ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
this 31st day of March, 1998, by and between Xxxxxx XX, Inc., a Minnesota
corporation ("Purchaser"), Xxxxxx Corporation, a Minnesota corporation
("Seller"), and Xxxx Xxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxx, and Xxxxx Xxxxxx
(collectively the "Shareholders" and individually by either their name or as a
"Shareholder").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the business of manufacturing vehicles
and equipment used primarily by airlines, airports, fixed base operators and
airplane owners, with its principal place of business in Eagan, Minnesota (the
"Business");
WHEREAS, Xxxx X. Xxxxxx and Xxxx X. Xxxxxx are the owners of approximately
four acres of land adjacent to the Seller's real property on which the Business
is conducted (all such real property, whether owned by Seller or such
individuals being referred to herein as the "Real Estate");
WHEREAS, concurrently with the closing of this Agreement and as an express
condition precedent to such closing, Purchaser, Seller and Xxxx and Xxxx Xxxxxx
are entering into Contracts for Deed pursuant to which the Real Estate will be
purchased by the Purchaser;
WHEREAS, Seller desires to sell, convey, grant, transfer, assign and
deliver to Purchaser, and Purchaser desires to purchase, acquire, assume and
accept from Seller, substantially all of the assets owned by Seller used,
useable, or useful in or in conjunction with the operation of the Business upon
the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser
hereby agree as follows:
1. SALE AND PURCHASE OF ASSETS. Seller agrees to sell, transfer, assign
and deliver to Purchaser, and Purchaser agrees to purchase, assume, and accept
from Seller, as of the Closing Date (as defined in Section 10) all of the
assets, properties, rights, powers, and privileges of Seller, tangible and
intangible, whether or not written-off, expensed or fully depreciated, used,
useable, or useful in or in conjunction with the operation of the Business, as
more specifically set forth below (collectively, the "Assets"), free and clear
of any and all liens (other than (i) liens securing the Seller's line of credit
or other financing provided by Norwest Bank Minnesota, (ii) liens in favor of
Ford Motor Credit Company securing the purchase price of equipment financed by
Ford Motor Credit Company, and (iii) that certain UCC-1 financing statement
naming the Seller as debtor and Xxxx Xxxxx Oil Company as secured party (the
"Permitted Liens")), claims, charges, pledges, mortgages, security interests,
licenses, and other encumbrances or rights of third parties of any kind, nature,
or description (collectively, "Liens"), except as set forth in Section 2 (the
"Excluded Assets"):
(a) to the extent transferable by the Seller, all machinery, equipment,
furniture, office equipment, tools, computer hardware and software, disks, disk
drives, and all other items of tangible personal property owned by Seller
(collectively, "Personal Property");
(b) all inventories of maintenance, spare and replacement parts and product
brochures, signs, sales literature, pamphlets, videos, price lists, product
information and other marketing materials and merchandising equipment used
and/or saleable in the Business;
(c) all cash and cash equivalents;
(d) all accounts receivable and other rights to payment of Seller;
(e) all of the vehicles (the "Vehicles") used in the Business;
(f) all inventory of the Seller including all finished goods, raw materials and
work in process, useable and/or saleable in the ordinary course of the Business
(the "Inventory");
(g) all packaging material, repair parts and tools, manufacturing and office
supplies useable and/or saleable in the ordinary course of the Business;
(h) to the extent transferable by the Seller, all of Seller's federal, state,
local and foreign licenses, permits, authorizations and registrations, relating
to, or necessary or useful in connection with, the operation of the Business or
the ownership of the Assets (collectively, the "Permits");
(i) all of Seller's customer and prospective customer lists, sales and business
records, product and device complaint records, warranty records, manuals
(including those for equipment, machinery and computer software), operating and
distribution records, vendor records and all other documents maintained by
Seller relating to the operation of the Business prior to the Closing Date,
including without limitation, to the extent transferable, agreements with
producers, suppliers, dealers, distributors, customers, licensees, airlines,
port and airport authorities and military bases and installations (collectively,
"Records"); provided that Purchaser will retain and make available to Seller and
Shareholders all Records for not more than six (6) years following the Closing
Date for Seller's inspection and copying, at Seller's sole expense, upon
reasonable request and during normal business hours at a site designated by
Purchaser which is reasonably convenient to Seller and Shareholders, provided
that Seller and Shareholders shall only be entitled to inspect and copy such
Records as are required by Seller and Shareholder to (i) prepare their
respective tax returns and to prepare for and defend audits of such returns, and
(ii) prepare to assert claims and defenses to claims by third parties, including
Purchaser;
(j) all United States and foreign intellectual property used by Seller or
developed by Seller or its employees in connection with the operation of the
Business, including, without limitation, all patents, pending patent
applications and any patents issuing therefrom, patent licenses, registered and
common law trademarks, service marks and trademark and service xxxx applications
(and all goodwill associated with those trademarks, service marks, and trademark
and service xxxx applications), trade names, corporate name, assumed names and
all registrations and applications, including the name "Xxxxxx Corporation" and
copyrights, copyright applications and slogans, technical information,
inventions, designs, drawings, research, other know-how, confidential
information, trade secrets, and other similar intangible property and rights of
Seller used in conjunction with the operation of the Business (collectively,
"Intellectual Property");
(k) all purchase orders, contracts, and agreements arising from the operation
of the Business, confidentiality agreements, and non-competition agreements, to
which Seller is a party or under which Seller has any type of interest, all of
which Purchaser agrees to assume pursuant to this Agreement, including all
maintenance and security deposits (collectively, "Contracts");
(l) those certain personal property leases (other than Contracts) to which
Seller is a party and which pertain to the operation of the Business, all of
which Purchaser agrees to assume pursuant to this Agreement (collectively,
"Leases");
(m) to the extent transferable, the Seller's rights to the telephone numbers,
facsimile transmission numbers, web sites, domain names, listings and numbers,
telex numbers, advertising, telephone and other directory and catalog listings,
and prepaid expenses used in connection with, or arising from, the operation of
the Business; and
(n) all good will comprising a part of the business.
2. EXCLUDED ASSETS. Seller is not selling, transferring, or assigning to
Purchaser, and Purchaser is not purchasing, acquiring, or assuming from Seller,
the following Excluded Assets: (a) all refunds and deposits of all federal,
state, local and foreign income taxes paid, or which may be paid, by Seller with
respect to the Business for any period; (b) all records related to Seller's
corporate organization and capitalization, tax records, and returns, schedules
of depreciation, and financial statements; (c) the Real Estate and the
improvements thereto; and (d) personal effects and personal papers of the
Shareholders.
3. ASSIGNMENT AND ASSUMPTION OF LIABILITIES. On the Closing Date the
Purchaser will assume and will thereafter be liable for and pay and perform all
debts, liabilities, or obligations of Seller and the Business, except for the
Seller's Profit Sharing Plan, the administration and winding-up of which shall
remain the sole and exclusive liability of the Seller (collectively, the
"Assumed Liabilities"). Without limiting the generality of the foregoing,
Purchaser covenants and agrees that on the Closing Date, it shall execute and
deliver to Seller an Assignment and Assumption Agreement in the form of Exhibit
A hereto (the "Assumption Agreement"), pursuant to which it will assume and
agree to pay and perform the Assumed Liabilities, including, but not limited to
the following:
(a) All debts, liabilities and obligations of the Seller arising under the
Contracts and Leases;
(b) All of Seller's accounts payable and other current operating expenses;
(c) All amounts accrued for wages, salaries and benefits payable to Seller's
employees (other than benefits payable under the Seller's Profit Sharing Plan),
including vacation and sick leave (other than such amounts accrued with respect
to the Shareholders);
(d) All of Seller's indebtedness with respect to borrowed money;
(e) All liabilities and obligation of the Seller with respect to products sold
in the operation of the Business prior to the Closing Date, including
obligations with respect to product returns and product warranty claims;
(f) All debts, liabilities and obligations of Seller reflected on its balance
sheet as of the most recent date on or before to the Closing Date; and
(g) All debts, liabilities and obligations of the Seller under each and every
health and welfare plan of the Seller, but specifically excluding any debts,
liabilities or obligations under the Seller's Profit Sharing Plan.
