Exhibit 10.1
ASSET PURCHASE AGREEMENT
Dated as of ▇▇▇▇▇ ▇, ▇▇▇▇
▇▇ and Among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC., a New Jersey corporation,
▇▇▇▇▇▇▇ ▇▇▇▇▇, INC., a Florida corporation,
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee,
The ▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust
under Agreement dated September 6, 2000, as Shareholder,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Shareholder
and
▇▇ ▇▇▇▇▇, INC., a Delaware corporation,
or its Assigns
TABLE OF CONTENTS
Page No.
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ARTICLE 1 PURCHASE OF ASSETS................................................. 1
SECTION 1.1 PURCHASE AND SALE OF ASSETS................................... 1
(a) Inventory........................................................... 1
(b) Customers and Accounts.............................................. 1
(c) Furniture and Equipment............................................. 1
(d) Books and Records................................................... 1
(e) Goodwill............................................................ 2
(f) Insurance Proceeds, Warranty Rights................................. 2
(g) Telephone Numbers................................................... 2
(h) Claims and Causes of Action......................................... 2
(i) Material Agreements................................................. 2
(j) Intangible Assets................................................... 2
(k) Permits............................................................. 2
(l) Other Property...................................................... 2
SECTION 1.2 EXCLUDED ASSETS............................................... 2
SECTION 1.3 LIABILITIES................................................... 2
SECTION 1.4 PURCHASE PRICE................................................ 3
SECTION 1.5 EXCLUDED INVENTORY............................................ 3
SECTION 1.6 ALLOCATION.................................................... 3
ARTICLE 2 CLOSING............................................................ 3
SECTION 2.1 CLOSING....................................................... 3
SECTION 2.2 TRANSFER OF ASSETS; PAYMENT................................... 3
SECTION 2.3 CLOSING DOCUMENTS............................................. 4
SECTION 2.4 AMENDMENT OF SCHEDULES........................................ 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES..................................... 5
SECTION 3.1 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE SELLING
PARTIES....................................................... 5
(a) Organization, Standing and Corporate Power of the Selling Parties... 5
(b) Authority; Noncontravention......................................... 5
(c) Financial Statements................................................ 6
(d) Undisclosed Liabilities............................................. 6
(e) Absence of Certain Changes or Events with respect to ▇▇▇▇▇.......... 6
(f) Litigation.......................................................... 7
(g) Taxes............................................................... 7
(h) Brokers............................................................. 7
(i) Compliance with Laws, Environmental Laws; ISRA...................... 8
(j) Title to Properties; Liens.......................................... 8
(k) Owned and Leased Real Property...................................... 8
(l) Inventories......................................................... 9
(m) Employee Relations.................................................. 9
(n) Insurance........................................................... ▇▇
-▇-
(▇) ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇............................................ ▇▇
(▇) Leased Personal Property........................................... 10
(q) Condition of Acquired Assets....................................... 10
(r) Transactions With Related Parties.................................. 10
(s) Material Agreements................................................ 11
(t) Solvency........................................................... 11
(u) Corporate Matters.................................................. 12
(v) Product Warranties................................................. 12
(w) Books and Records.................................................. 12
(x) Confirmations with respect to Consigned Inventory.................. 12
(y) Disclosure......................................................... 12
SECTION 3.2 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SHAREHOLDERS.. 13
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF BUYER...................... 13
(a) Organization, Standing and Corporation Power of Buyer.............. 13
(b) Authority; Noncontravention........................................ 14
(c) Litigation......................................................... 14
(d) Brokers............................................................ 14
ARTICLE 4 COVENANTS RELATING TO CONDUCT OF BUSINESS......................... 14
SECTION 4.1 FORBEARANCES BY SELLING PARTIES.............................. 14
SECTION 4.2 CONDUCT OF BUSINESS BY THE SELLING PARTIES................... 15
SECTION 4.3 OTHER ACTIONS................................................ 15
ARTICLE 5 ADDITIONAL AGREEMENTS............................................. 15
SECTION 5.1 ACCESS TO INFORMATION; CONFIDENTIALITY....................... 15
SECTION 5.2 REASONABLE EFFORTS; NOTIFICATION............................. 16
SECTION 5.3 FEES AND EXPENSES............................................ 16
SECTION 5.4 PUBLIC ANNOUNCEMENTS......................................... 17
SECTION 5.5 ACCOUNTS RECEIVABLE.......................................... 17
(a) ▇▇▇▇▇'▇ Accounts................................................... 17
(b) Trust.............................................................. 17
(c) Selling Parties Payment............................................ 17
(d) Buyer Payment...................................................... 17
(e) Unidentified Payment............................................... 17
(f) Transfer of Funds.................................................. 18
SECTION 5.6 NO SOLICITATION.............................................. 18
SECTION 5.7 INFORMATION FOR TAX RETURNS.................................. 18
SECTION 5.8 MAINTENANCE OF EXISTENCE; NAME CHANGE........................ 18
SECTION 5.9 EMPLOYEES.................................................... 18
SECTION 5.10 ISRA......................................................... 19
SECTION 5.11 HFB INVENTORY................................................ 21
SECTION 5.12 REVOCABLE LICENSE............................................ 21
ARTICLE 6 CONDITIONS PRECEDENT.............................................. 21
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING.. 21
(a) Authorizations, Consents, and Approvals............................ 21
-ii-
(b) No Injunctions or Restraints........................................22
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF BUYER.............................22
(a) Representations and Warranties......................................22
(b) Performance of Obligations of the Selling Parties...................22
(c) No Suit or Judgment.................................................22
(d) Opinion of Counsel..................................................22
(e) Consents............................................................22
(f) Material Adverse Change.............................................22
(g) Board and Lender Authorizations.....................................22
(h) Release by Wachovia Bank............................................22
(i) Lease Assumptions...................................................23
(j) Schedules...........................................................23
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF THE SELLING PARTIES...............23
(a) Representations and Warranties......................................23
(b) Performance of Obligations of Buyer.................................23
(c) No Suit or Judgment.................................................23
SECTION 6.4 FRUSTRATION OF CLOSING CONDITIONS..............................23
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER...................................23
SECTION 7.1 TERMINATION....................................................23
SECTION 7.2 EFFECT OF TERMINATION..........................................24
SECTION 7.3 AMENDMENT......................................................24
SECTION 7.4 EXTENSION; WAIVER..............................................24
ARTICLE 8 INDEMNIFICATION.....................................................24
SECTION 8.1 INDEMNIFICATION................................................24
(a) By the Selling Parties..............................................25
(b) By Buyer............................................................25
(c) Direct Liability....................................................25
(d) Third Party Claim...................................................26
SECTION 8.2 RIGHT TO SET-OFF...............................................27
SECTION 8.3 ASSETS OF ▇▇▇▇▇................................................27
ARTICLE 9 GENERAL PROVISIONS..................................................27
SECTION 9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS..........27
SECTION 9.2 NOTICES........................................................27
SECTION 9.3 DEFINITIONS....................................................28
SECTION 9.4 INTERPRETATION; GOVERNING LANGUAGE.............................31
SECTION 9.5 COUNTERPARTS; FACSIMILES.......................................31
SECTION 9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.................31
SECTION 9.7 GOVERNING LAW..................................................31
SECTION 9.8 ASSIGNMENT.....................................................31
SECTION 9.9 AMENDMENT......................................................31
SECTION 9.10 PARENT GUARANTEE...............................................31
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EXHIBITS
Exhibit A Allocation
Exhibit B Form of ▇▇▇▇ of Sale and Assignment
Exhibit C Form of Employment Agreement
Exhibit D Form of Consulting Agreement
Exhibit E Form of Agreement to License Copyrighted Material
SCHEDULES
Schedule 1.1(a) - Inventory; Value
Schedule 1.1(b) - Customers
Schedule 1.1(c) - Equipment
Schedule 1.1(g) - Telephone Numbers
Schedule 1.1(i) - Material Agreements
Schedule 1.1(j) - Intangible Assets
Schedule 1.1(k) - Permits
Schedule 1.2 - Excluded Assets
Schedule 1.3 - Assumed Liabilities
Schedule 1.5 - Excluded Inventory
Schedule 3.1(b) - Authority; Noncontravention
Schedule 3.1(c) - Financial Statements
Schedule 3.1(e) - Material Adverse Changes
Schedule 3.1(f) - Litigation
Schedule 3.1(j) - Title to Properties; Liens
Schedule 3.1(k) - Real Property
Schedule 3.1(m) - Employee Relations
Schedule 3.1(n) - Insurance
Schedule 3.1(o) - Customers and Suppliers
Schedule 3.1(p) - Leases
Schedule 3.1(r) - Transactions with Related Parties
Schedule 3.1(s) - Material Agreements
Schedule 3.1(v) - Product Warranties
Schedule 5.11 - HFB Inventory
Schedule 6.2(e) - Consents
-iv-
ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (this "Agreement") is made as of March 5,
2003, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC., a
New Jersey corporation
("▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇, INC., a Florida corporation ("▇▇▇▇▇"), ▇▇▇▇▇ ▇.
▇▇▇▇▇, Trustee of the ▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust under Agreement dated
September 6, 2000, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (individually, each a "Shareholder"
and, collectively, the "Shareholders"), and ▇▇ ▇▇▇▇▇, INC., a Delaware
corporation, or its assigns ("EMB" or "Buyer"). ▇▇▇▇▇ and ▇▇▇▇▇ are sometimes
referred herein, individually, as a "Selling Party" and, collectively, as the
"Selling Parties." EMB, together with its assignee or assignees of any
interests hereunder, are at times referred to herein as the "Buyer." Other
capitalized terms used in this Agreement are defined in Section 9.3 of this
Agreement.
ARTICLE 1
PURCHASE OF ASSETS
SECTION 1.1 Purchase and Sale of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Selling Parties
shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall
purchase from the Selling Parties, all of the assets of every type and
description, tangible or intangible, other than the Excluded Assets, as defined
below (all of such assets to be transferred referred to as the "Acquired
Assets"), and wherever located, used or held for use by or on behalf of the
Selling Parties, directly or indirectly, in connection with the porcelain
collectibles business conducted by the Selling Parties (the "Business"), free
and clear of all Liens, including, without limitation, the following assets:
(a) Inventory. All inventory, parts, raw materials, supplies and
other materials used or usable by the Business, including, without limitation,
those items listed on Schedule 1.1(a) hereto, but specifically excluding the
Excluded Inventory (the "Inventory");
(b) Customers and Accounts. All past and current customers and
accounts of the Business, including, without limitation, those customers and
accounts listed on Schedule 1.1(b) hereto (the "Customers");
(c) Furniture and Equipment. The furniture, equipment, fixtures,
ovens, molds, machines, and other tangible assets of the Business, including
all related spare or replacement parts, service agreements, warranties and
other items described on Schedule 1.1(c) hereto (the "Equipment");
(d) Books and Records. All books, records, computer records, ledgers,
files, documents, correspondence, lists, plats, architectural plans, drawings
and specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials relating to the
Business; provided, however, that the Selling Parties retain originals of
financial books of original entry so long as copies thereof are available to
EMB for copying at Closing (such photocopying costs at Buyer's expense) and for
five (5) years thereafter;
ASSET PURCHASE AGREEMENT -- PAGE 1
(e) Goodwill. All goodwill of the Business;
(f) Insurance Proceeds, Warranty Rights. All insurance proceeds and
insurance claims relating to the Business or all or any part of the Acquired
Assets and, to the extent transferable, the benefit of and the right to enforce
the covenants and warranties, if any, that Selling Parties are entitled to
enforce with respect to the Business or all or any part of the Acquired Assets
against Selling Parties' predecessors in title to the Acquired Assets;
(g) Telephone Numbers. The telephone numbers for the Business,
including those described on Schedule 1.1(g) hereto.
(h) Claims and Causes of Action. All right, title and interest of
Selling Parties in, to and under all rights, privileges, claims, causes of
action and options relating or pertaining to the Business or the Acquired
Assets;
(i) Material Agreements. The contracts and agreements described on
Schedule 1.1(i) hereto (the "Material Agreements") and all rights (including
rights of refund and offset), privileges, deposits, sums of money due, claims,
causes of action and options relating or pertaining to the Material Agreements
or any thereof.
(j) Intangible Assets. Any and all copyrights, trademarks, trade
secrets, trade names, data, websites, domain names, service marks, licenses,
franchises, distributorships, labels, logos, covenants by others not to compete,
rights, privileges and any registrations or applications for registrations of
the foregoing, and any right to recovery for infringement thereof (including
past infringement) and any and all goodwill associated therewith or connected
with the use thereof and symbolized thereby, including those described on
Schedule 1.1(j) hereto (the "Intangible Assets");
(k) Permits. Any and all permits used by the Business, including
those described on Schedule 1.1(k) hereto (the "Permits"); and
(l) Other Property. Except for the Excluded Assets, all other
additional privileges, rights, interests, properties and assets of Selling
Parties of every kind and description and wherever located, that are used or
intended for use in connection with, or that are necessary to the continued
conduct of, the Business as presently being conducted or as contemplated to be
conducted in the future.
EXCEPT AS SET FORTH IN THIS AGREEMENT THE ACQUIRED ASSETS SHALL BE PURCHASED AS
IS, WHERE IS AND WITH ALL FAULTS.
SECTION 1.2 Excluded Assets. The Selling Parties shall retain, and the
Acquired Assets shall not include the Excluded Inventory, or any assets of the
Selling Parties expressly listed on Schedule 1.2 hereto (the "Excluded Assets").
▇▇▇▇▇ cash on hand at the close of business on the Closing Date shall be
remitted to the Selling Parties within two (2) business days following Closing.
SECTION 1.3 Liabilities. In connection with the purchase of the Acquired
Assets, and subject to and upon all the terms and condition of this Agreement,
at Closing, Buyer shall assume
ASSET PURCHASE AGREEMENT - PAGE 2
and agree to pay, perform and discharge only those liabilities and obligations
of the Selling Parties specifically listed on Schedule 1.3 hereto (collectively,
the "Assumed Liabilities"). Except for Buyer's environmental obligations
expressly set forth in Section 5.10, Buyer is not assuming, and shall have no
liability for, and the Selling Parties agree that they will be solely
responsible for, and shall indemnify and hold Buyer harmless from and against,
the payment, performance, and discharge of all liabilities of the Selling
Parties, other than the Assumed Liabilities, whether accrued, absolute,
contingent or otherwise (collectively, the "Retained Liabilities").
SECTION 1.4 Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration for Buyer's acquisition of the Acquired Assets,
Buyer shall pay the Selling Parties an amount (the "Purchase Price") equal to
the sum of: (a) at the Closing, FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00), less a credit for the sum of Fifteen Thousand and No/100 Dollars
($15,000.00) previously deposited by Buyer with ▇▇▇▇▇ (the "Deposit"), plus (b)
within two (2) business days following Closing, an amount equal to the Closing
Inventory Value (hereinafter defined). For purposes of this Agreement, the term
"Closing Inventory Value" shall mean the value at Closing of the Inventory of
the Business (but not excluding the Excluded Inventory), with such Inventory to
be valued prior to Closing as set forth on Schedule 1.1(a) hereto, as updated to
reflect changes in Inventory between the date on which such valuation was
completed and the Closing Date.
