Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is entered into this 31st day
of July, 2008 ("EFFECTIVE Date") by and between DANBOM TEMPORARY, INC., an Iowa
corporation ("BUYER"), and CRAGAR INDUSTRIES, INC., a Delaware corporation
("SELLER").
The Seller is engaged in the business of selling and licensing others to
sell various customized vehicles, vehicle parts, kits, and other goods and
services (the "PRODUCTS") distributed under various trademarks and trade dress
(the "TRADEMARKS") through its offices located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇,
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "BUSINESS"). Seller desires to sell, and Buyer desires to
purchase, substantially all of Seller's assets used in connection with the
Business for the consideration and on the terms set forth in this Agreement.
The parties, intending to be legally bound, agree as follows:
1. PURCHASE AND SALE.
1.1. PURCHASED ASSETS. Subject to the terms and conditions stated in this
Agreement, Seller shall sell to Buyer and Buyer shall purchase from
Seller, free and clear of all liens and encumbrances, all of Seller's
rights, title and interest in and to the assets of Seller relating to
or arising from the conduct of the Business (the "PURCHASED ASSETS")
as listed below:
1.1(a). All books, records, customer lists, customer information and
credit files, supplier lists, correspondence and other files
owned by Seller and used or intended for use by Seller in the
Business, including, but not limited to, physical and digital
files and folders regardless of where or on which computer
they are stored; provided, however, that Seller shall retain
the right to reasonable access to all such books and business
records for tax and business records related to the Business
or Agreement (the "BOOKS AND RECORDS");
1.1(b). All of the intangible rights and property of Seller,
including all trade secrets; proprietary information;
know-how; inventions; going concern value; goodwill; all
trade names, corporate or other business names, trademarks,
service marks, trade dress rights, and domain names
(including all applications, registrations and common law
rights in any of the aforementioned and all goodwill
associated with any of the aforementioned); telephone,
telecopy, e-mail addresses; patents, patent applications and
all inventions claimed therein or related thereto; copyright
registrations and unregistered copyrights owned by Seller,
including, without limitation, all rights Seller has in the
rights listed on SCHEDULE A attached hereto (the "SCHEDULED
INTELLECTUAL Property") (all of the aforementioned
collectively comprising "SELLER'S INTELLECTUAL PROPERTY");
1.1(c). The right to ▇▇▇ and collect damages for past and future
infringement of Seller's Intellectual Property;
1.1(d). The content of the website of Seller (including all
copyrights relating thereto): ▇▇▇.▇▇▇▇▇▇.▇▇▇ (the "WEBSITE")
and the domain name for ▇▇▇.▇▇▇▇▇▇.▇▇▇ (the "DOMAIN NAME");
1.1(e). The telephone number 1-877-8CRAGAR (1-877-827-2427);
1.1(f). All catalogues, catalogue layouts, artwork, photography,
etc., necessary to complete a catalogue layout.
1.1(g). The contents of a storage unit located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇., ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, including but not limited to
items listed in SCHEDULE C;
1.1(h). Certain race wheel dies stored at ▇▇▇▇▇▇ Bros Machinery
Moving, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇;
1.1(i). All inventory owned by Seller including, but not limited to,
those items of inventory described in SCHEDULE D, except
items of inventory sold in the regular course of business
prior to the Closing Date;
1.1(j). All equipment owned by Seller including, but not limited to,
those items of equipment described in SCHEDULE E;
1.1(k). All memorabilia and promotional items owned by Seller from
Seller's offices including, but not limited to, those items
listed on SCHEDULE F.
1.2. INTELLECTUAL PROPERTY AGREEMENTS. As of the Effective Date, Buyer
shall assume all benefits and obligations under all license agreements
relating to Seller's Intellectual Property between Seller and any
third party, including but not limited to those licenses described in
SCHEDULE G.
1.3. EXCLUDED ASSETS. Buyer and Seller acknowledge that the insurance
policies, corporate and financial records (except as provided in
Subsection 1.1(a)), employee benefit plans, bank accounts, accounts
receivable, cash, cash equivalent assets, and investments of Seller
are not included as part of the Assets to be conveyed in this
transaction.
2. EXCLUDED LIABILITIES. Buyer does not assume and shall have no obligation
with respect to any of the liabilities, claims, obligations or agreements
of Seller except as otherwise expressly provided in this Agreement, and
Seller shall indemnify Buyer against such non-assumed liabilities, claims,
obligations or agreements until the end of the applicable statute of
limitations for such non-assumed liabilities, claims, obligations or
agreements. By way of illustration, and not in limitation of the foregoing,
Buyer does not assume:
2.1. Any liabilities or obligations of, or claims against, Seller which
arise out of the operation of the Business prior to the Closing;
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2.2. Any warranty and/or service obligations or product liability claims,
suits, losses, damages, expenses, costs or obligations related to or
arising from Products manufactured, replaced, sold or distributed in
connection with the Business prior to the date of Closing;
2.3. Any claims, suits, losses, damages, expenses, costs or obligations
arising prior to Closing out of or in connection with any employee
benefits or compensation;
2.4. Any leases for equipment or office space;
2.5. Any federal, state or local income, sales, property, or other taxes
payable by Seller;
2.6. Any amount owing to Katt Worldwide Logistics, ▇▇▇▇▇▇ Bros. Machinery
Moving Inc., Now Courier, or Power Stop;
2.7. Any agreement between Seller and Auto World Marketing, including, but
not limited to, the Sales Incentive Agreement;
2.8. Notwithstanding subsection 1.1(f) above, Buyer is not acquiring the
Order Motion Software and Buyer will have no obligation or liability
with respect to such software or any license agreements relating
thereto.
3. PURCHASE PRICE, ADDITIONAL CONSIDERATION AND TERMS
3.1. PURCHASE PRICE. The purchase price for the Purchased Assets shall be
$1,900,000.00.
