Exhibit 99.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 13th day of August, 2004, by and
between Ag-Bag International Limited, a Delaware corporation ("Seller") and
Xxxxxx St. Xxxxxxx, Inc., a Wisconsin corporation ("Buyer").
RECITALS
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WHEREAS, Seller is engaged in the manufacture and sale of complete
sealed plastic storage systems for agricultural and environmental uses (the
"Business"). Buyer desires to purchase and Seller desires to sell substantially
all of the assets owned by and/or used by Seller in the operation of the
Business, upon the terms and conditions hereinafter set forth.
AGREEMENT
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NOW, THEREFORE, in consideration of the warranties, covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. PURCHASE AND ASSIGNMENT OF ASSETS OF SELLER.
1.1 PURCHASED ASSETS. Seller shall sell, transfer, assign, convey
and deliver to Buyer, free and clear of all liens, security interests, claims
and encumbrances, except for (i) taxes not yet due and payable and (ii) those
liens, security interests and the rights of lessors under certain leases and of
licensors under certain licenses, none of which, alone or in the aggregate
materially interfere with the present use of the following or the operation of
the Business (as scheduled on Schedule 1.1, the "Permitted Encumbrances"), taken
as a whole, and Buyer will acquire, on the Closing Date (as hereinafter defined)
all right, title and interest in and to all of the assets owned by or used by
Seller in the operation of the Business (the "Purchased Assets"), except those
Excluded Assets set forth in Section 1.2 below, as follows:
(a) All inventory usable by Seller in the operation of the
Business and accepted by Buyer ("Inventory");
(b) All machinery, equipment, cranes and other building
fixtures, jigs and manufacturing fixtures, furniture, office supplies, vehicles,
software programs, computer printouts, telephone systems and numbers, data bases
and all related maintenance parts ("Equipment");
(c) All software products and any other proprietary products
and related object, source, and all other computer programming codes, graphics
sources, scripts, user manuals and instructions, and related items developed by
Seller or used in Seller's business, subject, however, to the rights of the
licensors under all applicable licenses;
(d) All technical information, documentation and descriptive
materials used in connection with or otherwise related to the Seller's business;
(e) All patents, trademarks, service marks, trade names,
copyrights, inventions, trade secrets, discoveries, and all rights to xxx for
past, present or future infringement
or appropriation thereof, internet domain names, formulas and other proprietary
know-how, whether or not patentable and any other intellectual property;
(f) All rights and interests in and to purchase orders,
license agreements, maintenance and service agreements and other contracts with
Seller's customers, sales orders issued to Seller's suppliers, leases of
personal and real property, and other contracts with Seller's suppliers (the
parties expressly acknowledge herein that Seller's existing contract with Up
North Plastics, Inc. dated December 20, 1991, and as amended June 19, 2002,
February 1, 1993, November 17, 1993, December 20, 1995, and February 2, 2000
shall not be assigned to Buyer and Buyer shall not assume said contract) and, in
addition to the foregoing, any other contracts of Seller which Buyer expressly
elects to assume, provided that in each case Seller obtains any required consent
of third parties to the assignment thereof to Buyer, or Buyer in its sole
discretion waives same ("Contracts");
(g) All books and records, including all customer lists,
sales and promotional materials, warranty records, personnel records, payroll
records, product engineering and development records and research and
development records; and
(h) All other assets and rights of Seller, unless expressly
listed as Excluded Assets in Section 1.2.
1.2 EXCLUDED ASSETS. The following assets and rights owned or
leased by Seller, as the case may be, shall not be sold by Seller to Buyer and
shall be retained by Seller following the Closing ("Excluded Assets"):
(a) All cash;
(b) All accounts receivable;
(c) All real estate;
(d) The paint booths and systems;
(e) The Visual computer system;
(f) Seller's corporate minute and stock record books and
corporate seal, general accounting records and books of original entries,
checkbooks and cancelled checks, and tax returns, reports and related records;
and
(g) Seller's rights and interest in and to any contracts not
assumed by Buyer, if any.
1.3 DELIVERY OF PURCHASED ASSETS. At the Closing, Seller shall
transfer and assign all of the Purchased Assets to Buyer by delivery to Buyer of
an appropriate xxxx of sale, assignment documents and such other instruments of
transfer and conveyance as shall be necessary to vest in Buyer full and complete
ownership, and legal and equitable title, to the Purchased Assets free and clear
of any and all liens and encumbrances of any kind or nature whatsoever except
for the Permitted Encumbrances; all such documents to be in form and substance
satisfactory to counsel for Buyer.
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2. PURCHASE PRICE.
