EXHIBIT 2.1
ASSETS PURCHASE AGREEMENT
ASSETS PURCHASE AGREEMENT, dated as of May 19, 2000, by and between
StreamWorks International, Inc., a Washington corporation (the "Seller"), and
Minnesota Mining and Manufacturing Company, a Delaware corporation ("Purchaser"
or "3M"), with reference to the following RECITALS:
A. Seller is engaged, in part, in the business of fly fishing products;
such business including but not limited to sportsmen's fishing bags, fishing
creels, fishing flies, fishing fly tying materials, namely, bobbins, threads,
foams, yarns, chenilles, plastics, popper bodies, lacquers, epoxies, lead wire,
tape, eyes, beads, tinsel, foam, rubber, wire, synthetic wings, reflective
mylar, piping, braid, dubbing, raffine, antron, angora, legs, shellbacks,
tinsels, synthetic fibers, feathers, fur, hair, dyes, deer, elk, and calf skins,
hackles and dubbings, fishing fly boxes, fishing hooks, fishing leaders, fishing
lines, fishing lure boxes, fishing lure parts, fishing lures, fishing nets for
sportsmen, fishing reels, fishing xxx xxxxxx, fishing rod handles, fishing rod
holders, fishing rods, fishing spinners, fishing strike indicators, fishing
tackle, fishing tackle boxes, fishing tackle containers and float tubes for
fishing.
B. Purchaser is engaged, in part, in the business of leisure sports
products, and desires to purchase all of the above-described business operations
of Seller except for sport utility boats and travel. All of such business
operations of Seller desired to be purchased by Purchaser hereunder are referred
to herein as the "Business" and such business operations of Seller not desired
to be purchased by Purchaser are referred to herein as the "Excluded
Businesses". "Excluded Businesses" shall refer to herein to the Reel
Expeditions, Inc. and Sport Utility Boat businesses.
C. This Agreement contemplates the sale of substantially all of the
assets of Seller to Purchaser in a transaction intended qualify as a
tax-deferred reorganization pursuant to Internal Revenue Code Section
368(a)(1)(C).
D. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and Purchaser desires to purchase the Business, its operations, and the
assets of Seller used therein.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I - PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing hereunder (as defined in Section
2.1 hereof) and except as otherwise specifically provided in this Section 1.1,
Seller shall
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grant, sell, convey, assign, transfer and deliver to Purchaser, upon and subject
to the terms and conditions of this Agreement, all right, title and interest of
Seller in and to (a) the Business as a going concern, (b) the name "StreamWorks"
and all goodwill associated therewith, and (c) all of the assets, properties and
rights of Seller constituting the Business or used therein, of every kind and
description, real, personal and mixed, tangible and intangible, wherever
situated (which Business, name, goodwill, assets, properties and rights are
herein sometimes called the "Assets"), free and clear of all mortgages, liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature whatsoever except Permitted Liens as defined in Section 3.1.13
hereof.
1.1.1 Included Assets. The Assets shall include without limitation the
following assets, properties and rights of Seller used directly or indirectly in
the conduct of, or generated by or constituting, the Business, except as
otherwise expressly set forth in Section 1.1.2 hereof:
(a) all machinery, equipment, tools, vehicles, furniture,
furnishings, leasehold improvements, goods, and other tangible personal
property, including without limitation, those set forth on SCHEDULE
1.1.1(a);
(b) all cash or cash equivalents in transit, in hand or in bank
accounts;
(c) all prepaid items, unbilled costs and fees, and accounts,
notes and other receivables, including without limitation, those set
forth on SCHEDULE 1.1.1(c);
(d) all supplies and inventories and office and other supplies,
including without limitation, those set forth on SCHEDULE 1.1.1(d);
(e) to the extent permitted by applicable law, all rights under
any written or oral contract, agreement, lease, plan, instrument,
registration, license, certificate of occupancy, other permit or
approval of any nature, or other document, commitment, arrangement,
undertaking, practice or authorization;
(f) all rights under any patent, trademark, service xxxx, trade
name or copyright, whether registered or unregistered, and any
applications and registrations therefor, including without limitation,
those set forth on SCHEDULE 1.1.1(f);
(g) all technologies, methods, formulations, data bases, trade
secrets, know-how, inventions and other intellectual property used in
the Business or under development;
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(h) all computer software (including documentation and related
object and source codes), including without limitation, those set forth
on SCHEDULE 1.1.1(h);
(i) all rights or choses in action arising out of occurrences
before or after the Closing, including without limitation all rights
under express or implied warranties relating to the Assets;
(j) all assets and properties reflected on the Closing Balance
Sheet as defined in Section 1.5; and
(k) all information, files, records, data, plans, contracts and
recorded knowledge, including customer and supplier lists, related to
the foregoing.
1.1.2 Excluded Assets. Notwithstanding the foregoing, the Assets shall
not include any of the following:
(a) any assets, properties or rights of Seller used exclusively
in the Excluded Businesses;
(b) the corporate seals, certificates of incorporation, minute
books, stock books, tax returns, books of account or other records
having to do with corporate organization of Seller;
(c) the rights to any of Seller's claims for any federal, state,
local, or foreign tax refunds;
(d) the stock of the StreamWorks (Thailand) Ltd.; or
(e) the assets, properties or rights set forth on SCHEDULE
1.1.2.
1.2 Agreement to Purchase. At the Closing hereunder, Purchaser shall
purchase the Assets from Seller, upon and subject to the terms and conditions of
this Agreement and in reliance on the representations, warranties and covenants
of Seller contained herein, in exchange for the Purchase Price (hereinafter
defined in Section 1.3 hereof). In addition, Purchaser shall assume at the
Closing and agree to pay, discharge or perform, as appropriate, certain
liabilities and obligations of Seller only to the extent and as provided in
Section 1.4 of this Agreement. EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 1.4
HEREOF, PURCHASER SHALL NOT ASSUME OR BE RESPONSIBLE FOR ANY LIABILITIES OR
OBLIGATIONS OF THE BUSINESS OR SELLER.
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1.3 The Purchase Price.
1.3.1 Purchase Price.
(a) The aggregate consideration for the Assets to be paid by
Purchaser shall be (i) $11,000,000 (the "Purchase Price"), subject to
adjustment pursuant to Section 1.3.1(b) and 1.5 below, and (ii) the
assumption by Purchaser of the assumed liabilities, as described in
Section 1.4 below. The Purchase Price shall be paid by issuance of
shares of voting common stock of 3M (the "3M Shares") from Purchaser's
treasury or otherwise.
(b) After the Closing Date, the Purchase Price shall by
adjusted, as applicable, as follows: (i) downwards by the amount, if
any, by which the Net Assets (hereinafter defined) on the Closing Date
as reflected on the Closing Balance Sheet is less than the Net Assets on
the Interim Balance Sheet (hereinafter defined in Section 3.1.6 hereof)
by more than $250,000 (the "Downwards Adjustment"), or (ii) upwards by
the amount, if any, by which the sum of the Net Assets on the Closing
Date as reflected on the Closing Balance Sheet plus $250,000, exceeds
the Net Assets on the Interim Balance Sheet (the "Upwards Adjustment").
Net Assets as of a given date shall mean the net book value of all
assets, less the assumed liabilities, which would have been included in
the Assets if the Closing had taken place on such date without regard to
any other assets reflected on the balance sheet which would not be
included in the Assets if the Closing had taken place on such date.
(c) In the event of any stock split, stock dividend,
reclassification, or other such change in the outstanding stock of 3M,
the record date for which is a date prior to the Closing Date, the
number of shares issuable pursuant to this Section 1.3.1 shall be
appropriately adjusted so as to accord the benefit of such changes to
Seller.
(d) The 3M Shares shall be valued at the average closing price
for five trading days prior to the Closing Date (which is currently
expected to be the period from May 22, 2000 through May 26, 2000) (the
"Per Share Value"). For purposes of this Section 1.3.1(d) the closing
price of 3M voting common stock as reported in the Wall Street Journal
shall be used.
1.3.2 Payment of Purchase Price.
(a) On the Closing Date Purchaser shall pay to Seller the
Purchase Price, less the Escrow Closing Payment (as defined below), by
issuance to Seller of one or more stock certificate(s) for the 3M shares
(the "Seller Closing Payment"), payable to such account as Seller shall
designate. An amount equal
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to fifteen percent (15%) of the total Purchase Price is to be held in an
escrow and shall be paid on the Closing Date by Purchaser to the Escrow
Agent under an Escrow Agreement substantially in the form attached
hereto as Exhibit A (the "Escrow Agreement"), by issuance of an
appropriate number of 3M shares (the "Escrow Closing Payment"; and
together with the Seller Closing Payment, the "Closing Payment").
(b) Following the Closing Date, if a post-closing adjustment to
the Purchase Price is required to be made pursuant to the provisions of
Section 1.5 below, then, within seven days after the Adjustment Date (as
defined in Section 1.5 below), as applicable, (i) Purchaser shall pay
the Upwards Adjustment to Seller by issuance and delivery to Seller of
one or more stock certificates for an additional number of 3M shares
equal in value to the Upwards Adjustment, or (ii) in the event of a
Downwards Adjustment, Purchaser shall be entitled to cause the Escrow
Agent to release from the Escrow that number of 3M shares equal in value
to the Downwards Adjustment to be redelivered to Purchaser for
cancellation. For purposes of this Section 1.3.2(b), the 3M shares to be
issued as payment of the Upwards Adjustment or cancelled as payment of
the Downwards Adjustment shall be valued at the Per Share Value.
(c) In addition, within seven days after the Adjustment Date,
the Escrow Agent shall (and Seller shall be entitled to cause the Escrow
Agent to) release from the Escrow to be distributed to Seller a number
of 3M shares such that the total amount remaining in the Escrow as of
that date shall equal ten percent (10%) of the initial Purchase Price.
For purposes of this Section 1.3.2(c), the value of the 3M shares
remaining in the Escrow shall be valued at the Per Share Value.
1.3.3 Allocation of Purchase Price. The Purchase Price and the
liabilities assumed by Purchaser in accordance with Section 1.4 hereof and any
non-recourse liabilities to which any Asset is subject (together, the "Total
Consideration") as finally determined shall be allocated among the Assets
acquired hereunder as described on SCHEDULE 1.3.3 hereof. Seller and Purchaser
each hereby covenant and agree that it will not take a position on any income
tax return, before any governmental agency charged with the collection of any
income tax, or in any judicial proceeding that is in any way inconsistent with
the terms of this Section 1.3.3.
1.4 Assumption of Liabilities.
(a) At the Closing hereunder and except as otherwise
specifically provided in this Section 1.4, Purchaser shall assume and
agree to pay, discharge or perform, as appropriate, the following
liabilities and obligations of Seller:
(i) all liabilities and obligations of Seller in respect
of the Business existing as of the Interim Balance Sheet Date
(hereinafter defined in
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Section 3.1.6), but only if and to the extent that the same are
accrued or reserved for on the Interim Balance Sheet and remain
unpaid and undischarged on the Closing Date;
(ii) all liabilities and obligations of Seller arising
in the regular and ordinary course of the Business between the
Interim Balance Sheet Date and the Closing Date, to the extent
that the same remain unpaid and undischarged on the Closing Date
and are accrued or reserved for on the Closing Balance Sheet;
(iii) all liabilities and obligations of Seller in
respect of the agreements, contracts, commitments and leases
which are specifically identified in any list called for by
Sections 3.1.19 or 3.1.25 hereof or not required to be
identified on any such list in accordance with the provisions of
Section 3.1.19, except that Purchaser shall not assume or agree
to pay, discharge or perform any liabilities or obligations
arising out of any material breach by Seller of any provision of
any agreement, contract, commitment or lease referred to in this
Section 1.4(c), including but not limited to liabilities or
obligations arising out of Seller's failure to perform any
agreement, contract, commitment or lease in accordance with its
terms prior to the Closing, but excluding however any liability
arising out of the assignment to Purchaser of such agreements,
contracts, commitments or leases in violation of the terms
thereof to the extent that the agreement, contract, commitment
or lease is listed on SCHEDULE 3.1.19 or SCHEDULE 3.1.25 hereof;
(iv) all liabilities and obligations arising out of any
express or implied product or service warranties,
representations, agreements or guaranties made by Seller prior
to the Closing Date with respect to the Assets, except as set
forth in Section 1.4(b)(i);
(v) all liabilities and obligations arising out of
events occurring on or after the Closing Date related to
Purchaser's ownership of the Assets or its conduct of the
business or operations of the Business; and
(vi) any other liabilities or obligations of Purchaser
expressly stated in this Agreement.
