Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA228379
`ESTTA Tracking number:
`08/05/2008
`
`Filing date:
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`91185234
`Defendant
`VERSACOMP, INC.
`DANIEL S. POLLEY, ESQ.
`DANIEL S. POLLEY, P.A.
`1215 E BROWARD BLVD
`FORT LAUDERDALE, FL 33301-2133
`
`betty@danpolley.com
`Answer
`Daniel S. Polley
`dan@danpolley.com
`/Daniel S Polley/
`08/05/2008
`Answer to Second Notice of Opposition.pdf ( 9 pages )(31341 bytes )
`Answer Exhibit A.pdf ( 69 pages )(3114081 bytes )
`Answer Exhibits B through G.pdf ( 33 pages )(1268513 bytes )
`
`Proceeding
`Party
`
`Correspondence
`Address
`
`Submission
`Filer's Name
`Filer's e-mail
`Signature
`Date
`Attachments
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`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the Matter of U.S. Application No. 77/124,487
`For the Mark: TNT LIFT SYSTEMS
`
`Filing Date: March 7, 2007
`
`ANTHONY P. SCHMIDT, JR.
`
`Vs.
`
`Opposer,
`
`VERSACOMP, INC.
`
`Applicant.
`
`\_/\_/\_/\_/\_/\_/\_/\_/\_/\_/
`
`Opposition No. 91185234
`
`ANSWER AND AFFIRMATIVE DEFENSES TO NOTICE OF OPPOSITION
`
`Applicant, Versacomp,
`
`Inc.
`
`(“Applicant”), by and through the undersigned
`
`counsel, hereby files its Answer and Affirmative Defenses to the Notice of Opposition
`
`and states as follows:
`
`As to the preamble or opening paragraph of the Notice of Opposition, Applicant
`
`denies that Opposer will be damaged by registration of Applicant’s pending U.S.
`
`Application Serial No. 77/124,487 (“the ‘487 Application”) and also denies that Opposer
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`has any Valid legal basis to oppose registration of Applicant’s mark shown in the above-
`
`identified application.
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`

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`As to the numbered paragraphs of the Notice Of Opposition, Applicant states as
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`follows:
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`1. Applicant
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`lacks information or knowledge sufficient
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`to form a belief
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`concerning the allegations contained in Paragraph 1 of the Notice of Opposition and
`
`therefore denies such allegations.
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`2. Applicant admits the first sentence of Paragraph 2. With respect to the second
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`sentence of Paragraph 2 Applicant states that it sells movable lifts and platforms secured
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`to the transom of a boat. Applicant denies all other statements in Paragraph 2 of the
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`Notice of Opposition.
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`3. Applicant
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`lacks
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`information or knowledge sufficient
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`to form a belief
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`concerning the allegations contained in Paragraph 3 of the Notice of Opposition and
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`therefore deny such allegations.
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`4. Applicant denies that the ‘606 Patent is directed to a Vehicle lift for a boat.
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`Applicant lacks information or knowledge sufficient to form a belief concerning the
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`remaining allegations contained in Paragraph 4 of the Notice of Opposition and therefore
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`denies such allegations.
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`5. Applicant
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`lacks
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`information or knowledge sufficient
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`to form a belief
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`concerning the allegations contained in Paragraph 5 of the Notice of Opposition and
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`therefore deny such allegations. Applicant does admit that Opposer’s company TNT
`
`Marine Equipment, Inc. transferred any and all rights and goodwill to the TNT mark to a
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`third party (namely MAO, LC whose principal/manager was Michael A. O’Conner, Jr.)
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`in 2000 as part of the sale of Opposer’s business and as part of such sale Opposer also
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`executed a ten—year non—compete agreement. See January 31, 2000 Agreement between
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`

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`Seller TNT Marine Equipment, Inc., Seller Anthony P. Schmidt, Jr. and Buyer MAO, LC
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`attached hereto as Exhibit A and two Bills of Sale between TNT Marine Equipment, Inc.