2.1 AMOUNT OF PURCHASE PRICE. As consideration for the Purchased
Assets, Buyer will assume the Assumed Liabilities and will pay to Seller an
amount equal to the following (the "Purchase Price"):
(a) The amount of inventory on hand of new finished goods
and components equal to the amount of such inventory items that were sold or
used in the manufacturing process during the twelve (12) month period prior to
Closing, valued at actual cost; plus the amount of other inventory items,
accepted by Buyer, valued at Seller's cost less accumulated reserve; plus
(b) The amount of inventory on hand of new repair parts
equal to the sales of such repair parts during the twenty-four (24) month period
prior to Closing valued at actual cost; plus the amount of other repair parts
inventory, accepted by Buyer, valued Seller's cost less accumulated reserve;
plus
(c) The amount of inventory on hand of used finished goods,
accepted by Buyer, valued at the lower of cost or net book value (cost minus
accumulated reserves for each machine) times 85%; plus
(d) The amount of Equipment valued at the depreciated book
value of each item; plus
(e) One Million Two Hundred Thousand Dollars ($1,200,000);
minus
(f) The amount of the warranty expense accrued by Seller
during the twelve (12) month period prior to Closing.
2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price should be
allocated among the Purchased Assets as provided on Schedule 2.2 to be attached
hereto at the Closing and incorporated herein by this reference to be prepared
by mutual agreement of Seller and Buyer.
3. ASSUMPTION OF LIABILITIES. At the Closing, Buyer will only assume
and perform the obligations of Seller (i) arising from and after the Closing
associated with the ownership of the Purchased Assets, including, but not
limited to, the Contracts and (ii) arising from and after the Closing associated
with the operation of the Business (collectively, the "Assumed Liabilities").
Except for the Assumed Liabilities, Seller is retaining all of its debts,
liabilities and obligations existing as of the Closing and Buyer will not assume
and will not be obligated to pay, perform or discharge any debts, liabilities or
obligations of Seller, whether actual or contingent including, without
limitation and if any, obligations relating to Seller's plastic supply agreement
with Up North Plastics, Inc., employee pension, profit sharing, vacation, health
insurance or any other employee benefits, income taxes, sales or use taxes, or
product warranty or product liability claims arising prior to or as a result of
the Closing.
4. CLOSING DATE. The closing (consummation of the transactions
contemplated by this Agreement) ("Closing") shall take place at Seller's
corporate office on October 29, 2004, or at such other time and place as the
parties may agree ("Closing Date").
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5. REPRESENTATIONS OF SELLER. For purposes of this Section 5:
(a) References to the "knowledge" of Seller means the actual
knowledge of Seller's management personnel; and
(b) No specific representation or warranty shall limit the
applicability of a more general representation or warranty.
Seller hereby represents to the Buyer as follows:
5.1 SELLER'S ORGANIZATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power to own the Purchased Assets associated
with the Business as it is now being conducted and is qualified to do business
and is in good standing in all states where it does business.
5.2 SELLER'S AUTHORITY. The execution and delivery of this
Agreement, and all documents to be executed and delivered by Seller pursuant to
this Agreement, have been duly and validly authorized Board of Directors of
Seller, and at the Closing, will have been duly approved by the stockholders of
Seller. This Agreement is, and such other documents when executed and delivered
by Seller will be, valid and binding obligations of Seller enforceable in
accordance with their respective terms.
5.3 TITLE TO AND CONDITION OF PROPERTY. On the Closing Date, (a)
Seller shall have good and marketable title to, undisputed possession of and
complete and unrestricted power to sell, assign, transfer, convey and deliver
all of the Purchased Assets free and clear of all options, adverse claims,
restrictions, debts, claims, security interests, defects of title, liens,
pledges, charges or encumbrances of any nature whatsoever, except for the
Permitted Encumbrances and (b) there shall not be as of the Closing Date any
fact or circumstance known to Seller which may or could result in any liability
to Buyer, Seller or the Business by reason of any local, state or federal
statute or ordinance.
5.4 CONDITION OF PURCHASED ASSETS. To the knowledge of Seller,
all of the Purchased Assets shall be, as of the Closing Date, in good working
condition in all material respects.
5.5 NO CONSENT REQUIRED. Seller shall be solely responsible for
any consent, approval, order or authorization of, or declaration, filing or
registration with, any person or governmental authority as may be required to be
made or obtained in connection with the authorization, execution, delivery or
performance of this Agreement or the transactions contemplated hereby and
thereby, other than (i) such as will have been made or obtained as of the
Closing Date, and (ii) such consents, approvals, orders, authorizations,
declarations, filings, or registrations the failure to make or obtain will not
have a material adverse effect on Seller, its business, operations or financial
condition, or on the Purchased Assets (a "Material Adverse Effect").
5.6 FINANCIAL STATEMENTS. Seller has delivered annual income
statements and balance sheets for its three most recent fiscal years (the
"Annual Financial Statements") to Buyer. The Annual Financial Statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied. To Seller's knowledge, the books, records
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and accounts of the Business accurately and fairly reflect in all material
respects the activities, transactions and dispositions of assets relating to the
Business.
5.7 CHANGES SINCE RECENT BALANCE SHEET DATE. With respect to the
period from and after the date of the June 30, 2004 Balance Sheet (the "Recent
Balance Sheet"), to Seller's knowledge, there has not been any material adverse
change in the condition of the Purchased Assets or the Business of Seller,
except changes in the ordinary course of business.
