UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
AMENDMENT NO. 2
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
Bison Instruments, Inc.
- ----------------------------------------------
(Name of Small Business Issuer in its charter)
Minnesota E41-0947661
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5610 Rowland Road, Minneapolis, MN 55343-8956
- --------------------------------------- -----------------------------
(Address of principal executive office) (Zip Code)
Issuer's telephone number (612) 931-0051
--------------------------------------
Securities to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which
registered
- ------------------- ------------------------------
Securities to be registered pursuant to Section 12(g) of the Act.
Common Stock
- -------------------------------------------------------------------------
-1-
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
The Company was incorporated under the laws of the State of Minnesota on January
18, 1968.
The Company has not been subject to any bankruptcy, receivership or similar
proceedings.
In the last fiscal year and the first quarter of the current year, the Company
sold substantially all of the assets of the Company outside of the ordinary
course of business.
Prior to the sale of its assets, the Company was engaged in the manufacture and
sale of electronic instrumentation. The Company currently is only engaged in
residual sales of inventory on hand, and has ceased manufacturing new products.
The following table provides some detail as to the Company's remaining
inventory.
INVENTORY 10/31/98 07/31/99
Finished goods 50,000 7,500
Less - reserves* (50,000) (7,500)
net 0 0
* the cost has been fully reserved as the product line has been sold.
The Company will continue its efforts to sell the inventory and does continue to
receive inquiries in this regard.
Andus Inc., a Delaware corporation, owns 67.05% of the Company. Andus Inc. is a
wholly-owned subsidiary of Autrex Inc., a Canadian corporation. Autrex Inc. also
owns Pylon Electronics Inc. which is engaged primarily in the manufacture and
distribution of electronic instrumentation, and equipment for the
telecommunications and telephone industries, and the calibration and repair of
electronic test and measurement instruments. Approximately 95% of the issued and
outstanding stock of Autrex is owned by Androcan Inc., which is ultimately
controlled by Mr. Barrie D. Rose, and members of this family.
Bison Instrument, Inc. also has a wholly-owned subsidiary, Bison International,
Inc., which was incorporated in the U.S. Virgin Islands. Bison International,
Inc, handled some international sales efforts of the Company, but is now
essentially inactive.
The Company currently has one employee.
-2-
<PAGE>
The Company sends out audited financial statements for each fiscal year-end to
its security holders. The Company has not previously filed any reports with the
Securities and Exchange Commission.
ITEM 2. MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Sales from operations were $520,000 in 1998 compared with $2,554,000 in 1997.
The net loss for 1998 was $152,000, or $0.17 per share, compared with a loss in
1997 of $1,298,000 or $1.46 per share. The 1998 loss includes other income of
$118,000.
The other income received by the Company in 1998 was from the sale of its
Galileo and Jupiter seismic product lines. Proceeds of the transaction totaled
$474,000. In 1998, the total proceeds on disposal of fixed assets and product
lines were $503,000. these proceeds were applied to repay a loan payable to its
parent company, Autrex Inc., in the amount of $450,000.
In October, Bison entered into a conditional agreement to sell it remaining
product line, the Mu-Meter Airport Runway Friction Measuring System. This sale,
which was approved by the shareholders in November, closed that month. The sale
generated proceeds of $179,000 and a gain of $90,000. This gain was recognized
in the first quarter of 1999.
The Company has continued its efforts to sell off its remaining inventory. Sales
through the third quarter were $32,880, resulting in a profit of $83,750. This
compares to sales of $486,950 and a loss of $68,340 for the same period last
year.
The Company has income tax losses of $1,400,000 available for carryforwards,
which may be used to reduce future years' taxable income and for which the
benefit has not been recorded. These losses expire between 2010 and 2015.
As operations have been wound down, Bison's staffing levels have been reduced.
Other operating expenses were also reduced to a minimum, and only one salaried
employee remains in Bison. The General Manager, Larry Martin, administers the
corporate affairs of the Company and monitors residual business matters. The
Company has sufficient cash resources to maintain these reduced operations for
the foreseeable future.
-3-
<PAGE>
The sale of the product lines has essentially rendered Bison inactive.
Other business opportunities for the corporation are being pursued. However,
there is no guarantee that the Company will be successful in its endeavors.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company operates out of leased office space located at 5610 Rowland Road,
Minneapolis, Minnesota.
The Company does not currently hold investments in real estate or mortgages
relating to real estate.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security Ownership Greater than 5%
--------------------------------------------------------------------
(1) (2) (3) (4)
--------------------------------------------------------------------
TITLE OF NAME AND AMOUNT AND PERCENT OF
CLASS ADDRESS OF NATURE OF CLASS
BENEFICIAL BENEFICIAL
OWNER OWNER
--------------------------------------------------------------------
Common Andus, Inc. 595,539 Common 67.05%
Stock 1209 Orange Shares
Street,
Wilmington,
Delaware, 19801
--------------------------------------------------------------------
(b) Security Ownership of Management
--------------------------------------------------------------------
(1) (2) (3) (4)
--------------------------------------------------------------------
TITLE OF NAME AND AMOUNT AND PERCENT OF
CLASS ADDRESS OF NATURE OF CLASS
BENEFICIAL BENEFICIAL
OWNER OWNER
--------------------------------------------------------------------
Common Allan D. 12,418 Common 1.40%
Stock Erickson Shares
2855 Park
Avenue
Minneapolis,
Minnesota,
55407
--------------------------------------------------------------------
Common Barrie D. 595,539 Common 67.05%
Stock Rose* Shares
50 Bartor Road
Toronto,
--------------------------------------------------------------------
-4-
<PAGE>
--------------------------------------------------------------------
Ontario,
Canada, M9M 2G5
--------------------------------------------------------------------
Common Total 607,957 68.45%
Stock
* Andus, Inc., a Delaware corporation, is a subsidiary of Autrex
Inc., a Canadian corporation. Androcan Inc., a Canadian
corporation, is the majority shareholder of Autrex Inc., and is
ultimately controlled by Barrie D. Rose, and members of his
immediate family.
(c) Change in Control
There are not currently any arrangements in place which may result in a
change in control of the Company.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
DIRECTORS
NAME AGE POSITIONS HELD IN TERM OF SERVED
BISON OFFICE SINCE
Barrie D. Rose 69 Director 1 year 1983
Allan D. 55 Director 1 year 1982
Erickson
Glen A. Peer 36 Director 1 year 1996
Edward G. 54 Director, and Chief 1 year 1996
Lampman Executive Officer
Lawrence M. 58 Director and General 1 1998
Martin Manager
Barrie D. Rose. Mr. Rose has held a number of executive positions in a variety
of industrial companies. Mr. Rose founded the Androcan Group of Companies in
1984. He is currently Chairman and Chief Executive Officer of Androcan Inc. and
Chairman and Chief Executive Officer of Autrex Inc., and Chairman and President
of Andus Inc.
Allan D. Erickson. As well as being a director of Bison Instruments, Inc. since
1992, Mr. Erickson is also the founder and President of Dagan Corporation, and
is one of the principal shareholders of Dagan Corporation.
-5-
<PAGE>
Glen A. Peer. Mr. Peer has been President of Pylon Electronics Inc. since 1995,
and has been a Director of Autrex Inc. since 1997. Prior to that, Mr. Peer was
Vice-President and General Manager of Hathaway Inc.
Edward G. Lampman. Mr. Lampman has held a number of positions with the Androcan
Group of Companies since 1993. He is currently President of Androcan Inc., and
Executive Vice-President of Autrex Inc., and Vice-President of Andus Inc.
Lawrence M. Martin. Mr. Martin has been engaged since July 1997 on a contract
basis as the Acting General Manager of Bison Instruments, Inc. Prior to
consulting for Bison, he was Vice-President of Marketing for Hitchcock
Industries from 1995 to 1997.
None of the directors or officers, or any companies employing them, have been
subject to any bankruptcy, or criminal proceedings or are subject to any orders
by the civil courts limiting their ability to carry on business or trade in
securities.
ITEM 6. EXECUTIVE COMPENSATION.
(a) Summary Compensation Table
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------
AWARDS PAYOUTS
----------------------------- ----------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ----------------------------------------------------------------------------------------------------
NAME AND YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARs PAYOUTS COMPENSATION
PRINCIPAL ($) ($) ($) ($) (#) ($) ($)
POSITION
- --------------- ---- ----------------------------- ----------------------- ------- ------------
<S> <C> <C> <C> <C> <C>
Edward G. 1998 nil nil nil nil
Lampman, -----------------------------------------------------------------------------------
Chief 1997 nil nil nil nil
Executive -----------------------------------------------------------------------------------
Officer 1996 nil nil nil nil
- ----------------------------------------------------------------------------------------------------
</TABLE>
(b) Option/SAR in Last Fiscal Year
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
- ----------------------------------------------------------------------------------------------------
NAME NUMBER OF % OF TOTAL EXERCISE OR EXPIRATION
SECURITIES OPTIONS/SARs BASE PRICE DATE
UNDERLYING GRANTED TO ($/SH)
OPTIONS/SARs EMPLOYEES IN
GRANTED (#) FISCAL YEAR
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
N/A * -- -- -- --
- ----------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
(c) Aggregate Option/SAR Exercises in Last Fiscal Year and FY-end Option/Share
Values
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
- ----------------------------------------------------------------------------------------------------
NAME SHARES VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED REALIZED UNDERLYING IN-THE-MONEY
ON ($) UNEXERCISED OPTIONS/SARS AT FY-
EXERCISE OPTIONS/SARS AT FY- END ($)
(#) END (#)
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
N/A * -- -- -- --
- ----------------------------------------------------------------------------------------------------
</TABLE>
* The Company had previously granted an option to purchase shares in the
Company at $2.25 to a former officer. These options were cancelled in 1997
and were not replaced.
(d) Long-term Incentive Plans - Awards in Last Fiscal Year
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS
UNDER NO STOCK PRICED-BASED
PLANS
- ----------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
- ----------------------------------------------------------------------------------------------------
NAME NUMBER OF PERFORMANCE THRESHOLD TARGET MAXIMUM
SHARES, UNITS OR OTHER ($ OR #) ($ OR #) ($ OR #)
OR OTHER RIGHTS PERIOD UNTIL
(3) MATURATION OR
PAYOUT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
N/A * -- -- -- -- --
- ----------------------------------------------------------------------------------------------------
</TABLE>
(e) Compensation of Directors
Allan D. Erickson and Lawrence M. Martin are each paid an annual retainer
of $1,000, as well as fees in the amount of $200 per meeting for their
services as directors of the Company. None of the other directors receive
compensation for their services as directors.
(f) Employment Contracts and Termination of Employment/Change in Control
Arrangements
-7-
<PAGE>
The Company does not have any compensatory plan or arrangement regarding
the termination of any executive officer or regarding a change in control
of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has not entered into any transaction during the last two years to
which the Company was a party in which any director or executive officer or
nominees thereof or securities holders or members of their immediate families
were also involved or have a direct or indirect material interest.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company has authorized the issue of one class of common stock. As of the
date of this report, 888,180 shares of common stock were issued and outstanding.
Dividends are payable on such stock as and when declared. Each share entitles
the holder thereof to one vote. There are no preemptive rights with respect to
this stock.
Because the securities of the Company may constitute "penny stocks" as defined
in the Securities and Exchange Commission rules, the Company's securities may be
subject to rules that impose special sales practice requirements upon
broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a new worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rules, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rules may affect the ability of broker-dealers to sell
the Company's securities and also may affect the ability of purchasers in the
offering to sell their securities in any market that might develop therefor.
In addition, the Securities and Exchange Commission has adopted a number of
other rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-8 and 15g-9 under the Securities and Exchange
Act of 1934, as amended. The rules may further affect the ability of the
Company's shareholders to sell their shares in any public market which might
develop.
-8-
<PAGE>
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
The Company has not issued any debt securities.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's common equity is traded principally on the OTCBB Bulletin Board
service. The high and low bids on the Company's common equity for each quarter
in the last two fiscal years and subsequent interim periods are set out in the
following table.
---------------------------------------------------------------
FISCAL YEAR HIGH LOW
---------------------------------------------------------------
1997 Q1 $2.50 $2.50
---------------------------------------------------------------
1997 Q2 $2.50 $2.50
---------------------------------------------------------------
1997 Q3 $2.50 $2.50
---------------------------------------------------------------
1997 Q4 $2.50 $2.50
---------------------------------------------------------------
1998 Q1 $2.50 $1.50
---------------------------------------------------------------
1998 Q2 $1.50 $0.25
---------------------------------------------------------------
1998 Q3 $0.25 $0.25
---------------------------------------------------------------
1998 Q4 $0.25 $0.11
---------------------------------------------------------------
1999 Q1 $0.11 $0.10
---------------------------------------------------------------
1999 Q2 $0.10 $0.10
---------------------------------------------------------------
1999 Q3 $0.16 $0.06
---------------------------------------------------------------
-9-
<PAGE>
Note that these are over-the-counter market quotations, which reflect
inter-dealer prices without retail mark-up, mark-down or commission, and may not
represent actual transactions.
There are approximately 300 holders of record of the common stock of the
Company.
No dividends have been declared on the common stock of the Company within the
last two fiscal years or any subsequent interim period.
There are no restrictions that limit the ability to pay dividends on the common
stock or that are likely to do so in the future.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not presently party to any pending legal proceeding, and its
property is not the subject of any pending legal proceeding.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
No independent accountant whose services were employed by the Company or any
independent accountant on whom the report is relied on by the Company have
resigned or been dismissed in the two most recent fiscal years or subsequent
interim periods.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has not offered or issued securities to the public within the last
three years.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company provides liability insurance for directors and officers of the
Company. The current annual premium is approximately $1,400 for directors and
officers, all of which was paid by the Company. The policy limit is $5,000,000
with a deductible of $50,000. The individual directors and officers of the
Company and its subsidiaries are insured from claims against them for certain of
their acts, errors or omissions. The Company is insured against any loss arising
out of any liability to indemnify the directors or officers.
-10-
<PAGE>
PART F/S
Financial Statements of
BISON INSTRUMENTS, INC.
Years ended October 31, 1998 and 1997
-11-
<PAGE>
AUDITORS' REPORT
To the Directors and Stockholders of Bison Instruments, Inc.
We have audited the balance sheets of Bison Instruments, Inc. as at October 31,
1998 and 1997 and the statements of operations and deficit and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at October 31, 1998 and 1997
and the results of its operations and its cash flows for the years then ended in
accordance with generally accepted accounting principles in the United States.
/s/ KPMG LLP
Chartered Accountants
Toronto, Canada
December 9, 1998
-12-
<PAGE>
BISON INSTRUMENTS, INC.
Balance Sheets
(Expressed in United States dollars)
<TABLE>
<CAPTION>
October 31, 1998 and 1997
- ------------------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 33,199 $ 109,117
Accounts receivable 16,167 307,691
Inventories (note 3) 79,000 319,100
Current portion of notes receivable -- 151,667
Prepaid expenses and other assets 2,226 38,494
------------------------------------------------------------------------------------------
130,592 926,069
Fixed assets (note 4) -- 118,586
- ------------------------------------------------------------------------------------------------
$ 130,592 $ 1,044,655
================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 80,120 $ 306,986
Accrued wages and commissions -- 84,723
Loan payable (note 6) -- 450,560
------------------------------------------------------------------------------------------
80,120 842,269
Stockholders' equity (note 7):
Capital stock:
Authorized: 2,000,000 common shares, $.10 par value
Issued and outstanding: 889,890 common shares 88,989 88,989
Capital in excess of par value 914,002 914,002
Deficit (952,519) (800,605)
------------------------------------------------------------------------------------------
50,472 202,386
Operations (note 1)
- ------------------------------------------------------------------------------------------------
$ 130,592 $ 1,044,655
================================================================================================
</TABLE>
See accompanying notes to financial statements.
On behalf of the Board:
/s/ Edward G. Lampman Director
- -----------------------
/s/ Lawrence M. Martin Director
- -----------------------
-13-
<PAGE>
BISON INSTRUMENTS, INC.
Statements of Operations and Deficit
(Expressed in United States dollars)
<TABLE>
<CAPTION>
Years ended October 31, 1998 and 1997
- ---------------------------------------------------------------------------------
1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C>
Sales $ 519,733 $ 2,554,416
Cost of goods sold 255,583 1,721,711
- -------------------------------------------------------------------------------
Gross profit 264,150 832,705
Operating expenses:
Selling, general and administrative 553,293 1,027,131
New product line development -- 563,337
Provision for restructuring (note 8) (18,717) 377,734
---------------------------------------------------------------------------
534,576 1,968,202
- ---------------------------------------------------------------------------------
Operating loss (270,426) (1,135,497)
Other income (expense) (note 1) 118,512 (67,256)
- ---------------------------------------------------------------------------------
Loss before income taxes (151,914) (1,202,753)
Income taxes (note 9) -- 95,000
- ---------------------------------------------------------------------------------
Loss for the year (151,914) (1,297,753)
Retained earnings (deficit), beginning of year (800,605) 497,148
- ---------------------------------------------------------------------------------
Deficit, end of year $ (952,519) $ (800,605)
=================================================================================
Loss per share $ (.171) $ (1.458)
=================================================================================
</TABLE>
See accompanying notes to financial statements.
-14-
<PAGE>
BISON INSTRUMENTS, INC.
