Exhibit 10.33
AGREEMENT OF PURCHASE AND SALE OF ASSETS
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THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS (the "Agreement") is dated this
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30th day of January, 2004 between MEASUREMENT SPECIALTIES, INC., a New Jersey
corporation ("MSI " or "Seller") and CONAIR CORPORATION, a Delaware corporation
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(the "Purchaser").
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BACKGROUND STATEMENT
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A. Seller, among other things, designs, manufactures and markets sensor-based
bathroom and kitchen scale products under the Thinner brand name
("Products") all of which Products are listed by Seller's model codes, SKU
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number or other designations on Schedule A, (the "Business"). "Products"
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shall also include products under development as identified on Schedule A
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("Products Under Development").
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B. Seller desires to sell (or license as provided below) certain of the assets
necessary to operate the Business and Purchaser desires to purchase such
assets, specifically excluding the Excluded Assets (as hereinafter defined)
for the Purchase Price (as hereinafter defined) and upon the terms and
subject to the conditions hereinafter set forth.
STATEMENT OF AGREEMENT
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In consideration of the mutual covenants and agreements hereinafter set
forth, the parties agree as follows:
1.0 PURCHASE AND SALE OF ASSETS; LICENSE OF CERTAIN RIGHTS.
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1.1 Assets Transferred. On the "Closing Date" (as defined in Section 3.2
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below), Seller shall sell, assign and deliver (or, in the case of Sections
1.1(f) and 1.1(g) hereof, license) to Purchaser, free and clear of all
liabilities, obligations, liens and encumbrances of any kind other than the
Assumed Liabilities and except as expressly set forth herein, and Purchaser
shall purchase and acquire (or license in the case of Sections 1.1(f) and
1.1(g)) from Seller, all right, title and interest in and to the
properties, assets and rights owned by Seller in the Business, and
specifically set forth in this Section 1.1, (collectively, the
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"Purchased Assets"):
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(a) all inventories of finished Products owned, used or held by Seller on
the Closing Date, (which inventories (excluding inventory in-transit)
of Products as of January 30, 2004 are listed by Seller's model codes,
SKU number or other designations, cube size and unit price on Schedule
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1.1(a)(i) attached hereto and which inventories of Products in-transit
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as of January 30, 2004 are listed by Seller's model codes, SKU number
or other designations, cube size and unit price on Schedule 1.1(a)(ii)
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attached hereto) and all packaging materials relating thereto
(collectively, the "Inventories"), including Inventories in transit to
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Seller and Inventories at any location, whether or not controlled by
Seller;
(b) all transferable rights (including rights that become transferable
pursuant to Section 9.1 of this Agreement or otherwise pursuant to the
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consent or approval of third parties) of Seller relating to the
Purchased Assets or the Business under (i) those written or oral
contracts, arrangements, license and technology agreements and other
agreements listed on Schedule 1.1(b), and (ii) all open customer
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purchase orders ("Open Customer Orders") and open purchase orders from
Seller to its suppliers for Products not yet in inventory ("Open
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Supplier Purchase Orders"), (the items described in clauses (i) and
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(ii) above collectively referred to as the "Contracts");
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(c) (i) all trademarks, service marks and trade names listed on Schedule
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1.1(c)(i) and any registrations and applications therefore, and all
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common law trademarks, used exclusively in connection with the
Products (collectively the "Thinner Marks"), and (ii) all copyrights,
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all copyright registrations and applications for copyright
registrations identified on Schedule 1.1(c)(ii), and any other
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non-registered copyrights, used exclusively in connection with the
marketing, promotion and sale of the Products (the items described in
clauses (i) and (ii) are collectively referred to as the "Intellectual
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Property"), together with all files relating to the prosecution or
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maintenance of any item of Intellectual Property in the possession of
Seller or its attorneys or agents;
(d) to the extent relating exclusively to the Business or the Products,
all manuals, information, artwork, signage, displays, computer files
and other catalogs, mailing lists, price lists, lists of customers,
production data, marketing, advertising and promotional materials and
records (including without limitation items relating to Products
displayed in Seller's industry trade booths and, at Purchaser's option
exercisable within 90 days of the Closing Date hereof provided that
Seller has at or prior to the Closing Date made the booths available
to Purchaser for inspection or delivered photographs thereof to
Purchaser, the booths themselves), purchasing materials and records,
manufacturing and quality control records and procedures
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and other similar materials ("Materials");
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(e) to the extent their transfer is permitted by law or applicable
regulations or guidelines, and to the extent related exclusively to
the Products, any licenses, permits, approvals, license applications
and product registrations and certifications issued by any
governmental agency or pursuant to any regulatory, engineering,
industrial or other codes, including without limitation those of
Underwriters Laboratories ("Permits");
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(f) a perpetual, irrevocable, royalty-free, non exclusive license under
the patents (the "Licensed Patents") listed on Schedule 1.1(f) is
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hereby granted by Seller to Purchaser (as of the Closing Date) to
make, market and sell Products anywhere in the world, which shall not
in any way restrict or limit the exclusive rights granted to Purchaser
pursuant to Section 1.1(g)(i); and
(g) a perpetual, irrevocable, royalty-free license is hereby granted by
Seller to Purchaser (as of the Closing Date) to utilize Seller's
Designs (as hereinafter defined), including without limitation all
rights under any industrial design patents of Seller related to
Seller's Designs, in connection with Purchaser's sale and marketing of
Products in the following territories (each, a "Design Territory"):
(i) the license granted to Purchaser pursuant to this Section 1.1(g)
shall be exclusive in the Design Territory consisting of the United
States of America, its territories and possessions, Mexico and Canada
("North America"); and (ii) the license granted to Purchaser pursuant
to this Section 1.1(g) shall be either exclusive or non-exclusive as
designated on Schedule 1.1(g), with respect to each Design Territory
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and Seller's Design set forth on Schedule 1.1(g).
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For the purposes of this Agreement, (i) "Seller's Designs" shall mean
the exterior aesthetic designs and nonfunctional exterior features of
sensor-based bathroom and kitchen scale products sold or offered for
sale by Seller (A) utilizing the Thinner Marks or (B) bearing
Substantially Similar Designs (as defined below), and (ii)
"Substantially Similar Designs" shall mean (A) the same visible top
covering (including its sides) regardless of color, of sensor-based
bathroom and kitchen scale products having a non-glass platform sold
or offered for sale by Seller or (B) in the case of glass scales, the
same visible frame (regardless of color), or if the frame underneath
the glass platform is not visible due to the design of the glass
platform, the same unique shape and/or the same unique visible
features of the glass platform regardless of color.
1.2 Excluded Assets. The Purchased Assets shall not include any of the assets
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owned or used
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by the Seller not specifically identified in Section 1.1 above including
without limitation: (a) cash and cash equivalents of Seller or the
Business, (b) any accounts receivable of Seller or the Business, (c) any
contractual claims Seller may have against third parties for damages,
indemnification or otherwise arising under one or more Contracts, and
arising from damage or injury suffered by Seller before Closing, (d)
patents and patent applications of Seller (subject to the license rights
granted in Section 1.1. above), (e) any inventory of Products held by, or
in transit to, Seller prior to Closing, for Seller's distribution and sale
in only Australia, Brazil, Israel, Japan, Korea, People's Republic of
China, Philippines and Taiwan, (f) any inventory of kitchen scale Products,
(g) any rights pursuant to Seller's agreements with its independent sales
representatives ("Sales Representative Agreements"), and (h) any assets
listed on Schedule 1.2 hereto (collectively, the "Excluded Assets").
