EXHIBIT 2.1
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PURCHASE AND SALE AGREEMENT
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PURCHASE AND SALE AGREEMENT, made the 10th day of January, 2002, by and
between XXXX XXXXXXXX ("Seller") and XXXXXX, INC., ("Buyer").
R E C I T A L S:
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A. Seller owns one hundred percent (100%) of the outstanding shares
of Xxx X. Xxxxxxxx, Inc., ("MNNI"), a Pennsylvania corporation (such 100% is
referred to as the "Shares").
B. MNNI owns one hundred percent (100%) of the outstanding shares of
Topsville, Inc. ("Topsville"), a Florida corporation (such 100% is referred to
as the "Topsville Shares").
C. Topsville is engaged in the business of manufacturing,
distributing and selling children and infants' apparel.
D. Topsville owns one hundred percent (100%) of the outstanding
shares of Josell Global Sourcing Ltd. ("JGSL"), a Hong Kong corporation (such
100% is referred to as the "JGSL Shares").
E. Topsville uses offices located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx (the "Topsville Office") and owns all of the furnishings, fixtures,
equipment and chattels located at the Topsville Office (the "Office Property"),
except for certain items that Topsville leases in that regard (the "Leased
Property").
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F. JGSL uses offices located at Xxxx #0, Xxxxxxxxx Xxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxx Xxxx (the "JGSL Office") and owns all of the furnishings,
fixtures, equipment and chattels located at the JGSL Office (the "JGSL Office
Property"), except for certain items that JGSL leases in that regard (the "JGSL
Leased Property").
G. Topsville is party to a factoring agreement with Capital factors,
Inc. ("Capital"), pursuant to which Topsville has assigned its accounts
receivable to Capital (the "Factoring Agreement").
H. Seller is desirous of selling the Shares to Buyer, and Buyer is
desirous of purchasing same, on the terms and conditions set forth herein.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I.
DEFINITIONS
A. Definitions. In addition to the definitions set forth above, the
following terms shall have the meanings specified:
"Agreement" shall mean this Purchase and Sale Agreement, together
with the Schedules and the Exhibits attached hereto;
"Artwork" shall mean all of MNNI's, Topsville's and JGSL's
rights, claims and interests in and to all artwork, patterns, trademarks, trade
names, copyrights and intellectual property of any nature or medium whatsoever,
which were created or developed by or for MNNI, Topsville or JGSL and which are
or have been associated with the conduct of their business;
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"Closing Date" shall mean (a) January 10, 2002; or (b) such other
date as Buyer and Seller may agree upon in writing. The Closing shall be deemed
effective as of the end of business on the Closing Date. Immediately upon the
Closing, the purchase and sale of the Shares shall be deemed fully executed;
"Closing" shall mean the conference to be held at 10:00 AM local
time on the Closing Date at the offices of Xxxxx & Xxxx, LLP, 470 Park Avenue
South, 12th Floor, New York, New York, or at such other time and place as the
parties may mutually agree to in writing;
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
"Exhibits" shall mean the exhibits referred to in this Agreement;
"JGSL Leased Property" shall mean the items set forth on SCHEDULE
4.6, which schedule sets forth a description of each item of JGSL Leased
Property and the financial and durational terms of its respective lease;
"Knowledge of Seller" or "to the Seller's Knowledge" shall mean
that which Seller knows or, based upon objective facts of which Seller is or
should be aware, has reason to know or reasonably should believe;
"Leased Property" shall mean the items set forth on SCHEDULE 4.5,
which schedule sets forth a description of each item of Leased Property and the
financial and durational terms of its respective lease;
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"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, security interest, encumbrance, claim, lien, lease (including any
capitalized lease) or charge of any kind, whether voluntarily incurred or
arising by operation of law or otherwise, which affects (i) the Shares, (ii) the
Topsville Shares, (iii) the JGSL Shares, (iv) any assets or property of MNNI,
(v) any assets or property of Topsville and/or (vi) any assets or property of
JGSL, including any agreement to give or grant any of the foregoing, any
conditional sale or other title retention agreement and the filing of or
agreement to give any financing statement with respect to any assets or property
under the Uniform Commercial Code of the State of New York or the comparable law
of any U.S. or foreign jurisdiction;
"Material Adverse Effect" means anything that could have a
materially adverse effect upon Buyer's right, title or interest in and to any of
the Shares, the Topsville Shares or the JGSL Shares;
"Net Sales" means the total invoiced price of goods sold by
Topsville, less all discounts, customer allowances, markdowns, returns and
unrecovered chargebacks;
"Person" shall mean any natural person, general or limited
partnership, corporation, limited liability company, firm, association or other
legal entity;
"Prescribed Margin Level" means an overall profit margin of at
least twenty-two and one-half percent (22.5%) on Net Sales, when comparing the
Net Sales to their "cost of goods sold";
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"Purchase Price" shall mean the amount of three million two
hundred forty-five thousand seven hundred two dollars ($3,245,702). The Purchase
Price has been calculated based on Topsville's net book value, plus a premium of
two million one hundred thousand dollars ($2,100,000), as more particularly set
forth in Exhibit "A".
"Schedules" shall mean the schedules referred to in this
Agreement;
B. Singular/Plural; Gender. Where the context so requires or
permits, the use of the singular form includes the plural, and the use of the
plural form includes the singular, and the use of any gender includes any and
all genders.
ARTICLE II.
PURCHASE AND SALE
A. Purchase and Sale. At the Closing, on the Closing Date, Seller
shall fully and absolutely sell, assign, convey, transfer and deliver to Buyer
all of the Shares, free and clear of any and all Liens of any nature whatsoever,
and Buyer shall purchase same.
B. Payment on Closing. At the Closing, on the Closing Date, Buyer
shall pay to Seller the sum of one million seven hundred forty-five thousand
seven hundred two dollars ($1,745,702) on account of the Purchase Price. The
balance of the Purchase Price shall be paid as set forth in Article VIII.
C. Closing Date Deliveries. At the Closing, on the Closing Date,
Seller shall deliver, or cause to be delivered, to Buyer, properly executed and
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dated and effective as of the Closing Date: (i) the official corporate records
and corporate kit of Topsville and JGSL, including the stock ledgers, minutes
and corporate seals thereof, (ii) the certificates for the Shares, duly endorsed
to Buyer as owner/assignee thereof, (iii) the certificates for the Topsville
Shares, evidencing MNNI's 100% interest therein, (iii) the certificates for the
JGSL Shares, evidencing Topsville's 100% interest therein, (iv) the Consulting
Agreement, and (v) such other documents as Buyer shall reasonably request.
D. Taxes. All federal, state, local and other transfer, sales and
use taxes (if any) applicable to, imposed upon or arising out of the transfer to
Buyer of the Shares as contemplated by this Agreement shall be paid by Seller.
ARTICLE III.
GOVERNMENTAL APPROVALS
Seller represents and warrants that, to Seller's Knowledge, no
approvals or requests for approval or waiver are required from any governmental
authorities in connection with Seller's consummation of the Closing or any of
the transactions by Seller that are contemplated thereby.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
A. Organization. MNNI is a corporation duly incorporated, validly
existing and in good standing under the laws of Pennsylvania and is duly
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qualified to do business in every jurisdiction where it does business and where
such qualification is necessary. Topsville is a corporation duly incorporated,
validly existing and in good standing under the laws of Florida and is duly
qualified to do business in every jurisdiction where it does business and where
such qualification is necessary. JGSL is a corporation duly incorporated,
validly existing and in good standing under the laws of Hong Kong and is duly
qualified to do business in every jurisdiction where it does business and where
such qualification is necessary. Each of MNNI, Topsville and JGSL has the power
and authority to own, lease, and operate its properties and to carry on its
business in the places where such properties are now owned, leased or operated,
as such business is now conducted, and as it will be conducted at the time of
Closing.