5.8 TAXES. Seller has duly filed or caused to be filed all
federal, state, local and foreign tax returns, reports and declarations required
to be filed by it, and has paid or made adequate provisions on the books and
records of Seller for the payment of all Taxes (as hereinafter defined) due in
respect thereof. As used herein, "Taxes" shall mean all taxes, fees, levies or
other assessments including but not limited to income, excise, property, sales,
social security and unemployment compensation taxes imposed by the United
States, any state, county or local government, and any interest or penalty
relating to such taxes or other assessments, in each case that relate to the
Purchased Assets or the Business or could become a lien thereon.
5.9 LITIGATION AND PROCEEDINGS. There is no action, suit or
proceeding pending or, to the knowledge of the Seller, threatened against the
Seller, that would prevent the consummation of the transactions contemplated by
this Agreement. Except as otherwise disclosed on Schedule 5.9, there is no suit,
action or legal, administrative, arbitrative or other proceeding pending, nor
does Seller have written notice or actual notice of any threatened suit, action
or legal, administrative, arbitrative or other proceeding in connection with the
Seller's Business or Purchased Assets; and to Seller's actual knowledge, Seller
is not under governmental investigation with respect to any violation of any law
or administrative regulation, federal, local or state, with respect to its
design, manufacture or sale of any of the items sold and Seller has no actual
knowledge of any existing facts or circumstances which would constitute a basis
for such action, proceeding, investigation, suit or arbitration.
5.10 LABOR AGREEMENTS. Seller has no obligations, contingent or
otherwise, under any written employment contract (and to Seller's knowledge, any
oral employment contracts), collective bargaining agreement, executive
employment agreement, executive compensation agreement, employees' pension or
retirement plan, thrift plan, employees' insurance plan, employees' profit
sharing or employees' stock purchase plan.
5.11 COMPLIANCE WITH LAW. To the knowledge of Seller, Seller and
the methods and means employed by it in the operation of the Business and its
ownership of the Purchased Assets are in compliance with all applicable federal,
state, local and foreign laws, regulations or orders of any court, or federal,
state, municipal or other governmental department, commission, board, agency or
other instrumentality (including without limitation, laws and regulations
applicable to environmental standards, wages and hours, civil rights and
occupational health and safety), except where such non-compliance would not have
or result in a Material Adverse Effect.
5.12 CUSTOMERS AND SUPPLIERS. As soon as possible after the date
of this Agreement, but in no event later than September 1, 2004, Seller shall
provide Buyer with a list of the twenty (20) largest customers of the Business
in terms of dollar volume of sales for the three (3) preceding fiscal years and
for the current fiscal year-to-date, showing the approximate total dollar amount
of sales by Seller to each such customer during each such fiscal year and a list
of the twenty (20) largest suppliers of the Business in terms of dollar volume
of purchases for the
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three (3) preceding fiscal years and for the current fiscal year-to-date,
showing the approximate total dollar amount of purchases by Seller from each
supplier during each such fiscal year. In the event the listed customers do not
represent at least eighty percent (80%) of the total sales volume in any fiscal
year, the listing of customers shall be expanded to include the next largest
customers such that the total list of customers in the fiscal year represent at
least eighty percent (80%) of the total sales volume for that fiscal year. To
Seller's knowledge, there has not been any material adverse change in the
Business relationship of Seller with any of such customers or suppliers since
the date of the Recent Balance Sheet.
5.13 CONTRACTS AND COMMITMENTS. Each of the Contracts is in full
force and effect and has not been modified or amended. Seller is not and no
other party is in material breach or default under any Contract, and, to
Seller's knowledge, no event has occurred which constitutes, or with the lapse
of time or the giving of notice, or both, would constitute such a breach or
default by Seller thereunder. True, correct and complete copies of all of the
Contracts have been delivered to Buyer. Except as specifically disclosed
pursuant to other provisions of this Agreement or in Schedule 5.13, Seller is
not a party to any:
(a) Purchase Order which by its terms will not be filled
within sixty (60) days of its date, is in excess of the normal, ordinary and
usual requirements of the Business or provides for the purchase of
goods/services at a price in excess of $25,000;
(b) Sales Order which by its terms will not be filled within
sixty (60) days of its date, quotes prices which are not in the ordinary course
of Business or provides for the sale of goods/services at a price in excess of
$25,000;
(c) agreement with any agent, consultant, advisor,
salesperson, sales agent or representative, distributor or dealer, or any
agreement or arrangement providing for the payment of any bonus or commission
based on sales or earnings;
(d) except for Seller's standard limited warranty, any
agreement requiring Seller to accept the return of inventory or merchandise in
the possession of wholesalers, distributors, retailers or other customers;
(e) agreement requiring Seller to assign any interest in any
trade secret or prohibiting or restricting Seller from competing in any Business
or geographical area or soliciting customers or otherwise restricting it from
carrying on its Business anywhere in the world;
(f) any other agreement, lease, license or commitment which
is material to the Purchased Assets or the conduct of the Business.
