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EXHIBIT 99.6(a)
ASSET PURCHASE AGREEMENT
DATED: January 28, 1999
PARTIES: GTI Acquisition Corporation ("Buyer")
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx X
Xxxx Xxxxxxx, XX 00000
Xxxxxx Marketing Associates, Incorporated ("Seller")
d/b/a Graphics Technologies, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx ("Shareholder")
c/o Xxxxxx X. Xxxxxx, Esq.
Meshbesher & Xxxxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
RECITALS:
A. Seller has been engaged in the business of developing, manufacturing,
distributing and selling various computer related products and services
(the "Business").
B. Seller leases certain real estate from which it conducts the Business.
C. The parties mutually desire that Seller shall sell to Buyer
substantially all of the assets which Seller uses in the Business upon
the terms and subject to the conditions set forth in this Agreement.
AGREEMENTS:
In consideration of the mutual provisions, representations, warranties,
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1.
PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1. Purchase of Assets from Seller. Subject to the terms and
conditions hereof, Seller agrees on the Closing Date (as hereinafter defined) to
assign, sell, transfer, convey, and deliver to Buyer, and Buyer agrees on the
Closing Date to purchase from Seller, all of the assets and personal property of
Seller (excepting only the assets specifically identified as "Excluded Assets"
in Section 1.2 herein) related to or used in the operation of the Business,
wherever the same may be located (collectively referred to as the "Purchased
Assets"), including, without limitation, the following:
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(a) All cash and cash equivalents on hand or on deposit with
any financial institution related to the Business;
(b) All furniture, equipment, machinery, tooling, trade
fixtures and leasehold improvements reflected on Seller's books and
records for the business, including those items identified on Exhibit
1.1(b) ("Equipment");
(c) All vehicles including those vehicles identified on
Exhibit 1.1(c) hereto ("Vehicles");
(d) All intangible personal property, business records,
customer lists and goodwill ("Intangible Property"), including the
following:
(i) All assumed names under which Seller conducts the
Business, including those identified on Exhibit 1.1(d)(i)
hereto;
(ii) All tradenames, trademarks or service xxxx
registrations and applications, common law trademarks,
including those identified on Exhibit 1.1(d)(ii) hereto, and
all goodwill associated therewith ("Trademarks");
(iii) All domestic and foreign letters patent, patent
applications, and patent and know-how licenses, including
those identified on Exhibit 1.1(d)(iii) hereto ("Patents");
and
(iv) All technology, know-how, trade secrets,
manufacturing processes, formulae, drawings, designs, computer
programs, copyrights (including registrations and applications
therefor identified on Exhibit 1.1(d)(iv) hereto), related to
the Business, and all documentary evidence thereof
("Technology").
(e) All notes receivable, rights to payment and accounts
receivable of the Business as of the Closing Date including those
identified on Exhibit 1.1(e) ("Accounts Receivable");
(f) All inventory, including raw materials, supplies, work in
process and finished inventory of the Business as of the Closing Date
identified in Exhibit 1.1(f) ("Inventory");
(g) All permits, licensing approvals and notifications,
governmental or otherwise, relating to the Business ("Licenses and
Permits");
(h) INTENTIONALLY OMITTED;
(i) All of Seller's contract rights and benefits under its
real estate leases ("Real Estate Leases") used in the Business,
including leases identified in Exhibit 1.1(i) hereto, subject to the
terms and conditions thereof;
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(j) All of Seller's contract rights and benefits under all of
its personal property leases for tangible personal property used in the
Business, including those leases identified in Exhibit 1.1(j) hereto, subject to
the terms and conditions thereof ("Personal Property Leases");
(k) All other contract rights related to the Business, subject
to the terms and conditions thereof ("Contracts"); and
(l) All instruments, including stock certificates, owned by
Seller, including those identified in Exhibit 1.1(l) hereto.
1.2. Excluded Assets. Notwithstanding anything herein to the
contrary, Buyer does not purchase, and Seller does not sell, any of the
following assets ("Excluded Assets"):
(a) Seller's corporate minute book and corporate records
(provided that Seller will provide copies thereof relating to the
Business to Buyer upon request by Buyer for reasonable business
purposes).
(b) Any repayments or deposits of obligations which Buyer does
not assume under Paragraph 1.3 below.
(c) Any pending litigation, claims and related matters
identified on Exhibit 1.2(c) hereto.
(d) Leased vehicles identified on Exhibit 1.2(d) hereto.
1.3. Liabilities and Obligations Assumed. Subject to the terms and
conditions hereof, upon the Closing Date, Seller hereby assigns, transfers, and
conveys to Buyer, and Buyer hereby assumes from Seller and agrees to pay
according to their terms, all of the liabilities and obligations of Seller
related to the Purchased Assets or the operation of the Business, as the same
shall exist on the Closing Date, including all liabilities accruing in the
ordinary course of business after the effective date of this Agreement
(excepting, without limitation, the liabilities specifically identified as
"Excluded Liabilities" in Section 1.4 herein) (collectively referred to herein
as the "Assumed Liabilities"), including only those identified in Exhibit 1.3
hereto.
1.4. Excluded Liabilities and Obligations. Notwithstanding anything
herein to the contrary, without limitation, Buyer does not assume and Seller
does not transfer or assign any of the following liabilities or obligations
related to the Business ("Excluded Liabilities"):
(a) Any fee, extraordinary bonus or incentive payments payable
to key management personnel of Seller based upon a successful
completion of the transaction contemplated herein;
(b) Any federal, state or local taxes based upon or measured
by income or profits from operation of the Business through the Closing
Date; and
(c) Any obligation for accounting, legal or other professional
fees which are related to the consummation of the transaction
contemplated herein.
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(d) Any contingent or other liabilities not otherwise
identified in Exhibit 1.3 hereto.
1.5. Sales, Use and Deed Taxes. Seller shall be responsible for payment
of any sales, use or deed taxes assessable with respect to the transfer of the
Purchased Assets contemplated herein.
ARTICLE 2.
PURCHASE PRICE AND PAYMENT
2.1. Purchase Price. The purchase price for the Purchased Assets
and Non-Compete Agreement (as described in Section 2.5(b) herein) shall be the
sum of Ten Million One Hundred Thousand and no/100 Dollars ($10,100,000) subject
to the Post-Closing Adjustment described in Section 2.4 herein ("Purchase
Price").
2.2. Payment of Purchase Price. The Purchase Price shall be paid as
follows:
(a) Cash Payment. Buyer shall deliver to Seller at the Closing
One Million and no/100 Dollars ($1,000,000) by wire transfer to a bank
account designated by Seller.
(b) Stock Payment. Buyer shall deliver to Seller at the
Closing One Million Six Hundred Thousand and no/100 Dollars
($1,600,000), such amount payable by the issuance of a total of Two
Hundred Twenty Eight Thousand Five Hundred Seventy One (228,571) shares
of Buyer's parent company (Virtual Technology Corporation) Common
Stock, such shares to be non-registered and restricted from transfer
for one (1) year, pursuant to Rule 144 of the Securities Act of 1933,
as amended.
(c) Promissory Notes.
