than the Purchaser or its Affiliates) engaged, directly or
indirectly, in the Business, or (iv) be employed in any capacity by,
serve as an employee of, or consultant or advisor to, or otherwise
participate in the management or operation of, any Person that (x)
engages in any facet of the Restricted Business, or (y) competes
with the Restricted Business in any way; provided, however, that
notwithstanding the foregoing, (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may continue to
own and operate the Charity and Nut Division in accordance with the
terms of his Non-competition Agreement with the Purchaser, provided
that the Charity and Nut Division changes its name in accordance
with Section 6(k) hereof, and (ii) the Sellers, the Stockholder, ▇▇.
▇▇▇▇ and the Affiliates of the foregoing (collectively and not
individually) may own up to 2% of the voting securities of any
publicly-traded company engaged in the Restricted Business.
(ii) The parties hereto intend that the covenant contained in
Section 3(g)(i) above shall be construed as a series of separate
covenants, one for each applicable state. Except for geographic
coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in Section 3(g)(i) above. If, in any
judicial proceeding, a court shall refuse to enforce any of the
separate covenants deemed included in Section 3(g)(i) above, then
such unenforceable covenant shall be deemed reduced in scope or, if
necessary, eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate
covenants to be enforced.
(iii) The Sellers, the Stockholder and ▇▇. ▇▇▇▇ acknowledge
that the provisions of this Section 3(g), and the period of time,
geographic area and scope and type of restrictions on their
activities set forth herein, are reasonable and necessary for the
protection of the Purchaser and are an essential inducement to the
Purchaser's entering into this Agreement and all agreements,
instruments and documents to be delivered hereunder to which it is a
party and consummating the transactions contemplated hereby and
thereby.
(h) Other Actions Each of the parties hereto shall use all
reasonable efforts to (i) take, or cause to be taken, all actions, (ii) do, or
cause to be done, all things, and (iii) execute and deliver all such documents,
instruments and other papers, as in each case may be necessary, proper or
advisable under applicable Laws, or reasonably required in order to carry out
the terms and provisions of this Agreement and to consummate and make effective
the transactions contemplated hereby.
(i) Consents: Releases. The Sellers and the Stockholder shall use
commercially reasonable efforts to cause the Sellers to receive all necessary
consents and
25
approvals other than the Permits on or prior to the Closing Date. At or prior to
the Closing, the Stockholder and the Sellers shall cause the Acquired Assets to
be released from all liabilities, liens or other obligations not constituting
Assumed Liabilities. On or prior to the Closing Date ▇▇. ▇▇▇▇ shall obtain the
consent of his spouse (the "SPOUSAL CONSENT"), which shall release any Lien that
such person may have on any Acquired Asset.
(j) Exclusivity. From and after the date hereof and unless and until
this Agreement is terminated as provided in ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ of the Sellers, the
Stockholder or ▇▇. ▇▇▇▇ shall, and none of them shall knowingly permit any of
the Sellers or any of their Affiliates, officers, directors, employees, agents
or representatives, directly or indirectly, to encourage, solicit, initiate or
participate in discussions or negotiations with, provide any information to,
receive any proposals or offers from, or enter into any agreement with, any
third party, in each case other than the Purchaser and/or its Affiliates, that
involves the sale, joint venture or the other disposition of all or any portion
of the Acquired Assets or any merger, consolidation, recapitalization or other
business combination of any kind involving the Sellers (an "ALTERNATIVE
TRANSACTION"). If the Sellers, the Stockholder or ▇▇. ▇▇▇▇ receives or becomes
aware of any such offer or proposed offer, the Sellers, the Stockholder or ▇▇.
▇▇▇▇, as the case may be, shall promptly notify the Purchaser in writing.
(k) Real Property. During the period from the date hereof through
the Closing Date the Sellers shall maintain (i) the Real Property from the date
of this Agreement until the Closing Date in its current condition, (ii) the fire
and extended coverage casualty insurance in the amount of the full replacement
cost of the Real Property and all improvements located thereon, and (iii)
comprehensive liability insurance in the amounts carried prior to the date
hereof.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS, THE
STOCKHOLDER AND ▇▇. ▇▇▇▇. The Sellers, the Stockholder and ▇▇. ▇▇▇▇, jointly and
severally, hereby represent, warrant and covenant to the Purchaser as follows:
(a) Organization. Each Seller is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Seller is qualified to do business and in good standing in
each state where the character of the real properties owned or held under lease
or the nature of business transacted by such Seller makes qualification therein
by such Seller as a foreign corporation necessary, or where the failure to be so
qualified or to be in good standing therein could have a Material Adverse Effect
on the Sellers. Schedule 4(a) hereto sets forth with respect to each Seller and
each of its Subsidiaries (i) the jurisdiction in which such Seller and its
Subsidiaries are incorporated and (ii) each jurisdiction in which such Seller
and its Subsidiaries are qualified to do business as a foreign corporation. The
Stockholder is the sole stockholder of ▇▇▇▇ Vending. The Stockholder owns 70% of
the outstanding capital stock of ▇▇▇▇ Novelty, and ▇▇▇▇ Vending owns the
remaining 30% of the outstanding capital stock of ▇▇▇▇ Novelty.
(b) Enforceable Obligation; Due Authorization. The execution,
delivery and performance of this Agreement and all agreements, instruments and
documents to be delivered by the Sellers, the Stockholder and ▇▇. ▇▇▇▇ hereunder
(i) are within the power and authority of
26
the Sellers, the Stockholder and ▇▇. ▇▇▇▇, (ii) do not require the consent or
approval of or filing with any Governmental Body or any other Person other than
as otherwise provided herein and except for the Permits, (iii) will not conflict
with, result in the breach of, or constitute a Default under, any of the terms,
conditions or provisions of the certificate of incorporation or By-laws of the
Sellers, (iv) will not violate any Laws (except with respect to the Permits) or
Order of any Governmental Body, (v) will not conflict with, result in the breach
of, or constitute a Default under any material indenture, mortgage, deed of
trust, lease, agreement, contract or other instrument to which Sellers, the
Stockholder and/or ▇▇. ▇▇▇▇ is a party or by which Sellers, the Stockholder or
▇▇. ▇▇▇▇ or any of their respective properties are bound, and (vi) will not
result in the creation or imposition of any Encumbrance upon any of the property
of the Sellers, the Stockholder and/or ▇▇. ▇▇▇▇, other than as contemplated by
this Agreement and the documents executed in connection with the transactions
contemplated hereby. This Agreement and the other agreements, documents and
other instruments attached as Exhibits and Schedules hereto or executed and
delivered in connection herewith to which Sellers, the Stockholder and/or ▇▇.
▇▇▇▇ is a signatory have been duly authorized, executed and delivered by the
Sellers, the Stockholder and/or ▇▇. ▇▇▇▇, as the case may be, and constitute the
legal, valid and binding obligations of the Sellers, the Stockholder and/or ▇▇.
▇▇▇▇ enforceable in accordance with their terms, except that (x) such
enforcement may be subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (y) the remedy of specific performance and
injunctive and other forms of equitable or legal remedies may be subject to
equitable defenses, equitable principles and to the discretion of the court
before which any proceeding therefor may be brought.
(c) Governing Instruments. True and complete copies of the
certificate of incorporation and By-laws of each Seller, as amended to the date
hereof, have been delivered to the Purchaser.
27
(d) Litigation; Observance of Laws.
(i) There is no litigation, at law or in equity, or any
proceeding before any Governmental Body or any arbitration pending
or, to the Sellers' or Stockholder's Knowledge, threatened against
or relating to the Sellers, which is likely to involve any material
risk of any judgment or liability not fully covered by insurance,
which, if adversely decided, would have a Material Adverse Effect on
the Sellers or any of them, or which seeks to enjoin the
consummation of, or questions the validity of, any of the
transactions contemplated hereby, or which would question the
validity or enforceability or impair the validity or enforceability
of or the ability of Sellers, the Stockholder or ▇▇. ▇▇▇▇ to perform
its or his obligations under this Agreement or any agreement
contemplated hereby or which would question the validity or
enforceability or impair the ability of Sellers, the Stockholder or
▇▇. ▇▇▇▇ to perform its or his respective obligations under any
instrument, document or agreement contemplated hereby, and no Order
of any Governmental Body or arbitrator has been issued against or
binds Sellers, the Stockholder or ▇▇. ▇▇▇▇ which has, or could have,
a Material Adverse Effect on the Sellers, the Stockholder's or ▇▇.
▇▇▇▇'▇ ability to consummate the transactions contemplated hereby.
To the Sellers' or Stockholder's Knowledge, no basis exists for the
commencement of any such litigation, proceeding or arbitration.
Schedule 4(d)(i) lists all pending legal actions, suits proceedings
and claims, including any brought by the Sellers against a third
party.
(ii) The Sellers are not in violation of or default with
respect to any Order of any arbitrator or Governmental Body where
such violation or default is likely to have a Material Adverse
Effect on the Sellers', the Stockholder's or ▇▇. ▇▇▇▇'▇ ability to
consummate the transactions contemplated hereby, and to the Sellers'
and Stockholder's Knowledge there is no basis for there to be
declared any such violation or default which is likely to have a
Material Adverse Effect on the Sellers', the Stockholder's or ▇▇.
▇▇▇▇'▇ ability to consummate the transactions contemplated hereby.
(iii) To the Sellers' and Stockholder's Knowledge, the Sellers
are not in violation of any Laws (including, without limitation,
Environmental Laws), the violation of which would have a Material
Adverse Effect on the Sellers' or the Purchaser's ability to conduct
their existing or contemplated businesses. To the Sellers' and
Stockholder's Knowledge, neither the Sellers nor any of their
stockholders, officers, directors, employees, agents or
representatives has made, directly or indirectly, with respect to
the Acquired Assets, any illegal political contributions, payments
from corporate funds not recorded in the Books and Records of the
Sellers, payments from corporate funds that were
28
falsely recorded on the Books and Records of the Sellers, payments
from corporate funds to governmental officials in their individual
capacities for the purpose of affecting their action or the action
of the government they represent to obtain special concessions or
illegal payments from corporate funds to obtain or retain business.
(e) Title to Acquired Assets; Condition; Leased Equipment;
Inventory.
(i) The Sellers have good and marketable title to, or valid
leasehold interests in, all of the Acquired Assets (other than Real
Property), free and clear of all claims, mortgages, pledges, liens,
encumbrances, security interests and adverse interests of every
nature whatsoever ("ENCUMBRANCES") except: (A) as shown on the
Financial Statements, (B) liens for current Taxes not yet due and
payable and which constitute a Retained Liability, (C) Encumbrances
which do not, either individually or in the aggregate, materially
detract from the value of, or interfere with the present use of, the
properties subject thereto or affected thereby, or otherwise impair
the operation(s) of the Business or the Acquired Assets, (D)
mechanics', carriers', workers', repairmen's, and other similar
liens arising or incurred in the ordinary course of its business for
monies not yet due and payable, (E) rights of customers with respect
to inventory and work-in-process in amounts included within accounts
payable in the Financial Statements, (F) leases with or licenses
from third parties as set forth on Schedule 4(e)(i)(F) hereto, and
(G) Encumbrances reflected on Schedule 4(e)(i)(G) hereto.
(ii) The Acquired Assets (together with the Excluded Assets)
constitute all of the properties, assets, rights, contracts, leases,
easements, Permits, licenses and real and personal property
(including, without limitation, all Intellectual Property)
heretofore utilized by the Sellers in the conduct of the Business
and with respect to such Acquired Assets are reflected in the Books
and Records and/or Financial Statements; and no Acquired Asset is
owned by a Person other than the Sellers or is necessary or
desirable to conduct the existing or currently contemplated
Business, except for those Acquired Assets which are leased to the
Sellers, which leases are set forth on Schedule 4(e)(ii) attached
hereto.
(iii) The real and personal property owned or leased by the
Sellers, including, without limitation, all Machinery and Equipment
and Furniture and Fixtures of the Sellers used in connection with
the Business and the Acquired Assets, are in good order and proper
repair taken as a whole (ordinary wear and tear excepted) and, to
the best of the Sellers' and the Stockholder's Knowledge, are
adequate for present uses thereof and meet all standards, clearances
and ratings in effect on the date hereof in respect of those Laws
applicable thereto, except for minor items of
29
Machinery and Equipment and Furniture and Fixtures which will
require replacement or repair in the Ordinary Course of Business,
the temporary lack of use of which will not materially disrupt
normal production, and minor defects which do not interfere in a
material way with the continued use thereof.
(iv) Each material lease or license of an Acquired Asset
(other than Real Property) is a valid and subsisting obligation
enforceable in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in
effect, or to legal or equitable principles, relating to or limiting
creditors' rights; and that the remedy of specific performance and
injunctive and other forms of equitable or legal relief are subject
to certain equitable defenses or equitable principles and to the
discretion of the court before which any proceeding therefor may be
brought.
(v) Neither the Stockholder, ▇▇. ▇▇▇▇ nor any third Person
owns or has any rights in any Acquired Assets, or in any other
property used to carry on the Business other than the Excluded
Assets.
(vi) Such of the Acquired Assets as constitute inventory are,
on the date hereof, in good and merchantable condition and usable
for their intended purposes, and, as to finished goods inventory,
saleable in the aggregate at its normal gross profit margins
experienced over the last twelve (12) months and no item of
inventory, whether of raw material, work-in-process or finished
goods, is damaged, obsolete or in excess of the Sellers' reasonable
requirements, based on their business experience. The inventory set
forth in the Financial Statements: (i) is properly stated at the
lower of cost or market, cost being determined using the first-in,
first-out method, consistent with the Sellers' system of valuation
and (ii) written off or reserved to the extent it is physically
damaged, previously used, obsolete, discontinued or treated as
excess. Notwithstanding the foregoing, inventory specified on
Schedule 4(e)(vi), in an aggregate amount equal to no more than
$500,000, may not be saleable in the Ordinary Course of Business.
The inventory specified on Schedule 4(e)(vi) has been safety tested
and meets the standards set forth in Section 4(bb) of this
Agreement, and Schedule 4(e)(vi) sets forth an aging schedule with
respect to such inventory.
(vii) Schedule 4(e)(vii) hereto is a true and correct list of
all of the Furniture and Fixtures and Machinery and Equipment owned
or leased by the Sellers as of a date no earlier than 10 days prior
to the date hereof having an initial cost exceeding $25,000 or
requiring annual lease payments exceeding $15,000. Except as
provided in Schedule 4(e)(vii) hereto the Sellers have good and
marketable title to the Machinery and Equipment and Furniture and
Fixtures, merchandise, materials, supplies and other property of
every kind, tangible or intangible, which are shown as assets on the
most recent Financial Statements, or which, whether or not shown on
the Financial Statements, were acquired directly or indirectly by
the Sellers through the purchase of assets or stock from or through
merger, consolidation or other transaction with another Person,
except for Machinery and
30
Equipment and Furniture and Fixtures and other assets which have
been consumed, sold or disposed of in the Ordinary Course of
Business since the date of those Financial Statements or such
acquisition, free and clear of all Encumbrances, except (A) as set
forth on Schedule 4(e)(vii) hereto and (B) Encumbrances which are
incurred to finance the purchase of the property subject thereto,
which do not cover any other property and which secure indebtedness
therefor in an amount, unless set forth on said Schedule 4(e)(vii)
hereto, which is no greater than the initial cost of such property
and which is reflected in the Financial Statements and which, absent
a foreclosure of such liens, do not impose any restrictions on the
operation of such property contrary to the use thereof in the
operation of the Acquired Assets.
(viii) The Sellers have complied in all material respects with
all obligations under all material leases or licenses to which
either of them is a party or to which either of them have succeeded
by merger or acquisition of the stock or assets of any other Person
and under which either of them is in occupancy and all such leases
or licenses are in full force and effect. The Sellers enjoy peaceful
and undisturbed possession under such leases and to the best of the
Sellers' Knowledge no other party to any such lease or license is in
material Default thereunder.
(f) Real Property.
(i) Definitions As used in this Section as elsewhere in this
Agreement the following terms shall be defined as follows:
"OWNED REAL PROPERTY" means all land, together with all
buildings, structures, improvements, and fixtures located thereon, and all
easements and other rights and interests appurtenant thereto owned by the
Sellers.
"LEASED REAL PROPERTY" means all leaseholds or subleasehold
estates and other rights to use or occupy any land, buildings, structures,
improvements, fixtures or other interest in real property held by the Sellers.
"LEASES" means all leases, subleases, licenses, concessions,
and other agreements (written or oral) pursuant to which the Sellers or any
Subsidiary holds any Leased Real Property, including the right to all security
deposits and other amounts and instruments deposited by or on behalf of the
Sellers thereunder.
31
"LEASEHOLD IMPROVEMENTS" means all buildings, structures,
improvements and fixtures located on any Leased Real Property which are owned by
the Sellers, regardless of whether title to such buildings, structures,
improvements or fixtures are subject to reversion to the landlord or other third
party upon the expiration or termination of the Lease for such Leased Real
Property.
(ii) Owned Real Property. No Owned Real Property exists. The
Sellers are not a party to any agreement or option to purchase any
real property or interest therein.
(iii) Leased Real Property. Schedule 4(f)(iii) sets forth the
address of each Leased Real Property, and a true and complete list
of all Leases (including all amendments, extensions, renewals,
guaranties, assignments, and other agreements with respect thereto)
for each such Leased Real Property (including the date and name of
the parties to such Lease document and all assignors, and assignees
thereof). The Sellers have delivered to the Purchaser a true and
complete copy of each such Lease document and all assignment
documents. With respect to each of the Leases, except as set forth
on Schedule 4(f)(iii): (i) such Lease is legal, valid, binding,
enforceable and in full force and effect; (ii) the transactions
contemplated by this Agreement do not require the consent of any
other party to such Lease, will not result in a breach of or default
under such Lease, or otherwise cause such Lease to cease to be
legal, valid, binding, enforceable and in full force and effect on
identical terms following the Closing; (iii) to the Knowledge of the
Sellers, neither the Sellers nor any other party to the Lease is in
breach or default under such Lease, and, to Sellers' Knowledge, no
event has occurred or circumstance exists which, with the delivery
of notice, the passage of time or both, would constitute such a
breach or default, or permit the termination, modification or
acceleration of rent under such Lease; (iv) to the Sellers'
Knowledge no security deposit or portion thereof deposited with
respect such Lease has been applied in respect of a breach or
default under such Lease which has not been redeposited in full; (v)
the Sellers do not owe, or will not owe in the future, any brokerage
commissions or finder's fees with respect to such Lease; (vi) the
other party to such Lease is not an Affiliate of, and otherwise does
not have any economic interest in, the Sellers; (vii) the Sellers
have not subleased, licensed or otherwise granted any Person the
right to use or occupy such Leased Real Property or any portion
thereof; (viii) the Sellers have not collaterally assigned or
granted any other security interest in such Lease or any interest
therein; (ix) Sellers enjoy peaceful and undisputed possession under
such Lease; and (x) the Sellers pay market rate rents under such
Lease.
(iv) Leasehold Improvements. Schedule 4(f)(iv) sets forth a
description of all material Leasehold Improvements for each Leased
Real
32
Property. Except as set forth in Schedule 4(f)(iv), the Sellers have
good and marketable title to the Leasehold Improvements, free and
clear of all Liens, and other than the right of the Purchaser
pursuant to this Agreement, there are no outstanding options, rights
of first offer or rights of first refusal to purchase any such
Leasehold Improvements or any portion thereof or interest therein.
(v) Real Property Used in the Business. The Leased Real
Property identified in Schedule 4(f)(iii), and the Leasehold
Improvements identified in Schedule 4(f)(iv) (collectively, the
"REAL PROPERTY") comprise all of the real property used or intended
to be used in the Business as currently conducted.
(vi) Improvements. To the Knowledge of the Sellers, all
buildings, structures, improvements, fixtures, building systems and
equipment, and all components thereof, included in the Real Property
(the "IMPROVEMENTS") are in working order, subject to ordinary and
routine rehabilitation and repair requirements, consistent with past
practices, and have been and, subject to the foregoing, are being
used in the operation of the Business as currently conducted. To the
Knowledge of the Sellers, there are no structural deficiencies or
latent defects affecting any of the Improvements or facts or
conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any material respect
with the use or occupancy of the Improvements or any portion thereof
in the operation of the Business as currently conducted.
(g) Licenses, Permits, Etc. The Sellers possess adequate licenses,
clearances, ratings, permits, orders, approvals, authorizations and franchises,
and all rights with respect thereto ("PERMITS"), for the Sellers or the
Purchaser (subject to the matters set forth in Section 7(a)(i)) to conduct the
Business substantially as now and heretofore conducted (except where the failure
to obtain the same would not have a Material Adverse Effect), which are listed
on Schedule 4(g) and, to Sellers' and Stockholder's Knowledge, except as
otherwise set forth on Schedule 4(g) hereto, such Permits are in full force and
effect and are without any conflict with the rights of others in any such
Permits. Except for instances previously remedied, neither the Sellers nor the
Stockholder has Knowledge or has received notice of termination, revocation or
limitation of, or of the pendency or threatened commencement of any proceeding
to terminate, revoke or limit any such Permits by the Governmental Body issuing
same.
(h) Tax Matters.
(i) Except as set forth in Schedule 4(h):
A. the Sellers have (A) duly and timely filed or caused
to be filed with the Internal Revenue Service or other applicable
Taxing Authority all Tax Returns that are required to be filed by or
on behalf of
33
the Sellers or that include or relate to the Acquired Assets, which
Tax Returns are true, correct and complete in all material respects,
and (B) duly and timely paid in full or caused to be paid in full,
all Taxes that are due and payable on or before the date hereof
(whether or not shown on any such Tax Return);
B. the Sellers have duly and timely complied with all
applicable Laws relating to the collection or withholding of Taxes
(whether with respect to employees, independent contractors,
creditors, stockholders or other third parties), and the reporting
and remittance thereof to the applicable Taxing Authorities;
C. no audit, examination, investigation, reassessment or
other administrative or court proceeding (collectively, a "TAX
PROCEEDING") is pending or, to the best Knowledge of each of the
Sellers and the Stockholder, proposed, or to the best Knowledge of
each of the Sellers and the Stockholder threatened;
D. there is no Encumbrance for any Tax upon any of the
Acquired Assets;
E. there is no outstanding or pending request for a
waiver or extension of the statute of limitations on the assessment
or collection of any Taxes, a ruling from any Taxing Authority,
subpoena or request for information by any Taxing Authority, closing
agreement (within the meaning of Section 7121 of the Code or any
analogous provision of applicable Law) relating to any Tax for which
the Sellers are or may be liable or with respect to the Sellers'
income, assets or business, power of attorney or adjustment related
to or in connection with any Tax of the Sellers or which relates to
the Acquired Assets;
F. the Sellers have never been a member of an affiliated
group filing a consolidated, combined or unitary Tax Return, and
have no liability for Taxes of any other person or entity under
Treasury Regulation 1-1502-6 (or similar provision of state local or
foreign law), as trustee or successor, by contract, or otherwise;
G. no claim has ever been made by a Taxing Authority in
a jurisdiction in which the Sellers have not paid any Tax or filed
any Tax Return asserting that the Sellers are or may be subject to
Tax in such jurisdiction; and
(ii) The Sellers have provided to the Purchaser true, correct
and complete copies of (A) all Tax Returns filed by the Sellers
after December 31, 1998 and (B) all audit and/or accountant reports
and correspondence
34
relating to each proposed adjustment, if any, made by any Taxing
Authority with respect to, any such Tax Return.
(i) Financial Statements of the Sellers.
(i) The Financial Statements (other than the Interim
Statements) have been audited by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and are
accompanied by their related unqualified opinions (copies of which
are attached hereto as a part of Schedule 4(i)(i)). The Financial
Statements present fairly the financial condition of the Sellers as
of the dates thereof and their results of operations for the periods
indicated in accordance with GAAP applied on a basis consistent with
past practices (except as set forth on Schedule 4(i)(ii) with
respect to the Interim Financial Statements), and are true, correct
and complete in all material respects. The Financial Statements, as
of the dates thereof, include all the material assets of the Sellers
owned by them and except as set forth on Schedule 4(i)(i) hereto,
the amounts reflected with respect to such assets are stated in
accordance with GAAP and reflect all assets that are required, in
accordance with such principles, to be reflected in such Financial
Statements. Except as set forth on Schedule 4(i)(i) hereto, since
December 31, 2001 there has been no Material Adverse Effect. Neither
the Sellers nor the Stockholder has Knowledge of facts or other
information that indicates that the reserves and accruals reflected
in the Financial Statements are inadequate or were inadequate as of
the date thereof. All advance payments and deposits are shown as
liabilities in the Financial Statements.
(ii) Schedule 4(i)(ii) contains a true and complete copy of
the Interim Financial Statements.
(iii) Sellers and the Business have no Accounts Receivable
other than approximately $10,000 due from subcontractors.
(iv) Other than as reflected on the face of (and not solely in
any notes to) the Financial Statements, Sellers have not had
intercompany advances, receivables or liabilities in any fiscal year
covered by the Financial Statements. The aggregate amount paid by
▇▇▇▇ Canada to the Sellers in fiscal year 2002 as payment for
leasing the Canadian Vending Machines was $29,000.
(j) Conduct of the Business. From and after December 31, 2001, and
until the date hereof:
(i) Except as set forth on Schedule 4(j)(i), Sellers have
continued to operate the Business in the usual and ordinary manner
in which the Business has been conducted in the past; during such
period, the
35
Sellers have not made any expenditures or entered into any
commitments which, when compared to past operations of the Business
are unusual or extraordinary or outside the scope of the normal
course of routine operations;
(ii) The Sellers have kept in a customary state of repair and
operating efficiency all tangible personal property used in the
operation of the Business;
(iii) The Sellers have used their respective best efforts to
maintain the good will associated with the Business, and the
existing business relationships with their agents, customers, key
employees, suppliers and other Persons having relations with it;
(iv) The Sellers have not entered into any contract, agreement
or transaction, or relinquished or released any rights or privileges
under any contracts or agreements, the performance, violation,
relinquishment or release of which could, on the date on which such
contract or agreement was entered into, or such rights or privileges
were relinquished or released, be reasonably foreseen to have a
Material Adverse Effect on the Sellers or the operation of the
Acquired Assets by the Purchaser;
(v) The Sellers have not made, or agreed to make, any
acquisition of stock or assets of, or made loans to, any Person
other than assets acquired in the Ordinary Course of Business, which
assets, if considered inventory in the hands of the Sellers under
GAAP, are in an amount consistent with business requirements;
(vi) The Sellers have not sold, leased, licensed or otherwise
disposed of any of its assets or created or permitted to exist any
Encumbrance on its assets except (A) in the Ordinary Course of
Business and which could not, on the date of such sale, disposition,
creation or permission, be reasonably foreseen to have a Material
Adverse Effect on the Sellers, (B) as otherwise permitted by this
Agreement, or (C) as set forth in Schedule 4(j)(i);
(vii) The Sellers have notified the Purchaser in writing and
prior to the Closing will notify the Purchaser in writing of any
material adverse change in its assets, liabilities or business or of
any Material Adverse Effect on the Sellers;
(viii) The Sellers have kept Books and Records with respect to
the Business in a manner (A) in which entries have been made of all
transactions on a basis consistent with past practices, (B) which
are true, correct and complete in all material respects, and (C) in
which entries have
36
been made only in accordance with GAAP, except for normal year end
adjustments;
(ix) The Sellers have paid current liabilities in the Ordinary
Course of Business as and when such liabilities became due and have
paid or incurred no fees and expenses not in the Ordinary Course of
Business other than as set forth on Schedule 4(j)(i); provided,
however, the Sellers have not delayed payment of any trade payables
beyond the normal payment periods for such payables which as of the
date hereof are more than 90 days past due ("PAST DUE PAYABLES") and
are identified on Schedule 4(j)(ix);
(x) The Sellers have made no non-cash distributions to the
Stockholder, ▇▇. ▇▇▇▇ or any of their respective Affiliates,
directly or indirectly, whether by way of dividend, compensation or
otherwise;
(xi) The Sellers, the Stockholder and ▇▇. ▇▇▇▇ have not
entered into any transactions by and between or among the Sellers,
the Stockholder or ▇▇. ▇▇▇▇ relating to the Acquired Assets;
(xii) Except for normal annual increases or increases
resulting from the application of existing formulae under existing
plans, agreements or policies (including commission arrangements)
relating to non-officer/director, employee compensation, there has
not been any material increase (5% or more) in the rate of
compensation payable or to become payable to (or in the amount of
bonus or other remuneration paid, payable or to become payable to)
employees in the aggregate or to any officer, director, employee or
consultant of the Sellers; and the Sellers have not become a party
to any Sellers Employment Agreement with any of their respective
directors, officers, employees or consultants;
(xiii) The Sellers have not instituted any sales incentive
programs amongst their employees, sales representatives or
distributors which has resulted in greater than average inventories
of the Sellers' products being held by distributors or customers
and, except as provided on Schedule 4(j)(xiii), have instituted no
sales incentive programs whatsoever; and
(xiv) Other than in the Ordinary Course of Business, the
Sellers have not entered into any arrangements or understandings
with any Person with respect to (A) rebate, price protection and
volume discount practice and obligations, (B) allowance and customer
return practices and obligations, (C) co-op advertising and other
promotional practices.
37
(k) Liabilities.
(i) Except as provided in Schedule 4(k)(i) hereto, the Sellers
have no liabilities or obligations, whether known or unknown, due or
not yet due, fixed or variable, absolute or contingent, or
otherwise, other than the liabilities and obligations which are
stated or provided for in the Financial Statements and which
continue to exist on the date hereof, liabilities and obligations
incurred by the Sellers in the Ordinary Course of Business
subsequent to the date of the Financial Statements and prior to the
date hereof which, individually or in the aggregate, do not and will
not have a Material Adverse Effect on the Sellers or the operation
of the Business and the Acquired Assets by the Purchaser. All
obligations of the Sellers pursuant to allowances, certificates or
other promotional materials obligating the Sellers to perform
services or supply product at prices below their normal prices or at
no cost have been adequately reserved for and disclosed in the
Financial Statements.
(ii) Except as set forth in Schedule 4(k)(ii) hereto, since
December 31, 2001, the Sellers have not:
A. subjected to Encumbrance, or agreed to do so, any of
its assets (other than the Excluded Assets), tangible or intangible,
other than purchase money liens on equipment used in the conduct of
their businesses and incurred to finance the purchase price of the
equipment involved and which do not cover any other asset of the
Sellers; or
B. engaged in any transactions affecting its business or
properties not in the Ordinary Course of Business or suffered any
extraordinary losses or waived any rights of substantial value.
(l) No Default or Event of Default. Except as set forth on Schedule
4(l)(i) hereto, there exists no event or condition which constitutes, or which,
as a consequence of the execution and performance of this Agreement or with the
passage of time or giving of notice, or both, could constitute, a Default or
event of termination under any Assigned Contracts or any material license,
judgment, decree, or Order to which either Seller is a party or to which it has
succeeded by merger or acquisition of the stock or assets of another Person or
by which Sellers or any of their respective properties are bound. Provided that
the Sellers obtain the consents which may be required to enter into this
Agreement and to consummate the transactions contemplated hereby and which are
set forth on Schedule 4(l)(ii), no such Assigned Contract or license, judgment,
decree, or Order limits in any material way the freedom of any person or entity
acquiring control of the Sellers from performing such Assigned Contract or
license, judgment, decree, or Order in accordance with its terms. To the
Sellers' and Stockholder's Knowledge, the Sellers have not received any notice
from any party to any such Assigned Contract with respect to such party's
unwillingness or inability to perform thereunder.
38
(m) No Right of Action. Other than with respect to the Purchaser's
assumption of the Sellers' obligations existing as of the Closing Date under the
Assumed Liabilities, the execution of this Agreement and the other agreements,
instruments and documents contemplated hereby and the completion of the
transactions contemplated hereby and thereby, shall not cause the Purchaser or
any of its Subsidiaries or Affiliates to be liable for damages to any other
Person, or give such Person any equitable right against any of them or the
Sellers, or any of its assets by reason of any agreement or arrangement to which
any Seller is a party.
(n) Employee Benefits and other Employee Matters. With respect to
Sellers and each ERISA Affiliate of Seller:
(i) Schedule 4(n) lists each employee benefit plan (as defined
in Section 3(3) of ERISA) that provides benefits for employees or
former employees of the Sellers or any of their respective direct or
indirect subsidiaries, or for which either Seller could have any
direct or indirect, actual or contingent liability (collectively,
the "PLANS").
(ii) With respect to each Plan that is subject to Title IV of
ERISA, there is no amount of unfunded benefit liabilities as defined
in Section 4001(a)(18) as determined in accordance with actuarial
assumptions used by the Pension Benefit Guaranty Corporation
("PBGC") to determine the level of funding required in the event of
termination of the Plan.
(iii) Sellers have no direct or indirect, actual or contingent
liability with respect to any Plan other than to make payments to
the Plans in accordance with the terms of such Plans.
(iv) With respect to each Plan which is subject to the minimum
funding standards of Section 412 of the Code, there has occurred no
failure to meet the minimum funding standards of Section 412 of the
Code, and no such Plan has incurred an "accumulated funding
deficiency" within the meaning of such Section, whether or not
waived.
(v) With respect to each Plan which is subject to Title IV of
ERISA: (i) no such Plan has terminated, or has filed a notice of
intent to terminate in the last six years; (ii) there is no
outstanding liability under Section 4062 of ERISA; (iii) neither the
Sellers or any ERISA Affiliate of Sellers that is a substantial
employer has made a withdrawal (or has deemed to do so under Section
4062(e) of ERISA) that could result in liability to Sellers under
section 4063 of ERISA or otherwise; (iv) the PBGC has not instituted
proceedings to terminate any such Plan; (v) no reportable event, as
described in Section 4043 of ERISA has occurred.
39
(vi) Except as indicated in Schedule 4(n), neither the Sellers
nor any ERISA Affiliate of Sellers contributes to any "multiemployer
plan," as defined in Section 4001(a)(3) of ERISA, and neither the
Sellers nor any ERISA Affiliate of Sellers have in the past six
years withdrawn in a complete or partial withdrawal from any
multiemployer plan or incurred any actual or contingent liability
under section 4204 of ERISA. With respect to each such multiemployer
plan in which the Sellers and any ERISA Affiliate of Sellers
participates or has participated, neither the Sellers nor any ERISA
Affiliate of Sellers have:
A. withdrawn, partially withdrawn, or received any
notice of any claim or demand for withdrawal liability or partial
withdrawal liability;
B. received any notice that any such Plan is in
reorganization, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise
tax, or that any such Plan is or may become insolvent;
C. failed to make any required contributions; or
D. incurred any withdrawal liability by reason of a sale
of assets pursuant to Section 4204 of ERISA.
(vii) Schedule 4(n) includes for each multiemployer plan, as
of its last valuation date, the amount of any potential withdrawal
liability of the Sellers and any member of their controlled group
calculated according to the information made available pursuant to
Section 4221(e) of ERISA, and identifies the specific obligor. To
the best Knowledge of the Sellers, nothing has occurred or is
expected to occur that would materially increase the amount of the
total potential withdrawal liability of a specified obligor for any
such multiemployer plan over the amount shown in Schedule 4(n).
(viii) No Plan is a "multiple employer plan" within the
meaning of Section 4063 or 4064 of ERISA.
(ix) With respect to each Plan, the Sellers have made all
payments due from it to date and will make each payment due from it
for all periods through and including the Closing Date on or prior
to the Closing Date.
(o) Investment Company Act; Public Utility Holding Company Act.
Neither Seller is, and is not directly or indirectly controlled by, or acting on
behalf of, any Person which is an "investment company" within the meaning of the
Investment Company Act of 1940, as
40
amended. Neither Seller is a "holding company" as that term is defined in or is
otherwise subject to regulation under, the Public Utility Holding Company Act of
1935.
(p) Agreements. Except as set forth on Schedule 4(p) hereto, Sellers
are not party to any material written or oral agreement, loan, credit, lease,
sublease, franchise, license, contract, commitment or instrument or subject to
any corporate restriction that has or the performance or violation of which
could, on the date hereof, reasonably be foreseen to have a Material Adverse
Effect on the Sellers, or which has a term in excess of one year. Schedule 4(p)
hereto identifies every written or oral loan or credit agreement, and every
fully or partially executory agreement or purchase order pursuant to which
Sellers are obligated to deliver goods or perform services, pay for goods,
services or other property, or repay any loan, in each case in an amount in
excess of $10,000 in respect of any one Person, or group of Persons, other than
for purchases of inventory in the Ordinary Course of Business, including,
without limitation, any agreement with present or former officers, directors,
consultants, agents, brokers, vendors, customers and/or dealers of any nature.
True, correct and complete copies (or summaries of oral agreements) of all such
agreements have been delivered to the Purchaser. The Sellers are not in Default
(nor shall it be as a result of the transactions contemplated hereby being
consummated) under any material agreement, loan, credit, lease, sublease,
franchise, license, contract, commitment, instrument or restriction, except as
set forth on Schedule 4(p) hereto. As of the date of the signing of this
Agreement, ▇▇▇▇ Vending has taken delivery of and paid for one thousand, seven
hundred and ninety-eight (1,798) sticker machines pursuant to the terms and
conditions of the Fundamental Financing Agreement and ▇▇▇▇ Vending remains
obligated under the Fundamental Financing Agreement to take delivery of and pay
for only two hundred and fifty (250) additional sticker machines at a purchase
price of $280 per machine.
(q) Environmental and OSHA Matters.
(i) The Sellers have obtained all Permits which are required
with respect to its operations under Environmental Laws;
(ii) to the Knowledge of the Sellers, the Sellers are in
compliance with the terms and conditions of all Permits required by
the Environmental Laws;
(iii) there is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, proceeding,
notice or demand letter pending relating to Sellers or, to Sellers'
and Stockholder's Knowledge, threatened against the Sellers relating
in any way to any Environmental Laws or any regulation, code, plan,
order, decree, judgment or injunction issued, entered, promulgated
or approved thereunder;
(iv) to the Sellers' and Stockholder's Knowledge, there are no
investigations or internal or non-public agency proceedings pending
regarding the Sellers relating in any way to any Environmental Laws
or
41
any regulation, code, plan, order, decree, judgment or injunction
issued, entered, promulgated or approved thereunder;
(v) there has been no generation, production, refining,
processing, manufacturing, use, storage, disposal, treatment,
shipment, emission, receipt or release of a Hazardous Substance (as
hereinafter defined) or petroleum or petroleum by-product on, in or
under such of the assets of the Sellers constituting real property
which would subject the owner or operator of the real property or
business, or any past or future owner or operator of the real
property to liability for the removal, remediation or cleanup of the
Hazardous Substance, petroleum or petroleum by-product under the
Environmental Laws or common law during ownership and/or use by the
Sellers of their property, or, to Sellers' and the Stockholder's
Knowledge, prior thereto. "HAZARDOUS SUBSTANCE" means any substance
or material regulated by any Environmental Law, or in the
regulations adopted and publications promulgated pursuant thereto
and include, without limitation, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, toxic
substances, asbestos or any material containing asbestos. The
Sellers shall deliver to the Purchaser true and complete copies of
all environmental studies made in the last ten years relating to the
Sellers' real property or the business of the Sellers. During the
ownership and/or operation by the Sellers of their property, and, to
Sellers' and Stockholder's Knowledge, prior thereto, no Hazardous
Substance has ever been spilled, released, leaked, poured, leached,
dumped, discharged, placed or disposed of, or otherwise caused to be
located at any property which has at any time been owned, leased or
used by the Sellers in violation of any Environmental Law and all
Hazardous Substances have been handled in compliance with
Environmental Laws; and
(vi) to the Knowledge of the Sellers, (A) Sellers have not
violated any OSHA Laws; Sellers have not received any notice or
claim, nor are there pending, threatened or reasonably anticipated,
lawsuits or proceedings against Sellers, with respect to violations
of an OSHA Law; the Sellers have delivered to Purchaser all copies
of Permits in connection with OSHA Laws, reports and other Books and
Records related to OSHA matters; and (D) the Sellers have all
controls, programs, policies, guards, protections and plans required
under the OSHA Laws.
(r) Insurance. Schedule 4(r) hereto includes a true and correct list
of all policies or binders of insurance of the Sellers in force as of the date
hereof, specifying the insurer, policy number (or covering note number with
respect to binders), amount thereof and describing each pending claim
thereunder. Such policies are in full force and effect. The Sellers are not in
Default with respect to any material provisions contained in any such policy or
binder, nor have Sellers failed to give any notice or present any claim under
any such policy or binder in
42
due and timely fashion. There are no outstanding unpaid claims under any such
policy or binder, or claims for worker's compensation except as reflected on
Schedule 4(r) hereto. The Sellers have not received notice of cancellation or
non-renewal of any such policy or binder. The Sellers have never been, and are
not now, the subject of any claim relating to damage or injury in excess of the
Sellers' then-current product liability policy limits or which has been
disclaimed by the Sellers' insurer.
(s) Sellers' Employment Agreements. Other than those which are
identified on Schedule 4(s) hereto, there are no Sellers' Employment Agreements
between Sellers and any other Person.
(t) Employees and Labor Disputes.
(i) Schedule 4(t) hereto contains a complete and correct list
of all persons who are currently employed by the Sellers and
consultants providing services to the Sellers, together with
separate line entries setting forth with respect to each such person
their title, annual salary, bonus and all other compensation. There
is no outstanding commitment (whether or not legally binding) to
increase the remuneration of any such employee and the Sellers have
not received any notice of termination from any of such persons,
nor, to Sellers' Knowledge, does any such employee intend to
terminate his/her employment.
(ii) There is neither pending nor, to the best of the Sellers'
and Stockholder's Knowledge, threatened any labor dispute, strike,
work stoppage or lockout involving employees of the Sellers or
against the Sellers which affects or which may affect the Business
or which may interfere with any of their continued operations. There
is not pending or, to the best of the Sellers' and Stockholder's
Knowledge, threatened any charge or complaint against the Sellers by
the National Labor Relations Board or any representative thereof.
There have been no strikes, walkouts, work stoppages or lockouts
involving employees of the Sellers or against the Sellers or in the
last five years. The Sellers have no Knowledge of any facts
indicating that (A) the consummation of any of the transactions
contemplated by this Agreement will have a Material Adverse Effect
on the labor relations of the Sellers, or (B) any of the employees
of the Sellers intends to terminate his or her employment with the
Sellers or refuse to accept employment with the Purchaser. To the
Knowledge of the Sellers, the Sellers employ in the Business in the
United States only U.S. citizens or U.S. residents who are in the
United States in compliance with U.S. immigration laws and possess
"green cards". To the Knowledge of Sellers, the Sellers are in
compliance with all Laws respecting employment and employment
practices, terms and conditions of employment, immigration laws and
wages and hours. No Continuing Employee has been offered employment
by (A) the Sellers, the
43
Stockholder or any of their Affiliates in a capacity other than in
connection with the Sellers' Business, or (B) to the Knowledge of
Sellers or Stockholder, any other Person, other than the Purchaser.
(u) Collective Bargaining Agreements. Other than the Agreement,
dated January 1, 2002, by and between Sellers and Local #210, Warehouse and
Production Employees Union, AFL-CIO, the Sellers are not party to any collective
bargaining agreements. The Sellers' relations with their employees are
satisfactory. With respect to the transactions contemplated by this Agreement
and all agreements, instruments and documents to be delivered hereunder, any
notice required under any law or collective bargaining agreement has been given,
and all bargaining, information and consultation obligations with any employee
representative have been, or prior to the Closing will be, satisfied.
(v) Affiliates. Except as set forth on Schedule 4(v) hereto, there
are no Affiliates of the Sellers or any of their respective Subsidiaries.
(w) Intellectual Property.
(i) All trademarks, service marks, trade names, Internet
domain names, designs, logos, slogans, and general intangibles of
like nature, together with all goodwill, registrations and
applications related to the foregoing (collectively, "TRADEMARKS");
patents and industrial design registrations or applications
(including any continuations, divisionals, continuations-in-part,
renewals, reissues and applications for any of the foregoing);
copyrights (including any registrations and applications therefor);
computer software programs or applications (in both source and
object code form) ("SOFTWARE PROGRAMS"); technical documentation
relating to the Software Programs ("TECHNICAL DOCUMENTATION"); "mask
works" (as defined under 17 U.S.C. Section 901) and any
registrations and applications for "mask works"; technology, trade
secrets and proprietary or other confidential information, know-how,
proprietary processes, formulae, algorithms, models, technical and
engineering data, computer discs and tapes, plans, diagrams and
schematics and methodologies (collectively, "TRADE SECRETS"); moral
rights; rights of publicity and privacy relating to the use of the
names, likenesses, voices, signatures and biographical information
of real persons, are hereinafter referred to as the "INTELLECTUAL
PROPERTY".
