Exhibit 10.1
DISPUTE RESOLUTION AGREEMENT
THIS DISPUTE RESOLUTION AGREEMENT ("Agreement") is made and entered into as
of the 30th day of January, 2002 by and between DCI, Inc., a Kansas corporation
("Seller"), and Design Concepts, Inc., a Kansas corporation ("Buyer"), Xxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxx and Xxxxx X. Xxxxxxx (collectively, the "Buyer's
Stockholders");
W I T N E S S E T H
WHEREAS, Buyer desires to purchase certain assets of Seller associated with
Seller's Instrumentation Product Line, consisting of the products and models
listed on Schedule "A" (the "Product Line");
WHEREAS, Seller desires to sell the Product Line to Buyer; and
WHEREAS, Seller and Buyer's Stockholders have, over a period of time,
engaged in discussions concerning representations and warranties made by Buyer's
Stockholders in a prior transaction involving Seller and Buyer's Stockholders
and Seller wish to resolve and compromise the claims related to that
transaction.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
PURCHASE OF ASSETS
SALE AND PURCHASE OF ASSETS: On the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall
purchase and accept from Seller, on the terms and conditions set forth herein,
all of Seller's right, title and interest in and to the following tangible and
intangible assets of Seller related to the Product Line (collectively, the
"Assets") described below:
1.1 TANGIBLE ASSETS:
a. Product Line Inventory. All inventories of raw materials,
work-in-progress and finished goods related to the Product Line and
described on Schedule "B" attached hereto (the "Product Line Inventory");
b. Excess Inventory. Certain inventory not specifically related to the
Product Line and described on Schedule "C" attached hereto (the "Excess
Inventory");
c. Machinery and Equipment. All of Seller's machinery, equipment,
fixtures, and other similar miscellaneous tangible assets used exclusively
for the Product Line as described on Schedule "D" attached hereto (the
"Equipment");
d. Marketing Materials. All photos, catalog information, and trade
show equipment used exclusively for the Product Line (the "Marketing
Materials");
e. Miscellaneous Tangible Assets. All other tangible assets or
properties of Seller to the extent used solely in conjunction with the
Product Line (the "Miscellaneous Assets").
1.2 INTANGIBLE ASSETS:
a. Intellectual Property. All of Seller's drawings, manuals,
procedures, computer software, and other intellectual property, but only to
the extent it is associated with the design, manufacture, and support of
the Product Line (the "Intellectual Property");
b. Records. All customer lists, customer files, sales and purchase
records, sales proposals, sales literature, office records and other books
and records relating solely to the Product Line (the "Books and Records");
c. Assumed Contracts. Those of Seller's contracts, agreements, leases,
arrangements, customer orders, and commitments related to the Product Line,
and described on Schedule "E" attached hereto (the "Assumed Contracts");
d. Miscellaneous Intangible Assets. All other intangible assets or
properties of Seller to the extent used solely in conjunction with the
Product Line (the "Miscellaneous Assets").
1.3 COPIES OF CUSTOMER INFORMATION. Seller reserves the right to retain
copies of customer files for any customers for which it reasonably believes it
will have future opportunities for ongoing business relationships.
1.4 COST OF MOVING ASSETS. As soon as possible following the Closing, Buyer
shall remove the Assets from the property of Seller. All costs incurred for the
transport or transfer of any of the Assets will be borne by Buyer.
ARTICLE II
PURCHASE PRICE
The Buyer's Stockholders are the holders of a $1,248,000.00 promissory note
dated as of February 7, 2000, by Airport Systems International, Inc., and the
Buyer's Stockholders (the "Old Note"), executed pursuant to the Stock Purchase
Agreement (defined in Section 8.3 below). Seller and Buyer's Stockholders have,
over a period of time, engaged in discussions concerning
representations and warranties made by Buyer's Stockholders in a prior
transaction involving Seller. Buyer's Stockholders and Seller wish to resolve
and compromise the claims related to that transaction in the following way.
First, Seller will transfer to Buyer the Excess Inventory, which Seller and
Buyer's Stockholders acknowledge to be valued at $200,000.00, and as a result of
that transfer, the Buyer's Stockholders agree to forgive $200,000.00 on the Old
Note. Next, Seller will transfer the Equipment valued at approximately
$13,000.00, and as a result of that transfer, Buyer's Stockholders agree to
forgive such amount on the Old Note. In addition, Seller will transfer to Buyer
the Product Line Inventory valued at approximately $196,000.00, and as a result
of that transfer, Buyer's Stockholders agree to forgive on the Old Note an
amount equal to the net book value thereof, calculated as described below.
