Exhibit 2.1
by and among
Xxxxx Holding Co.
(as Buyer)
and
baggallini, Inc.
(as Seller)
and
Xxxxx X. Xxxxxx
(Individually and in her capacity as
Trustee of the Xxxxx Xxxxx Xxxxxx Revocable Living Trust)
and
Xxxxxxxxx Xxx Xxxxxxx
Dated March 15, 2011
TABLE OF CONTENTS
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PAGE |
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ARTICLE 1 Definitions; Construction |
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2 |
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1.1 Definitions |
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2 |
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1.2 Construction |
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17 |
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ARTICLE 2 The Acquisition and the Closing |
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2.1 Asset Purchase Transaction |
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2.2 Liabilities Assumed and Excluded |
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2.3 Purchase Price |
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2.4 Post-Closing Adjustment |
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19 |
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2.5 Allocation of Purchase Price |
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21 |
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2.6 Updating of Certain Exhibits Prior to the Closing |
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21 |
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2.7 Closing |
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2.8 Closing Deliveries |
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22 |
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ARTICLE 3 Representations and Warranties of Seller, the Shareholders and Xx. Xxxxxx |
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25 |
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3.1 Organization and Good Standing; Capitalization |
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3.2 Authorization |
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3.3 Validity; Binding Effect |
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26 |
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3.4 Noncontravention |
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3.5 Financial Statements; Accounts Receivable; Inventory |
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27 |
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3.6 Books and Records |
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28 |
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3.7 Assets |
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28 |
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3.8 Real Property |
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3.9 Taxes |
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29 |
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3.10 Employee Benefits |
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31 |
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3.11 Compliance with Law |
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34 |
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3.12 Permits |
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34 |
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3.13 Litigation |
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35 |
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3.14 Contracts |
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35 |
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3.15 Insurance |
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37 |
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3.16 Environmental Matters |
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37 |
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3.17 Employment Matters |
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38 |
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3.18 Labor Disputes; Compliance |
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39 |
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3.19 Intellectual Property |
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40 |
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3.20 Relationships with Affiliates |
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3.21 Broker’s Fees |
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3.22 Customers, Suppliers |
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3.23 Bulk Sales |
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43 |
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3.24 Disclosure |
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43 |
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ARTICLE 4 Representations and Warranties of Buyer |
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43 |
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4.1 Organization and Good Standing |
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4.2 Authorization |
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43 |
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4.3 Validity; Binding Effect |
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43 |
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4.4 Noncontravention |
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43 |
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4.5 Broker’s Fees |
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43 |
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ARTICLE 5 Covenants of Seller Prior to Closing |
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44 |
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5.1 Access and Investigation |
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5.2 Operation of the Business of Seller |
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44 |
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5.3 Negative Covenant |
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45 |
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5.4 Required Approvals and Material Consents |
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46 |
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5.5 Notification |
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5.6 No Negotiation |
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46 |
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5.7 Best Efforts |
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47 |
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5.8 Interim Financial Statements |
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47 |
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5.9 Payment of Liabilities |
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47 |
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5.10 Bulk Sales Laws |
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47 |
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ARTICLE 6 Covenants of Buyer Prior to Closing |
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47 |
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6.1 Required Approvals |
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6.2 Best Efforts |
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ARTICLE 7 Conditions Precedent to Buyer’s Obligation to Close |
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48 |
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7.1 Accuracy of Representations |
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48 |
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7.2 Seller’s Performance |
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48 |
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7.3 Material Consents |
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48 |
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7.4 No Proceedings |
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48 |
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7.5 Permits |
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48 |
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7.6 Closing Deliveries |
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48 |
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7.7 No Injunction |
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7.8 Sourcing Agreement |
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48 |
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ARTICLE 8 Conditions Precedent to Seller’s Obligation to Close |
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49 |
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8.1 Accuracy of Representations |
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8.2 Buyer’s Performance |
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8.3 No Injunction |
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8.4 Closing Deliveries |
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49 |
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ARTICLE 9 Termination |
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49 |
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9.1 Termination Events |
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9.2 Effect of Termination |
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50 |
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ii
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ARTICLE 10 Additional Covenants |
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50 |
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10.1 Noncompetition, Nonsolicitation and Nondisparagement |
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10.2 Customer and Other Business Relationships |
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52 |
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10.3 Employees and Employee Benefits |
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10.4 Assistance in Proceedings |
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10.5 Taxes |
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10.6 Further Assurances |
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57 |
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10.7 Name Change |
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57 |
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10.8 Y & S Litigation |
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10.9 Opposition to China Trademark Filing |
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58 |
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ARTICLE 11 Indemnification and Remedies |
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58 |
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11.1 Indemnification and Reimbursement by Seller, the Shareholders and
Xx. Xxxxxx |
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11.2 Indemnification and Reimbursement by Buyer |
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59 |
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11.3 Survival |
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60 |
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11.4 Basket and Cap |
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60 |
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11.5 Third-Party Claims |
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60 |
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11.6 Other Claims |
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11.7 Escrow |
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11.8 Procedures for Resolving Indemnification Claims |
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11.9 Exclusive Remedy |
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11.10 Indemnity Payment Characterization |
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11.11 Concept of Indemnity |
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64 |
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ARTICLE 12 General Provisions |
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64 |
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12.1 Expenses |
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12.2 Confidentiality |
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65 |
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12.3 Public Announcements |
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65 |
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12.4 Notices |
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65 |
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12.5 Enforcement of Agreement |
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66 |
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12.6 Waiver; Remedies Cumulative |
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12.7 Entire Agreement and Modification |
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67 |
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12.8 Schedules |
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12.9 Assignments, Successors and No Third-Party Rights |
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12.10 Severability |
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12.11 Time of Essence |
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12.12 Governing Law |
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12.13 Execution of Agreement |
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68 |
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12.14 Shareholder Obligations |
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12.15 Jurisdiction; Service of Process |
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iii
EXHIBITS
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No. |
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Description |
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A |
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Accounts Receivable |
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B |
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Assumed Contracts |
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C |
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Methodology for Preparation of Closing Date Balance Sheet |
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D |
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Customer Orders |
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E |
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Excluded Assets |
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F |
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Purchase Orders |
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2.8(a)(i) |
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Xxxx of Sale |
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2.8(a)(ii) |
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Assignment and Assumption Agreement |
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2.8(a)(ix) |
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Escrow Agreement |
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2.8(a)(xiii) |
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Lease Agreement |
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2.8(c) |
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Consulting Agreement |
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2.8(e) |
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Intellectual Property Assignment |
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7.3 |
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Material Consents |
iv
THIS
ASSET PURCHASE AGREEMENT, entered into on March 15, 2011, by and among
Xxxxx Holding Co.,
an
Ohio corporation (“
Buyer”),
baggallini, Inc. an Oregon corporation, (“
Seller”),
Xxxxx X. Xxxxxx, a resident of the State of Washington (“
Xx. Xxxxxx”), both individually
and in her capacity as Trustee of the Xxxxx Xxxxx Xxxxxx Revocable Living Trust (the
“
Trust”) , and
Xxxxxxxxx Xxx Xxxxxxx, a resident of the State of Texas, (“
Xx.
Xxxxxxx”);
ARTICLE 1
Definitions; Construction
1.1 Definitions. All capitalized terms used in this Agreement shall have the meanings
given to such terms in this Section 1.1 below:
“Accounts Receivable” means customer trade accounts receivable set forth on
Exhibit A, as the same may be updated pursuant to Section 2.6(a), that were
incurred in Seller’s Ordinary Course of Business.
“Acquired Assets” means all of the assets of Seller, wherever located, used or held
for use by Seller in or for the operation of the Business, other than the Excluded Assets. Without
limiting the generality of the foregoing, the Acquired Assets include:
(i) all tangible personal property of Seller used or held for use in or for the
operation of the Business (such as tools, dies, equipment, packaging materials, displays,
advertising materials, raw materials, supplies, fixtures, leasehold improvements and
furniture);
(ii) all Accounts Receivable of Seller as of the Closing Date;
(iii) all Intellectual Property Assets, the goodwill associated therewith, all licenses
and sublicenses granted and obtained with respect thereto, all rights thereunder, all
remedies against infringement thereof, and all rights to protection of interests therein
under the Laws of all jurisdictions;
(iv) all of the Software;
(v) all of Seller’s right, title and interest in, to and under the Assumed Contracts;
(vi) all claims, customer deposits and other deposits, prepayments, refunds, causes of
action, chooses in action, rights of recovery, rights of set off, and rights of recoupment
(including any such item relating to the recovery of insurance proceeds) of Seller;
(vii) all franchises, approvals, permits, licenses, Orders, registrations,
certificates, variances and similar rights of Seller obtained from Governmental Authorities,
including, the Permits listed in Schedule 3.12;
(viii) all books, records, ledgers, files, documents, correspondence, lists (including
customer lists), drawings and specifications, creative materials, advertising and
promotional materials, studies, reports and other printed or written materials of Seller
relating to the Business; provided, that Seller will keep originals and provide to Buyer
copies of Seller’s organizational documents and tax records;
(ix) all Inventory;
(x) all of Seller’s rights under the Purchase Orders; and
(xi) all of the intangible rights and property of Seller, including its going concern
value, goodwill, telephone (except the cell phone numbers of Xx. Xxxxxx and Xx. Xxxxxxx) and telecopy numbers and listings and electronic mail
addresses.
2
“Active Employee” means any employee employed on the Closing Date by Seller, including
employees on temporary leave of absence, including family medical leave, military leave, temporary
disability or sick leave.
“Actions” has the meaning given to such term in Section 10.5(g)(i).
“Adjustment Amount” means an amount (which may be a positive or negative number) equal
to the amount determined by subtracting (i) the Estimated Closing Date Working Capital
Amount from (ii) the Closing Date Working Capital Amount.
“Adjustment Amount Calculation” means a written statement and detailed computation of
the Adjustment Amount prepared by Buyer.
“Affiliate” means, with respect to any Person, any other Person that controls, is
controlled by, or is under common control with, such Person. For purposes of making such
determination, a Person will be deemed to have control of another Person if such Person possesses
the power, directly or indirectly, to influence the actions, behavior, management or policies of
such other Person, whether as an officer, director, shareholder, member, manager, partner or
employee of such other Person, through voting control, agreement or otherwise.
“
Agreement” means this
Asset Purchase Agreement, executed by and among Buyer, Seller,
Xx. Xxxxxx and Xx. Xxxxxxx on the date first set forth above.
“Allocation” has the meaning given to such term in Section 2.5.
“Ancillary Documents” means all certificates, documents, instruments, contracts and
agreements, other than this Agreement, executed or delivered by any Person in connection with the
consummation of transactions contemplated hereby including, without limitation, the Xxxx of Sale,
the Assignment and Assumption Agreement and the Escrow Agreement.
“Assignment and Assumption Agreement” has the meaning given to such term in
Section 2.8(a)(ii).
“Assumed Contracts” means the Contracts listed on Exhibit B.
“Assumed Liabilities” means (i) the liabilities and obligations of Seller with respect
to the Assumed Contracts, other than for any act or action occurring prior to the Closing that
resulted or results in a breach or default, (ii) the liabilities and obligations of Seller with
respect to the Customer Orders, (iii) the Current Liabilities and (iv) the liabilities and
obligations of Seller with respect to the Purchase Orders.
“Balance Sheet” has the meaning given to such term in Section 3.5 (a)(i).
3
“Best Efforts” means the efforts that a prudent Person desirous of achieving a result
would use in similar circumstances to achieve that result as expeditiously as possible;
provided, however, that a Person required to use Best Efforts under this Agreement
will not be thereby required to take actions that would result in a material adverse change in the
benefits to such Person of this Agreement or to dispose of or make any material change to its
business, expend any material funds or incur any other material burden.
“Xxxx of Sale” has the meaning given to such term in Section 2.8(a)(i).
“Bulk Sales Law” means the bulk sales provisions of the Uniform Commercial Code, any
state Laws regarding bulk sales or bulk transfers or any similar Law.
“Business” has the meaning given to such term in the first recital of this Agreement.
“Business Day” means any day other than Saturday, Sunday or a Federal holiday.
“Buyer” has the meaning given to such term in the introductory paragraph of this
Agreement.
“Buyer Adjustment Amount” means the amount of the Adjustment Amount if the Adjustment
Amount is a negative number.
“Buyer Indemnified Persons” has the meaning given to such term in Section
11.1.
“Cap Amount” has the meaning given to such term in Section 11.4(a).
“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. §§ 9601-9657.
“Closing” means the consummation of the transactions contemplated by this Agreement.
“
Closing Date” means 5:00 p.m., Columbus,
Ohio time on the date on which the Closing
actually takes place.
“Closing Date Balance Sheet” means a balance sheet of the Business prepared as of the
close of business on the Closing Date in accordance with GAAP, but without giving effect to the
consummation of the transactions contemplated hereby, and in a manner consistent with the form
attached hereto as Exhibit C and the assumptions and methodologies contained therein;
provided that, in the event of any inconsistency between GAAP and the methodology by which the
balance sheet attached hereto as Exhibit C was prepared, the methodology in Exhibit C shall
control and be used in the preparation of the Closing Date Balance Sheet.
4
“Closing Date Working Capital Amount” means an amount determined as of the close of
business on the Closing Date, but without giving effect to the consummation of the transactions
contemplated hereby, equal to the result obtained by subtracting (i) the Current
Liabilities from (ii) the Current Assets.
“COBRA” has the meaning given to such term in Section 3.10(g).
“Code” means the Internal Revenue Code of 1986, as amended.
“Competing Business” means any business that is competitive with the Business on the
Closing Date or the business of the Buyer after the Closing Date, including any business that
involves the design, production or wholesale distribution of handbags, tote bags or travel
accessories. For purposes of this Agreement, a business which has a written license agreement with
the Buyer or an affiliate of Buyer to use the name “baggallini” shall not be a competing business.
“Confidential Information” means:
(i) all information of Seller, the Shareholders or Xx. Xxxxxx relating to Seller or the
Business that is a trade secret under applicable trade secret or other Law;
(ii) all information of Seller, either of the Shareholders or Xx. Xxxxxx relating to
the Business, concerning product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
past, current and planned research and development, current and planned manufacturing or
distribution methods and processes, current and anticipated customer requirements, price
lists, market studies, business plans, computer hardware, Software and database
technologies, systems, structures and architectures; and
(iii) all information concerning the business and affairs of Seller or the Business
(including historical and current financial statements, financial projections and budgets,
Tax returns and accountants’ materials, historical, current and projected sales, financial
forecasts, pricing, cost of goods, capital spending budgets and plans, business plans,
strategic plans, marketing and advertising plans, publications, client and customer lists
and files, contracts, the names and backgrounds of key personnel and personnel training
techniques and materials, however documented) and whether in written, electronic or other
form.
“Consent” means any approval, consent, ratification, waiver or other authorization by
any Person including any Governmental Authority.
“Confidentiality Agreement” means the letter agreement between X. X. Xxxxx Corporation
and Seller dated May 24, 2010.
5
“Contracts” has the meaning given to such term in Section 3.14(a).
“Copyrights” means all registered, unregistered or unregistrable works of authorship
and copyrights (including, but not limited to drawings and designs) in both published works and
unpublished works of Seller relating to the Business (whether United States or foreign).
“Current Assets” means (i) Seller’s Accounts Receivable (net of the Receivables
Reserve), (ii) Seller’s Finished Goods Inventory (net of reserves) and (iii) prepaid expenses to
the extent (and only to the extent) reflected on the Closing Date Balance Sheet as finally agreed
to or determined in accordance with Section 2.4 below. Current Assets do not include
Seller’s cash, cash equivalents, investment accounts, any Tax assets or any Excluded Assets.
“Current Liabilities” means the liabilities and obligations of Seller for current
liabilities, including Trade Payables, to the extent (and only to the extent) reflected on the
Closing Date Balance Sheet as finally agreed to or determined in accordance with Section
2.4 below. Current Liabilities do not include any Excluded Liabilities.
“Customer Claims” means any and all demands for replacement, refunds, returns or
allowances pertaining to products sold or distributed by Seller on or prior to the Closing Date
(other than claims by Buyer against Seller regarding products sold by Seller to Buyer pursuant to
this Agreement).
“Customer Orders” means all outstanding, unfilled, nondelinquent orders of customers
to purchase products of the Business as of the Closing Date, which are listed on Exhibit
D, as the same may be updated pursuant to Section 2.6(b).
“Damages” has the meaning given to such term in Section 11.1.
“Defined Benefit Plan” means an Employee Pension Benefit Plan of Seller which is
subject to the minimum funding requirements of Title IV of ERISA or the Code.
“Dispute Notice” has the meaning given to such term in Section 2.4(b).
“Dispute Period” has the meaning given to such term in Section 2.4(b).
“EGTRRA” means amendments to an Employee Pension Benefit Plan required by the Economic
Growth and Tax Relief Reconciliation Act of 2001, and all other amendments required prior to the
end of the initial remedial amendment period cycle set forth in Rev. Proc. 2005-66, as superseded
by Rev. Proc. 2007-44.
“Employee Benefit Plan” has the meaning given to such term in Section 3(3) of ERISA.
“Employee Pension Benefit Plan” has the meaning given to such term in Section 3(2) of
ERISA.
6
“Employee Plans” has the meaning given to such term in Section 3.10(a).
“Employee Welfare Benefit Plan” has the meaning given to such term in Section 3(1) of
ERISA.
“Environment” means all soil, land, surface or subsurface strata, surface waters
(including navigable waters and ocean waters), ground waters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life and any other environmental
medium or natural resource.
“Environmental, Health and Safety Liabilities” means any cost, damage, expense,
liability, obligation or other responsibility arising from or under any Environmental Law or
Occupational Safety and Health Law, including those consisting of or relating to:
(i) any environmental, health or safety matter or condition (including on-site
contamination, occupational safety and health and regulation of any chemical substance or
product);
(ii) any fine, penalty, judgment, award, settlement, legal or administrative
proceeding, damage, loss, claim, demand or response, remedial or inspection cost or expense
arising under any Environmental Law or Occupational Safety and Health Law;
(iii) financial responsibility under any Environmental Law or Occupational Safety and
Health Law for cleanup costs or corrective action, including any cleanup, removal,
containment or other remediation or response actions (“Cleanup”) required by any
Environmental Law or Occupational Safety and Health Law; or
(iv) any other compliance, corrective or remedial measure required under any
Environmental Law or Occupational Safety and Health Law.
The terms “removal,” “remedial” and “response action” include the types of activities covered by
CERCLA.