B. Authorization; Enforceability. The execution, delivery and
performance of this Agreement and all of the documents and instruments required
hereby by Seller, and the consummation and effectiveness of the transactions to
be done by Seller contemplated hereby and thereby, are within the corporate
power and authority of MNNI, Topsville and JGSL and have been duly authorized by
all necessary corporate action by MNNI, Topsville and JGSL and do not require
any further authorization or approval by any Person. This Agreement is and the
other documents and instruments required hereby will be, when executed and
delivered by Seller, valid and binding obligations of Seller, fully effective
and enforceable against Seller.
C. Absence of Conflicting Agreements. The execution, delivery and
performance of this Agreement by Seller, and the execution and performance of
the Consulting Agreement by Seller and Consultant, does not and will not, after
the giving of notice, or the lapse of time or both, or otherwise:
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i) conflict with, result in a breach of, or constitute a
default under, the Certificate of Incorporation or by-laws of MNNI, Topsville or
JGSL;
ii) conflict with, result in a breach of, or constitute a
default under any federal, foreign, state or local law, statute, ordinance, rule
or regulation which is applicable to Seller, MNNI, Topsville, JGSL, the Shares,
the Topsville Shares, the JGSL Shares and/or the transactions contemplated
hereby, or any court or administrative order or process, or any contract,
agreement, arrangement, commitment or plan to which Seller, MNNI, Topsville or
JGSL is a party or by which Seller, MNNI, Topsville or JGSL is bound and which
relates to the Shares, the Topsville Shares, the JGSL Shares and/or the
transactions contemplated hereby;
iii) result in the creation of any Lien upon the Shares, the
Topsville Shares, the JGSL Shares or any assets of property of MNNI, Topsville
or JGSL;
iv) require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
governmental or public agency or other authority; or
v) require the consent of any Person under any contract,
agreement, arrangement, commitment or plan to which Seller, MNNI, Topsville or
JGSL is a party or by which Seller, MNNI, Topsville or JGSL is bound.
D. Title to Assets; Liens and Encumbrances. On the Closing Date and
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simultaneously with the Closing, there shall not be any Liens on the Shares, the
Topsville Shares or the JGSL Shares. Except as set forth in SCHEDULE 4.1, and
except for the Leased Property, as to which it holds valid leasehold interest,
each of MNNI and Topsville owns good and exclusive title to all of its assets,
free and clear of any and all Liens of any nature whatsoever. Except as set
forth in SCHEDULE 4.2, and except for the JGSL Leased Property, as to which it
holds valid leasehold interest, JGSL owns good and exclusive title to all of its
assets, free and clear of any and all Liens of any nature whatsoever. As
provided in Exhibit "E" {the "Factoring Assignment"), Capital will assign to
Buyer both the Factoring Agreement and Liens that it has upon MNNI's,
Topsville's and JGSL's assets no later than the Closing.
E. Condition of Equipment. To Seller's Knowledge, except as set
forth on SCHEDULE 4.3, no item of Office Property or JGSL Office Property is in
need of imminent repair or replacement. To the extent that a scheduled item of
Office Property or JGSL Office Property is in need of imminent repair or
replacement, Buyer shall bear, collectively as to all such items, the first five
thousand dollars ($5,000) of the cost of such repair or replacement and Seller
shall bear the balance.
F. Leases of Real and Personal Property
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i) Seller has delivered a true and complete copy of the
leases for the Topsville Office and JGSL Office (including all riders, exhibits
and amendments) to Buyer. If and when the originals of said documents are
discovered by Seller, they will promptly be delivered to Buyer. To the extent,
if any, that consent of any of the landlords of those leases is required for the
continuation of those lease after the sale of the Shares, such consent has been
obtained by Seller, copies thereof are annexed as SCHEDULE 4.4, and the
originals thereof will be delivered to Buyer at or before Closing.
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ii) Annexed as SCHEDULE 4.5 is a complete and accurate list of
all Leased Property. Annexed as SCHEDULE 4.6 is a complete and accurate list of
all JGSL Leased Property. Seller has delivered a true and complete copy of all
leases for the Leased Property and JGSL Leased Property (including all riders,
exhibits and amendments) to Buyer. If and when the originals of said documents
are discovered by Seller, they will promptly be delivered to Buyer.
iii) Topsville and JGSL have made all payments required under
the aforesaid real and personal property leases which accrued at or prior to
Closing and, to Seller's Knowledge, there is no default under any of those
leases.
iv) Except as set forth in SCHEDULE 4.11, and except for
personal effects of other employees of Topsville and JGSL who work at the
Topsville Office and JGSL Office, upon Closing, and subject only to the terms of
any leases identified in SCHEDULE 4.5 and SCHEDULE 4.6, any and all items
located at those offices will be subject to disposition as directed by Buyer in
its sole discretion.
G. Artwork.
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i) There are no claims, demands or proceedings instituted,
pending or, to the Knowledge of Seller, threatened by any Person pertaining to
or challenging Topsville's or JGSL's right to use or ownership of any Artwork.
Without limiting the foregoing, to the extent any Artwork was made or developed,
in whole or in part, by any third party, such third-party work was a "work for
hire".
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ii) After the Closing, Seller shall not use any trademark or
trade name that was used by MNNI, Topsville or JGSL, or any word or phrase that
is similar to any of those trademarks or trade names, in connection with any
goods, services, trade or business, nor shall Seller be associated, directly or
indirectly, with any Person (other than MNNI, Topsville, JGSL or Buyer) who uses
any of those trademarks or trade names, or any word or phrase that is similar to
any of those trademarks or trade names, in connection with any goods, services,
trade or business.
H. No Litigation; Labor Disputes; Compliance with Laws.
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i) Except as set forth on SCHEDULE 4.7, there
is no decree, judgment, order, litigation at law or in equity, arbitration
proceeding or proceeding before or by any court, commission, agency or other
administrative or regulatory body or authority pending or, to the Knowledge of
Seller, threatened, to which MNNI, Topsville or JGSL is a party or which might
have a Material Adverse Effect. To the Knowledge of Seller, there is no
investigation by any commission, agency or other administrative or regulatory
body or authority pending or threatened, which is concerned with the operations,
business or affairs of MNNI, Topsville or JGSL, or the Shares, Topsville Shares
or JGSL Shares.
ii) To Seller's Knowledge, each of MNNI, Topsville and JGSL
owns and operates, and has owned and operated, its properties and assets, and
carries on and conducts, and has carried on and conducted, its business in
compliance with all applicable federal, foreign, state and local laws, statutes,
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ordinances, rules and regulations (including those pertaining to equal
employment opportunity, the environment and hazardous materials), and all court
or administrative orders or processes, including but not limited to Occupational
Safety and Health Administration, Equal Employment Opportunity Commission and
National Labor Relations Board.
