ASSET
PURCHASE AGREEMENT
PARTIES:
This Agreement is made and entered into as of the 1st day of April,
1997, by and between XENOTECH, INC. and XENOTECH RENTS, both of 0000-0000
Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxxxxx 00000, both California
corporations (hereinafter collectively referred to as the "Seller"). XXXXXXX
XXXX of 000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, 00000 (the
"Stockholder"), and BALLANTYNE OF OMAHA, INC., 0000 XxXxxxxx Xxxxxx,
Xxxxx, Xxxxxxxx 00000, a Delaware corporation (the "Buyer").
RECITALS:
A. Stockholder is the Owner of all of the issued and outstanding capital
stock of Seller.
B. Seller owns certain Assets which it uses in its business for the
design, manufacture, marketing, distribution, leasing, and sale
of lighting equipment.
C. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, substantially all of such assets, and substantially all of
the business of Seller, subject to the assumption of certain
liabilities of the Seller, upon the terms and conditions of this
Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
I. DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
following definitions:
A. "Accounts Receivable" shall mean all open, unpaid invoices and
unapplied credit memos of Seller's business as of the date of the Closing,
subject to a bad debt reserve which currently is Sixteen Thousand Four
Hundred Thirty-three Dollars ($16,433) and which
shall be adjusted at the date of the Closing. A true and correct list of
Accounts Receivable items as of February 28, 1997, specifically identifying
any accounts or amounts in dispute, is attached hereto as Exhibit 1.
B. "Assumed Liabilities" shall mean:
1. All open purchase orders of Seller pertaining to its business;
provided, however, that Buyer shall not assume any open purchase orders
for equipment, parts or supplies entered into after February 28, 1997,
not in the ordinary course of business. A true and correct list of such
current Purchase Orders is attached hereto as Exhibit 2.
2. All obligations of Seller under existing lease agreements
pertaining to the lease of lighting equipment to Seller's customers;
provided, however, that Buyer shall not assume any obligations of Seller
under lease agreements or arrangements entered into after February 28,
1997, not in the ordinary course of business. A true and correct list of
such current Lease Agreements is attached hereto as Exhibit 3.
3. All liabilities in connection with the debt obligations of the
Seller to California United Bank, N.A., under that certain Business Loan
Agreement dated May 16, 1996, and under certain Promissory Notes dated
May 16, 1996, in the amounts of $100,000, $200,000, and $375,000, and
the corresponding liabilities of the Stockholder for such debts under
that certain Commercial Guaranty Agreement dated May 16, 1996. The
unpaid principal balance of said loans as of February 28, 1997, is
$288,410.67.
4. All express Warranty obligations (as defined herein) on any
lighting equipment sold or leased by Seller. True and correct copies
of Seller's Warranty Agreements are attached hereto as Exhibit 4.
5. Seller's liabilities and obligations under that certain Lease
Agreement and Addendum thereto with Stockholder, with respect to its
current facilities located at 0000-0000 Xxxxxxxx Xxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000, a copy of which is attached as Exhibit 14
attached hereto.
6. All of the liabilities of Seller as set forth on its Balance
Sheet dated February 28, 1997, except as otherwise specifically excluded
herein.
7. Notwithstanding any other provision contained herein, Assumed
Liabilities shall not include:
a. Any federal, state or local income, sales, use, franchise,
or any other tax payable with respect to the Purchased
Assets, or operations of Seller for any period prior to the
Closing date,
-2-
including, but not limited to any sales taxes, interest and
penalties pertaining to Seller's unresolved sales tax dispute
with taxing authorities in the State of California, in
excess of $100,000, except: (i) income taxes for the fiscal
year ended March 31, 1997; (ii) accrued liability of Seller
for all current taxes that are set forth on the Balance
Sheet dated February 28, 1997; and (iii) all taxes accrued
by Seller during the month of March 1997 in the ordinary
course of business.
b. Any liability or obligation related to any Assets of Seller
not being purchased by Buyer.
c. Any liability or obligation of Seller arising in connection
with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby.
d. Any liability or obligation arising prior to the Closing
with respect to any of Seller's employees, agents or
independent contractors, whether or not subsequently
employed by Buyer.
e. Any claim or injury to person or property occurring prior to
the date of Closing of any nature whatsoever in connection
with the business or operations of Seller, or relating to
any products sold by Seller.
f. Any liability or obligation arising out of any breach by
Seller and/or Stockholder of any provision of any agreement,
contract or other commitment.
g. Any liability or obligation, including accrued interest,
from the Seller to the Stockholder, including, but not
limited to, the loan payable to Stockholder in the amount of
$306,814.51, plus accrued interest as shown on the Balance
Sheet.
h. Any liabilities other than those expressly assumed by Buyer
hereby.
