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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
SIDT, INC.;
SI DIAMOND TECHNOLOGY, INC.;
SIGN BUILDERS OF AMERICA, INC.;
SIGN BUILDERS, INC.;
AND
XXXXX XXXXX
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SCHEDULES
SCHEDULE 1.1(A) List of Assets
SCHEDULE 1.1(B) Work-in-Process
SCHEDULE 1.1(E) Contracts, Sale or Purchase Orders, Agreements, Etc.
SCHEDULE 1.1.2 Property Located on the Leasehold Property That Is Not Owned By Seller
SCHEDULE 2.2 Allocation of the Consideration
SCHEDULE 3.1 Assumed Obligations
SCHEDULE 7.10 Absence of Certain Changes or Events
SCHEDULE 7.11 Title to Properties; Absence of Liens and Encumbrances, Etc.
SCHEDULE 7.12 Leasehold Property
SCHEDULE 7.15 Agreements, Plans, Arrangements, Etc.
SCHEDULE 7.16 Patents, Trademarks, Copyrights, Etc.
SCHEDULE 7.17 Permits, Licenses, Etc.
SCHEDULE 7.18 Compliance with Applicable Laws
SCHEDULE 7.19 Litigation
SCHEDULE 7.20 Suppliers
SCHEDULE 7.21 Subleases
SCHEDULE 7.22 Purchase Obligations
SCHEDULE 7.24 All Salaried and Hourly Employees
SCHEDULE 7.25 Employee Benefits
SCHEDULE 7.27 Finder Fee
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THIS ASSET PURCHASE AGREEMENT dated the 31st day of August, 1999, by
and among SIDT, INC., a Delaware corporation having a principal place of
business at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000
(hereinafter referred to as "Buyer"); SI DIAMOND TECHNOLOGY, INC., a Texas
corporation, having its principal place of business at 0000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000 (hereinafter referred to as "SIDT"); and SIGN
BUILDERS OF AMERICA, INC. (hereinafter referred to as "SBOA") and SIGN
BUILDERS, INC., a wholly-owned subsidiary of SBOA (hereinafter referred to as
"SBI"), Texas corporations having their principal place of business at 0000-X
Xxxx Xxxx, Xxxxxx, Xxxxx 00000 (hereinafter jointly referred to as "Seller");
and XXXXX XXXXX, an individual residing at 0000 Xxxxxxxxxxxx, #00, Xxxxxx, XX
00000 (hereinafter referred to as "Majority Holder").
BACKGROUND
Seller is in the business of producing various forms of commercial
signs and signage. Buyer is interested in acquiring certain of the assets of
Seller associated with Seller's sign production business (the "Business") which
Seller is interested in selling to Buyer.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. TRANSFER OF ASSETS AND PROPERTIES.
1.1 Purchase and Sale of Assets.
1.1.1 On the Closing Date (as hereafter defined) and
subject to the terms of this Agreement, Buyer shall
purchase from Seller, and Seller shall sell, assign,
transfer, convey, and deliver to Buyer, all of the
assets and properties of Seller used or held for use
by Seller in connection with the Business
(collectively, the "Assets") including the
following:
(a) the list of assets set forth on SCHEDULE
1.1(A);
(b) all Work-in-Process (being herein defined
as any and all executory contracts with
third party customers) as set forth on
SCHEDULE 1.1(B);
(c) all goodwill pertaining to the Business
operations;
(d) all names, marks, logos, slogans,
advertising, trademarks, and copyrights
(whether or not registered), inventions,
techniques, discoveries, improvements,
designs, patterns, specifications,
formulae, computer software, trade secrets,
proprietary rights, and nonpublic
information and data, whether patentable or
not (collectively, the "Rights") which
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Sign Builders of America, Inc.; Sign Builders, Inc.;
And Xxxxx Xxxxx
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are owned by Seller and used or held for
use in connection with the business;
(e) all customer and supplier lists, working
files and correspondence with customers and
suppliers (both actual and prospective),
plans, blueprints, drawings, credit
information, business plans, studies,
surveys, reports, promotional literature,
and materials and trade association
memberships, used or held for use in
connection with or relating to the
business;
(f) those contracts, sale or purchase orders,
agreements, prepaid service contracts,
leases, legally enforceable commitments,
and other binding arrangements of Seller
that are listed on SCHEDULE 1.1(E); and
(g) to the extent legally permissible, all
licenses, permits, authorizations, and
other approvals from any governmental body
or authority (federal, state, or local)
(collectively, the "Permits") used or held
for use in connection with the Business.
1.1.2 The Assets shall not include the following:
(a) bank accounts of Seller (however, all cash
on-hand at the time of Closing is part of
the Assets which will become the property
of Buyer upon the closing of this
transaction);
(b) claims for income tax refunds,
(c) corporate minute books and stock record
books of Seller; and
(d) any property located on the Leasehold
Property that is not owned by Seller, a
list of such property is included on
SCHEDULE 1.1.2.
All of such excluded assets being
hereinafter referred to as the "Excluded
Assets." References to the Assets shall not
be deemed to include references to the
Excluded Assets.
1.2 Instruments of Transfer and Assignment. On the
Closing Date Seller shall deliver, or cause to be
delivered, to Buyer, duly executed bills of sale,
assignments, endorsements, and other instruments and
documents, in
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Sign Builders of America, Inc.; Sign Builders, Inc.;
And Xxxxx Xxxxx
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form and substance satisfactory to Buyer and its counsel,
sufficient to vest in Buyer good and valid title to, any and
all of Seller's right, title, and interest in and to, the
Assets to the extent required by this Agreement including,
without limitation:
1.2.1 instruments of transfer and assignment with respect
to the Rights, in the form mutually acceptable to
Buyer and Seller; and
1.2.2 a lease for the real property located at 0000-X Xxxx
Xxxx, Xxxxxx, Xxxxx in form and on terms acceptable
to Buyer.
1.3 Consents to Assignments. Notwithstanding, any other provision
of this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign any contract, agreement,
concession, claim, license, lease, commitment, sales order,
or purchase order (sometimes hereinafter referred to as
"Contract") without a consent, approval, or waiver if such
assignment would constitute a breach thereof or in any way
adversely affect the rights of Buyer or Seller thereunder. If
such consent, approval, or waiver of a Contract material to
the Business is not obtained, or is not reasonably
obtainable, Seller shall cooperate in any arrangement Buyer
may reasonably request to provide for Buyer the benefits
under any such Contract. This includes reasonable enforcement
for the benefit of Buyer of any and all rights of Seller
against any other party thereto arising out of the breach or
cancellation thereof by such party or otherwise. Any transfer
or assignment of any property, property right, contract, or
agreement material to the Business which shall require the
consent, approval, or waiver of any other party shall be made
subject to such consent, approval, or waiver being obtained.
