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Title: |
Asset Purchase Agreement |
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Entities: |
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Date: |
2006 |
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Preview shows 24KB of 153KB total |
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$67 |
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ID: |
#2540319 |
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this Agreement) effective as of the 3rd day of September, 2006, by and among Forefront Burton, Inc., a corporation organized and existing under the laws of the State of Florida (the Buyer), Burton Golf, Inc., a corporation organized and existing under the laws of the State of Florida (the Seller) and Donald Ochsenreiter and Terry Andre (Ochsenreiter, Andre and Seller are collectively referred to herein as the Seller Responsible Parties).
WITNESSETH:
WHEREAS, the Seller is engaged in the business of manufacturing, marketing, distributing and selling high quality mens and womens golf bags and accessories (the Business);
WHEREAS, the Buyer desires to acquire from the Seller and the Seller desires to sell to the Buyer substantially all of the assets utilized in and associated with the operation of the Business (as presently conducted and proposed to be operated in the future) upon the terms and subject to the conditions set forth in this Agreement (the Sale);
WHEREAS, the respective Board of Directors of the Seller and the Buyer have each approved the Sale, the terms of this Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties, intending legally to be bound, agree as follows:
AGREEMENT
[A list of defined terms is provided in Article 9 hereof]
Article 1. Purchase and Sale
1.1 General. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer shall purchase from Seller, and Seller shall sell, transfer, assign, convey and deliver to Buyer, all of Sellers right, title and interest in and to the Business, including, without limitation, in and to all of the assets, properties, rights, goodwill, contracts and claims of the Business, other than the Excluded Assets, wherever located, whether tangible or intangible, real or personal, known or unknown, actual or contingent, as the same shall exist as of the Closing (such rights, title and interest in and to all such assets, properties, rights, contracts and claims, being collectively referred to herein as, the Purchased Assets). The Purchased Assets shall include, without limitation, the following assets:
(a) cash and cash equivalents, including petty cash accounts or cash on hand or in bank accounts, certificates of deposit, commercial paper and other similar securities related to the Business;
(b) all accounts receivable and notes receivable and other claims for money or other obligations due (or which hereafter will become due) to Seller arising out of the Business together with any unpaid interest accrued thereon from the respective obligors and any security or collateral therefor;
(c) all inventory (including work in process, raw materials and finished goods), goods in transit, unbilled revenues and other properties and rights associated with the performance of contracts and the operation of the Business;
(d) all Equipment and machinery owned by Seller related to the Business, including but not limited to computers and software, office furniture and fixtures, as well as the rights to all communication numbers and addresses (telephone, fax, toll-free, e-mail, web site, domain name), telephone systems, office equipment and other tangible personal property, whether or not such assets are located at the Premises;
(e) all marketing materials, office supplies and letterhead used in connection with the Business;
(f) all of Sellers ownership rights and interest in the Intellectual Property Rights, including, without limitation, all results of the Businesss research and development activities and other Intellectual Property Rights developed or acquired for the Business, or related to, or of use or potential use in connection with any current or contemplated potential future products of the Business or parts, components or subassemblies used or purchased by the Business;
(g) all of Sellers rights under any insurance contract or arrangement relating to the Business;
(h) all right, title and interest in, to and under all Material Contracts associated with the Business, subject in each case to the terms of such contracts;
(i) all of Sellers past and present books and records (including such books and records as are contained in computerized storage media) of the Business, including all inventory, purchasing, accounting, sales, export, import, research, engineering, manufacturing, maintenance, repairs, marketing, banking, documents and records constituting Intellectual Property Rights, shipping records, personnel files and all files, customer and supplier lists, records, literature and correspondence, inquiries, letters of intent, publications, forms and sales leads, whether or not physically located on any of the Premises, provided the Seller may retain copies of all books and records related to Excluded Liabilities and Excluded Assets;
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(j) all Permits which are transferable and which are used in the Business, as presently conducted;
(k) all rights of the Seller pursuant to any express or implied warranties, representations or guaranties made by suppliers to the Business;
(l) all goodwill associated with the Business;
(m) all intangibles and contract rights associated with the Business including, without limitation, rights under non-disclosure agreements with employees and agents of Seller and under confidentiality agreements with prospective purchasers of the Business or with other third parties to the extent relating to the Business;
(n) all deposits, prepaid charges, insurance, sums and fees, offset credit balances in any country, refunds, and causes of action;
(o) any other asset of Seller, other than Excluded Assets, in respect of which there is an Assumed Liability;
(p) all rights of recovery, rights of set-off and rights of recoupment of Seller in connection with the Business; and
(q) any other assets, tangible or intangible, of Seller which are used in the Business and which are of a nature not customarily reflected in the books and records of a business, such as assets which have been written off for accounting purposes but which are still used by or of value to the Business.