C. "Balance Sheet" shall mean the unaudited Balance Sheet of Seller as
of February 28, 1997, a copy of which is attached hereto as Exhibit 5, which
Balance Sheet has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis. Said Balance Sheet is a
consolidated Balance Sheet of Xenotech, Inc. and Xenotech Rents.
-3-
D. "Contract" shall mean any of Seller's open agreements, leases,
contracts, purchase orders, sales orders, or other commitments that shall
exist as of February 28, 1997, a true and correct list of all of which is
attached hereto as Exhibit 6, and those entered into thereafter by Seller in
the ordinary course of business.
E. "Fixtures and Equipment" shall mean all of the tooling fixtures,
workbenches, shelving, computers, machinery and all other equipment and
fixtures owned by Seller, a true and correct list of which is attached hereto
as Exhibit 7.
F. "Inventory" shall mean all of Seller's inventories held for resale or
lease in the ordinary course of Seller's business to its customers, and all
of the raw materials, work in process, spare parts, finished products,
wrapping, supply and packaging items, and similar items which together
aggregate the amount listed as Inventory on Seller's Balance Sheet, as
adjusted to date of Closing in the ordinary course of business. This term
shall also include all rights to any equipment that would be a part of
Seller's Inventory held for resale or lease, except that it is in the
possession of third parties such as dealers, resellers, lessees, or end users,
if any, which belong to Seller and which do not constitute Accounts
Receivable. A list of Seller's Inventory and loan and lease inventory is
attached hereto as Exhibit 8.
G. "Purchase Assets" shall mean all of the following Assets as of the
date of the Closing pertaining exclusively to Seller's business, except those
Assets specifically excluded herein:
1. All cash, bank accounts, liquid assets, and all other bank
deposits of Seller.
2. All Accounts Receivable;
3. All Contract rights of Seller;
4. All Fixtures and Equipment;
5. All Inventory;
6. All Books and Records of Seller pertaining to the Purchased
Assets;
7. All trademarks, trade names, patents, patent applications and
interests thereunder, licenses, including patent licenses, copyrights
and copyright licenses pertaining to the Purchased Assets, a true and
correct list of which is attached hereto as Exhibit 9;
8. All invention processes, know-how, formulas, drawings,
blueprints, specifications, flow-sheets, manuals, data, trade secrets,
plans, files, software relating to machining programs, and all other
intangible Assets of any nature whatsoever; and
-4-
9. Any and all other assets of any kind or nature whatsoever
related exclusively to the assets and business of Seller, except any
assets specifically excluded herein.
H. "Warranty" shall mean all warranty obligations of Seller, pertaining
to any lighting equipment sold or leased by Seller, which are based on
express warranties only. Buyer does not assume any liability with respect to
any implied warranty or any liability which shall be in the nature of
personal injury or property damage or other consequential damages, except as
stated herein.
I. "Financial Statements" shall mean the Balance Sheet and all other
exhibits and representations herein containing financial information
pertinent to the Purchased Assets.
II. SALE OF ASSETS
A. At Closing, Seller shall sell, assign, transfer, convey and deliver
to Buyer the Purchased Assets, free and clear of all liabilities,
obligations, liens, security interests and encumbrances of any kind, except
those liabilities expressly assumed by Buyer herein.
B. At Closing, Buyer agrees that it will accept and assume the Assumed
Liabilities.
C. At Closing, Buyer shall wire transfer the Purchase Price to Seller's
bank account.
III. CLOSING
The Closing of the sale (the "Closing") shall take place at Seller's
offices on or before April 30, 1997, but shall be effective as of April 1,
1997. At the Closing, Seller shall deliver to Buyer such bills of sale,
endorsements, assignments, and other good and sufficient instruments of
transfer and conveyance as shall be effective to vest in the Buyer good and
marketable title to the Purchased Assets as provided in this Agreement.
IV. PURCHASE PRICE
The Purchase Price shall be Seven Hundred Fifty Thousand Dollars
($750,000).
-5-
V. ALLOCATION OF PURCHASE PRICE
Buyer shall allocate the Purchase Price among the Purchased Assets in
such manner as it shall determine. Such allocation shall be made at or prior
to the date of Closing. Such allocation shall be made in accordance with the
provisions of Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), and shall be binding upon Buyer and Seller for all purposes
(including financial accounting purposes, financial and regulatory reporting
purposes, and tax purposes). Buyer and Seller also each agree to file IRS Form
8594 consistent with the foregoing and in accordance with Section 1060 of the
Code.
VI. FURTHER ASSURANCES
From time to time, at Buyer's request, whether at or after the Closing
and without further consideration, Seller and Stockholder will execute and
deliver such further instruments of conveyance and transfer and take such
other action as Buyer reasonably may require more effectively to convey and
transfer to Buyer any of the Purchased Assets.
VII. PAYMENT OF SALES AND SIMILAR TAXES
Buyer will pay all sales, transfer, and documentary taxes, if any,
payable in connection with the sale, transfer, and deliveries to be made to
Buyer hereunder.
