ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
September 30, 2003 by and among FUN CITY FOODS, INC, a Nevada corporation and
its assignees (the "Purchaser") and FUN CITY POPCORN, INC., a Nevada corporation
(the "Seller"). Certain other capitalized terms used herein are defined in
Article 12 and throughout this Agreement.
R E C I T A L S:
A. The Seller is engaged in the business of wholesaling popcorn, snack
items, candy and related food products in and around the City of Las Vegas,
Nevada (the "Business");
B. The Seller wishes to sell, and the Purchaser wishes to buy,
substantially all of the assets of the Seller, and to assume substantially all
of the liabilities of the Seller, on the terms and subject to the conditions
hereinafter set forth.
TERMS OF AGREEMENT
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In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
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1.1 Purchased Assets. The Seller agrees to and will at the Closing (as
defined in Section 3.1) sell, convey, transfer, assign and deliver to the
Purchaser, on the terms and subject to the conditions set forth in this
Agreement, all of the assets of the Business, whether or not used in the
Business, as the same exist on the date hereof (collectively, the "Purchased
Assets"), including, without limitation, the assets listed in Schedule 1.1.1
through 1.1.5, but excluding the Excluded Assets described in Section 1.2 below.
All assets, property or rights of every kind or description owned by the Seller,
whether tangible or intangible, wherever located shall be deemed a Purchased
Asset for purposes of this Agreement, and shall include the following specific
assets:
1.1.1 Fixed Assets and Tangible Personal Property. The fixed assets and
tangible personal property of the Seller used in the Business set forth in
Schedule 1.1.1, including without limitation, business records, leasehold
improvements, equipment, trade fixtures, furniture, supplies and inventory.
Inventory shall include non-obsolete, salable inventory and perishable supplies
at a total cost of Two Hundred Thirty Nine Thousand and No/100 Dollars
($239,000.00). Perishable inventory is deemed "obsolete" and "non-salable" if
the "best used by" date printed on the product is within thirty (30) days of
Closing. Purchaser and Seller shall take stock of the inventory immediately
prior to Closing. Non-Perishable inventory items are deemed "obsolete" and
"non-salable" if such items have been held in inventory longer than one (1) year
prior to Closing and there has not been a sale of any such items within such
year. Purchaser shall have the option to reject any or all obsolete or
non-salable inventory. If at Closing the actual Inventory total cost does not
equal Two Hundred Thirty Nine Thousand and No/100 Dollars ($239,000), the
Purchase Price shall be adjusted up or down to reflect the actual Inventory
total cost at Closing.
1.1.2 Intangible Personal Property. All covenants, customer lists,
franchises and other items of intangible property, including without
limitations, the know-how, technical information or confidential information,
trade secrets, goodwill, service xxxx and trade name(s)(including, without
limitation, the names of "Fun City Popcorn", "Sunburst" and "Player's Choice")
all of which are used in or relate to the Business, including, without
limitation, those items set forth in Schedule 1.1.2. Notwithstanding the
foregoing, Seller shall retain the right, on a corporate basis only, to use the
name of "Fun City Popcorn" until either one (1) year after closing, or the date
upon which Seller merges out of the public shell, whichever occurs first. Seller
may not engage in any trade under the name of "Fun City Popcorn."
1.1.3 Contract Rights. All contract rights of the Seller pertaining to
the operation of the Business including, without limitation, licenses, leasehold
interests, purchase orders, sales orders, rights to discounts, maintenance
agreements and leases for leased equipment, including, without limitation, those
items set forth in Schedule 1.1.3.
1.1.4 Other Assets. All other assets, properties, and business of the
Seller pertaining to the operations of the Business, including, without
limitation, those items set forth on Schedule 1.1.4.
1.2 Excluded Assets. The Seller shall not sell and the Purchaser shall not
acquire any interest in any of the Seller's cash, bank accounts, receivables,
deposits or the 2003 Chevrolet Tahoe pickup truck (VIN#0XXXX00X000000000).
ARTICLE 2
PURCHASE PRICE
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2.1 Purchase Price. The purchase price for the Purchased Assets shall be
the sum of Four Hundred Forty Four Thousand and No/100 Dollars ($444,000.00)
(the "Purchase Price"), payable by the Purchaser as follows:
2.1.1 The amount of Sixty Three Thousand and No/100 Dollars
($63,000.00) has been deposited by with Business Center of Nevada and will be
paid to Seller into escrow at the Closing, as that term is defined in Article 3.
2.1.2 The amount of Three Hundred Eighty One Thousand and No/100
Dollars ($381,000.00) shall be paid to Seller into escrow at Closing.
2.2 Assumed Liabilities. As of the Closing, the Purchaser shall assume in
writing or pay when lawfully due, only those liabilities of the Seller relating
to the Business that are specifically set forth on Schedule 2.2 (the "Assumed
Liabilities") up to a maximum of Two Hundred Nineteen Thousand and No/100
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Dollars ($219,000.00) and consisting of two promissory notes aggregating One
Hundred Fifty Thousand and No/100 Dollars ($150,000.00) and accounts payable of
Sixty Nine and No/100 Dollars ($69,000). Accordingly, as of the Closing,
Purchaser shall pay the two promissory notes in the amount of One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) through a loan from Tone Products,
Inc. and shall assume accounts payable of up to Sixty Nine Thousand and No/100
Dollars ($69,000.00) As of the Closing, Seller shall pay all accounts payable
that are more than thirty (30) days old. The parties expressly agree that the
Purchaser shall not assume, pay or otherwise become liable for any liabilities
of the Seller, whether or not relating to the Business, other than the Assumed
Liabilities. If at Closing the actual Assumed Liabilities are less than Two
Hundred Nineteen Thousand and No/100 Dollars ($219,000.00), then the Purchase
Price shall be adjusted to reflect the accounts payable balance at Closing.