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`(Opposer’s then corporation) and MAO, LC dated January 2, 2000 attached hereto as
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`Exhibits B and C. Applicant also admits that Opposer’s business received three million
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`dollars for the purchase of all non—patent assets by MAO, LC. Applicant also admits
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`MAO, LC/Michael A. O’Conner defaulted on payment of an additional three million
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`dollars to Opposer and also defaulted on money owed to the principal owner of
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`Applicant. Applicant also admits that in View of such defaults, a subsequent Settlement
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`Agreement was entered into between Opposer, Applicant’s principal and Michael
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`O’Conner and his then company TNT Marine Equipment, L.C., wherein Opposer
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`received its patent rights back from the third party as full consideration and full
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`settlement for the money still owed to Opposer by O’Conner/TNT Marine Equipment,
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`L.C. and wherein Applicant’s principal received all other assets of O’Conner/TNT
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`Marine Equipment, L.C.,
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`including rights
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`to the TNT mark and name,
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`from
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`O’Conner/TNT Marine Equipment, L.C. as full consideration and full settlement for
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`money still owed to Applicant’s principal by O’Conner/TNT Marine Equipment, L.C.
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`See Settlement Agreement attached hereto as Exhibit D. See also Bill of Sale between
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`Michael O’Conner, Jr. and Dick Ulrich (Applicant’s principal) attached hereto as Exhibit
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`E and Bill of Sale between Dick Ulrich and Versacomp, Inc. attached hereto as Exhibit F.
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`6. With respect to the first sentence of Paragraph 6 of the Notice of Opposition,
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`Applicant again states that it sells movable lifts and platforms secured to the transom of a
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`boat under the marks TNT and TNT LIFT SYSTEMS. As to the second sentence,
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`Applicant admits that
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`the third party O’Conner, MAO, LC and/or TNT Marine
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`

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`Equipment, L.C., knew of, approved of and was compensated for Applicant’s adoption of
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`TNT and TNT LIFT SYSTEMS mark,
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`in View of the merger relationship between
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`Applicant and O’Conner/TNT Marine Equipment, L.C. See Exhibit G attached hereto.
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`7. Applicant admits that Opposer wrongfully began using the TNT mark in
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`violation and with full knowledge of Applicant’s superior rights from acquiring all rights
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`to the TNT mark from the third party buyer and from actually using the TNT and TNT
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`LIFT SYSTEMS marks in commerce for approximately five years before Opposer began
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`using the mark in 2006. Applicant denies all other allegations and characterizations
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`contained in Paragraph 7 of the Notice of Opposition.
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`8. If Opposer had any rights to abandon, Applicant denies all allegations of
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`Paragraph 8 of the Notice of Opposition. Applicant also states that Opposer transferred
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`all rights Opposer may have had in the previous century to the TNT mark in 2000 to the
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`third party buyer O’Conner/MAO, L.C. The transferred rights were ultimately transferred
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`to Applicant as referenced above in Paragraph 5, which is incorporated by reference.
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`9. Applicant
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`lacks
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`information or knowledge sufficient
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`to form a belief
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`concerning the allegations contained in Paragraph 9 of the Notice of Opposition and
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`therefore denies such allegations. Opposer does note that the vehicle lifts apparently sold
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`by Gray Manufacturing,
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`the original owner of Registration No. 818,635 (“the ‘635
`
`Registration) were and are completely unrelated to the goods and services listed in
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`Applicant’s above noted applications and travel in completely different trade channels.
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`10. Applicant
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`lacks information or knowledge sufficient
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`to form a belief
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`concerning the allegations contained in Paragraph 10 of the Notice of Opposition and
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`therefore denies such allegations.
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`

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`11. Applicant admits that Opposer wrongfully and fraudulently filed a trademark
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`application which was assigned the serial number 77/351,184. Applicant also admits that
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`the application was rightfully refused registration in View of Applicant’s aboVe—noted
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`application, and Applicant’s three other pending applications.
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`12. With respect to the first sentence of Paragraph 12 of the Notice of Opposition,
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`Applicant admits that Opposer sent a letter to Applicant on or about December 27, 2007.
