EXHIBIT 2.8
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ASSET PURCHASE AGREEMENT
by and between
FILTER SYSTEMS, INC.,
as Purchaser
and
LA-MAN CORPORATION,
as Seller
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January 16, 2001
TABLE OF CONTENTS
PAGE
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ARTICLE I - SALE AND PURCHASE OF ASSETS...........................................................................1
Section 1.01 Assets to be Acquired.......................................................................1
(a) Equipment...................................................................................1
(b) Inventory...................................................................................2
(c) Supplies....................................................................................2
(d) Computer Products...........................................................................2
(e) Intellectual Property.......................................................................2
(f) Other Promotional Rights....................................................................2
(g) Accounts Receivable.........................................................................2
(h) Customer Lists and Other Intangible Assets..................................................2
(i) Seller's Prepayments........................................................................3
(j) Telephone and Fax Numbers...................................................................3
(k) Permits.....................................................................................3
(l) Books and Records...........................................................................3
(m) Claims Relating to Purchased Assets.........................................................3
(n) General.....................................................................................3
Section 1.02 Assumed Obligations.........................................................................3
(a) Leases......................................................................................3
(b) Other Contracts.............................................................................3
(c) Purchase Obligations........................................................................4
Section 1.03 Excluded Assets.............................................................................4
(a) Books and Records...........................................................................4
(b) Cash, etc...................................................................................4
(c) Claims Against Third Parties................................................................4
(d) Prepaid Insurance Premiums..................................................................4
(e) Rights Hereunder............................................................................4
(f) Prepaid Expenses............................................................................5
(g) Contracts Not Assigned......................................................................5
ARTICLE II - PURCHASE PRICE.......................................................................................5
Section 2.01 Purchase Price and Payment..................................................................5
Section 2.02 Allocation of Purchase Price................................................................5
ARTICLE III - CLOSING; DOCUMENTS OF CONVEYANCE....................................................................5
Section 3.01 Closing.....................................................................................5
Section 3.02 ▇▇▇▇ of Sale; Assumption Agreements.........................................................5
Section 3.03 Other Deliveries at Closing.................................................................5
Section 3.04 Allocation of Closing Costs.................................................................7
Section 3.05 Prorations at Closing.......................................................................7
Section 3.06 Transfer of Possession......................................................................7
Section 3.07 Termination and Related Employee Matters....................................................7
Section 3.08 Utility Services............................................................................7
Section 3.09 Other Actions and Instrument................................................................7
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................8
Section 4.01 Organization, Good Standing and Qualification...............................................8
Section 4.02 Corporate Power and Authority...............................................................8
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Section 4.03 Validity of Contemplated Transactions.......................................................8
Section 4.04 Brokers' or Finders' Fees...................................................................8
Section 4.05 Completeness of Disclosure..................................................................9
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDER..............................................9
Section 5.01 Organization, Good Standing and Qualification...............................................9
Section 5.02 Corporate Power and Authority...............................................................9
Section 5.03 Validity of Contemplated Transactions.......................................................9
Section 5.04 Regulatory Approvals.......................................................................10
Section 5.05 Legal Compliance...........................................................................10
Section 5.06 Title and Condition of the Purchased Assets................................................10
Section 5.07 Employees..................................................................................10
Section 5.08 Litigation.................................................................................10
Section 5.09 Intellectual Property......................................................................11
Section 5.10 Assumed Leases and Contracts...............................................................11
Section 5.11 Certain Tax Matters........................................................................11
Section 5.12 Ad Valorem Tax Matters.....................................................................11
Section 5.13. Employee Benefit Plans....................................................................12
(a) COBRA......................................................................................12
(b) Profit Sharing Plans.......................................................................12
(c) Miscellaneous Benefit Plan Matters.........................................................12
(d) Excess Parachute Payments..................................................................12
Section 5.14 Inventory..................................................................................12
Section 5.15 Employee Compensation......................................................................12
Section 5.16 No Affiliates' Assets, Leases or Contracts.................................................13
Section 5.17 Environmental Matters......................................................................13
Section 5.18 Customers and Sales........................................................................14
Section 5.19 Concerning the Leased Real Estate..........................................................14
Section 5.20 Brokers' or Finders' Fees..................................................................15
Section 5.21 Completeness of Disclosure.................................................................15
ARTICLE VI - INDEMNIFICATION.....................................................................................15
Section 6.01 Indemnification by the Seller..............................................................15
Section 6.02 Indemnification by Purchaser...............................................................16
Section 6.03 Survival of Obligation to Indemnify........................................................16
Section 6.04 Notice and Procedure.......................................................................16
Section 6.05 Limitation on Indemnification Obligations..................................................17
ARTICLE VIII RESTRICTIVE COVENANTS...............................................................................18
Section 7.01 Noncompetition.............................................................................18
Section 7.02 Nonsolicitation............................................................................18
Section 7.03 Reasonably Necessary.......................................................................18
Section 7.04 Reasonable Restrictions....................................................................18
Section 7.05 Continuity of Restrictions.................................................................19
ARTICLE VII - MISCELLANEOUS......................................................................................19
Section 8.01 Expenses...................................................................................19
Section 8.02 Further Assurances.........................................................................19
Section 8.03 Section Headings...........................................................................19
Section 8.04 Entire Agreement...........................................................................19
Section 8.05 Waivers....................................................................................19
Section 8.06 Parties in Interest........................................................................20
Section 8.07 Notices....................................................................................20
Section 8.08 Amendments and Modifications...............................................................21
Section 8.09 Non-Assignability; Binding Effect..........................................................21
Section 8.10 Governing Law..............................................................................21
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Section 8.11 Personal Jurisdiction; Venue...............................................................21
Section 8.12 Waiver of Jury Trial.......................................................................21
Section 8.13 Severability...............................................................................21
Section 8.14 Independent Covenants......................................................................22
Section 8.15 Construction...............................................................................22
Section 8.16 Exhibits and Schedules.....................................................................22
Section 8.17 Counterparts...............................................................................22
Section 8.18 Time of Essence............................................................................22
Section 8.19 Attorneys' Fees............................................................................22
Section 8.20 Arm's Length Negotiations..................................................................23
Section 8.21 Rules of Interpretation....................................................................23
Section 8.22 Certain Defined Terms......................................................................24
Section 8.23 Survival of Agreement......................................................................24
Section 8.24 Recitals...................................................................................24
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is entered into as of
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the opening of business on the 16th day of January, 2001 (the "Effective Time"),
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by and between FILTER SYSTEMS, INC., a Florida corporation ("Purchaser"), and
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LA-MAN CORPORATION, a Nevada corporation ("Seller"). Terms used herein and not
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otherwise defined shall have the meanings set forth in Section 7.13.
R E C I T A L S:
- - - - - - - -
WHEREAS, Seller is a wholly-owned subsidiary of Display Technologies,
Inc., a Nevada corporation (the "Stockholder"); and
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WHEREAS, Seller is engaged in providing filtration and lubrication
products for the pneumatics industry (the "Business"); and
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WHEREAS, Seller desires to sell or cause to be sold to Purchaser, and
Purchaser wishes to purchase from Seller, all of the assets, properties and
business of the Seller relating to the Business, upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the foregoing premises and of the mutual promises, covenants,
representations, warranties, and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement do hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
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Section 1.01 Assets to be Acquired. Subject to the terms and conditions
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set forth herein, on the Closing Date (as set forth in Section 3.01), Seller
shall sell, assign, transfer, convey and deliver to Purchaser, free and clear of
all mortgages, claims, deeds of trust, pledges, liens, conditional sales
agreements, leases, lease-purchase agreements, security interests, restrictions,
options and encumbrances of every kind and nature (hereafter collectively
referred to as "Encumbrances") and Purchaser shall purchase, acquire and accept
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from Seller, all of Seller's right, title and interest in and to the following
assets of Seller which are utilized in the Business, whether real, personal or
mixed, and whether tangible or intangible (hereafter collectively referred to as
the "Purchased Assets"); provided, however, that the definition of Purchased
Assets shall not include any items defined as Excluded Assets in Section 1.03:
(a) Equipment. All equipment, machinery, tools, furniture,
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furnishings, signs, displays and other similar assets, in each case owned by
Seller as of the Effective Time all of which are set forth in SCHEDULE 1.01(A)
attached hereto (the foregoing items to be purchased by Purchaser are hereafter
collectively referred to as the "Equipment");
(b) Inventory. All saleable merchandise, supplies, inventory,
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finished materials, raw materials, work in process, fixtures and equipment and
other products owned by Seller and held for sale to customers as of the
Effective Time (the foregoing items to be purchased by Purchaser are hereinafter
collectively referred to as the "Inventory");
(c) Supplies. All usable supplies owned by Seller as of the
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Effective Time including, without limitation, all petroleum products, tires,
parts, product labels, packaging materials, sacks, bags, containers, shop
supplies, office supplies and cleaning supplies (the foregoing items to be
purchased by Purchaser are hereafter collectively referred to as the
"Supplies");
(d) Computer Products. All licensed and unlicensed computer
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program materials and software, including, but not limited to, the source and
object codes, documentation, development environment, development tools,
enhancements, and all works in progress on such computer program materials and
software comprising, applicable or relating in any manner to the Business
(hereinafter collectively referred to as the "Computer Products"), including,
but not limited to, such Computer Products set forth in SCHEDULE 1.01(D) hereto.