(ii) Schedule 4(w)(ii) contains a true and complete list of
all of the Sellers' U.S. and foreign (A) patents and patent
applications, (B) Trademark registrations and applications therefor
and material unregistered Trademarks; (C) copyright registrations
and applications therefor; and (D) other filings and formal actions
made or taken pursuant to federal, state, local and foreign laws by
the Sellers to protect their interests in the Intellectual Property
with respect to items (A), (B), (C) and
44
(D) above, the name of the registrant, owner or assignee, if
applicable, shall be set forth opposite each item on such Schedule
4(w)(ii). Attached to Schedule 4(w)(ii) are the applications and
registration material corresponding to each item on Schedule
4(w)(ii) marked by an "*". The applicable Seller is listed in the
records of the appropriate U.S., state or foreign registry as the
sole current owner of record for each listed application or
registration. With respect to the listed applications, each such
application has been prosecuted in full compliance with all
applicable rules, policies and procedures of the United States
Patent and Trademark Office.
(iii) The Intellectual Property consists solely of items and
rights that are: (A) owned by the Sellers; (B) in the public domain;
or (C) rightfully used by the Sellers and their successors pursuant
to a valid license. The Sellers have all rights in the Intellectual
Property used in their publications or otherwise necessary for them
or the Purchaser to carry out the Business as currently conducted,
including without limitation, to the extent required to carry out
such activities, rights to make, use, exclude others from using,
reproduce, modify, adapt, create derivative works based on,
translate, distribute (directly and indirectly), transmit, display
and perform publicly, license, rent, lease, assign and sell the
Intellectual Property in all geographic locations and fields of use,
and to sublicense any or all such rights to third parties, including
the right to grant further sublicenses.
(iv) The conduct of the Business as conducted in the past did
not infringe (when conducted) and as currently conducted or as
currently contemplated to be conducted does not infringe (either
directly or indirectly, such as through contributory infringement)
any intellectual property right owned or controlled by any third
party. There is no pending or, to the Knowledge of the Sellers,
threatened claim, suit, arbitration or other adversarial proceeding
before any court, agency, arbitral tribunal, or registration
authority in any jurisdiction (collectively, "CLAIMS") (A) involving
the Intellectual Property owned by the Sellers, or, to the Knowledge
of the Sellers or the Stockholder, Intellectual Property licensed to
the Sellers or (B) alleging that the activities or the conduct of
the Business does or will infringe upon, violate or constitute the
unauthorized use of the intellectual property rights of any third
party or challenging the ownership, use, validity, enforceability or
registrability of any Intellectual Property. There are no
settlements, forbearances to ▇▇▇, consent judgments or orders or
similar obligations other than license agreements in the Ordinary
Course of Business which (a) restrict the Sellers' or the
Stockholder's rights to use any Intellectual Property, (b) restrict
the Business in order to accommodate a third party's intellectual
property rights or (c) permit third parties to use any Intellectual
Property. To the
45
Knowledge of the Sellers (x) all registered, granted or issued
patents, mask works, Trademarks and copyrights held by the Sellers
are valid, enforceable and subsisting and (y) there has been no
denial, refusal or similar action by any governmental authority with
respect to any patent, copyright or Trademark application filed by
or on behalf of the Sellers or the Stockholder. To the Knowledge of
the Sellers or the Stockholder, there is no unauthorized use,
infringement or misappropriation of any of Intellectual Property by
any third party, employee or former employee.
(v) Except as set forth on Schedule 4(w)(v), there are no
royalties, fees, honoraria or other payments payable by the Sellers
or to any person or entity by reason of the ownership, development,
use, license, sale or disposition of Intellectual Property, other
than salaries and sales commissions paid to employees and sales
agents in the Ordinary Course of Business.
(vi) No current or former partner, director, officer, or
employee of the Sellers (or any predecessor in interest) will, after
giving effect to the transactions contemplated herein, own or retain
any rights in or to any of Intellectual Property.
(vii) Schedule 4(w)(vii) sets forth (A) all licenses or other
agreements which Sellers have granted to or entered into with any
third party with respect to the Intellectual Property and (B) all
Intellectual Property licensed by Sellers from a third party other
than licenses for off the shelf software. The Sellers are not, nor
as a result of the execution or delivery of this Agreement, or
performance of the Sellers' obligations hereunder, will the Sellers
be, in violation of any material license, sublicense, agreement or
instrument to which the Sellers are a party or otherwise bound, nor
will execution or delivery of this Agreement, or performance of the
Sellers' obligations hereunder, cause the diminution, termination or
forfeiture of any of the Sellers' rights in Intellectual Property or
require the consent of any governmental authority or third party in
respect of any such Intellectual Property. To the Knowledge of the
Sellers and the Stockholder, each such license, sublicense,
agreement or instrument constitutes the valid and binding obligation
of all parties thereto, enforceable in accordance with its terms,
and, to the Knowledge of the Sellers and the Stockholder, there
exists no breach by any party thereto and no event or circumstance
which will result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default by the
Sellers thereunder.
(viii) The Sellers have taken reasonable measures to protect
the confidentiality of their Trade Secrets. To the Knowledge of the
Sellers
46
and the Stockholder, there has been no misuse or misappropriation of
any Trade Secret by any person or entity.
(ix) Schedule 4(w)(ix) hereto contains a complete list of (A)
all software libraries, compilers and other third-party software
sold with, incorporated into or used in the development of the
Software Programs and (B) all material software systems and
applications used by the Sellers in the operation of the Business
other than off the shelf software. Schedule 4(w)(ix) hereto lists
all license agreements by which the Sellers are bound for the use of
such software and, if any such software is not licensed, the basis
of the use of such software by the Sellers. All use of each such
software item by the Sellers have been in full compliance in all
material respects with the respective license agreement or other
right of use listed for such item on Schedule 4(w)(ix) hereto.
(x) Except as set forth on Schedule 4(w)(x), the Sellers have
not taken any action (or failed to take any action), conducted the
Business or used or enforced their Trademarks, in each case, in a
manner that would result in the abandonment, cancellation,
forfeiture, relinquishment or unenforceability of any of the
Trademarks and the Sellers have taken all reasonable steps to
protect their rights in and to each of such Trademarks and to
prevent the unauthorized use thereof by a third party.
(x) Books of Account; Investigations. Schedule 4(x) hereto
identifies all correspondence received from a Governmental Body in the past four
years relating to regulatory compliance reviews, audits or investigations.
Except as disclosed in Schedule 4(x) hereto, the Sellers have maintained their
books of account in accordance with GAAP applied on a consistent basis and the
same are true, correct and complete in all material respects.
(y) Governmental Consents. No consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Body on the part
of the Sellers is necessary in connection with the execution, delivery and
performance of this Agreement or any other agreement contemplated hereunder to
which either Seller is a signatory except with respect to the Permits.
(z) Customers. Schedule 4(z) contains an alphabetical list of all
customers or other Persons whose revenues collectively accounted for
approximately 88% of the combined gross revenues of the Sellers in fiscal year
2001 and 2002. The Sellers have not received any notice or other communication
(in writing or otherwise) that any customer or other Person identified in
Schedule 4(z) will cease dealing with the Sellers or the Purchaser or will
otherwise reduce the volume of business transacted by such Person with the
Sellers or the Purchaser below historical levels.
(aa) Returns. There is no general understanding that merchandise in
a material amount, in the aggregate, in the hands of any customer would be
returnable to Sellers. The net
47
amount of merchandise returned by customers to the Sellers during the course of
2000 and 2001 did not exceed $25,000 in either year. Sellers are not aware of
any reason for the future returns experience of Sellers to be materially
different from prior experiences.
(bb) Product Warranties.
(i) Sellers have not sold or supplied any goods, materials or
products which were, are or are likely to become faulty or defective
or which do not comply in all material respects with all warranties
expressly or impliedly made by Sellers in excess of $10,000 in any
calendar year or which contain any Intellectual Property for which
any required license has not been obtained or which infringes upon,
violates or misappropriates or conflicts with any patent, copyright,
trade secret or other proprietary right of any third party.
(ii) Schedule 4(bb) lists any standard form of terms and
conditions regarding warranty, remedy, liability, limitation or
indemnification matters ("PRODUCT WARRANTY") used in connection with
any product sold by Sellers in the last three years and Schedule
4(bb) identifies any Product Warranty for products sold in the last
three years which is materially less favorable to Sellers than such
standard terms.
(iii) No recall or post-sale notice or warning is pending or,
to the Knowledge of Sellers, threatened in connection with any
product or the Business and, to the Knowledge of Sellers, no basis
exists for such a recall, notice or warning.
(iv) To the Sellers' Knowledge, each product sold by the
Sellers is and has been, free of any design defect or failure to
warn and complies in all material respects with any applicable (i)
Laws or (ii) certification from any industry, testing, or standard
setting organization. Schedule 4(bb) lists, to the Knowledge of
Sellers, any claims for any injury, damage, loss or failure arising
in connection with a product, other than claims arising solely out
of any warranty, which within the last two years have been recorded
in amounts exceeding $10,000.
(cc) Full Disclosure. No financial statement, Exhibit or Schedule or
document required by this Agreement to be prepared or furnished by or on behalf
of the Sellers, the Stockholder or ▇▇. ▇▇▇▇ to the Purchaser in connection with
this Agreement or any agreement contemplated hereby or delivered pursuant hereto
contained or contains any material misstatement of fact or omits to state any
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Sellers, the Stockholder and ▇▇.
▇▇▇▇ shall notify the Purchaser promptly of the occurrence of any event or the
discovery of any fact which would make any of the foregoing incorrect.
48
(dd) Closing Conditions. The Sellers, the Stockholder and ▇▇. ▇▇▇▇
shall use their respective best efforts to comply with and satisfy all closing
conditions set forth in Section 7(a) and (b).
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER AND
GUARANTOR. The Purchaser and Guarantor, jointly and severally, hereby represent,
warrant and covenant to the Sellers as follows:
(a) Organization. Each of the Purchaser and the Guarantor is a
corporation duly organized and validly existing under the laws of the State of
Delaware and has all requisite power and authority to enter into this Agreement
and the agreements contemplated hereunder and to consummate the transactions
contemplated hereby.
(b) Litigation; Observance of Orders. There are no actions, suits or
proceedings pending or to the knowledge of the Purchaser or the Guarantor
threatened, nor to the knowledge of the Purchaser or the Guarantor is there any
basis therefor against or affecting the Purchaser or the Guarantor in any court
or before an arbitrator of any kind or before or by any Governmental Body, which
involve the possibility of materially and adversely affecting the transactions
contemplated by this Agreement or which in any way might adversely affect the
validity or enforceability of this Agreement or any other agreement or
instrument to which the Purchaser or the Guarantor is or is to be a party
relating to the transactions contemplated hereby.
(c) Enforceable Obligation; Due Authorization. The execution,
delivery and performance of this Agreement and all agreements, instruments and
documents to be delivered by the Purchaser and the Guarantor hereunder (i) are
within the power and authority of the Purchaser and the Guarantor, (ii) do not
require the consent or approval of or filing with any Governmental Body or any
other Person other than as otherwise provided herein and except for the Permits,
(iii) will not conflict with, result in the breach of, or constitute a Default
under, any of the terms, conditions or provisions of the certificate of
incorporation or By-laws of the Purchaser or the Guarantor, (iv) will not
violate any Laws (except with respect to the Permits) or Order of any
Governmental Body, and (v) will not conflict with, result in the breach of, or
constitute a Default under any material indenture, mortgage, deed of trust,
lease, agreement, contract or other instrument to which the Purchaser or the
Guarantor is a party or by which the Purchaser or the Guarantor or any of their
respective properties are bound. This Agreement and the other agreements,
documents and other instruments attached as Exhibits and Schedules hereto or
executed and delivered in connection herewith to which the Purchaser and/or the
Guarantor is a signatory have been duly authorized, executed and delivered by
the Purchaser and/or the Guarantor, as the case may be, and constitute the
legal, valid and binding obligations of the Purchaser and/or the Guarantor
enforceable in accordance with their terms, except that (x) such enforcement may
be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (y) the remedy of specific performance and
injunctive and other forms of equitable or legal remedies may be subject to
equitable defenses, equitable principles and to the discretion of the court
before which any proceeding therefor may be brought.
49
(d) Government Consents. No consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Body on the part
of the Purchaser or the Guarantor in connection with the execution, delivery and
performance of this Agreement or any other agreement contemplated hereunder to
which either is a signatory is required except with respect to the Permits.
(e) Closing Conditions. The Purchaser and the Guarantor shall use
their respective best efforts to comply with and satisfy all closing conditions
set forth in Section 7(a) and (c).
6. POST-CLOSING COVENANTS.
(a) Sharing of Data.
(i) The Purchaser shall have the right for a period of four
(4) years following the Closing Date to have reasonable access to
(i) the corporate Books and Records identified as part of paragraph
(d) of the Excluded Assets definition; and (ii) the work papers of
the Sellers' accountants relating to the operation of the Acquired
Assets prior to the Closing Date, in each case to the extent that
any of the foregoing is needed by the Purchaser in order to comply
with its obligations under applicable securities, Tax,
environmental, employment or other Laws. The Sellers shall have the
right for a period of four (4) years following the Closing Date to
have reasonable access to (i) the corporate Books and Records
identified as part of paragraph (i) of the Acquired Assets
definition, to the extent that any of the foregoing is needed by the
Sellers in order to comply with their obligations under applicable
securities, Tax, environmental, employment or other Laws, and (ii)
former employees of the Sellers who may be knowledgeable with
respect to the affairs of the Sellers, on a mutually convenient
basis and without cost to the Sellers, provided that any such access
to employees does not interfere with any such employee's performance
of his or her duties on behalf of, and obligations owed to, the
Purchaser. None of the Purchaser, the Sellers, the Stockholder or
▇▇. ▇▇▇▇ shall destroy any such items identified in this Section
6(a)(i) without first providing the other parties with the
opportunity to obtain or copy such items.
(ii) In addition to all files and documents required to be
provided pursuant to this Agreement or any other agreement to be
entered into in accordance herewith, promptly upon request by the
Purchaser made at any time following the Closing Date, Sellers shall
authorize the release to the Purchaser of all files pertaining to
the Acquired Assets held by any federal, state, country or local
authorities, agencies or instrumentalities.
50
(b) Enforcement of Insurance Claims; Maintenance of Insurance. Each
Seller hereby assigns to the Purchaser the right to pursue and enforce, and
hereby irrevocably appoints the Purchaser as its true and lawful
attorney-in-fact with full power in the name of and on behalf of such Seller for
the purpose of pursuing and enforcing any and all rights of such Seller under
any insurance policies of such Seller (other than those assigned to the
Purchaser) with respect to any occurrence, claim or loss which is the subject of
an indemnity obligation by the Sellers, the Stockholder and/or ▇▇. ▇▇▇▇ to the
Purchaser under Section 9(a) of this Agreement; provided, that the Purchaser may
not exercise such right or power unless such Seller fails, within 90 days after
such Seller becomes aware of any such occurrence, claim or loss (or such shorter
time period as may be necessary so as not to adversely effect any potential
claim), to pursue and enforce their rights under its insurance policies with
respect to such occurrence, claim or loss. The power of attorney conferred upon
the Purchaser by each Seller pursuant to this Section 6(b) is an agency coupled
with an interest and all authority conferred hereby shall be irrevocable, and
shall not be terminated by the dissolution or the liquidation of such Seller or
any other act of such Seller. Sellers agree to maintain, at Sellers' sole cost
and expense, for a period of three years following the Closing Date, the
Sellers' employee practices liability insurance policy.
(c) Cooperation.
(i) The Purchaser, on the one hand, and the Sellers, the
Stockholder and ▇▇. ▇▇▇▇, on the other hand, shall use their
respective best efforts to cooperate with each other and shall cause
their respective officers, employees, agents, auditors and
representatives to cooperate with each other after the Closing to
ensure the orderly transition of the Business to the Purchaser, to
promote the sharing of data contemplated by Section 6(a) hereof, and
to minimize any disruption to the Business that might result from
the transaction contemplated hereby.
(ii) From and after the Closing Date, each party shall fully
cooperate with the others in the defense or prosecution of any
litigation or proceeding already instituted or which may be
instituted hereafter against or by such other Party relating to or
arising out of the conduct of the Business prior to or after the
Closing Date (other than litigation among the Sellers, the
Stockholder, ▇▇. ▇▇▇▇, the Purchaser or their Affiliates arising out
of the transactions contemplated by this Agreement or any other
agreement entered into in accordance herewith). The party requesting
such cooperation shall pay the reasonable out-of-pocket expenses
incurred in providing such cooperation (including reasonable legal
fees and disbursements) by the party providing such cooperation and
by its officers, directors, employees and agents, but shall not be
responsible for reimbursing such party or its officers, directors,
employees and agents for their time spent in such cooperation.
(d) Employees. Effective as of the Closing Date, the Sellers shall
terminate the employment of each employee listed on Schedule 6(d)-A hereto and
the Purchaser shall offer
51
employment to each such employee who is actively at work or on short-term
disability leave as of the Closing Date as identified on Schedule 6(d)-B, such
employment to be terminable at the will of the Purchaser or as otherwise agreed
to between the Purchaser and each such employee. Except as otherwise
specifically required by applicable law, the Purchaser shall not have any
obligation to employ or offer employment to any employees of the Business other
than as provided in the preceding sentence; provided that the Purchaser agrees
that it will not permanently close and cease all operations at the Plant prior
to December 31, 2003. The Purchaser shall have complete discretion to change any
of the terms or conditions of employment, compensation or benefits relating to
any such employee at any time. The parties hereto do not intend to create any
third party beneficiaries with respect to any employee as a result of the
provisions herein and specifically hereby negate any such intention. The Sellers
hereby consent to the hiring of such employees by the Purchaser and waive, with
respect to the employment by the Purchaser of such employees identified on
Schedule 6(d)-B (employees accepting employment with the Purchaser, "CONTINUING
EMPLOYEES"), any claims or rights the Sellers may have against the Purchaser or
any such employee under a noncompete, confidentiality or Sellers Employment
Agreement.
(e) Employee Benefit Matters.
(i) Welfare Plans:
A. Benefits Continuation. Except as provided in this
Section 6(e), effective as of the Closing Date, the Purchaser shall
cause each Continuing Employee to be covered by the Purchaser's
welfare benefit plans to the extent that they are otherwise eligible
therefor.
B. Disability and Certain Other Benefits. The Sellers
shall be liable for claims for benefits (other than for short-term
disability, workers' compensation and medical (including vision care
and prescription drugs) and dental benefits, which are addressed
below) by employees of the Business (active or inactive) and by
terminated employees previously employed in the Business under the
Sellers' Plans arising out of occurrences prior to the Closing Date.
In this regard, but not by way of limiting the foregoing, the
Sellers shall be liable for the long-term disability benefits for
those employees of the Business receiving or qualified to receive
long-term disability benefits under the Sellers' disability programs
as of the Closing Date, including without limitation those employees
of the Business in the long-term disability elimination period
(which employees shall receive long-term disability benefits from
the Sellers upon the conclusion of the applicable elimination
period).
C. Workers' Compensation Benefits. The Purchaser shall
not be liable for claims for Worker's Compensation in respect of
events occurring prior to Closing or with respect to payments due on
or prior to the Closing Date.
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D. Short-Term Disability Benefits. The Purchaser shall
not be liable for, and the Sellers, the Stockholder and ▇▇. ▇▇▇▇
shall jointly and severally indemnify (in accordance with the
procedural requirements of Section 9 but provided that the Basket
and Indemnification Cap, each as defined therein, shall not apply)
the Purchaser against, claims for short-term disability benefits
under the Sellers' Plans by employees of the Business (active or
inactive) arising from events prior to Closing or with respect to
payments due on or prior to the Closing Date.
E. Medical and Dental Benefits. The Purchaser shall not
be liable for, and the Sellers, the Stockholder and ▇▇. ▇▇▇▇ shall
jointly and severally indemnify (in accordance with the procedural
requirements of Section 9 but provided that the Basket and
Indemnification Cap, each as defined therein, shall not apply) the
Purchaser against, claims for medical (including vision care and
prescription drugs) and dental benefits incurred by employees of the
Business (active or inactive) and their respective covered
dependents with respect to services and treatment rendered on or
prior to the Closing Date under the terms of the Sellers' Welfare
Plans.
F. COBRA. The Sellers shall be responsible for providing
benefits pursuant to Section 4980B of the Code to employees of the
Business who cease to be employed by the Sellers on or prior to the
Closing Date.
G. Limitation on the Purchaser's Liability. The Sellers
shall be responsible for providing all benefits under all welfare
plans, including without limitation, all Plans, with respect to all
of their employees that are not Continuing Employees, which shall be
Retained Liabilities. The Purchaser shall have no liability with
respect to any claims for benefits under any of the Sellers' Plans,
and the Sellers, the Stockholder and ▇▇. ▇▇▇▇ shall jointly and
severally indemnify (in accordance with the procedural requirements
of Section 9 but provided that the Basket and Indemnification Cap,
each as defined therein, shall not apply) and hold the Purchaser
harmless from any claims under any of the Sellers' Plans, for
▇▇▇▇▇▇▇'▇ Compensation (or as otherwise described in this Section
6(e)).
(ii) Multiemployer Plans. Neither the Purchaser nor any of its
Affiliates shall assume any obligation or liability imposed on the
Sellers or any of their Subsidiaries under Section 4201 of ERISA.
(iii) The parties hereto do not intend to create any
third-party beneficiary rights respecting any current or former
employee as a result of the provisions set forth in this Section
6(e) and specifically hereby negate
53
any such intention. No provision in this Section 6(e) shall increase
the rights, benefits or remedies of any employee under any Plan of
the Sellers or the Purchaser.
(f) Tax Matters.
(i) The Sellers and the Stockholder shall duly and timely file
or cause to be filed with the applicable Taxing Authorities all Tax
Returns that are required to be filed by or on behalf of the Sellers
or that include or relate to the Acquired Assets to the extent that
such Tax Returns relate to Pre-Closing Periods, which Tax Returns
shall be true, complete and correct in all material respects, and
shall duly and timely pay in full or cause to be paid in full all
Taxes that are due and payable on or before the Closing Date and
could result in an Encumbrance on any Acquired Asset, and has
recorded a provision on the books and records of the Sellers in
accordance with GAAP for the payment of all such Taxes that are not
due and payable on or before the Closing Date. The Sellers shall
provide to the Purchaser true, complete and correct copies of such
Tax Returns promptly following their filing and shall promptly
provide all correspondence, reports and documents relating to any
Tax proceeding with respect thereto. The Sellers shall duly and
timely comply with all applicable Laws relating to the allocation or
withholding of Taxes and the reporting and remittance thereof to the
applicable Taxing Authorities.
(ii) The Sellers, the Stockholder and ▇▇. ▇▇▇▇ shall jointly
and severally indemnify (in accordance with the procedural
requirements of Section 9 but provided that the Basket and
Indemnification Cap, each as defined therein, shall not apply) the
Purchaser and its Affiliates (collectively, the "TAXPAYER"), and
hold the Taxpayer harmless, on an after-Tax basis, from and against
any (x) Taxes with respect to any Pre-Closing Periods for which the
Taxpayer is or may be liable, (y) the effect, if any, on the
Taxpayer in any period that ends after the Closing Date of an
adjustment with respect to a period on or before the Closing Date
and (z) fees and expenses (including, without limitation, reasonable
attorneys' fees) incurred by the Purchaser or its Affiliates in
connection therewith or in enforcing its rights or collecting any
amounts due hereunder. This indemnity shall apply notwithstanding
any investigation made by the Purchaser in connection with the
transactions contemplated by this Agreement or, its receipt,
examination, filing of or commenting on any Tax Return, and shall be
separate and independent of any other indemnity between the parties
hereto.
A. The Purchaser shall promptly forward to the Sellers a
copy of all written communications from any Governmental Body
received by the Taxpayer relating to any Pre-Closing Periods. The
Sellers
54
shall promptly forward to the Purchaser a copy of all written
communications from any Governmental Body received by the Sellers or
the Stockholder relating to any Pre-Closing Periods for which the
Taxpayer is or may be liable or which would become a claim on any of
the Acquired Assets.
B. Any Taxes for a period which includes but does not
end on the Closing Date shall be allocated between the period before
the Closing Date and the balance of the period in accordance with
this Section 6(f)(ii)(B). To the extent permitted under applicable
Law, the parties shall elect to treat the Tax period as ending at
the close of business on the Closing Date. Where applicable Law does
not permit such an election to be made, the taxable income or other
Tax base for the entire period shall be allocated between the period
on or before the Closing Date and the balance of the period on the
basis of an interim closing of the books at the close of business on
the Closing Date, except that exemptions, allocations and deductions
calculated on an annual basis shall be apportioned on the basis of
the relative number of days in the period on or before the Closing
Date and in the balance of the period.
(iii) The Sellers and the Purchaser shall cooperate with each
other by executing or causing to be executed any required documents
and by making available to the other, all books and records relating
to the Acquired Assets (including work papers, records and notes of
any kind) at all reasonable times, for the purpose of allowing the
appropriate party to complete its Tax Returns, respond to, defend or
prosecute any Tax Proceeding, make any determination required under
this Agreement (including, but not limited to, determinations as to
which period any asserted Tax liability is attributable) and verify
issues.
(iv) The Purchaser shall be responsible for any Taxes with
respect to all cash in vending machines as of the Closing Date,
which is included as item (c) in the definition of Acquired Assets.
(g) Notices to Employees, Customers and Vendors. The Sellers shall
deliver such notices to employees as shall be required of the Sellers by any
applicable Laws or by any agreements (including any notices required to be given
to any union, or similar representative body). The Sellers shall deliver such
notices to customers and vendors of the Sellers, if and as reasonably requested
by the Purchaser, in such form and substance as provided by the Purchaser,
informing such customers and/or vendors of the sale of the Business and the
Acquired Assets as contemplated hereunder.
(h) Sales Tax Waivers. The Sellers and, if applicable, the
Stockholder, shall give all required notices of the transfer of the Acquired
Assets to applicable taxing authorities. If all appropriate tax clearance
certificates are not available with respect to Taxes for which the
55
Sellers, or if applicable, the Stockholder, are or would be liable hereunder,
the Closing shall not be delayed, but the Sellers and, if applicable, the
Stockholder shall retain any liability for such Taxes.
(i) Bulk Sales. The Purchaser hereby waives compliance by the
Sellers with the provisions of the "bulk sales" laws or any similar provision of
law of any state insofar as the same may be applicable to the transactions
contemplated by this Agreement. The Sellers, the Stockholder and ▇▇. ▇▇▇▇ each
agree, jointly and severally, to indemnify and hold the Purchaser harmless from
and against (in accordance with the procedural requirements of Section 9 but
provided that the Basket and Indemnification Cap, each as defined therein, shall
not apply) any and all liability or claims arising out of such waiver (other
than any amounts in respect of Assumed Liabilities that otherwise would have
been owed by the Purchaser regardless of such waiver), and, upon receipt of
written notice from the Purchaser of the existence thereof, promptly to take all
necessary action to satisfy such claim or liability, including but not limited
to removing or causing to be removed any Encumbrance which may be placed on any
of the Acquired Assets by a creditor of the Sellers by reason of such waiver.
(j) Use of Name. The Sellers, the Stockholder and ▇▇. ▇▇▇▇ agree, on
their/its own behalf and on behalf of their/its Affiliates, from and after the
Closing Date, not to use any trademark or name previously or currently used by
any of the Sellers in connection with the Business, or any derivation thereof.
Each Seller agrees on its behalf, and each Seller, the Stockholder and ▇▇. ▇▇▇▇
agrees on behalf of its/their Affiliates, to change its corporate name and any
names and marks under which Sellers and such Affiliates do business promptly
after the Closing Date so as not to include the words "▇▇▇▇" in connection with
the word "Vending" or the word "Novelty," or any name or ▇▇▇▇ similar thereto or
similar to any name or marks assigned hereunder or otherwise indicative of the
Business, and shall deliver promptly after the Closing evidence reasonably
satisfactory to the Purchaser of such change of name for filing promptly after
the Closing Date with the Secretary of State of New York, and shall file
promptly after receipt of evidence of such change of name, such change of name
in all states in which it is qualified to do business. Notwithstanding the
above, (i) ▇▇▇▇ Canada shall not be required to change its corporate name or any
names or marks under which ▇▇▇▇ Canada does business, and (ii) if, and only if,
the Purchaser, its Affiliates and any subsequent purchaser of all or
substantially all of the Acquired Assets or capital stock of the Purchaser
ceases to do business and abandons using the name "▇▇▇▇" in connection with the
word "Vending" or the word "Novelty," then the provisions of this Section 6(j)
shall terminate and ▇▇. ▇▇▇▇ shall then be free to resume using the names "▇▇▇▇
Vending" and "▇▇▇▇ Novelty."
7. CONDITIONS TO CLOSING; CLOSING DELIVERIES.
(a) Conditions to All Parties' Obligations. The respective
obligations of the parties hereto to consummate the Closing shall be subject to
the satisfaction (or waiver by each party) as of the Closing of the following
conditions:
(i) Governmental Approvals. Any notice to or approvals of any
federal, state or foreign governmental authority with respect to the
56
transactions contemplated hereby shall have been either filed or
received, except that the Sellers shall not be required to effect
the transfer of the Permits as a condition to Closing.
(ii) No Order. No federal, state or foreign governmental
authority or other agency or commission or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) which remains in
effect, and which has the effect of making the transactions
contemplated hereby illegal or otherwise prohibiting consummation of
the transactions contemplated by this Agreement.
(iii) Indemnity Escrow Agreement. Each party thereto shall
have entered into the Indemnity Escrow Agreement.
(iv) Transitional Services Agreement. Each party thereto shall
have executed and delivered the Transitional Services Agreement.
(v) Plant Lease. Each party thereto shall have executed and
delivered the Plant Lease, and each such Person shall have taken all
other actions contemplated by the Plant Lease or in connection
therewith to be taken by them prior to the Closing.
(vi) Purchaser's Employment Agreements. Each party thereto
shall have executed and delivered the respective Purchaser's
Employment Agreements.
(vii) Replacement Letters of Credit. The Purchaser shall have
caused its lenders to issue letters of credit sufficient to back any
of Sellers' letters of credit that were issued to secure Acquired
Assets or Assumed Liabilities, that are outstanding as of the
Closing, and that cannot be terminated without an additional letter
of credit so issued by the Purchaser.
(viii) Schedule 2(d). The parties shall have agreed upon a
final allocation of the Purchase Price to be set forth on Schedule
2(d).
(b) Conditions to the Purchaser's and Guarantor's Obligations. The
obligations of the Purchaser and the Guarantor to consummate the Closing are
subject to the satisfaction (or waiver by the Purchaser and the Guarantor) as of
the Closing of the following conditions:
(i) Representations, Warranties and Covenants. The
representations and warranties of the Sellers, the Stockholder
and/or ▇▇. ▇▇▇▇ made in this Agreement which are qualified by
materiality shall be true and correct in all respects, and those
which are not qualified as to materiality shall be true and correct
in all material respects, as of the date
57
of this Agreement and, except as specifically contemplated by this
Agreement, on and as of the Closing Date, as though made on and as
of the Closing Date, and the Sellers, the Stockholder and/or ▇▇.
▇▇▇▇ shall have performed or complied with, or shall have caused to
be performed or complied with, in all materials respects all
obligations and covenants required by this Agreement to be performed
or complied with by the Sellers, the Stockholder and/or ▇▇. ▇▇▇▇ or
any Affiliate of theirs by the time of the Closing; and the
Purchaser shall have received from the Sellers, a certificate dated
the Closing Date and signed by an authorized officer of each Seller
confirming the foregoing.
(ii) Other Documents and Instruments to be delivered by the
Sellers and the Stockholder. The Sellers, the Stockholder and ▇▇.
▇▇▇▇ shall have delivered all certificates, agreements and other
documents and instruments required to be delivered by them on or
before the Closing pursuant to this Agreement, and such other
Documents and instruments as the Purchaser may reasonably request,
including, without limitation, the following:
A. Good Standing Certificate. A certificate of the
appropriate officials, dated the Closing Date or a date reasonably
prior thereto, certifying as to (A) the due organization and good
standing (including tax good standing (to the extent obtainable with
proper notice to the applicable jurisdiction)) of each Seller in its
jurisdiction of organization and (B) the qualification to do
business and the good standing (including tax good standing (to the
extent obtainable with proper notice to the applicable
jurisdiction)) of each Seller in each jurisdiction wherein the
conduct of its business or the ownership or operation of assets
requires such Seller to maintain qualification as a foreign
corporation.
B. Opinion of the Sellers', the Stockholder's and ▇▇.
▇▇▇▇'▇ Counsel. An opinion from ▇▇▇▇▇▇▇▇ Brog Leinwand ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C., counsel for the Sellers, the Stockholder and
▇▇. ▇▇▇▇, at the expense of the Sellers, dated as of the Closing
Date, in form and substance reasonably satisfactory to the
Purchaser.
C. Consents to Transaction. Written irrevocable
consents, in form and substance satisfactory to the Purchaser, to
the execution and consummation of this Agreement or waivers of
Default with respect thereto from all parties to the agreements
identified in Schedule 4(l)(ii) hereto.
D. Resolutions. Certified copies of resolutions duly
adopted by the Board of Directors of each Seller authorizing the
execution, delivery and performance of this Agreement and each of
the
58
Agreements contemplated hereby and the consummation of the
transaction contemplated hereby and thereby and all such resolutions
shall not have been amended or revoked and shall remain in full
force and effect.
E. ▇▇▇▇ of Sale and other Transfer Documents. A ▇▇▇▇ of
sale for the Acquired Assets, assignments of Patents, tradenames,
trademarks, copyrights and other Intellectual Property, and such
other transfer documents as are reasonably requested by the
Purchaser, each in form and substance reasonably acceptable to the
Purchaser.
F. Payoff Letters. A letter from each of the Sellers'
lenders evidencing the payoff of all of Sellers' obligations to such
lender and the discharge of all Encumbrances held by such lender on
the Acquired Assets, including without limitation the payoff of all
of the Sellers' obligations under and pursuant to (1) the Sellers'
credit facility with Merchants Bank, (2) the Promissory Note, dated
March 8, 1999, between ▇▇▇▇ Vending and Grundy County National Bank
in the original principal amount of $152,179.30, (3) the Promissory
Note, dated March 13, 2000, between ▇▇▇▇ Vending and Grundy County
National Bank in the original principal amount of $164,980.97, and
(4) that certain purchase order number 113888-000, dated January 1,
2003, pursuant to which ▇▇▇▇ Vending purchased from Rayco
Manufacturing Co., Inc. one thousand (1,000) Microvend meters for
sticker machines for a total purchase price of $97,000.
(iii) No Material Adverse Change Since December 31, 2001.
There have been no changes since December 31, 2001 with respect to
the Sellers, the Business or the capital markets which could have a
Material Adverse Effect on the Sellers or the Business.
(iv) Financing. The Purchaser shall have obtained on terms and
conditions satisfactory to it all of the financing it needs in order
to consummate the transactions contemplated hereby and fund the
working capital requirements of the Business after the Closing, and
any applicable consents from lenders with respect to the Purchaser's
existing financing arrangements necessary in connection with the
consummation of the transactions contemplated hereby.
(v) Year 2002 Audited Financials. The Purchaser shall have
received a true and complete copy of the Year 2002 Audited
Financials.
(vi) Schedule 4(z). No later than ten (10) business days prior
to the Closing Date, the Purchaser shall have received from the
Sellers a revised version of (A) Schedule 4(z) that identifies the
specific revenues associated with each of the customers identified
on the version of
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Schedule 4(z) delivered by the Sellers to the Purchaser on the date
of this Agreement, and (B) each other Schedule to this Agreement
that contains a reference to the Customer Contracts, revised only to
the extent necessary to list the specific Customer Contracts
referred to therein.
(vii) Spousal Consent. The Purchaser shall have received all
Spousal Consents.
(viii) Estoppel Certificates. The Purchaser shall have
obtained an estoppel certificate with respect to each of the Leases,
dated no more than thirty (30) days prior to the Closing Date, from
the landlord under such Lease, substantially in the form annexed as
Exhibit F hereto.
(ix) Non-competition Agreement. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
entered into a non-competition agreement with the Purchaser, in the
form annexed to this Agreement as Exhibit G.
(x) Insurance. The Sellers shall have provided to the
Purchaser evidence of the extension of Sellers' employee practices
liability insurance for a period of three years following the
Closing Date, and naming the Purchaser as an additional insured.
(xi) Name Change. The Sellers shall have provided to the
Purchaser copies of amendments to their respective certificates of
incorporation and any other documentation necessary for Sellers to
change their respective corporate names in accordance with Section
6(j) hereof, and so that the Purchaser may begin using the name
"▇▇▇▇ Vending, Inc." as of the Closing Date.
(c) Conditions to the Sellers, the Stockholder's and ▇▇. ▇▇▇▇'▇
Obligations. The obligations of the Sellers, the Stockholder and ▇▇. ▇▇▇▇ to
consummate the Closing are subject to the satisfaction (or waiver by each of the
Sellers and the Stockholder) as of the Closing of the following conditions:
(i) Representations, Warranties and Covenants. The
representations and warranties of the Purchaser and the Guarantor
made in this Agreement which are qualified by materiality shall be
true and correct in all respects, and those which are not qualified
as to materiality shall be true and correct in all material
respects, as of the date of this Agreement and on and as of the
Closing, as though made on and as of the Closing Date. The Purchaser
and the Guarantor shall have performed or complied in all material
respects with all obligations and covenants required by this
Agreement to be performed or complied with by the Purchaser and the
Guarantor by the time of the Closing; and the Sellers and the
Stockholder shall have received from the Purchaser and the Guarantor
a certificate
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dated the Closing Date and signed by an authorized officer of each
of the Purchaser and the Guarantor confirming the foregoing.
(ii) Certificate of Good Standing. The Sellers shall have
received from each of the Purchaser and the Guarantor a certificate
issued by the appropriate governmental authority of the jurisdiction
of incorporation of the Purchaser and the Guarantor evidencing their
respective good standing in such jurisdiction as of a date not more
than twenty days prior to the Closing Date.
(iii) Resolutions. The Sellers shall have received from the
Purchaser and the Guarantor certified copies of resolutions duly
adopted by the Board of Directors of each of the Purchaser and the
Guarantor authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
hereby, and all such resolutions shall not have been amended or
revoked and shall remain in full force and effect.
(iv) Payment. The Purchaser shall have paid the Purchase Price
to the Sellers, and the Indemnity Escrow Amount to the Escrow Agent,
each as contemplated by Section 2(c) hereof.
(v) Non-competition Agreement. The Purchaser shall have
entered into a non-competition agreement with ▇▇▇▇ Canada, in the
formed annexed to this Agreement as Exhibit H.
8. SIMULTANEOUS TRANSACTIONS. All transactions to be effected under this
Agreement at the Closing shall be deemed to occur in the order herein specified,
if any, but shall occur nearly simultaneously and no such transaction shall be
deemed to have occurred unless all such transactions have occurred. All
documents required to be delivered at the Closing by any party hereunder,
including this Agreement, shall be deemed initially delivered in escrow. No such
document shall be released therefrom until all documents have been delivered in
escrow and payment received, whereupon all shall be deemed released together.
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9. INDEMNIFICATION.
(a) Indemnification by the Sellers, the Stockholder and ▇▇. ▇▇▇▇.
The Sellers, the Stockholder and ▇▇. ▇▇▇▇, jointly and severally, shall
indemnify and hold harmless the Purchaser from and against, without duplication,
all costs, fees, liabilities, losses, Taxes, charges, claims, expenses and
damages, including, without limitation, reasonable legal fees and expenses (both
those incurred in connection with the defense or prosecution of the
indemnifiable claim and those incurred in connection with the enforcement of
this provision) and costs of investigation, actually incurred or as and when
actually paid by the Purchaser, its agents or Affiliates, or any of their
respective subsidiaries or Affiliates, or any of their respective officers,
directors or employees, (collectively "PURCHASER'S LOSSES") as a result of:
(i) any misrepresentation contained in or breach of or failure
to perform any representation, warranty, covenant or agreement of
the Sellers, the Stockholder or ▇▇. ▇▇▇▇ contained in this Agreement
or in any written agreement, document, instrument, certification,
Schedule, Exhibit or writing delivered pursuant hereto, or in
connection herewith, including, without limitation, the Plant Lease;
(ii) any Retained Liabilities;
(iii) the failure to pay any amount payable to Purchaser based
upon the Final Adjusted Working Capital as provided in Section 2(e);
(iv) the actual or threatened commencement of any proceeding,
suit or action against the Sellers, the Purchaser or any Affiliate
thereof, or any director, officer or employee of any of them,
arising out of actions taken, or omitted to be taken, or state of
facts existing, prior to the Closing, which, if determined adversely
thereto (regardless of the actual determination thereof) would
result in a Purchaser Loss which is indemnifiable under the
provisions of this Section 9(a) (any such pending or threatened suit
or action being a "PURCHASER'S COVERED ACTION"); and/or
(v) any and all actions, suits, proceedings, claims or demands
incident to any of the foregoing indemnifications.
(b) Indemnification by the Purchaser. The Purchaser agrees to
indemnify and hold harmless the Sellers, the Stockholder and ▇▇. ▇▇▇▇ from and
against, without duplication, all costs, losses, fees, liabilities, Taxes,
charges, claims, expenses and damages, including reasonable legal fees and
expenses (both those incurred in connection with the defense or prosecution of
the indemnifiable claim and those incurred in connection with the enforcement of
this provision) and costs of investigation, as and actually incurred or as and
actually paid by the Sellers, the Stockholder or ▇▇. ▇▇▇▇ (collectively
"SELLERS' LOSSES") as a result of:
62
(i) any misrepresentation contained in or breach of or failure
to perform any representation, warranty, covenant or agreement of
the Purchaser contained in this Agreement or in any written
agreement, document, instrument, certification, Schedule, Exhibit or
writing delivered pursuant hereto, or in connection herewith,
including, without limitation, the Plant Lease;
(ii) any Assumed Liabilities;
(iii) the failure to pay any amount payable to Sellers based
upon the Final Adjusted Working Capital as provided in Section 2(e);
(iv) the commencement or threatened commencement by a third
party of any proceeding, suit or action against the Sellers or the
Stockholder which is not indemnifiable by the Sellers, the
Stockholder and ▇▇. ▇▇▇▇, pursuant to Section 9(a) above, and which
is based upon clause 9(b) above or the operation of the Business and
Acquired Assets by the Purchaser after the Closing Date, which, if
determined adversely to them (regardless of the actual determination
thereof) would result in a Sellers Loss (any such pending or
threatened suit or action being a "SELLERS' COVERED ACTION" and
together with a "PURCHASER'S COVERED ACTION", a "COVERED ACTION");
and/or
(v) any and all actions, suits, proceedings, claims or demands
incident to any of the foregoing indemnifications.
(c) Loss Indemnity Procedure.
(i) Upon learning of the commencement of a Covered Action or
the actual receipt by the party claiming a right of indemnification
of information relating to the purported existence of facts or
circumstances which could result in the commencement of a Purchaser
or Sellers' Covered Action or other incurrence of a Purchaser or
Sellers Loss, the party claiming the right of indemnification (the
"INDEMNIFIED PARTY") shall promptly, but no later than fifteen (15)
days after learning of such commencement or receipt, give notice
thereof, with reasonable specificity of the facts as then known (the
"INDEMNITY NOTICE"), to the party asserted to have the
indemnification obligation (the "INDEMNIFYING PARTY"); provided,
however, failure to give timely notice shall not release the
Indemnifying Party of its obligations hereunder except if, and only
to the extent that, the Indemnifying Party suffers actual prejudice
as a proximate result of such failure.
