SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report: December 5, 1995
CARVER CORPORATION
(Exact Name of Registrant as specified in its charter)
WASHINGTON 91-1043157
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
20121 - 48th Avenue West, Lynnwood, WA 98036
(Address of principal executive offices) (Zip Code)
(206) 775-1202
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On November 20, 1995, Phoenix Gold International, Inc. an
Oregon corporation (the "Buyer") entered into an Asset
Purchase Agreement (the "Agreement") with Carver Corporation,
a Washington corporation (the "Registrant") pursuant to which
the Buyer agreed to purchase certain of the assets used by the
Registrant in its professional sound division (the
"Division"). The Registrant designs, develops, manufactures
and markets high-fidelity audio components targeted to the
audio entertainment systems market and professional amplifiers
principally for the professional audio market. While sales of
professional sound products for the professional audio
comprise approximately 30% of the Registrant's net revenues,
the Division has no separate legal status or existence.
On November 20, 1995 (the "Closing Date"), the sale was
completed. The Buyer acquired on Closing Date substantially
all of the assets of the Division excluding accounts
receivable as outlined in the Asset Purchase Agreement
attached hereto as Exhibit 2.1 and incorporated herein by
reference. The Registrant markets its professional products
to musical instrument and professional audio retailers,
touring sound companies, and sound contractors for commercial
installations. In addition, Carver Corporation has contracts
to supply professional products as an Original Equipment
Manufacturer (OEM). Phoenix Gold International intends to
continue such business and contracts.
The purchase price for the assets (the "Purchase Price")
was $2,023,000 which was paid to the Registrant in cash on
closing less the sum of $350,000 (the "Deferred Purchase
Price"). The Purchase Price included $380,000 for finished
goods inventory.
On the Closing Date, the Registrant entered into various
agreements with the buyer including (a) a manufacturing
agreement whereby the Registrant will provide certain finished
products and raw material to the Buyer for a transitional
period, (b) a noncompetitive agreement prohibiting Registrant
from competing with the Division for five years, (c)
agreements whereby Registrant granted to Buyer use of certain
licensed technology and patents and (d) the use of the name
"Carver Professional" by Phoenix Gold International for a
period of five years.
In the Agreement,the Registrant made various
representations and warranties as to itself and the Division
and has agreed to indemnify the Buyer against any damages
arising from any misrepresentation, breach of warranty or
nonfulfillment of any covenant or obligation on the part of
the Registrant.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Not Applicable
(b) Pro Forma Financial Information
Pro forma financial information is not available,
but will be filed on Form 8 as soon as practicable, but
not later than 60 days after the due date of this
report.
(c) Exhibits
The following exhibits are being filed herewith:
2.1 Asset Purchase Agreement dated as of November
20, 1995.
2.2 Amendment No. 1 to Asset Purchase Agreement
dated as of November 20, 1995.
2.3 License Agreement dated as of November 20, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned here unto duly
authorized.
CARVER CORPORATION
Dated: December 5, 1995
/s/ Sandra L. Jenkins
Sandra L. Jenkins
Vice President - Finance
(Principal Financial and
Accounting Officer)
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of November 20,
1995, is made and entered into by and between PHOENIX GOLD
INTERNATIONAL, INC., an Oregon corporation ("Purchaser"),
and CARVER CORPORATION, a Washington corporation (the
"Company").
Background
The Company, through its professional sound division
(the "Division"), designs, manufactures, markets and sells
electronic amplifiers and other products for the
professional market, including OEM customers. The Company
desires to sell, and Purchaser desires to purchase, certain
of the assets used by the Company in the Division on the
terms and subject to the conditions set forth in this
Agreement.
Agreement
In consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE 1
Sale of Assets, Liabilities Assumed and Closing
1.1 Purchase and Sale of Assets. Purchaser agrees to
purchase and pay for, and the Company agrees to sell,
assign, transfer and convey to Purchaser on the Closing Date
(defined below), the following assets (collectively, the
"Assets"):
1.1.1 Books and Records. All of the business
books and records (including, without limitation,
financial records, warranty experience records, trade
show booths and other advertising materials and product
brochures), operating systems, instruction manuals,
process manuals and other information relating to the
design, manufacture, marketing and sale of the products
sold by or through the Division that are identified on
attached Exhibit A (collectively, the "Products") and
for all other professional products sold by or through
the Division since January 1990, including, without
limitation, lists or other information with respect to
current or prospective customers, product schematic
designs and blueprints, dealer and vendor information
and tooling information (collectively, the "Books and
Records"); provided, however, that the Books and
Records acquired by Purchaser shall not include any
information licensed to the Company under that certain
License Agreement effective June 1, 1980 between the
Company and Carver Technology Development, Inc.
1.1.2 Intellectual Property. The following
intellectual property rights (collectively, the
"Intellectual Property"); provided, however, that the
Intellectual Property acquired by Purchaser does not
include any of the Company's rights under that certain
License Agreement effective June 1, 1980 between the
Company and Carver Technology Development, Inc.:
(i) Patents. All of the Company's rights
under or with respect to United States Patent
Number 4,808,946 (dated February 28, 1989); and a
perpetual, irrevocable, non-exclusive, paid-up
license with respect to all other patents and
patent rights owned by the Company that as of the
Closing Date are used or useful in connection with
the design, manufacture, marketing or sale of any
of the Products (including, without limitation,
United States Patent Number 5,396,194 (dated March
7, 1995)).
(ii) Carver Professional Name. An exclusive,
irrevocable, personal, non-transferable, paid-up
license to use the name "Carver Professional" for
five years following the Closing Date; provided,
however, that such license shall be revocable (A)
upon the failure of Purchaser to pay to the
Company the Deferred Purchase Price (defined
below) when due, subject to Purchaser's offset
rights under this Agreement or the Manufacturing
Agreement (defined below), (B) upon a final
judicial determination that Purchaser has used the
name "Carver Professional" in a manner that
materially disparages the tradename "Carver" or
(C) upon a final judicial determination that the
products manufactured and sold by Phoenix Gold to
which the name "Carver Professional" is affixed
are not of substantially similar quality of
design, materials and workmanship as the Products
as manufactured and sold by the Company at the
Closing Date.
(iii) Settlement Agreement Rights. A non-
exclusive assignment of the Company's rights under
that certain Settlement Agreement dated as of
December 8, 1994 among the Company, Robert W.
Carver and Diana R. Carver (the "Settlement
Agreement").
(iv) Other Rights. An assignment of all of
the Company's rights in all other assumed business
names, trademarks and trademark rights, service
marks and service mark rights, service names and
service name rights, copyrights and copyright
rights and other proprietary intellectual property
rights and all pending applications for and
registrations of any of the foregoing that are
used as of the Closing Date in connection with the
design, manufacture, marketing or sale of any of
the Products, and a perpetual, nonexclusive, paid
up license with respect to all of such rights in
connection with the design, manufacture, marketing
or sale of any of the Manufactured Products.
1.1.3 Acquired Contracts. All of the Company's
rights in the contracts, agreements and purchase orders
identified on attached Exhibit B (collectively, the
"Acquired Contracts").
1.1.4 Finished Goods Inventory. All of the
Company's inventory of finished Products existing at
Closing. The purchase price to Purchaser for each
component of such inventory is set forth on attached
Exhibit D.
1.2 Liabilities Assumed. At Closing, Purchaser shall
accept the assignment of and assume responsibility for the
following liabilities and obligations (collectively, the
"Liabilities"):
1.2.1 Warranty Claims. All warranty claims for
Products sold prior to the Closing Date in accordance
with the terms of the Company's written warranty
policies.
1.2.2 Acquired Contracts. The Company's
obligations under the Acquired Contracts with respect
solely to events occurring following Closing.
Purchaser shall not assume, and does not by this Agreement
assume, any liabilities of the Company except for the
Liabilities. All other liabilities of any kind, including,
without limitation, any product liability associated with
the operation of the Division or the Company prior to
Closing, any commissions or other amounts owed to dealers,
distributors or sales representatives for actions, events or
sales of products occurring prior to Closing, or for any
other reason owed by the Company, are expressly retained by
and shall remain the obligation of the Company.
1.3 Closing. The closing of the transaction
contemplated by this Agreement (the "Closing") shall, unless
another date or place is agreed upon in writing by the
parties hereto, take place in Lynnwood, Washington at the
offices of the Company at 10:00 a.m., Pacific Time, on
November 20, 1995 (the "Closing Date"). At the Closing,
Purchaser shall pay a portion of the purchase price for the
Assets. Simultaneously, the Company shall sell, assign,
transfer and convey to Purchaser good and valid title in and
to all of the Assets, free and clear of any liens, claims,
mortgages, encumbrances, pledges, security interests,
equities and charges of any kind (each a "Lien") by
delivering to Purchaser the assignments, licenses, bills of
sale, opinions, certificates and other agreements, documents
and instruments to be delivered under Article 8.