However, Buyer shall not be required by this SECTION 1.3 to
enter into, or to accept as a substitute for performance by
Seller hereunder, any arrangement which would impose any
additional material cost, expense, or liability on Buyer or
would deprive Buyer of any material benefits contemplated by
this Agreement. Further, provided that nothing contained in
this SECTION 1.3 shall affect the liability, if any, of
Seller pursuant to this Agreement for failing to have used
its best efforts to obtain the approvals, consents,
clearances, and waivers referred to in SECTION 6.
1.4 Seller's Endorsement. After the Closing Date, Seller shall
endorse, without recourse, any check or any other evidence of
indebtedness received by Seller on account of any Asset
transferred by Seller pursuant hereto.
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And Xxxxx Xxxxx
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2. PURCHASE.
2.1 Consideration and Mode of Payment. The aggregate
consideration to be tendered by Buyer to Seller and Majority
Holder at the Closing hereunder is the assumption of those
liabilities specified in SECTION 3 below and the following
additional consideration (hereinafter the total consideration
shall be referred to as the "Purchase Price"):
2.1.1 At the time of Closing (as defined in SECTION 6),
Buyer will make a cash payment to (a) Seller in the
amount of $150,000.00 and (b) Majority Holder in the
amount of $300,000.00 (the "Cash Payment").
2.1.2 At the time of Closing, Buyer will also sign a
promissory note (the "Note") in the amount of
$450,000 payable to SBOA, which Note shall be
payable in cash or, at the option of SBOA, be
convertible into an equivalent value of shares of
the common stock of SIDT in accordance with the
following terms and conditions:
(a) The Note will bear interest at the rate of
six percent (6%) per annum and shall become
due and payable in two (2) equal
installments, the first due six (6) months
from the date of Closing and the second due
one (1) year from the date of Closing.
Payment of the Note will be secured by
Seller retaining a security interest in the
Assets to be transferred hereunder.
(b) One-half of the principal balance of the
Note ($225,000) plus accrued interest will
be convertible into the common stock of
SIDT six (6) months after the date of
Closing, with the balance of the Note
($225,000) plus accrued interest to be
convertible in one year from the date
Closing (the "Note Conversion Value"). The
conversion rate ("Conversion Rate") for
converting the value of the Note Conversion
Value into shares of common stock of SIDT
shall be equal to $2.127 per share. If SBOA
elects to convert the Note into shares of
common stock of SIDT (whether in whole or
in part), the number of shares of stock to
be issued to SBOA shall be determined by
dividing the amount of the Note (including
accrued interest) to be converted into SIDT
stock by the Conversion Rate. SBOA, at its
option, may make an election individually
on each payment as to whether to receive
cash or SIDT common stock.
(c) However, the Purchase Price is based upon
the requirement that the Gross Sales of
Seller and Buyer for the 1999 calendar year
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will equal at least three million dollars
($3,000,000). To the extent that the Gross
Sales for the year fall below $3 million,
the principal balance of the Note shall be
reduced proportionately. The Note shall be
reduced in the amount of $50,000 for each
$100,000 of sales that the actual Gross
Sales fall below the figure of $3 million.
(By way of example only, if the actual
Gross Sales for the year were to be $2.8
million, the principal balance of the Note
would be reduced by $100,000.) Gross Sales
for the Year shall be computed exclusive of
any sales to SIDT, or its subsidiaries,
after the date of Closing and shall be made
up of "Bona Fide Sales," only. For purposes
of the Agreement, Bona Fide Sales shall
mean any sale which results in a gross
profit margin of not less than fifteen
percent (15%). Gross profit margin shall be
equal to the gross sales price, less direct
materials, direct labor, and manufacturing
overhead applied on the basis normally used
by SBOA.
(d) Additionally, if any of the individual
executory agreements making up the Work In
Process set forth on SCHEDULE 1.1(B)
results in a financial loss (i.e., the cost
of performing the agreement exceeds the
revenue received or receivable therefrom),
then in addition to the reduction in the
amount of the Note referred to in paragraph
(c) above, Buyer may also offset the amount
of any such loss against the Note.
2.1.3 The balance of the Purchase Price, an amount equal
to $900,000, will be paid partially to SBOA and
partially to Majority Holder, or their assigns, in
the form of an equivalent value of the common stock
of SIDT (the "Stock Consideration Value") as
hereafter provided. The conversion rate ("Conversion
Rate") for converting the value of the Stock
Consideration Value into shares of common stock of
SIDT shall be $2.127 per share. Based upon the
Conversion Rate, the number of shares of SIDT common
stock to be issued to SBOA shall be 329,101 and the
number of shares of SIDT common stock to be issued
to Majority Holder shall be 94,030 shares. The
number of shares to be issued has been rounded to
the nearest whole number of shares to avoid issuing
fractional shares.
2.1.4 None of the shares of SIDT stock to be issued to
SBOA and Majority Holder pursuant to this Agreement
shall be registered with the Securities and Exchange
Commission. As such, SBOA and Majority Holder will
be restricted in their ability to freely transfer
the
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SIDT, Inc.; SI Diamond Technology, Inc.;
Sign Builders of America, Inc.; Sign Builders, Inc.;
And Xxxxx Xxxxx
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shares and may not do so until they have fully
complied with all applicable statutes and
regulations. Upon Closing, Buyer will make the
necessary arrangements to register the stock with
the Securities and Exchange Commission and will
thereafter diligently pursue the registration until
accomplished. It is estimated by Buyer that the
registration should be accomplished within
forty-five (45) days of Closing; however, if Buyer
is unable to accomplish the registration within six
(6) months of the Closing, Buyer will issue Seller
and Majority Holder an additional number of shares
of SIDT common stock equal to twenty percent (20%)
of the number of shares issued to Seller and
Majority Holder at Closing, as further described in
SECTION 2.1.2 above. The total of such shares shall
be issued to Seller and Majority Holder in
proportion to the number of shares of common stock
of SIDT issued to Seller and Majority Holder at
Closing. Upon registering the shares of stock Buyer
agrees to keep the registration effective for a
period of no less than one (1) year after Closing.
2.1.5 The parties agree and acknowledge that the total
consideration paid to Majority Holder under this
Agreement represents the value of the
Non-Competition Agreement of Majority Holder which
is set forth hereinbelow.
2.2 Allocation of Consideration. Buyer and Seller agree that the
allocation of the Consideration among the Assets as set forth
on SCHEDULE 2.2 accurately reflects the price being paid for
each. Seller and Buyer shall report the sale and purchase of
the Assets in their respective tax returns as originally
filed for all federal, state, and local tax purposes in a
manner consistent with this allocation.
