ASSET PURCHASE AGREEMENT
ASSETS PURCHASE AGREEMENT, dated as of June 4, 1998, by and
among ROTARY POWER MARINE, INC., a Delaware corporation ("Seller") and ROTARY
POWER MARINE CORPORATION, a New York corporation ("Purchaser").
RECITALS:
A. Seller is engaged in the business of the manufacture and
sale of rotary engines for marine uses (the "Business").
B. Subject to the terms and conditions contained in this
Agreement, Seller desires to sell and Purchaser desires to purchase certain
tangible and intangible assets utilized by Seller in the Business.
NOW, THEREFORE, in consideration of the recitals and of the
respective covenants, representations, warranties and agreements herein
contained, and intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I. - PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing hereunder (as defined in
Section 2.1 hereof) and except as otherwise specifically provided in this
Section 1.1, Seller shall grant, sell, convey, assign, transfer and deliver to
Purchaser, upon and subject to the terms and conditions of this Agreement, all
right, title and interest of Seller in and to the following, free and clear of
all mortgages, liens, pledges, security interests, charges, claims, restrictions
and encumbrances of any nature whatsoever ("Encumbrances"): (a) certain
inventory of Seller, as listed in Schedule 1.1(a) annexed hereto and made a part
hereof, which shall include ninety-five (95) unused gasoline Mazda engines in
original Mazda packaging ("New Mazda Engines"), four (4) work in progress
engines, used engines and parts; (b) certain fixed assets of Seller listed in
Schedule 1.1(b) hereto, which shall include four sets of office furniture,
benches, shelving, one boat and trailer, a Superflow SF-901 Dynamometer and
controls with Serial Number __________; (c) certain intangible assets of Seller
related to Series 65 engines including, without limitation, the name and logo of
"Rotary Power Marine, Inc." (and all variations thereof) and all Series 65
gasoline manufacturing procedures, Series 65 gasoline bills of materials, Series
65 gasoline operator and service manuals, Series 65 gasoline designs, drawings
and blueprints created after September 1, 1995 and Series 65 gasoline vendor and
customer lists; (d) all engine supply agreements for the Series 65 gasoline
engines; and (e) all claims, defenses and choses of action
Seller may have related to the intangible assets utilized in its business prior
to the date of this Agreement (all of (a), (b), (c), (d) and (e) to be
collectively referred to herein as, the "Purchased Assets"). The parties hereto
agree that the Purchased Assets do not include one Superflow Dynamometer with
Serial Number __________ (the "Retained Dynamometer"), and that Seller shall
retain all right, title and interest in the Retained Dynamometer.
1.2 Agreement to Purchase. At the Closing hereunder, Purchaser
shall purchase the Purchased Assets from Seller, upon and subject to the terms
and conditions of this Agreement and in reliance on the representations,
warranties and covenants of Seller contained herein, in exchange for the
Purchase Price (hereinafter defined in Section 1.3.1 hereof).
1.3 The Purchase Price.
1.3.1. Purchase Price. The Purchase Price shall be an amount
equal to:
(a) One hundred forty thousand ($140,000) dollars,
which shall be paid by the Purchaser as follows:
(i) eighty-four thousand ($84,000) dollars (the
"Down Payment") which shall be delivered by (y)
cash or certified check representing the escrow
amount, if any, recommended by the State of New
Jersey Department of the Treasury Division of
Taxation Bulk Sale Unit (the "Bulk Sales
Department"), delivered to Seller's attorney at
the Closing to be held in escrow until receipt of
notification of satisfaction and release of all
tax liability of the Seller by the State of New
Jersey Department of the Treasury Division of
Taxation, and (z) cash or certified check
representing the balance of the Down Payment to be
delivered to Seller at the Closing; and (ii)
fifty-six thousand ($56,000.00) dollars to be
delivered to Seller in cash or certified or bank
check on or before September 1, 1998. In addition,
Purchaser shall pay interest on the amount due
Seller pursuant to this Section 1.3.1(a)(ii)
(until such amount is paid in full) at the rate of
six (6%) percent per annum, with such accrued
interest to be paid on the 1st day of each month;
(b) an amount not to exceed eight thousand six hundred
($8,600) dollars to fund repairs and
upgrades to the Retained Dynamometer ("Upgrade
Costs") which repairs and upgrades may become
necessary for the Retained Dynamometer to perform
the same functions as a Superflow model SF-901
during series production testing of 70 series
engines. In no event shall Purchaser be required
to pay more than $8,600 in Upgrade Costs, and the
Upgrade Costs shall be paid in cash or certified
or bank check by Purchaser within thirty (30) days
of Purchaser's receipt of a written notification
from Seller, sworn to by the President of Seller,
which states that the Retained Dynamometer no
longer performs at least the functions of a
Superflow model SF-901 during series production
testing of 70 series engines (the "Dynamometer
Notice"). Notwithstanding the foregoing, in lieu
of payment of $8,600 to Seller as set forth above,
Purchaser may have the necessary repairs and
upgrades made to the Retained Dynamometer at its
own expense, within thirty (30) days of receipt of
the Dynamometer Notice.
