ASSET PURCHASE AGREEMENT, dated as of November 19, 1999, among ATLAS BAG
INC., an Illinois corporation (the "SELLER"), Xxxxxxx X. Xxx, Xxxxx Xxxxxxx
and Xxxxx X. Xxxxxx (together, the "SHAREHOLDERS"), and MARINO TECHNOLOGIES
INCORPORATED, a Delaware corporation (the "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Seller, directly and through its wholly owned subsidiary,
Atlas Bag Texas Inc. ("ATLAS TEXAS"), is engaged in the business of
assembly, sale, refurbishing, importing and distribution of polypropylene
bulk bags in the United States and Mexico (the "BUSINESS"); and
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, all of the assets of the Business and
in connection therewith the Purchaser is willing to assume certain
liabilities of the Seller and Atlas Texas relating thereto, all upon the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Purchaser and the Seller hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Xxxxx.Xx used in this Agreement,
the following terms shall have the following meanings:
"ACQUISITION DOCUMENTS" means this Agreement, the Employment
Agreements, and any certificate, Financial Statement, Interim
Financial Statement, report or other document delivered pursuant
to this Agreement or the transactions contemplated hereby.
"ACTION" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified Person.
"AGREEMENT" or "THIS AGREEMENT" means this Asset Purchase Agreement, dated
as of November 19, 1999, between the Seller and the Purchaser (including
the Exhibits hereto and the Disclosure Schedule) and all amendments hereto
made in accordance with the provisions of Section 7.09.
"ASSETS" has the meaning specified in Section 2.01(a).
"ASSUMED LIABILITIES" has the meaning specified in Section 2.02(a).
"ATLAS TEXAS" has the meaning specified in the recitals to this Agreement.
"XXXX OF SALE" means the Xxxx of Sale and Assignment to be executed by the
Seller on the Closing Date substantially in the form of Exhibit 1.01(a).
"BUSINESS" has the meaning specified in the recitals to this Agreement.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by Law to be closed in Chicago,
Illinois, or New York, New York.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended through the date hereof.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System, as updated through the date hereof.
"CLAIM" has the meaning specified in Section 7.11.
"CLOSING" has the meaning specified in Section 2.04.
"CLOSING BALANCE SHEET" means the audited consolidated balance sheet
(including the related notes and schedules thereto) of the Company and the
Subsidiaries, to be prepared pursuant to Section 2.08(a) and to be dated as
of the Closing Date.
"CLOSING DATE" has the meaning specified in Section 2.04.
"CLOSING DATE NET WORKING CAPITAL" has the meaning specified in
Section 2.08(a).
"CLOSING PAYMENT" has the meaning specified in Section 2.03(b).
"Closing Payment Adjustment Amount" means $300,000.
"CODE" means the Internal Revenue Code of 1986, as amended through the date
hereof.
"CONFIDENTIALITY AGREEMENT" means the letter agreement dated as January 4,
1999 between the Seller and LINQ.
"DESIGNATED AMOUNT" means $100,000.
"DETERMINATION DATE" has the meaning specified in Section 2.08(c).
"DISABILITY" means a physical or mental disability or infirmity of the
Executive that prevents the normal performance of substantially all his
duties as an employee of the Purchaser, which disability or infirmity shall
exist, or in the opinion of an independent physician is reasonably likely
to exist, for any continuous period of 180 days or an aggregate of 180 days
in any twelve-month period.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto, dated
as of the date hereof, and forming a part of this Agreement.
"EMPLOYEE AMOUNTS" has the meaning specified in Section 5.07(b).
"EMPLOYMENT AGREEMENT" means, as the case may be, (A) the Employment
Agreement dated as of the date hereof between the Purchaser and Xx. Xxxxxxx
X. Xxx, substantially in the form of Exhibit 1.01(b), or (B) the Employment
Agreement dated as of the date hereof between the Purchaser and Xx. Xxxxx
Xxxxxxx, substantially in the form of Exhibit 1.01(c).
"ENVIRONMENT" means surface waters, groundwaters, soil, subsurface strata
and ambient air.
"ENVIRONMENTAL CLAIMS" means any and all actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation, notices of
liability or potential liability, investigations, proceedings, consent
orders or consent agreements relating in any way to any Environmental Law,
any Environmental Permit or any Hazardous Materials.
"ENVIRONMENTAL CONDITION" means a condition relating to or arising or
resulting from a failure to comply with any applicable Environmental Law or
Environmental Permit or a Release of Hazardous Materials into the
Environment.
"ENVIRONMENTAL LAW" means any Law, now or hereafter in effect and as
amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to pollution or protection of the environment, health, safety or
natural resources, including without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification number,
license or other authorization required under any applicable Environmental
Law.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement, or restriction of any
kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of
ownership.
"ERISA" has the meaning specified in Section 3.22(a).
"ESTIMATED NET WORKING CAPITAL" has the meaning specified in Section
2.07(a).
"EXCLUDED ASSETS" has the meaning specified in Section 2.01(b).
"EXCLUDED LIABILITIES" has the meaning specified in Section 2.02(b).
"EXECUTIVE" means, as the case may be, Xx. Xxxxxxx X. Xxx, Xx. Xxxxx
Xxxxxxx or Xx. Xxxxx Xxxxxx.
"FINAL CLOSING DATE NET WORKING CAPITAL" has the meaning specified in
Section 2.08(c).
"FINANCIAL STATEMENTS" has the meaning specified in Section 3.07(a)(i).
"GOVERNMENTAL AUTHORITY" means any United States federal, state or local or
any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or
arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HAZARDOUS MATERIALS" means (a) petroleum and petroleum products, by-
products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls and (b) any other chemicals,
materials or substances defined or regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable Environmental Law.
"INDEBTEDNESS" means, with respect to any Person, (i) all indebtedness of
such Person, whether or not contingent, for borrowed money, (ii) all
obligations of such Person for the deferred purchase price of property or
services, (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (iv) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the Sellers or lender under such agreement in the event of
default are limited to repossession or sale of such property), (v) all
obligations of such Person as lessee under leases that have been or should
be, in accordance with U.S. GAAP, recorded as capital leases, (vi) all
obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (vii) all obligations of such
Person to purchase, redeem, retire, defease or otherwise acquire for value
any capital stock of such Person or any warrants, rights or options to
acquire such capital stock, valued, in the case of redeemable preferred
stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (viii) all Indebtedness of
others referred to in clauses (i) through (vi) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly
or indirectly by such Person through an agreement (a) to pay or purchase
such Indebtedness or to advance or supply funds for the payment or purchase
of such Indebtedness, (b) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (c) to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or
such services are rendered)or (d) otherwise to assure a creditor against
loss, and (ix) all Indebtedness referred to in clauses (i) through (vi)
above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Encumbrance
on property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; PROVIDED, HOWEVER, that
Indebtedness shall not include accounts payable of such Person.
"INDEMNIFIED PARTY" has the meaning specified in Section 6.04(a).
"INDEMNIFYING PARTY" has the meaning specified in Section 6.04(a).
"INDEPENDENT ACCOUNTING FIRM" has the meaning specified in
Section 2.08(b)(ii).
"INTELLECTUAL PROPERTY" shall mean: (i) United States, international, and
foreign patents, patent applications and statutory invention registrations,
(ii) trademarks, service marks, domain names, trade dress, logos, and other
source identifiers, including registrations and applications for
registration thereof, (iii) copyrights, including registrations and
applications for registration thereof, (iv) computer software, data,
databases, and related documentation, and (v) confidential and proprietary
information, including trade secrets and know-how.
"INTEREST RATE" has the meaning specified in Section 2.03(c).
"INTERIM FINANCIAL STATEMENTS" has the meaning specified in Section
3.07(a)(ii).
"INVENTORIES" means all inventory (including inventory shipped on
consignment), merchandise, finished goods, and raw materials, packaging,
supplies and other personal property related to the Business, maintained,
held or stored by or for the Seller on the Closing Date and any prepaid
deposits for any of the same.
"IRS" means the Internal Revenue Service of the United States.
"LAW" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order, requirement or rule of common law.
"LEASED REAL PROPERTY" means the real property leased by the Seller and
Atlas Texas, as tenant, together with, to the extent leased by the Seller
or Atlas Texas, all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Seller or Atlas Texas
attached or appurtenant thereto, and all easements, licenses, rights and
appurtenances relating to the foregoing.
"LIABILITIES" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising
under any Law, Action or Governmental Order and those arising under any
contract, agreement, arrangement, commitment or undertaking.
"LICENSED INTELLECTUAL PROPERTY" shall mean (i) all licenses of
Intellectual Property and Software licensed to the Seller or Atlas Texas by
any third party, and (ii) all licenses of Intellectual Property by the
Seller or Atlas Texas to any third party.
"LINQ" means LINQ Industrial Fabrics, Inc.
"LOSS" has the meaning specified in Section 6.02.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in, or effect on,
the Business or the Seller that, individually or in the aggregate with any
other circumstances, changes in, or effects on, the Seller or the Business:
(a) is, or could be, materially adverse to the business, operations, assets
or liabilities (including, without limitation, contingent liabilities),
employee relationships, customer or supplier relationships, prospects,
results of operations or the condition (financial or otherwise) of the
Business or (b) could materially adversely affect the ability of the
Purchaser to operate or conduct the Business in the manner in which it is
currently operated or conducted by the Seller.
"MATERIAL CONTRACTS" has the meaning specified in Section 3.16(a).
"MULTIEMPLOYER PLAN" has the meaning specified in Section 3.22(b).
"MULTIPLE EMPLOYER PLAN" has the meaning specified in Section 3.22(b).
"NATURAL RESOURCES" means land, fish, wildlife, biota, air, water, ground
water, drinking water supplies, and other such resources.
"NET WORKING CAPITAL" means the total of current assets excluding cash but
including and not limited to all other current assets such as trade and
other receivables due in less than one year, inventory and prepaid expenses
less all current liabilities including but not limited to trade and other
payables, taxes, accruals, customer advances and any other payments due in
less than one year, excluding Indebtedness.
"OWNED INTELLECTUAL PROPERTY" shall mean all Intellectual Property and
Software owned by the Seller or Atlas Texas.
"PERMITS" means all environmental, health and safety and other permits,
licenses, authorizations, certificates, exemptions and approvals of
Governmental Authorities.
"PERMITTED ENCUMBRANCES" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) liens for taxes, assessments and governmental
charges or levies not yet due and payable; (b) Encumbrances imposed by Law,
such as materialmen's, mechanics', carriers', workmen's and repairmen's
liens and other similar liens arising in the ordinary course of business
securing obligations that (i) are not overdue for a period of more than 30
days and (ii) are not in excess of $10,000 in the case of a single property
or $50,000 in the aggregate at any time; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to
secure public or statutory obligations; and (d) minor survey exceptions,
reciprocal easement agreements and other customary encumbrances on title to
real property that (i) were not incurred in connection with any
indebtedness, (ii) do not render title to the property encumbered thereby
unmarketable and (iii) do not, individually or in the aggregate, materially
adversely affect the value of or the use of such property for its present
purposes.
"PERSON" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Securities Exchange Act of 1934, as amended.
"PLANS" has the meaning specified in Section 3.22(a).
"POST-CLOSING ADJUSTMENT" has the meaning specified in Section 2.08(c).
"PURCHASE PRICE" has the meaning specified in Section 2.03.
"PURCHASE PRICE BANK ACCOUNT" means a bank account in the United States to
be designated by the Seller in a written notice to the Purchaser at least
five Business Days before the Closing.