1.2 Excluded Assets. Notwithstanding anything herein to the contrary, the Purchased Assets shall not include any of the following assets related to the Business (collectively, the Excluded Assets):
(a) The fee owned Real Property located at 654 Anchors Street, Fort Walton Beach, Florida 32548 (the Premises);
(b) All fixtures relating to the operation of the building located on the Premises (i.e., HVAC, plumbing, elevators, etc.) (but not including any furniture located within such improvements);
(c) Key man life insurance policies that are for the benefit of Sellers lender; and
(d) Any personal items and furniture belonging to Ochsenreiter or Andre located in their respective offices at the Premises.
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1.3 Certain Provisions Relating to the Purchased Assets.
(a) To the extent that a contract, Permit or other asset which would otherwise be included within the definition of Purchased Assets, or any claim, right or benefit arising thereunder or resulting therefrom (each an Interest and collectively the Interests), is not capable of being sold, assigned, transferred or conveyed without the approval, consent or waiver of the issuer thereof or the other party thereto, or any third person (including a Governmental Authority), and such approval, consent or waiver has not been obtained prior to the Closing, or if such sale, assignment, transfer or conveyance or attempted sale, assignment, transfer or conveyance would constitute a breach thereof or a violation of any law, decree, order, regulation or other governmental edict, this Agreement shall not constitute a sale, assignment, transfer or conveyance thereof, or an attempted sale, assignment, transfer or conveyance thereof.
(b) Seller Responsible Parties and Buyer shall use their best efforts and shall cooperate to obtain all approvals, consents or waivers necessary to convey to Buyer each Interest as of the Closing. The failure to obtain any approval, consent or waiver necessary to convey any Interest to Buyer shall not affect the obligations of the parties to close hereunder. Subsequent to the Closing, the Seller Responsible Parties shall execute and deliver any other instruments and take any actions, which may be reasonably required for the implementation of this Agreement and the transactions contemplated hereby.
1.4 Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer will assume and become responsible for the following liabilities and obligations of the Seller (the Assumed Liabilities):
(a) all of the Sellers accounts payable (which have arisen in the ordinary course of the Business), accrued expenses and the third party liabilities and obligations set forth on Schedule 1.4(a); and
(b) the obligations under certain material contracts being transferred to Buyer hereunder, a list of which is set forth on Schedule 1.4(b) (to the extent that such liabilities and obligations remain unsatisfied or are required to be performed on or after the Closing Date), including that certain loan payable to Donald Ochsenreiter with an approximate outstanding balance of Sixty-Five Thousand Dollars ($65,000) (which the parties agree shall be paid in full by Buyer at Closing) true and correct copies of the documentation of which have previously been furnished by the Seller to Buyer, and that certain equipment loan payable to Vanguard Bank & Trust with an approximate outstanding balance of Sixty Thousand Dollars ($60,000).
