Exhibit 10.43
PURCHASE, SALE AND LICENSE AGREEMENT
THIS PURCHASE, SALE AND LICENSE AGREEMENT ("Agreement") is
entered into as of May 1, 2003 by and among PLANET POLYMER TECHNOLOGIES, INC., a
California corporation ("Planet"), and RYER ENTERPRISES LLC, a Nevada limited
liability company ("Ryer"), with reference to the following facts:
A. Planet is engaged in the business of developing and licensing
unique hydrosoluble polymer and biodegradable materials with broad applications
in the fields of agriculture and industrial manufacturing and other related
business activities; and
B. Planet desires to sell to Ryer, and Ryer desires to purchase
from Planet, all of Planet's Equipment (as hereinafter defined) and the AQUAMIM
Relationships (as hereinafter defined) relating to Planet's metal injection
molding feedstock business (the "Business"), which are described in more detail
in Section 1 below; and
C. Planet desires to license to Ryer and Ryer desires to acquire
an exclusive worldwide license from Planet to use and commercially exploit all
rights to the Intellectual Property (as hereinafter defined), which is described
in more detail in Section 3 below. It is anticipated that, as provided in
Section 3.5 below, the Intellectual Property will automatically become the
property of Ryer, without additional payment therefor, upon the expiration of
the Term (as hereinafter defined), provided that Ryer makes all of the payments
due to Planet under this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF the foregoing facts and
the mutual promises set forth below, the parties agree as follows:
1. Purchase and Sale of Assets. Subject to the terms and
conditions set forth in this Agreement, Planet hereby agrees to sell to Ryer,
and Ryer hereby agrees to purchase from Planet: (a) all of Planet's Equipment (
the "Equipment") relating to the Business, which Equipment is set forth in more
detail in Exhibit "A," attached hereto and incorporated by reference; and (b)
all right, title and interest of Planet in all existing business relationships,
development projects, business development programs, existing orders and
contracts relating to the AQUAMIM Technology, if any (collectively, the "AQUAMIM
Relationships"). The Equipment and the AQUAMIM Relationships are collectively
referred to as the "Assets".
2. Purchase Price for the Assets. The purchase price (the
"Purchase Price") for the Assets shall consist of the following consideration:
2.1 Cash. Ryer shall pay Planet Three Hundred One
Thousand Dollars ($301,000.00), payable in the following installments (each a
"Principal Payment"): (a) Twenty Five Thousand Dollars ($25,000.00) on or before
May 1, 2003, and (b) Eleven Thousand Five Hundred Dollars ($11,500.00) on or
before the first day of each and every month for the period beginning June 1,
2003 through May, 31, 2005, for a period of twenty-four (24) months (the
"Period"), as set forth in more detail in the Secured Promissory Note attached
hereto as Exhibit
"C" and incorporated by reference. Ryer reserves the right to pre-pay the
balance remaining on the Purchase Price and receive the benefit of the Balance
Pre-Payment Incentive as defined in Section 2.2 below.
2.2 Balance Pre-Payment Incentive. At any time during the
Period and so long as Ryer is not in default on any payment due Planet under
this Agreement, Ryer has the option to pre-pay the remaining balance on the
Purchase Price in full (the "Balance Pre-Payment") by paying to Planet the
discounted net present value of the remaining unpaid monthly payments determined
using a discount rate equal to the then current yield on Two Year U.S. Treasury
Bills ("T-Bill Rate"). The T-Bill rate shall be that rate published in the Wall
Street Journal on the third business day preceding the date the Balance
Pre-Payment is delivered to Planet.
2.3 Principal Payment Due Date. If any Monthly Principal
Payment hereunder is not paid on or before the fifth calendar day of the month
in which it becomes due, Ryer shall pay, at Planet's option, a late or
collection charge equal to ten percent (10%) of the amount of such unpaid
Monthly Principal Payment. In the event that any default under this Section 2.3
continues for more than thirty (30) days, interest shall accrue at the rate of
ten percent (10%) per year (based upon a 360-day year) on the entire outstanding
principal amount until such default is cured.
2.4 No Assumption of Planet Obligations. Buyer shall
assume no liability, claim or obligation (contingent or otherwise) of Planet
(the "Retained Obligations"), including without limitation the following:
(a) Accounts payable, product warranty
obligations and customer deposits.
(b) Any amount due and payable prior to or on
account of the period preceding the Closing Date, or any liabilities, claims or
obligations arising out of, or attributable to events, circumstances, acts or
omissions occurring prior to the Closing Date (even if asserted after the
Closing Date).
(c) Any liabilities arising out of or in
connection with any employment agreement, executive compensation agreement, or
any bonus, pension, benefit, welfare, vacation, sick pay, severance, retirement,
disability, insurance, collective bargaining, deferred compensation or other
employee benefit plan or labor agreement relating to Planet employees, whether
oral or written, or any liabilities arising out of or in connection with the
termination of employment of any Planet employee.
(d) Any Federal, state or local income, sales,
property, real estate or other taxes or imposts payable by Planet.
2.5 The Purchase Price shall be allocated to the
Equipment as set forth on Exhibit "A" attached hereto and incorporated by this
reference, and to the other assets being transferred to Ryer as provided
elsewhere in this Agreement. Seventy-Five Thousand Dollars ($75,000) of the
Purchase Price shall be allocated to the AQUAMIM Relationships and general
intangibles. Each of the parties shall report this transaction for tax purposes
in accordance with such allocations.