5.14 INTELLECTUAL PROPERTY. As soon as possible after the date of
this Agreement, but in no event later than September 1, 2004, Seller shall
provide Buyer with a schedule that contains all of the patents, trademarks,
copyrights, and similar rights and applications therefor, expired or currently
in effect, ever owned or obtained by Seller, or any affiliate of Seller. No
claims of infringement are presently pending or, to Seller's knowledge,
threatened with respect to any of such rights.
5.15 ALL NECESSARY ASSETS. The Purchased Assets constitute all of
the tangible and intangible assets, rights, and properties necessary to permit
Buyer to conduct the Business in
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all material respects in the same manner as the Business has been conducted by
the Seller prior to the date hereof.
5.16 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Closing Date,
the Seller will not have any material debts, liabilities or obligations of any
nature affecting the Business, or the Purchased Assets (whether accrued,
absolute, contingent, direct, indirect, perfected, inchoate, unliquidated or
otherwise and whether due or to become due) arising out of transactions entered
into on or prior to the Closing Date, or any transaction, series of
transactions, action or inaction occurring on or prior to the Closing Date, or
any state of facts or condition known to it existing on or prior to the Date
Closing (regardless of when such liability or obligation is asserted), including
but not limited to liabilities or obligations for governmental charges or
penalties, interest or fines thereon or in respect thereof, except as and to the
extent clearly and accurately reflected and accrued for or reserved against in
the Financial Statements or as otherwise disclosed to Buyer.
5.17 COMPLIANCE WITH SECURITIES LAWS. Seller has filed all forms,
reports and documents required to be filed by Seller with the United States
Securities and Exchange Commission (the "SEC") since July 1, 2001 (the "Seller's
SEC Reports"). The Seller's SEC Reports (including any financial statements
filed as a part thereof or incorporated therein by reference) (i) at the time
filed, complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, as the case may be, and (ii) did not, at the time they were filed (or
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing), contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such Seller's SEC Reports
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
6. BUYER'S REPRESENTATIONS. Buyer hereby represents to the Seller as
follows:
6.1 BUYER'S ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Wisconsin
and is qualified to do business in the State of Wisconsin.
6.2 BUYER'S AUTHORITY. The execution and delivery of this
Agreement, and all documents to be executed and delivered by Buyer pursuant to
this Agreement, have been duly and validly authorized by the Board of Directors
of Buyer. This Agreement is, and such other documents when executed and
delivered by Buyer will be, valid and binding obligations of Buyer enforceable
in accordance with their respective terms.
6.3 LITIGATION. There are no actions, suits, proceedings pending
or, to the knowledge of purchaser, threatened against the purchaser, that would
prevent the consummation of the transactions contemplated by this Agreement.
7. COVENANTS.
7.1 FULL ACCESS. From the date hereof to the Closing Date, during
reasonable times during normal business hours, Seller will give Buyer and its
representatives access to, and will cooperate as Buyer may request in making
available to it, all books, records and other information relating to the
Business. In the exercise of the rights conferred by Buyer under this
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Section 7.1, Buyer shall use all best efforts to minimize the disruption to
Seller and its business operations.
7.2 ACCESS TO BOOKS AND RECORDS. Following the Closing, upon
reasonable notice and during reasonable times during normal business hours,
Buyer shall make the books and records available to Seller for inspection by
Seller or its representatives with respect to Seller's operation of the Business
prior to the Closing. As used in this Section, the right of inspection includes
the right to make abstracts or copies.
7.3 COVENANT TO SATISFY CONDITIONS. Seller will use its best
efforts to ensure that the conditions set forth in Section 8 hereof are
satisfied, including, without limitation, the deliveries to Buyer provided for
therein. Buyer will use its best efforts to ensure that the conditions set forth
in Section 9 hereof are satisfied, including, without limitation, the deliveries
to Seller provided for therein.
7.4 PUBLICITY. Each party will consult with the other party prior
to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement, and will not issue
any such release or make any such statement over the reasonable objection of the
other party, except as required by law; provided, however, that without the
express approval of Seller in its sole discretion, Buyer will not disclose the
existence of the transactions contemplated hereby (except to their own advisors)
until after the Closing Date.
7.5 CONDUCT OF BUSINESS PENDING THE CLOSING. Prior to the Closing
Date:
(a) Seller will not institute any new or unusual methods of
sale, distribution, management, accounting or operation, and Seller will not,
except in the ordinary course of business consistent with past practice, engage
in any transaction or activity or enter into any agreement, lease, license or
commitment;
(b) Seller will not create any indebtedness for borrowed
money or incur any obligation or liability other than in the ordinary course of
the Business consistent with past practice, or subject any of the Purchased
Assets to any material lien or encumbrance of any nature;
(c) Seller will process sales orders, purchase orders and
warranty claims in a manner consistent with Seller's past practice;
(d) Seller will maintain all of its property, casualty,
liability and other insurance in effect as of the date hereof through the
Closing Date;
(e) Seller will use its reasonable efforts to preserve the
business organization of the Business intact and to preserve for Buyer the
present relationships of Seller with the suppliers, customers and employees of
the Business and others having business relations with it;
(f) Seller will not purchase or acquire or enter into any
contract to purchase or acquire for its Business any supplies, inventory,
services or other assets except in the ordinary course of business and in
quantities consistent with Seller's past practice, or dispose of any asset of
the Business (other than items of inventory in the ordinary course of business);
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(g) Seller will use its reasonable efforts to maintain in
effect any and all leases, agreements and other rights relating to the Business,
other than those which expire by their terms, and Seller will not breach or
commit a default under any of the foregoing; provided, however, that nothing in
this Section 7 or any other provision of this Agreement shall prohibit or
restrict Seller from (a) taking or refusing to take any action in accordance
with the ordinary course of business, or (b) taking or refusing to take any
action reasonably necessary in the judgment of Seller for the benefit of the
Business outside the normal course of business upon written notice thereof to
Buyer.
