FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) or the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 30, 1999
RIMAGE CORPORATION
(Exact name of Registrant as specified in its charter)
Minnesota 0-20728 41-1577970
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7725 Washington Avenue South, Edina, MN 55439
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(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (612) 944-8144
Not applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On June 30, 1999, Rimage Corporation ("Rimage") completed the sale of the
inventory, fixed assets and intangible assets of its Boulder, Colorado based
Services Divison to Advanced Duplication Services, Inc. ("ADS") for a sales
price of approximately $2.1 million in cash. This services operation had
revenues of approximately $1.1 million and net operating earnings of $144,000
during the three months ended March 31, 1999. Rimage will record a pretax gain
of approximately $800,000 on the sale of the assets in the quarter ending June
30, 1999.
Rimage Corporation is a leading provider of digital publishing and duplication
systems for CD-R media.
Item 7. Financial Statements.
(a) Financial Statements.
Not applicable
(b) Pro Forma Financial Information:
Not applicable
(c) Exhibits.
10.1 Asset Purchase Agreement dated as of June 30, 1999 by and
between Rimage and ADS.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RIMAGE CORPORATION
By /s/ Bernard P. Aldrich By /s/ Robert M. Wolf
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Bernard P. Aldrich, Director, Chief Robert M. Wolf
Executive Officer, and President Controller
Dated: July 12, 1999
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT is dated as of June 30, 1999, by and between
A/G SYSTEMS, INC., dba DUPLICATION TECHNOLOGY, a corporation organized under the
laws of the State of Colorado ("Seller"), located at 7725 Washington Avenue
South, Minneapolis, Minnesota 55439, and ADVANCED DUPLICATION SERVICES, INC., a
Minnesota corporation, located at 2155 Niagara Lane North, Suite 120, Plymouth,
Minnesota 55447 ("Buyer").
RECITALS
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1. Seller is in the business of providing software duplication services
specializing in custom media duplication and turnkey services, using
certain equipment located at the Seller's manufacturing facility in
Boulder, Colorado (the "Boulder Facility");
2. Buyer is in the business of manufacturing and replicating CD-ROMs,
among other businesses;
3. Buyer desires to purchase from Seller certain assets located at the
Boulder Facility; and
4. Seller desires to sell such assets to Buyer.
WITNESSETH:
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In consideration of the mutual covenants and agreements, representations
and warranties hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I. PURCHASE AND SALE OF ASSETS
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1.0 Assets to be Purchased. At Closing (as hereinafter defined) subject to
the terms and conditions of this Agreement, Seller shall sell to Buyer, and
Buyer shall purchase from Seller, all or substantially all of Seller's assets
utilized in the operation of Seller's Boulder Facility (the "Business"), free
and clear of all liens, encumbrances, and charges (the "Assets"), which Assets
shall include without limitation the following:
(a) all inventory owned, used or held for use with respect to
Seller's Business, including parts, materials, packaging, works in
progress and finished goods located at Seller's Boulder Facility at the
close of business on the date of Closing, as hereinafter defined on the
attached Schedule 1(a) (the "Inventory");
(b) all of Seller's right, title and interest in and to those
certain fixed assets that are described on the attached Schedule 1(b) (the
"Fixed Assets");
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(c) all of Seller's right, title and interest in and to any and all
licenses and permits, to the extent assignable, whether state, federal,
county, municipal, or otherwise material to the operation of the Boulder
Facility, leases, equipment warranties, maintenance contracts, service
contacts and other commitments as may be assumed in writing by Buyer or as
set forth on the attached Schedule 1(c); and
(d) all of Seller's right, title and interest in and to the general
intangibles and goodwill associated with the operation of the Assets at
Seller's Boulder Facility, including all telephone numbers used by Seller
at the Boulder Facility, access to certain books and records of Seller
which pertain to the Boulder Facility Business, including sales, customer
lists and suppliers, paid invoices, repair orders, employee records for
the last three years, yellow page advertising (subject to Section 12.1),
copies of pending sales orders, work in process and all other documents
associated with the Boulder Business (the "Company Records").
