EXHIBIT 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") dated as of July 27,
1996, is made by and among Xxxxxxxxxx Xxxx Direct, L.P., a Delaware limited
partnership ("Seller"), and ValueVision Direct Marketing Company, Inc., a
Minnesota corporation ("Purchaser").
R E C I T A L S
A. Seller is engaged in the specialty direct-mail
catalogue business (the "Business").
B. Seller desires to sell to Purchaser all of Seller's assets,
properties and rights, other than the Excluded Assets, as herein defined (the
"Purchased Assets"), and Purchaser desires to purchase the Purchased Assets, all
on the terms and subject to the conditions contained in this Agreement.
A G R E E M E N T S
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and subject to the
conditions contained in this Agreement, Purchaser agrees to purchase from
Seller, and Seller agrees to sell to Purchaser, all of the Purchased Assets.
1.2 Enumeration of Purchased Assets. The Purchased Assets shall include
but are not limited to the following assets owned by Seller:
(a) all cash on hand and in banks, and other depositaries but
in any event in an amount not less than $4,000,000;
(b) all inventory, including, without limitation, raw
materials, work in process, finished goods, service parts and supplies
(collectively, the "Inventory"), including without limitation the
Inventory listed on Schedule 1.2(b);
(c) all furniture, fixtures, equipment, machinery, parts,
computer hardware, racks, pallets, automobiles and trucks and all other
tangible personal property (other than the Inventory) (collectively,
the "Equipment"), including without limitation the Equipment listed on
Schedule 1.2(c);
(d) all leasehold interests in personal property leased to
Seller (the "Leased Personalty"), including without limitation the
Leased Personalty listed on Schedule 1.2(d);
(e) Seller's entire leasehold interest as lessee of that
certain real property commonly known as Interchange Tower, Suite 300,
000 Xxxxx Xxxxxxx 000, Xx. Xxxxx Xxxx, Xxxxxxxxx 00000 (the "Leased
Premises");
(f) all trade accounts receivable, notes receivable,
negotiable instruments and chattel paper (collectively, the "Accounts
Receivable"), including without limitation the Accounts Receivable
listed on Schedule 1.2(f);
(g) all claims and rights (and benefits arising therefrom)
with or against all persons whomsoever to the extent they are legally
transferable by Seller;
(h) all sales orders and sales contracts, purchase orders and
purchase contracts, quotations and bids;
(i) all Intellectual Property (as herein defined), and all
goodwill associated with the Intellectual Property;
(j) all license agreements, distribution agreements, sales
representative agreements, service agreements, supply agreements,
franchise agreements, computer software agreements and technical
service agreements to the extent they are legally transferable by
Seller;
(k) all customer lists, customer records and information;
(l) all insurance policies;
(m) all rights in connection with prepaid expenses with
respect to the assets being sold hereunder;
(n) all letters of credit, if any, issued to Seller;
(o) all computer software, including all documentation and
source codes with respect to such software and licenses and leases of
software to the extent they are legally transferable by Seller;
(p) all sales and promotional materials, catalogues and
advertising literature;
(q) all rights of Seller under that certain Amended and
Restated Services Agreement, dated as of June 5, 1996 between Seller
and Fingerhut Corporation, a Minnesota corporation ("Fingerhut"); and
(r) all telephone numbers of Seller and all lock boxes to
which Seller's account debtors remit payments.
1.3 Excluded Assets. The Excluded Assets shall consist of the following
items:
(a) all contracts with Seller's Affiliates (as herein
defined);
(b) claims (and benefits to the extent they arise therefrom)
that relate to liabilities other than the Assumed Liabilities (as
herein defined) and assets other than the Purchased Assets;
(c) rights arising from prepaid expenses, if any, with respect
to assets not being sold hereunder;
(d) tax refunds due from federal, state and local taxing
authorities;
(e) Seller's rights under this Agreement;
(f) Seller's partnership agreement, minute and stock record
books, and tax returns; and
(g) the service marks "Xxxxxxxxxx Xxxx" and "Xxxxxxxxxx Xxxx
Direct".