2.3 No Expansion of Third Party Rights. The assumption or payment by the
Purchaser of the Assumed Liabilities, and the transfer thereof by the Seller,
shall in no way expand the rights or remedies of any third parties against the
Purchaser or the Seller, as compared to the rights and remedies which such third
party would have had against the Seller had the Purchaser not assumed such
liabilities. Without limiting the generality of the preceding sentence, the
assumption by the Purchaser of the Assumed Liabilities shall not create any
third party beneficiary rights.
ARTICLE 3
CLOSING
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3.1 Time and Place. Subject to the terms and conditions of this Agreement,
the closing of the purchase and sale of the Purchased Assets (the "Closing")
shall take place on or before3:00 p.m. on September 30, 2003, at the offices of
the Purchaser's counsel, or such other time and place as the parties may
otherwise agree. The date on which the Closing occurs shall be referred to as
the "Closing Date".
3.2 Escrow:
3.2.1 At the Closing, the Purchaser shall deposit into an escrow
account (the "Escrow Account") with Business Center of Nevada (the "Escrow
Agent") the following:
(a) Cash or Certified Funds in the amount of the Purchaser Price.
(b) Note, Financing Statement and Security Agreement for the
amount of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) for the
benefit of Tone Products, Inc., pursuant to Section 2.2.
(c) Purchaser's written agreement to assume the
remaining Assumed Liabilities.
3.2.2 At the Closing, the Seller shall deposit in the Escrow Account
all of the bills of sale, assignments and other conveyance documents necessary
to convey good title to the Purchased Assets and the Non-Compete Agreement set
forth in Section 8.10 and the Shareholder Agreement set forth in Schedule 8.11.
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3.2.3 Escrow Instructions. At the Closing, the parties shall execute
and deliver to the Escrow Agent, instructions (the "Escrow Instructions") which
require the Escrow Agent to hold all of the above items in the Escrow Account
until counsel for the Seller shall advise the Escrow Agent, in writing, that the
Seller's stockholders shall have approved the transaction set forth in this
Agreement. In such event, the Escrow Agent shall deliver the items deposited by
the Purchaser to the Seller and shall deliver the items deposited by the Seller
to the Purchaser. In the event Seller's counsel fails to provide such letter
within six (6) months from the Closing Date, Purchaser may at anytime thereafter
terminate the Escrow Account, in which event all items in the Escrow Account
shall be returned to the party providing such items.
3.3 Procedure at the Closing. At the Closing, the parties agree that the
following shall occur:
3.3.1 The Seller shall have satisfied each of the conditions set forth
in Article 8 and shall deliver all items into the Escrow Account required by
Section 3.2.2 to the Purchaser.
3.3.2 The Purchaser shall have satisfied each of the conditions set
forth in Article 9 and shall deliver all items into the Escrow Account required
by Section 3.2.1.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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As a material inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Purchaser makes the
following representations and warranties:
4.1 Corporate Status. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
4.2 Corporate Power and Authority. The Purchaser has the corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The Purchaser
has taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby.
4.3 Enforceability. This Agreement has been duly executed and delivered by
the Purchaser and constitutes a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
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As a material inducement to the Purchaser to enter into this Agreement and
to consummate the transactions contemplated hereby, the Seller makes the
following representations and warranties to the Purchaser:
5.1 Corporate Status. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
requisite power and authority to own or lease its properties and to carry on the
Business as now being conducted. The Seller is duly authorized and qualified,
under all applicable laws, regulations, ordinances and orders of public
authorities, to carry on the Business in the places and in the manner as now
conducted, where the failure to be so authorized or qualified would not have a
Material Adverse Effect on the Business or on the operations, properties, assets
or condition (financial or otherwise), of the Seller.
5.2 Power and Authority. The Seller has the power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The Seller has taken all action
necessary to authorize the execution and delivery of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby.
5.3 Enforceability. This Agreement has been duly executed and delivered by
the Seller, and constitutes the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.
5.4 Ownership. The Seller is the record and beneficial owners of all of the
Purchased Assets, and owns the Purchased Assets, free and clear of all liens and
restrictions, encumbrances, and claims of any kind. All of the Purchased Assets
are in good and operable condition. The Seller is also the record and beneficial
owner of the names "Fun City Popcorn," "Sunburst" and "Player's Choice."
5.5 No Violation. The execution and consummation of this Agreement will not
(i) contravene any provision of the articles of incorporation or bylaws of the
Seller (the "Charter Documents"), (ii) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment or
order of any Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against the Seller, the Business or
the Purchased Assets, (iii) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Seller, the Business or
the Purchased Assets, or (iv) result in or require the creation or imposition of
any Lien upon or with respect to any of the Purchased Assets.
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5.6 Financial Statements. The Seller has delivered to the Purchaser the
financial statements of the Seller, including the notes thereto FOR THE YEAR
ENDED September 30, 2002 and the nine (9) months thereafter ending June 30,
2003, (collectively, the "Financial Statements"), a copy of which is attached
hereto as Schedule 5.6. The balance sheet dated as of June 30, 2003 of the
Seller included in the Financial Statements is referred to herein as the
"Current Balance Sheet." The Financial Statements for the year ended September
30, 2003 have been audited and prepared in accordance with generally accepted
accounting principles ("GAAP"), and fairly present the financial position of the
Seller at each of the balance sheet dates and the results of operations for the
periods covered thereby. The books and records of the Seller fully and fairly
reflect all transactions, properties, assets and liabilities of the Seller.
