ASSET PURCHASE AGREEMENT
THIS AGREEMENT made the 31st day of May, 2006, by and between General Sound
(Texas) Company, a Delaware corporation, with its principal office located at
0000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx ("Seller"), and LCR Sound, a Texas
company, with its principal office located at 0000 Xxxxxxxxx, Xxxxxx, Xxxxx
00000 ("Buyer").
WHEREAS:
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
upon the terms and conditions set forth below, certain of the assets and
property of Seller, together with Seller's trade name, namely "General Sound".
NOW, THEREFORE, in consideration of the mutual promises contained in this
agreement and other good and valuable consideration had and received by each of
the parties to this agreement from each of the other parties, Seller agrees with
Buyer and Buyer agrees with Seller as follows:
1. SALE AND PURCHASE OF ASSETS.
1.1. Upon and subject to the terms and conditions set forth below, on the
Closing Date (as defined below) Seller shall sell to Buyer or its
assign, and Buyer or its assign shall buy from Seller, all of the
following properties and assets (the "Assets":
1.1.1. All company vehicles (excepting 2003 and 2006 Ford Explorers)
1.1.2. All Business inventory items both new and used, assets tangible
or intangible, all furniture, computers, computer software
(including all program codes, materials and related program
documentation) tools and equipment, test and repair equipment
relating directly to the operation of the business and all other
personal property the Seller used to operate the business.
1.1.3. All customer contracts and lists, all customer accounts.
1.1.4. All files, books and records including general business and
accounting records, all employment and personnel records and
supplier lists and agreements.
1.1.5. All jobs in progress or under contract.
1.1.6. All company name, trademark or intellectual property.
1.2. Excluded Assets/Liabilities
1.2.1. All Cash or cash equivalents and securities as of the Closing
Date
1.2.2. All Accounts receivable/payable
1.2.3. Any interest in any real property
1.2.4. All contracts, agreements, purchase orders or other obligations
or liabilities of seller other than the Assumed Contracts and
Customer Accounts.
2. PURCHASE PRICE.
2.1. Buyer shall pay to Seller a total purchase price of Five Hundred and
Seventy-four Thousand Dollars ($518,000) on the Closing Date as
provided below, for the entire business and all of the assets being
purchased under this agreement, such purchase price to be allocated as
follows:
2.1.1. $ 313,000 to the purchase price for the inventory, equipment,
and supplies; and
2.1.2. $ 205,000 to goodwill.
3. REAL ESTATE LEASE.
Buyer and Seller specifically agree that Buyer will assume Seller's lease
on 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx (the "Premises"), and that all costs,
expenses and occupancy of the Premises, from and after Closing, shall be paid by
Buyer.
4. CLOSING DATE.
4.1. The Closing Date shall be on the day and date that Buyer and Seller
agree in writing, but in no event shall the Closing Date be later than
May 31, 2006. Upon the Closing Date, Seller shall execute and deliver
to Buyer a xxxx of sale in the form attached as Exhibit and made a
part of this agreement (hereinafter the "Xxxx of Sale"), such Xxxx of
Sale to be effective to vest in Buyer good and marketable title to all
the property described in Subparagraph , above.
4.2. Upon the Closing Date, Buyer or its nominee shall deliver to Seller
Five Hundred and Seventy-four Thousand Dollars ($518,000), payable by
wire transfer or immediately available funds as and for the Purchase
Price due pursuant to this Agreement.
5. WARRANTIES AND REPRESENTATIONS.
5.1. Seller, as a material inducement to Buyer to enter into this
Agreement, covenants, represents and warrants to Buyer that:
5.1.1. Seller is a corporation duly organized and in good standing
under the laws of the State of Delaware, is unconditionally bound
by this Agreement, and has taken all corporate action required
under the laws of the State of Texas to authorize the entry into
and consummation of this Agreement;
5.1.2. Seller has good and marketable title to all the business assets
being sold herein, free and clear of all claims, liens, charges
and encumbrances, and upon delivery by Seller to Buyer of the
Xxxx of Sale, Buyer will own such business assets free and clear
of all claims, liens, charges and encumbrances;
5.1.3. Prior to the Closing Date, Seller shall take all corporate
action required by its charter, the laws of the State of Delaware
and reasonable requests of Buyer's counsel, including but not
limited to resolutions of its Board of Directors and
Shareholders, to fully authorize Seller to enter into and
consummate this Agreement and the transactions contained herein;
5.1.4. All State of Texas sales, use and other ad valorem taxes,
occupational and business taxes due and owing with respect to the
business conducted by Seller have been paid in full on or before
the date hereof; and
5.1.5 . Seller's employees are not represented by any union and are
not subject to any collective bargaining agreement, and Seller
has no agreement, written, oral, implied or express, with any
employee or group of employees under which any claim of
continued right to work or other employment might or could be
asserted against Buyer before or after the Closing Date.