3. ASSUMPTION OF LIABILITIES.
3.1 Assumption. Upon the transfer of the Assets, Buyer shall
assume and pay, perform, and discharge all liabilities and
obligations (the "Assumed Obligations") of Seller set forth
on SCHEDULE 3.1 of this Agreement and under the Commitments
(as defined in SUBSECTION 7.15.1) accruing and performable on
and after the Closing Date including, without limitation,
those associated with rentals on the assumed lease agreement
being transferred to Buyer. The assumption by Buyer of the
Assumed Obligations shall not in any way enlarge the rights
of any third party under any contract or other arrangement
with Buyer or Seller. Nothing contained herein shall prevent
Buyer from contesting any of the Assumed Obligations with any
third party obligee.
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And Xxxxx Xxxxx
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3.2 Limitations on Assumption. Except as provided in SECTION 3.1,
neither Buyer nor SIDT agrees to assume, pay, perform or
discharge, or indemnify Seller against or have any
responsibility for any liability or obligation of Seller not
included in the Assumed Obligations, including, (a)
obligations or commitments, under purchase orders or
otherwise relating to the operation of the business prior to
the Closing; (b) liabilities and claims expressly reserved by
Seller; (c) the fees and expenses of Seller's counsel and
accountants and other experts; (d) liabilities or obligations
of Seller otherwise incurred on and after the Closing Date;
(e) liabilities or obligations involving the payment of any
domestic (federal, state, or local) taxes of any kind,
including, without limitation, sales taxes, transfer taxes,
gains taxes, recording taxes, and taxes on or measured by
income, any of which taxes are due or shall become due as a
result of the operations of Seller on or before the Closing
Date or interest or penalties relating thereto (all of such
excluded liabilities being hereinafter referred to as
"Excluded Liabilities").
3.3 Instrument of Assumption. On the Closing Date, Buyer shall
deliver, or cause to be delivered, to Seller a duly executed
instrument of assumption with respect to the Assumed
Obligations, in form and substance acceptable to Seller.
3.4 Right of Enforcement and Settlement. From and after the
Closing Date, Buyer shall have complete control over the
payment, settlement, or other disposition of the Assumed
Obligations and the right to commence, conduct and control
all negotiations and proceedings with respect thereto. Seller
shall notify Buyer promptly of any claim made with respect to
any such Assumed Obligation and shall not, except with the
latter's prior written consent, voluntarily make any payment
of, settle or offer to settle, or consent to any compromise
or admit liability with respect to, any such Assumed
Obligation.
4. ASSIGNMENT BY BUYER TO ASSIGNEE. In its sole discretion, Buyer may
assign to one or more Assignees of Buyer's choice on or after the date
hereof all of Buyer's rights under this Agreement (and all of the
Assets purchased under this Agreement); provided that any such
Assignment shall not relieve Buyer from any of its obligations
hereunder. In the event of such an Assignment, the Assignee shall
assume all obligations of Buyer under this Agreement not fulfilled by
Buyer prior to the Assignment and all references to Buyer hereunder
shall be deemed to include the Assignee.
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And Xxxxx Xxxxx
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5. NON-DISCLOSURE AND NON-COMPETITION OBLIGATIONS. As part of the
consideration and as an additional incentive for Buyer to enter into
this Agreement, Seller, Majority Holder, and Buyer agree to the
non-disclosure and non-competition provisions of this SECTION 5.
5.1 Non-Disclosure.
5.1.1 Seller and Majority Holder acknowledge and agree
that Buyer acquired all trade secrets as defined in
the Uniform Trade Secrets Act related to and
associated with the Business upon acquiring it from
Seller, all of which constitutes "Confidential
Information" but in no event shall it include
information readily available to the public.
5.1.2 Seller and Majority Holder shall not at any time
divulge the Confidential Information to any person,
directly or indirectly, except to Buyer or its
directors, officers, and agents as reasonably
required in connection with their obligations under
the terms of the Purchase Agreement to Buyer, or use
the Confidential Information in any manner or for
any purpose. Seller shall deliver to Buyer all
records, papers, and computer data and any copies
thereof relating to the Confidential Information (or
if such papers, records, computer data, or copies
are not on the premises of Buyer, Sellers agree to
return such papers, records, and computer data as
soon as practicable after the Closing), Sellers
acknowledge that all such papers, records, computer
data, or copies thereof, are and remain the property
of Buyer.
5.1.3 Seller and Majority Holder acknowledge that (a) the
Confidential Information is commercially and
competitively valuable to Buyer; (b) the
unauthorized use or disclosure of the Confidential
Information would cause irreparable harm to Buyer;
(c) Buyer has taken and is taking all reasonable
measures to protect its legitimate interest in its
Confidential Information, including, without
limitation, affirmative action to safeguard the
confidentiality of such Confidential Information;
(d) the restrictions on the activities in which
Seller and Majority Holder may engage set forth in
this Agreement, and the period of time for which
such restrictions apply were agreed to by Seller and
Majority Holder in consideration of the purchase
price and compensation to be paid to Seller and
Majority Holder pursuant to the Purchase Agreement,
and that such restrictions are reasonably necessary
in order to protect Buyer's legitimate interests in
its Confidential Information; and (e) nothing herein
shall prohibit Buyer from pursuing any remedies,
whether in law or equity, available to Buyer for
breach or threatened breach of this Agreement,
including the recovery of damages from Seller and
Majority Holder.
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Sign Builders of America, Inc.; Sign Builders, Inc.;
And Xxxxx Xxxxx
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5.2 Non-Competition.
5.2.1 Seller and Majority Holder agree that for a period
of three (3) years after the Closing, they will not
(directly or indirectly), solicit, entice away,
divert, or hire any of Buyer's employees, agents, or
representatives or any person or entity who is then
a customer of Buyer or who was a customer of the
Business at any time prior to or during Seller's
involvement with the Business.
5.2.2 Seller and Majority Holder agree that for a period
of three (3) years after the Closing (for whatever
reason) they will not, directly or indirectly, own,
manage, operate, control, be employed by,
participate in, provide consulting services to, or
be connected in any manner with the ownership,
management, operation, or control of, any business
or enterprise which is in competition with Buyer.
During such period Seller and Majority Holder will
not compete with Buyer by developing, marketing, or
assisting others to develop or market products or
services that are competitive with the products or
services of Buyer in North America.
5.2.3 Seller and Majority Holder represent and warrant
that their obligations to Buyer do not conflict with
and will not be constrained by any prior business
relationships and that Seller and Majority Holder do
not possess confidential information arising out of
any prior business relationships which, in Seller's
and Majority Holder's best judgment, would be
utilized in connection with Seller's and Majority
Holder's obligations to Buyer.
5.2.4 Seller and Majority Holder hereby represent and
acknowledge that the restrictions stated herein on
the activities in which Seller and Majority Holder
may engage are reasonable and that, despite such
restrictions, Seller and Majority Holder will be
able to earn a livelihood and engage in their
business or profession following the Closing; the
locations designated above are reasonable because
they are limited to the locations in which Buyer
presently does business, plans to do business or has
reasonable expectations of doing business in the
future; and the period of time designated above is
reasonable because it extends only for the mutually
agreed upon period following the Closing.