3.1(a). UNAMORTIZED DEFERRED INCOME. In addition to the purchase
price in Subsection 3.1 above, Seller will pay to Buyer at
Closing the remaining amount of unamortized deferred income
from the Carlisle Tire and Wheel Co. wheel agreement.
Pursuant to this agreement there was an unamortized balance
of $53,706.80 as of May 31, 2008. The amount to be paid at
Closing will be the most recent computed number of the
unamortized balance prior to Closing. If it is determined
after Closing that the balance of the unamortized amount as
of the Closing date was less than the amount paid at Closing,
then Buyer shall reimburse Seller the difference within 15
days of such determination. If it is determined after Closing
that the balance of the unamortized amount as of the Closing
date was more than the amount paid at Closing, then Seller
shall reimburse Buyer the difference within 15 days of such
determination.
3.2. PAYMENT TERMS. The purchase price shall be payable in cash at the time
of Closing.
3.3. INTELLECTUAL PROPERTY AND OTHER INTANGIBLE ASSETS.
3.3(a). ASSIGNMENT OF SELLER'S INTELLECTUAL PROPERTY: Seller hereby
irrevocably grants, conveys, transfers, assigns and
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relinquishes exclusively to Buyer all of its rights, title
and interest in and to Seller's Intellectual Property and any
reasonably foreseeable or otherwise contemplated expansions
thereof and/or extensions thereto.
3.3(b). Seller shall not on or after the Effective Date:
3.3(b)(i) Make any claims or threats against Buyer or any third
party alleging infringement or violation of Seller's
Intellectual Property;
3.3(b)(ii) Make any claim of ownership of or right in or to any
of Seller's Intellectual Property;
3.3(b)(iii) Do or cause to be done any act contesting,
challenging or in any way impairing the validity or
enforceability of or Buyer's right, title and/or interest in
or to any part of Seller's Intellectual Property;
3.3(b)(iv) File any application seeking or otherwise attempt to
obtain any rights in any patents, trademarks, service marks,
trade dress, domain names, or copyrights that dominate,
cover, or otherwise relate to the Business, Seller's
Intellectual Property, or any of the assets transferred to
Buyer hereunder;
3.3(b)(v) Do or cause to be done any act to enforce or purporting
or attempting to enforce any of Seller's Intellectual
Property; or
3.3(b)(vi) Do or cause to be done any act to or purporting to
license, assign, otherwise transfer, covenant not to ▇▇▇,
grant a non-assert, or give permission to practice any of
Seller's Intellectual Property to any third party.
3.3(c). After the Closing Date, Buyer shall have the exclusive right
to seek and/or procure any intellectual property and similar
and/or related protection for or related to the Business,
Seller's Intellectual Property, or any of the Purchased
Assets, and Seller shall reasonably assist Buyer in Buyer's
efforts to procure and/or enforce such rights.
3.4. INTELLECTUAL PROPERTY WARRANTIES AND REPRESENTATIONS.
3.4(a). Seller hereby represents and warrants to Buyer:
3.4(a)(i) At Closing, Seller will deliver free and clear of all
liens, security interests, claims, restrictions, or
other encumbrances, all of Seller's Intellectual
Property, including, without limitation, the Scheduled
Intellectual Property, provided, however, Seller shall
obtain releases of such liens, security interests,
claims, restrictions, or other encumbrances held by
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Foothill Capital Corp. and Norwest Business Credit,
Inc. (or their respective successors in interest, as
applicable) to Buyer within 15; days after Closing;
3.4(a)(ii) To Seller's knowledge: (a) Seller has not received
any notice of a claim that any of Seller's trademark
registrations listed in the Scheduled Intellectual
Property; and (b) none of Seller's trademark
registrations listed in the Scheduled Intellectual
Property are invalid or have even been found invalid or
unenforceable for any reason in any administrative,
arbitration, judicial or other proceeding;
3.4(a)(iii) To Seller's knowledge, all filings necessary to
maintain the validity, enforceability and effectiveness
of all Seller's trademark registrations listed in the
Scheduled Intellectual Property with the listed
registering authority have been made, and all
statements made in such filings are accurate;
3.4(a)(iv) To Seller's knowledge, none of the trademark
registration applications listed in the Scheduled
Intellectual Property have been cancelled or
terminated, or been finally rejected, and all
statements made in such registration applications are
accurate;
3.4(a)(v) To Seller's knowledge, there are no limitations,
defects or other circumstances or threats, pending that
could reasonably be expected to cause the invalidity,
unenforceability or other loss of any of the trademark
registrations listed in the Scheduled Intellectual
Property;
3.4(a)(vi) Seller is not aware of any third-party claims
assertions, or threats leading Seller to believe any of
the trademark registrations listed in the Scheduled
Intellectual Property are or may be found or held by a
court of competent jurisdiction to be invalid,
unenforceable;
3.4(a)(vii) Subject to the provisions of Section 6.14 of this
Agreement, Seller has the right to use and to freely
transfer to Buyer as set forth herein, without any
obligation or liability whatsoever to make any payments
or provision of other compensation by way of royalties,
fees or otherwise, all of Seller's trademark
registrations and applications listed in the Scheduled
Intellectual Property;
3.4(a)(viii) To the Seller's knowledge, no claims are pending
against Seller by any person or entity regarding the
use of any intellectual property, similar and/or
related right or other proprietary right, including,
without limitation, Seller's Intellectual Property,
which includes, without limitation, the Scheduled
Intellectual Property;
3.4(a)(ix) To the Seller's knowledge, no claims or proceedings
are pending or threatened, against Seller alleging that
Seller is infringing upon or otherwise violating, or
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causing, contributing to or inducing its customers or
other persons or entities to infringe upon or otherwise
violate, any known right or claimed right of any person
or entity under or with respect to any intellectual