Effective upon the Closing, Purchaser shall grant Seller a
security interest in the Purchased Assets, and will cause to be filed
appropriate UCC-1 financing statements in respect thereof, to secure payment of
the interest and principal referenced in Sections 1.3.1(a)(ii) above. Nothing
contained herein or in the UCC-1 financing statements shall be construed to
prevent Purchaser from using and selling inventory in the ordinary course of
business.
1.3.2. Allocation of Purchase Price. The Purchase Price
shall be allocated among the Purchased Assets acquired hereunder as described in
Schedule 1.3.2. hereto. Seller and Purchaser each hereby covenant and agree that
they or it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income taxes, or in any
judicial proceeding that is in any way inconsistent with the terms of this
Section 1.3.2. The allocation described in Schedule 1.3.2. shall be reflected in
the notification of bulk sale which shall be delivered to the New Jersey Tax
Department by Purchaser immediately following execution of this Agreement.
1.4 Assumption of Liabilities. As of the Closing, Purchaser
shall either (i) assume and agree to perform, discharge and pay all of the
rights, duties, liabilities and obligations of Seller under the Agreement dated
November 10, 1995 (the "Mazda
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Agreement") by and among Mazda Motor Corporation, Mazda (North America), Inc.
(collectively, "Mazda"), and Seller, or (ii) in the event Purchaser decides to
enter into a new agreement with Mazda, produce a confirmation of the termination
of the Mazda Agreement as required by Section 2.2(b)(v) hereof. Except as
otherwise set forth in the preceding sentence, in no event shall Purchaser
assume, pay, perform or discharge any liabilities or obligations of the Seller
whatsoever, including without limitation any of the following:
(a) any product liability or similar claim for injury
to person or property, regardless of when made or asserted,
which arises out of or is based upon any express or implied
representation, warranty, agreement or guarantee made by
Seller, or alleged to have been made by Seller, or which is
imposed or asserted to be imposed by operation of law, in
connection with any service performed or product sold or
leased by or on behalf of Seller on or prior to the Closing,
including without limitation any claim relating to any product
delivered in connection with the performance of such service
and any claim seeking recovery for consequential damage, lost
revenue or income;
(b) any federal, state or local income or other tax
(i) payable with respect to the business, assets, properties
or operations of Seller (or any member of any affiliated group
of which Seller is a member) for any period prior to the
Closing Date, or (ii) incident to or arising as a consequence
of the negotiation or consummation by Seller (or any member of
any affiliated group of which Seller is a member) of this
Agreement and the transactions contemplated hereby, except
that Purchaser shall be responsible for payment of sales tax
arising from the sale of the Purchased Assets by the Seller;
(c) any liability or obligation arising prior to or
as a result of the Closing to any employees, agents or
independent contractors of Seller, whether or not employed by
Purchaser after the Closing, or under any benefit arrangement
with respect thereto;
(d) any liability or obligation of Seller arising
from Seller's violation of any Regulations related to soil,
land surface or subsurface strata, surface waters (including
navigable waters and ocean waters), ground waters, drinking
water supply, stream sediments, ambient
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air (including indoor air), plant and animal life, and any
other environmental medium or natural resource (the
"Environment"), including the United States Comprehensive
Environmental Response, Compensation and Liability Act, 42
U.S.C. ss. 9601 et seq., as amended ("CERCLA"), the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss.
6901 et seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq.,
the Clean Air Act, 33 U.S.C. ss. 2601 et seq., the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq., the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
ss. 136 et seq., the Oil Pollution Act of 1990, 33 U.S.C. ss.
2701 et seq. and the Occupational Safety and Health Act
("OSHA"), 39 U.S.C. ss. 651 et seq., as such laws have been or
will be amended or supplemented and the regulations
promulgated pursuant thereto and all analogous state or local
statutes including any environmental property transfer laws
(all of the foregoing collectively referred to herein as
"Environmental Laws");
(e) any liability or obligation of Seller arising or
incurred in connection with the negotiation, preparation and
execution of this Agreement and the transactions contemplated
hereby and fees and expenses of counsel, accountants and other
experts;
(f) any liability or obligation which may arise by
reason or with respect to the dissolution or liquidation of
Seller; or
(g) liabilities or obligations of Seller arising
after the Closing Date.
1.5. Escrow of Funds. The parties hereto agree that the
portion of the Purchase Price referenced in Section 1.3.1(a)(i) (the "Escrowed
Funds") shall be held in escrow by Seller's attorney, Wilentz, Xxxxxxx &
Xxxxxxx, P.A. (the "Escrow Agent"), until receipt of notification of release and
satisfaction of all tax liability of the Seller from the State of New Jersey
Department of the Treasury Division of Taxation. In no event shall this Section
1.5 be construed to limit Seller's liability under Article VII to the amount
held in escrow, and Seller shall be liable for all Losses to the fullest extent.
ARTICLE II. - CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY
CONSENTS, CHANGE IN NAME AND FURTHER ASSURANCES
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2.1 Closing. The closing (the "Closing") of the sale and
purchase of the Purchased Assets shall take place within thirty (30) days of
execution of this Agreement at such time, date and location as may be mutually
agreed upon in writing by Purchaser and Seller. The date of the Closing is
sometimes herein referred to as the "Closing Date".
