ASSET PURCHASE AGREEMENT AMONG CRIVELLO GROUP, LLC, RENEWAL FUELS, INC. AND BIODIESEL SOLUTIONS, INC. Dated as of March 9, 2007
AMONG
XXXXXXXX
GROUP, LLC,
RENEWAL
FUELS, INC.
AND
BIODIESEL
SOLUTIONS, INC.
Dated
as
of March 9, 2007
TABLE
OF
CONTENTS
Page
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Section
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ARTICLE
I SALE AND PURCHASE OF ASSETS
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1
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1.1
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Sale
of Assets.
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1
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1.2
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Excluded
Assets.
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2
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1.3
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Assumed
Liabilities; Excluded Liabilities; Employees.
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2
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1.4
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Purchase
Price; Adjustment; Payment.
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3
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1.5
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Purchase
Price Allocation.
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4
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1.6
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Records
and Contracts.
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4
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1.7
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Further
Assurances.
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4
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1.8
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Sales
and Transfer Taxes.
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4
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ARTICLE
II CLOSING AND TERMINATION
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5
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2.1
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Closing
Date.
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5
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2.2
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Termination
of Agreement.
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5
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2.3
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Procedure
Upon Termination
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5
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2.4
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Effect
of Termination.
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5
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ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE SELLER
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6
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3.1
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Organization
and Good Standing.
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6
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3.2
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Authorization
of Agreement.
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6
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3.3
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Records.
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6
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3.4
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Conflicts;
Consents of Third Parties.
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6
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3.5
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Ownership
and Transfer of Assets.
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7
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3.6
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Financial
Statements.
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7
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3.7
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No
Undisclosed Liabilities.
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7
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3.8
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Absence
of Certain Developments
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8
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3.9
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Taxes.
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9
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3.10
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Real
Property.
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11
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3.11
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Tangible
Personal Property.
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11
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3.12
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Intangible
Property.
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12
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3.13
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Material
Contracts.
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12
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3.14
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Employee
Benefits.
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13
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3.15
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Labor.
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15
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3.16
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Litigation.
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16
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3.17
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Compliance
with Laws; Permits.
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16
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3.18
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Environmental
Matters.
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16
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3.19
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Insurance.
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17
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3.20
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Inventories;
Receivables; Payables.
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17
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3.21
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Customers
and Suppliers.
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18
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3.22
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Financial
Advisors. .
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18
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3.23
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Patriot
Act
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18
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3.24
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No
Misrepresentations.
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18
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i
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
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19
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4.1
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Organization
and Good Standing.
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19
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4.2
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Authorization
of Agreement.
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19
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4.3
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Conflicts;
Consents of Third Parties.
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19
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4.4
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Litigation.
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20
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4.5
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Financial
Advisors
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20
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4.6
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Patriot
Act.
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20
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ARTICLE
V COVENANTS
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20
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5.1
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Access
to Information.
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20
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5.2
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Conduct
of the Business Pending the Closing.
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21
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5.3
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Consents.
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23
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5.4
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Other
Actions.
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23
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5.5
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No
Solicitation.
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23
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5.6
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Preservation
of Records.
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23
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5.7
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Publicity.
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24
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5.8
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Use
of Name.
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24
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5.9
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Management
Agreement.
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24
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5.10
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Financial
Statements.
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24
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5.11
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Non-Competition
Agreements
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24
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5.12
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Insurnace
Coverage.
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25
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5.13
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Web
Site Crossover.
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25
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ARTICLE
VI CONDITIONS TO CLOSING
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26
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6.1
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Conditions
Precedent to Obligations of Parent.
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26
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6.2
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Conditions
Precedent to Obligations of the Seller.
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26
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ARTICLE
VII DOCUMENTS TO BE DELIVERED
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27
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7.1
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Documents
to be Delivered by the Seller.
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27
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7.2
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Documents
to be Delivered by the Parent.
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27
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ARTICLE
VIII INDEMNIFICATION
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28
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8.1
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Non-Tax
Indemnification.
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28
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8.2
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Limitations
on Indemnification .
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29
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8.3
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Indemnification
Procedures.
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30
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8.4
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Exclusive
Remedy
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31
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ARTICLE
IX MISCELLANEOUS
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31
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9.1
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Payment
of Sales, Use or Similar Taxes.
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31
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9.2
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Survival
of Representations and Warranties.
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31
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9.3
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Expenses.
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31
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9.4
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Specific
Performance.
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32
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9.5
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Further
Assurances.
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32
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9.6
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Submission
to Jurisdiction; Consent to Service of Process.
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32
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9.7
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Table
of Contents and Headings.
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33
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ii
9.8
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Notices.
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33
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9.9
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Severability.
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34
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9.10
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Binding
Effect; Assignment.
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34
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iii
ASSET
PURCHASE AGREEMENT, dated as of March 30, 2007 (the “Agreement”), between
Xxxxxxxx Group, LLC, a limited liability company existing under the laws of
Florida (the “Parent”), Renewal Fuels, Inc., a corporation existing under the
laws of Delaware (“Acquisition Sub”) and Biodiesel Solutions, Inc., a
corporation existing under the laws of Nevada (the “Seller”).
WITNESSETH:
WHEREAS,
subject to the terms and conditions hereof, Seller desires to sell, transfer
and
assign to Acquisition Sub, and Acquisition Sub desires to purchase from Seller,
all of the properties, rights and assets constituting the business of Seller’s
FuelMeister division as set forth on Schedule 1.1 attached hereto (the
“Business”). The Business is limited to the development and marketing of
personal biodiesel processors which produce less than 200 gallons per
day.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE
I
PURCHASE
AND SALE OF ASSETS.
1.1 Sale
of Assets.
Seller
agrees to sell, assign, transfer and deliver to Acquisition Sub, and Acquisition
Sub agrees to purchase from Seller, all of Seller’s right, title and interest in
and to all of the properties, assets and business of the Business, of every
kind
and description, tangible and intangible, real, personal or mixed, and wherever
located, but excluding the Excluded Assets, including, without limitation,
the
following:
(a) Equipment.
All
fixed assets, equipment, furniture, fixtures, leasehold improvements used in
connection with the Business and located within the Seller’s office located at
0000
Xxxx
Xx., Xxxxxx, XX 00000,
as
specified in Exhibit 1.1, and parts, accessories, inventory, office materials,
software, supplies and other tangible personal property of every kind and
description owned by Seller and used or held for use in connection with the
Business, all as set forth on Schedule
1.1attached
hereto (“Equipment”);
(b) Contracts.
All of
the rights of Seller under, and interest of Seller in and to, all contracts
relating to the Business (other than those included in Excluded Assets), a
true,
correct and complete list of which contracts is attached hereto as Schedule 1.1
(“Contracts”);
(c) Intellectual
Property.
All of
Seller’s Intellectual Property relating to the Business, as set forth on
Schedule
1.1 attached
hereto;
(d) Goodwill.
All of
the goodwill of Seller in, and the going concern value of, the Business, and
all
of the business and customer lists and accounts, proprietary information,
marketing materials and trade secrets specific to the Business; and
(e) Records.
All of
Seller’s customer logs, location files and records, engineering records,
accounting records, knowledge base for customer service and support, and other
business files and records, in each case specifically relating to the
Business.
The
assets, properties and business of Seller being sold to and purchased by
Acquisition Sub under this Section 1.1, all specifically related to the
Business, are referred to herein collectively as the “Assets.”
1.2 Excluded
Assets.
There
shall be excluded from the Assets and retained by Seller all assets identified
on Schedule
1.2(a)
attached
hereto, as well as the following assets (the assets set forth on Schedule 1.2(a)
together with the assets falling into any of the following enumerated categories
being referred to as the “Excluded Assets”):
(a) Accounts
Receivable; Other Assets.
All
accounts receivable generated by the Business prior to the date of this
Agreement as defined by US Generally Accepted Accounting Practices
(“GAAP”);
(b) Corporate
Records.
All of
Seller’s corporate and other organizational records;
(c) Cash.
Cash on
hand, exclusive of cash reserves associated with undelivered service;
(d) Non-Business
Assets.
All
assets of Seller not used or held for use exclusively for the Business;
(e) Real
Property.
All of
Seller’s right title and interest under, and in and to, all real estate leases;
and
(f) Permits.
All of
Seller's governmental permits and approvals from state, federal or local
authorities.
1.3 Assumed
Liabilities; Excluded Liabilities; Employees.
(a) Assumed
Liabilities.
Acquisition Sub shall accept and assume, and together with Parent shall become
and be fully liable and responsible for, and other than as expressly set forth
herein Seller shall have no further liability or responsibility for or with
respect to, (i) liabilities and obligations arising out of events occurring
on and after the date hereof related to Parent’s ownership of the Assets and
Parent’s operation of the Business after the consummation of the transactions
contemplated herein; (ii) all obligations and liabilities of Seller which
are to be performed after the date hereof arising under the Contracts; and
(iii)
the liabilities identified on Schedule
1.3(a)
attached
hereto (collectively, the “Assumed Liabilities”). The assumption of the Assumed
Liabilities by Acquisition Sub hereunder shall not enlarge any rights of third
parties under contracts or arrangements with Parent or Seller or any of their
respective affiliates or subsidiaries.
2
(b) Excluded
Liabilities.
It is
expressly understood that, except for the Assumed Liabilities, Acquisition
Sub
shall not assume, pay or be liable for any liability or obligation of Seller
of
any kind or nature at any time existing or asserted, whether, known, unknown,
fixed, contingent or otherwise, not specifically assumed herein by Parent or
Acquisition Sub, including, without limitation any liability or obligation
relating to, resulting from or arising out of (i) the Excluded Assets, (ii)
the employees of the Business or (iii) any fact existing or event occurring
prior to, or relating to the operation of the Business prior to, the date
hereof.
(c) Employees,
Wages and Benefits.
(i) Neither
Parent nor Acquisition Sub shall assume or have any obligations or liabilities
with respect to any employees of the Seller or such terminations, including,
without limitation, any severance obligation, except as specifically consented
to by the Parent and Acquisition Sub.
(ii) Parent
and Acquisition Sub specifically reserve the right, on or after the date hereof,
to employ or reject any of Seller’s employees or other applicants in its sole
and absolute discretion. Nothing in this Agreement shall be construed as a
commitment or obligation of Parent to accept for employment, or otherwise
continue the employment of, any of Seller’s employees, and no employee shall be
a third-party beneficiary of this Agreement.
(iii) Seller
shall pay all wages, salaries, commissions, and the cost of all fringe benefits
provided to its employees which shall have become due for work performed as
of
and through the date hereof, and Seller shall collect and pay all Taxes in
respect of such wages, salaries, commissions and benefits.
(iv) Seller
acknowledges and agrees that neither Parent nor Acquisition Sub shall acquire
any rights or interests of Seller in, or assume or have any obligations or
liabilities of Seller under, any benefit plans maintained by Seller, or for
the
benefit of any employees of Seller, including, without limitation, obligations
for severance or vacation accrued but not taken.
1.4 Purchase
Price; Adjustment; Payment.
(a) Purchase
Price.
In
consideration of the sale by Seller to Acquisition Sub of the Assets, and
subject to the assumption by Acquisition Sub of the Assumed Liabilities and
satisfaction of the conditions contained herein, Parent shall pay to Seller
an
amount equal to Five Hundred Thousand dollars ($500,000) (the “Purchase Price”),
which amount shall be adjusted in accordance herewith. In the event the
inventory, work in process and materials due on open purchase orders on the
Closing Date, at cost (the “Closing Inventory”), shall be more than $40,000,
then such excess amount shall be added to the Purchase Price. In the event
the
Closing Inventory shall be less than $40,000, then such deficiency shall be
deducted from the Purchase Price. The amount of Closing Inventory shall be
mutually agreed upon between the Purchaser and the Seller.
3
(b) Payment
of Purchase Price.
The
Parent shall, upon execution of this Agreement, advance to the Seller One
Hundred Thousand dollars ($100,000) of the Purchase Price (the “Advance”) via
wire transfer of immediately available funds into an account designated by
the
Seller and at the Closing the Parent shall deliver to the Seller the remaining
Four Hundred Thousand dollars ($400,000) of the Purchase Price, subject to
adjustment in accordance with Section 1,4(a), via wire transfer of immediately
available funds into an account designated by the Seller.
