ASSET PURCHASE AGREEMENT
DEFINITIONS
This Contract, effective September 17, 1999, is by and between
Mirror USA, a California Limited Partnership, hereinafter known as "Seller,"
and IPAC Manufacturing, Inc., a California Corporation, hereinafter known as
" Buyer."
ARTICLE 1. PURCHASE AND SALE OF ASSETS
ASSETS BEING PURCHASED
SECTION 1.01. Seller shall sell to Buyer and Buyer shall purchase from
Seller on the terms specified in this agreement, certain assets, both
tangible and intangible, of Seller, herein called "said Assets," including:
A. All the assets shown on the schedule hereto attached marked Exhibit A;
B. The goodwill, and any and all intangibles of Seller, not expressly
excluded in this contract;
C. Those certain agreements, contracts, commitments or obligations as
described in the attached "Exhibit B," which Buyer will either assume or
renegotiate.
PURCHASE PRICE
SECTION 1.02. Buyer shall pay to Seller, as consideration for this purchase,
the sums and amounts described, and upon the schedule and terms set forth, in
the attached of Exhibit C. Seller shall be responsible for the payment of any
and all of its liabilities except as those that are explicitly identified in
the attached Exhibit D, and shall be solely and completely responsible for
payment of said liabilities. Seller shall indemnify, hold and save the Buyer
harmless from any and all claims or lien claims pertaining to unassumed
obligations. Pursuant to the terms as described elsewhere in this Agreement,
Buyer is granted and retains the right to set off against any amounts due
Seller per this Purchase Agreement, the amount of any liabilities of Seller,
or entities affiliated with the Seller, that it is required or determines it
must pay, beyond those called out in Exhibit "D."
REPRESENTATIONS OF SELLER
AUTHORITY TO SELL
SECTION 2.01. Seller warrants and represents it has complied with all the
requirements of General Corporation Law of the State of California relative
to the sale of assets described in this contract and that the principal terms
of the sale as set forth in this contract were duly and legally approved by
Seller prior to the execution of this Agreement.
FINANCIAL STATEMENTS
SECTION 2.02. Seller represents and warrants that those records pertaining
to the purchased assets and contracts, and assumed and unassumed liabilities,
have been accurately presented. Seller warrants that, except for the sale
described in this contract, it has taken no action to materially change the
financial condition of the Seller or the subject assets and liabilities, and
has not encumbered the property which is the subject of this agreement.
DEFAULTS AND VIOLATIONS
SECTION 2.03. Seller warrants that to the best of its knowledge, and subject
to the financial information described in Section 2.03 already provided to
the Buyer, it is not in default or material violation of any contracts,
agreements, leases, or other instruments or obligations to be sold and
transferred to Buyer pursuant to this contract that effect or impede its
ability to make and consummate the terms and provisions of this Agreement.
LITIGATION
SECTION 2.04. Seller warrants and represents to the best of its knowledge
that there is now no litigation pending against it or any affiliate, of which
it or its principals are aware that will or could affect the consummation of
the sale described in this contract or transfer of title of any of said
assets on good and marketable condition to Buyer.
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ARTICLE 3. WARRANTIES OF BUYER
DUE ORGANIZATION
SECTION 3.01. Buyer warrants to Seller that it, Buyer, is a corporation duly
organized and existing under the laws of the State of California and that it
is active and in good standing.
AUTHORITY TO BUY
SECTION 3.02. Buyer further warrants to Seller that this contract has been
duly approved, that Buyer has full power and authority to both execute and
perform this contract, and that the persons executing this Agreement on
behalf of Buyer are so authorized to take such actions by Buyer.
ARTICLE 4. OPEARATION OF BUSINESS
SELLER TO CONTINUE BUSINESS
SECTION 4.01. Seller shall continue to operate its business in the current
facility until consummation of the transaction described in this contract
consistent with its ongoing operations in normal course. Any and all risk of
loss or damages to said assets during such period from any and all causes,
except the fault or negligence of Buyer, shall be assumed and borne by Seller.
ARTICLE 5. WARRANTIES AND CONDITIONS OF SALE
SECTION 5.01. Buyer and Seller each agree, for the benefit of the other, as
to the following:
A. All warranties and representations of each to the other are true and
correct to the best of each party's knowledge; and
B. Neither party is in violation of any State, Federal, County, City or
other governmental law or regulation to the best of its knowledge.
SECTION 5.02. Neither party shall be under any obligation to perform any
provision of this contract unless all of the conditions of this contract to
be performed with the other party have been fully performed.