(e) Intellectual Property. All trademarks, patents, service marks,
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copyrights and trade names (including the name of Seller identified in the
preamble hereto or any variation thereof) owned by Seller as of the Effective
Time, including, but not limited to, those set forth in SCHEDULE 1.01(E), and
all goodwill associated therewith, applications therefor or registrations
thereof and rights against any other Person in respect thereof (hereafter
collectively referred to as the "Intellectual Property");
(f) Other Promotional Rights. All marketing or promotional
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designs, brochures, advertisements, concepts, literature, books, media rights
and all other promotional properties (hereafter collectively referred to as the
"Promotional Rights"), in each case exclusively used or useful or developed or
acquired by Seller for use in connection with the ownership and operation of the
Purchased Assets;
(g) Accounts Receivable. All of Seller's accounts receivable,
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including those written off prior to the Effective Time, as of the Effective
Time and the proceeds thereof after the Effective Time resulting from the
operations of Seller (hereinafter referred to as the "Accounts Receivable") all
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of which are set forth in SCHEDULE 1.01(g);
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(h) Customer Lists and Other Intangible Assets. All customer lists
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(the "Customer Lists"), vendor lists, "know-how," proprietary information and
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trade secrets; and, to the extent assignable, all supplier and manufacturers'
warranties (including pending warranty claims) and manuals in Seller's
possession relating to the Purchased Assets in each case owned by Seller as of
the Effective Time;
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(i) Seller's Prepayments. All of Seller's deposits, credits and
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prepayments connected in any fashion to the operation of the Business existing
as of the Effective Time (including, without limitation, prepaid ad valorem
taxes, but excluding prepaid and rebatable insurance premiums) (hereafter
collectively referred to as the "Seller's Prepayments");
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(j) Telephone and Fax Numbers. All telephone and fax numbers
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(including any mobile telephone numbers) and e-mail addresses and/or universal
resource locator on the World Wide Web assigned to the Seller and/or its
employees (other than telephone numbers assigned to employees for personal use)
all of which are specifically described in SCHEDULE 1.01(j);
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(k) Permits. All permits, licenses, approvals or other
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authorizations relating to the operation of the Business ("Permits"), to the
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extent such Permits are transferable and whether or not all action necessary to
effect such transfer has been taken prior to the Closing (as defined in Section
3.01);
(l) Books and Records. Except as expressly set forth in Section
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1.03(a), originals of all papers, documents, computerized databases and Records
of Seller relating to the Purchased Assets and the operation of the Business
including, without limitation, all personnel, labor relations and workers'
compensation records relating to employees hired by Seller, environmental
control records, sales records, marketing records, accounting and financial
records, and maintenance records; and
(m) Claims Relating to Purchased Assets. To the extent assignable,
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all claims, causes of action, rights of recovery and rights of set-off of every
type and kind relating to the Purchased Assets and supplier and manufacturers
warranties issued with respect to the Purchased Assets, and all claims, causes
of action, rights of recovery and rights of set-off of every type and kind
relating to the Assumed Obligations (as defined in Section 1.02); in each case
whether accruing before or after the Closing.
(n) General. All other rights and assets of any kind, tangible or
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intangible, of Seller, whether or not reflected in Seller's financial statements
or on its books and records, including, without limitation, the goodwill of the
business as a going concern.
Section 1.02 Assumed Obligations. Subject to the terms and conditions
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set forth herein, on the Closing Date, Seller shall assign to Purchaser and
Purchaser shall assume, pay and discharge in full when due all of the
liabilities and obligations under the following leases, contracts, purchase
orders and liabilities of Seller (hereafter collectively referred to as the
"Assumed Obligations"):
(a) Leases. The operating leases and capital leases for machinery
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and equipment described in SCHEDULE 1.02(a) (hereafter collectively referred to
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as the "Assumed Leases");
(b) Other Contracts. The contracts described in SCHEDULE 1.02(b)
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(hereafter collectively (hereafter collectively referred to as the "Assumed
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Contracts"); and
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(c) Purchase Obligations. The obligations of Seller to purchase or
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pay for services, materials or Supplies used in Seller's business operations
described in SCHEDULE 1.02(c).
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Except as expressly set forth in this Section 1.02, Purchaser shall
have no responsibility for any of Seller's obligations (including contracts,
leases, purchase orders and liabilities of any type, kind or nature) and all
such obligations shall remain with Seller and are herein referred to as the
"Excluded Obligations." Without limiting the generality of the foregoing, it is
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hereby agreed that Purchaser is not assuming any liability and shall have no
obligation with respect to any liability or obligation of Seller: (i) in respect
of any current and deferred federal and state income tax and franchise
liabilities, any inter-company accounts or notes payable by or to any Affiliate
of Seller; (ii) in respect of income, franchise, personal property, employment
or sales, use or any other taxes or similar imposts (other than any of the
foregoing attributable to the Business to the extent that the same are accrued
on the Closing Date); (iii) in respect of any past or current employees of
Seller as of the Effective Time whether or not such persons become employees of
Purchaser; or (iv) in respect of any obligation of Seller to pay any amounts
arising out of any action, suit or proceeding based upon an event occurring or a
claim arising (x) prior to the Effective Time or (y) after the Effective Time in
the case of claims relating or attributable to acts performed or omitted by
Seller prior to the Effective Time.
Section 1.03 Excluded Assets. The "Purchased Assets" shall not include
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any of Seller's rights, privileges, title or interest in any of the following
assets (hereafter referred to as the "Excluded Assets"):
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(a) Books and Records. Copies of Seller's books and Records
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referred to in Section 1.01(l) hereof and originals of all of Seller's minute
books, stock books, tax returns and books and records directly relating to the
Excluded Assets and the Excluded Obligations, and originals of all personnel,
labor relations and workers' compensation records relating to Seller's employees
who are not hired by Purchaser;
(b) Cash, etc. Cash, currency, coins or balances in checking or
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other demand deposits, securities or money market accounts or other liquid
investments or cash equivalents, and deposits with others such as utility
deposits in each case owned by Seller as of the Effective Time;
(c) Claims Against Third Parties. Any claim of Seller against any
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Person unless such claim is a Purchased Asset under Section 1.01 hereof;
(d) Prepaid Insurance Premiums. Any claim for refund of prepaid
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insurance premiums, it being understood and agreed that Seller may cancel all
policies insuring the Purchased Assets as of the Closing Date upon the first to
occur of: (i) five (5) business days after the Closing; or (ii) notification
that Purchaser's insurance has become effective;
(e) Rights Hereunder. All rights and claims of Seller under this
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Agreement;
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(f) Prepaid Expenses. Prepaid expenses not assignable to
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Purchaser, including, without limitation, prepaid insurance premiums;
(g) Contracts Not Assigned. All rights of Seller in, to and under
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those leases, purchase orders, contracts and other agreements not being assigned
to Purchaser pursuant to Section 1.02; and
(h) Accounts Receivable. The account receivable from Martech
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Services Company in the amount of $47,129.08.
