ASSET PURCHASE AGREEMENT
Exhibit
10.5
ASSET PURCHASE AGREEMENT (the
"Agreement") dated effective as of March 31, 2009, between United Mine Services,
Inc., an Idaho corporation (the "Purchaser"), and Mine Fabrication &
Machine, Inc., an Idaho corporation, (the "Seller"), and Xxxx X. and Xxxxx X.
Xxxxxxxx, individually and as Co-Trustees of the Family Trust of Xxxx X.
Xxxxxxxx and Xxxxx X. Xxxxxxxx dated September 26, 2008 (collectively the
"Forsbergs").
RECITALS
WHEREAS, the Seller and the
Forsbergs desire to sell and the Purchaser desires to purchase certain assets,
properties, and rights of the Seller and the Forsbergs.;
WHEREAS, the parties hereto
agreed to that certain Stock Purchase and Sale Agreement on April 11, 2007, as
amended, and the transaction contemplated thereunder failed to close;
and
WHEREAS, the parties hereto
entered into a Letter of Intent on November 6, 2008, outlining the transaction
contemplated herein and calling for a mutual release of claims by the parties
upon Closing.
NOW, THEREFORE, in
consideration of the covenants, agreements, representations, and warranties
contained in this Agreement, the parties hereto hereby agree as
follows:
ARTICLE
I
PURCHASE
AND SALE OF ASSETS;
PURCHASE
PRICE; CLOSING
1.1. Purchase and Sale of
Assets. Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined herein) and except for those assets listed in paragraph
1.2 below: (i) the Seller shall sell, transfer, convey, assign, and deliver to
the Purchaser, and the Purchaser shall purchase, acquire, and accept from the
Seller, all assets of the Seller, lists of the Seller's customers, vendors, and
employees (including names, addresses, and wage rates, but not employee files)
and all of Seller's right, title, and interest in and to its goodwill and the
names "Mine Fab", "Mine Fab & Machine, Inc.", "Mine Fabrication &
Machine, Inc.", and any other name under which the Seller is known and does
business (such rights hereinafter referred to as the "Trade Name") and; (ii) the
Forsbergs shall sell and the Purchaser shall purchase certain real
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PURCHASE AGREEMENT, Page 1
property
described in Section 2.5 (all such assets referred to herein as the "Transferred
Assets").
1.2. Excluded Assets.
Notwithstanding any other provision of this Agreement, the Seller shall retain
and shall not transfer to Purchaser a Seller-owned policy of life insurance on
the life of Xxxx Xxxxxxxx; the pickup truck used by Xxxx Xxxxxxxx owned by the
Seller; Seller-owned cash, bank accounts, investments, employee files, computers
(including all software and hardware) and corporate books and records with
regard to any activity of the Seller for any period preceding
Closing.
1.3. No Assumption of Liabilities
or Obligations. Notwithstanding anything to the contrary in this
Agreement, the Purchaser shall not assume any liabilities or obligations of the
Seller except the Seller's open purchase orders and executory contract
obligations that were entered into in the normal course of business existing for
the Seller, at Closing as disclosed on Schedule 2.13 hereto, and nothing herein
shall be construed as imposing any liability or obligation upon the Purchaser
other than those specifically provided for herein. Seller and Forsbergs shall
not assume any liability or obligations of the Purchaser, and nothing herein
shall be construed as imposing any liability or obligation upon the Seller and
Forsbergs other than those specifically provided for herein. Notwithstanding any
other provision herein, Seller shall be responsible for payment of all employee
salaries and payroll taxes (i.e., FICA, FUTA, federal income tax withholding,
Idaho State income tax withholding, SUDA, and L&I taxes, etc.) through the
Date of Closing, and Purchaser shall be responsible for payment of said salaries
and payroll taxes owed from the day immediately following the Date of Closing
forward. Seller and Forsbergs and Purchaser acknowledge and agree that all
employees of the Seller are employed "at will".
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1.4.
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Purchase
Price.
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(a)
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Purchase Price.
The aggregate consideration for the Transferred Assets shall be $2,700,000
[the "Purchase Price "] payable to the Seller and Forsbergs by the
Purchaser as described in Section 1.4(b). The Purchase Price includes
$250,000 to be allocated to inventory existing at Closing, which amount
shall be adjusted to the lesser of the following for each item of
inventory: (i) the Seller's actual cost of each item of inventory existing
at Closing, or (ii) the fair market value of each item of inventory. The
aggregate of each item of inventory so valued shall be referred to as
"Inventory Value". Work in progress inventory shall not be included in
determining Inventory Value. Inventory Value shall not include any
inventory located on the Real Property that is owned by F&H Mine
Supply. Inventory Value in excess of $250,000 shall increase the total
Purchase Price. Inventory Value less than $250,000 shall decrease the
total Purchase Price. At an agreed upon date, but no more than one week
before the Closing Date, Seller and Purchaser shall meet to inspect the
inventory and determine in good faith the Inventory Value to include in
the purchase price, and shall
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PURCHASE AGREEMENT, Page 2
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complete
the Agreement as to Inventory Value attached hereto as Schedule 1.4(a). If
the parties are unable to agree on the Inventory Value by the date of
Closing, the transaction shall nevertheless Close with the Inventory Value
at the midpoint between the Purchaser's valuation and the Seller's
valuation (calculated by adding the Purchaser's valuation and the Seller's
valuation together and dividing the result by 2), not to exceed $250,000,
and the amount of the Inventory Value shall be submitted to arbitration
under Section 11.14.
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(b)
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Payment. At the
Closing, the Purchaser shall pay, execute, and deliver each of the
following to the Seller and
Forsbergs:
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(i) cash
payment of One Million Five Hundred Thousand Dollars ($1,500,000) in
immediately available funds to the Seller's bank account, as previously
instructed to the Purchaser by the Seller in
writing;
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(ii)
the Purchaser's Promissory Note #1, attached hereto as Exhibit "A", in the
principal amount of Five Hundred Thousand Dollars ($500,000), plus or
minus the adjustment to Inventory Value as stated in Section
1.4(a).
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(iii)
the Purchaser's Promissory Note #2, attached hereto as Exhibit "B" in the
principal amount of Five Hundred Thousand Dollars
($500,000);
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(iv)
subordinated Deed of Trust attached hereto as Exhibit "C";
and
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(v)
subordinated Security Agreement attached hereto as Exhibit
"0".
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(vi)
Guaranty of Xxxx Xxxxxxx, in the form attached hereto as Schedule
3.7.
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Purchaser
has already made, and Forsbergs acknowledge receipt of, payments in a
total amount of Two Hundred Thousand Dollars
($200,000).
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1.5. Allocation of Purchase
Price. The Purchase Price shall be allocated among the Transferred Assets
in the manner set forth in Exhibit "E". Neither the Purchaser nor the Seller and
Forsbergs shall, in connection with any tax return, any refund claim, any
litigation or investigation or otherwise, take any position with respect to the
allocation of the Purchase Price which is inconsistent with the manner of
allocation provided in such schedule.
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PURCHASE AGREEMENT, Page 3
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE SELLER AND FORSBERGS
Except as otherwise set forth in the
schedules attached to this Agreement by reference to specific sections of this
Agreement (hereinafter collectively referred to as the "Disclosure Schedule"),
the Seller and Forsbergs represent and warrant to the Purchaser as set forth
below:
2.1. Organization and Good
Standing. The Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Idaho and is in good
standing in every jurisdiction in which the conduct of its business requires it
to be so qualified. For purposes of the change of Seller's name to "Xxxxxxxx
Investments, Inc." contemplated under this Agreement, as detailed in Section
5.5(e), Purchaser and Seller acknowledge and agree that Seller may prior to
Closing change its name to Xxxxxxxx Investments, Inc., and shall be the same
entity as the Seller. Accordingly, the term "Seller" as used herein shall, where
applicable, shall also mean "Xxxxxxxx Investments, Inc."