property of any other person or entity, or challenging
the validity or enforceability of any of Seller's
Intellectual Property (including, without limitation,
the Scheduled Intellectual Property);
3.4(a)(x) Seller is not aware of any infringements or violations
by third parties of Seller's Intellectual Property
(including, without limitation, the Scheduled
Intellectual Property), and Seller has not made any
claims or threats alleging any such infringement or
violation by third parties;
3.4(a)(xi) To its knowledge, Seller is not using any
confidential and/or proprietary information or know-how
or any trade secrets of others, and none of the
Purchased Assets comprise any confidential and/or
proprietary information or know-how or any trade
secrets of others;
3.4(a)(xii) To its knowledge, Seller has not disclosed to any
person not obligated to maintain the confidentiality
thereof, any trade secret, confidential and/or
proprietary information or other information the value
of which is contingent upon confidentiality or secrecy
thereof without securing an appropriate confidentiality
agreement, and there have been no material violations
of any such confidentiality obligations or any such
agreements;
3.4(a)(xiii) Other than those comprising part of Seller's
Intellectual Property, Seller has not filed any
application seeking or obtained any rights in any
patents, trademarks, service marks, trade dress, domain
names, or copyrights that dominate, cover, or otherwise
relate to the Business, the Products, or any of the
assets transferred to Buyer hereunder;
3.4(a)(xiv) Seller is not aware of any intellectual property
right or similar and/or related right that dominates
any of the registered or unregistered trademarks listed
in the Scheduled Intellectual Property;
3.4(a)(xv) Seller has not licensed, assigned, otherwise
transferred, covenanted not to ▇▇▇, granted a
non-assert, or given permission to practice any of
Seller's Intellectual Property to any third party,
other than as set forth in SCHEDULE G. Notwithstanding
anything to the contrary in this Agreement, to the
extent any agreement between Seller and any third party
relating to the Purchased Assets is not listed in
Schedule G (an "UNSCHEDULED AGREEMENT"), for a period
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of thirty (30) days from the later of Closing or when
Buyer becomes aware of such Unscheduled Agreement,
Buyer shall have the option, but not the obligation, to
assume any or all benefits and/or obligations under
such Unscheduled Agreement. Unscheduled Agreements
include, but are not limited to, the Sales Incentive
Agreement between Cragar and Auto World Marketing
effective August 1, 2006. By the time of Closing,
Seller shall provide notice of termination of the Sales
Incentive Agreement between Cragar and Auto World
Marketing to Auto World Marketing in the manner
specified in that agreement.
3.4(a)(xvi) Seller disclaims all representations and warranties
of Seller not expressly stated herein, including: any
implied warranties including those of fitness for a
particular purpose or merchantability.
3.4(B). INDEMNIFICATION: THE SELLER SHALL DEFEND AND INDEMNIFY
AGAINST, AND HOLD BUYER AND ITS Employees, DIRECTORS,
OFFICERS AND AGENTS HARMLESS FROM, ANY LOSS, COST, LIABILITY
OR EXPENSE (INCLUDING COURT COSTS AND REASONABLE FEES OF
ATTORNEYS AND OTHER PROFESSIONALS) INCURRED FROM ANY CLAIM TO
THE EXTENT ARISING OR Alleged TO ARISE OUT OF THE SELLER'S
BREACH OF ANY TERM OR CONDITION OF THIS SUBSECTION 3.4 OF
THIS AGREEMENT.
3.5. At the execution of this agreement and as additional consideration
hereof, Buyer and Seller shall enter into a Notice of Assignment for
the purpose of evidencing and/or recording the above assignments
substantially in the form of EXHIBIT I attached hereto. The parties
shall also enter into a Notice of Assignment and Assumption for the
purpose of notifying licensees of the change in ownership of the
Purchased Assets substantially in the form of EXHIBIT K attached
hereto.
3.6. ACCOUNTING FOR ROYALTIES. Seller is entitled to retain any royalties
earned prior to Closing. All royalty customers shall be notified by
Seller immediately after Closing to make royalty payments to Buyer.
Buyer shall provide an accounting to Seller for all royalties received
after Closing that were earned prior to Closing. Seller will be
entitled to all royalties earned prior to Closing; Buyer will be
entitled to all other royalties. Buyer will remit to Seller its share
of the royalties within thirty (30) days of receipt. If Seller
receives any unearned royalty after Closing it shall immediately remit
such royalty to Buyer to be accounted for as provided herein.
3.7. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets as set forth in SCHEDULE H, such allocation
to be made as provided in Section 1060 of the Internal Revenue Code of
1986 ("CODE"). Buyer and Seller shall each file Form 8594 (Asset
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Acquisition Statement under Section 1060) and any required amendment
thereto on a timely basis reporting the allocation of the Purchase
Price consistent with the allocation in SCHEDULE H. Buyer and Seller
shall not take any position on their respective income tax returns
that is inconsistent with the allocation of the Purchase Price as
agreed to in SCHEDULE H.
3.8. AGREEMENTS NOT TO COMPETE. At execution of this Agreement, Seller
shall enter into an Agreement Not to Compete substantially in the form
of EXHIBIT J attached hereto.
4. CLOSING DATE AND PLACE. The Closing shall take place on July 31, 2008 (the
"CLOSING DATE") in Tempe, AZ at the offices of Global Entertainment
Corporation or at such other time and location as the parties may agree.
Time is of the essence for this Agreement.
5. FURTHER COOPERATION.
5.1. EXECUTION OF DOCUMENTS. At the reasonable request of the other party,
each party will execute and deliver such other instruments and do and
perform such other acts and things as may be necessary or desirable
for effecting completely the consummation of the transactions
contemplated hereby, including, without limitation, execution,
acknowledgment, and recordation of other such papers, and using
commercially reasonable efforts to obtain the same from the respective
inventors or other individuals or parties, as necessary or desirable
for fully perfecting and conveying unto the parties the benefit of the
transactions contemplated hereby.