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ARTICLE 6. MISCELLANEOUS PROVISIONS
MUTUAL INDEMNITY AGREEMENT
SECTION 6.01. Except as otherwise expressly provided in this contract or any
attachment to this contract, as to products or services manufactured or
provided prior to this agreement, the Seller shall indemnify and hold the
Buyer harmless from any and all claims, liabilities, losses, damages, or
expenses resulting from claims defects injuries or loss associated with such
products or services. Buyer shall do the same with regard to the Seller for
any products or services manufactured or provided after the effective date of
this Agreement. Notwithstanding the above, this mutual indemnification
agreement shall expire One Hundred and Twenty (120) days subsequent to the
execution of this agreement, except for claims that have been identified
within said 120 day period and Taxes in Mexico and Rent in Mexico as they
relate only to EspejoMex, a Mexican Corporation.
ENTIRE AGREEMENT
SECTION 6.02. This instrument with its attachments constitutes the entire
agreement between Buyer and Seller respecting said assets or the sale of said
assets to Buyer by Seller, and any agreement or representation respecting
said assets or their sale by Seller to Buyer not expressly set forth in this
instrument is null and void.
NOTICES
SECTION 6.03. Any and all notices or other communications required or
permitted by this contract or by law to be served on or given to either party
hereto, Buyer or Seller, shall be, unless otherwise required by law, in
writing and deemed duly served and give when personally delivered to the
party to whom directed or any of its officers, or in lieu of such personal
service, when deposited in the United States mail, first-class postage
prepaid, addressed to Buyer at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000,xx Seller at 0000 Xxxxxxxx Xxxxxx Xxxxxx, Xxx Xxx 00000.
ATTORNEY'S FEES
SECTION 6.04. Should any litigation be commenced between the parties hereto,
Buyer and Seller, concerning this contract, the sale and purchase described
in this contract, or the rights and duties of either in relation to this
contract, the Party (Buyer or Seller), prevailing in that litigation shall be
entitled, in addition to any other relief that may be
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granted, to a reasonable sum as and for its attorney's fees in that
litigation which shall be determined by the court in that litigation or in a
separate action brought for that purpose.
ASSIGNMENT
SECTION 6.05. Neither this contract nor any right or interest in it may be
assigned by either party to any other person or corporation without the
express written consent of the other party to this contract, except that
Buyer may assign its rights, interests and obligations to a subsidiary or
affiliate of Buyer upon notice to Seller.
GOVERNING LAW
SECTION 6.06. This contract shall be governed and all rights and liabilities
under it determined in accordance with the laws of the State of California in
effect on this date.
MUTUALLY CONTINGENT AGREEMENT
SECTION 6.07. This agreement is executed contemporaneously with, and is
conditioned upon the execution of that certain agreement dated between IPAC
Manufacturing, Inc. and RPM Micro.
Effective September 15, 1999, at Carlsbad, San Diego County, California.
BUYER: SELLER:
IPAC MANUFACTURING, INC. MIRROR USA
By:___________________________ By: __________________________
XXXXXXX X. XXXXX, CEO XXXXX XXXXXXXX-MANAGING
PARTNER
Exhibit A - Purchased Assets
Exhibit B - Agreement, Contracts, Customers
Exhibit C - Purchase Price
Exhibit D - Liabilities
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EXHIBIT A - PURCHASED ASSETS
MIRROR USA EQUIPMENT INVENTORY
DESCRIPTION
1 TRUCK, FLATBED FORD 1976
1 SINK, CONCRETE OUTSIDE
1 TRANSFORMER
1 TELEPHONE SYSTEM, MERLIN
1 BATTERY CHARGER
1 BOILER (XXXXXXX)
1 LAMINATING PRESS (PHI)
1 PROPANE TANK (TATSA)
1 WAVE SOLDER MACHINE (ELECTROVERT)
1 BATTERY CHARGER - 40 AMP (DAYTON)
1 PHOTOCOPIER (KONICA)
1 1986 PANEL TRUCK (DODGE)
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EXHIBIT B - AGREEMENTS/CONTRACTS
Customers being transferred:
RPM Micro - Shelter Agreement Attached
Xxxxx Aqualine - Shelter Agreement Attached
Admaster - No written Agreement Exists
AGREEMENT
This agreement is between IPAC Manufacturing, Inc. USA with offices at 0000
Xxxxxxx Xxx, Tecnologias Nacionales Manufactureras de Mexico S de RL de CV
located at 0000 X Xxxx. Insurgentes, Tijuana, Baja California, Mexico,
(hereafter NMT de Mexico) And RPM Micro a California Corporation with offices
at 00000 Xxxx Xxxxxxxx Xx., Xxx Xxxxx, XX 00000, (hereafter called principal).
The principal and NMT de Mexico desire to create a contract relationship
providing manufacturing labor services based on hourly rates which may be
utilized by the principal.