In the
event that this Agreement is terminated prior to the Closing in accordance
with
Section 2.2 hereof, the Advance shall be immediately due and payable by the
Seller to the Parent.
1.5 Purchase
Price Allocation.
Parent,
Acquisition Sub and Seller hereby agree on the allocation of the Purchase Price
as set forth on Schedule
1.5
attached
hereto. Such allocation shall be binding upon Parent, Acquisition Sub and Seller
for all purposes (including financial accounting purposes, financial and
regulatory reporting purposes and tax purposes). Parent, Acquisition Sub and
Seller each further agrees to file its Federal income tax returns and its other
tax returns reflecting such allocation, Form 8594 and any other reports
required by Section 1060 of the Internal Revenue Code of 1986, as amended
(the “Code”).
1.6 Records
and Contracts.
Seller
shall deliver to Parent and Acquisition Sub all of the Contracts, but shall
be
entitled to retain copies thereof, with such assignments thereof and consents
to
assignments as are necessary to assure Parent and Acquisition Sub of the full
benefit of the same. Seller shall also deliver to Parent and Acquisition Sub
all
of Seller’s files and records constituting Assets, but shall be entitled to
retain copies thereof.
1.7 Further
Assurances.
Seller
shall, from time to time after the consummation of the transactions contemplated
herein, at the request of Parent or Acquisition Sub and without further
consideration, execute and deliver further instruments of transfer and
assignment and take such other action as Parent or Acquisition Sub may
reasonably require to more effectively transfer and assign to, and vest in,
Parent or Acquisition Sub the Assets free and clear of all Liens.
1.8 Sales
and Transfer Taxes.
All
sales, transfer, use, recordation, documentary, stamp, excise taxes, personal
property taxes, fees and duties (including any real estate transfer taxes)
under
applicable law incurred in connection with this Agreement or the transactions
contemplated hereby will be borne and paid by Parent.
4
ARTICLE
II
CLOSING
AND TERMINATION
2.1 Closing
Date.
Subject
to the satisfaction of the conditions set forth in Sections 6.1 and 6.2 hereof
(or the waiver thereof by the party entitled to waive that condition), the
closing of the sale and purchase of the Assets provided for in Section 1.1
hereof (the “Closing”) shall take place at the offices of Sichenzia Xxxx
Xxxxxxxx Xxxxxxx located at 0000 Xxxxxx xx xxx Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000 (or at such other place as the parties may designate in
writing) on March 20, 2007, or on such other date as the Seller and the Parent
may designate. The date on which the Closing shall be held is referred to in
this Agreement as the “Closing Date”.
2.2 Termination
of Agreement.
This
Agreement may be terminated prior to the Closing as follows:
(a) at
the
election of the Seller or the Parent on or after March 31, 2007, if the Closing
shall not have occurred by the close of business on such date, provided that
the
terminating party is not in default of any of its obligations
hereunder;
(b) by
mutual
written consent of the Seller and the Parent; or
(c) by
the
Seller or the Parent if there shall be in effect a final nonappealable order
of
a court,
government or governmental agency or body of competent jurisdiction
(“Governmental Body”)
of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; it being agreed that
the
parties hereto shall promptly appeal any adverse determination which is not
nonappealable (and pursue such appeal with reasonable diligence).
2.3 Procedure
Upon Termination.
In
the
event of termination and abandonment by the Parent or the Seller, or both,
pursuant to Section 2.2
hereof,
written notice thereof shall forthwith be given to the other party or parties,
and this Agreement shall terminate, and the purchase of the Assets hereunder
shall be abandoned, without further action by the Parent or the Seller. If
this
Agreement is terminated as provided herein each party shall redeliver all
documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same.
2.4 Effect
of Termination.
In
the
event that this Agreement is validly terminated as provided herein, then each
of
the parties shall be relieved of their duties and obligations arising under
this
Agreement after the date of such termination and such termination shall be
without liability to the Parent the Seller; provided, however, that the
obligations of the parties set forth in Section 9.4 hereof shall survive any
such termination and shall be enforceable hereunder; provided, further, however,
that nothing in this Section 2.4 shall relieve the Parent or the Seller of
any
liability for a breach of this Agreement.
5
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
The
Seller hereby represents and warrants to the Parent and Acquisition Sub
that:
3.1 Organization
and Good Standing.
The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation as set forth above
and
has all requisite corporate power and authority to carry on the Business as
now
conducted. The Seller is duly qualified or authorized to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction
in which it owns or leases real property and each other jurisdiction in which
the conduct of the Business requires such qualification or authorization, except
where failure to be so qualified would not have a material adverse effect on
the
business, assets or financial condition of the Seller taken as a whole
(“Material Adverse Effect”).
3.2 Authorization
of Agreement.
The
Seller has all requisite power, authority and legal capacity to execute and
deliver this Agreement, and each other agreement, document, or instrument or
certificate contemplated by this Agreement or to be executed by the Seller
in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the “Seller Documents”), and to
consummate the transactions contemplated hereby and thereby. This Agreement
has
been, and each of the Seller Documents will be at or prior to the Closing,
duly
and validly executed and delivered by the Seller and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the Seller Documents when so executed
and delivered will constitute, legal, valid and binding obligations of the
Seller, enforceable against the Seller in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in
equity).
3.3 Records.
The
books
of account and other financial Records of Seller as they relate to the Business,
all of which have been made available to Purchaser, are complete and correct
in
all material respects and represent actual, bona fide transactions.
3.4 Conflicts;
Consents of Third Parties.
(a) Except
as
set forth in Schedule 3.4(a), none of the execution and delivery by the Seller
of this Agreement and the Seller Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Seller with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach
of,
any provision of the articles of incorporation or by-laws of the Seller; (ii)
conflict with, violate, result in the breach or termination of, or constitute
a
default under any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation relating to the Business to which the Seller is a
party
or by which the Business or its assets are bound; (iii) violate any statute,
rule, regulation, order or decree of any governmental body or authority by
which
the Seller is bound; or (iv) result in the creation of any Lien upon the
properties or assets of the Seller except, in case of clauses (ii), (iii) and
(iv), for such violations, breaches or defaults as would not, individually
or in
the aggregate, have a Material Adverse Effect.
6
(b) No
consent, waiver, approval, order, permit or authorization of, or declaration
or
filing with, or notification to, any person or Governmental Body is required
on
the part of the Seller, in connection with the execution and delivery of this
Agreement or the Seller Documents, or the compliance by the Seller as the case
may be, with any of the provisions hereof or thereof.
3.5 Ownership
and Transfer of Assets.
The
Seller is the record and beneficial owner of the Assets free and clear of any
and all Liens. The Seller has the corporate power and authority to sell,
transfer, assign and deliver such Assets as provided in this Agreement, and
such
delivery will convey to the Parent good and marketable title to such Assets,
free and clear of any and all Liens.
3.6 Financial
Statements.
The
Seller has attached as Schedule 3.6 copies of the unaudited balance sheets
of
the Business as at December 31, 2006 and 2005 and the related statements of
income and of cash flows of the Business for the years then ended (the
“Financial Statements”). Each of the Financial Statements is complete and
correct in all material respects and in conformity with the practices
consistently applied by the Seller without modification of the accounting
principles used in the preparation thereof and or will present fairly the
financial position, results of operations and cash flows of the Business as
at
the dates and for the periods indicated, except for the absence of footnote
disclosures and the potential for normal audit adjustments and except as
otherwise set forth on Schedule 3.6.
For
the
purposes hereof, the unaudited balance sheet of the Seller as at December 31,
2006 is referred to as the “Balance Sheet” and December 31, 2006 is referred to
as the “Balance Sheet Date”.
3.7 No
Undisclosed Liabilities.
The
Business has no indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become due)
that would have been required to be reflected in, reserved against or otherwise
described on the Balance Sheet or in the notes thereto which was not fully
reflected in, reserved against or otherwise described in the Balance Sheet
or
the notes thereto or was not incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date.
7
3.8 Absence
of Certain Developments.
Except
as expressly contemplated by this Agreement or as set forth on Schedule 3.8,
since the Balance Sheet Date:
(i) there
has
not been any Material Adverse Change in the Business nor has there occurred
any
event which is reasonably likely to result in a Material Adverse Change in
the
Business;
(ii) there
has
not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the property and assets of the Business having a replacement
cost of more than $5,000 for any single loss or $10,000 for all such
losses;
(iii) the
Seller has not awarded or paid any bonuses to employees of the Seller related
to
the Business with respect to the fiscal year ended 2006, except to the extent
accrued on the Balance Sheet or entered into any employment, deferred
compensation, severance or similar agreement (nor amended any such agreement)
or
agreed to increase the compensation payable or to become payable by it to any
of
the employees, agents or representatives related to the Business or agreed
to
increase the coverage or benefits available under any severance pay, termination
pay, vacation pay, company awards, salary continuation for disability, sick
leave, deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan, payment or arrangement made to, for
or
with such directors, officers, employees, agents or representatives (other
than
normal increases in the ordinary course of business consistent with past
practice and that in the aggregate have not resulted in a material increase
in
the benefits or compensation expense of the Business);
(iv) there
has
not been any change by the Seller in accounting or tax reporting principles,
methods or policies related to the Business;
(v) the
Seller, with regard to the Business, has not entered into any transaction or
Contract or conducted its business other than in the ordinary course consistent
with past practice;
(vi) the
Seller, with regard to the Business, has not failed to promptly pay and
discharge current liabilities except where disputed in good faith by appropriate
proceedings;
(vii) the
Seller, with regard to the Business, has not mortgaged, pledged or subjected
to
any Lien any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets of the Seller,
except for assets acquired or sold, assigned, transferred, conveyed, leased
or
otherwise disposed of in the ordinary course of business consistent with past
practice;
(viii) the
Seller, with regard to the Business, has not discharged or satisfied any Lien,
or paid any obligation or liability (fixed or contingent), except in the
ordinary course of business consistent with past practice and which, in the
aggregate, would not be material to the Seller;
8
(ix) the
Seller, with regard to the Business, has not canceled or compromised any debt
or
claim or amended, canceled, terminated, relinquished, waived or released any
Contract or right except in the ordinary course of business consistent with
past
practice and which, in the aggregate, would not be material to the
Seller;
(x) the
Seller, with regard to the Business, has not made or committed to make any
capital expenditures or capital additions or betterments in excess of $10,000
individually or $20,000 in the aggregate;
(xi) the
Seller, with regard to the Business, has not instituted or settled any material
legal proceeding; and
(xii) the
Seller has not agreed to do anything set forth in this Section 3.8.
3.9 Taxes.
(a) Except
as
set forth on Schedule 3.9 or as would otherwise not be material to Parent’s
acquisition of the Business, (A) all Tax returns required to be filed by or
on
behalf of the Seller have been properly prepared and duly and timely filed
with
the appropriate taxing authorities in all jurisdictions in which such Tax
returns are required to be filed (after giving effect to any valid extensions
of
time in which to make such filings), and all such Tax returns were true,
complete and correct in all material respects; (B) all Taxes payable by or
on
behalf of the Seller or in respect of its income, assets or operations have
been
fully and timely paid, and adequate reserves or accruals for Taxes have been
provided in the Closing Date Balance Sheet with respect to any period for which
Tax Returns have not yet been filed or for which Taxes are not yet due and
owing; and (C) the Seller has not executed or filed with the IRS or any other
taxing authority any agreement, waiver or other document or arrangement
extending or having the effect of extending the period for assessment or
collection of Taxes (including, but not limited to, any applicable statute
of
limitation), and no power of attorney with respect to any Tax matter is
currently in force. “Tax or Taxes” means all federal, state, local or other
taxes or similar governmental charges, fees, levies or assessments.
(b) The
Seller has complied in all material respects with all applicable laws, rules
and
regulations relating to the payment and withholding of Taxes and has duly and
timely withheld from employee salaries, wages and other compensation and has
paid over to the appropriate taxing authorities all amounts required to be
so
withheld and paid over for all periods under all Laws.
(c) Parent
has received complete copies of (A) all federal, state, local and foreign income
or franchise Tax Returns of the Seller relating to the taxable periods since
2002 and (B) any audit report issued within the last three years relating to
any
material Taxes due from or with respect to the its income, assets or operations.
