EXHIBIT 10.5
PURCHASE AND SALE OF BUSINESS ASSETS
This Agreement (the "Agreement") is made on August 1, 2004, (the
"Effective Date") between National Abrasive Systems, Co. ("Seller"), and
AmeriChip Tool and Abrasives, LLC, ("Purchaser"), a wholly owned subsidiary of
AmeriChip International, Inc. (collectively, the "Parties").
Recitals
This Agreement is made with reference to the following facts and
circumstances:
A. Seller owns and operates a certain industrial abrasives sales business and
the assets used in connection with such business (the "Business") under the name
of National Abrasive Systems, Co. (the "Name"), located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
B. Seller desires to sell and Purchaser desires to purchase Seller's
interest in the "Purchased Assets," as defined in this Agreement.
C. ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, the shareholders ("Shareholders") of
Seller will receive a substantial economic benefit derived from Purchaser's
purchase of the Purchased Assets from Seller. In exchange, Shareholders agree to
make the representations, warranties, and covenants set forth in this Agreement.
In addition, Seller and Shareholders agree not to compete with Purchaser in the
conduct of the Business as provided in a non-competition agreement attached to
this Agreement as Exhibit 1 and as a condition to Purchaser's purchase of the
Purchased Assets from Seller. D. The Parties agree as follows:
Agreement
1. Agreement to Purchase and Sell.
1.1. Assets Purchased and Sold. At the Closing (as defined in this
Agreement), Purchaser shall buy and Seller shall sell, assign, convey, transfer,
set over, and deliver (by appropriate instrument of transfer) to Purchaser all
of the assets, rights, and interests of every conceivable kind or character
whatsoever, whether tangible or intangible, that on the Closing Date (as defined
in this Agreement) are owned by Seller or in which Seller has an interest of any
kind. These include, without limitation, the following, (collectively, the
"Purchased Assets"):
A. Trade Fixtures. Trade fixtures and equipment, as defined in the Michigan
Uniform Commercial Code, MCLA 440.1101-.1102 (the "UCC"), including but not
limited to those items listed in Exhibit 2;
B. Inventory. All inventory of any kind or description, whatsoever, wherever
located, which is owned by the Seller at the time of closing;
C. Miscellaneous Items. All patents, logos, slogans, trademarks, copyrights,
know-how, processes, trade secrets, formulae, inventions, telephone numbers,
telephone listings, computer programs, software programs, software and technical
libraries, engineering data, electronic data bases, all drawings, license
agreements and all other intellectual and/or proprietary information and
property and applications therefore or
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licenses thereof, used in connection with the Business, including Internet
address for the Business, if any (collectively, the "Miscellaneous Items");
D. Purchase Orders. Any existing customer purchase orders which have not
completed prior to the Closing (the "Purchase Orders");
E. Customer List and Miscellaneous Records. Any records, files, lists and
other tangible assets that pertain to the Business, including lists and records
pertaining to any one or more of the following: Seller's customers, suppliers,
advertising, promotional material, sales, services, delivery, and/or operations,
except those items, if any, required to be retained by law, including accounting
records and returns (collectively, the "Customer List and Miscellaneous
Records");
F. Remote Assets. All assets located off site from the Location or in the
possession of others, but used in connection with the Business (collectively,
the "Remote Assets"). The situs of the Remote Assets and the person or entity in
possession or control thereof shall be delivered by Seller to Purchaser at the
Closing;
G. Contracts. All contracts and service agreements (collectively, the
"Contracts") shall be delivered by Seller to Purchaser at the Closing;
H. Sales, Contracts and Service Records. All contracts and service records for
sales, services, or leasing relating to the Business (collectively, the "Sales
Contracts/Service Records") shall be delivered by Seller to Purchaser at the
Closing; and
I. Goodwill. The goodwill, telephone fax numbers, yellow-page advertisements,
and Seller's right to use the registered name, and all related names and
derivations, including the Business Internet address, if any (collectively, the
"Goodwill").
1.2. Excluded Assets. Except as otherwise set forth in this Agreement,
this Agreement contemplates the purchase and sale, inclusive of assignments, of
the Purchased Assets. This Agreement specifically excludes, however, the
following assets (collectively, the "Excluded Assets"):
A. The miscellaneous items of personal property and possessions of
Shareholders including any policy of life insurance and cash surrender value of
such life insurance upon life of any Shareholder; and
B. Seller's assets not specifically or by inference included in the above
paragraphs or attached Exhibit.