iii) There is no litigation or proceeding of any nature pending
or, to Seller's Knowledge, threatened against or affecting him, MNNI, Topsville,
JGSL or any of their affiliates that might adversely affect (i) Seller's ability
to fully and timely perform his obligations hereunder or (ii) the post-Closing
conduct of MNNI's, Topsville's and JGSL's businesses. To Seller's Knowledge,
there is no investigation pending or threatened against or affecting him, MNNI,
Topsville, JGSL or any of their affiliates that might adversely affect (i)
Seller's ability to fully and timely perform his obligations hereunder or (ii)
the post-Closing conduct of MNNI's, Topsville's and JGSL's businesses.
iv) Each of the employees listed in SCHEDULE 4.8 has been paid
all compensation, fringe benefits and bonuses that are or may become due him/her
from Topsville, and there is no dispute with any of those employees in that
regard. None of those employees is entitled to pay in lieu of unused vacation
days. Those employees who have unused vacation days, and the respective number
thereof, are set forth in SCHEDULE 4.8. Such unused vacation days are further
dealt with in Article VII, Section I(i)
v) Seller shall, at his sole cost and expense, defend and
fully indemnify Buyer, MNNI, Topsville and JGSL from any and all out of pocket
loss, damage and expense (including reasonable attorneys' fees) which relates to
or arises out of the litigation and potential litigation listed on SCHEDULE 4.7,
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as well as any other litigation or potential litigation that should have been
listed on that schedule. Seller shall use his best efforts to settle, as soon as
possible, the case of Topsville x. Xxxxxxxx, listed on that schedule.
I. Taxes. Except to the extent that it could not result in Liens
against any of the Shares, the Topsville Shares, the JGSL Shares, or any assets
or property of MNNI, Topsville or JGSL:
i) To Seller's Knowledge, each of Seller, MNNI, Topsville and
JGSL has filed all federal, foreign, state and local tax returns, reports and
estimates for all years and periods (and portions thereof) for which any such
returns, reports and estimates were due (except that MNNI may not have filed a
Form 5471 with respect to JGSL on its consolidated tax returns), and any and all
amounts shown on such returns and reports to be due and payable have been paid
in full except as may be contested in good faith. To Seller's Knowledge, each of
Seller, MNNI, Topsville and JGSL has withheld all taxes required to be withheld
under applicable law and regulations, and such withholdings have either been
paid to the proper governmental agency or properly set aside and deposited in
accounts for such purpose. To Seller's Knowledge, there are no tax deficiencies
(including penalties and interest) of any kind assessed against or relating to
Seller, MNNI, Topsville or JGSL with respect to any taxable periods ending on or
before or including the Closing Date. Irrespective of whether it results in
Liens against any of the Shares, the Topsville Shares, the JGSL Shares, or any
assets or property of MNNI, Topsville or JGSL, if any present or future contest
of taxes or other assessments (whether known or unknown to Seller, and
regardless of whether the assessment occurs before or after the Closing Date,
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and including, but not limited to, customs duties) which are owed or owing with
respect to pre-Closing taxable periods (or the pre-Closing portion of taxable
periods that include the Closing Date) is decided adversely to Seller, MNNI,
Topsville or JGSL (or if any such taxes or assessments are not contested),
Seller shall fully indemnify Buyer, MNNI, Topsville and JGSL against any and all
resulting liabilities and assessments (including, but not limited to, any
interest, fines or penalties that may be assessed). All such contests shall be
at Seller's sole cost and expense. The aforesaid indemnification need not be
made to such extent, if any, as the tax liability that is to be indemnified has,
as set forth in Exhibit "A", already been deducted in arriving at the Purchase
Price.
J. Governmental Authorizations. No governmental qualifications,
registrations, filings, privileges, franchises, licenses, permits, approvals or
authorizations, other than those which apply to all businesses generally, are
required for Topsville or JGSL to own and operate their businesses in the manner
that they were operated during the two-year period preceding the Closing.
K. Brokers. Neither this Agreement nor the sale and purchase of the
Shares nor any other transaction contemplated by this Agreement was induced or
procured through any Person who might have a claim to a brokerage fee, finder's
fee or similar fee other than Xxxxxx Xxxxxxx Xxxxx ("Xxxxx"). Xxxxx shall be
entitled to a fee only if and when the Closing occurs. One-half of that fee (but
in no event more than a maximum of seventy-five thousand dollars [$75,000])
shall be paid by Buyer. The balance of that fee shall be paid by Seller. Seller
shall defend and indemnify Buyer against any claim that is made against Buyer
for a brokerage fee, finder's fee or similar fee other than as provided herein,
if such claim is based on alleged actions or conduct of Seller.
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L. Employee Benefit Plans. The consummation of the transactions
contemplated hereby will not result in any liability on the part of MNNI,
Topsville, JGSL or Buyer under any plan that is subject to ERISA, or in the
violation of any obligation or duty that MNNI, Topsville, JGSL or Seller has
under ERISA, or in any claim against MNNI, Topsville, JGSL or Buyer or the
imposition of any liability or obligation upon MNNI, Topsville, JGSL or Buyer in
respect of any plan of Seller or his affiliates that is subject to ERISA.
Topsville is in full compliance with the terms and legal requirements of the
401(k) plan that was established by it, which plan is employee-funded only.
M. Customer Satisfaction. To Seller's Knowledge, none of the Persons
listed on SCHEDULE 4.9 has indicated, nor is there any reason to believe, that
the volume of such Persons' purchase orders to Topsville during the 12-month
period following the Closing will fall below the respective amounts forecast by
Seller in SCHEDULE 4.9a. The forecasts made by Seller in SCHEDULE 4.9a are based
on a careful and thorough analysis and assessment by Seller of all relevant
factors known to him. Buyer acknowledges that it has met with the Persons listed
on SCHEDULE 4.9 and that, based on such meetings, there is no reason to believe
that the volume of such Persons' purchase orders to Topsville during the
12-month period following the Closing will fall below the respective amounts
forecast by Seller in SCHEDULE 4.9a.
N. Disclosure of Liabilities. All actual, potential and contingent
liabilities of MNNI, Topsville and JGSL (including any that are disputed in any
way) are fully and accurately disclosed in the financial statements annexed as
Exhibit "B" (including any footnotes or other comments thereto). If not so fully
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and accurately disclosed, any and all additions or modifications are set forth
in SCHEDULE 4.10. Annexed as Exhibit "F" is written consent, from the
accountants who prepared the aforesaid financial statements, to the use of their
audit opinions for the last three years in registration statements and reports
that are filed with the SEC.
O. Additional Representations and Warranties by Seller. Additional
representations and warranties by Seller are set forth in Article VIII.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
A. Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and Buyer
has full corporate power to consummate the transactions contemplated by this
Agreement.
B. Authorization; Enforceability. The execution, delivery and
performance of this Agreement and all of the documents and instruments required
hereby by Buyer, and the consummation and effectiveness of the transactions to
be done by Buyer contemplated hereby and thereby, are within the corporate power
and authority of Buyer and have been duly authorized by all necessary corporate
action by Buyer and do not require any further authorization or approval by any
Person. This Agreement is and the other documents and instruments required
hereby will be, when executed and delivered by Buyer, valid and binding
obligations of Buyer, fully effective and enforceable against Buyer.
