EXHIBIT 10.2
AGREEMENT
THIS AGREEMENT is made to be effective this day of August 11, 2005, by and
between X.X. XXXXX CORPORATION, an Ohio corporation with its principal executive
offices at 00000 Xxxxxxxx Xxxx, X.X., Xxxxxxxxxxxx, Xxxx (the "Company"), and
XXXXXXXX XXXXX XXXXXX, whose principal residence address is ___________________,
Columbus, Ohio ("Xxx. Xxxxxx").
WITNESSETH:
WHEREAS, the Company and Xxx. Xxxxxx are parties to an Agreement dated
February 7, 1952, as amended by an Agreement of Amendment dated September 18,
1961, a Second Amendment dated April 15, 1968, and a Third Amendment dated
October 31, 2000 (together, the "Royalty Agreement") pursuant to which Xxx.
Xxxxxx has granted to the Company the exclusive right to utilize product designs
owned by her, including designs created by her after the original date of the
Royalty Agreement, in exchange for the Company's agreement to pay to Xxx. Xxxxxx
royalties on its sale of products based on Xxx. Xxxxxx'x designs; and
WHEREAS, pursuant to the Royalty Agreement, Xxx. Xxxxxx has also granted to
the Company the option to purchase and acquire her ownership interest in her
product designs and patent rights, if any, upon the occurrence of her death or a
change of control of the Company; and
WHEREAS, pursuant to the Royalty Agreement, the Company has granted to Xxx.
Xxxxxx and her assigns and estate, the right to require the Company to purchase
and acquire her product designs and patent rights, if any, on the occurrence of
a change of control of the Company; and
WHEREAS, on the terms and conditions set forth below, the Company desires
to purchase from Xxx. Xxxxxx and Xxx. Xxxxxx desires to sell to the Company all
of her product designs and patent rights, and to terminate the Royalty
Agreement, effective immediately;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Purchase and Sale of Rights. Xxx. Xxxxxx hereby sells, assigns,
transfers and conveys to the Company, and the Company hereby purchases from Xxx.
Xxxxxx, all of Xxx. Xxxxxx'x right, title and interest in and to the following
(the "Property"): (i) all slippers and other footwear products or components or
designs thereof that have been designed, created or conceptualized by Xxx.
Xxxxxx, either alone or with others, including all product designs,
constructions, inventions, know-how and rights related thereto, (ii) all other
items, products, designs and constructions created, designed or conceptualized
by Xxx. Xxxxxx which have been sold or offered for sale by the Company or which
have been presented to the Company for possible sale by the Company, and (iii)
all patents and patent rights and any other intellectual property of Xxx. Xxxxxx
which relate to slippers or other footwear products. The Property includes,
without limitation, the product designs described on Annex A to this Agreement
and the patent rights described on Annex B to this Agreement. Xxx. Xxxxxx agrees
that she will provide, upon reasonable notice, such information and assistance
to the Company as may reasonably be requested by the Company in connection with
the Company's use of the Property. Xxx. Xxxxxx also agrees that she will execute
and deliver to the Company, upon the Company's request, such further assignments
and other instruments as the Company determines are desirable in order to
reflect the Company's exclusive ownership rights in and to the Property and/or
the transfer by Xxx. Xxxxxx of her ownership rights in the Property to the
Company including, without limitation, any and all patent assignment documents
prescribed by the federal government.
2. Purchase Price for the Property.
(a) Purchase Price. In consideration of (1) the sale and transfer by Xxx.