1.3. Liabilities Excluded. Purchaser does not assume nor shall Purchaser
be obligated for any liabilities or responsibilities whatsoever of Seller or the
Business as conducted by Seller through the Closing Date, inclusive of
obligations or liabilities resulting from Seller's total or partial withdrawal
from any pension, profit sharing, or retirement plans (the "Excluded
Liabilities").
2. Purchase Price. Purchase Price
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The purchase price for the Purchased Assets is Two Hundred Fifty Thousand
Dollars ($250,000.00); additionally ▇▇▇▇▇▇▇ ▇▇▇▇ shall transfer his One Thousand
shares of common stock in the Seller back to Seller and receive One Hundred
Twenty Five Thousand (125,000) shares of free trading common stock of AmeriChip
International, Inc.; and ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall transfer his One Thousand shares of
common stock in the Seller back to the Seller and receive Twenty Five Thousand
(25,000) shares of free trading common stock of AmeriChip International, Inc.,
(the "Purchase Price"). This shall take place at time of closing.
3. Terms of Payment
3.1 Promissory Note. Two Hundred Fifty Thousand Dollars ($250,000.00)
shall be paid pursuant to the terms and provisions of a promissory note (the
"Note") that Purchaser shall execute at the Closing. The Note will provide for
monthly installment payments of Seven Hundred Twenty Nine and 17/100 Dollars
($729.17) representing interest only for the first six months commencing one
month after the date of execution of the note at the option of the Purchaser;
thereafter monthly payment shall be Two Thousand Four Hundred Seventeen
($2,417.00) Dollars or more, at the option of the Purchaser; the payments shall
include interest on the unpaid balance. Interest shall accrue on the unpaid
balance at a rate of three and one-half percent (3-1/2%) per annum. The
installment payments of the Note shall continue monthly until the principal and
interest are fully paid; provided, however, that the unpaid principal and
interest shall be fully paid no later than ten (10) years from the effective
date of the Note. There shall be no penalty for prepayment of the note. A copy
of the Note is attached as Exhibit 3.
3.2 Security Agreement. As security for the payment of the Note owed to
Seller, by Purchaser, the Purchaser shall execute a security agreement granting
a security interest to Seller in the assets described in this Agreement (the
"Security Agreement") together with a UCC-1 financing statement (the "Financing
Statement"). A copy of the Security Agreement is attached as Exhibit 4, and a
copy of the Financing Statement is attached as Exhibit 5.
4. Adjustments.
At the Closing, the following shall be adjusted or apportioned and, to the
extent practicable, all such prorations shall be computed and paid at the
Closing, and to the extent not practicable, as soon as practicable after the
Closing:
4.1 Taxes on Purchased Assets. Purchaser shall pay all taxes and
assessments, extraordinary as well as ordinary, that may be levied on any
Purchased Assets which become due after the Closing Date and which arise from
actions of Purchaser after the Closing; provided that Seller shall pay for all
taxes upon Purchased Assets that arise from Seller's ownership or operation of
the Business on or before the Closing and which may be due on, before, or after
the Closing Date. Current personal property taxes shall not be prorated.
4.2 Miscellaneous Business Taxes. All Social Security, sales, use,
withholding, and single business taxes for all years up to and including the
last completed tax year and all quarters for the current tax year immediately
preceding the Closing Date shall be paid in full by Seller when payment of such
amounts shall become due.
4.3 Miscellaneous. If applicable, adjustments shall be made for payroll
and any other prepaid items, and any other unspecified unpaid taxes.
4.4 Transfer Fees; Sales Taxes. Purchaser shall pay all transfer fees and
applicable sales taxes, if any, (but excluding Seller's income or other taxes in
the nature thereof) arising under or on account of the purchase and sale of the
Purchased Assets.
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5. Title.
The assets described in this agreement are subject to a lien in favor of
Huntington Bank, Mt. ▇▇▇▇▇▇▇, Michigan, See Exhibit 6.