ARTICLE II
PURCHASE PRICE
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Section 2.01 Purchase Price and Payment. The net purchase price for the
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Purchased Assets shall be One Million Three Hundred Thousand Dollars
($1,300,000) (the "Purchase Price"), which shall be paid at Closing by wire
transfer into a bank account designated by Seller.
Section 2.02 Allocation of Purchase Price. Purchaser shall, with
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respect to the transactions provided for in this Agreement, prepare and file
Internal Revenue Service Form 8594 and any required exhibits thereto (the
"Assets Statement"). The Assets Statement shall allocate the purchase price paid
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to Seller for the Purchased Assets, and in the amounts, as mutually agreed to by
the parties no later than thirty (30) days after the Closing Date.
ARTICLE III
CLOSING; DOCUMENTS OF CONVEYANCE
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Section 3.01 Closing. The closing of the purchase and sale of the
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Purchased Assets shall take place simultaneously with the execution of this
Agreement at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. Throughout this Agreement, such event is
referred to as the "Closing" and such date is referred to as the "Closing Date."
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Section 3.02 ▇▇▇▇ of Sale; Assumption Agreements. The parties hereby
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confirm that this Agreement shall be sufficient as a ▇▇▇▇ of sale in respect of
the Purchased Assets and as an assignment and assumption agreement in respect of
the Assumed Liabilities; provided, however, that if, as and when required, or
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reasonably requested by any party, the parties shall execute and deliver such
supplemental agreements, instruments, certificates of title and other documents
as may be necessary or appropriate in order to give effect to the transfer of
the Purchased Assets to Purchaser and the assignment to and assumption by
Purchaser of the Assumed Liabilities.
Section 3.03 Other Deliveries at Closing. At the Closing, Seller shall
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deliver, or cause to be delivered, the following:
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(a) Lease Agreement. An executed real property lease and
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memorandum of lease for the property located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Leased Real Estate"), substantially in the form of EXHIBIT
3.03(a) attached hereto; -------
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(b) Legal Opinion. An opinion of counsel to Seller and Stockholder
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addressed to Purchaser and in form and content reasonably acceptable to
Purchaser and its counsel;
(c) Good Standing. A certificate of good standing for Seller from
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the Secretary of State of the State of Nevada, dated no earlier than fifteen
(15) days prior to the Closing Date, together with the consent of the Board of
Directors of Seller approving this Agreement and the related transactions;
(d) Sales Tax Certificate. A sales tax status certificate issued
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by the appropriate regulatory authorities of the state of Florida, dated not
less than five (5) days prior to the Closing Date, indicating that all sales
taxes required to be paid by Seller as of such date have been paid;
(e) Title Certificates. All title certificates, registrations and
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other documentation necessary to transfer title to any certificated assets
included in the Purchased Assets, duly completed in favor of Purchaser and duly
executed by Seller;
(f) Consents and Approvals. All required consents or approvals
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from any third parties, including, without limitation, Renaissance Capital
Growth & Income Fund III, Inc., Renaissance US Growth & Income Trust PLC and the
third parties to all of the Assumed Leases and the Assumed Contracts, any
governmental agency or body or any other person, firm or corporation which owns
or has authority to grant any franchise, license, permit, easement, right or
other authorization necessary for the business or operations of the Seller or
the Purchased Assets which will be transferred by Seller to Purchaser pursuant
to this Agreement, and any governmental or regulatory agency or body having
jurisdiction over Purchaser or Seller, to the extent that their consent or
approval is required under the pertinent debt, lease, contract, commitment or
agreement or other document or instrument or under applicable laws, rules or
regulations for the consummation of the transactions contemplated hereby and for
the continued operation by Purchaser of Seller's business in the same manner
which Seller operated its business prior to the Closing, in the manner herein
provided;
(g) UCC Reports. UCC search reports dated as of a date not more
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than five (5) days before the Closing Date issued by the appropriate
governmental bodies indicating that there are no filings under the Uniform
Commercial Code on file with the such governmental bodies which indicate any
Encumbrances on the Purchased Assets, other than those Encumbrances which will
be released at Closing. Seller shall provide Purchaser with payoff letters from
the "secured party" indicating a commitment to execute and file UCC-3's upon
payment of the Purchase Price to Seller;
(h) Termination of Encumbrances. Executed agreements by each of
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SouthTrust Bank, Renaissance Capital Growth & Income Fund III, Inc. and
6
Renaissance US Growth & Income Trust PLC terminating their respective
Encumbrances on the Purchased Assets; and
(i) Patent and Trademark Assignments. Executed assignments of all
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the Intellectual Property set forth in SCHEDULE 1.01(e).
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Section 3.04 Allocation of Closing Costs. At or promptly after the
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Closing, Seller shall pay all sales taxes and transfer fees relating to the
Purchased Assets. Except as otherwise provided in this Agreement, each party
shall be responsible for and bear all of its own transactional costs and charges
relating to the purchase and sale contemplated herein.
Section 3.05 Prorations at Closing. All ad valorem taxes, intangible
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personal property taxes, general and special real property taxes, and special
district levies and assessments, if any relating to the Purchased Assets for the
2001 calendar year shall be allocated as of the Closing Date based on Seller's
2000 tax bills. All other operating expenses and liabilities relating to the
ownership and operation of the Purchased Assets attributable to the period
ending at the Effective Time (other than expenses included in the Assumed
Obligations) shall be paid by Seller prior to the Closing. All operating and
other expenses relating to the ownership and operation of the Purchased Assets
attributable to periods commencing on and after the Effective Time and all of
the Assumed Obligations shall be the sole responsibility of Purchaser.
Section 3.06 Transfer of Possession. Simultaneously with the Closing
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Date, Seller shall give Purchaser full possession and enjoyment of the Purchased
Assets.
Section 3.07 Termination and Related Employee Matters. Simultaneously
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with the Closing Date, Seller shall terminate all of its employees engaged in
the Business and Purchaser shall employ such of the terminated employees as it
determines in its sole discretion. Notwithstanding anything to the contrary in
this Agreement, nothing herein constitutes a promise or agreement by Purchaser
to provide employment for any employees of Seller, specifically administrative
personnel, for any period of time after the Effective Time.
Section 3.08 Utility Services. On the Closing Date or as soon
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thereafter as practicable, Seller and Purchaser will cooperate with each other
to arrange to obtain final readings with respect to all electricity, water,
telephone, and other utilities, and to have such services transferred to
Purchaser's name immediately thereafter. All unpaid utility charges accrued
through the Effective Time shall be paid by Seller.
Section 3.09 Other Actions and Instruments. Purchaser and Seller shall
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take such other actions and shall execute and deliver such other instruments,
documents and certificates at the Closing as are required by the terms of this
Agreement or as may be reasonably requested by Purchaser or Seller in connection
with the Closing of the transactions contemplated by this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser makes the following representations and warranties to Seller,
each of which shall be deemed material (and Seller, in executing, delivering and
consummating this Agreement, has relied and will rely upon the correctness and
completeness of each of such representations and warranties):
Section 4.01 Organization, Good Standing and Qualification. Purchaser
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is a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, with all necessary power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. Purchaser is not required to be qualified as a foreign corporation under
the laws of any jurisdiction.
Section 4.02 Corporate Power and Authority. Purchaser has the requisite
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corporate power and authority to execute, deliver and perform its obligations
under and pursuant to this Agreement, and all documents executed and delivered
by Purchaser in connection herewith, including without limitation, the requisite
corporate power and authority to acquire the Purchased Assets and assume the
Assumed Obligations upon the terms and conditions set forth herein. The
execution and delivery of this Agreement and all documents executed and
delivered by Purchaser in connection herewith and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of Purchaser. This Agreement and all documents
required under the terms of this Agreement to be executed and delivered by
Purchaser in connection herewith will be duly executed and upon the execution
and delivery thereof will be the legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their respective
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
Section 4.03 Validity of Contemplated Transactions. The execution,
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delivery and performance of this Agreement and all documents executed and
delivered in connection herewith, and the consummation of the transactions
contemplated hereby do not and will not: (a) contravene any provision of the
Articles of Incorporation or Bylaws of Purchaser; (b) violate any material
provision of any law, rule, regulation, order, license of any governmental
authority, administrative body or agency applicable to Purchaser; or (c) violate
any judgment, order, writ, prohibition, injunction or decree of any court,
governmental body or arbitrator specifically applicable to Purchaser.