"PURCHASER" has the meaning specified in the recitals to this Agreement.
"PURCHASER'S ACCOUNTANTS" means PricewaterhouseCoopers, independent
accountants of the Purchaser.
"RECEIVABLES" means any and all accounts receivable, notes, commissions and
other amounts receivable from third parties, including, without limitation,
customers, suppliers and employees, arising from the conduct of the
Business on or before the Closing Date, whether or not in the ordinary
course, together with any unpaid financing charges accrued thereon.
"REFERENCE BALANCE SHEET" means the consolidated balance sheet of the
Seller as of June 30, 1999.
"Reference Balance Sheet Date" means June 30, 1999.
"REGULATIONS" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of the Treasury
with respect to the Code or other federal tax statutes.
"RELEASE" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and the
like into or upon any land or water or air or otherwise entering into the
Environment.
"REMEDIAL ACTION" means all action to (i) clean up, remove, treat or handle
in any other way Hazardous Materials in the Environment; (ii) restore or
reclaim the Environment or Natural Resources; (iii) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or the Environment; or (iv) perform remedial
investigations, feasibility studies, corrective actions, closures, and
postremedial or postclosure studies, investigations, operations,
maintenance and monitoring on, about or in any Real Property.
"REPRESENTATIVE" has the meaning specified in Section 2.09.
"RESTRICTED PERIOD" has the meaning specified in Section 5.08.
"RULES" has the meaning specified in Section 7.11.
"SELLER" has the meaning specified in the recitals to this Agreement.
"SELLER COMMON STOCK" has the meaning specified in Section 3.02.
"SELLER SYSTEMS" has the meaning specified in Section 3.32.
"SELLER'S ACCOUNTANT" means Whippman, Xxxxxxxxx & Xxxxxxxx, Limited,
independent accountant of the Seller.
"SOFTWARE" shall mean all computer software material to the operation of
the Business.
"STATEMENT OF CLOSING DATE NET WORKING CAPITAL" has the meaning specified
in Section 2.08(a).
"STATEMENT OF ESTIMATED NET WORKING CAPITAL" has the meaning specified in
Section 2.07(a).
"SUBSEQUENT PAYMENT" has the meaning specified in Section 2.03(b).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any government or taxing authority, including, without
limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value added, or gains taxes; license, registration and documentation fees;
and customs' duties, tariffs, and similar charges.
"THIRD PARTY CLAIMS" has the meaning specified in Section 6.04(a).
"TRANSFERRED EMPLOYEE" has the meaning specified in Section 5.07(a).
"U.S. GAAP" means United States generally accepted accounting principles
and practices in effect from time to time applied consistently throughout
the periods involved.
"VENDORS" means any and all vendors who are unaffiliated with the Seller
and who supply raw materials, components, spare parts, supplies, goods,
merchandise or services to the Seller or Atlas Texas.
"YEAR 2000 COMPLIANT" has the meaning specified in Section 3.32.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. ASSETS TO BE SOLD. (a) On the terms and subject to the
conditions of this Agreement, the Seller hereby sells, assigns, transfers,
conveys and delivers to the Purchaser or causes to be sold, assigned,
transferred, conveyed and delivered to the Purchaser, and the Purchaser
purchases from the Seller, all the assets, properties, goodwill and
business of every kind and description and wherever located, whether
tangible or intangible, real, personal or mixed, directly or indirectly
owned by the Seller or to which it is directly or indirectly entitled and,
in any case, belonging to or used or intended to be used in the Business
(regardless of whether such assets, properties, goodwill and business are
accounted for or otherwise recorded as such in the books of account and
other financial records of the Seller), other than the Excluded Assets (the
assets to be purchased by the Purchaser being referred to as the "ASSETS"),
including, without limitation, the following:
(i) the Business as a going concern;
(ii) all rights in respect of the Leased Real Property;
(iii) all furniture, fixtures, equipment, machinery and other tangible
personal property used or
held for use by the Seller and Atlas Texas at the locations at which the
Business is conducted, or otherwise owned or held by the Seller or Atlas
Texas at the Closing Date for use in the conduct of the Business;
(iv) all vehicles and rolling stock;
(v) all Inventories;
(vi) all Receivables;
(vii) all books of account, general, financial, tax and personnel records,
bank accounts, invoices, shipping records, supplier lists, correspondence
and other documents, records and files and all Software and programs and
any rights thereto owned, associated with or employed by the Seller and
Atlas Texas or used in, or relating to, the Business at the Closing Date,
other than organization documents, minute and stock record books and the
corporate seal of the Seller;
(viii) the goodwill of the Seller relating to the Business;
(ix) the Intellectual Property;
(x) all claims, causes of action, choses in action, rights of recovery and
rights of set-off of any kind (including rights to insurance proceeds and
rights under and pursuant to all warranties, representations and guarantees
made by suppliers of products, materials or equipment, or components
thereof), pertaining to, arising out of, and enuring to the benefit of the
Seller or Atlas Texas;
(xi) all sales and promotional literature, customer lists and other
sales-related materials owned, used, associated with or employed by the
Seller and Atlas Texas in connection with the Business at the Closing Date;
(xii) all rights of the Seller and Atlas Texas under all contracts,
licenses, sublicenses, agreements, leases, commitments, and sales and
purchase orders, and under all commitments, bids and offers (to the extent
such offers are transferable);
(xiii) all municipal, state and federal franchises, permits, licenses,
agreements, waivers and authorizations held or used by the Seller and Atlas
Texas in connection with, or required for, the Business, to the extent
transferable;
(xiv) all insurance policies and rights thereunder of the Seller and Atlas
Texas pertaining to the Assumed Liabilities in respect of the Business and
all rights of the Seller and Atlas Texas of every nature and description
under or arising out of such insurance policies; and
(xv) all the Seller's and Atlas Texas's right, title and interest on the
Closing Date in, to and under all other assets, rights and claims of every
kind and nature used or intended to be used in the operation of, or
residing with, the Business.
(b) Notwithstanding anything in clause (a) above, the Assets shall exclude
the following assets owned by the Seller (the "EXCLUDED ASSETS"):
(i) all cash and marketable securities (it being understood that the
Receivables shall not be considered securities);
(ii) claims for refunds of Taxes paid by the Seller or Atlas Texas
imposed on property, incomes or payrolls arising prior to or on the
Closing Date;
(iii) the Seller's minute books and stock ledgers;
(iv) the capital stock of the Seller;
(v) all rights of the Seller under this Agreement and the Ancillary
Agreements; and
(vi) the automobiles listed on Section 3.25 of the Disclosure
Schedule.
SECTION 2.02. ASSUMPTION AND EXCLUSION OF LIABILITIES. (a) On the terms
and subject to the conditions of this Agreement, the Purchaser hereby
assumes and shall pay, perform and discharge when due the following
Liabilities (the "ASSUMED LIABILITIES"):
(i) Liabilities of the Seller at the Closing Date arising in the ordinary
course of business to the extent of any accrual therefor on the Closing
Balance Sheet or incurred in the ordinary course of business since the
Closing Balance Sheet Date, but excluding any Indebtedness and any Taxes;
(ii) current Liabilities included in the Net Working Capital of the Seller
to the extent reflected on the Closing Balance Sheet or incurred in the
ordinary course of business since the Closing Balance Sheet Date; and
(iii) Liabilities arising after the Closing Date with respect to any
contracts assigned to the Purchaser pursuant to Section 2.01(a).
(b) The Seller shall retain, and shall be responsible for paying,
performing and discharging when due, and the Purchaser shall not assume or
have any responsibility for, all Liabilities of the Seller as of the
Closing Date other than the Assumed Liabilities (the "EXCLUDED
LIABILITIES"), including, without limitation:
(i) all Taxes now or hereafter owed by the Seller or Atlas Texas, or
attributable to the Assets or the Business, relating to any period, or
any portion of any period, ending on or prior to the Closing Date;
(ii) all Liabilities relating to or arising out of the Excluded
Assets; and
(iii) all Liabilities of the Seller under this Agreement.
SECTION 2.03. PURCHASE PRICE. (a) Subject to the adjustments set forth
in Sections 2.07 and 2.08, the aggregate purchase price for the Assets
shall be $13,750,000 (the "PURCHASE PRICE").
(b) The Purchase Price shall be paid as follows: (i) subject to
Sections 2.03(c) and 2.07, $11,140,000 at the Closing (the "CLOSING
PAYMENT"); and (ii) subject to any rights to withhold or offset such
payments provided elsewhere in this Agreement and in the Employment
Agreements, $911,000 on each of September 30, 2000 and September 30, 2001
and $788,000 on September 30, 2002 (each, a "SUBSEQUENT PAYMENT"). The
Subsequent Payment amounts will be secured by a LINQ corporate guarantee.
In the event that any Subsequent Payment is not made by the applicable due
date, default interest at a rate of 12% per annum shall apply to the period
between such date and the date of payment. The Seller may assign the right
to receive Subsequent Payments, if any, to an Affiliate with the consent of
the Purchaser (which consent shall not be unreasonably withheld), in an
agreement in writing pursuant to which the assignee agrees to be bound by
the provisions of this Agreement.
(c) The Closing Payment Adjustment Amount shall be withheld from the
Closing Payment until any adjustment of the Closing Payments under Section
2.08(c) becomes final, at which time any remaining portion of the Closing
Payment Adjustment Amount, together with interest thereon at the rate of 6%
per annum (the "INTEREST RATE"), will be paid to the Seller.
(d) The sum of the Purchase Price and the Liabilities treated as
assumed for federal income tax purposes shall be allocated among the Assets
as of the Closing Date in accordance with Exhibit 2.03(d). Any subsequent
adjustments to the sum of the Purchase Price and Assumed Liabilities shall
be reflected in the allocation hereunder in a manner consistent with
Treasury Regulation 1.1060-1T(f). For all Tax purposes, the
Purchaser and the Seller agree to report the transactions contemplated in
this Agreement in a manner consistent with the terms of this Agreement,
including the allocation under Exhibit 2.03(d), and that none of them will
take any position inconsistent therewith in any Tax return, in any refund
claim, in any litigation, or otherwise.
SECTION 2.04. CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Assets and the assumption of the
Assumed Liabilities contemplated by this Agreement shall take place at a
closing (the "CLOSING") to be held at the offices of Shearman & Sterling,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. New York time on
November 19, 1999, or at such other place or at such other time or on such
other date as the Seller and the Purchaser may mutually agree upon in
writing (the day on which the Closing takes place being the "CLOSING
DATE").
SECTION 2.05. CLOSING DELIVERIES BY THE SELLER. At the Closing, the
Seller shall deliver or cause to be delivered to the Purchaser:
(a) the Xxxx of Sale and such other instruments, in form and
substance satisfactory to the Purchaser, as may be requested by the
Purchaser to
transfer the Assets to the Purchaser or evidence such transfer on the
public records;
(b) a receipt for the Closing Payment;
(c) executed counterparts of each of the Employment Agreements;
(d) a certificate of an officer of the Seller with respect to (i) the
resolutions duly and validly adopted by the Board of Directors of the
Seller and the shareholders of the Seller evidencing its and their
authorization of the execution and delivery of this Agreement and the Xxxx
of Sale and the consummation of the transactions contemplated hereby and
(ii) the incumbency and signature of each officer and representative of the
Seller executing this Agreement and the Xxxx of Sale; and
(e) good standing certificates for the Seller from the secretary of
state of Illinois, for Atlas Texas from the secretary of state of Texas and
from the secretary of state in each other jurisdiction in which the
properties owned or leased by the Seller, or the operation of its business
in such jurisdiction, require the Seller and Atlas Texas to qualify to do
business as a foreign corporation, in each case dated as of a date not
earlier than five Business Days prior to the Closing Date.