(ii) The Indemnifying Party shall have the right to assume the
defense of any such Covered Action only by giving written notice
(the
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"ASSUMPTION NOTICE") to the Indemnified Party within 20 days after
the Indemnity Notice has been given, which Assumption Notice shall
state that (A) it agrees that the claimant is entitled to
indemnification hereunder; and (B) it agrees or they agree to assume
the defense thereof in the name and on behalf of the Indemnified
Party with counsel reasonably satisfactory to the Indemnified Party,
in either event at the sole cost and expense of the Indemnifying
Party; provided, however:
(x) all such costs and expenses of the foregoing counsel, if
not paid by the Indemnifying Party and instead paid by the
Indemnified Party shall be Losses indemnifiable by the Indemnifying
Party under Section 9(a) or (b), as the case may be,
(y) the Indemnified Party, notwithstanding the timely delivery
of an Assumption Notice, may participate in such Covered Action
through counsel separately selected and paid for by the Indemnified
Party, and
(z) if no Assumption Notice complying with subclauses (A) and
(B) above is timely given, or if within twenty (20) days after the
Indemnity Notice the Indemnifying Party gives written notice to the
Indemnified Party disputing its obligation hereunder with respect to
such Covered Action, or if despite the giving of the Assumption
Notice the defendants in any Purchaser's Covered Action or Sellers'
Covered Action, as the case may be, include both the Indemnified
Party and the Indemnifying Party, and the Indemnified Party shall
have reasonably concluded that there may be legal defenses available
to it which are different from or additional to those available to
the Indemnifying Party, or if there is a conflict of interest which
would prevent counsel for the Indemnifying Party from also
representing the Indemnified Party, or if the amount claimed in the
Purchaser's Covered Action or Sellers' Covered Action, as the case
may be, is subject to the Indemnification Cap and, together with all
other claims previously made for indemnification hereunder to which
the Indemnification Cap may apply, such claims, in the aggregate,
exceed the Indemnification Cap, or if the amount claimed in the
Covered Action is subject to the Basket, and together with all other
claims for indemnification previously made hereunder to which the
Basket may apply such claims in the aggregate are less than the
Basket, then the Indemnified Party in each of the foregoing cases
shall have the right to select one separate counsel to conduct the
defense of such action on its behalf, and all such costs and
expenses shall be paid by the Indemnifying Party and, if paid by the
Indemnified Party, shall be Purchaser's Losses or Sellers' Losses
indemnifiable by the Indemnifying Party under Subsection 9(a) or
(b), as the case may be (subject however to the Basket and the
Indemnification Cap, as defined below). The Indemnified Party may
take such action with respect to a Purchaser or Sellers' Covered
Action as it may deem appropriate to protect against further damage
or default, including obtaining an extension of time to answer the
complaint or other pleading or filing an answer thereto.
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(iii) Where the Sellers, the Stockholder or ▇▇. ▇▇▇▇ are the
Indemnifying Party, the Sellers, the Stockholder and ▇▇. ▇▇▇▇ shall
not consent to the entry of any judgment or enter into any
settlement without the written consent of the Purchaser, which shall
not be unreasonably withheld or delayed. Where the Purchaser is the
Indemnifying Party, the Purchaser shall not consent to the entry of
any judgment or enter into any settlement without the written
consent of the Sellers, the Stockholder and ▇▇. ▇▇▇▇, which consent
will not be unreasonably withheld or delayed.
(d) Payment by Indemnified Party. The Indemnifying Party shall be
entitled to receive payment from the Indemnified Party of an amount equal to the
Tax reduction or refund actually realized, or insurance proceeds actually paid
to the Indemnified Party, solely as a result of the Indemnified Party having
incurred such Sellers or Purchaser Loss, provided that the Indemnifying Party
shall have paid to the Indemnified Party the full amount of such Purchaser or
Sellers Loss. Nothing herein shall obligate the Indemnified Party, in the
exercise of his/its good faith reasonable business judgment, or that of its
direct or indirect parent, to make any claim for a Tax reduction or refund or
insurance recovery.
(e) Duration of Indemnification. Liability for indemnification
hereunder shall expire as provided in Section 9(h) below unless the Purchaser
gives written notice prior to such date of expiration to the Sellers of a
Purchaser Loss or a Purchaser's Covered Action (setting forth in reasonable
detail the specific facts and circumstances then known and pertaining thereto).
In any of such events, such liability shall survive until such Purchaser Loss or
Purchaser's Covered Action is finally determined and any indemnification payment
due with respect thereto or with respect to a Purchaser Loss is made.
(f) Limitations.
(i) Notwithstanding anything to the contrary contained in this
Section 9, (A) the Sellers, the Stockholder and ▇▇. ▇▇▇▇ shall not
be obligated to pay in the aggregate any amounts in respect of
Purchaser's Losses in excess of the Purchase Price (the
"INDEMNIFICATION CAP") and (B) the Purchaser shall not be obligated
to pay in the aggregate any amounts in respect of Sellers' Losses in
excess of the Indemnification Cap. Notwithstanding the foregoing and
Sections 9(f)(ii) and 9(f)(iii), the Indemnification Cap and the
Basket (except as otherwise explicitly provided below in this
Section 9(f)(i)) shall not apply to obligations to pay Purchaser's
Losses or Sellers' Losses (as applicable) in respect of Unlimited
Purchaser Obligations or Unlimited Sellers Obligations (each as
hereinafter defined). For purposes hereof, (A) "UNLIMITED SELLERS
OBLIGATIONS" shall mean Purchaser's Losses attributable to or
resulting from (1) fraud of the Sellers, the Stockholder or ▇▇.
▇▇▇▇, (2) failure by the Sellers, the Stockholder and/or ▇▇. ▇▇▇▇ to
perform any of the covenants, agreements or obligations to be
performed by them under this Agreement, provided that, with respect
to any intentional or knowing
65
failure to so perform, neither the Indemnification Cap nor the
Basket shall apply, but that with respect to any failure to so
perform that is neither intentional nor knowing, only the
Indemnification Cap (and not the Basket) shall apply, (3) failure to
satisfy any Retained Liability, (4) any intentional or knowing
breach or misrepresentation of any representation or warranty
contained in Section 4, (5) any breach or misrepresentation of any
representation or warranty contained in Section 4(a) (Organization),
other than the second sentence of such Section 4(a), subclauses (i),
(ii) or (iii) of Section 4(b) (Enforceable Obligation; Due
Authorization), subclauses (i), (ii), (iv) or (v) of Section 4(e)
(Title to Acquired Assets; Condition; Leased Equipment; Inventory),
and Sections 4(h) (Tax Matters) or 12 (Brokers), or (6) payments of
any amount to Purchaser pursuant to Sections 6(e)(Employee Benefit
Matters), 6(f)(Tax Matters), or 9(a)(iii), and (B) "UNLIMITED
PURCHASER OBLIGATIONS" shall mean Sellers' Losses attributable to or
resulting from (1) fraud of the Purchaser, (2) failure by the
Purchaser to perform any of the covenants, agreements or obligations
to be performed by it under this Agreement, provided that, with
respect to any intentional or knowing failure to so perform, neither
the Indemnification Cap nor the Basket shall apply, but that with
respect to any failure to so perform that is neither intentional nor
knowing, only the Indemnification Cap (and not the Basket) shall
apply, (3) failure to satisfy any Assumed Liability, (4) any
intentional or knowing breach or misrepresentation of any
representation or warranty contained in Section 5, (5) any breach or
misrepresentation of any representation or warranty contained in
Section 5(a) (Organization), subclauses (i), (ii) or (iii) of
Section 5(c) (Enforceable Obligation; Due Authorization) or Section
12 (Brokers), or (6) payments of any amount to the Sellers, the
Stockholder and ▇▇. ▇▇▇▇ pursuant to Section 9(b)(iii).
(ii) Notwithstanding anything to the contrary contained in
this Section 9, neither the Sellers nor the Stockholder shall be
obligated to make any payment in respect of a Purchaser Loss which
is not in respect of an Unlimited Sellers Obligation until the
aggregate of such Purchaser's Losses exceeds $150,000 (the
"BASKET"), after which any Purchaser's Losses in excess of the
Basket shall be immediately payable.
(iii) Notwithstanding anything to the contrary contained in
this Section 9, the Purchaser shall not be obligated to make any
payment in respect of a Sellers Loss which is not in respect of an
Unlimited Purchaser Obligation until the aggregate of such Sellers'
Losses exceeds $150,000, after which any Sellers' Losses in excess
of the Basket shall be immediately payable.
(iv) For purposes of this Section 9 and the indemnification
rights and obligations that are set forth in this Section 9 only,
the
66
representations and warranties of the parties that are contained in
this Agreement shall be read and interpreted without any of the
qualifications or exceptions that are contained in those
representations and warranties relating to materiality or Material
Adverse Effect.
(g) Payment of Purchaser's Losses. Purchaser's Losses pursuant to
this Section 9 shall be paid first, by the amount and to the extent of the
Indemnity Escrow Amount and second, the remainder shall be paid by the Sellers,
the Stockholder and ▇▇. ▇▇▇▇ pursuant to this Section 9.
(h) Survival. All covenants shall survive the closing indefinitely.
Except as otherwise specifically provided herein, all representations and
warranties shall survive the Closing, regardless of any inspection or discovery,
whether by reason of due diligence or otherwise, for a period of eighteen (18)
months from the Closing, except that a representation or warranty with respect
to subclauses (i), (ii) or (iii) of Sections 4(b) (Enforceable Obligations; Due
Authorization), subclauses (i), (ii), (iv) or (v) of Section 4(e) (Title to
Acquired Assets; Condition; Leased Equipment; Inventory), Section 4(h) (Taxes),
Section 4(n) (ERISA), or Section 4(q) (Environmental and OSHA Laws) ("SURVIVING
REPRESENTATIONS") shall survive the maximum duration of the longest statute of
limitations applicable with respect to such respective representation or
warranty plus sixty (60) days.
(i) Treatment of Payment. Any indemnity payment made under this
Agreement following the Closing Date shall be treated by the parties as an
adjustment to the Purchase Price, and the parties agree to report such payments
consistent therewith.
(j) Exclusive Remedy. The indemnification provisions of this Section
9 are the sole and exclusive remedies of the parties for any breach of
representations or warranties contained in this Agreement or any non-fulfillment
of or failure to perform any covenant or agreement contained herein of any other
party, except in the event of willful breach, willful non-fulfillment, willful
failure or fraud.
10. GUARANTY.The Guarantor shall cause the Purchaser to perform its
obligations under Section 9(b)(ii) (Indemnification; Indemnification by the
Purchaser; Assumed Liabilities), and shall be jointly and severally liable with
the Purchaser for any failure to so perform.
11. PUBLIC ANNOUNCEMENTS. The parties hereto have agreed to issue a press
release promptly upon signing this Agreement, in the form attached hereto as
Exhibit I. No party hereto shall issue any other press release or announcement,
or make any reference to the Closing or to the transactions contemplated hereby
to any third Person without the prior written consent of the other parties
hereto, except as may be necessary for the Purchaser to comply with any
applicable securities Laws. All parties shall coordinate the announcement of the
Closing, as to both the manner and content thereof.
12. BROKERS. Each of the parties hereto represents and warrants to the
others that he/she or it has not employed or dealt with any broker in connection
with any transactions
67
contemplated by this Agreement and shall save the other harmless from any and
all other claims at any time hereafter made for brokers' or finders' fees or
commissions, which claim or claims arise out of any agreement alleged to have
been made or action taken by the other, concerning or relating to the subject
matter of this Agreement. Notwithstanding the above, the parties acknowledge
that the Sellers have engaged ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Partners, LLC as a broker in
connection with the transaction contemplated by this Agreement, and the Sellers
and the Stockholder shall be responsible for all fees and expenses of such
broker. To the extent that there are any other brokers' or finders' fees or
commissions claimed such fees and expenses shall be paid by the Sellers, the
Stockholder and/or ▇▇. ▇▇▇▇ and otherwise shall be a Retained Liability, except
as provided in the first sentence of this Section 12.
13. TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by the mutual agreement of the Purchaser and the Sellers;
(ii) by either the Purchaser or the Sellers in the event of a
material breach by or default of the other party hereto but not
before ten (10) days after giving written notice to such effect to
the other party; provided, however, that delivery of such notice
shall not affect the right of the other party to cure the default
during such ten-day period; or
(iii) by either Purchaser or Sellers if the Closing shall not
have been consummated on or before April 15, 2003, unless the
failure to close results primarily from the breach by the party so
seeking to terminate of any representation, warranty or covenant
that is contained in this Agreement.
(b) In the event of the termination of this Agreement as provided in
Section 13(a), this Agreement shall be of no further force or effect; provided,
however, that (i) this Section 13(b), and Section 15 shall survive the
termination of this Agreement and shall remain in full force and effect, and
(ii) the termination of this Agreement shall not relieve any party from any
liability for any breach of any representation, warranty or covenant contained
in this Agreement which results in such termination.
(c) Termination of this Agreement by either the Purchaser or the
Sellers pursuant to this Section 13 will be valid only if the parties who elect
to terminate this Agreement deliver to all the non-terminating parties a notice
of termination that is signed by or on behalf of all such terminating parties.
With respect to Section 13(a) above, this Agreement's termination shall be
effective on the date specified in such written agreement.
14. NOTICES.
(a) All notices and other communications hereunder will be in
writing and will be given by delivery in person, facsimile or other standard
form of telecommunications, by
68
overnight courier, or by registered or certified mail, return receipt requested,
to the parties at their respective addresses set forth below, with copies as
follows:
If to the Purchaser:
c/o ACMI Holdings, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Sellers, the Stockholder and/or ▇▇. ▇▇▇▇:
▇▇▇▇ Vending Co., Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Brog Leinwand ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Notice given by mail shall be deemed given four business days after deposit with
the United States Postal Service; Notice given by overnight courier shall be
deemed given one business day after delivery into the custody and control of
such overnight courier service for next day delivery and notice delivered in
person or by facsimile shall be deemed given one business day after such
delivery or receipt.
69
(b) Any party hereto may change the address to which any notice or
other communication shall be given by a notice to such effect complying with
this Section 14.
15. MISCELLANEOUS.
(a) Rights Confined to Parties. Nothing expressed or implied herein
is intended or shall be construed to confer upon or give to any Person, other
than the parties hereto, and their respective heirs, executors, administrators,
successors and assigns as permitted hereunder, any right, remedy, or claim under
or by reason of this Agreement or of any term, covenant, or condition hereto,
and all the terms, covenants, conditions, promises, and agreements contained
herein shall be for the sole and exclusive benefit of the parties hereto and
their successors and assigns as permitted hereunder.
(b) Entire Agreement. This Agreement, together with the Exhibits and
Schedules annexed hereto, and the agreements entered into in accordance with the
terms hereof and contemplated hereby, constitute the entire understanding
between the parties hereto with respect to the subject matter hereof and thereof
and supersede any and all prior agreements between the parties hereto with
respect to the subject matter hereof and thereof. Sellers agree that (i) the
Confidentiality and Non-Disclosure Agreement, dated July 31, 2002, by and among
American Coin Merchandising, Inc., Wellspring Capital Management, LLC and ▇▇▇▇
Vending, and (ii) the letter agreement, dated October 16, 2002, between American
Coin Merchandising, Inc. and ▇▇▇▇ Vending, each shall terminate and be of no
further force or effect as of the Closing Date.
(c) Assignment. This Agreement is not assignable by any party hereto
and any purported assignment shall be null and void and of no effect, provided,
however, that the Purchaser may assign its rights and/or obligations herewith to
(i) an Affiliate or (ii) after the Closing, a subsequent purchaser of all or
substantially all of the Acquired Assets.
(d) Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not affect the validity or
enforceability of any other provision in such jurisdiction or the validity or
enforceability of such provision in any other jurisdiction.
(e) Effect of Headings. The Section and subsection headings
contained herein are for convenience only and shall not affect the construction
hereof.
70
(f) Governing Law; Jurisdiction.
(i) The provisions of this Agreement, and all the rights and
obligations of the parties hereunder, shall be governed by, and
construed and enforced in accordance with the laws of the State of
New York applicable to agreements made and to be performed wholly
within such State without regard to such State's conflicts of law
principles.
(ii) The Purchaser, each Seller, the Stockholder and ▇▇. ▇▇▇▇
hereby consent to the jurisdiction of any state or federal court
located within the County of New York, State of New York and
irrevocably agrees that, subject to the Purchaser's election, all
actions or proceedings arising out of or relating to this Agreement
shall be litigated in such courts. The Purchaser, each Seller, the
Stockholder and ▇▇. ▇▇▇▇ accepts for each of itself/himself and in
connection with its/his properties, generally and unconditionally,
the exclusive jurisdiction of the aforesaid courts and waives any
defense of forum non conveniens, and irrevocably agrees to be bound
by any judgment rendered thereby in connection with this Agreement.
(g) Counterparts. Telefacsimile transmissions of any executed
original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(h) Construction. Each of the Sellers, the Stockholder, ▇▇. ▇▇▇▇ and
the Purchaser acknowledges that each of them has been represented by counsel in
connection with this Agreement and the transactions contemplated hereby.
Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against a party that
drafted it has no application and is explicitly waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the intent of
the Sellers, the Stockholder, ▇▇. ▇▇▇▇ and the Purchaser.
(i) Amendments and Waivers. No amendment, modification, waiver or
course of conduct shall be effective unless the same is approved in writing and
duly executed by all of the parties hereto and then such amendment, modification
or waiver shall be effective only with respect to the specific instance and for
the specific purpose for which it was given.
71
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused same to be executed by their respective officers or other representatives
thereunto duly authorized, as of the date first above written.
PURCHASER:
FVFN ACQUISITION CORP., INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
GUARANTOR:
AMERICAN COIN MERCHANDISING, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
SELLERS:
▇▇▇▇ VENDING CO., INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
▇▇▇▇ NOVELTY CO., INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
STOCKHOLDER:
THE ▇▇▇▇▇ ▇▇▇▇ REVOCABLE TRUST
By /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Trustee
▇▇. ▇▇▇▇:
/s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
73
TRANSITIONAL SERVICES AGREEMENT
THIS TRANSITIONAL SERVICES AGREEMENT (the "AGREEMENT"), dated as of
April 15, 2003, is entered into by and between FVFN ACQUISITION CORP., a
Delaware corporation (the "FVFN"), and ▇▇▇▇ VENDING CO., LTD., an Ontario
corporation ("▇▇▇▇ CANADA").
RECITALS
WHEREAS, pursuant to that certain Asset Purchase Agreement (the
"PURCHASE AGREEMENT"), dated as of March 14, 2003, by and among FVFN, American
Coin Merchandising, Inc., ▇▇▇▇ Vending Co., Inc. ("▇▇▇▇ VENDING"), ▇▇▇▇ Novelty
Co., Inc. ("▇▇▇▇ NOVELTY," and together with ▇▇▇▇ Vending collectively the
"SELLERS"), The ▇▇▇▇▇ ▇▇▇▇ Revocable Trust, and ▇▇▇▇▇ ▇▇▇▇, FVFN has agreed to
purchase substantially all of the assets of the Sellers;
WHEREAS, ▇▇▇▇ Canada is an affiliate of the Sellers; and
WHEREAS, the Acquired Assets (as defined in the Purchase Agreement)
include certain assets necessary for the continued operation of the business of
▇▇▇▇ Canada and FVFN is willing to provide through its employees and/or through
the employees of its affiliates and contractors, certain sales, operations,
accounting, financial, personnel, general administrative and technical services
to ▇▇▇▇ Canada as further set forth herein; and
WHEREAS, it is a condition to the parties' obligations under the
Purchase Agreement that FVFN and ▇▇▇▇ Canada enter into this Agreement; and
WHEREAS, FVFN desires to provide to ▇▇▇▇ Canada and ▇▇▇▇ Canada
desires to avail itself of such services as are described herein, upon the terms
and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, and the
mutual promises and covenants contained herein, the parties agree as follows:
1. Term, Renewal and Termination.
(a) Term. Unless sooner terminated in accordance with the provisions
of this Agreement, the initial term (the "INITIAL TERM") of this Agreement shall
be from the date hereof through the earlier of (i) December 31, 2003, and (ii)
the date of the consummation of the sale of ▇▇▇▇ Canada by way of merger, sale
of capital stock, transfer of substantially all assets or otherwise.
(b) Automatic Renewal. Unless terminated in accordance with Section
1(c), this Agreement shall renew automatically and continue for successive one
(1) month terms upon the expiration of the Initial Term or any subsequent term.
(c) Termination. Notwithstanding any terms of this Agreement to the
contrary, either party may, by giving the other party thirty (30) days prior
written notice, terminate this Agreement as of a date specified in such notice
of termination; provided, however, that neither party may terminate this
Agreement before the expiration of the Initial Term.
2. Services and Personnel.
(a) Services. During the term hereof, FVFN agrees to furnish to ▇▇▇▇
Canada the sales, operations, accounting, financial, personnel, general
administrative and technical services specified in the column entitled
"DEPT/FUNCTION" in Exhibit A attached hereto (the "SERVICES"), in each case at
levels substantially similar to the corresponding services provided by the
Sellers to ▇▇▇▇ Canada during the twelve month period immediately preceding the
date of this Agreement.
(b) Products. In addition to providing the Services, FVFN agrees to
use its commercial best efforts to sell to ▇▇▇▇ Canada, and ▇▇▇▇ Canada shall
purchase from FVFN, all of ▇▇▇▇ Canada's requirements for amusement vending
products (the "PRODUCTS") to be sold in ▇▇▇▇ Canada's vending machines. ▇▇▇▇
Canada will notify FVFN in writing no less than five days prior to the end of
each month of its requirements of Products for the immediately succeeding month.
The Products will be shipped to ▇▇▇▇ Canada in accordance with the past
practices of the Sellers and ▇▇▇▇ Canada during the twelve month period
immediately preceding the date of this Agreement.
(c) Responsibility. Except as otherwise provided herein, FVFN will
be solely responsible for compensating any personnel performing the Services,
providing them (to the extent required) with employee benefits, withholding
federal and state taxes and other required withholdings, and preparing,
processing and filing all reports required with respect to such personnel.
(d) Supervision of Personnel. The personnel performing the Services
pursuant to this Agreement shall not be considered employees of ▇▇▇▇ Canada and
any employees of FVFN will continue as such. All such personnel shall be subject
to the policies and practices of FVFN.
(e) Cooperation and Assistance. The parties shall cooperate in
arranging for an orderly, effective transition of operational control of all
operations necessary for the conduct of ▇▇▇▇ Canada's business from FVFN to ▇▇▇▇
Canada, and shall cooperate in effectuating their other respective obligations
under this Agreement. ▇▇▇▇ Canada and FVFN will each provide the other
reasonable availability and access to its premises and its personnel to afford
an effective transition of the Services to be performed.
3. Charges for Services and Products.
(a) Charge for Services. In consideration for the provision of the
Services by FVFN to ▇▇▇▇ Canada pursuant to Section 2(a) hereof, ▇▇▇▇ Canada
shall pay to FVFN an amount equal to $25,820.48 per month.
(b) Charge for Products. ▇▇▇▇ Canada will pay to FVFN an amount
equal to 100% of FVFN's cost for each Product supplied by FVFN to ▇▇▇▇ Canada
pursuant to Section 2(b) hereof. For these purposes, FVFN's "cost" shall include
any costs customarily included by the Sellers as costs of inventory on the date
of this Agreement, plus any shipping costs attributable to the Products.
(c) Payments. Payment from ▇▇▇▇ Canada for Services shall be due
monthly in advance on the first day of the month. Payment for Products shall be
due thirty (30) days following the date of an invoice therefor. Any amounts
payable by ▇▇▇▇ Canada hereunder that remain unpaid after the due date shall be
subject to a late charge at a rate equal to 7% per annum from the date due until
such amount is paid.
(d) Taxes Relating to the Services. Payment of all federal, state
and/or local taxes based on the Services provided under this Agreement shall be
the responsibility of FVFN. Each party shall reasonably cooperate with the other
in minimizing any applicable tax and, in connection therewith, ▇▇▇▇ Canada shall
provide FVFN any information reasonably requested by FVFN.
4. Relationship of the Parties. The parties are independent contractors
and, except as otherwise expressly set forth elsewhere herein, nothing in this
Agreement shall create or imply an agency relationship between the parties, nor
shall this Agreement be deemed to constitute a joint venture or partnership
between the parties. Except as provided in this Agreement, neither party shall
have authority to bind or otherwise obligate the other in any manner whatsoever.
5. Excused Performance. FVFN does not warrant that any of the services or
benefits herein agreed to be provided will be free of interruptions caused by
acts of God or other causes
beyond FVFN's reasonable control. No such interruption of services or benefits
shall be deemed to constitute a breach of any kind whatsoever.
6. Proprietary Information. "PROPRIETARY INFORMATION" shall include but
not be limited to the pricing, methods, processes, financial data, lists,
statistics, software, systems or equipment, programs, research, development,
strategic plans, operating data, or related information of each of the parties
and/or its or their customers and suppliers, concerning past, present, or future
business activities of said entities. Proprietary Information shall include all
such information disclosed by either party prior to the execution of this
Agreement, and shall include the terms and conditions, including all
attachments, of this Agreement.
(a) Confidentiality. From and after the date hereof, each party
hereto agrees not to divulge, communicate, use to the detriment of the other
party hereto or for the benefit of any other person, or misuse in any way, and
each party will use their respective best efforts to cause their officers,
directors, employees, accountants, counsel, consultants, advisors, agents and
affiliates not to divulge, communicate, use to the detriment of the other party
hereto or for the benefit of any other person, or misuse in any way, any
Proprietary Information.
(b) Return Upon Request. The parties agree that upon the request of
the party having proprietary rights to Proprietary Information, the party in
possession of such information will promptly return it (including any copies,
extracts and summaries) to the requesting party, or, with the other party's
written consent, will promptly destroy it (and any copies, extracts and
summaries thereof) and will provide the other party with written certification
of same.
(c) Information Rightly Received.
(i) Neither party shall have any obligation or liability with
respect to the other's information to the extent-that such
information (i) is or becomes publicly known through no wrongful act
of the receiving party; (ii) is rightfully received by the receiving
party from a third party without restriction and without breach of
this Agreement; or (iii) must be disclosed pursuant to a court order
or as required by any governmental or administrative authority or
authorized regulatory agency.
(ii) A party ordered to disclose the other party's Proprietary
Information shall notify the other party in advance of any
disclosure and use its reasonable efforts to limit and to assist the
other party in limiting such disclosure.
(iii) Information developed independently by either party
without use of any of the other's Proprietary Information shall not
be considered to be Proprietary Information of the other for
purposes of this Section 6.
(d) Irreparable Harm. The parties acknowledge that any disclosure or
misappropriation of Proprietary Information in violation of this Agreement could
cause irreparable harm the amount of which may be extremely difficult to
estimate, thus making any
remedy at law or in damages inadequate. Each party therefore agrees that the
other party shall have the right to apply to any court of competent jurisdiction
for an order restraining any breach or threatened breach of this Section 6 or
other relief as such other party deems appropriate. This right shall be in
addition to any other remedy available in law or equity.
7. Indemnification. Each party shall defend and indemnify the other party
against and hold the other party harmless from any and all liability, claims,
suits, judgments, losses, damages, costs (including reasonable attorneys' fees
and expenses) resulting from such indemnifying party's performance or
non-performance of this Agreement, except to the extent caused by the willful
acts of omissions of the other party. Notwithstanding the foregoing, neither
party shall be liable to the other for any indirect, special, consequential or
exemplary damages of any kind. Each party's indemnification obligation shall
survive termination or expiration of this Agreement for a period of three years.
8. Integration. This Agreement and Exhibit A attached hereto constitute
the sole and entire agreement among the parties with respect to the services and
benefits described herein, and cancels and supersedes any and all prior written
or oral contacts or negotiations between the parties with respect to the subject
matter hereof. The provisions of this Agreement shall in no way modify or amend,
or be construed to modify or amend, any terms or conditions of the Purchase
Agreement.
9. Successors and Assigns. This Agreement and all of the terms and
covenants herein contained shall be binding and inure to the benefit of the
parties hereto and their respective permitted successors and assigns. No party
shall have the right to assign, whether by operation of law or otherwise, all or
any portion of its obligations or interest in this Agreement or in any monies
which may be due pursuant hereto without the prior written consent of the other
party, and any attempted assignment in violation hereof shall be null and void
and of no force and effect. This Agreement is for the sole benefit of the
parties hereto. Nothing herein expressed or implied shall give or be construed
to give any other person or entity any legal or equitable rights hereunder.
10. Waiver. No waiver by any party hereto of any of its rights under this
Agreement shall be effective unless in writing and signed by an officer or other
authorized signatory of the party waiving such right. No waiver of any breach of
this Agreement shall constitute a waiver of any subsequent breach, whether or
not of the same nature. This Agreement may not be modified except in writing
signed by officers or other authorized signatory of each of the parties hereto.
11. Governing Law; Jurisdiction.
(a) The provisions of this Agreement, and all the rights and
obligations of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within such State without regard to
such State's conflicts of law principles.
(b) Each party hereto hereby consents to the jurisdiction of any
state or federal court located within the County of New York, State of New York
and irrevocably agrees that, subject to FVFN's election, all actions or
proceedings arising out of or relating to this Agreement
shall be litigated in such courts. Each party hereto accepts for each of itself
and in connection with its properties, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and waives any defense of forum
non conveniens, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement.
12. Headings. The descriptive headings of the several sections hereof are
inserted for convenience only and do not control or affect the meaning or
construction of any of the provisions hereof.
13. Notice. All notices and other communications hereunder will be in
writing and will be given by delivery in person, facsimile or other standard
form of telecommunications, by overnight courier, or by registered or certified
mail, return receipt requested, to the parties at their respective addresses set
forth below, with copies as follows:
If to FVFN:
c/o ACMI Holdings, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to ▇▇▇▇ Canada:
▇▇▇▇ Vending Co., Ltd.
[ADDRESS]
Fax:
Attn:
with a copy to:
▇▇▇▇▇▇▇▇ Brog Leinwand ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Notice given by mail shall be deemed given four business days after deposit with
the United States Postal Service; notice given by overnight courier shall be
deemed given one business day after delivery into the custody and control of
such overnight courier service for next day delivery and notice delivered in
person or by facsimile shall be deemed given one business day after such
delivery or receipt. Any party hereto may change the address to which any notice
or other communication shall be given by a notice to such effect complying with
this Section 13.
14. Amendments and Waivers. No amendment, modification, waiver or course
of conduct shall be effective unless the same is approved in writing and duly
executed by each of the parties hereto and then such amendment, modification or
waiver shall be effective only with respect to the specific instance and for the
specific purpose for which it was given.
15. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not affect the validity or
enforceability of any other provision in such jurisdiction or the validity or
enforceability of such provision in any other jurisdiction.
16. Counterparts. Telefacsimile transmissions of any executed original
document and/or retransmission of any executed telefacsimile transmission shall
be deemed to be the same as the
delivery of an executed original. At the request of any party hereto, the other
party hereto shall confirm telefacsimile transmissions by executing duplicate
original documents and delivering the same to the requesting party. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
EXHIBIT A
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement by their respective officers or other signatories thereunto duly
authorized as of the day and year first above written.
FVFN ACQUISITION CORP.
By________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
▇▇▇▇ VENDING CO., LTD.
By________________________________
Name:
Title:
EXHIBIT A
[ATTACH SPREADSHEET OF HOME OFFICE CHARGES]
86
INDEMNITY ESCROW AGREEMENT
THIS INDEMNITY ESCROW AGREEMENT (the "ESCROW AGREEMENT"), dated as of
April 15, 2003, by and among FVFN ACQUISITION CORP., a Delaware corporation (the
"PURCHASER"), ▇▇▇▇ VENDING CO., INC., a New York corporation ("▇▇▇▇ VENDING"),
▇▇▇▇ NOVELTY CO., INC., a New York corporation ("▇▇▇▇ NOVELTY," and together
with ▇▇▇▇ Vending collectively the "SELLERS"), THE ▇▇▇▇▇ ▇▇▇▇ REVOCABLE TRUST,
the sole stockholder of ▇▇▇▇ Vending and the majority stockholder of ▇▇▇▇
Novelty (the "TRUST," or the "STOCKHOLDER"), ▇▇▇▇▇ ▇▇▇▇, an individual and the
grantor of the Trust ("▇▇. ▇▇▇▇"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ SINGER & ▇▇▇▇▇▇▇▇▇, LLP,
as escrow agent (the "ESCROW AGENT").
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of
March 14, 2003 (the "PURCHASE AGREEMENT"), by and among the Purchaser, the
Sellers, the Stockholder, ▇▇. ▇▇▇▇ and American Coin Merchandising, Inc., a
Delaware corporation, the Purchaser has delivered the sum of $1,500,000 to the
Escrow Agent, to be held in escrow pursuant to this Escrow Agreement, to secure
payment of any amounts due to the Purchaser by either of the Sellers, the
Stockholder and/or ▇▇. ▇▇▇▇ pursuant to Section 9(a) (Indemnification) of the
Purchase Agreement.
WHEREAS, the Purchaser, the Sellers, the Stockholder and ▇▇. ▇▇▇▇ desire
that the Escrow Agent act as escrow agent, and the Escrow Agent is willing to do
so, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises above and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise specified herein, all capitalized
terms used but not otherwise defined herein shall have the respective meanings
assigned to them in the Purchase Agreement.
2. Deposits. Simultaneously with the execution of this Escrow Agreement,
the Purchaser shall deposit in an interest bearing escrow account with the
Escrow Agent the sum of $1,500,000 (the "ESCROW AMOUNT"), which shall be held by
the Escrow Agent as the subject of the escrow arrangement created hereby. The
Escrow Amount, together with all interest and other earnings thereon
("EARNINGS"), and reduced by all losses thereon and all distributions pursuant
to Section 3 hereof, is referred to herein as the "ESCROW Fund". The Escrow
Agent hereby agrees to act as escrow agent under this Escrow Agreement.
3. Disbursement of Escrow Fund.
(a) In the event that prior to the date that is eighteen (18) months
from the date hereof (the "TERMINATION DATE"), the Purchaser shall determine
that it has or may have a Claim (as defined below) or Claims, the Purchaser
shall so notify the Escrow Agent and Sellers' Agent (as defined hereinafter) in
writing, which written notice shall specify the basis for and amount(s) of such
Claim or Claims, to the extent then known. Sellers' Agent shall give written
notice of objection or consent to such Claim or Claims to the Purchaser and the
Escrow Agent within 20 days after its receipt of the Purchaser's notice,
provided that any notice of objection shall identify the matters set forth in
the notice of Claim which are disputed and shall specify the amount of the Claim
which is in dispute. Promptly following delivery by Sellers' Agent of a notice
of objection or consent, or, in the absence of delivery of either a notice of
objection or consent within such 20-day period, then promptly following such
20-day period, the
87
Escrow Agent shall satisfy the undisputed amount of such Claim or Claims by
delivery to the Purchaser out of the Escrow Fund of an amount equal to either
(i) the amount of such Claim or Claims if either (x) a consent is delivered by
Sellers' Agent or (y) Sellers' Agent fails to deliver to the Escrow Agent and
the Purchaser a notice of objection or consent during such 20-day period or (ii)
that portion of Purchaser's Claim or Claims which is not in dispute, if any, in
the case a notice of objection is delivered by Sellers' Agent. Failure of
Sellers' Agent to deliver a notice of objection within such 20-day period shall
constitute an irrevocable waiver on the part of Sellers' Agent of its right to
object to the delivery to the Purchaser out of the Escrow Fund of such amount.
(b) For purposes of this Escrow Agreement, the term "CLAIM" shall
mean any right of the Purchaser pursuant to Section 9(a) of the Purchase
Agreement to an amount equal to any Purchaser Losses, including, without
limitation, Claims dependent on the outcome of any Purchaser Covered Actions.
(c) If the Escrow Agent receives a written notice of objection
within the 20-day period referred to in Section 3(a) hereof, then, concurrently
with the payment to the Purchaser of the undisputed amount of a Claim, if any,
in accordance with Section 3(a) hereof, the Escrow Agent shall account for the
amount in dispute as a separate fund (a "DISPUTED FUND"). In the event that a
notice of objection is timely given and Sellers' Agent, on the one hand, and the
Purchaser on the other hand fail to reach agreement as to the disposition of any
Claim or Claims within 30 days after receipt by the Purchaser and the Escrow
Agent of the notice of objection, Sellers' Agent and the Purchaser may proceed
to enforce their respective rights through legal proceedings, by arbitration or
otherwise; provided, however, that neither the Purchaser nor Sellers' Agent
shall seek to enforce their rights with respect to disputed Claims dependent on
the outcome of a Purchaser Covered Action until final determination of such
Purchaser Covered Action. The Escrow Agent shall distribute the amounts
accounted for as a Disputed Fund promptly upon delivery of and in accordance
with the terms of (i) a joint written notice of the Purchaser and Sellers' Agent
providing instructions therein and certifying that the dispute with respect to
any amount deposited in such other Disputed Fund has been finally resolved, or
(ii) the issuance of any judgment, order or decree by any court of competent
jurisdiction directing the Escrow Agent as to the proper distribution of any
amount so held. Sellers' Agent or the Purchaser shall deliver to the Escrow
Agent a certified copy of any judgment, order or decree in any such legal
proceedings or any award in such arbitration. The Escrow Agent shall act upon
such judgment, award, order or decree which has become final (and not subject to
appeal) in like manner as though it constituted the joint instructions of
Sellers' Agent and the Purchaser.
(d) Subject to the provisions of Section 3(g) hereof, the Escrow
Agent shall deliver from the Escrow Fund to Sellers' Agent promptly following
receipt by the Escrow Agent of a written demand by Sellers' Agent given on any
business day following (i) the date that is twelve (12) months from the date
hereof, the amount, if any, by which $750,000 exceeds any amounts then accounted
for as Disputed Funds, and (ii) the Termination Date, any moneys remaining in
the Escrow Fund (excluding any Disputed Funds), in the case of each of (i) and
(ii) above, at the address and according to the payment instructions to be
provided to the Escrow Agent by Sellers' Agent. For purposes of this Escrow
Agreement, the term "business day" means any day (other than a Saturday or a
Sunday) on which banks are not required or authorized to close in The City of
New York.
(e) Upon the release of any Disputed Funds to the Purchaser, the
Purchaser shall also be entitled to receive all Earnings thereon.
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(f) Upon the release of any amount held in a Disputed Fund which is
not paid over to the Purchaser in respect of the Claim for which such amount was
originally deposited in such Disputed Fund, such amount shall be paid in the
following manner and order of priority:
(i) First, to the Purchaser in respect of any other Claim paid
or payable to the Purchaser pursuant to Section 3 hereof for which
written notice was given by the Purchaser to the Escrow Agent prior
to the date of such release (if such date is prior to the
Termination Date), and for which the amount, if any, previously paid
to the Purchaser was less than the amount to which the Purchaser was
entitled with respect to such Claim;
(ii) Second, to any other Disputed Fund in respect of any
other disputed Claim for which written notice was given pursuant to
Section 3 hereof by the Purchaser to the Escrow Agent prior to the
date of such release (if such date is prior to the Termination
Date), and for which the amount, if any, previously set aside in
such other Disputed Fund was less than the amount of the Claim in
dispute;
(iii) Third, subject to the provisions of Section 3(g) hereof,
to the Escrow Agent any remaining unpaid portion of such released
Disputed Fund to hold in the Escrow Fund; and
(iv) Fourth, on and after the Termination Date to Sellers'
Agent, subject to the provisions of Section 3(g) hereof, pursuant to
the provisions of Section 3(d) hereof.
(g) Notwithstanding anything to the contrary contained herein, if on
or prior to the earlier to occur of the date of a distribution pursuant to
Section 3(d) or 3(f) and the Termination Date, the Purchaser shall have
delivered to the Escrow Agent and Sellers' Agent a notice (a "COVERED ACTION
NOTICE") that there exists a Purchaser Covered Action and setting forth a
reasonable estimate of the Purchaser Losses reasonably anticipated to be
incurred in connection with such Purchaser Covered Action, including, without
limitation, Purchaser Losses which may be incurred if such Purchaser Covered
Action is determined adversely (such amount the "COVERED ACTION AMOUNT"), then
the Covered Action Amount shall be deemed to be a "Disputed Fund" for purposes
of Section 3(d) and 3(f) hereof. Upon all or any portion of the Covered Action
Amount becoming a Claim, the Purchaser and Sellers' Agent shall comply with the
terms hereof regarding Claims and such Claims shall be deemed a Claim for which
notice has been timely given.
4. Investments.
(a) The Escrow Amount and Earnings and the full amount of any
Disputed Funds shall be deposited by the Escrow Agent in the manner set forth in
Section 6(a) hereof and invested in short-term government securities, government
repurchase agreements, commercial paper rated the highest grade by ▇▇▇▇▇'▇
Investors Service, Inc. and Standard & Poor's Corporation with a maturity of not
more than one year, money market funds invested in the foregoing, short-term
certificates of deposit issued by commercial banks having a combined capital
surplus and undivided profits of not less than $50,000,000 or other similar
short-term highly liquid investments of equal or greater security as the
foregoing, or in U.S. Treasury Notes having a maturity of one year or less, as
shall be directed in writing by Sellers' Agent, with the interest thereon to be
accumulated and reinvested until disbursed. In the absence of
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instructions from Sellers' Agent, the Escrow Agent shall invest the Escrow
Amounts and Earnings and any Disputed Funds in any of the foregoing instruments.
Any interest or profit realized on any investment of any Escrow Amounts and
Earnings and any Disputed Funds shall be made part of the Escrow Fund, with
respect to the Escrow Amount and Earnings, and any Disputed Funds, and shall be
held and disbursed in accordance with the provisions of Section 3 of this Escrow
Agreement. Except as otherwise specifically noted herein, the Escrow Agent is
not obligated to render any statements or notices of nonperformance hereunder to
any party hereto, but may in its discretion inform any party hereto, or its
authorized representative, of any matters pertaining to this Escrow Agreement.
(b) Receipt or investment of the Escrow Amount shall be confirmed by
the Escrow Agent as soon as practicable by account statements unless otherwise
indicated and any discrepancies shall be noted to the Escrow Agent within a
reasonable time prior to the next account statement. Failure to inform the
Escrow Agent in writing of any discrepancies shall be deemed confirmation of the
description of the Escrow Amount listed on the report, regardless of any
variations from that described herein. Unless otherwise directed by Sellers'
Agent, the Escrow Agent may use a broker-dealer, bank or other financial
institution of its own selection. All brokerage costs and expenses shall be
deducted from the Escrow Amount. The Escrow Agent shall not be liable for losses
on any investments, market risk due to premature liquidation, or other actions
taken in compliance with this Escrow Agreement or appropriate written
instruction. Prior to any investment the parties hereto shall provide the Escrow
Agent with written certification of their respective taxpayer identification
numbers or appropriate foreign taxpayer exemptions. Failure to provide such
information may incur a penalty and cause the Escrow Agent to be required to
withhold tax on any interest payable hereunder. Any payments of income shall be
subject to applicable United States withholding regulations then in force.
(c) The Escrow Agent is authorized to exchange temporary securities
for securities in definitive form, exchange temporary shares, and surrender
stocks and bonds or other securities at maturity or earlier call for redemption,
upon receiving payment. The Escrow Agent is authorized to act on direction to
process tender offers, reorganizations, capital changes, bonds called for
redemption, dividend reinvestment, and rights and warrants. The Escrow Agent is
authorized to act without further instructions in the event of nondiscretionary
calls, exchanges and reorganizations. The Escrow Agent must have written
authorization, instructions, securities and other documentation, if any,
relating to such matters at least three (3) business days prior to the deadline.
The Escrow Agent's sole obligation shall be to make a good faith effort to give
appropriate notice to the appropriate party. With respect to all securities, the
Escrow Agent may deliver or authorize book-entry transfer of such securities
according to generally accepted settlement methods.
5. Escrow Agent Not a Party; Counsel to Purchaser. All parties
hereto understand, agree and acknowledge that (a) the Escrow Agent's duties
pursuant to this Escrow Agreement are ministerial and the Escrow Agent is not a
principal, participant, or beneficiary of the underlying transactions which
necessitate this Escrow Agreement and it is not a party to, and is not bound by,
any agreement out of which this escrow may arise and (b) the Escrow Agent is
counsel to the Purchaser and its affiliates and all parties hereto consent that
the Escrow Agent may represent the Purchaser, any of its affiliates and any
entities in which the Purchaser or any of its affiliates own any securities,
equity, debt or otherwise or other interest, in any dispute, controversy, action
or legal proceeding (including, without limitation, against the Sellers, the
Stockholder or ▇▇. ▇▇▇▇ or involving this Escrow Agreement, the Purchase
Agreement, or any other agreement, instrument or document).
6. Duties of Escrow Agent; Limited Liability of Escrow Agent.
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(a) The Escrow Agent shall deposit the Escrow Amount with Fleet
National Bank, or with any other banking institution which has a capital and
surplus in excess of $1,000,000,000, and the Escrow Agent shall not be
responsible for any losses resulting therefrom.
(b) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions from any party hereto
with respect to the Escrow Fund or any Disputed Funds which, in its reasonable
opinion, are in conflict with any of the provisions of this Escrow Agreement or
any instructions received from one of the other parties to this Escrow
Agreement, the Escrow Agent shall be entitled to (i) refrain from taking any
action other than to keep the Escrow Fund or any Disputed Funds in question
until such time as there has been a "final determination" of the rights of the
applicable parties with respect to the Escrow Fund or any Disputed Funds or (ii)
deposit at any time the Escrow Fund or any Disputed Funds into any court of
competent jurisdiction and to commence an action in the nature of interpleader
to adjudicate the parties' rights thereto and thereafter shall have no further
obligations or liabilities to anyone under this Escrow Agreement. For purposes
of this Section 6(b), there shall be deemed to have been a "final determination"
of the rights of the applicable parties with respect to the Escrow Fund or any
Disputed Funds at such time as any of the applicable parties shall file with the
Escrow Agent (i) an official certified copy of a court order, together with an
opinion of counsel of the party filing the foregoing, in form and substance
acceptable to the Escrow Agent and its counsel, stating that the court order is
a final determination of the rights of the parties hereto with respect to the
Escrow Fund or any Disputed Funds in question, that the time to appeal from said
court order has expired, and that said court order is binding upon the
applicable parties, or (ii) a fully executed agreement or consent by and among
the applicable parties, which provides for disposition of the Escrow Fund or any
Disputed Funds in question.