(b) In no event, however, shall Purchaser assume or incur any
liability or obligation under this Section 1.4 or otherwise in respect
of any of the following:
(i) any product liability or similar claim for any
injury to person or property, regardless of when made or
asserted, which arises out of or is based upon any express or
implied representation, warranty, agreement or guarantee made by
Seller, or alleged to have been made by Seller, or which is
imposed or asserted to be imposed by operation of law, in
connection with any
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service performed or product designed, sold, manufactured, or
leased by or on behalf of Seller on or prior to the Closing
Date, including without limitation any claim relating to any
product delivered in connection with the performance of such
service and any claim seeking recovery for consequential damage,
lost revenue or income;
(ii) any federal, state or local income or other tax (a)
payable with respect to the business, assets, properties or
operations of Seller for any period prior to the Closing Date,
or (b) incident to or arising as a consequence of the
negotiation or consummation by Seller of this Agreement and the
transactions contemplated hereby;
(iii) any liability or obligation under or in connection
with the assets excluded from the Assets under Section 1.1.2 and
any liability or obligation of Seller with respect to the
Excluded Businesses;
(iv) any liability or obligation attributable to periods
and arising from events or circumstances occurring prior to the
Closing Date to any employees, agents or independent contractors
of Seller, whether or not employed by Purchaser after the
Closing, or under any benefit arrangement with respect thereto,
except as expressly set forth in Section 9.1 hereof, including
but not limited to any liability or obligation for royalties or
other compensation relating to the use by Seller of any
invention or idea created by Xxx Xxxxxxx during his employment
with Seller prior to the Closing Date;
(v) any liability or obligation attributable to periods
and arising from events or circumstances occurring prior to the
Closing Date relating to environmental and/or real estate
matters; or
(vi) any liability or obligation of Seller arising or
incurred in connection with the negotiation, preparation and
execution of this Agreement and the transactions contemplated
hereby and fees and expenses of counsel, accountants and other
experts.
1.5 Closing Balance Sheet. Not later than 60 days after the Closing
Date, Seller shall cause to be prepared the balance sheet of the Business at the
Closing Date and the related statement notes, if any, in accordance with the
Seller's past accounting policies and practices consistently applied for the
financial statements described in Section 3.1.6 hereto. Such balance sheet shall
specifically identify all assets reflected thereon which are not included in the
Assets and all liabilities reflected thereon which are not assumed by Purchaser
hereunder. This balance sheet shall be the basis for which a Closing Balance
Sheet will be created.
For purposes of calculating the Closing Balance Sheet, Seller shall
cause Knight Vale & Xxxxxxx PLLC, its independent accountants ("Seller's
Auditors"), to
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review the Closing Balance Sheet in accordance with the "review" provisions of
Statement No. 1, entitled "Compilation and Review of Financial Statements"
(December 1978) of the Accounting and Review Services Committee of the American
Institute of Certified Public Accountants, and to issue, as soon as practicable
but in any event not later than 75 days after the Closing Date, its report
thereon to Seller and Purchaser, restating the Seller's balance sheet as of the
Closing Date in conformity with generally accepted accounting principles applied
on a consistent basis. In reviewing the Closing Balance Sheet, Seller's Auditors
shall apply and adhere to the "true-up" procedures set forth on SCHEDULE 1.5, as
agreed upon by Seller and Purchaser. Such report shall also include a detailed
schedule setting forth the calculation of the amount described in Section
1.3.1.(b) hereof and the Purchase Price and a statement to the effect that the
Purchase Price was calculated in accordance with the provisions of this
Agreement. In rendering the foregoing review and report, Seller's Auditors shall
consult with PricewaterhouseCoopers, LLP, Purchaser's independent accountants
("Purchaser's Auditors"), and permit Purchaser's Auditors at the earliest
practicable date to review the report of Seller's Auditors, including all work
papers, schedules and calculations related thereto, prior to the issuance
thereof. Purchaser's Auditors shall commence its review of said work papers,
schedules and calculations as soon as practicable after Seller's Auditors has
completed the field work phase of its review.
Any dispute which may arise between Seller and Purchaser as to the
amount of the Net Assets on the Closing Date as reflected on the Closing Balance
Sheet shall be resolved in the following manner:
(a) Purchaser, if it disputes the amount of Net Assets reflected
on the Closing Balance Sheet, shall notify Seller in writing within 15
days after the issuance of the report of Seller's Auditors pursuant
hereto that Purchaser disputes the amount of the Net Assets; such notice
shall specify in reasonable detail the nature of the dispute;
(b) during the 15-day period following the date of such notice,
Seller and Purchaser shall attempt to resolve such dispute and to
determine the appropriateness of the balance sheet;
(c) if at the end of the 15-day period specified in subsection
(b) above, Seller and Purchaser shall have failed to reach a written
agreement with respect to such dispute, the matter shall be referred to,
(name of accounting firm), independent certified public accountants (the
"Arbitrator"), which shall act as an arbitrator and shall issue its
report as to the amount of the Net Assets on the Closing Date within
thirty (30) days after such dispute is referred to the Arbitrator. Each
of the parties hereto shall bear all costs and expenses incurred by it
in connection with such arbitration, except that the fees and expenses
of the Arbitrator hereunder shall be borne equally by Seller and
Purchaser. This provision for arbitration shall be specifically
enforceable by the parties and the
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decision of the Arbitrator is accordance with the provisions hereof
shall be final and binding and there shall be no right of appeal
therefrom; and
References in this Agreement to the Closing Balance Sheet shall mean the
restated balance sheet of the Business at the Closing Date, prepared by Seller's
Auditors and delivered as described in this Section 1.5. The Adjustment Date
shall be the later of the 15th day after delivery of the Closing Balance Sheet
by Seller pursuant hereto, or the date upon which any dispute concerning the
amount of the Purchase Price is resolved.
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS, CHANGE IN
NAME AND FURTHER ASSURANCES
2.1 Closing. The closing (the "Closing") of the sale and purchase of the
Assets shall take place at 10:00 A.M., local time, on May 31, 2000 or on such
other date as may be mutually agreed upon in writing by Purchaser and Seller.
The Closing may take place by facsimile, overnight delivery or other means
determined acceptable by the parties. The date of the Closing is sometimes
herein referred to as the "Closing Date." The Closing shall be deemed effective
as of 12:01 a.m. CDT on the Closing Date.
2.2 Items to be Delivered at Closing. At the Closing and subject to the
terms and conditions herein contained:
(a) Seller shall deliver to Purchaser the following:
(i) such bills of sale with covenants of warranty,
assignments, endorsements, and other good and sufficient
instruments and documents of conveyance and transfer, in form
reasonably satisfactory to Purchaser and its counsel, as shall
be necessary and effective to transfer and assign to, and vest
in, Purchaser all of Seller's right, title and interest in and
to the Assets, including without limitation, (A) good and valid
title in and to all of the Assets owned by Seller, (B) good and
valid leasehold interests in and to all of the Assets leased by
Seller as lessee, and (C) all of Seller's rights under all
agreements, contracts, commitments, leases, plans, bids,
quotations, proposals, instruments and other documents included
in the Assets to which Seller is a party or by which it has
rights on the Closing Date;
(ii) all of the agreements, contracts, commitments,
leases, plans, bids, quotations, proposals, instruments,
computer programs and software, data bases whether in the form
of computer tapes or otherwise, related object and source codes,
manuals and guidebooks, price books and price lists, customer
and subscriber lists, supplier lists, sales records, files,
correspondences, legal opinions, rulings issued by governmental
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entities, and other documents, books, records, papers, files,
office supplies and data belonging to Seller which are part of
the Assets;
and simultaneously with such delivery, all such steps will be taken as may be
required to put Purchaser in actual possession and operating control of the
Assets.
(b) Purchaser shall deliver to Seller the following:
(i) one or more certificates for the 3M Shares in
accordance with Section 1.3.2, subject to the delivery of the 3M
Shares into Escrow as provided in Section 1.3.2 herein; and
(ii) an undertaking whereby Purchaser will assume and
agree to pay, discharge or perform, as appropriate, Seller's
liabilities and obligations to the extent and as provided in
Section 1.4 hereof in form reasonably satisfactory to Seller and
its counsel.
(c) Purchaser shall deliver the Escrow Closing Payment to the
Escrow Agent under the Escrow Agreement.
(d) At or prior to the Closing, the parties hereto shall also
deliver to each other the agreements, opinions, certificates and other
documents and instruments referred to in Article VII hereof.
2.3 Third Party Consents. To the extent that Seller's rights under any
agreement, contract, commitment, lease, Authorization (as defined in Section
3.1.15) or other Asset to be assigned to Purchaser hereunder may not be assigned
without the consent of another person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful, and Seller, prior
to the Closing Date and at its expense, shall use its commercially reasonable
efforts to obtain any such required consent(s) as promptly as possible. If any
such consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Purchaser's rights under the Asset in question so
that Purchaser would not in effect acquire the benefit of all such rights,
Seller, to the maximum extent permitted by law and the Asset, shall act after
the Closing as Purchaser's agent in order to obtain for it the benefits
thereunder and shall cooperate, to the maximum extent permitted by law and the
Asset, with Purchaser in any other reasonable arrangement designed to provide
such benefits to Purchaser.
2.4 Change in Name. On the Closing Date, Seller shall deliver to
Purchaser all such executed documents as may be required to change Seller's name
on that date to another name bearing no similarity to StreamWorks, including but
not limited to a name change amendment with the Secretary of State of Washington
and an appropriate name change notice for the States of California, Idaho and
Oregon, which are the states where Seller is qualified to do business as a
foreign corporation. Seller
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hereby appoints Purchaser as its attorney-in-fact to file all such documents on
or after the Closing Date.
2.5 Further Assurances. Seller from time to time after the Closing, at
Purchaser's request, will execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably require in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Assets, or to better enable Purchaser to complete, perform or discharge any of
the liabilities or obligations assumed by Purchaser at the Closing pursuant to
Section 1.4 hereof. Each of the parties hereto will cooperate with the other and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller. The Seller hereby
represents and warrants to Purchaser that, except as set forth on a Disclosure
Schedule attached hereto, each of which exceptions shall specifically identify
the relevant subsection hereof to which it relates and shall be deemed to be
representations and warranties as if made hereunder. For purposes of this
Section 3.1, "to the Knowledge of Seller" shall mean the actual knowledge of
Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxxxx and Xxxxxx X. XxXxxxxx, after reasonable
inquiry and investigation.
3.1.1 Corporate Existence. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Seller is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the conduct of the Business by it requires it to be
so qualified, all of which jurisdictions are listed on SCHEDULE 3.1.1,
except where the failure to be so qualified would not have a material
adverse effect on the business, operations or financial condition of
Seller.
3.1.2 Corporate Power; Authorization; Enforceable Obligations.
Seller has the power, authority and legal right to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by Seller have been duly authorized by all necessary corporate
and shareholder action. This Agreement has been, and the other
agreements, documents and instruments required to be delivered by Seller
in accordance with the provisions hereof (the "Seller's Documents") will
be, duly executed and delivered by Seller by duly authorized officers of
Seller, and this Agreement constitutes, and the Seller's Documents when
executed and delivered will constitute, the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with
their respective terms.
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3.1.3 No Interest in Other Entities. Except for interests in the
entities described in the SCHEDULE 3.1.3 (such entities are hereinafter
referred to as the "Subsidiaries"), no shares of any corporation or any
ownership or other investment interest, either of record, beneficially
or equitably, in any association, partnership, joint venture or other
legal entity are included in the Assets, other than shares of capital
stock representing immaterial, non-controlling interests in
publicly-traded companies obtained by Seller in the ordinary course of
the Business.
3.1.4 Validity of Contemplated Transactions, etc. Except as set
forth on SCHEDULE 3.1.4, the execution, delivery and performance of this
Agreement by Seller does not and will not violate, conflict with or
result in the breach of any term, condition or provision of, or require
the consent of any other person under, (a) any existing law, ordinance,
or governmental rule or regulation to which Seller is subject, (b) any
judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority
which is applicable to Seller, (c) the charter documents of Seller or
any securities issued by Seller, or (d) any material provision of any
mortgage, indenture, agreement, contract, commitment, lease, plan,
Authorization (hereinafter defined in Section 3.1.17), or other
instrument, document or understanding, oral or written, to which Seller
is a party, by which Seller may have rights or by which any of the
Assets may be bound or affected, or give any party with rights
thereunder the right to terminate, modify, accelerate or otherwise
change the existing rights or obligations of Seller or shareholders
thereunder. Except as aforesaid, no authorization, approval or consent
of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the
execution, delivery or performance of this Agreement by Seller.