SECTION 1.5 Excluded Inventory. Buyer shall not purchase the inventory
described in Schedule 1.5 ("Excluded Inventory"). All Excluded Inventory, shall
be sold by Buyer after Closing pursuant to the Consignment Sales Agreement (as
defined below).
SECTION 1.6 Allocation. The Purchase Price shall be allocated between ▇▇▇▇▇
and ▇▇▇▇▇ and among the Acquired Assets as set forth on Exhibit "A" attached
hereto. Buyer and the Selling Parties agree that they will not take any position
on their respective tax returns or on any other document that is inconsistent
with such allocation, and Buyer and the Selling Parties shall duly prepare and
timely file such returns under the Code to report such allocation.
ARTICLE 2
CLOSING
SECTION 2.1 Closing. The closing of the purchase and sale of the Acquired
Assets (the "Closing") shall take place on March 13, 2003, or such earlier date
as a fully executed Remediation Agreement is delivered to Buyer in accordance
with Section 5.10 and all other conditions to Closing set forth in this
Agreement have been satisfied (the "Closing Date"), at the offices of ▇▇▇▇ and
▇▇▇▇, counsel for Selling Parties, located in Princeton,
New Jersey at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 2.2 Transfer of Assets; Payment. At the Closing, Selling Parties
shall do and take all steps necessary to transfer, assign and convey to Buyer
all of the right, title and interest in and to the Acquired Assets, free and
clear of all Liens. On the dates set forth in Section 1.4, Buyer shall deliver
the Purchase Price in immediately available funds, to the Selling Parties in
accordance with the allocation set forth on Exhibit "A" attached hereto.
ASSET PURCHASE AGREEMENT - PAGE 3
SECTION 2.3 Closing Documents. At the Closing, the Selling Parties and
Shareholders shall deliver, or cause to be delivered to Buyer, the following
items (each a "Closing Document" and, collectively, the "Closing Documents"):
(a) A lease agreement (the "
New Jersey Lease Agreement") executed by
▇▇▇▇▇ in mutually acceptable form with respect to the approximately 40,000
square foot property owned by ▇▇▇▇▇ and located in the State of
New Jersey
(the "
New Jersey Premises"), it being understood that, except as set forth
herein and therein, the
New Jersey Premises shall be accepted by Buyer as
is, where is and with all faults;
(b) A ▇▇▇▇ of sale and assignment, executed by the Selling Parties,
in the form attached hereto as Exhibit "B";
(c) An employment and non-competition agreement (the "Employment
Agreement"), executed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in the form attached hereto as
Exhibit "C";
(d) A consulting and non-competition agreement (the "Consulting
Agreement"), executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇, in the form attached hereto as
Exhibit "D";
(e) a consignment sales agreement (the "Consignment Sales Agreement")
executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇ with respect to the HFB Inventory, in mutually
acceptable form;
(f) An Agreement to License Copyrighted Material (the "License
Agreement"), executed by ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, in the form attached
hereto as Exhibit "E";
(g) An Officers' Certificate, dated the Closing Date, of the
President and Secretary of each Selling Party, certifying to (a) the
Certificate of Incorporation of such Selling Party (as certified to by an
appropriate governmental authority), (b) the Bylaws of such Selling Party,
(c) the due adoption by the Board of Directors and the stockholders of such
Selling Party of the resolutions attached thereto approving the execution
and delivery of this Agreement and the acquisition and sale contemplated
herein, (d) the incumbency of the President, Secretary and other officers
of such Selling Party executing this Agreement and any of the other
agreements or documents contemplated hereby, and (e) a Certificate of Good
Standing of such Selling Party from its jurisdiction of incorporation;
(h) A fully executed Remediation Agreement with the NJDEP;
(i) Copies of all consents, authorizations, orders or approvals of
and filings or registrations with, and any Permits, licenses or other
authorizations required by, any third party or applicable Governmental
Entity that are required for, or in connection with, the execution and
delivery of this Agreement by the Selling Parties and the consummation by
Selling Parties of the transactions contemplated herein; and
(j) At the Closing and thereafter, such other documents, certificates
of title, endorsements, assignments and instruments in form and substance
reasonably satisfactory to
ASSET PURCHASE AGREEMENT - PAGE 4
the Selling Parties, Shareholders, Buyer and their legal counsel, as shall
be necessary, advisable or desirable to carry out the terms, purposes and
intents of this Agreement, including vesting in Buyer good and indefeasible
title to the Acquired Assets, free and clear of all Liens.
SECTION 2.4 Amendment of Schedules. The parties acknowledge that the
Schedules attached to this Agreement are not complete as of the date of
execution of this Agreement. At the Closing, such Schedules shall be updated by
the Selling Parties to accurately reflect the matters disclosed therein as of
the date of Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties with respect to the Selling
Parties. As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Selling Parties and
Shareholders hereby jointly and severally represent and warrant (such
representation and warranty of each Shareholder being only to his or her
Knowledge) to Buyer that the following statements are true and correct as of the
date of this Agreement and will be true and correct with equal force and effect
as of the Closing Date. NOTWITHSTANDING THE FOREGOING, EXCEPT AS SET FORTH
BELOW, BUYER ACCEPTS THE ACQUIRED ASSETS AS IS, WHERE IS AND WITH ALL FAULTS.
(a) Organization, Standing and Corporate Power of the Selling Parties.
Each Selling Party is a corporation, duly organized, validly existing and
in good standing under the laws of the state of its formation and has the
requisite corporate power and authority to carry on its business as now
being conducted. Each Selling Party is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary.
(b) Authority; Noncontravention. Each Selling Party has the requisite
corporate power and authority to enter into this Agreement and the Closing
Documents and to consummate the transactions contemplated by this Agreement
and the Closing Documents. The execution and delivery of this Agreement and
the Closing Documents by each Selling Party and the consummation by each
Selling Party of the transactions contemplated by this Agreement and the
Closing Documents have been duly and validly authorized by all necessary
corporate action on the part of each Selling Party. This Agreement and the
Closing Documents have been duly executed and delivered by each Selling
Party and constitute valid and binding obligations of each Selling Party,
enforceable against each Selling Party in accordance with their respective
terms. Except as set forth on Schedule 3.1(b) hereto, the execution and
delivery of this Agreement and the Closing Documents does not, and the
consummation of the transactions contemplated by this Agreement and the
Closing Documents and compliance with the provisions of this Agreement and
the Closing Documents will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of any benefit under, or result in the creation
of any Liens upon, any of the Acquired Assets under (i) the articles of
incorporation, bylaws or
ASSET PURCHASE AGREEMENT - Page 5
other governing documents of either Selling Party, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to either
Selling Party or the Acquired Assets, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to either Selling Party
or the Acquired Assets. Except as set forth in Schedule 3.1(b) hereto, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any third party or Governmental Entity, is required by or with
respect to either Selling Party in connection with the execution and delivery
of this Agreement and the Closing Documents by such Selling Party or the
consummation by either Selling Party of the transactions contemplated by this
Agreement and the Closing Documents.
(c) Financial Statements. Schedule 3.1(c) hereto contains (i) the
unaudited balance sheets of each Selling Party as of December 31, 2002, as
reviewed by (and together with the report of their review) ▇▇ ▇▇▇▇ LLP and the
related statements of operations, changes in shareholders' equity and cash
flows for the eleven (11) month period then ended, including the footnotes
thereto, (collectively, the "Financial Statements"), and (ii) the unaudited,
internally prepared, balance sheets of each Selling Party as of January 31,
2003, and the related statements of operations, changes in shareholders' equity
and cash flows for the one (1) month period then ended (collectively, the
"Current Financial Statements"). Such Financial Statements and Current
Financial Statements have been prepared in conformity with GAAP, and present
fairly, in all material respects, the financial position of and results of
operations, changes in shareholders' equity and cash flows of each Selling
Party as of and for the periods then ended.
(d) Undisclosed Liabilities. Except (i) as disclosed, reflected or reserved
against in the Current Financial Statements, or (ii) for liabilities and
obligations incurred in the ordinary course of business consistent with past
practices since the date of the Current Financial Statements, each Selling Party
does not have any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required by GAAP to be set
forth on the Financial Statements or Current Financial Statements.
(e) Absence of Certain Changes or Events with respect to ▇▇▇▇▇. Except as
set forth in Schedule 3.1(e) hereto, since December 31, 2002, each Selling
Party, insofar as it relates to the Acquired Assets, has conducted the Business
in the ordinary course, and there has not been (i) any Material Adverse Change
in or to such Selling Party, the Acquired Assets or the Business, (ii) any debt
incurred or assumed (other than accounts payable in the ordinary course of
business consistent with past practices), (iii) any granting by either Selling
Party to any employee of the Business of any increase in compensation, except
any standard increase, made in the ordinary course of business consistent with
prior practice, or any granting by such Selling Party to any employee of the
Business of any severance or termination pay, (iv) any damage, destruction or
loss, whether or not covered by insurance, that has or could reasonably be
expected to have a Material Adverse Effect on the Acquired Assets, (v) any
change in accounting methods, principles or practices by such Selling Party,
adversely affecting its assets, liabilities or business, except insofar as any
have been required by a change in GAAP, (vi) any acquisition of real property
or undertaking or commitment to
ASSET PURCHASE AGREEMENT - PAGE 6
undertake capital expenditures, (vii) any cancellation of any debts owed to or
claims held by such Selling Party, other than in the ordinary course of business
consistent with past practices, or (viii) any sale, lease, transfer or other
disposition of, or mortgage, pledge or creation of any encumbrance on any assets
of the Business, except transactions having an aggregate value of less than
$10,000.00, made in the ordinary course of business consistent with past
practices.
(f) Litigation. Except as set forth in Schedule 3.1(f) hereto, there is no
suit, action or legal proceeding pending or, to the Knowledge of the Selling
Parties, threatened against or affecting any Selling Party, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against any Selling Party.
(g) Taxes. All Taxes that are due and payable by each Selling Party, other
than those presently payable without penalty or interest, have been timely paid,
and such Selling Party has timely filed (and, through the Closing Date, will
timely file) all Tax reports and returns required by law to be filed by such
Selling Party. All such Tax reports and returns are true, complete and correct
in all material respects with regard to such Selling Party for the periods
covered thereby. Such Selling Party is not delinquent in the payment of any Tax.
There is no Tax deficiency asserted against such Selling Party, and there is no
unpaid assessment, proposal for additional Taxes, deficiency or delinquency in
the payment of any of the Taxes of such Selling Party or any violation of any
Tax law that could be asserted by any taxing authority. There are no Tax Liens
upon any of the Acquired Assets or the
New Jersey Premises nor has notice been
given of any event which could lead to any such Lien. No Internal Revenue
Service, state or local, audit, investigation or Proceeding of such Selling
Party is pending or Threatened, and the results of any completed audits are
properly reflected in the Financial Statements. Such Selling Party has not
granted any extension to any taxing authority of the limitation period during
which any Tax liability may be asserted. Such Selling Party has not committed
any violation of any Tax laws. All monies required for the payment of Taxes not
yet due and payable with respect to the operations of such Selling Party through
and including the Closing Date have been approved, reserved against and entered
upon the books and Financial Statements. All monies required to be withheld by
such Selling Party from employees, if any, independent contractors, or others or
collected from customers for income taxes, social security and unemployment
insurance taxes and sales, excise and use taxes, and the portion of any such
taxes to be paid by such Selling Party to governmental agencies or set aside in
accounts for such purpose have been approved, reserved against and entered upon
the books and records and Financial Statements of such Selling Party.
Consummation of the Transactions will not result in any obligations for Taxes on
the Acquired Assets.
(h) Brokers. Except ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, whose fees have been or will be paid at
Closing by ▇▇▇▇▇ pursuant to a separate agreement and for which Buyer has no
liability whatsoever, no broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of any Selling
Party.
ASSET PURCHASE AGREEMENT -- PAGE 7
(i) Compliance with Laws, Environmental Laws. Neither Selling Party has
received any written communication from a Governmental Entity alleging that
such Selling Party or the
New Jersey Premises is not in compliance in any
material respect with, or has liability under, any Environmental Laws or any
Permits.
(j) Title to Properties; Liens. The Selling Parties have good title to,
or valid leasehold interests in, all of the Acquired Assets. All such Acquired
Assets, other than the Dallas Retail Site and the Florida Retail Site, in which
the Selling Parties have a leasehold interest, are free and clear of all Liens
and other encumbrances, except as set forth on Schedule 3.l(j) hereto. Upon
consummation of the transactions contemplated herein, Buyer will acquire good
and indefeasible title to, and will own, the Acquired Assets free and clear of
all Liens. The Acquired Assets and the Excluded Assets, together, constitute
all of the assets and properties, real, personal, tangible and intangible that
are used or useable in the conduct of the Business as presently being conducted
or as contemplated to be conducted.
(k) Owned and Leased Real Property.
(i) Schedule 3.1(k) contains a list and brief description of all
of the owned and leased real property of Selling Parties (the "Real
Property"). The Real Property, constitutes all real properties used or
occupied in connection with the Business. The
New Jersey Lease Agreement,
and the leases with respect to the Dallas Retail Site and the Florida
Retail Site, constitute a portion of the Acquired Assets (as such, the
"Acquired Leased Real Property Interests").
(ii) With respect to the Acquired Leased Real Property Interests,
except as set forth on Schedule 3.1(k):
(A) No portion of the New Jersey Premises and, to the
Selling Parties Knowledge, no portion of the Dallas Retail Site
or the Florida Retail Site, is subject to any pending
condemnation proceeding by any public or quasi-public authority
nor is there any threatened condemnation proceeding with respect
thereto. The Selling Parties have no actual knowledge of any
pending condemnation proceeding by any public or quasi-public
authority with respect to the Dallas Retail Site or the Florida
Retail Site.
(B) Except as set forth in Schedule 3.1(k) hereto, no
written notice of any increase in any payment obligations under
any leases which are part of the Acquired Leased Real Property
Interests has been received by any Selling Party and, to the
Knowledge of the Selling Parties, except as expressly contained
in the leases for the Dallas Retail Site and Florida Retail Site,
there is no threatened increase in any payment obligation nor any
event which with the passage of time would cause an increase in
the payment obligations under any such lease. Buyer acknowledges
that it has been notified that the lease with respect to the
Dallas Retail Site, is a month-to-month lease.
ASSET PURCHASE AGREEMENT - PAGE 8
(C) There are no contracts, agreements, instruments, licenses,
commitments, leases or similar document, written or oral, to which
any Selling Party is a party, granting to any one or more persons
the right of use or occupancy of any portion of the parcels of the
New Jersey Premises. ▇▇▇▇▇ has executed written leases, which have
been furnished to Buyer, for property owned by ▇▇▇▇▇ and contiguous
to the New Jersey Premises, which tenants have rights to public and
common areas in common with Buyer's rights under the New Jersey
Lease Agreement; provided, however, that such tenants' rights will
not adversely affect Buyer's ability to conduct the Business after
Closing as conducted by the Selling Parties.
