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Exhibit 10.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made as of November 17, 2000, by and
among Masterset Fastening Systems, Inc., an Indiana corporation ("Seller"), and
▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ Associates Inc., a
New Jersey corporation ("▇▇▇▇▇"), and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇" and, together
with ▇▇▇▇▇, Swiggard and ▇▇▇▇▇, the "Shareholders"), on the one hand, and
▇▇▇▇▇▇▇ Strong-Tie Company Inc., a California corporation ("Buyer"), on the
other hand, with reference to the following facts:
Seller is engaged in the business principally of developing, designing,
manufacturing, marketing, distributing and selling powder actuated tooling
products used in building construction. Buyer is engaged in the business
principally of developing, designing, manufacturing, marketing, distributing and
selling connectors, fasteners and other products used in the construction
industry. Seller and the Shareholders desire to sell to Buyer and Buyer desires
to purchase from Seller and the Shareholders substantially all of the assets of
Seller and all Shareholder Patent Rights, as that term is defined in section 1.2
(such assets and the Shareholder Patent Rights being called, collectively, the
"Assets"), as a going concern, although Seller will continue to be liable, and
Buyer will not assume or otherwise have any liability, for any of the debts or
obligations of Seller (except for obligations accruing under certain contracts
after their assignment to Buyer hereunder). For purposes of this Agreement, the
term "affiliate" shall mean, with respect to a specified person, a person
controlling, controlled by or under common control with the specified person.
Swiggard is part owner and intimately involved in ▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ is
a part owner and intimately involved in a separate corporation known as ▇▇▇▇▇▇▇▇
& Company, a Michigan corporation ("▇▇▇▇▇▇▇▇ & Company"). Other than the
Shareholder Patent Rights (as that term is defined in section 1.2), this Asset
Purchase Agreement is not intended to encompass, and the Assets do not include,
the Excluded Assets (as that term is defined in section 1.1.5) or any assets
owned by either ▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ & Company. The Shareholders are parties to
this Agreement as shareholders and corporate representatives of Seller.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein, Buyer, Seller and the Shareholders agree as
follows:
1. Purchase and Sale. Subject to and in reliance on the respective
representations, warranties and agreements of Seller, the Shareholders and Buyer
and subject to the terms and conditions provided in this Agreement:
1.1 Assets. At the closing on the Closing Date (as that term is
defined in section 2.5), except only as is provided in section 1.2, Buyer shall
purchase from Seller and Seller shall sell to Buyer all of the Assets, as
follows:
1.1.1 Equipment and Furnishings. All apparatus, equipment,
appliances, machines and machinery, devices, furniture, furnishings, tools,
cloth and synthetic material goods, fuel, spare parts and supplies
(collectively, the "Equipment");
1.1.2 Inventory. All inventory, whether held for sale or held
for demonstration or as samples ("Inventory");
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1.1.3 Intangible Property. All intangible property ("Intangible
Property"), including, without limitation,
(a) all right, title and interest of Seller in, to and under
all leases, contracts and contract rights (including, without limitation, all
licenses and license agreements) to which Seller is a party or which are for the
benefit of Seller, and which are listed in Schedule 1.1.3(a) attached hereto
(the "Assigned Contracts"); provided that Buyer shall not purchase or acquire
any interest in, and the Assigned Contracts do not include, any automobile
leases, or any other contract or agreement that is not listed on Schedule
1.1.3(a);
(b) all permits, authorizations and licenses, if any,
applicable to Seller or its business and assignable by Seller (whether or not
subject to the consent or approval of any third party), including, without
limitation, all findings, reports and approvals of the International Conference
of Building Officials ("ICBO"), the ICBO Evaluation Service, Inc. or any other
code approval agency (collectively, the "Code Approvals"), all of such Code
Approvals being listed and described in Schedule 1.1.3(b) attached hereto;
(c) all secret inventions, patents, letters patent, patent
applications, trade secrets, know-how and other intellectual property,
including, without limitation, the patents and patent applications listed and
described as being owned by Seller on Schedule 5.1.13 attached hereto (the
"Seller Patent Rights");
(d) all confidential or proprietary information, documents,
matter or materials, trade secrets, customer lists and information, know-how,
technologies, algorithms and other intellectual property related to or useful in
connection with any or all of the Assigned Contracts, the Code Approvals and the
Seller Patent Rights or any development, design, making, use, marketing,
distribution or sales of products or other commercialization thereof
(collectively, the "Trade Secrets"), which may consist of, among other things,
ideas; designs; equipment; devices; patterns; electronically recordable data or
concepts; computer programs, software and hardware; software and hardware
enhancements, modifications and improvements; secret inventions; processes;
compilations of information; books; papers; records and specifications;
operating practices and related data;
(e) all copyrights, trademarks, service marks, trade names
(including, without limitation, all right, title and interest in and to the
trademark and trade name "Masterset", the trademark "Tru-Set", applications for
the registration thereof, registrations thereof, and the goodwill associated
therewith;
(f) all judgments, orders, decrees, files, books, records,
financial statements, tax returns, correspondence, instruments, plans,
projections, data, information and documents of or relating to the Assets or
Seller's business;
(g) all prepaid deposits and expenses;
(h) all other accounts (including, without limitation,
accounts and notes receivable, other than accounts receivable that are Excluded
Assets), chattel paper, contract rights and general intangibles;
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(i) all cash, certificates of deposit, bank accounts,
brokerage accounts, money market accounts or similar accounts; and
(j) all goodwill; and
1.1.4 After-Acquired Assets. All property used or useful in
Seller's business and acquired by Seller after the date hereof.
1.1.5 Excluded Assets. Accounts receivable of Seller that shall,
on and as of the Closing Date, have been outstanding and unpaid for more than
ninety days (the "Excluded Assets") are not and shall not be included in the
Assets.
1.2 Shareholder Patent Rights. At the closing on the Closing Date
(as that term is defined in section 2.5), Buyer shall purchase from the
Shareholders and their respective affiliates the patents and patent applications
listed and described as being owned by the Shareholders or their affiliates on
Schedule 5.1.13 attached hereto (the "Shareholder Patent Rights" and together
with the Seller Patent Rights, the "Patent Rights"), and the Shareholders shall
sell and cause their affiliates to sell to Buyer the Shareholder Patent Rights;
provided that none of the Shareholders and their respective affiliates shall be
entitled to any payment or other consideration for the Shareholder Patent
Rights, it being understood that the consideration therefor is included as part
of the Purchase Price (as that term is defined in section 2.1.2).
1.3 No Assumption of Liabilities. Anything herein to the contrary
notwithstanding, the parties intend and agree that Buyer shall not under any
circumstances assume or become liable for or obligated to pay or discharge any
debt, duty, obligation or liability of Seller, and Seller shall pay and
discharge all of the same as they become due; provided that Buyer shall assume
and pay or discharge when due all debts, duties, obligations and liabilities of
Seller accruing after the closing hereunder under all Assigned Contracts that
are duly and validly assigned to Buyer on the Closing Date.
2. Payment and Delivery. Subject to and in reliance on the respective
representations, warranties and agreements of Buyer, Seller and the Shareholders
and subject to the terms and conditions provided in this Agreement:
2.1 Purchase Price.
2.1.1 Initial Calculation. Subject to the post-closing
adjustment pursuant to section 2.1.2, the initial purchase price of the Assets
(the "Initial Purchase Price") shall be $2,500,000.00, reduced by:
(a) $465,856.40, being the principal amount advanced by
Buyer to Seller pursuant to that certain Loan and Security Agreement dated as of
September 25, 2000, between Buyer and Seller;
(b) an amount equal to all interest on such principal amount
accrued as of the Closing Date; and
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(c) the aggregate amount of the Excluded Assets as of the
Closing Date.
2.1.2 Post-Closing Adjustment. The Initial Purchase Price shall
be adjusted as provided in this section 2.1.2 (as so adjusted, the "Purchase
Price"). Within ninety days from the Closing Date, Buyer shall prepare a balance
sheet of Seller as of the Closing Date (the "Closing Date Balance Sheet") in
accordance with Generally Accepted Accounting Principals ("GAAP"), and shall
calculate the total assets of Seller shown on the Closing Date Balance Sheet and
the total assets of Seller shown on Seller's balance sheet as of June 30, 2000,
which Seller furnished to Buyer and which is attached hereto as Schedule 2.1.2
(the "June 30 Balance Sheet"), and by adding back to the Closing Date Balance
Sheet any amount of depreciation shown on the Closing Date Balance Sheet in
excess of the amount of depreciation shown on the June 30 Balance Sheet. Buyer
shall promptly notify Seller of the amount by which such total assets as so
calculated shown on the Closing Date Balance Sheet are more or less than such
total assets as so calculated shown on the June 30 Balance Sheet (hereinafter
called the "Asset Surplus" or the "Asset Shortfall," respectively) and shall
include in such notice the manner and basis for such calculation. Buyer's
determination of the Asset Surplus or the Asset Shortfall shall be final,
binding and conclusive in the absence of fraud, bad faith and manifest error;
provided that accounts receivable over ninety days will not be considered assets
for purposes of this section 2.1.2.
2.2 Payments.
2.2.1 At Closing. On the Closing Date, Buyer shall pay the
Initial Purchase Price to Seller by check or wire transfer in accordance with
such written instructions as Seller may furnish to Buyer at least three business
days prior to the Closing Date, minus $200,000 (the "Payables Holdback"), which
will be held back from Purchase Price to pay trade accounts payable or debts
that (a) are set forth in Schedule 5.1.31 and are not paid by Seller within
thirty days from the Closing Date or (b) are not specifically or accurately set
forth in Schedule 5.1.31 on the Closing Date. Seller shall pay in full, on the
Closing Date, all of the Trade Payables and deliver to Buyer evidence thereof
satisfactory to Buyer.
2.2.2 Asset Value Adjustment. Within ten days after Buyer
notifies Seller of the Asset Surplus or the Asset Shortfall, Seller shall pay in
cash to Buyer the amount of the Asset Shortfall, if any, or Buyer shall pay in
cash to Seller the amount of the Asset Surplus, if any.
2.2.3 Payables Holdback. If, within ninety days after the
Closing Date (the "Holdback Period"), Buyer shall determine that Seller owes any
amount as a trade account payable or debt accrued prior to the Closing Date and
not shown on Schedule 5.1.31, or shown on Schedule 5.1.31 but not paid in full
pursuant to section 2.2.1, Buyer shall pay such amount out of the Payables
Holdback, to the extent thereof. If any portion of the Payables Holdback shall
not have been so paid on or before the expiration of the Holdback Period, Seller
shall promptly pay such portion to Buyer, without interest; provided that Buyer
shall have the right to offset against such portion any other amount owing by
Seller to Buyer hereunder or otherwise.
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2.3 Delivery of Certain Assets. At the closing on the Closing Date,
Seller shall deliver to Buyer (a) originals or true and complete copies of all
Assigned Contracts, all Code Approvals and all Patent Rights, (b) all warranties
or guaranties received by Seller from any contractors, subcontractors, suppliers
or materialmen in connection with Seller's business, (c) originals or true and
complete copies of all building permits and certificates of occupancy in the
possession of Seller that have been issued for the buildings occupied by Seller,
(d) such written notices as Buyer may request, executed by Seller and addressed
to all parties to Assigned Contracts (other than Seller) and to taxing
authorities having jurisdiction over any or all of the Assets, notifying such
parties and authorities of the sale of the Assets and changing the address for
service of notice and delivery of statements and bills, (e) keys and
combinations to all doors and gates in all premises occupied by Seller and all
tangible personal property included among the Assets, which keys and
combinations shall be properly and clearly tagged for identification, and (f)
any other documents, instruments or agreements required hereunder which are not
otherwise delivered.
