ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into
as of the _21st_ day of July, 2000, by and between ALANCO ENVIRONMENTAL
MANUFACTURING, INC., a Nebraska corporation ("Seller"), and KREBS, INC., a
Nebraska corporation ("Purchaser").
RECITALS
The Seller is engaged in the business of manufacturing and marketing
certain equipment useful in the reduction and collection of air particulants
from manufacturing processes including, but not limited to, equipment known as
cyclones and bag houses (the "Business"). Seller is a wholly owned subsidiary
of Alanco Technologies, Inc., an Arizona corporation ("Alanco") Ronald R.
Krebs is the president of Seller and he and his wife own all of the issued and
outstanding capital stock of Purchaser.
Purchaser desires to acquire substantially all of the assets of the
Business and the Seller is willing to sell such assets to Purchaser upon the
terms and conditions contained herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and subject to the
terms and conditions set forth in this Agreement, the parties agree as follows:
1.0 Sale of Assets of Seller to Purchaser. Upon and
subject to the terms and conditions herein stated, Purchaser agrees to acquire
from Seller and Seller agrees to transfer, assign and convey to Purchaser upon
the Closing Date (as hereinafter defined), free and clear of all debts, liens
and encumbrances (except as otherwise provided in this Agreement), all of the
assets and properties of Seller used in connection with the Business (the
"Assets") including all of the business, goodwill, assets, properties and
rights of every nature, kind and description, whether tangible or intangible,
real, personal or mixed, which are owned by Seller or in which Seller has any
interest (including the right to use), excepting only the Excluded Assets and
any of the foregoing which relate exclusively to the Excluded Assets.
Notwithstanding anything contained herein to the contrary, for all accounting
purposes, the Closing shall be deemed to occur on June 30, 2000 irrespective of
the actual Closing Date, provided, however, for all employment related matters
and reporting, employees of Seller shall be employees of Seller through the
Closing Date. The Assets shall include, but are not limited to, the following:
1.1 Real Property. All real estate owned by
Seller, including the improvements and buildings located thereon located in
Falls City, Nebraska. The legal description of said real estate is attached
hereto as Exhibit "A" (the "Real Estate").
1.2 Inventories. All inventories, whether located
on Seller's business premises, in transit to or from such premises, in storage
facilities, at dealer customer facilities, or otherwise.
1.3 Tangible Personal Property. All tangible
personal property of Seller, wherever located owned by Seller or in which
Seller has any interest, including all machinery, equipment, vehicles,
1
furniture, supplies, spare parts, tools, stores and other tangible personal
property, other than the Inventories.
1.4 Intangible Personal Property. All intangible
personal property including all intangible properties owned by Seller or in
which Seller has any interest, including, but not limited to (i) any registered
or unregistered trademarks, service marks, trade names and slogans, all
applications therefor, and all associated goodwill, except for the name
"Alanco" which shall be an Excluded Asset as described below; (ii) all
statutory, common law or registered copyrights, all applications therefore and
all associated goodwill; (iii) all patents (including specifically the patent
on the product known as E86) and patent applications, all associated technical
information, shop rights, know-how, trade secrets, processes, operating,
maintenance, and other manuals, drawings and specifications, process flow
diagrams and related data, and all associated goodwill; (iv) all "software" and
documentation thereof, (including all electronic data processing systems and
program specifications, source codes, input data and report layouts and
formats, records, files, layouts, or diagrams, functional specifications and
narrative descriptions, or flow charts); (v) all other inventions, discoveries,
improvements, processes, formulae (secret or otherwise), data, drawings,
specifications, trade secrets, confidential information know-how and ideas
(including those in possession of third-parties, but which are the property of
Seller), and all drawings, records, books or other tangible media embodying the
foregoing.
1.5 Prepaid Items. All prepaid items including
insurance deposits, municipal or local tax payments or deposits, utility
deposits and the like, deferred charges, reserve accounts and other security or
similar deposits owned by Seller or in which Seller has any interest.
1.6 Licenses and Permits. All licenses and
permits issued to Seller in which Seller has any interest to the extent
assignable.
1.7 Contracts, Leases and Other Agreements. All
contracts and other agreements, including contracts, agreements, options,
leases and subleases, easements, plans, licenses, commitments or binding
arrangements of any nature whatsoever, express or implied, written or
unwritten, and all amendments thereto, entered into by or binding upon Seller
or to which any of its properties may be subject, other than those, if any,
which constitute Excluded Assets or relate exclusively to the Excluded Assets.
1.8 Warranties. All warranties or other rights of
Seller under express or implied warranties from suppliers or contractors with
respect to the Assets to the extent assignable.
