Exhibit 10.1
AGREEMENT OF SALE OF ASSETS
THIS AGREEMENT OF SALE OF ASSETS (the "Agreement") is made and entered
into as of the 8th day of April, 2004, by and among Xact Aid, Inc., a California
corporation ("Seller"), and QT 5, Inc., a Delaware corporation ("Buyer").
WITNESETH
WHEREAS, the parties hereto desire that certain of Seller's assets be
sold to Buyer pursuant to this Agreement on the date and at the time provided
for herein (as further defined below, the "Closing Date"), subject to the terms
and conditions of this Agreement; and
WHEREAS, the parties hereto desire to set forth certain undertakings,
conditions, representations, warranties, and covenants made by each other as an
inducement to the consummation of the sale and certain additional agreements
related to the sale; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto do hereby agree as follows:
SECTION 1
PURCHASE AND SALE OF ASSETS
1.1 Substantive Terms of the Purchase and Sale of Corporation Assets.
Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, on
the terms and subject to the conditions of this Agreement, certain of Seller's
assets, as hereinafter set forth, in exchange for the consideration hereinafter
described in paragraph 1.6. In consideration of the mutual covenants,
agreements, representations, and warranties contained in this agreement, the
parties agree as follows:
1.2 Purchased Assets. Subject to the terms and conditions set forth
in this Agreement, Seller agrees to sell, convey, transfer, assign and deliver
to Buyer, and Buyer agrees to purchase from Seller, all of Seller's right, title
and interest in and to the following assets, including all goodwill appurtenant
thereto (collectively, the "Purchased Assets"):
(a) The confidential and proprietary information relating to
Seller's products, including any formula, pattern,
compilation, method, invention, technique or process used in
the manufacture of such products (collectively, the
"Know-How");
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(b) The words, symbols, devices, logos and other designations
which are used by Seller to identify and distinguish Seller's
products (collectively, the "Trademarks");
(c) All registrations and applications for registrations for the
Trademarks, it any;
(d) All registrations for any and all of Seller's domain names,
together with source codes, user name and passwords, and any
and all documents necessary or required to transfer such
domain names to Buyer (collectively, the "Registrations");
(e) All designs and copyrights for labels, packages and other
commercial designs used for or in connection with the
Trademarks (collectively, the "Designs"),
(f) All of Seller's rights under any claim that may have arisen
in respect of the Know-How, the Trademarks, the
Registrations or the Designs;
(g) All of Sellers books, records, notes or other materials
relating to Seller's suppliers and customer list; and
(h) The Inventory (as defined and discussed below).
1.3 Definition. For purposes of this Agreement, "Inventory" means the
value of Seller's inventory of product on hand as of the Closing Date. On the
day prior to the execution of this contract. Buyer shall conduct a physical
inventory of Seller's merchandise. The Buyer shall have the right to conduct the
inventory at its sole discretion, provided that Buyer shall conduct such
inventory during regular business hours and in a manner that does not materially
interfere with Seller's business and operations. The inventory shall be in
writing and shall identify the quantity of each item, the value per unit of such
item, and the aggregate value for such item. Each item shall be valued on a
cost-basis and through the use a purchase invoice for such item. Seller shall
supply to Buyer all records that disclose the cost of said inventory. The final
inventory value shall be the figure used by the parties in determining the
consideration to be paid as set forth in paragraph 1.6.
1.4 Excluded Assets. The Purchased Assets shall specifically and
expressly exclude my the following:
(a) Those assets disposed of in the ordinary course of Seller's
business or as permitted by this Agreement;
(b) Seller's accounts receivable as of the Closing Date, as
reflected on Seller's books and records; and
(a) Any and all other assets specified or reserved under this
Agreement.
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1.5 Change of Corporation's Name. Seller herein agrees that after the
Closing Date. Seller shall not use or employ in any manner directly or
indirectly the names "Xact Aid" or "Exact Aid." and shall further take or cause
to be taken all necessary action to change Seller's name so as not to conflict
with the foregoing restricted names.