ARTICLE II
Assumption of Liabilities
2.1 Agreement to Assume. At the Closing (as herein defined), Purchaser
shall assume and agree to discharge and perform when due, the liabilities of
Seller (and only those liabilities of Seller) which are enumerated in Section
2.2 (the "Assumed Liabilities"). All claims against and liabilities and
obligations of Seller not specifically assumed by Purchaser pursuant to Section
2.2, including, without limitation, the liabilities enumerated in Section 2.3,
are collectively referred to herein as the "Excluded Liabilities." Seller shall
promptly pay and discharge when due all of the Excluded Liabilities.
2.2 Description of Assumed Liabilities. The Assumed Liabilities shall
consist of the following liabilities of Seller:
(a) all liabilities of Seller incurred in the ordinary course
of business which are reflected on or reserved against in the Interim
Financial Statements (as herein defined) which have not been discharged
on or prior to the date hereof, to the extent such liabilities are so
reflected or reserved against;
(b) liabilities of the type described in paragraph (a) of this
Section 2.1 which, in accordance with generally accepted accounting
principles ("GAAP"), were required to be reflected on or reserved
against in the Interim Financial Statements but which were not fully
reflected on or fully reserved against, in an aggregate amount not in
excess of $250,000;
(c) all liabilities of Seller incurred in the ordinary course
of business after the date of the Interim Financial Statements and
prior to the date hereof which have not been discharged on or prior to
the date hereof; and
(d) all executory liabilities of Seller under contracts,
leases and other agreements which are included in the Purchased Assets
and assigned to Purchaser.
2.3 Excluded Liabilities. Notwithstanding Section 2.2 (and without
implication that Purchaser is assuming any liability not expressly excluded by
this Section 2.3 and, where applicable, without implication that any of the
following would constitute Assumed Liabilities but for the provisions of this
Section 2.3), the following claims against and liabilities of Seller are
excluded and shall not be assumed or discharged by Purchaser:
(a) any liabilities to any of Seller's Affiliates;
(b) any liabilities for legal, accounting, audit and
investment banking fees, brokerage commissions, and any other expenses
incurred by Seller in connection with the negotiation and preparation
of this Agreement and the sale of the Purchased Assets to Purchaser or
negotiations or agreements with Fingerhut;
(c) any liabilities of Seller for taxes, other than for sales
taxes collected from customers;
(d) any liability for or related to indebtedness of Seller to
banks, financial institutions or other persons or entities with respect
to borrowed money or otherwise;
(e) any liabilities of Seller under those leases, contracts,
insurance policies, commitments, sales orders, purchase orders and
Permits which are not assigned to Purchaser pursuant to the provisions
of this Agreement;
(f) any liabilities of Seller in connection with or arising
out of the transfer or assignment of any lease, contract, commitment,
or other agreement, including, without limitation, under any computer
software agreement;
(g) any liabilities of Seller under collective bargaining
agreements pertaining to employees of Seller; any liabilities of Seller
to pay severance benefits to employees of Seller whose employment is
terminated prior to the Closing Date or in connection with or following
the sale of the Purchased Assets pursuant to the provisions hereof; or
any liability under any Federal or state civil rights or similar law,
or the so-called "WARN Act", resulting from the termination of
employment of employees;
(h) product warranty liabilities of Seller with respect to
products shipped on or prior to the Closing Date and products
constituting finished goods inventory as of the Closing Date, to the
extent such liabilities are not reserved against on the Interim
Financial Statements;
(i) liabilities with respect to returns or allowances of
products which were sold on or prior to the Closing Date or which
constitute finished goods inventory as of the Closing Date and
liabilities with respect to recalls of products sold prior to the
Closing Date, whether required by a governmental body or otherwise, to
the extent not reserved against on the Interim Financial Statements;
(j) any claims against or liabilities of Seller for injury to
or death of persons or damage to or destruction of property (including,
without limitation, any workmen's compensation claim) regardless of
