ASSET PURCHASE AGREEMENT
Exhibit
10.2
THIS
ASSET PURCHASE AGREEMENT (“Agreement”) is entered into as of June 1, 2005, by
and between G.K. Gymnastics, Inc. a Colorado corporation (“Seller”), and U.S.A.
Connection, Inc., a Colorado Corporation (“Buyer”).
R
E C I T A L S
Seller
wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Assets
(as defined in Section 1), subject to and upon the terms and conditions
hereinafter set forth.
A
G R E E M E N T
It
is
agreed as follows:
1. Sale
and Purchase of Assets.
Subject
to and upon the terms and conditions set forth herein, Seller agrees to sell,
assign, convey, transfer and deliver (“Transfer”) to Buyer and Buyer agrees to
purchase from Seller, on the Closing Date (as defined in Section 10), the
following assets (“Assets”):
(a) All
items
of inventory, including, but not limited to goods for sale, supplies and
inventory of equipment held for rental to customers, kits, and spare
parts;
(b) The
right
to use the name “Action Fashions” and all intangible rights thereto and all
trade secrets, know how, customer lists, inventions and other intangible
property used in the business of Seller; and
(c) All
computer printouts, software, databases and related items, copies of books
and
records and files related to the business of Seller and any of the
Assets.
Buyer
acknowledges that the Assets do not include any cash, cash equivalents, accounts
receivable or tax or other refunds due to Seller.
2. Consideration.
(a) In
consideration of the Assets to be transferred by Seller, Buyer shall deliver
to
Seller a promissory note in the amount of $19,000 on the Closing
Date.
(b) The
parties agree that the total consideration paid by Buyer shall be allocated
among the Assets as follows: $19,000 shall be allocated towards the purchase
of
the inventory for sale.
3. No
Assumption of Indebtedness; Payment of Sales Tax.
(a) Buyer
is
not assuming any liabilities or indebtedness of Seller in connection with the
transactions contemplated hereby and shall have no liability for any such
liabilities or indebtedness by reason of this Agreement or the transactions
contemplated hereby.
(b) Buyer
shall be responsible for all sales and use taxes due with respect to this
Agreement.
4. Bulk
Sales Law Compliance;Instruments of Transfer, Etc.
(a) Buyer
shall have given notice in compliance with the Colorado Commercial Code if
required. Seller shall furnish to Buyer all information necessary to prepare
the
notice, including the names and business addresses used by Seller within the
last three (3) years and the location of all of the assets to be transferred
under this Agreement at least fifteen (15) business days before the Closing
Date.
(b) Seller
shall deliver to Buyer on the Closing Date and thereafter upon Buyer’s request
such bills of sale, assignments and other good and sufficient instruments of
Transfer in form and substance satisfactory to Buyer and its counsel as are
necessary to effectively Transfer all of Seller’s right, title and interest in
the Assets to Buyer. At any time after the Closing Date, Seller shall execute,
acknowledge and deliver to Buyer any further documents, assurances or other
matters, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer and as are necessary or
desirable to carry out the purpose of this Agreement.
5. Representations
and Warranties of Seller.
Seller
represents, warrants and covenants to Buyer as of the date hereof and as of
the
Closing Date as follows:
5.1 Corporate
Organization.
Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Colorado.
5.2 Power
and Authority.
Seller
has all corporate power and authority to enter into and to carry out all of
the
terms of this Agreement and all other documents executed and delivered in
connection herewith, including, but not limited to, those instruments of
Transfer described in Section 4 of this Agreement (collectively “Documents”).
All corporate action on the part of Seller, its officers, directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Documents by Seller has been taken and no further corporate
or other authorization on the part of Seller is required to consummate the
transactions provided for in the Documents. When executed and delivered by
Seller, the Documents shall constitute the valid and legally binding obligations
of Seller enforceable in accordance with their respective terms. Neither the
execution, delivery nor performance of the Documents by Seller shall (i) violate
or result in a breach of any provisions of Seller’s articles of incorporation or
bylaws, (ii) constitute a default or result in a breach of any contract or
agreement to which it is a party or its assets or properties are bound, or
(iii)
violate any order, writ, injunction, decree, judgment or other restriction
of
any court, administrative agency or governmental body.