ARTICLE 2
Covenant Not to Compete
2.1 Covenant. For a period of five years following
Closing, the Company covenants and agrees that it will not,
directly or indirectly: (a) as a shareholder, investor,
consultant, partner or otherwise design, manufacture,
market, distribute, sell or otherwise deal with (including,
without limitation, use the tradename "Carver" or any
derivative thereof in connection with) any products in
competition with any business conducted by or through the
Division as of Closing in any location throughout the world
in which any of the Products or any of the Manufactured
Products (defined in Section 8.9 below) were sold during any
of the 12 months immediately preceding the Closing; (b)
hire, or directly or indirectly assist anyone else to hire,
any Employee (defined below); or (c) seek to persuade any
Employee to discontinue employment with Purchaser, or seek
to persuade any independent contractor, customer or supplier
to discontinue such person's business relationship with
Purchaser. "Employee" means any person who (i) was employed
by the Company in or with respect to the Division at any
time during the 12 months immediately preceding the Closing
Date and (ii) who is hired by Purchaser within the 12 months
immediately following Closing.
2.2 Exclusions. Section 2.1 shall not apply in the
following circumstances:
2.2.1 The Company retains the right to sell its
consumer products for custom installations that involve
professional sound applications in the same manner and
to the same extent as the Company is doing so as of the
Closing Date.
2.2.2 The Company retains the right to engage in
ordinary course business operations with third parties
solely with respect to products other than professional
sound products, including, without limitation, the
Products or the Manufactured Products, even though
other divisions or subsidiaries of such third parties
also design, manufacture, market, distribute, sell or
otherwise deal in products that compete with the
Products or the Manufactured Products.
2.2.3 The Company may sell, following the 180th
day after Closing, any of the work in process and raw
materials not purchased by Purchaser pursuant to the
option granted in Section 4.4 of the Manufacturing
Agreement (and including the right of the Company to
purchase additional raw material to manufacture
Products and Manufactured Products so as to consume raw
material owned by the Company at Closing).
2.2.4 The Company may sell any of the Division's
products that are in inventory as finished products or
work in process as of Closing that are not Products or
Manufactured Products (e.g., guitar amplifiers).
2.3 Subsequent Modification. It is the intent of the
parties that the restrictions contained in this Article 2 be
reasonable in both duration and geographic scope. If any
court of competent jurisdiction shall find the provisions of
this Article 2 unreasonable, the restrictions contained in
this Article 2 shall be reduced in duration or geographic
scope, or both, to the extent necessary to be deemed
reasonable by such court, and shall be enforceable as so
modified.
ARTICLE 3
Purchase Price
3.1 Determination and Allocation of Purchase Price.
The purchase price for the Assets (the "Purchase Price")
shall be the sum of $______________. The Purchase Price
shall be allocated among the Assets and the covenant not to
compete contained in Article 2 by Purchaser and the Company
pursuant to a memorandum to be signed by them at Closing.
The parties shall report consistently with such allocations
on all income tax returns and other tax statements
(including, without limitation, filing of Form 8594 for the
fiscal year in which Closing occurs) and in the course of
any tax audit, tax review or tax litigation relating
thereto.
3.2 Payment of Purchase Price. The Purchase Price,
less the sum of $350,000 (the "Deferred Purchase Price"),
shall be paid by Purchaser on the Closing Date to the
Company. The Deferred Purchase Price, subject to
Purchaser's offset rights under this Agreement and the
Manufacturing Agreement, shall be paid to the Company on the
first anniversary of the Closing Date. The Deferred
Purchase Price shall bear interest at the rate of 6.0% per
annum from the Closing Date until paid.
3.3 Fees, Taxes or Assessments. The Company shall be
responsible for and shall pay all sales, use or other fees,
taxes or assessments arising as a result of the sale of the
Assets to Purchaser under this Agreement.
ARTICLE 4
Disclosure Schedules
Prior to the execution of this Agreement, the Company
has delivered to Purchaser the following schedules (each a
"Disclosure Schedule") which accurately and completely set
forth the following information regarding the Company, the
Assets or the Products:
(i) as Disclosure Schedule 1, a description of all
existing notes, bonds, mortgages, security agreements,
indentures, licenses, franchises, concessions, contracts,
leases or other obligations, agreements or instruments of any
kind, oral or written, (collectively, "Contracts")
relating to the Division or by which any of the Assets or
Products is bound;
(ii) as Disclosure Schedule 2, a list of all judgments,
decrees, orders, writs, licenses, permits, variances,
exemptions, orders and approvals (collectively "Orders") of
any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United
States or any domestic or foreign state, county, city or other
political subdivision (each a "Governmental Authority")
material to the operations conducted by or through the
Division or by which any of the Assets or Products is bound;
(iii)as Disclosure Schedule 3, a description of any actions,
suits, arbitrations or proceedings pending or threatened
against the Company involving the Division or any of the
Assets or Products;
(iv) as Disclosure Schedule 4, any exceptions to the
representations and warranties contained in Article 5,
specifying with particularity the representation or warranty
to which each such exception applies.
Each Disclosure Schedule, or a summary cover page
thereto, shall be initialed for identification by an
authorized officer of the Company and by an authorized officer
of Purchaser.
ARTICLE 5
Representations and Warranties of the Company
The Company represents and warrants, except to the
extent specifically otherwise indicated on Disclosure
Schedule 4, to Purchaser as follows:
5.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the state of Washington, and has
full corporate power and authority to own, lease and operate
its properties and to conduct its business as and to the
extent now conducted.
5.2 Authority Relative to Agreement. The Company has
full corporate power and authority to enter into this
Agreement and each other assignment, instrument, document
and agreement necessary to consummate the transactions
contemplated hereby and to perform its obligations
hereunder. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Company,
and no other corporate proceedings on the part of the
Company or its shareholders are necessary to authorize the
execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the
transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with
its terms, subject as to enforcement only to bankruptcy,
insolvency, reorganization, moratorium or other laws
affecting the enforceability of creditors' rights generally
or to general equitable principles.
Non-Contravention; Approvals and Consents.
5.3.1 The execution and delivery of this
Agreement by the Company does not, and the performance by
the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby will
not, conflict with, result in a material violation or breach
of, constitute (with or without notice or lapse of time or
both) a material default under, result in or give to any
person, corporation, partnership, joint venture, limited
liability corporation, association or other firm or entity
(each a "Person") any right of payment or reimbursement,
termination, cancellation, modification or acceleration of,
or result in the creation or imposition of any Lien upon any
of the Assets under, any of the terms, conditions or
provisions of (i) the Articles of Incorporation or Bylaws of
the Company, (ii) any Contract to which the Company is a
party or by which any of the Assets is bound or (iii) any
material provision of any statute, law, rule, regulation or
ordinance (collectively, "Laws") or any Orders of any
Governmental Authority.
5.3.2 No consent, approval or action of, filing
with or notice to any Governmental Authority or other public
or private third party is necessary or required under any of
the terms, conditions or provisions of any Law or Order of
any Governmental Authority or any Contract to which the
Company is a party or by which any of the Assets is bound,
for the execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations
hereunder or the consummation of the transactions
contemplated hereby.
5.4 Financial Statements. The Company delivered to
Purchaser prior to the execution of this Agreement true and
complete copies of unaudited statements of revenues, costs
of sales and operating expenses for the Division for the
nine-month period ending September 30, 1995 and the 12-month
periods ending December 31, 1994 and 1993, and unaudited
statements of revenues, costs of sales and operating costs
for the Products for the 12-month period ending September
30, 1995 (collectively, the "Financial Statements"). The
Financial Statements are true, correct and complete in all
material respects, were prepared from the books and records
of the Company in accordance with generally accepted
accounting principles applied on a consistent basis during
the periods involved, fairly present the results of
operations of the Division for the respective periods, and
accurately reflect allocations of revenues and expenses to
the Division. To the best of the Company's knowledge, the
reserves established by the Company on the Financial
Statements with respect to all risks, liabilities and
contemplated future losses in connection with the Division
are adequate.
5.5 Absence of Material Changes. Since September 30,
1995, there has not been:
5.5.1 any material adverse change in the financial
condition or in the operations of the Division from that
reflected by the Financial Statements as of and for the nine
months ended such date;
5.5.2 any damage, destruction or loss, whether or
not covered by insurance, which has had, or could reasonably
be expected to have, a material adverse effect on any of the
Assets;
5.5.3 any mortgage, pledge, lien or other
encumbrance or security interest created on or with respect
to any Asset;
5.5.4 any rights transferred or granted under any
concessions, leases, licenses, agreements, patents,
inventions, trademarks, trade names or copyrights or with
respect to any know-how used or useful in connection with
the design, manufacture, marketing or sale of any of the
Products or any of the Intellectual Property;
5.5.5 any loss of supplier or suppliers or
customer or customers, including, without limitation,
dealers or distributors, which has had, or could reasonably
be expected to have, a material adverse effect on the
Division; or
5.5.6 any other event or condition of any
character has had, or could reasonably be expected to have,
a material adverse effect on the Division or any of the
Assets, or any Acquired Contract or commitment obligating
the Company or any other Person to do any of the things set
forth in this Section 5.5.
5.6 Tax Matters. The Company has filed all tax
returns and reports required to be filed in any jurisdiction
as a result of the Company's operations, and has paid all
taxes, interest, penalties, assessments or deficiencies due
and payable with respect to such returns, and all other
taxes and assessments payable by the Company, to the extent
the same have become due and payable and before they have
become delinquent. All such returns and reports are
accurate and complete in all material respects. The Company
has made withholding of such taxes (and transmittals of the
same) as may be required to be made under all applicable tax
laws and regulations. The Company has no knowledge of any
proposed tax assessment against or with respect to any of
the Assets.
