Greg Cole
Member
Shawn York said:Mike:
Can we agree to each post one post at a time? I know I've posted more than one at a time as well but I'm just noticing now that it's getting confusing to follow. I'm not ignoring all your statements and questions in your last three posts. I will respond to them in my next post. And for clarification... I've only gotten pissy with three manufacturers not five. And they all deserved it every time. Also, I've done business with 7 different manufacturers since 1995. Oh, and when I want lessons on how ta get along with people I won't be asking YOU! Lordy! I'm surprised nobody poisoned you at Mikeyfest. :shock:
Is it true that the Ron Lippold / Bill Bruders thread was pulled? Who pulled it and why?
The following is for your readers not for you cuz I know you've seen all this already. !gotcha!
WANTED: Evidence re: Bill Bruders, T. Fielding, Legends, Sapphire, BLUEline and Vortex.
Shortly after the BL acquisition by Legends I decided to drop by the Prescott factory to take a little look-see at the Vortex project. This was just after I came back from Costa Rica. While there, I saw what I thought to be a Vortex under construction. When I questioned the plant manager, Richard Loftin, he stated that the truck was NOT a Vortex but was a "Zero-Rez Vortex". BL had been building these "ZERO-REZ Vortex" trucks since 2007 and not paying the royalties and commissions for them.
I've also been told by two BL employees that Thom asked them to "just keep it hush around Shawn" regarding the Zero-Rez trucks. I am also aware of other Vortex machines they have built and not paid royalties on. Ron Verga called me recently and told me how much he loved his new 8000Q - but yet Thom Fielding didn't feel it necessary to pay the royalties on that one either until I forced the issue. There are also "Vortex Show Trucks" that I believe I have not been paid for yet and I'm quite sure there are even more. I don't really know for sure however. I brought this to the attention of Bruders and was ignored for months before he coughed up $24k in the past due royalties dating back to 2007- they finally paid the sales commissions of over 13k for those trucks they have admitted to so far just a few weeks ago. They held onto this money for months even after I brought it to their attention.
The lawsuit is not solely because of the Zero-Rez puppet act - but also because in my opinion, BL (and now Skagit/Legends) completely ignored the Vortex project ever since Adam was let go. I think it is also probable that Mr. Bruders had no intentions of doing anything with the Vortex project before he ever bought Blueline. Mike has said this and so have others. I believe that Adam was possibly let go (as well as Chuck) in preparation for the buyout of BL and Vortex by Legends/Sapphire. If I can prove this in arbitration I will very likely get the patent and the company back as well as enough money to redesign the Vortex, fix current engineering problems and provide the customer support and parts delivery necessary.
Mike has been aware of every bit of this information and was updated by me for the last eight months. I have no idea why he chose to support Bruders after knowing all this. I was and still am shocked. The only response I remember getting from Mike was that it would create too much havoc since all the arrangements were already made for Mikeyfest and Pemberton's.
If anyone has any information that demonstrates that BL or Legends has dropped the ball in any way on the Vortex project - (This includes customer service issues, not answering the phone, not sending parts) or if you have VIN numbers of any Vortex machines built between May 11th 2006 and present) it would be very useful to me. Please email me at: ShawnLorenzoYork@gmail.com Please don't send through PM. My phone number is 801 432 0759 Signed and notarized statements on your company letterhead would be icing on the cake. My deadline to turn in all evidence is this Friday at 5PM. Thanks.
On May 11th, 2006 BLUEline Equipment Company (Mark Loftin and Thom Fielding, "The Buyer") entered into an asset purchase agreement with Vortex Cleaning Systems and Vortex Technologies. (Shawn Lorenzo York, "The Seller") The agreement provides for the sale of Vortex assets to BLUEline in exchange for the sum of $174,000.00 and payment of perpetual royalties of $2,000.00 per each Vortex PTO machine and $1,500.00 per each Vortex slide-in machine that is manufactured and sold. Provision 2.4 of the agreement states, "The parties understand and acknowledge that a primary consideration for the sale of the Assets by Seller and a key element of this Agreement was the payment of perpetual royalties to Vortex Cleaning by Buyer." BLUEline Equipment Company was acquired by Legend Brands Company (Bill Bruders) on March 17th, 2009. As a result of the acquisition of BLUEline by Legend Brands, "Buyer" as defined below is now "the acquiring corporation", Legend Brands. (Bill Bruders)
CLAIM ONE: Breach Of Contract: Legend Brands ("the acquiring corporation" ) has not assumed in writing all of the obligations of the BLUEline/ Vortex Purchase Agreement. (see Provision 2.10, "Merger, etc.")