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`Applicant denies that Opposer has prior, superior rights to the TNT mark as also alleged
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`in the first sentence of Paragraph 12 of the Notice of Opposition. In View of Applicant’s
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`superior rights to the TNT and TNT LIFT SYSTEMS marks for the goods and services
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`listed in Applicant’s aboVe—noted application and Applicant’s three other pending
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`applications, Applicant admits that it did not cease and desist use of its TNT and TNT
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`LIFT SYSTEMS marks. Applicant also denies that it is infringing any marks by its
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`lawful use of the marks TNT and TNT LIFT SYSTEMS in connection with the goods
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`and services listed in Applicant’s aboVe—noted application and Applicant’s three other
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`pending applications. Applicant denies all remaining allegations, if any, contained in
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`Paragraph 12 of the Notice of Opposition.
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`13. Applicant admits that the allegations contained in Paragraph 13 of the Notice
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`of Opposition.
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`14. Applicant admits that the Examining Attorney initially and incorrectly refused
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`registration of Applicant’s TNT LIFT SYSTEMS mark in View of the ‘635 Registration.
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`Applicant also admits that once presented with eVidence showing the highly unrelated
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`nature of Applicant’s goods and serVices and those of the goods listed in the ‘635
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`

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`Registration, the Examining Attorney withdrew the refusal to register based on the ‘635
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`Registration and passed Applicant’s mark to publication.
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`15. Applicant admits
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`that
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`the PTO correctly allowed Applicant’s
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`‘487
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`Application.
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`16. Applicant denies all allegations contained in Paragraph 16 of the Notice of
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`Opposition.
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`17. Applicant denies all allegations contained in the unnumbered paragraph
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`following Paragraph 16 of the Notice of Opposition.
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`18. Applicant denies all allegations contained in the WHEREFORE paragraph of
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`the Notice of Opposition and submits that Opposer is not entitled to any of the relief it
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`seeks in the Notice of Opposition.
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`19. Unless expressly admitted in this Answer, Applicant denies all allegations
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`contained in the Notice of Opposition.
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`AFFIRMATIVE DEFENSES
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`Applicant incorporates by reference its Answer and Exhibits in these Affirmative
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`Defenses.
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`1. Applicant submits that it is the senior user of the mark TNT and TNT LIFT
`
`SYSTEMS in connection with all of the goods listed in Applicant’s Application Serial
`
`No. 77/124,487 and Applicant’s three other pending applications.
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`2. Opposer has committed fraud on the PTO in connection with one or more
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`statements made in Opposer’s noted application (Serial No. 77/351,184).
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`

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`3. With respect to the ‘635 Registration, there is no likelihood of confusion or
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`chance of association or affiliation or to deceive as alleged by Opposer because of one or
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`more of the following non—lirniting reasons: (a) The respective goods and services listed
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`in Applicant’s opposed application and the goods listed in the ‘635 Registration are
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`noncompetitive and unrelated; (b) The respective channels of trade are dissimilar; (c) the
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`respective purchasers are dissimilar; (d) there is no market overlap between the respective
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`goods and services;
`
`(e)
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`there has been no actual confusion despite many years of
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`simultaneous use in commerce; and (f) the respective products are both expensive and are
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`not purchased on impulse, but rather only after careful deliberation.
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`4. The Notice of Opposition, in whole or as to specific allegations, fails to state a
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`claim for which relief can be granted.
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`5. Opposer comes before the TTAB with unclean hands.
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`6. Opposer is estopped from asserting the reasons alleged in the Notice of
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`Opposition.
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`7. The Notice of Opposition fails to state a basis for opposing Applicant’s
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`application.
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`8. The allegations of the Notice of Opposition were not made in good faith, and
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`any allegation made “on information and belief’ did not have the requisite degree of
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`investigation necessary and required to form a good faith allegation “on information and
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`belief’.
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`9. With respect to Opposer’s ‘184 Application, the Notice of Opposition fails to
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`properly and adequately plead standing in that the ‘ 184 application on which Opposer’s
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`claim of damage is based is void ab initio.
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`

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`10. With respect to Opposer’s ‘ 184 Application, the Notice of Opposition fails to
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`properly and adequately plead standing in that the ‘ 184 application on which Opposer’s
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`claim of damage is based is fatally defective in that the declaration was signed by a
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`person, attorney Richard S. Ross, who, on information and belief, did not have
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`independent knowledge of the facts alleged in the ‘ 184 application at the time of signing
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`the ‘184 application.