VIII. EMPLOYEES OF SELLER
It is Buyer's intention to retain in the employment of Buyer all of the
employees of Seller at the present rate of compensation of such employees;
provided, however, that such expression of the Buyer's intention shall not be
construed as imposing any binding legal obligation on the Buyer to retain any
employee or employees of Seller in the employ of Buyer upon and after the
Closing, nor as to the terms of such employment.
IX. EMPLOYMENT OF STOCKHOLDER
A. Buyer shall employ Stockholder effective immediately upon the
Closing of the transactions herein contemplated. Stockholder shall be
employed by Buyer for a term of five (5) years at an annual base salary of
One Hundred Sixty Thousand Dollars ($160,000), and additional compensation in
the form of a Bonus Plan, the terms of which have been agreed upon by Buyer
and Stockholder. Stockholder shall be employed by Buyer in the capacity of
Vice President in charge of a new division of Buyer which shall be comprised
of the business and assets of Seller being purchased hereunder by Buyer. At
Closing, Buyer and Stockholder shall enter into a written Employment
Agreement in the form and of the
-6-
content of Exhibit 10, attached hereto, the terms and conditions of which
are incorporated herein by this reference.
B. In consideration of Stockholder entering into the Employment
Agreement referenced in subparagraph A above, Buyer shall grant to
Stockholder the right and option to purchase Fifteen Thousand (15,000) shares
of the common stock of Buyer, pursuant to Buyer's 1995 Stock Option Plan, and
on the terms and conditions set forth in the Stock Option Agreement
attached hereto as Exhibit 11 (the "Stock Option Agreement"), the terms and
conditions of which are incorporated herein by this reference. At Closing,
Buyer and Stockholder shall execute the Stock Option Agreement.
X. GUARANTY OF ACCOUNTS RECEIVABLE
At the Closing, Seller and Stockholder shall execute and deliver to
Buyer a Guaranty in the form set forth as Exhibit 12 hereto (the
"Guaranty"), under the terms of which Seller and Stockholder shall
unconditionally guarantee that all indebtedness represented by the Accounts
Receivable of Seller as of the Closing date (less Seller's reserve for
doubtful accounts not to exceed Sixteen Thousand Four Hundred Thirty-three
Dollars ($16,433)) will be paid by the respective debtors to Buyer. In the
event such net indebtedness is not paid on or before one hundred eighty (180)
days after the Closing date, Seller and/or Stockholder shall within ten (10)
days following receipt from Buyer of notice to such effect make payment to
Buyer of an amount in cash equal to the difference between the amount
collected by Buyer and the net receivables as shown on the Balance Sheet,
whereupon Buyer shall promptly assign or cause to be assigned to Seller
and/or Stockholder (as the case may be) all rights, claims, actions or causes
of action which Buyer may have relating to such unpaid receivables.
XI. REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDER
Seller and Stockholder represent, warrant and covenant to and with Buyer
as follows:
A. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, and has full
corporate power and authority to conduct its business as it is presently
being conducted and to own, sell and convey its properties and Assets.
B. Copies of Seller's Certificate of Incorporation and all amendments
thereof to date, certified by the Secretary of State of California, and of
Seller's Bylaws as amended to date, have been delivered to Buyer and are
complete and correct as of the date of this Agreement. At the Closing, Seller
shall deliver to Buyer a Certificate of Good Standing certified by the
Secretary of State of California.
-7-
C. Seller has all necessary corporate power and authority and has
taken all corporate action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its
obligations hereunder. This Agreement has been duly executed and delivered by
Seller and constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its respective terms.
D. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will result in (1) a
violation of or a conflict with any of the provisions of the Certificate of
Incorporation or Bylaws of Seller, (2) a breach of, or a default under, any
term or provision of any contract, agreement, indebtedness, lease,
commitment, license, franchise, permit, authorization or concession to which
Seller is a party, which breach or default would have a material adverse
effect on the business or financial condition of Seller or its ability to
consummate the transactions contemplated hereby, or (3) a violation by Seller
of any statute, rule, regulation, ordinance, code, order, judgement, writ,
injunction, decree or award, which violation would have a material adverse
effect on the business or financial condition of Seller or its ability to
consummate the transactions contemplated hereby.
E. Seller knows of no and has not been informed of any consent,
approval or authorization of, or declaration, filing or registration with any
governmental or regulatory authority, or any other person or entity which is
required to be made or obtained by Seller in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, except the approval of Seller's Board of
Directors.
F. Neither Seller nor any affiliate of Seller has entered into or will
enter into any contract, agreement, arrangement, or understanding with any
person or firm which will result in the obligation of Buyer or any
Stockholder to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated hereby.