All income and franchise Tax returns filed by or on behalf of the Seller for
the
taxable years ended on the respective dates set forth on Schedule 3.9 have
been
examined by the relevant taxing authority or the statute of limitations with
respect to such Tax Returns has expired.
9
(d) Schedule
3.9 lists all material types of Taxes paid and material types of Tax returns
filed by or on behalf of the Seller. Except as set forth on Schedule 3.9, no
claim has been made by a taxing authority in a jurisdiction where the Seller
does not file Tax Returns such that it is or may be subject to taxation by
that
jurisdiction.
(e) Except
as
set forth on Schedule 3.9, all deficiencies asserted or assessments made as
a
result of any examinations by the IRS or any other taxing authority of the
Tax
Returns of or covering or including the Seller have been fully paid, and there
are no other audits or investigations by any taxing authority in progress,
nor
has the Seller received any written notice from any taxing authority that it
intends to conduct such an audit or investigation. No issue has been raised
in
writing by a federal, state, local or foreign taxing authority in any current
or
prior examination which, by application of the same or similar principles,
could
reasonably be expected to result in a proposed deficiency for any subsequent
taxable period.
(f) Except
as
set forth on 3.9, the Seller has (A) filed a consent pursuant to Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by the Seller, (B) agreed to or is required to
make
any adjustments pursuant to Section 481(a) of the Code or any similar provision
of state, local or foreign law by reason of a change in accounting method
initiated by the Seller or has any knowledge that the Internal Revenue Service
(“IRS”) has proposed any such adjustment or change in accounting method, or has
any application pending with any taxing authority requesting permission for
any
changes in accounting methods that relate to the business or operations of
the
Seller, (C) executed or entered into a closing agreement pursuant to Section
7121 of the Code or any predecessor provision thereof or any similar provision
of state, local or foreign law with respect to the Seller, or (D) requested
any
extension of time within which to file any Tax Return, which Tax Return has
since not been filed.
(g) No
property owned by the Seller related to the Business is (i) property required
to
be treated as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (ii)
constitutes “tax-exempt use property” within the meaning of Section 168(h)(1) of
the Code or (iii) is “tax-exempt bond financed property” within the meaning of
Section 168(g) of the Code.
(h) The
Seller is not a foreign person within the meaning of Section 1445 of the
Code.
(i) The
Seller is not a party to any tax sharing or similar agreement or arrangement
(whether or not written) pursuant to which it will have any obligation to make
any payments after the Closing.
10
(j) There
is
no contract, agreement, plan or arrangement covering any person that,
individually or collectively, could give rise to the payment of any amount
that
would not be deductible by the Parent, the Affiliates or their respective
affiliates by reason of Section 280G of the Code, or would constitute
compensation in excess of the limitation set forth in Section 162(m) of the
Code.
(k) The
Seller is not subject to any private letter ruling of the IRS or comparable
rulings of other taxing authorities.
(l) There
are
no liens as a result of any unpaid Taxes upon any of the Assets.
(m) Except
as
set forth on Schedule 3.9, the Seller has no elections in effect for federal
income tax purposes under Sections 108, 168, 338, 441, 463, 472, 1017, 1033
or
4977 of the code.
3.10 Real
Property.
Seller
is
not transferring to the Parent or the Acquisition Sub herein (i) any real
property and interests in real property owned in fee by the Seller related
to
the Business (individually, an “Owned Property” and collectively, the “Owned
Properties”), or (ii) any real property and interests in real property leased by
the Seller related to the Business (individually, a “Real Property Lease” and
the real properties specified in such leases, together with the Owned
Properties, being referred to herein individually as a “Seller Property” and
collectively as the “Seller Properties”) as lessee or lessor.
3.11 Tangible
Personal Property.
(a) Schedule
3.11 sets forth all leases of personal property (“Personal Property Leases”)
involving annual payments in excess of $10,000 relating to personal property
used in the Business or to which the Seller is a party or by which the
properties or assets of the Seller related to the Business is bound. The Seller
has delivered or otherwise made available to the Parent true, correct and
complete copies of the Personal Property Leases, together with all amendments,
modifications or supplements thereto.
(b) The
Seller has a valid leasehold interest under each of the Personal Property Leases
under which it is a lessee, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity), and there is no default under any Personal Property Lease by the Seller
or, to the best knowledge of the Seller, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder.
(c) The
Seller has good and marketable title to all of the items of tangible personal
property reflected in the Balance Sheet (except as sold or disposed of
subsequent to the date thereof in the ordinary course of business consistent
with past practice), free and clear of any and all liens other than as set
forth
on Schedule 3.11. All such items of tangible personal property which,
individually or in the aggregate, are material to the operation of the business
of the Seller are in good condition and in a state of good maintenance and
repair (ordinary wear and tear excepted).
11
(d) All
of
the items of tangible personal property used by the Seller under the Personal
Property Leases are in good condition and repair (ordinary wear and tear
excepted).
3.12 Intangible
Property.
Schedule
3.12 contains a complete and correct list of each patent, trademark, trade
name,
service xxxx and copyright owned or used by the Seller solely in connection
with
the Business as well as all registrations thereof and pending applications
therefor, and each license or other agreement relating thereto. Except as set
forth on Schedule 3.12, each of the foregoing is owned by the party shown on
such Schedule as owning the same, free and clear of all mortgages, claims,
liens, security interests, charges and encumbrances and is in good standing
and
not the subject of any challenge. To the knowledge of the Seller, there have
been no claims made and the Seller has not received any notice or otherwise
knows or has reason to believe that any of the foregoing is invalid or conflicts
with the asserted rights of others. The Seller possesses, owns or licenses
all
patents, patent licenses, trade names, trademarks, service marks, brand marks,
brand names, copyrights, know-how, formulate and other proprietary and trade
rights necessary for the conduct of the Business as now conducted, not subject
to any restrictions and without any known conflict with the rights of others
and
has not forfeited or otherwise relinquished any such patent, patent license,
trade name, trademark, service xxxx, brand xxxx, brand name, copyright,
know-how, formulate or other proprietary right necessary for the conduct of
the
Business as conducted on the date hereof. The Seller is not under any obligation
to pay any royalties or similar payments in connection with any license to
any
Affiliate thereof. “Affiliate” means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under common control
with such person and for purposes of individuals, Affiliates would include
an
individual’s spouse and minor children.
3.13 Material
Contracts.
Schedule
3.13 sets forth all of the following Contracts to which the Seller is a party
or
by which it is bound to the extent applicable to the Business (collectively,
the
“Material Contracts”): (i) Contracts with any current officer or director of the
Seller; (ii) Contracts with any labor union or association representing any
employee of the Seller; (iii) Contracts pursuant to which any party is required
to purchase or sell a stated portion of its requirements or output from or
to
another party; (iv) Contracts for the sale of any of the assets of the Seller
other than in the ordinary course of business or for the grant to any person
of
any preferential rights to purchase any of its assets; (v) joint venture
agreements; (vi) material Contracts containing covenants of the Seller not
to
compete in any line of business or with any person in any geographical area
or
covenants of any other person not to compete with the Seller in any line of
business or in any geographical area; (vii) Contracts relating to the
acquisition by the Seller of any operating business or the capital stock of
any
other person; (viii) Contracts relating to the borrowing of money; or (ix)
any
other Contracts which involve the expenditure of more than $25,000 in the
aggregate or $10,000 annually or require performance by any party more than
one
year from the date hereof. There have been made available to the Parent, its
affiliates and their representatives true and complete copies of all of the
Material Contracts. Except as set forth on Schedule 3.13, all of the Material
Contracts and other agreements are in full force and effect and are the legal,
valid and binding obligation of the Seller, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Except
as
set forth on Schedule 3.13, the Seller is not in default in any material respect
under any Material Contracts, nor, to the knowledge of the Seller, is any other
party to any Material Contract in default thereunder in any material
respect.
12
3.14 Employee
Benefits.
(a) Schedule
3.14 sets forth a complete and correct list of (i) all “employee benefit plans”,
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), and any other pension plans or employee benefit
arrangements, programs or payroll practices (including, without limitation,
severance pay, vacation pay, company awards, salary continuation for disability,
sick leave, retirement, deferred compensation, bonus or other incentive
compensation, stock purchase arrangements or policies, hospitalization, medical
insurance, life insurance and scholarship programs) maintained by the Seller
or
to which the Seller contributes or is obligated to contribute thereunder with
respect to employees of the Seller related to the Business(“Employee Benefit
Plans”) and (ii) all “employee pension plans”, as defined in Section 3(2) of
ERISA, maintained by the Seller or any trade or business (whether or not
incorporated) which are under control, or which are treated as a single
employer, with Seller under Section 414(b), (c), (m) or (o) of the (“ERISA
Affiliate”) or to which the Seller or any ERISA Affiliate contributed or is
obligated to contribute thereunder (“Pension Plans”) related to the Business.
Schedule 3.14 clearly identifies, in separate categories, Employee Benefit
Plans
or Pension Plans that are (i) subject to Section 4063 and 4064 of ERISA
(“Multiple Employer Plans”), (ii) multiemployer plans (as defined in Section
4001(a)(3) of ERISA) (“Multiemployer Plans”) or (iii) “benefit plans”, within
the meaning of Section 5000(b)(1) of the Code providing continuing benefits
after the termination of employment (other than as required by Section 4980B
of
the Code or Part 6 of Title I of ERISA and at the former employee’s or his
beneficiary’s sole expense).
(b) The
Purchaser would not have any withdrawal or other liability (contingent or
otherwise) under Title IV of ERISA with respect to any Multiple Employer Plan
or
Multiemployer Plan if they had not purchased the Assets from Seller at the
Effective Time in accordance with the terms of this Agreement.
(c) Each
of
the Employee Benefit Plans and Pension Plans intended to qualify under Section
401 of the Code (“Qualified Plans”) so qualify and the trusts maintained thereto
are exempt from federal income taxation under Section 501 of the Code, and,
except as disclosed on Schedule 3.16(c), nothing has occurred with respect
to
the operation of any such plan which could cause the loss of such qualification
or exemption or the imposition of any liability, penalty or tax under ERISA
or
the Code.
13
(d) All
contributions and premiums required by Law or by the terms of any Employee
Benefit Plan or Pension Plan which are defined benefit plans or money purchase
plans or any agreement relating thereto have been timely made (without regard
to
any waivers granted with respect thereto) to any funds or trusts established
thereunder or in connection therewith, and no accumulated funding deficiencies
exist in any of such plans subject to Section 412 of the Code.
(e) The
benefit liabilities, as defined in Section 4001(a)(16) of ERISA, of each of
the
Employee Benefit Plans and Pension Plans subject to Title IV of ERISA using
the
actuarial assumptions that would be used by the Pension Benefit Guaranty
Corporation (the “PBGC”) in the event it terminated each such plan do not exceed
the fair market value of the assets of each such plan. The liabilities of each
Employee Benefit Plan that has been terminated or otherwise wound up, have
been
fully discharged in full compliance with applicable Law.
(f) There
has
been no “reportable event” as that term is defined in Section 4043 of ERISA and
the regulations thereunder with respect to any of the Employee Benefit Plans
or
Pension Plans subject to Title IV of ERISA which would require the giving of
notice, or any event requiring notice to be provided under Section 4041(c)(3)(C)
or 4063(a) of ERISA.
(g) There
has
been no violation of ERISA with respect to the filing of applicable returns,
reports, documents and notices regarding any of the Employee Benefit Plans
or
Pension Plans with the Secretary of Labor or the Secretary of the Treasury
or
the furnishing of such notices or documents to the participants or beneficiaries
of the Employee Benefit Plans or Pension Plans.
(h) True,
correct and complete copies of the following documents, with respect to each
of
the Employee Benefit Plans and Pension Plans (as applicable), have been
delivered to the Parent (A) any plans and related trust documents, and all
amendments thereto, (B) the most recent Forms 5500 for the past three years
and
schedules thereto, (C) the most recent financial statements and actuarial
valuations for the past three years, (D) the most recent Internal Revenue
Service determination letter, (E) the most recent summary plan descriptions
(including letters or other documents updating such descriptions) and (F)
written descriptions of all non-written agreements relating to the Employee
Benefit Plans and Pension Plans.
