ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is effective as of November
23, 2004, and is by and among ScaleCars, Ltd., a Nevada Corporation, whose
address is 00000 Xxxxx Xxxx Xxxx. Xxxxx 0, Xxxxxxxxxx, Xxxxxxx 00000 (the
"Seller"), Ten Stix, Inc., a Nevada corporation ("Ten Stix"), and Scottsdale
Diecast, Inc., an Arizona Corporation, whose address is X.X. Xxx 00000,
Xxxxxxxxxx, Xxxxxxx 00000 (the "Purchaser") and , a wholly-owned subsidiary of
Ten Stix.
RECITALS
A. Whereas, Seller is the owner of that certain business known as
ScaleCars, Ltd., located at 00000 Xxxxx Xxxx Xxxx. Xxxxx 0, Xxxxxxxxxx, XX 00000
(the "Business").
B. Whereas, Ten Stix, though its wholly-owned subsidiary, the Purchaser
desires to purchase all assets of the Business.
C. Whereas, as a condition to this Agreement, the Purchaser will
concurrently execute a Commercial Lease (the "Lease") under which Purchaser
shall lease from Seller, and Seller will lease to Purchaser approximately 2,800
square feet of retail space (the "Business Premises") in the building where the
Business is currently conducted, which building is owned by ABR Group, Inc.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
ARTICLE 1.
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 Closing Date. The "Closing Date" shall be November 24, 2004, or such
later date as mutually agreed upon by the parties in writing.
1.2 Excluded Assets. The term "Excluded Assets" shall mean those assets of
Seller which are not to be acquired by Purchaser hereunder. The "Excluded
Assets" are defined as all personal items which shall be specifically designated
on Exhibit 1, prior to Closing. The "Excluded Assets" are not included as
Purchased Assets under Section 1.3. In this regard, Seller and Purchaser will
prepare and attach, as a supplement hereto, an Exhibit that reasonably and
fairly reflects the value of the what must be completed with respect to each
work in-progress project, the amount the customers have agreed to pay for such
project, the amount paid as of Closing, and the agreed account receivable as of
Closing.
1.3 Purchased Assets. The term "Purchased Assets" shall mean all assets of
the Business located at 00000 Xxxxx Xxxx Xxxx. Xxxxx 0, Xxxxxxxxxx, XX 00000,
and all of Seller's right, title and interest in and to the following:
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(a) Seller's supplier, customer and vendor lists and records
pertaining thereto;
(b) The trade name, website and URL addresses "XxxxxXxxx.xxx," and all
other trade names, websites, and URL addresses associated with the Business
including with out limitation those trade name, website and URL addresses
set forth on Exhibit 2.
(c) All registered and unregistered trademarks, service marks, sales
marks, colors, names and slogans relating to XxxxxXxxx.xxx and ScaleCars,
Ltd, and all applications for any of the foregoing, together with all of
the Seller's rights to use all of the foregoing forever, and all goodwill
associated with any of the foregoing;
(d) The existing phone number(s) and web-site of the Business; and
(e) Any and all equipment, furniture, fixtures, assets, racks,
machinery trade fixtures, miscellaneous supplies, inventory, assets,
existing rental contracts and tangible and intangible personal property
including without limitation those items set forth on Exhibit 3, attached
hereto and incorporated herein by this reference.
ARTICLE 2.
ESCROW AND PURCHASE AND SALE OF ASSETS
2.1 Transfer of Assets. Upon the terms and subject to the conditions
contained herein, on the Closing Date, Seller will sell, convey, transfer,
assign, and deliver to Purchaser on the Closing Date, the Purchased Assets.
2.2 Assumption of Obligations and Liabilities. Purchaser is not assuming
any obligations or liabilities of Seller and is not assuming any liabilities
associated with the Purchased Assets, such as warranties relating to any
projects or portions of projects completed by Seller prior to close. To the best
of Seller's knowledge, there are no liabilities associated with the Purchased
Assets.
2.3 Purchase Price. Upon the terms and subject to the conditions contained
herein, the purchase price to be paid by Purchaser to Seller for the sale,
transfer, assignment, conveyance and delivery of the Purchased Assets free and
clear of all liens and encumbrances, shall be:
(a) Four million nine hundred thousand (4,900,000) restricted shres of
common shares of Ten Stix, Inc.; and
(b) $166,919.89, evidenced by Purchaser's Promissory Note (the
"Purchaser Note"), in the form and content as attached hereto as Exhibit 4,
and made a part hereof by this reference, payable as follows:
(i) Thirty thousand dollars ($30,000) payable in four (4) equal
installments of $7,500 each as follows:
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(A) $7,500 payable 90 days after Closing;
(B) $7,500 payable 180 days after Closing;
(C) $7,500 payable 270 days after Closing; and
(D) $7,500 payable 360 days after Closing.