5.1 Agreement of Payment. In addition to the warranties and
representations contained in this Agreement, if for any reason any taxing
authority, creditor or third party, in addition to Huntington Bank, who is owned
a debt by Seller on or before the Closing, or who otherwise possesses any type
of right or interest in the Purchased Assets arising from ownership or operation
of the Business, including the Purchased Assets, by Seller prior to the Closing,
holds or obtains a lien on the Purchased Assets, then the following shall apply:
A. Seller, on written notice given by Purchaser to Seller, shall pay such
monies arising from the ownership or operation of the Business, including the
Purchased Assets, by Seller prior to the Closing required to prevent the seizure
of the property;
B. In the event of default by Seller as to the foregoing, Purchaser, shall
have the right to pay for the same and/or obtain the release of lien, if any,
and receive a credit toward the payment of any obligations owing by Purchaser to
Seller until the indebtedness is paid in full or satisfied; and
5.2 Disclosure. Before the Closing, Seller shall furnish to Purchaser a
true and complete list of all existing creditors. This list shall set forth the
names and addresses of all of Seller's creditors and shall contain information
regarding the nature and extent of the claim or claims of each creditor. Seller
shall afford to Purchaser or Purchaser's authorized representatives access to
Seller's books and records related to each claim and shall furnish Purchaser
with such financial and operating data and other information regarding each such
claim as Purchaser may from time to time reasonably request.
6. Representations, Covenants, and Warranties of Seller.
Seller and Shareholders (as evidenced by the signature of Shareholders)
represent, covenant, and warrant the following to be true, which
representations, covenants, and warranties shall survive the Closing:
6.1 Status of Seller. Seller is a Michigan corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan;
and, further, is properly authorized, according to its Articles of Incorporation
and Bylaws and duly adopted Resolutions, to enter into and carry out the
transactions contemplated by this Agreement. See Exhibit 7.
6.2 Authority. When executed, this Agreement and all instruments necessary
to carry out the transactions contemplated by this Agreement (the "Related
Documents") will be legal, valid, and binding obligations of each party signing
such instruments on behalf of Seller.
6.3 Absence of Undisclosed Liabilities. Notwithstanding anything contained
in this Agreement to the contrary, except to the extent stated in paragraph 5,
above, Seller has no undisclosed liabilities or obligations. Seller represents
that Seller does not know or have reasonable grounds to know of any basis for
the assertion against Seller, as of any liability of any nature or in any amount
not fully reflected in Exhibit 6.
6.4 Title to Properties. Seller has good and marketable title to all its
properties and assets, including those reflected in the Financial Statements
(except those since sold or otherwise disposed of in the ordinary course of
business), subject to no lien, encumbrance, security interest except as
disclosed in paragraph 5, above. Further, except as set forth in this Agreement,
there are no imperfections of title that would affect the marketability of title
of Seller's assets.
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6.5 Seller's Name. Seller agrees that from and after the Closing Date,
Purchaser shall have the right to use in or in connection with the conduct of
any business (whether carried on by Purchaser directly to through any affiliate)
(1) the Name; or (2) any part or portion of the Name, either alone or in
combination with one or more other words. Seller warrants to Purchaser that it
has taken all necessary action to protect the Name in the State of Michigan and
agrees to take or cause to be taken any and all steps or actions that shall be
or become permissible, proper, or convenient to enable or permit Purchaser to
use the Name, or any portion of the Name, either alone or in combination with
one or more other words, except as presently restricted. It is contemplated that
on or as soon as practicable after the Closing Date, Seller will terminate
Seller's interest in the Name. After the Closing Date, Seller agrees that it
will not use the Name directly or indirectly, either alone or in combination
with one or more other words, in or in connection with any business, activities,
or operations that Seller directly or indirectly may carry on or conduct.
6.6 Status of Contracts. Seller has, to the best of Seller's knowledge,
complied with all of the provisions of contracts described in this Agreement and
of all other contracts and commitments to which Seller is a party. Further,
other than those contracts or agreements specifically described in this
paragraph, Seller has no contract or commitment extending beyond the Closing
Date.
6.7 Insurance. All assets owned by Seller are and will be adequately
insured against fire and casualty to the Closing Date; and, in addition, the
leased premises occupied by Seller are and will be adequately insured for fire
and extended coverage, personal liability, and property damage (collectively,
the "Policies"). Further, the Policies are and will be outstanding and duly
enforced and the premiums to become due on the Policies to the Closing Date will
be paid when due. Seller has not received any notice of any cancellation of the
Policies.