5.2. Buyer, as a material inducement to Seller to enter into this
Agreement, covenants, represents and warrants to Seller that:
5.2.1. It is a company duly organized and in good standing under the
laws of the State of Texas, is unconditionally bound by this
Agreement and has taken such action required under the laws of
the State of Texas to enter into and consummate (by way of either
initial action or ratification or adoption of prior action) this
Agreement; and
5.2.2. Prior to the Closing Date, Buyer shall take all corporate
action required by its charter, the laws of the State of Texas,
and reasonable requests of Seller's counsel in order to enter
into and consummate the transaction contained herein.
5.2.3. Subsequent to Closing, and for a period of six (6) years, Buyer
shall make available to Seller, either the originals or copies of
any and all tax or accounting records as the Seller may request.
6. CONDITIONS.
6.1. Buyer shall not be obligated to complete the transactions contemplated
by this agreement unless, on the Closing Date, each of the following
conditions is satisfied:
6.1.1. All covenants, representations and warranties of Seller set
forth in Paragraph are, on the date of this Agreement and on the
Closing Date, true and correct;
6.1.2. Seller has complied with its agreements herein to be performed
by Seller at or prior to the Closing Date;
6.1.3. All legal matters in connection with the transaction
contemplated by this Agreement and all instruments to be
delivered by Seller to Buyer pursuant to this agreement are in
form and substance satisfactory to Buyer's counsel; and
6.2. Seller and Buyer may each waive in writing any one or more of the
conditions of their respective obligations set forth in this
agreement.
7. DEBTS AND TAXES.
7.1. It is specifically understood and agreed that Buyer shall not assume
Seller's accounts payable. Seller agrees and hereby indemnifies and
holds Buyer harmless from any and all claims arising out of
non-payment of such accounts payable.
7.2. Seller shall further pay and discharge, without proration or recourse
to Buyer, all present and future debts, liabilities and taxes
(including, but not limited to, sales, withholding and personal
property taxes) attributable to Seller's operation of Seller's
business prior to closing, and Seller shall indemnify and hold Buyer
harmless for any costs, charges and/or expenses to Buyer in connection
therewith.
7.3. With respect to the assets, Seller shall indemnify and hold Buyer
harmless against all claims, causes of action, liens or encumbrances,
including, without limiting the generality of the foregoing, any
claims for taxes of any character, accrued (whether or not payable) or
payable prior to the Closing Date, which may be asserted by Seller's
creditors or anyone claiming by, through or under Seller, against
Buyer or all or any part of the assets used in Seller's business and
being transferred pursuant to the terms of this Agreement.
7.4. It is expressly agreed and understood by and between Seller and Buyer
that Seller's accounts receivable due and owing prior to the execution
of this agreement (the "Retained Receivables"), are not being
transferred pursuant to this Agreement. Buyer shall have no right to
the Retained Receivables. Buyer shall cooperate with Seller with
respect to all Retained Receivable to be collected by Seller after
Closing. Before instituting any suit or similar proceeding against the
account debtor, Seller shall notify Buyer and give it reasonable
opportunity (not to exceed 30 days) if it so requests, to assist with
the collection. Buyer may at any time acquire any Retained Receivable
from Seller at the face amount. The parties hereto shall negotiate in
good faith the equitable distribution of any proceeds of receivables
that accrue or are created on account of projects (i) completed in
whole or in part by Seller and performed by Buyer; or (ii) performed
in part by Seller but not invoiced prior to the Closing Date.
8. NO BROKER.
Each party agrees that such party has not incurred and will not incur any
liability for brokerage fees, finders fees, or agents' commissions in connection
with this Agreement and the transactions contemplated hereby; each party agrees
to hold harmless and indemnify the other party for any breach by such party of
the within warranty.
9 . CERTIFICATES
At Closing, Seller shall furnish to Buyer certified copies of
resolutions of its Shareholders and Board of Directors authorizing all
transactions contemplated by this Agreement and authorizing the officers of
Seller to act on behalf of Seller to consummate the transactions contemplated by
this Agreement.
10. NOTICE.
Any notice or other communication required or permitted to be given to the
parties shall be deemed to be given if delivered, or three days after the same
is mailed by certified mail, return receipt requested, first-class, postage
prepaid, addressed as follows:
If to Seller: General Sound (Texas) Company
000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
With a copy to Seller's counsel:
Xxxxxx X. XxXxxxxxx, Esq.
Dolgenos Xxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
If to Buyer: LCR Sound
0000 Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Or at such other addresses as the parties may from time to time designate
in writing.
11. EMPLOYEES.
11.1. Buyer shall not be obligated to hire or continue the employment of
any of Seller's employees, or representatives (expect as set forth in
this section), and Seller shall, prior to the Closing, make any
necessary or appropriate arrangements as directed by Buyer in
connection with the termination of any relationship with such persons
or such employees and shall otherwise aid in the transition of any
retained employees from Seller to Buyer.
