ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made as of the 1st day
of April, 1998, by and among GO-VIDEO, INC. ("Go-Video") and GO-VIDEO
PRODUCTIONS, INC. ("GVP"), both Delaware corporations with principal executive
offices at 0000 X. XxXxxxx, Xxxxxxxxxx, Xxxxxxx, 00000 (collectively
"Purchaser"), and XXXXXXXX XXXXXXXXX, AKRADEJ SRICHAWLA, and VORATHEP SRICHAWLA
(collectively referred to as "Sellers" and individually as "Seller").
W I T N E S S E T H:
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, all ownership interests, whether represented by shares,
certificates of interest, or otherwise ("Interests"), in and to CALIFORNIA AUDIO
LABS L.L.C., a California limited liability company (the "Company") on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in reliance upon the
representations and warranties contained herein, the parties do hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF INTERESTS
1.1 Purchase and Sale of the Interests. Upon the terms and subject to
the conditions set forth herein, and in reliance on the respective
representations and warranties of the parties, Sellers agree to sell, transfer,
assign, and deliver to Purchaser, and Purchaser agrees to purchase from Sellers,
good and marketable title in any and all Interests in the Company. Go-Video
shall own 99% of the Interests and GVP shall own 1% of the Interests.
1.2 No Assumed Liabilities. Purchaser shall not assume any liabilities
of Sellers of any kind or nature incurred before or after the Closing Date.
Sellers hereby agree to indemnify Purchaser and its affiliates from any and all
claims arising, directly or indirectly, from liabilities or obligations of
Sellers, including, without limitation, any and all taxes related, directly or
indirectly, to Sellers' Interests in the Company including any liabilities and
obligations related to the closing of this transaction.
1.3 Purchase Price. The total purchase price for the Interests shall be
$775,000.00 ("Purchase Price"). The Purchase Price shall be paid by Purchaser in
cash (99% payable by Go-Video and 1% payable by GVP) in proportions designated
by Sellers for their respective ownership interests of the Company.
1.4 Closing. This Agreement shall be executed on April 1, 1998 (the
"Execution Date"). The Closing of the sale by the Sellers (the "Closing") shall
occur at the offices of
Xxxxx & Xxxxxx L.L.P., One Arizona Center, Phoenix, Arizona, on April 2, 1998,
or on such other day or at such other time or place as the Purchaser and the
Sellers shall agree upon in writing (the "Closing Date") following satisfaction
of conditions precedent.
ARTICLE 2
EMPLOYMENT AGREEMENT
2.1 Employment Agreement. In connection with this Agreement, Purchaser
and Xxxxxx Xxxxxxxx ("Xxxxxxxx") shall enter into an employment agreement in the
form attached hereto as Exhibit A (the "Employment Agreement").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
3.1 Representations and Warranties of Sellers. As of the date hereof
and as of the Closing Date, Sellers, jointly and severally, hereby represent and
warrant to Purchaser the following:
3.2 Organization and Standing. The Company is a California limited
liability company, duly organized, validly existing, and in good standing under
the laws of its state of organization. The Company has all necessary power and
authority to engage in the business in which it is presently engaged, and to own
all of the tangible and intangible assets of the Company ("Assets"). The Company
is qualified to do business as a foreign corporation in all states and countries
where the nature of its business requires such qualification. The copies of the
Operating Agreement and Articles of Formation and other formation documents of
the Company (collectively referred to as the "Operating Agreement"), attached as
Schedule 3.2, are true and correct. The Operating Agreement has not been
subsequently amended or repealed.
3.3 Authority, Restrictions, and Enforceability. Each of Sellers has
the authority and capacity to execute and deliver this Agreement and to perform
its obligations hereunder. Neither Sellers nor the Company are subject to any
restriction, agreement, law, judgment, or decree which would prohibit or be
violated by the execution, delivery or performance of the Agreement. This
Agreement has been duly executed and delivered by each of Sellers and
constitutes a legal, valid, and binding obligation of each of them, enforceable
against each in accordance with its terms.
3.4 Interests of Sellers in the Company. The Interests constitute all
ownership interests in the Company and are owned of record and beneficially, and
free and clear, by the Sellers, with no other person owning or having any rights
(including without limitation any voting rights, whether as proxy,
attorney-in-fact, assignee, transferee, or otherwise) in or with respect
thereto. The Company is owned in its entirety by the Sellers in equal
proportions. There are no outstanding options, rights, or other agreements or
commitments obligating Sellers or the Company to issue or to transfer any
Interests in the Company to any Person.
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3.5 Financial Statements. Prior to Closing, Sellers shall have
delivered to Purchaser the unaudited balance sheets of the Company at December
31, 1997, and the related statements of income for the fiscal year then ended,
together with the related notes thereto, as certified by the Sellers, the
unaudited financial statements of the Company at January 31, 1998, and the
unaudited balance sheets at December 31, 1996 and 1995, respectively, and the
related statements of operations for the fiscal years then ended (collectively
the "Financial Statements"). The Company's Financial Statements are complete and
correct in all material respects and in accordance with the books of account and
records of the Company, and present fairly the Company's financial position. The
aforementioned Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied.
3.6 Subsidiaries. The Company does not own, directly or indirectly, any
interest or investment (whether equity or debt) in any corporation, partnership,
joint venture, trust, or other entity.
3.7 Title and Condition of Assets. The Company has good and marketable
title to the Assets free and clear of any and all liens, claims, charges,
restrictions, security interests, equities or encumbrances whatsoever. To the
best of Sellers' knowledge, all of the Assets are in good operating condition
and repair.
3.8 No Material Adverse Change. Except as disclosed on Schedule 3.8
hereto, since December 31, 1997, there have not been any:
(a) Transactions by the Company except in the usual and
ordinary course of business;
(b) Undisclosed material adverse changes in the business,
operations, financial condition, property, or affairs of the Company, as a
result of any occurrence or development, whether or not insured against, and no
threatened occurrence or development exists which would materially adversely
affect the properties or assets, or the business operations or affairs of the
Company;
(c) Labor disputes or other events or conditions of any
character materially and adversely affecting the financial condition, business,
assets, or prospects of the Company;
(d) Change in the accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) of the Company;
(e) Amendment or termination of any contract, agreement, or
license to which the Company is a party, or by which it or any of its assets or
properties are subject, except in the ordinary course of business;
(f) Citations received for any violations of any act, law,
rule, or regulation of any governmental agency;
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(g) Claims incurred for damages or alleged damages for actual
or alleged negligence or other tort or breach of contract which is not fully
covered by insurance underwritten by responsible insurers;
(h) Sales, transfers, or disposal of, or agreements to sell,
transfer, or otherwise dispose of any of the assets, properties, or rights of
the Company, except as incurred in the ordinary course of business consistent
with the past practices of the Company;
(i) Agreements entered into granting any preferential rights
to purchase any of the Assets or requiring the consent of any party to the
transfer and assignment of the Assets;
(j) Sales or disposal of any capital assets; or
(k) Agreements by the Company or by the Sellers, individually
or in any combination by or on behalf of the Company, to do any of the things
described in the preceding clauses (a) through (j).