(i) Promissory Note From Buyer. Buyer shall execute and
deliver to Seller at Closing a Promissory Note from
Buyer to Seller in the amount of Four Million and
no/100 Dollars ($4,000,000), to be paid within thirty
(30) days after the Closing Date, without the payment
of interest. The Promissory Note from Buyer shall be
subject to offset by Buyer against any breach by
Seller and/or Shareholder of the representations,
warranties, agreements and indemnity obligations of
Seller and/or Shareholder, and any Post-Closing
Adjustment as described in Section 2.4 herein. The
Promissory Note from Buyer is attached hereto as
Exhibit 2.2(c)(i).
(ii) Promissory Note From Buyer's Parent Company. Buyer
shall deliver to Seller at the Closing a Promissory
Note from Buyer's parent company (Virtual Technology
Corporation) to Seller in the amount of Three Million
Three Hundred Thousand and no/100 Dollars
($3,300,000) to be paid within ninety (90) days of
the Closing Date, without the payment of interest.
The Promissory Note from Buyer's Parent shall be
subject to offset by Buyer against any breach by
Seller and/or Shareholder of the representations,
warranties, agreements and indemnity obligations of
Seller
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and/or Shareholder, and any Post-Closing Adjustment
as described in Section 2.4 herein. The Promissory
Note from Buyer's Parent is attached hereto as
Exhibit 2.2(c)(ii).
(d) Payment into Escrow. Ninety (90) days after the Closing
Date, Buyer shall deliver a certified, cashier's or bank check, or
equivalent instrument or funds, in the amount of Two Hundred Thousand
and no/100 Dollars ($200,000) to Xxxxxxxx & Xxxxxx P.A.
("Escrowholder"), pursuant to an Escrow Agreement attached hereto as
Exhibit 2.2(d). Such escrowed funds shall be held for a period of three
(3) years following the Closing Date as security against any breach of
the representations, warranties and agreements of Seller and
Shareholder contained herein and as security against any Post-Closing
Adjustment as described in Section 2.4 herein, one third (1/3) of which
shall be released on each of the first, second and third anniversaries
of the Closing Date.
2.3. Allocation of Purchase Price. The Purchase Price is hereby
allocated among the Purchased Assets and Non-Compete Agreement as set forth in
Exhibit 2.3. The parties agree to report this transaction for tax purposes in
accordance with the allocations set forth in Exhibit 2.3.
2.4. Post-Closing Adjustment.
(a) The Purchase Price shall be adjusted down dollar for
dollar following the Closing Date to the extent that the Actual Stockholder's
Equity (as hereinafter defined) is less than $2.1 million, the Funded Debt (as
hereinafter defined) is greater than $1.7 million or Shareholder/Seller fail(s)
to perform his/its indemnification obligations and/or other representations,
warranties and agreements pursuant to this Agreement. If the Purchase Price is
adjusted down pursuant to the foregoing, then Seller shall pay to Buyer an
amount equal to the difference, which may be done by Buyer as an offset against
amounts owing to Seller, at Buyer's sole discretion. Seller's "Actual
Stockholders' Equity" is the stockholders equity appearing on Seller's balance
sheet as of the Closing Date, to be computed within ninety (90) days after the
Closing Date at Buyer's expense by Buyer's independent auditors in accordance
with generally accepted accounting principles consistently applied, after (i)
forgiveness by Shareholder of any loans made to Seller, (ii) the writeoff of all
accounts receivable outstanding for more than ninety (90) days (including the
writeoff of approximately $400,000 owed by ATM), (iii) the writeoff of all notes
receivable in default for more than ninety (90) days, (iv) the writeoff of
inventory that is not saleable in the ordinary course of Seller's business in
Buyer's sole discretion, (including the writeoff of approximately $500,000 of
obsolete Sylvania inventory) and (v) payoff to Seller on or prior to the Closing
Date of all the sums owed by Technology Marketing Unlimited, LLC or any other
affiliate of Shareholder/Seller. "Funded Debt" is the sum of any short or
long-term bank or other third party debt, capital lease obligations.
(b) Within ninety (90) days after the Closing Date, Buyer
shall prepare and deliver to Seller a determination (the "Determination") of the
actual amount of the Purchase Price Post-Closing Adjustment as of the Closing
Date (which actual amount is referred to herein as the "Actual Amount")
including the basis for such Determination. If, within thirty (30) days after
the date on which a Determination is delivered to Seller, Seller shall not have
given written notice to the Buyer setting forth in detail any objection of
Seller to such Determination, then such Determination shall be final and binding
on the parties hereto. In the event Seller gives written notice of any objection
to such Determination within such 30-day period, Buyer and Seller shall
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use all reasonable efforts to resolve the dispute within thirty (30) days
following the receipt by Buyer of the written notice from Seller. If the parties
are unable to reach an agreement within such 30-day period, the matter shall be
submitted to a mutually agreed upon certified public account firm for
determination of the Actual Amount which shall be final and binding upon Buyer
and Seller. If the parties cannot mutually agree on a firm to make such
determination, each shall select a firm and these two firms shall select
together an independent firm of certified public accountants for the
determination of the Actual Amount which shall be final and binding upon Buyer
and Seller. Buyer and Seller shall contribute equally to all costs (including
fees and expenses charged by the selected firm of certified public accountants)
in connection with the resolution of any such dispute. The Actual Amount shall
be paid to Buyer by Seller within ten (10) business days of the date the
Determination has become final by virtue of Seller's failure to have given
written notice of objection, mutual agreement of the parties or binding
resolution of the dispute and shall be deemed to be indemnifiable. In the event
of Seller's failure to pay within the time frame provided, Buyer may take any
action or exercise any remedy available to it to recover such amount.
2.5. Payment for Business Agreements. Buyer and Seller and/or
Shareholder shall enter into the following agreements and/or arrangements
(collectively referred to as the "Business Agreements"):
(a) Consulting Agreement. On the Closing Date, Seller will
enter into an agreement to provide consulting services to Buyer as
requested during the three (3) year period after the Closing date
("Consulting Agreement"). The Consulting Agreement will require Buyer
to pay to Shareholder for his services an aggregate of $1,015,000, such
amount payable by the issuance of a total of One Hundred Forty Five
Thousand (145,000) shares of Buyer's parent company (Virtual Technology
Corporation) Common Stock, which would be delivered on the Closing
Date. The public resale of such shares will be registered on Form S-8
or other available form as soon as reasonably possible with the
Securities and Exchange Commission.
The Consulting Agreement is attached hereto as Exhibit 2.5(a).
(b) Non-Compete Agreement. On the Closing Date, Shareholder
and Seller will enter into an agreement not to compete against Buyer
(which shall include an agreement of non-solicitation of Buyer's
employees) during the three (3) years after the Closing Date
("Non-Compete Agreement"). The consideration to be paid to Shareholder
by Buyer for this Non-Compete Agreement shall be set forth in the
Allocation of Purchase Price, Exhibit 2.3.
(c) Employment Agreements. On the Closing Date, each of the
Seller's employees, as required by Buyer, will agree to become
employees of the Buyer on the terms and conditions acceptable to Buyer
and each of the employees. However nothing herein obligates Buyer to
employ all of Seller's employees.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1. Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, has all
requisite power and authority, corporate and otherwise, to own its properties
and assets and to conduct the Business as it is now conducted.
