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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 4, 1998
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BARRINGER LABORATORIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-8241 84-0951626
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(Commission File Number) (IRS Employer Identification No.)
15000 West 6th Avenue, Suite 300, Golden, CO 80401-5047
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303/277-1687
Not Applicable
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 4, 1998 the Registrant completed the acquisition of certain
substantial assets of Shasta Geochemistry Laboratory, Inc. ("Shasta"), in an
all stock transaction, for 150,000 shares of the Registrant's common stock
and contingent consideration consisting of additional common stock in the
event certain sales goals are met. Based in Redding, California, Shasta has
enjoyed a strong reputation for the high quality of its mineral assay data
and customer service among gold mining companies in northern Nevada and
California.
The acquisition was made through an assets purchase agreement which,
although dated November 24, 1998, was not fully executed by all of the
parties thereto, making the transaction final, until December 4, 1998. The
assets acquired included customer lists, a noncompetition agreement among the
President of Shasta, Shasta and the Registrant, all goodwill of Shasta, and
unlimited access by the Registrant to Shasta's books and records.
Shasta's business is being integrated into the Registrant's 27,000
square foot Minerals Division headquarters in Reno, Nevada. Chuck Whipple,
former President of Shasta, has joined the Registrant as Laboratory Director
responsible for all aspects of operations at the Registrant's facility in
Reno.
The purchase price was arrived at by arms-length negotiations between
the parties, which took into consideration several factors, including
revenues, operations, present and future prospects of both entities and the
entities on a combined basis. Neither the Registrant nor any of its
affiliates had any material relationships with Shasta and its affiliates
prior to the transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The financial statements in respect of the event reported in Item 2
will be filed at a date not later than 60 days after the date this Form 8-K
was required to be filed.
(b) The pro forma financial information in respect of the event
reported in Item 2 will be filed at a date not later than 60 days after the
date this Form 8-K was required to be filed.
(c) Exhibits. The following exhibits are filed herewith:
<TABLE>
<CAPTION>
DESCRIPTION EXHIBIT NUMBER
<S> <C>
Assets Purchase Agreement by and among Shasta Geochemistry 98.10.1
Laboratory, Inc., Charles R. Whipple, Russell G. Whipple and Chipps
S. Whipple and Barringer Laboratories, Inc.
</TABLE>
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: December 16, 1998
BARRINGER LABORATORIES, INC.
By: /s/ J. Graham Russell
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J. Graham Russell, President
3
<PAGE>
EXHIBIT 98.10.1
ASSETS PURCHASE AGREEMENT
THIS AGREEMENT is made this 24th day of November 1998, by and among
SHASTA GEOCHEMISTRY LABORATORY, INC., a California corporation ("Seller"),
CHARLES R. WHIPPLE, RUSSELL G. WHIPPLE AND CHIPPS S. WHIPPLE (the Whipples
are hereafter collectively, jointly and severally, referred to as
"Shareholders"), and BARRINGER LABORATORIES, INC., a Delaware corporation
("Buyer").
EXPLANATORY STATEMENT
A. Shareholders own of record and beneficially all of the outstanding
shares of the capital stock of Seller, and constitute all of the directors
and officers of Seller.
B. Seller desires to sell, transfer and assign to Buyer, and Buyer
desires to purchase from Seller, Seller's goodwill, certain assets related to
the goodwill, and certain items of laboratory equipment, as described in
Section 1 below, on the terms and subject to the conditions hereinafter
contained.
AGREEMENT
In consideration of the mutual covenants, promises, agreements,
representations warranties contained in this Agreement, the parties agree as
follows:
1. PURCHASE AND SALE OF ASSETS; REGISTRATION RIGHTS; NONCOMPETITION
AGREEMENT.
1.1. PURCHASE AND SALE. On the terms and subject to the conditions
set forth in this Agreement, at Closing on the Closing Date (as set forth in
Section 10 below), Seller shall sell, transfer and assign to Buyer, and Buyer
shall purchase from Seller, all of the right, title and interest of Seller in
and to the following property and assets of Seller (the "Assets"), free and
clear of any liens, encumbrances and adverse claims except as otherwise
specifically provided herein. The following tangible and intangible assets,
interests and rights shall be sold, assigned and transferred by Seller to
Buyer in consideration of the Purchase Price (as defined below) and other
consideration, as set forth below:
1.1.1. Except for such items as are identified in Section 1.2
below, all of Seller's agreements and unfilled or partially filled orders
with Seller's customers for sales and all claims, whether or not presently
identified or existing, against past or present customers of Seller,
including but not limited to the agreements, orders, claims and prepayments
for unperformed services or undelivered goods (which the parties intend shall
be performed by or on behalf of Buyer), described in Exhibit 1.1.1 attached
hereto and made part hereof (the "Customer Agreements").
1.1.2. All of Seller's customer lists, as described in
Section 6 (all such customers on such customer lists, "Seller's Customers"),
and Seller's customer sales files.
98.10.1-1
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1.1.3. The Noncompetition Agreement among Seller, Charles R.
Whipple and Buyer as provided in Section 1.6 below.
1.1.4. All of Seller's goodwill (the "Goodwill").
1.1.5. Access to copies of all of Seller's business records
which are or may be related to the Assets, including, but not limited to,
employment and personnel records, books and records relating or pertaining to
Seller's business, including all sales records and similar data, records of
purchases or leases of services or goods from third parties, agreements or
contracts relating to Seller's business and financial data (hereinafter
collectively referred to as the "Records"). Seller shall provide access to
or deliver to Buyer the Records upon the request of Buyer, and Buyer shall
have the right to make such copies of the Records as it may desire at Buyer's
expense.
1.1.6. Seller agrees to lease and sell to Buyer, as Lessee,
such laboratory equipment (the "Laboratory Equipment") as set forth on
Exhibit 1.1.6, attached hereto and made part hereof, pursuant such lease
agreements (the "Lease Agreements") as are attached to Exhibit 1.1.6. The
lease and purchase of the Laboratory Equipment hereunder is a finance lease
by which Buyer, as provided in this Section 1.1.6 and other provisions of
this Agreement, will purchase the Laboratory Equipment and pay for it over a
period of three years, using an implied interest rate of 10% per annum, as
specified in the Lease Agreements, and upon the payment of all required
payments to Seller under the Lease Agreements, Buyer's ownership of the
Laboratory Equipment shall be free of any encumbrances or claims by Seller or
Shareholders. If, within two years following the Closing Date herein, Buyer
substantially ceases engaging in business of selling to Seller's Customers
and no longer has a need for the Laboratory Equipment, Seller shall have the
right to reacquire the Laboratory Equipment as if it were subject to a true
lease, with Buyer being obligated to pay lease payments prorated up until the
date of repossession by Seller; and after said two year period, Seller shall
have only the rights of a secured creditor. Seller and Shareholders shall at
all times keep the Laboratory Equipment free from all charges, liens,
security interests, claims and encumbrances of every kind and nature for the
benefit of any person or entity other than Seller.
1.2. EXCLUDED ASSETS; NO ASSUMPTION OF LIABILITIES. Except as set
forth in Section 1.1, no other assets of Seller, including but not limited to
billed but unpaid accounts receivable and other receivables (but excluding,
as of the Closing, any billed receivables as to which the related services or
property have not been delivered to Seller's clients or customers), shall be
sold, transferred or assigned to Buyer; nor shall any liability whatsoever of
Seller be assumed by Buyer.