(ii) The balance of the cash purchase price of $136,919.89
payable in full 450 days after Closing.
2.4 Failure to Satisfy Conditions to Closing. If at the Closing Date, the
Purchaser or Seller has failed to satisfy all conditions to closing or a waiver
of any condition has not been obtained from the other party, and no extension of
the Closing Date has been mutually agreed to by the parties, then either party
may, at any time thereafter and prior to the satisfaction of all of the
conditions to this Agreement by written notice to the other party, terminate the
executory provisions of this Agreement, in which event any funds deposited and
delivered to Escrow Holder by Purchaser or any other party shall immediately be
returned to the Purchaser or such other party and any and all original documents
to be delivered hereunder by any party or their attorneys or agents, shall be
returned to such delivering party immediately, and thereafter, no party shall
have any further obligations hereunder.
2.5 Allocation of Purchase Price. Prior to the Closing Date, or such
earlier date as Escrow Holder shall require for calculation of any prorations or
withholdings, Purchaser and Seller shall use their respective best reasonable
efforts to agree upon an allocation of the aggregate purchase price being paid
pursuant to this Agreement for the Purchased Assets, which allocation shall
comply in all material respects with the requirements of Internal Revenue Code
Section 1060 and the underlying regulations. Seller shall cooperate in all
reasonable respects with Purchaser's due diligence, which due diligence may,
among other things, include: (a) putting together an itemized list of the
Purchased Assets to be acquired pursuant hereto; (b) ascertaining a close as
reasonably possible, the original cost, accumulated depreciation, book value and
tax basis of each such asset; and (c) ascertaining the current use and operating
condition of each such asset. Such allocation shall be set forth on two (2) IRS
Forms 8594 (one in the form required to be filed by Seller and the other in the
form required to be filed by Purchaser), which shall be presented to Seller for
its approval, which approval shall not be withheld unreasonably and shall, to
the extent practical, be given prior to the Closing Date. Provided such
allocation has been approved by Seller and the transaction contemplated by this
Agreement is closed, Purchaser and Seller shall each report the transaction on
their respective federal income tax returns for the taxable year in which the
transaction is closed on the applicable IRS Form 8594 prepared by Purchaser and
approved by Seller, and each shall report the transaction for state income tax
purposes using the allocation set forth in such IRS Forms 8594. A copy of Form
8594 is attached hereto as Exhibit 5
ARTICLE 3.
CLOSING
3.1 Closing. The closing (the "Closing") for the consummation of the
transactions contemplated by this Agreement shall take place at the offices of
XxxxxXxxx.xxx - 00000 X. Xxxx Xxxx. Xxxxx 0, Xxxxxxxxxx, XX 00000, or such other
place as the Seller and the Purchaser shall agree, at 5:00 p.m., local time, on
November 24, 2004, or such other date and time agreed to by the Seller and the
Purchaser (such date of the Closing being hereinafter called the "Closing
Date"). The Closing shall be deemed to be effective as of the close of business
on the Closing Date.
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3.2 Conveyances at Closing.
(a) To effect the transaction contemplated in this Agreement, Seller
will, on the Closing Date, deliver to Purchaser the following:
(i) A Xxxx of Sale conveying in the aggregate all the Purchased
Assets pursuant to paragraph 1.3, with title vested in Purchaser, or
its designated nominee, in the form as approved by Purchaser, to be
attached hereto as Exhibit 6.
(ii) A duplicate original executed copy of the Lease of the
Business Premises in the form and content as attached hereto as
Exhibit 7, fully executed by Seller and Purchaser; and
(iii) All such other documents and instruments as shall be
reasonably requested by Purchaser to vest in Purchaser title in and to
the Purchased Assets in accordance with the provisions hereof.
(b) To effect the transaction contemplated in this Agreement,
Purchaser will, on the Closing Date, deliver to Seller the following:
(i) Four million nine hundred thousand (4,900,000) restricted
shares of common shares of Ten Stix, Inc., registered in the name of
Seller;
(ii) Purchaser's fully executed Promissory Note in favor of
Seller in the principal amount of $166,919.89 in the form and content
as attached hereto as Exhibit 4;
(iii) A duplicate original executed copy of the Lease of the
Business Premises in the form and content as attached hereto as
Exhibit 7, fully executed by Seller and Purchaser; and
(iv) All such other documents and instruments as shall be
reasonably requested by Seller in accordance with the provisions
hereof.
(c) All instruments executed and delivered to Seller and
Purchaser pursuant hereto shall be in form and substance, and shall be
executed in a manner, reasonably satisfactory to Seller and Purchaser.
