ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into as of this
15th day of May 2002, between each of Xx. Xxx Productions, a sole proprietor
("Seller"), and Legends of the Faith, Inc., a Nevada corporation ("Buyer"), to
memorialize the terms and conditions under which Seller shall transfer to
Buyer, and Buyer shall acquire from Seller, the assets and liabilities
described below.
1. Assets and Liabilities Transferred. Seller hereby transfers to Buyer,
and Buyer receives from Seller: (i) all of Seller's rolling stock, machinery,
equipment, office equipment, computer hardware and software, tools, supplies,
parts, furniture, fixtures, and all other assets of a similar character owned
by Seller and used in Seller's business (a complete list of all such equipment
is set forth on Schedule B hereto); (ii) all of Seller's inventory;( up to
$7500: above or below will be balanced thru escrow by either party (iii) all
of Seller's rights and obligations under existing contracts to which Seller is
a party; and (iv) all other assets or properties of Seller relating to the
business and in existence on the closing date, including telephone numbers and
telephone directory listings and advertising, customer lists, sales and
purchase records, office records, all drawings, franchises, licenses,
permits, other rights granted by governmental agencies, trademarks, trade
names, logos, copyrights, patents, goodwill, know-how, processes and
supplies. Buyer assumes no liabilities of Seller. Buyer has no obligation
whatsoever with respect to any employees of Seller, including any obligations
pursuant to any benefit or retirement or other similar plan.
2. Representations and Warranties of Seller. Seller represents and
warrants to Buyer the following: (i) Seller is validly organized, in good
standing, and operates with all necessary authority; (ii) this Agreement is
legally binding against Seller; (iii) the execution and performance of this
Agreement will not violate Seller's organizational documents or any of
Seller's agreements, including loans; (iv) there is no legal claim pending or
threatened against Seller which might have an adverse effect on the assets,
the business, or the transaction contemplated by this Agreement; (v) true and
complete copies of all contracts, leases, agreements, licenses and permits
relating to the operation of the business or the assets have been provided to
Buyer by Seller; (vi) neither Seller nor any of Seller's affiliates are in
default under any material agreement; (vii) the execution and performance of
this Agreement will not constitute a default under any material agreement;
(viii) a true and complete list of all of Seller's employees, and their
pertinent history with Seller, has been provided to Buyer; (ix) Seller
lawfully possesses and will, at the Closing deliver to Buyer, good and
marketable title to Seller's assets as described in this Agreement; (x) all of
Seller's tangible assets are in good working order; equipment is being
purchased in "as is" condition; (xi) Seller's assets and business operations
are insured for adequate amounts under valid liability and casualty policies;
(xii) No real estate utilized in Seller's business is, to the best of Seller's
knowledge, contaminated with any hazardous substances; (xiii) Seller is not
in violation of any requirements of any environmental law with respect to the
operation of Seller's business or assets; (xiv) Seller has timely filed all
federal, state and local tax returns and has paid all applicable taxes and
assessments which have become due and payable; (xv) Seller has provided Buyer
with accurate financial statements which fairly and accurately represent
Seller's business; (xvi) no statement,
representation or warranty by Seller in this Agreement or in any document
delivered in connection with this Agreement contains any untrue or misleading
statement of material fact; (xvii) there is no information which would have a
material adverse effect on Seller's assets or business which has not been
disclosed to Buyer in writing; (xviii) Seller has not participated in any
retirement plan for the benefit of any employees of Seller's business; and
(xix) Seller has held, and currently does hold, all necessary licenses and
permits to conduct Seller's business. Each representation and warranty
contained in this Section 2 shall remain in full force and effect from the
date of the Closing and for one year thereafter.
3. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller the following: (i) Buyer is validly organized, and in good standing;
(ii) this Agreement is legally binding against Buyer; (iii) the execution and
performance of this Agreement will not violate Buyer's organizational
documents; and (iv) there is no legal claim pending or threatened against
Buyer which might have an adverse effect on this transaction.
4. Covenants of Seller. From the date hereof until the Closing, Seller
will not (i) incur any obligations except in the ordinary course of business;
(ii) allow any additional liens on Seller's assets; (iii) sell any of Seller's
assets, except sales of inventory in the ordinary course of business; (iv)
amend, transfer or terminate any of the contracts to be assumed by Buyer; (v)
grant salary or benefit increases to any employees; or (vi) enter into any
transactions other than in the ordinary course of business. Moreover, from
the date hereof until the Closing, Seller will: (i) conduct its business only
in the usual course of business; (ii) maintain Seller's assets and business,
including employee and customer relationships, business records and accounts;
(iii) pay all costs of operating Seller's business as they become due and all
liabilities existing on the date of Closing. (iv) comply with all laws; (v)
not breach any material contracts or cause any representation or warranty of
Seller to be untrue; (vi) keep all insurance in effect; and (vii) allow Buyer
or Buyer's representatives reasonable access to Seller's facilities, assets
and records. In addition, beginning on the date of Closing and for a period
of three years from the date thereof, Seller will not, directly or indirectly,
within a 45 mile radius of the Business engage in any business similar to the
type of business involved in this Agreement, or solicit business from any of
Seller's customers. If a court of competent jurisdiction finds that any of
these non-compete provisions are too broad to be enforced, the court may
modify those provisions to the extent necessary to permit their enforcement.
Buyer can use all legally available remedies to counter a breach of this
non-compete covenant, including injunctive relief. In consideration of the
non-compete covenant, Buyer will pay to Seller $1.00 at the Closing, which is
included in Section 5 hereof.
