**Exhibit 10.2**

 

**ASSET PURCHASE AGREEMENT**

 

This ASSETPURCHASE AGREEMENT dated as of April 19, 2002 is made and entered into byand between INTERNATIONAL INTEGRATED INCORPORATED, a British Virgin Islandscorporation (“*Purchaser*”), and * * * (“*Seller*”).

 

**RECITALS**

 

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WHEREAS Sellerdesires to sell, transfer and assign to Purchaser, and Purchaser desires topurchase and acquire from Seller, substantially all of the assets of Sellerrelating to the operation of the Business, and in connection therewith,Purchaser has agreed to assume certain of the liabilities of Seller relating tothe Business, all upon the terms and subject to the conditions set forthherein.

 

**AGREEMENT**

 

NOW, THEREFORE, inconsideration of the mutual covenants, agreements, representations andwarranties set forth in this Agreement, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto agree as follows:

 

1.                                       PURCHASEAND SALE OF ASSETS

 

1.1                                 *AssetPurchase*.

 

(a)                                  *Assets*.  Subject to the terms and conditions of thisAgreement and on the basis of and in reliance upon the representations,warranties, covenants and agreements set forth herein, on the Closing Date,Seller shall sell to Purchaser and Purchaser shall purchase from Seller theassets of Seller relating to the operation of the Business as fully set forthon Schedule 1.1(a) attached hereto (the “*Assets*”).  The Purchase Price for the Assets shall beas defined in Section 1.2 hereof.

 

(b)                                 *ExcludedAssets*.  Notwithstandinganything in this Agreement to the contrary, the following assets and propertiesof Seller (the “*Excluded Assets*”) shall be excluded from and shall notconstitute Assets:

 

(1)                                  *CorporateDocuments*.  The corporatecharter, qualification to conduct business as a foreign corporation,arrangements with registered agents relating to foreign qualifications,taxpayer and other identification numbers, seals, minute books, stock transferbooks, blank stock certificates, and other documents relating to theorganization and existence of Seller as a corporation; and

 

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(2)                                  *OtherAssets. *All assets notspecifically described and set forth in Schedule 1.1(a);

 

(3)                                  *AgreementRights*.  Seller’s rightsunder this Agreement.

 

1.2                                 *PurchasePrice*. The “*Purchase Price*,” shall initially be * * *,subject to adjustment in accordance with Schedule 1.2 and this Section 1.2.  The Purchase Price shall be payable inaccordance with the following:

 

(a)                                  Priorto the Closing (as defined in Section 2.1 hereof), Seller shallmake the following deposits, each of which shall be applied to the PurchasePrice at the Closing:

 

(1)                                  *InitialDeposit*.  Seller acknowledgesand agrees that Purchaser, as of the date hereof, has already paid to Seller aninitial deposit in the amount of * * * (the “*Initial Deposit*”).

 

(2)                                  *ExecutionDeposit*.  Concurrently withthe execution and delivery of this Agreement, Purchaser shall pay to Seller anadditional deposit in the amount of * * * (the “*Execution Deposit*”).

 

(3)                                  *WeeklyDeposits*.  Beginning onThursday April 25, 2002 and on each Thursday thereafter until the earlierto occur of the Closing, termination of this Agreement in accordance with Section 8.1or January 1, 2004, Purchaser shall pay to Seller a weekly deposit in theamount of * * * (each a “*Weekly Deposit*” and collectively the “*WeeklyDeposits*”).

 

(b)                                 Ifthe Closing occurs pursuant to Section 2.1(a) hereof, Purchasershall pay to Seller the difference between (x) the Purchase Price as of thedate of * * * (as set forth on Schedule 1.2) and (y) the sum totalof the Initial Deposit, the Execution Deposit and all Weekly Deposits made byPurchaser as of the Closing Date.

 

(c)                                  NotwithstandingSchedule 1.2, if the Closing occurs pursuant to Section 2.1(b)hereof, the Purchase Price shall be * * *, and Purchaser shall pay to Sellerthe difference between (x) * * * and (y) the sum total of the Initial Deposit,the Execution Deposit and all Weekly Deposits made by Purchaser as of theClosing Date.  Upon Purchaser’s paymentof the Purchase price in accordance with this Section 1.2(c),Purchaser shall be deemed to have paid the entire Purchase Price in full as ofsuch Closing Date and Purchaser shall have no further obligation to pay anyamounts to Seller for the purchase of the Assets.

 

(d)                                 Ifthe Closing occurs on January 1, 2004, the sum total of the InitialDeposit, the Execution Deposit and all Weekly deposits made by Purchaser as ofsuch Closing Date (* * *) shall exceed the then effective Purchase Price(* * * as set forth on Schedule 1.2), and Purchaser shallbe deemed to have paid the entire Purchase Price in full as of such ClosingDate and Purchaser shall have no further obligation to pay any amounts toSeller for the purchase of the Assets.

 

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1.3                                 *Liabilities.*

 

(a)                                  *AssumedLiabilities*.  In connectionwith the sale, transfer, conveyance, assignment and delivery of the Assets tothe Purchaser pursuant to this Agreement, on the terms and subject to theconditions set forth in this Agreement, at the Closing, Purchaser will assumeand agree to pay only those liabilities exclusively pertaining to the Assetsthat are set forth on Schedule 1.3 attached hereto (the “*AssumedLiabilities*”).

 

(b)                                 *RetainedLiabilities*.  Except for theAssumed Liabilities, Purchaser shall not assume by virtue of this Agreement orthe transactions contemplated hereby, and shall have no liability for, anyliabilities of Seller (including those related to the Business) of any kind,character or description whatsoever (the “*Retained Liabilities*”).

 

1.4                                 *SellerIndemnity*.  Except withrespect to the Assumed Liabilities and provided that a Closing occurs, Selleragrees to indemnify and hold harmless Purchaser, its subsidiaries and itsshareholders from and against any loss, liability or expense arising from orrelated to the Assets.  The foregoingindemnity shall include but not be limited to any loss, liability or expensearising from or related to claims of creditors of Seller or any of itssubsidiaries.  The amount of anyindemnification due pursuant to this Section 1.4, as the case maybe, shall be calculated after taking into account the amount of all insurance,cash or other direct financial benefits paid to such indemnified party(including any such benefits paid by third parties) and after taking intoaccount the United States federal, state and local and foreign national,provincial and local tax benefits or detriments to the indemnified party, asthe case may be, calculated assuming the indemnified party were a taxpayersubject to tax at the highest marginal rate in effect when the payment is made,of the payments made in respect of such loss, claim, demand, cost or expense givingrise to the indemnification and the payments, including indemnificationpayments made in respect thereto.

 

2.                                       CLOSING

 

2.1                                 *Closing**Locationand Date*.  The closing of thetransactions described in Section 1 (the “*Closing*”) shall take placeat the offices of Sheppard, Mullin, Richter & Hampton, LLP located at 333S. Hope Street, 48th Floor, Los Angeles, California 90071 or at such otherplace as is mutually agreed upon by the parties, and on such date (the “*Closing Date*”)as is determined in accordance with the following:

 

(a)                                  Inthe event that * * *, the Closing shall occur on a date no later than 30 daysfollowing the date of * * *, *provided that* (i) such Closing shall occurbefore January 1, 2004 and (ii) all conditions to Closing shall have beensatisfied or waived.

 

(b)                                 Inthe event that * * *, the Closing shall occur no later than five business daysfollowing the date of * * *, *provided that*(i) such Closing shall occurbefore January 1, 2004 and (ii) all conditions to Closing, other than Section 6.1(h),shall have been satisfied or waived.

 

(c)                                  Unlessthis Agreement is terminated pursuant to Section 8.1 hereof and ifa Closing has not occurred prior to January 1, 2004, the Closing shalloccur on January 1, 2004.

 

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2.2                                 *ClosingDeliveries*.  At the Closing:

 

(a)                                  Sellershall deliver to Purchaser a bill of sale and such other documents in formreasonably satisfactory to Purchaser to effectuate the transfer of the Assetsto Purchaser substantially in the form of the General Assignment and Bill ofSale attached hereto as Exhibit A.

 

(b)                                 Sellershall deliver to Purchaser a certificate, dated the Closing Date and executedby the President of Seller, substantially in the form of the Officer’sCertificate attached hereto as Exhibit B.

 

(c)                                  Purchasershall deliver to Seller an assumption agreement to effectuate the transfer ofthe Assumed Liabilities to Purchaser substantially in the form of theAssumption Agreement attached hereto as Exhibit C.

 

(d)                                 Purchasershall deliver to Seller the balance of the Purchase Price (if any) as set forthin Section 1.2 above.

 

(e)                                  Theparties hereto shall deliver such other documents as may be required by thisAgreement.

 

2.3                                 *ClosingNotices*.  Only upon thesuccessful closing of the transactions contemplated herein, Seller shall (i)notify each of  * * * of this Agreement,the agreements to be entered into by the parties hereto (the “*AncillaryAgreements*”) and the transactions contemplated hereby and thereby;and (ii) comply with all applicable reporting requirements imposed by theInternational Investment and Trade in Services Survey Act (22 U.S.C.§ 3101 et seq.), including, to the extent required, the completion andfiling of Form BE-13 (Initial Report on a Foreign Person’s Direct or IndirectAcquisition, Establishment, or Purchase of the Operating Assets of a U.S.Business Enterprise, Including Real Estate) with the Bureau of EconomicAnalysis of the United States Department of Commerce no later than 45 daysfollowing the Closing Date.

 

3.                                       REPRESENTATIONSAND WARRANTIES OF SELLER

 

To inducePurchaser to enter into this Agreement and consummate the transactionscontemplated hereby, Seller represents and warrants to Purchaser as of the datehereof and as of the Closing Date as follows (for purposes of this Agreement,the phrases “knowledge of Seller” or the “Seller’s knowledge,” or words ofsimilar import, mean the knowledge of Seller and the directors and officers ofSeller, including facts of which the directors and officers, in the reasonablyprudent exercise of their duties, should be aware):

 

3.1                                 *DueOrganization*.  Seller is acorporation duly organized, validly existing and in good standing under thelaws of the * * * and is duly authorized, qualified and licensed under allapplicable laws, regulations, ordinances and orders of public authorities toown, operate and lease its properties and to carry on its business, includingthe Business, in the places and in the manner it has been and is now beingconducted, except where the failure to be so authorized, qualified or licensedwould not have a material adverse effect on the business, operations,properties, assets or condition, financial or otherwise, of Seller or any ofits subsidiaries (“*Material Adverse Effect*”).  Schedule 3.1 hereto contains alist of all jurisdictions in which Seller is authorized or qualified to dobusiness, which includes all jurisdictions in which the failure to be soauthorized, qualified or licensed would have a Material Adverse Effect.  Seller is in good standing in eachjurisdiction indicated.  Seller has

 

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made available to Purchaser true, complete and correct copies of thecertificate or articles of incorporation and bylaws of Seller.  Such certificate or articles ofincorporation and bylaws are collectively referred to as the “*CharterDocuments*.”  Seller is not inviolation of any of its Charter Documents. Copies of the minute books of Seller have been made available toPurchaser and are correct and, except as set forth in Schedule 3.1,complete in all material respects.

