ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (hereinafter sometimes referred to as "this
Agreement") is executed as of August 2, 2000, and is effective as of the closing
of the purchase, by and between, Century Rubber, LLC, a limited liability
California corporation (hereinafter referred to as "Seller") and Industrial
Rubber Innovations, Inc., a Florida corporation, (hereinafter referred to as
"Buyer");
WHEREAS, Industrial Rubber Innovations, Inc. is currently in the business
of marketing and developing rubber products with certain unique qualities.
WHEREAS, Century Rubber, LLC ("Seller") owns the intellectual and
proprietary information (Exhibit 1) that are marketed by Industrial Rubber
Innovations, Inc.("Buyer").
WHEREAS, Industrial Rubber Innovations, Inc. has entered into an agreement
to sell virtually all of its outstanding shares to Pacific Charter Financial
Services Corporation and the purchase is contingent upon all intellectual and
proprietary information being owned by the Buyer.
WHEREAS, the principals of Century Rubber, LLC are Nancy Sheo and Steven
Tieu and officers and directors of Industrial Rubber Innovations, Inc.
WHEREAS, Century Rubber LLC wishes to sell all of its assets and all of the
business currently conducted by it (all such business hereinafter sometimes
referred to as "the Acquired Assets") to Buyer in exchange for the consideration
stated herein and the assumption by Buyer of certain liabilities (to the extent
disclosed in this Agreement) of Seller as herein provided;
WHEREAS, Buyer wishes to acquire such assets and business of Seller, all as
hereinafter more fully set forth; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
convenant and agree as follows:
SECTION I
ASSETS TO BE PURCHASED
1. DESCRIPTION OF PURCHASE ASSETS. On the terms and subject to the
conditions herein, Seller agrees to sell, convey, transfer, assign, set over and
deliver to Buyer on the Closing Date effective as of the Effective Time (as said
terms are defined in Section 6.1 and 6.2 hereof) all of the assets and goodwill
owned and operated by Seller and used or intended for use in the operation of
the Century Rubber LLC business (the Acquired Business"), real and personal,
tangible and intangible, of every kind, nature and description, and wheresoever
situated, whether or not carried or reflected on the books of Seller, or on the
Balance Sheet (as such term is defined in Article IX hereof), including, but not
limited to the following:
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a. All intellectual property of Nancy Sheo and Steven Tieu, all research
and development work completed or in process for certification listed in Exhibit
"1" herein, including but not limited to plans, controlling documents, material
specifications, process specifications, detail design drawings, tooling planning
list, tooling design drawings, manufacturing engineering manual test reports and
test results, engineering reports, quality control manual, distributorship
agreements and marketing documentation, certification documentation, computer
programming and hardware, inventory of raw materials, supplies, purchased parts,
concepts, designs, work-in-process, and finished products, including without
limitation.
b. the right to use the name Veraton and Century Rubber and all derivations
of each thereof and all trade names, trademarks, service marks and applications
for any thereof.
c. licenses and permits as may be permitted by regulatory authorities.
d. all of Seller's right, title and interest in all inventions, patents,
patent rights, applications for patents, trademarks, trade names, copyrights,
applications for copyright, production rights, manufacturing rights,
reproduction rights, similar rights, trade secrets, know how, processes,
formula, licenses, permits, and designs;
e. corporate seal, minute books and stock record book, and all other records
and reports relating to the assets purchased and the liabilities assumed by
Buyer, all printed and other advertising, sales and promotional materials, and
all stationary and other imprinted material and office supplies, signs, and
catalogues, circulars, business records and supplies, and the right to receive
mail and other communications and shipments of merchandise addressed to Seller
and the rights to telephone numbers, and all computer programs, computer
software, computer manuals, flowcharts, printouts, data files, programs
documentation and all other related materials of Seller and all copies of each
thereof;
f. all other assets or interests to which Seller has any right by ownership,
use o otherwise, or in which Seller has a conveyable or assignable interest on
the Closing Date.
