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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into
as of this 27th day of October, 1995, by and between PCT HOLDINGS, INC., a
Nevada corporation ("PCTH"), PCT HOLDINGS, INC., a Washington corporation
and wholly owned subsidiary of PCTH ("PCTH-WA"), SEISMIC SAFETY PRODUCTS,
INC., a Washington corporation and wholly owned subsidiary of PCTH-WA
("Buyer"), SEISMIC SAFETY PRODUCTS, INC., a Florida corporation ("Seller"),
XXXXX X. XxXXXX ("X. XxXxxx"), XXXXXX X. XxXXXX ("X. XxXxxx") and XXXX X. XXXX
("Xxxx"). X. XxXxxx, X. XxXxxx and Xxxx are together referred to as the
"Affiliates," and each is sometimes referred to as an "Affiliate."
RECITALS
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A. Seller is currently in the business of manufacturing and selling
automatic earthquake gas shut-off valves and other earthquake safety
products (the "Business");
B. On or about the date of this Agreement, PCTH-WA and Buyer are
entering into a Patent Purchase Agreement with X. XxXxxx and Xxxxxxx X.
Xxxxxxxxx (the "XxXxxx/Xxxxxxxxx Agreement"), pursuant to which Buyer will
purchase all of the interest of Messrs. X. XxXxxx and Xxxxxxxxx in one
United States Letter Patent, U.S. Patent No. 5,409,031, granted on April
25, 1995, one United States Patent Application, U.S. Patent Application No.
08/403,098, filed on March 13, 1995, and one International Patent
Application, International Application No. PCT/US95/04830, filed on April
24, 1995 (collectively, the "Patents") and certain intellectual property
rights related thereto.
C. Seller is a party to a License Agreement dated April 24, 1995 (the
"License Agreement"), pursuant to which Seller licenses the Patents for use
in the Business.
D. The Affiliates are the holders of 1,447,000 of the 2,685,000 issued
and outstanding shares of Seller's capital stock.
E. Buyer desires to purchase from Seller, and Seller desires to sell,
substantially all of the assets of the Business, on the terms and subject
to the conditions set forth in this Agreement.
F. To induce PCTH, PCTH-WA and Buyer to enter into this Agreement,
Seller and X. XxXxxx have agreed to enter into a noncompetition agreement,
as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto covenant
and agree as follows:
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AGREEMENT
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1. PURCHASE AND SALE.
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1.1 Agreement to Sell and Purchase. Upon the basis of the
representations and warranties, for the consideration, and subject to the
terms and conditions set forth in this Agreement, Seller hereby agrees to
sell, transfer, assign and convey to Buyer, and Buyer hereby agrees to
purchase, on the Closing Date (as defined in Section 1.7), all of the
assets, properties, and rights of Seller (other than the excluded assets
specified in Section 1.2), tangible and intangible and wherever located,
including all of the assets necessary or useful to maintain and operate the
Business (the "Assets"), which Assets shall include, without limitation:
(a) Personal Property. All items of tangible personal property,
such as manufacturing, computer and office equipment; drawings, designs and
blueprints; tooling; molds; furniture; fixtures; materials and supplies;
inventory (whether raw materials, work in process, or finished goods); and
spare and replacement parts; including without limitation all such items
listed or described on Schedule 1.1(a) and all such items acquired by
Seller after the date of this Agreement and on or before the Closing Date,
other than to the extent such items are disposed of by Seller prior to the
Closing Date in the ordinary course of business without breach of this
Agreement;
(b) Contracts. All rights, benefits and interests of Seller under
the contracts, agreements, commitments, purchase orders, sales orders,
documents and leases listed on Schedule 1.1(b) or entered into between the
date of this Agreement and the Closing Date and expressly assumed by Buyer
in writing on the Closing Date (the "Contracts");
(c) Intellectual Property. All proprietary rights and intangible
property of Seller, such as trade secrets, technology, software, operating
systems, customer lists, know-how, formulae, slogans, processes, operating
rights, goodwill, trade names, and the exclusive right to use the name
"Seismic Safety Products, Inc." and any derivation thereof, and all such
items acquired by Seller or coming into existence between the date of this
Agreement and the Closing Date (the "Intellectual Property");
(d) Receivables. Any accounts receivable of Seller, including
without limitation all such items reflected on Schedule 1.1(d) or arising
between the date of this Agreement and the Closing Date;
(e) Prepaid Expenses. Any deposits or prepaid or deferred items
of Seller, such as prepaid insurance; and
(f) Records. All operating data and records relating to the
Business, including without limitation financial and accounting records,
correspondence, budgets, and engineering and manufacturing records.
1.2 Excluded Assets. The Assets shall not include the following:
(a) Corporate Documents. Seller's corporate seal, minute books,
charter documents and corporate stock record books; or
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(b) Contracts. Any lease, contract, agreement, commitment,
understanding, purchase order, sales order, document or instrument not
listed on Schedule 1.1(b), unless Buyer expressly agrees in writing on the
Closing Date to assume the obligations thereunder, in which case Seller
shall assign its rights and benefits thereunder to Buyer and the same shall
be treated as a "Contract" for purposes of this Agreement.