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C. Absence of Conflicting Agreements. The execution, delivery and
performance of this Agreement, the Note and the Consulting Agreement by Buyer
does not and will not, after the giving of notice, or the lapse of time or both,
or otherwise:
i) conflict with, result in a breach of, or constitute a
default under, the Certificate or Articles of Incorporation or bylaws of Buyer;
ii) conflict with, result in a breach of, or constitute a
default under any federal, foreign, state or local law, statute, ordinance, rule
or regulation which is applicable to Buyer or any court or administrative order
or process, or any contract, agreement, arrangement, commitment or plan to which
Buyer is a party or by which Buyer is bound and which relates to the Shares, the
Topsville Shares, the JGSL Shares and/or the transactions contemplated hereby;
iii) require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
governmental or public agency or other authority (except for requisite SEC
filings); or
iv) require the consent of any Person under any contract,
agreement, arrangement, commitment or plan to which Buyer is bound.
D. Brokers. Neither this Agreement nor the sale and purchase of the
Shares nor any other transaction contemplated by this Agreement was induced or
procured through any Person who might have a claim to a brokerage fee, finder's
fee or similar fee other than Xxxxxx Xxxxxxx Xxxxx ("Xxxxx"). Xxxxx shall be
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entitled to a fee only if and when the Closing occurs. One-half of that fee (but
in no event more than a maximum of seventy-five thousand dollars [$75,000])
shall be paid by Buyer. The balance of that fee shall be paid by Seller. Buyer
shall defend and indemnify Seller against any claim that is made against Seller
for a brokerage fee, finder's fee or similar fee other than as provided herein,
if such claim is based on alleged actions or conduct of Buyer.
E. Litigation. There is no litigation, proceeding or investigation
of any nature pending or, to Buyer's knowledge, threatened against or affecting
it or any of its affiliates that would materially adversely affect Buyer's
ability fully to perform its obligations hereunder.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
A. Compliance with Agreement. Seller shall have performed and
complied in all respects with all of its obligations under this Agreement which
are to be performed or complied with by it prior to or at the Closing.
B. Representations and Warranties. The representations and
warranties made by Seller in this Agreement shall be true and correct in all
respects as of the Closing Date and, to Seller's Knowledge, that will not change
after Closing except for post-Closing matters that will be in the sole control
of Buyer.
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C. Deliveries at Closing. Seller shall have delivered or caused to
be delivered to Buyer the documents, each properly executed, required to be
delivered pursuant to this Agreement.
D. Approvals and Consent. There shall have been secured such
permissions, approvals, determinations, consents and waivers, if any, as may be
required by law, regulatory authorities, or any third party.
E. Absence of Investigations and Proceedings. Neither Seller nor
Buyer nor MNNI nor Topsville nor JGSL shall be subject to any restraining order
or injunction restraining or prohibiting the consummation of any of the
transactions contemplated hereby; no action or proceeding shall have been
instituted before any court or governmental body to restrain or prohibit, or to
obtain substantial damages in respect of, the consummation of the transactions
contemplated by this Agreement; and none of the parties to this Agreement shall
have received written notice from any Person of (i) its intention to institute
any action or proceeding to restrain or enjoin or nullify this Agreement or the
transactions contemplated hereby, or to commence any investigation (other than a
routine letter of inquiry) into the consummation of this Agreement or (ii) the
actual commencement of such investigation.
F. Absence of Liens. On the Closing Date and simultaneously with the
Closing, there shall not be any Liens on the Shares, the Topsville Shares or the
JGSL Shares, nor (except as provided in SCHEDULES 4.1 and 4.2) on any of the
assets or property of MNNI, Topsville or JGSL.
G. Future Services of Key Personnel. Prior to the Closing, each of
the Persons set forth in SCHEDULE 4.8a must have committed to continue to work
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for Topsville after the Closing, and, to Seller's Knowledge, there shall be no
reason to believe that any of those commitments is untrue or that any of the
Persons who made such a commitment plans to terminate his/her employment in the
foreseeable future after Closing. If, as of the time of Closing, a Person listed
on SCHEDULE 4.8a has indicated that he/she (i) will not continue to work for
Topsville or (ii) plans to terminate his/her employment in the foreseeable
future, Seller shall, at Closing, modify SCHEDULE 4.8a accordingly. At Closing,
Natoosh, LLC ("Consultant"), a company whose principal is Seller, must enter
into a written consulting agreement with Buyer in the form annexed as Exhibit
"C" (the "Consulting Agreement"). Seller must be insurable, and must submit to
and cooperate in being insured, for Buyer's benefit, for no less than $2 million
in life insurance. Such life insurance policy will not be maintained by Buyer
for more than one year after the termination of the Consulting Agreement, as the
same may be extended or renewed.
If any of the conditions set forth in this Article VI has not been
satisfied, Buyer may in its sole discretion nevertheless elect to proceed with
the consummation of the transactions contemplated hereby, without thereby
waiving (except to the limited and specific extent set forth in SCHEDULE 6.1)
any of Seller's representations, warranties or obligations.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
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A. Compliance with Agreement. Buyer shall have performed and
complied in all respects with all of its obligations under this Agreement which
are to be performed or complied with by it prior to or at the Closing.
B. Representations and Warranties. The representations and
warranties made by Buyer shall be true and correct in all respects as of the
Closing Date.
C. Deliveries at Closing. Buyer shall have delivered, or caused to
be delivered, to Seller the following: (i) the $1,745,702 referred to in Article
II, Section B, (ii) the Note, (ii) the Consulting Agreement, and (iii) the
Factoring Assignment.
D. Absence of Investigations and Proceedings. Neither Seller nor
Buyer nor MNNI nor Topsville nor JGSL shall be subject to any restraining order
or injunction restraining or prohibiting the consummation of any of the
transactions contemplated hereby; no action or proceeding shall have been
instituted before any court or governmental body to restrain or prohibit, or to
obtain substantial damages in respect of, the consummation of the transactions
contemplated by this Agreement; and none of the parties to this Agreement shall
have received written notice from any Person of (i) its intention to institute
any action or proceeding to restrain or enjoin or nullify this Agreement or the
transactions contemplated hereby, or to commence any investigation (other than a
routine letter of inquiry) into the consummation of this Agreement or (ii) the
actual commencement of such investigation.
If any of the conditions set forth in this Article VII has not been
satisfied, Seller may nevertheless elect to proceed with the consummation of the
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transactions contemplated hereby, without thereby waiving (except to the limited
and specific extent set forth in SCHEDULE 7.1) any of Buyer's representations,
warranties or obligations.
ARTICLE VIII.
ADDITIONAL AGREEMENTS
A. Installment Payments to Seller. Subject to the rights of offset
and recoupment discussed in Section J of this Article VIII, Buyer shall, on the
dates set forth below, cause the following additional payments to be made to
Seller on account of the Purchase Price for the Shares:
i) $500,000 - three (3) months after the Closing Date
ii) $400,000 - six (6) months after the Closing Date
iii) $300,000 - nine (9) months after the Closing Date
iv) $200,000 - one (1) year after the Closing Date
v) $100,000 - fifteen (15) months after the Closing Date.
Buyer's obligation to make such payments will be evidenced by a non-negotiable
promissory note in the form annexed as Exhibit "D" (the "Note").
B. Seller's Right to Receive Certain Assets.
----------------------------------------
i) SCHEDULE 8.1 sets forth items that have previously been
delivered to Capital as collateral security for Topsville's performance under
the Factoring Agreement. Capital is, by separate agreement, releasing those
items only. To the extent that an item listed on SCHEDULE 8.1 is being released
to Seller, Seller's right to such distribution is pursuant to the Redemption
Agreement.