3.2. Qualification. Seller is qualified to do business and is in
good standing as a foreign corporation in all states in which qualification is
required by the nature of the Business and in which the failure to so qualify
and be in good standing would have a material adverse effect on the Business.
3.3. Financial Statements.
(a) Financial Statements. Seller has furnished Buyer with a
true and complete copy of its balance sheets, statement of changes in
financial condition and statements of income for fiscal years ending
December 31, 1996, December 31, 1997, December 31, 1998 and for interim
periods ending January 28, 1999, together with all notes and schedules
related thereto, all of which are attached hereto as Exhibit 3.3(a).
Such financial statements, together with the Audited Financial
Statements (as defined in Section 5.4) have been and will be prepared
in conformance with generally accepted accounting principles and
procedures applied on a basis consistent with prior periods and fairly
present and will fairly present in all material respects the financial
condition of the Business as of the represented dates thereof and the
results of the Business' operations for the period covered thereby. For
purposes of this Agreement the foregoing financial statements and the
Audited Financial Statements shall be deemed to include any notes
thereto.
(b) Books and Records. Seller's books of account and records
(including customer order files, employment records and production and
manufacturing records) for the Business are complete, true and correct
in all material respects.
3.4. Tax Reports, Returns and Payment.
(a) Tax Reports and Returns. Except as disclosed in Exhibit
3.4(a) hereto, Seller has accurately prepared and timely filed all
federal and applicable state, local, and foreign tax or assessment
reports and returns of every kind required to be filed by Seller with
relation to the Business, including, without limitation, income tax,
sales and use tax, real estate tax, personal property tax and
unemployment tax, and has duly paid all taxes and other charges
(including interest and penalties) due to or claimed to be due by any
taxing authorities. Where required, timely estimated payments or
installment payments of tax liabilities have been made to all
governmental agencies in amounts sufficient to avoid underpayment
penalties or late payment penalties applicable thereto.
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(b) Tax Payments. Except as disclosed in Exhibit 3.4(b)
hereto, the provisions for taxes shown in the Financial Statements are and will
be adequate to cover the aggregate liability of Seller as of the Closing date
for all taxes, duties and charges based on the income, purchases, sales,
business, real estate ownership, capital stock or surplus, or assets of Seller
relating to the Business.
3.5. Title to Assets. Except as disclosed on Exhibit 3.5 hereto,
Seller holds title to the Purchased Assets free and clear of all liens,
encumbrances, licenses or leases.
3.6. Tangible Personal Property. Except as stated in Exhibit 3.6
hereto, all material assets described in Sections 1.1(b), (c) and (f) are in
good repair and operating condition and will be maintained in good repair and
operating condition, ordinary wear and tear excepted, from the date hereof until
the Closing Date. Seller hereby assigns to Buyer as of the Closing Date, to the
extent possible, any and all warranties covering such property existing as of
the Closing Date.
3.7. Trademarks. Seller has good title to the assumed names and the
Trademarks listed on Exhibits 1.1(d)(ii), free and clear of all liens and
encumbrances except as set forth on Exhibit 3.5. Except as disclosed in Exhibit
3.7 hereto, such Trademarks are not licenses to or licenses from any other
person or entity.
3.8. Patents. Seller has good title to the Patents listed on
Exhibit 1.1(d)(iii) hereto, free and clear of all liens and encumbrances except
as set forth on Exhibit 3.5. Except as disclosed in Exhibit 3.8 hereto, such
Patents are not licensed to or licensed from any other person or entity.
3.9. Accounts Receivable. Except to the extent reserved against in
the Audited Financial Statements, all accounts receivable of Seller related to
the Business are collectable at the aggregate face amounts of such receivables
recorded on Seller's books. All such accounts, notes or other receivables are
valid, legal, and binding obligations owing to Seller, enforceable against the
parties to be charged thereby.
3.10. Inventory. The Inventory represents the normal supplies and
stock in trade of Seller on hand as of the close of business on the Closing
Date. Except to the extent reserved against in the Audited Financial Statements,
the Inventory is and will be, as of the Closing Date, good, merchantable and
saleable at customary prices in the ordinary course of business and is and will
be, as of the Closing Date, of a quality, quantity and mix consistent with
Seller's past business practices and the demands of its customers.
3.11. Licenses and Permits. Seller possesses all permits, licenses,
approvals and notifications, governmental or otherwise, the absence of which
would have a material adverse effect on the Business. Except as disclosed in
Exhibit 3.11, all of such licenses and permits are freely assignable and
transferable to Buyer at the Closing and will continue to be in full force and
effect after such transfer.
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3.12. Real Property. Exhibit 1.1(i) is an accurate and complete list
of all real property leased by Seller for operation of the Business. Seller has
not received notice of the initiation of any condemnation proceeding with
respect to such real property, or offer of sale in lieu thereof, nor has Seller
breached (or received any claim that it has breached) any of the terms or
conditions of such leases.
3.13. Personal Property Leases. Exhibit 1.1(j) contains and accurate
and complete list of all leases of material personal property necessary in the
operation of the Business. Seller has not breached, nor has it received in
writing any claim or threat that it has breached, any of the terms or conditions
of such personal property leases.
3.14. Agreements, Contracts and Commitments.
(a) Material Contracts. Except as disclosed on Exhibit 3.14(a)
or on other Exhibits attached hereto, Seller is not a party to or bound
by any written agreement listed below relating to the Business:
(i) dealer, distributorship or sales agent agreement,
excluding purchase orders for sales of products in the
ordinary course of business;
(ii) advertising contract;
(iii) contract commitment, or arrangement for capital
expenditures having a remaining balance in excess of
Twenty--Five Thousand and no/100 Dollars ($25,000);
(iv) lease with respect to any property, real or personal.
(v) contract, commitment, or arrangement containing
covenants by Seller not to compete in any lines of business or
with any person or business entity;
(vi) franchise agreement;
(vii) loan, credit, promissory note or other evidence
of indebtedness, including all agreements for any commitments
for future loans, credit, or financial, excluding
inter-company loans and credit extended by the Business to its
customers;
(viii) guarantee;
(ix) agreement, contract or commitment for the purchase of
any services, raw materials, supplies or equipment involving
payments of more than One Hundred and no/100 Dollars ($100)
per annum or an aggregate of more than One Thousand and no/100
Dollars ($1,000), excluding of purchase orders for the
purchase of products or services required in the ordinary
course of business; or
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(x) agreement, contract or commitment for the sale of the
Business' assets, products or services involving a value
estimated at more than Five Hundred and no/100 Dollars ($500),
excluding purchase orders for the sale of the Business
products in the ordinary course of business.
Except as specifically set forth in Exhibit 3.14(a), each contract,
commitment, or arrangement referred to in such Exhibit is terminable
pursuant to the terms of the contract without penalty, costs, or
liability on notice not exceeding sixty (60) days. Seller is not in
material breach (nor has it received notice of a claim that it is in
material breach) of any contracts identified on Exhibit 3.14(a) as not
terminable on a sixty (60) days notice. All such contracts, commitments
or other arrangements are assignable without consent of any person
other than as listed on Exhibit 3.14(a) and such consents, if any, as
are required shall be obtained by Seller prior to the Closing.