(i) There
are
no pending Legal Proceedings which have been asserted or instituted against
any
of the Employee Benefit Plans or Pension Plans, the assets of any such plans
or
the Seller, or the plan administrator or any fiduciary of the Employee Benefit
Plans or Pension Plans with respect to the operation of such plans (other than
routine, uncontested benefit claims), and there are no facts or circumstances
which could form the basis for any such Legal Proceeding.
(j) Each
of
the Employee Benefit Plans and Pension Plans has been maintained, in all
material respects, in accordance with its terms and all provisions of applicable
Law. All amendments and actions required to bring each of the Employee Benefit
Plans and Pension Plans into conformity in all material respects with all of
the
applicable provisions of ERISA and other applicable Laws have been made or
taken
except to the extent that such amendments or actions are not required by law
to
be made or taken until a date after the Closing Date and are disclosed on
Schedule 3.16(j).
14
(k) The
Seller and any ERISA Affiliate which maintains a “benefits plan” within the
meaning of Section 5000(b)(1) of ERISA, have complied with the notice and
continuation requirements of Section 4980B of the Code or Part 6 of Title I
of
ERISA and the applicable regulations thereunder.
(l) None
of
the Seller, any ERISA Affiliate or any organization to which any is a successor
or parent corporation, has divested any business or entity maintaining or
sponsoring a defined benefit pension plan having unfunded benefit liabilities
(within the meaning of Section 4001(a)(18) of ERISA) or transferred any such
plan to any person other than the Seller or any ERISA Affiliate during the
five-year period ending on the Closing Date.
(m)
Neither
the Seller nor any “party in interest” or “disqualified person” with respect to
the Employee Benefit Plans or Pension Plans has engaged in a “prohibited
transaction” within the meaning of Section 4975 of the Code or Section 406 of
ERISA.
(n) Neither
the Seller nor any ERISA Affiliate has terminated any Employee Benefit Plan
or
Pension Plan subject to Title IV of ERISA, or incurred any outstanding liability
under Section 4062 of ERISA to the Pension Benefit Guaranty Corporation or
to a
trustee appointed under Section 4042 of ERISA.
(o) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due
to
any employee of the Seller; (ii) increase any benefits otherwise payable under
any Employee Benefit Plan or Pension Plan; or (iii) result in the acceleration
of the time of payment or vesting of any such benefits.
(p) No
stock
or other security issued by Seller forms or has formed a material part of the
assets of any Employee Benefit Plan or Pension Plan.
3.15 Labor.
(a) Except
as
set forth on Schedule 3.15, the Seller is not party to any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of the Seller engaged in the Business. The Seller
has
delivered or otherwise made available to the Parent true, correct and complete
copies of the labor or collective bargaining agreements listed on Schedule
3.15,
together with all amendments, modifications or supplements thereto.
(b) Except
as
set forth on Schedule 3.15, no employees of the Seller related to the Business
are represented by any labor union. No labor union or group of employees of
the
Seller has made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending or, to the best knowledge of the Seller, threatened to be
brought or filed, with the National Labor Relations Board or other labor
relations tribunal. There is no organizing activity involving the Seller pending
or, to the best knowledge of the Seller, threatened by any labor union or group
of employees of the Seller related to the Business.
15
(c) There
are
no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii)
material grievances or other labor disputes pending or, to the best knowledge
of
the Seller, threatened against or involving the Business. There are no unfair
labor practice charges, grievances or complaints pending or, to the best
knowledge of the Seller, threatened by or on behalf of any employee or group
of
employees of the Seller related to the Business.
3.16 Litigation.
Except
as
set forth in Schedule 3.16, there is no suit, action, proceeding, or order
pending or, to the knowledge of the Seller, overtly threatened against the
Seller or to the knowledge of the Seller, pending or threatened, against any
of
the officers, directors or key employees of the Seller with respect to the
Business activities on behalf of the Seller, or to which the Seller is otherwise
a party, which, if adversely determined, would have a Material Adverse Effect,
before any court, or before any governmental department, commission, board,
agency, or instrumentality; nor to the knowledge of the Seller is there any
reasonable basis for any such action, proceeding, or investigation. The Seller
is not subject to any judgment, order or decree of any court or governmental
agency except to the extent the same are not reasonably likely to have a
Material Adverse Effect and is not engaged in any legal action to recover monies
due it or for damages sustained by it. Nor is there, to the knowledge of the
Seller, and investigation or claim pending or overtly threatened against the
Seller or pending or threatened, against any of the officers, directors or
key
employees of the Seller with respect to the Business activities on behalf of
the
Seller, or to which the Seller is otherwise a party.
3.17 Compliance
with Laws; Permits.
(a) The
Seller, with regard to the Business, is in compliance with all federal, state
and local statutes, laws, rules, regulations, orders and ordinances (“Laws”)
applicable to it or to the conduct of its business or operations or the use
of
its properties (including any leased properties) and assets, except for such
non-compliances as would not, individually or in the aggregate, have a Material
Adverse Effect. The Seller has all governmental permits and approvals from
state, federal or local authorities which are required for it to operate the
Business, except for those the absence of which would not, individually or
in
the aggregate, have a Material Adverse Effect.
3.18 Environmental
Matters.
Except
as
set forth on Schedule 3.18 hereto, or as would not adversely impact the Business
in Parent’s hands:
(a) the
operations of the Seller with regard to the Business are in compliance in all
material respects with all applicable laws promulgated by any governmental
entity which prohibit, regulate or control any hazardous material or hazardous
material activity (“Environmental Laws”) and all permits issued pursuant to
Environmental Laws or otherwise;
16
(b) the
Seller has obtained all material permits required under all applicable
Environmental Laws necessary to operate the Business;
(c) to
its
knowledge, the Seller is not the subject of any outstanding written order or
Contract with any governmental authority or person respecting (i) Environmental
Laws, (ii) Remedial Action or (iii) any release or threatened release of a
Hazardous Material (“Release”) and related to the Business;
(d) the
Seller has not received any written communication alleging either or both that
it may be in material violation of any Environmental Law, or any permit issued
pursuant to Environmental Law, or may have any liability under any Environmental
Law related to the Business;
(e) the
Seller does not have any current contingent liability in connection with any
Release into the indoor or outdoor environment (whether on-site or off-site)
related to the Business;
(f) to
the
Seller’s knowledge, there are no investigations of the business, operations, or
currently or previously owned, operated or leased property of the Seller related
to the Business pending or threatened which could lead to the imposition of
any
liability pursuant to Environmental Law;
(g) the
Seller has provided to the Parent all environmentally related audits, studies,
reports, analyses, and results of investigations that have been performed with
respect to the currently or previously owned, leased or operated properties
of
the Seller related to the Business.
3.19 Insurance.
Schedule
3.19 sets forth a complete and accurate list of all policies of insurance of
any
kind or nature covering the Seller or any of its employees, properties or
assets, including, without limitation, policies of life, disability, fire,
theft, workers compensation, employee fidelity and other casualty and liability
insurance related to the Business. All such policies are in full force and
effect, and, to the Seller’s knowledge, it is not in default of any provision
thereof, except for such defaults as would not, individually or in the
aggregate, have a Material Adverse Effect.
3.20 Inventories;
Receivables; Payables.
(a) The
inventories of the Seller related to the Business are in good and marketable
condition, and are saleable in the ordinary course of business. Schedule 3.20
sets forth the reserves that have been reflected in the Balance Sheet by the
Seller for shorts, drops, off-cuts, obsolete or otherwise unusable inventory
in
connection with the Business, which reserves were calculated in a manner
consistent with past practice.
17
(b) All
accounts receivable of the Business reflected in the Balance Sheet sheet or
arising after the date thereof have arisen from bona fide transactions in the
ordinary course of business consistent with past practice.
(c) All
accounts payable of the Business reflected in the Balance Sheet or arising
after
the date thereof are the result of bona fide transactions in the ordinary course
of business.
3.21 Customers
and Suppliers.
Schedule
3.21 sets forth a list of the twenty (20) largest customers and the twenty
(20) largest
suppliers of the Business, as measured by the dollar amount of purchases
therefrom or thereby, during each of the fiscal years ended 2005 and 2006,
showing the approximate total sales by the Business to each such customer and
the approximate total purchases by the Business from each such supplier, during
such period. Since the Balance Sheet Date, the Seller has not been notified
of
any material adverse change in the business relationship of the Seller with
customer or supplier listed on Schedule 3.21 and has not received complaints
or
notices of default from such customers or suppliers, in each case except as
set
forth on Schedule 3.21.
3.22 Financial
Advisors.
Except
for BTI,
no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Seller in connection with the transactions contemplated by
this
Agreement and no Person is entitled to any fee or commission or like payment
in
respect thereof.
3.23 Patriot
Act.
The
Seller certifies that, to the best of the Seller’s knowledge, the Seller has not
been designated, and is not owned or controlled, by a “suspected terrorist” as
defined in Executive Order 13224. The Seller hereby acknowledges that the Parent
seeks to comply with all applicable Laws concerning money laundering and related
activities. In furtherance of those efforts, the Seller hereby represents,
warrants and agrees that: (i) none of the cash or property owned by the Seller
has been or shall be derived from, or related to, any activity that is deemed
criminal under United States law; and (ii) no contribution or payment by the
Seller has, and this Agreement will not, cause the Seller to be in violation
of
the United States Bank Secrecy Act, the United States International Money
Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001.
3.24 No
Misrepresentations.
No
representation or warranty of the Seller contained in this Agreement or in
any
schedule hereto or in any certificate furnished by the Seller to the Parent
pursuant to the Article VI hereof, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
18
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND ACQUISITION SUB
The
Parent and the Acquisition Sub jointly and severally represent and warrant
that:
4.1 Organization
and Good Standing.
(a) The
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey; and
(b) Acquisition
Sub is a corporation duly incorporated and validly existing and in good standing
under the laws of the State of Delaware.
4.2 Authorization
of Agreement.
(a) The
Parent and the Acquisition Sub have full corporate power and authority to
execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed
by
the Parent in connection with the consummation of the transactions contemplated
hereby and thereby (the “Parent Documents”), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
the
Parent and Acquisition Sub of this Agreement and each Parent Document have
been
duly authorized by all necessary corporate action on behalf of the Parent and
Acquisition Sub. This Agreement has been, and each Parent Document will be
at or
prior to the Closing, duly executed and delivered by the Parent and (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Parent Document when so executed
and delivered will constitute, legal, valid and binding obligations of the
Parent and Acquisition Sub, enforceable against the Parent and Acquisition
Sub
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(b) Acquisition
Sub has the corporate power, capacity and authority to enter into and complete
this Agreement;
4.3 Conflicts;
Consents of Third Parties.
(a) Except
as
set forth on Schedule 4.3 hereto, neither of the execution and delivery by
the
Parent or Acquisition Sub of the Parent Documents, nor the compliance by the
Parent Acquisition Sub with any of the provisions hereof or thereof will (i)
conflict with, or result in the breach of, any provision of the certificate
of
incorporation or by-laws of the Parent, (ii) conflict with, violate, result
in
the breach of, or constitute a default under any note, bond, mortgage,
indenture, license, agreement or other obligation to which the Parent
Acquisition Sub is a party or by which the Parent or its properties or assets
are bound or (iii) violate any statute, rule, regulation, order or decree of
any
governmental body or authority by which the Parent Acquisition Sub is bound,
except, in the case of clauses (ii) and (iii), for such violations, breaches
or
defaults as would not, individually or in the aggregate, have a material adverse
effect on the business, properties, results of operations, prospects, conditions
(financial or otherwise) of the Parent and its subsidiaries, taken as a
whole.
19
(b) No
consent, waiver, approval, order, permit or authorization of, or declaration
or
filing with, or notification to, any Person or Governmental Body is required
on
the part of the Parent in connection with the execution and delivery of this
Agreement or the Parent Documents or the compliance by Parent with any of the
provisions hereof or thereof.
4.4 Litigation.
There
are
no Legal Proceedings pending or, to the best knowledge of the Parent, threatened
that are reasonably likely to prohibit or restrain the ability of the Parent
or
Acquisition Sub to enter into this Agreement or consummate the transactions
contemplated hereby.