5.7 Legal Proceedings. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of
the Company threatened, against the Company or any of the
Assets or Products, and no pending or threatened actions,
suits, arbitrations or proceedings involving any of the
Assets or Products in which the Company is or would be the
plaintiff. There are no Governmental Authority
investigations or audits pending or, to the knowledge of the
Company threatened, against, relating to or affecting any of
the Assets or Products. To the knowledge of the Company,
there are no facts or circumstances that could be reasonably
expected to give rise to any such action, suit, arbitration,
proceeding, investigation or audit.
5.8 Acquired Contracts.
5.8.1 All Acquired Contracts are in good standing,
valid and effective.
5.8.2 Neither the Company nor, to the knowledge of
the Company, any other party thereto, is in breach or
violation of, or in default in the performance or observance
of any term or provision of, and no event has occurred
which, with notice or lapse of time or both, could be
reasonably expected to result in a default under any
Acquired Contract.
5.8.3 All Acquired Contracts have been duly
authorized, executed and delivered by the Company and, to
the knowledge of the Company, by each other party thereto,
and are the legal, valid and binding obligation of the
Company and, to the knowledge of the Company, of each other
party thereto, enforceable against the Company and each
other party thereto in accordance with their respective
terms, subject as to enforcement only to bankruptcy,
insolvency, reorganization, moratorium or other laws
affecting the enforceability of creditors' rights generally
or to general equitable principles.
5.9 Intellectual Property Rights. The Intellectual
Property comprises all of the intellectual property rights
necessary or required in connection with the design,
manufacture, marketing or sale of the Products. To the
knowledge of the Company, the design, manufacture, marketing
or sale of the Products does not infringe
any intellectual property of any third party. The Company
has all right, title and interest in, or a valid, binding
and assignable license to use, all of the Intellectual
Property. The Company is not in default (or with the giving
of notice or lapse of time or both, would be in default)
under any license to use such Intellectual Property, and to
the knowledge of the Company such Intellectual Property is
not being infringed by any third party.
5.10 Disclosure. This Agreement and each Disclosure
Schedule, certificate, financial statement and all other
written information delivered to Purchaser by the Company
(including, without limitation, costed bills of materials
relating to Products and warranty claims experience relating
to Products), or to be delivered by the Company at Closing,
are true, correct and complete and do not or will not, as
the case may be, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements contained herein and therein not
misleading.
5.11 Products Warranties and Claims. All Products and
Manufactured Products sold by the Company prior to the
Closing Date complied, and all Products and Manufactured
Products held for sale by the Company at Closing will
comply, in all material respects with all warranties
applicable thereto and with all requirements of any
applicable agreements of sale as to such Products and
Manufactured Products. The Company has previously provided
Purchaser a true, correct and complete history of warranty
claims and costs relating to the Products and the
Manufactured Products for the period beginning August 1,
1994 and ending September 30, 1995 (the "Prior History
Period"). The Company has previously provided Purchaser a
true, correct and complete identification, by serial number
and date of sale, of all Products and Manufactured Products
that were sold during the Prior History Period and that
remain within the Company's applicable warranty coverage
periods at September 30, 1995.
5.12 CE Certification. Exhibit C identifies the
European electromagnetic and safety certifications obtained
by the Company with respect to each model of Product and
Manufactured Product. The Company makes no representation
or warranty that such certifications are transferable to
Purchaser.
5.13 Customer and Vendor Relations.
5.13.1 The Company has not been notified that any
customer, including, without limitation, dealers and
distributors, of the Division intends to cease doing
business with the Company or significantly reduce the amount
of business done with the Company, and the Company has no
knowledge of any information, circumstances or facts that
could reasonably be expected to give rise to such cessation
or reduction. The Company is not a party to any Contract
with any dealer, distributor or sales representative that
cannot be terminated without penalty upon 30 days notice.
5.13.2 The Company has not been notified that any
vendor to the Division intends to cease doing business with
the Company, significantly alter the terms on which such
vendor does business with the Company or increase the prices
of the materials or services provided by such vendor to the
Company, and the Company has no knowledge of any
information, circumstances or facts that could reasonably be
expected to give rise to such cessation, reduction or
increase, other than changes imposed by vendors from time to
time in the ordinary course of business.
5.14 Plans, Blueprints and Designs. All manufacturing
and engineering drawings, plans, blueprints, schematic and
other designs, trade secrets, processes, formulae, process
sheets, parts lists and other tangible data comprising the
Books and Records are owned by the Company, are in
reproducible form and are of such quality that competent
personnel can produce, manufacture, assemble and repair the
Products in such a manner that they meet applicable
specifications.
5.15 Finished Goods Inventory. All finished Products
comprising part of the Assets are in good condition,
function in accordance with their design specifications and
are not obsolete or used, and, unless identified as "B"
stock on Exhibit D, are not "B" stock or trade show samples.
ARTICLE 6
Representations and Warranties of Purchaser
Purchaser represents and warrants to the Company as
follows:
6.1 Organization and Good Standing. Purchaser is a
corporation duly organized and validly existing under the
laws of the state of Oregon, and has full corporate power
and authority to own, lease and operate its properties and
to conduct its business as and to the extent now conducted.
6.2 Authority Relative to Agreement. Purchaser has
full corporate power and authority to enter into this
Agreement and each other instrument, document and agreement
necessary to consummate the transactions contemplated
hereby, and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement by
Purchaser and the consummation by Purchaser of the
transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Purchaser, and no
other corporate proceedings on the part of Purchaser or its
shareholders are necessary to authorize the execution,
delivery and performance of this Agreement by Purchaser and
the consummation by Purchaser of the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by Purchaser and constitutes
the legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms,
subject as to enforcement only to bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforceability of creditors' rights generally or to general
equitable principles.
6.3 Effect of Agreement. The execution and delivery
of this Agreement by Purchaser does not, and the performance
by Purchaser of its obligations hereunder and the
consummation of the transactions contemplated hereby will
not, conflict with, result in a material violation or breach
of, constitute (with or without notice or lapse of time or
both) a material default under, result in or give to any
Person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in
the creation or imposition of any Lien upon any of the
material assets or properties of Purchaser under, any of the
terms, conditions or provisions of (a) Purchaser's Articles
of Incorporation or Bylaws, (b) any material Contract to
which Purchaser is a party or (c) any material provision of
any applicable Laws or Orders of any Governmental Authority.
6.4 Approvals and Consents. No consent, approval or
action of, filing with or notice to any Governmental
Authority or other public or private third party is
necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental Authority
or any Contract to which Purchaser is a party for the
execution and delivery of this Agreement by Purchaser, the
performance by Purchaser of its obligations hereunder or the
consummation by Purchaser of the transactions contemplated
hereby.
ARTICLE 7
Covenants and Other Agreements
7.1 Access to Information. During the period between
the execution of this Agreement and the fifth anniversary of
the Closing Date, the Company shall maintain, and shall give
Purchaser and its authorized representatives, upon
reasonable notice and during normal business hours, full
access to, all books, records, Contracts, documents, and
leases of the Company relating to the Products, any of the
Assets and any products sold by or through the Division
prior to Closing, which the Company maintains in the normal
course of its business (the "Information"), and shall
furnish or cause to be furnished to Purchaser and its
authorized representatives all Information in the form or
format customarily maintained by the Company with respect to
the Products, the Assets or such other products as Purchaser
or its authorized representatives may reasonably request.
At its election, the Company may deliver all Information to
Purchaser as full satisfaction of its obligations under this
Section.
7.2 Preservation of Assets. During the period between
the execution of this Agreement and the Closing Date, the
Company shall:
7.2.1 operate the Division in, and engage in no
transaction out of, the ordinary course of business
consistent with past practices and use its best efforts to
conduct the Division in a reasonable and prudent manner in
accordance with past practices;
7.2.2 enter into no Contract or transaction affecting
any of the Assets or Products which extends beyond the Closing
Date except as approved in writing by Purchaser or except
the sale of Products in the normal course of business;
7.2.3 use commercially reasonable efforts to
preserve the existing relations with all of the Division's
suppliers and customers, including, without limitation,
dealers and distributors;
7.2.4 not sell, assign or otherwise dispose of or
otherwise cause to be removed from the Company's premises
any of the Assets;
7.2.5 take all necessary corporate and other
action and use commercially reasonable efforts to obtain all
consents and approvals required to enable the transactions
contemplated by this Agreement to be consummated;
7.2.6 notify Purchaser in writing in the event
that prior to the Closing Date there is any material adverse
change in the Assets, or if any material litigation,
proceeding or investigation is instituted or threatened
affecting any of the Products or Assets; and
7.2.7 not take any action or fail to take any
action that would result in a breach or default of any
representation or warranty made by the Company in this
Agreement.
7.3 Employment Matters. Purchaser shall have no
obligation to employ any of the Company's current employees,
but may upon reasonable notice to the Company interview such
employees for the possibility of employment with Purchaser
following Closing. Purchaser shall not, for a period of two
years after Closing, solicit to employ any of the current
officers or employees of the Company with whom Purchaser has
had contact or who was specifically identified to Purchaser
by the Company prior to Closing, so long as they are
employed by the Company, without obtaining the prior written
consent of the Company.
