EXHIBIT 10.68
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of this 29th
day of March, 2002 by and between FFM Acquisition Corp., a corporation organized
and existing under the laws of the State of California ("Buyer"), Fast Forward
Marketing, Inc., a corporation organized and existing under the laws of the
State of California ("Seller"), Intervisual Books, Inc., a corporation organized
and existing under the laws of the State of California (the "Stockholder") and
Xxxxxxxxx Wireless, a corporation organized and existing under the laws of the
State of Nevada ("Xxxxxxxxx") with respect to Sections 5.1, 5.2, 5.3 and 12
only.
RECITALS:
Seller is engaged in the business of distributing video products for
major motion picture studios and independent film and video producers. Seller
desires to sell, and Buyer desires to acquire, the property and assets
comprising the Business, upon the terms and conditions set forth herein.
Kanakaris is the 50% shareholder of Buyer.
IN CONSIDERATION of the mutual covenants, agreements, representations
and warranties set forth herein, and in reliance thereon, Buyer and Seller agree
as follows:
SECTION 1. DEFINITIONS
The capitalized and certain other terms used herein shall have the
meanings ascribed to them in Schedule 1 to this Agreement.
SECTION 2. THE TRANSACTION
2.1 Assets To Be Acquired. Subject to the terms and conditions of this
Agreement, and in reliance on the representations, warranties and covenants
contained herein, on and as of the Closing Date, Seller will sell, convey,
assign, transfer and deliver to Buyer, and Buyer will purchase and acquire, the
Business as a going concern and all of Seller's right, title and interest in and
to the Purchased Assets, as the same shall exist as of the Closing Date
(excluding the Excluded Assets listed in Section 2.2), including without
limitation:
(a) all Accounts Receivable;
(b) all Inventory;
(c) all Equipment, a list of which is set forth in Schedule 2.1(c);
(d) all Intellectual Property, a portion of which is set forth in
Schedule 2.1(d), together with the goodwill associated therewith and symbolized
thereby; and any licenses relating to the Intellectual Property used in or
useful to the Business, whether to or from Seller and all income, royalties,
damages and payments due or payable with respect to any time on or after the
Closing Date, including, without limitation, damages and payments for
infringements or misappropriations of any of the Intellectual Property
throughout the world after the Closing Date; and all rights of Seller in and to,
including rights to enforce the terms of, confidentiality
agreements and noncompetition agreements of, and any agreements relating to the
assignment of Intellectual Property made by, prior and present employees of
Seller and any such agreements with any other Person with respect to the
Intellectual Property;
(e) all Technical Information;
(f) all Computer Software Assets;
(g) all Prepaid Expenses;
(h) all Contracts and Leases;
(i) all Open Orders;
(j) all Permits, a list of which is set forth in Schedule 2.1(j);
(k) all Books and Records; all property, records and copies of
personnel records of employees who become Hired Employees after the Closing Date
and the right to receive and retain mail and other communications relating to
the Business;
(l) all certifications, ratings, listings and similar benefits from
any product or quality control certification organization and all systems and
manuals related thereto;
(m) all memberships of Seller relating to the Business in, and all
rights as a member of, the industry, trade, civic, social and other
associations, organizations and clubs, a list of which is set forth in Schedule
2.1(m); and
(n) all other assets (including causes of action, rights of action,
contract rights and warranty and product liability claims against third parties)
relating to the Purchased Assets or the Business.
2.2 Excluded Assets. Notwithstanding Section 2.1, the following assets
shall be excluded from this Agreement and shall not be sold, conveyed, assigned,
transferred or delivered to Buyer pursuant hereto:
(a) Any insurance policies maintained by Seller with respect to the
Business and any prepaid insurance expenses;
(b) Any intercompany deposits with Seller and intercompany
receivables from Seller or an Affiliate of Seller;
(c) Seller's franchise to be a corporation, its certificates of
incorporation, bylaws, minutes books and other records having to do with the
organization and capitalization of Seller;
(d) Any claims and rights against third parties (including, without
limitation, insurance carriers), to the extent they relate to Liabilities or
Obligations that are not assumed by
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Buyer (except to the extent Buyer shall have incurred costs and expenses with
respect to such claims and rights);
(e) All payments made by Seller which constitute prepaid Taxes of
the Business and all claims for refunds of Taxes and other governmental charges
to the extent such refunds relate to periods ending on or prior to the Closing
Date;
(f) Any pension, health or welfare plans, any post-retirement
benefits for any employees of Seller and all payments made by Seller which
constitute prepaid expenses of the Business relating to such excluded employee
benefits;
(g) Seller's depository and other accounts, including without
limitation, cash on hand;
(h) All assets listed in Schedule 2.2(h); and
(i) All rights of Seller under this Agreement.
2.3 Consideration for the Purchased Assets. Subject to the terms and
conditions of this Agreement, and in reliance on the representations, warranties
and covenants contained herein, in consideration of the sale, conveyance,
assignment, transfer and delivery of the Purchased Assets, Buyer agrees (a)
subject to adjustment pursuant to Section 2.5, to pay and deliver to Seller on
the Closing Date the Purchase Price, as set forth in Section 2.4, and (b) to
assume as of the Closing Date the Assumed Liabilities, as set forth in Section
2.6.
2.4 Purchase Price. Subject to the adjustment set forth in Section 2.5
below, the purchase price for the Purchased Assets is up to $516,000 payable as
follows: (a) $255,000 which shall be paid to Seller's legal counsel as escrow
agent on the date hereof and (b) up to $261,000 paid from the amounts collected
on accounts receivable outstanding at the time of closing (including future
accounts receivable related to Open Orders) ("Closing Receivables") as set forth
herein. Promptly following the date hereof, the Buyer and the Seller shall
jointly select a mutually agreeable bank to serve as an escrow agent (the
"Escrow Agent"). At Closing, the Buyer, the Seller and the Escrow Agent shall
enter into an escrow agreement in form and substance satisfactory to the parties
(the "Escrow Agreement"). The Escrow Agreement shall provide, among other
things, for the establishment of a lock box account ("Lock Box") with the Escrow
Agent and provisions memorializing the following agreement.
All collections from holders of accounts comprising Closing Receivables
be deposited into the Lock Box until the Lock Box Termination Date (as
hereinafter defined). Each of the Buyer and the Seller shall receive from the
Escrow Agent copies of checks (or wire transfer statements) deposited along with
any other information submitted in connection with each such payment. Joint
authorization in writing signed by each of the Buyer and the Seller will be
required before any funds can be released from the Lock Box. The Escrow Agent
shall deliver to each of the Buyer and the Seller semi-monthly statements (the
"Escrow Statements") detailing the names of the accounts, the amount paid, the
invoice number, and any other available relevant information with respect to
funds deposited into the Lock Box during the statement period. Within three (3)
business days following the delivery of each Escrow Statement, the Buyer shall
notify the Seller and the Escrow Agent in writing (the "Buyer Notification") as
to whether the
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funds deposited in the Lock Box were payments of a Closing Receivable or an
account receivable from an account comprising the Closing Receivables generated
post closing (a "New Receivable"). Within three business days (3) following
delivery of the Buyer Notification, the Seller and the Buyer shall jointly
instruct the Escrow Agent in a writing signed by each of the Buyer and the
Seller to (i) distribute to the Buyer all of the funds deposited in the Lock Box
with respect to the New Receivables, and (ii) distribute to the Seller forty two
and one half percent (42.5%) of the funds deposited in the Lock Box with respect
to the Closing Receivables; provided however, that in no event shall the Seller
be entitled to receive payment in excess of an aggregate amount of $261,000 (the
"Maximum Amount") from the Lock Box. The remaining funds deposited in the Lock
Box with respect to the Closing Receivables shall be used by the Buyer solely to
repay in full all of the accounts payable reflected on the Balance Sheet until
the Lock Box Termination Date. The Buyer shall submit to the Seller a schedule
of invoices included in the Assumed Liabilities to be paid and copies of any
settlement agreements executed by the Buyer with creditors with respect to the
Assumed Liabilities. Within five (5) days following the Seller's receipt of each
such schedule, the Seller and the Buyer shall authorize the Escrow Agent in a
writing signed by each of the Buyer and the Seller to distribute the amounts to
the parties as specified in such schedule.
The "Lock Box Termination Date" shall terminate upon the later of (i)
the Seller's receipt of the Maximum Amount from funds deposited in the Lock Box,
(ii) the payment by the Buyer of all of the Assumed Liabilities, or such lesser
amount pursuant to settlement agreements with such third party creditors, such
settlement agreements to be in form and substance reasonably satisfactory to the
Seller; or (iii) the first anniversary of the Closing Date.
Buyer agrees to use its reasonable best efforts to collect all of the
Closing Receivables, maintain good working relationships with such accounts
comprising the Closing Receivables and discourage returns of previously sold
products. Amounts collected by Buyer from accounts comprising Closing Receivable
shall be applied first to the oldest Closing Receivable prior to applying such
amounts to New Receivables. Buyer further agrees that after the Closing Date it,
together with Seller, shall prepare a notice to be delivered to all customers
that comprise the Closing Receivables informing such customers that payments
relating to the Closing Receivables are to be made to the Lock Box.
2.5 Adjustment to Purchase Price. In the event that any Closing
Receivables remain uncollected as of the first anniversary of the Closing Date
("Adjustment Date"), and provided the Buyer has used its reasonable best efforts
to collect the Closing Receivables and has not compromised the ability to
collect these receivables (and in no event shall Buyer's exercise of reasonable
business judgment be deemed to have compromised its ability to collect Closing
Receivables), then the amount of the Closing Receivables to which Seller is
entitled to collect shall be adjusted downward, after the Seller has had 30 days
following the Adjustment Date to try to collect these amounts, by an amount
equal to the amount of Closing Receivables that remain uncollected following
such 30-day period multiplied by forty two and one-half percent (42.5%) (the
"Adjusted Amount"). In the event that Seller has received payment from the Lock
Box for Closing Receivables in excess of the Adjusted Amount, then the Seller
shall repay to the Buyer the amount of such overpayment by immediate cash
payment.
