AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT, made at Aurora, Minnesota, as of the 22nd day of
January, 2001 by and between NRI Electronics & Cables, Inc., a Minnesota
corporation ("Buyer") and Waters Instruments, Inc., a Minnesota corporation
("Seller").
RECITALS
A. Seller, through its unincorporated Waters Technical Systems
division, is engaged in the assembly and sale of cable and cable harnesses used
or useful in connection with electronic products and other related products (the
"Business").
B. Buyer and Seller mutually desire that Seller shall sell to Buyer
certain assets used in the Business as described in this Agreement, and the
Buyer shall assume certain liabilities of the Business, all upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and conditions
herein contained, the parties hereby agree as follows:
1. Purchase and Sale. Upon the terms and subject to all of the conditions herein
and the performance by each of the parties hereto of their respective
obligations hereunder, the Buyer agrees to purchase from the Seller, and the
Seller agrees to sell and deliver to the Buyer on the Possession Date (as
hereafter defined) the Purchased Assets. As used in this Agreement, the term
"Purchased Assets" means all of the following:
(a) Accounts Receivable. All of the Seller's accounts receivable
and related client records which were generated exclusively by
the Business or operations of the Business as of the Closing
(the "Accounts Receivable");
(b) Inventory. All raw material, work in process and finished
goods inventory which as of the Closing are (i) owned by the
Seller, (ii) located at Seller's facilities in Rochester,
Minnesota to the extent such facilities are used in the
Business (the "Facilities") and used or useful solely in
connection with the Business (this subsection (ii) is not
applicable to Ordered Inventory), and (iii) acquired
exclusively for use in the Business or operations of the
Business (the "Inventory"), and any tangible property that
could qualify as Inventory upon receipt which has been ordered
from vendors and which property has not been delivered or
which order remains unfulfilled as of the Closing ("Ordered
Inventory");
(c) Fixed Assets. Those items of equipment, machines, tooling,
molds and other similar tangible assets which as of the
Closing are all of the following: (i) owned by the Seller,
(ii) located at the Facilities, (iii) acquired or created
exclusively for use in the Business or operations of the
Business, and (iv) listed on Exhibit F (the "Fixed Assets");
(d) Leased Assets. Seller's rights under the lease agreements with
respect to the assets listed on Schedule I to Exhibit A (the
"Leased Assets"); and
(e) Other Outstanding Orders. All tangible and intangible
property, excluding Ordered Inventory, and services of any
kind which have been ordered from vendors and which property
or services have not been delivered or received or which order
remains unfulfilled as of the Closing ("Other Orders").
"Purchased Assets" shall not include each, every and all of Seller's assets not
expressly included in the definition of Purchased Assets. Without in any way
limiting the generality of the immediately previous sentence, the term
"Purchased Assets" shall not include (a) any of the Seller's assets not
exclusively used in the Business or operations of the Business, (b) any of the
Seller's assets located in any place other than the Facilities (this subsection
(b) is not applicable to Ordered Inventory), and (c) any cash, cash equivalents,
bank deposits and the like.
2. Purchase Price and Allocation. Subject to the terms and conditions of this
Agreement, and in full consideration for the conveyance, transfer, and delivery
of the Purchased Assets as provided herein:
(a) The total consideration paid to Seller for all of the
Purchased Assets will be One Million Two Hundred Seventy-Three
Thousand Two Hundred Two Dollars and Sixty-Two Cents
($1,273,202.62) (the "Purchase Price"). The Purchase Price
will be apportioned to the Purchased Assets as follows:
Fixed Assets at book value $187,918.04
Accounts Receivable at book value, $484,884.17
not including reserves
Inventory (at Seller's cost) $600,400.41
Ordered Inventory (if prepaid) $ 00
Seller's "cost of Inventory" shall mean, subject to the next
sentence, the lower of Seller's landed acquisition cost or
market value of each item of Inventory. Consistent with past
practices, Seller's "cost of Inventory" shall mean the market
value of an item of Inventory where the market value of such
item is rapidly exceeding and where, in the opinion of Seller,
reporting such item of Inventory at Seller's landed
acquisition cost would contribute to a misstatement of
Seller's financial position. Also, Seller's "cost of
Inventory" shall not include any accounting "reserve" created
by Seller respecting any issue relating to Inventory.