3.9 Leases. Neither the Company, nor the Sellers, individually or in
any combination, by or on behalf of the Company, are a party to any leases,
agreements, subleases, or covenants pertaining to real property other than those
described on Schedule 3.9.
3.10 Assets. The Assets constitute all personal property and rights
necessary for the operation of the Company's business as now conducted.
.
3.11 Absence of Undisclosed Liabilities. Except as set forth in the
Financial Statements or in any Schedule attached to this Agreement, the Company
has not incurred, and none of the Assets are subject to, any liabilities or
obligations (accrued, absolute, contingent or otherwise including, without
limitation, accrued but not yet payable tax liabilities) whether or not such
liabilities are normally shown or reflected on a balance sheet prepared in a
manner consistent with generally accepted accounting principles, other than
unsecured trade accounts payable arising in the ordinary course of business
since December 31, 1997 and estimated federal and state income tax accrued in
respect of the operations of the Sellers since December 31, 1997. The Company is
not in default in respect of any term or condition of any indebtedness or
liability. There are no facts in existence on the date hereof and known to
Sellers or the Company that might reasonably serve as the basis for any
liabilities or obligations of Sellers or the Company not disclosed in this
Agreement, the Financial Statements or the Schedules attached to this Agreement.
3.12 Litigation. Except as set forth on Schedule 3.12, there are no
suits, claims, actions, arbitration, investigations, or proceedings entered
against, now pending, or, to the Sellers' knowledge, threatened against Sellers
or the Company before any court, arbitration, administrative or regulatory body,
or any governmental agency which may result in any judgment, order, award,
decree, liability, or other determination which will or could reasonably be
expected to have any effect upon the Sellers' Interests or upon the Company.
Neither
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Sellers nor the Company are subject to any continuing court or administrative
order, writ, injunction, or decree applicable to it, property, or employees, and
neither Sellers nor the Company are in default with respect to any order, writ,
injunction, or decree of any court or federal, state, municipal, or other
governmental department, commission, board, agency, or instrumentality.
3.13 Consents. Except as otherwise disclosed on Schedule 3.13, neither
the Sellers nor the Company are required to obtain any consents or other
approvals from any governmental agency, bureau, or authority, or other Person,
including any lender, vendor, or lessor in order to effect the transaction
contemplated hereby; provided, however, that with respect to any necessary
consents disclosed on Schedule 3.13, Sellers have obtained at their sole
expense, prior to Closing, all such consents.
3.14 Taxes. The Company is and from its inception has been treated as a
partnership for tax purposes. Sellers have duly filed all tax reports and
returns required to be filed in respect of the Sellers' Interests and the
Company and have duly paid all taxes shown to be due on such tax returns or
reports or claimed to be due from them by federal, state, or local taxing
authorities (including, without limitation, those due in respect of its
properties, income, franchise, licenses, sales, and payrolls). Sellers have no
knowledge of any state of facts which would constitute grounds for the
assessment of any material tax liability against the Sellers' Interest or the
Company with respect to any tax reports and returns filed. Neither Sellers nor
the Company have caused or permitted a change in any method of accounting for
tax purposes during or applicable to its current tax year which would render
inaccurate, misleading, or incomplete the information concerning taxes set forth
in or referred to in this Section 3.14, or which would have an adverse effect on
Sellers' Interests or the Company for any period ending on or before the Closing
Date.
3.15 Licenses and Permits. Schedule 3.15 sets forth a list of all of
the licenses, franchises, certificates, permits, easements, consents, rights,
and privileges, including, without limitation, those of any federal, state, or
local governmental or regulatory body, that are necessary and appropriate to the
operation of the Company. All such items are in full force and effect and true
and correct copies thereof have heretofore been furnished to Purchaser.
3.16 Compliance with Laws. Neither Sellers nor the Company are in
default under or in violation of any applicable statute, law, ordinance, decree,
order, rule, regulation, franchise, permit, or license of any governmental body,
which had or may have an adverse affect upon any property or assets of the
Company or upon any Interest of the Sellers, or upon the Company's business,
condition (financial or other) or results of operations.
3.17 Contracts. Except as set forth in Schedule 3.17 hereto, there is
no legally enforceable contract, agreement, commitment, or arrangement
("Contract"), or any outstanding unaccepted offer ("Offer"), whether written or
oral, express or implied, fixed or contingent, having a value of greater than
Ten Thousand Dollars ($10,000), to which the Company is a party or by which any
property or assets of the Company or any Interests of the Sellers is or could be
bound; provided, however, that the Contracts and Offers set forth on
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Schedule 3.17 include all service contracts to which the Company is a party
regardless of value. Sellers have made available to Purchaser true and correct
copies of all written (and has furnished to Purchaser accurate and complete
written summaries of all material provisions of all oral) Contracts and Offers,
all as presently in effect. The Company is not in default in the payment of any
obligation under, or in the performance of any material covenant or obligation
to be performed by such party pursuant to, any Contract. Except only as to
contracts, agreements, and other documents listed in Schedule 3.17 attached
hereto or any other Schedule attached hereto, neither the Company nor the
Sellers, whether individually or in any combination by or on behalf of the
Company, are a party to or bound by any written or oral:
(a) Contract not made in the ordinary course of business;
(b) Employment or independent contractor agreement;
(c) Contract with any labor union or association;
(d) Bonus, pension, profit sharing, retirement, stock
purchase, hospitalization, medical reimbursement, insurance, or other plan
providing employee benefits;
(e) Lease with respect to any property, real or personal,
whether as lessor or lessee;
(f) Continuing contract for the future purchase of materials,
supplies, or equipment;
(g) Contract or commitment for capital expenditures;
(h) Contract continuing over a period of more than thirty (30)
days from its date;
(i) Contract for the lease, operation, or maintenance of any
machinery or equipment; or
(j) Contract or agreement to pay any royalties or fees with
respect to any sales of Sellers.
Schedule 3.17 also contains a list of all customers who have conducted business
with the Company during the one (1) year period prior to the Closing Date.
3.18 Patents and Trademarks. Attached hereto as Schedule 3.18 is a
complete list of all trademarks, trademark registrations or applications,
service marks, patents, trade names, copyrights, or copyright registrations or
applications used by the Company. No Person owns any trademark, trademark
registration or application, service xxxx, patent, trade name, copyright, or
copyright registration or application, the use of which is necessary or
contemplated in connection with the operation of the Company or in connection
with the
6
performance of any contract to which the Company is a party. The Company is not
infringing upon or otherwise acting adversely to any right or claimed right of
any person related to any patents, trademarks, copyrights, or other intellectual
property rights.
3.19 Employee Benefit Plans. Except as set forth on Schedule 3.19
hereto, there are no pension, bonus, profit sharing, stock option, or employee
benefit plans maintained by the Company or to which the Company contributes or
is required to contribute. All such plans set forth on Schedule 3.19 hereto, and
their related trusts, if any, comply with the provisions of and have been
administered in compliance with the provisions of the Employee Retirement Income
Security Act of 1974 as amended ("ERISA"), and all other applicable laws, rules,
and regulations, and any necessary governmental approvals of the plans set forth
on Schedule 3.19 hereto have been obtained. True and complete copies of the
plans set forth on Schedule 3.19 hereto and reports filed with any governmental
agency with respect thereto and the amount of contributions made by the Company
to any such plans for the last three (3) fiscal years of the Company have been
furnished to Purchaser by Sellers.