G. Seller currently has and will have and will transfer to Buyer at
Closing, good and marketable title to all of the Purchased Assets, free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements, charges, encumbrances, restrictions and equities, except those
mortgages, pledges, liens, security interests and other liabilities expressly
assumed by Buyer hereunder.
H. Except as described in Exhibit 15, there are no material actions,
suits, claims, proceedings or investigations pending or, to the best knowledge
of Seller, threatened against or affecting the Purchased Assets, at law or in
equity, or before or by any federal, state, municipal or other governmental
court, department, commission, board, bureau, agency or instrumentality.
Prior to the Closing, either (1) Seller shall have resolved the matters
disclosed in Exhibit 15, or (2) Buyer and Seller shall agree as to how such
matters will be handled.
-8-
I. The Assets being purchased hereunder by Buyer constitute all of the
Assets of Seller.
J. Other than as set forth in this Agreement or the Exhibits hereto,
there are no material liabilities or obligations, secured or unsecured,
whether accrued, absolute, contingent, unasserted or otherwise, affecting the
Purchased Assets. Unless consented to by Buyer in writing, no liabilities
have been or will be incurred since February 28, 1997, except in the ordinary
course of business. Seller has no liabilities or obligations whatsoever,
either accrued, absolute, contingent or otherwise, which are not reflected or
provided for in the Financial Statements except (i) those arising after the
date of the Balance Sheet which are in the ordinary course of business, in
each case in normal amounts and none of which is materially adverse, and
(ii) as and to the extent specifically described in the Schedules hereto.
K. Seller has disclosed to Buyer all facts known by Seller to be
material to the Assets to be acquired by Buyer pursuant to this Agreement. No
written representation or warranty by the Seller in this Agreement or any
written statement or certificate furnished or to be furnished to the Buyer
pursuant hereto, contains or will contain any untrue statement of a material
fact known to Seller, or omits or will omit to state a material fact known to
Seller necessary to make the statements contained therein not misleading.
During the period from the date of this Agreement to the Closing date, Seller
represents and covenants that its business shall in all respects continue to
be operated only in the ordinary course. Seller shall give prompt notice to
Buyer with respect to any material changes in the operation of the business
and any matter or event which comes to Seller's attention and which, if it
had occurred as of the date hereof, would constitute a material breach of the
representations and warranties of Seller contained in this Agreement.
L. All tangible personal property, Equipment, Fixtures and
Inventories included within the Purchased Assets or required to be used in
the ordinary course of Seller's business are in good, merchantable, or in
reasonably repairable condition and are suitable for the purposes for which
they are being used. No value in excess of applicable reserves has been given
to any Inventory with respect to obsolete or discontinued products. All of
the Inventories and Equipment, including Equipment leased to others, are well
maintained and in good operating condition.
M. All Financial Statements provided to Buyer pursuant to this
Agreement and all Exhibits hereto are accurate in all material respects; and
all other financial data relating to the Purchased Assets given by Seller to
Buyer was accurate in all material respects as to what it was represented to
be when given to Buyer.
N. The Accounts Receivable reflected in the Balance Sheet and all
Accounts Receivable arising after the Balance Sheet date through Closing
arose from bona fide transactions in the ordinary course of business and to
the best of Seller's knowledge and belief are valid and collectible within
the limit of the stated bad debt reserve.
-9-
O. Seller warrants that the products which it manufactures do not
violate or infringe upon any valid patent, trade secret or proprietary rights
of others and that Buyer may continue to manufacture such products without
violating any patents, trade secrets or proprietary rights of others, or of
Seller. Seller shall defend any action brought against Buyer based upon a
claim that any of such items infringe upon a patent, trade secret or other
proprietary right. Seller further agrees to indemnify Buyer and hold Buyer
harmless from any or all of judgments, decrees, costs or expenses resulting
from such action.
P. Seller is not a party to any collective bargaining agreement.
There are no controversies between Seller and any of its employees which
might reasonably be expected to materially adversely affect the conduct of
its business, or any unresolved labor union grievances or unfair labor
practice or labor arbitration proceedings pending or threatened relating to
its business, and there are not any organizational efforts presently being
made or threatened involving any of Seller's employees. Seller has not
received notice of any claim that Seller has not complied with any laws
relating to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining, the payment of social
security and similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that Seller is liable for any
arrears of wages or any taxes or penalties for failure to comply with any of
the foregoing.
Q. Seller is not a party to any contract of employment, either
expressed or implied, with any of its existing employees.
R. The execution and delivery of this Agreement to Buyer and the
consummation of the transactions contemplated hereby have been duly authorized
by Seller's Board of Directors.
S. Exhibit 16 sets forth a complete and correct list and
description of all of the policies of liability, property, workers'
compensation, and all other forms of insurance or bonds carried by Seller for
the benefit of or in connection with the Purchased Assets and the business of
Seller.