1.9 Cash and Cash Equivalents. Except as stated
in Section 1.18, all cash or cash equivalents, including actual cash, bank
accounts, certificates of deposits, banker's acceptances, United States
Government (or agency) securities, or other securities owned by Seller.
1.10 Accounts Receivable. All accounts receivable
of Seller, including all accounts, notes, accounts receivable, contract rights,
drafts, and other forms of claims, demands, instruments, receivables and rights
to the payment of money or other forms of consideration, whether for goods sold
or leased, services performed or to be preformed, or otherwise, owned by Seller
or in which Seller has any interest, together with all guarantees, security
agreements and rights and interests securing the same; provided, however,
receivables with respect to amounts owed by or involving Alanco Technologies,
Inc, an Arizona corporation and the parent corporation of Seller ("Alanco"),
known as the "Cash Transfer Account", shall be Excluded Assets.
2
1.11 Books and Records. All books and records of
Seller including customer ledgers, customer lists, files, correspondence, and
other written records of every kind owned by Seller or in which Seller has any
interest, which relate to the Assets other than those, if any, which constitute
Excluded Assets or relate exclusively to the Excluded Assets.
1.12 Goodwill. All goodwill of the Business as a
going concern.
1.13 Other Properties. All other properties,
tangible and intangible, not otherwise referred to above which are owned by
Seller or in which it has any interest, other than those, if any, which
constitute Excluded Assets or relate exclusively to the Excluded Assets.
Excluded specifically from the Assets which Seller has agreed to sell
to Purchaser are the following Assets ("Excluded Assets") which shall be
retained by Seller:
1.14 Books and Records. All books and records of
Seller including general ledgers, employee records, files, correspondence,
documents and records relating to the organization of Seller, all of Seller's
tax and information returns, and all other financial records of Seller which
do not relate in any way to Seller's ownership of the Assets and other written
records of every kind; provided, however, that upon reasonable notice from
Purchaser to Seller based upon reasonable cause, Seller shall provide Purchaser
with access, at reasonable charge, to any of the foregoing described material
and with copies of said documents.
1.15 Tax Refunds. All of Seller's rights to
refunds of all or any part of any taxes paid by Seller in relation to periods
prior to the Closing Date.
1.16 Treasury Shares. Any shares of Seller's
capital stock held in treasury.
1.17 Claims Against Alanco, Etc. All of Seller's
claims, causes of action, choses in action, and rights of set-off of any kind
against or pertaining to Alanco, or Seller's or Alanco's officers and
directors.
1.18 Cash Transfer Account. Prior to or on the
date hereof, appropriate payments of cash shall have been made between Seller
and Alanco so that the balance of the Cash Transfer Account with respect to
transfers of cash between Alanco and Seller shall reflect a balance due to
Seller of $1,175,000, which receivable shall be an Excluded Asset.
1.19 Agreement Rights. The rights of Seller under
this Agreement.
1.20 The Name "Alanco". The right to use the name
"Alanco" in any manner whatsoever, except Purchaser shall have a perpetual
license to use the name "Alanco Environmental Manufacturing" following the
Closing, but shall not use the name "Alanco" either alone or as part of any
other name without the prior written consent of Alanco.
1.21 CDSI. All rights and title to certain
technology know as Charged Dry Sorbent Injection ("CDSI"), together with all
associated equipment and inventory, shall be retained by Alanco under certain
patents held by Alanco.
3
1.22 Fryer Inventory and Testing Equipment. All
rights and title to Fryer inventory and testing equipment, shall be retained by
Alanco under certain patents held by Alanco.
2.0 Assumption of Liabilities.
2.1 Assumed Liabilities. Upon and subject to the
terms and conditions herein stated, Purchaser agrees to assume as of the
Closing Date and to pay, perform and discharge all the liabilities of Seller
which are reflected in the Balance Sheet of Seller dated as of May 31, 2000, a
copy of which is attached hereto as Exhibit "B" and made a part hereof,
adjusted as such liabilities may have changed in the ordinary course of
business of Seller from May 31, 2000 until the Closing Date, together with all
product warranty liabilities of Seller (collectively, the "Assumed
Liabilities"). In the event that Seller or anyone on behalf of Seller have
personally guaranteed any of the Assumed Liabilities, both parties shall try to
obtain a complete novation of such guarantors on such liabilities. Purchaser
agrees to indemnify and hold harmless Seller, as well as Alanco and Seller's
guarantors, successors and assigns, from any and all claims, charges,
liabilities and expenses, including reasonable attorney's fees, relating in any
way to the Assumed Liabilities.