when said claim or liability is asserted, including, without
limitation, any claim or liability for consequential or punitive
damages in connection with the foregoing, to the extent not reserved
against on the Interim Financial Statements;
(k) any liabilities for medical, dental, and disability (both
long-term and short-term) benefits, whether insured or self-insured,
accruing or based upon exposure to conditions, or aggravation of
disabilities or conditions in existence, on or prior to the Closing
Date or for claims incurred or disabilities commencing on or prior to
the Closing Date, and any liability for the foregoing, regardless of
when accrued and regardless of when any condition existed, which arises
by virtue of an employment relationship at any time with Seller;
(l) any liabilities arising out of or in connection with any
of Seller's employee welfare and pension benefit (including profit
sharing) plans;
(m) any bonus or other compensation payments to Seller's
employees which are owed by reason of the sale of the Purchased Assets,
and any liabilities for salaries, wages, bonuses, vacation pay and
other compensation which are owed to employees of Seller;
(n) any liabilities arising out of or in connection with any
violation of a statute or governmental rule, regulation or directive;
and
(o) without limitation by the specific enumeration of the
foregoing, any liabilities not expressly assumed by Purchaser pursuant
to the provisions of Section 2.2.
2.4 No Expansion of Third Party Rights. The assumption by Purchaser of
the Assumed Liabilities shall not expand the rights or remedies of any third
party against the Purchaser or the Seller as compared to the rights and remedies
which such third party would have had against the Seller had the Purchaser not
assumed the Assumed Liabilities.
ARTICLE III
Consideration, Manner of Payment and Closing
1 Consideration. The consideration for the Purchased Assets shall
consist of a Class P Warrant to purchase 1,484,993 shares of common stock, $.01
par value, of Purchaser's parent, ValueVision International, Inc., a Minnesota
corporation ("VVI"), in the form attached hereto as Exhibit A (the "Warrant"),
plus the aggregate book amount of the Assumed Liabilities (the "Purchase
Price").
2 Time and Place of Closing. The transactions contemplated by this
Agreement shall be consummated (the "Closing") at 10:00 am at the offices of
Altheimer & Xxxx, 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx, 00000 on
the date hereof. The date on which the Closing occurs in accordance with the
preceding sentence is referred to in this Agreement as the "Closing Date". The
Closing shall be effective for all purposes as of 12:01 a.m., Central Daylight
Time, on the Closing Date.
3 Manner of Satisfaction of the Consideration. At the Closing,
Purchaser shall assume the Assumed Liabilities and deliver the Warrant to
Seller. The Warrant shall (i) be subject to the terms of an Amended and Restated
Warrant Agreement, dated of even date herewith, between Xxxxxxxxxx Xxxx & Co.,
Incorporated, an Illinois corporation ("MW"), VVI and Purchaser, and (ii) have
the benefits of an Amended and Restated Registration Rights Agreement, dated of
even date herewith, between MW and VVI.
4 Effect of Agreement. This Agreement shall be effective to convey,
transfer and assign the Purchased Assets to Purchaser, and for Purchaser to
assume the Assumed Liabilities, without the necessity for any further
instruments of transfer, conveyance or assumption.
5 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Purchased Assets in the manner required by Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE IV
Representations and Warranties
1 Purchaser's Representations and Warranties. Purchaser represents and
warrants to Seller that:
(a) Purchaser is a corporation duly organized, existing and in
good standing, under the laws of the State of Minnesota.
(b) Purchaser has full corporate power and authority to enter
into and perform (x) this Agreement and (y) all documents and
instruments to be executed by Purchaser pursuant to this Agreement
(collectively, "Purchaser's Ancillary Documents"). This Agreement has
been, and Purchaser's Ancillary Documents will be, duly executed and
delivered by duly authorized officers of Purchaser.
(c) No consent, authorization, order or approval of, or filing
or registration with, any governmental authority or other person is
required for the execution and delivery by Purchaser of this Agreement
and Purchaser's Ancillary Documents, and the consummation by Purchaser
of the transactions contemplated by this Agreement and Purchaser's
Ancillary Documents.