7.4 No Solicitations.
7.4.1 The Company shall not, nor shall the Company
authorize or permit any officer, director, employee,
investment banker, financial advisor, attorney, accountant
or other agent or representative (each, a "Representative")
retained by or acting for or on behalf of the Company to,
directly or indirectly, initiate,solicit, encourage,
participate in any negotiations regarding, furnish any
confidential information in connection with, endorse or
otherwise cooperate with, assist, participate in or facilitate
the making of any proposal or offer for, or which may
reasonably be expected to lead to, an Acquisition Transaction
(defined below), by any Person or group of Persons (a
"Potential Acquiror").
The Company shall promptly inform Purchaser orally and in
writing of the material terms and conditions of any proposal
or offer for, or which may reasonably be expected to lead to,
an Acquisition Transaction that it receives and the identity
of the Potential Acquiror. The Company shall immediately
cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted prior
to the date of this Agreement with respect to any Acquisition
Transaction. This Section shall survive for 180 days
following termination of this Agreement;
provided, however, that if this Agreement is terminated by
the Company for any failure by Purchaser to satisfy any of
the conditions to Closing in Article 9 that are within
Purchaser's control, this Section shall terminate upon such
termination of this Agreement.
7.4.2 The Company shall pay to Purchaser the sum
of $500,000 in immediately available funds at the closing of
any Acquisition Transaction made in violation of the
covenant set forth in Section 7.4.1. The parties agree that
such sum represents liquidated damages that would be
suffered by Purchaser in such event, which damages are
incapable of calculation, and is not a penalty or
forfeiture.
7.4.3 For purposes of this Agreement, "Acquisition
Transaction" means any acquisition in any manner of all or a
substantial portion of the Assets, whether for cash,
securities or any other consideration or any combination
thereof other than pursuant to the transactions contemplated
by this Agreement.
7.4.4 Nothing contained in this Agreement shall
limit or preclude the Company or any Representative from
directly or indirectly initiating, soliciting, encouraging,
or participating in any negotiations regarding, furnish
confidential information in connection with, endorsing or
otherwise cooperating with, assisting, participating in or
facilitating the making of any proposal or offer for, or
which may reasonably be expected to lead to, a Transaction
(defined below) by any third party. As used in this
Agreement, the term "Transaction" means any acquisition in
any manner of all or substantially all of the assets of the
Company or its outstanding Common Stock, whether for cash,
securities or other consideration or any combination
thereof; provided, however, that the consummation of the
Transaction shall not limit or prevent the performance by
the Company of its obligations under this Agreement.
7.5 Notice and Cure. Purchaser and the Company shall
notify the other in writing of, and contemporaneously shall
provide the other with true and complete copies of, any and
all information or documents relating to, and will use all
commercially reasonable efforts to cure before Closing, any
event, transaction or circumstance, as soon as practical
after it becomes known to such party, occurring after the
date of this Agreement that causes or will cause any
covenant or agreement of Purchaser or the Company, as the
case may be, under this Agreement to be breached or that
renders or will render untrue any representation or warranty
of Purchaser or the Company, as the case may be, contained
in this Agreement as if the same were made on or as of the
date of such event, transaction or circumstance. Purchaser
and the Company shall also notify the other in writing of,
and shall use all commercially reasonable efforts to cure,
before the Closing, any violation or breach, as soon as
practical after it becomes known to such party, of any
representation, warranty, covenant or agreement
made by Purchaser or the Company, as the case may be, in
this Agreement, whether occurring or arising prior to, on or
after the date of this Agreement. No notice given pursuant
to this Section shall have any effect on the
representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining
satisfaction of any condition contained in this Agreement.
7.6 Fulfillment of Conditions. Subject to the terms
and conditions of this Agreement, Purchaser and the Company
shall take or cause to be taken all commercially reasonable
steps necessary or desirable and proceed diligently and in
good faith to satisfy each condition to the other's
obligations contained in this Agreement and consummate and
make effective the transactions contemplated by this
Agreement. Neither Purchaser nor the Company will take or
fail to take any action that could be reasonably expected to
result in the nonfulfillment of any such condition.
7.7 Fulfillment of Warranty Obligations. After
Closing, the Company shall fulfill all obligations as they
come due pursuant to warranty obligations, with respect to
products sold by or through the Division prior to Closing,
that are not assumed by Purchaser pursuant to Section 1.2.1.
7.8 Payment of Commissions. The Company will pay when
due all commissions and other amounts owed to its dealers,
distributors and independent sales representatives with
respect to actions, events or sales of products made prior
to Closing.
7.9 Collection of Accounts Receivable. Purchaser
will take no action to impede the Company's collection of
accounts receivable of the Division relating to events,
actions or sales occurring prior to Closing. Purchaser will
cooperate with the Company regarding the Company's
collection of such accounts receivable, but will have no
obligation to take any action or refrain from taking any
action regarding such collection, including, without
limitation, refusing to grant credit to persons owing the
Company funds under such accounts receivable.
7.10 Confidential Information. Purchaser agrees that
it will continue to be bound by the provisions of that
certain letter agreement dated May 12, 1995 regarding
confidential information of the Company; provided, however,
that following Closing Purchaser shall have no obligations
under such letter agreement with respect to any information
comprising part of the Assets.
7.11 Exclusive Distributor. Purchaser, at its
election, shall have the right to act as the Company's
exclusive distributor of Products between the date this
Agreement is executed and Closing. The price to be paid by
Purchaser as distributor for any Products in the Company's
inventory as of the date of this Agreement shall be as set
forth on Exhibit D. The price to be paid by Purchaser as
distributor for any other Products shall be established by
the mutual agreement of Purchaser and the Company, but shall
in no case exceed the Company's lowest price offered to any
other party.
ARTICLE 8
Conditions Precedent to Purchaser's Obligations
Each obligation of Purchaser to be performed on the
Closing Date or thereafter, as the case may be, shall be
subject to the satisfaction prior thereto of the following
conditions precedent, any of which may be waived by
Purchaser:
8.1 Representations and Warranties. Each of the
representations and warranties made by the Company in this
Agreement shall be true and correct as of the Closing Date
as though made on and as of the Closing Date or, in the case
of representations and warranties made as of a specified
date earlier than the Closing Date, on and as of such
earlier date, and the Company shall have delivered to
Purchaser a certificate, dated the Closing Date and executed
on behalf of the Company by its President, to such effect.
8.2 Compliance with Terms and Conditions. All the
terms, covenants, agreements and conditions of this
Agreement to be complied with and performed by the Company
on or before Closing shall have been complied with and
performed in all material respects, and the Company shall
have delivered to Purchaser a certificate, dated the Closing
Date and executed on behalf of the Company by its President,
to such effect.
8.3 No Material Adverse Change. There shall not have
been any loss or destruction of any material Asset.
8.4 No Litigation. No court of competent jurisdiction
or other competent Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law or
Order (whether temporary, preliminary or permanent) which is
then in effect and which (a) has the effect of making
illegal or otherwise restricting, preventing or prohibiting
purchase of the Assets or (b) which could be reasonably
expected to result in a material diminution of the benefits
of the purchase of the Assets to Purchaser; and there shall
not be pending or threatened on the Closing Date any
investigation, suit, action or other proceeding before or by
any court or other Governmental Authority which could be
reasonably expected to result in any such issuance,
enactment, promulgation or deemed applicability of any such
Order or Law.
Approval of Documentation. The form and substance
of all certificates, instruments of conveyance, assignments
and other documents to be delivered to Purchaser hereunder
shall be satisfactory in all reasonable respects to
Purchaser and its counsel.
8.6 Opinion of Counsel for the Company. Purchaser
shall have received on the Closing Date a written opinion,
from counsel and in form reasonably satisfactory to
Purchaser, addressed to it with respect to the following
matters:
(a) The Company is a corporation duly organized
validly existing and in good standing under the laws of the
state of Washington, and has full corporate power and
authority to own, lease and operate its properties and to
conduct its business as and to the extent now conducted.
(b) The Company has full corporate power and
authority to enter into this Agreement and each other
assignment, instrument, document and agreement necessary to
consummate the transactions contemplated hereby and to perform
its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated
hereby have been duly and validly approved by the Board of
Directors of the Company, and no other corporate proceedings
on the part of the Company or its shareholders are necessary
to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the
Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, subject as to enforcement only to
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforceability of creditors' rights
generally or to general equitable principles.
(c) (i) The execution and delivery of this Agreement by
the Company does not, and the performance by the Company of
its obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under,
result in or give to any Person any right of payment or
reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of
any Lien upon any of the Assets under, any of the terms,
conditions or provisions of (x) the Articles of Incorporation
or Bylaws of the Company, (y) any Contract known to such
counsel to which the Company is a party or by which any of the
Assets is bound or (z) any Law or any Orders of any
governmental Authority.