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2.6 Assumed Liabilities. On and subject to the terms and conditions set
forth in this Agreement, as additional consideration for the Purchased Assets,
on the Closing Date Buyer shall undertake, assume, perform and otherwise pay,
satisfy and discharge, and hold the Seller harmless from all of the following
Liabilities and Obligations of Seller relating to the Business:
(a) the Liabilities and Obligations relating to the Business to the
extent incurred in the ordinary course of business, including, to the extent of
the warranty reserve set forth in the Balance Sheet, any Warranty Claims; and
(b) the Liabilities and Obligations arising pursuant to Open Orders,
Contracts, Leases and Permits, but not including any Liability or Obligation
relating thereto, or arising out of or in connection with any breach thereof,
and occurring prior to the Closing Date (except as specifically provided in
Section 2.6 (a)).
2.7 Excluded Liabilities. Notwithstanding anything to the contrary
contained in this Agreement, Buyer will not assume or in any way become liable
for any Liabilities or Obligations other than the Assumed Liabilities, and
Seller shall retain, all of Seller's and its Affiliates' debts, Liabilities and
Obligations of any nature whatsoever (other than the Assumed Liabilities),
whether accrued, absolute or contingent, whether known or unknown, whether due
or to become due, including, without limitation, the following:
(a) the Liabilities or Obligations of Seller to the Stockholder
respecting dividends, distributions to its stockholder in liquidation,
redemptions of stock or otherwise;
(b) Liabilities or Obligations of Seller or the Stockholder arising
out of any transactions occurring, or Liabilities or Obligations incurred, after
the Closing Date, other than relating to Buyer's use or operation of the
Purchased Assets or the Assumed Liabilities after the Closing Date;
(c) any Liabilities or Obligations of Seller or the Stockholder for
expenses, Taxes or fees incident to or arising out of the negotiation,
preparation, approval or authorization of this Agreement or the consummation of
the transactions contemplated hereby, including, without limitation, all of its
attorneys', and accountants', fees and all brokers', or finders', fees or
commissions payable by Seller;
(d) any Liabilities or Obligations of Seller or the Stockholder
under or arising out of this Agreement;
(e) Liabilities or Obligations against which Seller is insured or
otherwise indemnified or which would have been covered by insurance (or
indemnification) but for a claim by the insurer (or the indemnitor) that the
insured (or the indemnitee) had breached its obligations under the policy of
insurance (or the contract of indemnity) or had committed fraud in the insurance
application or in entering unto the indemnity agreement;
(f) any Liabilities or Obligations of the Business to Seller or any
Affiliates of Seller, except payables for products sold or shipped to the
Business by Seller or an Affiliate of Seller after the Closing Date;
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(g) any Liabilities and Obligations of Seller to indemnify its
officers, directors, employees or agents;
(h) all Taxes imposed on Seller (including any Taxes of any other
corporation) and any Taxes assessed against Seller by virtue of its status as a
member of any consolidated group of which such other corporation was also a
member;
(i) all Liabilities and Obligations of the Business for Warranty
Claims with respect to products manufactured sold or delivered by Seller prior
to the Closing Date to the extent they, in the aggregate, exceed the warranty
reserve set forth in the Balance Sheet; and
(j) all Liabilities and Obligations arising under or imposed
pursuant to Environmental Laws, whether or not attributable to actions or
failures to act by Seller, with respect to the ownership of, operation of, or
properties utilized in connection with, the Business at any time prior to the
Closing Date, or to any property being transferred or leased to Buyer pursuant
to this Agreement;
(k) all Liabilities and Obligations for employee benefits and
employment-related Liabilities and Obligations of the Business incurred prior to
the close of business on the Closing Date including Liabilities and Obligations
to pay wages, salaries and other sums for accrued vacation or sick time, or
otherwise due to Seller's employees and former employees (irrespective of such
employees' status as Hired Employees); and
(l) without limiting the generality of the foregoing subparagraphs
(a)-(l), all liabilities listed on Schedule 2.7(l).
2.8 Allocation of Consideration. Seller and Buyer agree that the
Purchase Price and the amount of the Assumed Liabilities shall be allocated to
the various assets comprising the Purchased Assets for all purposes (including
tax and financial accounting purposes) in a manner to be determined in writing
by Buyer and Seller as soon as practicable following the Closing Date. Seller
and Buyer acknowledge that such allocation is intended to comply with the
requirements of Section 1060 of the Code and shall be binding upon the parties
for all applicable federal, state, local and foreign tax purposes. Seller and
Buyer covenant and agree to report gain or loss or cost basis, as the case may
be, in a manner consistent with such allocation on all tax returns filed by
either of them subsequent to the Closing Date and not to take voluntarily any
inconsistent position therewith in any administrative or judicial proceeding
relating to such returns, except if, in the opinion of counsel reasonably
acceptable to the other party, there has been a change in applicable law since
the Closing Date. Seller and Buyer shall exchange mutually acceptable completed
IRS Forms 8594 (including any Supplemental IRS Forms 8594 that they mutually
deem necessary to reflect adjustments to the Purchase Price and to the amount of
Assumed Liabilities), which they shall use to report the transaction
contemplated hereunder to the Internal Revenue Service in accordance with such
allocation.
SECTION 3. CLOSING
The Closing of the transactions contemplated by this Agreement shall
take place at 10:00 a.m. at the offices of Buyer's counsel at Xxxxx and Xxxxxx,
LLP, 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx 00000, on the third
(3rd) business day following the date when all
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of the conditions to the Closing specified in Sections 9 and 10 have been
satisfied or waived, or such other date as the parties may mutually agree to in
writing, but in no event later than April 8, 2002.
SECTION 4. REPRESENTATIONS AND WARRANTIES
OF SELLER AND STOCKHOLDER
The Seller and the Stockholder jointly represent and warrant to Buyer
that:
4.1 Organization and Good Standing. Each of Seller and the Stockholder
is a corporation organized, validly existing and in good standing under the laws
of the State of California, with full corporate power and authority to carry on
the Business as presently conducted by it. Seller is qualified to do business in
all of the states where the failure to be so qualified would materially
adversely affect the condition (financial or otherwise), prospects, properties,
assets or operations of the Business. Seller has made available to Buyer copies,
true and correct as of the date hereof, of its Articles of Incorporation, duly
certified by the Secretary of State of the State of California, and of its
By-laws, duly certified by its Secretary.
4.2 Subsidiaries. The Seller has no Subsidiaries.
4.3 Names. Seller has not conducted the Business under any name other
than the names set forth in Schedule 4.3.
4.4 Certain Business Relationships. Except as noted in Stockholder's
filings with the Securities Exchange Commission, neither the Stockholder nor any
Affiliate of Seller has been involved in any business arrangement, contract or
relationship with Seller or the Business (other than as a stockholder, director,
officer or employee), and neither the Stockholder nor any Affiliate of Seller
owns any asset, tangible or intangible, which is used in the Business.
4.5 Corporate Authority. Each of Seller and the Stockholder has full
corporate power and authority to execute and deliver this Agreement and the
instruments of transfer and other documents delivered or to be delivered
pursuant hereto, to perform all the terms and conditions hereof and thereof to
be performed by it, and to consummate the transactions contemplated hereby and
thereby. This Agreement and all instruments of transfer and other documents
delivered or to be delivered by Seller and the Stockholder, as applicable, in
connection with this Agreement have been duly authorized and approved by all
necessary and proper corporate action of Seller and the Stockholder (including
all necessary stockholder action) and constitute, and will constitute, the valid
and binding obligations of Seller and the Stockholder, as applicable,
enforceable against Seller and the Stockholder, as applicable, in accordance
with their respective terms.
4.6 No Violation. Except as noted in Schedule 4.6, neither the execution
and delivery by each of Seller and the Stockholder of this Agreement or the
instruments of transfer and other documents delivered or to be delivered
pursuant hereto by Seller and the Stockholder and the performance by each of
Seller and the Stockholder, hereunder or thereunder, nor the consummation of the
transactions contemplated hereby or thereby, will violate, conflict with, result
in the breach of, or accelerate the performance required by any of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of each of
Seller or the Stockholder or any
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covenant, agreement or understanding to which Seller or the Stockholder is a
party or any order, ruling, decree, judgment, arbitration award or stipulation
to which Seller or the Stockholder is subject, or constitute a default
thereunder or result in the creation or imposition of any Lien upon any of the
Purchased Assets, or allow any Person to accelerate any debt owed by Seller or
the Stockholder or secured by any Purchased Asset, or allow any Person to
interfere with Buyer's full use and enjoyment of any of the Purchased Assets and
operation of the Business.
4.7 Consents and Approvals of Governmental Authorities and Others.
Except as noted in Schedule 4.7, no approval or authorization of, filing or
registration with, or notification to, any Governmental Authority is required in
connection with the execution and delivery of this Agreement by each of Seller
and the Stockholder or the performance of its obligations hereunder or the
consummation of the transactions contemplated hereby. Except as noted in
Schedule 4.7, no consent, approval or authorization of any Person is required in
connection with the execution or delivery of this Agreement by each of Seller
and the Stockholder, the transfer to Buyer of the Purchased Assets, or the
performance by each of Seller and the Stockholder of any other obligation under
this Agreement, except where the failure to obtain such consent or approval
would not have a material adverse effect on the Business or the Purchased
Assets.
4.8 Financial Statements; Books and Records.
(a) Seller has delivered to Buyer a balance sheet of the Business as
of December 31, 2001 and a balance sheet and statement of income of the Business
as of February 28, 2002, which are unaudited, copies of which are attached
hereto as Schedule 4.8(a). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, are true and correct in all respects and
present fairly Seller's financial condition as of the dates thereof and results
of its operations for such periods.