Now, therefore, in consideration of the foregoing, and the following
covenants and promises, and for good and valuable consideration the principal
and NMT de Mexico agree to the following:
A relationship between the principal and NMT de Mexico will be established
creating an exclusive work force dedicated to the principal. This work force
will be managed, directed and scheduled by the principal. Certain services
and facilities will be provided by NMT de Mexico as specified in this
agreement. The term of this agreement will be 6 months from the date
production begins. Production is estimated to begin August 1, 1999. This will
allow time for constructing leasehold, improvements and for obtaining
permits. The principal agrees to provide any equipment, supplies and
descriptions of the process necessary for obtaining permits, funds for agreed
upon leasehold improvements and the principal will advance special machinery
installations as required by the principal.
This relationship may continue on a month to month basis after the six-month
period, on the agreed on rates and conditions as long as the Principal is
manufacturing any of its product line in Mexico and the quality of product
and service is acceptable to principal.
The principal may appoint, in writing, an individual to administrate this
agreement and act as the principal's representative during the time of this
agreement.
NMT de Mexico agrees to invoice the principal for their labor force weekly.
The invoices will be based on the total number of hours worked at the hourly
rate shown below. Hourly labor rates are based on the total number of people
employed on the principal's work force for a 48 hour work week or any portion
thereof. NMT de Mexico will provide facilities including janitorial,
utilities, licenses, insurance, and Electronic/electro-mechanical workers at
the following rates:
Number of Workers Regular Overtime Overtime
rate 0ver 9 hours Under 9 hours
----------------- --------- ------------ -------------
10-11 $7.00 US $8.33 $9.66 US
12-14 $6.50 $7.83 $9.16 US
15-20 $6.50 US $7.83 US $9.16 US
21-50 $6.35 $7.68 $9.01 US
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Labor rates for workers requiring specific technical skills may be provided
and invoiced as needed. All above labor rates will be adjusted annually to
reflect worker income adjustments required by the Mexican Government.
THIS RATE PRODUCTION LINE SUPERVISION AND ENGINEERING SUPPORT FOR PRINCIPAL'S
HIGH VOLTAGE AND REGULAR LINES ALONG WITH MACHINING SUPPORT UP TO 24 HOURS
PER WEEK. ADDITIONAL PRODUCTION LINE SUPERVISORS MAY BE APPOINTED BY THE
PRINCIPAL AT ITS DISCRETION TO OPERATE THEIR LINE AT PRINCIPAL'S COST.
Supervisor will provide scheduling, quality control, worker training and
report directly to the principal. NMT de Mexico will invoice the wages and
taxes as agreed by the supervisor and the client plus 10% for administration.
NMT de Mexico agrees to provide management support and assistance for the
supervisor as needed for supervisory training and a good working environment.
Job descriptions, technical and quality control training, production goals
and quantities will be the responsibility of the principal.
Employees are eligible for six-(6) days vacation (48 hours) after the first
year of employment and eight (8) days vacation (64 hours) after the second
year. The principal will pay employee vacation time and Mexican legal
holidays. Eight legal holidays are observed on the following dates:
New Year's Day January 1
Constitution Day February 5
Xxxxxx Xxxxxx Birthday March 21
Good Friday Varies
Labor Day May 1
Independence Day September 16
Revolution Day November 20
Christmas Day December 25
At principal's option an employee performance bonus plan may be implemented
in an effort to reduce worker turnover. The principal will be responsible for
designing the plan and establish suitable standards for their product. Any
bonus authorized by the principal will be invoiced weekly. NMT de Mexico
reserves the right to approve Principal's bonus plan to insure it does not
conflict with the current NMT de Mexico plan or Mexican laws. This approval
will not be unreasonably withheld.
Payment terms on all invoices will be net 5 days. A late charge of 1% will be
assessed on all open balances exceeding 15 days from the date of invoice. NMT
de Mexico will provide utilities, security, maintenance and personal services
facilities, under the following guidelines:
Facilities will be defined as 40 square feet per worker to include
warehousing, aisles, and workstations. If additional space is required, it
will be invoiced at up to $1.00 US per square foot per month unless otherwise
agreed which will include fair usage of equipment consigned to the shelter
facility by RPM for use by Photomatrix for its customers.
Electrical services will be provided for workstations using normal hand tools
and small machines. Large power consuming equipment will be billed at a rate
of $0.18 US per 20
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Kilowatt-hour. NMT de Mexico will provide fax/telephone service up to $35 US
per month. Additional usage will be invoiced on an as used basis. Raw
materials direct supplies, tools, equipment, training and special leasehold
improvement will be provided by the principal. Emergency supplies or
materials, when requested, will be supplied by NMT de Mexico S.A. at cost
plus 5%.
