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THIS AGREEMENT, made and entered into this _____ day of _____, _____ by and between XXX Japan, Inc., a Japanese corporation, having its principal place of business at _______________, Tokyo, Japan (hereinafter referred to as "Purchaser"), a subsidiary of XXX, Inc., a California corporation, having its principal place of business at _______________, U.S.A. (hereinafter referred to as "XXX"); and YYY Co., Ltd., a Japanese corporation, having its principal place of business at _______________, Tokyo, Japan (hereinafter referred to as "Seller")
WHEREAS, Seller wishes to sell and Purchaser wishes to purchase certain operations of the XXX Product Business of Seller on the terms and conditions and for the consideration described below: NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, Purchaser and Seller hereby agree as follows. Article 1. Definitions As used in this Agreement, the following terms shall have the following respective meanings. 1.1 Transferred Business. The term "Transferred Business" shall mean the business and operations of importing, purchasing, selling, distributing and otherwise marketing in Japan of products manufactured by XXX as well as certain chemicals manufactured by Purchaser and the business and operations of servicing such products and chemicals and providing training concerning such products and chemicals, as conducted by Seller as going concern at the time of execution of this Agreement. 1.2 Transferred Assets. The term "Transferred Assets" shall mean the assets and properties used or possessed by Seller in the Transferred Business, as identified in Exhibit A attached hereto and made a part hereof, which include, but are not limited to, such items as (i) tools, equipment and fixtures, (ii) automobiles and distribution equipment, (iii) inventory and (iv) goodwill. 1.3 Transferred Employees. The term "Transferred Employees" shall mean such employees employed by Seller and engaging in the Transferred Business as listed in Exhibit B attached hereto and made a part hereof. 1.4 Closing or Closing Date. The term "Closing" or "Closing Date" shall mean the closing or the closing date at which the transfer of the Transferred Business, including the Transferred Assets, from Seller to Purchaser will be effected pursuant to the provisions of Article 5 hereof. Article 2. Transfer of Assets Subject to the terms and conditions hereinafter set forth, at the Closing Seller shall transfer, assign, convey and deliver to Purchaser, free and clear of any liens, claims or encumbrances of any kind, all of the Transferred Assets, wherever located. Article 3. Assumption of Liabilities 3.1 Liabilities to Be Assumed. At the Closing, Purchaser shall assume the following liabilities and obligations:
3.2 Liabilities Not to Be Assumed. Except for the liabilities and obligations set forth in the preceding paragraph, Purchaser shall not assume any liabilities, including, but not limited to, any corporation tax or other tax liabilities, or obligations which Seller has incurred prior to the date of this Agreement or will have incurred prior to the Closing in connection with or out of the Transferred Business and Seller shall discharge and indemnify and hold harmless Purchaser and its parent or subsidiaries and their respective successors from and against any of such liabilities or obligations which Purchaser does not assume under this Paragraph. Article 4. Consideration At the Closing, Purchaser shall pay to Seller a total of the following amounts in cash by remitting the same to a bank account of Seller as separately designated by Seller:
Article 5. Closing 5.1 Closing Schedule. The closing of the sale and purchase hereunder shall take place at the offices of Purchaser, ____________, Tokyo at 10:00 a.m., on ____________, or at such other place and time upon which Purchaser and seller may agree in writing (such time and date are herein collectively referred to as the "Closing Date") 5.2 Delivery. At the Closing, Seller shall deliver to Purchaser such deeds, assignments and other good and sufficient instruments of transfer, conveyance, and assignment, as shall be effective to vest in Purchaser good and marketable title to the Transferred Assets, free and clear of any liens, claims and encumbrances of any kind. Simultaneously with such delivery, Seller shall cause to be taken all such additional steps as shall be requested by Purchaser to put Purchaser in possession and in operating control of the Transferred Assets. Seller shall pay or discharge all taxes imposed in connection with the transfer of the Transferred Assets hereunder. 5.3 Transfer of Transferred Employees. At the Closing, Seller shall take all steps necessary to transfer the transferred Employees from Seller to Purchaser. Seller shall pay all retirement allowances or other severance payments in order to terminate employment relationship between Seller and such Transferred Employees as at the Closing. Seller shall indemnify and hold harmless Purchaser from any liabilities and obligations which may arise in connection with the employment by Seller of the Transferred Employees prior to the Closing, and shall pay or discharge all social security taxes or other dues which may arise in connection with the employment of the Transferred Employees by Seller prior to the Closing. 