There are no material special or non-recurring items of income or expense during
the periods covered by the Financial Statements, and the Current Balance Sheet
does not reflect any write-up or revaluation increasing the book value of any
assets, except as specifically disclosed in the notes thereto. The Financial
Statements reflect all adjustments necessary for a fair presentation of the
financial information contained therein.
5.7 Changes Since the Current Balance Sheet. Since the date of the Current
Balance Sheet, the Seller has not (i) paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees, or amended any other
terms of employment of such persons; (ii) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business consistent
with past practice; (iii) made or obligated itself to make capital expenditures
out of the ordinary course of business consistent with past practice; (iv) made
any payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice; (v) incurred any obligations or
liabilities (including any indebtedness) or entered into any transaction or
series of transactions involving in excess of $5,000 in the aggregate out of the
ordinary course of business, except for this Agreement and the transactions
contemplated hereby; (vi) waived, cancelled, compromised or released any rights
having a value in excess of $5,000 in the aggregate; (vii) made or adopted any
change in its accounting practice or policies; (viii) made any adjustment to its
books and records other than in respect of the conduct of its business
activities in the ordinary course consistent with past practice; (ix) entered
into any transaction with any Affiliate other than intercompany transactions in
the ordinary course of business consistent with past practice; (x) entered into
any employment agreement; (xi) terminated, amended or modified any agreement
involving an amount in excess of $5,000; (xii) imposed any security interest or
other Lien on any of the Purchased Assets; (xiii) delayed paying any account
payable which is due and payable except to the extent being contested in good
faith; (xiv) made or pledged any charitable contribution; (xv) entered into any
other transaction or was subject to any event which had or may have a Material
Adverse Effect on the Seller, the Business or the Purchased Assets; (xvi)
engaged in any transaction out of the ordinary course of the Business; (xvii)
suffered or incurred any work interruptions, labor grievances, or claims filed,
or any similar event which has or would have a Material Adverse Effect on the
Seller, the Business or the Purchased Assets; or (xviii) agreed to do or
authorized any of the foregoing.
5.8 Litigation. There is no action, suit, or other legal or administrative
proceeding or governmental investigation pending, or to the best of Seller's
knowledge, threatened, anticipated or contemplated against, by or affecting the
Seller, the Business, or the Purchased Assets, or which questions the validity
or enforceability of this Agreement or the transactions contemplated hereby, and
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there is no basis for any of the foregoing. There are no outstanding orders,
decrees or stipulations issued by any Governmental Authority in any proceeding
to which the Seller is or was a party which have not been complied with in full
or which continue to impose any material obligations on the Seller, the
Business, or the Purchased Assets.
5.9 Real Property, Leases and Significant Personal Property. Schedule 5.9
sets forth all real and personal property included (or that will be included) on
the Current Balance Sheet and among the Purchased Assets, all other real and
personal property of the Seller with a value in excess of $1,000 and acquired
since the Current Balance Sheet Date, and all leases for real and personal
property to which the Seller is a party involving real or personal property
having a value in excess of $1,000, including in each case, true, complete and
correct copies of all such leases and including an indication as to which real
and personal property is currently owned, or was formerly owned, by the Seller
or its Affiliates. Except as set forth in Schedule 5.9, (i) all of the trucks
and other material machinery and equipment and all other tangible assets of the
Seller are in good working order and condition, ordinary wear and tear excepted
and have been maintained in accordance with all applicable specifications and
warranties; (ii) all leases set forth in Schedule 5.9, are in full force and
effect and constitute valid and binding agreements on the Seller and constitute
valid and binding agreements on the other parties thereto in accordance with
their respective terms; and (iii) all fixed assets used by the Seller are either
owned by the Seller or leased under a valid agreement. Schedule 5.9 also sets
forth a summary description of all plans or projects involving the opening of
new operations or the acquisition of any real property or existing business,
with respect to which the Seller has made any expenditure in the two-year period
prior to the date of the Agreement in excess of $10,000 in the aggregate, or
which if pursued by the Seller would require additional expenditures of capital
in excess of $10,000 in the aggregate.
5.10 Good Title, Adequacy and Condition.
5.10.1 The Seller has, and at Closing will have, good and marketable
title to the Purchased Assets with full power to sell, transfer and assign the
same, free and clear of any Lien.
5.10.2 The Purchased Assets constitute, in the aggregate, all of the
assets and properties necessary for the conduct of the Business in the manner in
which and to the extent to which such business is currently being conducted.
5.11 Compliance with Laws. To the best of Seller's knowledge, the Seller is
not in violation of any law or regulation or any order of any court or federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over the Seller, there are no
claims, actions, suits or proceedings pending or, to the knowledge of the
Seller, threatened, against or affecting the Seller or the Business, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over any of them, and no notice of any such claim, action, suit or
proceeding, whether pending or threatened, has been received. The Seller has
conducted and is conducting the Business in compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing.
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5.12 Insurance. The Business and the Purchased Assets are covered by valid,
outstanding and enforceable policies of insurance issued to the Seller by
reputable insurers covering the Purchased Assets and the Business against risks
of the nature normally insured against by corporations in the same or similar
lines of business and in coverage amounts typically and reasonably carried by
such corporation (the "Insurance Policies"). The Insurance Policies are in full
force and effect, and all premiums due thereon have been paid. The Seller has
complied with the provisions of the Insurance Policies. The Seller has not
failed to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder.
5.13 THIS SECTION INTENTIONALLY OMITTED.
5.14 Licenses and Permits. To the best of Seller's knowledge, the Seller
possesses all licenses and required governmental or official approvals, permits
or authorizations (collectively, the "Permits") for the Business and its
operations. All Permits are valid and in full force and effect, the Seller is in
compliance in all material respects with their requirements, and no proceeding
is pending or threatened to revoke or amend any of the Permits. None of the
Permits is or will be impaired or in any way affected by the execution and
delivery of this Agreement or the transactions contemplated hereby.