4.5 Financial
Advisors.
No
person
has acted, directly or indirectly, as a broker, finder or financial advisor
for
the Parent in connection with the transactions contemplated by this Agreement
and no person is entitled to any fee or commission or like payment in respect
thereof.
4.6 Patriot
Act.
The
Parent certifies that, to the best of the Parent’s knowledge, the Parent has not
been designated, and is not owned or controlled, by a “suspected terrorist” as
defined in Executive Order 13224. The Parent hereby acknowledges that the Seller
seeks to comply with all applicable Laws concerning money laundering and related
activities. In furtherance of those efforts, the Parent hereby represents,
warrants and agrees that: (i) none of the cash or property owned by the Seller
has been or shall be derived from, or related to, any activity that is deemed
criminal under United States law; and (ii) no contribution or payment by the
Parent has, and this Agreement will not, cause the Parent to be in violation
of
the United States Bank Secrecy Act, the United States International Money
Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001.
ARTICLE
V
COVENANTS
5.1 Access
to Information.
The
Seller agrees that, prior to the Closing Date, the Parent shall be entitled,
through its officers, employees and representatives (including, without
limitation, its legal advisors and accountants), to make such investigation
of
the properties, businesses and operations of the Seller related to the Business
and such examination of the books, records and financial condition of the Seller
as it reasonably requests and to make extracts and copies of such books and
records. Any such investigation and examination shall be conducted during
regular business hours and under reasonable circumstances, and the Seller shall
cooperate fully therein. No investigation by the Parent prior to or after the
date of this Agreement shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Seller contained in the Seller
Documents. In order that the Parent may have full opportunity to make such
physical, business, accounting and legal review, examination or investigation
as
it may reasonably request of the affairs of the Seller, Seller shall cause
its
officers, employees, consultants, agents, accountants, attorneys and other
representatives to cooperate fully with such representatives in connection
with
such review and examination.
20
5.2 Conduct
of the Business Pending the Closing.
(a) Except
as
otherwise expressly contemplated by this Agreement or with the prior written
consent of the Parent, the Seller shall:
(i) conduct
the Business only in the ordinary course consistent with past
practice;
(ii) use
its
best efforts to (A) preserve the present business operations, organization
(including, without limitation, management and the sales force) and goodwill
of
the Business and (B) preserve the present relationship with Persons having
business dealings with the Business;
(iii) maintain
(A) all of the Business’ assets and properties in their current condition,
ordinary wear and tear excepted and (B) insurance upon all of its properties
and
assets in such amounts and of such kinds com-parable to that in effect on the
date of this Agreement;
(iv) (A)
maintain the books, accounts and records of the Business in the ordinary course
of business consistent with past practices, (B) continue to collect accounts
receivable and pay accounts payable utilizing normal procedures and without
discounting or accelerating payment of such accounts, and (C) comply with all
contractual and other obligations applicable to the Business operation;
and
(v) comply
in
all material respects with applicable Laws, including, without limitation,
Environmental Laws related to the Business.
(b) Except
as
otherwise expressly contemplated by this Agreement or with the prior written
consent of the Parent, the Seller shall not with regard to the
Business:
(i)
(A)
materially increase the annual level of compensation of any of its employees
related to the Business, (B) increase the annual level of compensation payable
or to become payable by the it to any of its executive officers, (C) grant
any
unusual or extraordinary bonus, benefit or other direct or indirect compensation
to any employee, director or consultant related to the Business, other than
in
the ordinary course consistent with past practice and in such amounts as are
fully reserved against in the Financial Statements, (D) increase the coverage
or
benefits available under any (or create any new) severance pay, termination
pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan or arrangement made to, for, or with any of
its
directors, officers, employees, agents or representatives or otherwise modify
or
amend or terminate any such plan or arrangement or (E) enter into any
employment, deferred compensation, severance, consulting, non-competition or
similar agreement (or amend any such agreement) involving a director, officer
or
employee of the Seller in his or her capacity as a director, officer or employee
of the Seller related to the Business;
21
(ii) except
for trade payables and for indebtedness for borrowed money incurred in the
ordinary course of business and consistent with past practice, borrow monies
for
any reason or draw down on any line of credit or debt obligation, or become
the
guarantor, surety, endorser or otherwise liable for any debt, obligation or
liability (contingent or otherwise) of any other Person;
(iii) subject
to any Lien (except for liens that do not materially impair the use of the
property subject thereto in their respective businesses as presently conducted),
any of its properties or assets (whether tangible or intangible);
(iv) acquire
any material properties or assets or sell, assign, transfer, convey, lease
or
otherwise dispose of any of its material properties or assets (except for fair
consideration in the ordinary course of business consistent with past practice)
except, with respect to the items listed on Schedule
5.2(b)(viii)
hereto,
as previously consented to by the Parent;
(v) cancel
or
compromise any debt or claim or waive or release any material right except
in
the ordinary course of business consistent with past practice;
(vi) enter
into any commitment for capital expenditures in excess of $5,000 for
any
individual commitment and $10,000 for
all
commitments in the aggregate;
(vii) enter
into, modify or terminate any labor or collective bargaining agreement or,
through negotiation or otherwise, make any commitment or incur any liability
to
any labor organization with respect to it;
(viii) introduce
any material change with respect to its operation, including any material change
in the types, nature, composition or quality of its products or services,
experience any material change in any contribution of its product lines to
its
revenues or net income, or, other than in the ordinary course of business,
make
any change in product specifications or prices or terms of distributions of
such
products;
(ix) enter
into any transaction or make or enter into any Contract which by reason of
its
size or otherwise is not in the ordinary course of business consistent with
past
practice;
(x) enter
into or agree to enter into any merger or consolidation with, any corporation
or
other entity, and not engage in any new business or invest in, make a loan,
advance or capital contribution to, or otherwise acquire the securities of
any
other Person;
22
(xi) except
for transfers of cash pursuant to normal cash management practices, make any
investments in or loans to, or pay any fees or expenses to, or enter into or
modify any Contract with any Affiliate; or
(xii) agree
to
do anything prohibited by this Section 5.2 or anything which would make any
of
the representations and warranties of the Seller in this Agreement or the Seller
Documents untrue or incorrect in any material respect as of any time through
and
including the Effective Time.
5.3 Consents.
The
Seller shall use its best efforts, and the Parent shall cooperate with the
Seller, to obtain at the earliest practicable date all consents and approvals
required to consummate the transactions contemplated by this Agreement,
including, without limitation, the consents and approvals referred to in Section
3.5(b) hereof; provided, however, that neither the Seller nor the Parent shall
be obligated to pay any consideration therefor to any third party from whom
consent or approval is requested.
5.4 Other
Actions.
Each
of
the Seller, Parent and Acquisition Sub shall use its best efforts to (i) take
all actions necessary or appropriate to consummate the transactions contemplated
by this Agreement and (ii) cause the fulfillment at the earliest practicable
date of all of the conditions to their respective obligations to consummate
the
transactions, covenants and requirements contemplated by this
Agreement.
5.5 No
Solicitation.
The
Seller will not, and will not cause or permit any of its directors, officers,
employees, representatives or agents (collectively, the “Representatives”) to,
directly or indirectly, (i) discuss, negotiate, undertake, authorize, recommend,
propose or enter into any transaction involving the Business other than the
transactions contemplated by this Agreement (an “Acquisition Transaction”), (ii)
facilitate, encourage, solicit or initiate discussions, negotiations or
submissions of proposals or offers in respect of an Acquisition Transaction,
(iii) furnish or cause to be furnished, to any Person, any information
concerning its business, operations, properties or assets in connection with
an
Acquisition Transaction, or (iv) otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing. The Seller will inform the Parent
in
writing immediately following the receipt by the Seller or any Representative
of
any proposal or inquiry in respect of any Acquisition Transaction.
5.6 Preservation
of Records.
Subject
to Section 8.4(e) hereof (relating to the preservation of Tax records), the
Seller, the Parent and Acquisition Sub agree that each of them shall preserve
and keep the records held by it relating to the business of the Seller for
a
period of three years from the Closing Date and shall make such records and
personnel available to the other as may be reasonably required by such party
in
connection with, among other things, any insurance claims by, legal proceedings
against or governmental investigations of the Seller, the Parent or Acquisition
Sub or any of their Affiliates or in order to enable the Seller, the Parent
or
Acquisition Sub to comply with their respective obligations under this
Agreement, the Employment Agreement and each other agreement, document or
instrument contemplated hereby or thereby. In the event the Seller, the Parent
or Acquisition Sub wishes to destroy such records after that time, such party
shall first give ninety (90) days prior written notice to the other and such
other party shall have the right at its option and expense, upon prior written
notice given to such party within that ninety (90) day period, to take
possession of the records within one hundred and eighty (180) days after the
date of such notice.
23
5.7 Publicity.
Neither
the Seller, the Parent nor the Acquisition Sub shall issue any press release
or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed, unless, in the
sole
judgment of the Parent or the Seller, disclosure is otherwise required by
applicable Law or by the applicable rules of any stock exchange on which the
Parent or the Seller lists securities, provided that, to the extent required
by
applicable Law, the party intending to make such release shall use its best
efforts consistent with such applicable Law to consult with the other party
with
respect to the text thereof.
5.8 Use
of
Name.
The
Seller hereby agrees that upon the consummation of the transactions contemplated
hereby, the Parent and Acquisition Sub shall have the sole right to the use
of
the name “FuelMeister” and the domain names xxx.xxxxxxxxxxx.xxx and xxx.xxxxxxxxxxxxx.xxx
and,
other than in connection with a reasonable transition period following the
Closing in which the parties will cooperate with each other to separate the
FuelMeister name and marks from Seller’s ongoing business, the Seller shall not,
and shall not cause or permit any Affiliate to use such name or any variation
or
simulation thereof.
5.9 Management
Agreement.
The
Seller hereby agrees that, on or prior to the Closing Date, the Seller shall
enter into a management services agreement, substantially in the form of Exhibit
B hereto (the “Management Agreement”).
5.10 Financial
Statements.
The
Seller shall cooperate with the Parent to provide all information required
for
the completion of audited financial statements of the Business to be prepared
and delivered no later than 4 days from the Closing Date.
5.11 Non-Competition.
For
a
period of three years after the Closing Date, Sellers agree not to engage in
any
of the following competitive activities: (a) engaging directly or indirectly
in
any business or activity involving the development, manufacture or sale of
personal scale biodiesel processing products with less than 200 gallons per
day
of output; (b) interfering with any contractual or other relationship between
the Business or the Purchaser and any employee, agent, representative,
contractor, supplier, vendor, customer, franchisee, lender or investor; or
(c)
using, for the benefit of any person or entity other than the Business, any
confidential information of the Business or the Purchaser. In addition, the
Seller shall not make or permit the making of any negative statement of any
kind
concerning the Business, the Purchaser or their affiliates, or their directors,
officers or agents; provided that the foregoing shall not prohibit or limit
the
Seller’s ability to respond truthfully to any inquiries from or satisfy any
disclosure requirements to (a) existing or potential sources of debt or equity
financing, (b) existing or potential parties to business transactions with
Seller following the Closing, (c) any governmental or regulatory authorities,
or
(d) any party to any legal or similar adversarial proceeding involving the
Seller or its affiliates, nor shall it apply to any statements made during
the
course of any legal action between the parties
24
5.12 Insurance
Coverage.
The
Parent and Acquisition Sub hereby covenants and agrees that subsequent to the
Closing Date it shall use commercially reasonable efforts to keep in full force
and effect liability insurance at least comparable in amount and scope of
coverage to that currently maintained with respect to the Business by the
Seller.
5.13 Web
Site Crossover.
The
Sellers, Parent and Acquisition Sub hereby covenants and agrees
that:
(a) At
the
Closing Seller shall:
(i) post
a
notice on the Seller’s current web site, mutually agreed upon by all of the
parties, that the FuelMeister products have been sold to the Acquisition Sub,
but despite the reference to Biodiesel Solutions all products can be ordered
at
(000) 000-0000 from Acquisition Sub;
(ii) turn
off
the Cart-32 commerce engine, to prevent internet orders going to Seller;
and
(iii) immediately
upon being notified that Acquisition Sub’s web site is operational, take down
the current web site and remove all references to FuelMeister except sale
notification and a link to Acquisition Sub’s web site, which shall remain in
place for 36 weeks.