1.3. PURCHASE PRICE FOR THE ASSETS; ALLOCATIONS.
1.3.1. The purchase price for the Assets identified in
Section 1.1 above (except for the Laboratory Equipment) shall be 150,000
shares of the common stock ("Common Stock"), $.01 par value, of Buyer (the
"Purchase Price"), subject to adjustment as provided in Sections 1.3.2 and
1.3.3 below.
98.10.1-2
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1.3.2. Seller shall receive one additional share of Buyer's
Common Stock for each $2.00 that, as of the date one year from the Closing
Date, total gross revenues collected by Buyer from Seller's Customers listed
on Exhibit 6 exceeds $300,000, up to a maximum of 150,000 additional shares;
provided, however, that no fractional share of Common Stock shall be issued.
Any additional shares under this Section 1.3.2 shall be issued to Seller
within 15 business days after such date one year after the Closing Date.
1.3.3. Seller shall receive one additional share of Buyer's
Common Stock for each $2.00 that, during the one year period ending on and as
of the date two years after the Closing Date, total gross revenues collected
by Buyer from Seller's Customers listed on Exhibit 6 exceeds $600,000;
provided, however, that the total number of shares of Buyer's Common Stock
received by Seller in this transaction under Sections 1.3.1 and 1.3.2 and
this Section 1.3.3 shall not in any case exceed 300,000; and provided
further, that no fractional share of Common Stock shall be issued. Any
additional shares under this Section 1.3.3 shall be issued to Seller within
15 business days after such date two years after the Closing Date.
1.3.4. The parties agree that the above Purchase Price, set
forth in Sections 1.3.1 through 1.3.3, for the Assets described in Section
1.1, shall be based on the Stock Value (as defined below), and shall be
allocated as follows:
<TABLE>
<S> <C>
Customer Lists 50%
Noncompetition Agreement 50%
</TABLE>
The "Stock Value" per share of Buyer's common stock shall be the average bid
price for the last five trading days on which the common stock was traded on
the NASDAQ Bulletin Board Market preceding the Closing Date.
The parties agree to negotiate in good faith to adjust the foregoing
allocations.
1.3.5. RESTRICTIONS ON SALE OF STOCK. Notwithstanding
anything herein to the contrary, no more than 50,000 shares of the Common
Stock received by Seller pursuant to Sections 3.1.1 through 3.1.3 above may
be sold in each of the first three years following the Closing Date.
1.5. BUYER'S DUE DILIGENCE. Between the date hereof and Closing,
Seller shall give to Buyer and its accountants, counsel and other
representatives access, during normal business hours, to Seller's books,
records, contracts and commitments. Seller and Shareholders shall also
furnish Buyer during such period with all information concerning Seller's
affairs (including Shareholders' affairs insofar as Shareholders' affairs are
pertinent to Seller's business, this Agreement and the Assets) that Buyer
reasonably requests. Buyer and its agents shall keep such information
confidential until Closing, and in the event that this Agreement is
terminated before Closing, shall return all confidential information to
Seller.
1.6. NONCOMPETITION AGREEMENT. As of Closing, Seller, Charles R.
Whipple and Buyer shall enter into the Noncompetition Agreement, in the form
attached as Exhibit 1.6 and
98.10.1-3
<PAGE>
made part of this Agreement, under which Seller and Charles R. Whipple shall
agree not to compete with the business of Buyer for a period of time as set
forth therein.
2. EMPLOYMENT AGREEMENT. As of Closing, Buyer and Charles R. Whipple
shall enter into the Employment Agreement, in the form attached as Exhibit 2
and made part of this Agreement, under which Buyer shall agree to employ Mr.
Whipple, and Mr. Whipple shall agree to provide services to Buyer for a
period of two years after the Closing Date.
3. LIABILITIES OF SELLER AND SHAREHOLDERS. In spite of anything in this
Agreement to the contrary, Seller and Shareholders shall be and remain solely
liable and responsible for all debts, obligations, duties, and liabilities of
Seller and Seller's business; and in particular, Seller and Shareholders
shall be and remain solely liable and responsible for all events and
circumstances occurring or existing up to the time of Closing, including such
events and circumstances with respect to the Assets. Buyer does not and
shall not assume, agree to pay or pay any debts, obligations, duties or
liabilities of any nature of Seller, of Shareholders or of or related to
Seller's business, including, but not limited to, any debts, obligations,
duties or liabilities relating to Seller's employees or employee benefit
plans, regardless of whether any such debt, obligation, duty or liability
arises under any contract, agreement, practice, arrangement, law or
otherwise. Nothing in this Agreement or otherwise is intended or shall be
construed to the contrary. The parties further agree that Buyer shall not be
obligated to employ any of Seller's employees, except for Charles R. Whipple
as provided in Section 2.
4. CREDITOR MATTERS.
4.1. PRESENT AND REASONABLY EQUIVALENT VALUE. The transactions
contemplated by this Agreement are intended by the parties to be a
contemporaneous exchange between Seller and Buyer and will be accomplished at
the Closing Date contemporaneously. The transactions contemplated by this
Agreement represent a regularly conducted, noncollusive sale and have been
negotiated by the parties and their respective professional advisors in an
arm's-length manner with due regard for the respective obligations of the
parties and value of the Assets.
4.2. LIST OF CREDITORS. Promptly following the execution of this
Agreement, Seller and Shareholders shall provide Buyer with a list of all
existing creditors of Seller. Seller and Shareholders shall also include on
such list any creditors of any of Shareholders where such creditors could
make a claim against Seller, the business of Seller, any assets or property
held or used by Seller, or the Assets. Existing creditors shall include any
person who has a right to payment, whether or not the right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured. The list of
creditors will be signed and sworn to or affirmed by Seller and Shareholders
and will contain the names and business addresses all such creditors of
Seller and Shareholders with the amount of each claim or a reasonable
estimate of the amount. The Treasurer or other official, as the case may be,
of the county or counties wherein any of the property being transferred under
this Agreement is located or deemed to be located shall be listed as a
creditor regarding all taxes, assessments, or other charges which may be
levied on the Assets. Seller and Shareholders warrant and represent that the
list of creditors to be furnished under
98.10.1-4
<PAGE>
this paragraph shall be accurate and complete without any omission or
deletions, and said list shall be attached as Exhibit 4.2 and made part of
this Agreement.
4.3. PAYMENT TO CREDITORS. At or prior to Closing, Seller and
Shareholders agree that all debts which are or could be or result in a
charge, lien or encumbrance against the Assets shall be paid. The parties
agree to cooperate together to assure that, before Closing, all such debts as
are to be thus paid are identified, that such procedures are acceptable to
all the creditors, and thus the tender of such monies will be sufficient to
satisfy all claims of such creditors with respect to such debts.
5. REMOVAL OF ASSETS. Seller shall assemble by the time of Closing on
the Closing Date and thereafter maintain at Seller's premises and place of
business (the "Premises") all of the Assets (except for certain Records and
other documents which, as provided herein, shall be delivered by Seller to
Buyer at or before Closing or access to which may be requested by Buyer; and
except for such property as may be held by customers of Seller in conjunction
with Seller's business) being purchased by Buyer under this Agreement in
order to facilitate the time, place and delivery of the Assets to Buyer
concurrently with and following Closing as provided in this Agreement.
6. CUSTOMER LISTS AND RECORDS. Promptly following the execution of
this Agreement, Seller shall furnish Buyer with a list of all of Seller's
Customers, which shall include a complete and correct list of all of Seller's
past and present customers and their addresses (insofar as Seller possesses
records of past customers) which shall be attached as Exhibit 6 and made part
of this Agreement (the "Customer List"). Seller shall further provide such
other and further information as Buyer may from time to time reasonably
request in respect of the business of Seller, including customer sales files
and applicable portions of the Records.