3.20 Warranties. Except as set forth on Schedule 3.20, neither the
Company nor Sellers have given or made any express warranties to third parties
with respect to any products sold or services performed by the Company. Sellers
have no knowledge of any state of facts or the occurrence of any event forming
the basis of any present claim against the Company or Sellers' Interests therein
for liability due to any express or implied warranty.
3.21 Labor Matters. The Company is not a party to any collective
bargaining agreement with any labor union or association. There are no
discussions, negotiations, demands, or proposals that are pending or that have
been conducted or made with or by any labor union or association, and there are
no pending or threatened labor disputes, strikes, or work stoppages that may
have a material and adverse effect the Company or upon Sellers Interests. The
Company is in compliance with all federal and state laws respecting employment
and employment practices, terms and conditions of employment, and wages and
hours, and is not engaged in any unfair labor practices.
3.22 Accounts Receivable. Schedule 3.22 consists of an accurate and
complete listing of all the accounts receivable of the Company as of December
31, 1997. The accounts receivable of the Company, which are reflected in the
Financial Statements and all of its accounts receivable which have arisen since
December 31, 1997 (except such accounts receivable as have been collected since
then) in excess of reserves for doubtful accounts are valid and enforceable
claims in all material respects, and the goods and services sold and delivered
which gave rise to such accounts were sold and delivered in conformity with the
applicable purchase orders, agreements, and specifications. Such accounts
receivable are subject to no valid defense or offsets except routine customer
complaints or warranty demands of an immaterial nature. An adequate reserve for
doubtful accounts in the ordinary course of business has been established.
3.23 Inventories. Schedule 3.23 consists of an accurate and complete
listing of all the inventories of the Company as of December 31, 1997. The
inventories of the Company, which are reflected in the Financial Statements and
all inventory items which have been
7
acquired since December 31, 1997, consist of raw materials, supplies,
work-in-process, and finished goods in all material respects of such quality and
in such quantities as are being used and are currently usable or are being sold
and are currently selling in the ordinary course of its business. The value of
all items that are below standard quality or obsolete has been written down to
net realized value or adequate reserves have been provided therefore.
3.24 Prorations. Certain prepaid expenses and certain accrued expenses
or liabilities related to the operation of the Company's business will cover
periods before and after the Closing Date including, without limitation, such
things as rent, realty taxes, utilities, telephone, payroll, commissions,
bonuses, vacation pay, percentage rent and/or common area charges, and employee
benefits (collectively the "Proration Items"). The Company is not in default on
any Proration Item covering periods prior to the Closing Date.
3.25 Provision for Returns of Merchandise Made After Closing. The
Company has provided for adequate reserves to account for merchandise sold by
the Company in a bona fide transaction to a customer prior to the Closing Date
and returned by the customer to the Purchaser for refund or credit.
3.26 Environmental Matters.
(a) No properties owned or leased by the Company are in
violation of any applicable environmental law, regulation, ordinance, or order
of any federal, state, or local government entity, dealing with "superfund",
water pollution, air pollution, solid and hazardous waste, underground storage
tanks, "sanitary landfills", and "open dumps", injection and drywell, or any
other federal, state, or local laws relating to contamination of or adverse
effect on the environment, and neither the properties nor any underlying ground
water contain any concentrations of regulated substances, hazardous substances,
hazardous materials, toxic substances, or similar substances, residues, and
wastes;
(b) Neither Sellers, the Company, nor any of its employees,
agents, or representatives have conducted activities for or on behalf of the
Company involving any hazardous substances or materials or substances otherwise
regulated as provided in paragraph (a) or have taken, or refrained from taking,
any action that has caused or will cause a violation of any regulation provided
in paragraph (a); and
(c) Schedule 3.26 identifies all environmental audits or
assessments undertaken by Sellers, the Company, or any governmental entities
relating to or affecting the Company or any properties or assets owned or leased
by or affecting the Company.
3.27 Brokers and Finders. Sellers have not dealt with any broker,
finder, or other person entitled to any broker's or finder's fee, commission, or
other similar compensation in connection with the transaction contemplated
hereby.
3.28 No Default. There has been no default in any material respect in
any obligation to be performed by the Company under any contract, lease,
agreement, commitment, or undertaking to which it is a party or by which it or
its assets or properties are bound, nor has
8
the Company waived any material right under any such contract, lease, agreement,
commitment, or undertaking.
3.29 Transactions with Affiliated Parties. Attached hereto as Schedule
3.29 is a list and description of all material transactions engaged in among or
between any of Sellers, the Company, or any employee, agent, officer, or
director of the Company, or any of their spouses or children, any trust of which
any such person is the grantor, trustee, or beneficiary, any corporation of
which any such person or party is a shareholder, employee, officer, or director,
or any partnership in which any such person or party owns an interest (all such
persons, trusts, corporations, and partnerships being herein referred to
collectively as "Affiliated Parties" and individually as "Affiliated Party").
Except as set forth in Schedule 3.29 hereto, no Affiliated Party has any
material or controlling ownership interest, directly, indirectly, or
beneficially, in any competitor or potential competitor, supplier, or customer
of Sellers.
3.30 Books and Records. The books and records of account of the Company
are complete and correct in all material respects and reflect a true record of
all financial affairs of the Company in all material respects as prepared in the
normal course of business through the date hereof, and the minute books and
other records of the Company fairly reflect the meetings and proceedings of the
Company and Sellers. All books, files, computer systems, and records of account
have been made fully available without restriction for examination by the
Purchaser.
3.31 Authority of Sellers. The execution, delivery, and performance by
Sellers of this Agreement has been fully authorized by each Seller individually
as a Member of the Company ("Member"). No further action is necessary on the
part of Sellers or the Company to make this Agreement valid and binding upon
Sellers, and this Agreement is enforceable in accordance with its terms. Upon
execution of this Agreement, Sellers will have no economic, managerial, or other
interest in the Company.
3.32 Minimum Working Capital. On the Closing Date, the Company will
possess a minimum amount of Working Capital (current assets less current
liabilities, excluding the Factory Line of Credit) of at least $1,000,000.
3.33 Territorial Restriction. The Company is not restricted by any
agreement or understanding with any other Person from carrying on the business
of the Company anywhere in the world. Neither Purchaser, nor any of its
Affiliates will, as a result of its purchase of the Sellers' Interests from
Seller pursuant hereto, become restricted in carrying on the business of the
Company anywhere in the world as a result of any Contract or other agreement to
which Sellers or the Company are a party or by which they or any of their
Affiliates are bound.
3.34 Customers. Schedule 3.34 sets forth (a) the names and addresses of
all customers of the Company that ordered products, goods or services from the
Company with an aggregate value for each such customer of $5,000 or more during
the twelve month period ended December 31, 1997 and (b) the amount for which
each such customer was invoiced during such period. The Company has received no
notice and the Company has no reason
9
to believe that any significant customer of the Company (i) has ceased, or will
cease, to use the products, goods, or services of the Company which relate to
the business, (ii) has substantially reduced, or will substantially reduce, the
use of products, goods, or services of the Company which relate to the business
or (iii) has sought, or is seeking, to reduce the price it will pay for
products, goods or services of the Company, which relate to the business,
including in each case after the consummation of the transactions contemplated
hereby. To the best knowledge of Sellers, no customer of the Company with
respect to the business described in clause (a) of this section has otherwise
threatened to take any action described in the preceding sentence as a result of
the consummation of the transactions contemplated by this Agreement.