Section 4.04 Brokers' or Finders' Fees. No broker, Person or firm
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acting on behalf of Purchaser or under its authority is or will be entitled to
any commission, broker's or finder's fee or financial advisory fee from
Purchaser in connection with any of the transactions contemplated herein.
Purchaser agrees to indemnify Seller against, and to hold it harmless from, any
claim for brokerage or similar commission or other compensation which may be
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made against Seller by any third party in connection with the transactions
contemplated hereby, which claim is based upon any action by Purchaser.
Section 4.05 Completeness of Disclosure. No representation or warranty
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by Purchaser in this Agreement contains or at the Closing Date will contain any
false or misleading statement of material fact or omits a fact necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDER
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Seller and Stockholder, jointly and severally, make the following
representations and warranties to Purchaser, each of which shall be deemed
material (and Purchaser, in executing, delivering and consummating this
Agreement, has relied and will rely upon the correctness and completeness of
each of such representations and warranties):
Section 5.01 Organization, Good Standing and Qualification. Seller is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada, with full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and to own its assets and conduct its business as owned and conducted on the
date hereof. Seller is qualified to do business as a foreign corporation in each
jurisdiction where the laws of such jurisdiction requires such qualification.
Section 5.02 Corporate Power and Authority. Seller has the requisite
------------------------------
corporate power and authority to execute, deliver and perform its obligations
under and pursuant to this Agreement, and all documents executed and delivered
by Seller in connection herewith, including without limitation, the requisite
corporate power and authority to sell the Purchased Assets and transfer the
Assumed Obligations upon the terms and conditions set forth herein. The
execution and delivery of this Agreement and all documents executed and
delivered by Seller in connection herewith and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement and all
documents required under the terms of this Agreement to be executed and
delivered by Seller in connection herewith will be duly executed and upon the
execution and delivery thereof will be legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Section 5.03 Validity of Contemplated Transactions. The execution,
---------------------------------------
delivery and performance of this Agreement and all documents executed and
delivered in connection herewith, and the consummation of the transactions
contemplated hereby do not and will not: (a) contravene any provision of the
Articles of Incorporation or Bylaws of Seller; (b) violate, be in conflict with,
constitute a default under, result in the termination of, cause the acceleration
of any payments pursuant to, or otherwise impair the good standing, validity and
effectiveness of any agreement, contract, commitment, indenture, lease or
mortgage applicable to Seller; (c) violate any material provision of any law,
9
rule, regulation, order, license of any governmental authority, administrative
body or agency applicable to Seller; or (d) violate any judgment, order, writ,
prohibition, injunction or decree of any court, governmental body or arbitrator
specifically applicable to Seller or the Purchased Assets.
Section 5.04 Regulatory Approvals. All consents, waivers, approvals,
--------------------
authorizations or exemptions from governmental entities and other third parties
and other material requirements prescribed by any law, rule or regulation which
must be obtained or satisfied by Seller in order to permit the consummation of
the transactions contemplated by this Agreement have been obtained or satisfied
or will be obtained or satisfied prior to the Closing.
Section 5.05 Legal Compliance. Seller is in compliance in all material
----------------
respects with all laws, statutes, regulations, rules and ordinances applicable
to the conduct of its business (including, without limitation, all applicable
environmental and hazardous materials laws, statutes, regulations, rules and
ordinances), and has in full force and effect all licenses, permits, approvals
and other authorizations required for the conduct of its business as presently
constituted; and Seller is not in default or violation in respect of or under
any of the foregoing, and Seller is not aware of any past or present condition
or circumstance in Seller's business (including, without limitation, with
respect to any real property now or previously occupied by Seller) which could
give rise to any material liability under any such law, statute, regulation,
rule or ordinance.
Section 5.06 Title and Condition of the Purchased Assets. Except as set
-------------------------------------------
forth in SCHEDULE 5.06, Seller has and owns good and marketable title to all of
--------
the Purchased Assets, in each case free and clear of all Encumbrances. To the
best of Seller's and Stockholder's knowledge, all of the Purchased Assets are in
good operating condition and repair (reasonable wear and tear excepted), are
adequate for their use in the Business as presently conducted, and are
sufficient for the continued conduct of such Business.
Section 5.07 Employees. Seller is not a party to or bound by any
---------
collective bargaining agreement, employment agreement, consulting agreement or
other commitment for the employment or retention of any person, and no union is
now certified or has claimed the right to be certified as a collective
bargaining agent to represent any employees of Seller. Seller has not received
notice of any unfair labor practice charges against Seller or any actual or
alleged violation by Seller of any law, regulation, or order affecting the
collective bargaining rights of employees, equal opportunity in employment, or
employee health, safety, welfare, or wages and hours.
Section 5.08 Litigation. There is neither pending nor, to Seller's or
----------
Stockholder's knowledge, threatened any legal or governmental action, suit,
investigation, proceeding or claim, to which Seller is or may be named as a
party by or before any court, governmental or regulatory authority or by any
third party. Seller is not a party or subject to the provisions of any material
injunction, judgment, decree, or order of any court, regulatory body,
administrative agency or other governmental body.
10
Section 5.09 Intellectual Property. Except as set forth in SCHEDULE
---------------------- --------
5.09, there are no pending or threatened claims of which Seller has been given
----
written notice by any person against Seller's use of any Intellectual Property.
To Seller's and Stockholder's knowledge, Seller has such ownership of or such
rights by license, lease or other agreement to the Intellectual Property as are
necessary to permit it to conduct its operations as currently conducted.
SCHEDULE 1.01(e) sets forth all of the Intellectual Property owned by Seller as
----------------
of the Effective Time.
Section 5.10 Assumed Leases and Contracts. Subject to receipt of all
-----------------------------
necessary third party and lessor consents, at the Closing, Purchaser will
receive Seller's entire right, title and interest in the Assumed Leases and the
Assumed Contracts, free and clear of all Encumbrances and restrictions. Each of
the Assumed Leases and Assumed Contracts is valid, binding, in full force and
effect, and enforceable by or against Seller in accordance with their respective
terms and conditions, and upon assignment and assumption by Purchaser, will be
enforceable by Purchaser in accordance with their respective terms, subject to
bankruptcy, insolvency and laws affecting the rights of creditors generally.
There is no existing material default thereunder or material breach thereof or
condition which, with the passage of time or notice or both, might constitute a
default thereunder. There has been no termination or threatened termination or
notice of default (not heretofore cured) relating to any such lease or contract.
Prior to the Closing, Seller will obtain all necessary consents to the
assignment of the Assumed Leases and Assumed Contracts to Purchaser at the
Closing.
Section 5.11 Certain Tax Matters. Seller has duly filed all federal,
--------------------
state, and local tax returns and reports required to be filed by it and all
taxes for which Seller is or could be liable have either been paid, withheld or
reserved. Seller's income tax returns have not been audited within the past five
(5) years and all such returns have been properly completed and filed on a
timely basis and such returns are true and correct in all material respects. As
of the time of filing, all such returns correctly reflected in all material
respects the facts regarding the income, business, assets, operations,
activities, status or other matters of the Seller or any information required to
be shown thereon. Seller has not: (a) entered into any agreements for the
extension of time or for the assessment of any tax or tax delinquency which
would adversely affect the Purchaser or the Purchased Assets; or (b) received
any outstanding or unresolved notices from the Internal Revenue Service or any
taxing body of any proposed deficiency or assessment. Seller has properly paid
all sales and use taxes due with respect to its business operations and withheld
all amounts, if any, required by law to be withheld for income taxes and
unemployment taxes, including without limitation, social security and
unemployment compensation, relating to its employees, and remitted such withheld
amounts to the appropriate taxing authority.