2.0 ASSUMPTION OF LIABILITIES.
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2.1 Assumed Liabilities. Subject to the terms and conditions of this
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Agreement, as of the Closing Date, Purchaser assumes and agrees to perform
and discharge the following, and only the following liabilities of Seller
incurred in the ordinary course of operating the Business (the "Assumed
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Liabilities"):
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(a) (i) all liabilities arising from and after the Closing Date under and
pursuant to all Contracts, and (ii) all liabilities arising prior to
the Closing Date under Open Supplier Purchase Orders;
(b) those liabilities, if any, for customer Product returns of
non-defective Product, whether for stock balancing or of overstock or
based upon an express or implied right of return granted to the
customer prior to Closing or otherwise, relating to Products sold by
Seller prior to the Closing ("Trade Returns") subject to Section 2.1.1
below; and
(c) all liabilities for customer discounts, marketing allowances, rebate
allowances, cooperative advertising allowances and similar charges
incurred by Seller prior to the Closing Date, as specifically
identified on Schedule 2.1(c) ("Customer Allowances").
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2.1.1 Without limiting anything contained in Section 2.1 hereof, in the
event that, during the 90 day period following the Closing Date, Purchaser
experiences a volume of Trade Returns that is clearly extraordinary relative to
the historical non-defective returns for that particular customer (as compared
to Seller's pre-closing Trade Return experience) ("Extraordinary Trade Return"),
Purchaser and Seller shall meet to discuss in good faith, whether or not Seller
should reimburse or pay Purchaser for any portion of the cost of such
Extraordinary
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Trade Returns, and, subject to agreement between the parties, if any, Seller
shall reimburse or pay Purchaser for such portion of the cost and in such manner
as mutually agreed. Except as otherwise set forth above in this Section 2.1.1,
nothing contained in the immediately preceding sentence shall require Seller to
make any such payment to Purchaser and Purchaser shall have no right to offset
the cost of such Extraordinary Trade Returns against any amount owed to
Purchaser.
2.2 Excluded Liabilities. Notwithstanding anything to the contrary in this
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Agreement, except as expressly set forth in Section 2.1 above, Purchaser
does not assume, and Seller shall indemnify and hold Purchaser harmless
from all liabilities arising from or in connection with any or all of the
following: (a) the operation of the Business or sale of Products prior to
the Closing Date; (b) defective Products; (c) Sales Representative
Agreements; and (d) claims of patent infringement and/or product liability
arising from Seller's sale of Product, and/or from sale by Purchaser or any
of its subsidiaries to customers anywhere in the world of Inventory and/or
Product purchased from Seller on or after the Closing Date and/or any other
scale products purchased from Seller before or after the Closing Date,
including but not limited to any claim related to or arising from any of
the matters set forth on Schedule 5.6, (collectively the "Excluded
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Liabilities"). Without limiting the foregoing, Purchaser's rights and
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Seller's obligations with respect to patent infringement claims pursuant to
this Section 2.2, subdivision (d) shall include (i) liabilities relating to
any customer return and/or inability of Purchaser or any of its
subsidiaries to sell inventory of Product or other scale products purchased
from Seller as the result of a patent infringement claim and/or (ii) any
enhanced damages including for willful infringement, arising from or in
connection with a patent infringement claim in connection with which Seller
has provided Purchaser a written opinion of counsel that there is no
infringement.
With respect to defective Product pursuant to this Section 2.2, subdivision
(b), Purchaser shall ship all defective Product to Seller's facility in
Hong Kong. For defective Products returned to Purchaser within six (6)
months from the Closing Date, Seller shall credit or, at Sellers election,
directly reimburse Purchaser for such defective Products in an amount equal
to such customer's actual cost of goods for such defective Products. For
defective Products returned to Purchaser after the end of such 6-month
period, Seller shall credit or, at Seller's election directly reimburse
Purchaser for, such defective Products in an amount equal to Purchaser's
cost (FOB Yantian) for such Products. In each such case of a defective
Product return, whether such return occurs within or after such 6-month
period, such credit or reimbursement shall be made within ten (10) business
days from the date of invoice from Purchaser, together with Purchaser's
reasonable out of pocket expenses incurred to ship such defective Products
to Hong Kong
3.0 CLOSING; PURCHASE PRICE.
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3.1 Conditions Precedent to Obligations of Purchaser and Seller. The
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obligations of Purchaser and Seller to consummate the transactions
contemplated by this Agreement will be subject to the satisfaction or
waiver, at or prior to the Closing, of all of the following conditions;
provided, however, that neither party shall be entitled to refrain from
Closing due to the failure to occur of a condition required to be performed
by that party.
3.1.1. Execution and delivery of a Transition Services Agreement in the
form attached as Attachment A.
3.1.2. The representations and warranties of each party shall be true
and correct as of the Closing.
3.1.3. There shall be no material breach by either party in the
performance of any of the covenants herein to be respectively
performed by it.
3.1.4. Seller shall have delivered to Purchaser a ▇▇▇▇ of sale for the
transfer of the property included in the Purchased Assets and any
assignment documents relating to the Purchased Assets reasonably
requested by and satisfactory to Purchaser.
3.1.5. Purchaser shall have delivered to Seller an assumption agreement
relating to the Assumed Liabilities in the form attached as
Exhibit 3.1.5.
3.1.6. Purchaser shall have delivered to Seller the Purchase Price in
the manner set forth in Section 3.3.
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3.1.7. Seller shall have received and delivered to Purchaser the
written consent of Fleet Capital Corporation to the consummation
of the transactions contemplated by this Agreement.
3.2 Closing; Closing Date. This Agreement and closing documents are being
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executed and delivered via fax on the date hereof and the executed
originals thereof shall be exchanged within two (2) business days. Payment
of the Purchase Price pursuant to Section 3.3 shall occur, and the
transactions contemplated by this Agreement shall be deemed consummated and
become effective (the "Closing") as of 9:00 a.m. on February 2, 2004, or on
such other date as the parties may agree in writing (the "Closing Date.
3.3 Purchase Price and Payment. The purchase price (the "Purchase Price")
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for the Purchased Assets is Eleven Million Five Hundred Thousand Dollars
($11,500,000.00) subject to adjustment pursuant to this Section 3.3 and
Section 3.4, payable as follows:
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a. At the Closing, Purchaser shall pay in cash by wire
transfer to an account designated by Seller, Ten Million Five Hundred
Thousand Dollars ($10,500,000.00), minus the total dollar amount of
the Customer Allowances set forth on Schedule 2.1(c).
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b. In the event that the actual amount paid by Purchaser in
respect of Customer Allowances (the "Actual Customer Allowance
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Amount") during the six (6) months from the Closing Date is either
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less or greater than the amount of Customer Allowances set forth on
Schedule 2.1(c) (the "Closing Date Customer Allowance Amount"),
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Purchaser or Seller as the case may be shall pay the other party for
the shortfall or excess as follows: if the Actual Customer Allowance
Amount is more than $25,000.00 greater than the Closing Date Customer
Allowance Amount, Seller shall pay Purchaser, dollar for dollar
calculated from $1.00 and above, the full amount by which the Actual
Customer Allowance Amount exceeds the Closing Date Customer Allowance
Amount; and if the Actual Customer Allowance Amount is more than
$25,000.00 less than the Closing Date Customer Allowance Amount,
Purchaser shall pay Seller, dollar for dollar calculated from $1.00
and above, the full amount by which the Closing Date Customer
Allowance Amount exceeds the Actual Customer Allowance Amount. Any
payment due under the preceding provisions of this Section 3.3(b) will
be made within seven (7) business days following the end of such
6-month period. In the event that, after the Closing Date any customer
off-sets the amount of any Customer Allowance assumed by Purchaser
under Section 2.1 hereof from any amount due and owing from the
customer to Seller, Purchaser shall reimburse Seller for such amount
within 7 business days of receipt of written notice (together with
supporting documentation provided by such customer with respect to
such offset) from Seller of such offset; provided, however, that any
amount reimbursed to Seller pursuant to this sentence shall be
included as having been paid by Purchaser for purposes of determining
the Actual Customer Allowance Amount.