7.6 TAX ON TRANSACTION. Seller shall be responsible for and shall
pay all transfer taxes and fees and sales and use taxes or other taxes and fees
which may be imposed in connection with the sale or use of any of the Purchased
Assets sold and transferred by Seller to Buyer pursuant to this Agreement.
7.7 CONFIDENTIALITY. Each party to this Agreement will hold in
confidence all documents and information concerning the other party furnished to
it in connection with the transactions contemplated by this Agreement and not
otherwise lawfully available to it, and will use such information only in
connection with such transactions and, after the consummation of such
transactions, only in the conduct of its business. Neither party will release or
disclose such documents or information to any other person, except to its
attorneys, accountants and other outside consultants in connection with this
Agreement and its business, except to the extent such party can demonstrate such
information was previously known by it, in the public domain through no fault of
such party, disclosed to it by a third party having no confidentiality
obligation to the other party, or required by law. If the transactions
contemplated by this Agreement are not consummated, such confidence shall be
maintained and such information and documents shall not be used to the detriment
of the disclosing party or otherwise in any manner and all such documents
(including copies and extracts thereof) shall be returned to the disclosing
party immediately upon its request.
7.8 FURTHER ASSURANCES. Each party will execute such further
documents, and perform such further acts as may be necessary to sell, transfer,
assign, convey and deliver the Purchased Assets to Buyer on the terms herein
contained and to otherwise comply with the terms of this Agreement and to
consummate the transactions contemplated by this Agreement.
7.9 PRODUCT LIABILITY MATTERS. Any product liability claim made
by a customer relating to products invoiced by Seller shall be the sole
responsibility of Seller unless the Buyer has subsequently improperly serviced
such products and Seller shall indemnify and hold harmless Buyer with respect to
any such product liability claims. Any product liability claim made by a
customer relating to products invoiced by Buyer or improperly serviced by the
Buyer subsequent to the Closing Date shall be the sole responsibility of Buyer
and Buyer shall indemnify and hold harmless Seller with respect to any such
product liability claims.
7.10 PRODUCT WARRANTY CLAIM PROCEDURES. Buyer shall notify Seller
of any product warranty or other claim made by a customer relating to products
invoiced by Seller. Buyer shall perform such warranty related services for
Seller at Buyer's expense.
7.11 USE OF SELLER'S NAME. Following the Closing, neither Seller
nor any affiliate of Seller shall, without the prior written consent of Buyer,
shall make any use of the name "Ag-Bag" or "Ag-Bag International Limited" or any
other name confusingly similar
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thereto, except as may be necessary for Seller to pay the liabilities, prepare
tax returns and other reports, and to otherwise wind up and conclude its
business.
7.12 TRANSPORTATION OF PURCHASED ASSETS; RENT-FREE USE OF SELLER'S
FACILITY. On the Closing Date, Buyer shall take physical possession of the
Purchased Assets and shall be solely responsible for the transportation of the
Purchased Assets to Buyer's facility. Buyer shall be allowed to store some or
all of the Purchased Assets at Seller's facility for up to ninety (90) days
following the Closing Date at no charge. Seller agrees that Buyer may conduct
sales of any excess Equipment during such period at Seller's facility.
7.13 BROKERAGE. Buyer and Seller each covenant to the other that
neither it nor any of its officers, directors or employees have employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement.
7.14 THIRD-PARTY CLAIMS. The parties shall cooperate with each
other with respect to the defense of any claim made or litigation commenced by a
third party subsequent to the Closing Date which is not subject to the
indemnification provisions contained in Section 11, provided that the party
requesting cooperation shall reimburse the other party for such other party's
reasonable out-of-pocket costs of furnishing such cooperation.
7.15 NONCOMPETITION. On the Closing Date, Seller and Buyer shall
enter into a mutually acceptable Noncompetition Agreement. Notwithstanding
anything herein or in such Non-competition Agreement to the contrary, nothing
shall preclude Seller from disposing of or otherwise dealing in the inventory
not accepted by Buyer in such manner as Seller, in its sound discretion, shall
determine.
7.16 REPORTING. Following the Closing, each party will file all
income and other tax returns and reports, including the report required by
Section 1060 of the Internal Revenue Code of 1986, as amended, consistent with
the allocation of the Purchase Price set forth in Section 2.2.