3. License of Patents and Trademarks and Other Intellectual
Property. Subject to the terms and conditions of this Agreement, including the
payment of royalties to Planet as provided in this Agreement, Planet hereby
grants to Ryer an exclusive, worldwide license (the "License") to use any and
all of the patents and trademarks described on Exhibit "B" attached hereto and
incorporated by reference (the "Patents and Trademarks") and any and all other
existing intellectual property relating to Planet's AQUAMIM Metal Injection
Molding ("MIM") technology (collectively, the "AQUAMIM Technology") and any
other formulas, processes and other information and trade secrets related to the
Business (collectively the "Intellectual Property") and to develop, have
developed, make, have made, use, offer to sell and sell products using any or
all of the Intellectual Property. The License includes the right to grant
sublicenses to third parties to use some or all of the Intellectual Property to
make, use or sell products, subject to the payment of royalties to Planet as if
any such use or sale were by Ryer directly (however, Planet shall never be
entitled to receive more than one royalty for any product sold). Ryer shall
notify any sub-licensees under this section of all rights and obligations of
Ryer under this Agreement that are sublicensed to such sub-licensee, and Ryer
shall notify Planet within 30 days after the grant of any sublicense under this
section, including the name and address of any such sublicensee. Except as
expressly provided in this Agreement, the License is perpetual and irrevocable.
The License may be terminated by Planet, by written notice to Ryer, in the event
that Ryer fails to make any payment due to Planet under this Agreement and such
failure is not cured within thirty (30) days after written notice thereof is
given by Planet to Ryer; provided, however, that if there is a bona fide dispute
between the parties as to the amount of any payment due to Planet, the License
may not be terminated by Planet until and unless such payment has not been made
within thirty (30) days after the final resolution of such dispute.
3.1 Royalties. During the eight-year period beginning on
May 1, 2003 and ending on April 30, 2011 (the "Term"), Ryer shall pay to Planet
royalties based upon sales by Ryer to third parties during the Term of Feedstock
(as hereinafter defined) and MIM products manufactured by Ryer using any
Feedstock ("Feedstock Products"). The amount of the royalties will be determined
by the formulas set forth in this Section 3.1. The applicable formula will be
determined by: (a) whether the Feedstock is based upon Planet's water-soluble
binder system ("Water-Soluble Feedstock") or is a tungsten-carbide Feedstock
made using the AQUAMIM Technology ("Carbide Feedstock"); and (b) whether the
Feedstock is sold to a third party or used by Ryer to make a Feedstock Product
that is sold to a third party. As used herein, the term "Feedstock" shall mean a
mixture of one or more metal powders and one or more binders that is used in MIM
to make a sintered metal product and that is either a Water-Soluble Feedstock or
a Carbide Feedstock.
3.1.1 Royalty on Feedstock Sold to a Third Party.
The royalty on any Water-Soluble Feedstock or Carbide Feedstock sold to a third
party shall be computed by multiplying the total price of such Feedstock
(excluding taxes, shipping and handling, and similar charges) by six percent
(6%). Such total price and the Shipped Weight (as that term is hereinafter
defined) of the Feedstock sold to a third party shall be evidenced by Ryer's
invoice to such third party.
3.1.2 Royalty on Feedstock Used by Ryer. The
royalty on any Water-Soluble Feedstock or Carbide Feedstock used by Ryer to make
a Feedstock Product shall be computed by dividing the Shipped Weight (as that
term is hereinafter defined) of such Feedstock Product by ninety-four percent
(94%), and then multiplying such quotient by the Royalty Per Pound (as
hereinafter defined) of the Feedstock used to make such Feedstock Product. The
parties acknowledge that approximately six percent (6%) of the weight of a
Feedstock is comprised of the weight of the binders, which are removed during
the debinding and sintering processes of MIM. Accordingly, the parties agree
that dividing the Shipped Weight of a Feedstock Product by 94% (i.e. by 0.94)
will yield the approximate weight of the Feedstock incorporated into such
Feedstock Product. For example, if the Shipped Weight of a Feedstock Product is
94 grams, then the weight of the Feedstock incorporated into such Product is
approximately 100 grams [94 / 0.94 = 100], comprised of 94 grams of metal
powders and 6 grams of binders.
3.1.3 Royalty Per Pound. Since Feedstock used by
Ryer to make Feedstock Products will not be sold to a third party, the parties
have agreed to determine a Royalty Per Pound for each Feedstock, which will be
used in computing the royalty due to Planet on Feedstock incorporated by Ryer
into Feedstock Products. The parties acknowledge that: (a) the cost to produce a
Feedstock is affected by the cost of the metal powders, the cost of the binders
and the cost of mixing the metal powders and binders to form the Feedstock; (b)
the current cost of mixing is approximately One Dollar ($1.00) per pound of
Feedstock for each time the Feedstock must be mixed (e.g. the cost of mixing for
a single-mixed Feedstock is $1.00 per pound of Feedstock and such cost for a
triple-mixed Feedstock is $3.00 per pound of Feedstock); (c) the cost of metal
powders and, to a lesser extent, binders will vary (sometimes substantially)
from time to time as market conditions change; and (d) in setting the selling
price for any Feedstock, Planet would customarily mark up the total cost of such
powders, binders and mixing by fifty percent (50%) for its gross profit.