SECTION 2.06. CLOSING DELIVERIES BY THE PURCHASER. At the Closing, the
Purchaser shall deliver to the Seller:
(a) the Closing Payment by certified check to the bank account or
bank accounts specified by the Seller at least two Business Days prior to
the Closing Date;
(b) executed counterparts of each of the Employment Agreements;
(c) a certificate of an officer of the Purchaser with respect to
(i) the resolutions duly and validly adopted by the Board of Directors of
the Purchaser and the shareholder of the Purchaser evidencing its and his
authorization of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) the
incumbency and signature of each officer and representative of the
Purchaser executing this Agreement; and
(d) a good standing certificate for the Purchaser from the secretary
of state of Delaware dated as of a date not earlier than five Business Days
prior to the Closing Date.
SECTION 2.07. ESTIMATE OF PURCHASE PRICE. The Purchase Price to be paid
at the Closing shall be subject to adjustment prior to the Closing as
specified in this Section 2.07:
(a) ESTIMATED NET WORKING CAPITAL. Five Business Days prior to
the Closing, the Seller shall deliver to the Purchaser its estimate of
Net Working Capital as of September 30, 1999 ("ESTIMATED NET WORKING
CAPITAL") (the "STATEMENT OF ESTIMATED NET WORKING CAPITAL"), together
with reasonable supporting financial information therefor.
(b) AMOUNT OF CLOSING PAYMENT. To the extent that Estimated Net
Working Capital exceeds $2,900,000, the amount of the Closing Payment
shall be adjusted upward from the Purchase Price in an amount equal to
such excess.
SECTION 2.08. POST-CLOSING ADJUSTMENT OF CLOSING PAYMENT. The Closing
Payment shall be subject to adjustment after the Closing as specified in
this Section 2.08:
(a) CLOSING BALANCE SHEET. As promptly as practicable, but in any
event on or before December 15, 1999, the Purchaser shall deliver to the
Seller the Closing Balance Sheet, together with a report thereon of the
Purchaser's Accountants stating that the Closing Balance Sheet fairly
presents in all material respects the consolidated financial position of
the Seller as of September 30, 1999 in conformity with U.S. GAAP applied on
a basis consistent with the preparation of the Reference Balance Sheet.
The Purchaser shall also deliver with the Closing Balance Sheet a statement
based on such Closing Balance Sheet setting forth the Purchaser's
calculation of actual Net Working Capital as of September 30, 1999
("CLOSING DATE NET WORKING CAPITAL") (the "STATEMENT OF CLOSING DATE NET
WORKING CAPITAL"). The costs of preparation of the Closing Balance Sheet
and the Statement of Closing Date Net Working Capital shall be divided
equally between the Seller and the Purchaser.
(b) DISPUTES. (i) Subject to clause (ii) of this Section 2.08(b),
the Closing Balance Sheet delivered by the Purchaser to the Seller shall be
deemed to be and shall be final, binding and conclusive on the parties
hereto.
(ii) The Seller may dispute any amounts reflected on the Closing
Balance Sheet and the Statement of Closing Date Net Working Capital
only on the basis that the amounts reflected on the Closing Balance
Sheet were not arrived at in accordance with U.S. GAAP applied on a
basis consistent with the preparation of the Reference Balance Sheet,
excluding normal recurring adjustments; PROVIDED, HOWEVER, that the
Seller shall have notified the Purchaser and the Purchaser's
Accountants in writing of each disputed item, specifying the amount
thereof in dispute and setting forth, in reasonable detail, the basis
for such dispute, within 15 Business Days of the Purchaser's delivery
of the Closing Balance Sheet and the Purchaser's calculation of
Closing Date Net Working Capital. In the event of such a dispute, the
Seller's Accountant and the Purchaser's Accountants shall attempt to
reconcile their differences, and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the parties
hereto. If any such resolution by the Purchaser's Accountants and the
Seller's Accountant leaves in dispute amounts the net effect of which
in the aggregate would not affect the Closing Date Net Working Capital
reflected on the Closing Balance Sheet by more than the Designated
Amount, all such amounts remaining in dispute shall then be deemed to
have been resolved one-half in favor of the Purchaser and one-half in
favor of the Seller. If the Seller's Accountant and the Purchaser's
Accountants are unable to reach a resolution with such effect within
20 Business Days after receipt by the Purchaser and the Purchaser's
Accountants of the Seller's written notice of dispute, the Seller's
Accountant and the Purchaser's Accountants shall submit the items
remaining in dispute for resolution to Deloitte & Touche, L.L.P. (or,
if such firm shall decline to act or is not, at the time of such
submission, independent of the Seller and the Purchaser, to another
independent accounting firm of international reputation mutually
acceptable to the Purchaser and the Seller) (either Deloitte & Touche,
L.L.P. or such other accounting firm being referred to herein as the
"INDEPENDENT ACCOUNTING FIRM"), which shall, within 30 Business Days
after such submission, determine and report to the Purchaser and the
Seller upon such remaining disputed items, and such report shall be
final, binding and conclusive on the Seller and the Purchaser. The
fees and disbursements of the Independent Accounting Firm shall be
allocated between the Seller and the Purchaser in the same proportion
that the aggregate amount of such remaining disputed items so
submitted to the Independent Accounting Firm that is unsuccessfully
disputed by each such party (as finally determined by the Independent
Accounting Firm) bears to the total amount of such remaining disputed
items so submitted.
(iii) In acting under this Agreement, the Purchaser's
Accountants, the Seller's Accountant and the Independent Accounting
Firm shall be entitled to the privileges and immunities of
arbitrators.
(c) CLOSING PAYMENT ADJUSTMENT. The calculation of Closing Date Net
Working Capital shall be deemed final ("FINAL CLOSING DATE NET WORKING
CAPITAL") for the purposes of this Section 2.08 upon the earliest of
(A) the failure of the Seller to notify the Purchaser of a dispute within
15 Business Days of the Purchaser's delivery of the Closing Balance Sheet
to the Seller, (B) the resolution of all disputes, pursuant to
Section 2.08(b)(ii), by the Purchaser's Accountants and the Seller's
Accountant and (C) the resolution of all disputes, pursuant to
Section 2.08(b)(ii), by the Independent Accounting Firm (such date being
the "DETERMINATION DATE"). Within three Business Days of the calculation
of Final Closing Date Net Working Capital being deemed final, a Closing
Payment adjustment shall be made as follows:
(i) in the event that the Final Closing Date Net Working Capital
is greater than Estimated Net Working Capital and in excess of $2.9
million, then the Closing Payment shall be adjusted upward in an
amount equal to such difference; and
(ii) in the event that the Final Closing Date Net Working Capital
is less than Estimated Net Working Capital and less than $2.5 million,
then the Closing Payment shall be adjusted downward in an amount equal
to such difference.
Upon the final determination of the amount of any cumulative
adjustment to the Closing Payment pursuant to (i) through (iv) above
(the "POST-CLOSING ADJUSTMENT"), such Post-Closing Adjustment shall
be paid as follows, in each case by wire transfer in immediately
available funds:
(A) in the event that a Post-Closing Adjustment is due to the
Purchaser in an amount less than the Closing Payment Adjustment Amount,
then the Purchaser shall retain the amount of the Post-Closing Adjustment
from the Closing Payment Adjustment Amount and pay the balance of the
Closing Payment Adjustment Amount to the Seller within three Business Days
of the Determination Date; or
(B) in the event that a Post-Closing Adjustment is due to the
Purchaser in an amount greater than the Closing Payment Adjustment Amount,
then the Purchaser shall retain the Closing Payment Adjustment Amount and
the Seller, within three Business Days of the Determination Date, shall pay
the amount of the Post-Closing Adjustment that is in excess of the Closing
Payment Adjustment Amount to the Purchaser; or
(C) in the event that a Post-Closing Adjustment is due to the Seller,
then the Purchaser shall pay the sum of the Closing Payment Adjustment
Amount and the Post-Closing Adjustment to the Seller within three Business
Days of the Determination Date.
SECTION 2.09. THE REPRESENTATIVE. Each of the Seller and each Shareholder
hereby appoints Xxxxxxx Xxx its legal representative (such Person and any
successor or successors being the "REPRESENTATIVE"), as each such Seller or
Shareholder's Attorney-in-Fact and representative, to act on behalf of such
Seller or Shareholder (i) with respect to any claims (including the
settlement thereof) made by such party for indemnification pursuant to
Article VI and (ii) with respect to any actions to be taken in connection
with the Post-Closing Adjustment to the Purchase Price pursuant to Section
2.08. In the event that the Representative becomes unable or unwilling to
continue in his capacity as Representative under this Agreement, the Seller
and the Shareholders shall promptly appoint a successor Representative, who
shall be reasonably acceptable to the Purchaser (it being agreed that any
Shareholder shall be deemed reasonably acceptable), by written notice to
the Purchaser. All references herein to the "Representative" shall include
any such successor Representative. The Seller and the Shareholders hereby
consent to the taking by the Representative of any and all actions and the
making of any decisions required or permitted to be taken by him under this
Agreement. The Seller and each of the Shareholders shall be bound by all
actions taken by the Representative in his capacity thereof. The Purchaser
shall be entitled to rely, as being binding upon such party, upon any
document or other paper believed by it to be genuine and correct and to
have been signed or sent by the Representative, and the Purchaser shall not
be liable to any of the Seller or any Shareholders for any action taken or
omitted to be taken by it in such reliance. Copies of any notice given by
the Purchaser to the Representative shall be provided to each of those
persons specified in Section 7.02.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the Seller
and each of the Shareholders hereby jointly and severally represent and
warrant to the Purchaser as follows:
SECTION 3.01. ORGANIZATION AND AUTHORITY OF THE SELLER. (a) The Seller
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois and has all necessary power and
authority to enter into this Agreement and the Xxxx of Sale, to carry out
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Seller is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes
such licensing or qualification necessary, except to the extent that the
failure to be so licensed or qualified would not materially adversely
affect (i) the ability of the Seller to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Xxxx of Sale and (ii) the ability of the Seller to conduct the Business.
The execution and delivery of this Agreement and the Xxxx of Sale by the
Seller, the performance by the Seller of its obligations hereunder and
thereunder and the consummation by the Seller of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of the Seller and its shareholder. This Agreement and
the Xxxx of Sale have been duly executed and delivered by the Seller, and
(assuming due authorization, execution and delivery by the Purchaser) this
Agreement and the Xxxx of Sale constitute, legal, valid and binding
obligations of the Seller enforceable against the Seller in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting enforceability and to general equitable
principles.
(b) All the outstanding shares of capital stock of the Seller are
validly issued, fully paid, nonassessable and are owned by the Shareholders
directly, free and clear of all Encumbrances.
(c) Except as set forth in Section 3.01 of the Disclosure Schedule,
there are no options, warrants, convertible securities, or other rights,
agreements, arrangements or commitments of any character relating to the
capital stock of the Seller or obligating the Seller to issue or sell any
shares of capital stock of, or any other interest in, the Seller.