(d) Neither the execution and delivery of this Agreement and
Purchaser's Ancillary Documents by Purchaser, nor the consummation by
Purchaser of the transactions contemplated hereby, will conflict with
or result in a breach of any of the terms, conditions or provisions of
Purchaser's Articles of Incorporation or By-laws, or of any statute or
administrative regulation, or of any order, writ, injunction, judgment
or decree of any court or governmental authority or of any arbitration
award.
(e) Purchaser is not a party to any unexpired, undischarged or
unsatisfied written or oral contract, agreement, indenture, mortgage,
debenture, note or other instrument under the terms of which
performance by Purchaser according to the terms of this Agreement will
be a default, or whereby timely performance by Purchaser according to
the terms of this Agreement may be prohibited, prevented or delayed.
(f) Neither Purchaser nor any of its Affiliates has dealt with
any person or entity who is or may be entitled to a broker's
commission, finder's fee, investment banker's fee or similar payment
for arranging the transaction contemplated hereby or introducing the
parties to each other. As used herein, an "Affiliate" is any person or
entity which controls a party to this Agreement, which that party
controls, or which is under common control with that party. "Control"
means the power, direct or indirect, to direct or cause the direction
of the management and policies of a person or entity through voting
securities, contract or otherwise.
2 Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that, except as set forth in the schedule delivered by
Seller to Purchaser concurrently herewith and identified as the "Disclosure
Schedule":
(a) Seller is a limited partnership duly organized, existing
and in good standing under the laws of the State of Delaware. Seller
has all necessary partnership power and authority to conduct the
Business as the Business is now being conducted.
(b) Seller has qualified as a foreign limited partnership, and
is in good standing, under the laws of all jurisdictions where the
nature of the Business or the nature or location of its assets requires
such qualification and where the failure to so qualify would have a
Material Adverse Effect (as herein defined). For the purposes of this
Agreement, "Material Adverse Effect" means a material adverse effect on
the assets, liabilities, financial condition or results of operations
of the Business, taken as a whole.
(c) Seller has full partnership power and authority to enter
into and perform (x) this Agreement and (y) all documents and
instruments to be executed by Seller pursuant to this Agreement
(collectively, "Seller's Ancillary Documents"). This Agreement has
been, and Seller's Ancillary Documents will be, duly executed and
delivered by duly authorized officers of Seller.
(d) No consent, authorization, order or approval of, or filing
or registration with, any governmental authority or other person is
required for the execution and delivery of this Agreement and Seller's
Ancillary Documents and the consummation by Seller of the transactions
contemplated by this Agreement and Seller's Ancillary Documents.
(e) Neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation by Seller
of the transactions contemplated hereby, will conflict with or result
in a breach of any of the terms, conditions or provisions of Seller's
Agreement or Limited Partnership or of any statute or administrative
regulation, or of any order, writ, injunction, judgment or decree of
any court or any governmental authority or of any arbitration award.
(f) Copies of the balance sheet, statement of income and
retained earnings, statement of cash flows, and notes to financial
statements of Seller, as of and for the year ended December 29, 1995,
and the unaudited balance sheet and statement of income of Seller as of
and for the six month period ended June 28, 1996 (the "Interim
Financial Statements"), are contained in the Disclosure Schedule. Said
financial statements present fairly, in all material respects, the
financial position of Seller as of the dates thereof, and the results
of operations and cash flow of Seller for the periods covered by said
statements, in accordance with GAAP, consistently applied, except (x)
as disclosed therein, (y) in the case of the Interim Financial
Statements, for normal year-end adjustments, and (z) in the case of the
Interim Financial Statements for the omission of footnote disclosures
required by GAAP.