(D) There are no persons (other than the Selling Parties) in
possession of the New Jersey Premises or the Acquired Leased Real
Property Interests.
(l) Inventories. The Inventory is accurately reflected in the Current
Financial Statements at the lower of cost or market in accordance with GAAP.
(m) Employee Relations.
(i) Schedule 3.1(m) hereto sets forth a list of (x) all
employees, commission salespersons and independent contractors of the
Selling Parties as of Closing, (y) then current annual compensation of, and
a description of fringe benefits provided by the Selling Parties to any
such employees, commission salespersons and independent contractors, and
(z) any increase, effective on or after Closing, in the rate or manner of
compensation of any employees, commission salespersons or independent
contractors.
(ii) The Selling Parties have no employment, consulting or
collective bargaining agreement with any director, officer or employee of
the Selling Parties and neither Shareholder is a party to any employment or
consulting agreement, except as set forth on Schedule 3.1(m) hereto.
(iii) The Selling Parties are and have complied in all material
respects with all laws, rules and regulations which relate to hiring,
termination, wages, hours, discrimination in employment, working
conditions, including without limitation, laws, rules and regulations
relating to equal employment opportunities, fair employment practices and
occupational health and safety, and collective bargaining and is not liable
for any arrears of wages or any Taxes (including penalties) for failure to
so comply with any of the foregoing.
(iv) There is no unfair labor practice charge or complaint against
the Selling Parties or the Business pending before any Governmental Entity.
There is no charge or complaint against the Selling Parties pending, or to
the Knowledge of the Selling Parties, threatened under any Legal
Requirement. There is no labor strike,
ASSET PURCHASE AGREEMENT - PAGE 9
dispute or stoppage, or any union organizing campaign or petition for
certification actually pending or, to the Knowledge of the Selling Parties,
threatened against or involving the Selling Parties. No labor grievance has
been filed with the Selling Parties, has arisen out of or under a
collective bargaining or other labor agreement and is pending, and no claim
therefor has been asserted. The Selling Parties have not previously
experienced any work stoppage.
(n) Insurance. Schedule 3.1(n) hereto sets forth a list of all policies of
insurance maintained, owned or held by or for the benefit of the Selling Parties
on the date hereof. The Selling Parties shall keep or cause such insurance or
comparable insurance to be kept in effect through the Closing Date. The Selling
Parties have complied in all material respects with its obligations under each
of such insurance policies, and to the Knowledge of the Selling Parties, have
not failed to give any notice or present any claim thereunder in a due and
timely manner.
(o) Customers and Suppliers. Schedule 3.1(o) sets forth a list of names and
addresses of all material Customers and all suppliers of the Business. There
exists no actual or threatened termination or cancellation of the business
relationship of the Selling Parties with any customer or group of Customers or
with any supplier or group of suppliers listed therein. The Selling Parties
supplied Buyer with true, complete and correct copies of all Material Agreements
(as defined below) (or in the case of oral agreements, written descriptions)
relating to such customers and suppliers.
(p) Leased Personal Property. There are no leases under which either
Selling Party is a lessee of or holds or operates any personal property owned by
any third person, with respect to the Business, except as set forth on Schedule
3.1(p) hereto, and true, complete and correct copies (or, in the case of oral
leases, written descriptions) of such leases have been previously furnished to
Buyer.
(q) Condition of Acquired Assets. To the Knowledge of the Selling Parties,
the Equipment is in good operating condition and repair, ordinary wear and tear
excepted. ▇▇▇▇▇ has made available to Buyer all records maintained by ▇▇▇▇▇ with
respect to the maintenance and repair of such Equipment.
(r) Transactions With Related Parties. Except as set forth on Schedule
3.1(r) hereto, to the Knowledge of the Selling Parties, neither Shareholder, nor
any spouse, child, parent, sibling or any other person or entity closely related
to or affiliated with any Shareholder, as the case may be, nor any employee,
officer or director of either Selling Party owns any equity interest, directly
or indirectly in, or is an officer or director of, any proprietorship, firm,
company, corporation, partnership or other entity (i) which: (a) is a competitor
of either Selling Party; (b) is a Customer or supplier of either Selling Party;
or (c) has any contractual or business relationship whatsoever with either
Selling Party; provided that the foregoing does not apply to the ownership by
any of them of not more than five percent (5%) of any outstanding security (or
any class thereof) of any corporation or partnership listed on a national
securities exchange or traded over-the-counter on NASDAQ; or (ii) which has
or
ASSET PURCHASE AGREEMENT -- PAGE 10
claims to have any direct or indirect interest in any tangible or intangible
property of either Selling Party, except with respect to each Shareholder as a
holder of common stock of either Selling Party.
(s) Material Agreements.
(i) Schedule 3.1(s) hereto contains a true and complete list of all
written and oral contracts, agreements, instruments and other
understandings and commitments to which either Selling Party is a party and
relating to the Business (all such contracts, agreements, instruments and
other understandings and commitments, together with those listed on the
other Schedules hereto, being collectively called "Material Agreements"
herein).
(ii) To the Knowledge of the Selling Parties, all Material Agreements
are in full force and effect, constitute legal, valid and binding
obligations of the respective parties thereto, and are enforceable in
accordance with their respective terms. The Selling Parties have performed
all of the obligations required to be performed by them to date pursuant to
the Material Agreements, and, to the Knowledge of the Selling Parties,
there exists no default, or any event which upon the giving of notice or
the passage of time, or both, would give rise to a claim of a default in
the performance by the Selling Parties or by any other party to any of the
Material Agreements. Buyer has been furnished with true, complete and
correct copies of all Material Agreements and each Material Agreement that
is listed on Schedule 3.1(s) hereto is assignable to Buyer according to its
terms or appropriate consents with respect to any such assignment to Buyer
have been obtained and furnished to Buyer, except to the extent
specifically set forth on Schedule 3.1(s) hereto.
(t) Solvency. The Selling Parties are solvent and the Selling Parties will
not be rendered insolvent by the consummation of the transactions contemplated
hereunder. In addition, immediately after giving effect to the transactions
contemplated hereunder, (a) the Selling Parties will be able to pay its debts
as they become due, (b) the Selling Parties will not have unreasonably small
capital and insufficient capital with which to conduct its present or proposed
business, and (c) taking into account pending and threatened litigation, final
judgments against the Selling Parties in actions for money damages are not
reasonably anticipated to be rendered at a time when, or in amounts such that,
the Selling Parties will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum probable amount of
such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). The cash available to the Selling Parties,
after taking into account all other anticipated uses of the cash of such
Selling Party, will be sufficient to pay all such judgments promptly in
accordance with their terms. As used in this Section only, (x) "insolvent"
means, for any Person, that the sum of the present fair saleable value of its
assets does not and/or will not exceed its debts and other probable
liabilities, and (y) the term "debts" includes any legal liability, whether
matured or
ASSET PURCHASE AGREEMENT - PAGE 11
unmatured, liquidated or unliquidated, absolute, fixed or contingent, disputed
or undisputed or secured or unsecured.
(u) Corporate Matters. The Boards of Directors and shareholders of each
Selling Party have approved the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby in accordance with
applicable law.
(v) Product Warranties. Schedule 3.1(v) hereto contains the forms of
express warranties and guaranties, which have been used by the Selling Parties
in the Business. Except as set forth on Schedule 3.1(v) hereto, the Selling
Parties have not offered any different forms of express product warranties and
guaranties. No events have occurred or facts exist which could result in a
material increase to warranty expenses.
(w) Books and Records. The minute books and other corporate records of the
Selling Parties, as previously made available to Buyer and its representatives,
constitute all of the minute books and other corporate records of the Selling
Parties and such corporate records of the Selling Parties contain accurate
records of all meetings of and corporate actions or written consents by the
respective shareholders and Boards of Directors of the Selling Parties.
(x) Confirmations with respect to Consigned Inventory. It is agreed that
Inventory purchased by Buyer shall include inventory owned by ▇▇▇▇▇, but
consigned to third parties at the time of Closing ("Consigned Inventory"), on
terms and conditions confirmed in writing by such third parties, as to
ownership, condition and terms of consignment. The written confirmations
provided by such third parties with respect to Consigned Inventory shall be true
and correct in all material respects.
(y) Disclosure.
(i) The Selling Parties have delivered or made available to Buyer
complete and accurate copies of all documents listed on the schedules
delivered as a part hereof and all other information requested by Buyer
pursuant hereto. No representation or warranty of the Selling Parties
contained in this Agreement or any statement in the schedules hereto
contains any untrue statement. No representation or warranty of the Selling
Parties contained in this Agreement or statement in the schedules hereto
omits to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were
made, not misleading.
(ii) In the event of any inconsistency between the statements in the
body of this Agreement and those in the schedules hereto (other than an
exception expressly set forth as such in the schedules in relation to a
representation or warranty), those in this Agreement shall control.
(iii) The schedules to this Agreement may not be amended without the
prior written consent of Buyer and the Selling Parties.
ASSET PURCHASE AGREEMENT - PAGE 12
SECTION 3.2 Representations and Warranties with respect to Shareholders. As
an inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, each of the Selling Parties and Shareholders
hereby represents and warrants to Buyer that the following statements (in
addition to those set forth in Section 3.1) are true and correct as of the date
of this Agreement and will be true and correct with equal force and effect as of
the Closing Date:
(a) Authority. This Agreement and the Closing Documents have been duly
executed and delivered by such Shareholder and are the legal, valid and
binding obligation of such Shareholder enforceable against such Shareholder
in accordance with its terms.
(b) Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of any of the transactions contemplated
hereby or compliance with or fulfillment of the terms, conditions and
provisions hereof or thereof, by such Shareholder, will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or
a loss of rights under, (1) any material note, instrument, agreement,
contract, mortgage, lease, license, franchise, Permit or other
authorization, right, restriction or obligation to which such
Shareholder is a party or is bound, or (2) any court order to which
such Shareholder is a party or to which any of the assets or
properties of such Shareholder is subject or by which Shareholder is
bound; or
(ii) require the approval, consent, authorization or act of, or
making by Shareholder of any declaration, filing or registration with,
any person or entity, except for the execution of a NJDEP Remediation
Agreement.
(c) Ownership of Stock. The Shareholders, collectively, own and
control all of the issued and outstanding capital stock of ▇▇▇▇▇.
(d) Exculpation and Non-liability of Shareholders. Notwithstanding
anything to the contrary which may be set forth in this Agreement, the
Shareholders shall have no personal liability whatsoever under any of the
terms and provisions of this Agreement, including but not limited to, any
liability for any breach by the Shareholders or the Selling Parties of any
representation or warranty made by the Shareholders or Selling Parties. The
preceding sentence shall not be construed to limit in any manner whatsoever
liability of the Selling Parties.
SECTION 3.3 Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Selling Parties and Shareholders that the following
statements are true and correct as of the date of this Agreement and will be
true and correct with equal force and effect as of the Closing Date:
(a) Organization, Standing and Corporation Power of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the
jurisdiction governing its
ASSET PURCHASE AGREEMENT - PAGE 13
formation and existence and has the requisite corporate power and authority
to carry on its business as now being conducted.
(b) Authority; Noncontravention. Buyer has the requisite corporate
power and authority to enter into this Agreement and the Closing Documents
and to consummate the transactions contemplated by this Agreement and the
Closing Documents. The execution and delivery by Buyer of this Agreement
and the Closing Documents and the consummation of the transactions
contemplated by this Agreement and the Closing Documents have been duly and
validly authorized by all necessary corporate action on the part of Buyer.
This Agreement and Closing Documents have been duly executed and delivered
by Buyer and constitute valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their terms. The execution and delivery of
this Agreement and the Closing Documents does not, and the consummation of
the transactions contemplated by this Agreement and the Closing Documents,
and compliance with the provisions of this Agreement and the Closing
Documents will not conflict with or result in any violation of the
governing documents of Buyer. No consent, approval, order or authorization
of, or registration, declaration or filing with, any third party or
Governmental Entity is required by or with respect to Buyer in connection
with the execution and delivery by Buyer of this Agreement and the Closing
Documents or the consummation by Buyer, of any of the transactions
contemplated by this Agreement and the Closing Documents, which has not
been obtained as of Closing.
(c) Litigation. There is no suit, action or proceeding pending or, to
the Knowledge of Buyer, threatened against or affecting Buyer that,
individually or in the aggregate, could reasonably be expected to (i)
impair the ability of Buyer to perform its obligations under this
Agreement, or (ii) prevent the consummation of any of the transactions
contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Buyer having, or which, insofar as reasonably can be
foreseen, would have any such effect in the future.
(d) Brokers. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by Buyer, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Buyer.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Forbearances by Selling Parties. Selling Parties, jointly and
severally, covenant from and after the date hereof through the Closing Date
that neither Selling Party will:
(a) sell any Acquired Assets not in the ordinary course of business;
(b) mortgage, pledge or otherwise encumber any of the Acquired Assets;
ASSET PURCHASE AGREEMENT - PAGE 14
(c) enter into any employment, independent contractor agreement or
arrangement relating to any of the Acquired Assets or the Business other
than in the ordinary course of business consistent with past practice;
(d) take any action, or fail to take any action, the result of which
could reasonably be expected to be a termination of or a material default
under any Material Agreement or Permit;
(e) amend, modify or terminate, or agree to materially amend, modify
or terminate any Material Agreement;
(f) fail to maintain the confidential treatment or otherwise fail to
preserve any of its proprietary rights; or
(g) enter into any agreement to do any of the things described in
clauses (a) through (f) above.
SECTION 4.2 Conduct of Business by the Selling Parties. During the period
from the date of this Agreement to the Closing Date, the Selling Parties shall
carry on the Business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organization, keep available the services of its current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill, ongoing Business and the
Acquired Assets shall be preserved through the Closing Date.
SECTION 4.3 Other Actions. The Selling Parties and Buyer shall not take
any action that would result in (i) any of the representations and warranties
of such party set forth in this Agreement becoming untrue in any material
respect, or (ii) any of the conditions to the Closing set forth in Article 6
not being satisfied.