T. All representations and warranties contained in this Article XI
shall be construed as being made jointly and severally by Xenotech, Inc.,
Xenotech Rents, and Stockholder.
XII. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
A. Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full corporate
power and authority to
-10-
conduct its business as it is presently being conducted and to own and lease
its properties and Assets.
B. Copies of Buyer's Certificate of Incorporation and all
amendments thereof to date, certified by the Secretary of State of Delaware,
and of Buyer's Bylaws as amended to date, have been delivered to Seller and
are complete and correct as of the date of this Agreement.
C. Buyer has all necessary corporate power and authority and has
taken all corporate action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its
obligations hereunder. This Agreement has been duly executed and delivered by
Buyer and constitutes a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its respective terms.
D. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will result in (1) a
violation of or a conflict with any of the provisions of the Certificate of
Incorporation or Bylaws of Buyer, (2) a breach of, or a default under, any
term or provision of any contract, agreement, indebtedness, lease,
commitment, license, franchise, permit, authorization or concession to which
Buyer is a party, which breach or default would have a material adverse
effect on the business or financial condition of Buyer or its ability to
consummate the transactions contemplated hereby, or (3) a violation by Buyer
of any statute, rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree or award, which violation would have a material adverse
effect on the business or financial condition of Buyer or its ability to
consummate the transactions contemplated hereby.
E. Buyer knows of no and has not been informed of any consent,
approval or authorization of, or declaration, filing or registration with any
governmental or regulatory authority, or any other person or entity which is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, except that Buyer is required to file an
8-K report with the Securities Exchange Commission within fifteen (15) days
after Closing.
F. Neither Buyer nor any affiliate of Buyer has entered into or
will enter into any contract, agreement, arrangement, or understanding with
any person or firm which will result in the obligation of Seller or
Stockholder to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated hereby.
G. The execution and delivery of this Agreement to Seller and the
consummation of the transactions contemplated hereby have been duly
authorized by Buyer's Board of Directors.
-11-
XIII. COVENANTS OF SELLER, STOCKHOLDER, AND BUYER
Seller covenants with Buyer and Buyer covenants with Seller as
follows:
A. Seller shall assign to Buyer all transferable manufacturer,
supplier or contractor warranties or guaranties respecting any of the
Purchased Assets.
B. Effective upon the Closing of the transactions contemplated
hereby, Seller shall no longer use, in any respect, the name or terms
"Xenotech," "Xenotech, Inc." or "Xenotech Rents" without the express written
consent of Buyer. Within six (6) months after Closing, Seller shall either be
dissolved or shall change its corporate name to a name which bears no
resemblance to the name "Xenotech," "Xenotech, Inc." or "Xenotech Rents," and
thereafter shall never use a name or names which shall be similar to such
name or names.
C. Seller shall not use, in any respect, the name, terms, or items
listed in Exhibit 9 hereto without the express written consent of Buyer.
D. Except as otherwise requested by Buyer, and without making any
commitment on its behalf, Seller will use its best efforts to preserve its
business intact; and preserve for Buyer the goodwill of the suppliers,
customers, and others having business relations with Seller prior to Closing.
Until the Closing, Seller shall not acquire any capital assets. In addition,
until Closing, Seller shall make no purchases or sales of Inventory items, or
enter into any contract or transaction, without the consent of Buyer in
writing, except in the ordinary course of its business. Further, Seller has
not and shall not make any distributions or payments (excluding Stockholder's
regular salary and the regular salaries of the employees of the Seller)
between February 28, 1997, and the date of Closing, without the written
consent of Buyer.
E. Buyer and Seller shall mutually approve any public announcement
and/or press release concerning this transaction. However, if a public
announcement or press release is required by the SEC or a listed exchange,
the other party shall give such advance notice as is reasonable under the
circumstances.
XIV. BULK SALES
Seller agrees to cooperate with Buyer in complying with the
provisions of Article 6 of the California Uniform Commercial Code -- Bulk
Transfer -- relating to bulk transfers in connection with the transactions
contemplated by this Agreement. If Buyer shall waive the provisions of the
Bulk Sales Law, Seller and Stockholder shall indemnify and hold Buyer
harmless from any damages, losses or expenses (including reasonable
attorneys' fees) suffered by Buyer from any claim which may be asserted
against Buyer by creditors of Seller for obligations not assumed by Buyer
hereunder which result from noncompliance with the California Bulk Transfer
Law. The parties agree that all necessary procedures to effect such
compliance shall be performed by Seller's counsel on behalf of Buyer at
Buyer's expense.
-12-
XV. COVENANT NOT TO COMPETE
At the Closing, Stockholder and Seller will execute a
Non-Competition Agreement in the form of Exhibit 13 hereto. The effectiveness
of this Agreement and of the Non-Competition Agreement will be contingent
upon the execution of each other.
