AGREEMENT FOR PURCHASE AND SALE
OF ASSETS
between
AMS ACQUISITION CORP.
("Seller")
and
AFFILIATED MARKETING SERVICES, INC.
("Purchaser")
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This Agreement for Purchase and Sale of Assets (this
"Agreement") is entered into as of this 31st day of December, 1998
by and among AMS Acquisition Corp., a Nevada corporation ("Seller"),
Affiliated Marketing Services, Inc., a California corporation
("Purchaser"), and Xxxx Xxxxxxxx, an individual ("Hentschl", and
each of Seller, Purchaser, and Hentschl shall be referred to as a
"Party" and collectively as the "Parties").
WHEREAS, on July 8, 1998, Seller acquired from Purchaser,
under the terms of that certain Agreement for Purchase and Sale of
Assets dated July 8, 1998 (the "First Purchase Agreement"), several
different publishing and advertising business divisions (the
"Divisions"), including but not limited to Entertainer and Lifestyle
Magazine ("Entertainer"), Smart Shoppers' Savings Guide ("Smart
Shopper"), Escondido Recreation Activities & Community Newsletter
("Escondido Newsletter"), and all equipment, inventories, contract
rights with advertisers, leasehold interests, permits and
miscellaneous assets used in connection with the operation of its
business (collectively the "Business");
WHEREAS, in connection with the First Purchase Agreement,
Seller assumed certain liabilities of Purchaser and entered into an
employment agreement (the "Employment Agreement") with Hentschl;
WHEREAS, Purchaser desires to acquire all of the assets of
Seller, assume all of the liabilities and obligations of Seller, and
Seller desires to sells its assets to Purchaser.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Assets Purchased.
1.1 Assets Purchased. Seller agrees to sell, transfer,
convey and assign to Purchaser and Purchaser agrees to purchase from
Seller, subject to the terms and conditions set forth in this
Agreement, all of Seller's rights, title and interest in and to all
of the assets of the Business, including without limitation all of
the accounts receivable of the Business and those assets set forth
on Schedule 1.1 hereto ("Assets"), other than those assets expressly
excluded in paragraph 2 hereof. The parties hereto acknowledge that
such Assets constitute all of the assets necessary for the operation
of the Business.
1.2 Liabilities Assumed. Purchaser accepts
responsibility for and shall assume all liabilities of the Business,
including without limitation those set forth in Schedule 1.2
attached hereto, including but not limited to the accounts payable
and note obligations (including that certain Promissory Note dated
March 20, 1997 between Seller and Xxxxx Xxxxxxxx which is assigned
to Purchaser pursuant to this Agreement) set forth therein.
1.2.1 As a material term of this Agreement, Purchaser
agrees to pay, in full, any and all obligations of Seller due and
owing to any tax authority, including but not limited to the
California Board of Equalization, California Franchise Tax Board,
and the Employment
Development Department, which accrued between
July 8, 1998 and the Closing Date as defined herein. Purchaser
further agrees that these obligations will be paid no later than
ninety (90) days after the Closing Date and that proof of payment
satisfactory to Seller shall be provided to Seller immediately upon
payment of any obligation. Hentschl agrees to personally guarantee
payment under this Section 1.2.1 and to execute the Unconditional
Personal Guarantee attached hereto as Exhibit "A."
Section 2. Excluded Assets. Assets excluded from this sale and
purchase are those set forth on Schedule 2 attached hereto.
Section 3. Release of Obligations. Seller, Purchaser, and
Hentschl shall be relieved of any and all obligations to each other,
including but not limited to those arising out of the First Purchase
Agreement, whether paid, unpaid, accrued, or accruing in the future,
except as set forth in this Agreement.
Section 4. Adjustments. All Business revenues relating to the
period from and after the Closing shall be the responsibility and
property of Purchaser upon the execution of this Agreement.
Revenues and expenses from the operation of the Business relating to
the period after the Closing shall be the property and liabilities,
respectively, of Purchaser.
Section 5. Seller's Representations and Warranties. Seller
represents and warrants to Purchaser as of the date hereof and as of
the Closing Date as follows:
5.1 Authority. Seller has full right, title, authority
and capacity to execute and perform this Agreement and to consummate
all of the transactions contemplated herein.