c. At the Closing, One Million Dollars ($1,000,000.00) of the
Purchase Price (the "Escrow Amount") shall be paid to The Capital
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Trust Company of Delaware (the "Escrow Agent") to be held in escrow
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and disbursed in accordance with the terms set forth below in this
subsection (c) and the Escrow Agreement attached hereto as Attachment
B. In the event that the greater of the amount of (1) the aggregate of
gross sales of Products by Seller from April 1, 2003 through Closing
and by Purchaser from Closing through March 31, 2004 or (2) the
aggregate of gross sales of Products by Seller from May 1, 2003
through Closing and by Purchaser from Closing through April 30, 2004
(such greater amount hereinafter referred to as the "Gross Sale
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Amount") is less than or equal to $14.5 million, the Escrow Amount
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shall be returned to Purchaser. In the event the Gross Sale Amount is
greater than or equal to $16.5 million, the Escrow Amount will be paid
to Seller. In the event the
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Gross Sale Amount is greater than $14.5 million but less than $16.5
million the Escrow Amount will be divided proportionately between
Purchaser and Seller. (By way of illustration: if the Gross Sale
Amount is $16.0 million, $250,000 of the Escrow Amount will be
returned to Purchaser and $750,000 of the Escrow Amount will be paid
to Seller). The gross sales of Products by Seller through the Closing
Date that shall be included in the Gross Sales Amount pursuant to this
Section 3.3(c) shall be as reflected on Schedule 3.3(c). For purposes
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of determining disbursement of the Escrow Amount under the foregoing
terms of this Section 3.3(c), it is hereby acknowledged and agreed
that Purchaser may operate the Business post-Closing and sell and
market Products as Purchaser deems appropriate in its sole discretion,
including but not limited to the right, exercisable in Purchaser's
sole discretion, to sell or not to sell to any of Seller's existing
customers. Within fifteen (15) business days after the end of each
calendar month during the period from the Closing Date through April
30, 2004, Purchaser shall provide Seller with a report detailing its
gross sales of Products for such month.
3.4 Inventory Adjustment.
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(a) Seller shall deliver to Purchaser at least five (5) business days
before the Closing Date, Seller's final pre-Closing estimate of the gross
value of the Inventory set forth on Schedule 1.1(a)(i) and Schedule
1.1(a)(i)(ii) as determined pursuant to Section 5.3(c), for informational
purposes only.
(b) No physical Inventory shall be transferred from Seller to Purchaser
prior to Closing. All Inventory shall be counted and verified after the
Closing Date as all the following are completed: (i) receipt of Inventory
from Seller's facilities into Purchaser's facilities; (ii) shipment of
Inventory by Seller on Purchaser's behalf pursuant to customer order; and
(iii) delivery of Inventories in-transit on the Closing Date directly to
Purchaser's facilities (collectively "Actual Inventory"). If the Actual
Inventory value is (i) less than One Million Seven Hundred Thousand Dollars
($1,700,000.00), Seller shall pay Purchaser dollar for dollar, the amount
of such difference, within five (5) business days of such determination or
(ii) in excess of One Million Nine Hundred Thousand Dollars
($1,900,000.00), Purchaser shall pay Seller dollar for dollar, the amount
of such excess, within five (5) business days of such determination.
3.5 Allocation of Purchase Price. Within one hundred eighty (180) days of the
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Closing, Seller and Purchaser shall agree in writing upon an allocation of
the Purchase Price and Assumed Liabilities among the Purchased Assets and
the noncompetition covenants set forth in Section 8.3 ("Allocation
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Schedule"). Such allocation shall be made in accordance with the provisions
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of Section 1060 of the Internal Revenue Code of 1986, as
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amended, and shall be binding upon the Seller and the Purchaser for all
purposes. Purchaser and Seller agree to (i) be bound by the Allocation
Schedule, (ii) act in a manner consistent with the Allocation Schedule in
the preparation of financial statements and filing of all state and United
States federal income tax returns (including, without limitation, providing
the other for their review a draft of Form 8594 and thereafter filing Form
8594 with its United States federal income tax return for the taxable year
that includes the Closing Date) and in the course of any tax audit, tax
review or tax litigation relating thereto, and (iii) take no position and
cause any of their Affiliates (which term is defined as set forth in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended) to take no position inconsistent with the
Allocation Schedule for any tax purposes or in any judicial proceeding.
4.0 TRANSITION PERIOD; TRANSFER OF PURCHASED ASSETS.
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4.1 Transition Services Agreement. Seller shall perform certain
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services and otherwise assist Purchaser in the transition of the
Business after Closing as set forth in the Transition Services
Agreement entered into between the parties, the form of which is
attached hereto as Attachment A.
4.2 Intellectual Property. Seller shall deliver and cause its
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attorneys and agents to deliver to Purchaser, within twenty (20)
business days following the Closing Date, all their respective files
relating to registration and maintenance of the Thinner Marks and all
other Intellectual Property.
4.3 Material and Permits. Seller shall deliver to Purchaser within
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ten (10) business days following the Closing Date, all Materials and
Permits specified in Section 1.1(d) and (e) respectively.
4.4 Risk of Loss. Risk of loss of Inventories, wherever located,
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passes from Seller to Purchaser on the Closing Date.
4.5 Sales Representatives. Seller intends to terminate as of the
Closing Date all Sales Representative Agreements with respect to
Products, except for any such agreements identified in writing by
Purchaser, and as to such identified agreements, Seller shall inform
the sales representative to await contact from Purchaser.
4.6 Other Transition Matters. Upon request with reasonable advance
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notice, Seller agrees to accompany Purchaser on visits to customers of
the Business for purposes of transitioning customer accounts. All such
assistance shall be provided at no cost to Purchaser for a period up
to sixty (60) days following the
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Closing, provided, however, that Purchaser shall reimburse Seller for
any reasonable out of pocket travel expenses incurred by Seller in
connection with such assistance.
5.0 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
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warrants to Purchaser that:
5.1 Corporate Organization. Seller is a corporation duly organized, validly
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existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to
conduct the Business as now operated by it. Seller is duly qualified,
licensed or domesticated and in good standing in the jurisdiction where the
nature of its activities or the character of the properties owned, leased
or operated by it in connection with the Business, require such
qualification, licensing or domestication, except where such failure to
qualify would not have a Material Adverse Effect on the condition of the
Business or Purchased Assets (as defined below).
5.2 Corporate Authorization, Certain Corporate Actions, No Conflicts. Seller
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has all requisite corporate power and authority to execute and deliver this
Agreement and all necessary corporate proceedings have been taken to
authorize the execution, delivery and performance by Seller of this
Agreement and the transactions described herein. This Agreement is the
legal, valid and binding obligation of Seller, and is enforceable as to the
Seller in accordance with its terms, except as such validity, binding
effect or enforcement may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally or by equitable principles
relating to the availability of remedies. Except as set forth in Schedule
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5.2, neither the execution, delivery nor performance of this Agreement by
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Seller, nor consummation of the transactions contemplated hereby, will,
with or without the giving of notice or the passage of time, or both,
either (i) conflict with or result in a default, right to accelerate or
loss of rights relating to the Purchased Assets or result in the creation
of any lien, charge or encumbrance relating to the Purchased Assets or to
such right to sell Products pursuant to, any provision of Seller's charter,
bylaws or any franchise, mortgage, deed of trust, lease, license,
agreement, law, rule or regulation or any order, judgment, or decree to
which Seller is a party or by which Seller or any of the Purchased Assets
or to such right to sell Products may be bound or affected or (ii) except
as set forth in Schedule 5.2 , require any waiver, consent, approval,
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authorization or action of or filing with any third party.