1.5 Excluded Liabilities. Except for the Assumed Liabilities, the Seller Responsible Parties and the Buyer expressly understand and agree that Buyer shall not assume, pay, perform or discharge or otherwise become liable for any obligations, commitments or liabilities of any and every nature whatsoever of the Seller, whether known or unknown, fixed or contingent, relating to the ownership of the Purchased Assets, the operation of the Business or otherwise (the Excluded Liabilities), including, without limitation, liabilities and obligations relating to or arising in connection with the following:
(a) all liabilities associated with the Real Property including the Real Property located at 654 Anchors Street, Fort Walton Beach, Florida 32548 including, without limitation, the note and mortgage thereon;
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(b) liabilities resulting from Environmental Claims relating to the operation of the Business prior to the Closing;
(c) Sellers bank debt and other funded debt (including Sellers revolving credit facility and working capital line of credit), including overdrafts (provided that the Seller shall obtain, at or prior to Closing, any and all releases of liens necessary to transfer the Purchased Assets to the Buyer hereunder free and clear of any and all Encumbrances);
(d) any liability or obligation arising out of any claim of or for injury to persons or property by reason of the improper performance or malfunctioning, improper design or manufacture, or failure to adequately package, label or provide warnings as to the hazards of, any product of the Business, where the injury giving rise to such claim occurred on or prior to the Closing Date;
(e) any liability of the Seller to any plan, individual or governmental agency arising out of any failure of the Seller to comply with the applicable provisions of any Employee Benefit Plans, ERISA, the Code, or other applicable Laws with respect to its employees, including any obligation or liability of the Seller for any penalty, fine or similar amount due from the Seller on account of any breach of fiduciary duty or failure to comply with applicable laws or regulations;
(f) any liability associated with the hiring, employment or termination of any employees of Seller at any time prior to Closing including obligations under any severance, deferred compensation or employment agreements, guaranteed fixed terms of employment or retirement benefits beyond those provided under applicable law, collective bargaining agreements, or any Employee Benefit Plan applicable to employees of the Business generally, which arises out of any acts or omissions of Sellers prior to the Closing Date;
(g) any liability associated with the Excluded Assets; and
(h) all liabilities of Seller or any Affiliate of Seller for Taxes.
1.6 Purchase Price; Payment. On the terms and subject to the conditions set forth in this Agreement, and subject to adjustment as provided herein, at the Closing the Buyer shall acquire the Purchased Assets from the Seller for an aggregate consideration of Four Million Two Hundred Thousand Dollars ($4,200,000), plus the liabilities assumed under Section 1.4(b), above (the Purchase Price). The Purchase Price shall be payable as follows:
(a) On the Closing Date, the Buyer shall pay the loan payable to Donald Ochsenreiter and the equipment loan payable to Vanguard Bank & Trust, both as described in Section 1.4(b), above.
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(b) On the Closing Date, the Buyer shall deliver to the Seller the Closing Cash Payment by wire transfer of immediately available funds to the account or accounts designated by the Seller not later than three Business Days prior to the Closing Date;
(c) On the Closing Date, the Buyer shall deliver to the Seller the executed Promissory Note A in the principal amount of $750,000;
(d) On the Closing Date, the Buyer shall deliver to the Seller the executed Promissory Note B in the principal amount of $1,000,000;
(e) On the Closing Date, the Buyer shall deliver to the Seller the executed Promissory Note C in the principal amount of $475,000; and
(f) 250,000 shares of the common stock of ForeFront Holdings (the Common Shares).
In the event that as of the third anniversary of the Closing Date, the Common Shares can be sold on any national exchange, the OTC Bulletin Board or other established market, but the per share market value of such Common Shares is less than $4.00 (based on the 30 day moving average trading price of ForeFront Holdings common stock as quoted on the OTC Bulletin Board or other established market), then the then outstanding principal balance of Promissory Note B shall be offset by the value of the Common Shares as of such date, and the Seller shall have the option to be paid the then outstanding principal balance of Promissory Note B in cash or in additional shares of common stock of ForeFront Holdings (valued at the then current trading price); provided, however that if the Seller elects to be paid such balance (or any portion thereof) in additional shares of common stock, the maximum amount of additional shares of common stock that may be issued hereunder shall not exceed 2 million shares; provided, further that if the Seller elects to be paid such balance (or any portion thereof) in additional shares of common stock the Buyer shall have the right, in its sole discretion, to elect to pay such amount in cash instead of issuing additional shares of common stock. In the event that on the third anniversary of the Closing Date, the Common Shares can be sold on any national exchange, the OTC Bulletin Board or other established market and the per share market value of such Common Shares is equal to or greater than $4.00 (based on the 30-day moving average trading price of ForeFront Holdings common stock as quoted on the OTC Bulletin Board or other established market), then Promissory Note B shall be deemed paid and satisfied in full on such third anniversary. Notwithstanding the foregoing, the Buyer shall be permitted to prepay Promissory Note B on the second anniversary and the 2 1/2 year anniversary of the Closing Date using the same methodology described in the preceding sentence (referring to the then current market price of the Common Shares).
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