5.4 Repayment of Amount Due to XXX. At the Closing, Seller shall pay to XXX any amount due from Seller to XXX in connection with the Transferred Business by remitting such amount to a bank account of XXX and shall also cause Seller's U.S. subsidiary, _________________, to pay to XXX any amount due from such subsidiary of Seller to XXX as at the Closing. Such amounts to be paid by Seller and Seller’s U.S. subsidiary at the Closing shall be notified in writing by XXX to Seller not later than one (1) week before the Closing Date and shall be confirmed in writing by Seller. 5.5 Settlement of Accounts between Seller and Purchaser. At the Closing, Seller and Purchaser shall pay any outstanding amount owed to each other in connection with the following:
Article 6. Determination of the Value of the Transferred Assets The estimate book value of each of the Transferred Assets as at ____________ is as described in Exhibit A hereto. Not later than one (1) week before the Closing Date, Purchaser and Seller shall agree upon an estimate of the transfer value of each of the Transferred Assets as listed in Exhibit A hereto, except for the goodwill of the Transferred Business, which will be transferred and conveyed by Seller to Purchaser at the Closing. Purchaser shall pay to Seller such amount as agreed to between Purchaser and Seller for the transfer value of the Transferred Assets at the Closing pursuant to the provisions of Article 4 (b) hereof. Then, not later than three (3) weeks after the Closing, Purchaser and Seller shall have good faith consultation and agree to the final transfer value of such Transferred Assets, except for the goodwill, as actually transferred at the Closing. If there is any excess or deficiency of the consideration, then Purchaser and Seller shall agree upon such amount of the excess or deficiency and settle such difference within one (1) week after such consultation but not later than one (1) month after the Closing Date. It is agreed that the transfer value of the goodwill of the Transferred Business has been agreed to between Purchaser and Seller at ____________ Yen (\____________) and shall not be subject to change. Article 7. Representations and Warranties of Seller 7.1 Representations and Warranties of Seller. Seller represents and warrants to Purchaser as follows: (a) Corporate Existence. Seller is a corporation duly organized, validly existing and in good standing under the laws of Japan. (b) Authority. Seller has all requisite power and authority to enter into, execute and deliver this Agreement, and has taken all necessary actions to authorize the execution and delivery of this Agreement and to consummate the transactions contemplated by this Agreement. This Agreement constitutes a valid and binding obligation of Seller enforceable in accordance with its terms. (c) Title to the Transferred Assets. Seller has, and immediately prior to the Closing Seller shall have, complete, good and marketable title to the Transferred Assets, except for those restrictions expressly provided for in Exhibit A attached hereto. (d) Inventory. The items covered by the designation "Inventories" on Exhibit A attached hereto consist of items of a condition, quality and quantity merchantable or usable in the normal course of business of Seller valued at historical costs, and include no obsolete or discontinued merchandise, or merchandise which is below standard quality. (e) Warranty. At the Closing there will be no outstanding warranty obligations owed by Seller to customers of products in the Transferred Business other than those set forth in Exhibit C hereto. (f) Litigation. There is no action, proceeding or investigation pending or, to the knowledge of Seller, threatened which might result in any material adverse change in the operations, prospects (assuming continued operation in the ordinary course of business) or condition of the Transferred Business or which questions the validity of this Agreement or of any action taken or to be taken by or on behalf of Seller pursuant hereto, nor does Seller know or have any reasonable ground to know any basis for any such action, proceeding or investigation in the future. (g) Employees. None of the Transferred Employees is currently a member of a labor union. Seller has no knowledge of any union organizing activity within the Transferred Employees. Seller has no knowledge of any labor trouble, dispute or problems that will have a material adverse effect upon the Transferred Business. (h) Absence of Breach. As far as the Transferred Business is concerned, there has not been a breach or any default in any material obligation of Seller to be performed by Seller under any contract, agreement or other instrument to which Seller is a party; and Seller has not waived any substantial right under any such contract, agreement or instrument. No event has occurred with Seller which would, either with notice or the passage of time, constitute an event of default under any material contract, agreement or instrument relating to the Transferred Business. (i) Material Changes. Except as contemplated by this Agreement, since in connection with the Transferred Business there has not been, and as of the Closing there will not have been:
(j) No Conflict. The consummation of the transactions contemplated by this Agreement will not result in any conflict with or breach of or violation of, or default under, the Articles of Incorporation of Seller, or any law, ordinance, regulation, order, judgment, decree, mortgage, obligation, agreement, indenture, or other instrument applicable to Seller. 7.2 Continuation of Representations and warranties of Seller. All of the representations and warranties of Seller contained herein shall be true in all respects at and as of the Closing. Notwithstanding any investigation at any time made by or on behalf of Purchaser, all such representations and warranties shall survive the Closing and remain in full force and effect until the first anniversary date of the Closing. Article 8. Representations and Warranties of Purchaser 8.1 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller as follows:
8.2 Continuation of Representations and Warranties of Purchaser. All of the representations and warranties of Purchaser contained herein shall be true in all respects at and as of the Closing. Notwithstanding any investigation at any time made by or on behalf of Seller, all such representations and warranties shall survive the Closing and remain in full force and effect until the first anniversary date of the Closing. Article 9. Covenants 9.1 Conduct of Business. Between the date hereof and the Closing, except as otherwise contemplated or provided for herein, Seller shall carry on the Transferred Business in the same manner as conducted heretofore, and refrain from taking any action outside of the ordinary course of business concerning the Transferred Business. 9.2 Access to Information. From the date hereof Seller shall give to Purchaser and its representatives full access during normal business hours to the properties, books, records and contracts relating to the Transferred Business of Seller, including full access to the officers and employees of Seller, and, if requested, full opportunity to conduct a physical inventory of the Transferred Business and an audit of its operations and financial statements and shall furnish all such information and documents relating to the Transferred Business as Purchaser may reasonably request and shall permit Purchaser and its representatives to make copies and abstracts thereof. In the event this Agreement is terminated, Purchaser shall keep confidential and not use any information (unless readly ascertainable from public information or otherwise required by law to be disclosed) obtained from Seller in connection with transactions contemplated hereby and shall promptly return to Seller all documents and other written materials so obtained. 9.3 Governmental Procedures. The parties hereto agree to use their best efforts to obtain all governmental approvals and complete all governmental filings (including, without limitation, a filing with the Japanese Fair Trade Commission under the Japanese Law Concerning Prohibition of Private Monopoly and Maintenance of Fair Trade) as expeditiously as possible. 9.4 Further Assurances. At any time and from time to time after the Closing at the request of either party hereto, and without further consideration, the parties hereto shall execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation and take such other actions as may reasonably be necessary or desirable in order (i) to transfer, convey and assign more effectively to Purchaser, and to confirm Purchaser's title to, the Transferred Assets and (ii) otherwise carry out the obligations of either party to the other under the provisions of this Agreement. Seller hereby expressly undertakes to cooperate and assist Purchaser in smoothly acquiring the goodwill of the Transferred Business. 9.5 Indemnification by Seller. Seller shall be responsible for indemnification of Purchaser for any damages and losses incurred by Purchaser on account of Seller's breach of representations, warranties covenants or other obligations set forth in this Agreement. 9.6 Indemnification by Purchaser. Purchaser shall be responsible for indemnification of Seller for any damages and losses incurred by Seller on account of Purchaser's breach of representations, warranties, covenants or other obligations set forth in this Agreement. Article 10. Conditions Precedent to Closing 10.1 Conditions to Obligations of Purchaser. The obligation of Purchaser to consummate the transactions contemplated hereunder is expressly subject to the fulfillment of the following conditions at or before the Closing any of which may be waived by Purchaser.