(b) Employee Plans. Except as set forth on Exhibit 3.14(b)
hereto, Seller does not maintain any "Employee Plans" covering
employees working in the Business. "Employee Plans" mean any pension,
retirement, disability, medical, dental, or other health insurance
plan, life insurance or other death benefit plan, profit sharing,
deferred compensation, stock option, or severance plan including,
without limitation, any "pension plan" as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any "welfare plan" as defined in Section 3(l) or ERISA,
whether or not any of the foregoing is funded.
(c) Union and Employment Contracts and Other Employment
Matters.
(i) Except as set forth in Exhibit 3.14(c)(i) hereto,
Seller is not a party to any collective bargaining agreement
or any other written employment agreement with employees
working in the Business, nor is Seller a party to any other
written contract or understanding that contains any severance
pay liabilities or obligations, except for accrued, unused
vacation pay or accrued and unused sick leave pay for
employees working in the Business.
(ii) During the last three (3) years Seller has not
experienced any work stoppages, walkouts or strikes or
attempts by employees working the Business to organize a
union.
(iii) Except as disclosed in Exhibit 3.14(c)(iii) hereto,
in the past three (3) years no claims have been made against
Seller by any former or present employee who worked in the
Business based on employment discrimination, wrongful
discharge, or unfair labor practices.
(iv) Seller has received no claim asserting (and has no
knowledge of) any failure of Seller to comply with applicable
federal and state laws and regulations relating to employment
of labor, including laws and regulations relating to wages,
hours, collective bargaining, withholding taxes, and employee
health and benefits.
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3.15. Predominant Customers. Except as disclosed in Exhibit 3.15
hereto, no single customer of the Business accounted for over five percent (5%)
of the Business' revenues during the fiscal year ending prior to the date of
this Agreement.
3.16. Change In Customers. Except as disclosed in Exhibit 3.16
hereto, no significant customer has indicated to Seller that it intends to cease
doing business with Seller or materially alter the amount of business with
Seller.
3.17. Product Liability Claims. All products which Seller has sold
through the Business have been merchantable and free from material defects in
material or workmanship for the term and under the conditions set forth in the
Business' standard written limited product warranties. Except as set forth on
Exhibit 3.17 hereto, during the last three (3) years Seller has not received a
claim exceeding $25,000 based upon an alleged breach of product warranty,
arising from Seller's manufacture or sale of its products (hereafter
collectively referred to as "Product Liability Claims"). Seller has no
reasonable grounds to believe that future Product Liability Claims with respect
to products of Seller sold through the Business prior to the Closing Date will
be different from Seller's past experience with respect thereto as set forth
herein.
3.18. Insurance. Seller has maintained and will continue to maintain
until the Closing Date the insurance described in Exhibit 3.18, including
insurance on Seller's tangible real and personal property and assets, whether
owned or leased, against loss or damage by fire and other casualty, in amounts
equal to or in excess of one hundred percent (100%) of the replacement value
thereof. All such insurance is in full force on the date of this Agreement and
is carried with reputable insurers. Seller has promptly and adequately notified
Seller's insurance carriers of any and all claims known to Seller with respect
to the operations or products of Seller for which Seller is insured. At the
Closing, Seller shall have in effect the product liability insurance policy
described in Exhibit 3.18 and will use Seller's best efforts to obtain extended
coverage, satisfactory to Purchaser, for product liability for at least three
(3) years. The cost of such extended coverage shall be borne by Seller.
3.19. Litigation, Adverse Claims and Related Matters. Except as
disclosed on Exhibit 3.19 hereto, there is no pending or threatened litigation
(nor, to Seller's knowledge, any claim which may lead to a threat of
litigation), proceeding, or investigation (including any environmental, building
or safety investigation) relating to any material aspect of the Business or the
Purchased Assets, nor is Seller subject to any existing judgment, order or
decree which would prevent, impede, or make illegal the consummation of the
transactions contemplated in this Agreement or which would have a material
adverse effect on the Business.
3.20. Laws and Regulations. Seller has complied, and is in
compliance on the Closing Date, with all applicable laws, statutes, orders,
rules, regulations and requirements promulgated by governmental or other
authorities relating to the Business or the Purchased Assets, the failure of
which would have a material adverse effect on the Business. Seller has not
received any notice of any sort of alleged violation of any such statute, order,
rule, regulation or requirement.
3.21. Breaches of Contracts; Required Consents. Neither the
execution and delivery of this Agreement by Seller, nor compliance by Seller
with the terms and provisions of this Agreement will:
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(a) Conflict with or result in a breach of (i) any of the
terms, conditions or provisions of the Articles of Incorporation,
Bylaws or other governing instruments of Seller; (ii) any judgment,
order, decree or ruling to which the Seller is a party; (iii) any
injunction of any court or governmental authority to which Seller is
subject; or (iv) any agreement, contract or commitment which is
material to the Business; or
(b) Except as disclosed in Exhibit 3.21(b) hereto, require the
affirmative consent or approval of any third party, the absence of
which would have a material adverse effect on the Business.
3.22. Binding Obligation. This Agreement constitutes the legal,
valid and binding obligation of Seller in accordance with the terms hereof.
Seller has all requisite corporate power and authority, including the approval
of its Shareholders and Board of Directors, to execute, perform, carry out the
provisions of and consummate the transactions contemplated in this Agreement.
3.23. Banks and Other Depositories. Exhibit 3.23 hereto is an
accurate and complete list of the names and account numbers of each of Seller's
bank accounts, brokerage accounts, savings accounts, certificates of deposit and
similar cash investments, and safe-deposit boxes relating to the Business,
together with the identification of persons authorized to withdraw or otherwise
deal with them.
3.24. Commissions or Finder's Fees. There is no obligation,
commission, or fees Seller has incurred or will incur to any broker or finder in
connection with the transactions contemplated herein.
3.25. Completeness of Disclosure. No representation in this Article
contains any untrue statement of a material fact or omits to state any material
facts or omissions of which would be misleading.
ARTICLE 4.
REPRESENTATION AND WARRANTIES OF BUYER
4.1. Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, has all
requisite power and authority, corporate and otherwise, to own its properties
and assets and to conduct the Business as it is now conducted.
4.2. Corporate Authority. Buyer has all requisite power and
authority, including the approval of its Board of Directors, to execute,
perform, carry out the provisions of this Agreement.
4.3. Breaches of Contracts; Required Consents. Neither the
execution and deliver of this Agreement by Buyer, nor compliance by Buyer with
the terms and provisions of this Agreement, will:
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(a) Conflict with or result in a breach of: (i) any of the
terms, conditions or provisions of the Articles of Incorporation,
Bylaws or other governing instruments of Buyer; (ii) any judgment,
order, decree or ruling to which the Buyer is a party; (iii) any
injunction of any court or governmental authority to which it is
subject; or (iv) any agreement, contract or commitment which is
material to the financial condition of Buyer; or
(b) Require the affirmative consent or approval of any third
party.
4.4. Binding Obligation. This Agreement constitutes the legal,
valid and binding obligation of Buyer in accordance with the terms hereof. Buyer
is not subject to any charge, mortgage, lien, lease, agreement, contract,
instrument, law, rule, regulation, order, judgment or decree, or any other
restriction of any kind or character, which would prevent the consummation of
the transactions contemplated in this Agreement.