(b) On the Closing date, Buyer will deliver a cashier's check in
the amount of One Million Two Hundred Seventy-Three Thousand
Two Hundred Two Dollars and Sixty-Two Cents ($1,273,202.62) to
Seller, in full payment of the Purchase Price for the
Purchased Assets.
3. Prorations. The following items shall be prorated, as of 12:01 a.m., January
22, 2001 ("date of Closing"):
(a) Employee Compensation. Seller agrees to pay any and all
compensation and amounts due to but not including the date of
Closing, to Seller's employees, and shall thereafter remit all
sums due to governmental entities or any other parties and
arising out of such employment to, but not including, the date
of Closing, including, without limitation, salaries, social
security taxes, bonuses, group medical and life insurance.
Seller will terminate the employment of all persons
exclusively employed in the operation of the Business (the
"Business Employees") effective as of the date of Closing. The
Buyer may choose to hire some or all of the Business
Employees. Buyer shall not have any responsibility or
obligation to the Business Employees with respect to any
pension plan that may have been provided by Seller; nor does
Buyer have any obligation to provide a pension plan for the
benefit of the Business Employees.
(b) [intentionally omitted]
(c) Physical Inventory. The parties hereto shall cooperate in the
taking physical inventory of the Inventory as of the date of
Closing. After taking such physical Inventory and excluding
therefrom all Inventory that is "damaged" or Inventory that is
"outdated" or "unmerchantable", the parties hereto shall
jointly determine the value of the Inventory as of the date of
Closing based upon Seller's actual cost. The value of the
Inventory as so determined shall constitute the "Adjusted
Inventory Value." For the purpose of this Agreement, Inventory
shall be considered "damaged" only if the Inventory is
actually physically damaged and Inventory shall be considered
"outdated" or "unmerchantable" only if the Inventory is older
than twelve (12) months old. Inventory that is determined to
be damaged, outdated or unmerchantable shall be and remain the
property of Seller.
(d) Accounts Receivable. Except as described below, the Accounts
Receivable to be valued as of Closing shall include only
receivables less than 90 days old arising from bona fide sales
of products and services to customers. The Accounts Receivable
to be valued at Closing shall include all receivables from
Ocean Electronics and XxXxxxx, regardless of whether such
receivables are more than 90 days old. Accounts Receivable
that are not to be valued as of the Closing shall be and
remain the property of Seller.
(e) Other Expenses. Other expenses and liabilities of the Seller,
including but not limited to those allocable to the Purchased
Assets, are the responsibility of the Seller to the Possession
Date.
4. Seller Warranties. Buyer shall honor all of Seller's warranties to customers
made prior to the Closing Date; provided that Buyer may charge Seller an amount
equal to no more than the Buyer's actual cost of honoring such warranties to the
extent Buyer's actual costs of doing so are equal to or less than $100,000 on a
cumulative basis. Buyer shall charge Seller an amount equal to no more than the
lowest amount Buyer charges its customers for the same or similar products for
honoring warranties for which Buyer's actual cost exceeds $100,000 on a
cumulative basis.
5. Purchase Price Adjustment. The Purchase Price shall be increased or decreased
in accordance with the dollar for dollar variance of the actual values for
Inventory, Accounts Receivable, and Accounts Payable from the amount estimated
on date of Closing (the "Purchase Price Adjustment"). As soon as practicable,
but not later than fifteen (15) days after the date of Closing, Buyer shall
deliver to Seller calculation of the Purchase Price Adjustment, as finally
determined and computed in accordance with the provisions of this Agreement,
which statement shall include reasonable detail of the basis and method of the
calculation. Buyer shall make its records and working papers relating to the
determination and computation of the Purchase Price Adjustment available for
review by Seller. Seller shall review Buyer's statement and shall furnish to
Buyer not later than ten (10) days after Seller's receipt of said statement, a
letter stating that Seller has reviewed the Purchase Price Adjustment together
with the determinations and computations set forth therein and all supporting
documents provided pursuant to Seller's request and that, in Seller's opinion,
the statement complies with the provisions of this Agreement. If Seller is
unable to furnish said letter due to differences of opinion as to the
determination and computation of the Purchase Price Adjustment, which
differences cannot be resolved within fifteen (15) days after expiration of the
fifteen (15) day period referenced above, then all unresolved items shall be
immediately referred to a firm of independent public accountants of recognized
standing mutually acceptable to Seller and Buyer which firm shall promptly, but
not later than thirty (30) days after receipt of a list of said differences and
copies of all documents required to review same, make determinations and
computations of the Purchase Price Adjustment, which determinations and
computations shall be binding on Buyer and Seller. The fees of such firm of
independent public accountants shall be borne equally by Buyer and Seller.