Said assets, properties, interests, and business of Seller to be sold,
conveyed, transferred, assigned, set over and delivered to Buyer on the Closing
Date are herein sometimes collectively called the "Purchased Assets".
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SECTION II
PURCHASE PRICE OF THE PURCHASE ASSETS
AND ASSUMPTION OF LIABILITIES
1. PURCHASE PRICE.
A. AMOUNT OF PURCHASE PRICE. The purchase price is $,1,000,000 which shall
be paid in ten (10) installments. One-half of the first installment, $50,000,
shall be paid within twenty business (20) days from signing herein, and $50,000
from proceeds of the Regulation D, Rule 506 Private Placement Memorandum for a
total of $100,000. The second half of the first installment of $50,000 payment
is due no later than 45 days from the date of the Regulation D, Rule 506 Private
Placement Memorandum. The balance of $900,000 shall be due and payable, in
equal installments of $100,000, on August 1st for nine years. (the "Purchase
Price").
1. In the event this transaction does not close either at the Closing date
or any extension thereto, the assets listed as Exhibit 1 herein, shall be
returned to the Seller and any payments made shall be refundable in full to
Buyer.
1. Buyer may extend an additional ten business (10) days, if necessary.
2. Allocation of Purchase Price. The parties hereto agree that the Purchase
Price shall be allocated among the Purchased Assets for all purposes, including
financial and tax purposes in the manner reasonably determined by the Buyer's
accountant, with the approval of Seller's accountants, which approval shall not
be unreasonably withheld. The parties hereto further agree to utilize the
foregoing allocation of the Purchase Price in filing any and all necessary
reports with the Secretary of the Treasury under Section 1060(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
SECTION III
ASSUMPTION OF CERTAIN LIABILITIES
CERTAIN RELATED TRANSACTION
Anything to the contrary in this Agreement or otherwise notwithstanding,
Buyer shall not assume and shall have no liability with respect to any
liabilities or obligations of Seller which are not expressly assumed by Buyer
pursuant to this Section III.
SECTION IV
ASSIGNMENT OF CONTRACT RIGHTS
1. In connection with the sale and transfer of the Purchased Assets and on
the terms and subject to the conditions herein expressed, Seller will assign, or
cause to be assigned, to Buyer all of Seller's right, title and interest in and
to all contracts, leases and other agreements to be assumed by Buyer hereunder,
and all guaranties, warranties and service contracts relating to the Purchased
Assets. The assets are to be delivered free and clear of indebtedness of any
kind.
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SECTION V
CONDITIONS TO CLOSING APPLICABLE TO SELLER
1. Correctness of Warranties, etc. The warranties and representations made
by Seller herein or in any Exhibit or list or information required to be
delivered pursuant hereto shall be true and correct in all material respects on,
and as, of the Closing Date with the same effect as if such warranties and
representations had been made on, and as of, the Closing Date, and Seller shall
have in all material respects, performed and complied with all agreements,
covenants and conditions on their parts required to be performed or complied
with on, or prior to, the Closing Date.
2. No Undisclosed Liabilities, etc. On the Closing Date, Seller shall have
no knowledge of any material liability (or reasonable basis therefor) of any
nature, whether accrued, absolute, contingent or otherwise, relating to Seller
(pursuant to generally accepted accounting principles) other than those
disclosed in the Financial Statements, the Exhibits hereto, those incurred in
the ordinary course of its business, and those agreed to in writing by Buyer.
3. Non Commit. Seller shall not sign or commit the company on any contract
or agreement, nor pay any compensation, including but not limited to back
salaries, vacation pay, severance pay or bonuses, nor make any extraordinary
purchases, note payments, lease payments, stock options, stock warrants, or
special vendor considerations prior to the Closing, except those payments
approved by Buyer in writing.
