ASSET PURCHASE AGREEMENT
EXHIBIT
1.0
This
ASSET PURCHASE AGREEMENT
(this “Agreement”), dated as of May 15, 2008 (the “Closing Date”), by and
between Bear Holdings,
Inc. (“Purchaser”), a wholly owned subsidiary of Westmoore Holdings, Inc. (the
“Parent Company”), and Bear
Industrial Supply & Manufacturing, Inc. (the “Company”) on the
other. The Purchaser, the Parent Company, and the Company shall
sometimes be collectively referred to herein as the “Parties”.
WHEREAS, Purchaser desires to
acquire the assets of the Company (the “Assets”) set forth in Exhibit A hereto,
pursuant to the terms of this Agreement;
WHEREAS, the Company desires
to sell the Assets to the Company, pursuant to the terms of this
Agreement.
NOW, THEREFORE, in
consideration of the premises and the representations, warranties, covenants and
agreements herein contained, the parties hereby agree as follows:
Sale of
Assets. Upon execution of this Agreement (the “Closing Date”),
the Company shall acquire the Assets set forth in Exhibit A hereto and assume
certain liabilities of the Company, set forth in Exhibit B
hereto. The purchase price of the assets shall be $2.25 million
calculated as follows (“Purchase Price”):
(a) $1
million dollars in cash, payable as cancellation of the loan previously provided
by the Purchaser to the Company; and
(b) The
issuance of shares of common stock of the Parent Company equal in value to $1.25
million, calculated at the closing bid price of the Parent Company as of the
Closing Date.
Valuation. It
is acknowledged that certain members of the Parent Company’s board of directors
have a conflict of interest in connection with the proposed acquisition in that
they are also shareholders (directly or through certain controlled
entities) of the Company. In this regard, the Parties hereto have
taken the following actions: (i) the Parent Company has obtained the approval of
all independent members of its Board of Directors to the acquisition of the
Assets by the Purchaser; (ii) the Parent Company had an independent valuation
conducted of the Company by Avalon Advisers, Inc and (iii) the interested
members of the Board of Directors have disqualified themselves from all
consideration of the proposed acquisition of the Assets.
Assurances. Company
shall not, by amendment of its organizational documents or any agreement or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by Company, but shall at all times in good faith assist
in the carrying out of all the provisions of this Agreement and in taking of all
such actions as may be necessary or appropriate in order to protect the
conversion rights of Purchaser against impairment or dilution.
Representations and
Warranties of Company. Company hereby represents and warrants
to Purchaser as follows:
Due Organization and
Qualification. Company is a corporation duly organized,
validly existing and in good standing under the laws of its state of its state
of incorporation. Company has all requisite power and authority to
own, lease and operate its assets and properties and to carry on its business as
presently conducted and as presently contemplated. Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the nature of its business or the locations of its property requires such
qualification, except where the failure to do so would not have a material
adverse effect on Company’s business, operations, assets or condition (financial
or otherwise).
Power and
Authority. Company has the requisite power and authority to
execute and deliver this Agreement and all other agreements contemplated by this
Agreement and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement
and all other agreements and documents contemplated by this Agreement have been
duly authorized by all necessary action on the part of Company. This
Agreement has been duly executed and delivered by Company and is the valid and
binding obligation of Company, enforceable against Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, moratorium, insolvency, reorganization or other similar laws now or
hereafter in effect generally affecting the enforcement of creditors’ rights,
specific performance, injunctive or other equitable remedies.
Compliance with
Laws. Company is in compliance in all material respects with
all Federal, state, local and foreign laws, statutes, ordinances, regulations,
orders, judgments, injunctions, awards or decrees (collectively, “Laws”),
applicable to it or any of its properties or operations. Company has not
received any notice of violation or alleged violation of any Law by
it. Company has all licenses, permits, orders and approvals of
Federal, state, local and foreign governmental or regulatory bodies necessary
for the conduct of its business and operations as presently conducted and
presently contemplated to be conducted.