Section 5.12 Ad Valorem Tax Matters. There are no taxes, fees, or
------------------------
assessments of any kind or nature whatsoever which are presently due or, to the
best of Seller's knowledge, which will or may become due with respect to the
Purchased Assets, except for ad valorem personal property taxes and special
district levies and assessments, if any, for the current calendar year, which
have been prorated and accrued for in accordance with Section 3.05. Any taxes,
fees or assessments of any kind or nature arising out of Seller's business
activities prior to Closing shall be the responsibility of Seller, except to the
extent assumed by Purchaser in the Assumed Obligations.
11
Section 5.13 Employee Benefit Plans. Except as set forth in SCHEDULE
----------------------- --------
5.13, there are no: (a) "employee pension benefit plans" (within the meaning of
----
Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) maintained by Seller; (b) policies or plans, whether written
or not, that provide for vacation benefits, health benefits, severance benefits,
leave rights or other benefits to its employees; and (c) "employee welfare
benefit plans" (within the meaning of Section 3(1) of ERISA) maintained by
Seller or to which Seller makes employer contributions with respect to its
employees.
(a) COBRA. Seller and all Commonly Controlled Entities (as
-----
hereinafter defined) have complied with the continuation coverage requirements
of group health plans provided in Section 4980B of the Internal Revenue Code of
1986, as amended (the "Code"), Sections 601 et. seq. of ERISA, the Family and
Medical Leave Act of 1994, and the regulations promulgated thereunder, and there
are no individual claims by any employee of Seller for any illness or accident
which is expected to exceed $10,000 in health-related costs to such employee or
employer within the twelve (12) month period following the Closing. A "Commonly
Controlled Entity" is any entity, whether or not incorporated, which is deemed
to be under common control (as defined in Section 414 of the Code or 4001(b) of
ERISA) with Seller.
(b) Profit Sharing Plans. All discretionary, employer
------------------------
contributions that have been declared by Seller have been contributed to the
La-Man Corporation Employees' (401(k)) Profit Sharing Plan (the "Plan"), and all
employer matching contributions for employee 401(k) contributions made to the
Plan prior to Closing, have been made and contributed to the Plan or will be
made by the Seller within the time periods required by law.
(c) Miscellaneous Benefit Plan Matters. At no time during the five
----------------------------------
(5) consecutive year period immediately preceding the first day of the year in
which the Closing Date occurs has Seller or any Commonly Controlled Entity
participated in or contributed to any multi-employer plan defined in Section
4001(a)(3) of ERISA, or Section 414(f) of the Code, nor during such period has
Seller or any Commonly Controlled Entity had an obligation to participate in or
contribute to any such multi-employer plan. No agreement subject to Section 4204
of ERISA has been entered into in connection with the transactions contemplated
in this Agreement.
(d) Excess Parachute Payments. No payment is required to be made
--------------------------
to any employee of or associated with Seller as a result of the transactions
contemplated hereby under any contract or otherwise.
Section 5.14 Inventory. To Seller's and Stockholder's knowledge, the
---------
Inventory is and at the Effective Time will be merchantable and in salable
condition in all material respects and no portion of the Inventory is or at the
Effective Time will be obsolete.
Section 5.15 Employee Compensation. SCHEDULE 5.15 attached hereto
---------------------- --------------
contains a true, complete and correct list of the names of all employees of
Seller as of the Closing Date, their dates of hire, positions, base salaries and
commissions or bonus schedules, fringe benefits, accrued vacation time, and
accrued sick leave, a list of all employment contracts with Seller's employees,
12
and all employee manuals which have been distributed to or otherwise apply to
the Seller's employees.
Section 5.16 No Affiliates' Assets, Leases or Contracts. (a) None of
-------------------------------------------
the Purchased Assets are owned by any person other than Seller, and (b) all of
the Assumed Contracts and Assumed Leases are with Persons who are not Affiliates
of Seller and were negotiated at arms' length.
Section 5.17 Environmental Matters. Except in accordance with
-----------------------
applicable laws, Seller has not, during its ownership of the Purchased Assets,
generated, processed, distributed, transported, used, treated, stored, handled,
emitted, discharged, released or disposed (or caused, permitted or suffered any
person or entity to do any of the foregoing or assisted any person or entity in
doing any of the foregoing) of any oil, gasoline, petroleum-related products,
hazardous substances, hazardous waste, or pollutants or contaminants (as defined
by CERCLA), including, without limitation, asbestos or asbestos containing
materials, PCB's or urea formaldehyde, or any other material which may give rise
to Hazardous Materials Liabilities. For purposes of this Section 5.17, the
following terms shall have the following meanings:
(i) The term "Hazardous Materials" shall mean: (a) hazardous
--------------------
materials, contaminants, constituents, medical wastes, hazardous or infectious
wastes and hazardous substances as those terms are defined in any Environmental
Laws, including without limitation the following statutes and their implementing
regulations: the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801
et seq. (the "HMTA"), the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act,
42 U.S.C. Section 9601 et seq. (as so amended, "CERCLA"), the Clean Water Act,
-- ----
33 U.S.C. Section 1251 et seq. (the "CWA"), and the Clean Air Act, 42 U.S.C.
-- ----
Section 7401 et seq. (the "CAA"); (b) petroleum, including crude oil and any
-- ---- ---
fractions thereof; (c) natural gas, synthetic gas and any mixtures thereof; (d)
asbestos and/or asbestos-containing materials; and (e) polychlorinated biphenyl
("PCBs") or materials or fluids containing PCBs;
(ii) The term "Hazardous Materials Liabilities" shall mean any and
-------------------------------
all damages, losses, liabilities, disabilities, fines, penalties, costs or
expenses (including reasonable attorneys' fees) incurred or to be incurred,
whether absolute, fixed or contingent, civil or criminal, and whether arising
under federal law or state law, incurred or to be incurred in connection with
the handling, storage, transportation, discharge or disposal of any Hazardous
Materials; and
(iii) The term "Environmental Laws" shall mean any statute, law,
-------------------
ordinance, code, rule, regulation, policy, guideline, permit, consent, approval,
license, judgment, order, writ, decree or authorization, including the
requirement to register storage tanks, established or enacted for, or relating
to, the protection of the environment or the health and safety of any Person
(including, without limitation, those relating to (a) the HMTA, CERCLA, the CWA,
the CAA or the Resource Conservation and Recovery Act, 42 U.S.C. Section 6903 et
seq.; (b) emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment, including, without limitation, into ambient air,
soil, sediments, land surface or subsurface, buildings or facilities, surface
water, groundwater, publicly-owned treatment works, septic systems or land; or
13
(c) the generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Materials).
Section 5.18 Customers and Sales. SCHEDULE 5.18 attached hereto and
------------------- --------------
incorporated herein by reference, is a true and accurate list of the top twenty
(20) customers of, and suppliers to, Seller and the Business for the fiscal
years ended December 31, 1999 and 1998, and the nine (9) months ended September
30, 2000. The officers and directors of Seller do not possess, directly or
indirectly, any financial interest in, or as a director, officer or employee of,
any Person that is a supplier, customer, lessor, lessee, or competitor of the
Business. No customer or supplier of Seller has advised Seller that it intends
to cease doing business with Seller (or the Purchaser after the Closing).
Section 5.19 Concerning the Leased Real Estate. Seller does not own,
----------------------------------
lease or use any real estate, or have a written or oral commitment to do so in
the future, other than the use and occupancy of the Leased Real Estate. Further
representations and warranties as to the Leased Real Estate are as follows:
(a) The only person in occupancy of the Leased Real Estate is
Seller.
(b) To Seller's and Stockholder's knowledge, the Leased Real
Estate is zoned to permit the Business to be conducted on the Leased Real Estate
as of the date of this Agreement. To Seller's and Stockholder's knowledge, there
are no planned or threatened changes to the current zoning or land use
designations of the Leased Real Estate.
(c) Except as set forth in SCHEDULE 5.19, the Leased Real Estate
--------------
is not subject to any outstanding lease, agreement of sale, option or other
right of any party to acquire any interest therein.
(d) Seller is not conducting the Business on the Leased Real
Estate pursuant to or in accordance with any variance, conditional use or other
special permit issued by any governmental authority.