7. APPROVALS, CONSENTS, PERMITS, LICENSES AND AUTHORIZATIONS. The
parties shall use their best efforts to obtain such approvals, consents,
permits, licenses and authorizations, if any, required under any laws or
regulations, by any governmental authority, or by any third parties, pursuant
to any existing agreements, leases, loans or otherwise, as may be required to
lawfully complete the transactions set forth in this Agreement. Seller and
Shareholders, jointly and severally, agree to cooperate fully, execute,
acknowledge and deliver such instruments and documents and take all such
other and further actions as may be necessary or desirable in order to obtain
such approvals, consents, permits, licenses and authorizations.
8. REPRESENTATIONS AND WARRANTIES.
8.1. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS.
Seller and Shareholders, jointly and severally, represent and warrant to
Buyer as of the date hereof and as of Closing that:
8.1.1. OWNERSHIP OF SELLER'S STOCK. Shareholders are the sole
and exclusive record and beneficial owner of all of the outstanding shares of
the capital stock of Seller, and constitute all of the directors and officers
of Seller. Seller's only authorized class of capital stock is common stock,
no par value, of which 602.8 shares are issued and
98.10.1-5
<PAGE>
outstanding. The Shareholders individually wholly own the following numbers
of outstanding shares, and there are no other beneficial owners: Charles R.
Whipple, 360.5 shares; Russell G. Whipple, 145.7 shares; and Chipps S.
Whipple, 96.6 shares. All of the foregoing issued and outstanding shares are
fully paid and non-assessable, and none of the outstanding shares are subject
to any liens, encumbrances, restrictions, adverse claims, voting trusts or
voting agreements, nor have any such shares been pledged. Shareholders have
the absolute and unconditional right, power and authority to cause Seller to
sell, assign, transfer and deliver the Assets to Buyer in accordance with the
terms of this Agreement and to consummate the transactions set forth in this
Agreement. There are no existing subscriptions, options, warrants or
agreements for Seller to issue any additional shares stock or for
Shareholders to sell or otherwise dispose of their shares of stock. Seller
has neither declared nor paid any dividends nor made any distributions on its
stock within the past 24 months.
8.1.2. DUE ORGANIZATION; NAME AND ADDRESS; GOOD STANDING,
AUTHORITY OF SELLER. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. Seller has
full right, power and authority to own, lease and operate its properties and
assets, and to carry on its business. Seller is duly licensed, qualified and
authorized to do business in each jurisdiction in which the properties and
assets owned by it or the nature of the business conducted by it make such
licensing, qualification and authorization legally necessary. Seller is not
in breach or violation of, and the execution, delivery and performance of
this Agreement will not result in a breach or violation of, any of the
provisions of Seller's articles of incorporation (the "Articles") or bylaws
(the "Bylaws").
8.1.3. AUTHORIZATION AND VALIDITY OF AGREEMENTS. Seller and
Shareholders have the legal capacity, right, power, and authority to enter
into this Agreement and the agreements made part of this Agreement. The
execution and delivery of this Agreement by Seller and Shareholders and the
performance by Seller and Shareholders of the transactions as set forth in
this Agreement have been duly and validly authorized by all necessary
corporate and Shareholder actions. This Agreement has been duly executed and
delivered by Seller and Shareholders and is the legal, valid and binding
obligation of Seller and Shareholders, enforceable against Seller and
Shareholders in accordance with its terms. The agreements and documents made
part of this Agreement, when duly executed and delivered by Seller and
Shareholders, will be the legal, valid and binding obligations of Seller and
Shareholders, respectively, enforceable against Seller and Shareholders,
respectively, in accordance with their terms except as such enforceability
may be limited by general principles of equity, bankruptcy, insolvency,
moratorium and similar laws relating to creditors' rights generally.
8.1.4. AGREEMENT NOT IN CONFLICT WITH OTHER INSTRUMENTS;
REQUIRED APPROVALS OBTAINED. The execution, delivery and performance of this
Agreement and the agreements and documents made part of this Agreement and
the consummation of the transactions contemplated by this Agreement and such
agreements and documents will not (a) violate or require after Closing any
consent, approval, or filing under, (i) any law, statute, rule, regulation of
any government or governmental authority, or (ii) any judgment, injunction,
order, writ or decree of any court, arbitrator, or governmental authority by
which Seller, any of the Assets or any of Shareholders is bound; (b) conflict
with or after Closing require any consent, approval, or filing under, result
in the breach, default or termination of any provision of, or result in the
creation of any claim, security interest, lien, charge, or encumbrance upon
any of the
98.10.1-6
<PAGE>
Assets pursuant to, (i) Seller's Articles or Bylaws, (ii) any indenture,
mortgage, deed of trust, license, permit, approval, consent, franchise,
lease, contract, or other instrument, document or agreement to which Seller
or any of Shareholders is a party or by which Seller, any of Shareholders or
any of the Assets is bound, or (iii) any judgment, injunction, order, writ or
decree of any court, arbitrator, governmental authority by which Seller, any
of the Assets or any of Shareholders is bound. All permits, licenses,
consents, approvals and authorizations required by any laws or regulations,
governmental authorities or third parties to be obtained prior to Closing,
shall have been obtained and shall be in full force and effect as of the
Closing Date.
8.1.5. CONDUCT OF BUSINESS IN COMPLIANCE WITH REGULATORY AND
CONTRACTUAL REQUIREMENTS. Seller has conducted and is conducting its business
in compliance with all applicable laws and governmental regulations and all
contracts and agreements to which Seller or any of Shareholders may be a
party. The Seller's assets and property and the use, operation, maintenance
and sale thereof (i) are in compliance with all applicable laws and
regulations, and (ii) are in compliance with all restrictions, covenants,
agreements, contracts, commitments, understandings and arrangements
applicable with respect thereto.
8.1.6. LEGAL PROCEEDINGS. There is no action, suit,
proceeding, claim or arbitration, or any investigation by any person or
entity, including, but not limited to, any governmental authority, (i)
pending (or to the knowledge of Seller or any of Shareholders, threatened),
to which Seller or any of Shareholders is or may become a party, against or
relating to Seller, Seller's business or any of the Assets, or (ii)
challenging Seller's or Shareholders' right to execute, deliver, perform or
complete the transactions set forth in this Agreement or the agreements and
documents made part of this Agreement, or (iii) asserting any right with
respect to any of the Assets.
8.1.7. FINANCIAL INFORMATION. Attached hereto and made part
hereof as Exhibit 8.1.7 are copies of the unaudited Balance Sheets of Seller
as of September 30, 1998 and June 30, 1997 and 1996 and the Operating
Statements of Seller for the nine months ended September 30, 1998 and the
years ended June 30, 1997 and 1996, and provided by Seller and Shareholders
to Buyer (the "Financial Statements"). The Financial Statements are in
accordance with the books and records of Seller, are true, correct and
complete and accurately present Seller's financial position as of the dates
set forth therein and the results of Seller's operations for the periods then
ended; all such Financial Statements are in conformity with the accounting
principles historically utilized by Seller and applied on a consistent basis
during each period and on a basis consistent with that of prior periods.