5.2. PRIVILEGED AND PROTECTED INFORMATION. To the extent any
attorney-client privilege or the attorney work-product doctrine
applies to any documents, files, or other information relating to the
Purchased Assets, Seller will ensure that, if any such documents,
files, or other information remains under Seller's possession or
control after Closing, it is not disclosed to any third party unless
(a) disclosure is ordered by a court of competent jurisdiction, after
all appropriate efforts to prevent disclosure have been exhausted, and
(b) Seller gave Buyer prompt notice upon learning that any third party
sought or intended to seek a court order requiring the disclosure of
any such portion of such documents, files, or other information. In
addition, Seller will continue to reasonably prosecute, maintain, and
defend the Purchased Assets at its sole expense until the Closing.
5.3. PROSECUTION AND LITIGATION ASSISTANCE. Seller will also, at the
reasonable request of Buyer after Closing, assist Buyer in providing,
and obtaining, from individuals who are employees of Seller at the
time of Buyer's request, prompt production of pertinent facts and
documents, otherwise giving of testimony, execution of petitions,
oaths, powers of attorney, specifications, declarations or other
papers and other assistance reasonably necessary for filing patent
applications, trademark applications, trademark renewals, enforcement
or other actions and proceedings with respect to the claims under the
Purchased Assets. Buyer shall compensate Seller for any reasonable,
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documented disbursements and time incurred after Closing in connection
with providing assistance under this subparagraph 5.3 in connection
with any enforcement or other infringement action regarding the
Purchased Assets, under a standard billable hour rate of Seller.
Seller shall furnish Buyer an advance, written estimate of the fees
and costs for such assistance and Buyer shall have agreed in writing
to pay such fees and costs.
5.4. Seller shall pass through to Buyer all manufacturer warranties, if
any, on the inventory items listed in Schedule D.
6. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Buyer as follows:
6.1. LEGAL STATUS. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware, has full corporate power and authority to enter into this
Agreement. Seller has full power to carry on the Business as presently
conducted, and to own, lease, and operate its assets. When executed,
this Agreement will be the legal, valid and binding obligations of
Seller, enforceable in accordance with its terms.
6.2. NO ADVERSE CHANGE. Since June 30, 2008, there has not been: (a) any
material adverse change in the business or financial condition of the
Business; (b) any material loss, damage or destruction to the
properties of the Business (whether or not covered by insurance); (c)
any mortgage, pledge, lien or encumbrance upon any of the properties
or assets of the Business, including but not limited to the Purchased
Assets, or (d) any sale, transfer or other disposition of assets of
the Business except in the ordinary and normal course of business.
Buyer does not assume, and shall not in any event be responsible or
liable for, any loss or damage to any of the properties and assets to
be transferred from any cause whatsoever and the risk of loss shall
remain on the Seller.
6.3. TITLE TO ASSETS. Seller has, and as of the Closing Date will have,
good and marketable title to all of the Purchased Assets, all of which
will be transferred free and clear of all liens, claims and
encumbrances whatsoever. Seller shall take all action necessary both
before and after Closing to assure full compliance with this warranty
and representation. No liens, including, without limitation, mechanics
liens, will attach to the Purchased Assets after the Closing Date as a
result of material, supplies or services furnished to Seller prior to
the Closing Date. If a lien is asserted against the Purchased Assets:
(a) Seller agrees to promptly discharge such lien and (b) Seller shall
indemnify, and hold Buyer harmless, from any loss, damages and expense
arising therefrom.
6.4. REGISTRATION OF ▇▇▇▇▇▇ ▇▇▇▇. Seller currently owns a pending trademark
application (Serial No. 78/836,465) to register ▇▇▇▇ ▇▇▇▇▇▇ with the
United States Patent and Trademark Office. Before the Closing Date,
Seller warrants that it will file a valid statement of use in such
trademark application.
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6.5. RECORDATION OF RELEASE OF SECURITY INTERESTS. For all of Seller's
Intellectual Property currently subject to any liens, security
interests, claims, restrictions, or other encumbrances, Seller shall
obtain releases of such liens, security interests, claims,
restrictions, or other encumbrances and Seller warrants it shall
deliver such releases to Buyer before Closing, provided, however,
Seller shall obtain releases of such liens, security interests,
claims, restrictions, or other encumbrances held by Foothill Capital
Corp. and Norwest Business Credit, Inc. (or their respective
successors in interest, as applicable) to Buyer within 15 days after
Closing.
6.6. RENEWAL OF CRAGAR AMERICA'S CHOICE ▇▇▇▇. Before the Closing Date,
Seller warrants that it shall file valid renewal documents with the
U.S. Patent and Trademark Office for U.S. Trademark Registration No.
1,478,604.
6.7. RECORDATION OF MEXICAN ASSIGNMENT OF ▇▇▇▇▇▇ ▇▇▇▇. Within a reasonable
time after the Closing Date not to exceed thirty (30) days, Seller
warrants that it shall record the assignment of Mexican Registration
No. 354,546.
6.8. NO VIOLATION. Neither the execution and delivery of this Agreement or
the other documents and instruments to be executed and delivered by
Seller pursuant hereto, nor the consummation by Seller of the
transactions contemplated hereby or thereby:
6.8(a). Will violate any provision of the Articles of Incorporation
or Bylaws of Seller;
6.8(b). Will violate or be in conflict with any applicable law or any
judgment, decree, injunction or order of any court or
governmental agency or authority; or
6.8(c). Violate or conflict with or constitute a default (or an event
which, with notice or lapse of time or both, would constitute
a default) under or will result in the termination of, or
accelerate the performance required by, or result in the
creation of any lien, security interest, charge or
encumbrance upon any of the Purchased Assets under (i) any
term or provision of the Articles of Incorporation or Bylaws
of Seller or (ii) any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or
character to which Seller is a party or by which its assets
or properties may be bound or affected, other than violations
or conflicts which would not have a material adverse effect
on the Business or the Purchased Assets. By way of example
only, the license agreement between Seller and Carlisle Tire
and Wheel Co. expires on July 13, 2015 (pursuant to Amendment
B thereto), and Seller warrants it has the right to assign
this license agreement to Buyer (in accordance with the
consent to assignment executed on behalf of the licensee
dated July __, 2008) and entering into this Agreement will
not cause termination of such license agreement.