4. Taxes are to be paid current.
SECTION VI
CONDITIONS TO CLOSING APPLICABLE TO BUYER
1. CORRECTNESS OF WARRANTIES, ETC. The warranties and representations made
by Buyer herein or in any Exhibit or list or information required to be
delivered pursuant hereto shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if such warranties and
representations had been made on and as of the Closing Date and Seller shall
have in all material respects, performed and complied with all agreements,
covenants and conditions on their parts required to be performed or complied
with on or prior to the Closing Date.
SECTION VII
THE CLOSING
1. CLOSING DATE. Closing of this transaction shall take place August 2,
2000, which date shall be considered the effective date of this Contract of
Sale.
2. CHANGES. Agreements to change or extend times and places permitted by
this section may be made by an instrument or instruments in writing signed by an
officer of Buyer and an officer of Seller authorized to sign such a document.
3. Assignment. This Asset Purchase Agreement may be conveyed to a
subsidiary or affiliated corporation of Buyer before the Closing of this
transaction with the approval of Seller.
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SECTION VIII
DELIVERIES AT THE CLOSING
1. DELIVERIES BY SELLER. At the closing on the Closing Date, Seller
shall deliver to Buyer, in addition to the other items specified elsewhere in
this Agreement.
a. Company corporate seal.
b. Minute book.
c. Books and records.
d. Corporate name of Century Rubber, LLC
e. All drawings, designs, research and development of the Nancy Sheo and
Steven Tieu.
f. Licenses and permits as may be permitted by regulatory authorities.
g. Raw materials, if any.
h. Off balance sheet assets and intangibles, including but not limited to
plans, controlling documents, material specifications, process specifications,
design drawings, tooling planning list, tooling design drawings, manufacturing
engineering manual, manufacturing planning documents, test reports and test
results, engineering reports, quality control manual,, distributorship
agreements and marketing documentation, registered US trademarks/copyrights,
patents, patents applied for and certification documentation.
SECTION IX
POST CLOSING COVENANTS OF SELLERS
1. Twenty (20) days after the Closing Buyer shall deliver to Seller $50,000,
which represents one-half of the first installment of this Asset Purchase
Agreement. The second half of the first installment of $50,000 payment is due
no later than 45 days from the date of the Regulation D, Rule 506 Private
Placement Memorandum, for a total of $100,000.
2. Further Assurances. Upon the reasonable request of Buyer at any time and
from time to time after the Closing Date, Seller will forthwith at Buyer's
expense, execute and deliver such further instruments of assignments, transfer,
conveyance, endorsement, direction or authorization and do all things necessary
or proper as Buyer or its counsel may reasonably request, in order to vest,
perfect or confirm, of record or otherwise, the right, title and interest of
Buyer, its successor and assigns, in and to the Company's assets and the
assignment to, and assumption by Buyer of the franchises, agreements, contracts,
and commitments to be assigned to, and assumed by Buyer to carry out the purpose
of this Agreement.
SECTION X
POST CLOSING COVENANTS OF BUYER
Buyer to assume possession of the assets at closing. Seller entrusts the
assets to Buyer to be returned in not less the condition received should there
be a default of payment of the Promissory Note.
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SECTION XI
BULK SALES LAWS
Seller hereby represents and warrants that on the Closing Date the fair
market value of Seller's assets, or the value thereof on the books of Seller,
whichever is the lesser amount, exceed the total amount of Seller's liabilities,
and that the proceeds to Seller from the sale of the Purchased Assets
contemplated in this Agreement will be applied first to the debts of Seller (to
the extent not assumed by Buyer hereunder) associated with or related to such
Purchased Assets. In consideration of such representations and warranty by
Seller, Buyer hereby waives any compliance with the bulk sales law of any state
or other jurisdiction which might be applicable to the transaction contemplated
in this Agreement, subject to the agreement that nothing in this Section shall
estop or prevent Buyer from asserting as a bar or defense to any action or
proceeding brought under that law that it is not applicable to the sale
contemplated under this Agreement, provided however that Seller shall indemnify
and hold harmless Buyer with respect to any and all liability, including
guarantees, which may arise as a result of the application of any such bulk
sales law, the intent of this provision being that Seller will maintain Buyer in
such financial condition as would have resulted had such compliance taken place.