Furthermore, the Buyer's Stockholders agree to forgive $158,348.00 due on the
Old Note. Buyer's Stockholders will receive $81,824.00 in interest that has
accrued and remains unpaid under the Old Note. Buyer's Stockholders will also
receive $246,375.00 of principal repayment on the Old Note. The amount remaining
after the above transactions on the Old Note will be converted into two new
notes, the first of which is a new convertible promissory note in an estimated
amount equal to $410,625.00 (the "New Note") and the Buyer's Stockholders will
deliver to Seller the Old Note, marked "CANCELLED". The final amount of the New
Note will be determined on the Closing Date in the following manner. At the
close of the business on the Closing Date, Seller will generate a computer
printout reflecting the net book value of the Equipment and the Product Line
Inventory. For every dollar that the combined net book values of both the
Equipment and the Product Line Inventory at the close of business on the Closing
Date exceed $200,000.00, the New Note will be decreased one dollar. For every
dollar that the combined net book values of both the Equipment and the Product
Line Inventory at the close of business on the Closing Date are below
$200,000.00, the New Note will be increased one dollar. Notwithstanding the
foregoing, if the combined net book value of the Product Line Inventory and
Equipment exceeds $205,000.00, it is within the discretion of the Buyer to
determine (i) if it will accept all items of Equipment and Product Line
Inventory that cause the combined net book value to exceed $205,000, and (ii) if
not, which Product Line Inventory it will not accept to reduce the net book
value of Product Line Inventory and Equipment to no less than $205,000.00. The
second new note will be in the amount of $31,652 (the "Second New Note").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer as follows:
a. Due Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its organization.
b. Authority. Seller has the corporate power and authority to sell the
Assets and consummate the transactions provided for in this Agreement and
this Agreement and all instruments and agreements contemplated by this
Agreement to which Seller is a party
or signatory have been duly authorized, executed and delivered by Seller
and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their terms. All necessary corporate
proceedings of Seller have been taken to authorize this Agreement and the
agreements and instruments contemplated by this Agreement and all
transactions contemplated hereby.
c. Title to Assets. Seller has, and upon conveyance, transfer and
assignment of the Assets to Buyer by Seller at the Closing, Buyer will
acquire and hold, good and marketable title to all of the Assets, in each
case, free and clear of any and all options, rights, pledges, security
interests, liens, charges, and other encumbrances whatsoever (hereinafter
sometimes collectively referred to as "Encumbrances"), except such
Encumbrances as are placed on the Assets by Buyer.
d. Condition of Assets. All of the tangible Assets are transferred in
"as is" condition, with no implied warranty.
e. Contracts. True, correct and complete copies of the Assumed
Contracts have heretofore been provided by Seller to Buyer, and all such
documents are genuine and in all respects what they purport to be. Each of
the Assumed Contracts is valid and enforceable in accordance with its
terms. Seller is not in default in the performance, observance or
fulfillment of any material obligation, covenant or condition contained in
the Assumed Contracts, and no event has occurred that with the giving of
notice or lapse of time would constitute a default thereunder.
f. Ability to Carry Out Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not violate the provisions of the Articles of Incorporation or
Bylaws of Seller or any note, indenture, mortgage, lease or other agreement
or instrument to which Seller is a party or by which it is bound.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER'S STOCKHOLDERS. Buyer
represents and warrants to Seller as follows:
a. Due Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its organization.
b. Authority. Buyer has the corporate power and authority to acquire
the Assets and consummate the transactions provided for in this Agreement
and this Agreement and all instruments and agreements contemplated by this
Agreement to which Buyer is a party or signatory have been duly authorized,
executed and delivered by Buyer and constitute the legal, valid and binding
obligation of Buyer enforceable in accordance with their terms. All
necessary corporate proceedings of Buyer have been taken to authorize this
Agreement and the agreements and instruments contemplated by this Agreement
and all transactions contemplated hereby.
c. Ability to Carry Out Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not violate the provisions of the Articles of Incorporation or
Bylaws of Buyer or any note, indenture, mortgage, lease or other agreement
or instrument to which Buyer is a party or by which it is bound.
d. Duration of Warranty Coverage. To the knowledge of the Buyer and
the Buyer's Stockholders, there are no warranties that extend longer than
twelve (12) months.
