Document:

AMENDMENT NO

Exhibit

10.2

AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT

 

THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT, is

dated as of November 29, 2001, by and between Surgidyne, Inc., a Minnesota

corporation (“Seller”) and Oxboro Medical, Inc., a Minnesota corporation (the

“Company”).

 

WITNESSETH

 

WHEREAS, Seller and the Company have entered into an

Asset Purchase Agreement, dated as of October 4, 2001 (the “Agreement”); and

 

WHEREAS, the parties to the Agreement wish to amend

the Agreement to change the date for closing of the transactions contemplated

by the Agreement and to make a clarification regarding accounts payable.

 

NOW, THEREFORE, in connection with and in

consideration of the premises and the mutual agreements and covenants

hereinafter set forth, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged and intending to be

legally bound hereby, Seller, Acquisition and the Company hereby agree as

follows:

 

1.                                       Capitalized terms used but not otherwise

defined herein shall have the same meanings as in the Agreement.

 

2.                                       Section 7.1 is hereby amended to read in

its entirety:

 

7.1           Closing.  The closing of the transaction contemplated by this Agreement

(“Closing”) shall be held at the offices of Lindquist & Vennum P.L.L.P.,

4200 IDS Center, Minneapolis, MN 55402 at 9:00 a.m. on January 15, 2002 or at

such other time or place as the parties may mutually agree, but effective at

the close of business on such date (the “Closing Date”).  Seller specifically acknowledges that time

is of the essence in the Closing of this Agreement.

 

3.                                       Section 1.3(b) is hereby amended to read

in its entirety:

 

b.             All

(i) current trade accounts payable and (ii) other accounts payable of Seller

which have been due in excess of 120 days in the amounts set forth on Exhibit

1.3(b) or on the Closing Payables Sheet.

 

4.                                       Except as modified herein, all of the

terms and conditions of the Agreement remain unchanged and in full force and

effect and are hereby ratified as of the date hereof by the parties

hereto.  In the event of a conflict in

the terms of the Agreement and this Amendment No. 1, the terms of this

Amendment No. 1 shall control.

 

1

 

5.                                       This Amendment No. 1 to the Agreement may

be executed in counterpart signature pages, each of which shall be deemed an

original, and all such counterparts constitute but one instrument.

 

6.                                       Any provision of the Agreement may be

further amended or waived, but only if in writing and signed by each party to

this Amendment No. 1 to the Agreement, in the case of an amendment, or in the

case of waiver, in writing and signed by the party against whom the waiver is

to be effective.

 

[Remainder of page intentionally left blank.]

 

2

 

IN WITNESS WHEREOF, the parties hereto have duly

executed this Amendment No. 1 to the Agreement as of the day and year first

above written.

 

	

   

  	

  OXBORO MEDICAL, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/

  	

   J. David

  Berkley

  
	

   

  	

  Name:

  	

  J. David Berkley

  
	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  SURGIDYNE, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/

  	

   Theodore

  Johnson

  
	

   

  	

  Name:

  	

  Theodore Johnson

  
	

   

  	

  Title:

  	

  Chairman of the Board

  
						

 

3AMENDMENT NO

Exhibit

10.3

AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT

 

THIS AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT, is

dated as of January 15, 2002, by and between Surgidyne, Inc., a Minnesota

corporation (“Seller”) and Oxboro Medical, Inc., a Minnesota corporation (the

“Company”).

 

WITNESSETH

 

WHEREAS, Seller and the Company have entered into an

Asset Purchase Agreement, dated as of October 4, 2001, as amended by that

certain Amendment No. 1 to Asset Purchase Agreement dated November 29, 2001

(the “Agreement”); and

 

WHEREAS, the parties to the Agreement wish to amend

the Agreement to change the date for closing of the transactions contemplated

by the Agreement.

 

NOW, THEREFORE, in connection with and in

consideration of the premises and the mutual agreements and covenants

hereinafter set forth, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged and intending to be

legally bound hereby, Seller and the Company hereby agree as follows:

 

1.                                       Capitalized terms used but not otherwise

defined herein shall have the same meanings as in the Agreement.

 

2.                                       Section 7.1 is hereby amended to read in

its entirety:

 

7.1          Closing.  The closing of the transaction contemplated by this Agreement

(“Closing”) shall be held at the offices of Lindquist & Vennum P.L.L.P.,

4200 IDS Center, Minneapolis, MN 55402 at 2:00 p.m. on January 22, 2002 or at

such other time or place as the parties may mutually agree, but effective at

the close of business on such date (the “Closing Date”).  Seller specifically acknowledges that time

is of the essence in the Closing of this Agreement.

 

3.                                       Except as modified herein, all of the

terms and conditions of the Agreement remain unchanged and in full force and

effect and are hereby ratified as of the date hereof by the parties

hereto.  In the event of a conflict in

the terms of the Agreement and this Amendment No. 2, the terms of this

Amendment No. 2 shall control.

 

4.                                       This Amendment No. 2 to the Agreement may

be executed in counterpart signature pages, each of which shall be deemed an

original, and all such counterparts constitute but one instrument.

 

5.                                       Any provision of the Agreement may be

further amended or waived, but only if in writing and signed by each party to

this Amendment No. 2 to the Agreement, in the case of an amendment, or in the

case of waiver, in writing and signed by the party against whom the waiver is

to be effective.

 

1

 

IN WITNESS WHEREOF, the parties hereto have duly

executed this Amendment No. 2 to the Agreement as of the day and year first

above written.

 

	

   

  	

  OXBORO MEDICAL, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/

  	

   J. David

  Berkley

  
	

   

  	

  Name:

  	

  J. David Berkley

  
	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  SURGIDYNE, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/

  	

   Theodore

  Johnson

  
	

   

  	

  Name:

  	

  Theodore Johnson

  
	

   

  	

  Title:

  	

  Chairman of the Board

  
						

 

2Exhibit 10

Exhibit 10.4

ASSET PURCHASE AGREEMENT

 

This Asset Purchase

Agreement (the “Agreement”) is entered into as of this 18th day of  January, 2002 (the “Effective Date”) by and

between Sterion Incorporated (“Buyer”) and Bellingham Medical, Inc. (“Seller”).

 

RECITALS:

 

A.            Seller

conducts a business (the “Business”) which manufactures, sells and distributes

wound closure strips and other products as described on Exhibit A (the

“Products”).

 

B.            Buyer

desires to purchase and assume from Seller, and Seller desires to sell and

transfer to Buyer certain of the assets and liabilities of Seller relating to

the Business, upon the terms and subject to the conditions set forth herein;

 

AGREEMENTS:

 

NOW, THEREFORE, in consideration of the

foregoing, of the mutual promises herein contained and of other good and

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the parties hereto, intending to be legally bound, hereby agree

as follows:

 

 

ARTICLE

1.