“Environmental Law” means any Law that regulates or relates to:
(i) advising appropriate authorities, employees or the public of intended or actual
Releases of pollutants or hazardous substances or materials, violations of discharge limits
or other prohibitions and the commencement of activities, such as construction, that could
impact the Environment;
(ii) preventing or reducing to acceptable levels the Release of Hazardous Material into
the Environment;
7
(iii) reducing the concentrations or volume, or preventing the Release or minimizing
the hazardous characteristics, of wastes that are generated, emitted or disposed of, and
ensuring that wastes, including Hazardous Material, are disposed of properly;
(iv) assuring that products are designed, formulated, packaged and used so that they do
not present unreasonable risks to human health or the Environment when used or disposed of;
(v) protecting resources, species or ecological amenities;
(vi) reducing to acceptable levels the risks inherent in the transportation of
Hazardous Material or other potentially harmful substances;
(vii) cleaning up pollutants that have been Released, preventing the Threat of Release
or paying the costs of such clean up or prevention;
(viii) making responsible parties pay private parties, or groups of them, for damages
done to their health or the Environment or permitting self-appointed representatives of the
public interest to recover for injuries done to public assets; or
(ix) Permits for the treatment, storage, disposal, emission or discharge of Hazardous
Material, including Permits required for the construction or operation of equipment or
processes that have the potential to emit or generate Hazardous Material.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means (i) any Person included with Seller in a controlled group
within the meaning of Section 414(b) of the Code, (ii) any trade or business (whether or not
incorporated) which is under common control with Seller within the meaning of Section 414(c) of the
Code, (iii) any member of any affiliated service group of which Seller is a member within the
meaning of Section 414(m) of the Code, or (iv) any other Person treated as an affiliate of Seller
under Section 414(o) of the Code.
“Escrow Agent” means the escrow agent designated in the Escrow Agreement.
“Escrow Agreement” has the meaning given to such term in Section 2.8(a)(ix).
“Escrow Fund” means the fund organized by the Escrow Agent in accordance with the
terms of the Escrow Agreement.
“Estimated Closing Date Working Capital Amount” means $4,600,000.
8
“Excess Benefit Plan” has the meaning given to such term in Section 3(36) of ERISA.
“Excluded Assets” means (i) Seller’s cash and cash equivalents, (ii) Seller’s
corporate record book and corporate seal, (iii) Seller’s rights under this Agreement (or under any
Ancillary Documents executed or delivered by Seller), (iii) accounts receivable that are listed on
Exhibit A, as the same may be updated pursuant to Section 2.6(a), and (iv) any
asset listed on Exhibit E hereto.
“Excluded Liability” means any liability or obligation of Seller, direct or indirect,
known or unknown, absolute or contingent, not expressly defined in this Agreement as an Assumed
Liability. Without limiting the generality of the foregoing, an “Excluded Liability”
includes any liability or obligation of Seller:
(i) except as otherwise provided for by Section 10.5(d), any Taxes or other
obligation and expense of any kind or nature relating to Taxes, including without
limitation, any liabilities, obligations and expenses pursuant to any tax sharing agreement,
tax indemnification or similar arrangement (and all penalties, interest and additions with
respect thereto) (A) payable with respect to any of the Seller, either of the Shareholders,
Xx. Xxxxxx, the Business, the Acquired Assets or any other assets or properties of the
Seller, or (B) incident to or arising as a consequence of the negotiation or consummation of
this Agreement and the transactions contemplated hereby by Seller, the Shareholders and Xx.
Xxxxxx;
(ii) for costs, fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby including any claims for brokerage or finder’s fees or
commissions or similar payments in connection with the transactions contemplated hereby,
including any fees owing to X.X. Xxxxxxxx & Co.;
(iii) resulting from, arising out of, relating to, in the nature of, or caused by any
(A) breach of contract, (B) tort, (C) infringement or violation of Law or of any Order, or
(D) environmental matter, including, those arising under Environmental, Health and Safety
Liabilities;
(iv) which relates to any Excluded Asset or to the operation of the Business prior to
the Closing, unless an Assumed Liability, including all trade accounts payable of Seller
other than the Trade Payables;
(v) for unpaid remuneration and/or compensation due to Seller’s employees through the
close of business on the Closing Date, such as accrued but unpaid salary, wages, bonuses,
commissions, and vacation pay;
(vi) under any employment, severance, retention, bonus or termination agreement with
any employee of Seller or under any Employee Welfare Benefit Plan;
9
(vii) arising out of or relating to any employee grievance, the facts or circumstances
of which occurred prior to the Closing, whether or not the affected employees are hired by
Buyer at or after the Closing;
(viii) arising out of any Litigation or workers’ compensation claim pending or settled
as of the Closing (and any Litigation relating in any way to any workers’ compensation
claim, the facts and circumstances of which occurred prior to the Closing);
(ix) arising out of any Litigation or workers’ compensation claim commenced after the
Closing Date relating to any occurrence or event happening prior to or on the Closing Date;
(x) under this Agreement (or under any Ancillary Document);
(xi) any amount owing to either of the Shareholders, Xx. Xxxxxx or any of their
respective family members or beneficiaries;
(xii) all long-term liabilities and Indebtedness;
(xiii) under or arising from any contract or agreement other than the Assumed
Contracts;
(xiv) arising under or related to any Product Liability Claim;
(xv) arising under or related to any Customer Claim; and
(xvi) arising out of any Proceeding involving the Business, the Seller or either
Shareholder pending as of the Closing Date or arising out of or relating to any occurrence
or event happening prior to the Closing Date.
“Facilities” or “Facility” means any real property currently or formerly
owned, leased, occupied or operated by Seller, including the tangible personal property used,
leased or operated by Seller at the respective locations of such real property.
“Financial Statements” has the meaning given to such term in Section
3.5(a)(i).
“Finished Goods Inventory” means packaged, saleable products.
“GAAP” means generally accepted accounting principles for financial reporting in the
United States of America, consistently applied.
“Governmental Authority” means any (i) nation, state, county, city, town, borough,
village, district or other jurisdiction, (ii) federal, state, local, municipal, foreign or other
government, (iii) governmental or quasi-governmental authority of any nature, (iv) multinational
organization or body, (v) body exercising or entitled or purporting to
exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power, or (vi) official of any of the foregoing.
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“Hazardous Activity” means the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage, transfer,
transportation, treatment or use (including any withdrawal or other use of groundwater) of
Hazardous Material in, on, under, about or from any of the Facilities or any part thereof and any
other act, business, operation or thing that violates any Environmental Law, or increases the
danger, or risk of danger, or poses an unreasonable risk of harm, to Persons or property on or off
the Facilities.
“Hazardous Material” means any substance, material or waste which is regulated by any
Governmental Authority, including any material, substance or waste which is defined as a “air
pollutant,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous
waste,” “restricted hazardous waste,” “contaminant,” “toxic waste” or “toxic substance” under any
provision of Law, including lead paint, petroleum, petroleum products, asbestos, presumed
asbestos-containing material or asbestos-containing material, urea formaldehyde and polychlorinated
biphenyls.
“Hired Active Employee” has the meaning given to such term in Section
10.3(a)(i).
“Indebtedness” means, with respect to a Person, without duplication, all of the
following, including accrued and unpaid interest, fees and expenses of such Person with respect to
the following: (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations or liabilities under or in
connection with letters of credit or bankers’ acceptances or similar items, (iv) obligations to pay
the deferred purchase price of property or services other than trade payables incurred in the
Ordinary Course of Business, (v) obligations under capitalized leases, (vi) obligations arising out
of interest rate and currency swap arrangements and any other arrangements designed to provide
protection against fluctuations in interest or currency rates, (vii) deferred purchase price
obligations related to past asset or equity acquisitions by such Person, (viii) all indebtedness of
other Persons guaranteed or secured by such Person, and (ix) any and all amounts due from such
Person to any Affiliate of such Person.
“Indemnified Person” has the meaning given to such term in Section 11.5(a).
“Indemnifying Person” has the meaning given to such term in Section 11.5(a).
“Indemnity Escrow Amount” means $3,375,000.
“Independent Accountants” has the meaning given to such term in Section
2.4(g).
“Intellectual Property Assets” means all intellectual property (owned or licensed) by
Seller in connection with the operation of the Business, including, but not limited to,
the Marks, the Patents, the Copyrights, the Trade Secrets, the Net Names, and all rights in
mask works, and the goodwill associated with all of the foregoing.
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“Intellectual Property Assignments” has the meaning given to such term in Section
2.8(e).
“Inventory” means all inventories of Seller, wherever located, including all Finished
Goods Inventory, work in process, raw materials, spare parts and all other materials and supplies
to be used or consumed by Seller in the production or final assembly of finished goods.
“IRS” means the United States Internal Revenue Service and, to the extent relevant,
the United States Department of the Treasury.
“Knowledge” means that a Person has knowledge of a particular fact or matter contained
in a representation or warranty set forth in this Agreement. Seller will be deemed to have
Knowledge of a particular fact or other matter if Xx. Xxxxxx, Xx. Xxxxxxx or Xxxxxx Xxxxxx has, or
at any time had, knowledge of that fact or other matter. An individual shall be deemed to have
knowledge of a particular fact or other matter if (a) such individual is actually aware of such
fact or other matter or (b) a prudent individual would be expected to discover or otherwise become
aware of such fact or other matter during the performance of such individual’s duties for his
employer.
“Lease Agreement” has the meaning given to such term in Section 2.8(a)(xiii).
“Leased Property” has the meaning given to such term in Section 3.8.
“Law” means any federal, state, local, municipal, foreign, international,
multinational or other constitution, law, ordinance, principle of common law, code, regulation,
rule, ruling, statute or treaty (or other proclamation having the force of law).
“Letter of Intent” means the letter of intent dated January 26, 2011, by and between
Seller and X. X. Xxxxx Corporation, relating to the transactions contemplated hereby.
“Liens” means any and all charges, liens, mortgages, deeds of trust, encumbrances,
claims, community or other marital property interests, conditions, equitable interests, options,
pledges, security interests, rights-of-way, easements, encroachments, servitudes, rights of first
option, rights of first refusal, rights of first offer, restrictions on transfer or similar
restrictions, conditional sales contracts or other similar conflicting ownership interests.
“Litigation” means any and all actions, arbitrations, audits, Proceedings, hearings,
investigations, litigation (including appeals thereof) or suits (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, whether public or private)
commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental
Authority or arbitrator.
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“Marks” means all assumed and fictitious business names, trade names, trade dress,
registered and unregistered trademarks, service marks and applications owned by or licensed to
Seller (whether United States or foreign). Marks shall include the name “baggallini” and all
derivations thereof and the rights to use the same names alone or in combination with other words,
along with all related goodwill.
“Material Adverse Effect” means any event, fact, occurrence or circumstance that (i)
has or is reasonably likely to have a material and adverse effect on the financial condition,
business, operations, assets, properties, or prospects of Seller or the Business, (ii) does or
would prevent or materially impair the ability of Seller, either of the Shareholders or Xx. Xxxxxx
to carry out its, her or their respective obligations under this Agreement and any Ancillary
Documents or (iii) would threaten or impede the consummation of the transactions contemplated by
this Agreement.
“Material Consents” has the meaning given to such term in Section 7.3.
“Xx. Xxxxxx” has the meaning given to such term in the introductory paragraph of this
Agreement. All references in this Agreement to Xx. Xxxxxx include Xx. Xxxxxx in her individual
capacity.
“Xx. Xxxxxxx” has the meaning given to such term in the introductory paragraph of this
Agreement.
“Multiemployer Plan” has the meaning given to such term in Section 3(37) of ERISA.
“Net Names” means internet web site names, internet domain names, social media site
names and the like used or held for use in connection with the Business.
“No Material Adverse Change” means that between the date of the Balance Sheet and the
Closing, the business, operations, assets, properties and prospects of Seller and the Business
shall have not been, or be threatened to be, materially and adversely affected in any way as a
result of any event, occurrence, act or omission.
“Noncompetition Period” means the period of time commencing on the Closing Date, and
expiring at 11:50 p.m. (EDT) on the third anniversary of the Closing Date.
“Occupational Safety and Health Law” means any Law designed to provide safe and
healthy working conditions and to reduce occupational safety and health hazards, including the
Occupational Safety and Health Act.
“Opposition Filing” has the meaning given to such term in Section 10.9.
“Order” means any order, injunction, judgment, decree, ruling, assessment or award of
any Governmental Authority or arbitrator.
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“Ordinary Course of Business” means an action taken by a Person only if such action:
(i) is consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal, day-to-day operations of such Person;
(ii) does not require authorization by the board of directors or shareholders of such
Person (or by any Person or group of Persons exercising similar or delegated authority, such
as managers or members of a limited liability company or general partners of a limited
partnership) and does not require any other separate or special authorization of any nature;
and
(iii) is similar in nature, scope and magnitude to actions customarily taken, without
any separate or special authorization, in the ordinary course of the normal, day-to-day
operations of other Persons that are in the same line of business as such Person.
“Parties Accountants” has the meaning given to such term in Section 2.4(f).
“Parties Accountants Resolution Period” has the meaning given to such term in
Section 2.4(f).
“Parties Resolution Period” has the meaning given to such term in Section
2.4(e).
“Patents” means all patents, patent applications, inventions and discoveries that may
or may not be patentable or patented which are owned by or licensed to Seller (whether United
States or foreign).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Permit” means any consent, approval, ratification, waiver or other authorization,
license, registration (not including, any patent, trademark or copyright applications or
registrations) or permit issued, granted, given or otherwise made available by or under the
authority of any Governmental Authority or pursuant to any Law.
“Person” means an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust, unincorporated
association, joint venture or other entity or a Governmental Authority.
“Position Statement” has the meaning given to such term in Section 2.4(g).
“Post-Closing Delivery” has the meaning given to such term in Section 2.4(a).
“Proceeding” means any action, arbitration, audit, hearing, investigation, litigation
or suit (whether civil, criminal, administrative, judicial or investigative,
whether formal or informal, whether public or private) commenced, brought, conducted or heard
by or before, or otherwise involving, any Governmental Authority or arbitrator.
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“Product Liability Claims” means any and all product liability claims or other claims
for injury to person or property relating to products manufactured, distributed or sold by Seller,
whether based on theories of tort, contract, strict liability, express or implied warranty or
otherwise.
“Purchase Orders” means all orders placed by Seller with Seller’s sourcing agent in
China for the manufacture of products outstanding as of the Closing Date, which are listed on
Exhibit F, as the same may be updated pursuant to Section 2.6(c).
“Purchase Price” has the meaning given to such term in Section 2.3(a).
“Receivable Reserves” means the reserves for Accounts Receivable set forth on the
Closing Date Balance Sheet.
“Release” means any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the
Environment or into or out of any property.
“Remedial Action” means all actions required or voluntarily undertaken (i) to clean
up, remove, treat or in any other way address any Hazardous Material or other substance, (ii) to
prevent the Release or Threat of Release or to minimize the further Release of any Hazardous
Material or other substance so it does not migrate or endanger or threaten to endanger public
health or welfare or the Environment, (iii) to perform pre-remedial studies and investigations or
post-remedial monitoring and care, or (iv) to bring all Facilities and the operations conducted
thereon into compliance with Environmental Laws and environmental Permits.
“Representative” means, with respect to a particular Person, any director, officer,
manager, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or
other representative of that Person.
“Rules” shall have the meaning given to such term in Section 11.8(a).
“SBDC” has the meaning given to such term in Section 2.8(d).
“Securities Act” means the Securities Act of 1933, as amended.
“Seller” has the meaning given such term in the introductory paragraph of this
Agreement.
“Seller Adjustment Amount” means the amount of the Adjustment Amount if the Adjustment
Amount is a positive number.
“Seller Indemnified Persons” has the meaning given to such term in Section
11.2.
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“Seller’s Basket” has the meaning given to such term in Section 11.4(a).
“Shareholders” means Xx. Xxxxxxx and Xx. Xxxxxx in her capacity as Trustee of the
Trust, each of whom is a “Shareholder”.
“Software” means all of Seller’s computer software and subsequent versions and
releases thereof, including source code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons and icons and all files, data,
materials, manuals, design notes and other items and documentation related thereto or associated
therewith.
“Sourcing Agreement” has the meaning given to such term in Section 2.8(d).
“Tax” or “Taxes” shall mean all (a) taxes, charges, withholdings, fees,
levies, imposts, duties and governmental fees or other like assessments or charges of any kind
whatsoever in the nature of taxes imposed by any United States federal, state, or local or any
foreign or other Governmental Authority (including but not limited to those related to income, net
income, gross income, receipts, capital, windfall profit, severance, property (real and personal),
production, sales, goods and services, use, business and occupation, license, excise, registration,
franchise, employment, payroll (including social security contributions), deductions at source,
withholding, alternative or add-on minimum, intangibles, ad valorem, transfer, gains, stamp,
customs, duties, estimated, transaction, title, paid-up capital, profits, premium, value added,
recording, inventory and merchandise, business privilege, federal highway use, commercial rent or
environmental tax, and any liability under unclaimed property, escheat, or similar regulations),
(b) interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental
Authority in connection with (i) any item described in clause (a) or (ii) the failure to comply
with any requirement imposed with respect to any Tax Return, and (c) liability in respect of any
items described in clause (a) and/or (b) payable by reason of any contract (including any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar contract or
arrangement, whether written or unwritten), assumption, transferee, successor or similar liability,
operation of law (including pursuant to Treasury Regulations Section 1.1502-6 (or any predecessor
or successor thereof or any analogous or similar state, local, or foreign Regulations)) or
otherwise.
“Tax Returns” means federal, state, local and foreign tax returns, reports,
declarations, information returns, statements and other similar filings relating to Taxes,
including any schedule or attachment thereto, and including any amendment thereof.
“Territory” means the United States and each state thereof and every other country in
the world in which (i) the Seller is marketing and selling the products of the Business on the
Closing Date or (ii) the Buyer markets and sells products after the Closing Date.
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“Third-Party Claim” means any claim against any Indemnified Person by a Person not a
party to this Agreement, whether or not involving Litigation.
“Third-Party Software” has the meaning given to such term in Section 3.19(h).
“Threat of Release” means a reasonable likelihood of a Release that may require action
in order to prevent or mitigate damage to the Environment that may result from such Release.
“Trade Payables” means the trade accounts payable of Seller to the extent (and only to
the extent) reflected on the Closing Date Balance Sheet as finally agreed to in accordance with
Section 2.4.
“Trade Secrets” means all of Seller’s know-how, trade secrets, confidential or
proprietary information, customer lists, Software, technical information, data, process technology,
plans, drawings and blue prints.
“Treasury Regulations” means those regulations promulgated under the Code, as
currently in effect, and as modified and clarified by amendment or successor regulation.
“Trust” has the meaning given to such term in the introductory paragraph of this
Agreement.
“WARN Act” means the Worker Adjustment and Retraining Notification Act.
“Working Capital Calculation” means a written statement and detailed computation of
the Closing Date Working Capital Amount as prepared by Buyer.
“Y & S Litigation” has the meaning given to such term in Section 10.8.
1.2 Construction.
(a) The meanings of terms defined herein are equally applicable to the singular and
plural of such defined terms.
