Exhibit 5.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of August ___, 2002 by and among TTC
ACQUISITION COMPANY, an Indiana corporation (the "Purchaser"), and ▇▇▇ ▇▇▇▇▇
(the "Seller").
WITNESSETH:
WHEREAS, subject to the terms and conditions hereof, Purchaser desires to
purchase and Seller desires to sell certain assets relating to or used or useful
in connection with Seller's business of selling or installing telephones and
voicemail systems (the "Business");
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the Parties hereto
agree as follows:
SECTION 1
PURCHASE AND SALE OF ASSETS
1.1 Sale of Assets. Subject to the provisions of this Agreement, Seller
agrees to sell and Purchaser agrees to purchase, on such date (the "Closing
Date"), all of Seller's right, title and interest in and to a complete list of
Seller's customers current as of the Closing Date, the telephone numbers used in
conjunction with the operation of the Business and all goodwill relating to the
Business as set forth on the attached Schedule 1.1. All of the assets described
or referred to in this Section 1.1 are hereinafter referred to as the "Subject
Assets".
1.2 Assumption of Liabilities It is expressly understood and agreed that
Purchaser is not assuming or becoming liable for any liabilities of Seller of
any kind or nature at any time existing or asserted, whether known or unknown,
fixed or contingent.
1.3 Purchase Price. In consideration of the sale by Seller to Purchaser of
the Subject Assets, and subject to the other terms and conditions contained
herein, Purchaser agrees to pay at Closing, the sum of One Dollar ($1.00) (the
"Purchase Price") to Seller. In addition, Purchaser shall cause to be issued to
Seller within fifteen (15) days of the date of Closing, Two Hundred Fifty
Thousand (250,000) shares of Fortune Diversified Industries, Inc. ("FDVI")
common stock. The 250,000 shares shall be unvested and subject to the following
conditions:
vii) If Seller is employed by Purchaser on February 28, 2003 and Purchaser
has attained a positive cumulative EBITDA during the period September 1, 2002 to
February 28, 2003, Seller shall become immediately vested in 50,000 shares of
the FDVI common stock.
viii) If Seller fails to become vested in the 50,000 shares of stock
pursuant to Section 1.3(i) above, and Seller is employed by Purchaser on August
31, 2004 and Purchaser has attained a positive cumulative EBITDA during the
period September 1, 2002 to August 31, 2004, Seller shall become immediately
vested in 50,000 shares of the FDVI common stock.
ix) In addition to Section 1.3(ii) above, if Seller is employed by
Purchaser on August 31, 2004 and Purchaser has attained a positive cumulative
EBITDA during the period September 1, 2002 to August 31, 2004, Seller shall
become immediately vested in one (1) share of FDVI common stock for each $1.00
of cumulative EBITDA up to a maximum of 200,000 shares (cumulative EBITDA of at
least $200,000.00).
x) EBITDA shall be defined as Purchaser's accrued earnings before any
interest, income taxes, depreciation or amortization. EBITDA shall be calculated
by Purchaser's outside accountant, which calculation shall be final and binding
on Purchaser and Seller. Each calculation shall be completed within ninety (90)
days after the end of the applicable period.
xi) If Seller's employment with Purchaser is, for any reason, terminated
prior to August 31, 2004, any unvested shares shall immediately, without any
further action by Seller or Purchaser, revert back to Fortune Diversified
Industries, Inc. Fortune Diversified Industries, Inc. shall promptly cancel said
shares upon their reversion.
xii) Prior to vesting, all of the unvested shares shall be retained in a
▇▇▇▇▇▇▇ ▇▇▇▇▇ brokerage account in care of ▇▇▇▇ ▇▇▇▇▇▇▇. Promptly upon vesting,
all of the newly vested shares shall be delivered to Seller.
1.4 Transfer of Subject Assets. On the Closing Date, Seller shall deliver
or cause to be delivered to Purchaser good and sufficient instruments of
transfer, transferring to Purchaser title to all of the Subject Assets. Such
instruments of transfer (a) shall be in the form and will contain the
warranties, covenants and other provisions (not inconsistent with the provisions
hereof) which are usual and customary for transferring the type of property
involved under the laws of the jurisdictions applicable to such transfers, (b)
shall be in form and substance reasonably satisfactory to Purchaser and its
counsel, and (c) except as otherwise provided in this Agreement, shall
effectively vest in Purchaser
good and marketable title to all the Subject Assets free and clear of all
licenses, liens, encumbrances, mortgages and security interests whatsoever
(collectively "Liens").
1.5 Related Agreements. On the Closing Date, Purchaser and Seller shall
have entered into: (a) the ▇▇▇▇ of Sale made by Seller in favor of Purchaser (b)
any other agreements necessary to the consummation of this Agreement and the
operation of the Business, which collectively are referred to herein as the
"Related Agreements."