5.3 Remedies. In the event of a breach of the covenants contained
in this SECTION 5, the periods provided herein shall be
tolled (i.e., such periods shall not run during a breach of
any covenant contained herein) during the
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And Xxxxx Xxxxx
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time of such violation. In the event of such a breach, Seller
and Majority Holder further agree that Buyer shall be
entitled to recover all damages incurred as a result of such
breach.
5.4 Injunctive Relief. Notwithstanding anything contained herein
to the contrary, in the event of a breach or threatened
breach of the covenants contained in this SECTION 5, Buyer
shall, in addition to all other available remedies, be
entitled to an injunction enjoining Seller and Majority
Holder and any person or persons acting for or in concert
with Seller and Majority Holder in any capacity whatsoever
from violating any of the provisions herein
6. CLOSING. On the terms and subject to the conditions hereof, the
closing of the transaction to be effected hereunder (the "Closing")
shall be held at the offices of SI Diamond Technology, Inc. Suite 107,
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxx 00000 on 3, September, 1999,
commencing at 10:00 a.m. local time, or thereafter on such date, or
within five business days after the conditions set forth in SECTIONS
12.3, 12.4, and 12.5 have been fulfilled or waived, as is set forth in
a notice from Buyer to Seller at least two days prior thereto, or at
such other place or time or on such other date as shall be agreed upon
by Buyer and Seller (the date of the Closing being herein referred to
as the "Closing Date"). The Closing shall be effective as of 12:59
p.m. on August 31, 1999.
7. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT AND SELLER. Seller
and, to the best of his knowledge, Majority Holder hereby represent
and warrant to Buyer as follows:
7.1 Organization, Good Standing, Power, Etc. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. Seller has the
requisite legal authority to execute, deliver, and perform
this Agreement and to consummate the transactions
contemplated hereby. Seller has all Permits required to own
or lease and operate the Assets and carry on the business as
presently being conducted. Seller has shipped goods and
contracted for the installation of signage in most states.
7.2 Certificate of Incorporation. Seller has furnished to Buyer
the Corporate Charter and Articles of Incorporation
("Charter") of Seller.
7.3 Subsidiaries. Seller does not have any subsidiaries, save and
except as disclosed herein.
7.4 Ownership of Seller. Majority Holder directly or indirectly
owns all the authorized, issued, and outstanding shares of
capital stock of Seller.
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7.5 Authorization of Agreement. The execution, delivery, and
performance by Seller and the consummation of the
transactions contemplated hereby have been duly authorized by
the Board of Directors and by the requisite stockholder vote
of Seller. This Agreement has been duly executed and
delivered by Seller and constitutes a valid and binding
obligation of Seller and Majority Holder, enforceable in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, or other
similar laws affecting the enforcement of creditors' rights
generally.
7.6 Effect of Agreement, Etc. The execution, delivery, and
performance by Seller of the transactions contemplated hereby
will not (a) violate any law, statute, rule, or regulation
("Law") to Seller is subject, which violation could have a
material adverse effect on the Assets; (b) violate any order,
judgment, injunction, writ, or decree ("Order") of any court
applicable to Seller or Majority Holder, which violation
could have a material adverse effect on the Assets; (c)
constitute a material violation of any of the Permits
referred to in SECTION 7.17; (d) conflict with any provision
of the Charter or bylaws, if any, of Seller; or (e) result in
the termination of, constitute a default under, or result in
the creation or imposition of any lien, security interest,
charge, or encumbrance upon any of the Assets pursuant to any
contract or other agreement or instrument, including any of
the Commitments, to which Seller is a party or by which any
of the Assets is bound, which would have a material adverse
effect on the value of the Assets, as a whole, or the
operations of the business.
7.7 Governmental and Other Consents, Etc. No Permit and no
consent, authorization, or approval of, filing with, or
exemption by, any domestic (federal, state, or local) or
foreign governmental body or authority is required in
connection with the execution, delivery, and performance of
Seller of this Agreement or the consummation by Seller of the
transactions contemplated hereby.
7.8 Financial Statements. Seller has delivered to Buyer correct
and complete copies of the balance sheets and related
statements of income for the fiscal years 1996 through 1998,
and for the period ending July 31,1999, for Seller, which
present fairly the financial position and results of
operations of the business for the period or as of the dates
indicated, in all material respects in accordance with the
common accounting practices of Seller applied on a basis
consistent with that of prior years or periods. Since August
1, 1999, there has been no material adverse change in the
financial condition, operations, or properties of Business.
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And Xxxxx Xxxxx
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7.9 Inventories. The Inventories reflected on the July 31, 1999,
Balance Sheet and the Closing Balance Sheet represent and
will represent all of the inventory of the Business as of the
dates of such balance sheets.
7.10 Absence of Certain Changes or Events. Except as set forth in
SCHEDULE 7.10, since August 1, 1999, Seller has not, with
respect to the Business: (a) incurred any obligation or
liability (fixed or contingent) except (i) current trade or
business obligations incurred in the ordinary course of
business; (ii) obligations or liabilities under the
Commitments to the extent required thereby; and (iii)
obligations and liabilities under this Agreement; (b) made or
granted any general wage or salary increase; made or granted
any wage or salary increase to any employee or paid any bonus
to any employee other than a sales bonus or commission given
to a salesman in the ordinary course of business; engaged any
new officer or employee or entered into any employment
agreement with any officer or employee; (c) made any material
increase in or commitment to increase any employee benefits
or adopted or made any material commitments to adopt any
additional employee benefit plan; (d) made or entered into
any contracts to make any capital expenditures; (e)
mortgaged, pledged, or subjected to lien, security interest,
or any other encumbrance any of the Assets other than in the
ordinary course of business; (f) transferred or leased any of
the Assets, except for the sale of inventory in the ordinary
course of business; (g) financed accounts receivables or
failed to finance accounts receivables, other than in the
usual, regular, and ordinary course of business as such
business was conducted prior to August 1, 1999; (h) canceled
or compromised any debt or claim, except in the ordinary
course of business; (i) sold, assigned, transferred, or
granted any rights under or with respect to, any contracts,
agreements, licenses, permits, patents, inventions,
trademarks, trade names, copyrights, formulae, or Rights or
with respect to know-how or any other intangible asset; (j)
waived or released any other rights of material value; or (k)
entered into any transaction not in the ordinary course of
business.
7.11 Title to Properties; Absence of Liens and Encumbrances, Etc.
Except as set for in SCHEDULE 7.11, Seller has good title to,
and owns outright, the Assets, free and clear of all
mortgages, claims, liens, charges, encumbrances, or security
interests except the Assumed Obligations. The leases and
other agreements or instruments under which Seller holds,
leases, or is entitled to the use of any real or personal
property used or held for use in connection with the Business
are in full force and effect and all rentals or other
payments accruing thereunder prior to the date hereof have
been duly paid or accrued and Seller enjoys peaceable and
undisturbed possession under all such leases. No default or
event of default exists, and no event which, with notice or
lapse of time or both,
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would constitute a default, has occurred and is continuing,
under the terms or provisions of any such lease, agreement,
or other instrument nor, to the knowledge of Seller, has
Seller received written notice of any claim of such default.