1.3 Assumption of Liabilities. Except for obligations arising under
the Contracts after the Closing Date and obligations specifically listed on
Schedule 1.3, Buyer will not assume and will not be liable for any
liabilities of Seller, known or unknown, contingent or absolute, accrued or
other, and the Assets shall be free of all liabilities, obligations, liens
and encumbrances. Without limiting the generality of the foregoing, and
except as otherwise provided above, Buyer will not be responsible for any:
(a) liabilities, obligations or debts of Seller for any federal, state or
local tax of any nature; (b) liabilities or obligations of Seller to
employees (including without limitation accrued vacation or any other
employee benefit or severance arrangement); (c) liabilities or obligations
of Seller relating to issuances of securities; (d) liabilities or
obligations of Seller incurred in connection with distributions to
shareholders or in connection with any corporate dissolution; or (e)
liabilities or obligations of Seller under any "Environmental Law," as such
term is defined in Section 2.19.
1.4 Purchase Price. The total purchase price for the Assets (the
"Purchase Price") shall be (i) $70,000 in cash, plus (ii) 128,750 fully
paid and nonassessable, unregistered shares of common stock, $.001 par
value, of PCTH (the "PCTH Common Stock").
1.5 Payment of Purchase Price.
(a) Cash. $41,666.00 of the Purchase Price has been advanced
prior to the date of this Agreement, and the remainder shall have been
advanced prior to Closing.
(b) PCTH Common Stock. A certificate representing the shares of
PCTH Common Stock referred to in Section 1.4(ii) shall be delivered to
Seller at the Closing (as defined in Section 1.7).
1.6 Transfer Documents. Provided that all conditions precedent
contained in this Agreement have been fulfilled or waived, Seller shall
deliver to Buyer, upon payment of the Purchase Price at the Closing Date,
assignments, bills of sale, and such other instruments of transfer (in form
and substance satisfactory to PCTH, PCTH-WA and Buyer) as may be necessary
to transfer to Buyer all of the right, title and interest of Seller in and
to the Assets, free and clear of any liens, claims or encumbrances of any
kind.
1.7 Closing. The closing of the transaction contemplated in this
Agreement (the "Closing") shall take place on November 30, 1995 (the
"Closing Date") at the offices of Stoel Rives, 3600 One Union Square,
Seattle, Washington, or at such other time and place as the parties may
agree.
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2. REPRESENTATIONS AND WARRANTIES OF SELLER.
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Seller and X. XxXxxx, jointly and severally, represent and
warrant, and X. XxXxxx and Xxxx each severally represents and
warrants to the best of his knowledge and belief, to PCTH, PCTH-WA and
Buyer that:
2.1 Due Organization. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Florida and
has full corporate power and corporate authority operate the Business and
to enter into and perform its obligations under this Agreement. Seller is
not required to be qualified to do business as a foreign corporation in any
jurisdiction. Seller has 2,685,000 shares of common stock issued and
outstanding, all of which are validly issued, fully paid and nonassessable
and held as set forth on Schedule 2.1.
2.2 Due Authorization. Seller has full corporate power and corporate
authority to execute and deliver this Agreement and to perform and carry
out its obligations under this Agreement. Each of the Affiliates has full
power and authority to execute and deliver this Agreement and to perform
and carry out his obligations under this Agreement. This Agreement has been
duly and validly executed and delivered by Seller and each of the
Affiliates and is binding upon and enforceable against Seller and each of
the Affiliates in accordance with its terms, except as such enforcement may
be limited by equitable principles or by applicable bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally. The
execution and delivery of this Agreement (as well as all instruments,
agreements, certificates, or other documents contemplated hereby) by Seller
and each of the Affiliates, and the performance of their obligations
thereunder, will not (a) violate any federal, state, county, or local law,
rule, or regulation or any applicable decree or judgment of any court or
governmental authority, (b) violate any provision of the Articles of
Incorporation or Bylaws of Seller, or (c) violate or conflict with, or
permit the cancellation of, or constitute a default under, any agreement to
which Seller is a party or by which Seller or its property is bound.
2.3 Consents and Approvals. Other than in accordance with the License
Agreement, no consent, approval or authorization of, or filing or
registration with, any court, regulatory authority, governmental body, or
any other third party is required for the consummation of the transaction
contemplated in this Agreement.
2.4 Financial Statements. Seller has furnished to Buyer complete and
correct copies of all financial records and reports of Seller and all
communications with shareholders regarding the financial status of Seller.
Seller has not prepared annual or other periodic financial statements since
1992.
2.5 Absence of Certain Changes. Except as set forth in Schedule 2.5,
since January 1, 1995:
(a) No Damage. Seller has not sustained any damage, destruction
or loss, materially and adversely affecting the Business;
(b) No Debt. Seller has not incurred debt for borrowed money
(including without limitation obligations under leases for real or personal
property) and has
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not incurred or increased any obligation or liability except in the ordinary
and usual course of its business, nor has Seller forgiven or released any
debt or claim, given any waiver of any right of material value or suffered
any extraordinary loss;
(c) No Dividends. Seller has not declared or made any dividend
payment or other distribution of property on or with respect to any share
of its capital stock;
(d) No Redemptions. Seller has not purchased, redeemed or
otherwise acquired or committed itself to acquire, directly or indirectly,
any share or shares of its capital stock;
(e) No Liens. Seller has not mortgaged, pledged, otherwise
encumbered or subjected to lien any of the Assets or committed itself to do
any of the foregoing, except for liens for current taxes that are not yet
due and payable and purchase money liens arising out of the purchase or
sale of products or services in the ordinary and usual course of business;
and
(f) No Transfers. Seller has not, except in the ordinary and
usual course of business and in each case for fair consideration, disposed
of, or agreed to dispose of, any of the Assets, or leased or licensed to
others or agreed to lease or license, any of the Assets.
2.6 Real Property. Seller owns no real property and has no other
interest in any real property except the lease described in Schedule
1.1(b).