 

3.2                                 *Authorization;Validity*.  Therepresentatives of Seller executing this Agreement and the Ancillary Agreementshave all requisite power and authority to enter into and bind Seller to theterms of this Agreement and the Ancillary Agreements.  Seller has the full legal right, corporate power and authority toenter into this Agreement, the Ancillary Agreements and the transactionscontemplated hereby and thereby.  Theexecution and delivery of this Agreement and each of the Ancillary Agreementsby Seller and the performance by Seller of the transactions contemplated herebyand thereby have been duly and validly authorized by the board of directors ofSeller, and this Agreement and each Ancillary Agreement has been duly andvalidly authorized by all necessary corporate action.  This Agreement and each Ancillary Agreement is a legal, valid andbinding obligation of Seller, enforceable against Seller accordance with itsterms.

 

3.3                                 *No Conflicts*.  Except as disclosed in Schedule 3.3or as contemplated hereunder, the execution, delivery and performance of thisAgreement and each Ancillary Agreement, the consummation of the transactionscontemplated hereby and thereby, and the fulfillment of the terms hereof andthereof do not and will not:

 

(a)                                  conflictwith, or result in a breach or violation of, any of the Charter Documents;

 

(b)                                 conflictwith, or result in a default, breach or violation of (or an event that wouldconstitute a default, breach or violation but for any requirement of notice orlapse of time or both) under, any document, agreement or other instrument towhich Seller is a party or by which Seller is bound (including the SupplyAgreement), create in any other person a right of termination, acceleration,amendment or increased payment under, or result in the creation or impositionof any Lien (as defined in Section 3.4) on any of Seller’sproperties or assets, except as provided in Section 5.7, pursuantto (i) any law or regulation to which Seller or any of its respectiveproperties or assets are subject, (ii) any document, agreement or instrument towhich Seller is a party (including the Supply Agreement) or (iii) any judgment,order or decree to which Seller is bound or any of their respective propertiesor assets is subject;

 

(c)                                  resultin termination or right to termination or any impairment of any permit,license, franchise, contractual right or other authorization of Seller; or

 

(d)                                 violate,or require any consent or approval of any governmental authority under, anylaw, order, judgment, rule, regulation, decree or ordinance to which Seller issubject or by which Seller is bound, including the Hart-Scott-Rodino AntitrustImprovements Act of 1976 (the “*HSR Act*”), together with all rules andregulations promulgated thereunder.

 

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3.4                                 *Assets*.  Except as set forth in Schedule 3.4and except as provided in Section 5.7, Seller has good andmarketable title to the Assets, free and clear of all Liens.  For purposes of this Agreement, “*Lien*”means any mortgage, security interest, pledge, hypothecation, assignment,deposit arrangement, encumbrance, lien (statutory or otherwise), adverse claim,charge, preference, priority or other security agreement, option, warrant,attachment, right of first refusal, preemptive, conversion, put, call or otherclaim or right, restriction on transfer (other than restrictions imposed byfederal and state securities laws), or preferential arrangement of any kind ornature whatsoever (including any restriction on the transfer of any assets, anyconditional sale or other title retention agreement, any financing leaseinvolving substantially the same economic effect as any of the foregoing andthe filing of any financing statement under the Uniform Commercial Code orcomparable law of any jurisdiction).

 

3.5                                 *PredecessorStatus*.  Schedule 3.5sets forth a list of all names of all predecessor companies of Seller,including the names of any entities from which Seller previously acquiredsignificant assets.  Except as set forthon Schedule 3.5, Seller has never been a subsidiary or division ofanother corporation, nor has it been a part of an acquisition that was laterrescinded.

 

3.6                                 *Absence ofClaims*.   Except as set forthon Schedule 3.6, none of Seller’s affiliates have any claimsagainst the Assets and, upon consummation of the purchase of the Assets and thepayment of the Purchase Price, no affiliates of Seller will have any claimsagainst the Assets.

 

3.7                                 *Liabilitiesand Obligations*.  Except asset forth on Schedule 3.7, Seller does not have any liability orobligations of any nature, whether known, unknown, accrued, contingent orotherwise and whether due or to become due, in which the Assets are held assecurity.

 

3.8                                 *Books andRecords*.  Seller has made andkept books and records and accounts, which, in reasonable detail, accuratelyand fairly reflect the activities of Seller. Seller has not engaged in any transaction, maintained any bank account,or used any corporate funds except for transactions, bank accounts, and fundswhich have been and are reflected in Seller’s normally maintained books andrecords and which are in compliance with all applicable laws, other than lawsrelating to the receipt and deposit of funds in trust for third parties.

 

3.9                                 *Permits*.  Except as disclosed in Schedule 3.9,Seller owns or holds all licenses, franchises, permits and other governmentalauthorizations, including permits, titles (including motor vehicle titles andcurrent registrations), licenses and franchises necessary for the continuedoperation of its business as it is currently being conducted (the “*Permits*”).  The Permits are valid, and Seller has notreceived any notice that any governmental authority intends to modify, cancel,terminate or fail to renew any Permit. No present or former officer, manager,member or employee of Seller or any affiliate thereof, or any other individual,partnership, corporation, limited liability company, association, joint stockcompany, trust, joint venture, unincorporated organizations or a governmentalentity (or any department agency or political subdivision thereof) owns or hasany proprietary, financial or other interest (direct or indirect) in anyPermits.  Except as otherwise disclosedin Schedule 3.9, Seller has conducted and is conducting itsbusiness and is holding the Assets in compliance with the requirements,standards, criteria and conditions set forth in the Permits and otherapplicable orders, approvals, variances, rules and regulations and is not inviolation of any of the foregoing.  Theexecution and delivery of this Agreement and the Ancillary Agreements and theconsummation of the transactions contemplated by this Agreement and the

 

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Ancillary Agreements do not and will not result in a default under, ora breach or violation of, or adversely affect the rights and benefits affordedto Seller by, any Permit.

 

3.10                           *PersonalProperty*.

 

(a)                                  Asit relates to this transaction, Schedule 3.10(a) sets forth acomplete and accurate list of all personal property owned or leased by Sellerwith a current book value in excess of $5,000, including in each case true,complete and correct copies of leases for material equipment.

 

(b)                                 Asit relates to this transaction, all material machinery and equipment of Seller,including those listed on Schedule 3.10(b), are in good workingorder and condition, ordinary wear and tear excepted.  All fixed assets used by Seller that are material to the goodoperation of the assets are either owned by Seller or leased under an agreementlisted on Schedule 3.10(b).

 

3.11                           *IntellectualProperty*

 

(a)                                  Sellerhas good and valid title to, and owns free and clear of all encumbrances, hasthe exclusive right to use, sell, offer to sell, transfer, license (orsublicense), transmit, broadcast, display, modify, create derivative worksfrom, deliver (electronically or otherwise) and dispose of, and has the rightto bring actions for infringement of or has a valid and exclusive license for(except for standard licenses for the use of any technology which is part ofthe Assets which licenses may not be exclusive), all Intellectual Property (asdefined below) necessary or required for the conduct of the Business ascurrently conducted or as proposed to be conducted.

 

(b)                                 Exceptas disclosed in Schedule 3.11, (i) Seller has the exclusive rightto use the Intellectual Property, (ii) all registrations with and applicationsto governmental or regulatory authorities in respect of such IntellectualProperty are valid and in full force and effect and are not subject to thepayment of any Taxes (as defined in Section 3.19 hereof) or maintenancefees or the taking of any other actions by Seller to maintain their validity oreffectiveness, (iii) Seller has delivered to Purchaser prior to the executionof this Agreement documentation with respect to any invention, process, design,computer program or other know-how or trade secret included in suchIntellectual Property, which documentation is accurate in all material respectsand reasonably sufficient in detail and content to identify and explain suchinvention, process, design, computer program or other know-how or trade secretand to facilitate its full and proper use without reliance on the specialknowledge or memory of any third party, (iv) Seller has taken reasonablesecurity measures to protect the secrecy, confidentiality and value of itstrade secrets in respect of the Business, (v) Seller is not, nor has itreceived any notice that it is, in default (or with the giving of notice orlapse of time or both, would be in default) under any contract or otheragreement (written or oral) to use such Intellectual Property and (vi) to theknowledge of Seller, no such Intellectual Property is being infringed by anyother third party.  Seller has notreceived notice that Seller is infringing any Intellectual Property of anyother third party in connection with the conduct of the Business; no claim ispending or, to the knowledge of Seller, has been made to such effect that hasnot been resolved; and, to the knowledge of Seller, Seller is not infringingany Intellectual Property of any other third party in connection with theconduct of the business.

 

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(c)                                  Asused herein, the term “*Intellectual Property*” shall mean allpatents and patent rights, trademarks and trademark rights, trade names andtrade name rights, service marks and service mark rights, service names andservice name rights, brand names, inventions, processes, formulae, copyrightsand copyright rights, trade dress, business and product names, logos, slogans,trade secrets, industrial models, processes, designs, methodologies, computerprograms (including all source codes) and related documentation, technicalinformation, manufacturing, engineering and technical drawings, know-how andall pending applications for and registrations of patents, trademarks, servicemarks and copyrights.

 

3.12                           *NoUndisclosed Liabilities*. Except as disclosed in Schedule 3.12 or any otherSchedule attached hereto, there are no liabilities against, relating to oraffecting the Business or any of the Assets, other than liabilities incurred inthe ordinary course of business consistent with past practice which in theaggregate are not material to the condition of the Business.

 

3.13                           *MaterialContracts and Commitments.*  Schedule 3.13contains a complete and accurate list of all contracts, commitments, leases,instruments, agreements, licenses or permits, written or oral, to which Selleris a party whether they are suppliers, vendors or any such third-partyentities, or by which it or its properties are bound (including joint ventureor partnership agreements, contracts with any labor organizations, employmentagreements, consulting agreements, loan agreements, indemnity or guarantyagreements, bonds, mortgages, options to purchase land or Liens) (i) to whichSeller and any affiliate of Seller or any officer or director of Seller areparties (“*RelatedParty Agreements*”); or (ii) that may give rise to obligations orliabilities exceeding, during the current term thereof, $10,000, or that maygenerate revenues or income exceeding, during the current term thereof, $5,000(collectively with the Related Party Agreements, the “*Material Contracts*”).  Seller has delivered or made available toPurchaser true, complete and correct copies of the Material Contracts that arein writing.  Seller has complied withall of its commitments and obligations, including all obligations to compensateemployees, consultants, attorneys and contractors for services provided inconnection with * * *, and is not in default under any of the Material Contracts,including the Supply Agreement,  and nonotice of default has been received with respect to any thereof, and except asprovided in this Agreement there are no Material Contracts that were notnegotiated at arm’s length.