7.12 Leasehold Property. SCHEDULE 7.12 contains a correct and
complete list as of the date hereof of all of the Leasehold
Property, setting forth where such property is located. All
such Leasehold Property is included in the Assets. The use of
all the Leasehold Property conforms with all applicable Laws
(including, without limitation, zoning ordinances) currently
in effect, which relate to the Leasehold Property or its
manner of use as of the Closing Date, the violation of which
would have a material adverse effect on the business. Correct
and complete copies of all Leases, and other documents
relating to any of the leasehold properties required to be
shown on SCHEDULE 7.12 as being leased by Seller have been
previously delivered or made available to Buyer.
7.13 Equipment. SCHEDULE 1.1(A) contains a list of all equipment
used by business in its operations, all of which is included
in the Assets ("Equipment"). No Equipment has been disposed
of since August 1, 1999.
7.14 Insurance. To the extent requested, Seller has given Buyer
notice of, and access to all of the books and records of
Seller relating to, (a) all accidents, casualties, or damage
occurring on or to the Assets or relating to the products of
the Business or (b) claims for damages, contribution, or
indemnification relating thereto and settlements or
negotiations of settlements relating thereto. To the extent
requested, Seller has provided to Buyer the workers'
compensation and unemployment insurance ratings and
contributions of Seller with respect to the employees of the
Business. Except as previously disclosed by Seller in writing
to Buyer, to the knowledge of Seller, there are no
outstanding or unsatisfied material requirements or
recommendations by any insurance company or other body
exercising similar functions or by any governmental authority
requiring that (i) any repairs or other work to be done on or
with respect to, or (ii) any equipment or facilities be
installed on or in connection with, any of the Assets or the
Business.
7.15 Agreements, Plans, Arrangements, Etc.
7.15.1 Except as set forth in SCHEDULE 7.15 or any other
schedule to this Agreement, Seller is not a party to
or bound by, and the Assets are not bound by, any of
the following:
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(a) any lease agreement (whether as lessor or
lessee) relating to real or personal
property to which Seller is not a party and
which has not been assigned to Buyer as set
forth under the terms of this Agreement;
(b) license agreement, assignment, or contract
(whether as licensor or licensee, assignor
or assignee) relating to Rights or
know-how, technical assistance, or other
proprietary rights;
(c) employment or consulting agreement;
(d) agreement with any labor union or other
collective bargaining unit;
(e) agreement with any manufacturer, supplier,
or customer with respect to discounts or
allowances or extended payment terms other
than in the ordinary course of business;
(f) agreement for the borrowing or lending of
money;
(g) agreement granting any person any
encumbrance on the Assets;
(h) agreement for the construction,
modification, or repair of any building or
structure or for the incurrence of any
other capital expenditure.
(i) advertising agreement;
(j) agreement which restricts it from doing
business anywhere in the world except the
restrictions related to the use of the
trade name and trademark set forth in the
License; or
(k) other agreements affecting the Business or
the Assets other than the purchase of
supplies and inventory made in the ordinary
course of business.
Correct and complete copies of all such contracts,
leases, agreements, orders, policies, arrangements,
understandings, commitments and other instruments
and written amendments identified on SCHEDULE 7.15
(collectively referred to herein as the
"Commitments"), have been previously delivered or
made available to Buyer.
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7.15.2 Except as noted in SCHEDULE 7.15, each of the
Commitments is valid and in full force and effect.
7.15.3 Except as set forth in SCHEDULE 7.15, Seller has
fulfilled, as applicable, or taken all action
reasonably necessary to enable it to fulfill when
due, all of its respective obligations under the
Commitments. There has not occurred any default by
Seller or others any event which, with the lapse of
time and/or the election of any person other than
Seller, will become a default, except defaults, if
any, which have been indicated in SCHEDULE 7.15.
Seller is not in arrears in respect of the
performance or satisfaction of the terms or
conditions to be performed or satisfied by it under
any of the Commitments and, no waiver or indulgence
has been granted by any of the parties thereto.
7.15.4 Except as set forth in SCHEDULE 7.15, each of the
Commitments is assignable by Seller to Buyer without
the consent of the other parties thereto.
7.16 Patents, Trademarks, Copyrights, Etc. SCHEDULE 7.16 contains
a correct and complete list of all Rights (as defined in
SECTION 1.1.1) currently used or held for use by Seller in
connection with the Business indicating the registered and
beneficial owner and the expiration date thereof. Seller owns
or possesses adequate licenses or other valid rights to use
all Rights and other proprietary information necessary to the
conduct of the Business as currently being conducted. To the
knowledge of Seller, no use is now being made of any Rights
owned by or licensed to Seller, except by Seller in
connection with the Business or by other entities duly
licensed to use the same under agreements disclosed in
SCHEDULE 7.16. No infringement of any proprietary right owned
or licensed by Seller used or held for use in connection with
the Business is known to Seller.
7.17 Permits, Licenses, Etc. Seller has all material Permits
required to permit it to own, maintain, and operate the
Business and the Assets as currently conducted. SCHEDULE 7.17
contains a correct and complete list of all such Permits, all
of which are in full force and effect and are assignable to
Buyer pursuant to the terms of this Agreement except as
otherwise indicated in SCHEDULE 7.17; and Seller knows of no
threatened suspension, cancellation, modification, or
nonrenewal of any of them. All such Permits are included in
the Assets.
7.18 Compliance with Applicable Laws. The conduct by Seller of the
Business does not violate any Law or Order currently in
effect. Seller is not in
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default under any governmental or administrative order or
demand directed to it, or with respect to any Order. Seller
has not received any notice of violation of any applicable
Law or Order relating to the Assets or the operations of the
Business that has not been cured. Seller has fully and
completely complied with all federal, state, county, and
municipal statutes, regulations, orders, and ordinances
regarding the handling and disposal of hazardous materials
and hazardous waste, including but not limited to, the
requirements of the CERCLA and/or RCRA statutes. Seller has
no knowledge of any condition which could potentially result
in a claim being made against Seller for environmental
clean-up or remediation, except as set forth on SCHEDULE
7.18.
7.19 Litigation. There is no claim, action, suit, proceeding,
arbitration, investigation, or hearing or notice of hearing
pending or, to the knowledge of Seller, threatened, before
any court or governmental or administrative authority or
private arbitration tribunal against Seller except as set
forth on SCHEDULE 7.19. Seller has not waived any statute of
limitations or other affirmative defense with respect to any
of its liabilities relating to the Business. There is no
continuing Order of any court or other tribunal or any
governmental agency to which Seller is a party or subject
relating to the Business or the Assets. Seller is not
presently subject to any injunction of any court or other
tribunal or any governmental agency prohibiting Seller from
engaging in or continuing any conduct or practice in
connection with the Business.