8.1.8. TAX MATTERS. Attached hereto as Exhibit 8.1.8 are
complete and correct copies of the income tax returns of Seller for Seller's
four most recent fiscal years (collectively, the "Returns"), as filed by
Seller with the Internal Revenue Service (the "IRS"). All information
reported on the Returns is true, accurate, and complete. Seller is not a
party to, and is not aware of, any pending or threatened action, suit,
proceeding, or assessment against it for the collection of taxes by any
government or governmental authority or agency, and has duly and timely filed
with all appropriate governmental authorities or agencies all tax returns,
information returns, and reports required to be filed by Seller. Except for
accruals for taxes payable (the "Accrued Taxes") as set forth in Seller's
Balance Sheet as of September 30, 1998
98.10.1-7
<PAGE>
(the "Balance Sheet") and accruals for the period of time thereafter until
Closing, which are not presently due and payable, Seller has paid in full all
taxes, interest, penalties, assessments and deficiencies owed by Seller to
all taxing authorities. All taxes and other assessments and levies which
Seller is required by applicable Law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities or agencies or are properly held by Seller for such payment. All
claims by the IRS or any state or local taxing authorities for taxes due and
payable by Seller have been paid by Seller. The provisions for the Accrued
Taxes are adequate for the payment of all of Seller's liabilities for unpaid
taxes (whether or not disputed). For all federal income tax returns examined
by the IRS, such examinations have been completed and any deficiencies or
assessments claimed or made have been paid or settled. There are no pending
examinations by the IRS for any periods of time up to the date of this
Agreement of which Seller or Shareholders are aware or which Seller or
Shareholders have reason to anticipate will be conducted by the IRS. Seller
is not a party to, and Seller and Shareholders are not aware of, any suit,
proceeding, or assessment against Seller for the collection of taxes by any
taxing authority.
8.1.9. TITLE TO THE ASSETS; ALL ASSETS OF SELLER. Seller has,
or will have as of Closing, as provided in Sections 4 and 10 herein, sole and
exclusive, good and marketable title to all of the Assets free and clear of
any and all pledges, claims, threats, liens, restrictions, agreements,
leases, security interests, charges and encumbrances. All of the Laboratory
Equipment is in good, working and operating condition and repair, reasonable
wear and tear excepted, fit for their intended purposes, and free from any
defects known to Seller or to Shareholders. All of the Assets (as defined in
Section 1.1 above) have been and will by Closing be identified to Seller and
sold, assigned and transferred to Buyer as provided by this Agreement with no
exclusions.
8.1.10. RECORDS. The Customer List and Records, including, but
not limited to, the lists of Seller's customers and sales files, that have
been delivered by Seller to Buyer or access to which has been made available
to Buyer; or that shall be delivered by Seller to Buyer or made accessible to
Buyer, are true, complete and correct.
8.1.11. EMPLOYMENT MATTERS. None of Seller's employees are
covered by a collective bargaining agreement or are represented by a labor
organization, and Seller and Shareholders are not aware of any union
organizational activity. Seller has complied with all laws and regulations
concerning its employees, and there are no pending or threatened proceedings
or lawsuits by or on behalf of any former or current employee before any
court or government agency. Seller has not entered into any employment
agreements with any of its employees, and all employees may be terminated at
will. Seller has paid all wages, bonuses, commissions and other benefits and
sums due (and all required taxes, insurance, social security and withholding
thereon), including all accrued vacation, accrued sick leave, accrued
benefits and accrued payments (and pro rata accruals for a portion of a year)
to its employees. Seller has maintained in effect all insurance policies and
other employee benefits covering any employee claims incurred through the
Closing Date. Buyer is under no obligation or duty, whether under any
contract or otherwise, relating to compensation or benefits for Seller's
employees, arising out of or in connection with the transactions contemplated
by this Agreement, and Seller has made no commitment and is under no
obligation to cause Buyer
98.10.1-8
<PAGE>
to assume or to be responsible for any such obligation, duty or liability to
any of Seller's employees.
8.1.12. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September
30, 1998, Seller has not:
8.1.12.1. Incurred any indebtedness, obligation, duty or
liability (contingent or otherwise) or acted as a guarantor or surety of any
debt, except normal trade or business obligations incurred in the ordinary
course of Seller's business, as such business has been operated historically,
or incurred any debt to any of Shareholders.
8.1.12.2. Subjected to pledge, lien, charge, claim,
security interest, agreement, deed of trust or encumbrance any of the Assets.
8.1.12.3. Sold, assigned, transferred, leased, disposed
of, or agreed to sell, assign, transfer, lease, or dispose of, any of the
Assets, except in the ordinary course of Seller's business, as such business
has been operated historically, at the full prices and rates currently in
effect, without discount or rebate.
8.1.12.4. Canceled or compromised any amounts due to or
claims of Seller or waived or released any of its rights against persons
which debts, claims or rights otherwise, pursuant to the terms hereof,
possibly could accrue to the benefit of Buyer.
8.1.12.5. Made any capital expenditure in excess of
$1,000.00 or entered into any contract, agreement, arrangement, understanding
or commitment therefor; or acquired or leased any assets or property of any
third person or party other than in the ordinary course of Seller's business,
as such business has been operated historically.
8.1.12.6. Suffered any casualty loss or damage, whether
or not such loss or damage is or was covered by insurance.
8.1.12.7. Suffered any adverse change in Seller's
operations, earnings, assets, liabilities, or business (financial or
otherwise).
8.1.12.8. Changed the nature or manner of operation of
Seller's business, the method of Seller's accounting or Seller's fiscal year.
8.1.12.9. Other than in the ordinary course of Seller's
business, as such business has been operated historically, made any payment
or entered into any transaction, contract, agreement, lease, arrangement,
understanding or commitment.
8.1.12.10. Failed to pay any indebtedness or other
obligation, including any taxes and other charges, when due.
8.1.12.11. Increased any salary, wages or other
remuneration or benefits to any officer, director or employee of Seller.
98.10.1-9
<PAGE>
8.1.12.12. Dissolved, liquidated, or made any change to
the corporate structure of organization or the capital stock or formed or
acquired any interest in any subsidiary, person or entity.
8.1.12.13. Entered into any transaction with any of
Shareholders except in the ordinary course of business.
8.1.13. ADVERSE CONDITIONS. Neither Seller nor any of
Shareholders has any knowledge of any past, present or future condition,
state of facts or circumstances which has affected or which might affect
adversely the business of Seller or prevent Buyer from carrying on Seller's
business with respect to the Assets. None of Seller or Shareholders is a
party to any contract or agreement which might or could adversely affect
their performance under this Agreement or which could adversely affect
Buyer's interests with respect to this Agreement and the Assets. Seller
maintains adequate policies of insurance, consistent with good commercial
practices, to protect the business, property and assets of Seller, and said
policies are sufficient to replace the Assets in the event of casualty or
loss.
8.1.14. FULL DISCLOSURE. This Agreement (including the
Exhibits hereto) does not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained
herein not misleading. There is no fact known to Seller or to any of
Shareholders which is not disclosed in this Agreement which materially
adversely affects the accuracy of the representations and warranties
contained in this Agreement or Seller's financial condition, operations,
business, earnings, assets, or liabilities. All material contracts of Seller
have been disclosed to Buyer and copies of such contracts provided to Buyer.
All material contracts of any of Shareholders relating to or which could
affect the business or affairs of Seller or the Assets have been disclosed to
Buyer and copies of such contracts provided to Buyer. Seller and
Shareholders have complied with all such contracts and are not in default or
breach of any of them.
8.1.15. NO BROKERAGE. Neither Seller nor any of Shareholders
has incurred any obligation or liability, contingent or otherwise, for
brokerage fees, finder's fees, agent's commissions, or the like in connection
with this Agreement or the transactions contemplated hereby.
