Exhibit 10.3
AGREEMENT FOR THE PURCHASE AND SALE OF PERSONAL GOODWILL
This AGREEMENT FOR THE PURCHASE AND SALE OF PERSONAL GOODWILL (this
"Agreement") is made as of this 1st day of March, 2005, by and among Xxxxxx
Lighting Products, Inc., a Delaware corporation ("Buyer") and Xxxxxx Xxxxxxxxx
("Seller").
RECITALS
WHEREAS, the Seller owns 640 shares of the issued and outstanding
capital stock of Xxxx Xxxxxx Co., Inc., a Texas corporation (the "Company"); and
WHEREAS, contemporaneously with this Agreement, Craftmade
International, Inc., a Delaware corporation ("Craftmade"), Buyer, the Company,
Seller and Xxxx Xxxxxx ("Xxxxxx") are simultaneously entering into that certain
Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which the
Company will be merged with and into the Buyer (the "Merger"), with the Buyer
being the surviving corporation; and
WHEREAS, pursuant to the Merger Agreement, Craftmade is acquiring from
Seller and Xxxxxx all of the issued and outstanding capital stock of the
Company; and
WHEREAS, the Seller has independently developed, owned and will
continue to own on the Closing Date (as defined in Section 2) close personal and
ongoing business relationships, trade secrets and knowledge in connection with
the Company's light bulb and complimentary lighting products business, through
the personal ability, personality, reputation, skill and integrity of Seller,
and other information relating thereto (collectively, the "Personal Goodwill"),
which the Seller desires to sell to the Buyer as hereinafter provided; and
WHEREAS, Seller is not subject to an employment agreement,
noncompetition agreement, or similar restrictive covenant agreement relating to
the Personal Goodwill that restricts Seller's use of the Personal Goodwill; and
WHEREAS, the Buyer desires to acquire all of the Personal Goodwill, as
hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
1. Purchase Price and Exchange of Consideration. The Seller shall sell,
assign, transfer, convey and deliver to the Buyer at the Closing the Personal
Goodwill including, but not limited to, all of the Seller's respective rights
and benefits related to the Personal Goodwill. In exchange for the Personal
Goodwill and subject to the terms and conditions of this Agreement, the Buyer
shall pay to the Seller on the Closing Date the total sum of One Million and
00/100 Dollars ($1,000,000.00) for all of the Personal Goodwill (the "Purchase
Price"). The payment required by this Section 1 shall not be affected by the
death or disability of Seller.
2. Closing/Termination. The sale and assignment of the Personal
Goodwill (the "Closing") shall take place at the offices of Xxxxxx and Xxxxx,
LLP, at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx, Texas, at 10:00 a.m. (local
time) on March 1, 2005, or at such other time and date as the Buyer and the
Seller may agree (the "Closing Date").
3. Representations and Warranties. The Seller represents and warrants
to the Buyer as follows:
3.1 Personal Goodwill. All of the Personal Goodwill is owned,
and immediately prior to the Closing will be owned, by the Seller, free
and clear of all liens, encumbrances, claims, options, security
interests, calls and commitments of any kind. The Seller has full legal
right, power and authority to enter into this Agreement and to sell,
assign and transfer the Personal Goodwill to the Buyer and, on the
Closing Date, the sale and assignment of the Personal Goodwill to the
Buyer hereunder will transfer to the Buyer valid title thereto, free
and clear of all liens, encumbrances, claims, options, security
interests and commitments of any kind.
3.2 No Restrictions. Seller is not currently a party to any
contract, employment agreement, noncompetition agreement or any other
contract or agreement, or subject to any restriction or condition
contained in any permit, license, judgment, order, writ, injunction,
decree or award which, singly or in the aggregate, materially and
adversely affects or restricts, or is likely to materially and
adversely affect or restrict the Personal Goodwill or the Buyer's
acquisition, use or enjoyment thereof.
3.3 Approval and Authorization. The execution and delivery of
this Agreement by Seller and the performance of the transactions
contemplated herein have been duly and validly authorized by Seller,
and this Agreement is a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its respective terms
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditor's
rights and general equity principles.
3.4 Economic Benefits. To the best of Seller's knowledge,
Seller is not aware of any present facts or any pending events, which
would prevent the Buyer from realizing the economic benefits associated
with the Personal Goodwill in the same manner as presently enjoyed by
the Seller.