6.8 Taxes; Unemployment Liabilities; Tax Returns and Audits.
A. Taxes. All personal property taxes and other taxes of any nature assessed
against Seller and/or the Purchased Assets are and will be fully paid by Seller
when they come due. Without limiting the generality of the foregoing, all
federal, state, county, and local taxes, including without limitation, income,
corporate franchise, single business, stamp, transfer, sales and use, employee
withholding, and ad valorem taxes due and payable by Seller on or before the
Closing Date have been or will have been paid or provided for by Seller.
B. No Dispute. Seller is not involved in any dispute with any tax authority
about the amount of taxes due, nor has it received any notice of any deficiency,
audit, or other indication of deficiency from any tax authority not disclosed to
the Parties to this Agreement.
6.9 Insolvency Proceedings. Seller is not involved in any proceeding by
or against it in any court under the Bankruptcy Code or any other insolvency or
debtor's relief act, whether state or federal, or for the appointment of a
trustee, receiver, liquidator, assignee, or other similar official of Seller or
Seller's property.
6.10 Condition of Purchased Assets. The following representations are made
with respect to the Purchased Assets:
A. The Purchased Assets are presently operating and have been regularly
maintained and will be in the same working condition as of the Closing Date.
B. There are no known defects that have not been disclosed to Purchaser.
C. There are no known outstanding citations issued by any health, building,
or other governmental agency, under the Occupational Safety and Health Act
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and/or under the Americans with Disabilities Act having jurisdiction over the
operation of the Purchased Assets and/or the Business, including any claims of
any violation of federal, state, or local environmental statues, regulations,
ordinances, or other environmental regulatory requirements.
6.11 No Violation or Breach. The performance of this Agreement will not be
in violation of any laws, statutes, local ordinances, state or federal
regulations, court or administrative order, or ruling, nor is the performance of
this Agreement in violation of the conditions or restrictions in effect for
financing pursuant to any loan documents, whether any such loan is secured or
unsecured.
6.12 ERISA Plans. Seller has no employee benefit plans now in effect which
are subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
6.13 Full Disclosure. This Agreement and any other information furnished
to the Purchaser in connection with the transactions contemplated by this
Agreement neither contain any untrue statement of material fact nor omit to
state any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
6.14 Officers and Shareholders. The names of officers, and the resident
agent of Seller, together with each individual Shareholder, are set forth on
attached Exhibit 7.
6.15 Patents, Trademarks, etc., of Seller. Seller will retain no patents,
patent applications, trademarks, trade names, copyrights, and/or licenses.
6.16 Customer List of Seller. Seller shall provide Purchaser with a
customer list and, to that end, Seller authorizes the release of pertinent
information pertaining to the customer list to Purchaser. Seller is in a
position to know and knows of no intention on the part of any customer of Seller
to terminate the existing contracts currently in effect with Seller.
6.17 No Violation or Breach. The performance of this Agreement will not be
in violation of any laws, statutes, local ordinances, state or federal
regulations, court or administrative order, or ruling, nor is the performance of
this Agreement in violation of any loan document's conditions or restrictions in
effect for financing, whether secured or unsecured.
6.18 Reliance. The foregoing representations and warranties are made by
the Seller with the knowledge and expectation that Purchaser is placing complete
reliance on them.
7. Representations, Covenants, and Warranties of Purchaser.
Purchaser represents, covenants, and warrants the following to be true,
which representations, covenants and warranties shall survive the Closing:
7.1 Status of Purchaser. Purchaser is a Michigan limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Michigan; and, further, is properly authorized, according to its
Articles of Organization, and duly adopted Resolution, to enter into and carry
out the transactions contemplated by this Agreement. A copy of Purchaser's
Articles of Organization and amendment to date, are attached as Exhibit 8. Upon
request of Seller, Purchaser shall provide certification of the foregoing.
7.2 Authority. This Agreement and all Related Documents when executed will
be legal, valid, and binding obligations of each party signing such instruments
on behalf of Purchaser.
7.3 Awareness of Purchaser. Purchaser acknowledges the following:
A. Purchaser has had an opportunity to examine the Purchased Assets and
agrees to accept the same "As Is," subject to the remaining conditions and other
provisions of this Agreement.