Xxxxxx to the Company of the Property, (2) the Covenant Not to Compete provided
for in Section 4 below and (3) the Release of Claims provided for in Section 5
below, the Company agrees to pay to Xxx. Xxxxxx the sum of Six Hundred Thousand
Dollars ($600,000), payable in twenty-four (24) quarterly payments of
Twenty-Five Thousand Dollars ($25,000) each, commencing on the date of this
Agreement and continuing on the last business day of each and every October,
January, April and July ("Quarterly Payment Dates") until the last business day
in April 2011, on which date the final payment shall be due and owing. In the
event of the death of Mrs. Xxxxxx xxxxx to the time that all payments owing
under the first sentence of this Section 2 have been made, the Company shall pay
to the then acting trustee of the Xxxxxxxx Xxxxx Xxxxxx Trust dated November 9,
1997, as restated in its entirety on September 27, 2000, and as amended (or to
such other designee as may be provided to the Company in writing by Mrs. Xxxxxx
xxxxx to her death), the remaining quarterly payments as provided under this
Section 2 as such payments become due and payable. In the event of a Change of
Control (as defined below) of the Company prior to the time that all payments
owing under this Section 2 have been made in full, the time for payment of all
remaining amounts then owing under this Section 2 shall be accelerated and the
Company shall pay all such amounts to Xxx. Xxxxxx, or if she is then deceased,
to the then acting trustee of the Xxxxxxxx Xxxxx Xxxxxx Trust dated November 9,
1997, as restated in its entirety on September 27, 2000, and as amended (or to
such to other designee as may be provided to the Company in writing by Mrs.
Xxxxxx xxxxx to her death), within ten (10) days following the occurrence of the
Change of Control.
(b) Definition of a Change of Control. For purposes of this Agreement, a
"Change of Control" of the Company shall be deemed to have occurred if (i) any
individual or entity or group of related individuals or entities (an "Acquiring
Person"), shall hereafter acquire (or disclose the previous acquisition of)
beneficial ownership of common shares of the Company which results in the
Acquiring Person possessing more than a majority of the total voting power of
the Company's outstanding common shares; or (ii) as the result of, or in
connection with, any tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions, the individuals who were directors of the Company
immediately before the completion of such transaction shall cease to constitute
a majority of the Board of Directors of the Company.
3. Representations and Warranties of Xxx. Xxxxxx. In order to induce the
Company to purchase the Property and make the payments provided for in Section 2
above, Xxx. Xxxxxx hereby represents and warrants to the Company as follows:
(a) She is the sole owner of the Property and has good and transferable
title to the Property free and clear of any and all agreements (other than with
the Company), liens, charges, encumbrances, security agreements, options and
adverse claims or rights. She has not conveyed to anyone any interest in or to
the Property, and no other person or entity holds any interest in the Property.
(b) She has the full right, power and authority to enter into this
Agreement and to transfer, convey and sell to the Company the Property. Upon
execution of this Agreement, the Company will acquire from Xxx. Xxxxxx good and
marketable title to the Property, free and clear of any and all agreements,
liens, charges, encumbrances, security agreements, options and adverse claims or
rights.
(c) She is not a party to or bound by any agreement which would prevent,
prohibit, condition or limit the execution of delivery of this Agreement or the
transfer, conveyance and sale of the Property to the Company pursuant hereto.
(d) Other than the Property, Xxx. Xxxxxx does not own or have rights in and
to any property that would fall within the descriptions set forth in clauses
(i), (ii) and (iii) of Section 1 of this Agreement.
(e) No authorization, consent or approval of any third party is necessary
for the transfer of the Property by Xxx. Xxxxxx to the Company.
4. Covenant Not to Compete.
(a) During the period that payments are owing to Xxx. Xxxxxx pursuant to
this Agreement and for a period of one year thereafter, Xxx. Xxxxxx will not,
directly or indirectly, individually or on behalf of another person or entity,
engage or be interested in (whether as owner, stockholder, partner, consultant,
agent, designer or otherwise) any business, activity or enterprise which is then
competitive with the Company Business (as defined below) in any region of the
United States. Xxx. Xxxxxx'x ownership of less than 1% of any class of stock in
a publicly-traded corporation shall not be deemed a breach of this Section 4.
For purposes of this Agreement, the term "Company Business" means the business
of designing, sourcing and selling slippers and other comfort footwear products.
(b) If at any time following the date of this Agreement, Xxx. Xxxxxx
develops new product designs or other creations that would have constituted
Property if in existence on the date of this Agreement ("New Property"), the
Company shall have a royalty-free, permanent license to use such designs or
creations. Xxx. Xxxxxx will notify the Company of the development of any New
Property.