2.7 Personal Property. Except as set forth in Schedule 2.7, Seller has
good and marketable title to all personal property it purports to own,
including without limitation all of the personal property identified in
Schedule 1.1(a), free and clear of all mortgages, pledges, liens,
conditional sales agreements, leases or other encumbrances of any kind or
nature. Except as indicated in Schedule 2.7, the personal property of
Seller is in good operating condition and free from material defects.
2.8 Leases of Real and Personal Property. Schedule 1.1(b) sets forth a
complete and correct description of all leases of real or personal property
of which Seller is the lessee or the sublessee. Except as described in
Schedule 2.8, each lease is valid and subsisting and no event or condition
exists that constitutes, or after notice or lapse of time or both would
constitute, a default thereunder that could reasonably be expected to
result in the loss of quiet enjoyment by Seller of the real or personal
property that is the subject of the lease.
2.9 Contracts. Schedule 1.1(b) contains a complete list of all of the
contracts or agreements to which Seller is a party or by which Seller is
bound. The Contracts are valid, binding and enforceable in accordance with
their terms. Seller has performed, or is now performing, its obligations
under the Contracts. Except as described on Schedule 2.9, Seller is not in
material default (and would not by the lapse of time and/or the giving of
notice be in material default) in respect of any of the Contracts, and
Seller has not received notice or warning of alleged nonperformance, delay
in delivery or other noncompliance with respect to its obligations under
any of the Contracts or any notice that any of the Contracts may be totally
or partially terminated or suspended by the other parties thereto.
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2.10 Employment Contracts. Seller is not a party to or bound by any
employment, collective bargaining or other labor contract or consulting
agreements.
2.11 Insurance. Schedule 2.11 contains a complete list of all
insurance policies maintained by Seller covering any property or asset of,
or otherwise insuring, Seller or any of the Assets. All policies of fire,
liability, workers' compensation and other forms of insurance owned or held
by and insuring Seller or the Assets are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
date as of which this representation is being made have been paid, and no
notice of cancellation or termination has been received with respect to any
such policy which was not replaced on substantially similar terms prior to
the date of such cancellation. Such policies are valid and outstanding
policies. Seller has not been refused any insurance with respect to its
assets or operations nor had its coverage limited by any insurance carrier
during the 12 months prior to the month in which this representation is
made.
2.12 Intellectual Property Rights. Seller does not own any patents,
trademarks, copyrights or service marks. Seller owns, or possesses adequate
licenses or other rights to use, all other Intellectual Property used in
the Business, and the Intellectual Property is sufficient to conduct the
Business as it has been and is now being conducted. The operations of
Seller do not conflict with or infringe, and no one has asserted that such
operations conflict with or infringe, upon any proprietary rights owned,
possessed or used by any third party. Seller has not received notice of any
claims, disputes, actions, proceedings, suits or appeals pending against
Seller that if adversely determined could result in a loss of any
Intellectual Property, and none has been threatened. That certain Patent
Transfer and Royalty Agreement dated March 14, 1994, between Seller and X.
XxXxxx is void and of no effect and was superseded by the License
Agreement.
2.13 Accounts Receivable. Schedule 1.1(d) is a complete and accurate
schedule of the accounts receivable of Seller as of the date of this
Agreement. These accounts receivable (a) have arisen in the ordinary course
of business of Seller; (b) represent valid obligations due to Seller,
enforceable in accordance with their terms; and (c) will be collected in
the ordinary course of business and will not be subject to any recoupments,
setoffs or counterclaims.
2.14 Absence of Undisclosed Liabilities. Except as disclosed in the
Schedules to this Agreement, Seller has no material liabilities or
obligations of any nature, whether accrued, absolute, contingent or
otherwise (including without limitation liabilities as guarantor or
otherwise with respect to obligations of others) and whether due or to
become due, including without limitation any liabilities for taxes. All of
the cash portion of the Purchase Price that has been advanced to Seller, or
that will be advanced prior to the Closing Date, has been used or will be
used to pay outstanding debts to creditors.
2.15 Taxes. All taxes, assessments, fees, imposts, levies and other
charges of any kind, including without limitation interest and penalties,
upon Seller, by any taxing authority, federal, state, local or foreign
("Taxes"), that have become due and payable have been paid, other than
those not yet delinquent. Seller has duly filed with the appropriate
government agencies all returns and reports with respect to Taxes required
to be filed by it. No waiver of any statute of limitations relating to
Taxes has been executed or given by Seller or any
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affiliated corporation. There is no pending federal, state or local tax
dispute concerning Seller or in any way affecting the Business
or the Assets.
2.16 Litigation. There is no action, dispute, claim, proceeding, suit,
appeal or investigation pending against Seller or involving the Business or
any of the Assets before any court, agency, authority, arbitration panel or
other tribunal, and, to the best of the knowledge of the Affiliates and
Seller, none has been threatened. To the best of the knowledge of the
Affiliates and Seller, there are no facts that, if forming the basis of any
action, dispute, claim, proceeding, suit, appeal or investigation by any
customer, governmental authority or other person, could reasonably be
expected to result in a judgment or other determination that would have a
material adverse effect on the Business or the Assets. Neither Seller nor
any of the Assets is subject to any judgment, order, writ, injunction or
decree of any court, agency, authority, arbitration panel or other
tribunal, nor has Seller received notice that it is in default with respect
to any judgment, order, writ, injunction or decree. There are no actions,
proceedings, suits, investigations or inquiries pending that question the
validity of this Agreement or any action taken or to be taken pursuant
hereto.