Upon receipt of Seller's written notice of acceptance of the statement described
in this Section of the determination of the Purchase Price Adjustment. Buyer
shall pay Seller an amount reflecting the Purchase Price Adjustment.
6. Assignment and Assumption of Contracts; Assumption of Liabilities. Seller
agrees to assign to Buyer Seller's interest in those contracts attached as
Schedule 1 to Exhibit A and leases with respect to the Leased Assets, and Buyer
agrees to assume Seller's obligations under such contracts and leases (the
"Assumed Contracts"); provided that Seller does not warrant to Buyer that any of
the Assumed Contracts are transferable to Buyer.
7. Closing and Certain Related Matters. The Closing shall take place at 10:00
a.m. on January 22, 2001 (the "Closing") or such other date and time as the
parties hereto shall mutually agree. Closing shall take place at the offices of
Xxxxxxxxxx & Xxxxx, P.A., 000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxxx, XX
00000, or at such other time and place as are mutually agreeable to the parties.
8. Effective Date of Turnover. Physical possession of the Purchased Assets and
operation of the business shall be given to Buyer effective as of the Closing
("Possession Date"). At that date and time, the Purchaser assumes all
responsibility of operating the business, is entitled to all income and is
responsible for all liabilities incurred on and after that date.
9. Instruments of Conveyance and Transfer.
(a) At Closing, Seller shall be execute and deliver to Buyer the
following:
(1) A Xxxx of Sale in the substantially the form attached
hereto as Exhibit B;
(2) Duly executed Lease Agreement in substantially the
form attached hereto as Exhibit C;
(3) A Transition Agreement substantially in the form and
substance attached hereto as Exhibit D; and
(4) Any other instruments as shall be agreed upon by
Buyer and Seller acting in good faith as reasonably
necessary to effectuate the sale and purchase of the
Purchased Assets in accordance with the terms of this
Agreement.
(b) At Closing, Buyer shall take the following actions and execute
and deliver to Seller the following:
(1) Payment of the Purchase Price, in the amount, form
and manner herein prescribed;
(2) A duly executed Lease Agreement in substantially the
form attached hereto as Exhibit C;
(3) A Transition Agreement substantially in the form and
substance attached hereto as Exhibit D; and
(4) Any other instruments as shall be agreed upon by
Buyer and Seller acting in good faith as reasonably
necessary to effectuate the sale and purchase of the
Purchased Assets in accordance with the terms of this
Agreement.
10. Sales and Transfer Taxes and Fees. All applicable sales, income, transfer,
documentary, use, filing and other taxes and fees that may be due or payable as
a result of the conveyance, assignment, transfer or delivery of the Purchased
Assets shall be borne by the Seller.
11. Further Assurances to Buyer. From time to time after the Closing, at the
request of the Buyer, Seller will execute and deliver to Buyer such other
instruments of conveyance and transfer and take such other action as Buyer may
reasonably require to more effectively convey, transfer to, and vest in Buyer,
and to put Buyer in lawful possession of any of the properties or assets to be
conveyed, transferred, and delivered to Buyer hereunder.
12. Representations and Warranties by Seller. As a material inducement to Buyer
to execute and perform its obligations under this Agreement, except as disclosed
to Buyer, the Seller hereby represents and warrants to Buyer as follows:
(a) Organization of Seller. Seller is a corporation duly
organized, validly existing, and in good standing under the
laws of the State of Minnesota and has all requisite corporate
power and authority to carry on its business as it is
presently being conducted, to enter into this Agreement, and
to carry out and perform the terms and provisions of this
Agreement.