(c) The Escrow Agent shall not be bound by any agreement or contract
between the other parties hereto (whether or not the Escrow Agent shall have
knowledge thereof) and the Escrow Agent's only duties and responsibilities shall
be to hold the Escrow Fund and any Disputed Funds and to invest and dispose of
it in accordance with the terms of this Escrow Agreement.
(d) The Escrow Agent shall not be bound by any modification,
amendment, termination, cancellation or rescission of this Escrow Agreement
unless the same shall be in writing and signed by all of the other parties
hereto and, if its duties as Escrow Agent hereunder are affected thereby, unless
it shall have given prior written consent thereto.
(e) The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein. The Escrow Agent shall have no duty to
enforce any obligation of any person to make any payment or delivery, or to
direct or cause any payment or delivery to be made, or to enforce any obligation
of any person to perform any other act. The Escrow Agent shall be under no
liability to the other parties hereto or to anyone else by reason of any failure
on the part of any party heretofore, any maker, guarantor, endorser or other
signatory of any document or any other person to perform such person's
obligations under any such document.
(f) The Escrow Agent shall have no responsibility as to the validity
or value of the Escrow Fund or any Disputed Funds held in escrow hereunder.
Furthermore, the Escrow Agent shall have no duty as to the collection or
protection of the Escrow Fund or any Disputed Funds, nor as to the preservation
of any rights pertaining thereto, beyond the safe custody of the Escrow Fund and
any Disputed Funds actually in its possession.
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(g) The Escrow Agent shall not be liable to the parties or to anyone
else for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith and in the exercise of its own best judgment,
except in the event of its willful misconduct. The Escrow Agent may rely
conclusively and shall be protected in acting upon any order, notice, demand,
certificate, opinion or advise of counsel (including counsel chosen by the
Escrow Agent), statement, instrument, report or other paper or document (not
only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information
contained therein), which is believed by the Escrow Agent to be genuine and to
be signed or presented by the proper person or persons. The Escrow Agent shall
not be bound by any notice or demand, or any waiver, modification, termination
or rescission of this Escrow Agreement or any of the terms thereof, unless
evidenced by a writing delivered to the Escrow Agent signed by the proper party
or parties and, if the duties or rights of the Escrow Agent are affected, unless
it shall give its prior written consent thereto.
(h) The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness of,
any document or property received, held or delivered by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon, or for
any description therein; nor shall the Escrow Agent be responsible or liable to
the other parties hereto or to anyone else in any respect on account of the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any document or property or this Escrow
Agreement. The Escrow Agent shall have no responsibility with respect to the use
or application of any funds or other property paid or delivered by the Escrow
Agent pursuant to the provisions hereof. The Escrow Agent shall not be liable to
the Sellers, the Stockholder, ▇▇. ▇▇▇▇, the Purchaser or to anyone else for any
loss which may be incurred by reason of any investment of any monies which it
holds hereunder provided the Escrow Agent has complied with the provisions of
Section 4 hereof.
(i) The Escrow Agent shall have the right to assume in the absence
of written notice to the contrary from the proper person or persons that a fact
or an event by reason of which an action would or might be taken by the Escrow
Agent does not exist or has not occurred, without incurring liability to the
other parties hereto or to anyone else for any action taken or omitted, or any
action suffered by it to be taken or omitted, in good faith and in the exercise
of its own best judgment, in reliance upon such assumption.
(j) The Escrow Agent shall have no liability for loss arising from
any cause beyond its control, including, but not limited to, the following: (i)
the act, failure or neglect of any agent or correspondent selected by the Escrow
Agent or the parties hereto; (ii) any delay, error, omission or default
connected with the remittance of funds; (iii) any delay, error or omission or
default of any mail, telephone or wireless agency or operator; and (iv) the acts
or edicts of any government or governmental agency or other group or entity
exercising governmental powers.
(k) The Escrow Agent shall be responsible for holding, investing and
disbursing the Escrow Fund and any Disputed Funds pursuant to this Escrow
Agreement, but in no event shall the Escrow Agent be liable for any exemplary or
consequential damages except where such damages arise from the Escrow Agent's
willful misconduct.
7. Conference with Legal Counsel. The Escrow Agent may confer with legal
counsel in the event of any dispute or question as to the construction of any of
the provisions hereof, or its duties hereunder, and it shall incur no liability
and it shall be fully protected in acting in accordance with the opinions and
instructions of such counsel.
92
8. Interpleader. If the Escrow Agent becomes a party to any litigation or
dispute by reason hereof, it is hereby authorized to deposit with the clerk of a
court of competent jurisdiction any and all cash, securities or other property
held by it pursuant hereto and, thereupon, shall stand fully relieved and
discharged of any further duties hereunder. If the Escrow Agent is threatened to
be made a party to litigation by reason hereof, it is authorized to interplead
all interested parties in any court of competent jurisdiction and to deposit
with the clerk of such court any cash, and all or any part of the securities or
other property held by it pursuant hereto and, thereupon, shall stand fully
relieved and discharged of any further duties hereunder in respect of the Escrow
Fund and any Disputed Funds and the matter(s) giving rise thereto.
9. Seller's Agent.
(a) ▇▇. ▇▇▇▇ shall be constituted and appointed as agent ("SELLERS'
AGENT") for and on behalf of the Sellers and the Stockholder under this Escrow
Agreement and to execute and deliver, in the name and on behalf of himself, each
Seller and the Stockholder, all documents, to take all actions required to be
executed or taken by himself, any Seller and the Stockholder, to give and
receive notices and communications, including any of the foregoing as may be
required pursuant to this Escrow Agreement, and to take all actions necessary or
appropriate in the judgment of the Sellers' Agent for the accomplishment of the
foregoing. The Sellers' Agent shall receive no compensation for such Sellers'
Agent's services. Notices or communications to or from the Sellers' Agent shall
constitute notice to or from ▇▇. ▇▇▇▇, each Seller and the Stockholder.
(b) A decision, act, consent or instruction of the Sellers' Agent
shall constitute a decision of ▇▇. ▇▇▇▇, the Sellers and the Stockholder and
shall be final, binding and conclusive upon ▇▇. ▇▇▇▇, each Seller and the
Stockholder, and the Escrow Agent and the Purchaser may rely upon any decision,
act, consent or instruction of the Sellers' Agent as being the decision, act,
consent or instruction of ▇▇. ▇▇▇▇, each Seller and the Stockholder. The Escrow
Agent and the Purchaser are hereby relieved from any liability to any Person for
any acts done by them in accordance with such decision, act, consent or
instruction of the Sellers' Agent.
10. Resignation of Escrow Agent or Sellers' Agent.
(a) The Escrow Agent or any successor to it as escrow agent
hereafter appointed may resign for any reason upon ten (10) days' written notice
to the Purchaser and Sellers' Agent. Upon the expiration of such ten (10) days'
notice, the Escrow Agent may deliver all cash or property in its possession
under this Escrow Agreement to any successor escrow agent appointed by the other
parties hereto; or, if no successor escrow agent has been appointed, to any
court of competent jurisdiction in the State of New York. Upon either such
delivery, the Escrow Agent's obligations hereunder shall cease and terminate and
the Escrow Agent shall be released from any and all liability under this Escrow
Agreement. A termination under this paragraph shall in no way change the terms
of Section 11 affecting reimbursement of expenses and fees. The Escrow Agent's
sole responsibility from the time of the expiration of the ten (10) days' notice
set forth above in this paragraph until such termination shall be to keep safely
the Escrow Fund and any Disputed Funds Funds and to deliver the same to a person
designated by the appropriate parties executing this Escrow Agreement or in
accordance with the directions of a final order or judgment of a court of
competent jurisdiction.
(b) Upon the death or disability of ▇▇. ▇▇▇▇, [▇▇▇▇▇ ▇▇▇▇▇] shall be
appointed as Sellers' Agent. Sellers' Agent or any successor Sellers' Agent
hereafter appointed may resign for any reason upon
93
ten (10) days' written notice to the Purchaser. Upon the expiration of such ten
(10) days' notice, if no Sellers' Agent is appointed by written instruction to
the Purchaser, Sellers' Agent shall be [▇▇▇▇▇ ▇▇▇▇▇].
11. Escrow Agent Fee. For its services hereunder, the Escrow Agent shall
not be entitled to a fee and shall provide its services hereunder as a
convenience to the other parties. Notwithstanding the foregoing, ▇▇. ▇▇▇▇, the
Sellers and the Stockholder, on the one hand, and the Purchaser on the other
hand, shall share equally the cost of reimbursing the Escrow Agent for its
reasonable out-of pocket expenses, including reasonable attorney's fees in
administering the Escrow Fund, including any Disputed Funds, and performing its
duties under this Escrow Agreement.
12. Indemnification of Escrow Agent. The Sellers, the Stockholder, ▇▇.
▇▇▇▇ and the Purchaser shall jointly and severally reimburse and indemnify the
Escrow Agent (it being understood among the Sellers, the Stockholder, ▇▇. ▇▇▇▇
and the Purchaser, that the Sellers, the Stockholder and ▇▇. ▇▇▇▇, on the one
hand, and the Purchaser on the other hand, shall each bear 50% of the aggregate
responsibility of any such indemnity) for, and hold it harmless against, any and
all loss, liability, costs or expenses in connection herewith (including fees,
disbursements and other charges of counsel incurred by the Escrow Agent in any
dispute, controversy, action or legal proceeding between it and one of the other
parties hereto, or between it and a third party, or pursuant to Section 7
hereof), incurred by the Escrow Agent arising out of or in connection with its
acceptance of, or the performance of its duties and obligations under this
Escrow Agreement (except those arising out of or in connection with Escrow
Agent's willful misconduct) as well as the costs and expenses of defending
against any claim or liability arising out of or relating to this Escrow
Agreement. The Escrow Agent shall have a lien for the amount of any such
expenses or loss on the monies and other property held by it hereunder and shall
be entitled to reimburse itself from such monies or property for the amount of
any such expense or loss. Notwithstanding any obligation to make payments and
deliveries hereunder, the Escrow Agent may retain and hold for such time as it
deems necessary such amount of monies or property as it shall, from time to
time, in its sole discretion, deem sufficient to indemnify itself for any such
loss or expense and for any amounts due to it under this Escrow Agreement. For
the purposes hereof, the term "loss or expense" shall include all amounts paid
or payable to satisfy any claim, demand or liability, or in settlement of any
claim, demand, action, suit or proceeding settled with the express written
consent of the Escrow Agent, and all costs and expenses, including, but not
limited to, reasonable counsel fees and disbursements, paid or incurred in
investigating or defending against any such claim, demand, action, suit or
proceeding.
13. Tax Matters.
(a) The Sellers shall be responsible for all income taxes on any
Earnings that may accrue in respect of the Escrow Fund and any Disputed Funds,
except for any Earnings distributed to the Purchaser. The Sellers and the
Purchaser will provide the Escrow Agent all information, and will execute and
deliver all IRS forms, sufficient to enable the Escrow Agent to comply with its
tax reporting obligations, reporting interest on the Escrow Fund and any
Disputed Funds, as interest of the Sellers for Federal income tax purposes.
(b) The parties represent and warrant to the Escrow Agent that there
are no Federal, State or local tax liabilities or filing requirements (other
than with respect to preparation and delivery of Form 1099 or other information
returns generally applicable to financial institutions) concerning the Escrow
Agent's actions contemplated hereunder and represent and warrant to the Escrow
Agent that the Escrow Agent has no duty to withhold or file any report (other
than with respect to preparation and delivery of Form 1099 or other information
returns generally applicable to financial institutions) or any tax liability
94
under any Federal or State income tax, local or State property tax, local or
State sales or use taxes, or any other tax by any taxing authority.
(c) The parties hereto jointly and severally agree to indemnify the
Escrow Agent fully for any tax liability, penalties or interest incurred by the
Escrow Agent arising hereunder and agree to pay in full any such tax liability
together with penalty and interest if any is ultimately assessed against the
Escrow Agent for any reason as a result of its action hereunder (except for the
Escrow Agent's individual income tax liability).
14. Termination. This Escrow Agreement, and the obligations of the Escrow
Agent hereunder, shall terminate upon the release and delivery by the Escrow
Agent of all Escrow Funds and any Disputed Funds in accordance with the
provisions of Section 3 hereof.
15. Notices. The Escrow Agent shall not be charged with knowledge of any
fact, including, but not limited to, performance or nonperformance of any
condition, unless it has actually received written notice thereof from one of
the parties hereto, or their authorized representatives, clearly referring to
this Escrow Agreement. All notices, requests, demands and other communications
hereunder shall be in writing, shall be effective when received, and shall be
hand delivered or sent by Federal Express or other comparable nationally
recognized courier service (receipt requested) or by facsimile transmission, or
mailed by registered or certified mail, postage prepaid, return receipt
requested and addressed:
IF TO THE PURCHASER:
C/O ACMI HOLDINGS, INC.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH COPIES TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ SINGER & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ESQ.
95
IF TO THE SELLERS' AGENT:
▇▇▇▇▇ ▇▇▇▇
[ADDRESS]
FAX: [_____________]
ATTN: [_____________]
WITH COPIES TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ESQ.
IF TO THE ESCROW AGENT:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ SINGER & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ESQ.
96
Any party or parties to be notified or copied may change the address for notices
or the person to whose attention notices are to be directed by written notice
given to each other party (including parties to be copied) in the manner
provided above.
16. Binding Effect. This Escrow Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.
17. Governing Law; Jurisdiction.
(a) The provisions of this Escrow Agreement, and all the rights and
obligations of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within such State without regard to
such State's conflicts of law principles.
(b) The parties hereto hereby consent to the jurisdiction of any
state or federal court located within the County of New York, State of New York
and irrevocably agree that, subject to the Escrow Agent's election, all actions
or proceedings arising out of or relating to this Escrow Agreement shall be
litigated in such courts. The parties hereto accept for each of itself/himself
and in connection with his/its properties, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and waives any defense of forum
non conveniens, and irrevocably agree to be bound by any judgment rendered
thereby in connection with this Escrow Agreement.
18. Counterparts. Telefacsimile transmissions of any executed original
document and/or retransmission of any executed telefacsimile transmission shall
be deemed to be the same as the delivery of an executed original. At the request
of any party hereto, the other parties hereto shall confirm telefacsimile
transmissions by executing duplicate original documents and delivering the same
to the requesting party or parties. This Escrow Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
19. Entire Agreement; Amendment. This Escrow Agreement constitutes the
entire understanding and agreement of the parties hereto with respect to the
subject matter described herein and supersedes all prior agreements or
understandings, written or oral, between the parties with respect thereto. This
Escrow Agreement may be amended only by a written instrument signed by all the
parties hereto.
20. Severability. Any provision of this Escrow Agreement that is
prohibited or unenforceable in any jurisdiction shall not affect the validity or
enforceability of any other provision in such jurisdiction or the validity or
enforceability of such provision in any other jurisdiction.
[Remainder of Page Intentionally Left Blank]
97
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the day and year first written above.
PURCHASER:
FVFN ACQUISITION CORP.
By________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
[SIGNATURE PAGE TO ESCROW AGREEMENT]
SELLERS:
▇▇▇▇ VENDING CO., INC.
By________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
▇▇▇▇ NOVELTY CO., INC.
By________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
STOCKHOLDER:
THE ▇▇▇▇▇ ▇▇▇▇ REVOCABLE TRUST
BY________________________________
NAME: ▇▇▇▇▇ ▇▇▇▇
TITLE: TRUSTEE
▇▇. ▇▇▇▇:
-----------------------------------
▇▇▇▇▇ ▇▇▇▇
[SIGNATURE PAGE TO ESCROW AGREEMENT]
ESCROW AGENT:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ SINGER & ▇▇▇▇▇▇▇▇▇, LLP,
AS ESCROW AGENT
------------------------
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 15th day of April, 2003, by and
between FVFN Acquisition Corp., a Delaware corporation (to be renamed ▇▇▇▇
Vending, Inc. on the date hereof, the "EMPLOYER" or the "COMPANY") and ▇▇▇▇▇
▇▇▇▇ (the "EXECUTIVE").
RECITALS
WHEREAS, the Employer prior hereto purchased certain of the assets and
businesses of ▇▇▇▇ Vending Co., Inc., a New York corporation ("FV"), and ▇▇▇▇
Novelty Co., Inc., a New York corporation (together with FV, the "SELLERS", and
each individually, a "SELLER"); and
WHEREAS, the Executive is the grantor of The ▇▇▇▇▇ ▇▇▇▇ Revocable Trust
(the "TRUST"), and was the sole shareholder and President of each Seller; and
WHEREAS, the Employer desires to employ the Executive and to utilize his
management services as indicated herein and the Executive has agreed to provide
such management services to the Employer; and
WHEREAS, as a material inducement for the Employer to enter into the Asset
Purchase Agreement, dated as of March 14, 2003 (the "PURCHASE AGREEMENT"), by
and among the Employer, American Coin Merchandising, Inc., the Sellers, the
Executive, and the Trust, and to hire and pay the Executive, the Executive has
agreed to execute this Agreement and be bound by the provisions herein; and
WHEREAS, capitalized terms used but not defined in this Agreement are used
herein as defined in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
PROVISIONS
1. Term and Duties. The Employer hereby agrees to employ the Executive as
President of the Company commencing on the date hereof and continuing for a
period of one (1) year from the date hereof (the "INITIAL TERM") or until
terminated in accordance with this Section 1 or Section 4. Unless terminated by
written notice delivered at least thirty (30) days prior to the expiration of
the Initial Term, the Executive's employment shall continue for successive one
(1) year terms (each one (1) year term hereinafter referred to as a "SUBSEQUENT
TERM" and together with the Initial Term, the "TERM") until terminated by
written notice delivered at least thirty (30) days prior to the expiration of
the Subsequent Term in question (it being understood that any termination by the
Employer pursuant to this sentence shall not be considered a termination by the
Employer other than for Cause for purposes of Section 5(c)
102
hereof). Subject to the provisions of this Agreement, during the Term, the
Executive shall devote his best efforts and abilities to the performance of the
Executive's duties on behalf of the Employer and to the promotion of its
interests, consistent with and subject to, the direction and control of the
Board of Directors of the Company (the "BOARD"). The Executive shall not be
required to devote substantially all of his business time, energies, attention
and abilities to the operation of the Business, it being understood that the
Executive shall devote such time and attention as shall be reasonably necessary
to perform his obligations hereunder, and shall be free to pursue other
businesses and enterprises during the Term subject to the non-solicitation,
non-competition and other restrictive covenants contained in the Purchase
Agreement. The Executive shall be entitled to (i) not less than four (4) weeks
of vacation time per year, (ii) maintain his current office in the premises of
the Company in Oceanside, New York (so long as the business of the Company is
located in Oceanside, New York), together with the business equipment currently
located in such office, and (iii) the services of an executive secretary. The
Executive's services shall be performed during administrative hours
substantially in Oceanside, New York, and the Executive shall not be required to
undertake any overnight business travel.
2. Compensation. In consideration of the services to be rendered by the
Executive during the Term of this Agreement, the Employer shall pay to the
Executive salary at a rate of $12,000 per year, payable bi-weekly.
3. Benefits.
(a) Board Membership. During the Term, the Executive shall be
entitled to a seat on the Board, and shall hold that office until the earlier of
the date upon which (i) this Agreement is terminated, and (ii) his voluntary
resignation. The Company shall provide to the Executive the same information
concerning the Company, and access thereto, provided to other members of the
Board. The Executive shall not be entitled to any compensation in consideration
of his service on the Board in excess of the salary otherwise provided herein.
(b) Benefit Programs. The Executive shall be eligible to participate
in the Company's health, disability, life insurance, vacation and 401(k)
programs, in each case on substantially similar terms as are offered to
similarly-situated employees and subject to the generally applicable terms and
conditions of the specific plan, benefit or program in question.
(c) Business Expenses. During the Term, the Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with carrying out his duties hereunder. The
Employer shall reimburse the Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance
with the generally applicable policies of the Employer.
4. Termination.
(a) Death or Disability. This Agreement shall terminate
automatically upon the Executive's death or termination due to "DISABILITY." For
purposes of this Agreement, Disability shall mean the Employee's inability to
perform the duties of his position for four (4) consecutive months, or 180 days
in any 365-day period.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, the Executive may, upon not less than 10 business
days written notice to the Employer, voluntarily
103
terminate his employment for any reason; provided, however, that any termination
by the Executive pursuant to Section 4(d) shall not be treated as a voluntary
termination under this Section 4(b).
(c) Cause. The Employer may terminate the Executive's employment for
Cause (as hereinafter defined).
(d) Good Reason. The Executive may terminate his employment for Good
Reason (as hereinafter defined).
(e) Notice of Termination. Any termination by the Employer for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12. For
purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
given within a reasonable time after the event or action believed to constitute
the reason for giving notice.
(f) Date of Termination. For the purpose of this Agreement, the term
"DATE OF TERMINATION" means (i) in the case of termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein up to thirty (30) days after receipt, as
the case may be, and (ii) in all other cases, the actual date on which the
Executive's employment terminated during the Term.
5. Termination Payments.
(a) Death or Disability. If the Executive's employment is terminated
during the Term of this Agreement by reason of the Executive's death or
Disability, this Agreement shall terminate without further obligations to the
Executive or the Executive's legal representatives under this Agreement other
than those obligations accrued hereunder through the Date of Termination and the
Employer shall pay to the Executive (or his beneficiary of estate) (i) the
Executive's accrued but unpaid salary, if any, accrued and unused vacation and
sick days, and unreimbursed business expenses (the "EARNED SALARY") in cash in a
single lump sum as soon as practicable following the Date of Termination, (ii)
any vested amounts or vested benefits owed to the Executive under the Employer's
otherwise applicable employee benefit plans and programs, and not yet paid by
the Employer (the "ACCRUED OBLIGATIONS"), and (iii) any other benefits payable
due to the Executive's death or Disability under the Employer's plans, policies
or programs (the "ADDITIONAL BENEFITS").
(b) Cause and Voluntary Termination. If the Executive's employment
shall be terminated for Cause or voluntarily terminated by the Executive without
Good Reason, the Employer shall pay to the Executive (i) the Earned Salary in
cash in a single lump sum as soon as practicable following the Date of
Termination, and (ii) the Accrued Obligations in accordance with the terms of
the applicable plan, program or arrangement.
(c) Termination by the Employer other than for Cause and Termination
by the Executive for Good Reason.
(i) Generally. If the Employer terminates the
Executive's employment other than for Cause or the Executive
terminates his employment for Good Reason, the Employer shall pay to
the Executive the following amounts: (A) the Earned Salary in cash
in a single lump sum as soon
104
as practicable following the Date of Termination; (B) his salary
until the end of the Term, in bi-weekly installments over such
period in accordance with the payroll practices of the Employer; and
(C) the Accrued Obligations in accordance with the terms of the
applicable plan, program or arrangement.
(ii) Benefits. For any termination of employment under
this Section 5(c), the Executive (and, to the extent applicable, his
dependents) shall be entitled, for one year, to continue
participation at the Company's expense in the Employer's health
plan. During this period, to the extent any such benefits cannot be
provided under the terms of the applicable health plan, the Employer
shall make COBRA payments sufficient to provide the Executive and
the Executive's family with an equivalent level of coverage as
existed prior to the Date of Termination.
(iii) No Duty to Mitigate Damages. The Executive shall
not be required to take any steps to mitigate damages with respect
to his entitlement under this Section 5(c).
(d) Discharge of the Employer's Obligations. The amounts payable to
the Executive pursuant to this Section 5 following termination of his employment
shall be in full and complete satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of his employment by the
Employer. Such amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt of such
amounts, the Employer shall be released and discharged from any and all
liability to the Executive in connection with this Agreement or otherwise in
connection with the Executive's employment with the Employer.
6. Confidentiality. The Executive acknowledges that he is subject to the
confidentiality provisions of Sections 3(e) of the Purchase Agreement, and that
this Agreement incorporates by reference any and all of the terms and provisions
of that Section. The provisions of this Section 6 shall survive the termination
of this Agreement.
7. Non-Compete; Non-Solicitation. The Executive acknowledges that he is
subject to the non-solicitation and non-competition provisions of Sections 3(f)
and 3(g) of the Purchase Agreement, and that this Agreement incorporates by
reference any and all of the terms and provisions of those Sections. The
provisions of this Section 7 shall survive the termination of this Agreement.
8. Definitions.
(a) "CAUSE" as used herein shall mean the Executive's (i) commission of
an act which constitutes common law fraud, embezzlement or a felony,
(ii) the commission of an act of moral turpitude, or of any tortious
or unlawful act, which, in each of the foregoing cases, causes
material harm to the Employer's business, standing or reputation,
(iii) gross negligence on the part of the Executive in the
performance of his duties hereunder, (iv) breach of his duty of
loyalty or care to the Employer, (v) other misconduct that is
materially detrimental to the Employer, (vi) ongoing refusal or
failure to perform the Executive's duties or the deliberate and
consistent refusal to conform to or follow any reasonable policy
adopted by the Board, in each case after receiving written notice
describing his non-compliance and being given a ten (10) business
day opportunity to
105
cure (to the extent curable) such non-compliance, or (vii) any other
breach by the Executive of a material obligation under this
Agreement, including without limitation the non-competition and
non-solicitation provisions of Section 7 hereof, the Purchase
Agreement or any other agreement with or for the benefit of the
Employer to which the Executive is a party or by which the Executive
is bound, which is not cured (to the extent curable) within ten (10)
business days following written notice from the Employer describing
such breach. The allegation by Employer of an act or failure to act
of Executive described in any of clauses (i) through (vii) above
shall not constitute "Cause" if same is subsequently determined by a
court of law or equity not to be such an act or failure to act;
pending such determination, the Employer may withhold payment of any
salary and may relieve the Executive of his duties as described
herein, provided that, if the relevant act or omission is not
ultimately determined to constitute a an act or omission to act of
Executive described in any of clauses (i) through (vii) above, then
such salary withholding and the Executive being relieved of his
duties shall be deemed to have been a dismissal or termination of
the Executive without Cause.
(b) "GOOD REASON" shall mean (i) there is a substantial reduction of the
level of the Executive's salary, responsibilities, perquisites or
title (including, without limitation, the appointment of an
individual, without the Executive's prior written consent, to hold
any of the offices (or to discharge the duties) the Executive is to
hold (or discharge) pursuant to this Agreement), (ii) the failure in
any material way of the Employer otherwise to fulfill any of its
material obligations under this Agreement, after receiving written
notice describing such non-compliance and being given a ten (10)
business day opportunity to cure (to the extent curable) such
non-compliance, or (iii) the involuntary relocation of the
Employer's offices at which the Executive is principally employed to
a location more than ten (10) miles from such offices, or the
requirement by the Employer that the Executive be based anywhere
other than the Employer's offices at such location on an extended
basis, except for required travel on employee business to an extent
substantially consistent with the Executive's business travel
obligations.
(c) "INVENTIONS" means discoveries, developments, improvements, or
inventions (whether patentable or not) related to the Business.
(d) "RESTRICTIVE COVENANTS" means the covenants set forth in Sections 6
and 7 and the related provisions thereafter.
9. Consideration, Severability, Reasonableness of Restrictive Covenants and
Maximum Enforceable Restrictions.
(a) Consideration. The Executive acknowledges and agrees that the
consideration set forth in the recitals to this Agreement and rights
and benefits hereunder are all and singularly valuable consideration
which are sufficient for any or all of the Executive's covenants set
forth herein, but specifically with respect to the Restrictive
Covenants.
(b) Severability. Each of the Restrictive Covenants is distinct and
severable, notwithstanding that some of such covenants may be set
forth in one Section hereof for convenience.
106
(c) Reasonableness of Restrictive Covenants. It is recognized and
understood by the Executive that the Employer's Confidential
Information is the result of large amounts of time, effort and
expense of the Employer in acquiring and/or developing such
information and is essential to the success of the Employer.
(d) Maximum Enforceable Restriction. In the event that any or all of the
Restrictive Covenants shall be determined by a court of competent
jurisdiction to be unenforceable by reason of their geographic or
temporal restrictions being too great, or by reason that the range
of activities covered are too great, or for any other reason, they
should be interpreted to extend over the maximum geographic area,
period of time, range of activities or other restrictions as to
which they may be enforceable by such court under applicable law.
10. Injunctive Relief. The parties agree that a breach of the Restrictive
Covenants may cause irreparable damage to the Employer, the extent of
which may be difficult to ascertain, and the award of damages may not be
adequate relief, and consequently, the Executive agrees that, in the event
of a breach or a threatened breach of any of the Restrictive Covenants,
the Employer may institute an action to compel the specific performance of
the Restrictive Covenants, and that such remedy shall be cumulative, not
exclusive, and shall be in addition to any other available remedies.
11. No Prior Agreements. The Executive represents and warrants that his
performance of all the terms of this Agreement does not and shall not
breach any fiduciary or other duty or any covenant, agreement or
understanding (including, without limitation, any agreement relating to
any proprietary information, knowledge or data acquired in confidence,
trust or otherwise) to which he is a party or by the terms of which he may
be bound. The Executive further covenants and agrees not to enter into any
agreement or understanding, either written or oral, in conflict with the
provisions of this Agreement.
12. Notices. All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by confirmed facsimile transmission,
by recognized national overnight courier service or by deposit in the
United States mail, postage prepaid, by registered or certified mail,
return receipt requested, addressed to the party to be notified at the
addresses set forth below:
IF TO THE EXECUTIVE TO:
▇▇▇▇▇ ▇▇▇▇
[ADDRESS]
WITH COPY TO:
▇▇▇▇▇▇▇▇ Brog Leinward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
1345 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
IF TO THE EMPLOYER:
▇▇▇▇ VENDING, INC.
c/o American Coin Merchandising, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Notices shall be effective immediately upon personal delivery or facsimile
transmission, one business day after deposit with an overnight courier service
or three (3) business days after the date of mailing thereof. Other notices
shall be deemed given on the date of receipt. Any party hereto may change the
address specified herein by written notice to the other parties hereto.
13. Entire Agreement. This Agreement cancels and supersedes any and all prior
agreements and understandings, written or verbal, between the parties
hereto with respect to the Executive's employment by the Employer. This
Agreement and the Purchase Agreement constitute the entire agreement
between the parties with respect to the matters herein provided, and no
modifications or waiver of any provision hereof shall be effective unless
in writing and signed by the Employer and the Executive.
14. Binding Effect. All of the terms and provisions of this Agreement shall be
binding upon the parties hereto and its or his heirs, executors,
administrators, legal representatives, successors and assigns, and inure
to the benefit of and be enforceable by the Employer and its successors
and
108
assigns, except that the duties and responsibilities of the Executive
hereunder are of a personal nature and shall not be assignable or
delegable in whole or in part.
15. Severability In the event that any provision of this Agreement or
application thereof to anyone or under any circumstance is found to be
invalid or unenforceable in any jurisdiction to any extent for any reason,
such invalidity or unenforceability shall not affect any other provision
or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate
or render unenforceable such provision or application in any other
jurisdiction.
16. Remedies; Waiver. No remedy conferred upon the Employer by this Agreement
is intended to be exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity. No delay
or omission by the Employer in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the party
possessing the same from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
17. Counterparts. This Agreement may be executed in several counterparts, each
of which is an original and all of which shall constitute one instrument.
It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other
counterparts.
18. Governing Law; Jurisdiction.
(a) The provisions of this Agreement, and all the rights and obligations
of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly within such
State without regard to such State's conflicts of law principles.
(b) Each of the parties hereto hereby consents to the jurisdiction of
any state or federal court located within the County of New York or
County of Nassau, State of New York and irrevocably agrees that,
subject to the Employer's election, all actions or proceedings
arising out of or relating to this Agreement shall be litigated in
such courts. Each party hereto accepts for each of itself and
himself and in connection with its and his properties, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts
and waives any defense of forum non conveniens, and irrevocably
agrees to be bound by any judgment rendered thereby in connection
with this Agreement.
19. Headings. The captions and headings contained in this Agreement are for
convenience only and shall not be construed as a part of the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
109
IN WITNESS HEREOF, the parties have executed this Agreement as of the date
and year first above written.
EMPLOYER:
FVFN ACQUISITION CORP.
By
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
EXECUTIVE:
--------------------------------
▇▇▇▇▇ ▇▇▇▇
[SIGNATURE PAGE TO ▇▇▇▇▇ ▇▇▇▇ EMPLOYMENT AGREEMENT]
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 15th day of April, 2003, by and
between FVFN Acquisition Corp., a Delaware corporation (to be renamed ▇▇▇▇
Vending, Inc. on the date hereof, the "EMPLOYER" or the "COMPANY") and ▇▇▇▇▇
▇▇▇▇▇ (the "EXECUTIVE").
RECITALS
WHEREAS, the Employer prior hereto purchased certain of the assets and
business of ▇▇▇▇ Vending Co., Inc., a New York corporation ("FV"), and ▇▇▇▇
Novelty Co., Inc., a New York corporation (together with FV, the "SELLERS", and
each individually, a "SELLER"); and
WHEREAS, the Executive was employed by FV; and
WHEREAS, the Employer desires to employ the Executive and to utilize her
management services as indicated herein and the Executive has agreed to provide
such management services to the Employer; and
WHEREAS, as a material inducement for the Employer to enter into the Asset
Purchase Agreement, dated as of March 14, 2003 (the "PURCHASE AGREEMENT"), by
and among the Employer, American Coin Merchandising, Inc., the Sellers, ▇▇▇▇▇
▇▇▇▇, and The ▇▇▇▇▇ ▇▇▇▇ Revocable Trust, and to hire and pay the Executive, the
Executive has agreed to execute this Agreement and be bound by the provisions
herein; and
WHEREAS, capitalized terms used but not defined in this Agreement are used
herein as defined in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
PROVISIONS
1. Term and Duties. The Employer hereby agrees to employ the Executive as
the Chief Financial Officer of the Company commencing on the date hereof and
continuing for a period of one (1) year from the date hereof (the "INITIAL
TERM") or until terminated in accordance with this Section 1 or Section 4.
Unless terminated by written notice delivered at least thirty (30) days prior to
the expiration of the Initial Term, the Executive's employment shall continue
for successive one (1) year terms (each one (1) year term hereinafter referred
to as a "SUBSEQUENT TERM" and together with the Initial Term, the "TERM") until
terminated by written notice delivered at least thirty (30) days prior to the
expiration of the Subsequent Term in question (it being understood that any
termination by the Employer pursuant to this sentence shall not be considered a
termination by the Employer other than for Cause for purposes of Section 5(c)
hereof). Subject to the provisions of this Agreement, during the Term, the
Executive shall
112
devote her best efforts and abilities to the performance of the Executive's
duties on behalf of the Employer and to the promotion of its interests,
consistent with and subject to, the direction and control of the Board of
Directors of the Company (the "BOARD") and the President of the Company (the
"PRESIDENT"). The Executive shall devote no less than twenty-five (25) hours per
week of her business time, energies, attention and abilities to the operation of
the Business. The Executive's services shall be performed during administrative
hours substantially in Oceanside, New York. The Executive shall be entitled to
maintain her current office in the Oceanside premises (so long as the business
of the Company is located in Oceanside, New York), together with the office
furniture, furnishings and business equipment currently located therein. The
Executive shall be entitled to the services of an executive secretary. The
Executive shall be entitled to no less than four (4) weeks of vacation time per
year. The Executive shall not be required to undertake any overnight business
travel at the same time that ▇▇▇▇▇▇ ▇▇▇▇▇ is also undertaking overnight business
travel, and, in any case, such overnight business travel shall be for a
reasonably minimum period of time.
2. Compensation.
(a) Base Compensation. In consideration of the services to be
rendered by the Executive during the Term of this Agreement, the Employer shall
pay the Executive base compensation at a rate of $100,000 per year (the "BASE
COMPENSATION"), payable bi-weekly.
(b) Bonus. In addition to the Base Compensation, the Executive shall
be entitled to an incentive bonus (the "INCENTIVE BONUS") based upon her
participation in the Company's regular annual bonus program for senior
executives as the same is in effect from time to time. The amount of such bonus,
if any, shall be in the discretion of the President and the Board.
3. Benefits.
(a) Benefit Programs. The Executive shall be eligible to participate
in such benefit programs offered by the Employer such as health, disability,
life insurance, any employee stock purchase plan, vacations and 401(k), as are
offered to similarly-situated employees (except in the case of equity-based
incentive plans where awards are subject to Board (or committee thereof)
approval) and in each case no more favorable than the terms of benefits
generally available to the employees of the Employer (based on seniority and
salary level), subject in each case to the generally applicable terms and
conditions of the plan, benefit or program in question.
(b) Business Expenses. During the Term, the Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with carrying out her duties hereunder. The
Employer shall reimburse the Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance
with the generally applicable policies of the Employer.
(c) Automobile Allowance. During the Term, the Employer shall
provide the Executive the use of an automobile in accordance with customary
Company policy, together with an allowance sufficient to cover fuel,
maintenance, registration and taxes with respect thereto in accordance with
customary Company policy.
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4. Termination.
(a) Death or Disability. This Agreement shall terminate
automatically upon the Executive's death or termination due to "DISABILITY." For
purposes of this Agreement, Disability shall mean the Executive's inability to
perform the duties of her position for four (4) consecutive months, or 180 days
in any 365-day period.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, the Executive may, upon not less than 10 business
days written notice to the Employer, voluntarily terminate her employment for
any reason; provided, however, that any termination by the Executive pursuant to
Section 4(d) shall not be treated as a voluntary termination under this Section
4(b).
(c) Cause. The Employer may terminate the Executive's employment for
Cause (as hereinafter defined).
(d) Good Reason. The Executive may terminate her employment for Good
Reason (as hereinafter defined).
(e) Notice of Termination. Any termination by the Employer for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13. For
purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
given within a reasonable time after the event or action believed to constitute
the reason for giving notice.
(f) Date of Termination. For the purpose of this Agreement, the term
"DATE OF TERMINATION" means (i) in the case of termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein up to thirty (30) days after receipt, as
the case may be, and (ii) in all other cases, the actual date on which the
Executive's employment terminated during the Term.
5. Termination Payments.
(a) Death or Disability. If the Executive's employment is terminated
during the Term of this Agreement by reason of the Executive's death or
Disability, this Agreement shall terminate without further obligations to the
Executive or the Executive's legal representatives under this Agreement other
than those obligations accrued hereunder through the Date of Termination and the
Employer shall pay to the Executive (or her beneficiary of estate) (i) the
Executive's accrued but unpaid Base Compensation and Incentive Bonus, if any,
accrued and unused vacation and sick days, and unreimbursed business expenses
(the "EARNED SALARY") in cash in a single lump sum as soon as practicable
following the Date of Termination, (ii) any vested amounts or vested benefits
owed to the Executive under the Employer's otherwise applicable employee benefit
plans and programs, and not yet paid by the Employer (the "ACCRUED
OBLIGATIONS"), and (iii) any other benefits payable due to the Executive's death
or Disability under the Employer's plans, policies or programs (the "ADDITIONAL
BENEFITS").
(b) Cause and Voluntary Termination. If the Executive's employment
shall be terminated for Cause or voluntarily terminated by the Executive without
Good Reason, the Employer shall pay to the Executive (i) the Earned Salary in
cash in a single lump sum as soon as practicable following the Date of
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Termination, and (ii) the Accrued Obligations in accordance with the terms of
the applicable plan, program or arrangement.
(c) Termination by the Employer other than for Cause and Termination
by the Executive for Good Reason.
(i) Generally. If the Employer terminates the
Executive's employment other than for Cause or the Executive
terminates her employment for Good Reason, the Employer shall pay to
the Executive the following amounts: (A) the Earned Salary in cash
in a single lump sum as soon as practicable following the Date of
Termination; (B) her then current Base Compensation until the one
(1) year anniversary of the Date of Termination, in bi-weekly
installments over such one (1) year period in accordance with the
payroll practices of the Employer; and (C) the Accrued Obligations
in accordance with the terms of the applicable plan, program or
arrangement.
(ii) Benefits. For any termination of employment under
this Section 5(c), the Executive (and, to the extent applicable, her
dependents) shall be entitled, for one year, to continue
participation at the Company's expense in the Employer's health
plan. During this period, to the extent any such benefits cannot be
provided under the terms of the applicable health plan, the Employer
shall make COBRA payments sufficient to provide the Executive and
the Executive's family with an equivalent level of coverage as
existed prior to the Date of Termination.
(iii) No Duty to Mitigate Damages. The Executive shall
not be required to take any steps to mitigate damages with respect
to her entitlement under this Section 5(c).
(d) Discharge of the Employer's Obligations. The amounts payable to
the Executive pursuant to this Section 5 following termination of her employment
shall be in full and complete satisfaction of the Executive's rights under this
Agreement, and any other claims she may have in respect of her employment by the
Employer other than any claim she may have against the Employer arising out of
her being a victim of any unlawful act. Such amounts shall constitute liquidated
damages with respect to any and all such rights and claims and, upon the
Executive's receipt of such amounts, the Employer shall be released and
discharged from any and all liability to the Executive in connection with this
Agreement or otherwise in connection with the Executive's employment with the
Employer, other than in respect of any claim the Executive may have against the
Employer arising out of her being a victim of any unlawful act.
6. Confidentiality.
(a) The Executive realizes that during this Agreement, the Executive
will produce and/or will have access to confidential memoranda, notes,
information, records, maps, research results, business projections, business and
research notebooks, data, formulae, specifications, trade secrets, customer
lists, inventions and processes of the Employer, and other information of a
confidential nature (collectively, "CONFIDENTIAL INFORMATION"). Confidential
Information shall not include any information that (i) has become publicly known
through no wrongful act or breach of any obligation of confidentiality on the
part
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of the Executive; or (ii) was rightfully received by the Executive on a
non-confidential basis from a third party (provided that such third party is not
known to the Executive after reasonable inquiry to be bound by a confidentiality
agreement with the Employer or another party).
(b) Both during the term of this Agreement and subsequent to its
termination, the Executive agrees to hold all Confidential Information in
confidence and not to disclose, and not directly or indirectly to use, copy,
digest or summarize, any Confidential Information, except as required by law and
to the extent the Executive reasonably believes is necessary to carry out the
Executive's responsibilities as directed or authorized by the Employer and,
after termination of the Executive's employment hereunder, as specifically
authorized in writing by the Employer.
(c) All records in whatsoever form and in whatsoever medium
recorded, and any and all copies thereof (including volatile electronic or
magnetic signals), relating to the Employer's business that the Executive shall
prepare, or use, or come into contact with in the course of her executing her
duties under this Agreement, shall be and remain the sole property of the
Employer and shall not be removed from the Employer's premises except as the
Executive reasonably believes is necessary to carry out the Executive's
responsibilities as directed and authorized by the Employer; and the same shall
be returned promptly to the Employer upon termination of the Executive's
employment relationship with the Employer or upon the Employer's request.
(d) The provisions of this Section 6 shall survive the termination
of this Agreement.
7. Inventions. The Executive shall promptly, and in any event no later
than one (1) year after termination of her employment with the Employer, with
respect to Inventions made or conceived by the Executive during her employment,
either solely or jointly with others, if based on or related to or connected
with the Business or the Employer or time, material, facilities or other
employees of the Employer contributed thereto:
(a) promptly and fully inform the Employer in writing of such
Inventions;
(b) assign, and the Executive does hereby assign, to the Employer
all of the Executive's rights to such Inventions, if any, and to applications
for Letters Patent and to Letters Patent granted upon such Inventions; and
(c) acknowledge and deliver promptly to the Employer (without charge
to the Executive but at the expense of the Employer) such written instruments
and do such other acts as may be reasonably necessary to obtain and maintain
Letters Patent and to vest the entire right and title thereto in the Employer.
All Inventions, regardless of whether or not they are considered "WORKS
FOR HIRE," shall for all purposes be regarded as acquired and held by the
Executive for the benefit, and shall be the sole and exclusive property, of the
Employer.
The provisions of this Section 7 shall survive the termination of this
Agreement.