7.17 RECEIVABLES; MAIL. At Closing, Seller shall provide Buyer
with a list of all Seller's accounts receivable as of the Closing Date. Buyer
shall assist Seller in the collection of Seller's accounts receivable following
the Closing Date. Any payments received against those accounts receivable after
the Closing Date from Seller's former customers shall be applied against the
oldest balance due unless a bona fide dispute exists and the customer directs
payment to be applied in a different manner. Both Buyer and Seller agree to
promptly forward to one another any mail intended for the other which comes into
its possession following Closing.
7.18 WAIVER BULK SALES COMPLIANCE. Seller shall pay or otherwise
satisfy in the ordinary course of business all of its liabilities and
obligations not otherwise to be assumed by Buyer hereunder. Buyer and Seller
hereby waive compliance with the bulk-transfer provisions of the Uniform
Commercial Code (or any similar law) ("Bulk Sales Laws") in connection with the
Contemplated Transactions. Seller shall indemnify Buyer from any loss or damages
sustained or suffered by Buyer by reason of the parties' failure to comply with
any applicable Bulk Sales Laws.
7.19 ACCOUNTING INFORMATION AND DATA. Seller shall, at its sole
cost, but in all respects subject to the rights of any third parties, download
into a Microsoft Excel program and
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provide to Buyer all accounting, manufacturing, purchasing, engineering and
other data relevant to the operation of the Business. Additionally, Seller
shall, at its sole cost, but in all respects subject to the rights of third
parties, download and provided to Buyer all manufacturing and engineering
drawings into DXF files or such other media as may be reasonably requested by
Buyer.
7.20 NON-SOLICITATION; FIDUCIARY OBLIGATIONS IN EVENT OF SUPERIOR
OFFER. Seller shall not solicit, initiate or encourage any inquiries or
proposals that constitute a proposal or an offer for a merger, consolidation,
business combination, sale of substantial assets, sale of shares of capital
stock or similar transaction of such party involving other than the transactions
contemplated by this Agreement (any of the foregoing inquiries or proposal being
referred to as an "Acquisition Proposal"); provided, however, that nothing
contained in this Section 7.20 shall prevent Seller from furnishing non-public
information to, or entering into discussions or negotiations with, any third
party in connection with an unsolicited bona fide written proposal for an
Acquisition Proposal by such third party, if and only to the extent that (1)
such third party has made a written proposal to the Seller's Board of Directors
to consummate an Acquisition Proposal, which proposal identifies a price or
range of values to be paid for the outstanding securities or substantially all
of the assets of Seller, as the case may be, (2) the Board of Directors of
Seller determines in good faith that such Acquisition Proposal is reasonably
capable of being completed on substantially the terms proposed, and would, if
consummated, result in a transaction that would provide greater benefit to the
Seller's stockholders than the transaction contemplated by this Agreement (a
"Superior Proposal"), (3) the Board of Directors of Seller determines in good
faith that the failure to take such action would be inconsistent with its
fiduciary duties under applicable law, and (5) prior to furnishing such
non-public information to, or entering into discussion or negotiation with, such
person or entity, the Board of Directors of Seller receives from such person or
entity an executed confidentiality agreement. If the Seller receives a Superior
Proposal, and the Board of Directors of Seller determines in good faith that it
is necessary or advisable to do so in order to comply with its fiduciary duties
to Seller and its stockholders, Seller may terminate this Agreement upon payment
of a breakup fee to Buyer of $100,000.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of
Buyer under this Agreement shall, at its option, be subject to the satisfaction,
on or before the Closing Date, of all of the following conditions:
8.1 POSSESSION OF PURCHASED ASSETS. Buyer shall have the right to
take possession of the Purchased Assets and receive a duly executed xxxx of sale
and an assignment therefor.
8.2 REPRESENTATIONS AND WARRANTIES ACCURATE. All representations
and warranties of Seller contained in this Agreement shall have been true when
made and shall be true at the Closing Date as if such representations and
warranties were made at the Closing Date. Seller shall furnish Buyer with an
appropriate certificate to that effect, dated as of the Closing Date, and signed
by a duly authorized officer of Seller.
8.3 PERFORMANCE BY SELLER. Seller shall have performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed and complied with by Seller prior to or on the
Closing Date, and shall have delivered to Buyer an appropriate certificate to
that effect, dated as of the Closing Date, and signed by a duly authorized
officer of Seller.
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8.4 APPROVAL. The Board of Directors of Seller shall have taken
all action necessary to approve the transactions called for by this Agreement
and certified copies of any resolutions duly adopted by the Board of Directors
shall have been delivered to Buyer.
8.5 MATERIAL ADVERSE EFFECTS. Since the execution of the
Agreement, there shall not have occurred any changes that in the aggregate
materially adversely affect the Purchased Assets or Business.
8.6 CHANGE OF NAME. Seller shall have delivered to Buyer Articles
of Amendment to its Articles of Incorporation effecting a change of its name (to
be filed immediately after the Closing) together with the filing fees and all
other documents needed to effect such name change.