4.5. Commissions or Finder's Fees. The only obligation, commissions
or fees Buyer has incurred or will occur to any broker or finder in connection
with the transactions contemplated herein is to NONE, which amounts shall be
paid in full on the Closing Date.
4.6. Completeness of Disclosure. No representation in this Article
contains any untrue statement of a material fact or omits to state any material
fact the omission of which would be misleading.
ARTICLE 5.
CONDUCT AND TRANSACTIONS OF BUSINESS PRIOR TO CLOSING
5.1. Access to Information. During the period prior to the
Closing, Seller shall give to Buyer and its attorneys, accountants or other
authorized representatives, full access to all of the property, books,
contracts, commitments and records relating to the Business and shall furnish to
Buyer during such period all such information concerning the Business, or the
Purchased Assets as Buyer reasonably may request. Buyer shall have the right to
conduct on site inspections of the Business' premises.
5.2. Restrictions in Operation of the Business. Seller
represents and covenants that during the period from the date of this Agreement
to the Closing (except as Buyer otherwise has consented in writing):
(a) The Business will be conducted only in the usual and
ordinary manner.
(b) Seller will not sell, dispose, transfer, assign or
otherwise remove any of the Purchased Assets except inventory in the
ordinary course of business and at regular prices.
(c) Seller will timely pay and discharge all bills and
monetary obligations and timely and properly perform all of its
obligations and commitments under all existing contracts and agreements
pertaining to the Business, except as to amounts or obligations which
Seller contests in good faith.
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(d) Seller shall use its best efforts to preserve the business
organization and assets of the Business and to keep available to Buyer
the services of the Business' present employees, and not to impair
relationships with suppliers, customers and other having business
relations with the Business.
5.3. No Solicitation of Other Offers. Seller agrees that, prior to
the later of the Closing Date, the termination of this Agreement pursuant to
Section 6.4 or February 28, 1999, neither Seller nor any of Seller's
representatives will enter into any negotiations with or solicit any offer,
inquiry or proposal from any other person with respect to the sale, merger or
other acquisition of the Business.
5.4. Audit and Comfort Letter. Seller shall cause its certified
public accounts, Xxx Xxxxxx, CPA, to prepare and certify an audited balance
sheet and statement of operations for the Business for the twelve (12) month
periods ending December 31, 1996, December 31, 1997, December 31, 1998 and the
one (1) month period ending January 28, 1999 (the "Audited Financial
Statements") and to deliver a comfort letter dated thirty (30) days after the
Closing Date certifying that the warranty provided in Section 3.3 is true as of
the date of such letter, in the form attached hereto as Exhibit 5.4 (the
"Comfort Letter"). Buyer's certified public accountants shall have the right to
review the audit of the Audited Financial Statements.
5.5. Xxxx-Xxxxx-Xxxxxx Act Filings. Seller and Buyer will promptly
prepare and file with the Federal Trade Commission and with the United States
Department of Justice any notification and report forms required, with respect
to the purchase of the Purchased Assets and the Stock by Buyer, under the
provisions of the Xxxx-Xxxxx-Xxxxxx Anti-trust Improvements Act of 0000 (xxx
"XXX Xxx"). The parties shall each promptly notify the other party of any
request by any governmental agency for additional information with respect to
such filings, and shall use reasonable efforts to cooperate in responding
promptly to any such request.
5.6. Confidentiality Agreement.
(a) Definition of Confidential Information. For purposes of
this Section, "Confidential Information" means any information or
compilation of information not generally known, which is proprietary to
a business, and includes, without limitation, trade secrets,
inventions, and information pertaining to development, marketing,
sales, accounting and licensing of the business' products and services,
customer information, customer lists, and any customer information
contained in customer records, working papers or correspondence files
and all financial information, including financial statements, notes
thereto and information contained in federal and state tax returns.
Information shall be treated as Confidential Information irrespective
of its source and all information which is identified as being
"confidential", "trade secret", or is identified or marked with any
similar reference shall be presumed to be Confidential Information.
(b) Covenants by Parties. Buyer, on the one hand, and Seller,
on the other, each agree and covenant with respect to all Confidential
Information of the other received or learned by either of them as
follows:
(i) It will treat as confidential all Confidential
Information made available to it or any of its employees,
agents or representatives;
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(ii) It will maintain the same in a secure place and limit
access to the Confidential information to those employees,
agents and representatives to whom it is necessary to disclose
the Confidential Information in furtherance of the
transactions contemplated by this Agreement;
(iii) It and its employees, agents and representatives
will not copy any Confidential Information, disclose any
Confidential Information to any unauthorized party, or use any
Confidential Information for any purpose including competition
with the other party or solicitation of the other party's
customers; and
(iv) It will assume liability for any breach of this
Section 5.6 by it or any of its employees, agents or
representatives.
(c) Applicability; Limitations. The obligations imposed by
this Section shall apply (i) to Buyer forever with respect to any
Confidential Information relating to the business or operations of
Seller other than the Business, and until the Closing with respect to
the Business or, if such Closing does not occur, forever with respect
to the Business; and (ii) to Seller, forever with respect to the
operations of Buyer and forever with respect to the Business after the
Closing; provided, however, that the obligations imposed by this
Section 5.6 shall not apply to any Confidential Information:
(i) which was known to the receiving party prior to
receipt from the disclosing party;
(ii) which, was publicly divulged prior to receipt from
the disclosing party;
(iii) which, through no act on the part of the receiving
party, thereafter becomes publicly divulged;
(iv) which was received in good faith by the receiving
party from any third party without breach of any obligations
of confidentiality; or
(v) which was independently developed (without access to
or use of any Confidential Information of the other party) by
an employee or agent of the receiving party subsequent to
receipt of the Confidential Information under this Agreement.
(d) Injunctive Relief. The parties agree that the nonbreaching
party would not have an adequate remedy at law for any breach or
nonperformance of the terms of this Section 5.6 by the other party or
any of its employees, agents and representatives and that this
Agreement, therefore, may be enforced in equity by specific
performance, temporary restraining order and/or injunction. The
nonbreaching party's right to such equitable remedies shall be in
addition to all other rights and remedies which the nonbreaching party
may have hereunder or under applicable law, including a right to
damages.
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(e) Unconditional Obligation. The obligations set forth in
this Section 5.6 to maintain the confidentiality of and not wrongfully
use the Conditional Information are unconditional and shall not be
excused by any conduct on the part of a party except as specifically
set forth in Section 5.6(c).
ARTICLE 6.
CONDITIONS OF CLOSING; ABANDONMENT OF TRANSACTION
6.1. Conditions to Obligations of Buyer to Proceed on the Closing
Date. The obligations of Buyer to proceed on the Closing Date shall be subject
(at its discretion) to the satisfaction, on or prior to the Closing, of all of
the following conditions:
(a) Truth of Representations and Warranties and Compliance
with Obligations. The representations and warranties of Seller herein
shall be true in all material respects on the Closing Date with the
same effect as though made at such time. Seller shall have performed
all material obligations and complied with all material covenants and
conditions prior to or as of the Closing Date. Seller shall have
delivered to Buyer a certificate of Seller in form and substance
satisfactory to Buyer dated as of the Closing Date and executed by the
President of Seller to all such effects.