Statements of Cash Flows (Expressed in United States dollars)
<TABLE>
<CAPTION>
Years ended October 31, 1998 and 1997
- ---------------------------------------------------------------------------------------------------------
1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash provided by (used in):
Cash flows from operating activities:
Loss for the year $ (151,914) $(1,297,753)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 59,974 101,303
Gain on disposal of product lines (105,465) --
Gain on disposal of fixed assets (10,905) --
Deferred income taxes -- 95,000
Loss on disposition of equipment held for rental -- 5,370
---------------------------------------------------------------------------------------------------
(208,310) (1,096,080)
Changes in non-cash working capital balances
related to operations:
Accounts receivable 291,524 253,265
Notes receivable 151,667 192,155
Inventories (82,882) 667,410
Prepaid expenses and other assets 36,268 40,000
Accounts payable and accrued liabilities (226,866) (306,012)
Accrued wages and commissions (84,723) 38,658
---------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (123,322) (210,604)
Cash flows from investing activities:
Proceeds on disposal of fixed assets 37,382 --
Proceeds on disposal of product lines 466,094 --
Capital expenditures (5,512) (31,527)
---------------------------------------------------------------------------------------------------
497,964 (31,527)
Cash flows from financing activities:
Loan payable (450,560) 450,560
Line of credit -- (150,000)
---------------------------------------------------------------------------------------------------
Net cash provided by financing activities (450,560) 300,560
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (75,918) 58,429
Cash, beginning of year 109,117 50,688
- ---------------------------------------------------------------------------------------------------------
Cash, end of year $ 33,199 $ 109,117
=========================================================================================================
Supplemental information:
Cash paid for interest $ -- $ 25,614
Notes receivable obtained on sale of equipment $ -- $ 48,513
=========================================================================================================
</TABLE>
See accompanying notes to financial statements.
-15-
<PAGE>
BISON INSTRUMENTS, INC.
Notes to Financial Statements
(Expressed in United States dollars)
Years ended October 31, 1998 and 1997
- --------------------------------------------------------------------------------
Bison Instruments, Inc. (the "Company") was engaged in the manufacture of
geophysical and other measurement instruments, sold internationally, until the
end of this fiscal year. Andus Inc. owns approximately 66.9% of the Company's
outstanding common stock. Andus is a subsidiary of Autrex Inc. of Toronto,
Canada.
1. GAIN ON DISPOSAL OF PRODUCT LINES AND FIXED ASSETS:
On June 5, 1998, Bison sold the seismic products lines, including all
inventory and intellectual property associated therewith, to a third party
resulting in a net gain on disposal of product lines and fixed assets of
$116,370.
An agreement to sell the Mu-Meter product line, including inventory and
intellectual property rights, for $179,000 was entered into on October 23,
1998, and closed in November 1998 with a net gain of approximately $90,000
being recognized in the first quarter of 1999.
At October 31, 1998, the operations of Bison had essentially ceased and the
corresponding assets were written down to net realizable value.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Inventories:
Inventories are stated at the lower of cost and net realizable value.
(b) Fixed assets:
There are no remaining fixed assets at October 31, 1998. Depreciation
has been provided throughout the year using the following methods and
useful lives:
----------------------------------------------------------------------
Useful
Asset Basis lives
----------------------------------------------------------------------
Shop equipment Straight line 2-10 years
Furniture and fixtures Straight line 3-5 years
Leasehold improvements Straight line 3 years
Equipment held for rental Straight line 3 years
(c) Product warranty costs:
Anticipated future costs of product warranties were charged to
operations in the year the product was sold.
-16-
<PAGE>
BISON INSTRUMENTS, INC.
Notes to Financial Statements (continued)
(Expressed in United States dollars)
Years ended October 31, 1998 and 1997
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(d) Income taxes:
The Company accounts for income taxes in accordance with the Financial
Accounting Standards Board Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes. Under the asset and liability
method of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(e) Fair value of financial assets and financial liabilities:
The fair value of the Company's cash, accounts receivable, notes
receivable, accounts payable and accrued liabilities approximates
their carrying amounts due to the relatively short periods to maturity
of the instruments.
(f) Use of estimates:
These financial statements are prepared in accordance with generally
accepted accounting principles which require management to make
estimates and assumptions which affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of income, expenses and changes in financial position
for the year. Actual results could differ from these estimates.
(g) Earnings per share:
The earnings per share computations are based on the weighted average
number of common shares outstanding during each year (889,890 shares).
3. INVENTORIES:
Inventories consist of the following:
---------------------------------------------------------------------------
1998 1997
---------------------------------------------------------------------------
Finished goods $ 79,000 $ 165,548
Work-in-process -- 43,481
Raw materials -- 110,071
---------------------------------------------------------------------------
$ 79,000 $ 319,100
===========================================================================
-17-
<PAGE>
BISON INSTRUMENTS, INC.
Notes to Financial Statements (continued)
(Expressed in United States dollars)
Years ended October 31, 1998 and 1997
- --------------------------------------------------------------------------------
4. FIXED ASSETS:
Fixed assets consist of the following:
---------------------------------------------------------------------------
1998 1997
---------------------------------------------------------------------------
Accumulated Net book Net book
Cost depreciation value value
---------------------------------------------------------------------------
Shop equipment $ -- $ -- $ -- $ 23,393
Furniture and fixtures -- -- -- 26,032
Leasehold improvements -- -- -- 1,938
Equipment held for rental -- -- -- 67,223
---------------------------------------------------------------------------
$ -- $ -- $ -- $118,586
===========================================================================
5. RELATED PARTY TRANSACTIONS:
The Company accrued management fees of $25,000 (1997 - nil) to Autrex Inc.
Included in accrued liabilities is $25,000 (1997 - $14,931) payable to
Autrex Inc.
6. LOAN PAYABLE:
The non-interest bearing loan payable to Autrex Inc. was repaid during the
year.
7. STOCKHOLDERS' EQUITY:
In 1995, the Company granted to an officer an option to purchase 50,000
shares of the Company at $2.25 per share. The options vest at the rate of
10,000 on January 7 of each year from 1995 to 1998 inclusive and expire on
January 7, 2001. On July 23, 1997, these 50,000 stock options were
cancelled and not replaced.
8. RESTRUCTURING EXPENSES:
During 1997, the Company commenced reorganizing and downsizing its
operations. Certain product lines were eliminated, resulting in inventory
writedowns of $257,000, other intangible assets in the amount of $33,000
were written off, and severance payments and other related expenses of
$88,000 were accrued in the 1997 financial statements. Of the $88,000,
approximately $70,000 was paid out by October 31, 1998; the remaining
$18,000 was taken into income this year.
-18-
<PAGE>
BISON INSTRUMENTS, INC.
Notes to Financial Statements (continued)
(Expressed in United States dollars)
Years ended October 31, 1998 and 1997
- --------------------------------------------------------------------------------
9. INCOME TAXES:
Income tax expenses in the 1997 fiscal year were the result of an increase
in the valuation allowance for deferred tax debits representing loss
carryforwards for which a future benefit is no longer probable.
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at October 31,
1998 and October 31, 1997 are presented below:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
1998 1997
----------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets primarily attributable to losses available
for carryforward, reserves on receivables and
non-deductible accruals $ 1,400,000 $ 1,200,000
Less valuation allowance (1,400,000) (1,200,000)
----------------------------------------------------------------------------------
-- --
Deferred tax liabilities primarily attributable to excess
tax depreciation over financial reporting depreciation -- --
----------------------------------------------------------------------------------
Net deferred tax asset $ -- $ --
==================================================================================
</TABLE>
10. RETIREMENT PLAN:
The Company has a 401(k) defined contribution retirement plan which is
available to all company employees who have reached age 21 and completed
six months of employment. Employer contributions to a maximum of 4% of
qualified compensation are made at a rate of 50% of employees'
contributions. Expenses incurred by the Company related to such
contributions were $6,950 (1997 - $22,650).
-19-
<PAGE>
BISON INSTRUMENTS, INC.
Notes to Financial Statements (continued)
(Expressed in United States dollars)
Years ended October 31, 1998 and 1997
- --------------------------------------------------------------------------------
11. SEGMENT OF BUSINESS:
The Company's operations are in one principal segment - the manufacture
and sale of geophysical and other measurement instrumentation. A breakdown
of sales by geographic area for the year is as follows:
--------------------------------------------------------------------------
1998 1997
--------------------------------------------------------------------------
Domestic customers $ 339,358 $ 1,193,859
Foreign customers:
Europe 76,704 401,745
Canada 91,191 406,919
Asia 2,262 256,479
Argentina 1,202 --
South America 1,468 159,545
All other 7,548 135,869
--------------------------------------------------------------------------
$ 519,733 $ 2,554,416
==========================================================================
Sales amounts reported include instrument rental income of $116,256 (1997 -
$151,980).
-20-
<PAGE>
BISON INSTRUMENTS, INC.
BALANCE SHEET
JULY 31, 1999
UNAUDITED (000'S) 1999 1998
- --------------------------------------------------------------------------------
ASSETS
Cash $ 134 $ 116
Accounts receivable -- 75
Inventory -- 86
Prepaid expenses -- 26
Fixed -- 27
-------- --------
$ 134 $ 330
======== ========
LIABILITIES
Accounts payable and accruals $ -- $ 96
Loan payable -- 100
-------- --------
-- 196
-------- --------
SHAREHOLDERS EQUITY
Capital stock 1,003 1,003
Deficit (869) (869)
-------- --------
134 134
-------- --------
$ 134 $ 330
======== ========
-21-
<PAGE>
BISON INSTRUMENTS, INC.
STATEMENT OF INCOME AND DEFICIT
NINE MONTHS ENDED JULY 31, 1999
UNAUDITED (000'S) 1999 1998
- --------------------------------------------------------------------------------
Sales $ 32 $ 487
Cost of sales and operating
expenses 44 669
------- -------
(12) (182)
Gain on disposal of product line 96 114
------- -------
Net income (loss) for the period 84 (68)
Deficit, beginning of period (953) (801)
------- -------
Deficit, end of period $ (869) $ (869)
======= =======
INCOME (LOSS) PER SHARE $ 0.09 $ (0.08)
======= =======
-22-
<PAGE>
BISON INSTRUMENTS, INC.
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 1999
UNAUDITED (000'S) 1999 1998
- --------------------------------------------------------------------------------
Net income (loss) $ 84 $ (68)
Depreciation -- 45
Gain on disposal of a product line (96) (105)
Gain on disposal of fixed assets -- (11)
Other non-cash items (74) (384)
------- -------
(86) (523)
------- -------
Proceeds on disposal of
fixed assets and a product line 187 530
------- -------
187 530
------- -------
Increase in cash 101 7
Cash, beginning of period 33 109
------- -------
Cash, end of period $ 134 $ 116
======= =======
-23-
<PAGE>
PART III
ITEM 1. EXHIBITS AND INDEX TO EXHIBITS
(a) EXHIBITS
The rights of securities holders are set out in their entirety in the
Articles of Incorporation of the Company, its By-laws and all amendments
thereto and are incorporated herein by reference under the classification
of Instruments Defining the Rights of Holders.
The Company is not subject to any voting trust agreements.
As the Company is essentially inactive at the time of this filing, it is
not currently party to any material contracts aside from a monthly lease
for a small office space. A copy of the lease document and other related
documents are attached.
The Company was party to two separate material contracts in the last two
years wherein the Company disposed of substantially all of its assets.
Copies of these documents are also attached.
A statement regarding the computation of share earnings has not been
included in this Form for Registration of Securities, as the primary and
fully-diluted share earnings are identical and can be clearly determined
from the financial statements provided.
A Financial Data Schedule is also included.
(b) INDEX TO EXHIBITS
Page
1. (i) Articles of Incorporation 26
(ii) By-laws 39
2. Instruments defining
the rights of holders incorporated by reference
(see Articles & By-Laws)
3. Material Contracts 47
4. Financial Data Schedule 114
-24-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Bison Instruments, Inc.
-----------------------------------------
Date: October 4, 1999 By: /s/ Edward G. Lampman
------------------ ------------------------------------
(Signature)
Edward G. Lampman
-----------------------------------------
(Print Name of Signing Officer)
Chief Executive Officer
-----------------------------------------
(Title of Signing Officer)
-25-
EXHIBIT 3.(i)
ARTICLES OF INCORPORATION
OF
BISON INSTRUMENTS, INC.
* * *
We, the undersigned, for the purpose of forming a corporation under
and pursuant to Chapter 301 of the Minnesota Statutes of 1945, and laws
amendatory thereof and supplementary thereto, do hereby associate ourselves as a
body corporate and adopt the following Articles of Incorporation:
ARTICLE I
The name of this corporation is BISON INSTRUMENTS, INC.
ARTICLE II
The location and post office address of the registered office of
this corporation if 901 Parkview Terrace, Minneapolis, Minnesota.
ARTICLE III
The period of duration of this corporation shall be perpetual.
ARTICLE IV
This corporation shall have and enjoy general business purposes and
powers.
ARTICLE V
The amount of stated capital with which this corporation shall begin
business is at least One Thousand Dollars ($1,000.00).
ARTICLE VI
The authorized capital of this corporation shall consist of 2,500
shares of common stock with no par value. Said shares shall be issued from time
to time for such consideration of money, property and/or services as the Board
of Directors will from time to time prescribe. Voting by shareholders shall not
be cumulative; nor shall shareholders have pre-emptive subscription rights as to
any subsequent issue of stock of the corporation.
-26-
<PAGE>
ARTICLE VII
The names and post office addresses of the Incorporators are as
follows:
Axel M. Fritz 901 Parkview Terrace
Minneapolis, Minnesota
Clark Johnston 60 Pinecroft Road
Weston, Massachusetts
Harold M. Mooney 4331 Longfellow Avenue South
Minneapolis, Minnesota
Bernard E. Sellent Box 184
Almena, Wisconsin
Jay M. Woldenberg
ARTICLE VIII
The names and post offices addresses of the First Directors are as
follows:
Axel M. Fritz 901 Parkview Terrace
Minneapolis, Minnesota
Clark Johnston 60 Pinecroft Road
Weston, Massachusetts
Harold M. Mooney 4331 Longfellow Avenue South
Minneapolis, Minnesota
Bernard E. Sellent Box 184
Almena, Wisconsin
Jay M. Woldenberg
Said Directors shall hold office until the annual meeting of
shareholders in 1969, and until their successors will have been elected.
ARTICLE IX
The management of the business and properties of this corporation
shall be vested in a Board of Directors, to be comprised of such number of
Directors and to be annually elected
-27-
<PAGE>
at such time and place as will be fixed in the By-Laws of the corporation, but
always in conformity with law.
ARTICLE X
The holders of a majority of the outstanding shares of the
corporation shall have power to authorize the sale, lease, exchange or other
disposition of all or substantially all of the property and assets of the
corporation, including its good will; to amend the Articles of Incorporation;
and to adopt or reject an agreement of consolidation or merger.
ARTICLE XI
The Board of Directors shall have power to adopt By-Laws for the
governance of this corporation and a corporate seal.
IN WITNESS WHEREOF, we have hereunto set our hands this 29th day of
December, 1967.
In the presence of:
George F. Reilly /s/ Axel M. Fritz
- ---------------- ------------------------
Axel M. Fritz
/s/ Clark Johnson
- ---------------- ------------------------
Clark Johnson
/s/ Harold M. Mooney
- ---------------- ------------------------
Harold M. Mooney
/s/ Bernard E. Sellent
- ---------------- ------------------------
Bernard E. Sellent
/s/ Jay M. Woldenberg
- ---------------- ------------------------
Jay M. Woldenberg
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
-28-
<PAGE>
On this 29th day of December, 1967, before me, a Notary Public
within and for Hennepin County, Minnesota, personally appeared Axel M. Fritz,
Harold M. Mooney, and Bernard E. Sellent, to me known to be the persons named in
and who executed the foregoing Articles. Being first duly sworn by me, they
acknowledged that they executed the said Articles as their free act and deed and
for the purposes therein expressed.
/s/ George F. Reilly
- ---------------------------
George F. Reilly
Notary Public, Hennepin County, Minn.
My Commission Expires Feb. 7, 1972.
-29-
<PAGE>
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
BISON INSTRUMENTS, INC.
We, the undersigned, Axel M. Fritz and Orrin Grangaard, respectively
the President and the Secretary of Bison Instruments, Inc., a corporation
existing under the Minnesota Business Corporations Act, do hereby certify that
at the annual meeting of the Shareholders of said corporation, duly held on
February 14, 1969, the following resolution was presented and unanimously
adopted:
"RESOLVED, by the shareholders of Bison Instruments, Inc. that its
Articles of Incorporation be, and they same hereby are, amended in
the following respects, to-wit:
1. By striking out and annulling Article II thereof, presently reading:
'The location and post office address of the registered office of
this corporation is 901 Parkview Terrace, Minneapolis, Minnesota.'
and by substituting in lieu of said stricken Article, the following:
"The location and post office address of the registered office of
this corporation is 3401 48th Avenue North, Minneapolis, Minnesota."
2. By striking out and annulling the first sentence of Article VI
thereof, presently reading:
"The authorized capital of this corporation shall consist of 2,500
shares of common stock with no par value."
and by substituting in lieu of said stricken sentence, the
following:
"The authorized capital of this corporation shall consist of
1,000,000 shares of common stock of the par value of $.01 each."
-30-
<PAGE>
2. By adding as Article XII thereof, the following:
"'The corporation is hereby expressly authorized and empowered, from
time to time, by resolution of its Board of Directors, to create and
issue, whether or not in connection with the issue and sale of any
shares of stock or other securities of the corporation, rights or
options entitling the holders or owners thereof to purchase or
acquire from the corporation any shares of its capital stock of any
class or classes or other securities, whether now or hereafter
authorized, such rights or options to be evidenced by or in such
warrants or other instruments as shall be approved by the Board of
Directors. The terms upon which, the time or times, which may be
limited or unlimited in duration, at or within which, and the price
or prices at which any such shares or other securities may be
purchased or acquired from the corporation upon the exercise of any
such rights or options shall be such as shall be fixed in a
resolution or resolutions adopted by the Board of Directors
providing for the creation and issue of such rights or options, and
set forth or incorporated by reference in the warrants or other
instruments evidencing such rights or options, and as shall be
permitted by law. The Board of Directors is hereby authorized and
empowered to authorize the creation and issue of any such rights or
options and any such warrants or other instrument from time to time,
for such consideration as the Board of Directors may determine. Any
and all shares of stock which may be purchased or acquired or issued
upon the exercise of any such right or option, shall be deemed fully
paid stock and not liable to any further call or assessment thereon,
or partly paid and liable to further call or assessment, as the
terms of the warrants or other instruments evidencing such rights or
options shall provide. Except as otherwise provided by law, the
Board of Directors shall have full power and discretion to
prescribed and regulate from time to time the procedure to be
following in, and all other matters concerning, the creation, issue
and exercise of any such rights and options and such warrants or
other instruments, and the setting aside of stock or other
securities for the purpose thereof, and the issuance of such stock
or other securities upon the exercise thereof."