(ii) No consent, approval or action of, filing with or
notice to any Governmental Authority or other public or
private third party is necessary or required under any of the
terms, conditions or provisions of any Law or Order of any
Governmental Authority or any Contract known to such counsel
to which the Company is a party or by which any of the Assets
is bound, for the execution and delivery of this Agreement by
the Company, the performance by the Company of its obligations
hereunder or the consummation of the transactions contemplated
hereby.
(d) There are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of such counsel
threatened, against the Company or any of the Assets or
Products, and no pending or threatened actions, suits,
arbitrations or proceedings involving the any of the Assets or
Products in which the Company is or would be the plaintiff.
There are no Governmental Authority investigations or audits
pending or, to the knowledge of such counsel threatened,
against, relating to or affecting any of the Assets or
Products.
(e) All Acquired Contracts have been duly authorized,
executed and delivered by the Company and are the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with their respective terms, subject as
to enforcement only to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforceability of
creditors' rights generally or to general equitable
principles.
8.7 Bill of Sale and Assignments. The Company shall
have duly authorized, executed and delivered to Purchaser a
Bill of Sale and such other assignments, licenses and
instruments of conveyance in form and substance reasonably
acceptable to Purchaser and its counsel as may be reasonably
required by Purchaser.
8.8 Review of Business and Legal Matters. Purchaser
and its advisors shall have completed their reviews in form
and scope satisfactory to Purchaser of the Assets and the
Products.
8.9 Manufacturing Agreement. The Company shall have
executed and delivered to Purchaser a Manufacturing
Agreement in form and with such terms as are reasonably
satisfactory to Purchaser with respect to the Products and
the professional sound products identified on attached
Exhibit E (the "Manufactured Products").
8.10 Tax Clearance Certificate. The Company shall have
provided to Purchaser certification in form reasonably
satisfactory to Purchaser from the appropriate authorities
of the state of Washington that no Washington state taxes
are then due and payable by the Company.
8.11 Noninfringement Opinion. Purchaser shall have
received the opinion of its patent counsel, in form and
substance acceptable to Purchaser, that the design,
manufacture, marketing or sale by Purchaser of certain
Products would not infringe certain U.S. patents.
8.12 License Agreement. The Company shall have duly
authorized, executed and delivered to Purchaser a License
Agreement in the form attached as Exhibit F.
ARTICLE 9
Conditions Precedent to the Company's Obligations
Each obligation of the Company to be performed on the
Closing Date or thereafter, as the case may be, shall be
subject to the satisfaction prior thereto of the following
conditions precedent, any of which may be waived by the
Company:
9.1 Representations and Warranties. Each of the
representations and warranties made by Purchaser in this
Agreement shall be true and correct as of the Closing Date
as though made on and as of the Closing Date or, in the case
of representations and warranties made as of a specified
date earlier than the Closing Date, on and as of such
earlier date, and Purchaser shall have delivered to the
Company a certificate, dated the Closing Date and executed
on behalf of the Company by its Executive Vice President, to
such effect.
9.2 Compliance with Terms and Conditions. All the
terms, covenants, agreements and conditions of this
Agreement to be complied with and performed by Purchaser on
or before Closing shall have been complied with and
performed in all material respects, and Purchaser shall have
delivered to the Company a certificate, dated the Closing
Date and executed on behalf of the Company by its Executive
Vice President, to such effect.
9.3 No Litigation. No court of competent jurisdiction
or other competent Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law or
Order (whether temporary, preliminary or permanent) which is
then in effect and which has the effect of making illegal or
otherwise restricting, preventing or prohibiting sale of the
Assets; and there shall not be pending or threatened on the
Closing Date any investigation, suit, action or other
proceeding before or by any court or other Governmental
Authority which could be reasonably expected to result in
any such issuance, enactment, promulgation or deemed
applicability of any such Order or Law.
9.4 Receipt of Purchase Price. The Company shall have
received that portion of the Purchase Price specified to be
paid at Closing in Section 3.2.
9.5 Opinion of Counsel for Purchaser. The Company
shall have received on the Closing Date a written opinion
from Tonkon, Torp, Galen, Marmaduke & Booth in form reasonably
satisfactory to the Company and addressed to it with respect
to the following matters:
(a) Purchaser is a corporation duly organized and
validly existing under the laws of the state of Oregon, and
has full corporate power and authority to own, lease and
operate its properties and to conduct its business as and to
the extent now conducted.
(b) Purchaser has full corporate power and authority
to enter into this Agreement and each other assignment,
instrument, document and agreement necessary to consummate the
transactions contemplated hereby and to perform its
obligations hereunder. The execution, delivery and
performance of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated
hereby have been duly and validly approved by the Board of
Directors of Purchaser, and no other corporate proceedings on
the part of Purchaser or its shareholders are necessary to
authorize the execution, delivery and performance of this
Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its
terms, subject as to enforcement only to bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
the enforceability of creditors' rights generally or to
general equitable principles.
(c) (i) The execution and delivery of this Agreement
by Purchaser does not, and the performance by Purchaser of its
obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to
any Person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, (x) the
Articles of Incorporation or Bylaws of Purchaser, (y) any
material Contract known to such counsel to which Purchaser is
a party or (z) any material provision of any applicable Law or
Order of any Governmental Authority.
(ii) No consent, approval or action of, filing with or
notice to any Governmental Authority or other public or
private third party is necessary or required under any of the
terms, conditions or provisions of any Law or Order of any
Governmental Authority or any Contract known to such counsel
to which Purchaser is a party for the execution and delivery
of this Agreement by Purchaser, the performance by Purchaser
of its obligations hereunder or the consummation of the
transactions by Purchaser contemplated hereby.
9.6 Manufacturing Agreement. Purchaser shall have
executed and delivered to the Company the Manufacturing
Agreement.
9.7 License Agreement. Purchaser shall have duly
authorized, executed and delivered to the Company a License
Agreement in the form attached as Exhibit F.
ARTICLE 10
Indemnification by the Company
10.1 Company Indemnification Liability. The Company,
subject to the limitation on damages hereinafter provided,
shall indemnify and hold Purchaser and its directors,
officers, employees and agents (collectively, the
"Indemnified Parties") harmless from and against any Damages
(defined below), whether claims are made before or after the
Closing Date, arising or resulting from (a) any
misrepresentation, breach of warranty or nonfulfillment of
any covenant or obligation on the part of the Company under
this Agreement, (b) any liability of the Company other than
the Assumed Liabilities or (c) any claim that the design,
manufacture, marketing or sale of the Products infringe any
or all of U.S. Patent Nos. 4,218,660, 4,484,150 or
4,586,002.
10.2 Damages Defined. For purposes of this Agreement
"Damages" means all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including,
without limitation, reasonable attorney fees) incurred in
connection with any action, suit, proceeding, demand,
assessment or judgment incident to any matters indemnified
against in this Article 10 or Article 11 and in any appeal
therefrom.
10.3 Claims Procedure.
10.3.1 If any Indemnified Party shall incur any
Damages or determine that as a result of any claim it is
likely to incur any Damages and shall consider that it is
entitled to be indemnified against such Damages, such
Indemnified Party shall deliver to the Company a written
notice which shall specify in reasonable detail each
individual item of Damage, the date such item was paid or
properly accrued, the basis for any anticipated liability,
the nature of the misrepresentation, breach of warranty or
breach of covenant to which such item is related (if
applicable) and, if then determinable, the computation of
the amount of the indemnification claim hereunder.
10.3.2 If the notice states that a claim has been
made by a third party, the Company shall be eligible to
participate in (and at the request of the Indemnified Party
shall assume) the defense of such claim. The Company shall
not be liable to indemnify for any settlement of any such
claim the defense of which has been so assumed by the
Company if the settlement is effected by the Indemnified
Party without the prior written consent of the Company,
which consent shall not be unreasonably withheld, but if
settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, the Company
shall indemnify the Indemnified Party from and against any
loss or liability by reason of such settlement or judgment.
Any defense of a claim assumed by the Company shall be
conducted by counsel of good standing reasonably
satisfactory to the Indemnified Party, and at the expense of
the Company, except that if any proceeding involves both
claims against which indemnity is granted hereunder and
other claims for which indemnification is not granted
hereunder, the expenses of defending against such claims
shall be borne in proportion to the respective dollar
amounts of such claims, excluding any punitive damages in
determining such proportion. Purchaser agrees to render to
the Company, at the Company's expense, such assistance as
may reasonably be requested to insure the proper and
adequate defense of any such claim. The Indemnified Party
may be a participant in the defense of any claim at its own
expense.
10.3.3 In case the Company shall object to the
indemnification in respect of any claim or claims specified
in the notice from an Indemnified Party, the Company shall,
within 30 days after receipt of the notice, deliver to the
Indemnified Party a written notice to such effect, which
notice shall specify with respect to each individual item of
Damage claimed under Section 10.2.1 the amount, if any, that
the Company admits the Indemnified Party is entitled to
indemnification. The Company and the Indemnified Party
shall, within such 30-day period beginning on the date of
receipt of such written objection, attempt in good faith to
agree upon the rights of the respective parties with respect
to each of such claims to which the Company shall have so
objected. If agreement can be reached on their respective
rights with respect to such claims, they shall promptly
prepare and sign a memorandum setting forth such agreement.