3.5 No Conflicts. The execution and delivery of this Agreement
by Seller does not, and the consummation by Seller of the transactions
contemplated hereby does not and will not, violate or conflict with, or
result (with the giving of notice or the lapse of time or both) in the
violation of, or constitute a default under any provision of, or result
in the acceleration or termination of, or entitle any party to
accelerate or terminate (whether after giving of notice or lapse of
time or both), any obligation or benefit under, or result in the
creation or imposition of any lien, pledge, security interest or other
encumbrance upon the
Personal Goodwill pursuant to any material contract, law, ordinance,
regulation, order, arbitration award, judgment or decree to which the
Seller is a party, or by which Seller or his assets (including the
Personal Goodwill) are bound and to Seller's knowledge, does not and
will not violate or conflict with any other material restriction of any
kind or character to which the Seller is subject or by which any of
Seller's assets (including the Personal Goodwill) may be bound.
4. Representations and Covenants of Buyer. The Buyer represents and
warrants as follows:
4.1 Existence and Good Standing. The Buyer has been duly
organized and validly exists in good standing as a corporation under
the laws of the State of Delaware.
4.2 No Default. The execution of this Agreement by the Buyer
and the performance of its obligations hereunder will not violate or
result in a breach of, or constitute a default under any material
agreement to which the Buyer is a party or by which it or its assets
are bound.
4.3 Approval and Authorization. The execution and delivery of
this Agreement and the performance of the transactions contemplated
herein have been duly and validly authorized by all necessary action on
the part of the Buyer and is a legal, valid and binding obligation of
the Buyer, enforceable against the Buyer in accordance with its terms
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to, or affecting
creditor's rights and general equity principles.
5. Additional Agreements and Covenants: The Buyer and Seller covenant
as follows:
5.1 Preservation and Maintenance of Personal Goodwill. The
Seller shall cooperate with the Buyer after the Closing Date in
connection with all reasonable actions deemed necessary by the Buyer to
transition the economic value of the Personal Goodwill to the Buyer.
5.2 Breaches of Representation and Warranties by Seller. Any
Breach (as defined in the Merger Agreement) of a representation,
warranty, covenant, obligation or other provision of this Agreement by
the Seller shall be subject to the indemnification and escrow
provisions of Sections 11.2 and 11.8 of the Merger Agreement,
respectively.
5.3 Breaches of Representation and Warranties by Buyer. Any
Breach (as defined in the Merger Agreement) of a representation,
warranty, covenant, obligation or other provision of this Agreement by
the Buyer shall be subject to the indemnification provisions of Section
11.7 of the Merger Agreement.
6. Survival. The representations, warranties and covenants of the
parties contained in this Agreement shall survive the Closing Date for two (2)
years thereafter.
7. General.
7.1 Further Assurances. The Seller will cooperate with the
Buyer on and after the Closing Date in furnishing information and other
assistance in connection with any actions, proceedings, arrangements or
disputes of any nature with respect to matters pertaining to all
periods prior to the Closing Date and will take, or cause to be taken
such further action, and will execute, deliver and file such further
documents and instruments as the Buyer reasonably requests in order to
effectuate fully the purposes, terms and conditions of this Agreement.
7.2 Assignment: Binding Effect. This Agreement and the rights
of the Buyer hereunder may be assigned by the Buyer. This Agreement and
the rights of the Seller hereunder may not be assigned by Seller. This
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, the successors and assigns of the Buyer and the heirs,
beneficiaries and legal representatives of the Seller.
7.3 Execution. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute but one and the same
instrument. Execution and delivery of this Agreement by delivery of a
facsimile copy bearing the facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement
by such party. Such facsimile copies shall constitute enforceable
original documents.
7.4 Brokers. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and
shall indemnify the other against all loss, cost, damage or expense
arising out of claims for fees or commissions of brokers or agents
employed or alleged to have been employed by such indemnifying party.
7.5 Notices. Any notice or communication required or permitted
hereunder shall be sufficiently given if sent by facsimile, or first
class mail, postage prepaid to:
(a) Buyer:
Xxxxxx Lighting Products, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxx 000
P.O. Box #1037
Coppell, Texas 75019-1037
Attention: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
(b) Seller:
Xxxxxx Xxxxxxxxx
0000 Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
with a copy to:
Xxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
7.6 Applicable Law. This Agreement will be governed by the
laws of the State of Delaware without regard to conflicts of laws
principles.
7.7 Captions. The captions in this Agreement are for
convenience only and shall not be considered a part hereof, or affect
the construction or interpretation of any provisions of this Agreement.
7.8 Entire Agreement. This Agreement shall constitute the
entire agreement and understanding between the Seller and the Buyer and
supersedes any prior agreement and understanding, written or oral,
relating to the subject matter of this Agreement. The Seller
acknowledges that he has (a) had the opportunity to seek the advice of
independent counsel, including independent tax counsel, regarding the
consequences of this Agreement; and (b) received no representations
from the Buyer or its counsel regarding the tax consequences of this
Agreement. This Agreement may be modified or amended only by a written
instrument executed by the parties hereto.
*****
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the day and year first above written.
SELLER:
/s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx, individually
BUYER:
XXXXXX LIGHTING PRODUCTS, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: President