No Breach;
Consents. The execution, delivery and performance of this
Agreement by Company and the consummation by Company of the transactions
contemplated hereby will not: (i) result in any lien, pledge, mortgage,
security interest, claim, lease, charge, option, easement, servitude or other
encumbrance whatsoever (collectively, “Liens”) upon any of the property or
assets of Company (other than in favor of Purchaser), or (ii) violate,
conflict with or otherwise result in the breach of any of the terms and
conditions of, result in a material modification of, accelerate or trigger the
rights of any person under, or constitute (or with notice or lapse of time or
both would constitute) a default under: (a) any material instrument,
contract or other agreement to which Company is a party or by or to which it or
any of its properties is bound or subject; (b) Company’s organizational
documents or bylaws (and all amendments thereto up through the date hereof); or
(c) any law applicable to Company or any of its properties or
operations. No consent, approval or authorization of, or declaration
or filing with, any governmental authority, member of Company or other person or
entity is required on the part of Company in connection with the execution,
delivery or performance of this Agreement or the consummation by it of the
transactions contemplated hereby.
Litigation. There
are no material suits or actions, administrative, arbitration or other
proceedings or governmental investigations pending or, to Company’s knowledge,
threatened against or affecting Company or any of its properties or
assets. There are no judgments, orders, injunctions, decrees or
awards against Company that are not satisfied or remain
outstanding.
Title to Property and
Assets. Company has good and marketable title to all of the
Assets sold hereunder, free and clear of all liens, except liens for current
taxes and assessments not yet due. With respect to the material
property and assets it leases, Company is in material compliance with such
leases and, to the best of its knowledge, holds a valid leasehold interest free
of all Liens, except for such Liens, which would not materially impair the
operations of Company. Company’s properties and assets are in good
condition and repair, in all material respects, and are fit for the purposes for
which they are currently used, ordinary wear and tear excepted.
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Not a Regulated
Entity. Company is not: (i) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an
investment company” within the meaning of the Investment Company Act of 1940;
(ii) a “holding company,” or a “subsidiary company” of a “holding company,”
or an “affiliate” of a “holding company” or of a “subsidiary company” of a
“holding company,” within the meaning of the Public Utility Holding Company Act
of 1935; or (iii) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any public utilities code or any other Law regarding
its authority to incur indebtedness.
No
Misrepresentations. The representations and warranties of
Company contained herein do not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which they were made, not
misleading.
Financial
Statements. At or prior to the Closing, the Company shall
provide to the Purchaser copies of the financial statements for the previous two
operating years (the “Financial Statements”). The Financial
Statements shall be true and correct and shall be prepared in accordance with
GAAP consistently applied and consistent with prior periods. The
balance sheet comprising a part of the Financial Statements shall fairly
present, in all material respects, the financial position of the Company as of
its date, and the statements of operations shall fairly present, in all material
respects, the results of operations of the Company for the period then
ended.
No Material Adverse
Change. Since the latest date of the Financial Statements,
there has not been any material adverse change in the Company, operations,
properties, prospects, assets, or condition of the Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
Books and
Records. The books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to the Purchaser, are complete and correct and have been maintained in
accordance with sound Company practices. At the Closing, all of those
books and records will be in the possession of the Company.
Title to Properties;
Encumbrances. The Company owns all the Assets free and clear
of all encumbrances except for liens for current taxes not yet due and
payable.
Undisclosed
Liabilities. Except as, and to the extent reflected in the
Financial Statements the Company does not have, nor shall it have on the date of
Closing, any liabilities or obligations of any kind or nature, whether known or
unknown or secured or unsecured (whether absolute, accrued, contingent or
otherwise, and whether due or to become due) that would be required to be
reflected on a balance sheet, or the notes thereto, prepared in accordance with
GAAP.
Legal Compliance and
Proceedings. The Company has not received any notice from a
governmental agency alleging that it is not in compliance with all material
legal requirements associated with the operation of the Company and there is no
pending proceeding: (a) that has been commenced by or against the Company or
that otherwise relates to or may affect the Company of, or any of the property
or assets owned or used by, the Company; or (b) that challenges, or that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated hereunder.
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Taxes.
(a) The
Company has timely filed or caused to be timely filed (or has received an
appropriate extension of time to file) all material tax returns that are or were
required to be filed by it prior to the Closing Date, pursuant to applicable
legal requirements, and such tax returns were true and correct in all material
respects. The Company has made available to the Purchaser copies of
all such Tax Returns relating to income or franchise taxes filed since the
inception of the Company.