Accordingly, the parties have agreed that the Royalty Per Pound for each
Feedstock will be adjusted periodically to reflect changes in such costs, as
more particularly hereinafter provided. The Royalty Per Pound for any Feedstock
at any given time shall be computed by multiplying the then cost per pound of
such Feedstock by one and one-half (1.5) and then multiplying such product (the
"Internal Price") by either six percent (6%) for Water-Soluble Feedstocks or ten
percent (10%) for Carbide Feedstocks. The current Royalty Per Pound for each of
certain Feedstocks that Ryer anticipates it may use to make Feedstock Products,
based on the current Internal Price of such Feedstock, is set forth on Exhibit
"G" attached hereto and incorporated by reference. The Royalty Per Pound for
each Feedstock shall be adjusted annually, on the last business day of each
April, based on the then total costs of producing such Feedstock. The costs of
metal powders shall be based upon the average cost of the metal powders
purchased by Ryer over the 30-day period directly preceding the last business
day of each April, as evidenced by invoices for such purchases. Should Ryer not
purchase any metal powders in the preceding 30-day period, the price will be
determined upon the metal powder prices reported on the last business day of
April by a mutually agreeable third party supplier of the metal powder. For
simplicity, the cost of the binders and the mixing shall be assumed to be $1.00
per pound of Feedstock for the binders and $1.00 per pound of Feedstock for each
time that a Feedstock must be mixed (e.g. $3.00 per pound of Feedstock for a
triple-mixed Feedstock). Said assumed costs shall be adjusted equitably if Ryer
can demonstrate
materially lower total costs for those two items. For example, if, on April 30,
2004, the cost of the metal powders used to make Tungsten Carbide (15%) Carbide
Feedstock has increased by $2.00 per pound (to $10.00 per pound) of Feedstock
then the Royalty Per Pound for such Carbide Feedstock will become $2.10 per
pound [($10.00+$1.00+$3.00) x 1.5 x 10% = $2.10]. If, on April 30, 2004, the
cost of the metal powders used to make Tungsten Carbide (15%) Carbide Feedstock
has decreased by $2.00 per pound (to $6.00 per pound) of Feedstock, and if Ryer
has determined to double-mix the Feedstock (instead of triple-mixing it), then
the Royalty Per Pound for such Carbide Feedstock will become $1.35 per pound
[($6.00+$1.00+$2.00) x 1.5 x 10% = $1.35]. The Royalty Per Pound for any
Feedstock shall also be adjusted at such other times as there is a Material
Change in the cost of the metal powders. A Material Change is one that results
in a Twenty Five Percent (25%) or greater increase or decrease in the cost of
the metal powders.
3.1.4 Shipped Weight. The Shipped Weight of any
Feedstock Product shall be determined in the following manner. If fewer than
four of any identical item are shipped, the Ryer employee responsible for
shipping such items (the "Shipping Clerk") shall weigh each item and shall
determine the average weight of such items, which average weight and the total
weight of all such items (determined by multiplying the average weight by the
number of pieces of such item) shall be noted on the shipping manifest. If more
than three of any identical item are shipped, the Shipping Clerk shall weigh
three representative samples of such item and determine the average weight of
such items, which average weight and the total weight of all such items
(determined by multiplying the average weight by the number of pieces) shall be
noted on the shipping manifest. Alternatively, if a container contains only
identical Feedstock Products or Feedstock, the Shipping Clerk may determine the
total weight of the contents (exclusive of the weight of any packaging
material), which total weight shall be noted on the shipping manifest. The total
Shipped Weight of the various Feedstocks and Feedstock Products shipped, and the
Feedstock used to make each such Feedstock Product, shall be indicated on the
invoices to the purchasers of such items.
3.1.5 Computation and Payment of Royalties.
Royalties due from Ryer to Planet under this Section 3.1 shall be computed on
the total Shipped Weight of the various Feedstocks and Feedstock Products
shipped during each calendar month of the Term. The royalties due to Planet for
each calendar month (the "Royalty Payments"), computed in accordance with the
provisions of this Section 3.1, shall be paid by Ryer to Planet prior to the
expiration of forty-five (45) days after the end of such calendar month. The
obligation to make the Royalty Payments shall survive the expiration of the Term
and the termination of this Agreement. Ryer shall submit to Planet, with each
remittance, Ryer's computation of the Royalty Payment then due, together with
copies of shipping manifests and invoices to support such computation.
3.2 Royalty Payment Due Date. If any Royalty Payment, as
defined in Section 3.1 above, is not paid on or before the fifth calendar day
after it is due, Ryer shall pay, at Planet's option, a late or collection charge
equal to ten percent (10%) of the amount of such unpaid Monthly Principal
Payment. In the event that any default under this Section 3.2 continues for more
than thirty (30) days, interest shall accrue at the rate of ten percent (10%)
per year (based upon a 360-day year) on the unpaid amount until such default is
cured.
3.3 Enforcement of Patents and Trademarks During the
Term.
3.3.1 Notice of Potential Infringement. Each party
(the "Notifying Party") shall promptly notify the other party of any
infringement or potential infringement of any of the Patents or Trademarks or
any use or disclosure of any trade secret comprising part of the Intellectual
Property (the "Affected Intellectual Property") of which the Notifying Party
becomes aware.
3.3.2 Planet Option to Prosecute. Planet shall
have the first option and right to commence and prosecute litigation or other
proceedings to enforce any and all rights under the Intellectual Property. If
Planet commences any such litigation or proceedings, Planet shall, unless Planet
provides adequate notice, within any applicable statute of limitations, to Ryer
of Planet's intent to discontinue to prosecute such litigation or other
proceedings, diligently prosecute the same to final judgment or settlement;
provided, however, that Planet shall not settle any such matter without the
prior written approval of Ryer, which may be granted, withheld or conditioned in
Ryer's sole and absolute discretion.