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ii) SCHEDULE 8.2 sets forth obsolete inventory and non-first
quality inventory of Topsville that is being distributed to Seller. Seller's
right to such distribution is pursuant to the Redemption Agreement.
iii) SCHEDULE 8.3 sets forth accounts receivable of Topsville,
unpaid as of the Closing Date, which were assigned to Capital pursuant to the
Factoring Agreement. Pursuant to the Factoring Assignment, such accounts
receivable are being assigned to Buyer. Subject to the terms of (i) the
Factoring Assignment and (ii) Buyer's rights of offset and/or recoupment, the
Excess referred to in the Factoring Assignment will be paid over to Seller.
Seller's right to such distribution is pursuant to the Redemption Agreement.
After the Closing, Topsville will make reasonable collection efforts (not
including incurrence of attorney's fees or other extraordinary expenses), in the
ordinary course of its business and without cost to the Seller, to collect the
receivables set forth in SCHEDULE 8.3 and, upon collection, to remit the same to
Xxxxxx, pursuant to Jaclyn's rights under the Factoring Assignment.
C. Topsville's Inventory and Work In Process.
-----------------------------------------
Seller represents and warrants that annexed as SCHEDULE 8.4 is a full
and accurate list of (i) Topsville's inventory of finished goods and (ii) all
work in process ("WIP") of Topsville, which WIP list includes a correlation, by
the number of to-be-finished units and their particular style number, of each
particular work in process with the numbered customer purchase order that that
work is intended to fill. Seller represents and warrants that true and complete
copies of the aforesaid purchase orders have been delivered to Buyer prior to
Closing. Seller represents and warrants that none of those purchase orders has
been cancelled or modified, in whole or in part, that Topsville will not make
any cancellation or modification, in whole or in part, and that none of the
customers of those orders has indicated that it intends to cancel or modify
them, in whole or in part. There may be a variance of not more than two percent
(2%) between the raw materials and piece goods that are being used in the WIP
and the finished goods resulting therefrom, which variance will be attributable
to ordinary and customary loss in the cutting and assembly of goods.
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D. "Backlog" Orders.
----------------
Seller represents and warrants that annexed as SCHEDULE 8.5 is a full
and accurate list of all "backlog" orders of Topsville, together with their
related cost sheets. Seller represents and warrants that true and complete
copies of such orders have been delivered to Buyer prior to Closing. Seller
represents and warrants that none of such orders has been cancelled or modified,
in whole or in part, that Topsville will not make any cancellation or
modification, in whole or in part, and that none of the customers of those
orders has indicated that it intends to cancel or modify them, in whole or in
part. Seller further represents and warrants that the orders set forth on
SCHEDULE 8.5 will generate post-Closing receivables of at least $21 million at
the Prescribed Margin Level and that all of those receivables will be free of
any Lien except for such Lien as Buyer, and only Buyer, will have as assignee of
the Factoring Agreement.
E. Piece Goods and Raw Materials.
-----------------------------
Seller represents and warrants that annexed as SCHEDULE 8.6 is a full
and accurate list of all piece goods and raw materials that are owned by
Topsville and are not part of SCHEDULE 8.2.
F. Protection of Goodwill and Value.
--------------------------------
i) The Purchase Price was arrived at with the understanding
that the value of the Shares, and the interest that they represent, will be
severely and irreparably damaged by the possibility that customers of Topsville
may do business with Persons, other than Buyer, with whom Seller has some
connection. In order to avoid such a possibility, for the period set forth in
subdivision (iii), Seller agrees not to engage in any of the following
activities:
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(a) provide direct or indirect financing to any Person
who is engaged in the manufacture, sale, distribution or marketing of children
or infants' apparel in the United States;
(b) have any direct or indirect ownership or equity
interest in any Person who is engaged in the manufacture, sale, distribution or
marketing of children or infants' apparel in the United States;
(c) directly or indirectly provide consulting services
or other assistance to any Person who is engaged in the manufacture, sale,
distribution or marketing of children or infants' apparel in the United States;
(d) be directly or indirectly employed by any Person
who is engaged in the manufacture, sale, distribution or marketing of children
or infants' apparel in the United States;
(e) directly or indirectly solicit or induce any Person
to cease being a customer of Buyer or to diminish its purchases from Buyer;
(f) directly or indirectly solicit or induce any Person
to become a children or infants' apparel customer of, or to increase its
purchases of children or infants' apparel from, any Person other than Buyer.
ii) The restrictions set forth in subdivision (i)(b) of this
Section "F" shall not apply in a situation in which the "ownership or equity
interest" consists solely of shareholder status in a publicly-held and
publicly-traded company, but only if all of the following conditions to such an
exemption are met: (1) the aggregate shareholdings of both Seller and the
members of his family (to the second degree of kinship) do not exceed five (5%)
percent, (2) no member of Seller's family (to the second degree of kinship) is
an officer, director or executive employee of the publicly-held and
publicly-traded company, and (3) none of subdivisions (a), (c), (d), (e) or (f)
of this Section "F" is applicable to the situation.
iii) The restrictions set forth in subdivision (i) of this
Section "F" shall apply until six (6) months after the termination of the
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Consulting Agreement (as the same may be extended or renewed), irrespective of
why or by whom the Consulting Agreement is terminated. Notwithstanding the
immediately preceding sentence, if the Consulting Agreement is terminated within
one year after the Closing Date, Buyer may, at its option, continue to impose
the restrictions set forth in subdivision (i) of this Section "F" until eighteen
(18) months after the Closing Date, but only if, during that 18-month period,
Buyer is making the payments that are required to be made to the consultant
pursuant to the Consulting Agreement (except for allowable offsets against those
payments). This reference to making payments during the said 18-month period
shall not be construed as relieving Buyer from its respective financial
obligations under the Consulting Agreement for the full duration of the initial
30-month term of that agreement, except that Buyer shall be relieved from those
obligations if the Consulting Agreement is rightfully terminated by it pursuant
P. P. 5-6 of the Consulting Agreement. If Buyer does not exercise the aforesaid
option, or if the option is exercised but the payments that are necessary for
its effectiveness are not made, the aforesaid six-months-after-termination-of-
the-Consulting-Agreement period shall apply.