XVI. ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
A. Seller and Buyer agree that so long as any books, records and
files relating to the business, Assets or operations of the Seller, to the
extent that they pertain to the operations prior to the Closing date relating
to the Purchased Assets, remain in existence and available, Buyer (at its
expense) shall have the right to inspect and to make copies of the same at
any time during business hours for any proper purpose with reasonable advance
notice. Seller further agrees that it shall preserve and maintain all of its
existing books and records relating to the Purchased Assets for a period of
at least five (5) years following the date of Closing.
B. On and after the Closing date, Seller and Buyer will take all
appropriate action and execute all documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out any of
the provisions hereof.
C. Buyer will assume all express Warranty obligations, as defined
herein.
XVII. INDEMNIFICATIONS
A. BY SELLER AND STOCKHOLDER: It is specifically acknowledged that
Buyer does not assume and will not be responsible for any liabilities of
Seller, except as may be expressly stated herein. Effective as of the Closing
date, Seller and Stockholder shall indemnify and hold harmless Buyer against
and in respect of:
1. All liabilities and obligations of, or claims against,
Seller not expressly assumed by Buyer in this Agreement, including
but not limited to: all obligations of Seller not reflected on
Seller's Balance Sheet dated February 28, 1997; all sales, income
and other tax liabilities, except those expressly assumed by Buyer
pursuant to this Agreement; all employment contracts of Seller; all
employment claims against Seller, including claims of discrimination
or unfair labor practices or of any other nature, whether accruing
prior to or subsequent to Closing, relating to any present or
former employee of Seller while he/she was an employee of Seller,
and any claims of employees of Seller to have any entitlement of
employment with Buyer, unless said claims are based upon an agreement
pursuant to which said employees are expressly retained by Buyer
after the employee has submitted an employment application to Buyer.
-13-
2. Any damage or deficiency resulting from any material
misrepresentation, breach of warranty, or nonfulfillment of any
agreement on the part of Seller and/or the Stockholder under this
Agreement or from any material misrepresentation in or omission
from any certificate or other instrument furnished or to be
furnished to Buyer under this Agreement.
3. Any and all liabilities, claims or damages (whether or
not caused by negligence), including civil or criminal fines,
arising out of or relating to any of the following:
a. Any generation, processing, handling, transportation,
storage, treatment or disposal of solid wastes or
hazardous wastes by Seller, including, but not
limited to, any of such activities occurring with
respect to the business of Seller, the Assets
purchased hereunder, or any facilities or property
of Seller, and
b. Any releases or contamination by Seller or its
predecessors, tenants, vendors, employees, or
agents (including, but not limited to, any releases
as declared under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980,
as amended) to the extent occurring or existing
prior to Closing, including, but not limited to,
such releases to land, ground water, surface water,
or into the air.
B. BY BUYER: Buyer agrees that, on and after the date hereof, it
shall indemnify and save and hold harmless Seller and Stockholder from and
against any and all damages incurred in connection with or arising out of or
resulting from (1) any material breach of any covenant or warranty, or the
inaccuracy of any representation, made by Buyer in or pursuant to this
Agreement; (2) any liability, obligation or commitment of Buyer relating in
any way to the Purchased Assets or Assumed Liabilities; or (3) any claim,
liability, obligation or commitment of any nature which is specifically
assumed by Buyer pursuant to this Agreement.
XVIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to purchase the Purchased Assets from
Seller are subject to the satisfaction, on or before the Closing date, of all
of the following conditions, which conditions may be waived in writing by
Buyer:
A. The representations and warranties of Seller and Stockholder
contained in this Agreement shall have been true in all material respects
when made and, in addition, shall be true in all material respects on and as
of the Closing date with the same force and effect as though made on and as
of the Closing date.
-14-
B. Seller and Stockholder shall have, or have caused to be,
performed and observed, in all material respects, all obligations and
agreements hereunder and shall have complied with all covenants and
conditions contained in this Agreement to be performed and complied with by
them at or prior to the Closing date.
C. If, prior to the Closing date, any material part of the
Purchased Assets is damaged by fire, other casualty, or any cause or activity
not attributable to or under the control of Buyer, Seller shall give Buyer
written notice thereof and Buyer may, at its option, terminate this Agreement
by written notice of such election given to Seller no later than five (5)
working days after receipt of Seller's notice, and upon giving such notice,
both parties shall be fully discharged from all duties hereunder and all
obligations hereof. However, if Buyer shall not so elect, or if an immaterial
part of the Assets is damaged, then Seller hereby assigns to Buyer all of its
rights, title and interest in and to any and all insurance proceeds payable
by reason of such destruction or damage to the Purchased Assets and Seller
hereby agrees to pay Buyer a sum equal to the deductible amount provided in
such policies to the extent necessary to correct such damage.
D. At or prior to the Closing, Seller and Stockholder shall have
executed the Non-Competition Agreement as provided in Article XV herein.