2.2 Items to be Delivered at Closing. At the Closing and
subject to the terms and conditions herein contained:
(a) Seller shall deliver to Purchaser such bills of
sale with covenants of warranty, assignments, endorsements,
and other good and sufficient instruments and documents of
conveyance and transfer, in form reasonably satisfactory to
Purchaser and its counsel, as shall be necessary and effective
to transfer and assign to, and vest in, Purchaser all of
Seller's right, title and interest in and to the Purchased
Assets, including without limitation, (A) good and valid title
in and to all of the Purchased Assets and (B) all of Seller's
rights under all agreements, contracts, commitments, and other
documents included in the Purchased Assets to which either
Seller is a party or by which either Seller has rights on the
Closing Date.
Simultaneously with such delivery, all such steps will be taken as may be
required to put Purchaser in actual possession and operating control of the
Purchased Assets.
(b) Purchaser shall deliver the following:
(i) the escrow amount recommended by the Bulk
Sales Department to the Escrow Agent;
(ii) the balance of the Down Payment to the
Seller;
(iii) a promissory note in the principal amount
of $56,000.00 bearing interest at 6% per
annum (the "Promissory Note");
(iv) such UCC-1 financing statements and other
documents executed by Purchaser as may be
necessary to grant Seller a security
interest in the Purchased Assets as
security for
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Purchaser's performance of its obligations
under the Promissory Note; and
(v) an Assignment and Assumption of the Mazda
Agreement, or in the event Purchaser enters
into a new agreement, a confirmation of
termination of the Mazda Agreement.
(c) At or prior to the Closing, the parties hereto shall also
deliver to each other the agreements, opinions, certificates and other documents
and instruments referred to in Article V hereof.
2.3 Third Party Consents. To the extent that Seller's rights
under any agreement, contract, commitment, or other Purchased Asset to be
assigned to Purchaser hereunder may not be assigned without the consent of
another person which has not been obtained, this Agreement shall not constitute
an agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and Seller, at its expense, shall use its best
efforts to obtain any such required consent(s) as promptly as possible. If any
such consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Purchaser's rights under the Purchased Asset in
question so that Purchaser would not in effect acquire the benefit of all such
rights, Seller, to the maximum extent permitted by law and the Purchased Asset,
shall act after the Closing as Purchaser's agent in order to obtain for it the
benefits thereunder and shall cooperate, to the maximum extent permitted by law
and the Purchased Asset, with Purchaser in any other reasonable arrangement
designed to provide such benefits to Purchaser. Notwithstanding the foregoing,
it is an express condition of Closing that Seller shall have obtained an
assignment of all engine supply agreements, or that new agreements with terms
satisfactory to Purchaser in its sole discretion shall have been entered into by
Purchaser to assure the continuous supply of Mazda engines to Purchaser after
the Closing Date.
2.4 Change in Name. On the Closing Date, Seller shall deliver
to Purchaser all such executed documents as may be required to change RPM's name
on that date to another name bearing no similarity to Rotary Power Marine, Inc.,
including but not limited to a name change amendment with the Secretary of State
of Delaware and an appropriate name change notice for each state where RPM is
qualified to do business. Seller hereby appoints Purchaser as its
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attorney-in-fact to file all such documents on or after the Closing Date.
2.5 Further Assurances. Seller from time to time after the
Closing, at Purchaser's request, will execute, acknowledge and deliver to
Purchaser such other instruments of conveyance and transfer and will take such
other actions and execute and deliver such other documents, certifications and
further assurances as Purchaser may reasonably require in order to vest more
effectively in Purchaser, or to put Purchaser more fully in possession of, any
of the Purchased Assets. Each of the parties hereto will cooperate with the
other and execute and deliver to the other parties hereto such other instruments
and documents and take such other actions as may be reasonably requested from
time to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller. Seller
hereby represents and warrants to Purchaser that, except as set forth on the
Schedules attached hereto and made a part hereof, each of which exceptions shall
specifically identify the relevant subsection hereto to which it relates:
3.1.1. Corporate Existence. Seller (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and (b) has full corporate power and
authority to conduct its business as it is now being conducted, to own or use
its properties and assets that it purports to own or use, and to perform all its
obligations under all contracts, agreements or instruments to which it is a
party.
3.1.2. Corporate Power; Authorization; Enforceable
Obligations. Seller has the corporate power, authority and legal right to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary corporate and shareholder action. This Agreement has been, and the
other agreements, documents and instruments required to be delivered by Seller
in accordance with the provisions hereof (the "Seller's Documents") will be,
duly executed and delivered on behalf of Seller by duly authorized officers of
the Seller, and this Agreement constitutes, and the Seller's Documents when
executed and delivered will constitute, the legal, valid and binding joint and
several obligations of Seller, enforceable against it in accordance with their
respective terms.
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3.1.3. Validity of Contemplated Transactions, etc.