4. PURCHASE PRICE, METHOD OF PAYMENT AND ALLOCATION OF PURCHASE PRICE.
Purchaser agrees to pay to Seller, and Seller agrees to accept from Purchaser,
in full payment for the Assets, a purchase price of Two Million Nine Hundred
Thousand dollars ($2,900,000) (the "Purchase Price"), payable by Purchaser's
delivery to the Seller of the following at the Closing: (a) $2,000,000 by
cashier's or certified check or by a single wire transfer of immediately
available funds (the "Cash Portion") to an account designated by Seller in
writing before 12:00 noon on the Closing Date, (b) the Company's 8.25%
Promissory Note in the principal amount of $200,000 in the form of Exhibit B
hereto (the "Promissory Note"), (c) the 9% Convertible Subordinated Debenture
("Debenture") of Oakridge Holdings, Inc., a Minnesota corporation and parent
company of Purchaser ("Parent"), in the form of Exhibit C hereto in the
principal amount of Seven Hundred Thousand Dollars ($700,000). The payment and
performance of the Promissory Note will be guarantied by the Parent pursuant to
the Guaranty in the form of Exhibit D hereto (the "Parent Guaranty"), and the
payment and performance of the Debenture will be guarantied by the Purchaser
pursuant to the Guaranty in the form of Exhibit E hereto (the "Guaranty"). The
payment and performance of the Promissory Note and Debenture shall also be
secured by a second priority security interest in all of Purchaser's personal
property which shall be granted pursuant to a Security Agreement in the form of
Exhibit F hereto (the "Security Agreement"). Seller and Purchaser shall
mutually agree upon the allocation of the Purchase Price among the Assets prior
to the Closing and shall jointly prepare and file an Asset Acquisition
Statement, Form 8594, conforming to such allocation which shall be filed with
the Internal Revenue Service.
5. PURCHASE OF REAL ESTATE. Concurrently with, and as a condition
precedent to, the Closing, Seller, Purchaser, and Xxxx and Xxxx Xxxxxx will
enter into the Contracts for Deed attached as Exhibits G-1 and G-2 hereto.
6. SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller and the
Shareholders jointly and severally represent as follows:
(a) Existence and Good Standing. The Seller is a corporation duly organized,
validly existing, and in good standing under the laws of Minnesota, is qualified
to do business and is in good standing under the laws in which the nature of its
activities or of its properties owned, leased, or operated makes qualification
necessary and in which the failure to be qualified could reasonably be expected
to have a material adverse effect on the Seller.
(b) Corporate Power. The Seller has the corporate power and authority to own,
operate, and lease its properties as presently owned, operated, and leased and
to carry on its business as now being conducted. The Seller does not have any
subsidiaries and it is not a partner in a partnership or a member of a joint
venture.
(c) Corporate Records. The Shareholders have made available to Purchaser true
and complete copies of the Seller's (i) Articles of Incorporation and By-laws as
presently in effect, (ii) list of officers and directors, (iii) minute books
containing all records of actions of the directors and shareholders of the
Seller, and (iv) stock ledger setting forth all known transfers of its shares of
capital stock.
(d) Authority. Seller and each Shareholder has the requisite power and
authority to execute, deliver, and perform this Agreement and his or its
obligations hereunder. This Agreement has been duly executed by Seller and each
Shareholder and is a valid, legal, and binding obligation of each of them,
enforceable against each of them in accordance with its terms. Except as set
forth on Schedule 6(d) no other action is necessary to authorize the Seller or
any Shareholder to execute this Agreement and consummate the transactions
contemplated herein.
(e) No Violation of Governmental Authority. Neither the execution and delivery
of this Agreement, the fulfillment of the terms and provisions of this
Agreement, nor the consummation of the transactions contemplated herein, will
constitute a default under or conflict with any judgment, decree, or order or
award of any court or other governmental body to which the Seller or any
Shareholder is subject or to which any of them is a party. Except as set forth
on Schedule 6(d), the execution, delivery, and performance of this Agreement by
Shareholders does not require the consent, approval, or action of or any filing
with or notice to any public authority or any other party.
(f) No Conflict or Default. Except as set forth on Schedule 6(d), neither the
execution and delivery of this Agreement, the fulfillment of the terms and
provisions of this Agreement, nor the consummation of the transactions
contemplated herein, will (i) constitute a default under, a breach of, or
conflict with any mortgage, security agreement, lease, deed of trust,
partnership agreement, license, indenture, or other material agreement or
instrument to which the Seller or any Shareholder is a party or by which the
Seller or any Shareholder, or any of their assets may be bound, (ii) give to
others any right to terminate, or result in the termination of, any material
agreement or instrument, (iii) result in the creation of any Lien upon any of
the property or assets of the Seller or any Shareholder, or (iv) require the
consent, approval, or permission of any other party, entity or person.
(g) Compliance with Laws; Condition of Premises. To the best of the
Shareholders' knowledge after due inquiry, the Seller and its operation of the
Business is, and has been, operated in compliance in all material respects with
all applicable laws, regulations, orders, judgments, and decrees. Except as
disclosed in Schedule 6(g) no complaints that Seller is in violation of
applicable building, zoning, health, safety, or similar law, ordinance or
regulation in respect of the premises, or the operation thereof, have been
received by Seller, and to the best of knowledge of Shareholder, none are
threatened. To the best of the Shareholders' knowledge after due inquiry, Seller
is not in violation in any material respect, of any law, ordinance or
regulation, relating to the Business, the Assets or the Real Estate, and no
taking by condemnation or right of eminent domain is pending or threatened. To
the best of the Shareholders' knowledge after due inquiry, Seller has all
material permits, licenses, registrations and approvals of and from all
governmental authorities necessary for the operation of the Business.
(h) Environmental Matters. Except as disclosed in Section 9 hereof and in
those environmental assessments and reports referenced in Section 9, (i) the
Seller and its operation of the Business is, and has been, operated in
compliance with all Environmental and Occupational Safety and Health Laws, and
(ii) the Seller has obtained all permits, licenses and authorizations required
by all Environmental and Occupational Safety and Health Laws. No enforcement,
investigation, or other governmental or regulatory actions have been at any time
in the past asserted or, to the best knowledge of Shareholders, threatened with
respect to the Real Estate, operations conducted on the Real Estate, or against
the Seller or any Shareholder regarding the Real Estate arising out of any
Environmental and Occupational Safety and Health Laws. No claims or settlements
by any third party, including any governmental agency, have been made with
respect to the Real Estate, operations conducted on the Real Estate, or against
the Seller or any Shareholder regarding the Real Estate arising out of any
Environmental and Occupational Safety and Health Laws. The term "Environmental
and Occupational Safety and Health Laws" means any United States common law or
duty, case law or ruling, statute, rule, regulation, law, ordinance or code,
whether local, state, or federal, that (i) regulates, creates standards for or
imposes liability or standards of conduct concerning any Hazardous Substance,
Pollutant or Contaminant (as defined in Section 9) or (ii) is designed to
provide safe and healthful working conditions or reduce occupational safety and
health hazards. Such laws include, but are not limited to, the National
Environmental Policy Act, 42 U.S.C. section 4321 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. section 9601
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. section 6901 et
seq., the Federal Water Pollution Control Act, 33 U.S.C. section 1251 et seq.,
the Clean Air Act, 42 U.S.C. section 7401 et seq., the Toxic Substances Control
Act, 15 U.S.C. section 2601 et seq., the Emergency Planning and Community Right
to Know Act, 42 U.S.C. section 11001 et seq., the Hazard Communication Act, 29
U.S.C. section 651 et seq., the Occupational Safety and Health Act, 29 U.S.C.
section 651 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. section 136 et seq., and any amendments thereto, and their state and
local counterparts, including but not limited to the Minnesota Environmental
Policy Act, Minn. Stat. ch. 116D, the Minnesota Environmental Rights Act, Minn.