(b) Except as otherwise specifically provided, the words “hereof,” “herein,” “hereto,”
“hereunder” and similar words refer to this Agreement as a whole and not to any particular
provision of this Agreement. Any references herein to “Section,” “subsection,” “paragraph,”
“subparagraph,” “Article,” “Exhibit” or “Schedule” refer to the sections, subsections,
paragraphs, subparagraphs, articles, exhibits and schedules to this Agreement, as
appropriate.
(c) The headings of articles and sections to this Agreement are provided for
convenience only and will not affect the construction or interpretation hereof.
17
(d) This Agreement and all Exhibits and Schedules hereto are a result of negotiations
among the parties hereto. Accordingly, neither this Agreement nor any Exhibit or Schedule
hereto shall be construed against any party because of such party’s or its counsel’s
involvement in its preparation.
(e) Reference to any Law means such Law as amended, modified, codified, replaced or
reenacted, in whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or other provision of any
Law means that provision of such Law from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment of such
section or other provision.
(f) “Including” (and with correlative meaning “include”) means including without
limiting the generality of any description preceding such term.
(g) Except as otherwise specifically set forth herein, all references to dollars or
other monetary values or currency herein or the symbol “$” shall be deemed to be references
to currency of the United States of America.
2.1
Asset Purchase Transaction. On the Closing Date, but subject to the terms and
conditions set forth in this Agreement, Seller shall sell, convey, transfer and assign the Acquired
Assets to Buyer, free and clear of all Liens, and Buyer shall purchase and acquire the Acquired
Assets and assume the Assumed Liabilities from Seller.
2.2
Liabilities Assumed and Excluded. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Buyer shall assume the Assumed Liabilities. Buyer
expressly does not assume and does not agree to and shall not assume any Excluded Liabilities.
Seller shall promptly pay, discharge and perform in full all Excluded Liabilities when and as the
same become due.
2.3
Purchase Price. The consideration for the Acquired Assets will be (a) $33,750,000
plus or minus the Adjustment Amount (the “
Purchase Price”) and (b) the assumption of the
Assumed Liabilities. At the Closing, the Purchase Price, prior to adjustment on account of the
Adjustment Amount pursuant to
Section 2.4, shall be delivered by Buyer to Seller as
follows: (a) $30,375,000 by wire transfer to a bank account designated by Seller; (b) $3,375,000
(which is the amount of the Indemnity Escrow Amount) to the Escrow Agent pursuant to the Escrow
Agreement. Buyer shall also deliver to Seller the Assignment and Assumption Agreement. The
Adjustment Amount shall be paid in accordance with
Section 2.4.
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(a) As promptly as reasonably practicable after the Closing Date, and in any event not
later than 90 days after the Closing Date, Buyer shall prepare and deliver to Seller (i) the
Closing Date Balance Sheet, (ii) the Working Capital Calculation, and (iii) the Adjustment
Amount Calculation (such delivery, the “Post-Closing Delivery”).
(b) Seller shall have 30 days from the date Buyer makes the Post-Closing Delivery (such
period, the “Dispute Period”) to notify Buyer, in writing, as to whether Seller
agrees or disagrees with Buyer’s (i) preparation of the Closing Date Balance Sheet, (ii)
Working Capital Calculation, and/or (iii) Adjustment Amount Calculation (such written
notice, if any, the “Dispute Notice”). During the Dispute Period, Buyer shall
timely provide copies of its working papers upon the request of Seller and its
Representatives, and, where applicable, Buyer shall make commercially reasonable efforts to
cause its accountants to provide copies of its working papers upon the request of Seller and
its Representatives, in each case relating to the matters set forth in the Post-Closing
Delivery.
(c) Seller may only object to Buyer’s (i) preparation of the Closing Date Balance
Sheet, (ii) Working Capital Calculation and/or (iii) Adjustment Amount Calculation, by
delivering a Dispute Notice to Buyer during the Dispute Period.
(d) If Seller fails to deliver a Dispute Notice to Buyer during the Dispute Period, (i)
the Closing Date Balance Sheet as prepared by Buyer shall be deemed to have been correctly
prepared, (ii) the Working Capital Calculation and Adjustment Amount Calculation prepared by
Buyer shall be deemed to be correct and complete, and (iii) the calculation of the Closing
Date Working Capital Amount and the Adjustment Amount by Buyer shall be deemed final and
correct and shall each be binding upon each of the parties hereto.
(e) If Seller delivers a Dispute Notice to Buyer during the Dispute Period, Seller and
Buyer shall, for a period of 45 days from the date the Dispute Notice is received by Buyer
(such period, the “Parties Resolution Period”), use their respective Best Efforts to
resolve the items in dispute. Any items so resolved by the parties shall be deemed to be
final and correct as so resolved and shall be binding upon each of the parties hereto.
(f) If Seller and Buyer are unable to resolve all of the items in dispute during the
Parties Resolution Period, then either Buyer or Seller may give the other party written
notice that such party intends to refer the items remaining in dispute to the parties’
respective independent accounting firms for resolution. Buyer and Seller shall each, within
ten days after delivery of such notice and at their own expense, appoint (and notify the
other of such appointment) an
accounting firm of their choice (collectively, the “Parties Accountants”) and
notify the other party of that choice. The Parties Accountants shall, for a period of 45
days from the date of the last notice of the choice of the Parties’ Accountants (such
period, the “Parties Accountants Resolution Period”), attempt to reach mutual
agreement on the items in dispute. In the event the Parties Accountants reach mutual
agreement on the items in dispute within the Parties Accountants Resolution Period, such
items so resolved by the Parties Accountants shall be final and binding upon the parties
hereto and shall not be subject to judicial review or other Proceeding.
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(g) If the Parties Accountants are unable to resolve all of the items in dispute during
the Parties Accountants Resolution Period, then the Parties Accountants shall, within 15
days after the end of the Parties Accountants Resolution Period, jointly appoint a
disinterested, nationally or regionally-recognized accounting firm to serve as the
independent accounting firm to resolve such disputed items (the “Independent
Accountants”). The Independent Accountants selected by the Parties Accountants shall be
final and binding. Upon the selection of the Independent Accountants, Buyer or Seller shall
refer the items remaining in dispute to the Independent Accountants, which referral shall be
made in writing, copies of which shall concurrently be delivered to the parties hereto. The
referring party shall furnish the Independent Accountants, at the time of such referral,
with the Post-Closing Delivery and the Dispute Notice. The parties shall also furnish the
Independent Accountants with such other information and documents as the Independent
Accountants may reasonably request in order for them to resolve the items in dispute. Buyer
and Seller shall also, within ten days of the date the items in dispute are referred to the
Independent Accountants, provide the Independent Accountants with a written notice (a
“Position Statement”) describing in reasonable detail their respective positions on
the items in dispute (copies of which will concurrently be delivered to the other parties
hereto). If any party fails to timely deliver its Position Statement to the Independent
Accountants, the Independent Accountants shall resolve the items in dispute solely upon the
basis of the information otherwise provided to them. The Independent Accountants shall
resolve all disputed items in a written determination to be delivered to each of the parties
hereto within 45 days after such matter is referred to them; provided,
however, that any delay in delivering such determination shall not invalidate such
determination or deprive the Independent Accountants of jurisdiction to resolve the items in
dispute. The decision of the Independent Accountants as to the items in dispute shall be
final and binding upon the parties hereto and shall not be subject to judicial review or
other Proceeding. The fees and expenses of the Independent Accountants incurred in the
resolution of any items in dispute shall be determined by the Independent Accountants and
set forth in their report and shall be allocated and paid by Buyer and Seller, in inverse
proportion to the extent they prevailed on the items in dispute.
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(h) Within five days after the final determination of the Adjustment Amount (whether
through failure of Seller to timely deliver a Dispute Notice,
agreement of the parties, a determination of the Parties Accountants or determination
of the Independent Accountants) the Purchase Price shall be adjusted as follows:
(i) if the Adjustment Amount results in a Buyer Adjustment Amount, Seller
shall pay to Buyer, within two Business Days from the date on which the Adjustment
Amount is finally determined, by wire transfer of immediately available funds to an
account specified by Buyer in writing, the Buyer Adjustment Amount.
(ii) if the Adjustment Amount results in a Seller Adjustment Amount, Buyer
shall pay to Seller, within two Business Days from the date on which the Adjustment
Amount is finally determined, by wire transfer of immediately available funds to an
account specified by Seller in writing, the Seller Adjustment Amount.
2.5
Allocation of Purchase Price. The Purchase Price, as adjusted, shall be allocated
among the Acquired Assets. Buyer shall retain, and pay the expenses of, a valuation firm to
perform within 60 days following the Closing an allocation of the Purchase Price among the Acquired
Assets (the “
Allocation”), and such Allocation shall be used by all of the parties hereto.
Neither Seller, Buyer, either of the Shareholders nor Xx. Xxxxxx shall take a position on any tax
return (including, without limitation, IRS Form 8594, and any amendments thereto), before any
Governmental Authority charged with the collection of any Tax, or in any Proceeding that is
inconsistent with the Allocation (taking into account any subsequent amendments required by law)
without the prior written consent of the other parties hereto. Seller, Buyer, the Shareholders and
Xx. Xxxxxx shall make their respective IRS Forms 8594 (and any amendments thereto) filed or to be
filed with the IRS available for inspection by the other party for the purpose of verifying
compliance with this
Section 2.5 and the Allocation.
(a) Within two Business Days of the Closing Date, Seller and Buyer shall update the list of
Accounts Receivable included as Exhibit A to this Agreement to include all customer trade
accounts receivable of Seller arising in the Ordinary Course of Business of Seller after the date
of this Agreement; provided, however, that no such Accounts Receivable shall be added to
Exhibit A if Buyer determines, in good faith and after consultation with Xxxxxx Xxxxxx,
that such Accounts Receivable are reasonably unlikely to be fully collectible within 90 days
following the Closing as a result of Seller’s providing extended payment terms to the customer, the
customer’s financial condition or other factors known to Buyer.
(b) Within two Business Days of the Closing Date, Seller and Buyer shall update the list of
Customer Orders that is included as Exhibit D to this Agreement to include all outstanding,
unfilled, non-delinquent orders of customers to purchase
products of the Business as of the Closing Date that are not listed on said Exhibit D
because such Customer Orders were entered into in the Ordinary Course of Business of Seller after
the date of this Agreement.
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(c) Within two Business Days of the Closing Date, Seller and Buyer shall update the list of
Purchase Orders included as Exhibit F to this Agreement to include all orders placed by
Seller with Seller’s sourcing agent in China after the date of this Agreement so long as such
Purchase Orders have been entered into in the Ordinary Course of Business of Seller and are
consistent with Seller’s past practice.
2.7
Closing. The Closing will take place at the offices of Buyer’s legal counsel,
Vorys, Xxxxx, Xxxxxxx and Xxxxx, LLP, Columbus,
Ohio, commencing at 10:00 a.m. (local time) on
March 31, 2011, unless Buyer and Seller otherwise agree. To the extent reasonably practicable, the
parties shall use Best Efforts to effect the Closing through electronic means of communication.
Subject to the provisions of
Article 9, failure to consummate the purchase and sale
provided for in this Agreement and at the place determined pursuant to this
Section 2.6
will not result in the termination of this Agreement and will not relieve any party of any
obligation under this Agreement. In such a situation, the Closing will occur as soon as
practicable, subject to
Article 9.
2.8
Closing Deliveries. In addition to any other documents to be delivered under the
provisions of this Agreement, at the Closing:
(a) Seller shall (and the Shareholders and Xx. Xxxxxx shall cause Seller to) deliver
the following to Buyer, all of which shall be in form and substance reasonably satisfactory
to Buyer and its counsel:
(i) One or more bills of sale for all of the Acquired Assets that are items of
tangible personal property, substantially in the form attached hereto as Exhibit
2.8(a)(i), duly executed by Seller (the “Xxxx of Sale”);
(ii) An assignment of all of the Acquired Assets that are items of intangible
property (other than the Intellectual Property Assets), including the Assumed
Contracts, substantially in the form attached hereto as Exhibit 2.8(a)(ii),
duly executed by Seller (the “Assignment and Assumption Agreement”);
(iii) Assignments by Seller of all Intellectual Property Assets, in proper form
for recordation with respect to the registered Intellectual Property Assets with the
United States Patent and Trademark Office, or other appropriate office, duly
executed by Seller;
(iv) Such other deeds, bills of sale, assignments, certificates of title,
documents, and other instruments of transfer and conveyance as may reasonably be
requested by Buyer;
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(v) Copies of Seller’s articles of incorporation and by-laws, each as amended
to date, and certified as to accuracy by an officer of Seller;
(vi) A Certificate of Existence for Seller from the Oregon Secretary of State
and from each jurisdiction in which it is qualified to do business, each dated no
more than ten days prior to the Closing Date;
(vii) A certificate of a duly authorized officer of Seller, to be dated as of
the Closing Date, certifying (A) the resolutions duly adopted by the board of
directors and each of the Shareholders, authorizing and approving the execution,
delivery and performance of this Agreement and the transactions contemplated hereby,
(B) that such resolutions have not been rescinded or modified and remain in full
force and effect as of the Closing, and (C) to the incumbency and signatures of the
officers of Seller executing this Agreement and any other document executed on
behalf of Seller in connection with this Agreement and the transactions contemplated
hereby;
(viii) A certificate executed by Seller, each of the Shareholders and Xx.
Xxxxxx as to the accuracy of their representations and warranties as of the date of
this Agreement and as of the Closing Date in accordance with Section 7.1 and
as to their compliance with and performance of their covenants and obligations to be
performed or complied with at or before the Closing in accordance with Section
7.2;
(ix) An escrow agreement substantially in the form of Exhibit
2.8(a)(ix), executed by Seller, each of the Shareholders and the Escrow Agent
(the “Escrow Agreement”);
(x) An affidavit of Seller pursuant to Section 1445(b)(2) of the Code stating,
under penalties of perjury, Seller’s United States taxpayer identification number
and that Seller is not a foreign person, which affidavit complies with the
requirements of Treasury Regulation Section 1.1445-2(b)(2).
(xi) An opinion of Xxxx Xxxxxxxx, Esq., dated as of the Closing Date, in form
and substance reasonably acceptable to Buyer;
(xii) Releases of all Liens on the Acquired Assets;
(xiii) A Lease Agreement between Buyer and Xxxxx-Xxx, LLC in the form attached
hereto as Exhibit 2.8(a)(xiii) (the “Lease Agreement”), duly
executed; and
(xiv) Evidence of the termination by Seller of the employment of the Hired
Active Employees effective as of the Closing;
(xv) Such other documents as Buyer or its counsel may reasonably require.
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(b) Buyer shall deliver the following to Seller, all of which shall be in form and
substance reasonably satisfactory to Seller and its counsel:
(i) $30,375,000 by wire transfer to an account specified by Seller in writing,
prior to the Closing Date;
(ii) The Escrow Agreement, executed by Buyer and the Escrow Agent, together
with the delivery of $3,375,000 to the Escrow Agent thereunder, by wire transfer to
an account specified by the Escrow Agent;
(iii) The Assignment and Assumption Agreement, duly executed by Buyer;
(iv) A Certificate of Good Standing for Buyer from the
Ohio Secretary of State
dated no more than ten days prior to the Closing Date;
(v) A certificate of the Secretary or Assistant Secretary of Buyer, to be dated
as of the Closing Date, certifying (A) the resolutions duly adopted by the board of
directors of Buyer authorizing and approving the execution, delivery and performance
of this Agreement and the transactions contemplated hereby, (B) that such
resolutions have not been rescinded or modified and remain in full force and effect
as of the Closing, and (C) to the incumbency and signatures of the officers of Buyer
executing this Agreement and any other document executed on behalf of Buyer in
connection with the transactions contemplated hereby;
(vi) A certificate executed by Buyer as to the accuracy of its representations
and warranties as of the date of this Agreement and as of the Closing Date in
accordance with Section 8.1 and as to its compliance with and performance of
its covenants and obligations to be performed or complied with at or before the
Closing in accordance with Section 8.2;
(viii) The Lease Agreement executed by Buyer.
(d) Buyer and Shenzhen Baggallini Distribution Company Limited (“SBDC”) shall
enter into a sourcing and support agreement in a form satisfactory to Buyer (the
“Sourcing Agreement”).
(e) Each of the Shareholders, Xx. Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxxx shall execute
and deliver to Seller prior to the Closing an Intellectual
Property Assignment in the form attached hereto as Exhibit 2.8(e) (the
“Intellectual Property Assignments”).
(f) Buyer and each of Xxxxxx Xxxxxx and Xxxxx Xxxxxxx shall have entered into
employment agreements in a form mutually agreed upon between Buyer and each such individual.
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Except as otherwise disclosed in the Schedules, Seller, each of the Shareholders and Xx.
Xxxxxx, jointly and severally, represent and warrant the following to Buyer:
(a) Seller is a corporation duly organized, validly existing and in good standing under
the laws of the State of Oregon.
(b) Schedule 3.1(b) hereto contains a true, accurate and complete list of each
jurisdiction in which Seller is authorized to conduct business.
(c) The Shareholders are the only record and beneficial owners of the outstanding
voting capital stock of Seller. The issued and outstanding shares of voting capital stock
of Seller are owned, beneficially and of record, by the Shareholders and are owned free and
clear of any and all Liens. Other than as described on Schedule 3.1(c), there are
no issued and/or outstanding shares or other equity securities of Seller, or securities
convertible into or exchangeable or exercisable for equity securities or interests of
Seller, and there are no outstanding options, warrants, rights, contracts, commitments,
understandings or arrangements by which Seller or any other Person is bound to issue,
repurchase or otherwise acquire or retire any equity securities or interests of Seller.
There are no voting trusts, proxies or any other agreements or understandings with respect
to the voting of any equity securities or interests of Seller. Seller does not own, or have
any right, option or obligation to acquire, any equity securities or interests of any other
Person.
3.2
Authorization. Each of Seller, the Shareholders and Xx. Xxxxxx has full power and
authority to execute and deliver this Agreement and each Ancillary Document to which Seller or such
Shareholder is a party and to perform its or her respective obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and each Ancillary Document to which
Seller is a party and consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action (including director and
shareholder approval) on the part of Seller.
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3.3 Validity; Binding Effect. This Agreement has been duly and validly executed and
delivered by Seller, each of the Shareholders and Xx. Xxxxxx. This Agreement constitutes a valid
and legally binding obligation of Seller, each of the Shareholders and Xx. Xxxxxx, enforceable
against Seller, each of the Shareholders and Xx. Xxxxxx in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar Laws affecting the enforcement of creditors’ rights and remedies
generally or by general equitable principles. Each of the Ancillary Documents, when executed and
delivered, will constitute a valid legal obligation of Seller, each of the Shareholders and Xx.
Xxxxxx (if Seller, such Shareholder or Xx. Xxxxxx is a party thereto), enforceable against Seller,
each of the Shareholders and Xx. Xxxxxx (if a party thereto) in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar Laws affecting the enforcement of creditors’ rights and
remedies generally or by general equitable principles.
