EXHIBIT 2
ASSET PURCHASE AGREEMENT
by and between
XXXXXX INDUSTRIES, INC.
and
EMPIRE COMFORT SYSTEMS, INC.
November 30, 2001
TABLE OF CONTENTS
PAGE NO.
ARTICLE 1 - ASSETS TO BE PURCHASED................................................................................1
Section 1.1 Description of Purchased Assets...............................................................1
Section 1.2 Retained Assets...............................................................................2
ARTICLE 2 - PURCHASE PRICE OF THE PURCHASED ASSETS................................................................3
Section 2.1 Purchase Price................................................................................3
Section 2.2 Purchase Price Allocation.....................................................................3
Section 2.3 Reporting of Purchase Price Allocation........................................................4
Section 2.4 Post-Closing Inventory Verification...........................................................4
Section 2.5 Acknowledgment of Adjustments to the Purchase Price...........................................6
ARTICLE 3 - PAYMENT OF THE PURCHASE PRICE AND ASSUMPTION OF CERTAIN LIABILITIES...................................6
Section 3.1 Assumption of Certain Liabilities.............................................................6
Section 3.2 Payment of Purchase Price.....................................................................7
Section 3.3 Assignment of Contract Rights.................................................................7
Section 3.4 Execution of Assignment and Assumption Agreement..............................................7
ARTICLE 4 - THE CLOSING...........................................................................................8
Section 4.1 The Closing...................................................................................8
Section 4.2 Changes.......................................................................................8
Section 4.3 Closing Date; Effective Time..................................................................8
ARTICLE 5 - DELIVERIES AT THE CLOSING.............................................................................8
Section 5.1 Deliveries By Xxxxxx..........................................................................8
Section 5.2 Deliveries by Buyer...........................................................................8
ARTICLE 6 - COVENANTS OF XXXXXX...................................................................................9
Section 6.1 Inspection....................................................................................9
Section 6.2 Preservation of Business......................................................................9
Section 6.3 Consents......................................................................................9
Section 6.4 No Public Announcement........................................................................9
Section 6.5 Xxxxx Tooling................................................................................10
Section 6.6 Inventory Levels.............................................................................10
ARTICLE 7 - POST-CLOSING COVENANTS OF XXXXXX.....................................................................10
Section 7.1 Non-Competition..............................................................................10
Section 7.2 Further Assurances...........................................................................10
Section 7.3 Availability of Employees....................................................................10
Section 7.4 Call Forwarding..............................................................................10
Section 7.5 Transition of Customers and Vendors..........................................................11
Section 7.6 Transfer of Equipment and Other Purchased Assets.............................................11
ARTICLE 8 - COVENANTS OF BUYER...................................................................................11
Section 8.1 Access to Records............................................................................11
Section 8.2 Availability of Employees....................................................................12
Section 8.3 No Public Announcement.......................................................................12
Section 8.4 Product Liability Insurance..................................................................12
Section 8.5 Removal of Purchased Assets..................................................................12
ARTICLE 9 - REPRESENTATIONS AND WARRANTIES OF XXXXXX.............................................................12
Section 9.1 Organization, etc............................................................................12
Section 9.2 Good Title, etc..............................................................................12
Section 9.3 No Litigation................................................................................13
Section 9.4 Reserved.....................................................................................13
Section 9.5 Contracts and Commitments....................................................................13
Section 9.6 Intellectual Property........................................................................13
Section 9.7 No Default...................................................................................14
Section 9.8 No Undisclosed Liabilities...................................................................14
Section 9.9 No Violation.................................................................................14
Section 9.10 Certain Governmental Regulations.............................................................14
Section 9.11 Approval.....................................................................................15
Section 9.12 Tax Matters..................................................................................15
Section 9.13 Suppliers and Customers......................................................................15
Section 9.14 Warranty Claims..............................................................................15
Section 9.15 No Untrue Statements.........................................................................15
Section 9.16 Representations and Warranties to be True and Correct on the Closing Date....................15
Section 9.17 Transfer Liability...........................................................................15
Section 9.18 Product Defects..............................................................................16
Section 9.19 Xxxxxx Information and Records...............................................................16
ARTICLE 10 - REPRESENTATIONS AND RESTRICTIVE COVENANTS OF BUYER..................................................16
Section 10.1 Organization, etc............................................................................16
Section 10.2 No Violation.................................................................................16
Section 10.3 Payment of Liabilities Assumed...............................................................16
ARTICLE 11 - INDEMNIFICATION.....................................................................................17
Section 11.1 Indemnity by Xxxxxx..........................................................................17
Section 11.2 Notification to Xxxxxx and Related Matters...................................................17
Section 11.3 Indemnity by Buyer...........................................................................18
Section 11.4 Notification to Buyer........................................................................18
Section 11.5 Limitations on Recourse......................................................................19
Section 11.6 Escrow.......................................................................................19
Section 11.7 Survival of Representations and Warranties...................................................19
ARTICLE 12 - CONDITIONS TO CLOSING APPLICABLE TO BUYER...........................................................20
Section 12.1 Correctness of Warranties, etc...............................................................20
Section 12.2 No Proceedings...............................................................................20
Section 12.3 Satisfaction of Buyer and its Counsel........................................................20
Section 12.4 Opinion of Counsel...........................................................................20
Section 12.5 Consents.....................................................................................20
Section 12.6 Officer's Certificates.......................................................................20
Section 12.7 Condition of Inventory and Equipment.........................................................20
Section 12.8 Vendor Releases..............................................................................20
ARTICLE 13- CONDITIONS TO CLOSING APPLICABLE TO XXXXXX...........................................................21
Section 13.1 Correctness of Warranties, etc...............................................................21
Section 13.2 No Proceedings...............................................................................21
Section 13.3 Satisfaction of Xxxxxx and its Counsel.......................................................21
Section 13.4 Opinion of Counsel to Buyer..................................................................21
ARTICLE 14 - BROKERS.............................................................................................21
ARTICLE 15 - MISCELLANEOUS.......................................................................................22
Section 15.1 Termination of Agreement.....................................................................22
Section 15.2 Notices......................................................................................22
Section 15.3 Governing Law; Arbitration...................................................................22
Section 15.4 Table of Contents; Captions..................................................................22
Section 15.5 Incorporation of Exhibits....................................................................23
Section 15.6 Entire Agreement and Amendment...............................................................23
Section 15.7 Successors and Assigns.......................................................................23
Section 15.8 Counterparts.................................................................................23
ARTICLE 16 - BULK SALE OBLIGATION................................................................................23
ARTICLE 17 - SERVICING OF WARRANTY CLAIMS........................................................................23
Section 17.1 Buyer's Warranty Coverage....................................................................23
Section 17.2 Xxxxxx'x Coverage of Costs...................................................................24
Section 17.3 Warranty/Schedule............................................................................24
Section 17.4 Warranty Escrow..............................................................................24
Section 17.5 Expiration of Escrow.........................................................................25
Section 17.6 Termination of Warranty Claims Obligations...................................................25
Section 17.7 Right to Continue Warranty Coverage..........................................................25
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
1.1(i) Inventory
1.1(ii) Equipment
1.1(iii) Tradenames, Trademarks, Service Marks, Copyrights, Patents, Patent Rights and Production,
Manufacturing, Reproduction and Similar Rights
1.1(vi) Leases, Purchase Orders, Sales Orders and Other Contracts to be Assumed
1.1(vii) Prepaid Items and Deferred Charges
3.1(iv) Other Obligations and Liabilities to be Assumed
3.2(v) Xxxxxx Vendor Disbursements
9.3 Litigation
9.7 No Default
9.8 No Undisclosed Liabilities
9.9 No Violation
9.19 Xxxxxx Information and Records
12.8 Supplier Arrangements
12.9 Distributor Agreements
12.10 Vendor Releases
12.10(A) Vendor Correspondence
17.2 Xxxxxx'x Coverage of Costs
SCHEDULES
Schedule A Form of Inventory Escrow Agreement
Schedule B Form of Warranty Claims Escrow Agreement
Schedule C Form of Representation and Warranty Escrow Agreement
Schedule D Form of General Assignment and Assumption Agreement
Schedule E Form of Non-competition Agreement by Xxxxxx
Schedule F Form of Opinion of Counsel to Xxxxxx
Schedule G Form of Opinion of Counsel to Buyer
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (hereinafter sometimes referred to as
"this Agreement") made this 30 day of November, 2001, by and between Xxxxxx
Industries, Inc., a Delaware corporation ("Xxxxxx"), and Empire Comfort
Systems, Inc., an Illinois corporation ("Buyer");
WITNESSETH:
WHEREAS, Xxxxxx wishes to sell and transfer the assets constituting
its Broilmaster gas barbeque grill product line and the business conducted by
it in the manufacture and sale of its Broilmaster gas barbeque grill products
(such business is hereinafter sometimes referred to as "The Acquired Business")
to Buyer in exchange for cash and the assumption by Buyer of certain specified
liabilities of Xxxxxx as herein provided;
WHEREAS, Buyer wishes to acquire such assets and business of Xxxxxx
all as hereinafter more fully set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
ARTICLE 1.