2.4 ▇▇▇▇ of Sale and Assignment. At the closing on the Closing Date,
Seller shall deliver to Buyer a ▇▇▇▇ of Sale and Assignment, in substantially
the form of Exhibit A attached hereto (the "▇▇▇▇ of Sale"), listing or
describing all of the Assets. Seller shall also deliver to Buyer at or prior to
the closing, a certificate from each of the Indiana Secretary of State and the
California Secretary of State and other appropriate governmental officials
confirming that as of the Closing Date there are no filings against Seller or
any of the Assets in the office of either such Secretary of State or such other
governmental officials under any applicable Uniform Commercial Code that would
be a lien on any of the Assets specified (other than such filings, if any, as
either are in favor of Buyer as creditor or are released at the time of the
closing).
2.5 The Closing. The closing of the sale and purchase of the Assets
hereunder shall take place at the offices of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
counsel for Buyer, at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
at 10:00 a.m., California time, on ____________, 2000, or at such other place,
time and date as shall be mutually satisfactory to the parties (the "Closing
Date"); provided that the closing may be extended, at the election of either
party, to any date not later than November 30, 2000, if the condition in section
3.1.5 shall not have been satisfied or waived by Buyer. On the Closing Date,
Seller shall deliver to Buyer, in addition to the matter otherwise required
hereby, such other certificates, instruments and documents as Buyer may request
to evidence or perfect Buyer's ownership of the Assets, and Seller shall turn
over to Buyer possession of all of the Assets.
2.6 Earn-Out Payment Provisions.
2.6.1 Definitions. The following terms have the following
meanings:
(a) "Earn-out Year" means a calendar year ending on December
31, 2001, 2002 or 2003.
(b) "Minimum Revenue Level" means Product Revenues of
$5,500,000 for the Earn-out Year ending December 31, 2001, $7,5000,000 for the
Earn-out Year ending December 31, 2002, and $10,000,000 for the Earn-out Year
ending December 31, 2003.
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(c) "Products" means the products listed and described on
Schedule 2.6 attached hereto, all of which are regularly manufactured or sold by
Seller.
(d) "Product Revenues" means the aggregate gross revenues
(determined by Buyer in accordance with GAAP from Buyer's sales reports prepared
in the ordinary course of Buyer's business) from sales by Buyer of Products,
reduced by discounts, rebates and charges for returns of any Products not sold.
2.6.2 Payment Obligation. Subject to and except as provided in
section 2.6.3, Buyer shall pay to Seller, within sixty days after the end of
each Earn-out Year a payment (an "Earn-out Payment") in the amount of $100,000,
if (a) during such Earn-out Year, Buyer receives all of the vendor discounts set
forth in Schedule 2.6.2, and (b) the Product Revenues for such Earn-out Year
exceed the Minimum Revenue Level for such Earn-out Year. Each such payment shall
be made to Seller, or as Seller may direct, by check or wire transfer in
accordance with instructions provided by Seller to Buyer not later than March 1
of the year when such payment is required to be made.
2.6.3 Failure to Achieve Minimum Revenue Level.
(a) Provided that the condition in clause (a) of section
2.6.2 is satisfied, if the Minimum Revenue Level for an Earn-out Year is not
achieved but the Minimum Revenue Level for a subsequent Earn-out Year is
achieved, Seller shall be entitled to receive Earn-out Payments for both of such
Earn-out Years.
(b) Provided that the condition in clause (a) of section
2.6.2 is satisfied, if Product Revenues exceed $7,500,000 but are less than
$10,000,000 for the Earn-out Year ending December 31, 2003, Seller shall be
entitled to receive a pro rata portion of the Earn-out Payment for that Earn-out
Year, determined by multiplying the Earn-out Payment for that Earn-out Year by
the quotient of the amount of Product Revenues for that Earn-out Year in excess
of $7,500,000 divided by $2,500,000.
2.6.4 Aggregate Maximum. Anything herein to the contrary
notwithstanding, Buyer shall have no obligation whatsoever under this section
2.6 to pay any amount in excess of $300,000 in the aggregate.
2.7 Allocation of Purchase Price. The parties shall allocate the
Purchase Price and all payments made under section 2.6 among the Assets as set
forth in Schedule 2.7 attached hereto. The parties agree consistently to state
or report such allocation on all tax and information returns and statements and
other statements, notices or other documents furnished or submitted to or filed
with any governmental bureau, agency or instrumentality of the United States or
any state, territory, protectorate, possession or other jurisdiction of the
United States or any political subdivision thereof.
3. Conditions to Parties' Obligations.
3.1 Conditions to Buyer's Obligations. The obligation of Buyer to
purchase the Assets and all other obligations of Buyer hereunder shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions precedent:
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3.1.1 Due Diligence. Buyer shall have completed to Buyer's
satisfaction such review, examination and inspection of Seller's assets,
business, operations and affairs as Buyer may consider advisable.
3.1.2 Representations and Warranties. The representations and
warranties of Seller and the Shareholders in this Agreement shall be true and
complete on and as of the Closing Date with the same effect as if those
representations and warranties had been made on and as of the Closing Date, and
Seller shall have delivered to Buyer a certificate to that effect dated the
Closing Date and signed by the President and the Secretary of Seller; provided
that, immediately prior to the closing hereunder, Seller shall have amended
section 5.1.31 to contain a complete and accurate list of all Trade Payables (as
that term is defined in Schedule 5.1.31) and the respective amounts thereof at
that time, certified by the President and the Secretary of Seller to be true and
complete as of the Closing Date.
3.1.3 Conditions and Covenants. On or prior to the Closing Date,
Seller shall have performed or satisfied all covenants, agreements and
conditions to be performed or satisfied on or prior to the Closing Date by
Seller hereunder, and Seller shall have delivered to Buyer a certificate to that
effect dated the Closing Date and signed by the President and the Secretary of
Seller.
3.1.4 Consents and Waivers. Seller shall have obtained all
necessary consents and waivers with respect to the sale, conveyance, transfer
and delivery of Assets from all parties to any Assigned Contracts and Code
Approvals, with regard to which any such consent or waiver is required to effect
any of such sales, conveyances, transfers or deliveries, to prevent acceleration
of the maturity of any indebtedness secured by a lien on real or personal
property, or to prevent the termination of any of the Assigned Contracts and
Code Approvals, except in any instance in which Buyer in its exclusive
discretion deems the obtaining of such consents or waivers not material.
3.1.5 Permits. Buyer shall have obtained such licenses, permits,
authorizations and approvals from all federal, state, local and other
governmental agencies, instrumentalities and authorities that Buyer may consider
necessary or advisable for its purchase of the Assets and for the conduct by
Buyer of the business of Seller from and after the Closing Date as Seller has
heretofore conducted such business.
3.1.6 Inventory. Buyer shall have inspected the Inventory and
found it to be in good and marketable condition and otherwise satisfactory.
3.1.7 Books and Records. Seller shall have furnished to Buyer
and Buyer shall have reviewed and approved all of the books and records of
Seller.
3.1.8 Licenses and Contracts. Seller shall have furnished to
Buyer and Buyer shall have reviewed and approved all of the licenses and permits
to which clause (b) of section 1.1.3 refers (including, without limitation, all
of the Code Approvals) and all Assigned Contracts and all other material
contracts, agreements, purchase orders, leases, commitments or understandings,
whether written or oral, relating to the business of Seller and to which Seller
is a party or by which any of the Assets are bound or affected.
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3.1.9 ▇▇▇▇ of Sale. Seller shall have duly executed,
acknowledged and delivered the ▇▇▇▇ of Sale to Buyer.
3.1.10 Assignments of Intellectual Property. Seller, the
Shareholders and affiliates of the Shareholders, as appropriate, shall have duly
executed, acknowledged and delivered to Buyer an Assignment of Patent Rights
(the "Patent Assignment") and an Assignment of Trademark (the "Trademark
Assignment") in substantially the forms of Exhibits B and C, respectively,
attached hereto.
3.1.11 Business Relationship. Seller shall have furnished to
Buyer the names and addresses and all pertinent information regarding all
customers, employees, suppliers, distributors and others who have business
relationships with Seller and shall have introduced Buyer to each of them, and
Buyer shall have satisfied itself that each of such relationships may reasonably
be expected to be continued with Buyer from and after the Closing Date.
3.1.12 Opinion of Counsel. On the Closing Date, Seller and the
Shareholders shall have delivered to Buyer an opinion, dated the Closing Date,
of McNeeley, Stephenson, Thopy & ▇▇▇▇▇▇▇, counsel for Seller and the
Shareholders, to the effects set forth in Exhibit D attached hereto.
3.1.13 Supply Contract. ▇▇▇▇▇▇▇▇ & Company shall have entered
into a Supply Contract with Buyer in substantially the form attached hereto as
Exhibit E ("Supply Contract").
3.2 Conditions to Seller's Obligations. The obligation of Seller to
sell the Assets and all other obligations of Seller and the Shareholders
hereunder shall be subject to the satisfaction on or prior to the Closing Date
of the following conditions precedent:
3.2.1 Representations and Warranties. The representations and
warranties of Buyer in this Agreement shall be true and complete on and as of
the Closing Date with the same effect as if those representations and warranties
had been made on and as of the Closing Date, and Buyer shall have delivered to
Seller a certificate to that effect dated the Closing Date and signed by the
President and the Secretary of Buyer.
3.2.2 Conditions and Covenants. On or prior to the Closing Date,
Buyer shall have performed or satisfied all covenants, agreements and conditions
to be performed or satisfied on or prior to the Closing Date by Buyer hereunder,
and Buyer shall have delivered to Seller a certificate to that effect dated the
Closing Date and signed by the President and the Secretary of Buyer.
3.3 Failure of Condition.
3.3.1 Buyer's Remedies. If any of the conditions specified in
section 3.1 are not satisfied, Buyer shall have the right, at its exclusive
election, either to waive the condition in question and proceed with the
purchase of the Assets or to terminate this Agreement; provided that the Closing
Date may be extended, at Buyer's exclusive election, for a reasonable period to
allow all of such conditions to be satisfied, subject to Buyer's further right
to terminate this Agreement on the expiration of the period of the extension if
all of such conditions shall not then
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have been satisfied. If Buyer so elects to terminate this Agreement, neither
Buyer nor Seller nor any of the Shareholders shall have any further rights or
obligations under this Agreement, except that the covenants and agreements in
sections 4.3, 4.5.4 and 4.11 shall survive any termination of this Agreement.
Notwithstanding any of the foregoing provisions of this section 3.3.1 to the
contrary, in the event of any breach by any of Seller and the Shareholders of
any covenant or agreement herein or hereunder, Buyer may elect nevertheless
either (a) to proceed with the purchase of the Assets, reserving the right to
recover damages for such breach from Seller and the Shareholders, or (b) to
terminate this Agreement by notice to Seller on or prior to the Closing Date,
and on such termination, Buyer shall be relieved of all obligations and
liabilities hereunder and Buyer may proceed against Seller and the Shareholders
to recover any damages occasioned by such breach.