5.3 Title
to Assets.
Seller
has and will Transfer to Buyer good and marketable title to the Assets, free
and
clear of all mortgages, pledges, security interests, liens, claims, charges,
restrictions and encumbrances.
5.4 Inventory.
The
inventory, including the inventory of rental equipment on Schedule 5.4 hereto
is
of merchantable quality, free of defects and salable (or usable) in the ordinary
course of business of Seller.
5.5 Furniture
and Equipment.
All of
the items of furniture and equipment set forth on the Schedule 5.5 hereto are
suitable for the purpose or purposes for which it is being used and is in such
good and proper condition and repair as to permit the continued use by Buyer
in
accordance with its intended purpose.
5.6 Lease.
None.
5.7 Liabilities.
Seller
is paying and will pay all of its liabilities, debts and obligations outstanding
as of the Closing Date.
5.8 No
Governmental or Other Proceeding or Litigation.
No
order of any court or administrative agency is in effect which restrains or
prohibits the transactions contemplated hereby, and no suit, action,
investigation, inquiry or proceeding by any governmental body or other person,
or legal or administrative proceeding has been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby.
There are no actions or proceedings pending or threatened arising out of or
related to the Assets. There is no voluntary action or proceeding affecting
the
Assets pending or the commencement of which is contemplated by Seller, and
to
the best knowledge of Seller there is no involuntary action or proceeding
pending or the commencement of which is threatened or contemplated affecting
the
Assets against Seller, under any federal, state or local bankruptcy, insolvency,
reorganization, receivership, attachment or other similar law.
5.9 Approvals
and Consents.
There
are no permits, consents or approvals of public authorities, federal, state
or
local, or of any third party necessary for the consummation of the transactions
contemplated hereby.
5.10 Financial
Statements.
Seller
has delivered to Buyer the unaudited financial statements of Seller and such
financial statements are complete and correct, and fairly and accurately
presents the financial position of Seller as of the date or periods
indicated.
5.11 Absence
of Undisclosed Liabilities.
Except
as previously disclosed to Buyer in writing, Seller has no material liabilities
or material obligations of any nature, whether accrued, absolute, contingent
or
otherwise, and whether due or to become due, which are not reflected in the
Seller Balance Sheet. There is no fact known to Seller which materially
adversely affects or in the future is likely to materially adversely affect
the
businesses, properties, the Assets or operations of Seller which has not been
set forth in the Seller Balance Sheet or previously disclosed to Buyer in
writing.
5.12 Survival
of Representations and Warranties.
The
representations and warranties of Seller made herein shall not be affected
by
any information furnished to or investigations made by Buyer, or any of its
employees or representatives in connection with the subject matter of this
Agreement and shall survive the execution and delivery of this Agreement and
the
consummation of the transactions contemplated hereby for a period commencing
with the date hereof and expiring on December 31, 2005.
6. Representations
and Warranties of Buyer.
Buyer
represents, warrants and covenants to Seller as of the date hereof and as of
the
Closing Date as follows:
6.1 Organization.
Buyer
is a Colorado Corporation validly existing and in good standing under the laws
of the State of Colorado.
6.2 Power
and Authority.
Buyer
has all requisite partnership power and authority to enter into and to carry
out
all of the terms of this Agreement and the other Documents executed and
delivered in connection herewith. All corporate action on the part of Buyer
and
its partners necessary for the authorization, execution, delivery and
performance of the Documents by Buyer has been taken and no further
authorization on the part of Buyer is required to consummate the transactions
provided for in the Documents. When executed and delivered by Buyer, the
Documents shall constitute the valid and legally binding obligations of Buyer
enforceable in accordance with their respective terms.
6.3 Survival
of Representations and Warranties.
The
representations and warranties of Buyer made herein shall not be affected by
any
information furnished to or investigations made by Seller, or any of its
employees or representatives in connection with the subject matter of this
Agreement and shall survive the execution and delivery of this Agreement and
the
consummation of the transactions contemplated hereby for a period commencing
with the date hereof and expiring on December 31, 2005.
