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Exhibit 10.42
ASSET PURCHASE AGREEMENT
Among
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
and
Rockford Corporation
Dated: September 21, 2000
Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is among ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
("Fosgate") and Rockford Corporation ("Rockford"). In consideration of the
mutual covenants and agreements in this Agreement, Fosgate and Rockford agree as
follows:
1. BACKGROUND AND DEFINITIONS.
1.1 Rockford Business. Rockford manufactures and sells car, home,
and professional audio products.
1.2 Asset Sale. Fosgate desires to sell, and Rockford desires to
purchase (a) the names "Fosgate-Audionics" and "Audionics" and
any federal or state registrations relating to these names
(the "Names") and (b) all of the goodwill associated in any
way with the Names (the "Goodwill"and, together with the Names
the "Assets").
1.3 Purpose. The purpose of this Agreement is to state the terms
of Fosgate's agreement to sell, and Rockford's agreement to
purchase, the Assets.
1.4 Definitions. In this Agreement:
Agreement means this Asset Purchase Agreement and each of the
Schedules and certificates delivered with this Agreement. The
Schedules and certificates are a part of this Agreement;
Assets means the Assets described in Section 1.2;
Business means the manufacture and sale of car, professional,
and home audio equipment, products, and accessories;
Closing means the consummation of the transactions
contemplated by this Agreement.
Closing Date means the day on which the Closing actually takes
place;
Contract means any contract, indenture, mortgage or deed of
trust, lease, guaranty, insurance policy, bond, license,
instrument, understanding, obligation, or other agreement;
Encumbrance means any mortgage, pledge, lien, claim, charge,
security interest, restriction, or other encumbrance;
Government means any legislature, executive, department,
administrative agency, municipality, subdivision,
instrumentality, or other authority of the United States, any
state, or any foreign country;
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Information means information supplied to Rockford by Fosgate
under this Agreement;
Law means any law, statute, ordinance, rule, regulation,
order, judgment, injunction, or decree;
Fosgate means ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇;
Order means any order, decree, decision, injunction, finding,
or judgment;
Permits means all approvals, permits, licenses, filings,
registrations, certificates, orders, authorizations,
qualifications, or other consents from any Government,
self-regulatory authority, or any other third party;
Proceeding means any claim, action, suit, mediation,
arbitration, labor grievance, Government investigation, or
other legal or administrative proceeding;
Purchase Price means the purchase price of the Assets
established in Section 4; and
Rockford means Rockford Corporation, an Arizona corporation;
2. PURCHASE AND SALE OF ASSETS; NO ASSUMPTION OF LIABILITIES.
2.1 Purchase of Assets. At the Closing, Fosgate will convey to
Rockford, and Rockford will purchase, all of Fosgate's right
and interest in the Names and Goodwill free and clear of any
Encumbrance through Fosgate. Rockford acknowledges that
Fosgate makes no representation or warranty with respect to
Fosgate's ownership of the Names and Goodwill.
2.2 No Purchase of Other Assets. Other than the Assets, Rockford
will not acquire any other asset of Fosgate. Rockford
specifically acknowledges that it will not acquire any of
Fosgate's cash, accounts receivable, or other assets other
than the Names and Goodwill.
2.3 No Assumption of Liabilities. Rockford will not assume any
liability in connection with this Agreement.
2.4 Right of Repurchase. If Rockford ceases using the Names and
Goodwill for more than 2 years, and determines that it does
not intend to use the Names and Goodwill thereafter, then
Rockford shall offer to return the Names and Goodwill to
Fosgate without charge to Fosgate. Any return of the Names and
Goodwill to Fosgate will be made "as is" without any warranty.
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3. CLOSING. The Closing will take place at 10:00 A.M., local time, on or
before September 30, 2000, at the offices of Steptoe & ▇▇▇▇▇▇▇ LLP,
Counsel for the Rockford, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, or at another agreed upon time and place.
4. PURCHASE PRICE. Rockford will, in full payment for the Assets, pay to
Fosgate:
4.1 Initial Price. $(Confidential Information redacted and filed
separately with the Commission.) payable by check at the
Closing, with one-half payable to ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
one-half payable to ▇▇▇▇▇▇▇ ▇▇▇▇.
4.2 Royalty. A royalty for any product that Rockford sells after
the Closing Date and within (Confidential Information redacted
and filed separately with the Commission.) years after the
Closing Date using the name "Fosgate-Audionics," "Audionics"
or any other combination using a form of the name "Audionics"
(for example, "Rockford-Fosgate-Audionics" or "Hafler
Audionics").