(c) Xxx. Xxxxxx acknowledges that a violation of this Section 4 would cause
irreparable harm to the Company, and that the Company's remedy at law for any
such violation would be inadequate. In recognition of the foregoing, Xxx. Xxxxxx
agrees that, in addition to any other relief afforded by law or this Agreement,
and without the necessity or proof of actual damages, the Company shall have the
right to enforce this Agreement by specific remedies, which shall include, among
other things, temporary and permanent injunctions.
5. Release of Claims. In consideration of the Company's agreement to
purchase the Property and to make the payments provided for in Section 2 above,
Xxx. Xxxxxx, on her own behalf and on behalf of her executors, legal
representatives, administrators, successors, heirs, assigns, distributees and
legatees (together, the "Releasing Parties"), does hereby release, acquit and
forever discharge the Company and its subsidiaries (and all of their
predecessors and all former subsidiaries) and each of their current and former
respective officers, directors, employees, representatives, attorneys and
affiliates (each, a "released party") of and from any and all past, present and
future claims, demands, obligations, actions, causes of action, rights, damages,
costs, expenses, attorneys' fees and obligations for compensation of any nature
whatsoever, including, without limitation, claims for unpaid royalties under the
Royalty Agreement, whether based on tort, contract or any other theory of
recovery, and whether for compensatory or punitive damages which Xxx. Xxxxxx (or
any of the other Releasing Parties) now has, or which may hereafter accrue or
otherwise be acquired, but excluding claims arising under this Agreement. This
full release includes, without limitation, any and all known or unknown claims
for injury or damage to Xxx. Xxxxxx which have resulted or may result from any
alleged acts or omissions of each released party, it being intended to release
all claims of any kind which Xxx. Xxxxxx might have against those hereby
released because of any matter or any thing which ever happened from the
beginning of the world up to the time this full release is executed, known or
unknown, whether asserted at this time or not, and it constitutes a fully
binding and complete settlement and release of disputed claims between Xxx.
Xxxxxx and the released party.
It is further understood and agreed that this full release is a general
release, and that Xxx. Xxxxxx expressly waives and assumes the risk of any and
all claims for financial injuries or damages which exist as of the date hereof
but of which she does not know or suspect to exist whether through ignorance,
oversight, error or negligence or otherwise and which, if known, would affect
Xxx. Xxxxxx'x decision to enter into this full release.
Xxx. Xxxxxx further expressly warrants, represents, covenants and agrees in
consideration of the recitals and payments set forth above that:
(a) No other person or entity has or has had any interest in the claims,
demands, obligations or causes of action referred to in this full release.
(b) Before executing this full release, Xxx. Xxxxxx has fully informed
herself of its terms, content, conditions and effects, and Xxx. Xxxxxx has been
similarly informed by legal counsel of its terms, contents, conditions and
effects.
Notwithstanding any of the foregoing, the parties hereto agree that this
release shall not operate so as to impair or affect the obligations of the
parties undertaken by or pursuant to this Agreement.
6. Termination of Royalty Agreement. Effective upon the execution of this
Agreement, the Royalty Agreement is hereby terminated. Both the Company and Xxx.
Xxxxxx hereby release any and all rights and claims against the other arising
out of the Royalty Agreement.
7. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties with respect to the subject matter of this
Agreement and supersedes and preempts any prior understandings, agreements or
representations between the parties, written or oral, which may have related to
the subject matter hereof in any way.
8. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together shall
constitute one and the same agreement.
9. Applicable Law. THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF OHIO.
10. Successors, Etc. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns. This Agreement shall inure
to the benefit of and be binding upon Xxx. Xxxxxx and Xxx. Xxxxxx'x heirs,
legatees, personal representatives, administrators, executors, and assigns.
11. Validity of the Agreement. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
X.X. XXXXX CORPORATION
By /s/ Xxxxxx Xxx Xxxxxx
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Xxxxxx Xxx Xxxxxx, President and CEO
/s/ Xxxxxxxx Xxxxx Xxxxxx
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Xxxxxxxx Xxxxx Xxxxxx