The execution, delivery and performance of this Agreement by Seller does not and
will not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other person under, (a) any
existing law, ordinance, or governmental rule or regulation to which Seller are
subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Seller, (c) the charter documents of Seller, any
resolutions adopted by the board of directors or shareholders of either Seller,
any shareholder voting agreement entered into by the shareholders of either
Seller, (d) any mortgage, indenture, agreement, contract, commitment, or other
instrument, document or understanding, oral or written, to which Seller is a
party, by which Seller may have rights or by which any of the Purchased Assets
may be bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of Seller thereunder. Except as aforesaid, no authorization,
approval or consent of, and no registration or filing with, any governmental or
regulatory official, body or authority is required in connection with the
execution, delivery or performance of this Agreement by Seller.
3.1.4. No Third Party Options. There are no existing
agreements, options, commitments or rights with, of or to any person to acquire
any of Seller's assets, properties or rights included in the Purchased Assets or
any interest therein, except for those contracts entered into in the normal
course of business consistent with past practice for the sale of inventory of
Seller.
3.1.5. Business Transactions. Except as set forth on
Schedule 3.1.5., since December 31, 1997, Seller, with respect to the Business,
has not entered into any transaction other than in the ordinary course of
business consistent with past practice.
3.1.6. Title to Properties. Seller has good, valid
and marketable title to all of its properties and assets, real, personal and
mixed, included in the Purchased Assets, free and clear of all Encumbrances and
defects of title of any nature whatsoever, except as set forth in Schedule 3.1.6
annexed hereto. All Encumbrances set forth in such Schedule shall be removed at
or prior to Closing, and Seller shall deliver fully executed UCC-3 statements
evidencing termination of such Encumbrances.
3.1.7. Compliance with Law; Authorizations. Each
Seller has complied with, and is not in violation of any, law, ordinance, or
governmental or regulatory rule or regulation,
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whether federal, state, local or foreign, to which Seller's business,
operations, assets or properties is subject ("Regulations").
3.1.8. Litigation. Except as set forth on Schedule
3.1.8. annexed hereto, no litigation, including any arbitration, investigation
or other proceeding (collectively, "Proceedings") of or before any court,
arbitrator or governmental or regulatory official, body or authority is pending
or, to the best knowledge of Seller, threatened against Seller or which relates
to the Purchased Assets or the transactions contemplated by this Agreement, nor
does Seller know of any reasonably likely basis for any Proceeding. Seller is
not a party to or subject to the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which may adversely affect the Purchased
Assets or the transactions contemplated hereby. Seller has delivered to
Purchaser copies of all pleadings, correspondence or other documents relating to
each Proceeding set forth in Schedule 3.1.8. There are no Proceedings listed in
Schedule 3.1.8 or required to be listed that may have a material adverse effect
on the Business, its operations, assets, condition or prospects, or upon the
Purchased Assets.
3.1.9. Contracts and Commitments. Except as set forth
in Schedule 3.1.9 annexed hereto, Seller is not party to any written or oral
agreement, contract or commitment relating to the Purchased Assets.
3.1.10. Availability of Documents. Seller has made
available to Purchaser copies of all documents listed in the Schedules annexed
hereto or referred to herein. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently in effect
modifications thereunder.
3.1.11. Completeness of Disclosure. No representation
or warranty by Seller in this Agreement nor any certificate, schedule,
statement, document or instrument furnished or to be furnished to Purchaser
pursuant hereto, or in connection with the negotiation, execution of performance
of this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated herein
or therein or necessary to make any statement herein or therein not misleading.
3.2. Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:
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3.2.1. Corporate Existence. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York.
3.2.2. Corporate Power and Authorization. Purchaser
has the corporate power, authority and legal right to execute, deliver and
perform this Agreement and the Promissory Note. The execution, delivery and
performance of this Agreement and the Promissory Note by Purchaser have been
duly authorized by all necessary corporate action. This Agreement and the
Promissory Note have been duly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligations of Purchaser enforceable
against Purchaser in accordance with their terms.
3.2.3. Validity of Contemplated Transactions, etc.
The execution, delivery and performance of this Agreement by Purchaser does not
and will not violate, conflict with or result in the breach of any term,
condition or provision of, or require the consent of any other party to, (a) any
existing law, ordinance, or governmental rule or regulation to which Purchaser
is subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Purchaser, (c) the charter documents or ByLaws of, or any
securities issued by, Purchaser, or (d) any mortgage, indenture, agreement,
contract, commitment, lease, plan or other instrument, document or
understanding, oral or written, to which Purchaser is a party or by which
Purchaser is otherwise bound. Except as aforesaid, no authorization, approval or
consent of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery and performance of this Agreement by Purchaser.
3.3. Survival of Representations and Warranties. All
representations and warranties made by the parties in this Agreement or in any
certificate, schedule, statement, document or instrument furnished hereunder or
in connection with negotiation, execution and performance of this Agreement
shall survive the Closing for a period of two years. Notwithstanding any
investigation or audit conducted before or after the Closing Date or the
decision of any party to complete the Closing, each party shall be entitled to
rely upon the representations and warranties set forth herein or therein.
ARTICLE IV. - AGREEMENTS PENDING CLOSING
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4.1 Agreements of Seller Pending the Closing. Seller covenants
and agrees that, pending the Closing and except otherwise agreed to in writing
by Purchaser:
4.1.1. Maintenance of Purchased Assets. Seller shall
continue to maintain and service the Purchased Assets used in the conduct of the
Business in the same manner as been its consistent past practice.