5.15 Contracts, Customer Lists and Employment Matters. Schedule 5.15 lists
all customers and Contracts of the Seller that account for more than 1% of the
Seller's annual revenue and all Contracts of the Seller requiring payment or
performance in excess of $5,000 for the twelve-month period ending on the date
of this Agreement, all of which are part of the Purchased Assets (collectively,
the "Material Contracts"). All of the Material Contracts (i) are valid and
binding obligations of the parties, (ii) are not in default nor will become in
default solely upon notice or the passage of time without curative action and
(iii) will remain in full force and effect following the Closing and after
assignment to the Purchaser, without requiring the consent of the other parties
thereto and without causing a default, right to terminate or right to modify any
terms under any such Material Contracts, notwithstanding any provisions in any
such Material Contracts which may set forth a restriction on assignability by
the Seller. The Seller has delivered to the Purchaser true, complete and correct
copies of all Material Contracts. None of the parties to the Material Contracts
(which include all of the Seller's significant Customers) has cancelled or
substantially reduced or, to the knowledge of the Seller, is currently
attempting or threatening to cancel any Material Contract or substantially
reduce utilization of the services provided by the Seller, and the Seller has
complied with all commitments and obligations pertaining to any Material
Contract, and is not in default under any such Material Contract, and no notice
of default has been received. The Seller has not been the subject of any
election in respect of union representation of employees and is not bound by or
subject to any arrangement with any labor union. No employees of the Seller are
represented by any labor union or covered by any collective bargaining agreement
and no campaign to establish such representation has ever occurred or is in
progress. There is no pending, or to the Seller's knowledge, threatened labor
dispute involving the Seller and any group of employees, nor has the Seller
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experienced any labor interruptions over the past three years and the Seller
considers its relationship with employees to be good, except as set forth on
Schedule 5.15.
5.16 Governmental Contracts Subject to Price Redetermination or
Renegotiation. The Seller is not now a party to any governmental contracts
(including school districts, prisons, or military facilities) subject to price
redetermination or renegotiation.
5.17 Spin-Off by the Seller. There has not been, within the preceding two
years, any sale, spin-off or split-up of material assets of the Seller or any
other person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Seller other than in the ordinary course of business, except the spin-off by
Tone Products, Inc. of the outstanding common stock of Fun City Popcorn, Inc, to
the stockholders of Tone Products, Inc.
5.18 Environmental Matters. To the best of Seller's knowledge:
5.18.1 The Seller is and has at all times been in compliance with all
Environmental, Health and Safety Laws (as defined in this Section) governing the
Business and its operations, properties, and Purchased Assets, including,
without limitation, Environmental, Health and Safety Laws with respect to
discharges into the ground water, surface water and soil, emissions into the
ambient air, and generation, accumulation, storage, treatment, transportation,
transfer, labeling, handling, manufacturing, use, spilling, leaking, dumping,
discharging, release or disposal of Hazardous Substances (as defined herein), or
other Waste (as described herein). The Seller is not currently liable for any
penalties, fines or forfeitures for failure to comply with any Environmental,
Health and Safety Laws. The Seller is in full compliance with all notice, record
keeping and reporting requirements of all Environmental, Health and Safety Laws,
and has complied with all informational requests or demands arising under the
Environmental, Health and Safety Laws.
5.18.2 The Seller has not generated, manufactured, used, transported,
transferred, stored, handled, treated, spilled, leaked, dumped, discharged,
released or disposed, nor has it allowed or arranged for any third parties to
generate, manufacture, use, transport, transfer, store, handle, treat, spill,
leak, dump, discharge, release or dispose of, Hazardous Substances or other
Waste to or at any location other than a site lawfully permitted to receive such
Hazardous Substances or other Waste for such purposes, nor has it performed,
arranged for or allowed by any method or procedure such generation, manufacture,
use, transportation, transfer, storage, treatment, spillage, leakage, dumping,
discharge, release or disposal in contravention of any Environmental, Health and
Safety Laws. The Seller has not generated, manufactured, used, stored, handled,
treated, spilled, leaked, dumped, discharged, released or disposed of, or
allowed or arranged for any third parties to generate, manufacture, use, store,
handle, treat, spill, leak, dump, discharge, release or dispose of, Hazardous
Substances or other Waste upon property owned or leased by it, except as
permitted by law. For purposes of this Section, the term "Hazardous Substances"
shall be construed broadly to include any toxic or hazardous substance,
material, or waste, and any other contaminant, pollutant or constituent thereof,
whether liquid, solid, semi-solid, sludge and/or gaseous, including without
limitation, chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated biphenyls, the
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presence of which requires investigation or remediation under any Environmental,
Health and Safety Laws or which are or become regulated, listed or controlled
by, under or pursuant to any Environmental Health and Safety Laws. For purposes
of this Section, the term "Waste" shall be construed broadly to include
agricultural wastes, biomedical wastes, biological wastes, bulky wastes,
construction and demolition debris, garbage, household wastes, industrial solid
wastes, liquid wastes, recyclable materials, sludge, solid wastes, special
wastes, used oils, white goods, and yard trash.
5.18.3 The Seller has not caused, or allowed to be caused or
permitted, either by action or inaction, a Release or Discharge, or threatened
Release or Discharge, of any Hazardous Substance on, into or beneath the surface
of any property owned or leased by it (for purposes of this Section, the
"Premises"). There has not occurred, nor is there presently occurring, a Release
or Discharge, or threatened Release or Discharge, of any Hazardous Substance on,
into or beneath the surface of the Premises. For purposes of this Section, the
terms "Release" and "Discharge" shall have the meanings given them in the
Environmental, Health and Safety Laws.
