EXHIBIT 2.3
FIRST AMENDMENT
TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this "First
Amendment") is made this 29th day of December, 2003, by and among RGB
Technology, Inc., a North Carolina corporation formerly known as "Vesture
Corporation" ("Seller"), X.X. Xxxxx Corporation, an Ohio corporation and the
parent corporation of Seller ("Xxxxx"), and Vesture Corporation, a North
Carolina corporation formerly known as "Vesture Acquisition Corp." ("Buyer").
RECITALS:
WHEREAS, Seller, Xxxxx and Buyer are parties to an Asset Purchase
Agreement dated as of May 14, 2003 (the "Agreement"), pursuant to which Seller
sold to Buyer substantially all of the assets of Seller utilized in its business
of developing, producing, selling and distributing products that utilize thermal
(hot or cold) retention technology for food or beverages, medical and self-care
applications, products utilizing hot or cold packs and other applications (the
"Vesture Assets"); and
WHEREAS, at the time of the closing of the purchase and sale of the
Vesture Assets, Seller was a party to a lawsuit that was pending in the United
States District Court of the Middle District of North Carolina (the
"Litigation") to which CookTek, Inc. ("CT") and Thermal Solutions, Inc. ("TS")
were also parties; and
WHEREAS, Buyer is now a party to the Litigation; and
WHEREAS, Section 12 of the Agreement addresses the agreement of the
parties to the Agreement with respect to their respective responsibilities in
respect of the Litigation; and
WHEREAS, the parties to the Litigation are entering into a global
settlement of all issues relating to the Litigation, which settlement will
result in the dismissal of the Litigation with prejudice; and
WHEREAS, the parties to this First Amendment desire to amend and
supplement the Agreement to reflect the final settlement of the Litigation and
to set forth new agreements among the parties hereto arising from such
settlement (all capitalized terms used in this First Amendment without
definition have the same definitions given to them in the Agreement);
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties herein made, and in consideration of the covenants
herein contained, the parties agree as follows:
1. AGREEMENT TO SETTLEMENT OF THE LITIGATION. Each of the parties
to this First Amendment agrees to the settlement of the Litigation (the
"Settlement") pursuant to that certain Confidential Settlement Agreement of even
date herewith to which Seller, Buyer, CT and TS are
parties. Buyer hereby waives any right it may have under the Agreement to
receive a Settlement Notice or any other notification in respect of the
Settlement.
2. EXISTING PROMISSORY NOTE. Pursuant to Section 2.2(c) of the
Agreement, Buyer delivered to Seller a promissory note in the principal amount
of $290,000 which is payable in full on December 1, 2004 (the "Promissory
Note"). Nothing contained in this First Amendment shall affect the Promissory
Note which shall remain outstanding and payable in accordance with its terms.
3. SATISFACTION OF SELLER PUT RIGHT ON ACCOUNTS RECEIVABLE.
Pursuant to Section 11.2 of the Agreement, Seller exercised its right to require
Buyer to purchase, for cash, the uncollected Qualified Accounts Receivable for
the Put Amount. Buyer currently is indebted to Seller in the amount of $44,299
pursuant to Section 11.2 in connection with the uncollected Qualified Accounts
Receivable. Buyer agrees that the Put Amount has been reduced from $153,001 to
$44,299 in the manner described in a letter dated December 22, 2003 from Xxxx
Xxxxxxxx of Xxxxx to Xxxxx Xxxxx of Buyer. In full satisfaction of all
obligations of the parties under Section 11.2 of the Agreement, Buyer agrees to
pay Seller the sum of $44,299 by executing and delivering to Seller,
concurrently with the execution of this Agreement, a promissory note in the
principal amount of $44,299 (the "Second Promissory Note") in the form attached
to this Agreement as Exhibit A.
4. PAYMENT OF LITIGATION LIABILITIES BY BUYER. Pursuant to
Section 12.3 of the Agreement, Buyer is obligated to reimburse and indemnify
Seller and Xxxxx for Litigation Liabilities up to the Litigation Liability
Threshold. The provisions of Section 3.1(vii), Section 12.2 and Section 12.3 of
the Agreement are hereby eliminated and, in place thereof, each of Seller and
Buyer agrees to pay on or before February 15, 2004 one-half of the billed but
unpaid legal fees and expenses described on Exhibit B to this First Amendment.
In addition, each of Seller and Buyer agrees to pay, within 60 days of receipt
of an invoice therefor, one-half of all legal fees and expenses billed by the
law firm of Merchant & Xxxxx for services rendered after December 15, 2003
relating to the Litigation. If Seller or Buyer should pay more than its one-half
share of the Merchant & Xxxxx legal fees described above, the party who has not
paid its one-half share shall reimburse and indemnify the other party for the
amount it has paid in excess of its one-half share. The parties agree that it is
their intent to reach a comprehensive settlement on matters related to the
Litigation. Accordingly, each of the parties to this First Amendment agrees
that, except as provided herein, it will not seek against any other party any
costs, expenses, reimbursements, damages or any other amounts related to the
Litigation, including, without limitation, any indemnification under the
Agreement for amounts paid or to be paid under the Settlement.