(b) Neither Seller nor Stockholder has any Liabilities or
Obligations relating to the Business and there is no basis for any present or
future, action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against any of them giving rise to any Liability or Obligation,
except:
(i) those Liabilities and Obligations set forth on the Financial
Statements and not heretofore paid or discharged; and
(ii) those Liabilities and Obligations arising in the ordinary
course of business consistent with past practice under any Contract, Lease, Open
Order or other commitment specifically disclosed in the Schedules hereto.
(c) All Books and Records are complete and correct with respect to
all information and time periods covered thereby. All of the Books and Records
have been prepared and maintained, where applicable, in conformity with
generally accepted accounting principles and in compliance with applicable laws,
regulations and other requirements.
4.9 Subsequent Events. Except as set forth in the Financial Statements
or as noted in Schedule 4.9, there has not been since February 28, 2002 any
adverse change in the condition
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(financial or other), properties, assets, liabilities or prospects of Seller or
the Business. Without limiting the generality of the foregoing, since that date:
(a) Seller has not sold, leased, transferred or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
ordinary course of business;
(b) Seller has not entered into any Contract, Lease or license (or
series of related Contracts, Leases, and licenses) either involving more than
$10,000 or outside the ordinary course of business;
(c) No party (including Seller, has accelerated, terminated,
modified or cancelled any Contract, Lease, Open Order, agreement or license (or
series of related Contracts, Leases, Open Orders, agreements and licenses) to
which Seller is a party or by which it is bound;
(d) Seller has not imposed or suffered any Lien upon any of its
assets, tangible or intangible;
(e) Seller has not made any capital expenditure (or series of
related capital expenditures) either involving more than $10,000 or outside the
ordinary course of business;
(f) Seller has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans and acquisitions) either involving more than
$10,000 or outside the ordinary course of business;
(g) Seller has not granted any license or sublicense of any right
under or with respect to any Intellectual Property;
(h) Seller has not issued any note, bond or other debt security or
created, incurred, assumed or guaranteed any indebtedness for borrowed money or
capitalized lease obligation;
(i) Seller has not delayed or postponed the payment of accounts
payable and other Liabilities or Obligations outside Seller's ordinary course of
business;
(j) Seller has not cancelled, compromised, waived or released any
right or claim (or series of related rights and claims);
(k) Seller has not issued, sold or otherwise disposed of any of its
capital stock or the capital stock of any Subsidiary, or granted any options,
warrants or other rights to purchase or obtain (including upon conversion,
exchange or exercise) any of its capital stock or the capital stock of any
Subsidiary;
(l) Seller has not declared, set aside or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired, or become obligated to redeem,
purchase or otherwise acquire, any of its capital stock;
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(m) Seller has not experienced any damage, destruction or loss
(whether or not covered by insurance) to its property;
(n) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, employees or Affiliates
outside the ordinary course of business;
(o) Seller has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(p) Seller has not granted any increase in the base compensation of
any of its directors, officers and employees;
(q) Seller has not adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance or other plan, contract or
commitment for the benefit of any of its directors, officers or employees (or
taken any such action with respect to any other employee benefit plan);
(r) Seller has not made any other change in employment terms for any
of its directors, officers and employees;
(s) Seller has not made or pledged to make any charitable or other
capital contribution;
(t) Seller has not paid any amount to any third party with respect
to any liability or obligation (including any costs and expenses Seller has
incurred or may incur in connection with this Agreement and the transactions
contemplated hereby) which would constitute an Excluded Liability if in
existence as of the Closing Date;
(u) there has not been any other adverse change, occurrence, event,
incident, action, failure to act or transaction outside the ordinary course of
business involving Seller or the Business; and
(v) Seller has not committed to do or perform any of the foregoing.
4.10 Accounts Receivable. All of the Accounts Receivable as of the date
of the Balance Sheet arose in bona fide transactions and to Seller's Knowledge
are good and collectible in full at the recorded amounts thereof in the Books
and Records in the ordinary course of business without resort to legal
proceedings, net of an aggregate amount equal to reserves for doubtful accounts
and xxxx-back items, as reflected in the Financial Statements.
4.11 Inventory. The Inventory consists of items which are merchantable
and fit for the purposes intended and the quantity thereof is at levels
appropriate and adequate for Buyer to conduct the Business as currently
conducted by Seller.
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4.12 Tangible Purchased Assets.
(a) Schedule 2.1(c) sets forth a list of all Equipment owned by
Seller and included in the Purchased Assets. Except as noted in Schedule
4.12(a), on the Closing Date, Seller shall have good and marketable title to,
and all right, title and interest in all Equipment and other Tangible Purchased
Assets owned by it, and will transfer and convey such properties and assets to
the Buyer, free and clear of all Liens (other than those relating to Assumed
Liabilities). None of the Tangible Purchased Assets owned by Seller was
purchased by the Seller in a bulk sale.
(b) Schedule 4.12(b) sets forth a list of all Equipment and other
Tangible Purchased Assets leased by Seller and the Leases pursuant to which such
Tangible Purchased Assets are leased. Except as noted in Schedule 4.12(b), all
Leases relating to Equipment or other Tangible Purchased Assets, leased by
Seller are valid and enforceable by Seller in accordance with their respective
terms. There is not, under any Lease relating to, Equipment or other Tangible
Purchased Asset, any existing default by Seller or any existing default by any
other party thereto, or any circumstance known to Seller that could give rise to
a default by the Seller or any other party to such Lease. All commissions
payable by Seller under or with respect to any such Leases have been paid.
(c) All the Tangible Purchased Assets of the Seller are in "AS IS"
"WHERE IS" condition.
(d) The Tangible Purchased Assets include all tangible personal
property necessary to permit Buyer to carry on the Business following the
Closing Date in substantially the same manner as the Business is currently
conducted by Seller.
4.13 Intellectual Property. The Intellectual Property, Technical
Information and Computer Software Assets include all intellectual property and
proprietary rights necessary or desirable to carry on the Business as currently
conducted by Seller. To Seller's Knowledge, Seller requires no rights under any
patent, trade secret or other proprietary information or computer software
license which Seller does not have or does not have the lawful right to use in
order to conduct the Business as currently conducted or as currently proposed to
be conducted. Except as noted in Schedule 4.13, to Seller's Knowledge, all
patents, copyrights (where such registration is permitted or required by
applicable law), trademarks, tradenames and service marks included in the
Intellectual Property are registered to or owned by or licensed to Seller, are
valid and enforceable (or, in the case of any unregistered or unpatented rights,
may be freely used by Seller) or pending (in the case of patents), and all
annuities, if any, are fully paid. Seller has not infringed and is not
infringing, nor has Seller contributed to or is contributing to the infringement
of, any valid patents, copyrights, trademarks, tradenames or service marks of
any third party in its conduct of the Business. To Seller's Knowledge, there are
no pending or threatened actions against Seller for infringement of any such
patents, copyrights, trademarks, tradenames or service marks. None of the
patents or patent applications included in the Intellectual Property is involved
in a reissue, reexamination, interference, opposition or similar proceeding, and
there is no threat that any such proceeding will be declared or commenced. To
Seller's Knowledge, Seller is not using, without authorization, any trade or
other business secret, know-how or technical information of any other Person in
the conduct of the Business. To
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Seller's Knowledge, all licenses permitting Seller to use any Intellectual
Property, Technical Information or Computer Software Assets are in full force
and effect and the terms of such licenses do not provide that they may be
terminated or restricted as a result of the execution of this Agreement or the
consummation of the transactions contemplated herein. None of the Seller, the
Stockholder or any of their directors, officers or employees with responsibility
for Intellectual Property matters has any Knowledge of any new products,
inventions, processes or procedures that any competitors or other third parties
have developed that could supersede or make obsolete any product, service or
process of Seller.
4.14 Solvency. The transfer of the Purchased Assets by the Seller in
return for the Purchase Price and the assumption of the Assumed Liabilities will
not render Seller insolvent or unable to pay its debts as they become due in the
ordinary course or leave Seller with an unreasonably small capital for any
business in which it will continue to engage.
4.15 No Prior Sale or Licensing of Purchased Assets. Seller is not a
party to any license with respect to, and has not made any sale, pledge or other
transfer of, and has not granted any rights or options to purchase or acquire,
all or any part of the Purchased Assets, except as contemplated by this
Agreement.
4.16 Tax Matters.
(a) Except as noted in Schedule 4.16, Seller has duly and timely
filed all returns for Taxes required to be filed by it or for which it may be
held responsible under applicable law, and has paid all Taxes due and payable by
it or with respect to which a taxing or collection authority has issued a
proposed or final assessment or made any similar claim.
(b) There is no dispute or claim concerning any Taxes of Seller
either (i) claimed or raised by any Governmental Authority in writing or (ii) as
to which any of the directors, officers or representatives of Seller have
knowledge based upon personal contact with any agent of such Governmental
Authority. No returns for Taxes of Seller are currently under audit or
examination by any Governmental Authority.
(c) Seller has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to an assessment or
deficiency for Taxes.
4.17 [Intentionally Omitted.]
4.18 Open Orders. Schedule 4.18 sets forth a list of all Open Orders as
of the Closing Date. All Open Orders as of the Closing Date are valid, binding
and in full force and effect and neither Seller nor the other party thereto is
in default thereunder. None of the Open Orders as of the Closing Date contains
any provision giving any party thereto the right to terminate the Open Order by
reason of the execution of this Agreement or the consummation of the
transactions contemplated herein, and none of the terms of any Open Order will
be altered by reason of the execution of this Agreement or the consummation of
the transactions contemplated herein.