ARTICLE 5
ADDITIONAL AGREEMENTS
SECTION 5.1 Access to Information; Confidentiality. The Selling Parties
shall afford to Buyer reasonable access, during normal business hours during
the period prior to the Closing Date, to the Business' properties, books,
contracts, licenses, commitments, personnel and operating and other records
and, during such period, the Selling Parties shall furnish promptly to Buyer
all information concerning the Business as Buyer may reasonably request with
regard to the Business and the Acquired Assets. Each party shall treat in
confidence all documents, materials and other information which it shall have
obtained regarding the other party during the course of the negotiations
leading to the consummation of the transactions contemplated hereby (whether
obtained before or after the date of this Agreement), and, in the event the
transactions contemplated hereby shall not be consummated, each party will
return to the other party all copies of nonpublic documents and materials which
have been furnished in connection therewith. Such documents, materials and
information shall not be communicated to any third person (other than to the
respective counsel,
ASSET PURCHASE AGREEMENT -- PAGE 15
accountants, financial advisors, engineers, or the lenders of any party). Prior
to the Closing, Buyer shall not use any confidential information in any manner
whatsoever except solely for the purpose of evaluating the proposed purchase and
sale of the Acquired Assets, or the negotiation or enforcement of this Agreement
or any agreement contemplated hereby. The obligation of each party to treat such
documents, materials and other information in confidence shall not apply to any
information that (i) is or becomes lawfully available to such party from a
source other than the furnishing party, provided that such confidential
information is not known by the receiving party to be subject to another
confidentiality agreement with or other obligation of secrecy to the furnishing
party, (ii) is or becomes generally available to the public other than as a
result of disclosure by such receiving party or its agents, or (iii) is required
to be disclosed under applicable law or judicial process, but only to the extent
it must be disclosed, and after notice to the furnishing party.
SECTION 5.2 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the parties hereto shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner reasonably practicable, the Closing, and the other
transactions contemplated by this Agreement, including (i) the obtaining of
all necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Entity, (ii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement
or the consummation of any of the transactions contemplated by this
Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully
carry out the purposes of, this Agreement.
(b) The Selling Parties shall give prompt written notice to Buyer, and
Buyer shall give prompt notice to the Selling Parties, of (i) any
representation or warranty made by such party contained in this Agreement
that has become untrue or inaccurate in any material respect, or (ii) the
failure by it to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement;
provided, however, that such notification shall not, in and of itself,
excuse or otherwise affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
SECTION 5.3 Fees and Expenses. Each party hereto shall be responsible for
its, hers or his own fees and expenses in connection the negotiation, execution,
delivery and performance of this Agreement and the related due diligence
regardless of whether the transaction contemplated by this Agreement is
completed.
ASSET PURCHASE AGREEMENT -- PAGE 16
SECTION 5.4 Public Announcements. The parties hereto shall consult with
each other before issuing, and will provide to each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, and shall not issue
any press release or make any public statement prior to such consultation and
prior to the Closing Date, except as may be required by applicable law, court
process or obligations pursuant to any listing agreement with any national
securities exchange, in which case the party required to make the release or
announcement shall allow the other parties reasonable time to comment on such
release or announcement in advance of such issuance.
SECTION 5.5 Accounts Receivable.
(a) ▇▇▇▇▇'▇ Accounts. The Selling Parties and Buyer acknowledge and
agree that all customer accounts receivable pertaining to the Business that
arise prior to the Closing Date (the "Accounts Receivable") are and shall
remain assets of the Selling Parties and the Selling Parties shall have
sole and exclusive authority to invoice and collect Accounts Receivable and
to issue correction invoices and credit memos with respect to such
accounts. The Selling Parties shall use their commercially reasonable
efforts to keep Buyer reasonably informed of any disputes with any
customers relating to Accounts Receivable and the Selling Parties' denial
of any customer request for a credit or correction with respect to an
Account Receivable and shall copy Buyer on any communication with a
customer of the Business.
(b) Trust. Any payment received by one party to this Agreement after
the Closing Date that properly belongs to another party shall be held in
trust for the benefit of the party properly entitled to the payment and
shall be paid over by the receiving party to the proper party as herein
provided.
(c) Selling Parties Payment. In the event that Buyer receives a
payment on an Account Receivable that is identified by Selling Parties'
invoice number or that is otherwise accompanied by information identifying
it as a payment belonging to a Selling Party (a "Selling Party Payment"),
Buyer shall turn such Selling Party Payment over to Selling Parties. Such
Selling Party Payments shall be turned over to the applicable Selling Party
without representation, warranty or guaranty by, or recourse against,
Buyer.
(d) Buyer Payment. The Selling Parties acknowledge that after the
Closing Date, Buyer will generate accounts receivable from customers of the
Business. In the event that any Selling Party receives a payment that is
identified by Buyer's invoice number, or that is otherwise accompanied by
information identifying it as a payment belonging to Buyer (a "Buyer
Payment"), such Selling Party shall turn such Buyer Payment over to Buyer.
Such Buyer Payments shall be turned over to Buyer without representation,
warranty or guaranty by, or recourse against, the Selling Parties.
(e) Unidentified Payment. In the event that Selling Parties or Buyer
receives a payment from a customer of the Business on or after the Closing
Date as to which the owner is not clearly indicated on or with the payment
(an "Unidentified Payment"), the party receiving the payment shall, within
five (5) business days after its receipt, notify the other of
ASSET PURCHASE AGREEMENT - PAGE 17
the amount of the Unidentified Payment and the customer from which it was
received, and the parties shall exchange pertinent records and otherwise
cooperate in good faith to determine the party to which the Unidentified
Payment belongs. If the parties are unable to resolve ownership of the
Unidentified Payment from their records, Buyer shall promptly contact the
customer from whom the payment was received to obtain instructions as to
which invoices(s) the customer intended its payment to be applied, and the
instructions of the customer shall be binding on the parties.
(i) Transfer of Funds. Each Selling Party Payment and each Buyer
Payment shall be paid over to the party to which it belongs within ten
(10) business days after receipt. Each Unidentified Payment shall be paid
to the party to which it belongs within ten (10) business days after
ownership of the payment is resolved. All payments belonging to another
party but not timely paid over to the proper party shall bear interest
from and after the next business days after the payment was due until paid
at the rate of ten percent (10%) per annum.
Section 5.6 No Solicitation. The Selling Parties and Shareholders covenant
and agree that, during the period that this Agreement is in force and effect,
they will not and will not permit any of their affiliates, agents or
representatives (including, without limitation, investment bankers, attorneys
and accountants) to, directly or indirectly (a) solicit, initiate or encourage
submission of proposals or offers by, or (b) furnish any information with
respect to or otherwise cooperate in any way with, or participate in any
discussions or negotiations with, any Person with respect to any proposal
regarding the acquisition or purchase of all or a material portion of the
Business or the Acquired Assets, or any equity interest in the Selling Parties
or any business combination with the Selling Parties. The Selling Parties and
Shareholders shall promptly notify Buyer in writing of any inquiry or proposal
that is received concerning any of the foregoing transactions.
Section 5.7 Information for Tax Returns. The Selling Parties shall
cooperate with Buyer after the Closing by providing Buyer, promptly upon
request, such records and other information regarding the Acquired Assets
and/or the Business as may reasonably be requested from time to time by Buyer
in connection with the preparation or audit of its federal, state and local
income and other Tax returns, and audits, disputes, refund claims or litigation
relating thereto. In such connection, the Selling Parties will afford Buyer's
representatives including independent tax advisers and others access to books
and records or relating to the Acquired Assets.
Section 5.8 Maintenance of Existence; Name Change. Selling Parties shall
preserve and maintain their corporate existence in New Jersey and Florida for a
period of at least three (3) years after the Closing Date. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc.
shall change its corporate name to a name reasonably acceptable to Buyer
within 30 days after Closing. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. may maintain and use
its corporate name in connection with owning, operating and leasing real
property; however, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. shall not use its corporate name
in connection with any activity relating directly or indirectly to the Business.
Section 5.9 Employees. ▇▇▇▇▇ shall terminate its employees and independent
contractors on or before the Closing Date. From and after the date hereof
through the Closing Date or earlier termination of this Agreement, Buyer has
the right to enter into negotiations with any or all of the
ASSET PURCHASE AGREEMENT -- PAGE 18
employees and independent contractors of the Selling Parties for their
employment with Buyer from and after the Closing Date on such terms and
conditions as Buyer and such employees or contractors shall agree. Buyer shall
have no liability whatsoever with respect to any matter relating to the
employment or contracting of such persons by the Selling Parties prior to the
Closing Date. Without limiting the foregoing, ▇▇▇▇▇ shall be responsible for
any and all (i) accrued vacation benefits and pay, and (ii) severance benefits,
through and including the Closing Date.
Section 5.10 ISRA. The Selling Parties shall, at their own cost and
expense, comply with the Industrial Site Recovery Act ("ISRA") for the New
Jersey Premises prior to the Closing and provide documentation evidencing that
compliance to the Buyer. The Selling Parties shall, at their own cost and
expense, diligently file the General Information Notice and any other plan or
submission required by ISRA with the New Jersey Department of Environmental
Protection ("NJDEP") and satisfy all requirements of ISRA, up to and including
receipt of a No Further Action letter with Covenant Not to ▇▇▇ ("NFA/CNS").
However, the Selling Parties may comply with ISRA and close this transaction by
entering into a Remediation Agreement with the NJDEP (the "Remediation
Agreement"). In that event, the Selling Parties shall remain liable for all
ISRA compliance relating to operations and conditions at the New Jersey
Premises prior to Closing, up to and including receipt of the NFA/CNS,
including, but not limited to maintaining the requisite financial assurance.
Prior to Closing, the Selling Parties agree to provide copies of all Notices
and correspondence to the Buyer.
(a) Before the Closing, the Selling Parties shall provide a Schedule of
all reports, including drafts, and correspondence other than correspondence
protected by the Attorney/Client Privilege, related to Environmental Laws for
the New Jersey Premises, whether or not submitted to any governmental agency.
After the Closing, in the event the Selling Parties must continue with ISRA
compliance for this transaction, or if the Selling Parties execute a contract
for a sale of the real property at the New Jersey Premises, or pursue any other
transaction triggering the requirements of ISRA, the Selling Parties shall, at
their own cost and expense, comply with ISRA as to operations or conditions at
the New Jersey Premises prior to Closing. If the Selling Parties trigger ISRA,
the Selling Parties shall, at their own cost and expense, diligently file the
General Information Notice, and any other plan or submission required by ISRA
with the NJDEP and satisfy all requirements of ISRA relating to operations or
conditions at the New Jersey Premises prior to Closing, including but not
limited to the financial assurance requirements up to and including receipt of
an NFA/CNS, except that Buyer shall bear that portion of the investigative
and/or remedial costs for ISRA compliance that arise from Buyer's operations,
Release of Hazardous Materials at the site or conditions created at the New
Jersey Premises subsequent to Closing. The Selling Parties shall be solely
responsible for all costs of ISRA compliance not related to or arising out of
Buyer's operations, Release of Hazardous Materials or conditions occurring at
the New Jersey Premises subsequent to Closing. Buyer shall promptly provide all
information requested by the Selling Parties regarding or in furtherance of
ISRA compliance to the extent available to Buyer and shall sign any affidavit
submitted to it by the Selling Parties regarding or in furtherance of ISRA
compliance which is true, accurate and complete; and if an affidavit is not
true, accurate or complete, Buyer shall supply the necessary information to
make it true, accurate or complete and shall then sign the same. The Selling
Parties expressly agree to provide copies of all Notices and correspondence with
NJDEP relating to the New Jersey Premises, to Buyer.
ASSET PURCHASE AGREEMENT -- PAGE 19
(b) Buyer shall grant the Selling Parties reasonable access to the New
Jersey Premises as necessary in furtherance of the Selling Parties' ISRA
compliance efforts, at a time, place, and manner mutually agreeable to Buyer and
the Selling Parties.
(c) Buyer agrees to grant to the officers, employees and authorized
representatives of the Selling Parties, including agents, contractors and
subcontractors, access to enter onto the New Jersey Premises to perform any
investigation or remediation required of Selling Parties by NJDEP necessary to
comply with Environmental Laws (hereinafter "Intended Activities"), so long as
the Intended Activities do not unreasonably interfere with Buyer's operations or
as required by law.
(d) At all times during the Intended Activities, the Selling Parties'
contractor for the Intended Activities shall, at its own costs an expense,
provide and keep in force the following insurance: Workers' Compensation and
Employer's Liability Insurance in accordance with any law that may be applicable
to all of its employees, agents and/or subcontractors engaged in performing the
Intended Activities; Comprehensive General Liability and Automobile Liability
Insurance against any claims for bodily injury, death, or property damage
occurring in or about the New Jersey Premises and in connection with the
Intended Activities, with limits of not less than $1,000,000 for bodily injury
or death to any one person and aggregate limits of $2,000,000 for bodily injury
or death to any number of persons and property damage with limits of not less
than $1,000,000; and Umbrella Insurance not less than $1,000,000 and Pollution
Liability Insurance not less than $1,000,000. At least ten (10) days before
entering the New Jersey Premises for the purpose of completing the Intended
Activities, the Selling Parties' contractor shall provide Buyer with
Certificates of Insurance that will name Buyer as an additional insured and
certificate holder.
(e) Prior to the breaking of ground or performance of any Intended
Activities at the New Jersey Premises by the Selling Parties, or their
contractors or agents, the Selling Parties shall make reasonable effort to
locate, identify and ▇▇▇▇ all subsurface utilities in compliance with the
Underground Facility Protection Act, N.J.S.A. 48:2-7.3 et seq. and N.J.A.C.
14:2-5.1 et seq.
(f) All ground water, development water, drill cuttings, used personal
protective equipment or other material generated, if any, during the Intended
Activities by the Selling Parties (hereinafter "Investigation Derived Waste" or
"IDW") shall be the sole property of the Selling Parties, and the Selling
Parties shall be the sole generator of such IDW. As the generator of such
material, the Selling Parties shall have the sole responsibility and resulting
liability for the proper handling, storage and disposal of such IDW in
accordance with Environmental Laws. The Selling Parties shall remove all IDW
from the New Jersey Premises within two (2) weeks following completion of the
Intended Activities.
(g) Following the completion of the Intended Activities, the Selling
Parties shall at their sole cost and expense restore the ground at the New
Jersey Premises to substantially the same the condition it was in prior to the
performance of the Intended Activities.
(h) In the event Buyer shall trigger ISRA after Closing, for any reason,
Buyer shall, at its own cost and expense, file a General Information Notice, and
any other plans or submissions required by ISRA with the NJDEP and satisfy all
other requirements of ISRA, up to receipt of an
ASSET PURCHASE AGREEMENT -- PAGE 20
NFA/CNS for areas of concern related to Buyer's operations, activities, or
Release of Hazardous Materials, if any, including the financial assurance
requirements related to such areas of concern. Buyer shall bear that portion of
the investigative and/or remedial costs for ISRA compliance that arise from
Buyer's operations, activities, or Release of Hazardous Material at the Leased
Premises. In the event Buyer triggers ISRA, the Selling Parties shall be solely
responsible for all costs of ISRA compliance not (1) related to or arising out
of Buyer's operations, activities, or Release of Hazardous Materials at the
Site, including but not limited to, conditions of the New Jersey Premises
antecedent to Buyer's occupancy thereof and (2) related to Buyer's filing of the
General Information Notice, Negative Declaration and/or Remediation Agreement
Application. The Selling Parties shall promptly provide all information
requested by Buyer regarding or in furtherance of ISRA compliance to the extent
available to the Selling Parties and shall sign any affidavit submitted to it by
Buyer regarding or in furtherance of ISRA compliance which is true, accurate and
complete; and if an affidavit is not true, accurate and complete, the Selling
Parties shall supply the necessary information to make it true, accurate or
complete and shall then sign the same.