3.35 Suppliers. Schedule 3.35 sets forth (a) the names and addresses of
all suppliers from which the Company ordered inventories, and other products,
goods, and services with an aggregate purchase price for each such supplier of
$5,000 or more during the twelve month period ended December 31, 1997 and (b)
the amount for which each such supplier invoiced the Company during such period.
Seller has not received any notice from any such supplier indicating that there
is or will be a material change in the price of such items or services, and
Seller has no reason to believe that there will be any such material change in
the price of such items or services, or that any such supplier will not sell
such items to Purchaser at any time after the Closing Date on terms and
conditions similar to those used in its current sales to the Company, subject to
general and customary price increases. Except as described in Schedule 3.35, to
the best knowledge of Sellers, no supplier to Seller described in clause (a) of
the first sentence of this section has otherwise threatened to take any action
described in the preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement.
3.36 Insurance. Schedule 3.36 contains a complete and correct list and
summary description of all insurance policies maintained by Sellers and/or the
Company for the benefit of or in connection with the Company. Sellers have
delivered to Purchaser complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in full force and
effect, and all premiums due thereon have been paid. Sellers have complied in
all material respects with the terms and provisions of such policies. Schedule
3.36 sets out all claims made by the Company under any policy of insurance
during the past two years with respect to the Company and in the opinion of
Sellers reasonably formed and held, there is no basis on which a claim should or
could be made under any such policy with respect to it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Representation and Warranties of Purchaser. As of the date hereof
and as of the Closing Date, Purchaser hereby represents and warrants to Sellers
the following:
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4.2 Organization and Standing. Purchaser is a duly organized and
validly existing corporation in good standing under the laws of the State of
Delaware and has all the requisite corporate power to enter into and perform
this Agreement.
4.3 Authority of Purchaser. Purchaser is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and all
required corporate action with respect thereto has been duly and validly taken
and this Agreement is binding upon the Purchaser and enforceable in accordance
with its terms.
4.4 Restrictions. Purchaser is not subject to any restriction,
agreement, law, judgment, or decree which would prohibit or be violated by the
execution, delivery, or performance hereof.
4.5 Brokers and Finders. Purchaser has not dealt with any broker,
finder, or other person entitled to any broker's or finder's fee, commission, or
other similar compensation in connection with the transaction contemplated
hereby.
4.6 Litigation. There is no suit, claim, arbitration, investigation,
action, or proceeding entered against, now pending, or, to the Purchaser's
knowledge, threatened against Purchaser before any court, arbitration,
administrative, or regulatory body or any governmental agency which may result
in any judgment, order, award, decree, liability, or other determination which
will, or could reasonably be expected to, materially impair the ability of the
Purchaser to fulfill and perform its obligations under this Agreement.
ARTICLE 5
COVENANTS OF SELLERS
5.1 Sellers' Covenants. Sellers hereby covenant and agree that from the
date of this Agreement until the Closing Date:
5.2 Access to Information. Purchaser and its counsel, accountants, and
other representatives will have full access during normal business hours to all
properties, books, accounts, records, contracts, and documents of or relating to
Sellers' Interests to and the Company so that Purchaser may have full
opportunity to make such investigation as it shall desire to make of the affairs
of the Company and the Sellers' Interests. Sellers shall furnish or cause to be
furnished to Purchaser and its representatives all data and information
concerning the Sellers' Interests or the Company and its finances and properties
that may reasonably be requested.
5.3 Conduct of Business. Except as specifically contemplated in this
Agreement, from the date of this Agreement to the Closing Date, the Company will
be operated only in the ordinary course, and, in particular, the Company and the
Sellers, with respect to the Company's business, will not, without the prior
written consent of Purchaser:
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(a) Cancel or permit any insurance to lapse or terminate,
unless renewed or replaced by like coverage;
(b) Be in default under any material contract, agreement,
commitment, or undertaking of any kind;
(c) Knowingly violate or fail to comply with any laws
applicable to it or its properties or business;
(d) Commit any act or permit the occurrence of any event or
the existence of any condition of the type described in clauses (a) through (k)
of Section 3.8 hereof;
(e) Enter into any contract, agreement, or other commitment of
the type described in Section 3.17 hereof;
(f) Fail to maintain and repair its assets and properties in
accordance with good standards of maintenance and as required in any leases or
other agreements pertaining thereto;
(g) Merge, consolidate or agree to merge or consolidate with
or into any other corporation or other entity; or
(h) Agree to do any of the actions described in the preceding
clauses (a) through (g), either individually or in any combination by or on
behalf of the Company.
5.4 Business Relationships. Sellers will use their best efforts to
preserve the Company's business organizations intact, to keep available to
Purchaser its present officers and employees, and to preserve its present
relationships with customers, suppliers, and others having business
relationships with the Company.
5.5 Organizational and Company Matters. From the date of this Agreement
until the Closing Date, the Sellers will not:
(a) Amend its Operating Agreement;
(b) Issue any additional rights or interests in the Company to
any other members; or
(c) Agree to do any of the acts listed above.
5.6 Insurance. Sellers will cause the Company to continue to carry its
existing insurance, subject to variations in amounts required for the ordinary
operations.
5.7 Employees. Sellers shall not cause the Company to do, or agree to
do, by or on behalf of the Company, any of the following acts:
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(a) Grant any increase in salaries payable, or to become
payable by it, to any officer, employee, sales agent, or representative;
(b) Increase benefits payable to any officer, employee, sales
agent, or representative under any bonus or pension plan or other contract or
commitment; or
(c) Modify any collective bargaining agreement to which it is
a party or by which it may be bound.
5.8 New Business. Sellers will not cause the Company to, or agree to do
by or on behalf of the Company, without Purchaser's written consent, any of the
following acts:
(a) Enter into any contract, commitment, or transaction not in
the usual and ordinary course of business; or
(b) Sell or dispose of any capital assets relating to the
Company's business except in the ordinary course of business.
5.9 Liability and Waiver. Sellers will not cause the Company to, or
agree to do by or on behalf of the Company, without Purchaser's written consent,
any of the following acts:
(a) Pay any obligation or liability, fixed or contingent,
other than current liabilities;
(b) Waive or compromise any right or claim relating to the
Company's business except in the ordinary course of business; or
(c) Cancel, without full payment, any note, loan, or other
obligation owing to Sellers' Interests or the Company relating to the Company's
business except in the ordinary course of business.
5.10 Agreements. Sellers will not cause the Company to modify, amend,
cancel, or terminate any of its existing contracts or agreements, or agree to,
by or on behalf of the Company, any of those acts other than in the ordinary
course of business.
5.11 Warranties at Closing. All representations and warranties of
Sellers set forth in this Agreement and in any written statements delivered to
Purchaser by Sellers under this Agreement will also be true and correct as of
the Closing Date as if made on that date.