3.3.3 Ryer Option to Prosecute. In the event that,
within ninety (90) days after the first to occur of: (a) Planet becomes aware of
an infringement or potential infringement of any Affected Intellectual Property;
or (b) Ryer notifies Planet of such an infringement or potential infringement;
Planet determines not to commence litigation or other proceedings to enforce
and/or protect the Affected Intellectual Property Planet shall notify Ryer in
writing of any such determination prior to the expiration of such 90-day period
and, if Planet fails to so notify Ryer, Planet shall be deemed to have
determined not to commence such litigation or other proceedings, then upon
expiration of such period or upon any such refusal, Ryer may commence and
prosecute litigation or other proceedings to enforce and/or protect the Affected
Intellectual Property. Planet shall cooperate with Ryer, as necessary, to enable
Ryer to prosecute such litigation or other proceedings. If acting to prevent the
running of any applicable statute of limitations, and after having provided
written notice to Planet of Ryer's intent to commence litigation and or other
proceedings, Ryer may commence said action prior to the running of the 90-day
period.
3.3.4 Recoveries. All recoveries resulting from
any such litigation or other proceedings shall be for the benefit of the party
that bore the expense of prosecuting the litigation or other proceeding until
all such expenses have been recovered and thereafter shall be allocated to
Planet to provide for recovery of its lost royalty interest and to Ryer to
provide for recovery of its lost profits.
3.4 Infringement Actions.
3.4.1 Notice. If at any time before termination of
this Agreement a claim is made or an action is brought against Ryer by a third
party alleging intellectual property or trade secret infringement attributable
to Ryer's use of the Intellectual Property, Ryer shall promptly inform Planet,
and Planet and Ryer shall confer together to find the best means of avoiding
infringement of such third party's intellectual property or of defending such
claims or
action. Notwithstanding the foregoing, Ryer shall have no obligation to take or
refrain from taking any action to avoid any such infringement that would involve
any material change to any part of Ryer's production process or the cost to Ryer
of such process unless arrangements reasonably satisfactory to Ryer are made for
the payment by Planet of all costs of such change and all additional costs of
such process.
3.4.2 Indemnification. Planet shall, at its own
expense, defend and indemnify Ryer from and against any claim, demand,
liability, loss, cost, damage or expense (including attorney's fees and
disbursements but excluding those attorney's fees incurred by Ryer should Ryer
choose to retain separate outside counsel) incurred in connection with or
resulting from the alleged infringement of a third party's patent or other
propriety rights by reason of the use of the Intellectual Property in accordance
with this Agreement. Planet shall obtain written approval from Ryer as to
counsel selected to defend against any infringement claim or action. Approval of
said counsel will not be unreasonably withheld by Ryer.
3.4.3 Right of Setoff. If in the reasonable
judgment of Ryer (which judgment shall be exercised in good faith), Planet shall
be indebted to Ryer under this Agreement, including under Section 3.4, Ryer
shall have the right to setoff such indebtedness against any amount Ryer then or
in the future may owe to Planet, including without limitation amounts under the
promissory note delivered to Planet at Closing and any royalties owed under
Section 3.1, above.
3.5 Transfer of Intellectual Property Upon Expiration of
the Term. Provided that Ryer has paid to Planet all amounts due to Planet under
this Agreement, Planet shall transfer the Intellectual Property to Ryer upon the
expiration of the Term, without additional consideration. Prior to such
transfer: (a) Planet may not encumber, sell or otherwise transfer any of the
Intellectual Property to any party other than Ryer, and any such encumbrance,
sale or transfer shall be null and void; (b) Planet shall not disclose any of
the Intellectual Property that is not in the public domain as of the date of
this Agreement; (c) Planet shall, at its own expense, keep the Intellectual
Property in full force and effect, and shall timely file all necessary
extensions and other documents; and (d) if, at any time, Planet desires to
abandon any Intellectual Property, Planet shall notify Ryer thereof and shall,
at Ryer's request, transfer such Intellectual Property to Ryer.
4. Closing Date. The closing shall take place concurrently with
execution of this Agreement.
5. Conditions Precedent to the Closing by Ryer. The obligations
of Ryer to consummate this Agreement are subject to the fulfillment, at or prior
to the Closing Date of the conditions set forth below, unless waived by Ryer in
a writing delivered to Planet:
5.1 Representations and Warranties. The representations
and warranties of Planet shall be true and correct in all material respects as
of the Closing Date as though made on that date and Planet shall have performed
or complied with all of its covenants, terms and conditions to be performed
prior to Closing Date.
5.2 Absence of Litigation. Prior to or at the Closing
Date, no litigation, investigation, inquiry or proceeding shall be pending or
threatened (i) to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or to obtain damages or other relief by reason of
such consummation; (ii) involving any of the Assets of Planet; (iii) involving
any contractual relationship pertaining to the acquisition by Ryer of the
Assets, (iv) involving the Intellectual Property, or (v) involving any
contractual relationship pertaining to the acquisition by Ryer of the
Intellectual Property, the results of which could prevent, materially delay or
make illegal the consummation of such purchase.
5.3 Material Damage. Prior to the Closing Date, no
material damage, destruction, casualty or loss (whether or not covered by
insurance) and no other event or condition materially and adversely affecting
the Assets shall have occurred.
5.4 Authorization by Planet. The execution and delivery
of this Agreement by Planet and the performance of the transactions contemplated
herein shall have been duly authorized by Planet's Board of Directors and Ryer
shall have received copies of all resolutions of the Board of Directors
pertaining to such authorization, certified by Planet's secretary.