Stat. ch. 116B, the Minnesota Environmental Response and Liability Act, Minn.
Stat. ch. 115B, and the Minnesota Petroleum Tank Release Cleanup Act, Minn.
Stat. ch. 115C.
(i) Title to Personal Property. The Seller has good and marketable title to
all of the Assets. Except as set forth on Schedule 6(i), title to the Assets,
at Closing, will be free and clear of all Liens, Claims, security interest, and
encumbrances except for the Permitted Liens.
(j) ERISA.
(1) Neither the Seller nor any other "person" within the meaning of Section
7701(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), that
together with the Seller is considered a single employer pursuant to Sections
414(b), (c), (m) or (o) of the Code or Sections 3(5) or 4001(b)(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (an
"Affiliated Organization") sponsors, maintains, contributes to, is required to
contribute to or has or could have reasonably be expected to have any material
liability of any nature, whether known or unknown, fixed or contingent, with
respect to, any "employee pension benefit plan" ("Pension Plan") as such term is
defined in Section 3(2) of ERISA, including without limitation, any such plan
that is excluded from coverage by Section 4(b)(5) of ERISA or is a
"Multiemployer Plan" within the meaning of Sec. 3(37) or 4001(a)(3) of ERISA.
Each such Pension Plan has been operated in accordance with its terms and in
compliance in all material respects with the applicable provisions of ERISA, the
Code and all other applicable law. All Pension Plans which the Seller operates
as plans that are qualified under the provisions of Section 401(a) of the Code
satisfy in form and operation the requirements of Section 401(a) in all material
respects and all other sections of the Code incorporated therein, including
without limitation Sections 401(k) and 401(m) of the Code.
(2) Neither the Seller nor any Affiliated Organization has or could reasonably
be expected to have any liability of any nature, whether known or unknown or
fixed or contingent, to any Pension Plan, the Pension Benefit Guaranty
Corporation ("PBGC") or any other person, arising directly or indirectly under
Title IV of ERISA. No "reportable event," within the meaning of Section 4043(b)
of ERISA, has occurred with respect to any Pension Plan. Neither the Seller nor
any Affiliated Organization has been a party to a sale of assets to which
Section 4204 of ERISA applied with respect to which it could reasonably be
expected to incur any material withdrawal liability (including any contingent or
secondary withdrawal liability) to any Multiemployer Plan. Neither the Seller
nor any Affiliated Organization has incurred any material withdrawal liability
within the meaning of Section 4201 of ERISA or suffered or otherwise caused a
"complete withdrawal" or "partial withdrawal," as such terms are defined
respectively in Sections 4203 and 4205 of ERISA, with respect to a Multiemployer
Plan, and nothing has occurred that is reasonably likely to result in such a
complete or partial withdrawal.
(3) Neither the Seller nor any Affiliated Organization sponsors, maintains,
contributes to, is required to contribute to or has or could reasonably be
expected to have any material liability of any nature, whether known or unknown,
fixed or contingent, with respect to, any "employee welfare benefit plan"
("Welfare Plan") as such term is defined in Section 3(1) of ERISA, whether
insured or otherwise. Each Welfare Plan has been operated in accordance with
its terms and in compliance with the applicable provisions of ERISA, the Code
and all other applicable law. Neither the Seller nor any Affiliated
Organization has established or contributed to, is required to contribute to or
has or could reasonably be expected to have any material liability of any
nature, whether known or unknown, fixed or contingent, with respect to any
"voluntary employees' beneficiary association" within the meaning of Section
501(c)(9) of the Code, "welfare benefit fund" within the meaning of Section 419
of the Code, "qualified asset account" within the meaning of Section 419 of the
Code, "qualified asset account" within the meaning of Section 419A of the Code
or "multiple employer welfare arrangement" within the meaning of Section 3(40)
or ERISA. Neither the Seller nor any Affiliated Organization maintains,
contributes to or has or could reasonably be expected to have any material
liability of any nature, whether known or unknown, or fixed or contingent, with
respect to medical, health, life or other welfare benefits for present or future
terminated employees or their spouses or dependents other than as required by
Part 6 of Subtitle B of Title I of ERISA or any comparable state law.
(4) Neither the Seller nor any Affiliated Organization is a party to,
maintains, contributes to, is required to contribute to or has or could
reasonably be expected to have any material liability of any nature, whether
known or unknown, fixed or contingent, with respect to, any bonus plan,
incentive plan, stock plan or any other current or deferred compensation,
separation, retention, severance or similar agreement, arrangement or policy, or
any individual employment agreement ("Compensation Plans"). Each Compensation
Plan has been operated in accordance with its terms and in all material respects
in compliance with the applicable provisions of all applicable Law.
(5) There are no facts or circumstances which could, directly or indirectly,
reasonably be expected to subject the Seller or any Affiliated Organization to
any material (1) excise tax or other liability under Chapters 43, 46 or 47 of
Subtitle D of the Code, (2) penalty tax or other liability under Chapter 68 of
Subtitle F of the Code or (3) civil penalty arising under Section 502 of ERISA.
(6) Full payment has been made of all amounts which the Seller or any
Affiliated Organization is required, under applicable law, the terms of any
Pension Plan, Welfare Plan or Compensation Plan, or any agreement relating to
any Pension Plan or Welfare Plan or Compensation Plan, to have paid as a
contribution, premium or other remittance thereto or benefit thereunder. No
Pension Plan is subject to Part 3 of Subtitle B of Title I of ERISA or Section
412 of the Code. The Seller and each Affiliated Organization has made adequate
provi-sions for reserves or accruals in accordance with generally accepted
accounting principles to meet contribution benefit or funding obligations
arising under applicable law or the terms of any Pension Plan or Welfare Plan or
Compensation Plan or related agreement. There will be no change on or before
Closing in the operation of any Pension Plan, Welfare Plan or Compensation Plan
or any documents with respect thereto which will result in an increase in the
benefit liabilities under such plans, except as may be required by law.
(7) The Seller and each Affiliated Organization has in all material respects
timely complied with all reporting and disclosure obligations with respect to
the Pension Plans, Welfare Plans and Compensation Plans imposed by Title I of
ERISA or other applicable law.
(8) There are no pending or, to the Seller's knowledge, threatened audits,
investigations, claims, suits, grievances or other proceedings, and there are no
facts that could reasonably be expected to give rise thereto, involving,
directly or indirectly, any Pension Plan, Welfare Plan, or Compensation Plan, or
any rights or benefits thereunder, other than the ordinary and usual claims for
benefits by participants, dependents or beneficiaries.
(9) To the best knowledge of Seller and Shareholders, after due inquiry, the
transactions contemplated herein do not result in the acceleration of accrual,
vesting, funding or payment of any contribution or benefit under any Pension
Plan, Welfare Plan or Compensation Plan.
(10) In connection with the termination of any Pension Plan and without limiting
the applicability of the foregoing representations to such Pension Plan: (i)
nothing done or omitted to be done has or could reasonably be expected to
subject the Seller or any Affiliated Organization to any material liability,
loss, cost, charge, expense or expenditure of any nature or result in the
imposition of any Lien in favor of the PBGC or any other person; (ii) the
Seller has received a determination letter from the Internal Revenue Service,
based on complete and accurate disclosure by the Seller, that such termination
did not adversely affect the qualified status of such Pension Plan under Section
401(a) of the Code or the tax exempt status of its related trust under Section
501(a) of the Code; (iii) all notices and other filings required to be submitted
to the PBGC were, in all material respects, submitted in a timely manner and
were complete and accurate and no distributions were made until receipt of PBGC
approval in the form of a notice of sufficiency or by lapse of any applicable
time period without notice of PBGC objection, as the case may be; (iv) all
participants, beneficiaries of deceased participants, alternate payees and other
interested parties received all notices and disclosures required by applicable
law in a timely manner and all such notices and disclosures were complete and
accurate in all material respects and satisfied the requirements imposed by all
applicable laws; (v) no portion of the assets of the Plan reverted to the Seller
or any Affiliated Organization; (vi) the selection of annuity contracts and the
process employed in connection therewith satisfied all applicable laws,
including without limitation ERISA, and each and all of the issuers of such
contracts have fully satisfied all of its or their material obligations
thereunder and (vii) the termination in all material respects satisfied all
applicable laws.