8. Non-Compete; Non-Solicitation
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(a) The Executive agrees that she possesses or will possess knowledge,
skills and reputation in the industry in which the Employer operates
which are of material importance to the Employer, and which are
special, unique and extraordinary. The Executive acknowledges that
the loss of her services, or the use of her services by a
competitor, may cause irreparable harm to the Employer. Therefore,
during the term hereof and during periods set forth in Subsection
(b) hereof following termination of the Executive's employment
hereunder for any reason, with or without Cause, the Executive,
individually and personally, shall not do any of the following
unless specifically authorized in writing by the Board:
(i) Canvass, solicit, or accept any business in the amusement
vending machine business or industry (the "INDUSTRY") from any present or past
customer of the Employer or any related company, if the customer is located in
the United States (the "TERRITORY").
(ii) Aid or assist any other person, entity, partnership, or
corporation in any effort to canvass, solicit, or accept any business in the
Industry from any past or present customers of the Employer or of any related
company, if the customer is located within the Territory.
(iii) Directly or indirectly request or advise any past or
present customer of the Employer, or any past, present, or possible future
customer of any related companies to withdraw, curtail, cancel, or not undertake
business in the Industry with any related company, if the customer is located
within the Territory.
(iv) Directly or indirectly disclose to any other person,
entity, partnership, or corporation the names of past or present customers of
the Employer, or of any related company. The parties agree that the names of
these customers are confidential and proprietary and constitute trade secrets of
the Employer.
(v) Suggest, solicit, or encourage any employee of the
Employer or any related company to leave the employment of such entity or
disparage the Employer or any related company or their conditions of employment,
or disclose to any other person, entity, partnership, or corporation the names
of employees of the Employer or any related company.
(vi) Directly or indirectly establish, as manager, employee or
owner of greater than 1% of the outstanding ownership interest, or participate
in an enterprise competitive with any business which is conducted at any time
during the term of this Agreement by the Employer or any related company, and
which business is in the Industry and in the Territory.
(vii) Provide any product, service, financing, aid, or
assistance of any kind for any person, entity, partnership, association, or
corporation which is competitive with any business which is conducted at any
time during the term of this Agreement by the Employer or any related company,
and which business is in the Industry and in the Territory.
(viii) Compete in any manner with any business which is
conducted at any time during the term of this Agreement by the Employer or any
related company, and which business is in the Industry and in the Territory.
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(b) The non-competition provisions set forth in Subsection (a) shall
apply as follows: (i) if the Executive's employment is terminated
for any reason, for a period of one (1) year from the Date of
Termination (as defined in Section 4(f)) regardless of the reason
for termination, and (ii) if this Agreement is not renewed or
extended at the end of the Term, for a period of one (1) year from
the end of the Term.
9. Definitions.
(a) "CAUSE" as used herein shall mean the Executive's (i) commission of
an act which constitutes common law fraud, embezzlement or a felony,
(ii) commission of an act of moral turpitude, or of any tortious or
unlawful act, which, in each of the foregoing cases, causes material
harm to the Employer's business, standing or reputation, (iii) gross
negligence on the part of the Executive in the performance of her
duties hereunder, (iv) breach of her duty of loyalty or care to the
Employer, (v) other misconduct that is materially detrimental to the
Employer, (vi) ongoing refusal or failure to perform the Executive's
duties or the deliberate and consistent refusal to conform to or
follow any reasonable policy adopted by the Board or lawful
instructions of the President, in each case after receiving written
notice describing her non-compliance and being given a ten (10)
business day opportunity to cure (to the extent curable) such
non-compliance, or (vii) any other breach by the Executive of a
material obligation under this Agreement, including without
limitation the non-competition and non-solicitation provisions of
Section 8 hereof, or any other agreement with or for the benefit of
the Employer to which the Executive is a party or by which the
Executive is bound, which is not cured (to the extent curable)
within ten (10) business days following written notice from the
Employer describing such breach. The allegation by Employer of an
act or failure to act of Executive described in any of clauses (i)
through (vii) above shall not constitute "Cause" if same is
subsequently determined by a court of law or equity not to be such
an act or failure to act; pending such determination, the Employer
may withhold payment of any Base Compensation or Incentive Bonus and
may relieve the Executive of her duties as described herein,
provided that, if the relevant act or omission is not ultimately
determined to constitute an act or omission to act of Executive
described in any of clauses (i) through (vii) above, then such
salary withholding and the Executive being relieved of her duties
shall be deemed to have been a dismissal or termination of the
Executive without Cause.
(b) "GOOD REASON" shall mean (i) there is a substantial reduction of the
level of the Executive's compensation, responsibilities, perquisites
or title (including, without limitation, the appointment of an
individual, without the Executive's prior written consent, to hold
any of the offices (or to discharge the duties) the Executive is to
hold (or discharge) pursuant to this Agreement), (ii) the failure in
any material way of the Employer otherwise to fulfill any of its
material obligations under this Agreement, after receiving written
notice describing such non-compliance and being given a ten (10)
business day opportunity to cure (to the extent curable) such
non-compliance, or (iii) the involuntary relocation of the
Employer's offices at which the Executive is principally employed to
a location more than ten (10) miles from such offices, or the
requirement by the Employer that the Executive be based anywhere
other than the Employer's offices at such location on an extended
basis, except for required travel on employee business to an extent
substantially consistent with the Executive's business travel
obligations.
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(c) "INVENTIONS" means discoveries, developments, improvements, or
inventions (whether patentable or not) related to the Business.
(d) "RESTRICTIVE COVENANTS" means the covenants set forth in Sections 6,
7 and 8 and the related provisions thereafter.
10. Consideration, Severability, Reasonableness of Restrictive Covenants and
Maximum Enforceable Restrictions.
(a) Consideration. The Executive acknowledges and agrees that the
consideration set forth in the recitals to this Agreement and rights
and benefits hereunder are all and singularly valuable consideration
which are sufficient for any or all of the Executive's covenants set
forth herein, but specifically with respect to the Restrictive
Covenants.
(b) Severability. Each of the Restrictive Covenants is distinct and
severable, notwithstanding that some of such covenants may be set
forth in one Section hereof for convenience.
(c) Reasonableness of Restrictive Covenants. It is recognized and
understood by the Executive that the Employer's Confidential
Information is the result of large amounts of time, effort and
expense of the Employer in acquiring and/or developing such
information and is essential to the success of the Employer.
(d) Maximum Enforceable Restriction. In the event that any or all of the
Restrictive Covenants shall be determined by a court of competent
jurisdiction to be unenforceable by reason of their geographic or
temporal restrictions being too great, or by reason that the range
of activities covered are too great, or for any other reason, they
should be interpreted to extend over the maximum geographic area,
period of time, range of activities or other restrictions as to
which they may be enforceable by such court under applicable law.
11. Injunctive Relief. The parties agree that a breach of the Restrictive
Covenants may cause irreparable damage to the Employer, the extent of
which may be difficult to ascertain, and the award of damages may not be
adequate relief, and consequently, the Executive agrees that, in the event
of a breach or a threatened breach of any of the Restrictive Covenants,
the Employer may institute an action to compel the specific performance of
the Restrictive Covenants, and that such remedy shall be cumulative, not
exclusive, and shall be in addition to any other available remedies.
12. No Prior Agreements. The Executive represents and warrants that her
performance of all the terms of this Agreement does not and shall not
breach any fiduciary or other duty or any covenant, agreement or
understanding (including, without limitation, any agreement relating to
any proprietary information, knowledge or data acquired in confidence,
trust or otherwise) to which he is a party or by the terms of which he may
be bound. The Executive further covenants and agrees not to enter into any
agreement or understanding, either written or oral, in conflict with the
provisions of this Agreement.
13. Notices. All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by confirmed facsimile transmission,
by recognized national overnight courier service or
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by deposit in the United States mail, postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to be
notified at the addresses set forth below:
IF TO THE EXECUTIVE TO:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ Brog Leinward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
IF TO THE EMPLOYER:
▇▇▇▇ VENDING, INC.
c/o American Coin Merchandising, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Notices shall be effective immediately upon personal delivery or facsimile
transmission, one business day after deposit with an overnight courier service
or three (3) business days after the date of mailing thereof. Other notices
shall be deemed given on the date of receipt. Any party hereto may change the
address specified herein by written notice to the other parties hereto.
14. Entire Agreement. This Agreement cancels and supersedes any and all prior
agreements and understandings, written or verbal, between the parties
hereto with respect to the Executive's employment, and cancels and
supercedes any and all agreements and understandings, written or verbal,
between FV and the Executive, with respect to the Executive's employment,
including without limitation, that certain Employment Agreement, dated as
of March 1, 1999 (as the same may have been amended or modified subsequent
thereto). This Agreement constitutes the entire agreement between the
parties with respect to the matters herein provided, and no modifications
or waiver of any provision hereof shall be effective unless in writing and
signed by the Employer and the Executive.
15. Binding Effect. All of the terms and provisions of this Agreement shall be
binding upon the parties hereto and its or her heirs, executors,
administrators, legal representatives, successors and assigns, and inure
to the benefit of and be enforceable by the Employer and its successors
and assigns, except that the duties and responsibilities of the Executive
hereunder are of a personal nature and shall not be assignable or
delegable in whole or in part.
16. Severability In the event that any provision of this Agreement or
application thereof to anyone or under any circumstance is found to be
invalid or unenforceable in any jurisdiction to any extent for any reason,
such invalidity or unenforceability shall not affect any other provision
or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate
or render unenforceable such provision or application in any other
jurisdiction.
17. Remedies; Waiver. No remedy conferred upon the Employer by this Agreement
is intended to be exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity. No delay
or omission by the Employer in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the party
possessing the same from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
18. Counterparts. This Agreement may be executed in several counterparts, each
of which is an original and all of which shall constitute one instrument.
It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other
counterparts.
19. Governing Law; Jurisdiction.
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(a) The provisions of this Agreement, and all the rights and obligations
of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly within such
State without regard to such State's conflicts of law principles.
(b) Each of the parties hereto hereby consents to the jurisdiction of
any state or federal court located within the County of New York or
County of Nassau, State of New York and irrevocably agrees that,
subject to the Employer's election, all actions or proceedings
arising out of or relating to this Agreement shall be litigated in
such courts. Each party hereto accepts for each of itself and
herself and in connection with its and her properties, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts
and waives any defense of forum non conveniens, and irrevocably
agrees to be bound by any judgment rendered thereby in connection
with this Agreement.
20. Headings. The captions and headings contained in this Agreement are for
convenience only and shall not be construed as a part of the Agreement.
122
IN WITNESS HEREOF, the parties have executed this Agreement as of the date
and year first above written.
EMPLOYER:
FVFN ACQUISITION CORP.
By
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
EXECUTIVE:
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO ▇▇▇▇▇ ▇▇▇▇▇ EMPLOYMENT AGREEMENT]
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 15th day of April, 2003, by and
between FVFN Acquisition Corp., a Delaware corporation (to be renamed ▇▇▇▇
Vending, Inc. on the date hereof, the "EMPLOYER" or the "COMPANY") and ▇▇▇▇▇▇
▇▇▇▇▇ (the "EXECUTIVE").
RECITALS
WHEREAS, the Employer prior hereto purchased certain of the assets and
business of ▇▇▇▇ Vending Co., Inc., a New York corporation ("FV"), and ▇▇▇▇
Novelty Co., Inc., a New York corporation (together with FV, the "SELLERS", and
each individually, a "SELLER"); and
WHEREAS, the Executive was employed by FV; and
WHEREAS, the Employer desires to employ the Executive and to utilize his
management services as indicated herein and the Executive has agreed to provide
such management services to the Employer; and
WHEREAS, as a material inducement for the Employer to enter into the Asset
Purchase Agreement, dated as of March 14, 2003 (the "PURCHASE AGREEMENT"), by
and among the Employer, American Coin Merchandising, Inc., the Sellers, ▇▇▇▇▇
▇▇▇▇, and The ▇▇▇▇▇ ▇▇▇▇ Revocable Trust, and to hire and pay the Executive, the
Executive has agreed to execute this Agreement and be bound by the provisions
herein; and
WHEREAS, capitalized terms used but not defined in this Agreement are used
herein as defined in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
PROVISIONS
1. Term and Duties. The Employer hereby agrees to employ the Executive as
the Chief Operating Officer of the Company commencing on the date hereof and
continuing for a period of one (1) year from the date hereof (the "INITIAL
TERM") or until terminated in accordance with this Section 1 or Section 4.
Unless terminated by written notice delivered at least thirty (30) days prior to
the expiration of the Initial Term, the Executive's employment shall continue
for successive one (1) year terms (each one (1) year term hereinafter referred
to as a "SUBSEQUENT TERM" and together with the Initial Term, the "TERM") until
terminated by written notice delivered at least thirty (30) days prior to the
expiration of the Subsequent Term in question (it being understood that any
termination by the Employer pursuant to this sentence shall not be considered a
termination by the Employer other than for Cause for purposes of Section 5(d)
hereof). Subject to the provisions of this Agreement, during the Term, the
Executive shall
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devote his best efforts and abilities to the performance of the Executive's
duties on behalf of the Employer and to the promotion of its interests,
consistent with and subject to, the direction and control of the Board of
Directors of the Company (the "BOARD") and the President of the Company (the
"PRESIDENT"). The Executive shall devote substantially all of his business time,
energies, attention and abilities to the operation of the Business and shall not
be actively involved in any other trade or business or as an employee of any
other trade or business. The Executive's services shall be performed during
administrative hours substantially in Oceanside, New York. The Executive shall
be entitled to maintain his current office in the Oceanside premises (so long as
the business of the Company is located in Oceanside, New York), together with
the office furniture, furnishings and business equipment currently located
therein. The Executive shall be entitled to the services of an executive
secretary. The Executive shall be entitled to no less than four (4) weeks of
vacation time per year.
2. Compensation.
(a) Base Compensation. In consideration of the services to be
rendered by the Executive during the Term of this Agreement, the Employer shall
pay the Executive base compensation at a rate of $182,000 per year (the "BASE
COMPENSATION"), payable bi-weekly.
(b) Bonus. In addition to the Base Compensation, the Executive shall
be entitled to an incentive bonus (the "INCENTIVE BONUS") based upon his
participation in the Company's regular annual bonus program for senior
executives as the same is in effect from time to time. The amount of such bonus,
if any, shall be in the discretion of the President and the Board.
3. Benefits.
(a) Benefit Programs. The Executive shall be eligible to participate
in such benefit programs offered by the Employer such as health, disability,
life insurance, any employee stock purchase plan, vacations and 401(k), as are
offered to similarly-situated employees (except in the case of equity-based
incentive plans where awards are subject to Board (or committee thereof)
approval) and in each case no more favorable than the terms of benefits
generally available to the employees of the Employer (based on seniority and
salary level), subject in each case to the generally applicable terms and
conditions of the plan, benefit or program in question.
(b) Business Expenses. During the Term, the Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with carrying out his duties hereunder. The
Employer shall reimburse the Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance
with the generally applicable policies of the Employer.
(c) Automobile Allowance. During the Term, the Employer shall
provide the Executive the use of an automobile in accordance with customary
Company policy, together with an allowance sufficient to cover fuel,
maintenance, registration and taxes with respect thereto in accordance with
customary Company policy.
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4. Termination.
(a) Death or Disability. This Agreement shall terminate
automatically upon the Executive's death or termination due to "DISABILITY." For
purposes of this Agreement, Disability shall mean the Executive's inability to
perform the duties of his position for four (4) consecutive months, or 180 days
in any 365-day period.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, the Executive may, upon not less than 10 business
days written notice to the Employer, voluntarily terminate his employment for
any reason; provided, however, that any termination by the Executive pursuant to
Section 4(d) shall not be treated as a voluntary termination under this Section
4(b).
(c) Cause. The Employer may terminate the Executive's employment for
Cause (as hereinafter defined).
(d) Good Reason. The Executive may terminate his employment for Good
Reason (as hereinafter defined).
(e) Notice of Termination. Any termination by the Employer for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13. For
purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
given within a reasonable time after the event or action believed to constitute
the reason for giving notice.
(f) Date of Termination. For the purpose of this Agreement, the term
"DATE OF TERMINATION" means (i) in the case of termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein up to thirty (30) days after receipt, as
the case may be, and (ii) in all other cases, the actual date on which the
Executive's employment terminated during the Term.
5. Termination Payments.
(a) Death or Disability. If the Executive's employment is terminated
during the Term of this Agreement by reason of the Executive's death or
Disability, this Agreement shall terminate without further obligations to the
Executive or the Executive's legal representatives under this Agreement other
than those obligations accrued hereunder through the Date of Termination and the
Employer shall pay to the Executive (or his beneficiary of estate) (i) the
Executive's accrued but unpaid Base Compensation and Incentive Bonus, if any,
accrued and unused vacation and sick days, and unreimbursed business expenses
(the "EARNED SALARY") in cash in a single lump sum as soon as practicable
following the Date of Termination, (ii) any vested amounts or vested benefits
owed to the Executive under the Employer's otherwise applicable employee benefit
plans and programs, and not yet paid by the Employer (the "ACCRUED
OBLIGATIONS"), and (iii) any other benefits payable due to the Executive's death
or Disability under the Employer's plans, policies or programs (the "ADDITIONAL
BENEFITS").
(b) Cause and Voluntary Termination. If the Executive's employment
shall be terminated for Cause or voluntarily terminated by the Executive without
Good Reason, the Employer shall pay to the Executive (i) the Earned Salary in
cash in a single lump sum as soon as practicable following the Date of
Termination, (ii) the Accrued Obligations in accordance with the terms of the
applicable plan, program or
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arrangement, and (iii) subject to the immediately succeeding sentence, an amount
equal to the Executive's then current Base Compensation, payable in bi-weekly
installments in accordance with the payroll practices of the Employer, for a
period of time beginning on the day after the Date of Termination and ending on
the earliest to occur of (A) the date that the Company determines to no longer
enforce the non-competition provisions of Section 8 hereof, (B) the date upon
which the Executive commences new employment, and (C) one (1) year from the Date
of Termination. ▇▇▇▇▇ ▇▇▇▇ hereby agrees that, if he is employed by the Company
on the Date of Termination if the Executive's employment is terminated for Cause
or voluntarily terminated by the Executive without Good Reason, he will pay to
the Executive an amount equal to 50% of the amount otherwise payable by the
Company pursuant to subclause (iii) of the immediately preceding sentence, at
substantially the same time as any such payments are made by the Company, and
any amounts so paid by ▇▇▇▇▇ ▇▇▇▇ will reduce the Company's obligation pursuant
to such subclause (iii) by a like amount, such that the amounts received by the
Executive from the Employer and from ▇▇▇▇▇ ▇▇▇▇ in the aggregate will equal his
then current Base Compensation for the period of time set forth in subclause
(iii).
(c) Nonrenewal by the Employer. If the Executive's employment shall
be terminated by the Employer at the end of the Initial Term or any Subsequent
Term in accordance with Section 1 hereof, the Employer shall pay to the
Executive (i) the Earned Salary in cash in a single lump sum as soon as
practicable following the Date of Termination, (ii) the Accrued Obligations in
accordance with the terms of the applicable plan, program or arrangement, and
(iii) an amount equal to the Executive's then current Base Compensation, payable
in bi-weekly installments in accordance with the payroll practices of the
Employer, for a period of time beginning on the day after the Date of
Termination and ending on the earliest to occur of (A) the date that the Company
determines to no longer enforce the non-competition provisions of Section 8
hereof, (B) the date upon which the Executive commences new employment, and (C)
one (1) year from the Date of Termination.
(d) Termination by the Employer other than for Cause and Termination
by the Executive for Good Reason.
(i) Generally. If the Employer terminates the
Executive's employment other than for Cause or the Executive
terminates his employment for Good Reason, the Employer shall pay to
the Executive the following amounts: (A) the Earned Salary in cash
in a single lump sum as soon as practicable following the Date of
Termination; (B) his then current Base Compensation until the one
(1) year anniversary of the Date of Termination, in bi-weekly
installments over such one (1) year period in accordance with the
payroll practices of the Employer; and (C) the Accrued Obligations
in accordance with the terms of the applicable plan, program or
arrangement.
(ii) Benefits. For any termination of employment under
this Section 5(d), the Executive (and, to the extent applicable, his
dependents) shall be entitled, for one year, to continue
participation at the Company's expense in the Employer's health
plan. During this period, to the extent any such benefits cannot be
provided under the terms of the applicable health plan, the Employer
shall make COBRA payments sufficient to provide the Executive and
the Executive's family with an equivalent level of coverage as
existed prior to the Date of Termination.
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(iii) No Duty to Mitigate Damages. The Executive shall
not be required to take any steps to mitigate damages with respect
to his entitlement under this Section 5(d).
(e) Discharge of the Employer's Obligations. The amounts payable to
the Executive pursuant to this Section 5 following termination of his employment
shall be in full and complete satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of his employment by the
Employer. Such amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt of such
amounts, the Employer shall be released and discharged from any and all
liability to the Executive in connection with this Agreement or otherwise in
connection with the Executive's employment with the Employer.
6. Confidentiality.
(a) The Executive realizes that during this Agreement, the Executive
will produce and/or will have access to confidential memoranda, notes,
information, records, maps, research results, business projections, business and
research notebooks, data, formulae, specifications, trade secrets, customer
lists, inventions and processes of the Employer, and other information of a
confidential nature (collectively, "CONFIDENTIAL INFORMATION"). Confidential
Information shall not include any information that (i) has become publicly known
through no wrongful act or breach of any obligation of confidentiality on the
part of the Executive; or (ii) was rightfully received by the Executive on a
non-confidential basis from a third party (provided that such third party is not
known to the Executive after reasonable inquiry to be bound by a confidentiality
agreement with the Employer or another party).
(b) Both during the term of this Agreement and subsequent to its
termination, the Executive agrees to hold all Confidential Information in
confidence and not to disclose, and not directly or indirectly to use, copy,
digest or summarize, any Confidential Information, except as required by law and
to the extent the Executive reasonably believes is necessary to carry out the
Executive's responsibilities as directed or authorized by the Employer and,
after termination of the Executive's employment hereunder, as specifically
authorized in writing by the Employer.
(c) All records in whatsoever form and in whatsoever medium
recorded, and any and all copies thereof (including volatile electronic or
magnetic signals), relating to the Employer's business that the Executive shall
prepare, or use, or come into contact with in the course of executing his duties
under this Agreement, shall be and remain the sole property of the Employer and
shall not be removed from the Employer's premises except as the Executive
reasonably believes is necessary to carry out the Executive's responsibilities
as directed and authorized by the Employer; and the same shall be returned
promptly to the Employer upon termination of the Executive's employment
relationship with the Employer or upon the Employer's request.
(d) The provisions of this Section 6 shall survive the termination
of this Agreement.
7. Inventions. The Executive shall promptly, and in any event no later
than one (1) year after termination of his employment with the Employer, with
respect to Inventions made or conceived by the Executive during his employment,
either solely or jointly with others, if based on or related to or connected
with the Business or the Employer or time, material, facilities or other
employees of the Employer contributed thereto:
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(a) promptly and fully inform the Employer in writing of such
Inventions;
(b) assign, and the Executive does hereby assign, to the Employer
all of the Executive's rights to such Inventions, if any, and to applications
for Letters Patent and to Letters Patent granted upon such Inventions; and
(c) acknowledge and deliver promptly to the Employer (without charge
to the Executive but at the expense of the Employer) such written instruments
and do such other acts as may be reasonably necessary to obtain and maintain
Letters Patent and to vest the entire right and title thereto in the Employer.
All Inventions, regardless of whether or not they are considered "WORKS
FOR HIRE," shall for all purposes be regarded as acquired and held by the
Executive for the benefit, and shall be the sole and exclusive property, of the
Employer.
The provisions of this Section 7 shall survive the termination of this
Agreement.
8. Non-Compete; Non-Solicitation
(a) The Executive agrees that he possesses or will possess knowledge,
skills and reputation in the industry in which the Employer operates
which are of material importance to the Employer, and which are
special, unique and extraordinary. The Executive acknowledges that
the loss of his services, or the use of his services by a
competitor, may cause irreparable harm to the Employer. Therefore,
during the term hereof and during periods set forth in Subsection
(b) hereof following termination of the Executive's employment
hereunder for any reason, with or without Cause, the Executive,
individually and personally, shall not do any of the following
unless specifically authorized in writing by the Board:
(i) Canvass, solicit, or accept any business in the amusement
vending machine business or industry (the "INDUSTRY") from any present or past
customer of the Employer or any related company, if the customer is located in
the United States (the "TERRITORY").
(ii) Aid or assist any other person, entity, partnership, or
corporation in any effort to canvass, solicit, or accept any business in the
Industry from any past or present customers of the Employer or of any related
company, if the customer is located within the Territory.
(iii) Directly or indirectly request or advise any past or
present customer of the Employer, or any past, present, or possible future
customer of any related companies to withdraw, curtail, cancel, or not undertake
business in the Industry with any related company, if the customer is located
within the Territory.
(iv) Directly or indirectly disclose to any other person,
entity, partnership, or corporation the names of past or present customers of
the Employer, or of any related company. The parties agree that the names of
these customers are confidential and proprietary and constitute trade secrets of
the Employer.
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(v) Suggest, solicit, or encourage any employee of the
Employer or any related company to leave the employment of such entity or
disparage the Employer or any related company or their conditions of employment,
or disclose to any other person, entity, partnership, or corporation the names
of employees of the Employer or any related company.
(vi) Directly or indirectly establish, as manager, employee or
owner of greater than 1% of the outstanding ownership interest, or participate
in an enterprise competitive with any business which is conducted at any time
during the term of this Agreement by the Employer or any related company, and
which business is in the Industry and in the Territory.
(vii) Provide any product, service, financing, aid, or
assistance of any kind for any person, entity, partnership, association, or
corporation which is competitive with any business which is conducted at any
time during the term of this Agreement by the Employer or any related company,
and which business is in the Industry and in the Territory.
(viii) Compete in any manner with any business which is
conducted at any time during the term of this Agreement by the Employer or any
related company, and which business is in the Industry and in the Territory.
(b) The non-competition provisions set forth in Subsection (a) shall
apply as follows: (i) if the Executive's employment is terminated
for any reason, for a period of one (1) year from the Date of
Termination (as defined in Section 4(f)) regardless of the reason
for termination, and (ii) if this Agreement is not renewed or
extended at the end of the Term, for a period of one (1) year from
the end of the Term.
9. Definitions.
(a) "CAUSE" as used herein shall mean the Executive's (i) commission of
an act which constitutes common law fraud, embezzlement or a felony,
(ii) the commission of an act of moral turpitude, or of any tortious
or unlawful act, which, in each of the foregoing cases, causes
material harm to the Employer's business, standing or reputation,
(iii) gross negligence on the part of the Executive in the
performance of his duties hereunder, (iv) breach of his duty of
loyalty or care to the Employer, (v) other misconduct that is
materially detrimental to the Employer, (vi) ongoing refusal or
failure to perform the Executive's duties or the deliberate and
consistent refusal to conform to or follow any reasonable policy
adopted by the Board or lawful instructions of the President, in
each case after receiving written notice describing his
non-compliance and being given a ten (10) business day opportunity
to cure (to the extent curable) such non-compliance, or (vii) any
other breach by the Executive of a material obligation under this
Agreement, including without limitation the non-competition and
non-solicitation provisions of Section 8 hereof, or any other
agreement with or for the benefit of the Employer to which the
Executive is a party or by which the Executive is bound, which is
not cured (to the extent curable) within ten (10) business days
following written notice from the Employer describing such breach.
The allegation by Employer of an act or failure to act of Executive
described in any of clauses (i) through (vii) above shall not
constitute "Cause" if same is subsequently determined by a court of
law or equity not to be such an act or failure to act; pending such
determination, the Employer may withhold payment of any Base
Compensation or Incentive Bonus and may relieve the Executive of his
duties as
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described herein, provided that, if the relevant act or omission is
not ultimately determined to constitute an act or omission to act of
Executive described in any of clauses (i) through (vii) above, then
such salary withholding and the Executive being relieved of his
duties shall be deemed to have been a dismissal or termination of
the Executive without Cause.
(b) "GOOD REASON" shall mean (i) there is a substantial reduction of the
level of the Executive's compensation, responsibilities, perquisites
or title (including, without limitation, the appointment of an
individual, without the Executive's prior written consent, to hold
any of the offices (or to discharge the duties) the Executive is to
hold (or discharge) pursuant to this Agreement), (ii) the failure in
any material way of the Employer otherwise to fulfill any of its
material obligations under this Agreement, after receiving written
notice describing such non-compliance and being given a ten (10)
business day opportunity to cure (to the extent curable) such
non-compliance, or (iii) the involuntary relocation of the
Employer's offices at which the Executive is principally employed to
a location more than ten (10) miles from such offices, or the
requirement by the Employer that the Executive be based anywhere
other than the Employer's offices at such location on an extended
basis, except for required travel on employee business to an extent
substantially consistent with the Executive's business travel
obligations.
(c) "INVENTIONS" means discoveries, developments, improvements, or
inventions (whether patentable or not) related to the Business.
(d) "RESTRICTIVE COVENANTS" means the covenants set forth in Sections 6,
7 and 8 and the related provisions thereafter.
10. Consideration, Severability, Reasonableness of Restrictive Covenants and
Maximum Enforceable Restrictions.
(a) Consideration. The Executive acknowledges and agrees that the
consideration set forth in the recitals to this Agreement and rights
and benefits hereunder are all and singularly valuable consideration
which are sufficient for any or all of the Executive's covenants set
forth herein, but specifically with respect to the Restrictive
Covenants.
(b) Severability. Each of the Restrictive Covenants is distinct and
severable, notwithstanding that some of such covenants may be set
forth in one Section hereof for convenience.
(c) Reasonableness of Restrictive Covenants. It is recognized and
understood by the Executive that the Employer's Confidential
Information is the result of large amounts of time, effort and
expense of the Employer in acquiring and/or developing such
information and is essential to the success of the Employer.
(d) Maximum Enforceable Restriction. In the event that any or all of the
Restrictive Covenants shall be determined by a court of competent
jurisdiction to be unenforceable by reason of their geographic or
temporal restrictions being too great, or by reason that the range
of activities covered are too great, or for any other reason, they
should be interpreted to extend over the maximum geographic area,
period of time, range of
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activities or other restrictions as to which they may be enforceable
by such court under applicable law.
11. Injunctive Relief. The parties agree that a breach of the Restrictive
Covenants may cause irreparable damage to the Employer, the extent of
which may be difficult to ascertain, and the award of damages may not be
adequate relief, and consequently, the Executive agrees that, in the event
of a breach or a threatened breach of any of the Restrictive Covenants,
the Employer may institute an action to compel the specific performance of
the Restrictive Covenants, and that such remedy shall be cumulative, not
exclusive, and shall be in addition to any other available remedies.
12. No Prior Agreements. The Executive represents and warrants that his
performance of all the terms of this Agreement does not and shall not
breach any fiduciary or other duty or any covenant, agreement or
understanding (including, without limitation, any agreement relating to
any proprietary information, knowledge or data acquired in confidence,
trust or otherwise) to which he is a party or by the terms of which he may
be bound. The Executive further covenants and agrees not to enter into any
agreement or understanding, either written or oral, in conflict with the
provisions of this Agreement.
13. Notices. All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by confirmed facsimile transmission,
by recognized national overnight courier service or by deposit in the
United States mail, postage prepaid, by registered or certified mail,
return receipt requested, addressed to the party to be notified at the
addresses set forth below:
IF TO THE EXECUTIVE TO:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ Brog Leinward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
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IF TO THE EMPLOYER:
▇▇▇▇ VENDING, INC.
c/o American Coin Merchandising, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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with copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Notices shall be effective immediately upon personal delivery or facsimile
transmission, one business day after deposit with an overnight courier service
or three (3) business days after the date of mailing thereof. Other notices
shall be deemed given on the date of receipt. Any party hereto may change the
address specified herein by written notice to the other parties hereto.
14. Entire Agreement. This Agreement cancels and supersedes any and all prior
agreements and understandings, written or verbal, between the parties
hereto with respect to the Executive's employment. This Agreement
constitutes the entire agreement between the parties with respect to the
matters herein provided, and no modifications or waiver of any provision
hereof shall be effective unless in writing and signed by the Employer and
the Executive.
15. Binding Effect. All of the terms and provisions of this Agreement shall be
binding upon the parties hereto and its or his heirs, executors,
administrators, legal representatives, successors and assigns, and inure
to the benefit of and be enforceable by the Employer and its successors
and assigns, except that the duties and responsibilities of the Executive
hereunder are of a personal nature and shall not be assignable or
delegable in whole or in part.
16. Severability In the event that any provision of this Agreement or
application thereof to anyone or under any circumstance is found to be
invalid or unenforceable in any jurisdiction to any extent for any reason,
such invalidity or unenforceability shall not affect any other provision
or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate
or render unenforceable such provision or application in any other
jurisdiction.
17. Remedies; Waiver. No remedy conferred upon the Employer by this Agreement
is intended to be exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity. No delay
or omission by the Employer in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the party
possessing the same from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
18. Counterparts. This Agreement may be executed in several counterparts, each
of which is an original and all of which shall constitute one instrument.
It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other
counterparts.
19. Governing Law; Jurisdiction.
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(a) The provisions of this Agreement, and all the rights and obligations
of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly within such
State without regard to such State's conflicts of law principles.
(b) Each of the parties hereto hereby consents to the jurisdiction of
any state or federal court located within the County of New York or
County of Nassau, State of New York and irrevocably agrees that,
subject to the Employer's election, all actions or proceedings
arising out of or relating to this Agreement shall be litigated in
such courts. Each party hereto accepts for each of itself and
himself and in connection with its and his properties, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts
and waives any defense of forum non conveniens, and irrevocably
agrees to be bound by any judgment rendered thereby in connection
with this Agreement.
20. Headings. The captions and headings contained in this Agreement are for
convenience only and shall not be construed as a part of the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS HEREOF, the parties have executed this Agreement as of the date
and year first above written.
EMPLOYER:
FVFN ACQUISITION CORP.
By
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
EXECUTIVE:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
For purposes of Section 5(b) only:
--------------------------------
▇▇▇▇▇ ▇▇▇▇
[SIGNATURE PAGE TO ▇▇▇▇▇▇ ▇▇▇▇▇ EMPLOYMENT AGREEMENT]
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 15th day of April, 2003, by and
between FVFN Acquisition Corp., a Delaware corporation (to be renamed ▇▇▇▇
Vending, Inc. on the date hereof, the "EMPLOYER" or the "COMPANY") and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ (the "EXECUTIVE").
RECITALS
WHEREAS, the Employer prior hereto purchased certain of the assets and
business of ▇▇▇▇ Vending Co., Inc., a New York corporation ("FV"), and ▇▇▇▇
Novelty Co., Inc., a New York corporation (together with FV, the "SELLERS", and
each individually, a "SELLER"); and
WHEREAS, the Executive was employed by FV; and
WHEREAS, the Employer desires to employ the Executive and to utilize his
management services as indicated herein and the Executive has agreed to provide
such management services to the Employer; and
WHEREAS, as a material inducement for the Employer to enter into the Asset
Purchase Agreement, dated as of March 14, 2003 (the "PURCHASE AGREEMENT"), by
and among the Employer, American Coin Merchandising, Inc., the Sellers, ▇▇▇▇▇
▇▇▇▇, and The ▇▇▇▇▇ ▇▇▇▇ Revocable Trust, and to hire and pay the Executive, the
Executive has agreed to execute this Agreement and be bound by the provisions
herein; and
WHEREAS, capitalized terms used but not defined in this Agreement are used
herein as defined in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
PROVISIONS
1. Term and Duties. The Employer hereby agrees to employ the Executive as
Vice President of Sales of the Company commencing on the date hereof and
continuing for a period of one (1) year from the date hereof (the "INITIAL
TERM") or until terminated in accordance with this Section 1 or Section 4.
Unless terminated by written notice delivered at least thirty (30) days prior to
the expiration of the Initial Term, the Executive's employment shall continue
for successive one (1) year terms (each one (1) year term hereinafter referred
to as a "SUBSEQUENT TERM" and together with the Initial Term, the "TERM") until
terminated by written notice delivered at least thirty (30) days prior to the
expiration of the Subsequent Term in question (it being understood that any
termination by the Employer pursuant to this sentence shall not be considered a
termination by the Employer other than for Cause for purposes of Section 5(c)
hereof). Subject to the provisions of this Agreement, during the Term, the
Executive shall devote his best
137
efforts and abilities to the performance of the Executive's duties on behalf of
the Employer and to the promotion of its interests, consistent with and subject
to, the direction and control of the Board of Directors of the Company (the
"BOARD") and the President of the Company (the "PRESIDENT"). The Executive shall
devote substantially all of his business time, energies, attention and abilities
to the operation of the Business and shall not be actively involved in any other
trade or business or as an employee of any other trade or business. The
Executive's services shall be performed during administrative hours
substantially in Oceanside, New York. The Executive shall be entitled to
maintain his current office in the Oceanside premises (so long as the business
of the Company is located in Oceanside, New York), together with the office
furniture, furnishings and business equipment currently located therein. The
Executive shall be entitled to the services of an executive secretary. The
Executive shall be entitled to no less than four (4) weeks of vacation time per
year.
2. Compensation.
(a) Base Compensation. In consideration of the services to be
rendered by the Executive during the Term of this Agreement, the Employer shall
pay the Executive base compensation at a rate of $90,000 per year (the "BASE
COMPENSATION"), payable bi-weekly.
(b) Commissions. In addition to the Base Compensation, the Employee
shall be entitled to commissions (the "COMMISSIONS") computed and paid in
accordance with the Company's policy therefor, as such policy may be amended or
modified by the Company from time to time in the sole discretion of the
President and the Board.
(c) Bonus. In addition to the Base Compensation and Commissions, the
Executive shall be entitled to an incentive bonus (the "INCENTIVE BONUS") based
upon his participation in the Company's regular annual bonus program for senior
executives as the same is in effect from time to time. The amount of such bonus,
if any, shall be in the discretion of the President and the Board.
3. Benefits.
(a) Benefit Programs. The Executive shall be eligible to participate
in such benefit programs offered by the Employer such as health, disability,
life insurance, any employee stock purchase plan, vacations and 401(k), as are
offered to similarly-situated employees (except in the case of equity-based
incentive plans where awards are subject to Board (or committee thereof)
approval) and in each case no more favorable than the terms of benefits
generally available to the employees of the Employer (based on seniority and
salary level), subject in each case to the generally applicable terms and
conditions of the plan, benefit or program in question.
(b) Business Expenses. During the Term, the Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with carrying out his duties hereunder. The
Employer shall reimburse the Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance
with the generally applicable policies of the Employer.
(c) Automobile Allowance. During the Term, the Employer shall
provide the Executive the use of an automobile in accordance with customary
Company policy, together with an allowance sufficient to cover fuel,
maintenance, registration and taxes with respect thereto in accordance with
customary Company policy.
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4. Termination.
(a) Death or Disability. This Agreement shall terminate
automatically upon the Executive's death or termination due to "DISABILITY." For
purposes of this Agreement, Disability shall mean the Executive's inability to
perform the duties of his position for three (3) consecutive months, or 90 days
in any 365-day period.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, the Executive may, upon not less than 10 business
days written notice to the Employer, voluntarily terminate his employment for
any reason; provided, however, that any termination by the Executive pursuant to
Section 4(d) shall not be treated as a voluntary termination under this Section
4(b).
(c) Cause. The Employer may terminate the Executive's employment for
Cause (as hereinafter defined).
(d) Good Reason. The Executive may terminate his employment for Good
Reason (as hereinafter defined).
(e) Notice of Termination. Any termination by the Employer for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13. For
purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
given within a reasonable time after the event or action believed to constitute
the reason for giving notice.
(f) Date of Termination. For the purpose of this Agreement, the term
"DATE OF TERMINATION" means (i) in the case of termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein up to thirty (30) days after receipt, as
the case may be, and (ii) in all other cases, the actual date on which the
Executive's employment terminated during the Term.
5. Termination Payments.
(a) Death or Disability. If the Executive's employment is terminated
during the Term of this Agreement by reason of the Executive's death or
Disability, this Agreement shall terminate without further obligations to the
Executive or the Executive's legal representatives under this Agreement other
than those obligations accrued hereunder through the Date of Termination and the
Employer shall pay to the Executive (or his beneficiary of estate) (i) the
Executive's accrued but unpaid Base Compensation, Commissions and Incentive
Bonus, if any, accrued and unused vacation and sick days, and unreimbursed
business expenses (the "EARNED SALARY") in cash in a single lump sum as soon as
practicable following the Date of Termination, (ii) any vested amounts or vested
benefits owed to the Executive under the Employer's otherwise applicable
employee benefit plans and programs, and not yet paid by the Employer (the
"ACCRUED OBLIGATIONS"), and (iii) any other benefits payable due to the
Executive's death or Disability under the Employer's plans, policies or programs
(the "ADDITIONAL BENEFITS").
(b) Cause and Voluntary Termination. If the Executive's employment
shall be terminated for Cause or voluntarily terminated by the Executive without
Good Reason, the Employer shall pay to the Executive (i) the Earned Salary in
cash in a single lump sum as soon as practicable following the Date of
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Termination, and (ii) the Accrued Obligations in accordance with the terms of
the applicable plan, program or arrangement.
(c) Termination by the Employer other than for Cause and Termination
by the Executive for Good Reason.
(i) Generally. If the Employer terminates the
Executive's employment other than for Cause or the Executive
terminates his employment for Good Reason, the Employer shall pay to
the Executive the following amounts: (A) the Earned Salary in cash
in a single lump sum as soon as practicable following the Date of
Termination; (B) his then current Base Compensation until the one
(1) year anniversary of the Date of Termination, in bi-weekly
installments over such one (1) year period in accordance with the
payroll practices of the Employer; and (C) the Accrued Obligations
in accordance with the terms of the applicable plan, program or
arrangement.
(ii) Benefits. For any termination of employment under
this Section 5(c), the Executive (and, to the extent applicable, his
dependents) shall be entitled, for one year, to continue
participation at the Company's expense in the Employer's health
plan. During this period, to the extent any such benefits cannot be
provided under the terms of the applicable health plan, the Employer
shall make COBRA payments sufficient to provide the Executive and
the Executive's family with an equivalent level of coverage as
existed prior to the Date of Termination.
(iii) No Duty to Mitigate Damages. The Executive shall
not be required to take any steps to mitigate damages with respect
to his entitlement under this Section 5(c).
(d) Discharge of the Employer's Obligations. The amounts payable to
the Executive pursuant to this Section 5 following termination of his employment
shall be in full and complete satisfaction of the Executive's rights under this
Agreement and any other claims he may have in respect of his employment by the
Employer. Such amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt of such
amounts, the Employer shall be released and discharged from any and all
liability to the Executive in connection with this Agreement or otherwise in
connection with the Executive's employment with the Employer.
6. Confidentiality.
(a) The Executive realizes that during this Agreement, the Executive
will produce and/or will have access to confidential memoranda, notes,
information, records, maps, research results, business projections, business and
research notebooks, data, formulae, specifications, trade secrets, customer
lists, inventions and processes of the Employer, and other information of a
confidential nature (collectively, "CONFIDENTIAL Information"). Confidential
Information shall not include any information that (i) has become publicly known
through no wrongful act or breach of any obligation of confidentiality on the
part of the Executive; or (ii) was rightfully received by the Executive on a
non-confidential basis from a third party (provided that such third party is not
known to the Executive after reasonable inquiry to be bound by a confidentiality
agreement with the Employer or another party).
140
(b) Both during the term of this Agreement and subsequent to its
termination, the Executive agrees to hold all Confidential Information in
confidence and not to disclose, and not directly or indirectly to use, copy,
digest or summarize, any Confidential Information, except as required by law and
to the extent the Executive reasonably believes is necessary to carry out the
Executive's responsibilities as directed or authorized by the Employer and,
after termination of the Executive's employment hereunder, as specifically
authorized in writing by the Employer.
(c) All records in whatsoever form and in whatsoever medium
recorded, and any and all copies thereof (including volatile electronic or
magnetic signals), relating to the Employer's business that the Executive shall
prepare, or use, or come into contact with in the course of executing his duties
under this Agreement, shall be and remain the sole property of the Employer and
shall not be removed from the Employer's premises except as the Executive
reasonably believes is necessary to carry out the Executive's responsibilities
as directed and authorized by the Employer; and the same shall be returned
promptly to the Employer upon termination of the Executive's employment
relationship with the Employer or upon the Employer's request.
(d) The provisions of this Section 6 shall survive the termination
of this Agreement.
7. Inventions. The Executive shall promptly, and in any event no later
than one (1) year after termination of his employment with the Employer, with
respect to Inventions made or conceived by the Executive during his employment,
either solely or jointly with others, if based on or related to or connected
with the Business or the Employer or time, material, facilities or other
employees of the Employer contributed thereto:
(a) promptly and fully inform the Employer in writing of such
Inventions;
(b) assign, and the Executive does hereby assign, to the Employer
all of the Executive's rights to such Inventions, if any, and to applications
for Letters Patent and to Letters Patent granted upon such Inventions; and
(c) acknowledge and deliver promptly to the Employer (without charge
to the Executive but at the expense of the Employer) such written instruments
and do such other acts as may be reasonably necessary to obtain and maintain
Letters Patent and to vest the entire right and title thereto in the Employer.