PURCHASE

OF ASSETS; NO ASSUMPTION OF LIABILITIES

 

1.1.          Purchase of Assets. 

Subject to the terms and conditions of this Agreement, Seller agrees on

the Closing Date (as defined in this Agreement) 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 below)

related to or used in the operation of the Business, wherever the same may be

located (collectively referred to as the “Purchased Assets”) as follows:

 

a.                                       All furniture,

equipmcent, machinery and tooling (“Equipment”) described in Exhibit 1.1(a)

hereto;

 

b.                                      All intangible

personal property, business records, telephone numbers, and customer lists and

goodwill (together with all documents, records, files, computer tapes or discs,

or other media on or in which the same may be evidenced or documented)

(“Intangible Property”), including without limitation the following:

 

1

 

(i)                                     The corporate

name of Secller and all assumed names under which it conducts the Business;

 

(ii)                                  All tradenames,

trademarks or service mark registrations and applications, common law

trademarks, copyrights and copyright registrations and applications

(“Trademarks”) as identified on Exhibit 1.1(b)(ii) hereto and all goodwill

associated therewith;

 

(iii)                               All domestic

and foreign letters patent, patent applications, and patent and know-how

licenses (“Patents”) as listed on Exhibit 1.1(b)(iii) hereto; and

 

(iv)                              All technology,

know-how, trade secrets, manufacturing processes, formulae, drawings, designs

and computer programs related to or used or useful in the Business, and all

documentary evidence thereof 

(“Technology”) as listed on Exhibit 1.1(b)(iv) hereto;

 

(v)                                 All of Seller’s

business records and files, relating to the Business and Purchased Assets,

including, without limitation, customer lists and records, sales information,

supplier records, cost and pricing information, and other records and copies of

such records on whatever media such records or copies are maintained (the

“Business Records”); provided however that Seller may keep a copy of such

records as may be necessary for purpose of government or similar record keeping

requirements.

 

c.                                       All inventory,

materials, supplies and work-in-progress as of the Closing Date (“Inventory”);

 

d.                                      All licenses

and permits, to the extent transferable (“Licenses and Permits”) as set forth

in Exhibit 1.1(e) hereto;

 

e.                                       All rights of

Seller under contracts, agreements, commitments and other arrangements relating

to the Business to which Seller is a party or is otherwise bound (the

“Contracts”), listed on Exhibit 1.1(f) hereto, including, without limitation,

all contracts:

 

(i)                                     which restricts

in any manner Seller’s right to compete with anyone in any part of the world or

restricts Seller’s right to sell to or purchase from anyone;

 

2

 

(ii)                                  for the payment

or receipt of license fees or royalties to or from any person or entity;

 

(iii)                               of brokerage,

agency, representation, distribution, or franchise;

 

(iv)                              for the

advertisement, display or promotion of any of the Products of the Seller;

 

(v)                                 for service,

consulting or management affecting any of the Assets or the Business;

 

(vi)                              which is a

guaranty, performance, bid or completion bond, or surety or indemnification

contract;

 

(vii)                           which requires

the making of a charitable contribution; or

 

(viii)                        which provides

for the receipt or expenditure by Buyer in excess of $15,000 at any time

following the Closing Date.

 

(ix)                                which the

requirements for performance extend beyond one (1) year from the date of this

Agreement.

 

Notwithstanding the listing

of contracts on Exhibit 1.1(f), only those specifically designated thereon as a

contract to be assumed by Buyer shall be considered an Assumed Contract

(collectively, the “Assumed Contracts”).

 

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.                                       All cash or

cash equivalents on hand or on deposit at any bank as of the Closing Date.

 

b.                                      Any interest in

real property.

 

c.                                       All accounts

receivable of Seller.

 

d.                                      All claims or

causes of action which seller may have relating to Excluded Assets or relating

to Excluded Liabilities.

 

e.                                       Seller’s

corporate minute book, stock records, and similar records, including financial

records and tax returns.

 

f.                                         All of Seller’s

rights in Contracts which are not Assumed Contracts.

 

g.                                      All assets in

any of Seller’s Employee Plans.

 

3

 

h.                                      Seller’s rights

under this Agreement.

 

1.3.          Assumption of Liabilities.  On the Closing Date, Buyer hereby assumes the following

obligations and liabilities (the “Assumed Liabilities”):

 

a.                                       All obligations

arising from and after the Closing Date under any contracts specifically

identified in Schedule 1.1(f) as the Assumed Contracts (provided that Buyer

does not assume, and Seller shall pay, all past-due obligations thereunder).

 

b.                                      Any liabilities

of Seller specifically identified on Exhibit 1.3(b) hereto, but only in the

amounts set forth on Exhibit 1.3(b).

 

1.4.          Exclusion of Liabilities.  Except for the foregoing Assumed Contracts and the Assumed

Liabilities, Buyer shall not assume any liabilities, obligations or

undertakings of Seller of any kind or nature whatsoever, whether fixed or

contingent, known or unknown, determined or determinable, due or not yet due

(“Excluded Liabilities”).  Without limiting

the generality of the foregoing sentence, the Excluded Liabilities include:

 

a.                                       Liabilities or

obligations arising out of an event that occurred, Products sold or services

performed by Seller, or Seller’s ownership of its assets or the operation of

the Business on or prior to, the Closing Date; 

provided, however, that Buyer shall be responsible for delivering

Products which were sold prior to the Closing Date and for which Seller has

accepted and entered the order as of the Closing Date.

 

b.                                      Liabilities and

obligations of Seller for accrued audit fees, accrued commissions, accrued

payroll (including associated employer taxes or employee withholdings), accrued

insurance premiums, and garnishments payable of the Business incurred by Seller

 

c.                                       Liabilities or

obligations for foreign, federal, state, county, local or other governmental

taxes of Seller relating to the operation of the Business or the ownership of

the Assets on or prior to the Closing Date;

 

d.                                      Liabilities or

obligations related to or arising out of any Employee Plan, workers’

compensation claim or any other liabilities to employees or former employees of

Seller;

 

e.                                       Liabilities or

obligations arising out of any litigation or administrative or arbitration

proceeding to which Seller is a party or any claims by or against Seller

arising from events or facts existing on or prior to the Closing Date;

 

4

 

f.                                         Liabilities or

obligations resulting from any breach by Seller on or prior to the Closing Date

of any contract or agreement to which the Seller is party or by which the

Seller is bound, including, without limitation, any Assumed Contract;

 

g.                                      Liabilities or

obligations resulting from any violation by Seller, the Shareholders, or any

employee, director or agent of Seller, or any predecessor for which Seller may

be liable, of any applicable foreign, federal, state, county, local or other

governmental laws, decrees, ordinances or regulations, or any permit, license,

consent, certificate, approval or authorization issued pursuant to such laws,

decrees, ordinances or regulations, including, without limitation, those

applicable to discrimination in employment, employment practices, wage and

hour, retirement, labor relations, occupational safety, health, trade

practices, environmental matters, competition, pricing, product warranties,

product liability and product advertising;

 

h.                                      Liabilities or

obligations to any investment banker, broker, finder or other intermediary

which has been retained by or is authorized to act on behalf of Seller who may

be entitled to or may claim any fee or commission from Buyer in connection with

the transactions contemplated by this Agreement.