3.3.2 Seller's Remedies. If any of the conditions in section 3.2
are not satisfied, Seller shall have the right, at Seller's exclusive election,
either to waive the condition in question and proceed with the sale or to
terminate this Agreement; provided that the Closing Date may be extended, at
Seller's exclusive election, for a reasonable period to allow all of such
conditions to be satisfied, subject to Seller's further right to terminate this
Agreement on the expiration of the period of the extension if all of such
conditions shall not then have been satisfied. If Seller so elects to terminate
this Agreement, neither Buyer nor Seller nor the Shareholders shall have any
further rights or obligations under this Agreement, except that the covenants
and agreements in sections 4.3, 4.5.4 and 4.11 shall survive any termination of
this Agreement.
4. Covenants.
4.1 Permits. Buyer shall, at its own expense, forthwith apply for
and diligently pursue the issuance of the licenses, permits, authorizations and
approvals to which section 3.1.5 refers. Buyer shall take all reasonable actions
to apply for the same and shall diligently and in good faith process such
applications and avoid taking any action that would delay the investigation and
processing thereof by the appropriate governmental authorities. Seller shall
cooperate fully and in good faith with Buyer, as and to the extent that Buyer
may reasonably request, in making and processing such applications, and Seller
shall execute and deliver all such certificates, instruments and documents as
Buyer may reasonably request in connection therewith.
4.2 Assignments of Permits, Contracts, Patent Rights and Trademarks.
Seller shall apply for and obtain legal, valid and binding assignments to Buyer
of the permits, authorizations and licenses to which clause (b) of section 1.1.3
refers (including, without limitation, all of the Code Approvals) and to the
Assigned Contracts, and all consents and waivers in connection therewith that
Buyer may reasonably consider to be necessary or advisable. Seller shall also
execute, acknowledge and deliver the Patent Assignment and the Trademark
Assignment. Seller and the Shareholders shall cooperate, and the Shareholders
shall cause their affiliates to cooperate, fully and in good faith with Buyer to
record the Patent Assignment and the Trademark Assignment in accordance with the
requirements of the United States Patent and Trademark Office to effect the
assignment and transfer of exclusive rights to the letters patent, applications
for letters patent, trademark registrations and applications for trademark
registrations included in the Assets. Buyer shall cooperate fully and in good
faith with
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Seller, as and to the extent that Seller may reasonably request, in obtaining
the same, and Buyer shall execute and deliver all such certificates, instruments
and other documents as Seller may reasonably request in connection therewith.
4.3 Indemnity.
4.3.1 By Buyer. Buyer agrees to indemnify and defend Seller, its
directors, officers, employees and agents and the Shareholders and to hold them
harmless from and against any and all claims, liabilities, damages and expenses
(including, without limitation, the fees and expenses of attorneys and expert
witnesses, the costs of investigation and court costs) suffered or incurred by
them, when and as suffered or incurred, whether or not any of such claims,
liabilities, damages or expenses are suffered or incurred in connection with the
ownership, operation, use, sale or possession of any of the Assets, (a) in
connection with the Assigned Contracts and arising after the Closing Date, to
the extent that such claims, liabilities, damages or expenses are specifically
disclosed in writing by Seller to Buyer and accepted in writing by Buyer prior
to the Closing Date, or (b) as a direct or indirect result of any breach of any
covenant, agreement, representation or warranty by Buyer hereunder.
4.3.2 By Seller and the Shareholders. Seller and the
Shareholders, jointly and severally, agree to indemnify and defend Buyer and
Buyer's directors, officers, employees and agents and to hold them harmless from
and against any and all claims, liabilities, damages and expenses (including,
without limitation, the fees and expenses of attorneys and expert witnesses, the
costs of investigation and court costs) suffered or incurred by them, when and
as suffered or incurred, whether or not any of such claims, liabilities, damages
or expenses are suffered or incurred in connection with the ownership,
operation, use, sale or possession of any of the Assets, directly or indirectly
in connection with (a) the Assigned Contracts and arising on or prior to the
Closing Date, to the extent that any of such claims, liabilities, damages and
expenses are not specifically disclosed in writing by Seller to Buyer or are not
accepted by Buyer prior to the Closing Date, or (b) any written or oral
contracts, agreements, understandings or commitments that are not included in
the Assets or are not legally and validly assigned hereunder, or (c) any breach
of any covenant, agreement, representation or warranty by any of Seller and the
Shareholders hereunder, (d) any infringement or violation by Seller of any
intellectual property rights of any other person, or (e) any flaw or default in
the design, materials used in, manufacture or installation of any Product
manufactured or sold by Seller, or (f) the use or ownership of any of the
Intangible Property.
4.3.3 Limitations. Anything herein to the contrary
notwithstanding, neither Buyer nor Seller and the Shareholders shall have any
liability or obligation under section 4.3.1 or 4.3.2, respectively, (a) with
respect to any claim, liability, damage or expense suffered or incurred by the
other party unless and until the aggregate of all such claims, liabilities,
damages and expenses exceed $25,000, (b) with respect to any claim, liability,
damage or expense suffered or incurred by a party seeking indemnity hereunder,
if such party does not provide notice thereof to the other party within ninety
days of the date that such party is notified of such claim for indemnity, to the
extent (but only to the extent) that the party entitled to notice is prejudiced
by the failure to receive notice within such ninety-day period, or (c) with
respect to any claim made against such party more than five years after the
Closing Date; provided that the
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aggregate liability of the Shareholders under section 4.3.2 for product
liability claims shall not exceed $1,000,000.
4.4 Operation Prior to Closing Date. Prior to the closing on the
Closing Date, Seller and the Shareholders shall use their best efforts to
preserve the organization of Seller intact, keep available the services of
Seller's employees and preserve Seller's relationships with suppliers,
distributors, customers and others having business relations with Seller. Prior
to the closing on the Closing Date and except as may be first approved by Buyer
or as is otherwise permitted by this Agreement, (a) Seller shall conduct its
business only in the usual and ordinary course and the character and extent of
its business shall not be changed, (b) no increase shall be made in the
compensation payable or to become payable by Seller to any of its employees, nor
shall any bonus payment or arrangement be made by Seller to or with any such
employee, (c) Seller shall not acquire or dispose of any Assets except for sales
of inventory in good faith in the usual and ordinary course of business and, in
the event of any disposition of any Asset, shall replace such Asset as may be
reasonable in the ordinary conduct of business, (d) Seller shall maintain all
tangible Assets in good condition and repair and in accordance with all
applicable laws, rules and regulations, as is reasonable in the ordinary course
of business, and (e) Seller shall not, and the Shareholders shall not suffer or
permit Seller to, declare or pay any dividend or other distribution to its
shareholders, as such.
4.5 Buyer's Investigation.
4.5.1 Entry and Inspection. Seller and the Shareholders shall
make available to Buyer and Buyer's officers, employees, attorneys, accountants
and other authorized representatives reasonable access at all times to all of
the Assets and related properties, operations, books and financial records,
contracts, commitments and sales, production and maintenance records, will
permit Buyer and such representatives to enter any real property occupied by
Seller, will make Seller's officers, employees, agents, contractors and
consultants and the Shareholders available to Buyer and such representatives so
that Buyer may make such inquiries as Buyer may deem appropriate, and will
furnish Buyer with all information concerning the Assets and the operations,
affairs and business of Seller as is required hereby or as Buyer may reasonably
request.
4.5.2 No Waiver. Anything in this Agreement to the contrary
notwithstanding, no inquiry or investigation by or on behalf of Buyer shall
constitute a waiver of, negate, abrogate or otherwise affect the validity of any
representation, warranty or covenant of Seller or the Shareholders in, pursuant
to or in connection with this Agreement or modify or affect any of Seller's or
any Shareholder's obligations or Buyer's rights herein or hereunder in the event
of any breach of any such representation, warranty or covenant.
4.5.3 Indemnity. Buyer agrees to indemnify and defend Seller and
hold Seller harmless from and against any and all mechanics' liens, physical
damage to property or persons and claims arising therefrom, and losses arising
out of any interference with contractual relations between Seller and third
parties, if any of the foregoing result from entry by Buyer or such
representatives on premises occupied by Seller pursuant to section 4.5.1.
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4.5.4 Return of Materials. On any termination of this Agreement
without consummation of the transactions contemplated hereby, Buyer shall return
to Seller all documents, work papers and other materials (including all copies
thereof) in connection with the transactions contemplated hereby and shall use
all reasonable efforts to keep confidential any information obtained pursuant to
this Agreement, unless disclosure is required by law or unless such information
has otherwise been obtained by third parties without any obligation of
confidentiality to Seller through no fault of Buyer.
4.6 Further Assurances. Seller and the Shareholders shall cooperate
with Buyer, at Buyer's request, after the Closing Date and without further
consideration, (a) to execute, deliver, record and publish as Buyer considers
appropriate such other certificates, instruments and documents of sale,
assignment, transfer and conveyance of the Assets, and take such other action,
as Buyer may reasonably request more effectively to convey, assign, sell and
transfer to or vest in Buyer, and to put Buyer in possession of, any and all of
the Assets, (b) in the case of Assigned Contracts, if any, that have not at the
Closing Date been transferred effectively due to the lack of consents of third
parties, to continue to endeavor to obtain such consents promptly and, if any
such consents are not obtainable, to provide Buyer with the benefit thereof in
some other manner, and (c) to assist Buyer in connection with any actions,
proceedings or arrangements or disputes relating to ownership of and other
rights in the Assets. The parties shall each do or perform such further acts and
things and execute and deliver such further certificates, instruments and other
documents as may be reasonably necessary and proper to implement the intent of
the parties as expressed in this Agreement.
4.7 Proceedings. Each party shall promptly inform the other of the
making of any threat or claim or the commencement of any investigation,
litigation or proceeding against or affecting Seller, the business or operations
of Seller, the Assets or any of the transactions contemplated hereby.
4.8 Employees. From and after the closing hereunder, Buyer shall not
assume any obligation or liability of any nature whatsoever with respect to, and
shall have no duty to employ, any of the employees of Seller, or any consultants
engaged to render services to Seller; and Seller shall deliver the Assets to
Buyer free and clear of any such obligations, liabilities and duties.
Notwithstanding the foregoing, Buyer shall be permitted to interview the
individuals employed or engaged by Seller during the thirty-day period prior to
the closing and the thirty-day period following the closing to determine which
employees and consultants Buyer might desire to employ or engage after the
Closing Date. The hiring of any such employees or consultants by Buyer shall be
on such terms and conditions as may be agreeable to Buyer and shall be without
regard to the terms and conditions of the employment or engagement of such
individuals established by Seller prior to the Closing Date.
4.9 Sales Tax. Except as specifically provided in section 4.10,
Seller shall pay when due, to the appropriate governmental authority or
authorities, all sales, use and excise taxes and levies, if any, arising from
the sale of any of the Assets hereunder.
4.10 Prorations. Real property taxes, water, sewer, gas, electric,
telephone and other utility charges, permit fees, inspection fees, insurance
premiums (as to those policies, if any, that Buyer determines will be continued
for Buyer's benefit after the Closing Date), and
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other expenses normal to the operation and maintenance of the business of Seller
shall be prorated as of 12:01 a.m. on the Closing Date on the basis of a 365-day
year. If any of the aforesaid prorations cannot be calculated accurately at such
time on the Closing Date, the same shall be calculated within thirty days after
the Closing Date and either party owing the other a sum of money based on such
subsequent proration shall promptly pay said sum to the other party.