E. There shall not have been, between the date of this Agreement
and the Closing date, any materially adverse change in any of the Purchased
Assets or the current operations of Seller.
F. Seller and Stockholder shall have furnished Buyer with such
certificates in form and substance reasonably satisfactory to counsel for
Buyer as may be reasonably requested by counsel for Buyer to evidence
compliance with the conditions set forth in this Section.
G. Either (1) Seller shall have resolved the matters disclosed in
Exhibit 15, or (2) Buyer and Seller shall have agreed as to how those matters
that will be handled.
H. Stockholder and Buyer shall have executed the Lease Agreement
as provided in Article I herein.
I. Seller and Stockholder shall have executed the Guaranty as
provided in Article IV herein.
J. At or prior to the Closing, Buyer and Stockholder shall have
executed the Employment Agreement as provided in Article IX herein.
K. At or prior to the Closing, Buyer, Seller, and Stockholder
shall have entered into the Escrow Agreement referred to in the Employment
Agreement and Non-Competition Agreement.
-15-
XIX. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to sell the Purchased Assets under this
Agreement to Buyer is subject to the satisfaction, on or before the Closing
date, of all of the following conditions, which conditions may be waived in
writing by Seller:
A. The representations and warranties of Buyer contained in this
Agreement shall have been true in all material respects when made and, in
addition, shall be true in all material respects on and as of the Closing
date with the same force and effect as though made on and as of the Closing
date.
B. Buyer shall have, or have caused to be, performed and observed,
in all material respects, all covenants, agreements and conditions hereof to
be performed or observed by Buyer at or before the Closing.
C. Seller shall have received approval from its Board of Directors
for consummation of this transaction on the terms and conditions contained
herein.
D. Buyer shall have furnished Seller with such certificates in form
and substance reasonably satisfactory to counsel for Seller as may be
reasonably requested by counsel for Seller to evidence compliance with the
conditions set forth in this Section.
E. Either (1) Seller shall have resolved the matters disclosed in
Exhibit 15, or (2) Buyer and Seller shall have agreed as to how those matters
will be handled.
XX. NONASSIGNMENT
Neither this Agreement nor any of the rights or obligations hereunder
may be assigned by any party without the prior written consent of the other
parties. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns, and no other person shall have any right, benefit or obligation
hereunder, as a third-party beneficiary or otherwise.
XXI. EXPENSES
Except as otherwise provided in this Agreement, each party shall pay
its respective expenses, taxes, charges and liabilities incurred in
connection with or arising out of this Agreement, including, without
limitation thereto, counsel fees, accounting fees, and other expenses related
to the assignment and delivery of the Purchased Assets to Buyer.
-16-
XXII. NOTICES
Unless otherwise provided herein, any notices, request, instruction
or other document to be given hereunder by either party to the other shall be
in writing and delivered personally or mailed by certified mail, postage
prepaid, return receipt requested (such mailed notice to be effective on the
date such receipt is acknowledged or refused), as follows:
IF TO SELLER: Xenotech, Inc.
0000-0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
WITH COPY TO: Xxxxxxx Xxxx Xxxxxxxxx, Esq.
00000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
IF TO STOCKHOLDER: Mr. Xxxxxxx Xxxx
000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxxxxxx, XX 00000
WITH COPY TO: Xxxxxxx Xxxx Xxxxxxxxx, Esq.
00000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
IF TO BUYER: Ballantyne of Omaha, Inc.
Attn: Xxxxxx Xxxxxxxxxx
0000 XxXxxxxx Xxxxxx
Xxxxx, XX 00000
WITH COPY TO: Xxxxx Xxxxx & Xxxxxxxx
Xxxxx X. Xxxxxx, Esq.
00000 Xxxxxxx Xxxxx Xx., Xxxxx 000
Xxxxx, XX 00000
or at such other address or designation as is provided by one party to the
other in writing.
XXIII. CHOICE OF LAW
This agreement shall be construed, interpreted and the rights of
the parties determined in accordance with the laws of the State of
California (without reference to the choice of law provisions of California
law).
-17-
XXIV. SURVIVAL OF WARRANTIES AND REPRESENTATIONS
The representations, warranties and covenants of the parties hereto
contained herein, or in any certificates or other documents delivered prior
to or at the Closing, shall not be deemed waived or otherwise affected by
any investigation theretofore made by either party. Each and every
representation, warranty and covenant of Seller, Stockholder, and Buyer and
the indemnification provisions set forth in Article XV herein shall survive
the Closing date and remain operative and in full force and effect as herein
provided.