2.2. Authorization, etc.
The Seller and Forsbergs have full corporate power and authority to enter into
this Agreement, all exhibits and schedules hereto, and all agreements
contemplated herein (this Agreement and all such exhibits, schedules, and other
agreements being collectively referred to herein as the "Acquisition
Documents"), to perform its obligations hereunder and thereunder, to transfer
the Transferred Assets, and to carry out the transactions contemplated hereby
and thereby. The Board of Directors of the Seller has taken, or will take before
the Closing Date, all actions required by law, its Articles of Incorporation,
its By-Laws or otherwise to authorize (i) the execution and delivery of this
Agreement and the other Acquisition Documents, and (ii) the performance of their
obligations hereunder and thereunder.
This Agreement has been duly executed
and delivered by the Seller and Forsbergs, and this Agreement is and such other
Acquisition Documents will be, upon due execution and delivery thereof, the
legal, valid, and binding obligations of the Seller and Forsbergs enforceable
according to their terms, except (a) as such enforcement may be limited by
bankruptcy. insolvency, reorganization, moratorium general principle, or similar
laws now or hereafter in effect relating to creditors' rights and (b) that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding may be brought.
2.3. Title to Transferred
Assets. The Seller and Forsbergs (as to the real property) own and have
good and marketable title to all Transferred Assets, free and clear of all
Liens. There is no significantly material asset used or required by the
Seller
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PURCHASE AGREEMENT, Page 4
in
conduct of its business which is not owned. by the Seller or, as to the real
property described in Section 2.5 below, by the Forsbergs.
2.4. Permitted Liens. The
Seller and Forsbergs have good and marketable title to all of the Transferred
Assets, tangible and intangible, free and clear of all Liens except for (i)
Liens set forth in the Schedule 2.4 hereto, (ii) Liens for current taxes not yet
due and payable, and (iii) except as disclosed on Schedule 2.5(c) hereto, such
other minor imperfections of title and encumbrances, if any, that do not, in the
aggregate, have a significantly material adverse effect on the business, assets,
or financial condition of the Seller (collectively hereinafter referred to as
the "Permitted Liens").
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2.5.
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Owned Real
Property.
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(a)
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The
real property ("Real Property") on which the Seller operates, is owned by
the Forsbergs and consists of approximately 9.0 acres located adjacent to
1-90 on Silver Valley Road (a.k.a. Highway 10), Kellogg, Shoshone County,
Idaho. The Forsbergs have good and marketable title to the Real Property
owned by them free and clear of any Liens except for Permitted
Liens.
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(b)
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The
Real Property includes all/and, bUildings, structures, and other
improvements used by the Seller or necessary to enable the Seller to
conduct its business as it is presently being conducted. Seller does not
lease any real property other than the Real
Property.
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(c)
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To
the best of the Forsbergs' present knowledge, and except as disclosed on
Schedule 2.5(c) hereto, there is no condition of the Real Property, that
would be revealed by an accurate surveyor physical inspection thereof,
which would intertere in any respect with the use or occupancy thereof as
currently used and occupied. At Closing, title to the Real Property shall
be conveyed by Warranty Deed free of all encumbrances except Permitted
Liens. Forsbergs shall supply a standard form of title insurance with
First American Title Company, Inc., with insuring title in the Purchaser,
with such restrictions of record as may be reflected in the commitment for
such insurance, attached as Exhibit
"F".
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(d)
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To
the best of the Forsbergs' present knowledge, a portion of the Real
Property may be located in a special flood hazard area designated by any
state or federal governmental
authority.
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(e)
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The
legal description of the Real Property is as
follows:
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A
parcel of land situated in the Northeast Quarter of the Southwest Quarter
and Northwest Quarter of the Southwest Quarter of
Section
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PURCHASE AGREEMENT, Page 5
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5,
Township 48 North, Range 3 East B.M., Shoshone County, Idaho and being
more particularly described as
follows:
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Beginning
at a point where the North-South centerline of said Section 5 intersects
the Northerly right-of-way line of the I-90 frontage road, whence the
South Quarter Corner of said Section 5 bears South 00°51'54" West,
1,486.88 feet distant (shown of record to be South 00°42' East, 1,485.00
feet);
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Thence
South 8r05'43" West, 191.87 feet along said Northerly right-of-way
line;
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Thence
North 74°08'05" West, 369.76 feet along said Northerly right-of- way to a
point on the Westerly boundary of a tract described in Deeds Book 77, page
66;
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Thence
North 12°34'20" East, 928.58 feet along said Westerly boundary to a point
on the East-West centerline of said Section
5;
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Thence
North 88°41'55" East, 360.46 feet along said East-West centerline to the
Center Quarter of said Section 5;
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Thence
North 88°41'55" East, 63.40 feet along said centerline; Thence South
00°00'04" West, 1,010.12 feet to a point on the Northerly right-of-way of
said 0-00 xxxxxxxx xxxx;
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Thence
North 87°56'36" West, 78.61 feet along said right-of-way to the point of
beginning.
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(f)
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Purchaser
and Forsbergs hereby acknowledge the existence of that certain lease
entered into by Forsbergs with Young Electric Sign Company on January 27,
1998, as further detailed in item number 16 under "PART I " of "SCHEDULE
B-SECTION II EXCEPTIONS" of that certain Title Commitment issued by First
American Title Company, attached hereto as Exhibit "F". Purchaser
acknowledges that it has read said lease and is familiar with its terms.
Purchaser and Forsbergs agree that said lease shall be assigned to
Purchaser, by execution of an Assignment of Lease, attached hereto as
Schedule 2.5(1), and that Purchaser shall become the Lessor thereon, and
shall have all rights and obligations of the Lessor
thereunder.
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2.6. No Violation. None of
(I) the execution and delivery of this Agreement or any of the other Acquisition
Documents by the Seller and the Forsbergs, (ii) the
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PURCHASE AGREEMENT, Page 6
performance
by the Seller and the Forsbergs of its obligations hereunder or thereunder, or
(iii) the consummation of the transactions contemplated hereby or thereby after
the Closing, will (A) violate any provision of the Articles of Incorporation or
By-Laws of the Seller; (B) violate or constitute a default under or breach of,
or permit the termination of, or cause the acceleration of the maturity of, any
indenture, mortgage, contract, debt or contractual obligation of the Seller,
which violation, default, breach, termination, or acceleration, either
individually or in the aggregate with all other such violations, defaults,
breaches, terminations, and accelerations, would have a significant material
adverse effect on the Transferred Assets, including goodwill; (C) require the
consent of any other party to or result in the creation or imposition of any
Lien upon any property or assets of the Seller or the Transferred Assets under
any indenture, mortgage, contract, debt or obligation of or to which the Seller
is a party or by which the Seller is bound; (D) violate any statute, law,
judgment, decree, order, regulation, or rule of any court or governmental
authority to which the Seller or the Transferred Assets is subject; or (E)
result in the loss of any material license or certificate benefiting the
Seller.
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2.7.
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Financial
Statements.
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(a)
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Delivery. The
Seller has delivered to the Purchaser true and complete copies of its tax
returns, as of and for the years ended 2004, 2005, 2006, and 2007, as well
as its unaudited financial statements, including balance sheet and
statement of operations for the twelve-month period ending December 31,
2008 (hereinafter referred to as the Seller's
"Financials").
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(b)
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Accuracy. To
the best of Seller's present knowledge and without further investigation,
the Financials are true and correct and fairly present the financial
condition of the Seller as of the respective dates thereof and the results
of operations of the Seller for the periods then
ended.
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2.8. Absence of Certain
Changes. Since April 11, 2007, the date of the original Stock Purchase
and Sale Agreement, the Seller has not: (i) suffered any significantly material
adverse change in its assets (including goodwill); (ii) suffered any damage,
destruction, or loss, whether covered by insurance or not, materially adversely
affecting its assets (including goodwill); (iii) permitted or allowed any of its
property or assets (real, personal, or mixed, tangible or intangible) to be
subjected to any mortgage or, pledge (individually and collectively hereinafter
referred to as a "Lien"), except Permitted Liens; (iv) created or incurred any
liability (fixed, absolute, accrued, contingent, or otherwise) except for
unsecured current liabilities entered into in the ordinary course of business;
(v) made any disposition of assets except in the ordinary course of business,
consistent with past practice; or (vi) paid or agreed to pay any payment or
compensation to any employee outside the ordinary course of
business.