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`ll. All of Opposer’s allegations contained in the Notice of Opposition are barred
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`by the doctrines of laches, waiver, acquiescence and estoppel.
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`l2. Opposer neither owns nor possesses any rights in the United States in or to the
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`TNT mark or any other mark or name incorporating the term “TNT” which are superior
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`to Applicant’s rights to the TNT and TNT LIFT SYSTEMS marks in connection with the
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`goods listed in Applicant’s opposed application and Applicant’s three other pending
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`applications.
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`13. Applicant states that it has at all times relevant hereto acted in good faith.
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`WHEREFORE, Applicant respectfully requests that this Opposition be dismissed
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`in its entirety on all grounds in favor of Applicant with prejudice, that Opposer take
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`nothing by its Opposition filing, that Applicant’s aboVe—identified application be passed
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`to allowance; and that Applicant be awarded any and all other relief deemed just or
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`appropriate by the Trademark Trial and Appeal Board.
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`

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`Please direct all correspondence with respect to this Opposition Proceeding to the
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`undersigned at the address listed below.
`
`Respectfully submitted,
`
`Attorneys for Applicant
`
`/Daniel S. Polley/
`Daniel S. Polley, Reg. No. 34,902
`DANIEL S. POLLEY, P.A.
`l2l5 East Broward Boulevard
`
`Fort Lauderdale, Florida 33301
`
`Telephone: (954) 234-2417
`Fax: (954) 234-2506
`
`E—mail: dan @ danpolley.com
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on the 5th day of August, 2008, a true copy of the foregoing
`ANSWER AND AFFIRMATIVE DEFENSES TO NOTICE OF OPPOSITION was
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`served via First Class U.S. Mail, addressed as follows:
`
`Richard S. Ross, Esq.
`Atrium Centre
`
`4801 South University Drive
`Suite 237
`
`Ft. Lauderdale, Florida 33328
`
`Executed on August 5, 2008.
`
`/Daniel S. Polley/
`Daniel S. Polley, Reg. No. 34,902
`
`

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`\
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`.3“$9
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`.\\.\\\<.Pxx\.
`
`
`
`

`
`AGREEMENT
`
`This Agreement made and entered effective January 31, 2000 between TNT
`MARINE EQUIPMENT, INC. a Florida corporation having its principal address at 2385
`Stirling Road (Lake View Center), Ft. Lauderdale, Florida 33312, ANTHONY P.
`SCHMIDT, Jr., having his principal residence at 35-A Isle of Venice, Ft. Lauderdale,
`Florida 33301 (“Seller TNT”) and "Anthony P. Schmidt,
`Jr." hereinafter
`("Seller
`Schmidt"), sometimes hereinafter collectively referred to as Seller and MAO, LC
`(“Buyer"), a Florida limited liability company whose mailing address will be at 2385
`Stirling Road,
`(Lake View Center),
`Ft. Lauderdale, Florida 33312,
`after
`the
`consummation of this Agreement.