-31-
<PAGE>
"RESOLVED FURTHER, that the President or Vice President and the
Secretary or Treasurer of the corporation be, and they hereby are,
authorized and directed to execute and file an appropriate
certificate embodying the foregoing amendments and to take all other
steps required by law to perfect the same."
IN WITNESS WHEREOF, we have subscribed our names and caused the
corporate seal of said corporation to be hereto affixed this 27th day of
February, 1969.
In the Presence of: /s/ Axel M. Fritz
--------------------------
Axel M. Fritz, President
/s/ Peter F. Graske
- --------------------------
/s/ Orrin Grangaard
--------------------------
Orrin Grangaard, Secretary
/s/ Janet Prince
- --------------------------
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On this 27th day of February, 1969, before me, a Notary Public in
and for Hennepin County, Minnesota, personally appeared Axel M. Fritz and Orrin
Grangaard, to me personally known to be respectively the President and Secretary
of BISON INSTRUMENTS, INC. and the persons who subscribed the foregoing Articles
of Amendment of its Articles of Incorporation. Being first duly sworn by me,
they acknowledged that they executed said Articles of Amendment pursuant to
authorization by the shareholders of said corporation and for the uses and
purposes in said Articles of Amendment set forth; that the seal affixed to said
Articles of Amendment is the true seal of said corporation; and that they
executed said Articles of Amendment in their said respective official capacities
as their own free act and deed and as the free act and deed of said corporation.
/s/ George F. Reilly
- --------------------------
GEORGE F. REILLY
Notary Public, Hennepin County, Minn.
My Commission Expires Feb. 7, 1972.
-32-
<PAGE>
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION
OF BISON INSTRUMENTS, INC.
We, the undersigned, respectfully the president and secretary of
Bison Instruments, Inc., a corporation organized under the provisions of Chapter
301, Laws of Minnesota, known as the Minnesota Business Corporations Act, do
hereby certify that a special meeting of the shareholders of said corporation
which was held at the Board of Directors Room, Northwestern National Bank,
Minneapolis, Minnesota on the 10th day of August, 1981, pursuant to notice and
call of the meeting to the shareholders. A quorum of the shareholders was
determined to be present and the meeting was duly called to order. The following
resolution was thereafter presented and adopted by a vote of the shareholders:
RESOLVED, that Article VI of the Articles of Incorporation are hereby amended so
as to read as follows:
ARTICLE VI
The authorized capital of this corporation shall consist of two million
(2,000,000) shares of common stock of the par value of ten cents ($.10) each and
with voting rights of one vote per share.
/s/ Bart Hazleton
- --------------------------
Bart Hazleton, President
/s/ David A. Bailly
- --------------------------
David A. Bailly, Secretary
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
-33-
<PAGE>
On this 8th day of September, 1981, personally appeared before me Bart Hazleton
and David A. Bailly, president and secretary, respectfully, of Bison
Instruments, Inc., duly organized under the laws of the state of Minnesota, and
they acknowledge to me that they are the president and secretary, respectfully,
of the above mentioned corporation, and that they do certify that the
resolutions set forth hereinabove were duly adopted at a special meeting of the
shareholders of Bison Instruments, Inc., held on August 10, 1981, and that,
further, said Bart Hazleton and David A. Bailly acknowledge execution of this
Certificate and Amendment of their own free act and deed.
/s/ Robert L. McCollum
- --------------------------
Robert L. McCollum
Notary Public, Hennepin County, Minn.
My Commission Expires May 20, 1982.
-34-
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
BISON INSTRUMENTS, INC., A MINNESOTA CORPORATION
We, the undersigned, Bart C. Hazleton, President and Kenneth J. Abdo, Secretary
of Bison Instruments, Inc., a corporation duly organized and existing under and
by virtue of the laws of the State of Minnesota, do hereby certify that at a
meeting of the Shareholders of this Company, held pursuant to due call according
to law for that purpose, on the 19th day of February, 1991, at the Ambassador
Hotel, Minneapolis, Minnesota, the following resolution was adopted:
BE IT RESOLVED, that the Articles of Incorporation of Bison Instruments, Inc. be
amended to add a new Article XIII to read as follows:
(A) No director of the Corporation shall be personally liable to the
Corporation or its Shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its Shareholders; (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) under Sections 302A.559 or 80A.23 of the Minnesota
Statutes; (iv) for any transaction from which the director derived an improper
personal benefit; or (v) for any act or omission occurring prior to the date
when this provision becomes effective.
(B) The provisions of this Article XIII shall not be deemed to limit
or preclude indemnification of a director by the Corporation for any liability
of a director which has not been eliminated by the provisions of this Article
XIII.
(C) If the Minnesota Statutes hereafter are amended to authorize the
further elimination or limitation of the liability of Directors, then the
liability of a director of the Corporation, shall be eliminated or limited to
the fullest extent permitted by the Minnesota Statutes, as so amended."
/s/ Bart C. Hazleton
- --------------------------
Bart C. Hazleton, President
/s/ Kenneth J. Abdo
- --------------------------
-35-
<PAGE>
Kenneth J. Abdo, Secretary
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 19th day of
February, 1991 by Kenneth J. Abdo, Secretary of Bison Instruments, Inc.
/s/ Janice K. Hanson
- --------------------------
Janice K. Hanson
Notary Public, Minnesota
HENNEPIN COUNTY
My Commission Expires Feb. 2, 1997
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 3rd day of
April, 1991 by Bart C. Hazleton, President of Bison Instruments, Inc.
/s/ Stefan Ingvarsson
- --------------------------
Stefan Ingvarsson
Notary Public, Minnesota
ANOKA COUNTY
My Commission Expires June 12, 1995
-36-
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
BISON INSTRUMENTS, INC., A MINNESOTA CORPORATION
We, the undersigned, Lawrence M. Martin, General Manager and Kenneth J. Abdo,
Secretary of Bison Instruments, Inc., a corporation duly organized and existing
under and by virtue of the laws of the State of Minnesota, do hereby certify
that at a meeting of the Shareholders of this Company, held pursuant to due call
according to law for that purpose, on the 4th day of March, 1998, at 5610
Rowland Road, Minneapolis, Minnesota, the following resolution was adopted:
BE IT RESOLVED, that Article VI of the Articles of Incorporation of Bison
Instruments, Inc. be amended and replaced by a new Article VI to read as
follows:
ARTICLE VI
The aggregate number of shares of stock which this Company shall have the
authority to issue is sixty million (60,000,000) shares. The stock of this
Company shall be a single class of common stock, par value ten (.10) cents per
share. The Board of Directors may from time to time establish by resolution
additional or different classes or series of shares and may fix the rights and
preferences of said shares in any class or series. The Board of Directors shall
have the authority to issue shares of a class or series to holders of shares of
another class or series to effect share dividends, divisions or combination,
splits or conversion of its outstanding shares. No holder or stock shall have
any preferential preemptive or other right of subscription to any shares or any
class or series of shares of stock of this Company allotted or sold or to be
allotted or sold as now, or hereafter be authorized, or to any obligations or
securities convertible into any class of series of stock of this Company, nor
any right of subscription to any part thereof. No shareholder shall be entitled
to any cumulative voting rights. Said shares shall be issued from time to time
for such consideration of money, property or services as the Board of Directors
from time to time prescribe."
/s/ Lawrence M. Martin
- --------------------------
Lawrence M. Martin, General Manager
-37-
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 27th day of
March, 1998 by Lawrence M. Martin, General Manager of Bison Instruments, Inc.
/s/ Renae Toov
- --------------------------
Renae Toov
Notary Public, Minnesota
HENNEPIN COUNTY
My Commission Expires Jan. 31, 2000
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 13th day of
March, 1998 by Kenneth J. Abdo, Secretary of Bison Instruments, Inc.
/s/ Theresa E. Abdo
- --------------------------
Theresa E. Abdo
Notary Public, Minnesota
HENNEPIN COUNTY
My Commission Expires Jan. 31, 2000
-38-
EXHIBIT 3.(ii)
BY-LAWS
OF
BISON INSTRUMENTS, INC.
A corporation duly organized under the Laws of the State of Minnesota
Adopted at the annual meeting of the Board of Directors February 28, 1989
ARTICLE I
OFFICES
Section 1. The registered office of the Corporation shall be at 5708
West 36th Street in the City of St. Louis Park, County of Hennepin, State of
Minnesota, and the corporation shall have other offices at such places as the
Board of Directors may from time to time determine.
ARTICLE II
SHAREHOLDERS' MEETING
Section 1. PLACE. All meetings shall be held at such location within
or without the State of Minnesota, including Canada, as the Board of Directors
determines from time to time, except as required by statute.
Section 2. TIME. Unless otherwise designated by the Board of
Directors, the annual meeting of the Shareholders shall be held on the third
Tuesday of February each year.
NOTICE OF MEETINGS
Section 3. ANNUAL MEETINGS. Written notice of the Annual Meeting
shall be mailed at least ten days prior to the meeting to each Shareholder
entitled to vote thereat to the last known address of such Shareholder as same
appears upon the books of the Corporation.
Section 4. SPECIAL MEETINGS. Except as limited by statute, written
notice of a Special Meeting of Shareholders stating the time, place, and object
thereof, shall be mailed to the last known address of such Shareholders, postage
prepaid, at least 10 days before such meeting to each Shareholder entitled to
vote thereat.
Section 5. QUORUM. The presence at any meeting, in person or by
proxy, of the holders of a majority of the shares entitled to vote, shall
constitute a quorum for the transaction of
-39-
<PAGE>
business. Each Shareholder shall be entitled to one vote for each share entitled
to vote standing in his name on the books of the Corporation. If, however, such
majority shall not be present in person, or by proxy, at any meeting of the
Shareholders entitled to vote thereat those present shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until the requisite amount of voting shares shall be represented. At
such adjourned meeting at which the required amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 6. VOTING. At each meeting of the Shareholders, every
Shareholder having the right to vote shall be entitled to vote in person, or by
proxy, duly appointed by an instrument in writing subscribed by such
Shareholder. Each Shareholder shall have one vote for each share having voting
power, standing in his name on the books of the Corporation. Upon the demand of
any Shareholder the vote for Directors, or the vote upon any question before the
meeting, shall be by ballot. All elections shall be had and all questions
decided by a Majority vote, except as otherwise required by statute.
Section 7. CALL OF SPECIAL MEETINGS. Special meetings of the
Shareholders for any purpose, or purposes, unless otherwise prescribed by
statute, shall be called by:
a. The Chairman of the Board.
b. The Chief Executive Officer.
c. The Chief Financial Officer.
d. Two or more Directors.
e. A shareholder or Shareholders holding 10% or more of the
voting power of all shares entitled to vote.
Such call shall state the purpose or purposes of the proposed
meeting.
Section 8. Business transacted at all special meetings shall be
confined to purposes stated in the call.
ARTICLE III
BOARD OF DIRECTORS
Section 1. ELECTION OF DIRECTORS. The property and business of this
Corporation shall be managed by its Board of Directors, which shall not be less
than three in number. They shall be elected at the annual meeting of the
Shareholders by a majority vote and each director shall be elected to serve for
one year or until his successor shall have been elected and qualified.
-40-
<PAGE>
Section 2. ANNUAL MEETINGS. The regular and annual meetings of the
Board shall be held without notice at the time and immediately following the
adjournment of the Annual Shareholders' meeting, for the purpose of election of
officers for the ensuing year and to transact such other business as may
properly come before it.
Section 3. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such time and place (within or without the State of
Minnesota, including Canada) as shall from time to time be determined by the
Board. Notice of the regular meeting shall be sent to each Director by mail or
telegram to his last known address at least ten days prior to the meeting.
Section 4. SPECIAL MEETINGS. Special Meetings of the Board may be
called by the Chief Executive Officer at any time and at any place (within or
without the State of Minnesota, including Canada) as determined by the Chief
Executive Officer, and shall be called by him whenever required to do so in
writing by any member of the Board. Notice of special meetings shall be sent to
each Director by mail or telegram to his last known address at least ten days
prior to the meeting. A special meeting may be called without notice to the
Directors if a full Board convenes and all agree to the holding of the meeting
at such time and place and waive all rights to notice thereof. Any action which
might be taken at a meeting of the Board of Directors may be taken without a
meeting if done in writing, signed by all the Directors.
Section 6. ABSENT DIRECTORS. A Director may give advanced written
consent or opposition to a proposal to be acted on at a Board meeting. If the
Director is not present at the meeting, consent or opposition to a proposal does
not constitute presence for the purposes of determining the existence of a
quorum, but consent or opposition shall be counted as a vote in favor of or
against the proposal and shall be entered in the minutes or other record of
action at the meeting if the proposal acted upon at the meeting is substantially
the same or has substantially the same effect as the proposal to which the
director has consented or objected.
ARTICLE IV
Section 1. ISSUANCE OF SHARES. The Board of Directors are authorized
and directed to issue shares of the Corporation, to the full amount authorized
by the Articles of Incorporation in
-41-
<PAGE>
such amounts and at such times as may be determined by the Board and as may be
permitted by law.
Section 2. TRANSFER OF SHARES. Transfers of shares shall be made on
the books of the Corporation only by the person named in the certificate or by
attorney, lawfully constituted in writing and upon surrender of the certificate
therefor, properly endorsed.
Section 3. CLOSING OF BOOKS. The Board of Directors may fix a time
not exceeding sixty days preceding the date of any meeting of Shareholders, as a
record date for the determination of the Shareholders entitled to notice of and
to vote at such meeting, notwithstanding any transfer of any shares on the books
of the Corporation after any record date so fixed. The Board of Directors may
close the books of the Corporation against transfer of shares during the whole
or any part of such period.
Section 4. OTHER POWERS. In addition to the powers and authorities
conferred upon them by these By-Laws, the Board of Directors shall have the
power to do all lawful acts necessary and expedient to the conduct of the
business of the Corporation that are not conferred upon the Shareholders by
these By-Laws or by the Articles of Incorporation, or by statute.
ARTICLE V
OFFICERS
Section 1. The Board of Directors at its first meeting and after
each annual meeting of the Shareholders shall elect such of the following
officers as the Board deems necessary from time to time:
a. Chairman of the Board.
b. Vice-Chairman of the Board.
c. Chief Executive Officer.
d. President and Chief Operating Officer.
e. Chief Financial Officer.
f. Treasurer.
g. Secretary.
Section 2. OTHER OFFICERS. The Board may appoint such other officers
and agents as it shall deem necessary from time to time who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 3. TERMS OF OFFICE. The officers of the Corporation shall
hold office for one year or until their
-42-
<PAGE>
successors are chosen and qualify in their stead. Notwithstanding earlier
termination of their office as Directors, any officer elected or appointed by
the Board of Directors may be removed by the affirmative vote of a majority of
the whole Board of Directors with or without cause.
Section 4. SALARIES. The salaries of all the officers and agents of
the Corporation shall be determined by the Board of Directors.
Section 5. CHAIRMAN OF THE BOARD. The Chairman of the Board when
present shall preside at all meetings of the Board and of the Shareholders. In
the absence of the Chairman of the Board, the Vice-Chairman of the Board shall
preside at all meetings of the Board and of the Shareholders. In the absence of
the Vice-Chairman of the Board, the President and Chief Executive Officer shall
preside at all meetings of the Board and of the Shareholders.
Section 6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall be the senior corporate officer and all other officers shall be
subordinate to him/her. The Chief Executive Officer shall be subordinate tot he
Board of Directors and shall:
a. See that all orders and resolutions of the Board of
Directors are carried into effect.
b. Sign and deliver in the name of the Corporation any
deeds, mortgages, bonds, contracts or other instruments
pertaining to the business of the Corporation, except in
cases in which the authority to sign and deliver such
documents is expressly delegated by the Board of
Directors to other officers or agents of the
Corporation.
c. Perform other duties prescribed by the Board.
Section 7. PRESIDENT AND CHIEF OPERATING OFFICER. The President and
Chief Operating Officer shall be subordinate to the Chief Executive Officer and
the Board of Directors and shall have general active management of the business
of the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall be ex-officio a member of all
standing committees, and shall have the general powers and duties of supervision
and management usually vested in the office of President of a corporation.
Section 8. SECRETARY. The Secretary shall attend all sessions of the
Board of Directors and all meetings of the Shareholders and record all votes and
the minutes of all
-43-
<PAGE>
proceedings in a book kept for that purpose and shall perform like duties for
the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the Shareholder and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, under whose supervision he shall be. He shall be sworn to the
faithful discharge of his duty. He shall keep in safe custody the seal of the
Corporation, and when authorized by the Board affix the same to any instrument
requiring it.
Section 9. TREASURER. (a)The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys, and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. (b) He shall disburse the funds of the Corporation as may be ordered
by the Board, taking the proper vouchers for such disbursements, and shall
render to the President and Directors at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the Corporation. (c) He shall give the
Corporation a bond as may be required by the Board of Directors and with one or
more sureties satisfactory to the Board, for the faithful performance of the
duties of his office, and for the restoration of the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 10. VACANCIES. If the office of any Director or any officer
or agent become vacant by reason of death, resignation, retirement,
disqualification, removal from office or otherwise, the Directors then in
office, although less than a quorum, by a majority vote may choose a successor
or successors who shall hold office for the unexpired term in respect of which
such vacancy occurred.
Section 11. EXECUTIVE COMMITTEE. The Board of Directors may, by
unanimous affirmative action of the entire Board, designate two or more of their
number to constitute an executive committee which, to the extent determined by
unanimous affirmative action of the entire Board, shall have and exercise the
authority of the Board in the management of the business of the Corporation. Any
such executive committee shall act only in the interval between meetings of the
Board, and shall be subject at all times to the control and direction of the
Board.
-44-
<PAGE>
Section 12. SEAL. The Corporation shall operate without a corporate
seal.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. The Certificate of shares of this Corporation shall
comply with the statutes and shall be registered in the books of the Corporation
as they are issued. They shall exhibit the holder's name, number of shares and
shall be signed by the President or Vice-President and the Secretary.