(g) Seller has good title to, and the partnership power to
sell, the Purchased Assets, free and clear of any liens, claims,
encumbrances and security interests, except for the following liens:
(i) statutory liens for taxes not yet due, (ii) liens of landlords,
carriers, warehousemen, mechanics and materialmen for sums not yet due;
(iii) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and the like or to secure other performance and obligations;
and (iv) minor irregularities of title which do not in the aggregate
materially detract from the value or use of the Purchased Assets. The
foregoing representation and warranty shall not apply to the Leased
Premises.
(h) Since June 28, 1996, Seller has not:
(i) sold or transferred any material portion of its
assets or property, except for (A) sales of Inventory and (B)
cash applied in payment of Seller's liabilities, in the usual
and ordinary course of business;
(ii) suffered any material loss, or any material
interruption in use, of any material assets or property
(whether or not covered by insurance), on account of fire,
flood, riot, strike or other hazard or Act of God;
(iii) made or suffered any change in the conduct or
nature of the Business which would, individually or in the
aggregate, have a Material Adverse Effect;
(iv) waived any material rights other than in the
ordinary course of business;
(v) paid or declared any distributions to its
partners, or purchased or redeemed any of its partnership
interests;
(vi) incurred any liability or obligation of any
kind, other than in the ordinary course of business; or
(vii) without limitation by the enumeration of any of
the foregoing, entered into any material transaction other
than in the usual and ordinary course of business.
(i) The Disclosure Schedule lists and describes all material
contracts, leases, and agreements to which Seller is a party and which
relate to the conduct of the Business, including, without limitation:
employment and employment related agreements; covenants not to compete;
loan agreements; notes; security agreements; sales representative,
distribution, franchise, advertising and similar agreements; leases and
subleases of Leased Personalty or the Leased Premises; license
agreements; purchase orders and purchase contracts and sales orders and
sales contracts. All contracts, leases, subleases and other instruments
referred to in this paragraph 4.3(i) are binding upon the parties
thereto. No default by Seller has occurred thereunder and, to Seller's
knowledge, no default by the other contracting parties has occurred
thereunder, which default would, individually or in the aggregate, have
a Material Adverse Effect.
(j) Seller is not a party to, or bound by, any unexpired,
undischarged or unsatisfied written contract, agreement, indenture,
mortgage, debenture, note or other instrument under the terms of which
performance by Seller according to the terms of this Agreement will be
a default or an event of acceleration, which default or acceleration
would, individually or in the aggregate, have a Material Adverse
Effect, or whereby timely performance by Seller according to the terms
of this Agreement may be prohibited, prevented or delayed.
(k) Seller possesses all licenses, permits, registration and
governmental approvals (the "Permits") which are required in order for
the Seller to conduct the Business as presently conducted where the
failure to possess such Permits would have a Material Adverse Effect.
The Disclosure Schedule contains a complete list of all Permits issued
to Seller.
(l) There is no litigation or proceeding, in law or in equity,
and there are no proceedings or governmental investigations before any
commission or other administrative authority, pending, or, to Seller's
knowledge, overtly threatened, against Seller or its Affiliates, or
with respect to the consummation of the transaction contemplated
hereby, or the use of the Purchased Assets (whether used by Purchaser
after the Closing or by Seller prior thereto) which if decided
adversely to Seller would have a Material Adverse Effect.
(m) Seller is not in violation of, or delinquent in respect
to, any decree, order or arbitration award or law, statute, or
regulation of or agreement with, or Permit from, any Federal, state or
local governmental authority (or to which its properties, assets,
personnel, business activities or the Leased Premises are subject or to
which it, itself, is subject), including, without limitation, laws,
statutes and regulations relating to equal employment opportunities,
fair employment practices, and discrimination, which violation or
delinquency would have a Material Adverse Effect.
(n) The Leased Premises are leased to Seller pursuant to
written leases, copies of which are attached to the Disclosure
Schedule. Seller is not in default under any material term of any
agreement relating to the Leased Premises nor, to Seller's knowledge,
is any other party thereto in material default thereunder.