2.9. Trade Names. The
Seller owns, is licensed, or to the best of its present knowledge and without
investigation, otherwise has the full right to use all trade names,
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PURCHASE AGREEMENT, Page 7
used in
the business of the Seller as currently conducted and as listed on Schedule 2.9.
Upon Closing, Seller agrees to execute an Assignment of Trade Names,
substantially in the form of Schedule 2.9 hereto, which contains a list of all
trade names used by the Seller.
2.10. Litigation. To the
best of Seller's present knowledge and without investigation, there are no
actions, claims, proceedings, and investigations ("Actions"), including without
limitation Actions for personal injuries, products liability, or breach of
warranty arising from products sold by the Seller, pending or threatened against
the Seller, or the Transferred Assets, before any court, arbitrator, or
administrative or governmental body. The Seller is not subject to any judgment,
order, or decree entered in any lawsuit or proceeding that has materially
adversely affected, or that can reasonably be expected to materially adversely
affect, the transactions contemplated by this Agreement, the Seller, or the
Transferred Assets, including, without limitation, the Seller's business
practices and its ability to acquire any property or conduct business in
anyway.
2.11. Tax Returns and
Payments. All of the tax returns and reports of the Seller required by
law to be filed on or before the date hereof have been duly and timely filed and
all taxes shown as due thereon have been paid. There are in effect no waivers of
any applicable statute of limitations related to such returns. To the best of
Seller's present knowledge and without investigation, no liability for any tax
will be imposed upon the Transferred Assets or the Transferred Assets with
respect to any period before the Closing Date. The provisions of this Section
2.11 shall include, without limiting the generality of this Section,
all reports, returns, and payments due under all federal, state, or local laws
or regulations relating to income, sales, use and withholding taxes, withholding
Obligations, unemployment insurance, Social Security, workers' compensation and
other obligations of the same or of a similar nature. The Seller is not subject
to any open audit in respect of its taxes and no deficiency assessment or
proposed adjustment for taxes is pending.
2.12.
Insurance. Schedule
2.12 contains a complete list of all material policies of fire, liability,
workers' compensation and other forms of insurance owned or held by or for the
benefit of the Seller (collectively, the "Insurance Policies"). The Seller has
delivered to the Purchaser true and complete copies of the Insurance Policies,
along with copies of all past Insurance Policies reasonably available after due
and diligent search. To the best of Seller's present knowledge and without
investigation, the Seller's tangible real and personal property and assets,
whether owned or leased, are insured by reputable insurance companies licensed
to do business in the state in which such property is located in such amounts
customarily carried by comparable businesses, except to the extent that any
failures to insure would not, in the event of a loss, have a material adverse
effect upon the business of Seller. All such Insurance Policies are and will
remain in full force and effect through the Closing Date and, to the best of
Seller's
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PURCHASE AGREEMENT, Page 8
present
knowledge and without investigation, there is no notice of or basis for any
modification, suspension, termination, or cancellation of any Insurance
Policy.
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2.13.
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Contracts and
Commitments.
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(a)
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Schedule
2.13 hereto contains a complete list of each written contract of the
Seller that is material to the Seller, including but not limited to the
following: (i) all employment contracts between the Seller and its
employees, other than those terminable by the Seller at will and without
payment or penalty; (ii) all collective bargaining agreements and union
contracts to which the Seller is a party; (iii) all written contracts with
distributors, brokers, manufacturer's representatives, sales
representatives, service or warranty representatives, customers, and other
persons, firms, or corporations engaged in the sale or distribution of the
Seller's products; (iv) all presently open purchase orders issued by the
Seller in excess of $5,000, all sales orders received by the Seller in
excess of $5,000 that have not yet been completed, and all purchase or
sales orders that call for delivery or performance on a date more than one
year from the date of this Agreement; (v) all written contracts between
the Seller or any person or entity that controls, is controlled by, or is
under common control with, the Seller or any family member of any such
person (such entity or person, being hereinafter referred to as an
"Affiliate"); (vi) all written contracts under which the Seller is either
a xxxxxx or bailee including without limitation written contracts for the
bailment of vehicles; (Vii) all agreements pursuant to which the Seller
acquired the Trade Name or a substantial portion of its assets; and (viii)
all other written executory contracts of the Seller reflecting obligations
for borrowed money or for other indebtedness or guaranties
thereof.
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(b)
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To
the best of Seller's present knowledge and without investigation, the
Seller is not a party to any written contract that would restrict it from
engaging in any business.
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(c)
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To
the best of Seller's present knowledge and without investigation, each of
the contracts listed on Schedule 2.13 is valid and binding, and each has
been entered into in the ordinary course of business. To the best of
Seller's present knowledge and without investigation, the Seller is not in
default of the contracts described in this Section
2.13.
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2.14.
Distributors and
Customers. To the best of Seller's present knowledge and without
investigation, it enjoys good working relationships under all of its
distributor, sales representative, and similar contracts necessary to the normal
operation of its business. Except for ARM AeroSpace, with whom Seller terminated
work in April, 2008, the Seller has no knowledge or basis for knowledge that any
customer or group of related customers (i.e., any customers who are directly or
indirectly through one or more intermediaries under common control), who, for
the fiscal year ended 2008 accounted
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PURCHASE AGREEMENT, Page 9
for more
than $5,000 in aggregate volume of gross sales of the Seller, has terminated or
expects to terminate a material portion of its normal business with the Seller.
Seller's working relationships with all of its distributors, sales
representatives, and customers are to a large extent personal to Seller or the
Forsbergs, and no guarantees can be made by Seller or Forsbergs that Purchaser
will enjoy the same relations.
2.15. Labor Relations. No
employee of the Seller is represented by a labor union, and no petition has been
filed or proceedings instituted by any employee or group of employees with any
labor relations board seeking recognition of a bargaining representative. There
are no matters pending before the National Labor Relations Board or any similar
state or local labor agency, and the Seller is neither engaged in nor subject to
any penalties or enforcement action in respect of any unfair labor practices,
and the Seller believes that it enjoys good labor relations. There are no
controversies or disputes pending between the Seller and any of its employees,
except for such controversies and disputes as do not and will not, individually
or in the aggregate, have a material adverse effect on the Transferred
Assets.
2.16. Environmental
Matters.
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(a)
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For
purposes of this Section 2.16, the property of the Seller and Forsbergs
shall mean the Real Property. Additionally, for purposes of this Section
2.16, "Hazardous Substance" means (i) a "hazardous substance" as defined
in 42 USC §9601(14), as amended from lime to time, and all rules,
regulations, and orders promulgated thereunder as in effect from time to
time, (ii) "hazardous waste" as defined in 42 USC §6903(5), as amended
from time to time, and all rules, regulations, and orders promulgated
thereunder as in effect from time to time, (iii) if not included in (i) or
(ii) above, "hazardous waste constituents" as defined in 40 CFR § 260.10,
specifically including Appendix VII and VIII of Subpart D of 40 CFR § 261,
as amended from time to lime, and all rules, regulations, and orders
promulgated thereunder as in effect from time to time, and (iv) "source,"
"special nuclear," or "by-product material" as defined in 42 USC §3011, et
seq., as amended from time to time, and all rules, regulations, and orders
promulgated thereunder as in effect from time to time. Further,
"Requirements of Law" shall mean all applicable federal, state or local
laws, statutes, ordinances, rules, regulations, or court or administrative
orders or processes, or arbitrator's orders or processes, including those
applicable to the development, manufacture, or sale of the processes,
technology, results, or products of the Seller applicable to air, soil,
water, or noise pollution, or the production, storage, processing,
utilization, labeling, transportation, disposal, emission, or other
disposition of Hazardous Substances, any of the processes used or
followed, results obtained, or products developed, made, or sold by the
Seller including, without limitation, under CERCLA, the Toxic Substances
Control Act of 1976, as amended, the Resource Conservation and Recovery
Act of 1976, as amended, the Clean Air Act, as amended, the Federal Water
Pollution Control
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PURCHASE AGREEMENT, Page 10
Act, as amended, or the Occupational
Safety and Health Act of 1970, as amended.