(a)
By Seller. The execution, delivery and performance of this Agreement and
of each Ancillary Document to which Seller is a party, the consummation of the transactions
contemplated hereby and thereby and the compliance with or fulfillment of the terms and
provisions hereof and thereof or of any other agreement or instrument contemplated hereby or
thereby, do not and will not (i) contravene, conflict with or result in a breach or
violation of (A) any of the provisions of the articles of incorporation or by-laws of
Seller, (B) any resolution adopted by the board of directors or shareholders of Seller or
(C) any agreement or instrument to which Seller is a party or by which any of its assets are
bound, (ii) contravene, conflict with or result in a breach or violation of, or to the
Knowledge of Seller, give any Governmental Authority or other Person the right to
challenge, this Agreement, any Ancillary Document, or the transactions contemplated hereby
or thereby, or to exercise any remedy or obtain any relief under, any Law or Order which
affects or binds Seller or any of its assets or properties, (iii) contravene, conflict with,
or result in a breach or violation of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Permit that is held by Seller or
that otherwise relates to the Business, (iv) result in the imposition or creation of any
Lien upon or with respect to any of the assets owned or used by Seller, including the
Acquired Assets, or (v) require Seller to obtain the approval, consent or authorization of,
or to make any declaration, filing or registration with, any Governmental Authority which
has not been obtained in writing prior to the date of this Agreement.
(b)
By the Shareholders and Xx. Xxxxxx. The execution, delivery and
performance of this Agreement by the Shareholders and Xx. Xxxxxx of each Ancillary Document
to which either of the Shareholders or Xx. Xxxxxx is a party,
the consummation of the transactions contemplated transactions contemplated hereby and
thereby and the compliance with or fulfillment of the terms and provisions hereof and
thereof or of any other agreement or instrument contemplated hereby or thereby, do not and
will not (i) contravene, conflict with or result in a breach or violation by either of the
Shareholders or Xx. Xxxxxx of any agreement or instrument to which such Shareholder is bound
or by which such Shareholder’s assets are bound, (ii) contravene, conflict with, or result
in a breach or violation of any Law or Order which affects or binds either of the
Shareholders or Xx. Xxxxxx or (iii) require either of the Shareholders or Xx. Xxxxxx to
obtain the approval, consent or authorization of, or to make any declaration, filing or
registration with, any Governmental Authority which has not been obtained in writing prior
to the date of this Agreement.
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(a) Financial Statements of Seller.
(i) Attached hereto as Schedule 3.5(a) are true, accurate and complete
copies of the balance sheet of Seller as of December 31, 2010 (the “Balance
Sheet”) and the related statements of income and cash flows for the fiscal year
then ended (collectively, the “Financial Statements”).
(ii) The Financial Statements (A) fairly present, in all material respects, the
operating results and the financial condition of Seller on the dates and for the
periods indicated, (B) are correct and complete in all material respects, (C) are
consistent, in all material respects, with the books and records of Seller (which
books and records are correct and complete in all material respects), and (D) were
prepared in accordance with GAAP. No financial statements of any Person other than
Seller are required by GAAP to be included in the Financial Statements. Seller has
no liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise), except for liabilities or obligations reflected or reserved against
in the Balance Sheet, and non-material liabilities incurred in the Ordinary Course
of Business since the date thereof in amounts consistent with past practice.
(b)
No Changes. Except as disclosed in
Schedule 3.5(b), since the date
of the Balance Sheet, (i) there has been No Material Adverse Change and no event has
occurred or circumstance exists that may result in such a change or in a Material Adverse
Effect, (ii) Seller has not sold, leased, transferred or assigned any of its assets,
tangible or intangible, other than for a fair consideration in the Ordinary Course of
Business, (iii) Seller has not entered into any agreement, contract, lease or license (or
series of related agreements, contracts, leases and licenses) outside the Ordinary Course of
Business, (iv) no party has accelerated, terminated, modified or cancelled any agreement,
contract, lease or license to which Seller is a party or by which Seller or its assets are
bound, or to Seller’s
Knowledge has threatened, or is entitled under the terms of the applicable agreement,
contract, lease or license, to do any of the foregoing, (v) Seller has not imposed or had a
Lien imposed upon any of its assets, (vi) Seller has not made any capital expenditure
outside of the Ordinary Course of Business, (vii) Seller has not made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans and acquisitions), (viii) Seller has not
delayed or postponed the payment of accounts payable or other liabilities outside the
Ordinary Course of Business, (ix) Seller has not experienced any material damage,
destruction or loss (whether or not covered by insurance) to any of its property, and (x)
Seller has not entered into any employment contract or collective bargaining agreement,
written or oral, or modified the terms of any such existing contract or agreement.
27
(c)
Accounts Receivable. The Accounts Receivable of Seller as of the Closing
Date will represent valid, current and collectible obligations (other than to the extent of
the Receivables Reserve) arising from sales actually made or services actually performed by
Seller in the Ordinary Course of Business. There will be no contest, claim, or right of
set-off (other than to the extent of the Receivable Reserves) under any agreement with any
obligor of any such Account Receivable relating to the amount or validity of such Account
Receivable.
Exhibit A sets forth a true, accurate and complete list of all Accounts
Receivable as of the date hereof.
(d)
Inventory. All items included in the Inventory as reflected on the Balance
Sheet consisted, on the date of such Balance Sheet, of a quality and quantity usable and,
with respect to the Finished Goods Inventory, saleable, in Seller’s Ordinary Course of
Business (other than to the extent of the reserves therefor set forth in the Financial
Statements or Closing Date Balance Sheet and except for obsolete items and items of
below-standard quality), all of which had been written off or written down to net realizable
value on the Balance Sheet or on the accounting records of Seller as of the Closing Date, as
the case may be. All items of Inventory have been valued at the lower of cost or market
value on a first in, first out basis. Inventory items now on hand that were purchased after
the date of the Balance Sheet were purchased in the Ordinary Course of Business of Seller at
a cost not exceeding market prices prevailing at the time of purchase. The quantities of
each item are not excessive but are reasonable in the present circumstances of Seller.
3.6
Books and Records. The books, records and accounts of Seller accurately and
fairly reflect, in reasonable detail, the transactions and the assets and liabilities of Seller.
The books and records of Seller have been maintained in accordance with sound business practices,
including maintenance of an adequate system of internal controls.
(a) Seller owns, licenses or leases all of the Acquired Assets and all such assets (i)
are reflected on the Balance Sheet (except for assets held under capitalized leases
disclosed in Schedule 3.7(a) and personal property sold since the date of the
Balance Sheet in the Ordinary Course of Business), or (ii) have been purchased or otherwise
acquired by Seller since the date of the Balance Sheet in the Ordinary Course of Business.
(b) Except as set forth in Schedule 3.7(b), Seller owns and has good and
marketable title to all of the Acquired Assets free and clear of any and all Liens.
28
(c) Other than the Acquired Assets, the Excluded Assets and the Leased Property (as
defined in Section 3.8) and except as set forth in Schedule 3.7(c), Seller
does not own, lease or license any assets used, or held for use, in or in connection with
the Business. Other than the Leased Property and the Excluded Assets, Seller does not use
or hold for use in connection with the Business any assets owned by any other Person.
(d) Other than the Excluded Assets, the Acquired Assets and the Leased Property (i)
constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary
to operate the Business in the manner presently operated by Seller, (ii) include all of the
operating assets of Seller, and (iii) constitute all of the assets necessary to continue the
operations of the Business after the Closing as it has been conducted prior to the date of
this Agreement.
(e) Schedule 3.7(e) lists the location of all Inventory, equipment, leasehold
improvements and other tangible assets of Seller.
3.8
Real Property. Seller does not own and has never owned any real property.
Schedule 3.8 describes all real property in which Seller has a leasehold interest (the
“
Leased Property”) and an accurate description (including location, name of lessor, date of
Lease, expiration date and renewal rights) of all such Leased Property. The only real property
used by Seller in connection with the Business is the Leased Property.
(a) Each of Seller, the Shareholders and Xx. Xxxxxx has timely filed, or caused to be
timely filed, all Tax Returns, and all reports with respect to Taxes, required to have been
filed by or with respect to Seller, the Shareholders, Xx. Xxxxxx, the Acquired Assets or the
Business prior to the date hereof. All such Tax Returns were true, accurate, correct and
complete in all material respects. Except as otherwise set forth in Schedule
3.9(a), neither Seller, either of the Shareholders nor Xx. Xxxxxx is the beneficiary of
any extension of time within which to file any Tax Return relating to Seller, either of the
Shareholders, Xx. Xxxxxx, the Acquired Assets or the Business.
(b) Each of Seller, the Shareholders and Xx. Xxxxxx has paid or caused to be paid all
Taxes required to have been paid by or with respect to Seller, the Shareholders, Xx. Xxxxxx,
the Acquired Assets and the Business prior to the date hereof (whether or not shown on any
Tax Return). Each of Seller, the Shareholders and Xx. Xxxxxx has timely withheld, deducted,
collected and paid all Taxes required to have been withheld, deducted, collected and paid by
Seller, Shareholders and Xx. Xxxxxx in connection with amounts paid or owing to any
employee, independent contractor, creditor, member or other third-party by or with respect
to Seller, the Shareholders and Xx. Xxxxxx, and Seller, the Shareholders and Xx. Xxxxxx have
complied with all information reporting and backup withholding requirements under applicable
law.
29
(c) To the extent that they could impact the Business or the Acquired Assets, neither Seller,
either of the Shareholders nor Xx. Xxxxxx has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. Except as
otherwise set forth in Schedule 3.9(c), no claim has ever been made by a Governmental
Authority in a jurisdiction where Tax Returns by or with respect to Seller, the Acquired Assets and
the Business have not been filed that Seller, either of the Shareholders or Xx. Xxxxxx is or may be
subject to taxation by such jurisdiction. There are no Liens for Taxes upon any of the Acquired
Assets, other than Liens for current Taxes not yet due and payable. None of Seller, either of the
Shareholders, Xx. Xxxxxx or any of Seller’s officers, directors or employees responsible for Tax
matters expects any Governmental Authority to assess any additional Taxes against or with respect
to Seller for any period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax liability of Seller, either of the Shareholders or Xx. Xxxxxx, or with respect
to Seller, the Acquired Assets or the Business either (i) claimed or raised by any Governmental
Authority, or (ii) as to which Seller or its officers, directors, or employees responsible for Tax
matters, either of the Shareholders or Xx. Xxxxxx, has Knowledge. There have been no audits or
examinations, and there are no audits or examinations pending or, to Seller’s, the Shareholders’
and Xx. Xxxxxx’ Knowledge, threatened or proposed, against the Seller, either of the Shareholders
or Xx. Xxxxxx with respect to the Business or any of the Acquired Assets. The Seller has
established reserves (which may be zero) in accordance with GAAP that are adequate for the payment
of all Taxes of Seller or with respect to Seller, the Acquired Assets or the Business that are not
yet due and payable.
(d) There is no Tax sharing agreement, Tax allocation agreement, Tax indemnity
obligation or similar written or unwritten agreement, arrangement, understanding or practice
with respect to Taxes (including any advance pricing agreement, closing agreement or other
arrangement relating to Taxes) that will require any payment by or with respect to Seller,
either of the Shareholders or Xx. Xxxxxx.
(e) Schedule 3.9(e) lists all the states and localities with respect to which
Seller has filed any income or franchise tax returns and sets forth whether Seller is
treated as the equivalent of a limited liability company by or with respect to each such
state or locality. Each of the Shareholders, Xx. Xxxxxx and Seller
has properly filed Tax Returns with and paid and discharged all liabilities for Taxes.
30
(f) Seller (and any predecessor of Seller) has been a validly electing S corporation
within the meaning of Sections 1361 and 1362 of the Code at all times after January 1, 2000.
Seller has no liability for federal, state or local income Taxes. No Governmental Authority
has taken any position inconsistent with the treatment of Seller as an S corporation for
federal, state or local income tax purposes. None of the Assumed Liabilities is an
obligation to make a payment that will not be deductible under Section 280G of the Code.
Seller has not made any payments, is not obligated to make any payments, and is not a party
to any agreement that under any circumstances could obligate it to make any payments, that
will not be fully deductible under Section 280G of the Code. Seller has disclosed on its
Tax Returns all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662 of the Code. Seller will not be
required to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result
of any (i) change in method of accounting of Seller for a taxable period ending on or prior
to the Closing Date under Section 481(c) of the Code (or any corresponding or similar
provision of state, local, or foreign income Tax law); (ii) “closing agreement” as described
in Section 7121 of the Code (or any corresponding or similar provision of state, local, or
foreign income Tax law) executed on or prior to the Closing Date; (iii) installment sale or
open transaction disposition made on or prior to the Closing Date; or (iv) prepaid amount
received on or prior to the Closing Date.
(a) Schedule 3.10(a) lists all Employee Benefit Plans, all “specified fringe
benefit plans” as defined in Section 6039D of the Code, and all other bonus, incentive
compensation, deferred compensation, retirement or supplemental retirement, sharing, stock
option, stock appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, employment, consulting, severance, change-in-control, supplemental unemployment,
layoff, salary continuation, retirement, pension, health, life insurance, disability,
accident, group insurance, vacation, holiday, sick leave, fringe benefit or welfare plan,
and any other employee compensation or benefit plan, agreement, policy, practice,
commitment, contract or understanding (whether qualified or nonqualified, currently
effective or terminated, written or unwritten) and any trust, escrow or other agreement
related thereto that (i) are sponsored, maintained or contributed to by Seller or any of its
ERISA Affiliates or have been maintained or contributed to in the last six years by Seller
or any of its ERISA Affiliates or with respect to which Seller or any of its ERISA
Affiliates has or may have any liability or obligation, and (ii) provides benefits, or
describes policies or procedures applicable to any current or former director, officer or
employee of Seller or any of its ERISA Affiliates, or the dependents of any of them,
regardless of how (or whether) liabilities for the provision of benefits are accrued or
assets
are acquired or dedicated with respect to the funding thereof (collectively, the
“Employee Plans”). Schedule 3.10(a) identifies as such any Employee Plan
that is (x) a Defined Benefit Plan, (y) a plan intended to meet the requirements of Section
401(a) of the Code, or (z) a Multiemployer Plan.
(b) Except as set forth in Schedule 3.10(b), neither Seller nor any of its
ERISA Affiliates ever has and does not now (i) sponsor, maintain or contribute to any plan,
program, fund or arrangement which constitutes an Employee Plan, or (ii) have any obligation
to contribute to or accrue or pay benefits under any deferred compensation or retirement
funding arrangement on behalf of any current or former employee or employees such as, for
example, and without limitation, any individual retirement account or annuity, any Excess
Benefit Plan or any non-qualified deferred compensation arrangement.
31
(c) Except as set forth in Schedule 3.10(c), Seller has no, and has never had
any, ERISA Affiliates.
(d) Full payment has been made by Seller and its ERISA Affiliates of all amounts that
are required under the terms of each Employee Plan to be paid as contributions, premiums or
benefits with respect to all periods prior to and including the Closing Date, whether the
contributions, premiums or benefits are due before or after the date of this Agreement and
no accumulated funding deficiency or liquidity shortfall ( as defined in Section 302 of
ERISA and Section 412 of the Code) has been incurred with respect to any Plan, whether or
not waived.
(e) Except as set forth in Schedule 3.10(e), no Employee Plan subject to Title
IV of ERISA has been completely or partially terminated, nor has any event occurred, nor
does any circumstance exist that could result in the complete or partial termination of such
Employee Plan. The PBGC has not instituted or threatened, in writing, a proceeding to
terminate any plan or to appoint a trustee to administer any of the Employee Plans pursuant
to Subtitle C of Title IV of ERISA, and no condition or set of circumstances exists that
presents a material risk of termination or partial termination of any of the Employee Plans
by the PBGC. None of the Employee Plans has been the subject of, and no event has occurred
or condition exists that could be deemed, a reportable event (as defined in Section 4043 of
ERISA) as to which a notice would be required, without regard to regulatory monetary
thresholds, to be filed with the PBGC.
(f) Seller has never and does not now (i) sponsor, maintain or contribute to any
Defined Benefit Plan or Multiemployer Plan, (ii) have any obligation to contribute to or
accrue or pay benefits under any Defined Benefit Plan or Multiemployer Plan or (iii) sponsor
or maintain any health insurance program for retired employees, officers or directors.
(g) Seller and all of its ERISA Affiliates have, at all times, complied, and currently
comply, in all material respects, with the applicable continuation
requirements for its Employee Welfare Benefit Plans, including (i) Section 4980B of the
Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601
through 608, inclusive, of ERISA, and (ii) any applicable state statutes mandating health
insurance continuation coverage for employees, which provisions are hereinafter referred to
collectively as “COBRA”.
(h) The form and documents of all Employee Plans are in material compliance with the
terms of ERISA, the Code, and any other applicable Laws, including the Americans with
Disabilities Act of 1990, the Family Medical Leave Act of 1993 and the Health Insurance
Portability and Accountability Act of 1996, and such Plans have been operated in compliance
with such Laws and the written Employee Plan documents. Neither Seller, nor any of its
ERISA Affiliates, nor to the Seller’s Knowledge any fiduciary of an Employee Plan has
violated the requirements of Section 404 of ERISA. All required reports and descriptions of
the Employee Plans (including IRS Form 5500 Annual Reports, Summary Annual Reports, Summary
Plan Descriptions and Summaries of Material Modifications) have been (when required) timely
filed with the IRS, the U.S. Department of Labor or other Governmental Authority and
distributed as required to participants and beneficiaries, and all notices required by ERISA
or the Code or any other Law with respect to the Employee Plans have been appropriately
given.
32
(i) Each Employee Plan that is intended to be qualified under Section 401(a) of the
Code has received a favorable opinion or advisory letter from the IRS for the plan and all
amendments for which an IRS determination letter is required to be obtained under applicable
law, including amendments required by EGTRRA, and Seller has no Knowledge of any
circumstances that will or could reasonably be expected to result in revocation of any such
favorable letter. Each trust created under any Employee Plan has been determined to be
exempt from taxation under Section 501(a) of the Code, and Seller has no Knowledge of any
circumstance that will or could reasonably be expected to result in a revocation of such
exemption. Each Employee Welfare Benefit Plan of Seller that utilizes a funding vehicle
described in Section 501(c)(9) of the Code or is subject to the provisions of Section 505 of
the Code has received notification by the IRS that such funding vehicle qualifies for
tax-exempt status under Section 501(c)(9) of the Code or that the plan complies with Section
505 of the Code. With respect to each Employee Plan, no event has occurred or to the
Seller’s Knowledge condition exists that will or could reasonably be expected to give rise
to a loss of any intended tax consequence or to any Tax under Section 511 of the Code.
(j) There is no pending, or to the Knowledge of Seller threatened, Litigation relating
to any Employee Plan, nor to the Knowledge of Seller is there any reasonable basis for any
such Litigation. Neither Seller nor to the Knowledge of Seller any fiduciary of an Employee
Plan has engaged in a transaction with respect to any Employee Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could reasonably be
expected to subject
Seller or Buyer to a Tax or penalty imposed by either Section 4975 of the Code or
Section 502(l) of ERISA or a violation of Section 406 of ERISA.