CLAIM TWO: Breach Of Contract: Buyer failed to produce the Vortex slide-in model on its trigger date of November 11, 2008. (see provision 2.4.5 "Covenant to Market and Manufacture Vortex Machines")
CLAIM THREE: Breach Of Contract: Buyer has failed to use all reasonable efforts to market, promote, distribute and sell the Vortex machines. Buyer has discontinued advertising of the Vortex machines. (see provision 2.4.5, "Covenant to Market and Manufacture Vortex Machines")
CLAIM FOUR: Breach Of Contract: Buyer has refused to provide seller (York) reasonable access to books and records of Vortex machine sales. (see provision 2.4.3 "Payment")
CLAIM FIVE: Breach Of Contract: Buyer has failed to pay royalties on Vortex PTO machine and Vortex slide-in machine sales. The total number of machines that were not paid for is unknown. Buyer must provide access to books and records.(see provision 2.4.3 "Payment")
CLAIM SIX: (Breach Of Good Faith And Fair Dealing) Bill Bruders CEO Legend Brands (Skagit) did disparage, slander and defame the character of York in an attempt to threaten and thwart him from seeking fair relief. In a telephone conversation with Mr. Mike Palliotet, a very well known industry leader, Mr. Bill Bruders threatened to "blacklist" York so that he "could not so much as buy a part in this industry" and referred to York as "The cancer of the industry". Several other employees and owners of the companies have made similar comments during a recent trade show in Las Vegas. Respondents have also stated in writing and clearly demonstrated in deed their intentions to prevent the Vortex Brand Name and products from competing with their own brand name and line of Sapphire Scientific products. Skagit's actions demonstrate their intentions to "squash & bury" the Vortex brand name products in order to further promote their own new Sapphire brand name products instead without the obligation thereof.
CLAIM SEVEN: (Declaratory judgement that Skagit Nortwest Holdings, Inc. be deemed the legal acquiring corporation of BLUEline and therefore compelled to assume the obligations of the Asset Purchase Agreement as provided for in provision 2.1.0 of the Asset Purchase Agreement.) The Legends Brands press release on their website states, "March 17, 2009 – Burlington, Wash. Legend Brands, the parent company of Dri-Eaz Products and Unsmoke/Microban, announced today that it has purchased BLUEline Equipment LLC, manufacturer of carpet and tile cleaning equipment located in Prescott, Ariz." By Respondent's own admission in his counterclaims, Legend Brands is not a legal entity capable of upholding the contractual obligations of The Asset Purchase Agreement. According to respondents answer, BLUEline and Sapphire are wholly owned subsidiaries of Skagit Northwest Holdings, Inc. and "only conduct business under the name Legend Brands".
CLAIM EIGHT: (Immediate and emergency relief be awarded and a declaratory order to compel respondent to return all Vortex assets originally received in the Asset purchase agreement back to Claimant in order to prevent further damage to the Vortex Brand Name.) Further damage to the Vortex brand name can only be mitigated by returning the Vortex assets to a party who place value on the brand name and alleges commercial value and intends to promote the brand name. Skagit should not object to this action in light of their stated disinterest in continuing the promotion and production of the Vortex- branded products and are petitioning for the release of their obligations under The Asset Purchase Agreement. Under Mr. York's direction, Vortex was a viable business with over thirty million dollars in sales between September 1998 and the May 11th, 2006 Asset Purchase and has a significant and provable commercial value. Swift and immediate action is required to prevent further damage to the Vortex Brand Name. Further, that Vortex be allowed unfettered, to continue in it's original course of business prior as conducted prior to the May 11th Asset Purchase Agreement and to allow Vortex to continue rightfully in the marketplace without interference, threat or thwart from Skagit or it's subsidiaries. Further, that York and Vortex may pursue without delay from Skagit their original course of business in their duties of producing and promoting the Vortex brand name and products.
CLAIM NINE: Respondent did neglect it's fair duty to provide reasonable service and support and to patronize Vortex customers and prospects which has resulted in further damage to the Vortex brand name.
Monetary Amount of claim: $1,208,886.00
Respectfully submitted this 16th day of October, 2009,
Shawn Lorenzo York
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the “Agreement”) is made and entered into as of this 11th day of May, 2006, by and between Shawn York (“York”), Vortex Cleaning Systems, LLC, a Utah limited liability company (“Vortex Cleaning”), and Vortex Technologies LLC, a Utah limited liability company (“Vortex Technologies”), and Blue Line Equipment, LLC, an Arizona limited liability company (the “Buyer”). York, Vortex Cleaning, and Vortex Technologies may be referred to herein as “Seller” or collectively as the “Sellers”. If only one of the Sellers is being referred to, it shall be so specified herein. The parties have agreed as follows:
1. RECITALS
The purpose hereof is to provide for the acquisition by Buyer of the business of Seller (“Business”) and certain assets used therein, through the purchase of those of Seller’s assets which are listed and described in Section 2 hereof.
2. PURCHASE AND SALE
2.1 Sale of Assets. On the Closing Date (herein below defined) the Sellers will sell, convey, assign, transfer and deliver to Buyer, subject to all of the terms and conditions hereof, and Buyer shall make payment as provided herein for the assets of the Sellers, which are more particularly described as follows (hereinafter the “Assets”):
2.1.1 Intangible Assets. All of Sellers’ right, title and interest, if any, in and to any and all patents, trademarks, trade names, trade dress, service marks, copyrights, and any applications therefor, maskworks, net lists, schematics, technology, know-how, computer software programs or applications and tangible or intangible proprietary information or material that are used or currently proposed to be used in the Business as currently conducted or as currently proposed to be conducted, including without limitation, U.S. Patent No. 6,673,437 issued to York on January 13, 2004 (the “437 Patent”), use of the name “Vortex”, all rights to the Vortex mark and/or trademark of three, red swooshes in a swirling circle as currently used by Sellers in the Business, all warranties, guarantees, licenses, permits, entitlements, governmental approvals, and goodwill, if any, which benefit the Business (the “Intangible Assets”).
2.1.2 Documentation. All files, books, records and documentation (including data recorded on electronic or magnetic media) related to the Business, including without limitation, all vendor lists, customer or client lists, product brochures, maintenance manuals, employee lists and files, advertising materials, marketing data, purchasing and other data.