 

3.14                           *Insurance*.  Schedule 3.14 sets forth acomplete and accurate list of all insurance policies currently carried bySeller, relating to product liability, protection, errors and omission, orother similar business risks that are transferable. Seller has made availableto Purchaser true, complete and correct copies of all current insurancepolicies of Seller, all of which are in full force and effect. All premiumspayable under all such policies have been paid and Seller is otherwise in fullcompliance with the terms of such policies. Such policies of insurance are of the type and in amounts customarilycarried by persons conducting businesses similar to that of Seller.  The insurance carried by Seller with respectto its properties, assets and business is, to Seller’s knowledge, withfinancially sound insurers.  To theknowledge of Seller, there have been no threatened terminations of, or materialpremium increases with respect to, any of such policies.

 

3.15                           *Labor andEmployment Matters*.  Schedule 3.15sets forth any personnel that may be hired or retained, who are or wereconnected in any way to Seller and will be hired under new conditions andcontracts that are acceptable to Purchaser.

 

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3.16                           *Employee BenefitPlans.*

 

(a)                                  Except as set forthon Schedule 3.16(a), neitherthe Seller, nor any entity that would be aggregated with the Seller forpurposes of Section 414(b), (c), (m) or (o) of the Internal Revenue Codeof 1986, as amended (the “*Code*”), sponsors, maintains, orcontributes to, is obligated to maintain or contribute to, has ever sponsored,maintained, contributed to or been obligated to contribute to, any “employeebenefit plan” (as such term is defined in Section 3(3) of the EmployeeRetirement Income Security Act of 1974, as amended).

 

(b)                                 Effectiveas of the Closing and to the extent required by federal or state law, Sellershall provide group health coverage under the Seller’s group health plan forall employees of Seller who do not become employees of Buyer (“*Employees*”)and such Employees’ eligible dependents. To the extent required by federal or state law, Seller shall also havethe responsibility to make health care continuation coverage available to allemployees of Seller and their eligible dependents, covered under the Seller’sgroup health plan, who experience a “qualifying event” (within the meaning ofCode Section 4980B(f)(3)) prior to or in connection with the sale of theAssets.

 

3.17                           *Conformitywith Law; Litigation*.

 

(a)                                  Exceptas set forth on Schedule 3.17(a), Seller is not in violation of anylaw or regulation or under any order of any court or federal, state, municipalor other governmental department, commission, board, bureau, agency orinstrumentality having jurisdiction which would have a Material Adverse Effect.Except as set forth on Schedule 3.17(a), Seller has conducted andis conducting its business in substantial compliance with the requirements,standards, criteria and conditions set forth in applicable federal, state andlocal statutes, ordinances, permits, licenses, orders, approvals, variances,rules and regulations and is not in violation of any of the foregoing thatindividually or collectively might have a Material Adverse Effect.

 

(b)                                 Exceptas set forth on Schedule 3.17(b), there are no claims, actions,suits or proceedings, pending or, to the knowledge of Seller, threatenedagainst or affecting Seller at law or in equity, or before or by any federal,state, municipal or other governmental department, commission, board, bureau,agency or instrumentality having jurisdiction over it and no notice of anyclaim, action, suit or proceeding, whether pending or threatened, has beenreceived. There are no judgments, orders, injunctions, decrees, stipulations orawards (whether rendered by a court or administrative agency or by arbitration)against Seller or against any of their respective properties or business.

 

3.18                           *RestrictiveCovenants*. Except as set forth on Schedule 3.18, Selleris not a party to or bound or affected by any commitment, agreement or documentcontaining any covenant limiting the freedom of Seller to compete in any lineof business, transfer or move any of its assets or operations or which is orwould reasonably be expected to materially or adversely affect the businesspractices, operations or conditions of Seller.

 

3.19                           Taxes.

 

(a)                                  Exceptas set forth on Schedule 3.19 or as provided herein,

 

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(1)                                  Sellertimely filed all Tax Returns due on or before the Closing Date and all such TaxReturns are true, correct and complete in all respects;

 

(2)                                  Sellerhas paid in full on a timely basis all Taxes owed by it, whether or not shownon any Tax Return;

 

(3)                                  thereare no ongoing examinations or claims against Seller, for Taxes, and no noticeof any audit, examination or claim for Taxes, whether pending or threatened,has been received;

 

(4)                                  Sellerhas had a taxable year ended on December 31, in each year in which Sellerhas filed Tax Returns;

 

(5)                                  thereare (and as of and immediately following the Closing there will be) no Liens onthe Assets relating to or attributable to Taxes;

 

(6)                                  thereis no basis for the assertion of any claim relating to or attributable to Taxeswhich, if adversely determined, would result in any Lien on the Assets orotherwise have a Material Adverse Effect; and

 

(7)                                  Seller’sTax basis in its assets for purposes of determining future amortization,depreciation and other federal income Tax deductions is accurately reflected onSeller’s Tax books and records.

 

(b)                                 Forpurposes of this Agreement:

 

(1)                                  theterm “*Tax*”shall include any tax or similar governmental charge, impost or levy (includingincome taxes, franchise taxes, transfer taxes or fees, sales taxes, use taxes, grossreceipt taxes, value added taxes, employment taxes, excise taxes, ad valoremtaxes, property taxes, withholding taxes, payroll taxes, minimum taxes orwindfall profit taxes) together with any related penalties, fines, additions totax or interest imposed by the United States or any state, county, local orforeign government or subdivision or agency thereof; and

 

(2)                                  theterm “*TaxReturn*” shall mean any return (including any information return),report, statement, schedule, notice, form, estimate or declaration of estimatedtax relating to or required to be filed with any governmental authority inconnection with the determination, assessment, collection or payment of anytax.

 

3.20                           *Inventory*.  Except as set forth on Schedule 3.20,all of Seller’s inventory consists of a quality and quantity usable and salablein the ordinary course of business consistent with past practice, subject tonormal and customary allowances in the industry for spoilage, damage andoutdated items.  All items of inventoryare the property of Seller, free and clear of any Lien (except as provided in Section 5.7),have not been pledged as collateral, are not held by Seller on consignment fromothers and conform in all material respects to all standards applicable to suchinventory or its use or sale imposed by any governmental or regulatoryauthority.  The aggregate

 

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value of all of Seller’sinventory located in * * * is not less than * * *, as determined by anindependent appraiser chosen by the mutual agreement of the parties hereto.

 

3.21                           *Absence ofChanges*.   SinceDecember 31, 2000, Seller has conducted its business in the ordinarycourse and held the Assets consistent with past practice and, except as setforth on Schedule 3.21, there has not been:

 

(a)                                  anymaterial adverse change in the financial condition, assets, liabilities(contingent or otherwise), income or business of Seller or any event,occurrence, fact, condition, change, development or effect that, individuallyor in the aggregate could reasonably be expected to become or result in such amaterial adverse change;

 

(b)                                 anydamage, destruction or loss (whether or not covered by insurance) adverselyaffecting the Assets;

 

(c)                                  anysale or transfer, or any agreement to sell or transfer, any material assets,property or rights of Seller to any person;

 

(d)                                 anyplan, agreement or arrangement granting any preferential rights to purchase oracquire any interest in any of the assets, property or rights of Seller orrequiring consent of any party to the transfer and assignment of any suchassets, property or rights;

 

(e)                                  anypurchase or acquisition of, or agreement, plan or arrangement to purchase oracquire, any property, rights or assets outside of the ordinary course ofbusiness of Seller;

 

(f)                                    anywaiver or release of any rights or claims of Seller;

 

(g)                                 anybreach, amendment or termination of any material contract, agreement, license,permit or other right to which Seller is a party;

 

(h)                                 anytransaction by Seller outside the ordinary course of business;

 

(i)                                     anychange in accounting methods or practices (including any change in depreciationor amortization policies or rates) by Seller or the revaluation by Seller ofany of its assets;

 

(j)                                     anycreation or assumption by Seller of any Lien on any asset (other than Lienswhich are not material arising under existing lease financing arrangements andLiens for Taxes not yet due and payable);

 

(k)                                  anyentry into, amendment of, relinquishment, termination or non-renewal by Sellerof any contract, lease transaction, commitment or other right or obligationrequiring aggregate payments by Seller in excess of $10,000;

 

(l)                                     anyloan by Seller to any person or entity, incurring by Seller of anyindebtedness, guaranteeing by Seller of any indebtedness, issuance or sale ofany debt securities of Seller or guaranteeing of any debt securities of others;

 

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* * *       Indicates Confidentialtreatment requested

 

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(m)                               thecommencement or notice or, to the knowledge of Seller, threat of commencement,of any lawsuit or proceeding against, or investigation of, Seller or any of inits affairs;

 

(n)                                 anychange in relations with or loss of a supplier, vendor, distributor or customer(and Seller has no reason to believe that any such change will occur prior toor as a result of the consummation of the transactions contemplated hereby);

 

(o)                                 anysale of any assets in excess of $10,000 other than in the ordinary course ofbusiness;

 

(p)                                 anysettlement of or agreement to settle any litigation, action or proceedingrelating to the business or assets of Seller; or

 

(q)                                 anynegotiation or agreement by Seller or any officer or employee thereof to do anyof the things, or the taking of any action or omission to take any action thatcould result in occurrence of the things, described in the preceding clauses(a) through (p) (other than negotiations with Purchaser and its representativesregarding the transactions contemplated by this Agreement).

 

3.22                           *Relationswith Governments*.   Sellerhas not made, offered or agreed to offer anything of value to any governmentalofficial, political party or candidate for government office, nor has itotherwise taken any action that would cause Seller to be in violation of theForeign Corrupt Practices Act of 1977, as amended, or any law of similareffect.