5.3 Financial Information. All the financial information contained in the
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following Schedules is accurate in all material respects including without
limitation the financial information specifically identified below:
(a) Schedule 2.1(c): The dollar amount of Customer Allowances by type
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of customer discount, allowance or charge as of January 30, 2004.
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(b) Schedule 3.3(c): The amount of Seller's gross sales of Product for
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the period from April 1, 2003 through Closing, by Product model code
or other designation and by customer on a monthly basis.
(c) Schedules 1.1(a)(i) and 1.1(a)(ii): The quantity and the unit
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price of the Inventories as of January 30, 2004 based upon the unit
prices set forth in the landed price list provided by the Seller as
set forth on Schedule 5.3(c)(i) ("Unit Prices"). Seller's current unit
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prices (FOB Yantian) are set forth on schedule 5.3(c)(ii).
(d) Schedule 5.3(d): "Gross Sales" and "Net Sales" amounts (each in
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U.S. dollars and by number of units sold, listed by Product model and
by customer) of Products sold by Seller for each of the fiscal years
ending March 31, 2002 and March 31, 2003 and for the period from April
1, 2003 through January 30, 2004. For avoidance of doubt, for purposes
of this Agreement including but not limited to the Schedules, "Net
Sales" shall mean Seller's gross sales of Product less returns.
5.4 Operations of the Business; Adequacy of Purchased Assets.
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(a) Except as set forth in Schedule 5.4(a), as of the date immediately
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preceding the Closing Date the Business is operated and sales of
Product to customers are made only through Seller and not through any
direct or indirect subsidiary or affiliate of Seller or any third
party.
(b) Except for the Excluded Assets or as set forth in Schedule 5.4(b) ,
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the Purchased Assets constitute all the assets, properties and rights
of every type and description owned by Seller, and used primarily in
the conduct of the Business by Seller in the ordinary course as such
Business has been operated during the twelve-month period prior to the
Closing, and no assets, properties or rights material to the operation
of the Business as it has been operated by Seller during such period
are not being transferred to Purchaser hereby.
5.5 Title. Except as set forth on Schedule 5.5, Seller owns all right, title
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and interest in and to the Purchased Assets, free and clear of any
mortgage, pledge, lien, encumbrance, security interest, license,
sublicense, judgment, order, decree, stipulation or charge of any kind
(collectively "Liens"). The right, title and interest to and in the
Purchase Assets being transferred to Purchaser pursuant to this Agreement
constitute all right, title and interest therein owned by Seller or
licensed from third parties.
5.6 Litigation; Orders. Except as set forth in Schedule 5.6, there is no
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claim, legal action,
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administrative proceeding, governmental investigation, arbitration or other
proceeding involving amounts in excess of Five Thousand Dollars ($5,000.00)
(collectively, "Litigation") pending, nor to Seller's Knowledge (as defined
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below) threatened, against Seller, nor any claim, legal action,
administrative proceeding, arbitration or other proceeding pending by
Seller against any third party, arising from or otherwise relating to the
Business or the Products. As of the date hereof, there is no judgment or
outstanding order, injunction, decree, stipulation or award (whether
rendered by a court or administrative agency, or by arbitration) against
Seller relating to the Business or Products that would prohibit the
consummation of the transaction contemplated by this Agreement.
5.7 Intellectual Property. Schedule 5.7(i) contains a complete and correct
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list of all the Thinner Marks and Seller has not used any of the Thinner
Marks in connection with any product other than the Products. To Seller's
Knowledge, the Products do not infringe upon or otherwise violate any
patent, trademark, trade secret or other intellectual property or other
rights of any other Person and, except as set forth on Schedule 5.6, there
is no claim or action by any Person pending, or to Seller's Knowledge
threatened, with respect thereto. To Seller's Knowledge there is no
infringement or improper use by any third party of any intellectual
property owned or licensed by Seller in its operation of the Business
including but not limited to patents, trade secrets and the Intellectual
Property (collectively "Seller's Intellectual Property") and there is no
action or proceeding instituted by Seller pending in which an act
constituting an infringement of any of such the rights was alleged to have
been committed by a third party. Schedule 5.7(ii) lists all licenses,
----------------
sublicenses or agreements relating to the use by third parties of the
Intellectual Property, and/or the use by the Business of the intellectual
property of another Person, and there is no default under any such license,
sublicense or agreement.
5.8 Compliance with Laws. Since April 1, 2001 Seller has conducted the
--------------------
Business in a manner that materially complies with all applicable statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto except to the extent that any noncompliance does not
have a Material Adverse Effect on the Business.
5.9 Taxes. Other than liens for taxes not yet due and payable, there are no
-----
unpaid taxes, deficiencies, assessments, penalties, interest or other
governmental charges relating to the income, receipts, payrolls,
transactions, capital or other operations of the Business which are or
could become a lien on any of the Purchased Assets.
5.10 Contracts.
---------
(a) Schedule 5.10(a) contains a listing of all Contracts including but
----------------
not limited to Open Customer Orders and Open Supplier Purchase Orders,
and a full and accurate summary description of any material oral
contracts.
12
(b) Except as disclosed in Schedule 5.10(b), neither Seller nor, to
----------------
Seller's Knowledge, any other party to any Contract (written or oral)
is in material breach thereof or default thereunder, and to Seller's
Knowledge there does not exist any event, default or condition which,
with the giving of notice and/or the lapse of time, would constitute
such a breach or default. Except as otherwise set forth in Schedule
--------
5.10(b), all Contracts are in full force and effect in accordance with
-------
their terms. No Contract (other than Open Supplier Purchase Orders or
Open Customer Orders) requires the consent, notice to, assignment or
approval of another party to be transferred, except as set forth in
Schedule 5.10(b). Seller has provided Purchaser true, complete and
----------------
correct copies of all written Contracts including, without limitation,
Open Customer Orders and Open Supplier Purchaser Orders.
5.11 Inventories. All Inventories are in merchantable condition in the ordinary
-----------
course of business. All Inventories not in transit (other than inventory
consigned to Starcrest Products of California, Inc.) set forth on Schedule
1.1(a)(i) are located at Seller's facility in Hampton, Va. A list of all
in-transit Inventories, and the expected dates of arrival, by location, is
set forth in Schedule 1.1(a)(ii).
-------------------
5.12 Consents, Approvals, etc. There are no filings required to be made by
------------------------
Seller with, and there are no consents, approvals, permits or
authorizations required to be obtained by Seller from, governmental and
regulatory authorities or instrumentalities of the United States, the
several states or any other jurisdiction in connection with the execution
and delivery of this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby.
5.13 Defects in Products or Designs; Products.
----------------------------------------
(a) To Seller's Knowledge, there are no defects in the design or
manufacture of Products or the tooling used to manufacture Products
that would materially adversely affect the performance or quality of
the Products or preclude attaining any currently required licenses,
permits, approvals, registrations or certifications. Without limiting
the foregoing, any and all defects in the design or manufacture of
Products previously sold to Sharper Image and/or Products with glue or
battery compartment problems have, as of the date hereof, been
corrected and there are no such existing defects in the design or
manufacture of Products that would have a Material Adverse Effect on
the performance or quality of the Products.