(k) Payment of Taxes. Within the time and manner prescribed by law, the Seller
has filed all federal, state, and local tax returns required by law to be filed
on or before the date of this Agreement and has paid, and will pay, all tax
assessments and penalties and interest, if any, due and payable for all periods
covered by such filings. The federal income tax returns of the Seller have not
been audited by the Internal Revenue Service. There are no present disputes as
to taxes of any nature payable by the Seller. The Seller has fully paid and
will continue to pay all federal, state, and local taxes of every kind and
description that are due and payable with respect to the Business on or before
the Closing Date (as defined in Section 10) including all payroll, sales,
license, franchise, property, and income taxes.
(l) Litigation. Except as set forth on Schedule 6(l). there is no litigation,
arbitration, proceeding, or controversy which is pending before any court or
governmental authority, to which the Seller is a party, or, to the best
knowledge of Shareholders, is threatened against either the Business or Assets
or the Seller's right to carry on the Business as conducted as of the date
hereof. Further, there is no action, suit, or proceeding pending before any
court or governmental authority which would give any party the right to rescind
or enjoin this transaction.
(m) Investments. The Seller has not made any investment in any person. firm,
entity, corporation, partnership, sole proprietorship, or joint venture.
(n) Misstatements or Omissions. No representation or warranty made by Seller
or any Shareholder in this Agreement or in any Schedule or Exhibit hereto
contain or will contain any untrue statement of a material fact, or omit or will
omit to state a material fact necessary to make the statements of facts
contained therein not materially misleading.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Seller and Shareholders as follows:
(a) Existence and Good Standing. Each of the Purchaser and Parent is a
corporation duly organized, validly existing, and in good standing under the
laws of Minnesota, and each is qualified to do business and is in good standing
under the laws in which the nature of its respective activities or of its
respective properties owned, leased, or operated makes qualification necessary
and in which the failure to be qualified could reasonably be expected to have a
material adverse effect on the Purchaser or Parent, as the case may be.
(b) Corporate Power. Each of the Purchaser and Parent has the corporate power
and authority to own, operate, and lease its respective properties as presently
owned, operated, and leased and to carry on its respective business as now being
conducted.
(c) Authority of Parent and Purchaser; Consents. The execution, delivery, and
performance of this Agreement, including the documents, instruments, and
agreements to be executed and delivered by Purchaser or Parent, as the case may
be, pursuant to this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action on the part of Purchaser or Parent. This Agreement and the
documents, instruments, and agreements to be executed and delivered by the
Purchaser or Parent pursuant to this Agreement have been duly and validly
authorized, executed, and delivered by the Purchaser, as the case may be, and
the obligations of the Purchaser hereunder and Parent and Purchaser thereunder
are or will be upon their execution and delivery valid and legally binding, and
this Agreement and the documents, instruments, and agreements to be executed and
delivered by the Purchaser and Parent, as the case may be, pursuant to this
Agreement are or will be upon their execution and delivery enforceable against
Purchaser or Parent in accordance with their terms. No approval or consent of
any person, firm, or other entity or body is or was required to be obtained by
the Purchaser for the authorization or execution of this Agreement, including
the documents, instruments and agreements to be executed and delivered by the
Parent and/or the Purchaser pursuant to this Agreement, or the consummation of
the transactions contemplated hereby or thereby.
(d) No Conflicts. Purchaser has full power and authority to purchase the
Assets and to otherwise perform its obligations under this Agreement and
Purchaser and Parent have full power and authority to otherwise perform their
respective obligations under the documents, instruments, and agreements to be
executed and delivered by Purchaser and Parent pursuant hereto. The execution
and delivery of this Agreement by Purchaser and the execution and delivery of
the documents, instruments, and agreements to be executed and delivered by
Purchaser and Parent pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby will not: (i) violate any provision
of the Articles of Incorporation or Bylaws of Purchaser or Parent; (ii) violate
any law applicable to the Purchaser or Parent; (iii) require any filing with, or
permit, consent, or approval of, or the giving of any notice to, any person or
entity; (iv) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give another party any rights
of termination, cancellation, or acceleration) under, any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, lease, contract, agreement, or other instrument or obligation
to which Purchaser or Parent is a party, or by which it or any of its assets or
properties may be bound; or (v) result in the creation or imposition of any Lien
on any of Purchaser's or Parent's assets or properties.
(e) Misstatements or Omissions. No representations or warranties made by
Purchaser in this Agreement or in any document, written statement, certificate,
or Schedule furnished or to be furnished to the Seller or its counsel pursuant
hereto, or in connection with the transactions contemplated hereby, contain or
will contain any untrue statement of a material fact, or omit or will omit to
state a material fact necessary to make the statements of facts contained
therein not materially misleading. All statements made and data presented by
Purchaser in any certificate, schedule, chart, list, letter, compilation, or
other document provided to the Seller pursuant to this Agreement are deemed to
be representations and warranties made under this Agreement to Seller by the
Purchaser.
8. COVENANTS OF THE PARTIES.
(a) Inspection of the Business. As of the date hereof through the Closing
Date, Seller will give to Purchaser and its counsel, accountants, and other
representatives, access upon reasonable advance notice during normal business
hours to Seller's offices and properties. Seller will allow Purchaser to
inspect and copy all agreements, records, and affairs relating in any manner to
the Business, and will cause Seller's employees to respond to questions by
Purchaser and it representatives about the Business and the Assets and furnish
Purchaser with all reasonably requested financial, regulatory, and operating
data and other information with respect to the Business and the Assets.
(b) Seller's Employees and Benefits.
(1) Seller will terminate all of the employees of the Business effective as of
the Closing Date and Purchaser will offer employment to all of Purchaser's
employees (including all employees on vacation or leave of any sort) on
substantially the same terms as they were previously employed by Seller. Seller
agrees to use reasonable efforts to encourage those former employees of Seller
to accept Purchaser's offer of employment. All former employees of Seller will
be considered employees at will of the Purchaser and all other terms and
conditions of employment after the Closing Date of any person hired by Purchaser
will be at Purchaser's sole discretion. Except for any and all liabilities
associated with the Seller's Profit Sharing Plan, which liabilities the
Purchaser does not agree to assume and which Seller agrees to perform and
discharge on a timely basis, Purchaser will be responsible for all claims made
by, any of Seller's employees or former employees arising from, or claimed to
arise from the employees' or former employees' termination of employment by
Seller as of or prior to the Closing Date. Except as specifically provided for
in this Agreement, this Agreement does not obligate Purchaser to be a successor
employer or obligate Purchaser to assume any benefit or employee plan currently
or previously provided by Seller to employees of the Business prior to the
Closing Date or to assume any collective bargaining agreement between Seller and
any union representative in effect as of or prior to the Closing Date.
(2) Seller will timely and completely provide all notices and will provide
required continuation of health benefits coverage, including, without
limitation, medical and dental coverage, to employees, former employees, and the
beneficiaries or dependents of employees and former employees under Part 6 of
Subtitle B of Title 1 of the Employee Retirement Income Security Act of 1974, as
amended or, if applicable, Internal Revenue Code Section 4980B (commonly
referred to collectively as "COBRA"), to the extent notices and continuation of
health benefits coverage were or are required to be provided by reason of events
occurring prior to or as of the Closing Date as a result of the consummation of
the transactions described in or contemplated by this Agreement or otherwise.