8.1.16. CUSTOMERS. Neither Seller nor any of Shareholders are
aware that any customer of Seller intends to cease doing business with Seller
or intends to alter adversely the amount of business such customer has done
with Seller.
8.1.17. OPERATION OF BUSINESS. Since September 30, 1998,
Seller and Shareholders have used, and from the date hereof until Closing
Seller and Shareholders shall use their best efforts to preserve the business
of Seller and the Assets. Since September 30, 1998, Seller and Shareholders
have maintained and preserved, and from the date hereof until Closing Seller
and Shareholders shall maintain and preserve Seller's business and the Assets
at or above the levels at which the business was previously operated and at
or above the amounts and values previously represented to Buyer, and the
relationship of Seller with its suppliers and customers.
98.10.1-10
<PAGE>
8.1.18. DISCLAIMER OF FRAUDULENT INTENT. Seller and
Shareholders, jointly and severally, represent and warrant that the
transactions described in this Agreement have been undertaken by them in good
faith, considering their obligations to any person or entity to whom Seller
and Shareholders owe a right to payment, whether or not the right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured (collectively
such persons with such claims are called "Creditors" under this paragraph),
and have undertaken these transactions without any intent to hinder, delay or
defraud any such Creditors, and have not and will not conceal this
transaction or the proceeds of this transaction from any such Creditors.
Seller and Shareholders further represent and warrant that: (1) they will
not retain possession or control of any of the property transferred under
this Agreement following Closing, except as expressly provided in this
Agreement and then only for and on behalf of the account of Buyer; (2) Seller
and Shareholders have not been sued or threatened with suit by any Creditor
prior to the execution of this Agreement, except as fully disclosed in an
exhibit to this Agreement; (3) Seller and Shareholders have not removed or
concealed any assets from any Creditors; (4) Seller and Shareholders have not
incurred any individual or aggregate substantial debt in connection with the
Assets or business of Seller that is significantly greater than the normal
and customary debts of Seller and Shareholders in the ordinary course of
business; (5) Seller and Shareholders do not contemplate and have no reason
to contemplate that they will seek protection under the bankruptcy laws; and
(6) Seller and Shareholders at Closing believe in good faith that Seller and
Shareholders will receive consideration reasonably equivalent to the value of
the Assets transferred under this Agreement.
8.1.19. REPRESENTATIONS AS TO SOLVENCY. Seller and
Shareholders, jointly and severally, represent and warrant that:
8.1.19.1. Prior to Closing, Seller and Shareholders
respectively will not engage in any business or transaction for which the
remaining respective assets of Seller and Shareholders are unreasonably small
in relation to the business or transactions in which they undertake or intend
to engage;
8.1.19.2. Prior to Closing, Seller and Shareholders
respectively have not incurred, do not intend to incur and have no reasonable
basis to believe that they will incur any debts beyond their respective
ability to pay as they become due;
8.1.19.3. Prior to Closing, Seller and Shareholders
respectively have and will continue to have assets greater than Seller's and
Shareholders' respective debts, based upon a fair valuation;
8.1.19.4. Prior to Closing, Seller and Shareholders
respectively shall have paid and will pay their debts as they become due; and
8.1.19.5. Buyer is entitled to rely upon the foregoing
representations in asserting that Buyer has no reasonable cause to believe
that Seller or Shareholders are or will become insolvent as a result of the
transactions contemplated by this Agreement.
98.10.1-11
<PAGE>
8.1.20. INVESTMENT REPRESENTATIONS AND ACKNOWLEDGMENTS.
Seller and Shareholders, jointly and severally, hereby represent, warrant and
acknowledge to Buyer, and to the directors, officers and control persons of
Buyer that:
8.1.20.1. Seller and Shareholders have received and read,
and are familiar with, the contents of the Buyer's most recent Form 10-KSB,
Form 10-QSB and Proxy Statement.
8.1.20.2. The shares of Common Stock of Buyer that
comprise the purchase price (the "Purchase Price") for the Assets, as set
forth in Section 1.3, will be acquired by Seller for investment only, for
Seller's own account, and not with a view to, for offer for sale or for sale
in connection with, the distribution or transfer thereof. The shares of
Common Stock of Buyer that comprise the Purchase Price are not being acquired
for subdivision or fractionalization thereof; and neither Seller nor any of
Shareholders has any contract, undertaking, agreement or arrangement with any
person or entity to sell, hypothecate, pledge, donate or otherwise transfer
(with or without consideration) to any such person or entity any shares of
Common Stock of Buyer that comprise the Purchase Price, and neither Seller
nor any of Shareholders has any present plans or intention to enter into any
such contract, undertaking, agreement or arrangement.
8.1.20.3. The present financial condition of Seller is
such that it is under no present or contemplated future need to dispose of
any portion of the shares of Common Stock of Buyer that comprise the Purchase
Price to satisfy any existing or contemplated undertaking, need or
indebtedness.
8.1.20.4. Seller and Shareholders acknowledge their
awareness and understanding of the following:
(i) The acquisition of the Common Stock comprising the
Purchase Price constitutes a speculative investment which involves a high
degree of risk of loss of Seller's entire investment in such Common Stock.
(ii) No federal or state agency has made any finding or
determination as to the fairness for public investment, nor any
recommendation or endorsement, of the Common Stock.
(iii) There are restrictions on the transferability of
the shares of Common Stock of Buyer that comprise the Purchase Price, as
set forth herein and as provided under applicable state and federal
securities laws; and, accordingly, it may not be possible for Seller to
liquidate readily, or at all, its investment in Buyer in case of an
emergency or otherwise.
(iv) The shares of Common Stock of Buyer that comprise
the Purchase Price have not been registered under either the federal
Securities Act of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and, therefore, cannot be resold unless they are registered
under the Act and the State Acts or unless
98.10.1-12
<PAGE>
an exemption from such registration is available, in which event Seller
might still be limited as to the number of shares of Common Stock of
Buyer that may be sold.
(v) The stock certificates of Buyer that will evidence
the shares of Common Stock comprising the Purchase Price will be imprinted
with a conspicuous legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts"), and shall
not be sold, pledged, hypothecated, donated or otherwise
transferred (whether or not for consideration) by the holder
except upon the issuance to the Company of a favorable opinion of
its counsel or submission to the Company of such other evidence
as may be satisfactory to counsel to the Company, to the effect
that any such transfer shall not be in violation of the Act and
the State Acts."
(vi) Buyer has not agreed to register any of Seller's
shares of Common Stock of Buyer for distribution in accordance with the
provisions of the Act or the State Acts, and Buyer has not agreed to comply
with any exemption from registration under the Act or the State Acts for
the resale of Seller's shares of Common Stock of Buyer. Hence, it is the
understanding of Seller that by virtue of the provisions of certain rules
respecting "restricted securities" promulgated by the SEC, the shares of
Common Stock of Buyer for which Seller is subscribing hereby may be
required to be held for certain periods of time or indefinitely, unless and
until registered under the Act and the State Acts, unless an exemption from
such registration is available, in which case Seller may still be limited
as to the number of shares of Common Stock of Buyer that may be sold.