(b) The
Company has paid (or made appropriate provision in the Financial Statements for
the payment of) all taxes that have or may have become due pursuant to material
tax returns or otherwise, or pursuant to any assessment received by the
Company. The Company has withheld and paid all taxes required by law,
rule or regulation to have been withheld and paid by the Company in connection
with amounts paid by or owing to any employee, independent contractor, creditor,
shareholder or other third party. The Company is under no obligation
to prepay, and has not prepaid, any taxes.
(c) No claims
have ever been made against the Company by any tax authority in a jurisdiction
where the Company does not file material tax returns that it is or may be
subject to taxation by that jurisdiction. There is no pending, or
threatened in writing, action, audit, proceeding or investigation for the
assessment or collection of any taxes.
(d) No power
of attorney has been granted by the Company, and is currently in force, with
respect to any matter relating to taxes, and there are no liens (other than
liens for Taxes that are not yet due and payable or which are being contested in
good faith) on any assets of the Company that arose in connection with any
failure (or alleged failure) to pay any tax, except for liens which would not,
individually or in the aggregate, have a material adverse effect with respect to
the Company.
Real
Property.
(a) The
Company does not own any real property.
(b) The
Company is in compliance with all material terms of the Commercial Lease
covering its manufacturing facility. The Company will assure the
transfer of this Lease to the Purchaser on or prior to the Closing
Date.
(c) The
Company has not received written notice of: (i) any violation of
federal, state or local laws, codes, regulations or ordinances affecting the
Premises, including, without limitation, zoning, building or similar laws or
ordinances, nor do they have any actual knowledge of any of the foregoing, (ii)
any covenant, restriction, condition or agreement contained in any instrument
affecting such real property, or (iii) any default from any third party who
would be benefited by such restriction, condition or agreement.
Tangible
Assets.
(a) The
Assets constitute all assets owned or leased by the Company.
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(b) The
Company owns or leases, all tangible assets necessary for the conduct of the
Company as presently conducted and as presently proposed to be
conducted. Each tangible asset is free from defects (patent and
latent), has been maintained in accordance with normal industry practice, is in
good operating condition and repair, and is suitable for the purposes for which
it presently is used and presently is proposed to be used.
Contracts and
Consents. All contracts, agreements and other instruments
relating to the Company’s business and are in full force and effect, in
accordance with their respective terms, and true and correct copies thereof
(together with any and all amendments thereto, and together with written
descriptions for any material oral Applicable Contracts) have been provided to
the Purchaser. No breach, default or violation by the Company has
occurred or has been alleged thereunder and the Company shall assure that all
such contracts are assigned to the Purchaser on or prior to the Closing
Date.
Accounts
Receivable. All accounts receivable represent or will
represent valid obligations of the respective account debtors thereunder arising
from sales actually made or services actually performed in the ordinary course
of Company; provided, however, it is understood between the Parties that the
Purchaser is acquiring the accounts receivable on a nonrecourse basis. After the
Closing, the Purchaser shall assume all risk of collection of these accounts
receivable.
Insurance. The
Company maintains adequate insurance to insure against all foreseeable
liabilities arising from the operations of the Company.
Employees. The
Company is not a party to, or bound by any collective bargaining agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. To the best of the Company’s knowledge,
the Company has not committed any unfair labor practice.
Employee
Benefits. Neither the Company nor any affiliate of the Company
maintains, administers or contributes to, or has maintained, administered or
contributed to, nor do the employees of the Company or any ERISA Affiliate
receive or expect to receive, as a condition of employment, benefits pursuant
to, any employee benefit plan (as defined in section 3(3) of the Employment
Retirement Income Security Act of 1974, as amended (“ERISA”). The Company has
from time to time provided employees with performance based bonuses which have
been issued at the sole discretion of Company management.
Environment, Health and
Safety. The Company and its predecessors have complied with
all environmental, health and safety laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure to so
comply.
Completeness of
Statements. No representation or warranty of the Company
herein, and no written statement or certificate furnished or to be furnished by
or on behalf of the Company to the Purchaser pursuant hereto or in connection
with the transactions contemplated hereby, contains or will contain as of the
Closing any untrue statement of a material fact or omits or will omit to state a
material fact necessary in light of the circumstances to make the statements
contained herein or therein not misleading. It is understood that the
representations and warranties contained in this Agreement are for the direct
benefit of the Purchaser only and no third party is to rely upon such
representations or is to otherwise have any recourse against Company or Seller
arising from such representations.