(d) Anything in this Agreement to the contrary notwithstanding,
this Agreement shall not constitute an agreement to assign any claim,
contract, license, lease commitment, sales order, purchase order or
any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a breach thereof or in any way
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affect the respective rights of Purchaser or Seller thereunder. If
such consent is not obtained, or if an attempted assignment thereof
would be ineffective or would affect the rights thereunder so the
Purchaser would not receive all such rights, Seller will cooperate
with Purchaser, in all reasonable respects, to provide to Purchaser
the benefits under any such claim, contract, alarm service contract,
license, lease, commitment, sales order or purchase order, including
without limitation, enforcement for the benefit of Purchaser of any
and all rights of Seller against a third party thereto arising out of
the breach or cancellation by such third party or otherwise; and any
transfer of assignment to Purchaser of any property or property rights
or any contract or agreement which shall require the consent or
approval of any third party shall be made subject to such consent or
approval being obtained.
(e) Anything in this Agreement to the contrary notwithstanding,
this Agreement shall not constitute an agreement by Seller to transfer
to Purchaser any of the Excluded Assets.
3.3 Closing Costs.
(a) Seller shall incur all costs and expenses in clearing and
delivering clear title to the Purchased Assets.
(b) Purchaser will incur all costs of escrow.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that:
4.1 Organization of Seller. Seller is a Nevada corporation organized and
existing under the laws of the State of Nevada.
4.2 Authorization. Seller has full power and authority to enter into this
Agreement, to consummate the transactions contemplated hereby and to perform his
obligations hereunder. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by Seller do not
have to be authorized by any third party. This Agreement has been duly executed
and delivered by Seller and is a valid and binding obligation of Seller
enforceable against Seller in accordance with its terms.
4.3 Title to Purchased Assets, Etc. Seller has good, marketable, and
unencumbered title to all the Purchased Assets or will, prior to the Closing
Date obtain, to the satisfaction of Purchaser good, marketable, and unencumbered
title. None of the Purchased Assets will as of the Closing Date be subject to
any mortgage, pledge, lien, security interest, encumbrance, claim, charge or
material adverse interest of any kind or character. None of the Fixed Assets are
subject to, or held under, any security, conditional sales or other title
retention contract or will be located on the Closing Date at the facilities
where the Business is operated and which Purchaser will be occupying under the
Commercial Lease as provided in this Agreement. All inventories of goods held by
Seller are of merchantable quality and usable or salable in the ordinary course
of the Business. There are not and there will not be as of the Closing Date, any
unpaid or
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outstanding liabilities to creditors which affect or may affect Seller's title
to the Purchased Assets. Seller is not in breach or default under any agreement
or instrument where such default could, singly or in the aggregate with defaults
under other agreements or instruments, give rise to any adverse claim against
the Purchased Assets, nor has Seller been notified of any such allegation.
4.4 Taxes. Seller has filed all federal, local and state tax returns
required to be filed by the Seller have been timely filed and all taxes have
been paid in full in accordance with applicable laws. Such tax returns are true,
correct and complete in all material respects. Seller is not in default of any
tax obligation or settlement, and none of the Purchased Assets is subject to any
lien arising in connection with any failure or alleged failure to pay any tax;
4.5 Employees / Contractor Wages and Compensation. Any and all employee or
other wages due and owing by Seller have been paid in full, and Seller has
withheld and paid all corresponding taxes required to have been withheld and
paid in connection with amount paid or owing to any employee or independent
contractor, and none of the Purchased Assets is subject to any lien arising in
connection with failure or alleged failure to pay such wages or withhold and pay
such taxes;
4.6 Product Warranty. Each product manufactured, sold or delivered by any
Seller in connection with the Business has been manufactured, sold or delivered,
as the case may be, in conformity with all applicable contractual commitments
(including any applicable warranties), and no Seller has any Liability in
connection with the Business (and there is no basis for any present or future
Action against any of them giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith, except to the extent of
the reserve for product warranty claims set forth on the most recent financial
statements as adjusted for the passage of time through the Closing Date in the
ordinary course of business. No product manufactured, sold or delivered by any
Seller in connection with the Business is subject to any guaranty, warranty or
other indemnity beyond such Seller's applicable standard terms and conditions of
sale. Exhibit 8 includes copies or complete descriptions of the standard terms
and conditions of sale in connection with the Business.
4.7 Product Liability. Seller has manufactured, sold or supplied products
or services that are or were or will become in any material respect faulty or
defective or that do not comply in any material respect with any warranties or
representations expressly or impliedly made by any Seller and, to Seller's
Knowledge, there is no basis for any present or future action arising out of any
injury to individuals or property as a result of the ownership, possession or
use of any product manufactured, sold or Delivered by such Seller in connection
with the Business.
4.8 "AS-IS" Sale. Except as set forth herein, Purchaser acknowledges that
Seller makes no representation or warranty, either expressed or implied, with
respect to the Purchased Assets, their present condition or fitness or
suitability for any particular purpose. In this respect, Purchaser confirms that
he is relying solely upon his investigation and review of the present condition
of the Purchased Assets.