(k) Seller has maintained workers’ compensation coverage as required by applicable
state law through purchase of insurance and not by self-insurance or otherwise.
(l) Except as required by Law and as set forth in Schedule 3.10(l), the
consummation of the transactions contemplated hereby will not accelerate the time of vesting
or the time of payment, or increase the amount, of compensation or benefits due to any
current or former manager, director, employee or officer of Seller. There are no contracts
or arrangements providing for payments that could subject any Person to liability for Tax
under Section 4999 of the Code.
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(m) Except for the continuation of coverage requirements of COBRA, Seller has no
obligations or potential liability for benefits to employees, former employees or their
respective dependents following termination of employment or retirement under any of the
Employee Plans that are Employee Welfare Benefit Plans.
(n) Except as provided in Schedule 3.10(l), the transactions contemplated
hereby will not result in an amendment, modification, vesting or termination of any of the
Employee Plans.
(o) To Seller’s Knowledge no event, action, default, error, omission or violation has
occurred as of the Closing Date with respect to any Employee Plan for which Buyer could be
liable as a result of the consummation of the transactions contemplated by this Agreement.
No Employee Plan has terms requiring that it be assumed by Buyer.
3.11
Compliance with Law. Seller is, and at all times has been, in material
compliance with all material Laws that are or were applicable to it or to the conduct or operation
of the Business or the ownership or use of any of its assets. Neither Seller, either of the
Shareholders nor Xx. Xxxxxx has received during the past two years any notice or other
communication (whether oral or written) from any Governmental Authority or any other Person
regarding any actual, alleged, possible or potential violation by Seller of, or failure of Seller
to comply with, any Law.
3.12
Permits.
Schedule 3.12 contains a complete and accurate list of each
Permit that is held by Seller (or either of the Shareholders, Xx. Xxxxxx or any officer, director
or employee of Seller) relating to the Business. Each Permit listed in
Schedule 3.12 is
valid and in full force and effect. Except as set forth in
Schedule 3.12:
(a) Seller (and any other Person holding such a Permit) is, and at all times has been,
in material compliance with all of the terms and requirements of each Permit identified in
Schedule 3.12;
(b) to the Knowledge of Seller, no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (i) constitute or result directly or indirectly in
a violation of or a failure to materially comply with any term or requirement of any Permit,
or (ii) result directly or indirectly in the revocation, withdrawal, suspension,
cancellation or termination of, or any amendment, restriction or modification to, any
Permit;
(c) neither Seller, either of the Shareholders nor Xx. Xxxxxx has received any notice
or other communication (whether oral or written) from any Governmental Authority or any
other Person regarding (i) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any Permit, or (ii) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation, termination of, or
any amendment, restriction or modification to, any Permit; and
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(d) except as set forth in Schedule 3.12, consummation of the transactions
contemplated hereby (i) does not require the consent or approval of any Person that has
issued a Permit, (ii) will not result in (A) a breach of or default under any such Permit,
or (B) any revocation, withdrawal, suspension, cancellation or termination of or amendment,
restriction or modification to, any such Permit, and (iii) will not otherwise cause any such
Permit to cease to be legal, valid, binding and in full force and effect and to the
Knowledge of Seller, on identical terms following the Closing and the consummation of the
transactions contemplated hereby.
The Permits held by Seller and listed in Schedule 3.12 collectively constitute all of the
Permits necessary to permit Seller to lawfully conduct and operate the Business in the manner in
which it currently conducts and operates the Business and to permit Seller to own and use its
assets in the manner in which it currently owns and uses such assets.
(a) Except as set forth in Schedule 3.13(a), there is no pending or, to
Seller’s Knowledge, threatened, Litigation:
(i) by or against Seller, any director, officer or employee of Seller, or
against either of the Shareholders or Xx. Xxxxxx with respect to the Business, or
that otherwise relates to or may affect the Business or any of the assets owned or
used by Seller; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, the transactions contemplated by this
Agreement.
To the Knowledge of Seller, no event has occurred or circumstance exists that is reasonably
likely to give rise to or serve as a basis for the commencement of any such Litigation.
(b) Except as set forth in Schedule 3.13(b), there is no Order to which Seller,
any director, officer or employee of Seller, either of the Shareholders or Xx. Xxxxxx is
subject relating to the Business.
(a) Schedule 3.14(a) lists all contracts, agreements, arrangements and
understandings (whether oral or written) that are currently in effect and to which Seller is
a party or by which it is bound or that otherwise relate to the Business (collectively, the
“Contracts”):
(i) involving performance of services or delivery of goods or materials by
Seller of an amount or value in excess of $10,000 other than for legal and
accounting services;
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(ii) involving performance of services or delivery of goods or materials to
Seller of an amount or value in excess of $10,000 other than for legal and
accounting services;
(iii) not entered into in the Ordinary Course of Business;
(iv) affecting the ownership of, leasing of, title to, use of or any leasehold
or other interest in any real or personal property (except personal property leases
and installment and conditional sales agreements having a value per item or
aggregate payments of less than $5,000 and with a term of less than one year);
(v) involving a sharing of profits, losses, costs or liabilities by Seller with
any other Person;
(vi) containing covenants that in any way purport to restrict Seller’s business
activities or limit the freedom of Seller to engage in any line of business or to
compete with any Person;
(vii) providing for payments to or by any Person based on sales, purchases or
profits, other than direct payments for goods;
(viii) granting a power of attorney of Seller that is currently effective and
outstanding;
(ix) with, or for the benefit of, any Governmental Authority;
(x) for capital expenditures in excess of $5,000;
(xi) not denominated in U.S. dollars or with any Person not a resident of or
domiciled in the United States of America;
(xii) relating to the abatement of any Taxes;
(xiii) relating to the Intellectual Property Assets, except for any license
implied by the sale of a product and perpetual, paid-up licenses for commonly
available Software programs under which Seller is the licensee; and
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(xiv) amending, supplementing or modifying (whether oral or written) in any
respect any of the foregoing.
(b) Except as set forth in Schedule 3.14(b), with respect to each Assumed
Contract (i) the agreement is legal, valid, binding, enforceable and in full force and
effect, (ii) Seller is, and at all times has been, in material compliance with all
applicable terms and requirements of such Assumed Contract, (iii) to the Knowledge of
Seller, the counter-party to such Assumed Contract is, and at all times has been, in
material compliance with all applicable terms and requirements of such Assumed Contract,
(iv) Seller is not in breach or default thereof, and to the Knowledge of Seller, no event
has occurred which with notice or lapse of time, would constitute a breach or default
thereof, or permit termination, modification, or acceleration thereunder, and (v) to the
Knowledge of Seller, no party has breached, repudiated or defaulted on any material
provision of such Assumed Contract.
(c) To the Knowledge of Seller, no counter-party to any Contract is currently
renegotiating, attempting to renegotiate or has plans to renegotiate any material amounts
paid or payable to Seller under any Contract.
3.15
Insurance.
Schedule 3.15 (a) lists all policies of insurance to which
Seller is a party or under which Seller is covered, and (b) describes (i) any self-insurance
arrangement by or affecting Seller, and (ii) all obligations of Seller to provide insurance
coverage to other Persons (for example, under leases or service agreements) and identifies the
policy under which such coverage is provided. All policies of insurance listed in
Schedule
3.15 are valid and outstanding and, to the Knowledge of Seller, were issued by an insurer that
is financially sound and reputable. Such policies of insurance, taken together, provide adequate
insurance coverage for Seller’s assets and properties and the operations of the Business, and are
sufficient for compliance in all material respects with the Contracts. Since January 1, 2009, no
insurer has refused indemnification or coverage for any claim by Seller under any insurance policy.
(a) To the Knowledge of Seller, Seller is, and at all times has been, in material
compliance with all Environmental Laws. To the Knowledge of Seller, neither Seller, either
of the Shareholders nor Xx. Xxxxxx has any basis to expect, nor have they received, any
Order, notice or other communication from (i) any Governmental Authority or private citizen
acting in the public interest, or (ii) the current or prior owner or operator of any
Facility, of any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or threatened obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities or Remedial Action with respect to any
Facility, or with respect to any Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, processed or disposed of by Seller or
any other Person for whose conduct it is or may be held responsible, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred, disposed, recycled
or received.
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(b) There are no pending or, to the Knowledge of Seller, threatened claims, Liens, or
other restrictions of any nature resulting from any Environmental, Health and Safety
Liabilities or arising under or pursuant to any Environmental Law with respect to or
affecting any Facility in which Seller has or had an interest.
(c) Seller has no Knowledge of, or to the Knowledge of Seller any basis to expect, nor
has it received, any citation, directive, inquiry, notice, Order, summons, warning or other
communication that relates to (i) any Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation or failure to comply with any Environmental Law, or
(ii) of any alleged, actual, or potential obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities or Remedial Action (A) with respect to any
Facility in which Seller has or had an interest, or (B) with respect to any Facility to
which Hazardous Materials have been transported, treated, stored, handled, transferred,
disposed, recycled or received by Seller.
(d) To the Knowledge of Seller, there are no Hazardous Materials present on or in the
Environment at any Facility, including any Hazardous Materials contained in barrels,
aboveground or underground storage tanks or other containers, either temporary or permanent,
and deposited or located in land, water, sumps, or any other part of the Facility, or
incorporated into any structure therein or thereon, except in material compliance with
Environmental Law. Seller has not permitted or conducted, and is not is aware of, any
Hazardous Activity conducted with respect to any Facility in which Seller has or had an
interest except in material compliance with all applicable Environmental Laws.
(e) To the Knowledge of Seller, there has been no Release or Threat of Release of any
Hazardous Materials at or from any Facility, or from any other property or asset (whether
real, personal or mixed) in which Seller has or had an interest.
(a)
Schedule 3.17(a) contains a complete and accurate list of the following
information for each employee, officer and director of Seller, including each employee on
leave of absence or layoff status: name; job title; date of hiring or engagement; date of
commencement of employment or engagement; current compensation paid or payable and any
change in compensation since December 31, 2009; sick and vacation leave that is accrued but
unused; and service credited for purposes of vesting and eligibility to participate under
any Employee Plan, or any other officer, employee or director (or similar) benefit plan.
(b) Schedule 3.17(b) contains a complete and accurate list of the following
information for each retired officer, employee or director (or individual having similar
authority) of Seller, or their dependents, receiving benefits or scheduled to receive
benefits in the future: name; pension benefits; pension option election; retiree medical
insurance coverage; retiree life insurance coverage; and other benefits.
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(c) Except as set forth in Schedule 3.17(c), no employee or director (or
individual with similar responsibilities) of Seller is a party to, or bound by, any
employment, severance, change in control, bonus or similar agreement or arrangement with
Seller.
(d) To the Knowledge of Seller, no officer, director, shareholder, agent, employee,
consultant, or contractor of Seller (i) is bound by any contract or agreement with any
third-party or any Order that purports to limit the ability of such officer, director,
shareholder, agent, employee, consultant, or contractor (A) to engage in or continue or
perform any conduct, activity, duties or practice relating to the Business, or (B) to assign
to Seller or to any other Person any rights to any invention, improvement, or discovery, or
(ii) has been charged with, or convicted or plead nolo contendere to, a felony or other
crime that could reasonably be expected to adversely affect the ability of the Business to
maintain, or Buyer to obtain, any necessary Permits to operate the Business.
(a) To the Knowledge of Seller, Seller has complied in all material respects with all
Laws relating to employment practices, terms and conditions of employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, and collective
bargaining, the payment of social security and similar Taxes, unemployment compensation,
workers compensation and occupational safety and health. Except as provided in Schedule
3.9(c), the Seller has not received notice of any violation for failure to pay any
Taxes, fines, penalties, or other amounts, however designated, or for failure to comply with
any of the foregoing Laws.
(b) Except as set forth in Schedule 3.18(b), (i) Seller has not been, and is
not now, a party to any collective bargaining agreement or other labor contract; (ii) since
December 31, 2009, there has not been, there is not presently pending or existing, and to
the Knowledge of Seller there is not threatened, any strike, slowdown, picketing, work
stoppage or employee grievance process involving Seller; (iii) to the Knowledge of Seller,
no event has occurred or circumstance exists that could reasonably be expected to provide
the basis for any work stoppage or other labor dispute; (iv) there is not pending or, to the
Knowledge of Seller, threatened against or affecting Seller any Litigation relating to the
alleged violation of any Law pertaining to labor relations or employment matters, including
any charge or complaint filed with the National Labor Relations Board, the Equal Employment
Opportunities Commission, Occupational Safety and Health Administration, the Department of
Labor, or any comparable Governmental Authority, and there is no organizational activity or
other labor dispute against or affecting Seller or the Facilities; (v) no application or
petition for an election of or for certification of a collective bargaining agent is pending
with respect to Seller; (vi) no grievance or arbitration proceeding exists against Seller;
(vii) there is no lockout of any employees by Seller, and no such action is contemplated by
Seller; and (viii) there has been no charge of discrimination filed against or threatened
against Seller with the Equal Employment Opportunity Commission or similar Governmental
Authority.
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(a) All Intellectual Property Assets are listed in Schedule 3.19(a). Seller is
the owner of all right, title and interest in and to each of the Intellectual Property
Assets and has the unrestricted right to use, without payment to any other Person, all of
the Intellectual Property Assets.
(b) The Intellectual Property Assets listed in Schedule 3.19(a) constitute all
of the items of intellectual property owned, used or held for use in the operation of the
Business and all of the items of intellectual property necessary for Buyer’s continued
operation of the Business after the Closing in the manner in which it is currently conducted
by Seller or contemplated to be conducted as of the Closing Date by Seller.
(c) Seller holds no interest in any Patents. Except as described in Scheduled
3.19(c), none of the products manufactured or sold, nor any process or know-how used, by
Seller infringes or, to the Knowledge of Seller, is alleged to infringe any patent or other
proprietary right of any other Person. All products made, used or sold under the Patents
have been marked with the proper patent notice.
(d) Schedule 3.19(d) contains a complete and accurate list and summary
description of all Marks. All Marks indicated as registered on Schedule 3.19(d) are
currently registered in Seller’s name with the applicable Trademark
Offices, are currently in material compliance with all Laws (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable and are not subject to any maintenance fees or
Taxes or actions falling due within 90 days after the Closing Date. Except as indicated on
Schedule 3.19(d), no Xxxx has been or is now involved in any opposition,
invalidation or cancellation proceeding and, to the Knowledge of Seller, no such action is
threatened with respect to any such Marks. Except as indicated on Schedule 3.19(d),
to the Knowledge of Seller, there is no trademark or trademark application of any other
Person interfering or potentially interfering with the Marks. Except as described in
Schedule 3.19(d), to the Knowledge of Seller, no Xxxx is infringed or has been
challenged or threatened in any way. None of the Marks infringes or, to the Knowledge of
Seller, is alleged to infringe any trade name, trademark or service xxxx of any other
Person.
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(e) Schedule 3.19(e) contains a complete and accurate list and summary
description of all registered and unregistered Copyrights. All of the registered Copyrights
are registered in Seller’s name. All of the Copyrights listed in Schedule 3.19(e)
are currently in material compliance with Law, are valid and enforceable, and are not
subject to any maintenance fees or Taxes or actions falling due within 90 days after the
Closing Date. Except as described in Schedule 3.19(e), no Copyright is infringed
or, to the Knowledge of Seller, has been challenged or threatened in any way. None of the
subject matter of any of the Copyrights infringes or, to the Knowledge of Seller, is alleged
to infringe, any copyright of any other Person. Except as described in Schedule
3.19(e), none of the subject matter of any of the Copyrights is a derivative work (i.e.,
based upon the work of any other Person).
(f) With respect to each Trade Secret of Seller, the documentation relating to such
Trade Secret is current, accurate and sufficient in detail and content to identify and
explain it and to allow its full and proper use without reliance on the knowledge or memory
of any individual. Seller has taken reasonable precautions to protect the secrecy,
confidentiality and value of all its Trade Secrets including, but not limited to, informing
each employee or contractor of Seller of the confidential nature of such Trade Secret, and
enforcing the confidentiality thereof. Seller has good title to and an absolute right to
use the Trade Secrets. To the Knowledge of Seller, the Trade Secrets of Seller are not part
of the public knowledge or literature and have not been used, divulged or appropriated
either for the benefit of any Person (other than Seller) or to the detriment of Seller. To
the Knowledge of Seller, no Trade Secret of Seller is subject to any adverse claim or has
been challenged or threatened in any way or infringes any intellectual property right of any
other Person.
(g) Schedule 3.19(g) contains a complete and accurate list and summary
description of all Net Names of Seller. All Net Names have been registered in the name of
Seller and are in material compliance with all Laws. No Net Name has been since being
acquired by Seller or is now involved in any dispute, opposition, invalidation or
cancellation proceeding and, to the Knowledge of Seller, no such action is threatened with
respect to such Net Name. To the Knowledge of Seller, there is no domain name application
pending of any other Person which could reasonably be expected to interfere with or infringe
any Net Name or Xxxx. To the Knowledge of Seller, no Net Name is infringed or has been
challenged, interfered with or threatened in any way. No Net Name infringes or interferes
with or, to the Knowledge of Seller, is alleged to interfere with or infringe, any
trademark, copyright or domain name of any other Person.
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(h) All Software used or held for use by Seller that is not owned by Seller (including
any commonly available “shrink wrap” Software copyrighted by third parties) (collectively,
the “Third-Party Software”) is used pursuant to an agreement or license, each such
agreement or license is valid and in full force and effect, and neither Seller nor, to the
Knowledge of Seller, any licensor is in material default under or in breach of any such
license or agreement. The Software, the Third-Party Software and Seller’s rights therein
are sufficient and adequate to conduct the Business to the full extent the Business is
conducted as of the date hereof. To the Knowledge of Seller, all Software and any
Third-Party Software that is incorporated into the Software performs in accordance with the
documentation and other written material used in connection with the Software and
Third-Party Software. To the Knowledge of Seller, the Software and the Third-Party Software
is free of material defects in operations as it is currently utilized in the Business.
(i) All current employees of Seller, the Shareholders and Xx. Xxxxxx have executed or
will execute at Closing, written agreements or contracts with Seller that assign to Seller
all rights to any Patents, Copyrights, and Trade Secrets relating to the Business.
(j) All license agreements to which Seller, either of the Shareholders or Xx. Xxxxxx is
a party that affect or pertain to the Intellectual Property Assets are disclosed on
Schedule 3.19(j).
3.20
Relationships with Affiliates. Except as described on
Schedule 3.20,
neither Seller, either of the Shareholders, Xx. Xxxxxx nor any of their respective Affiliates owns,
or since December 31, 2009 has owned, of record or as a beneficial owner, an equity interest or any
other financial or profits interest in any Person that has (a) had business dealings with, or a
material financial interest in any transaction with, Seller, or (b) engaged in competition with
Seller in any Competing Business. No Affiliate of Seller is a party to any contract or agreement
with, or has any claim or right against Seller.