10.3.4 Claims for indemnity to which the Company
does not object in writing within 30 days after receipt of
an Indemnified Party's notice, those parts of a claim which
are not disputed by the Company, and claims covered by a
memorandum of agreement of the nature described in the last
sentence of subsection 10.2.3 shall constitute Agreed
Claims. Agreed Claims shall bear interest at the rate of 10
percent per annum from the date such claim is determined to
be an Agreed Claim until paid. Purchaser reserves the right
to offset any Agreed Claim or any other amount determined by
a final order of any court to be due to Purchaser hereunder
dollar for dollar against any amounts payable to the
Company. This remedy shall not be exclusive of any other
rights Purchaser may have against the Company at law or in
equity. No waiver of Purchaser's right to pursue a claim
for indemnification hereunder shall be inferred by reason of
the failure of the parties to agree that the claim
constitutes an Agreed Claim.
10.4 Survival of Representations, Warranties and
Covenants. The representations and warranties made by the
Company in this Agreement shall survive Closing and shall
expire on the third anniversary of the Closing Date. The
covenants made by the Company in this Agreement shall
survive Closing and expire in accordance with their terms.
No claim for indemnity may be made with respect to any
expired representation or warranty; provided, that any
representation or warranty the subject of a claim made prior
to such expiration shall continue in full force and effect
until the resolution of such claim.
10.5 Limitation on Damages. No claim for indemnity
shall be made against the Company unless and until the
aggregate of all Damages for which indemnity is sought by
the Indemnified Parties exceeds $25,000 and then such
indemnity shall apply to the first dollar of Damages.
ARTICLE 11
Purchaser's Indemnification
11.1 Purchaser's Indemnification Liability. Except to
the extent otherwise specifically provided in this Agreement,
Purchaser shall indemnify and hold the Company and its
directors, officers, employees and agents harmless from and
against any and all Damages arising out of or related to any
misrepresentation, breach of warranty or nonfulfillment of any
covenant or obligation on the part of Purchaser under this
Agreement.
11.2 Survival of Representations, Warranties and
Covenants. The representations and warranties made by
Purchaser in this Agreement shall survive Closing and shall
expire on the third anniversary of the Closing Date. The
covenants made by Purchaser in this Agreement shall survive
Closing and expire in accordance with their terms. No claim
for indemnity may be made with respect to any expired
representation or warranty; provided, that any representation
or warranty the subject of a claim made prior to such
expiration shall continue in full force and effect until the
resolution of such claim.
11.3 Limitation on Damages. No claim for indemnity
shall be made against Purchaser unless and until the
aggregate of all Damages for which indemnity is sought from
the Company exceeds $25,000 and then such indemnity shall
apply to the first dollar of Damages.
11.4 Claims Procedure. The claims procedures in Section
10.3 shall apply to claims for indemnification made under
this Article 11, with appropriate changes to reflect the
different parties involved.
ARTICLE 12
Termination
12.1 Termination. This Agreement may be terminated
only by mutual consent of the Company and Purchaser at any
time, and by either Purchaser or the Company if the Closing
shall not have occurred by November 30, 1995; provided,
however, that Purchaser or the Company may not terminate
this Agreement if the Closing has not occurred as of such
date due to a breach by Purchaser, on the one hand, or the
Company, on the other hand, of their respective obligations
under this Agreement. If this Agreement is terminated
pursuant to this Section 12.1, this Agreement shall become
void and shall have no effect, and no party hereto shall
have any liability to any other party except for those
provisions of this Agreement that by their terms survive
such termination; provided, however, that in the event that
this Agreement is terminated by Purchaser as a result of the
Company's failure to satisfy any of the conditions identified
in Sections 8.1, 8.2, 8.5, 8.6, 8.7, 8.9 or 8.12, Purchaser
shall be entitled to recover from the Company all of
Purchaser's reasonable costs, fees and expenses (including,
without limitation, attorney fees and accountant fees)
incurred by Purchaser in connection with this Agreement;
provided, further, that in the event that this Agreement is
terminated by the Company as a result of Purchaser's failure
to satisfy any of the conditions identified in Sections 9.1,
9.2, 9.4, 9.6 or 9.7, the Company shall be entitled to recover
from Purchaser all of the Company's reasonable costs, fees and
expenses (including, without limitation, attorney fees and
accountant fees) incurred by the Company in connection with
this Agreement.
12.2 Waiver of Conditions. Subject to applicable law,
(a) if any of the conditions specified in Article 8 has not
been satisfied, Purchaser may waive such conditions and elect
to proceed with Closing; and (b) if any of the conditions
specified in Article 9 has not been satisfied, the Company may
waive such conditions and elect to proceed with Closing.
ARTICLE 13
Additional Provisions
13.1 Brokerage. The Company represents and warrants to
Purchaser that the Company has not engaged the services of
any broker or finder with respect to this Agreement or the
transaction contemplated herein, except for Cruttenden Roth
Incorporated, the fees and expenses of which are the sole
responsibility of the Company. The Company agrees to
indemnify Purchaser for and hold it harmless from any claim
for brokers' or finders' fees or compensation in connection
with the transaction herein provided for by any person, firm
or corporation claiming such a right because engaged by the
Company. Purchaser represents and warrants to the Company
that it has not engaged the services of any broker or finder
with respect to this Agreement or the transaction contemplated
herein, and Purchaser agrees to indemnify the Company for and
hold it harmless from any claim for brokers' or finders' fees
or compensation in connection with the transaction herein
provided for any person, firm or corporation claiming such a
right because engaged by the Purchaser.
13.2 Publicity. Except as may be required by law,
neither party shall release information or publicity to the
media regarding this transaction without first providing a
copy to the other party. Purchaser shall prepare the public
announcements regarding this transaction and shall submit
copies to the Company prior to release.
13.3 Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Purchaser and
the Company shall each pay their own expenses in connection
with the transactions contemplated by this Agreement,
including, without limitation the fees and expenses of their
respective advisors, except as set forth in Section 12.1.
13.4 Litigation Expenses. In the event of any
litigation to enforce or interpret any of the provisions of
this Agreement, the prevailing party shall recover and the
other party shall pay the reasonable expenses of the
prevailing party, including, without limitation, investigation
costs, accountant fees and attorney fees incurred by the
prevailing party in preparation of trial, at the trial and
upon any appeals therefrom, as determined by the respective
courts, in addition to all other sums to which the prevailing
party may be entitled.
13.5 Entire Agreement. This Agreement and the attached
Exhibits, each of which is incorporated herein by reference,
set forth the entire agreement and understanding between the
parties as to the subject matter hereof, and supersede all
prior discussions, agreements and understandings of every
kind and nature between them. No party shall be bound by
any condition, definition, warranty or representation, other
than expressly set forth or provided for in this Agreement,
or as may be, on or subsequent to the date hereof, set forth
in writing and signed by the party to be bound thereby.
This Agreement may not be changed or modified, except by
agreement in writing, signed by both parties hereto.
13.6 Success and Assigns. All the terms and provisions
of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the successors and assigns
of the respective parties hereto. Nothing contained herein,
express or implied, is intended nor shall be construed to
confer or give any person, firm or corporation other than
the parties hereto, any rights or remedies under or by
reason of the Agreement.
13.7 Notices. All notices or other communications
which are required or permitted hereunder shall be
sufficient if delivered personally, by facsimile (with
confirmation copy simultaneously sent by first class mail,
postage prepaid) or by registered or certified mail, postage
prepaid, as follows:
If to Purchaser: Phoenix Gold International,
Inc.
Attn: Timothy G. Johnson
9300 North Decatur Street
Portland, Oregon 97203
Telephone: (503) 288-2088
Facsimile: (503) 978-3337
with a copy to: Kurt W. Ruttum
Tonkon, Torp, Galen, Marmaduke
& Booth
1600 Pioneer Tower
888 S. W. Fifth Avenue
Portland, Oregon 97204
Telephone: (503) 221-1440
Facsimile: (503) 274-8779
If to the Company: Carver Corporation
Attn: President and CEO
P.O. Box 1237
Lynnwood, Washington 98046-1237
Telephone: (206) 775-1202
Facsimile: (206) 670-3426
with a copy to: Thomas S. Hodge
Heller, Ehrman, White & McAuliffe
6100 Columbia Center
701 Fifth Avenue
Seattle, Washington 98104-7098
Telephone: (206) 447-0900
Facsimile: (206) 447-0849
Any party may, by written notice to the other, change its
address for purposes of this Agreement.
13.8 Waiver. Waiver by any party of the strict
performance of any of the provisions of this Agreement shall
not be construed as a waiver of, or prejudice that party's
right to subsequently require strict performance of, the
same or any other provision of this Agreement.
13.9 Section Headings. The headings of the sections of
this Agreement are for the convenience of the parties only
and shall not be construed as affecting the terms of this
Agreement or be used in the interpretation of the terms of
this Agreement.
13.10 Counterparts. This Agreement may be executed in
counterparts. When each party has signed at least one
counterpart, the Agreement shall be fully binding. Each
counterpart shall be considered an original, and all of
them, taken together, shall constitute a single agreement.
13.11 Choice of Law; Venue. This Agreement shall be
interpreted in accordance with the laws of the state of
Oregon without reference to conflicts of laws principles
thereunder. The parties agree that jurisdiction for
resolving all disputes under this Agreement shall reside
exclusively in the state and federal courts located within
Multnomah County, Oregon to the exclusion of all other
courts that might have jurisdiction absent this Section.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the day and year first
above written.