1.1 Assets Not Included. Buyer shall not acquire title to any assets other
than those that are expressly stated herein. Buyer acknowledges it will not
acquire any interest in Seller's accounts receivable, cash, or cash equivalents.
1.2 Nonassumption of Liabilities.
(a) Generally. In no event will Buyer assume any liability or
obligation of any nature whatsoever, contractual or otherwise, of Seller
by reason of this Agreement, or any of the transactions contemplated
hereby, including but not limited to any obligations or liability to
employees, officers, or agents of Seller or to pension or profit sharing
plans or other entities for their benefit (welfare plans, deferred
compensation arrangements, sick leave, payroll taxes and other employee
benefits), any and all obligations or liabilities of Seller to pay taxes
(including sales taxes, income taxes, withholding taxes, unemployment
compensation, worker's compensation or other taxes), any undisclosed
contracts of Seller, including but not limited to, collective bargaining
agreements and multi employer pension liabilities.
(b) Seller Warranties on Products. In the event Seller has provided
customers with certain warranties on Seller's products sold by Seller, the
parties agree that it is in the best interests of both parties that Buyer
honor such warranties. Buyer agrees that in the event it performs warranty
work for customers of Seller, it shall perform such warranty services and
repairs in compliance with the terms of Seller's written warranties in
accordance with this Section. Seller agrees to reimburse Buyer for such
written warranty work for a period of twelve (12) months from the Date of
Closing, provided, however, Buyer must notify Seller and receive Seller's
approval within three (3) business days of Seller receiving Buyers notice
prior to beginning any such written warranty work, but such approval shall
not be unreasonably withheld. Seller shall reimburse Buyer within thirty
(30) days of receipt of Buyer's invoice for the costs incurred for
performing said warranty work. All warranty work and repair reimbursement
requests must be supported by documentation.
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ARTICLE II. PURCHASE PRICE
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2.0 Purchase Price. The agreed-upon Purchase Price for the Assets shall be
two million fifty thousand dollars ($2,050,000), subject to the adjustment
provided for in Section 2.2, which shall be payable by cashiers check or wire
transfer of same-day funds at Closing.
2.1 Allocation. The parties shall determine the allocation of the Purchase
Price among the Assets being purchased hereunder, shall report this transaction
for tax purposes in accordance with such mutually agreed-upon allocation and
shall execute IRS Form 8594 reflecting the same at Closing. The total Purchase
Price allocation shall be adjusted in accordance with the Purchase Price
adjustment below.
2.2 Purchase Price Adjustment. Part of the Purchase Price is based upon
the value of the inventory listed on Schedule 1(a) attached. The parties agree
to adjust the Purchase Price on or before the Closing Date to reflect an
adjusted Closing Date value of the inventory as follows:
The parties shall conduct an inspection of the inventory on or before the
Closing Date. The Purchase Price shall be adjusted up or down to correct for the
actual value, at Buyer's or Seller's cost, if the difference between the actual
value of inventory on the Closing Date and the value of inventory on the above
schedule is more than twenty thousand dollars ($20,000). If the difference, as
defined above, is less than twenty thousand dollars ($20,000), there will be no
adjustment to the Purchase Price.
ARTICLE III. CLOSING
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3.0 Closing. The effective date of the Closing shall be June 30, 1999, at
such time as the parties may mutually agree to, at 7725 Washington Avenue South,
Minneapolis, Minnesota or at such other location as the parties may agree to.
3.1 Seller's Obligations at Closing. At Closing, Seller shall deliver or
cause to be delivered to Buyer:
(a) a bill of sale in the form attached hereto and incorporated
herein as Schedule 3.1(a) with respect to the Fixed Assets and the
Inventory, properly executed and acknowledged;
(b) an assignment and assumption agreement in the form set forth in
Schedule 3.1(b) hereto, properly executed with respect to any intangible
Assets and any and all leases and other agreements as identified in
Schedule 1(c); and
(c) such other documents as Buyer may reasonably request to carry
out the transactions contemplated in this Agreement.