7.20 Suppliers. SCHEDULE 7.20 contains a complete list of all
current suppliers of the Business (the "Suppliers"), as at
the quarter ending June 30, 1999; the list of Suppliers
contains a general description of items supplied but does not
include any Supplier which sold less than an aggregate of
$500 of supplies to Seller during the twelve month period
ending June 30, 1999. Seller has no knowledge of any
termination or cancellation of or any modification or change
in, the business relationship of the Business with any
Suppliers which would have a material averse effect on the
Business.
7.21 Subleases. SCHEDULE 7.21 sets forth the names of each
sublessee of Seller and each such sublessee's monthly rental
payment, deposit, if any (complete list of short term leases
who sublease).
7.22 Purchase Obligations. Except as shown on SCHEDULE 7.22, there
are no outstanding purchase orders and other commitments for
purchases by Seller relating to the Business or on behalf of
the Business. No customer of Seller has prepaid the cost of
services or products as of the date of this Agreement, except
as disclosed on SCHEDULE 7.22.
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7.23 Books and Records. The books of account and other financial
and business records of Seller relating to the Business are
in all material respects complete and correct and are
maintained in accordance with good business practices
applicable to the Business.
7.24 Labor Relations, Etc.
7.24.1 Seller is in compliance in all material respects
with all Laws respecting employment, and employment
practices, terms and conditions of employment, and
wages and hours relating to persons employed in the
business ("Employees"). Seller has withheld all
amounts required by Law in an amount which would be
material to the Business to be withheld from the
ages or salaries of, and other payments to,
Employees and former Employees and is not liable for
any arrears of wages, salaries, or other payments to
such employees and former employees or any taxes or
penalties for failure to comply with any of the
foregoing in an amount which would be material to
the business. With respect to Employees, Seller has
not engaged in any unfair labor practice and has not
discriminated on the basis of age or sex in its
employment conditions or practices. There is no
unfair labor practice or age or sex discrimination
complaint or any other employment related complaint
pending or threatened against Seller.
7.24.2 SCHEDULE 7.24 sets forth a list of all salaried and
hourly Employees of Seller as of the date of
Closing, with aggregate annual compensation
(including bonuses, incentive compensation and
commissions, if any) on an annualized basis for
calendar year 1999, the names, position titles,
aggregate compensation, and actual or estimated
contribution to pension and benefit plans on behalf
of such persons projected for the year ended
December 31, 1999, and the amount and date of last
wage or salary increase. None of such Employees have
resigned or retired or notified Seller in writing of
his or her intention to resign or retire.
7.25 Employee Benefits. SCHEDULE 7.25 contains a complete and
accurate list of all pension, profit sharing, stock option,
stock purchase, welfare, bonus, disability, insurance,
incentive, deferred compensation, and other similar fringe or
employee benefit plans, programs, or arrangements relating to
the Employees (the "Employee Plans").
7.25.1 Each Employee Plan is in substantial compliance in
all material respects with the requirements
prescribed by any and all statutes or governmental
rules and regulations currently in effect.
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7.25.2 Seller has delivered to Buyer true and complete
copies of all Employee Plans. With respect to each
(within the meaning of Section 3(2) of ERISA), true
and complete copies of the (a) most recent annual
actuarial valuation report, if any; (b) the last
filed Form 5500 and Schedule A or B thereto or both;
and (c) the Summary Plan Description, have been
delivered to Buyer and are correct in all material
respects.
7.25.3 Each Employee Plan intended to qualify under
Sections 401(a) and 401(k) of the Internal Revenue
Code of 1986, as amended (the "Code") has heretofore
been determined by the Internal Revenue Service to
so qualify or an application for such determination
has been made, and a copy of the most recent
determination letter or application therefor with
respect to each such Employee Plan has been
delivered to Buyer.
7.26 Power of Attorney. No person has any power of attorney
outstanding in connection with the business of the Business
or the Assets which would be binding on Buyer or the Business
after the Closing.
7.27 Finder. Except as disclosed on SCHEDULE 7.27, there is no
person that may be entitled to a finder's fee or any type of
commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of
any agreement or understanding with Seller or Majority Holder
or affiliates.
7.28 Y2K Compliance. To the best of Seller's knowledge and belief
it has made an investigation within the Business and is
compliant with the computer situation generally known as
"Y2K," which involves potential computer malfunctions on or
after January 1, 2000, resulting from the inability of
computers to properly deal with dates represented by six (or
fewer) digits. Seller has no reason to believe that the Y2K
situation will cause any interruption in Seller's normal
business operations.
7.29 General Representation and Warranty. None of the
representations and warranties of Seller and to the best of
their knowledge, Majority Holder made in this Agreement
contain any untrue statement of material fact or omits to
state any material fact necessary in order to make said
representations and warranties not misleading.
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8. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Seller as follows:
8.1 Organization, Etc. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware. Buyer has the requisite corporate powers
to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby and thereby.
8.2 Authorization of Agreement. The execution, delivery, and
performance by Buyer of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by its Board of Directors. This Agreement has been
duly executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer enforceable in accordance
with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally.
8.3 Governmental and Other Consents. No Permit and no consent,
authorization, or approval of, or exemption by governmental,
public, or self-regulatory body or authority is required in
connection with the execution, delivery, and performance by
Buyer of this Agreement or the consummation by Buyer of the
transactions contemplated hereby.
8.4 Effect of Agreement. The execution, delivery, and performance
by Buyer of this Agreement and the consummation by Buyer of
the transactions contemplated hereby will not (a) violate any
Law to which Buyer is subject, (b) violate any Order of any
court applicable to Buyer or, (c) conflict with any provision
of the charter or bylaws of Buyer, result in the termination
of, constitute a default under any contract or other
agreement or instrument to which Buyer is a party or by which
any of its properties are bound or subject.
8.5 General Representation and Warranty. None of the
representations and warranties of Buyer made in this
Agreement contains any untrue statement of material fact or
omits to state any material fact necessary in order to make
said representations and warranties not misleading.
9. COVENANTS OF SELLER. For a period of five (5) years following the
Closing unless a shorter period is stated, Seller hereby covenants and
agrees with Buyer as follows:
9.1 Access to Properties and Records. Seller shall give to Buyer
and to its counsel, accountants, and other representatives
reasonable access during
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normal business hours to such of its books and records as
relate to the business or the Assets in the possession of
Seller or Majority Holder and shall allow Buyer to make
copies therefrom. Seller shall furnish to Buyer and such
representatives all such additional documents and financial,
tax, and other information concerning such business and
Assets as Buyer or its representatives may from time to time
reasonably request.