7. Certain
Additional Understandings and Agreements.
7.1 [Intentionally
Omitted]
7.2 Assignment
and Amendment to Lease.
None.
7.3 Prorations.
None.
7.4 Agreement
to Perform Necessary Acts.
Each
party agrees to perform any further acts and execute and deliver any documents
which may be reasonably necessary to carry out the provisions and purposes
of
this Agreement, including, but not limited to, the relinquishment or changing
of
Seller’s dba to “Deep Six Enterprises” or a similar name.
7.5 Notification
of Creditors.
On the
Closing Date, Buyer shall notify the creditors listed on Schedule 7.6 that
Seller is not responsible for goods ordered by Buyer after the Closing
Date.
8. Conditions
to Buyer’s Obligations.
Buyer’s
obligations hereunder are subject to the fulfillment, on or before the Closing
Date, of the following conditions (any of which may be waived in writing by
Buyer):
8.1 Representations
and Warranties.
The
representations and warranties of Seller contained herein shall have been true
and correct in all material respects as of the Closing Date.
8.2 Performance
of Covenants.
Seller
shall have performed and complied in all material respects with all covenants,
agreements, terms and conditions and executed all documents required by this
Agreement to be performed, complied with or executed by it prior to or on the
Closing Date.
8.3 Instruments
of Transfer.
Seller
shall have delivered to Buyer a xxxx of sale for the Assets and such other
good
and sufficient instruments of Transfer in form and substance satisfactory to
Buyer and its counsel as shall be necessary to effectively Transfer all of
the
Seller’s right, title and interest in the Assets to Buyer.
8.4 No
Governmental or Other Proceeding or Litigation.
No
order of any court or administrative agency shall be in effect which restrains
or prohibits the transactions contemplated hereby, and no suit, action,
investigation, inquiry or proceeding by any governmental body or other person
or
legal or administrative proceeding shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated
hereby.
8.5 Bulk
Sale Compliance.
The
Notice to Creditors of Bulk Sale shall have been published and all requirements
of the California Commercial Code relating to “Bulk Sales” shall have been
complied with by the parties.
8.6 [Intentionally
Omitted]
8.7 Approval
and Consents.
All
permits, consents or approvals of applications to public authorities, federal,
state or local, and all approvals of any third persons, the granting of which
are necessary for the consummation of the transactions contemplated hereby
shall
have been obtained.
9. Conditions
to Seller’s Obligations.
Seller’s obligations hereunder are subject to the fulfillment, on or before the
Closing Date, of the following conditions (any of which may be waived in writing
by Seller):
9.1 Representations
and Warranties.
The
representations and warranties of Buyer contained herein shall have been true
and correct in all material respects as of the Closing Date.
9.2 Performance
of Covenants.
Buyer
shall have performed and complied in all material respects with all covenants,
agreements, terms and conditions and executed all documents required by this
Agreement to be performed, complied with or executed by it prior to or on the
Closing Date.
10. Closing.
The
closing of the sale and purchase of the Assets and the other transactions
contemplated by this Agreement shall take place at the offices of Seller
(“Closing Date”).
11. Indemnification
by Seller.
11.1 General.
Seller
agrees to indemnify, defend and hold harmless Buyer against and in respect
of
any and all claims, demands, losses, costs, expenses, liabilities and damages,
including interest, penalties, and reasonable attorneys’ fees, that Buyer shall
incur or suffer which: (i) arise, result from or relate to any material
inaccuracy in or material breach or nonfulfillment of any of the
representations, warranties, covenants or agreements made by Seller in this
Agreement, the schedules and exhibits hereto or in any other Document furnished
to such party under this Agreement; and (ii) any liability of Seller or Seller’s
business arising out of events occurring, products or services sold or any
activities of Seller prior to the Closing Date whenever such liabilities may
arise.
11.2 Procedures;
Rights to Separate Counsel.