SECTION 5.11 HFB Inventory. The parties acknowledge that certain
inventory owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "HFB Inventory") listed in Schedule 5.11,
will remain in the possession of Buyer after Closing. Unless otherwise directed
by ▇▇▇▇▇ ▇. ▇▇▇▇▇, the HFB Inventory shall be sold by Buyer after Closing
pursuant to the Consignment Sales Agreement.
SECTION 5.12 Revocable License. For the purpose of allowing the Selling
Parties to sell Excluded Inventory and to allow ▇▇▇▇▇ ▇. ▇▇▇▇▇ to sell the HFB
Inventory, Buyer grants to ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ a Revocable License to use
the trademark "▇▇▇▇▇" in connection with the sale of the Excluded Inventory and
HFB Inventory, which was manufactured by ▇▇▇▇▇. In connection with such License,
▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall comply with all instructions from Buyer made from
time to time with respect to the use by ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ of such
trademark. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ agree to use such trademark in a manner that
will maintain the goodwill and business reputation of the Business. Unless
extended, the License granted under this Section 5.12 shall terminate six (6)
months following the date of Closing. Nothing in this Section 5.12 shall limit
the ability of ▇▇▇▇▇ to utilize the corporate name "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc."
in compliance with restrictions set forth in Section 5.8
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Closing.
The respective obligations of each party to effect the Closing are subject to
the satisfaction, or waiver on or prior to the Closing Date of the following
conditions:
(a) Authorizations, Consents, and Approvals. Any authorizations, consents,
approvals, orders or waivers required to be obtained, and all filings, notices
or declarations required to be made with any third party or Governmental Entity
shall have been obtained or made including, without limitation, the obtaining of
a Remediation Agreement.
ASSET PURCHASE AGREEMENT - PAGE 21
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
Closing shall be in effect; provided, however, that each of the parties shall
have used such party's reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.
SECTION 6.2 Conditions to Obligations of Buyer. The obligations of Buyer
to effect the Closing and to purchase the Acquired Assets pursuant to this
Agreement shall, unless waived in writing by Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Selling Parties and Shareholders, set forth in this
Agreement, in each case as of the date of this Agreement, and as of the Closing
Date as though made on and as of the Closing Date, shall be true and correct in
all material respects, and Buyer shall have received a certificate to such
effect, signed on behalf of the Selling Parties by an authorized officer of
▇▇▇▇▇ and ▇▇▇▇▇ with respect to representations and warranties of ▇▇▇▇▇ and
▇▇▇▇▇, and signed by each Shareholder with respect to representations and
warranties of such Shareholder.
(b) Performance of Obligations of the Selling Parties. The Selling
Parties and Shareholders shall have executed all documents and performed all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, including without limitation delivery of and execution of the
applicable Closing Documents.
(c) No Suit or Judgment. There shall be no suit or proceeding
instituted to prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby, and there shall be no judgment, order or
decree by any court with proper jurisdiction prohibiting consummation of such
transactions.
(d) Opinion of Counsel. Buyer shall have received written opinions,
dated as of the Closing Date, from counsel for the Selling Parties and
Shareholders in mutually acceptable form.
(e) Consents. The Selling Parties shall have received consents to
the transactions contemplated hereby from the parties listed in Schedule 6.2(e).
(f) Material Adverse Change. From and after the date of this
Agreement, there shall not have been any Material Adverse Change to any of the
operations, financial condition, revenues or properties of the Business.
(g) Board and Lender Authorizations. Buyer shall have received
approval of the sale and purchase of the Acquired Assets by the Board of
Directors of Buyer, as well as any authorizations, consents or waivers required
to be obtained by Buyer from its lenders in order for Buyer to enter into the
transactions made the subject of this Agreement.
(h) Release by Wachovia Bank. Buyer shall have received a release in
form and substance satisfactory to Buyer of any Lien held by Wachovia Bank on
the Acquired Assets.
ASSET PURCHASE AGREEMENT - PAGE 22
(i) Lease Assumptions. Buyer shall have received consents to the
assumption by Buyer of the lease rights and obligations of ▇▇▇▇▇ for the retail
site located in Dallas, Texas (the "Dallas Retail Site") and of the lease
rights and obligations of ▇▇▇▇▇ for the retail site located in Florida (the
"Florida Retail Site") from the applicable landlords in form and substance
satisfactory to Buyer in Buyer's sole discretion.
(j) Schedules. The form and content of the Schedules to this Agreement, as
amended and supplemented through the date of Closing, are satisfactory to each
of the parties, in each party's sole discretion.
SECTION 6.3 Conditions to Obligations of the Selling Parties. The
obligations of the Selling Parties to effect the Closing and to transfer and
convey the Acquired Assets pursuant to this Agreement shall, unless waived in
writing by the Selling Parties, be subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Buyer set forth in this Agreement, in each case as of the date of this
Agreement, and as of the Closing Date as though made on and as of the Closing
Date, shall be true and correct in all material respects, and the Selling
Parties and Shareholders shall have received a certificate to such effect signed
on behalf of Buyer by an authorized officer of Buyer.
(b) Performance of Obligations of Buyer. Buyer shall have made all
payments, executed all documents and performed all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) No Suit or Judgment. There shall be no suit or proceeding instituted
to prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby, and there shall be no judgment, order or decree by any
court with proper jurisdiction prohibiting consummation of such transactions.
SECTION 6.4 Frustration of Closing Conditions. Buyer and the Selling
Parties may not rely on the failure of any condition set forth on this Article
6 to be satisfied, if such failure was caused by such party's failure to act in
good faith or to use its reasonable efforts to cause the Closing to occur.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date without liability:
(a) by the unanimous written consent of Buyer and the Selling Parties;
(b) by Buyer or by the Selling Parties if the Closing shall not have
occurred on or before March 21, 2003, unless the failure to effect the
Closing is the result of a material breach of this Agreement by the party
seeking to terminate;
ASSET PURCHASE AGREEMENT - PAGE 23
(c) by Buyer or by the Selling Parties:
(i) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Closing and
such order, decree, ruling or other action shall have become
final and nonappealable; and
(ii) in the event of any breach by Buyer, on the one
hand, or by the Selling Parties, on the other hand, of its or
his/her respective agreements, representations or warranties
contained herein and the failure of such party to cure such
breach within three (3) days after receipt of notice from any
other party requesting such breach to be cured;
(d) by Buyer if any Material Adverse Effect shall occur with
respect to the Business.
SECTION 7.2 Effect of Termination. In the event of termination of
this Agreement as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of any party, other than the provisions of this Section 7.2 and Article 9,
where applicable and the provisions of Paragraph 16, titled "Legal Effect", of
the Letter of Intent dated December 12, 2002, executed by the parties and any
and all confidentiality and nondisclosure agreements executed by the parties.
In the event that Buyer or the Selling Parties, shall terminate this Agreement
pursuant to Section 7.1(b) or (c)(ii) hereof, the rights of the parties, as the
case may be, to pursue any and all rights they may have at law or equity or
hereunder shall survive unimpaired. It is agreed that the Deposit shall be
refunded to Buyer in the event any of the Selling Parties makes a fraudulent
statement or a misrepresentation of a material fact in connection with the
Letter of Intent dated December 13, 2002, executed in connection with this
Agreement or in connection with this Agreement (including misrepresentations
made in connection with due diligence conducted by Buyer); in all other events,
the Deposit shall be retained by the Selling Parties.
SECTION 7.3 Amendment. This Agreement may be amended by the parties
at any time prior to the Closing Date by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 7.4 Extension; Waiver. At any time prior to the Closing Date,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement, or (c) waive compliance with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure
of any party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
ARTICLE 8
INDEMNIFICATION
SECTION 8.1 Indemnification.
ASSET PURCHASE AGREEMENT - PAGE 24
(a) By the Selling Parties. From and after the Closing Date, the
Selling Parties, shall (i) indemnify and hold harmless the Buyer and its
respective officers, directors, employees, affiliates, successors and assigns
from and against any and all losses which it or such persons may suffer or
incur, resulting from, related to or arising out of (a) any misrepresentation or
breach of warranty of the Selling Parties or Shareholders contained in or made
pursuant to this Agreement; (b) any breach by the Selling Parties or
Shareholders of any of their agreements or obligations contained in or made
pursuant to this Agreement; (c) any liability or obligation arising out of the
Business as conducted prior to the Closing and not expressly assumed by Buyer
pursuant to this Agreement; (d) any losses or costs of defending against any
claims which may be made against Buyer by any Person claiming violations by any
Selling Party of any local, state, or federal law relating to the employment
relationship, including, but not limited to, wages, hours, concerted activity,
nondiscrimination, occupational health and safety and the payment and
withholding of Taxes, where such claims arise out of circumstances occurring
prior to the Closing Date; (e) any actual or threatened violation of or
noncompliance with, or remedial obligation arising under, any Environmental Laws
arising from any event, condition, circumstance, activity, practice, incident,
action or plan existing or occurring prior to the Closing relating in any way to
the Acquired Assets or the Business; or (f) Selling Parties' failure to comply
with the laws of any jurisdiction with respect to the bulk sales laws that may
be applicable to the sale of the Acquired Assets to Buyer as contemplated
hereby; and (ii) reimburse Buyer and each of its respective officers, directors,
agents and employees for any and all reasonable fees, costs and expenses related
thereto (including without limitation, reasonable legal expenses) ((i) and (ii),
collectively, "Buyer's Indemnifiable Losses").
(b) By Buyer. From and after the Closing Date, Buyer shall (i)
indemnify and hold harmless the Selling Parties and Shareholders and their
respective officers, directors, employees, affiliates, successors and assigns,
from and against any and all losses, which any of them may suffer or incur,
resulting from, related to or arising out of (a) any misrepresentation or breach
of warranty of Buyer which is contained in or made pursuant to this Agreement;
(b) any breach by Buyer of any of its agreements or obligations contained in or
made pursuant to this Agreement; and (c) any liability or obligation arising out
of the Business as conducted after the Closing and not retained or assumed by
the Selling Parties under this Agreement, except liabilities or obligations
arising out of the acts or omissions of the Selling Parties, Shareholders or
their directors, officers, agents, employees and professionals and (ii)
reimburse each Shareholder and his or her heirs, personal representatives,
administrators, trustees, agents or employees, and each Selling Party and its
officers, directors, employees and attorneys for any and all reasonable fees,
costs and expenses related thereto (including, without limitation, reasonable
legal expenses) ((i) and (ii), collectively, "Selling Parties' and Shareholders
Indemnifiable Losses").
(c) Direct Liability. In the event that the person or entity seeking
indemnification under this Article 8 (the "Indemnified Party") shall become
aware of an event which will give rise to or result in an Indemnifiable Loss,
he, she or it shall, within thirty (30) days thereafter, give written notice to
the party from whom indemnification under this Article 8 is sought (the
"Indemnifying Party") of the amount of the Indemnifiable Loss, together with
sufficient information to enable the Indemnifying Party to determine the
accuracy and nature of the claimed Indemnifiable Loss (the "Indemnity Notice").
The failure of the Indemnified Party to give the Indemnifying Party an
Indemnity Notice shall not release the Indemnifying Party from liability under
this Article 8;
ASSET PURCHASE AGREEMENT - PAGE 25
provided, however, that the Indemnifying Party shall not be liable for losses
which would not have been incurred but for the delay in the delivery of, or the
failure to deliver, the Indemnity Notice. Within thirty (30) days after the
receipt by the Indemnifying Party of the Indemnity Notice, the Indemnifying
Party shall either (i) pay to the Indemnified Party an amount equal to the
Indemnifiable Loss, or (ii) object to such claim, in which case the Indemnifying
Party shall give written notice to the Indemnified Party of such objection
together with the reasons therefor, it being understood that the failure of the
Indemnifying Party to so object shall preclude the Indemnifying Party from
asserting any claim, defense or counterclaim relating to the Indemnifying
Party's failure to pay any Indemnifiable Loss.
(d) Third Party Claim. In the event the facts giving rise to the claim
for indemnification under this Article 8 shall involve any action or threatened
claim or demand by any third party against the Indemnified Party (a "Third Party
Claim"), within the earlier of, as applicable, ten (10) days after receiving
notice of the filing of a lawsuit or thirty (30) days after receiving notice of
the existence of a claim, demand, suit or proceeding (each a "Claim") giving
rise to the claim for indemnification, the Indemnified Party shall send written
notice of such Claim to the Indemnifying Party (the "Claim Notice"). The failure
of the Indemnified Party to give the Indemnifying Party the Claim Notice shall
not release the Indemnifying Party from liability under this Article 8;
provided, however, that the Indemnifying Party shall not be liable for losses
incurred by the Indemnified Party which would not have been incurred but for the
delay in the delivery of, or the failure to deliver, the Claim Notice. Except as
set forth below, the Indemnifying Party shall be entitled to defend such Claim
in the name of the Indemnified Party at his or its own expense and through
counsel of his or its own choosing. The Indemnifying Party shall give the
Indemnified Party notice in writing within ten (10) days after receiving the
Claim Notice from the Indemnified Party in the event the Claim is one involving
an instituted suit or proceeding, or otherwise within thirty (30) days, of his
or its intent to do so. If the Indemnifying Party chooses to defend or prosecute
a Third Party Claim, all the Indemnified Parties shall cooperate in the defense
or prosecution thereof. Such cooperation shall include the retention and (upon
the Indemnifying Party's request) the provision to the Indemnifying Party of
records and information that are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not the Indemnifying Party assumes the defense of a Third Party
Claim, the Indemnified Party shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim without the Indemnifying
Party's prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. The Indemnified Party may elect, by notice in writing to
the Indemnifying Party, to continue to participate through his or its own
counsel, at his or its expense, but the Indemnifying Party shall have the right
to control the defense of the Claim with counsel reasonably acceptable to the
Indemnified Party. In the event that the Indemnifying Party is controlling the
defense of the Claim and shall have negotiated a settlement thereof, which
proposed settlement is final and unconditional as to the parties thereto and
contains an unconditional release of the Indemnified Party, without the
Indemnified Party being liable for damages of any kind or nature or being
otherwise required to pay any amount of money to any third party and does not
include the imposition of any restrictions on the part of the Indemnified Party
or require that the Indemnified Party make an admission of guilt or liability or
deliver a confession of judgment, or any other non-financial obligation which,
in the reasonable
ASSET PURCHASE AGREEMENT - PAGE 26
judgment of the Indemnified Party, renders such settlement unacceptable, the
Indemnified Party shall consent to such settlement.
SECTION 8.2 Right to Set-Off. To secure the indemnification provided for
in Section 8.1(a) hereof, and to compensate Buyer for any claim having as its
basis the indemnification provided for in Section 8.1(a) hereof, Buyer shall
have a right of set-off from any sum due to a Selling Party, including,
without limitation, sums due under this Agreement and any amounts which would
be otherwise due under the Consignment Sales Agreement.