2.1.3 Assets Not Included. It is understood by the parties that the Assets shall not include any of the following assets: (i) cash on hand or in bank accounts of Sellers, (ii) notes or accounts receivable of Sellers, (iii) machinery or equipment of Sellers, (iv) any inventory of parts or other materials of Sellers, or (v) books and records that pertain to financial data of the Sellers.
2.2 No Assumption of Liabilities. Except as otherwise specifically shown in this Agreement, Buyer will not assume any liability or obligation of the Sellers. The Assets will be delivered to Buyer free and clear of all encumbrances, mortgages, liens, tax liens, attachments, security interests and any other rights, interests or title of any other person or entity.
2.3 Purchase Price. The purchase price to be paid by Buyer to Sellers for the Assets (the “Purchase Price”) shall be the total sum of One Hundred Seventy-Four Thousand Dollars ($174,000). The Purchase Price shall be allocated as set forth in Schedule 2.1.1. The Purchase Price shall be paid as follows:
2.3.1 Cash at Closing. Seventy-Four Thousand Dollars ($74,000) payable in cash, cashier’s check or other immediately available funds to Vortex Cleaning upon the Closing Date; and
2.3.2 Note. A promissory note executed by the Buyer in favor of York in the principal amount of One Hundred Thousand Dollars ($100,000), in the form of promissory note attached hereto as Exhibit 2.3.2 (the “Note”).
2.4 Perpetual Royalties. In addition to the payment of the Purchase Price provided in paragraph 2.3, Buyer shall pay royalties as provided in this paragraph 2.4. The parties understand and acknowledge that a primary consideration for the sale of the Assets by Seller and a key element of this Agreement was the payment of perpetual royalties to Vortex Cleaning by Buyer.
2.4.1 Definitions. As used in this paragraph 2.4, the following terms shall have the following meanings:
(a) “Vortex PTO Machine” means any configuration of any machine which utilizes the vehicle’s engine to power the cleaning machine and which either incorporates the Intangible Assets or uses the Vortex brand.
(b) “Vortex Slide-In Machine” means any configuration of machine which does not utilize the vehicle’s engine to power the cleaning machine but rather is self contained and which either incorporates the Intangible Assets or uses the Vortex brand name.
2.4.2 Royalties. BuyeragreestopayVortexCleaning,commencingupontheClosing and continuing indefinitely and perpetually (the “Royalty Period”), (i) a monthly royalty of Two Thousand Dollars ($2,000) per Vortex PTO Machine sold by Buyer in a given month during the Royalty Period and (ii) a monthly royalty of One Thousand Five Hundred Dollars ($1,500) per Vortex Slide-In Machine sold by Buyer in a given month during the Royalty Period.
2.4.3 Payment. Buyer shall pay royalties to Vortex Cleaning, determined as provided above. Payments shall commence upon receipt of the first customer deposit received by Buyer for a Vortex PTO Machine after the Closing and shall be paid within ten (10) days following the end of each month in which the customer deposit was received. Buyer shall keep full, complete and accurate books and records of its sales of the Vortex PTO Machine and the Vortex Slide-In Machine and Seller shall have reasonable access to such books and records on an annual basis.
2.4.4 Set-Off. The right of the Vortex Cleaning to the payment of royalties and the obligation of Buyer to pay the same shall be subject to any claims or set-off which Buyer may have under this Agreement; provided that neither the foregoing in this paragraph nor any other provision of this Agreement in any way limits any remedy of Buyer.
2.4.5 Covenant to Market and Manufacture Vortex Machines. Buyer covenants and agrees in good faith to use all reasonable efforts to market, promote, distribute and sell the Vortex Machines; provided that it is commercially reasonable for Buyer to continue to manufacture and market such Vortex PTO Machines; further provided that it shall be deemed per se commercially
unreasonable for Buyer to cease manufacturing, marketing, or promoting the Vortex PTO Machine solely to manufacture, market or promote products similar to, or using technologies that compete with, the Vortex PTO Machine. Buyer further covenants and agrees in good faith to use its reasonable efforts to commence production on the Vortex PTO Machine no later than ninety (90) daysfromtheClosingDateandcommenceproductionontheVortexSlide-InMachinenolaterthan eighteen (18) months from the Closing Date.
2.5 Closing Date. The consummation of the purchase and sale of Assets (the “Closing”) shall take place of the offices of the Buyer on May 15, 2006 at 11:00a.m. (the “Closing Date”), or such other date, time or place as the parties may agree. On the Closing Date, (i) Buyer shall deliver to Seller the cash payment required by Section 2.3.1; (ii) Buyer shall execute and deliver to York the promissory note required by Section 2.3.2; (iii) Sellers shall deliver to Buyer a duly executed Bill of Sale covering the Assets, an Assignment of the 437 Patent in a form recognized by the U.S. Patent and Trademark Office, and an Assignment of Intangible Assets; (iv) all documents required by this Agreement shall be duly executed and delivered; and (v) possession of the Assets shall be delivered to Buyer.
2.6 Taxes. Sellers shall remain liable for and shall pay all amounts due upon notice of any assessment or license fee and shall pay all tax liability for business conducted prior to the Closing and Seller shall indemnify and hold Buyer harmless therefrom. Such tax liability shall include, but not be limited to all sales, transaction, privilege, use, ad valorem, payroll, or any tax or assessment of any nature or description imposed by or due to any state, county, federal or municipal taxing authority including any subdivision thereof.