Section 2. LOST CERTIFICATES. Any Shareholder claiming a certificate
of shares to be lost or destroyed shall make an affidavit or affirmation of that
fact in such form as the Board of Directors may require, and shall, if the
Directors so require, give the corporation a bond of indemnity in form and with
one or more sureties satisfactory to the Board, in at least double the value of
the shares represented by said certificate, whereupon a new certificate may be
issued of the same tenor and for the same number of shares as the one alleged to
have been lost or destroyed.
ARTICLE VII
Section 1. INSPECTION OF BOOKS. Shareholders shall be permitted to
inspect the books of the Corporation at all reasonable times.
Section 2. CHECKS. All checks and notes of the Corporation shall be
signed by such officers or agents as may from time to time be designated by
resolution of the Board of Directors.
Section 3. THE FISCAL YEAR shall begin the first day of November of
each year.
Section 4. DIVIDENDS OF THE CORPORATION, when earned, may be
declared by the Board of Directors at any regular or special meeting. Before
payment of any dividends or making any distribution of profits there may be set
aside out of the earned surplus of the Corporation such sum or sums as the
Directors from time to time in their absolute discretion think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such purposes
as the Directors shall think conducive to the best interests of the Corporation.
-45-
<PAGE>
Section 5. DIRECTORS' ANNUAL STATEMENT. The Board of Directors
shall, at each annual meeting and when called for by a vote of Shareholders,
present a full and clear statement of the business and condition of the
Corporation.
Section 6. AMENDMENTS TO BY-LAWS. These By-Laws may be amended or
altered by the vote of a majority of the whole Board of Directors at any
meeting, provided that notice of such proposed amendments shall have been given
in the notice given to the Directors is subject to the powers of the
shareholders to change or repeal such By-Laws by a majority vote of the
shareholders present and represented an any annual meeting or at any special
meeting called for that purpose, and the Board of Directors shall not make or
alter any By-Laws fixing their number, qualification or term of office.
ARTICLE VIII
Each Director, or Officer, whether or not then in office, shall be
indemnified and reimbursed by the Corporation against loss, cost and/or expenses
reasonably incurred or imposed upon him or her in connection with or arising out
of any act for which the Corporation is entitled to reimbursement or
indemnification from any insurance carrier or other third party as a result of
said act, indemnification or reimbursement and also whenever the Director or
Officer can prove (1) that he or she acted in good faith, and (2) to the extent
that said good faith act did not result in any personal gain to that Officer or
Director.
The undersigned Secretary of Bison Instruments, Inc. hereby
certifies that the above By-Laws constitute the By-Laws of Bison Instruments,
Inc. as adopted at the annual meeting of the Board of Directors on February 29,
1989.
DATED: April 2, 1991 /s/ Bart Hazleton
------------- --------------------------
Bart Hazleton, President
-46-
EXHIBIT 10
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and
entered into as of June 5, 1998, by and between INNOVATIVE TRANSDUCERS INC., a
Delaware corporation, with offices at 17200 Park Row, Houston, Texas 77084-3925
("ITI" or "Buyer"), and BISON INSTRUMENTS, INC., a Minnesota corporation, with
offices at 5610 Rowland Road, Minneapolis, Minnesota 55343-8956 ("Bison" or
"Seller").
RECITALS
Seller desires to sell and Buyer desires to purchase all of Seller's
right, title and interest in and to the Assets defined herein pursuant to the
terms and conditions of this Agreement.
Therefore, Seller agrees to sell and Buyer agrees to purchase the
Assets on the terms and conditions set forth in this Agreement.
ARTICLE 1. PURCHASE AND SALE
1.1 Assets. Subject to the terms of this Agreement, Seller agrees to
convey, transfer and assign to Buyer, and Buyer agrees to accept, as
of the Closing Date, all of Seller's right, title and interest in
and to the Jupiter and Galileo product lines (hereinafter
collectively referred to as the "Assets"). The Assets including
without limitation:
1.1.1 Inventories. All of Seller's right, title and interest
in the inventory of finished goods, work in progress,
raw materials, parts, rental equipment and all other
materials and supplies associated with the Jupiter and
Galileo product lines as listed and valued on Schedule
1.1.1 (the "Inventories");
1.1.2 Intellectual Property. All of Seller's intellectual
property used in developing or operating the Assets,
including without limitation proprietary computer
software, patents, trade secrets, copyrights, marks,
logos, goodwill, and the property licensed to Seller in
that certain License Agreement With One Time Fee dated
November 1, 1996, between Bison Instruments, Inc. and
Hugh Winkler, but excluding those assets identified in
Section 1.2.7 of the Agreement (the "Intellectual
Property");
1.1.3 Contracts. All of Seller's right, title and interest in
the contracts, agreements and commitments related
-47-
<PAGE>
to the purchase of the Jupiter and Galileo products, as
listed on Schedule 1.1.3 hereto;
1.1.4 Records. All of Seller's right, title and interest in
all files, records and other data (including but not
limited to those in electronic format) in the actual
possession of Seller related to the Inventories and
Intellectual Property including without limitation all
operational records, technical records, contract files,
computer records, computer tapes and disks, supplier
lists, marketing document, credit information, operating
guides and manuals, sales records, research and
development reports and records, and production reports
and records, but excluding accounting and tax records
and any documents covered by the attorney-client
communication or attorney work product privileges (the
"Seller Records");
1.1.5 Names. All rights of any kind whatsoever in the names
"Bison Instruments", "Galileo", and "Jupiter". However,
Buyer agrees that (a) for a period of one (1) year,
Seller may continue to use the name "Bison Instruments"
in connection with Seller's sale and servicing of its
inventory that exists for seismographic product lines
other than the Jupiter and Galileo product lines, and
(b) Seller may continue to use the name "Bison
Instruments, Inc." in connection with Seller's operation
of its Bison Instruments, Inc. company only if such
company's operations do not compete in the same market
encompassing Buyer's seismographic products;
1.1.6 Manufacturing Documentation. All of Seller's right,
title, and interest in all manufacturing documentation
associated with the seismograph product lines listed on
Schedule 1.1.6.
1.2 Retained Assets. The Assets to be conveyed to Buyer do not include
any assets other than those set forth in Section 1.1 and exclude
specifically, without limitation, the following property:
1.2.1 Records. Any of Seller's corporate, financial and
accounting and tax records, and legal files, except that
Seller will provide Buyer with copies of any tax records
that are necessary for Buyer's ownership, administration
or operation of the Assets.
-48-
<PAGE>
1.2.2 Confidential Information. Notwithstanding any other
provision of this Agreement to the contrary, any records
or data that Seller reasonably considers proprietary or
confidential (including without limitation employee
information and excepting the documents described in
1.1.6 above), or which Seller cannot provide to Buyer
because of third-party restrictions;
1.2.3 Cash. All of Seller's cash.
1.2.4 Accounts Receivable. All of Seller's accounts
receivable.
1.2.5 Tax Refunds. Any tax refunds due to Seller.
1.2.6 Other Product Lines. The assets associated with product
lines of Seller other than the Jupiter and Galileo
product lines, other than those assets described in
Section 1.1.7 above.
1.2.7 Retained Intellectual Property. All of Seller's right,
title, and interest in the BISON graphic logo identified
in Schedule 1.2.7 as the "BISON LOGO". Buyer shall have
no rights in or to the BISON LOGO, including, without
limitation, the right to use the BISON LOGO. Seller
grants a non-exclusive, worldwide license to Buyer to
use the BISON Word Mark in connection with the Assets
and for no other use. All other rights in the BISON Word
Mark are reserved to Seller. Buyer acknowledges that the
BISON Word Mark is the property of the Seller and that
by this Agreement Buyer acquires license rights and not
the right, title or interest in or to the BISON Word
Mark. Buyer shall not, during the term of this Agreement
or thereafter, adopt or use any service mark, trade
name, or trademark confusingly similar to the BISON Word
Mark. Buyer acknowledges that strict observance and
performance of the terms of this section of the
Agreement are necessary to protect Seller and the BISON
Word Mark. IN that regard, Buyer agrees that the BISON
Word Mark shall be used only in connection with the
Assets and the quality of the Assets will be the same
quality or better than the quality of the Assets as
presently manufacturing and distributed by Seller. In
all agreements entered into by Buyer in which Buyer's
right in the BISON Word Mark are assigned, Buyer shall
specify that all such assignments are subject to the
terms of this
-49-
<PAGE>
Section 1.2.7 and such assignees shall agree to include
such terms in any subsequent assignments. Buyer and any
and all subsequent assignees shall notify Seller of such
assignments of any rights to the BISON Word Mark.
1.2.8 Customer Lists. All of Seller's right, title and
interest in Seller's customer lists. However, Seller
shall provide Buyer with copies of Seller's customer
lists used for developing or operating the Assets and
Buyer shall have the exclusive right to use such lists
only in connection with the marketing and selling of the
Assets in the seismographic market.
ARTICLE 2. CONSIDERATION AND PAYMENT
2.1 Consideration. At Closing, Buyer will pay Seller Four Hundred
Seventy-four Thousand Dollars ($474,000) in cash, such amount being
subject to adjustment as provided in Section 2.2 of this Agreement
(collectively the "Cash Consideration").
2.2 Adjustments to the Cash Consideration after Closing. Adjustments to
the Cash Consideration shall be made as between the Seller and the
Buyer, as follows:
2.2.1 Settlement Statement. The Cash Consideration payable to
Seller at Closing will be subject to the adjustments set
forth in Section 2.2.2 and 2.2.3. Within sixty (60) days
after Closing, the Buyer will prepare and provide to
Seller a settlement statement showing all adjustments to
the Cash Consideration paid at Closing pursuant to this
Section 2.2. (However, failure of Buyer to complete the
settlement statement within sixty (60) days after
Closing will not constitute a waiver of any right to an
adjustment otherwise due.) Seller will have thirty (30)
days after receiving the settlement statement to provide
Buyer with any written exceptions to any items in the
settlement statement that Seller believes in good faith
to be questionable. Any such disputed items will be
resolved as provided in Section 2.3.1. All items in the
settlement statement to which Seller does not except in
writing within the thirty (30) day review period will be
deemed correct.
2.2.2 Upward Adjustments. The Cash Consideration will be
increased by any increase in value of the
-50-
<PAGE>
Inventories, such value to be determined in accordance
with Section 7.1.
2.2.3 Downward Adjustments. The Cash Consideration will be
decreased by any decrease in value of the Inventories,
such value to be determined in accordance with Section
7.1.
2.2.4 Payment of Undisputed Adjustments. Seller and Buyer, as
applicable, will pay each other the undisputed
adjustment to the Cash Consideration contained in the
settlement statement within ten (10) days after the
expiration of Seller's thirty (30) day review period for
the settlement statement.
2.3. Resolution of Disputed Adjustments.
2.3.1 Resolution of Disputed Adjustments. If Seller and Buyer
are unable, within ten (10) days after the expiration of
Seller's thirty (30) day review period for the
settlement statement, to resolve any disputed items
pertaining to the settlement statement, the Seller and
the Buyer agree to promptly and jointly retain the
independent accounting firm of Price Waterhouse LLP to
evaluate the items in dispute as between such parties
and render an opinion on their validity, with each such
affected party paying one-half of the charges of Price
Waterhouse LLP. The determination of Price Waterhouse
LLP will be final and binding on the parties. If the
independent accounting firm determines that a payment or
refund is due, the owing party shall pay the full amount
determined by Price Waterhouse LLP to be due within ten
(10) days after receiving written notice of Price
Waterhouse LLP's opinion.
2.4 Payment Method. Unless the parties otherwise agree in writing, all
payments under this Agreement will be by wire transfer in
immediately available funds to an account designated by the party
receiving payment.
ARTICLE 3. REPRESENTATIONS
3.1 Reciprocal Representations. By their execution of this Agreement,
Seller and Buyer make the following representations as to themselves
as an executing party. These representations are deemed to be made
as of the Closing Date.
-51-
<PAGE>
3.1.1 Requisite Authority. Seller is a corporation duly
organized and in good standing under the laws of
Minnesota, is duly qualified to carry on its business in
the State of Minnesota, and has all the requisite power
and authority to enter into and perform this Agreement.
Buyer is a corporation duly organized and in good
standing under the laws of Delaware, is duly qualified
to carry on its business in the state of Texas, and has
all the requisite power and authority to enter into and
perform this Agreement.
3.1.2 Requisite Approvals. The executing party has taken all
necessary or appropriate actions to authorize (i) the
execution and delivery of this Agreement and the other
transaction documents referenced in this Agreement; (ii)
the performance of its obligations under this Agreement
and the other transaction documents; and (iii) the
consummation of this transaction.
3.1.3 Validity of Obligation. This Agreement and the other
transaction documents referenced in this Agreement (I)
have been duly executed and delivered by the executing
party; (ii) constitute the legal, valid and binding
obligations of the executing party, subject to the
effect of bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to creditors'
rights generally and general equitable principles; and
(iii) are enforceable against the executing party in
accordance with their respective terms, subject to the
effect of bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to credits'
rights generally and general equitable principles.
3.1.4 No Conflicts or Impediments. The consummation of the
transaction contemplated by this Agreement (i) does not
require the approval, authorization, consent or other
action by, or filing with, any governmental authority,
administrative agency, court or other party; (ii) will
not breach, violate or conflict with any material
agreement or instrument to which either the executing
party or the Assets being transferred by the executing
party is subject, including without limitation covenants
imposed on the executing party by any bank or other
financial institution, lender or debtholder and other
terms, provisions or conditions of the Certificate of
Incorporation, By-Laws or applicable shareholder
agreement of the party; and
-52-
<PAGE>
(iii) does not violate any judgment, decree, law, rule
or regulation of any governmental authority or
administrative agency, in the case of each clause (i),
(ii) and (iii), in a manner that would adversely affect
the transaction.
3.1.5 Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by,
or to its actual knowledge, threatened against it.
3.1.6 Broker's Fee. The executing party has not incurred any
obligation for brokers, finders or similar fees for
which the other executing party or parties would be
liable.
3.2 Seller's Representations. By its execution of this Agreement, Seller
makes the following representations to Buyer as to the Assets. These
representations are deemed to be made as of the Closing Date.
3.2.1 Preferential Rights and Consents. There are no prior or
preferential rights to purchase, rights of first
refusal, or other similar rights vested in any other
party to purchase or otherwise acquire the Assets.
3.2.2 Mortgages and Other Instruments. The transfer of the
Assets does not violate any covenants or restrictions
imposed on Seller by any bank or other financial
institution in connection with a mortgage or other
instrument, and will not result in the creation or
imposition of a lien on any portion of the Assets.
3.2.3 Compliance with Law and Agreements. Except as disclosed
on Schedule 3.2.3(a), to the best of Seller's knowledge,
(i) Seller is in compliance with all applicable laws,
rules, and regulations of federal, state and local
authorities in connection with Seller's ownership and
operation of the Assets; and (ii) Seller is in
compliance with all of its obligations under the
Contracts and any other agreements relating to or
involving the Assets. Seller is not a party to any
partnership agreements, joint venture agreements,
operating agreements and agreements for the sale of the
Assets. Except as disclosed on Schedule 3.2.3(b), Seller
is not obligated to sell, lease, market, distribute or
service the Assets through or with any Person.
-53-
<PAGE>
3.2.4 Litigation and Claims. To the best of Seller's
knowledge, there are no material actions, suits or other
proceedings pending before any court or governmental
agency in which Seller is a party or any other claims
that (i) would result in loss of Seller's title to the
Assets, (ii) would affect the value of the Assets, or
(iii) would subject Buyer to an legal or monetary
liability, except for those listed in Schedule 3.2.4 to
this Agreement.
3.2.5 FIRPTA. Seller is not a "foreign person" as defined in
Section 1445 of the Internal Revenue Code of 1986, as
amended.
3.2.6 Bulk Sales Laws. Seller represents that Seller has no
creditors or situations which would require the parties
hereto to comply with or which would result in the
violation of the requirement of any bulk sales act
concerning or relating to the transactions contemplated
by this Agreement.
3.3 Buyer's Representations. By execution of this Agreement, Buyer makes
the following representations:
3.3.1 Licensing. Buyer acknowledges that Buyer has met all of
the requirements under applicable local, state and
federal law to accept assignment of the Assets, and is
not otherwise prevented from having the Assets
transferred to such Buyer, and is properly authorized to
operate said Assets.
ARTICLE 4. WARRANTIES AND WARRANTY DISCLAIMERS.
4.1 Title to Assets. Seller has good and marketable title to all of the
Assets. Seller represents that it has taken no steps to register or
apply for registration with respect to he Intellectual Property.
4.2 Encumbrances. Seller represents and warrants that it owns and is
assigning, conveying and transferring full legal and beneficial
ownership of Seller's interest in the Assets, free and clear of all
assessments, charges, liens, pledges, mortgages, security interests
and other encumbrances caused by Seller, other than Permitted Liens.
For purposes of this Agreement, "Permitted Liens" means the
following:
(i) liens for taxes not due or due but not yet delinquent or
which are being contested in good faith by appropriate
proceedings;
-54-
<PAGE>
(ii) mechanics', materialmens', repairmen's or other like
liens arising in the ordinary course of business;
4.3 Condition and Fitness of Assets. To the best of Seller's knowledge,
the Inventories are of a quality usable and saleable consistent with
past practice in the ordinary course of Seller's business. The
Inventories will not include any obsolete, damaged or defective
goods.
4.4 Subrogation of Warranties. To the extent transferable without
consent of a third party, Seller will give and grant to Buyer, its
successors and assigns, as to the Assets, full power and right of
substitution and subrogation in and to all covenants and warranties
(including warranties of title) by preceding owners, vendors, or
others, given or made with respect to the Assets or any part thereof
prior to the Closing Date.
4.5 Representations and Warranties Exclusive. All representations and
warranties contained in this Agreement (including without limitation
those in Article 3 and 4 of this Agreement) are exclusive, and are
given in lieu of all other representations and warranties, express
or implied.