4.9 Reports and Financial Statements. Purchaser has heretofore been
furnished with complete copies of the unaudited balance sheet, statements of
income and cash flows of ScaleCars, Ltd. as of November 10, 2004 attached hereto
as Exhibit 9, Purchaser understands and acknowledges that said financial
statements are unaudited and internal financial statements and may be subject to
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changes and adjustments based on actual year ended results of operations. Seller
represents that said financial statements, to the best of his knowledge, are
true and accurate. Seller shall not under any circumstances exclusive of fraud,
misappropriation of intentional omissions, be liable for any deviation or
adjustments to said financial statements.
4.10 Loss of Suppliers or Customers. Purchaser understands and acknowledges
that there are no long term customer or supplier agreements and no guaranty that
any of Seller's existing suppliers and/or customers will remain suppliers or
customers following the sale contemplated hereby. In this regard Seller
represents to the best of his knowledge that, other than in the ordinary course
of business, there has been no recent loss of suppliers or customers and that
there is no anticipated loss of suppliers or customers.
4.11 Litigation, Proceeding and Applicable Law. There are material actions,
suits or proceedings pending or, threatened against or affecting any of the
Purchased Assets or the consummation of the transactions contemplated hereby, at
law or in equity before or by any governmental authority, instrumentality or
arbitrator of any kind, and there is no valid basis for any such action.
Purchaser is not assuming any liability with respect to any such actions.
4.12 Compliance with Law. To the best of Seller's knowledge, Seller is in
compliance, in all material respects, with all applicable statutes, rules,
regulations, ordinances, codes, and orders as such apply to Seller or the
Purchased Assets.
4.13 Insurance. All of the material insurable properties constituting any
part of the Purchased Assets are insured for Seller's benefit and will be so
insured through the Closing Date, in amounts and against risks customary in the
Seller's business.
4.14 Consents and Approval. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority, or any other person or entity, is required to be made or obtained by
Seller in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
4.15 Disclosure. To the best of Seller's knowledge no representation or
warranty of Seller contained in this Agreement, and no statement contained in
any schedule, exhibit or list furnished to Purchaser pursuant hereto, contains
any untrue statement of a material fact or omits to state a material fact.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
5.1 Authorization. Purchaser has full legal authority to enter into this
Agreement, to consummate the transactions contemplated hereby and to perform its
obligations hereunder.
5.2 Consents and Approvals. No consent, approval or authorization or
declaration, filing or registration with any governmental or regulatory
authority, or any other person or entity, is required to be made or obtained by
Purchaser in connection with the execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby.
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5.3 Disclosure. To the best of Purchaser's knowledge no representation or
warranty of Purchaser contained in this Agreement, and no statement contained in
any schedule, exhibit or list furnished to Purchaser pursuant hereto, contains
any untrue statement of a material fact or omits to state a material fact.
ARTICLE 6.
ACTIONS BY SELLER AND PURCHASER PRIOR TO THE CLOSING
Seller and Purchaser covenant as follows for the period from the date
hereof through the Closing Date:
6.1 Maintenance of Purchase Assets. Without limiting the generality of the
foregoing, Seller shall maintain the Purchased Assets in their current state of
repair and maintain insurance covering the Purchased Assets comparable to that
in effect on the date hereof.
6.2 Due Diligence and Assess to Information.
(a) Purchaser acknowledges that commencing on the execution hereof and
continuing for a period which will expire at 5:00 p.m. Pacific Time on the
fifteenth (15th) day following execution (i.e. December 9, 2004, (the "Due
Diligence Period"), Purchaser shall conduct, its examinations, inspections,
testing, studies and investigations (herein collectively called the "Due
Diligence") of the Business, information regarding the Business and such
documents applicable to the assets of the Business. During regular business
hours, Purchaser may conduct such due diligence activities, inspections,
and studies of the Business as it deems necessary or appropriate, and
examine and investigate to its full satisfaction all facts, circumstances,
and matters relating to the Business (including, with regard to the
premises, the physical condition , use, availability and adequacy of
utilities, access, zoning, compliance with applicable laws, environmental
conditions, engineering and structural matters), and any other matters it
deems necessary or appropriate for purposes of consummating this
transaction. In order to complete such Due Diligence, Purchaser through its
designated representative, Xxxxx Xxxxxxxx and Xxxx Xxxxxx will have
reasonable access to the books, records, and agreements concerning the
Business and Seller will make good faith efforts upon Purchaser's
reasonable request to provide Purchaser with other relevant or necessary
information with respect to the Business. Purchaser's designated
representative will conduct its due diligence solely through Seller's
representative, Xxx Xxxxx. Purchaser will not directly or indirectly
contact any employees, agents, suppliers or customers of Seller without the
expressed authorization, consent and presence of Xxx Xxxxx, which consent
and authorization Xxx Xxxxx can withhold in his sole discretion. Purchaser
agrees to hold in confidence any information gathered from its inspection
of the Seller's books and records (Purchaser may disclose any such
information to its professional advisors, lenders, partners, and
investors). The Due Diligence shall be at Purchaser's sole cost and
expense.