(b) Financial Information. Seller has delivered to Buyer copies of
the compiled financial statements pertaining to the business
for years ended June 30, 1999, and June 30, 2000, and for the
five (5) months ended November 30, 2000, with respect to the
Business. Such financial statements present fairly, based on
generally accepted accounting principles consistently applied
(GAAP), the financial position of the Business as of the dates
indicated and the results of operations for the period
covered. Since November 30, 2000, there has been no material
adverse financial changes in the assets, properties, results
of operations, business prospects or condition of the Business
from those reflected in such financial statements as of
November 30, 2000.
(c) Payment of Taxes. Seller has filed all federal, state, local
and other tax returns covering the operations of the Business
required to be filed and has paid all taxes required to be
paid for such operations and there are no requests or waivers
by Seller for the extension of time for the assessment of any
tax. There are no claims pending or, to the knowledge of
Seller, threatened against Seller for past due taxes covering
the operations or properties of the Business or that would in
any way materially adversely effect the Purchased Assets.
(d) Contracts and Commitments. Except for the Assumed Contracts,
with respect to the Business, to Seller's knowledge, with
respect to any contract or commitment for which Buyer will be
liable, the Seller is not a party to or bound by any written:
(1) agreement, contract, arrangement, understanding or
commitment with any labor union;
(2) except for Seller's 401(k) plan, in which the
Business Employees participate, bonus, pension,
profit sharing, retirement, incentive compensation,
deferred compensation, savings, stock purchase, stock
option, health, hospitalization, medical, disability,
death benefit, insurance or other plan providing
benefits to or for directors, officers, employees,
agents or customers;
(3) employment, agency, consulting or similar agreement,
contract, arrangement, understanding or commitment
that cannot be canceled by it without cost or penalty
upon notice of 30 days or less;
(4) lease, whether as lessor or lessee, with respect to
any real or personal property, involving a rental
obligation of more than $500 a year, that cannot be
canceled by it without cost or penalty upon notice of
30 days or less ;
(5) agreement, contract, arrangement, understanding or
commitment not made in the ordinary course of
business and involving an aggregate obligation of
more than $250; or
(6) other material agreement, contract, arrangement,
understanding or commitment extending beyond 30 days
from the date hereof that cannot be canceled by it
without cost or penalty upon notice of 30 days or
less.
The Seller has furnished to Buyer complete and correct copies
of all Assumed Contracts.
(e) Employee Benefit Plans. With respect to all employee benefit
plans and programs effecting the Business, including any
pension and retirement plans and including any multiemployer
plan as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974 ("ERISA") or other employee
benefit plan as defined in Section 3(3) of ERISA, Seller has
fulfilled all of its material obligations thereunder through
the date of this Agreement, and all such plans and programs
are in compliance with all applicable laws, rules and
regulations, including ERISA and rules and regulations
thereunder. With respect to the Business, Seller has not
participated in or contributed to any plan which is a
multiemployer plan subject to the withdrawal liability
provisions of Subtitle E of Title IV or ERISA.
(f) Labor Matters. There are no National Labor Relations Board
petitions, Wage and Hour (Fair Labor Standards Act)
proceedings, state workers' compensation proceedings, EEOC or
similar state or local proceedings involving employee claims
against Seller currently filed or expected to be filed
pertaining to Seller's business. Seller is not aware of any
facts which may form a basis for any such claim.
(g) Litigation. There are no actions, suits or proceedings pending
or to Seller's knowledge is threatened against Seller or
affecting the Business, at law or in equity, or before any
Federal, state, municipal or other governmental agency or
instrumentality, domestic or foreign, that would have a
material adverse effect on the Business, nor is Seller aware
of any facts which to its knowledge might result in any such
action, suit, or proceeding. The Seller is not in default with
respect to any order or decree of any court or of any such
governmental agency or instrumentality.
(h) Compliance with Law and Other Instrument. To Seller's
knowledge, the Seller is not in violation of any term or
provision of any charter, bylaw, mortgage, indenture,
contract, agreement, instrument, judgment, decree, order
statute, rule or regulation, that would have a material
adverse effect on the Business and the execution and delivery
of and performance and compliance with this Agreement will not
result in the violation of or be in conflict with or
constitute a material default under any such term or provision
or result in the creation of any mortgage, lien, encumbrance,
or charge upon any of the properties or assets of Seller
pursuant to any such term or provision unless otherwise
consented to by the parties thereto; provided that,
notwithstanding anything to the contrary in this Agreement;
Seller makes no representations or warranties with respect to
the transferability of any of the Assumed Contracts.