ASSETS TO BE PURCHASED
Section 1.1 Description of Purchased Assets. On the terms and
subject to the conditions herein expressed, Xxxxxx agrees to sell, convey,
transfer, assign, set over and deliver to Buyer on the Closing Date effective
as of the Effective Time (as said terms are defined in Sections 4.1 and 4.3
hereof) the following specified assets owned by Xxxxxx and used or intended for
use in the operation of The Acquired Business, regardless of where such assets
are located:
(i) the current inventories of raw materials, supplies, purchased
parts to be incorporated in finished products, work-in-process and finished
Broilmaster products, (the "Inventory"), as described as of November 14, 2001
at Exhibit 1.1(i) hereto, which exhibit shall be amended and replaced by an
Addendum hereto following the Closing, as provided under Article 2 (Section
2.4) hereinbelow;
(ii) the tooling, molds, machinery and equipment described in
Exhibit 1.1(ii) hereto (indicating locations thereof) (the "Equipment");
(iii) the tradenames, trademarks, service marks, copyrights and
pending applications therefor described in Exhibit 1.1(iii) hereto;
(iv) the patents and patent rights described in Exhibit 1.1(iii)
hereto, the production rights, manufacturing rights, reproduction rights, trade
secrets, know-how, processes,
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formulae, licenses and designs for the Broilmaster products;
(v) the marketing studies, customer lists, customer files, art
work, supplier files, sales agent and manufacturers' representatives files,
credit files, credit data, appraisals, valuations, and consulting studies,
printed and other advertising, sales and promotional materials catalogues and
supplies, and production materials related thereto, in each case relating to
The Acquired Business and the assets purchased and the liabilities assumed by
Buyer;
(vi) all interests of Xxxxxx under the leases, purchase orders and
other contracts described in Exhibit 1.1(vi) hereto, subject to Buyer crediting
Xxxxxx with any prepaid items thereunder, prorated to the Effective Time;
(vii) all Broilmaster stationery and other imprinted material and
office supplies of The Acquired Business, business records of The Acquired
Business (or copies thereof), including but not limited to all customer
warranty cards and warranty records, and the rights to telephone numbers
specific to The Acquired Business (as specifically noted in Section 1.1 (x)
below) and the rights to any Uniform Product Codes of The Acquired Business;
(viii) the Broilmaster website and domain name of
xxx.xxxxxxxxxxx.xxx;
(ix) all prototypes of Broilmaster products and products under
development related to the Broilmaster product line including all drawings,
schematic diagrams, specification sheets, testing protocols and testing
results, and all computer software containing same, related to such prototypes
and development products; and
(x) the following telephone numbers related to The Acquired
Business:
(000) 000-0000 Broilmaster Customer Service - Consumer Ad
(000) 000-0000 Broilmaster Recipe Book - Xxxx Book
(000) 000-0000 Broilmaster Customer Service - Web Site
(000) 000-0000 Broilmaster Customer Service - Trade Ad
Said assets, properties, interests and business of Xxxxxx to be so sold,
conveyed, transferred, assigned, set over and delivered to Buyer on the Closing
Date are herein sometimes collectively called the "Purchased Assets."
Section 1.2 Retained Assets.
(i) Xxxxxx shall on the Closing Date retain all of its assets
other than those specifically identified in Section 1.1 above, including
specifically any outdoor cooking products or outdoor cooking products in
development that do not utilize the Broilmaster name or any related trademarks,
do not utilize a cast aluminum cooking enclosure, or porcelanized cast iron
cooking grid and are not intended for sale at retail price points between $300
and $1,600 (other than Xxxxxx'x Stadium Trailer Grill), and all drawings,
schematic diagrams, specification sheets, testing protocols and testing
results, and all computer software containing same, related to such outdoor
cooking products. Such retained product assets may be marketed or sold by
Xxxxxx and will be specifically excluded from the provisions of the Agreement
Not to Compete referenced under Section 7.1
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hereinbelow; provided, however, such retained assets may not be marketed or
sold under the "Broilmaster" name.
(ii) The assets of Xxxxxx related to The Acquired Business which
are located in Canada as of the Closing Date are further excluded from the sale
and purchase under this Agreement; provided, however, Xxxxxx shall neither
market nor sell such Broilmaster finished products (the "Canadian Products")
following the Closing Date, and provided further, that at such time as the
Canadian Products may be sold and transferred to Buyer free of all liens or
encumbrances at the time of payment therefor and may be freely transferred to
Buyer in the United States without any tax or tariff, Xxxxxx will offer in
writing to sell the Canadian Products to Buyer at 65% of the average sale price
of Xxxxxx for each such Canadian Product for the 12 month period preceding the
date of such offer. If Buyer does not accept such offer within thirty (30) days
of receipt thereof, Xxxxxx will discard or destroy the Canadian Products in
such a manner so as to insure that they are not salvageable or saleable by
Xxxxxx or any third party thereafter. Nothing contained in the foregoing shall
prohibit Xxxxxx xxxx using, selling or salvaging any raw material or component
inventory located in Canada other than the Canadian Products.
ARTICLE 2.
PURCHASE PRICE OF THE PURCHASED ASSETS
Section 2.1 Purchase Price. The Purchase Price (herein called
the "Purchase Price") of the Purchased Assets shall be FOUR MILLION NINE
HUNDRED SIXTY EIGHT THOUSAND FORTY AND 00/100 Dollars ($4,968,040.00) plus the
assumption of those certain liabilities of Xxxxxx to be assumed by Buyer
pursuant to the provisions of Section 3.1 hereof and subject to the final
determination of Inventory value pursuant to the provisions of Section 2.4
hereof.
Section 2.2 Purchase Price Allocation The Purchase Price
shall be allocated among the Purchased Assets as follows:
(i) Inventory - $1,692,040.00, subject to post-closing adjustment
pursuant to the provisions of Section 2.4 hereinbelow;
(ii) Tools and Dies - $1,241,633.00;
(iii) Equipment - $447,650.00;
(ii) Tradenames, patents, customer files, the Broilmaster website
and domain name, and all other tangible and intangible assets referenced under
Section 1.1 (iii) through (x) hereinabove - $100,000.00;
(iii) Covenant not to compete referenced under Section 7.1
hereinbelow - $100,000.00;
(vi) Goodwill - $1,386,717.00
Section 2.3 Reporting of Purchase Price Allocation It is
agreed that the above
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allocations of the Purchase Price, subject to final adjustments to Inventory
value as provided herein, shall be reported by each party pursuant to Internal
Revenue Code (Title 26 United States Code) Section 1060 to the Internal Revenue
Service on IRS Form 8594, Asset Acquisition Statement, and further that the
parties shall make such additional disclosures regarding this transaction as
may be required by Internal Revenue laws, regulations or pronouncements
consistent therewith.
Section 2.4 Post-Closing Inventory Verification. In
determining the amounts and value of Inventory to be purchased by Buyer and
sold by Xxxxxx hereunder, the following procedures will apply:
(i) prior to the date of this Agreement, Buyer has conducted a
partial physical inventory of the Inventory as part of Buyer's due diligence
review of this transaction;
(ii) the quantity and value of Inventory as described as of
November 14, 2001, are as set forth on Exhibit 1.1(i) attached hereto;
(iii) as referenced under Section 7.6 below within ten (10) days
following Closing, Buyer will arrange for the removal and transportation of the
Inventory from Xxxxxx'x facilities to Buyer's facilities and will notify Xxxxxx
of such arrangement, and Xxxxxx will cooperate in scheduling such
transportation and the removal of Inventory from Xxxxxx'x facilities for
transport by the Buyer, including, but not limited to, making Xxxxxx'x
facilities available to the Buyer and Buyer's transportation services at all
reasonable hours, including times before and after normal business operation
hours, and assistance in locating and identifying all items of Inventory which
are subject to this Agreement;
(iv) at the time Inventory items are loaded and shipped from
Xxxxxx'x facilities, Xxxxxx'x personnel will conduct a complete physical
inventory of the items shipped and will provide a xxxx of lading and a detailed
record thereof to Buyer within five (5) days of shipment of Inventory items
from Xxxxxx (with a copy of the xxxx of lading and detailed record thereof to
be provided to Buyer by facsimile within twenty-four (24) hours of the time of
shipment) including, at Buyer's request, copies of all physical inventory
account records maintained during the course of shipping of the Inventory
items;
(v) Buyer will have the option, at Buyer's expense, to have one
or more employees or agents of Buyer on hand to observe and verify the physical
inventory to be conducted by Xxxxxx upon shipment of Inventory items as
referenced under Section 2.4 (iv) above and such employees or agents shall have
full and complete access to the Inventory as shipped and the inventory records
maintained by Xxxxxx'x personnel as may be reasonably required to verify
quantities and conditions of Inventory shipped by Xxxxxx;
(vi) the value of Inventory will be determined based upon the
Xxxxxx'x physical count of Inventory items shipped from Xxxxxx, subject to
Buyer's verification as provided herein, and the Purchase Price to be paid by
the Buyer to Xxxxxx for each Inventory item andtotal Inventory will be
determined under the pricing schedule set forth on Exhibit 1.1(i) attached
hereto;
(vii) within five (5) days of the final shipment of Inventory from
Xxxxxx facilities Xxxxxx will provide to Buyer a total of the purchased
Inventory indicating the total physical count of
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each Inventory item shipped from Xxxxxx and total calculated price of the
Inventory based upon the pricing schedule referenced under Section 2.4(vi)
above, together with Xxxxxx'x Inventory work papers;
(viii) the calculated value of the total purchased Inventory will be
reduced by the sum of $409,279.00 representing the parties' agreed adjustment
for obsolescense of Inventory items, which adjustment has been reflected in the
indicated value of Inventory referenced in Section 2.2(i) above and Section
2.4(x) below;
(ix) Buyer will have fifteen (15) days after receiving the
purchased Inventory total from Xxxxxx, and Xxxxxx'x inventory work papers, as
referenced under Section 2.4 (vii) above, to deliver a written notice to Xxxxxx
of any objections to the physical inventory count and the calculation of the
final Inventory value. Any such notice of objection will be in writing and will
state, in reasonable detail, the basis for each objection and the amount of
adjustment that the Buyer proposes related thereto. If Buyer and Xxxxxx cannot
agree through negotiations with respect to the final physical Inventory and/or
calculation of the final Inventory value within thirty (30) days after Xxxxxx'x
receipt of such notice of objection, or such later date as may be agreed upon
by Buyer and Xxxxxx, the dispute will be resolved by arbitration in accordance
with Section 15.3 hereinbelow. Any items not disputed by Buyer shall be deemed
agreed upon between Buyer and Xxxxxx and the amount of such agreed upon items
(unless already paid to Xxxxxx at Closing) will be paid out of the Inventory
Escrow Account as referenced hereinbelow. Any disputed amount will remain in
escrow pending resolution through agreement of the parties or arbitration. The
determination of the arbitrator shall be binding on and conclusive with respect
to the matters determined therein and the final physical inventory and
valuation thereof will be adjusted accordingly for all purposes under this
Agreement;
(x) based upon the Buyer's preliminary verification of Inventory
and Xxxxxx'x indicated value of Inventory as of November 14, 2001, as described
at Exhibit 1.1(i), the sum of $1,592,040.00 will be paid to Xxxxxx for the
Inventory at Closing and the sum of $100,000.00 will be placed in escrow
(subject to the provisions of the Inventory Escrow Agreement set forth in
Schedule A attached hereto), to pay the remaining balance due for purchased
Inventory items, subject to the Buyer's post-Closing physical Inventory count,
as referenced under Section 2.4 hereinabove;
(xi) if the amount ultimately determined to be due for the
Inventory exceeds the amount paid by the Buyer to Xxxxxx at Closing plus that
amount available in the Inventory Escrow Account, (totaling $1,692,040.00),
such amount plus the full amount in the Inventory Escrow Account will be paid
by Buyer to Xxxxxx within ten (10) days of Buyer's receipt of written demand
therefor;
(xii) if the amount ultimately determined to be due upon the
Inventory is between $1,592,040.00 and $1,692,040.00, that amount in excess of
$1,592,040.00 will be paid out of the Inventory Escrow Account to Xxxxxx and
the remaining balance of the Inventory Escrow will be refunded to Buyer with
such amounts to be distributed from the Inventory Escrow Account by the Escrow
Agent as provided under the terms of the Inventory Escrow Agreement;
(xiii) if the amount ultimately determined to be due upon the
Inventory is less than
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$1,592,040.00 the entire balance of the Inventory Escrow Account will be
refunded to Buyer and, in addition, Xxxxxx will remit to Buyer the difference
between $1,592,040.00 and the final Inventory Valuation amount, within ten (10)
days of Xxxxxx'x receipt of Buyer's written demand therefor;
(xiv) following the final determination of the value of Inventory
under Section 2.4 (i) through (ix) above, Section 1.1 (i) shall be amended and
replaced by an Addendum reflecting the Inventory received and purchased by
Buyer in this transaction.