5.18.4 The Seller has not generated, handled, manufactured, treated,
stored, used, shipped, transported, transferred, or disposed of, nor has it
allowed or arranged, by contract, agreement or otherwise, for any third parties
to generate, handle, manufacture, treat, store, use, ship, transport, transfer
or dispose of, any Hazardous Substance or other Waste to or at a site which,
pursuant to CERCLA or any similar state law (i) has been placed on the National
Priorities List or its state equivalent; or (ii) the Environmental Protection
Agency or the relevant state agency has notified the Seller that it has proposed
or is proposing to place on the National Priorities List or its state
equivalent. The Seller has not received notice and has no knowledge of any facts
which could give rise to any notice, that the Seller is a potentially
responsible party for a federal or state environmental cleanup site or for
corrective action under CERCLA, RCRA or any other applicable Environmental
Health and Safety Laws. The Seller has not submitted nor was required to submit
any notice pursuant to Section 103(c) of CERCLA with respect to any of the
Purchased Assets. The Seller has not received any written or oral request for
information in connection with any federal or state environmental cleanup site,
or in connection with any of the real property or premises where the Seller has
transported, transferred or disposed of other Wastes. The Seller has not been
required to undertake, nor has it undertaken, any response or remedial actions
or clean-up actions of any kind at the request of any Governmental Authorities
or at the request of any other third party. The Seller has no liability under
any Environmental, Health and Safety Laws for personal injury, property damage,
natural resource damage, or clean up obligations.
5.18.5 The Seller does not use, nor has it used, any Aboveground
Storage Tanks or Underground Storage Tanks, and there are not now nor have there
ever been any Underground Storage Tanks on the Premises. For purposes of this
Section, the terms "Aboveground Storage Tanks" and "Underground Storage Tanks"
shall have the meanings given them in Section 6901 et seq., as amended, of RCRA,
or any applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage Tanks or
Underground Storage Tanks.
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As used in this Agreement, "Environmental, Health and Safety Laws" means all
federal, state, regional or local statutes, laws, rules, regulations, codes,
orders, plans, injunctions, decrees, rulings, and changes or ordinances or
judicial or administrative interpretations thereof, whether currently in
existence or hereafter enacted or promulgated, any of which govern (or purport
to govern) or relate to pollution, protection of the environment, public health
and safety, air emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste or occupational health and safety, as any of these
terms are or may be defined in such statutes, laws, rules, regulations, codes,
orders, plans, injunctions, decrees, rulings and changes or ordinances, or
judicial or administrative interpretations thereof, including, without
limitation, the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and subsequent Hazardous and Solid Waste
Amendments of 1984 (collectively, "RCRA"); the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendment and Reauthorization Act (collectively, "CERCLA"); the Hazardous
Materials Transportation Act; the Toxic Substances Control Act; the Clean Air
Act; the Clean Water Act; the Federal Insecticide, Fungicide and Rodenticide
Act, as amended ("FIFRA"); the Emergency Planning and Community Right-to-Know
Act of 1986, as amended ("EPCRA") and the Occupational Safety and Health Act of
1970, as amended ("OSHA").
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
---------------------------------------
6.1 Conduct of Business by the Seller Pending the Closing. The Seller
covenants and agrees that, except as otherwise expressly required or permitted
by the terms of this Agreement, between the date of this Agreement and the
Closing, the business of the Corporation shall be conducted only in, and the
Seller shall not take any action except in, the ordinary course of business
consistent with past practice. The Seller shall use its reasonable best efforts
to preserve intact its business organizations, to keep available the services of
its current officers, employees and consultants, and to preserve its present
relationships with customers, suppliers and other Persons with which it has
business relations. By way of amplification and not limitation, the Seller shall
not, except as expressly required or permitted by the terms of this Agreement
between the date of this Agreement and the Closing, directly or indirectly, do
or propose or agree to do any of the following without the prior written consent
of the Purchaser:
(a) sell, pledge, dispose of, encumber, or authorize the sale,
pledge, disposition, grant or encumbrance of any of the Purchased Assets, except
in the ordinary course of business consistent with past practice;
(b) sell, lease or transfer any of its properties or Purchased
Assets (other than in the ordinary course of business consistent with past
practice), or acquire (including, without limitation, for cash or shares of
stock, by merger, consolidation or acquisition of stock or assets) any interest
in any corporation, partnership or other business organization or division
thereof or any assets; make or obligate itself to make capital expenditures out
of the ordinary course of business consistent with past practice; other than in
the ordinary course of business consistent with past practice, incur any
obligations or liabilities including, without limitation, any indebtedness for
borrowed money, issue any debt securities or assume, guarantee or endorse or
otherwise as
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an accommodation become responsible for, the obligations of any Person, or make
any loans or advances, modify, terminate, amend or enter into any Contract other
than as expressly required or permitted herein or in the ordinary course of
business consistent with past practice, or impose any security interest or other
Lien on any of its assets other than in the ordinary course of business
consistent with past practice;
(c) pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits which any collective bargaining,
bonus, profit sharing trust, compensation, stock option, restricted stock
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(d) take any action with respect to accounting policies or
procedures other than in the ordinary course of business and in a manner
consistent with past practices;
(e) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in the Financial Statements, as
appropriate, or liabilities incurred after the date thereof in the ordinary
course of business and consistent with past practice, or delay paying any amount
payable beyond thirty (30) days following the date on which it is due, except to
the extent being contested in good faith;
(f) enter into any transaction or agreement with an Affiliate,
except for such transactions or agreements expressly permitted herein;
(g) agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any representation or
warranty in Article 5 untrue or incorrect in any respect.