5.5 Covenants and Agreements. Planet shall have performed
and complied with each and all of the covenants, agreements, terms and
conditions to be performed and complied with by Planet on or before the Closing
Date, pursuant to the provisions of this Agreement, and Planet shall so certify
in writing delivered to Ryer at the Closing Date.
5.6 Physical Inventory. On or before the Closing Date,
Ryer shall have conducted a physical inventory of all Equipment as held by
Planet as of the Closing Date and shall be satisfied that such Equipment is one
hundred percent (100%) owned by Planet and is in working order, and that such
Equipment fully complies with the representations and warranties set forth
herein with respect to such Equipment. Ryer acknowledges that it has received
all of the Equipment and Raw Materials from Planet.
6. Conditions Precedent to the Closing by Planet. The obligations
of Planet to consummate this Agreement are subject to the fulfillment, before or
on the Closing Date, of the conditions set forth below, unless waived by Planet
in a writing delivered to Ryer:
6.1 Representations and Warranties. The representations
and warranties of Ryer shall be true and correct in all material respects as of
the Closing Date as though made on that date and Ryer shall have performed or
complied with all of its covenants, terms and conditions to be performed prior
to the Closing Date.
6.2 Absence of Litigation. Prior to or at the Closing
Date, no litigation, investigation, inquiry or proceeding shall be pending or
threatened (i) to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or to obtain damages or other relief by reason of
such consummation; (ii) involving any contractual relationship pertaining to the
acquisition by Ryer of the Assets, or (iii) involving any contractual
relationship pertaining to the acquisition by Ryer of the Intellectual Property,
the results of which could prevent, materially delay or make illegal the
consummation of such purchase.
6.3 Authorization by Ryer. The execution and delivery of
this Agreement by Ryer and the performance of the transactions contemplated
herein shall have been duly authorized by Ryer's Manager shall have received
copies of all resolutions of the Manager pertaining to such authorization,
certified by Ryer's Manager.
6.4 Covenants and Agreements. Ryer shall have performed
and complied with each and all of the covenants, agreements, terms and
conditions to be performed and complied with by Ryer on or before the Closing
Date, pursuant to the provisions of this Agreement, and Ryer shall so certify in
writing delivered to Planet at the Closing Date.
6.5 Consulting Agreement. On or before the Closing Date,
Ryer shall have duly executed and delivered the Consulting Agreement to Planet
in the form attached hereto as Exhibit "D," and incorporated by reference.
7. Planet's Representations and Warranties. Planet represents and
warrants to Ryer the accuracy and completeness of the matters set forth in this
Section 8 as of the date hereof and as of the Closing Date:
7.1 Organization and Standing. Planet is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, and has full and complete power and authority together with
all licenses, permits and certificates from agencies and public authorities as
are necessary to own its properties and to conduct its business where such
properties are now owned and such business is now conducted, and has full power
and authority to enter into and accomplish the transactions herein contemplated,
to enter into this Agreement and to carry out the provisions hereof.
7.2 No Breach. The execution, delivery, performance and
compliance by Planet with this Agreement will not (with or without the giving of
notice or passage of time) result in any material breach of, constitute a
default under, or result in the imposition of any lien or encumbrance upon the
Assets or Intellectual Property pursuant to any material agreement or other
instrument to which Planet is a party or by which Planet or the Assets or
Intellectual Property are bound or affected.
7.3 Authorization and Binding Effect. The execution,
delivery and performance of this Agreement by Planet and the consummation of the
transactions contemplated by this Agreement have all been duly authorized by the
directors of Planet and all the corporate acts, proceedings and approvals
required of Planet, its officers and directors for all of the foregoing have
been duly taken and remain in effect. This Agreement constitutes the legal,
valid and binding obligation of Planet, enforceable against Planet in accordance
with its terms.
7.4 Compliance with Laws and Other Instruments. Planet
has, complied in all material respects with all laws, regulations and orders
applicable to the Assets and has all material permits and licenses required
thereby. There is no term or provision of any mortgage, indenture, contract,
agreement or instrument to which Planet is a party or by which it is bound, or
of any provision of any state or federal judgment, decree, order, statute, rule
or regulation applicable to or binding upon Planet or the Assets and/or
Intellectual Property which materially adversely affects or, so far as Planet
may now foresee, in the future is reasonably likely to materially adversely
affect, the Assets and/or Intellectual Property.
7.5 Proprietary Rights. Planet is not using any
trademark, trademark registration or application, service mark or trade name,
patent, patent registration or application, copyright or copyright registration
or application, the use of which is necessary or contemplated in connection with
the operation of Planet's business or in connection with the performance of any
contract to which Planet is a party, in violation of the rights of the owner
thereof.
7.6 Title to and Condition of Equipment. Except as set
forth in Exhibit "E," attached hereto and incorporated by reference, Planet will
have on the Closing Date good and marketable title to all of the Equipment,
subject to no liens or encumbrances, whether by mortgage, security interest,
pledge, lien, conditional sale agreement, encumbrance, charge or otherwise, and
at the Closing Date will deliver to Ryer full legal title thereto free and clear
of all liens and encumbrances. Except as specifically represented or warranted
in this Agreement, the Equipment is being sold to Ryer "as is" without any
further representation or warranty being made by Planet, express or implied.
7.7 Brokers or Finders. Planet has retained no broker or
finder in connection with the transactions contemplated by this Agreement.
7.8 Intangible Property. With regard to the Intangible
Property:
7.8.1 To Planet's knowledge, all of the Intangible
Property consisting of Patents is currently in compliance with formal legal
requirements (including payment of filing, examination, and maintenance fees and
proofs of working or use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within 120 days after the
Closing Date.