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(b)
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To
the best of Seller's present knowledge and without investigation, and
except as disclosed to the Purchaser, the Seller and Forsbergs are and
have been in compliance with all Requirements of Law relating to Hazardous
Substances and applicable to the Real
Property.
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(c)
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To
the best of Seller's present knowledge and without investigation, and
except as disclosed to the Purchaser, in the report dated , 2009, from
ALLWEST Testing & Engineering, undertaken as part of a Phase I
Environmental Site Assessment (ESA) required by the Purchaser and its
lender for certain financing of the Purchaser, detailing potential
environmental concerns with regard to the Real Property, no discharge,
release, spillage, uncontrolled loss, seepage, or filtration of any
Hazardous Substance or any fuel, gasoline, or other petroleum product or
by-product has occurred at the Real Property in an amount that violates
any Requirements of Law.
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(d)
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Except
for that reasonably necessary for the operation of its business
and in conformity with historical practices, the Seller does not treat,
generate, process, or transport any Hazardous Substance, nor has the
Seller ever done so.
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(e)
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To
the best of Seller's present knowledge and without investigation, the
Seller has in a timely manner obtained all Licenses and filed all reports
required to be filed under or pursuant to any applicable environmental
Requirements of Law.
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(f)
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To
the best of Seller's and Forsbergs' present knowledge and without
investigation, and except as noted in the report dated , 2009, from
ALLWEST Testing & Engineering, undertaken as part of a Phase I
Environmental Site Assessment (ESA) required by the Purchaser and its
lender for certain financing of the Purchaser, detailing potential
environmental concerns with regard to the Real Property, the Real Property
does not contain any underground tanks for the storage of any Hazardous
Substance or fuel oil, gasoline, or any other petroleum product or
by-product.
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(g)
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The
Seller has not received any notice of writs, injunctions, decrees, orders,
or judgments outstanding, or suits, claims, actions, proceedings, or
investigations instituted or threatened under any environmental
Requirements of Law applicable to any of the Real
Property,
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PURCHASE AGREEMENT, Page 11
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(h)
|
The
Seller has not received notice of any violation of any environmental,
zoning, worker safety, or land use Requirements of Law relating to the
Real Property.
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2.17. Compliance with Laws.
Except as disclosed on Schedule 2.17 hereto, to the best of Seller's and
Forsbergs' present knowledge and without investigation, the Seller is not in
violation of, has not been charged with any violation of, or is not under any
investigation with respect to any charge concerning any violation of any
Requirements of Law, in which such violation either singly or in the aggregate
with other violations would have a significantly material adverse effect upon
the Transferred Assets. The Seller is not in default with respect to any order,
writ, injunction, or decree of any court, agency, or
instrumentality.
2.18. Licenses, Permits, and
Authorizations. To the best of Seller's present knowledge and without
investigation, the Seller has all authorizations, licenses, and other permits
(collectively, "Licenses") of (i) any governmental or regulatory agency, whether
federal, state, or local.
2.19. Inventory. The
Inventory Value will be determined in accordance with Section 1.4. The
inventories of the Seller are in good and merchantable condition and are
suitable and usable or saleable in the ordinary course of business for the
purposes intended. The Seller has reasonable inventories to conduct its business
consistent with past practices.
2.20.
Property
of Others. No shortage exists in any finished goods owned by customers or
suppliers of the Seller and stored upon the Real Property or otherwise, or any
other item of personal property owned by another for which the Seller is
accountable to another. Without limiting the foregoing, all items of personal
property for which the Seller is accountable under any bailment agreement,
consignment contract, loan program, or otherwise are fully accounted for with no
shortages or missing or lost items, are in workable, usable, and saleable
condition, and have suffered no damage or deterioration.
2.21.
Condition of Tangible
Assets. All of the facilities of the Seller and its equipment and other
tangible assets are in good condition and repair (ordinary wear and tear
excepted) and workable, usable, and adequate for the uses to which they have
been put by the Seller in the ordinary course of business, and none of such
facilities and none of such equipment or other tangible assets (exclusive of
obsolete items no longer used in the Seller's business) is in need of other than
routine maintenance or repair. The Seller has not received any notice of any
violations of any Requirements of Law with respect to the Seller's properties or
operations that have not been cured. Notwithstanding the foregoing, many of the
Transferred Assets are in a used condition and it cannot be known how and when
any item may break down or become the subject of additional maintenance,
therefore, ALL THE FACILITIES
OF THE SELLER AND ITS
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PURCHASE AGREEMENT, Page 12
EQUIPMENT
ARE SOLD "AS IS, WHERE IS" AND WITHOUT ANY WARRANTY, EXPRESS
OR IMPLIED.
2.22. Disclosure. No
representation or warranty by the Seller in this Agreement contains any untrue
statement of a significant and material fact or omits or will omit to state any
significant and material fact necessary to make the statements herein or therein
not misleading. There is no fact known to the Seller that materially adversely
affects the Transferred Assets.
2.23
Purchaser's Representations
and Warranties. The Purchaser agrees to operate its business and maintain
all its assets including the Transferred Assets and the Real Property in
accordance with all of the representations and warranties made by the Seller
and/or the Forsbergs in this Agreement, which shall apply to the Purchaser in
favor of the Seller and/or the Forsbergs for as long as any amount remains owing
on either of the Promissory Notes issued by the Purchaser at
Closing.
2.24. Brokerage. No broker
or finder has acted directly or indirectly for the Seller or any of their
Affiliates in connection with this Agreement or the transactions contemplated
hereby, and no broker or finder is entitled to any brokerage or finder's fee or
other commission in respect thereof based in any way on the actions or
statements of, or agreements, arrangements, or understandings made with the
Seller or any of its Affiliates.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and
warrants to the Seller as set forth below:
3.1. Corporate Organization
etc. The Purchaser is on the date hereof, and will be on the Closing
Date, a corporation duly organized, validly existing and in good standing under
the laws of the State of Idaho.
3.2. Authorization, etc.
The Purchaser has full corporate power and authority to enter into this
Agreement and the other Acquisition Documents to which it is or will be a party,
to perform its obligations hereunder and thereunder, and to carry out the
transactions contemplated hereby and thereby. The Board of Directors of the
Purchaser has taken, or will take before the Closing Date, all actions required
by law. its Articles of Incorporation, its By-Laws or otherwise to authorize (i)
the execution and delivery of this Agreement and the other Acquisition Documents
and (ii) the performance of its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by the Purchaser and, upon the
execution and delivery of the remaining Acquisition Documents by a duly
authorized officer of the Purchaser, the remaining Acquisition Documents will
have been duly executed and delivered by the Purchaser,
ASSET
PURCHASE AGREEMENT, Page 13
and this
Agreement is, and such other Acquisition Documents will be, upon due execution
and delivery thereof, the legal, valid, and binding obligations of the
Purchaser, enforceable according to their terms (A) as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws now or hereafter in effect relating to creditors' rights, and (B) that the
remedy of specific enforcement and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.3. No Violation. None of
(i) the execution and delivery of this Agreement or any other Acquisition
Document by the Purchaser, (ii) the performance by the Purchaser of its
obligations hereunder or thereunder, or (iii) the consummation of the
transactions contemplated hereby or thereby will (A) violate any provision of
the Articles of Incorporation or By-Laws of the Purchaser, (B) violate, or be in
conflict with, or permit the termination of, or constitute a default under or
breach of, or cause the acceleration of the maturity of, any contract, debt, or
other obligation of the Purchaser, which violation, conflict, default, breach,
termination or acceleration, either individually or in the aggregate with all
other such violations, conflicts, defaults, breaches, terminations and
accelerations, would have a material adverse effect on the business, assets or
financial condition of the Purchaser, (C) require the consent of any other party
to, or result in the creation or imposition of any Lien upon any property or
assets of the Purchaser under any agreement or commitment to which the Purchaser
is a party or by which the Purchaser is bound, or (D) to the best knowledge and
belief of the Purchaser, violate any statute or law or any judgment, decree,
order, regulation, or rule of any court or governmental authority to which the
Purchaser is subject.