ARTICLE 7
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
-----------------------------------------------
7.1 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby and to
satisfy the conditions set forth in Articles 8 and 9.
7.2 Confidentiality; Publicity. With the exception of any filings with the
Securities and Exchange Commission as required by government regulations,
including, without limitation, proxy solicitation materials, the Seller shall
not disclose the terms of this transaction to any third party nor make any
public announcement related to this Agreement or the transactions contemplated
hereby without the prior written approval of the Purchaser.
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7.3 No Other Discussions. The Seller and its respective Affiliates,
employees, agents and representatives will not (i) initiate, encourage the
initiation by others of discussions or negotiations with third parties or
respond to solicitations by third persons relating to any merger, sale or other
disposition of any substantial part of the Business or the properties of the
Corporation, or any of the Purchased Assets (whether by merger, consolidation,
sale of stock, sale of assets, or otherwise), or (ii) enter into any agreement
or commitment (whether or not binding) with respect to any of the foregoing
transactions. The Seller will immediately notify the Purchaser if any third
party attempts to initiate any solicitation, discussion or negotiation with
respect to any of the foregoing transactions.
7.4 Due Diligence Investigation. The Purchaser shall be entitled to
conduct, prior to Closing, a due diligence investigation of the Seller, the
Purchased Assets, and the Business. The Seller shall provide the Purchaser and
its designated agents and consultants with the access to the Seller's Business
and the Purchased Assets, and all books, records, documents, correspondence and
other materials related thereto which the Purchaser, its agents and consultants
require to conduct such due diligence review, including, without limitation, the
following:
7.4.1 Access to, and review of the Seller's real property leases.
7.4.2 Access to, review of, and assistance in understanding the
Seller's financial records and back up documentation for the following:
(a) Profit/Loss Statements and Balance Sheets
(b) Bank Deposits, Statements and Check Register
(c) Cash Flow Statements
(d) Vendor Terms
(e) Accounts Receivable
(f) Accounts Payable
(g) Job Payment Records
(h) Profit Analysis by Product (such analysis shall be performed
by Purchaser, based on data supplied by Seller).
7.4.3 Access to, review of, and discussions with Purchaser's CFO
and/or outside accountant regarding any items shown in the Seller's 10-K and
10-Q filings.
7.4.4 Access to, review of, and assistance in understanding the
Seller's 2001 and 2002 Federal Income Tax returns.
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7.4.5 Access to, and review of all of the Seller's Vendor and Billing
Records.
7.4.6 Access to, and review of all of the Seller's insurance policies,
including, without limitation, health, liability, vehicle and xxxxxxx'x
compensation.
7.4.7 Access to, and review of all of the Seller's contracts.
7.4.8 Access to, and inspection of, all of the Seller's furniture,
fixtures, and equipment.
7.4.9 Access to, and discussions with Seller's employees and
participation in distribution routes.
If the results of the Purchaser's due diligence review are not satisfactory to
the Purchaser in its sole discretion, then the Purchaser may elect not to close
the transactions contemplated by this Agreement.
7.5 Covenant not to Compete. The Seller agrees that it will not, directly
or indirectly, for a period of two (2) years from the Closing Date:
(a) alone or as a partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor, or security holder, of any
Person, engage in any business activity in the States of Nevada, Utah, Arizona
or California which is directly or indirectly in competition with the Business
as the Business existed on the Closing Date;
(b) (i) induce any customer acquired hereunder or any other
customer of the Purchaser or any of its Affiliates to patronize any business
which is directly or indirectly in competition with the Business as the Business
existed on the Closing Date; (ii) canvass, solicit or accept for or on behalf of
any such competitive business any customer of the Purchaser or any of its
Affiliates; or (iii) request or advise any customer of the Purchaser or any of
its Affiliates to withdraw, curtail or cancel any such customer's business with
the Purchaser or any of its Affiliates or their successors;
(c) employ any person who was employed by the Purchaser or any of
its Affiliates, within one year prior to the date being employed by the Seller
or any of its Affiliates, or in any manner seek to induce any employee of the
Purchaser or any of its Affiliates to leave his or her employment, except that
the Seller may employ any person whose employment was terminated by the
Purchaser;
(d) in any way utilize, disclose, copy, reproduce or retain in
his possession any of the proprietary rights, or records acquired by Purchaser
hereunder, including, but not limited to, any customer lists; and
(e) notwithstanding the foregoing, Tone Products, Inc., an
affiliate and former parent of the Seller, may continue to carry on business as
constituted by Tone Products, Inc. on the Closing Date, including maintenance of
existing distribution chains, but it may not develop new distribution centers or
otherwise introduce products that directly compete with the Business as such was
constituted on the Closing Date.
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The Seller agrees and acknowledges that the restrictions contained in this
Section are reasonable in scope and duration, and are necessary to protect the
Purchaser. If any provision of this Section is adjudged by a court of competent
jurisdiction to be invalid or unenforceable, the same will in no way affect the
validity or enforceability of the remainder of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or otherwise, then the
parties agree that the court making such determination shall have the power to
reduce the duration, area or scope of such provision, and/or to delete specific
words or phrases, and in its reduced or modified form, such provision shall then
be enforceable and shall be enforced. The Seller further agrees and acknowledges
that any breach of this Section will cause irreparable injury to the Purchaser
and upon any breach or threatened breach of any provision of this Section, the
Purchaser shall be entitled to injunctive relief, specific performance or other
equitable relief, without the necessity of posting bond; provided, however, that
this shall in no way limit any other remedies which the Purchaser may have as a
result of such breach, including the right to seek monetary damages.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
----------------------------------------------
The obligations of the Purchaser to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by the Purchaser;
8.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. The Seller shall have performed and complied with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date, including these obligations set forth in Article 7 herein. The
Seller shall have delivered to the Purchaser a certificate, dated as of the
Closing Date, duly signed, certifying that such representations and warranties
are true and correct and that all such obligations have been performed and
complied with.