(vii) All instruments, documents, records and books
pertaining to Seller's investment the Common Stock of Buyer have been made
available for inspection by Seller, Shareholders and their representatives,
as they have reasonably requested, and the books and records of Buyer will
be available upon reasonable notice, as reasonably requested, for
inspection by Seller, Shareholders or their representatives during
reasonable business hours at its principal place of business. There has
been and remains available to Seller and any of Shareholders or their
representatives, by contacting J. Graham Russell, President of Buyer, the
opportunity to ask questions and receive answers concerning the terms and
conditions of Seller's acquisition of Common Stock comprising the Purchase
Price and to obtain any additional information which Buyer possesses or can
obtain without unreasonable effort or expenses that is necessary to verify
the merits and risks of this investment in the Common Stock of Buyer
comprising the Purchase Price and the information contained in Buyer's most
recent Form 10-KSB, 10-QSB, Proxy Statement, and other reports and forms
relating to securities laws and publicly filed with the Securities and
Exchange Commission or state regulatory agencies.
8.1.20.5. CERTAIN AGREEMENTS RESPECTING COMPLIANCE WITH
SECURITIES LAWS. Seller and Shareholders agree that the shares of Common
Stock of Buyer
98.10.1-13
<PAGE>
that comprise the Purchase Price will not be transferable under any
circumstances except upon the conditions specified in this Section 8.1.20.6.
Seller and Shareholders realize that Seller, by becoming a holder of shares
of Common Stock of Buyer (subject to the restrictions set forth in the
aforesaid legends), agrees, prior to any transfer of shares of the Common
Stock of Buyer, to give written notice to Buyer expressing the desire of
Seller to effect such transfer and describing briefly the proposed transfer.
Upon receiving such notice, Buyer shall present copies thereof to counsel to
Buyer and the following provisions shall apply:
(i) If, in the opinion of such counsel, the proposed
transfer of shares of the Common Stock of Buyer may be effected without
registration under the Act and the State Acts, Buyer will promptly
thereafter notify Seller thereof, whereupon Seller shall be entitled to
transfer such shares of Common Stock of Buyer in accordance with the terms
of the notice delivered by Seller to Buyer and upon such further terms and
conditions as shall be required by Buyer to assure compliance with the Act
and the State Acts; and Buyer will deliver, upon surrender of the stock
certificate representing such shares of Common Stock of Buyer, in exchange
therefor, a new certificate not bearing a legend of the character set forth
in Section 8.20.5, if such counsel agrees that such securities legend is no
longer required under the Act and the State Acts.
(ii) If, in the opinion of such counsel, the proposed
transfer of the shares of Common Stock of Buyer may not be effected without
registration under the Act and the State Acts, a copy of such opinion shall
be delivered promptly to Seller, and such proposed transfer shall not be
made unless such registration is then in effect or such transfer can be
accomplished under an applicable exemption from registration as provided
above.
8.2. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller and Shareholders, as of the date of this Agreement and as
of Closing that:
8.2.1. DUE ORGANIZATION; GOOD STANDING; POWER. Buyer is a
corporation duly incorporated, validly existing, and in good standing under
the laws of the State of Delaware. Buyer has full right, power and authority
to enter into this Agreement and the agreements made part of this Agreement
and to perform its obligations hereunder and thereunder.
8.2.2. AUTHORIZATION AND VALIDITY OF DOCUMENTS. The execution,
delivery and performance by Buyer of this Agreement and the agreements made
part of this Agreement and the transactions contemplated hereby and thereby,
have been duly and validly authorized by Buyer. This Agreement has been duly
executed and delivered by Buyer and is a legal, valid and binding obligation
of Buyer, and the agreements made part of this Agreement, when executed, will
be legal, valid and binding obligations of Buyer, each enforceable against
Buyer in accordance with its terms. except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium
and similar laws relating to creditors' rights generally.
98.10.1-14
<PAGE>
9. PARTICULAR COVENANTS.
9.1. AFFIRMATIVE COVENANTS. Seller and each of Shareholders,
jointly and severally, covenant, promise and agree that from the date hereof
and afterwards until this Agreement is fully performed or such earlier time
as otherwise provided herein, Seller and Shareholders shall, and Shareholders
shall cause Seller to:
9.1.1. Continue until Closing to operate the business of
Seller diligently, including the payment of all ongoing operating debts,
expenses, payables, insurance and taxes; and not take any action, omit to
take any action, or engage in any transaction other than such acts or
transactions in the ordinary course of business, as such business has been
operated historically.
9.1.2. Preserve the business of Seller until Closing and
preserve the relationship of the business with suppliers, customers and
others, including the maintenance and repair of the Laboratory Equipment
until Closing and maintaining all insurance policies in force until Closing.
9.1.3. Exert their best efforts to prevent the occurrence of
any event which could result in any of Seller's or Shareholders'
representations and warranties contained in this Agreement not being true and
correct as of the date of this Agreement or thereafter as may affect the
Assets, the performance of any portion of this Agreement or any of Buyer's
rights under this Agreement, and Seller and Shareholders shall promptly
notify Buyer of the occurrence of any event or the discovery of any fact
which would cause any of their covenants, promises and agreements to be
breached or violated or any of their representations and warranties to become
not true and correct or which could interfere with or prevent the completion
of the transactions or other performance contemplated by this Agreement.
9.1.4. Provide Buyer and its representatives with full access
during normal business hours to all of Seller's properties, the Assets and
the Records, (ii) provide Buyer and its representatives with such financial
and operating data and other information with respect to Seller's business
and properties as Buyer shall from time to time request, (iii) cooperate with
Buyer in confirming any agreements with customers, suppliers or other persons
and whether customers or others possess any of the Assets, and (iv) permit
Buyer and its representatives to consult with Seller's representatives,
officers, employees and accountants.
9.2. RISK OF LOSS. All risk of loss or damage to or destruction of
the Assets, in whole or in part, shall be and remain with Seller and
Shareholders until Closing. In the event of such loss, damage, or
destruction, Seller and Shareholders, to the extent reasonable, shall replace
the lost property or repair or cause the repair of the damaged property to
its condition prior to the damage. If replacements, repairs, or restorations
are not completed prior to Closing and will not be covered by Seller's
insurance, then the Purchase Price shall be adjusted by an amount agreed upon
by Buyer and Seller that will be required to complete the replacement,
repair, or restoration within 30 days following Closing. If Buyer and Seller
are unable to agree, then Buyer, at its sole option and notwithstanding any
other provision of this Agreement, upon notice to Seller, may rescind this
Agreement.
98.10.1-15
<PAGE>
9.3. NEGOTIATIONS WITH OTHER PERSONS. Until Closing, neither Seller
nor Shareholders shall initiate, encourage the initiation by others, or
participate in any discussion or negotiations with any other person or entity
relating to the sale of any or all of the Assets, the business of Seller or
any securities issued by Seller. From the date of this Agreement and until
after Closing and the completion of the transactions contemplated by this
Agreement, Shareholders shall not offer for sale, sell or otherwise transfer
(with or without consideration) any securities issued by Seller owned of
record or beneficially by them.
10. CLOSING.
10.1. DATE AND PLACE. The closing of the purchase and sale of the
Assets and other transactions contemplated by this Agreement (referred to
throughout this Agreement as the "Closing") shall take place at the offices
of Seller, 5301 Longley Lane, Building E, Suite 178, Reno, Nevada 89511, on
or before November 13, 1998. The date of Closing, whether on said date or
another date, is referred to throughout this Agreement as the "Closing Date."
10.2. SELLER'S AND SHAREHOLDERS' CONDITIONS TO CLOSE. Seller's and
Shareholders' obligations to close the transactions contemplated hereby at
Closing shall be subject to the complete satisfaction and fulfillment of all
of the following conditions precedent, any or all of which may be waived in
whole or in part by the party entitled to the benefit thereof:
10.2.1. All representations and warranties made by Buyer in
this Agreement shall be complete and accurate at and as of Closing.