2.2 Excluded Liabilities. All of the liabilities
not specifically assumed by Purchaser pursuant to paragraph 2.1 above shall
remain the liabilities of Seller (the "Excluded Liabilities"). Seller agrees
to indemnify, pay, perfect, defend and hold harmless Purchaser, as well as its
successors and assigns, from any and all claims, charges, liabilities and
expenses, including reasonable attorney's fees, relating in any way to the
Excluded Liabilities. The Excluded Liabilities include, but are not limited to
the following:
(a) All obligations and liabilities with
respect to unfunded employee benefit plan obligations or severance obligation
for any personnel whose severance occurs prior to or on the Closing Date.
(b) Any obligations of Seller to perform
this Agreement.
(c) Any liability for income taxes.
(d) Any liability known or unknown, not
assumed by Purchaser under the provisions of Section 2.1 above.
3.0 Consideration For Assets. In consideration of and in
exchange for the transfer, assignment and conveyance of the Assets, in addition
to the assumption of Assumed Liabilities, Purchaser shall pay to Seller the
sum of Three Million Four Hundred Fifty Thousand and No/100ths Dollars
($3,450,000.00) (the "Purchase Price"), as follows:
3.1 Deposit. Purchaser has paid to Seller the sum
of $50,000.00 as a good faith deposit on or before the date hereof, which
deposit is non-refundable unless Seller defaults hereunder.
3.2 Promissory Note. Purchaser shall deliver its
Note Purchase Agreement and Promissory Note in the amount of $600,000 in favor
of Seller on the Closing Date (collectively, the "Promissory Note"). The
Promissory Note shall be in the form of Exhibit "C" attached hereto, and shall
be secured by the non-recourse personal guarantee of Ronald and Julie Krebs in
the form of Exhibit "D" attached hereto ("Guaranty"), which is secured in turn
by a second position pledge of all of the issued and outstanding capital stock
of Purchaser in the for on Exhibit "E" attached hereto ("Security Agreement").
4
3.3 Balance. The balance of the Purchase Price,
$2,800,000, shall be paid in immediately available funds on the Closing Date.
3.4 Allocation of Purchase Price Among Assets.
The parties shall determine the final allocation of the aggregate purchase
price among the Assets as of the Closing Date, which allocation shall be used
on Form 8594 and any other notice or filing required pursuant to section 1060
of the Internal Revenue Code of 1986, as amended (the "Code").
4.0 Representations and Warranties of Seller. Seller
represents and warrants to Purchaser as follows, and acknowledges and confirms
that Purchaser is relying upon such representations and warranties in
connection with the execution, delivery and performance of this Agreement,
notwithstanding any investigation made by Purchaser or on its behalf:
4.1. Organization and Standing. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nebraska, has all of the requisite power and authority and
has all of the licenses, permits, authorities and consents that are necessary
to own, operate and lease its properties and to carry on its business as now
being conducted. Seller is not a party to or subject to any agreement,
consent decree or order, or other understanding or arrangement with, or any
directive of, any governmental authority or other person which imposes any
restriction or otherwise affects in any material way the conduct of its
business in any jurisdiction or location.
4.2. Capitalization. All of the issued and
outstanding capital stock of Seller is owned by Alanco.
4.3. Subsidiaries. Seller has no subsidiaries and
does not otherwise presently own or control, directly or indirectly, any other
corporation, association, or other business entity.
4.4. Authorization. Seller has all the requisite
legal power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All action on the part of
Seller necessary for the authorization, execution, delivery, and performance of
all obligations of Seller under this Agreement has been (or will be) taken
prior to the Closing. This Agreement, when executed and delivered, shall
constitute a legal, valid and binding obligation of Seller enforceable in
accordance with its terms.
4.5 Title to Assets; Liens, etc. Seller has good
and marketable title to the Assets, free and clear of all liens, other than the
lien for current taxes not yet due and payable and recorded non-monetary
encumbrances, easements, and restrictions with respect to the real estate
described in Exhibit "A".
4.6 Employees. Seller has no employment contracts
with any of its employees which are not terminable at will or any consulting or
independent contractor agreements with any individual or entity, and it does
not have any collective bargaining agreements covering any of its employees.
4.7 Taxes. Seller has filed all federal, state,
county, local and foreign tax returns, reports and forms for income, excise,
social security, property, payroll, unemployment and other taxes which are
required to be filed by it, including all sales tax returns ("Tax Returns").
5
5.0 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows, and acknowledges and confirms
that Seller is relying upon such representations and warranties in connection
with the execution, delivery and performance of this Agreement, notwithstanding
any investigation made by Seller or on its behalf:
5.1. Organization and Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nebraska, has all of the requisite corporate power and
authority and has all of the licenses, permits, authorities and consents that
are necessary to own, operate and lease its properties and to carry on its
business as now being conducted and as proposed to be conducted. Purchaser is
duly qualified to do business and is in good standing as a foreign corporation
in all jurisdictions in which the property owned, leased or operated by
Purchaser or the nature of the business conducted by Purchaser makes such
qualification necessary. Neither Purchaser nor any Subsidiary of Purchaser is
a party to or subject to any agreement, consent decree or order, or other
understanding or arrangement with, or any directive of, any governmental
authority or other person which imposes any restriction or otherwise affects in
any material way the conduct of their business in any jurisdiction or location.