8.2 No Material Adverse Change or Destruction of Property. Between the date
hereof and the Closing Date, (i) there shall have been no Material Adverse
Change to the Seller, the Purchased Assets, or the Business, (ii) there shall
have been no adverse federal, state or local legislative or regulatory change
affecting in any material respect the service or products of the Seller or the
Business, and (iii) none of the Purchased Assets shall have been damaged by
fire, flood, casualty, riot or other cause (regardless of insurance coverage for
such damage), and there shall have been delivered to the Purchaser a certificate
to that effect, dated as of the Closing Date and signed by the Seller.
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8.3 Corporate Certificate. The Seller shall have delivered to the Purchaser
(i) copies of the Charter Documents as in effect immediately prior to the
Closing Date, (ii) copies of resolutions adopted by its Board of Directors
authorizing the transactions contemplated by this Agreement, and (iii) a
certificate of good standing issued by the Secretary of State of the State of
Nevada as of a date not more than ten (10) days prior to the Closing Date,
certified in the case of subsections (i) and (ii) as of the Closing Date by the
Secretary of the Seller as being true, correct and complete. The resolutions
mentioned herein shall be in conformance with the rules and regulations of the
Securities and Exchange Commission, and shall reflect the result of an
information statement giving the shareholders notice of the intent of the
holders of more than fifty percent (50%) of the Sellers outstanding common stock
to approve the terms of this Agreement. If such holders reject this Agreement
then this Agreement shall become void and all funds deposited by Purchaser shall
be immediately refunded by the Escrow Agent. This contingency shall survive due
diligence.
8.4 Delivery of Purchased Assets. At Closing, the Seller shall deliver the
Purchased Assets to the Purchaser in escrow, and such instruments of transfer of
title as are necessary to transfer to the Purchaser good and marketable title to
the Purchased Assets as provided in Section 3.2.
8.5 Consents. The Seller shall have received consents and assignments,
where appropriate, to the transactions contemplated hereby and waivers of rights
to terminate or modify any material rights or obligations of the Seller from any
person from whom such consent or waiver is required under any contract to which
the Seller or the Purchased Assets are bound as of a date not more than ten (10)
days prior to the Closing Date, or who, as a result of the transactions
contemplated hereby, would have such rights to terminate or modify such
contracts, either by the terms thereof or as a matter of law, including, without
limitation, all material contracts and insurance policies.
8.6 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of the
Purchaser, makes it inadvisable to proceed with the transactions contemplated
hereby.
8.7 Due Diligence Review. The Purchaser shall have completed its due
diligence review of the Seller, the Purchased Assets, and the Business pursuant
to Section 7.4, and shall be satisfied with the results of such review and
assessment.
8.8 Releases. At the Closing, the Seller and such of its Affiliates as may
be designated by the Purchaser shall deliver to the Purchaser a release in such
form as is reasonably satisfactory to the Purchaser, releasing all claims of any
nature against the Purchased Assets. Such release may be included in the Xxxx of
Sale.
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8.9 Landlord Consents. The Purchaser shall have obtained the written
consent of the Business premises landlord to an assignment of the existing
lease, or the making of a new lease with the Purchaser for the Business
premises.
8.10 Shareholder Non-Compete Agreement. Seller shall have obtained from
each its Officers and Director's, including, without limitation, Xxxxxxx X. Xxxx
and Xxxxxx X. Xxxx, executed copies of a non-competition agreement as set forth
in Schedule 8.10.
8.11 Shareholder Authorization. Seller shall have obtained from a majority
of its shareholders, including, without limitation, Xxxxxxx X. Xxxx and Xxxxxx
X. Xxxx, and delivered at Closing, a consent for the sale of the Assets in
accordance with this Agreement as set forth in Schedule 8.11.
ARTICLE 9
CONDITIONS TO THE
OBLIGATIONS OF THE SELLER
-------------------------
The obligations of the Seller to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by the Seller:
9.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. The Purchaser shall have performed and complied in all material respects
with all of its obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. The Purchaser shall have
delivered to the Seller a certificate, dated as of the Closing Date, and signed
by an executive officer thereof, certifying that such representations and
warranties are true and correct, and that all such obligations have been
performed and complied with, in all material respects.
9.2 Other Conditions. At the Closing, the Purchaser shall have delivered
through the Escrow Agent to the Seller the Purchase Price.
ARTICLE 10
INTERIM MANAGEMENT PROVISIONS
-----------------------------
The Purchaser shall be responsible to solely operate the Business following
the Closing Date and through the date the Escrow Account remains in force (the
"Interim Period"). During the Interim Period, the Purchaser shall have full
authority and control over the operation of the Business and shall be entitled
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to any profits and responsible for any losses incurred by the Business. In the
event the Escrow Account terminates by a return of the items in the Escrow
Account to the party that deposited such items, then the Escrow Agent shall pay
over to the Seller any losses incurred by the Purchaser during the Interim
Period as determined using generally accepted accounting principles, after
adding back depreciation and amortization, during the Interim Period, using
funds deposited by the Purchaser into the Escrow Account at the time of Closing.
To the extent depreciation and amortization are added back for purchased
equipment, Seller shall have the first right of refusal to purchase the
equipment at cost. If Seller elects not to purchase the equipment at cost,
Purchaser shall be entitled to title and possession of the equipment.