ARTICLE 5. CASUALTY LOSSES
5.1 Casualty Losses.
5.1.1 Notice of Casualty Losses. If, prior to the date of
shipment of the Assets from Seller's facilities to
Buyer's facilities, all or part of the Assets are
damaged or destroyed by fire, flood, storm or other
casualty ("Casualty Losses"), Seller must promptly
notify the Buyer in writing of the nature and extent of
the Casualty Loss and Seller's estimate of the cost
required to repair or replace that portion of the Assets
affected by the Casualty Loss.
5.1.2 Adjustments to Cash Consideration for Casualty Losses.
With respect to each Casualty Loss to the Assets, the
Buyer will have the following rights:
(i) If Seller and the Buyer agree on the cost to
repair or replace the portion of the Assets
affected by the Casualty loss, the Cash
Consideration will be adjusted by the agreed
cost of the Casualty Loss.
-55-
<PAGE>
(ii) If Seller and the Buyer are unable to agree
on the cost to repair or replace the portion
of the Assets affected by the Casualty Loss,
then the parties shall submit the issue to
arbitration, as provided for in Section
9.10, and upon determination of such cost
pursuant to arbitration, the Cash
Consideration will be adjusted by the
arbitration derived cost of the Casualty
Loss.
5.1.3 Insurance Proceeds and Settlement Payments. If the
Seller and Buyer agree to an adjustment in the Cash
Consideration, Seller will be entitled to retain (i) all
insurance proceeds payable to Seller with respect to
such Casualty Loss, and (ii) all sums paid to Seller by
third parties by reason of the Casualty Loss.
ARTICLE 6. CLOSING AND POST-CLOSING OBLIGATIONS
6.1 Closing. The closing of the sale (the "Closing") shall take place on
or before 5:00 p.m. CST on June 5, 1998, (the actual date on which
Closing occurs being the "Closing Date") at the offices of Bison
Instruments, Inc., 5610 Rowland Road, Minneapolis, Minnesota, unless
the parties agree in writing to another location.
6.2 Closing Obligations. At Closing, the following events will occur,
each being a condition precedent to the others and each being deemed
to have occurred simultaneously with the others.
6.2.1 Payment of Cash Consideration. Buyer will pay Seller the
Cash Consideration by wire transfer.
6.2.2 Execution and Delivery of Closing Documents. Seller and
Buyer will execute, acknowledge, and deliver the
following closing documents:
(i) Seller will execute, acknowledge and deliver
to Buyer an Assignment, Assumption and Bill
of Sale (in sufficient counterparts for
recording) transferring Seller's interest in
the Assets to Buyer. The Assignment,
Assumption and Bill of Sale will be in the
form set forth in Exhibit A.
(ii) Seller will obtain and deliver to Buyer
releases of any and all liens affecting the
Assets.
-56-
<PAGE>
(iii) Seller and Buyer will execute and deliver
any other documents and instruments
necessary to consummate the transaction
contemplated by this Agreement.
6.3 Post-Closing Obligations.
6.3.1 Recording Transfer Documents. Buyer, within thirty (30)
days after Closing, will record the Assignment and Bill
of Sale and all other instruments that must be recorded
to effectuate the transfer of the Assets the Seller is
transferring to Buyer. All costs of recording and filing
these documents will be responsibility of the Buyer.
6.3.2 Files and Records. No later than thirty (30) days after
Closing, Seller will deliver to Buyer (at a location
designated by Buyer) the originals or legible copies of
the Seller Records relating to the Assets, the Seller is
transferring to Buyer. Thereafter, Seller will forward
to the Buyer any other correspondence, documents and
other information Seller receives relating to the Assets
the Seller is transferring to Buyer. Thereafter, Seller
will forward to the Buyer any other correspondence,
documents and other information Seller receives relating
to the Assets the Seller transfers to Buyer. The freight
costs and costs of counting and packing the Seller
Records will be borne by Buyer. Seller shall pay the
costs of packaging materials and will provide assistance
with packing the Seller Records. If Seller retains any
original Seller Records, the Buyer will have the right
to review those original Seller Records during normal
business hours. Seller will maintain its computer
systems associated with the Assets for a period up to
and including September 30, 1998 and will assist Buyer
in obtaining any reasonable information from the
computer systems needed to operate the Assets. After
such period, Seller will give Buyer thirty (30) days'
notice of Seller's intention to destroy any Seller
Records, whereby Buyer will have the right to obtain
such Seller Records from Seller. After the thirty (30)
days' notice period expires, Seller shall have the right
to destroy any Seller Records it retains in accordance
with its usual and customary records retention policies.
Nothing herein shall be deemed to require the Buyer to
maintain or refrain from disposing of any books and
records transferred
-57-
<PAGE>
pursuant to this Agreement for any period of time after
the Closing Date. However, if Buyer desires to dispose
of any such books or records, Buyer agrees to give
Seller notice of such intention and the opportunity to
retain such books and records, at Seller's expense. From
and after the Closing Date and upon reasonable written
require, Seller and Buyer shall cooperate with each
other in providing the other party with copies of books
or records needed in connection with customer
complaints, lawsuits, investigations, and tax audits and
examination. Such books or records shall be provided at
the cost and expense of the requesting party.
6.3.3 Training Cooperation. At no cost to Buyer, Seller agrees
to assist in the training of two of Buyer's technicians
on assembly of the Assets over a period of five (5) full
business days at Seller's facilities. Seller shall have
no liability and Buyer shall have no recourse to Seller
with respect to any assistance provided to Buyer by
Seller as a result of its undertakings pursuant to this
section.
6.3.4 Non-competition. Seller and Buyer acknowledge that as an
inducement to Buyer to enter into this Agreement and in
partial consideration of the Purchase Price, Buyer has
required that Seller agree that for a period of three
(3) years after the Closing Date, Seller will not engage
directly or indirectly anywhere in the Restricted Market
(as defined below) in a business which involves products
similar to the Jupiter and Galileo product lines, or
solicit customers who have purchased from Seller the
Jupiter and Galileo products. However, Seller may sell
and service any of its existing inventory not sold to
Buyer. "Restricted Market" shall mean all international
markets and all areas of the United States. Seller
agrees that if this Section 6.3.4 is violated, Buyer
shall be entitled to seek injunctive relief in addition
to any other legal remedies available to it. Seller and
Buyer hereby waive any provision of applicable law that
would render any provision of this Section 6.3.4 invalid
or unenforceable.
6.3.5 Subrogation of Rights. From and after the Closing Date,
if Buyer becomes liable for or suffers any damage with
respect to any matter associated with the Jupiter and
Galileo product lines that was covered by
-58-
<PAGE>
insurance maintained by Seller or in which Seller is a
named insured at or before the Closing Date, Buyer shall
be and is hereby subrogated to any rights of Seller
under the insurance coverage. Seller shall promptly
remit to Buyer any insurance proceeds received by them
on account of any such liability or damage less Seller's
cost (including any claim amounts), expenses, and fees
relating thereto. In the event of Seller's liability,
such insurance proceeds shall be used by Seller to
satisfy that liability.
6.3.6 Customer and Business Relationships. From and after the
Closing Date, Seller will cooperate with Buyer in its
efforts to continue and maintain, with customers,
suppliers, or other business associates of Seller, the
same business relationship with Buyer after the Closing
Date as maintained with Seller prior to the Closing
Date, with respect to the business to be carried on by
Buyer with the Assets. Seller will not take any action
designed or intended to have the effect of discouraging
any person from continuing or maintaining a business
relationship with Buyer after the Closing Date.
6.3.7 Further Assurances. Seller and Buyer agree to execute
and deliver from time to time such further instruments
and do such other acts as may be reasonably necessary to
effectuate the purposes of this Agreement.
6.3.8 Products Liability Insurance. For a period of one (1)
year following Closing, Buyer shall maintain products
liability insurance in adequate and appropriate amounts
to cover the Inventories. For such period, if Seller
becomes liable for or suffers any damage with respect to
any matter that is covered by such insurance, Seller
shall be and is hereby subrogated to any rights of Buyer
under the insurance coverage. Buyer shall promptly remit
to Seller any insurance proceeds received by them on
account of any such liability or damage less Buyer's
cost (including any claim amounts), expenses, and fees
relating thereto. In the event of Buyer's liability,
such insurance proceeds shall be used by Buyer to
satisfy that liability.
6.3.9 Letter of Credit. Within ten (10) business days after
Closing, Seller shall obtain a standby letter
-59-
<PAGE>
of credit with terms mutually agreeable to Buyer and
Seller in favor of Buyer to cover Seller's Retained
Obligations, as defined in Section 8.3 of the Agreement,
with the following terms:
$184,000 available up to thirty (30) days after Closing;
$100,000 available from thirty (30) days to sixty (60)
days after Closing;
$75,000 available from sixty (60) days to ninety (90)
days after Closing;
$0 available after ninety (90) days after Closing.
The letter of credit shall be payable up to the amount
of the claim by the issuer bank upon presentation by
Buyer of a written notice of claim. Seller may request
arbitration in accordance with Section 9.10 of the
Agreement if it disputes Buyer's claim.
ARTICLE 7. INVENTORIES, REVENUES, EXPENSES AND TAXES
7.1 Accounting for Inventories. The Buyer will take a physical count of
the Inventories within sixty (60) days of the Closing Date and will
determine the fair value of the Inventories. Seller shall assist
Buyer in counting the Inventories.
7.2 Expenses. Seller will be responsible for the payment of all
operating expenses and capital expenditures related to the Assets
the Seller transfer under this Agreement and attributable to the
period prior to the Closing Date. Buyer will be responsible for the
payment of all operating expenses and capital expenditures related
to the Assets attributable to the period on and after the Closing
Date. Any party that pays any expenses that are the responsibility
of another party will be reimbursed for those expenses.
7.3 Taxes and Incidental Expenses
7.3.1 Ad Valorem and Personal Property Taxes. Ad valorem and
personal property and similar obligations on the Assets
the Seller transfers under this Agreement are the
obligation of Seller for periods before the Closing Date
and are the obligation of the Buyer for periods after
the Closing Date. All such taxes will be prorated as of
the Closing Date.
-60-
<PAGE>
7.3.2 Income Taxes. Each party shall be responsible for its
own state income and federal income taxes, if any, as
may result from this transaction.
7.3.3 Sales and Use Taxes. Buyer will be responsible for all
sales, use and similar taxes applicable to the transfer
of the Assets. If Seller is required to pay such sales,
use or similar taxes on behalf of Buyer, Buyer will
reimburse Seller for such taxes paid by Seller.
7.3.4 Incidental Expenses. Each party shall bear its own
respective expenses incurred in connection with the
negotiation and Closing of this transaction, including
it own consultants' fees, attorneys' fees, accountants'
fees, and other similar costs and expenses.
ARTICLE 8. RETAINED AND ASSUMED RIGHTS AND OBLIGATIONS
8.1 Buyer's Rights After Closing. Upon and after Closing, Buyer will
receive and assume all of Seller's right, title and interest to the
Assets, as of the Closing Date.
8.2 Buyer's Obligations After Closing. Upon and after Closing, Buyer
will unconditionally and irrevocably assume, pay, perform and
discharge all of the liabilities, obligations and duties with
respect to the ownership of the Assets on or after the Closing Date,
except as otherwise provided in this Agreement (the "Buyer's Assumed
Obligations"). The Buyer's Assumed Obligations include without
limitation:
8.2.1 All performance obligations under the Contracts the
Buyer receives that are attributable to and accrue in
the period on and after the Closing Date;
8.2.2 All Claims (as defined in Section 8.4.1) arising from
Buyer's ownership or operating of the Assets on and
after the Closing Date; and
8.2.3 All Claims (as defined in Section 8.4.1) arising from
any inaccuracy in any representations or warranties of
Buyer under this Agreement.
8.2.4 All warranty obligations, expressed or implied, of Buyer
with respect to the Jupiter and Galileo products sold or
services rendered by Buyer after the Closing Date.
-61-
<PAGE>
8.2.5 All Claims arising out of any suits, claims or
proceedings brought or asserted by a third party and
which are alleged to have arisen or are attributable to
the period on or after the Closing Date.
8.3 Seller's Obligations After Closing. After Closing, Seller will
retain responsibility for all liabilities, obligations and duties
with respect to the ownership of the Assets before the Closing Date,
except as otherwise specifically provided in this Agreement (the
Seller's Retained Obligations"). The Seller's Retained Obligations
include without limitation:
8.3.1 All performance obligations under the Contracts that are
attributable to and accrue in the period before the
Closing Date;
8.3.2 All Claims (as defined in Section 8.4.1) arising from
Seller's ownership or operation of the Assets before the
Closing Date.
8.3.3 All Claims (as defined in Section 8.4.1) arising from
any inaccuracy in any representations or warranties of
Seller under this Agreement.
8.3.4 All warranty obligations, expressed or implied, of
Seller with respect to the Jupiter and Galileo products
sold or services rendered by Seller on or prior to the
Closing Date and as set forth in Schedule 8.3.4 hereto
("Warranty Obligations"). Seller and Buyer agree that
Buyer will perform the services necessary to fulfill the
Warranty Obligation that continue after the Closing
Date, and that Seller shall pay all direct material and
labor costs, plus a ten percent (10%) mark-up, borne by
Buyer to fulfill such Warranty Obligations that continue
after the Closing date.
8.3.5 All Claims arising out of any suits, claims or
proceedings brought or asserted by a third party and
which are alleged to have arisen or are attributable to
the period prior to the Closing Date.
8.4 Indemnities.
8.4.1 Definition of Claims. As used in this Agreement, the
term "Claims" means any and all losses, liabilities,
damages, obligations, expenses, fines, penalties, costs,
claims, causes of action and judgments for:
-62-
<PAGE>
(i) breaches of contract; (ii) loss or damage to
property, injury to or death of persons, and other
tortious injury; (iii) liability assessments due to
strict liability of which notice has been given by the
relevant third party, and (iv) violations of which
notice has been given by the relevant third party of
published, binding and applicable laws, rules,
regulations, orders or any other legal right or duty
actionable at law or equity. The term "Claims" also
includes reasonable attorneys; fees, court costs, and
other reasonable costs of litigation resulting from the
defense of any claim or cause of action within the scope
of the indemnities in this Agreement.
8.4.2 Application of Indemnities. All indemnities set forth in
this Agreement extend to the officers, directors,
employees and affiliates of the party indemnified. The
indemnities set forth in this Agreement do not extend to
any part of an indemnified Claim to the extent caused by
the negligence, willful misconduct or fraud of the
indemnified party or the result of the imposition of
punitive damages on the indemnified party.
8.4.3 Seller's Indemnity. To the extent that Buyer is not
otherwise indemnified pursuant to indemnification
provisions of Contracts that have been conveyed,
transferred and assigned to Buyer in connection with
this Agreement, Seller shall indemnify, defend and hold
Buyer harmless from and against any and all Claims
caused by, resulting from or incidental to Seller's
Retained Obligations described in Section 8.3 of this
Agreement, to the extent such Claims related to the
Assets.
8.4.4 Buyer's Indemnity. Buyer shall indemnify, defend and
hold Seller harmless from and against any and all Claims
caused by, resulting from or incidental to Buyer's
Assumed Obligations set forth in Section 8.2 of this
Agreement, to the extent such Claims relate to the
Assets.
8.4.5 Notices and Defense of Claims. Each party shall
immediately notify the other affected party of any Claim
of which it becomes aware and for which it is entitled
to indemnification from the other party under this
Agreement. The indemnifying party shall be obligated to
defend at the indemnifying party's
-63-
<PAGE>
sole expense any litigation or other administrative or
adversarial proceeding against the indemnified party
relating to any Claim for which the indemnifying party
has agreed to indemnify and hold the indemnified party
harmless under this Agreement. However, the indemnified
party shall have the right to participate with the
indemnifying party in the defense of any such Claim at
its own expense.
8.4.6 Limitations.
(i) Each warranty, covenant and agreement of
indemnity contained in this Agreement shall
survive the Closing and the delivery of
instruments of conveyance by the parties
hereto, and shall not be deemed to have been
superseded by the terms and conditions of
the instruments delivered at the Closing.
All warranties, representations and
agreements of indemnity shall survive for a
period of one (1) year from the Closing
Date, except Buyer's obligation sunder
Section 8.2.4 and Seller's obligations under
Section 8.3.4 which shall survive without
any limitation.
(ii) In calculating the amount of any Claim for
which any indemnifying person is liable
under this Section 8.4, there shall be taken
into consideration the value of any federal
or state income tax effects on, or insurance
amounts recovered by, the indemnified person
that result from the circumstances to which
the Claim related or from which the Claim
arose.
8.4.7 Limitation of Seller's Liability.
(i) Notwithstanding anything to the contrary
contained in this Agreement, after the
Closing, the aggregate liability of the
Seller for any Claim, individually or in the
aggregate with all other Claims covered by
this Agreement, for which indemnification is
required by Seller pursuant to Section
8.4.3, shall be limited to the full amount
of the adjusted Cash Consideration. Buyer
agrees to hold Seller harmless for any
Claims greater than such amount.
(ii) The Buyer is entitled to indemnification
pursuant to this Agreement only to the
extent that the
-64-
<PAGE>
amount of any Claim, individually or in the
aggregate with all other Claims covered by
this Agreement, exceeds Ten Thousand Dollars
($10,000) and is not a Buyer's Assumed
Obligation.
8.4.8 Limitation of Buyer's Liability.
(i) Notwithstanding anything to the contrary
contained in this Agreement, after the
Closing, the aggregate liability of the
Buyer for any Claim, individually or in the
aggregate with all other Claims covered by
this Agreement, for which indemnification is
required by a Buyer pursuant to Section
8.4.4, shall be limited to the full amount
of the adjusted Cash Consideration. Seller
agrees to hold Buyer harmless for any Claims
greater than such amount.
(ii) The Seller is entitled to indemnification
pursuant to this Agreement only to the
extent that the amount of any Claim,
individually or in the aggregate with all
other Claims covered by this Agreement,
exceeds Ten Thousand Dollars ($10,000) and
is not a Seller's Retained Obligation.
8.4.9 Limitation on Claims. Neither party to this Agreement
shall make a claim against the other party to this
Agreement except pursuant to and subject to the
limitations contained in, this Section 8.4.
8.4.10 Inconsistent Provisions. The provisions of this Section
8.4 shall govern and control over any inconsistent
provisions of this Agreement.