(b) Opinion of Counsel. Buyer shall have received a duly
executed opinion letter from Seller's legal counsel dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyer
and its counsel, to the effect that:
(i) Seller is a corporation duly organized and validly
existing and in good standing in the State of Minnesota; has
all necessary corporate power to own the property it now owns
and to operate the Business as it is now operated; and is
qualified to do business in all states in which qualification
is required by the nature of the Business and where the
failure to so qualify would have a material adverse effect on
the Business;
(ii) This Agreement and all collateral documents have been
duly and validly authorized, executed and delivered by Seller,
constitute the valid and binding obligations of Seller and are
enforceable in accordance with their terms, except as limited
by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally;
(iii) To the best of such counsel's knowledge, after
reasonable inquiry, no suit, action, arbitration, legal or
administrative proceeding is pending against the Business or
the Purchased Assets;
(iv) Neither the execution nor delivery of this Agreement,
nor the consummation of the transactions contemplated in this
Agreement, will constitute a violation of Seller's Articles of
Incorporation or Bylaws, or, to the best of such counsel's
knowledge, a default under, or violation or breach of, any
material agreement listed on an Exhibit to this Agreement; and
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(v) To the best of such counsel's knowledge, Seller has
good and marketable title to the Purchased Assets.
In giving such opinion, such counsel may rely, as to matters of fact,
upon certificates of officers of Seller or public officials, and as to
matters of law solely upon the laws of the State of Minnesota.
(c) Assignments. Seller shall have executed and delivered to
Buyer documents assigning all of its right, title and interest in the
Real Estate Leases, Personal Property Leases, Trademarks, Copyrights
and Patents to Buyer.
(d) INTENTIONALLY OMITTED
(e) Release Secured Claims and Mortgages. Seller shall have
obtained full and complete releases of all security interest, mortgages
or other encumbrances upon the Purchased Assets, including those set
forth in Exhibit 6.1(e).
(f) Required Consents. All required consents shall have been
received from governmental agencies whose approval is required to
consummate the transaction contemplated herein and from each person or
entity listed on Exhibit 3.21(b).
(g) Change of Name. Seller shall have prepared and filed
suitable documents amending its Articles of Incorporation and
Certificate of Assumed Name to change Seller's legal and assumed names
to a legal and assumed name dissimilar to its present legal and assumed
name.
(h) Comfort Letter. Seller's certified public accountants
shall have delivered the Comfort Letter as required under Section 5.4.
(i) Xxxx-Xxxxx-Xxxxxx Act Filing. The parties shall have filed
all notification and report forms required to be filed under the
provisions of the HSR Act and supplied all additional information
requested by any governmental agency relating thereto. All waiting
periods provided under the HSR Act shall have expired.
(j) Delivery of Documents. Seller shall have delivered all
documents required to be delivered at Closing pursuant to Section 7.2
hereof.
(k) Litigation Affecting Closing. No suit, action or other
proceeding shall be pending or threatened by or before any court or
governmental agency in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transaction contemplated by this Agreement, and no
investigation that may result in any suit, action or other proceeding
shall be pending or threatened.
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(l) Legislation. No statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any domestic or
foreign government or governmental or administrative agency or court
which would make the transaction contemplated by this Agreement illegal
or otherwise materially adversely affect the Purchased Assets or the
use and operation of the Business in the hands of Buyer.
(m) Review of Records of the Business. Buyer shall have had
the opportunity prior to the Closing Date to review the business
records of the Business and to take such other actions as specified in
Section 5.1. Buyer shall not have discovered during such review any
substantial liabilities relating to the Business which were not
previously disclosed to Buyer in the Audited Financial Statements or
otherwise by Seller.
(n) Employment Contracts. Buyer shall have reached agreement
or contracts or commitments of continued employment reasonably
satisfactory to Buyer with those current employees of Seller named in
Exhibit 6.1(n) hereto.
6.2. Conditions to Obligation of Seller to Proceed on the Closing
Date. The obligation of Seller to proceed on the Closing Date shall be
subject (at its discretion) to the satisfaction, on or before the
Closing, of the following conditions:
(a) Truth of Representations and Warranties and Compliance
with Obligations. The representations and warranties of Buyer herein
contained shall be true in all material respects on the Closing Date
with the same effect as though made at such time. Buyer shall have
performed all material obligations and complied with all material
covenants and conditions prior to or as of the Closing Date. Buyer
shall have delivered to Seller a certificate in form and substance
reasonably satisfactory to Seller dated as of the Closing Date and
executed by their respective Presidents to all such effects.
(b) Opinion of Counsel. Seller shall have received a duly
executed opinion letter from Buyer's legal counsel dated as of the
Closing Date, in form and substance reasonably satisfactory to Seller
and its counsel, to the effect that:
(i) Buyer is a corporation duly organized and validly
existing and in good standing in the State of Minnesota and
has all necessary corporate power to own the property it now
owns and to operate its business as it is now operated;
(ii) This Agreement and all collateral documents have been
duly and validly authorized, executed and delivered by Buyer,
constitute the valid and binding obligations of Buyer, and are
enforceable in accordance with their terms, except as limited
by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally;
(iii) To the best of such counsel's knowledge, after
reasonable inquiry, no suit, action, arbitration, legal or
administrative proceeding, or any governmental investigation,
is pending or threatened against Buyer, or any of their
businesses or properties; and
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(iv) Neither the execution nor delivery of this agreement,
nor the consummation of the transactions contemplated in this
Agreement, will constitute a violation of the Articles of
Incorporation or Bylaws of Buyer, or, to the best of such
counsel's knowledge, after reasonable inquiry, a default
under, or violation or breach of, any indenture, license,
lease, mortgage, instrument, or other agreement to which Buyer
is a party, or by which either of their properties may be
bound.
In giving such opinion, such counsel may rely, as to matters of fact,
upon certificates of officers of Buyer or public officials.
(c) Delivery of Documents. Buyer shall have delivered all
documents required to be delivered at Closing pursuant to Section 7.3
hereof.
(d) Required Consents. All required consents shall have been
received from governmental agencies whose approval is required to
consummate the transaction contemplated herein and from each person or
entity listed on Exhibit 3.21(b).
(e) Comfort Letter. Seller's certified public accountants
shall have delivered the Comfort Letter as required under Section 5.4.
(f) Xxxx-Xxxxx-Xxxxxx Act Filings. The parties shall have
filed all notification and report forms required to be filed under the
provisions of the HSR Act and supplied all additional information
requested by any governmental agency relating thereto. All waiting
periods provided under the HSR Act shall have expired.
(g) Litigation Affecting Closing. No suit, action or other
proceeding shall be pending or threatened by or before any court or
governmental agency in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transaction contemplated by this Agreement, and no
investigation that might eventuate in any such suit, action or other
proceeding shall be pending or threatened.
(h) Legislation. No statute, rule, regulation or other shall
have been enacted, entered or deemed applicable by any domestic or
foreign governmental or governmental or administrative agency or court
which would make the transaction contemplated by this Agreement
illegal.
6.3. Absence of Exhibits. The parties acknowledge that Exhibit 5.4
is not attached hereto and that Exhibit 1.3 is only a preliminary version of
Exhibit 1.3 has been attached hereto. The parties agree to use their best
efforts to negotiate in good faith the final form of such Exhibits, and no party
may decline to proceed at the Closing unless the other party has failed to
negotiate in good faith concerning a material portion of any such Exhibit.