(i) No Default. To Seller's knowledge, Seller is not in material
default in any respect under any of the Assumed Contracts.
(j) Absence of Certain Changes or Events. Since November 30, 2000
there has not been any material adverse change not disclosed
to Buyer in, or event or condition adversely affecting, the
condition (financial or otherwise) of the Business.
(k) [intentionally omitted]
(l) Title to Properties and Assets and Validity of Leases. Seller
has good, absolute, and marketable title to all the Purchased
Assets. All properties held by Seller relating to the Business
under leases or contracts are held by it under valid,
subsisting and enforceable leases or contracts. The Purchased
Assets constitute all of the properties and assets utilized
exclusively in the conduct of the Business during the last 12
months other than assets disposed of in the ordinary course of
business and assets covered by any leases.
(m) [intentionally omitted]
(n) Customer Accounts. Seller represent that the customer list to
be attached hereto as Exhibit E at Closing accurately
represents customers of Seller's business as of the date of
Closing.
(o) Warranties. Each warranty, representation, and covenant of
Seller set forth in this Agreement shall be deemed to be made
on and as of the date of this Agreement and again on and as of
Closing (except as otherwise specifically provided).
13. Representations and Warranties by Buyer. As a material inducement to Seller
to execute and perform its obligations under this Agreement, the Buyer hereby
represents and warrants to Seller as follows:
(a) Organizations of Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Minnesota and has all requisite corporate power and
authority to carry on its business as it is presently being
conducted, to enter into this Agreement, and to carry out and
perform the terms and provisions of this Agreement.
(b) Litigation. There are no actions, suits or proceedings pending
or to Buyer's knowledge, threatened against Buyer or affecting
any of its properties or rights, at law or in equity, or
before any Federal, state, municipal or other governmental
agency or instrumentality, domestic or foreign, nor is Buyer
aware of any facts which to its knowledge might result in any
such action, suit, or proceeding. The Buyer is not in default
with respect to any order or decree of any court or of any
such governmental agency or instrumentality.
(c) No Default. The Buyer is not in violation of any term or
provision of any charter, bylaw, mortgage, indenture,
contract, agreement, instrument, judgment, decree, order
statute, rule or regulation, and the execution and delivery of
and performance and compliance with this Agreement will not
result in the violation of or be in conflict with or
constitute a material default under any such term or provision
or result in the creation of any mortgage, lien, encumbrance,
or charge upon any of the properties or assets of Buyer
pursuant to any such term or provision unless otherwise
consented to by the parties thereto.
(d) Warranties. Each warranty, representation, and covenant of
Buyer set forth in this Agreement shall be deemed to be made
on and as of the date of this Agreement and again on and as of
Closing (except as otherwise specifically provided).
14. Covenants of Seller. As a material inducement to Buyer to enter into this
Agreement, Seller hereby covenants with Buyer as follows:
(a) Prior to the Closing, Seller shall carry on the business
substantially in the same manner as heretofore conducted and
shall use its reasonable efforts to keep its business
relationships intact, including retention of customers and
others having business relations with it. Seller shall make no
material change in the operation of the business, nor sell,
transfer, or convey any items that pertain to the Purchased
Assets;
(b) From the date hereof until Closing, Seller will not (without
the prior written consent of Buyer) enter into any material
agreement, contract or commitment other than in the ordinary
course of business for the Business nor sell or otherwise
dispose of any of the Purchased Assets other than in the
ordinary course of business.
(c) Seller will pay and discharge or cause to be paid and
discharged all liabilities and commitments of the Seller
relating to the Business not expressly assumed by Buyer.
(d) As of Possession Date, Seller will terminate, in a manner
acceptable to Buyer, all the Business Employees.
(e) Prior to Closing, Buyer, its accountants, and other
representatives shall have reasonable access to all
properties, books, records, contracts and documents of or
relating to the Purchased Assets. Seller shall furnish or
cause to be furnished to Buyer and its representatives
reasonably requested data and information concerning the
Purchased Assets, at the sole cost and expense of Buyer.