`
`WHEREAS, Seller TNT desires to sell to Buyer and Buyer desires to purchase
`from Seller the certain assets and business of Seller relating to the manufacture of the
`“Dinghy Lift", which name is (not under trademark) related to the manufacture and sale
`of lifts being attached to a wide variety of boats and yachts and the installation thereof
`for each appropriate vessel (the "Business”) as hereinafter described; and
`
`WHEREAS, Seller Schmidt who owns 90% of the stock of Seller TNT is the
`owner and holder, individually, of the Secured Patents as defined in Section 2 below
`and Buyer desires to purchase from Seller Schmidt the Secured Patents and Seller
`Schmidt desires to sell the Secured Patents to the Buyer for the Purchase Price set
`forth in Section 1.6 below; and
`
`in consideration of these premises and of the covenants,
`NOW,’THEREFORE,
`conditions, promises and earnest money deposit set forth below, and for Ten Dollars
`($10.00) and other good and valuable consideration, the receipt and sufficiency of which
`are hereby acknowledged, the parties’ mutually agree as‘ follows:
`
`Section 1
`
`Purchase and Sale of Asset
`
`Agreement of Sale and Purchase. Seller hereby agrees to sell, bargain,
`1.1
`assign, transfer and convey to Buyer and Buyer hereby purchases and acquires the
`following assets (the “Assets”) of Seller on the terms and conditions set forth in this
`Agreement:
`
`Fixed Assets. All tools, spare parts, machinery and equipment and
`(a)
`other fixed assets of Seller TNT used in the assembly of the Dinghy Lift, including but
`not limited to the attached Schedule 1.1(a) (the “Fixed Assets");
`
`raw
`inventory of finished goods, work-in-process,
`Inventory. All
`(b)
`materials, supplies and other materials relating to the equipment used for the Dinghy
`Lift, including but not limited to Schedule 1.1(b) (the “|nventory");
`
`

`
`“W
`
`Leased Equipment. Seller TNT shall deliver at Closing all leased
`(c)
`personal property which shall be assigned to and assumed by Buyer as set forth in
`Schedule 1.1 (c) ("Leased Personal Property")
`
`All of Seller TNT’s and Seller Schmidt's,
`Intangible Assets.
`(d)
`intangible rights to the Dinghy Lift and equipment (including all formulae, patents,
`equipment designs and schematics, and trademarks and trade names), and all lists and
`records (including addresses, phone numbers, contact persons and all purchase
`history) for customers, suppliers, distributors and sales representatives of the Business
`during the last five years;
`
`including patents of Seller TNT and/or
`intellectual property,
`All
`(e)
`Seller Schmidt, trademarks, trade names, rights to the name “TNT Marine Equipment",
`and "Dinghy Lift” and other names used in the Business, trade secrets, copyrights,
`blueprints, drawings, computer software and similar items, together with any goodwill
`associated therewith and all rights of action on account of past, present, and future
`unauthorized use or infringement thereof, a listing of which as of December 31, 1999 is
`attached as Schedule 1.1(e) (provided that Seller may keep copies of financial records
`and correspondence, as may be necessary);
`
`All books, operating and financial records, correspondence, files,
`(f)
`vendor lists, customer lists, sales brochures, letters of interest of potential Purchasers of
`Seller TNT, and other data used in or relating to the Business;
`
`All deposits from customers for Dinghy Lifts not installed on the
`(g)
`—
`customers’ vessel as of January 31, 2000, Schedule 1.‘l(g) hereto.
`
`authorizations,
`‘approvals,
`consents,
`permits,
`licenses,
`All
`(h)
`qualifications and orders of governmental authorities,
`to the extent that any of the
`foregoing may be transferred, a listing of which is attached as Schedule 1.1(h).
`
`“Assets" shall include all right, title and interest in and to all of the
`(i)
`properties and rights used in, held for use in, held for the benefit of, arising from
`or accruing to the Business,
`including but not limited to any of the following, detailed
`and listed on Schedule 1.1(i);
`(a) tangible personal property (such as supplies,
`packaging goods, equipment, manufactured and purchased parts, machinery, furniture,
`trucks, tools, jigs, and dies); (b) inventories of raw materials, supplies work in process,
`packaging goods and finished goods; (c) agreements, contracts, instruments, Security
`Interests, guaranties, other similar arrangements, and rights thereunder; (d) franchises,
`approvals, permits, licenses, orders, registrations, certificates, variances, exemptions,
`and similar
`rights obtained from governments and governmental agencies (the
`“Permits”);
`(e) Intellectual Property, goodwill associated therewith,
`licenses and
`sublicenses granted and obtained with respect thereto, and rights to protection of
`interests therein under the laws of all jurisdictions; (f) leaseholds and sublease holds in
`real property, fixtures,
`improvements, and fittingsthereon, and easements, rights-of-
`appurtenants thereto (such as appurtenant rights in and to public
`
`

`
`‘W
`
`(h) prepayments, prepaid
`thereunder;
`and rights
`subleases
`(g) leases,
`streets);
`expenses, and deferred items, claims, deposits, refunds, causes of action, chooses in
`action, rights of recovery, rights of setoff, and rights of recoupment; (i) books, records,
`ledgers, files, documents, correspondence,
`lists, plats, architectural plans, drawings,
`and specifications, creative materials, advertising and promotionals materials, studies,
`reports, and other printed or written materials,
`including the CAD/CAM design
`technology and the certain materials commonly known as the ‘‘Bible'' for all lift design
`and transom configuration for all style of vessels; and ((j) all
`insurance policies
`associated with, relating to or providing benefits with respect to the Business.