(o) Each material (i) trademark, service xxxx, slogan, trade
name, trade dress and the like (collectively with the associated
goodwill of each, "Trademarks"), including information regarding each
registration and pending application to register any such Trademarks;
(ii) common law Trademark; (iii) patent on and pending application to
patent any technology or design; (iv) registration of and application
to register any copyright; and (v) license of rights in computer
software, Trademarks, patents, copyrights, unpatented formulations, and
know-how, whether to or by Seller, is listed in the Disclosure
Schedule. The scheduled rights are referred to herein collectively as
the "Intellectual Property".
(p) Seller has no knowledge: (i) that any other person or
entity claims the right to use in connection with similar or closely
related goods and in the same geographic area, any xxxx which is
identical or confusingly similar to any of the Trademarks; (ii) of any
claim that any third party asserts ownership rights in any of the
Intellectual Property; (iii) of any claim that Seller's use of any
Intellectual Property infringes any right of any third party; and (iv)
that any third party is infringing any of Seller's rights in any of the
Intellectual Property.
(q) Neither Seller, nor any of its Affiliates, has dealt with
any person or entity who is or may be entitled to a broker's
commission, finder's fee, investment banker's fee or similar payment
from Purchaser for arranging the transaction contemplated hereby or
introducing the parties to each other.
3 Limitation on Warranties. Except as expressly set forth in Section
4.2, Seller makes no express or implied warranty of any kind whatsoever,
including, without limitation, any representation as to physical condition or
value of any of the Purchased Assets or the future profitability or future
earnings performance of the Business. ALL IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
4 Definition of Knowledge. For the purposes of this Agreement, the
knowledge of Seller shall be deemed to be limited to the actual knowledge as of
the Closing Date of Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx and
Xxxxxx Xxxxxxx, without giving effect to imputed knowledge.
ARTICLE V
Post-Closing Agreements
1 Post-Closing Agreements. From and after the Closing, the parties
shall have the respective rights and obligations which are set forth in the
remainder of this Article V.
2 Inspection of Records. Seller and Purchaser shall each make their
respective books and records (including work papers in the possession of their
respective accountants) available for inspection by the other party, or by its
duly accredited representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a seven (7) year period after
the Closing Date, with respect to all transactions occurring prior to and those
relating to the Closing, the historical financial condition, results of
operations and cash flows of Seller, or the Assumed Liabilities. As used in this
Section 5.2, the right of inspection includes the right to make extracts or
copies. The representatives of a party inspecting the records of the other party
shall be reasonably satisfactory to the other party.
3 Payments of Accounts Receivable. In the event Seller shall receive
any instrument of payment of any of the Accounts Receivable, Seller shall
forthwith deliver it to Purchaser, endorsed where necessary, without recourse,
in favor of Purchaser.
4 Products Liability Insurance. For a period of five years commencing
on the Closing Date, Purchaser shall maintain policies of products liability
insurance naming Seller as an additional insured and covering the operations of
the Business with coverages and limits which are comparable to those maintained
from time to time by Purchaser with respect to its own business.
5 Non-Assignment. Notwithstanding any provision to the contrary
contained herein, Seller shall not be obligated to assign to Purchaser any
contract, purchase order, sales order, lease or other instrument which provides
that it may not be assigned without the consent of the other party thereto and
for which such consent is not obtained, but in any such event, Seller shall
cooperate with Purchaser in any reasonable arrangement designed to provide the
benefits thereof to Purchaser.
6 Further Assurances. The parties shall execute such further documents,
and perform such further acts, as may be necessary to transfer and convey the
Purchased Assets to Purchaser, on the terms herein contained, and to otherwise
comply with the terms of this Agreement and consummate the transaction
contemplated hereby.