(f) Prior to Closing, Seller shall deliver to Buyer financial and
business information requested by Buyer including, but not
limited to the following:
(i) Seller's Accounts Receivable Detail Aging as of
December 31, 2000.
(ii) Seller's Inventory Aging Recap as of December 31,
2000.
(iii) Seller's fixed assets as of December 31, 2000. At or
prior to Closing, Seller shall disclose any additions
to its fixed assets during December, 2000.
(iv) Seller's organization chart.
(v) Seller's revised forecast for the period ended June
30, 2001, by customer, including actual sales through
December 31, 2000.
15. Nature and Survival of Representations and Warranties The representations
and warranties contained in and made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and all inspections, examinations,
and audits made at any time by or on behalf of any of the parties for a period
of one (1) year beyond Closing except for income tax representations, which
shall survive for the period of the applicable tax statute of limitations, and
except as to representations relating to title to assets in Section 12(l), which
shall survive indefinitely.
16. Conditions Precedent to Obligations of Buyer. The obligations of Buyer to
purchase the Purchased Assets and to otherwise perform hereunder shall be
subject to the satisfaction, at or before the Closing, of the following further
conditions (any one or more of which may be waived by Buyer) provided that Buyer
shall have delivered written notice of the failure of a condition precedent
specifying the reasons therefor to Seller, and Seller shall have had a
reasonable opportunity, not to exceed 10 business days, to correct the reason
for the failure of the condition:
(a) Seller's representations and warranties contained in paragraph
12 shall be true and correct as of the Closing date.
(b) The Seller shall have, or caused to be performed and observed
all covenants, agreements and conditions to be performed by
Seller at or before the Closing.
(c) Buyer shall have entered a Lease for the premises occupied by
Seller in the form and substance attached hereto as Exhibit C.
The Lease shall be for an initial term of six (6) months for
15,000 square feet of rental space at the gross ("all in")
rent amount of $6.11 per square foot per lease year.
(d) Seller and Buyer shall have executed a Transition Agreement
substantially in the form and substance attached hereto as
Exhibit D.
(e) Seller shall not have sustained any material loss or
interference with the business from any civil disturbance,
fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or dispute
with suppliers or customers or from any court or governmental
action, order or decree.
(f) No action, suit or proceeding shall be pending or threatened
against Seller, by or before any court or other governmental
body, with respect to the transaction contemplated by this
agreement.
(g) On or before Closing, Seller shall have terminated all of the
Business Employees.
(h) Consummation of this Purchase Agreement is subject to the
results of Buyer's due diligence review (to be concluded prior
to the Closing) being reasonably satisfactory to it in its
sole discretion, receipt by Buyer and Seller of all necessary
director, shareholder and third party approvals, including
bank approvals allowing release of liens, if any, on the
Purchased Assets, and no material adverse change prior to
Closing in the Purchased Assets or the business prospects or
financial condition of the business.
17. Indemnification.
(a) Seller hereby undertakes and agrees to indemnify and hold
Buyer harmless from and against any liability, claims, causes
of action, damages, judgments, penalties, loss, reasonable
attorneys' fees, interest or other cost or expense of whatever
kind or nature incurred or sustained by Buyer at any time
before or after the Closing with respect to or by reason of:
(i) any inaccurate representation made by Seller in or under
this Agreement; (ii) breach of any of the warranties made by
the Seller in or under this Agreement; (iii) breach or default
in the performance by the Seller of any of the covenants to be
performed by it hereunder; (iv) any debts, liabilities, or
obligations of Seller, whether accrued, absolute, contingent,
or otherwise, due or to become due; and (v) any incident or
transaction occurring prior to the Possession Date involving
or arising out of Seller's business operation or the Purchased
Assets except as may be attributable to acts or omissions of
Buyer and except as the result of Buyer's performance or
nonperformance under any contract or liability assumed by
Buyer pursuant to this Agreement.