(xv) the levels of Inventory to be purchased and sold hereunder
are subject to that limitation referenced under Section 6.6 below.
Section 2.5 Acknowledgment of Adjustments to the Purchase
Price. The parties acknowledge the following adjustments reflected in the
Purchase Price under Section 2.4 above:
(i) the Purchase Price of the Tools and Dies was agreed upon by
the parties at $1,241,633.00, as reflected in Section 2.2 (ii) above; that
amount will be adjusted at Closing by $8,250.00 to reflect that amount advanced
by Empire pursuant to Section 6.5 below.
(ii) the Purchase Price of the Inventory as reflected in Section
2.4 (i) above has been reduced by $409,279.00 for the obsolescence of Inventory
pursuant to Section 2.4 (viii) above.
ARTICLE 3.PAYMENT OF THE PURCHASE PRICE AND
ASSUMPTION OF CERTAIN LIABILITIES
Section 3.1 Assumption of Certain Liabilities. At the closing
on the Closing Date, Buyer shall not be obligated to assume, and shall not
assume, any of the liabilities and obligations of Xxxxxx whether existing as of
the Effective Time or asserted after the Effective Time and relating to events
that occurred before the Effective Time, or otherwise, except Buyer shall
assume and agrees to pay, perform and discharge the following liabilities and
obligations of Xxxxxx related to The Acquired Business as of the Effective
Time, which shall be assumed by Buyer on the Closing Date as of the Effective
Time:
(i) the future obligations of Xxxxxx as of the Effective Time
under the leases and other contracts described in Exhibit 1.1(vi) hereto;
(ii) provided that Xxxxxx'x rights with respect thereto are
validly assigned to Buyer, the obligations of Xxxxxx to fill sales orders for
finished goods and parts with respect to The Acquired Business entered into in
the ordinary course of business, provided that all consideration for such sales
shall belong to Buyer, each such individual obligation of Xxxxxx to fill such
sales orders as of the close of business on November 19, 2001, being listed in
Exhibit 1.1(vi) hereto; and
Section 3.2 Payment of Purchase Price. The Purchase Price shall
be paid on the Closing Date as follows:
(i) Buyer shall remit to Union Planters Bank, N.A. (the "Escrow
Agent") the sum of $100,000.00 by wire transfer of immediately available funds,
which funds shall be held by the
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Escrow Agent in accordance with the terms of the Inventory Escrow Agreement in
the form of attached Schedule A ("Inventory Escrow Agreement"), which shall
have been entered into by Xxxxxx, Buyer and the Escrow Agent on or prior to the
Closing Date; and
(ii) Buyer shall remit to Escrow Agent the sum of $200,000.00 by
wire transfer of immediately available funds, which funds shall be held by the
Escrow Agent in accordance with the terms of the Warranty Claims Escrow
Agreement in the form of attached Schedule B ("Warranty Claims Escrow
Agreement"), which shall have been entered into by Xxxxxx, Buyer and the Escrow
Agent on or prior to the Closing Date; and
(iii) Buyer shall remit to Escrow Agent the sum of $100,000.00 by
wire transfer of immediately available funds, which funds shall be held by the
Escrow Agent in accordance with the terms of the Representation and Warranty
Escrow Agreement in the form of attached Schedule C ("Representation and
Warranty Escrow Agreement"), which shall have been entered into by Xxxxxx,
Buyer and the Escrow Agent on or prior to the Closing Date; and
(iv) Buyer shall remit the sum of $8,250.00 to Xxxxx Industries,
Inc., as provided under Section 6.5 by check or wire transfer of immediately
available funds; and
(v) Buyer shall remit to those vendors of Xxxxxx those amounts as
set forth on Exhibit 3.2 (v) hereto, by check or wire transfer of immediately
available funds; and
(vi) the balance of the Purchase Price ($4,559,790.00) shall be
paid by Buyer to Xxxxxx'x lender, AmSouth Bank, on the Closing Date by wire
transfer of immediately available funds.
Section 3.3 Assignment of Contract Rights. In connection with
the sale and transfer of the Purchased Assets and on the terms and subject to
the conditions herein expressed, Xxxxxx will assign, or cause to be assigned,
to Buyer all of Xxxxxx'x rights, title and interest in and to all contracts,
leases and other agreements to be assumed by Buyer hereunder, and all
guaranties, warranties and service contracts relating to the Equipment.
Section 3.4 Execution of Assignment and Assumption Agreement.
In connection with the sale and transfer of the Purchased Assets and the
assumption of the liabilities to be assumed by Buyer pursuant to Section 3.1 of
this Agreement, Xxxxxx and Buyer shall as of the closing execute and deliver an
Assignment and Assumption Agreement in substantially the form attached hereto
as Schedule D for each lease and other contract, purchase orders, sales orders
and other obligations and liabilities set forth in Exhibits 1.1(vi) hereto.
ARTICLE 4.
THE CLOSING
Section 4.1 The Closing. The closing shall take place at the
offices of Xxxxxxx Xxxxx Xxxx & White LLP located at 0000 Xxxx Xxxxx, Xxxxx
0000, in Birmingham, Alabama at 10:00 a.m., local time, on November 30, 2001,
or at such other time and place as the parties may agree upon in writing.
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Section 4.2 Changes. Agreements to change or extend times and
places permitted by Section 4.1 hereof may be made by an instrument or
instruments in writing signed by an officer of Buyer and an officer of Xxxxxx.
Section 4.3 Closing Date; Effective Time. For purposes of
this Agreement, the term "Closing Date" shall mean the date on which the
closing shall occur. For purposes of this Agreement, the term "Effective Time"
shall mean the time of the completion of the closing on the Closing Date.
ARTICLE 5.
DELIVERIES AT THE CLOSING
Section 5.1 Deliveries By Xxxxxx. At the closing on the
Closing Date, Xxxxxx shall deliver to Buyer, in addition to all other items
specified elsewhere in this Agreement, the following:
(i) the Purchased Assets free and clear of all liens and
encumbrances;
(ii) such instruments of sale, conveyance, transfer, assignment,
endorsement, direction or authorization as will be sufficient or requisite, in
the reasonable opinion of Buyer and its counsel, to vest in Buyer, its
successors and assigns, all right, title and interest, in and to the Purchased
Assets;
(iii) the various documents referred to in Article 12 hereof;
(iv) such assignments, and consents thereto, of the various
franchises, leases, contracts, purchase orders, sales orders and commitments
referred to in Section 3.1 hereof as will be sufficient or requisite, in the
reasonable opinion of Buyer and its counsel, to vest in Buyer all of Xxxxxx'x
rights, powers and privileges thereunder;
(v) the agreement referred to in Section 3.4 hereof;
(vi) the agreements referred to in Sections 7.1 and 7.2 hereof;
and
(vii) the agreements referred to in Section 3.2 hereof.