4.1.2. Business Relations. Seller shall use its best
efforts to maintain the relations and good will with the suppliers, customers,
distributors and any others having business relations with the Business.
4.1.3. Compliance with Laws, etc. Seller shall comply
with all laws, ordinances, rules, regulations and orders applicable to the
Business, or Seller's operations, assets or properties in respect thereof, the
noncompliance with which might materially adversely affect the Business or the
Purchased Assets.
4.1.4. Update Schedules. Seller shall promptly
disclose to Purchaser any information contained in its representations and
warranties or the Schedules which, because of an event occurring after the date
hereof, is incomplete or is no longer correct as of all times after the date
hereof until the Closing Date; provided, however, that none of such disclosures
shall be deemed to modify, amend or supplement the representations and
warranties of Seller or the schedules hereto for the purposes of Article V
hereof, unless Purchaser shall have consented thereto in writing.
4.1.5. Sale of Assets; Negotiations. Seller shall
not, directly or indirectly, sell or encumber all or any part of the Purchased
Assets or initiate or participate in any discussions or negotiations or enter
into any agreement to do so. Seller shall not provide any confidential
information concerning the Business or the Purchased Assets to any third party
other than in the ordinary course of business.
4.1.6. Access. Seller shall give Purchaser reasonable
access to the Purchased Assets at the then location of such Purchased Assets,
and at such times as may be mutually agreed by Seller and Purchaser, for the
purposes of making physical inventories and inspections of the Purchased Assets.
4.1.7. Press Releases. Except as required by
applicable law or Regulation, Seller shall not give notice to third parties or
otherwise make any public statement or releases
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concerning this Agreement or the transactions contemplated hereby except for
such written information as shall have been approved in writing as to form
content by Purchaser, which approval shall not be unreasonably withheld.
4.2 Agreements of Purchaser Pending the Closing. Purchaser
covenants and agrees that, pending the Closing and except as otherwise agreed to
in writing by Seller:
4.2.1. Actions of Purchaser. Purchaser will not
knowingly take any action which would result in a breach of any of its
representations or warranties hereunder. Furthermore, Purchaser shall cooperate
with Seller and use its best efforts to cause all of the conditions to the
obligations of Purchaser under this Agreement to be satisfied on or prior to the
Closing Date.
4.2.2. Confidentiality. Unless and until the Closing
has been consummated, Purchaser will hold, and shall cause its counsel,
accountants and agents to hold in confidence any confidential data or
information made available to Purchaser in connection with this Agreement with
respect to the Business using the same standard of care to protect such
confidential data or information as is used to protect Purchaser's confidential
information. If the transactions contemplated by this Agreement are not
consummated, Purchaser shall return or cause to be returned to Seller all
written materials and all copies thereof that were supplied to Purchaser by
Seller and that contain any such confidential data or information.
ARTICLE V. - CONDITIONS PRECEDENT TO THE CLOSING
5.1. Conditions Precedent to Purchaser's Obligations. All
obligations of Purchaser under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
5.1.1. Representations and Warranties True as of the
Closing Date. The representations and warranties of Seller contained in this
Agreement or in any schedule, certificate or document delivered by Seller to
Purchaser pursuant to the provisions hereof shall have been true on the date
hereof without regard to any schedule updates furnished by Seller after the date
hereof and shall be true on the Closing Date with the same effect as though such
representations and warranties were made as of such date.
5.1.2. Compliance with this Agreement. Seller shall
have performed and complied with all agreements and
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conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
5.1.3. Closing Certificate. Purchaser shall have
received a certificate from Seller dated the Closing Date, certifying in such
detail as Purchaser may reasonably request that the conditions specified in
Sections 5.1.1. and 5.1.2. hereof have been fulfilled and certifying that Seller
have obtained all consents and approvals required with respect to Seller or the
Purchased Assets by Section 5.1.5. hereof.
5.1.4. No Threatened or Pending Litigation. On the
Closing Date, no suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened.
5.1.5. Consents and Approvals. All consents and
approvals necessary to be obtained for the consummation of the transactions
contemplated hereby shall have been obtained.
5.1.6. Material Adverse Changes. The Purchased Assets
shall not have been and shall not be threatened to be materially adversely
affected in any way as a result of any event or occurrence.
5.1.7. Release of Liens. Seller shall have provided
Purchaser with evidence satisfactory to Purchaser that all liens, pledges,
security interests, charges, claims, restrictions and other encumbrances
relating to any of the Purchased Assets have been released on or prior to the
Closing Date.
5.1.8. Mazda Agreement. Purchaser shall have assumed
the rights, duties, liabilities and obligations of Seller under the Mazda
Agreement. After the Closing Date, Purchaser may negotiate a new agreement with
Mazda at Purchaser's own risk.
5.1.9. Compliance with ISRA. Seller shall have (i)
complied with all provisions of the Industrial Site Recovery Act, N.J.S.A.
13:1D-1 et seq., 13:1K-6 (ISRA) and the Industrial Site Recovery Act Rules,
N.J.A.C. 7:26 B-1 et seq. and satisfied all requirements thereunder, and shall
have received from the New Jersey Department of Environmental Protection (the
"DEP") the written approval of a negative declaration, a remedial action work
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plan or a remediation agreement, or (ii) in the alternative, filed a diminimus
quantity exemption application with the DEP to be exempt from the provisions of
ISRA and shall have received a written determination from the DEP that such an
exemption is available to the Seller.