5.12 Tax on Prior Sales. Sellers agree to furnish to Purchaser
certificates from state and foreign taxing authorities and any related
certificates that Purchaser may reasonably request as evidence that all sales
and use tax liabilities of the Company accruing before the Closing Date have
been fully satisfied or provided for.
13
5.13 Confidentiality. Sellers and their representatives will hold in
strict confidence, and will not divulge, communicate, use to the detriment of
Purchaser or for the benefit of any other person or persons, or misuse in any
way, any financial information, including the terms of this Agreement, or other
data obtained in connection with this Agreement, including, without limitation,
any Confidential Information of Purchaser, personnel information, secret
processes, know how, customer lists, formulas, or other technical data; and if
the transactions contemplated by this Agreement are not consummated, Sellers and
their representatives will return to Purchaser all such data and information as
Purchaser may reasonably request, including, without limitation, work sheets,
test reports, manuals, lists, memoranda, and other documents prepared by or made
available to Sellers in connection with this transaction. "Confidential
Information" shall mean the technical information, trade secrets, and all other
information about the Purchaser, the Company, or its products. Information shall
not be considered "Confidential Information" to the extent that the disclosing
party can clearly demonstrate the information (i) is publicly and openly known
and in the public domain through no fault of the receiving party and without a
breach of this Agreement, (ii) is or has lawfully been disclosed to the
receiving party by a third party without any obligation of confidentiality, or
(iii) is required to be disclosed by law. Sellers may disclose such information
to its attorneys and accountants so long as they agree to keep such information
confidential.
5.14 Closing. Sellers shall use their best efforts to cause the
conditions specified in Article 5 hereof to be satisfied at or prior to the
Closing Date hereof.
ARTICLE 6
COVENANTS OF PURCHASER
6.1 Purchaser's Covenants. Purchaser hereby covenants and agrees that
from the date of this Agreement until the Closing Date:
6.2 Confidentiality. Purchaser and its officers, directors, and other
representatives will hold in strict confidence, and will not divulge,
communicate, use to the detriment of Sellers or for the benefit of any other
person or persons, or misuse in any way, any financial information or other data
related to Sellers obtained in connection with this Agreement, including,
without limitation, any confidential information or trade secrets of Sellers,
personnel information, secret processes, know how, customer lists, formulas, or
other technical data; and if the transactions contemplated by this Agreement are
not consummated, Purchaser will return to Sellers all such data and information
as Sellers may reasonably request, including, without limitation, work sheets,
test reports, manuals, lists, memoranda, and other documents prepared by or made
available to Purchaser in connection with this transaction.
6.3 Closing. Purchaser will use its best efforts to cause the
conditions specified in Article 6 hereof to be satisfied at or as soon as
practicable prior to the Closing Date.
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ARTICLE 7
POST CLOSING COVENANTS
7.1 Books and Records. Sellers and Purchaser hereby covenant and agree
that as soon as is reasonably practicable after the Closing Date, Sellers'
representatives and Purchaser's representatives will cooperate in reviewing the
books and records of the Company relating to the Company's business and the
Sellers' Interests. Purchaser agrees to provide to Sellers and their
representatives during business hours and upon reasonable notice, any books and
records relating to the Company's business and the Sellers' Interests desired by
Sellers for tax purposes. Such items will be copied for and given to Sellers at
Sellers' expense. All books and records relating to the Company's business and
Sellers' Interests shall belong to the Company.
7.2 Non-Competition. Sellers, jointly and severally, agree with
Purchaser that for a period of three (3) years from the Closing Date they will
not, whether for their own account or for the account of any other person, firm,
corporation, or other business entity, interfere with the Purchaser's
relationship with, or endeavor to entice away from the Purchaser, any person,
firm, corporation, or other business entity who or which at the Closing Date was
an employee, consultant, agent, customer, or in the habit of dealing with the
Company unless the Purchaser has formally terminated its business relationship
with said employee, consultant, agent, or customer.
7.3 Repayment of Factory Line of Credit. The Company's principal
balance outstanding at the Closing Date under its Factory Line of Credit with
California Audio Labs (Thailand) LTD (the "Factory") which is set forth in
Schedule 7.3 (the "Line Amount") will be repaid by the Company concurrent with
the Closing, less a seven and one half percent (7.5%) prepayment discount. No
interest shall be payable by the Company for the Line Amount.
7.4 Section 754 Election. Sellers agree to prepare and timely file with
the appropriate government authorities documentation necessary or appropriate to
constitute a Section 754 Election under the Internal Revenue Code and under any
corresponding provision of state or local law. Sellers agree to facilitate a
review of Seller's tax return(s) and related documentation by Purchaser's public
accountants, Deloitte & Touche, and to submit all such returns and
documentation, prior to filing, to Purchaser's public accountants for review and
comment.
7.5 Release. Effective as of the Closing Date, each Seller hereby
irrevocably waives and releases all known and unknown claims such Seller may
have against the Company, Purchaser, any of the Purchaser's affiliates, or any
present and former directors, officers, agents, and employees of the Company,
Purchaser, or any of the Purchaser's affiliates, and irrevocably waives and
releases any and all actions, claims, causes of action, or liabilities of any
nature, in law or equity, known or unknown, and whether or not heretofore
asserted, which such Seller ever had, now has, or hereafter can, will, or may
have against any of the foregoing, upon or by reason of any matter, cause, or
thing whatsoever from the formation of the Company to the Closing Date.
15
7.6 Name Change. Sellers agree that, within three months from the
execution of this Agreement, they and any and all affiliates of Sellers,
including without limitation California Audio Labs (Thailand) LTD, a Thai
company, shall have commenced proceedings to remove any reference to, or
otherwise use, either in whole or in part, "California Audio Labs" as a company
and/or d/b/a name or trademark under which it conducts any business worldwide,
and that it shall use its best efforts to effect such change as soon as
possible.
ARTICLE 8
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
8.1 Conditions. All obligations of Purchaser to proceed with Closing
and to consummate the transactions contemplated hereby are subject to
fulfillment and satisfaction by Sellers on or before the Closing Date of each of
the conditions precedent set forth in this Article 8. Purchaser may waive any or
all of these conditions in whole or in part without prior notice to Sellers;
provided, however, that no waiver of a condition shall constitute a waiver by
Purchaser of any of its other rights or remedies, at law or in equity, if
Sellers shall be in default of any of its representations, warranties, or
covenants under this Agreement.
8.2 Accuracy of Representations and Warranties. The representations and
warranties of Sellers contained herein and in any certificate or other writing
delivered pursuant hereto or in connection herewith shall be true and correct in
all material respects on and as of the Closing Date as though made at that time.
8.3 Performance of Sellers. Sellers shall have duly performed or
complied with all of the covenants, acts, and obligations to be performed or
complied with by Sellers hereunder at or prior to the Closing Date including the
deliveries set forth in Section 10.1.