(e) There is sufficient parking on the Leased Real Estate to
accommodate customers of Seller, as its business is currently conducted.
(f) To Seller's and Stockholder's knowledge, there are no
historical features or artifacts, religious or otherwise, located on the Leased
Real Estate.
(g) To Seller's and Stockholder's knowledge, there is no
underground or buried storage tank or drum located on the Leased Real Estate.
(h) To Seller's and Stockholder's knowledge, Seller has no
Hazardous Materials Liabilities, and neither the Purchased Assets, the
operations of the Business nor the operations of its predecessors in interest on
the Leased Real Estate will carry with them any Hazardous Materials Liabilities
(as defined in Section 5.24): (i) for which the Purchaser could be responsible;
14
or (ii) that would materially and adversely affect the ability of the Purchaser
to use the Leased Real Estate in the manner heretofore used by the Division.
Section 5.20 Brokers' or Finders' Fees. Except as set forth in SCHEDULE
------------------------- --------
5.20, no broker, Person or firm acting on behalf of Seller or under its
----
authority is or will be entitled to any commission, broker's or finder's fee or
financial advisory fee from Seller in connection with any of the transactions
contemplated herein. Seller agrees to indemnify Purchaser against, and to hold
it harmless from, any claim for brokerage or similar commission or other
compensation which may be made against Purchaser by any third party in
connection with the transactions contemplated hereby, which claim is based upon
any action by Seller.
Section 5.21 Completeness of Disclosure. No schedule attached to this
--------------------------
Agreement or representation or warranty by Seller in this Agreement contains or
at the Closing Date will contain any false or misleading statement of material
fact or omits a fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
ARTICLE VI
INDEMNIFICATION
---------------
Section 6.01 Indemnification by Seller. Seller and Stockholder, jointly
-------------------------
and severally, regardless of any prior knowledge, inspection or investigation on
the part of Purchaser, hereby agrees to indemnify and hold harmless Purchaser
against and in respect of:
(a) Any loss, claim, liability, obligation, or damage suffered or
incurred by Purchaser resulting from or arising in connection with any
misrepresentation, breach of warranty, or non-fulfillment of any covenant or
agreement on the part of Seller contained in this Agreement;
(b) Any liability or claim which may be asserted against Purchaser
arising at any time in connection with Seller's ownership of the Purchased
Assets or operation of the Business on or prior to the Effective Time;
(c) All actions, suits, investigations, proceedings, demands,
assessments, judgments, reasonable attorneys' fees, costs and expenses incident
to the foregoing, including, but not limited to, any audit or investigation by
any governmental entity;
(d) All liabilities and obligations of Seller arising prior to the
Effective Time of every kind and description, regardless of how or when the same
may have arisen; and
(e) All claims against, or claims of any interest in, or of a lien
upon, any or all of the Purchased Assets, which arise in connection with events,
acts, omissions, or circumstances occurring or existing on or prior to the
Effective Time.
15
Section 6.02 Indemnification by Purchaser. Purchaser, regardless of any
----------------------------
prior knowledge, inspection or investigation on the part of Seller, hereby
agrees to indemnify and hold harmless Seller against and in respect of:
(a) Any loss, claim, liability, obligation or damage suffered or
incurred by Seller resulting from or arising in connection with any
misrepresentation, breach of warranty, or non-fulfillment of any covenant or
agreement on the part of Purchaser contained in this Agreement;
(b) Any liability or claim asserted against Seller arising in
connection with Purchaser's failure to perform its obligations with respect to
the Assumed Obligations;
(c) Any liability or claim which may be asserted against Seller
arising at any time in connection with Purchaser's ownership of the Purchased
Assets or operation of the Business subsequent to the Effective Time; and
(d) All actions, suits, investigations, proceedings, demands,
assessments, judgments, reasonable attorneys' fees, costs and expenses incident
to the foregoing, including, but not limited to, any audit or investigation by
any governmental entity.
Section 6.03 Survival of Obligation to Indemnify. The obligation of
------------------------------------
each party hereto to indemnify the other party hereto shall survive the Closing,
the transfer of the Purchased Assets and the payment of the consideration
therefor for a period of thirty (30) months from the Closing Date, and shall
continue thereafter with respect to: (a) matters which the party seeking
indemnity hereunder shall have given the other party written notice of as
provided herein prior to thirty (30) months from the Closing Date; and (b) any
claims, actions, suits, investigations or proceedings based on fraud or willful
misconduct, willful misrepresentation or willful breach of warranty.
Section 6.04 Notice and Procedure. Any party claiming indemnity
----------------------
hereunder (hereinafter referred to as the "Indemnified Party") shall give the
------------------
party against whom indemnity is sought (hereinafter referred to as the
"Indemnifying Party") prompt written notice after obtaining knowledge of any
-------------------
claim or the existence of facts as to which recovery may be sought against it in
respect of which the Indemnifying Party may be liable because of the indemnity
provisions set forth in this Article VI. If such claim for indemnity arises in
connection with a legal action instituted by a third party (hereinafter a "Third
-----
Party Claim"), the Indemnified Party hereby agrees that, within five (5)
------------
business days after it is served with notice of the assertion of any Third Party
Claim for which it may seek indemnity hereunder, the Indemnified Party will
notify the Indemnifying Party in writing of such Third Party Claim.
The Indemnifying Party shall, within five (5) business days after the
date that the Indemnified Party gives notice of a claim (whether a Third Party
Claim or otherwise) as provided above, notify the Indemnified Party whether it
accepts or contests its obligation of indemnity hereunder as claimed by the
Indemnified Party.
If the claim for indemnity arises in connection with a Third Party
Claim and the Indemnifying Party accepts its indemnity obligation hereunder, the
Indemnifying Party shall have the right, after conceding in writing its
16
obligation of indemnity hereunder, to conduct the defense of such action at its
sole expense through counsel reasonably acceptable to the Indemnified Party. The
Indemnified Party shall cooperate in such defense as reasonably necessary to
enable the Indemnifying Party to conduct its defense, including providing the
Indemnifying Party with reasonable access to such records as may be relevant to
its defense. The Indemnifying Party shall be entitled to settle any such Third
Party Claim without the prior written consent of the Indemnified Party provided
that the Indemnifying Party provides the Indemnified Party with reasonable
assurances that the Indemnified Party will be fully indemnified by the
Indemnifying Party in connection with any such Third Party Claim. The
Indemnified Party shall be entitled to retain its own counsel at its own expense
in connection with any Third Party Claim that the Indemnifying Party has elected
to defend. If the Indemnifying Party accepts its indemnity obligations hereunder
in connection with a Third Party Claim but elects not to conduct the defense
thereof, the Indemnified Party may defend and/or settle such Third Party Claim
and shall be entitled to be indemnified for the full amount of such claim and
all costs and expenses, including attorneys' fees, incurred in connection
therewith pursuant to this Article VI.
If the claim for indemnity arises in connection with a Third Party
Claim and the Indemnifying Party contests or does not accept its indemnity
obligation hereunder, the Indemnified Party shall have the right to defend
and/or settle such Third Party Claim and thereafter seek indemnity from the
other party pursuant to this Article VI; provided, however, that the Indemnified
-------- -------
Party shall not settle any such claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
If the claim for indemnity arises other than in connection with a Third
Party Claim and the Indemnifying Party accepts its indemnity obligation
hereunder, the Indemnifying Party shall, upon the request of the Indemnified
Party, pay the full amount of such claim to the Indemnified Party or to the
third party asserting such claim as directed by the Indemnified Party. If the
claim for indemnity arises other than in connection with a Third Party Claim and
the Indemnifying Party contests its indemnity obligation hereunder, the
Indemnified Party shall have the right to defend, settle or take any other
action with respect to such claim and thereafter seek indemnity pursuant to this
Article VI; provided, however, that the Indemnified Party shall not settle any
-------- -------
such claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
Section 6.05 Limitation on Indemnification Obligations. An Indemnified
------------------------------------------
Party shall not be entitled to recover from an Indemnifying Party any amounts
under this Article VI until the total amount under which the Indemnified Party
would seek a recovery exceeds the sum of $85,000 (the "Threshold Amount"), and
then the Indemnified Party may recover the Threshold Amount and any sums which
are in excess of the Threshold Amount, but in no event may the Indemnified Party
be entitled to an amount in excess of the sum of the Purchase Price. The
Threshold Amount shall not be applicable in the event an Indemnified Party seeks
to recover from an Indemnifying Party under Sections 5.11 and 5.12 above.