ARTICLE 9. MISCELLANEOUS PROVISIONS
9.1 Notices. All notices under this Agreement must be in writing. Any
notice under this Agreement may be given by personal delivery,
facsimile transmission, U.S. mail (postage prepaid), or commercial
delivery service, and will be deemed duly given when received by the
party charged with such notice and addressed as follows:
Buyer Seller
----- ------
Innovative Transducers Inc. Bison Instruments, Inc.
17200 Park Row 5610 Rowland Road
Houston, Texas 77084-4925 Minneapolis, Minnesota
-65-
<PAGE>
55343-8956
Attn.: Sam Bull Attn.: Larry Martin
Fax: 281-579-8656 Fax: 612-931-0997
with required copy (which shall not constitute notice) to:
Tech-Sym Corporation
10500 Westoffice Drive, Suite 200
Houston, Texas 77042-5391
Attn.: General Counsel
Fax: 713-780-3524
Either party, by written notice to the other, may change the address
or the individual to which or to whom notices are to be sent under
this Agreement.
9.2 Public Announcements. Neither party may make press releases or other
public announcements concerning this transaction, without the other
party's prior written approval and agreement to the form of the
announcement except: (a) as may be required by applicable laws or
rules and regulation of any governmental agency or stock exchange;
and (b) Seller may disclose the transaction to its shareholders in
writing and by announcement.
9.3 Survival or Representations and Warranties. All of the
representations, warranties, indemnities and other agreements of or
by the parties to this Agreement shall survive the execution and
delivery of the closing documents and the transfer of assets between
the parties.
9.4 Exhibits. The Exhibits attached to this Agreement are incorporated
into and make a part of this Agreement. In the event of a conflict
between the provisions of the Exhibits or the executed Closing
documents and the foregoing provisions of this Agreement, the
provisions of this Agreement shall take precedence. The omission of
certain provisions of this Agreement from the Closing documents does
not constitute a conflict between this Agreement and the Closing
documents and will not effect of merger of the omitted provisions.
9.5 Integration and Amendment. This Agreement represents the entire
agreement between the parties, superseding all prior negotiations,
and may not be amended or modified except by written agreement
between duly authorized representatives of the parties.
-66-
<PAGE>
9.6 Successors and Assigns. This Agreement binds and inures to the
benefit of the parties hereto and their respective permitted
successors and assigns, and nothing contained in this Agreement,
express or implied, is intended to confer upon any other person or
entity any benefits, rights, or remedies.
9.7 Severability. If any provision of this Agreement is found by a court
of competent jurisdiction to be invalid or unenforceable, that
provision will be deemed modified to the extent necessary to make it
valid and enforceable and if it cannot be so modified, it shall be
deemed deleted and the remainder of the Agreement shall continue and
remain in full force and effect.
9.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which shall
constitute one document.
9.9 Governing Law. This Agreement shall be governed by the laws of the
State of Texas.
9.10 Arbitration.
(i) All disputes, differences or questions arising out of or
relating to this Agreement (including, without
limitation, those as to the validity, interpretation,
breach, violation or termination hereof) shall, at the
written request of any party hereto, be finally
determined and settled pursuant to arbitration in
Wilmington, Delaware by three arbitrators, one to by
appointed by Buyer, and one by Seller, and a neutral
arbitrator to be appointed by such two appointed
arbitrators. The neutral arbitrator shall be an attorney
and shall act as chairman. Should (a) either party fail
to appoint an arbitrator as hereinabove contemplated
within ten (10) days after the party not requesting
arbitration has received such written request, or (b)
the two arbitrators appointed by or on behalf of the
parties as contemplated by this Section 9.10 fail to
appoint a neutral arbitrator as hereinabove contemplated
within ten (10) days after the date of the appointment
of the last arbitrator appointed, then any person
sitting as a Judge of the United Stated District Court
for a district covering Wilmington, Delaware, upon
application of Seller or of Buyer, shall appoint an
arbitrator to fill such position with the same force and
effect as though such
-67-
<PAGE>
arbitrator had been appointed as hereinabove
contemplated.
(ii) The arbitration proceeding shall be conducted in
accordance with the Rules of the American Arbitrator
Association. A determination, award of other action
shall be considered the valid action of the arbitrators
if supported by the affirmative vote of two or three of
the three arbitrators. The costs of arbitration
(exclusive of extending the arbitration, and of the fees
and expenses of legal counsel to such party, all of
which shall be borne by such party) shall be shared
equally by Buyer and Seller. This arbitration award
shall be final and conclusive and shall receive
recognition, and judgment upon such award may be entered
and enforced in any court of competent jurisdiction.
IN WITNESS WHEREOF, the authorized representatives of the Parties
executed this Agreement on the date indicated in the opening
paragraph of this Agreement.
INNOVATIVE TRANSDUCERS INC. BISON INSTRUMENTS, INC.
By: /s/ Philip Bull By: /s/ Lawrence Martin
--------------- -------------------
Name: Philip "Sam" Bull Name: Lawrence M. Martin
Title: President Title: General Manager
-68-
<PAGE>
DATED OCTOBER 23, 1998
DOUGLAS EQUIPMENT LIMITED (1)
- - and -
BISON INSTRUMENTS INC (2)
- ---------------------------------------------------------
AGREEMENT FOR THE SALE AND PURCHASE OF
ASSETS AND INTELLECTUAL PROPERTY RIGHTS
- ---------------------------------------------------------
Manches & Co
3 Worcester Street
OXFORD
OX1 2PZ
Tel : 01865 722106
Fax : 01865 201012
-69-
<PAGE>
THIS AGREEMENT is made the 23rd day of October, 1998 BETWEEN:
(1) DOUGLAS EQUIPMENT LIMITED a company registered in England and Wales
(Company No: 697744) whose registered office is at Village Road,
Arle, Cheltenham, Gloucester GL51 0AB (trading as Douglas Schopf)
("the Purchaser"); and
(2) BISON INSTRUMENTS INC a company registered in the State of Minnesota
(Federal Identification No: 41-0947661) whose principal place of
business is at 5610 Rowland Road, Minneapolis, MN 55343-8956 ("the
Vendor").
WHEREAS:
The Vendor wishes to sell the Assets (as defined below) and the Purchaser wishes
to purchase the Assets upon the terms and subject to the conditions hereinafter
appearing.
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1. In this Agreement the following words and expressions
shall have the following meanings, unless they are
inconsistent with the context:
"THE ASSETS" means the Intellectual Property Rights, the
Stock, the four (4) completed Ultra Chassis Friction
Meters, the Designs, the Software and the Records and
any other property, rights and assets relating to the
Business as set out in Schedule 1;
-70-
<PAGE>
"A BUSINESS DAY" means Mondays to Fridays (inclusive)
except any day which is a public holiday in England or
the United States of America;
"THE BUSINESS" means the Vendor's business associated
with the sale of the Vendor's friction measurement
product line as carried on by the Vendor prior to
Completion;
"COMPLETION" means the actual completion of the sale of
the Assets to the Purchaser;
"THE COMPLETION DATE" means 2 November 1998 or three
Business Days after the Vendor has obtained Shareholder
approval in accordance with clause 8.1 hereof whichever
is the later;
"THE CONTRACTS" means all those contracts and licences
of any nature entered into by the Vendor with agents or
distributors under which such agents or distributors
sell, sub-license or distribute the Software or any
friction measurement equipment;
"THE DESIGNS" means the mechanical and electronic design
of the MK4 and MK5 equipment, the mechanical and
electrical design of the Bison Self Watering System (ie
speed related system part number B707 and Dual Speed
system part number B706) and the mechanical design of
the Ultra Chassis Friction Meters;
"THE ESCROW AMOUNT" means the sum of $US 50,000 payable
by the Purchaser to the Purchaser's Solicitors
-71-
<PAGE>
in accordance with clause 3.2 and to be dealt with in
accordance with clause 3.3;
"GROUP" means a group as defined in section 53(1) of the
Companies Act 1989;
"THE INTELLECTUAL PROPERTY RIGHTS" means the Trade Mark
and all and any patents, patent applications,
copyrights, trade marks, service marks, registered
designs, design rights, business names, know-how,
database rights and any other industrial or intellectual
property rights (and applications for any of these) and
any similar or analogous rights in any jurisdiction
anywhere in the world subsisting in any of the Records,
the Software or the Designs with the exception of those
intellectual property rights possessed by the Purchaser
or any Company in its Group prior to the date hereof and
with the exception of those intellectual property rights
set out in clause 2.5 of this Agreement;
"THE PURCHASER'S SOLICITORS" means Manches & Co of 3
Worcester Street, Oxford OX1 2PZ;
"THE RECORDS" means all and any drawings, papers,
documents, samples, reports, specifications, designs,
manuals, drawings, statistics, accounts, documentation,
know-how, marketing or promotional material and any
other material including any drafts, scraps or work in
progress or any other information relating to the Stock,
the Designs, the Software or the Business, including
without limitation:
-72-
<PAGE>
(i) records of all customers to whom sales have been
made;
(ii) contact names and addresses of the Vendor's agents
and distributors in the United States, Canada, Central
America and South America and the rest of the world; and
(iii) full details of all suppliers of any and all
components of any equipment to which any of the Designs
relate;
"THE SOFTWARE" means the source code and the object code
of the Mu-Meter software and all versions and releases
thereof (including without limitation the MK4 and MK5
versions) and all specifications and documentation
relating to that software;
"THE STOCK" means the stock of the Business including
all the test equipment as determined under clause 2.1
below;
"THE TRADE MARK" means the trade mark registered in the
United States details of which are set out in Schedule 3
including all common law rights connected therewith
together with all goodwill relating to that trade mark.
1.2. Reference to any statute, statutory provision or
statutory instrument shall be construed as including a
reference to that statute, statutory provision or
statutory instrument (together with all rules and
regulations made under them) as may from time to time
-73-
<PAGE>
be amended, consolidated or re-enacted.
1.3. References to persons shall include bodies corporate,
unincorporated associations and partnerships.
1.4. References to clauses and Schedules are to clauses of
and Schedules of this Agreement.
2. SALE AND PURCHASE
2.1. The Vendor shall, on the Completion Date, sell and the
Purchaser shall purchase such of the Stock as the
Purchaser requires and notifies in writing to the Vendor
prior to the Completion Date at the actual cost that the
Vendor purchased that Stock from third parties and the
four completed Ultra Chassis Friction Meters for US
$16,000 each.
2.1.1. The Vendor will forthwith make available to
the Purchaser and its authorised
representatives the Stock and the four (4)
completed Ultra Chassis Friction Meters, for
review and inspection purposes in order to
allow the Purchaser to determine that such
Stock and the four (4) completed Ultra
Chassis Friction Meters are of merchantable
quality and reasonably fit for their usual
purposes. The Purchaser shall notify the
Vendor by the Completion Date of any obvious
defects which render such defective stock or
any of the four (4) completed Ultra Chassis
Friction Meters not of merchantable quality
or reasonably fit for their usual purposes,
as soon as reasonably possible and
-74-
<PAGE>
shall have the right to return such
defective Stock and any of the four (4)
Ultra Chassis Friction Meters, provided such
notice is received by the Completion Date.
In such event, the Purchaser will not be
obliged to purchase such defective Stock or
the defective Ultra Chassis Friction Meters
on Completion.
2.1.2. Subject to the Purchaser's rights under
clause 2.1.1, the Purchaser acknowledges
that the Stock and the four (4) completed
Ultra Chassis Friction meters are purchased
on an "as is, where is" basis, and without
warranty, express or implied.
2.2. Subject to the terms and conditions of this Agreement,
on the Completion Date the Vendor will sell and the
Purchaser will purchase the Assets.
2.3. Subject to the terms and conditions contained in this
Agreement the Assets are sold by the Vendor with full
title guarantee without any liens, charges, claims,
encumbrances or adverse claims.
2.4. The Vendor shall on the Completion Date:
2.4.1. transfer title to all the Assets to the
Purchaser; and
2.4.2. arrange for the shipment of all the Assets
to the Purchaser at the Purchaser's expense
and all such items shall be at the risk of
the Purchaser from the Completion Date; and
-75-
<PAGE>
2.4.3. deliver to the Purchaser all documents of
title relating to the Assets including
without limitation assignments or the Trade
Mark and other Intellectual Property Rights
in the form set out in Schedule 4 and
transfers or assignments of any other of the
Assets which are not transferable by
delivery; and
2.4.4. deliver to the Purchaser deeds in the form
set out in Schedule 2 from respectively, the
Vendor, Androcan Inc, and Autrex Inc.
2.5. The Vendor retains the right, title and interest in (i)
the name "Bison Instruments Inc", (ii) the Bison trade
mark, service mark and trade name (the "Bison Word
Mark") and (iii) the Bison graphic logo (the "Bison
Logo") (together the "Retained Intellectual Property").
The Purchaser shall have no rights in or to the Bison
Logo, including, without limitation, the right to use
the Bison Logo. All rights in the Bison Word Mark are
reserved to the Vendor. The Purchaser acknowledges that
the Bison Word Mark is the property of the Vendor. The
Purchaser shall not, during the term of this Agreement
or thereafter, adopt or use any service mark, trade
name, or trade mark confusingly similar to the Bison
Word Mark. The Purchaser acknowledges that strict
observance and performance of the terms of this section
of the Agreement are necessary to protect the Vendor and
the Bison Word Mark.
3. PAYMENT
-76-
<PAGE>
3.1. In consideration of the Vendor carrying out its
obligations under this Agreement and subject to the
Vendor complying with clause 2.4 above, the Purchaser
shall pay the Vendor the sums set out in Schedule 1
within 24 hours after the Completion Date via an
electronic bank transfer to the Purchaser's account
number 6046486 with Richfield Bank and Trust, 6625
Lyndale Avenue South, Richfield, Minnesota 55423 USA,
Main Routing 091016498 less the Escrow amount.
3.2. The Purchaser shall pay the Escrow Amount to the
Purchaser's Solicitors on 2 November 1998.
3.3. The parties irrevocably instruct Manches & Co that in
the event that the Vendor shall notify the Purchaser's
Solicitors that the Vendor has received shareholders
consent as required under clause 8.1 of this Agreement,
the Purchaser's Solicitors shall if such notice is
received more than two Business Days prior to 2 November
1998 pay the Escrow Amount to the Vendor on 2 November
1998 or if such notice is received on the date two
Business Days prior to 2 November 1998 or any date
thereafter pay the Escrow Amount to the Vendor on the
Completion Date. The Purchaser's Solicitors shall pay
the Escrow Amount to the Vendor by electronic transfer
to the account specified in clause 3.1.
3.4. The Vendor may only instruct the Purchaser's Solicitors
under clause 3.3 above if it has obtained its
shareholders' consent in accordance with clause 8.1.
-77-
<PAGE>
3.5. All sums stated herein are inclusive of any value added,
sales or export taxes (if any) in the United States but
is exclusive of any value added, sales or import taxes
in the United Kingdom.
3.6. The Purchaser will pay the Vendor, within 30 days after
any sale to any third party of any of the four completed
Ultra Chassis Friction Meters included in the Assets,
half of the difference between the price at which it
sells any Ultra Chassis Friction Meter included in the
Assets to that third party and the price it has paid the
Vendor for any Ultra Chassis Friction Meter included in
the Assets (as set out in Schedule 1) provided that:
3.6.1. the sale of any Ultra Chassis Friction Meter
to the third party occurs within 3 years
after the date of this Agreement; and
3.6.2. the third party purchasing any Ultra Chassis
Friction Meter pays the Purchaser more than
the price that the Purchaser has paid the
Vendor for that Ultra Chassis Friction
Meter.
3.7. Subject to clause 3.8, the Purchaser agrees that it
shall act in good faith regarding the sale of the Ultra
Chassis Friction Meters to third parties and, in
particular, that:
3.7.1. the Purchaser acting reasonably will attempt
to sell the Ultra Chassis Friction Meters
purchased under this Agreement before any
other
-78-
<PAGE>
Ultra Chassis Friction Meters that the
Purchaser acquires later than those acquired
under this Agreement; and
3.7.2. the price at which the Purchaser sells any
of the Ultra Chassis Friction Meters to a
third party will not be unfairly discounted
by the Purchaser by comparison with the
discounts offered by the Purchaser on other
meters; and
3.7.3. following the reasonable request of the
Vendor, the Purchaser will inform the Vendor
how many of the Ultra Chassis Friction
Meters purchased from the Vendor under this
Agreement have been sold.
3.8. The obligations of the Purchaser in clause 3.7 shall not
prevent the Purchaser from selling any other type of
friction meter to any third party before the Ultra
Chassis Friction Meters purchased under this Agreement,
and shall not prevent the Purchaser from selling any of
the Ultra Chassis Friction Meters at such price as it
deems to be appropriate acting reasonably.
4. OBLIGATIONS OF THE VENDOR
4.1. Subject to the Purchaser's review of the source code of
the Software to be provided to the Purchaser forthwith,
the Vendor shall procure that the services of Karina
Rasyaeva, Hugo Janke or John Decharinte are made
available to the Purchaser for 30 hours (10 hours a day
on 3 consecutive days) and that the services of
-79-
<PAGE>
Karina Rasyaeva or Hugo Janke are made available to the
Purchaser for 18 hours of the total 30 hour period (6
hours a day on 3 consecutive days), at a time to be
arranged between the parties , in order to transfer to a
representative of the Purchaser the Vendor's information
and knowledge relating to the Software and the structure
and operation of the source code for the Software.
4.2. In the event that the Purchaser considers that the
transfer of information set out in clause 4.1 from
Karina Rasyaeva or Hugo Janke has not been achieved
within 30 hours, the Vendor shall make the Services of
Karina Rasyaeva or Hugo Janke available to the Purchaser
for a further 18 hours (6 hours a day on 3 consecutive
days) at a time to be arranged between the parties for
the purpose as set out in clause 4.1 above.
4.3. The Vendor shall provide such information as the
Purchaser may require to enable the Purchaser to carry
out effective after sales support to the Purchaser's
customers including, without limitation, full details of
the type and mark of any friction measurement product
supplied to individual customers of the Vendor, the
agent (if any) that was involved in that supply and the
contact names, addresses and company names of any such
customers.