G. Hiring Restrictions.
-------------------
i) As a further inducement to Buyer to pay the Purchase
Price, Seller agrees that, subject to the limited exceptions set forth in
subdivision (vi), until five (5) years after the termination of the Consulting
Agreement (as the same may be extended or renewed, and irrespective of why or by
whom the Consulting Agreement is terminated), he will not engage in any of the
following activities:
(a) provide direct or indirect financing to any Person
(other than Buyer, MNNI, Topsville or JGSL) who hires or engages a Restricted
Person after the Closing;
(b) have any direct or indirect ownership or equity
interest in any Person (other than Buyer, MNNI, Topsville or JGSL) who hires or
engages a Restricted Person after the Closing;
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(c) directly or indirectly provide consulting services
or other assistance to any Person (other than Buyer, MNNI, Topsville or JGSL)
who hires or engages a Restricted Person after the Closing, if such consulting
services or assistance relate to any product or service with which the
Restricted Person is involved;
(d) be directly or indirectly employed by any Person
(other than Buyer, MNNI, Topsville or JGSL) who hires or engages a Restricted
Person after the Closing, if such employment relates to any product or service
with which the Restricted Person is involved;
(e) solicit or induce any Restricted Person to cease
being an employee or sales representative of Buyer, MNNI, Topsville or JGSL.
ii) "Restricted Person" means (i) any employee, consultant or
sales representative of Buyer, MNNI, Topsville or JGSL who, immediately after
Closing, is or previously was an employee, consultant or sales representative of
MNNI, Topsville or JGSL or (ii) any person who is listed on SCHEDULE 8.7. After
the Closing, Buyer shall have the unilateral right, on notice to Seller, to add
persons from among the following to SCHEDULE 8.7: (i) employees, consultants
(other than Natoosh, LLC) or sales representatives of Buyer, MNNI, Topsville or
JGSL who became such after the Closing and/or (ii) employees, consultants (other
than Natoosh, LLC) or sales representatives of Buyer, MNNI, Topsville or JGSL
with whom Seller has contact during the term of the Consulting Agreement.
iii) The restrictions of this Section "G" shall apply (1)
irrespective of whether the Restricted Person was solicited by Seller or the
Person(s) referred to in subdivisions (i)(a) through (i)(d), and (2)
irrespective of why the Restricted Person's employment or engagement by Buyer,
MNNI, Topsville or JGSL terminated.
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iv) The restriction set forth in subdivision (i)(b) of this
Section "G" shall not apply in a situation in which the "ownership or equity
interest" consists solely of shareholder status in a publicly-held and
publicly-traded company, but only if all of the following conditions to such an
exemption are met: (1) the aggregate shareholdings of both Seller and the
members of his family (to the second degree of kinship) do not exceed five (5%)
percent, (2) neither Seller nor any member of his family (to the second degree
of kinship) is an officer, director or executive employee of the publicly-held
and publicly-traded company, and (3) none of subdivisions (a), (c), (d) or (e)
of this Section "G" is applicable to the situation.
v) The restrictions of this Section "G" shall not apply to a
Restricted Person once that Restricted Person's employment or engagement by
Buyer, MNNI, Topsville and/or JGSL has terminated for at least two (2) years.
vi) During the otherwise-applicable restriction period,
Seller's restrictions with respect to the following Restricted Persons are
modified as set forth in this subdivision (vi).
1. Xxxxxxx Xxxxx shall be entitled to perform work for
Seller personally and in connection with his companies, but only if such work
does not interfere with the performance of Xxxxxxx Xxxxx'x work, duties and
responsibilities for MNNI, Topsville, JGSL or Buyer.
2. Seller may engage in business ventures with Xxxx
Xxxxx, but only if such ventures do not involve or relate to the manufacture,
sale, distribution or marketing of children or infants' apparel in the United
States.
3. Seller may engage in business ventures with Xxxxxxx
Xxxxxx, but only if such ventures do not involve or relate to the manufacture,
sale, distribution or marketing of children or infants' apparel in the United
States.
4. Seller may engage in business ventures with Xxxx
Xxxxxxxx, even if such ventures involve or relate to the manufacture, sale,
distribution or marketing of children or infants' apparel, but not during the
period that Seller is prohibited from engaging in such ventures pursuant to
Article VIII, Section F.
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5. Seller may use the professional services of
attorneys or accountants who represented MNNI, Topsville or JGSL, but only if
that will not conflict with those Restricted Persons' duties to MNNI, Topsville
or JGSL, including, but not limited to, their responsibilities in respect of the
litigation referenced in SCHEDULE 4.7.
H. Adjustments.
-----------
i) It is acknowledged that Buyer is not doing a manual count
or analysis of Topsville's inventory, WIP or raw materials before the Closing.
To the extent, if any, that a post-Closing count or analysis indicates that
SCHEDULE 8.4 (subject to allowable variance) or SCHEDULE 8.6 does not accurately
reflect those items, the Purchase Price will, after due consultation by the
parties about any inaccuracies, be modified accordingly. In connection with such
consultation, Seller shall be afforded an opportunity to review the pertinent
business records of Topsville to verify the position taken by Buyer. If,
notwithstanding being afforded an opportunity for such review, Seller is unable
or unwilling to agree on the amount of adjustment that should be made because of
inaccuracies in SCHEDULE 8.4 or SCHEDULE 8.6, and if such dispute continues for
at least thirty (30) days, the issue of "What amount of adjustment should be
made because of inaccuracies in SCHEDULE 8.4 or SCHEDULE 8.6?" -- and only that
issue -- shall be submitted to an independent accounting firm, jointly selected
by Buyer and Seller, whose (i) determination shall be final and binding and (ii)
cost shall be jointly borne by Buyer and Seller. The provisions of this
subdivision regarding submission to an independent accounting firm shall be
enforced in accordance with Article 76 of the New York Civil Practice Law and
Rules. In the event of undue delay by Seller in conducting the aforesaid review,
in selecting an independent accounting firm, or in cooperating with or
participating in that independent accounting firm's proceedings, Buyer may
unilaterally make an adjustment, which unilateral adjustment shall be subject to
correction by the independent accounting firm, if and when its determination is
made.
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ii) In calculating the Purchase Price, Buyer is assuming that
all actual, potential and contingent liabilities and assets of Topsville and
JGSL have been accurately recorded in accordance with GAAP and fully disclosed.
To the extent, if any, that post-Closing events indicate otherwise, the Purchase
Price will, after due consultation by the parties about any inaccuracies, be
modified down (because of liabilities) or up (because of assets) accordingly.
If, notwithstanding being afforded an opportunity for such consultation, Seller
is unable or unwilling to agree on the amount of adjustment that should be made,
and if such dispute continues for at least ten (10) business days, Buyer may
unilaterally make an adjustment, which unilateral adjustment shall be subject to
correction by legal action.
iii) Certain bills of Topsville that would reduce the formula
by which the Purchase Price was calculated may not be received or booked by
Topsville until after the Closing Date. Once they are properly booked, the
amount thereof will be credited towards the next installment due under the Note.
The basis for such credit will be reported to Seller, and Seller shall be
provided with appropriate documentation with respect thereto.
I. Payment of Certain Liabilities.
------------------------------
i) Except as set forth in subdivision (ii), and except for
those accounts payable, prospective lease payments and accrued expenses that are
set forth in SCHEDULE 8.8, all liabilities of MNNI, Topsville and JGSL that
accrued prior to the Closing Date or are attributable to pre-Closing events
(e.g., taxes and customs obligations [even if assessed after Closing], but in
the case of taxes only if attributable to pre-Closing taxable periods or the
pre-Closing portion of taxable periods that include the Closing Date) shall be
the responsibility of Seller. Seller shall pay (or otherwise fully eliminate)
all of those liabilities at or prior to Closing. This includes, but is not
limited to, any inter-company liabilities (including the one with Topsville
Brands, Inc.) and the 9.65% note payable to a former shareholder. Buyer may, at
its option, draw checks for any liabilities which are not so paid or eliminated
by Seller out of the sum that would otherwise be paid to Seller under Article
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II, Section B. To the extent, if any, that Buyer gives any of the persons listed
on SCHEDULE 4.8 additional post-Closing vacation days because of unused
pre-Closing vacation days, Buyer shall not deduct the cost of such additional
post-Closing days from the Purchase Price. Seller shall have the right, at his
sole cost and expense, to contest any taxes for which he is liable hereunder,
before or after such taxes are paid, in the name of the entity against whom such
taxes are asserted, and Buyer shall cause each such entity to take such actions
and to provide such Form 2848 and similar tax powers of attorney as are
reasonably necessary to enable Seller to undertake, control the conduct of and
make all decisions with respect to such contest. If Seller successfully contests
any such taxes after the taxes have been paid, Buyer shall pay to Seller the
taxes recovered in that contest, but only to the extent that such taxes were
previously paid by Seller directly or by way of offset, recoupment or adjustment
of the Purchase Price
ii) The following pre-Closing liabilities of Topsville or JGSL
shall, in accordance with the payment schedule set forth in SCHEDULE 8.9, be
paid by Topsville or Buyer after the Closing. The fact that such payments will
be made does not affect the calculation of the Purchase Price: $67,000 that is
due Xxx Xxxxxxxx; $138,425 that is due Xxxx Xxxxx; $25,000 that is due Xxxxxxx
Xxxxx. In the event that Seller pays any of those liabilities at or before
Closing, the payment that SCHEDULE 8.9 otherwise required to the payee(s) to
whom Seller made such payment shall, instead, be made to Seller by Topsville or
Buyer, but only on the same installment schedule that SCHEDULE 8.9 prescribed.