Representations and
Warranties of Purchaser. Purchaser hereby represents and
warrants to Company as follows:
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Due
Execution. This Agreement has been duly executed and delivered
by Purchaser and is the valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws generally affecting the enforcement of creditors’ rights, specific
performance, injunctive or other equitable remedies.
Conditions Precedent to the
Obligation of Purchaser to Close.
Closing. The
obligation of Purchaser to complete the Closing is subject to the fulfillment on
or prior to the Closing Date (or applicable Subsequent Closing Date, as the case
may be) of all of the following conditions, any one or more of which may be
waived by Purchaser in writing:
(a) Agreements and
Conditions. Company shall have complied with and duly
performed and satisfied ill all material respects all agreements and conditions
on its part to be complied with and performed by such date pursuant to this
Agreement.
(b) Representations and
Warranties. The representations and warranties of Company
contained in this Agreement shall be true and correct on and as of the
applicable Closing Date with the same force and effect as though such
representations and warranties had been made on and as of such Closing
Date.
(c) No Material Adverse
Change. Since the date of this Agreement, there shall not have
accrued any change, circumstance or event that constitutes or has resulted in,
or that is reasonably likely to result in, a material adverse change in
Company’s business, assets, operations or financial condition.
(d) No Legal
Proceedings. No court or governmental action or proceeding
shall have been instituted or threatened against Company that was instituted to,
or threatens to, restrain or prohibit the transactions contemplated
hereby.
(e) Consents. Company
shall have obtained all consents necessary to effectuate this Agreement and to
consummate the transactions contemplated hereby and delivered copies thereof to
Purchasers.
Conditions Precedent to the
Obligation of Company to Close.
Closing. The
obligation of Company to complete the Closing is subject to the
fulfillment on or prior to the Closing Date of all of the following conditions,
any one or more of which may be waived by Company in
writing:
(a) Agreements and
Conditions. On or before the Closing Date, Purchaser shall
have complied with and performed and satisfied in all material respects all
agreements and conditions on its part to be complied with and performed by such
date pursuant to this Agreement.
(b) Representations and
Warranties. The representations and warranties of Purchaser
contained in this Agreement shall be true and correct on and as of the
applicable Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing
Date.
(c) No Legal
Proceedings. No court or governmental action or proceeding
shall have been instituted or threatened to restrain or prohibit the
transactions contemplated hereby.
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(d) Payment of Purchase
Price. Purchaser shall have paid to Company the Purchase
Price.
Indemnification.
(a) Company
shall defend and indemnify Purchaser from any and all losses, liabilities,
proceedings, claims, settlements, judgments, fines, assessments, damages and
expenses (including reasonable attorneys’ fees and recoverable costs including,
but not limited to, the fees for expert witnesses, whether arising out of a
third party claim or relating to recovering damages from Purchaser)
(collectively, the “indemnifiable damages”) that Purchaser may suffer or incur
in whole or in part by reason of, or which may arise out of: (i) the inaccuracy
of any of the representations of Company in this Agreement; (ii) the breach by
Company of any of the covenants or warranties herein; (iii) any and all
liabilities (including, without limitation, unasserted claims, whether known or
unknown, matured or unmatured, absolute, contingent or otherwise) that are not
reflected, or are in excess of the amount reflected, in the Financial Statements
or notes thereto and which resulted either during the ordinary course of
Company’s business or from an extraordinary event affecting Company’s business
prior to the Closing Date; or (iv) the failure of Company to obtain any required
consents to effectuate the transactions contemplated herein.
(b) (i) Promptly
upon receipt of notice of any third party claim, demand or assessment or the
commencement of any suit, action or proceeding in respect of which indemnity may
be sought on account of an indemnity agreement contained in this Section, the
party seeking indemnification (the “Indemnitee”) shall notify in writing, within
sufficient time to respond to such claim or answer or otherwise plead in such
action, the party from whom indemnification is sought (the “Indemnitor”)
thereof; provided, however, that failure or delay to supply such notice shall
not relieve Indemnitor of their indemnification obligation hereunder except to
the extent that Indemnitor is actually prejudiced by such failure or
delay.