7.8.2 None of the Intangible Property is involved
in, any interference, cancellation, reissue, reexamination, challenge,
infringement or opposition proceeding. Planet has not received any written
notice of any interference, cancellation, reissue, reexamination, challenge,
infringement or opposition proceeding regarding the Intangible Property. To
Planet's knowledge, there is no potentially interfering patent or patent
application of any third party and no such action is threatened with the respect
to any of the Intangible Property.
7.8.3 To Planet's knowledge, no patent is
infringed or has been challenged or threatened in any way by the Intangible
Property. To Planet's knowledge, none of the products manufactured and sold, nor
any process or know-how used, by Planet in the Business infringe or is alleged
to infringe any patent or other proprietary right of any other person. Planet
has not received any written notice that any of the products manufactured and
sold, nor any process or know-how used, by Planet in the Business infringe or is
alleged to infringe any patent or other proprietary right of any other person.
7.8.4 To the extent applicable, all products made,
use, or sold relating to the Business under any patents have been marked with
the proper patent notice.
7.8.5 To Planet's knowledge, the AQUAMIM trademark
has not been infringed or challenged or threatened in any way. To Planet's
knowledge, none of the marks used by Planet in the Business infringes or is
alleged to infringe any trade name, trademark, or service mark of any third
party. The AQUAMIM mark has been registered with the United States Patent and
Trademark Office is currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal application), are valid and enforceable, and are
not subject to any maintenance fee or taxes or actions falling due within 120
days after the Closing Date.
7.8.6 If applicable, all products and materials
containing a mark bear the proper federal registration notice where permitted by
law.
7.8.7 With respect to each trade secret, the
documentation relating to such trade secret is current, accurate, and sufficient
in detail and content to identify and explain it and to allow its full and
proper use without reliance on the knowledge or memory of any individual.
7.8.8 Planet has taken all reasonable precautions
to protect the secrecy, confidentiality, and value of its trade secrets related
to the AQUAMIM Technology.
7.8.9 To Planet's knowledge, the trade secrets and
proprietary information related to the AQUAMIM Technology and other Intellectual
Property, including without limitation the formulations used in connection
therewith, are not part of the public knowledge or literature, and, to Planet's
knowledge, have not been used, divulged, or appropriated either for the benefit
of any person (other than Planet) or to the detriment of Planet. Planet has used
its best efforts to protect the confidentiality and non-disclosure of trade
secrets and proprietary information related to the Business. No trade secret is
subject to any adverse claim or has been challenged or threatened in any way.
7.8.10 All former and current employees of Planet
have executed written contracts with Planet that assign to Planet all rights to
any inventions, improvements, discoveries, or information relating to the
business of Planet. No employee of Planet has entered into any contract or
agreement that restricts or limits in any way the scope of work in which the
employee may be engaged or requires the employee to transfer, assign, or
disclose information concerning his work to anyone other than the Planet.
8. Ryer's Representations and Warranties. Ryer represents and
warrants to Planet the accuracy and completeness of the matters set forth in
this Section 9, as of the date hereof and as of the Closing Date:
8.1 Organization and Standing. Ryer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Nevada, and has full and complete power and authority
together with all licenses, permits and certificates from
agencies and public authorities as are necessary to own its properties and to
conduct its business where such properties are now owned and such business is
now conducted, and has full power and authority to enter into and accomplish the
transactions herein contemplated, to enter into this Agreement and to carry out
the provisions hereof.
8.2 Authorization and Binding Effect. The execution,
delivery and performance of this Agreement by Ryer and the consummation of the
transactions contemplated by this Agreement have been all duly authorized by the
Manager of Ryer and all the company acts, proceedings and approvals required of
Ryer, its Manager and/or Members for all of the foregoing have been duly taken
and remain in effect. This Agreement constitutes the legal, valid and binding
obligation of Ryer, enforceable against Ryer in accordance with its terms.
8.3 Brokers or Finders. Ryer has retained no broker or
finder in connection with the transactions contemplated by this Agreement.
8.4 Financial Condition of Ryer. On the Closing Date,
Ryer has unencumbered cash on hand in the approximate amount of Two Hundred
Thousand Dollars ($200,000), and approximately Two Hundred Thousand Dollars
($200,000) in equipment other than the Equipment which secures a loan in the
approximate amount of Two Hundred Thousand Dollars ($200,000). Ryer believes its
financial condition is reasonably adequate to execute its business plan.
8.5 Survival of Representations. The covenants,
representations and warranties made by Ryer herein, except as they may be fully
performed prior to or contemporaneously with the Closing and except that the
last sentence of Section 8.4 shall apply only as of the Closing Date, shall
remain for the Term.
9. Covenants of Planet. Planet covenants to Ryer as set forth
below.
9.1 Conduct of Business. Planet shall:
(a) until delivery to Ryer, shall maintain the
Equipment in the condition it received the Equipment and shall not, without the
prior written consent of Ryer, incur expenses in the maintenance or repair of
any Assets which could result in a lien upon or other liability against any of
the Equipment;
(b) until delivery to Ryer, shall duly observe
and conform to all legal requirements applicable to such Equipment and the
business conducted in connection therewith;
(c) use its best efforts to cause all of the
conditions set forth in Section 9 of this Agreement to be satisfied, and has not
and shall not undertake any course of action which would be inconsistent with
either a prompt consummation of the Closing Date or satisfaction of the
conditions of the Closing Date set forth in this Agreement; and
(d) use its best efforts to preserve the
goodwill of the customers, suppliers and others having relationships with the
Business or the Assets.