3.1.5 No Third Party Options. There are no existing agreements,
options, commitments or rights with, of or to any person to acquire any
of Seller's assets, properties or rights included in the Assets or any
interest therein, except for those contracts entered into in the normal
course of business consistent with past practice for the sale of
inventory of Seller.
3.1.6 Financial Statements. Seller has delivered to Purchaser a
true and complete copy of the unaudited balance sheet of Seller as of
February 29, 2000, prepared in accordance with the Seller's accounting
policies and practices consistently applied throughout the periods
involved. Such balance sheet, including the related notes, if any,
fairly presents in all material respects the financial position, assets
and liabilities (whether accrued, absolute, contingent or otherwise) of
Seller at the date indicated. The unaudited balance sheet as of February
29, 2000, to the Knowledge of Seller and except as set forth on SCHEDULE
3.1.6, contains all material adjustments, which are solely of a normal
recurring nature, necessary to present fairly the financial position for
the periods then ended. The Interim Balance Sheet specifically
identifies the assets and liabilities which, if the Closing had been
held on the Interim Balance Sheet Date, would have been transferred to
or assumed by Purchaser in accordance
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herewith. References in this Agreement to the "Interim Balance Sheet"
shall mean the balance sheet of the Business as of February 29, 2000
referred to above; and references in this Agreement to the "Interim
Balance Sheet Date" shall be deemed to refer to February 29, 2000.
3.1.7 Accounts Receivable. The accounts receivable of Seller
arising from the Business as set forth on the Interim Balance Sheet or
arising since the date thereof are valid and genuine; have arisen solely
out of bona fide sales and deliveries of goods, performance of services
and other business transactions in the ordinary course of business
consistent with past practice. No defense or setoff to any such account
receivable has, to the Knowledge of Seller, been asserted by the account
obligor.
3.1.8 Inventory. Except as set forth on SCHEDULE 3.1.8, all
inventory of Seller used in the conduct of the Business, including
without limitation raw materials, work-in process and finished goods,
reflected on the Interim Balance Sheet or acquired since the date
thereof was acquired and has been maintained in the ordinary course of
the Business; is of good and merchantable quality; consists
substantially of a quality, quantity and condition usable, leasable or
saleable in the ordinary course of the Business; is valued at reasonable
amounts based on the ordinary course of business of Seller; and is not
subject to any write-down or write-off. Except as set forth on SCHEDULE
3.1.8, Seller is not under any liability or obligation with respect to
the return of inventory in the possession of wholesalers, retailers or
other customers.
3.1.9 Absence of Undisclosed Liabilities. To the Knowledge of
Seller and except as set forth on SCHEDULE 3.1.9, Seller has no
liabilities or obligations with respect to the Business, either direct
or indirect, matured or unmatured or absolute, contingent or otherwise,
except:
(a) those liabilities or obligations set forth on the
Interim Balance Sheet and not heretofore paid or discharged;
(b) liabilities arising under any agreement, contract,
commitment, lease or plan specifically disclosed on any SCHEDULE
to this Agreement or not required to be disclosed because of the
term or amount involved; and
(c) those liabilities or obligations incurred,
consistently with past business practice, in or as a result of
the normal and ordinary course of business since the Interim
Balance Sheet Date.
For purposes of this Agreement, the term "liabilities" shall include,
without limitation, any direct or indirect indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation
or responsibility, fixed or unfixed, asserted or unasserted, liquidated
or unliquidated, secured or unsecured.
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3.1.10 Tax and Other Returns and Reports. Except as set forth on
SCHEDULE 3.1.10, All federal, state, local and foreign tax returns,
reports, statements and other similar filings required to be filed by
Seller (the "Tax Returns") with respect to any federal, state, local or
foreign taxes, assessments, interest, penalties, deficiencies, fees and
other governmental charges or impositions, (including without limitation
all income tax, unemployment compensation, social security, payroll,
sales and use, excise, privilege, property, ad valorem, franchise,
license, school and any other tax or similar governmental charge or
imposition under laws of the United States or any state of municipal or
political subdivision thereof or any foreign country or political
subdivision thereof) (the "Taxes") have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns properly reflect the
liabilities of Seller for Taxes for the periods, property or events
covered thereby. Except as set forth on SCHEDULE 3.1.10, all Taxes,
including those without limitation which are called for by the Tax
Returns, or heretofore or hereafter claimed to be due by any taxing
authority from Seller, have been properly accrued or paid. Except as set
forth on SCHEDULE 3.1.10, the accruals for Taxes contained in the
Interim Balance Sheet are adequate to cover the tax liabilities of
Seller with respect to the Business as of that date and include adequate
provision for all deferred taxes, and, to the Knowledge of Seller,
nothing has occurred subsequent to that date to make any of such
accruals inadequate. Seller has not received any notice of assessment or
proposed assessment in connection with any Tax Returns and, to the
Knowledge of Seller, there are not pending tax examinations of or tax
claims asserted against Seller or any of its assets or properties.
Seller has not extended, or waived the application of, any statute of
limitations of any jurisdiction regarding the assessment or collection
of any Taxes. There are no tax liens (other than any lien for current
taxes not yet due and payable) on any of the assets or properties of
Seller. Seller has no knowledge of any basis for any additional
assessment of any Taxes. Seller has made all deposits required by law to
be made with respect to employees' withholding and other employment
taxes, including without limitation the portion of such deposits
relating to taxes imposed upon Seller.
3.1.11 Books of Account. The books, records and accounts of
Seller maintained with respect to the Business materially accurately and
fairly reflect, in reasonable detail, the transactions and the assets
and liabilities of Seller with respect to the Business. Seller has not
engaged in any material transaction with respect to the Business,
maintained any bank account for the Business or used any of the funds of
Seller in the conduct of the Business except for transactions, bank
accounts and funds which have been and are reflected in the normally
maintained books and records of the business.
3.1.12 Existing Condition. Except as set forth on SCHEDULE
3.1.12, since the Interim Balance Sheet Date, Seller with respect to the
Business has not:
(a) incurred any liabilities, other than liabilities
incurred in the ordinary course of business consistent with past
practice, or discharged or satisfied any
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lien or encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice, or
failed to pay or discharge when due any liabilities of which the
failure to pay or discharge has caused or will cause any
material damage or risk of material loss to it or any of its
assets or properties;
(b) sold, encumbered, assigned or transferred any assets
or properties which would have been included in the Assets if
the Closing had been held on the Interim Balance Sheet Date or
on any date since then, except for the sale of inventory in the
ordinary course of business consistent with past practice;
(c) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or
subjected any of its Assets to any mortgage, lien, pledge,
security interest, conditional sales contract or other
encumbrance or any nature whatsoever, except for Permitted Liens
(hereinafter defined in Section 3.1.13);
(d) made or suffered any amendment or termination of any
material agreement, contract, commitment, lease or plan to which
it is a party or by which it is bound, or canceled, modified or
waived any substantial debts or claims held by it or waived any
rights of substantial value, whether or not in the ordinary
course of business;
(e) declared, set aside or paid any dividend or made or
agreed to make any other distribution or payment in respect of
its capital shares or redeemed, purchased or otherwise acquired
or agreed to redeem, purchase or acquire any of its capital
shares;
(f) suffered any damage, destruction or loss, whether or
not covered by insurance, (i) materially and adversely affecting
its business, operations, assets, properties or prospects or
(ii) of any item or items carried on its books of account
individually at more than $3,000.00, or suffered any repeated,
recurring or prolonged shortage, cessation or interruption of
supplies or utility or other services required to conduct its
business and operations;
(g) suffered any material adverse change in its
business, operations, assets, properties, prospects or condition
(financial or otherwise);
(h) received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or
condition of any similar character which has had or might have
an adverse effect on its business, operations, assets,
properties or prospects;
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(i) made commitments or agreements for capital
expenditures or capital additions or betterments exceeding
individually $3,000.00 except such as may be involved in
ordinary repair, maintenance or replacement of its assets;
(j) increased the salaries or other compensation of, or
made any advance (excluding advances for ordinary and necessary
business expenses) or loan to, any of its employees or made any
increase in, or any addition to, other benefits to which any of
its employees may be entitled;
(k) changed any of the accounting principles followed by
it or the methods of applying such principles; or
(l) entered into any transaction other than in the
ordinary course of business consistent with past practice.
3.1.13 Title to Properties. Seller has good, valid and
marketable title to all of its properties and assets, real, personal and
mixed, which would be included in the Assets if the Closing took place
on the date hereof, which it purports to own, including without
limitation all properties and assets reflected in the Interim Balance
Sheet (except for inventory sold since the date thereof in the ordinary
course of business consistent with past practice) free and clear of all
mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances, except for (i) liens disclosed in
SCHEDULE 3.1.13, (ii) worker's, carrier's and materialman's liens, and
(iii) liens that are immaterial in character, amount, and extent, and
which do not detract from the value or interfere with the present or
continued use of the properties they affect ("Permitted Liens").
3.1.14 Condition of Tangible Assets. All buildings, structures,
facilities, equipment and other material items of tangible property and
assets which would be included in the Assets if the Closing took place
on the date hereof are in good operating condition and repair, subject
to normal wear and maintenance, are usable in the regular and ordinary
course of business. No person other than Seller owns any equipment or
other tangible assets or properties situated on the premises of Seller
or necessary to the operation of the business of Seller, except for
items disclosed on SCHEDULE 3.1.14 and for items of immaterial value.
3.1.15 Compliance with Law; Authorizations. To the Knowledge of
Seller, Seller has complied with each, and is not in violation of any,
law, ordinance, or governmental or regulatory rule or regulation,
whether federal, state, local or foreign, to which Seller's business,
operations, assets or properties is subject ("Regulations"), except
where the failure to be in compliance with, or the violation of, any
Regulation would not have a material adverse effect on the business and
operations of Seller. Except as set forth on SCHEDULE 3.1.15, Seller
owns, holds, possesses or lawfully uses in the operation of its business
all material franchises, licenses, permits, easements, rights,
applications, filings registrations and other authorizations from
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governmental authorities ("Authorizations") which are in any manner
necessary for it to conduct its business as now conducted or for the
ownership and use of the assets owned or used by Seller in the conduct
of the business of Seller. Except as set forth on SCHEDULE 3.1.15,
Seller is not in material default, nor has it received any notice of any
claim of default, with respect to any such Authorization. Except as set
forth on SCHEDULE 3.1.15, no director, officer or greater than 10
percent shareholder of Seller, owns or has any proprietary, financial or
other interest (direct or indirect) in any Authorization which Seller
owns, possesses or uses in the operation of the business of Seller as
now conducted.
3.1.16 Transactions With Affiliates. Except as set forth on
SCHEDULE 3.1.16, no director, officer or greater than 10 percent
shareholder of Seller, or any member of his or her immediate family or
any other of its, his or her affiliates, owns or has a 5% or more
ownership interest in any corporation or other entity that is or was, at
any time since January 1, 1999, a party to, or in any property which is
or was, at any time since January 1, 1999, the subject of, any material
contract, agreement or understanding, business arrangement or
relationship with Seller.
3.1.17 Litigation. No litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is pending or, to
the Knowledge of Seller, threatened against Seller or which relates to
the assets of Seller or the transactions contemplated by this Agreement.
Seller is not a party to or subject to the provisions of any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which may
materially adversely affect Seller, its assets or the transactions
contemplated hereby.
3.1.18 Insurance. The assets, properties and operations of
Seller are insured under various policies of general liability and other
forms of insurance, all of which are described in SCHEDULE 3.1.18, which
discloses for each policy the risks insured against, coverage limits,
deductible amounts, all outstanding claims thereunder, and whether the
terms of such policy provide for retrospective premium adjustments. All
such policies are in full force and effect in accordance with their
terms, no notice of cancellation has been received, and there is no
existing material default or event which, with the giving of notice or
lapse of time or both, would constitute a default thereunder. Such
policies are in amounts which are adequate in relation to the business
and assets of Seller and all premiums to date have been paid in full.
Seller has not been refused any insurance, nor has its coverage been
limited, by any insurance carrier to which it has applied for insurance
or with which it has carried insurance at any time since January 1,
2000. SCHEDULE 3.1.18 also contains a true and complete description of
all outstanding bonds and other surety arrangements issued or entered
into in connection with the business, assets and liabilities of Seller.