2.17 Compliance with Laws. The Business has been conducted in
accordance with all applicable laws, rules, regulations, orders, licenses,
permits and authorizations of federal, state, local and foreign
governmental authorities, and there are in full force and effect all
licenses, permits and authorizations necessary for Seller to operate the
Business as presently conducted. Seller has not received any notice of
alleged violations that would provide a reasonable basis for a
determination by any court, agency, authority, arbitration panel or other
tribunal of any material liability against Seller.
2.18 Labor Matters. Seller is in compliance with applicable laws
respecting employment practices, terms and conditions of employment and
wages and hours, and Seller is not engaged in any unfair labor practice.
2.19 Environmental Matters. Except as described on Schedule 2.19, no
"Hazardous Substance," as hereinafter defined, is or has been used,
treated, stored, disposed of, released, spilled, generated, manufactured or
otherwise handled on any real property owned or leased by Seller (the "Real
Estate") or has otherwise come to be located on or under the Real Estate.
All wastes generated by the Business have been properly disposed of or
recycled in compliance with all applicable Environmental Laws. No
"Asbestos-Containing Material," as hereinafter defined, is present in any
of the Assets. For purposes of this Agreement, "Hazardous Substance" shall
mean any hazardous, toxic, radioactive or infectious substance, material or
waste as defined or listed under any Environmental Law. "Environmental Law"
shall mean any federal, state or local statute, regulation or ordinance
pertaining to the protection of human health or the environment.
"Asbestos-Containing Material" shall mean any material containing more than
one percent by weight of asbestos.
2.20 Brokers. Neither Seller nor any of the Affiliates has entered
into any arrangement with any broker, finder or investment banker or will
incur a fee or any liability for any brokerage or investment banking fee,
commission, or finder's fee in connection with the transactions
contemplated in this Agreement.
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2.21 Reliance. Seller and the Affiliates recognize and agree that,
notwithstanding any investigation by PCTH, PCTH, PCTH-WA and Buyer are
relying upon the representations and warranties made by Seller and the
Affiliates in this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF PCTH, PCTH-WA AND BUYER.
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PCTH, PCTH-WA and Buyer represent and warrant to Seller and the
Affiliates as follows:
3.1 Due Organization. PCTH is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada and
has full corporate power and corporate authority to enter into and perform
its obligations under this Agreement. PCTH-WA is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Washington and has full corporate power and corporate authority to
enter into and perform its obligations under this Agreement. Buyer is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Washington and has full corporate power and
corporate authority to perform its obligations under this Agreement.
3.2 Due Authorization. PCTH, PCTH-WA and Buyer each has full corporate
power and corporate authority to execute and deliver this Agreement and to
perform and carry out its obligations under this Agreement. The execution
and delivery of this Agreement and performance of the obligations of PCTH,
PCTH-WA and Buyer contemplated hereby have been duly and validly authorized
by all necessary corporate action of PCTH, PCTH-WA and Buyer. This
Agreement has been duly and validly executed and delivered by PCTH, PCTH-WA
and Buyer and constitutes the valid and binding obligation of PCTH, PCTH-WA
and Buyer, enforceable against them in accordance with its terms, except as
such enforcement may be limited by equitable principles or by applicable
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally. The execution and delivery of this Agreement (as well as
all instruments, agreements, certificates or other documents contemplated
hereby) by PCTH, PCTH-WA and Buyer, and their performance of their
obligations thereunder, will not (a) violate any federal, state, county, or
local law, rule, or regulation or any decree or judgment of any court or
governmental authority applicable to them or their property, (b) violate
any provision of the Articles of Incorporation of PCTH, PCTH-WA or Buyer,
or (c) violate or conflict with, or permit the cancellation of, or
constitute a default under, any agreement to which either of them is a
party or by which either of them or their property is bound.
3.3 PCTH Common Stock. At the Closing, Seller will acquire good title
to the shares of PCTH Common Stock constituting the Purchase Price (the
"Shares"), free and clear of all pledges, security interests, liens,
charges, equities or claims. The Shares will not be registered under the
Securities Act of 1933, as amended (the "1933 Act"), and, except as
provided in Section 4.10, PCTH shall have no obligation to register the
Shares.
4. OTHER AGREEMENTS.
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4.1 Noncompetition Covenants.
(a) Seller. Seller agrees that, for five years following the
Closing Date, it will not directly or indirectly engage in or perform any
services to, or provide
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individuals to perform such services to, or own, manage, operate, control,
participate in or be connected in any manner with the ownership, management,
operation or control of, any business or undertaking that competes with the
Business as currently operated or as it will be operated during such
five-year period by PCTH, PCTH-WA, Buyer or any affiliate thereof.
(b) X. XxXxxx. X. XxXxxx agrees that, for five years following
the Closing Date, he will not directly or indirectly engage in or perform
any services to, or provide individuals to perform such services to,
whether on an employment, a consulting or an advisory basis, or own,
manage, operate, control, participate in or be connected in any manner with
the ownership, management, operation or control of, any business or
undertaking that competes with any business of PCTH, PCTH-WA, or Buyer, or
any affiliate thereof, in an area of technology that is related to
earthquake gas and electricity shutoff and actuator apparatus that are
activated by seismic activity, this area of technology specifically
excluding, without limitation, technology related to leak-detecting shutoff
systems, earthquake alarms and P wave alarms.
4.2 Sales Tax. Buyer shall pay any sales tax owing in respect of the
purchase of the Assets. Buyer shall file all necessary sales tax returns
and pay all sales taxes due within the time required by the applicable
taxing authority and shall deliver to Seller copies of receipts showing
payment.