XXV. ARBITRATION
If a controversy shall exist between the parties hereto, their suc-
cessors or assigns, arising under or out of this Agreement which they cannot
resolve among themselves, either party to the controversy shall have the
right to submit the same to arbitration in accordance with the commercial
rules of the American Arbitration Association. The arbitration shall apply
the law of the State of California. In addition, either party may exercise
the right to have the dispute or controversy submitted to mediation prior to
an arbitration. Such arbitration shall be conducted in Los Angeles County,
California, with a written record kept of the proceedings. The arbitrator(s)
shall prepare a written summary of findings and facts and conclusions of law
upon which any award is based. The arbitrator(s), if they desire, shall have
access to all books and records of the Buyer and Seller directly pertinent to
this Agreement, as well as any and all other documents and things pertinent
to the matter in arbitration which shall enable them to make a fair and full
settlement of all matters in controversy. In addition, the provisions of
California Code of Civil Procedure Section 1283.05, or any successor section
thereto (allowing discovery in arbitration proceedings), shall be applicable
to the arbitration. Any award made pursuant to arbitration shall be entered
as a judgment by any court of competent jurisdiction on the application of
any party to such arbitration. The successful or prevailing party or parties
through arbitration shall be entitled to recover reasonable attorney fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it or he may be entitled.
XXVI. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS
This Agreement, together with all exhibits and schedules hereto,
constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
-18-
XXVII. MULTIPLE COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together constitute one
and the same instrument.
XXVIII. INVALIDITY
In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then
to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or
any other such instrument.
XXIX. TITLES
The titles, captions or headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
XXX. PUBLICITY
Except as specified in Article XIII(E) hereof, neither party shall
issue any press release or make any public statement regarding the
transactions contemplated hereby, without the prior approval of the other
party, and the parties hereto shall issue a mutually acceptable press release
as soon as practicable after the execution and delivery of this Agreement.
XXXI. CONFIDENTIAL INFORMATION
In connection with the negotiation of this Agreement, each party
acknowledged that it has had access to confidential information relating to
the other party. Each party shall treat such information as confidential,
preserve the confidentiality thereof and not duplicate or make use of any
other such information, except to advisors, consultants, lenders and
affiliates in connection with the transactions contemplated hereby or
pursuant to or as required by law. If the transaction is not closed, each
party shall return to the other all confidential information in tangible
form, belonging or relating to the other party or provide a certificate of
destruction of such material acceptable to the other party.
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers
thereunto duly authorized, on this 8 day of April, 1997, effective as of the
1st day of April, 1997.
"Seller"
XENOTECH, INC. XENOTECH RENTS,
a California corporation a California corporation
By /s/ Xxxxxxx X. Xxxx By /s/ Xxxxxxx X. Xxxx
------------------------- -------------------------
Title: President Title: President
--------------------- --------------------
"Buyer"
"Stockholder" BALLANTYNE OF OMAHA, INC.
a Delaware corporation
/s/ Xxxxxxx X. Xxxx By /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------------- ---------------------------
Xxxxxxx Xxxx
Title: Vice Chairman
------------------------
STATE OF Nev. )
) ss.
COUNTY OF Xxxxx )
On this 8 day of April, 1997, before me, the undersigned, a Notary
Public in and for said County, personally appeared the above-named XXXXXXX
XXXX, President of XENOTECH, INC., to me known to be the identical person
named in and who executed the foregoing instrument and acknowledged that he
executed the same as his voluntary act and deed and the voluntary and deed of
said corporation.
/s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------
[NOTARY SEAL] Notary Public
-20-
STATE OF Nev. )
) ss.
COUNTY OF Xxxxx )
On this 8 day of April, 1997, before me, the undersigned, a Notary
Public in and for said County, personally appeared the above-named XXXXXXX
XXXX, President of XENOTECH RENTS, to me known to be the identical person
named in and who executed the foregoing instrument and acknowledged that he
executed the same as his voluntary act and deed and the voluntary and deed of
said corporation.
/s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------
Notary Public
[NOTARY SEAL]
STATE OF Nev. )
) ss.
COUNTY OF Xxxxx )
On this 8 day of April, 1997, before me, the undersigned, a Notary
Public in and for said County, personally appeared the above-named
Stockholder, XXXXXXX XXXX, to me known to be the identical person named in
and who executed the foregoing instrument and acknowledged that he executed
the same as his voluntary act and deed.
/s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------
Notary Public
[NOTARY SEAL]
-00-
XXXXX XX XXXXXXXX )
) ss.
COUNTY OF XXXXXXX )
On this 8th day of April, 1997, before me, the undersigned, a Notary
Public in and for said County, personally appeared the above-named Xxxxxx X.
Xxxxxxxxxx, Vice Chairman of the Board of BALLANTYNE OF OMAHA, INC. to me
known to be the identical person named in and who executed the foregoing
instrument and acknowledged that he executed the same as his voluntary act
and deed and the voluntary act deed of said corporation.
[NOTARY SEAL]
/s/ Xxxxx X. Xxxxxx
----------------------------------
Notary Public
-22-