(d) originals or copies of relevant Company records;
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(e) assignment of customer contracts;
(f) a Uniform Commercial Code security interest and tax lien search
from the State of Colorado, dated within fifteen (15) days of the Closing
Date, with an update as of the Closing Date, showing that there are no
security interests, judgments, taxes, other liens or encumbrances
outstanding against the Assets other than those disclosed on Schedule 3.1
and agreed to by Buyer;
(g) assignments of all licenses and permits which can be assigned
and which are material to the operation of the Boulder Facility;
(h) certified copy of a Certificate of Organization and/or Good
Standing Certificate for Seller and certified copies of corporate
resolutions of Seller, authorizing it to enter into the Agreement and to
consummate the transactions contemplated herein;
3.2 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver or
cause to be delivered to Seller such documents as Seller may reasonably request
to carry out the transactions contemplated in this Agreement.
ARTICLE IV. PRORATIONS
----------------------
4.0 Operating Costs. All operating costs of the Business shall be
allocated so that Seller pays that part of such operating costs properly
allocable to periods before the Closing Date, and Buyer pays that part of such
operating costs attributable to periods on and after the Closing Date.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLER
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Except as otherwise disclosed to Buyer, Seller represents and warrants to
Buyer as follows:
5.0 Status. Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Colorado and has full power and
authority to own its property and to carry on its Business as it has been and is
currently conducted. Seller has full power and authority to enter into this
Agreement and to consummate the transactions contemplated herein.
5.1 Corporate Action. All necessary corporate action has been duly taken
by the Board of Directors in order to authorize the execution and consummation
of this Agreement. Upon execution hereof by Buyer, this Agreement shall be the
legal, valid and binding obligation of Seller enforceable in accordance with its
terms.
5.2 Restrictions. There have been no written notices of violation of any
applicable law, order, ordinance, rule, regulation or requirement, or of any
covenant, condition or restriction affecting or relating in a materially adverse
manner to the use of the Assets issued by any governmental agency.
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5.3 Title to Assets. Seller is the owner of the Assets and has good and
marketable title to all of the Assets to be transferred hereunder, free and
clear of all liens, liabilities, encumbrances, security interests, charges,
imperfections of title, or restrictions of any kind or nature whatsoever, and on
the Closing Date, Buyer shall receive good and marketable title to all of such
Assets free and clear of any liens, liabilities, encumbrances, security
interests, charges, imperfections of title, or restrictions of any material kind
or nature whatsoever.
5.4 Litigation. There is no claim, suit, action or other proceeding which
is pending or threatened before any court or other governmental agency, or to
the knowledge of Seller, threatened, which might materially affect the Assets or
Business of Seller or in which it is sought to restrain or prohibit the
consummation of the transaction herein contemplated.
5.5 Compliance with Law. Seller has complied with and, to the best of
Seller's knowledge, is not in violation of applicable federal, state or local
statutes, laws or regulations materially affecting the Assets or the operation
of the Business as now conducted by Seller.
5.6 Taxes. Seller has filed or will properly file when due, with the
appropriate governmental agencies, all tax returns required to be filed by it
and has paid or made provisions for the payment of all taxes which have or may
become due, pursuant to said return or pursuant to any assessment received by
Seller, except such taxes, if any, as are being contested in good faith and to
which adequate reserves have been provided. All Federal and State income, sales,
use, excise or other taxes due in connection with the Business of Seller being
purchased herein have been duly paid or shall be fully paid as of the Closing
Date or thereafter when due, except for the 1999 calendar year Colorado personal
property tax liability, which amount will be prorated based upon the closing
date of this agreement. To the knowledge of Seller, Seller is not now being
audited by the Internal Revenue Service.
5.7 Compliance with Environmental Laws. Except as disclosed in Schedule
5(a), Seller has materially complied with, and is presently in material
compliance with, all Environmental Laws (as hereinafter defined), except for
such minor noncompliances which do not materially affect the Business. Except as
disclosed on Schedule 5(a), no party is currently asserting that Seller has
violated any Environmental Laws. Specifically and without limiting the
generality of the foregoing, except as disclosed on Schedule 5(a):
(a) Except as allowed under applicable laws and regulations,
including, without limitation, Environmental Laws, Seller has not
accepted, processed, handled, transferred, generated, treated, stored or
disposed of any Hazardous Material (as defined in Section (f) below).