In the
event Buyer receives a complaint, claim or other notice of any loss, claim
or
damage, liability or action, giving rise to a claim for indemnification under
this Section 11, Buyer shall promptly notify the Seller of such complaint,
notice, claim or action, and Seller shall have the right to investigate and
defend any such loss, claim, damage, liability or action. Buyer shall have
the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel shall not be at the
expense of Seller, unless Seller fails to promptly defend, in which case the
fees and expenses of such separate counsel shall be borne by Seller. In no
event
shall Seller be obligated to indemnify Buyer for any settlement of any claim
or
action effected without Seller’s prior written consent.
12. General.
12.1 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered personally or, if mailed, three (3)
business days after having been mailed by registered or certified mail with
return receipt requested, postage prepaid, addressed:
(a) If
to
Buyer: U.S.A.
Connections, Inc.
XX
Xxx
000000
Xxxxxxxxx,
XX 00000
(b) If
to
Seller: G.K.
Gymnastics, Inc.
0000
Xxxx
Xxxx
Xxxxxxx, XX 00000
or
at
such other address as shall have been furnished to the other in writing.
12.2 Successors
and Assigns.
Neither
this Agreement nor the rights or obligations of Seller under this Agreement
shall be assignable without the written consent of Buyer and any such purported
assignment without the written consent of Buyer shall be void and with effect.
Except as otherwise provided herein, this Agreement and all covenants and
agreements contained herein shall be binding upon and inure to the benefit
of
the parties hereto, their respective successors, representatives and
assigns.
12.3 Arbitration.
Any
controversy or claim arising out of or relating to this Agreement or the breach
hereof, except as stated below, shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect. The
decision of the arbitrator shall, except for mistakes of law, be final and
binding upon the parties hereto, and judgment upon the award rendered by the
arbitrator, which shall, in the case of damages, be limited to actual damages
proven in the arbitration, may be entered in any court having jurisdiction
thereof.
There
shall be a single arbitrator who shall be an existing or former judge of a
court
of record within the United States or an attorney in good standing admitted
to
practice for a period of at least ten (10) years within the United States.
No
arbitration shall involve parties other than the parties hereto and their
respective successors and assigns or be in any respect binding with respect
to
any such other parties. The situs of the arbitration will be in the State of
Colorado.
The
parties to any arbitration arising hereunder shall have the right to take
depositions and to obtain discovery regarding the subject matter of the
arbitration and to use and exercise all of the same rights, remedies and
procedures, and be subject to all of the same duties, liabilities, and
obligations in the arbitration with respect to the subject matter thereof,
as if
the subject matter of the arbitration were pending in a civil action before
a
court of highest jurisdiction in the state where the arbitration is held. The
arbitrator shall have the power to enforce said discovery by imposition of
same
terms, conditions, consequences, liabilities, sanctions and penalties as can
be
or maybe imposed in like circumstances in a civil action by a court of highest
jurisdiction of the state in which the arbitration is held, except the power
to
order the arrest or imprisonment of a person.
If
any
party commences an action, either arbitration or court proceedings, against
any
other party arising out of or in connection with this Agreement, the prevailing
party or parties shall be entitled from the losing party or parties, both
attorney’s fees and costs of the arbitration and/or suit as part of the judgment
rendered.
12.4 Attorneys’
Fees.
If any
legal action or any mutually agreed upon arbitration or other proceeding is
brought for the enforcement of this Agreement or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions
of
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be
entitled.
12.5 Entire
Agreement.
This
Agreement embodies the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof.
12.6 Modification.
This
Agreement may be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
12.7 Governing
Law.
This
Agreement shall be construed in accordance with and governed by the laws of
the
State of Colorado.
12.8 Counterparts.
This
Agreement may be executed in several counterparts, each of which is an original
but all of which shall constitute one and the same instrument.
IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
on
the day and year first hereinabove written.
“BUYER”
U.S.A.
Connections, Inc.
a
Colorado corporation
__________________________________________
By:
Its:
“SELLER”
G.K.
Gymnastics, Inc.
a
Colorado corporation
__________________________________________
By:
Its:
