EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of ________________, 2002
between VGR Acquisition Inc., a Delaware corporation ("Purchaser"), and Xxxx X.
Xxxx ("Xxxx").
W I T N E S S E T H:
WHEREAS, Hall has been engaged in the business of marketing and selling
cigarettes as an owner of a tobacco distribution business, and has developed
significant contacts within the tobacco industry;
WHEREAS, Hall has been a shareholder and officer of The Medallion
Company, Inc., a Virginia corporation ("Company") since 1996, and thus engaged
in the manufacture of tobacco products and is personally responsible for
developing contacts with customers and suppliers of Company due in part to his
involvement in the tobacco distribution business for many years prior to the
incorporation of Company; and
WHEREAS, pursuant to that certain Purchase and Sale Agreement between
Purchaser, Company and the stockholders of Company ("Purchase and Sale
Agreement"), Purchaser will acquire all the issued and outstanding shares of the
Common Stock of Company (certain capitalized terms set forth in this Asset
Purchase Agreement shall have the meaning attributed to them in the Purchase and
Sale Agreement).
NOW THEREFORE, the parties agree as follows:
1. TRANSFER OF ASSETS. Hall shall transfer and sell, and Purchaser
shall purchase, all of Hall's right, title and interest in any and all assets
and properties he possesses, of every kind, real, personal or mixed, absolute,
accrued, contingent or otherwise, tangible or intangible, wherever located, that
are used or useful in the conduct of Company's business, including but not
limited to any interest that Hall may have in agreements reached with customers
and suppliers of Company, with employees of Company and any other assets that
have been owned or acquired by Hall in connection with his ownership of Company
or as a result of Hall's involvement in the tobacco manufacturing business.
2. MEMORANDA, NOTES, RECORDS, TRADE SECRETS, NON-COMPETITION.
(a) All memoranda, notes, records, files or other documents
made or compiled by Hall in connection with his involvement in tobacco
manufacturing businesses or made available to him as an employee of Company
shall be Purchaser's property and all originals or copies thereof shall be
delivered to Purchaser at any time on request of Purchaser.
(b) Hall shall not, for the period from the date of this Asset
Purchase Agreement to the date five years following the Closing Date, interfere
with the Company's relationships with, or endeavor to employ or entice away from
the Company, any person who at any time on or after January 1, 2001 was an
employee of the Company (other than those resigning as contemplated by the terms
of the Purchase and Sale Agreement and Xxxxxx Xxxxxx).
(c) Following the Closing Date, Hall shall not, directly or indirectly,
at any time, except with the prior express written consent of Purchaser,
disclose any Confidential
Information that he may learn or have learned by reason of his involvement in
the tobacco manufacturing business or due to his employment or association with
the Company, or use any such information for his own personal benefit or gain.
(d) Except as set forth in Schedule 4.08 of the Purchase and
Sale Agreement, Hall shall not, for a period of five years following the Closing
Date, compete, directly or indirectly, with Purchaser or its affiliates by
engaging in the business, or lending assistance to anyone engaged in the
business of developing or manufacturing cigarettes in the United States or
elsewhere in the world, as an owner, investor, employee, or in any manner
whatsoever. Notwithstanding the foregoing, Hall shall not be prohibited from
making investments of less than 1% in the aggregate of publicly-traded tobacco
companies for his own account. The parties agree that $1,000,000 of the
Five-Year Promissory Note (as defined below) to be paid to Hall hereunder shall
be in consideration of Hall's agreement not to compete with Purchaser, as
described above.
3. INTANGIBLE ASSETS. Hall shall never at any time have or claim any
right, title or interest in any patent, trade name, trademark, service xxxx,
copyright, trade secret, invention, discovery, concept, method, idea, software,
data bases, price lists, sales materials, sales aids, or other similar rights
developed by, generated by or made known to Hall as a result of his involvement
in tobacco manufacturing businesses or during the term of his employment with
the Company. All such tangible or intangible property shall be disclosed to and
be the sole and exclusive property of Purchaser. Hall shall fully describe any
such tangible or intangible property to an officer or director of Purchaser, and
upon request, Hall shall execute, acknowledge, and deliver, without further
consideration: (a) all papers, drawings, models, programs, data, documents and
other material pertaining to or in any way relating to or evidencing such
property; and (b) such assignments, certificates, and other documents as
Purchaser may consider necessary or appropriate to properly vest all rights,
title, and interest in such property in Purchaser or to enable Purchaser to file
and process applications for and to acquire, maintain and enforce any and all
patents, trademarks, registrations or copyrights or extensions, continuances or
renewals thereof.
4. FURTHER ASSURANCES. Each party agrees without further consideration
to execute and deliver all such documents and instruments as the other party may
reasonably deem necessary or desirable to evidence the consummation of the
transactions contemplated by this Asset Purchase Agreement.
5. PURCHASE PRICE AND PAYMENT. In consideration for the transfer of the
assets described above and in consideration of the other covenants described
above, Hall shall receive the sum of twenty-five million dollars ($25,000,000),
subject to reduction pursuant to Section 1.01 of the Purchase and Sale
Agreement. The purchase price described above shall be paid to Hall by delivery
on the Closing Date of the promissory note of Purchaser in the form of Exhibit B
to the Purchase and Sale Agreement (the "Five-Year Promissory Note"). The
Five-Year Promissory Note shall be guaranteed by Xxxxxxx Group Inc., a Delaware
corporation, and Vector Group Ltd., a Delaware corporation.
6. CERTAIN PROVISIONS IN PURCHASE AND SALE AGREEMENT APPLY. The parties
agree that the following terms and provisions of the Purchase and Sale Agreement
shall be applicable to this Asset Purchase Agreement as if fully set forth
herein. For purposes of applying the terms and provisions of the Purchase and
Sale Agreement to this Asset Purchase Agreement, Hall shall
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be referred to as Seller for purposes of the terms and provisions of the
Purchase and Sale Agreement that are applicable to this Asset Purchase Agreement
and all representations, warranties, covenants and indemnities of Seller made in
the Purchase and Sale Agreement with respect to the Purchase and Sale Agreement
shall be deemed to be made with respect to this Asset Purchase Agreement:
Article II- Representations and Warranties of Seller
Article III- Representations and Warranties of Purchaser
Article IV- Further Agreements and Assurances
Article V- Conduct of Business
Article VI- Conditions to Purchaser's Obligations
Article VII- Conditions to Seller's and the Company's Obligations
Article VIII- Survival
Article IX- Indemnification
Article X- Termination
Article XI- Miscellaneous
Hall specifically agrees that all amounts due him under the Five-Year Promissory
Note are subject to the indemnification and right of setoff provisions set forth
in the Purchase and Sale Agreement.
This Asset Purchase Agreement has been executed and delivered on the
Closing Date. The closing of the transaction contemplated by this Asset Purchase
Agreement shall occur simultaneously with, and be subject to all of the
conditions precedent to, the Closing of the sale and purchase of the Shares
contemplated by the Purchase and Sale Agreement. Upon termination of the
Purchase and Sale Agreement, this Asset Purchase Agreement shall also terminate.
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first above written.
VGR ACQUISITION INC.
By:
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Name:
Title:
HALL
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Xxxx X. Xxxx
For purposes of conveying all rights she has in the property being sold
hereunder, Xxxxx X. Xxxx, wife of Xxxx X. Xxxx, signs below on the date first
written above.
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Xxxxx X. Xxxx
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