8.7 NONCOMPETITION AGREEMENTS. Buyer and each of Xxxxx Xxxxx,
Xxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxx Xxx Xxxxxx, Xxxxxx Xxx, Xxxxxx Xxxxxx, Art
Xxxxxxxx and Xxxxx Xxxxxxx shall have entered into Noncompetition Agreements
which shall contain terms and conditions acceptable to Buyer.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of
Seller under this Agreement shall, at its option, be subject to the
satisfaction, on or before the Closing Date of all the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES ACCURATE. Representations and
warranties of Buyer contained in this Agreement shall have been true when made
and shall be true at the Closing Date as if such representations and warranties
were made at the Closing Date. Buyer shall furnish Seller with an appropriate
certificate to that effect, dated as of the Closing Date, and signed by a duly
authorized officer of Buyer.
9.2 PERFORMANCE BY BUYER. Buyer shall have performed and complied
in all material respects with all agreements and conditions required by this
Agreement to be performed and complied with by Buyer prior to or on the Closing
Date and shall have delivered to Seller an appropriate certificate to that
effect, dated as of the Closing Date, and signed by a duly authorized officer of
Buyer.
9.3 RECEIPT OF PURCHASE PRICE. Seller shall have received payment
of the Purchase Price from Buyer as provided for in Section 2.1.
9.4 STOCKHOLDER APPROVAL; NO INJUNCTIONS. This Agreement and the
transactions contemplated hereby shall have been approved by the stockholders of
the Seller in the manner required by law and the charter documents and bylaws of
Seller. No governmental entity shall have enacted, issued, promulgated, enforced
or entered any order, executive order, stay, decree, judgment, injunction,
statute, rule, or regulation which has the effect of making this Agreement or
the transactions contemplated hereby illegal or otherwise prohibiting the
consummation of this Agreement or the transactions contemplated hereby.
9.5 DISSENTERS. Not greater than 5% of the outstanding shares of
the Buyer's capital stock shall have perfected dissenters' rights with respect
to the transactions contemplated hereby.
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10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement by Seller, and Buyer shall survive the
Closing Date and shall continue for a period of twelve (12) months following the
Closing, except (a) those representations and warranties set forth in Section
5.8 shall continue until the expiration of the applicable statute of
limitations, including any extensions thereof, and (b) those representations and
warranties set forth in Sections 5.1, 5.2, 5.3(a), 6.1 and 6.2 shall continue
indefinitely.
11. INDEMNIFICATION AND DISPUTE RESOLUTION.
11.1 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
Buyer harmless from and against any loss, cost, expense or damage suffered by
Buyer (including reasonable attorneys' fees) resulting from or arising out of
the breach of any representation or warranty made by Seller under this Agreement
or any other agreement with or in favor of Buyer. Seller's obligation under this
Section with respect to the breach of any representations or warranties under
Section 5 shall become effective only after and to the extent that the total
amount of claim for what Buyer is entitled to indemnification exceeds $50,000.
11.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
Seller harmless from and against any loss, cost, expense or damage suffered by
Seller (including reasonable attorneys' fees) resulting from or arising out of
the breach of any representation or warranty made by Buyer under this Agreement
or any other agreement with or in favor of Seller. Buyer's obligation under this
Section with respect to the breach of any representations or warranties under
Section 6 shall become effective only after and to the extent that the total
amount of claim for what Seller is entitled to indemnification exceeds $50,000.
11.3 NOTICE AND RESOLUTION OF CLAIMS. An indemnified party
hereunder shall give notice to the indemnifying party promptly of any claim and
within fourteen (14) days of receipt of notice of any lawsuit for which recovery
may be sought under this Section 11. If such indemnify shall arise from the
claim of a third party, the indemnified party shall tender defense of such claim
and the indemnifying party shall assume the defense of any such claim or any
litigation resulting from such claim.
The indemnifying party shall take all steps necessary in the
defense or settlement of such claim or litigation but shall notify the
indemnified party prior to any settlement that does not include a full and final
release from all liability associated with such claim or litigation.
11.4 DEFENSE OF THIRD PARTY CLAIMS. Failure by the indemnifying
party to acknowledge its assumption of the defense of any claim or litigation by
a third party within fifteen (15) days after notice thereof shall have been
given to the indemnifying party, shall be deemed a waiver by the indemnifying
party of its right to defend such claim or litigation. The indemnified party may
defend against such claim or litigation in such manner as it may deem
appropriate and may settle such claim or litigation on terms as it may deem
appropriate.
11.5 ARBITRATION. Any dispute under this Agreement or under the
Consulting and Noncompetition Agreements or under the Noncompetition Agreement
shall be submitted to arbitration conducted in accordance with the Commercial
Arbitration Rules ("Rules") of the American Arbitration Association ("AAA"). The
parties shall submit the dispute to the Milwaukee regional office of the AAA and
the situs of the arbitration shall be Milwaukee. The arbitration shall be
conducted by a single arbitrator. The parties shall appoint the single
arbitrator to arbitrate the dispute within ten (10) business days of the
submission of the dispute.