(d) All corporate actions taken by the Seller have been duly
authorized and the Seller has not taken any action that in any respect
conflicts with, constitutes a default under or results in a violation of
any provision of its charter or by-laws (or similar organizational
documents). True and complete copies of the charter and by-laws (or
similar organizational documents), as in effect on the date hereof, of the
Seller have been delivered by the Seller to the Purchaser.
(e) The Seller is neither a member of (nor is any part of its
business conducted through) any partnership nor a participant in any joint
venture or similar arrangement.
(f) Except as set forth in Section 3.01 of the Disclosure Schedule,
there are no voting trusts, stockholder agreements, proxies or other
agreements or understandings in effect with respect to the voting or
transfer of any shares of capital stock of or any other interests in the
Seller.
(g) The stock register of the Seller accurately records: (i) the
name and address of each Person owning shares of capital stock of the
Seller and (ii) the certificate number of each certificate evidencing
shares of capital stock issued by the Seller, the number of shares
evidenced by each such certificate, the date of issuance thereof and, in
the case of cancellation, the date of cancellation.
(h) Except as set forth in Section 3.01 of the Disclosure Schedule,
there are no contracts or arrangements whereby any Person is entitled to
any payments based upon the revenues or income of the Seller.
SECTION 3.02. CAPITALIZATION. The authorized capital stock of the Seller
consists of 10,000 shares of common stock, no par value, of the Seller
("SELLER COMMON STOCK"), 56.40 of which are duly authorized, validly
issued, fully paid and non-assessable. The Shareholders in the aggregate
hold all such authorized and issued shares of Seller Common Stock.
SECTION 3.03. SUBSIDIARIES. (a) Other than Atlas Texas, there are no
other corporations, partnerships, joint ventures, associations or other
entities in which the Seller owns, of record or beneficially, any direct or
indirect equity or other interest or any right (contingent or otherwise) to
acquire the same. The Seller is not a member of (nor is any part of the
Business conducted through) any partnership. The Seller is not a
participant in any joint venture or similar arrangement.
(b) Atlas Texas: (i) is a corporation duly organized and validly
existing under the laws of Texas, (ii) has all necessary power and
authority to own, operate or lease the properties and assets owned,
operated or leased by it and to carry on its business as it has been and is
currently conducted by it and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes
such licensing or qualification necessary, except to the extent that the
failure to be so licensed or qualified would not materially adversely
affect (i) the ability of the Seller to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Xxxx of Sale and (ii) the ability of the Seller to conduct the Business.
(c) All the outstanding shares of capital stock of Atlas Texas are
validly issued, fully paid, nonassessable and are owned by the Seller
directly, free and clear of all Encumbrances.
(d) There are no options, warrants, convertible securities, or other
rights, agreements, arrangements or commitments of any character relating
to the capital stock of Atlas Texas or obligating the Seller or Atlas Texas
to issue or sell any shares of capital stock of, or any other interest in,
Atlas Texas.
(e) All corporate actions taken by Atlas Texas have been duly
authorized and Atlas Texas has not taken any action that in any respect
conflicts with, constitutes a default under or results in a violation of
any provision of its charter or by-laws (or similar organizational
documents). True and complete copies of the charter and by-laws (or
similar organizational documents), as in effect on the date hereof, of
Atlas Texas have been delivered by the Seller to the Purchaser.
(f) Atlas Texas is neither a member of (nor is any part of its
business conducted through) any partnership nor a participant in any joint
venture or similar arrangement.
(g) There are no voting trusts, stockholder agreements, proxies or
other agreements or understandings in effect with respect to the voting or
transfer of any shares of capital stock of or any other interests in Atlas
Texas.
(h) The stock register of Atlas Texas accurately records: (i) the
name and address of each Person owning shares of capital stock Atlas Texas
and (ii) the certificate number of each certificate evidencing shares of
capital stock issued by Atlas Texas, the number of shares evidenced each
such certificate, the date of issuance thereof and, in the case of
cancellation, the date of cancellation.
(i) There are no arrangements whereby any Person is entitled to any
payments based upon the revenues or income of Atlas Texas.
SECTION 3.04. CORPORATE BOOKS AND RECORDS. The minute books of the Seller
and Atlas Texas contain accurate records of all meetings and accurately
reflect all other actions taken by the stockholders, Boards of Directors
and all committees of the Boards of Directors of the Seller and Atlas
Texas. Complete and accurate copies of all such minute books and of the
stock register of the Seller and Atlas Texas have been provided by the
Seller to the Purchaser.
SECTION 3.05. NO CONFLICT. Assuming that all consents, approvals,
authorizations and other actions described in Section 3.06 have been
obtained and all filings and notifications listed in Section 3.06 of the
Disclosure Schedule have been made, the execution, delivery and performance
by the Seller of this Agreement and the Xxxx of Sale do not and will not
(a) violate, conflict with or result in the breach of any provision of the
charter or by-laws (or similar organizational documents) of the Seller,
(b) materially conflict with or result in a material violation of (or cause
an event which could have a Material Adverse Effect as a result of) any Law
or Governmental Order applicable to the Seller or any of its assets,
properties or businesses or (c) materially conflict with, result in any
material breach of, constitute a material default (or event which with the
giving of notice or lapse of time, or both, would become a material
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Seller pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise
or other instrument or arrangement to which the Seller is a party or by
which any of such assets or properties is bound or affected.
SECTION 3.06. CONSENTS AND APPROVALS. (a) The execution, delivery and
performance by the Seller of this Agreement and the Xxxx of Sale do not and
will not require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority,
except (i) where failure to obtain such consent, approval, authorization or
action, or to make such filing or notification, would not have a Material
Adverse Effect and (ii) as may be necessary as a result of any facts or
circumstances relating solely to the Purchaser.
(b) The execution and delivery of this Agreement and the Xxxx of Sale
by the Seller do not, and the performance by the Seller of this Agreement
and the Xxxx of Sale will not, require any third-party consents, approvals,
authorizations or actions on the part of the Seller, except as described in
Section 3.06 of the Disclosure Schedule. Except as described in Section
3.06 of the Disclosure Schedule, each of such third-party consents,
approvals, authorizations or actions has been obtained by the Seller at no
cost to the Purchaser.
SECTION 3.07. FINANCIAL INFORMATION; BOOKS AND RECORDS. (a) True and
complete copies of (i) the consolidated balance sheet of the Seller for
each of the three fiscal years ended as of December 31, 1996, December 31,
1997, and December 31, 1998, and the related statements of income, retained
earnings, stockholders' equity and changes in financial position of the
Seller, as compiled by the Seller's Accountant (collectively, the
"FINANCIAL STATEMENTS") and (ii) the Reference Balance Sheet and the
related statements of income, retained earnings, stockholders' equity and
changes in financial position of the Seller, as compiled by the Seller's
Accountant (collectively, the "INTERIM FINANCIAL STATEMENTS"), have been
delivered by the Seller to the Purchaser. The Financial Statements and the
Interim Financial Statements (i) were prepared in accordance with the books
of account and other financial records of the Seller, (ii) present fairly
in all material respects the financial condition and results of operations
of the Seller as of the dates thereof or for the periods covered thereby,
(iii) except for treatment of fixed assets, which are depreciated on an
income tax basis, as otherwise noted thereon and, in the case of the
Interim Financial Statements, for normal year-end adjustments that would
not have a Material Adverse Effect, have been prepared in accordance with
U.S. GAAP applied on a basis consistent with the past practices of the
Seller and throughout the periods involved and (iv) will include all
adjustments (consisting only of normal recurring accruals) that are
necessary for a fair presentation of the financial condition of the Seller
and the results of the operations of the Seller as of the dates thereof and
for the periods covered thereby.
(b) The books of account and other financial records of the Seller:
(i) reflect all items of income and expense and all assets and Liabilities
required to be reflected therein in accordance with U.S. GAAP applied on a
basis consistent with the past practices of the Seller and throughout the
periods involved, (ii) are in all material respects complete and correct,
and do not contain or reflect any material inaccuracies or discrepancies
and (iii) have been maintained in accordance with good business and
accounting practices.
SECTION 3.08. NO UNDISCLOSED LIABILITIES. Other than as set forth in
Section 3.08 of the Disclosure Schedule, there are no Liabilities of the
Seller other (i) than Liabilities reflected or reserved against on the
Closing Balance Sheet or (ii) incurred in the ordinary course of business
since the Closing Balance Sheet Date and that would not, in the aggregate,
have a Material Adverse Effect. Reserves are reflected on the Closing
Balance Sheet against all Liabilities of the Seller in amounts that have
been established on a basis consistent with the past practices of the
Seller and in accordance with U.S. GAAP.
SECTION 3.09. RECEIVABLES. Except to the extent reserved for on the
Closing Balance Sheet, all Receivables reflected on the Closing Balance
Sheet arose from the sale of Inventory or services to Persons not
affiliated with the Seller and in the ordinary course of the Business
consistent with past practice and, except as reserved against on the
Closing Balance Sheet, constitute or will constitute, as the case may be,
only valid, undisputed claims of the Seller not subject to valid claims of
set-off or other defenses or counterclaims. All Receivables reflected on
the Closing Balance Sheet or arising from the date thereof until the
Closing (subject to the reserve for bad debts, if any, reflected on the
Closing Balance Sheet) are or will be good and have been collected or are
or will be collectible, without resort to litigation or extraordinary
collection activity, within 120 days of the Closing Date.
SECTION 3.10. INVENTORIES. (a) Section 3.10 of the Disclosure Schedule
contains a complete list of the addresses of all warehouses and other
facilities in which the Inventories are located. Subject to amounts
reserved therefor on the Closing Balance Sheet, the values at which all
Inventories are carried on the Closing Balance Sheet reflect the historical
inventory valuation policy of the Seller of stating such Inventories at the
lower of cost or market value. Except as set forth in Section 3.10 of the
Disclosure Schedule and except for payments in the ordinary course of
Business, the Seller has good and marketable title to the Inventories free
and clear of all Encumbrances. The Inventories do not consist of, in any
material amount, items that are obsolete, damaged or slow-moving. The
Inventories do not consist of any items held on consignment. The Seller is
not under any obligation or liability with respect to accepting returns of
items of Inventory or merchandise in the possession of its customers other
than in the ordinary course of the Business consistent with past practice.
No clearance or extraordinary sale of the Inventories has been conducted
since the Closing Balance Sheet Date. The Seller has not acquired or
committed to acquire or manufactured Inventory for sale which is not of a
quality and quantity usable in the ordinary course of the Business within a
reasonable period of time and consistent with past practice nor has the
Seller, since the Closing Balance Sheet Date, changed the price of any
Inventory except for (i) price reductions to reflect any reduction in the
cost thereof to the Seller, (ii) reductions and increases responsive to
normal competitive conditions and consistent with the Seller's past sales
practices.
(b) The Inventories are in good and merchantable condition in all
material respects, are suitable and usable for the purposes for which they
are intended and are in a condition such that they can be sold or used in
the ordinary course of the Business consistent with past practice.