Section 5.2 Deliveries by Buyer. At the closing on the Closing
Date, Buyer shall deliver to Xxxxxx the following:
(i) the various documents referred to in Article 13 hereof;
(ii) documents (including, without limitation, the agreement
referred to in Section 3.4 hereof) evidencing the assumption by Buyer of the
liabilities and franchises, agreements, leases, contracts, purchase orders,
sales orders, other obligations and liabilities, and commitments of Xxxxxx
provided to be assumed by Buyer in Section 3.1 hereof; and
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(iii) the funds in payment of the Closing Purchase Price in
accordance with the provisions of Section 3.2 hereof.
(iv) the agreements referred to in Section 3.2 hereof.
ARTICLE 6.
COVENANTS OF XXXXXX
Xxxxxx covenants and agrees with Buyer that between the date hereof
and the Closing Date:
Section 6.1 Inspection. At all reasonable times Xxxxxx shall
make its plants, inventories, books of account and records, and all market
studies and reports, consultant studies and reports, manufacturers
representatives agreements, customer lists, appraisals, valuation, and other
material or information in the possession of Xxxxxx relating to The Acquired
Business available for examination and inspection by Buyer and its agents.
Section 6.2 Preservation of Business. With respect to The
Acquired Business, Xxxxxx will, except as otherwise permitted herein, use
reasonable efforts to preserve its business organization intact and to preserve
its respective relationships with distributors, suppliers, producers, customers
and others having business relationships with The Acquired Business. Xxxxxx
will promptly notify Buyer in writing of any material adverse change in The
Acquired Business as affected by changes in distributors, suppliers, producers
or customers.
Section 6.3 Consents. In each case where the properties,
franchises, agreements, leases, contracts or other rights or commitments of
Xxxxxx which are to be transferred to Buyer pursuant to this Agreement are not
transferable or assignable to Buyer, or cannot be purchased or assumed by Buyer
pursuant to this Agreement, without the consent of another party, Xxxxxx will
at its expense obtain, prior to the Closing Date, all such consents of such
other party to the transfer of such properties, franchises, agreements, leases,
contracts, rights and commitments to Buyer pursuant to this Agreement; provided
that in any case where required, Buyer will expressly assume the future
obligations of Xxxxxx under any such franchise, agreement, lease, contract or
other instrument.
Section 6.4 No Public Announcement. Prior to the Closing Date,
Xxxxxx will not make any press release or public announcement in respect to the
transactions contemplated by this Agreement, except to the extent, if any,
required by law (and in no event will any such press release or public
announcement be made without reasonable advance notice thereof to Buyer and
Buyer's written or facsimile consent which consent will not be unreasonably
withheld).
Section 6.5 Watry Tooling. In anticipation of the closing of
this transaction, Xxxxxx has solicited from Xxxxx Industries, Inc. of
Sheboygan, Wisconsin, ("Watry") a bid proposal for repair of tooling owned by
Xxxxxx but utilized by Watry in producing Broilmaster barbeque grill components
for Xxxxxx. A copy of such proposal has been provided by Xxxxxx to Buyer and,
subject to Buyer's prior approval, Xxxxxx will authorize the repair of that
tooling by Watry. In connection therewith the Buyer will advance to Watry the
cost of repair of such tooling in an amount not to
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exceed $8,250.00 which amount will be credited against the Purchase Price
referenced under Article 3 hereinabove.
Section 6.6 Inventory Levels. Xxxxxx will not purchase or
acquire any Inventory items in addition to those listed on Exhibit 1.1 (i)
hereto without the prior written consent of Buyer and Buyer will have no
obligation to purchase any such additional Inventory items absent such prior
written consent.
ARTICLE 7.
POST-CLOSING COVENANTS OF XXXXXX
Xxxxxx covenants and agrees as follows:
Section 7.1 Non-Competition. Xxxxxx will as of the Closing Date
execute and deliver to Buyer an agreement to refrain from competition in
substantially the form of the Covenant Not to Compete attached hereto as
Schedule E.
Section 7.2 Further Assurances. Upon the reasonable request of
Buyer at any time and from time to time after the Closing Date, Xxxxxx will
forthwith, at its own expense, execute and deliver such further instruments of
assignment, transfer, conveyance, endorsement, direction or authorization and
do all things necessary or proper, as Buyer or its counsel may reasonably
request, in order to vest, perfect or confirm, of record or otherwise, the
right, title and interest of Buyer, its successors and assigns, in and to the
Purchased Assets and the assignment to, and assumption by Buyer of the
franchises, agreements, leases, contracts and commitments to be assigned to,
and assumed by Buyer pursuant to Sections 3.1 hereof or otherwise to carry out
the purpose of this Agreement.
Section 7.3 Availability of Employees.
(i) Xxxxxx will, after the Closing Date, cooperate fully in
providing to Buyer or its designees information necessary to prosecute or
defend any third-party litigation for which Buyer is responsible for Xxxxxx
hereunder relating to operation of The Acquired Business acquired by Buyer and
will use Xxxxxx'x best efforts to provide and make available the services of
employees of Xxxxxx to participate in the preparation and prosecution or
defense of such litigation, all at no charge to Buyer other than direct
reasonable out-of-pocket expenses, which shall be charged to Buyer.
(i) During the ninety (90) day period immediately following the
Closing Date, Xxxxxx will provide 80 man hours by employees of Xxxxxx at the
facilities of Buyer for the purpose of consulting with Buyer in the transition
of the manufacture of Broilmaster gas barbeque grill products and to assist
Buyer with respect to technical issues related to the manufacture and sale of
Broilmaster gas barbeque grill products, as Buyer may request. During that
ninety (90) period, Xxxxxx will also make available to Buyer up to a total of
an additional 80 man hours of services of employees of Xxxxxx to assist Buyer
with respect to technical issues related to the manufacture and sale of
Broilmaster gas barbeque grill products, as Buyer may request from time to
time. The initial 80 man hours provided by Xxxxxx during the ninety (90) day
period following the Closing Date shall be at no charge to Buyer other than
direct reasonable out-of-pocket expenses such as the cost of transportation and
lodging for such employees, which shall be charged to Buyer. For the additional
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80 man hours provided by Xxxxxx, Buyer shall pay such reasonable out-of-pocket
expenses and be charged a reasonable hourly rate for time required to be spent
by Xxxxxx employees on such assistance to Buyer; provided that Buyer shall not
be charged for assistance provided by telephone or e-mail from Xxxxxx'x
facilities. Subject to the foregoing, Buyer shall have the right to bring such
employees to Buyer's production facility for the purpose of rendering such
technical assistance.
Section 7.4 Call Forwarding. For a period of twelve (12) months
following the Closing Date, Xxxxxx will refer to Buyer all telephone calls that
it may receive during such period related to the manufacture, production,
distribution or sale of Broilmaster gas barbeque grill products, at no cost to
Buyer.
Section 7.5 Transition of Customers and Vendors. For a period of
three (3) months following the Closing Date, Xxxxxx will take such actions and
sign such documents as Buyer may reasonably request to provide for the orderly
transition from Xxxxxx to Buyer of Xxxxxx'x vendors, suppliers, distributors
and customers related to the Broilmaster gas barbeque grill line of products
which actions will include, without limitation, the signing and mailing to such
vendors, suppliers, distributors and customers letters advising such persons of
the sale contemplated herein.
Section 7.6 Transfer of Equipment and Other Purchased Assets.
Within ten (10) days following Closing, Buyer will arrange for the removal and
transportation of the Equipment and other Purchased Assets noted in Section 1.1
(i) through (x) from Xxxxxx'x facilities to Buyer's facilities. Xxxxxx will
cooperate in scheduling such transportation and removal of those Purchased
Assets from Xxxxxx'x facilities for transport by the Buyer including, but not
limited to, making Xxxxxx'x facilities available to the Buyer and Buyer's
transportation services at all reasonable hours including times before and
after normal business operation hours, and assisting in locating and
identifying all such Purchased Assets.
ARTICLE 8.
COVENANTS OF BUYER
Section 8.1 Access to Records. Buyer agrees, for a period of
five (5) years after the Closing Date, to preserve and protect, or, in the
event Buyer wishes to destroy or discard such items, offer to surrender to
Xxxxxx, all books and records of Xxxxxx delivered to Buyer pursuant to this
Agreement, and Buyer's books and records maintained for eighteen (18) months
after the closing relating to delivery of products to customers for the purpose
of identifying whether Xxxxxx or Buyer is responsible for claims for loss or
injury relating to the sale of products of The Acquired Business, and to
afford, at Xxxxxx'x expense, to the officers, employees and authorized
representatives of Xxxxxx, reasonably free and full access for legitimate
business purposes during normal business hours to such books and records; and,
Buyer further agrees that such officers, employees and authorized
representatives of Xxxxxx shall be free during such period to make copies of
and to take notes from such books and records at Xxxxxx'x expense.
Section 8.2 Availability of Employees. Buyer will, after the
Closing Date, cooperate fully in providing to Xxxxxx or Xxxxxx'x designees
information necessary to prosecute or defend any third-party litigation for
which Xxxxxx is responsible relating to The Acquired Business at no charge to
Xxxxxx other than direct reasonable out-of-pocket expenses, which shall be
charged to
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Xxxxxx.
Section 8.3 No Public Announcement. Prior to the Closing Date,
Buyer will not make any press release or public announcement in respect of the
transactions contemplated by this Agreement, except to the extent, if any,
required by law (and in no event will any such press release or public
announcement be made without reasonable advance notice thereof to Xxxxxx and
Xxxxxx'x written or facsimile consent which consent will not be unreasonably
withheld).
Section 8.4 Removal of Purchased Assets. As referenced under
Section 7.6, within ten days (10) following Closing, Buyer will arrange for the
removal and transportation of Equipment and other Purchased Assets noted in
Section 1.1 (i) through (x) from Xxxxxx'x facilities to Buyer's facilities.