5.2 Authorization. Purchaser has all the
requisite legal power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. All action on the part of
Purchaser necessary for the authorization, execution, delivery, and performance
of all obligations of Purchaser under this Agreement has been (or will be)
taken prior to the Closing. This Agreement, when executed and delivered, shall
constitute a legal, valid and binding obligation of Purchaser, enforceable in
accordance with its terms.
5.3 Governmental Consents. No consent, approval,
order, or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority
is required on the part of Purchaser in connection with the execution, delivery
or performance of this Agreement or consummation of the transactions
contemplated hereby.
5.4 Compliance with Other Instruments. Purchaser
will not be, as a result of the execution, delivery or performance of this
Agreement, in violation of or default under any provision of any instrument or
agreement to which they are a party, or of any provision of any federal or
state judgment, writ, decree, order, statute, rule, or governmental regulation
applicable to Purchaser.
5.5 Litigation. There is no action, suit,
arbitration, proceeding or investigation pending or threatened against
Purchaser before any court or administrative agency, nor does Purchaser, after
due investigation, know or have any reason to know of any basis for any such
action, proceeding or investigation. Purchaser has not received any opinion or
memorandum or legal advice or notice from legal counsel to the effect that it
is likely, from a legal standpoint, that it will incur any liability or
disadvantage which may be material to Purchaser.
5.6. No Known Violations of Seller
Representations; Unrecorded Liabilities. As president of Seller, Ronald R.
Krebs is not aware of any violations by Seller of Seller's warranties and
representations set forth in section 4 above, nor of any liabilities not
reflected on the Balance Sheet of Seller attached hereto as Exhibit "B", except
as such liabilities may have changed in the ordinary course of business of
Seller from May 31, 2000 until the Closing Date.
6
6.0 Agreements Concerning the Real Estate.
6.1 Title Company. Upon execution of this
Agreement, an escrow shall be established with Goldsmith Abstract and Title,
217 E 18th, Falls City, NE 68355, Telephone: 402-245-3088 (Coleen Marx, Escrow
Officer) (the "Title Company") in accordance with the this Agreement. This
transaction shall be closed in accordance with this Agreement and the Purchase
Price shall be paid as indicated in section 3 above and all documents necessary
for the consummation of this transaction shall be delivered through escrow on
or prior to the Closing Date. Provided that all conditions of this Agreement
have been satisfied, the Title Company shall disburse the proceeds of sale to
Seller and Seller shall deliver possession of the Assets to Purchaser on the
Closing Date.
6.2 Title Commitment. As soon as reasonably
possible after opening of escrow, Seller shall cause a preliminary title report
for an extended coverage policy ("Commitment") to be issued by the Title
Company showing the condition of title to the Real Estate. If the Commitment
or any amendment thereto discloses exceptions which are objectionable to
Purchaser, Purchaser, within fifteen (15) days following the date on which
Purchaser received the Commitment, together with legible copies of all items
(if available) listed as exceptions in Schedule "B" of such Commitment or
within five (5) days after receipt of any amendment to the Commitment, shall
deliver to Seller written notice of Purchaser's objections, if any, to such
exceptions ("Unpermitted Exceptions"). If Purchaser fails to deliver such
written notice or objection to Seller within the applicable time period,
Purchaser shall be deemed to have waived its right to object to such
Unpermitted Exceptions, which shall thereafter be deemed "Permitted
Exceptions." In the event that Purchaser shall so object to any such
Unpermitted Exceptions, Seller shall notify Purchaser within five (5) business
days following the date of Purchaser's notice of such objections that either
(a) the Unpermitted Exceptions have been, or will be at or prior to Closing,
removed from the Commitment or are or will be insured over by the Title Company
pursuant to an endorsement to the Commitment and in such event, if reasonably
required to allow the parties to prepare for Closing, the Closing Date shall be
deferred to a date mutually agreed upon by the parties, or (b) Seller has
failed to arrange to have the Unpermitted Exceptions removed or insured over by
the Title Company. If Seller does not notify Purchaser that it has arranged to
have the Unpermitted Exceptions removed or insured over within said five (5)
business day period, Purchaser may elect either:
(a) to terminate this Agreement, in
which event the deposit shall be returned to Purchaser as Purchaser's sole
remedy hereunder; or
(b) to take title as it then is, which
election must be made within five (5) days following expiration of said five
(5) day period in which event:
(1) Purchaser shall be deemed to have
agreed to accept title as it then is without any reduction
in the Purchase Price;
(2) all Unpermitted Exceptions not
removed from the Commitment will thenceforth be deemed
Permitted Exceptions; and
(3) this Agreement shall remain in full
force and effect.