5.2 Conditions Precedent to the Obligations of Seller. All
obligations of Seller under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
5.2.1. Representations and Warranties True as of the
Closing Date. The Representations and warranties of Purchaser contained in this
Agreement or in any list, certificate or document delivered by Purchaser to
Seller pursuant to the provisions hereof shall be true on the Closing Date with
the same effect as though such representations and warranties were made as of
such date.
5.2.2. Compliance with this Agreement. Purchaser
shall have performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
5.2.3. Closing Certificates. Seller shall have
received a certificate from Purchaser dated the Closing Date, certifying in such
detail as Purchaser may reasonably request that the conditions specified in
Sections 5.2.1. and 5.2.2. hereof have been fulfilled.
5.2.4. No Threatened or Pending Litigation. On the
Closing Date, no suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened.
ARTICLE VI. - POST CLOSING MATTERS
6.1 Use of Name. From and after the Closing Date, Seller will
sign such consents and take such other action as Purchaser shall reasonably
request in order to permit Purchaser to use the name "Rotary Power Marine" and
variants thereof. From and after the Closing Date, Seller will not itself use
the name or any names similar thereto or variants thereof.
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6.2 Covenant Not to Compete and Not to Use or Disclose Certain
Information. Seller, on behalf of itself and its affiliates covenants that, for
a period of five (5) years after the Closing Date such person will not, directly
or indirectly, operate, join, control or participate in management, operation or
control of, any company, corporation, proprietorship or partnership which
engages in the sale or distribution of Series 65 gasoline engines to any marine
market. Seller, on behalf of itself and its affiliates further covenants that it
shall treat as confidential and proprietary all Series 65 gasoline designs,
drawings and blueprints used in its business prior to the date of this
Agreement, whether or not such Series 65 gasoline designs, drawings and
blueprints are part of the Purchased Assets, and shall not disclose any Series
65 gasoline designs, drawings and blueprints used in its business prior to the
date of this Agreement to any person or entity other than Purchaser, nor shall
Seller use them to compete with Purchaser. The parties specifically acknowledge
and agree that the remedy at law for any breach of the foregoing restrictions
will be inadequate and that the Purchaser, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage. In the event that the provisions
of this Section 6.2 should ever be deemed to exceed the limitation provided by
applicable law, then the parties agree that such provisions shall be reformed to
set forth the maximum limitations permitted.
6.3 Transfer of Possession of Tangible Purchased Assets. The
parties hereto agree that although transfer of title and ownership of the
Purchased Assets shall take place at Closing, Purchaser shall have up to two
weeks after the date of Closing to take actual physical possession of the
tangible Purchased Assets. Purchaser shall obtain all necessary insurance to
cover risk of loss from and after the Closing Date. Seller shall not be liable
for any damage or loss to the Purchased Assets after the Closing Date, except to
the extent such damage or loss is caused by the gross negligence or willful
misconduct of Seller, or any of their employees, officers, directors, agents or
affiliates. Seller shall cooperate with Purchaser in arranging physical transfer
of the Purchased Assets during Seller's normal business hours.
ARTICLE VII - INDEMNIFICATION
Section 7.1 Indemnification of the Purchaser . The Seller
agrees to indemnify, defend and hold harmless the Purchaser and any of its
affiliates, shareholders, members, officers, partners, employees, successors and
assigns from and against any and all losses, liabilities (including punitive or
exemplary damages and fines or penalties and any interest thereon), expenses
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(including fees and disbursements of counsel and expenses of investigation and
defense), claims, liens or other obligations of any nature whatsoever
(hereinafter individually, a "Loss" and collectively, "Losses") which, directly
or indirectly, arise out of, result from or relate to:
(i) any inaccuracy in or any breach of any representation and
warranty, or any breach of any covenant or agreement, of the Seller contained in
this Agreement or in any other document contemplated by this Agreement;
(ii) any claim by a creditor of the Seller;
(iii) (A) contamination occurring after January 5, 1998 on any
real property, leasehold or other interests currently or formerly owned or
operated by Seller by any substance, material or waste which is or will
foreseeably be regulated by any governmental body, including any material,
substance or waste which is defined as a "hazardous waste", "hazardous
material", "hazardous substance", "extremely hazardous waste", "restricted
hazardous waste", "contaminant", "toxic waste", or "toxic substance" under any
provision of Environmental Law, which includes petroleum, petroleum products,
asbestos, presumed asbestos-containing material or asbestos-containing material,
urea formaldehyde and polychlorinated biphenyls (all of the foregoing
collectively referred to herein as "Hazardous Materials");
(B) Seller's financial responsibility arising after
January 5, 1998 under any Environmental Laws for cleanup costs or corrective
action, including any cleanup, removal, containment, or other remediation or
responsive actions ("Cleanup") required by any applicable Environmental Laws
(whether or not such Cleanup has been required or requested by any governmental
body or any other person) and for any natural resource damages;
(C) Seller's failure after January 5, 1998 to obtain and
maintain all permits, approvals, authorizations, licenses, variances,
registrations or permissions required under any applicable Environmental Laws or
order thereunder ("Environmental Permits") necessary for its operations; or
(iv) any liability or obligation of Seller arising from
Seller's violation after January 5, 1998 of any Regulations related to soil,
land surface or subsurface strata, surface waters (including navigable waters
and ocean waters), ground waters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource (the "Environment"), including the
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Xxxxxx Xxxxxx Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., as amended ("CERCLA"), the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801 et seq., the Clean Air Act, 33 U.S.C. ss.