Buyer will complete the removal of the Equipment from Xxxxxx'x facilities prior
to January 31, 2002. Buyer will complete the removal of the Inventory and other
Purchased Assets (except the Equipment) from Xxxxxx'x facilities prior to
February 28, 2002. The foregoing time frames will apply unless delay in
performance is occasioned by acts or events beyond Buyer's control including,
but not limited to, fire, earthquake, strikes, acts of war, or acts of God.
ARTICLE 9.
REPRESENTATIONS AND
WARRANTIES OF XXXXXX
Xxxxxx warrants and represents to and covenants with Buyer and its
successors and assigns (which warranties, representations and covenants
together with the other warranties, representations and covenants of Xxxxxx set
forth in this Agreement or contained in any exhibit hereto, or in any
certificate or other document required to be delivered to Buyer by Xxxxxx
pursuant to this Agreement, shall, except as otherwise expressly provided
herein, survive the closing hereof) as follows:
Section 9.1 Organization, etc. Xxxxxx is a corporation, duly
organized, validly existing and in good standing under the laws of Delaware and
has the corporate power and all licenses, permits, authorizations and approvals
(governmental, corporate or otherwise) necessary to own and operate its
properties and to carry on The Acquired Business as it is now being conducted.
Section 9.2 Good Title, etc. On the Closing Date, Xxxxxx will
have good and marketable title to all of the Purchased Assets including,
without limitation, the molds, tools and dies included in the Purchased Assets
(except, as to Inventory only, as the same may have been sold or otherwise
disposed of after the date hereof in the ordinary course of its business),
subject to no mortgages, pledges, liens, encumbrances, rights of third parties
or other charges of any kind. Each and every location where Inventory and
Equipment are located are as set forth in Exhibits 1.1(i) and 1.1(ii).
Section 9.3 No Litigation. There is no litigation at law or in
equity, no arbitration proceeding and no proceeding before any commission or
other administrative or regulatory authority pending, or to the knowledge of
Xxxxxx threatened, against or affecting the Purchased Assets or The Acquired
Business or Xxxxxx'x right to carry on such businesses as conducted on the date
hereof,
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except as set forth in Exhibit 9.3. Xxxxxx is not in default or in violation of
any order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality affecting The Acquired Business or
the Purchased Assets.
Section 9.4 [Reserved]
Section 9.5 Contracts and Commitments. Exhibit 1.1(vi) contains
a true and complete list and brief description of all contracts, agreements,
purchase orders and sales orders to be assigned to and assumed by Buyer. Xxxxxx
has in all respects performed all the obligations required to be performed by
it to date and is not in default or alleged to be in default in any respect
under any of the contracts, agreements, purchase orders or sales orders
described in said Exhibit 1.1(vi).
Section 9.6 Intellectual Property
(i) A schedule setting forth all federal and state trademarks,
service marks, trade name or brand name registrations and copyright
registrations, and all pending applications and applications to be filed, if
any, therefor, owned or controlled by Xxxxxx that are used by Xxxxxx in The
Acquired Business is contained in Exhibit 1.1(iii) hereto (such assets
hereinafter sometimes collectively referred to as "Intellectual Properties").
No licenses, sublicenses, covenants or agreements have been granted or entered
into by Xxxxxx in respect of or under any of such Intellectual Properties.
Except as disclosed in Exhibit 1.1(iii) Xxxxxx owns the entire right, title and
interest in and to any and all Intellectual Properties utilized in The Acquired
Business and each item included in the Intellectual Properties is (i) in full
force and effect, (ii) free and clear of all liens and encumbrances of every
nature, (iii) not currently being challenged in any way, and (iv) not involved
in any pending (or, to the knowledge of Xxxxxx threatened) interference
proceeding.
(ii) With respect to The Acquired Business, the operations of
Xxxxxx, the manufacture, use and sale by Xxxxxx of its products, the use by
Xxxxxx of its machinery, equipment and processes, the use of the products of
Xxxxxx by its customers for the purpose for which sold, and the use of the
patents, trademarks, service marks, trade names, brand names, copyrights,
applications, licenses, inventions, proprietary processes and know-how,
formulae and trade secrets and advertising, technical or other literature of
Xxxxxx have not, and pending the closing will not, infringe, nor has Xxxxxx
been advised of any claim of infringement, of any proprietary right, patent,
trademark, service xxxx, trade name or copyright of others. Xxxxxx has the
right and authority to use the Intellectual Properties and other intellectual
property rights as are necessary to enable it to conduct and to continue to
conduct all phases of The Acquired Business in the manner presently conducted
and such use does not and will not conflict with, infringe on or misappropriate
any patent or other intellectual property right of any other person.
Section 9.7 No Default. Except as set forth in Exhibit 9.7,
Xxxxxx is not on the date hereof, and on the Closing Date it will not be, in
default under or in breach of the terms or conditions of any lease, contract or
other agreement, obligation or liability to be assumed by Buyer, and there has
not occurred, and on the Closing Date there will not have occurred, any event
which after the giving of notice, or the lapse of time, or both would
constitute a default under or breach of any of such leases, contracts or other
agreements, obligations or liabilities to be assumed by Buyer.
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Section 9.8 No Undisclosed Liabilities. Except as set forth in
Exhibit 9.8, as of the date hereof, Xxxxxx has, and as of the Closing Date
Xxxxxx will have, no material liability of any nature, whether accrued,
absolute, contingent or otherwise, relating to The Acquired Business not
disclosed in this Agreement or any certificate, exhibit or other instrument or
list or information required to be furnished by Xxxxxx pursuant to this
Agreement.
Section 9.9 No Violation. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not except as described in Exhibit 9.9 hereto, or otherwise disclosed
in this Agreement
(i) violate, conflict with or result in a breach of or default
under any of the terms, provisions or conditions of the articles of
incorporation or bylaws, of Xxxxxx or any statute, regulation or court or
administrative order or process, or any agreement or instrument to which Xxxxxx
is a party or by which it or any of its properties or assets, is bound;
(ii) result in the creation of any lien, charge or encumbrance
upon any of the Purchased Assets under any of the foregoing;
(iii) terminate, delay or give any party thereto the right to
terminate, delay, amend, abandon, or refuse to perform any provision of any
lease, contract or other agreement, obligation or liability to be assumed by
Buyer; or
(iv) require the consent of any other person or entity to the
transfer or assignment to Buyer, or the purchase or assumption by Buyer,
pursuant to this Agreement of the Purchased Assets and the properties,
franchises, licenses, contracts, purchase orders, sales orders or other rights
or commitments of Xxxxxx to be acquired by Buyer hereunder (or if any such
consent is required, Xxxxxx shall have obtained the same on or before the
Closing Date).
Section 9.10 Certain Governmental Regulations. The Acquired
Business of Xxxxxx has not been, and was not prior to the Effective Time,
conducted in violation of any statute, law, ordinance or regulation of any
governmental entity affecting The Acquired Business with respect to health and
safety in plants and environmental and pollution control, including the
disposition of hazardous or toxic waste materials. Xxxxxx has not received
notice of and is not aware of any condition or event relating to The Acquired
Business which by the passage of time would result in the violation of any such
statute, law, ordinance or regulation of any governmental entity, or would
require remedial action by Xxxxxx.
Section 9.11 Approval. Xxxxxx, at the time of closing, will have
taken all requisite corporate action to approve this Agreement and the
transactions contemplated by this Agreement, and there shall have at the time
of closing been delivered to Buyer certified copies of the resolutions duly
adopted in connection therewith.
Section 9.12 Tax Matters. All taxes, including, without
limitation, income, property, sales, use, franchise, value added, employees'
income withholding and social security taxes imposed by the United States, by
any state, municipality, subdivision or instrumentality of the United States,
or by any other domestic or foreign taxing authority, which are due and payable
by
14
Xxxxxx, and all interest and penalties thereon, have been paid in full. Xxxxxx
has, and at the Closing Date will have, filed all federal, state, county,
local, foreign and other tax returns which are required to be filed, on or
before the dates on which such returns are required to be filed. All such
returns of Xxxxxx are true, correct and complete in all respects and reflect
accurately all income, deductions, credits and liability for taxes of Xxxxxx.
The sale by Xxxxxx of the Purchased Assets and Buyer's acquisition of the
Purchased Assets will not result in the imposition of or liability for any
sales, use or other transfer taxes.
Section 9.13 Suppliers and Customers. Xxxxxx has no actual
knowledge that any of Xxxxxx'x customers or distributors will not continue to
be customers or distributors of Buyer or that others having business
relationships with Xxxxxx related to The Acquired Business will not continue to
have such business relationships with Buyer.
Section 9.14 Warranty Claims. Attached hereto as Exhibit 9.14 is
a schedule setting forth warranty experience of Xxxxxx during 1998, 1999, 2000
and year to date to November 2, 2001 and detail with respect to warranty claims
during the period from February to December 2000 and year to date 2001 related
to Broilmaster gas barbeque grill products.
Section 9.15 No Untrue Statements. Neither this Agreement, nor
any certificate, or exhibit hereto, (including, but not limited to Exhibit 9.19
referenced in Section 9.19 below) or other instrument or list or information
heretofore or hereinafter furnished by Xxxxxx to Buyer pursuant to this
Agreement, contains, any untrue statement of a material fact or omits, to state
any material fact necessary in order to make the statements contained herein or
therein not misleading.
Section 9.16 Representations and Warranties to be True and
Correct on the Closing Date. The representations and warranties set forth in
Sections 9.1 through 9.19 hereof shall be true and correct on the Closing Date
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date.