5.2 Brokers and Finders. Seller has not employed
any broker or finder in connection with the transactions
contemplated by this Agreement, or taken action that would give rise
to a valid claim against any party for a brokerage commission,
finder's fee, or other like payment.
5.3 Preservation of Business. Seller has used its best
efforts to preserve its respective business organizations intact, up
to and including the date of this Agreement, and to preserve all
existing relationships with suppliers, customers and others having
business relationships with Seller or Purchaser and/or the Business.
5.4 Conduct of Business in Normal Course. Seller has
carried on the Business and activities of the Business diligently
and in substantially the same manner as it has previously been
carried out, and has not made or instituted any unusual or unlawful
methods of inventory levels, purchase, maintenance sale, lease,
management, accounting or operation that varies from those methods
previously used with respect to the operation of the Business and
has not made or agreed to make any contractual obligations under
which the Business might be directly or indirectly affected.
5.5 No Liabilities Not Disclosed. Seller hereby
represents and warrants that it has disclosed all known liabilities
in Schedule 1.2 and that it has not incurred any liabilities to
which Purchaser and Hentschl are not aware.
Section 6. Representations of Purchaser. Purchaser
represents and warrants as of the date hereof and as of the Closing
Date as follows:
6.1 Corporate Existence. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of California. Purchaser has all requisite corporate
power, shareholder approval and authority to enter into this
Agreement and perform its obligations hereunder.
6.2 Authorization. The execution, delivery, and
performance of this Agreement have been duly authorized and approved
by the board of directors, and this Agreement constitutes a valid
and binding Agreement of Purchaser in accordance with its terms.
6.3 Brokers and Finders. Purchaser has not employed any
broker or finder in connection with the transaction contemplated by
this Agreement and has taken no action that would give rise to a
valid claim against any party for a brokerage commission, finder's
fee, or other like payment.
6.4 Accuracy of Representations and Warranties. None of
the representations or warranties of Purchaser contain or will
contain any untrue statement of a material fact or omit or will omit
or misstate a material fact necessary in order to make the
statements contained herein not misleading.
Section 7. Covenants of Seller.
7.1 Seller's Operation of Business Prior to Closing.
Seller agrees that between the date of this Agreement and the
Closing Date, Seller will:
7.1.1 Continue to operate the business that is the subject
of this Agreement in the usual and ordinary course and in conformity
in all material respects with all applicable laws, ordinances,
regulations, rules, or orders, and will use its best efforts to
preserve its business organization and preserve the continued
operation of its business with its customers, suppliers, and others
having business relations with Seller.
7.1.2 Not assign, sell, lease, or otherwise transfer or
dispose of any of the assets used in the performance of its
business, whether now owned or hereafter acquired, except in the
normal and ordinary course of business and in connection with its
normal operation.
7.1.3 Maintain its assets other than inventories in their
present condition, reasonable wear and tear and ordinary usage
excepted, and maintain the inventories at levels normally maintained.
7.2 Access to Premises and Information. At reasonable
times during normal business hours prior to the Closing Date, Seller
will provide Purchaser and its representatives with reasonable
access to the assets, titles, contracts, and records of Seller and
furnish such additional information concerning Seller's business as
Purchaser from time to time may reasonably request. Seller will
provide copies of any and all documents, contracts, and other
materials reasonably requested by Purchaser to complete its due
diligence investigation of Seller.
7.3 Employee Matters. Prior to the Closing Date, Seller
will not, without Purchaser's prior written consent, enter into any
material agreement with its employees, increase the rate of
compensation or bonus payable to or to become payable to any
employee, or effect any changes in the management, personnel
policies, or employee benefits, except in accordance with existing
employment practices. Seller further agrees that it will not
terminate the employment agreement of Hentschl prior to the Closing
Date except in the event of illegal acts by Hentschl.
7.4 Conditions and Best Efforts. Seller will use its
best efforts to effectuate the transactions contemplated by this
Agreement and to fulfill all the conditions of the obligations of
Seller under this Agreement, and will do all acts and things as may
be required to carry out its obligations under this Agreement and to
consummate and complete this Agreement.