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6.9. CONSENTS. No authorization, consent, approval, order of or filing with
or notice to any governmental agency, instrumentality or authority is
necessary for the execution and delivery of this Agreement by Seller
or the consummation by Seller of the transactions contemplated hereby.
6.10. CONTRACTS AND AGREEMENTS. Seller is not party to any contract or
agreement relating to the Purchased Assets or the Business except as
shown on SCHEDULE G attached hereto. SCHEDULE G lists all contracts to
which Seller is party and that Buyer is assuming.
6.11. FINANCIAL STATEMENTS. Seller has provided historical financial
information regarding the Business to Buyer as set forth in Schedule
B. Seller warrants that such financial information presents fairly the
financial condition of the Business and results of operation of the
Business for the dates or periods indicated and are true and complete
in all material respects and do not contain any untrue statement of
material fact or omit any material fact necessary to make such
information not misleading. The information in Schedule B was prepared
in accordance with generally accepted accounting principles and on a
basis consistent with Seller's past financial statements and the terms
of this Agreement.
6.12. DEFAULT UNDER CONTRACTS. Seller is not in material violation, breach
or default under any provision of any contract or agreement described
in Schedule G or to which it or its assets or properties are subject
or bound, and, to Seller's knowledge, no event has occurred which, but
for the passage of time or giving of notice, or both, would constitute
such a violation, breach or default. To the best of Seller's
knowledge, no party to any such contract or agreement has asserted any
such violation, breach or default by any other party thereto and all
such contracts or agreements are binding upon all parties thereto and
their successors, assigns and heirs.
6.13. LITIGATION. Seller is not a party to, nor to the best of Seller's
knowledge is there threatened, any litigation, proceeding or
controversy before any court or administrative agency, and Seller is
not in default with respect to any judgment, order, writ, injunction
or decree of any court or administrative agency.
6.14. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent that
liabilities are incurred in the ordinary and usual course of business
which do not materially affect the Business, Seller has no debt,
liability, or obligation of any nature, whether accrued, absolute,
contingent, or other, and whether due or to become due, including, but
not limited to, liabilities or obligations on account of taxes, other
governmental charges, duties, penalties, interest or fines and
unfunded past service liabilities to any pension, profit sharing, or
similar plan, and, to the best of Seller's and the Shareholder's
knowledge, there is no basis for the successful assertion against the
Seller of any such debt, liability or obligation. Buyer acknowledges
that, in the ordinary course of business, assets of Seller are pledged
as security relative to primary borrowing arrangements with third
party financial institutions by Seller and Seller's shareholder.
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6.15. TAX RETURNS. As of the Closing Date, Seller shall have filed all tax
returns and reports (foreign, federal, state, and local) required to
be filed by it, and all such returns are true, accurate, and correct.
Seller has paid all taxes shown to be due and payable on such returns
and all assessments and all other taxes, governmental charges, duties,
penalties, interest, and fines due and payable by it on or before the
Closing Date. To the best of Seller's knowledge, there are no suits,
actions, claims, investigations, inquiries, or proceedings now
threatened or pending against Seller in respect of taxes, governmental
charges, duties, or assessments, or any matters under discussion with
any governmental authority relating to taxes, governmental charges,
duties, or assessments, or any claims for additional taxes,
governmental charges, duties, or assessments asserted by any such
authority and, to the best of Seller's and the Shareholder's knowledge
there is no basis for the successful assertion thereof. Seller has
withheld or collected from each payment made to its employees the
amount of all taxes (including, but not limited to, federal income
taxes, Federal Insurance Contribution Act taxes, and Federal
Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid when due the same to the proper tax receiving
officers.
6.16. EMPLOYEES. On or prior to the Closing Date, Seller shall have
satisfied all of its obligations for accrued employee payroll and
accrued employee vacation benefits through the Closing Date. Seller
has no right, claim, or agreement pertaining to the employees which
would affect the right of Buyer to employ such employees, and Seller
recognizes that Buyer may, but shall have no obligation to, employ
such employees. In order to facilitate a smooth transition of the
Business, in the event Buyer elects not to employ Seller's employees,
Buyer shall have the right (but not the obligation) to occasionally
make reasonable inquiries of Seller's employees regarding the
pre-close operations of the Business for a period of six (6) months;
however, Seller is under no obligation to maintain the employment of
Seller's employees. Seller's employees shall use commercially
reasonable efforts in preparing responses to Buyer's inquiries and
shall respond to such inquiries promptly. The parties intend that the
right of Buyer to make such inquiries does not obligate Seller to
provide consulting or similar services, but is limited to specific and
historical matters.
6.17. INSURANCE. Seller shall maintain its present insurance coverage with
respect to the Business and the Purchased Assets in full force and
effect until the Closing Date.
6.18. AUTHORIZATION AND APPROVAL OF AGREEMENT. All proceedings or corporate
action required to be taken by Seller relating to the execution and
delivery of this Agreement and the consummation of the Transactions
contemplated hereby have been or will be taken prior to the Closing
Date. Seller has fully disclosed all material information regarding
the Business and the Purchased Assets to Buyer.
6.19. TAX STATUS. Seller is not a person other than a United States person
within the meaning of the Internal Revenue Code.
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6.20. COMPLIANCE WITH LAWS. To the best of Seller's knowledge, Seller has
operated the Business and the Purchased Assets in compliance with all
material applicable laws, rules and regulations.