SECTION XII
INDEMNIFICATION
1. INDEMNITY BY SELLER. Seller agrees to indemnify and hold harmless
Buyer against any loss, damage or expense (including reasonable attorney's fees)
suffered by Buyer, its successors or assigns resulting from:
a. any breach by Seller of this Agreement.
b. any inaccuracy in, or breach of, any of the representations, warranties
or covenants made by Seller herein or in any Exhibit hereto.
c. any inaccuracy or misrepresentation in any certificate or information
required to be delivered hereunder by Seller in accordance with any provision of
this Agreement.
d. any suit in which Buyer becomes involved alone, or in conjunction with
Seller, and resulting directly or indirectly from the alleged failure of Seller
to pay any of the alleged liabilities or obligations of Seller or to fulfill any
alleged contractual obligation of Seller; or
e. any claim, demand, administrative proceeding or suit against Buyer,
including, without limitation, any tort claim or demand and any claim or
liability arising out of the manufacture, sale or licensing of products or the
performance of services by Seller, to the extent that the acts, deeds, omissions
or contractual undertakings giving rise to such claim, demand, or liability were
acts, deeds, omissions or contractual undertakings by Seller, which shall have
transpired, occurred or been done, performed or omitted prior to the Effective
Time, other than the liability for which has been assumed by Buyer.
SECTION XIII
SECURITY AGAINST LOSS
Buyer hereby pledges the assets being acquired under this Asset Purchase
Agreement, and listed in Exhibit "I" herein, as security for the Promissory Note
being delivered to Seller at closing.
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SECTION XIV
REPRESENTATIONS AND WARRANTIES OF SELLER
Sellers' warranties and representations to, and covenants with, Buyer and
its successors and assigns (which warranties, representations and covenants
together with the other warranties, representations and covenants of Seller set
forth in this Agreement, or contained in any exhibit hereto, or in any
certificate or other document required to be delivered to Buyer by Seller,
pursuant to this Agreement) shall, except as otherwise expressly provided
herein, survive the closing hereof as follows:
1. ORGANIZATION, ETC. Seller is a California limited liability
corporation, duly organized, validly existing and in good standing under the
laws of California and has the powers and all licenses, permits, authorizations
and approvals (governmental, corporate or otherwise) necessary to own and
operate its properties and to carry on the Business as it is now being
conducted and has the authorization to enter into this Asset Purchase Agreement.
2. GOOD TITLE, ETC. Except as disclosed on Exhibit (III) Seller will
have good and marketable title, to all of the Purchased Assets, subject to no
mortgages, pledges, liens, encumbrances or other charges of any kind, except as
stated herein. The Purchased Assets to be conveyed to Buyer on the Closing Date
shall be free of mortgages, pledges, liens, encumbrances or charges of any kind,
except as disclosed on Exhibit 3.
3. NO LITIGATION. There is no litigation at law or in equity, no
arbitration proceedings and no proceedings before any commission or other
administrative or regulatory authority pending, or to the knowledge of Seller
threatened against or affecting the Purchased Assets or Business or Seller's
right to carry on such businesses as conducted on the date hereof. Seller is not
in default with respect to any order, writ, injunction or decree of any Federal,
state, local or foreign court, department, agency or instrumentality. Seller is
not presently engaged in any legal action to recover monies due to it or damages
sustained by it.
4. NO UNDISCLOSED LIABILITIES. Except as identified and attached
hereto as Exhibit III, as of the date hereof Seller had, and as of the Closing
Date Seller will have, no material liability of any nature, whether accrued,
absolute, contingent or otherwise, relating to the Acquired Business not
disclosed in this Agreement or any certificate, exhibit or other instrument or
list or information required to be furnished by Seller pursuant to this
Agreement.