4.11 Expenses. Each party shall pay all costs, expenses and fees of
his or its own attorneys, accountants, auditors and other advisers and
consultants incurred in negotiating the terms and conditions of this Agreement,
making any investigation in connection herewith, preparing and executing this
Agreement and any certificates, instruments and documents necessary in
connection herewith and consummating the transactions contemplated hereby.
4.12 Risk of Loss. Risk of loss, damage or destruction of any of the
Assets shall be borne by Seller and the Shareholders until the closing on the
Closing Date and delivery of possession thereof to Buyer.
4.13 Bulk Sales. Seller either (a) shall pay or otherwise discharge
in full all of Seller's debts, duties, obligations and liabilities of any nature
whatsoever on or prior to the Closing Date and provide to Buyer on or prior to
the Closing Date evidence thereof that is satisfactory to Buyer, or (b) shall
forthwith effect compliance, at Seller's own expense, with the bulk sales laws
of the States of California and Indiana, Article 6 of the Uniform Commercial
Code as in effect in such States, and if Seller elects to effect such
compliance, Buyer shall cooperate with and assist Seller therewith as Seller may
reasonably request.
4.14 Casualty and Condemnation. If, prior to the closing on the
Closing Date, any of the Assets or any part of any Asset is destroyed or
materially damaged, or if condemnation proceedings are commenced against any of
the Assets, Buyer shall have the right, exercisable by notice to Seller within
fifteen days after receiving actual notice of such damage, destruction or
condemnation proceedings, to terminate this Agreement, in which event neither
Seller nor the Shareholders nor Buyer shall have any further rights or
obligations hereunder, except that the covenants and agreements in sections 4.3,
4.5.4 and 4.11 shall survive such termination. If Buyer does not so elect to
terminate this Agreement, Buyer may elect to accept the Assets in their then
condition and all proceeds of insurance or condemnation payable to Seller by
reason of such damage, destruction or condemnation shall be paid and assigned to
Buyer. In the event of any immaterial damage to any Assets that Seller is
unwilling to repair or replace, Buyer shall have the right, exercisable by
notice within fifteen days after receiving actual notice of such damage, either
(a) to terminate this Agreement as provided above in this section 4.14 or (b) to
accept the Assets in their then condition and proceed with the purchase, in
which event Buyer shall be entitled to a reasonable reduction of the Purchase
Price to offset the cost of repairing or replacing the damaged Assets.
4.15 Buyer's Consent to New Contracts. None of Seller and the
Shareholders shall hereafter enter into any oral or written lease, amendment of
lease, contract, agreement, commitment or understanding pertaining to any of the
Assets, other than in the ordinary course of Seller's business as heretofore
conducted, without obtaining Buyer's prior written consent thereto, which
consent shall not be unreasonably withheld.
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4.16 Brokers and Finders. Buyer represents and warrants to Seller
and the Shareholders, and Seller and the Shareholders represent and warrant to
Buyer, that it or they, respectively, have not had any contact or dealings
regarding any of the Assets, or communications in connection with the subject
matter of this Agreement, with or through any broker or finder who can claim a
valid and lawful right to a commission or fee as a procuring cause of the
transactions contemplated hereby. If any such broker or finder perfects a claim
for any commission or fee based on any such contact, dealings or communications,
the party or parties through whom or by whose authority such broker or finder
makes such claim shall be responsible for such commission or fee and all costs
and expenses (including reasonable attorneys' fees) incurred by the other party
or parties in defending the same.
4.17 No Solicitation. Prior to the Closing Date, none of Seller or
the Shareholders shall contact, solicit or discuss or negotiate with any person
other than Buyer any of the transactions contemplated hereby, the possible sale
to any person of the Assets or any substantial part thereof or any of the
capital stock of the Seller or any possible business combination involving
Seller.
4.18 Publicity. Prior to the closing on the Closing Date, no
publicity, release, announcement, notice, statement or report concerning the
transactions contemplated hereby shall be issued by any party without the prior
approval of the form and substance thereof by Buyer and Seller; provided that
Buyer and its affiliates shall have the right, in their absolute discretion, to
make or file with the Securities and Exchange Commission or any other
governmental agency such releases, announcements, notices, statements or reports
as they may determine to be necessary or advisable for Buyer or any of its
affiliates to comply with applicable laws, rules and regulations.
4.19 Consultation by Seller. From and after the Closing Date, Seller
shall, without further consideration, cooperate with and assist Buyer in
effecting an orderly transition of ownership and operation of the Assets and the
business of Seller as contemplated hereby.
4.20 Noncompetition. None of Seller and the Shareholders shall, at
any time within three years after the Closing Date, directly or indirectly, own
an interest in, join, operate, control or participate in, or be connected as an
officer, employee, agent, independent contractor, consultant, partner, member,
manager, shareholder (except as holder of not more than one percent of the
outstanding stock of any corporation, which stock is actively and publicly
traded) or principal with, any corporation, limited liability company,
partnership, joint venture, proprietorship, association, firm or other entity or
person engaged in any business that would be competitive with the business of
Seller as conducted by Seller on or prior to the Closing Date in any state where
Seller shall have conducted business or where any customer of Seller is located
on or prior to the Closing Date; provided that this section 4.20 shall not
prohibit ▇▇▇▇▇▇▇▇ from continuing to be engaged in the business activities
unrelated to Seller's business in which he is engaged on the date hereof, so
long as such activities do not include the design, manufacture or sale for or to
persons other than Buyer of any of the products described on Schedule 2.6 or any
parts or components thereof; and provided further that, during the three-year
period beginning on the Closing Date, ▇▇▇▇▇▇▇▇ shall not, and shall not permit
▇▇▇▇▇▇▇▇ & Company to, design or manufacture powder actuated tools for or sell
any powder actuated tools to any person other than Buyer, except strictly in
accordance with the Supply Contract. Notwithstanding the foregoing
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provision for a three-year period, this section 4.20 shall only apply for a
period of one year for Swiggard and ▇▇▇▇▇ if, and only if, during such one-year
period Buyer shall maintain non-exclusive distribution areas for Masterset brand
name products with Swiggard or ▇▇▇▇▇. If Buyer fails to maintain the
non-exclusive distribution areas for Swiggard or ▇▇▇▇▇, through no fault of
Swiggard or ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall have no further obligation under
this section 4.20.
4.21 Name Change. On or promptly after the Closing Date (and in any
event within ten days thereafter), Seller shall change its name to a name that
does not include any of the words in Seller's name at the date hereof or any
variation or abbreviation thereof, which new name is not similar to Seller's
name at the date hereof.
4.22 Seller's and Shareholders' Representative. Seller and the
Shareholders hereby designate and appoint ▇▇▇▇▇ as their attorney-in-fact and
agent, to act in their place and stead and on their behalf, in connection with
all matters arising under or relating to this Agreement, including, without
limitation, the defense and settlement of all claims within the scope of their
indemnification obligations under section 4.3.2 of this Agreement. Such
attorney-in-fact shall have full power and authority to do and perform every
act, deed, matter and thing whatsoever in connection therewith, as fully and
effectually to all intents and purposes as Seller or the Shareholders might or
could do in person if personally present. This power of attorney shall become
effective on the date of this Agreement and shall terminate when all of Seller's
and the Shareholders' obligations under this Agreement are satisfied in full or
expire. This power of attorney shall not be affected by the disability or death
of any of the Shareholders and shall be irrevocable for its term. Any person
acting without negligence and in good faith in reasonable reliance on this power
of attorney shall not incur any liability thereby. Any actions so taken, unless
otherwise invalid or unenforceable, shall be binding on the successors, assigns,
heirs and personal representative of Seller and the Shareholders. Buyer shall be
entitled to rely on instructions of the attorney-in-fact without reservation,
unless and until all the Shareholders and Seller state to the contrary by
written notice to Buyer signed by all of them.
5. Representations and Warranties.
5.1 Of Seller and the Shareholders. Seller and Shareholders, jointly
and severally, hereby represent and warrant to and agree with Buyer, as follows:
5.1.1 Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana,
and has full power and authority to carry on its business as now conducted and
to own its assets. Seller is duly qualified to conduct business and is in good
standing as a foreign corporation under the laws of each jurisdiction where, by
virtue of its business conducted therein, it is required to be so qualified. The
copies of the Articles of Incorporation and Bylaws of Seller heretofore
delivered by Seller to Buyer are true and complete copies thereof as in effect
on the date hereof. The minute books of Seller, true and complete copies of
which have heretofore been furnished by Seller to Buyer, contain substantially
accurate records of all meetings of Seller's Board of Directors, all committees
of such Board of Directors, and Seller's shareholders since inception and
accurately reflect all material transactions to which such minutes refer.
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5.1.2 Capitalization. The authorized capital stock of Seller
consists of 1,000 shares of common stock, of which 1,000 shares have been
validly issued and are outstanding, fully paid, nonassessable and free of
preemptive and similar rights. Such issued and outstanding shares and all right,
title and interest therein, of record and beneficial, are owned by the persons
and in the amounts stated on Schedule 5.1.2 attached hereto. No shares of
capital stock of Seller have been issued, sold, transferred, assigned, pledged,
hypothecated or otherwise disposed of since 1991.
5.1.3 Subsidiaries. Seller has no subsidiaries and does not own
of record or beneficially any capital stock or other equity securities issued by
any other person.
5.1.4 Options, Warrants, Convertible Securities, etc. There are
no outstanding options, rights, warrants, convertible securities, commitments or
agreements calling for the issuance or the transfer, sale or disposition by any
person of any shares of capital stock of Seller or of any securities convertible
into or exchangeable therefor.
5.1.5 Directors and Officers. The directors and officers of
Seller are as set forth on Schedule 5.1.5 attached hereto. No other person is a
director or officer of Seller.
5.1.6 No Restriction on Transaction. Neither Seller nor any of
the properties, business or operations of Seller nor any of the Shareholder
Patent Rights is subject to (a) any mortgage, pledge, lien, claim, charge,
encumbrance, security interest or other restriction or defect in title (each, a
"Lien"), except as shown on Schedule 5.1.6 attached hereto, each of which Liens
will be discharged and released on or prior to the Closing Date, or (b) any
indenture, lease, agreement, instrument, law, statute, code, ordinance, rule,
regulation, order, judgment or decree, or any other restriction, that would
interfere with consummation of the transactions contemplated by this Agreement
or the conduct by Seller of its business and operations hereafter or the conduct
of such business by Buyer from and after the closing hereunder. This Agreement
has been duly authorized, executed and delivered by each of Seller and the
Shareholders and is the legal, valid and binding agreement of each of them,
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws relating to or affecting the
rights of creditors generally and except for limitations imposed by general
principles of equity on the availability of equitable remedies.