3.4. Litigation. There is
no action pending or, to the best knowledge and belief of the Purchaser,
threatened against the Purchaser, or any properties or rights of the Purchaser,
that questions or challenges the validity of this Agreement or any of the other
Acquisition Documents, nor any action taken or to be taken by the Purchaser
pursuant hereto or thereto or in connection with the transactions contemplated
hereby or thereby and the Purchaser does not know of any such action,
proceeding, or
investigation
that may be asserted.
3.5. Disclosure. No
representation or warranty by the Purchaser in this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make the statements herein not misleading. The
Purchaser shall operate Seller's business and maintain its assets and the Real
Property in accordance with all of the representations and warranties made by
the Seller's and/or the Forsbergs in this Agreement until such time as all
amounts due under both Promissory Notes detailed in this Agreement have been
paid in full.
3.6. Brokerage. No broker
or finder has acted directly or indirectly for the Purchaser or its Affiliates
in connection with this Agreement or the transactions contemplated hereby, and
no broker or finder is entitled to any brokerage or finder's fee
ASSET
PURCHASE AGREEMENT, Page 14
or other
commission in respect thereof based in any way on the actions or statements of,
or the agreements, arrangements, or understandings made with the Purchaser or
its Affiliates.
3.7. Personal Guaranties.
Except for Xxxx Xxxxxxx (and his spouse, if any), whose Personal Guaranty shall
be in the form attached hereto as Schedule 3.7, no other person holding any
stock of other equity interest in the Purchaser, or any party affiliated with
the Purchaser, is giving a personal guaranty to Mountain West Bank or any
affiliate of said bank with respect to financing the purchase of any of the
Transferred Assets.
ARTICLE
IV
OBLIGATIONS
OF THE PARTIES
The Seller hereby covenants and agrees
with the Purchaser and the Purchaser
hereby
covenants and agrees with the Seller that:
4.1. Reasonable Access.
Prior to Closing, the Seller shall afford the Purchaser and its counsel,
accountants, and other authorized representatives reasonable access during
normal business hours to its property, books and records so that the Purchaser
and its advisors may have the opportunity to make such reasonable investigations
that pertain to the Closing of this transaction. With prior notice, the
Purchaser may contact employees of the Seller to discuss their employment by the
Purchaser and the present and future operation of the Seller's business. The
Seller shall furnish to the Purchaser any additional financial and operating
data and other reasonable information as the Purchaser and its counsel,
accountants, and other authorized representatives shall from time to time
reasonably request. The Seller shall, upon reasonable request, provide the
Purchaser, its counsel, accountants and other authorized representatives with
such information concerning the Seller as may be reasonably necessary for the
Purchaser to verify the Seller's performance of and compliance with its
representations and warranties herein contained. The Purchaser shall, for as
long as any amount remains owed on one or both of the Promissory Notes detailed
in this Agreement and upon reasonable request, provide the Seller and Forsbergs,
their counsel, accountant and other authorized representatives with such
information concerning the Purchaser and its operations of the business as may
be reasonably necessary for the Seller and Forsbergs to verify the Purchaser's
performance of and compliance with its representations, warranties, and
covenants herein contained.
4.2. Conduct Before Closing
Date. Before the Closing Date, except as otherwise contemplated by- this
Agreement or as permitted by the prior written consent of the Purchaser, but
without making any commitment on the Purchaser's behalf, the Seller
shall:
ASSET
PURCHASE AGREEMENT, Page 15
|
(a)
|
conduct
its business and operations only in the ordinary course, including,
without limitation, maintaining inventories of raw materials, taken as a
whole, at levels consistent with past
practice;
|
|
(b)
|
maintain
the Transferred Assets in good condition, working order, and repair
(except for ordinary wear and
tear);
|
|
(c)
|
perform
its obligations in conformity with past practices under all contracts
binding upon it and maintain all of its Licenses in good
standing;
|
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(d)
|
continue
in effect the Insurance Policies (or similar coverage) referred to in
Section 2.14 hereof;
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(e)
|
to
the extent that it is reasonably able, keep available the services of its
current officers and employees;
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(f)
|
to
the extent that it is reasonably able, maintain and preserve the good will
of the suppliers, customers, and others having business relations with it;
and
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(g)
|
before
the Closing Date, upon request, consult with the Purchaser from time to
time with respect to any significantly material change in the conduct of
its business.
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(h)
|
not
become a party to any written contract which, if it had existed on the
date hereof, would have come within the scope of the Disclosure Schedule
pursuant to Section 2.13 hereof;
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4.3. Further Assurances.
Before and after the Closing, each party hereto shall execute and deliver such
instruments and take such other actions as any other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
other Acquisition Documents. Each party hereto shall use its best efforts to
cause the transactions contemplated by this Agreement and the other Acquisition
Documents to be consummated, and, without limiting the generality of the
foregoing, to obtain all consents and authorizations of government agencies and
third parties and to make all filings with and give all notices to government
agencies and third parties that may be necessary or reasonably required to
effect the transactions contemplated by this Agreement and the other Acquisition
Documents. The Seller shall give prompt notice to the Purchaser, after receipt
thereof by the Seller, of (i) any notice of, or other communication relating to,
any default or event that, with notice or lapse of time or both, would become a
default under any indenture, instrument, or agreement material to the
Seller,
to which the Seller is a party or by which the Seller is bound, and (ii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this
ASSET
PURCHASE AGREEMENT, Page 16
Agreement
and the other Acquisition Documents. Each corporate party shall deliver to the
other, by the Closing Date, appropriate evidence of the approval of its Board of
Directors and stockholders (if required by law) of this Agreement and the
transactions contemplated hereby and thereby.
4.4. Confidentiality. The
parties to this Agreement hereby acknowledge and reconfirm the terms of that
certain Confidentiality Agreement entered into between them, as amended,
attached hereto as Exhibit "G".
ARTICLE
V
CONDITIONS
TO PURCHASER'S OBLIGATIONS
The obligation of the Purchaser under
this Agreement to consummate the Closing on the Closing Date shall be subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions:
5.1. Representations and
Warranties True. The representations and warranties of the Seller and
Forsbergs contained herein shall be true and accurate as of the Closing Date,
except for changes permitted or contemplated by this Agreement, or those
occurring in the ordinary course of business.
5.2. No Material
Changes.
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(a)
|
No
portion of the Transferred Assets that are as a whole significantly
material to the operation of the business of the Seller shall, after April
11 , 2007, and before the Closing Date, be damaged, destroyed, or taken by
condemnation, whether or not covered by any Insurance
Policy.
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(b)
|
After
April 11, 2007, and before the Closing Date, the Seller shall be subjected
to changes of any kind or nature that either individually or in the
aggregate have a significantly material adverse effect on the Transferred
Assets.
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(c)
|
No
significant and material adverse change in the Transferred Assets shall
have occurred after April 11 , 2007, and be by its nature
continuing.
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5.3. Performance. The
Seller shall have performed and complied in all material respects with all
agreements, obligations, and conditions required by this Agreement or the other
Acquisition Documents to be performed or complied with by them on or before the
Closing Date. On the Closing Date and immediately prior to Closing, Purchaser
and Seller shall do a physical walk through to view the Transferred Assets and
verify their description, and as to inventory, verify that the inventory present
during a walk through by Purchaser prior to the Closing Date remains on the
premises or has been sold in the ordinary course of business.