SECTION 8.3 Assets of ▇▇▇▇▇. In order to insure that ▇▇▇▇▇ has assets
sufficient to provide the indemnification provided for in Section 8.1(a), the
Selling Parties and Shareholders agree that ▇▇▇▇▇ shall own unencumbered real
estate including without limitation the real property containing the New Jersey
Premises until the later of (i) six (6) months following Closing and (ii) the
resolution of any claims in excess of $25,000 made during such six (6) month
period for Buyer's Indemnifiable Losses, after which later date there shall be
no restriction whatsoever upon ▇▇▇▇▇'▇ ownership of any real property.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1 Survival of Representations, Warranties and Covenants. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Closing Date; provided, however,
that no claim for indemnification under Article 8 for misrepresentation or
breach of warranty may be first made later than six (6) months following the
Closing Date; provided, however, that claims for Buyer's Indemnifiable Losses
relating to misrepresentation or breach of warranty in connection with
Sections 3.1(g) (Taxes), 3.1(i) (Compliance with Laws) and 3.1(m) (Employee
Relations) may be made at any time prior to expiration of the applicable statute
of limitations, if any, for such claim.
SECTION 9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally when received if or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Buyer, to:
▇▇ ▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ASSET PURCHASE AGREEMENT - PAGE 27
with a mandatory copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) if to Selling Parties or either or both Shareholders to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a mandatory copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
SECTION 9.3 Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:
"Acquired Assets": As defined in Section 1.1 hereof.
"Acquired Leased Real Property Interests": As defined in Section 3.1(k) hereof.
"Assumed Liabilities": As defined in Section 1.3 hereof.
"Agreement": As defined in the introductory paragraph hereof.
"Business": As defined in Section 1.1 hereof.
"Buyer": As defined in the introductory paragraph hereof.
"Buyer Payment": As defined in Section 5.5(d) hereof.
"Claim": As defined in Section 8.1(d) hereof.
"Claim Notice": As defined in Section 8.1(d) hereof.
"Closing": As defined in Section 2.1 hereof.
"Closing Date": As defined in Section 2.1 hereof.
"Closing Document" or "Closing Documents": As defined in Section 2.3 hereof.
"Closing Inventory Value": As defined in Section 1.4 hereof.
"Consigned Inventory": As defined in Section 3.1(x) hereof.
"Consulting Agreement": As defined in Section 2.3(g) hereof.
"Current Financial Statements": As defined in Section 3.1(c) hereof.
"Dallas Retail Site": As defined in Section 6.2(i) hereof.
"Employment Agreement": As defined in Section 2.3(f) hereof.
"Environmental Laws" means any applicable treaties, laws, regulations,
enforceable requirements, order, decrees or judgments issued, promulgated or
entered into by any
ASSET PURCHASE AGREEMENT - PAGE 28
Governmental Entity, which relate to (x) pollution or protection of the
environment or (y) Hazardous Materials generation, storage, use, handling,
disposal or transportation, including: (1) the Comprehensive Environmental
Response, Comprehensive and Liability Act of 1980, 42 U.S.C. 9601 et seq.
("CERCLA"); (2) the Industrial Site Recovery Act ("ISRA"), N.J.S.A 13:1K-6 et
seq.; (3) the New Jersey Spill Compensation and Control Act, N.J.S.A
58:10-23.11, et seq. ("Spill Act"); (4) the Solid Waste Management Act, N.J.S.A,
13:1E-1 et seq., ("SWMA"); (5) the Resource and Conservation and Recovery Act,
42 U.S.C. 6901 et seq. ("RCRA"); (6) the New Jersey Underground Storage of
Hazardous Substances Act, N.J.S.A 58:10A-21 et seq. ("USTA"); (7) the Clean Air
Act, 42 U.S.C. Section 7401 et seq. ("CAA"); (8) the Air Pollution Control Act,
N.J.S.A 26:2C-1 et seq. ("APCA"); (9) the New Jersey Water Pollution Control
Act, N.J.S.A 58:10A-1 et seq. ("WPCA"); and any rules or regulations promulgated
thereunder or in any other applicable federal, state or local law, rule or
regulation dealing with environmental protection now existing or hereafter
enacted.
"Excluded Assets": As defined in Section 1.2 hereof.
"Excluded Inventory": As defined in Section 1.5 hereof.
"Financial Statements": As defined in Section 3.1(c) hereof.
"Florida Retail Site": As defined in Section 6.2(i) hereof.
"GAAP": means Generally Accepted Accounting Principles, as consistently applied.
"Governmental Entity": Any court or any foreign, federal, state, municipal or
other governmental department, commission, board, bureau, agency, authority or
instrumentality.
"Hazardous Materials" means all explosive or regulated radioactive materials or
substances, hazardous or toxic substances, pollutants, dangerous substances,
toxic substances, any hazardous chemical, hazardous substance, hazardous
pollutant, hazardous wastes or chemicals, petroleum or petroleum distillates,
asbestos or asbestos containing materials and all other materials or chemicals
regulated pursuant to any Environmental Law.
"HFB Inventory": As defined in Section 5.11 hereof.
"Indemnified Party": As defined in Section 8.1(c) hereof.
"Indemnifying Party": As defined in Section 8.1(c) hereof.
"Indemnity Notice": As defined in Section 8.1(c) hereof.
"Knowledge of the Selling Parties" and "Knowledge of the Shareholders" means,
with respect to a Shareholder, to the best of that Shareholder's belief and
knowledge and, with respect to ▇▇▇▇▇ and ▇▇▇▇▇, to the best of its belief and
knowledge (obtained through the exercise of reasonable diligence, inquiry and
investigation) of any of its directors or officers.
"Legal Requirement": means any federal, state, local, municipal, foreign,
international, multi-national, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute, or treaty as in
effect on the date in question.
"Liens": All mortgages, deeds of trust, claims, liens, security interests,
pledges, leases, conditional sale contracts, rights of first refusal, options,
charges, liabilities, obligations, agreements, easements, rights-of-way, powers
of attorney, limitations, reservations, restrictions and other encumbrances of
any kind.
"Losses": Damages, losses (which shall include any diminution in value,
liabilities, joint or several), payments, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses (including without limitation, reasonable fees,
disbursements and expenses of attorneys, accountants and other professional
advisors and
ASSET PURCHASE AGREEMENT - PAGE 29
of expert witnesses and costs of investigation and preparation) of any kind or
nature whatsoever.
"Material Adverse Change" or "Material Adverse Effect": Any change
(individually or in the aggregate) that has a material adverse effect on the
business, results of operations or financial condition of the Selling Parties
that is likely to result in a cost, expense, charge or liability equal to or
greater than $25,000.00.
"Material Agreements": As defined in Section 3.1(s) hereof.
"New Jersey Premises": As defined in Section 2.3(a) hereof.
"Notice": means any summons, citation, directive, order, claim, litigation,
investigation, proceeding, judgment, letter or other communication, written or
oral, actual or threatened, from the New Jersey Department of Environmental
Protection ("NJDEP"), the United States Environmental Protection Agency
("USEPA"), the United States Occupational Safety and Health Administration
("OSHA") or other federal, state or local agency or authority, or any other
entity or any individual, concerning any act or omission resulting or which may
result in the Release of Hazardous Materials into the waters or onto the lands
of the State of New Jersey, or into waters outside the jurisdiction of the
State of New Jersey, or into the environment.
"Order": Any judgment, writ, decree, injunction, order, stipulation, compliance
agreement or settlement agreement issued or imposed by, entered into with, a
Governmental Entity, whether or not having the force of law.
"Permits": All permits, authorizations, certificates, approvals, registrations,
variances, exemptions, rights-of-way, franchises, privileges, immunities,
grants, ordinances, licenses and other rights of every kind and character (a)
under any (1) federal, state, local or foreign statute, ordinance or
regulation, (2) Order, (3) Environmental Laws, or (4) contract with any
Governmental Entity or (b) granted by any Governmental Entity (excluding
certificates of occupancy).
"Persons": An individual, partnership, joint venture, corporation, company,
limited liability company, bank, trust, unincorporated organization,
Governmental Body or other entity or group.
"Purchase Price": As defined in Section 1.4 hereof.
"Real Property": As defined in Section 3.1(k) hereof.
"Release": means releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, ejecting, escaping, leaching, disposing or dumping.
"Selling Party Payment": As defined in Section 5.5(c) hereof.
"Selling Parties": As defined in the introductory paragraph hereof.
"Selling Parties' and Shareholders' Indemnifiable Losses": As defined in
Section 8.1(b) hereof.
"Shareholders": As defined in the introductory paragraph hereof.
"Tax" or "Taxes": Any federal, state, local or foreign income, sales, excise,
real or personal property franchise, capital stock, gross receipts, license,
payroll, employment, unemployment, social security, stamp, occupation,
intangible, estimated tax or other taxes, assessments, fees, levies, imposts,
duties, deductions or other charges of any nature whatsoever (including, without
limitation, interest and penalties) imposed by any law, rule or regulation.
ASSET PURCHASE AGREEMENT - PAGE 30
"Third Party Claim": As defined in Section 8.1(d) hereof.
"Unidentified Payment": As defined in Section 5.5(e).
SECTION 9.4 Interpretation; Governing Language. When a reference is made in
this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 9.5 Counterparts; Facsimiles. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Facsimile
signatures shall be effective.
SECTION 9.6 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all prior representations,
agreements or understandings among the parties with respect to the subject
matter of this Agreement both written and oral. Except with respect to any
entity or person in addition to Buyer who may be a Buyer, this Agreement is not
intended to confer upon any person other than the parties any rights or remedies
hereunder.
SECTION 9.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
SECTION 9.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by the Selling Parties without the prior
written consent of Buyer. Buyer may assign this Agreement to an affiliated
entity without the prior written consent of any of the Selling Parties;
provided, however, that Buyer must provide the Selling Parties and
Shareholders ten (10) days' prior written notice, and said assignment shall not
operate to release Buyer or Home Interiors & Gifts, Inc. (as a guarantor of the
obligations of Buyer) of any of its obligations under this Agreement without
the consent of the Selling Parties. This Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 9.9 Amendment. This Agreement and the exhibits and schedules
hereto may be amended by the parties hereto at any time prior to the Closing
Date; provided, however, that any amendment must be by an instrument or
instruments in writing signed and delivered on behalf of each of the parties
hereto.
SECTION 9.10 Parent Guarantee. Home Interiors and Gifts, Inc., a Texas
corporation, agrees to perform any and all of the obligations of EMB and make
all payments due by EMB under this Agreement in the event EMB shall fail to do
so.
ASSET PURCHASE AGREEMENT - PAGE 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
SELLING PARTIES:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Chairman and Chief Executive Officer
SHAREHOLDERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
The ▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust under
Agreement dated September 6, 2000
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually
▇▇▇▇▇ ▇. ▇▇▇▇▇ is executing this Agreement solely to evidence her
agreement to the provisions of Sections 2.3(d), (e) and (f).
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
ASSET PURCHASE AGREEMENT - PAGE 32
BUYER:
▇▇ ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Home Interiors & Gifts, Inc. is executing this Agreement solely to
evidence its agreement to the provisions of Section 9.10.
HOME INTERIORS & GIFTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ASSET PURCHASE AGREEMENT -- PAGE 35
EXHIBIT "A"
Allocation
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee of the ▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust 75%
under Agreement dated September 6, 2000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 25%
EXHIBIT "A" TO ASSET PURCHASE AGREEMENT-PAGE SOLO
EXHIBIT "B"
Form Of ▇▇▇▇ Of Sale And Assignment
-----------------------------------
This ▇▇▇▇ of Sale and Assignment is made pursuant to that certain Asset
Purchase Agreement dated March 5, 2003, among ▇▇ ▇▇▇▇▇, Inc., a Delaware
corporation ("Buyer"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc., a New Jersey corporation
("▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. a Florida corporation ("▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Trustee of the ▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust under Agreement dated September
6, 2000 and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Asset Purchase Agreement"). ▇▇▇▇▇ and ▇▇▇▇▇
are referred to jointly as the "Selling Parties."
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Selling Parties do hereby grant, bargain, sell,
assign, transfer, convey and deliver unto Buyer, its successors and assigns,
all right, title and interest of the Selling Parties in and to the Acquired
Assets, as such term is defined in the Asset Purchase Agreement.
The Selling Parties do hereby covenant to Buyer, its successors and
assigns, to do, execute, acknowledge and deliver to, or to cause to be done,
executed, acknowledged and delivered to, Buyer, its successors and assigns, all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances that may be reasonably requested by Buyer to ensure the
sale, assignment in accordance with the Asset Purchase Agreement, transfer,
conveyance and delivery of the Acquired Assets to Buyer, its successors and
assigns, or to aid and assist in collecting or reducing to Buyer's possession,
any or all of the Acquired Assets.
This ▇▇▇▇ of Sale shall be binding upon the successors, assigns, heirs and
representatives of the Selling Parties and shall inure to the benefit of the
successors and assigns of Buyer.
IN WITNESS WHEREOF, the Selling Parties have executed this ▇▇▇▇ of Sale
and Assignment as of the ___ day of March, 2003.
▇▇▇▇▇: ▇▇▇▇▇:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC., ▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.,
(a) a New Jersey Corporation a FLORIDA CORPORATION
By: By:_________________________________
_____________________________ Name:_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman Its:________________________________
and Chief Executive Officer
EXHIBIT "B" TO ASSET PURCHASE AGREEMENT - PAGE SOLO
EXHIBIT "C"
Form of Employment Agreement
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement") is made
effective as of March , 2003, between ▇▇ ▇▇▇▇▇, INC., a Delaware corporation
(together with its successors and assigns, the "Company"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Employee").
WHEREAS, the Company desires to employ the Employee, and the Employee
desires to be employed by the Company on the terms and conditions set forth
herein;
WHEREAS, Company is a wholly owned subsidiary of Home Interiors & Gifts,
Inc. ("Home Interiors"), a Texas corporation;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. EMPLOYMENT PERIOD. The Company agrees to employ the Employee, and the
Employee agrees to be employed by the Company, in accordance with the terms and
conditions of this Agreement, for the period commencing as of the date of this
Agreement and continuing until the first anniversary of the date of this
Agreement (the "Employment Period"); provided, however, that such Employment
Period (i) shall be extended for successive terms of one (1) year unless either
party advises the other in writing, at least sixty (60) days prior to the end
of the initial term, or any annual extension thereof, that it will not agree to
extend this Agreement, and (ii) may be terminated by the Company in accordance
with Section 3, below.
2. TERMS OF EMPLOYMENT.
(a) Position and Duties.
(i) During the Employment Period, the Employee shall perform the
functions of Chief Operating Officer of the Company, and, in so
doing, shall report to the Board of Directors of the Company. The
Employee shall have such powers and duties as may from time to
time be prescribed by the Board of Directors of the Company.
(ii) During the Employment Period, excluding any periods of vacation
and sick leave to which the Employee is entitled, the Employee
agrees to devote substantially all of his business time to the
business and affairs of the Company and to use the Employee's
reasonable best efforts to perform faithfully, effectively and
efficiently such responsibilities.
