ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of this 19th
day of May, 1998, by and between COLMENA CORP. a Delaware corporation ("Buyer")
and XXXXXX X. XXXXXX, INC. dba Associated Industries, a California corporation
("Seller").
R E C I T A L S
Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller,
the Assets (as defined in Section 1 hereof), subject to and upon the terms and
conditions hereinafter set forth.
A G R E E M E N T
It is agreed as follows:
1. Sale and Purchase of Assets. Subject to and upon the terms and
conditions set forth herein, Seller agrees to sell, assign, convey, transfer and
deliver to Buyer and Buyer agrees tro purchase from Seller, as of the Closing
Date (as defined in Section 9), all of Seller's right, title and interest in and
to the equipment identified and described on Schedule 1 attached hereto (the
"Assets").
2. Consideration. Consideration to be paid by Buyer to Seller for the
Assets shall be:
(a) The sum of Three Hundred and Seventy-Five Dollars ($375,000) payable in
cash (the "Purchase Price"). A credit of Twenty-Five Thousand Dollars ($25,000)
issued by an affiliate of Seller shall be applied towards the Purchase Price.
Buyer has also made a deposit of One Hundred Thousand Dollars ($100,000) which
was delivered to Seller by Buyer on April 21, 1998 and shall be applied towards
the Purchase Price; and
(b) Three Hundred Thousand (300,000) shares of Buyer's common stock, $.01
par value (the "Shares").
3. No Assumption of Indebtedness; Payment of Sales Tax.
(a) Buyer is not assuming any liabilities or indebtedness of Seller in
connection with the transactions contemplated hereby and shall have no liability
for any such liabilities or indebtedness by reason of this Agreement or the
transactions contemplated hereby.
(b) Buyer shall be responsible for all sales and use taxes due with respect
to this Agreement.
4. Instruments of Transfer, Etc. Seller shall deliver to Buyer on the
Closing Date and thereafter upon Buyer's request a Xxxx of Sale in the form of
Exhibit "A" attached hereto and such other good and sufficient instruments of
transfer in form and substance reasonably satisfactory to Buyer and its counsel
as are necessary to effectively transfer all of Seller's right, title and
interest in the Assets to Buyer. At any time after the Closing Date, Seller
shall execute, acknowledge and deliver to Buyer any further documents, assurance
or other matters, and will take any other action consistent with the terms of
this Agreement that may reasonably be requested by Buyer and as are necessary or
desirable to carry out the purpose of this Agreement.
Page 289
5. Representations and Warranties of Seller. Seller represents, warrants
and covenants to Buyer as of the date hereof and as of the Closing Date as
follows:
5.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of California.
5.2 Power and Authority. Seller has all requisite corporate power and
authority to enter into and carry out all of the terms of this Agreement. All
corporate action necessary for the authorization, execution, delivery and
performance of this Agreement by Seller has been taken or will be taken prior to
the Closing Date and no further authorization on the part of Seller ios required
to consummate the transactions provided for in this Agreement. When executed and
delivered by Seller, this Agreement shall constitute the valid and legally
binding obligation of Seller enforceable in accordance with its terms. Neither
the execution, delivery not performance of this Agreement by Seller shall (i)
constitute a default or result in a breach of any contract or agreement to which
Seller is a party of its assets or properties are bound, ot (ii) violate any
order, writ, injunction, decree, judgement or other restriction of any court,
administrative agency or governmental body.
5.3 Title to Assets. Seller has and will transfer to Buyer good and
marketable title to the Assets, free and clear of all mortgages, pledges,
security interests, liens, claims, charges, restrictions and encumbrances.
5.4 Equipment. Seller makes no representations or warranties with respect
to the condition of the Assets being transferred to Buyer pursuant to this
Agreement, or the suitability of the Assets for the purpose or purposes for
which Buyer intends to use the Assets. The Assets are sold in their "as is,"
"where is," condition, and Seller makes no representations or warranties with
respect to the condition of the Assets. Buyer acknowledges and agrees that Buyer
has been informed by Seller that portions of the equipment constituting the
Assets are missing due to theft, for which Seller has filed a police report with
the Los Angeles Police Department. As a result of such theft, the Assets may not
be in good working order, and Buyer may be required to purchase from third
parties additional equipment in order to place the Assets in good working order.