All Inventions, regardless of whether or not they are considered "WORKS
FOR HIRE," shall for all purposes be regarded as acquired and held by the
Executive for the benefit, and shall be the sole and exclusive property, of the
Employer.
The provisions of this Section 7 shall survive the termination of this
Agreement.
8. Non-Compete; Non-Solicitation
(a) The Executive agrees that he possesses or will possess knowledge,
skills and reputation in the industry in which the Employer operates
which are of material importance to the Employer, and which are
special, unique and extraordinary. The Executive acknowledges that
the loss of his services, or the use of his services by a
competitor, may cause irreparable harm to the Employer. Therefore,
during the term hereof and during periods
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set forth in Subsection (b) hereof following termination of the
Executive's employment hereunder for any reason, with or without
Cause, the Executive, individually and personally, shall not do any
of the following unless specifically authorized in writing by the
Board:
(i) Canvass, solicit, or accept any business in the amusement
vending machine business or industry (the "INDUSTRY") from any present or past
customer of the Employer or any related company, if the customer is located in
the United States (the "TERRITORY").
(ii) Aid or assist any other person, entity, partnership, or
corporation in any effort to canvass, solicit, or accept any business in the
Industry from any past or present customers of the Employer or of any related
company, if the customer is located within the Territory.
(iii) Directly or indirectly request or advise any past or
present customer of the Employer, or any past, present, or possible future
customer of any related companies to withdraw, curtail, cancel, or not undertake
business in the Industry with any related company, if the customer is located
within the Territory.
(iv) Directly or indirectly disclose to any other person,
entity, partnership, or corporation the names of past or present customers of
the Employer, or of any related company. The parties agree that the names of
these customers are confidential and proprietary and constitute trade secrets of
the Employer.
(v) Suggest, solicit, or encourage any employee of the
Employer or any related company to leave the employment of such entity or
disparage the Employer or any related company or their conditions of employment,
or disclose to any other person, entity, partnership, or corporation the names
of employees of the Employer or any related company.
(vi) Directly or indirectly establish, as manager, employee or
owner of greater than 1% of the outstanding ownership interest, or participate
in an enterprise competitive with any business which is conducted at any time
during the term of this Agreement by the Employer or any related company, and
which business is in the Industry and in the Territory.
(vii) Provide any product, service, financing, aid, or
assistance of any kind for any person, entity, partnership, association, or
corporation which is competitive with any business which is conducted at any
time during the term of this Agreement by the Employer or any related company,
and which business is in the Industry and in the Territory.
(viii) Compete in any manner with any business which is
conducted at any time during the term of this Agreement by the Employer or any
related company, and which business is in the Industry and in the Territory.
(b) The non-competition provisions set forth in Subsection (a) shall
apply as follows: (i) if the Executive's employment is terminated
for any reason, for a period of one (1) year from the Date of
Termination (as defined in Section 4(f)) regardless of the reason
for termination, and (ii) if this Agreement is not renewed or
extended at the end of the Term, for a period of one (1) year from
the end of the Term.
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9. Definitions.
(a) "CAUSE" as used herein shall mean the Executive's (i) commission of
an act which constitutes common law fraud, embezzlement or a felony,
(ii) the commission of an act of moral turpitude, or of any tortious
or unlawful act, which, in each of the foregoing cases, causes
material harm to the Employer's business, standing or reputation,
(iii) gross negligence on the part of the Executive in the
performance of his duties hereunder, (iv) breach of his duty of
loyalty or care to the Employer, (v) other misconduct that is
materially detrimental to the Employer, (vi) ongoing refusal or
failure to perform the Executive's duties or the deliberate and
consistent refusal to conform to or follow any reasonable policy
adopted by the Board or lawful instructions of the President, in
each case after receiving written notice describing his
non-compliance and being given a ten (10) business day opportunity
to cure (to the extent curable) such non-compliance, or (vii) any
other breach by the Executive of a material obligation under this
Agreement, including without limitation the non-competition and
non-solicitation provisions of Section 8 hereof, or any other
agreement with or for the benefit of the Employer to which the
Executive is a party or by which the Executive is bound, which is
not cured (to the extent curable) within ten (10) business days
following written notice from the Employer describing such breach.
The allegation by Employer of an act or failure to act of Executive
described in any of clauses (i) through (vii) above shall not
constitute "Cause" if same is subsequently determined by a court of
law or equity not to be such an act or failure to act; pending such
determination, the Employer may withhold payment of any Base
Compensation or Incentive Bonus and may relieve the Executive of his
duties as described herein, provided that, if the relevant act or
omission is not ultimately determined to constitute an act or
omission to act of Executive described in any of clauses (i) through
(vii) above, then such salary withholding and the Executive being
relieved of his duties shall be deemed to have been a dismissal or
termination of the Executive without Cause.
(b) "GOOD REASON" shall mean (i) there is a substantial reduction of the
level of the Executive's compensation, responsibilities, perquisites
or title (including, without limitation, the appointment of an
individual, without the Executive's prior written consent, to hold
any of the offices (or to discharge the duties) the Executive is to
hold (or discharge) pursuant to this Agreement), (ii) the failure in
any material way of the Employer otherwise to fulfill any of its
material obligations under this Agreement, after receiving written
notice describing such non-compliance and being given a ten (10)
business day opportunity to cure (to the extent curable) such
non-compliance, or (iii) the involuntary relocation of the
Employer's offices at which the Executive is principally employed to
a location more than ten (10) miles from such offices, or the
requirement by the Employer that the Executive be based anywhere
other than the Employer's offices at such location on an extended
basis, except for required travel on employee business to an extent
substantially consistent with the Executive's business travel
obligations.
(c) "INVENTIONS" means discoveries, developments, improvements, or
inventions (whether patentable or not) related to the Business.
(d) "RESTRICTIVE COVENANTS" means the covenants set forth in Sections 6,
7 and 8 and the related provisions thereafter.
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10. Consideration, Severability, Reasonableness of Restrictive Covenants and
Maximum Enforceable Restrictions.
(a) Consideration. The Executive acknowledges and agrees that the
consideration set forth in the recitals to this Agreement and rights
and benefits hereunder are all and singularly valuable consideration
which are sufficient for any or all of the Executive's covenants set
forth herein, but specifically with respect to the Restrictive
Covenants.
(b) Severability. Each of the Restrictive Covenants is distinct and
severable, notwithstanding that some of such covenants may be set
forth in one Section hereof for convenience.
(c) Reasonableness of Restrictive Covenants. It is recognized and
understood by the Executive that the Employer's Confidential
Information is the result of large amounts of time, effort and
expense of the Employer in acquiring and/or developing such
information and is essential to the success of the Employer.
(d) Maximum Enforceable Restriction. In the event that any or all of the
Restrictive Covenants shall be determined by a court of competent
jurisdiction to be unenforceable by reason of their geographic or
temporal restrictions being too great, or by reason that the range
of activities covered are too great, or for any other reason, they
should be interpreted to extend over the maximum geographic area,
period of time, range of activities or other restrictions as to
which they may be enforceable by such court under applicable law.
11. Injunctive Relief. The parties agree that a breach of the Restrictive
Covenants may cause irreparable damage to the Employer, the extent of
which may be difficult to ascertain, and the award of damages may not be
adequate relief, and consequently, the Executive agrees that, in the event
of a breach or a threatened breach of any of the Restrictive Covenants,
the Employer may institute an action to compel the specific performance of
the Restrictive Covenants, and that such remedy shall be cumulative, not
exclusive, and shall be in addition to any other available remedies.
12. No Prior Agreements. The Executive represents and warrants that his
performance of all the terms of this Agreement does not and shall not
breach any fiduciary or other duty or any covenant, agreement or
understanding (including, without limitation, any agreement relating to
any proprietary information, knowledge or data acquired in confidence,
trust or otherwise) to which he is a party or by the terms of which he may
be bound. The Executive further covenants and agrees not to enter into any
agreement or understanding, either written or oral, in conflict with the
provisions of this Agreement.
13. Notices. All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by confirmed facsimile transmission,
by recognized national overnight courier service or by deposit in the
United States mail, postage prepaid, by registered or certified mail,
return receipt requested, addressed to the party to be notified at the
addresses set forth below:
IF TO THE EXECUTIVE TO:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇ Leinward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
IF TO THE EMPLOYER:
▇▇▇▇ VENDING, INC.
c/o American Coin Merchandising, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Notices shall be effective immediately upon personal delivery or facsimile
transmission, one business day after deposit with an overnight courier service
or three (3) business days after the date of mailing thereof. Other notices
shall be deemed given on the date of receipt. Any party hereto may change the
address specified herein by written notice to the other parties hereto.
145
14. Entire Agreement. This Agreement cancels and supersedes any and all prior
agreements and understandings, written or verbal, between the parties
hereto with respect to the Executive's employment, and cancels and
supercedes any and all agreements and understandings, written or verbal,
between FV and the Executive, with respect to the Executive's employment,
including without limitation, that certain Employment Agreement, dated as
of September 12, 1994 (as the same may have been amended or modified
subsequent thereto). This Agreement constitutes the entire agreement
between the parties with respect to the matters herein provided, and no
modifications or waiver of any provision hereof shall be effective unless
in writing and signed by the Employer and the Executive.
15. Binding Effect. All of the terms and provisions of this Agreement shall be
binding upon the parties hereto and its or his heirs, executors,
administrators, legal representatives, successors and assigns, and inure
to the benefit of and be enforceable by the Employer and its successors
and assigns, except that the duties and responsibilities of the Executive
hereunder are of a personal nature and shall not be assignable or
delegable in whole or in part.
16. Severability In the event that any provision of this Agreement or
application thereof to anyone or under any circumstance is found to be
invalid or unenforceable in any jurisdiction to any extent for any reason,
such invalidity or unenforceability shall not affect any other provision
or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate
or render unenforceable such provision or application in any other
jurisdiction.
17. Remedies; Waiver. No remedy conferred upon the Employer by this Agreement
is intended to be exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity. No delay
or omission by the Employer in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the party
possessing the same from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
18. Counterparts. This Agreement may be executed in several counterparts, each
of which is an original and all of which shall constitute one instrument.
It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other
counterparts.
19. Governing Law; Jurisdiction.
(a) The provisions of this Agreement, and all the rights and obligations
of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly within such
State without regard to such State's conflicts of law principles.
(b) Each of the parties hereto hereby consents to the jurisdiction of
any state or federal court located within the County of New York or
County of Nassau, State of New York and irrevocably agrees that,
subject to the Employer's election, all actions or proceedings
arising out of or relating to this Agreement shall be litigated in
such courts. Each party hereto accepts for each of itself and
himself and in connection with its and his properties,
146
generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts and waives any defense of forum non conveniens, and
irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement.
20. Headings. The captions and headings contained in this Agreement are for
convenience only and shall not be construed as a part of the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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EXHIBIT D
IN WITNESS HEREOF, the parties have executed this Agreement as of the date
and year first above written.
EMPLOYER:
FVFN ACQUISITION CORP.
By
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
EXECUTIVE:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[SIGNATURE PAGE TO ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ EMPLOYMENT AGREEMENT]
FORM OF SALES FORCE
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this [__] day of [__________], 2003, by
and between FVFN Acquisition Corp., a Delaware corporation (to be renamed ▇▇▇▇
Vending, Inc. on the date hereof, the "EMPLOYER" or the "COMPANY") and
[___________] (the "EMPLOYEE").
RECITALS
WHEREAS, the Employer prior hereto purchased certain of the assets and
business of ▇▇▇▇ Vending Co., Inc., a New York corporation ("FV"), and ▇▇▇▇
Novelty Co., Inc., a New York corporation (together with FV, the "SELLERS", and
each individually, a "SELLER"); and
WHEREAS, the Employee was employed by FV; and
WHEREAS, the Employer desires to employ the Employee and to utilize the
Employee's services as indicated herein and the Employee has agreed to provide
such services to the Employer; and
WHEREAS, as a material inducement for the Employer to enter into the Asset
Purchase Agreement, dated as of March [_], 2003 (the "PURCHASE AGREEMENT"), by
and among the Employer, American Coin Merchandising, Inc., the Sellers, ▇▇▇▇▇
▇▇▇▇, and The ▇▇▇▇▇ ▇▇▇▇ Revocable Trust, and to hire and pay the Executive, the
Executive has agreed to execute this Agreement and be bound by the provisions
herein; and
WHEREAS, capitalized terms used but not defined in this Agreement are used
herein as defined in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
PROVISIONS
1. "At-will" Nature of the Relationship; Duties. The Employer hereby
agrees to employ the Employee commencing on the date hereof on a voluntary,
AT-WILL BASIS. This means that both the Employee and the Employer are free to
terminate the employment relationship at any time, for any or no reason, with or
without prior notice, unless otherwise prohibited by law. Subject to the
provisions of this Agreement, the Employee shall devote [HIS/HER] best efforts
and abilities to the performance of the Employee's duties on behalf of the
Employer and to the promotion of [HIS/HER] interests, consistent with and
subject to, the direction and control of the Board of Directors of the Company
(the "BOARD") and the
149
President of the Company (the "PRESIDENT"). The Employee shall devote
substantially all of [HIS/HER] business time, energies, attention and abilities
to the operation of the Business and shall not be actively involved in any other
trade or business or as an employee of any other trade or business. The
Employee's services shall be performed substantially during administrative
hours.
2. Compensation.
(a) Base Compensation. In consideration of the services to be
rendered by the Employee during the Term of this Agreement, the Employer shall
pay the Employee base compensation at a rate of $[_________] per year (the "BASE
COMPENSATION"), payable bi-weekly.
(b) Commissions. In addition to the Base Compensation, the Employee
shall be entitled to commissions (the "COMMISSIONS") computed and paid in
accordance with the Company's policy therefor, as such policy may be amended or
modified by the Company from time to time in the sole discretion of the
President and the Board.
3. Benefits.
(a) Benefit Programs. The Employee shall be eligible to participate
in such benefit programs offered by the Employer such as health, disability,
life insurance, vacations and 401(k), in each case on terms no more favorable
than the terms of benefits generally available to the employees of the Employer
(based on seniority and salary level), subject in each case to the generally
applicable terms and conditions of the plan, benefit or program in question.
(b) Business Expenses. During the Term, the Employee shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with carrying out [HIS/HER] duties hereunder.
The Employer shall reimburse the Employee for such expenses upon presentation of
an itemized account and appropriate supporting documentation, all in accordance
with the generally applicable policies of the Employer.
(c) Automobile Allowance. During the Term, the Employer shall
provide the Employee the use of an automobile in accordance with customary
Company policy, together with an allowance sufficient to cover fuel,
maintenance, registration and taxes with respect thereto in accordance with
customary Company policy.
4. Termination.
(a) Payment. If the Employee's employment is terminated for any
reason, this Agreement shall terminate without further obligations to the
Employee or the Employee's legal representatives under this Agreement other than
those obligations accrued hereunder through the date of termination, and the
Employer shall pay to the Employee (or [HIS/HER] beneficiary of estate) (i) the
Employee's accrued but unpaid Base Compensation and Commissions, if any, in cash
in a single lump sum as soon as practicable following the date of termination,
(ii) the Employee's then current Base Compensation, payable in bi-weekly
installments in accordance with the payroll practices of the Employer, for a
period of time beginning on the day after the date of termination and ending on
the earliest to occur of (A) the date that the Company determines to no longer
enforce the non-competition provisions of Section 7 hereof, (B) the date upon
which the Employee commences new employment, and (C) six (6) months from the
date of termination, (iii) any vested amounts or vested benefits owed to the
150
Employee under the Employer's otherwise applicable employee benefit plans and
programs, and not yet paid by the Employer, and (iv) any other benefits payable
due to the Employee's death or disability under the Employer's plans, policies
or programs.
(b) Discharge of the Employer's Obligations. The amounts payable to
the Employee pursuant to this Section 4 following termination of employment
shall be in full and complete satisfaction of the Employee's rights under this
Agreement and any other claims [HE/SHE] may have in respect of [HIS/HER]
employment by the Employer [OTHER THAN ANY CLAIM SHE MAY HAVE AGAINST THE
EMPLOYER ARISING OUT OF HER BEING A VICTIM OF ANY UNLAWFUL ACT]. Such amounts
shall constitute liquidated damages with respect to any and all such rights and
claims and, upon the Employee 's receipt of such amounts, the Employer shall be
released and discharged from any and all liability to the Employee in connection
with this Agreement or otherwise in connection with the Employee 's employment
with the Employer[, OTHER THAN IN RESPECT OF ANY CLAIM THE EXECUTIVE MAY HAVE
AGAINST THE EMPLOYER ARISING OUT OF HER BEING A VICTIM OF ANY UNLAWFUL ACT].
5. Confidentiality.
(a) The Employee realizes that during this Agreement, the Employee
will produce and/or will have access to confidential memoranda, notes,
information, records, maps, research results, business projections, business and
research notebooks, data, formulae, specifications, trade secrets, customer
lists, inventions and processes of the Employer, and other information of a
confidential nature (collectively, "CONFIDENTIAL Information"). Confidential
Information shall not include any information that (i) has become publicly known
through no wrongful act or breach of any obligation of confidentiality on the
part of the Employee; or (ii) was rightfully received by the Employee on a
non-confidential basis from a third party (provided that such third party is not
known to the Employee after reasonable inquiry to be bound by a confidentiality
agreement with the Employer or another party).
(b) Both during the term of this Agreement and subsequent to its
termination, the Employee agrees to hold all Confidential Information in
confidence and not to disclose, and not directly or indirectly to use, copy,
digest or summarize, any Confidential Information, except as required by law and
to the extent the Employee reasonably believes is necessary to carry out the
Employee's responsibilities as directed or authorized by the Employer and, after
termination of the Employee's employment hereunder, as specifically authorized
in writing by the Employer.
(c) All records in whatsoever form and in whatsoever medium
recorded, and any and all copies thereof (including volatile electronic or
magnetic signals), relating to the Employer's business that the Employee shall
prepare, or use, or come into contact with in the course of executing the
Employee's duties under this Agreement, shall be and remain the sole property of
the Employer and shall not be removed from the Employer's premises except as the
Employee reasonably believes is necessary to carry out the Employee's
responsibilities as directed and authorized by the Employer; and the same shall
be returned promptly to the Employer upon termination of the Employee's
employment relationship with the Employer or upon the Employer's request.
(d) The provisions of this Section 5 shall survive the termination
of this Agreement.
6. Inventions. The Employee shall promptly, and in any event no later
than one (1) year after termination of the Employee's employment with the
Employer, with respect to Inventions made or conceived by the Employee during
the Employee's employment, either solely or jointly with others, if
151
based on or related to or connected with the Business or the Employer or time,
material, facilities or other employees of the Employer contributed thereto:
(a) promptly and fully inform the Employer in writing of such
Inventions;
(b) assign, and the Employee does hereby assign, to the Employer all
of the Employee's rights to such Inventions, if any, and to applications for
Letters Patent and to Letters Patent granted upon such Inventions; and
(c) acknowledge and deliver promptly to the Employer (without charge
to the Employee but at the expense of the Employer) such written instruments and
do such other acts as may be reasonably necessary to obtain and maintain Letters
Patent and to vest the entire right and title thereto in the Employer.
All Inventions, regardless of whether or not they are considered "WORKS
FOR HIRE," shall for all purposes be regarded as acquired and held by the
Employee for the benefit, and shall be the sole and exclusive property, of the
Employer.
The provisions of this Section 6 shall survive the termination of this
Agreement.
7. Non-Compete; Non-Solicitation. The Employee agrees that he possesses
or will possess knowledge, skills and reputation in the industry in which the
Employer operates which are of material importance to the Employer, and which
are special, unique and extraordinary. The Employee acknowledges that the loss
of the Employee's services, or the use of the Employee's services by a
competitor, may cause irreparable harm to the Employer. Therefore, during the
term hereof and for a period of one (1) year following termination of the
Employee's employment hereunder for any reason, the Employee, individually and
personally, shall not do any of the following unless specifically authorized in
writing by the Board:
(a) Canvass, solicit, or accept any business in the amusement
vending machine business or industry (the "INDUSTRY") from any present or past
customer of the Employer or any related company, if the customer is located
anywhere where the Company currently does business and anywhere where the
Company is doing business on the date of termination of the Employee (the
"TERRITORY").
(b) Aid or assist any other person, entity, partnership, or
corporation in any effort to canvass, solicit, or accept any business in the
Industry from any past or present customers of the Employer or of any related
company, if the customer is located within the Territory.
(c) Directly or indirectly request or advise any past or present
customer of the Employer, or any past, present, or possible future customer of
any related companies to withdraw, curtail, cancel, or not undertake business in
the Industry with any related company, if the customer is located within the
Territory.
(d) Directly or indirectly disclose to any other person, entity,
partnership, or corporation the names of past or present customers of the
Employer, or of any related company. The parties agree that the names of these
customers are confidential and proprietary and constitute trade secrets of the
Employer.
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(e) Suggest, solicit, or encourage any employee of the Employer or
any related company to leave the employment of such entity or disparage the
Employer or any related company or their conditions of employment, or disclose
to any other person, entity, partnership, or corporation the names of employees
of the Employer or any related company.
(f) Directly or indirectly establish, as manager, employee or owner
of greater than 1% of the outstanding ownership interest, or participate in an
enterprise competitive with any business which is conducted at any time during
the term of this Agreement by the Employer or any related company, and which
business is in the Industry and in the Territory.
(g) Provide any product, service, financing, aid, or assistance of
any kind for any person, entity, partnership, association, or corporation which
is competitive with any business which is conducted at any time during the term
of this Agreement by the Employer or any related company, and which business is
in the Industry and in the Territory.
(h) Compete in any manner with any business which is conducted at
any time during the term of this Agreement by the Employer or any related
company, and which business is in the Industry and in the Territory.
8. Definitions.
(a) "INVENTIONS" means discoveries, developments, improvements, or
inventions (whether patentable or not) related to the Business.
(b) "RESTRICTIVE COVENANTS" means the covenants set forth in Sections 5,
6 and 7 and the related provisions thereafter.
9. Consideration, Severability, Reasonableness of Restrictive Covenants
and Maximum Enforceable Restrictions.
(a) Consideration. The Employee acknowledges and agrees that the
consideration set forth in the recitals to this Agreement and rights
and benefits hereunder are all and singularly valuable consideration
which are sufficient for any or all of the Employee's covenants set
forth herein, but specifically with respect to the Restrictive
Covenants.
(b) Severability. Each of the Restrictive Covenants is distinct and
severable, notwithstanding that some of such covenants may be set
forth in one Section hereof for convenience.
(c) Reasonableness of Restrictive Covenants. It is recognized and
understood by the Employee that the Employer's Confidential
Information is the result of large amounts of time, effort and
expense of the Employer in acquiring and/or developing such
information and is essential to the success of the Employer.
(d) Maximum Enforceable Restriction. In the event that any or all of the
Restrictive Covenants shall be determined by a court of competent
jurisdiction to be unenforceable by reason of their geographic or
temporal restrictions being too great, or by reason that the range
of activities covered are too great, or for any other reason, they
should be interpreted to extend over the maximum geographic area,
period of time, range of
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activities or other restrictions as to which they may be enforceable
by such court under applicable law.
10. Injunctive Relief. The parties agree that a breach of the Restrictive
Covenants may cause irreparable damage to the Employer, the extent of which may
be difficult to ascertain, and the award of damages may not be adequate relief,
and consequently, the Employee agrees that, in the event of a breach or a
threatened breach of any of the Restrictive Covenants, the Employer may
institute an action to compel the specific performance of the Restrictive
Covenants, and that such remedy shall be cumulative, not exclusive, and shall be
in addition to any other available remedies.
11. No Prior Agreements. The Employee represents and warrants that the
Employee's performance of all the terms of this Agreement does not and shall not
breach any fiduciary or other duty or any covenant, agreement or understanding
(including, without limitation, any agreement relating to any proprietary
information, knowledge or data acquired in confidence, trust or otherwise) to
which [HE/SHE] is a party or by the terms of which [HE/SHE] may be bound. The
Employee further covenants and agrees not to enter into any agreement or
understanding, either written or oral, in conflict with the provisions of this
Agreement.
12. Notices. All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by confirmed facsimile transmission, by
recognized national overnight courier service or by deposit in the United States
mail, postage prepaid, by registered or certified mail, return receipt
requested, addressed to the party to be notified at the addresses set forth
below:
IF TO THE EMPLOYEE TO:
[EMPLOYEE]
[ADDRESS]
IF TO THE EMPLOYER:
▇▇▇▇ VENDING, INC.
c/o American Coin Merchandising, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH COPY TO:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Notices shall be effective immediately upon personal delivery or facsimile
transmission, one business day after deposit with an overnight courier service
or three (3) business days after the date of mailing thereof. Other notices
shall be deemed given on the date of receipt. Any party hereto may change the
address specified herein by written notice to the other parties hereto.
13. Entire Agreement. This Agreement cancels and supersedes any and all
prior agreements and understandings, written or verbal, between the parties
hereto, or between FV and the Employee, with respect to the Employee's
employment or any of the other substantive matters addressed herein[, INCLUDING
WITHOUT LIMITATION, THAT CERTAIN EMPLOYMENT AGREEMENT, DATED AS OF [_________]
(AS THE SAME MAY HAVE BEEN AMENDED OR MODIFIED SUBSEQUENT THERETO)]. This
Agreement constitutes the entire agreement between the parties with respect to
the matters herein provided, and no modifications or waiver of any provision
hereof shall be effective unless in writing and signed by the Employer and the
Employee.
14. Binding Effect. All of the terms and provisions of this Agreement
shall be binding upon the parties hereto and its or their heirs, executors,
administrators, legal representatives, successors and assigns, and inure to the
benefit of and be enforceable by the Employer and its successors and assigns,
except that the duties and responsibilities of the Employee hereunder are of a
personal nature and shall not be assignable or delegable in whole or in part.
15. Severability. In the event that any provision of this Agreement or
application thereof to anyone or under any circumstance is found to be invalid
or unenforceable in any jurisdiction to any extent for any reason, such
invalidity or unenforceability shall not affect any other provision or
application of this Agreement which can be given effect without the invalid or
unenforceable provision or application and shall not invalidate or render
unenforceable such provision or application in any other jurisdiction.
16. Remedies; Waiver. No remedy conferred upon the Employer by this
Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity. No delay or
omission by the Employer in exercising any right, remedy or power hereunder or
existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by the party possessing the same
from time to time and as often as may be deemed expedient or necessary by such
party in its sole discretion.
17. Counterparts. This Agreement may be executed in several counterparts,
each of which is an original and all of which shall constitute one instrument.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
18. Governing Law; Jurisdiction.
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(a) The provisions of this Agreement, and all the rights and
obligations of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within such State without regard to
such State's conflicts of law principles.
(b) Each of the parties hereto hereby consents to the jurisdiction
of any state or federal court located within the County of New York or County of
Nassau, State of New York and irrevocably agrees that, subject to the Employer's
election, all actions or proceedings arising out of or relating to this
Agreement shall be litigated in such courts. Each party hereto accepts for each
of itself and in connection with its properties, generally and unconditionally,
the exclusive jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement.
19. Headings. The captions and headings contained in this Agreement are
for convenience only and shall not be construed as a part of the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
156
IN WITNESS HEREOF, the parties have executed this Agreement as of the date
and year first above written.
EMPLOYER:
FVFN ACQUISITION CORP.
By
------------------------------------
Name:
Title
EMPLOYEE:
--------------------------------
[EMPLOYEE]
[SIGNATURE PAGE TO [EMPLOYEE] EMPLOYMENT AGREEMENT]
37. RENEWAL TERMS 28
LEASE
BETWEEN
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, LLC
as Landlord,
and
FVFN ACQUISITION CORP.
as Tenant
Dated: April 15, 2003
TABLE OF CONTENTS
1. DEFINITIONS 1
2. DEMISE AND TERM; STATUS OF TITLE 3
3. RECORDATION OF LEASE 3
4. FIXED MONTHLY RENT 3
5. ADDITIONAL RENT 3
6. TENANT'S PAYMENTS 4
7. PAYMENT OF REAL ESTATE TAX INCREASE 4
8. USE; COMPLIANCE WITH LAWS; ETC 5
9. UTILITIES AND SERVICES 6
10. INDEMNIFICATION AND LIABILITY OF LANDLORD. 7
11. MAINTENANCE AND REPAIRS. 8
12. MECHANIC'S AND OTHER LIENS. 9
13. ALTERATIONS 9
14. CONDITIONS FOR TENANT'S WORK 10
15. INSURANCE 11
16. DAMAGE OR DESTRUCTION 12
17. CONDEMNATION 13
18. CONDITIONAL LIMITATIONS - DEFAULT PROVISIONS 15
19. QUIET ENJOYMENT 18
20. SURRENDER OF PREMISES 18
21. ASSIGNMENT AND SUBLETTING 19
22. ESTOPPEL CERTIFICATES 21
23. INVALIDITY OF PARTICULAR PROVISIONS 22
24. CONDITION OF PREMISES 22
25. EXHIBITION OF DEMISED PREMISES 22
26. ARBITRATION 22
27. NOTICES, ETC 22
28. INJUNCTION 23
29. OWNER'S RIGHT TO CURE TENANT'S DEFAULTS 23
30. BROKER 24
31. REPRESENTATIONS AND WARRANTY 24
32. ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. COMPLIANCE WITH LAWS; HAZARDOUS MATERIALS 25
34. INDEMNIFICATION PROCEDURES 26
35. COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT 26
36. MISCELLANEOUS PROVISIONS 27
LEASE
This Lease dated April 15, 2003, between ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, LLC,
a New York limited liability company ("Landlord" or "Owner"), having an office
at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, and FVFN ACQUISITION CORP., a
Delaware corporation, to be renamed ▇▇▇▇ Vending, Inc. on the date hereof
("Tenant"), having an office c/o ACMI Holdings, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Landlord desires to lease to Tenant and Tenant desires to hire
from Landlord the premises commonly known as ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, upon the terms, covenants and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant hereby agree as follows:
1. DEFINITIONS.
Section 1.1 For the purposes of this lease, unless the context otherwise
requires, the following words and terms shall have the meanings indicated
(whether or not the initial letters are capitalized):
1.1.1 ADDITIONAL RENT: All rent, Impositions and other charges
and sums payable by Tenant under or in respect of this lease to Landlord,
but excluding Fixed Monthly Rent.
1.1.2 BUILDING: The buildings and improvements erected on the
Land or any part thereof, together with all alterations, additions,
improvements, restorations and replacements
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thereof.
1.1.3 BUILDING EQUIPMENT: All machinery, utility, heat,
ventilation and air conditioning systems, apparatus, equipment, and
fixtures of every kind and nature which is heretofore or hereafter
attached to or used in connection with the repair and maintenance of the
Building and any and all alterations, additions, improvements,
restorations and replacements of any thereof; provided, however, that
"Building Equipment" shall not include any freely moveable personal
property of Tenant.
1.1.4 DEMISED PREMISES OR PREMISES: The Land, the Building and
the Building Equipment, together with all rights, privileges and easements
now or hereafter pertaining thereto.
1.1.5 EVENT OF DEFAULT: Defined in Section 19.1.
1.1.6 FEE MORTGAGE (and FEE MORTGAGEE): Any mortgage on all or
any part of the fee title to the Demised Premises (and the holder
thereof).
1.1.7 FIXED MONTHLY RENT: Defined in Section 4.1.
1.1.8 INSURANCE REQUIREMENTS: The requirements of any insurer
of the Premises under any of the insurance policies required under Section
16 hereof and of the local Board of Fire Underwriters insofar as they
pertain to the Premises.
1.1.9 LAND: All that certain plot, piece or parcel of land
more particularly described in EXHIBIT I annexed hereto and made a part
hereof.
1.1.10 LANDLORD: The owner at the time in question of
Landlord's interest under this lease so that, in the event of any transfer
of Landlord's interest in the Demised Premises, the transferor, grantor or
assignor shall be and hereby is entirely relieved and freed of all of its
obligations hereunder, arising from and after the effective date of such
transfer and it shall be deemed without further agreement between the
parties that such grantee, transferee or
159
assignee has assumed and agreed to perform and observe all obligations of
the transferor, grantor or assignor hereunder, whether then accrued or
thereafter accruing.
1.1.11 LANDLORD'S OBLIGATIONS: Landlord's obligations under
this lease.
1.1.12 LEASE YEAR: The period beginning on the date of this
lease and continuing through March 31, 2004 (the "1st Lease Year"), and
each succeeding twelve (12) month period thereafter during the term of
this lease.
1.1.13 LEGAL REQUIREMENTS: All laws, statutes and ordinances
(including, but not limited to, building codes and zoning regulations and
ordinances), and the orders, rules, regulations and requirements of all
federal, state and municipal governments and the appropriate agencies,
officers, departments, boards and commissions thereof, whether now or
hereafter in force, which may be applicable to the Demised Premises, or
any part thereof, or the use or manner of all or any part of the Demised
Premises or the sidewalks and curbs adjacent thereto.
1.1.14 LENDING INSTITUTION: Any insurance company, commercial
bank, investment bank, trust company, savings and loan association, credit
union or union or municipal pension fund authorized or permitted to
conduct business in the jurisdiction in which the Land is located.
1.1.15 PERSON: (whether or not the initial letter is
capitalized): A natural person or persons, a partnership, a corporation, a
limited liability company or any other form of business or legal
association or entity.
1.1.16 RENT: The Fixed Monthly Rent and the Additional Rent.
1.1.17 SUBLEASE: All subleases and lettings, written and oral,
licenses, concessions, occupancies or any other agreement for use or hire
of all or any portion of the Demised Premises; and any person entitled to
use all or any portion of the Demised Premises under any Sublease is
herein sometimes called a "SUBTENANT".
160
1.1.18 TENANT: The tenant named herein and, unless the context
specifically prohibits, its successors and assigns.
1.1.19 UNAVOIDABLE DELAYS: Any delays resulting from any acts
of God, governmental restrictions or preemption, acts of public enemy,
riot, civil commotion, storms, fire, floods, earthquakes, strikes,
lock-outs and any other matter which shall be beyond the reasonable
control of the party required to perform, except that any obligation to
pay money shall be absolute and shall not be subject to any Unavoidable
Delay.
Section 1.2 Various other words or terms which are defined in other
Articles of this lease shall have the meanings specified in such other Articles
for all purposes of this lease, unless the context otherwise requires.
2. DEMISE AND TERM; STATUS OF TITLE.
Section 2.1 Landlord, for and in consideration of the Rent, terms, covenants and
conditions herein reserved and contained, does hereby demise and lease to
Tenant, and Tenant does hereby take and hire from Landlord, the Premises, upon
and subject to the terms, covenants and conditions herein set forth;
TO HAVE AND TO HOLD the Premises for a term of approximately two (2) years,
commencing on the date hereof and expiring at midnight on March 31, 2005 (the
"Initial Term"), unless this lease shall sooner terminate as hereinafter
provided. This lease is also subject to two Renewal Terms as set forth in
Section 38.
3. RECORDATION OF LEASE.
Section 3.1Tenant shall not record this lease.
161
4. FIXED MONTHLY RENT.
Section 4.1 Tenant agrees to pay to Landlord during the Initial Term, in
addition to the Additional Rent to be paid by Tenant hereunder, a fixed monthly
rent (the "Fixed Monthly Rent") in the amount of $30,000.00 per month ($360,000
per annum).
Section 4.2 The Fixed Monthly Rent and Additional Rent payable by Tenant to
Landlord under the terms of this lease shall be paid at the office of Landlord
set forth above, or at such other place or to such other person as Landlord may
from time to time designate by notice to Tenant. The Fixed Monthly Rent shall be
paid on the first day of each and every month during the term hereof in lawful
money of the United States which shall be legal tender for the payment of all
debts and dues, public and private, at the time of payment without set-off,
abatement or diminution, except as otherwise expressly provided in this Lease.
To the extent this Lease commences on a day other than the first day of a
calendar month or terminates on a day other than the last day of a calendar
month the Rent shall be commensurately prorated.
5. ADDITIONAL RENT.
Section 5.1 All charges, sums and amounts other than Fixed Monthly Rent to be
paid by Tenant pursuant to this Lease shall be deemed additional rent
("Additional Rent"), whether or not the same be designated as such, and shall be
due and payable within twenty (20) days after written demand (or such earlier or
later time as may be elsewhere specifically provided in this Lease). Owner shall
have all rights and remedies provided for in this Lease or by law upon Tenant's
failure to pay any Additional Rent, after giving effect to any applicable notice
and cure period, as for the non-payment of Fixed Monthly Rent.
Section 5.2 If any of the Fixed Monthly Rent or Additional Rent payable under
the terms and provisions of this Lease shall be or become uncollectible, reduced
or required to be refunded because of any act or law enacted by a governmental
authority, Tenant shall enter into such agreement(s) and take such other steps
(without additional expense to Tenant) as Owner may request and as may be
legally permissible to permit Owner to collect the maximum rents which, from
time to time during the continuance of such legal rent restriction, may be
legally permissible (but not in excess of the amounts reserved therefor under
this Lease). Upon the termination of such legal rent restriction, (a) the Fixed
Monthly Rent and/or Additional Rent shall become and thereafter be payable in
accordance with the amounts reserved herein for the periods following such
termination, and (b) Tenant shall pay to Owner
162
promptly upon being billed, to the maximum extent legally permissible, an amount
equal to (x) the Fixed Monthly Rent and/or Additional Rent which would have been
paid pursuant to this Lease but for such legal rent restriction less (y) the
rents and other sums paid by Tenant during the period such legal restriction was
in effect.
6. TENANT'S PAYMENTS.
Section 6.1 I f any Fixed Monthly Rent, Additional Rent or other monies owing by
Tenant under this Lease are paid more than ten (10) days after written notice
that such monies are due and payable pursuant to the provisions of this Lease,
Tenant shall pay Owner interest thereon, at three (3%) percent over the then
prime rate announced by Citibank, N.A. but not in excess of the maximum legal
rate (the "Interest Rate"), for the period from the date such monies were due to
the date such monies are paid. It is expressly acknowledged and agreed that
nothing herein contained shall be deemed or construed as permitting or allowing
Tenant to make any payment of Fixed Monthly Rent or Additional Rent at a time
other than when the same shall be required to be paid pursuant to the provisions
of this Lease. The acceptance of the late charge referred to in this Paragraph
shall not in any manner preclude Owner from enforcing any of its rights
contained elsewhere in this Lease.
Section 6.2If any installment or installments of Fixed Monthly Rent or
Additional Rent payable to Landlord shall not be paid within ten (10) days after
notice from Landlord to Tenant that the same is due hereunder, then, in addition
to and without waiving or releasing any other rights and remedies of Landlord, a
late charge equal to three percent (3%) of the amount overdue shall become
immediately due and payable to Landlord and the same may be collected on demand.
Section 6.3 If Tenant shall be in arrears in the payment of rent when due,
Tenant waives its right, if any, to designate the items in arrears against which
any payments by Tenant are to be credited and Landlord may apply any of such
payments to any such items in arrears as Landlord, in its sole discretion, shall
determine, irrespective of any designation or request by Tenant as to the items
against which any such payments shall be credited.
Section 6.4 If any payment of rent shall be made by or from any person,
partnership corporation or entity other than Tenant, the acceptance of same by
Landlord shall not under any circumstances be deemed or construed to be a
recognition of any subletting of the premises, or of any portion thereof, or of
any assignment of this Lease.
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7. PAYMENT OF REAL ESTATE TAX INCREASE
Section 7.1 For purposes of this Lease, "Real Estate Taxes" shall mean the
taxes, assessments and any special assessments levied, assessed or imposed at
any time by any governmental authority upon or against the Building and all
taxes and assessments levied, assessed or imposed at any time by any
governmental authority in connection with the receipt of income or rents from
the real property to the extent the same shall be in lieu of or in addition to
or a substitute for all or a portion of any of the taxes or assessments upon or
against the real property. Notwithstanding the foregoing "Real Estate Taxes"
shall not include any income, estate, inheritance, succession, corporate stock
transfer or franchise taxes or penalties or interest for late payment of taxes.
As of the date hereof, the Real Estate Taxes consist of the Town of Hempstead,
County of Nassau general tax (the "Town Tax") and the Oceanside School District
and Local Library tax (the "School Tax"). The "Town Tax Base Year" shall mean
the calendar year 2003. The "School Tax Base Year" shall mean the 12 months
ending June 30, 2003.
Section 7.2 If in any subsequent tax year the Town Tax shall be greater than the
Town Tax for the Town Tax Base Year, Tenant shall pay, in addition to the Fixed
Rent, an amount equal to such increase. If in any subsequent tax year the School
Tax shall be greater than the School Tax for the School Tax Base Year, Tenant
shall pay to Landlord an amount equal to the amount of such increase. The amount
payable by Tenant hereunder is referred to as "Tenant's Tax Payment."
Section 7.3 At any time during any subsequent tax year Landlord may furnish
Tenant with a statement setting forth the amount of the Town Tax or School Tax
for each subsequent year together with a copy of the relevant tax ▇▇▇▇. Tenant
shall pay to Landlord Tenant's Tax Payment within 15 days prior to the first day
of the month in which the applicable tax for such subsequent tax year is due;
provided, however, that if such tax is paid in installments Tenant's tax payment
for such subsequent year shall be likewise payable in proportionate
installments, each installment to be paid 15 days prior to the date in which the
corresponding installment of taxes shall become due. In the event any Real
Estate Tax or installment thereof becomes due and payable by Landlord prior to
the time that Landlord shall have furnished such statement to Tenant, Tenant
shall pay Tenant's Tax Payment or installment thereof within 30 days of the
furnishing to Tenant of such statement.
Section 7.4 Only Landlord shall be eligible to institute tax reduction or other
proceedings to reduce the assessed valuation of the real property. In the event
the assessed valuation which had been utilized in computing real estate taxes
for the Town Tax Base Year or the School Tax Base Year shall be retroactively
adjusted to reflect such reduction, Tenant's tax payment shall be increased
accordingly and all retroactive additional rent resulting from such retroactive
adjustment shall be payable by Tenant within 30 days after notice from Landlord.
Tax payments shall be apportioned between Landlord and Tenant at the beginning
and at the expiration or sooner termination of this Lease so that Tenant shall
pay only the portion of such payments which are allocable to the term of this
Lease.
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8. USE; COMPLIANCE WITH LAWS; ETC.
Section 8.1 The Demised Premises may be used and occupied for a vending machine
warehouse and refurbishment center, inventory storage and distribution center
and related office purposes; provided, however, that the Premises may not be
used for the use or storage of Hazardous Materials (as hereinafter defined).
Tenant shall not use, improve, permit or suffer the use, improvement or
occupancy of, the Demised Premises, or any part thereof, (a) in any unlawful
manner or for any illegal purpose, and (b) other than for the purposes and in
the manner and to the extent permitted by all Legal Requirements, Insurance
Requirements and any Certificate of Occupancy now or hereafter applicable or
issued with respect to the Demised Premises.
Section 8.2 Landlord represents and warrants to Tenant that (a) the current
Certificate of Occupancy for the Building will not be violated by the specific
use of the Premises contemplated by Tenant as set forth in Section 8.1 and (b)
there are no current violations against the Building that have been noted by any
governmental authority.
Section 8.3 Tenant shall, throughout the term, at Tenant's own cost and expense,
promptly comply, or cause compliance, with all Legal Requirements (other than
those constituting Landlord's Obligations) and Insurance Requirements, foreseen
or unforeseen, ordinary as well as extraordinary, and whether or not the same
shall presently be within the contemplation of the parties or shall involve any
change of governmental policy or require alterations or additions and
irrespective of the cost thereof. Tenant shall not be obligated to make capital
improvements or structural repairs unless the need to make same arises out of
(a) Tenant's particular manner of use of the Premises (as opposed to the mere
use of the premises as permitted hereunder) or (b) the negligent or intentional
act or omission of Tenant, its agents, servants, employees, contractor or
invitees or (c) a breach of Tenant's obligations under this Lease. Except as
provided in the immediately preceding sentence, Landlord will be obligated to
make any required structural repairs. The provisions and conditions of Article
14 shall also apply to any work required to be performed by Tenant under this
Article.