Notwithstanding the foregoing, Seller makes no representation or warranty
of any kind with respect to third parties or the activities of third
parties who have accepted, processed, handled, transferred, generated,
treated, stored or disposed of any Hazardous Materials for Seller; without
limiting the generality of the foregoing, Seller makes no representation
or warranty of any kind with respect to such third parties' compliance
with Environmental Laws; provided, however, that notwithstanding the
foregoing clauses, the representation will nevertheless apply in the event
that Buyer has any Losses directly resulting from Seller's contractual
agreements or relationships with such third parties.
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(b) No Hazardous Material, other than that allowed under applicable
laws and regulations, including, without limitation, Environmental Laws,
has been disposed of, stored, maintained or otherwise related on real
property leased by Seller at 4601 Nautilus Court South, Boulder, Colorado,
during Seller's lease of such real property (the "Leased Premises").
(c) Seller has never been subject to nor received any notice of, any
private, administrative or judicial action, or notice of any intended
private, administrative or judicial action relating to the presence or
alleged presence of Hazardous Material in, under, upon or emanating from
the Leased Premises. There are no pending or threatened actions or
proceedings from any governmental agency or any other entity involving
remediation of any condition on the Leased Premises, including, without
limitation, petroleum contamination, pursuant to Environmental Laws.
(d) Except as allowed under applicable laws and regulations,
including, without limitation, Environmental Laws, Seller has not
knowingly sent, transported or arranged for the transportation or disposal
of any Hazardous Waste, to any site, location or facility. Notwithstanding
the foregoing, Seller makes no representation or warranty of any kind with
respect to third parties or the activities of third parties who have
accepted, processed, handled, transferred, generated, treated, stored or
disposed of any Hazardous Materials for Seller; without limiting the
generality of the foregoing, Seller makes no representation or warranty of
any kind with respect to such third parties' compliance with Environmental
Laws; provided, however, that notwithstanding the foregoing clauses, the
representation will nevertheless apply in the event that Buyer has any
Losses resulting from Seller's agreements or relationships with such third
parties.
(e) As used in this Agreement, "Environmental Laws" means all
federal, state and local laws, ordinances, rules, regulations,
governmental permits, orders, judgments, awards, decrees, consent
judgments, consent orders and requirements applicable to Seller relating
to the public health, safety or protection of the environment, including,
without limitation, the federal Resource Conservation Recovery Act, 41 USC
ss.6901 et seq. ("RCRA").
(f) As used in this Agreement, "Hazardous Material" shall mean the
substances (i) defined as "Hazardous Waste" in 40 CFR 261, and substances
defined in any comparable Colorado statute or regulations, (ii) any
substance, the presence of which, requires remediation pursuant to any
Environmental Laws; and (iii) any substance disposed of in a manner not in
compliance with Environmental Laws.
(g) To Seller's knowledge, Schedule 5(b) contains a complete listing
(including addresses) of all the waste haulers, landfills, hazardous waste
recycling and hazardous waste disposal companies used by Seller to dispose
of or recycle such hazardous waste since the start of its Business.
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ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer represents and warrants to Seller as follows:
6.0 Organization and Status. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota
and has the full power and authority to own its property. Buyer is qualified and
in good standing to do business as a foreign corporation within the states in
which it is currently doing business.
6.1 Corporate Authority. Buyer has duly approved the Agreement and the
performance of the obligations contemplated herein and has authorized the
execution and delivery hereof by a duly elected and acting officer. No further
corporate action on the part of Buyer is required for approval of this Agreement
and authorization of the transaction contemplated herein. Upon execution hereof
by Seller, this Agreement shall be the legal, valid and binding obligation of
Buyer, enforceable in accordance with its terms.
6.2 Brokers. Buyer knows of no brokerage or finder's fees or commissions
that will be payable in connection with its purchase of the Assets hereunder,
and if any such fees or commissions are claimed or payable as the result of any
other party's claimed representation of Buyer or Seller, any such fees or
commissions shall be the sole responsibility of Buyer or Seller, as the case may
be.
ARTICLE VII. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
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The obligations of Buyer under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set out below in
this Article VII. Buyer may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Buyer of any of its other rights or remedies, at
law or in equity, if Seller is in default of any of its representations,
warranties or covenants under this Agreement.