SECTION 2
SELLER'S REPRESENTATIONS AND WARRANTIES
As a material inducement to Purchaser to enter into this Agreement and
consummate the transactions contemplated hereby, Seller hereby makes to
Purchaser the representations, warranties and covenants contained in this
Section 2 as of the date of this Agreement.
2.1 Authority of Seller. Seller has the full right, authority and power to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by or on behalf of Seller pursuant to this Agreement (the
"Seller Documents") and to carry out the transactions contemplated hereby and
thereby. The execution, delivery and performance by Seller of this Agreement and
Seller Documents have been duly authorized by all necessary action of Seller and
no other action on the part of Seller is required in connection therewith. This
Agreement and Seller Documents executed and delivered by Seller pursuant to this
Agreement constitute, or when executed and delivered will constitute, valid and
binding obligations of Seller enforceable in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency or other similar laws affecting creditors' rights. The execution,
delivery and performance by Seller of this Agreement, Seller Documents and the
consummation of the transactions contemplated hereby or thereby:
(a) Does not and will not violate any laws of the United States, or any
state or other jurisdiction applicable to Seller or require Seller to obtain any
approval, consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made;
(b) Does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture, loan or credit agreement or any other agreement, contract
instrument mortgage, lien, lease, permit authorization, order, writ, judgment,
injunction, decree, determination or arbitration award to which Seller is a
party or by which any of the property of Seller is bound or affected, or result
in the creation or imposition of any Lien on any of the Subject Assets.
2.2 Title to Assets. Seller has good, marketable and indefeasible title to
all of the Subject Assets, free and clear of all claims, liabilities,
restrictions and Liens. Upon the sale, assignment, transfer and delivery of the
Subject Assets to Purchaser under and in accordance with this Agreement and
Seller Documents, there will be vested in Purchaser good, marketable and
indefeasible title to the Subject Assets, free and clear of all Liens.
2.3 Seller's Business Operations. Seller has no liabilities of any nature,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown (including without limitation liabilities as guarantor or
otherwise with respect to obligations of others, or liabilities for taxes due or
then accrued or to become due or contingent or potential liabilities relating to
activities of the Business or the conduct of the Business) which will materially
and adversely affect the conduct of the Business subsequent to Closing.
2.4 Investment Representations and Covenants.
(i) Seller understands that as of the Closing Date the FDVI Stock will not
be registered under the Securities Act of 1933, as amended (the "Securities
Act"), or any state securities laws on the grounds that the issuance of the FDVI
Stock is exempt from registration pursuant to Section 4(2) of the Securities Act
or Regulation D promulgated under the Securities Act and applicable state
securities laws, and that the reliance of FDVI on such exemptions is predicated
in part on Seller's representations, warranties, covenants and acknowledgments
set forth in this Section 2.4.
(ii) Seller represents and warrants that he is an "accredited investor" as
defined in Rule 501 promulgated as part of Regulation D under the Securities
Act.
(iii) Seller represents and warrants that the FDVI Stock to be acquired by
him upon consummation of the transactions contemplated herein will be acquired
by him for his own account, not as a nominee or agent, and without a view to
resale or other distribution within the meaning of the Securities Act and the
rules and regulations thereunder, and that he will not distribute all or any
portion of the FDVI Stock in violation of the Securities Act.
(iv) Seller acknowledges that the shares of FDVI Stock are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Securities Act, only in certain limited circumstances.
(v) Seller represents and warrants that he has such knowledge and
experience in financial and business matters such that he is capable of
evaluating the merits and risks of his investment in the FDVI Stock.
(vi) Seller is in a financial position to afford to hold the FDVI Stock
indefinitely, Seller's financial condition being such that he is not presently
under (and does not contemplate any future) necessity or constraint to dispose
of the FDVI Stock to satisfy any existing or contemplated debt or undertaking.
Seller recognizes that it may not be possible for him to liquidate his
investment in the FDVI Stock and, accordingly, he may have to hold the FDVI
Stock, and bear the economic risk of this investment, indefinitely.
(vii) Seller understands that neither the Securities and Exchange
Commission nor any other federal or state agency has recommended, approved or
endorsed the purchase of the FDVI Stock as an investment.
(viii) Seller confirms that the FDVI Stock was not offered to Seller by any
means of general solicitation or general advertising, and that Seller has
received no representations, warranties or written communications with respect
to the FDVI Stock other than those contained or described in this Agreement.
(ix) Seller acknowledges that he has been provided or that FDVI has made
available to him copies of FDVI's most recent Form 10-KSB, Form 10-QSB and any
Form 8-KS and Form 4s filed since the most recent Form 10-QSB was filed.