11.2. Buyer agrees to hire the following employees of Seller for the weekly
salary set forth beside each persons name:
This agreement is for no definite term and does not represent an obligation on
the part of Buyer to continue the employment of any of the persons set forth
above.
12. INDEMNIFICATION.
12.1. Seller shall defend, indemnify and save and hold Buyer harmless from
and against any and all damages, losses, obligations, claims,
encumbrances, deficiencies, costs, expenses, and other liabilities of
every kind, nature and description that Buyer shall suffer, sustain,
incur or be required to pay by reason of any breach of Seller
hereunder or by reason of the failure of Seller to observe or perform
any of the covenants, obligations, restrictions, or other terms,
provisions or conditions of this Agreement, or by reason of any
representations or warranties of Seller, contained in this Agreement
being untrue or incorrect in any respect, or from the operation or
conduct of Business before Closing.
12.2. Buyer shall defend, indemnify and save and hold Seller harmless from
and against any and all damages, losses, obligations, claims,
encumbrances, deficiencies, costs, expenses, and other liabilities of
every kind, nature and description that Seller shall suffer, sustain,
incur or be required to pay by reason of any breach of Buyer hereunder
or by reason of the failure of Buyer to observe or perform any of the
covenants, obligations, restrictions, or other terms, provisions or
conditions of this Agreement, or by reason of any representations or
warranties of Buyer, contained in this Agreement being untrue or
incorrect in any respect, or from the operation or conduct of Business
after Closing.
13. COVENANT NOT TO COMPETE.
13.1. For a period of three (3) years from the date of Closing, Seller
shall not, directly or indirectly (including as principal, agent,
investor, guarantor or lender) compete with Buyer within the Dallas
metropolitan area in the lines of business conducted by Seller as at
the Closing Date, without the express written consent of Buyer.
13.1.1. For purposes of this Paragraph 13, actions or ownership by the
Seller or by any stockholder of Seller shall be deemed to be the
actions or ownership of the Seller.
13.2. Seller acknowledges that Buyer shall be entitled to injunctive relief
for the breach of the covenant not to compete contained in this
Paragraph 13, in addition to all of the remedies which may be
available to Buyer.
13.3. If a court of competent jurisdiction determines that the restrictions
contained in this paragraph are too broad to be enforced, it may
modify such provisions to the extent necessary to permit their
enforceability.
14. ASSIGNMENT.
Buyer may assign this agreement, in whole or in part, including the covenant not
to compete to a third party.
15. CAPTIONS.
The captions set forth in this Agreement are for convenience only and shall
not be considered as part of this Agreement or in any way limiting or amplifying
the terms and provisions hereof.
16. BINDING EFFECT.
This Agreement shall be binding upon, enforceable by and against, and shall
inure to the benefit of the parties and their respective heirs, personal
representatives, successors and assigns.
17. SURVIVAL OF OBLIGATIONS.
Seller and Buyer agree that all of their respective warranties,
representations and indemnifications set forth in this Agreement shall survive
the delivery and payment for the assets to be transferred hereunder as well as
the consummation of the other obligations to be performed by the parties.
18. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties with
respect to the matter provided for herein and shall not be modified, changed or
limited in any way except by a written document signed by the parties.
19. NON-WAIVER.
No delay or failure by either party to exercise any right hereunder, and no
partial or single exercise of any such right, shall constitute a waiver of that
or any other right, unless otherwise expressly provided herein.
20. GOVERNING LAW EFFECT.
This agreement is entered into and intended to be performed in the State of
Texas and shall be governed by the laws of the State of Texas.
21. COUNTERPARTS.
This agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
SELLER
By: ____________________________
Xxx Xxxxxx, President
BUYER
By: _____________________________
_______________, President
Exhibit 3.1
Xxxx of Sale
General Sound (Texas) Company, a Delaware corporation, in consideration of
Five Hundred and Seventy-four Thousand Dollars ($518,000) paid by LCR Sound is
hereby acknowledged, has sold and hereby conveys to LCR Sound, or its assignee,
all its personal property, including furniture, fixtures, equipment, work in
process, inventory, supplies, and intangibles, to have and to hold the same unto
LCR Sound, its legal representatives, and assigns forever, free and clear of all
liens and encumbrances.
General Sound (Texas) Company warrants and agrees to defend the title to
all of such property for the benefit of LCR Sound, its legal representatives,
and assigns against all persons.
In witness whereof General Sound (Texas) Company, has caused this xxxx of
sale to be executed and delivered this 31st day of May, 2006.
GENERAL SOUND (TEXAS) COMPANY
By: ___________________________________
Xxx Xxxxxx, President