SECTION 3.11. Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions. Since the Closing Balance Sheet Date, except as set
forth in Section 3.11 of the Disclosure Schedule, the Business has been
conducted in the ordinary course and consistent with past practice, and
since January 1, 1999 the Seller has continued actively to manage, promote
and grow the Business. As amplification and not limitation of the
foregoing, except as would not have a Material Adverse Effect, since the
Closing Balance Sheet Date, the Seller has not:
(i) permitted or allowed any of the assets or properties (whether
tangible or intangible) of the Seller or Atlas Texas to be subjected to any
Encumbrance, other than Permitted Encumbrances and Encumbrances that will
be released at or prior to the Closing;
(ii) except in the ordinary course of the Business consistent with
past practice, discharged or otherwise obtained the release of any
Encumbrance or paid or otherwise discharged any Liability, other than
current liabilities reflected on the Closing Balance Sheet and current
liabilities incurred in the ordinary course of the Business consistent with
past practice since the Closing Balance Sheet Date;
(iii) written up (or failed to write down in accordance with U.S. GAAP
consistent with past practice) the value of any Inventories or Receivables
or revalued any assets of the Seller or Atlas Texas other than in the
ordinary course of business consistent with past practice and in accordance
with U.S. GAAP;
(iv) made any change in any method of accounting or accounting
practice or policy used by the Seller, other than such changes required by
U.S. GAAP;
(v) amended, terminated, cancelled or compromised any material claims
of the Seller or Atlas Texas or waived any other rights of substantial
value to the Seller;
(vi) sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed (including,
without limitation,
leasehold interests and intangible property), other than the sale of
Inventories in the ordinary course of the Business consistent with past
practice and the sale of Excluded Assets or Excluded Liabilities;
(vii) merged with, entered into a consolidation with or acquired an
interest of 5% or more in any Person or acquired a substantial portion of
the assets or business of any Person or any division or line of business
thereof, or otherwise acquired any material assets other than in the
ordinary course of business consistent with past practice;
(viii) made any capital expenditure or commitment for any capital
expenditure in excess of $50,000 individually or $500,000 in the aggregate;
(ix) issued any sales orders or otherwise agreed to make any purchases
involving exchanges in value in excess of $50,000 individually or $500,000
in the aggregate;
(x) made any material changes in the customary methods of operations
of the Seller or the Business, including, without limitation, practices and
policies relating to manufacturing, purchasing, Inventories, marketing,
selling and pricing;
(xi) incurred any Indebtedness for borrowed money or issued any debt
securities or assumed, granted, guaranteed or endorsed, or made any other
accommodation arrangement making the Seller responsible for, the
obligations of any Person, or made any loans or advances other than in the
ordinary course of business consistent with past practice;
(xii) failed to pay any creditor any amount owed to such creditor when
due;
(xiii) (A) granted any increase, or announced any increase, in the
wages, salaries, compensation, bonuses, incentives, pension or other
benefits payable by the Seller to any of its employees, including, without
limitation, any increase or change pursuant to any Plan, or (B) established
or increased or promised to increase any benefits under any Plan, in either
case except as required by Law or any collective bargaining agreement and
involving ordinary increases consistent with the past practice of the
Seller;
(xiv) entered into any agreement, arrangement or transaction with any
of its directors, officers, employees or shareholders (or with any
relative, beneficiary, spouse or Affiliate of such Persons);
(xv) terminated, discontinued, closed or disposed of any plant,
facility or other business operation, or laid off any employees (other than
layoffs in the ordinary course of the Business consistent with past
practice) or implemented any early retirement, separation or program
providing early retirement window benefits within the meaning of Section
1.401(a)-4 of the Regulations or announced or planned any such action or
program for the future;
(xvi) allowed any Permit that was issued or relates to the Seller or
otherwise relates to the Business to lapse or terminate or failed to renew
any insurance policy or Permit that is scheduled to terminate or expire
within 45 calendar days of the Closing Date;
(xvii) failed to maintain the Seller's and Atlas Texas's plant,
property and equipment in good repair and operating condition, ordinary
wear and tear excepted;
(xviii) suffered any casualty loss or damage with respect to any of
the Assets, whether or not such losses or damage shall have been covered by
insurance;
(xix) amended, modified or consented to the termination of any
Material Contract or the Seller's rights thereunder;
(xx) made any change in any cash management practice or policy of the
Seller;
(xxi) disclosed any secret or confidential Intellectual Property
(except by way of issuance of a patent) or permitted to lapse or go
abandoned any Intellectual Property (or any registration or grant thereof
or any application relating thereto) to which, or under which, the Seller
or Atlas Texas has any right, title, interest or license;
(xxii) made any express or deemed election or settled or compromised
any liability, with respect to Taxes of the Seller or Atlas Texas;
(xxiii) suffered any Material Adverse Effect; or
(xxiv) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.11 or granted any options to purchase,
rights of first refusal, rights of first offer or any other similar rights
with respect to any of the actions specified in this Section 3.11, except
as expressly contemplated by this Agreement and the Employment Agreements.
SECTION 3.12. LITIGATION. Except as set forth in Section 3.12 of the
Disclosure Schedule (which, with respect to each Action disclosed therein,
sets forth the parties, nature of the proceeding, date and method
commenced, amount of damages or other relief sought and, if applicable,
paid or granted), there are no Actions by or against the Seller or Atlas
Texas, or affecting any of the Assets or the Business, pending before any
Governmental Authority (or, to the best knowledge of the Seller after due
inquiry, threatened to be brought by or before any Governmental Authority).
None of the matters disclosed in Section 3.12 of the Disclosure Schedule
has had or could have a Material Adverse Effect or could affect the
legality, validity or enforceability of this Agreement, the Xxxx of Sale or
the consummation of the transactions contemplated hereby or thereby.
Except as set forth in Section 3.12 of the Disclosure Schedule, neither the
Seller nor any of its assets or properties, including, without limitation,
the Assets, is subject to any Governmental Order (nor, to the best
knowledge of the Seller after due inquiry, are there any such Governmental
Orders threatened to be imposed by any Governmental Authority) which has
had or could have a Material Adverse Effect.
SECTION 3.13. COMPLIANCE WITH LAWS. Except as set forth in Section 3.13
of the Disclosure Schedule, to the best knowledge of the Seller, the Seller
has conducted and continues to conduct the Business in accordance with all
Laws and Governmental Orders applicable to the Seller or any of its
properties or assets, including, without limitation, the Assets, or the
Business. The Seller is not in violation of any such Law or Governmental
Order. Section 3.13 of the Disclosure Schedule sets forth a brief
description of each Governmental Order applicable to the Seller or any of
its properties or assets, including, without limitation, the Assets, or the
Business, and no such Governmental Order has or has had a Material Adverse
Effect.
SECTION 3.14. CERTAIN INTERESTS. (a) Except as disclosed in Section 3.14
of the Disclosure Schedule, no officer or director of the Seller or Atlas
Texas and no relative or spouse (or relative of such spouse) who resides
with, or is a dependent of, any such officer or director:
(i) has any direct or indirect financial interest in any competitor,
supplier or customer of the Seller or Atlas Texas, PROVIDED, HOWEVER, that
the ownership of securities representing no more than one percent of the
outstanding voting power of any competitor, supplier or customer, and which
are listed on any national securities exchange or traded actively in the
national over-the-counter market, shall not be deemed to be a "financial
interest" so long as the Person owning such securities has no other
connection or relationship with such competitor, supplier or customer;
(ii) owns, directly or indirectly, in whole or in part, or has any
other interest in any tangible or intangible property which the Seller or
Atlas Texas uses or has used in the conduct of the Business or otherwise;
or
(iii) has outstanding any Indebtedness to the Seller or Atlas Texas.
(b) Neither the Seller nor Atlas Texas has any Liability or any
other obligation of any nature whatsoever to any officer, except for
compensation under a plan disclosed pursuant to Section 3.22, director
or shareholder of the Seller or Atlas Texas or to any relative or
spouse (or relative of such spouse) who resides with, or is a
dependent of, any such officer, director or shareholder.
SECTION 3.15. ENVIRONMENTAL MATTERS. (a) (i) The Seller and Atlas Bag
are in compliance with all applicable Environmental Laws and all
Environmental Permits. All past non-compliance with Environmental Laws or
Environmental Permits has been resolved without any pending, on-going or
future obligation, cost or liability, and there is no requirement proposed
for adoption or implementation under any Environmental Law or Environmental
Permit that is reasonably expected to have a Material Adverse Effect.
(ii) There are no underground or aboveground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or have been treated, stored or disposed on
any of the Real Property or on any property formerly owned, leased, used or
occupied by the Seller and Atlas Texas.
(iii) The Seller has not, and to its knowledge no other Person has,
Released Hazardous Materials on any of the Real Property or on any property
formerly owned, leased, used or occupied by the Seller and Atlas Texas.
(iv) The Seller is not conducting, and has not undertaken or
completed, any Remedial Action relating to any Release or threatened
Release at the Real Property or at any other site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority
or the requirements of any Environmental Law or Environmental Permit.
(v) There is no asbestos or asbestos-containing material on any of
the Real Property.
(vi) None of the Real Property is listed or proposed for listing, or
adjoins any other property that is listed or proposed for listing, on the
National Priorities List or the CERCLIS under CERCLA or any analogous
federal, state or local list.
(vii) There are no Environmental Claims pending or, to the best
knowledge of Seller, threatened against the Seller, the Business or the
Real Property, and to its knowledge there are no circumstances that can
reasonably be expected to form the basis of any such Environmental Claim,
including without limitation with respect to any off-site disposal location
presently or formerly used by the Seller, Atlas Texas or any of their
predecessors or with respect to any previously owned or operated
facilities.
(viii) The Seller and Atlas Texas can maintain present production
levels in compliance with applicable Environmental Laws without a material
increase in capital or operating expenditures and without modifying any
Environmental Permits or obtaining any additional Environmental Permits.
(ix) There are no wetlands or any areas subject to any legal
requirement or restriction in any way related to wetlands (including,
without limitation, requirements or restrictions related to buffer or
transition areas or open waters) at or affecting the Real Property.
(b) The Seller has provided the Purchaser with copies of (i) any
environmental assessment or audit reports or other similar studies or
analyses relating to the Business or the Real Property, and (ii) all
insurance policies issued at any time that may provide coverage to the
Seller or the Business for environmental matters.
(c) Neither the execution of this Agreement nor the consummation
of the transactions contemplated herein will require any Remedial
Action or notice to or consent of Governmental Authorities or third
parties pursuant to any applicable Environmental Law or Environmental
Permit.
SECTION 3.16. MATERIAL CONTRACTS. (a) The contracts, agreements,
licenses, leases and sales and purchase orders (including, without
limitation, oral and informal arrangements) listed in Section 3.16 of the
Disclosure Schedule are all of the contracts, agreements, licenses, leases
and sales and purchase orders applicable to the operation of the Assets and
the conduct of the Business consistent with the Seller's past practice (all
such contracts and agreements in connection with which the Seller is likely
to pay or otherwise give consideration of more than $100,000 in the
aggregate (i) during the calendar year ending December 31, 1999 or (ii)
over the remaining term of such contract, as the case may be, being
"MATERIAL CONTRACTS").
(b) Each Material Contract: (i) is valid and binding on the Seller
and, to the Seller's knowledge, on the other parties thereto and is in full
force and effect, (ii) except as set forth on Section 3.16 of the
Disclosure Schedule, is freely and fully assignable to the Purchaser
without penalty or other adverse consequences and (iii) upon consummation
of the transactions contemplated by this Agreement and the Ancillary
Agreements, except to the extent that any consents set forth in Section
3.06 of the Disclosure Schedule are not obtained, shall continue in full
force and effect without penalty or other adverse consequence. The Seller
is not in material breach of, or material default under, any Material
Contract. To the Seller's knowledge no other party to any Material
Contract is in breach thereof or default thereunder. There is no contract,
agreement or other arrangement granting any Person any preferential right
to purchase, other than in the ordinary course of the Business consistent
with past practice, any of the properties or assets of the Seller or Atlas
Texas, including, without limitation, the Assets.