(c) Conduct of Business and Absence of Certain Changes. Seller has actively
conducted, and will through the Closing Date continue to actively conduct, the
Business in the ordinary and regular course of business consistent with past
practice. From the date of this Agreement through the Closing Date, Seller will
not make any distributions to the Shareholders (other than (i) the payments made
in accordance with and in the amount of the employment relationships existing as
of the date of this Agreement and (ii) distributions to Shareholders to extent
the Shareholders have income tax liability arising from net income of the Seller
arising prior to the Closing Date but only to the extent that state and federal
tax refunds to be received by the Shareholders with respect to the year ended
December 31, 1997, together with the $60,612 note payable by the Seller to the
Shareholders is not sufficient to pay such liability for 1998), make or
undertake to make any sale or other distribution of its properties or assets,
make or change in its legal structure or make or revoke any tax election,
dispose of any Inventory, property or assets, except in the ordinary course of
business, incur any indebtedness except in the ordinary course of business, make
or permit to be made any material adverse change in its financial affairs or
enter into, modify, amend or terminate any Contracts.
(d) Risk of Loss. Seller assumes all risk of loss, damage, or destruction to
the Assets through the Closing Date. If there is any loss, damage or
destruction to any of the Assets in excess of $25,000, Purchaser, in its sole
discretion, has the option, on or prior to the Closing Date, to (i) terminate
this Agreement, without any liability to Seller whatsoever; (ii) close the
transactions described in or contemplated by this Agreement and receive from
Seller an assignment of all applicable insurance proceeds paid because of a loss
to an Asset; or (iii) perform in accordance with the terms and conditions of
this Agreement by paying the Purchase Price proportionately reduced by the
impairment in value of the Assets as mutually agreed by Seller and Purchaser.
(e) Warranty Claims. Purchaser covenants that Purchaser shall, following the
Closing Date, perform all warranty service and repairs on all products on which
the product warranty given by the Seller has not expired. All costs and
expenses incurred by Purchaser under this article shall be borne by Purchaser.
(f) Consents and Approvals.
(1) Prior to and after the Closing Date, Seller will use its best efforts to
obtain all necessary consents and approvals of all persons, entities, and
governmental authorities necessary to consummate the transactions contemplated
by this Agreement.
(2) If Seller is unable to procure prior to the Closing Date a duly executed
consent to the assignment of any Contract or Lease where a consent is necessary
to the assignment of any Contract or Lease that is being assigned to Purchaser,
Seller agrees to cooperate with Purchaser in any reasonable arrangement designed
to provide to Purchaser the benefit of any assigned Contract or Lease, including
enforcement of all rights Seller has against any other party to any of those
agreements until an effective consent to an assignment is procured by Seller or
Purchaser.
(g) Payment of Taxes. Seller and Purchaser will share equally any and all sales
taxes arising out of or imposed because of the sale of the Assets to Purchaser.
Seller and the Shareholders will pay all other taxes, including income taxes,
arising out of or imposed because of the sale of the Assets to Purchaser.
(h) Exhibits and Schedules. Seller and Purchaser each covenant and agree that,
prior to the Closing Date, they will cooperate with each other in connection
with the review, amendment, finalization, and substitution of all Schedules so
that the content of that each Schedule is complete and accurate as of the
Closing Date.
(i) Further Assurances. The parties hereto agree both prior to and after the
Closing Date, to execute and deliver all additional documents, and take all
other actions, as may be necessary or advisable to provide each of the parties
with the rights and benefits intended to be afforded to each of them pursuant to
the terms and conditions set forth in this Agreement. The parties hereto
further agree that this Section 8(i) will survive the execution of this
Agreement and the consummation of the transactions described in and contemplated
by this Agreement.
9. ENVIRONMENTAL MATTERS. Seller and Shareholders acknowledge that the
Real Estate may contain certain Hazardous Substances, Pollutants or Contaminants
(as defined in the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. section 9601(14) or the Minnesota Environmental
Response and Liability Act, Minn. Stat. section 115B.02, subds. 8, 9 and 13),
including but not limited to those disclosed in the Phase I Environmental Site
Assessment dated June 13, 1997, and the Limited Phase II Environmental
Assessment dated September 9, 1997, each prepared by RE/SPEC, Inc. (the
"Environmental Reports"), at levels exceeding Minnesota Pollution Control Agency
(MPCA) Soil Screening Values, MPCA Soil Reference Values, or Minnesota
Department of Health (MDH) Health Risk Limits. The Environmental Reports are
attached hereto as Schedule 9. Seller agrees to take the following steps with
respect to these Hazardous Substances, Pollutants and Contaminants :
(a) Notice to MPCA; Plan of Remediation. Seller has previously notified the
Minnesota Pollution Control Authority ("MPCA") of the existence of the
contamination disclosed in the Environmental Reports and has submitted to the
MPCA a Phase II site work plan (the "Work Plan") to determine the nature and
extent of any contamination in, on or under the Real Estate or on or under any
adjacent property attributable to the Seller. The MPCA has approved the Work
Plan and RE/SPEC, Inc. is currently carrying out the work plan on behalf of the
Seller. Based on the results of the testing to be conducted pursuant to the
Work Plan, the Seller will prepare and propose to the MPCA a plan of remediation
(the "Plan of Remediation") with respect to such contamination. The Plan of
Remediation will, at a minimum, restore the Real Estate to a condition (and, to
the extent any such contamination has migrated from the Real Estate to any
adjacent properties, restore such adjacent properties to a condition) which will
result in the MPCA issuing a "no further action" letter. Following notification
to the MPCA, Seller shall diligently pursue the concurrence of the MPCA with
respect to the Plan of Remediation. Seller and Shareholders shall provide
Purchaser and its counsel with copies of the Plan of Remediation and of all
documents and correspondence submitted by Seller to the MPCA or received from
the MPCA, to the extent such documents and correspondence relate to the Real
Estate, the Plan of Remediation or the No Association Letter (as defined
herein).
(b) Execution of Plan of Remediation. Upon acceptance and approval of the Plan
of Remediation by MPCA, Seller agrees to diligently pursue the execution and
full implementation and completion of the Plan of Remediation (both prior to and
following the Closing Date) and agree to engage any and all engineers,
contractors, consultants, laborers, materialmen, suppliers, attorneys, agents or
other parties in order to execute the Plan of Remediation. Subject to the
limitations set forth in Section 9(e), Seller shall pay all costs and expenses
incurred or associated with the preparation, execution and implementation of the
Plan of Remediation.
(c) No Association Letter. Seller agrees to assist Purchaser and fully
cooperate with Purchaser in obtaining a letter from the MPCA (the "No
Association Letter") at the Purchaser's expense stating that the MPCA
acknowledges that Purchaser shall have no liability or responsibility for
contamination or any other release of Hazardous Substances, Pollutants, or
Contaminants which occurred prior to the Closing Date. The No Association
Letter shall be in form and substance agreeable to Purchaser in the exercise of
its sole discretion. Purchaser's purchase of the Assets and the Real Estate is
contingent upon Purchaser obtaining to its satisfaction the No Association
Letter from the MPCA.
(d) Escrow. Seller and Shareholders agree that fifty percent (50%) of all
principal and interest due under the Debenture (including any common stock of
Parent issued in conversion of such principal) and the Promissory Note, and
fifty percent (50%) of all payments made under the Contracts for Deed, shall be
deposited, when paid by Purchaser, into a joint bank account agreed upon by
Seller and Purchaser which requires the signature of both Seller and Purchaser
to make draws and sign checks; provided however, that in no event shall payments
due under the Promissory Note, the Debenture or the Contracts for Deed be
withheld or deposited in the foregoing account if sum of the aggregate amount
then held in such account plus the sum of amounts previously expended by Seller
in implementing the Plan of Remediation is at least equal to the lesser of (i)
$350,000, or (ii) the amount reasonably estimated by RE/SPEC, Inc. to implement
any work under the Plan of Remediation for which payment has not been made or
which is yet to be performed. All amounts so deposited (the "Escrowed Amounts")
shall be used by Seller to implement the Plan of Remediation and the remaining
balance shall be held in such account until such time as (i) the MPCA has issued
a letter to Seller stating that no further action is required with respect to
remediation of the contamination of the Real Estate or any adjacent property
affected by contamination to the Real Estate; and (ii) all contractors,
engineers, consultants, laborers, materialmen, suppliers, attorneys, agents and
any other party retained by Seller to provide services in the preparation and
execution of the Plan of Remediation have been paid in full. All interest
earned on the Escrowed Amounts may be withdrawn by the Seller and Shareholders
as permitted by the depository institution at which the Escrowed Amounts are
deposited. The foregoing escrow of payments will not preclude Purchaser from
seeking indemnification from Seller and Shareholders under Section 11 of this
Agreement, to the extent the foregoing remedies do not adequately compensate
Purchaser for expenses and costs incurred in respect of any Third Party Claims
(as defined in Section 11).