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5. Terms of Sale. In exchange for Seller's assets, Buyer will pay the
Seller
(i) $5,000 xxxxxxx money, to be held by Western Title Company of Carson
City, NV (the "Escrow Agent"), to be applied to the purchase price
at the Closing, otherwise to be returned to Buyer if the transaction
contemplated by this Agreement fails to close due to no fault of
Buyer; (ii) $45,000 cash paid at the Closing; (iii) a secured
promissory note (which may be prepaid at any time without penalty)
in the form attached hereto as Exhibit C payable to Seller in the
amounts of (1) $50,000 within 90 days of the date of Closing (2)
$35,000 within 180 days of the date of the Closing, (3) $40,000
within 250 days of the date of Closing, and (4) $75,000 within one
year of the date of the Closing; and (iv) assumption of the $904 per
month lease on the Tajima 4 head embroidery machine attached hereto
as Exhibit D. Should any payment of items #1-4 above be more than
15 days late, a late charge of 1% will be added to the payment then
due. Interest at the rate of 4.5% on the outstanding principal
balance is included in the above payment schedule.
(ii) The aggregate $250,000 purchase price is allocated as follows:
Equipment $ 50,000
Inventory $ 10,000
Non-compete covenant $ 1
Goodwill $ 189,999
All recurring costs, such as utilities and property taxes, will be prorated to
the date of Closing, with Seller paying for the date of Closing. Each party
will bear its own costs in connection with this Agreement and the transactions
contemplated hereby. Seller will be responsible for the payment of any and
all taxes payable in connection with this Agreement and the transactions
contemplated hereby.
6. Employment Agreement. Buyer and Xxxxxx Xxxx ("Employment") will enter
into a Employment agreement, providing for transition-period of 90 days with a
minimum of 40 hours per week at the rate of $1000.00 per week. Employee will
perform management, training, and strategic consulting direction during the
entire term of such Employment agreement. Employee
will be paid $ 25.00 per hour if serving less than 40 hours per week.
7. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will occur on or before May 31, 2002. Immediately
prior to the Closing, Seller and Buyer will together conduct a physical
inventory of the products inventory and each will initial duplicate copies of
an inventory sheet listing the inventory being purchased and the purchase
price for each item.
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At the Closing, Seller will perform all acts necessary to put Buyer in actual
and complete possession and ownership of Seller's assets, free of all liens,
including providing the following documents: Xxxx of Sale for the equipment,
inventory, miscellaneous assets, assignment of patents, trademarks, trade
names, copyrights, contracts, leases, all certificates of occupancy, licenses,
tariffs, permits, authorizations, approvals and applications, required by law
or issued by any government authority having jurisdiction over the assets;
releases of all liens; consents of any third parties necessary to permit the
sale; and consents of any third parties necessary to assign any contracts to
Buyer.
At the Closing, Buyer will deliver payment of the purchase price for Seller's
assets; evidence that all necessary authorizations have been obtained from
Buyer's governing body, including a corporate resolution authorizing Buyer's
purchase of Seller's assets.
8. Indemnification. Seller, Except as otherwise provided herein, will
indemnify Buyer against all liabilities of Seller, including those related to
hazardous substances and including those related to Seller's representations
in this Agreement or in any document delivered in connection with this
Agreement, including claims arising out of the operation of Seller's business
or for products sold prior to the Closing. Buyer will indemnify Seller against
all liabilities of Buyer related to Buyer's representations in this Agreement
or in any document delivered in connection with this Agreement.
9. Bulk Sales Law Compliance and Announcements. Seller will furnish to
Buyer a complete list of existing creditors, with the amounts due to each, and
agrees to cooperate with Buyer in all matters related to notice to such
creditors in accordance with the provisions of the Uniform Commercial Code.
The parties will cooperate with each other in announcing this transaction.
Seller will cooperate with Buyer in notifying key customers and vendors in
person and through written correspondence.
10. Risk of Loss. All risk of loss to the assets will remain with Seller
until the Closing. If a material loss of Seller's assets occurs prior to the
Closing, Buyer has the right to terminate this Agreement.
11. Notice. Any notice required by either party to be given to the other
will be in writing addressed to the other party at the following respective
addresses, and deemed given when personally delivered or three days after it
is mailed.
Legends of the Faith, Inc.
Attn: Xx. Xxxx Xxxxxxx
0000 Xxxxxxxxx Xxx
Xxxxxx, XX 00000
Xx. Xxx Productions/Xxxxxx Xxxx
000 Xxxxxxx Xxx
Xxxxxx Xxxx, XX 00000
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12. Successors and Assigns. This Agreement will be binding on the
successors and assigns of the parties.
13. Construction. This Agreement will be governed by the laws of the State
of Nevada. If any provision of this Agreement is ineffective, the other
provisions are not affected.
14. Counterpart/Telefax Signatures. This Agreement may be executed in
counterparts, and may be accepted by sending an executed copy of the signature
page by telefax if the original is also mailed on the same date.
15. Entire Agreement/Amendment. This Agreement contains the entire
agreement of the parties with respect to the subject matter and cannot be
modified or amended unless in writing and signed by all the parties.
IN WITNESS WHEREOF, the parties hereto have each hereunder set their hands by
their duly authorized representatives as of the date first written above.
LEGENDS OF THE FAITH, INC. XX. XXX PRODUCTIONS
/s/ Xxxx Xxxxxxx /s/ Xxxxxx Xxxx
By:__________________________ By:_____________________________
Xxxx Xxxxxxx Xxxxxx Xxxx
Date: May 15, 2002 Date: May 15, 2002