1.6 Consideration. As full payment for Seller's sale of the Purchased
Assets to Buyer, Buyer shall pay to Seller the following:
(a) Inventory value, as determined by the physical inventory
conducted pursuant to paragraph 1.3(a), in the amount of $ 35,701.00 , payable
to Seller on the Closing Date; and
(b) Any credits received by Buyer from Water Gel in connection with
that certain previously-existing credit memorandum in the approximate amount of
$27,000.00, payable from time to time to Seller in immediately available funds
promptly as and when received by Buyer.
1.7 Terms of Payment Buyer shall pay to Seller the total
consideration set forth above 'n accordance with this Agreement as follows:
(a) A down payment of $5,000.00, in immediately available funds, due
and payable on the Closing Date; and
(b) The balance of the consideration to be paid in equal monthly
installments of $5.000.00 until such time as the total consideration, together
with interest thereon at the per annum rate of 5%, is paid in full. The terms of
Buyer's repayment of such sum is evidenced by that certain promissory note of
even date herewith, a copy of which is attached to this Agreement as Exhibit "A"
and incorporated herein by this reference.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller, in order to induce the Buyer to execute this Agreement and to
consummate the transactions contemplated herein, represents and warrants to
Buyer as set forth below. Each such representation and warranty is true as of
the date hereof and shall remain true through the Closing Date and forever
thereafter and shall inure to the benefit of Buyer and its successors and
assigns.
2.1 Organization and Qualification. Seller is duly organized, validly
existing and in good standing under the laws of the State of California, with
all requisite power and authority to own its property and to carry on its
business as it is now being conducted. This Agreement has been approved by all
action necessary on the part of Seller and. when signed, will be a valid and
binding agreement of Seller.
2.2 Ownership of Seller. Seller is authorized to issue one class of
stock, no par value per share, and. as of the date of this Agreement and on the
Closing Date, Xxxx X. Brunette is and shall be the sole shareholder of Seller.
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2.3 Litigation. To the best of Seller's knowledge, no action, suit,
inquiry, audit, proceeding or investigation by or before any court or
governmental or other regulatory or administrative agency or commission is
currently pending or threatened against, involving or arising in connection with
the Purchased Assets or that question the validity of this Agreement or any
action taken or to be taken by the Seller pursuant to this Agreement.
2.5 Validity and Registration of Trademarks. Xxxx X. Xxxxxxxx had
previously filed a trademark application for "Xact Aid;" however, the parties
have discovered that such application has been abandoned. Seller and Xxxx X.
Xxxxxxxx agree to cooperate with Buyer and to do all things reasonably necessary
in connection with the refilling or reviver of the "Xact Aid" trademark
application, the costs of which shall be borne solely by Buyer. If necessary,
Xxxx X. Xxxxxxxx shall assign such application to Buyer at Buyer's sole cost and
expense.
2.6 Title to the Purchase Assets. Seller is the owner of, and has all
right title and interest to the Purchased Assets, free and clear of all liens,
claims and encumbrances.
2.7 Intellectual Property Rights. Seller has not granted to any
person or entity any intellectual property right with respect to the Purchased
Assets, and, to the best of Seller's knowledge, the Purchased Assets and the use
thereof will not infringe upon or violate any intellectual property right of any
person or entity.
2.8 Liability to Employees. To the best of Seller's knowledge, there
are no unpaid obligations to any of Seller's employees.
2.9 Conduct of Business in Normal Course. Prior to the Closing Date,
Seller shall carry on its business and activities diligently and in
substantially the same manner as has previously been carried out and shall not
make or institute any unusual or novel methods of operations. As of the Closing
Date, no material adverse change in the results of operations, financial
condition or business of Seller shall have occurred, and Seller shall not have
suffered any material loss or damages to any of the Purchased Assets.