Section 9.17 Transferee Liability. Xxxxxx hereby represents that
the value of the Purchased Assets represents approximately 20% of the value of
Xxxxxx'x business and accordingly the sale of the Purchased Assets contemplated
herein is not a sale of all or substantially all of its business assets within
the meaning of Section 271 of the Delaware General Corporation Law (the
"Transferee Liability Laws") and/or the governing laws of Delaware or Alabama
or the articles of incorporation, by-laws or other laws or agreements governing
Xxxxxx (the "Corporation Governing Documents"). Based upon such representation
Buyer hereby waives any requirement on the part of Xxxxxx to obtain a
certificate of no tax due from the Delaware or Alabama Department of Revenue or
any other state taxing authority and shareholder approval as may be required
under Corporation Governing Documents. Xxxxxx hereby specifically agrees to
indemnify and save and hold harmless Buyer from any and all claims, demands,
causes of action, liability or loss of every kind and nature whatsoever
including attorneys fees, costs and expenses, arising out of or resulting from
any failure on the part of Xxxxxx and/or Buyer to comply with Transferee
Liability Laws or Corporation Governing Documents in connection with the
purchase and sale of The Acquired Business hereunder.
Section 9.18 Product Defects. Xxxxxx has no actual knowledge of
any defects in the design or manufacturing of the Broilmaster products which
may result in faulty or defective
15
performance by Broilmaster products or result in damage to property or injury
to persons arising from the use of the Broilmaster products or in warranty
claims for such products.
Section 9.19 Xxxxxx Information and Records. Exhibit 9.19
attached hereto contains copies of documents and information provided by Xxxxxx
to Buyer during Buyer's due diligence review of The Acquired Business. The
information and documents contained in Exhibit 9.19 are expressly subject to
the representation and warranty of Section 9.15 above which states that the
same are true and correct.
ARTICLE 10.
REPRESENTATIONS AND RESTRICTIVE
COVENANTS OF BUYER
Buyer warrants and represents to and covenants with Xxxxxx as follows:
Section 10.1 Organization, etc. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of Illinois and
has all necessary corporate power and authority to enter into this Agreement
and the transactions contemplated hereby.
Section 10.2 No Violation. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not violate, conflict with or result in a breach of or default under
any of the terms, provisions or conditions of the certificate of incorporation
or by-laws of Buyer or any statute, regulation or any court or administrative
order or process, or any agreement or instrument to which Buyer is a party or
by which it, or its properties or assets is bound or result in the creation of
any lien, charge or encumbrance upon any of the assets of Buyer under any of
the foregoing.
Section 10.3 Payment of Liabilities Assumed. Buyer shall pay and
discharge all the liabilities and obligations of Xxxxxx that are assumed
hereunder, when and as the same shall become due and payable or dischargeable.
ARTICLE 11.
INDEMNIFICATION
Section 11.1 Indemnity by Xxxxxx. Xxxxxx agrees to indemnify and
hold harmless Buyer from and against any loss, damage or expense (including
reasonable attorney's fees) suffered by Buyer, its successors or assigns
resulting from:
(i) any breach by Xxxxxx of this Agreement;
(ii) any inaccuracy in or breach of any of the representations,
warranties or covenants made by Xxxxxx herein or in any Exhibit hereto;
(iii) any inaccuracy or misrepresentation in any certificate or
information required to be delivered hereunder by Xxxxxx in accordance with any
provision of this Agreement;
16
(iv) any claim or suit in which Buyer is involved alone or in
conjunction with Xxxxxx, and resulting directly or indirectly from the alleged
failure of Xxxxxx to pay any of the alleged liabilities or obligations of
Xxxxxx or to fulfill any alleged contractual obligation of Xxxxxx; provided,
however, Buyer shall not be entitled to assert any rights of indemnification
hereunder to the extent that Buyer has assumed such liability hereunder, or
with respect to claims that neither Buyer nor Xxxxxx is legally obligated to
satisfy and that are paid by Buyer merely, in the reasonable judgment of Buyer,
for customer relationships; and
(v) any claim, demand, administrative proceeding or suit against
Buyer, including, without limitation, any tort claim or demand and any claim or
liability arising out of the manufacture or sale of products or the performance
of services by Xxxxxx with respect to products and services constituting a part
of The Acquired Business, to the extent that the acts, deeds, omissions or
contractual undertakings giving rise to such claim, demand or liability were
acts, deeds, omissions or contractual undertakings by Xxxxxx which shall have
transpired, occurred or been done, performed or omitted prior to the Effective
Time, other than the liability for which has been assumed by Buyer.
Section 11.2 Notification to Xxxxxx and Related Matters. Upon
obtaining knowledge thereof, Buyer shall promptly notify Xxxxxx in writing of
any claim of loss, damage or expense which Buyer has determined has given or
reasonably may give rise to a right of indemnification under this Agreement and
shall specify details thereof, without regard to whether the amount of any
loss, damage or expense has been finally determined, and Xxxxxx shall have a
reasonable time to contest any such claim. If such claim or demand relates to a
claim or demand by a third party against Buyer, Xxxxxx shall have the right to
settle any such claim or demand (at Xxxxxx'x expense and without admitting that
Buyer had any liability with respect thereto) or to employ counsel reasonably
acceptable to Buyer to defend any such claim or demand asserted against Buyer
and Buyer shall have the right to cooperate in the defense of any such claim
with counsel of Buyer's selection at Buyer's expense. So long as Xxxxxx is
defending in good faith any such claim or demand, Buyer will not settle such
claim or demand. Buyer shall make available to Xxxxxx or its representatives,
all records and other materials required by them for their use in contesting
any such claim or demand asserted by a third party against Buyer. Whether or
not Xxxxxx so elects to defend any such claim or demand, Buyer shall have no
obligation to do so. If such claim or demand relates to a claim or demand other
than one asserted by a third party against Buyer, Buyer shall promptly notify
Xxxxxx of Buyer's claim or demand against Xxxxxx and of Buyer's demand for
indemnification hereunder. Xxxxxx shall then promptly pay to Buyer the amount
of Buyer's claim or demand, if undisputed. In the event that Xxxxxx shall
dispute such claim or demand or any portion thereof, Xxxxxx shall immediately
notify Buyer in writing, specifying in detail the portion of such claim or
demand (if less than all) which is disputed and the facts relied upon by Xxxxxx
as a basis for such dispute. Xxxxxx and Buyer agree to negotiate in good faith
to attempt to reach a resolution of any disputed claim or demand for
indemnification hereunder in order to attempt to avoid resorting to arbitration
as provided by this Agreement.
Section 11.3 Indemnity by Buyer. Buyer agrees to indemnify and
hold harmless Xxxxxx xxxx and against any loss, damage or expense (including
reasonable attorneys' fees) suffered by Xxxxxx resulting from
(i) any material breach by Buyer of this Agreement;
17
(ii) any material inaccuracy in or breach of any of the
representations, warranties or covenants made by the Buyer herein or in any
Exhibit hereto;
(iii) any liability under any franchise, lease, contract or
commitment expressly to be assumed by Buyer pursuant to this Agreement to the
extent assumed; and
(iv) any suit in which Xxxxxx is involved alone or in conjunction
with Buyer, and resulting directly or indirectly from alleged failure of Buyer
to pay any of the alleged liabilities or obligations of Buyer or to fulfill any
alleged contractual obligation of Buyer; provided, however, Xxxxxx shall not be
entitled to assert any rights of indemnification hereunder to the extent that
Xxxxxx has retained such liability.
Section 11.4 Notification to Buyer. Upon obtaining knowledge
thereof, Xxxxxx shall promptly notify Buyer of any claim or demand which Xxxxxx
has determined has given or reasonably may give rise to a right of
indemnification under this Agreement and Buyer shall have a reasonable time to
contest any such claim. If such claim or demand relates to a claim or demand
asserted by a third party against Xxxxxx, Buyer shall have the right to settle
any such claim or demand (at the expense of Buyer and without admitting that
Xxxxxx had any liability with respect thereto) or to employ counsel reasonably
acceptable to Xxxxxx to defend any such claim or demand asserted against
Xxxxxx, and Xxxxxx shall have the right to cooperate in the defense of any such
claim with counsel of Xxxxxx'x selection at Xxxxxx'x expense. So long as Buyer
is defending in good faith any such claim or demand, Xxxxxx will not settle
such claim or demand. Xxxxxx shall make available to Buyer or its
representatives all records and other materials required by them for their use
in contesting any such claim or demand asserted by a third party against
Xxxxxx. Whether or not Buyer so elects to defend any such claim or demand,
Xxxxxx shall have no obligation to do so. If such claim or demand relates to a
claim or demand other than one asserted by a third party against Xxxxxx, Xxxxxx
shall promptly notify Buyer of Xxxxxx'x claim or demand against Buyer and of
Xxxxxx'x demand for indemnification hereunder. Buyer shall then promptly pay to
Xxxxxx the amount of Xxxxxx'x claim or demand, if undisputed. In the event that
Buyer shall dispute such claim or demand or any portion thereof, Buyer shall
immediately notify Xxxxxx in writing specifying in detail the portion of such
claim or demand (if less than all) which is disputed and the facts relied upon
by Buyer as a basis for such dispute. Xxxxxx and Buyer agree to negotiate in
good faith to attempt to reach a resolution of any disputed claim for
indemnification hereunder in order to attempt to avoid resorting to a court of
competent jurisdiction for such resolution.