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 1
(b) Compensation.
(i) Base Salary. During the Employment Period, the Employee shall receive,
at such intervals and in accordance with such Company policies as may
be in effect from time to time, an annual salary (pro rata for any
partial year) equal to One Hundred Thirty-Seven Thousand Eight Hundred
Dollars ($137,800), payable in equal installments no less often than
monthly (the "Annual Base Salary"), which Annual Base Salary shall be
subject to appropriate increase, as determined in the sole discretion
of the Board of Directors of the Company.
(ii) Annual Bonus. The Employee shall be eligible for a year-end bonus
based upon the performance of the Company and of the Employee and such
other criteria as may be established by the Board of Directors of the
Company from time to time (the "Annual Bonus"). Each Annual Bonus (or
portion thereof) shall be paid in cash promptly following delivery to
the Board of Directors of the Company of audited financial statements
of the company for the fiscal year for which the Annual Bonus (or pro
rated portion) is earned or awarded. Although the Employee shall be
eligible for an Annual Bonus, the Company shall be under no obligation
to pay any Annual Bonus, regardless of the performance of Employee or
the Company.
Incentive, Savings and Retirement Plans. During the term of the Employee's
employment, the Employee shall be entitled to participate in all incentive,
savings, and retirement plans, practices, policies and programs applicable
generally to other employees of the Company ("Investment Plans") as determined
by and at the discretion of the Board of Directors of the Company.
Welfare Benefit Plans. During the term of the Employee's employment, the
Employee and/or the Employee's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs ("Welfare Plans") provided by the
Company (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent offered and applicable generally to
other executives of the Company.
Expenses. During the term of the Employee's employment, the Employee shall
be entitled to receive prompt reimbursement for all reasonable employment
expenses incurred by the Employee in accordance with the policies, practices
and procedures of the Company.
Vacation and Holidays. During the term of the Employee's employment, the
Employee shall be entitled to paid vacation of three (3) weeks per year and
paid holidays in accordance with the plans, policies, programs and practices of
the Company for its employees. Such vacation shall be taken at such time or
times reasonably acceptable to the Company. In no case shall vacation time be
in excess of two (2) consecutive weeks.
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 2
Automobile Lease. In addition to the other compensation to be provided
to Employee under this Agreement, Company shall provide to Employee use of
or reimbursement for, a mutually-agreed leased vehicle. In satisfaction of
this Section 2(b)(vii), the Company will pay, during the Employment Term,
the monthly payments under Employee's current Chevrolet Tahoe lease.
3. TERMINATION OF EMPLOYMENT.
(a) Death or Disability. The Employee's employment shall terminate
automatically upon the Employee's death during the Employment
Period. If the disability of the Employee occurs during the
Employment Period, the Company may terminate the Employee's
employment in accordance with its then current policies and
practices regarding disability.
(b) Termination by the Company. The Company may terminate the
Employee's employment during the Employment Period with or without Cause. For
purposes of this Agreement, "Cause" means: (i) the Employee's material breach of
this Agreement or any other document, agreement or contract to which the
Employee and the Company are a party, which constitutes a material
nonperformance by the Employee of his obligations and duties hereunder or
thereunder, as reasonably determined by the Board of Directors of the Company,
which is not remedied within thirty (30) days after receipt of written notice
from the Company specifying such breach; (ii) the Employee's intentional failure
to adhere to any material written policy of the Company, which is not remedied
within thirty (30) days after receipt of written notice from the Company
specifying such failure; (iii) the Employee's appropriation (or attempted
appropriation) of a material business opportunity of the Company; including,
without limitation, attempting to secure or securing, any personal profit in
connection with any transaction entered into on behalf of the Company; (iv) the
Employee's commission of (or attempt to commit) an act of fraud, illegality,
theft or willful misconduct toward the Company in the course of employment with
the Company that relates to the Company's assets, activities, operations or
other employees; (v) the Employee's conviction of, the indictment for (or its
procedural equivalent), or the entering of a guilty plea or plea of no contest
or deferred adjudication with respect to, a felony, the equivalent thereof, or
any other crime with respect to which imprisonment is a possible punishment;
(vi) the Employee's absence from his duties without the consent of the Company's
Board of Directors for more than ten (10) consecutive business days for reasons
other than vacation authorized under this Agreement, illness or injury; (vii) a
material breach by the Employee of Section 6 or Section 9 hereof; or (viii) the
intentional failure of the Employee to carry out, or comply with, in any
material respect any directive of the Board of Directors consistent with the
terms of this Agreement, which is not remedied within thirty (30) days after
receipt of written notice from the Company specifying such failure.
(c) Voluntary Termination by Employee. Notwithstanding anything in
this Agreement to the contrary, the Employee's employment may be
terminated during the Employment Period by the Employee for any
reason or no reason, provided Employee gives four (4) months'
prior written notice to Company of Employee's intention to do so.
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 3
(d) Notice of Termination. Any termination by the Company (for
Cause or otherwise), or by the Employee, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 11(b).
(e) Date of Termination. "Date of Termination" means (i) the
date of receipt of a Notice of Termination or any later date
specified therein, and (ii) if the Employee's employment is
terminated by reason of death or Disability, the date of death
of the Employee or the Disability Effective Date, as the case
may be.
4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) Termination by the Company Other Than For Cause. If the
Company terminates Employee without Cause (other than for or in
connection with death or Disability) during the Employment
Period, the Company shall pay to the Employee: (i) in a lump sum
in cash within thirty (30) days after the Date of Termination
(1) the sum of the Employee's applicable Annual Base Salary
through the Date of Termination to the extent not theretofore
paid ("Accrued Obligations") and (2) any amount arising from
Employee's participation in, or benefits under, any Investment
Plans ("Accrued Investments"), which amounts shall be payable in
accordance with the terms and conditions of such Investment
Plans; (ii) severance pay equal to the Employee's Annual Base
Salary, payable in accordance with the Company's regular pay
schedule, for six (6) months from the Date of Termination of
employment ("Severance Pay"); and (iii) any earned but unpaid
Annual Bonus in respect of any full fiscal year ended prior to
the date the Employee's employment is terminated, payable in a
lump sum in cash at such time as such Annual Bonus otherwise
would be payable ("Accrued Bonus"), but not a prorated or
partial bonus with respect to the time period between the end of
the previous full fiscal year and the date the Employee's
employment is terminated. An election by the Company not to
extend the initial term beyond its initial expiration date,
shall not be considered a termination without Cause for purposes
of this Section 4(a), Company shall have no obligation to pay
Severance Pay to the Employee, following March __, 2004.
(b) Death or Disability. If the Employee's employment is
terminated by reason of the Employee's death or Disability
during the Employment Period, the Company shall pay to his legal
representatives: (i) in a lump sum in cash within thirty (30)
days after the Date of Termination the aggregate Accrued
Obligations; and (ii) the Accrued Investments, which shall be
payable in accordance with the terms and conditions of the
Investment Plans; and (iii) any Accrued Bonus, which shall be
payable at such time as such Annual Bonus otherwise would be
payable. The Company shall have no further payment obligations
to the Employee or his legal representatives under this
Agreement.
(c) Cause. If the Employee's employment shall be terminated by
the Company for Cause or by the Employee, during the Employment
Period, the Company shall have no further
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 4
payment obligations to the Employee other than for payment of Accrued
Obligations, Accrued Investments (which, shall be payable in accordance with
the terms and conditions of the Investment Plans) and Accrued Bonus (which
shall be payable at such time as such Annual Bonus otherwise would be payable).
5. FULL SETTLEMENT, MITIGATION. In no event shall the Employee be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Employee under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not the
Employee obtains other employment. Company shall not be liable to Employee for
any damages in addition to the amounts payable under Section 4 arising out of
the termination of the Employee's employment prior to the end of the Employment
Period, provided, however, that the Company shall be entitled to seek damages
for any breach of Sections 6, 7, or 9 hereof or criminal misconduct.
6. CONFIDENTIAL INFORMATION.
(a) The Employee acknowledges that the Company and Home Interiors and
its affiliates have trade, business, and financial secrets and other
confidential and proprietary information, including but not limited to product
information, designs and formulas, processes, sales and marketing information
and strategy, and identity of suppliers and displayers (collectively, the
"Confidential Information"). As defined herein, Confidential Information shall
not include (i) information that is generally known to other persons or entities
who can obtain economic value from its disclosure or use, or (ii) information
required to be disclosed by the Employee pursuant to a subpoena or court order,
or pursuant to a requirement of a governmental agency or law of the United
States of America or a state thereof or any governmental or political
subdivision thereof; provided, however, that the Employee shall take all
reasonable steps to prohibit disclosure pursuant to subsection (ii) above at the
cost of Company.
(b) The Employee shall (i) hold Confidential Information in
confidence; (ii) not release Confidential Information to any person (other than
Company employees and other persons to whom the Company has authorized the
Employee to disclose such information and then only to the extent that such
Company employees and other persons authorized by the Company have a need for
such knowledge); and (iii) not use any Confidential Information for the benefit
of any person or entity other than the Company.
7. SURRENDER OF MATERIALS UPON TERMINATION. Upon any termination of the
Employee's employment, the Employee shall immediately return to the Company all
copies, in whatever form, of any and all Confidential Information and other
properties of the Company and its affiliates which are in the Employee's
possession, custody or control.
8. SUCCESSORS.
(a) This Agreement is personal to the Employee and shall not be
assignable by the Employee otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Employee's legal representatives.
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 5
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company may assign this Agreement to any successor that
agrees to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken place.
9. NON-COMPETITION AND NON-SOLICITATION.
(a) The Employee acknowledges that: (i) the services to be performed
by him under this Agreement are of a special, unique, unusual,
extraordinary, and intellectual character; (ii) the Company's
business is international in scope and its products are marketed
throughout the United States and the world; (iii) the Company
competes with other businesses both nationally within the United
States and internationally; and (iv) the provisions of this
Section 9 are reasonable and necessary to protect the Company's
business.
(b) In consideration of the acknowledgments by the Employee, and in
consideration of the compensation and benefits to be paid or
provided to the Employee by the Company, the Employee agrees
that he will not, directly or indirectly:
(i) during the Employment Period, except in the course of his
employment hereunder, and during the Post-Employment Period,
engage or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, financing,
or control of, be employed by, associated with, or in any manner
connected with, lend the Employee's name or any similar name to,
lend the Employee's credit to or render services or advice to,
any business whose products, services or activities compete in
whole or in part with the products, services or activities of
the Company, Home Interiors or its Affiliates, anywhere within
the United States where the Company, Home Interiors or its
Affiliates conduct or market their business or services;
(ii) whether for the Employee's own account or for the account of any
other person, at any time during the Employment Period and the
Post-Employment Period, solicit business of the same or similar
type being carried on by the Company, Home Interiors or its
Affiliates, from any customer of the Company, Home Interiors or
its Affiliates, whether or not the Employee had personal contact
with such person during and by reason of the Employee's
employment with the Company;
(iii) whether for the Employees own account or the account of any
other person at anytime during the Employment Period and the
Post-Employment Period, solicit, employ, or otherwise engage as
an employee, independent contractor, or otherwise, any person
who is or was at the time of such solicitation, employment
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT -- PAGE 6
or engagement an employee, consultant or independent contractor of the
Company or Home Interiors or in any manner induce or attempt to induce
any employee of the Company, Home Interiors or its Affiliates to
terminate his/her employment with the Company, Home Interiors or its
Affiliates;
(iv) whether for the Employee's own account or the account of any other
person at any time during the Employment Period and the Post-
Employment Period, interfere with the Company's, Home Interiors' or
its Affiliates' relationship with any person, including any person who
is or was at any time during the Employment Period, an employee,
contractor, supplier, or customer of the Company, Home Interiors or
its Affiliates; or
(v) at any time during or after the Employment Period, including the Post-
Employment Period, disparage the Company, Home Interiors or its
Affiliates or any of their shareholders, partners, members, other
holders of equity in the Company or Home Interiors, directors,
officers, employees, or agents or any Affiliate of the foregoing.
(c) If any covenant in this Section 9 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered
to be divisible with respect to scope, time, and geographic area, and
such lesser scope, time, or geographic area, or all of them, as a
court of competent jurisdiction may determine to be reasonable, not
arbitrary, and not against public policy, will be effective, binding,
and enforceable against the Employee.
(d) The period of time applicable to any covenant in this Section 9
will be extended by the duration of any violation by the Employee of
such covenant.
(e) The Employee will, while the covenant under this Section 9 is in
effect, give written notice to the Company, within ten (10) days after
accepting any other employment or consulting arrangement, of the
identity of the Employee's new employer or contractor and all of the
material duties and services to be provided by Employee in such
employment or retention, which shall not require disclosure by
Employee of any terms of compensation. The Company may notify such new
employer that the Employee is bound by this Agreement and, at the
Company's election, furnish such new employer with a copy of this
Agreement or relevant portion thereof.
(f) The term "Post-Employment Period" means the six (6) month period
beginning on the date of termination or expiration of the Employee's
employment with the Company.
(g) The Employee acknowledges that the geographic boundaries, scope
of prohibited activities, and time duration of the preceding
paragraphs are reasonable in nature and are no broader than are
necessary to maintain the
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 7
confidentiality and the goodwill of the Company's and Home Interiors'
proprietary information, plans and services and to protect the other
legitimate business interests of the Company and Home Interiors.
10. EFFECT OF AGREEMENT ON OTHER BENEFITS. The existence of this Agreement
shall not prohibit or restrict the Employee's entitlement to full participation
in the employee benefit and other plans or programs in which employees of the
Company are eligible to participate.
11. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey without reference to principles of
conflict of laws. Any legal action to enforce or interpret any provision of
this Agreement shall be brought in Dallas County, Texas. By execution and
delivery of this Agreement, the Employee accepts and consents to for himself,
the jurisdiction of the Courts of the State of Texas, County of Dallas.
(b) All notice and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
------------------------------------
If to the Company: ▇▇ ▇▇▇▇▇, Inc.
c/o Home Interiors & Gifts, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement; and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
as part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
(d) Withholding. The Company will withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT -- PAGE 8
(e) Waiver. Employee's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Employee or the Company may have hereunder shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) Injunctive Relief and Additional Remedy. The Employee acknowledges
that money damages would be both incalculable and an insufficient remedy for a
breach of Section 6 or 9 by the Employee and that any such breach would cause
the Company irreparable harm. Accordingly, the Company, in addition to any other
remedies at law or in equity it may have, shall be entitled, without the
requirement of posting of bond or other security, to equitable relief, including
injunctive relief and specific performance, in connection with a breach of
Section 6 or 9 by the Employee. If the Employee breaches in any material respect
any of the material provisions of Section 6 or 9, following termination of
Employee's employment, the Company will have the right to cease making any
payments otherwise due to the Employee under this Agreement.
(g) Entire Agreement; Amendments. The provisions of this Agreement
constitute the complete understanding and agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, between or among the parties hereto. This
Agreement may not be amended orally, but only by an agreement in writing signed
by the parties hereto or their respective successors and legal representatives.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same Agreement.