3.21
Broker’s Fees. Seller has engaged X.X. Xxxxxxxx & Co. as its broker in
connection with the transactions contemplated by this Agreement and will pay all such fees owing to
such broker. Neither Seller, either of the Shareholders nor Xx. Xxxxxx has any other liability or
obligation to pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(a)
Schedule 3.22(a) lists Seller’s top ten customers by sales volume and the
percentage sales volume of such customer during the fiscal years ended December 31, 2008 and
2009, and during the nine-month period ended September 30, 2010. No customer listed in
Schedule 3.22(a) has terminated, threatened to terminate, or, to the Knowledge of
Seller, intends to terminate, its business relationship with Seller or has materially
reduced, threatened to materially reduce or, to the Knowledge of Seller, intends to
materially reduce, the volume of products it is purchasing or intends to purchase from the
level of services historically purchased by such customer.
(b) Except as set forth in Schedule 3.22(b), there are no suppliers of products
or services to Seller which are material and with respect to which practical alternative
sources of supply are not generally available to Seller on comparable terms and conditions
in the marketplace. None of the suppliers listed in Schedule 3.22(b) has indicated
its intention to, or to the Knowledge of Seller intends to, terminate its business
relationship with Seller, reduce the level of products or services supplied to Seller from
historic levels, or materially change the price or terms on which such products or services
are sold to Seller.
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3.23
Bulk Sales. This Agreement and the transactions contemplated hereby are not
subject to any Bulk Sales Law.
3.24.
Disclosure. Seller does not have Knowledge of any fact that could reasonably be
expected to have a Material Adverse Effect that has not been set forth in this Agreement or the
Schedules.
Buyer represents and warrants the following to Seller, the Shareholders and Xx. Xxxxxx:
4.2
Authorization. Buyer has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all necessary corporate action
on the part of Buyer.
4.3
Validity; Binding Effect. This Agreement has been duly and validly executed and
delivered by Buyer. This Agreement constitutes a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar Laws
affecting the enforcement of creditors’ rights and remedies generally or by general equitable
principles.
4.4
Noncontravention. The execution, delivery and performance of this Agreement by
Buyer, the consummation of the transactions contemplated hereby and the compliance with or
fulfillment of the terms and provisions hereof or of any other agreement or instrument contemplated
hereby, do not and shall not (a) conflict with or result in a breach of any of the provisions of
the Articles of Incorporation or the Regulations of Buyer, (b) contravene any Law or Order which
affects or binds Buyer or any of its Affiliates or properties, or (c) result in a breach of,
constitute a default under or give rise to a right of termination or acceleration under any
contract, license, franchise or any other agreement or instrument to which Buyer or its Affiliates
is a party or by which any of its properties may be affected or bound.
4.5
Broker’s Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which Seller, either of the Shareholders or Xx. Xxxxxx could become liable or
obligated.
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5.1
Access and Investigation. Between the date of this Agreement and the Closing
Date, upon reasonable advance notice received from Buyer, Seller shall (and the Shareholders and
Xx. Xxxxxx shall cause Seller to) (a) afford Buyer and its Representatives full and free access,
during regular business hours, to Seller’s personnel, Facilities, Contracts, Permits, books and
records and other documents and data, such rights of access to be exercised in a manner that does
not unreasonably interfere with the operations of Seller; (b) furnish Buyer with copies of all such
Contracts, Permits, books and records and other existing documents and data as Buyer may reasonably
request; (c) furnish Buyer with such additional financial, operating and other relevant data and
information as Buyer may reasonably request; and (d) otherwise cooperate and assist, to the extent
reasonably
requested by Buyer, with Buyer’s investigation of the properties, assets and financial condition of
Seller.
(a) conduct its business only in the Ordinary Course of Business;
(b) except as otherwise directed by Buyer in writing, and without making any commitment
on Buyer’s behalf, use its Best Efforts to preserve intact its current business
organization, keep available the services of its officers, employees and agents and maintain
its relations and goodwill with suppliers, customers, landlords, creditors, employees,
agents and others having business relationships with it;
(c) obtain the approval of Buyer prior to implementing operational decisions of a
material nature;
(d) otherwise report periodically to Buyer concerning the status of its business,
operations and finances;
(e) make no material changes in management personnel without the prior approval of
Buyer;
(f) maintain the Acquired Assets in a state of repair and condition that complies with
applicable legal requirements and is consistent with the requirements and normal conduct of
the Business;
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(g) keep in full force and effect, without amendment, all material rights relating to
the Business;
(h) materially comply with all legal requirements (including all Laws) and contractual
obligations applicable to the operations of the Business;
(i) continue in full force and effect the insurance coverage maintained by the Company
on the date of this Agreement;
(j) cooperate with Buyer and assist Buyer in identifying any Permits or other
governmental authorizations that Buyer is required to obtain in order to operate the
Business from and after the Closing Date and either transferring existing Permits or other
governmental authorizations of Seller to Buyer, where permissible, or obtaining new Permits
or other governmental authorizations for Buyer;
(k) upon request from time to time, execute and deliver all documents and do all other
acts that may be reasonably necessary or desirable in the opinion of Buyer to consummate the
transactions contemplated by this Agreement; and
(l) maintain all books and records of Seller relating to the Business in the Ordinary
Course of Business.
5.3
Negative Covenant. Except as otherwise expressly permitted herein, between the
date of this Agreement and the Closing Date, Seller shall not, and the Shareholders and Xx. Xxxxxx
shall not permit Seller to, without the prior written consent of Buyer, which consent shall not be
unreasonably withheld,
(a) take any affirmative action, or fail to take any reasonable action within its
control, as a result of which any of the changes or events listed in Section 3.5(b)
would be likely to occur;
(b) make any modification to any Contract;
(c) allow the levels of Inventory to vary materially from the levels customarily
maintained;
(d) Except with respect to settlement of the Y&S Litigation in the manner described in
Section 10.8, enter into any compromise or settlement of any litigation, proceeding
or governmental investigation relating to the Acquired Assets, the Business or the Assumed
Liabilities;
(e) merge or consolidate with any other Person, liquidate or dissolve or sell or lease
all or any portion of its assets or business (and neither of the Shareholders shall sell or
dispose of her or its interest in Seller), except for this Agreement and the transactions
contemplated hereby;
45
(f) except as required to comply with ERISA or to maintain qualification under Section
401(a) of the Code, amend, modify or terminate any Employee Plan without the express written
consent of Buyer, and except as required under the provisions of any Employee Plan, make any
contributions to or with respect to any Employee Plan without the express written consent of
Buyer;
(g) incur any indebtedness of any kind or nature whatsoever (including Indebtedness)
outside the Ordinary Course of Business or in an amount exceeding $10,000; or
(h) take any action that would (i) result in any of the representations and warranties
of the Seller, the Shareholders and Xx. Xxxxxx to not be true and correct as of the Closing
Date, (ii) render Seller, either of the Shareholders or Xx. Xxxxxx unable to comply with its
or her covenants or obligations hereunder, or
(iii) reasonably be expected to result in a material delay in consummation of the
transactions contemplated by this Agreement.
5.4
Required Approvals and Material Consents. As promptly as practicable after the
date of this Agreement, Seller shall make all filings required by Law to be made by it in order to
consummate the transactions contemplated by this Agreement. Seller, each of the Shareholders and
Xx. Xxxxxx also shall cooperate with Buyer and its Representatives with respect to all filings that
Buyer elects to make or, pursuant to applicable Law, shall be required to make in connection with
the transactions contemplated by this Agreement. Seller, each of the Shareholders and Xx. Xxxxxx
also shall cooperate with Buyer and its Representatives in obtaining all Material Consents.
5.5
Notification. Between the date of this Agreement and the Closing, Seller, each
of the Shareholders and Xx. Xxxxxx shall promptly notify Buyer in writing if any of them becomes
aware of any fact or condition that causes or constitutes a breach of any of Seller’s
representations and warranties. Should any such fact or condition require any change to the
Schedules to this Agreement, Seller shall promptly deliver to Buyer a supplement to the applicable
Schedule specifying such change. Such delivery shall not affect any rights of Buyer under
Section 9.2 and
Article 11. During the same period, Seller, each of the
Shareholders and Xx. Xxxxxx also shall promptly notify Buyer of the occurrence of any breach of any
covenant of Seller, such Shareholder or Xx. Xxxxxx in this
Article 5 or of the occurrence
of any event that may make the satisfaction of the conditions in
Article 7 impossible or
unlikely.
5.6
No Negotiation. Until such time as this Agreement shall be terminated pursuant to
Section 9.1, neither Seller, either of the Shareholders nor Xx. Xxxxxx nor their respective
Representatives shall directly or indirectly solicit, initiate, encourage or entertain any
inquiries or proposals from, discuss or negotiate with, provide any nonpublic information to or
consider the merits of any inquiries or proposals from any Person (other than Buyer) relating to
any business combination transaction involving Seller, including the sale by either of the
Shareholders of her or its shares of Seller, the merger or consolidation of Seller or the sale of
the Business or any of the Acquired Assets (other than in the Ordinary Course of Business).
Seller, each of the Shareholders and Xx. Xxxxxx shall notify Buyer of any such inquiry or proposal
within 24 hours of receipt or awareness of the same by Seller, such Shareholder or Xx. Xxxxxx.
46
5.7
Best Efforts. Seller, each of the Shareholders and Xx. Xxxxxx shall use their Best
Efforts to cause the conditions in
Article 7 and
Section 8.3 to be satisfied.
5.8
Interim Financial Statements. Until the Closing Date, Seller shall deliver to
Buyer within ten days after the end of each month a copy of the balance sheet and income statement
for such month prepared by management of Seller in a manner and containing information consistent
with Seller’s current practices and certified by Seller’s chief financial officer as to compliance
with
Section 3.4.
5.9
Payment of Liabilities. Seller shall pay or otherwise satisfy in the Ordinary
Course of Business all of its liabilities and obligations. Buyer and Seller hereby waive
compliance with all Bulk Sales Laws in connection with the transactions contemplated by this
Agreement.
5.10
Bulk Sales Laws. Buyer and Seller hereby waive compliance with all Bulk Sales
Laws in connection with the transactions contemplated by this Agreement.
6.1
Required Approvals. As promptly as practicable after the date of this Agreement,
Buyer shall make, or cause to be made, all filings required by applicable Law to be made by it to
consummate the transactions contemplated by this Agreement. Buyer also shall cooperate with Seller
(a) with respect to all filings Seller shall be required by applicable Law to make and (b) in
obtaining all Material Consents; provided, however, that Buyer shall not be required to dispose of
or make any change to its business, expend any material funds or incur any other burden in order to
comply with this
Section 6.1.
6.2
Best Efforts. Buyer shall use its Best Efforts to cause the conditions in
Article 8 and
Section 7.3 to be satisfied.
47
Buyer’s obligation to purchase the Acquired Assets and to take the other actions required to
be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Buyer, in whole or in part):
(a) All of Seller’s, the Shareholders’ and Xx. Xxxxxx’ representations and warranties
in this Agreement (considered collectively), and each of the representations and warranties
(considered individually), shall have been accurate in all material respects as of the date
of this Agreement, and shall be
accurate in all material respects as of the time of the Closing as if then made, without
giving effect to any supplement to the Schedules; and
(b) Each of the representations and warranties in Sections 3.3 and 3.5,
and each of the representations and warranties in this Agreement that contains an express
materiality qualification, shall have been accurate in all respects as of the date of this
Agreement, and shall be accurate in all respects as of the time of the Closing as if then
made, without giving effect to any supplement to the Schedules.
7.2
Seller’s Performance. All of the covenants and obligations that Seller, the
Shareholders and Xx. Xxxxxx are required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of these covenants and obligations
(considered individually), shall have been duly performed and complied with in all material
respects.
7.3
Material Consents. Each of the consents identified in
Exhibit 7.3 (the
“
Material Consents”) shall have been obtained and shall be in full force and effect.
7.4
No Proceedings. Since the date of this Agreement, there shall not have been
commenced or threatened against Buyer, Seller or any of their respective Affiliates any Proceeding
(a) involving any challenge to, or seeking damages or other relief in connection with, any of the
transactions contemplated by this Agreement, (b) that may have the effect of preventing, delaying,
making illegal, imposing limitations or conditions on or otherwise interfering with any of the
transactions contemplated by this Agreement, or (c) prohibiting or seeking to prevent any of the
transactions contemplated by this Agreement.
7.5
Permits. Buyer shall have received such Permits as are necessary or desirable to
allow Buyer to operate the Acquired Assets and the Business from and after the Closing.
7.6
Closing Deliveries. All of the deliveries required under
Section 2.8(a),
Section 2.8(c),
Section 2.8(e) and
Section 2.8(f) hereof shall have been
made by Seller, the Shareholders and Xx. Xxxxxx.
7.7
No Injunction. There shall not be in effect any injunction or order judgment,
decree, ruling, assessment or arbitration award of any Governmental Authority that (a) prohibits
the consummation of the transactions contemplated by this Agreement and (b) has been adopted or
issued, or has otherwise become effective, since the date of this Agreement.
48
Seller’s obligation to sell the Acquired Assets and to take the other actions required to be
taken by Seller at the Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by Seller in whole or in part):
8.1
Accuracy of Representations. All of Buyer’s representations and warranties in
this Agreement (considered collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material respects as of the date of this
Agreement and shall be accurate in all material respects as of the time of the Closing as if then
made.
8.2
Buyer’s Performance. All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered individually), shall have
been performed and complied with in all material respects.
8.3
No Injunction. There shall not be in effect any injunction or order judgment,
decree, ruling, assessment or arbitration award of any Governmental Authority that (a) prohibits
the consummation of the transactions contemplated by this Agreement and (b) has been adopted or
issued, or has otherwise become effective, since the date of this Agreement.
8.4
Closing Deliveries. All of the deliveries required under
Section 2.8(b)
and
(c) hereof have been made by Buyer.
9.1
Termination Events. By notice given prior to or at the Closing, subject to
Section 9.2, this Agreement may be terminated as follows:
(a) by Buyer if a material breach of any provision of this Agreement has been committed
by Seller, either of the Shareholders or Xx. Xxxxxx and such breach has not been waived by
Buyer;
(b) by Seller if a material breach of any provision of this Agreement has been
committed by Buyer and such breach has not been waived by Seller;
49
(c) by Buyer if any condition in Article 7 has not been satisfied as of the
date specified for the Closing or if satisfaction of such a condition by such date is or
becomes impossible (other than through the failure of Buyer to comply with its obligations
under this Agreement), and Buyer has not waived such condition on or before such date;
(d) by Seller if any condition in Article 8 has not been satisfied as of the
date specified for the Closing or if satisfaction of such a condition by such date is or
becomes impossible (other than through the failure of Seller, either of the Shareholders or
Xx. Xxxxxx to comply with their respective obligations under this Agreement), and Seller has
not waived such condition on or before such date;
(e) by mutual consent of Buyer and Seller;
(f) by Buyer if the Closing has not occurred on or before April 30, 2011, or such later
date as the parties may agree upon, unless the Buyer is in material breach of this
Agreement; or
(g) by Seller if the Closing has not occurred on or before April 30, 2011, or such
later date as the parties may agree upon, unless the Seller, either of the Shareholders or
Xx. Xxxxxx is in material breach of this Agreement.
9.2
Effect of Termination. Each party’s right of termination under
Section
9.1 is in addition to any other rights such party may have under this Agreement or otherwise,
and the exercise of such right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to
Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2
and
Article 12 will survive; provided, however, that, if this Agreement is terminated
because of a breach of this Agreement by the nonterminating party or because one or more of the
conditions to the terminating party’s obligations under this Agreement is not satisfied as a result
of the party’s failure to comply with its obligations under this Agreement, the terminating party’s
right to pursue all legal remedies will survive such termination unimpaired.
(a)
Noncompetition. During the Noncompetition Period, Seller, the
Shareholders, Xx. Xxxxxx and their respective Affiliates shall not, anywhere in the
Territory, directly or indirectly, invest in, own, manage, operate, finance, control,
advise, render services to, be employed (as an employee, independent contractor, member,
director manager or otherwise) by, provide financial
assistance to or guarantee the obligations of any Person engaged in or to the Knowledge
of Seller, the Shareholders or Xx. Xxxxxx, planning to become engaged in a Competing
Business. Nothing contained herein shall preclude Seller, either of the Shareholders, Xx.
Xxxxxx or any of their respective Affiliates from, in the aggregate, purchasing or otherwise
acquiring up to (but not more than) 5% of any class of the securities of any Person (but may
not otherwise participate in the activities of such Person) if such securities are listed on
any national or regional securities exchange or have been registered under Section 12(g) of
the Securities Exchange Act of 1934. For the avoidance of doubt, nothing in this Agreement
shall be interpreted to grant Seller, either of the Shareholders, Xx. Xxxxxx or any of their
respective Affiliates the right to use, directly or indirectly, any Intellectual Property
Assets in connection with rendering services permitted hereby after the Closing.
50
(b)
Nonsolicitation. During the Noncompetition Period, Seller, the
Shareholders, Xx. Xxxxxx and their respective Affiliates shall not, directly or indirectly:
(i) solicit the business of any Person who was at any time prior to the Closing
a customer of Seller;
(ii) cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other business relation (A)
of Seller on the Closing Date or within the year immediately preceding the Closing
Date, or (B) of Buyer after the Closing Date, to cease doing business with Buyer
after the Closing Date, to deal with any competitor of Buyer or in any way interfere
with its relationship with Buyer; or
(iii) hire, retain or attempt to hire or retain any employee or independent
contractor of Buyer (other than Seller’s outside legal counsel or outside
accountants) or in any way interfere with the relationship between Buyer and any of
its employees or independent contractors.
(c)
Nondisparagement. After the Closing, Seller, the Shareholders, Xx. Xxxxxx
and their respective Affiliates and Buyer and Buyer’s respective Affiliates, shall not,
directly or indirectly, make any false, disparaging or derogatory statements or remarks
(orally, in writing, by electronic means of communication or otherwise) about the other
party or any of its owners, officers, directors, employees, agents, Representatives or
Affiliates. Nothing contained in this
Section 10.1(c) shall apply to statements
made in any arbitration or litigation proceeding arising out of this Agreement or the
transactions contemplated by this Agreement.
(d)
Modification of Covenant. If a final judgment of a court or tribunal of
competent jurisdiction determines that any term or provision contained in
Sections
10.1(a) through
(c) is invalid or unenforceable, then the parties agree
that the court or tribunal will have the power, and is hereby directed, to reduce the
scope, duration or geographic area of the term or provision, to delete specific words or
phrases or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision. This
Section 10.1 will be
enforceable as so modified after the expiration of the time within which the judgment may be
appealed.