(e) Abandonment of Plan of Remediation; Failure to Issue No Further Action
Letter. In the event the aggregate cost, as estimated by RE/SPEC, Inc., to
Seller and Shareholders of executing the Plan of Remediation is reasonably
expected to exceed the sum of $350,000, the Purchaser shall sell its vendee's
interest in the Real Estate to the Seller and Shareholder for the sum of one
dollar ($1.00), such sale to occur within 120 days of written notice from Seller
to Purchaser that the cost of executing the Plan of Remediation is reasonably
expected to exceed such amount. Upon such sale by Purchaser (i) the Purchaser
shall have no further obligation or liability to Seller and Shareholders under
the Contracts for Deed, (ii) Seller and Shareholders shall have no further
liability or obligation to Purchaser under this Section 9 or under Section 11,
except for the continuing obligation of Seller and Shareholders to provide
indemnity for Third Party Claims as provided in Section 11, and (iii) Seller,
Shareholders and Purchaser shall jointly execute any documents necessary to
release to Seller and Shareholders funds held in the account established under
Section 9(d) of this Agreement.
10. CLOSING DATE. Subject to the satisfaction of the conditions set forth
herein, the closing ("Closing") of the transactions described in and
contemplated by this Agreement with respect to the sale, conveyance, grant,
transfer, assignment, and delivery of the Assets and Real Estate will take place
on June 30, 1998 (the "Closing Date") at 10:00 a.m., central standard time, at
the offices of Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP, counsel to the Purchaser, or on
another date, time, or location as is agreed upon by Seller and Purchaser. The
Closing will be effective as of 12:01 a.m., central standard time, on the
Closing Date.
(a) Deliveries of Seller at Closing. At Closing, Seller will deliver, or cause
to be delivered, to Purchaser, the following:
(1) bills of sale, assignments, certificates of title, and other instruments of
transfer required to effectively transfer and assign good and marketable title
to all of the Assets to Purchaser;
(2) Articles of Amendment to the Articles of Incorporation of Seller, in form
suitable for filing with the Secretary of State of Minnesota, changing Seller's
corporate name to a name which does not include the word "Xxxxxx", duly executed
by an officer of Seller;
(3) reasonably current UCC, tax lien, judgment and bankruptcy searches
demonstrating the absence of any Liens (except for Permitted Liens) on the
Assets;
(4) the Assumption Agreement duly executed by the Seller;
(5) the Security Agreement, duly executed by Seller;
(6) all necessary consents and approvals of all persons, entities, and
governmental authorities required by this Agreement;
(7) the executed Contracts for Deed and commitments for title insurance
indicating that the transfer of the Real Estate to the Purchaser pursuant to the
Contracts for Deed shall vest Purchaser with good and marketable title (except
as such title is affected by the Contracts for Deed) and all other items to be
executed and delivered by Seller and Shareholders in connection therewith;
(8) the Plan of Remediation, approved in writing by the MPCA;
(9) executed employment agreements between Purchaser and Xxxx Xxxxxx and
Purchaser and Xxxxx Xxxxxx in the form of Exhibits H-1 and H-2 hereto (the
"Employment Agreement");
(10) certified copies of resolutions duly adopted by the board of directors and
shareholders of Seller approving this Agreement and the transactions described
in and contemplated by this Agreement;
(11) a certificate, signed by the president of Seller, certifying that (A) all
representations and warranties made by Seller hereunder are true and correct in
all material respects as of the Closing Date, (B) all obligations and covenants
of Seller required to be performed or complied with on or prior to the Closing
Date have been performed or complied with in all material respects by Seller,
and (C) Seller has not taken any action which Seller had agreed not to take
prior to the Closing Date;
(12) any updated Schedules;
(13) reasonably current good standing certificates issued by the Secretary of
State of Minnesota and by the appropriate governmental office of each of the
states in which Seller is authorized to conduct business; and
(14) such other documents and items as are reasonably necessary or appropriate
to effect the transactions contemplated hereby or which may be necessary under
local law.
(b) Deliveries of Purchaser at Closing. At Closing, Purchaser will deliver, or
cause to be delivered, to Seller the following:
(1) the Cash Portion;
(2) the Promissory Note;
(3) the Debenture;
(4) the Assumption Agreement duly executed by Purchaser;
(5) the Guaranty;
(6) the Parent Guaranty;
(7) the Security Agreement together with appropriate UCC-1 financing statements
duly executed by the Purchaser;
(8) the executed Contracts for Deed and all other documents and instruments to
be executed and delivered by Purchaser in connection therewith;
(9) the executed Employment Agreements;
(10) certified copies of resolutions duly adopted by the boards of directors of
Purchaser and Parent approving this Agreement and the transactions described in
and contemplated by this Agreement;
(11) a certificate, signed by the president of Purchaser, certifying that (A)
all representations and warranties made by Purchaser in this Agreement are true
and correct as of the Closing Date (B) all obligations and covenants of
Purchaser required to be performed or complied with on or prior to the Closing
Date have been performed or complied with by Purchaser, and (C) Seller has not
taken any action which Purchaser had agreed not to take prior to the Closing
Date;
(12) reasonably current good standing certificates issued by the Secretary of
State of Minnesota with respect to each of Parent and Purchaser and by the
appropriate governmental office of each of the states in which Parent or
Purchaser is authorized to conduct business;
(13) cash or other immediately available funds to pay in full the principal and
accrued interest due on the notes payable by the Seller to its officers,
directors and shareholders; and
(14) such other documents and items as are reasonably necessary or appropriate
to effect the transactions contemplated hereby or which may be necessary under
local law.
(c) General Closing Conditions. All documents delivered on or prior to the
Closing Date by Seller to Purchaser will be reasonably satisfactory in form and
substance to Purchaser and Purchaser's counsel, which approval will not be
unreasonably withheld, and all documents delivered on or prior to the Closing
Date by Purchaser or Parent to Seller will be reasonably satisfactory in form
and substance to Seller and its counsel, which approval will not be unreasonably
withheld.
(d) Conditions Prior to Closing.
(1) The obligations of Purchaser to close this transaction and purchase the
Assets pursuant to the terms and conditions of this Agreement and to consummate
the transactions described in or contemplated by this Agreement are subject to
the satisfaction prior to or as of the Closing Date of all of the following:
(A) completion of Purchaser's due diligence review of the Business and the
Assets to Purchaser's sole satisfaction;
(B) all representations and warranties of Seller in this Agreement remain true
and correct in all material respects at all times prior to and as of the Closing
Date and all of the obligations and covenants of Seller to be performed on or
before the Closing Date pursuant to the terms and conditions of this Agreement
are performed in all material respects, and Seller has not taken any action
which it agreed not to take in this Agreement;
(C) none of the Assets shall have suffered any destruction or damage by fire,
accident or other casualty, or act of god which destruction or damage would have
a material adverse effect on the conduct of the Business;
(D) the general closing conditions set forth in Section 10(c) have been
satisfied in full;
(E) the acquisition by Purchaser of all permits, licenses, authorizations,
registrations, consents, and approvals deemed necessary by Purchaser to conduct
the Business as of the Closing Date;
(F) Seller will have caused to be delivered to Purchaser payoff letters or
statements and Purchaser will have received written commitments to deliver
termination statements of any financing statements and releases of any Liens
covering any of the Assets upon receipt of payment in full of the indebtedness
secured thereby; and
(G) the board of directors of Purchaser and Parent will have approved the
execution and delivery of this Agreement and all of the transactions set forth
in this Agreement.