7.5 Release. Effective as of the Closing Date, each of
Seller and Xxxxxx Xxxxxxxx shall release and discharge Purchaser and
Hentschl, their affiliates, divisions, predecessors, successors and
assigns, and each and all of their present and former agents,
officers, directors, attorneys, and employees, from and against any
and all claims, agreements, contracts, covenants, representations,
obligations, losses, liabilities, demands and causes of action which
Seller may now or hereafter have or claim to have against Purchaser
and Hentschl arising out of or pertaining to the subject matter of
the First Purchase Agreement. This release of claims and defenses
shall not alter the prospective duties between the parties under
this Agreement.
Section 8. Covenants of Purchaser.
8.1 Conditions and Best Efforts. Purchaser will use its
best efforts to effectuate the transactions contemplated by this
Agreement and to fulfill all the conditions of Purchaser's
obligations under this Agreement, and shall do all acts and things
as may be required to carry out Purchaser's obligations and to
consummate this Agreement.
8.2 Financial Statements. Purchaser shall, at the
Closing or such other time as the Parties agree, provide to Seller
all data reasonable requested by Seller that is necessary for the
preparation of financial statements, reconciliation of bank
accounts, and preparation of tax returns for the period from July
8, 1998 through the Closing Date, including but not limited to
monthly income and expense statements, balance sheets, and cash flow
statements for the applicable period.
8.3 Release. Effective as of the Closing Date, Purchaser
shall release and discharge Seller and Xxxxxx Xxxxxxxx (the
"Released Parties"), their affiliates, divisions, predecessors,
successors and assigns, and each and all of their present and former
agents, officers, directors, attorneys, and employees, from and
against any and all claims, agreements, contracts, covenants,
representations, obligations, losses, liabilities, demands and
causes of action which Purchaser may now or hereafter have or claim
to have against the Released Parties arising out of or pertaining to
the subject matter of the First Purchase Agreement. This release of
claims and defenses shall not alter the prospective duties between
the parties under this Agreement.
Section 9. Risk of Loss. The risk of loss, damage, or
destruction to any of the equipment, inventory, or other personal
property to be conveyed to Purchaser under this Agreement shall be
borne by Purchaser to the time of Closing.
Section 10. Survival of Representations and Warranties. All
representations and warranties made in this Agreement shall survive
the Closing of this Agreement, except that any party to whom a
representation or warranty has been made in this Agreement shall be
deemed to have waived any misrepresentation or breach of
representation or warranty of which such party had knowledge prior
to Closing. Any party learning of a misrepresentation or breach of
representation or warranty under this Agreement shall immediately
give written notice thereof to all other parties to this Agreement.
Section 11. Closing.
11.1 Time and Place. The transactions contemplated by
this Agreement shall be closed on the close of business on January
11, 1999 or that date upon which all of the conditions set forth
herein have been satisfied, or at such other time as the parties may
agree in writing at a location to be agreed upon by the parties.
Section 12. Miscellaneous Provisions.
12.1 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified, or supplemented only
by a written agreement signed by all of the parties hereto.
12.2 Notices. All notices, requests, demands, and other
communications required or permitted hereunder will be in writing
and will be deemed to have been duly given when delivered by hand or
two days after being mailed by certified or registered mail, return
receipt requested, with postage prepaid:
If to Seller:
AMS Acquisition Corp.
0000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx,
Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to:
The Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: M. Xxxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other person or address as Seller may furnish to Purchaser
pursuant to the above.
If to Purchaser:
Affiliated Marketing Services, Inc.
00000 Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Facsimile No.: ( )
With a copy to:
Xxxxxxxxx Xxxxxxxx Xxxxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as Purchaser may furnish to Seller
pursuant to the above.
12.3 Attorney Fees. In the event an
arbitration, suit or action is brought by any party under
this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party
shall be entitled to reasonable attorneys fees to be fixed
by the arbitrator, trial court, and/or appellate court.
12.4 Law Governing. This Agreement shall be
governed by and construed in accordance with the laws of
the State of California.
12.5 Titles and Captions. All section titles or
captions contained in this Agreement are for convenience
only and shall not be deemed part of the context nor
affect the interpretation of this Agreement.
12.6 Pronouns and Plurals. All pronouns and any
variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
12.7 Entire Agreement. This Agreement, along
with its attachments and exhibits, contains the entire
understanding between and among the parties and supersedes
any prior understandings and agreements among them
respecting the subject matter of this Agreement. Any
amendments to this Agreement must be in writing and signed
by the party against whom enforcement of that amendment is
sought.
