Exhibit 2.01
ASSET PURCHASE AGREEMENT
by and among
METRO TEL CORP. OF MINNESOTA, INC.
and
DRYCLEAN USA, INC.
Dated as of July 31, 2002
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of July 31,
2002 by and among (i) METRO TEL CORP. OF MINNESOTA, INC., a Minnesota
corporation (the "Purchaser"), (ii) solely for purposes of Article IV herein and
Section 5.09 herein, INDEPENDENT TECHNOLOGIES, INC., a Nebraska corporation
("Independent"), and SHEYENNE DAKOTA, INC., a North Dakota corporation
("Sheyenne"), and (iii) DRYCLEAN USA, INC., a Delaware corporation (the
"Seller").
WHEREAS, Seller is the owner of a division doing business as Metro-Tel
Telecommunications (the "Metro-Tel Division") which is engaged in the design,
manufacturing, marketing, selling and servicing of telecommunications test
equipment and customer premise equipment; and
WHEREAS, Purchaser desires to purchase, and Seller desires to sell and
convey to Purchaser, substantially all of the assets and business of the
Metro-Tel Division, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS AND PURCHASE PRICE
Section 1.01. Purchase and Sale of Assets. On the terms and subject to
satisfaction of the conditions set forth herein, the Seller agrees to sell,
convey, transfer, assign and deliver to the Purchaser, and the Purchaser agrees
to purchase, receive and accept, on the Closing Date (as defined in Section 1.06
below) all right, title and interest of Seller in and to the Metro-Tel Division
assets, including but not limited to, all product lines and inventory,
equipment, furniture, fixtures, machinery, general intangibles, intellectual
property, including but not limited to patents, patent applications, copyrights,
trademarks, service marks and web sites, supplies, computer hardware and
software, the names "Metro-Tel Telecommunications" and "Metro-Tel Corp." and any
variations thereof, and proprietary rights and interests, product designs,
plans, schematics and technical data, manufacturers and vendors warranties, if
any, for the foregoing equipment and machinery and the manufacturers and vendors
warranties which relate to inventory and products that are subject to customer
warranty claims to be borne by Purchaser pursuant to Section 5.05, and customer
lists, including all assets identified on Exhibit "A" attached hereto and by
this reference incorporated herein; provided, however, the Purchaser is not
purchasing, and the Seller is not selling to the Purchaser, any cash, cash
equivalents, checks, negotiable instruments, securities and investments;
accounts receivable, intercompany receivables from any direct or indirect
subsidiary of Seller; real estate and any leasehold interest in any real estate
and security deposits therefore; computer hardware, furniture and fixtures
located in Seller's Tampa, Florida office; prepaid rent and other prepaid
expenses; rights to Federal, State or local, income, franchise, sales and other
tax refunds and benefits; rights in and to the assets of all bonus, 401(k),
profit sharing, pension and other employee benefit plans maintained by Seller;
insurance policies, performance, workmen's compensation bonds and prepaid
premiums and short-period premium refund claims, reserves and deposits
attributable thereto; rights under manufacturers' and vendors' warranties to the
extent such warranties relate to products that are subject to customer warranty
claims to be borne by Seller pursuant to Section 5.05; rights under this
Agreement, including the right to receive the Purchase Price (as defined in
Section 1.04); and assets of Seller not dedicated to the operations of the
Metro-Tel Division (but rather related to Seller's consolidated operations, such
as treasury stock, capital stock of ▇▇▇▇▇▇▇-Atlantic Corporation ("▇▇▇▇▇▇▇") and
▇▇▇▇▇▇▇'▇
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subsidiaries, minute books, accounting books and records and tax returns). The
assets to be conveyed by Seller to Purchaser are collectively referred to herein
as the "Assets").
SECTION 1.02. EMPLOYMENT OF SELLER'S EMPLOYEES. Purchaser shall assume no
obligations or liabilities to retain the existing employees of Seller; provided,
however, to the extent that Purchaser shall elect to retain any such employees,
Seller covenants to assist and cooperate in Purchaser's efforts. Nothing
contained herein shall constitute or be construed as an employment agreement or
contract made by Purchaser with regard to any such employees. In the event
Purchaser shall elect to retain any such employees, the compensation and other
terms of employment with regard to any such retained employees shall be
determined by Purchaser, at Purchaser's sole discretion. Seller shall have no
obligation to assure that such employees accept such employment.
SECTION 1.03. NO ASSUMPTION OF LIABILITIES. The Purchaser will not in any
event assume or be responsible for any liabilities, liens, claims, obligations
or encumbrances of the Seller, contingent or otherwise, and the Assets shall be
sold and conveyed to the Purchaser free and clear of all liabilities, liens,
claims, obligations, security interests and encumbrances. Without limiting the
generality of the foregoing, in no event will the Purchaser assume or be
responsible for:
(a) any income, sales, property, franchise, use or other tax of the
Seller arising out of or resulting from the sale of the Assets pursuant
hereto or pursuant to any transaction of the Seller prior to or subsequent
to the execution of this Agreement (Purchaser is purchasing the inventory
for resale and Purchaser shall apply for a California seller's permit
immediately upon Closing and shall promptly deliver to Seller a California
Resale Certificate);
(b) any liability, obligation or cost resulting from any claim or
lawsuit or other proceeding relating to the Assets or naming the Seller, or
any successor thereof as a party arising out of events, transactions or
circumstances occurring or existing prior to Closing (as defined in Section
1.06(a) hereof);
(c) any claim against the Purchaser or the Seller, which claim is
based, in whole or in part, upon the failure of the Seller or the Purchaser
to comply with laws applicable to bulk transfers;
(d) subject to Section 5.06, any accrued vacation or sick leave,
social security payments, insurance payments or premiums, any employee
benefit, any taxes related to employees or any other employee cost of the
Seller; or
(e) subject to Section 5.06, any accrued rent, utilities, real estate
taxes, insurance premiums or other expenses related to the Milpitas,
California building.