 

i.                                          Liabilities or

obligations (whether interest, principal, fees, penalties or otherwise) of

Seller (i) for borrowed money; (ii) evidenced by bonds, debentures, notes or

other similar instruments, (iii) to pay the deferred purchase price of property

or services, (iv) and any of the foregoing guaranteed by Seller.

 

j.                                          All accounts

payable of Seller.

 

k.                                       Seller’s

obligations under this Agreement.

 

1.5.          Sales and Use Tax. 

Buyer shall be responsible for payment of any sales or use tax

assessable with respect to the transactions herein.

 

5

 

ARTICLE

2.

PURCHASE

PRICE AND PAYMENT OF PURCHASE PRICE

 

2.1           Purchase Price. 

The purchase price (the “Purchase Price”) for the Purchased Assets and

the performance by Seller of its obligations under this Agreement shall be

Three Hundred Fifty Thousand Dollars ($350,000), payable to the Seller in full

in immediately available funds on the Closing Date.

 

2.2           Allocation of Purchase Price.  The Purchase Price shall be allocated among

the Purchased Assets as set forth in Exhibit 2.2.  The parties agree to report this transaction for federal tax

purposes in accordance with the allocations set forth in Exhibit 2.2.

 

 

ARTICLE

3

EMPLOYEE

MATTERS

 

3.1           Employees. 

During the period after the date of this Agreement, but before the

Closing Date, Buyer will have the option of interviewing and making an offer in

writing of employment at will to those employees listed on Exhibit 3.1 hereto

(each, a “Selected Employee”).

While Seller will cooperate with Buyer to assist Buyer to hire and retain the

services of all Selected Employees, Buyer acknowledges and agrees that the

Selected Employee has the final decision whether to transfer with the Business

and the failure of one or more Selected Employee(s) to accept an offer of

employment from Buyer shall not be deemed to be a breach of this

Agreement.  Buyer shall have no

obligation to make any offer of employment to any Selected Employee earlier

than thirty (30) days after the first public announcement made pursuant to

Section 10.1.

 

3.2           Benefits. 

Each Selected Employee will be covered under the Employee Plans of Buyer

available to other employees of Buyer who are employed in similar categories of

employment.  Buyer shall offer each

Selected Employee the opportunity, as of the Closing Date, to participate in

all of Buyer’s Employee Plans for which each such Selected Employee would be

eligible under the guidelines for such plans. 

Before the Closing Date, Buyer shall provide to the Selected Employees

summaries of the material terms and conditions of and guidelines for Buyer’s

Employee Plans (including, but not limited to, medical and dental insurance

plans, life insurance plan, pension plan, savings plan, short-term and

long-term disability plans, employee stock ownership plan, vacation plan and

severance or termination plan).

 

 

6

 

 

ARTICLE

4

REPRESENTATIONS

AND WARRANTIES

OF

SELLER

Seller makes the following

representations and warranties to Buyer with the intention that Buyer may rely

upon the same, and acknowledges that the same shall be true as of the Closing

Date (as if made at the Closing) and shall survive the Closing of this

transaction.

 

4.1           Organization. 

Seller is a corporation duly organized, validly existing and in good

standing under the laws of the State of Minnesota, has all requisite corporate

power and authority, corporate and otherwise, to own its properties and assets

and conduct the Business, as it is currently conducted.  Seller does not have any subsidiary and

Seller is not a shareholder, partner or joint venturer with any other person or

legal entity.  Seller has not failed to

qualify as a foreign corporation in any other state or states where such

failure may have a material adverse effect on the Business.

 

4.2           Corporate Authority.  The Seller has all requisite 

power and authority to enter into and perform this Agreement.  The execution and delivery of this Agreement

and the consummation of the transactions contemplated in this Agreement have

been duly authorized by all requisite action of Seller’s Board of Directors and

shareholders.  This Agreement has been

executed and delivered by a duly authorized officer of Seller and is a valid

and binding agreement of the Seller, enforceable against them in accordance

with its terms.

 

4.3           Financial Statements.

 

a.                                       Financial Statements.  Seller has furnished Buyer a true and

complete copy of its audited balance sheets and statements of income for its

fiscal years ended December 31, 2000, and has furnished unaudited update

thereof as of and for the period ending December 31, 2001 (collectively the

“Financial Statements”, all of which are attached as Schedule 4.3(a)

hereto).  The audited Financial

Statements have been prepared in conformance with generally accepted accounting

principles and procedures applied on a basis consistent with prior periods and

will fairly present in all material respects the financial condition of Seller

as of the represented dates thereof and the results of Seller’s operations for

the periods covered thereby.  For purposes

of this Agreement, the Financial Statements shall be deemed to include any

notes thereto.

 

b.                                      No Adverse

Changes.  Since January 9, 2002, there

has not occurred or arisen (whether or not in the ordinary course of business,

except subsection (iii) below): (i) any material adverse change in the in the

Business, Purchased Assets, relationships with customers or suppliers,

backlogs, sales, income, profit margins, assets, liabilities or financial

condition of Seller, (ii) any change in Seller’s accounting methods or

practices, (iii) any sale or transfer of any asset or any amendment of any

agreement of Seller whether or not  in

the ordinary course of business, (iv) any loss of or damage to the Purchased

Assets due to abuse, misuse, fire, damage, destruction or other casualty,

whether or not covered by insurance, affecting any of the Purchased Assets or

any portion of the

 

7

 

Business (v) any labor

trouble, (vi)  to Seller’s knowledge any

reasonably foreseeable increase in operating costs of the Business not

commensurate with increased production, (vii) any material warranty or

liability claims or losses, or (viii) any other event or condition known to

Seller to have occurred or to exist which, singly or in the aggregate,

materially and adversely affect the Purchased Assets or the Business.