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(e)
Acknowledgement. Each of Seller, the Shareholders, Xx. Xxxxxx and the
Buyer acknowledges that its or her obligations under this
Section 10.1 are
reasonable and that the scope of the Territory is reasonable because Seller currently sells
products directly or through retailers located throughout the Territory. Each of Seller,
the Shareholders and Xx. Xxxxxx also acknowledges the competitive injuries likely to be
sustained by Buyer if either of them were to violate the obligations in this
Section
10.1. Seller, each of the Shareholders and Xx. Xxxxxx acknowledge and agree that this
Section 10.1 is reasonable and necessary to protect and preserve Buyer’s legitimate
business interests and the value of the Business and to prevent any unfair advantage from
being conferred on Seller, the Shareholders, Xx. Xxxxxx or any of their Affiliates. Each of
Seller, the Shareholders and Xx. Xxxxxx further acknowledge and agree that the
Noncompetition Period is reasonable in view of the legitimate interest sought to be
protected by this Agreement.
(f)
Equitable Relief. Each of Seller, the Shareholders and Xx. Xxxxxx
acknowledge and agree that their respective obligations contained in this
Section
10.1 are of special and unique character which give them a peculiar value to Buyer, and
that Buyer will suffer immediate and irreparable harm to its goodwill and the Business which
will not be compensable by damages alone in the event Seller, either of the Shareholders or
Xx. Xxxxxx repudiates or breaches the provisions this
Section 10.1, or threatens or
attempts to do so. Therefore, notwithstanding anything else in this Agreement, each of
Seller, the Shareholders and Xx. Xxxxxx expressly agrees that, in addition to any other
rights or remedies that Buyer may have under this Agreement, whether at law or in equity or
by reason of any other agreement, Buyer will be entitled to obtain a temporary, preliminary
and/or permanent injunction in order to prevent or restrain any such breach by Seller,
either of the Shareholders, Xx. Xxxxxx or any of their respective Affiliates.
10.2
Customer and Other Business Relationships. After the Closing, Seller, the
Shareholders and Xx. Xxxxxx shall reasonably cooperate with Buyer in its efforts to continue, and
maintain for the benefit of Buyer, those business relationships of Seller existing prior to the
Closing and relating to the business to be operated by Buyer after the Closing, including
relationships with lessors, employees, contractors, regulatory authorities, licensors, customers,
suppliers and others.
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(i) Seller shall terminate the employment of all Active Employees at the
Closing and contemporaneously therewith, Buyer shall offer employment to all such
Active Employees on substantially the terms and conditions as which they were
employed by Seller immediately prior to the Closing (subject to applicable legal
requirements and the terms of any employment, severance or similar agreements
entered into in connection herewith, if any) (all Active Employees to whom Buyer has
made an offer of employment, and who have accepted such offer of employment,
collectively, the “Hired Active Employees”). Subject to applicable Law,
Buyer will have reasonable access to personnel records (including performance
appraisals, disciplinary actions and grievances) of Seller.
(ii) It is understood and agreed that (A) Buyer’s offers of employment to the
Active Employees shall not constitute any commitment, contract or understanding
(expressed or implied) of any obligation on the part of Buyer to a post-Closing
employment relationship of any fixed term or duration or upon any terms or
conditions other than those that Buyer may establish pursuant to individual offers
of employment, and (B) employment offered by Buyer is “at will” and may be
terminated by Buyer or by an employee at any time for any reason (subject to any
written commitments to the contrary made by Buyer or an employee and applicable
Law). Nothing in this Agreement shall be deemed to prevent or restrict in any way
the right of Buyer to terminate, reassign, promote or demote any of the Hired Active
Employees after the Closing or to change adversely or favorably the title, powers,
duties, responsibilities, functions, locations, salaries, employee benefits, other
compensation or terms or conditions of employment of such employees.
(iii) Each of Seller, the Shareholders, Xx. Xxxxxx and Buyer agrees that Forms
W-2 for the Hired Active Employees for the 2011 calendar year shall be prepared and
filed in accordance with the “standard procedure” under Section 4 of IRS Revenue
Procedure 2004-53.
(i) Seller shall be responsible for (A) the payment of all wages and other
remuneration and/or compensation due to Active Employees with respect to their
services as employees of Seller through the close of business on the Closing Date,
including any commissions and performance bonus payments earned prior to the Closing
Date, (B) the payment of any termination, change in control or severance payments
and the provision of health plan continuation coverage in accordance with the
requirements of
COBRA and Sections 601 through 608 of ERISA, and (C) any and all payments to
employees required under the WARN Act, if applicable.
53
(ii) Seller shall be liable for any claims made or incurred by Active Employees
and their beneficiaries under the Employee Plans.
(iii) On or prior to the Closing Date, Seller shall pay to all employees (A)
all vacation time accrued through the Closing Date and (B) the safe harbor
contribution and any profit sharing contribution under the Seller’s 401(k) plan for
all periods prior to and through the Closing Date.
(i) Seller shall give all notices required by Law (including, the WARN Act if
applicable) and take whatever other actions with respect to the plans, programs and
policies described in this Section 10.3 as may be necessary to carry out the
agreements described in this Section 10.3.
(ii) Seller and Buyer shall provide each other with such plan documents and
summary plan descriptions, employee data or other information as may be reasonably
required to carry out the agreements described in this Section 10.3.
(iii) If any of the agreements described in this Section 10.3 is
determined by the IRS or other Governmental Authority to be prohibited by Law,
Seller and Buyer shall modify such agreement to as closely as possible reflect their
expressed intent and retain the allocation of economic benefits and burdens to the
parties contemplated herein in a manner that is not prohibited by Law.
(iv) Seller shall provide Buyer with completed Forms I-9 and attachments with
respect to all Hired Active Employees, except for such employees as Seller certifies
in writing to Buyer are exempt from such requirement.
(v) Buyer shall not have any responsibility, liability or obligation, whether
to Active Employees, former employees, their beneficiaries or to any other Person,
with respect to any Employee Plans, practices, programs or arrangements (including
the establishment, operation or termination thereof and the notification and
provision of COBRA coverage extension) maintained by Seller.
54
10.4
Assistance in Proceedings. Each of Seller, the Shareholders and Xx. Xxxxxx shall
reasonably cooperate with Buyer and its counsel in the contest or defense of, and make available
its personnel and provide any testimony and access to its books and records in connection with, any
Litigation involving or relating to (a) the transaction contemplated hereby, or (b) any action,
activity, circumstance, condition, conduct, event, fact, failure to act, incident, occurrence,
plan, practice, situation, status or transaction on or before the Closing Date involving Seller or
the Business.
(a)
Pre-Closing Income Taxes. Seller, the Shareholders and Xx. Xxxxxx shall
make, or have made, all federal, state, local and foreign filings with respect to income
Taxes of Seller, the Shareholders and Xx. Xxxxxx for the Business and the Acquired Assets
for any Tax period (or portion thereof) ending on or before the Closing Date. All
liabilities of Seller, the Shareholders and Xx. Xxxxxx with respect to income Taxes under
federal, state, local and foreign income Tax laws attributable to the operations of the
Business and the Acquired Assets through the Closing Date shall be borne by Seller, the
Shareholders and Xx. Xxxxxx, and any refunds or credits or rights to refunds or credits with
respect thereto shall be the property of Seller, the Shareholders and Xx. Xxxxxx, as
applicable.
(b)
Other Pre-Closing Taxes. All Tax liabilities of Seller (other than income
Taxes) attributable to the Business or the Acquired Assets for Tax periods (or portions
thereof) ending on or prior to the Closing Date shall be borne by Seller.
(c)
Post-Closing Taxes. All Taxes attributable to the Business or the Acquired
Assets for Tax periods (or portions thereof) beginning after the Closing Date shall be the
responsibility of Buyer, and any refunds or credits or rights to refunds or credits with
respect thereto shall be Buyer’s.
(d)
Straddle Periods. All real property Taxes, personal property Taxes and
similar ad valorem obligations with respect to the Business or the Acquired Assets for a Tax
period that includes (but does not end on) the Closing Date, whether such Taxes are payable
to a Governmental Authority, a landlord or other third party, shall be apportioned between
Buyer and Seller as of the Closing Date based upon, respectively, the number of calendar
days in the portion of such Tax period ending on the Closing Date and the number of calendar
days in the portion of such Tax period commencing after the Closing Date. If the Closing
occurs before the Tax rate is fixed for the then current Tax period, the proration of the
corresponding Taxes shall be on the basis of the Tax rate for the last preceding Tax period
applied to the latest assessed valuation. Buyer shall be responsible for filing all Tax
Returns relating to such Taxes with respect to the Business and the Acquired Assets required
to be filed after the Closing Date. For any such Tax Return relating to a Tax period that
begins on or prior to, and ends
after, the Closing Date, Buyer shall provide such Tax Return to the Seller at least 30 days
prior to the date on which such Tax Return is required to be filed (but in no event earlier
than 30 days after the Closing Date), for Seller’s review and comment. Seller shall have
ten days to review and comment on any such Tax Return, which comments Buyer shall take into
consideration in its sole discretion. Buyer shall provide such Tax Returns to the Seller at
least ten business days prior to the date on which any such Tax Return is required to be
filed, for Seller’s review and comment. Seller shall have five business days to review and
comment on any such Tax Return, which comments Buyer shall take into consideration in its
sole discretion.
55
(e)
Reimbursements. If either Seller (or an affiliate of Seller) or Buyer (or
an affiliate of Buyer) pays, in good faith, any Taxes to be borne by the other party under
this
Section 10.5, the other party shall promptly reimburse Seller or Buyer, as
applicable, for the Taxes paid. If, in preparing Tax Returns or payments after the Closing,
it appears to Buyer that Seller will be asked to pay additional Taxes, Buyer shall so notify
Seller, and provide Seller a reasonable opportunity to review and comment upon any related
Tax Returns prior to filing them and paying the Tax. If either party receives any refunds
or credits which are the property of the other party under this
Section 10.5, such
party shall promptly pay the amount of such refunds or credits to the other party.
(f)
Pre-Closing Tax Returns. All Tax Returns prepared and filed by Seller
relating to Tax liabilities attributable to the Business or the Acquired Assets for Tax
periods (or portions thereof) ending on or prior to the Closing Date shall be prepared and
timely filed in a manner that is consistent with prior practice of Seller (including,
without limitation, with respect to the jurisdictions in which such Tax Returns are filed).
With respect to any such Tax Return that is due prior to the Closing Date, Seller shall
deliver drafts of such Tax Return to the Buyer no later than 15 days prior to the date
(including extensions) on which such Tax Return is so filed.
(i) Seller shall (A) reserve properly (and reflect such reserve in its books
and records and financial statements), in accordance with the past practices of
Seller and in the ordinary course of business, for all Taxes payable by Seller for
which no Tax Return is due prior to the Closing Date, and (B) notify promptly Buyer
of any United States federal, state, local or foreign suit, claim, action,
investigation, proceeding or audit (collectively, “Actions”) pending against
or with respect to Seller, including (without limitation) Tax liabilities and refund
claims, and shall not settle or compromise any such Action without Buyer’s consent;
and
(ii) Seller shall not, without the prior written consent of Buyer, make or
revoke any Tax elections or, except as required by law or GAAP, change any
accounting principles or practices used by Seller, or reverse
any accruals with respect to Taxes of Seller, file any amended Tax Return, settle or
compromise any Tax liability, waive any statutes of limitations with respect to
Taxes or agree to any extension of time with respect to any Tax assessment or
deficiency.
56
(h)
Transfer Taxes and Conveyance Fees. Notwithstanding any other provision of
this Agreement, all transfer, documentary, sales, use, stamp, registration, value-added, and
other such Taxes, and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) incurred in connection with the consummation of the
transactions contemplated by this Agreement and which are imposed upon the owners or sellers
of assets shall be paid by Seller, each of the Shareholders and Xx. Xxxxxx when due. Seller
and each of the Shareholders and Xx. Xxxxxx shall, at their expense, file all necessary Tax
Returns with respect to such Taxes, fees and charges.
(i)
Cooperation. The parties agree to cooperate with each other and to provide
each other with all information and documentation reasonably necessary to permit the
preparation and filing of all federal, state, local and foreign Tax Returns and Tax
elections with respect to Seller, the Acquired Assets and the Business. Buyer shall make
available to Seller and its representatives, on at least three days’ prior written notice,
all records and materials reasonably required by them to pursue or contest any Tax matters
and shall provide reasonable cooperation to Seller in such case, including having personnel
of the Business provide reasonable assistance to Seller. Seller, each of the Shareholders
and Xx. Xxxxxx shall make available to Buyer and its representatives, on at least three
days’ prior written notice, those records and materials reasonably required by them to
prepare, pursue or contest any Tax matters arising after the Closing which have factual
reference to the pre-Closing periods.
10.6
Further Assurances. The parties shall cooperate reasonably with each other and
with their respective Representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement, and shall (a) furnish (or cause to be furnished)
upon request to each other such further information; (b) execute and deliver (or cause to be
executed and delivered) to each other, and file (or cause to be filed) where appropriate, such
other documents (including, without limitation, foreign Intellectual Property Asset assignments);
and (c) do (or cause to be done) such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement. Further, Seller shall
promptly (and in all cases within ten days of receipt) transfer to Buyer (in the form received) any
proceeds of accounts receivable that constitute any of the Acquired Assets.
10.7
Name Change. Contemporaneously with the Closing, Seller shall (and each of the
Shareholders and Xx. Xxxxxx shall cause Seller to) change its corporate name (and any and all
fictitious, trade name or assumed name filings) so that they no longer include “baggallini” or any
derivative thereof; and, after the Closing Seller, the Shareholders and Xx. Xxxxxx shall not,
directly or indirectly, use any such names, or any derivative thereof, in any trade or business.
57
10.8.
Y & S Litigation. Notwithstanding anything to the contrary contained herein,
after Closing the Seller, at its sole cost and expense, shall retain total responsibility for the Y
& S litigation described in
Schedules 3.13(a) and
3.19(d) (the “
Y & S
Litigation”). However, Seller shall not enter into any compromise or settlement of such
litigation without the prior written consent of Buyer, which, with respect to the defendant’s or
Buyers’ rights or obligations after Closing, or affecting the Acquired Assets in any manner after
Closing, may be withheld in Buyers’ sole discretion, but which otherwise shall not be unreasonably
withheld.
10.9
Opposition to China Trademark Filing. Seller has filed an opposition to the
People’s Republic of China trademark application filed by Huizhou Depth Information Service
Development Limited Company for the xxxx “BAGGALLINI” in Int. Class 25 (the “
Opposition
Filing”). Following the Closing, Buyer, at its sole cost and expense, shall assume
responsibility for all further actions taken with respect to the Opposition Filing. Buyer
understands and agrees that after Closing Seller will have no further responsibility with respect
to the Opposition Filing.
11.1
Indemnification and Reimbursement by Seller, the Shareholders and Xx. Xxxxxx.
Subject to
Sections 11.3 and
11.4 below, Seller, each of the Shareholders and Xx.
Xxxxxx shall, jointly and severally, indemnify and hold harmless Buyer, and its Representatives,
subsidiaries and Affiliates (collectively, the “
Buyer Indemnified Persons”) from and
against, and will reimburse the Buyer Indemnified Persons for, any and all losses, liabilities,
claims, damages, obligations, awards, judgments, settlements, penalties, costs and expenses
(including costs of investigation and defense and reasonable expert, accounting and attorneys’
fees, costs and expenses), whether or not involving a Third-Party Claim (collectively,
“
Damages”), arising from or in connection with:
(a) any inaccuracy or breach of any representation or warranty made by Seller, either
of the Shareholders or Xx. Xxxxxx in (i) this Agreement, (ii) the Schedules, or (iii) any
Ancillary Document (and without giving effect to any supplement to a Schedule);
(b) any default or breach of any covenant or obligation of Seller in this Agreement or
any Ancillary Document;
(c) any default or breach of any covenant or obligation of either of the Shareholders
or Xx. Xxxxxx in this Agreement or any Ancillary Document;
(d) any claim by any Person for brokerage or finder’s fees or commissions or similar
payments based upon any agreement or understanding made, or alleged to have been made, by
any Person with Seller, either of the Shareholders, Xx. Xxxxxx and/or their respective
Affiliates (or any Person acting on their behalf) in connection with the transactions
contemplated hereby;
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(e) any noncompliance with any fraudulent transfer or Bulk Sales Law in respect of the
transactions contemplated hereby;
(f) any Litigation listed or required to be listed in Schedule 3.13(a) and the
Y & S Litigation described in Section 10.8;
(g) the Excluded Assets or any Excluded Liabilities;
(h) any liability arising out of the ownership or operation of the Acquired Assets
prior to the Closing Date (including any Liens) other than the Assumed Liabilities;
(i) any Product Liability Claim;
(j) any Customer Claim;
(k) any Taxes of the Seller, either of the Shareholders or Xx. Xxxxxx resulting from
the consummation of the transactions contemplated hereby;
(l) any Employee Plan established or maintained by Seller; and
(m) any violation or alleged breach by Seller, both or either of the Shareholders or
Xx. Xxxxxx of Section 10.1.
11.2
Indemnification and Reimbursement by Buyer. Buyer will indemnify and hold
harmless each of the Shareholders, Xx. Xxxxxx and Seller and Seller’s Representatives, subsidiaries
and Affiliates (collectively, the “
Seller Indemnified Persons”), and will reimburse the
Seller Indemnified Persons, for any Damages arising from or in connection with:
(a) any inaccuracy or breach of any representation or warranty made by Buyer in this
Agreement or in any Ancillary Document;
(b) any default or breach of any covenant or obligation of Buyer in this Agreement or
in any Ancillary Document;
(c) any claim by any Person for brokerage or finder’s fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by such Person
with Buyer (or any Person acting on Buyer’s behalf) in connection with the transactions
contemplated hereby;
(d) the Assumed Liabilities arising subsequent to the Closing Date; and
(e) any liability arising out of the ownership or operation of the Acquired Assets and
the Business from and after the Closing.
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11.3
Survival. All representations, warranties, covenants, agreements and obligations
in this Agreement, the Schedules, the certificates delivered pursuant
Section 2.8 and any
other Ancillary Document shall survive the Closing and be enforceable against the party making the
same, for the following time periods:
(a) All covenants, agreements and obligations shall survive the Closing and expire in
accordance with their respective terms.
(b) All representations and warranties set forth in Article 3 and Article
4 hereof shall survive until the expiration of 18 months following the Closing Date,
other than (i) any representation or warranty made pursuant to Sections 3.1
(organization; capitalization), 3.2 (authorization), 3.3 (validity),
3.4 (noncontravention), 3.7(b) (title), 3.21 (brokers), which shall
survive indefinitely and (ii) any representation or warranty made pursuant to Section
3.9 (taxes), which shall survive for a period of three months after the expiration of
the applicable statute of limitations. For the avoidance of doubt, the reference above to
“title” in Section 3.7(b) is not intended to refer to intellectual property
infringement.