6.4. Termination of Agreement. This Agreement and the transactions
contemplated herein may be terminated at or prior to the Closing Date as
follows:
(a) By mutual written consent of all parties.
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(b) By Buyer pursuant to written notice delivered at or prior
to the Closing if Seller has failed in any material respect to satisfy
all of the conditions to Closing set forth in Section 6.1 or if the
parties have been unable after good faith efforts to reach agreement on
any issues arising under paragraph 6.2.
(c) By Seller pursuant to written notice delivered at or prior
to the Closing if Buyer has failed in any material respect to satisfy
the conditions set forth in Section 6.2 or if the parties have been
unable after good faith efforts to reach agreement on any issue arising
under paragraph 6.2.
6.5. Consequences of Termination. In the event of termination of
this Agreement, each party will return to the other all documents and materials
obtained from the other in connection with the transaction contemplated by this
Agreement and will not use and will keep confidential all Confidential
Information about the other party obtained pursuant to this Agreement pursuant
to the terms of Section 5.6 hereof.
6.6 Cancellation of Transaction. Notwithstanding anything to the
contrary herein or elsewhere to the contrary, Seller, Buyer and Shareholder
acknowledge and agree that Buyer is relying on the availability of reasonable
financing sources, terms and conditions, in order to fully consummate the
transaction contemplated by this Agreement, including but not limited to, the
payment of the Purchase Price to Seller and/or Shareholder, and in the event
that Buyer is unable to obtain such financing with respect to the Promissory
Note from Buyer to Seller in the amount of Four Million and no/100 Dollars
($4,000,000) within sixty (60) days of the Closing Date, the parties hereto
hereby agree that the transaction contemplated by this Agreement shall be
canceled in its entirety (unless otherwise agreed to in writing by the Buyer,
Seller and Shareholder), and any and all consideration paid to any party
pursuant to this Agreement shall be returned to the respective parties so that
Buyer, Seller and Shareholder shall be placed in the same position as that party
was in prior to this Agreement, all without the payment of any damages or
penalty unless it is determined that such party acted in bad faith, except that
Shareholder shall be entitled to retain Two Hundred Thousand and No/100 Dollars
($200,000) of consideration paid by Buyer as a break-up fee.
ARTICLE 7.
CLOSING
7.1. Closing. The closing of the transaction contemplated by this
Agreement ("Closing") shall be held at the offices of Xxxxxxxx & Xxxxxx P.A.,
0000 Xxxxx Xxxxxx Towers, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000, on January 28, 1999, at 9:00 a.m., or at such later date or time as
the parties may mutually agree upon in writing. Such date of Closing is referred
to herein as the Closing Date.
7.2. Documents to be Delivered by Seller. Seller agrees to deliver
the following documents, duly executed as appropriate, to Buyer at the Closing:
(a) Articles of Incorporation of Seller certified by the
Secretary of State of Minnesota.
(b) Bylaws of Seller certified by the Seller's Secretary.
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(c) Certificate of Good Standing of Seller dated no earlier
than ten (10) days prior to the Closing Date.
(d) Certified copies of corporate resolutions of Seller
authorizing it to enter into this Agreement and to consummate the
transactions contemplated herein.
(e) The Audited Financial Statements.
(f) A Xxxx of Sale for the assignment and transfer of the
Purchased Assets.
(g) Certificates of title and assignment thereof for all motor
vehicles transferred by Seller to Buyer as part of the Purchased
Assets.
(h) Appropriate assignment documents assigning Seller's title
and interest in the Real Estate Leases, Personal Property Leases,
Trademarks, Copyrights and Patents.
(i) Real Estate Purchase Agreements and all conveyances and
related documents referenced therein.
(j) Certificate of Seller's President regarding
representations and warranties as required under Section 6.1(a).
(k) Opinion of Seller's Counsel as required under Section
6.1(b).
(l) Documentation of receipt and consents from all persons
listed on Exhibit 3.21(b).
(m) The Comfort Letter from Xxx Xxxxxx, CPA, as required under
Section 5.4.
(n) Such other documents as Buyer may reasonably request for
the purpose of assigning, transferring, granting, conveying, and
confirming to Buyer or reducing to its possession any and all of the
Purchased Assets.
7.3. Documents Delivered by Buyer. Buyer agrees to deliver the
following documents, duly executed as appropriate, to Seller at the Closing:
(a) Articles of Incorporation of Buyer certified by the
Secretary of State of Minnesota.
(b) Bylaws of Buyer certified by Buyer's Secretary.
(c) Certificate of Good Standing of Buyer dated no earlier
than ten (10) days prior to the Closing Date.
(d) Certified copies of corporate resolutions of Buyer
authorizing it to enter into this Agreement and to consummate the
transactions contemplated herein.
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(e) Wire transfer of $1,000,000 to Seller's bank.
(f) Certified or cashier's check, or equivalent instrument or
funds, from Buyer, made payable to Escrowholder in the amount of
$200,000.
(g) Certificate of Buyer's President as required under Section
6.2(a).
(h) Opinion of Buyer's counsel as required under Section
6.2(b).
(i) Such other documents as Seller reasonably may request to
carry out the transactions contemplated under this Agreement.
7.4. Assignment and Assumption of Certain Contracts. Effective upon
consummation of all transactions herein on the Closing Date, Seller hereby
assigns to Buyer all of Seller's rights, title and benefit under the Real Estate
Leases described in Exhibit 1.1(i), the Personal Property Leases described in
Exhibit 1.1(j) and the Contracts. Buyer hereby assumes all liabilities or
obligations with respect thereto. Seller shall execute such forms of assignment
and provide such other reasonable cooperation as may be necessary to effect the
assignments herein.
ARTICLE 8.
POST CLOSING OBLIGATIONS
8.1. Further Documents and Assurances. At any time and from time to
time after the Closing Date, each party shall, upon request of another party,
execute, acknowledge and deliver all such further and other assurances and
documents, and will take such action consistent with the terms of this
Agreement, as may be reasonably requested to carry out the transactions
contemplated herein and to permit each party to enjoy its rights and benefits
hereunder. If requested by Buyer, Seller further agrees to prosecute or
otherwise enforce in its own name for the benefit of Buyer, any claim, right or
benefit transferred by this Agreement that may require prosecution or
enforcement in Seller's name. Any prosecution or enforcement of claims, rights,
or benefits under this provision shall be solely at Buyer's expense, unless the
prosecution or enforcement is made necessary by a breach of this Agreement on
the part of Seller.
ARTICLE 9.
BULK TRANSFER ACT
9.1. Waiver of Compliance. The parties hereby waive compliance with
the provisions of the Bulk Transfer Act, Seller and Shareholder hereby agree to
indemnify and hold Buyer harmless from any damages, losses or expenses
(including reasonable attorneys' fees) suffered by Buyer from any claims which
may be asserted against Buyer by creditors of Seller for obligations not assumed
by Buyer hereunder which result from such non-compliance.
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ARTICLE 10.
