Exhibit 10.2
CONSIGNMENT SALE AGREEMENT
This Agreement is made as of
February 5, 2007, by and between Nature Vision, Inc., a
Minnesota corporation (“Seller”) and New Vad, LLC, a
Minnesota limited liability company,
(“Buyer”).
Recitals
A.
Seller and Buyer are parties to that
certain Asset Purchase Agreement dated of even date herewith (the
“Purchase Agreement”), pursuant to which Seller is
selling to Buyer certain assets and Buyer is assuming from Seller
certain liabilities, as specified in the Purchase Agreement
relating to Seller’s Vaddio business line.
B.
Pursuant to the terms of the
Purchase Agreement, Seller is retaining title to the Vaddio
inventory but has agreed to sell to Buyer the inventory on
consignment on the terms and conditions set forth
herein.
Agreement
1.
Transfer of
Possession. Seller agrees
to transfer possession of the inventory described in the Purchase
Agreement and schedules thereto (the “Consigned
Inventory”) to Buyer upon execution of the Purchase Agreement
(the “Closing Date”).
2.
Title to Goods and
Proceeds . Seller shall
at all times retain title to all Consigned Inventory delivered to
Buyer under this Agreement until the sale, if applicable, of such
Consigned Inventory. The proceeds of all Consigned Inventory
purchased by Buyer shall be held in trust for the benefit and the
account of Seller until fully accounted for in accordance with the
provisions of this Agreement. Buyer must hold such funds in trust
for Seller.
3.
Grant of Authority; First
Use. Seller hereby grants
to Buyer the right and authority to act as its exclusive Buyer to
purchase the Consigned Inventory for its book value as set forth in
the attached Schedule A. Buyer agrees to purchase from Seller
an item of Consigned Inventory before purchasing that type of item
from a third party.
4.
Security Interest
. In that regard, and to protect
Seller’s rights with respect to the Consigned Inventory (in
the event Buyer is deemed to hold title to any of the Consigned
Inventory), Buyer hereby grants Seller a security interest in all
right, title and interest of Buyer in and to the Consigned
Inventory, together with all substitutions and replacements and
proceeds thereof, together with all warehouse receipts, bills of
lading and other documents of title now or hereafter covering the
Consigned Inventory. In no event shall the foregoing grant by Buyer
of a security interest be deemed to abrogate Seller’s
ownership interest in the Consigned Inventory. Buyer agrees that
its security interest in an item of Consignment Inventory will be
released upon receipt of payment for that item.
5.
Liens and Encumbrances
. Buyer shall not pledge or encumber
any Consigned Inventory. Buyer shall not give a security interest
in the Consigned Inventory to any third party. Buyer shall have
informed Seller in writing, prior to the execution of this
Agreement, of any
security interests Buyer has given
to any third party in its inventory that could, in any way, cover
the Consigned Inventory.
6.
Accounting; Payment on Sale of
Consigned Inventory. On
or before Friday of each week during which this Agreement is in
effect, Buyer will provide in writing to Seller an accounting of
all Consigned Inventory purchased in the previous week and shall
remit to Seller the payment due therefore within thirty (30) days
of the accounting. Such accounting shall be submitted in such form
and shall contain such detail as may be necessary to adequately
account to the Seller for the disposition of the Consigned
Inventory, the remaining balances of Consigned Inventory in
Buyer’s possession and the payment due to Seller therefrom.
Notwithstanding Seller’s acceptance of periodic payments,
Seller shall have 30 days following April 30, 2007, July 31, 2007,
October 31, 2007 and January 31, 2008 to make a claim for
adjustment by reason of errors or omissions from the payment or the
accounting relating to the previous quarter. If no such claim for
adjustment is timely made, such accounting and receipt of such
payment shall be deemed final and satisfied in full. The Seller or
its designated representatives may, upon request, periodically
inspect the books and records of Buyer during regular business
hours for the purpose of verifying the accuracy of the accountings
and payments.
7.
Maintenance of Consigned
Inventory. Buyer shall
maintain the Consigned Inventory at its principal place of business
and use due care for protecting the inventory from theft or damage
in a commercially reasonable manner. Buyer must also implement a
clear method to physically segregate the Consigned Inventory from
any component parts or merchandise Buyer may acquire from other
sources after the Closing Date, and must disclose the details of
such method of segregation to Seller.
8.
Risk of Loss,
Insurance . Buyer shall
accept consignment of the Consigned Inventory by signing this
Agreement. Buyer shall be responsible for loss or damage to any
Consigned Inventory that has not been sold or delivered to
purchasers. Buyer shall obtain and maintain adequate insurance to
cover losses of or damages to all such Consigned Inventory. Seller
is entitled to all insurance proceeds that cover the loss of
Consigned Inventory. Buyer shall pay Seller the book value of the
Consigned Inventory for the loss or damage to Consigned Inventory
under consignment. Within fifteen(15) days of the date hereof,
Buyer must provide proof to Seller that such insurance coverage is
in effect and that Seller is a loss payee.
9.
No Commission.
There shall be no commission payable
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