3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in Section 3.1(c) and (e) shall survive Closing for two years
and six months, respectively. All other representations and warranties made by
the parties in this Agreement or any exhibit, schedule, instrument or
certificate provided hereunder shall expire at Closing.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 NEGATIVE COVENANTS OF SELLER. Except as may be otherwise expressly
provided herein, from and after the date of this Agreement and until the Closing
Date, with respect to the Assets without the consent of Buyer, Seller covenants
and agrees that it will not:
a. Encumbrances. Execute, grant or suffer any Encumbrance upon the
Assets;
b. Disposition of Assets. Effect any sale, transfer, Encumbrance or
other disposition of the Assets and properties which would otherwise be
included in the Assets, except for sales of inventories in the ordinary
course of business, and except for machinery, and equipment replaced with
items of equivalent or greater value;
c. Assumed Contracts. Amend, modify, assign, transfer, grant or
terminate any of the Assumed Contracts;
4.2 AFFIRMATIVE COVENANTS OF SELLER. From and after the date of this
Agreement and until the Closing Date, Seller covenants and agrees that it will:
a. Ordinary Course of Business. Carry on the operations of the Product
Line only in the usual, regular and ordinary course consistent with good
business practices and with prior practices;
b. Maintenance of Relationships. Use commercially reasonable efforts
to maintain and preserve its business organization and to maintain its
present relationships with customers, suppliers and others having business
dealings with the Product Line;
c. Maintenance of the Assets. Maintain the Assets in existing
operating repair and maintain the level of inventories in accordance with
past practices;
d. Payment of Obligations in Ordinary Course. Pay and discharge all
costs and expenses of maintaining and operating the Assets as they become
due and pay and discharge any such costs and expenses which at the date
hereof are past due, unless contested in good faith;
e. Maintenance of Records. Maintain its books, accounts, including
accounts receivable and records in the usual, regular and customary manner
on a basis consistently applied; and
f. Additional Inventory. Seller may, at Seller's discretion, make
available to Buyer for purchase additional surplus/on-hand inventory at
cost for a period of one (1) year. In addition Seller must make available
to Buyer for purchase any additional custom manufactured or specially
ordered parts at prices to be quoted; provided, however, any such order
must have a minimum value of $1,000.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO BUYER'S OBLIGATION TO CLOSE. The obligations of Buyer
under this Agreement, are subject to the satisfaction, or the written waiver
thereof, by Buyer of the following conditions on or prior to the Closing Date:
a. Representations and Warranties of Seller. All of the
representations and warranties of Seller contained in this Agreement shall
have been true and correct when made, and shall be true and correct in all
material respects on and as of the Closing Date.
b. Covenants of Seller. All of the covenants and agreements herein on
the part of Seller to be complied with or performed on or before the
Closing Date, including, but not limited to, the documents or items to be
delivered at Closing as set forth in Article VI, shall have been fully
complied with and performed.
c. No Material Adverse Changes. There shall not have occurred any
material adverse change in the Assets.
5.2 CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligations of Seller
under the Agreement are subject to the satisfaction, or the written waiver
thereof, of the following conditions on or prior to the Closing Date:
a. Representations and Warranties of Buyer. All of the representations
and warranties of Buyer contained in this Agreement shall have been true
and correct when made, and shall be true and correct in all material
respects on and as of the Closing Date.
b. Covenants of Buyer. All of the covenants and agreements herein on
the part of Buyer to be complied with or performed on or before the Closing
Date, including, but not limited to, the documents or items to be delivered
at Closing as set forth in Article VI, shall have been fully complied with
and performed.
ARTICLE VI
CLOSING
6.1 CLOSING DATE. The closing of the sale and purchase provided for herein
(the "Closing") shall take place at the offices of Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxxx LLP, 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx 0000, Xxxxxxxx Xxxx, Xxxxxx 00000,
at 10:00 a.m., on January 31, 2002 or at such other place, time and date as the
parties may mutually agree (the "Closing Date").
6.2 ITEMS TO BE DELIVERED AT CLOSING BY SELLER. At the Closing, Seller
shall perform all acts necessary to put Buyer in actual and complete possession
and control of the Assets, including, but not limited to, the delivery to Buyer
of such instruments of sale, assignment, transfer and conveyance duly executed
and in form and content satisfactory to counsel for Buyer as are necessary to
vest in Buyer good and marketable title to and possession of the Assets. Without
limiting the generality of the foregoing, Seller shall deliver the following at
Closing:
a. A Xxxx of Sale executed by Seller selling, assigning and
transferring to Buyer all right, title and interest in and to any and all
personal property comprising the Assets; and
b. An executed Registration Rights Agreement by and between Elecsys
Corporation and the Buyer's Stockholders that provides "piggyback" rights
to the Buyer's Stockholders for two (2) years from the date of Closing;
c. Seller will pay by wire transfer of immediately available funds the
amount of $328,199.00, representing past due interest of $81,824.00 and
principal of $246,375.00 on the Old Note.
6.3 ITEMS TO BE DELIVERED AT CLOSING BY BUYER'S STOCKHOLDERS. At the
Closing, Buyer's Stockholders shall deliver the Old Note stamped "CANCELLED".
6.4 ITEMS TO BE DELIVERED AFTER CLOSING BY SELLER On Friday February 1,
2002 Seller will deliver the New Note and the Second New Note to Buyer's
Stockholders.