2601 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et seq.,
the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq. and the Occupational
Safety and Health Act ("OSHA"), 39 U.S.C. ss. 651 et seq., as such laws have
been or will be amended or supplemented and the regulations promulgated pursuant
thereto and all analogous state or local statutes including any environmental
property transfer laws (all of the foregoing collectively referred to herein as
"Environmental Laws");
(v) Seller's use after January 5, 1998 of any patent,
trademark, service xxxx, copyright, software, trade secret or know-how not owned
by Seller;
(vi) (A) Seller's failure to file on a timely basis all tax
returns required to be filed after January 5, 1998 by or with respect to
applicable local, state or federal Regulations;
(B) Seller's failure to file true, correct and complete
tax returns after January 5, 1998;
(C) Seller's failure to pay all taxes (federal, state and
local) when due, if such taxes were due after January 5, 1998.
(vii) (A) Seller's failure to make full payment of all amounts
which are required to be paid after January 5, 1998 under the terms of any
"employee benefit plans" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), all specified fringe benefit
plans as defined in the Internal Revenue Code of 1986, as amended (the "Code"),
and all other bonus, incentive compensation, deferred compensation, profit
sharing, stock option, stock appreciation right, stock bonus, stock purchase,
employee stock ownership, savings, severance, supplemental unemployment, layoff,
salary continuation, retirement, pension, health, life insurance, disability,
accident, group insurance and any other employee compensation or benefit plan,
agreement, policy, practice, commitment, contract or other understanding
(whether qualified, unqualified, written or unwritten), and any trust, escrow,
or other agreement related thereto, that (I) is maintained or contributed to by
either Seller or any other corporation or trade or business controlled by,
controlling or under common control with either Seller (within the meaning of
Section 414 of the Code or Section
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4001(a)(14) or 4001(b) of ERISA) ("ERISA Affiliate") or has been maintained or
contributed to in the last six years by either Seller or an ERISA Affiliate, or
with respect to which either Seller or an ERISA Affiliate has any liability, and
(II) provides benefits, or describes policies or procedures applicable to any
current or former director, officer or employee of either Seller or an ERISA
Affiliate, or dependents thereof, regardless of whether funded (the "Employee
Plans");
(B) any proceeding instituted at any time regarding
Seller's termination of any Employee Plan after January 5, 1998;
(C) Seller's failure after January 5, 1998 to pay
insurance premiums with regard to any Employee Plan;
(D) Seller's failure after January 5, 1998 to comply
with the continuation coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") or to operate all "group health
plans" as defined in Section 5000(b) of the Code, in conformance with the
Medicare as Secondary Payor provisions of the Social Security Act;
(E) Seller's failure after January 5, 1998 to timely
file all reports and descriptions of Employee Plans required to be filed
pursuant to ERISA, the Code and any other applicable laws or failure to give all
notices required thereunder;
(F) Seller's failure after January 5, 1998 to maintain
workers' compensation coverage as required by applicable state law;
(G) Seller's failure after January 5, 1998 to otherwise
comply with federal, state or local regulations related to Employee Plans.
(viii) either Seller's failure after January 5, 1998 to comply
in all respects with all legal requirements and laws relating to employment
practices, terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining
and other requirements under 29 U.S.C. xx.xx. 141-187, the payment of social
security and similar taxes, and occupational safety and health.
(ix) any liability of the Seller not assumed by Purchaser,
whether or not related to the Purchased Assets, whenever arising.
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Section 7.3 Indemnification of the Seller .
The Purchaser agrees to indemnify, defend and hold harmless
the Seller and any of its affiliates, shareholders, directors, officers,
partners, employees, successors and assigns from and against any and all Losses
which, directly or indirectly, arise out of, result from or relate to any
inaccuracy in or any breach of any representation and warranty, or any breach of
any covenant or agreement, of the Purchaser contained in this Agreement.
Section 7.4 Method of Asserting Claims . A claim for indemnity
by any party (the "Indemnitee") against any other party (the "Indemnitor") may
only be made by a written notice from the Indemnitee to the Indemnitor. Such
written notice shall set forth in reasonable detail the basis upon which such
claim for indemnity is made. In the event any person or entity not a party to
this Agreement shall make a demand or claim, or file or threaten to file any
lawsuit which demand, claim or lawsuit may result in any liability, damage or
loss to an Indemnitee, then, in any such event, after notice from the Indemnitee
to the Indemnitor of such demand, claim or lawsuit, the Indemnitor shall have
the duty at its or their sole expense and cost to retain counsel for the
Indemnitee and to defend any such demand, claim or lawsuit. In the event that
the Indemnitor shall fail to respond within ten (10) days (or such earlier date
as may be required by law to respond to such demand, claim or lawsuit) after
receipt of such notice of any such demand, claim or lawsuit, then the Indemnitee
shall have the right to retain counsel and conduct a defense of such demand,
claim or lawsuit, as he may in his discretion deem proper, at the sole cost and
expense of the Indemnitor.