4.3 Pre-Closing Covenants.
(a) Negative Covenants of Seller and the Affiliates. Except as
otherwise permitted by this Agreement or with the prior written consent of
PCTH, prior to the Closing, Seller shall not:
(i) Incur additional debt for borrowed money (including
without limitation obligations under leases for real or personal property)
or incur or increase any obligation or liability;
(ii) Make any payment to discharge or satisfy any lien or
encumbrance or pay any obligation or liability;
(iii) Issue, sell, encumber or give any option or right to
purchase any of its capital stock or other securities;
(iv) Declare, pay or make any dividend or other distribution
of money or property on or with respect to any share of its capital stock;
(v) Purchase, redeem or otherwise acquire or commit to
acquire, directly or indirectly, any shares of its capital stock;
(vi) Mortgage, pledge, otherwise encumber or subject to lien
any of the Assets, or commit itself to do any of the foregoing;
(vii) Dispose of any of the Assets, or lease or license to
others, or agree to lease or license, any of the Assets;
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(viii) Acquire any Assets which would be material to the
Business;
(ix) Enter into any transaction or contract or make any
commitment to do the same, except in the ordinary and usual course of
business and not requiring the payment or receipt in any case of an amount
in excess of $1,000 annually;
(x) Increase the wages, salaries, compensation, pension or
other benefits payable, or to become payable by it, to any of its officers,
employees or agents, including without limitation any bonus payments or
severance or termination pay; or
(xi) Agree or commit to do any of the foregoing.
(b) Affirmative Covenants of Seller and the Affiliates. Except as
otherwise permitted by this Agreement or with the prior written consent of
Buyer, prior to the Closing, Seller shall:
(i) Operate the Business only in the ordinary course and in
accordance with reasonable business practices;
(ii) Advise Buyer in writing of any litigation or
administrative proceeding that challenges or otherwise materially affects
the transactions contemplated hereby and of any material adverse change or
any event, occurrence or circumstance which is likely to cause a material
adverse change in the Assets or the Business;
(iii) When the consent of any third party to the
transactions contemplated by this Agreement is required under the terms of
any contract or agreement, use its best efforts to obtain such consent;
(iv) Use its best efforts to maintain all of the tangible
Assets in good operating condition, and take all steps reasonably necessary
to maintain the intangible Assets;
(v) Not cancel or change any policy of insurance relating to
the Assets or the Business, unless such cancellation or change is effective
only on or after the Closing;
(vi) Maintain all inventories, spare parts, office supplies
and other expendable items included in Assets;
(vii) Pay and discharge all Taxes prior to the date on which
penalties attach thereto;
(viii) Comply with all laws, rules and regulations
applicable to Seller or the Business; and
(ix) Preserve and maintain its separate corporate existence
and not amend its articles of incorporation or bylaws.
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4.4 No Solicitations. Except as otherwise permitted by this Agreement
or with the prior written consent of Buyer, the Affiliates and Seller shall
refrain, and shall cause their officers, directors and employees and any
investment banker, attorney, accountant or other agent retained by any of
them to refrain, from initiating or soliciting any inquiries or making any
proposals with respect to, or engaging in negotiations concerning, or
providing any confidential information or data to or having any discussions
with any person relating to, any acquisition, business combination or
purchase of all or any significant portion of the assets of, or any equity
interest in, Seller. The Affiliates and Seller will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
4.5 Best Efforts; No Inconsistent Action. Each party will use its best
efforts to effect the transactions contemplated by this Agreement and to
fulfill the conditions to the obligations of the opposing parties set forth
in this Agreement. No party will take any action inconsistent with its
obligations under this Agreement or that could hinder or delay the
consummation of the transactions contemplated by this Agreement, except
that nothing in this section shall limit the rights of the parties under
Section 5.
4.6 Further Assurances. Seller and the Affiliates agree that, from
time to time and after execution of this Agreement, they will, upon the
request of PCTH, PCTH-WA or Buyer and without further consideration, take
all steps reasonably necessary to place Buyer in possession of full record
and actual title to the Assets and full operating control of all rights to
make, use and sell the products of the Business, and Seller and the
Affiliates will do or have done, execute or have executed, and deliver or
have delivered, all further acts, assignments, powers of attorney, and
acknowledgements or assurances as reasonably required to assign to and vest
in Buyer all of the rights, titles, and interests of Seller in the Assets.
4.7 Confidentiality. The terms and conditions of this Agreement and
all information and materials, including all financial statements and
business information, know-how, techniques and other proprietary materials
and intellectual property used in the conduct of the respective businesses
of the parties hereto, as now conducted or as proposed to be conducted,
that have been divulged or provided during the negotiation of this
Agreement are the confidential information of the party owning such
information and materials (the "Confidential Information"). Unless the
owner of the relevant Confidential Information consents in writing to the
contrary, no Confidential Information shall be divulged, except on a need
to know basis to directors, officers or key employees involved in the
transactions contemplated hereby and such third party consultants as need
the Confidential Information for tax, legal, accounting, or similar
purposes, or as required by applicable law; provided that this obligation
will not apply to PCTH, PCTH-WA or Buyer after the Closing Date.
4.8 Disclosure. Any press release or public disclosure regarding the
execution of the Agreement or the terms hereof will be made at the sole
discretion of PCTH, PCTH-WA or Buyer.