(b) Within
two weeks of the Closing Date, Parent and Acquisition Sub shall take Acquisition
Sub’s web site source code, replace Seller’s name throughout site, and enable
e-commerce, and host the site under its own URL.
25
ARTICLE
VI
CONDITIONS
TO CLOSING
6.1 Conditions
Precedent to Obligations of Parent and Acquisition Sub.
The
obligation of the Parent and Acquisition Sub to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, on or prior to
the
Closing Date, of each of the following conditions (any or all of which may
be
waived by the Parent in whole or in part to the extent permitted by applicable
Law):
(a) all
representations and warranties of the Seller contained herein qualified as
to
materiality shall be true and correct, and the representations and warranties
of
the Seller contained herein not qualified as to materiality shall be true and
correct in all material respects, at and as of the Closing Date with the same
effect as though those representations and warranties had been made again at
and
as of that time;
(b) the
Seller shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date, including, without limitation,
those
set forth on Schedule 6.1 attached hereto;
(c) the
Parent shall have been furnished with certificates (dated the Closing date
and
in form and substance reasonably satisfactory to the Parent) executed by the
Seller certifying as to the fulfillment of the conditions specified in Sections
6.1(a) and 6.1(b) hereof;
(d) there
shall not have been or occurred any Material Adverse Change;
(e) the
Parent shall have obtained all consents and waivers referred to in Section
4.3
hereof with respect to the transactions contemplated by this Agreement and
the
Parent Documents;
(f) the
Seller shall have obtained all consents and waivers referred to in Section
3.5
hereof, in a form reasonably satisfactory to the Parent, with respect to the
transactions contemplated by this Agreement and the Seller
Documents;
(g) no
Legal
Proceedings shall have been instituted or threatened or claim or demand made
against the Seller or the Parent seeking to restrain or prohibit or to obtain
substantial damages with respect to the consummation of the transactions
contemplated hereby, and there shall not be in effect any order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated
hereby;
(h) the
Management Agreement shall have been executed by Seller.
6.2 Conditions
Precedent to Obligations of the Seller.
The
obligations of the Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date,
of
each of the following conditions (any or all of which may be waived by the
Seller in whole or in part to the extent permitted by applicable
law):
(a) all
representations and warranties of the Parent and Acquisition Sub contained
herein shall be true and correct as of the date hereof;
26
(b) all
representations and warranties of the Parent and Acquisition Sub contained
herein qualified as to materiality shall be true and correct, and all
representations and warranties of the Parent and Acquisition Sub contained
herein not qualified as to materiality shall be true and correct in all material
respects, at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that
date;
(c) the
Parent and Acquisition Sub shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Parent and Acquisition Sub on or prior to the
Closing Date, including, without limitation, those set forth on Schedule 6.2
attached hereto
(d) the
Seller shall have been furnished with certificates (dated the Closing Date
and
in form and substance reasonably satisfactory to the Seller) executed by the
Chief Executive Officer and Chief Financial Officer of the Parent and the
Acquisition Sub certifying as to the fulfillment of the conditions specified
in
Sections 6.2(a), 6.2(b) and 6.2(c), and resolutions of the Board of Directors
of
the Parent and Acquisition Sub authorizing the acquisition of the Seller;
and
(e) there
shall not be in effect any order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby.
ARTICLE
VII
DOCUMENTS
TO BE DELIVERED
7.1 Documents
to be Delivered by the Seller.
At
the
Closing, the Seller shall deliver, or cause to be delivered, to the Parent
and
Acquisition Sub the following:
(a) copies
of
all consents and waivers referred to in Section 6.1(e) hereof;
(b) Management
Agreement, substantially in the form of Exhibit B hereto, duly executed by
the
Seller; and
(c) such
other documents as the Parent and Acquisition Sub shall reasonably
request.
7.2 Documents
to be Delivered by the Parent and Acquisition Sub.
At
the
Closing, the Parent and/or Acquisition Sub shall deliver to the Seller the
following
(a) evidence
of the wire transfer referred to in Section 1.4(a) hereof; and
27
(b) such
other documents as the Seller shall reasonably request.
ARTICLE
VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Subject
to Section 8.2 hereof, the Seller hereby agrees to indemnify and hold the
Parent, Acquisition Sub and their respective directors, officers, employees,
Affiliates, agents, successors and assigns (collectively, the “Parent
Indemnified Parties”) harmless from and against:
(i) any
and
all liabilities of the Seller of every kind, nature and description, absolute
or
contingent, existing as against the Seller prior to and including the Closing
Date or thereafter coming into being or arising by reason of any state of facts
existing, or any transaction entered into, on or prior to the Closing Date,
except to the extent that the same have been fully provided for (and accrued
and
applied as a liability) in the Closing Date Balance Sheet or were incurred
in
the ordinary course of business between the Balance Sheet Date and the Closing
Date;
(ii) subject
to Section 9.2, any and all losses, liabilities, obligations, damages, costs
and
expenses based upon, attributable to or resulting from the failure of any
representation or warranty of the Seller set forth in Section 3 hereof, or
any
representation or warranty contained in any certificate delivered by or on
behalf of the Seller pursuant to Article VI of this Agreement, to be true and
correct in all respects as of the date made;
(iii) any
and
all losses, liabilities, obligations, damages, costs and expenses based upon,
attributable to or resulting from the breach of any covenant or other agreement
on the part of the Seller under this Agreement;
(iv) any
and
all losses (including any loss of use of Seller Property or any of the tangible
personal property of the Seller, liabilities, obligations, claims, damages,
costs and expenses arising from:
(A)
any
failure of any of the representations and warranties contained in Section
3.20 of
this
Agreement, or any representation or warranty with respect to environmental
matters contained in any certificate delivered by or on behalf of the Seller
pursuant to this Agreement, to have been true and correct in all respects as
of
the date made;
(B)
any
Release in, on, at, or from the Seller Properties which occurred, or resulted
from operations occurring, as of or prior to the Closing;
28
(C)
any
tort liability to third parties as a result of any Releases or from exposure
to
Hazardous Materials arising from any Releases as of or prior to the
Closing;
(D)
notification or designation under any Environmental Law as a potentially
responsible party for onsite or offsite disposal of Hazardous Materials, which
disposal occurred as of or prior to the Closing, or the listing of any Purchased
Asset on the CERCLA National Priorities List or any similar list under any
Environmental Law as a result of onsite disposal of Hazardous Materials as
of or
prior to the Closing; and
(E)
any
fines or penalties with respect to any violation of Environmental Law occurring
as of or prior to the Closing; and
(v) any
and
all notices, actions, suits, proceedings, claims, demands, assessments,
judgments, costs, penalties and expenses, including attorneys’ and other
professionals’ fees and disbursements (collectively, “Expenses”) incident to any
and all losses, liabilities, obligations, damages, costs and expenses with
respect to which indemnification is provided hereunder (collectively,
“Losses”).
(b) Subject
to Section 8.2, Parent and Acquisition Sub hereby jointly and severally agree
to
indemnify and hold the Seller and its Affiliates, agents, successors and assigns
(collectively, the “Seller Indemnified Parties”) harmless from and
against:
(i) subject
to Section 9.2, any and all Losses based upon, attributable to or resulting
from
the failure of any representation or warranty of the Parent sand Acquisition
Sub
set forth in Section 4 hereof, or any representation or warranty contained in
any certificate delivered by or on behalf of the Parent pursuant to Article
VI
of this Agreement, to be true and correct as of the date made;
(ii) any
and
all Losses based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Parent and Acquisition Sub under
this Agreement;
(iii) any
and
all Expenses incident to the foregoing; and
(iv) any
and
all liabilities of the Parent and Acquisition Sub of every kind, nature and
description, absolute or contingent, existing as against the Parent and
Acquisition Sub subsequent to the Closing Date coming into being or arising
by
reason of any state of facts existing, or any transaction entered into,
subsequent to the Closing Date, except to the extent that the same has occurred
due to any actions of the Seller prior to the Closing Date.
8.2 Limitations
on Indemnification.
(a) An
indemnifying party shall not have any liability under Section 8.1(a)(ii) or
Section 8.1(b)(i) hereof unless the aggregate amount of Losses and Expenses
to
the indemnified parties finally determined to arise thereunder based upon,
attributable to or resulting from the failure of any representation or warranty
to be true and correct, other than the representations and warranties set forth
in Sections 3.7, 3.11, 3.16, 3.20, 3.22 and 4.5 hereof, exceeds $10,000 (the
“Basket”) and, in such event, the indemnifying party shall be required to pay
the entire amount of such Losses and Expenses in excess of $10,000 (the
“Deductible”).
29
(b) Nothwithstanding
anything herein to the contrary, an indemnifying party shall have no liability
under Section 8.1(a)(i), (ii), (iv) or (v) or 8.1(b)(i) or (iii), other than
claims made on or prior to the date eighteen (18) months from the Closing
Date.
(c) Nothwithstanding
anything herein to the contrary, except with respect to third party claims
concerning any product sold by the Seller prior to the Closing Date which
alleges the occurrence of any loss or injury resulting from either an alleged
defect in design, manufacture or materials of any product, an alleged failure
to
warn as to the condition or use of any product, or an alleged breach of implied
warranties or representations made with respect to any product, Seller’s
aggregate liability under this Article VIII shall not exceed the Purchase
Price.
8.3 Indemnification
Procedures.
(a) In
the
event that any Legal Proceedings shall be instituted or that any claim or demand
(“Claim”) shall be asserted by any Person in respect of which payment may be
sought under Section 8.1 hereof (regardless of the Basket or the Deductible
referred to above), the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has knowledge which
is
covered by this indemnity to be forwarded to the indemnifying party. The
indemnifying party shall have the right, at its sole option and expense, to
be
represented by counsel of its choice, which must be reasonably satisfactory
to
the indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within five (5) days (or sooner, if the nature of the Claim
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder,
fails to notify the indemnified party of its election as herein provided or
contests its obligation to indemnify the indemnified party for such Losses
under
this Agreement, the indemnified party may defend against, negotiate, settle
or
otherwise deal with such Claim. If the indemnified party defends any Claim,
then
the indemnifying party shall reimburse the indemnified party for the Expenses
of
defending such Claim upon submission of periodic bills. If the indemnifying
party shall assume the defense of any Claim, the indemnified party may
participate, at his or its own expense, in the defense of such Claim; provided,
however, that such indemnified party shall be entitled to participate in any
such defense with separate counsel at the expense of the indemnifying party
if,
(i) so requested by the indemnifying party to participate or (ii) in the
reasonable opinion of counsel to the indemnifying party, a conflict or potential
conflict exists between the indemnified party and the indemnifying party that
would make such separate representation advisable; and provided, further, that
the indemnifying party shall not be required to pay for more than one such
counsel for all indemnified parties in connection with any Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim. Any settlement of any Claim by
the
indemnifying party shall provide for a full release of Claims against the
indemnified party and any settlement of any Claim by the indemnified party
is
subject to the reasonable consent of the indemnified party.
30
(b) After
any
final judgment or award shall have been rendered by a court, arbitration board
or administrative agency of competent jurisdiction and the expiration of the
time in which to appeal therefrom, or a settlement shall have been consummated,
or the indemnified party and the indemnifying party shall have arrived at a
mutually binding agreement with respect to a Claim hereunder, the indemnified
party shall forward to the indemnifying party notice of any sums due and owing
by the indemnifying party pursuant to this Agreement with respect to such matter
and the indemnifying party shall be required to pay all of the sums so due
and
owing to the indemnified party by wire transfer of immediately available funds
within 10 business days after the date of such notice.
(c) The
failure of the indemnified party to give reasonably prompt notice of any Claim
shall not release, waive or otherwise affect the indemnifying party’s
obligations with respect thereto except to the extent that the indemnifying
party can demonstrate actual loss and prejudice as a result of such
failure.
8.4 Exclusive
Remedy.
The
parties agree that the indemnification provisions of this Article VIII shall
be
the sole and exclusive remedy of each party to this Agreement with respect
to
any claim arising out of the transactions contemplated by this Agreement.