(a) Payments. The royalty will be paid in the amount of
(Confidential Information redacted and filed
separately with the Commission.) % of Rockford's net
sales of such products, with payments made quarterly
within 30 days after the end of each quarter. One-half
of the royalty is payable to Fosgate and one-half to
▇▇▇▇▇▇▇ ▇▇▇▇. Net sales equals the net invoice price
of products actually shipped to dealers, excluding
freight and duties but including allowances for
discounts, marketing and coop expenses, and returns.
(b) Exclusion. Fosgate acknowledges that Rockford is
already the owner of the name "Rockford-Fosgate" and
that no royalty is due on any product using the name
"Rockford-Fosgate" or any variant or combination of
names so long as the variant or combination does not
include a form of the name "Audionics."
(c) Right to Audit and Procedure.
(1) Once per year, Fosgate may arrange to have
an independent accountant audit Rockford's
records relating to the sale of
Fosgate-Audionics and Audionics branded
products to confirm that the required
royalty has been paid. Rockford will provide
reasonable access to these records.
(2) The auditor will report the results of its
investigation to both Fosgate and Rockford.
Rockford will have the right to dispute the
auditor's findings by giving Fosgate notice
within 60 days after Rockford receives them.
If Rockford disputes the findings, Fosgate
and Rockford will meet and attempt to
resolve the dispute. If they are unable to
do so, they will submit the matter to
another independent auditor who is mutually
acceptable to Fosgate and Rockford and the
findings of this new auditor will be final.
(3) If the auditor finds a shortfall in royalty
payments of more than 5%, then Rockford will
reimburse the costs of the audit(s). If the
shortfall is less than 5% or if there is an
excess payment, then Fosgate will bear the
costs of the audit(s).
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(4) If the audit finds a shortfall in royalty
payments, Rockford will pay the shortfall
within 30 days after the final
determination. If the audit finds excess
royalties were paid, Rockford is entitled to
offset the excess against future royalties
until the excess is fully offset.
5. REPRESENTATIONS AND WARRANTIES BY FOSGATE. Fosgate represents and
warrants to Rockford as follows:
5.1 Ownership of Assets. Fosgate is conveying the Assets "as is"
and makes no warranty as to Fosgate's title to or the
condition of the Assets.
5.2 No Knowledge of Encumbrances. Fosgate does not know of any
assertion of an interest in or Encumbrance against the Assets
through or authorized by Fosgate.
5.3 Harman Agreements. The copies of the Agreement between Fosgate
and ▇▇▇▇▇▇ International, and of the letter signed by ▇▇▇▇▇▇
International, (each relating to ▇▇▇▇▇▇'▇ transfer of the
Names and Goodwill to Fosgate) are true and correct copies of
documents Fosgate received from Harman and Fosgate believes
that they were signed by an authorized representative of
Harman.
5.4 Binding Effect. This Agreement, and each other document
executed by Fosgate in connection with this Agreement,
constitutes Fosgate's valid, binding, and enforceable
obligation.
5.5 Litigation.
(a) There is no Proceeding pending or, to Fosgate's
knowledge, threatened; and
(b) There is no Order in effect or, to Fosgate's
knowledge, threatened
against, relating to or adversely affecting Fosgate, the
Assets, or the transactions contemplated by this Agreement.
Fosgate does not know any basis for such a Proceeding or
Order.
5.6 Bankruptcy Proceedings. Fosgate is not involved in any
Proceeding by or against it (a) under the Bankruptcy Code, (b)
under any other insolvency or debtors' relief Law, or (c) for
the appointment of a trustee, receiver, liquidator, assignee,
sequestrator or other similar official.
5.7 No Employees. Fosgate does not have any employees whose
activities are related to the Assets.
6. REPRESENTATIONS AND WARRANTIES BY ROCKFORD. Rockford represents and
warrants to Fosgate as follows:
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6.1 Organization and Authority. Rockford is a corporation duly
organized, validly existing and in good standing under the
laws of Arizona and has all requisite power and authority to
enter into this Agreement and to carry out the transactions
contemplated by this Agreement.
6.2 Binding Effect. This Agreement, and each document executed by
Rockford in connection with this Agreement, constitutes the
valid, binding, and enforceable obligation of Rockford.
6.3 Execution, Delivery and Performance of Agreement. The
execution, delivery, and performance of this Agreement by
Rockford will not (with or without the giving of notice or the
passage of time) conflict with, result in a default under, or
result in the creation of any Encumbrance pursuant to, (a)
Rockford's articles of incorporation or bylaws; or (b) any
material Contract or Law to which Rockford is a party or by
which it may be bound.