6.5 FURTHER ASSURANCES. Seller shall from time to time after the Closing,
at the request of Buyer and without further consideration, execute and deliver
such other instruments of conveyance, assignment and transfer and take such
other action as Buyer may reasonably request to more effectively convey, assign,
transfer to and vest in Buyer good and marketable title to and possession of the
Assets.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLER. Seller shall defend, indemnify and hold
Buyer and each of Buyer's subsidiaries, shareholders, affiliates, officers,
directors, employees, agents, successors and assigns (collectively, "Buyer's
Indemnified Persons") harmless from, against and in respect of any and all
liabilities and obligations of Seller including, but not limited to, any claim
arising out of the operation of the Seller's business, or for products
manufactured or sold prior to the Closing Date except those liabilities which
have been expressly assumed by Buyer: (i) as Assumed Contracts and (ii) as
warranty obligations pursuant to Section 8.1 warranty.
7.2 INDEMNIFICATION BY BUYER. Buyer shall defend, indemnify and hold Seller
and each of Seller's subsidiaries, shareholders, affiliates, officers,
directors, employees, agents, successors and assigns (collectively, "Seller's
Indemnified Persons") harmless from, against and in respect of any and all
liabilities and obligations of Buyer including, but not limited to, any claim
arising out of the operation of Buyer's business, or for products manufactured
or sold after the Closing Date.
7.3 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification under this Section 7, the Buyer, the Buyer's Stockholder's or
the Sellers, as the case may be, seeking indemnification (the "Indemnified
Party"), shall promptly notify the other party (the "Indemnifying Party") of the
claim and, when known, the facts constituting the basis for such claim. In the
event of any such claim for indemnification hereunder resulting from or in
connection with any claim or legal proceedings by a third party, the notice
shall specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
that if suit shall have been instituted against the Indemnified Party and the
Indemnifying Party shall not have taken control of such suit after notification
thereof as provided in this Section 7.3, the Indemnified Party shall have the
right to settle or compromise such claim upon giving notice to the Indemnifying
Party as provided in this Section 7.3.
7.4 DEFENSE BY THE INDEMNIFYING PARTY. In connection with any claim which
may give rise to indemnity hereunder resulting from or arising out of any claim
or legal proceeding by a person other than the Indemnifying Party, at the sole
cost and expense of the Indemnifying Party, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim. If the Indemnifying Party assumes the
defense of any such claim or legal proceeding, the Indemnifying Party shall
select counsel reasonably acceptable to the Indemnified Party to conduct the
defense of such claims or legal proceedings and at the sole cost and expense of
the Indemnifying Party shall take all steps necessary in the
defense or settlement thereof. The Indemnified Party shall thereafter be
entitled to participate in and assume control of the defense of any such action
only if the Indemnified Party has a reasonable basis for concluding that its
interests are in conflict with those of the Indemnifying Party. The Indemnifying
Party shall not consent to a settlement of, or the entry of any judgment arising
from, any such claim or legal proceeding, without the prior written consent of
the Indemnified Party (which consent shall not be unreasonably withheld or
delayed). The Indemnified Party shall be entitled to participate in (but not
control) the defense of any such action, with its own counsel and at its own
expense. If the Indemnifying Party does not assume the defense of any such claim
or litigation resulting therefrom within 30 days after the date such claim is
made: (a) the Indemnified Party may defend against such claim or litigation in
such manner as it may deem appropriate, including, but not limited to, settling
such claim or litigation, after giving notice of the same to the Indemnifying
Party, on such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. If the
Indemnifying Party or the Indemnifying Party thereafter seeks to question the
manner in which the Indemnified Party defended such third party claim or the
amount or nature of any such settlement, the Indemnifying Party shall have the
burden to prove by a preponderance of the evidence that the Indemnified Party
did not defend or settle such third party claim in a reasonably prudent manner.
ARTICLE VIII
POST CLOSING COMMITMENTS
8.1 POST CLOSING COVENANTS.
a. Use of Brand Name. Buyer, as soon as practical after the Closing,
will establish a new logo that differs substantially in color and design
from that of Seller's existing logo. Seller hereby grants Buyer permission
to use existing materials and literature containing Seller's current logo
until the supply of those materials is depleted, but in no event beyond
twelve (12) months after Closing. Notwithstanding the previous sentence,
the Buyer shall under no circumstances refer to itself as "DCI" nor shall
the Buyer use the "DCI" logo or name in any form of advertisement or
tradeshow.
b. Access to IMPACT. Seller must, during reasonable business hours,
afford to Buyer and authorized representatives of Buyer access to those
portions of the IMPACT Encore data files that include information both (i)
gathered prior to the Closing, and (ii) relating to the Product Line.