8.4 No Material Changes. During the period from December 31, 1997 to
the Closing Date, there shall not have been any undisclosed material adverse
change in the Sellers' Interests, or the financial condition or results of
operations of the Company, and neither the Sellers' Interests nor the Company
shall have sustained any material casualty or other loss, damage, or
destruction. Since December 31, 1997, there shall have been no undisclosed
material adverse change in the assets, liabilities, or business of the Company
and no indebtedness shall have been incurred by the Company other than accounts
payable, taxes, and similar liabilities incurred in the ordinary course of
business. Without limiting the generality of the foregoing, neither the Company
nor the Sellers shall have incurred any liability or have engaged in any conduct
since the Execution Date that would have a undisclosed material adverse effect
on Purchaser with respect to the transaction contemplated hereunder.
8.5 Sellers' Certificate. Purchaser shall have received a certificate,
dated the Closing Date, signed and verified by the Sellers' certifying, in such
detail as Purchaser and its counsel may reasonably request, that the conditions
specified in Section 8.2 and Section 8.4, above, have been fulfilled.
16
8.6 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
8.7 Chief Financial Officer's Certificate. Purchaser shall have
received from the Chief Financial Officer of the Company a letter, dated the
Closing Date, that on the basis of his or her review (not an audit) of the
latest available accounting records of the Company, consultations with other
responsible officers of the Company, and other pertinent inquiries that he or
she may deem necessary, he or she has no reason to believe that during the
period from December 31, 1997, to the Closing Date, there has been any
undisclosed change in the financial condition or results of operations of the
Company except changes incurred in the ordinary and usual course of business
during that period that in the aggregate are not materially adverse, and other
changes or transactions, if any, contemplated by this Agreement.
8.8 Consents. All necessary agreements and consents of any parties to
the consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, shall have been obtained by
Sellers and delivered to Purchaser.
8.9 Approval of Documents. The form and substance of all certificates,
instruments, opinions, Schedules, and other documents delivered to Purchaser
under this Agreement shall be satisfactory in all respects to Purchaser and its
counsel.
8.10 Opinion of Counsel. Sellers shall have delivered to Purchaser an
opinion of counsel to Purchaser, dated as of the Closing Date, in the form of
Exhibit B.
8.11. Employment Agreement. Sellers shall have delivered to Purchaser
an Employment Agreement for Xxxxxx Xxxxxxxx in the form attached as Exhibit A.
8.12. Company Approval of Purchaser as a Member. If required by the
Operating Agreement or the laws of the State of California, Sellers will take
whatever steps are necessary to insure that Purchaser will, on the Closing Date,
have all rights and powers of a member of the Company under the Operating
Agreement or the laws of the State of California, including, but not limited to,
conducting a proper meeting at which Sellers, by unanimous vote, approve of the
sale, transfer, and assignment of Sellers' Interests to Purchaser and their
acceptance of Purchaser as the new, and sole, member of the Company.
8.13. Execution of Manufacturing Agreement. On or before the Closing
Date, California Audio Labs (Thailand) LTD and the Company shall have entered
into a Manufacturing Agreement in the forms of Exhibit C ("Manufacturing
Agreement"), which shall set forth all rights of Sellers and California Audio
Labs (Thailand) LTD regarding the Company after the Closing Date.
17
ARTICLE 9
CONDITIONS PRECEDENT TO SELLERS' PERFORMANCE
9.1 Conditions. All obligations of Sellers to proceed with Closing are
subject to fulfillment and the satisfaction on or before the Closing Date of
each of the conditions precedent set forth in this Article 9, unless otherwise
waived, in writing, by Sellers:
9.2 Accuracy of Representations and Warranties. The representations and
warranties of Purchaser contained herein and in any certificate or other writing
delivered pursuant hereto or in connection herewith shall be true and correct in
all material respects on and as of the Closing Date as though made at that time.
9.3 Performance of Purchaser. Purchaser shall have duly performed or
complied with all of the covenants, acts, and obligations to be performed or
complied with by Purchaser hereunder at or prior to the Closing Date.
ARTICLE 10
DELIVERIES AT CLOSING
10.1 Sellers' Obligations. In addition to any other documents that
Purchaser may require to be delivered by Sellers at Closing, Sellers shall
deliver to Purchaser at Closing the following documents:
(a) Executed assignments of all Contracts and Offers (with
consents if required) in the form attached hereto as Exhibit D;
(b) Executed assignments or consents of all assignable
licenses and permits issued to Sellers by any governmental entity or vendor;
(c) All books, records, and other data relating to the
Company's business;
(d) Instruments of assignment and transfer of all other
property of Sellers directly related to and/or owned by the Company of every
kind and description and wherever situated;
(e) Executed Employment Agreement;
(f) Sellers' Certificate as provided for in Section 8.5
hereof;
(g) Chief Financial Officer's Certificate as provided for in
Section 8.7 hereof;
(h) The consents as provided for in Section 8.8 hereof;
(i) The Manufacturing Agreement;
18
(j) Such other documents as Purchaser or its counsel or any
lender or lessor of Purchaser may reasonably request in order to effectuate the
transactions contemplated under this Agreement.
Sellers, at any time before or after the Closing, will execute,
acknowledge, and deliver any further deeds, assignments, conveyances, and other
assurances, documents, and instruments of transfer, reasonably requested by
Purchaser, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Purchaser, for the purpose of
assigning, transferring, granting, conveying, and confirming to Purchaser, or
reducing to possession, any or all property to be conveyed and transferred by
this Agreement. If requested by Purchaser, Sellers further agree to prosecute or
otherwise enforce in its own name for the benefit of Purchaser, any claims,
rights, or benefits that are transferred to Purchaser by this Agreement and that
require prosecution or enforcement in Sellers' name. Any prosecution or
enforcement of claims, rights, or benefits under this Section shall be solely at
Purchaser's expense, unless the prosecution or enforcement is made necessary by
a breach of this Agreement by Sellers.
10.2 Purchaser's Obligations. Purchaser shall deliver to Sellers:
(a) The Purchase Price payable at Closing as provided in
Section 1.3 hereof;
(b) Executed counterparts of such of the closing documents as
shall require acceptance by Purchaser.
ARTICLE 11
POST CLOSING
11.1 Nature of Statements. All statements contained herein, in any
Schedule or Exhibit hereto, or in any certificate or other written instrument
delivered by or on behalf of Sellers or Purchaser pursuant to this Agreement, or
in connection with the transactions contemplated hereby, shall be deemed
representations and warranties by Sellers or Purchaser, as the case may be.
11.2 Survival of Representations and Warranties. Regardless of any
investigation at any time made by or on behalf of any party hereto, or of any
information any party may have in respect thereof, all covenants, agreements,
representations, and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive for a period
of five (5) years after the Closing.
11.3 Indemnification of Purchaser by Sellers. Sellers shall, jointly
and severally, indemnify, defend, and hold harmless Purchaser and its direct and
indirect parent companies, subsidiaries, and affiliates, and their respective
officers, directors, and shareholders, successors and assigns, from and against
any and all costs, expenses, losses, damages, fines, penalties, or liabilities
(including, without limitation, interest which may be imposed in connection
therewith, court costs, litigation expenses, reasonable attorneys' fees, and
19
accounting fees) ("Actual Loss") incurred by Purchaser, directly or indirectly,
with respect to, in connection with, arising from or out of:
(a) A breach by Sellers of any representation or warranty made
by Sellers and contained in this Agreement or in any certificate or other
document delivered by said party to Purchaser hereunder or thereunder;
(b) A breach by Sellers of any covenant, restriction, or
agreement made by or applicable to Sellers and contained in this Agreement or in
any certificate or other document delivered by said party to Purchaser hereunder
or thereunder; and
(c) Any claim, debt, suit, cause of action, investigation, or
proceeding of any kind whatsoever, whether instituted or commenced prior to or
after the Closing Date and which relates to or arises from the business or
assets of the Company on or before the Closing Date which was not specifically
disclosed in a schedule to this Agreement.