In the event that any equipment constituting the Assets is subsequently
recovered by Seller following the Closing Date, such equipment shall be
delivered by Seller to Buyer. In the event Seller recovers any insurance
proceeds with respect to the stolen Assets, such insurance proceeds shall remain
in the property of Seller, and Buyer shall have no claims with respect thereto.
5.5 Approvals and Consents. There are no permits, consents or approvals of
public authorities, federal, state or local, or of any third party necessary for
the consummation of the transactions contemplated hereby.
5.6 Restriction on Transferability of Shares. Seller acknowledges that the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or any state blue sky laws and that the transferability
of an interest in the Shares is restricted by applicable Fderal and State
securities laws. Each certificate representing the Shares shall bear a legend in
substantially the following form:
'THISSECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND HAS BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION PROVIDED IN THE
ACT AND REGULATION D UNDER THE ACT. AS SUCH, THE PURCHASE OF THIS
SECURITY WAS MADE WITH THE INTENT OF INVESTMENT AND NOT WITH A VIEW
FOR DISTRIBUTION. THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY
OR ANY INTEREST THEREIN MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT THE PROPOSED TRANSFER OR SALE
DOES NOT AFFECT THE EXEMPTION RELIED UPON BY THE COMPANY IN ORIGINALLY
DISTRIBUTING THE SECURITY AND THAT REGISTRATION IS NOT REQUIRED."
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5.7 Survival of Representations and Warranties. The representations and
warranties of Seller made herein shall not be affected by any information
furnished to or investigations made by Buyer, or any of its employees or
representatives in connection with the subject matter of this Agreement and
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
6. Representations and Warranties of Buyer. Buyer represents, warrantss and
covenants to Seller as of the date hereof and as of the Closing Date as follows:
6.1 Organization. Buyer is a corporation validly existing and in good
standing under the laws of the State of Delaware.
6.2 Power and Authority. Buyer has all requisite corporate power and
authority to enter into and carry out all of the terms of this Agreement. All
corporate action necessary for the authorization, execution, delivery and
performance of this Agreement by Buyer has been taken or will be taken prior to
the Closing and no further authorization on the part of the Buyer is or will be
required to consummate the transactions provided for in this Agreement. When
executed and delivered by Buyer, this Agreement shall constitute the valid and
legally binding obligation of Buyer enforceable in accordance with its terms.
Neither the execution, delivery nor performance of this Agreement by Buyer shall
(i) constitute a default or result in a breach or result in a breach of any
contract or agreement to which Buyer is a party or its assets or properties are
bound, or (ii) violate any order, writ, injunction, decree, judgement or other
restriction of any court, administrative agency or governmental body.
6.3 Survival of Representations and Warranties. The representations and
warranties of Buyer made herein shall not be affected by any information
furnished to or investigations made by Seller, or any of its employees or
representatives in connection with the subject matter of this Agreement and
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
6.4 The shares to be issued to Seller pursuant to this Agreement, when
issued and delivered in accordance with the terms and for the consideration
expressed herein, shall be duly and validly issued, fully paid and
non-assessable.
7. Conditions to Buyer's Obligations. Buyer's obligations hereunder are
subject to the fulfillment, on or before the Closing Date, of the following
conditions (any of which may be waived in writing by Buyer):
7.1 Representations and Warranties. The representations and warranties of
Seller contained herein shall have been true and correct in all material
respects as of the Closing Date.
7.2 Performance of Covenants. Seller shall have performed and complied in
all material respects with all covenants, agreements, terms and conditions and
executed all documents required by this Agreement to be performed, complied with
or executed by un prior to or on the Closing Date.
7.3 Instruments of Transfer. Seller shall have delivered to Buyer a Xxxx of
Sales for the Assets in the form of Exhibit "A" attached hereto, and such other
good and sufficient instruments of transfer in form and substance satisfactory
to Buyer as shall be necessary to effectively transfer all of the Seller's
right, title and interest in the Assets to Buyer.
7.4 No Governmental or Other Proceeding or Litigation. No order of any
court or administrative agency shall be in effect which restrains or prohibits
the transactions contemplated hereby, and no suit, action, investigation,
inquiry or proceeding by any governmental body 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.
7.5 Approval and Consents. All permits, consents or approvals of
applications to public authorities, federal, state or local, and all approvals
or any 5 third persons, the granting of which are necessary or the consummation
of the transactions contemplated hereby shall have been obtained.