4.9 Consulting Agreement. For a period of three months after the
Closing Date, X. XxXxxx agrees to provide consulting services to PCTH,
PCTH-WA and Buyer. These services shall include, but shall not be limited
to, assistance with the relocation, establishment and organization of the
Assets for PCTH, PCTH-WA and Buyer and general
12
consultation with respect to the Business, as requested by PCTH, PCTH-WA
or Buyer. In consideration for these consulting services, PCTH, PCTH-WA
or Buyer shall pay X. XxXxxx $5,000 per month during the three-month
consulting period, which shall be paid on PCTH's regular payroll days.
In addition, PCTH, PCTH-WA or Buyer shall pay X. XxXxxx'x reasonable
expenses during the consulting period, provided that such expenses are
approved in advance by PCTH. In the event that PCTH determines that it
would be desirable to retain X. XxXxxx'x services prior to the Closing
Date, then PCTH and McGill may agree upon terms of such additional services.
4.10 Piggyback Registration Rights. At Closing, PCTH agrees to enter
into an agreement (the "Registration Rights Agreement") with Seller and any
person who is a shareholder of Seller at Closing and who elects to execute
such agreement (the "Eligible Shareholders"). The Registration Rights
Agreement will provide that if, at any time (but only once) within two
years after Closing, PCTH proposes to register any PCTH Common Stock under
the Securities Act of 1933, as amended (except for registrations under
compensation plans on Form S-8 or any successor form and except for
registrations in connection with the acquisition by merger, tender offer or
otherwise of another public company), PCTH will provide to Eligible
Shareholders who then hold shares of PCTH Common Stock that were issued
pursuant to this Agreement ("Registrable Shares") the opportunity to have
their Registrable Shares registered at the expense of PCTH (except any
underwriting discounts and commissions), on an equal basis with other
shareholders of PCTH. The Registration Rights Agreement will contain other
provisions customary in such agreements and agreed upon by PCTH and Seller.
5. TERMINATION.
-----------
5.1 Right to Terminate. Notwithstanding anything to the contrary in
this Agreement, this Agreement may be terminated and the transactions
contemplated herein abandoned at any time prior to the Closing:
(a) Mutual Consent. By mutual consent of PCTH and Seller.
(b) Delay. By either PCTH or Seller, if the Closing shall not
have occurred by December 31, 1995; provided, however, that the right to
terminate this Agreement under this Section 2.1(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Closing to occur
on or before such date.
(c) Breach by PCTH, PCTH-WA or Buyer . By Seller, if PCTH,
PCTH-WA or Buyer breach any of their representations and warranties in any
material respect or fail to comply in any material respect with any of
their agreements contained here.
(d) Breach by Seller. By PCTH, if Seller or the Affiliates breach
any of their representations and warranties in any material respect or fail
to comply in any material respect with any of their agreements contained
herein.
5.2 Certain Obligations to Cease. If this Agreement is terminated
pursuant to Section 5.1, all obligations of the parties to this Agreement
shall terminate and there shall be no liability of any party hereto to any
other party, except: (i) as set forth in Sections 4.7
13
and 8.6; (ii) that nothing herein will relieve any party from liability
for any willful breach of this Agreement; and (iii) that in the event of
such termination, Seller and X. XxXxxx shall be responsible, jointly and
severally, for refunding to PCTH the full amount of the cash portion of the
Purchase Price that has been advanced to Seller as of the termination date,
or providing to PCTH, PCTH-WA or Buyer full, unencumbered title to equipment
acceptable to PCTH, at PCTH's discretion, with a value of no less than the
amount advanced.
6. INDEMNIFICATION.
---------------
6.1 Indemnification. Seller and X. XxXxxx, jointly and severally,
agree to indemnify and hold harmless PCTH, PCTH-WA and Buyer, and any of
the affiliates, officers, directors, employees, successors, assigns or
agents (the "Related Persons") of PCTH, PCTH-WA and Buyer, from and against
any losses, damages, liabilities, costs and expenses, including without
limitation any attorneys' fees, technical expert fees and any other
expenditures for defense, and damages and settlement disbursements
("Losses") that may be incurred (a) as a result of any breach of,
misrepresentation or inaccuracy in, or omission from, any representation or
warranty made by Seller or X. XxXxxx in this Agreement or related
agreements or documents or (b) arising out of the conduct of the Business
prior to Closing. The Affiliates other than X. XxXxxx each agree,
severally, to indemnify and hold harmless PCTH, PCTH-WA and Buyer, and any
Related Persons of PCTH, PCTH-WA or Buyer, from and against all Losses that
may be incurred (a) as a result of any breach of, misrepresentation or
inaccuracy in, or omission from any representation or warranty made by such
Affiliate in this Agreement or related agreements or documents or (b)
arising out of such Affiliate's involvement in the operation of the
Business prior to Closing. PCTH, PCTH- WA and Buyer agree to indemnify and
hold harmless Seller and the Affiliates, and any of their Related Persons,
from and against any Losses that may be incurred (a) as a result of any
breach of, misrepresentation or inaccuracy in, or omission from, any
representation or warranty made by PCTH, PCTH-WA or Buyer in this Agreement
or related agreements or documents or (b) arising out of the conduct of the
Business after Closing.
6.2 Indemnification Procedures.
(a) Claim Notice. In the event that an indemnified person
reasonably determines that it is entitled to indemnification pursuant to
Section 6.1, the indemnified person shall provide written notice to the
indemnifying persons, specifying in reasonable detail the nature and
estimated amount of the claim.