(2) The obligations of Seller and the Shareholders to close this transaction
and sell the Assets pursuant to the terms and conditions of this Agreement and
to consummate the transactions described in or contemplated by this Agreement
are subject to the satisfaction prior to or as of the Closing Date of all of the
following:
(A) all representations and warranties of Purchaser and Parent in this
Agreement remain true and correct in all material respects at all times prior to
and as of the Closing Date and all of the obligations and covenants of Purchaser
and Parent to be performed on or before the Closing Date pursuant to the terms
and conditions of this Agreement are performed in all material respects, and
neither Purchaser nor Parent has taken any action which either agreed not to
take in this Agreement;
(B) the Purchaser shall have paid all debts, liabilities and obligations of
Seller which are secured in whole or in part by a Lien on any of the Assets;
(C) the Seller shall have obtained all consents and approvals necessary to
consummate the transactions contemplated hereby;
(D) the Plan of Remediation shall have been approved by the MPCA; and
(E) the general closing conditions set forth in Section 10(c) have been
satisfied in full.
(3) If the closing conditions set forth in this Section 10(d) are not fulfilled
to the satisfaction of Seller, the Shareholders or Purchaser on or before June
30, 1998, the party or parties which are not satisfied may waive in writing any
or all of such conditions and close and consummate the transactions described in
and contemplated by this Agreement, or, in its discretion, terminate this
Agreement and the transactions described in and contemplated by this Agreement
by giving written notice to the other parties hereto, without any liability
whatsoever of the part of Seller, the Shareholders, or Purchaser arising from or
out of such termination. In the event of the termination of this Agreement
pursuant to this Section or otherwise, each party shall return all documents and
materials which shall have been furnished by or on behalf of the other parties,
and each party hereby covenants that it will not disclose to any person or
entity any confidential or proprietary information about the other parties or
any information about the transactions contemplated hereunder, except insofar as
may be necessary to assert its rights hereunder or as may be required by
applicable law.
11. INDEMNIFICATION.
(a) The Seller's and Shareholders' Indemnification Regarding Release of
Hazardous Substances, Pollutants or Contaminants. From and after the Closing,
subject to the provisions of this Section 11 and except as provided in Section
9(e) the Seller and the Shareholders, jointly and severally, agree to defend,
indemnify, and hold Purchaser and each of its affiliates, each of their
respective officers, directors, employees, shareholders, agents, legal
representatives, successors, and permitted assigns, harmless from, and against
any loss, claim, damage, liability, penalty, fine, fee or other cost or expense
(including without limitation costs of defense, settlement, and reasonable
attorneys' and consultant fees and costs, as well as the reasonable costs of
investigation or cleanup) incurred or sustained by any of them (a "Loss"), at
any time after the Closing Date, including but not limited to liabilities
incurred as a result of death or bodily injury to any person, contamination of
or adverse effects on the environment, or any violation of governmental laws,
regulations or orders, arising out of or in connection with the release, prior
to the Closing Date, of any Hazardous Substance, Pollutant or Contaminant at or
from the Real Estate, including any such release which affects any property
adjacent to the Real Estate.
(b) Indemnification by Purchaser. From and after the Closing, subject to the
provisions of this Section 11, Purchaser agrees to defend, indemnify, and hold
the Seller and the Shareholder and their officers, directors, employees,
shareholders, agents, legal representatives, successors, and permitted assigns,
harmless from and against, and to promptly pay to them or reimburse them for any
Loss sustained or incurred by any of them relating to or resulting from (a) the
operation of the Business or ownership of the Assets after the Closing Date, and
(b) the failure of the Purchaser to timely pay and perform the Assumed
Liabilities.
(c) Indemnification Procedure for Claims. The party or parties making a claim
for indemnification under this Section 11 is, for the purposes of this
Agreement, referred to as the "Indemnified Party" and the party or parties
against whom claims are assured under this Section 11 is, for the purposes of
this Agreement, referred to as the "Indemnifying Party". All claims by any
Indemnified Party under this Section 11 must be asserted and resolved as
follows:
(1) In the event that (A) any claim, issuance of any order or the commencement
of any action or proceeding (collectively, a "Proceeding") is asserted or
instituted by any party other than the parties hereto and their affiliates which
could give rise to Losses for which an Indemnified Party intends to seek
indemnification from an Indemnifying Party hereunder (a "Third Party Claim") or
(B) any Indemnified Party hereunder intends to make a claim to be indemnified by
any Indemnifying Party hereunder which does not involve a Third Party Claim (a
"Direct Claim", and together with a Third Party Claim, a "Claim"), the
Indemnified Party must promptly, and in any event within 60 days of the date on
which the Indemnified Party (in the case of a corporation, its senior
management) first becomes aware of the existence of a Claim, send to the
Indemnifying Party a written notice specifying the nature of the Claim, the
amount or estimated amount (which estimate will not be any evidence of the final
amount of any Claim), and any information available to the Indemnified Party
about the Claim (a "Claim Notice"); provided, however, that any failure to give
a Claim Notice will not waive any rights of the Indemnified Party except to the
extent that the rights of the Indemnifying Party are actually prejudiced.
(2) In the event of a Third Party Claim, the Indemnifying Party may assume the
defense of the Third Party Claim at its expense in its own name, or if necessary
in the name of the Indemnified Party with counsel of his or its choice
reasonably satisfactory to the Indemnified Party by providing written notice to
the Indemnified Party of its assumption of the defense within 20 days of receipt
of the Claim Notice (the "Defense Notice"); provided, however, that the
Indemnifying Party must conduct the defense of the Third Party Claim actively
and diligently thereafter in order to preserve the Indemnified Party's rights.
(3) If the Indemnifying Party elects to conduct the defense of the Third Party
Claim, the Indemnified Party will cooperate with and make available to the
Indemnifying Party all assistance and materials as may be reasonably requested
by it, all at the expense of the Indemnifying Party. The Indemnified Party may
at its own expense participate in the defense assisted by counsel of its own
choosing.
(4) The Indemnified Party may compromise and settle the Third Party Claim only
with the prior written consent of the Indemnifying Party, which consent will not
be unreasonably withheld or delayed. The Indemnifying Party may not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without prior written consent of the Indemnified Party, which
consent will not be unreasonably withheld or delayed, unless the entry of
judgment or settlement is only for a liquidated dollar amount and the
Indemnifying Party posts security adequate to the Indemnified Party for the
payment of the judgment or the settlement amount. Without the prior written
consent of the Indemnified Party, which consent will not be unreasonably
withheld or delayed, the Indemnifying Party may not enter into any settlement of
any Third Party Claim or cease to defend against a Third Party Claim, if
pursuant to or as a result of settlement or cessation: (i) injunctive or other
equitable relief would be imposed against the Indemnified Party, or (ii)
settlement or cessation would lead to liability or create any financial or other
obligation on the part of the Indemnified Party for which the Indemnified Party
is not entitled to indemnification hereunder, or (iii) the proposed settlement
includes a written admission of guilt. If an offer is made to settle a Third
Party Claim which all parties to the Third Party Claim (including the
Indemnifying Party) are prepared to settle and which offer the Indemnifying
Party is permitted to settle under this Section only upon the prior written
consent of the Indemnified Party, the Indemnifying Party will give prompt
written notice to the Indemnified Party to that effect. If the Indemnified
Party fails to consent to the firm offer within 30 calendar days after its
receipt of notice, the Indemnified Party may continue to contest or defend the
Third Party Claim and, in that event, the maximum liability of the Indemnifying
Party as to the Third Party Claim will not exceed the amount of the settlement
offer, plus costs and expenses paid or incurred by the Indemnified Party through
the end of that 30 day period.