ASSET
PURCHASE AGREEMENT, Page 17
5.4. Consents. All filings
with and consents from government agencies required to consummate the
transactions contemplated hereby and by the other Acquisition Documents shall
have been made or obtained, except to the extent that making any such filing or
obtaining any such consent has been waived in writing by the Purchaser or the
failure to obtain any such consent or make any such filing would not have a
significant and material adverse effect on the Transferred Assets.
5.5. Closing Documents.
The Seller and Forsbergs shall have delivered, or caused to be delivered to the
Purchaser, the documents and instruments described below:
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(a)
|
Copies
of the resolutions adopted by the Boards of Directors of the Seller
authorizing this Agreement and the other Acquisition Documents and the
transactions contemplated hereby and
thereby.
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(b)
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Warranty
Deed for the Real Property, and Title
Policy.
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(c)
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Xxxx
of Sale for the Transferred Assets, including assignment of Trade Names in
the form of Schedule 2.9 hereto.
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(d)
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A
copy of Articles of amendment to the Articles of Incorporation of the
Seller, duly authorized and executed and in form and substance, filed by
the Seller with the Secretary of State of the State of Idaho, changing the
Seller's name to Xxxxxxxx Investments, Inc. (which purchaser hereby
acknowledges does not include the Trade Name, any variation thereof, or
any other word which could be reasonably confused therewith). Seller will
have filed an Application for Reservation of Legal Entity Name with the
Secretary of State of the State of Idaho, reserving the name "Mine
Fabrication & Machine, Inc." until Closing, at which xxxx Xxxxxx shall
deliver to Purchaser a notice of transfer of a reserved corporate name
suitable for immediate filing by the Purchaser with the Secretary of State
of the State of Idaho.
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(e)
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Acknowledgement
that a total of $7,150.00 is to be applied to the first two payments on
Promissory Note #1, being (1) Seller's reimbursement to Purchaser for
computer equipment ($1,000.00), (2) Seller's reimbursement to Purchaser
for and in consideration of any potential issues that could arise with
respect to Seller's and Forsbergs' non-conformity with conditions
specified in certain Business Development Permits, as more fully detailed
in Schedule 2.17 hereto, for which Purchaser hereby agrees to indemnify
and hold harmless Seller and Forsbergs ($5,000.00), and (3) Seller's
reimbursement for Purchaser's prorata share of annual rent on that certain
Lease detailed further in Schedule 2.5(1) hereto
($1,150).
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PURCHASE AGREEMENT, Page 18
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(f)
|
List
of Seller's customers, vendors and employees, and a disc and/or hard
copies of invoices and purchase orders containing the sales, pricing, and
customer history of the Seller for a five (5) year period prior to
Closing.
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(g)
|
Such
other documents or instruments as shall be reasonably requested by the
Purchaser or its counsel.
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5.6. Environmental Report.
If the Purchaser shall choose at its expense to retain an environmental
consulting firm to render an environmental audit report respecting the Real
Properly and such firm renders a report that details violations of federal,
state, or local environmental Requirements of Law, the Seller shall have cured
such violations without warranty, therefore, the Purchaser shall have waived
such compliance with this Section 5.6; and Purchaser accepts the Real Property
in such form; provided however, in no event may such report be construed as
obligating the Seller to cure any such violation.
ARTICLE
VI
CONDITIONS
TO SELLER'S OBLIGATIONS
The obligation of the Seller under this
Agreement to consummate the Closing on the Closing Date shall be subject to the
satisfaction, on or before the Closing Date, of each of the following
conditions:
6.1. Representations and
Warranties True. The representations and warranties of the Purchaser
contained herein, in the other Acquisition Documents (including, without
limitation, all schedules and exhibits hereto and thereto), and in all documents
delivered by the Purchaser, shall be true and accurate as of the Closing Date,
except for changes permitted or contemplated by this Agreement.
6.2. Performance. The
Purchaser shall have performed and complied in all material respects with all
agreements, obligations, and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
6.3. Consents. All filings
with and consents from government agencies required to consummate the
transactions contemplated hereby shall have been made or obtained unless the
failure to obtain any such consent or make any such filing would not have an
adverse effect on the Transferred Assets.
6.4. Closing Documents.
The Purchaser shall have delivered or caused to be delivered to the Seller the
documents and instruments described below:
|
(a)
|
The
cash payment, Promissory Notes, Deed of Trust, and Security Agreement, all
as detailed in Section 1.4(b).
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ASSET
PURCHASE AGREEMENT, Page 19
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(b)
|
A
copy of the resolutions adopted by the Board of Directors of the Purchaser
authorizing this Agreement and the transactions contemplated hereby and
thereby, including but not limited to a specific reference to the
convertibility of Promissory Note #2 into the Voting Common Stock of the
Purchaser.
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|
(c)
Assumption of all written contracts and open purchase orders of the
Seller, as disclosed on Schedule
2.13.
|
|
(d)
The Personal Guaranty of Xxxx Xxxxxxx of the Purchaser's Promissory
Notes.
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(e)
Such other documents or instruments as shall be reasonably requested by
the Purchaser or its counsel.
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ARTICLE
VII
CLOSING;
CLOSING DATE
7.1. Closing. The closing
(the "Closing") will be held at __________________.m. at the offices of First
American Title Company, Inc., 000 Xxxxx 0xx Xxxxxx, Xxxxx 0, Xxxxxxx, Xxxxx on
or before April 3, 2009, or at such other time and place as the parties hereto
may mutually agree upon in writing (the "Closing Date"), notwithstanding that
the parties hereto will execute the Exhibits and Schedules referred to herein on
March 31, 2009.
ARTICLE
VIII
CERTAIN
POST-CLOSING COVENANTS
8.1. Access. Subsequent to
the Closing Date, the Purchaser shall, at the Seller's expense, permit the
Seller, from time to time, to inspect and copy such books of account and other
records of the Purchaser and to utilize the services of the Purchaser's or the
Seller's employees, all as may be necessary or convenient to enable the Seller
to prepare and file tax returns and to confirm Purchaser's ongoing compliance
with its obligations under any Deed of Trust or Security Agreement for either of
the Promissory Notes issues by Purchaser herein. Until the fourth anniversary of
the Closing Date, the Purchaser shall not, without the prior written consent of
the Seller or its successors in interest, to destroy or dispose of any such
records. Notwithstanding any of the foregoing, no covenant contained in this
Section 8.1 on the part of the Purchaser is intended to, and nothing herein
shall be construed to, benefit or confer any rights upon any person, firm, or
corporation other than the Seller.
ASSET
PURCHASE AGREEMENT, Page 20
8.2. Use of Trade Name.
Commencing on the Closing Date, the Seller shall cease using the Trade Name as a
company name, or trade name.
8.3. Non-Competition. The
Purchaser, Forsbergs, and Seller agree that the Purchase Price is fixed on the
basis that the transfer of the Transferred Assets to the Purchaser would provide
the Purchaser with the full benefit and goodwill of the Seller as it existed on
the Closing Date, provided, however, that the Purchaser understands that the
Seller's working relationships with all of its distributors, sales
representatives, and customers are to a large extent personal to the Forsbergs,
and no guarantees can be made by Seller or Forsbergs that Purchaser will enjoy
the same relations. The Seller and Forsbergs acknowledge that it is proper for
the Purchaser to have assurance that the value of the Transferred Assets will
not be diminished by acts of the Seller or Forsbergs after the Closing Date.