4.19 Permits. Schedule 4.19 sets forth a list of all Permits required in
the conduct of the Business. All Permits are in full force and effect and no
suspension or cancellation of any have been threatened. No Permits or parts
thereof are subject to loss by reason of dormancy or
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non-use. No claims have been made by any Governmental Authority or any Person
relating to the Permits and no such claim is contemplated by any Governmental
Authority or other Person, nor does any basis therefor exist. Except as noted in
Schedule 4.19, no Permit will be terminated or require the consent of the issuer
to continue in effect as a result of the execution of this Agreement or the
consummation of the transactions contemplated herein.
4.20 Real Property. There is no Real Property and no Leased Real
Property.
4.21 Insurance. All insurance policies held by or on behalf of Seller as
of the date hereof are sufficient in all material respects for compliance by
Seller with all requirements of law and with the requirements of all of the
Contracts, and Seller has not received any notice of actual or proposed
cancellation or of reduction in coverage of, or of any increase in premium
under, such policies of insurance.
4.22 Compliance with Laws; Litigation. Seller has been, and is,
operating the Business in material compliance with the requirements of all
federal, state and local laws, regulations, judgments, injunctions, decrees,
court orders and administrative orders regarding such operations. Except as
noted in Schedule 4.22, Seller is not engaged in, or a party to, or threatened
with, any legal action, suit, investigation or other proceeding by or before any
court, arbitrator or administrative agency, and after due inquiry, Seller does
not know of any basis for any such action, investigation or proceeding. There
are no outstanding orders, rulings, decrees, judgments, stipulations or
proceedings to which Seller is a party or by which Seller is bound, by or with
any court, arbitrator or administrative agency.
4.23 Warranties; Product Liability. All goods and products manufactured
or repaired by Seller in the Business were manufactured or repaired, as the case
may be, in compliance with all contractual requirements, all applicable federal
and state laws, rules and regulations and applicable underwriters and industry
standards and codes, if any, except for such noncompliance as would not have a
material adverse effect on the value or use of such goods and products or the
adequacy of such repairs. Except as noted in Schedule 4.23(a), there is not
presently any action, suit, proceeding, claim or investigation pending or, to
Seller's Knowledge, threatened against Seller for Product Liabilities or
otherwise relating to the safety or fitness or quality of the goods or products
manufactured or repaired by Seller and Seller does not know of any basis for any
such action, suit, proceeding, claim or investigation.
4.24 Absence of Sensitive Payments. Seller has not made any
contributions, payments or gifts to or for the private use of any governmental
official, governmental employee or governmental agent in any amount where either
the payment or the purpose in making such contribution, payment or gift is
illegal under the laws of the United States or any other jurisdiction; Seller
has not established or maintained any unrecorded fund or asset for any purpose
or made any false or artificial entries on its books; and Seller has not made
any payments to any Person with the intention or understanding that any part of
such payment was to be used for any purpose other than that described in the
document supporting the payment.
4.25 Environmental Matters. Except as noted in Schedule 4.25, Seller is
in material compliance with all applicable Environmental Laws. Except for
routine quantities of office supplies and cleaning supplies held for use in the
ordinary course of business in compliance with
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Environmental Laws, the operations of Seller do not include or involve and have
never included or involved any use, storage or disposal of materials classified
as hazardous substances under applicable Environmental Laws. Seller has never
caused, participated in or suffered any discharge or release of hazardous
substances at any of the locations at which it has conducted business or
anywhere else, nor is Seller otherwise aware or has reason to suspect any past
or existing event, condition, circumstance or practice or procedure involving or
relating to hazardous substances or other environmental matters at any of the
locations at which it has conducted business which may constitute a violation of
applicable Environmental Laws or require notification or remediation under any
Environmental Laws, or which might otherwise interfere with or adversely affect
the conduct of the Business as now being conducted or Seller's ability to
continue to use any of the locations at which it conducts business or
contemplated to be used in the Business.
4.26 Obligations to Pay Fees. Except as noted in Schedule 4.26, none of
Seller or Stockholder has Liability or Obligation to pay any fees or commissions
to any investment banker, broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Buyer could become liable
or obligated. None of the Subsidiaries has any liability or obligation to pay
any fees or commissions to any investment banker, broker, finder or agent with
respect to the transactions contemplated by this Agreement.
4.27 Customers. Schedule 4.27 lists, with respect to the period from
January 1, 2001 through December 31, 2001, the ten (10) largest customers and
suppliers (by dollar volume) of Seller during each year or partial year during
such period (showing the dollar volume for each). Neither the Stockholder nor
Seller has Knowledge that any customer listed on Schedule 4.27 intends to cease
or substantially reduce purchasing goods or services from Seller.
4.28 Suppliers. Schedule 4.28 lists, with respect to the period from
January 1, 2001 through December 31, 2001, the ten (10) largest suppliers (by
dollar volume) of Seller during each year or partial year during such period
(showing the dollar volume of each). Buyer acknowledges that Seller's failure to
pay such suppliers on a timely basis may materially and adversely affect Buyer's
relationship with such supplier after Closing. Except as set forth on Schedule
4.28(a), neither the Stockholder nor Seller has Knowledge that any supplier
listed on Schedule 4.28 intends to cease or substantially reduce supplying goods
or services to Seller.
4.29 Employees. Seller has paid all wages, salaries and other sums due
employees through the date of this Agreement and has complied with all laws
affecting Seller's employment activities.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER AND KANAKARIS
Buyer and Xxxxxxxxx, as the case may be, hereby represent and warrant,
severally and not jointly, to Seller and the Stockholder as follows:
5.1 Organization, Good Standing, and Corporate Authority. Each of Buyer
and Xxxxxxxxx is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of California and Nevada, respectively, and
each has full corporate power and
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authority to execute this Agreement and the other documents delivered or to be
delivered pursuant hereto, to perform all the terms and conditions hereof and
thereof to be performed by it, and to consummate the transactions contemplated
hereby and thereby. This Agreement and the other documents delivered or to be
delivered by Buyer and Xxxxxxxxx in connection with this Agreement have been
duly authorized and approved by all necessary and proper corporate action and
constitute, and will constitute the valid and binding obligations of Buyer and
Xxxxxxxxx, enforceable against Buyer and Xxxxxxxxx in accordance with their
respective terms.
5.2 No Violation. Neither the execution and delivery by Buyer or
Kanakaris of this Agreement or the other documents delivered or to be delivered
pursuant hereto by Buyer and Kanakaris and the performance by Buyer or Kanakaris
hereunder or thereunder, nor the consummation of the transactions contemplated
hereby or thereby, will violate, conflict with, result in the breach of, or
accelerate the performance required by any of the terms, conditions or
provisions of the Articles of Incorporation or Bylaws of Buyer or Kanakaris or
any covenant, agreement or understanding to which Buyer or Xxxxxxxxx is a party
or any order, ruling, decree, judgment, arbitration award or stipulation to
which Buyer and Xxxxxxxxx is subject, or constitute a default thereunder.
5.3 Consents and Approvals of Governmental Authorities and Others. No
approval or authorization of, filing or registration with, or notification to,
any Governmental Authority is required in connection with the execution and
delivery of this Agreement by Buyer or Kanakaris or the performance of their
respective obligations hereunder or the consummation of the transactions
contemplated hereby. No consent, approval or authorization of any Person is
required in connection with the execution or delivery of this Agreement by Buyer
or Kanakaris, the purchase by Buyer of the Business and the Purchased Assets, or
the performance by Buyer or Kanakaris of any other obligation under this
Agreement.
5.4 Obligation to Pay Certain Fees. Neither Buyer nor any of its
officers, directors, employees or Affiliates has agreed to pay any fees or
commissions to fees or commissions to any investment banker, broker, finder or
agent with respect to the transactions contemplated by this Agreement for which
Seller could become liable or obligated.
5.5 Litigation. There are no actions, suits or proceedings pending, or,
threatened, by any Person or Governmental Authority challenging the legality,
validity or propriety of the transactions contemplated by this Agreement.
5.6 Buyer's Acknowledgment. Buyer acknowledges as follows:
(a) that Buyer has had the opportunity to conduct a UCC lien search
on Seller's Business and that Seller has not received all Consents;
(b) that Seller has had a history of not paying its payables in a
timely manner which has damaged Seller's relationships with certain of its
customers and suppliers;
(c) that Seller has experienced problems in delivering products to
certain customers which has damaged Seller's relationships with those customers
and suppliers; and
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(d) that Buyer shall hold Seller harmless from any liability as a
result of any of the foregoing matters in this Section 5.6.
SECTION 6. COVENANTS OF SELLER AND STOCKHOLDER
6.1 Taxes. Seller or the Stockholder shall pay all Taxes, if any,
arising from the sale of the Purchased Assets pursuant hereto.
6.2 Access to Offices, Officers, Accountants, Etc. Seller and
Stockholder will afford to, and will cause their Affiliates to afford to, the
officers and authorized representatives of Buyer (including without limitation,
attorneys, accountants, surveyors, building inspectors, engineers, environmental
consultants, insurance brokers, financial advisors and bankers) access to the
offices, officers, properties, Books and Records of Seller, Stockholder their
Affiliates and the Business, and to the attorneys, accountants and other
representatives of Seller, Stockholder and their Affiliates and with any and all
Persons Buyer deems appropriate in order to enable it to consummate the
transactions contemplated hereby and to complete a post closing audit of the
financial condition and operation of the Business, and will furnish Buyer with
such additional financial and operating data and other information as to the
Business and Purchased Assets as Buyer may from time to time reasonably request.
Seller, Stockholder and their Affiliates will cooperate with Buyer to facilitate
Buyer's contacting vendors, dealers, customers and such other Persons as Buyer
and its representatives may desire to contact in connection with Buyer's
investigation and audit of the Business.
6.3 [Intentionally Omitted.]
6.4 Change of the Seller's Name. At closing Seller shall execute such
documents as Buyer shall reasonably request to enable Buyer to change its
corporate name (and assume any alternate or fictitious name of Seller) to that
of Seller and change Seller's corporate name to one not including the names set
forth in Schedule 4.3, or words similar thereto.