Section 8.4 Tenant shall, at its sole cost and expense, obtain and keep in full
force and effect any and all necessary permits, licenses, certificates or of
Tenant's other authorizations required in connection with the lawful and proper
construction of any Tenant alterations (as defined in Section 13.1), and with
the use, occupancy, operation and management of the Demised Premises and
Tenant's signs thereat (the "Authorizations"); and Tenant shall indemnify and
hold harmless Landlord from and against all claims, liability, damages, loss,
costs and expenses (including, without limitation, reasonable attorneys' fees)
in connection therewith. Upon the expiration or sooner termination of the term
of this lease, Tenant shall
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promptly deliver all Authorizations to Landlord which relate to the Demised
Premises and which were obtained by or issued to Tenant and are then in force,
together with an assignment or conveyance thereof to Landlord if reasonably
necessary, in such form and substance as Landlord shall reasonably require to
effect such transfer. Landlord agrees to cooperate with Tenant, at no cost to
Landlord, in obtaining any Authorizations, zoning variance or change to the
Certificate of Occupancy required by Tenant.
Section 8.5 Except as provided in Section 16 (Damage or Destruction) and Section
17 (Condemnation), or as otherwise specifically provided for in this Lease, no
abatement, diminution or reduction of the Rent shall be claimed by, or allowed
to, Tenant for any inconvenience, interruption, cessation or loss of business or
otherwise caused, directly or indirectly, by any Legal Requirements or any other
matter or thing resulting therefrom. Except as provided in Section 16 (Damage or
Destruction) and Section 17 (Condemnation), no diminution of the amount of space
caused by legally required changes (a) limiting the use of the Demised Premises
or (b) in the construction, equipment or operation of the Demised Premises,
shall entitle Tenant to any reduction or abatement of the Rent. Notwithstanding
the foregoing in the event that Tenant shall be unable to have access to the
Demised Premises or use the Demised Premises as a result of the existence of
Hazardous Materials that exist in the Demised Premises on the date hereof the
violation by Landlord of the Legal Requirement that are the obligation of the
Landlord to comply with pursuant to the terms hereunder or as a result of the
negligence or wilful misconduct of the Landlord, or its agents, contractors or
employees, then in any of the foregoing events, the Rent shall be abated until
such time as the access to or use of the Demised Premises has been restored to
Tenant.
9. UTILITIES AND SERVICES.
Section 9.1 Tenant agrees to pay or cause to be paid all charges for water,
trash removal, exterior or interior cleaning gas, water, sewer, electricity,
light, heat, power, telephone or other communication service or other utility or
service used, rendered or supplied to, upon or in connection with the Demised
Premises throughout the term of this Lease.
Section 9.2 Tenant expressly agrees that other than through the use of the
Building Equipment Landlord is not, nor shall it be, required to furnish to
Tenant or any other occupant of the Demised Premises during the term of this
lease, any waste removal, exterior or interior cleaning, water, sewer, gas,
heat, electricity, light, power or any other facilities, equipment, labor,
materials or any services of any kind whatsoever, whether similar or dissimilar.
Section 9.3 Landlord represents and warrants to Tenant that the Building
Equipment is in good
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working order as of the date hereof. The relative obligations of Tenant and
Landlord with respect to maintenance, repair and replacement of the Building
Equipment is set forth in Article 11 hereof.
Section 9.4 In the event there shall be any interruption in the services to be
provided by Landlord to Tenant pursuant to Section 9.2, such that Tenant shall
be unable to have access to or use of the Demised Premises, the rent hereunder
shall be abated until that date that services shall have been restored.
10. INDEMNIFICATION AND LIABILITY OF LANDLORD.
Section 10.1 Except for the negligence or willful misconduct of Landlord, its
agents, employees or contractors and subject to waivers of subrogation
hereinafter provided for, Tenant agrees, at its sole cost and expense, to
indemnify and hold harmless Landlord against and from any and all claims by or
on behalf of any Person arising from or in connection with (a) any work or thing
whatsoever done in or about the Demised Premises by or on behalf of Tenant (or
any person holding or claiming through or under Tenant) during the term of this
Lease after giving effect to any applicable notice and cure periods; (b) the
condition of the Demised Premises during the term of this lease; (c) any breach
or default on the part of Tenant in the performance of any of Tenant's covenants
or obligations under this Lease; (d) any negligence or willful misconduct of
Tenant, or any of its agents, servants, employees, contractors, invitees (while
in the Demised Premises) or licensees, or of any person holding or claiming
through or under Tenant; (e) any accident, injury or damage whatsoever caused to
any person or persons or any property damage occurring during the term of this
Lease, in or about the Demised Premises, or upon or under the streets and
sidewalks adjacent thereto, excluding those caused by the negligence or wilful
misconduct of Landlord or its members, partners, shareholders, principals,
officers, directors, managers, agents, servants, employees or contractors.
Tenant agrees to indemnify and hold harmless Landlord from and against all
costs, reasonable attorneys' fees, expenses and liabilities incurred in
connection with or in defending any such claim or any action or proceeding
brought thereon; and in case any action or proceeding be brought against
Landlord by reason of any such claim, Tenant, upon notice from Landlord, agrees
to defend such action or proceeding unless Tenant causes the same to be
discharged and satisfied. In addition, Tenant shall indemnify and hold harmless
Landlord against and from any costs and expenses paid or incurred by Landlord
(including reasonable attorneys' fees) in obtaining possession of the Demised
Premises after an Event of Default or upon the expiration or sooner termination
of this lease, or in enforcing any of Tenant's obligations hereunder.
Section 10.2 Tenant agrees that, except for Landlord's Obligations and as
otherwise specifically provided for herein and except for the negligent or
willful misconduct of Landlord, its agents, employees or contractors, Landlord
shall not be responsible or liable to Tenant or any other person for, or by
reason of, (a) any defect in the Land, the Building, the Building Equipment, or
any other equipment, machinery, wiring, apparatus or appliances whatsoever now
or hereafter situate in, at or upon the Demised Premises,
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or (b) any failure or defect of water, heat, electric light or power supply, or
of any apparatus or appliance in connection therewith, or from any injury or
loss or damage to property resulting therefrom, (c) any injury, loss or damage
to any person or to the Demised Premises, or to any property of Tenant, or of
any other person, contained in, upon or about the Demised Premises, or the
streets and sidewalks adjacent thereto, caused by or arising or resulting from
the electric wiring or plumbing, water, steam, sewerage or other pipes, or by or
from any machinery or apparatus, or by or from any defect in or leakage,
bursting or breaking up of same, or by or from any leakage, running or overflow
of water or sewerage in any part of the Demised Premises, or by or from any
other defect whatsoever, or (d) any injury or damage caused by, arising or
resulting from lightning, wind, tempest, water, snow or ice, in or upon or
coming through or falling from the roof, skylight, trapdoors, walls, windows or
otherwise, or by or from other actions of the elements, or from any injury or
damage caused by or arising or resulting from acts, omissions or negligence of
any occupant or occupants of the Demised Premises or of any subtenant, licensee,
invitee or contractor of Tenant (or of any other person holding or claiming
through or under Tenant).
Section 10.3 Notwithstanding the foregoing Landlord agrees, at its sole cost and
expense, to indemnify and hold harmless Tenant from and against any and all
claims by or on behalf of any Person arising from or in connection with (a) any
breach or default on the part of Landlord in the performance of any of
Landlord's Obligations and (b) any negligence or wilful misconduct of Landlord,
or any of its agents, servants, employees, invitees (while in the Demised
Premises) or Licensees, or any person holding or claiming through or under
Landlord. In connection with such indemnity, Landlord agrees to indemnify Tenant
from and against all costs, reasonable attorney's fees, expenses and liabilities
incurred in connection with or in defending any such claim or any action or
proceeding brought thereon and, in case any action or proceeding be brought
against the Tenant by the reason of any such claim, Landlord upon notice from
Tenant, agrees to defend such action or proceeding unless Landlord causes the
same to be discharged and satisfied.
11. MAINTENANCE AND REPAIRS.
Section 11.1 Tenant shall, throughout the term of this lease, at Tenant's sole
cost and expense, maintain in good and lawful order, condition and repair the
non-structural portions of the Demised Premises and the parking area, lawn,
sidewalks and curbs adjacent thereto; and Tenant shall not commit or suffer any
waste with respect to the Demised Premises. Except for Landlord's Obligations,
Tenant shall promptly make all non-structural repairs, interior and exterior,
ordinary as well as extraordinary, foreseen as well as unforeseen, necessary to
keep the Demised Premises, the Building Equipment and the parking area, lawn,
sidewalks and curbs adjacent thereto in good and lawful order and condition and
said repairs shall be at least equal in quality and class to the condition
existing on the date hereof. When used in this Article, the term "repairs" as
applied to Building Equipment shall include normal maintenance and replacement
of parts but shall not include major repairs or replacements which shall be the
obligation of Landlord. If any Building Equipment shall be removed, Tenant shall
promptly replace the same with other equipment, not necessarily of the same
character but of at least equal utility and value. The
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provisions and conditions of Article 14 shall apply to repairs required to be
done by Tenant under this Article. Tenant shall keep and maintain all portions
of the Demised Premises and the parking area, lawn, curbs and sidewalks
adjoining the Demised Premises in a clean and orderly condition, free of
accumulation of dirt, rubbish, snow and ice and Tenant shall not permit or
suffer any overloading of the floors of the Building. Except as otherwise
provided in Article 20, nothing herein contained shall be construed to prevent
Tenant, any Subtenant or other occupant claiming under or through Tenant from
removing from the Demised Premises its trade fixtures, signs, furniture and
equipment (other than Building Equipment), on the condition, however, that such
removal shall be done without cost or expense to Landlord. Tenant hereby agrees
to promptly repair or cause to be repaired any and all damage to the Demised
Premises resulting from or caused by such removal.
Section 11.2 Landlord shall, through the term of the Lease make all reasonably
necessary structural repairs to the Building and major repairs or replacements
to the Building including the sidewalk adjacent thereto and major repairs or
replacements to the Building Equipment.. In addition, Landlord will make any
capital improvements to the Demised Premises which are required in connection
with (a) removal of any Hazardous Materials which exist in the Demised Premises
on the date hereof, (b) the removal of any violations of record which have been
noted against the Demised Premises or the Building (c) necessary to provide
access to or use of the Demised Premises by Tenant under the circumstances where
such access or use has been denied to Tenant as a result of the failure of
Landlord to perform any of Landlord's obligations and (d) necessary for the
safety of ▇▇▇▇▇▇▇ and its employees and for the preservation of the ▇▇▇▇▇▇▇'▇
property..
Section 11.3 Notwithstanding anything to the contrary contained in Section 11.1,
in no event shall Tenant have liability for any conditions or matters
constituting Landlord's Obligations.
12. MECHANIC'S AND OTHER LIENS.
Section 12.1 Tenant shall not suffer or permit any mechanic's or other liens to
be filed against the Demised Premises, or any part thereof, or against Tenant's
leasehold estate therein, by reason of any work, labor, services or materials
done for, or supplied, or claimed to have been done for, or supplied to, Tenant
or anyone holding the Demised Premises or any part thereof through or under
Tenant. If any such mechanic's lien shall at any time be filed against the
Demised Premises, Tenant shall promptly cause such mechanic's lien to be
discharged of record by either payment, deposit, bond or otherwise. If Tenant
shall fail to discharge of record any such mechanic's lien within 60 days after
Tenant receives notice thereof, or within such shorter period of time as may be
required under any Fee Mortgage (but not less than 30 days) then, in addition to
any other right or remedy of Landlord, Landlord may, but shall not be obligated
to, procure the discharge of such lien of record, and Tenant shall, within 20
days after, written demand by Landlord, reimburse Landlord for all costs and
expenses (including reasonable attorney's fees) reasonably
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incurred by Landlord in discharging such lien of record together with interest
thereon at the Interest Rate from the date of demand by Landlord until paid by
Tenant.
Section 12.2 Nothing contained in this lease shall be deemed to be, or construed
in any way as constituting, the consent or request of Landlord, express or
implied, by inference or otherwise, to any third party for the performance of
any labor or the furnishing of any materials or equipment for any construction,
rebuilding, alteration, improvement or repair of or to the Demised Premises or
any part thereof, nor as giving Tenant any right, power or authority to contract
for or permit the rendering of any services or the furnishing of any materials
or equipment which might in any way give rise to the right to file any lien
against Landlord's interest in the Demised Premises. Landlord hereby gives
notice to all persons who may furnish labor or materials to Tenant at the
Demised Premises that Landlord does not consent to the filing of any mechanic's
or other lien against Landlord's interest or estate in the Demised Premises, and
that all persons furnishing labor and materials to Tenant shall look solely to
Tenant's credit and such security as Tenant may furnish for the payment of all
such labor and materials.
13. ALTERATIONS.
Section 13.1 Tenant, subject to obtaining the express prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed, shall
have the right, at any time and from time to time during the term of this lease,
to make, at its sole cost and expense, non-structural changes, alterations,
additions, replacements or improvements (individually an "Alteration" and
collectively "Alterations") in or to the Demised Premises. Notwithstanding the
foregoing, the prior written consent of Landlord shall not be required with
respect to any non-structural Alterations, the total cost of which shall not
exceed $100,000. The term "Alteration" does not include any alterations
described in the preceding sentence. No Alteration unless specifically consented
to by Landlord, shall reduce the value or size of the Demised Premises or affect
the structural components, of the Building. Landlord's consent to any proposed
Alteration shall be accompanied by architectural plans sufficient in detail to
enable Landlord to evaluate their impact, if any, on the structural components
and value of the Building. If within twenty (20) days after receipt by Landlord
of Tenant's request Landlord fails to either approve Tenant's request, or to
deny such request with a written explanation sufficiently detailed to enable
Tenant to address Landlord's objections, and Tenant resubmits such request to
the Landlord and Landlord does not approve Tenant's resubmitted request, or deny
such resubmitted request with a written explanation sufficiently detailed to
enable Tenant to address Landlord's objections, within ten (10) days after
Tenant submits such request, then Landlord shall be deemed to have approved the
request in question. Any disputes under this Article 13 shall be resolved by
arbitration pursuant to Section 26. Tenant shall be responsible for all out of
pocket costs including legal, engineering and architectural fees, reasonably
incurred by Landlord in reviewing any such request. Tenant may make purely
decorative changes to the Demised Premises without first obtaining Landlord's
consent thereto.
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Section 13.2 The provisions and conditions of Article 14 shall apply to any work
performed by Tenant under this Article.
14. CONDITIONS FOR TENANT'S WORK.
Section 14.1 Tenant agrees that all repairs, alterations, additions,
improvements, rebuilding, restoration and other work which Tenant shall be
required or permitted to do under the provisions of this lease, including, but
not limited to the provisions of Articles 8, 11, 13, 16 and 17 ("Work") shall be
done in all cases upon and subject to all of the following terms and conditions:
14.1.1 All Work shall be commenced only after all required
municipal and other governmental permits, authorizations and approvals
shall have been obtained by Tenant, at its sole cost and expense, and
copies thereof delivered to Landlord. Tenant shall have the right to sign
and file all necessary applications and other filings with the department
of buildings or other applicable governmental office necessary to obtain
any governmental approvals or permits required in order to perform and/or
occupy the Work. In addition, Landlord will, on Tenant's written request,
execute any documents reasonably necessary to be signed by Landlord to
obtain any such permits, authorizations and approvals, provided that
Tenant shall discharge any reasonable, out-of-pocket expense of Landlord
in connection therewith.
14.1.2 All Work shall be performed in accordance with all
Legal Requirements and Insurance Requirements and shall be commenced and
completed with reasonable diligence, subject to Unavoidable Delays.
14.1.3 The cost of all Work shall be paid promptly, in such
manner, so that the fee title to the Demised Premises shall at all times
be free from:
(a) Liens for labor or materials supplied or claimed to
have been supplied to the Demised Premises or Tenant;
(b) Chattel mortgages, conditional sales contracts
and/or title retention agreements; and
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(c) Security interests and agreements, and financing
agreements and statements;
arising out of or in connection with such Work.
14.1.4 At all times when any Work is in progress, Tenant shall
maintain or cause to be maintained (a) worker's compensation insurance
covering all persons employed in connection with the Work, in an amount at
least equal to the minimum amount of such insurance required by law, and
(b) naming Tenant as the insured and Landlord (and Landlord's managing
agent, if any) as additional insureds, commercial general liability
insurance against claims for bodily injury, death or property damage
occurring in or about the Demised Premises, with limits of not less than
$2,000,000 (which can be provided in combination with Umbrella Liability
coverage) for bodily injury or death to any number of persons in respect
of any one accident or occurrence, and property damage in respect of such
accident or occurrence. Such commercial general liability insurance shall
be in addition to the insurance required pursuant to Section 15.1.1, but
may be effected by an endorsement, if obtainable, upon the insurance
policy referred to in said Section. The provisions and conditions of
Section 15 hereof shall apply to any insurance which Tenant shall be
required to maintain or cause to be maintained under this subsection.
14.1.5 The conditions of Article 13 shall have been complied
with, to the extent applicable to the Work.
Section 14.2 Title to the Work, when erected, constructed, installed or placed
upon the Demised Premises, shall automatically pass to, vest in and belong to
Landlord upon expiration or sooner termination of the term of this lease without
further action on the part of either party and without cost or charge to
Landlord. Upon completion of the Work, Tenant shall deliver to Landlord a copy
of the plans for the Work marked to show field conditions.
Section 14.3 Upon the termination of this Lease, Tenant shall be obligated to
repair and restore the premises to the condition existing at the commencement of
the Lease term subject to reasonable wear and tear, Landlord's obligations and
damage due to casualty and condemnation. Any Alterations shall be removed by
Tenant, all at Tenant's sole cost and expense, unless Landlord has agrees
otherwise at or prior to the time such Alteration was made.
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15. INSURANCE.
Section 15.1 Tenant shall, at its own cost and expense, provide and keep in
force for Tenant and naming Landlord as an additional insured the following
insurance:
15.1.1 Commercial general public liability insurance against
claims for bodily injury or death or property damage occurring in or about
the Demised Premises (including, without limitation, bodily injury, death
or property damage resulting directly or indirectly from any change,
alteration, improvement or repair thereof), with limits of not less than
$2,000,000 (which can be provided in combination with Umbrella Liability
coverage) for bodily injury or death to any number of persons in respect
of any one accident or occurrence and property damage in respect of such
accident or occurrence;
Section 15.2 Tenant shall carry worker's compensation insurance and shall
require any general contractor or subcontractor performing work in the Building
carry the same, and shall deliver to Landlord a certificate of insurance prior
to commencement of any such work covering all persons employed, directly or
indirectly, in connection with any work performed by Tenant or any repair or
alteration authorized hereunder. Tenant shall also, in connection with any such
matters, deliver to Landlord a certificate of general liability insurance with
limits as set forth above, including all employees and agents of Tenant with
respect to whom death or bodily injury claims could be asserted against Landlord
or Tenant as required by law.
Section 15.3 All insurance to be provided and kept in force by Tenant under the
provisions of this lease (except worker's compensation insurance) shall name the
Tenant as the insured and Landlord and any Fee Mortgagees of which Tenant has
notice as additional insureds, as their respective interests may appear. Said
policies shall be obtained and fully paid for by Tenant upon the commencement of
the term of this lease, and shall be taken in companies of recognized
responsibility, licensed to do business in the State of New York, with a Bests'
rating of A-VIII or more (provided that Landlord agrees that New York State Fund
is an acceptable carrier for the workers' compensation insurance). Certificate
of insurance for the insurance required by Section 15.1 shall be delivered to
Landlord within ten (10) days following request. A certificate for each such
policy of insurance shall be delivered to Landlord. Said policies shall be for a
period of not less than one year and shall contain provisions providing that (i)
such policy cannot be cancelled or modified unless Landlord (and each Mortgagee
named as an insured thereunder) is given at least thirty (30) days' prior
written notice of such cancellation or modification and (ii) no act or omission
by Tenant shall impair or affect the rights of the Landlord or Mortgagee to
receive and collect the proceeds under the policy. Tenant shall procure and pay
for renewals of such insurance from time to time at least fifteen (15) days
before the expiration thereof, and Tenant shall promptly deliver to such
Mortgagees and to Landlord the renewal policies or certificates thereof, as
required, together with, if
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requested by Landlord, receipted bills or other reasonably satisfactory evidence
of the payment of the premiums there for. All insurance required hereunder may
be provided by a blanket policy.
Section 15.4 Tenant and Landlord shall obtain, for each policy of insurance
obtained by either party in respect of the Premises or its contents, provisions
permitting waiver of any claim by Landlord or Tenant, as the case may be,
against the other party for loss or damage within the scope of the insurance,
and each party, to such extent permitted, for itself and its insurers, waives
all such insured claims against the other party.
Section 15.5 Tenant shall not carry separate or additional insurance, concurrent
in form and contributing, in the event of any loss or damage to the Demised
Premises, with any insurance required to be obtained by Tenant under this Lease,
unless such separate or additional insurance shall comply with and conform to
all of the provisions and conditions of this Article. Tenant shall promptly give
notice to Landlord of such separate or additional insurance and deliver a
certificate of such policies to Landlord within ten (10) days of Landlord's
request for same.
Section 15.6 Landlord shall carry insurance covering the Demised Premises in
normal and customary forms and amounts, which amount shall not be less than that
carried by Tenant.
16. DAMAGE OR DESTRUCTION.
Section 16.1 If the Building or the Building Equipment shall be damaged or
destroyed by fire or other casualty, Landlord shall, with reasonable diligence,
repair, restore, replace or rebuild the Building and/or the Building Equipment
to as nearly as may be practicable its condition and character immediately prior
to such damage or destruction (with such alterations, additions, replacements
and improvements as may be made under and in accordance with the provisions and
conditions of Article 14). The work required under this Section 16.1 is herein
called the "Restoration".
Section 16.2 The net amount of the insurance proceeds paid over to the Landlord
shall be applied by the Landlord to the cost of the Restoration . At the request
of Landlord, Tenant shall furnish to the Landlord, an official search or other
evidence reasonably satisfactory to the Landlord showing whether (i) there has
been filed with respect to the Demised Premises any mechanic's or other lien
which has not been discharged of record, in respect of any work, labor, services
or materials performed by furnished or supplied to Tenant in connection with the
Restoration, and (ii) all of said materials have been purchased
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free and clear of any chattel mortgage or title retention or other security
agreement.
Section 16.3 If the reasonably estimated time required to complete the
Restoration is in excess of 270 days in the last year of the Term, either party
hereto, on thirty (30) days notice to the other party, may terminate this Lease.
If the reasonable estimated time required to complete the Restoration is in
excess of 180 days, Tenant may, on thirty (30) days notice to Landlord,
terminate this Lease. In the event that more than thirty (30%) percent of the
Demised Premises shall be rendered unusable as a result of any fire or other
casualty and if Landlord shall be required to effect a Restoration hereunder,
the Rent hereunder shall be abated (on a pro-rated basis determined with respect
to the portion of the Demised Premises rendered unuseable) until the Restoration
shall have been completed.
Section 16.4 If any of the insurance proceeds paid to the Landlord as
hereinabove provided shall remain after the completion of the Restoration, the
excess shall be retained by the Landlord.
Section 16.5 Landlord and Tenant each agree that it will cooperate with the
other, to such extent as such other party may reasonably require, in connection
with the prosecution or defense of any action or proceeding arising out of, or
for the collection of any insurance monies that may be due in the event of, any
loss or damage, and that they will execute and deliver to such other parties
such instruments as may be required to facilitate the recovery of any insurance
monies.
Section 16.6 Tenant agrees to give prompt notice to Landlord with respect to all
fires and other casualties occurring in, on, at or about the Demised Premises
which result in any death or serious personal injury or in any damage or
destruction to the Building or Building Equipment.
Section 16.7 To the extent that the provisions of this Article shall conflict
with the provisions of any laws of the State of New York, or any agency or
political subdivision thereof controlling the rights and obligations of parties
to leases in the event of damage by fire and other casualty to leased space, the
provisions of this Article shall govern and control and such conflicting laws
shall be deemed waived by the parties hereto. To the extent that the provisions
of this Article are inconsistent with the rights of a Superior Mortgagee
pursuant to the terms of the Superior Mortgage which it holds, the provisions of
the Superior Fee Mortgage shall control to the extent the same do not decrease
Tenant's rights or increase Tenant's obligations under this Lease in any
material respect and, otherwise, the terms of this Article shall control.
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17. CONDEMNATION.
Section 17.1 If, at any time during the term of this lease, title to the whole
or materially all of the Demised Premises shall be taken by the exercise of the
right of condemnation or eminent domain, this lease shall terminate and expire
upon the vesting of title to the Demised Premises in the condemning authority
and Landlord shall be entitled to receive and retain the entire award. Upon such
termination, the Fixed Monthly Rent and Additional Rent shall be apportioned and
paid to the date of such termination and Tenant shall have no claim for the
unexpired term of this Lease.
For the purpose of this lease, "materially all of the Demised Premises" shall
mean a taking of such scope that the portion of the Building not so taken cannot
reasonably be repaired with the available condemnation award so as to constitute
a complete unit economically feasible for the use to which the Demised Premises
were put prior to the taking. If, within thirty (30) days after title shall vest
in the condemning authority, Landlord and Tenant cannot agree upon whether or
not materially all of the Demised Premises shall have been taken, the dispute
shall be determined by arbitration in accordance with Article 26 hereof.
Section 17.2 If at any time during the term of this lease title to less than the
whole or materially all of the Demised Premises shall be taken as aforesaid, so
that in the reasonable judgment of Tenant the Demised Premises remaining would
be unsatisfactory for Tenant's business operation, Tenant may cancel this Lease
and any unearned portion of the rent paid by Tenant shall be refunded to Tenant,
as of the date Tenant surrenders possession of the Demised Premises. If Tenant
does not elect to cancel this lease, then the entire award, after the payment of
the reasonable costs and expenses incurred by the parties in connection with any
proceeding relating thereto, shall be paid to the Landlord, and the Landlord
shall hold, apply and pay over the same towards Landlord's cost of demolition,
repair and restoration, substantially in the manner and subject to the same
terms and conditions as those provided in Article 16 hereof. If, however, the
cost of demolition, repairs and restoration shall exceed the net amount of
condemnation awards paid to the Landlord, Landlord may elect to cancel this
Lease or pay the deficiency. Any balance remaining in the hands of the Landlord
after payment of such costs of demolition, repair and restoration as aforesaid
shall be retained by Landlord. Notwithstanding the foregoing, and provided that
Landlord's award is not diminished thereby, Tenant shall be entitled to apply
for and receive separate awards for Tenant's fixtures and equipment.
Section 17.3 If title to less than the whole or materially all of the Demised
Premises shall be taken as aforesaid, and Tenant has not elected to cancel this
lease, this lease shall continue, except that thereafter the Fixed Monthly Rent
for each Lease Year or partial Lease Year subsequent to the taking shall be
equitably reduced in the same proportion by which the value of Tenant's
leasehold estate hereunder shall have been reduced by reason of such taking.
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Section 17.4 In the event of any dispute between the parties arising under, in
connection with or relating to this Article, such dispute shall be determined by
arbitration in accordance with the provisions of Article 26 of this lease except
that each of the arbitrators shall be a member of the American Institute of Real
Estate Appraisers or the Society of Real Estate Appraisers (of any successor
organizations of comparable function) and have at least 10 years' experience in
the appraisal of similar properties located in the jurisdiction in which the
Demised Premises are located.
Section 17.5 If, at any time after the date hereof, the whole or any part of
Tenant's interest under this lease shall be taken or condemned by any competent
authority for its or their temporary use or occupancy (i.e. less than thirty
(30) days), this lease shall not terminate by reason thereof and Tenant shall
continue to pay, in the manner and at the time herein specified, the full amount
of the Fixed Monthly Rent and Additional Rent and, except only to the extent
that Tenant may be prevented from so doing pursuant to the terms of the order of
the condemning authority or to the extent Tenant cannot use the space for such
period, Tenant shall perform and observe all of the other terms, covenants,
conditions and obligations hereof upon the part of Tenant to be performed and
observed as though such taking had not occurred. In the event of any such
temporary taking, Tenant shall be entitled to receive the entire amount of any
award made for such taking, whether paid by way of damages, rent or otherwise;
provided, however, that (a) if the award is made in a lump sum, the same shall
be paid to and held by the Landlord as a fund which shall be applied from time
to time to the Fixed Monthly Rent and Additional Rent, and the balance, if any,
of such fund shall be paid to Tenant upon the expiration of such temporary
taking of this lease and (b) if such period of temporary use or occupancy shall
extend beyond the expiration of the term of this lease, such award, whether paid
in a lump sum or in installments covering at least the last twelve (12) months
of the term of this lease, shall be equitably apportioned between Landlord and
Tenant as of date of expiration of the term of this lease. Tenant agrees that
upon the termination of any such period of temporary use or occupancy it will,
at its sole cost and expense, restore the Demised Premises, as nearly as may be
practicable, to the condition in which the Demised Premises were immediately
prior to such taking.
Section 17.6 Notwithstanding anything to the contrary contained herein, Tenant
shall be entitled to assert a claim for condemnation based upon its moving
expenses and any unamortized cost relating to its furniture, fixtures and
equipment.
18. CONDITIONAL LIMITATIONS - DEFAULT PROVISIONS.
Section 18.1 This lease and the term here of are subject to the limitation that
if, at any time during the term of this lease, any one or more of the following
events (herein called an "Event of Default") shall occur:
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18.1.1 Tenant shall fail to pay any installment of the Fixed
Monthly Rent or any Additional Rent, or any part thereof, within ten (10)
days after notice from Landlord in the case of Fixed Monthly Rent and
within ten (10) days after notice from Landlord in the case of Additional
Rent that the same are past due (subject to the provisions of Section
18.5); or
18.1.2 Tenant shall fail to perform or observe any other
requirement of this lease on the part of Tenant to be performed or
observed and such failure shall continue for thirty (30) days after notice
thereof from Landlord to Tenant (provided that if such default cannot,
because of the nature of such default, be cured within the thirty (30) day
period provided for herein, then such 30-day period shall be extended for
such additional period of time as may be reasonably necessary to effect
such cure provided that Tenant commences such cure within said thirty (30)
day period and thereafter prosecutes such cure to completion); or
18.1.3 This lease or the estate of Tenant hereunder is
transferred or passes to or devolves upon any other person or party,
except in a manner herein permitted; or
18.1.4 Tenant, while in possession, shall file a voluntary
petition in bankruptcy or insolvency or for reorganization or arrangement
under the bankruptcy laws of the United States or under any insolvency act
of any state or shall voluntarily take advantage of any such law or act by
answer or otherwise or shall be dissolved or shall make an assignment for
the benefit of creditors; or
18.1.5 Involuntary proceedings under any such bankruptcy law
or insolvency act or for the dissolution of a corporation shall be
instituted against Tenant which is not dismissed within ninety (90) days
of filing or a custodian or receiver was appointed and took possession of
Tenant's property; or
18.1.6 Tenant, or a trustee or custodian appointed for all or
a substantial portion of Tenant's property pursuant to the provisions of
any insolvency, bankruptcy, reorganization or other law then in effect,
shall fail within the time provided by law and an order of a court having
competent jurisdiction, to provide Landlord with adequate protection (as
that term is used in 11 USC 361) and specifically the "indubitable
equivalent" of Landlord's interest in the Premises as provided in 11 USC
361(3); (If a petition shall be filed by or against Tenant in any
bankruptcy, reorganization, composition, arrangement or insolvency
proceeding pursuant to the provisions of the present Bankruptcy Code or
any subsequent Act similar thereto or amending such Act, demand shall be
deemed automatically made for relief from the imposition of the
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automatic stay presently imposed by 11 USC 362 or such later or similar
section or provision as shall be in effect imposing said stay. This
provision shall be deemed the request of Landlord for a hearing to be held
with regard to the modification, termination or lifting of said stay and
shall be deemed effective as of the date of filing of said petition by or
against Tenant.) or
18.1.7 Tenant, while insolvent or unable to pay its debts as
they mature, procures, permits or suffers voluntarily or involuntarily the
appointment of a receiver or trustee to take charge of all or
substantially all of its property; or
then, upon the happening and continuance of any one or more of the
aforementioned Events of Default, Landlord may (a) give to Tenant a notice
(hereinafter called "Notice of Termination") terminating this lease at the
expiration of five (5) days from the date of service of such Notice of
Termination, and at the expiration of such five (5) days, this lease and the
term of this lease, as well as all of the right, title and interest of Tenant
hereunder, shall wholly cease and expire in the same manner and with the same
force and effect as if the date of expiration of such five (5) day period were
the date originally specified herein for the expiration of the term of this
lease, and Tenant shall then quit and surrender the Demised Premises to
Landlord, and/or (b) Landlord or Landlord's agents or servants may, either by
summary process or by any proceeding at law, immediately or at any time
thereafter re-enter the Demised Premises and remove therefrom Tenant, its
agents, employees, servants, licensees and, subject to the terms of any
non-disturbance agreements entered into by Landlord, any Subtenants and other
Persons and all or any of its or their property therefrom, and repossess and
enjoy the Demised Premises, together with all additions, alterations and
improvements thereto; but, in either case, Tenant shall remain liable as
hereinafter provided.
Section 18.2 If this lease shall be terminated as provided in Section 18.1, all
of the right, title, estate and interest of Tenant (a) in and to the Demised
Premises, including, without limitation, the Building and the Building
Equipment, all changes, additions and alterations therein, and all renewals and
replacements thereof, (b) in and to all rents, income, receipts, revenues,
issues and profits issuing from the Demised Premises, or any part thereof,
whether then accrued or to accrue.
Section 18.3 If this lease is terminated or if Landlord shall re-enter the
Demised Premises under the provisions of Section 18.1, or in the event of the
termination of this lease, or of re-entry, by or under any summary dispossess or
other proceeding or action or any provision of law by reason of an Event of
Default hereunder, Tenant shall pay to Landlord as damages the following:
18.3.1 In the event the Demised Premises, or any portion
thereof are relet a
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sum equal to any deficiency between the Fixed Monthly Rent and Additional
Rent which would have been payable by Tenant had this lease not so
terminated and the net amount, of the rents, additional rent and other
charges collected on account of the lease or leases of the Demised
Premises for each month of the period which would otherwise have
constituted the balance of the term of this lease (subject to Landlord's
obligation to use commercially reasonable efforts to mitigate damages
hereunder). Any such reletting may be for a period shorter or longer than
the remaining term of this lease; but in no event shall Tenant be entitled
to receive any excess of such credits over the sum payable by Tenant to
Landlord hereunder.
Tenant shall pay Landlord the fair rental value of any space in the Demised
Premises occupied by Tenant after such termination or re-entry. Suit or suits
for the recovery of such damages, or any installments thereof, may be brought by
Landlord from time to time at its election, and nothing contained herein shall
be deemed to (a) require Landlord to postpone suit until the date when the term
of this lease would have expired if it had not been so terminated under the
provisions of Section 18.1 or under any provision of law, or had Landlord not
re-entered the Demised Premises, or (b) preclude the bringing of additional or
subsequent suits. Nothing herein contained shall be construed to limit or
preclude (x) recovery by Landlord against Tenant of any sums or damages to
which, in addition to the damages particularly provided above, Landlord may
lawfully be entitled by reason of any default hereunder on the part of Tenant,
or (y) the right of Landlord to prove and obtain as liquidated damages in either
(i) any court proceeding or (ii) any bankruptcy, insolvency, receivership,
reorganization or dissolution proceeding, an amount equal to the maximum allowed
by any statute or rule of law governing such proceeding and in effect at the
time when such damages are to be proved, whether or not such amount be greater,
equal to or less than the amount of the damages particularly provided above. In
computing such damages there shall be added to the deficiency such reasonable
expenses as Landlord may incur in connection with re-letting, such as, by way of
example and not limitation, reasonable attorneys' fees, brokerage, advertising
and for keeping the Demised Premises in good order or preparing the same for
re-letting. Any such damages shall be paid in monthly installments by Tenant on
the rent day specified in this lease. Landlord, in putting the Demised Premises
in good order or preparing the same for rerental, may, at Landlord's option,
make such alterations, repairs, replacements, and/or decorations in the Demised
Premises as Landlord, in Landlord's reasonable judgment, considers advisable and
necessary for the purpose of re- letting the Demised Premises, and the making of
such alterations, repairs, replacements, and/or decorations shall not operate or
be construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for failure to re-let the
Demised Premises, or in the event that the Demised Premises are re-let, for
failure to collect the rent thereof under such reletting, and in no event shall
Tenant be entitled to receive any excess, if any, of such net rents collected
over the sums payable by Tenant to Landlord hereunder. Tenant hereby expressly
waives any and all rights of redemption granted by or under any present or
future laws in the event of Tenant being evicted or dispossessed for any cause,
or in the event of Landlord lawfully obtaining possession of the Demised
Premises by reason of the violation by Tenant of any of the covenants and
conditions of this lease, or otherwise. Notwithstanding the foregoing, if this
Lease is terminated or if Landlord recovers possession of the Premises following
Tenant's default, Landlord shall use commercially reasonable good faith efforts
to relet the Premises.
Section 18.4 Tenant, for itself and any and all persons claiming through or
under Tenant, including its creditors, upon the termination of this lease in
accordance with the terms hereof, or in the event of entry
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of judgment for the recovery of the possession of the Demised Premises in any
action or proceeding, hereby waives any right of redemption provided or
permitted by any statute, law or decision now or hereafter in force, and does
hereby waive, surrender and give up all rights or privileges which it or they
may or might have under and by reason of any present or future law or decision,
to redeem the Demised Premises or for a continuation of this lease for the term
of this lease hereby demised after having been dispossessed or ejected therefrom
by process of law, or other lawful means.
Section 18.5 If Tenant shall default in the timely payment of Fixed Monthly Rent
or Additional Rent beyond the applicable notice and cure period, and any such
default shall be repeated for three (3) consecutive months or three (3) times in
any consecutive twelve (12) month period, then such defaults shall be deemed to
be deliberate, and thereafter Owner may serve the five (5) days' notice of
termination referred to in Article 18 hereof upon Tenant without affording
Tenant an opportunity to cure such further default, in which event this Lease
and the term hereunder shall end and expire upon the expiration of such five (5)
day period with the same force and effect as if such date were the original
expiration date set forth in this lease and Tenant shall quit and surrender the
Demised Premises to Owner, but shall remain liable as provided in this Lease.
Section 18.6 The words "re-enter" and "re-entry" as used herein are not
restricted to their technical legal meanings.
Section 18.7 If there shall be an Event of Default which shall remain uncured,
Landlord may, but shall not be obligated so to do, without notice to or demand
upon Tenant, and without waiving, or releasing Tenant from, any obligations of
Tenant in this lease contained, make such payment or perform such act which
Tenant is obligated to perform under this lease in such manner and to such
extent as may be necessary to cure such Event of Default, and, in exercising any
such rights, pay any reasonably necessary and incidental costs and expenses,
employ counsel and incur and pay reasonable attorneys' fees. All sums so paid by
Landlord and all necessary costs and expenses of Landlord incidental thereto,
together with interest thereon at the Interest Rate on the date of the making of
such expenditures by Landlord, shall be deemed to be Additional Rent and, except
as otherwise in this lease expressly provided, shall be payable to Landlord
within Twenty (20) days after written demand, and if not promptly paid shall be
added to any rent then due or thereafter becoming due under this lease, and
Tenant covenants to pay any such sum or sums with interest as aforesaid and
Landlord shall have (in addition to any other right or remedy of Landlord) the
same rights and remedies in the event of the non-payment thereof by Tenant
beyond any applicable notice and cure periods as in the case of default by
Tenant in the payment of the Fixed Monthly Rent.
Section 18.8 No receipt of monies by Landlord from Tenant after the expiration,
cancellation or termination hereof shall reinstate, continue or extend the term
of this lease, or affect any notice theretofore given to Tenant or operate as a
waiver of the right of Landlord to enforce the payment of Fixed Monthly Rent and
Additional Rent reserved herein or to recover possession of the Demised
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Premises by proper suit, action, proceeding or other remedy; it being agreed
that, after the service of notice to cancel or terminate as herein provided and
the expiration of the time therein specified, or after the commencement of any
suit, action, proceeding or other remedy, or after final order or judgment for
possession of the Demised Premises, in any such event, Landlord may demand,
receive and collect any monies due, or thereafter falling due, without in any
manner affecting such notice, suit, action, proceeding, order or judgment; and
any and all such monies so collected shall be deemed payments on account of the
use and occupation of the Demised Premises, or, at the election of Landlord, on
account of Tenant's liability hereunder.
19. QUIET ENJOYMENT.
Section 19.1 Landlord agrees that Tenant, provided there is no default hereunder
beyond any notice and cure period of a material obligation of Tenant hereunder,
shall and may peaceably hold and enjoy the Demised Premises during the term of
this lease, without any interruption or disturbance from Landlord or Persons
claiming through or under Landlord, subject, however, to the terms of this
lease. This covenant shall be construed as running with the land to and against
subsequent owners and successors in interest, and is not, nor shall it operate
or be construed as, a personal covenant of Landlord, except to the extent of
Landlord's interest in the Demised Premises and only so long as such interest
shall continue, and thereafter this covenant shall be binding only upon such
subsequent owners and successors in interest of Landlord's interest under this
lease, to the extent of their respective interests, as and when they shall
acquire the same, and only so long as they shall retain such interest. Except as
may be otherwise herein specifically provided, there shall be no personal
liability on the part of Landlord.
20. SURRENDER OF PREMISES.
Section 20.1 Tenant shall, upon the expiration or sooner termination of this
lease for any reason whatsoever, surrender to Landlord the Demised Premises,
including, without limitation, the Building and Building Equipment then upon the
Demised Premises, together with all replacements thereof and Alterations then on
the Demised Premises (unless such Alterations are required to be removed under
Section 14.3), in good order, condition and repair, except for reasonable wear
and tear and damage by casualty or condemnation as Landlord's obligations.
Section 20.2 Title to all trade fixtures, furniture (other than the furniture
described in Section 20.4) and equipment (other than Building Equipment) and
other personal property installed or placed in the
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Demised Premises by Tenant or Subtenants shall remain in Tenant or Subtenants,
as the case may be, and, upon the expiration or sooner termination of this
lease, such trade fixtures, furniture, equipment and personal property may and,
upon notice from Landlord, shall, be removed promptly and any resultant damage
to the Demised Premises shall be repaired promptly, by and at the expense of
Tenant. The provisions of this Section shall survive the expiration or sooner
termination of this lease.
Section 20.3 Any personal property of Tenant or Subtenants which shall remain
in, at or upon the Demised Premises for twenty (20) days after the expiration or
sooner termination of this lease may, at the option of Landlord, be deemed to be
abandoned property, and the same may be retained by Landlord, as its sole
property, or disposed of by Landlord at Tenant's expense in such manner as
Landlord may see fit, without accountability or liability therefor, subject,
however, to any lien of a lender to Tenant.
Section 20.4 Tenant may use the furniture and furnishings currently located in
the Demised Premises which are listed on EXHIBIT 20.4 hereto (the "Furniture and
Furnishings"). Tenant acknowledges that the Furniture and Furnishings are the
property of Landlord and agrees to accept the same in their current condition
and repair. Landlord shall be under no obligation to repair or replace or take
any other action with respect to the Furniture and Furnishings. Upon the
termination date of this lease, Tenant shall return the Furniture and
Furnishings to Landlord in substantially the same condition as on the date
hereof, reasonable wear and tear and damage due to casualty excepted. It is
understood that the Fixed Monthly Rent includes the right to utilize the
Furniture and Furnishings as set forth herein.
21. ASSIGNMENT AND SUBLETTING.
Section 21.1 Except as provided in Section 22.6(h) Tenant shall not sell, assign
or in any manner transfer this lease or its interest therein in whole or in part
or sublet any part of the Demised Premises, without first obtaining the express
prior written consent of Landlord which consent, Landlord may, in its sole and
absolute discretion, decline to give.
Section 21.2 If Tenant shall desire to assign this Lease or to sublet any part
of the Demised Premises, Tenant shall submit to Owner a written request
("Tenant's Notice") for Owner's consent to such assignment or subletting, which
request shall contain or be accompanied by the following information: (i) the
name and address of the proposed assignee or subtenant; (ii) a copy of the
proposed assignment agreement or sublease, the commencement date of which shall
be at least thirty (30) days after the given of Tenant's Notice; (iii) the
nature and character of the business of the proposed assignee or subtenant and
its proposed use of the Demised Premises; and (iv) financial and other credit
information with respect to the proposed assignee or subtenant reasonably
sufficient to enable Owner to determine the financial
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responsibility of the proposed assignee or subtenant.
21.2.1 Owner shall notify Tenant within 30 days whether it
does or does not consent to the proposed assignment or sublease.
21.2.2 If Owner shall elect to consent to the proposed
assignment or subletting then such consent shall be subject to and
conditioned upon the following.
21.2.3 If the requested consent is granted:
(a) The Demised Premises will be used only for purposes
permitted under in Section 8.1 of this Lease or any other lawful purposes
permitted under applicable zoning regulations and the certificate of
occupancy.