2.7 Risk of Loss. Until the transaction contemplated hereby shall have closed, Sellers shall bear the risk of loss or damage to the Assets. In the event of any loss or damage which materially reduces the value of the Assets prior to or on the Closing Date, Buyer may: (i) rescind this Agreement and forthwith receive a refund from Sellers of all monies paid to Sellers in connection herewith, if any; (ii) to the extent there are insurance proceeds to cover such loss, require Sellers to replace or repair any such loss or damage prior to the Closing (which Buyer may extend for a fixed time period not to exceed sixty (60) days to accomplish same); (iii) elect to consummate the transaction with a reduction in Purchase Price equal to the loss incurred, which such reduction shall be reflected in the monies due at the Closing; or (iv) accept an assignment, duly agreed to by Sellers’ insurer of insurance proceeds payable as a result of any such loss or damage.
2.8 Offset Right. In addition to any other right of offset shown in this Agreement, Buyer shall have a right to offset against payments to be made to the Sellers under the Note, and/or against Sellers’ royalty payments, sums paid or incurred by Buyer as a result of a breach of Sellers’ representations or warranties made herein which shall be discovered by Buyer after the Closing Date.
Such right of offset shall be in addition to, and not mutually exclusive with regard to any other right or remedy Buyer may have. Nothing herein contained shall be construed as Buyer’s agreement to assume or pay any debt or liability of Seller other than those specifically assumed under this Agreement, nor shall anything herein contained create any right in any third party.
2.9 Undisclosed Liens. In the event Buyer shall at any time become aware of any lien encumbering the Assets not assumed by Buyer or disclosed to Buyer pursuant to this Agreement,
incurred or created by any Seller, in addition to any other rights Buyer may have, Buyer, after notice to Sellers giving them at least sixty (60) days to remove such lien, may elect to pay same (in installments or otherwise) and offset the amount of such lien against installments next due under the Note, with appropriate adjustment of interest as of the date such amounts are paid, or if Buyer shall agree in writing to assume such debt, the principal amount of the Note shall immediately be reduced by the principal amount of such assume debt, plus any amount by which the projected interest of such debt shall exceed the projected interest under that portion of the Note. No installments shall thereafter be due upon the Note until such assume amount would have been paid under the Note pursuant to the amortization schedule required by the Note.
2.10 Merger, Etc. In the event that there shall be consummated any merger, consolidation, or reorganization involving Buyer (including, without limitation, a series of mergers, consolidations, or reorganizations) in which Buyer is not the surviving entity to such transaction, or in the event that there shall be consummated any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets or the business of the Buyer, then the Buyer shall assign this Agreement and all of its rights and obligations hereunder to the acquiring or surviving corporation or entity; and it shall be a condition precedent to the consummation of such a transaction that such acquiring or surviving corporation or entity shall assume in writing all of the obligations of the Buyer hereunder; provided, however, that the Buyer and its successors (if and so long as it and they remains in existence) shall remain primarily liable for the performance of its obligations hereunder in the event of an unjustified failure of the acquiring or surviving corporation or entity to perform its obligations under this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
In order to induce Buyer to enter into this Agreement and to make the payments provided for herein, York, Vortex Cleaning, Vortex Engineering and Vortex Technologies, jointly and severally represent, warrant and agree as follows:
3.1 Good Standing. Vortex Cleaning and Vortex Technologies have full power and authority to own their property and carry on their business as it is now being conducted. Each of the Sellers is a limited liability company duly organized, validly existing and in good standing under the laws of Utah. There is no dissolution, liquidation or bankruptcy proceedings pending, contemplated by or threatened against the Sellers. York is the sole owner or member of Vortex Cleaning, Vortex Engineering and Vortex Technologies.
3.2 Authority for this Agreement. York, Vortex Cleaning, and Vortex Technologies each have full power and authority to enter into this Agreement and to perform as required herein. Each of the Sellers has duly and validly taken all necessary action to authorize the execution, delivery and performance of this Agreement by the Sellers. This Agreement constitutes a legal, valid and binding obligation of each Seller, and (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar law effecting the rights of creditors generally or general equitable principles), is enforceable as to each Seller in accordance with its terms.
3.3 No Violation of Governing Instruments. The execution, delivery and performance of this Agreement by Vortex Cleaning and Vortex Technologies and the consummation of the transactions contemplated herein will not result in a breach or violation of the terms and provisions
of the Articles of Organization or the Operating Agreement of the respective Sellers in effect on the date hereof and (i) will not constitute a material default under any indenture, mortgage, deed of trust or other material agreement or instrument to which a Seller is a party or by which a Seller is bound, and (ii) will not violate or contravene any governmental statute, rule or regulation applicable to a Seller or any order, writ, judgment, injunction, decree, determination or award which has been entered against a Seller, the violation or contravention of which would materially affect such Seller, its assets, financial condition or operations. The execution, delivery and performance of this Agreement by York and the consummation of the transactions contemplated herein (i) will not constitute a material default under any indenture, mortgage, deed of trust or other material agreement or instrument to which York is a party or by which York is bound, and (ii) will not violate or contravene any governmental statute, rule or regulation applicable to York or any order, writ, judgment, injunction, decree, determination or award which has been entered against York, the violation or contravention of which would materially affect York, his assets, financial condition or operations.