iii) SCHEDULE 8.10 sets forth the particulars regarding vendors
of Topsville with whom Seller made arrangements whereby Topsville could take, as
a credit towards the amount due them, chargebacks that Topsville's customers
make because of defects which are attributable to goods provided by those
vendors. To the extent, if any, that, because of such arrangements, (i)
Topsville ends up paying a listed vendor a sum that is less than its recorded
payable and (ii) the "savings" to Topsville in that regard exceed the amount of
corresponding chargebacks made by Topsville's customers, such "excess savings"
shall be paid to Seller.
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J. Mistaken Payments Or Deductions; Buyer's Rights To Offsets And/Or
Recoupment.
-----------
i) In the event any customer or other debtor of Topsville
makes payment to Seller (or for Seller's benefit, e.g., to Capital) or makes a
chargeback, deduction or other claim of any nature whatsoever against MNNI,
Topsville, JGSL or Buyer because of (i) a transaction that occurred prior to the
Closing Date or (ii) goods that were purchased from Topsville prior to the
Closing Date, Buyer shall (without limitation of its rights or remedies) have
the right to offset and/or recoup the amount of such payment, chargeback,
deduction or claim against/from any money that it owes Seller and/or the
Consultant, including, but not limited to, payments due under or pursuant to the
Note, the Consulting Agreement and/or the Factoring Assignment.
ii) In the event a breach of any of Seller's representations,
warranties or obligations under this agreement causes MNNI, Topsville, JGSL or
Buyer to incur any out of pocket loss, damage or expense, Buyer shall (without
limitation of its rights or remedies) have the right to offset and/or recoup the
amount of such loss, damage and expense against/from any money that its owes
Seller and/or the Consultant under the Consulting Agreement, including, but not
limited to, payments due under or pursuant to the Note, Consulting Agreement
and/or the Factoring Assignment.
iii) In the event that any claim is made against Buyer, MNNI,
Topsville or JGSL because of liabilities of MNNI, Topsville or JGSL that are the
responsibility of Seller under Article VIII, Section I(i), Buyer shall (without
limitation of its rights or remedies) have the right to offset and/or recoup the
amount of such claim against/from any money that its owes Seller and/or the
Consultant under the Consulting Agreement, including, but not limited to,
payments due under or pursuant to the Note, Consulting Agreement and/or the
Factoring Assignment.
iv) In the event Seller fails to make any adjustment to the
Purchase Price that is reasonably warranted pursuant to Article VIII, Section H,
Buyer shall (without limitation of its rights or remedies) have the right to
offset and/or recoup the amount of the adjustment that is reasonably warranted
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against/from any money that they it owes Seller and/or the Consultant under the
Consulting Agreement, including, but not limited to, payments due under or
pursuant to the Note, the Consulting Agreement and/or the Factoring Assignment.
v) Buyer shall notify Seller of any mistaken payment,
chargeback or deduction that gives rise to a right of offset or recoupment under
subdivision (i) within ten (10) business days after the actual making of such
payment, or the actual taking of such chargeback or deduction, has become known
to Buyer. If Seller does not promptly cause the mistaken payment, chargeback or
deduction to be rectified, Buyer shall proceed with the offset or recoupment.
vi) Buyer shall notify Seller of any claim that gives rise to
a right of offset or recoupment under subdivision (i), any situation that gives
rise to a right of offset or recoupment under subdivision (ii), any loss, damage
or expense that gives rise to a right of offset or recoupment under subdivision
(ii), or any claim that gives rise to a right of offset or recoupment under
subdivision (iii) within a reasonable time after the existence of same has
become known to Buyer. If Seller does not promptly cause the loss or damage to
be made whole, or the expense (to the reasonable extent of its amount) to be
made whole, or, in the case of a claim or situation which has not yet resulted
in loss or damage, does not promptly cause Buyer to be fully indemnified and
adequately protected against such claim or situation, Buyer shall proceed with
the offset or recoupment.
vii) The amount of any mistaken payment that is made to Seller
or for Seller's benefit shall not be deemed the property of its recipient
(whether that be Seller, Capital or anyone else), but, rather, shall be deemed
property held in trust by that recipient for the benefit of Topsville (but need
not be segregated by the recipient for such purpose), and the recipient shall
promptly pay over the amount of such mistaken payment to Topsville. The
Factoring Assignment includes an undertaking by Capital in respect of mistaken
payments.
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viii) In the event the basis for an adjustment, offset and/or
recoupment or other remedy of Buyer has been rectified, the adjustment, offset
and/or recoupment shall, to the extent of such rectification, be reversed, and,
if such reversal requires payment, such payment shall be made within ten (10)
business days. In that regard, the fact that Buyer has unilaterally made an
adjustment, offset and/or recoupment shall not preclude Seller from contesting
the basis for such adjustment, offset and/or recoupment, including contesting
the same with a third party whose conduct constituted the basis for the
adjustment, offset and/or recoupment. Any such contest shall be at Seller's sole
cost and expense. Buyer shall provide reasonable cooperation to Seller (at
Seller's expense) in Seller's contest with such a third party, including such
reasonable access to Buyer's, MNNI's and Topsville's personnel, books and
records as may be necessary for that contest. To the extent that requirements of
law make it necessary for Seller to pursue such contest with a third party in
the name of MNNI, Topsville or JGSL, Buyer shall not unreasonably withhold its
consent from Seller pursuing such contest in the name of MNNI, Topsville or
JGSL, all, however, at Seller's sole cost and expense.
K. Indemnification of Seller. SCHEDULE 8.11 sets forth the extent,
if any, to which Topsville, JGSL or Buyer will indemnify Seller.
L. Crediting of Insurance Proceeds. To the extent that Seller or
Buyer actually collects insurance proceeds which cover all or part of a
liability that Seller or Buyer has to the other pursuant to this Agreement, the
amount of such collected proceeds shall be credited towards that liability.
Nothing contained herein shall be construed as imposing an obligation on Seller
or Buyer to pursue such an insurance claim.