9.2 Transfer of Raw Materials. At the Closing, Planet
shall transfer to Ryer, at Ryer's option, the raw materials as set forth in more
detail on Exhibit "F," attached hereto and incorporated by reference, "as is"
without representation or warranty of any kind, express or implied, including
without limitation any warranty as to condition or title. Forty Thousand Four
Hundred Dollars ($40,400) of the Purchase Price shall be allocated to such raw
materials.
9.3 Survival of Representations. The covenants,
representations and warranties made by Planet herein, except as they may be
fully performed prior to or contemporaneously with the Closing Date, shall
survive indefinitely.
10. Covenants of Ryer. Ryer covenants to Planet as set forth
below:
10.1 License. In the event that, during the Term, Ryer or
its assigns, for a period of 180 consecutive calendar days discontinues, for any
period of 180 consecutive calendar days, for any reason other than as a result
of force majeur, the business of supplying products or services to the custom
MIM feedstock marketplace, and the manufacture of Feedstock Products, the
License with respect to the Patents shall terminate.
10.2 Maintenance of Records. During the Term, Ryer shall
maintain current, accurate and complete books and records relating to the sales
of Feedstocks and Feedstock Products and the payment of the above-referenced
royalties to Planet, and the performance of its obligations under this
Agreement. Planet or its designee may, annually during the Term and for a period
of twenty-four (24) months thereafter, upon at least ten (10) days' advance
written notice to Ryer and during reasonable business hours, examine, inspect
and audit such books and records and any source documents pertaining thereto for
the purposes of verifying the accuracy and completeness of records, reports and
payments provided hereunder. Notwithstanding the foregoing, if Planet discovers
during the course of any such audit that royalty payments to Planet for any
six-month period are ninety-seven percent (97%) or less of the royalty payments
that should have been paid ("Material Discrepancy"), Planet may thereafter
conduct audits on a quarterly basis until there shall have been two (2)
consecutive years without a Material Discrepancy and Ryer shall pay all
reasonable costs of the audits. Planet or its designee may, during the course of
such examination, review or audit, make copies and/or extracts of books and
records relating to sales of Feedstock and Feedstock Products and royalty
payments with respect thereto and Ryer's compliance with the provisions of this
Agreement. Planet shall treat all such information reviewed during an audit as
confidential and will not disclose the same to any third party without the
written consent of Ryer.
11. Sales and Use Taxes. Planet and Ryer shall each pay one-half
(1/2) of all taxes arising out of the transfer of the Assets to Ryer pursuant to
this Agreement. Planet shall file all necessary reports and other documents with
the appropriate governing bodies in California in connection with the transfer
of Assets and Planet shall pay all amounts of such taxes due in connection with
the sale and transfer of the Assets. Within 15 days after Planet has provided
copies of the transfer or sales tax returns and evidence of payment, Ryer shall
reimburse Planet for one-half (1/2) of all such taxes. Ryer shall not be
responsible for any sales, use, business, occupation, withholding or similar tax
or any taxes of any kind related to the Assets or the Business for any period
prior to the Closing Date.
12. Confidential Information. Planet and Ryer shall maintain in
confidence all proprietary information of the other party to this Agreement
disclosed to Planet or Ryer, respectively, under this Agreement. Planet and Ryer
shall not disclose any proprietary information to any other person or use such
proprietary information for its own or any other persons' benefit other than as
permitted by this Agreement without the prior written consent of the owner of
the proprietary information. Planet and Ryer shall abide by the reasonable
confidentiality restrictions imposed by the other party from time to time for
such proprietary information.
13. Non-Competition and Non-Solicitation. During the Term, Planet
shall not:
13.1 Directly or indirectly own, manage, operate, control,
provide financing to or, engage or otherwise participate in any business,
corporation, partnership, limited liability company, association, firm, joint
venture, organization or other person or entity that is competitive with the
Business. Notwithstanding the foregoing, the ownership of securities of a public
company not in excess of one percent of any class of such securities shall not
in and of itself be considered to be in competition with the business.
13.2 Accept or fill any order from or contract for any
Feedstock or related services or otherwise directly or indirectly solicit,
persuade, induce, attempt to solicit, persuade or induce any Customer not to do
business with Ryer or to reduce the amount of business done with Ryer. The term
"Customer" refers to any person or entity constituting part of the AQUAMIM
Relationships and any person or entity with whom Planet has done business at any
time during the 36 months preceding the Closing Date which was related to any
product or service created or developed that uses any aspect of the AQUAMIM
Technology or other Intellectual Property. A Customer shall also include a known
customer of a Customer when the Customer is a distributor or reseller.
13.3 Directly or indirectly hire, employ, retain, engage,
contract or otherwise interfere with any person who was an employee of Planet
prior to the Closing Date who has entered into Ryer's employ, or induce any such
person to leave Ryer's employ.
13.4 Planet will be in violation of this Agreement if it
engages in any or all of the activities set forth in this Section 13 directly or
indirectly for itself or any other person or entity and whether as partner,
joint venturer, agent and/or director of any person or as an equity holder of
any person or entity in which Planet owns, directly or indirectly, any of the
outstanding equity interests (including convertible debt).
14. General Provisions.
14.1 Jurisdiction. Each party hereto hereby consents to
the exclusive jurisdiction of the state and federal courts sitting in San Diego
County, California in any action on a claim arising out of, under or in
connection with this Agreement or the transactions contemplated by this
Agreement. Each party hereto further agrees that personal jurisdiction over it
may be effected by service of process by registered or certified mail addressed
as provided in Section 14.2 of this Agreement, and that when so made shall be as
if served upon it personally within the State of California.