Notwithstanding the foregoing, Purchaser shall assume and fill all
outstanding orders for the purchase of products from the Metro-Tel Division
and for the purchase of inventories by the Metro-Tel Division, in either
case if committed to prior to the Closing in the ordinary course of
business; provided, however, any cash, cash equivalents, checks, negotiable
instruments, securities, accounts receivable and inter-company receivables
arising from said outstanding orders for the sale of products shall be the
sole property and assets of Purchaser and the cost and expense for the
purchase of such inventories shall be the sole responsibility of Purchaser.
SECTION 1.04. PURCHASE PRICE. Subject to satisfaction of the conditions
precedent to Closing set forth in Section 1.07 hereof, the purchase price for
the Assets shall be Eight Hundred Thousand and no/100 Dollars ($800,000.00)
("Purchase Price"), payable as follows:
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(a) On Closing Date, and subject to consummation of Closing, Purchaser
shall pay the sum of Two Hundred Fifty Thousand and no/100 Dollars
($250,000.00) to Seller;
(b) The balance of the Purchase Price shall be evidenced by
Purchaser's Promissory Note made payable to the order of Seller in the
principal sum of Five Hundred Fifty Thousand and no/100 Dollars
($550,000.00) together with interest accruing thereon at the Prime Rate
published in the "Money Rates" column of The Wall Street Journal (the base
rate on corporate loans posted by at least 75% of the nation's thirty (30)
largest banks) plus 1% per annum (adjustable monthly), payable in forty-two
(42) equal monthly installments of principal and interest, such monthly
installments commencing on the 1st day of October, 2002 and continuing on
the 1st day of each month thereafter until paid in full. In order to secure
said Promissory Note, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall execute and deliver to Seller a joint
and several Guaranty of the obligations of Purchaser under said Promissory
Note, and Purchaser, Independent and Sheyenne shall execute and deliver to
Seller their respective security agreements granting to Seller a security
interest in all assets of Purchaser, Independent and Sheyenne, subject and
subordinate to the security interests of the primary lenders of Purchaser,
Independent and Sheyenne, each under a subordination agreement mutually
satisfactory to Seller and the applicable primary lender. The Promissory
Note shall provide that Purchaser shall have the option to make partial or
full prepayment of the Note without assessment of any prepayment penalty or
premium, provided, however, that Purchaser shall not be entitled to make
such prepayment if and to the extent Seller is prohibited from receiving or
accepting any such prepayment pursuant to any agreement that may exist from
time to time between Seller and any other lender of Purchaser.
SECTION 1.05. ALLOCATION OF CONSIDERATION. The Purchase Price shall be
allocated as follows:
(a) Inventory $785,000.00
(b) Equipment and Furnishings $ 5,000.00
(c) Intellectual Properties and
General Intangibles $ 5,000.00
(d) Non-competition Covenant and
Confidentiality Agreement $ 5,000.00
The parties hereto agree to cooperate in preparing and filing IRS Form 8594
reflecting the allocation set forth herein and acknowledge and agree that
neither of them will take a position on any income tax return, before any
governmental agency charged with the collections of any income tax or in any
judicial proceeding, that is inconsistent with such allocation.
SECTION 1.06. THE CLOSING.
(a) TIME AND PLACE. Subject to the terms and conditions of this
Agreement, the closing under this Agreement (the "Closing") will take place
on a date (the "Closing Date") no later than July 31, 2002 at the offices
of Independent Technologies, Inc. in Omaha, Nebraska, or at such other
time, date or place as the Purchaser and Seller may agree. Unless the
parties otherwise agree in writing, this Agreement shall terminate on
August 12, 2002, if the Closing has not occurred.
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(b) PARTIES' OBLIGATIONS AT CLOSING.
(i) At the Closing, the Purchaser will deliver to the Seller:
(A) The sum of Two Hundred Fifty Thousand and no/100 Dollars
($250,000.00) in cash by wire transfer of immediately available
funds;
(B) Purchaser's Promissory Note in the amount of Five
Hundred Fifty Thousand and no/100 Dollars ($550,000.00) together
with the Security Agreements and Guaranties required under
Section 1.04(b) above;
(C) A copy of the resolution of the Board of Directors (and
shareholders, if required by applicable law) of each of the
Purchaser, Independent and Sheyenne, certified by the applicable
corporation's corporate secretary, authorizing the execution,
delivery and performance of this Agreement and the other
documents referenced herein to be entered into by such
corporation and the consummation of the transactions contemplated
of it hereby and thereby;
(D) Certificates of the Purchaser, Independent and Sheyenne,
each in form and substance reasonably satisfactory to the Seller
and its counsel to the effect that each representation and
warranty of the certifying corporation in this and the other
documents referenced herein to be entered into by such
corporation is true and correct on and as of the Closing Date
with the same effect as though such representations and
warranties were made on and as of such date, unless such
representation or warranty is as of a specific date, in which
case, as of such date, and no breach of or default under this
Agreement or such agreement exists;
(E) Each required consent or approval of a creditor,
contract party or public or governmental authority that is
required to enable Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to enter into
the agreements to which they are to enter pursuant to this
Agreement and to consummate the transactions contemplated
thereby, if any;
(F) Such other certificates and documents as the Seller or
its counsel may reasonably request.