7. PRE-CLOSING COVENANTS. After the execution of this Agreement and before
the Closing or termination of this Agreement:
7.1 Consents and Approvals. Rockford and Fosgate will cooperate
(a) to obtain as expeditiously as possible all material
Permits necessary to carry out the transactions
contemplated by this Agreement; and
(b) to comply with all material Laws regulating or
restricting the transactions contemplated by this
Agreement.
7.2 Approval of Certain Transactions. Fosgate will not, without
Rockford's prior written approval, take or agree to take any
of the following actions:
(a) sell or otherwise dispose of any of the Assets;
(b) incur any debt that encumbers the Assets; or
(c) enter into or terminate any material Contract related
to the Assets.
7.3 Asset Restrictions. Fosgate will take no action that would
encumber or restrict the Assets or their sale or transfer.
7.4 Confidentiality. A party may make a public announcement of the
transactions contemplated in this Agreement only with the
prior written consent of all other parties. A party will not
unreasonably withhold consent if an announcement is required
by applicable securities laws.
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8. CONDITIONS TO ROCKFORD'S OBLIGATIONS. Rockford is not obligated to
close the transactions contemplated by this Agreement unless the
following conditions are satisfied on or before the Closing Date:
8.1 Accuracy of Representations and Warranties. The
representations and warranties of Fosgate in Section 5 of this
Agreement must be true and correct, in all material respects,
both when made and on the Closing Date.
8.2 Performance of Obligations and Delivery of Documents. Fosgate
must have performed all covenants, agreements, and obligations
required of them by this Agreement and must have delivered to
Rockford all documents required to be delivered at or prior to
the Closing.
9. CONDITIONS TO FOSGATE'S OBLIGATIONS. Fosgate is not obligated to close
the transactions contemplated by this Agreement unless the following
conditions are satisfied on or before the Closing Date:
9.1 Accuracy of Representations and Warranties. The
representations and warranties of Rockford in Section 6 of
this Agreement must be true and correct, in all material
respects, both when made and on the Closing Date.
9.2 Performance of Obligations and Delivery of Documents. Rockford
must have performed all covenants, agreements, and obligations
required of it by this Agreement and must have delivered to
Fosgate all documents required to be delivered at or prior to
the Closing.
10. OBLIGATIONS AT AND AFTER CLOSING.
10.1 Fosgate Deliveries. At the Closing, Fosgate will deliver to
Rockford:
(a) a ▇▇▇▇ of sale duly executed by Fosgate for transfer
of the Assets to Rockford or its nominees; and
(b) all documents required to be delivered to Rockford
under this Agreement.
10.2 Rockford Deliveries. At the Closing, Rockford will deliver to
Fosgate:
(a) the Initial Price of $(Confidential Information
redacted and filed separately with the Commission.);
and
(b) all documents required to be delivered to Fosgate
under this Agreement.
10.3 Additional Documents. At and after the Closing, each party
will execute and deliver other documents and take further
action, as any other party reasonably deems necessary, to
carry out the transactions contemplated by this Agreement, to
effectively and irrevocably transfer the Assets to Rockford,
to confirm Rockford's title to the Assets, or to put Rockford
in possession and operating control of the Assets.
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11. TERMINATION.
11.1 Rights to Terminate. A party may terminate this Agreement at
any time before the Closing:
(a) by mutual written consent of Fosgate and Rockford;
(b) by written notice to the other parties if the Closing
has not occurred on or before June 30, 2000; or
(c) by written notice to the other parties if (1) a
material representation or warranty of the other
party was or has become inaccurate or untrue or (2)
the other party has failed to comply with or perform
under this Agreement (except that, if the
misrepresentation or breach is curable then this
Agreement will not terminate until the responsible
party has failed for 10 days after notice to cure the
misrepresentation or breach).
11.2 Effect of Termination. If this Agreement is terminated, no
party will have any liability or further obligation unless the
termination was a result of such party's (a) breach, (b)
violation of its duties, obligations, representations, or
warranties, or (c) fraud, bad faith, or willful misconduct.
The Confidentiality Agreement will survive any termination and
govern the parties' obligations with respect to Information
and confidentiality.
12. POST-CLOSING COVENANTS.
12.1 Consulting Services. In connection with the development of its
business relating to the Assets after the Closing, Rockford
will have the right to call upon ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇
to provide limited public relations services (as mutually
agreed) relating to development of new products, and of a
distribution network for new products, to be sold under the
Names.
(a) For up to five years after the Closing, ▇▇▇ ▇▇▇▇▇▇▇
will make appearances at two mutually agreed trade
shows, press conferences, and other events, without
additional charge to Rockford other than the
royalties due under this Agreement and expenses paid
under (b) below.