6.5 Further Assurances. From time to time after the Closing, at Buyer's
request and without further consideration, Seller will execute and deliver such
other and further instruments of conveyance, assignment and transfer, and take
such other action as Buyer may reasonably request for the more effective
conveyance, transfer and enjoyment of the Purchased Assets to Buyer. To the
extent that the assignment of confidentiality and noncompetition agreements to
Buyer is not enforceable against the other parties to such agreements, Seller
will use its best efforts to enforce such agreements with respect to the
Business for Buyer's benefit. Seller will cooperate with Buyer in obtaining
execution of any documents by current or prior employees of Seller with respect
to inventions, invention disclosures and patent applications for goods or
processes invented prior to the Closing Date.
6.6 Employees. Seller shall permit Buyer to discuss the possibility of
employment with current employees of the Business, and shall not interfere with
or impede the Buyer's right to do so, either directly or indirectly. Seller
shall pay all wages, salaries and other sums due employees through the close of
business on the Closing Date. Immediately prior to the closing, Seller shall
terminate the employees.
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6.7 Preservation of Business Organization. Seller will conduct the
Business in the ordinary course, in a manner consistent with applicable federal,
state and local regulations, and use its best efforts to preserve Seller's
business relationships intact and to preserve the goodwill of Seller with its
suppliers, customers and others having business relations with it.
6.8 Other Regulatory Approvals and Filings. Each party hereto covenants
and agrees to use its best efforts to promptly prepare and file all necessary
permits, consents, approvals, and authorizations, and make all filings, with all
governmental authorities and all other Persons necessary or advisable to
consummate the transactions contemplated hereunder.
6.9 Exclusive Dealing. Seller and the Stockholder will not:
(a) solicit or initiate discussions or engage in negotiations with
any Person other than Buyer (whether or not such discussions are initiated by
Seller), with respect to the possible acquisition of, Seller, the Business or
the Purchased Assets by such Person (whether by merger, purchase of capital
stock, purchase of assets, consolidation or otherwise);
(b) provide any information with respect to Seller, the Business or
the Purchased Assets to any Person other than Buyer relating to the possible
acquisition of Seller, the Business or the Purchased Assets by such Person
(whether by merger, purchase of capital stock, purchase of assets, consolidation
or otherwise); or
(c) enter into a transaction with any Person other than Buyer
concerning the possible acquisition of Seller, the Business or the Purchased
Assets by such Person (whether by merger, purchase of capital stock, purchase of
assets, consolidation or otherwise).
6.10 Update Schedules. Prior to the Closing Date, Seller or the
Stockholder, as appropriate, shall disclose to Buyer any information contained
in the representations and warranties of Seller and the Stockholder contained in
Section 4 or in the Schedules delivered pursuant thereto which is no longer true
or complete. Any such disclosure shall not be deemed to modify, amend or
supplement the Seller's or the Stockholder's representations and warranties
unless otherwise agreed in writing by Buyer.
SECTION 7. COVENANTS OF BUYER
7.1 Hired Employees. Without limiting Seller's obligations pursuant to
Section 6.1 or the Excluded Liabilities retained by Seller pursuant to Section
2.7, the Buyer will offer employment to all of the employees of the Seller
listed on Schedule 4.26(a), on terms and conditions reasonably determined by
Buyer, which shall include health benefits commensurate with the benefits
currently offered to employees of Xxxxxxxxx Wireless, Inc.; provided that to the
extent such health benefit policy requires an employee waiting period prior to
enrollment, Buyer shall reimburse Seller for all costs and expenses incurred by
Seller related to COBRA health benefits provided to Hired Employees during the
required waiting period. Such terms shall also include provisions for vacation
and holiday time commensurate with the vacation and holiday time to which any
Hired Employee had been entitled while employed by Seller.
7.2 Confidentiality. If the transactions provided for herein are not
consummated, unless and then only to the extent otherwise required by law, each
of Buyer, Seller and
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Stockholder and their respective officers, agents and representatives will hold
in strict confidence all information obtained from the other parties and their
respective officers, agents or representatives in connection with the
transactions contemplated thereby
SECTION 8. NON-COMPETITION
In order to induce Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, the Seller and Stockholder hereby covenant
as follows, which covenants shall be in addition and without prejudice to any
other noncompetition, nonsolicitation and/or similar covenants to which the
Seller or Stockholder may be subject from time to time.
8.1 Restriction of Management and Investment. During a period of five
(5) years from the Closing Date (the "Restricted Period"), neither the Seller
nor the Stockholder shall engage, directly or indirectly, as a proprietor,
equityholder, investor, lender, partner, consultant, or representative, or in
any other capacity, in any business competitive with the Business in any country
or any other political subdivision of any state of the United States of America
or of any other country in the world including, without limitation, those
counties in California and the other political subdivisions set forth on Exhibit
8.1. Notwithstanding the foregoing, nothing in this Agreement shall prohibit the
Seller or the Stockholder from acting as an owner, lender or joint venturer with
motion picture studios or independent video producers.
8.2 Restriction on Solicitation of Employees. During the Restricted
Period, neither the Seller, the Stockholder nor any of their Affiliates shall,
directly or indirectly, recruit, solicit, induce, or attempt to induce any of
the employees or independent contractors of Buyer or any of its Affiliates to
terminate their employment or contractual relationship with Buyer or any such
Affiliate; and neither the Seller, the Stockholder nor any of their Affiliates
shall assist any other Person to do so, or be a proprietor, equityholder,
investor (except as an investor holding not more than 1% of the capital stock or
other securities of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
8.3 Restrictions on Solicitations of Customers. Solely with respect to
the Business, during the Restricted Period, neither the Seller, the Stockholder
nor any of their Affiliates shall, directly or indirectly, solicit, divert, take
away, or attempt to divert or take away, from Buyer or any of its Affiliates any
of the business or patronage of any of their respective customers, clients,
accounts, vendors, or suppliers of the Business, and neither the Seller, the
Stockholder nor any of their Affiliates shall assist any other Person to do so,
or be a proprietor, equityholder, investor (except as an investor holding not
more than 1% of the capital stock or other securities of a publicly held
company), lender, partner, director, officer, employee, consultant, or
representative of any Person who does or attempts to do so.
8.4 Equitable Relief. The Seller and Stockholder hereby acknowledge that
any breach by either of them of their obligations under this Section 8 would
cause substantial and irreparable damage to Buyer and its Affiliates; and that
money damages would be an inadequate remedy therefore, and accordingly,
acknowledge and agree that each Buyer or any Affiliate thereof shall be entitled
to an injunction, specific performance, and/or other equitable relief to
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prevent the breach of such obligations (in addition to all other rights and
remedies to which such party may be entitled in respect of any such breach).
8.5 Enforceability. The parties hereto agree that the duration and area
for which the covenant not to compete set forth in this Section 8 is to be
effective are reasonable. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court or arbitrators are hereby expressly authorized so to modify this Agreement
and to enforce it as so modified. The parties intent that the covenant not to
compete in this Section 8 shall be deemed to be a series of separate covenants,
one for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this covenant is intended to be
effective. No invalidity or enforceability of any section of this Agreement or
any portion thereof shall affect the validity or enforceability of any other
section or of the remainder of such section. The parties hereto acknowledge that
the covenant not to compete set forth in this Section 8 has not been bargained
for separate and apart from the consideration to be paid for the Purchased
Assets and that no part of such consideration is allocable to such covenant not
to compete.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to acquire the Purchased Assets, pay the
Purchase Price and assume the Assumed Liabilities is subject to the satisfaction
or waiver in writing by the Buyer, on or prior to the Closing Date, of each of
the following express conditions precedent:
9.1 Corporate Action. All corporate and other actions necessary to
authorize and effectuate the consummation of the transactions contemplated
hereby by Seller shall have been duly taken prior to the Closing, and Seller
shall have delivered to Buyer a certificate of a duly authorized officer of
Seller to that effect with respect to Seller.
9.2 Representations and Warranties. The representations and warranties
of Seller and Stockholder made in or pursuant to this Agreement shall be true
and correct on and as of the Closing Date with the same effect as though all
such representations and warranties had been made on and as of such date (except
for representations and warranties that expressly relate to a specified date,
which need be true and correct only as of the specified date), and there shall
have been delivered to Buyer a certificate to that effect, dated the Closing
Date, signed by a duly authorized officer of the Stockholder and a duly
authorized officer of Seller.
9.3 Performance of Obligations. Each and all of the covenants and
agreements of Seller and Stockholder to be performed or complied with pursuant
to this Agreement on or prior to the Closing Date shall have been duly performed
and complied with or duly waived and there shall have been delivered to Buyer a
certificate to that effect, dated the Closing Date, signed by a duly authorized
officer of Seller and a duly authorized officer of the Stockholder.
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9.4 Due Diligence Investigation. The results of Buyer's due diligence
investigation, including, but not limited to, the Environmental Investigation,
shall have been satisfactory to Buyer.
9.5 Instruments of Conveyance, Etc. Seller shall have executed and
delivered such deeds, bills of sale, assignments and other instruments of
transfer and conveyance, certificates of title and other documents as shall be
reasonably required by Buyer for the transfer to the Buyer of all of Seller's
right, title, and interest to and in the Purchased Assets, free and clear of any
Liens (other than those relating to the Assumed Liabilities) or shall have
delivered, with such instruments and documents, financing statement releases or
termination statements with respect to any security interests constituting Liens
on the Purchased Assets.
9.6 Delivery of Physical Possession. Seller shall have delivered
physical possession of all Equipment, Inventory, Technical Information and
Tangible Purchased Assets and any tangible evidence of all Intellectual
Property, Open Orders and Accounts Receivable to Buyer.
9.7 [Intentionally Omitted.]