(ii) At Closing, the Seller will deliver to the Purchaser:
(A) a ▇▇▇▇ of sale (the "▇▇▇▇ of Sale") and assignments
relating to the Assets, duly executed by the Seller, in form and
substance reasonably satisfactory to the Purchaser and its
counsel, pursuant to which title to the Assets purchased is
transferred to the Purchaser, free and clear of all liabilities,
liens, claims, obligations, security interests or encumbrances;
(B) a copy of the resolutions of the Board of Directors (and
shareholders, if required by Delaware law) of the Seller,
certified by the Seller's corporate secretary, authorizing the
execution, delivery and performance of this Agreement and the
other documents referenced herein to be entered into by Seller
and the consummation of the transactions contemplated hereby;
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(C) a certificate of the Seller in form and substance
reasonably satisfactory to the Purchaser and its counsel to the
effect that each representation and warranty of the Seller in
this Agreement is true and correct on and as of the Closing Date
with the same effect as though such representations and
warranties were made on and as of such date, unless such
representation or warranty is as of a specific date, in which
case, as of such date, and no breach of or default under this
Agreement exists;
(D) each required consent or approval of a creditor,
contract party or public or governmental authority that is
required to enable Seller to enter into the agreements to which
it is to enter pursuant to this Agreement and to consummate the
transactions contemplated thereby, if any;
(E) the Non-Competition Covenant and Confidentiality
Agreement of Seller identified in Section 1.07(a)(ix) below;
(F) the subordination agreements mutually satisfactory to
Seller and the applicable primary lenders of Purchaser,
Independent and Sheyenne as contemplated in Section 1.04(b)
above;
(G) all purchase orders, contracts, invoices and such other
certificates or documents related to any outstanding orders or
commitments for the purchase of products from the Metro-Tel
Division and for the purchase of inventories by the Metro-Tel
Division, in either case committed to prior to the Closing in the
ordinary course of business, for which Purchaser shall be
responsible pursuant to section 1.03 above;
(H) such other certificates or documents as the Purchaser or
its counsel may reasonably request.
SECTION 1.07. OTHER CONDITIONS TO CLOSING. (a) The obligations of Purchaser
to close this Agreement are, in addition to the receipt of the items identified
in Section 1.06(b)(ii), subject to the satisfaction of the conditions precedent
that:
(i) The representations and warranties of the Seller set forth in this
Agreement shall be true and correct on the Closing Date;
(ii) No event shall have occurred with respect to the Seller that has
caused a material adverse effect on the business, results of operations,
financial condition or business prospects of the Seller (a "Seller Material
Adverse Effect");
(iii) Each Exhibit to this Agreement shall have been duly completed in
form and substance reasonably satisfactory to the Purchaser and its
counsel;
(iv) Each obligation set forth in Section 1.06(b)(ii) shall have been
satisfied in form and substance reasonably satisfactory to the Purchaser
and its counsel;
(v) The Seller shall have delivered to the Purchaser all schedules,
lists, contracts and other agreements or documents required to be delivered
pursuant to this Agreement;
(vi) The Seller shall not be the subject of any action, proceeding or
investigation by
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or before any court, governmental or administrative agency or arbitrator
against or affecting the Assets or materially affecting the Seller,
including, without limitation, any proceeding seeking to adjudicate the
Seller insolvent or seeking a liquidation of the Seller's assets or any
case or other proceeding naming the Seller as debtor under the United
States Bankruptcy Code or similar law, domestic or foreign; no case or
other proceeding shall have been commenced against the Seller under the
United States Bankruptcy Code or any similar law, domestic or foreign; the
Seller shall not have consented to, or acquiesced in, the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect
of the Seller or the whole or any substantial part of its properties or
assets; and the Seller shall not have taken any corporate action in
furtherance of any of the foregoing;
(vii) The Assets shall be delivered to Purchaser at the Seller's
Metro-Tel Division office in Milpitas, California except for inventory
samples in the possession of sales representatives of Seller's Metro-Tel
Division as to which Seller will, promptly following the Closing, request
such sales representatives to deliver to the Purchaser;
(viii) All liens, security interests and encumbrances, including tax
liens, if any, shall be released against the Assets;
(ix) Seller shall deliver to Purchaser, at Closing, Seller's executed
Non-Competition Covenant and Confidentiality Agreement in form and content
reasonably satisfactory to Purchaser, wherein Seller shall covenant that:
(A) for a period of three (3) years from and after the Closing
Date, Seller shall not engage, either directly or indirectly, in the
business of designing, inventing, patenting, manufacturing, marketing,
selling, leasing, licensing, distributing and servicing of
telecommunications testing equipment and customer premise equipment or
any other products or services that the Seller's Metro-Tel Division
has designed, invented, manufactured, patented, marketed, sold,
leased, licensed or otherwise distributed or serviced, as an owner,
partner, member, joint venture, independent contractor, consultant,
representative or otherwise; and
(B) All customer lists, price lists, pricing information,
marketing plans, strategies, product specifications and designs,
production methods and other proprietary information of Seller's
Metro-Tel Division which are being transferred to Purchaser shall be
considered trade secrets and confidential property which, as of the
Closing Date and thereafter, shall be owned by Purchaser and the
Seller shall not, directly or indirectly, for any reason whatsoever,
disclose such confidential information and trade secrets to any
person, firm, corporation, association, or other entity, without the
prior written consent of Purchaser, except such trade secrets and
confidential property which are known to the general public.
The Non-Competition Covenant and Confidentiality Agreement shall
provide that in the event of breach or threatened breach thereof, the
Purchaser shall be entitled to any and all remedies provided at law and in
equity, including but not limited to, injunctive relief, and collect actual
damages, whether or not said damages exceed the consideration allocated to
such agreement under Section 1.05 above.
(x) Purchaser shall have procured financing in the amount of at least
Five Hundred Thousand and no/100 Dollars ($500,000.00) ($250,000.00 to be
used for the payment required at Closing under Section 1.04(a) above and
$250,000.00 for operating capital) from such lender as
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Purchaser may elect, upon financing terms reasonably acceptable to
Purchaser. Such financing may, at Purchaser's option, be secured by a
security interest having first lien priority on all assets of Purchaser,
including the Assets to be purchased hereunder and Seller shall subordinate
Seller's security interest to be granted under this Agreement to the
security interest of such lender, in accordance with the provisions of
Section 1.04(b) above.