6.21. ACCURATENESS OF REPRESENTATIONS AND WARRANTIES. To the best of the
Seller's knowledge, no representation or warranty by Seller and no
statement contained in any document delivered or to be delivered to
Buyer hereunder contains or will contain any untrue statement of a
material fact or omits or will omit a material fact necessary to make
the statements contained therein not misleading.
6.22. SELLER'S KNOWLEDGE. Any reference to Seller's knowledge or awareness,
or similar words, means only such actual knowledge or actual notice as
has been acquired by ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President of Seller and
primary officer responsible for Cragar operations, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
President and CEO of Seller's shareholder, Global Entertainment
Corporation ("GEC"), ▇▇▇▇▇ ▇▇▇▇▇▇, SVP and CFO of GEC, or ▇▇▇▇▇ ▇▇▇▇▇,
VP and General Counsel of GEC, but specifically excludes all imputed
or constructive knowledge or notice and any duty to investigate.
6.23. COMPLETENESS OF DISCLOSURE. To the best of Seller's knowledge, the
listing of Purchased Assets in Subsection 1.1 above is a complete
listing (except for items of nominal value) of Seller's assets
relating to or arising from the conduct of the Business, the listing
of Scheduled Intellectual Property is a complete listing of Seller's
Intellectual Property relating to the Business, and there are no
undisclosed liabilities. Seller owns no other assets (except for items
of nominal value) relating to the Business other than those listed in
Subsection 1.1. In addition to and without waiving or otherwise
limiting Buyer's other rights or available remedies, to the extent
Seller's disclosures in this regard are not complete, Buyer shall be
entitled to pursue one or more of the following remedies: (1)
immediate transfer of such undisclosed asset(s) and/or undisclosed
intellectual property from Seller to Buyer; and (2) injunctive relief
to prevent Seller, Seller's shareholder, Global Entertainment Corp.,
or any successor-in-interest of Seller or Seller's shareholder, from
using such undisclosed asset(s) and/or undisclosed intellectual
property and to prevent transfer of the same to anyone other than
Buyer, as well as costs and reasonable attorney's fees incurred to
seek such injunctive relief.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
Seller that:
7.1. ORGANIZATION. At the time of the execution of this Agreement, Buyer is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Iowa and has full corporate power and
authority to enter into this Agreement and to carry out the
transaction contemplated by this Agreement and to carry on its
business and to own, lease or operate its properties. When executed,
this Agreement will be the legal, valid and binding obligations of
Buyer, enforceable in accordance with its terms.
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7.2. AUTHORIZATION AND APPROVAL OF AGREEMENT. All proceedings or corporate
action required to be taken by Buyer relating to the execution and
delivery of this Agreement, and the consummation of the transaction
shall have been taken at or prior to the Closing. This Agreement is,
and the other agreements and instruments to be executed and delivered
by Buyer in connection with the transaction will be legal, valid and
binding obligations of Buyer.
7.3. BUYER PERFORMANCE NOT CONDITIONED ON FINANCING. Buyer's performance of
its financial obligations to Seller under the terms of this Agreement
is not conditioned or dependent upon Buyer securing financing from any
third party, and Buyer has the financial capacity as of the Effective
Date and will have such financial capacity as of the Closing Date to
perform its financial obligations to Seller.
7.4. NO ADVERSE CHANGE. Since June 30, 2008, there has not been: (a) any
material adverse change in the financial condition of the Buyer; and
(b) any material loss, damage or destruction to the properties of the
Buyer (whether or not covered by insurance).
7.5. NO VIOLATION. Neither the execution and delivery of this Agreement or
the other documents and instruments to be executed and delivered by
Buyer pursuant hereto, nor the consummation by Buyer of the
transactions contemplated hereby or thereby: (a) will violate any
provision of the Articles of Incorporation or Bylaws of Buyer; or (b)
will violate or be in conflict with any applicable law or any
judgment, decree, injunction or order of any court or governmental
agency or authority, to the best of Buyer's knowledge.
7.6. CONSENTS. To the best of Buyer's knowledge, no authorization, consent,
approval, order of or filing with or notice to any governmental
agency, instrumentality or authority is necessary for the execution
and delivery of this Agreement by Buyer or the consummation by Buyer
of the transactions contemplated hereby.
7.7. ACCURATENESS OF REPRESENTATIONS AND WARRANTIES. To the best of Buyer's
knowledge, no representation or warranty by Buyer and no statement
contained in any document delivered or to be delivered to Seller
hereunder contains or will contain any untrue statement of a material
fact or omits or will omit a material fact necessary to make the
statements contained therein not misleading.
7.8. RETENTION OF AND ACCESS TO RECORDS. From and after the Closing Date,
for a period of six (6) years Buyer shall: (a) preserve the books and
records related to the Business that were transferred to Buyer; and
(b) afford Seller and/or its shareholder, during normal business
hours, reasonable access to and opportunity to copy the books and
records related to the Business that were transferred to Buyer to the
extent that the access may be reasonably required for the preparation
of tax returns and audits or other reasonable business purposes,
provided the access does not unreasonably disrupt the Business or
Buyer.
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7.9. PRODUCT LIABILITY INSURANCE. Subsequent to the Closing, Buyer will
carry product liability insurance (but will not be obligated to cause
the Seller or GEC to be carried as additional insureds under such
policy(ies)) for as long as any applicable statute of limitations for
product liability claims may be asserted against Seller. Also
subsequent to Closing, Seller will purchase tail coverage for three
(3) years from the Closing for all product liability coverage Seller
maintains in the operation of the Business.
8. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE AT CLOSING. The obligation of
Buyer to consummate the transaction are subject to the fulfillment of each
of the following conditions:
8.1. LEGAL MATTERS. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental thereto and all
other related legal matters shall have been approved by counsel for
Buyer.