(5) The Indemnifying Party will not be entitled to control, and the Indemnified
Party will be entitled to have sole control over, the defense or settlement of
any claim (i) to the extent that claim seeks an order, injunction, or other
equitable relief against the Indemnified Party which, if successful, could
materially interfere with the business, operations, assets, condition (financial
or otherwise) or prospects of the Indemnified Party or (ii) in a proceeding to
which the Indemnifying Party is also a party and the Indemnified Party
determines in good faith that joint representation would be inappropriate (and
in each case the cost of defense will constitute an amount for which the
Indemnified Party is entitled to indemnification hereunder).
(6) If the Indemnifying Party does not assume and conduct the defense of the
Third Party Claim in accordance with Section 11(e)(2) above, the Indemnified
Party may defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim.
(7) In the event of a Direct Claim, unless the Indemnifying Party notifies the
Indemnified Party within thirty (30) days of receipt of a Claim Notice that it
disputes the claim, the amount of the claim will be conclusively deemed a
liability of the Indemnifying Party hereunder and will be paid to the
Indemnified Party immediately.
(d) Failure to Give Timely Notice. A failure by an Indemnified Party to give
timely, complete, or accurate notice as provided in this Section 11 will not
affect the rights or obligations of any party hereunder except and only to the
extent that, as a result of that failure, any party entitled to receive notice
was deprived of its right to recover any payment under any applicable insurance
coverage, or deprived of its right to assert any claim because of expiration of
the applicable statute of limitations, or was otherwise directly damaged as a
result of a failure to give timely notice.
(e) Survival of Representations Warranties and Covenants; Time Limits on
Indemnification Obligations. Notwithstanding any right of any party to fully
investigate the affairs of all other parties to this Agreement, and
notwithstanding any knowledge of facts determined or determinable by any party
pursuant to that investigation or right of investigation, the investigating
party has the right to rely fully upon the representations, warranties,
covenants, and agreements of the other parties contained in this Agreement or in
any certificate delivered pursuant to any of the foregoing. All
representations, warranties, covenants, and agreements of each of the parties to
this Agreement will survive the execution and delivery of this Agreement but
shall not survive the Closing, except for (i) the representations and warranties
set forth in Section 6(g), which shall survive indefinitely, and (ii) the
parties' respective post-closing covenants, indemnities and agreements which
shall be performed in accordance with their terms.
(f) Right of Set-Off. In order to secure the Seller's payment of all claims
for indemnification under Section 11, and in addition to any other rights
Purchaser may have against the Seller and Shareholders, Purchaser may, in good
faith, set off the amount of Claims subject to indemnification by the
Shareholders against payments due the Shareholders under the Promissory Note or
the Debenture; provided, however, in the event that the Purchaser sets off
against any payments due to the Shareholders under the Promissory Note or the
Debenture all or any part of a Claim for which the Seller is not required to
indemnify the Purchaser under this Agreement, then (i) the Purchaser agrees to
pay interest to the Seller at the rate provided for in the Promissory Note or
the Debenture, as applicable, on the amounts wrongfully set off, and (ii) agrees
to reimburse the Seller and Shareholders for all reasonable attorney's and
paralegal's fees, accountant's fees, witness fees, and court costs incurred by
the Seller and Shareholders in recovering the amounts wrongfully set off by the
Purchaser.
(g) Fraud. The limitations set forth in this Section do not and will not apply
to intentional misrepresentation by any party.
12. CONSTRUCTION.
(a) Binding Effect. This Agreement will be binding upon and inure to the
benefit of Seller, Shareholders and Purchaser, and their respective legal
representatives, successors, and permitted assigns, if any. This Agreement may
not be assigned without the prior written consent of the non-assigning party,
except that Purchaser may assign this Agreement to a party which, directly or
indirectly, is controlled by, controls, or is under common control, with
Purchaser, without notice to or the consent of Seller. This Agreement is for
the benefit of Seller, Shareholders and Purchaser only, and no other person or
entity will be deemed a third-party beneficiary of this Agreement.
(b) Communications. All notices and other communications required or desired
to be given pursuant to this Agreement must be given in writing and will be
deemed duly given (i) upon personal delivery; (ii) on the third day after
mailing if sent by registered or certified mail, postage prepaid, return receipt
requested; (iii) on the day after mailing if sent by a nationally recognized
overnight delivery service which maintains records of the time, place, and
recipient of delivery; or (iv) upon receipt of a confirmed transmission, if sent
by telex, telecopy or facsimile transmission, and in each case if addressed as
follows:
If to Purchaser: With a copy to:
Oakridge Holdings, Inc. Xxxxxx G Rock, Esq.
0000 000xx Xxxxxx Xxxx Xxxxxxxxxxx Xxxxx & Xxxxxxxx
Apple Valley, MN 55124-8628 Suite 3400
Attn: Chief Executive Officer 00 Xxxxx Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000 Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Seller and Shareholders: With a copy to:
Xxxxxx Corporation Xxxxxxxx X. Xxx, Esq.
0000 Xxxxxx Xxxxxxxx Xxxxxxx Xxxx & Xxxxxxx
Xxxxx, XX 00000 A Professional Association
Attn: Xx. Xxxx Xxxxxx 4800 Norwest Center
Facsimile: (000) 000-0000 00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
or to such other person, entity, address or facsimile number as a party may
respectively designate in like manner, from time to time.
(c) Amendments. No modifications or amendments of this Agreement will be
effective unless made in writing and signed by the parties hereto.
(d) Governing Law. The parties hereto agree that this Agreement is delivered
and is intended to be performed in the State of Minnesota and will be construed
and enforced in accordance with the laws of the State of Minnesota without
regard to the choice of law provisions thereof.
(e) Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
(f) Entire Agreement. This Agreement, together with the Exhibits and Schedules
attached hereto, embodies the entire agreement and understanding between the
parties hereto and supersedes any and all prior and contemporaneous agreements
and understandings between the parties hereto relating to the subject matter
hereof, whether verbal or written. No statement, representation, warranty,
covenant, indemnity, or agreement of any kind not expressly set forth in this
Agreement will affect, or be used to interpret, change or restrict, the express
terms and provisions of this Agreement.
(g) Waivers and Consents. The terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by the written
agreement of the party entitled to the benefits of such terms or provisions
intended to be waived. Each such waiver or consent will be effective only in
the specific instance and for the specific purpose for which it was given, and
will not constitute a continuing waiver or consent.
(h) Expenses; Taxes. Each of the parties will pay its own fees and expenses in
connection with this Agreement and the transactions contemplated hereby whether
or not the transactions contemplated hereby are consummated, including, without
limitation, the fees of any attorneys, accountants, appraisers, or others
engaged by such party. Purchaser and Seller shall cooperate in preparing and
filing use and sales tax returns which are required, if any, in connection with
the transactions contemplated by this Agreement, and Seller shall pay all
income, sales, transfer or use taxes due, if any, with regard to such
transaction, and the Purchaser shall also furnish Seller with a form of reseller
certificate that complies with the requirements of any applicable state taxation
laws.
(i) Publicity. Purchaser may make those public announcements that are required
for it or the Parent to comply with the disclosure requirements of any
affiliated corporation under the securities laws. Purchaser will use its best
efforts to forward any written disclosure to the Seller prior to distribution
for comments. The Seller agrees that it will not issue any press release or any
written public statement with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of Purchaser.
(j) Recitals. The recitals set forth at the beginning of this Agreement are
hereby incorporated into and made a part of this Agreement as if fully set forth
herein.
(k) Exhibits and Schedules. The Exhibits and Schedules referred to in this
Agreement are attached hereto, made a part hereof and incorporated herein by
this reference.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Seller and Purchaser have each duly executed this
Agreement as of the date first set forth above.
PURCHASER: SELLER:
XXXXXX XX, INC. STlNAR CORPORATION
By:/s/ Xxxxxx Xxxxxx By:/s/ Xxxx Xxxxxx
Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxxx
Title: President Title: President
and
By:/s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Secretary
The following shareholders of the Seller will be benefited by the purchase of
the Assets as provided in this Agreement and are executing this Agreement for
the purpose of making the representations and warranties set forth in Section 6
and agreeing to indemnify Purchaser as provided in Section 11.
SHAREHOLDERS:
/s/ Xxxx X. Xxxxxx /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