B. Purchaser is capable of evaluating the merits and risks of the purchase of
the Assets.
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7.4 Litigation. There are no actions, suits, or proceedings pending or, to
Purchaser's knowledge, threatened or likely to be asserted, against the
Purchaser, before any court, administrative agency, or other body; and no
judgment, order, writ, injunction, decree, or other similar command of any court
or governmental agency has been entered against or served upon Purchaser
relating to this Agreement and/or the transactions contemplated by this
Agreement.
7.5 Reliance. The foregoing representations and warranties are made by
Purchaser with the knowledge and expectation that Seller is placing complete
reliance on them.
8. Miscellaneous Covenants
8.1 Accuracy of Representations and Warranties; Satisfaction of
Conditions. Seller will immediately advise Purchaser in writing if (1) any of
Seller's representations or warranties are untrue or incorrect in any material
respect or (2) Seller becomes aware of the occurrence of any event or any state
of facts that results in any of the representations and warranties of Seller
being untrue or incorrect as if Seller were then making them. Seller will not
take any action, or omit to take any action, that would result in any of
Seller's representations and warranties set forth in this Agreement to be untrue
or incorrect as of the Closing Date. Seller will use its best efforts to cause
all conditions within Seller's control that are set forth in this Agreement to
be satisfied as promptly as practicable under the circumstances.
8.2 Conduct of Business. Seller will use all reasonable efforts to
preserve the relationships with Seller's customers, suppliers, and others having
business dealings with Seller; and to preserve the services of Seller's agents
and representatives, if any. Without limitation of the foregoing:
A. Seller shall not undertake any action without the prior written consent of
Purchaser that, if taken before the date of this Agreement, would have been
required to be disclosed on any Exhibit or required to be disclosed pursuant to
the provisions of this Agreement; and
B. Seller will not undertake any action which would result in any change in
the Purchased Assets, other than in the ordinary course of business consistent
with past practices.
9. Conditions Precedent to Obligations of Purchaser at Closing.
The obligations of Purchaser to perform this Agreement at the Closing are
subject to the satisfaction at or prior to the Closing of the following
conditions, unless waived in writing by Purchaser:
9.1 Accuracy of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement and all Related Documents shall
be true and correct at and as of the Closing Date as though such representations
and warranties were made on the Closing Date. Further, upon request of
Purchaser, Seller shall deliver to Purchaser a certificate certifying that as of
the Closing Date all of the representations and warranties of Seller contained
in this Agreement are true and correct.
9.2 Performance of Covenants. Unless otherwise agreed or waived, Seller
shall have in all respects performed and complied with all covenants,
agreements, and conditions that this Agreement and all Related Documents require
to be performed or complied with before or on the Closing Date. In addition,
Seller and Shareholders shall have properly executed and delivered the
Noncompetition Agreement.
9.3 Closing Documents; Instruments of Transfer, Etc. Purchaser shall have
received the following:
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A. All bills of sale, general instruments of transfer, conveyances,
assurances, transfers, assignments, approvals, consents by third parties, and
any other instruments and documents containing the usual and customary covenants
and warranties of title that are consistent with the requirements and the
warranties of Seller in this Agreement and that shall be convenient, necessary,
or reasonably required to effectively transfer the Purchased Assets to Purchaser
with good title, free and clear of all encumbrances.
B. Resolutions of the Seller's board of directors approving and authorizing
this Agreement and the transactions contemplated hereby, and identifying the
officer authorized to execute all documents.
9.4 No Litigation. No action, suit, or other proceeding shall be pending
or threatened before any court, governmental authority, or other lawful body
seeking or threatening to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain damages in
connection with this Agreement, or involving a claim that consummation of this
Agreement shall be in violation of any law, decree, or regulation. No other
material adverse actions or proceedings shall have been instituted or threatened
against Seller or the Business.
9.5 No Material Adverse Change. Except as described in this Agreement,
there shall have been no material adverse change or development in the Business,
its properties, results of operations, financial condition, assets, or volume of
sales or service orders; and no fact or condition shall exist or be contemplated
or threatened which will, or in Purchaser's reasonable judgment will be likely
to, cause such a change or development.