7
If the Commitment discloses Unpermitted Exceptions, and other than those which
the Title Company has agreed to insure against, or the Seller has agreed to pay
or discharge, or Purchaser has agreed to waive, then unless Purchaser agrees to
accept title as it then is without reduction of the Purchase Price, Seller may,
at its option, terminate this Agreement, in which event the deposit together
with interest accrued thereon shall be returned to Purchaser as Purchaser's
sole remedy under this Agreement. On the Closing Date, Seller shall cause the
Title Company to issue an owner's title insurance policy, or the unconditional
commitment of the Title Company to issue such policy (which commitment shall be
deemed made upon the recordation by the Title Company or its agent of the
Deed), in the amount of $1,000,000, subject only to the printed exceptions
normally contained in such policies and the Permitted Exceptions. The Title
Policy shall be standard or extended coverage, at Purchaser's option; provided,
however, if Purchaser elects extended coverage, Purchaser shall be responsible
for satisfying, at Purchaser's cost, the Title Company's requirements therefor,
and payment for any additional premiums for such extended coverage. In no
event shall the Closing be extended because of Purchaser's election of extended
coverage.
6.3 Escrow Costs. Costs incurred with respect to
the escrow shall be paid as follows:
(a) Recording fees for the release of
any encumbrances against the Real Estate shall be paid by Seller.
(b) Recording fees for the deed shall be
paid by Purchaser.
(c) Any general charges of the Escrow
Agent shall be divided between Purchaser and Seller equally.
(d) Additional title insurance premiums
to issue any endorsements required by Purchaser or Purchaser's Lender shall be
paid by Purchaser.
7.0 Pre-Closing Covenants.
7.1 Interim Operations of the Business. Seller
hereby covenants and agrees that between the date hereof and the Closing Date:
(a) Seller shall conduct its business diligently
and in the ordinary course and in accordance with past practice, and use its
best efforts to (i) preserve its business organization intact, and (ii) keep
available the services of its present employees.
(b) Seller shall not mortgage or encumber any
Asset.
(c) All Assets shall be used, operated, maintained
and repaired in accordance with normal and prudent business practices.
(d) Seller shall use its best efforts to preserve
Seller's relationships and goodwill with its customers, suppliers, licensors
and others having business relationships with Seller.
(e) Seller shall (i) maintain all Assets in
substantially the same condition as they are now (reasonable wear and tear,
which are not such as to adversely affect the operation of its business,
excepted), (ii) maintain insurance upon the Assets and with respect to the
8
conduct of the business, all such insurance to be comparable in amount, scope
and coverage to that in effect on the date of this Agreement, and (iii) give
Purchaser immediate written notice of any material damage to Seller's Assets by
fire or other casualty.
(f) Seller shall maintain its books, records and
accounts in the usual, regular and ordinary manner, on a basis consistent with
prior periods, and shall not make any changes in the accounting methods or
practices followed by Seller or any change in the depreciation or amortization
policies or rates theretofore adopted or applied.
(g) Seller shall duly comply with all laws
applicable to it, the Assets and the conduct of its business.
(h) Seller shall perform all of its obligations
without default.
(i) Seller shall not grant any power of attorney
with respect to its business or the Assets.
(j) Without the prior written consent of
Purchaser, Seller shall not enter into any new material contracts or
agreements, or cancel, amend, modify adversely, waive any material rights
under, assign, encumber or terminate any of the existing contracts or
agreements.
(k) Seller shall not, directly or indirectly,
sell, lease or otherwise dispose of any of the Assets or make any capital
expenditures, except in the ordinary course of business and consistent with the
past practices of Seller, or acquire any other business.
(l) Seller shall not increase the compensation
payable or to become payable to any employee, officer or director of Seller.
(m) Seller shall not write-down, cancel or
forgive, in full or in part, any accounts receivable of, or loans payable to
Seller, other than those involving Alanco or in the ordinary course of
business.
(n) Seller will not engage in any transaction
which would be inconsistent with any representation, warranty or covenant of
Seller set forth herein or which would cause a breach of any such
representation, warranty or covenant.