 

c.                                       Undisclosed

Liabilities.  Except as

set forth on Schedule 4.3(c),  Seller

has no liabilities (whether known or unknown, accrued, absolute, contingent or

otherwise) for which Seller would be liable in any single instance for more

than $1000 or in the aggregate more than $5000, that exist or arise out of any

transaction or state of facts existing on or prior to the Closing Date other

than as and to the extent reflected or reserved against in the Financial Statements

(none of which is a liability for borrowed money (other than under current

credit facilities), breach of contract, breach of warranty, tort, infringement

or lawsuit).

 

4.4           Tax Reports, Returns and Payment.  Seller has timely filed (subject to

extension) 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.  True and correct copies of the reports and returns

filed by Seller during the last three tax years have been made available to

Buyer.  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. 

During the three (3) years preceding the Closing Date, such income tax

returns have not been subjected to any examination or audit by governmental

authorities.

 

4.5           Title to Assets. 

Other than the Excluded Assets and the employees of the Business, the

Purchased Assets constitute all property owned by Seller which is necessary for

the conduct of the Business as now conducted. 

Seller is the sole owner of the Purchased Assets, and holds good and

marketable title thereto free and clear of all liens, charges, encumbrances or

third party claims or interests of any kind whatsoever, except for the current

liens for Seller’s bank debt.

 

4.6           Tangible Personal Property.  All personal property included in the

Purchased Assets is in substantially the same operating condition as existed on

January 9, 2002, ordinary wear and tear excepted.  Seller hereby assigns to Buyer as of the Closing Date any and all

warranties covering such property existing as of the Closing Date.

 

                4.7           Inventory.  The Inventory reflected on Seller’s books

and records has been valued at the lower of cost or market in accordance with

generally accepted accounting principles applied on a basis consistent with

Seller’s past practices.  In the twelve

(12) months prior to the Closing Date, there has not been a material change in

the level of Seller’s Inventory other than

 

8

 

changes in the ordinary course of business

consistent with Seller’s past practices. 

All raw material and work-in-progress Inventory included in the

Purchased Assets is of a quality and quantity usable in the ordinary course of

business.

 

4.8           Trademarks. 

Seller has filed the trademarks registrations for the Trademarks listed

on Exhibit 1.1(b)(ii).  Exhibit 1.1(b)(ii)

sets forth all Trademarks owned, used by, accruing to the benefit of or

necessary or useful to the operation of the Business by Seller.  The Trademarks and other names are not

licensed to or licensed from any other person or entity.  Seller has not received any notice or claim

that Seller’s title to or use of the Trademarks is impaired, encumbered or

invalid or is unenforceable by it.  To

the best of Seller’s knowledge, Seller’s use of any Trademark does not infringe

upon any intellectual property rights held by any other person or entity.  There is no claim or action pending or

threatened with respect to the Trademarks. 

To the best of Seller’s knowledge there has been no infringement or

improper use of any Trademark by any third party.

 

4.9           Patents.  Exhibit 1.1(b)(iii) sets forth all Patents owned, used by,

accruing to the benefit of or necessary or useful to the operation of the

Business by Seller. The Patents are not licensed to or licensed from any other

person or entity.  Seller has not

received any notice or claim that Seller’s title to or use of the Patents is

impaired, encumbered or invalid or is unenforceable by it.  To the best of Seller’s knowledge, Seller’s

use of any Patent does not infringe upon any intellectual property rights held

by any other person or entity and there is no claim or action pending or

threatened with respect to the Patents. 

To the best of Seller’s knowledge there has been no infringement or

improper use of any Patent by any third party.

 

4.10         Licenses and Permits.  To the best of Seller’s knowledge, Seller possesses all necessary

permits, licenses and approvals, governmental or otherwise, without which it

could not conduct the Business in its present form and at its present location,

all of which are listed on Exhibit 1.1(e). 

All of the Licenses and Permits are valid and in good standing and

Seller has not received any notice that the Licenses and Permits will lapse or

be terminated by action of any governmental authority or otherwise.  Except as set forth on Exhibit 1.1(e), to

the best of Seller’s knowledge, all of the 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.

 

4.11         Agreements, Contracts and Commitments.

 

a.                                       Employee Plans.  There is no liability that will be imposed

upon Buyer with respect to any Employee Plan. 

“Employee Plan” means any pension, retirement, disability, medical,

dental, or other health insurance plan, life insurance or other death benefit

plan, profit sharing, deferred compensation, stock option, bonus or other

incentive plan, vacation benefit plan, severance plan, or other employee

benefit plan or arrangements 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(1)

of ERISA, whether or not any of the foregoing is funded, (i) to which

 

9

 

Seller is a party or by

which Seller is bound; or (ii) with respect to which Seller has made any

payments or contributions since January 1, 1998, or may otherwise have any

liability (including any such plan or other arrangement formerly maintained by

Seller).

 

b.                                      Union and

Employment Contracts and Other Employment Matters.

 

(i)                                     Seller is not a

party to any collective bargaining agreement or any other written employment

agreement, nor is Seller a party to any other contract or understanding (oral

or written) that contains any severance pay liabilities or obligations, except

for accrued, unused vacation pay or accrued and unused sick leave pay.

 

(ii)                                  During the last

three (3) years Seller has experienced no work stoppages, walkouts or strikes

or attempts by its employees to organize a union.

 

(iii)                               Except as

disclosed in Schedule 4.12(b)(iii) hereto, there have been no employee or

ex-employee lawsuits or claims, or any claims of unfair labor practices or the

like, in the past three (3) years.

 

d.                                      Breach.  Seller has performed in all material

respects all obligations required to be performed by Seller to date under each

Assumed Contract; and neither Seller nor, to the knowledge of Seller, any other

party is in default under any Assumed Contract.  No event has occurred which after the giving of notice or the

lapse of time or otherwise would constitute a default under, or result in a

breach of by Seller of any Assumed Contract.

 

e.                                       Copies of

Contracts; Terms and Binding Effect.  Exhibit 1.1(f) contains an accurate and complete list of all

Contracts.  True, complete and correct

copies of all Assumed Contracts have been delivered to Buyer or are attached to

the Schedules where required by this Agreement; there are no amendments to or

modifications of, or agreements of the parties relating to, any such Assumed

Contracts which have not been delivered to Buyer; and each such Assumed

Contract is considered valid and binding on Seller to it in accordance with its

respective terms (except as such enforceability may be limited by the effect of

bankruptcy, insolvency or similar laws affecting creditor rights generally or

by general principles of equity).

 

4.12         Insurance. 

Seller maintains the insurance identified in Schedule 4.12.