7.0 Accuracy of Representations and Warranties. All representations and
warranties by Seller in this Agreement or in any written statement that shall be
delivered to Buyer under this Agreement shall be true on and as of the Closing
Date as though made at that time.
7.1 Seller's Performance. Seller shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it.
7.2 No Litigation. No action, suit or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated by
this Agreement or to its consummation, shall have been instituted on or before
the Closing Date.
7.3 UCC Searches. Buyer shall have obtained for review and approval UCC
searches from the office of the Colorado Secretary of State as required under
the terms of this Agreement.
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7.4 Transfer of Personal Property Warranties. Seller shall assign and
transfer to Buyer all available equipment manufacturer warranties still in
effect on the Closing Date of all personal property being purchased by Buyer, if
any.
7.5 Buyer shall have received and approved landlord estoppel letter
regarding the lease being assigned to Buyer and the written consent of landlord
to the assignment.
7.6 Buyer shall have inspected the Assets on or before the Closing Date
and determined that they are in good condition and that the Fixed Assets are in
good working order.
ARTICLE VIII. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
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The obligations of Seller under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set out below in
this Article. Seller may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Seller of any of its other rights or remedies, at
law or in equity, if Buyer is in default of any of its representations,
warranties or covenants under this Agreement.
8.0 Accuracy of Representations and Warranties. All representations and
warranties by Buyer contained in this Agreement or in any written statement
delivered by Buyer under this Agreement shall be true on and as of the Closing
Date as though such representations and warranties were made on and as of that
date.
8.1 Buyer's Performance. Buyer shall have performed and complied with all
covenants and agreements, and satisfied all conditions that it is required by
this Agreement to perform, comply with or satisfy, before or on the Closing
Date.
8.2 No Litigation. No action, suit or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated by
this Agreement or to its consummation, shall have been instituted on or before
the Closing Date.
ARTICLE IX. CONDITION OF ASSETS
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9.0 EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, THE ASSETS ARE SOLD
"AS IS, WHERE IS" WITH NO WARRANTIES OF MERCHANTABILITY OR PHYSICAL CONDITION
EXPRESSED OR IMPLIED EXCEPT FOR EQUIPMENT WARRANTIES ASSIGNED BY BUYER. BUYER
ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO INSPECT THE ASSETS AND THAT AN
OFFICER OR REPRESENTATIVE OF BUYER HAS BEEN ABLE TO ASK QUESTIONS OF SELLER'S
EMPLOYEES AND OFFICERS.
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ARTICLE X. INDEMNIFICATION
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10.0 Indemnity by Seller. Seller hereby agrees to indemnify and defend and
hold Buyer harmless from any and all claims, demands, obligations, losses,
liabilities, damages, recoveries and deficiencies ("Liabilities"), including
interest, penalties and reasonable attorneys' fees, costs and expenses, which
Buyer may suffer as a result of any misrepresentations or breach of any of the
warranties of Seller herein or given pursuant hereto, or any default by Seller
in the performance of any of its commitments, covenants or obligations under
this Agreement, or for any Liabilities which may arise from operation or
ownership of the Assets by Seller prior to the Closing Date. The rights of Buyer
under this Section are without prejudice to any other remedies not inconsistent
herewith which Buyer may have against Seller.
10.1 Indemnity by Buyer. Buyer hereby agrees to indemnify, defend and hold
Seller harmless from any and all Liabilities including interest, penalties and
reasonable attorneys' fees, costs and expenses which Seller may suffer as a
result of any misrepresentations or breach of any of the warranties of Buyer
herein or given pursuant hereto, or any default of Buyer in the performance of
any of its respective commitments, covenants or obligations under this
Agreement, or for any Liabilities which may arise from operation or ownership of
the Assets by Buyer from and after the Closing Date. The rights of Seller under
this Section are without prejudice to any other remedies not inconsistent
herewith which it may have against Buyer.