The parties hereby agree that claims arising out of Section 11.3(a) and
Section 11.3(b) above, and to the extent practicable claims arising out of
Section 11.3(c) above, shall be resolved by arbitration pursuant to the
procedure set forth in Section 11.6 below.
11.4 Indemnification of Sellers by Purchaser. Purchaser shall
indemnify, defend, and hold Sellers harmless from and against any and all costs,
expenses, losses, damages, fines, penalties, or liabilities (including, without
limitation, interest that may be imposed in connection therewith, court costs,
litigation expenses, reasonable attorneys' fees, and accounting fees) ("Actual
Loss") incurred by Sellers with respect to, in connection with, arising from, or
out of:
(a) A breach by Purchaser of any representation or warranty
made by Purchaser and contained in this Agreement or in any certificate or other
document delivered by Purchaser to Sellers hereunder or thereunder; and
(b) A breach by Purchaser of any covenant, restriction, or
agreement made by or applicable to Purchaser and contained in this Agreement or
in any certificate or other document delivered by Purchaser to Sellers hereunder
or thereunder.
The parties hereby agree that claims arising out of Section 11.4(a) and
Section 11.4(b) above, shall be resolved by arbitration pursuant to the
procedure set forth in Section 11.6 below.
11.5 Procedure for Indemnification.
(a) The party which is entitled to be indemnified hereunder
(the "Indemnified Party") shall promptly give notice hereunder to the party
required to indemnify (the "Indemnifying Party") after obtaining written notice
of any claim as to which recovery may be sought against the indemnifying party
because of the indemnity in Section 11.3 and Section 11.4 hereof and, if such
indemnity shall arise from the claim of a third party, shall permit the
Indemnifying Party to assume the defense of any such claim and any litigation
resulting from
20
such claim. Notwithstanding the foregoing, the right to indemnification
hereunder shall not be affected by any failure of an Indemnified Party to give
such notice, or delay by an Indemnified Party in giving such notice unless, and
then only to the extent that, the rights and remedies of the Indemnifying Party
shall have been prejudiced as a result of the failure to give, or delay in
giving, such notice. Failure by an Indemnifying Party to notify an Indemnified
Party of its election to defend any such claim or action by a third party within
forty five (45) days after notice thereof shall have been given to the
Indemnifying Party shall be deemed a waiver by the Indemnifying Party of its
right to defend such claim or action.
(b) If the Indemnifying Party assumes the defense of such
claim or litigation resulting therefrom, the obligations of the Indemnifying
Party hereunder as to such claim shall include taking all steps necessary in the
defense or settlement of such claim or litigation and holding the Indemnified
Party harmless from and against any and all damages caused by or arising out of
any settlement approved by the Indemnifying Party or any judgment in connection
with such claim or litigation. The Indemnifying Party shall not, in the defense
of such claim or any litigation resulting therefrom, consent to entry of any
judgment (other than a judgment of dismissal on the merits without costs) except
with the written consent of the Indemnified Party, or enter into any settlement
(except with the written consent of the Indemnified Party) which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all liability in respect of
such claim or litigation. Anything in this Section 11.5 to the contrary
notwithstanding, the Indemnified Party may, with counsel of its choice and at
its expense, participate in the defense of any such claim or litigation.
(c) If the Indemnifying Party shall not assume the defense of
any such claim by a third party or litigation resulting therefrom after receipt
of notice from such Indemnified Party, the Indemnified Party may defend against
such claim or litigation in such manner as it deems appropriate, and unless the
Indemnifying Party shall deposit with the Indemnified Party a sum equivalent to
the total amount demanded in such claim or litigation plus the Indemnified
Party's estimate of the costs of defending the same, the Indemnified Party may
settle such claim or litigation on such terms as it may deem appropriate and the
Indemnifying Party shall promptly reimburse the Indemnified Party for the amount
of such settlement and for all damages incurred by the Indemnified Party in
connection with the defense against or settlement of such claim or litigation.
(d) The Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of any judgment rendered with respect to any
claim by a third party in such litigation and for all damage incurred by the
Indemnified Party in connection with the defense against such claim or
litigation, whether or not resulting from, arising out of, or incurred with
respect to, the act of a third party.
11.6 Arbitration. Any controversy or claim arising solely between the
parties out of or relating to Section 11.3 or Section 11.4 herein, or the breach
thereof, shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, to be held in the
State of California, and judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. The parties agree that
21
within six (6) months of notice of such a controversy or claim by one party to
another, said controversy or claim, if unresolved, shall be submitted to
arbitration.
ARTICLE 12
MISCELLANEOUS
12.1 Liens. In the event Purchaser receives any notice or claim of lien
upon any of Sellers' assets which lien is not satisfied or released as of the
Closing Date, and Purchaser becomes obligated to pay any amounts due in
connection with such lien, Purchaser shall have the right in addition to any
other remedy to offset against any payments due any or all of the Sellers, which
offset shall be in lieu of the payment of such amounts. Purchaser shall comply
with the terms of all notices and orders issued by such authorities, and shall
have no responsibility for the correctness or accuracy of such notices and
orders. If any such offset is made, then Purchaser's rights and interests shall
be assigned to Sellers, who can then seek recovery from the third party
responsible for said offset.
12.2 Written Agreement to Govern. This Agreement sets forth the entire
understanding and supersedes all prior oral or written agreements among the
parties hereto relating to the subject matter contained herein, and merges all
prior and contemporaneous discussions among them. No party hereto shall be bound
by any definition, condition, representation, warranty, covenant, or provision
other than as expressly stated in this Agreement or as hereafter set forth in a
written instrument executed by such party or by a duly authorized representative
of such party.
12.3 Severability. The parties hereto expressly agree that it is not
the intention of any party hereto to violate any public policy, statutory, or
common law rules, regulations, treaties, or decisions of any government or
agency thereof. If any provision of this Agreement is judicially or
administratively interpreted or construed as being in violation of any such
provision, such articles, sections, sentences, words, clauses, or combinations
thereof shall be inoperative, and the remainder of this Agreement shall remain
binding upon the parties hereto.
12.4 Notices and Other Communications. Every notice or other
communication required, contemplated, or permitted by this Agreement by any
party shall be in writing and shall be delivered either by personal delivery,
telegram, private courier service, or by certified or registered mail, postage
prepaid, return receipt requested, addressed to the party to whom intended at
the following address:
(a) If to Purchaser:
---------------
Go-Video, Inc. and Go-Video Productions, Inc.