5. CONTRACTS AND COMMITMENTS. Except as shown in Exhibit II, Seller is
not a party to any written or oral contracts or agreements. Seller has
furnished or made available to Buyer true and correct copies of all documents
described in said Exhibit.
6. NO DEFAULT. Seller is not, on the date hereof, and on the Closing
Date it will not be, in default under or in breach of the terms or conditions of
any lease, contract, or other agreement, obligation or liability to be assumed
by Buyer, and there has not occurred, any event which after the giving of
notice, or the lapse of time, or both would constitute a default under, or a
breach of, any of such leases, contracts, or other agreements, assumed
obligations or assumed liabilities.
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7. OWNERSHIP OF ESSENTIAL ASSETS: PRESENCE OF ESSENTIAL ASSETS. Except
as reflected on Exhibit 1, with respect to the Acquired Business of Seller,
there is no material asset: (i) used by Seller in the conduct of the Acquired
Business or (ii) without which the Acquired Business of Seller could not be
conducted as presently conducted, which is not either owned by Seller or leased
to Seller under any of the leases listed in Exhibit II, except as otherwise
disclosed in this Agreement: all such assets owned or used by Seller are
encompassed within the Purchased Assets and are on the date hereof, and on the
Closing Date will be, in as good operating condition and repair, ordinary wear
and tear excepted, as they are on the date hereof. On the Closing Date, Seller
will deliver to Buyer all of the Purchased Assets.
8. APPROVAL. Seller, at the time of closing will have taken all
requisite legal action to approve this Agreement and the transactions
contemplated by this Agreement, and there shall have at the time of closing been
delivered to Purchaser certified copies of the resolutions duly adopted in
connection therewith.
9. RELIANCE. All documents, records and other information attached as
Exhibits hereto have been prepared by Seller and furnished to Buyer by Seller,
and fairly, accurately and completely present (in a manner consistent with prior
periods) the matters purported to be presented therein. Seller acknowledges
that such documents were furnished at the request of Buyer and that such
documents, records and other information have been relied upon by Buyer in
connection with Buyer's execution and delivery of this Agreement.
SECTION XV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer warrants and represents to and covenants with Seller as follows:
1. ORGANIZATION, ETC. Buyer is a corporation, duly organized and
validly existing and in good standing under the laws of the State of Nevada and
has all necessary corporate power and authority to enter into this Agreement and
the transactions contemplated hereby.
2. APPROVALS. At the time of closing Buyer will have taken all
requisite corporate action to approve this Agreement and the transactions
contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transaction contemplated
hereby do not, and will not, violate, conflict with or result in a breach of or
default under any of the terms, provisions or conditions of the certificate of
incorporation or by-laws of Buyer or any statute, regulation or any court or
administrative order or process, or any agreement or instrument to which Buyer
is a party, or by which it, or its properties or assets is bound or result in
the creation of any lien, charge or encumbrance upon any of the assets of Buyer
under any of the foregoing.
SECTION XVI
MISCELLANEOUS
1. TERMINATION. This Agreement may be terminated under any of the
following circumstances by notice given on or before the Closing Date:
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1. Buyer shall have the right to terminate if, during the period until the
Closing Date, Buyer shall learn of any fact or condition which is materially at
a variance with one or more of the warranties or representations of Seller set
forth in this agreement, or Seller shall fail to perform any of the covenants
set forth in this Agreement.
2. INCORPORATION OF EXHIBITS. This Agreement shall be deemed to have
incorporated by reference all of the Exhibits referred to herein to the same
extent as if such Exhibits were fully set forth herein. Each reference herein
to "the Agreement" or "this Agreement" shall be construed to include each such
Exhibit.
3. ENTIRE AGREEMENT AND AMENDMENTS. This Agreement and the Exhibits
attached hereto represent the entire understanding and agreement between the
parties with respect to the subject matter hereof and shall supersede any prior
agreement and understanding between the parties (whether oral or written) with
respect to that subject matter. This Agreement may not be amended or modified
except by a written instrument executed by an authorized representative of Buyer
and Seller.
4. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of and be enforceable by the parties hereto, and their respective
successors, heirs, and personal and legal representatives; but no assignment
shall relieve any party of its obligations hereunder. Buyer shall have the
right to assign its rights and obligations under this Agreement to one or more
subsidiaries of Buyer, provided however that Buyer hereby unconditionally
guarantees the performance by such assignee or assignees of each and every
obligation of Buyer under this Agreement. If such assignment to one or more
subsidiaries is made by Buyer, the term "Buyer" as used herein shall refer to
the assignee or assignees of this Agreement.
5. GOVERNING LAW. This Agreement shall be controlled, construed and
enforced in accordance with the laws of the State of California.
6. COUNTERPARTS. This Agreement may be executed simultaneously and in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
7. CONFIDENTIALITY AND NONCOMPETITION AGREEMENT.
1. For a period of five (5) years from the Closing Date, Shareholders Steven
Tieu, Nancy Sheo and Dave Foran shall not, without the prior written consent of
the Buyer, do any of the following:
1. Enter into, be engaged, directly or indirectly, as an employee,
independent contractor, stockholder, owner, or officer, in any business or
undertaking which owns, operates, and/or controls (in whole or in part) anywhere
in the world a rubber manufacturing or producing, selling, leasing or licensing
business.
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ii Engage in any activity which competes with the Business and/or the Assets
being sold and/or with the business or assets of Industrial Rubber Innovations,
Inc.
2. Shareholders Steven Tieu, Nancy Sheo and Dave Foran agree that in the
event any of the provisions of Section XVI, 7 are held to be unenforceable, the
parties agree that each of the provisions shall be deemed modified to the
maximum restrictions which may be legally enforced. Without limiting the
foregoing, if any provision of Sections XVI, 7 shall be held unenforceable, said
invalidity shall not affect the validity of any other provisions of this
Agreement.
3. Shareholders Steven Tieu, Nancy Sheo and Dave Foran agree to keep secret
and confidential, and not disclose to others, or use, any and all information
heretofore acquired by them relating to, or concerning: (i) the Business and/or
Assets being acquired by Buyer, including but not limited to, the performance of
services involved in, relating to, or concerning the operation of the Business,
and/or the Assets, of Seller, the identity of the Company's customers and/or
their prices, suppliers, employees, independent contractors, techniques,
procedures and practices utilized in, or in connection, with the Business, their
business plans, and the equipment software, sources, techniques, procedures, and
practices utilized in, or in connection with, the Business and/or the Assets
being acquired by Buyer and/or (ii) the Business or Assets of Industrial Rubber
Innovations, Inc.; except for imparting this information to the Buyer or to the
Buyer's professional advisors, or to the extent required by any statute,
ordinance or applicable law.
IN WITNESS WHEREOF, Seller and Buyer have each caused this Agreement to be
duly executed on and has hereunto set their hands and seal, this 2nd day of
August, 2000.
(FACSIMILE SIGNATURES ACCEPTED AND BINDING)
"BUYER" "SELLER"
Industrial Rubber Innovations, Inc., Century Rubber, LLC,
a Florida corporation A California limited
liability corporation
By: /s/ Dave Foran By: /s/ Steven Tieu
Dave Foran, President Steven Tieu, President
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By: /s/ Steven Tieu By: /s/ Nancy Sheo
Steven Tieu, Vice President Nancy Sheo, Vice President
The following being all of the shareholders of Century Rubber, LLC hereby (i)
approve the foregoing Asset Purchase Agreement, and (ii) agree to all the
confidentiality and non-compete provisions in Section XVI, 7 herein:
/s/ Steven Tieu /s/ Nancy Sheo /s/ Dave Foran
----------------------- -------------------- ---------------------
Steven Tieu Nancy Sheo Dave Foran
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EXHIBIT I
List of Assets Being Acquired
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EXHIBIT II
CONTRACTS AND COMMITMENTS.
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EXHIBIT III
UNDISCLOSED LIABILITIES.