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(b) Seller acknowledges that commencing on the execution hereof and
continuing for a period which will expire at 5:00 p.m. Pacific Time on the
fifteenth (15th) day following execution (i.e. December 9, 2004, (the "Due
Diligence Period"), Seller shall conduct such its examination, inspections
and due diligence with regard to Purchaser (herein collectively called the
"Due Diligence") of the Purchaser, information regarding the Purchaser, its
principals and guarantors and such documents applicable to the Purchaser.
Seller may conduct such due diligence activities as it deems necessary or
appropriate to its full satisfaction all facts, circumstances, and matters
relating to the Purchaser, its principals and its guarantors and any other
matters it deems necessary or appropriate for purposes of consummating this
transaction. In order to complete such Due Diligence, Seller through its
designated representative, Xxx Xxxxx will have reasonable access to the
books, records, and agreements concerning the Purchaser and Purchaser will
make good faith efforts upon Seller's reasonable request to provide Seller
with other relevant or necessary information with respect to the Purchaser,
its principals and guarantors. Seller agrees hold in confidence any
information gathered from its inspection pertaining to the Purchaser, its
principals and guarantors (Seller may disclose any such information to its
professional advisors, lenders, partners, and investors). The Due Diligence
shall be at Seller's sole cost and expense.
(c) If during the Due Diligence period, Purchaser or Seller in their
sole and absolute discretion choose not to proceed with this transaction
then such party shall provide written notice of the termination of this
agreement to the other party, prior to the expiration of the Due Diligence
period, and the party terminating this Agreement shall be responsible for
the payment of all costs and expenses of Escrow Holder, including any
expenses and fees incurred by Escrow Holder with regard to complying with
the Bulk Sales Act and obtaining any such tax clearance certificates. If
this agreement is terminated by either party during the Due Diligence
Period then the parties shall have no further obligations to proceed with
the transaction contemplated hereby, and the parties hereby release each
other from any and all obligations hereunder.
6.3 Consents and Best Efforts. Except as otherwise set forth herein, as
soon as practicable, Seller will commence to take all reasonable actions and use
its best efforts to obtain all consents, approvals, releases, agreements of, and
to give all notices and make all filings with, any third parties, necessary to
authorize, approve or permit the full and complete sale of the Purchased Assets
to Purchaser free and clear of all liens and encumbrances. Seller and Purchaser
shall take, or cause to be taken, all action or do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby.
6.4 Best Efforts. Seller shall use its reasonable best efforts to cause all
conditions in Article 7., hereof to be satisfied, and Purchaser shall use its
best efforts to cause all the conditions in Article 8., hereof to be satisfied.
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ARTICLE 7.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions provided for
hereby are subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions:
7.1 Representations, Warranties and Covenants. To the best of Purchaser's
knowledge all representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date and Purchaser shall have performed all agreements and covenants
required hereby to be performed by it prior to or at the Closing Date.
7.2 Consents. To the best of Purchaser's knowledge all consents, approvals
and waivers from governmental authorities and other parties, necessary to permit
Seller to transfer the Purchased Assets to Purchaser as contemplated hereby
shall have been obtained, unless the failure to obtain any such consent,
approval or waiver would not have a material adverse effect upon Seller.
7.3 Delivery of Documents. Purchaser shall have delivered to Seller through
Escrow Holder, the purchase price in cash or cash equivalent, the fully executed
Secured Promissory Note along with a fully executed Security Agreement, a UCC-1
Financing Statement securing the Purchaser's Secured Note, and a fully executed
duplicate original of the Lease, all as attached hereto.
ARTICLE 8.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions provided for
hereby are subject, in the discretion of Purchaser, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions:
8.1 Representations, Warranties and Covenants. To the best of Seller's
knowledge all representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date, and Seller shall have performed all agreements and covenants
required hereby to be performed by it prior to or at the Closing Date.
8.2 Consents. To the best of Seller's knowledge all consents, approvals and
waivers from any third parties necessary to permit Seller to transfer the
Purchased Assets to Purchaser as contemplated hereby, shall have been obtained,
unless the failure to obtain any such consent, approval, or waiver would not
have a material adverse effect upon Purchaser and would not restrict the
transferability of any Purchased Asset.
8.3 No Governmental Proceeding or Litigation. To the best of Seller's
knowledge no suit, action, investigation, inquiry or other proceeding by any
governmental authority or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby and which could reasonably be
expected materially and adversely to affect the right or ability of Purchaser to
own, operate or possess after the Closing, or the value after the Closing of the
Purchased Assets of Seller being acquired by Purchaser hereunder or which could
reasonably be expected to result in any material liability of Purchaser.