5. LIABILITIES, CONTRACTS AND CLAIMS
For the avoidance of doubt, the Purchaser shall not be liable to
pay, satisfy or discharge any liabilities (whether accrued, actual
or contingent) of the Vendor in
-80-
<PAGE>
connection with the Business or any of the Assets arising from any
act or omission or event occurring prior to Completion.
6. WARRANTIES
6.1. The Vendor represents and warrants that:
6.1.1. it has terminated all of the Contracts prior
to the date hereof and no third party shall
have any rights to sell, distribute or
sub-license the Software or any of the
Assets, or to use the Trade Mark or any
similar mark in connection with any goods or
services within the class[es] in which the
Trade Mark is registered or used or use any
of the other Intellectual Property Rights in
any way whatsoever;
6.1.2. it will not, and will procure that each
company in its Group will not, hereafter use
or permit the use of any of the Intellectual
Property Rights (or any part thereof)
without a licence from the Purchaser;
6.1.3. it will promptly provide on request all
reasonable assistance and technical
information to the Purchaser (including
allowing reasonable site visits before
Completion) for the purpose of enabling the
Purchaser to grant licences of or assign the
Intellectual Property Rights (or any part
thereof) to any third party but the Vendor
will only be obliged to provide assistance
where the Vendor is able to do so;
-81-
<PAGE>
6.1.4. it has caused to be waived irrevocably all
moral rights which may exist in relation to
any of the Assets anywhere in the world;
6.1.5. the Vendor is the sole and legal owner of
the Intellectual Property Rights, has full
power to enter into this Agreement and has
not previously assigned or licensed any of
the Intellectual Property Rights or
otherwise encumbered any of the Intellectual
Property Rights;
6.1.6. to the best of the Vendor's knowledge the
Assets (or part thereof) or the possession
or use of the Assets (or part thereof) by
the Purchaser, will not infringe any
intellectual property right or any other
right of any third party in any way
whatsoever, provided that no warranty is
given under this clause 6.1.6 in respect of
any part of the Software developed by the
Purchaser;
6.1.7. the Software is and will be Year 2000
compliant. For the purposes of this clause,
"Year 2000 compliant" means neither the
performance, operation or functionality of
the Software is or will be affected by any
dates prior to, during or after 1 January
2000 and in particular:
(i) no value for current date causes
or will cause any interruption
in the operation,
-82-
<PAGE>
performance or functionality of
the Software;
(ii) date based functionality in the
Software does and will behave
consistently for dates prior to,
during and after the Year 2000;
(iii) in all interfaces to and data
storage in the Software, the
century in any date is and will
be specified either explicitly
or by unambiguous algorithms or
inferencing rules;
(iv) the year 2000 is and will be
recognised by the Software as a
leap year;
6.1.8. it is the registered proprietor of the Trade
Mark and nothing has been done or omitted to
be done which entitles any person to cancel
or rectify or otherwise modify any
registration of the Trade Mark;
6.1.9. no claim concerning any infringement of any
of the Intellectual Property Rights has been
made against or by the Vendor, the Vendor
has not considered making any such claim
and, to the best of the Vendor's knowledge
and belief, there has been no infringement
of any of the Intellectual Property Rights;
and
6.1.10. the Vendor uses no assets other than the
Assets in relation to the Business and no
marks or names (registered or otherwise)
have been
-83-
<PAGE>
used by the Vendor in relation to the Assets
or the Business other than those names,
logos or marks included in the Vendor's
Retained Intellectual Property.
6.2. The Vendor will indemnify and keep the Vendor
indemnified against all and any costs, expenses,
liabilities, damages, losses and claims incurred or
suffered by the Purchaser which are notified to the
Vendor during the 3 years following Completion as a
result of or arising from any breach of the above
warranties by the Vendor.
7. FURTHER ASSURANCE
7.1. The Vendor will, at the reasonable request of the
Purchaser and at the Purchaser's expense for out of
pocket costs:
7.1.1. do all acts, and execute and swear all
documents that are reasonably necessary to
vest absolute legal and beneficial ownership
of the Intellectual Property Rights in the
Purchaser or to perfect the Purchaser's
title thereto anywhere in the world; and
7.1.2. give to the Purchaser such reasonable
assistance as the Purchaser may request in
evidencing the Purchaser's title to and
enforcing and defending the Intellectual
Property Rights anywhere in the world.
7.2. The Vendor hereby appoints the Purchaser as its
-84-
<PAGE>
attorney on behalf of the Vendor to complete and execute
such documents and do such things as the Purchaser may
reasonably require to perfect the assignment and
transfer of the Intellectual Property Rights to the
Purchaser pursuant to clause 2 and the Vendor hereby
agrees to ratify and confirm such acts of the Vendor and
declares this power to be irrevocable pursuant to
section 4 of the Powers of Attorney Act 1971.
The Purchaser shall not exercise the power of attorney
hereby granted if
7.2.1. the Vendor advises the Purchaser that it
disagrees with the assignment or transfer
within 14 days after the Purchaser's
request; and
7.2.2. unless the Vendor shall have failed to
execute and deliver such documents or do
such things within 14 days after the
Purchaser's request to do so.
In the event that the Purchaser disagrees with the
Vendor then the provisions of clause 13 shall apply.
7.3. The Vendor may keep one copy of any of the Records that
it is required to keep by law for accounting, legal or
tax purposes and that copy may only be used for such
purposes.
7.4. The Vendor will remain liable to any third party under
any warranties it has given to that third party in
relation to the Business or any of the Assets and will
-85-
<PAGE>
indemnify and keep indemnified the Purchaser against all
and any costs, expenses, liabilities, damages, losses
and claims incurred by the Purchaser as a result of or
arising from any breach of the warranties referred to in
this clause.
7.5. Subject to clause 7.4, for a period of 12 months after
Completion the Purchaser will use reasonable endeavours
to fulfil any warranty obligations of the Vendor in
relation to the Software or any Ultra Chassis Friction
Meters provided that the Vendor shall pay and reimburse
the Purchaser at the Purchaser's then standard time and
material rates for any work carried out under this
clause and will reimburse to the Purchaser all other
reasonable direct expenses incurred in connection with
that work, and provided that the Purchaser shall have no
liability to any third party or to the Vendor for any
failure to fulfil such warranty obligations.
7.6. The Vendor shall use its reasonable endeavours after the
Completion Date to pass onto the Purchaser any enquiries
relating to the Business, the Assets or any sales of any
friction measurement product that it receives from third
parties.
8. CONDITIONS
8.1. The completion of the transfer and assignment of the
Assets to the Purchaser is conditional upon the passing
at a duly convened and held special meeting of the
Vendor's shareholders of a resolution to approve the
sale of the Assets. The Vendor shall procure that all
necessary steps are taken so that that meeting is
-86-
<PAGE>
held on or before the date 30 days from 2 November 1998.
The Vendor shall notify the Purchaser and the
Purchaser's Solicitors that it has obtained its
shareholders' consent in accordance with this clause
within one Business Day of obtaining that consent.
8.2. In the event of such resolution not being passed on or
before the date 60 days from 2 November 1998 , this
Agreement shall terminate and neither party shall be
liable to the other in respect of such termination,
provided that termination shall not affect either
party's accrued rights at termination.
8.3. The Vendor undertakes that with effect from the date
hereof until Completion or the termination of this
Agreement under clause 8.2, it will act in concert with
the Purchaser in all matters relating to the Business
and the Assets and in particular it will:
8.3.1. pass all live enquiries relating to the
Business or the Assets to the Purchaser as
soon as reasonably practical;
8.3.2. obtain the prior written approval of the
Purchaser before any quotation is made to
any potential customer or purchaser of any
of the Assets or any friction measurement
product; and
8.3.3. will send the Purchaser a copy of all
correspondence which it intends to send to
its customers or to its potential customers
for review by the Purchaser and will alter
such correspondence as the Purchaser
reasonably
-87-
<PAGE>
requires.
Any sales of any product (including any of the Assets)
to any third party shall enure for the benefit of the
Purchaser provided that this transaction is completed.
9. INSURANCE
For a period of three years after the date of this Agreement, the Purchaser
shall maintain products liability insurance covering the sale of the Assets to
third parties in a minimum amount of 5 million US dollars.
10. LITIGATION
Each party shall immediately notify the other affected party of any claim of
which it becomes aware and for which it is entitled to indemnification from the
other party under this Agreement. The indemnifying party shall be obliged to
defend at the indemnifying party's sole expense any litigation or other
administrative or adversarial proceeding against the indemnified party relating
to any claim for which the indemnifying party has agreed to indemnify and hold
the indemnified party harmless under this Agreement. However, the indemnified
party shall have the right to participate with the indemnifying party in the
defence of any such claim at its own expense.
11. NOTICES
11.1. Any demand, notice or communication shall be deemed to
have been duly served:-
11.1.1. if delivered by hand, when left at the
-88-
<PAGE>
address for service provided for in this
clause 11;
11.1.2. if sent by prepaid first class post, 96
hours after being posted (excluding
Saturdays, Sundays and other days which are
not business days); or
11.1.3. if sent by facsimile, on the next business
day after transmission
provided that where, in the case of delivery by hand
such delivery or transmission occurs on a day which is
not a Business Day or after 4.00 p.m. on a Business Day,
service will be deemed to occur on the next following
Business Day.
11.2. Any demand, notice or communication must be made in
writing addressed to the addresses set out below, or
sent to the following fax numbers:
the Vendor: Bison Instruments Inc, 5610
Rowland Road, Minneapolis,
Minnesota MN 55343-8956 (Facsimile
Number: 001 612 931 0997) with a
copy to Androcan Inc, 50 Bartor
Road, Toronto, Canada M9M 2G5
(Facsimile Number: 001 416 745
9884)
the Purchaser: Douglas Equipment Limited, Village
Road, Arle, Cheltenham,
Gloucestershire GL51 0AB
(Facsimile Number: 01242 221198)
-89-
<PAGE>
12. GENERAL
12.1. Neither party may assign this Agreement in whole or in
part without first obtaining the written consent of the
other but, subject thereto, this Agreement shall be
binding on and shall enure for the benefit of each
party's permitted successors and assigns, as the case
may be.
12.2. Except for any obligation fully performed at or prior to
Completion, each of the agreements, covenants,
obligations, warranties, indemnities and undertakings
contained in this Agreement shall continue in full force
and effect notwithstanding Completion but in any event
the Vendor's liability for any of the agreements,
covenants, obligations, warranties, indemnities, or
undertakings under this Agreement shall not survive
beyond three years following the Completion Date, and
provided that the maximum liability of the Vendor under
this Agreement is limited to the sums paid to the Vendor
by the Purchaser under this Agreement.
12.3. Failure or delay by either party in exercising any right
or remedy of that party under this Agreement shall not
in any circumstances operate as a waiver of it, nor
shall any single or partial exercise of any right or
remedy in any circumstances preclude any other or
further exercise of it or the exercise of any other
right or remedy. Any waiver of a breach of, or default
under, any of the terms of this Agreement shall not be
deemed a waiver of any subsequent breach or default and
shall in no way affect the other terms of this
Agreement.
-90-
<PAGE>
12.4. The headings to the clauses of this Agreement shall not
affect its construction.
12.5. This Agreement shall be subject to the laws of England
and Wales and subject to clause 13 each party shall
submit to the exclusive jurisdiction of the English
Courts.
13. DISPUTE RESOLUTION
13.1. If any dispute arises between the parties arising from
or relating to this Agreement, the Vendor or the
Purchaser shall refer the dispute to their respective
representatives, who shall promptly discuss the dispute
with a view to its resolution.
13.2. If any dispute cannot be resolved in accordance with
Clause 13.1 within 14 days, the Purchaser or the Vendor
may require in writing that the matter be referred for
consultation between the Board of the Purchaser and the
Board of the Vendor. In this event, both the Purchaser
and the Vendor shall be represented by one or more
members of their respective Boards in consultations
which shall be held within twenty-one days of the
requirement.
13.3. If any dispute can not be resolved under clauses 13.1
and 13.2, the dispute may be referred by either party to
a person agreed by the parties or in default of
agreement within 10 Business Days to a person nominated
by the President of the Law Society in the United
Kingdom with a request that such a person make
-91-
<PAGE>
a decision on the dispute within 10 Business Days of
receiving the reference. The nominated person shall act
as an expert and not as an arbitrator and the decision
of the expert in the absence of manifest fraud or error,
shall be final and binding. Each party shall share the
costs of instructing the expert.
AS WITNESS the hands of the duly authorised representatives of the parties the
day and year first above written.
-92-
<PAGE>
SCHEDULE 1
- --------------------------------------------------------------------------
ASSETS PURCHASE
PRICE
$US
- --------------------------------------------------------------------------
1. The Stock As
determined
under clause
2.1
- --------------------------------------------------------------------------
2. Four complete and tested Ultra Chassis US$16,000
Friction Meters each
- --------------------------------------------------------------------------
3. The Software, the Records and the US$100,000
Intellectual Property Rights
- --------------------------------------------------------------------------
-93-
<PAGE>
SCHEDULE 2
THIS DEED OF COVENANT is made the day of 1998
BETWEEN:
(1) DOUGLAS EQUIPMENT LIMITED a company registered in England and Wales
(Company No: 697744) whose registered office is at Village Road,
Arle, Cheltenham, Gloucester GL51 0AB (trading as Douglas Schopf)
("the Purchaser"); and
(2) [ ] a company registered
[ ] (Company No:
[ ]) whose principal place of business is
at [] ("the Covenantor").
WHEREAS
The Purchaser has agreed to enter into an agreement with Bison Instruments Inc
("the Company") under which the Company will sell certain assets to the
Purchaser for the sums set out therein ("the Agreement") and, in consideration
of the Purchaser entering into the Agreement, the Covenantor has agreed to give
the Purchaser the covenant set out below
IT IS AGREED THAT:
1. INTERPRETATION
1.1 Words and expressions defined in the Agreement shall
have the same meaning in this Deed.
-94-
<PAGE>
1.2 In addition, "the Restriction Period" shall mean the
period of [five] years following the date hereof.
2. COVENANT
The Covenantor covenants with the Purchaser that it will not, and
will procure that any body corporate of which it has from time to
time control (within the meaning of Section 840 of the Income and
Corporation Taxes Act 1988) and that and any partnership or any
business in which it may be engaged or interested will not:
2.1 at any time during the Restriction Period, either by
itself or with or on behalf of any other person, firm or
company, directly or indirectly engage or participate
in, or carry on the business of, friction measurement
anywhere in the United States which is similar to or in
competition with the Business or the business carried on
from time to time by the Purchaser in relation to any of
the Assets;
2.2 at any time during the Restriction Period, either by
itself or with or on behalf of any other person, firm or
company, directly or indirectly engage or participate
in, or carry on the business of friction measurement
anywhere in the world (other than the United States)
which is similar to or in competition with the Business
or the business carried on from time to time by the
Purchaser in relation to the Assets;
2.3 at any time during the Restriction Period, either by
-95-
<PAGE>
itself or with or on behalf of any other person, firm or
company, directly or indirectly solicit or entice, or
endeavour to solicit or entice, away from the Purchaser
or (in relation to any business which may in any way be
in competition with any of the businesses carried on
from time to time by the Purchaser) deal with any
person, firm or company which at the date hereof, or at
any time during the period of two years prior to the
date hereof, has directly or indirectly been a customer,
agent or supplier or otherwise in the habit of dealing
with the Company or the Purchaser in connection with the
friction measurement business;
2.4 at any time subsequent to Completion represent itself as
currently being in any way connected with or interested
in any friction management business. For the avoidance
of doubt, the Covenantor may represent itself as being
connected with the friction management business which
was carried on by the Vendor prior to Completion;
2.5 at any time disclose or use any confidential information
relating to the Business or to the Company's affairs or
trade secrets.
3. The covenants contained in Clause 2 hereof shall be separate and (if
necessary) severable covenants.
4. The restrictions contained in Clause 2 are considered reasonable by
the parties but in the event that any such restrictions shall be
found to be void, but would be valid if some part thereof were
deleted or the period or area of application reduced, such
restriction shall apply with such
-96-
<PAGE>
modification as may be necessary to make it valid and effective.
5. It is hereby agreed and declared that the benefit of this Deed shall
be assignable by the Purchaser to any purchaser of its shares or any
assignee of its friction measurement business.
6. This Deed shall be subject to the laws of England and Wales and each
party shall submit to the exclusive jurisdiction of the English
Courts.
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered the day and year first before written.
EXECUTED as a DEED )
by Douglas Equipment )
Limited )
................................. Director
................................. Director/Secretary
EXECUTED as a DEED )
by the Covenantor )
................................. Director
................................. Director/Secretary
-97-
<PAGE>
SCHEDULE 3
DETAILS OF TRADE MARK
-------------------------------------------------
Trade Mark Date of Registration
Registration Number
-------------------------------------------------
MU-METER 3 June 1997 1,066,264
-------------------------------------------------
-98-
<PAGE>
SCHEDULE 4
FORM OF ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS
THIS DEED OF ASSIGNMENT is made the day of 1998
BETWEEN
(1) BISON INSTRUMENTS INC a company registered in the State of Minnesota
(Federal Identification No: 41-0947661) whose principal place of
business is at 5610 Rowland Road, Minneapolis, MN 55343-8956 ("the
Vendor");
(2) DOUGLAS EQUIPMENT LIMITED a company registered in England & Wales
(Company No: 697744) whose registered office is at Village Road,
Arle, Cheltenham. Gloucester GL51 0AB (trading as Douglas Schopf)
("the Purchaser").
WHEREAS
The parties have entered into the Sale and Purchase Agreement (as defined below)
under which the Vendor agreed to assign the Intellectual Property Rights (as
defined below) to the Purchaser on the terms and conditions set out below.