9.8 Litigation. No order of any court or administrative agency shall be
in effect which restrains or prohibits the transactions contemplated hereby and
there shall not have been threatened, nor shall there be pending, any action or
proceeding by or before any court or governmental agency or other regulatory or
administrative agency or commission (a) challenging any of the transactions
contemplated by this Agreement; (b) seeking monetary relief by reason of the
consummation of such transactions; or (c) which would adversely affect the
Purchased Assets or the Business following the Closing Date.
9.9 Governmental Action; Damage to Property. There shall not have
occurred any (a) seizure by any Governmental Authority of all or a portion of
the Purchased Assets, or (b) damage, destruction or other impairment of or to
all or a portion of the Purchased Assets including, without limitation, damage,
destruction or other impairment caused by theft, fire, any casualty or the
negligence of any Person, including Seller.
9.10 UCC-3 Lien Release. The pay-off statements and UCC-3 termination
statements releasing and terminating any liens and security interests on the
Purchased Assets identified on Schedule 9.10 attached hereto shall have been
terminated and all indebtedness there under shall have been repaid in full.
9.11 No Adverse Change. There have been no material adverse changes to
the financial condition of Seller or the Business.
9.12 Escrow Agreement. Each of the Seller and Buyer shall have agreed
upon an escrow agent to administer the Lock Box and shall have executed with
such escrow agent the escrow agreement described in Section 2.4.
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SECTION 10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligation of Seller to sell or otherwise transfer the Purchased
Assets hereunder is subject to the satisfaction, or waiver in writing by Seller,
on or prior to the Closing Date, of each of the following express conditions
precedent:
10.1 Corporate Action. All corporate and other actions necessary to
authorize and effectuate the consummation of the transactions contemplated
hereby by Buyer shall have been duly taken prior to the Closing, and Buyer shall
have delivered to Seller a certificate of a duly authorized officer of Buyer to
that effect.
10.2 Representations and Warranties. The representations and warranties
of Buyer made in or pursuant to this Agreement shall be true and correct on and
as of the Closing Date with the same effect as though all such representations
and warranties had been made on and as of such date and there shall have been
delivered to Seller a certificate to that effect, dated the Closing Date, signed
by a duly authorized officer of Buyer.
10.3 Performance of Obligations. Each and all of the covenants and
agreements of Buyer to be performed or complied with pursuant to this Agreement
on or prior to the Closing Date shall have been duly performed or complied with
or duly waived and there shall have delivered to Seller a certificate to such
effect, dated the Closing Date, signed by a duly authorized officer of Buyer.
10.4 Payment. Buyer shall have paid the Cash Portion of the Purchase
Price to Seller in accordance with Section 2.4 of this Agreement.
10.5 Documents. Buyer shall have executed and delivered such agreements
and undertakings confirming Buyer's assumption of the Assumed Liabilities as
Seller shall reasonably request.
10.6 Litigation. No order of any court or administrative agency shall be
in effect which restrains or prohibits the transactions contemplated hereby, and
there shall not have been threatened, nor shall there be pending, any action or
proceeding by or before any court or governmental agency or other regulatory or
administrative agency or commission: (a) challenging any of the transactions
contemplated by this Agreement or (b) seeking monetary relief by reason of the
consummation of such transactions.
10.7 Escrow Agreement. Each of the Seller and Buyer shall have agreed
upon an escrow agent to administer the Lock Box and shall have executed with
such escrow agent the escrow agreement described in Section 2.4.
SECTION 11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS
All representations and warranties made by Seller, Stockholder or Buyer
as to any fact or condition existing on or before the Closing Date in this
Agreement, in any exhibit, schedule or in any certificate delivered pursuant
hereto shall survive the Closing for a period of one (1) year, except the
representations and warranties in Section 4.16 which shall survive for the
applicable
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limitations period, and in Section 4.25, which shall survive without time limit;
provided, that there shall be no termination of any such representation or
warranty as to which a claim has been asserted in writing prior to the
termination of any such survival period. All such representations and warranties
shall be unaffected by any investigation made by or on behalf of Buyer,
Stockholder or Seller or by any knowledge obtained as a result thereof or
otherwise. Except as otherwise expressly provided in this Agreement, all
covenants, agreements, undertakings and indemnities set forth in this Agreement
shall survive indefinitely.
SECTION 12. INDEMNIFICATION
12.1 Indemnity by Seller. The Seller and the Stockholder, jointly and
severally, shall defend, indemnify and hold Buyer, its officers, directors,
employees, subsidiaries and Affiliates harmless from and against all Losses
arising out of or resulting from:
(a) any material breach of the representations and warranties made
by either Seller or Stockholder in or pursuant to this Agreement or the failure
of such representations and warranties to be true and correct;
(b) any material failure by Seller or the Stockholder to carry out,
perform, satisfy and discharge any of its covenants, agreements, undertakings,
Liabilities or Obligations under this Agreement or under any of the documents
delivered by Seller pursuant to this Agreement;
(c) any failure of Seller or Stockholder to pay and discharge any
Excluded Liabilities; and
(d) any suit, action or other proceeding brought by any Person or
Governmental Authority asserting any of the matters referred to in this Section
12.1.
12.2 Indemnity by Buyer. Buyer and Xxxxxxxxx Wireless, Inc. shall
jointly and severally indemnify and hold Seller harmless from and against all
Losses arising out of or resulting from:
(a) any material breach of any representations and warranties made
by the Buyer in or pursuant to this Agreement or the failure of such
representations and warranties to be true and correct;
(b) any material failure by Buyer to carry out, perform, satisfy and
discharge any of its respective covenants, agreements, undertakings, Liabilities
or Obligations under this Agreement or any of the documents and materials
delivered by Buyer pursuant to this Agreement;
(c) the failure by Buyer to pay, discharge or perform any Assumed
Liabilities;
(d) any claims asserted by third parties against Seller relating to
the ownership, occupation or operation of the Business or the Purchased Assets
by Buyer after the Closing Date; and
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(e) any suit, action, or other proceeding brought by any Person or
Governmental Authority asserting any of the matters referred to in this Section
12.2.
12.3 Notice of Claim. The indemnified party shall promptly notify the
indemnifying party in writing in reasonable detail of any claim, demand, action
or proceeding for which indemnification will be sought under this Section 12. If
such claim, demand, action or proceeding is a third party claim, demand, action
or proceeding (a "Third Party Claim"), the indemnifying party will have the
right at its expense to assume the defense thereof using counsel reasonably
acceptable to the indemnified party. The indemnified party shall have the right
to participate, at its own expense, with respect to any such Third Party Claim.
In connection with any such Third Party Claim, the parties shall cooperate with
each other and provide each other with access to relevant books and records in
their possession. No such Third Party Claim shall be settled without the prior
written consent of the indemnified party. If a firm written agreement is made
by, or with the approval of the indemnifying party to settle any such Third
Party Claim and the indemnified party unreasonably refuses to consent to such
settlement, then: (a) the indemnifying party shall be excused from, and the
indemnified party shall be solely responsible for, all further defense of such
Third Party Claim; (b) the maximum liability of the indemnifying party relating
to such Third Party Claim shall be the amount of the proposed settlement if the
amount thereafter recovered from the indemnified party on such Third Party Claim
is greater than the amount of the proposed settlement; and (c) the indemnified
party shall pay all attorneys' fees and legal costs and expenses incurred after
rejection of such settlement by the indemnified party.
12.4 Termination of Indemnification.
(a) As to Buyer. The right of Buyer to be indemnified under this
Section 12 shall survive:
(i) as to matters described in Section 12.1(a), 12.1(b), and
12.1(e), except as to matters arising from Taxes and Excluded Liabilities until
the first anniversary of the Closing Date;
(ii) as to matters relating to Taxes, until the termination of
the applicable statute of limitations (including any waivers or extensions
thereof agreed to by Buyer); and
(iii) as to matters arising from Excluded Liabilities until the
termination of the applicable statute of limitations on such claims (including
any tolling thereof).
(b) As to Seller. The right of Seller to be indemnified under this
Section 12 shall survive until the first anniversary of the Closing Date.
(c) Exceptions. Notwithstanding subsections (a) and (b) hereof:
(i) any indemnity claim based on fraudulent misrepresentations
or fraudulent material omission or fraudulent breach of warranty shall survive
without any time limitations; and
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(ii) any indemnity claim based on any matter which has been
described in a notice to an indemnifying party pursuant to Section 12.3 of this
Agreement prior to the expiration of the applicable time limitation set forth in
subsections (a) and (b) above shall survive until the claim is finally resolved.
12.5 Limitation. Each party's aggregate liability for indemnification
pursuant to this Section 12 shall not exceed the Purchase Price, to the extent
paid and delivered to Seller. The limitation in this Section shall not apply to
fraud or to Losses arising out of Taxes of Seller or Excluded Liabilities.
12.6 Exclusive Remedy. Each party agrees that its sole remedy against
any other party for any Losses arising out of this Agreement, except for fraud,
is set forth in this Section 12.
SECTION 13. AMENDMENT
13.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written agreement of the Buyer and the Seller;
(b) by Buyer if at any time it determines that the conditions
precedent to its obligations hereunder in Section 9 hereof will not be satisfied
prior to April 8, 2002;
(c) by Seller if at any time it determines that the conditions
precedent to its obligations hereunder in Section 10 hereof will not be
satisfied prior to April 8, 2002;
(d) by Buyer if the transactions contemplated hereby have not been
consummated, through no fault or failure of the Buyer, on or before April 8,
2002; or
(e) by Seller if such transactions have not been consummated,
through no fault or failure of Seller, on or before April 8, 2002.