(b) The obligations of Seller to perform this Agreement are, in addition to
the receipt of the items identified in Section 1.06(b)(i), subject to the
satisfaction of the conditions precedent that:
(i) The representations and warranties of the Purchaser set forth in
this Agreement shall be true and correct on the Closing Date;
(ii) No event shall have occurred with respect to the Purchaser,
Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ that has caused or could cause a material adverse effect on the
business, results of operations, financial condition or business prospects
of the Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (a "Purchaser Material Adverse Effect");
(iii) Each Exhibit to this Agreement shall have been duly completed in
form and substance reasonably satisfactory to the Seller and its counsel;
(iv) Each obligation set forth in Section 1.06(b)(i) shall have been
satisfied in form and substance reasonably satisfactory to the Seller and
its counsel;
(v) None of the Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall be the subject of any action,
proceeding or investigation by or before any court, governmental or
administrative agency or arbitrator materially affecting any of the
Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell or
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, including, without limitation, any proceeding seeking to
adjudicate any of them insolvent or seeking a liquidation or any case or
other proceeding naming any of them as debtor under the United States
Bankruptcy Code or similar law, domestic or foreign; no case or other
proceeding shall have been commenced against any of them under the United
States Bankruptcy Code or any similar law, domestic or foreign; no
proceeding shall have been instituted against any of them seeking
liquidation of any of their assets; none of them shall have consented to,
or acquiesced in, the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of any of their or the whole or any
substantial part of any of their properties or assets; and none of them
shall have taken any action in furtherance of any of the foregoing.
(c) The obligations of each of the Purchaser and the Seller to perform this
Agreement are subject to the satisfaction of the condition precedent that
Purchaser shall have obtained the consent of the lenders of Purchaser,
Independent and Sheyenne to the granting of the subordinate security interests
required to be given to Seller pursuant to Section 1.04 above, to the extent
that such consent is required pursuant to any loan covenants of the respective
lenders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents, warrants and agrees as follows:
SECTION 2.01. ASSETS. The Seller is, or as of Closing will be, the lawful
owner of the Assets free
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and clear of all liens, claims, charges, restrictions, security interests,
pledges or encumbrances of any kind and has, or as of Closing will have, the
full right, power, authority and capacity to sell and transfer the Assets. By
virtue of the transfer of the Assets to the Purchaser, the Purchaser will obtain
full title to the Assets free and clear of all liens, claims, charges,
restrictions, security interests, pledges and encumbrances of any kind.
Exhibit "A" attached hereto contains a true and correct list as of June 30,
2002 of all Assets owned by the Seller that are used in the Metro-Tel Division
and, by specific identification, all equipment or other personal property leased
by the Seller that are used in the Metro-Tel Division. Since June 30, 2002,
there have been no changes in the assets of Seller's Metro-Tel Division other
than in the ordinary course of business. As of the date of this Agreement, all
Assets are in good working condition and repair, normal wear and tear excepted.
SECTION 2.02. EXISTENCE; GOOD STANDING; CORPORATE POWER AND AUTHORITY. The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Seller has all requisite corporate
power and authority to own and carry on its business as now conducted.
SECTION 2.03. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Seller
has the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby. This Agreement
and the transactions contemplated hereby have been approved by the Seller's
Board of Directors (and, if required by Delaware law, the shareholders of
Seller) and the consummation by the Seller of the transactions contemplated
hereby has been duly authorized by all requisite corporate action. This
Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered by Seller pursuant hereto) will constitute, the
valid and legally binding obligations of the Seller, enforceable in accordance
with their respective terms.
SECTION 2.04. NO VIOLATION. Neither the execution and delivery by the
Seller of this Agreement nor the consummation by the Seller of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict with
or result in a breach of any provisions of the articles of incorporation or
bylaws of the Seller; (ii) conflict with, result in a breach of any provision of
or the modification or termination of, constitute a default under or result in
the creation or imposition of any lien, security interest, charge or encumbrance
upon any of the assets of the Seller pursuant to, any material commitment,
lease, contract or other material agreement or instrument to which the Seller is
a party, or, if any such conflict, breach, modification, termination or default
shall result, each such conflict, breach, modification, termination or default
shall be cured at Closing; or (iii) violate or result in a change in any rights
or obligations under any governmental permit or license (other than with respect
to permits or licenses that are non-transferable and that relate to the use and
operation of the Seller's Milpitas, California facility) or any order,
arbitration award, judgment, writ, injunction, decree, statute, rule or
regulation applicable to the Seller.
SECTION 2.05. REGULATORY CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity, is required by or with respect to the Seller in connection with the
execution and delivery of this Agreement by the Seller, or the consummation by
the Seller of the transactions contemplated hereby, which has not been made
(other than post-Closing filings with the Securities and Exchange Commission) or
obtained and where the failure to make or obtain would have Seller Material
Adverse Effect.
SECTION 2.06. NO MATERIAL ADVERSE CHANGES. The Seller will promptly give
the Purchaser written notice of (i) any material adverse change in the financial
condition, results of operations, business, assets or liabilities (contingent or
otherwise, whether due or to become due, known or unknown) of the
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Seller's Metro-Tel Division; and (ii) any other transaction entered into by the
Seller regarding or affecting the Metro-Tel Division, except in the ordinary
course of business and consistent with past practice.
SECTION 2.07. TAX MATTERS.
(a) For purposes of this Agreement, (i) "Tax" means any federal,
state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Section 59A of the Internal
Revenue Code of 1986, as amended (the "Code")), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not, and (ii) "Tax Return"
means any return, report, information return or other document (including
any related or supporting information) filed or required to be filed with
any taxing authority in connection with its determination, assessment,
collection, administration or imposition of any Tax.