2.10 Brokers and Finders. No broker or finder has acted for Seller in
connection with this Agreement or the transaction contemplated herein.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer, in order to induce Seller to execute this Agreement and to
consummate the transactions contemplated herein, represents and warrants to
Seller as set forth below. Each such representation and warranty is true as of
the date hereof and shall remain true through the Closing Date and forever
thereafter and shall inure to the benefit of Seller and its successors and
assigns.
3.1 Organization and Qualification. Buyer is duly organized, validly
existing and in good standing under the laws of the State of Delaware, with all
requisite power and authority to own its property and to carry on its business
as it is now being conducted. This Agreement has been approved by all action
necessary on the part of Buyer and, when signed, will be a valid and binding
agreement of Buyer.
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3.2 No Conflict. The execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby will not
violate the articles of incorporation or bylaws of Buyer and will not, with or
without the giving of notice or the passage of time. or both, effect a breach or
default of, or cause an event of default under, any mortgage, agreement,
instrument, statute, regulation, order, judgment or decree to which Buyer is a
party or by which Buyer is bound or affected.
3.3 Purchased Assets. Seller has not provided any warranties and
assurances of any kind, express or implied, in connection with the Purchased
Assets including any warranties of the condition or quality of any Purchased
Asset or the fitness of any Purchased Asset for a particular purpose, except as
otherwise expressly set forth in this Agreement, and Buyer expressly
acknowledges that the Purchased Assets are being transferred to Buyer in "as is,
where is" condition.
3.4 Brokers and Finders. No broker or finder has acted for Buyer in
connection with this Agreement or the transaction contemplated herein.
SECTION 4
INDEMNIFICATION
4.1 Indemnification by Seller. Seller hereby indemnifies Buyer from
and against any and all claims, debts, liabilities, obligations, losses, costs
and expenses (collectively, "Claims") arising in connection with: (i) a breach
by Seller of any representation, warranty, covenant or agreement made by Seller
in this Agreement; (ii) any liability, debt or obligation pertaining to the
Purchased Assets and arising prior to the Closing Date; (iii) any liability,
debt or obligation of Seller; or (iv) any act or omission of Seller.
4.2 Indemnification by Buyer. Buyer hereby indemnifies Seller from
and against any and all Claims arising in connection with: (i) any breach by
Buyer of any representation, warranty, covenant or agreement made by Buyer in
this Agreement; (ii) any liability, debt or obligation pertaining to the
Purchased Assets and arising as of or subsequent to the Closing Date; (iii) any
liability, debt or obligation of Buyer; or (iv) any act or omission of Buyer.
SECTION 5
COVENANT NOT TO COMPETE
Seller and Xxxx X. Xxxxxxxx hereby covenant and agree that, for a
period of three (3) years commencing as of the March 31, 2004, neither shall not
directly or indirectly own, control or participate in the ownership of, or
control of or be connected with, as a partner, shareholder, lender or otherwise,
or have any financial interest in any business involved in the distribution of
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first aid kits. Notwithstanding the above, Seller or Xxxx X. Xxxxxxxx may be
employed as an employee of a company that distributes first aid kits. Seller and
Xxxx X. Xxxxxxxx understand that Buyer would not have agreed to enter into this
Agreement nor would Buyer have made the commitments contained in this Agreement
without having received the foregoing covenant not to complete from the Seller
and Xxxx X. Xxxxxxxx. Seller and Xxxx X. Xxxxxxxx acknowledge that Seller and
Xxxx X. Xxxxxxxx are entering into this covenant not to compete as a material
inducement to Buyer to consummate the transaction contemplated hereby. This
covenant not to compete is incidental to the sale of the Purchased Assets, and
shall be effective with respect to Los Angeles County only. Seller and Xxxx X.
Xxxxxxxx agree that the remedy at law for damages for any violation of the
foregoing covenant will be inadequate, and that the Buyer shall be entitled to
such temporary and permanent injunctive relief as may be granted by a court of
equity without the necessity of proving actual damages. The ownership alone by
Seller or Xxxx X. Xxxxxxxx of up to five percent (5%) of the stock of a
competitive business, where such stock is publicly traded, shall not constitute
a violation of this paragraph 5.