3.1.19 Contracts and Commitments. Except as set forth on
SCHEDULE 3.1.19, Seller is not a party to any written or oral:
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(a) agreement, contract or commitment with any present
or former employee or consultant or for the employment of any
person, including any consultant, who is engaged in the conduct
of the Business;
(b) agreement, contract or commitment for the future
purchase of, or payment for, supplies or products, or for the
performance of services by a third party which supplies,
products or services are used in the conduct of the Business
involving in any one case $3,000.00 or more;
(c) agreement, contract or commitment to sell or supply
products ("Goods Contracts") in connection with the Business
involving in any one case $3,000.00 or more;
(d) agreement, contract or commitment relating to the
Business not otherwise listed on the SCHEDULE and continuing
over a period of more than six months from the date hereof or
exceeding $3,000.00 in value;
(e) distribution, dealer, representative or sales agency
agreement, contract or commitment relating to the Business;
(f) lease under which Seller is either lessor or lessee
relating to the Assets or any property at which the Assets are
located;
(g) note, debenture, bond, equipment trust agreement,
letter of credit agreement, loan agreement or other contract or
commitment for the borrowing or lending of money relating to the
Business or agreement or arrangement for a line of credit or
guarantee, pledge or undertaking of the indebtedness of any
other person relating to the Business;
(h) agreement, contract or commitment for any charitable
or political contribution relating to the Business;
(i) commitment or agreement for any capital expenditure
or leasehold improvement individually in excess of $3,000.00
relating to the Business;
(j) agreement, contract or commitment limiting or
restraining Seller, the Business or any successor thereto from
engaging or competing in any manner or in any business, nor, to
the Knowledge of Seller, is any employee of Seller engaged in
the conduct of the Business subject to any such agreement,
contract or commitment;
(k) license, franchise, distributorship or other
agreement which relates in whole or in part to any software,
patent, trademark, trade name, service xxxx
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or copyright or to any ideas, technical assistance or other
know-how of or used by Seller in the conduct of the Business; or
(l) material agreement, contract or commitment relating
to the Business not made in the ordinary course of business.
Each of the agreements, contracts, commitments, leases, plans
and other instruments, documents and undertakings listed on SCHEDULE
3.1.19, or not required to be listed therein because of the amount
thereof, under which Purchaser is to acquire rights or obligations
hereunder is valid and enforceable in accordance with its terms; Seller
is, and to the Knowledge of Seller all other parties thereto are, in
material compliance with the provisions thereof; Seller is not, and to
the Knowledge of Seller no other party thereto is, in material default
in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein; and no event has
occurred which with or without the giving of notice or lapse of time, or
both, would constitute a default thereunder. Except as set forth on
SCHEDULE 3.1.19, no written or oral agreement, contract or commitment
described therein requires the consent of any party to its assignment in
connection with the transactions contemplated hereby.
Except as disclosed on SCHEDULE 3.1.19, each Goods Contract is
in one of the forms attached to the SCHEDULE with only such changes
thereto as are necessary to reflect applicable fees, products, and time
periods and such other changes therein as do not materially affect the
rights or obligations of Seller thereunder.
3.1.20 Additional Information. SCHEDULE 3.1.20 contains accurate
lists and summary descriptions of the following:
(a) all inventory, equipment and furniture and fixtures
of Seller included in the Assets as of the Interim Balance Sheet
Date, specifying such items as are owned and such as are leased
and, with respect to the owned property, specifying its
aggregate cost or original value and, with respect to the leased
property as to which Seller is lessee, specifying the identity
of the lessor, the rental rate and the unexpired term of the
lease;
(b) all real property and interests in real property
owned, leased or otherwise held by Seller in the conduct of the
Business or upon which the Assets are located as of the Interim
Balance Sheet Date, specifying which are owned and which are
leased and, (i) with respect to the owned property, specifying
its cost or original value, and (ii) with respect to the leased
property, specifying the identity of the lessor, the rental rate
and the unexpired term of the lease;
(c) the name and address of every bank and other
financial institution in which Seller or its affiliates maintain
an account (whether checking, savings or
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otherwise), lock box or safe deposit box for the Business, and
the account numbers and names of persons having signing
authority or other access thereto;
(d) the names and titles of and current annual base
salary or hourly rates for all employees of Seller engaged in
the conduct of the Business, together with a statement of any
other remuneration, whether in cash or kind, payable to each
such person during the current fiscal year or payable to each
such person in the future and the bonuses accrued for, the
vacation and severance benefits to which, each such person is
entitled; and
(e) all names under which Seller has conducted any
business or which it has otherwise used in any material respect
at any time since January 1, 1999.
3.1.21 Labor Matters. Seller has not suffered any strike,
slowdown, picketing or work stoppage by any union or other group of
employees affecting the business of Seller. Seller is not a party to any
collective bargaining agreement, no such agreement determines the terms
and conditions of employment of any employee of Seller, no collective
bargaining agent has been certified as a representative of any of the
employees of Seller, and no representation campaign or election is now
in progress with respect to any of the employees of Seller.
3.1.22 Employee Benefit Plans and Arrangements.
(a) Identification of Employee Benefit Plans. SCHEDULE
3.1.22 contains a complete list of all employee benefit plans,
whether formal or informal, whether or not set forth in writing,
and whether covering one person or more than one person,
sponsored or maintained by the Seller. For the purposes hereof,
the term "employee benefit plan" includes all plans, funds,
programs, policies, arrangements, practices, customs and
understandings providing benefits of economic value to any
employee, former employee, or present or former beneficiary,
dependent or assignee of any such employee or former employee
other than regular salary, wages or commissions paid
substantially concurrently with the performance of the services
for which paid. Without limitation, the term "employee benefit
plan" includes all employee welfare benefit plans within the
meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), all employee pension
benefit plans within the meaning of section 3(2) of ERISA. Each
plan providing benefits which are funded through a policy of
insurance is indicated by the word "insured" placed by the
listing of the plan in the SCHEDULE.
(b) Stock Options. Seller has adopted and maintains the
StreamWorks International Inc. 1999 Stock Option Plan (the
"Option Plan"), a copy of which has been provided to Purchaser.
SCHEDULE 3.1.22 lists all outstanding and unexercised options
granted under the Option Plan (the "Outstanding Options"),
specifying the name of each optionee, the date on which
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each option was granted, the number of shares that may be
purchased pursuant to each option and the exercise price at
which each option is exercisable.
3.1.23 Intellectual Property Matters. Except as set forth on
SCHEDULE 3.1.23, Seller owns, is licensed or has rights to use all
patents, trademarks, tradenames, service marks, copyrights, internet
domain names, software, trade secrets, know-how and tangible or
intangible proprietary information or materials that are used in the
business of the Seller (the "Intellectual Property"), except where the
failure to own or otherwise have such rights would not have a material
adverse effect upon the business, assets, financial condition or
operations of the Seller. Except as set forth on SCHEDULE 3.1.23, to the
Knowledge of Seller, Seller does not infringe upon or unlawfully or
wrongfully use any U.S. patent, trademark, tradename, service xxxx,
copyright or internet domain names, or any trade secret owned or claimed
by another. Except as set forth on SCHEDULE 3.1.23, Seller has not
received any notice of any claim of infringement or any other claim or
proceeding relating to any such patent, trademark, tradename, service
xxxx, copyright, internet domain names or trade secret. Except as set
forth on SCHEDULE 3.1.23, to the Knowledge of Seller, no present or
former employee of Seller owns or has any proprietary, financial or
other interest, direct or indirect, in whole or in part, in any patent,
trademark, tradename, service xxxx or copyright, internet domain names
or in any application therefor, or in any trade secret, which Seller
owns, possesses or uses in its operations as now or heretofore
conducted. SCHEDULE 3.1.23 lists all confidentiality or non-disclosure
agreements to which Seller or any of Seller's employees engaged in the
Business is a party which relates to the Business.
3.1.24 Web Site. For purposes of this Agreement, the "Web Site"
means all materials and content (including computer software web site
development utilities (whether in object or source code), HTML
programming code, HTML script, HTML text, and graphic files) existing
during the 24 hour period immediately prior to the Closing Date that
Seller (including its employees and agents) created or that a third
party created for Seller as "work for hire," that a contractor operates
on behalf of Seller from its or its contractor's servers, and that has
the internet protocol address "209.67.75.40" as of the date of this
Agreement and corresponding domain name "(xxxx://xxx.xxxxxxxxxxx.xxx/)."
"Web Site Documentation" means process documentation to facilitate
Seller's maintenance of the Web Site, written for and delivered to
Seller as "work for hire" prior to the date of this Agreement. Seller
owns the Web Site and the Web Site Documentation, including United
States copyrights in the Web Site and Web Site documentation, and to the
Knowledge of Seller, the Web Site and Web Site Documentation do not
infringe any U.S. patent, trademark, tradename, service xxxx, copyright
or internet domain name, or misappropriate any trade secret, owned or
claimed by any third party.
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3.1.25 Environmental Matters.
(a) To the Knowledge of Seller, Seller has obtained all
permits, licenses and other authorizations which are required in
connection with the conduct of the Business under Regulations
relating to pollution or protection of the environment,
including Regulations relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or
wastes into the environment (including without limitation
ambient air, surface water, groundwater, or land), or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
(b) To the Knowledge of Seller, Seller is in full
compliance in the conduct of the Business with all terms and
conditions of the required permits, licenses and authorizations,
and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or
contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
(c) Seller is not aware of, nor has Seller nor any of
its subsidiaries received notice of, any past, present or future
events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent
compliance or continued compliance with those laws or any
regulations, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation, based
on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
(d) There is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice or demand letter,
notice of violation, investigation, or proceeding pending or, to
the Knowledge of Seller, threatened against Seller in connection
with the conduct of the Business relating in any way to those
laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated
or approved thereunder.
(e) Seller agrees to cooperate with Purchaser in
connection with Purchaser's application for the transfer,
renewal or issuance of any permits, licenses, approvals or other
authorizations or to satisfy any regulatory requirements
involving Seller's business.
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3.1.26 Leased Property. With respect to the real property that
is leased by Seller ("Leased Real Property"), which is identified on
SCHEDULE 3.1.26 as being leased by Seller:
(a) Seller has delivered to Purchaser a true and
complete copy of every lease and sublease to which Seller is a
tenant or subtenant and which is not an Excluded Asset (the
"Leases"), and each Lease is described on SCHEDULE 3.1.26 by
listing the name of the landlord or sublandlord, a description
of the leased premises, the commencement and expiration dates of
the current term, the security deposited by Seller with the
landlord and sublandlord, if any, the monthly rental (including
base and all additional rents), and whether Seller may assign
the Lease to Purchaser (if the consent of the landlord and
sublandlord is required for such an assignment, that should be
set forth in the SCHEDULE);
(b) except as listed on SCHEDULE 3.1.26, each Lease is,
and at Closing shall be, in full force and effect and has not
been assigned, modified, supplemented or amended, and neither
Seller nor, to the Knowledge of Seller, the landlord or
sublandlord under any Lease, is in default under any of the
Leases, and no circumstances or state of facts presently exists
which, with the giving of notice or passage of time, or both,
would permit the landlord or sublandlord under any Lease to
terminate any Lease (except as described in Section 2.3 above);
and
(c) at Closing, subject to Section 2.3 above, Seller
shall assign to the Purchaser all right, title and interest of
Seller in and to all Leases (and shall deliver to Purchaser
original copies of all consents required for such assignments)
and all security deposits made by Seller pursuant to any of the
Leases, including, but not limited to, the security deposits
listed on the SCHEDULE, together with all interest earned on
such deposits.
3.1.27 Availability of Documents. Seller has made available to
Purchaser copies of all material documents, including without limitation
all agreements, contracts, commitments, insurance policies, leases,
plans, instruments, undertakings, authorizations, permits, licenses,
patents, trademarks, tradenames, service marks, copyrights and
applications therefor listed in the Disclosure Schedules hereto or
referred to herein. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently
in effect thereunder.
3.1.28 Assets. The Assets include all material rights and
property necessary to the conduct of the Business by Purchaser in the
manner it is presently conducted by Seller and no property excluded from
the Assets under Section 1.1 hereof constitutes property or rights
material to the Business.
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3.1.29 Restrictions. Seller is not a party to any indenture,
agreement, contract, commitment, lease, plan, license, permit,
authorization or other instrument, document or understanding, oral or
written, or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which materially
adversely affects or materially restricts the business, operations,
assets, properties, prospects or condition (financial or otherwise) of
the Business after consummation of the transactions contemplated hereby.