c. Marketing/Sales Representatives. Seller will assign to Buyer and
cooperate with Buyer's effort to transfer to Buyer any rights Seller may
have with respect to the contracts by and between the sales representatives
selling the Product Line (the "Representatives") and Seller. Seller will
only pay commissions to the Representatives for established
contracts on Product Line products shipped by Seller. Except for sales of
the Series 1093 Heat Bonders, all commissions earned for Product Line sales
by former employees of Seller will cease to accrue on the date of this
Agreement. Any sales
commissions relating to the Series 1093 Heat Bonders will continue to
accrue pursuant to the terms of any original severance agreement.
d. Warranty Work. Except as set forth in (e) below, Buyer hereby
assumes all warranty liability, including any repair and calibration
liability, resulting from the remaining period on the standard twelve (12)
month warranty given in conjunction with the sale of any products included
in the Product Line. Buyer will not be responsible for granting any credits
on any products included in the Product Line that are sold prior to the
Closing and subsequently returned for credit. However, if at any xxxx
Xxxxxx needs components to service or repair any products it has accepted
back from a Product Line customer, Buyer will provide available components
from initial inventory to Seller at no charge.
e. Seller's Obligation for Returned Products. Although, Seller is
under no obligation to grant credit, or any other favorable accommodation
to Product Line customers for any products sold by it, any products
returned to Seller for credit will be the property of Seller. Seller will
communicate customer requests for credit, or any other accommodation, to
Buyer in order to provide Buyer an opportunity to build customer
relationships. Notwithstanding the obligation of Buyer set forth in
subsection (d) above, and except for problems arising from incorrect
specification or unsuitability for use due to errant technical sales
activity, Seller will retain responsibility for defects in workmanship,
materials and design performance for a period of twelve (12) months from
the Closing Date for the following programs:
(i) University of Alabama at Birmingham P.O. #523581 (Seller
Sales Order #32023),
(ii) ADI Limited P.O. #FF0742 (Seller Sales Order #31830)
(ii) Xxxxxxx products associated with DCI RMA #1281.
f. Software Licenses for MAS90. Buyer will acquire all licenses and
pay all fees required for the transfer of the software for the MAS90
accounting system.
g. Seller's Obligation for Transition period remittances, etc. For a
period of two (2) years, Seller shall refer to Buyer all calls, faxes, and
e-mails received by Seller regarding the Product Line or related services.
Furthermore, Seller shall deliver to Buyer any correspondence and/or
remittances incorrectly received by Seller on a weekly basis.
h. Buyer's Obligation for Transition period remittances, etc. For a
period of two (2) years, Buyer shall refer to Seller all calls, faxes, and
e-mails received by Buyer for Seller's products and services. Furthermore,
Buyer shall deliver to Seller any correspondence and/or remittances
incorrectly received by Buyer on a weekly basis.
i. Transition Period Shipping and Accounts Receivable. Seller shall
continue shipping customer orders relating to the Product Line on schedule
until Buyer assumes responsibility for delivery at a mutually agreed upon
date. Furthermore, all accounts receivable derived from shipments made by
Seller shall be the sole property of Seller.
j. Seller's Existing Purchase Orders to Vendors. Upon Buyer's request,
Seller will cancel, or transfer to Buyer, any existing purchase orders
relating to the Product Line and for which the ordered material has not yet
been received by Seller. Furthermore, any accounts payable derived from
Product Line materials received by Seller after the Closing will be the
sole responsibility of the Buyer.
k. Use of phone numbers (000) 000-0000 and (000) 000-0000. Buyer will
pay all fees associated with the transfer of the phone numbers (913)
782-5672 and (000) 000-0000. The foregoing numbers will be transferred from
Seller to Buyer promptly following the Closing.
l. Use of Seller's P.O. Box (P.O. Box 2877). Buyer will pay all fees
associated with the transfer of the X.X. Xxx 0000. Such P.O. Box will be
transferred by the Seller to the Buyer promptly following the Closing.
m. Health Insurance. Seller and Buyer's Stockholders acknowledge that
the Buyer's Stockholders are currently covered under Seller's family health
insurance plan pursuant to an agreement previously entered with Seller or
its Stockholders. That prior commitment related to health insurance is
hereby terminated. The Buyer's Stockholders are electing today to obtain
COBRA coverage under that plan, effective February 1, 2002, and Seller
acknowledges its commitment to permit the Buyer's Stockholders to maintain
coverage for eighteen months from February 1, 2002. During that period,
Seller shall pay 73% of family coverage for each of Buyer's Stockholders.
n. Limitations on Other Debt. As long as the New Note remains unpaid
and outstanding, Seller shall not incur debt for borrowed money except the
following:
(i) borrowed money from a commercial bank; and
(ii) currently outstanding subordinated debt; and
(iii) borrowed money from a source other than (i) and (ii)
above in an aggregate amount not to exceed $1,000,000.00 provided such
indebtedness is (i) pari passu in all respects with the New Note and
(ii) subordinated to any debt incurred under Section 8.1 n(i) above.