SECTION 6
DOCUMENTS OBTAINED BY THE PARTIES.
Each of the parties acknowledges that they have obtained from the
other certain documents, work materials and other materials which constitute
confidential and proprietary information. In the event of termination of this
Agreement, each party shall deliver to the other all such documents, work papers
and other materials and all copies thereof obtained by them or on their behalf,
whether obtained before or after the execution of this Agreement, will not use
or disclose, directly or indirectly, any confidential or proprietary information
to any other person or entity, and will keep all such information confidential,
except to the extent the same is publicly and lawfully disclosed by others.
SECTION 7
WAIVER OF BULK SALES
Buyer waives compliance with the provisions of the California
Commercial Code relating to bulk transfers in connection with the purchase of
the Purchased Assets. Nothing in this paragraph shall stop or prevent either
Buyer or Seller from asserting as a bar or defense to any action or proceeding
brought under that law that the law does not apply to the sale contemplated by
this Agreement.
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SECTION 8
CLOSING AGREEMENTS AND POST-CLOSING
8.1 General Procedure. On the Closing Date, and thereafter if
necessary, each party shall execute, where applicable, deliver to the other
party such documents, instruments and materials as may be reasonably required in
order to effectuate the intent and provisions of this Agreement, and all such
documents, instruments and materials shall be satisfactory in form and substance
to counsel for the other party.
8.2 Time and Place. The closing of the transactions contemplated
hereby shall take place at 10:00 a.m. on Thursday, April 8, 2004, at 0000
Xxxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, or at such time
and place as shall be mutually agreed upon by Seller and Buyer (the "Closing
Date").
8.3 Seller's Obligations at Closing. On the Closing Date, Seller
shall comply with each of the following:
(a) Execute, where necessary, and deliver instruments of assignment
and transfer of all the Purchased Assets;
(b) Deliver, or cause Xxxx X. Xxxxxxxx to deliver, an assignment of
the "Xact Aid" trademark application, if applicable;
(c) Execute, where necessary, and deliver, from time to time
subsequent to the Closing Date, upon request and without further
consideration, such other instruments of conveyance, assignment
or transfer and take such other action as may be reasonably
required in order to more effectively convey, transfer and vest
in Buyer title to the Purchased Assets as set forth in this
Agreement; and
(d) Execute and deliver a counterpart to this Agreement.
8.4 Buyer's Obligations at Closing. On the Closing Date, Buyer shall
comply with each of the following:
(a) Deliver the sum of $5,000.00, in immediately available funds;
(b) Execute and deliver the Promissory Note, as set forth in
paragraph 1.7(b); and
(c) Execute and deliver a counterpart to this Agreement.
8.5 Xxxx X. Xxxxxxxx'x Obligations at Closing. On the Closing Date,
MeirJ. Xxxxxxxx shall deliver, if necessary, an assignment to Buyer of the "Xact
Aid" trademark application.
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SECTION 9
CONDITIONS PRECEDENT TO OBLIGATION TO CLOSE
The obligation of each party to complete the transactions contemplated
by this Agreement on the Closing Date in accordance with the terms set forth in
this Agreement is subject to the satisfaction by the other party of each of the
following conditions:
(a) Compliance with Obligations. All obligations and covenants
required to be performed or complied with by such other party shall have been
fully performed or complied with in all material respects on or before the
Closing Date.
(b) Delivery of Closing Documents. Such other party shall have
executed, where applicable, and delivered on or before the Closing Date each of
the closing items required to be executed and delivered by such other party to
the reasonable satisfaction of the first party.
SECTION 10
MISCELLANEOUS
10.1 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if written and delivered in
person or by registered mail, postage prepaid, addressed as follows:
To Seller 0000 Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
To Buyer: 0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
10.2 Costs. Each party hereto will bear the costs and expenses
incurred by such party in connection with this Agreement and the transactions
contemplated hereby.