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8.4 General Due Diligence. Purchaser shall have completed, with results
satisfactory to him in his reasonable discretion, his due diligence and
investigation of the Purchased Assets.
8.5 Delivery of Clear Title. Seller shall be able to deliver the Purchased
Assets and a Xxxx of Sale vesting title in said Purchased Assets in Purchaser in
the form of Exhibit 6 attached hereto.
8.6 Delivery of Documents. Seller shall have delivered to Purchaser through
Escrow Holder, a fully executed duplicate original of the Lease attached hereto.
8.7 Verification and Confirmation of the Purchased Assets. Purchaser and
Seller have confirmed and verified and signed-off on a list of the Purchased
Assets being sold under this agreement.
ARTICLE 9.
COVENANTS OF SELLER
9.1 Offset of Creditor, Supplier, Warranty, Tax, or other Claims Against
Note. Any of the obligations of Seller, to provide indemnification to the
Purchaser pursuant to this Agreement, or as a result of any whatsoever that
effects the Purchased Assets, including without limitation, any claim by a
creditor, supplier, warranty, tax, employee or contractor, may be offset against
the Purchaser Note delivered pursuant to this Agreement, up to the entire
principal amount thereof, if Purchaser determines in good faith that such amount
is due and gives written notice to Shareholder stating the amount claimed and
that it is claimed as a result of a representation of warranty of the Seller as
set forth in this Agreement. Seller may dispute such claim in accordance with
the dispute resolution procedures set forth in paragraph 9.2 below, provided,
that such dispute shall not permit Seller to receive any portion of the amounts
to be offset pursuant to such notice unless and until such dispute has been
resolved in Seller's favor. Any attorneys' fees due to Purchaser under Section
9.2 may also be offset against the Purchaser Note.
9.2 Disputes - of Claims of Offset. All claims for indemnity payments
under this Agreement, or Offset under paragraph 9.1 shall be made in writing (a
"Notice of Claim of Offset"). In the event Seller wishes to dispute a Notice of
Offset the Seller shall notify the Purchaser in writing as to the amount of the
claim that is disputed (the "Notice of Offset Dispute"). If no Notice of Offset
Dispute is given within fifteen (15) days after the date on which the Notice of
Offset is given the amount specified in the Notice of Offset shall be final and
conclusive. If the parties cannot agree on the amount due within fifteen (15)
days after the date on which the Notice of Offset Dispute is given, such
disagreement shall be referred for resolution to a single arbitrator who is
mutually agreed upon by the Seller and Purchaser (the "Arbitrator"). If the
parties cannot agree on the Arbitrator within twenty five (25) days after the
Notice of Offset Dispute is given the Arbitrator shall be chosen by the
President of the American Arbitration Association for the office situation in
Scottsdale, Arizona or the nearest office of the American Arbitration
Association. The decision of the Arbitrator shall be given in writing to Seller
and Purchaser within thirty days after the Arbitrator is chosen, and such
decision shall be final and binding on the parties. The fees of the Arbitrator
11
shall be shared equally by the Seller and Purchaser. Any meetings with or
proceedings before the Arbitrator shall be held in Scottsdale, Arizona. The
powers of the Arbitrator under this subsection shall be limited to determination
of amounts due under a Notice of Offset and Notice of Offset Dispute. The award
of the Arbitrator shall state which party is the "Prevailing Party". The
Prevailing Party shall be entitled to receive from the other party its
reasonable attorneys' fees in connection with the arbitration. If Seller is the
"Prevailing Party" and if a determination is made that amounts are payable to
Seller which have been wrongfully offset by Purchaser from payments due under
the Purchaser Note, then Seller shall be entitled to interest on the amount
withheld from the date due under the Purchaser Note until the wrongfully offset
amount is paid in full at the rate of eight percent (8%) per annum. Time is of
the essence of the provisions of Section 9.2. Judgment on the award rendered by
the Arbitrator may be entered in any Court having jurisdiction thereof.
ARTICLE 10.
ACTIONS BY SELLER AND PURCHASER AFTER THE CLOSING
10.1 Indemnification by Seller. Seller shall indemnify, save and hold
harmless Purchaser, its affiliates and subsidiaries, and its respective
employees, representatives, officers, directors and agents from and against any
and all costs, losses (including, without limitation, diminutions in value),
liabilities, damages, lawsuits, deficiencies, claims and expenses (whether or
not arising out of third-party claims), including without limitation, interest,
penalties, reasonable attorneys' fees and reasonable amounts paid in
investigation, defense or settlement of any of the foregoing, incurred in
connection with or arising out of or resulting from or incident to:
(a) any breach of any covenant or warranty, or the inaccuracy of any
representation, made by Seller in or pursuant to this Agreement;
(b) any liability, obligation or commitment of any nature (absolute,
accrued, contingent or otherwise) of Seller or relating to Seller and not
specifically assumed by Purchaser pursuant to this Agreement; and
(c) any act or omission of Seller related to the Purchased Assets
before the Closing Date.