M. Seller's Redemption Agreement.
-----------------------------
(a) Seller represents and warrants that, prior to the signing
of this Agreement, Seller, MNNI and Topsville entered into and consummated a
redemption agreement, dated January 10, 2002 (the "Redemption Agreement")
pursuant to which MNNI acquired from Seller (i) all of the shares of Topsville
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that MNNI did not previously own (free of all liens, encumbrances and claims
upon such shares) and (ii) certain shares of MNNI (free of all liens,
encumbrances and claims upon such shares), which Redemption Agreement also
provided for MNNI to make the distributions referred to in Article VIII, Section
B. Seller represents and warrants that, prior to the signing of this Agreement,
(i) Seller has become the owner of 100% of the outstanding shares of MNNI (free
of all liens, encumbrances and claims upon such shares) and (ii) MNNI has become
the owner of 100% of the outstanding shares of Topsville (free of all liens,
encumbrances and claims upon such shares). Buyer was not and is not a party to
the Redemption Agreement. Seller represents and warrants that in no way shall
Buyer's rights and interests as owner of the Shares following the Closing (free
of all liens, encumbrances and claims upon such shares) or MNNI's rights and
interests as owner of the Topsville Shares (free of all liens, encumbrances and
claims upon such shares) be adversely affected by the performance,
non-performance or manner of performance of the Redemption Agreement by any
party to that agreement. Seller shall fully indemnify Buyer against any such
adverse effect, as well as against any and all claims that may be made against
Buyer because of the Redemption Agreement, including, but not limited to, any
claims for tax liabilities which relate to the Redemption Agreement.
b) Article VIII, Section B sets forth distributions that the
parties to the Redemption Agreement have provided are to be made to Seller
pursuant to that agreement.
c) Notwithstanding that the Closing is deemed effective as of
the end of business on the Closing Date, Seller shall, by his signature to this
Agreement, and immediately upon such signing, be deemed to have done the
following: (i) immediately resigned as an officer and director of MNNI and
Topsville, (ii) as the-then sole shareholder of MNNI, which, in turn, is
the-then sole shareholder of Topsville, immediately elected Xxxxxx Xxxxxxxx as
president of both MNNI and Topsville. Seller acknowledges that, as president,
only Xxxxxx Xxxxxxxx shall have the power and authority to take significant
corporate acts on behalf of Topsville until such time as the Closing becomes
effective. Immediately following the effectiveness of the Closing, Buyer, as
the-then sole shareholder of MNNI, shall have the exclusive right to elect (or
control the election) of such persons as it, in its sole discretion, chooses to
be the officers and directors of MNNI and its subsidiaries.
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ARTICLE IX.
MISCELLANEOUS
A. Further Assurances. From time to time after the Closing Date,
upon the reasonable request of Buyer, Seller shall, at his own cost and expense,
execute and deliver or cause to be executed and delivered such further
instruments of conveyance, assignment and transfer and take such further action
as Buyer may reasonably request in order more effectively to sell, assign,
convey, transfer, possess, use and/or record title to the Shares. Seller agrees,
at his own cost and expense, to cooperate with Buyer in all reasonable respects
to assure to Buyer the continued title to, use and possession of the Shares in
the condition and manner contemplated by this Agreement.
B. Survival. The Closing shall not be deemed to extinguish any
representations, warranties or other agreements contained herein which, by their
nature or purpose, should survive the Closing. The transactions contemplated by
this Agreement shall survive any dissolution, merger or consolidation of Buyer
or Seller and shall bind the legal representatives, assigns and successors of
Buyer and Seller.
C. Entire Agreement; Amendment; and Waivers. This Agreement and the
documents that are to be executed and delivered pursuant hereto constitute the
entire agreement between the parties pertaining to the subject matter hereof,
and supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties, whether oral or written. This
Agreement may not be altered, modified, terminated or discharged except by a
writing signed by the party against whom such alteration, modification,
termination or discharge is sought to be enforced. The failure (whether or not
knowing and whether or not prolonged) to take action against a breach or default
under this Agreement shall not be construed as a waiver of the right to take
action against such or a similar breach or default, it being understood that no
waiver shall be effective and no waiver is to be relied upon unless it be made
in a writing signed by the party charged with it.
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D. Benefit; Assignment. This Agreement shall be binding upon and
inure to the benefit of and shall be enforceable by Buyer and Seller and their
respective successors and assigns. In no event shall any employee of MNNI,
Topsville or JGSL, or the aforesaid broker, Xxxxx, be deemed a third party
beneficiary of any provision of this Agreement.
E. Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given on the
date when personally delivered to an officer of the other party or when sent by
confirmed facsimile transmission to the number (and copy number) shown below;
or, if sent by commercial overnight delivery service, then one (1) business day
after being properly deposited for delivery by commercial overnight delivery
service, prepaid; or, if sent by U.S. mail, then three (3) business days after
being properly deposited in the United States mail, certified or registered
mail, postage prepaid, return receipt requested, and addressed as follows;
unless and until either of such parties notifies the other in accordance with
this Section of a change of address or change of facsimile number:
If to Buyer: Xxxxxx, Inc.
000-00xx Xxxxxx
Xxxx Xxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax No.: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
If to Seller: Xxxx Xxxxxxxx
00 Xxxx Xxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Fax No.: (000) 000-0000
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With a copy to: Xxxxxx Xxxxx, Esq.
Xxxxx & Liss
00 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
F. Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. The Section headings
are inserted for convenience of reference only and shall be disregarded in
interpreting this Agreement.
G. Severability. If any word, provision, clause or other part of
this Agreement, or the application thereof under certain circumstances, is held
invalid, or unenforceable, the remainder of this Agreement, or the application
of such word, provision, clause or other part under different circumstances,
shall not be affected thereby. In the event any word provision, clause or other
part of this Agreement shall be held invalid or unenforceable, it shall be
deemed modified, but only to the extent necessary to make it lawful. To effect
such modification, the said word, provision, clause or other part shall be
deemed deleted, added to and/or rewritten, whichever shall most fully preserve
the intentions of the parties as originally expressed herein.
H. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of New York without regard to the
conflict of law principles thereof. Except to the limited extent provided in
Article VIII, Section H, Subdivision (i), any controversy arising out of or
relating to this Agreement, or any duty created thereby, shall be resolved
without a jury in a federal or state court located within the City of New York
(and/or in any appellate court therefrom) and in no other forum. The parties
consent to jurisdiction in such courts, waive any objection to such exclusive
venue, waive trial by jury, and agree that service of the summons to such
proceedings (and of any papers which may accompany it) shall be deemed
sufficient if made by certified mail, postage prepaid, addressed to the parties'
addresses as designated in or hereafter changed under Article IX, Section E.
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Service by such method shall be deemed complete five (5) business days after
such mailing. Seller acknowledges that, without limiting or precluding other
appropriate remedies, the remedies of injunction and/or specific performance are
necessary and proper to enforce his obligations under Article IV, Section G,
Article VIII, Section F, Article VIII, Section G, and Article IX, Section A,
and, further, that, in the event a temporary injunction is obtained, Seller
waives the right to a bond.
IN WITNESS WHEREOF, the parties have executed this Purchase and Sale
Agreement as of the day and year first above written.
"BUYER"
XXXXXX, INC.
By: /s/ XXXXXX XXXXXXXX
--------------------------------
Name: Xxxxxx Xxxxxxxx
------------------------------
Title: President
------------------------------
"SELLER"
/s/ XXXX XXXXXXXX
------------------------------------
Xxxx Xxxxxxxx
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