0000 X. XxXxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: President
(000) 000-0000 - facsimile
22
Copy to:
Xxxxxx X. Xxxxxx
Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
(000) 000-0000 - facsimile
(b) If to Sellers:
-------------
Mr. Akradej Srichawla
4 1/2 World Trade Center
Section X-000
Xxxxxxxxx, Xxxxxxx 00000
Xxxxxxxx
(000) 000-0000 - facsimile {Thailand}
Copy to:
Xxxxxxx X. Xxxxxxxx, CPA
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 - facsimile
or at such other address as the intended recipient shall from time to time
designate by written notice delivered in accordance herewith. Notice by courier
or certified or registered mail shall be effective on the date it is officially
recorded as delivered to the intended recipient by return receipt or the date of
attempted delivery where delivery is refused by the intended recipient. All
notices and communications required, contemplated, or permitted by this
Agreement to be delivered in person shall be deemed to have been delivered to
and received by the addressee, and shall be effective, on the date of personal
delivery. Any notice transmitted by telegram shall be deemed to have been
delivered to and received by the addressee, and shall be effective, on the date
said notice is delivered to the telegram company for transmission.
12.5 Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute one and the same agreement.
12.6 Governing Law. The validity, construction, and enforceability of
this Agreement shall be governed in all respects by the laws of the State of
California, without regard to its conflict of laws rules.
12.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors, and assigns;
provided, however, that this Agreement may not be assigned by Sellers without
the prior written consent of Purchaser.
23
12.8 Further Assurances. At any time on or after the date hereof, the
parties hereto shall each perform such acts, execute and deliver such
instruments, assignments, endorsements and other documents and do all such other
things consistent with the terms of this Agreement as may be reasonably
necessary to accomplish the transaction contemplated in this Agreement or
otherwise carry out the purpose of this Agreement.
12.9 Gender, Number and Headings. The masculine, feminine, or neuter
pronouns used herein shall be interpreted without regard to gender, and the use
of the singular or plural shall be deemed to include the other whenever the
context so requires.
12.10 Schedules and Exhibits. The Schedules and Exhibits referred to
herein and attached hereto, are incorporated herein by such reference as if
fully set forth in the text hereof.
12.11 Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof shall, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
12.12 Specific Performance. Each party's obligations under this
Agreement are unique. If any party should default in its obligations under this
Agreement, the parties each acknowledge that it would be extremely impracticable
to measure the resulting damages; accordingly, the non-defaulting party, in
addition to any other available rights or remedies, may xxx in equity for
specific performance, and the parties each expressly waive the defense that a
remedy in damages will be adequate. Notwithstanding any breach or default by any
of the parties of any of their respective representations, warranties,
covenants, or agreements under this Agreement, if the purchase and sale
contemplated by it shall be consummated at the Closing, each of the parties
waives any rights that it or he may have to rescind this Agreement or the
transaction consummated by it; provided, however, this waiver shall not affect
any other rights or remedies available to the parties under this Agreement or
under the law.
12.13 Costs. If any legal action or any arbitration or other proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
12.14 Assignment. This Agreement may not be assigned by any party
hereto without the consent of the other party hereto.
24
12.15 Section and Paragraph Headings. The Article and Section headings
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
12.16 Amendment. This Agreement may be amended only by an instrument in
writing executed by all parties hereto.
12.17 Expenses. Except as otherwise expressly provided herein, each
party shall bear its own expenses incident to this Agreement and the
transactions contemplated hereby, including without limitation, all fees of
counsel, consultants, and accountants.
12.18 Waiver of Objection to Personal Jurisdiction. Sellers hereby
expressly submit and consent in advance to jurisdiction in any action or
proceeding commenced by Purchaser in arbitration in California or in the
Superior Court of California or the United States District Court for the
Northern District of California, and hereby waives personal service of the
Summons and Complaint, or other process of papers issued therein, and agrees
that service of such Summons and Complaint or other process or papers may be
made by Federal Express or other international commercial mail carrier addressed
to Sellers at the address to which notices are to be sent pursuant to this
agreement. Seller waives any claim that San Francisco, California or the
Northern District of California is an inconvenient forum or an improper forum
based on lack of venue. Should Sellers, after being so served, fail to appear or
answer to any summons, complaint, process or papers so served within the number
of days prescribed by law after the mailing thereof, Sellers shall be deemed in
default and an order and/or judgment may be entered by Purchaser against Sellers
as demanded or prayed for in such summons, complaint, process or papers. The
exclusive choice of forum for Sellers set forth in this section shall not be
deemed to preclude the enforcement, by Purchaser, or any judgment obtained in
any other form or the taking, by Purchaser, of any action to enforce the same in
any other appropriate jurisdiction, and Sellers hereby waive the right to
collaterally attack any such judgment or action.
12.19 Waiver of Right to Jury Trial. Purchaser and Sellers acknowledge
and agree that any controversy which may arise under this Agreement or with
respect to the transactions contemplated thereby would be based upon difficult
and complex issues and, therefore, the parties agree that any lawsuit arising
out of any such controversy shall be tried in a court of competent jurisdiction
by a judge sitting without a jury.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
"SELLERS" ------------------------------------
XXXXXXXX XXXXXXXXX
------------------------------------
AKRADEJ SRICHAWLA
------------------------------------
VORATHEP SRICHAWLA
"PURCHASER" GO-VIDEO, INC., a Delaware corporation
By:
---------------------------------
Xxxxx X. Xxxxxxx
Its: Chairman, Chief Executive Officer,
and President
GO-VIDEO PRODUCTIONS, INC., a Delaware corporation
By:
---------------------------------
Xxxxx X. Xxxxxxx
Its: Chairman, Chief Executive Officer,
and President
"FACTORY" CALIFORNIA AUDIO LABS (Thailand) LTD
{As to Section
7.3 only} By:
---------------------------------
Its:
--------------------------------
By:
---------------------------------
Its:
--------------------------------
26
Exhibit A
---------
EMPLOYMENT AGREEMENT
27
Exhibit B
---------
OPINION OF COUNSEL
28
Exhibit C
---------
MANUFACTURING AGREEMENT
29
Exhibit D
---------
ASSIGNMENTS OF CONTRACTS AND OFFERS
30
Schedule 3.2
------------
OPERATING AGREEMENT
31
Schedule 3.8
------------
CHANGES OUTSIDE ORDINARY COURSE OF BUSINESS
32
Schedule 3.9
------------
LEASES
------
33
Schedule 3.12
-------------
LITIGATION
34
Schedule 3.13
-------------
CONSENTS
35
Schedule 3.15
-------------
LICENSES AND PERMITS
36
Schedule 3.17
-------------
CONTRACTS
37
Schedule 3.18
-------------
PATENTS AND TRADEMARKS
38
Schedule 3.19
-------------
EMPLOYEE BENEFIT PLANS
39
Schedule 3.20
-------------
WARRANTIES
40
Schedule 3.22
-------------
ACCOUNTS RECEIVABLE
41
Schedule 3.23
-------------
INVENTORIES
42
Schedule 3.26
-------------
ENVIRONMENTAL MATTERS
43
Schedule 3.29
-------------
TRANSACTIONS WITH RELATED PARTIES
44
Schedule 3.34
-------------
CUSTOMERS
45
Schedule 3.35
-------------
SUPPLIERS
46
Schedule 3.36
-------------
INSURANCE
47
Schedule 7.3
------------
FACTORY LINE OF CREDIT
48