8.2. CLOSING DOCUMENTS. Seller shall have delivered to Buyer in a form
reasonably satisfactory to Buyer:
8.2(a). Documents and instruments of transfer for the Purchased
Assets including, without limitation, assignments of
intangible property, and ▇▇▇▇ of Sale for tangible personal
property;
8.2(b). Copies or originals of all Seller's files, papers and
records, licenses, permits, approvals, applications,
correspondence and other documents relative to the Purchased
Assets;
8.2(c). Termination statements and any other termination documents
terminating all liens and encumbrances in and to the
Purchased Assets;
8.2(d). Consent from Carlisle Tire and Wheel Co. to the assignment of
its license agreement with Seller to Buyer as part of this
Agreement;
8.2(e). Proof of payment of all amounts due to Katt Worldwide
Logistics, Now Courier, or Power Stop;
8.2(f). A copy of the resolutions adopted by Seller's shareholder and
a copy of the resolutions adopted by Seller's Board of
Directors, both certified by authorized officers of Seller,
authorizing Seller to execute, deliver and perform this
Agreement (and the other agreements contemplated hereby);
8.2(g). All other agreements, certificates, instruments and documents
reasonably requested by Buyer in order to fully consummate
the transaction contemplated hereby and carry out the
purposes and intent of this Agreement;
8.2(h). A copy of the Agreement Not to Compete executed by Buyer and
Seller.
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8.3. NO ACTIONS, SUITS, ETC. There shall be no injunction or similar legal
order effective, nor shall there be any litigation, proceeding, or
investigation, either administrative or judicial, pending or
threatened, for the purpose of enjoining or preventing the
consummation of the transaction, or otherwise claiming that this
Agreement, or the consummation of the transaction, is improper.
8.4. NO MATERIAL ADVERSE CHANGE. The Business, Purchased Assets, properties
and operations of Seller shall not have been materially adversely
affected in any way as the result of any fire, accident or other
casualty or act of God or the public enemy.
8.5. STATEMENT OF USE FOR ▇▇▇▇▇▇ ▇▇▇▇. Before the Closing Date, Seller
shall file a valid statement of use in pending trademark application
Serial No. 78/836,465 for the ▇▇▇▇ ▇▇▇▇▇▇.
8.6. CONDITIONS PRECEDENT. If any of the above conditions precedent is not
met or fulfilled, or is violated, Buyer shall not be under any
obligation to consummate the transaction, and may terminate this
Agreement without liability, provided, however, that the termination
of this Agreement by Buyer shall not relieve Seller from liability for
any breach of this Agreement. Buyer shall promptly provide Seller with
written notice of the non-fulfillment of such conditions precedent.
9. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE AT CLOSING. The obligations of
Seller to consummate this transaction are subject to the fulfillment of
each of the following conditions:
9.1. COMPLIANCE WITH COVENANTS. Buyer shall have fully performed and
complied with all agreements, covenants and conditions required by
this Agreement to be performed or complied with or executed by it at
or prior to the Closing. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental thereto
and all other related legal matters shall have been approved by
counsel for Seller.
9.2. PAYMENT AT CLOSING. Buyer shall deliver to Seller the payment provided
for in Subsection 3.1.
9.3. CLOSING DOCUMENTS. Buyer shall have delivered to Seller in form
reasonably satisfactory to Seller:
9.3(a). A copy of the resolutions adopted by Buyer's Board of
Directors, certified by an authorized officer of Buyer,
authorizing Buyer to execute, deliver and perform this
Agreement (and the other agreements contemplated hereby).
9.3(b). All other agreements, certificates, instruments and documents
reasonably requested by Seller in order to fully consummate
the transaction and carry out the purposes and intent of this
Agreement.
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9.3(c). A copy of the Agreement Not to Compete executed by Buyer and
Seller.
10. INDEMNITY.
10.1. SELLER INDEMNITY. Seller shall indemnify and save and hold Buyer
harmless from and against, up to the amount of the Purchase Price as
set forth in Subsection 3.1 and up to three (3) years after the
Closing, any claim, liability, loss, damage, cost, expense or
deficiency (a "Claim"), (including, without limitation, reasonable
attorneys' fees and other legal costs and expenses), to the extent
arising out of, resulting from, or relating to:
10.1(a). Any breach or inaccuracy of any representation, warranty or
covenant made by Seller in or pursuant to this Agreement or
the documents referred to herein or executed in connection
herewith.
10.1(b). Any third party claims in any way arising out of, resulting
from, or relating to the operation and ownership of the
Purchased Assets and the Business on or before the Closing
Date.
10.1(c). Any obligation or liability of Seller which is not assumed by
Buyer.
10.2. BUYER'S INDEMNITY. Buyer shall indemnify and save and hold Seller
harmless from and against, up to the amount of the Purchase Price as
set forth in Subsection 3.1, any Claim (including, without limitation,
reasonable attorneys' fees and other legal costs and expenses) for the
duration of the applicable statute of limitations of such Claim, to
the extent arising out of, resulting from, or relating to:
10.2(a). Any breach or inaccuracy of any representation, warranty or
covenant made by the Buyer in or pursuant to this Agreement
or the documents referred to herein or executed in connection
herewith, provided however the indemnity obligation in this
Subsection 10.2(a) shall be for only up to three (3) years
after the Closing.
10.2(b). Any third party claim in any way arising out of, resulting
from, or relating to the operation of the Business or
ownership of the Purchased Assets and/or assumed liabilities,
after the Closing Date except to the extent such claim,
liability, loss, damage, cost, expense or deficiency results
from a breach of any representations, warranties, covenants
or agreements of Seller or Shareholder hereunder.
10.2(c). The performance by Buyer of the obligations to have been
performed by Buyer after the Closing including, specifically,
the Contracts to be assumed by Buyer as set forth on SCHEDULE
G.