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8. Conditions to Seller's Obligations. Seller's obligations hereunder are
subject to the fulfillment, on or before the Closing Date, of the following
conditions (any of which may be waived in writing by Seller):
8.1 Representations and Warranties. The representations and warranties of
Buyer contained herein shall have been true and correct in all material respects
as of the Closing Date.
8.2 Performance or Covenants. Buyer shall have performed and complied in
all material respects with all covenants, agreements, terms and conditions and
executed all documents required by this Agreement to be performed, complied with
or executed by it prior to or on the Closing Date.
8.3 Delivery of Purchase Price. Buyer shall deliver Two Hundred and
Fifty Thousand Dollars ($250,000) in cash and the Shares to Seller.
9. Closing. The closing of the sale and purchase of the Assets and the
other transactions contemplated by this Agreement shall take place at the
offices of Seller, located at 00000 Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxxxxx
00000, at 10:00 a.m., local time, on May 31, 1998, or at such other time and
place as may be mutually agreed to by Buyer and Seller ("Closing Date").
10. Indemnification by Seller.
10.1 General. Seller agrees to indemnify, defend and hold harmless Buyer
against and in respect of any and all claims, demands, losses, costs, expenses,
liabilities and damages, including interest, penalties, and reasonable
attorneys' fees, that Buyer shall incur of suffer which: (i) arise, result from
or relate to any material inaccuracy in or materials breach or nonfulfillment of
any of the representations, warranties, covenants or agreements, made by Seller
in this Agreement, the schedules and exhibits hereto or in any other document
furnished to such party under this Agreement; and (ii) any liability of Seller
or Seller's business arising out of events occurring, products or services sold
or any activities of Seller prior to the Closing Date whenever such liabilities
may arise.
10.2 Procedures; Rights to Separate Counsel. In the event Buyer receives a
complaint, claim or other notice of any loss, claim or damage, liability or
action, giving rise to claim for indemnification under this Section 10, Buyer
shall promptly notify the Seller of such complaint, notice, claim or action, and
Seller shall have the right to investigate and defend any such loss, claim,
damage, libility or action. Buyer shall have the right to employ separate
counsel in any such action and to participate in the defense thereof but the
fees and expenses of such counsel shall not be at the expense of Seller, unless
Seller fails to promptly defend, in which case the fees and expenses of such
separate counsel shall be borne by Seller. In no event shall Seller be obligated
to indemnify Buyer for any settlement of any claim or action effected without
Seller's prior written consent.
Page 292
11. Indemnification by Buyer.
11.1 General. Buyer agrees to indemnify, defend and hold harmless Seller
against and in respect of any claims, demands, losses, costs, expenses,
liabilities and damages, including interest, penalties, and reasonable
attorneys' fees, that Seller shall incur or suffer which: (i) arise, result from
or relate to any material inaccuracy in or material breach or nonfulfillment or
any of the representations, warranties, covenants or agreements made by Buyer in
this Agreement, the schedules and exhibits hereto or in any other document
furnished to such party under this Agreement; and (ii) any liability of Buyer or
Buyer's business arising out of events occurring, products or services sold or
any activities of Buyer prior to the Closing Date whenever such liabilities may
arise.
11.2 Procedures; Rights to Separate Counsel. In the event Seller receives a
complaint, claim or other notice of any loss, claim or damages, liability or
action, giving rise to a claim for indemnification under this Section 11, Seller
shall promptly notify the Buyer of such complaint, notice, claim or action, and
Buyer shall have the right to investigate and defend any such loss, claim,
damage, liability or action. Seller shall have the right to employ separate
counsel in any such action and to participate in the defense thereof but the
fees and expenses of such counsel shall not be at the expense of Buyer, unless
Buyer fails to promptly defend, in which case the fees and expenses of such
separate counsel shall be borne by Buyer. In no event shall Buyer be obligated
to indemnify Seller for any settlement of any claim or action effected without
Buyer's prior written consent.
12. General.
12.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given when delivered personally or, if
mailed, three (3) business days after having been mailed by registered or
certified mail with return receipt requested, postage prepaid, addressed:
If to Buyer: Colmena Corp.
Attn: Xxxxxxx X. Xxxxxx, Xx., President
00000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
If to Seller: Xxxxxx X. Xxxxxx, Inc.
dba Associated Industries
Attn: Xxxxxx X. Xxxxxx, President
00000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
or at such other address as shall have been furnished to the other in writing.