8.2 AMENDMENT TO NON-COMPETE AGREEMENTS
The Buyer's Stockholders entered into agreements with the Seller or the
sole stockholder of the Seller that included non-compete provisions (the
"Non-Compete Agreements"). In order
to operate the Product Line business acquired pursuant to this Agreement, the
following provisions of the Non-Compete Agreements are amended to provide as
follows:
a. Section 1.1 of the Noncompetition And Nondisclosure Agreement dated
February 7, 2000, by and between Airport Systems International, Inc., a Kansas
corporation, and Xxxxxxx X. Xxxx is amended to read as follows:
1.1 Scope. Xxxx covenants and agrees that commencing today and
continuing for a period of two years from and after the date of this
Agreement, Xxxx will not, anywhere in the world, directly or indirectly,
without the express prior written permission of the Company:
(a) Other than Design Concepts, Inc. or any entity (i) wholly
owned by Xxxx, Xxxxx X. Xxxxxxx, or Xxxxx X. Xxxxxxx and (ii) that
conducts business related to the product line acquired from the
Company, own, have any interest in, or be, serve, or act as an
individual proprietor, partner, agent, stockholder, officer, employee,
consultant, director, joint venturer, investor (other than as an
investor holding less than three percent of the stock of a public
company), lender, or in any other capacity whatsoever of or with, or
assist in any way, any person, corporation, partnership, firm, or
business enterprise (other than the Company or a subsidiary or
affiliate of the Company) which is in direct or indirect competition
with the business as carried on by DCI on the date first preceding the
date hereof.
(b) Section 7.1 of the Employment Agreement dated February 7,
2000, by and between DCI, Inc. and Xxxxx X. Xxxxxxx:
7.1 Scope. Employee covenants and agrees that commencing today and
continuing for a period of three years from and after the date of
termination of his employment by the Company, Employee will not, anywhere
in the world, directly or indirectly, without the express prior written
permission of the Company:
(a) Other than Design Concepts, Inc. or any entity (i) wholly
owned by the Employee, Xxxxxxx X. Xxxx, or Xxxxx X. Xxxxxxx and (ii)
that conducts business related to the product line acquired from the
Company, own, have any interest in, or be, serve, or act as an
individual proprietor, partner, agent, stockholder, officer, employee,
consultant, director, joint venturer, investor (other than as an
investor holding less than three percent of the stock of a public
company), lender, or in any other capacity whatsoever of or with, or
assist in any way, any person, corporation, partnership, firm, or
business enterprise (other than ASII or the Company or a subsidiary or
affiliate of either) which is in direct or indirect competition with
the business as carried on by ASII or the Company on the date first
preceding the date hereof.
(c) Section 7.1 of the Employment Agreement dated February 7,
2000, by and between DCI, Inc. and Xxxxx X. Xxxxxxx:
7.1 Scope. Employee covenants and agrees that commencing today
and continuing for a period of three years from and after the date of
termination of his employment by the Company, Employee will not,
anywhere in the world, directly or indirectly, without the express
prior written permission of the Company:
(a) Other than Design Concepts, Inc. or any entity (i) wholly
owned by the Employee, Xxxxxxx X. Xxxx, or Xxxxx X. Xxxxxxx and (ii)
that conducts business related to the product line acquired from the
Company, own, have any interest in, or be, serve, or act as an
individual proprietor, partner, agent, stockholder, officer, employee,
consultant, director, joint venturer, investor (other than as an
investor holding less than three percent of the stock of a public
company), lender, or in any other capacity whatsoever of or with, or
assist in any way, any person, corporation, partnership, firm, or
business enterprise (other than ASII or the Company or a subsidiary or
affiliate of either) which is in direct or indirect competition with
the business as carried on by ASII or the Company on the date first
preceding the date hereof.
8.3 SELLER'S RELEASE. The Buyer's Stockholders and all of their agents,
affiliates, and representatives, jointly and severally, hereby release, acquit
and forever discharge Seller, all of its present and past partners, associates,
employees, agents or affiliates and its sole stockholder, all of its present and
past partners, associates, employees, agents or affiliates (collectively, the
"Releasees") from any and all manner of action or actions, cause or causes of
action, cross-claims or counter-claims, in law or in equity, suits, claims,
demands, damages, loss, costs or expenses, of any nature whatsoever, known or
unknown, fixed or contingent, whether or not ascertainable at the time of
execution of this Agreement, and whether or not based upon common law or any
federal or state statute, which the Buyer's Stockholders now have or may
hereafter have against each or any of the Releasees, by reason of any matter,
cause, or thing whatsoever, arising in connection with the Old Note, the Asset
Purchase Agreement between Seller, KHC of Lenexa, LLC, and the Buyer's
Stockholders (the "Asset Purchase Agreement"), or the Stock Purchase Agreement
dated as of January 10, 2000, by and among Airport Systems International, Inc.,
the Buyer (the "Stock Purchase Agreement") and any matters affecting the Old
Note, the Asset Purchase Agreement, or the Stock Purchase Agreement.