(b) Buyer hereby undertakes and agrees to indemnify and hold
Seller harmless from and against any liability, claims, causes
of action, damages, judgments, penalties, loss, reasonable
attorneys' fees, interest or other cost or expense of whatever
kind or nature incurred or sustained by Seller at any time
before or after the Closing with respect to or by reason of:
(i) any inaccurate representation made by Buyer in or under
this Agreement; (ii) breach of any of the warranties made by
the Buyer in or under this Agreement; (iii) breach or default
in the performance by the Buyer of any of the covenants to be
performed by it hereunder; (iv) any debts, liabilities, or
obligations of Buyer, whether accrued, absolute, contingent,
or otherwise, due or to become due; and (v) any incident or
transaction occurring after the Possession Date involving or
arising out of Buyer's business operation or the Purchased
Assets except as may be attributable to acts or omissions of
Seller.
18. Conditions Precedent of Obligations of Seller. The obligations of Seller to
sell the Purchased Assets and to otherwise perform hereunder shall be subject to
the satisfaction, at or before the Closing, of the following further conditions
(any one or more of which may be waived by Seller) provided that Seller shall
have delivered written notice of the failure of a condition precedent specifying
the reasons therefor to Buyer, and Buyer shall have had a reasonable
opportunity, not to exceed 10 business days, to correct the reason for the
failure of the condition.):
(a) Seller and Buyer shall have executed a lease agreement
substantially in the form and substance attached hereto as
Exhibit C.
(b) Seller and Buyer shall have executed a transition agreement
substantially in the form and substance attached hereto as
Exhibit D.
(c) Buyer's representations and warranties contained in paragraph
13 shall be true and correct as of the Closing date.
(d) No action, suit or proceeding shall have been instituted or
threatened against Buyer before any court or governmental body
with respect to the transaction contemplated by the agreement.
(e) The Buyer has performed all covenants and agreements required
to be performed by the Buyer at or before closing.
19. Risk of Loss.
(a) Seller assumes all risk of destruction, loss, or damage due to
fire or other casualty up to the Possession Date. Upon said
destruction, loss or damage due to fire or other casualty of a
substantial portion of the Purchased Assets, the Buyer shall
have the option to terminate this Agreement and all rights of
the Buyer and Seller shall terminate.
(b) Buyer shall notify Seller within ten (10) days after receiving
written notice of said destruction, loss, or damage due to
fire or other casualty of its decision to terminate this
Agreement. If the Buyer does not timely notify Seller of the
termination, this Agreement shall remain in full force and
effect, provided, however, the Purchase Price shall be
adjusted at the Closing to reflect such destruction, loss, or
damage, and if Buyer and Seller are unable to agree upon the
amount of such adjustment, the dispute shall be determined by
an independent appraiser selected by the parties and such
determination shall be binding upon both Buyer and Seller
herein. In the event Seller utilizes insurance proceeds to
replace damaged property with property of like quality and
value, Buyer shall complete the Closing with no adjustment to
the purchase price for the loss.
(c) Seller shall be solely liable for any third party personal
injury or property damage claims based on any actions or
activities arising in connection with the operation of the
business up to the Possession Date.
20. Demands and Actions. Buyer agrees that upon receipt by it of notice of any
demand, claim, action, or proceeding, judicial or otherwise, with respect to any
matter as to which Seller has agreed to indemnify Buyer under the provisions of
this Agreement, Buyer will give prompt notice thereof in writing to Seller,
together in each instance, with a statement of such information respecting such
demand, claim, action, or proceeding as Buyer shall then have. Seller reserves
the right to contest and defend by all appropriate legal or other proceedings
any demand, claim, action or proceeding with respect to which it or its
stockholders have been called upon to indemnify Buyer under the provisions of
this Agreement, provided, however, that:
(a) Notice of the intention to so contest shall be delivered to
Buyer within ten (10) calendar days from the date of receipt
by Seller of notice of the assertion of such demand, claim,
action, or proceedings;
(b) Seller shall pay all costs and expenses of such contest,
including all attorney's and accountants' fees and the cost of
any bond required by law to be posted in connection with such
contest; and
(c) Such contest shall be conducted by reputable attorneys
employed by Seller at Seller's sole cost and expense, but
Buyer shall have the rights to participate in such proceedings
and to be represented by attorneys of its own choosing, at its
own cost and expense.