7 Right of Endorsement, Etc. Effective upon the Closing, Seller hereby
constitutes and appoints Purchaser and its successors and assigns, the true and
lawful attorney of Seller with full power of substitution, in the name of
Purchaser, or the name of the Seller, on behalf of and for the benefit of
Purchaser, to collect all items being sold, transferred, conveyed and assigned
to Purchaser as provided herein, to endorse, without recourse, notes and other
instruments constituting or relating to the Assets in the name of the Seller, to
institute and prosecute, in the name of the Seller or otherwise, all proceedings
which Purchaser may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Purchased Assets, to defend and
compromise any and all actions, suits or proceedings in respect of any of the
Purchased Assets and to do all such acts and things in relation thereto as
Purchaser may deem advisable. The foregoing powers are coupled with an interest
and shall be irrevocable by Seller, directly or indirectly, whether by the
dissolution of the Seller or in any manner or for any reason.
ARTICLE VI
Intentionally Omitted
ARTICLE VII
Indemnification
1 General. From and after the Closing, the parties shall indemnify each
other as provided in this Article VII. As used in this Agreement, the term
"Damages" shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation thereof.
2 Indemnification Obligations of Seller. Subject to the provisions of
Section 7.3, Seller shall indemnify, save and keep harmless Purchaser and its
successors and permitted assigns ("Purchaser Indemnitees") against and from all
Damages sustained or incurred by any of them resulting from or arising out of or
by virtue of:
(a) any material inaccuracy in or breach of any representation
and warranty made by Seller in this Agreement or in any closing
document delivered to Purchaser in connection with this Agreement;
(b) any material breach by Seller of, or failure by Seller to
comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Article
VII); and
(c) the failure to discharge any liability or obligation of
Seller other than the Assumed Liabilities.
3 Limitation on Seller's Indemnification Obligations. Seller's
obligations pursuant to the provisions of Section 7.2 are subject to the
following limitations:
(a) the Purchaser Indemnitees shall not be entitled to recover
under Section 7.2(a): (i) until the total amount which Purchaser would
recover under Section 7.2(a), but for this Section 7.3(a), exceeds
$100,000, and then only for the excess over $100,000; (ii) unless a
claim for Damages has been asserted by written notice, specifying the
details of the alleged misrepresentation or breach of warranty,
delivered to Seller prior to April 1, 1998; or (iii) if at or before
the time of Closing Xxxx Xxxxx or Xxxxxx Xxxxxxxxx had actual knowledge
of the misrepresentation or breach of warranty;
(b) the Purchaser Indemnitees shall not be entitled to recover
under Section 7.2(b) or (c) hereof if indemnification is also available
under Section 7.2(a) hereof;
(c) the Purchaser Indemnitees shall not be entitled to recover
under Section 7.2:
(i) WITH RESPECT TO CONSEQUENTIAL DAMAGES, INCLUDING
CONSEQUENTIAL DAMAGES CONSISTING OF BUSINESS INTERRUPTION OR
LOST PROFITS, OR WITH RESPECT TO PUNITIVE DAMAGES;
(ii) to the extent aggregate Damages under Section
7.3(a) exceed $10,000,000; and
(iii) to the extent the Damages are covered by
insurance (including title insurance) held by Purchaser.
4 Purchaser's Indemnification Covenants. Purchaser shall indemnify,
save and keep harmless Seller and its successors and permitted assigns against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of:
(a) any material inaccuracy in or breach of any representation
and warranty made by Purchaser in this Agreement or in any closing
document delivered to Seller in connection with this Agreement;
(b) any material breach by Purchaser of, or failure by
Purchaser to comply with, any of its covenants or obligations under
this Agreement (including, without limitation, its obligations under
this Article VII); or
(c) Purchaser's failure to pay, discharge and perform any of
the Assumed Liabilities.
5 Indemnification Exclusive Remedy. Indemnification pursuant to the
provisions of this Article VII shall be the exclusive remedy of the parties for
any misrepresentation or breach of any warranty or covenant contained herein or
in any closing document executed and delivered pursuant to the provisions hereof
with respect to any matter which is the subject of this Article VII. Without
limiting the generality of the preceding sentence, no legal action sounding in
tort or strict liability may be maintained by any party.