3.4 Financial Statements. Any and all financial statements, books, records, and the like of Sellers exhibited to Buyer, all of which were material inducements to Buyer to enter into this Agreement, are true and accurate representations of the business conducted by Sellers and the condition thereof. Except as specifically disclosed in any of the Sellers’ financial statements or the notes thereto, all such financial statements together with the notes thereto, are true and correct and fairly present the financial position of the Sellers’ business as at the dates indicated and the results of its operations for the periods ended thereon.
3.5 Absence of Undisclosed Liabilities. The Sellers have no liabilities or obligations as of the date hereof, secured or unsecured (whether accrued, absolute, contingent or otherwise), which are not listed in Schedule 3.5 hereof, incur any additional liabilities. Any accounts payable due and owing as of the Closing Date shall remain the obligation and responsibility of Sellers and shall be paid promptly as they become due. The Sellers have filed all federal, state and local tax returns required to be filed by them and have paid or provided for the payment in full of all taxes required to be paid in respect to the periods covered by such returns, and the Sellers are not now and on the Closing Date will not be delinquent in the payment of any tax, assessment or other governmental charge.
3.6 Books and Records. The financial records, ledgers, account books, and all records of each Seller are current and complete and any signatures on any document or instrument therein are and will be true signatures of the persons who are purported to have signed the same.
3.7 TitletoAssets. TheSellershavegoodandmarketabletitletoandwill,ontheClosing Date, be possessed of all of the Assets free and clear of all liens and encumbrances except as specifically disclosed in this Agreement or the attachments hereto.
3.8 Bulk Sales Law. The transfer of the Assets to the Buyer as provided in this Agreement is not fraudulent as to any creditor of the Sellers.
3.9 No Restrictions on Business Activities. There is no agreement, judgment, injunction, order or decree binding upon Sellers which has or could reasonably be expected to have the effect of materially prohibiting or materially impairing any business practice of Sellers, any Buyer acquisition
of the Assets of Sellers or the conduct of business by Sellers as currently conducted or as currently proposed to be conducted by the Buyer.
3.10 Usual Course of Business. Except as disclosed in Schedule 3.10 attached hereto, since April 1, 2006, the Business has been conducted in the usual course and Sellers have not entered into any transaction, incurred any liabilities or obligations, sold or transferred any assets or properties, waived any rights of substantial value or made any commitments, other than in the ordinary course of such Business, nor has it altered or revised in any way, its accounting principles, accounting procedures, accounting methods or accounting practices.
3.11 Contracts. ExceptaslistedanddescribedinSchedule3.11heretoorelsewhereinthis Agreement, the Sellers are not a party to any lease, or a party to or bound by any purchase commitment (including, without limitation, purchase commitments for materials and supplies in the ordinary course of business) contract agreements or understandings which would in any way affect the Assets or Buyer’s operation of the Assets or Business. The Sellers are not in default or in arrears in the performance or satisfaction of any lease, commitment, contract, agreement or understanding or any condition thereof. Except as so disclosed, the Sellers have not given a power of attorney to any person or organization for any purpose, nor authorized any person or entity to act for a Seller or bind a Seller to any agreement with respect to the conduct of the business. Schedule 3.11 also lists all written commitments made by Sellers and lists, to the best knowledge of Sellers and Shawn York, all verbal commitments with respect to the Vortex PTO Machine, the Vortex Slide-In Machine, any other product of Sellers, the 437 Patent or other assets of Sellers which may affect dealings by Buyer with its customers or suppliers in the future.
3.12 Intangible Property. Attached hereto as Schedule 3.12 is a list of intangible assets now owned by or pending application for Sellers, including without limitation, all right, title and interest of Sellers in and to the 437 Patent, the name “Vortex”, the mark and/or trademark of three, red swooshes in a swirling circle as currently used by Sellers in the Business, and the patents, patent applications, trademarks, trademark applications, trade names, fictitious names, service marks, copyrights, processes, trade secrets, customer lists and all licenses or permits under any of the same (“Intangible Property”).
Included in Schedule 3.12 are copies of the originals and all amendments of and any pending applications for all foreign and domestic patents, registrations, licenses, filings, permits, approvals, authorizations, exemptions, certifications for the Intangible Property, including without limitation, all trade secrets, trademarks, service marks, trade names, fictitious names, copyrights and all other forms of intellectual property registrations (the “Registrations”). Notwithstanding the preceding sentence, all trade secrets will be disclosed to Buyer in a form suitable to Buyer prior to the Closing Date. Except as otherwise specifically set forth on Schedule 3.12:
3.12.1 Owner of Registrations. Sellers are the sole and exclusive owners of the entire right, title and interest in and to all Registrations free and clear of all security interests, encumbrances, charges, leases or licenses; Sellers do not hold or use any Registration or any part thereof by consent of any other person; Sellers are not required to, and do not make any payments to others with respect to any Registrations, nor has any other person asserted an entitlement to any such payments; and, to the best of Sellers’ knowledge and belief, Sellers are entitled to use the
Registrations free of any claims, restrictions, qualifications, limitations, or rights of others of any kind in or to the Registrations or any part thereof.