If after such opportunity, Seller does not elect to participate, or does not
participate, in any such proceedings, Seller and its stockholders shall be bound
by the result obtained by Buyer, including without limitation any out-of-court
settlement or compromise. If Seller elects to contest any demand, claim, action,
or proceedings, neither it nor its stockholders shall be obligated to make any
payments to Buyer with respect thereto until the legal remedies available to
Seller or Buyer, as the case may be, with respect to such demand, claim, action,
or proceedings shall have been exhausted. If requested by Seller, Buyer agrees
to cooperate with Seller in contesting any demand, or claim which Seller elects
to contest or, if appropriate, in the making of any counterclaim or demand
against the person asserting such demand, or claim or any cross-complaint
against any person; but Seller will reimburse Buyer for any expenses incurred by
Buyer in so cooperating with Seller. If such counterclaim or cross-complaint
results in receipt by Buyer of amounts in excess of the amount which is subject
to any such demand or claim, such excess shall first be applied to the payment
of the reasonable costs and expenses of Seller incurred in connection with such
contest, counter claim, or cross-complaint and the balance shall be retained by
Buyer.
21. Broker Compensation. Seller represents that Xxxxxx XxXxxxxx ("Broker") is
the broker acting in connection with this transaction and represents Seller
pursuant to a separate written agreement. Seller further represents that
Broker's entire compensation shall be paid by Seller, and that no other broker
has in any way been involved in this transaction. Seller agrees to hold the
Buyer harmless from any person or entity claiming a commission, finders fee, or
other compensation related to this transaction as a result of actions by Seller.
Buyer agrees to hold Seller harmless from any person or entity claiming a
commission, finders fee, or other compensation related to this transaction as a
result of actions by Buyer.
22. Termination. This Agreement and the transactions contemplated hereby may be
terminated at any time before Closing (a) by mutual consent of Seller and Buyer;
(b) by Buyer, if there has been any material misrepresentation in this Agreement
by Seller, or any material breach by Seller or any of Seller's warranties or
covenants set forth herein; or (c) by Seller, if there has been any material
misrepresentation in this Agreement by Buyer, or a material breach by Buyer or
any of the warranties or covenants of Buyer set forth herein. If Buyer refuses
to close the transaction contemplated by this Agreement for any reason other
than due to a material breach of this Agreement by Seller, Buyer shall pay to
Seller a break-up fee of $50,000.
23. Arbitration. Except as otherwise expressly provided in this Agreement, any
dispute or claim arising under or with respect to this Agreement will be
resolved by arbitration in Minneapolis, Minnesota in accordance with the Rules
of the American Arbitration Association before a panel of three (3) arbitrators,
one appointed by the Seller, one appointed by Buyer, and the third appointed by
the arbitrators selected by the parties. In any such arbitration, the prevailing
party shall be entitled to collect from the losing party all of its costs and
reasonable attorney fees. The decision or award of a majority of the arbitrators
shall be final and binding upon the parties. Any arbitral award may be entered
as a judgment in any court of competent jurisdiction.
24. Assignment. This Agreement shall not be assignable by Seller or Buyer
without the consent of the other, except that Buyer may assign the agreement to
a corporation or other entity in which it owns a controlling interest. No such
assignment shall release Buyer from its obligations under this Agreement.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
person, other than the parties hereto and their successors, any rights or
remedies under by reason of this Agreement.
25. Miscellaneous. Time is of the essence. It is the intention of the parties
that the laws of Minnesota should govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the parties. Each of the parties shall bear all expenses incurred by them in
connection with this Agreement and in the consummation of the transaction
contemplated hereby and in preparation thereof. This Agreement may be amended or
modified at any time and in all respects, and any provision may be waived by an
instrument in writing executed by Buyer and Seller, or any of them in the case
of a waiver. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of, and be enforceable by, Seller and Buyer and
their successors and assigns. This Agreement and the attached exhibits
constitute the entire agreement between the parties hereto, and there are no
agreements, understandings, restrictions, warranties or representations between
the parties other than those set forth herein or herein provided for.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and the year first above written.
NRI ELECTRONICS & CABLES, INC. WATERS INSTRUMENTS, INC.
(Buyer) (Seller)
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxx, CEO Xxxxx Xxxxxxxxx, CEO & President
Exhibit List
Document Exhibit
-------- -------
Assignment and Assumption Contracts A
Xxxx of Sale B
Lease Agreement C
Transition Agreement D
Customer List E
Fixed Assets F