7.2 No Public Disclosure. The parties hereto
hereby covenant and agree that they shall not publicly disclose the existence
of this Agreement or the terms (including, without limiting the generality of
the foregoing, the Purchase Price) of the transactions contemplated by this
Agreement except (i) as necessary for the review by Purchaser's advisors,
lenders, prospective investors and analysts in connection with the consummation
of this Agreement, (ii) with the prior written consent of the other parties,
(iii) if such disclosure is compelled by an order of a court or governmental
agency having competent jurisdiction, and after consultation by the disclosing
party with the other parties, (iv) if such disclosure shall be determined by
such party's counsel to be required or necessary for purposes of such party's
compliance with applicable stock exchange regulations or foreign, federal or
state securities laws and the rules and regulations promulgated thereunder, and
after consultation by such party with the other parties, (v) if such disclosure
is required by lawful discovery in any judicial proceeding, and after
consultation by the disclosing party with the other parties, or (vi) in any
9
action by any party to enforce this Agreement, and Purchaser shal be free to
disclose that it has acquired the Asets following the Closing. .
8.0 Agreement Expenses. Each of the parties shall bear
their own expenses in connection with the transactions covered or contemplated
by this Agreement, and each represents and warrants to the other that there is
no broker, agent or other person entitled to compensation or a fee in
connection with this Agreement or with the transactions contemplated hereby,
except such fees or compensations as each of the parties is hereby representing
and warranting that it is exclusively liable to pay.
9.0 Conditions Precedent to Closing.
9.1. Conditions to the Obligations of Purchaser.
The performance of the obligations of Purchaser hereunder is subject to the
fulfillment, or waiver by Purchaser, on or before the Closing Date of the
following conditions:
(a) Authorization. All action necessary to
authorize the execution, delivery and performance of this Agreement by Seller
and the consummation of the transactions contemplated hereby and thereby shall
have been duly and validly taken by Seller, and Seller shall have full power
and right to consummate the transactions contemplated hereby and thereby.
(b) Conduct of Business in Ordinary Course. To
the Closing Date, Seller shall have conducted its business only in the ordinary
course, consistent with the past practices of Seller, except for actions
expressly permitted by this Agreement, matters incident to carrying out this
Agreement, or such further matters as may be consented to in writing by
Purchaser.
(c) Consents and Approvals. Seller shall have
obtained all consents and approvals and waivers and given such notices as may
be necessary to consummate the transactions contemplated hereby.
(d) No Litigation or Legislation. No federal,
state, local or foreign statute, rule or regulation shall have been enacted or
litigation, proceeding, government inquiry or investigation commenced or
threatened which prohibits, restricts or delays the consummation of the
transactions contemplated by this Agreement or any of the conditions to the
consummation of such transactions or adversely affects the desirability of
consummating the transactions contemplated hereby, including but not limited to
(i) requisite stockholder approval or notification and (ii) the consent to the
transactions contemplated hereby of the parties to all material agreements
under which Seller would otherwise be in default as a result of the
transactions contemplated hereby. All consents, authorizations, orders or
approvals of, and filings or registrations with, any federal, state or local
governmental commission, board or other regulatory body which is required for
or in connection with the execution, delivery, and performance of this
Agreement by the Seller and the consummation of the transactions contemplated
hereby shall have been obtained.
(e) Accuracy of Representations and Warranties.
Each of the representations and warranties of Seller set forth in Section 4
hereof shall be true and correct in all material respects on and as of the
Closing Date.
(f) Delivery of Closing Documents. Purchaser
shall have received the closing documents set forth in Section 11.1 hereof.
10
(g) No Adverse Change. There shall not have
occurred a material adverse change to Seller, its business, or its assets.
(h) Financing Contingency. Purchaser shall have
obtained necessary financing for this transaction in an amount of at least
$2,665,000 at current commercial interest rates, including a guarantee of such
financing by the United States Small Business Association.
9.2. Conditions to the Obligations of Seller. The
performance of the obligations of Seller hereunder is subject to the
fulfillment, or waiver by Seller, on or before the Closing Date of the
following conditions:
(a) Authorization. All action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby and thereby, shall have
been duly and validly taken by Purchaser, and Purchaser shall have full power
and right to consummate the transactions contemplated hereby and thereby.
(b) Delivery of Closing Documents. Seller shall
have received the closing documents set forth in Section 11.2 hereof.
(c) No Litigation or Legislation. No federal,
state, local or foreign statute, rule or regulation shall have been enacted or
litigation, proceeding, government inquiry or investigation commenced or
threatened which prohibits, restricts or delays the consummation of the
transactions contemplated by this Agreement or any of the conditions to the
consummation of such transactions or adversely affects the desirability of
consummating the transactions contemplated hereby and thereby.
(d) Accuracy of Representations and Warranties.
Each of the representations and warranties of Purchaser set forth in Section 5
hereof shall be true and correct in all respects on and as of the Closing Date.