12.8 Agreement Binding. This Agreement shall be
binding upon the heirs, executors, administrators,
successors and assigns of the parties hereto.
12.9 Presumption. This Agreement or any Section
thereof shall not be construed against any party due to
the fact that said Agreement or any Section thereof was
drafted by said party.
12.10 Further Action. The parties hereto shall
execute and deliver all documents, provide all information
and take or forbear from all such action as may be
necessary or appropriate to achieve the purpose of the
Agreement.
12.11 Counterparts. This Agreement may be
executed in several counterparts and all so executed shall
constitute one Agreement, binding on all the parties
hereto even though all the parties are not signatories to
the original or the same counterpart.
12.12 Parties in Interest. Nothing herein shall
be construed to be to the benefit of any
third party, nor is it intended that any provision shall
be for the benefit of any third party.
12.13 Savings Clause. If any provision of this
Agreement, or the application of such provision to any
person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as
to which it is held invalid, shall not be affected thereby.
12.14 Section 1542 Release. It is understood and
agreed by all Parties hereto that all rights under Section
1542 of the Civil Code of California, which provides as
follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time
of executing the release, which if known by him must have materially
affected his settlement with the debtor."
are hereby expressly waived. Each Party acknowledges and
agrees such Party understands the consequences of a waiver
of Section 1542 of the California Civil Code and assumes
full responsibility for any and all injuries, damages,
losses or liabilities that may hereinafter arise out of or
be related to matters released hereunder. Each Party
understands and acknowledges that the significance and
consequence of this waiver of Section 1542 of the Civil
Code is that even if such Party should eventually suffer
additional damages arising out of the subject matter of
the Dispute, it will not be permitted to make any claim
for those damages. Furthermore, each Party acknowledges
that they intend these consequences even as to claims for
damages that may exist as of the date of this Agreement
but which a Party does not know exists, and which, if
known, would materially affect each Party's decision to
execute this Agreement, regardless of whether each Party's
lack of knowledge is the result of ignorance, oversight,
error, negligence, or any other cause.
The parties hereto hereby agree to the foregoing and execute this
Agreement as of the date first above written.
"Purchaser" "Seller"
Affiliated Marketing Services, Inc. AMS Acquisition Corp.
/s/ Xxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
By: Xxxx Xxxxxxxx By: Xxxxxx Xxxxxxxx
Its: President Its: Chief Executive Officer
Executed to signify compliance with Paragraph 7.5 hereof
only:
/s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Executed to signify compliance with Paragraph 8.3 hereof
only:
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
Schedule 1.1
ASSETS
Schedule 1.2
LIABILITIES
Schedule 2
EXCLUDED ASSETS
Exhibit "A"
UNCONDITIONAL PERSONAL GUARANTY
Xxxx Xxxxxxxx ("Guarantor"), hereby irrevocably and
unconditionally guarantees to AMS Acquisition Corp, or assigns
(the "Holder") under that certain Agreement for Purchase and
Sale of Assets between Holder and Affiliated Marketing
Services, Inc. dated as of December 31, 1998 (the "Asset
Purchase Agreement") prompt payment, performance and
observance of any and all obligations (past due and future),
indebtedness, liabilities, obligations and agreements of any
kind due under Section 1.2.1 thereof, however evidenced,
whether as principal, surety, endorser, guarantor or
otherwise, whether now existing or hereafter arising, whether
direct or indirect, absolute or contingent, joint or several,
due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, original, renewed or
extended, whether arising under any guaranty, endorsement or
undertaking, whether arising directly or acquired from others,
and of all agreements, documents and instruments evidencing
any of the foregoing or under which any of the foregoing may
have been issued, created, assumed or guaranteed, including
without limitation, charges, commissions, interests, expenses,
fees, costs and reasonable attorney's fees chargeable to
Holder in connection with any or all of the foregoing (all of
the foregoing being herein referred to, jointly and severally,
as the "Obligations"). THIS IS A CONTINUING GUARANTY.
GENERAL TERMS
1. Guarantor is executing this guaranty in order to
induce Holder to execute the Asset Purchase Agreement.