5. AMENDMENT OF SECTION 2.5. Existing Section 2.5 and Section
12.10 of the Agreement are hereby deleted from the Agreement in their entirety,
and the following shall be added to the Agreement to become new Section 2.5 of
the Agreement (and all internal references to Section 2.5 in the Agreement shall
hereafter refer to the following provisions):
2.5 ADDITIONAL CONSIDERATION.
(a) As additional consideration for the Transferred
Assets and the Exhibit 1.3 Intellectual Property, Buyer shall pay to Seller an
amount equal to five percent (5%) of the net sales of Buyer in excess of
$500,000 for each of the twelve month periods ending on December 31, 2004 (the
"2004 Period"), December 31, 2005 (the "2005 Period"), December 31, 2006 (the
"2006 Period"), and December 31 2007 (the "2007 Period"). No amount shall be
payable for any period ending on or before December 31, 2003. For purposes of
this Section 2.5, the "net sales" of Buyer shall mean the gross sales of
products related to the Business by Buyer and all subsidiaries and other
affiliates of Buyer less returns and discounts on such sales and shall be
determined in accordance with generally accepted accounting principles ("GAAP")
and Seller's historical accounting practices; provided, however, that "net
sales" shall not include any sales directly related to products using the heat
induction technology at issue in the Litigation and any such sales shall be
subtracted from the net sales of Buyer in determining any additional
consideration due under this Section 2.5.
(b) Within 30 days after the completion of each six-month
period during the 2004 Period, the 2005 Period, the 2006 Period and the 2007
Period, Buyer shall furnish to Seller a statement in writing (a "Reporting
Statement") showing Buyer's net sales for the applicable reporting period and
the method by which such net sales were determined, including a breakdown of
sales by customer, products sold and product price and accompanied by a
statement, certified by the chief accounting officer of Buyer, confirming, to
the best knowledge of such officer, the accuracy of the information furnished to
Seller. The Reporting Statements shall also be accompanied by payment in full of
the amount of the additional consideration owed to Seller for the relevant
reporting period, if any. Seller shall have the right, exercisable at any time
within 30 days following its receipt of a Reporting Statement, to review the
books and records of Buyer and its subsidiaries and other affiliates, if any, to
confirm the accuracy of the information presented in the Reporting Statement and
the accuracy of the amount of any payment accompanying such Reporting Statement.
Seller and Xxxxx agree that any information provided under this Section 2.5
shall be kept strictly confidential and only used for the purpose provided for
herein.
6. RELEASE OF CLAIMS RELATING TO THE LITIGATION AND OTHER
MATTERS.
(a) In exchange for the payments and other consideration provided
for in this First Amendment, Seller and Xxxxx hereby release and forever
discharge Buyer and its successors and assigns, and any other entity succeeding
to any such person, from any and all claims, demands, charges, actions,
liabilities, damages, costs, expenses and causes of action of whatever type or
nature, which Seller or Xxxxx has or may have against Buyer arising out of (i)
the Litigation or the heat induction technology and patents at issue in the
Litigation, (ii) Section 12 of the Agreement, (iii) the Purchase Price
adjustment provided for in Section 2.1(b) of the Agreement, (iv) the
determination and payment of the Interim Period Adjustment provided for in
Section 2.2 of the Agreement, and (v) the Put Right provided for in Section 11.2
of the Agreement; provided, however, that the foregoing release shall not apply
to or affect any rights of Seller or Xxxxx arising under this First Amendment,
the Promissory Note or the Second Promissory Note. Neither Seller nor Xxxxx
shall xxx Buyer or any other person or entity benefiting from the foregoing
release, or make, assert, or maintain any charge, claim, demand or action
against Buyer with respect to any matter released pursuant to the foregoing
release.
(b) In exchange for the consideration provided for in this First
Amendment, Buyer and its successors and assigns hereby release and forever
discharge each of Xxxxx and Seller and their respective successors and assigns,
and any other entity succeeding to any such person, from
any and all claims, demands, charges, actions, liabilities, damages, costs,
expenses and causes of action of whatever type or nature, which Buyer or any of
its subsidiaries or affiliates has or may have against Xxxxx and/or Seller
arising out of (i) the Litigation or the heat induction technology and patents
at issue in the Litigation, (ii) Section 12 of the Agreement, (iii) the Purchase
Price adjustment provided for in Section 2.1(b) of the Agreement, (iv) the
determination and payment of the Interim Period Adjustment provided for in
Section 2.2 of the Agreement, and (v) the Put Right provided for in Section 11.2
of the Agreement; provided, however, that the foregoing release shall not apply
to any rights of Buyer arising under this First Amendment. Neither Buyer nor any
of its subsidiaries or other affiliates shall xxx Xxxxx or Seller or any other
person or entity benefiting from the foregoing release, or make, assert, or
maintain any charge, claim, demand or action against Xxxxx or Seller with
respect to any matter released pursuant to the foregoing release.
7. ONE AGREEMENT; REFERENCES. The Agreement, as modified by this
First Amendment, will be construed as one agreement. All references in the
Agreement or to the Agreement will be deemed to be references to the Agreement
as amended by this First Amendment.
8. COUNTERPARTS. This First Amendment may be executed in multiple
counterparts and by facsimile, each of which shall be an original but all of
which together shall constitute one and the same instrument.
9. ENTIRE AGREEMENT. This First Amendment sets forth the entire
agreement of the parties with respect to the subject matter of this First
Amendment and supersedes all previous understandings, written or oral, in
respect of this First Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to be effective as of the date first set forth above.
SELLER:
RGB TECHNOLOGY, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Secretary and Treasurer
XXXXX:
X.X. XXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President - Finance, CFO
BUYER:
VESTURE CORPORATION
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Name: Xxxxx Xxxxx