(b) Tenant shall reimburse Owner on demand for any
reasonable, out-of-pocket costs that may be incurred in connection with
any assignment or sublease including, without limitation, the reasonable
costs of making investigations as to the acceptability of the proposed
assignee or subtenant, and reasonable legal costs incurred in connection
with the consideration of any requested consent, but not in excess of
$2,000.00.
(c) In case of a subletting, it shall be expressly
subordinate to the Lease and subject to all of the obligations of Tenant
under this Lease and the further condition and restriction that the
sublease shall not be assigned, encumbered or otherwise transferred or the
subleased premises further sublet by the sublessee in whole or in part, or
any part thereof suffered or permitted by the sublessee to be used or
occupied by others, except in accordance with all of the provisions of
this Section 21 as are applicable to a sublease by Tenant.
(d) If the consent of Landlord is required, assignment
or subletting shall be valid and no assignee or subtenant shall take
possession of the Demised Premises until an executed counterpart of such
assignment or sublease shall have been delivered to Owner and written
consent thereto has been delivered by Owner as applicable.
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(e) Except as is specifically hereinafter provided,
Tenant shall remain fully liable for the payment of rent due and to become
due under this Lease and for the performance of any of the covenants,
agreements, terms, provisions and conditions of this Lease on the part of
the Tenant to be performed or observed, notwithstanding any assignment or
subletting, whether or not in violation of the provisions of this Lease
and notwithstanding the acceptance of rent by Owner from any assignee or
subtenant or any other party. The consent by Owner to an assignment or
subletting shall not be considered as relieving Tenant from obtaining the
express written consent of Owner to any other or further assignment or
subleasing (to the extent such consent is required hereunder).
(f) Notwithstanding anything to the contrary contained
in this Section 21, if (i) Tenant proposes an assignment or sublease and
Landlord does not approve or disapprove the proposed transaction within 30
days after the notice required hereunder, then Landlord shall be
conclusively deemed to have granted its consent to the assignment or
sublease in question.
(g) The transfer of a majority of the issued and
outstanding capital stock of any corporate tenant or a corporate guarantor
of this Lease or a transfer of a majority of the total proprietary
interest of any partnership or limited liability company tenant or any
partnership or limited liability company guarantor of this Lease, however
accomplished, and whether in a single transaction or in a series of
related or unrelated transactions, shall be deemed to be an assignment of
this Lease, except than the sale of stock in the Tenant by means of a
public offering shall not be deemed an assignment of this Lease.
(h) The following transactions shall not require the
consent of the Landlord: (i) the assignment of this Lease by Tenant to a
subsidiary, parent or affiliate, provided, however, that the above named
Tenant shall remain liable for all of the obligations of Tenant hereunder
and (ii) the merger or consolidation or reorganization of Tenant with or
into with any other entity or the sale of all or substantially all of the
assets or equity of Tenant or a majority or more of ▇▇▇▇▇▇▇'▇ stock as a
going business provided the successor entity has, the wherewithal to
perform Tenant's obligations under this Lease and provided further that
the transaction described in this clause (ii) is a bonafide acquisition of
Tenant (as opposed to a transaction the purpose of which is to acquire
merely Tenant's interest in the Lease). In addition, a sale of equity of
Tenant in the public security markets, shall not be deemed to be an
assignment of the Lease that requires the consent of Landlord.
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Section 21.3 Any attempted assignment or sublet in violation of this Article 21
shall be void. No consent by Landlord to any assignment or sublet shall be
deemed or construed to relieve Tenant from obtaining the express written consent
of Landlord to any further assignment or sublet.
Section 21.4 No acceptance by Landlord of Rent or the performance of any
obligation by any Person other than Tenant shall discharge Tenant or any other
Person liable for performance of Tenant's obligations hereunder (except to the
extent of the performance and payments so accepted by Landlord) from liability
to pay all of the Rent herein provided to be paid by Tenant or from liability to
perform any of the terms, covenants, conditions and agreements set forth in this
lease.
Section 21.5 Each assignment or sublease, to which Landlord consents, shall
expressly provide that it is subject and subordinate to this lease and all of
its terms and conditions, and shall terminate and be null and void upon the
expiration or sooner termination of this Lease (subject to the provisions of
Section 21.7).
Section 21.6 If this lease shall be sold or assigned (and Tenant
shall not be released as aforesaid), or if the Demised Premises or any portion
thereof shall be sublet or occupied by any Person other than Tenant, Landlord
may, during the continuance of an Event of Default hereunder, collect rent from
the purchaser, assignee, Subtenant or occupant and apply the net amount
collected to the Fixed Monthly Rent and Additional Rent payable under this
lease, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of the provisions of this Section, or acceptance of the
purchaser, assignee, subtenant or occupant as Tenant, or a release of Tenant
from the further performance of the terms, covenants and conditions of this
lease on the part of Tenant to be performed. Further, no liability hereunder of
Tenant shall be discharged, reduced, released or impaired in any respect by any
waiver, indulgence or extension of time which Landlord may grant to the then
owner of Tenant's interest in this lease, whether or not notice thereof has been
given or consent from Tenant has been obtained.
Section 21.7 Any dispute arising under this Section 21 shall be resolved by
arbitration pursuant to Section 26.
Section 21.8 Under no circumstances shall Landlord be responsible for money
damages for failure to grant its consent to any proposed assignment or sublease
regardless of whether such failure was or was not reasonable unless Landlord
acted maliciously or in bad faith
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22. ESTOPPEL CERTIFICATES.
Section 22.1 Tenant and Landlord agrees, at any time and from time
to time, upon not less than twenty (20) days' prior request by the Tenant and
Landlord or by any Fee Mortgagee, to execute, acknowledge and deliver to the
requesting party a statement in writing certifying (a) that this lease is
unmodified and in full force and effect (or if there have been modifications
that the lease is in full force and effect as modified and stating the
modifications), (b) the dates to which the Fixed Monthly Rent and Additional
Rent have been paid (c) whether or not, to the actual knowledge of the party
delivering such certificate, there is any existing Event of Default under this
lease and, if so, specifying each such Event of Default, (d) whether or not
there exists any outstanding notice of default served by the party delivering
such certificate, and (e) whether or not, to the actual knowledge of the party
delivering such certificate, any event has occurred which, with the passage of
time or the giving of notice, or both, would constitute a default or an Event of
Default under this lease, and, if so, specifying each such event, it being
intended that any such statement delivered pursuant to this Section may be
relied upon by any prospective purchaser or mortgagee of the fee of the Demised
Premises or of the leasehold estate created under this lease, the prospective
assignees of any Fee Mortgage, the Tenant or its lender.
23. INVALIDITY OF PARTICULAR PROVISIONS.
Section 23.1 If any term or provision of this lease or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this lease, or the application of such term
or provision to Persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this lease shall be valid and enforceable to the fullest extent
permitted by law.
24. CONDITION OF PREMISES.
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Section 24.1 Except as otherwise provided herein, Tenant accepts the
Demised Premises in the "as is" condition on the date hereof.
25. EXHIBITION OF DEMISED PREMISES.
Section 25.1 Tenant shall permit Landlord and its authorized
representatives to enter the Demised Premises at all times during usual business
hours and upon reasonable prior notice to (a) exhibit the same for the purposes
of sale and mortgaging, and (b) perform any act which Landlord is required or
entitled to perform pursuant to any provision of this Lease.
26. ARBITRATION
Section 26.1 In such cases where this lease provides for the settlement of
a dispute by arbitration, such arbitration shall be by the American Arbitration
Association (or any successor body of comparable function) in New York, New York
in accordance with the rules then obtaining of said Association (or such
successor) and a judgment upon the award may be entered in any court, federal or
state, having jurisdiction thereover. The fees and expenses of any arbitration
shall be borne by the parties equally, but each party shall bear the expense of
its own attorneys and experts and of presenting its own proof , provided that,
at the request of either party, the arbitrator(s) shall have the discretion to
include in any award that the losing party shall pay the reasonable attorneys'
and experts' fees of the prevailing party. The arbitrator(s) shall not have the
power to modify any of the provisions of this Lease and the arbitrator's
discretion is limited accordingly. With respect to any arbitration under
Sections 13 or 21 hereof, either party may require that the arbitration be
conducted under the rules for "Expedited Procedures" of the American Arbitration
Association. Any arbitrator must be independent and have at least ten years of
local experience with respect to the subject matter being arbitrated
27. NOTICES, ETC.
Section 27.1 All notices, consents, demands, requests and other communications
(collectively,
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"notices" and individually, a "notice") which are required or desired to be
given by either party to the other shall be in writing. All notices by either
party to the other shall be sent by United States registered or certified mail,
return receipt requested, postage prepaid, or by private, overnight carrier,
addressed to the other party at its address set forth below, or at such other
single address as it may from time to time designate in a notice to the other
party. All notices to Landlord shall be addressed to it ▇/▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇. Copies of all notices to Landlord shall
be given in the same manner to ▇▇▇▇▇▇▇▇ Brog Leinwand ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
P.C., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq. All notices to Tenant shall be addressed to it c/o ACMI
Holdings, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Copies of
all notices to Tenant shall be given in the same manner to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer
& ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., or in either case, to such other one person or address as
the party giving such notice shall have been previously notified from time to
time in the manner provided in this Article 27 by the party to whom such notice
is given. Notices which are given or served upon Landlord or Tenant in the
manner aforesaid shall be deemed to have been given or served for all purposes
hereunder when received (or if receipt is refused, when refused, or if delivery
is not possible because of a change of address of which the sending party was
not notified pursuant to this Section 27.1, when delivery is first attempted).
Section 27.2 All notices which are required or desired to be given
or served by either party to any Fee Mortgagee shall be in writing. All notices
to any Fee Mortgagee shall be sent by United States registered or certified
mail, return receipt requested, postage prepaid, or overnight courier addressed
to such Fee Mortgagee at its address set forth in its respective mortgage of
which the party giving the notice shall have been notified in accordance with
Section 27.1, or at such other address as the Mortgagee in question may from
time to time designate in a written notice, in accordance with Section 27.1 to
the party giving such notice. Notices which are given or served upon any Fee
Mortgagee in the manner aforesaid shall be deemed to have been given or served
for all purposes hereunder when received (or if receipt is refused, when
refused, or if delivery is not possible because of a change of address of which
the sending party was not notified pursuant to this Section 27.1, when delivery
is first attempted).
Section 27.3 This lease shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York and without aid of any canon
or rule of law requiring construction against the party drawing or causing this
lease or any provision thereof to be drawn.
Section 27.4 The parties hereby confer jurisdiction upon the Supreme Court of
the State of New York, Nassau County (or any successor court of similar
jurisdiction) with respect to any judicial action or proceeding arising out of
this lease or the relationship of the parties as landlord and tenant. Service of
process in any such action or proceeding may be accomplished in the same manner
as the giving of a notice under Section 27.1, or in any other manner allowed by
law.
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28. INJUNCTION.
Section 28.1 Landlord, at Landlord's option, in addition to any
other rights reserved to Landlord hereunder, at law or in equity, and
notwithstanding the concurrent pendency of summary or other dispossess
proceedings between Landlord and Tenant, shall have the right at all times
during the term of this lease to restrain by injunction any violation or
attempted violation by Tenant of any of the terms, covenants, conditions or
agreements of this leases, and to enforce by injunction any of the terms,
covenants, conditions and agreements hereof.
29. OWNER'S RIGHT TO CURE TENANT'S DEFAULTS.
Section 29.1 Anything herein to the contrary notwithstanding, Owner's
liability for its negligence or failure to perform its obligations under this
Lease shall be limited to Owner's interest in the Land and Building and the
proceeds thereof. Tenant shall neither seek to enforce nor enforce any judgment
or other remedy against any partner, member, shareholder, officer and/or
director of Owner or any principal of any firm or entity that may hereafter be
or become the Owner, and no other property or assets of Owner shall be subject
to levy, execution or other enforcement procedures for the satisfaction of
Tenant's remedies under or with respect to this Lease, the relationship of Owner
and Tenant under this Lease or Tenant's use and occupancy of the Demised
Premises.
Section 29.2 If the Demised Premises are not surrendered and vacated as
and at the time required by this Lease (TIME BEING OF THE ESSENCE), Tenant shall
be liable to Owner for (a) all losses and damages which Owner may incur or
sustain by reason thereof, including, without limitation, reasonable attorneys'
fees, but excluding all claims made by any succeeding tenants of the Demised
Premises against Owner or otherwise arising out of or resulting from the failure
of Tenant timely to surrender and vacate the Demised Premises in accordance with
the provisions of this Lease and (b) use and occupancy in respect of the Demised
Premises equal to one and one-half (1/2) times the Fixed Monthly Rent and 100%
of Additional Rent payable hereunder for the last year of the term of this Lease
(which amount Owner and Tenant presently agree is the minimum to which Owner
would be entitled and is presently contemplated by them as being fair and
reasonable under such circumstances and not a penalty) apportioned on a per diem
basis. In no event shall any provision hereof be construed as permitting Tenant
to hold over in possession of the Demised Premises after expiration or
termination of the term of this Lease.
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30. BROKER.
Section 30.1 Each of Landlord and Tenant represent and warrant to the other that
they have dealt with no broker or party claiming to be such in connection with
this lease. Each party shall indemnify and hold the other harmless from and
against any liability, cost or expense arising out of a breach of the
representation set forth in this Section 30.1, including any reasonable fees,
costs and expenses incurred in defending against any such liability. The
provisions of this Section 30.1 shall survive the term described herein.
31. REPRESENTATION AND WARRANTY.
Section 31.1 Each party represents and warrants that, with respect
to itself, all necessary action has been taken and all requisite approvals have
been duly obtained so as to make this lease valid, binding and enforceable
against such party in accordance with its terms.
32. SUBORDINATION.
Section 32.1 This Lease, and all rights of Tenant hereunder, are and
shall be subject and subordinate to all mortgages which may now or hereafter
affect the Land and/or the Building whether or not such mortgages shall also
cover other lands and/or buildings, to each and every advance made or hereafter
to be made under such mortgages, and to all renewals, modifications,
replacements and extensions of such mortgages, spreaders and consolidations of
such mortgages together with such changes that the mortgagee may require
provided such changes do not decrease Tenant's rights or increase Tenant's
obligations under this Lease in any material respect and provided that any such
mortgagee agrees that Tenant's possession of the Demised Premises will not be
disturbed so long as no Event of Default hereunder continues beyond any
applicable cure period and Tenant attorns to such mortgage. Any mortgagee to
which this lease is, at the time referred to, subject and subordinate is herein
191
called a "Superior Mortgage" and the holder of a Superior Mortgage is herein
called a "Superior Mortgagee." Landlord represents and warrants to Tenant that
as of the date hereof there is no Superior Mortgagee or ground lessor.
33. COMPLIANCE WITH LAWS; HAZARDOUS MATERIALS.
Section 33.1 Tenant, at Tenant's expense, shall comply with all
laws, rules, order, ordinances, directions, regulations and requirements of
federal, state county and municipal authorities pertaining to Tenant's use of
the Demised Premises and with the recorded covenants, conditions and
restrictions affecting the Demised Premises, regardless of when they become
effective, including, without limitation, all applicable federal, state and
local laws, regulations or ordinances pertaining to air and water quality,
Hazardous Materials (as hereinafter defined), waste disposal, air emissions and
other environmental matters, all zoning and other land use matters, and utility
availability, and with any direction of any public officer or officers, pursuant
to law, which shall impose any duty upon Owner or Tenant with respect to the use
or occupation of the Demised Premises provided that, notwithstanding the
foregoing, Tenant shall have no obligation to comply with any Legal Requirements
that are the responsibility of Landlord under Section 33.6 hereof and Tenant
shall have no obligation to make structural repairs or capital improvements
unless the need to do so arises out of a violation of Tenant's obligations under
Section 33.2 hereof. In addition, Tenant shall obtain and keep in force during
the term of this Lease any and all permits, licenses or certificates, of
whatsoever kind or nature, from any and all authorities having jurisdiction over
the Demised Premises, necessary or required for the occupation and use of the
Demised Premises.
Section 33.2 Tenant shall not cause or permit any Hazardous Material
to be brought upon, kept or used in or about the Demised Premises by Tenant, its
agents, employees, contractors or invitees without the prior written consent of
Owner, provided, however, that Tenant may, without Owner's consent, store and
use Hazardous Materials in the Premises that are commonly used in the operation
of Tenant's business in the ordinary course, provided further, however, that
Tenant does so in compliance with all Legal Requirements and Insurance
Requirements. If Tenant breaches the obligations stated in the preceding
sentence, or if the presence of Hazardous Material on the Demised Premises
caused or permitted by Tenant results in contamination of the Demised Premises,
or if contamination of the Demised Premises by Hazardous Material otherwise
occurs for which Tenant is legally liable to Owner for damage resulting
therefrom, then Tenant shall indemnify, defend and hold Owner harmless from any
and all claims, judgments, damages, penalties, fines, costs, liabilities or
losses (including, without limitation, diminution in value of the Demised
Premises, damages for the loss or restriction on
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use of rentable or usable space or of any amenity of the Demised Premises,
damages arising from any adverse impact on marketing of space, and sums paid in
settlement of claims, reasonable attorneys' fees, consultant fees and expert
fees) which arise during or after the term of this Lease as a result of such
contamination. This indemnification of Owner by Tenant includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work required by
any federal, state or local government agency or political subdivision because
of Hazardous Material present in the soil or ground water on or under the
Demised Premises covered by Tenant. Without limiting the foregoing, if the
presence of any Hazardous Material on the Demised Premises caused or permitted
by Tenant results in any contamination of the Demised Premises, Tenant shall
promptly take all actions at its sole expense as are necessary to return the
Demised Premises to the condition existing prior to the introduction of any such
Hazardous Material to the Demised Premises; provided that Owner's approval of
such actions shall first be obtained, which approval shall not be unreasonably
withheld so long as such actions would not potentially have any material adverse
effect on the Demised Premises. The foregoing indemnity shall survive the
expiration or earlier termination of this Lease. As used in this Section 33.2
the term "Hazardous Material" shall not include any Existing Hazardous Materials
(as defined below).
Section 33.3 As used herein, the term "Hazardous Material" or
"Hazardous Materials" means any hazardous or toxic substance, material or waste,
including, but not limited to, those substances, materials, and wastes listed in
the United States Department of Transportation Hazardous Materials Table (49 CFR
Section 172.101) or by the Environmental Protection Agency as hazardous
substances (40 CFR Section 302) and any existing or subsequent amendments
thereto, or such substances, materials and wastes that are or become regulated
under any applicable local, state or federal law, including certain toxic or
hazardous materials or wastes regulated under the Clean Water Act (33 USC
Section 1251 et seq.), the Clean Air Act (42 USC Section 7401 et seq.), the
Resource Conservation and Recovery Act (42 USC Section 6901 et seq.), Toxic
Substances Control Act (15 USC Section 2601 et seq.) and their New York State
counterparts and including petroleum or any product or fraction thereof.
Section 33.4 Owner and its agents shall have the right, but not the duty, to
inspect the Demised Premises at any reasonable time, upon reasonable prior
notice to Tenant, to determine whether Tenant is complying with the terms of
this Article. If Tenant is not in compliance with this Lease, Owner shall have
the right, at any time during the continuance of an Event of Default beyond any
applicable grace or cure period, to immediately enter upon the Demised Premises
to remedy any contamination caused by Tenant's failure to comply. Owner shall
use reasonable efforts to minimize interference with Tenant's business, but
shall not be liable for any interference caused thereby, provided that Owner
shall not be required to incur any overtime or unusual expense in connection
therewith.
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Section 33.5 Any default under this Section 34 that shall continue beyond the
grace period set forth in Section 17.1 shall be a material default enabling
Owner to exercise any of the remedies set forth in this Lease.
Section 33.6 Notwithstanding anything to the contrary contained in this Article
33, Tenant shall have no responsibility or liability for any Hazardous Materials
now or previously located on, under or about the Demised Premises (collectively
"Existing Hazmats").
34. INDEMNIFICATION PROCEDURES.
Section 34.1 Wherever this Lease provides that one party shall
indemnify the other or words of similar import, the following procedures shall
apply: (i) the party to be indemnified shall notify the indemnifying party of
any actual claim or claim threatened in writing promptly after the party to be
indemnified becomes aware of same (however, the failure to give such prompt
notice shall not relieve the indemnity obligations of the indemnifying party
except to the extent the delay in notification prejudices the indemnifying
party); (ii) the indemnifying party shall defend the other party with counsel
reasonably acceptable to the indemnifying party and, the party to be indemnified
may employ separate counsel to participate in such defense but, so long as the
indemnifying party is diligently carrying out such defense, the indemnifying
party shall have no obligation to pay the fees or expenses of such separate
counsel; (iii) the party being indemnified shall not settle or pay any claim
that is the subject of the indemnification obligation without the prior written
consent of the indemnifying party (except for payment of any judgment that has
been entered and for which there is no further right of appeal); (iv) the party
being indemnified shall cooperate with the indemnifying party (but shall not be
obligated to incur any out-of-pocket expenses unless reimbursed by the
indemnifying party) and (v) no party shall be indemnified for its own negligence
or willful misconduct.
35. COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT.
Section 35.1 Notwithstanding anything else in this lease to the
contrary, this Section 35 applies to all issues related to compliance with the
Americans with Disabilities Act
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("ADA") as amended from time to time. In the event of any conflict between the
rest of the lease and this Section 35, this Section 35 controls.
Section 35.2 Any remodeling, construction, reconstruction,
installation of improvements or other work done to the leased premises shall be
done in compliance with ADA Requirements, at the expenses of the party who is
performing the work.
Section 35.3 Both parties shall cooperate reasonably with each other to comply
with ADA Requirements in the least expensive reasonable manner.
Section 35.4 Any failure to comply with the provisions of this Section 35, after
written notice to the noncomplying party and an opportunity to cure within the
grace period set forth in Section 18.1, shall be an event of default under the
lease.
36. MISCELLANEOUS PROVISIONS
Section 36.1 Every term, condition, agreement or provisions contained in this
lease shall be deemed to be also a covenant.
Section 36.2 The specified remedies to which either party may resort under the
terms of this lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which that party may be lawfully entitled
in case of any breach or threatened breach by the other party of any provisions
of this lease.
Section 36.3 The failure of either party to insist in any one or more cases upon
the strict performance of any of the terms, covenants, conditions, provision or
agreements of this lease, or to exercise any option herein contained, shall not
be construed as a waiver or a relinquishment for the future of any such term,
covenant, condition, provision or agreement. A receipt and acceptance by
Landlord of rent or any other payment, or the acceptance or performance by
either party of anything required by this lease to be performed, with knowledge
of the breach of any term, covenant, condition, provision or agreement of this
lease, shall not be deemed a waiver of such breach, nor shall any such
acceptance of rent in a lesser amount than is herein provided for (regardless of
any endorsement on a check, or any statement in any
195
letter accompanying any payment of rent or other charge) operate or be construed
either as an accord and satisfaction or in any manner other than as a payment on
account of the earliest rent or other charge then unpaid by Tenant. Any such
acceptance shall be without prejudice to Landlord's right to recover the actual
amount due. No waiver by either party of any term, covenant, condition,
provision or agreement of this lease shall be deemed to have been made unless
expressed in writing and signed by that party. The making of any payment by
Tenant shall not be deemed a waiver of Tenant's right to thereafter contest its
obligation to make such payment.
Section 36.4 This lease may not be changed orally but only by an agreement in
writing signed by the party against whom enforcement of the change, modification
or discharge is sought.
Section 36.5 This instrument constitutes the entire agreement between the
parties with respect to the subject matter hereof, and there are no verbal or
collateral understandings, agreements, representations or warranties not
expressly set forth in this lease.
Section 36.6 In the event of any Unavoidable Delays under this lease, the time
of performance of the covenants and obligations under this lease in question
(which shall in no event include any requirement for the payment of a sum of
money) shall automatically be extended for a period of time equal to the
aggregate period of the Unavoidable Delays.
Section 36.7 All terms and words used in this lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number, or
any other gender, as the context may require.
Section 36.8 If and to the extent in this lease it is provided that Landlord's
consent or approval as to any matter will not be unreasonably withheld, and it
is established by a court or body having final jurisdiction thereover that
Landlord has been unreasonable, the only effect of such finding shall be that
Landlord shall be deemed to have given its consent or approval and shall be
liable to Tenant for its reasonable attorneys' fees incurred therein, it being
agreed that Landlord shall not be liable to Tenant in any respect for any other
money damages by reason of withholding its consent.
Section 36.9 The terms "herein", "hereby", "hereof", "hereunder" and words
of similar import shall be construed to refer to this lease as a whole, and not
to any particular Article or Section, unless expressly so stated.
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Section 36.10 The provisions of this lease shall not be construed
for the benefit of any third party, except as otherwise provided herein.
Section 36.11 In the event that Landlord shall commence any summary proceedings
or action for non-payment of rent, Tenant shall not interpose any counterclaim
of any nature or description unless such counterclaim is compulsory. THE PARTIES
HEREBY WAIVE A TRIAL BY JURY ON ANY AND ALL ISSUES ARISING IN ANY ACTION OR
PROCEEDING BETWEEN THEM OR THEIR SUCCESSORS UNDER OR CONNECTED WITH THIS LEASE
OR ANY OF ITS PROVISIONS, ANY NEGOTIATIONS IN CONNECTION THEREWITH, OR TENANT'S
USE OR OCCUPANCY OF THE PREMISES.
Section 36.12 Landlord shall not be deemed, in any way or for any purposes, to
have become, by the execution of this lease or any action taken under this
lease, a partner of Tenant in Tenant's business or otherwise or a member of any
joint enterprise with Tenant. The sole relationship of the parties is that of
Landlord and Tenant.
Section 36.13 The index and captions of this lease are for convenience and
reference only and in no way define, limit or describe the scope or intent of
this lease, nor in any way affect this lease.
Section 36.14 The terms, conditions, covenants, provisions and undertakings
herein contained shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, personal representatives,
successors and assigns.
Section 36.15 This Lease may be executed in any manner of counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
Section 36.16 In the event either of the parties hereto commence any legal
proceedings to enforce its rights hereunder and prevails in such proceeding,
then such party shall be entitled to reimbursed by the other for its reasonable
attorneys fees and expenses.
37. RENEWAL TERMS
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Section 37.1 Tenant shall have the right to renew the term of this
Lease as follows (provided that Tenant is not in default under any of the terms
of this Lease either on the date of the giving of such renewal notice or on the
commencement date of the renewal term beyond any notice and cure periods
hereunder). Time shall be of the essence with respect to the dates set forth
below for the giving of notice of renewal:
37.1.1 For a first renewal term commencing as of April 1, 2005
and terminating on March 31, 2006, provided that Tenant has given to
Landlord written notice of renewal not later than September 1, 2004.
37.1.2 For a second renewal term commencing as of April 1,
2006 and terminating on March 31, 2007, provided that Tenant has given
written notice of renewal to Landlord not later than September 1, 2005.
Section 37.2 All of the terms, covenants and conditions of this Lease shall
continue in full force and effect during each renewal term, except that (a) the
Fixed Monthly Rent for each month during the first and second renewal term shall
be in the amount of $31,000 per month, and (b) there shall be no further right
of renewal.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this lease
as of the day and year first above-written.
LANDLORD TENANT
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, LLC FVFN ACQUISITION CORP.
By: By:
--------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President Title: President and CEO
[SIGNATURE PAGE TO LEASE]
99. EXHIBIT I
Premises located in the County of Nassau, State of New York known as ▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, having a street address of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
EXHIBIT 20.4
EXHIBIT F
LANDLORD ESTOPPEL CERTIFICATE
TO: American Coin Merchandising, Inc. ("ASSIGNEE")
c/o ACMI Holdings, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________(collectively, "LANDLORD") hereby certifies to
Assignee as follows:
1. [▇▇▇▇ Vending Co., Inc.] ("TENANT") is the present tenant under that
certain Lease Agreement dated ____________________ ("LEASE") by and
between Landlord and Tenant with respect to the lease premises known as
________________________ ("PREMISES").
2. A true and complete copy of the Lease (including all amendments,
modifications, extensions, renewals, sublettings and assignments of the
Lease, if any) is attached to this Estoppel Certificate as Exhibit A.
3. The Lease is in full force and effect as of the date of this Estoppel
Certificate, and has not been modified, changed, altered or amended in any
respect except as indicated on Exhibit A, and is the only lease and
constitutes the entire agreement between Landlord and Tenant affecting the
Premises.
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4. The information set forth below is true and correct as of the date of this
Estoppel Certificate:
a. Monthly rent as of the date of this Estoppel Certificate: ________
b. Lease expiration date: __________________
c. Rent and any other charges are paid to and including:
__________________
d. Additional Rent, if any, including but not limited to, operating
expenses, insurances, taxes, etc.: __________________
e. Security Deposit, if any: __________________
5. The current address for notices under the Lease is________________.
6. To the best of Landlord's knowledge, Tenant is not in default under the
terms and provisions of the Lease and no event has occurred which, with
the passage of time or the giving of notice, or both, would constitute a
default by either Landlord or Tenant.
7. No free rent or other concessions, benefits or inducement other than as
expressly specified in the Lease have been granted to Tenant or undertaken
by Landlord.
8. To Landlord's actual knowledge, Tenant has not assigned all or any part of
its interest in and to the Lease, as security or otherwise, and has not
subleased all or any part of the Premises.
Landlord hereby acknowledges and agrees that Assignee shall be entitled to
rely on the truth and accuracy of the following certifications made by Landlord
in connection with Assignee's assumption of the Lease.
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Dated this ___ day of ____________, 2003.
-----------------------------
By: _________________________________
By: _________________________________
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EXHIBIT A
Lease
209
NON-COMPETITION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of this 15th day
of April, 2003, by and among FVFN Acquisition Corp., a Delaware corporation
("FVFN") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇").
RECITALS
WHEREAS, FVFN is the Purchaser under that certain Asset Purchase Agreement
dated as of March 14, 2003 (the "Purchase Agreement") among FVFN, American Coin
Merchandising, Inc. ("ACMI"), ▇▇▇▇ Vending Co., Inc. ("FV"), ▇▇▇▇ Novelty Co.,
Inc. ("FN" and FV are collectively, the "Sellers"), ▇▇▇▇▇ ▇▇▇▇ and the ▇▇▇▇▇
▇▇▇▇ Revocable Trust;
WHEREAS, it is a condition to FVFN's obligations under the Purchase
Agreement that ▇▇. ▇▇▇▇▇▇▇ enter into a non-competition agreement with FVFN;
WHEREAS, capitalized terms used herein but not defined shall have the same
meanings ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Non-Competition. For a period of five (5) years from the Closing Date
(the "Restricted Period"), ▇▇. ▇▇▇▇▇▇▇ and his Affiliates shall not, other than
in New York City and in the following counties in New York State: Nassau,
Suffolk and Westchester (the United States territory outside of New York City
and such New York counties being referred to herein as the "Restricted
Territory"), directly or indirectly, alone or in association with any other
Person (i) establish, participate or engage in any business enterprise (other
than as a less than 2% owner of any Person traded on any national, international
or regional stock exchange or in the over-the-counter market) that competes with
the business of merchandising bulk items through operating coin vending machines
conducted by FVFN in the Restricted Territory (the "Business"), (ii) sell
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any competitive product to any Person engaged, directly or indirectly, in the
Business or (iii) consult, advise or otherwise participate in the management or
operation of any Person that engages in the Business or competes with the
Business.
2. Non-Solicitation of Employees, Suppliers or Customers. During the
Restricted Period, ▇▇. ▇▇▇▇▇▇▇ and his Affiliates shall not, directly or
indirectly, for himself or itself or on behalf of any other Person, solicit,
employ, engage or retain any employee of FVFN who, at anytime during the
preceding 12-month period (which includes the Closing Date), shall have been a
significant employee of FVFN, or contact any employee, customer or supplier of
FVFN for the purpose of soliciting or diverting any such supplier, customer or
employee from FVFN for a competitive purpose or to encourage such Person to
terminate its relationship with FVFN. Notwithstanding the foregoing, ▇▇. ▇▇▇▇▇▇▇
and his Affiliates shall not be prohibited from hiring or engaging any
ex-employee of FVFN after such employee's employment has been terminated by
FVFN.
3. Non-Disparagement. ▇▇. ▇▇▇▇▇▇▇ and his Affiliates shall not, directly
or indirectly, defame or disparage FVFN, its employees, agents, Affiliates, the
Business or its products in any way during the Restricted Period or at any time
thereafter.
4. Non-Disclosure of Confidential Information. ▇▇. ▇▇▇▇▇▇▇ and his
Affiliates acknowledge that ▇▇. ▇▇▇▇▇▇▇ and his Affiliates may from time to time
have access to confidential memoranda, notes, information, records, business
projections, financial statements, data, trade secrets, customer lists and
proprietary information of FVFN and relating to the Business, and other
information of a confidential nature relating to FVFN and the Business
(collectively, "CONFIDENTIAL INFORMATION"). During the Restricted Period and
thereafter, ▇▇. ▇▇▇▇▇▇▇ and his Affiliates agree not to divulge, communicate,
use to the detriment of FVFN or for the benefit of any other Person, or misuse
in any way the Confidential Information, and ▇▇. ▇▇▇▇▇▇▇ and his Affiliates
agree to use their best efforts to cause their officers, directors, employees,
accountants, counsel, consultants, advisors and agents not to divulge,
communicate, use to the detriment of FVFN, or misuse in any way the Confidential
Information.
5. Enforcement. ▇▇. ▇▇▇▇▇▇▇ and his Affiliates acknowledge and agree that
a breach of this Agreement by ▇▇. ▇▇▇▇▇▇▇ and his Affiliates will cause serious
and potentially irreparable harm to FVFN, and damages alone may be an inadequate
remedy for any such breach. Accordingly, in the event of the breach by ▇▇.
▇▇▇▇▇▇▇ and his Affiliates of any of the provisions of this Agreement, FVFN may,
in addition and supplementary to other rights and remedies existing in its
favor, apply to any court of law or equity of competent jurisdiction for
specific
211
performance, or preliminary and permanent injunctive or other equitable relief
in order to enforce, or prevent any violations of, the provisions of this
Agreement.
6. Maximum Enforceable Restriction. In the event that any or all of the
restrictive covenants contained in this Agreement shall be determined by a court
of competent jurisdiction to be unenforceable by reason of their geographic or
temporal restrictions being too great, or by reason that the range of activities
covered are too great, or for any other reason, they should be interpreted to
extend over the maximum geographic area, period of time, range of activities or
other restrictions as to which they may be enforceable by such court under
applicable law.
7. Assignment. This Agreement may be assigned by FVFN if such assignment
is accompanied by the sale of the stock of FVFN, or of substantially all of the
assets of FVFN.
8. Notices. All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by confirmed facsimile transmission, by
recognized national overnight courier service or by deposit in the United States
mail, postage prepaid, by registered or certified mail, return receipt
requested, addressed to the party to be notified at the addresses set forth
below:
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IF TO FVFN:
▇▇▇▇ VENDING, INC.
c/o American Coin Merchandising, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
IF TO ▇▇. ▇▇▇▇▇▇▇:
[address to be supplied]
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Notices shall be effective immediately upon personal delivery or facsimile
transmission, one business day after deposit with an overnight courier service
or three (3) business days after the
213
date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified herein by written
notice to the other parties hereto.
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the matters herein provided, and no
modifications or waiver of any provision hereof shall be effective unless in
writing and signed by FVFN and ▇▇. ▇▇▇▇▇▇▇.
10. Binding Effect. All of the terms and provisions of this Agreement
shall be binding upon the parties hereto and their respective permitted
successors and assigns, and inure to the benefit of and be enforceable by FVFN
and its successors and assigns. The terms and provisions of this Agreement shall
be enforceable by FVFN against ▇▇. ▇▇▇▇▇▇▇ and his Affiliates, successors,
assigns, and successors-in-interest.
11. Severability. In the event that any provision of this Agreement or
application thereof to any party or under any circumstance is found to be
invalid or unenforceable in any jurisdiction to any extent for any reason, such
invalidity or unenforceability shall not affect any other provision or
application of this Agreement which can be given effect without the invalid or
unenforceable provision or application and shall not invalidate or render
unenforceable such provision or application in any other jurisdiction.
12. Remedies; Waiver. No remedy conferred upon FVFN by this Agreement is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given hereunder
or now or hereafter existing at law or in equity. No delay or omission by FVFN
in exercising any right, remedy or power hereunder or existing at law or in
equity shall be construed as a waiver thereof, and any such right, remedy or
power may be exercised by the party possessing the same from time to time and as
often as may be deemed expedient or necessary by such party in its sole
discretion.
13. Governing Law; Jurisdiction.
13.1. The provisions of this Agreement, and all the rights and
obligations of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within such State without regard to
such State's conflicts of law principles.
13.2. Each of the parties hereto hereby consents to the
non-exclusive jurisdiction of any state or federal court located within the
County of New York or County of Nassau, State of New York with respect to
actions or proceedings arising out of or relating to this Agreement.
14. Headings. The captions and headings contained in this Agreement are
for convenience only and shall not be construed as a part of the Agreement.
15. Counterparts. This Agreement may be executed in several counterparts,
each of which is an original and all of which shall constitute one instrument.
It shall not be necessary in
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making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this agreement as
of the date first set forth above.
FVFN Acquisition Corp.
By:
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
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NON-COMPETITION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of this 15th day
of April, 2003, by and among FVFN Acquisition Corp., a Delaware corporation
("FVFN") and ▇▇▇▇ Vending Co., Limited, a Canadian corporation (the "Company")
RECITALS
WHEREAS, FVFN is the Purchaser under that certain Asset Purchase Agreement
dated as of March 14, 2003 (the "Purchase Agreement") among FVFN, American Coin
Merchandising, Inc. ("ACMI"), ▇▇▇▇ Vending Co., Inc. ("FV"), ▇▇▇▇ Novelty Co.,
Inc. ("FN" and FV are collectively, the "Sellers"), ▇▇▇▇▇ ▇▇▇▇ and the ▇▇▇▇▇
▇▇▇▇ Revocable Trust;
WHEREAS, as an inducement to Sellers to consummate the Closing of the
Purchase Agreement, FVFN agreed to enter into a non-competition agreement with
the Company;
WHEREAS, capitalized terms used herein but not defined shall have the same
meanings ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Non-Competition. For a period of two (2) years from the Closing Date
(the "Restricted Period"), FVFN and its Affiliates, including but not limited to
ACMI shall not, anywhere in Canada (the "Restricted Territory"), directly or
indirectly, alone or in association with any other Person (i) establish,
participate or engage in any business enterprise (other than as a less than 2%
owner of any Person traded on any national, international or regional stock
exchange or in the over-the-counter market) that competes with the business of
merchandising bulk items through operating coin vending machines conducted by
the Company in the
217
Restricted Territory (the "Canadian Business"), (ii) sell any competitive
product to any Person engaged, directly or indirectly, in the Canadian Business
or (iii) consult, advise or otherwise participate in the management or operation
of any Person that engages in the Canadian Business or competes with the
Canadian Business.
2. Non-Solicitation of Employees, Suppliers or Customers. During the
Restricted Period, FVFN and its Affiliates shall not, directly or indirectly,
for itself or on behalf of any other Person, solicit, employ, engage or retain
any employee of the Company who, at anytime during the preceding 12-month period
(which includes the Closing Date), shall have been a significant employee of the
Company, or contact any employee, customer or supplier of the Company for the
purpose of soliciting or diverting any such supplier, customer or employee from
the Company for a competitive purpose or to encourage such Person to terminate
its relationship with the Company. Notwithstanding the foregoing, FVFN and its
Affiliates shall not be prohibited from hiring or engaging any ex-employee of
the Company after such employee's employment has been terminated by the Company.
3. Non-Disparagement. FVFN and its Affiliates shall not, directly or
indirectly, defame or disparage the Company, its employees, agents, Affiliates,
the Canadian Business or its products in any way during the Restricted Period or
at any time thereafter.
4. Non-Disclosure of Confidential Information. FVFN acknowledges that, as
a result of the transaction contemplated by the Purchase Agreement, FVFN and its
Affiliates have had access to confidential memoranda, notes, information,
records, business projections, financial statements, data, trade secrets,
customer lists and proprietary information of the Company and relating to the
Canadian Business, and other information of a confidential nature relating to
the Company and the Canadian Business (collectively, "CONFIDENTIAL
INFORMATION"). During the Restricted Period and thereafter, FVFN and its
Affiliates agree not to divulge, communicate, use to the detriment of the
Company or for the benefit of any other Person, or misuse in any way the
Confidential Information, and FVFN and its Affiliates agree to use their best
efforts to cause their officers, directors, employees, accountants, counsel,
consultants, advisors and agents not to divulge, communicate, use to the
detriment of the Company, or misuse in any way the Confidential Information.
5. Enforcement. FVFN acknowledges and agrees that a breach of this
Agreement by FVFN or its Affiliates will cause serious and potentially
irreparable harm to the Company, and damages alone may be an inadequate remedy
for any such breach. Accordingly, in the event of the breach by FVFN or any of
its Affiliates of any of the provisions of this Agreement, the Company may, in
addition and supplementary to other rights and remedies existing in its favor,
apply to any court of law or equity of competent jurisdiction for specific
performance, or
218
preliminary and permanent injunctive or other equitable relief in order to
enforce, or prevent any violations of, the provisions of this Agreement.
6. Maximum Enforceable Restriction. In the event that any or all of the
restrictive covenants contained in this Agreement shall be determined by a court
of competent jurisdiction to be unenforceable by reason of their geographic or
temporal restrictions being too great, or by reason that the range of activities
covered are too great, or for any other reason, they should be interpreted to
extend over the maximum geographic area, period of time, range of activities or
other restrictions as to which they may be enforceable by such court under
applicable law.
7. Assignment. This Agreement may be assigned by the Company if such
assignment is accompanied by the sale of the stock of the Company, or of
substantially all of the assets of the Company.
8. Notices. All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by confirmed facsimile transmission, by
recognized national overnight courier service or by deposit in the United States
mail, postage prepaid, by registered or certified mail, return receipt
requested, addressed to the party to be notified at the addresses set forth
below:
219
IF TO FVFN:
▇▇▇▇ VENDING, INC.
c/o American Coin Merchandising, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
IF TO THE COMPANY:
▇▇▇▇ Vending Co., Limited
[address to be supplied]
WITH COPY TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
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Notices shall be effective immediately upon personal delivery or facsimile
transmission, one business day after deposit with an overnight courier service
or three (3) business days after the date of mailing thereof. Other notices
shall be deemed given on the date of receipt. Any party hereto may change the
address specified herein by written notice to the other parties hereto.
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the matters herein provided, and no
modifications or waiver of any provision hereof shall be effective unless in
writing and signed by FVFN and the Company.
10. Binding Effect. All of the terms and provisions of this Agreement
shall be binding upon the parties hereto and their respective permitted
successors and assigns, and inure to the benefit of and be enforceable by the
Company and its successors and assigns. The terms and provisions of this
Agreement shall be enforceable by the Company against FVFN and its Affiliates,
successors, assigns, and successors-in-interest, including without limitation
any corporation with which the FVFN may be merged or by which it may be
acquired, or which may be the acquiring corporation in an asset sale transaction
or other form of corporate reorganization.
11. Severability In the event that any provision of this Agreement or
application thereof to any party or under any circumstance is found to be
invalid or unenforceable in any jurisdiction to any extent for any reason, such
invalidity or unenforceability shall not affect any other provision or
application of this Agreement which can be given effect without the invalid or
unenforceable provision or application and shall not invalidate or render
unenforceable such provision or application in any other jurisdiction.
12. Remedies; Waiver. No remedy conferred upon the Company by this
Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity. No delay or
omission by the Company in exercising any right, remedy or power hereunder or
existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by the party possessing the same
from time to time and as often as may be deemed expedient or necessary by such
party in its sole discretion.
13. Governing Law; Jurisdiction.
13.1. The provisions of this Agreement, and all the rights and
obligations of the parties hereunder, shall be governed by, and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within such State without regard to
such State's conflicts of law principles.
13.2. Each of the parties hereto hereby consents to the
non-exclusive jurisdiction of any state or federal court located within the
County of New York or County of Nassau, State of New York with respect to
actions or proceedings arising out of or relating to this Agreement.
221
14. Headings. The captions and headings contained in this Agreement are
for convenience only and shall not be construed as a part of the Agreement.
15. Counterparts. This Agreement may be executed in several counterparts,
each of which is an original and all of which shall constitute one instrument.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
222
IN WITNESS WHEREOF, the undersigned have executed this agreement as
of the date first set forth above.
FVFN Acquisition Corp.
By:_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
▇▇▇▇ Vending Co., Limited
By:__________________________
Name:
Title:
[SIGNATURE PAGE TO ▇▇▇▇ CANADA NON-COMPETITION AGREEMENT]