ARTICLE
IX
MISCELLANEOUS
9.1 Payment
of Sales, Use or Similar Taxes.
All
sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne by the
Seller.
9.2 Survival
of Representations and Warranties.
The
parties hereto hereby agree that the representations and warranties contained
in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto; provided, however, that any claims or actions with respect thereto
shall
terminate unless within eighteen (18) months after the Closing Date written
notice of such claims is given to the Seller or such actions are
commenced.
9.3 Expenses.
Except
as
otherwise provided in this Agreement, the Seller, the Parent and Acquisition
Sub
shall each bear its own expenses incurred in connection with the negotiation
and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby.
31
9.4 Specific
Performance.
The
Seller acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to the Parent and Acquisition Sub and that the Parent and
Acquisition Sub will not have an adequate remedy at law. Therefore, the
obligations of the Seller under this Agreement, including, without limitation,
the Seller’s obligation to sell the Assets to the Parent and Acquisition Sub,
shall be enforceable by a decree of specific performance issued by any court
of
competent jurisdiction, and appropriate injunctive relief may be applied for
and
granted in connection therewith. Such remedies shall, however, be cumulative
and
not exclusive and shall be in addition to any other remedies which any party
may
have under this Agreement or otherwise.
9.5 Further
Assurances.
The
Seller, the Parent and Acquisition Sub each agrees to execute and deliver such
other documents or agreements and to take such other action as may be reasonably
necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.
9.6 Submission
to Jurisdiction; Consent to Service of Process.
(a) The
parties hereto hereby irrevocably submit to the exclusive jurisdiction of any
federal or state court located within the State of Nevada over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims
in
respect of such dispute or any suit, action proceeding related thereto may
be
heard and determined in such courts. The parties hereby irrevocably waive,
to
the fullest extent permitted by applicable Law, any objection which they may
now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each
of
the parties hereto hereby consents to process being served by any party to
this
Agreement in any suit, action or proceeding by the mailing of a copy thereof
in
accordance with the provisions of Section 9.8.
(c) Entire
Agreement; Amendments and Waivers. This Agreement (including the schedules
and
exhibits hereto) represents the entire understanding and agreement between
the
parties hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed
to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver
by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or
as a
waiver of any other or subsequent breach. No failure on the part of any party
to
exercise, and no delay in exercising, any right, power or remedy hereunder
shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided
by
law.
32
(d) Governing
Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada.
9.7 Table
of Contents and Headings.
The
table
of contents and section headings of this Agreement are for reference purposes
only and are to be given no effect in the construction or interpretation of
this
Agreement.
9.8 Notices.
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given to
the
other party pursuant to this provision):
If
to
Parent or Acquisition Sub:
Renewal
Fuels, Inc.
|
|
0000
Xxxxx Xxxxxxx Xxxxxx
|
|
Xxxxxxxxx,
Xxxxxxxxx 00000
|
|
Attention:
President and Chief Executive Officer
|
|
Telephone:
(000) 000-0000
|
|
Facsimile:
(000) 000-0000
|
|
With
copy to:
|
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
|
0000
Xxxxxx xx xxx Xxxxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Attention:
Xxxxxx X. Xxxx, Esq.
|
|
Telephone:
(000) 000-0000
|
|
Facsimile:
(000) 000-0000
|
|
If
to Seller:
|
Biodiesel
Solutions, Inc.
|
0000
Xxxx Xxxxxx, Xxxxx #000
|
|
Xxxxxx,
Xxxxxx 00000
|
|
Attention:
President
|
|
Telephone:
(000) 000-0000
|
|
Facsimile:
(000) 000-0000
|
33
With
copy to:
|
Xxxx
Xxxx
|
0000
Xxxxxxx Xxxx, Xxxxxx Xxxxx
|
|
|
Xxxx,
Xxxxxx 00000
|
Attention:
Xxxxx X. Xxxxxx, Esq.
|
|
Telephone:
(000) 000-0000
|
|
Facsimile:
(000) 000-0000
|
9.9 Severability.
If
any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
9.10 Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
person or entity not a party to this Agreement except as provided below. No
assignment of this Agreement or of any rights or obligations hereunder may
be
made by either the Seller or the Parent (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void; provided, however,
that
the Parent may assign this Agreement and any or all rights or obligations
hereunder (including, without limitation, the Parent’s rights to purchase the
Assets and the Parent’s rights to seek indemnification hereunder) to any
Affiliate of the Parent. Upon any such permitted assignment, the references
in
this Agreement to the Parent shall also apply to any such assignee unless the
context otherwise requires; provided, further, however notwithstanding an
assignment of the assignment of any rights hereunder, the Parent shall continue
to be liable for all obligations to the Seller hereunder.
[REMAINDER
OF PAGE INTENTIONALL LEFT BLANK]
34
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.
BIODIESEL
SOLUTIONS, INC.
|
||
|
|
|
By: | /s/ XXXXXX X. XXXXXXXXX | |
Name: Xxxxxx X. Xxxxxxxxx |
||
Title: CEO |
RENEWAL FUELS, INC. | ||
|
|
|
By: | /s/ XXXX XXXX | |
Name: Xxxx Xxxx |
||
Title: President |
XXXXXXXX
GROUP, LLC
|
||
|
|
|
By: | /s/ XXXXX XXXXXXXX | |
Name: Xxxxx Xxxxxxxx |
||
Title:
Managing Member
|
35
Schedule
1.1 - List of Assets
What
is
included in the Business (all as of the closing date of sale):
·
|
All
FuelMeister name brands, trademarks, copyrights and all other related
rights.
|
·
|
Manufacturing
and marketing ownership of the following
products:
|
·
|
FuelMeister
II
|
·
|
FuelMeister
II eXpansion Tank
|
·
|
FuelMeister
II Dual
|
·
|
FuelMeister
Upgrade Kit
|
·
|
Oil
Pre-heater Kit
|
·
|
Oil
Transfer Kit
|
·
|
Fuel
Station Kit
|
·
|
FuelMeister
II Dryer Lit
|
·
|
Field
Test Kit
|
·
|
All
spare parts associated with the above
products.
|
·
|
All
copyrighted FuelMeister documents, literature, videos,
photos
|
·
|
Current
Biodiesel Solutions Website source files & CART 32 e-commerce module
interface with Biodiesel Solutions names and logos. Buyer is
responsible for “name change” at his cost.
|
·
|
Tooling,
fixtures, procedures, documents related directly to FuelMeister
production, including shop furniture at book value. Shop tooling
and
furniture is estimated at $9,145, and includes the following (quantity,
unit cost):
|
·
|
Pallet
Xxxx (1 @ $499)
|
·
|
Hand
Truck (1 @ $89)
|
·
|
Band
Strap Machine w/crimper (1@ $221)
|
·
|
Fixed
Stairway (1 @ $1,000)
|
·
|
Mobile
OSHA Step (1 @ $205)
|
·
|
Peanut
Xxxxxx (1 @ $50)
|
·
|
Fold
Up Tables (5 @ $49)
|
·
|
Shelves,
Pizza style, some rolling (12 @
$89)
|
·
|
Work
Tables (white top) (12 @ $236)
|
·
|
Rubber
Maid Carts (2 @ $129)
|
·
|
Drill
Press (1 @ $300)
|
·
|
Hand
Drills (Battery) (5 @ $199)
|
·
|
Table
Vise (4 @ $59)
|
·
|
Hand
Tools for Each Station (various, estimated total value
$800)
|
·
|
Plastic
Chop Saw (1 @ $99)
|
·
|
Pipe
Clamp (1 @ $49)
|
·
|
Cutting
Table and Roll Stand (1 @ $199)
|
·
|
Knowledge
base for customer service and
support
|
·
|
All
engineering and component specification files associated with
FuelMeister.
|
·
|
All
FuelMeister vendor and purchase history
files.
|
·
|
A
copy of all Intuit QuickBooks™ accounting data files since Aug 2004
subject to non-disclosure agreement for BDS financial performance
prior to
the sale.
|
·
|
FuelMeister
Customer files of all house accounts and dealer customers (where
identified), provided in hard
format.
|
·
|
Dealer
network and training information, subject to the understanding that
Dealers are independent companies and that either party may end dealer
agreement at any time.
|
·
|
Unfulfilled
and unpaid order backlog at closing
date.
|
·
|
In
the event the inventory, work in process and materials due on open
purchase orders on the Closing Date, at cost (the “Closing Inventory”),
shall be more than $40,000, then such excess amount shall be added
to the
Purchase Price. In the event the Closing Inventory shall be less
than
$40,000, then such deficiency shall be deducted from the Purchase
Price.
The amount of Closing Inventory shall be mutually agreed upon between
the
Purchaser and the Seller.
|
·
|
Agreement
not to compete with personal-scale products (<200
GPD)
|
·
|
Assignment
of provisional patent for Direct Catalyst Injection (lye lid), with
reciprocal non-exclusive rights to be granted to
BSI
|
·
|
xxx.xxxxxxxxxxx.xxx
and xxx.xxxxxxxxxxxxx.xxx
domain names.
|
2
Schedule
1.2 (a) - Accounts Receivable, Excluded Assets
·
|
Seller
will present an Accounts Receivable as listing from QuickBooks printed
one
day prior to Closing.
|
·
|
Excluded
Assets:
|
·
|
Biodiesel
Solutions company name, logo, marks,
copyrights
|
·
|
Biodiesel
Solutions equity or tangible assets (including Accounts Receivable)
other
than named above
|
·
|
Biodiesel
Solutions intellectual property
|
·
|
Building
Lease
|
·
|
Office
furniture and machines
|
·
|
Computer,
Network Domain, Application Software, Printers,
LAN
|
·
|
Phone
System
|
·
|
Vehicles
and Forklift
|
·
|
Biodiesel
Solutions Domain Name
|
·
|
Customer
Owned FM Inventory (Paid for before closing and held at BDS for drop
shipping at a later date)
|
·
|
Any
inventory required to complete orders that were booked and paid prior
to
closing.
|
·
|
Intuit
QuickBooks Premier 2004 Mfg. and Wholesale Ed. Application Software
or
licenses.
|
·
|
Any
and all assets not specifically defined in Schedule
1.1
|
·
|
Excluded
Contracts:
|
·
|
Green
Fuels Ltd. of the U.K. has a license from Seller to use “FuelMeister by
Green Fuels” name, and has been granted manufacturing license to build
FuelMeister (original version only) and market it in Europe, Africa,
and
the Middle East. There is no requirement for notification or consent
by
Green Fuels Ltd. needed for this
agreement.
|
3
Schedule
1.3 (a) - Assumed Liability to Acquisition Sub
·
|
End
Customer Product Support for products of the Business sold by
Seller.
|
·
|
Balance
of 90 days parts warranty for product sold by
Seller.
|
4
Schedule
1.5 - Purchase Price Allocation
The
following definitions are designations shall apply in this Allocation, without
regard
to
number or gender:
BUSINESS: FuelMeister
Division of Biodiesel Solutions, Inc.
BUYER: Renewal
Fuels, Inc.
SELLER: Biodiesel
Solutions, Inc
The
parties to the sale of the above Business agree that the purchase price shall
be
allocated among the assets purchased as follows:
1)
|
Registered
Vehicles
|
$
0
|
|
2)
|
Other
Tangible Personal Property:
|
||
(a)
Subject
to Sales Tax:
|
$
9,145 (tools)
|
||
(b)
Not Subject to Sales Tax:
|
$
50,150 (website & domain names
|
||
3)
|
Leasehold
Improvements:
|
$
0
|
|
4)
|
Value
of the Premise Lease:
|
$
0
|
|
5)
|
Goodwill:
|
$
365,705
|
|
6)
|
Covenant
Not to Compete:
|
$
20,000
|
|
7)
|
Resale
Inventory:
|
$
40,000
|
|
8)
|
Other:
Provisional Patent & Trademarks
|
$
15,000
|
|
TOTAL
PURCHASE PRICE:
|
$
500,000
|
The
above
allocation has been determined by the parties (not through any recommendation
of
Broker or Escrow Holder) and is effective subject to the disapproval
by
the
appraisers, accountants, or legal advisors of either party if given to Escrow
Holder
within
10 days. Each party agrees to report this sale for tax and other purposes in
accordance with the above and holds the other harmless from any liability or
expense resulting from a failure to do so. The down payment and any note
payments for the Business shall be apportioned among the various assets on
the
basis of the above allocation.