(b) To the extent such services require travel or other
expenses, Rockford will reimburse ▇▇▇ ▇▇▇▇▇▇▇ for
reasonable expenses so long as Rockford approves the
expenses in advance and is provided receipts.
12.2 Limited Non-Compete. After the closing, Fosgate will not use
the Names, or any confusingly similar name (including the name
"Fosgate") in connection with any business or on any product
that is related in any way to the Business. This restriction
does not limit Fosgate's ability (a) to engage in the Business
using names that are
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wholly distinct from the Names and from the name "Fosgate" or
(b) to use the name "Fosgate" in connection with the surround
sound processes Fosgate has licensed to Dolby Laboratories.
12.3 Endorsement. For five years after the Closing, ▇▇▇ ▇▇▇▇▇▇▇
will permit Rockford to use his name and likeness in
advertising and promotion of products that use the Names,
without compensation other than the Royalties payable under
this Agreement.
13. NOTICES. Notices under this Agreement must be in writing. Notices are
deemed given (a) when personally delivered, (b) when received by
facsimile, electronic mail transmission or by overnight courier
service, (c) on the fifth business day after mailing by first class
registered mail, return receipt requested. Notices must be sent to the
parties at the addresses stated on the signature page of this Agreement
(or at any other address designated in a notice given by a party to
change its address).
14. CERTAIN COSTS.
14.1 Costs of Proceedings. In any Proceeding arising under or
related to this Agreement the prevailing party is entitled, in
addition to other amounts it recovers, to have the other party
pay all costs and expenses (including reasonable attorneys'
fees) incurred in connection with the Proceeding.
14.2 Expenses. Each party is solely responsible for its own
expenses relating to the preparation, execution, and
consummation of this Agreement and the transactions
contemplated by this Agreement.
14.3 Broker's Fees. Each party is solely responsible for, and
indemnifies the other against, obligations to any broker,
finder or intermediary retained by it.
15. MISCELLANEOUS.
15.1 Integration and Amendment. This Agreement constitutes the
entire agreement of the parties, and supersedes all prior
agreements or understandings among the parties, with respect
to its subject matter. This Agreement may be amended only in a
written agreement signed by all of the parties.
15.2 Waivers. No waiver under this Agreement is valid unless it is
in writing and signed by the party giving the waiver. A waiver
of a particular matter does not waive a subsequent or similar
matter.
15.3 Binding Effect. This Agreement is binding upon, and inures to
the benefit of, each party and its successors and assigns.
15.4 No Benefit to Others. This Agreement is solely for the benefit
of the parties (and their successors and assigns) and does not
confer any rights on any other persons except for ▇▇▇▇▇▇▇
▇▇▇▇.
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15.5 Severability. The invalidity or unenforceability of any
provision of this Agreement does not affect the other
provisions. This Agreement is to be construed in all respects
as if it excluded any invalid or unenforceable provision.
15.6 Construction and Headings. Whenever a singular word is used in
this Agreement it also includes the plural if required by the
context, and vice versa. Paragraph headings are for
convenience only and do not define or limit the contents of a
paragraph.
15.7 Cooperation. In order to carry out this Agreement, each party
will cooperate, will take further action, and will execute and
deliver further documents as reasonably requested by any other
party.
15.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together are one original.
15.9 Governing Law. This Agreement is governed by the internal Laws
of Arizona. Exclusive jurisdiction and venue for any
litigation arising under this Agreement is in the federal and
state courts of Maricopa County, Arizona.
16. EFFECTIVE DATE. This Agreement is executed and effective as of
9-21, 2000.
ROCKFORD CORPORATION, an Arizona corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Secretary
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:W. ▇▇▇▇ ▇▇▇▇▇▇, President
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
FOSGATE
/s ▇▇▇▇▇ ▇. Fosgate
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Address:
POB 564
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone (▇▇▇)▇▇▇-▇▇▇▇
Facsimile (▇▇▇)▇▇▇-▇▇▇▇
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▇▇▇▇ of Sale
and
Conveyance of Names
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Fosgate") grant, sell, and convey to
Rockford Corporation ("Rockford") all of their interest in the Names and
Goodwill as defined in the Asset Purchase Agreement ("Agreement") between
Fosgate and Rockford.
The Names and Goodwill are transferred to Rockford "as is" and
Fosgate makes no warranty as to Fosgate's title to or the condition of the Names
and Goodwill, except for those warranties expressly set forth in the Agreement.
Dated and Effective as of 9-20, 2000.
FOSGATE
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.