10.2 Defense of Claims. If a claim for Liabilities is to be made by a
party entitled to indemnification hereunder against the indemnifying party, the
party entitled to such indemnification shall give written notice to the
indemnifying party as soon as practical after the party entitled to
indemnification becomes aware of any fact, condition or event that may give rise
to Liabilities for which indemnification may be sought under this Article X.
10.3 Contested Claims. In the event a party hereto is notified of an
indemnity claim by the other party hereto, the party receiving such notice (the
"Receiving Party") shall be entitled to defend, compromise, or otherwise contest
the claim for Liabilities at its own cost and expense. The party hereto giving
such notice shall have the right, but not the obligation, and at its own
expense, to participate in the defense the of Liability with counsel of its own
choosing. The Receiving Party shall control all matters of the defense of the
Liability including compromise thereof until relieved of its indemnification
liability under this Agreement by the other party. In the event of a Liability
claim, the parties shall cooperate with one another in good faith in order to
effectuate the intent of Section 10.2 and this Section 10.3.
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ARTICLE XI. COVENANTS OF SELLER
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11.0 Seller's Obligations. Seller shall assume and pay in a timely manner
all accounts payable for supplies received at the Boulder Facility prior to the
Closing Date, and for all other goods and services delivered, rendered or
performed prior to the Closing Date.
11.1 Ordinary Course. Prior to the Closing, Seller shall continue to
operate the Business consistently with historical practices and operations, and
shall take no action, including, but not limited to selling any Assets, not in
the ordinary course of business.
ARTICLE XII. COVENANTS OF BUYER
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12.0 Nonaffiliation. Buyer shall not take any action that could reasonably
be anticipated to imply, or cause any customer or other person to believe, that
following the Closing, Seller will continue to be the owner of, or affiliated
with, the Business. Notwithstanding the temporary use by Buyer of manuals and
software containing the Rimage name, Buyer and its employees and agents shall
neither misrepresent Buyer's relationship to Seller nor say or do anything that
would create or fail to dispel any belief that Buyer is affiliated with Seller.
12.1 Removal of Name. Buyer shall use its best efforts as soon as
practicable after the Closing to remove the name Rimage used in connection with
the Assets and to eliminate the name Rimage and the Rimage logo from each and
every instance of such use and from any other transferred assets, tangible or
intangible, that may carry or be imprinted with the Rimage name or logo.
ARTICLE XIII. MISCELLANEOUS
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13.0 Survival of Representations. All statements contained in any
certificate or other instrument delivered by or on behalf of Buyer or Seller
pursuant hereto shall be deemed representations and warranties by Buyer and
Seller respectively hereunder. Except as otherwise provided herein, all
representations, warranties, covenants and agreements made by Buyer or Seller
shall survive the Closing.
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13.1 Arbitration. All disputes or claims arising out of, or in any way
relating to this Agreement, shall be submitted to and determined by final and
binding arbitration under the rules of the American Arbitration Association.
Arbitration proceedings may be initiated by any party hereto or to the Agreement
upon notice to the other parties and to the American Arbitration Association and
shall be conducted by three arbitrators under the rules of the American
Arbitration Association in Minneapolis, Minnesota; provided, however, that the
parties may agree following the giving of such notice to have the arbitration
proceedings conducted by a single arbitrator. The notice must specify in general
the issues to be resolved in any such arbitration proceeding. The arbitrators
shall be selected by agreement of the parties to the arbitration proceeding from
a list of five or more arbitrators proposed to the party by the American
Arbitration Association or may be persons not on such list as agreed to by the
parties to such arbitration. If the parties to the arbitration proceeding fail
to agree on one or more of the persons to serve as arbitrators within fifteen
days after delivery to each party hereto of the list as proposed by the American
Arbitration Association, then at the request of any party to such proceeding,
such arbitrators shall be selected at the discretion of the American Arbitration
Association. Where the arbitrators shall determine that an arbitration
proceeding was commenced by a party frivolously or without a basis, or primarily
for the purpose of harassment or delay, the arbitrators may assess such party
the cost of such proceedings including reasonable attorneys' fees of any other
party. In all other cases, each party to the arbitration proceeding shall bear
its own costs and its pro-rata share of the fees and expenses charged by the
arbitrators and the American Arbitration Association in connection with any
arbitration proceeding.