Accordingly, the Seller and Forsbergs covenant and agree that, commencing on the
Closing Date and ending five years from the Closing Date, it will not, within a
100 mile radius of the City of Xxxxxxx, Shoshone County, Idaho (i) directly or
indirectly compete with, or own, manage, operate, or control or participate in
the ownership, management, operation or control of, or provide consulting
services to, any business, firm, corporation, partnership, person,
proprietorship or other entity which is conducting any business which competes
with the business of the Seller as constituted on the Closing Date (the
"Restricted Business"), (ii) directly or indirectly solicit employment by any
person, partnership, corporation or other entity of any of the employees,
consultants, agents, or independent contractors of the Seller (for this purpose
the terms "employees", "consultants", "agents", and "independent contractors"
shall include any persons having such status with regard to the Seller at any
time during the six (6) months preceding any solicitation in question), or (iii)
solicit, interfere with, or endeavor to entice away from the Seller, on behalf
of any person, partnership, corporation, or other entity, any customer of the
Restricted Business of the Seller. The foregoing provisions shall not apply to
investments in shares of stock of Purchaser or of a corporation traded on a
national securities exchange or on the national over-the-counter market. If the
Seller commits a breach, or threatens to commit a breach, of any of the
provisions of this Section 8.3, the Purchaser shall have the right and remedy,
in addition to any others, to have the provisions of this Section 8.3
specifically enforced by any court
having equity jurisdiction, together with an accounting therefor, it being
acknowledged and understood by the Seller that any such breach or threatened
breach will cause irreparable injury to the Purchaser and that money damages
will not provide an adequate remedy therefor.
ARTICLE
IX
INDEMNIFICATION
9.1. Survival.
Notwithstanding (i) the making of this Agreement, (ii) any examination made by
or on behalf of the parties hereto, and (iii) the Closing hereunder, (A) the
representations and warranties of the parties contained herein or in
any
ASSET
PURCHASE AGREEMENT, Page 21
document
delivered pursuant hereto or in connection herewith shall survive until the
fifth anniversary of the Closing Date, except for the representations and
warranties made in Section 2.16 hereof (Environmental Matters), and Section 2.11
hereof (Tax Returns and Payments), which in each case, shall survive until
expiration of the applicable statute of limitations for the underlying cause of
action and (B) the covenants and agreements required to be performed after the
Closing pursuant to any provision of this Agreement, including this Article 9,
shall survive until fully performed or fulfilled. No action for indemnification
pursuant to Sections 9.2(c) or 9.3(c) may be brought after the applicable
expiration date, provided, however, that if before such date one party hereto
has notified the other party hereto of a claim for indemnity hereunder (whether
or not formal legal action shall have been commenced based upon such claim),
such claim shall continue to be subject to indemnification in accordance
herewith.
9.2. Indemnification by the
Seller and Forsbergs. The Seller and Forsbergs, its successors, and
assigns shall indemnify and hold the Purchaser and its successors and assigns
harmless in respect of any and all claims, losses, damages, liabilities, and
expenses (including, without limitation, settlement costs and legal, accounting,
and other expenses in connection therewith) (collectively, the "Damages")
incurred by the Purchaser and its successors and assigns in connection with each
and all of the
following:
|
(a)
|
Any
claim by any person or other entity for any broker's or finder's fee or
similar fee charged for commission that arises from any action, statement,
or commitment made by the Seller or its agents or
Affiliates.
|
|
(b)
|
Any
breach or other failure to perform any covenant, agreement, or obligation
of the Seller contained in this Agreement, any other Acquisition Document
or any other instrument, including all certificates, contemplated hereby
or thereby.
|
|
(c)
|
Any
breach of any representation or warranty by the Seller contained in this
Agreement, any other Acquisition Document or any other instrument,
including all certificates, contemplated hereby or
thereby.
|
|
(d)
|
Any
breach or other failure to perform fully before the Closing Date the
Seller's contractual obligations under items disclosed pursuant to Section
2.13(a)(vi) hereof.
|
|
(e)
|
Any
damages (including, without limitation, costs of response, removal,
remediation, corrective action, property damage, personal injury, damage
to natural- resources, settlement, and attorneys' fees) paid by the
Purchaser and accruing from the operations of the Seller, or the
operations of the business at any time before the Closing Date and solely
attributable to the Transferred
Assets.
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ASSET
PURCHASE AGREEMENT, Page 22
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(f)
|
Any
liability to employees or to third parties for personal injury or death or
damage to property arising out of or occurring in connection with products
sold or services rendered by the Seller on or before the Closing Date in
excess of, not covered by, and not deductible from the Insurance
Policies.
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(g)
|
All
claims made by former or current employees of the Seller alleging the
occurrence of, or arising out of, an allegation relating to any breach of
any fiduciary obligation before the Closing Date under any employee
benefit plan.
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9.3. Indemnification by the
Purchaser. The Purchaser and its successors and assigns shall indemnify
the Seller and its successors and assigns in respect of any and all Damages
incurred by the Seller and its successors and assigns in connection with each
and all of the following:
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(a)
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The
claim by any person for any broker's or finder's fee or similar fee
charged for commission that arises from any actions, statements, or
commitments made by the Purchaser or its agents or
Affiliates.
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(b)
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The
breach or other failure to perform any covenant, agreement, or obligation
of the Purchaser contained in this Agreement or any other Acquisition
Document or any other instrument, including all certificates contemplated
hereby or thereby.
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(c)
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Any
breach of any representation or warranty by the Purchaser contained in
this Agreement or any other Acquisition Document or any other instrument,
including all certificates, contemplated hereby or
thereby.
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(d)
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Any
breach or other failure to perform fully perform any agreement that is
required to be disclosed pursuant to Section 2.13(a)(vi)
hereof.
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(e)
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Any
damages (including, without limitation, costs of response, removal,
remediation, corrective action, property damage, personal injury, damage
to natural resources, settlement, and attorneys' fees) paid by the Seller
or Forsbergs and accruing from the operations of the Purchaser, or the
operations of the business at any time after the Closing date and solely
attributable to the Transferred
Assets.
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(f)
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Any
liability to employees or to third parties for personal injury or death or
damage to properly arising out of or occurring in connection with products
sold or services rendered by the Purchaser after the Closing Date in
excess of, not covered by, and not deductible from the Insurance
Policies.
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ASSET
PURCHASE AGREEMENT, Page 23
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(g)
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All
claims made by former or current employees of the Purchaser alleging the
occurrence of, or arising out of, an allegation relating to any breach of
any fiduciary obligation after the Closing Date under any employee benefit
plan, provided, however, Purchaser has no obligation to continue any
employee benefit plan implemented by Seller prior to the Closing
date.
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9.4. Notice and Defense of
Claim. Whenever any claim shall arise for indemnification hereunder, the
party entitled to indemnification (the "Indemnified Party") shall provide
written notice to the other party (the "Indemnifying Party") within sixty (60)
days of becoming aware of the right to indemnification and, as expeditiously as
possible thereafter, the facts constituting the basis for such claim. In
connection with any claim giving rise to indemnity hereunder, resulting from or
arising out of any claim or legal proceeding by a person who is not a party to
this Agreement, the Indemnifying Party, at its sale cost and expense and upon
written notice to the Indemnified Party, may assume the defense of any such
claim or legal proceeding with counsel reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall be entitled to participate in the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom, the Indemnified Party may, but shall not be obligated to,
defend against such claim or litigation in such manner as it may deem
appropriate including, but not limited to, settling such claim or litigation,
after giving notice of it to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate and no action taken by the Indemnified
Party in accordance with such defense and settlement shall relieve the
Indemnifying Party of its indemnification obligations herein provided with
respect to any Damages resulting therefrom.
ARTICLE
X
TERMINATION
10.1. Termination. This
Agreement may be terminated at any time before the Closing Date:
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(a)
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by
mutual written consent of the Purchaser and the
Seller;
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(b)
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by
either the Purchaser or the Seller if the Closing has not occurred on or
before April 3, 2009, provided that this provision shall only be available
to any party who has, in good faith, made all reasonable efforts to Close;
and
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(c)
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by
either the Purchaser or the Seller if there has been a material breach on
the part of the other party in any material representation, warranty or
covenant set forth in this Agreement that is not cured within ten (10)
business days after such other party has been notified of the intent to
terminate this Agreement pursuant to this clause 10.1
(c).