(b) Except as disclosed on Exhibit B attached hereto, the Seller has
duly and timely filed all Tax Returns required to be filed by it and has
duly and timely paid all Taxes and other charges (whether or not shown on
any Tax Return) due or claimed to be due from it by federal, foreign, state
or local taxing authorities or has set up an adequate reserve for all Taxes
payable by the Seller. All such Tax Returns were true and complete in all
material respects. Except as set forth on Exhibit B attached hereto, there
are no Tax liens upon any properties or assets of the Seller (whether real,
personal or mixed, tangible or intangible) and there are no pending or, to
the Seller's knowledge, threatened audits or examinations relating to, or
claims asserted for, Taxes or assessments against the Seller. Seller is not
aware of a substantial basis for any such claims. Except as set forth on
Exhibit B attached hereto, the Seller has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor or shareholder.
(c) The Seller will assume liability for and will pay any and all
Taxes related to the sale of the Assets to the Purchaser.
Section 2.08. Employees and Fringe Benefit Plans.
(a) The Seller has provided to the Purchaser a true, accurate and
complete list of the identity and position of all employees of the
Metro-Tel Division of Seller, and the annual rate of compensation
(including bonuses) being paid to each such employee as of the most recent
practicable date.
(b) Prior to the Closing the Seller will provide the Purchaser with a
written schedule of each employment, bonus, deferred compensation, pension,
stock option, stock appreciation right, profit-sharing or retirement plan,
arrangement or practice, each medical, vacation, retiree medical, severance
pay plan and each other agreement or fringe benefit plan, arrangement, or
practice, of the Metro-Tel Division of Seller, whether legally binding or
not, that affects one or more of the Seller's Metro-Tel Division employees.
(c) Except where failure to do so would not have a Seller Material
Adverse Effect, the Seller has complied in all respects with all applicable
federal, state and local laws, rules and regulations relating to employees'
employment and employment relationships, including, without limitation,
wage related laws, anti-discrimination laws, employee safety laws and COBRA
10
(defined herein to mean the requirements of Code Section 4980B, Proposed
Treasury Regulation Section 1.162-26 and Part 6 of Subtitle B of Title I of
ERISA) with respect to the Seller's Metro-Tel Division employees.
SECTION 2.09. LEGAL COMPLIANCE. The Seller's Metro-Tel Division has been
and currently is conducting its business, and each of the premises leased or
owned by the Seller's Metro-Tel Division has been and now is being used and
operated, in compliance with all applicable laws, statutes, regulations, orders,
covenants, restrictions, decrees and plans of federal, state, regional, county
or municipal authorities, agencies or boards applicable to the same, except
where the failure to so comply would not have a Seller Material Adverse Effect.
SECTION 2.10. LITIGATION. Except as disclosed on Exhibit C attached hereto,
there is no suit, action or proceeding pending or threatened against or
affecting the Seller which, if adversely determined, could have a Seller
Material Adverse Effect. The Seller is not subject to any currently existing
order, writ, injunction or decree relating to the operations of Seller's
Metro-Tel Division.
SECTION 2.11. NO BROKERS. The Seller has not entered into any contract,
arrangement or understanding with any person or firm that may result in the
obligation of the Purchaser to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
SECTION 2.12. CONSENTS AND APPROVALS. The Seller has obtained, or will
obtain prior to Closing, all consents, approvals, authorizations or orders of
third parties, including governmental authorities, necessary for the
authorization, execution and performance of this Agreement by the Purchaser.
SECTION 2.13. INSOLVENCY. The Seller has not commenced and is not the
subject of any insolvency or bankruptcy proceeding and neither the shareholders
nor the board of directors of the Seller has determined to file any insolvency
or bankruptcy proceeding with respect to the Seller nor has the Seller consented
to the filing of any bankruptcy or insolvency proceeding against the Seller.
SECTION 2.14. FULL DISCLOSURE. No representation, warranty or statement
made by the Seller in or pursuant to this Agreement contains any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents, warrants and agrees as follows:
SECTION 3.01. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. The Purchaser,
Independent and Sheyenne, are corporations validly existing and in good standing
under the laws of the State of Minnesota, Nebraska and North Dakota,
respectively. The Purchaser, Independent and Sheyenne have all requisite power
and authority to own, operate and lease their respective properties and carry on
their respective businesses as now conducted.
SECTION 3.02. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The
Purchaser, Independent and Sheyenne have the power and authority to execute and
deliver this Agreement and all agreements and documents contemplated
11
hereby to be executed and delivered by them. The consummation by the Purchaser,
Independent and Sheyenne of the transactions contemplated hereby has been duly
authorized by all requisite action. This Agreement constitutes, and all
agreements and documents contemplated hereby (when executed and delivered
pursuant hereto) will constitute, the valid and legally binding obligations of
the Purchaser, Independent and Sheyenne, enforceable in accordance with their
respective terms.
SECTION 3.03. NO VIOLATION. Neither the execution and delivery by the
Purchaser, Independent and Sheyenne of this Agreement and all agreements and
documents contemplated hereby to be executed and delivered by them, nor the
consummation by the Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ of the transactions contemplated hereby and
thereby in accordance with the terms hereof and all agreements and documents
contemplated hereby and thereby to be executed and delivered by them, will (i)
conflict with or result in a breach of any provisions of the organizational
documents of the Purchaser, Independent or Sheyenne; (ii) conflict with, result
in a breach of any provision of or the modification or termination of,
constitute a default under, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the assets of the
Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell or ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ pursuant to any material commitment, lease, contract or other
material agreement or instrument to which any of them is a party, or, if any
such conflict, breach, modification, termination or default shall result, each
such conflict, breach, modification, termination or default shall be cured at
Closing; or (iii) violate or result in a change in any rights or obligations
under any governmental permit or license or any order, arbitration award,
judgment, writ, injunction, decree, statute, rule or regulation applicable to
the Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
SECTION 3.04. OWNERSHIP OF PURCHASER. All of the capital stock of Purchaser
is owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇.
SECTION 3.05. REGULATORY CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity, is required by or with respect to the Purchaser, Independent, Sheyenne,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in connection with
the execution and delivery of this Agreement and the other documents
contemplated herein to be entered into by them, or the consummation by them of
the transactions contemplated hereby, which has not been made or obtained and
where the failure to make or obtain would have a Purchaser Material Adverse
Effect or, with respect to Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, similar effect as to any of them.