3.1.30 Conditions Affecting Seller. There is no material fact,
development or threatened development with respect to the markets,
products, services, clients, customers, facilities, computer software,
data bases, personnel, vendors, suppliers, operations, assets or
prospects of the Business which are known to Seller which would
materially adversely affect the business, operations or prospects of
Seller considered as a whole, other than such conditions as may affect
the fishing industry or the economy generally. Seller has used its best
efforts to keep available for Purchaser the services of the employees,
agents, customers and suppliers of Seller active in the conduct of the
Business. Seller does not have any reason to believe that any loss of
any employee, agent, customer or supplier or other advantageous
arrangement will result because of the consummation of the transactions
contemplated hereby.
3.1.31 Completeness of Disclosure. No representation or warranty
by Seller in this Agreement nor any certificate, schedule, statement,
document or instrument furnished or to be furnished to Purchaser
pursuant hereto, or in connection with the negotiation, execution or
performance of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact required to be stated herein or therein or necessary to make any
statement herein or therein not misleading.
3.2 Representations and Warranties of Purchaser. Purchaser represents
and warrants to Seller as follows:
3.2.1 Corporate Existence. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. At Closing, Purchaser shall have qualified to do
business as a foreign corporation in each state necessary for the
operation of the Business and ownership of the Assets, except where the
failure to be so qualified would not have a material adverse effect on
the business, operations or financial condition of Purchaser.
3.2.2 Corporate Power and Authorization. Purchaser has the
corporate power, authority and legal right to execute, deliver and
perform this Agreement and any other agreements, documents and
instruments required to be delivered by Purchaser hereunder
(collectively, the "Purchaser Documents"). The execution, delivery and
performance of this Agreement and the Purchaser Documents by Purchaser
have been duly authorized by all necessary corporate action. This
Agreement has been, and the
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Purchaser Documents will be, duly executed and delivered by Purchaser,
and this Agreement constitutes, and the Purchaser Documents when
executed and delivered will constitute, the legal, valid and binding
obligations of Purchaser enforceable against Purchaser in accordance
with their respective terms.
3.2.3 Validity of Contemplated Transactions, etc. The execution,
delivery and performance of this Agreement and the Purchaser Documents
by Purchaser does not and will not violate, conflict with or result in
the breach of any term, condition or provision of, or require the
consent of any other party to, (a) any existing law, ordinance, or
governmental rule or regulation to which Purchaser is subject, (b) any
judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority
which is applicable to Purchaser, (c) the charter documents or By-Laws
of, or any securities issued by, Purchaser, or (d) any material
provision of any mortgage, indenture, agreement, contract, commitment,
lease, plan or other instrument, document or understanding, oral or
written, to which Purchaser is a party or by which Purchaser is
otherwise bound. Except as aforesaid, no authorization, approval or
consent of, and no registration or filing with, any governmental or
regulatory official, body or authority is required in connection with
the execution, delivery and performance of this Agreement by Purchaser.
3.2.4 3M Public Reports; Financial Statements. Purchaser has
delivered to Seller true and complete copies of, including all
amendments thereto, the 3M Annual Report for the calendar year ended
December 31, 1999, the annual report on Form 10-K for the year ended
December 31, 1999, the quarterly reports on Form 10-Q for the quarters
ended March 31, 2000 (collectively, the "3M Public Reports"). The
consolidated financial statements of Purchaser contained in the 3M
Public Reports present fairly the financial position of 3M and its
consolidated subsidiaries at the respective dates of the balance sheet
and the results of operations for the periods then ended, in conformity
with generally accepted accounting principles applied on a consistent
basis. The 3M Public Reports do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements made therein, in the light of the circumstances
under which they will be made, not misleading.
3.2.5 3M Common Stock. The shares of 3M common voting stock to
be issued and delivered by Purchaser pursuant to this Agreement have
been duly authorized and will be, upon Closing, validly issued, fully
paid, and nonassessable. On or before the effective date of any
registration statement filed with the SEC covering any of the 3M shares
to be issued hereunder, and in any event not more than one hundred
eighty (180) days after the Closing Date, the 3M shares to be issued
hereunder shall be listed for trading on the New York Stock Exchange,
Pacific Stock Exchange, and Midwest Stock Exchange, and any other
exchange on which the 3M common voting stock is then listed or quoted
for trading.
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3.3 Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement or in any certificate,
schedule, statement, document or instrument furnished hereunder or in connection
with negotiation, execution and performance of this Agreement shall survive the
Closing for a period of 18 months (the "Survival Period"), except that
representations and warranties contained in Section 3.1.10 and Section 3.1.25
shall survive until the expiration of any applicable federal or state statute of
limitations. Notwithstanding any investigation or audit conducted before or
after the Closing Date or the decision of any party to complete the Closing,
each party shall be entitled to rely upon the representations and warranties set
forth herein and therein.
ARTICLE IV - INVESTMENT REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties by Seller. Seller represents and
warrants to, and covenants with, the Purchaser that:
(a) the Seller is an "accredited investor" as defined in
Regulation D under the Securities Act and the Seller is also
knowledgeable, sophisticated and experienced in making, and is qualified
to make decisions with respect to, investments in shares presenting an
investment decision like that involved in acquiring the 3M Shares, and
has requested, received, reviewed and considered all information it
deemed relevant in making an informed decision to purchase the 3M
Shares;
(b) the Seller will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the 3M Shares
except in compliance with the Securities Act, applicable state
securities laws and the respective rules and regulations promulgated
thereunder;
(d) the Seller will notify the Purchaser immediately of any
change in any information in this Section 4.1 until such time as the
Seller has sold all of its 3M Shares or until the Purchaser is no longer
required to keep the Registration Statement effective; and
(e) the Seller, in connection with its decision to acquire the
number of 3M Shares set forth in the Agreement, relied only upon the
Purchaser's annual report on Form 10-K for the year ended December 31,
1999, the quarterly report on Form 10-Q for the quarter ended March 31,
2000 and the Current Reports on Form 8-K as filed by the Purchaser with
the Securities and Exchange Commission (the "SEC Documents") and the
representations and warranties of the Purchaser contained herein. Seller
understands that its acquisition of the 3M Shares has not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of the Seller's
investment intent as expressed herein.
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(f) As defined in Rule 501(e) of Regulation D under the
Securities Act, there are no more than 35 Shareholders of Seller that
will be receiving the 3M Shares under the plan of reorganization
referred to in Section 9.9 of the Agreement.
4.2 Representations and Warranties by Shareholders of Seller. Seller
will, as a condition to Closing, obtain from each shareholder of the Seller as
of the Closing Date an investment representation with respect to the 3M Shares
of common stock to be issued to Seller and distributed to such shareholder,
substantially in the form of Exhibit G.
4.3 Cooperation of Parties. In the event that any shareholder of Seller
disposes of any of the 3M Shares pursuant to Rule 144 under the Act, 3M agrees
to cooperate promptly in supplying information and taking steps to facilitate
the lawful disposition of such shares under the Rule. Seller will use its best
efforts to obtain from each shareholder of the Seller as of the Closing Date an
agreement to promptly provide 3M with copies of all Forms 144 filed with the
SEC, as well as such other information as 3M may reasonably require concerning
the sale of 3M Shares by such shareholder.
ARTICLE V - 3M COMMON STOCK
5.1 Rights. The 3M Shares to be issued to Seller shall have the rights,
preferences, privileges, and restrictions set forth in 3M's Certificate of
Incorporation and the provisions of Delaware law. Purchaser has provided a true
and complete copy of the Certificate of Incorporation, and all amendments
thereto, to Seller.
5.2 Legend. Seller acknowledges that each certificate representing the
3M Shares shall be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITIION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
5.3 Taxes on Transfer. Seller, and not Purchaser, shall be responsible
for any taxes resulting from any transfer of the 3M Shares to the shareholders
of Seller.
5.4 Effective Registration Statement. Subject to Section 5.5 hereof, 3M
shall file, within sixty (60) days following the Closing Date, a registration
statement on Form S-3 with the Securities and Exchange Commission ("SEC")
covering all of the 3M Shares issued pursuant to this Agreement (including, any
3M Shares held in the Escrow and any 3M Shares issued as payment of the Upwards
Adjustment). It is
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understood that 3M cannot and does not warrant or represent that such
registration statement filed with the SEC will be declared effective, but 3M
agrees to use its best efforts to file all documents and to take all other
reasonable steps possible in order to have such registration declared effective.
3M represents that it has filed a number of registration statements in the past,
all of which have been subsequently declared effective by the SEC, and agrees
that it will follow its normal procedure in connection with the filing of the
subject registration statement and will make all reasonable changes in response
to comments of the SEC so as to enable such registration statement to become
effective. 3M further agrees that it will file post-effective amendments to such
registration statement as are necessary to cause such registration statement to
remain continuously effective for a period not exceeding the earliest of (i) the
second anniversary of the Closing Date, or (ii) such time as all 3M Shares have
been sold pursuant to a registration statement.
5.5 Conditions to 3M's Obligation to File Registration Statement. 3M's
obligation to file a registration statement shall, in all cases, be subject to
the following provisions:
(a) Any registration statement filed by 3M shall cover only the
sale by selling stockholders in varying amounts from time to time, at
prices then prevailing on a national securities exchange on which shares
of 3M common stock are traded or in the so-called "third market."
(b) In the event 3M does not meet the requirements for use of
Form S-3 at the time of filing and is required to file a registration
statement on a different form, the time for filing any registration
statement shall be extended to one hundred eighty (180) days after the
Closing Date rather than the time period specified in Section 9.05
hereof.
(c) 3M shall have furnished, and Seller and/or its shareholders
shall have agreed to furnish any and all agreements, consents,
representations, etc. required of them by the SEC in connection with the
filing or as a condition of having the subject registration statement
declared effective.
(d) 3M shall not be obligated to file any registration statement
if 3M shall have delivered to Seller or each shareholder proposing to
sell shares delivered pursuant to this Agreement an opinion of its
counsel to the effect that the shares delivered pursuant to this
Agreement may lawfully be sold to the public without registration under
the Securities Act of 1933 and has delivered to its transfer agent
instructions to register the transfer of any of the 3M Shares sold in
reliance on such opinion.
(e) 3M shall have the right to include in any such registration
statement any of its securities which it or any holder or holders of its
securities desire to register or to include the shares delivered
pursuant to this Agreement in any
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registration statement filed or to be filed for other securities of 3M,
provided that such inclusion does not unreasonably delay the
effectiveness of the registration of said shares and provided further
that such registration will continue in effect as provided in Section
5.5 unless such requirement is waived by the security holders.
(f) With respect to such registration statement, 3M shall bear
the expense of all registration and qualification fees, state blue sky
fees, fees of 3M outside counsel and independent public accountants,
printing costs and the salaries and expenses of its employees, and all
other costs of preparing and filing the registration statement and
Seller or Seller's shareholders shall pay all attorneys fees for its
counsel incurred as a part of such registration. 3M agrees to furnish
Seller and its shareholders with such number of prospectuses or other
documents incident to any such registration as may from time to time be
reasonably requested.
(g) 3M shall have received all necessary information from Seller
or its shareholders, as applicable, for the filing of the Registration
Statement.
5.6 Reference to Shareholders. Any reference to shareholders contained
in this Article V shall be deemed to include all shareholders of Seller.
ARTICLE VI - AGREEMENTS PENDING CLOSING
6.1 Agreements of Seller Pending the Closing. Seller covenants and
agrees that, pending the Closing and except as otherwise agreed to in writing by
Purchaser:
6.1.1 Business in the Ordinary Course. The Business shall be
conducted solely in the ordinary course consistent with past practice.
6.1.2 Existing Condition. Seller shall not cause nor permit to
occur any of the events or occurrences described in Section 3.1.12
hereof, except as set forth on SCHEDULE 3.1.12.
6.1.3 Maintenance of Physical Assets. Seller shall continue to
maintain and service the physical assets used in the conduct of the
Business in the same manner as has been its consistent past practice.
6.1.4 Employees and Business Relations. Seller shall use its
best efforts to keep available the services of the present employees and
agents of the Business and to maintain the relations and goodwill with
the suppliers, customers, distributors and any others having business
relations with the Business.
6.1.5 Maintenance of Insurance. Seller shall notify Purchaser of
any changes in the terms of the insurance policies and binders referred
to on SCHEDULE 3.1.18 hereto.
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6.1.6 Compliance with Laws, etc. Seller shall comply with all
laws, ordinances, rules, regulations and orders applicable to the
Business, or Seller's operations, assets or properties in respect
thereof, the noncompliance with which might materially affect the
Business or the Assets.