9.3. Option to Terminate. In the event any of the
conditions precedent to the obligation of either of the parties to consummate
the transactions contemplated hereby is not satisfied and/or waived on or
before the Closing Date, then any party whose obligation is subject to such
conditions shall have the right to terminate this Agreement by written notice
to the other party. Upon the effective date of any termination made pursuant
to this Section 9.3, Purchaser's $35,000 deposit shall be returned to the
Purchaser by Seller, and none of the parties to this Agreement shall have any
further liability or obligation to the other parties hereunder, unless
otherwise specifically stated.
10.0 Closing. The closing ("Closing") shall occur at the
office of the Title Company upon such date as the parties agree within ten (10)
days following receipt by Purchaser of a commitment for financing, but not
later than August 15, 2000 (the "Closing Date"). The Closing shall constitute
the acts which take place on the Closing Date by which the transactions
contemplated by this Agreement are consummated. Notwithstanding anything
herein to the contrary, the Purchase Price shall be increased at the rate of
$745.20 per day for each day from July 1, 2000 to the actual Closing Date if
the Closing does not occur on or before August 1, 2000, unless the failure of
the Closing to occur by said date is the fault of Seller. Such increase in the
Purchase Price shall be paid by increasing the cash portion of the Purchase
Price to be paid at Closing.
11.0 Closing Documents. On the Closing Date, the parties
shall exchange documents as follows:
11
11.1 Delivery by Seller. Seller shall deliver to
Purchaser:
(a) A copy of the resolutions duly adopted by the
Board of Directors of Seller and the Board of Directors of Alanco authorizing
and approving the execution, delivery and performance of this Agreement, and
the execution and delivery of any and all other documents and agreements
contemplated hereunder, certified by the Secretary of Seller and Alanco.
(b) The Assets to be conveyed pursuant hereto
shall be conveyed by warranty deeds, bills of sale, assignments or other
instruments of transfer as shall be appropriate to carry out the intent of this
Agreement and as shall be sufficient to convey to Purchaser all of the rights,
title and interest of Seller in and to the Assets to be conveyed hereunder.
Any sales and transfer taxes imposed upon Seller in connection with the sale
and transfer of assets hereunder shall be paid by Purchaser.
(c) Such further instruments or documents as
Purchaser or its counsel may reasonably request to assure the effective
carrying out of the transactions contemplated hereby.
11.2 Delivery by Purchaser. Purchaser shall
deliver to Seller:
(a) A copy of the resolutions duly adopted by the
Board of Directors of Purchaser authorizing and approving the execution,
delivery and performance of this Agreement, and the execution and delivery of
any and all other documents and agreements contemplated hereunder, certified by
the Secretary or an Assistant Secretary of Purchaser.
(b) Immediately available funds for the portion of
the Purchase Price due at Closing in accordance with section 3.0 above.
(c) The Promissory Note, Guaranty and Security
Agreement.
(d) Such further instruments or other documents as
Seller or its counsel may reasonably request to assure the effective carrying
out of the transactions contemplated hereby.
11.3 Form of Closing Documents. All closing
documents shall be in form and substance reasonably satisfactory to counsel for
the respective parties.
11.4 Additional Documents. The parties further
agree that at any time subsequent to the Closing Date, they will, upon request
and at the expense of the requesting party, do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
further acts, assignments, transfers, conveyances, powers of attorney or
assurances as may be required for the better assigning, transferring, granting,
conveying and assuring to the parties any of the transactions contemplated
herein.
12.0 Post-Closing Employee Stock Options. The parties agree
that all of Seller's current employees, including Ronald R. Krebs, who
presently have Alanco Stock Options granted under any Alanco Employee Stock
Option Plan, shall have the right to request, within thirty (30) days following
the Closing Date, that such options be converted into non-statutory options
having the same exercise prices as their current options but which terminate
12
May 31, 2002. Each such requesting employee shall certify that they understand
that by converting their options to non-statutory options there will be taxable
income to them upon exercise of said options. Any such employee who fails to
request such conversion shall retain their existing incentive stock options,
which by their terms will expire the number of days following their termination
of employment with Seller specified in the Stock Option Plan under which such
options were originally granted.
13.0 Indemnification.
13.1 Seller. Seller agrees to pay, protect and
defend and does hereby indemnify, and hold harmless Purchaser, and Purchaser's
employees and agents, against and in respect to any claims, losses, expenses,
obligations and liabilities, including reasonable attorney's fees, which arise
or result from or relate to any breach of or failure by Seller to perform any
of Seller's warranties, representations, guarantees, commitments, covenants, or
conditions under this Agreement. Counsel employed to defend Purchaser
hereunder shall be reasonably satisfactory to Purchaser.