(a) Seller, the Shareholders and Xx. Xxxxxx shall not have any liability or obligation
to indemnify or reimburse the Buyer Indemnified Persons under Section 11.1(a)
(inaccuracy or breaches of representations and warranties), unless and until the aggregate
amount of Damages incurred as a result thereof exceeds $100,000 (the “Seller’s
Basket”), and once such Damages exceed the Seller’s Basket, Seller, the Shareholders and
Xx. Xxxxxx shall have liability for all such Damages, including the first $100,000, up to a
maximum aggregate amount of $11,000,000 (the “Cap Amount”).
(b) Notwithstanding the foregoing, (i) the Seller’s Basket shall only apply to claims
for inaccuracies or breaches of representations and warranties under Section 11.1(a)
and shall not apply to (A) any other indemnification obligations of Seller, the Shareholders
and Xx. Xxxxxx under this Article 11, or (B) any claims for fraud, any claim related
to Taxes or any claim for breach of the representations and warranties identified in
Section 11.3(b)(i), and (ii) the Cap
Amount shall not apply to any claims for fraud, any claim related to Taxes or any claim
for breach of the representations and warranties identified in Section 11.3(b)(i).
(a) Promptly after receipt by a Person entitled to indemnity under Sections
11.1 or 11.2 (an “Indemnified Person”) of notice of the assertion of a
Third-Party Claim against it, such Indemnified Person shall give notice to the Person
obligated to indemnify under such section (an “Indemnifying Person”) of the
assertion of such Third-Party Claim, provided that the failure to notify the Indemnifying
Person will not relieve the Indemnifying Person of any liability that it may have to any
Indemnified Person, except to the extent that the Indemnifying Person demonstrates that the
defense of such Third-Party Claim is prejudiced by the Indemnified Person’s failure to give
such notice.
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(b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to
Section 11.5(a) of the assertion of a Third-Party Claim, the Indemnifying Person
shall be entitled to participate in the defense of such Third-Party Claim or, alternatively,
it may assume the defense of such Third-Party Claim with counsel satisfactory to both
parties (unless (i) the Indemnifying Person is also a Person against whom the Third-Party
Claim is made and the Indemnified Person determines in good faith that joint representation
would be inappropriate or (ii) the Indemnifying Person fails to provide reasonable assurance
to the Indemnified Person of its financial capacity to defend such Third-Party Claim and
provide indemnification with respect to such Third-Party Claim). After notice from the
Indemnifying Person to the Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person shall not, so long as it diligently conducts such
defense, be liable to the Indemnified Person under this Article 11 for any fees of
other counsel or any other expenses with respect to the defense of such Third-Party Claim,
in each case subsequently incurred by the Indemnified Person in connection with the defense
of such Third-Party Claim, other than reasonable costs of investigation. If the
Indemnifying Person assumes the defense of a Third-Party Claim, no compromise or settlement
of such Third-Party Claim may be effected by the Indemnifying Person without the Indemnified
Person’s consent unless (A) there is no finding or admission of any violation of Law or any
violation of the rights of any Person; (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person; and (C) the Indemnified Person shall have no
liability with respect to any compromise or settlement of such Third-Party Claims effected
without its consent. If notice is given to an Indemnifying Person of the assertion of any
Third-Party Claim and the Indemnifying Person does not, within ten days after the
Indemnified Person’s notice is given, give notice to the Indemnified Person of its election
to assume the defense of such Third-Party Claim, the Indemnifying Person will be bound by
any determination made in such Third-Party Claim or any compromise or settlement effected by
the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person determines in good faith
that there is a reasonable probability that a Third-Party Claim may adversely affect it or
its Affiliates other than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by notice to the
Indemnifying Person, assume the exclusive right to defend, compromise or settle such
Third-Party Claim, but the Indemnifying Person will not be bound by any determination of any
Third-Party Claim so defended for the purposes of this Agreement or any compromise or
settlement effected without its consent (which consent may not be unreasonably conditioned,
withheld or delayed).
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(d) With respect to any Third-Party Claim subject to indemnification under this
Article 11 (i) both the Indemnified Person and the Indemnifying Person, as the case
may be, shall keep the other Person fully informed of the status of such Third-Party Claim
and any related Litigation at all stages thereof where such Person is not represented by its
own counsel, and (ii) the parties shall (each at its own expense) render to each other such
assistance as they may reasonably require of each other and to cooperate in good faith with
each other in order to ensure the proper and adequate defense of any Third-Party Claim.
(e) With respect to any Third-Party Claim subject to indemnification under this
Article 11 the parties shall cooperate in such a manner as to preserve in full (to
the extent possible) the confidentiality of all Confidential Information and the
attorney-client and work-product privileges. In connection therewith, (i) each party will
use its Best Efforts, in respect of any Third-Party Claim in which it has assumed or
participated in the defense, to avoid production of Confidential Information (consistent
with applicable Law and rules of procedure), and (ii) all communications between any party
hereto and counsel responsible for or participating in the defense of any Third-Party Claim
shall, to the extent possible, be made so as to preserve any applicable attorney-client or
work-product privilege.
11.6
Other Claims. A claim for indemnification or reimbursement for any matter not
involving a Third-Party Claim may be asserted by notice to the party from whom indemnification is
sought. Notwithstanding anything contained in this Agreement, the Schedules, or any Ancillary
Document to the contrary, in no event shall Seller, either of the Shareholders, Xx. Xxxxxx or Buyer
be liable for (a) any special, incidental, indirect or consequential damages that in each case are
not reasonably foreseeable as of the date of this Agreement, or (b) any exemplary or punitive
damages (other than exemplary or punitive damages awarded in connection with a claim of fraud or a
Third-Party Claim for which a party is liable for indemnification therefor).
11.7
Escrow. Any payment that Seller, either of the Shareholders or Xx. Xxxxxx is
obligated to make to any Buyer Indemnified Party under this
Article 11 shall be paid first,
to the extent there are sufficient funds in the
Escrow Fund, by release of funds to the Buyer Indemnified Persons from the Escrow Fund by the
Escrow Agent in accordance with the terms of the Escrow Agreement and, second, to the extent there
are insufficient funds in the Escrow Fund to pay any remaining sums due, the Seller, the
Shareholders and Xx. Xxxxxx, to the extent obligated under this
Article 11, shall be
required to pay all or such additional sums due and owing to the Buyer Indemnified Persons by wire
transfer of immediately available funds within five business days after the date of such notice.
On the Expiration Date (as defined in the Escrow Agreement), the Escrow Agent shall release the
remaining funds in the Escrow Fund (after making all deductions for fees and other amounts provided
for in the Escrow Agreement) as provided in the Escrow Agreement, except that the Escrow Agent
shall retain an amount (up to the total amount then held in the Escrow Fund) equal to the amount of
claims for indemnification under this
Article 11 asserted prior to such Expiration Date but
not yet resolved. The amount of the funds in the Escrow Fund retained for such unresolved claims
shall be released by the Escrow Agent (to the extent not utilized to pay the Buyer Indemnified
Parties for any such claims resolved in their favor) upon their resolution in accordance with this
Article 11 and the terms of the Escrow Agreement.
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(a) So long as the Escrow Agreement is in effect, all claims by a Buyer Indemnified
Person under this Article 11 (other than claims brought under Section 2.4 of
this Agreement or claims against Seller, either of the Shareholders or Xx. Xxxxxx resulting
from a violation or alleged breach of Section 10.1, which claims shall be made
directly to such Shareholder or Shareholders or Xx. Xxxxxx) must first be submitted to the
Escrow Agent and, if disputed, resolved in accordance with the terms of the Escrow
Agreement.
(b) If any Pending Claim (as defined in the Escrow Agreement) involves an amount in
excess of the funds then remaining available for payment of claims in the Escrow Fund, the
entire Pending Claim, including the amount in excess of such remaining funds, shall be
arbitrated by the same arbitrator or panel of arbitrators and in accordance with the same
requirements set forth in Section 4 of the Escrow Agreement. In the event a claim for
indemnification is asserted under this
Article 11 by Seller or Buyer after the
Escrow Agreement is no longer in effect, and such claim for indemnification is not resolved
by the parties to such claim within 20 days following delivery of the claim of
indemnification, such claim for indemnification shall be resolved, as between Buyer and
Seller, in accordance with the same dispute resolution procedures as are set forth in
Section 4(b) of the Escrow Agreement. Any such claim for indemnification shall be resolved
by final and binding arbitration to be conducted by JAMS in accordance with the then-current
JAMS Comprehensive Arbitration Rules and Procedures, or, if applicable, the Streamlined
Arbitration Rules and Procedures, as applicable (the “
Rules”). The arbitration
shall take place in Columbus,
Ohio. Such arbitration shall be before a single arbitrator
unless the claim or claims exceeds $500,000, in which case the dispute shall be heard and
determined by
three arbitrators. In the event of a claim requiring a panel of three arbitrators,
Buyer and Seller shall each select one arbitrator and the two arbitrators so selected shall
select a third arbitrator. The procedures and law applicable during the arbitration of a
Pending Claim shall be both the Rules and the internal laws of the State of
Ohio excluding,
and without regard to, its or any other jurisdiction’s rules concerning any conflict of
laws. The arbitrator or panel of arbitrators, as the case may be, shall have the power to
order injunctive relief or provide further equitable remedies. It is expressly agreed that
the arbitrator or arbitrators in any such arbitration proceeding shall have no authority to
award to any party any punitive, exemplary, treble or consequential damages of any type
under any circumstances, regardless of whether such damages may be available under law, the
parties hereby waiving their rights, if any, to recover such damages in connection with such
arbitration proceeding. Nothing in this paragraph shall prevent the party from seeking
injunctive relief before any court having jurisdiction over the matter, and any claim by the
Buyer against Seller, either of the Shareholders or Xx. Xxxxxx for a breach, or threatened
breach, of
Section 10.1 shall not be limited to arbitration and Buyer may seek any
and all remedies, whether in law or equity, as may be available to it.
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11.9
Exclusive Remedy. The parties to this Agreement agree that, in the absence of
fraud (in which event any affected party shall have all remedies available at law), the
indemnification provisions in this
Article 11 shall be the exclusive remedy of the parties
with respect to any claims arising out of this Agreement; provided, however, that in the event of a
breach, or threatened breach, by Seller, either or both of the Shareholders or Xx. Xxxxxx of
Section 10.1, Buyer shall not be limited to indemnification under this
Article 11
and may seek any and all remedies, whether in law or equity, as may be available to it.
11.11
Concept of Indemnity. For the avoidance of doubt, the concept of “indemnity” as
used in this
Article 11 is intended to include, among others, claims between or among the
parties to this Agreement and not involving any other Person, as well as third-party claims. For
purposes of quantifying Damages under this
Article 11 (but not for determining whether any
representation or warranty has been breached or is inaccurate) any representation or warranty that
is qualified in scope as to materiality shall be deemed to be made or given without such
qualification.
(a) Except as otherwise specifically provided herein, each party to this Agreement will
bear its respective fees and expenses incurred in connection with the preparation,
negotiation, execution and performance of this Agreement and the transactions contemplated
hereby, including all fees and expenses of its Representatives. Buyer will pay one-half and
Seller, the Shareholders and or Xx. Xxxxxx will pay one-half of the fees and expenses of the
Escrow Agent under the Escrow Agreement.
(b) In any litigation or arbitration between the parties regarding this Agreement, the
losing party shall pay to the prevailing party all reasonable expenses and court costs,
including, without limitation, reasonable attorneys’ fees and costs, incurred by the
prevailing party. A party shall be considered the prevailing party if (i) it initiated the
litigation and obtains substantially all of the relief or remedy it sought, either through a
judgment or the losing party’s voluntary action, (ii) the other party withdraws its action
without substantially obtaining the relief or remedy it sought, or (iii) it did not initiate
the litigation and judgment is entered for either party, but without substantially granting
the relief or remedy sought by the initiating party.
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12.2
Confidentiality. From and after the Closing, Seller, the Shareholders and Xx.
Xxxxxx shall, and shall cause their respective Affiliates, directors, officers, agents and
Representatives to, maintain in confidence all Confidential Information and shall not use any
Confidential Information for any purpose or to the detriment of Buyer or the Business.
12.3
Public Announcements. All general notices, releases, statements and
communications to employees, suppliers and customers of the Business and to the general public and
the press relating to the transactions covered by this Agreement shall be made only at such times
and in such manner as may be agreed upon by Buyer and Seller in writing;
provided,
however, that any party shall be entitled to make a public announcement of the transaction
if, in the opinion of its legal counsel, such announcement is required in order to comply with any
Law or any rule or regulation of any securities exchange or securities quotation system and such
party shall, to the extent practicable, consult with the other parties with respect to such
announcement and give reasonable prior written notice of its intent to issue such announcement.
12.4
Notices. All notices, consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized overnight courier service
(costs prepaid); (b) sent by facsimile with confirmation of transmission by the transmitting
equipment; or (c)
received or rejected by the addressee, if sent by certified mail, return receipt requested, in
each case to the following addresses, or facsimile numbers and marked to the attention of the
person (by name or title) designated below (or to such other address, facsimile number, or Person
as a party may designate by notice to the other parties):
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baggallini, Inc.
0000 XX Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000 |
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with a copy to (which
shall not constitute
notice):
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Xxxx X. Xxxxxxxx, Xx.
Attorney & Counselor
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000 |
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Xx. Xxxxxx (individually
or as Trustee of the
Trust):
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0000 XX Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Phone: (000) 000-0000 |
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with a copy to (which
shall not constitute
notice):
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Xx. Xxxxxx Xxxxxx
Xxxx Xxxxxx
000 Xxxxxxxxx 0xx Xxxxxx #0000
Xxxxxxxx, Xxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000 |
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Xxxxxxxxx Xxx Xxxxxxx
0000 Xxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
Phone: (503) 703 -4346 |
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Xxxxx Holding Co.
00000 Xxxxxxxx Xxxx, XX
Xxxxxxxxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxx, Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000 |
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with a copy to (which
shall not constitute
notice):
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Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000, Xxxxxx Xxx
Xxxxxxxxxx, Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxxxx |
12.5
Enforcement of Agreement. Each of Seller, the Shareholders and Xx. Xxxxxx
acknowledge and agree that Buyer would be irreparably damaged if any of the provisions of
Section 10.1 are not performed in accordance with their specific terms and that any default
or breach of such sections by Seller, either of the Shareholders or Xx. Xxxxxx could not be
adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any
other right or remedy to which Buyer may be entitled, at law or in equity, it shall be entitled to
enforce any provision of this Agreement by a decree of specific performance and to temporary,
preliminary and permanent injunctive relief to prevent defaults, breaches or threatened defaults or
breaches of
Section 10.1.
12.6
Waiver; Remedies Cumulative. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither any failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or any of the documents referred to
in this Agreement will operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or privilege. To the
maximum extent permitted by applicable Law, (a) no claim or right arising out of this Agreement or
any of the documents referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed by the party
granting such waiver or renunciation, (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given, and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand as provided in this Agreement
or the documents referred to in this Agreement.
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12.7
Entire Agreement and Modification. This Agreement supersedes all prior
agreements, whether written or oral, between the parties or their respective Affiliates with
respect to its subject matter (including the Letter of Intent and the Confidentiality Agreement,
each of which is hereby terminated and no longer in force or effect) and constitutes (along with
the Schedules, Exhibits and other documents delivered pursuant to this Agreement) a complete and
exclusive statement of the terms of the agreement among the parties with respect to its subject
matter. This Agreement may not be amended, supplemented, or otherwise modified except by a written
agreement executed by the party to be charged with the amendment.
(a) The information in the Schedules constitutes (i) exceptions to particular
representations, warranties, covenants and obligations of Seller, the Shareholders and Xx.
Xxxxxx as set forth in this Agreement, or (ii) descriptions or lists of assets and
liabilities and other items referred to in this Agreement. If there is any inconsistency
between the statements in this Agreement and those in the Schedules, the statements in this
Agreement will control.
(b) The statements in the Schedules relate only to the provisions in the section of
this Agreement to which they expressly relate and not to any other provision in this
Agreement, except to the extent the application thereof to another section is reasonably
apparent from the face of the disclosure or is otherwise provided in the Agreement or any
other Ancillary Document.
12.9
Assignments, Successors and No Third-Party Rights. No party may assign any of
its rights or delegate any of its obligations under this Agreement without the prior written
consent of the other parties, except that Buyer may, without the prior written consent of the other
parties assign its rights hereunder (in whole or in part) to X. X. Xxxxx Corporation or one or more
subsidiaries or other Affiliates. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon and inure to the benefit of the successors and permitted assigns of
the parties. Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right, remedy or claim under
or with respect to this Agreement or any provision of this Agreement, except such rights as shall
inure to a successor or permitted assignee pursuant to this
Section 12.9 or as otherwise
provided in
Article 11 with respect to Indemnified Persons.
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12.10
Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or unenforceable
only in part or degree will remain in full force and effect to the extent not held invalid or
unenforceable.
12.11
Time of Essence. With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
12.12
Governing Law. This Agreement will be governed by and construed under the laws
of the State of
Ohio without regard to conflicts-of-laws principles that would require the
application of any other Law.
12.13
Execution of Agreement. 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. The exchange
of
copies of this Agreement and of signature pages by facsimile or electronic mail transmission
shall constitute effective execution and delivery of this Agreement as to the parties and may be
used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by
facsimile or electronic mail shall be deemed to be their original signatures for all purposes.
12.14 Shareholder Obligations. The liability of the Shareholders, Xx. Xxxxxx and the
Seller hereunder shall be joint and several. Where in this Agreement provision is made for any
action to be taken or not taken by Seller, each of the Shareholders and Xx. Xxxxxx undertakes to
cause Seller to take or not take such action, as the case may be. Without limiting the generality
of the foregoing, the Shareholders and Xx. Xxxxxx shall be jointly and severally liable with Seller
for the indemnities set forth in
Article 11.
12.15
Jurisdiction; Service of Process. Except for any arbitration brought by the
parties pursuant to
Article 11, any Proceeding arising out of or relating to this agreement
or any transaction contemplated by this Agreement (including any claim for injunctive relief under
Section 10.1) shall be brought in the
Ohio state courts located in Franklin County,
Ohio or
in the United States District Court for the Southern District of Ohio, Eastern Division and each of
the parties irrevocably submits to the exclusive jurisdiction of each such court in any such
Proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum,
agrees that all claims in respect of the Proceeding shall be heard and determined only in any such
court and agrees not to bring any Proceeding arising out of or relating to this Agreement or any
transaction contemplated by this Agreement in any other court. The parties agree that either or
both of them may file a copy of this paragraph with any court as written evidence of the knowing,
voluntary and bargained agreement between the parties irrevocably to waive any objections to venue
or to convenience of forum. Process in any Proceeding referred to in the first sentence of this
section may be served on any party anywhere in the world.
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Title:
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Title:
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Xx. Xxxxxx: |
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Xx. Xxxxxxx: |
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Xxxxx X. Xxxxxx |
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Xxxxxxxxx Xxx Xxxxxxx |
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Trust: |
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Xxxxx X. Xxxxxx, Trustee of the |
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Xxxxx Xxxxx Xxxxxx Revocable |
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Living Trust |
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69