SECTION 3.17. INTELLECTUAL PROPERTY. (a) Section 3.17 of the Disclosure
Schedule sets forth a true and complete list of all (i) patents and patent
applications, registered trademarks and trademark applications, registered
copyrights and copyright applications, Software and other Intellectual
Property, in each case owned by the Seller or Atlas Texas and material to
the Business, and (ii) Licensed Intellectual Property, in each case with
the relevant expiration date.
(b) To the Seller's knowledge, the operation of the Business by the
Seller and Atlas Texas, and the use of the Owned Intellectual Property and
Licensed Intellectual Property in connection therewith, do not conflict
with or infringe the Intellectual Property rights of any third party, and
no claim is pending or, to the Seller's knowledge, threatened asserting
that the operation of such business, or such use of the Owned Intellectual
Property or Licensed Intellectual Property, does or may conflict with or
infringe the Intellectual Property rights of any third party.
(c) The Seller is the exclusive owner of the entire and unencumbered
right, title and interest in and to the Owned Intellectual Property, and is
entitled to use the Owned Intellectual Property and Licensed Intellectual
Property in the ordinary course of the Business as presently conducted.
(d) The Owned Intellectual Property and the Licensed Intellectual
Property include all of the Intellectual Property used in the ordinary day-
to-day conduct of the Business, and there are no other items of
Intellectual Property that are material to the ordinary day-to-day conduct
of the Business. The Owned Intellectual Property and, to the knowledge of
the Seller, any Intellectual Property licensed to the Seller under the
Licensed Intellectual Property, is subsisting, valid and enforceable, and
has not been adjudged invalid or unenforceable in whole or part.
(e) To the knowledge of the Seller, no person is engaging in any
activity that infringes the Owned Intellectual Property or Licensed
Intellectual Property. Except as set forth in Section 3.17 of the
Disclosure Schedule, the Seller has not granted any license or other right
to any third party with respect to the Owned Intellectual Property or
Licensed Intellectual Property. The consummation of the transactions
contemplated by this Agreement will not result in the termination or
impairment of any of the Owned Intellectual Property.
(f) The Seller has delivered or made available to the Purchaser
correct and complete copies of all the licenses of the Licensed
Intellectual Property. With respect to each such license:
(i) such license is valid and binding and in full force and
effect and represents the entire agreement between the respective
licensor and licensee with respect to the subject matter of such
license;
(ii) such license will not cease to be valid and binding and in
full force and effect on terms identical to those currently in effect
as a result of the consummation of the transactions contemplated by
this Agreement, nor, except as set forth in Section 3.17 of the
Disclosure Schedule, will the consummation of the transactions
contemplated by this Agreement constitute a breach or default under
such license or otherwise give the licensor a right to terminate such
license;
(iii) the Seller has not (A) received any written notice of
termination or cancellation under such license, (B) received any
written notice of breach or default under such license, which breach
has not been cured, and (C) granted to any other third party any
rights, adverse or otherwise, under such license that would
constitute a breach of such license; and
(iv) to the Seller's knowledge, neither the Seller nor any other
party to such license is in breach or default thereof in any material
respect, and no event has occurred that, with notice or lapse of time,
would constitute such a breach or default or permit termination,
modification or acceleration under such license.
(g) To the Seller's knowledge, the Software is free of all viruses,
worms, trojan horses and other material known contaminants, and does not
contain any bugs, errors, or problems of a material nature that disrupt its
operation or have an adverse impact on the operation of other software
programs or operating systems.
(h) The Seller has the right to use all software development tools,
library functions, compilers, and other third party software that is
material to the Business, or that is required to operate or modify the
Software.
(i) The Seller has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of its trade secrets and
other confidential Intellectual Property. To the knowledge of the Seller
(i) there has been no misappropriation of any material trade secrets or
other material confidential Intellectual Property of the Seller by any
person, and (ii) no employee, independent contractor or agent of the Seller
has misappropriated any trade secrets of any other person in the course of
such performance as an employee, independent contractor or agent; and (iii)
no employee, independent contractor or agent of the Seller is in default or
breach of any term of any employment agreement, non-disclosure agreement,
assignment of invention agreement or similar agreement or contract relating
in any way to the protection, ownership, development, use or transfer of
Intellectual Property.
SECTION 3.18. REAL PROPERTY. The Seller neither owns, nor owns any
interest in, any real property.
SECTION 3.19. ASSETS. (a) The Seller owns, leases or has the legal right
to use all the properties and assets, including, without limitation, the
Intellectual Property and the Leased Real Property, used or intended to be
used in the conduct of the Business or otherwise owned, leased or used by
the Seller, and, with respect to contract rights, is a party to and enjoys
the right to the benefits of all contracts, agreements and other
arrangements used or intended to be used by the Seller in or relating to
the conduct of the Business, all of which properties, assets and rights
constitute Assets except for the Excluded Assets. Except as set forth in
Section 3.19 of the Disclosure Schedule, the Seller has good and marketable
title to, or, in the case of leased or subleased Assets, valid and
subsisting leasehold interests in, all the Assets, free and clear of all
Encumbrances, except Permitted Encumbrances.
(b) The Assets and the Excluded Assets constitute all the properties,
assets and rights forming a part of, used, held or intended to be used in,
and all such properties, assets and rights as are necessary in the conduct
of, the Business. At all times since the Closing Date, the Seller has
caused the Assets to be maintained in accordance with good business
practice, and all the Assets are in good operating condition and repair,
subject to normal wear and tear, and are suitable for the purposes for
which they are used and intended.
(c) Except as set forth in Section 3.19 of the Disclosure Schedule,
the Seller has the complete and unrestricted power and unqualified right to
sell, assign, transfer, convey and deliver the Assets to the Purchaser
without penalty or other adverse consequences. Following the consummation
of the transactions contemplated by this Agreement and the execution of the
instruments of transfer contemplated by this Agreement, the Purchaser will
own, with good, valid and marketable title, or lease, under valid and
subsisting leases, or otherwise acquire the interests of the Seller in the
Assets, free and clear of any Encumbrances, other than Permitted
Encumbrances, and without incurring any penalty or other adverse
consequence, including, without limitation, any increase in rentals,
royalties, or license or other fees imposed as a result of, or arising
from, the consummation of the transactions contemplated by this Agreement.
SECTION 3.20. CUSTOMERS. Listed in Section 3.20 of the Disclosure
Schedule are the names and addresses of the 20 most significant customers
(by revenue) of the Business for the six-month period ended June 30, 1999
and for the year ended December 31, 1998 and the amount for which each such
customer was invoiced during such period. The Seller has not received any
notice or to its knowledge has reason to believe that any significant
customer of the Seller has ceased, or will cease, to use the products,
equipment, goods or services of the Seller, or has substantially reduced,
or will substantially reduce, the use of such products, equipment, goods or
services at any time.
SECTION 3.21. SUPPLIERS. Listed in Section 3.21 of the Disclosure
Schedule are the names and addresses of each of the ten most significant
suppliers of raw materials, supplies, merchandise and other goods for the
Business for the six-month period ended June 30, 1999 and for the year
ended December 31, 1998 and the amount for which each such supplier
invoiced the Seller during such period. The Seller has not received any
notice or to its knowledge has any reason to believe that any such supplier
will not sell raw materials, supplies, merchandise and other goods to the
Purchaser at any time after the Closing Date on terms and conditions
similar to those imposed on current sales to the Seller, subject to general
and customary price increases.
SECTION 3.22. EMPLOYEE BENEFIT MATTERS. (a) PLANS AND MATERIAL
DOCUMENTS. Section 3.22 of the Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other
benefit plans, programs or arrangements, and all employment, termination,
severance or other contracts or agreements, whether legally enforceable or
not, to which the Seller or Atlas Texas is a party, with respect to which
the Seller or Atlas Texas has any obligation or which are maintained,
contributed to or sponsored by the Seller or Atlas Texas for the benefit of
any current or former employee or director of the Seller or Atlas Texas,
(ii) each employee benefit plan for which the Seller or Atlas Texas could
incur liability under Section 4069 of ERISA in the event such plan has been
or were to be terminated, (iii) any plan in respect of which the Seller or
Atlas Texas could incur liability under Section 4212(c) of ERISA and
(iv) any contracts, arrangements or understandings between the Sellers and
any employee of the Seller or of Atlas Texas, including, without
limitation, any contracts, arrangements or understandings relating to the
sale of the Seller (collectively, the "PLANS"). Each Plan is in writing
and the Seller has furnished the Purchaser a complete and accurate copy of
each Plan and all material documents relating to legal compliance or the
material terms or funding of such Plans. Neither the Seller nor Atlas
Texas has any express or implied commitment, whether legally enforceable or
not, (i) to create, incur liability with respect to or cause to exist any
other employee benefit plan, program or arrangement, (ii) to enter into any
contract or agreement to provide compensation or benefits to any individual
or (iii) to modify, change or terminate any Plan, other than with respect
to a modification, change or termination required by ERISA or the Code.
(b) ABSENCE OF CERTAIN TYPES OF PLANS. None of the Plans was at any
time or is currently intended to be qualified under Section 401(a) of the
code. None of the Plans is, and neither the Seller nor Atlas Texas has at
any time maintained or currently maintains, a Plan within the meaning of
Title IV of ERISA. None of the Plans is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "MULTIEMPLOYER PLAN")
or a single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) for which the Seller or Atlas Texas could
incur liability under Section 4063 or 4064 of ERISA (a "MULTIPLE EMPLOYER
PLAN"). Except as set forth in Section 3.22(b) of the Disclosure Schedule,
none of the Plans provides for or promises retiree medical, disability or
life insurance benefits to any current or former employee, officer or
director of the Seller or Atlas Texas. Each of the Plans is subject only
to the laws of the United States or a political subdivision thereof.
(c) COMPLIANCE WITH APPLICABLE LAW. Each Plan is now and always has
been operated in all respects in compliance with the requirements of all
applicable Law, including, without limitation, ERISA and the Code, and all
persons who participate in the operation of such Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have always
acted in accordance with the provisions of all applicable Law, including,
without limitation, ERISA and the Code. Each of the Seller and Atlas Texas
has performed all obligations required to be performed by it under, is not
in any respect in default under or in violation of, and has no knowledge of
any default or violation by any party to, any Plan. No legal action, suit
or claim is pending or to the Seller's knowledge threatened with respect to
any Plan (other than claims for benefits in the ordinary course) and no
fact or event exists that could give rise to any such action, suit or
claim.
(d) ABSENCE OF CERTAIN LIABILITIES AND EVENTS. There has been no
prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan. Neither the Seller nor
Atlas Texas has incurred any liability for any penalty or tax arising under
Section 4971, 4972, 4980, 4980B or 6652 of the Code or any liability under
Section 502 of ERISA, and no fact or event exists which could give rise to
any such liability. No complete or partial termination has occurred within
the five years preceding the date hereof with respect to any Plan. No Plan
had an accumulated funding deficiency (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived, as of the most
recently ended plan year of such Plan. None of the assets of the Seller or
Atlas Texas is the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code; neither the Seller nor Atlas Texas has
been required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and, to the Seller's knowledge, no fact or
event exists which could give rise to any such lien or requirement to post
any such security.