13.2 Expenses. Each of the parties shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this Agreement and
in closing and carrying out the transactions contemplated herein, including its
counsel and accountants, even if the transactions contemplated herein are not
consummated for any reason. Buyer shall pay all sales or transfer costs, if any,
imposed for the sale/purchase of the Assets.
13.3 Assignment. Neither this Agreement nor the rights, duties or
obligations arising hereunder shall be assignable or delegable by either party
without the express prior written consent of the other. All the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by Buyer and Seller and their respective permitted successors
and assigns.
13.4 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than Buyer and Seller and their respective
permitted successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provisions give any third persons any
right of subrogation or action over or against any party to this Agreement.
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13.5 Notices. To be effective, all notices or other communications
required or permitted hereunder shall be in writing. A written notice or other
communication shall be deemed to have been given hereunder (i) if delivered by
hand, when all other parties to this Agreement receive such notice or other
communication from the notifying party, (ii) if delivered by telecopies or
timely delivered to the overnight courier, when so sent or delivered or (iii) if
delivered by mail, on the third business day following the date such notice or
other communication is deposited in the U.S. Mail for delivery by certified or
registered mail addressed to the other party or when actually received,
whichever occurs earlier. Mailed or telecopied communications shall be directed
as follows unless written notice of the change of address or telecopies number
has been given in writing in accordance with this paragraph:
To Purchaser: Mr. Michael Bernstein, CEO
Advanced Duplication Services, Inc.
2155 Niagara Lane North, Suite 120
Plymouth, Minnesota 55447
To Seller: Mr. Bernard P. Aldrich
President
Rimage Corporation
7725 Washington Avenue South
Minneapolis, Minnesota 55439
Fax Number: (612) 944-7808
Copy to: Mr. James L. Reissner
Activar, Inc.
7808 Creek Ridge Circle, Suite 200
Minneapolis, Minnesota 55439
Fax Number: (612) 941-4781
13.6 Applicable Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Minnesota.
13.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.8 Entire Agreement; Modification; Waiver. This Agreement, with the
Schedules hereto, constitutes the entire agreement between Seller, on the one
hand, and Buyer, on the other, pertaining to the subject matter contained in it
and supersedes all prior agreements, representations and all understandings of
the parties. No supplement, modification or amendment of this Agreement shall be
binding unless expressed as such and executed in writing by Buyer and Seller. No
waiver of any of the provisions of this Agreement shall be deemed to be or shall
constitute waiver of any other provisions hereof, whether or not similar, nor
shall any such waiver constitute a continuing waiver. No waiver shall be binding
unless expressed as such in a document executed by the party making the waiver.
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13.9 Copies. To the extent necessary for Seller's tax and legal
recordkeeping and reporting purposes, Seller may make and retain copies, at its
expense, of production records, lists of suppliers, sales reports and
advertising materials that pertain to the Business as conducted by Seller prior
to the Closing Date. After Closing, Buyer shall provide Seller with access to,
and Seller may make and retain copies, at its expense, of production records,
lists of suppliers, sales reports, advertising materials and such other records
as may be necessary or desirable to prosecute and/or defend any claim, action,
demand, suit or proceeding relating to the Business.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
AG/SYSTEMS, INC., dba ADVANCED DUPLICATION SERVICES, INC.
DUPLICATION TECHNOLOGY
By /s/ Bernard P. Aldrich By /s/ Michael Bernstein CEO
-------------------------------- ------------------------------
Bernard P. Aldrich Michael Bernstein
Its President and Chief Its Chief Executive Officer
Executive Officer
and
By /s/ James Reissner By /s/ Kathy Peterson COO
-------------------------------- ------------------------------
James L. Reissner Kathy Peterson
Its Secretary Its Chief Operating Officer
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SCHEDULE INDEX
Schedule 1(a) Inventory
Schedule 1(b) Fixed Assets
Schedule 1(c) Assumed Leases and Contracts
Schedule 2.1(a) Form of Bill of Sale
Schedule 2.1(b) Form of Assignment and Assumption Agreement
Schedule 3.1 Security Interests
Schedule 5(a) Environmental Violations
Schedule 5(b) List of Waste Haulers
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