10.2.2. All covenants, promises and agreements made by Buyer
in this Agreement and all other actions required to be performed or complied
with by Buyer under this Agreement prior to or at Closing shall have been
fully performed or complied with by Buyer.
10.3. BUYER'S CONDITIONS TO CLOSE. Buyer's obligation to close the
transactions contemplated hereby at Closing shall be subject to the complete
satisfaction and fulfillment of all of the following conditions precedent,
any or all of which may be waived in whole or in part by Buyer (but no such
waiver of any such condition precedent shall be or constitute a waiver of any
covenant, promise, agreement, representation or warranty made by Seller or
Shareholders in this Agreement):
10.3.1. All representations and warranties made by Seller and
Shareholders in this Agreement shall be complete and accurate at and as of
Closing.
10.3.2. All covenants, promises and agreements made by Seller
and Shareholders in this Agreement and all other actions required to be
performed or complied
98.10.1-16
<PAGE>
with by Seller and Shareholders under this Agreement prior to or at Closing
shall have been fully performed or complied with by Seller and Shareholders.
10.3.3. Seller and Shareholders shall have fully disclosed
this transaction to all creditors of Seller as necessary in order to affect
the payments of Creditors as provided in Section 4 above; Seller and
Shareholders shall not have concealed this transaction from any creditor of
Seller or Shareholders; Seller and Shareholders shall not have been sued or
threatened with suit, except as otherwise fully disclosed to Buyer in an
exhibit to this Agreement and waived by Buyer as a condition precedent to
Closing; Seller and Shareholders shall not have removed or concealed any
assets, whether or not such assets are to be transferred under this
Agreement; Seller and Shareholders shall have assets greater than Seller's
and Shareholders' respective debts, using a fair valuation; Seller and
Shareholders shall pay and continue to pay their debts as they become due;
and Seller and Shareholders shall not have incurred individually or in the
aggregate any substantial debt that is substantially greater than the debts
incurred by Seller and Shareholders, respectively, in the ordinary course of
Seller's and Shareholders' business or affairs.
10.3.4. Seller shall deliver to Buyer at or before Closing a
copy, certified by Seller's Secretary or other appropriate officer, of the
resolutions of Seller's Board of Directors and the resolutions of
Shareholders authorizing and approving Buyer's execution of and entering into
this Agreement and the agreements made part of this Agreement and the
performance by Seller of the transactions provided in this Agreement.
10.3.5. Seller shall deliver to Buyer at or before Closing a
certificate of good standing from the California Secretary of State.
10.3.6. All necessary authorizations, consents, permits,
licenses and approvals pursuant to Section 7 of this Agreement shall have
been obtained, and such verification and documentation concerning the same as
Buyer may have reasonably requested shall have been provided to Buyer.
10.3.7. There shall not have occurred any material adverse
change in the business of Seller or in the Assets.
10.3.8. Seller shall deliver to Buyer at and as of Closing a
certificate signed by an officer of Seller certifying, in such detail as
Buyer may request, to the fulfillment of the conditions specified in this
Section 10.3.
10.3.9. Buyer shall have received assurances, which in its
reasonable opinion are sufficient, that any financing statements, security
interests, liens and encumbrances against any of the Assets relating to any
debts of Seller or any of Shareholders have been released and terminated.
98.10.1-17
<PAGE>
10.3.10. Buyer shall have received all things required to be
delivered or furnished to Buyer by Seller and Shareholders hereunder prior to
or at Closing.
10.4. ACTIONS TO BE TAKEN AT CLOSING. At Closing, the following
actions, among others, shall occur:
10.4.1. Seller and Shareholders shall deliver to Buyer at or
before Closing all updated information and listings as set forth herein.
10.4.2. Seller and Shareholders shall execute and deliver to
Buyer a Warranty Assignment, in the form attached as Exhibit 10.4.3 and made
part of this Agreement, and any additional assignments and documents,
pursuant to which Seller shall sell, assign and transfer to Buyer the
Customer Agreements and any other rights and interests provided herein as may
be applicable.
10.4.3. Seller, Charles R. Whipple and Buyer shall execute and
deliver the Noncompetition Agreement in the form attached hereto as Exhibit
1.6.
10.4.4. Charles R. Whipple and Buyer shall execute and deliver
the Employment Agreement in the form attached hereto as Exhibit 2.
10.4.5. Buyer shall deliver a stock certificate for 150,000
shares of Buyer's common stock, in the name of Seller.
10.4.6. Buyer shall deliver to Seller a check for the first
payments under such equipment leases as are attached to Exhibit 1.1.6.
10.5. OPERATION OF BUSINESS. From and after the close of business
on the day immediately preceding the Closing Date, Seller shall cease to
operate its business in connection with the Assets and as provided in the
Noncompetition Agreement and shall thereafter not take any action with
respect to any of the Assets, except as expressly provided herein or
otherwise by agreement.
11. INDEMNIFICATION; REMEDIES.
11.1. SURVIVAL; RIGHTS AND REMEDIES NOT AFFECTED BY KNOWLEDGE. All
representations, warranties, covenants and obligations in this Agreement of
Seller or Shareholders and any other agreements, documents or certificates
delivered in connection with this Agreement by Seller or Shareholders will
survive Closing. The right to indemnification, payment of Damages (as
defined in Section 11.2 below) or other remedy based on such representations,
warranties, covenants and obligations will not be affected by any
investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time by any person with respect to the
accuracy or inaccuracy of, compliance with, or performance of any such
representation, warranty, covenant or obligation; provided, however, that the
foregoing provisions of this sentence shall not apply
98.10.1-18
<PAGE>
insofar as Buyer, knew or reasonably should have known or was put on inquiry
notice of a Breach (as defined below) or probable Breach or other occurrence
which Buyer reasonably should have known would likely permit the good faith
assertion of a claim for indemnification or Damages hereunder, and Buyer
failed to give written notice of such Breach, probable Breach or occurrence
to Seller before Closing. The waiver by Buyer of any condition based on any
such representation, warranty, covenant or obligation, with respect to any
particular facts, circumstances, actions, failures to act of any person will
not affect the right to indemnification, payment of Damages or other remedy
hereunder with respect to any other facts, circumstances, actions or failures
to act.
11.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER AND
SHAREHOLDERS. Seller and Shareholders, jointly and severally, will indemnify
and hold harmless Buyer and its shareholders, affiliates, officers,
directors, employees, representatives and agents (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons, the
amount of, any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and attorneys' fees) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), arising directly or indirectly,
from or in connection with:
11.2.1. Any breach ("Breach," defined as including but not
limited to any material misrepresentation or omission of material information
or that any representations or warranties are untrue as provided herein) of
any representations or warranties made by Seller or Shareholders in this
Agreement or any other agreement, document or certificate delivered by Seller
or Shareholders pursuant to this Agreement, including any Breach as if any
such representations or warranties were made on and as of the Closing Date or
afterwards, if applicable, unless otherwise disclosed to Buyer and to which
Buyer agrees in writing before Closing;
11.2.2. Any Breach by any of Seller or Shareholders of any
covenant or obligation of Seller or Shareholders in this Agreement or any
agreement made part of this Agreement;
11.2.3. Any Product shipped or manufactured by, or any
services provided by Seller prior to the Closing Date;
11.2.4 Any claim by any person for brokerage or finder's fees
or commissions in connection with this Agreement or the transactions
provided in this Agreement as a result of any agreement, arrangement or
understanding as to which any of Seller or Shareholders were a party.