 

3.23                           *Disclosure*.  Seller has delivered or made available toPurchaser true and complete copies of each agreement, contract, commitment orother document (or summaries thereof) that is referred to in the Schedules orthat has been requested in writing by Purchaser.  Without limiting any exclusion, exception or other limitationcontained in any of the representations and warranties made herein, thisAgreement, the Schedules hereto and all other documents and informationfurnished to Purchaser and its representatives pursuant hereto do not and willnot include any untrue statement of a material fact or omit to state a materialfact necessary to make the statements therein not misleading.  If Seller becomes aware of any fact orcircumstance that would change a representation or warranty of Seller in thisAgreement or any representation made on behalf of Seller, Seller shallimmediately give notice of such fact or circumstance to Purchaser. However,such notification shall not relieve Seller of its obligations under thisAgreement.

 

4.                                       REPRESENTATIONSOF PURCHASER

 

To induce Sellerto enter into this Agreement and consummate the transactions contemplatedhereby, Purchaser represents and warrants to Seller as of the date hereof asfollows:

 

4.1                                 *DueOrganization*.  Purchaser iscorporation duly organized, validly existing and in good standing under thelaws of the British Virgin Islands, and is duly authorized, qualified andlicensed under all applicable laws, regulations, ordinances and orders ofpublic authorities to own, operate and lease its properties and to carry on itsbusiness in the places and in the manner as now conducted, except where thefailure to be so authorized, qualified or licensed would not have a materialadverse effect on Purchaser.

 

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4.2                                 *Authorization;Validity of Obligations*.  Therepresentatives of Purchaser executing this Agreement and the AncillaryAgreements have all requisite power and authority to enter into and bindPurchaser to the terms of this Agreement and the Ancillary Agreements.Purchaser has the full legal right, power and corporate authority to enter intothis Agreement and the Ancillary Agreements and the transactions contemplatedhereby and thereby. The execution and delivery of this Agreement and theAncillary Agreements by Purchaser and the performance by Purchaser of thetransactions contemplated herein and therein have been duly and validlyauthorized by the board of directors of Purchaser, and this Agreement and theAncillary Agreements has been duly and validly authorized by all necessarycorporate action. This Agreement and each Ancillary Agreement is a legal, validand binding obligation of Purchaser, enforceable against Purchaser inaccordance with its terms.

 

4.3                                 *No Conflicts*.  The execution, delivery and performance ofthis Agreement, the Ancillary Agreements and the consummation of thetransactions contemplated hereby and thereby and the fulfillment of the termshereof will not:

 

(a)                                  conflictwith, or result in a breach or violation of the Purchaser Charter Documents;

 

(b)                                 subject,until the time of Closing, to compliance with any agreements between Purchaserand its lenders, conflict with, or result in a default (or would constitute adefault but for a requirement of notice or lapse of time or both) under anydocument, agreement or other instrument to which Purchaser is a party or bywhich Purchaser is bound, or result in the creation or imposition of any lien,charge or encumbrance on any of Purchaser’s properties pursuant to (i) any lawor regulation to which Purchaser or any of its property is subject, or (ii) anyjudgment, order or decree to which Purchaser is bound or any of its property issubject;

 

(c)                                  resultin termination or any impairment of any material permit, license, franchise,contractual right or other authorization of Purchaser; or

 

(d)                                 violateany law, order, judgment, rule, regulation, decree or ordinance to whichPurchaser is subject, or by which Purchaser is bound, (including, the HSR Act,together with all rules and regulations promulgated thereunder).

 

5.                                       COVENANTS

 

5.1                                 TaxMatters.

 

(a)                                  Eachof the parties hereto shall (i) cooperate fully, as reasonably requested by theother party, in connection with the preparation and filing of Tax Returnspursuant to this Section 5.1 and any audit, litigation or otherproceeding with respect to Taxes; (ii) make available to the other party, asreasonably requested, all information, records or documents with respect to Taxmatters pertinent to Seller for all periods; and (iii) preserve information,records or documents relating to tax matters pertinent to Seller that is intheir possession or under their control until the expiration of any applicablestatute of limitations or extensions thereof.

 

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(b)                                 Sellershall timely pay all transfer, documentary, sales, use, stamp, registration andother Taxes and fees arising from or relating to the transactions contemplatedby this Agreement, and Seller shall, at its own expense, file all necessary TaxReturns and other documentation with respect to all such transfer, documentary,sales, use, stamp, registration, and other Taxes and fees. If required by applicablelaw, Purchaser will join in the execution of any such Tax Returns and otherdocumentation.

 

5.2                                 CodeSection 1060 Asset Allocation

 

(a)                                  Sellerand Purchaser agree that they shall prepare and file all federal, state andlocal forms necessary for the valid allocation of the Purchase Price for theAssets for purposes of Code Section 1060 (the “*Section 1060 Allocation Forms*”).

 

(b)                                 Sellerand Purchaser shall adhere to the allocations of the Purchase Price among theAssets, as adjusted for liabilities and to reflect the net asset value of eachasset (the “*Section 1060Allocations*”), as determined by Purchaser in preparing theSection 1060 Allocation Forms and all relevant Tax Returns and any otherdocuments and forms.

 

5.3                                 *Cooperation*.

 

(a)                                  Eachparty hereto shall each deliver or cause to be delivered to the other on theClosing Date, and at such other times and places as shall be reasonably agreedto, such documents and instruments as the other may reasonably request for thepurpose of carrying out this Agreement. In connection therewith, if required,the president or chief financial officer of such party shall execute anydocumentation reasonably required by any other’s accountants (in connectionwith the accountants’ audits of Seller and Purchaser).

 

(b)                                 Eachparty hereto shall cooperate and use their reasonable efforts to have theofficers, directors and employees of Seller cooperate in furnishinginformation, evidence, testimony and other assistance in connection with anyfiling, obligations, actions, proceedings, arrangements or disputes of anynature.

 

(c)                                  Eachparty hereto shall cooperate in obtaining all consents and approvals requiredunder this Agreement to effect the transactions contemplated hereby.

 

5.4                                 *Conduct ofBusiness Pending Closing*. Between the date hereof and the Closing Date, Seller will (except asrequested or agreed by Purchaser):

 

(a)                                  holdthe Assets and carry on its business only in the ordinary course insubstantially the same manner as it has heretofore;

 

(b)                                 maintainits properties and facilities, including those held under leases, in as goodworking order and condition as at present, ordinary wear and tear, obsolescenceand other disposition or changes thereto as determined by Seller excepted;

 

(c)                                  performall of its obligations under agreements relating to or affecting its assets,properties or rights;

 

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(d)                                 keepin full force and effect present insurance policies or other comparableinsurance coverage;

 

(e)                                  maintaincompliance with all permits, laws, rules and regulations, consent orders, andall other orders of applicable courts, regulatory agencies and similargovernmental authorities; and

 

(f)                                    continuein good faith to use its best efforts to * * *.

 

(g)                                 notincrease the amount of salary or other compensation or payable to any employeeof the Business.

 

5.5                                 *Access toInformation*.  Within 10 daysof the execution of this Agreement, Seller will afford to the officers andauthorized representatives of Purchaser for a period of three days access to(i) all of the sites, properties, books and records of Seller (and shallprovide copies thereof) and (ii) such additional financial and operating dataand other information as to the Business and properties of Seller as Purchasermay from time to time reasonably request for the purpose of conducting duediligence inquiry.  No information orknowledge obtained in any investigation pursuant to this Section 5.5shall affect or be deemed to modify any representation or warranty contained inthis Agreement or the conditions to the obligations of the parties toconsummate this Agreement.

 

5.6                                 *Indemnification*.

 

(a)                                  *GeneralIndemnification by Seller*. Seller covenants and agrees to indemnify, defend, protect and holdharmless Purchaser and its officers, directors, employees, shareholders,assigns, successors and affiliates (individually, an “*Indemnified Party*” andcollectively, “*Indemnified Parties*”) from, against and in respect of:

 

(1)                                  allliabilities, losses, claims, damages, punitive damages, causes of action,lawsuits, administrative proceedings (including informal proceedings),investigations, audits, demands, assessments, adjustments, judgments,settlement payments, deficiencies, penalties, fines, interest (includinginterest from the date of such damages) and costs and expenses (includingreasonable attorneys’ fees and disbursements of every kind, nature anddescription) (collectively, “*Damages*”) suffered, sustained, incurred orpaid by the Indemnified Parties in connection with, resulting from or arisingout of, directly or indirectly:

 

(A)                              anybreach of any representation or warranty of Seller set forth in this Agreementor any Schedule or certificate delivered by or on behalf of Seller orSeller in connection herewith;

 

(B)                                anynonfulfillment of any covenant or agreement by Seller under this Agreement;

 

(C)                                thebusiness, operations or assets of Seller prior to the Closing Date or theactions or omissions of Seller’s directors, officers,

 

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* * *       IndicatesConfidential treatment requested

 

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shareholders,employees or agents prior to the Closing Date, other than with respect to theAssumed Liabilities following the Closing;

 

(D)                               anybreach of the representations made in Section 3.16 (employeebenefit plans); and

 

(E)                                 thematters disclosed on Schedule 3.19 (taxes); and

 

(2)                                  anyand all Damages incident to any of the foregoing or to the enforcement of this Section 5.6(a).

 

(b)                                 *Limitationand Expiration*. Notwithstanding the above:

 

(1)                                  thereshall be no liability for indemnification under Section 5.6(a)unless and until, the aggregate amount of Damages exceeds $10,000 upon whichSeller shall be liable for all Damages including the $10,000 (the “*IndemnificationThreshold*”); provided, however, that the Indemnification Thresholdshall not apply to and Seller shall be liable for (A) Damages arising out ofany breaches of the covenants of Seller set forth in this Agreement orrepresentations and warranties made in Section 3.16 (employeebenefit plans), Section 3.19 (taxes) or (B) Damages described in Section 5.6(a)(i)(D)or Section 5.6(a)(i)(E).

 

(2)                                  theindemnification obligations under this Section 5.6, or under anycertificate or writing furnished in connection herewith, shall terminate at thedate that is the later of clause (A) or (B) of this Section 5.6(b)(2):

 

(A)  (1)  except as to representations, warranties,and covenants contained in Section 3.16 (employee benefit plans), Section 3.19(taxes) and the indemnification set forth in Section 5.6(a)(i)(D)or Section 5.6(a)(i)(E), and except with respect to claims madeagainst Purchaser by third parties for which Purchaser seeks indemnificationfrom Seller, the third anniversary of the Closing Date; or  (2) with respect to representations and warranties contained in Section 3.16(employee benefit plans), Section 3.19 (taxes) and theindemnification set forth in Section 5.6(a)(i)(D) or Section 5.6(a)(i)(E),  on (a) the date that is six (6) months afterthe expiration of the longest applicable federal or state statute of limitation(including extensions thereof), or (b) if there is no applicable statute oflimitation, (x) six (6) years after the Closing Date; or

 

(B)                                thefinal resolution of Claims pending as of the relevant dates described in clause(A) of this Section 5.6(b)(2) (such Claims referred to as “PendingClaims”).