6.1.7 Update Schedules. Seller shall promptly disclose to
Purchaser any information contained in its representations and
warranties or the Schedules which, because of an event occurring after
the date hereof, is incomplete or is no longer correct as of all times
after the date hereof until the Closing Date; provided, however, that
none of such disclosures shall be deemed to modify, amend or supplement
the representations and warranties of Seller or the schedules hereto for
the purposes of Article V hereof, unless Purchaser shall have consented
thereto in writing.
6.1.8 Conduct of Business. Seller shall use its best efforts to
conduct its business in such a manner that on the Closing Date the
representations and warranties of Seller contained in this Agreement
shall be true in all material respects, except as specifically
contemplated by this Article VI, as though such representations and
warranties were made on and as of such date. Furthermore, Seller shall
cooperate with Purchaser and use its best efforts to cause all of the
conditions to the obligations of Purchaser and Seller under this
Agreement to be satisfied on or prior to the Closing Date.
6.1.9 Sale of Assets; Negotiations. Seller shall not, directly
or indirectly, sell or encumber all or any part of the Assets, other
than in the ordinary course of the Business consistent with past
practice, or initiate or participate in any discussions or negotiations
or enter into any agreement to do any of the foregoing. Seller shall not
provide any confidential information concerning the Business or its
properties or assets to any third party other than in the ordinary
course of business.
6.1.10 Access. Seller shall give to Purchaser's officers,
employees, counsel, accountants and other representatives free and full
access to and the right to inspect, during normal business hours, all of
the premises, properties, assets, records, contracts and other documents
relating to the Business and shall permit them to consult with the
officers, employees, accountants, counsel and agents of Seller for the
purpose of making such investigation of the Business, including without
limitation the Interim Balance Sheet, as Purchaser shall desire to make,
provided that such investigation shall not unreasonably interfere with
Seller's business operations. Furthermore, Seller shall furnish to
Purchaser all such documents and copies of documents and records and
information with respect to the affairs of the Business and copies of
any working papers relating thereto as Purchaser shall from time to time
reasonably request and shall permit Purchaser and its agents to make
such physical inventories and inspections of the Assets as Purchaser may
request from time to time at reasonable times during Seller's normal
hours of operations.
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6.1.11 Press Releases. Except as required by applicable law,
Seller shall not give notice to third parties or otherwise make any
public statement or releases concerning this Agreement or the
transactions contemplated hereby except for such written information as
shall have been approved in writing as to form and content by Purchaser,
which approval shall not be unreasonably withheld.
6.2 Agreements of Purchaser Pending the Closing. Purchaser covenants and
agrees that, pending the Closing and except as otherwise agreed to in writing by
Seller:
6.2.1 Actions of Purchaser. Purchaser will not knowingly take
any action which would result in a breach of any of its representations
and warranties hereunder. Furthermore, Purchaser shall cooperate with
Seller and use its best efforts to cause all of the conditions to the
obligations of Purchaser and Seller under this Agreement to be satisfied
on or prior to the Closing Date.
6.2.2 Confidentiality. Unless and until the Closing has been
consummated, Purchaser will hold, and shall cause their counsel,
independent certified public accountants, appraisers and investment
bankers to hold in confidence any confidential data or information made
available to Purchaser in connection with this Agreement with respect to
the Business using the same standard of care to protect such
confidential data or information as is used to protect Purchaser's
confidential information. If the transactions contemplated by this
Agreement are not consummated, Purchaser agrees that it shall return or
cause to be returned to Seller all written materials and all copies
thereof that were supplied to Purchaser by Seller and that contain any
such confidential data or information. The obligations set forth in this
Section 6.2.2 are in addition to and do not supersede the parties
obligations in the non-disclosure agreement between Seller and
Purchaser, dated November 5, 1999, which agreement shall survive Closing
or termination of this Agreement.
6.2.3 Press Releases. Except as required by applicable law,
Purchaser will not give notice to third parties or otherwise make any
public statement or releases concerning this Agreement or the
transactions contemplated hereby except for such written information as
shall have been approved in writing as to form and content by Seller,
which approval shall not be unreasonably withheld.
ARTICLE VII - CONDITIONS PRECEDENT TO THE CLOSING
7.1 Conditions Precedent to Purchaser's Obligations. All obligations of
Purchaser under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
7.1.1 Representations and Warranties True as of the Closing
Date. The representations and warranties of Seller contained in this
Agreement or in any schedule, certificate or document delivered by
Seller to Purchaser pursuant to the provisions hereof shall have been
true on the date hereof without regard to any
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schedule updates furnished by Seller after the date hereof and shall be
true on the Closing Date with the same effect as though such
representations and warranties were made as of such date.
7.1.2 Compliance with this Agreement. Seller shall have
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with or by them prior to or
at the Closing.
7.1.3 Closing Certificate. Purchaser shall have received a
certificate from Seller dated the Closing Date, certifying in such
detail as Purchaser may reasonably request that the conditions specified
in Sections 7.1.1 and 7.1.2 hereof have been fulfilled and certifying
that Seller has obtained all consents and approvals required with
respect to it or the Business by Section 7.1.6 hereof.
7.1.4 Opinions of Counsel for Seller. Cairncross & Hempelmann,
P.S., counsel for Seller, shall have delivered to Purchaser a written
opinion, dated the Closing Date, in the form of Exhibit B hereto with
only such changes as shall be in form and substance reasonably
satisfactory to the Purchaser and its counsel.
7.1.5 No Threatened or Pending Litigation. On the Closing Date,
no suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby, and no investigation that might result in any such
suit, action or proceeding shall be pending or threatened.
7.1.6 Consents and Approvals. Except for consents required by
the terms of the contracts, commitments or agreements listed in SCHEDULE
3.1.19 or SCHEDULE 3.1.25 hereto, the holders of any indebtedness of
Seller, the lessors or lessees of any real or personal property or
assets leased by Seller, the parties (other than Seller) to any
contract, commitment or agreement to which Seller is a party or subject,
any governmental or regulatory official, body or authority or any other
person which owns or has authority to grant any franchise and any
governmental, judicial or regulatory official, body or authority having
jurisdiction over Seller or Purchaser to the extent that their consent
or approval is required or necessary under the pertinent debt, lease,
contract, commitment or agreement or other document or instrument or
under applicable orders, laws, rules or regulations, for the
consummation of the transactions contemplated hereby in the manner
herein provided, shall have granted such consent or approval.
7.1.7 Material Adverse Changes. The business operations, assets,
properties or prospects of the Business shall not have been and shall
not be threatened to be materially adversely affected in any way as a
result of any event or occurrence.
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7.1.8 Escrow Agreement. Seller and the Escrow Agent shall have
executed and delivered the Escrow Agreement substantially in the form of
Exhibit A hereto.
7.1.9 Key Employee/Non-Compete Arrangements. Each of the
employees of the Business listed in SCHEDULE 7.1.9 hereto shall have
executed and delivered an agreement substantially in the form of Exhibit
C hereto.
7.1.10 Consulting Agreements. Each of the persons formerly
employed by the Business listed in SCHEDULE 7.1.10 shall have executed
and delivered an agreement substantially in the form of Exhibit D
hereto.
7.1.11 Non-Compete Agreements. Each of the persons formerly
employed by the Business listed in SCHEDULE 7.1.11 shall have executed
and delivered an agreement substantially in the form of Exhibit E
hereto.
7.1.12 Stock Options. Seller shall have amended its Option Plan
to eliminate any requirement that Purchaser assume or issue replacement
options for the Outstanding Options in connection with the transaction
contemplated by this Agreement. Seller shall have caused each of the
Outstanding Options to be exercised and satisfied in full on or prior to
the Closing Date, and shall have obtained from each option holder a
release of all claims with respect to such Outstanding Options (which
release shall include Purchaser as one of the parties intended to be
protected thereby).
7.1.13 Distribution Agreement with Rainy's Flies. Purchaser
shall have entered into a distribution agreement with Rainy's Flies and
Supplies, Inc. to be effective upon Closing.
7.1.14 Investment Representation Letters. Seller shall provide a
certificate as to investment representations substantially in the form
of Exhibit G from each shareholder of Seller as of the Closing Date.
7.2 Conditions Precedent to the Obligations of Seller. All obligations
of Seller under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
7.2.1 Representations and Warranties True as of the Closing
Date. The representations and warranties of Purchaser contained in this
Agreement or in any list, certificate or document delivered by Purchaser
to Seller pursuant to the provisions hereof shall be true on the Closing
Date with the same effect as though such representations and warranties
were made as of such date.
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7.2.2 Compliance with this Agreement. Purchaser shall have
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with or by it prior to or at
the Closing.
7.2.3 Closing Certificates. Seller shall have received a
certificate from Purchaser dated the Closing Date certifying in such
detail as Seller may reasonably request that the conditions specified in
Sections 7.2.1 and 7.2.2 hereof have been fulfilled.
7.2.4 Opinions of Counsel for Purchaser. Xxxxxxxx Xxxxx, counsel
for Purchaser, shall have delivered to Seller a written opinion, dated
the Closing Date, in the form of Exhibit F hereto with only such changes
as shall be in form and substance reasonably satisfactory to Seller and
its counsel.
7.2.5 No Threatened or Pending Litigation. On the Closing Date,
no suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby, and no investigation that might result in any such
suit, action or proceeding shall be pending or threatened.
7.2.6 Escrow Agreement. Purchaser and the Escrow Agent shall
have executed and delivered the Escrow Agreement substantially in the
form of Exhibit A.
7.2.7 Key Employee/Non-Compete Arrangements. Each of the
employees of the Business listed in SCHEDULE 7.1.9 hereto shall have
executed and delivered an agreement substantially in the form of Exhibit
C hereto.
7.2.8 Consulting. Each of the persons formerly employed by the
Business listed in SCHEDULE 7.1.10 shall have executed and delivered an
agreement substantially in the form of Exhibit D hereto.
7.2.9 Non-Compete Agreements. Each of the persons formerly
employed by the Business listed in SCHEDULE 7.1.11 shall have executed
and delivered an agreement substantially in the form of Exhibit E
hereto.
7.2.10 Intellectual Property Assignments. Seller shall have
executed assignments, acceptable to Purchaser, assigning all rights,
title and interest in all intellectual property listed on any SCHEDULE
to this Agreement to Minnesota Mining and Manufacturing Company or such
other entity as Purchaser may direct. The assignments will be in a form
suitable for recordation in the U.S. Patent and Trademark Office, as
reasonably determined by Purchaser, and in counterpart institutions in
other jurisdictions where there is intellectual property as listed on
any SCHEDULE to this Agreement. Without further consideration, Seller
agrees to execute any and all further
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documents to effect transfer of all intellectual property rights to
Minnesota Mining and Manufacturing Company or such other entity as
Purchaser may direct.
7.2.11 Distribution Agreement with Rainy's Flies. Purchaser
shall have entered into a distribution agreement with Rainy's Flies and
Supplies, Inc. to be effective upon Closing.
ARTICLE VIII - INDEMNIFICATION
8.1 General Indemnification Obligation of Seller. From and after the
Closing, Seller will reimburse, indemnify and hold harmless Purchaser and its
successors and assigns (an "Indemnified Purchaser Party") against and in respect
of:
(a) any and all damages, losses, deficiencies, liabilities,
costs and expenses incurred or suffered by any Indemnified Purchaser
Party that result from, relate to or arise out of:
(i) any and all liabilities and obligations of Seller of
any nature whatsoever, except for those liabilities and
obligations of Seller which Purchaser specifically assumes
pursuant to this Agreement;
(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings
or investigations against any Indemnified Purchaser Party that
relate to Seller or the Business in which the principal event
giving rise thereto occurred prior to the Closing Date or which
result from or arise out of any action or inaction prior to the
Closing Date of Seller or any director, officer, employee,
agent, representative or subcontractor of Seller, except for
those which Purchaser specifically assumes pursuant to this
Agreement; or
(iii) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of
Seller under this Agreement, or from any misrepresentation in or
omission from any certificate, schedule, statement, document or
instrument furnished to Purchaser pursuant hereto or in
connection with the negotiation, execution or performance of
this Agreement; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal fees
and expenses) incident to any of the foregoing or to the enforcement of
this Section 8.1.