IT IS AGREED
1. DEFINITION
IN THIS ASSIGNMENT THE FOLLOWING WORDS SHALL HAVE THE FOLLOWING MEANINGS:
-99-
<PAGE>
"THE BUSINESS" means the Vendor's business associated with the sale
of the Vendor's friction measurement product line as
carried on by the Vendor prior to the date hereof;
"THE DESIGNS" means the mechanical and electronic design of the
MK4 and MK5 equipment, the mechanical and electrical
design of the Bison Self Watering System (ie speed
related system part number B707 and Dual Speed
system part number B706) and the mechanical design
of the Ultra Chassis Friction Meters;
"THE means the Trade Mark and all and any patents, patent
INTELLECTUAL applications, copyrights, trade marks, service
PROPERTY marks, registered designs, design rights, business
RIGHTS" names, know-how, database rights and any other
industrial or intellectual property rights (and
applications for any of these) and any similar or
analogous rights in any jurisdiction anywhere in the
world subsisting in any of the Records, the Software
or the Designs with the exception of those
intellectual property rights possessed by the
Purchaser prior to the date of the Sale and Purchase
Agreement and with the exception of the name "Bison
Instruments Inc, the Bison trade mark, service mark
and trade name (the "Bison Word Mark") and the Bison
graphic logo (the "Bison Logo");
-100-
<PAGE>
"THE RECORDS" means all and any drawings, papers, documents,
samples, reports, specifications, designs, manuals,
drawings, statistics, accounts, documentation,
know-how, marketing or promotional material and any
other material including any drafts, scraps or work
in progress or any other information relating to the
Stock, the Designs, the Software or the Business,
including without limitation:
(i) records of all customers to whom sales have
been made;
(ii) contact names and addresses of the Vendor's
agents and distributors in the United States,
Canada, Central America and South America and
the rest of the world; and
(iii) full details of all suppliers of any and all
components of any equipment to which any of
the Designs relate;
"THE SALE AND means the agreement dated [ ]
PURCHASE between the Vendor and the Purchaser for the sale
AGREEMENT" and purchase of the Intellectual Property Rights and
other assets;
"THE SOFTWARE" means the source code and the object code of the
Mu-Meter software and all versions and releases
thereof (including without
-101-
<PAGE>
limitation the MK4 and MK5 versions) and all
specifications and documentation relating to that
software;
"THE STOCK" means the stock of the Business including all the
test equipment as determined in the Sale and
Purchase Agreement;
"THE TRADE MARK" means the trade mark registered in the United
States details of which are set out in the Appendix
hereto and all goodwill attaching to that mark.
2. ASSIGNMENT
In consideration of the sum of (pound)1, exclusive of VAT, the receipt of which
is hereby acknowledged the Vendor hereby assigns with full title guarantee the
Intellectual Property Rights to the Purchaser absolutely.
3. GOVERNING LAW
This Assignment is subject to and shall be construed in accordance with English
law and the parties hereby irrevocably submit to the exclusive jurisdiction of
the English Courts in relation thereto.
Executed as a Deed by the above parties and is intended to be and is hereby
delivered the day and year appearing above.
EXECUTED as a Deed by )
BISON INSTRUMENTS Inc )
..................................................
-102-
<PAGE>
Director
....................
Director/Secretary
EXECUTED as a Deed )
by DOUGLAS EQUIPMENT )
LIMITED )
...................................................
Director
...................................................
Director/Secretary
APPENDIX
DETAILS OF TRADE MARK
-------------------------------------------------
Trade Mark Date of Registration
Registration Number
-------------------------------------------------
MU-METER 3 June 1997 1,066,264
-------------------------------------------------
-103-
<PAGE>
SIGNED by )
for and on behalf of )
DOUGLAS EQUIPMENT )
LIMITED ) /s/ David Toolan
SIGNED by )
for and on behalf of )
BISON INSTRUMENTS INC ) /s/ Edward G. Lampman
-104-
<PAGE>
LEASE TERMINATION AGREEMENT
THIS AGREEMENT, made and entered into this 18th day of June, 1998, by and
between LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership
(hereinafter called "Landlord") and BISON INSTRUMENTS, a Minnesota corporation
(hereinafter called "Tenant").
WITNESSETH:
WHEREAS, LANDLORD AND TENANT ENTERED INTO A LEASE DATED JULY 20, 1994 ("LEASE"),
COVERING CERTAIN PREMISES KNOWN AS SUITE 145 AND CONSISTING OF APPROXIMATELY
10,165 SQUARE FEET OF SPACE ("PREMISES") IN THE BUILDING LOCATED AT 5610 ROWLAND
POND, MINNETONKA, MINNESOTA ("BUILDING"), WHICH PREMISES ARE MORE PARTICULARLY
DESCRIBED IN SAID LEASE; AND
WHEREAS, Landlord and Tenant now desire to terminate the Lease pursuant to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the preambles and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. The Lease is hereby terminated as of October 1, 1998 (the "Effective
Date"), and thereafter the parties shall have no rights, duties or
obligations under the Lease and are hereby released therefrom,
except those which are expressly stated in the Lease to survive the
termination of the Lease.
2. In consideration of Landlord's agreement to terminate the Lease as
set forth in Section 1, Tenant hereby agrees to pay to Landlord the
following amounts:
a) A termination fee of $25,000.00, which will be paid as
of the date of this Agreement;
b) All rent due and unpaid under the Lease as of the date
of this Agreement, totaling $18,259.96; and
c) All rent due under the Lease from the date of this
Agreement to the Effective Date, totaling $27,389.94.
The parties agree that Landlord shall apply Tenant's
security deposit under the Lease, in the amount of
$5,481.00, to the amount owed under this Sub-Section C.
Tenant shall pay to Landlord the balance owed of
$21,908.94 by no later than July 1, 1998.
-105-
<PAGE>
3. This Agreement shall be governed by and construed under the laws of
the State of Minnesota.
4. This Agreement shall not be binding until executed by all parties
hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
LANDLORD:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: /s/ Doug Johnson
--------------------------
Its: Vice President
--------------------------
TENANT:
BISON INSTRUMENTS
By: /s/ Lawrence M. Martin
--------------------------
Its: General Manager
--------------------------
-106-
<PAGE>
SUBLEASE AGREEMENT
This Sublease Agreement ("Sublease"), made and entered into this 18th day of
June, 1998, by and between BISON INSTRUMENTS, a Minnesota corporation
("Sublessor'), and ENDURATEC SYSTEMS CORP., a Minnesota corporation ("Tenant").
WITNESSETH:
WHEREAS, Sublessor entered into that certain Lease dated July 20, 1994 (the
"Prime Lease"), by and between MARFIELD, BELGARDE & YAFFE ("Landlord"), as
landlord, and Sublessor, as tenant, for certain premises ("Premises") in the
building located at 5610 Rowland Pond, Minnetonka, Minnesota, a true and correct
copy of which is attached hereto as Exhibit A and made a part hereof; and
WHEREAS, Sublessor desires to sublease to Tenant that portion of the Premises
which is identified by crosshatch on the attached Exhibit B ("Subleased
Premises"), and Tenant desires to sublease the same from Sublessor, upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by
and between the parties hereto as follows:
1. SUBLEASED PREMISES. Sublessor hereby leases unto Tenant, and Tenant hereby
takes from Sublessor, in its "as is" condition the Subleased Premises.
2. TERM. The term of this Sublease shall commence on July 1, 1998, and shall
terminate as of October 1st, 1998.
3. RENT. As monthly rent ("Rent") for the Subleased Premises, Tenant will pay
monthly rent in an amount equal to 50% of Sublessor's monthly installments of
Minimum Annual Rent, Annual Operating Expenses, Taxes and other Impositions, and
other additional rent for the Premises. Tenant's Rent shall be payable in
advance, without abatement, deduction or setoff, on the Commencement Date and on
the first day of each calendar month thereafter during the Sublease Term. The
Rent as to any partial months included in the Sublease Term shall be prorated on
a daily basis.
4. ASSUMPTION OF OBLIGATIONS. Except for the rent due under the Prime Lease and
except as otherwise set forth in this
-107-
<PAGE>
Sublease, Tenant assumes and agrees to keep, obey and perform all of the terms,
covenants and conditions of Sublessor as Tenant under the Prime Lease with
respect o the Subleased Premises. Any failure by Tenant to perform, keep and
obey the same shall be a default hereunder. It is hereby understood and agreed
that Tenant's rights to use, possess and enjoy the Subleased Premises are
subject to the terms and conditions of the Prime Lease and the rights and
remedies of Landlord thereunder.
5. TITLE AND POSSESSION. Sublessor covenants and agrees that it has full right
and authority to enter into this Sublease for the full term hereof, and that
Tenant, upon paying the rents and other sums provided herein, and upon
performing the duties, covenants, agreements and obligations hereof, and upon
keeping and obeying all of the restrictions, conditions and provisions hereof,
will have, hold and enjoy quiet possession of the Subleased Premises for the
term herein granted and with all of the rights and privileges of Sublessor under
the Prime Lease with respect to the Subleased Premises except as herein
expressly excluded or modified and subject to all of said duties, covenants,
agreements, obligations, restrictions, conditions and provisions.
6. SUBLEASE AND ASSIGNMENT. It is mutually agreed that Tenant may not assign
this Sublease or further sublease any portion of the Subleased Premises without
the prior written consent of Sublessor and Landlord. Tenant shall not pledge its
interest hereunder, or allow liens to be placed on such interest, or suffer this
Sublease or any portion thereof to be attached or taken upon execution. No
assignment or further subleasing, even with the consent of Sublessor and
Landlord, shall relieve Tenant from liability for payment of the rent herein
provided for or from the obligation to keep and be bound by all of the terms,
conditions and covenants of this Sublease.
7. DAMAGE, DESTRUCTION OR CONDEMNATION. In the event of damage or destruction of
the Subleased Premises or the taking of all or any part thereof under the power
of eminent domain, this Sublease shall terminate if, but only if, the Prime
Lease is terminated as a result thereof, and the rent payable hereunder shall
abate only as long as and in the same proportion as the rent due from Sublessor
to Landlord under the Prime Lease abates as a result thereof.
8. MUTUAL RELEASE AND WAIVER OF SUBROGATION. Notwithstanding any provision of
this Sublease to the contrary, all parties hereby waive any and all rights of
recovery, claim, action or cause of action, against the others and against
Landlord, their
-108-
<PAGE>
agents (including partners, both general and limited), officers, directors,
shareholders or employees, for any loss or damage that may occur to the
Subleased Premises, or any improvements thereto, or the building of which the
Subleased Premises are a part, or any improvements thereto, or any property of
such party herein, by reason of fire, the elements, or any other cause which
could be insured against under the terms of standard fire and extended coverage
insurance policies, regardless of cause or origin, including negligence of the
other party hereto, its agents, officers or employees, and each covenants that
its insurers shall hold no right of subrogation against any other party.
9. ALTERATIONS. Any alterations, additions and improvements in or upon the
Subleased Premises shall be made by Tenant only after prior written consent by
Sublessor, which consent shall not be withheld if Landlord consents thereto.
Upon the termination of the term hereof, all such alterations, additions and
improvements (except personal property, business and trade fixtures, machinery
and equipment, furniture and movable partitions owned by Tenant) shall be and
remain part of the Subleased Premises and shall not be removed by Tenant unless
such removal is required by Sublessor, in which case Tenant shall remove the
same and restore the Subleased Premises to the same condition in which they were
on the date hereof, reasonable and ordinary wear and tear excepted. Personal
property, business and trade fixtures, machinery and equipment, furniture and
movable partitions owned by Tenant shall be and remain the property of Tenant
and may be removed by Tenant at any time during the term hereof when Tenant is
not in default hereunder. Tenant covenants and agrees to indemnify Sublessor and
Landlord against, and hold Sublessor and Landlord harmless from, all liens,
whether for labor or materials arising as the result of alterations, additions,
repairs, or improvements to the Subleased Premises made by Tenant during the
term of this Sublease.
10. DEFAULT. If the rent above referred to, or any part thereof, whether the
same be demanded or not, shall remain unpaid for a period of 5 days from the
date when due hereunder, or if any other term, condition or covenant of this
Sublease, express or implied on the part of Tenant to be kept or performed shall
be violated or neglected, and if Tenant shall fail to cure the same within ten
days from the date of written notice from Sublessor to Tenant specifying the
violations, or if the Subleased Premises or Tenant's interest therein shall be
taken on execution or other process of law, or if Tenant shall petition to be or
shall be declared bankrupt or insolvent according to law or shall enter an
assignment for the benefit of
-109-
<PAGE>
creditors, or if Tenant shall abandon the Subleased premises, or if any default
under the Prime Lease shall occur with respect to Tenant or the performance by
Tenant of any of its covenants and obligations under this Sublease, then and in
any of said cases, Tenant shall be deemed in default, and Sublessor shall have
all of the rights and remedies against Tenant which would be available to
Landlord against Sublessor in the event of a default by Sublessor under the
Prime Lease.
11. NOTICES. Any notice or communication required or permitted to be given or
served by either party hereto upon the other shall be deemed given or served in
accordance with the provisions of this Sublease when mailed in a sealed wrapper
by United States registered or certified mail, return receipt requested, postage
prepaid, property addressed as follows:
If to Sublessor: Bison Instruments
5610 Rowland Road
Minnetonka, MN 55343
If to Tenant: EnduraTEC Systems Corporation
5610 Rowland Pond Road
Minnetonka, MN 55343
Each such mailed notice or communication shall be deemed to have been given to,
or served upon, the party to which addressed on the date the same is deposited
in the United States registered or certified mail, postage prepaid, property
addressed in the manner above provided. Any party hereto may change its address
for the service of notice hereunder by serving written notice hereunder upon the
other party hereto, in the manner specified above, at least ten (10) days prior
to the effective date of such change.
12. SURRENDER OF SUBLEASED PREMISES UPON EARLY TERMINATION. Upon any early
termination of this Sublease, Tenant shall quit and surrender possession of the
Subleased Premises to Sublessor in as good order and condition as the same are
now or hereafter may be improved by Landlord, Sublessor or Tenant, reasonable
wear and tear and repairs which are Landlord's obligation excepted, and shall,
without expense to Sublessor, remove or cause to be removed from the Subleased
Premises all debris and rubbish, all furniture, equipment, business and trade
fixtures, movable partitioning and other articles or personal property owned by
Tenant or installed or placed by Tenant at its expense in the Subleased
Premises, and all similar articles of any other persons claiming under Tenant,
and Tenant shall repair all damage to the Subleased Premises resulting from such
removal.
-110-
<PAGE>
13. TERMINATION OF PRIME LEASE. It is understood and agreed by and between the
parties hereto that the existence of this Sublease is dependent and conditioned
upon the continued existence of the Prime Lease, and in the event of the
cancellation or termination of the Prime Lease, this Sublease automatically
shall be terminated; provided, however, that this provision shall not be deemed
to release Sublessor from liability if the Prime Lease is cancelled or
terminated by reason of a default by Sublessor as tenant under the Prime Lease,
which default did not result, in whole or in part, from a default by Tenant
hereunder. Sublessor shall have no liability to Tenant if the Prime Lease is
cancelled or terminated by reason of a default by Tenant hereunder, or by reason
of any condemnation or destruction of the Subleased Premises.
14. WAIVER. A waiver by Sublessor of any default, breach or failure of Tenant
under this Sublease shall not be construed as a waiver of any subsequent or
different default, breach or failure.
15. HOLDING OVER. If Tenant holds over after the early termination of the term
hereof without the express written consent of Sublessor, Tenant shall become a
tenant at sufferance only, at a rental rate equal to 150% of the rental rate in
effect upon the date of such expiration and otherwise upon the terms, covenants
and conditions herein specified, so far as applicable. Acceptance by Sublessor
of rent after such expiration or earlier termination shall not constitute a
consent to a holdover hereunder or result in a renewal. The foregoing provisions
of this paragraph are in addition to, and shall not limit, Sublessor's right of
reentry or any other rights of Sublessor hereunder or as otherwise provided by
law. In the event of any unauthorized holding over, Tenant shall indemnify
Sublessor against all claims for damages arising therefrom.
16. SUCCESSORS AND ASSIGNS. All of the terms, covenants, provisions and
conditions of this Sublease shall be biding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
17. CAPTIONS. The captions used on the paragraphs of this Sublease are for
convenience only, are not a part of this Sublease, and are not to be considered
in the interpretation hereof.
18. CONSENT OF LANDLORD. This Sublease is contingent upon approval by Landlord
manifested by Landlord's execution of the Consent to Sublease appearing below.
Unless and until Landlord executes the Consent to Sublease below, this Sublease
shall be
-111-
<PAGE>
of no force or effect, and the parties hereto shall have no liability or
obligation to each other. Tenant shall not be permitted access to the Subleased
Premises for any purpose until the Consent to Sublease below has been executed
by Landlord.
19. RELATIONSHIP OF PARTIES. This Sublease does not and shall not create the
relationship of principal and agent, or of partnership, or of joint venture, or
of any other association between Sublessor and Tenant, the sole relationship
between the parties hereto being strictly that of landlord and tenant.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed
as of the day and year first above written.
SUBLESSOR:
BISON INSTRUMENTS
By: /s/ Lawrence M. Martin
-------------------------------------------
Its: General Manager
-------------------------------------------
TENANT:
ENDURATEC SYSTEMS CORP.
By: /s/ Kent Villander
-------------------------------------------
Its: President
-------------------------------------------
CONSENT TO SUBLEASE
THE UNDERSIGNED ("LANDLORD") DOES HEREBY CONSENT TO THE FOREGOING SUBLEASE,
PROVIDED THAT SUCH CONSENT SHALL NOT RELEASE OR DISCHARGE THE SUBLESSOR FROM ANY
OF ITS OBLIGATIONS TO BE PERFORMED UNDER THE PRIME LEASE, AND FURTHER PROVIDED
THAT SUCH CONSENT IS LIMITED TO THE FOREGOING SUBLEASE ONLY, AND ANY FURTHER
ASSIGNMENT, SUBLEASE, AMENDMENT OR MODIFICATION OF THIS SUBLEASE OR THE PRIME
LEASE SHALL REQUIRE THE PRIOR WRITTEN CONSENT OF THE UNDERSIGNED PURSUANT TO OF
THE PRIME LEASE.
LANDLORD:
LIBERTY PROPERTY LIMITED PARTNERSHIP
-112-
<PAGE>
By: /s/ Douglas Johnson
---------------------------------
Its: Vice President
---------------------------------
-113-