(b) Third-Party Claims. If the claim specified in the claim
notice relates to a third-party claim, the indemnifying persons shall have
15 days after their receipt of the claim notice to notify the indemnified
person whether the indemnifying persons agree that the claim is subject to
indemnification pursuant to this Section 6 and whether the indemnifying
persons elect to defend such third-party claim at their own expense. If the
claim relates to a third-party claim that the indemnifying persons elect to
defend, the indemnified person shall reasonably cooperate with such
defense. The indemnified person shall, however, be entitled to participate
in the defense or settlement of such a third-party claim through its own
counsel and at its own expense and shall be entitled to approve or
disapprove any proposed settlement that would impose a duty or obligation
on the indemnified person. If the indemnifying persons do not timely elect
to defend a third-party
14
claim, or if the indemnifying persons fail to conduct such defense with
reasonable diligence, the indemnified party may conduct the defense of,
or settle, such claim at the risk and expense of the indemnifying persons.
(c) Claims Other Than Third-Party Claims. If the claim does not
relate to a third-party claim, the indemnifying persons shall have 30 days
after receipt of the claim notice to notify the indemnified party in
writing whether the indemnifying persons accept liability for all or any
part of the claim and the method and timing of any proposed payment. If the
indemnifying persons do not so notify the indemnified party, the
indemnifying persons shall be deemed to have accepted liability for all
damages described in the claim notice.
7. CONDITIONS PRECEDENT TO CLOSING.
-------------------------------
7.1 Conditions Precedent to the Obligations of PCTH, PCTH- WA and
Buyer. The obligations of PCTH, PCTH-WA and Buyer to close the transaction
contemplated in this Agreement are subject to the fulfillment, at or prior
to Closing, of the following conditions (unless waived in writing by PCTH):
(a) Representations, Warranties and Covenants. All
representations and warranties of the Affiliates and Seller made in this
Agreement, or in any certificate delivered pursuant hereto, shall be true
and complete in all material respects on and as of the Closing Date with
the same force and effect as if made on and as of that date.
(i) All of the terms, covenants and conditions to be
complied with and performed by the Affiliates and Seller at or prior to the
Closing shall in all material respects have been complied with or performed
thereby.
(ii) Buyer, PCTH-WA and PCTH shall have received a
certificate from the Affiliates and Seller, dated as of the Closing Date
and executed by the President of Seller and by each Affiliate, to the
effect that the representations and warranties of the Affiliates and Seller
contained in this Agreement are in all material respects true and complete
on and as of the Closing Date as though made on and as of the Closing Date
and that the Affiliates, and Seller have in all material respects each
complied with or performed all terms, covenants and conditions to be
complied with or performed by such party at or prior to the Closing.
(iii) Seller shall have delivered to Buyer, PCTH- WA and
PCTH certified copies of the resolutions of the Board of Directors and the
shareholders of Seller authorizing the execution, delivery and performance
of this Agreement and all other actions taken or to be taken by Seller in
connection with this Agreement.
(b) Compliance with Securities Laws. All actions shall have been
taken and all filings shall have been made which counsel to Seller and PCTH
deem to be necessary and appropriate for the transactions contemplated
herein to have been carried out in compliance with federal and applicable
state securities laws. The parties agree that this condition does not
require the registration of the Shares under the Securities Act of 1933, as
amended, or under any state blue sky law.
15
(c) Adverse Proceedings. No suit, action, claim or governmental
proceeding shall have been instituted or threatened against, and no order,
decree or judgment of any court, agency or other governmental authority
shall have been rendered against, Buyer, PCTH, PCTH-WA, Seller or any
Affiliate to restrain or prohibit, or obtain damages in respect of, this
Agreement or the transactions contemplated by this Agreement.
(d) No Adverse Change. There shall not have been any material
adverse change in the Assets or the Business since the date of this
Agreement.
(e) Registration Rights Agreement. PCTH shall have executed and
delivered the Registration Rights Agreement.
(f) Actions Satisfactory to PCTH's Counsel. All actions,
proceedings, instruments and documents (including without limitation bills
of sale and assignment documents) required to be carried out by this
Agreement, or incidental hereto, and all other relevant legal matters shall
be reasonably satisfactory to counsel for PCTH.
(g) License Agreement. The License Agreement between Seller and
Seismic Safety Products, Inc., dated April 24, 1995, shall have been
terminated, and thereby rendered null and void in its entirety.
(h) Name. Seller shall have changed its corporate name.
(i) Closing Documents. Seller shall have executed and delivered
to PCTH, PCTH-WA and Buyer all documents required to be delivered by Seller
pursuant to this Agreement, in form reasonably satisfactory to PCTH and its
counsel.
(j) Cash Advance. Seller shall have provided to PCTH a complete
record of all payments made out of the cash portion of the Purchase Price.
7.2 Conditions Precedent to the Obligations of Seller. The obligations
of Seller to close the transaction contemplated in this Agreement are
subject to the fulfillment, at or prior to Closing, of the following
conditions (unless waived in writing by Seller):
(a) Representations, Warranties and Covenants. All
representations and warranties of PCTH, PCTH-WA and Buyer made in this
Agreement, or in any certificate delivered pursuant hereto, shall be true
and complete in all material respects on and as of the Closing Date with
the same force and effect as if made on and as of that date.
(i) All of the terms, covenants and conditions to be
complied with and performed by PCTH, PCTH-WA and Buyer at or prior to the
Closing shall in all material respects have been complied with or performed
thereby.