13.2 Effect of Termination. If either Buyer or Seller terminates this
Agreement pursuant to Section 13.1, this Agreement, except for the provisions of
Sections 7.2, 14.1, 14.3 through 14.8 and 14.11, shall become void and have no
effect. Notwithstanding the foregoing, nothing in this Section 13.2 shall
relieve any party to this Agreement for breach of any provision of this
Agreement. If it is judicially determined that termination of this Agreement was
the result of any intentional breach of this Agreement, then, in addition to
other remedies at law or in equity for breach of this Agreement, the party so
found to have intentionally breached this Agreement shall indemnify and hold
harmless the other party for their respective costs, fees and expenses of
counsel, accountants, financial advisors or other experts and advisors as well
as fees and expenses incident to negotiation, preparation and execution of this
Agreement and related documentation.
13.3 Amendment. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by Buyer and Seller. No
waiver by any party of any default, misrepresentation or breach of a warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default,
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misrepresentation or breach of a warranty or covenant hereunder or effect in any
way any rights arising by virtue of any prior or subsequent to such occurrence.
SECTION 14. GENERAL
14.1 Costs and Expenses. Each of the parties hereto shall pay, without
right of reimbursement from the other, all costs incurred by it incident to the
preparation, execution and delivery of this Agreement and the performance of its
obligations hereunder, whether or not the transactions contemplated by this
Agreement shall be consummated, including, without limitation, fees and
disbursements of legal counsel, accountants, and consultants employed by the
respective parties hereto in connection with the transactions contemplated by
this Agreement.
14.2 Parties in Interest; Assignment.
(a) This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
Except as otherwise expressly provided in this Agreement, this Agreement is not
made for the benefit of any Person not a party hereto, and nothing in this
Agreement will be construed as giving any Person, other than the parties hereto
and their respective successors and permitted assigns, any right, remedy, or
claim under or in respect of this Agreement, or any provision hereof.
(b) This Agreement shall not be assigned by Buyer, Seller or
Stockholder without the prior written consent of the other party; provided, that
Buyer shall have the right to assign all or any portion of its rights and
obligations under this Agreement to an Affiliate of Buyer without the Seller's
or Stockholder's consent (including the right to receive title to any portion of
the Purchased Assets). Any such assignment shall not release Buyer from its
obligations herein, including its obligations with respect to the Assumed
Liabilities.
14.3 Confidentiality. Each party to this Agreement shall take all
reasonable precautions to maintain the confidentiality of the negotiation or
existence of this Agreement, the identity of the parties hereto and any
nonpublic information concerning the other parties or their Subsidiaries or
Affiliates provided to or discovered by any of them or their respective
representatives and shall not disclose any of the above information to anyone
other than as required by law and (a) those people directly involved in the
investigation and negotiations pertaining to the transactions contemplated by
this Agreement, including without limitation, attorneys, accountants and similar
representatives, (b) such lenders or investors as may be necessary to finance
the transactions contemplated hereby, and (c) such Persons or Governmental
Authorities whose consents or approvals may be necessary or to whom notice needs
to be given to permit consummation of the transactions contemplated hereby.
14.4 Public Statements. Neither party to this Agreement shall, without
the prior written consent of the other party hereto, make or cause to be made
any press release or other public statement or announcement that directly or
indirectly discloses the transactions contemplated by this Agreement; provided,
however, that Buyer may issue a press release to announce the closing of the
purchase of the Purchased Assets and, Buyer and Seller may make any public
disclosure which it is advised by independent counsel it is required to make by
applicable law or any listing or trading agreement concerning its securities.
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14.5 Choice of Law. This Agreement shall be governed by, construed,
interpreted and the rights of the parties determined in accordance with the
laws, including equitable principles but without regard to principles of
conflict of laws, of the State of California.
14.6 Mediation. In the event of a dispute arising out of or related to
this Agreement, the parties shall, prior to initiating litigation, first submit
the dispute to non-binding mediation under the commercial mediation rules of the
American Arbitration Association at its Los Angeles, California offices. The
parties hereby acknowledge and agree that such mediation shall be deemed to be
in the nature of settlement discussions and that neither the fact that such
discussions took place, nor any statement or conduct of any participant in such
discussions shall be admissible into evidence in any subsequent litigation or in
any arbitration or other dispute resolution proceeding involving the parties. It
is further understood and agreed that any disclosure in any form, including
oral, by any Person participating in such mediation shall not operate as a
waiver of any privilege, including work product or attorney-client privilege,
applicable to the subject matter thereof.
14.7 Notices. Any notice, request, consent, waiver or other
communication required or permitted to be given hereunder shall be effective
only if in writing and shall be deemed sufficiently given only if delivered in
person or sent by telecopy, by a nationally-recognized overnight courier or by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to Seller or the Stockholder:
[PLEASE PROVIDE]
---------------------------------
---------------------------------
Attention:
-----------------------
Fax:
-----------------------------
with a copy to:
Xxxxx Xxxxxxx Berlack Israels, LLP
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
If to Buyer:
Fast Forward Marketing, Inc.
0000 Xxxxxx Xxxx. Xxxxx X-0
Xxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Fax: (000) 000-0000
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with a copy to:
Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxx. Xxxxx 0000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
or to such other Person or address as either such party may have
specified in a notice duly given by the sender as provided herein. Such notice
or communication shall be deemed to have been given as of the date so personally
delivered, on the business day following delivery by sender to such an overnight
courier, three business days after mailing or when receipt is confirmed if
delivered by telecopy.
14.8 Entire Agreement. This Agreement (including the Schedules and
Exhibits attached hereto) and the documents referred to herein as having been
entered into by any of the parties hereto or delivered by a party hereto to
another party hereto constitute the entire agreement and understanding of the
parties relating to the subject matter hereof and supersede all prior and
contemporaneous agreements and understandings, representations and warranties,
whether oral or written, relating to the subject matter hereof.
14.9 Cumulative Remedies. The rights and remedies provided in this
Agreement are cumulative and are not exclusive of any rights or remedies a party
may otherwise have at law or in equity.
14.10 Waiver. Any failure of Seller or Buyer to comply with any
obligation, covenant, agreement or condition contained herein may be expressly
waived in writing by Buyer in the case of any such failure by Seller or by
Seller in the case of any such failure by Buyer, but such waiver or failure to
insist upon strict compliance shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 14.10.
14.11 Severability. The unenforceability or invalidity of any Section or
subsection or provision of this Agreement shall not affect the enforceability or
validity of the balance of this Agreement. If any provision of this Agreement is
so broad as to be unenforceable, such provision shall be interpreted to be only
as broad as is enforceable.
14.12 Headings. The headings of the Sections and subsections contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning, interpretation, enforceability or validity of this
Agreement.
14.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed will be deemed to be an original, but
all of which together will constitute one and the same agreement.
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14.14 Facsimiles. Any facsimile signature of any party hereto or to any
other agreement executed in connection herewith shall constitute a legal, valid
and binding execution hereof by such party.
14.15 Construction. The Seller, the Stockholder and the Buyer hereby
agree that any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. Within this
Agreement, the singular shall include the plural and the plural shall include
the singular, and any gender shall include all other genders, all as the meaning
and the context of this Agreement shall require. Section, Exhibit and Schedule
references contained in this Agreement refer to those contained in or attached
to this Agreement unless otherwise specified.
[Signature appear on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BUYER:
FFM Acquisition Corp.
By: /s/ Xxxx Xxxxxxxxx
----------------------------------------
Title: CEO
SELLER:
Fast Forward Marketing, Inc.
By: /s/ Xxx X. Xxxxxx
----------------------------------------
Title: President
STOCKHOLDER:
Intervisual Books, Inc.
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Title: CEO
XXXXXXXXX (with respect to Sections 5.1,
5.2, 5.3 and 12 only):
Xxxxxxxxx Wireless
By: /s/ Xxxx Xxxxxxxxx
----------------------------------------
Title: CEO
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Schedule 1 - Definitions
"Accounts Receivable" means all accounts and notes receivable of the
Seller arising from the Business, products shipped or sold or services provided
by the Business to the Seller or an Affiliate of the Seller.
"Affiliate" means any Person who controls, is controlled by, or is under
common control with, the designated entity. Ownership, directly or indirectly,
of 20% or more of the voting stock or other equity interest shall be deemed to
constitute control.
"Assumed Liabilities" means the Liabilities and Obligations of Seller
assumed by Buyer under Section 2.6 of the Agreement, but not including the
Excluded Liabilities.
"Balance Sheet" means the balance sheet of Seller as of the Closing
Date, which Seller shall deliver to Buyer within five (5) days after the Closing
Date.
"Books and Records" means all books of account and other financial
records of Seller relating to the Business.
"Business" means the business of distributing video products (whether
via media and of content currently existing or hereafter developed) produced by
major motion picture studios and independent film video producers. Business
shall not include the distribution of any video products: (i) consisting of
works (a) exclusively authored by Seller or Stockholder (including works made
for hire) or (b) whose authorship is owned by Seller or Stockholder or to which
Seller or Stockholder has obtained exclusive control; or (ii) packaged and sold
in a form containing, in addition to a video product, specialty packaging and
promotional materials, or one or more books or other products.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, as amended.
"Closing" means the act or acts by which the transactions contemplated
by the Agreement are accomplished.
"Closing Date" means the date on which the Closing occurs. Unless the
parties otherwise agree, any references to "after the Closing Date" means any
time after the normal close of business of Seller on the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computer Software Assets" means all Software, data rights,
documentation and associated license, escrow, support and maintenance agreements
used in the conduct of the Business.
"Contamination" means the uncontained presence of Hazardous Substances
at any property, or arising from any property, which may require remediation or
otherwise give rise to liability under any applicable law.
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"Contracts" means all contracts, orders for spare parts, distribution
agreements, service agreements, development agreements, consulting agreements,
guarantees, commitments, instruments and other agreements relating to the
acquisition or ownership of any of the Purchased Assets or the operation of the
Business.
"Environmental Investigation" means the investigation commissioned by
Buyer of Seller's compliance with the Environmental Laws, the presence of
Hazardous Substances or other toxic or hazardous materials on properties owned,
leased or operated by Seller and the uses and condition of disposal sites for
waste generated in connection with the operations of Seller.