`
`Seller TNT is retaining the accounts receivable, accounts payable and other liabilities of
`the Business.
`
`(j)
`
`"Excluded Assets" which will not be sold at Closing are:
`(1)
`1996 Sea Ray fiberglass inboard boat Title Number 2047782
`with a value of $112,106.00.
`
`1997 Dodge Truck ID No. 2B7GB11X1RK113929 with a
`(2)
`value of $15,975.00.
`
`(3)
`
`1999 Hooper Trailer with a value of $2,863.00.
`
`Jet Ski boat
`(4)
`$6,287.00.
`
`ID No. SERR4787D595 with a value of
`
`The aggregate value of the Excluded Assets is $137,642.00, which shall be
`deducted and credited from the Purchase Price.
`
`There shall be withheld from the Purchase Price of Seller TNT the
`(k)
`sum of $25,000.00 for a period of one year from the actual closing as a reserve for the
`warranty repairs which may be called upon by the Buyer to perform for Dinghy Lifts sold
`by the Seller during this last year. Buyer may, but is not obligated to perform such
`warranty repairs at Buyer":s sole discretion.
`Seller shall have no further liability or
`obligation to Buyer for any repairs,
`including but not necessarily limited to warranty
`repairs. Upon the expiration of one (1) year from Closing, Buyer shall forthwith refund
`to Seller the aforesaid $25,000.00 sum less the reasonable cost of any reasonable and
`necessary warranty repairs performed by Buyer on Dinghy Lifts purchased during the
`one year period immediately preceding Closing; and further, regardless of whether a
`refund is due Seller hereunder, Buyer shall upon the expiration of one (1) year from
`Closing promptly provide Seller with a full and complete itemization and accounting of
`all warranty repairs and charges therefore incurred by Buyer and debited against said
`$25,000.00 sum.
`
`Notwithstanding anything contained to the contrary herein, Seller
`(I)
`shall be solely obligated to and shall perform at Seller's sole expense any warranty
`to
`finish applied to Dinghy
`by the Seller
`
`

`
`"\
`
`during the one (1) year period immediately preceding the actual closing. Seller's
`obligations under this subsection shall be included in Section 8 hereunder and the
`Indemnification provisions contained therein.
`
`Purchase Price Seller TNT. The purchase price for the Assets of Seller
`1.2
`TNT is $2,862,358.00, which shall be payable by cashiers check drawn on a local bank
`or by wire transfer.
`
`Allocation of Purchase Price. The purchase price for the Assets shall be
`1.3
`allocated to the Assets as set forth in the attached Schedule 1.3. Buyer and Seller
`agree that the allocation of the purchase price in Schedule 1.3 represents the fair
`market value allocable to each of the Assets to be purchased by Buyer under this
`Agreement, were arrived at by arm‘s length negotiations, and shall be used by each
`party in reporting the transaction contemplated by this Agreement for federal income tax
`
`purposes.
`Deposit. Buyer shall deposit with his attorneys, Richman Greer Weil
`1.4
`Brumbaugh Mirabito & Christensen, P.A. Trust Account the sum of $0.00 as a deposit
`from the purchase of the Assets of Seller TNT.
`
`At Closing the deposit will be used to pay all
`Funding of Deposit.
`1.5
`outstanding payables Schedule 1.5 so that all creditors of TNT Marine Equipment, Inc.
`will be paid at Closing,
`including the Bradley indebtedness in full. Any balance
`remaining after payment of the foregoing shall be paid to Seller TNT together with the
`balance of the Purchase Price.
`
`Purchase Price Seller Schmidt. The purchase price of the patents to be
`1.6
`assigned to the Buyer as set forth in Schedule 1.6 and owned free and clear by Seller
`Schmidt, and the consideration for the Covenant Not To Compete Agreement,
`is the
`aggregate sum of $3,000,000.00. The sum of $275,000.00 is payable for the Covenant
`Not To Compete Agreement, and the sum of $2,725,000.00 is payable for the patents.