9.6 Fire or Other Casualty/Risk of Loss.
A. Assumption of Risk - Seller. Except as set forth in this Agreement, Seller
assumes all risks of destruction, loss, or damage due to any casualty, including
any liability arising out of ownership of the Purchased Assets, up to the time
of the Closing.
B. Assumption of Risk - Purchaser. Notwithstanding the foregoing, Purchaser
assumes all risks of destruction, loss, or damage due to any casualty caused by
Purchaser's negligence and in such event Purchaser assumes all risks of
destruction, loss, or damage pertaining to any of the Purchased Assets placed in
the possession of Purchaser prior to the Closing, except defects in the
Purchased Assets, ordinary wear and tear, and a malfunction which results from
Purchaser's ordinary use of the Purchased Assets to assist Seller in the
Business prior to Closing.
C. Insurance. In the event of casualty or malfunction of any of the Purchased
Assets prior to Closing, Seller's insurance shall be applied toward repair or
replacement of any such property. Any liability of Purchaser shall be limited to
damages in excess of any insurance proceeds received by Seller or Purchaser and
applied toward repair or replacement of the property. Seller shall expeditiously
file a claim with its insurance carrier upon notice of any such casualty or
malfunction covered by insurance.
D. Damage to Seller's Property. If any of the Purchased Assets is materially
damaged at any time before the Closing, and the damages cannot reasonably be
repaired on payment of the sums available by insurance settlement or from any
sums to be paid by Purchaser to Seller at the Closing, Purchaser, at Purchaser's
option, shall have the right to terminate this Agreement and, upon giving notice
of such election, Purchaser shall be relieved of any obligations under this
Agreement. This paragraph shall not apply if damages are caused by Purchaser's
negligence.
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9.7 Possession. Purchaser shall have received operating control and
possession of all of the Purchased Assets.
10. Conditions Precedent to Obligations of Seller at Closing.
The obligations of Seller to perform this Agreement at the Closing are
subject to satisfaction at or prior to the Closing of the following conditions,
unless waived in writing by Seller:
10.1 Representations and Warranties. The representations and warranties of
Purchaser set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date.
10.2 Performance of Obligations of Purchaser. Purchaser shall have
performed all obligations required to be performed by it under this Agreement
prior to the Closing.
10.3 Closing Documentation. Seller shall have received the following
documents:
A. The Note, Security Agreement, and Financing Statement.
B. All other instruments and documents reasonably required by this Agreement
to be delivered by Purchaser to Seller, and such other instruments and documents
as Seller shall reasonably request which are consistent with the provisions of
this Agreement.
11. Notices
All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered or mailed, first-class postage prepaid, to Seller, at Seller's address
given in this Agreement, or to Purchaser, at Purchaser's address given in this
Agreement, or to any other address that Purchaser or Seller shall designate in
writing.
12. Indemnifications.
12.1 Indemnification by Seller. Seller shall defend, indemnify, and hold
harmless Purchaser and Purchaser's agents and employees, heirs, representatives,
successors, and assigns from and against any and all costs, losses, claims,
liabilities, fines, expenses, penalties, and damages (including reasonable legal
fees) in connection with or resulting from:
A. All debts, liabilities, and obligations of Seller, whether accrued,
absolute, contingent, known, unknown, or otherwise;
B. Any inaccuracy in any representation or breach of any warranty of Seller
contained in this Agreement or the Noncompetition Agreement; and
C. Any failure by Seller to perform or observe in full, or to have performed
or observed in full, any covenant, agreement, or condition to be performed or
observed by the Seller under this Agreement or the Noncompetition Agreement.
12.2 Indemnification by Purchaser. Purchaser shall defend, indemnify, and
hold harmless Seller and Seller's agents and employees, representatives,
successors and assigns from and against any and all costs, losses, claims,
liabilities, fines, expenses, penalties, and damages (including reasonable legal
fees) in connection with or resulting from:
A. All debts, liabilities, and obligations of Purchaser, whether accrued,
absolute, contingent, known, unknown, or otherwise;
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B. Any inaccuracy in any representation or breach of any warranty of
Purchaser contained in this Agreement; and
C. Any failure by Purchaser to perform or observe in full, or to have
performed or observed in full, any covenant, agreement, or condition to be
performed or observed by the Purchaser under this Agreement.