 

(c)                                  *IndemnificationProcedures*.  All claims ordemands for indemnification under this Section 5.6 (“Claims”)shall be asserted and resolved as follows:

 

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(1)                                  Inthe event that any Indemnified Party has a Claim against any party obligated toprovide indemnification pursuant to Section 5.6(a) hereof (the “*IndemnifyingParty*”) which does not involve a Claim being asserted against or soughtto be collected by a third party, the Indemnified Party shall with reasonablepromptness notify Seller of such Claim, specifying the nature of such Claim andthe amount or the estimated amount thereof to the extent then feasible (the “*Claim Notice*”).  If Seller does not notify the IndemnifiedParty within 30 days after the date of delivery of the Claim Notice that Sellerdisputes such Claim, with a detailed statement of the basis of such position,the amount of such Claim shall be conclusively deemed a liability of Sellerhereunder. In case an objection is made in writing in accordance with this Section 5.6(c)(i),the Indemnified Party shall respond in a written statement to the objectionwithin 30 days and, for 60 days thereafter, attempt in good faith to agree uponthe rights of the respective parties with respect to each of such Claims (and,if the parties should so agree, a memorandum setting forth such agreement shallbe prepared and signed by both parties).

 

(2)                                  (A)In the event that any Claim for which Seller would be liable to an IndemnifiedParty hereunder is asserted against an Indemnified Party by a third party (a “*Third-PartyClaim*”), the Indemnified Party shall deliver a Claim Notice toSeller.  Seller shall have 30 days fromthe date of delivery of the Claim Notice to notify the Indemnified Party (1)whether the Indemnifying Party disputes liability to the Indemnified Partyhereunder with respect to the Third-Party Claim, and, if so, the basis for sucha dispute, and (B) if such party does not dispute liability, whether or notSeller desires, at the sole cost and expense of Seller, to defend against theThird-Party Claim, provided that the Indemnified Party is hereby authorized(but not obligated) to file any motion, answer or other pleading and to takeany other action which the Indemnified Party shall deem necessary orappropriate to protect the Indemnified Party’s interests.

 

(3)                                  Inthe event that Seller timely notifies the Indemnified Party that Seller, as theIndemnifying Party, does not dispute the Seller’s obligation to indemnify withrespect to the Third-Party Claim, Seller shall defend the Indemnified Partyagainst such Third-Party Claim by appropriate proceedings, provided that,unless the Indemnified Party otherwise agrees in writing, Seller may not settleany Third-Party Claim (in whole or in part) if such settlement does not includea complete and unconditional release of the Indemnified Party.  Seller shall have the right to control allaspects of any litigation, including, but not limited to, the final consentwith respect to any settlement discussions (in accordance with the previoussentence) as well as the selection of counsel. If the Indemnified Party desires to participate in, but not control, anysuch defense or settlement the Indemnified Party may do so at its sole cost andexpense. If Seller elects not to defend the Indemnified Party against aThird-Party Claim, whether by failure of such party to give the IndemnifiedParty timely notice as provided herein or otherwise, then the IndemnifiedParty, without waiving any rights against such party, may settle or defendagainst such Third-Party Claim in the Indemnified Party’s sole discretion andthe Indemnified Party shall be entitled to recover from Seller the amount ofany 

 

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settlementor judgment and, on an ongoing basis, all indemnifiable costs and expenses ofthe Indemnified Party with respect thereto, including interest from the datesuch costs and expenses were incurred.

 

(4)                                  Ifat any time, in the reasonable opinion of the Indemnified Party, notice ofwhich shall be given in writing to Seller, any Third-Party Claim seeks materialprospective relief which could have an adverse effect on any Indemnified Partyor the Purchaser or any affiliate, the Indemnified Party shall have the rightbut not the obligation to control or assume (as the case may be) the defense ofany such Third-Party Claim and the amount of any judgment or settlement and thereasonable costs and expenses of defense shall be included as part of theindemnification obligations of Seller hereunder. If the Indemnified Partyelects to exercise such right, Seller shall have the right to participate in,but not control, the defense of such Third-Party Claim at the sole cost andexpense of Seller.

 

(5)                                  Nothingherein shall be deemed to prevent the Indemnified Party from making a Claim,and an Indemnified Party may make a Claim hereunder, for potential orcontingent Damages provided the Claim Notice sets forth the specific basis forany such potential or contingent claim or demand to the extent then feasibleand the Indemnified Party has reasonable grounds to believe that such Claim maybe made.

 

(6)                                  Subjectto the provisions of Section 5.6(b), the Indemnified Party’s failureto give reasonably prompt notice as required by this Section 5.6(c)of any actual, threatened or possible claim or demand which may give rise to aright of indemnification hereunder shall not relieve Seller of any liabilitywhich Seller may have to the Indemnified Party unless and to the extent thefailure to give such notice prejudiced Seller.

 

(7)                                  Theamount of any indemnification due to an Indemnified Party pursuant to this Section 5.6,as the case may be, shall be calculated after taking into account the amount ofall insurance, cash or other direct financial benefits payable to suchIndemnified Party (including any such benefits payable to third parties) andafter taking into account the United States federal, state and local andforeign national, provincial and local tax benefits or detriments to theIndemnified Party, as the case may be, calculated assuming the IndemnifiedParty were a taxpayer subject to tax at the highest marginal rate in effectwhen the payment is made, of the payments made in respect of such loss, claim,demand, cost or expense giving rise to the indemnification and the payments,including indemnification payments made in respect thereto. Purchaser or itsaffiliates shall, in addition to the obligations of Seller pursuant to this Section 5.6,have a right to set off the amount of any indemnification due to an IndemnifiedParty pursuant to this Section 5.6, as the case may be, against anypayment to Seller or its affiliates from Purchaser or its affiliates under thisAgreement or otherwise, if and when such payment obligation ever comes due atany time in the future.

 

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5.7                                 *Purchaser’sSecurity Interest*.   Sellerhereby grants Purchaser a security interest, lien and encumbrance on all ofSeller’s assets, including * * *, for the purpose of securing Seller’sobligations hereunder, including the return of all deposits and any other sumspaid by Purchaser toward the Purchase Price (pursuant to Section 8.2hereof).   Seller shall execute all suchdocuments and make all such filings as may be necessary to perfect Purchaser’ssecurity interest in Seller’s assets, and Seller hereby appoints Purchaser asits attorney-in-fact with all requisite power and authority to sign or recordsuch documents on Seller’s behalf.

 

5.8                                 ** * *SecurityInterest*.  Seller shallensure that the proper parties execute all such documents and file all suchfilings as may be necessary to terminate any and all security interests held by* * * with respect to any of the Assets on or before the Closing.

 

5.9                                 *Confidentiality*.   The parties hereto shall maintain theexistence of this Agreement, all Ancillary Agreements and the transactionscontemplated hereby and thereby in the strictest confidence until the first tooccur of the following: (i) the Closing or (ii) the expiration of the one-yearperiod following the termination of this Agreement for any reason whatsoever(the “*ConfidentialityPeriod*”).  Prior to theexpiration of the Confidentiality Period, the parties hereto will maintainstrictly confidential and secret, and not disclose any of the ConfidentialInformation (as defined below) to any person, corporation or other entity otherthan the Authorized Parties (as defined below) or pursuant to the lawful orderof a court of competent jurisdiction or other governmental authority.  The Confidential Information may not bedistributed or disseminated in any manner or method.  The “*Confidential Information*” shall mean anyand all financial statements, books, records, contracts, documents, agreements,correspondence, governmental filings, customer information, methods of doingbusiness, marketing, supply, supplier information, and correspondence and anyother information regarding current or proposed officers, directors, employeesor advisors, assets, income or financial status, or marketing plans, proposedstrategic or financial relationships or business plans of a party (the “*DisclosingParty*”) furnished to the other party (the “*Receiving Party*”) inwhatever form, but excluding any such information (i) generally known otherwisethan through an act or omission of the Disclosing Party, (ii) known to theReceiving Party prior to its receipt from the Disclosing Party, or (iii)provided to the Receiving Party by a third party without obligation ofconfidentiality.  The existence of thisAgreement and the Ancillary Agreements, the terms and conditions containedherein and therein and the transactions contemplated hereby and thereby shall alsobe deemed “*ConfidentialInformation*” for purposes of this Agreement.  The only individuals who will be grantedaccess to the Confidential Information are (a) executive officers of theReceiving Party and its counsel and accountants and (b) such other officers,agents and employees of the Receiving Party and its owners, investors orproposed investors, lenders or proposed lenders who agree to be bound by theterms of this Agreement (collectively, the “*Authorized Parties*”).  In the event that this Agreement isterminated for any reason whatsoever, the Receiving Party and all AuthorizedParties will return to the Disclosing Party all of the Confidential Informationthat was delivered to the Receiving Party in tangible form (including magneticor other means of data storage) and all copies thereof, and either deliver tothe Disclosing Party or destroy all of the balance of the ConfidentialInformation, including all notes, extracts, summaries, examples or othercompilations or analyses held in tangible form (including magnetic or othermeans of data storage) and made by the Receiving Party or any Authorized Party.If destroyed, the Receiving Party shall provide to the Disclosing Party awritten certification of such destruction. Each of the parties hereto hereby agrees that it will not use the ConfidentialInformation except for the express purpose

 

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* * *       Indicates Confidentialtreatment requested

 

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of evaluating the Business and the transactions contemplated by thisAgreement and the Ancillary Agreements.

 

5.10                           *Exclusivity*.  Seller will not take, nor will it permit anyaffiliate of Seller (or authorize or permit any investment banker, financialadvisor, attorney, accountant or other third party retained by or acting for oron behalf of Seller or any such affiliate) to take, directly or indirectly, anyaction to solicit, encourage, receive, negotiate, assist or otherwisefacilitate (including by furnishing Confidential Information with respect tothe Business or permitting access to the assets and properties and books andrecords of Seller) any offer, inquiry, discussion or proposal from any thirdparty concerning the direct or indirect acquisition of the Assets or theBusiness by any party other than Purchaser or its affiliates.  Seller will not propose or enter into anyagreement or understanding regarding the sale of any Assets or any part of theBusiness with any party other than Purchaser and its Affiliates.  If Seller or any of its affiliates (or any thirdparty acting for or on their behalf) receives from any third party any offer,inquiry or informational request referred to above, Seller will promptly advisesuch third party, by written notice, of the terms of this Section 5.10and will promptly, orally and in writing, advise Purchaser of such offer,inquiry or request and deliver a copy of such notice to Purchaser.