(i) Covenants of Sections 6 and 9 are Essential and Independent Covenants.
The covenants by the Employee in Sections 6 and 9 are essential elements of this
Agreement, and without the Employee's agreement to comply with such covenants,
the Company would not have entered into this Agreement or employed or continued
the employment of the Employee. The Company and the Employee have independently
consulted their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenants, with specific
regard to the nature of the business conducted by the Company.
(j) Section Headings, Construction. The captions or headings of Sections
in this Agreement are provided for convenience only and are not part of the
provisions hereof and shall have no force or effect. Whenever the terms
"hereof", "hereby", "herein", or words of similar import are used in this
Agreement they shall be construed as referring to this Agreement in its entirety
rather than to a particular section or provision, unless the context
specifically indicates to the contrary. Any reference to a particular "Section"
or "paragraph" shall be construed as referring to the indicated section or
paragraph of this Agreement unless the context indicates to the contrary. The
use of the term "including" herein shall be construed as meaning "including
without limitation."
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 9
EXECUTED on March __, 2003.
EMPLOYEE:
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually
COMPANY:
▇▇ ▇▇▇▇▇, INC.
By: ------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
GUARANTEE OF PERFORMANCE
Home Interiors hereby guarantees the payment obligations of the Company to
the Employee set forth in this Agreement.
HOME INTERIORS & GIFTS, INC.,
a Texas corporation
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
EXHIBIT "C" TO ASSET PURCHASE AGREEMENT - PAGE 10
EXHIBIT "D"
Form of Consulting Agreement
----------------------------
CONSULTING AND NON-COMPETITION AGREEMENT
----------------------------------------
This CONSULTING AND NON-COMPETITION AGREEMENT ("Agreement") made as of March
___, 2003 ("Effective Date"), by and between ▇▇ ▇▇▇▇▇, INC. ("Company") and
▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Consultant"). In consideration of the mutual promises
contained in this Agreement, the parties agree as follows:
RECITALS
--------
It is the desire of Company to (i) engage the services of Consultant to
perform for Company consulting services as an independent contractor and not as
an employee, and (ii) to license rights to use certain copyrighted works in the
marketing and promotion of the Company's business and the businesses of Home
Interiors and Gifts, Inc. ("Home Interiors") and its affiliates.
It is the desire of Consultant to (i) work with Company in providing
consulting services, and (ii) to license rights to use certain copyrighted
works in the marketing and promotion of the Company's and Home Interiors' and
its affiliates' businesses.
It is understood by the Company that Consultant's health may limit her
ability to travel at certain times and to certain locations.
AGREEMENT
---------
TERM
This Agreement will remain in effect for a period commencing on the
Effective Date and ending on March ___, 2006. This Agreement shall be renewed
automatically for additional one (1) year terms, unless one party shall notify
the other party of its intent not to renew not more than ninety (90), nor fewer
than thirty (30), days prior to the expiration of the initial or any renewal
term.
CONSULTING SERVICES
Upon the Company's request, Consultant will, at such reasonable times and
locations as may be mutually agreed, (i) assist with the promotion of the
Company's and Home Interiors' and its affiliates' porcelain collectibles
products, including, without limitation, public appearances and motivational
presentations, and (ii) advise the Company and Home Interiors and its
affiliates on other matters of importance concerning the affairs of the Company
and Home Interiors and its affiliates.
EMPLOYMENT OF ASSISTANTS
Consultant may, from time to time, retain and employ the aid of assistants
or the services of other persons, companies, or firms that Consultant deems
reasonably necessary in order to properly
EXHIBIT "D" TO ASSET PURCHASE AGREEMENT - PAGE 11
---------------------------------------
perform the duties and obligations under this Agreement. Except as may be
agreed in writing and in advance by the Company, all costs for these services
shall be the sole and exclusive responsibility of Consultant.
COMPENSATION
Company will pay to Consultant $1,000.00 per day as compensation for
consulting services.
EXPENSES; NO FURTHER COMPENSATION
The Company agrees to pay directly, when practical, or otherwise to
reimburse, in accordance with its internal reimbursement policies, Consultant
for all pre-approved business expenses (including travel, entertainment, meals
and other out-of-pocket expenses) associated with the consulting services
contemplated in this Agreement. The Company will pay for first class airfare for
Consultant and Consultant's private nurse. Additionally, the Company shall pay
for a suite at hotels and for reasonable meal expenses of Consultant and her
nurse and for an automobile and driver for Consultant. Except as otherwise
agreed in this Agreement, the Company shall not be obligated under this
Agreement to pay any retainer, compensation or other fee to Consultant.
OWNERSHIP OF DOCUMENTS
All business documents of Company provided by Company to Consultant during
the term of this Agreement remain the property of Company, and Consultant
agrees to promptly return all such documents to Company upon request.
LICENSE TO USE COPYRIGHTED MATERIAL
In connection with, and as a condition of, this Agreement, the Consultant
and the Company shall enter into a License of Copyrighted Material,
substantially in the form attached hereto as Exhibit A.
CONFIDENTIAL INFORMATION
The Consultant acknowledges that the Company and Home Interiors and its
affiliates have trade, business, and financial secrets and other confidential
and proprietary information, including but not limited to product information,
designs and formulas, processes, sales and marketing information and strategy,
and identity of suppliers and displayers (collectively, the "Confidential
Information"). As defined herein, Confidential Information shall not include
(i) information that is generally known to other persons or entities who can
obtain economic value from its disclosure or use, or (ii) information required
to be disclosed by the Consultant pursuant to a subpoena or court order, or
pursuant to a requirement of a governmental agency or law of the United States
of America or a state thereof or any governmental or political subdivision
thereof; provided, however, that the Consultant shall take all reasonable
steps to prohibit disclosure pursuant to subsection (ii) above at the cost of
Company.
The Consultant shall (i) hold Confidential Information in confidence; (ii)
not release Confidential Information to any person (other than Company
employees and other persons to whom
EXHIBIT "D" TO ASSET PURCHASE AGREEMENT - PAGE 12
the Company has authorized the Consultant to disclose such information and then
only to the extent that such Company employees and other persons authorized by
the Company have a need for such knowledge); and (iii) not use any Confidential
Information for the benefit of any person or entity other than the Company.
SUCCESSORS
This Agreement is personal to the Consultant and shall not be assignable
by the Consultant otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Consultant's legal representatives.
This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
The Company may assign this Agreement to any successor that agrees to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
NON-COMPETITION AND NON-SOLICITATION
(k) The Consultant acknowledges that: (i) the services to be
performed by her under this Agreement are of a special, unique,
unusual, extraordinary, and intellectual character; (ii) the Company's
business is international in scope and its products are marketed
throughout the United States and the world; (iii) the Company competes
with other businesses both nationally within the United States and
internationally; and (iv) the provisions of this Agreement are
reasonable and necessary to protect the Company's business.
(l) The Consultant agrees that she will not, directly or
indirectly at any time prior to the later of (i) March __, 2006, and
(ii) the expiration of the final renewal term of this Agreement:
(i) engage or invest in, own, manage, operate, finance, control,
or participate in the ownership, management, operation, financing, or
control of, be employed by, associated with, or in any manner
connected with, lend the Consultant's name or any similar name to,
lend the Consultant's credit to or render services or advice to, any
business whose products, services or activities compete in whole or in
part with the porcelain collectibles sales activities of the Company
or Home Interiors or its affiliates (the "Porcelain Collectibles
Business"), anywhere within the United States where the Company or
Home Interiors or its affiliates conduct or market their business or
services;
(ii) whether for the Consultant's own account or for the account
of any other person, solicit business of the same or similar type as
the Porcelain Collectibles Business, from any customer of the Company
or Home Interiors or its affiliates, whether or not the Consultant had
personal contact with such person during and by reason of the
Consultant's engagement with the Company;
EXHIBIT "D" TO ASSET PURCHASE AGREEMENT - PAGE 13
(iii) whether for the Consultant's own account or the account of any
other person solicit, employ, or otherwise engage as an employee,
independent contractor, or otherwise, any person who is or was at
the time of such solicitation, employment or engagement an
employee, consultant or independent contractor of the Company or
Home Interiors or in any manner induce or attempt to induce any
Consultant of the Company or Home Interiors or its affiliates to
terminate his/her employment with the Company or Home Interiors
or its affiliates; or
(iv) whether for the Consultant's own account or the account of any
other person interfere with the Company's or Home Interiors' or
its affiliates' relationship with any person, including any
person who is or was at any time during the term of this
Agreement, an employee, contractor, supplier, or customer of the
Company or Home Interiors or its affiliates.
(m) If any covenant in this Agreement is held to be unreasonable,
arbitrary, or against public policy, such covenant will be
considered to be divisible with respect to scope, time, and
geographic area, and such lesser scope, time, or geographic area,
or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public
policy, will be effective, binding, and enforceable against the
Consultant.
(n) The period of time applicable to any covenant in this Agreement
will be extended by the duration of any violation by the
Consultant of such covenant.
NON-DISPARAGEMENT
During the term of this Agreement Consultant will not disparage the Company
or Home Interiors or its affiliates or any of their shareholders, partners,
members, other holders of equity in the Company or Home Interiors, directors,
officers, employees, or agents or any affiliate of the foregoing. Similarly,
during the term of this Agreement neither the Company nor Home Interiors and its
affiliates will disparage the Consultant.
EFFECT OF AGREEMENT ON OTHER BENEFITS
The existence of this Agreement shall not prohibit or restrict the
Consultant's entitlement to full participation in the Consultant benefit and
other plans or programs in which Consultants of the Company are eligible to
participate.
MISCELLANEOUS
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey without reference to principles of
conflict of laws.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
EXHIBIT "D" TO ASSET PURCHASE AGREEMENT - PAGE 14
If to the Consultant: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
---------------------
With a Mandatory Copy to:
▇▇▇▇ and ▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Company: ▇▇ ▇▇▇▇▇, Inc.
c/o Home Interiors & Gifts, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision there shall be added automatically as part of this
Agreement a provision as similar-in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid or enforceable.
(d) Waiver. Consultant's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Consultant or the Company may have hereunder shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(e) Injunctive Relief and Additional Remedy. The Consultant
acknowledges that money damages would be both incalculable and an insufficient
remedy for a breach of this Agreement by the Consultant and that any such breach
would cause the Company irreparable harm. Accordingly, the Company, in addition
to any other remedies at law or in equity it may have, shall be entitled,
without the requirement of posting of bond or other security, to equitable
relief, including injunctive relief and specific performance, in connection with
a breach of this Agreement by the Consultant. If the Consultant breaches in any
material respect any of the material provisions of this Agreement, following
termination of the Consultant's employment, the Company will have the right to
cease making any payments otherwise due to the Consultant under this Agreement.
EXHIBIT "D" TO ASSET PURCHASE AGREEMENT - PAGE 15
(f) ENTIRE AGREEMENT; AMENDMENTS. The provisions of this Agreement
constitute the complete understanding and agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, between or among the parties hereto. This
Agreement may not be amended orally, but only by an agreement in writing signed
by the parties hereto or their respective successors and legal representatives.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same Agreement.
This Agreement may be executed in multiple counterparts, each of which is
an original.
EXECUTED and EFFECTIVE as of March __, 2003.
▇▇ ▇▇▇▇▇, INC.
By: ____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
By: ____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
GUARANTEE OF PERFORMANCE
Home Interiors hereby guarantees the payment obligations of the Company to
the Consultant set forth in this Agreement.
HOME INTERIORS & GIFTS, INC.,
a Texas corporation
By: ____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
EXHIBIT "D" TO ASSET PURCHASE AGREEMENT - PAGE 16
EXHIBIT A
---------
Agreement to License Copyrighted Material
[ATTACHED]
EXHIBIT "D" TO ASSET PURCHASE AGREEMENT - PAGE 17
---------------------------------------
EXHIBIT "E"
-----------
Form of Agreement to License Copyrighted Material
-------------------------------------------------
This Agreement to License Copyrighted Material (this "Agreement") is
entered by and between ▇▇ ▇▇▇▇▇, Inc., a Delaware corporation (the "Company"),
and ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Consultant"), effective as of March , 2003.
WHEREAS, this Agreement is executed in connection with, and as
consideration for, that certain Consulting Agreement by and between the Company
and Consultant, dated of even date herewith (the "Consulting Agreement");
WHEREAS, pursuant to that certain Agreement between the Consultant and
▇▇▇▇▇▇ Associates dated as of May 22, 1984 (the "Publishing Agreement"), the
Consultant granted and assigned to ▇▇▇▇▇▇ Associates the sole and exclusive
right to print, publish and sell in book form in the English language in the
United States of America, its territories and possessions, the Dominion of
Canada and the Philippine Islands (collectively, the "Territory") and the
non-exclusive right to print, publish, and sell in the English language in all
places outside the Territory, the Book (as defined hereafter); and
WHEREAS, this Agreement is made subject to the provisions of the Publishing
Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Consultant represents and warrants to the Company that to the best of her
knowledge, she (i) is the author and sole owner of all copyright interest in
the literary work entitled "With a Little Luck: An American Odyssey," which has
been registered with the United States Copyright Office and assigned
registration number TX-1-529-543 (the "Book"), (ii) has made no transfer or
license of any of these rights to any person other than the Company and ▇▇▇▇▇▇
Associates pursuant to the Publishing Agreement, and (iii) has made no agreement
that would conflict with the terms of this Agreement or otherwise limit the
Company's ability to use the rights granted in this Agreement other than the
Publishing Agreement.
Subject to the terms of the Publishing Agreement, Consultant hereby grants
to the Company, for use by the Company and its parent corporation and
affiliates, a non-exclusive, royalty-free, worldwide license for the term of the
Consulting Agreement (including renewal periods) to the rights of reproduction,
distribution, performance, display and preparation of derivative works,
including use of direct quotations, to the Book for use in the promotion and
marketing of the goods and services of the Company and its parent corporation
and affiliates (including, without limitation, for the motivation of its and
their employees and consultants).
EXHIBIT "E" TO ASSET PURCHASE AGREEMENT - PAGE 1
---------------------------------------
Executed by the parties on March ___, 2003.
▇▇ ▇▇▇▇▇, INC.
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
CONSULTANT
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
STATE OF TEXAS Section
Section
COUNTY OF ▇▇▇▇▇▇ Section
Before me, _______________________, on this day personally appeared ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, President of ▇▇ ▇▇▇▇▇, Inc., known to me to be the person whose name
is subscribed to the foregoing instrument and acknowledged to me that he
executed the same for the purpose and consideration herein expressed.
___________________________________
Notary Public
STATE OF _______ Section
Section
COUNTY OF ______ Section
Before me, _______________________, on this day personally appeared ▇▇▇▇▇
▇. ▇▇▇▇▇, known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that she executed the same for the purpose and
consideration herein expressed.
___________________________________
Notary Public
EXHIBIT "E" TO ASSET PURCHASE AGREEMENT -- PAGE 2