10.3 Entire Agreement and Amendment. This Agreement and all documents
required to be delivered hereunder contain the entire agreement between the
parties with respect to the transactions contemplated by this Agreement and
supersedes all other agreements, written or oral, with respect thereto. This
Agreement may be amended or modified in whole or in part, and any rights
hereunder may be waived, only by an agreement in writing, duly and validly
executed in the same manner as this Agreement or by the party against whom the
amendment, modification or waiver would be asserted. The waiver of any right
hereunder shall be effective only with respect to the matter specifically waived
and shall not act as a continuing waiver unless it so states by its terms.
10.4 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to constitute an original and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other party.
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10.5 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with the laws of the State of California.
10.6 Attorneys' Fees and Costs. In the event that any party to this
Agreement initiates legal proceedings to enforce performance of any term or
condition of this Agreement, including, but not limited to, the payment of
monies or the enjoining of any action prohibited hereunder, the prevailing party
shall be entitled to recover such sums, in addition to any other damages or
compensation received, as will reimburse the prevailing party for reasonable
attorneys' fees and court costs incurred on account thereof (including, without
limitation, the costs of any appeal), notwithstanding the nature of the claim or
cause of action asserted by the prevailing party.
10.7 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns as the case may be.
10.8 Captions. The captions appearing in this Agreement are inserted
for convenience of reference only and shall not affect the interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Xact Aid, Inc. QT 5, Inc.
By: /s/ Xxxx X. Xxxxxxxx, President By: /s/ illegible
-------------------------------- -------------------------
Xxxx X. Xxxxxxxx, President
With respect to paragraphs 2.5, 5 and 8.5 only:
QT 5, Inc.
By: /s/ illegible
-------------------------
/s/ Xxxx X. Xxxxxxxx Its: C.E.O.
----------------------------------- ------------------------
Xxxx X. Xxxxxxxx
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Xxxx of Sale
This is to acknowledge that Xact Aid Inc. ("Seller") has this day sold
to QT 5 Inc. ("Buyer") for the sum of Thirty five thousand seven hundred and one
dollars ($35,701.00), receipt of which is hereby acknowledged, by the list of
goods marked "A" attached hereto:
The Seller warrants and represents that the Seller has legal ownership
and clear title to this property, that the seller has full and complete
authority to sell and transfer this property, that this property is being sold
free and clear of all liens, claims and encumbrances, and that the Seller will
protect, defend, and indemnify the Buyer from any and all adverse claims
resulting from this xxxx of sale.
Executed on this 8th day of April 2004
Xact Aid, Inc. QT 5, Inc. "Buyer"
/s/ Xxxx X. Xxxxxxxx, President By: /s/ illegible
-------------------------------- -------------------------
Xxxx X. Xxxxxxxx, President
By: Its: President
------------------------
QT 5, Inc. "Buyer"
By: /s/ illegible
-------------------------
Its: C.E.O.
------------------------
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Vendor Description Quantity Unit Cost Dollar Value
Medline Ind. Self Grip Bandage 2x5 Yds 1,600 0.51 808.64
Quickstrip Band-Aid 3/4" x 3" 6,200 0.01 68.20
Water-Jel Knuckle Band-Aid 181,800 0.04 6,399.36
Water-Jel Finger Band-Aid 113,090 0.03 3,867.68
Medline Ind. 1/4" x 1 1/2" Wound Closure Strips 16,000 0.39 6,240.00
Water-Jel 2" x 3" Band-Aid 114,300 0.03 3,417.57
Leading Triple Application Clamshell 47,880 0.13 6,176.52
Leading Single Application Clamshell 50,400 0.11 5,594.40
Xxxxxxxxx Non Woven Clinisorb 2" x 2" 76,500 0.03 963.90
Norland Cold Pack #305 2,375 0.25 593.75
Qosina Tweezers 13,715 0.03 466.31
Fougera 1oz Analgesic Balm 1,874 0.59 1,105.66
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35,701.99
Deduct 0.99
---------------------------
Total $ 35,701.00
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