(b) The Products manufactured and sold by Seller have been designed and
manufactured in compliance with all regulatory, engineering,
industrial and other codes generally recognized as being applicable
thereto. None of the Products has been the subject of any voluntary or
involuntary recall campaign performed by Seller or any voluntary or
involuntary recall campaign required by, or performed
13
in cooperation with, any governmental agency, that would adversely
affect the performance or quality of such Products and there are no
claims or suits alleging violations of the Fair Packaging and Labeling
Act. Seller has received no written statements, citations or decisions
by any governmental or regulatory body specifically stating that any
Product is defective or unsafe or fails to meet any standards
promulgated by any such governmental or regulatory body or is
misbranded. No product liability claims relating to the Products are
presently pending (as to which Seller has been served) or, to Seller's
Knowledge, threatened.
5.14 Customers. Schedule 5.14 lists, on the basis of gross sales and Net Sales
--------- -------------
(as defined in Section 5.3(d)) for the twelve (12) month period ended March
31, 2003 and the period from April 1, 2003 through January 30, 2004, the
twenty (20) largest customers of the Business ("Customers"). Seller has
---------
received no written notice, and no senior executive of Seller, including,
without limitation ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇, has
received any verbal notice, from any of the Customers that such Customer
will terminate, cancel or discontinue a substantial portion of the business
it conducts with the Business, within a scheduled or approximate time
period, however, as previously disclosed to Purchaser in connection with
Seller's non-binding internal projections (as to which no representations
are made), Seller has experienced reduced current sales and anticipates
reduced future sales to Linens-n-Things and Macy's East. Schedule 5.14 sets
-------------
forth, by Customer, summaries of the Seller's pricing, payment, discount,
allowance, and shipping arrangements with such Customer for identified
Products ("Summaries"). Except as disclosed in Schedule 5.14, Seller has
--------- -------------
not entered into any express agreement with any Customers, whether in
writing or oral, relating to the purchase, returns, discounts, allowances
and/or pricing terms of Products that are not reflected in the Summaries.
5.15 Brokers. Seller has not entered into any arrangement for the provision of
-------
services in connection with this Agreement or the transactions contemplated
hereby that may give rise to an obligation to pay any brokers' or finders'
fees or other commissions.
5.16 Customer Warranties. Seller has provided to Purchaser, or will provide
-------------------
within ten (10) business days of Closing, complete and accurate copies of
the standard warranties given to purchasers of Products currently in effect
with respect to the Products (the "Product Warranties"). Seller has not
------------------
given, nor to the Seller's Knowledge have any of its salespersons,
employees, distributors or agents been authorized to give, any warranty
that deviates from the Product Warranties.
5.17 Trade Returns. From April 1, 2003 through Closing, other than in the
-------------
ordinary course of business consistent with prior practices, Seller has not
made any sale of Product to any customer, giving any such customer an
express or implied right of return or allowance in
14
lieu thereof for non-defective Product including for stock balancing or
overstock of Product.
5.18 Certain Defined Items. References in Sections 5.1 through 5.17 and
--------------------- -------------------------
elsewhere in this Agreement to (i) "Seller's Knowledge" shall mean actual
knowledge of any of the following individuals: ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or
▇▇▇▇ ▇▇▇▇: (ii) "Material Adverse Effect" shall mean a material adverse
effect on the value of the Purchased Assets or the financial condition,
operations, or results of operations of the Business involving the sum in
excess of $100,000.00; and (iii) "Person" shall mean any individual,
corporation, limited liability company, partnership, proprietorship, trust
or other entity of any kind.
6.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents
-------------------------------------------
and warrants to Seller that:
6.1 Corporate Organization. Purchaser is a corporation duly organized, validly
----------------------
existing and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to own, lease, license and
operate its properties and assets and to conduct the businesses now owned,
leased, licensed and operated by it. Purchaser is duly qualified, licensed
or domesticated and in good standing in each jurisdiction where the nature
of its activities or the character of its properties require such
qualification, licensing or domestication.
6.2 Corporate Authorization, Certain Corporate Actions, No Conflicts.
-----------------------------------------------------------------
Purchaser has all requisite corporate power and authority to execute and
deliver this Agreement and all necessary corporate proceedings have been
taken to authorize the execution, delivery and performance by Purchaser of
this Agreement and the transaction described herein. This Agreement is the
legal, valid and binding obligation of Purchaser, and is enforceable as to
Purchaser in accordance with its terms, except as such validity, binding
effect or enforcement may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally or by equitable principles
relating to the availability of remedies. Neither the execution, delivery,
nor performance of this Agreement by Purchaser will, with or without the
giving of notice or the passage of time, or both, conflict with, result in
a default, right to accelerate or loss of rights under, or result in the
creation of any lien, charge or encumbrance pursuant to, any provision of
Purchaser's certificate of incorporation or bylaws or any franchise,
mortgage, deed of trust, lease, license, agreement, understanding, law,
rule or regulation or any order, judgment, or decree to which Purchaser is
a party or by which Purchaser may be bound or affected.
6.3 Litigation; Orders. As of the date hereof, there is no judgment or
------------------
outstanding order, injunction, decree, stipulation or award, or pending or
threatened claims, suits or litigation against Purchaser that would
prohibit the consummation of the transaction contemplated by this
Agreement.
15
6.4 Consents, Approvals, etc. There are no filings required to be made by
------------------------
Purchaser with, and there are no consents, approvals, permits or
authorizations required to be obtained by Purchaser from, governmental and
regulatory authorities or instrumentalities of the United States, the
several states or any other jurisdiction in connection with the execution
and delivery of this Agreement by Purchaser and the consummation by
Purchaser of the transaction contemplated hereby.
6.5 Brokers. Purchaser has not entered into any arrangement for the provision
-------
of any services in connection with this Agreement or the transactions
contemplated thereby that may give rise to an obligation to pay brokers' or
finders' fees or other commissions.
7.0 DELIVERIES AT CLOSING
---------------------
7.1 Deliveries by Seller. At the Closing, Seller shall deliver to Purchaser
--------------------
the following closing documents ("Seller's Documents"):
------------------
(a) certificates executed by an executive officer of Seller as to
authorization and incumbency in the form attached as EXHIBIT 7.1(A),
which Purchaser hereby waives as a condition to Closing;
(b) the ▇▇▇▇ of Sale, Assignment and Assumption Agreement in the form
attached as EXHIBIT 3.1.5, duly executed by an executive officer of
Seller, and all other documents, certificates and agreements necessary
to transfer to Purchaser good, marketable and legal title to the
Purchased Assets, free and clear of any and all Liens thereon;
(c) assignments of all Intellectual Property in the forms attached as
EXHIBIT 7.1(C), duly executed by an executive officer of Seller; and
(d) evidence of release of all liens, charges and encumbrances on the
Purchased Assets, subject to final approval for release of Seller's
lender.
7.2 Deliveries by Purchaser. At the Closing, Purchaser shall deliver to Seller
-----------------------
the following closing documents ("Purchaser's Documents"):
---------------------
(a) a certificate executed by an executive officer of Purchaser as to
authorization and incumbency, in the form attached as EXHIBIT 7.2(A),
which Seller hereby waives as a condition to Closing; and
16
(b) the ▇▇▇▇ of Sale, Assignment and Assumption Agreement in the form
attached as EXHIBIT 7.1(B), duly executed by an executive officer of
Purchaser.
7.3 Effect of Closing Breach. A party which fails to consummate the
------------------------
transactions contemplated hereby on the Closing Date shall be deemed to be
in material breach of its obligations hereunder, unless such failure
results from the other party's failure to consummate the transactions (a
"Closing Breach"). Upon the occurrence of a Closing breach, Seller's
Documents and Purchaser's Documents shall automatically be deemed null and
void and of no further force and effect, and Seller and Purchaser, as the
case may be, shall destroy all copies of such documents, whether received
in original, fax or e-mail form.