 

4.13         Litigation and Related Matters.

 

a.                                       Except as set

forth on Schedule 4.13, there are no claims (including, without limitation,

workers’ compensation claims), action, suits, inquiries,

 

10

 

investigations, or

proceedings pending or threatened or imminent, relating to the Seller, the

Purchased Assets, any portion of the Business, any of the Assumed Liabilities

or the transactions contemplated by this Agreement, and, to the best knowledge

of Seller, there is no basis for any such claim, action or proceeding.  Seller has complied in all material respects

with all statutes, laws and regulations, orders, rules, regulations and

requirements (“Laws”) applicable to it, the Business, or the Purchased Assets,

including Laws relating to environmental matters and Laws promulgated by

governmental or other authorities, relating to the Purchased Assets and the

operation of the Business.  Without

limiting the generality of the foregoing, Seller has not used or stored

hazardous, toxic or contaminating wastes or substances on any real property or

discharged or released any such substances upon any real property, including,

but not limited to, underground injection of such substances, in violation of

any environmental Laws for which Seller would be liable in any single instance

for more than $1000 or in the aggregate more than $5000.

 

b.                                      Seller is not

subject to any material existing judgment, order, decree, or other action

affecting the operation of the Business or the Purchased Assets or 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 Seller or on the Business or any of the Purchased Assets.

 

c.                                       No legal

actions have been commenced against Seller with respect to the Business or the

Purchased Assets within the three (3) years prior to the Closing Date.

 

4.14         Customers. 

Except as provided in Schedule 4.14, no single customer of Seller

accounted for more than ten percent (10%) of Seller’s revenues in the Business

during the fiscal year ending prior to the date of this Agreement.  Seller has received no written notice that

any customer intends to cease doing business with Seller or materially alter

the amount of business or terms upon which it does with Seller.

 

4.15         Products.  To

the best of Seller’s knowledge, all Products sold by Seller conform in all

material respects to all applicable laws, ordinances, regulations, trade and

industry standards, contract specifications and descriptive material or

advertisements associated with the Products. 

Schedule 4.15 discloses all written claims received by Seller within the

last three years based upon alleged breach of product warranty, strict

liability in tort, or any other allegation of liability arising from Seller’s

sale of goods, including Products (hereafter collectively referred to as

“Product Liability Claims”).

 

4.16         Conflicts; Required Consents.  Except as provided in Schedule 4.16, neither

the execution and delivery of this Agreement by Seller nor compliance by Seller

with the terms and provisions of this Agreement will (a) conflict with or

result in a breach of (i) any of the terms,

 

11

 

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 either of them is

subject, or (iv) any Assumed Contract; or (b) require the affirmative consent

or approval of any third party other than the approval of Seller’s

shareholders.

 

4.17         Binding Obligation. 

This Agreement constitutes the legal, valid and binding obligation of

Seller in accordance with the terms hereof. 

Seller is not subject to any charter, 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.

 

4.18         Maintenance of Business.  Since January 9, 2002, Seller has conducted the Business only in

the usual and ordinary manner, including:

 

a.                                       except as

disclosed on Schedule 4.18, timely payment and discharge of all bills and

monetary obligations and timely and proper performance of all of its

obligations and commitments under all Assumed Contracts;

 

b.                                      preservation

and maintenance of its Business assets, including customer, vendor and employee

relationships consistent with past practices;

 

c.                                       processing or

shipment of any customer orders in a manner consistent with ordinary business

practices.

 

Further, since January 9,

2002, Seller has not:

 

d.                                      except as

disclosed on Schedule 4.16, to its knowledge, created or suffered to exist any

Encumbrances with respect to any of the Purchased Assets which has not been

discharged;

 

e.                                       sold or

transferred any assets of a type similar to the Purchased Assets, except for

sales of inventory in the ordinary course of its business;

 

f.                                         made any change

in the conduct or nature of the Business;

 

g.                                      changed any

method of accounting; or

 

h.                                      waived any

rights that are the subject of this Agreement.

 

4.19         Absence of Certain Business Practices.  Neither Seller nor any officer, employee or

agent of Seller, nor any other person acting on its behalf, has directly or

indirectly, within the past five years given or agreed to give any gift or

similar benefit to any customer, supplier,

 

12

 

governmental employee or other person who is

or may be in a position to help or hinder the Business (or assist Seller in

connection with any actual or proposed transaction) which (i) would subject

Seller to any damage or penalty in any civil, criminal or governmental

litigation or proceeding, or (ii) if not continued in the future, would

materially adversely affect the Assets of the Business, or the prospects of the

Business or which would subject Seller to suit or penalty in any private or

governmental litigation or proceeding.

 

4.20         Disclosure. 

No material representation or warranty in this Agreement or in any

certificate, schedule, statement or other document furnished or to be furnished

pursuant hereto or in connection with the transactions contemplated hereby

contains or will contain any untrue statement of a material fact or omits or

will omit to state any material fact required to be stated herein or therein or

necessary to make the statements herein or therein not misleading.

 

 

ARTICLE

5

REPRESENTATIONS

AND WARRANTIES OF BUYER

 

Buyer makes the following representations

and warranties to Seller with the intention that Seller may rely upon the same,

and acknowledges that the same shall be true as of the Closing Date (as if made

at the Closing) and shall survive the Closing of this transaction.

 

5.1           Organization. 

Buyer is a corporation, duly organized, validly existing in good

standing under the laws of the State of Minnesota, and has all requisite

corporate power and authority, corporate and otherwise, to own its properties

and conduct the business in which it is presently engaged.

 

5.2           Corporate Authority.  Buyer has all requisite 

power and authority to enter into and perform this Agreement.  The execution and delivery of this Agreement

and the consummation of the transactions contemplated in this Agreement have

been duly authorized by all requisite action of Buyer’s Board of Directors and

shareholders.  This Agreement has been

executed and delivered by a duly authorized officer of Buyer and is a valid and

binding agreement of the Buyer, enforceable against them in accordance with its

terms.

 

5.3           Breaches of Contracts; Required Consents.  Neither the execution and delivery of this

Agreement by Buyer, nor compliance by Buyer with the terms and provisions of

this Agreement, will (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 listed on

any Exhibit hereto and which is material to the financial condition of Buyer;

or (b) require the affirmative consent or approval of any third party.

 

5.4           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 charter,

mortgage, lien, lease, agreement, contract, instrument, law, rule, regulation,

order, judgment or

 

13

 

decree, or any other restriction of any kind

or character, which would prevent the consummation of the transactions

contemplated in this Agreement.

 

5.5           Disclosure. 

No material representation or warranty in this Agreement or in any

certificate, schedule, statement or other document furnished or to be furnished

pursuant hereto or in connection with the transactions contemplated hereby

contains or will contain any untrue statement of a material fact or omits or

will omit to state any material fact required to be stated herein or therein or

necessary to make the statements herein or therein not misleading.