(ii) In
case any claim, demand or assessment is asserted or suit, action or proceeding
commenced against an Indemnitee (collectively a “Claim”) and it notifies the
Indemnitor of the commencement thereof, if the Indemnitor acknowledges its
indemnification obligations therefore hereunder, then, the Indemnitor shall be
entitled to compromise or defend the action, in its sole discretion, with
counsel of its own choosing. After notice from the Indemnitor to the
Indemnitee of its election so to assume the defense, conduct or settlement
thereof, the Indemnitor shall not be liable to the Indemnitee for any legal or
other expenses subsequently incurred by the Indemnitee in connection with the
defense, conduct or settlement thereof; provided, however, that if in the
opinion of counsel to the Indemnitee, such counsel would be
subject to a conflict of interest in defending the claim as counsel to both the
Indemnitor and the Indemnitee, then the reasonable legal fees of the Indemnitee
shall be recoverable as losses hereunder and counsel for the Indemnitor and
counsel for the Indemnitee shall control the defense of the claim on behalf of
their respective clients. The Indemnitee shall have the right in any
event to participate in any such defense with its own counsel at its own
expense. The Indemnitee will cooperate with the Indemnitor in
connection with any such Claim and make personnel, books and records relevant to
the Claim available to the Indemnitor at Indemnitor’s expense. In the
event that the Indemnitor fails timely to defend, contest or otherwise protect
against any such Claim, the Indemnitee shall have the right to defend, contest
or otherwise protect against the same and may make any compromise or settlement
thereof and recover the entire cost thereof from the Indemnitor, including,
without limitation, reasonable attorneys’ fees, disbursements and all amounts
paid as a result of such Claim or compromise or settlement thereof
(iii) Anything
to the contrary herein notwithstanding, prior to finally settling any such
Claim, the Indemnitor shall give to the Indemnitee prompt notice of its
intention to settle same and the terms of such proposed settlement and
acknowledging its indemnification responsibility therefore hereunder. If the
Indemnitee shall object to such proposed settlement within ten (10) days, then
the Indemnitee shall thereafter, at its sole expense, assume the control and
defense of such claim, suit, action, investigation or proceeding and in such
event the liability of the Indemnitor shall be limited to the amount for which
the same could have been settled as proposed by the Indemnitor. If the
Indemnitee does not object to the terms of the proposed settlement within the
aforesaid 10-day period, then the Indemnitor shall have the right to consummate
such proposed settlement upon the terms set forth in the aforesaid
notice.
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Miscellaneous.
Publicity. The
parties may issue a public announcement following the Closing in form and
content reasonably satisfactory to each of the parties hereto.
Entire
Agreement. This Agreement and the other agreements
and certificates executed in connection with the consummation of the
transactions contemplated hereby embody the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof.
Governing Law; Venue.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California applicable to agreements made and to be
performed entirely within such jurisdiction. Any dispute, claim,
arbitration or any other legal proceedings in relation to this Agreement shall
be heard in the County of Orange, California.
Arbitration. All disputes or
claims arising under this Agreement shall be settled by arbitration before a
single arbitrator. The arbitration shall be conducted in accordance
with the rules of the American Arbitration Association, and shall take place in
Orange County, California.
[SIGNATURE
PAGE FOLLOWS]
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IN WITNESS WHEREOF, the
parties hereto have executed this Note Purchase Agreement on the date first
above written.
PARENT
COMPANY:
WESTMOORE HOLDINGS, INC. , a
California corporation
By: /s/ Xxxxxx
Xxxxxxxx
XXXXXX
XXXXXXXX
Its:
President
PURCHASER:
BEAR HOLDINGS, INC. , a
California corporation
By: /s/ Xxxxxx
Xxxxxxxx
XXXXXX
XXXXXXXX
Its:
President
COMPANY:
BEAR INDUSTRIAL & MANUFACTURING,
INC., a California corporation
By: /s/ Xxxxx
Xxxxxxxx
XXXXX
XXXXXXXX
Its:
President and CEO
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EXHIBIT
A
[LIST OF
ASSETS]
EXHIBIT
B
[ASSUMED
LIABILITIES]