9.2 Advice of Changes. Seller shall advise Buyer promptly in
writing of any material fact, which, if known at the date
hereof, would have been required to be set forth or disclosed
in or pursuant to this Agreement.
9.3 Approvals, Consents, Etc. At Buyer's request, Seller shall
reasonably assist Buyer in obtaining all approvals, consents,
clearances, and waivers material to the Business required to
be obtained by Seller in order to effectuate the transactions
contemplated hereby, and shall deliver to Buyer copies,
reasonably satisfactory in form and substance to counsel for
Buyer, of such approvals, consents, clearances, and waivers.
9.4 Employer Tax Matters. Seller shall make a clean cut-off of
payroll and payroll tax reporting with respect to the
Employees at the Closing, with Seller paying over to the
federal, state, and city governments those amounts required
to be withheld before the Closing. Seller shall issue, by the
date prescribed by IRS regulations, Forms W-2 for wages paid
through the Closing. Buyer shall be responsible for all
payroll responsibilities resulting from operations after the
Closing.
9.5 Collection of Accounts. Seller agrees to assist Buyer in
collecting the outstanding accounts receivable of Seller
arising from the business conducted prior to Closing.
10. REPRESENTATIONS OF MAJORITY HOLDER. Upon the Closing of this
transaction, and subject to reaching a mutually satisfactory agreement
with regard to compensation and benefits, Buyer intends to employ
Majority Holder and Majority Holder intends to accept employment with
Buyer.
11. COVENANTS OF BUYER. Buyer shall use its best efforts to assure that
the conditions set forth in SECTION 12 are satisfied by the Closing
Date.
12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The obligations of
Buyer under this Agreement are subject to the satisfaction of the
following conditions as of the Closing Date, any or all of which
conditions may be waived by Buyer in its sole discretion:
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12.1 Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this
Agreement shall be true and accurate in all material
respects.
12.2 Performance of Agreements. Seller shall have in all material
respects performed and complied in all material respects with
all covenants, obligations and agreements to be performed or
complied with by it on or before the Closing pursuant to this
Agreement.
12.3 Consents. Buyer shall have received all necessary consents,
approvals, clearances, or waivers for the transfer of the
Assets or entered into appropriate agreements permitting the
transfer of the Assets.
12.4 Secretary's Certificate. Buyer shall have received an
accurate certificate, dated the Closing Date, of the
Secretary of Seller (or other appropriate official) with
respect to (a) the resolutions adopted by the Board of
Directors of Seller approving this Agreement and the
transactions contemplated hereby and (b) the incumbency and
specimen signature of each officer of Seller executing this
Agreement and any other document to be executed by Seller, as
the case may be, and a certification by another officer of
Seller, as the case may be, as to the incumbency and specimen
signature of said Secretary (or other appropriate official).
12.5 Transfer Instruments. Seller, as appropriate, shall have
executed and/or delivered to Buyer the instruments of
transfer and assignment and the lease as provided in SECTION
1.2.
13. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The obligations of
Seller under this Agreement are subject to the satisfaction of the
following conditions as of the Closing Date, any or all of which may
be waived by Seller in its sole discretion.
13.1 Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall be true and accurate in all material respects
on and as of the Closing.
13.2 Receipt of Cash Consideration. Seller shall have received the
Cash Payment, the Note duly executed by Buyer and a
certificate representing the number shares of stock equal to
the Stock Consideration Value which has been duly and
properly issued by Buyer.
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14. INDEMNIFICATION.
14.1 Indemnification by Seller and Majority Holder. Seller and
Majority Holder hereby jointly and severally covenant and
agree with Buyer that they or either of them shall indemnify
Buyer and its directors, officers, and employees, and each of
its successors and assigns, and hold them harmless from,
against, and in respect of any and all costs, losses, claims,
liabilities, fines, penalties, damages, and expenses
(including interest which may be imposed in connection
therewith and court costs and fees and disbursements of
counsel) ("Losses") incurred by any of them in connection
with:
14.1.1 all liabilities, claims, losses, and causes of
actions alleged against Buyer arising from or in any
way related to the acts, omissions, or transactions
of Seller, including but not limited to the
operation of the business and/or the Assets prior to
the Closing Date;
14.1.2 any inaccuracy or any breach of any of the
representations, warranties, covenants, or
agreements made by Seller in this Agreement; or
14.1.3 any action, suit, proceeding, compromise,
settlement, assessment or judgment arising out of or
incident to any of the matters indemnified against
in this SECTION 14.1
14.2 Indemnification by Buyer. Buyer hereby covenants and agrees
with Seller that it shall indemnify Seller and its directors,
officers, and employees, and each of its successors and
assigns, and hold them harmless from, against and in respect
of any and all Losses incurred by any of them in connection
with:
14.2.1 all claims against Seller arising in connection with
or relating to the operation of the business or the
Assets following the Closing Date;
14.2.2 Buyer's failure to pay, discharge, or perform any of
the Assumed Obligations and commitments;
14.2.3 any attempt by any person to cause or require a
party indemnified pursuant to this SECTION 14.2 to
pay or discharge any of the Assumed Obligations and
commitments;
14.2.4 any action, suit, proceeding, compromise,
settlement, assessment, or judgment arising out of
or incident to any of the matters indemnified
against in this SECTION 14.2; or
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14.2.5 any inaccuracy or any breach of any of the
representations, warranties, covenants, or
agreements made by Buyer in this Agreement.
14.3 Right to Defend, Etc. If the facts given rise to any
indemnification pursuant to SECTION 14.1 or SECTION 14.2
shall involve any actual claim or demand by any third party
against an indemnified party, the indemnifying party shall be
entitled to notice of and entitled (without prejudice to the
right of any indemnified party to participate at its expense
through counsel of its own choosing) to defend or prosecute
such claim at its expense and through counsel of its own
choosing, which counsel shall be reasonably satisfactory to
the indemnified party, if it gives written notice of its
intention to do so to the indemnified party; provided,
however, that if the defendants in any action shall include
both an indemnified party and an indemnifying party and the
indemnified party shall have reasonably concluded, after
consultation with the indemnifying party, that counsel
selected by the indemnifying party has a conflict of interest
because of the availability of different or additional legal
defenses to the indemnified party, the indemnified party
shall have the right to select separate counsel to
participate in the defense of such action on its behalf, at
the expense of the indemnifying party. All notices under this
SECTION 14.3 must be given prior to the time by which the
interests of the party or parties to be notified will be
materially prejudiced as a result of the failure to have
received such notice. The failure to give such notice shall
not relieve any party of any liability which it may have
other than under SECTION 14.1 or SECTION 14.2. Such
indemnified party shall cooperate fully in the defense of
such claim and shall make available to the indemnifying
party, as the case may be, all pertinent information under
its control relating thereto, but shall be entitled to be
reimbursed, as provided in SECTION 14.1 or SECTION 14.2, for
all costs and expenses incurred by it in connection
therewith.