8.2 General Indemnification Obligation of Purchaser. From and after the
Closing, Purchaser will reimburse, indemnify and hold harmless Seller and its
successors or assigns (an "Indemnified Seller Party") against and in respect of:
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(a) Any and all damages, losses, deficiencies, liabilities,
costs and expenses incurred or suffered by any Indemnified Seller Party
that result from, relate to or arise out of:
(i) any and all liabilities and obligations of Seller
which have been specifically assumed by Purchaser to this
Agreement;
(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings
or investigations against any Indemnified Seller Party that
relate to Purchaser or the Business in which the principal event
giving rise thereto occurred on or after the Closing Date or
which result from or arise out of any action or inaction on or
after the Closing Date of Purchaser or any director, officer,
employee, agent, representative or subcontractor of Purchaser;
or
(iii) any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of
Purchaser under this Agreement, or from any misrepresentation in
or omission from any certificate, schedule, statement, document
or instrument furnished to Seller pursuant hereto or in
connection with the negotiation, execution or performance of
this Agreement; and
(b) any and all actions, suits, claims, proceeding,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal fees
and expenses) incident to any of the foregoing or to the enforcement of
this Section 8.2.
8.3 Limitations on Liability.
(a) Neither party shall be required to indemnify the other under
this Article VIII unless and until the aggregate amount of all such
claims against such party exceeds $50,000 (the "Threshold Amount"), and,
if such claims exceed the Threshold Amount, the party shall be entitled
to recover all of its losses, damages and costs up to, including and
over the Threshold Amount.
(b) Seller's liability, on the one hand, and Purchaser's
liability, on the other hand, under this Article 10 shall be limited to
(i) an amount equal to 15 percent of the Purchase Price for any Claim
Notice (as defined in Section 8.4 below) made prior to the Adjustment
Date and (ii) an amount equal to ten percent of the Purchase Price for
any Claim Notice made on or following the Adjustment Date; provided,
however, there shall be no limitation on liability for claims for fraud
or intentional misrepresentation.
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8.4 Method of Asserting Claims, Etc. In the event that any claim or
demand for which Seller would be liable to an Indemnified Purchaser Party
hereunder is asserted against or sought to be collected from an Indemnified
Purchaser Party by a third party, the Indemnified Purchaser Party shall promptly
notify Seller of such claim or demand, specifying the nature of such claim or
demand and the amount or the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the final amount of such
claim and demand) (the "Claim Notice"). Seller shall have ten days from the
personal delivery or mailing of the Claim Notice (the "Notice Period") to notify
the Indemnified Purchaser Party, (A) whether or not it disputes the liability to
the Indemnified Purchaser Party hereunder with respect to such claim or demand
and (B) notwithstanding any such dispute, whether or not it desires, at its sole
cost and expense, to defend the Indemnified Purchaser Party against such claim
or demand.
(a) If Seller disputes its liability with respect to such claim
or demand or the amount thereof (whether or not Seller desires to defend
the Indemnified Purchaser Party against such claim or demand as provided
in paragraphs (b) and (c) below), such dispute shall be resolved in
accordance with Section 8.6 hereof. Pending the resolution of any
dispute by Seller of its liability with respect to any claim or demand,
such claim or demand shall not be settled without the prior written
consent of the Indemnified Purchaser Party.
(b) In the event that Seller notifies the Indemnified Purchaser
Parties within the Notice Period that it desires to defend the
Indemnified Purchaser Party against such claim or demand then, except as
hereinafter provided, Seller shall have the right to defend the
Indemnified Purchaser Party by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by them to a final
conclusion in such a manner as to avoid any risk of Indemnified
Purchaser Party becoming subject to liability for any other matter;
provided, however, Seller shall not, without the prior written consent
of the Indemnified Purchaser Party, consent to the entry of any judgment
against the Indemnified Purchaser Party or enter into any settlement or
compromise which does not include, as an unconditional term thereof, the
giving by the claimant or plaintiff to the Indemnified Purchaser Party
of a release, in form and substance satisfactory to the Indemnified
Purchaser Party, as the case may be, from all liability in respect of
such claim or litigation. If any Indemnified Purchaser Party desires to
participate in, but not control, any such defense or settlement, it may
do so at its sole cost and expense. If, in the reasonable opinion of the
Indemnified Purchaser Party, any such claim or demand or the litigation
or resolution of any such claim or demand involves an issue or matter
which could have a materially adverse effect on the business,
operations, assets, properties or prospects of the Indemnified Purchaser
Party, including without limitation the administration of the tax
returns and responsibilities under the tax laws of any Indemnified
Purchaser Party, the Indemnified Purchaser Party shall have the right to
control the defense or settlement of any such claim or demand and its
reasonable costs
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and expenses shall be included as part of the indemnification obligation
of Seller hereunder; provided, however, that the Indemnified Purchaser
Party shall not settle any such claim or demand without the prior
written consent of Seller which consent shall not be unreasonably
withheld. If the Indemnified Purchaser Party should elect to exercise
such right, Seller shall have the right to participate in, but not
control, the defense or settlement of such claim or demand at its sole
cost and expense.
(c) (i) If Seller elects not to defend the Indemnified Purchaser
Party against such claim or demand, whether by not giving the
Indemnified Purchaser Party timely notice as provided above or
otherwise, then the amount of any such claim or demand, or if
the same be defended by Seller or by the Indemnified Purchaser
Party (but none of the Indemnified Purchaser Party shall have
any obligation to defend any such claim or demand), then that
portion thereof as to which such defense is unsuccessful, in
each case shall be conclusively deemed to be a liability of
Seller hereunder, unless Seller shall have disputed its
liability to the Indemnified Purchaser Party hereunder, as
provided in (a) above, in which event such dispute shall be
resolved as provided in Section 8.6 hereof.
(ii) In the event an Indemnified Purchaser Party should
have a claim against Seller hereunder that does not involve a
claim or demand being asserted against or sought to be collected
from it by a third party, the Indemnified Purchaser Party shall
promptly send a Claim Notice with respect to such claim to
Seller. If Seller disputes its liability with respect to such
claim or demand, such dispute shall be resolved in accordance
with Section 8.6 hereof; if Seller does not notify the
Indemnified Purchaser Party within the Notice Period that it
disputes such claim, the amount of such claim shall be
conclusively deemed a liability of Seller hereunder.
(d) All claims for indemnification by an Indemnified Seller
Party under this Agreement shall be asserted and resolved under the
procedures set forth above substituting in the appropriate place
"Indemnified Seller Party" for "Indemnified Purchaser Party" and
variations thereof and "Purchaser" for "Seller."
8.5 Payment.
(a) Upon the determination of the liability under Section 8.4 or
8.6 hereof, the appropriate party shall pay to the other, as the case
may be, within ten days after such determination, the amount of any
claim for indemnification made hereunder. In the event that the
indemnified party is not paid in full for any such claim pursuant to the
foregoing provisions promptly after the other party's obligation to
indemnify has
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been determined in accordance here, it shall have the right,
notwithstanding any other rights that it may have against any other
person, firm or corporation, to setoff the unpaid amount of any such
claim against any amounts owed by it under any agreements entered into
pursuant to this Agreement, the Seller's Documents or the Purchaser's
Documents. Upon the payment in full of any claim, either by setoff or
otherwise, the entity making payment shall be subrogated to the rights
of the indemnified party against any person, firm or corporation with
respect to the subject matter of such claim.
(b) Notwithstanding the foregoing, any sums due by Seller
pursuant to this Section 8.5 shall first be setoff against the 3M Shares
(or any proceeds from the 3M Shares) held in the Escrow. For purposes of
this Article VIII, the 3M Shares shall be valued at the Per Share Value.
8.6 Dispute Resolution.
(a) All disputes under this Section 8.6 shall first be attempted
to be settled as provided herein. Should there develop any dispute,
either party may, by written notice to the other party or parties,
request that such dispute be referred to the Division Vice President of
Home Care Division of Purchaser and Xxxxxx X. Xxxxxxxx, President of
Seller, who shall negotiate in good faith to attempt to promptly resolve
the dispute. No settlement reached under this Section 8.6(a) shall be
binding on the parties until reduced to a writing signed by the parties.
(b) Should the procedure outlined in Section 8.6(a) fail to
bring about a resolution of each dispute within 30 days following the
giving of the notice referred to therein, either party may commence a
civil action in a court of appropriate jurisdiction in accordance with
this Agreement to solve disputes hereunder.
8.7 Compliance with Bulk Sales Laws. Purchaser and Seller hereby waive
compliance by Purchaser and Seller with the bulk sales law and any other similar
laws in any applicable jurisdiction in respect of the transactions contemplated
by this Agreement. Seller shall indemnify Purchaser from, and hold it harmless
against, any liabilities, damages, costs and expenses resulting from or arising
out of (i) the parties' failure to comply with any of such laws in respect of
the transactions contemplated by this Agreement, or (ii) any action brought or
levy made as a result thereof, other than those liabilities which have been
expressly assumed, on such terms as expressly assumed, by Purchaser pursuant to
this Agreement.
8.8 Time and Manner of Claims. Neither Seller nor Purchaser shall have
any liability under this Article VIII, unless a claim for which indemnification
is sought is asserted by the party seeking indemnification by written notice to
the party from whom indemnification is sought within the Survival Period setting
forth, if practicable, a good faith estimate of the amount thereof and the basis
therefor. Notwithstanding anything to the contrary herein, if the Closing
occurs, neither Purchaser nor Seller shall have
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liability to the other (for indemnification or otherwise) for its breach of or
noncompliance with any covenant, agreement or obligation to the extent required
to be performed or complied with prior to the Closing Date and to the extent the
other party has actual knowledge of such breach or noncompliance on the Closing
Date and has expressly waived such breach or noncompliance in writing.
ARTICLE IX - POST CLOSING MATTERS
9.1 Employee Benefits.
(a) Except as otherwise specifically provided in this Section
9.1, Seller shall pay directly to each employee of the Business that
portion of all benefits which has been accrued on behalf of that
employee (or is attributable to expenses properly incurred by that
employee) as of the Closing Date, and Purchaser shall assume no
liability therefor. Except as otherwise specifically provided in Section
9.1(c) no portion of the assets of any plan, fund, program or
arrangement, written or unwritten, heretofore sponsored or maintained by
Seller (and no amount attributable to any such plan, fund, program or
arrangement) shall be transferred to Purchaser, and Purchaser shall not
be required to continue any such plan, fund, program or arrangement
after the Closing Date. The amounts payable on account of all benefit
arrangements (other than as specified in the following subsections)
shall be determined with reference to the date of the event by reason of
which such amounts become payable, without regard to conditions
subsequent, and Purchaser shall not be liable for any claim for
insurance, reimbursement or other benefits payable by reason of any
event which occurs prior to the Closing Date. All amounts payable
directly to employees, or to any fund, program, arrangement or plan
maintained by Seller therefor shall be paid by Seller within the time
allowable by the terms of such plan and applicable laws.
(b) Except as noted in the last sentence of this Section 9.1(b),
Seller will remain responsible for complying with all applicable COBRA
continuation coverage requirements (as described in section 4980B of the
Internal Revenue Code (the "Code") and section 601 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) following
the Closing Date with respect to all current and former employees of the
Business (and their eligible family members). In order to do so, Seller
will continue to maintain or cause its existing group health plan to
continue to be maintained for its remaining eligible employees following
the Closing Date and at least through August 31, 2000. Only with respect
to those employees of the Business identified in SCHEDULE 9.1(b) (and
their eligible family members), Purchaser will ensure that all
applicable COBRA continuation coverage requirements (as described in
section 4980B of the Code and section 601 of ERISA) are met following
August 31, 2000.
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(c) On or immediately following the Closing Date, Seller will
(i) transfer to Purchaser the cash value of the accrued and unused
vacation benefits of the Transferred Employees (defined in Section
9.1(d) below), and (ii) provide Purchaser with a list of the Transferred
Employees and the cash value of their unused vacation benefits
transferred to Purchaser. Upon receipt of such cash transfer, Purchaser
will cause its vacation program to permit the Transferred Employees to
receive paid vacation benefits equal to the number of days of unused
vacation benefits for which it received the cash transfer from Seller.
(d) As of the Closing Date, Purchaser will offer employment at
compensation levels at least equal to those being paid by Seller to
those of Seller's employees presently engaged in the Business and listed
in SCHEDULE 9.1(d); provided, however, that Purchaser shall not be
required to hire and Seller will continue the employment of those
employees of the Business who are absent from work due to disability on
the Closing Date. Those employees of Seller who accept employment with
Purchaser pursuant to the provisions of Section 9.1 will be referred to
as "Transferred Employees." With the exception of its defined benefit
pension plan and retiree medical plans, Purchaser will cause each of its
pension and welfare benefits plans to recognize all of the service that
the Transferred Employees completed with Seller for purposes of
determining their eligibility to participate in, and eligibility for
benefits under, such plans. Purchaser's defined benefit pension plan and
retiree medical plans will immediately recognize all of the Transferred
Employees' service with Seller for purposes of eligibility to
participate, and will recognize such service for purposes of eligibility
for and accrual of benefits over time in accordance with the provisions
of such plans.