8.0 POST-CLOSING OBLIGATIONS.
------------------------
8.1 Product Marking. Following Closing, all Products manufactured by Seller or
---------------
its designees pursuant to purchase orders of Purchaser, shall be indelibly
imprinted, stamped or otherwise tagged with a distinctive identifying ▇▇▇▇
(e.g., date stamp) which distinguishes all such products from products
manufactured by or on behalf of Seller prior to Closing and included in
Inventories and from products manufactured by or on behalf of Seller and
sold to third parties. Within sixty (60) days after the Closing Date,
Seller shall provide to Purchaser a sample of the distinguishing ▇▇▇▇ for
each Product manufactured.
8.2 Access After Closing. After the Closing, upon reasonable written notice,
--------------------
Purchaser and Seller shall furnish or cause to be furnished to each other
and their respective accountants, counsel and other representatives
reasonable access, during normal business hours, to such information
(including records pertinent to the Business) and assistance relating to
the Business as is reasonably necessary for operations, financial reporting
and accounting matters, the preparation and filing of any returns, reports
or forms or the defense of any tax claim or assessment. In the case of
Seller, such assistance shall include access to any and all documents,
records, files and correspondence relating to the Business, and Seller will
use reasonable efforts to maintain at their offices or in offsite storage
for the lesser of seven (7) years from the date of such document, record,
file or correspondence or three (3) years after the Closing Date. In the
case of Purchaser, such assistance shall include reasonably prompt written
response to reasonable written inquiries of Seller related to such
financial reporting, accounting and tax matters, cooperation in responding
to audit reports made by taxing authorities to Seller regarding the
Business, assisting Seller (including making its employees reasonably
available at Seller's expense) in defending any lawsuits or claims against
Seller with respect to Excluded Liabilities or relating to the operation of
the Business by Seller prior to the Closing Date and, at Seller' request
and expense, participation in audits conducted with respect to Seller.
Purchaser shall use reasonable efforts to retain the books and records of
Seller included in the Purchased Assets for a period of seven (7) years
after the Closing. After the end of such respective
17
retention period, before disposing of such books or records, Purchaser and
Seller, as the case may be, shall use commercially reasonable efforts to
give notice of the intended disposal to the other party, and such notified
party, within a reasonable time after the receipt of such notice, will
notify the other party whether to destroy such documents or whether the
notified party will, at its cost and expense, remove and retain all or any
part of such books or records as it may select.
8.3 Covenant Not to Compete. The parties acknowledge and agree that Purchaser
-----------------------
is acquiring, and the consideration paid by Purchaser hereunder reflects,
the goodwill of the Business associated with the manufacture, marketing
and/or sale of the Products. Therefore, as an inducement to enter into this
Agreement and in partial consideration for the payment to Seller of the
Purchase Price and the transfer of the Purchased Assets to Purchaser, the
parties agree that for a period of five (5) years following the Closing
Date, neither Seller nor any of its subsidiaries or affiliates shall
directly or indirectly (a) market and/or sell any sensor-based kitchen or
bathroom scales directly to retailers in North America and/or (b)market
and/or sell to customers who, in turn, sell to retailers ("OEM Customers")
in North America, any sensor-based kitchen or bathroom scales using
Substantially Similar Designs , and/or (c) use any of the Thinner Marks
anywhere in the world for any purpose except as may be agreed in writing by
the parties hereto. Except as set forth above, nothing contained herein
shall be construed to limit the ability of Seller to market and or sell
products to OEM Customers.
8.4 Right of First Opportunity. For the period of two (2) years after the
--------------------------
Closing Date, Purchaser shall have the right of first opportunity to have
Seller manufacture exclusively for Purchaser for sale in North America,
sensor-based kitchen or bathroom scale products based upon any new
Industrial Design (as defined below) or special features or technology
created, conceived, developed, owned or licensed by or for Seller after the
Closing Date (collectively "New Product"); excluding, however, any New
-----------
Product being developed, now or in the future, at the request of a
customer, for or in conjunction with such customer. Seller shall notify
Purchaser in writing of any New Product and provide Purchaser with
specifications, designs, samples, and/or prototypes of such New Product
(collectively "Notice"). Purchaser and Seller shall negotiate in good faith
with respect to the exclusive manufacture of such New Products including
with respect to pricing and minimum volume commitments. Notwithstanding
anything contained herein to the contrary, Seller shall have no obligation
under this paragraph to undertake the manufacture of any New Products for
which terms are not agreed within sixty (60) days of the date of Notice.
For purposes of this Agreement, "Industrial Design" shall mean the exterior
aesthetic design and/or nonfunctional exterior features of sensor-based
bathroom and kitchen scale products bearing (A) in the case of scales
having a non-glass platform, the visible top covering (including its sides)
regardless of color or (B) in the case of glass scales, the visible frame
(regardless of color) or if the frame underneath the glass platform is not
visible due to the design of the glass platform, the unique shape and/or
18
unique visible features of the glass platform regardless of color.
8.5 Confidentiality. Seller and Purchaser agree that after the date hereof
---------------
neither will nor will they permit any of their respective affiliates or
subsidiaries to divulge to any person, firm or corporation any confidential
information relating to the Business or the economic terms of this
Agreement (except as is reasonably deemed by a party to be required in
connection with public information requirements of applicable laws),
including without limitation customers, customer lists, trade secrets,
contracts, prices, suppliers or other business practices, unless and until
(i) such information shall have ceased to be confidential as evidenced by
general public knowledge or availability through public sources, (ii) such
disclosure is required in order for Seller or any of its affiliates or
subsidiaries to continue its business operations as contemplated by and not
in violation of this Agreement and (iii) disclosure is required under order
of a court or other body having jurisdiction, provided that the disclosing
party shall have given prior notice to the other of any hearing or other
proceeding in which the matter of such disclosure is to be heard.
8.6 Press Release. The parties agree to issue only those press releases and
-------------
such other forms of public notification announcing the transaction
contemplated hereby as is consented to in advance by the other party, such
consent not to be unreasonably withheld, or as is reasonably deemed by a
party to be required in connection with public information requirements of
applicable laws.
8.7 Accounts Receivable; Improper Customer Deductions/Credits. The parties
---------------------------------------------------------
acknowledge that following Closing, customers of Seller and Purchasers may
incorrectly apply payments or credits against a party not entitled to or
responsible for such items under this Agreement. Therefore, in such event,
the parties agree as follows:
(a) Seller and Purchaser agree to (i) remit to the other party (the
"Proper Payee") all receipts which are identified by the remitter as
------------
being applicable to sale of Products by the Proper Payee, within seven
(7) business days of receipt from the customer, (ii) provide
contemporaneously to the Proper Payee copies of all documents received
from the account debtors with respect to such remittances and (iii)
provide to the Proper Payee such other reasonable cooperation as shall
be necessary to assist Proper Payee's collection of such accounts
receivable.
(b) If any customer of Seller or Purchaser, as the case may be, credits
the value of any warranty claims, allowances, discounts and any other
customer deductions against any of its accounts payable to Seller or
Purchaser, as the case may be, and such warranty claims, allowances,
discounts or other deductions were appropriately borne by the other
party under the provisions of this Agreement and/or the Transition
Services Agreement, Seller and Purchaser shall reasonably cooperate to
reimburse the other party in the amount of the obligation for such
credit.
19
8.8 Further Assurances. After the Closing and for no further consideration,
------------------
Seller and Purchaser shall (a) perform all reasonable acts (including
without limitation, the use of their commercially reasonable efforts to
enable the other party to accomplish transfer of registration, permits,
approvals, and the like as contemplated by this Agreement), and (b)
execute, acknowledge and deliver such assignments, transfers, consents and
other documents and instruments as the other party or its counsel may
reasonably request, in each case, to vest in Purchaser or protect
Purchaser's right, title and interest in, and enjoyment of, the Purchased
Assets or to carry out the provisions and purposes of this Agreement.