 

5.11                           *Regulatoryand Other Approvals*.  Eachparty will (a) take all commercially reasonable steps necessary or desirable,and proceed diligently and in good faith and use all commercially reasonableefforts, as promptly as practicable to obtain all consents, approvals oractions of, to make all filings with and to give all notices to governmental orregulatory authorities required to consummate the transactions contemplated herebyand by the Ancillary Agreements, (b) provide such other information andcommunications to such governmental or regulatory authorities as the otherparty or such governmental or regulatory authorities may reasonably request inconnection therewith and (c) cooperate with the other party as promptly aspracticable in obtaining all consents, approvals or actions of, making allfilings with and giving all notices to governmental or regulatory authoritiesrequired to consummate the transactions contemplated hereby and by theAncillary Agreements.

 

5.12                           *Exon-FlorioFilings*.  In addition to andwithout limiting Purchaser’s covenants contained in Section 5.11,to the extent required by applicable law, Purchaser will promptly givevoluntary notice to the Committee on Foreign Investments in the United States(“*CFIUS*”)under the Exon-Florio Amendment of the transactions contemplated by thisAgreement and by the Ancillary Agreements, and, in connection therewith,provide CFIUS with such information concerning the transactions contemplated bythis Agreement and the Ancillary Agreements as is reasonably necessary ordesirable.

 

5.13                           *Notice ofMaterial Changes*.  Sellershall promptly notify Purchaser of the occurrence of any material change or anyevent, circumstance or situation that may have a material effect on thebusiness, operations, affairs, prospects, properties, assets, existing andpotential liabilities, obligations, profits or condition (financial orotherwise) of Seller since the date hereof.

 

5.14                           *Use ofSeller’s Name*.  Seller herebygrants to Purchaser the exclusive right to use the name “* * *” and anyvariation thereof in connection with the marketing, sale and distribution of ** * in the United States for a period of one year following the Closing Date.

 

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* * *       Indicates Confidentialtreatment requested

 

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5.15                           *Survival ofRepresentations Warranties and Covenants*.  All representations, warranties and covenants made by Seller andPurchaser in or pursuant to this Agreement or in any document deliveredpursuant hereto shall be deemed to have been made on the date of this Agreement(except as otherwise provided herein) and, if a Closing occurs, as of theClosing Date.  The representations ofSeller will survive the Closing.  Therepresentations of Purchaser will survive the Closing.

 

6.                                       CONDITIONSPRECEDENT TO THE OBLIGATIONS OF PURCHASER

 

6.1                                 *Conditionsto this Agreement.*  Theobligations of Purchaser to effect the transactions contemplated in Section 1are subject to the satisfaction or waiver, on or before the Closing Date, ofthe following conditions and deliveries:

 

(a)                                  *Representationsand Warranties; Performance of Obligations*. All of therepresentations and warranties of Seller contained in this Agreement shall betrue, correct and complete on and as of the Closing Date with the same effectas though such representations and warranties had been made on and as of suchdate; all of the terms, covenants, agreements and conditions of this Agreementto be complied with, performed or satisfied by Seller on or before the ClosingDate shall have been duly complied with, performed or satisfied; and acertificate to the foregoing effects dated the Closing Date and signed onbehalf of Seller shall have been delivered to Purchaser.

 

(b)                                 *NoLitigation*.  No temporaryrestraining order, preliminary or permanent injunction or other order issued byany court of competent jurisdiction or other legal or regulatory restraint orprovision challenging Purchaser’s proposed acquisition of the Assets orPurchaser’s conduct or operation of the Business following the execution ofthis Agreement or consummation of the transactions contemplated herein, shallbe in effect, nor shall any proceeding brought by an administrative agency orcommission or other governmental authority or instrumentality, domestic orforeign, seeking any of the foregoing be pending. There shall be no action,suit, claim or proceeding of any nature pending or threatened against Purchaseror Seller, their respective properties or any of their officers or directors,that could materially and adversely affect the business, assets, liabilities,financial condition, results of operations or prospects of Purchaser.

 

(c)                                  *No MaterialAdverse Change*.  Except asotherwise disclosed in this Agreement or the Schedules hereto, there shall havebeen no material adverse changes in the business, operations, affairs,prospects, properties, assets, existing and potential liabilities, obligations,profits or condition (financial or otherwise) of Seller since the date hereof;and Purchaser shall have received a certificate signed by Seller dated theClosing Date to such effect.

 

(d)                                 *Consents andApprovals*.  All necessaryconsents of, and filings with, any governmental authority or agency or thirdparty, relating to the consummation by Purchaser of the transactionscontemplated hereby, shall have been obtained and made, including the consentof any third party who is party to any contract which will be breached or couldbe terminated as a result of this Agreement or the transactions contemplatedthereby.

 

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(e)                                  O*pinion ofCounsel*.  Purchaser shallhave received an opinion of legal counsel to Seller dated the Closing Date inform and substance reasonably satisfactory to Purchaser and its counsel.

 

(f)                                    *CharterDocuments*.  Purchaser shallhave received (i) a copy of the Charter Documents of Seller certified by anappropriate authority in their respective state of incorporation and (ii) acopy of the bylaws of Seller certified by the Secretary of Seller, and suchdocuments shall be in form and substance reasonably acceptable to Purchaser.

 

(g)                                 *No Laws*.  No laws, rules, regulations, orders or anyother requirements of any Governmental Authority shall have been enacted,introduced or announced which may materially and adversely affect the Assets orthe conduct of the Business.

 

(h)                                 ** *

 

(i)                                     ** *

 

(j)                                     *Terminationof Security Interest*.  Anyand all security interests held by * * * with respect to the any of the Assets shall have been terminated, andall documents and filings necessary to effect the termination of such securityinterests shall have been properly executed and filed.

 

(k)                                  *Deliveries*.  The delivery by Seller of all documents andinstruments to be delivered by Seller under Section 2.2, and all ofthe Assets.

 

7.                                       CONDITIONSPRECEDENT TO THE OBLIGATIONS OF SELLER

 

7.1                                 *Conditionsto this Agreement*.  Theobligations of Seller to effect the transactions contemplated herein aresubject to the satisfaction or waiver, at or before the Closing Date, of thefollowing conditions and deliveries:

 

7.2                                 *Representationsand Warranties; Performance of Obligations*.  All of the representations and warranties ofPurchaser contained in this Agreement shall be true, correct and complete onand as of the Closing Date with the same effect as though such representationsand warranties had been made as of such date; all of the terms, covenants,agreements and conditions of this Agreement to be complied with, performed orsatisfied by Purchaser on or before the Closing Date shall have been dulycomplied with, performed or satisfied.

 

7.3                                 *NoLitigation*.  No temporaryrestraining order, preliminary or permanent injunction or other order issued byany court of competent jurisdiction or other legal or regulatory restraint orprovision challenging Purchaser’s proposed acquisition of the Assets, orlimiting or restricting Seller’s conduct or operation of the business of Sellerfollowing the execution of this Agreement or the consummation of thetransactions contemplated herein shall be in effect, nor shall any proceedingbrought by an administrative agency or commission or other governmentalauthority or instrumentality, domestic or foreign, seeking any of the foregoingbe pending. There shall be no action, suit, claim or proceeding of any naturepending or threatened, against Purchaser or Seller, their respective propertiesor any of their officers or directors, that could materially and adversely

 

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affect the business, assets, liabilities, financial condition, resultsof operations or prospects of Seller and its subsidiaries taken as a whole.

 

7.4                                 *Consents andApprovals*.  All necessaryconsents of, and filings with, any governmental authority or agency or thirdparty relating to the consummation by Seller of the transactions contemplatedherein, shall have been obtained and made.

 

7.5                                 *Deliveries*.  The delivery by Purchaser of all documents,instruments and payments to be delivered by Purchaser under Section 2.2.

 

8.                                       GENERAL

 

8.1                                 *Termination*.  This Agreement may be terminated at any timeprior to the Closing solely:

 

(a)                                  bythe mutual consent of the Purchaser and Seller;

 

(b)                                 bySeller if Purchaser fails to make two consecutive Weekly Deposits on the datesthat such deposits are required to be made hereunder;

 

(c)                                  bySeller if Purchaser lacks sufficient funds to pay the balance, if any, of thePurchase Price on the Closing Date;

 

(d)                                 bySeller or by Purchaser, if there is or has been a material breach, failure tofulfill or default on the part of the other party of any of the representationsand warranties contained herein or in the due and timely performance andsatisfaction of any of the covenants, agreements or conditions containedherein, and the curing of such default shall not have been made or shall notreasonably be expected to occur before the Closing Date; or

 

(e)                                  bySeller or by Purchaser, if there shall be a final nonappealable order of afederal or state court in effect preventing consummation of the transactionscontemplated herein or there shall be any action taken, or any statute, ruleregulation or order enacted, promulgated or issued or deemed applicable to thetransactions herein by any governmental entity which would make theconsummation of the transactions contemplated herein illegal.

 

8.2                                 *Effect ofTermination*.

 

(a)                                  Inthe event of termination of this Agreement pursuant to Sections 8.1(a), 8.1(d)or 8.1(e), Seller shall promptly return to Purchaser the InitialDeposit, the Execution Deposit and all Weekly Deposits paid by Purchaser as ofthe date of such termination.

 

(b)                                 Inthe event of termination of this Agreement pursuant to Sections 8.1(b)or 8.1(c), Seller shall have no obligation to return the InitialDeposit, the Execution Deposit or any Weekly Deposits to Purchaser, andPurchaser shall have no further right or claim to such amounts.

 

(c)                                  Inthe event of termination of this Agreement pursuant to Section 8.1(a),or 8.1(e), this Agreement shall forthwith become ineffective and, exceptas provided in Section

 

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8.2(a), there shall be no liabilityor obligation on the part of any party hereto or its officers, directors orshareholders.

 

(d)                                 Theprovisions of this Section 8 shall remain in full force and effectand survive any termination of this Agreement. Each party shall remain liable for any breach of this Agreement prior toits termination.  In the event oftermination of this Agreement pursuant to Section 8.1(d) above,then notwithstanding the provisions of Section 8.7 below, thebreaching party shall be liable to the other party to the extent of theexpenses incurred by such other party in connection with this Agreement and thetransactions contemplated hereby, as well as any damages in accordance withapplicable law.

 

8.3                                 *Successorsand Assigns*.  This Agreementshall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns.  Noparty hereto may assign this Agreement or any rights or obligations hereunderwithout the prior written consent of the other party; *provided, however*, thatPurchaser may assign its rights and obligations hereunder to a wholly owned subsidiarywithout the consent of Seller.