Section 11.5 Limitations on Recourse. Anything to the contrary
contained herein notwithstanding:
(a) Xxxxxx shall not have any obligation to indemnify Buyer under
Section 11.1(i), (ii) or (iii) unless and until the aggregate amount of
Xxxxxx'x obligation thereunder exceeds $25,000 and then only to the extent such
aggregate amount exceed $25,000; and
(b) Buyer shall not have any obligation to indemnify Xxxxxx under
Section 11.3 (i) and (ii) unless and until the aggregate amount of Buyer's
obligation thereunder exceeds $25,000 and then only to the extent such
aggregate amount exceeds $25,000; and
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(c) Xxxxxx will have no liability to Buyer under Section 11.1(i),
(ii) or (iii) in excess of a sum equal to the dollar amount of the Purchase
Price plus reasonable attorneys' fees, and other costs incurred by Buyer in
enforcing the indemnification obligations of Xxxxxx hereunder, whether or not
suit is filed.
Section 11.6 Escrow. Upon notice to Xxxxxx specifying in
reasonable detail the basis for an amount Xxxxxx owes to Buyer pursuant to
Section 11.1, Buyer may give notice of a claim in such amount under the
Representation and Warranty Escrow Agreement. Buyer may not proceed against
Xxxxxx for amounts alleged to be owing by Xxxxxx pursuant to Section 11.1 nor
set-off any such amount owed by Xxxxxx against any amount owed by Buyer to
Xxxxxx (other than as held in escrow under the Representation and Warranty
Escrow Agreement) unless and until the liabilities set off against the amount
held under the Representation and Warranty Escrow Agreement have reduced the
amount held under the Representation and Warranty Escrow Agreement to zero.
Section 11.7 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement and in any
instrument, certificate, document or information delivered pursuant to this
Agreement shall survive until November 30, 2002; provided, however, that
Xxxxxx'x representations in Sections 9.1, 9.2, 9.12, 9.17 and 9.18 shall
survive until the expiration of the statute of limitations applicable thereto.
The applicable period of survival for each representation and warranty is
referred to herein as the "Survival Period." Any claim or cause of action
(including, without limiting the generality of the foregoing, a claim for
indemnification pursuant to Article 11) based upon or arising out of a breach
of a representation or warranty made hereunder or in any instrument,
certificate, document or information delivered pursuant thereto must be made in
writing within the Survival Period or the party against which such claim is
made shall have no liability with respect thereto.
ARTICLE 12.
CONDITIONS TO CLOSING APPLICABLE TO BUYER
The obligations of Buyer hereunder (including the obligation of Buyer
to close the transactions and consummate the purchase herein contemplated) are
subject to the following conditions precedent:
Section 12.1 Correctness of Warranties, etc. The warranties and
representations made by Xxxxxx herein or in any Exhibit or list or information
required to be delivered pursuant hereto shall be true and correct in all
material respects on and as of the Closing Date with the same effect as if such
warranties and representations had been made on and as of the Closing Date and
Xxxxxx shall have, in all material respects, performed and complied with all
agreements, covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date.
Section 12.2 No Proceedings. No proceeding or formal
investigation shall have been commenced by any governmental or regulatory
agency or by any other person or entity with respect to any of the transactions
contemplated by this Agreement.
Section 12.3 Satisfaction of Buyer and its Counsel. All
proceedings to be taken in connection with the consummation of the transactions
contemplated by this Agreement, and all
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documents incident thereto, shall be reasonably satisfactory in form and
substance to Buyer and its counsel, and Buyer and its counsel shall have
received copies of such documents as its counsel may reasonably request in
connection with said transactions.
Section 12.4 Opinion of Counsel. At the closing there shall be
delivered to Buyer the written opinion of Xxxxxxx Xxxxx Xxxx & White LLP,
counsel for Xxxxxx, dated the Closing Date, substantially in the form annexed
hereto as Schedule F. Such opinion shall be acceptable to Buyer and its
counsel.
Section 12.5 Consents. In the case of those properties,
franchises, agreements, leases, contracts or other rights or commitments of
Xxxxxx and to be assumed by Buyer which are not transferable or assignable to
Buyer or cannot be purchased or assigned by Buyer pursuant to this Agreement
without the consent of another party, there shall have been delivered to Buyer
the written consent of such party to such transfer and assignment to Buyer and
assumption by Buyer pursuant to this Agreement.
Section 12.6 Officer's Certificates. Buyer shall have received a
certificate or certificates executed by the President or a Vice President of
Xxxxxx to the effect that the conditions set forth in Sections 12.1, 12.2 and
12.5 of this Article 12 have been satisfied.
Section 12.7 Condition of Inventory and Equipment. The Inventory
and Equipment delivered to Buyer shall be in the same condition upon such
delivery as at the time of inspection of the Inventory and Equipment by Buyer
as determined in Buyer's sole discretion. Any damage to the Inventory or
Equipment between Buyer's inspection and the Closing Date shall be the sole
responsibility of Xxxxxx.
Section 12.8 Vendor Releases. Prior to or at Closing Xxxxxx shall
deliver to Buyer letters from those vendors set forth in Exhibit 12.8 hereto
confirming Xxxxxx'x ownership of tooling held by such vendor and the right of
Buyer, following the purchase of such tooling, to ownership and control of such
tooling without further conditions or contingencies, in a form of confirming
corresponding as set forth on Exhibit 12.8 (A) attached hereto.
ARTICLE 13.
CONDITIONS TO CLOSING APPLICABLE TO XXXXXX
The obligations of Xxxxxx hereunder (including the obligation of
Xxxxxx to close the transactions herein contemplated) are subject to the
following conditions precedent:
Section 13.1 Correctness of Warranties, etc. All warranties and
representations made by Buyer herein shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if such
warranties and representations had been made on and as of the Closing Date, and
Buyer shall have, in all material respects, performed and complied with all
agreements, covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date, and at the closing Xxxxxx shall
have received a certificate executed by an officer of Buyer to the foregoing
effects.
Section 13.2 No Proceedings. No proceeding or formal
investigation shall have
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been commenced by any governmental or regulatory agency or by any other person
or entity with respect to any of the transactions contemplated in this
Agreement.
Section 13.3 Satisfaction of Xxxxxx and its Counsel. All
proceedings to be taken in connection with the consummation of the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Xxxxxx and its counsel, and
Xxxxxx and its counsel shall have received copies of such documents as its
counsel may reasonably request in connection with said transactions.
Section 13.4 Opinion of Counsel to Buyer. At the closing, there
shall be delivered to Xxxxxx the written opinion of Mathis, Marifian, Xxxxxxx &
Xxxxxx, Ltd., counsel for Buyer, dated the Closing Date, substantially in the
form attached hereto as Schedule G. Such opinion shall be acceptable to Xxxxxx
and its counsel.
ARTICLE 14.
BROKERS
The parties hereto agree that this Agreement was not induced or
procured through any person, firm or corporation acting as a broker or finder,
other than McDonald Investments Inc., whose fee shall be the expense of Xxxxxx
and not of Buyer. Buyer, on the one hand, and Xxxxxx, on the other, agree to
hold each other harmless from any loss, damage or expense resulting from any
claim by any other person, firm or corporation based upon any such other
person, firm or corporation having acted as a broker or finder for or in
connection with this transaction on behalf of Buyer on the one hand, or on
behalf of Xxxxxx on the other.
ARTICLE 15.
MISCELLANEOUS
Section 15.1 Termination of Agreement. This Agreement may be
terminated under any of the following circumstances by notice given on or
before the Closing Date:
(i) Buyer shall have the right to terminate if, during the period
from the date hereof to the Closing Date, Buyer shall learn of any fact or
condition which is materially at variance with one or more of the warranties or
representations of Xxxxxx set forth in this agreement, or Xxxxxx shall fail in
any material respect to perform the covenants set forth in Article 6 of this
Agreement.
(ii) Xxxxxx shall have the right to terminate if, during the
period from the date hereof to the Closing Date, Xxxxxx shall learn of any fact
or condition which is materially at variance with one or more of the warranties
or representations of Buyer set forth in this Agreement, or Buyer shall fail in
any material respect to perform the covenants set forth in Article 7 of this
Agreement.
(iii) Either Buyer or Xxxxxx may, at its election, waive any of its
rights to terminate this Agreement under the provisions of this Section 15.1,
and shall be deemed to have waived such rights upon completion of the closing
under this Agreement.
Section 15.2 Notices. Unless otherwise notified in writing to the
contrary, any notice required or permitted by the terms hereof to be given any
party hereto shall be effectively
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delivered for all purposes if delivered personally or if mailed, upon deposit
in the United States mail, postage prepaid, and if directed to Xxxxxx, properly
addressed to it at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000,
Attention: Xxxx Xxxxxx, President, with copy thereof addressed and mailed to
Xxxxxxx Xxxxx Rose & White LLP, 0000 Xxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxx,
Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxx III, and if directed to Buyer
properly addressed to Empire Comfort Systems, Inc., 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 Attention: Xxxx X. Xxxx, President, with a copy
thereof addressed and mailed to Mathis, Marifian, Xxxxxxx & Xxxxxx, Ltd., 000
Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxx.
Section 15.3 Governing Law; Arbitration. This Agreement shall be
governed in all respects in conformity with the intent of the parties as
expressed in the provisions of this Agreement. To the extent any issue between
the parties is not controlled by this Agreement, then any dispute between the
parties shall be governed and construed in accordance with the laws of the
State of Illinois, without regard to its choice of law principles. UNLESS THIS
AGREEMENT SPECIFICALLY PROVIDES FOR ANOTHER TYPE OF DISPUTE RESOLUTION WITH
RESPECT TO A PARTICULAR KIND OF DISPUTE, ANY AND ALL CONTROVERSIES AND CLAIMS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH THEREOF, SHALL BE
SETTLED BY FINAL AND BINDING ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. Any
such arbitration proceedings shall be and remain confidential. The panel of
arbitrators for any such arbitration shall consist of three members of the
American Arbitration Association, one of whom shall be selected by Buyer, one
of whom shall be selected by Xxxxxx, and the third who will be selected by the
other two. Judgment upon the decision rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The parties specifically
acknowledge that this Agreement evidences a transaction involving, affecting,
affected by, and a part of, interstate commerce and that this agreement to
arbitrate is governed by and enforceable under 9 U.S.C. 1 et seq. The place of
arbitration shall be Nashville, Tennessee.