 

 

ARTICLE

6

CONDITIONS

PRECEDENT TO CLOSING

 

6.1           Conditions Precedent to Obligations of Seller.  The obligations of Seller under this

Agreement are subject to fulfillment prior to or at the Closing of each of the

following conditions, unless waived in writing by Seller:

 

a.                                       Representations

and Warranties.  Each of

the representations and warranties made by Buyer in this Agreement or in any

instrument, schedule, certificate or writing delivered by Buyer pursuant to

this Agreement, shall be true and correct when made and shall be true and

correct at and as of the Closing Date as though such representation and

warranties were made or given on and as of the Closing Date.  Buyer shall have performed or complied with

all obligations and covenants required by this Agreement to be performed or

complied with by Buyer by the Closing Date. 

Seller shall have received a certificate signed by the appropriate

officer of Buyer to the foregoing effect.

 

b.                                      Absence of

Certain Legal Proceedings.  No

suit or other legal proceeding shall have been commenced seeking to restrict or

prohibit the transactions contemplated by this Agreement.

 

c.                                       Other Matters.  Buyer shall have delivered the documents

required under Section 7.3.

 

6.2           Conditions Precedent to Obligations of Buyer.  The obligations of Buyer under this

Agreement are subject to fulfillment prior to or at Closing of each of the

following conditions, unless waived in writing by Buyer:

 

a.                                       Representations

and Warranties.  Each of

the representations and warranties made by Seller in this Agreement, or in any

instrument, schedule, certificate or writing delivered by Seller pursuant to

this Agreement, shall be true and correct when made and as of the Closing

Date.  Seller shall have performed or

complied with all obligations and covenants required by this Agreement to be

performed or complied with 

 

14

by Seller by the Closing

Date.  Buyer shall have received a

certificate signed by the appropriate officer of Seller to the foregoing

effect.

 

b.                                      Approvals;

Absence of Certain Legal Proceedings.  All required approvals or consents shall have been obtained by

Seller and no suit or other legal proceeding shall have been commenced seeking

to restrict or prohibit the transactions contemplated by this Agreement.

 

c.                                       Corporate

Authorization.  All action

required by law, Seller’s Articles of Incorporation, Bylaws or otherwise to be

taken by the Boards of Directors and shareholders of Seller to authorize the

execution, delivery and performance of this Agreement and the transactions

contemplated thereby shall have been duly and validly taken.

 

d.                                      Preservation of

Business.  Seller

shall use commercially reasonable efforts to preserve intact its business

organization and goodwill, keep available the services of its respective

officers and employees and maintain satisfactory relationships with those

persons having business relationships with it.

 

e.                                       Other Matters.  Seller shall have delivered the documents

required under Section 7.2.

 

15

 

ARTICLE

7

CLOSING

 

7.1           Closing. 

The closing of the transaction contemplated by this Agreement

(“Closing”) shall be held at the offices of Lindquist & Vennum P.L.L.P.,

4200 IDS Center, Minneapolis, MN 55402 no later than 9:00 a.m. on

February 8, 2002, but effective at the close of business on such date (the “Closing

Date”).

 

7.2           Seller’s Deliveries.  Seller agrees to execute and/or deliver the following documents

to Buyer at the Closing:

 

a.                                       All

certificates, schedules, exhibits, and attachments in completed form and

specifying the information required by the provisions of this Agreement.

 

b.                                      A certificate

of the Secretary of Seller certifying as to (i) a copy of resolutions of the

Seller’s Board of Directors which authorize the execution, delivery and

performance of this Agreement as having been duly adopted and as being in full

force and effect on the Closing Date, (ii) a copy of resolutions of the

shareholders of Seller which authorize this Agreement and the transactions

contemplated herein as having been duly adopted and as being in full force and

effect on the Closing Date, (iii) a copy of the Seller’s Articles of

Incorporation as certified by the Secretary of State of Minnesota in effect as

of the Closing Date, and (iv) a true and correct copy of the Seller’s Bylaws in

effect as of the Closing Date.

 

c.                                       A certificate

of good standing of Seller certified by the Secretary of State of Minnesota as

of no more than two (2) days prior to the Closing Date.

 

d.                                      A Bill of Sale,

a Trademark and Patent Assignment and instruments of assignment and transfer

for the sale of the Purchased Assets.

 

e.                                       Instruments of

assumption of the Assumed Liabilities.

 

f.                                         Amendment to

Seller’s Articles of Incorporation changing Seller’s name, in form complete and

adequate for filing.

 

g.                                      All necessary

consents under the Assumed Contracts.

 

h.                                      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 assets, property and rights to be assigned, conveyed,

or transferred pursuant to the terms of this Agreement.

 

16

 

7.3           Buyer’s Deliveries.  Buyer agrees to execute and/or deliver the following to Seller at

the Closing:

 

a.                                       The Purchase

Price.

 

b.                                      Instrument of

assumption of the Assumed Liabilities.

 

c.                                       A certificate

of the Secretary of Buyer certifying as to (i) a copy of resolutions of the

Buyer’s Board of Directors which authorize the execution, delivery and

performance of this Agreement as having been duly adopted and as being in full

force and effect on the Closing Date, (ii) a copy of the Buyer’s Articles of

Incorporation as certified by the Secretary of State of Minnesota in effect as

of the Closing Date, and (iii) a true and correct copy of the Buyer’s Bylaws in

effect as of the Closing Date.

 

d.                                      Such other

documents as Seller reasonably may request to carry out the transactions

contemplated under this Agreement.

 

 

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,

including such documents as may be necessary or appropriate to perfect title in

Buyer of the Trademarks, Patents and Technology 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 their own respective names for the benefit of Buyer, any claim,

right or benefit transferred by this Agreement that may require prosecution or

enforcement in Seller’s name.

 

8.2           Payment of Debts and Liabilities.  Seller shall pay all of its liabilities and

debts relating to the Excluded Liabilities in the ordinary course as the same

become due.

 

8.3           Satisfaction of Liens on Purchased Assets. Seller

shall take all actions necessary to satisfy all liens on the Purchased Assets

immediately following Closing. Seller agrees to provide Buyer with evidence

acceptable to Buyer of such satisfaction.

 

17

 

ARTICLE

9

INDEMNIFICATION

 

9.1           Survival of Representations, Warranties and Agreements.

The representations, warranties and agreements contained in this Agreement or

in any certificate delivered pursuant to this Agreement shall survive the

Closing Date and remain in full force and effect after the Closing Date for a

period of one (1) year.