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ASSET
PURCHASE AGREEMENT, Page 24
10.2. Effect of
Termination. In the event of termination of this Agreement as expressly
permitted under Section 10.1 hereof, this Agreement shall forthwith become void
(except for this Section 10.2 hereof) and there shall be no liability arising
from this Agreement on the part of either the Seller, the Purchaser, or their
respective officers, directors or Affiliates; provided, however, if such
termination occurs pursuant to Section 10.1 (b or c) and resulted from the
material misrepresentation or material breach by a party of the covenants of
such party contained in this Agreement, such party shall be fully liable for any
and all Damages sustained or incurred as a result of such breach. In the event
of termination hereunder before the Closing, each party shall return promptly to
the other Party all documents, work papers, and other material of the other
party furnished or made available to such party or its representatives or agents
and all copies thereof.
ARTICLE
XI
OTHER
AGREEMENTS
11.1. Amendment and Modification:
Waiver of Compliance. Subject to the applicable law, this Agreement may
be amended, modified, and supplemented only by written agreement signed by the
Purchaser and the Seller. Any failure by any party to this Agreement to comply
with any obligation, covenant, agreement, or condition contained herein may be
expressly waived in writing by the other parties hereto, but such waiver or
failure to insist upon strict compliance shall not operate as a waiver of, or
estoppel with respect to, any Subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in a manner consistent with the requirements for a waiver
of compliance as set forth in this Section 11.1.
11.2 Disclosure of Confidential
Information. Forsbergs have fully disclosed, or will disclose to the
Purchaser, any reasonable information deemed by Purchaser to be materially
necessary to operating the Transferred Assets of the Seller upon the Purchaser's
request for a period of one (1) year following the Closing Date.
11.3 Mutual Release. At
Closing and not before, Purchaser, Seller, and Forsbergs shall execute a Mutual
Release and Settlement of All Claims arising from the Stock Purchase and Sale
Agreement, attached hereto as Exhibit "H".
11.4. Fees and Expenses.
Except as otherwise provided herein, each of the parties hereto will pay its own
fees and expenses (including attorneys' and accountants' fees, legal costs, and
expenses) incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby and thereby. Except for the allocation of
personal and real property tax among the assets and real property,
ASSET
PURCHASE AGREEMENT, Page 25
respectively,
Seller and Purchaser shall share equally in all closing costs. Seller shall pay
for a standard title policy. Purchaser shall pay for the lender policy
portion.
11.5. Notices. All notices,
requests, demands, and other communications required or permitted hereunder
shall be in writing and shall be deemed to have been given if delivered by hand,
overnight courier, or mailed certified or registered mail with postage prepaid
as follows:
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(a)
|
If
to the Purchaser, to:
|
|
|
Attention:
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Xxxx
Xxxxxxx
|
000 X. Xxxxxxxx
Xxxxxx
X.X. Xxx
000
Xxxxxxxxx, XX
00000
|
|
(b)
|
If
to the Seller, to:
|
|
|
Attention:
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Xxxx
X. Xxxxxxxx
|
Xxxxxxxx
Investments, Inc,
X.X. Xxx
0000
Xxxxxxxxx, XX
00000
With a copy
to:
Xxxxxx X.
XxXxxxxx
Xxxxxxx, Eden,
Phillips, XxXxxxxx & Xxxxxxx, X.X.
000 X. Xxxxxxxxx
Xxx., Xxxxx 000
Xxxxxxx, XX
00000
|
|
(c)
|
If
to Forsbergs, to:
|
|
|
Attention:
|
Xxxx
X. and Xxxxx X. Xxxxxxxx
|
X.X. Xxx
0000
Xxxxxxxxx, XX
00000
With a copy
to:
Xxxxxx X.
XxXxxxxx
Xxxxxxx, Eden,
Phillips, XxXxxxxx & Xxxxxxx, X.X.
000 X. Xxxxxxxxx
Xxx., Xxxxx 000
Xxxxxxx, XX
00000
11.6. Public Announcements.
Neither the Purchaser nor the Seller nor the representatives of any of them
shall make any public announcement with respect to this Agreement, the other
Acquisition Documents, or the transactions contemplated hereby or thereby
without the prior written consent of the other parties.
ASSET
PURCHASE AGREEMENT, Page 26
waived.
Notwithstanding any provision of the aforesaid Rules or Statutes to the
contrary, the refusal or failure of any party to appear at or participate in any
hearing or other portion of any arbitration proceeding pursuant to this
paragraph shall not prevent any such hearing or proceeding from going forward,
and the Arbitrator is empowered to make a decision or render an award, or both,
ex parte, which shall be binding on such party as fully as though such party had
fully participated in such hearing or proceeding. As provided in Section 11.13,
the prevailing party in any arbitration proceeding pursuant to this paragraph
shall be entitled to an award for such party's expenses and attorneys' fees in
connection therewith, and the cost of conducting the arbitration proceeding
shall
11.7.
Assignment. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interest, or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of all the other parties.
11.8. Governing Law. This
Agreement and the legal relations between the parties hereto shall be governed
by, and construed in accordance with, the laws of the State of Idaho, without
reference to the conflict of laws principles thereof.
11.9. Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.10. Headings. The
headings contained in this Agreement are inserted for convenience only and shall
not constitute a part hereof.
11.11. Entire Agreement.
This Agreement, including the Disclosure Schedule, the exhibits hereto and other
documents referred to herein which form a part hereof, embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and supersede all prior agreements and understandings
between the parties with respect to such subject matter, including, by way of
illustration and not by limitation, any term sheet agreed to by the parties
hereto
prior to
the date hereof. There are no restrictions, promises, warranties, covenants, or
undertakings other than those expressly set forth or referred to
herein.
11.12. Definitional
Provisions. All terms defined in this Agreement shall have such defined
meanings when used in any exhibit, schedule, or any certificate or other
document made or delivered pursuant hereto or thereto, unless otherwise defined
therein.
11.13.
Attorney's
Fees. In the event of any breach of this Agreement, the party responsible
for the breach agrees to pay reasonable attorney's fees and costs, including,
but not limited to the costs of service of notices incurred by the other party.
The prevailing party in any suit instituted arising out of this Agreement shall
be entitled to receive reasonable attorney's fees and costs incurred in such
suit or proceedings.
11.14 Arbitration of
Disputes. Any controversy or c1airn arising out of or relating to
Inventory Value shall be settled by exclusive and binding arbitration, by a
single
ASSET
PURCHASE AGREEMENT, Page 27
IN WITNESS, the parties hereto have
caused this Agreement to be duly executed
on the day and year first above stated.
|
[Seller]
|
By:
|
XXXX X.
XXXXXXXX
|
|||
|
Mine
Fabrication & Machine, Inc.
|
|||||
|
Name:
Xxxx X. Xxxxxxxx
|
|||||
|
Title:
President
|
|||||
|
By:
|
XXXX X.
XXXXXXXX
|
||||
|
Xxxx
X. Xxxxxxxx
|
|||||
|
By:
|
XXXXX X.
XXXXXXXX
|
||||
|
Xxxxx
X. Xxxxxxxx
|
|||||
|
The
Family Trust of Xxxx X. Xxxxxxxx
|
|||||
|
And
Xxxxx X. Xxxxxxxx dated
|
|||||
|
September
26, 2008
|
|||||
|
By:
|
XXXX X.
XXXXXXXX
|
||||
|
Xxxx
X. Xxxxxxxx, Co-Trustee
|
|||||
|
By:
|
XXXXX X.
XXXXXXXX
|
||||
|
Xxxxx
X. Xxxxxxxx, Co-Trustee
|
|||||
|
[Purchaser]
|
By:
|
XXXX
XXXXXXX
|
|||
|
Name:
Xxxx Xxxxxxx
|
|||||
|
Title:
President & CEO
|
|||||
ASSET
PURCHASE AGREEMENT, Page 29