5.1.7 No Conflicts. The execution and delivery by each of Seller
and the Shareholders of this Agreement, the performance by each of them of its
or his respective obligations hereunder and its or his performance of,
fulfillment of and compliance with all of the terms and conditions hereof, do
not and will not conflict with, breach or result in a breach of the terms,
conditions or provisions of, or constitute a default under, result in the
creation of any Lien on any of its or his properties pursuant to, give any third
party the right to accelerate any obligation under, violate or result in a
violation of, or require any authorization, consent, approval, exemption or
other action by or notice to any person or any court or administrative or
governmental body or agency pursuant to, any agreement, indenture, mortgage,
instrument, law, statute, code, ordinance, rule, regulation, order, judgment or
decree to or by which any of them or any of the Assets is a party, is subject or
is bound.
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5.1.8 Financial Statements. Seller has furnished to Buyer
Seller's financial statements consisting in each case of unaudited balance
sheets as of December 31, 1998 and 1999, and the related unaudited statements of
earnings and cash flows for the years then ended, accompanied in each case by
the compilation or review report of independent certified public accountants,
and Seller's unaudited balance sheets as of March 31 and September 30, 2000, and
the related statements of earnings and cash flows for the three-month and
nine-month periods, respectively, then ended. Such financial statements are
complete and correct and fairly present the financial position and results of
operations of Seller at the dates and for the periods indicated, in conformity
with GAAP consistently applied throughout such periods, except to the extent
disclosed in such statements. At the respective dates of such financial
statements, there were no material liabilities of Seller (actual, contingent or
accrued) which, in accordance with GAAP, should have been shown or reflected
therein or in the notes thereto which are not shown or reflected therein.
5.1.9 Changes in Condition. Since March 31, 2000, there has not
been (a) any change in the assets or liabilities or condition (financial or
other) of Seller from that set forth in Seller's balance sheet as of that date,
except changes in the ordinary course of business, none of which has been
material or adverse, (b) any damage, destruction or loss materially or adversely
affecting Seller or its business or the Assets, whether covered by insurance or
not, (c) any substantial increase in the compensation paid or payable to any
employee of Seller, including any direct or indirect form of payment made to or
with respect to any such person, or (d) any labor dispute involving Seller.
5.1.10 Books of Account. The books of account of Seller are
complete and correct in all material respects and have been furnished to Buyer,
and all monies due or to become due from or to or owing by, and all liabilities
(actual, contingent or accrued) of, Seller by reason of any transaction, matter,
cause or thing which, in accordance with GAAP should be entered therein, have
been duly, correctly and completely entered therein.
5.1.11 Validity of Contracts. The Assigned Contracts are legal,
valid, binding and subsisting agreements of Seller and each other party thereto,
enforceable against each other party thereto in accordance with their respective
terms. No party to any contractual arrangements with Seller (including Seller)
is not in compliance with or is in default (without regard to any requirement of
notice or grace period or both) in the observance or performance of any term,
condition or provision of any such contractual arrangement relating to or
affecting Seller or its business or the Assets in any manner so as presently or
at any future time to have any material adverse effect on Seller or its
business, operations or financial condition or any of the Assets.
5.1.12 Properties.
(a) Seller and the Shareholders have all requisite power,
capacity and authority to own and hold, and have good and marketable
indefeasible title to, all of the Assets respectively owned by them, which are
all of the assets and properties used or useful in or in connection with
Seller's business, subject to no Lien, excepting only such as will be discharged
or released on or prior to the Closing Date, the Assigned Contracts and minor
easements and exceptions, none of which will interfere with the use by Buyer of
the Assets.
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(b) At the closing on the Closing Date, Buyer will acquire
good and marketable indefeasible title to all of the Assets, subject to no Lien,
except only the Assigned Contracts and such as shall have then been approved by
Buyer herein or hereunder.
(c) No condemnation proceeding or eminent domain proceeding
of any kind is pending or, to the best knowledge of Seller and the Shareholders,
contemplated or threatened, against any of the Assets.
(d) No permits, licenses or certificates pertaining to the
ownership or operation of any of the Assets, other than those that are
transferable therewith and those to which section 3.1.5 refers, are required by
any governmental agency having jurisdiction over any of the Assets or Seller's
business or operations. Seller has furnished to Buyer true and complete copies
of all Code Approvals relating to any one or more products designed, developed,
manufactured or marketed by Seller. All such Code Approvals are valid and in
full force and effect and are based on and supported by bona fide, accurate and
complete test results, engineering calculations and other information procured
by Seller and furnished to ICBO or any other code approval agency. The load
values and other information set forth in each such Code Approval are accurate
and complete.
5.1.13 Intellectual Property.
(a) "Intellectual Property" means all Code Approvals, Patent
Rights, Trade Secrets, trademarks, service marks, trade names and copyrights and
all rights and licenses relating thereto and all other tangible or intangible
proprietary information and materials used or useful in Seller's business, as
well as all registrations and pending applications for registration of any of
the foregoing in any jurisdiction, and including each license, sublicense or
other contract relating thereto. Seller owns absolutely and exclusively all of
the Intellectual Property used or useful in Seller's business free and clear of
any Lien. The Shareholders own absolutely and exclusively all of the Shareholder
Patent Rights free and clear of any Lien. Seller and the Shareholders have fully
disclosed to Buyer all material information regarding the Intellectual Property,
all of which is listed and described on Schedule 5.1.13 attached hereto.
(b) Schedule 5.1.13 sets forth a complete and correct list
and description of all of the following Intellectual Property owned by any of
Seller, the Shareholders and affiliates of the Shareholders and a corresponding
list of each jurisdiction in which a patent or registration for such item has
been issued or in which an application has been filed therefor in the name of
Seller, the Shareholders or affiliates of the Shareholders: (i) letters patent
and patent applications, (ii) trademarks, service marks and trade names, and
(iii) copyrights. Each item set forth on Schedule 5.1.13 that is registered is
registered in the name and for the exclusive benefit of Seller, the Shareholders
or affiliates of the Shareholders.
(c) Seller has sole and exclusive rights to, and no other
person or entity has any claim of ownership, whether joint or individual, with
respect to, the Intellectual Property. The Shareholders have sole and exclusive
rights to and no other person or entity has any claim of ownership, whether
joint or individual, with respect to, the Shareholder Patent Rights. Each patent
and each registration listed on Schedule 5.1.13 is valid, enforceable,
subsisting and in full force and effect and has been duly prosecuted, registered
and maintained by
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Seller, the Shareholders or affiliates of the Shareholders in each jurisdiction
listed. No pending application for a patent or for registration of a trademark
has been rejected, suspended, made a subject of an office action or other
challenge by the agency with which such application has been filed or by any
third party, except as disclosed in Schedule 5.1.13. No patent has been claimed
or adjudicated to be invalid or unenforceable as a whole or in part, no
trademark or service ▇▇▇▇ has been the subject of any claim of abandonment or
otherwise challenged as invalid and no copyright has been invalidated or alleged
to be in the public domain. No patent or registration is subject to any current
tax, maintenance fee or renewal fee which has not been paid. All trademarks,
service marks and trade names set forth on Schedule 5.1.13 have been used
continuously by Seller since adoption by Seller.
(d) All of the Trade Secrets are valid and protectable, are
not publicly known and have not been disclosed or otherwise made available to
any person except pursuant to a written confidentiality agreement. Seller has
taken all reasonable and appropriate steps to protect and preserve all of the
Trade Secrets and all other Intellectual Property that is not otherwise
protected by patents or by copyright registrations. Each item of the Trade
Secrets qualifies as a "trade secret" under the Uniform Trade Secrets Act as
enacted as part of the California Civil Code. Seller does not possess and has
not used in its business any confidential information or trade secrets owned by
any person other than Seller except in strict compliance with the terms and
conditions of a valid and enforceable agreement between Seller and the owner or
owners of such trade secret or confidential information.
(e) Seller owns or is licensed or otherwise possesses
legally enforceable rights to use all Intellectual Property that is used or
useful in the business of Seller. No license, consent or other authorization is
required from any third party with respect to any Intellectual Property used or
useful in the business of Seller or, if so required, each such license or
consent has been obtained, is valid and enforceable in accordance with its terms
and is in full force and effect and is not the subject of any notice of
termination or nonrenewal, and there is no default or alleged or threatened
default with respect to any such license or consent.
(f) Seller's possession and use of the Intellectual Property
does not conflict with, infringe, violate, interfere with or constitute a
misappropriation of any right, title, interest or goodwill of any other person.
The Shareholders' and their affiliates' possession and use of the Shareholder
Patent Rights does not conflict with, infringe, violate, interfere with or
constitute a misappropriation of any right, title, interest or goodwill of any
other person. None of Seller and the Shareholders possesses any information or
is otherwise aware of any basis for any claim against any of Seller and the
Shareholders with respect to any infringement, misappropriation or other misuse
of any intellectual property of any third party. None of Seller, the
Shareholders and affiliates of the Shareholders has infringed, misappropriated
or misused or is now infringing, misappropriating or misusing any intellectual
property belonging to any other person.
5.1.14 Tax Returns and Payments. Seller has filed all tax and
information returns and reports required by law to be filed by Seller, including
those with respect to receipts, income, sales, use, value added, ad valorem,
withholding, social security, excise, franchise and unemployment taxes. All
returns are proper and all taxes shown to be due and all additional assessments
and charges on Seller or on or measured by properties, assets, receipts, income,
sales
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or payroll of Seller have been paid. The reserves for current taxes accrued on
the books of Seller are reasonable and substantially adequate in amount. Seller
has not received any notice of assessment or proposed assessment of any United
States, state, municipal or other tax on or measured by income, receipts or
sales, nor to the best of Seller's and the Shareholders' knowledge, is there any
basis for any additional assessment of any such tax.
5.1.15 Litigation. None of Seller and the Shareholders is a
party to any pending, and neither Seller nor any of the Shareholders has any
notice or knowledge of any threatened or any knowledge of any basis for any,
action, suit, proceeding or investigation, at law or in equity or otherwise, in,
before or by any court or arbitrator or any governmental board, commission,
agency, department or officer, in which an adverse determination could have any
material adverse effect on Seller or its business, operations or financial
condition or on any of the Assets.
5.1.16 Employee Claims. No present or former employee or
consultant of Seller has asserted any material claim directly or indirectly
against Seller or its business or the Assets on account of or for (a) overtime
pay, other than overtime pay for work done in the current payroll period, (b)
wages or salary for any period other than the current payroll period, (c) any
material amount of vacation time off or pay in lieu of vacation time off, other
than vacation time off (or pay in lieu thereof) earned in or in respect of the
current fiscal year, or (d) any violation of any statute, ordinance or
regulation relating to minimum wages or maximum hours of work. No person or
party (including, but not limited to, governmental agencies of any kind) has
asserted any claim, or has any basis for any action or proceeding, against
Seller under or arising out of any statute, ordinance or regulation relating to
discrimination in employment or employment practices.
5.1.17 Contracts for Personal Services. Seller is not a party or
subject to any contract, agreement or commitment, written or oral, for or
relating to personal services rendered or to be rendered to Seller, and the
Assets do not include, and after the closing hereunder will not be affected by,
any such contract, agreement or commitment.
5.1.18 Employee Benefit Arrangements. None of Seller and the
Shareholders is a party to or bound by any contract, agreement or commitment by
the terms of which any person is or may become entitled (for any reason or in
any capacity) to any share in the proceeds, earnings or profits of Seller or its
business or the Assets or of any department, division or other unit of Seller or
its business, and Seller has no pension or retirement income plan, contract,
agreement or commitment in force for the benefit of any of its employees or
consultants, the obligations under which will not at the Closing Date have been
fully discharged. No person or party has asserted any claim under which Seller
has any liability under any health, sickness, disability, medical, surgical,
hospital or similar benefit plan or arrangement (whether legally binding or not)
maintained by Seller, or to or by which Seller or its business or any of the
Assets is a party or is subject or is bound, or under any workers' compensation
or similar law, which is not fully covered by insurance maintained with
reputable, financially responsible insurers.