ARTICLE VIII - MISCELLANEOUS
8.1 Termination. (a) Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(i) by mutual consent of Seller and Purchaser;
(ii) by Purchaser, (A) at any time if the
representations and warranties of Seller contained in Section 3.1
hereof were incorrect in any material respect when made or at any time
thereafter, or (B) upon written notice to Seller given at any time
after the expiration of thirty (30) days from the date of this
Agreement (or such later date as shall have been specified in a writing
authorized on behalf of
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Seller and Purchaser) if all of the conditions precedent set forth in
Section 5.1 hereof have not been met; or
(iii) by Seller, (A) at any time if the
representations and warranties of Purchaser contained in Section 3.2
hereof were incorrect in any material respect when made or at any time
thereafter, or (B) upon written notice to Purchaser given at any time
after the expiration of thirty (30) days from the date of this
Agreement (or such later date as shall have been specified in a writing
authorized on behalf of Seller and Purchaser) if all of the conditions
precedent set forth in Section 5.2 hereof have not been met.
(B) In the event of the termination and abandonment
hereof pursuant to the provisions of this Section 8.1, this Agreement
(except for Section 4.2.2. which shall continue) shall become void and
have no effect, without any liability on the part of any of the parties
or their directors or officers or stockholders in respect to this
Agreement.
8.2 Brokers' and Finders' Fees.
(a) Seller represents and warrants to Purchaser that all
negotiations relative to this Agreement have been carried on by it
directly without the intervention of any person, who may be entitled to
any brokerage or finder's fee or other commission in respect of this
Agreement or the consummation of the transactions contemplated hereby,
and Seller agrees to indemnify and hold harmless Purchaser against any
and all claims, losses, liabilities and expenses which may be asserted
against or incurred by it as a result of Seller's dealing, arrangements
or agreements with any such person.
(b) Purchaser represents and warrants that all negotiations
relative to this Agreement have been carried on by it directly without
the intervention of any person who may be entitled to any brokerage or
finder's fee or other commission in respect of this Agreement or the
consummation of the transaction contemplated hereby, and Purchaser
agrees to indemnify and hold harmless Seller against any and all
claims, losses, liabilities and expenses which may be asserted against
or incurred by it as a result of Purchaser's dealings, arrangements or
agreements with or any such person.
8.3. Sales, Transfer and Documentary Taxes, etc. Purchaser
shall pay all federal, state and local sales, documentary and other transfer
taxes, if any, due as a result of the sale or transfer of the Purchased Assets
in accordance herewith whether
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imposed by law on Seller or Purchaser and Purchaser shall indemnify, reimburse
and hold harmless Seller in respect of the liability for payment of or failure
to pay such taxes or the filing of or failure to file any reports required in
connection therewith.
8.4. Expenses. Each party hereto shall pay its own expenses
incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby.
8.5. Contents of Agreement; Parties in Interest; etc. This
Agreement sets forth the entire understanding of the parties hereto with respect
to the transactions contemplated hereby. It shall not be amended or modified
except by written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement.
8.6. Assignment and Binding Effect. This Agreement may not be
assigned prior to the Closing by any party hereto without the prior written
consent of the other parties. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and assigns of Seller and Purchaser.
8.7. Waiver. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
8.8 Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally or sent by
telegram or by registered or certified mail, postage prepaid, as follows:
If to Purchaser, to:
Rotary Power Marine Corporation
00 Xxxxx Xxxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx
If to Seller, to:
Rotary Power Marine, Inc.
X.X. Xxx 000
Xxxx-Xxxxx, XX 00000-0000
Attention: Xxx Xxxxx
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or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or mailed.
8.9. New Jersey Law to Govern. This Agreement shall be
governed by and interpreted and enforced in accordance with the laws of the
State of New Jersey.
8.10. No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
8.11. Headings, Gender and "Person". All section headings
contained in this Agreement are for convenience of reference only, do not form a
part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization or any other entity.
8.12. Schedules and Exhibits. All Exhibits and Schedules
referred to herein are intended to be and hereby are specifically made a part of
this Agreement.
8.13. Severability. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability shall not invalidate or render unenforceable such provision in
any other jurisdiction.
8.14. Presumption. Should any of the provisions of this
Agreement require interpretation, it is agreed that the Court interpreting or
construing this Agreement shall not apply a presumption that the terms or
provisions hereof shall be more strictly construed against one party by reason
of the rule of
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construction that a document is to be construed more strictly
against the party who itself or through its agent prepared such document, it
being agreed that all parties and their respective agents have participated in
the preparation of this Agreement.
8.15. Counterparts. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written.
ROTARY POWER MARINE, INC.
By: /s/ Xxx Xxxxx
-------------
Name: Xxx Xxxxx
Title: President
ROTARY POWER MARINE CORPORATION
By: /s/ Xxxxxxxx Xxxxxx
-------------------
Name: Xxxxxxxx Xxxxxx
Title: President
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