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In the absence of agreement as to the identity of the single arbitrator to
arbitrate the dispute within such time, the AAA is authorized to appoint an
arbitrator in accordance with the Rules, except that the arbitrator shall have
as his principal place of business the Milwaukee metropolitan area.
Any award rendered by the arbitrator shall be conclusive and
binding upon the parties hereto; provided, however, that any such award shall be
accompanied by a written opinion of the arbitrator giving the reasons for the
award. This provision for arbitration shall be specifically enforceable by the
parties and the decision of the arbitrator in accordance herewith shall be final
and binding and there shall be no right of appeal therefrom.
Any arbitration award shall be paid within ten (10) business days
after the award has been made, together with interest, if not paid within such
ten day period, at the rate of ten percent (10%) per annum commencing upon the
expiration of such ten day period. Judgment upon the award may be entered in any
federal or state court having jurisdiction over the parties.
11.6 COSTS OF ENFORCEMENT. In the event of any suit or proceeding
seeking to enforce the terms, covenants, or conditions of this Agreement or
under the Consulting and Noncompetition Agreements or under the Noncompetition
Agreement, the prevailing party shall, in addition to all other remedies and
relief that may be available under the applicable agreement or applicable law,
recover his or its reasonable attorneys' fees and costs as shall be determined
and awarded by an arbitrator or the court.
11.7 EXCLUSIVITY OF REMEDY; LIMITATIONS ON AMOUNT. A parties'
right to indemnification under this Section 11 shall be the exclusive remedy
with respect to any matter otherwise indemnifiable hereunder. In no event shall
either parties' obligations to the other (except for any such claim arising out
of Buyer's obligation to pay the Purchase Price) under this Section 11 exceed in
the aggregate $300,000. The indemnification provisions and limitations set forth
in this Section 11 shall not apply to the covenants set forth in Section 7 of
this Agreement.
12. MISCELLANEOUS MATTERS.
12.1 AMENDMENT. This Agreement may not be amended or otherwise
altered except pursuant to an instrument in writing signed by each of the
parties. This Agreement shall inure to the benefit of and shall be binding upon
the respective successors and assigns, provided that no party shall assign any
of its rights, privileges or obligations hereunder without prior written consent
of the other.
12.2 NOTICES. Any notice, request or instruction to be given
hereunder by any party to the other shall be in writing and delivered personally
or sent by overnight carrier or by registered or certified mail, postage
prepaid,
If to Seller: Ag-Bag International Limited
0000 XX Xx-Xxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, CEO
With a copy to: Xxxxxxx, Xxxxxxxxxx & Xxxxx, P.C.
Suites 1600-1900 PacWest Center
0000 XX Xxxxx Xxxxxx
00
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxx
If to Buyer: Xxxxxx St. Xxxxxxx, Inc.
000 Xxxx Xxxx Xxxxxx
Xx. Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx, President
With a copy to: Xxxxx Xxxxxxxxxxx Xxxxx S.C.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
unless Buyer or Seller shall have given notice as provided herein of a different
address.
12.3 HEADINGS AND SCHEDULES. The headings contained in this
Agreement are for reference purposes only and are not to be considered in
interpreting this Agreement. The Exhibits and Schedules are incorporated into
and are made a part of this Agreement.
12.4 ENTIRE AGREEMENT. This instrument, and the Exhibits and
Schedules referred to herein, contain the entire agreement between the parties
hereto with respect to the transactions contemplated herein and supersede all
previous written or oral negotiations, commitments and writings, except for any
non-disclosure or confidentiality agreements heretofore entered into between the
parties.
12.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
12.6 GOVERNING LAW. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Wisconsin.
12.7 EXPENSES. Each party shall pay its own expenses incident to
preparation for entering into and carrying this Agreement into effect and for
consummating the transactions contemplated herein.
12.8 ASSIGNMENT. This Agreement shall not be assigned by either
party without the written consent of the other party and any attempted
assignment without such written consent shall be null and void and without legal
effect.
12.9 SEVERABILITY. The parties agree that if any provision of this
Agreement shall, under any circumstances, be deemed invalid or inoperative, the
Agreement shall be construed with the invalid or inoperative provision deleted
and the rights and obligations of the parties shall be construed and enforced
accordingly.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed and sealed as of the day and year first above written.
AG-BAG INTERNATIONAL LIMITED
By: /s/ XXXXX XXXXX
---------------------------------------
Xxxxx Xxxxx, Chairman of the Board &
President
By: /s/ XXXXXXX XXXXXXXXX
---------------------------------------
Xxxxxxx Xxxxxxxxx, CEO
XXXXXX ST. XXXXXXX, INC.
By: /s/ XXXX XXXXXX
---------------------------------------
Xxxx Xxxxxx, President
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List of Omitted Exhibits
------------------------
Exhibit No.
-----------
1.1 Schedule of Purchased Assets & Permitted Encumbrances
1.2 Schedule of Excluded Assets
2.2 Schedule of Purchase Price Allocation
5.9 Schedule of Litigation and Proceedings
5.13 Schedule of Contracts and Commitments
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