5
Schedule
3.4 (a) - Conflicts, Consents of Third Parties
·
|
Green
Fuels Ltd. has a license from Seller to use “FuelMeister by Green Fuels”
name, and has been granted manufacturing license to build FuelMeister
(original version only) and market it in Europe, Africa, and the
Middle
East. There is no requirement for notification or consent by Green
Fuels
Ltd. needed for this agreement.
|
6
Schedule
3.6 - Unaudited Balance Sheets and Incomes Statements and
Notes:
·
|
Adobe
Acrobat files of the 2005 and 2006 Balance Sheets and Income Statements
are provided for closing. Please Print and include
here.
|
Note:
The
$75,000 Allowance for Bad Debt and $125,000 Reserve for Return on the 2006
Balance Sheet pertain to BiodieselMaster business and have no direct effect
on
the Business.
Schedule
3.8 - Absence of Certain Developments
·
|
Seller
has overdue accounts payable with some vendors. Seller as part of
this
agreement has agreed to pay off all vendors of the Business within
two
days of closing with proceeds from the
sale.
|
Schedule
3.9 (a) - Taxes
·
|
2006
Tax Returns (not due yet) have not been
filed.
|
Schedule
3.10 - Real Property
·
|
None.
|
Schedule
3.11 - Schedule of Tangible Personal Property
·
|
None.
|
Schedule
3.12 - Intangible Property
·
|
Refer
to separate Trademark and Patent Assignment
Agreements.
|
·
|
Green
Fuels Ltd. has a license from Seller to use “FuelMeister by Green Fuels”
name, and has been granted manufacturing license to build FuelMeister
(original version only) and market it in Europe, Africa, and the
Middle
East. There is no requirement for notification or consent by Green
Fuels
Ltd. needed for this agreement.
|
Schedule
3.13 - Material Contracts
·
|
None.
|
Schedule
3.14 - Employee Benefits
·
|
Health
Insurance
|
·
|
Company
pays 100% of employee premium, OR
|
·
|
Company
pays 80% of employee & Spouse premium,
OR
|
·
|
Company
pays 80% of employee & Children premium,
OR
|
·
|
Company
pays 50% of employee’s Family
premium.
|
7
·
|
Sick
and vacation pay - 10 day paid per
year
|
·
|
Holidays
- 10 major holidays paid per year
|
·
|
GP
Bonus: Part of the Salary for Xxxx Xxxxxxxx is made up of 5% of the
monthly GP. For most of 2005 and all of 2006 this bonus has not been
paid
to Xxxx and is accrued on the Balance Sheet as part of the Accounts
Receivable.
|
Schedule
3.15 - Labor
·
|
None.
|
Schedule
3.16 - Litigation
·
|
None.
|
Schedule
3.18 - Environmental Matters
·
|
None.
|
Schedule
3.19 - Insurance: List of Policies
·
|
Worker’s
Compensation Policy #57WBCPQ5547, Term 8/10/06 to 8/10/07, Twin City
Fire
Insurance Company (Hartford)
|
·
|
General
Liability Policy VCGP013288, Term 9/24/06 to 9/24/07, Gemini Insurance
Company, Limits $1M each occurrence, $2M
Aggregate
|
·
|
Umbrella
Policy EBU0839082, Term 11/01/06 to 9/24/07, National Union Fire
Insurance
Company of Pittsburgh, Limits $5M Each Occurrence, $5M
Aggregate
|
·
|
Health
Insurance Policy 920YK200, Effective date 12/1/2006, SignatureOptions
(PPO) Plan N14 and Outpatient Prescription
Drugs
|
Schedule
3.20 - Reserves for Bad Inventory
·
|
None
|
Schedule
3.21 Customers
and Supplier’s
|
FM
Customers 2005
|
Jan
- Dec 05
|
Status
|
||
Green
Fuels, Ltd.
|
139,709.80
|
Has
manufacturing license for original FM in Europe, Africa, and Middle
East.
|
|||
Azure
Biodiesel
|
103,704.89
|
Current
Dealer
|
|||
Homemade
Biodiesel
|
101,650.87
|
Current
Dealer
|
|||
Cascade
Biodiesel
|
51,193.56
|
Current
Dealer
|
|||
New
England Biodiesel
|
23,206.25
|
Current
Dealer
|
|||
Xxxx
Xxxxxx
|
23,030.12
|
End
Customer
|
|||
Blaze
Petroleum
|
20,857.00
|
Current
Dealer
|
|||
San
Xxx LLC
|
20,238.75
|
Former
Dealer
|
|||
Trimline
Design Centre Inc
|
18,852.79
|
Current
Dealer
|
|||
Xxxxxxxxxx
Greenhouse
|
18,153.75
|
Former
Dealer
|
|||
Renewable
Energy
|
13,440.75
|
Former
Dealer
|
|||
Maris
Krasnikovs
|
12,364.07
|
End
Customer
|
|||
Real
Goods
|
10,364.50
|
Catalog
Dealer
|
|||
Xxxxxxx
Xxxxxxxxx
|
8,590.00
|
End
Customer
|
|||
C
& E Biodiesel
|
8,561.75
|
Current
Dealer
|
|||
Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx
|
7,810.44
|
End
Customer
|
|||
Freedom
Fuel America
|
7,386.52
|
Former
Dealer
|
|||
WRC,
Inc
|
6,983.75
|
Former
Dealer
|
|||
Xxxxxx
Corp
|
6,896.67
|
Current
Dealer
|
|||
Xxxxx
Xxxxx
|
6,698.08
|
End
Customer
|
8
|
FM
Customers 2006
|
Jan
- Dec 06
|
Status
|
||
Azure
Biodiesel
|
175,333.80
|
Current
Dealer
|
|||
New
England Biodiesel
|
149,425.75
|
Current
Dealer
|
|||
Cascade
Biodiesel
|
132,927.57
|
Current
Dealer
|
|||
Tri-State
Alternative Energy
|
36,848.40
|
Current
Dealer
|
|||
Renewable
Energy
|
21,848.75
|
Former
Dealer
|
|||
Provident
Farm Supply
|
15,932.50
|
Current
Dealer
|
|||
Fossiless
Fuels, L.L.P.
|
15,517.65
|
Current
Dealer
|
|||
Trimline
Design Centre Inc
|
15,265.75
|
Current
Dealer
|
|||
C
& E Biodiesel
|
14,083.87
|
Current
Dealer
|
|||
Independent
Power Corp
|
13,009.75
|
Former
Dealer, Dropped Since 12/31/06
|
|||
Valley
View Electric
|
8,860.50
|
Current
Dealer
|
|||
Pen-Ergy
|
8,568.75
|
Current
Dealer
|
|||
California
Biodiesel Solutions
|
7,471.75
|
Current
Dealer
|
|||
JetAxe
Motor Sports
|
7,416.25
|
Current
Dealer
|
|||
Green
Fuels, Ltd.
|
7,400.00
|
Has
manufacturing license for original FM in Europe, Africa, and Middle
East.
|
|||
Sonny's
Solar & Biodiesel
|
7,371.00
|
Current
Dealer
|
|||
CTT
Supply
|
7,106.40
|
Current
Dealer
|
|||
Xxxxxx
Corp
|
6,368.75
|
Current
Dealer
|
|||
Xxxxx
Harmony Gardens
|
5,708.75
|
Former
Dealer
|
|||
Xxxxx
Xxxxxx
|
5,678.50
|
End
User
|
|
FM
Vendors 2005
|
Jan
- Dec 05
|
Status
|
||
Den
Hartog Industries
|
222,625.15
|
||||
Wolverine
Brass, Inc.
|
92,250.38
|
||||
Grainger
Supply
|
64,848.15
|
Some
of this total was for BiodieselMaster
|
|||
Electro-Flex
Heat, Inc.
|
56,445.00
|
||||
Xxxxxxxxxx
Plastics (Sacramento)
|
52,573.75
|
||||
FarmTek
|
39,679.77
|
Not
using for FM2
|
|||
LabPro
|
39,170.10
|
||||
D
& N Precision
|
38,414.10
|
Not
using for FM2
|
|||
Xxxx
Hardware
|
33,588.67
|
||||
Xxxx
Xxxxxx
|
31,284.00
|
Webmaster
|
|||
Custom
Powder Coaters
|
31,146.50
|
||||
Northern
Tool (Great Plains)
|
29,955.68
|
||||
Anachemia
Science
|
27,003.95
|
||||
Acam
|
26,838.50
|
Not
using for FM2
|
|||
Industrial
Wood Products
|
20,973.78
|
Not
using for FM2
|
|||
Harbor
Freight Tools
|
19,758.15
|
||||
Graybar
|
18,708.89
|
Some
of this total was for BiodieselMaster
|
|||
Packaging
Corporation of America
|
11,518.75
|
||||
Xxxxxxxxxx
Plastics (Hayward)
|
11,350.10
|
Replaced
by Xxxxxxxxxx (Sacramento)
|
|||
Uline
Corp.
|
10,783.04
|
9
|
FM
Vendors 2006
|
Jan
- Dec 06
|
Status
|
||
Den
Hartog Industries
|
113,818.26
|
||||
Xxxxxxxxxx
Plastics (Sacramento)
|
91,567.79
|
||||
Wolverine
Brass, Inc.
|
55,532.64
|
||||
Grainger
Supply
|
33,139.83
|
Some
of this total was for BiodieselMaster
|
|||
Northern
Tool (Great Plains)
|
31,018.92
|
||||
Custom
Powder Coaters
|
25,121.25
|
Some
of this total was for BiodieselMaster
|
|||
Electro-Flex
Heat, Inc.
|
23,626.63
|
||||
Xxxxxx
Nevada
|
19,563.65
|
||||
LabPro
|
17,722.23
|
||||
Anachemia
Science
|
17,657.05
|
||||
Xxxxxx
Injector Corp.
|
17,288.13
|
||||
Harbor
Freight Tools
|
16,954.34
|
||||
Graybar
|
15,784.52
|
Some
of this total was for BiodieselMaster
|
|||
American
Weigh Scales
|
14,527.00
|
||||
FarmTek
|
13,128.00
|
||||
Artisan
Controls
|
12,126.57
|
||||
LiquiDynamics
|
12,008.79
|
||||
Xxxx
Hardware
|
10,859.82
|
||||
D
& N Precision
|
9,297.80
|
Not
using for FM2
|
|||
Xxxxxxxx
Engineering
|
8,099.65
|
Note:
Many of the vendors of the Business have overdue A/P balances. These will all
be
paid down to zero within two days of closing.
10
Schedule
4.3 - Conflicts;
Consents of Third Parties
None
Schedule
6.1 - Parent
and Acquisition Sub Conditions to Closing
1.
|
Dealer
Notification Letter (to be agreed on by Parent and Acquisition Sub
and to
be sent immediately after the
Closing)
|
(NOTE:
The following items are to be completed by Seller and billed to Acquisition
Sub
at a rate consistent with terms in the Management Agreement):
2.
|
Product
Re-label
|
a.
|
Product
Manual (Logo, name, address)
|
b.
|
Bumper
Sticker
|
c.
|
Product
Sticker
|
d.
|
DVD
(long-term requires a re-shoot of the
video)
|
e.
|
QC
Check Sheets
|
f.
|
Instruction
Sheets for Accessory Products
|
g.
|
Sales
Literature Re-label
|
3.
|
Infrastructure
|
a.
|
Phone
Line - Answering Service
|
b.
|
Quickbooks
set-up of new company record, new forms, starting balances
|
Schedule
6.2 -Seller Conditions to Closing
1.
|
Obtain
License(s) to operate Business in
Nevada
|
2.
|
Draft
Press Release on Ownership Change (to be agreed on by Seller and
to be
released immediately after the
Closing)
|
3.
|
Obtain
Product Liability Insurance
|
4.
|
Complete
financial audit
|
5.
|
Set
up Banking & Accounting
|
a.
|
Credit
Card Service
|
b.
|
Checking
Account
|
c.
|
Link
E-commerce module to banking
services
|
11