Purchaser: PHOENIX GOLD INTERNATIONAL, INC.
By:___________________________
Title: _______________________
The Company: CARVER CORPORATION
By:___________________________
Title: _______________________
PART NUMBER DESCRIPTION
PT Series
608-00622-01A PT-1250 120V
608-00622-13A PT-1250 Mono
608-00622-01B PR-1250 120V - B STOCK
CA Series
608-00630-01A CA-900 120V
608-00607-05A CA-400 Euro
608-00607-26A CA-400 UL/CSA
608-00607-01B CA-400 120V - B STOCK
608-00605-18A CA-120 CLA
608-00605-05A CA-120 Euro
PM Series
608-00627-01A PM-950 120V
608-00627-05A PM-950 Euro
608-00627-19A PM-950 Korea
608-00627-21A PM-950 100V
608-00627-45A PM-950 Euro CE
608-00626-01A PM-700 120V
608-00626-05A PM-700 Euro
608-00626-19A PM-700 Korea
608-00626-21A PM-700 100V
608-00626-45A PM-700 Euro CE
608-00608-05A PM-420 Euro
608-00608-18A PM-420 CLA
608-00608-19A PM-420 Korea
608-00608-45A PM-420 Euro CE
608-00606-05A PM-125 Euro
608-00606-18A PM-125 CLA
608-00606-45A PM-125 Euro CE
608-00606-05B PM-125 Euro - B STOCK
OEM Amps
608-00607-15A Walker Tech 120V
Claire Bros CBA-1000
608-00619-05A Stereo Euro
608-00619-10A Stereo Inverted
608-00619-11A Mono Inverted
608-00619-12A Stereo
608-00619-13A Mono
Pro Source Series
609-00654-01A PSC-60 Pre-amp/Tuner UL
609-00654-05A PSC-60 Pre-amp/Tuner Euro
609-00653-01A PSC-50 Pre-amp/UL
609-00653-05A PSC-50 Pre-amp Euro
609-00653-01B PSC-50 Pre-amp UL - B Stock
Accessories
608-0611-01A XO-450 Transformer (PM 700/950)
608-0634-01A at-2 Attenuator
608-0635-01A cx-2 Crossover
608-0642-01A XO-200A Transformer
608-0643-01A XO-450A Transformer
608-00782-01A Front Panel Kits
NONE Xformer Kit for PM line
Acquired Contracts
1. License for the Manufacture and Distribution of Lone
Wolf Proprietary Circuit Designs with Lone Wolf, Inc. dated
as of August 11, 1994
2. License for MediaLink Communication Protocol effective
August 7, 1992 with Lone Wolf, Inc.
3. Walker Technical Purchase Agreement (Agreement No.
REV:051395) dated as of May 143, 1995 with Walker Technical
Company
4. The purchase orders given to the Company by its
customers identified in Attachment 3.11 of Disclosure
Schedule 1
5. Carver Professional Dealer Agreements entered into with
the dealers identified in Attachment 3.1 of Disclosure
Schedule 1
6. Carver Professional Independent Sales Representative
Agreements entered into with representatives identified in
Attachment 3.2 of Disclosure Schedule 1
CARVER PROFESSIONAL PRODUCT COMPLIANCE CHART 11/2/95
PART NO. PRODUCT COMPLIANCE TYPE
PT Series
608-00622-01A PT-1250
608-00622-13A PT-1250 Mono
608-00140-05A PT-2400 Euro
608-00140-26A PT-2400 UL/CSA UL1419; CSA
608-00140-45A PT-2400 Euro CE EN55013*
608-00135-01A PT-1800 120V
608-00135-05A PT-1800 Euro
CA Series
608-00630-01A CA-900 120V
608-00630-01B CA-900 B Stock
608-00630-26A CA-900 UL/CSA UL813*; CSA*
608-00607-05A CA-400 Euro
608-00607-26A CA-400 UL/CSA UL813; CSA
608-00607-01B CA-400 B Stock
PM Series
608-00628-19A PM-1400 Korea
608-00628-21A PM-1400 100V
608-00628-25A PM-1400 Euro TUV/CE EN55013,60065,50082-1
608-00628-26A PM-1400 UL/CSA UL1419; CSA
608-00627-01A PM-950 120V
608-00627-05A PM-950 Euro
608-00627-19A PM-950 Korea
608-00627-21A PM-950 100V
608-00627-45A PM-950 Euro CE EN55013
608-00626-01A PM-700 120V
608-00626-05A PM-700 Euro
608-00626-19A PM-700 Korea
608-00626-21A PM-700 100V
608-00626-45A PM-700 Euro CE EN55013
608-00608-05A PM-420 Euro
608-00608-18A PM-420 CLA CLA EXPIRES 1/4/96
608-00608-19A PM-420 Korea
608-00608-45A PM-420 Euro CE EN55013
608-00606-05A PM-125 Euro
608-00606-18A PM-125 CLA CLA EXPIRES 12/29/95
608-00606-45A PM-125 Euro CE EN55013
608-00606-05B PM-125 Euro B Stock
OEM Amps
608-00607-15A Walker Tech 120V
Claire Bros CBA-1000
608-00619-05A Stereo Euro
608-00619-10A Stereo Inverted
608-00619-11A Mono Inverted
608-00619-12A Stereo
608-00619-13 Mono
Bose
608-00644-21A Bose 1800V-100V
608-00644-26A Bose 1800V-120V UL1419; CSA
608-00644-25A Bose 1800V-Euro EN55013,60065,50082-1
Pro Source
609-00654-01A PSC-60 Pre-amp/Tuner UL1270
609-00654-05A PSC-60 Euro
609-00653-01 PSC-50 Pre-amp UL1270
609-00653-05A PSC-50 Pre-amp Euro
*This product is approved, but has not been manufactured.
Standard Definitions
UL1419 Underwriters Laboratory Inc.,
Professional Audio Equipment
UL813 Underwriters Laboratory Inc.,
Commercial Audio Equipment
UL1270 Underwriters Laboratory Inc.,
Consumer Audio Equipment
CSA Canadian Standards Association
CLA City of Los Angeles
EN55013 Technical Regulation of EMC
Directive 89/336/EEC
EN60065 Technical Regulation of Low Voltage
Directive 73/23/EEC
En50082-1 Immunity Standard for Residential,
Commerical, and Light Industrial
PURCHASE
PART NUMBER DESCRIPTION PRICE/UNIT
PT Series
608-00140-05A PT-2400 Euro 399.21
608-00140-26A PT-2400 UL/CSA 400.64
608-00135-05A PT-1800 Euro 384.27
608-00135-26A PT-1800 UL/CSA 385.51
608-00622-01A PT-1250 120V 227.09
608-00622-13A PT-1250 Mono 221.28
608-00622-01B PR-1250 120V-B Stock 227.09
CA Series
608-00630-01A CA-900 120V 211.38
608-00607-05A CA-400 Euro 131.89
608-00607-26A CA-400 UL/CSA 133.73
608-00607-01B CA-400 120V-B Stock 133.73
608-00605-18A CA-120 CLA 107.77
608-00605-05A CA-120 Euro 106.98
PM Series
608-00628-19A PM-1400 Korea 239.50
608-00628-21A PM-1400 100V 239.50
608-00628-25A PM-1400 Euro TUV 257.48
608-00628-26A PM-1400 UL/CSA 241.43
608-00627-01A PM-950 120V 206.05
608-00627-05A PM-950 Euro 207.23
608-00627-19A PM-950 Korea 216.57
608-00627-21A PM-950 100V 210.45
608-00627-45A PM-950 Euro CE 207.23
608-00626-01A PM-700 120V 201.72
608-00626-05A PM-700 Euro 203.23
608-00626-19A PM-700 Korea 203.23
608-00626-21A PM-700 100V 201.72
608-00626-45A PM-700 Euro CE 203.23
608-00608-05A PM-420 Euro 134.14
608-00608-18A PM-420 CLA
124.29
608-00608-19A PM-420 Korea 134.14
608-00608-45A PM-420 Euro CE 134.14
608-00606-05A PM-125 Euro
114.08
608-00606-18A PM-125 CLA 112.51
608-00606-45A PM-125 Euro CE 114.08
608-00606-05B PM-125 Euro-B Stock 114.08
OEM Amps
608-00644-21A Bose 1800V-100V 234.74
608-00644-26A Bose 1800V-120V UL/CSA
235.98
608-00644-25A Bose 1800V-Euro CE 250.16
608-00607-15A Walker Tech 120V 124.29
Claire Bros CBA-1000
608-00619-05A Stereo Euro 221.04
608-00619-10A Stereo Inverted 209.36
608-00619-11A Mono Inverted 225.35
608-00619-12A Stereo 223.93
608-00619-13A Mono 221.28
Pro Source Series
609-00654-01A PSC-60 Pre-amp/Tuner UL 260.00
609-00654-05A PSC-60 Pre-amp/Tuner Euro 260.00
609-00653-01A PSC-50 Pre-amp/UL 222.32
609-00653-05A PSC-50 Pre-amp Euro 222.32
609-00653-01B PSC-50 Pre-amp UL-B Stock 222.32
Accessories
608-0611-01A XO-450 Transformer (PM 700/950) 38.78
608-0634-01A at-2 Attenuator 7.67
608-0635-01A cx-2 Crossover 10.16
608-0642-01A XO-200A Transformer 26.89
608-0643-01A XO-450A Transformer 38.78
608-00782-01A Front Panel Kits (Pkg of 10 ea.) 167.93
NONE Xformer Kit for PM line 41.36
EXHIBIT 2.2
AMENDMENT NO. 1
TO
ASSET PURCHASE AGREEMENT
This Amendment No. 1 (this "Amendment"), dated as of
November 20, 1995, is made and entered into by and between
Phoenix Gold International, Inc. ("Purchaser") and
CarverCorporation (the "Company").