SECTION 3.06. LITIGATION. Except as disclosed on Exhibit D attached hereto,
there is no suit, action or proceeding pending or threatened against or
affecting the Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ which, if adversely determined, could have a
Purchaser Material Adverse Effect. None of the Purchaser, Independent, Sheyenne,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is subject to any
currently existing order, writ, injunction or decree that could have a Purchaser
Material Adverse Effect or, with respect to Independent, Sheyenne, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, similar effect as to any of
them.
SECTION 3.07. NO BROKERS. None of the Purchaser, Independent, Sheyenne,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ has entered into any
contract, arrangement or understanding with any person or firm that may result
in the obligation of the Seller to pay any finder's fees, brokerage or agent's
commission or other like payments in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby.
SECTION 3.08. CONSENT AND APPROVALS. Each of the Purchaser, Independent,
Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ has
obtained, or will obtain prior to Closing, all consents, approvals,
authorizations or orders of third parties, including governmental authorities,
necessary for the authorization, execution and performance of this Agreement by
them
12
SECTION 3.09. INSOLVENCY. None of the Purchaser, Independent, Sheyenne,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ has commenced or is
the subject of any insolvency or bankruptcy proceeding and neither the
shareholders nor the board of directors of the Purchaser, Independent or
Sheyenne and none of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
has determined to file any insolvency or bankruptcy proceeding nor has the
Purchaser, Independent, Sheyenne, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ consented to the filing of any bankruptcy or insolvency proceeding
against any of them.
SECTION 3.10. FULL DISCLOSURE. No representation, warranty or statement
made by the Purchaser in or pursuant to this Agreement contains any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading. No
representation, warranty or statement made by Independent, Sheyenne, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. O'Dell and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ contained in any Guaranty or
Security Agreement to be entered into by them pursuant to this Agreement will
contain any untrue statement of a material fact or omit to state any material
fact necessary to make such representation, warranty or statement not
misleading.
ARTICLE IV
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
SECTION 4.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and indemnities of the parties contained
in this Agreement shall be deemed by the parties hereto to be restated on the
Closing Date and shall survive Closing and remain in full force and effect
thereafter; provided, however, that all representations and warranties contained
in Articles II and III shall expire and be of no further force or effect as to
any claim or matter not asserted by notice given in writing on or before
December 31, 2003.
SECTION 4.02. INDEMNIFICATION BY THE SELLER. Subject to the provisions of
this Article IV, the Seller agrees to indemnify and hold harmless the Purchaser,
and each shareholder, director, officer, employee or other agent thereof and
their respective successors, assigns, heirs, legal representatives and estates
(each being a "Purchaser Indemnified Party"), from and against any and all
claims, losses, damages, liabilities and expenses (including, without
limitation, settlement costs and any reasonable legal or other fees or expenses
for investigating or defending any actions or threatened actions) reasonably
incurred by such Purchaser Indemnified Party in connection with each and all of
the following:
(a) any misrepresentation or breach of any representation or warranty
made by the Seller in this Agreement;
(b) the nonfulfillment or breach of any covenant, agreement or
obligation of the Seller contained in or contemplated by this Agreement;
(c) any misrepresentation or breach of any representation or warranty
contained in any statement, certificate, or other document furnished by the
Seller pursuant to this Agreement;
(d) any attempt (whether or not successful) by any person (other than
a Purchaser Indemnified Party) to cause or require a Purchaser Indemnified
Party to pay or discharge any debt, obligation, liability or commitment,
the existence of which would entitle such Purchaser Indemnified Party to
indemnification pursuant to clauses (a) through (c) of this Section 4.02 or
13
would constitute a breach of any such representation, warranty or agreement
under this Agreement; and
(e) any non-compliance by Seller with applicable state bulk sales law
(compliance with which is hereby waived by Purchaser).
SECTION 4.03. INDEMNIFICATION BY THE PURCHASER. Subject to the provisions
of this Article IV, the Purchaser, Independent and Sheyenne, jointly and
severally, agree to indemnify and hold harmless the Seller, and the Seller's
successors and assigns (each being a "Seller Indemnified Party"), from and
against any and all claims, losses, damages, liabilities and expenses
(including, without limitation, settlement costs and any reasonable legal or
other fees or expenses for investigating or defending any actions or threatened
actions) reasonably incurred by such Seller Indemnified Party in connection with
each and all of the following:
(a) any misrepresentation or breach of any representation or warranty
made by the Purchaser in this Agreement;
(b) the nonfulfillment or breach of any covenant, agreement or
obligation of the Purchaser contained in or contemplated by this Agreement;
(c) any misrepresentation or breach of any representation or warranty
contained in any statement, certificate, or other document furnished by the
Purchaser pursuant to this Agreement; and
(d) any attempt (whether or not successful) by any person (other than
a Seller Indemnified Party) to cause or require a Seller Indemnified Party
to pay or discharge any debt, obligation, liability or commitment, the
existence of which would entitle such Seller Indemnified Party to
indemnification pursuant to clauses (a) through (c) of this Section 4.03 or
would constitute a breach of any such representation, warranty or agreement
under this Agreement.
SECTION 4.04. INDEMNIFICATION PROCEDURE. An indemnified party shall
promptly notify the indemnifying party of any claim, demand, action or
proceeding for which indemnification will be sought under Section 4.02 or
Section 4.03 of this Agreement, and, if such claim, demand, action or proceeding
is a third-party claim, demand, action or proceeding, the indemnifying party
will have the right at its expense to assume the defense thereof using counsel
reasonably acceptable to the indemnified party. The indemnified party shall have
the right to participate, at its own expense, with respect to any such
third-party claim, demand, action or proceeding. In connection with any such
third-party claim, demand, action or proceeding, the Purchaser and the Seller
shall cooperate with each other and provide each other with access to relevant
books and records in their possession. No such third-party claim, demand, action
or proceeding shall be settled without the prior written consent of the
indemnified party. If a firm written offer is made to settle any such
third-party claim, demand, action or proceeding and the indemnifying party
proposes to accept such settlement, and the indemnified party refuses to consent
to such settlement, then: (a) the indemnifying party shall be excused from, and
the indemnified party shall be solely responsible for, all further defense of
such third-party claim, demand, action or proceeding; and (b) the maximum
liability of the indemnifying party relating to such third-party claim, demand,
action or proceeding shall be the amount of the proposed settlement if the
amount thereafter recovered from the indemnified party on such third-party
claim, demand, action or proceeding is greater than the amount of the proposed
settlement.