8.4 BUYER'S STOCKHOLDERS'S RELEASE. Seller and all of its agents,
affiliates, and representatives, jointly and severally, hereby release, acquit
and forever discharge Buyer's Stockholders, all of their present and past
partners, associates, employees, agents or affiliates (the "Releasees") from any
and all manner of action or actions, cause or causes of action, cross-claims or
counter-claims, in law or in equity, suits, claims, demands, damages, loss,
costs or expenses, of any nature whatsoever, known or unknown, fixed or
contingent, whether or not ascertainable at the time of execution of this
Agreement, and whether or not based upon
common law or any federal or state statute, which Seller now has or may
hereafter have against each or any of the Releasees, by reason of any matter,
cause, or thing whatsoever, arising in connection with the Old Note, the Asset
Purchase Agreement, or the Stock Purchase Agreement and any matters affecting
the Old Note, the Asset Purchase Agreement, or the Stock Purchase Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 EXPENSES. Each party to this Agreement shall pay its own expenses
incidental to the negotiation, preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including, but not limited
to, the fees and expenses of their respective legal counsel, brokers and
accountants. Seller shall pay any sales, use or transfer taxes or fees in
connection with the transactions contemplated hereby.
9.2 NEWS RELEASE. The parties agree that they will cooperate with each
other in the preparation of a joint news release announcing the transactions
contemplated by this Agreement.
9.3 NOTICES. Any notice or demand desired or required to be given hereunder
shall be in writing and deemed given when personally delivered or three (3) days
after it is deposited in the United States mail, postage prepaid, sent certified
or registered and addressed as follows:
a. If to Seller, to:
DCI, Inc.
00000 X. 000xx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax Number: (000) 000-0000
b. If to Buyer, to:
Design Concepts, Inc.
X.X Xxx 0000
Xxxxxx, Xxxxxx 00000
or to such other address or person as hereafter shall be designated in writing
by the applicable party.
9.4 ENTIRE AGREEMENT. This Agreement and the exhibits and schedules hereto
constitute the entire agreement between the parties hereto pertaining to the
subject matters hereof, an supersede all negotiations, preliminary agreements
and all prior and contemporaneous
discussions and understandings of the parties in connection with the subject
matters hereof. All exhibits and schedules hereto are hereby incorporated into
and made a part of this Agreement.
9.5 AMENDMENTS. No amendment, waiver, change or modification of any of the
terms, provisions or conditions of this Agreement shall be effective unless made
in writing and signed or initialed by the parties or by their duly authorized
agents. Waiver of any provision of this Agreement shall not be deemed a waiver
of future compliance therewith and such provision shall remain in full force and
effect.
9.6 SEVERABILITY. In the event any provision of this Agreement is held
invalid, illegal or unenforceable, in whole or in part, the remaining provisions
of this Agreement shall not be affected thereby and shall continue to be valid
and enforceable, and, if, for any reason, a court finds that any provision of
this Agreement is invalid, illegal or unenforceable as written, but that by
limiting such provision it would become valid, legal and enforceable, then such
provision shall be deemed to be written and shall be construed and enforced as
so limited.
9.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas.
9.8 HEADINGS AND CAPTIONS. The titles or captions of paragraphs in this
Agreement are provided for convenience of reference only, and shall not be
considered a part hereof for purposes of interpreting or applying this
Agreement, and such titles or captions do not define, limit, extend, explain or
describe the scope or extent of this Agreement or any of its terms or
conditions.
9.9 GENDER AND NUMBER. Words and phrases herein shall be construed as in
the singular or plural number and as masculine, feminine or neuter gender,
according to the context.
9.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument, and in making proof
hereof, it shall not be necessary to produce or account for more than one such
counterpart.
9.11 BINDING EFFECT ON SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, heirs, successors and assigns; provided,
however, none of the parties to this Agreement may assign their rights or
obligations hereunder without the prior written consent of the other parties,
which consent shall not be unreasonably withheld, and in the event of any such
assignment, all of the terms, covenants, agreements and conditions of this
Agreement shall continue to be in full force and effect and the parties hereto
shall continue to remain respectively liable and responsible for the due
performance of all of the terms, covenants, agreements and conditions of this
Agreement which they are respectively obligated to observe and perform. Nothing
in this Agreement, express or implied, is intended to confer upon any party,
other than
the parties hereto (and their respective legal representatives, heirs,
successors and assigns), any rights, remedies, obligations or liabilities.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
DCI, INC. DESIGN CONCEPTS, INC.