5.1.19 Collective Bargaining Agreements. Seller is not a party
to or bound by any collective bargaining agreement or other labor agreement with
any bargaining
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agent (exclusive or otherwise) of any of its employees, except only for such
collective bargaining agreements as shall have been terminated and fully
performed and discharged by Seller on or prior to the Closing Date.
5.1.20 Other Interested Parties. None of Seller and the
Shareholders has adopted or become a party to any plan, contract, agreement or
commitment for the sale, distribution or issuance of any interest in Seller or
its business or any of the Assets to any person (other than as provided herein).
5.1.21 Contracts for Purchase or Sale. Seller is not a party to
or bound by any contract, agreement or commitment with any person or party for
the purchase of any properties or assets which requires that payment for such
properties or assets shall be made whether or not delivery is ever made thereof,
and Seller is not a party to or bound by any other contract, agreement or
commitment for the purchase or for the sale of any properties or assets of any
nature, except only such as have been made in the ordinary course of business.
5.1.22 Insurance. All of the tangible Assets are insured to
their full replacement value with financially sound and reputable insurers.
Schedule 5.1.22 attached hereto contains a true and complete list and
description of all insurance policies of which Seller is the owner or
beneficiary.
5.1.23 Condition of Assets. All of the tangible Assets are
accepted "as is" after acceptance on final inspection in good operating
condition and repair and in compliance with all applicable laws and regulations.
The use and operation of the Assets is in full compliance with applicable
building codes, environmental, zoning and land use laws, and all other local,
state and federal laws and regulations. All of the Assets described in clause
(h) of section 1.1.3 will have arisen or accrued, at the Closing Date, in the
ordinary course of business, will at the Closing Date represent legal, valid and
binding obligations due to Seller, and will at the Closing Date be collectible
in the ordinary course of business in the full recorded amounts thereof (except
only for any amount thereof for which reserves have been established on Seller's
balance sheet as of June 30, 2000). The Inventory is in good and merchantable
condition, reasonably in balance and currently of a usable and saleable quality
in the ordinary course of Seller's business. The Inventory is valued on Seller's
financial statements at the lower of cost or net realizable value, with cost
being determined on a consistent basis.
5.1.24 Utilities. All water, sewer, gas, electric, telephone and
drainage facilities and all other utilities required by law or by the normal use
and operation of the Assets are installed to the property lines of the premises
on which such Assets are located, are connected pursuant to valid permits and
are adequate to service such premises and the Assets and to permit full
compliance with all requirements of law and normal usage of the Assets by
licensees and invitees of Seller.
5.1.25 Licenses. Seller has obtained, and the Assets include,
all licenses, permits, easements and rights of way, but excluding those to which
section 3.1.5 refers, required from all governmental authorities having
jurisdiction over Seller or any of the Assets or from private parties, for the
normal use and operation of the Assets and Seller's business and to insure
vehicular and pedestrian ingress to and egress from the premises where the
Assets are located.
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5.1.26 Additions. Seller is not a party to any contract,
agreement or commitment for any additions, repairs or improvements to any Assets
for which payment has not been made in full.
5.1.27 No Liens. None of the Assets is subject to or affected by
any Lien, no such Lien has been claimed and there is no basis for any such
claim, except only for the security interest granted by Seller to Buyer in the
Loan and Security Agreement between them dated as of September 25, 2000.
5.1.28 Compliance with Laws. Each of Seller and the Shareholders
has complied with, and is not in violation of or default under, any laws, rules,
regulations, orders or decrees applicable to Seller or any of the Assets. To the
best of Seller's and the Shareholders' knowledge, (a) the sale and assignment
hereunder of the Assets to Buyer will include all rights necessary to ensure
compliance with all governmental statutes, laws, rules and regulations, and (b)
since December 31, 1999, no law, code, regulation or ordinance has been adopted
or is pending before ICBO or any other code approval agency or any legislative
or administrative body in any jurisdiction where Seller carries on its business,
which would, if adopted or enacted, materially and adversely affect such
business as now conducted.
5.1.29 Buyer's Use. None of Seller and the Shareholders has any
knowledge of any plan, study or effort of ICBO or any other code approval agency
or any governmental authority that would materially affect the business of
Seller or the use of the Assets, or any portion thereof, for their intended
uses, or of any intended public improvements that could result in any charge
being levied against, or any Lien assessed on, Seller or its business or any of
the Assets. None of Seller and the Shareholders has any notice or knowledge of
any facts that would adversely affect Buyer's usage and operation of the Assets
after the closing hereunder in the manner in which the Assets are now used and
operated by Seller.
5.1.30 Environmental Matters.
(a) Seller has complied and is presently in compliance with
all federal, state and local laws, ordinances, codes, rules, regulations,
permits, orders, judgments, awards, decrees, consent judgments, consent orders
and requirements applicable to it relating to the public health, safety or
protection of the environment (collectively, "Environmental Laws"). No party has
asserted that Seller has violated, or is in violation of, any Environmental
Laws. Specifically and without limiting the generality of the foregoing:
(1) Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource Conservation
Recovery Act, 42 US Section 6901 et seq. ("RCRA"), Seller has not accepted,
processed, handled, transferred, generated, treated, stored or disposed of any
Hazardous Material (as defined in Section 5.1.30(a)(6) below), and Seller has
not accepted, processed, handled, transferred, generated, treated, stored or
disposed of asbestos, medical waste, radioactive waste or municipal waste,
except in compliance with Environmental Laws.
(2) During Seller's ownership or leasing of the Assets
and any other property owned or leased by Seller ("Corporate Property") and, to
the knowledge
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of Seller and the Shareholders, prior to the Seller's ownership or leasing of
such Corporate Property, no Hazardous Material, other than that allowed under
Environmental Laws, including, without limitation, RCRA, has been disposed of,
or otherwise released on any Corporate Property.
(3) During Seller's ownership or leasing of the
Corporate Property and, to the knowledge of the Seller and the Shareholders,
prior to the Seller's ownership or leasing of such Corporate Property, no
Corporate Property has ever been subject to or received any notice of any
private, administrative or judicial action, or notice of any intended private,
administrative or judicial action relating to the presence or alleged presence
of Hazardous Material in, under, on or emanating from any Corporate Property or
any real property now or previously owned or leased by Seller. There are no
pending and, to Seller's and Shareholders' knowledge, no threatened actions or
proceedings from any governmental agency or any other entity involving
remediation of any condition of the Corporate Property, including, without
limitation, petroleum contamination, pursuant to Environmental Laws.
(4) Except as allowed under Environmental Laws, Seller
has not knowingly sent, transported or arranged for the transportation or
disposal of any Hazardous Material to any site, location or facility.
(5) Schedule 5.1.30(a) includes copies of: (i) all
records, notifications, reports, permit or license applications, engineering or
geologic studies, and environmental impact reports, tests or assessments
(collectively, "Records, Notifications and Reports") that (A) affect the
business of Seller, or (B) relate to the discharge or release by Seller of
materials into the environment and/or the handling or transportation by Seller
of waste materials or hazardous or toxic substances or otherwise relate to the
protection of the public health or the environment, or (C) were filed with or
submitted to appropriate governmental agencies during the past twenty-four
months by Seller or the Shareholders or their agents with respect to the
business of Seller, and (ii) all material notifications from such governmental
agencies to Seller, the Shareholders or their agents in response to or relating
to any of such Records, Notifications and Reports.
(6) As used in this Agreement, "Hazardous Material"
means the substances (i) defined as "Hazardous Waste" in 40 CFR 261, and
substances defined in any comparable state statute or regulation; (ii) any
substance the presence of which requires remediation pursuant to any
Environmental Laws; and (iii) any substance required to be disposed of in a
manner expressly prescribed by Environmental Laws.
(b) Except as set forth on Schedule 5.1.30(b), no
underground storage tanks containing petroleum products or wastes or other
hazardous substances regulated by 40 CFR 280 or Environmental Laws are currently
or have been located on any Corporate Property. Except as set forth on Schedule
5.1.30(b), the Corporation has not owned or leased any real property not
included in the Corporate Property having any underground storage tanks
containing petroleum products or wastes or other hazardous substances regulated
by 40 CFR 280. As to each such underground storage tank ("UST") identified on
Schedule 5.1.30(b), Seller has provided to SST on Schedule 5.1.30(b), the
following:
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(1) the location of the UST, information and material,
including any available drawings and photographs, showing the location, and
whether the Seller currently owns or leases the property on which the UST is
located (and if the Seller does not currently own or lease such property, the
dates on which it did and the current owner or lessee of such property);
(2) the date of installation and specific use or uses of
the UST;
(3) copies of tank and piping tightness tests and
cathodic protection tests and similar studies or reports for each UST;
(4) a copy of each notice to or from a governmental body
or agency relating to the UST;
(5) other material records with regard to the UST,
including, without limitation, repair records, financial assurance compliance
records and records of ownership; and
(6) to the extent not otherwise set forth pursuant to
the above, a summary description of instances, past or present, in which the UST
failed to meet applicable standards and regulations for tightness or otherwise
and the extent of such failure, and any other operational or environmental
problems with regard to the UST, including, without limitation, spills, whether
in connection with delivery of materials to the UST, releases from the UST, soil
contamination or otherwise.
Except to the extent set forth on Schedule 5.1.30(b), the
Seller has complied with Environmental Laws regarding the installation, use,
testing, monitoring, operation and closure of each UST described on Schedule
5.1.30(b).
5.1.31 Trade Payables. Schedule 5.1.31 contains a complete
and accurate list of all trade accounts and debts payable of Seller (the "Trade
Payables") and the respective amounts thereof, including (without limitation)
late charges, penalties and interest thereon. Other than as set forth on
Schedule 5.1.31, as it may be amended pursuant to section 3.1.2, Seller has no
trade accounts payable or debts in any amount, regardless of whether past due,
now due or becoming due in the future. All of the Trade Payables were incurred
in the ordinary course of Seller's business pursuant to arm's length
transactions.
5.1.32 Disclosure. Neither this Agreement nor the financial
statements delivered as provided in section 5.1.8 nor any exhibit or schedule
hereto nor any other certificate, instrument, document or information furnished
by Seller or any of the Shareholders to Buyer hereunder or in connection
herewith contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements contained therein or herein not
misleading. There is no fact which adversely affects or in the future may (so
far as Seller and the Shareholders can reasonably foresee) materially adversely
affect any of the Assets or the business of Seller that has not been set forth
herein or in an exhibit or schedule hereto or otherwise disclosed in writing to
Buyer.
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5.2 Of Buyer. Buyer hereby represents and warrants to and agrees
with Seller, as follows:
5.2.1 Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
and has full corporate power and authority to carry on its business as now
conducted and to own its assets.
5.2.2 No Restrictions on Transaction. Buyer is not subject to
any charter provision, bylaw, Lien, indenture, lease, agreement, instrument,
law, rule, regulation, order, judgment or decree or any other restriction that
would interfere with consummation of the transactions contemplated by this
Agreement. This Agreement has been duly authorized, executed and delivered by
Buyer and is the legal, valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar law relating to or affecting the rights of creditors generally and
except for limitations imposed by general principles of equity on the
availability of equitable remedies.