`The purchase price to be paid to Seller Schmidt, shall be evidenced by a Promissory
`Note att:-slotted hereto and identified as Exhibit 1. The Note shall be paid according to its
`terms and shall be secured by a first security interest in the patents assigned by Seller
`Schmidt, to the Buyer at Closing.
`
`~
`
`Closing Date. The Closing shall be effective as of January 31, 2000,
`1.7
`(“Closing”) and the actual closing shall take place on or before January 31, 2000.
`1.8
`Post Closing Adjustments. Within 60 days following the Closing, Seller
`shall prepare and provide to Buyer a post—closing adjustment schedule showing all
`items of income or credit received by Seller, and all items of cost or expense paid by
`Seller to third parties or
`incurred by Seller in connection with the operation and
`maintenance of the Business on or after the Closing of January 31, 2000. All items prior
`to the Closing shall be for the account of Seller and all items on or after the Closing
`if st.-r...h
`reflects that either Dart‘! Owed any
`
`

`
`‘
`
`/K.
`
`amount to the other, then such party shall pay the indicated sum to the other within ten
`(10) days from the date of receipt of such schedule by Buyer. Buyer shall have the right
`to investigate and dispute any item on such schedule, including full access to Seller's
`records relating to each item.
`
`Section 2
`
`The Bradley Agreement
`
`Satisfaction of Bradley Liability. On June 17, 1997 Seller Schmidt, the
`2.1
`principal stockholder of Seller TNT entered into an agreement with John G. Bradley lll
`a/k/a Jack Bradley, individually and as Trustee of the John Garrett Bradley Ill Amended
`and Restated Revocable Living Trust ("Brad|ey”). This agreement sets forth a liability
`owing from Anthony P. Schmidt, Jr. to Bradley which is secured by 40 shares of the
`stock of Seller TNT and the following patents (U.S. Patent Number 4878450 and/or U.S.
`Patent Number 5544606, International Patent Pending Number PCT US96/04578) and
`or any and all patents pending, existing or future patents, improvements, designs of any
`kind associated with Seller TNT’s products, owned by Seller Schmidt and titled in the
`names of Schmidt and Bradley which patents are hereinafter collectively referred to as
`"the Secured Patents"). The shares of stock and the Secured Patents have been
`pledged as security for paying the Bradley Liability to Bradley by Anthony P. Schmidt,
`Jr. as set forth in the June 17, 1997 Agreement, and as reflected in the July 24, 1997
`Escrow Agreement naming Norman B. Getson as escrow agent and Philip J. Gouze as
`escrow agent. At Closing, all liability owing to Bradley shall be paid in full, and evidence
`of that payment must be made in writing, satisfactory to Buyer, and the Escrow
`Agreement of July 24, 1997 shall be terminated in writing, and evidence satisfactory to
`Buyer and Buyer’s counsel that the stock and Secured Patents have been released to
`Seller and/or Anthony P. Schmidt, Jr.
`‘
`
`Bradley Covenant Not To Compete. On July 24, 1997 Bradley entered
`2.2
`into a Covenant Not to Compete with Seller TNT and Seller Schmidt, with respect to the
`purchase and sale of the stock and assignment of the Secured Patents to Seller
`Schmidt pursuant to the Bradley Agreement of June 17, 1997. The Covenant Not to
`Compete shall be assigned to Buyer and shall be represented by Bradley to Buyer that
`the Covenant Not to Compete is in full force and effect as of the date of Closing, and
`that there are no defaults or breaches thereunder, and Bradley shall covenant and
`agree that said Covenant Not to Compete shall remain in full force and effect in favor of
`and inure to the benefit of Buyer.