BACKGROUND
Purchaser and the Company are parties to that certain Asset
Purchase Agreement dated as of November 20, 1995 (the
"Agreement"). Purchaser and the Company desire to amend the
Agreement as set forth herein. All capitalized terms used
in this Amendment not otherwise defined herein shall have
the meanings ascribed to them in the Agreement.
AGREEMENT
The parties agree as follows:
1. Assets. The Assets shall include the Company's rights
and information licensed under that certain License
Agreement effective June 1, 1980 between the Company and
Carver Technology Development, Inc. (the "License
Agreement"). All references in the Agreement to such rights
and information not being part of the Assets are hereby
deleted. For all purposes of the Agreement, term "Products"
shall be deemed to include the Manufactured Products
2. Purchase Price. The Purchase Price is hereby increased
by $2,022,848 to a total of $200,000. All of such increased
Purchase Price shall be paid in full upon execution of this
Amendment.
3. No Other Modifications. Except as specifically
modified by this Amendment, the Agreement shall remain
unchanged and in full force.
CARVER CORPORATION PHOENIX GOLD INTL, INC.
By______________________ By__________________________
Robert A. Fulton Timothy G. Johnson
President and CEO Executive Vice President
EXHIBIT 2.3
LICENSE AGREEMENT
THIS AGREEMENT, dated as of November 20, 1995, is
between CARVER CORPORATION, a Washington corporation
("Carver"), and PHOENIX GOLD INTERNATIONAL, INC., an Oregon
corporation ("Phoenix Gold").
Background
Carver and Phoenix Gold are parties to that certain
Asset Purchase Agreement dated as of November 20, 1995 (the
"Purchase Agreement") under which Carver agreed to grant
Phoenix Gold licenses with respect to certain intellectual
property. All capitalized terms not otherwise defined in this
Agreement shall have the meanings ascribed to them in the
Purchase Agreement.
Agreement
For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Grant of License to U.S. Patent No. 5,396,194
and Other Intellectual Property.
(a) Carver hereby grants to Phoenix Gold the
perpetual,irrevocable, non-exclusive, paid-up,
worldwide right and license to (i) use the Licensed
Technology (defined below) in connection with the
development, manufacture, use, sale, rental, lease,
donation or other transfer of any product utilizing
the Licensed Technology, in whole or in part, and
(ii) practice the inventions covered by any claim or
claims of the patents and patent rights included
within the Licensed Technology in connection with
the development,manufacture, use, sale, rental,
lease, donation or other transfer of any product.
(b) For purposes of this Agreement, "Licensed
Technology" means all patents and patent rights
owned by Carver that as of the date of this
Agreement are used or useful in connection with the
design, manufacture, marketing or sale of any of the
Products (including, without limitation, United
States Patent Number 5,396,194 (dated March 7,
1995)); provided, however, that the Licensed
Technology shall not include United States Patent
Number 4,808,946 (dated February 28, 1989), which
patent is simultaneously being assigned to Phoenix
Gold.
(c) Phoenix Gold shall have the right to subcontract
the manufacture of all or any portion of any
products using any of the Licensed Technology to
another entity upon suchterms and conditions as
shall be acceptable to Phoenix Gold without the
necessity of obtaining any consent of Carver,
provided that no such entity shall, by virtue of
such subcontracting, acquire any proprietary rights
in the Licensed Technology.
(d) All patents issued with respect to the Licensed
Technology shall be the sole and exclusive property
of Carver, subject to the license granted pursuant
to this Section. Carver shall, upon demand, execute
and deliver to Phoenix Gold such documents as may be
deemed necessary or advisable by counsel for Phoenix
Gold for filing in the appropriate patent offices to
evidence the granting of the license pursuant to
this Section.
2. Carver Professional Name.
(a) Carver hereby grants to Phoenix Gold the
exclusive, irrevocable, personal, non-transferable,
paid-up license to use the name "Carver
Professional" (the "Licensed Mark") for five years
following the date of this Agreement; provided,
however, that such license shall be revocable (a)
upon the failure of Phoenix Gold to pay to Carver
the Deferred Purchase Price when due, subject to
Phoenix Gold's offset rights under the Purchase
Agreement or the Manufacturing Agreement, (b) upon
a final judicial determination that Phoenix Gold
has used the Licensed Mark in a manner that
materially disparages the tradename "Carver" or (c)
upon a final judicial determination that the
products manufactured and sold by Phoenix Gold to
which the Licensed Mark is affixed are not of
substantially similar quality of design,
materials and workmanship as the Products as
manufactured and sold by Carver at the Closing
Date.
(b) Phoenix Gold shall indemnify and hold harmless
Carver and its officers, employees and agents from
any and all claims, demands, causes of action, and
Damages (including, without limitation, product
liability) made or incurred by purchasers of
products (i) that were manufactured by Phoenix Gold
after Closing, (ii) that were subsequently sold by
Phoenix Gold and (iii) to which Phoenix Gold affixed
the Licensed Mark. The claims procedures in
Section 10.3 of the Purchase Agreement shall apply
to claims for indemnification made under this
Section 2. Phoenix Gold's obligations under this
subsection (b) shall terminate upon the termination
or revocation of the license granted under this
Section 2. No claim for indemnity shall be made
against Phoenix Gold under this Section 2 unless and
until the aggregate of all Damages for which such
indemnity is sought exceed $25,000 and then such
indemnity shall apply to the first dollar of
Damages.
(c) In addition to any other rights Phoenix Gold
may have against Carver at law or in equity, if (i)
Carver fails to deliver Products or raw materials
to Phoenix Gold in accordance with the terms of
that certain Manufacturing Agreement entered into
as of the date hereof, (ii) such failure is not
excused under Section 10.8 of such Manufacturing
Agreement, and (iii)such nonexcused failure
continues for 30 days, then (x)the grant of the
Licensed Mark made in Section 2(a)hereof shall
automatically become perpetual, irrevocable and
transferable (and will remain fully paid up) and
(z) Section 2(b) hereof shall automatically
terminate and be of no force or effect.
3. Assignment and License of Miscellaneous Rights.
Carver hereby assigns to Phoenix Gold all of Carver's rights
in all other assumed business names, trademarks and trademark
rights, service marks and service mark rights, service names
and service name rights, copyrights and copyright rights and
other proprietary intellectual property rights and all pending
applications for and registrations of any of the foregoing
that are used as of the date of this Agreement in connection
with the design, manufacture, marketing or sale of any of the
Products (collectively, the "Miscellaneous Rights"). Carver
hereby grants to Phoenix Gold a perpetual, irrevocable, non-
exclusive, paid-up, worldwide right and license to use the
Miscellaneous Rights in connection with the development,
manufacture, use, sale, rental, lease, donation or other
transfer of any of the Manufactured Products. Notwithstanding
the foregoing, no assignment or license made in this Section 3
shall apply with respect to any of Carver's rights under that
certain License Agreement dated as of June 1, 1980 between
Carver and Carver Technology Development, Inc.
4. Royalties. Phoenix Gold shall be liable for no
royalties with respect to the licenses granted in this
Agreement.
5. Successors. This Agreement shall bind and
inure to the benefit of the parties and their respective
successors and assigns; provided, however, that Phoenix Gold
cannot assign the license granted in Section 2 without
Carver's prior written consent, which consent shall not be
unreasonably withheld.
6. Litigation Expenses. In the event of any liti-
gation to enforce or interpret any of the provisions of this
Agreement, the prevailing party shall recover and the other
party shall pay the reasonable expenses of the prevailing
party, including, without limitation, investigation costs,
accountant fees and attorney fees incurred by the prevailing
party in preparation of trial, at trial and upon any appeals
therefrom, as determined by the respective courts, in addition
to all other sums to which the prevailing party may be
entitled.
7. Section Headings. The headings of the sections
of this Agreement are for the convenience of the parties only
and shall not be construed as affecting the terms of this
Agreement or be used in the interpretation of the terms of
this Agreement.
8. Choice of Law; Venue. This Agreement shall be
interpreted in accordance with the laws of the state of Oregon
without reference to conflicts of laws principles thereunder.
The parties agree that jurisdiction for resolving all disputes
under this Agreement shall reside exclusively in the state and
federal courts located within Multnomah County, Oregon to the
exclusion of all other courts that might have jurisdiction
absent this Section.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
PHOENIX GOLD INTERNATIONAL, INC.
By:___________________________
Title: _______________________
CARVER CORPORATION
By:___________________________
Title: _______________________