17
ARTICLE VII
RESTRICTIVE COVENANTS
---------------------
Section 7.01 Noncompetition. Seller and Stockholder each covenant and
--------------
agree that neither Seller nor Stockholder shall, for a continuous uninterrupted
period of 36 months commencing upon the Closing Date, alone, or jointly with
others, either directly or indirectly, for itself, himself or herself, or
through, on behalf of, or in conjunction with any person, persons, partnership,
association, corporation, or other entity, own, maintain, operate in, engage in,
or have any interest in any business enterprise which is the same as, similar to
or competitive with the Business, within the continental United States, or
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent or proprietor, or in any
capacity for, nor lend any assistance (financial, managerial, consulting or
otherwise) to or cooperate with any such business enterprise.
Section 7.02 Nonsolicitation. Seller and Stockholder each covenant and
---------------
agree that for a continuous uninterrupted period of 36 months commencing upon
the Closing Date, neither Seller nor Stockholder shall, either directly or
indirectly, for itself, himself or herself or through, on behalf of or in
conjunction with any person, persons, partnership, association, corporation, or
other entity: (a) divert or attempt to divert or solicit any prospective or
existing customer of the Business for the benefit of Seller or Stockholder or
any competitor by direct or indirect inducement or otherwise; or (b) employ or
seek to employ any person who was at the time immediately prior to the Closing
Date employed by Seller, and as of and after the Closing Date is working at the
Business and employed by Purchaser, or otherwise directly or indirectly induce
or solicit such person to leave his or her employment; however, Seller shall not
be prohibited from employing any person after their employment has been
terminated by Purchaser for any reason.
Section 7.03 Reasonably Necessary. Seller, Stockholder and Purchaser
--------------------
agree that these restrictive covenants are reasonably necessary to protect
Purchaser's legitimate business interests and are essential elements of this
Agreement, and that, but for the Agreement of the Seller and Stockholder to
comply with such covenants, the Purchaser would not have entered into this
Agreement.
Section 7.04 Reasonable Restrictions. Seller and Stockholder agree and
-----------------------
acknowledge that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
Purchaser. It is agreed by Seller and Stockholder that if any portion of the
restrictions contained in this Agreement are held to be unreasonable, arbitrary,
or against public policy, then the restriction shall be considered divisible,
both as to the time and to the geographical area, with each month of the
specified period being deemed a separate period of time, and each state being
deemed a separate geographical area, so that the lesser period of time or
geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Stockholder.
18
Section 7.05 Continuity of Restrictions. If either Seller or
-----------------------------
Stockholder shall violate any of the terms or covenants contained herein, and if
any court action is instituted by Purchaser to prevent or enjoin such violation,
then the period of time during which the terms or covenants of this Agreement
shall apply, as provided in this Agreement, shall be lengthened by a period of
time equal to the period between the date of the initial breach of the terms or
covenants contained in this Agreement, whether or not Purchaser had knowledge of
the breach, and the date on which the decree of the court disposing of the
issues upon the merits shall become final and not subject to further appeal.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.01 Expenses. Purchaser and Seller shall pay all costs and
--------
expenses incurred or to be incurred by either party in negotiating and preparing
this Agreement and in closing and carrying out the transactions contemplated by
this Agreement, including their own counsel fees.
Section 8.02 Further Assurances. From time to time from and after the
------------------
date hereof, the parties will execute and deliver to one another any and all
further agreements, instruments, certificates and other documents as may
reasonably be requested by any other party in order more fully to consummate the
transactions contemplated hereby, and to effect an orderly transition of the
Business being acquired by Purchaser hereunder. Without limitation of the
foregoing, Seller shall: (a) cooperate with Purchaser in order to cause the
local telephone company to transfer to Purchaser's name and account all
telephone numbers and fax numbers currently held by Seller (provided that
Purchaser acknowledges that the transfer of such telephone numbers and fax
numbers is in the discretion of the local telephone companies); and (b) within
three (3) business days from the Closing Date, file an amendment to its Articles
of Incorporation amending its corporate name to something other than "La-Man
Corporation."
Section 8.03 Section Headings. The titles to the numbered sections in
----------------
this Agreement and the ordering or position thereof are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of said covenants or provisions set forth herein.
Section 8.04 Entire Agreement. This Agreement contains and represents
----------------
the entire and complete understanding and agreement concerning and in reference
to the arrangement between the parties hereto. The parties hereto agree that no
prior statements, representations, promises, agreements, instructions, or
understandings, written or oral, pertaining to this Agreement, other than those
specifically set forth and stated herein, shall be of any force or effect. The
parties agree that prior drafts of this Agreement shall not be deemed to provide
any evidence as to the meaning of any provision hereof or the intent of the
parties with respect thereto.
Section 8.05 Waivers. No failure to exercise, and no delay in
-------
exercising, any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the exercise of any other right, power or
19
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be implied from any course of dealing between the parties.
No extension of time for performance of any obligations or other acts hereunder
or under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. No waiver shall be
effective unless in writing, and signed by the party or parties to which the
performance of duty is owed. The rights and remedies of the parties under this
Agreement are in addition to all other rights and remedies, at law or equity,
that they may have against each other except as may be specifically limited
herein.
Section 8.06 Parties in Interest. Nothing in this Agreement, whether
-------------------
expressed or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective heirs, executors, administrators, personal representatives,
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligations or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
Section 8.07 Notices. All notices, requests, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (a) on the date of service if served personally on the
party to whom notice is to be given; (b) on the day after the date sent by
recognized overnight courier service, properly addressed and with all charges
prepaid or billed to the account of the sender; or (c) on the third day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed as
follows:
If to Seller: La-Man Corporation
c/o Display Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to Stockholder: Display Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to Purchaser: FILTER SYSTEMS, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ Traurig, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
20
or to such other address as any party shall have specified by notice in writing
given to the other party.
Section 8.08 Amendments and Modifications. This Agreement may not be,
----------------------------
and shall not be construed to have been modified, amended, rescinded, canceled,
or waived, in whole or in part, except if done so in writing and executed by the
parties hereto.
Section 8.09 Non-Assignability; Binding Effect. Neither this Agreement,
---------------------------------
nor any of the rights or obligations of the parties hereunder, shall be
assignable by any party hereto without the prior written consent of all other
parties hereto, which such consent may be granted or withheld in such other
party's sole and absolute discretion. The rights and obligations of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Section 8.10 Governing Law. The validity, interpretation and
---------------
enforcement of this Agreement shall be governed by, and construed and enforced
in accordance with the local laws of the State of Florida without giving effect
to its conflicts of laws provisions, and to the exclusion of the law of any
other forum, without regard to the jurisdiction in which any action or special
proceeding may be instituted.
Section 8.11 Personal Jurisdiction; Venue. EACH PARTY HERETO AGREES TO
-----------------------------
SUBMIT TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR
FEDERAL COURTS LOCATED IN ORANGE COUNTY, FLORIDA, FOR RESOLUTION OF ALL DISPUTES
ARISING OUT OF, IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION,
CONSTRUCTION, AND ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR
DEFENSE THEREIN THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
Section 8.12 Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR THIS
--------------------
AGREEMENT, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
Section 8.13 Severability. If all or any portion of a covenant, clause
------------
or provision in this Agreement is held to be illegal, invalid, or unenforceable
by a court or agency having valid jurisdiction in an unappealed final decision,
the remaining covenants, clauses and provisions shall remain valid and
enforceable. In lieu of each covenant, clause or provision of this Agreement
that is held to be illegal, invalid or unenforceable, there shall be added as a
part of this Agreement a covenant, clause or provision as nearly identical as
may be possible and as may be legal, valid and enforceable, and the parties
expressly agree to be bound by any such added covenant, clause or provision as
if the resulting covenant, clause or provision were separately stated in, and
made a part of this Agreement. In the event any covenant, clause or provision of
this Agreement is illegal, invalid or unenforceable as aforesaid and the effect
of such illegality, invalidity or unenforceability is that either party no
21
longer has the substantial benefit of its bargain under this Agreement and a
covenant, clause or provision as nearly identical as may be possible cannot be
added, then, in such event, such party may in its discretion cancel and
terminate this Agreement provided such party exercises such right within a
reasonable time after such occurrence.