10.2(d). Any claims, suits, losses, damages, expenses, costs or
obligations arising out of or in connection with the actions,
inactions or activities of Buyer after Closing.
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10.3. SURVIVAL. All of the representations, warranties, and indemnification
obligations of the parties contained in this Agreement shall survive
until the expiration of the applicable statue of limitations for such
representations, warranties, or Claims. In the event of a change in
control of Seller, Seller's successor-in-interest shall assume
Seller's indemnification obligations; in the event of Seller's
dissolution, Global Entertainment Corporation (or its successor in
interest) shall assume Seller's indemnification obligations.
10.4. INDEMNITY CONDITIONS. All indemnity, defense and hold harmless
obligations under this Agreement are strictly conditioned on prompt
written notice, tender of defense and settlement, and reasonable
cooperation, by the party to be indemnified.
11. ALTERNATIVE RESOLUTION OF DISPUTES. If a dispute between the parties arises
out of or related to this Agreement, the parties shall use the following
procedure for resolution:
11.1. INITIAL MEETING. A meeting, called by any party, shall be promptly
held between all parties attended by representatives of each party
having decision-making authority regarding the dispute who shall
attempt in good faith to negotiate a resolution of the dispute. Such
meeting shall be held within five (5) working days of such written
notice by the party requesting the meeting.
11.2. ADR PROCESS. If, within ten (10) days after such meeting, the parties
have not succeeded in reaching a settlement of the dispute, they shall
promptly proceed to formal Alternative Dispute Resolution by jointly
appointing a mutually acceptable neutral ADR provider such as United
States Arbitration and Mediation or other organization not affiliated
with either party to the dispute. If the parties cannot mutually agree
upon a single neutral ADR provider, either party may petition the Iowa
District Court for ▇▇▇▇▇▇▇▇▇ County for the Court appointment of a
neutral ADR provider. Such petition shall be responded to within ten
(10) days of service of notice on the other parties and the hearing
shall be held within twenty (20) days of the filing of the petition.
11.3. MEDIATION, ARBITRATION AND ENFORCEMENT. Upon the selection of an
acceptable single neutral ADR provider, the parties shall, within ten
(10) days of appointment of the neutral ADR provider, enter into no
less than twenty-four (24) hours of one-on-one mediation in an attempt
to resolve the dispute and, at the end of this time period unless the
parties otherwise mutually agree to extension, the parties shall
proceed into binding arbitration on a timetable to be established by
the neutral ADR provider who shall render a binding arbitration
decision within ten (10) working days of final submission of the
matter to arbitration by the parties. The decision of the arbitrator
shall be binding and final and the parties shall proceed under the
provisions of Chapter 679A to appeal from or enforce the decision.
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12. MISCELLANEOUS.
12.1. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement between the parties with respect to its subject matter and
supersedes all prior agreements and understandings, oral or written,
between the parties with respect to its subject matter. This Agreement
may not be amended orally, but only by an agreement in writing signed
by the parties.
12.2. BROKERS. Buyer represents and warrants to Seller that no broker,
finder, or other financial consultant has acted on its behalf in
connection with this Agreement or the transaction. Seller represents
and warrants to Buyer that no broker, finder, or other financial
consultant has acted on its behalf in connection with this Agreement
or the transaction other than ▇▇▇▇▇▇ Capital Markets, LLC. Seller
shall indemnify and save Buyer harmless from any claim, demand,
commission, or other compensation of any broker, finder, other
financial consultant, or similar agent claiming to have been employed
by or on behalf of that party, and to bear the costs of legal expenses
incurred in defending against any such claim.
12.3. NOTICES. Any notices to be given shall be in writing either by
personal delivery or by mail, registered or certified, postage prepaid
with return receipt requested or by facsimile with receipt confirmed
by return facsimile. Mailed notices shall be addressed to the parties
at the following addresses:
If to Buyer: With a copy to:
Danbom Temporary, Inc. ▇▇▇▇▇▇▇, Stave & Co.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Box 175
Attn: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: 712-262-____
If to Seller or Shareholder: With a copy to:
Cragar Industries, Inc. General Counsel
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇ Global Entertainment Corporation
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇: [name] ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
12.4. BINDING EFFECT. Except as may be otherwise provided, this Agreement
and all of its provisions shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. For example, in the event of the dissolution of
Seller, the provisions of this Agreement shall be binding on Seller's
shareholder, Global Entertainment Corporation.
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12.5. HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
12.6. EXHIBITS AND SCHEDULES. The Exhibits and Schedules referred to in
this Agreement constitute an integral part of this Agreement as if
fully written herein.
12.7. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
12.8. GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with, the internal laws of the State of Iowa
without giving effect to its conflict of law provisions.
12.9. JURISDICTION. Sole jurisdiction for any legal action arising out of
or pertaining to this agreement brought by Seller shall be with the
Iowa District Court for ▇▇▇▇▇▇▇▇▇ County, and the parties hereby
irrevocably consent to personal jurisdiction and venue in such Court.
Sole jurisdiction for any legal action arising out of or pertaining to
this agreement brought by Buyer shall be with the Arizona District
Court for Maricopa County, and the parties hereby irrevocably consent
to personal jurisdiction and venue in such Court.
12.10. SEVERABILITY. If any provision of this Agreement shall be held
unenforceable, invalid, or void to any extent for any reason, such
provision shall remain in force and effect to the maximum extent
allowable, if any, and the enforceability or validity of the remaining
provisions of this Agreement shall not be affected thereby.
The parties have executed this Agreement as of the date first above
written.
DANBOM TEMPORARY, INC. CRAGAR INDUSTRIES, INC.
By: /s/▇▇▇ ▇▇▇▇▇▇ By: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------- -----------------------------------
▇▇▇ ▇▇▇▇▇▇, President ▇▇▇▇ ▇▇▇▇▇▇▇▇, Its President
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