(e) PLAN CONTRIBUTIONS AND FUNDING. All contributions, premiums or
payments required to be made with respect to any Plan have been made on or
before their due dates. All such contributions have been fully deducted
for income tax purposes and no such deduction has been challenged or
disallowed by any government entity and, to the Seller's knowledge, no fact
or event exists which could give rise to any such challenge or
disallowance.
(f) SEVERANCE PAYMENTS RESULTING FROM TRANSACTION. The consummation
of the transactions contemplated by this Agreement will not, either alone
or in combination with another event, (A) entitle any current or former
employee, officer or director of the Seller or Atlas Texas to severance
pay, unemployment compensation or any other payment, (B) accelerate the
time of payment or vesting, or increase the amount of compensation due any
such employee, officer or director or (C) constitute a "change in control"
under any Plan or within the meaning of such term under Section 280G of the
Code. No amounts payable under the Plans solely as a result of the
consummation of the transactions contemplated by this Agreement will fail
to be deductible for federal income tax purposes by virtue of Section 280G
of the Code or Section 162(m) of the Code.
(g) AMERICANS WITH DISABILITIES ACT. The Seller and Atlas Texas are
in compliance with the requirements of the Americans With Disabilities Act.
(h) WARN ACT. The Seller and Atlas Texas are in compliance with the
requirements of the Workers Adjustment and Retraining Notification Act
("WARN") and have no liabilities pursuant to WARN.
SECTION 3.23. LABOR MATTERS. (a) Neither the Seller nor Atlas Texas is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Seller or Atlas Texas and to the
Seller's knowledge currently there are no organizational campaigns,
petitions or other unionization activities seeking recognition of a
collective bargaining unit which could affect the Seller or Atlas Texas;
(b) there are no controversies, strikes, slowdowns or work stoppages
pending or, to the best knowledge of the Seller, threatened between the
Seller or Atlas Texas and any of their respective employees, and neither
the Seller nor Atlas Texas has experienced any such controversy, strike,
slowdown or work stoppage within the past three years; (c) there are no
unfair labor practice complaints pending against the Seller or Atlas Texas
before the National Labor Relations Board or any other Governmental
Authority or any current union representation questions involving employees
of the Seller or Atlas Texas which could have a Material Adverse Effect;
(d) each of the Seller and Atlas Texas is currently in compliance with all
applicable Laws relating to the employment of labor, including those
related to wages, hours, collective bargaining, employment of authorized
individuals, including the Immigration Reform and Control Act of 1986 and
the Immigration Act of 1990, and the payment and withholding of taxes and
other sums as required by the appropriate Governmental Authority and has
withheld and paid to the appropriate Governmental Authority or is holding
for payment not yet due to such Governmental Authority all amounts required
to be withheld from employees of the Seller or Atlas Texas and is not
liable for any arrears of wages, taxes, penalties or other sums for failure
to comply with any of the foregoing; (e) each of the Seller and Atlas Texas
has paid in full to all of its respective employees or adequately accrued
for in accordance with U.S. GAAP all wages, salaries, commissions, bonuses,
benefits and other compensation due to or on behalf of such employees;
(f) there is no claim with respect to payment of wages, salary or overtime
pay that has been asserted or is now pending or to the Seller's knowledge
threatened before any Governmental Authority with respect to any Persons
currently or formerly employed by the Seller or Atlas Texas; (g) neither
the Seller nor Atlas Texas is a party to, or otherwise bound by, any
consent decree with, or citation by, any Governmental Authority relating to
employees or employment practices; (h) there is no charge or proceeding
with respect to a violation of any occupational safety or health standards
that has been asserted or is now pending or to the Seller's knowledge,
threatened with respect to the Seller or Atlas Texas; and (i) except as set
forth in Section 3.23 of the Disclosure Schedule, there is no charge of
discrimination in employment or employment practices, for any reason,
including, without limitation, age, gender, race, religion or other legally
protected category, which has been asserted or is now pending or to the
Seller's knowledge threatened before the United States Equal Employment
Opportunity Commission, or any other Governmental Authority in any
jurisdiction in which the Seller or Atlas Texas has employed or currently
employs any Person.
SECTION 3.24. EMPLOYEES. Section 3.24 of the Disclosure Schedule lists
the name, current annual salary rates, and any special arrangements with
respect to bonuses, deferred or contingent compensation, pension, accrued
vacation, "golden parachute" and other like benefits paid or payable (in
cash or otherwise) in 1997 and 1998. Accrued vacation and other
entitlement expenses with respect to all employees as of September 30, 1999
are reflected on the Closing Balance Sheet.
SECTION 3.25. POTENTIAL CONFLICTS OF INTEREST. (a) Except as disclosed
in Section 3.25 of the Disclosure Schedule, no shareholder, officer or
director or, to the best knowledge of the Seller, employee of the Seller or
Atlas Texas and no immediate relative or spouse (or immediate relative of
such spouse) who resides with, or is a dependent of, any such shareholder,
officer or director or, to the best knowledge of the Seller, employee:
(i) controls, directly or indirectly, or is a consultant or agent of
any Person which is, a competitor, customer, lessee or lessor of, or
supplier of goods or services to, the Seller;
(ii) owns, directly or indirectly, in whole or in part, or has any
other interest in, any real property, leasehold interests, or tangible or
intangible property which the Seller uses or has used in the conduct of the
Business or otherwise;
(iii) has any cause of action or other suit, action or claim
whatsoever against, has outstanding any Indebtedness to, or otherwise
owes any amount to, or is owed any amount by, the Seller, except for
claims in the ordinary course of business, such as for accrued
vacation pay, accrued benefits under the Plans and similar matters;
(iv) has sold to, or purchased from, the Seller any assets or property
for consideration in excess of $25,000 in the aggregate since January 1,
1997;
(v) is a party to any contract or participates in any arrangement,
written or oral, pursuant to which the Seller provides office space to any
such individual, or provides services of any nature to any such
individual, except where such individual is an employee of the Seller; or
(vi) has, since January 1, 1997, engaged in any other material
transaction with the Seller (other than in connection with such person's
employment relationship, if any).
(b) Except as disclosed in Section 3.25(b) of the Disclosure
Schedule, other than in the ordinary course of business the Seller has
no Liability or any other obligation of any nature whatsoever to, any
officer, director, or shareholder of the Seller or to any immediate
relative or spouse (or immediate relative of such spouse) who resides
with, or is a dependent of, any such officer, director or shareholder.
SECTION 3.26. CERTAIN BUSINESS PRACTICES AND REGULATIONS. Neither of the
Seller nor Atlas Texas nor any of their respective officers, directors,
employees or agents acting within the scope of their agency has, to the
knowledge of the Seller, (i) made or agreed to make any contribution,
payment or gift to any customer, supplier, governmental official, employee
or agent where either the contribution, payment or gift or the purpose
thereof was illegal under any Law, (ii) established or maintained any
unrecorded fund or asset for any purpose or made any false entries on its
books and records for any reason, (iii) made or agreed to make any
contribution, or reimbursed any political gift or contribution made by any
other person, to any candidate for federal, state or local public office,
whether in the United States or elsewhere, in violation of any Law, or (iv)
engaged in any activity constituting fraud or abuse under the Laws of any
federal, state or local jurisdiction.
SECTION 3.27. TAXES. (a) (i) All returns and reports in respect of Taxes
required to be filed with respect to the Business (including the
consolidated federal income tax return of the Seller and any state Tax
return that includes the Seller or Atlas Texas on a consolidated or
combined basis) have been timely filed; (ii) all Taxes required to be shown
on such returns and reports or otherwise due have been timely paid;
(iii) all such returns and reports (insofar as they relate to the
activities or income of the Seller or Atlas Texas) are true, correct and
complete in all material respects; (iv) no adjustment relating to such
returns has been proposed formally or informally by any Tax authority
(insofar as either relates to the activities or income of the Business;
(v) there are no pending or, to the best knowledge of the Seller and Atlas
Texas, threatened actions or proceedings for the assessment or collection
of Taxes with respect to the Business; and (vi) there are no Tax liens on
any assets of the Business.
(b) (i) There are no outstanding waivers or agreements extending the
statute of limitations for any period with respect to any Tax to which the
Business may be subject; (ii) there are no requests for information
currently outstanding that could affect the Taxes of the Seller or Atlas
Texas; (iii) there are no proposed reassessments of any property owned by
the Seller or Atlas Texas with respect to the Business or other proposals
that could increase the amount of any Tax to which the Seller or Atlas
Texas would be subject; and (iv) neither the Seller nor Atlas Texas is
subject to any Tax imposed by any state or political subdivision thereof
other than Illinois, Texas and the political subdivisions thereof.
(c) (i) Section 3.27 of the Disclosure Schedule lists all income,
franchise and similar tax Returns (federal, state, local and foreign) filed
with respect to each of the Seller and Atlas Texas for taxable periods
ended on or after December 31, 1995, indicates for which jurisdictions
Returns have been filed on the basis of a unitary group, indicates the most
recent income, franchise or similar tax Return for each relevant
jurisdiction for which an audit has been completed or the statute of
limitations has lapsed and indicates all tax Returns that currently are the
subject of audit; and (ii) the Seller has delivered to the Purchaser
correct and complete copies of all federal, state and foreign income,
franchise and similar tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Seller or Atlas Texas
since December 31, 1995 other than immaterial items.
(d) For purposes of the Seller's indemnification of the Purchaser
pursuant to Section 6.01(a), the representations in Section 3.27(a) shall
be deemed to have been made with no exception for items disclosed in
Section 3.27 of the Disclosure Schedule or otherwise.
(e) On the Closing Balance Sheet, reserves and allowances have been
provided, and on the Closing Balance Sheet reserves and allowances will be
provided, in each case adequate to satisfy all Liabilities for Taxes
relating to the Seller and Atlas Texas for periods through the Closing Date
(without regard to the materiality thereof).
SECTION 3.28. INSURANCE. (a) All material assets, properties and risks
of the Business and the Seller are covered by valid and currently effective
insurance policies or binders of insurance (including, without limitation,
general liability insurance, property insurance and workers' compensation
insurance) issued in favor of the Seller, in each case with responsible
insurance companies, in such types and amounts and covering such risks as
are consistent with customary practices and standards of companies engaged
in businesses and operations similar to those of the Seller. Section 3.28
of the Disclosure Schedule sets forth all policies or binders of fire,
property, casualty, liability, workers' compensation, vehicular or other
insurance, and all bond and surety arrangements, held by or on behalf of
the Seller currently in effect (specifying the insurer, the policy number
or covering note number with respect to binders, and describing each open
claim thereunder, setting forth the aggregate amounts paid out under each
such policy and specifying the aggregate limits of liability thereunder).
Each such insurance policy and binder is legal, valid, binding and
enforceable in accordance with its terms and is in full force and effect.
All such policies and binders are issued by insurers who are unaffiliated,
directly or indirectly, with the Seller. Neither the Seller nor any Person
holding any such policy or binder is in breach or default with respect to
any provision contained in any such policy or binder, nor has the Seller or
any such policyholder failed to give any notice of any claim under any such
policy or binder in due or timely fashion. Neither the Seller nor any such
policyholder has cancelled or failed to renew any such policy or binder, or
has knowledge of any material inaccuracy in any application for such
policies or binders, or has failed to pay premiums when due or any similar
state of facts that might form the basis for termination of any such
insurance, or given notice of any such circumstance, except to the extent
that such occurrence would not have a Material Adverse Effect.
(b) Section 3.28 of the Disclosure Schedule sets forth all risks
against which the Seller is self-insured or which are covered under any
risk retention program in which the Seller participates and details for the
last five years of the Seller's loss experience with respect to such risks.