The remedies provided in this Section 11.2 will not be exclusive of or limit
any other remedies that may be available to Buyer or other Indemnified
Persons.
11.3. DEFENSE OF THIRD PARTY CLAIMS.
98.10.1-19
<PAGE>
11.3.1. In the event of any claim made or threatened or the
commencement of any proceeding or lawsuit by any third party for which an
Indemnified Person (hereafter in this Section 11.3, "Buyer" shall mean any
and all Indemnified Persons) may seek indemnity under Section 11.2 above,
Buyer shall promptly notify Seller and Shareholders of such claim, but the
failure to provide such notice will not relieve Seller or Shareholders of any
liability that they may have under this Section 11, except to the extent that
they demonstrate that the defense of such claim, proceeding or lawsuit is
prejudiced by the failure to give such notice. If Buyer, in its sole
discretion, consents, and upon such terms as Buyer may impose, Seller or
Shareholders may elect to assume the defense of such claim, proceeding or
lawsuit, at their expense.
11.3.2. In the event Seller or Shareholders assume the defense
of any such claim, proceeding or lawsuit, (i) it will be conclusively
established for purposes of this Agreement that such claim, proceeding or
lawsuit is within the scope of and subject to indemnification hereunder; and
(ii) no compromise or settlement which may or could in any respect adversely
affect Buyer may be effected without Buyer's consent, and Buyer shall have no
liability for any compromise or settlement effected without Buyer's consent.
11.3.3. Seller and Shareholders hereby consent to the
non-exclusive jurisdiction of any court in which a claim is brought against
Buyer for which indemnification under this Section 11.3 may be available.
12. EXPENSES OF TRANSACTIONS. All sales, transfer and use taxes incurred
in connection with the sale, assignment, transfer and delivery of the Assets,
and all filing and recording fees and taxes in connection with the filing and
recordation of any financing statements and any other documents, shall be
promptly paid by Seller.
13. MISCELLANEOUS.
13.1 FAIR MEANING. The parties acknowledge that this Agreement is
the product of arms-length negotiations among persons with substantially
equal bargaining power and shall not be construed against the party which
accepts primary responsibility for drafting this Agreement. The language in
this Agreement shall in all cases be construed as a whole according to its
fair meaning, and not strictly for or against any party.
13.2. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
of the representations, warranties, covenants, promises and agreements of the
parties contained in this Agreement (or in any agreement or document
delivered or to be delivered pursuant to this Agreement or at or in
connection with Closing) shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
13.3. NOTICES. All notices, requests, demands, consents, and other
communications which are required or may be given under this Agreement
(collectively, the "Notices") shall be in writing and shall be given either
(a) by personal delivery against
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a receipted copy or other reasonable verification of delivery, or (b) by
certified or registered United States mail, return receipt requested, postage
prepaid, to the following addresses:
(i) If to Seller or any of Shareholders, to
Charles R. Whipple, President
Shasta Geochemistry Laboratory, Inc.
1240 Redwood Boulevard
Redding, California 96003
(iii) If to Buyer:
J. Graham Russell, President
Barringer Laboratories, Inc.
15000 West Sixth Avenue, Suite 300
Golden, Colorado 80401
with a copy to:
Nathan D. Simmons, Esquire
Jones & Keller, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
or to such other address of which written notice in accordance with this
Section 13.3 shall have been provided by such party. Notices may be given
only in the manner above described in this Section 13.3 and shall be deemed
received upon delivery or three business days following the deposit of the
notice in the United States mail as provided above.
13.4. ENTIRE AGREEMENT. This Agreement (including the exhibits
hereto) constitutes the full, entire and integrated agreement between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior negotiations, correspondence, understandings and agreements among the
parties hereto respecting the subject matter hereof.
13.5. ASSIGNABILITY. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other parties hereto.
13.6. BINDING EFFECT; BENEFIT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
personal and legal representatives, successors and permitted assigns. Nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights, remedies, obligations, or liabilities.
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13.7. SEVERABILITY. Any provision of this Agreement which is held
by a court of competent jurisdiction to be prohibited or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability, without
invalidating or rendering unenforceable the remaining provisions of this
Agreement.
13.8. AMENDMENT; WAIVER. No provision of this Agreement may be
amended, waived or otherwise modified without the prior written consent of
all of the parties hereto. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement herein contained. The waiver
by any party hereto of a breach of any provision or condition contained in
this Agreement shall not operate or be construed as a waiver of any
subsequent breach or of any other conditions hereof.
13.9. SECTION HEADINGS. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
13.10. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which, together including the signature of each party hereto, shall be deemed
to be one and the same instrument.
13.11. APPLICABLE LAW; JURISDICTION AND VENUE; SERVICE OF PROCESS.
This Agreement shall be deemed to have been made in the State of Nevada; the
parties agree that Nevada has the most significant relationship to this
Agreement; and this Agreement shall be governed by, construed, interpreted
and enforced in accordance with the laws of the State of Nevada. All suits,
proceedings and other actions relating to, arising out of or in connection
with this Agreement shall be submitted to the in personam jurisdiction of the
courts of the State of Nevada or the Federal Courts in the District of
Nevada, and venue for all such suits, proceedings and other actions shall be
in Reno, Nevada. The parties hereby waive any claim against or objection to
in personam jurisdiction and venue in the Federal or state courts in Reno,
Nevada.
13.12. REMEDIES. The parties hereto acknowledge that in the event
of a breach of this Agreement, any claim for monetary damages hereunder may
not constitute an adequate remedy, and that it may therefore be necessary for
the protection of the parties and to carry out the terms of this Agreement to
apply for the specific performance of the provisions hereof. It is
accordingly hereby agreed by all parties that no objection to the form of the
action or the relief prayed for in any proceeding for specific performance of
this Agreement shall be raised by any party, in order that such relief may be
expeditiously obtained by an aggrieved party. All parties may proceed to
protect and enforce their rights hereunder by a suit in equity, at law or
other appropriate proceeding, whether for specific performance or for an
injunction against a violation of the terms hereof
98.10.1-22
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or in aid of the exercise of any right, power or remedy granted hereunder or
by law, equity or statute or otherwise. No course of dealing and no delay on
the part of any party hereto in exercising any right, power or remedy shall
operate as a waiver thereof or otherwise prejudice its rights, powers or
remedies, and no right, power or remedy conferred hereby shall be exclusive
of any other right, power or remedy referred to herein or now or hereafter
available at law, in equity, by statute or otherwise.
13.13. ATTORNEYS' FEES. In the event of a dispute among the parties
that results in litigation or arbitration, the prevailing party shall be
entitled to an award of attorneys' fees and costs.
13.14. FURTHER ASSURANCES. Seller and each of Shareholders jointly
and severally agree to execute, acknowledge, and deliver, after the date
hereof, without additional consideration, such further assurances,
instruments and documents, and to take such further actions, as Buyer may
reasonably request in order to fulfill the intent of this Agreement and the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
SELLER: BUYER:
SHASTA GEOCHEMISTRY BARRINGER LABORATORIES, INC.
LABORATORY, INC.
By: /s/ Charles R. Whipple By: /s/ J. Graham Russell
----------------------------- ----------------------------
Charles R. Whipple, President J. Graham Russell, President
SHAREHOLDERS:
/s/ Charles R. Whipple /s/ Russell G. Whipple
- -------------------------------- --------------------------------
Charles R. Whipple, individually Russell G. Whipple, individually
/s/ Chipps S. Whipple
- --------------------------------
Chipps S. Whipple, individually
98.10.1-23