(e) With the exception of Section 9.1(a), this Section 9.1 shall
apply only to employees of the United States Business.
9.2 Non-Solicitation. As of the Closing Date, Purchaser shall offer
employment to, and Seller shall use its best efforts to assist Purchaser in
employing as new employees of Purchaser, all persons presently engaged in the
Business who are identified by Purchaser prior to the Closing Date. Seller shall
terminate effective as of the Closing Date all employment agreements it has with
any of the Transferred Employees. Until the second anniversary of the Closing
Date, Seller will not directly or indirectly solicit or offer employment to any
Transferred Employee (i) who is then an employee of Purchaser, or (ii) who has
terminated such employment without the consent of Purchaser within 180 days of
such solicitation or offer, and Purchaser will not directly or indirectly
solicit or offer employment to any person who, after the Closing Date is then an
employee of Seller or who has terminated such employment without the consent of
Seller within 180 days of such solicitation or offer.
9.3 Discharge of Business Obligations. From and after the Closing Date
Seller shall pay and discharge, in accordance with past practice but not less
than on a
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timely basis, all obligations and liabilities incurred prior to the Closing Date
in respect of the Business, its operations or the assets and properties used
therein (except for those expressly assumed by Purchaser hereunder), including
without limitation any liabilities or obligations to employees, trade creditors
and clients of the Business.
9.4 Maintenance of Books and Records. Each of Seller and Purchaser shall
preserve until the fifth anniversary of the Closing Date all records possessed
or to be possessed by such party relating to any of the assets, liabilities or
business of the Business prior to the Closing Date, except that certain tax
records shall be preserved until the eighth anniversary. After the Closing Date,
where there is a legitimate purpose, such party shall provide the other parties
with access, upon prior reasonable written request specifying the need therefor,
during regular business hours, to (i) the officers and employees of such party
and (ii) the books of account and records of such party, but, in each case, only
to the extent relating to the assets, liabilities or business of the Business
prior to the Closing Date, and the other parties and their representatives shall
have the right to make copies of such books and records; provided, however, that
the foregoing right of access shall not be exercisable in such a manner as to
interfere unreasonably with the normal operations and business of such party;
and further, provided, that, as to so much of such information as constitutes
trade secrets or confidential business information of such party, the requesting
party and its officers, directors and representatives will use due care to not
disclose such information except (i) as required by law, (ii) with the prior
written consent of such party, which consent shall not be unreasonably withheld,
or (iii) where such information becomes available to the public generally, or
becomes generally known to competitors of such party, through sources other than
the requesting party, its affiliates or its officers, directors and
representatives. Such records may nevertheless be destroyed by a party if such
party sends to the other parties written notice of its intent to destroy
records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day after such
notice is given unless another party objects to the destruction in which case
the party seeking to destroy the records shall deliver such records to the
objecting party.
9.5 Payments Received. Seller and Purchaser each agree that after the
Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party, including without limitation any insurance proceeds,
and will account to the other for all such receipts.
9.6 Use of Name. From and after the Closing Date, Seller will sign such
consents and take such other action as Purchaser shall reasonably request, at
Purchaser's sole expense, in order to permit Purchaser to use the name
"StreamWorks" and variants thereof. From and after the Closing Date, Seller will
not itself use the name "StreamWorks" or any names similar thereto or variants
thereof.
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9.7 UCC Matters. From and after the Closing Date, Seller will promptly
refer all inquiries with respect to ownership of the Assets or the Business to
Purchaser. In addition, Seller will execute such documents and financing
statements as Purchaser may request from time to time, and at Purchaser's sole
expense, to evidence transfer of the Assets to Purchaser, including any
necessary assignments of financing statements.
9.8 Covenant Not to Compete. Each of Seller and the individuals
identified in SCHEDULE 7.1.11, and each of their affiliates, agrees that for a
period of three (3) years after the Closing Date that they will not,
individually or collectively, directly or indirectly, own, manage, operate, join
or assist (as an employee, independent contractor, consultant or the like) any
business, regardless of the form of such business (e.g., corporate, partnership,
proprietorship or otherwise) engaged in the manufacture, distribution or sale of
any product that is the same as, competitive with, or a replacement or
substitute for, any product that constituted any part of the Business; provided,
however, that the foregoing shall not prevent the individuals listed in SCHEDULE
7.1.11 from engaging in the retail sale (but not the manufacture or non-retail
distribution) of fly fishing related products. The parties hereto specifically
acknowledge and agree that the remedy at law for any breach of the foregoing
will be inadequate and that the Purchaser, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage. In the event that the provisions
of this Section 9.8 should ever be deemed to exceed the limitation provided by
applicable law, then the parties hereto agree that such provisions shall be
reformed to set forth the maximum limitations permitted.
9.9 Distribution of 3M Common Stock. Except for the Escrow Shares,
Seller will, as promptly as practicable after the Closing Date, distribute to a
liquidation trust (the "Trust") in exchange for and in complete cancellation and
redemption of the outstanding shares of Seller the 3M Shares received by Seller
pursuant to this Agreement, pursuant to the plan of reorganization of which this
Agreement is a part. The beneficial interests in the Trust shall be allocated
among the shareholders of Seller based proportionately upon their ownership of
Seller shares at Closing. Seller will dissolve and wind up its affairs as soon
as practicable after the completion of such distribution to the Trust.
9.10 Compliance with Income Tax Regulations. Purchaser and Seller each
agree to comply with the information reporting requirements of Treasury
Regulationsss.1.368-3, to the extent applicable.
9.11 Thailand Employees. As of the Closing Date, Purchaser will offer
employment at compensation levels at least equal to those being paid by Seller
to those of Seller's employees presently engaged in the Business and listed in
SCHEDULE 9.11.
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ARTICLE X - MISCELLANEOUS
10.1 Termination.
(a) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(i) by mutual consent of Seller and Purchaser;
(ii) by Purchaser, (A) at any time if the
representations and warranties of Seller contained in Section
3.1 hereof were incorrect in any material respect when made or
at any time thereafter, or (B) upon written notice to Seller
given at any time after June 1, 2000 (or such later date as
shall have been specified in a writing authorized on behalf of
Seller and Purchaser) if all of the conditions precedent set
forth in Section 7.1 hereof have not been met; or
(iii) by Seller, (A) at any time if the representations
and warranties of Purchaser contained in Section 3.2 hereof were
incorrect in any material respect when made or at any time
thereafter, or (B) upon written notice to Purchaser given at any
time after June 1, 2000 (or such later date as shall have been
specified in a writing authorized on behalf of Seller and
Purchaser) if all of the conditions precedent set forth in
Section 7.2 hereof have not been met.
(b) In the event of the termination and abandonment hereof
pursuant to the provisions of this Section 10.1, this Agreement (except
for Section 6.2.2 which shall continue) shall become void and have no
effect, without any liability on the part of any of the parties or their
directors or officers or stockholders in respect of this Agreement,
unless the termination was the result of the representations and
warranties of a party being materially incorrect when made or the
material breach by such party of a covenant hereunder in which event the
party whose representations and warranties were incorrect or who
breached such covenant shall be liable to the other party for all costs
and expenses of the other party in connection with the preparation,
negotiation, execution and performance of this Agreement.
10.2 Brokers' and Finders' Fees.
(a) Seller represents and warrants to Purchaser that all
negotiations relative to this Agreement have been carried on by it
directly without the intervention of any person, who may be entitled to
any brokerage or finder's fee or other commission in respect of this
Agreement or the consummation of the transactions contemplated hereby,
and Seller agrees to indemnify and hold
-44-
harmless Purchaser against any and all claims, losses, liabilities and
expenses which may be asserted against or incurred by it as a result of
Seller's dealings, arrangements or agreements with any such person.
(b) Purchaser represents and warrants that all negotiations
relative to this Agreement have been carried on by it directly without
the intervention of any person who may be entitled to any brokerage or
finder's fee or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby, and Purchaser
agrees to indemnify and hold harmless Seller against any and all claims,
losses, liabilities and expenses which may be asserted against or
incurred by it as a result of Purchaser's dealings, arrangements or
agreements with or any such person.
10.3 Sales, Transfer and Documentary Taxes, etc. Purchaser shall pay all
federal, state and local sales, documentary and other transfer taxes, if any,
due as a result of the purchase, sale or transfer of the Assets in accordance
herewith whether imposed by law on Seller or Purchaser and Purchaser shall
indemnify, reimburse and hold harmless Seller in respect of the liability for
payment of or failure to pay any such taxes or the filing of or failure to file
any reports required in connection therewith.
10.4 Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
10.5 Contents of Agreement; Parties in Interest; etc. This Agreement set
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. It shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the parties regarding
the subject matter hereof, whether written or oral, are superseded by this
Agreement.
10.6 Assignment and Binding Effect. This Agreement may not be assigned
by any party hereto without the prior written consent of the other party.
Notwithstanding the foregoing, the parties agree that Purchaser may assign its
rights to the intellectual property rights under this Agreement to 3M Innovative
Properties Company. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller and Purchaser.
10.7 Waiver. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
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10.8 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telegram or by
registered or certified mail, postage prepaid, as follows:
If to Purchaser, to:
Minnesota Mining and Manufacturing Company
Home Care Division
Building 223-4NE-13
0X Xxxxxx
Xx. Xxxx, XX 00000
Attention: Division Vice President
With a required copy to:
Office of General Counsel
Minnesota Mining and Manufacturing Company
X.X. Xxx 00000
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Senior Vice President
Legal Affairs
If to Seller, to:
0000 Xxxxxxxx Xxx. X., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
With a required copy to:
Cairncross & Hempelmann, P.S.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx xx Xxxxxxx Tower
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or mailed.
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10.9 Delaware Law to Govern. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Delaware.
10.10 No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article VI hereof, the other Indemnified
Parties, and their shareholders, heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
10.11 Headings, Gender and "Person." All section headings contained in
this Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
10.12 Schedules and Exhibits. All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
10.13 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
10.14 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date first written.
ATTEST: MINNESOTA MINING AND
MANUFACTURING COMPANY
By:________________________ By:___________________________
Its:_______________________ Its:___________________________
ATTEST: STREAMWORKS INTERNATIONAL, INC.
By: ________________________ By: ____________________________
Xxxxx X. Xxxxxxxxxx Xxxxxx X. Xxxxxxxx
Secretary President
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EXHIBITS
TO
ASSETS PURCHASE AGREEMENTS
Exhibit A Form of Escrow Agreement
Exhibit B Opinion of Counsel for Seller
Exhibit C Form of Key Employee/Non-Compete Agreement
Exhibit D Form of Consulting Agreement
Exhibit E Form of Non-Compete Agreement
Exhibit F Opinion of Counsel for Purchaser
Exhibit G Certificate of Investment Representations
SCHEDULES
TO
ASSETS PURCHASE AGREEMENTS
Schedule 1.1.1(a) Tangible Personal Property
Schedule 1.1.1(c) Prepaid Items, Unbilled Costs and Fees, and Accounts, Notes
and Other Receivables
Schedule 1.1.1(d) Supplies, Inventory and Office and Other Supplies
Schedule 1.1.1(f) Intellectual Property Rights
Schedule 1.1.1(h) Computer Software
Schedule 1.1.2(d) Excluded Assets
Schedule 1.3.3 Allocation of Purchase Price
Schedule 1.5 True-Up Procedures
Schedule 3.1.1 Corporate Existence
Schedule 3.1.3 No Interest in Other Entities
Schedule 3.1.4 Validity of Contemplated Transactions
Schedule 3.1.6 Financial Statements
Schedule 3.1.8 Inventory
Schedule 3.1.9 Absence of Undisclosed Liabilities
Schedule 3.1.10 Tax and Other Returns and Reports
Schedule 3.1.12 Existing Condition
Schedule 3.1.13 Title to Properties
Schedule 3.1.14 Condition of Tangible Assets
Schedule 3.1.15 Compliance with Law; Authorizations
Schedule 3.1.16 Transactions with Affiliates
Schedule 3.1.18 Insurance
Schedule 3.1.19 Contracts and Commitments
Schedule 3.1.20 Additional Information
Schedule 3.1.22 Employee Benefit Plans and Arrangements
Schedule 3.1.23 Intellectual Property Matters
Schedule 3.1.26 Leased Property
Schedule 7.1.9 Key Employees
Schedule 7.1.10 Consultants
Schedule 7.1.11 Non-Competes
Schedule 9.1(b) COBRA Continuation Coverage
Schedule 9.1(d) Transferred Employees
Schedule 9.11 Thailand Employees