15. RIGHTS OF OFFSET. Buyer shall be entitled to retain and deduct from
the Note the amount of any Losses (as defined in SECTION 14.1 above)
actually incurred by Buyer and thereby reduce the amount remaining due
Seller under this Agreement.
16. TERMINATION. This Agreement shall terminate:
16.1 if the Closing Date does not occur on or before November 1,
1999;
16.2 by notice of Buyer to Seller, if on the Closing Date any of
the conditions set forth in SECTION 11 have not been met or
waived by Buyer;
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16.3 by notice of Seller to Buyer, if on the Closing Date any of
the conditions set forth in SECTION 12 have not been met or
waived by Seller; or
16.4 by mutual consent of Seller and Buyer.
17. GENERAL.
17.1 Expenses, Taxes. Whether or not the transactions contemplated
by this Agreement are consummated, Buyer and Seller shall pay
their own respective expenses and the fees and expenses of
their respective counsel and accountants and other experts,
except as otherwise specified in this Agreement. Buyer shall
bear all sales and use taxes, transfer taxes, recording
taxes, and similar taxes payable or determined to be payable
in connection with the execution, delivery, and performance
of this Agreement and the transfer of the Assets contemplated
hereby and agrees to save Seller harmless from and against
any and all liabilities with respect to or resulting from any
delay in paying or omitting to pay such taxes.
17.2 Survival of Representations and Warranties Each party hereto
covenants and agrees that each of the representations,
warranties, covenants, agreements, and indemnities in
connection therewith contained in this Agreement shall
survive until the expiration of the applicable statute of
limitations following the Closing unless a claim for
indemnification shall be made with respect thereto prior to
the end of such period, in which case the survival of such
representation, warranty, covenant, agreement, or
indemnification shall survive until such claim is satisfied,
settled, or dismissed.
17.3 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty,
covenant, or agreement contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any
subsequent breach. The waiver by any party hereto at or
before the Closing Date of any condition to its obligations
hereunder which is not fulfilled shall not preclude such
party from seeking redress from the other party hereto for
breach of any representation, warranty, covenant, or
agreement contained in this Agreement.
17.4 Binding Effect; Benefits. This Agreement shall inure to the
benefit of the parties hereto and shall be binding upon the
parties hereto and their
27
Asset Purchase Agreement By and Among
SIDT, Inc.; SI Diamond Technology, Inc.;
Sign Builders of America, Inc.; Sign Builders, Inc.;
And Xxxxx Xxxxx
Page 25 of 27
respective successors and assigns. Except as otherwise set
forth herein, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the
parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by
reason of this Agreement.
17.5 Notices. All notices, requests, demands, and other
communications which are required to be or may be given under
this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or transmitted
by telex, telecopy, or facsimile transmission (with
confirmation of receipt) or upon receipt after dispatch by
certified or registered first class mail, postage prepaid,
return receipt requested, or by overnight courier to the
party to whom the same is so given or made:
If to Seller or Majority Holder, to:
Sign Builders of America, Inc.
C/O Xxxxxxxxxxx X. Xxxxxx
0000 Xxxxx Xxxxx Xxxx.
Xxxxxx, XX 00000
If to Buyer, to:
SI Diamond Technology, Inc.
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
Attn: President
or to such other address as such party shall have specified
by notice to the other party hereto.
17.6 Entire Agreement. This Agreement (including the Schedules
hereto) constitutes the entire agreement and supersedes all
prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter
hereof and cannot be changed or terminated orally.
17.7 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not be
deemed to be a part of this Agreement or to affect the
meaning or interpretation of this Agreement.
17.8 Schedules. All Schedules hereto have been delivered by the
parties hereto to each other previously or simultaneously
herewith.
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Asset Purchase Agreement By and Among
SIDT, Inc.; SI Diamond Technology, Inc.;
Sign Builders of America, Inc.; Sign Builders, Inc.;
And Xxxxx Xxxxx
Page 26 of 27
17.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed
to be an original and all of which together shall be deemed
to be one and the same instrument.
17.10 Rules of Construction.
17.10.1 In this Agreement, unless the context otherwise
requires, words in the singular number or in the
plural number shall each include the singular
number and the plural number, and words of the
masculine gender shall include the feminine and
the neuter, and, when the sense so indicates,
words of the neuter gender may refer to any
gender.
17.10.2 The term "affiliate" shall mean any person
directly or indirectly controlling, controlled by,
or under common control with the person of which
it is an affiliate.
17.10.3 The term "person" shall mean an individual, a
corporation, a partnership, an association, a
trust, or any other entity or organization,
including a government or political subdivision or
an agency or instrumentality thereof.
17.10.4 The terms "included" or "including" shall mean
without limitation by reason of enumeration.
17.11 Governing Law. This Agreement shall be construed as to both
validity and performance and enforced in accordance with and
governed by the laws of the State of Texas and is performable
in Xxxxxx, Xxxxxx County, Texas.
17.12 Separability. Any term or provision of this Agreement which
is invalid or unenforceable shall be ineffective to the
extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement. However, to the extent that any
time of performance or area of performance of the
Non-competition covenant set forth in Section 5.2 is held by
any court of competent jurisdiction to be unenforceable by
virtue of its being too broad in its scope, then the court
making that judgment shall reform that section of the
Agreement to make the requirements of Section 5.2 reasonable
in terms of term and scope of the restrictions.
17.13 Publicity Concerning Agreement. The parties agree that this
Agreement constitutes a material obligation of Buyer, as that
term is applicable to the
29
Asset Purchase Agreement By and Among
SIDT, Inc.; SI Diamond Technology, Inc.;
Sign Builders of America, Inc.; Sign Builders, Inc.;
And Xxxxx Xxxxx
Page 27 of 27
Securities Exchange Act of 1934 as amended. As such Buyer is
required to make a public disclosure of this Agreement and
may further be required to include a copy of this Agreement
which will thereafter become a matter of public record.
Seller shall take no action which will inhibit nor preclude
Buyer from fulfilling this obligation.
17.14 Amendments. This Agreement may not be modified or changed
except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification
or amendment is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
SIDT, INC. SI DIAMOND TECHNOLOGY, INC.
("Buyer") ("SIDT")
By: By:
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxxx, Vice President Xxxxxxx X. Xxxxx, Vice President
and Chief Financial Officer and Chief Financial Officer
SIGN BUILDERS OF AMERICA, INC. SIGN BUILDERS, INC.
("SBOA") ("SBI")
(jointly referred to as "Seller")
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx Xxxxx
----------------------------------- -----------------------------------
Xxxxx Xxxxx, President Xxxxx Xxxxx, President
XXXXX XXXXX
("Majority Holder")
/s/ Xxxxx Xxxxx
--------------------------------------