 

9.2           Indemnification by Seller.  For a period of one (1) year, Seller 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 expenses

(including reasonable attorney fees) which Buyer may suffer or incur in

connection with any of the following:

 

a.                                       Any claim,

demand, action or proceeding asserted by a creditor of Seller or respecting any

liabilities of Seller that are included in the Excluded Liabilities.

 

b.                                      The material

breach of any of the representations, warranties or covenants of Seller in this

Agreement.

 

c.                                       Any and all

claims by third parties arising out of Seller’s conduct of the Business or use

or ownership of any assets, including Purchased Assets, on or prior to the

Closing Date.

 

d.                                      Third party

product liability claims  filed within

twelve months following the Closing Date concerning products manufactured and

sold by Seller or which are finished goods included in the Inventory on the

Closing Date and sold in the Business after the Closing Date.

 

e.                                       Any reasonable

costs and expenses associated with defending against any of the foregoing

claims, liabilities, obligations, costs, damages, losses and expenses.

 

9.3           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 damages,

losses, costs and expenses (including reasonable attorney fees) which Seller

may suffer or incur in connection with any of the following:

 

a.                                       Any claim,

demand, action or proceeding asserted by any third party respecting any

liabilities that are included in the Assumed Liabilities.

 

b.                                      All claims by

third parties arising out of the conduct of the Business or use or ownership of

any of the Purchased Assets from and after the Closing (including, without

limitation, any product liability claims concerning Products which are sold by

Buyer from and after the Closing Date, unless covered by Section 9.1(d)).

 

18

 

c.                                       The breach of

any of the representations, warranties or covenants of Buyer in this Agreement.

 

d.                                      Any costs and

expenses associated with defending against any of the foregoing claims,

liabilities, obligations, costs, damages, losses and expenses.

 

9.4           Cooperation; Notice.  In the event a party hereto (the “Indemnifying Party”) is

indemnifying the other party hereto (the “Indemnified Party”), the Indemnified

Party agrees to provide the Indemnifying Party such cooperation, information or

assistance as the Indemnifying Party may reasonably request.  The Indemnified Party shall give prompt

notice to the Indemnifying Party of each matter, claim, demand, fact or other

circumstances upon which a claim for indemnification (“Claim”) under this

Article 9 is based.  Such notice shall

contain, with respect to each Claim, such facts and information as are then

reasonably available, and the specific basis for indemnification hereunder.

 

9.5           Defense of Claims. 

The Indemnifying Party shall have the right to assume defense of and to

settle any Claim asserted by a third party against the Indemnified Party with

counsel reasonably acceptable to the Indemnified Party so long as the

Indemnifying Party is diligently defending such Claim; provided that the

Indemnified Party may, at its expense, participate in such proceeding.  The Indemnifying Party shall not settle any

Claim without the consent of the Indemnified Party (which consent shall not be

unreasonably withheld, conditioned or delayed), unless such settlement requires

no admission of liability on the part of the Indemnified Party and no

assumption of any obligation or monetary payment for which the Indemnified

Party has not been fully indemnified and protected against.  The Indemnified Party may not settle any

Claim for which it may seek indemnification from an Indemnifying Party without

the Indemnifying Party’s consent, such consent not to be unreasonably withheld,

conditioned or delayed.

 

19

 

ARTICLE

10

GENERAL

 

10.1         Public Announcements.  None of the parties to this Agreement shall issue or make any

press release or other public statements with respect to this Agreement or the

transactions described herein to employees, customers, distributors, suppliers

or other persons except and unless such release, statement or announcement has

been jointly approved by the parties (which approval shall not be unreasonably

withheld or delayed), except as may be required by applicable law (including,

but not limited to the Securities Exchange Act of 1934) or by obligations

pursuant to any listing agreement with any securities market or any securities

market regulations.  If any party is so

required to issue or make a press release, public statement or other

announcement, such party shall inform the other party prior to issuing or

making any such press release, public statement or announcement and shall

reasonably consult with the other party regarding the content thereof if

practicable.

 

10.2         Counterparts. 

This Agreement may be executed in counterparts and by different parties

on 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 to this Agreement at

such time as all parties have executed a counterpart of this Agreement.

 

10.3         Notices.  Any

notice or other communication required or permitted hereunder shall be in

writing and shall be deemed to have been given, when received, if personally

delivered, and, three days after deposited, if placed in the U.S. mails for

delivery by registered or certified mail, return receipt requested, postage

prepaid, addressed to the address of the respective party as stated under such

party’s signature space on this Agreement. 

Addresses may be changed by written notice given pursuant to this

Section.

 

10.4         Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of

the parties to this Agreement and their successors or assigns.

 

10.5         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 lawyers, accountants, financial

consultants, brokers or finders incurred through the Closing Date.

 

10.6         Headings and Construction.  The descriptive headings of the several Articles and Sections of

this Agreement and of the several Exhibits to this Agreement are inserted for

convenience only and do not constitute a part of this Agreement.  This Agreement shall not be construed

against either party since each party has negotiated its provisions and

contributed to its drafting.

 

10.7         Entire Agreement; Modification and Waiver.  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

 

20

 

agreements, whether written or oral, relating

thereto.  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 provision hereof and the circumstance or event specifically made subject

thereto and shall not be deemed a waiver of any other term hereof or of the

same circumstance or event upon any recurrence thereof.

 

10.8         Jurisdiction. 

The parties agree that the forum for any controversy arising under this

Agreement shall be exclusively in the State of Minnesota.

 

10.9         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

(without giving effect to principles of conflict of law thereof).

 

10.10       Attorneys Fees. 

In an action to enforce a party’s rights hereunder, the prevailing party

shall be entitled to recover its cost and expenses (including attorneys’ fees,

whether or not suit is brought) from the other party.

 

10.11       Benefit.  Nothing

in this Agreement, expressed or implied, is intended to confer on any person

other than the parties to this Agreement or their respective successors or

assigns, any rights, remedies, obligations or liabilities under or by reason of

this Agreement.

 

10.12       Mediation.

 

a.                                       Any dispute,

controversy or claim arising out of this agreement, or the interpretation,

application, breach, termination or validity thereof, including any claim of

inducement by fraud or otherwise, shall, before submission to arbitration in

accordance with the following Section of this Agreement, first be mediated

through non-binding mediation in accordance with the Model Procedures for the

Mediation of Business Disputes promulgated by the Center for Public Resources

(“CPR”) then in effect, except

where those rules conflict with these provisions, in which case these

provisions control.  The mediation shall

be conducted in Minneapolis, Minnesota and shall be attended by a senior

executive with authority to resolve the dispute from each of the operating

companies that are parties.