 

8.4                                 *EntireAgreement; Amendment; Waiver*. This Agreement sets forth the entire understanding of the parties heretowith respect to the transactions contemplated hereby. Each of the Schedules tothis Agreement is incorporated herein by this reference and expressly made apart hereof. Any and all previous agreements and understandings between oramong the parties regarding the subject matter hereof, whether written or oral,are superseded by this Agreement. This Agreement shall not be amended ormodified except by a written instrument duly executed by each of the partieshereto.  Any extension or waiver by anyparty of any provision hereto shall be valid only if set forth in an instrumentin writing signed on behalf of such party. Any document or consent required to be delivered by Seller under Sections2.2 or 6.1(d) which is not so delivered, shall be delivered as soonas practicable following the Closing. Seller shall use best efforts and good faith in providing and obtainingsuch documents and consents in the shortest possible time.  Closing hereunder shall not constitute awaiver by Purchaser of the obligations of Seller to deliver such documents andconsents.

 

8.5                                 *Counterparts*.  This Agreement may be executed in any numberof counterparts and any party hereto may execute any such counterpart,including by electronic facsimile, each of which when executed and deliveredshall be deemed to be an original, and all of which counterparts taken togethershall constitute but one and the same instrument.

 

8.6                                 *Brokers andAgents*.  Each of Purchaserand Seller represents and warrants to the other that it has not employed anybroker or agent in connection with the transactions contemplated by thisAgreement and agrees to indemnify the other against all losses, damages orexpenses relating to or arising out of claims for fees or commission of anybroker or agent employed or alleged to have been employed by such party.

 

8.7                                 *Expenses*.  Subject to Section 8.2,Purchaser has paid and will pay the fees, expenses and disbursements ofPurchaser and its agents, representatives, financial advisors, accountants andcounsel incurred in connection with the subject matter of this Agreement.  Subject to Section 8.2, Sellerhas paid and will pay the fees, expenses and disbursements of Seller and its

 

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agents, representatives, financial advisers, accountants, consultants(technical and regular) and counsel incurred in connection with the subject matterof this Agreement.

 

8.8                                 *SpecificPerformance; Remedies*.  Eachparty hereto acknowledges that the other parties will be irreparably harmed andthat there will be no adequate remedy at law for any violation by any of themof any of the covenants or agreements contained in this Agreement. It isaccordingly agreed that, in addition to any other remedies which may beavailable upon the breach of any such covenants or agreements, each partyhereto shall have the right to obtain injunctive relief to restrain a breach orthreatened breach of, or otherwise to obtain specific performance of, the otherparties, covenants and agreements contained in this Agreement.

 

8.9                                 *Notices*.  Any notice, request, claim, demand, waiver,consent, approval or other communication which is required or permittedhereunder shall be in writing and shall be deemed given if delivered personallyor sent by telefax (with confirmation of receipt), by registered or certifiedmail, postage prepaid, by recognized courier service, or by electronic mail(with confirmation of delivery) as follows:

 

If to Purchaserto:

 

InternationalIntegrated Incorporated

3800 Howard HughesParkway, 18th Floor

Las Vegas, NV89109

Attention:  Edward V. Lower, Ph.D.

Facsimile:  (702) 791-5365

E-mail:tlower@aol.com

 

with a requiredcopy to:

 

Sheppard MullinRichter & Hampton LLP

800 Anacapa Street

Santa Barbara, CA93101

Attn:  Theodore R. Maloney, Esq.

Facsimile:  (805) 568-1955

E-mail:tmaloney@sheppardmullin.com

 

If to Seller, to:

 

* * *

 

with a requiredcopy to:

 

* * *

 

or to such other addressas the person to whom notice is to be given may have specified in a notice dulygiven to the sender as provided herein. Such notice, request, claim, demand,waiver, consent, approval or other communication shall be deemed to have beengiven as of the date so delivered,

 

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telefaxed, mailed ordispatched and, if given by any other means, shall be deemed given only whenactually received by the addressees.

 

8.10                           *GoverningLaw; Submission to Jurisdiction; Venue.*  This Agreement and therights and obligations of the parties hereunder shall be governed by andconstrued and interpreted in accordance with the laws of the State ofCalifornia, without regard to the conflict of laws.  Any legal action or proceeding with respect to the Agreement mustbe brought in the courts of the State of California, or of the United Statesfor the Central District of California, and by execution and delivery of theAgreement each party hereby irrevocably accepts for itself and in respect ofits property, generally and unconditionally, the jurisdiction of suchcourts.  Each party further irrevocablyconsents to the service of process out of any of the aforementioned courts inany such action or proceeding by the mailing of copies thereof by registered orcertified mail, postage prepaid, to it at the address for notices pursuant to Section 8.9of this Agreement, such service to become effective 30 days after such mailing.

 

8.11                           *Severability*.  If any provision of this Agreement or theapplication thereof to any person or circumstances is held invalid orunenforceable in any jurisdiction, the remainder hereof, and the application ofsuch provision to such person or circumstances in any other jurisdiction, shallnot be affected thereby, and to this end the provisions of this Agreement shallbe severable.

 

8.12                           *Absence ofThird-Party Beneficiary Rights*. No provision of this Agreement is intended, nor will any provision beinterpreted, to provide or to create any third-party beneficiary rights or anyother rights of any kind in any client, customer, affiliate, shareholder,employee or partner of any party hereto or any other person.

 

8.13                           *FurtherRepresentations*.  Each partyto this Agreement acknowledges and represents that it has been represented byits own legal counsel in connection with the transactions contemplated by thisAgreement, with the opportunity to seek advice as to its legal rights from suchcounsel. Each party further represents that it is being independently advisedas to the tax consequences of the transactions contemplated by this Agreementand is not relying on any representation or statements made by the other partyas to such tax consequences.

 

8.14                           *FurtherAssurances*.  Each party tothis Agreement agrees to deliver such additional documents and instruments andtake such further action as is reasonably necessary to effect the transactionscontemplated hereby.

 

8.15                           A*ccountingTerms*. Except as otherwise expressly provided herein or in theSchedules, all accounting terms used in this Agreement shall be interpreted,and all financial statements, Schedules, certificates and reports as tofinancial matters required to be delivered hereunder shall be prepared, in amanner consistent with past practices and audited by the service provider whichhas provided audit services in the past.

 

[Signature pagefollows]

 

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IN WITNESS WHEREOF, theparties hereto have executed this Agreement as of the day and year first abovewritten.

 
|   | INTERNATIONAL  INTEGRATED  INCORPORATED, a British Virgin Islands  corporation |
|--------|--------------------------------------------------------------------------------|
|   |                                                                           |   |
|   |                                                                           |   |
|   | By:                                                                            |   |   |
|   |                                                                           | Name:  Donald K. McGhan |   |
|   |                                                                           | Title:  Chairman |   |
|   |                                                                           |   |   |
|   |                                                                           |   |
|   | * * *                                                                          |   |
|   |                                                                           |   |
|   |                                                                           |   |
|   | By:                                                                            |   |   |
|   |                                                                           | Name:  * * * |   |
|   |                                                                           | Title:  President |   |
|        |                                                                                |  |  |  |

 

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[Signature Page toAsset Purchase Agreement]

 

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**EXHIBIT A**

 

GENERAL ASSIGNMENTAND BILL OF SALE

 

This GENERAL ASSIGNMENTAND BILL OF SALE is made, executed and delivered on                  ,           by * * *  (the “*Seller*”),to INTERNATIONAL INTEGRATED INCORPORATED, a British Virgin Islands corporation(the “*Buyer*”).

 

RECITALS

 

WHEREAS Seller andBuyer are parties to an Asset Purchase Agreement, dated as of April 15,2002 (the “*AssetPurchase Agreement*”), providing for, among other things, the sale,conveyance, transfer, assignment and delivery to Buyer of all of Seller’sright, title and interest in and to the Assets (such term and all other capitalized terms used but not defined hereinhaving the same meanings ascribed to them in the Asset Purchase Agreement), allas more fully described in the Asset Purchase Agreement, for consideration inthe amount and on the terms and conditions provided in the Asset PurchaseAgreement; and

 

WHEREAS theparties now desire to carry out the intent and purpose of the Asset PurchaseAgreement by Seller’s execution and delivery to Buyer of this instrumentevidencing the sale, conveyance, transfer, assignment and delivery to Buyer ofthe Assets.

 

AGREEMENT

 

NOW, THEREFORE, inconsideration of the foregoing premises and for other good and valuableconsideration to Seller, the receipt and adequacy of which are herebyacknowledged, Seller hereby sells, conveys, transfers, assigns and deliversunto Buyer, its successors and assigns in accordance with the terms andprovisions of the Asset Purchase Agreement, TO HAVE AND TO HOLD FOREVER all ofSeller’s right, title and interest in and to the Assets.

 

Seller, itsofficers and agents, for itself and its successors and assigns, covenants thatit and they will from time to time after the date hereof and without furtherconsideration, upon the reasonable request of Buyer, make, execute and deliverwithout further compensation any and all instruments in writing, furtherapplications, papers, affidavits, powers of attorney, assignments and otherdocuments which may be reasonably required to more effectively secure to andvest in said Buyer, its successors and assigns, the entire right, title andinterest in and to the Assets, as contemplated by the Asset Purchase Agreement.

 

Buyer has assumedand agreed to pay, discharge, and perform or satisfy certain liabilities ofSeller set forth on Schedule 1.3 to the Asset Purchase Agreement.

 

This GeneralAssignment and Bill of Sale is intended to implement the provisions of theAsset Purchase Agreement and shall not be construed to enhance, extend or limitthe rights or obligations of Seller or Buyer.

 

The validity,performance and enforcement of this General Assignment and Bill of Sale andAssignment shall be governed by the laws of the * * *  (regardless of the laws that might otherwise govern under * * *principles of conflicts of laws).

 

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This GeneralAssignment and Bill of Sale may be executed in any number of counterparts, eachof which shall be deemed to be an original, and all of which shall constituteone and the same instrument.

 

IN WITNESSWHEREOF, Seller and Buyer have caused this General Assignment and Bill of Saleto be duly executed effective as of the date first above written.

 
|   | SELLER:                                                                          |   |
|--------|----------------------------------------------------------------------------------|--------|
|   |                                                                             |   |
|   | * * *                                                                            |   |
|   |                                                                             |   |
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|   | By:                                                                              |   |   |
|   |                                                                             | Name:  |
|   |                                                                             | Title: |
|   |                                                                             |   |
|   |                                                                             |   |
|   | BUYER:                                                                           |   |
|   |                                                                             |   |
|   | INTERNATIONAL  INTEGRATED   INCORPORATED, a British Virgin Islands   corporation |
|   |                                                                             |   |
|   |                                                                             |   |
|   | By:                                                                              |   |   |
|   |                                                                             | Name:  |
|   |                                                                             | Title: |
|        |                                                                                  |        |  |  |  |

 

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| STATE OF NEVADA                                                                                                                                                                                                               | )      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                          |   |
|                                                                                                                                                                                                                          | ) ss.: |
|                                                                                                                                                                                                                          |   |
| COUNTY OF                                      | )      |

 

 

On this                        day of               2002, there appeared before me                                                                   ,personally known to me, who acknowledged that she/he signed the foregoingGeneral Assignment and Bill of Sale as his/her voluntary act and deed on behalfand with full authority of the Seller.