9.0 CLOSING MATTERS.
---------------
9.1 Authorizations. Seller and Purchaser, as promptly as practicable after the
--------------
date hereof, shall (a) use commercially reasonable efforts to obtain, or
cause to be obtained, all authorizations, approvals, consents and waivers
from all Persons necessary to be obtained by them or their affiliates in
conjunction with the transactions contemplated by this Agreement, and (b)
use commercially reasonable efforts to take, or cause to be taken, all
other actions necessary, proper or advisable in order to fulfill their
obligations hereunder and to carry out the intentions of the parties
expressed herein. Seller and Purchaser will coordinate and cooperate with
one another in exchanging such information and supplying such reasonable
assistance as may be reasonably requested by each in connection with the
foregoing.
9.2 Bulk Sales Compliance. Each of Purchaser and Seller hereby waive
---------------------
compliance with the provisions of any applicable statutes relating to bulk
transfers of bulk sales. Seller agrees to indemnify and hold Purchaser
harmless from and against any and all claims of Seller's creditors or
others asserted against Purchaser resulting from such non-compliance, as
provided in Section 11.1 hereof.
10.0 CONSENTS AND APPROVALS. This Agreement shall not constitute an agreement
----------------------
to assign or transfer any interest in any instrument, contract, lease,
permit or other agreement or arrangement or any claim, right or benefit
arising thereunder or resulting therefrom, if an assignment or transfer or
an attempt to make such an assignment or transfer without the consent of a
third party would constitute a breach or violation thereof or would affect
adversely the rights of Purchaser or Seller thereunder. Any transfer or
assignment to Purchaser by Seller of any interest under any instrument,
contract, lease, permit or other agreement or arrangement that requires the
consent of a third party shall be made subject to such consent or approval
being obtained. Seller will cooperate with Purchaser in any lawful and
economically feasible arrangement to provide that Purchaser shall receive
Seller's interest in the benefits under any such instrument, contract,
lease, permit or other agreement or arrangement, including a subcontract,
sublease or
20
performance by Seller as agent, provided that Purchaser shall undertake to
pay or satisfy the corresponding liabilities for the enjoyment of such
benefit to the extent Purchaser would have been responsible therefor if
such consent or approval had been obtained. In the case of an instrument,
contract, lease, permit or other agreement or arrangement with respect to
which Purchaser subcontracts or subleases from Seller, Purchaser will be
liable only to the extent agreed in such subcontract or sublease. Each
party will pay its own costs of seeking to obtain or obtaining any
necessary or desirable consent or approval whether before or after the
Closing Date.
11.0 INDEMNIFICATION.
---------------
11.1 Seller's Indemnification. Seller hereby agrees to indemnify and hold
------------------------
Purchaser harmless from, against and in respect of:
(a) any and all loss, liability, or damage, including reasonable
attorneys' fees and expenses (collectively "Damages") suffered or
-------
incurred by Purchaser whether or not arising from a claim asserted by
a third party against Purchaser or a claim asserted by the Purchaser
against the Seller by reason of any breach of representation or
warranty or non-fulfillment or non-performance of any covenant or
agreement of Seller contained herein or in any certificate, document,
instrument or agreement delivered to Purchaser pursuant hereto or in
connection herewith; and
(b) any and all Damages suffered or incurred by Purchaser in respect of or
in connection with any Excluded Liabilities or the conduct of the
Business by Seller prior to the Closing Date.
11.2 Purchaser's Indemnification. Purchaser hereby agrees to indemnify and hold
---------------------------
Seller harmless from, against, and in respect of:
(a) any and all Damages suffered or incurred by Seller whether or not
arising from a claim asserted by a third party against Seller or a
claim asserted by the Seller against the Purchaser by reason of any
breach of representation or warranty or non-fulfillment or
non-performance of any covenant or agreement by Purchaser contained
herein or in any certificate, document, instrument or agreement
delivered to Seller pursuant hereto or in connection herewith; and
(b) any and all Damages suffered or incurred by Seller by reason or in
connection with the Assumed Liabilities or the conduct of the Business
by Purchaser after the Closing Date.
21
11.3 Limitations on Indemnification.
------------------------------
(a) Notwithstanding Section 11.1above, Seller shall not be liable to
------------
indemnify Purchaser for Purchaser's Damages, and notwithstanding
Section 11.2 above, Purchaser shall not be liable to indemnify Seller
------------
for Seller' Damages, in either case arising from or relating to a
breach of a representation or warranty set forth in this Agreement
unless the Indemnified Party notifies the Indemnifying Party in
writing of its claim or potential claim for indemnification not later
than the end of the survival period for such representations specified
in Section 12.0 of this Agreement. To avoid any ambiguity, the
foregoing periods and the periods reflected in Section 12.0 are
notification periods only within which notice of a claim for
indemnification must be given and specifically shall not be deemed or
construed to be a limitations period in which the Indemnified Party
shall be required to file a lawsuit or initiate an arbitration
proceeding relating to such claim against the Indemnifying Party.
(b) Notwithstanding Section 11.1 and 11.2 above, Seller shall not be
---------------------
liable to indemnify or have any other liability arising under this
Agreement or otherwise to Purchaser for Purchaser's Damages, unless
the aggregate of the Indemnified Party's Damages exceeds $100,000.00
and then only for the amount by which such aggregate exceeds
$100,000.00 (the "Basket"), provided that the Basket shall not apply
------ -------------
to any claims made by Purchaser for breach of the representations
contained in Section 5.5 regarding title; and provided, further, that
----------- -------- -------
the Basket shall not apply to any claims made by Purchaser for breach
of any representations or warranties qualified by "Seller's Knowledge"
under the terms and provisions of this Agreement ("Seller's Knowledge
Representations"). In the event that any adjustment of the Purchase
Price occurs pursuant to Article 3 hereof, Purchaser shall not have
any corresponding right to indemnification for Damages arising out of
any breach of any representations, warranties, covenants or
obligations contained herein which covers the same subject matter as,
but only to the extent of, such adjustment of the Purchase Price.
Furthermore, Seller shall not be liable to indemnify or have any other
liability arising under this Agreement or otherwise to Purchaser for
Purchaser's Damages, and Purchaser shall not be liable to indemnify or
have any other liability arising under this Agreement or otherwise to
Seller for Seller's Damages, in excess of a total aggregate amount
equal to twenty percent (20%) of the Purchase Price (the "Cap").
---
(c) The limitations and provisions contained in Sections 11.3(a) and
--------------------
11.3(b) shall not apply to any claim by Purchaser for indemnification
-------
based on any breach of the representations contained in Sections 5.5
------------
regarding title or 5.9 regarding taxes and shall have no application
to or effect on the Purchase Price adjustments required to be made
pursuant to Sections 2.1.1, 3.3(b), 3.3(c), and\or 3.4(b) hereof.
Furthermore, the limitations contained in Section 11.3(b) shall not
---------------
apply
22
to breaches of any covenants or agreements contained in this Agreement.
(d) Notwithstanding the foregoing except as set forth in Section 2.2,
neither Seller nor the Purchaser will be entitled to indemnification
with respect to consequential damages or with respect to punitive
damages, except in the case of fraud or willful misconduct by the
other party. Any indemnification amounts payable by an Indemnifying
Party under Section 11.1 or 11.2 shall be calculated after giving
--------------------
effect to (i) any proceeds (net of retro-premium adjustments and other
expenses) actually received by an Indemnified Party from insurance
policies covering the damage that is the subject of such claim for
indemnity, and (ii) the actual realized tax benefit resulting from
such damage.