All personnel administration will be the responsibility of NMT de Mexico who
will have sole authority in hiring, termination, performance reviews,
bonuses, and wage increases of all workers except the supervisor appointed by
the principal.
NMT de Mexico will provide all U.S. and Mexican Customs interface and the
costs invoiced to the principal. Distribution and shipping service from
Tijuana will be provided FOB Tijuana and costs invoiced to principal. The
U.S. customs broker will xxxx the principal directly. Any duties declared by
U.S. Customs will be added to the weekly invoices and paid by the principal.
NMT de Mexico will provide adequate insurance coverage to protect any
principal equipment and materials from loss while in NMT de Mexico custody in
Mexico. The principal will be responsible for providing NMT de Mexico with
equipment and material costs.
In the event this agreement is terminated by the principal's actions, NMT de
Mexico will attempt on a best effort basis to place workers in other NMT de
Mexico operations; However, if relocation cannot be accomplished, the
principal will pay all Mexican payroll and administration costs incurred by
NMT de Mexico in compliance with the Mexican minimum severance laws. Three
months minimum severance pay is required under Mexican law.
This agreement contains the entire understanding of the parties and
supersedes any other oral or written agreements between the parties. The
principal will not have the right to assign this agreement in whole or part
without the express, written consent of NMT de Mexico.
In Witness, the parties hereto have agreed to the above terms and conditions
and hereby execute this agreement in the State of California, in duplicate.
Signature: XXXXXXX X. XXXXX Signature: LOCK XXXXX
-------------------- -------------------
Xxxxxxx X. Xxxxx Lock Xxxxx
------------------------------ -----------------------------
Name Name
Chief Executive Officer General Manager
------------------------------ -----------------------------
Title Title
IPAC Manufacturing, Inc. RPM Micro
Tecnologias Nacionales
Manufacureras de Mexico
Date: Date: September 23, 1999
------------------------- -----------------------
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EXHIBIT C
Purchase Price
The purchase price for the assets purchased per the terms of this Asset
Purchase Agreement shall be Sixteen Thousand Dollars and no cents.
($16,000.00). Plus the payment of the Xxxxxxxxx and vacation allowance to the
workers at EspejoMex estimated at Seven Thousand and no cents ($7,000.00)
The payment will be disbursed as follows:
1. Six Thousand dollars ($6,000.00) to be paid to the Sellers upon execution
of the Asset Purchase Agreement; occupation of the facility; and execution
of the shelter agreement with RPM Micro, plus an amount equal to Three
Thousand Five Hundred dollars ($3,500.00) which Mirror USA shall cover to
be used to pay for certain costs related to the labor personnel to which
Mirror USA is currently obligated per the transfer of its agreement with
RPM Micro and EspejoMex.
2. Five thousand dollars ($5,000) to be paid forty-five (45) days after
execution of this Agreement, plus 25% of the total Aguinldo paid on the
execution of the agreement estimated to be One Thousand Seven Hundred Fifty
Dollars and No cents ($ 1,750.00)
3. Five thousand dollars ($5,000 to be paid one hundred twenty (120) days
after execution of the Agreement, providing that the current shelter has
averaged a minimum of 12 people over that period of time, plus an amount
equal to One Thousand Seven Hundred Fifty Dollars and No Cents ($ 1,750.00)
which Mirror USA shall cover to be used to pay for certain costs related to
the labor personnel to which Mirror USA is currently obligated per the
transfer of this agreement with RPM Micro and EspejoMex.
4. Seller shall have 60 days from Buyer's occupation of the facility, rent
free, to export equipment owned by parties that no longer operate a shelter
at the facility, contained in no more than 1,000 square feet, with the
exception that those items without a Pedimento will be removed from the
premises immediately. Rent shall be $1.00 per month per sq. ft. after 60
days until the equipment is moved.
Buyer will assume no debt obligations or liabilities of Seller, its Mexican
contractor, or their respective owners, except as may be stated in
Attachment D. If any undisclosed liabilities of the Seller or its principles
or affiliates should become an obligation that Buyer must pay, such
obligations will be offset against the amounts payable above. Additionally,
to the extent that during the time periods referenced for payments number 2
and 3 above, if the shelter Principal averages less than 12 persons, the
amounts due shall be reduced proportionally (e.g., if the average was
10 persons, the payment would be five-sixths of $3,000).
Buyer, on behalf of itself and its Mexican contractor, and their respective
owners, also represents to Buyer that they are not in receipt of any notice
from the current shelter Principal of any intent to discontinue its shelter
activity at the facility described above, and that Seller has the approval of
the shelter Principal to transfer operation of the current existing shelter
activity to Buyer.
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EXHIBIT D LIABILITIES
There are no Liabilities of Seller that are to be assumed by Buyer. Seller
will be responsible for all liabilities per section 6.01 of this agreement.
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