Section 8.14 Independent Covenants. The parties agree that each of the
---------------------
covenants, clauses and provisions contained in this Agreement shall be deemed
severable and construed as independent of any other covenant, clause or
provision.
Section 8.15 Construction. The parties agree and acknowledge that they
------------
have jointly participated in the negotiation and drafting of this Agreement and
that this Agreement has been fully reviewed and negotiated by the parties and
their respective counsel. In the event of an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumptions or burdens of proof shall arise favoring any
party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant. The mere
listing (or inclusion of copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty relates solely to the existence of the
document or other items itself).
Section 8.16 Exhibits and Schedules. All exhibits and schedules
------------------------
attached hereto (the "Exhibits") shall be construed with and deemed an integral
--------
part of this Agreement to the same extent as if the same had been set forth
verbatim herein. Any matter disclosed pursuant to the Exhibits shall be deemed
to be disclosed for all purposes under this Agreement, and all references to
this Agreement herein or in any such Exhibits shall be deemed to refer to and
include all such Exhibits.
Section 8.17 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. A telecopy signature of
any party shall be considered to have the same binding legal effect as an
original signature.
Section 8.18 Time of Essence. The parties to this Agreement acknowledge
---------------
and agree that time is of the essence with respect to the consummation of the
transactions contemplated by this Agreement.
Section 8.19 Attorneys' Fees. Notwithstanding the foregoing, in the
---------------
event either party employs an attorney or brings an action against the other
arising out of the terms of this Agreement, the prevailing party (whether such
prevailing party has been awarded a money judgment or not) shall receive from
the other party (and the other party shall be obligated to pay) the prevailing
22
party's reasonable legal fees and expenses (including the fees and expenses of
experts and para-professionals), whether such fees and expenses are incurred
before, during or after any trial, re-trial, re-hearing, mediation or
arbitration, administrative proceedings, appeals or bankruptcy or insolvency
proceedings, and irrespective of whether the prevailing party would have been
entitled to such fees and expenses under applicable law in the absence of this
Section. Without limiting the generality of the foregoing, the term "EXPENSES"
shall include expert witness fees, bonds, filing fees, administrative fees,
transcriptions, depositions or proceedings, costs of discovery and travel costs.
The term "PREVAILING PARTY" as used in this Section shall mean that party whose
positions substantially prevail in such action or proceeding, and any action or
proceeding brought by either party against the other as contemplated in this
Section may include a plea or request for judicial determination of the
"prevailing Party" within the meaning of this Section. In the event neither
party substantially prevails in its positions in such action or proceeding, the
court may rule that neither party has so substantially prevailed, in which event
each party shall be responsible for its own fees and expenses in connection
therewith. In addition, the fees and expenses for the services of "in-house"
counsel (if any) shall be included within the prevailing party's fees and
expenses as fully as if such in-house legal services were provided by an
"outside" attorney or law firm as contemplated within this Section, irrespective
of whether "outside" legal services are obtained in connection with such matter.
The fees and expenses on the part of in-house counsel as aforesaid shall be
determined based upon the prevailing hourly rates, fees and expenses for an
attorney(s) of comparable experience in the Orlando, Florida area.
Section 8.20 Arm's Length Negotiations. Each party herein expressly
--------------------------
represents and warrants to all other parties hereto that: (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
Section 8.21 Rules of Interpretation. Except as otherwise expressly
-----------------------
provided in this Agreement, the following rules shall apply hereto: (a) the
singular includes the plural and plural includes the singular; (b) "or" is not
exclusive and "include" and "including" are not limiting; (c) a reference to any
agreement or other contract includes any permitted supplements and amendments;
(d) a reference to a section or paragraph in this Agreement shall, unless the
context clearly indicates to the contrary, refer to all sub-parts or
sub-components of any said section or paragraph; (e) words such as "hereunder",
"hereto", "hereof", and "herein", and other words of like import shall, unless
the context clearly indicates to the contrary, refer to the whole of this
Agreement and not to any particular clause hereof; (f) a reference in this
Agreement to a "person" or "party" (whether in the singular or the plural) shall
(unless otherwise indicated herein) include both natural persons and unnatural
persons (including, but not limited to, corporations, partnerships, limited
liability companies or partnerships, trusts, ETC.); (g) all accounting terms not
otherwise defined herein shall have the meanings assigned to them in accordance
with GAAP; and (h) any reference in this Agreement to a "Business Day" shall
23
include each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day
on which national banks in Orlando, Florida are closed.
Section 8.22 Certain Defined Terms. Except as otherwise defined in this
---------------------
Agreement, the following defined terms whether used in upper or lower case shall
have the respective meanings set forth below:
(a) The term "Affiliate" shall mean any controlled groups (within
---------
the meaning of Section 414(b) of the Code of which any party to this Agreement
is a member, all trades or businesses, whether or not incorporated, under common
control (within the meaning of Section 414(c) of the Code) and of which any
party to this Agreement is a member, and all affiliated service groups (within
the meaning of Section 414(m) of the Code of which any party to this Agreement
is a member).
(b) The term "Person" shall mean an individual, partnership,
------
corporation, trust, any other organization, or a federal, state, local or
foreign governmental body or agency.
(c) The term "Records" shall mean any paper, document, file or
-------
record of any kind, whether recorded in writing or on magnetic, optical, or any
other storage medium, and including without limitation all computer records in
whatever form.
(d) The term "tax" shall mean any federal, state, local or foreign
---
tax assessment, fee, interest, penalty or other governmental charge of any kind.
Section 8.23 Survival of Agreement. This Agreement shall survive the
---------------------
Closing of the transactions contemplated hereby.
Section 8.24 Recitals. The recitals set forth at the beginning of this
--------
Asset Purchase Agreement, as well as the definitions contained therein, are by
this reference incorporated herein and made a part of this Agreement.
[THIS SPACE INTENTIALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first set forth above.
FILTER SYSTEMS, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
LA-MAN CORPORATION,
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. Shawl
----------------------------------
▇▇▇▇▇ ▇. Shawl
President
With respect to Article V only:
------------------------------
DISPLAY TECHNOLOGIES, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President & Treasurer,
Chief Financial Officer
25
SCHEDULES AND EXHIBITS
----------------------
SCHEDULES
---------
SCHEDULE 1.01(A) - EQUIPMENT
SCHEDULE 1.01(D) - COMPUTER PRODUCTS
SCHEDULE 1.01(E) - INTELLECTUAL PROPERTY
SCHEDULE 1.01(G) - ACCOUNTS RECEIVABLE
SCHEDULE 1.01(J) - TELEPHONE AND FAX NUMBERS
SCHEDULE 1.02(A) - ASSUMED LEASES
SCHEDULE 1.02(B) - ASSUMED CONTRACTS
SCHEDULE 1.02(C) - PURCHASE OBLIGATIONS
SCHEDULE 5.06 - TITLE AND CONDITION OF THE PURCHASED ASSETS
SCHEDULE 5.09 - INTELLECTUAL PROPERTY
SCHEDULE 5.13 - EMPLOYEE BENEFIT PLANS
SCHEDULE 5.15 - EMPLOYEE COMPENSATION
SCHEDULE 5.18 - CUSTOMERS AND SALES
SCHEDULE 5.19 - CONCERNING THE LEASED REAL ESTATE
SCHEDULE 5.20 - BROKERS' OR FINDERS' FEES
EXHIBITS
--------
EXHIBIT 3.03(a) - FORM OF LEASE AGREEMENT
ORLANDO/BAHNSENJ/125403/2_rf06!.DOC/2/01/01