10.2 Indemnification by Purchaser. Purchaser shall indemnify and save and
hold harmless Seller, its affiliates and subsidiaries, and its and their
respective employees, representatives, officers, directors and agents from and
against any and all costs, losses (including, without limitation, diminutions in
value), liabilities, damages, lawsuits, deficiencies, claims and expenses
(whether or not arising out of third-party claims), including without
limitation, interest, penalties, reasonable attorneys' fees and reasonable
amounts paid in investigation, defense or settlement of any of the foregoing,
incurred in connection with or arising out of or resulting from or incident to:
(a) any breach of any covenant or warranty, or the inaccuracy of any
representation, made by Purchaser in or pursuant to this Agreement;
(b) any liability or obligation specifically assumed by Purchaser
pursuant to this Agreement; and
(c) any act or omission of Purchaser related to the Purchased Assets
after the Closing Date.
10.3 Further Assurances. On and after the Closing Date, Seller and
Purchaser will take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof, including without
limitation, putting Purchaser in possession and operating control of the
Purchased Assets.
12
10.4 Taxes.
(a) Purchaser shall pay all sales and use taxes applicable to the sale
of the Purchased Assets (and any deficiency, interest or penalty asserted
with respect thereto), or shall deliver to Escrow Holder, Purchaser's
Resale Number exempting Purchaser from paying said sales tax.
(b) Personal property taxes, if any, relating to the Purchased Assets
shall be prorated between Seller and Purchaser as of the Closing Date (with
Seller being responsible for such items for all periods ending on or before
the Closing Date and Purchaser being responsible for such items
thereafter), and Seller and Purchaser each agree to pay its respective
share of such items when due.
10.5 [INTENTIONALLY DELETED]
10.6 Covenant Not To Compete. For a period of five (5) years following the
Closing Date, Seller will not directly or indirectly open a new business that
competes, directly or indirectly, with the business of Purchaser within an
eighty (80) mile radius of the Business Premises.
The parties acknowledge and agree that the time, scope, geographic area and
other provisions of this Section 10.6 have been specifically negotiated by
sophisticated, commercial parties and specifically hereby agree that such time,
scope, geographic area and other provisions are reasonable under the
circumstances. Purchaser and Seller further agree that if, at any time, despite
the express agreement of the parties hereto, a court of competent jurisdiction
holds that any portion of this Section 10.6 is unenforceable because any of the
restrictions herein are unreasonable, or for any other reason, the maximum
restrictions of time, scope or geographic area reasonable under the
circumstances, as determined by such court, will be substituted for any such
restrictions held unenforceable. In the event of breach by Seller of any
provision of this Section 10.6, Seller acknowledges that such breach will cause
irreparable damage to Purchaser, the exact amount of which will be difficult or
impossible to ascertain, and that remedies at law for any such breach will be
inadequate.
Accordingly, Purchaser shall be entitled, in addition to any other rights
or remedies existing in its favor, to obtain, without the necessity for any bond
or other security, specific performance and/or injunctive relief in order to
enforce, or prevent breach or, any such provision.
10.7 Seller's Consulting Services Post Closing. The parties acknowledge and
agree that following Closing, the Seller will provide consulting services
regarding the operations of the business, (the "Consulting Services") to the
Purchaser, from time to as requested by Purchaser during regular business hours,
The Seller agrees to provide up to 10 hours of consulting services per week at
no additional cost for a period of three (3) months commencing from the Closing
Date.
10.8 Survival of Representations; Covenant Claims Limitation. The
representations and warranties in this Agreement of the Seller set forth in
Article 4. hereof, shall survive the Closing Date for a period through the full
satisfaction of the Purchaser Note attached hereto as Exhibit 4, and shall then
terminate; provided, however, that any such representation and warranty shall
survive the time it would otherwise terminate only with respect to claims of
which notice has been given as provided in this Agreement prior to such
termination.
13
ARTICLE 11.
MISCELLANEOUS
11.1 Termination. If any condition precedent to Seller's obligations
hereunder is not satisfied and such condition is not waived by Seller at or
prior to the Closing Date, or if any condition precedent to Purchaser's
obligations hereunder is not satisfied and such condition is not waived by
Purchaser at or prior to the Closing Date, Seller or Purchaser, as the case may
be, may terminate this Agreement at its option by notice to the other party, as
the case may be, unless such party shall be in default under its obligations
hereunder. In the event of the termination of this Agreement by either party as
above provided, neither party shall have any liability hereunder of any nature
whatsoever to the other party, including any liability for damages, unless
either party is in default under its obligations hereunder, in which event the
party in default shall be liable to the other party for such default, for such
damages resulting from such default. In the event that a condition precedent to
its obligations is not satisfied, nothing contained herein shall be deemed to
require any party to terminate this Agreement, rather than to waive such
condition precedent and proceed with the Closing.