Section 15.4 Table of Contents; Captions. The table of contents
and the captions and other headings contained in this Agreement as to the
contents of particular articles, sections, paragraphs or other subdivisions
contained herein are inserted for convenience of reference only and are in no
way to be construed as part of this Agreement or as limitations on the scope of
the particular articles, sections, paragraphs or other subdivisions to which
they refer and shall not affect the interpretation or meaning of this
Agreement.
Section 15.5 Incorporation of Exhibits. This Agreement shall be
deemed to have incorporated by reference all of the Exhibits and Schedules
referred to herein to the same extent as if such Exhibits were fully set forth
herein. Each reference herein to "the Agreement" or "this Agreement" shall be
construed to include each such Exhibit and Schedules.
Section 15.6 Entire Agreement and Amendment. This Agreement and
the Exhibits attached hereto represent the entire understanding and agreement
between the parties with respect to the subject matter hereof and shall
supersede any prior agreements and understanding between the parties with
respect to that subject matter. This Agreement may not be amended or modified
except by a written instrument executed by an officer of Buyer and an officer
of Xxxxxx.
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Section 15.7 Successors and Assigns. Buyer may assign this
Agreement in whole or in part to any subsidiary or to any person who becomes a
successor in interest (by purchase of stock or otherwise) to Buyer; provided,
however, that such assignment shall not relieve Buyer of its obligations under
Article 11; provided further that no such assignment shall reduce or otherwise
vitiate any of the obligations of Xxxxxx. Subject to the foregoing, this
Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto, and their respective successors, heirs, permitted assigns, and
personal and legal representatives.
Section 15.8 Counterparts. This Agreement may be executed
simultaneously and in any number of counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
Section 15.9 Facsimile Signatures. A signature on a counterpart
may be a facsimile or an electronically transmitted signature, and such
signature shall have the same force and effect as an original signature.
ARTICLE 16
BULK SALE OBLIGATION
In the event that it is determined that the bulk sale statute of any
state or states apply to this transaction, Xxxxxx agrees to indemnify and hold
harmless the Buyer from any claim, loss or liability, including, attorneys
fees, costs and expenses related thereto, arising from or resulting from the
parties failure to provide notices or otherwise comply with the provisions of
any such bulk sale statute.
ARTICLE 17
SERVICING OF WARRANTY CLAIMS
Section 17.1 Buyer's Warranty Coverage. Buyer shall be
responsible for servicing all post-closing claims received by Buyer or Xxxxxx
made by customers or consumers pursuant to the product warranties issued by
Xxxxxx on Broilmaster gas barbeque grill products sold by Xxxxxx on or before
the Effective Time ("Warranty Claims"). In the event that Xxxxxx receives any
Warranty Claim, Xxxxxx will either (1) forward any and all information
pertaining to such Warranty Claim received by Xxxxxx xxxx the customer to Buyer
within fifteen (15) days of receipt thereof, or (2) direct the customer to
contact Buyer directly for servicing of such Warranty Claim.
Section 17.2 Xxxxxx'x Coverage of Costs. Xxxxxx will be
financially responsible for Parts, Labor and Shipping ("Costs") on all Warranty
Claims until the Expiration Date (as defined below). For purposes of this
Article 17 the following meanings shall apply:
(i) "Parts" shall mean the Actual Cost of any component or part
which is repaired or replaced pursuant to the Warranty Claim.
(ii) "Labor" shall mean reasonable labor costs incurred by Buyer
in repairing or replacing the product or any part thereof. Unless otherwise
agreed by the parties the charge for Labor shall be $10.00 per Warranty Claim
Transaction;
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provided, however, in no event shall Labor Costs exceed $30,000.00 in any
calendar year, such limitations to be prorated for any partial calendar year of
the term of this Agreement. As used herein the term "Warranty Claim
Transaction" shall constitute a single order for warranty service which may
consist of one or more parts required to service the Warranty Claim.
(iii) "Shipping" shall mean the actual cost of any reasonable and
normal shipping or third party handling fees incurred by Buyer in servicing the
Warranty Claim
(iv) "Actual Cost" of each Part shall mean, in the case of
products acquired hereunder, the Inventory cost for such product except as to
those Parts acquired hereunder listed on Exhibit 17.2 which shall be priced as
shown on said Exhibit; in the case of products acquired hereafter, the invoice
cost of such product.
Section 17.3 Warranty/Schedule. Within thirty (30) days after the
close of each calendar quarter during the four (4) year period following the
date of this Agreement, Buyer shall provide Xxxxxx with a schedule of
information (the "Warranty Schedule") concerning Warranty Claims serviced by
Buyer during such calendar quarter. The Warranty Schedule shall include the
nature of each Warranty Claim, the date of the sale of the product with respect
to which the Warranty Claim was made, the Parts used, the Actual Cost of such
Parts used, the Labor performed and the Labor Cost and Shipping Cost with
respect to each Warranty Claim, and the total Costs of all such Warranty Claims
during the quarter. Buyer shall assert a claim against the escrow referenced in
Section 17.4 for the amount of Warranty Claims serviced by Buyer ( the "Claim")
by providing a copy of the Warranty Schedule and a demand for payment of the
Claim amount shown thereon (a "Claim Notice") to Xxxxxx, with a copy to the
Escrow Agent. Xxxxxx shall have the right at any reasonable time and from time
to time to review Buyer's records and work papers which are the basis of or
support the information contained in the Warranty Schedule. In the event Xxxxxx
disagrees with a Warranty Claim or Cost included in the Warranty Schedule, it
shall notify Buyer of such disagreement within thirty (30) days of its receipt
of the Warranty Schedule or, if a claim has been made pursuant to the Warranty
Escrow Agreement, pursuant to the requirements thereof. Thereafter, the parties
will seek to settle their disagreement through negotiation or, if negotiations
are unsuccessful, in accordance with the dispute resolution provisions
contained in Section 15.3 above.
Section 17.4 Warranty Escrow As referenced under Section 3.2 (ii)
above,Two Hundred Thousand Dollars ($200,000.00) of the Purchase Price will be
held in escrow, pursuant to the terms and provisions of the Warranty Claims
Escrow Agreement attached hereto as Schedule B, by Escrow Agent (as defined
therein) for a period of four (4) years beginning on the Closing Date. Buyer
shall be reimbursed from such funds held in escrow for any Costs incurred by
Buyer.
Section 17.5 Expiration of Escrow. For the four (4) year period
referenced under Section 17.4 Xxxxxx will maintain a $25,000.00 balance in the
Warranty Claims Escrow by contribution of additional funds as necessary within
thirty (30) days of Xxxxxx'x receipt of notice from the Escrow Agent or Buyer
of the escrow balance falling below $25,000.00. At the expiration of such four
(4) year period (the "Expiration Date"), the funds remaining in escrow which
are not subject to pending Warranty Claims shall be distributed to Xxxxxx and
Buyer will be deemed to have
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assumed, and will assume, all future liability for Warranty Claims made by
customers or consumers after the Expiration Date pursuant to product warranties
issued by Xxxxxx on Broilmaster gas barbeque grill products sold by Xxxxxx
prior to the Effective Time. Following the Expiration Date, Buyer will
indemnify and hold harmless Xxxxxx xxxx and against any and all loss, damage or
expense (including reasonable attorneys' fees) suffered by Xxxxxx resulting
from any failure by Buyer to honor and fulfill the obligation with respect to
Warranty Claims from and after the Expiration Date. Xxxxxx will notify Buyer of
any indemnification claim in accordance with Section 11.4 above.
Section 17.6 Termination of Warranty Claims Obligations. Buyer's
obligation to service Warranty Claims under this Section 17, including Buyer's
assumption of future liability for Warranty Claims made by customers or
consumers after the Expiration Date as referenced under Section 17.5 above,
shall terminate, and Buyer shall have no further obligation hereunder related
to the Warranty Claims, if at any time during the four (4) year period
contemplated in Section 17.4 above the balance maintained in the escrow account
falls below $25,000 and Xxxxxx fails to contribute those additional funds
required to restore the balance to the $25,000 level within the thirty (30) day
time frame referenced under Section 17.4 In such event the effective date of
the termination of Empire's obligations to service the Warranty Claims shall be
the date of notice to Xxxxxx requesting replenishment of the $25,000 minimum
balance to be held in the escrow account
Section 17.7 Right to Continue Warranty Coverage. Notwithstanding
the foregoing right to terminate Warranty Claims Coverage under Section 17.6,
Buyer may, in Buyer's sole discretion, elect to continue servicing Warranty
Claims and xxxx Xxxxxx for all such Costs as provided under Sections 17.2 and
17.3. In such event, any amounts so billed shall be paid by Xxxxxx to the Buyer
within thirty (30) days of receipt of written demand for reimbursement of the
Costs of servicing such Warranty Claims.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, Xxxxxx and Buyer have each caused this Agreement
to be duly executed on their respective behalves by their respective duly
authorized officers all as of the day and year first above written.
XXXXXX INDUSTRIES, INC.
By /s/ XXXX X. XXXXXX
-----------------------------------------
Its President
EMPIRE COMFORT SYSTEMS, INC.
By /s/ XXXX X. XXXX
-----------------------------------------
Xxxx X. Xxxx, President
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