 

 
|   |   |          |   |
|--------|--------|---------------|--------|
|   |   | Notary Public |

 

 
| * * *                                                                                                                                                                                                                         | )      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                          |   |
|                                                                                                                                                                                                                          | ) ss.: |
|                                                                                                                                                                                                                          |   |
| COUNTY OF                                      | )      |

 

On this                                  dayof           2002, thereappeared before me                                                            ,personally known to me, who acknowledged that she/he signed the foregoingGeneral Assignment and Bill of Sale as his/her voluntary act and deed on behalfand with full authority of the Buyer.

 

 
|   |   |          |   |
|--------|--------|---------------|--------|
|   |   | Notary Public |

 

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**EXHIBIT B**

 

* * *

 

Officer’s Certificate

 

 

I, * * *,President of  * * * (“*Seller*”),pursuant to Section 2.2(b) of the Asset Purchase Agreement dated as ofApril 15, 2002 (the “*Asset Purchase Agreement*”; capitalizedterms not defined herein shall have the meanings ascribed to them in the AssetPurchase Agreement) between International Integrated Incorporated, a BritishVirgin Islands corporation, and Seller, DO HEREBY CERTIFY on behalf of Sellerthat:

 

(1)  Each of the representations and warrantiesmade by Seller in the Asset Purchase Agreement is true and correct in allmaterial respects on and as of the date hereof as though made on and as of thedate hereof.

 

(2)  Each of the agreements, covenants andobligations required by the Asset Purchase Agreement to be performed orcomplied with by Seller at or before the Closing has been duly performed orcomplied with in all material respects.

 

IN WITNESSWHEREOF, Seller has caused this Certificate to be executed on its behalf by theundersigned on and as of                                                 ,                .

 
|   | * * *  |   |
|--------|--------|--------|
|   |   |   |
|   | By:    |   |   |
|   |   | Name:  |
|   |   | Title: |
|   |   |   |
|        |        |        |  |  |  |

 

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**EXHIBIT C**

 

ASSUMPTIONAGREEMENT

 

THIS ASSUMPTIONAGREEMENT is entered into as of                             ,                 by and between International Integrated Incorporated, a British Virgin Islandscorporation (“*Purchaser*”), and * * * (“*Seller*”).

 

**RECITALS**

 

WHEREAS Purchaserand Seller have entered into an Asset Purchase Agreement, dated as of April 15,2002 (the “*AssetPurchase Agreement*”) (capitalized terms not defined herein shallhave the meanings ascribed to them in the Asset Purchase Agreement), pursuantto which Seller has agreed to sell, transfer, convey, assign and deliver toPurchaser and Purchaser has agreed to purchase from Seller substantially all ofthe assets used or held for use by Seller in connection with the conduct of theBusiness, and Purchaser has agreed, in partial consideration therefor, toassume certain obligations in connection therewith by executing this AssumptionAgreement; and

 

WHEREAS theparties now desire to carry out the intent and purpose of the Asset PurchaseAgreement by Purchaser’s execution and delivery to Seller of this instrumentevidencing the assumption by Purchaser of the Assumed Liabilities.

** **

**AGREEMENT**

 

NOW, THEREFORE,for and in consideration of the mutual covenants contained herein and othergood and valuable consideration the receipt and sufficiency of which are herebyacknowledged, Purchaser hereby undertakes and agrees from and after the datehereof, subject to the limitations contained herein, to assume and to pay,perform and discharge when due the Assumed Liabilities, set forth on Schedule1.3 to the Asset Purchase Agreement.

 

Nothing containedherein shall require Purchaser to pay or discharge any debts or obligationsexpressly assumed hereby so long as Purchaser shall in good faith contest orcause to be contested the amount or validity thereof.

 

Other than asspecifically stated above or in the Asset Purchase Agreement, Purchaser assumesno debt, liability or obligation of Seller, including the Retained Liabilities,by this Assumption Agreement, and it is expressly understood and agreed thatall debts, liabilities and obligations not assumed hereby by Purchaser shallremain the sole obligation of Seller, its successors and assigns.

 

No person otherthan Seller, its successors and assigns shall have any rights under thisAssumption Agreement or the provisions contained herein.

 

This AssumptionAgreement may be executed in any number of counterparts, each of which will bedeemed an original, but all of which together will constitute one and the sameinstrument.

 

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This AssumptionAgreement shall be governed by and construed in accordance with the laws of the* * * applicable to a contract executed and performed in such state withoutgiving effect to the conflicts of laws principles thereof, except that if it isnecessary in any other jurisdiction to have the law of such other jurisdictiongovern this Assumption Agreement in order for this Assumption Agreement to beeffective in any respect, then the laws of such other jurisdiction shall governthis Assumption Agreement to such extent.

 

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IN WITNESSWHEREOF, the undersigned have caused their duly authorized officers to executethis Assumption Agreement on the day and year first above written.

 
|   |   | INTERNATIONAL  INTEGRATED  INCORPORATED, a British Virgin Islands  corporation |
|--------|--------|--------------------------------------------------------------------------------|
|   |   |                                                                           |
|   |   |                                                                           |
|   |   | By:                                                                            |   |   |
|   |   |                                                                           | Name: |
|   |   |                                                                           | Title: |
|   |   |                                                                           |   |
|   |   |                                                                           |   |
|   |   | * * *                                                                          |   |
|   |   |                                                                           |   |
|   |   | By:                                                                            |   |   |
|   |   |                                                                           | Name: |
|   |   |                                                                           | Title: |
|        |        |                                                                                |  |  |  |  |  |  |

 

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**SCHEDULES TO**

**ASSET PURCHASE AGREEMENT**

 

 

*Schedule 1.1(a)   Assets*

 

Purchaser herebypurchases the following assets of Seller:

 

1.  All of Seller’s right, title and interestin, to and under * * *.

 

2.  All of Seller’s right, title and interestin, to and under * * *.

 

3.  All of Seller’s rights under * * * (the“Supply Agreement”).

 

4.  All of Seller’s books and records pertainingto the operation of the Business, including the accounting records, files, listsof customers, lists of suppliers and vendors, other lists, sales, market andproduct development plans, training materials, studies, reports, and other dataand information on whatever media.

 

5.  All of Seller’s inventory located in * * *as of the Closing Date.

 

6.  All licenses and permits granted to Sellerby any state or federal governmental or regulatory authority in connection withthe operation of the Business.

 

7.  All of Seller’s furniture, fixtures andequipment used in connection with the operation of the Business.

 

8.  All data, maintained in whatever media,collected and maintained by Seller in connection with or in relation to theoperation of the Business.

 

9.  Any and all Intellectual Property used inconnection with or useful to the conduct of the Business.

 

10.  All of Seller’s computer equipment used ormaintained in connection with the operation of the Business.

 

 

*Schedule 1.2         PurchasePrice*

 

The Purchase Priceshall initially be * * *.  On each ofthe dates set forth in the table below (each an “*Adjustment Date*” andcollectively the “*Adjustment Dates*”), the Purchase Price shall be adjusted toequal the amount listed opposite each Adjustment Date.

 

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| **Adjustment Date**                        |   | **Purchase  Price** |
|--------------------------------------------|--------|---------------------|
| Present through  September 30, 2002        |   | * *  *              |
| October 1, 2002 through  December 31, 2002 |   | * *  *              |
| January 1, 2003 through  March 31, 2003    |   | * *  *              |
| April 1, 2003 through  June 30, 2003       |   | * *  *              |
| July 1, 2003 through  September 30, 2003   |   | * *  *              |
| October 1, 2003 through  December 31, 2003 |   | * *  *              |
| On or after January 1,  2004               |   | * *  *              |

 

In the event thatthe aggregate value of all of Seller’s inventory located in Baton Rouge,Louisiana and Glasgow, Scotland is less than * * * as of the Closing Date, asdetermined by an independent appraiser chosen by the mutual agreement of theparties hereto, the then effective Purchase Price (as set forth in the tableabove) shall be reduced by an amount equal to the difference between * * * andthe appraised value of such inventory.

 

 

*Schedule 1.3         AssumedLiabilities.*

 

Purchaserexpressly assumes the following liabilities of Seller in connection with thepurchase of the Assets:

 

1.  The obligation of Seller under the SupplyAgreement to pay * * *, but only in the event that * * *.

 

2.  All of Seller’s other obligations under theSupply Agreement.

 

3.  All liability for product warranty claimsfirst arising on or after the Closing Date, regardless of when the productswere sold.

 

4.  All liability for claims first arising on orafter the Closing Date of third parties for damage or injury suffered as aresult of defective products sold by Seller prior to the Closing Date, exceptthat the Purchaser assumes no liability for claims arising out of thenegligence or intentional acts of Seller or its employees or agents.

 

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*Schedule 3.4*

 

* * * currentlyholds a security interest on all of the assets of Seller in connection withcertain loans made by * * * to Seller.

 

Pursuant to theterms of the Supply Agreement, * * * currently holds a continuing securityinterest in all of Seller’s right, title and interest in and to certain assetsof Seller, including all of Seller’s inventory and * * *.

 

 

*Schedule 3.6*

 

See Schedule3.4 regarding the security interest held by * * *.

 

 

*Schedule 3.18*

 

Pursuant to theterms of the Supply Agreement, Seller may not be directly or indirectlyinvolved in the manufacture, supply, sale or distribution in the United Statesor Canada of any goods which * * * considers to be similar to or competitivewith any products supplied by * * * to Seller under the Supply Agreement.

 

 

*Schedule 3.20*

 

Pursuant to theterms of the Supply Agreement, * * * retains full legal and equitable title toall products supplied to Seller under the terms thereof until * * * hasreceived payment in full of all amounts due and owing for such products, atwhich time title to such products shall pass to Seller.  Until Seller receives full legal andequitable title to the products supplied by * * *, Seller is deemed to holdsuch products on consignment.

 

See also Schedules3.4 and 3.6 with regard to the security interests in Seller’sinventory held by each of * * * and * * *.

 

 

*Schedule 3.21(j)*

 

See also Schedules3.4 and 3.6 with regard to the security interests held by each of ** * and * * *.

 

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