3.12.2 No Adverse Claims to Registrations. Sellers have not received notice from any other person asserting ownership of, or challenging Sellers’ right to use, the Registrations or any part thereof; Sellers have no knowledge of any basis for any claim by any other person that would materially adversely affect Sellers’ rights in or use of the Registrations or any part thereof; and Sellers are not aware of any legal or equitable basis that would prevent the enforcement by Sellers or any nominee of its rights in and to the Registrations in any court of competent jurisdiction.
3.12.3 No Infringement by Others. To the best of Sellers’ knowledge and belief, no third party is using, infringing or otherwise violating or exercising any rights concerning any Registration; and Sellers have not granted to any other person any license or other right to use the Registrations or any part thereof.
3.12.4 Valid Trade Secrets. The Registrations disclosed to Buyer as trade secrets pursuant to this Section are, to the best of Sellers’ knowledge and belief, valid and enforceable trade secrets of Sellers and Sellers have taken and continue to take steps reasonably necessary to maintain their secrecy, including without limitation, controlling distribution of information, lending of formula books and obtaining confidentiality agreements with those having access to such trade secrets.
3.12.5 No Infringement of Existing Patents. To the best of Sellers’ knowledge and belief, no aspect of the business of Sellers as now or heretofore conducted, including without limitation, use of any Registration has infringed or does now infringe or violate any trade name, trademark, service mark, trade secret, patent, copyright or other right of any third party.
3.13 Government Authorizations. Schedule 3.13 accurately lists each material federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization issued to Sellers (i) pursuant to which Sellers currently operates or holds any interest in any of its properties or (ii) which is required for the operation of its business or the holding of any such interest (herein collectively called “Seller Authorizations”). All Seller Authorizations are in full force and effect and constitute all the authorizations required to permit Sellers to operate or conduct their business or hold any interest in its properties.
3.14 Labor Matters. Each Seller shall indemnify and hold Buyer harmless from any claim or demand from any employee or former employee of a Seller with respect to any wages, termination pay, vacation pay, sick leave or any remuneration claimed by any such employee as a result of his or her employment by a Seller; it being further understood that Buyer has no obligation to continue the employ of any existing employee of a Seller, other than York.
3.15 Compliance with Law. The Sellers are not in violation in any material respect under, and have not in any material respect failed to comply with, any law, rule, regulation, order, decree, judgment, award, determination or ruling of any federal, state or local court, agency commission or other governmental instrumentality, nor has it received notice of any alleged violation. The Sellers possess all licenses, rights, arrangements, permits, franchises and other authorizations required to conduct its Business as it is now conducted without any conflict with any rights of others.
3.16 Litigation. TheSellersarenotnowengagedin,ortotheirknowledgethreatenedwith, any litigation or other proceedings in connection with its affairs and the Sellers are not now subject to any order, decree or other governmental restriction adversely affecting the Sellers’ Business or the Assets in a material manner or which would prevent or hamper the consummation of the transaction contemplated by this Agreement or which, if made applicable to Buyer, would hamper or prevent its conduct of a carpet cleaning and pressure washing business through use of the Assets in the same manner as heretofore conducted by the Seller.
3.17 Distribution and Manufacturing Agreements. Except as disclosed in Schedule 3.17 or elsewhere in this Agreement, no person has the right to distribute any of the products of Sellers nor does any person have the right to manufacture any product of Sellers.
3.18 Product Claims. Schedule 3.18 lists all claims, including without limitation, product warranty claims, pending or threatened or of which Sellers have otherwise been advised or have knowledge arising out of the sale of products by Sellers (“Product Warranty Claims”). Sellers acknowledge and agree that Buyer may holdback and/or set-off against future payments due Sellers hereunder, the costs incurred by Buyer that are related to or associated with Product Warranty Claims; provided that Buyer may not holdback more than Twenty Thousand Dollars ($20,000) for such costs related to Product Warranty Claims (the “Maximum Holdback Amount”). To the extent not earlier applied or offset, the Maximum Holdback Amount shall be released to Sellers on a date which is eighteen (18) months from the Closing Date.
3.19 Full Disclosure. To the knowledge of the Sellers, neither the Seller nor any duly authorized representatives of the Sellers have, in connection herewith, made any untrue or misleading statement of a material fact or omitted to state a material fact necessary to move the statements made not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER In order to induce the Sellers to enter into this agreement, Buyer represents, warrants and
agrees as follows:
4.1 Good Standing. The Buyer has full power and authority to own its property and carry on its business as it is now being and as it is proposed to be conducted. The Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of Arizona.
4.2 Authority for this Agreement. Buyer has full power and authority to enter into this Agreement and to perform as required herein. Buyer has duly and validly taken all necessary action to authorize the execution, delivery and performance of this Agreement by Buyer. This Agreement constitutes a legal valid and binding obligation of Buyer, and (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws effecting the rights of creditors generally or general equitable principles) is enforceable as to Buyer in accordance with its terms.
4.3 No Violation of Instruments. The execution, delivery and performance of this Agreement by Buyer and the consummation of the transaction contemplated herein will not result in a breach or violation of the terms and provisions of the Articles of Organization or the Operating Agreement of the Buyer in effect on the date hereof (the “Organizational Documents”) and (i) will not constitute a material default under any indenture, mortgage, deed of trust or other material agreement or instrument to which the Buyer is a party or by which the Buyer is bound, and (ii) will not violate or contravene any governmental statute, rule or regulation applicable to the Buyer or any order, writ, judgment, injunction, decree, determination or award which has been entered against the Buyer, the violation or contravention of which would materially affect the Buyer, its assets, financial condition or operations.