BY: BY:
---------------------------------- --------------------------------------------
NAME: NAME:
------------------------------ ------------------------------------------
TITLE: TITLE:
------------------------------ ------------------------------------------
------------------------------------------------
Xxxxx X. Xxxxxxx
------------------------------------------------
Xxxxxxx X. Xxxx
-------------------------------------------------
Xxxxx X. Xxxxxxx
SCHEDULE A--PRODUCTS AND MODELS
Includes all Models, Options and Modifications (Specials) for the following:
Series Function
200 Voltmeters
300 Comparators
400 Clocks
500 Comparators
700 Counters
800 Counters/Timers
900 Remotes
1000 Remotes and Custom Meters
2000 Meters
2600 Process Meters
2700 Voltmeters
2900 Counters/Timers
6100 Counters/Timers
7000 Meters
7600 Strain Gage Meters
7700 Voltmeters
8000 Counters/Timers/Clocks
9000 Process Meters
PPI100 Pressure Readouts
All Velenex Equivalent Meters
SCHEDULE B--INVENTORY
1) Inventory Used Non-Exclusively On Instruments Products
2) Inventory Valuation Report for INST Product Class
SCHEDULE C--EXCESS INVENTORY
1) Non-Moving Inventory, the value of which was agreed upon by Buyer and Seller
on 1/7/02.
SCHEDULE D--EQUIPMENT
Instrument Product Line Associated Equipment Assets 1/29/2002
Item Acquired Value Depreciation Book Value # of Months
-------------------------------------------------------------------------------------------------------------------------------------
24
Tapmatic Model 30X Auto Tapping Attachment 0 0 0
Di-Acro No. 2 Hand Punch 350 -140 210
Di-Acro Model 24HS Hand Shear 425 -170 255
Di-Acro No. 4 Hand Brake 0 0 0
Pexto No. 137-J Foot Shear 1,500 -600 900
Baldor No. 2048 Belt Grinder 500 -200 300
Makita Model LS1013 Mitre Saw w/ Fixtures 150 -60 90
Instrument Test Stand 0 0 0
Stag Model PP28 EPROM Programmer 0 0 0
Modular Circuit Technologies EPROM Programmer 0 0 0
Xxxxxxxx No. 716 Micrometer & LVDT Tester 0 0 0
DCI Model 1001 Time Standard 0 0 0
1 Model 5100B Fluke Calibrator 550 -220 330
1 Model 341A Fluke Calibrator 1,050 -420 630
All Required Test Software 0 0 0
Miscellaneous Custom Fixtures 0 0 0
Quad Model 100 P&P with 4 inoperative feeders included 16,500 -6,600 9,900
Assembly Fixtures, Jigs and Samples 0 0 0
2 Worktables 0 0 0
Microprocessor Emulators and Software - Instrument 0 0 0
Tango CAD Software - TBD to license and register 0 0 0
Fax Machine - Surplus unit requires repair 0 0 0
Silkscreens for Lens Backplates 0 0 0
Solder Paste Stencils for PC Boards 0 0 0
Instrument Trade Show Demo Equipment 0 0 0
Xxxxxxx System Strapper (Yellow Banding Machine) 750 -300 450
Tape Machine - DCI's #3 unit, not currently in use 0 0 0
0
---------------------------------------------------------------
$21,775 -$8,710 $13,065
SCHEDULE E--ASSUMED CONTRACTS
DCI Instrument Product Line Sales Representative Organizations
with Contracts to be assigned
Xxxxx Associates L-Tron
000 X.X. 000xx, Xxxxx X 0000 Xxxxxxxxx-Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000 Xxxxxxxxx, XX 00000
Xxx Xxxxx & Associates, Inc. RG Associates
0000 Xxxxxxx Xxxx Xxxx 000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000 Xxxxxx, XX 00000
Instrumentation Resources, Inc. Analectro
00000 Xxxxxxx Xxxx., Xxxxx 000 0000 Xxx Xxxxxxxx Xxxx, Xxxxx X
Xxxxxxxxxx, XX 00000 Xxxxxx Xxxx, XX 00000
Vertec Associates, Inc. CP&F-Atlantic
000 Xxxxxxxxx Xxxxx, Xxxxx 0 0 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Xxxx Instruments, Inc. CP&F-Dixie
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000 0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Precision Measurement Products Techno-Data Co., Ltd.
000 Xxxxxx Xxxx, Xxxxx 000 Yoido XX Xxx 000
Xxxx Xxxxxx, XX 00000 Xxxxx, Xxxxx 000-000
Saber Enterprises Complete International Solutions
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000 2 North Xxxxxxx
Long Beach, CA 90806 Xxxxxxxx, XX 00000