ARTICLE 11
INDEMNIFICATION
---------------
11.1 Agreement by the Seller to Indemnify. The Seller agrees to indemnify
and hold the Purchaser and its Affiliates, officers, directors, and agents
thereof (collectively, the "Indemnified Party") harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by the Indemnified Party (collectively, "Indemnifiable
Damages") resulting from or arising out of (i) any breach of a representation or
warranty made by the Seller in or pursuant to this Agreement, (ii) any breach of
the covenants or agreements made by the Seller in this Agreement, (iii) any
inaccuracy in any certificate delivered by the Seller pursuant to this
Agreement, or (iv) any liabilities of the Seller other than the Assumed
Liabilities.
11.2 Agreement by the Purchaser to Indemnify. The Purchaser agrees to
indemnify and hold the Seller and its officers, directors, and agents thereof
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by resulting from
or arising out of (i) any breach of a representation or warranty made by the
Purchaser in or pursuant to this Agreement, (ii) any breach of the covenants or
agreements made by the Purchaser in this Agreement, or (iii) any inaccuracy in
any certificate delivered by the Purchaser pursuant to this Agreement.
11.3 Survival of Representations and Warranties. Each of the
representations and warranties made by the Seller and Purchaser in this
Agreement, including the indemnification provisions set forth in this Article,
or pursuant hereto, shall survive the Closing of the transactions contemplated
hereby. Notwithstanding any knowledge of facts determined or determinable by any
party by investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other parties
contained in this Agreement or in any other documents or papers delivered in
connection herewith. Each representation, warranty, covenant and agreement of
the parties contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.
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ARTICLE 12
DEFINITIONS
-----------
12.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument, whether written or
oral.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional
sale or other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or
charge).
"Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects which change (or
effect) individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
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ARTICLE 13
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
13.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
(b) by the Purchaser in the event of a material breach by the
Seller of any provision of this Agreement; or
(c) by the Purchaser or the Seller if the Closing shall not have
occurred by September 30, 2003, or such other date as the parties may otherwise
agree.
13.2 Effect of Termination. Except as provided in Article 11, in the event
of termination of this Agreement pursuant to Section 13.1, this Agreement shall
forthwith become void; provided, however, that nothing herein shall relieve any
party from liability for the willful breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement and all funds
deposited by Purchaser shall be immediately refunded.
ARTICLE 14
GENERAL PROVISIONS
------------------
14.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered (and shall
be deemed delivered) by certified or registered mail (first class postage
pre-paid), guaranteed overnight delivery, or facsimile transmission if such
transmission is confirmed by delivery by certified or registered mail (first
class postage pre-paid) or guaranteed overnight delivery, to the following
addresses and telecopy numbers (or to such other addresses or telecopy numbers
which such party shall designate in writing to the other party):
If to the Purchaser: Fun City Foods, Inc.
x/x Xxx Xxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
With a required copy to: Xxxxx XxXxxxx, Esq.
Xxxx Xxxx Peek Xxxxxxxx and Xxxxxx
0000 Xxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
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If to the Seller: Xxxxxxx "Xxxx" Xxxxx
Tone Products, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
With a required copy to: Xxxx X. Agron, Esq.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
14.2 Entire Agreement. This Agreement (including the Exhibits and Schedules
attached hereto) and other documents delivered at the Closing pursuant hereto,
contains the entire understanding of the parties in respect of its subject
matter and supersedes all prior agreements and understandings (oral or written)
between or among the parties with respect to such subject matter. The Exhibits
and Schedules constitute a part hereof as though set forth in full above.
14.3 Dispute Resolution. Purchaser and Seller mutually agree in advance
that if any dispute between Purchaser and Seller arises which cannot be resolved
in good faith after informal discussions between the senior executives of
Purchaser and Seller, attempts will first be made to resolve the dispute through
mediation by using a mutually acceptable neutral third party mediator. In the
event such mediation does not successfully resolve all remaining outstanding
issues, the parties may then commence litigation in any court located in Xxxxx
County, Nevada. The parties agree that the sole venue for resolution of any
dispute is Xxxxx County, Nevada.
14.4 Expenses. Except as otherwise provided herein, the parties shall pay
their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby. The
Purchaser and Seller hereby agree to pay equally, all of the transfer costs and
escrow fees for the Business, and to prorate, to the date of Closing, all
utilities, personal property taxes, and other expenses of the Business not
otherwise provided for in this Agreement. Further, Seller hereby agrees to pay
any and all fees, expenses and commissions due to United Business Brokers of
Nevada, LLC, and to hold Purchaser harmless from any liability to the Nevada
Employment Development Department, Department of Health or the Nevada State
Board of Equalization arising from the operation of the Business before the date
of Closing. Purchaser shall be protected from the imposition of transferee
liability by these agencies through a reserve, approved by the Purchaser, and
retained in escrow until such releases are obtained.
14.5 Amendment; Binding Effect; Assignment. This Agreement may not be
modified, amended, supplemented, canceled or discharged, except by written
instrument executed by all parties. The rights and obligations of this Agreement
shall bind and inure to the benefit of the parties and their respective
successors and assigns. Except as expressly provided herein, Seller may not
assign the rights and obligations of this Agreement without the prior written
consent of the Purchaser.
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14.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
14.7 Governing Law; Interpretation. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of Nevada
applicable to contracts executed and to be wholly performed within such state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
"PURCHASER"
FUN CITY FOODS, INC., a Nevada
corporation
By: /s/ Xxx Xxxx
--------------------------------
Xxx Xxxx, President
"SELLER"
FUN CITY POPCORN, INC., a Nevada
corporation
By: /s/ Xxxxxxx Xxxx
--------------------------------
Xxxxxxx Xxxx, President
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