5. AGREEMENTS OF THE SELLERS PENDING CLOSING Pending the Closing:
5.1 Access to Records. Buyer, its counsel, accountants and other representatives shall have full access, at reasonable times, to all of the properties, books, contracts, commitments and records of the Sellers, and the Sellers shall furnish to Buyer all such information concerning such business and properties of the Sellers as Buyer may reasonably request. Until the Closing, and thereafter if this transaction does not close, all information received by Buyer will be used solely for the purposes hereof, will remain confidential and will not be used to the detriment of the Sellers.
5.2 Preservation of Business. The Sellers will preserve its business intact, including without limitation, the maintenance and renewal of any licenses or permits, and will use its best efforts to keep available for Buyer the services of its employees and to preserve the good will of its customers, suppliers and others with whom it has business relations.
5.3 Conduct of Business. Without the consent of Buyer and except as provided herein, the Sellers will not (a) sell or otherwise dispose of or encumber or contract to sell or otherwise dispose of or encumber any of its properties or assets other than in connection with normal repairs, renewals and replacements, (b) take any other action which might materially adversely affect the interests of Buyer hereunder, or (c) fail to operate its business in the customary manner and in the ordinary and regular course of business and to maintain in good condition its business premises, plant, fixtures, furniture and equipment.
5.4 Compliance with Law. The Sellers will duly comply with all laws applicable to it or to the conduct of its business and will conduct its business in such a manner that on the Closing Date the representations and warranties contained in this Agreement shall be true as though such representations and warranties were made on and as of such date.
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6. CONDITIONS TO CLOSING All of the obligations of Buyer and Sellers under this Agreement are subject to each of the
following conditions:
6.1 Representations True at Closing. The representations and warranties of the Sellers made to Buyer and the representations and warranties of Buyer made to the Sellers contained in this Agreement shall be true and as of the Closing Date with the same effect as though such representations and warranties were made on and as of such date, and each and all of the agreements and conditions to be performed and satisfied hereunder by Buyer and the Sellers at or prior to the Closing Date shall have been duly performed and satisfied; provided, however, that should any of them become untrue because of events beyond the control of the Sellers or Buyer, as the case may be, and should the Sellers or Buyer have given notice to the other thereof before the Closing and should the Sellers or Buyer have been unable to make them true notwithstanding the application of its best efforts to do so, the sole remedy of the other party with respect thereto shall be to rescind this transaction.
6.2 No Litigation. No action or proceeding shall be pending or threatened at any time prior to the Closing Date before any court or other governmental body by any person or public authority seeking to restrain or prohibit, or to obtain damages or other relief in connection with, the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
6.3 Consents and Approvals. All consents or approvals of any other third party which in the reasonable judgment of Buyer or Seller are necessary to consummate the transactions contemplated in this Agreement, or to proceed with the Closing shall have been received and be reasonably satisfactory to the party requesting such consent or approval.
6.4 Employment Agreement. Shawn York and Buyer shall have executed a an Employment Agreement by which York agrees to become an employee of Buyer for a term not less than three years commencing on the Closing Date, all in the form of Employment Agreement attached hereto as Exhibit 6.4 (the “Employment Agreement”).
6.5 Promissory Note and Cash. At the Closing, the Buyer shall deliver the cash required by Section 2.3.1 and the Note required by Section 2.3.2.
6.6 Bill of Sale and Assignment of Intangible Assets and Assignment of 437 Patent. At the Closing, the Sellers shall execute and deliver to Buyer a Bill of Sale and Assignment of Intangible Assets covering the Assets and Intangible Assets as well as an Assignment of the 437 Patent, which shall be in such form as required by the U.S. Patent and Trademark Office and otherwise satisfactory to Buyer.
6.7 Non-Competition Covenant. Vortex Cleaning, Vortex Engineering and Vortex Technologies each agree that, for a period commencing on the Closing and ending on the expiration date of the 437 Patent, they will not engage, participate, operate or conduct, directly or indirectly, any
business activity or operation which competes with the Buyer’s business as currently conducted and as it is proposed to be conducted upon the completion of the purchase of Assets herein, or that manufactures, sells or markets any product bearing the Vortex brand, including the Vortex PTO Machine or Vortex Slide-In Machine, or any product similar to those sold by the Buyer.
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7. GENERAL AND MISCELLANEOUS
7.1 No Broker. Each of the parties agrees to indemnify and hold the other party harmless against any claim or liability asserted against them or it by any person acting or claiming to act as a broker or finder on behalf of the party against whom indemnity is sought.
7.2 Survival Past Closing. The respective representations and warranties of the parties herein contained shall survive the Closing, and each party shall continue to be jointly and severally liable with respect to their representations and warranties contained herein.
7.3 Indemnification.
7.3.1 Indemnification by Sellers. Sellers and each of Sellers’ owners and/or members shall, jointly and severally, indemnify, defend and hold harmless Buyer, its officers, members, managers, employees and agents, against and in respect of any and all liabilities including interest, penalties and reasonable attorneys’ fees, that Buyer shall incur or suffer, which arise or result from, or relate to (i) any breach by Sellers of any of their representations or warranties contained in the Agreement, or the failure of any Seller to perform any covenant or agreement contained in the Agreement, or in any exhibit or other instrument furnished or to be furnished by Sellers under the Agreement, and (ii) any and all claims of whatsoever nature, asserted (with or without the commencement of legal action) against Buyer with respect to the operation of the Business of Sellers prior to the Closing Date.