13.2 Purchaser. Purchaser agrees to pay, protect
and defend and hereby indemnifies and holds harmless the Alanco, Seller, and
their employees, agents, successors and assigns, against and in respect to any
claims, losses, expenses, costs, obligations and liabilities, including
reasonable attorney's fees, which they may incur or suffer by reason of a
breach of or failure by Purchaser to perform any of its warranties,
representations, guarantees, commitments or covenants in this Agreement, or by
reason of any act or omission of Purchaser subsequent to the Closing Date which
constitutes a breach or default hereunder, or which results in loss to Alanco
under any guarantees by Alanco of the obligations of Seller to any lender,
leasing company or other third party, existing on the Closing Date, which
obligation is assumed by Purchaser hereunder. Counsel employed to defend
Seller hereunder shall be reasonably satisfactory to Seller.
14.0 Benefits of this Agreement. Nothing in this Agreement
shall be construed to give any benefits to any person (including, without
limiting the generality of the foregoing, any present or former employee of
Seller, except as otherwise specifically stated herein) or corporation or other
entity, other than Seller and Purchaser, and this Agreement shall be for the
sole and exclusive benefit of Seller and Purchaser.
15.0 Successors and Assigns. This Agreement shall inure to
the benefit of, and be binding upon, the successors, heirs, executors,
administrators and permitted assigns of the parties hereto. This Agreement may
not be assigned by any of the parties hereto without the prior written consent
of the other parties, except that the Purchaser may assign Purchaser's rights
to acquire the Assets to one or more corporations or other legal entities owned
and controlled by Purchaser, provided however, if the Assets are to be acquired
by more than one entity, the closings of such transactions shall occur
simultaneously and be contingent upon one another.
16.0 Notices. Any notice from one party to the other shall
be deemed given when delivered to, or on the day after being sent by a
nationally recognized overnight courier service addressed to, the person at the
address listed below or to such other person and/or address as may be
designated from time to time in writing:
13
(a) If to Purchaser:
Krebs, Inc.
P.O. Box 398
Falls City, Nebraska 68355-0398
Attn: Ronald R. Krebs
with a copy to:
Vernon Jarboe
Sloan, Listrom, Eisenbarth, Sloan & Glassman, L.L.C.
700 S. Kansas Avenue
Topeka, KS 66603-3881
(b) If to Seller or Alanco:
c/o Alanco Technologies, Inc.
15900 N. 78th Street, Suite 101
Scottsdale, AZ 85260
with a copy to:
Steven P. Oman, Esq.
14001 N. 50th Street
Scottsdale, Arizona 85254
17.0 Severability. In the event any covenant, condition or
other provision of this Agreement is held to be invalid or unenforceable by a
final judgment of a court of competent jurisdiction, then such covenant,
condition or other provision shall be automatically terminated and performance
thereof waived, and such invalidity or unenforceability shall in no way affect
any of the other covenants, conditions or provisions hereof, and the parties
hereto shall negotiate in good faith to agree to such amendments, modifications
or supplements of or to this Agreement or such other appropriate actions as, to
the maximum extent practicable, shall implement and give effect to the
intentions of the parties as reflected herein.
18.0 Entire Agreement. This Agreement contain all of the
terms agreed upon by the parties with respect to the subject matter hereof and
thereof and there are no representations or understandings between the parties
except as provided herein and therein. This Agreement may not be amended or
modified in any way except by a written amendment to this Agreement duly
executed by the parties.
19.0 Waiver. No waiver of a breach of, or default under,
any provision of this Agreement shall be deemed a waiver of such provision or
of any subsequent breach or default of the same or similar nature or of any
other provision or condition of this Agreement.
20.0 Applicable Law. This Agreement shall be governed by
and construed (both as to validity and performance) and enforced in accordance
with the laws of the State of Nebraska.
21.0 Attorneys' Fees. In any action brought to enforce the
provisions of this Agreement, the prevailing party shall be entitled to recover
its attorneys' fees and costs as determined by the court and not the jury.
14
22.0 Equitable Relief. The parties agree that the remedies
at law for any breach of the terms of this Agreement are inadequate.
Accordingly, the parties consent and agree that an injunction may be issued to
restrain any breach or alleged breach of such provisions. The parties agree
that terms of this Agreement shall be enforceable by a decree of specific
performance. Such remedies shall be cumulative and not exclusive, and shall be
in addition to any other remedies which the parties may have at law or in
equity.
23.0 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument, but all of such counterparts taken
together shall be deemed to constitute one and the same instrument. No party
shall be bound until each party has signed at least one (1) such counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their respective names as of the day and year first above written.
SELLER:
ALANCO ENVIRONMENTAL MANUFACTURING, INC.
a Nebraska corporation
By: __/s/ John A Carlson________________
------------------------------------
Its: ___Chief Financial Officer_____________________________
PURCHASER:
KREBS, INC.
a Nebraska corporation
By: /s/ Ronald R. Krebs_________
------------------------------------______
Ronald R. Krebs, President
15