14
ARTICLE V
COVENANTS
SECTION 5.01. FURTHER ASSURANCES. Each of the parties hereto will cooperate
with the other toward the consummation of the transactions contemplated herein
and execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
SECTION 5.02. CONDUCT OF BUSINESS. The Seller covenants that prior to
Closing, except as otherwise agreed by Purchaser in writing in advance, it shall
(a) conduct the Seller's Metro-Tel Division business only in the usual and
ordinary course of business in accordance with good and prudent practices; (b)
keep the Purchaser informed daily of material developments which affect the
business of the Seller's Metro-Tel Division or the Assets; (c) not make any
material additions to or sell (other than inventories in the ordinary course of
business), transfer or otherwise dispose of, or subject to any encumbrance, any
Asset; (d) keep and maintain the Assets in good operating condition and repair
consistent with past practice; and (e) use its reasonable efforts to preserve
the goodwill of the Seller's Metro-Tel Division's suppliers, contractors,
licensors, employees, customers and distributors.
SECTION 5.03. BOOKS AND RECORDS. Promptly after Closing, the Seller shall
transfer to the Purchaser all customer lists, designs, plans, schematics,
warranties, records, documents and data in Seller's possession being sold as
part of the Assets relating to the business of the Seller's Metro-Tel Division.
If any record, document or data being sold as part of the Assets is required for
the Seller's business, accounting or tax purposes after Closing, the Seller may
retain a copy if it is in Seller's possession and Purchaser shall allow Seller
access to and the ability to make copies of any such record, document or data
being sold as part of the Assets. As to any accounting books and records
relating to Seller's Metro-Tel Division that are not included in the Assets,
Seller shall allow Purchaser access to and the ability to make copies of such
accounting books and records of Seller if and to the extent they pertain to the
operations of Seller's Metro-Tel Division. Each of Purchaser and Seller shall
maintain the information owned by the other to which it is afforded access
and/or copies pursuant to the foregoing provisions in strict confidence and not
use it except to the extent needed for its accounting or tax reporting purposes
and shall limit access thereto to those of its employees, accountants and
attorneys and requesting governmental authorities on a "need to know" basis.
None of the records, documents and data that are part of the Assets to be
transferred to Purchaser and none of the accounting books and records relating
to Seller's Metro-Tel Division that are not included in the Assets shall be
destroyed by Purchaser or Seller, as the case may be, prior to December 31, 2006
without the consent of the other unless first reproduced by microfilm or similar
process.
SECTION 5.04. RISK OF LOSS. All risk of loss to the Assets to be conveyed
hereunder shall be borne by Seller until Closing.
SECTION 5.05. WARRANTY CLAIMS. Purchaser covenants that Purchaser shall
service warranty claims of Seller's Metro-Tel Division customers on products and
services sold or provided prior to the Closing Date; provided, however, Seller
shall reimburse Purchaser for all such warranty claims properly claimed by the
customer within the applicable warranty period that was afforded by Seller with
respect thereto, such reimbursement to be made at Purchaser's cost, to the
extent the aggregate amount of all such costs exceeds $10,000.00. Seller shall
make any reimbursement required to be made by it to Purchaser pursuant to this
Section 5.05 within ten (10) days after Purchaser provides to Seller
notification of any such warranty claim and request for reimbursement. In the
event Seller shall not reimburse Purchaser within such ten (10) day period,
Purchaser shall be entitled, at Purchaser's option, to setoff against any
15
sums due from Purchaser to Seller hereunder, including any payments due on
Purchaser's Promissory Note identified in Section 1.04 above, the amount of any
such non-reimbursed warranty claim.
SECTION 5.06. POST-CLOSING EXPENSES OF MILPITAS, CALIFORNIA OFFICE.
Purchaser intends to relocate the Metro-Tel Division to Minnesota as soon as
reasonably practical after Closing. Seller agrees to permit Purchaser's use of
the Milpitas, California office after Closing for a period not to exceed three
(3) months in order to permit Purchaser sufficient time to consummate said
relocation. Seller shall use reasonable efforts to keep available the existing
employees of Seller's Metro-Tel Division during such period, but shall be under
no obligation to offer any monetary or other benefit inducements, in addition to
that presently paid to such employees, to retain such employees. Seller may,
after consultation with Purchaser, reduce the work force of Seller's Metro-Tel
Division to reflect the Purchaser's then needs contemplated by this Section.
Seller shall not be obligated to replace any such employees who terminate
employment (voluntarily or pursuant to the previous sentence). Seller shall not
be responsible if its ability to produce products or ship products is hindered
by reason of a reduction of such work force. Purchaser covenants that Purchaser
shall reimburse Seller for the monthly rent, utility charges and other expenses
(including, without limitation, insurance costs) related to said office which
accrues during such limited period of time, for all payroll, benefit and fringe
benefit (at the levels set forth on the schedule provided under Section
2.08(b)), and payroll tax costs attributable to the retained employees during
such limited period of time and for all other operating costs incurred by the
Seller in complying with this Section. All such payments shall be made by
Purchaser to Seller within ten (10) days after Seller provides Purchaser with
notification of such expenses and a request for reimbursement therefor.