12.2 Successors and Assigns. Neither this Agreement nor the rights or
obligations of Seller under this Agreement shall be assignable without the
written consent of Buyer and any such purported assignment without the written
consent of Buyer shall be void and without effect. Except as otherwise provided
herein, this Agreement and all covenants and agreements contained herein shall
be binding upon and inure to the benefit of the parties hereto, their respective
successors, representatives and assigns.
12.3 Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the breach hereof, except as stated below, shall be settled by
arbitration in accordance with the rules of the American Arbitration Association
then in effect. The decision of the arbitrator shall, except for mistakes of
law, be final and binding upon the parties hereto, and judgement upon the award
rendered by the arbitrator, which shall, in the case of damages, be limited to
actual damages proven in the arbitration, may be entered in any court having
jurisdiction thereof.
Page 293
There shall be a single arbitrator who shall be an existing or former judge
of a court of record within the United States or an attorney in good standing
admitted to practice for a period of at least ten (10) years within the United
States. No arbitration shall involve parties other than the parties hereto and
their respective successors and assigns or be in any respect binding with
respect to any such other parties. The situs of the arbitration will be in the
County of Orange, State of California.
The parties to any arbitration arising hereunder shall have the right to
take depositions and to obtain discovery regarding the subject matter of the
arbitration and to use and exercise all of the same rights, remedies and
procedures, and be subject to all of the same duties, liabilities, and
obligations in the arbitration with respect to the subject matter thereof, as if
the subject matter of the arbitration were pending in a civil action before a
court of highest jurisdiction in the state where the arbitration is held. The
arbitrator shall have the power to enforce said discovery by imposition of same
terms, conditions, consequences, liabilities, sanctions and penalties as can be
or may be imposed in like circumstances in a civil action by a court of highest
jurisdiction of the state in which the arbitration is held, except the power to
order the arrest or imprisonment of a person.
If any party commences an action, either arbitration or court proceedings.
Against any other party arising out of or in connection with this Agreement, the
prevailing party or parties shall be entitled from the losing party or parties,
both attorneys' fees and costs of the arbitration and/or suit as part of the
judgement rendered.
12.4 Attorneys' Fees. If any legal action or any mutually agreed upon
arbitration or other proceeding is brought for the enforcement of this Agreement
or because of any alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
12.5 Agreement to Perform Necessary Acts. Each party agrees to perform any
further acts and execute and deliver any documents which may be reasonably
necessary to carry out the provisions and purposes of this Agreement.
12.6 Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof.
12.7 Modification. This Agreement may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
12.8 Governing Laws. This Agreement shall be construed in accordance with
and governed by the laws of the State of California.
12.9 Counterparts. This Agreement may be executed in several counterparts,
each of which is an original but all of which shall consitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed on the say and year first hereinabove written.
"BUYER"
COLMENA CORP.
a Delaware corporation
By:/s/ Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxxx, Xx., President
"SELLER"
XXXXXX X. XXXXXX, INC.
dba ASSOCIATED INDUSTRIES,
a California corporation
By:/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, President
Page 294
SCHEDULE "1"
List of Equipment
See Attached.
EXHIBIT "A"
XXXX OF SALE
This xxxx of Sale is made this 31st day of May, 1998 by and between Xxxxxx
X. Xxxxxx, Inc., d/b/a ASSOCIATED INDUSTRIES, a California corporation
(hereinafter referred to as "Seller"), and COLMENA CORP., a Delaware corporation
(hereinafter referred to as "Buyer").
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Seller does hereby sell, assign, grant, convey, set
over, confirm and deliver to Buyer and its successors and assigns forever, all
of Seller's right, title and interest in an to those "Assets" set forth on
Exhibit "A" attached hereto, free and clear of any and all liens, claims and
encumbrances of any kind.
Simultaneously with the execution and delivery hereof and from time to time
thereafter, Seller will execute and deliver to Buyer such additional documents
of transfer with respect to the Assets as Buyer may reasonably require in order
to effectuate this transaction.
IN WITNESS WHEREOF, the Seller has caused this instrument to be executed on
the date first above-written.
"SELLER"
XXXXXX X. XXXXXX, INC.
dba ASSOCIATED INDUSTRIES,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, President
Page 295