"Environmental Laws" means all environmental or health and safety
statutes, ordinances, regulations, orders, directives, decrees, permits,
governmental approvals, contractual requirements and requirements of common law
concerning (i) activities relating to the Business, (ii) the Purchased Assets or
any other properties or assets owned, leased or operated by Seller in connection
with the Business, (iii) repairs or construction of any improvements, (iv)
handling of any materials, (v) discharges into the air, soil, surface, water or
ground water, and (vi) storage, treatment or disposal of any waste at or
connected with any activity at such properties.
"Environmental Lien" means any lien against the property held by the
United States and CERCLA, or any lien held by any other Governmental Authority.
"Environmental Permits" means all Permits issued under Environmental
Laws.
"Equipment" means all machinery, equipment, leasehold improvements,
owned trucks, owned automobiles, office furniture, office equipment, computing
and telecommunications equipment (including the software loaded on such
equipment unless separately listed in Schedule 2.1(f)), including leased
equipment if the lease agreement relating thereto is a Lease.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means an entity the employees of which are treated as
the employees of the Seller under Section 414(b), (c), (m) or (o) of the Code.
"Excluded Assets" means the assets of Seller specifically excluded from
the proposed transaction pursuant to Section 2.2 of the Agreement.
"Excluded Liabilities" means the Liabilities and Obligations of Seller
relating to the Business, the Excluded Assets or Seller under Section 2.7 of the
Agreement.
"Financial Statements" means the financial statements of Seller
delivered to Buyer pursuant to Section 4.8(a) and included in Schedule 4.8(a).
"Governmental Authority" means the government of the United States, any
state or political subdivision thereof, any foreign country and any entity
exercising executive, legislative, regulatory or administrative functions of or
pertaining to government.
"Hazardous Substances" means "hazardous substances" or "pollutants or
contaminants" as defined pursuant to CERCLA, "regulated substances" within the
meaning of Subtitle I of the
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Resource Conservation and Liability Act, as amended, hazardous substances as
defined under any applicable state or local Environmental Laws, petroleum or
petroleum products, and any other substance considered toxic, hazardous or a
potential threat to human health or the environment under any applicable
Environmental Law, the presence of which has resulted or may result in (i) an
Environmental Lien, or (ii) a party incurring costs or liabilities, or (iii) a
party being ordered or directed to investigate, remediate or otherwise respond
to a potential environmental threat posed by such substances.
"Hired Employee" means any employee of Seller to whom Buyer offers
employment after the Closing Date and who accepts such offer and commences such
employment.
"Intellectual Property" means all unpatented inventions, invention
disclosures, multinational invention registrations, patents and patent
applications (including, but not limited to, all reissues, divisions,
continuations, continuations-in-part, extensions and re-examinations) and all
rights therein provided by law, multinational treaties or conventions; all
publications and copyrights; all trade secrets, know-how, formulas, and all
common law and registered trademarks, trademark registrations, applications for
trademark registrations, tradenames (including, but not limited to, the names
listed in Schedule 4.3), or any derivation thereof, trade dress, brand names,
service marks and logos, whether owned or licensed, including in each case,
without limitation, those listed in Schedule 2.1(d).
"Inventory" means all raw materials inventory, work-in-process
inventory, finished goods inventory and spare parts inventory, together with all
manufacturing supplies and boxing, labeling and other shipping materials and, to
the extent permitted by law, an assignment of all related manufacturer or
fabricator warranties, guarantees and indemnities.
"Knowledge", "known to us" or "aware of" or "awareness" as used
throughout this Agreement with respect to the Seller or Stockholder, shall mean
the knowledge of either the Seller, the Stockholder or any of their officers,
directors or employees, after reasonable investigation and, with respect to the
Stockholder, shall mean the knowledge of the Stockholder, after reasonable
investigation.
"Leased Real Property" means parcels of land, together with all rights,
interests and appurtenances therein or thereto, and the buildings, structures,
installations, fixtures and other improvements thereon, leased by Seller and
used in the Business.
"Leases" means leases of Equipment and other tangible personal property,
leases of Leased Real Property and other leases of Tangible Purchased Assets or
intangible personal property, in each case whether classified as a capital or
operating lease for accounting purposes.
"Liabilities and Obligations" means any direct or indirect indebtedness,
lease obligation, guaranty, endorsement, claim, loss, damage, deficiency, cost
expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, xxxxxx or inchoate, liquidated or unliquidated, secured
or unsecured, whether arising in contract, tort or otherwise, whether now
existing or hereafter arising.
"Liens" means all mortgages, liens, pledges, charges, security
interests, title retention or security agreements, claims, restrictions, leases,
options, rights of first offer or first refusal,
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confidentiality or secrecy agreements, noncompetition agreements, defects in
title and other encumbrances or rights of other with respect to any of the
Purchased Assets.
"Losses" means all claims, damages, losses, liabilities, costs and
expenses (including reasonable attorneys' fees and disbursements and any other
legal costs) suffered or incurred by a party.
"Multiemployer Plan" means a "multiemployer plan" within the meaning of
Section 3(37(A)) of ERISA.
"Open Orders" means all open orders for goods and services with
customers of Seller arising from the Business, together with related purchase
orders, contracts, subcontracts and accounts receivable and credit support
associated therewith.
"Permits" means all governmental permits, licenses, registrations,
orders and approvals relating to the Business, all of which are listed in
Schedule 2.1(j).
"Person" shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
limited liability company, or any other entity of whatever nature.
"Plan" means any welfare plan as defined by Section 3(1) of ERISA, any
pension plan as defined by Section 3(2) of ERISA, any other retirement,
severance, continuation pay, termination pay, bonus, stock bonus, deferred
compensation, insurance, vacation, personal leave, tuition reimbursement,
dependent care assistance, cafeteria plan or other plan, policy or arrangement
providing employee benefits (whether or not described in ERISA) maintained by or
sponsored by Seller or an ERISA Affiliate of Seller to which Seller or any ERISA
Affiliate contributes or is obligated to contribute.
"Prepaid Expenses" means all expenses incurred by Seller prior to the
Closing Date relating to the Business which are properly classified as prepaid
expenses in accordance with GAAP and not excluded under Section 2.2.
"Product Liability" means Liabilities and Obligations for property
damage, death or personal injury (whether suffered or discovered prior to or
after the Closing Date) arising from, caused by or attributable to, products
manufactured, sold or distributed, or services performed or rendered by Seller
or Seller's agents prior to the Closing Date.
"Purchase Price" means the consideration payable for the Purchased
Assets under Section 2.3 of the Agreement.
"Purchased Assets" means all of the assets, properties and rights of
every kind and description, real, personal and mixed, tangible and intangible,
wherever situated, used in the Business and not excluded from the proposed
transaction pursuant to Section 2.2 of the Agreement.
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"Real Property" means all parcels of land, together with all rights,
interests and appurtenances therein or thereto, and the buildings, structures,
installations, fixtures and other improvements thereon, owned by Seller and used
in the Business.
"Software" means all software owned, developed, licensed or used,
including (i) all modifications, enhancements, fixes, updates, upgrades,
bypasses and workarounds, (ii) the source code and object code for any of the
foregoing and (iii) all operating systems, bridgeware, firmware, middleware and
utilities.
"Subsidiary" means a corporation in which Seller or any Subsidiary of
Seller owns a majority of the common stock or has the power to elect a majority
of the directors.
"Tangible Purchased Assets" means all tangible personal properties and
assets, whether owned or leased, included in the Purchased Assets.
"Taxes" mean all income or profits taxes (including, but not limited to,
federal income taxes and state income taxes), estimated taxes, payroll and
employee withholding taxes, unemployment insurance, social security taxes, sales
and use taxes, duties, ad valorem taxes, value added taxes, excise taxes,
capital stock or franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, recordation fees, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges and other
obligations of the same or of a similar nature to any of the foregoing
(including any interest or penalties relating to any of the foregoing), which a
corporation or other entity may be required to pay, withhold or collect, imposed
by any federal, territorial, state, local, or foreign government or any agency
or political subdivision of any such government;
"Technical Information" means all customer, dealer and supplier lists;
serial number records; engineering, manufacturing, design, installation and
other technical drawings, specifications and calculations; manufacturing and
production processes and techniques; research and development information;
operating, maintenance and repair manuals and instruction books; cost and
estimating information, cost records, vendor data and other business records
(including without limitation, sales histories); sales inquiries; consultant's
reports; bills of material, test data and selected test material samples;
advertising and promotional literature, including reproducible masters and all
other commercial, sales, marketing, and technical data (including, but not
limited to, data stored electronically or on other format, together with rights
under any third party licenses necessary to use such data).
"Warranty Claim" means a claim for the repair or replacement of products
manufactured by the Business under unexpired warranties or for credits or price
adjustments for such products, as a result of their failure to perform in
accordance with the warranties made in connection with their sale.
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EXHIBIT 8.1
Counties and Political Subdivisions
Subject to Covenant Not to Compete
The following counties in the State of California:
Alameda Orange
Alpine Placer
Xxxxxx Plumas
Butte Riverside
Calaveras Sacramento
Colusa San Xxxxxx
Contra Costa San Bernardino
Del Norte San Francisco
El Dorado San Xxxxxxx
Fresno San Xxxx Obispo
Xxxxx San Mateo
Humboldt Santa Xxxxxxx
Imperial Santa Xxxxx
Inyo Santa Xxxx
Xxxx Shasta
Kings San Diego
Lake Sierra
Lassen Siskiyou
Los Angeles Xxxxxx
Xxxxxx Sonoma
Marin Stanislaus
Mariposa Xxxxxx
Mendocino Tehama
Merced Trinity
Modoc Tulare
Mono Tuolumne
Monterey Ventura
Napa Yolo
Nevada Yuba
All counties and political subdivisions in each of the other forty-nine
states of the United States of America.
The District of Columbia.
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