11.2 Survival of Representations and Warranties. All of the representations
and warranties contained in this Agreement and in any certificate delivered
pursuant hereto shall not be affected by any investigation or opportunity or
right to investigate, and shall survive the Closing. Seller and Purchaser agree
to execute any documents which are needed by the other at any time after Closing
to confirm the terms of this Agreement.
11.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Seller without the prior written
consent of Purchaser, or by Purchaser without the prior written consent of
Seller, except that Purchaser may, without such consent, assign all such rights
and obligations to a wholly-owned subsidiary or subsidiaries of Purchaser or to
a successor to the business of Purchaser or the business presently being
conducted by Seller. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and no other person shall have any right, benefit or
obligation hereunder.
11.4 Notices. Unless otherwise provided herein, any notice request,
instruction or other document to be given hereunder by either party to the other
shall be in writing and delivered personally or mailed by certified mail,
postage prepaid, return receipt requested (such mailed notice to be effective on
the date such receipt is acknowledged), as follows:
If to the PURCHASER to:
----------------------
Scottsdale Diecast, Inc.
Attn: Xxxxx Xxxxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000
14
If to the SELLER to:
-------------------
ScaleCars, Ltd.
Attn: Xxx Xxxxx
00000 Xxxxx Xxxx Xxxx. Xxxxx 0
Xxxxxxxxxx, XX 00000
or to such other place and with such other copies as either party may
designate as to itself by written notice to the other.
11.5 Choice of Law. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the internal laws of the
State of Arizona, except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.
11.6 Entire Agreement; Amendments and Waivers. This Agreement and the
attached Exhibits constitute the entire agreement among the parties pertaining
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations, and discussions, whether oral or written, of the
parties with respect thereto. No supplement, amendment, modification or waiver
of this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver, unless
otherwise expressly provided.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Expenses. Except as set forth below, each party hereto shall pay its
own expenses incident to this Agreement and to action taken in preparation for
carrying this Agreement into effect.
11.9 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be to any extent invalid, illegal or
unenforceable in any respect, such provision shall be construed as if it were
written in such a way as to be to the greatest extent possible valid, legal and
enforceable, so as to effectuate to the greatest extent possible the parties'
intent, and such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
11.10 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of the Agreement.
11.11 Attorney Fees. If any action or other proceeding, in law or in
equity, is brought for the enforcement of this Agreement or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover its or their reasonable attorney's fees and other
costs incurred in that arbitration, action or proceeding, in addition to any
other relief to which it is or may be entitled.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth opposite their name below.
Seller
ScaleCars, Ltd
Dated: 11/23/04 /s/ Xxx Xxxxx
-------------------------------
By: Xxx Xxxxx
Its: President
Purchaser
Scottsdale Diecast, Inc.
Dated: 11/23/04 /s/ Xxxxx Xxxxxxxx
-------------------------------
By: Xxxxx Xxxxxxxx
Its: President
Ten Stix, Inc.
Dated: 11/23/04 /s/ Xxxxx Xxxxxxxx
-------------------------------
By: Xxxxx Xxxxxxxx
Its: President
16
EXHIBIT 1
EXCLUDED ASSETS
None To Be Listed
EXHIBIT 2
TRADE NAME, WEBSITE AND URL ADDRESSES
XxxxxXxxx.xxx
XxxxxXxxx.xxx
XxxxxXxxx.xxx
XxxxxXxx.xxx
XxxxxXxx.xxx
x-XxxxxXxxx.xxx
XxxxxXxxx.xxxx
Xxxxx-Xxxx.xxx
XxxxxXxxxXxxxxx.xxx
XxxxxxxXxxxxXxxx.xxx
Xxxxxxx-XxxxxXxxx.xxx
Xxx-Xxxx.xxx
Xxxxxxxxxxxxxxxx.xxx
Xxxxxxxxxxxxx.xxx
Xxxxxxx.xx
XxxxxxxXxxx.xxx
EXHIBIT 3
EQUIPMENT, FURNITURE, FIXTURES, ASSETS, RACKS, MACHINERY TRADE FIXTURES,
MISCELLANEOUS SUPPLIES, INVENTORY, ASSETS, EXISTING RENTAL CONTRACTS AND
TANGIBLE AND INTANGIBLE PERSONAL PROPERTY
EXHIBIT 4
PURCHASER PROMISSORY NOTE
EXHIBIT 5
FORM 8594
EXHIBIT 6
XXXX OF SALE
EXHIBIT 7
COMMERCIAL LEASE
EXHIBIT 8
COPIES OR COMPLETE DESCRIPTIONS OF
THE STANDARD TERMS AND CONDITIONS
OF SALE IN CONNECTION WITH THE BUSINESS.
EXHIBIT 9
COPIES OF 2003 TAX RETURNS