11.4 Procedure.
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(a) In order for a party (the "Indemnified Party"), to be entitled to any
indemnification provided under this Agreement in respect of, arising
out of or involving a claim made by any Person (other than the other
party to this Agreement, to which this Section 11.4 shall not apply)
------------
against the Indemnified Party (a "Third Party Claim"), such
-----------------
Indemnified Party must notify the other party (the "Indemnifying
------------
Party") in writing of the Third Party Claim within fifteen (15)
-----
business days after receipt by such Indemnified Party or written
notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party can demonstrate
actual prejudice as a direct or indirect result of such failure.
Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, within fifteen (15) business days after the Indemnified Party's
receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnified Party relating to the Third Party
Claim.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party will be entitled to participate in the defense
thereof and, if it acknowledges in writing its obligations to
indemnify the party seeking indemnification, subject to all provisions
of this Article 11, and so chooses to assume the defense thereof with
----------
counsel selected by the Indemnifying Party. Should the Indemnifying
Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party will not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof. If the Indemnifying Party
assumes such defense, the Indemnified Party shall have the right to
participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party,
it being understood that the Indemnifying Party shall control such
defense and investigation. The Indemnifying Party shall be liable for
the fees and expenses of counsel employed by the Indemnified Party for
any period during which the
23
Indemnifying Party has not assumed the defense thereof (other than
after the 15-day period described in Section 11.4(a) if the
---------------
Indemnified Party shall have failed to give notice of the Third Party
Claim). If the Indemnifying Party chooses to defend or prosecute a
Third Party Claim, the other party hereto 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. If the Indemnifying
Party chooses to defend or prosecute any Third Party Claim, the
Indemnified Party will consent to any reasonable settlement,
compromise or discharge of such Third Party Claim that the
Indemnifying Party may reasonably recommend and which the Indemnifying
Party will pay for or perform at its sole expense. If the Indemnifying
Party shall have assumed 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 shall not be
unreasonably withheld.
11.5 Indemnification as Exclusive Remedy. The indemnification provided in this
-----------------------------------
Article 11 shall be the exclusive post-closing remedy available to the
----------
parties for any breach of representation, warranty, covenant or agreement
contained in this Agreement or any other documents, instruments or
agreements executed in conjunction with the transactions contemplate
hereby, except as may otherwise be expressly provided for in this Agreement
or any such document, instrument or agreement; provided, however, that
either party shall be entitled to seek injunctive relief to enforce the
provisions of the Agreement or any related agreements.
12.0 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements,
------------------------------------------
representations and warranties made by each of the parties hereto shall
survive the Closing for a period of one (1) year, except that the
representations contained in (i) Section 5.5 shall survive without
-----------
limitation as to time; and (ii) Section 5.9 shall survive until the
-----------
expiration of the latest applicable statute of limitations. All
indemnities, covenants and agreements made herein shall survive for the
period expressly indicated herein, or, if not so indicated, indefinitely.
13.0 ARBITRATION.
-----------
(a) Any dispute, controversy or claim arising out of or in connection with
or relating to, this Agreement or any other agreement entered into
pursuant hereto, or the transactions contemplated hereby, (a
"Dispute"), including but not limited to any breach or alleged breach
-------
hereof, shall be determined and settled by arbitration in Stamford,
Connecticut pursuant to the rules then in effect of the
24
American Arbitration Association; provided, however, that in the event
-----------------
the Dispute involves an amount in excess of $250,000 the Dispute shall
be heard by a panel of three (3) arbitrators: one selected by the
Seller, one selected by the Purchaser and one mutually selected by the
arbitrators selected by the Seller and Purchaser respectively.
(b) The resolution of such arbitration shall be final and binding on the
parties hereto and enforceable in a court of competent jurisdiction.
The parties hereto hereby irrevocably submit to the nonexclusive
jurisdiction of any court of competent jurisdiction for the purpose of
enforcing any arbitration award.
(c) This Article 13 shall not preclude any of the parties hereto from
----------
seeking injunctive or other temporary relief in any court of competent
jurisdiction in the event of a breach or threatened breach of this
Agreement or any related agreement.
14.0 NOTICES. Any and all notices or other communications required or permitted
-------
to be given under any of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given when personally
delivered, one business day after being sent by express mail, or overnight
courier service, five business days after being sent by first class
registered mail, return receipt requested, or upon confirmation of receipt
of a telefax (with a copy also sent by express mail or overnight courier
services) addressed to parties at the addresses set forth below or at such
other address as any party may specify by notice to the other parties, or,
in the case of a telefax, to the telefax number indicated:
If to Purchaser:
Conair Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇, President
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President and General Counsel
Conair Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller:
25
Measurements Specialties, Inc.
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & English, LLP
Four Gateway Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
15.0 MISCELLANEOUS.
-------------
15.1 Entire Agreement; Modification. This Agreement, together with the other
------------------------------
transaction documents contemplated by and consummated pursuant to this
Agreement, constitutes the entire agreement of the parties with respect to
the subject matter and supersedes any prior agreements, oral or written,
hereof and may not be modified, amended or terminated except by written
agreement specifically referring to this Agreement and signed by each party
hereto.
15.2 Waiver. No waiver of any breach or default hereunder shall be considered
------
valid unless in writing and signed by the party giving such waiver, and no
such waiver shall be deemed a waiver of any subsequent breach or default of
the same or similar nature.
15.3 Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of each party hereto, its successors and assigns.
15.4 Numbers and Headings. The section and paragraph numbers and headings
--------------------
contained herein and/or in any Schedules attached hereto are for the
purposes of reference and convenience only and are not intended to define
or limit the contents of said paragraphs or sections.
15.5 Exhibits and Schedules. The Exhibits and Schedules referred to herein are
----------------------
hereby incorporated by reference as if set out in full and form an integral
part of this Agreement.
15.6 Transaction Taxes. All sales, transfer and documentary taxes, if any, and
-----------------
any and all
26
further taxes arising by virtue of the sale, transfers and deliveries to be
made to Purchaser as contemplated hereby shall be paid by the entity or
person on which such tax is imposed.
15.7 Counterparts. This Agreement may be executed in one or more counterparts,
------------
all of which taken together shall be deemed one original. This Agreement
and any agreements referenced herein or required pursuant to the Closing
may be executed and delivered by facsimile signature. The parties agree to
deliver original signatures promptly following execution by facsimile
signature.
15.8 Expenses. Subject to any express provisions of this Agreement to the
--------
contrary, Purchaser shall bear the expenses, costs and fees (including
attorneys' fees) incurred by it, and Seller shall bear the expenses, costs
and fees (including attorneys' fees) incurred by it, in connection with the
transactions contemplated hereby, the preparation and execution of this
Agreement and compliance herewith.
15.9 Validity of Provisions. If any provision of this Agreement or any
----------------------
agreement referenced herein shall be held or deemed to be or shall, in
fact, be inoperative or unenforceable as applied in any particular case
because it conflicts with any other provision or provisions hereof or any
constitution, statute, rule of public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other case or circumstance, or
of rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to any extent whatsoever. The invalidity of
any one or more phrases, sentences, clauses, sections, or subsections of
this Agreement or any other agreements referenced herein shall not affect
the remaining portions thereof.
15.10 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New Jersey applicable to
contracts made and to be performed therein.
15.11 Monetary Values. All monetary values as set forth herein shall refer to
---------------
U.S. Dollars.
[SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PURCHASER:
CONAIR CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
Its: Vice President and General Counsel
----------------------------------
SELLER:
MEASUREMENT SPECIALTIES, INC.
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
CHIEF EXECUTIVE OFFICER
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