(ii) Seller shall have received a certificate from PCTH and
Buyer dated as of the Closing Date and executed by their Presidents to the
effect that the representations and warranties of PCTH, PCTH-WA and Buyer
contained in this Agreement are in all material respects true and complete
on and as of the Closing Date as though made on and as of the Closing Date
and that PCTH, PCTH- WA and Buyer have in all material
16
respects each complied with or performed all terms, covenants and conditions
to be complied with or performed by such party at or prior to the Closing.
(iii) PCTH, PCTH-WA and Buyer shall have delivered to Seller
certified copies of the resolutions of the Board of Directors of PCTH,
PCTH-WA and Buyer authorizing the execution, delivery and performance of
this Agreement and all other actions taken or to be taken by PCTH, PCTH-WA
and Buyer in connection with this Agreement.
(b) Certificate. PCTH shall have delivered to Seller a
certificate representing the Shares constituting the Purchase Price.
(c) Cash Payment. PCTH shall have paid to Seller the cash portion
of the Purchase Price.
(d) Assumption of Liabilities. PCTH, PCTH-WA or Buyer shall have
executed an assumption agreement, assuming Seller's liabilities described
on Schedule 1.3.
7.3 Condition Precedent to the Obligations of All Parties. The
obligation of all parties to close the transaction contemplated in this
Agreement are subject to the closing, prior to or simultaneously with the
Closing, of the purchase by PCTH, PCTH-WA or Buyer of the Patents.
8. MISCELLANEOUS.
-------------
8.1 Waiver or Modification of Agreement. No modification or waiver of
any provision of this Agreement, nor any consent to any departure by either
party herefrom, shall in any event be effective unless the same shall be in
writing and signed by the party against which enforcement of such
modification or waiver is sought, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
8.2 Amendment of Agreement. This Agreement may be amended with respect
to any provision contained herein by a written instrument duly executed on
behalf of each party hereto.
8.3 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, or three days after deposited in the United States mail,
first-class, postage prepaid, or by facsimile addressed to the respective
parties hereto as follows:
If to PCTH, PCTH-WA or Buyer:
----------------------------
PCT Holdings, Inc.
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
17
and
c/o Cashmere Manufacturing, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Stoel Rives
00xx Xxxxx, Xxx Xxxxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller:
------------
c/o Xxx XxXxxx
0000 Xxxx Xxx. X.
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
If to the Affiliates:
--------------------
Xxxxx X. XxXxxx
c/o Xxxxx XxXxxx
000 Xxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxx X. XxXxxx
0000 Xxxx Xxx. X.
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
00
Xxxx X. Xxxx
0000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
or to such other address as to any party hereto as such party
shall designate by like notice to the other parties hereto.
8.4 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument, and in making
proof of this Agreement, it shall never be necessary to produce or account
for more than one such counterpart.
8.5 Survival of Representations and Warranties. The representations
and warranties of the parties contained in this Agreement shall survive the
Closing Date.
8.6 Expenses. Each of the parties hereto will bear all costs, charges
and expenses incurred by such party in connection with this Agreement and
the consummation of the transactions contemplated herein.
8.7 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of PCTH, PCTH-WA, Buyer, Seller, the Affiliates,
and their representatives, successors, and permitted assigns, in accordance
with the terms hereof.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements,
representations, warranties, statements, promises, information,
arrangements and understandings, whether oral or written, express or
implied, with respect to the subject matter hereof.
8.9 Governing Law. This Agreement and its validity, construction,
enforcement, and interpretation shall be governed by the substantive laws
of the State of Washington.
8.10 Attorneys' Fees. If suit, action or appeal is filed by any party
to enforce the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and expenses.
8.11 Invalid Provisions. If any provision of this Agreement is deemed
or held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it
is deemed to be illegal, invalid or unenforceable, and in all other
respects this Agreement shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal,
19
invalid or unenforceable there shall be added hereto automatically
a provision as similar as possible to such illegal, invalid or
unenforceable provision and be legal, valid and enforceable. Further,
should any provision contained in this Agreement ever be reformed or
rewritten by any judicial body of competent jurisdiction, such provision as
so reformed or rewritten shall be binding upon all parties hereto.
8.12 Remedies Cumulative. The remedies of the parties under this
Agreement are cumulative and shall not exclude any other remedies to which
any party may be lawfully entitled.
8.13 Waiver. No failure or delay on the part of any party in
exercising any right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall operate as a
waiver of such right, power, or privilege, nor shall any single or partial
exercise of any such right, power, or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege.
8.14 Headings. The descriptive section headings are for convenience of
reference only and shall not control or affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed as of the date and year first above written.
PCTH:
PCT HOLDINGS, INC., a Nevada corporation
By /s/ XXXXXX X. XXXXXX
-------------------------------------
Its President
PCTH-WA:
PCT HOLDINGS, INC., a Washington corporation
By /s/ XXXXXX X. XXXXXX
-------------------------------------
Its President
BUYER:
SEISMIC SAFETY PRODUCTS, INC., a
Washington corporation
By /s/ XXXX XXXX
-------------------------------------
Its President
20
SELLER:
SEISMIC SAFETY PRODUCTS, INC., a
Florida corporation
By /s/ XXXXXX X. XxXXXX
-------------------------------------
Its President
AFFILIATES:
/s/ XXXXX X. XxXXXX
------------------------------
XXXXX X. XxXXXX
/s/ XXXXXX X. XxXXXX
------------------------------
XXXXXX X. XxXXXX
/s/ XXXX X. XXXX
------------------------------
XXXX X. XXXX
21
SCHEDULES
The Schedules to this Asset Purchase Agreement have been omitted
in accordance with Item 601(b)(2).