Purchaser shall be responsible to pay its employees (including those employees
of Seller's Metro-Tel Division who become employees of Purchaser). At the end of
such limited period of time, Purchaser shall remove all property owned by it
from such premises and leave such premises in a "broom clean" condition.
Purchaser may terminate its use of the Milpitas, California office, at
Purchaser's option, prior to the expiration of such limited period of time, upon
Purchaser giving to Seller ten (10) days' prior written notice of termination
and Purchaser's payment to Seller of the costs, expenses and other payments
required under this Section 5.06 which have accrued to the date of termination.
Upon such termination and subject to Purchaser's obligation to pay to Seller
such costs, expenses and other payments which have accrued to the date of
termination, Purchaser shall have no further liability to Seller for Purchaser's
use of the Milpitas, California office.
SECTION 5.07. MERCHANDISE RETURNS. If and to the extent products sold by
Seller's Metro-Tel Division prior to the Closing are returned to either Seller
or Purchaser, Purchaser shall honor and adhere to Seller's policy of accepting
such returns and issuing a credit to (or paying) the customer at the invoice
price at which the merchandise was sold, less a 20% reshelving charge. Such
products shall be delivered to Purchaser by Seller (if returned to Seller) or
retained by Purchaser (if returned to Purchaser) and Seller shall pay Purchaser
an amount equal to the credit so afforded the customer, less Seller's material
cost thereof. Any such payments shall be made to Purchaser by Seller within ten
(10) days after Purchaser provides Seller with notification thereof.
SECTION 5.08. COLLECTION OF RECEIVABLES. Promptly following the Closing,
Seller shall deliver to Purchaser a schedule, by customer and invoice, of all
open accounts receivable of Seller's Metro-Tel Division as of the close of
business on the Closing Date and shall provide Purchaser with an update (to
reflect collections) monthly thereafter. Purchaser agrees to use its best
efforts to assist Seller in collecting such accounts receivable; provided
however, that Purchaser shall not be required to engage in litigation or retain
any agent to pursue the collection of such receivables and shall not be required
to incur any expenses in connection with the collection thereof. All payments
received on accounts receivable by Purchaser or Seller from such customers shall
be applied (a) first to the specific invoice designated by the customer, (b) if
not so designated then to an invoice that is in an amount that matches the
amount of such payment (in the case of more than one such matches, then to the
oldest of such invoices first and, if any
16
portion of an account receivable is disputed by the account debtor, but the
balance of the payment matches to an invoice, the payment shall be applied to
such invoice), or if neither (a) nor (b) applies, then (c) to the oldest
outstanding invoice. Each party shall, on or prior to Tuesday of each week
(commencing on the first Tuesday following the Closing), account to the other
for all payments received by it from Seller's Metro-Tel Division customers by
facsimile and make appropriate payment within five (5) business days after its
receipt of such accounting from the other party.
Seller agrees to pay to Purchaser all amounts which Seller may receive from
any customers which are identified by the paying customer as payments on
Purchaser's receivables. Any amounts received by Seller from such customers
shall be remitted to Purchaser weekly.
SECTION 5.09. SUPPORT COVENANT. Independent and Sheyenne shall cause
Purchaser to perform its obligations under this Agreement, including, without
limitation, paying the Purchase Price, on the terms and subject to the
conditions set forth in this Agreement.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and delivered by recognized overnight courier service
(with proof of delivery), hand delivery, certified or registered mail (return
receipt requested and postage prepaid), or by facsimile transmission, addressed
as follows:
If to Purchaser, Metro Tel Corp. of Minnesota, Inc.
Independent or Sheyenne Attention: President
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Walentine ▇'▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇ 11240 ▇▇▇▇▇▇▇▇▇
Street, ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇-▇▇▇▇ Fax:
402-330-6303
If to Seller: Dryclean USA, Inc.
Attention: President
▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
17
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered (a) on the first business
day after the business day of scheduled delivery by a recognized overnight
courier service in the manner described above, (b) upon delivery if delivered
personally to the address as provided above, or (c) on the third business day
after the day on which such mail is postmarked if delivery is by certified or
registered mail or (d) if sent by facsimile transmission to the facsimile number
as provided above, upon receipt if received on a business day between the hours
of 9:00 a.m. and 6:00 p.m. in the city of the intended recipient or on the next
business day if received after that time, in each case with automatic machine
confirmation indicating the time of delivery.
SECTION 6.02. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
SECTION 6.03. EXPENSES. Each party hereby agrees to pay its own expenses,
including legal fees and costs, incurred in the negotiation, preparation of
documents and consummation of the transaction contemplated hereby, whether or
not the purchase is completed.
SECTION 6.04. WAIVERS. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
SECTION 6.05. GOVERNING LAW. The validity of this Agreement, the
construction of its terms and the determination of the rights and duties of the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Nebraska.
SECTION 6.06. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
SECTION 6.07. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 6.08. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled by contract, at law or in equity.
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SECTION 6.09. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
SECTION 6.10. INCORPORATION OF EXHIBITS. The Exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
SECTION 6.11. ENTIRE AGREEMENT. This Agreement, the Exhibits and any
documents delivered by the parties pursuant hereto constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
SECTION 6.12. NOT CONSTRUED AGAINST DRAFTER. All the parties to this
Agreement have had an opportunity to review this Agreement, consult an attorney
before signing this Agreement, and have in fact consulted an attorney. As such,
any rule of interpretation or construction requiring that the language of this
Agreement or the Exhibits be construed against the drafter is inapplicable to
this Agreement or the Exhibits.
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement and caused the same to be duly delivered on their behalf on the day
and year first written above.
METRO TEL CORP. OF MINNESOTA,
INC.,
a Minnesota corporation, Purchaser
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Title: President
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INDEPENDENT TECHNOLOGIES, INC.,
a Nebraska corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Title: President
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SHEYENNE DAKOTA, INC.,
a North Dakota corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Title: President
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DRYCLEAN USA, INC.,
a Delaware corporation, Seller
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Title: President
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