`
`Section 3
`
`Representations, Warranties and Covenants of Seller
`
`Seller TNT and Seller Schmidt, individually, jointly and severally (for this Section
`hereinafter collectively referred to as Seller), represent and warrant to Buyer that each
`
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`of the following warranties are true and correct as of the date of this Agreement, and
`covenants and agrees for the benefit of Buyer as follows:
`
`Binding Agreement. This Agreement and the non-competition agreement
`31
`executed by Anthony P. Schmidt, Jr. the principal stockholder, and the Seller TNT,
`attached as Exhibit 3.1 (the "Non-Competition Agreement") have been duly executed
`and delivered by Seller, are valid and binding obligations of Seller, and are enforceable
`against Seller in accordance with their terms.
`
`Consents or Approvals Required. No filing except as provided in Section
`3.2
`2 above, with or consent or approval of any third party is required or necessary to effect
`the transfer or assignment of the Assets of Seller TNT and the Secured Patents by
`Seller Schmidt to be transferred or assigned to Buyer under this Agreement. There is
`no lease, mortgage, agreement, instrument or other restriction of any kind or character,
`nor any order, judgment or decree binding upon Seller or to which any of the Assets and
`Secured Patents are subject, which would be breached by or would prevent
`the
`consummation of the sale of the Assets and Secured Patents by Seller to Buyer
`pursuant to this Agreement and the transaction contemplated by this Agreement.
`
`Title to Assets. Seller hereby transfers to Buyer valid and good title to all
`3.3
`of the Assets and Secured Patents, free and clear of all charges, liens, commitments,
`claims, restrictions, leases or encumbrances of every kind and nature.
`
`Condition of Assets. At the time of delivery to Buyer, (i) the Fixed Assets
`3.4
`are in good repair and operating condition, subject to ordinarywear and tear; (ii) the
`Inventory shall be suitable for its intended uses; and (iii) the customers, supplier,
`distributors and sales representatives lists to the best of Seller's knowledge and belief
`are true, correct and complete, including in the case of the customer list, information on
`the customers for the past five years. Prior to Closing, Buyer shall have the right to
`inspect the Fixed Assets to determine whether they are in good repair and operating
`
`condition.
`
`not received any notice and has no knowledge
`No Violsstions. Seller
`3.5
`or reason to know of any violation of any laws, regulations or ordinances relating to the
`Assets or the Business.
`
`Liabilities. Seller does not have and will not have after the date of this
`3.6
`Agreement any debts, liabilities or obligations of any nature, whether accrued, absolute,
`contingent or otherwise (including those imposed by operation of law), for which Buyer
`may become liable as a result of the transactions contemplated by this Agreement.
`
`Tax Matters. Seller has duly filed all federal, state, local, income, sales or
`3.7
`use, personal property, franchise and other tax returns required to be filed by it relating
`to the Assets of the Business and has duly paid or made adequate provision for the
`payment of all taxes which have been incurred or may be due and payable for any
`period prior
`the
`this Agreement relating to the Assets or the Business. Seller
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`-6-
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`LT
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`shall be responsible for the payment of any sales, use, income or other taxes arising
`from the sale of the Assets to Buyer in the State of Florida.
`
`or governmental
`litigation proceedings
`no
`are
`There
`Litigation.
`3.8
`investigations pending or known by Seller to be threatened against Seller or
`its
`businesses or properties, or any facts which,
`to the knowledge of Seller, materially
`adversely affect, or which Seller has reason to believe may in the future materially
`adversely affect, the use or operation of the Assets or the Business, except for the
`“Marine Gear” litigation.
`
`Seller shall and does represent and warranty that
`Ceramkote Warranty
`3.9
`Seller shall perform and pay the warranty repairs as provided for in Section 1.1(l) above.
`
`investigations
`There are no litigation proceedings or governmental
`pending or known by Seller Schmidt to be threatened against Seller Schmidt or the
`Secured Patents, or any facts which, to the knowledge of Seller, materially adversely
`affect, or which Seller Schmidt has reason to believe may in the future materially
`adversely affect, the use or operation of the Secured Patents.
`
`No Misleading Statements. No representation, warranty or statement of
`3.9
`Seller set forth in this Agreement or any Schedule to this Agreement contains or will
`contain any knowingly untrue statements of a material fact.
`
`3.10 Corporate Status and Good Standing. Seller TNT is a corporation duly
`organized, validly existing and in good standing under the laws of Florida, with full
`corporate power and authority under its certificate or articles of incor