10.2 Conditions to Obligations of Seller. The obligation of Seller to consummate the transactions contemplated hereunder is expressly subject to the fulfillment of the following conditions at or before the Closing any of which may be waived by Seller:
Article 11. Miscellaneous 11.1 Termination. This Agreement may be terminated at any time prior to the Closing by mutual consent of the parties hereto. Such rights of termination shall not limit any other rights that the parties may have, whether legal or equitable, arising out of the act or failure to act of any other party hereto. 11.2 Modification; Waiver. This Agreement may be modified at any time prior to the Closing by written consent of all of the parties hereto. Any of the terms or conditions of this Agreement may be waived in writing prior to the Closing by the party which is entitled to the benefit thereof. Except as provided in this Paragraph, this Agreement shall not be amended, changed or modified in any manner. 11.3 Commissions. Each of the parties hereto represents and warrants that there are no claims for brokerage commissions or finder's fees in connection with the transactions contemplated by this Agreement, incurred by reason of any action taken by such party. Each of the parties hereto shall indemnify the other and hold the other harmless from and against any and all claims or liabilities for brokerage commissions or finder's fees incurred by reason of any action taken by it. 11.4 Taxes; Expenses. Except otherwise expressly provided herein, all taxes and expenses incurred by each party hereto in connection with the transactions contemplated by this Agreement shall be borne by each respective party. 11.5 Assignment. This Agreement may not be assigned by either party hereto without the prior written consent of the other party hereto. The terms and provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties and their successors and assigns. 11.6 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of Japan without regard to its conflicts of law rules. 11.7 Notice. Any notice to be given hereunder shall be in writing and shall be given by registered mail, with appropriate postage prepaid or in the form of a telex, telegram or facsimile, followed immediately by a confirmation letter by registered mail. Such notice shall be directed to the following addresses or such other address as either party hereto may designate by written notice given to the other party hereto. Any such notice shall become effective two days after being deposited in the mail, or, if delivered by a telex, telegram or facsimile, when received. To Purchaser: XXX Japan, Inc.
To Seller: YYY Co., Ltd.
11.8 Arbitration. All disputes, controversies or differences which may arise during the term of this Agreement or thereafter between the parties hereto out of or in relation to or in connection with this Agreement, or the breach thereof, shall be finally settled by arbitration in Tokyo, Japan pursuant to the Commercial Arbitration Rules of the Japan Commercial Arbitration Association, by which each party hereto is bound. 11.9 Entire Agreement. This Agreement and the Exhibits attached hereto contain the entire understanding of the parties hereto with respect to its subject matter. There are no restrictions, promises, warranties, covenants or undertakings other than expressly set forth herein or therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. 11.10 Non-Waiver. The waiver by either party hereto of a breach of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof. 11.11 Severability. The provisions of this Agreement are severable. The invalidity of any provision or provisions of this Agreement shall not affect the validity of any other provision hereof which shall remain valid and enforceable to the full extent permitted by law. 11.12 Headings; Counterparts. The article and paragraph headings in this Agreement are for ease of reference only and not a substantive part of this Agreement. This Agreement may be executed simultaneously in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.13 Nondisclosure of Agreement. The parties hereto agree not to refer to this Agreement in any published material or disclose the terms of this Agreement to any third party, except as required by law, without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
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EXHIBIT B
EXHIBIT C
AND CUSTOMERS AND INSTALLATION DATES
EXHIBIT D
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