14.2 Notices. All notices, requests, consents, and other
communications required or permitted hereunder shall be in writing and shall be
personally delivered or mailed by using first-class, registered, or certified
mail, postage prepaid, to the following addresses or to such other address as
the parties hereto may designate in writing:
Planet: Planet Polymer Technologies, Inc.
9985 Business Park Ave
San Diego, California 92131
with a copy to: Blanchard, Krasner & French, P.C.
800 Silverado St., 2nd Floor
La Jolla, California 92037
Attn: Robert W. Blanchard
Ryer: Ryer Enterprises LLC
42625 Rio Nedo, Unit B
Temecula, California 92590
Attn: Robert A. Sanford
with a copy to: Jay Gilbert
479 N. Main St., Suite 200
Glen Ellyn, IL 60137
All such notices, requests, consents and other communications shall be deemed to
be properly given if delivered personally, via e-mail, or, if sent by mail,
three business days after the same has been deposited in mail, addressed and
postage prepaid as set forth above.
14.3 Counterparts. This Agreement may be executed in any
number of counterparts, in person or by facsimile, each of which when executed
by the parties hereto and delivered shall be deemed to be an original, and all
such counterparts taken together shall be deemed to be but one and the same
instrument.
14.4 Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the internal laws of the State of
California.
14.5 Integration and Construction. This Agreement together
with all Exhibits and Schedules referred to herein shall comprise the complete
and integrated agreement of the parties hereto and shall supersede all prior
agreements, written or oral, on the subject matter hereof. This Agreement has
been drafted with the joint participation of the parties hereto and shall be
construed to be neither against nor in favor of Planet or Ryer in accordance
with the fair meaning thereof. The parties further agree that this Agreement
will be construed to effectuate the normal and reasonable expectations of a
sophisticated buyer and Planet.
14.6 Waivers and Amendments. No amendment, modification,
supplement, termination or waiver of any provision of this Agreement, and no
consent to any departure therefrom, may in any event be effective unless in
writing and signed by the party or parties affected thereby, and then only in
the specific instance and for the specific purpose given.
14.7 Attorneys' Fees. Each party to this Agreement shall
bear its own legal fees and any and all other expenses relating to the
transactions contemplated in this Agreement. If any party institutes any
arbitration, action or proceeding to enforce this Agreement or any provision
hereof or for damages by reason of any alleged breach of this Agreement or of
any provision hereof or for a declaration of rights hereunder, then the
prevailing party in any such arbitration, action or proceeding shall be entitled
to receive from the other party all costs and expenses, including reasonable
attorneys' fees, incurred by the prevailing party in connection with such action
or proceeding.
14.8 Headings. The headings of this Agreement are for
convenience of reference only and shall not affect the construction of any
provision of this Agreement.
14.9 Exhibits and Schedules. Each Exhibit and Schedule
referred to herein and attached hereto is an integral part of this Agreement and
is incorporated herein by this reference.
14.10 Successors and Assigns. This Agreement and the
provisions hereof shall be binding upon and inure to the benefit of each of the
parties and their successors and assigns.
14.11 Opportunity to Consult Counsel. Each party hereto
acknowledges that it has had a sufficient opportunity to consult independent
legal counsel and independent accountants concerning the provisions of this
Agreement and entered into this Agreement intending to be legally bound. The
parties hereto are relying solely upon the advice of their own independent
counsel and accountants and are not relying in any manner or way on the advice
or counsel of the other party's counsel, accountants, or other advisors.
14.12 Time is of the Essence. All dates and times in this
Agreement are of the essence.
14.13 Severability. If any provision of this Agreement or
the application of such provision to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision to
persons or circumstances other than those to which it is held invalid shall not
be affected thereby.
14.14 Non-Binding Mediation. Except as otherwise provided
by law, Planet and Ryer agree any controversy or claim arising out of or
relating to the calculation and determination of Royalty Payments shall be
brought to non-binding mediation before a mutually agreeable mediator in San
Diego, California. Should any dispute arising out of the calculation and
determination of Royalty Payments fail to be resolved through non-binding
mediation, then the terms of Section 14.15 shall take effect.
14.15 Binding Arbitration. Except as otherwise provided by
law, should non-binding mediation as provided for in section 14.14 above fail to
resolve any controversy or claim arising out of or relating to the calculation
and determination of Royalty Payments shall be settled by arbitration in San
Diego, California, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. BY AGREEING TO ARBITRATION
UNDER THIS PARAGRAPH, BOTH RYER AND PLANET UNDERSTAND THAT THEY ARE AGREEING TO
HAVE ANY DISPUTE RELATING TO THE CALCULATION AND DETERMINATION OF ROYALTY
PAYMENTS DECIDED BY A NEUTRAL ARBITRATOR, AND AS TO THOSE DISPUTES DECIDED BY
THE NEUTRAL ARBITRATOR, THE PARTIES ARE GIVING UP THEIR RIGHT TO A JURY OR COURT
TRIAL AND, IN ADDITION, THE PARTIES WAIVE ANY RIGHT TO SEEK PUNITIVE DAMAGES.
ANY OTHER ACTION, OTHER THAN ONE FOR CALCULATION OF THE ROYALTY PAYMENTS, ON A
CLAIM ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE DETERMINED IN STATE OR
FEDERAL COURT WITHIN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
PLANET:
PLANET POLYMER TECHNOLOGIES, INC., a
California corporation
By:_____________________________
Its: _____________________________
RYER:
RYER ENTERPRISES LLC, a Nevada limited liability
company
By: _____________________________
Jay Gilbert, Manager