5.2.3 No Conflicts. The execution and delivery by Buyer of this
Agreement, the performance by Buyer of its obligations hereunder and its
performance of, fulfillment of and compliance with all of the terms and
conditions hereof, do not and will not conflict with, breach or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
result in the creation of any Lien on any of its properties pursuant to, give
any third party the right to accelerate any obligation under, violate or result
in a violation of, or require any authorization, consent, approval, exemption or
other action by or notice to any person or any court or administrative or
governmental body or agency pursuant to, any agreement, indenture, mortgage,
instrument, law, statute, code, ordinance, rule, regulation, order, judgment or
decree to or by which Buyer is a party, is subject or is bound.
5.2.4 Litigation. Buyer is not a party to any pending, and has
no notice or knowledge of any threatened or any knowledge of any basis for any,
action, suit, proceeding or investigation, at law or in equity or otherwise, in,
before or by any court or arbitrator or any governmental board, commission,
agency, department or officer, in which an adverse determination could have a
material adverse effect on the execution, delivery or performance by Buyer of
this Agreement.
5.3 Survival. All representations, warranties and agreements in this
Agreement shall survive any investigation made by or on behalf of any party and
shall survive the consummation of the transactions contemplated by this
Agreement, except that the representations and warranties of Seller and the
Shareholders in section 5.1 or in any information furnished by them to Buyer
hereunder relating to the physical quality or physical condition of any of the
Assets shall expire on the fifth anniversary of the Closing Date.
6. Attorneys' Fees. If any party hereto shall fail to perform any of its
or his obligations under this Agreement or if a dispute arises concerning the
meaning or interpretation of any provision of this Agreement, the defaulting
party or parties or the party or parties not prevailing in such dispute, as the
case may be, shall pay any and all costs and expenses incurred by the other
party or parties in enforcing or establishing their or its or his rights
hereunder,
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including, without limitation, court costs and the fees and expenses of
attorneys and expert witnesses.
7. Time. Time is of the essence of this Agreement.
8. Entire Agreement. This Agreement contains the entire agreement of the
parties and supersedes any and all prior or contemporaneous negotiations,
correspondence, understandings and agreements between or among the parties,
written or oral, regarding the subject matter hereof.
9. Modification and Waiver. This Agreement may be amended or modified at
any time only by a written instrument executed by Seller, Shareholders holding a
majority of the shares of common stock of Seller owned by all of the
Shareholders, and Buyer. Any of the terms, covenants, representations,
warranties or conditions hereof may be waived by a written instrument executed
by the party waiving compliance; provided that, for this purpose, the
Shareholders all be deemed to be a single party, and such instrument need be
executed only by the holders of a majority of the shares of common stock of
Seller held by all of them. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such party at a later time to enforce the same. No waiver by any party of the
breach of any term, agreement, covenant, representation or warranty in this
Agreement as a condition to such party's obligations hereunder shall release or
affect any liability resulting from such breach, and no waiver of any nature,
whether by conduct or otherwise, in any one or more instances shall be deemed to
be or be construed as a further or continuing waiver of any such condition or of
any breach of any other term, agreement, covenant, representation or warranty.
10. Notices. All notices, requests, waivers, approvals, instructions,
consents, demands and other communications hereunder shall be in writing and
shall be deemed duly given and received when delivered personally, when
transmitted by facsimile, one business day after being deposited for next-day
delivery with a nationally recognized overnight delivery service, or three days
after being deposited with the United States Postal Service as first class mail,
with all charges or postage prepaid, properly addressed, as follows:
If to Seller, at --
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
McNeeley, Stephenson, Thopy & ▇▇▇▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
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If to Buyer, at --
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P.O. Box 10789
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. 925-847-9114
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
11. Counterparts. This Agreement may be executed in any number of
counterparts, or by different parties in different counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
12. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided that none of Seller and the Shareholders shall assign this Agreement or
any rights hereunder or delegate any duties hereunder, without the prior consent
of Buyer, and any attempted or purported assignment or delegation by any of
Seller and the Shareholders without the consent of Buyer shall be void.
13. Exhibits. All schedules and exhibits attached hereto and the
documents and instruments delivered at the closing hereunder are expressly made
a part of this Agreement as fully as though completely set forth herein, and all
references to this Agreement herein or in any of such documents and instruments
(whether or not such references include a specific reference to such documents
and instruments) shall be deemed to refer to and include all such documents and
instruments. Any breach of or default under any provision of any of such
documents and instruments, shall, for all purposes, constitute a breach or
default under this Agreement.
14. Number and Gender. Whenever the context requires, the use in this
Agreement of the singular number shall be deemed to include the plural and vice
versa, each gender shall be deemed to include each other gender, and "person"
shall be deemed to include, in addition to natural person, corporation,
partnership, limited liability company, trust, association, firm or other entity
or organization.
15. No Third Party Beneficiaries. This Agreement is not intended, nor
shall it be construed, to confer any enforceable rights on any person who is not
a party hereto.
16. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of California.
17. Headings. The headings herein are for convenience of reference only,
are not part of this Agreement and shall not affect the construction or
interpretation of any provision hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly executed
by or on behalf of the parties hereto as of the date first above written.
▇▇▇▇▇▇▇ STRONG-TIE COMPANY INC.
/s/▇▇▇▇▇ ▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇▇▇▇▇
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Chief Financial Officer
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
MASTERSET FASTENING SYSTEMS, INC.
By /s/▇▇▇▇▇ ▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇▇▇▇▇
President
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibit A Form of ▇▇▇▇ of Sale and Assignment
Exhibit B Form of Assignment of Patent Rights
Exhibit C Form of Assignment of Trademark
Exhibit D Form of Opinion of Counsel for Seller and the Shareholders
Exhibit E Form of Supply Contract
Schedule 1.1.3(a) Assigned Contracts
Schedule 1.1.3(b) Code Approvals
Schedule 2.1.2 June 30 Balance Sheet
Schedule 2.6 Products
Schedule 2.6.2 Vendor Discounts
Schedule 2.7 Allocation of Purchase Price and Earn-out Payments
Schedule 5.1.2 Share Ownership of Seller
Schedule 5.1.5 Directors and Officer of Seller
Schedule 5.1.6 Liens Affecting Seller or Its Properties or Business
Schedule 5.1.13 Intellectual Property
Schedule 5.1.22 Insurance
Schedule 5.1.30(a) Records, Notifications and Reports
Schedule 5.1.30(b) Underground Storage Tanks
Schedule 5.1.31 Trade Payables
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EXHIBIT A
▇▇▇▇ OF SALE AND ASSIGNMENT
AND
ASSUMPTION OF LIABILITIES
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, and pursuant to that certain Asset Purchase Agreement dated
as of November 17, 2000 (the "Agreement"), among Masterset Fastening Systems,
Inc., an Indiana corporation ("Transferor"), ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ Associates, Inc., a New Jersey corporation, and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and
▇▇▇▇▇▇▇ Strong-Tie Company Inc., a California corporation ("Buyer"), Transferor
hereby sells, assigns and transfers to Buyer all right, title and interest in
and to all of the tangible and intangible assets identified or described on
Exhibits I, II, III, IV, V and VI attached hereto and incorporated herein by
this reference (the "Assets"). Capitalized terms used and not otherwise defined
herein have the meanings respectively ascribed to them in the Agreement.
Transferor covenants and warrants that:
(a) Transferor has fully paid for, and is the owner of, and has
absolute title to, all of the Assets, free and clear of all mortgages,
pledges, liens, claims, charges, encumbrances, community property
rights, security interests and other defects of title, of any kind or
nature, except only as is expressly set forth in an exhibit attached
hereto.
(b) Transferor has not made any prior sale, assignment, transfer
or other disposition of any of the Assets to any person, firm or
association.
(c) Transferor has all right, power, authority and capacity to
sell, assign, convey and transfer each and all of the Assets to Buyer.
(d) None of the licenses or permits, Assigned Contracts or Code
Approvals, included in the Assets, has been amended or changed, nor has
any oral or written notice of breach, violation or default been received
by Transferor under any of such licenses, permits, leases or contracts.
(e) No notice is necessary or desirable to be given to, and no
consent or approval is necessary or desirable to be obtained from, any
person or party or governmental authority in connection with the
transactions effected hereby, except such as have been given or obtained
by Transferor and are in full force and effect.
(f) All of the Assets that are tangible, and each item thereof,
are in good repair, condition and working order, reasonable wear and
tear excepted, and, in the case of inventory, are in merchantable
condition and of a usable and saleable quality.
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(g) All acts, proceedings and things necessary and required by
law or any instrument to which Transferor is a party or by which
Transferor is bound to make this ▇▇▇▇ of Sale and Assignment a valid,
binding and legal obligation of Transferor, have been done and taken and
have happened, and the execution and delivery of this ▇▇▇▇ of Sale and
Assignment have in all respects been authorized in accordance with law.
Transferor shall forever warrant and defend the sale, assignment,
transfer, conveyance and delivery of each and every item of the Assets to Buyer
and Buyer's successors and assigns, against each and every person lawfully
claiming the same. Possession of all of the Assets and any and all instruments
representing the same is being delivered to Buyer concurrently with this ▇▇▇▇ of
Sale and Assignment.
Transferor hereby appoints Buyer as Transferor's attorney-in-fact to
demand, receive and collect for Buyer's own use and benefit all debts and
obligations owing to Transferor on the effective date hereof in connection with
the Assets. Transferor further authorizes Buyer to do all things legally
permissible that may be required to recover and collect such debts and
obligations and to use Transferor's name in any manner Buyer may deem necessary
for the collection and recovery of those debts and obligations, but without
cost, expense or damage to Transferor.
Buyer hereby assumes the performance and payment when due of all of the
terms, covenants and conditions imposed on Transferor under or in connection
with the Assigned Contracts identified in Exhibit III and all permits, licenses
and authorizations included in the Assets. Buyer agrees to indemnify Transferor
and hold Transferor harmless from and against any and all of such terms,
covenants and conditions.
This ▇▇▇▇ of Sale and Assignment and Assumption of Liabilities shall
bind and inure to the benefit of Transferor and Buyer and their respective
successors and assigns.
This ▇▇▇▇ of Sale and Assignment and Assumption of Liabilities shall be
governed by and construed and interpreted in accordance with the laws of the
State of California.
[Signature Page Follows]
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IN WITNESS WHEREOF, this ▇▇▇▇ of Sale and Assignment and Assumption of
Liabilities has been duly executed by or on behalf of Transferor and Buyer on
this ____________, 2000, at ____________, California.
BUYER: TRANSFEROR:
▇▇▇▇▇▇▇ STRONG-TIE COMPANY INC. MASTERSET FASTENING SYSTEMS, INC.