 

b.                                      The mediator

shall be an attorney specializing in business litigation who has at least 15

years of experience as a lawyer with a law firm or corporation of over 10

lawyers or was a judge of a court of general jurisdiction and who shall be

appointed from the list of neutrals maintained by CPR.

 

c.                                       The parties

shall promptly confer in an effort to select a mediator by mutual

agreement.  In the absence of such an

agreement, the mediator shall

 

21

 

be selected from a list

generated by CPR with each party having the right to exercise challenges for

cause and two peremptory challenges within 72 hours of receiving the CPR list.

 

d.                                      The mediator

shall confer with the parties to design procedures to conclude the mediation

within no more than 45 days after initiation. 

Under no circumstances shall the commencement of arbitration under

Section 11.13 below be delayed more than 45 days by the mediation process

specified herein.

 

e.                                       Each party

agrees to toll all applicable statutes of limitation during the mediation

process and not to use the period or pendency of the mediation to disadvantage

the other party procedurally or otherwise. 

No statements made by either side during the mediation may be used by

the other during any subsequent arbitration.

 

f.                                         Each party has

the right to pursue provisional relief from any court, such as attachment,

preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the

status quo, or preserve the subject matter of the arbitration,

even though mediation has not been commenced or completed.

 

10.13       Arbitration of Disputes.

 

a.                                       Any dispute,

claim or controversy arising from or related in any way to this Agreement or

the interpretation, application, breach, termination or validity thereof,

including any claim of inducement of this Agreement by fraud or otherwise, will

be submitted for resolution to arbitration pursuant to the commercial

arbitration rules then pertaining of the CPR, except where those rules conflict

with these provisions, in which case these provisions control.  The arbitration will be held in Minneapolis,

Minnesota.

 

b.                                      The panel shall

consist of one arbitrator chosen from the CPR Panels of Distinguished Neutrals

who is a lawyer specializing in business litigation with at least 15 years

experience with a law firm or corporation of over 10 lawyers or was a judge of

a court of general jurisdiction.

 

c.                                       The parties

agree to cooperate (1) to obtain selection of the arbitrator within 30 days of

initiation of the arbitration, (2) to meet with the arbitrator within 30 days

of selection and (3) to agree at that meeting or before upon procedures for

discovery and as to the conduct of the hearing which will result in the hearing

being concluded within no more than 9 months after selection of the arbitrator

and in the award being rendered within 60 days of the conclusion of the

hearings, or of any post-hearing briefing, which briefing will be completed by

both sides with 20 days

 

22

 

after the conclusion of the

hearings.  In the event no such

agreement is reached, the CPR will select an arbitrator, allowing appropriate

strikes for reasons of conflict or other cause and three peremptory challenges

for each side.  The arbitrator shall set

a date for the hearing, commit to the rendering of the award within 60 days of

the conclusion of the evidence at the hearing, or of any post-hearing briefing

(which briefing will be completed by both sides in no more than 20 days after

the conclusion of the hearings), and provide for discovery according to these

time limits, giving recognition to the understanding of the parties hereto that

they contemplate reasonable discovery, including document demands and

depositions, but that such discovery be limited so that the time limits

specified herein may be met without undue difficulty.  In no event will the arbitrator allow either side to obtain more

than a total of 40 hours of deposition testimony from all witnesses, including

both fact and expert witnesses.  To that

end each of the parties hereto agrees to pursue no more than the following

discovery in the aggregate from all parties and non-parties to the action: a

total of no more than 20 requests for documents (including subparts) set forth

in no more than two separately served document demands; a total of no more than

20 interrogatories (including subparts) set forth in no more than two

separately served sets of interrogatories. In the event multiple hearing days

are required, they will be scheduled consecutively to the greatest extent

possible.

 

d.                                      The arbitrator

shall render its award following the substantive law of Minnesota.  The arbitrator shall render an opinion

setting forth findings of fact and conclusions of law with the reasons therefor

stated.  A transcript of the evidence

adduced at the hearing shall be made and shall, upon request, be made available

to either party.

 

e.                                       To the extent

possible, the arbitration hearings and award will be maintained in confidence.

 

f.                                         The United

States District Court for the District of Minnesota may enter judgment upon any

award.  In the event the panel’s award

exceeds $5 million in monetary Damages or includes or consists of equitable

relief, then the court shall vacate, modify or correct any award where the

arbitrators’ findings of fact are clearly erroneous, and/or where the

arbitrators’ conclusions of law are erroneous; in other words, it will

undertake the same review as if it were a federal appellate court reviewing a

district court’s findings of fact and conclusions of law rendered after a bench

trial.  An award for less than $5

million in Damages and not including equitable relief may be vacated, modified

or corrected only upon  the grounds

specified in the Federal Arbitration Act. 

The parties consent to the jurisdiction of the above-specified Court for

the enforcement of these provisions, the entry of judgment on any award, and

the vacatur, modification and correction of any award as

 

23

 

above specified.  In the event such Court lacks jurisdiction,

then any court having jurisdiction of this matter may enter judgment upon any

award and provide the same relief, and undertake the same review, as specified

herein.

 

g.                                      Each party has

the right before or during the arbitration to seek and obtain from the

appropriate court provisional remedies such as attachment, preliminary

injunction, replevin, etc. to avoid irreparable harm, maintain the status

quo, or preserve the subject matter of the arbitration.

 

h.                                      EACH PARTY

HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY.

 

i.                                          EACH PARTY

HERETO WAIVES ANY CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES FROM THE OTHER.

 

j.                                          EACH PARTY

HERETO WAIVES ANY CLAIM OF CONSEQUENTIAL DAMAGES FROM THE OTHER.

 

 

 

[Signatures

to Asset Purchase Agreement on next page]

 

24

 

Each of the parties hereto

has caused this Asset Purchase Agreement to be executed in the manner

appropriate to each, all as of the day and year first above written.

 

	

   

  	

  STERION INCORPORATED

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  J. David Berkley

  
	

   

  	

   

  	

  J. David Berkley, President

  
	

   

  	

   

  	

   

  
	

   

  	

  Address:

  	

  13828 Lincoln Street NE

  
	

   

  	

   

  	

  Ham Lake, MN  55304

  
	

   

  	

   

  	

   

  
	

   

  	

  BELLINGHAM MEDICAL, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Godfrey Bellingham

  
	

   

  	

   

  	

  Godfrey Bellingham, Chairman

  
	

   

  	

   

  	

   

  
	

   

  	

  Address:

  	

  2401 Pilot Knob Road

  
	

   

  	

   

  	

  Mendota Heights, MN 55120

  
	

   

  	

   

  	

   

  
					

 

25

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