(x) Seller acknowledges that FDVI has given him a reasonable opportunity to
ask questions and receive answers concerning his receipt of FDVI Stock and to
obtain any additional information which FDVI possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
information.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to Seller to enter into this Agreement and
consummate the transactions contemplated hereby, Purchaser hereby makes the
representations and warranties to Seller contained in this Section 3 as of the
date of this Agreement.
3.1 Organization of Purchaser. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana
with full corporate power to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is conducted.
3.2 Authority of Purchaser. Purchaser has full right, authority and power
to enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Purchaser pursuant to this Agreement (the "Purchaser
Documents") and to carry out the transactions contemplated hereby and thereby.
The execution, delivery and performance by Purchaser of this Agreement and
Purchaser Documents have been duly authorized by all necessary action of
Purchaser and no other action on the part of Purchaser is required in connection
therewith. This Agreement and Purchaser Documents executed and delivered by
Purchaser pursuant to this Agreement constitute, or when executed and delivered
will constitute, valid and binding obligations of Purchaser enforceable in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency or other similar laws affecting creditor's
rights. The execution, delivery and performance by Purchaser of this Agreement
and Purchaser Documents and the consummation of the transactions contemplated
hereby or thereby:
(a) does not and will not violate any provision of the Articles of
Incorporation or By-laws of Purchaser, in each case as amended to date;
(b) does not and will not violate any laws of the United States, or any
state or other jurisdiction applicable to Purchaser or require Purchaser to
obtain any material approval, consent or waiver of, or make any filing with, any
person or entity (governmental or otherwise) that has not been obtained or made;
and
(c) does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,
injunction decree, determination or arbitration award to which Purchaser is a
party and which is material to the business and financial condition of
Purchaser.
The officers or agents who execute this Agreement and the Related Agreements on
behalf of Purchaser have and shall have all requisite power to do so in the name
of and on behalf of Purchaser.
SECTION 4
CLOSING
4.1 Time. The Closing hereunder shall occur on or before August 31, 2002
and shall be effective as of 12:01 a.m. on September 1, 2002.
4.2 Deliveries.
(a) At the Closing, Purchaser shall receive all of the following, in form
and substance reasonably satisfactory to Purchaser (it being agreed by Purchaser
that the documents attached hereto as exhibits are satisfactory in form to
Purchaser):
(vi) a ▇▇▇▇ of sale and assignment for the Personal Property in the form of
Exhibit A (the "▇▇▇▇ of Sale"), executed by Seller; and
(vii) An Employment Agreement in the form of Exhibit B executed by Seller.
(b) Seller shall have received from Purchaser all of the following, in form
and substance reasonably satisfactory to Seller (it being agreed by Seller that
the documents attached hereto as exhibits are satisfactory in form to Seller):
(vi) payment of the Purchase Price;
(vii) certificates representing the FDVI Stock, duly and validly issued in
the name of Seller within fifteen (15) days of the date of Closing;
(viii) an Employment Agreement in the form of Exhibit B executed by
Purchaser; and
(ix) a certified copy of resolutions of the Board of Directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and the
Related Agreements to which Purchaser is a party.
SECTION 5
MISCELLANEOUS
7.9 Fees and Expenses. Each of the parties will bear its own expenses in
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement, including but not limited to fees for attorneys,
accountants and other advisers.
7.10 Governing Law. This Agreement and the Related Agreements and all
disputes, whether equitable or legal in nature, that arise under this Agreement
that relate in any way to the rights or duties of the parties hereto or thereto,
shall be governed by the internal laws of the State of Indiana, without regard
to the conflict or choice of laws provisions thereof.
7.11 Entire Agreement. This Agreement and the schedules and exhibits
referred to herein are complete and reflect the entire agreement of the parties
with respect to their subject matter and supersede all previous written or oral
negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by either of the
parties except as referred to in this Agreement or in such schedules or exhibits
or Related Agreements, and all inducements to the making of this Agreement
relied upon by either party hereto have been expressed therein or herein or in
such schedules or exhibits or Related Agreements.
7.12 Assignability; Binding Effect. This Agreement shall be assignable by
Purchaser to a creditworthy corporation, partnership or entity, within its
control group provided that such assignment shall not release Purchaser of its
obligations hereunder prior to the assignment. This Agreement shall be binding
upon and enforceable by, and shall inure to the benefit of, the parties hereto
and their respective successors and permitted assigns. The rights, but not the
obligations of Seller, may be assigned by Seller to any person or entity upon
written notice to Purchaser.
7.13 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction on or interpretation of
any term or provision hereof. The use in this Agreement of the masculine pronoun
in reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
7.14 Execution in Counterparts. For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
7.15 Amendments. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
7.16 Severability. In the event that any provision or any portion of any
provision of this Agreement shall be held to be void or unenforceable, then the
remaining provisions of this Agreement (and the remaining portion of any
provision held to be void or unenforceable in part only) shall continue in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above.
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TTC ACQUISITION COMPANY
By:
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