By By
------------------------------- --------------------------------
Its Its
---------------------------- -----------------------------
By By
------------------------------- --------------------------------
Its Its
---------------------------- -----------------------------
EXHIBITS ATTACHED:
I Equipment
II Inventory
III Assigned Contracts and Code Approvals
IV Trade Names, Trademarks, Service Marks and Copyrights
V Patent Rights
VI Other Intangible Property
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ADD ACKNOWLEDGMENTS
33
EXHIBIT B
ASSIGNMENT
WHEREAS, Masterset Fastening Systems, Inc., a corporation of the State
of Indiana, having a place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, a/k/a Masterset Corporation, and a/k/a/ Masterset
Inc. (hereinafter "Assignor") owns the entire right, title and interest in
United States Letters Patents Nos. 5,119,634, granted June 9, 1992; 5,237,613,
granted August 17, 1993; and 5,657,919, granted August 19, 1997; (referred to
collectively hereinafter as "Patent Rights"); and
WHEREAS, ▇▇▇▇▇▇▇ Strong-Tie Company Inc., a corporation of the State of
California, having a place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "Assignee") desires to obtain the entire right,
title and interest in, to and under said Patent Rights.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, Assignor does hereby sell, assign, transfer and
set over unto the said Assignee, its successors, and assigns, the entire right,
title and interest in, to and under the said Patent Rights, and all reissues,
reexaminations and extensions thereof.
1. Assignment of Patent Rights. Assignor hereby sells, assigns,
transfers and sets over to Assignee and its successors and assigns, full and
exclusive right, title and interest in and to the Patent Rights or similar legal
protection in the United States of America and its territorial possessions and
in all foreign countries, now existing or that may be obtained, and to any
continuation, division, renewal, substitute, reissue or reexamination thereof or
any legal equivalent thereof in the United States of America or any foreign
country for the full term or terms for which the same may be granted, including
all priority rights under the International Convention.
2. Further Assurances. Assignor further covenants that Assignee
will, upon request, be provided promptly with all pertinent facts and documents
relating to the Patent Rights and all legal equivalents as may be known or
accessible to Assignor, and that Assignor, at Assignee's expense, will testify
as to the same in any interference or litigation relating thereto and will
promptly execute and deliver to Assignee or its legal representatives any and
all papers, instruments or affidavits required to apply for, obtain, maintain,
issue and enforce the Patent Rights and its equivalents in the United States of
America or in any foreign country, which may be necessary or desirable to carry
out the purposes thereof. Assignor authorizes Assignee to record this Assignment
with the United States Patent and Trademark Office without any further consent
or signature from Assignor.
3. No Prior Transfer. Assignor hereby covenants that it has the full
right to convey the interest assigned, and that no assignment, sale, agreement
or encumbrance has been or will be made or entered into that would conflict with
this Assignment.
4. No Licenses. Except for proprietary information agreements with
its own employees or consultants, and with the exception of standard end-user
license agreements, there are no outstanding options, licenses, or agreements of
any kind relating to the Patent Rights, nor
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is the Assignor bound by or a party to any options, licenses, or agreements of
any kind with respect to the Patent Rights.
5. No Infringement. The Assignor has not received any communications
alleging, nor does the Assignor have reason to believe, that the use or
exploitation of the Patent Rights has violated or would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets, or
other proprietary rights or processes of any other person or entity, and is not
aware, based on reasonable investigation, of any reasonable basis therefor or
threat thereof. The Assignor is not aware that any of its employees, agents,
consultants or contractors is obligated under any contract (including licenses,
covenants, or commitments of any nature) or other agreement, or subject to any
judgment, decree, or order of any court or administrative agency, that would
interfere with the use or exploitation of the Patent Rights. The Assignor is not
aware of any violation or infringement by a third party of any of the Patent
Rights.
6. Absolute and Exclusive Assignment. This Assignment is absolute,
exclusive and irrevocable.
7. Successors and Assigns. This Assignment shall bind and inure to
the benefit of the parties and their respective successors and assigns.
Masterset Fastening Systems, Inc., by:
------------------------------ ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇ Date
President
State of Indiana )
County of _____________________ ) ss:
On this _____________ day of ___________________, 20__ before me personally
appeared ▇▇▇▇▇ ▇▇▇▇▇ to me personally known, and known to me to be the person
who signed the foregoing assignment, and acknowledged the signing of same as his
free act and deed.
-----------------------------
NOTARY PUBLIC
Seal
My Commission Expires:
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35
EXHIBIT C
ASSIGNMENT
WHEREAS, Masterset Fastening Systems, Inc., a corporation of the State
of Indiana, having a place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, a/k/a Masterset Corporation, and a/k/a/ Masterset
Inc. (hereafter "MASTERSET") is the owner of United States Trademark Reg. Nos.:
1,687,553 granted May 19, 1992 for the trademark "MASTERSET and Design";
1,695,772 granted June 23, 1992 for the trademark "MASTERSET and Design"; and
1,695,773 granted June 23, 1992 for the trademark "MASTERSET and Design"
(collectively the "Registrations"); and is the owner of United States Trademark
Application No. 75/557,337 filed September 23, 1998 for the trademark "TRU-SET
and Design" ("Application"); and
WHEREAS, ▇▇▇▇▇▇▇ Strong-Tie Company Inc., a corporation of the State of
California, having a place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (hereinafter "▇▇▇▇▇▇▇") is desirous of acquiring all right and title to
said Registrations and Application (collectively the "Marks").
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, MASTERSET does hereby assign unto ▇▇▇▇▇▇▇ all
right, title and interest in and to the said Marks.
8. Assignment of ▇▇▇▇. MASTERSET hereby sells, assigns, transfers
and conveys to ▇▇▇▇▇▇▇ all right, title and interest MASTERSET may now have or
ever has had in and to the Marks for any and all purposes, together with all
good will of the business symbolized by the Marks and the trademark
registrations corresponding to the Marks. The foregoing assignment of the Marks
shall include without limitation (a) the right to register or renew the Marks in
the United States and in any foreign country, (b) all right, title and interest
of MASTERSET in any pending registration applications for the Marks, (c) the
exclusive right to sell, assign, lease, license, use or otherwise transfer or
exploit the Marks, and (d) the right to enforce, ▇▇▇ for and collect damages by
reason of any past or future infringement or misuse of the Marks.
9. Further Assurances. MASTERSET agrees to execute and deliver to
▇▇▇▇▇▇▇ any and all instruments or documents that may be necessary or
convenient, and to provide all assistance reasonably requested by ▇▇▇▇▇▇▇, to
evidence, maintain, defend or enforce this Assignment as well as ▇▇▇▇▇▇▇'▇
right, title and interest in and to the Marks and to effect the assignment and
transfer of the Marks to ▇▇▇▇▇▇▇, including but not limited to the recordation
of this Assignment with the United States Patent and Trademark Office.
10. No Prior Transfers. MASTERSET represents and warrants that it
has not previously assigned to any third party any right, title or interest in
or to the Marks or the associated goodwill. MASTERSET acknowledges that it shall
have no right to receive any royalty, fee or other share of income or revenue
that may be received by ▇▇▇▇▇▇▇ from the use, sale, license, publication,
distribution or any other transfer or exploitation of the Marks.
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11. No Licenses. Except for proprietary information agreements with
its own employees or consultants, and with the exception of standard end-user
license agreements, there are no outstanding options, licenses, or agreements of
any kind relating to the Marks, nor is MASTERSET bound by or a party to any
options, licenses, or agreements of any kind with respect to the Marks.
12. No Infringement. MASTERSET has not received any communications
alleging, nor does MASTERSET have reason to believe, that MASTERSET's use of the
Marks has violated or would violate any of the trademarks, service marks, trade
names, copyrights, or other proprietary rights of any other person or entity,
and is not aware, based on reasonable investigation, of any reasonable basis
therefor or threat thereof. MASTERSET is not aware of any violation or
infringement by a third party of any of the Marks.
13. Absolute and Exclusive Assignment. This Assignment is absolute,
exclusive and irrevocable.
14. Successors and Assigns. This Assignment shall bind and inure to
the benefit of the parties and their respective successors and assigns.
Masterset Fastening Systems, Inc., by:
------------------------------ ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇ Date
President
State of Indiana )
County of _____________________ ) ss:
On this _____________ day of ___________________, 20__ before me personally
appeared ▇▇▇▇▇ ▇▇▇▇▇ to me personally known, and known to me to be the person
who signed the foregoing assignment, and acknowledged the signing of same as his
free act and deed.
------------------------------
NOTARY PUBLIC
Seal
My Commission Expires:
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37
EXHIBIT D
OPINION OF COUNSEL FOR SELLER AND THE SHAREHOLDERS
Capitalized terms used and not otherwise defined herein have the
meanings respectively ascribed to them in the Asset Purchase Agreement.
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Indiana. Seller is duly qualified to
conduct business and is in good standing as a foreign corporation under the laws
of each jurisdiction where, by virtue of its business conducted therein, it is
required to be so qualified, except where the failure to be so qualified will
not have any material adverse effect on Seller or its business, assets or
financial condition.
(b) The authorized capital stock of Seller consists of 1,000 shares of
common stock, of which 1,000 shares have been duly and validly issued in
compliance with the securities laws of the State of Indiana and are outstanding,
fully paid, nonassessable and free of preemptive and similar rights.
(c) Seller has all necessary power, authority and capacity to carry on
its business as now being conducted, to own its assets, to sell the Assets to
Buyer as contemplated by the Agreement, to execute and deliver the Agreement,
the ▇▇▇▇ of Sale, the Patent Assignments and the Trademark Assignments
(collectively, the "Transaction Documents") and all certificates, instruments
and other documents contemplated thereby and to perform its obligations
thereunder, and all necessary action and other proceedings, including obtaining
all necessary waivers, approvals and consents from third parties and others,
required to be taken by any or all of Seller and the Shareholders to authorize
and carry out the Transaction Documents and the transactions thereunder have
been duly and properly taken or obtained.
(d) The Transaction Documents and the instruments and documents of
transfer and conveyance of the Assets in connection therewith have been duly
executed and delivered by Seller and the Shareholders party thereto,
respectively, and constitute legal, valid and binding agreements of Seller and
the Shareholders, enforceable against them in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating to or
affecting the rights of creditors generally and except for limitations imposed
by general principles of equity on the availability of equitable remedies.
(e) To the best of our knowledge and belief after reasonable inquiry,
Seller has, and at the closing on the Closing Date Buyer will acquire, good and
marketable title to all of the Assets, free and clear of all Liens, except Liens
in favor of Buyer.
(f) The execution and delivery by Seller and the Shareholders of the
Transaction Documents, the performance by each of them of its or his respective
obligations thereunder and its or his performance of, fulfillment of and
compliance with all of the terms and conditions thereof, do not and will not
conflict with, breach or result in a breach of, or constitute a default under,
result in the creation of any Lien on any of its or his properties pursuant to,
violate or
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result in a violation of any Lien, agreement, indenture or instrument known to
us, or any law, statute, code, ordinance, rule, regulation, order, judgment or
decree, to or by which any of Seller and the Shareholders is a party, is subject
or is bound.
(g) We do not know, after reasonable inquiry, of any litigation,
proceeding or governmental investigation pending or threatened against or
relating to Seller, any of the Assets or any of the transactions contemplated by
the Transaction Documents or of any legal impediment to the continued operation
and use of the Assets by Buyer in the ordinary course of business in the manner
in which the Assets have heretofore been used by Seller.
The opinions in the second sentence of paragraph (a), the opinion in
paragraph (b) that the shares of Seller have been fully paid and the opinion in
paragraph (g) are provided in reliance in part on an Officer's Certificate from
Seller, a copy of which has been provided to Buyer.
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