INDEMNIFICATION
10.1. Indemnification by Seller. Subject to the limitations set
forth in Section 10.2, Seller and Shareholder shall indemnify and hold Buyer
harmless at all times from and after the date of this Agreement, against and in
respect of all damages, losses, costs and expense (including reasonably
attorneys' fees) which Buyer may suffer or incur in connection with any of the
following matters:
(a) Any claim, demand, action or proceeding asserted by a
creditor of Seller under the provisions of any applicable Bulk Transfer
Act or asserted by any other person respecting any liabilities of
Seller which are not expressly assumed by Buyer under this Agreement.
(b) The breach by Seller of any of its representations,
warranties or covenants in this Agreement.
10.2. Seller's Limitation of Liability.
(a) Buyer shall not assert any claim under Section 10.1 unless
and until such claims exceed an aggregate of $ 0.
(b) Buyer shall assert any claim under Section 10.1(b) within
three (3) year(s) from the Closing Date or be forever barred from
asserting such claim.
(c) The rights of Buyer with respect to any claims arising
under Section 10.1 shall be limited to recovery of actual losses, costs
and expenses (including reasonable attorneys' fees).
10.3. Indemnification by Buyer. Buyer shall indemnify and hold
Seller harmless at all times from and after the date of this Agreement, against
and in respect of all losses, damages, costs and expenses (including reasonable
attorneys fees) which Seller may suffer or incur in connection with any of the
following matters:
(a) The breach by Buyer of any representations, warranties or
covenants in this Agreement.
(b) Any claim, demand, action or proceeding asserted by any
person against Seller relating to any obligation or liability assumed
by Buyer hereunder, or to any obligation or liability relating to the
Purchased Assets or the Business accruing after the Closing Date.
10.4. Buyer's Limitation of Liability.
(a) Seller shall not assert any such claim under Section 10.3
unless and until the claims exceed an aggregate of $ 0.
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(b) Seller shall assert any such claim under Section 10.3(a)
within three (3) year(s) of the Closing Date or be forever barred from
asserting such claim.
10.5. Third Party Claims. If a claim by a third party is made
against any of the indemnified parties, and if any of the indemnified parties
intends to seek indemnity with respect to such claim under this Article, such
indemnified party shall promptly notify the indemnifying party of such claim.
The indemnifying party shall have thirty (30) days after receipt of the
above-mentioned notice to undertake, conduct and control, through counsel of
such party's own choosing (subject to the consent of the indemnified party, such
consent not to be unreasonably withheld) and at such party's expense, the
settlement or defense of it, and the indemnified party shall cooperate with the
indemnifying party in connection with such efforts; provide that: (i) the
indemnifying party shall not by this Agreement permit to exist any lien,
encumbrance or other adverse charge upon any asset of any indemnified party,
(ii) the indemnifying party shall permit the indemnified party to participate in
such settlement or defense through counsel chosen by the indemnified party,
provided that the fees and expenses of such counsel shall be borne by the
indemnified party, and (iii) the indemnified party shall agree promptly to
reimburse the indemnified party for the full amount of any loss resulting from
such claim and all related expense incurred by the indemnified party pursuant to
this Article. So long as the indemnifying party is reasonably contesting any
such claim in good faith, the indemnified party shall not pay or settle any such
claim. If the indemnifying party does not notify the indemnified party within
thirty (30) days after receipt of the indemnified party's notice of a claim or
indemnity under this Article that such party elects to undertake the defense of
such claim, the indemnified party shall have the right to contest, settle or
compromise the claim in the exercise of the indemnified party's exclusive
discretion at the expense of the indemnifying party.
10.6. Escrow Fund. In the event Buyer has a claim against Seller for
indemnification pursuant to this Article, such claim may be made by Buyer and
disposed of in accordance with, the provisions of the Escrow Agreement.
ARTICLE 11.
GENERAL
11.1. Counterparts. This Agreement may be executed in counterparts
and by different counterparts with the same effect as if the signatures thereto
were on the same instrument. This Agreement shall be effective and binding upon
all parties hereto as of Closing when all parties have executed a counterpart of
this Agreement.
11.2. Exhibits. Each Exhibit delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a part of this Agreement.
11.3. Notices. Any notice or other communication required or
permitted hereunder shall in writing and shall be deemed to have been given,
when received, if delivered by hand, telegram, telex or telecopy, and, when
deposited, if placed in the mails for delivery by air mail, postage prepaid,
addressed to the appropriate party as specified on the first page of this
Agreement. Addresses may be changed by written notice given pursuant to this
Section, however any such notice shall not be effective, if mailed, until three
(3) working days after depositing in the mails or when actually received,
whichever occurs first.
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11.4. Successors and Assigns. Neither Seller, Buyer or Shareholder
shall assign or transfer any of its rights or obligations hereunder without the
prior written consent of the other party which consent shall not be reasonably
withheld.
11.5. Expenses. Except as otherwise provided herein, each party
hereto shall each bear and pay for its own costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereby,
including, without limitation, all fees and disbursements of attorneys,
accountants and financial consultants incurred through the Closing Date.
11.6. Entire Agreement. This Agreement, together with the Exhibits
and the related written agreements specifically referred to herein, represents
the only agreement among the parties concerning the subject matter hereof and
supersedes all prior agreements whether written or oral, relating thereto.
11.7. Modification and Waiver. No purported amendment, modification
or waiver of any provision hereof shall be binding unless set forth in a written
document signed by all parties (in the case of amendments or modifications) or
by the party to be charged thereby (in the case of waivers). Any waiver shall be
limited to the circumstance or event specifically referenced in the written
waiver document and shall not be deemed a waiver of any other term hereof or of
the same circumstance or event upon any recurrence thereof.
11.8. Publicity. Seller, Buyer and Shareholder each represent and
warrant that it will make no announcement to public officials or the press in
any way relating to the transaction described herein without the prior written
consent of all parties.
11.9. Governing Law. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the laws of
the State of Minnesota.
11.10. Knowledge. Knowledge, as used in this Agreement or the
instruments, certificates or other documents required under this Agreement,
means actual knowledge of a fact or constructive knowledge if a reasonably
prudent person in a like position would have known, or should have known, the
fact.
11.11. Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties to this Agreement or
their permitted successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
11.12. Dispute Resolution. Unless otherwise agreed to herein or
elsewhere in writing to the contrary by the parties, any dispute, controversy or
claim arising out of or relating to this Agreement or the breach thereof, shall
be settled by binding arbitration, venued in Hennepin County, Minnesota, and
administered by the American Arbitration Association, and judgment or the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, any party to this Agreement shall not be
subject to binding arbitration in the event it is seeking injunctive relief to
enforce its rights under the Non-Compete Agreement or the confidentiality
provisions of this Agreement, in which case such party shall have the right to
seek immediate and direct injunctive relief from any court having jurisdiction
thereof.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Asset
Purchase Agreement to be executed in the manner appropriate to each, to be
effective as of the day and year first above written.
BUYER: GTI ACQUISITION CORPORATION,
A MINNESOTA CORPORATION
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------
Its:President
-------------------------------------------
SELLER: XXXXXX MARKETING ASSOCIATES, INCORPORATED
D/B/A GRAPHICS TECHNOLOGIES, INC.
A MINNESOTA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Its:Chief Executive Officer
-------------------------------------------
SHAREHOLDER: XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
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