13. Termination of Agreement. Except as otherwise specifically set forth
in this Agreement:
13.1 Right of Termination. This Agreement may be terminated at any time
before the Closing Date as follows:
A. By Purchaser and Seller in a written instrument;
B. By Purchaser or Seller if the Closing does not occur on the Closing Date;
C. By Purchaser or Seller if there has been a material breach of any of the
representations or warranties set forth in this Agreement on the part of the
other Party, and such breach by its nature cannot be cured before the Closing;
or
D. By Purchaser or Seller if there has been a breach of any of the covenants
or agreements set forth in this Agreement on the part of the other Party, and
this breach is not cured within ten (10) business days after the breaching Party
or Parties receive written notice of the breach from the non-breaching Party.
13.2 Effect of Termination; Election of Remedies. If this Agreement is
terminated:
A. As provided in subparagraph 13.1 A., this Agreement shall forthwith become
void and have no effect, except for provisions of next succeeding sub-paragraph.
B. As provided in subparagraphs 13.1 B.-D., no Party shall be relieved or
released from any liabilities or damages arising out of such Party's breach of
any provision of this Agreement; however, in the event of Purchaser's breach,
Seller, at Seller's option, may by written notice declare a forfeiture and elect
any such remedies as allowed by law.
14. Closing.
14.1 Closing Date. The Closing shall be held on or before August 1, 2004,
or such later date as may be agreed upon by the Parties (the "Closing Date").
14.2 Closing Location. The Closing shall be held on the Closing Date at
such location as may be agreed upon by the Parties.
14.3 Documents. At the Closing and at any time after it, the Parties shall
execute all documents necessary to put into effect the terms of this Agreement.
15. Miscellaneoous
5.1 Amendment. This Agreement shall not be amended, altered, or terminated
except by a writing executed by each Party.
15.2 Choice of Law. This Agreement shall be governed in all respects by
the laws of the State of Michigan.
15.3 Headings. The paragraph headings used in this Agreement are included
solely for convenience.
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15.4 Entire Agreement. This Agreement sets forth the entire understanding
of the Parties; further, this Agreement shall supersede and/or replace any oral
or written agreement(s) relating to this subject matter entered into by the
Parties before the date of this Agreement.
15.5 Waiver. The waiver by any party of any breach or breaches of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any subsequent breach of any provision of this Agreement.
15,6 Binding Effect. This Agreement, inclusive of its terms and
provisions, shall survive the Closing and shall be binding on and inure to the
benefit of, and be enforceable by, the respective heirs, legal representatives,
successors, and assigns of the Parties.
15.7 Construction of Agreement. Each Party has reviewed and revised this
Agreement and has had equal opportunity for input into this Agreement. Neither
Party shall be construed to be the drafter or primary drafter of this Agreement.
In the event of any dispute regarding the construction of this Agreement or any
of its provisions, ambiguities or questions of interpretation shall not be
construed more in favor of one Party than the other; rather, questions of
interpretation shall be construed equally as to each Party.
15.8 Consent. Unless otherwise provided, any required consent of a Party
shall not be unreasonably withheld or delayed by such Party.
Purchaser and Seller have executed this Agreement on the following dates
to be effective as of the "Effective Date":
SELLER
National Abrasive Systems, Co.,
a Michigan Corporation
Dated: 08/01/2004 By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
PURCHASER
Americhip Tool and Abrasives, LLC, a wholly
owned subsidiary of Americhip International, Inc.
Dated: 08/03/2004 /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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by: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
AmeriChip International, Inc.
CONSENT OF SELLER'S SHAREHOLDERS
The undersigned shareholders of Seller, for good and valuable
consideration, the receipt of which is acknowledged, joins in the above
Agreement for the purpose of binding the undersigned to deliver the required
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Noncompetition Agreement as set forth in this Agreement, for binding the
undersigned to exchange their ownership in the Seller for common stock in the
Purchaser as set forth in paragraph and for the purpose of committing the
undersigned to the indemnification provisions of this Agreement, but only to the
extent of the Purchase Price.
Dated: 08/01/2004 /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇
Dated: 08/02/2004 /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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LIST OF EXHIBITS
1. NonCompetition Agreement
2. List of Assets
3. Promissory Note
..4. Security Agreement
5. Financing Statement
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