ARTICLE VIII
Miscellaneous
1 References. The following terms are defined in the Agreement:
Term Section
---- -------
Accounts Receivable 1.2(f)
Affiliate 4.1(f)
Agreement Preamble
Assumed Liabilities 2.1
Business Recitals
Closing 3.2
Closing Date 3.2
Code 3.5
Control 4.1(f)
Damages 7.1
Disclosure Schedule 4.2
Employee(s) 6.1
Equipment 1.2(b)
ERISA 6.2
GAAP 2.2(a)
Intellectual Property 4.2(o)
Interim Financial Statements 4.2(f)
Inventory 1.2(b)
Leased Personalty 1.2(d)
Leased Premises 1.2(e)
Material Adverse Effect 4.2(b)
MW 3.3
Permits 4.2(k)
Purchased Assets Recitals
Purchase Price 3.1
Purchaser Preamble
Purchaser Indemnitees 7.2
Purchaser's Ancillary Documents 4.1(b)
Seller Preamble
Seller's Ancillary Documents 4.2(c)
VVI 3.1
Trademarks 4.2(o)
Warrant 3.1
Welfare Plans 6.2
2 Sales and Transfer Taxes. Purchaser shall pay all sales, use,
transfer and conveyance taxes arising in connection with the sale and transfer
of the Purchased Assets to Purchaser pursuant to this Agreement.
3 Publicity. Except as otherwise required by law, press releases
concerning this transaction shall be made only with the prior agreement of the
Seller and Purchaser.
4 Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by mail
shall be deemed given three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail. Notices
delivered by hand by facsimile, or by nationally recognized private carrier
shall be deemed given on the first business day following receipt; provided,
however, that a notice delivered by facsimile shall only be effective if such
notice is also delivered by hand, or deposited in the United States mail,
postage prepaid, registered or certified mail, on or before two (2) business
days after its delivery by facsimile. All notices shall be addressed as follows:
If to Seller,
addressed to:
Xxxxxxxxxx Xxxx Direct, L.P.
Xxxxxxxxxxx Xxxxx, Xxxxx 000
000 Xxxxx Xxxxxxx 000
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Telecopier: (000) 000-0000
If to Purchaser,
addressed to:
ValueVision International, Inc.
0000 Xxxxx Xxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Xxxxxx & Brand, a professional
limited liability partnership
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 8.4.
5 Expenses. Each party hereto shall bear all fees and expenses incurred
by such party in connection with, relating to or arising out of the execution,
delivery and performance of this Agreement and the consummation of the
transaction contemplated hereby, including, without limitation, attorneys',
accountants' and other professional fees and expenses.
6 Entire Agreement. This Agreement and the instruments to be delivered
by the parties pursuant hereto constitute the entire agreement between the
parties. Each exhibit and the Disclosure Schedule shall be considered
incorporated into this Agreement. Any matter which is disclosed in any portion
of the Disclosure Schedule is deemed to have been disclosed for the purposes of
all relevant provisions of this Agreement. The inclusion of any item in the
Disclosure Schedule is not evidence of the materiality of such item for the
purposes of this Agreement and Seller's Ancillary Documents. The parties make no
representations or warranties to each other, except as contained in this
Agreement. Purchaser acknowledges that it has conducted an independent
investigation of the financial condition, assets, liabilities, properties and
projected operations of the Business in making its determination as to the
propriety of the transaction contemplated by this Agreement, and in entering
into this Agreement has relied solely on the results of said investigation and
on the representations and warranties of Seller expressly contained in this
Agreement.
7 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
8 Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Illinois applicable to contracts
made in that State.
9 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any person other than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, including, without limitation, third party beneficiary
rights.
10 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
11 Amendments. This Agreement shall not be modified or amended except
pursuant to an instrument in writing executed and delivered on behalf of each of
the parties hereto.
12 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
SELLER:
XXXXXXXXXX XXXX DIRECT, L.P.
By: MW Direct General, Inc.,
the general partner
By: /s/ Xxxx Xxxxxxx
Its: Treasurer
PURCHASER:
VALUEVISION DIRECT MARKETING
COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Its: Chairman and Chief Executive Officer