2. This Guaranty is effective as of the date hereof and
shall continue so long as Holder may have any obligations to
tax authorities arising out of the period from July 9, 1998 to
the Closing Date under the Asset Purchase Agreement.
3. The Guarantor waives notice of acceptance of this
guaranty, notice of any liability to which it may apply, and
waives presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such obligations, diligence by
the Holder in collection of any indebtedness or other
obligation guaranteed herein or other such notice.
4. Holder may, without affecting the Guarantor's
obligations herein: (i) grant renewals, extensions or
modifications of the obligation or indebtedness; (ii) change
the manner, place or terms of payment, and/or change or extend
the time of payment of, renew or alter, any liability under
the Asset Purchase Agreement, any security therefor, or any
liability incurred directly or indirectly in respect thereof;
(iii) surrender or release any and all security or collateral;
(iv) release co-guarantors if any; (v) sell, exchange,
release, surrender, realize upon or otherwise deal with in any
manner and in any order any property by whomsoever at any time
pledged or mortgaged to secured, or howsoever securing, the
obligations hereby guaranteed or any liabilities (including
any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and/or any offset thereagainst, or
fail to perfect, or continue the perfection of, any lien or
security interest in any such property, or delay in the
perfection of any such lien or security interest; or (vi)
exercise or refrain from exercising any rights against
Affiliated Marketing Services, Inc. or others (including the
undersigned) or otherwise act or refrain from acting.
5. Holder shall have no obligation to: (i) first
institute suit against Affiliated Marketing Services, Inc.
prior to demanding payment under this guaranty; (ii) exhaust
any remedies it may have against Affiliated Marketing
Services, Inc. or (iii) give notice of acceptance of this
guaranty.
6. Holder may in its sole discretion seek to enforce
this guaranty solely against the Guarantor. In the event
Holder is required to enforce this guaranty against Guarantor,
the undersigned Guarantor shall pay all costs and expenses of
every kind for collection, including reasonable attorneys'
fees. The undersigned waives the right of trial by jury in
the event of any litigation between the parties hereto in
respect of any matter arising under this guaranty and agree
that, should Holder bring any judicial proceedings in relation
to any such matter, the undersigned will not interpose any
counterclaim or setoff of any nature.
7. No delay on the part of Holder in exercising any of
its options, powers or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. No waiver of any
of their rights hereunder, and no modification or amendment of
this Guaranty, shall be deemed to be made by Holder unless the
same shall be in writing, duly signed on behalf of such
Holder, and each such waiver, if any, shall apply only with
respect to the specific instance involved, and shall in no way
impair the rights of Holder or the obligations of the
undersigned to Holder in any other respect at any other time.
No invalidity, irregularity or unenforceability of all or any
part of the obligations hereby guaranteed or of any security
therefor shall affect, impair or be a defense to this
guaranty, and this guaranty is a primary obligation of the
undersigned.
8. Any and all rights and claims of the undersigned
against Affiliated Marketing Services, Inc. or any of its
property, arising by reason of any payment by the undersigned
to Holder pursuant to the provisions of this guaranty, shall
be subordinate and subject in right of payment to the prior
payment in full of all obligations to Holder.
9. Together with the Asset Purchase Agreement, this is
the entire agreement of the parties and this agreement may be
modified only by a written agreement executed by both parties.
10. This guaranty and the rights and obligations of
Holder and of the undersigned hereunder shall be governed and
construed in accordance with the laws of the state of
California. This guaranty is binding upon the undersigned,
his executors, administrators, successors or assigns, and
shall inure to the benefit of Holder, its successors and
assigns. In the event Holder brings any action or suit in any
court of record of California or federal courts located in
California to enforce any or all of the obligations of the
undersigned hereunder, service of process may be made upon the
undersigned by mailing a copy of the summons to Affiliated
Marketing Services, Inc.'s address.
READ THIS AGREEMENT CAREFULLY. THIS IS AN AGREEMENT TO
GUARANTY THE DEBTS OF ANOTHER. THIS MEANS THAT YOU MAY HAVE
TO PAY THE WHOLE DEBT OR OBLIGATION OF AMS ACQUISITION CORP.
AS SET FORTH IN THE ASSET PURCHASE AGREEMENT.
Dated: January 11, 1999
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
Guarantor