7.3.2 Indemnification by Buyer. Buyer shall indemnify, defend and hold harmless Sellers, their officers, members, managers, employees and agents, against and in respect of any and all liabilities including interest, penalties and reasonable attorneys’ fees, that Sellers shall incur or suffer, which arise or result from, or relate to (i) any breach by Buyer of any of its representations or warranties contained in the Agreement, or the failure of Buyer to perform any covenant or agreement contained in the Agreement, or in any exhibit or other instrument furnished or to be furnished by Buyer under the Agreement, and (ii) any and all claims of whatsoever nature, asserted (with or without the commencement of legal action), including without limitation, any personal injury claims, against Sellers with respect to any products manufactured by Buyer under the rights granted to Buyer in this Agreement from and after the Closing Date.
7.4 Termination of Agreement. In the event that the Closing hereunder does not take place because a condition specified in this Agreement is not satisfied, then this Agreement shall terminate, and unless the foregoing is caused by the willful failure of Buyer or the Seller to perform or satisfy an agreement or condition to be performed or satisfied by it hereunder, Buyer shall have no further obligation or liability to the Seller and the Seller shall have no further obligation or liability to Buyer, under this Agreement except as may be shown elsewhere herein.
7.5 Notices. All notices, consents, requests, instructions, approvals or other communications required or permitted to be given hereunder, shall be in writing, addressed as shown below, or to such other address as any party hereto may, from time to time, designate in writing, by courier, facsimile or electronic mail. Notice may be given via fax, and shall be deemed given when transmission has been successfully completed and electronic confirmation of such facsimile transmission is received by the noticing party. Notices not faxed shall be deemed given when actually delivered by the courier service. Any notice which is attempted to be delivered by electronic
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mail shall not be valid notice hereunder, unless acknowledgment of receipt of such electronic mail by the recipient is transmitted to and received by the sender within twenty-four (24) hours of its delivery.
SELLERS:
Shawn York Vortex Cleaning Systems, LLC Vortex Technologies LLC 10942 Sandy Circle Sandy, UT 84092 Facsimile: (801) 553-1343 E-mail: shawn@vortexinfo.com
BUYER:
Blue Line Equipment LLC 2604 Liberator Prescott, AZ 86301 Facsimile: (928)
E-mail: tomf@bluelineequipment.com
7.6 Bulk Sales Law. Each of the Sellers shall indemnify and hold Buyer harmless against any claim, damage or expense suffered or incurred by Sellers as the result of any failure of any Seller to comply with Article 6 of the Uniform Commercial Code.
7.7 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties, their successors, heirs, personal representatives and assigns.
7.8 Entire Agreement. This Agreement, represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, supersedes all prior negotiations between such parties, and cannot be amended, supplemented or changed orally but only by an agreement in writing signed by the party against whom enforcement of any such amendment, supplement or modification is sought and making specific reference to this Agreement.
7.9 Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one instrument.
7.10 Section and Paragraph Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect, in any way, the meaning or interpretation of this Agreement.
7.11 Settlement of Disputes. Any dispute or controversy arising out of or relating to this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with the Agreement, or any breach of this Agreement or any such document or instrument (“Dispute”) shall be subject to the negotiation and arbitration provisions contained herein. Each party to a Dispute shall make every reasonable effort to meet in person and confer for the purpose of resolving the Dispute by good faith negotiation before resorting to any other dispute resolution procedure or legal proceeding. If the parties do not reach such resolution within a period of thirty (30) days, then, upon notice by any party to the other parties (a “Dispute Notice”), the Dispute shall be finally settled by arbitration by a single arbitrator qualified to consider the matter in dispute. The parties shall attempt to agree on a qualified arbitrator to hear the Dispute, provided that if the parties cannot agree on such an arbitrator within thirty (30) days of the Dispute Notice, the Dispute shall be filed with and administered by the American Arbitration Association, Phoenix, Arizona office (“AAA”) and the AAA shall select a single arbitrator qualified to consider the Dispute. The arbitration shall be held in Phoenix, Arizona, governed by the Commercial Arbitration Rules, then obtaining, of the AAA, conducted at an arbitration hearing that shall not exceed three (3) days unless otherwise agreed by the parties. The arbitrator may grant injunctions or other relief in such dispute or controversy and shall rule on all other evidentiary or discovery issues or requests. The decision of the arbitrator shall be final, conclusive and binding upon the parties to the arbitration; and any party shall be entitled to cause judgment on the decision or award of the arbitrator to be entered in any court of competent jurisdiction. The parties shall share equally the costs of the arbitrator, but each party shall be responsible for its own attorney fees and other related costs, fees and deposits, notwithstanding any provision to the contrary by statute or the rules of the American Arbitration Association.
7.12 Governing Law. This Agreement shall be construed in accordance with and interpreted under the laws of the State of Arizona existing as of the date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as to the day and year first above written.
SELLERS: SHAWN YORK
________________________________ Shawn York
VORTEX CLEANING SYSTEMS, LLC
By: __________________________ Its: __________________________
VORTEX TECHNOLOGIES, LLC
By: __________________________ Its: __________________________
BUYER: BLUE LINE EQUIPMENT, LLC
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By: Its:
________________________ ________________________
I apparently have way too much time on my hands this evening!