SECTION 3.29. ACCOUNTS; LOCKBOXES; SAFE DEPOSIT BOXES; POWERS OF ATTORNEY.
Section 3.29 of the Disclosure Schedule is a true and complete list of (i)
the names of each bank, savings and loan association, securities or
commodities broker or other financial institution in which the Seller has
an account relating to the Business, including cash contribution accounts,
and the names of all persons authorized to draw thereon or have access
thereto, (ii) the location of all lockboxes and safe deposit boxes of the
Seller relating to the Business and the names of all Persons authorized to
draw thereon or have access thereto and (iii) the names of all Persons, if
any, holding powers of attorney from the Seller relating to the Business.
At the time of the Closing, the Seller shall not have any such account,
lockbox or safe deposit box other than those listed in Section 3.29 of the
Disclosure Schedule, nor shall any additional Person have been authorized,
from the date of this Agreement, to draw thereon or have access thereto or
to hold any such power of attorney, without the prior written consent of
the Purchaser. The Seller has not commingled monies or accounts of the
Seller with other monies or accounts of any Affiliates of the Seller. At
the time of the Closing, all monies and accounts of the Seller shall be
held by, and be accessible only to, the Seller.
SECTION 3.30. FULL DISCLOSURE. (a) The Seller is not aware of any facts
pertaining to the Seller or the Business that could have a Material Adverse
Effect and which have not been disclosed in this Agreement, the Disclosure
Schedule, the Financial Statements or the Interim Financial Statements or
otherwise disclosed to the Purchaser by the Seller in writing.
(b) No representation or warranty of the Seller in this Agreement,
nor any statement or certificate furnished or to be furnished to the
Purchaser pursuant to this Agreement, or in connection with the
transactions contemplated by this Agreement, contains or will contain any
untrue statement of a material fact, or knowingly omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
SECTION 3.31. BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement or the Ancillary Agreements
based upon arrangements made by or on behalf of the Seller.
SECTION 3.32. YEAR 2000 COMPLIANCE. The Seller has undertaken an
assessment of those Seller Systems that could be adversely affected by a
failure to be Year 2000 Compliant. Based on such inventory and assessment,
the Seller has taken all commercially reasonable steps to ensure that all
Seller Systems are Year 2000 Compliant or will be Year 2000 Compliant as
required to avoid having a Material Adverse Effect on the Business. The
Seller estimates that the total remaining cost of rendering the Seller
Systems Year 2000 Compliant is as calculated and as disclosed on Section
3.32 of the Disclosure Schedule. Any costs incurred subsequent to
September 30, 1999 with respect to making Seller Systems Year 2000
Compliant shall be accrued as of the Closing Balance Sheet Date. For
purposes hereof, "SELLER SYSTEMS" shall mean all computer, hardware,
software, Software, systems, and equipment (including embedded
microcontrollers in non-computer equipment) embedded within or required to
operate the current products of the Seller and Atlas Texas, and/or material
to or necessary for the Seller to carry on the Business as currently
conducted. For purposes hereof, "YEAR 2000 COMPLIANT" means that the
Seller Systems provide uninterrupted millennium functionality in that the
Seller Systems will record, store, process and present calendar dates
falling on or after January 1, 2000, in the same manner and with the same
functionality as the Seller Systems record, store, process, and present
calendar dates falling on or before December 31, 1999.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the Purchaser
hereby represents and warrants to the Seller as follows:
SECTION 4.01. ORGANIZATION AND AUTHORITY OF THE PURCHASER. The Purchaser
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary corporate
power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Purchaser, the
performance by the Purchaser of its obligations hereunder and the
consummation by the Purchaser of the transactions contemplated hereby have
been duly authorized by all requisite action on the part of the Purchaser.
This Agreement has been duly executed and delivered by the Purchaser, and
(assuming due authorization, execution and delivery by the Seller) this
Agreement constitutes a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its
respective terms.
SECTION 4.02. NO CONFLICT. Except as may result from any facts or
circumstances relating solely to the Seller, the execution, delivery and
performance by the Purchaser of this Agreement do not and will not (a)
violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws of the Purchaser, (b) conflict with
or violate any Law or Governmental Order applicable to the Purchaser or
(c) conflict with, or result in any breach of, constitute a default (or
event which with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Purchaser pursuant to, any note, bond, mortgage
or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which the Purchaser is a
party or by which any of such assets or properties is bound or affected,
which would have a material adverse effect on the ability of the Purchaser
to consummate the transactions contemplated by this Agreement.
SECTION 4.03. GOVERNMENTAL CONSENTS AND APPROVALS. The execution,
delivery and performance of this Agreement by the Purchaser do not and will
not require any consent, approval, authorization or other order of, action
by, filing with, or notification to, any Governmental Authority.
SECTION 4.04. LITIGATION. No claim, action, proceeding or investigation
is pending or, to the best knowledge of the Purchaser after due inquiry,
threatened, which seeks to delay or prevent the consummation of, or which
would be reasonably likely to materially adversely affect either the
Purchaser's ability to consummate, the transactions contemplated by this
Agreement.
SECTION 4.05. BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. ACCESS TO INFORMATION. (a) In order to facilitate the
resolution of any claims made against or incurred by the Seller prior to
the Closing, for a period of seven] years after the Closing, the Purchaser
shall (i) retain the books and records of the Seller which are transferred
to the Purchaser pursuant to this Agreement relating to periods prior to
the Closing in a manner reasonably consistent with the prior practices of
the Seller and (ii) upon reasonable notice, afford the officers, employees
and authorized agents and representatives of the Seller reasonable access
(including the right to make, at the Seller's expense, photocopies), during
normal business hours, to such books and records.
(b) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser after the Closing or for any other
reasonable purpose, for a period of seven years following the Closing, the
Seller shall (i) retain all books and records of the Seller which are not
transferred to the Purchaser pursuant to this Agreement and which relate to
the Seller, its operations or the Business for periods prior to the Closing
and which shall not otherwise have been delivered to the Purchaser and
(ii) upon reasonable notice, afford the officers, employees and authorized
agents and representatives of the Purchaser, reasonable access (including
the right to make photocopies at the expense of the Purchaser), during
normal business hours, to such books and records.
SECTION 5.02. CONFIDENTIALITY. Each of the Seller and each Shareholder
agrees to, and shall use reasonable best efforts to cause its respective
agents, representatives, Affiliates, employees, officers and directors to:
(i) treat and hold as confidential (and not disclose or provide access to
any Person to) all information relating to trade secrets, processes, patent
or trademark applications, product development, price, customer and
supplier lists, pricing and marketing plans, policies and strategies,
operations methods, product development techniques, business acquisition
plans, new personnel acquisition plans and any other confidential
information with respect to the Business or the Seller, (ii) in the event
that the Seller, any Shareholder or any such agent, representative,
Affiliate, employee, officer or director becomes legally compelled to
disclose any such information, provide the Purchaser with prompt written
notice of such requirement so that the Purchaser may seek a protective
order or other remedy or waive compliance with this Section 5.02, (iii) in
the event that such protective order or other remedy is not obtained, or
the Purchaser waives compliance with this Section 5.02, furnish only that
portion of such confidential information which is legally required to be
provided and exercise its best efforts to obtain assurances that
confidential treatment will be accorded such information, and (iv) promptly
furnish (prior to, at, or as soon as practicable following, the Closing) to
the Purchaser any and all copies (in whatever form or medium) of all such
confidential information then in the possession of the Seller, any
Shareholder or any of their respective agents, representatives, Affiliates,
employees, officers and directors and destroy any and all additional copies
then in the possession of the Seller, any Shareholder or any of their
respective agents, representatives, Affiliates, employees, officers and
directors of such information and of any analyses, compilations, studies or
other documents prepared, in whole or in part, on the basis thereof;
PROVIDED, HOWEVER, that this sentence shall not apply to any information
that, at the time of disclosure, is available publicly and was not
disclosed in breach of this Agreement by the Seller, any Shareholder, or
their respective agents, representatives, Affiliates, employees, officers
or directors; PROVIDED FURTHER that specific information shall not be
deemed to be within the foregoing exception merely because it is embraced
in general disclosures in the public domain. In addition, any combination
of features shall not be deemed to be within the foregoing exception merely
because the individual features are in the public domain unless the
combination itself and its principle of operation are in the public domain.
The Seller and the Shareholders agree and acknowledge that remedies at Law
for any breach of their obligations under this Section 5.02 are inadequate
and that in addition thereto the Purchaser shall be entitled to seek
equitable relief, including injunction and specific performance, in the
event of any such breach, without the necessity of demonstrating the
inadequacy of monetary damages.
SECTION 5.03. USE OF INTELLECTUAL PROPERTY. (a) From and after the
Closing, the Seller and the Shareholders shall not use any of the
Intellectual Property; PROVIDED, HOWEVER, that Xxxxxxx Xxx and
Xxxxx Xxxxxxx may continue to use the Intellectual Property in the course
of their employment pursuant to their respective Employment Agreements.
(b) As promptly as practicable following the Closing, the Seller
shall remove or obliterate any Intellectual Property from letterheads and
other materials remaining in its possession or under its control, and the
Seller shall not use or put into use after the Closing any materials that
bear any trademark, service xxxx, trade dress, logo, trade name or
corporate name, including, but not limited to, "Atlas Bag Inc.," "Atlas
Bag" or "Atlas," contained in the Intellectual Property.
SECTION 5.04. TAXES. (a) The Seller, the Shareholders and the Purchaser
agree to treat all payments made by either party to or for the benefit of
the other party under the indemnity provisions of this Agreement and for
any misrepresentations or breach of warranties or covenants contained
herein as adjustments to the Purchase Price for Tax purposes, and that such
treatment shall govern for purposes hereof except to the extent that the
laws of a particular jurisdiction provide otherwise, in which case such
payments shall be made in an amount sufficient to indemnify the relevant
party on an after-tax basis.
(b) Notwithstanding any provision in this Agreement to the contrary,
the Seller and the Shareholders shall indemnify and hold harmless Purchaser
for any Tax liabilities imposed on Purchaser as a result of any payments
made by the Seller or any Shareholder under the indemnity provisions of
this Agreement, which obligation for such imposed Tax liabilities shall
survive until the close of business on the 60th day following the
expiration of the applicable statute of limitations (giving effect to any
waiver, mitigation or extension thereof).
(c) The Purchaser reserves the right to choose the procedure for
filing and furnishing IRS Forms W-2, W-3 and 941 under Revenue Procedure
96-60, including the right to succeed to the Seller's federal unemployment
tax accounts in accordance therewith. The Seller shall report and remit
federal taxes at the appropriate time as elected by the Purchaser under the
"Standard Procedure" or "Alternative Procedure" stated in sections 4 and 5
of Revenue Procedure 96-60. The Purchaser also reserves the right to
choose the procedure for filing state unemployment tax forms and to succeed
to the Seller's state unemployment tax accounts under state "successor-in-
interest" provisions under any similar procedure. The Seller agrees to
authorize the Purchaser's state unemployment tax election.
(d) The Seller and the Shareholders shall be jointly and severally
liable for and shall hold the Purchaser harmless against any real property
transfer or gains, sales, use, transfer, and value added taxes, any
transfer, recording, registration, and other fees, and any similar Taxes
which become payable in connection with the transactions contemplated by
this Agreement. The Seller, after the review and consent by the Purchaser,
shall file such applications and documents as shall permit any such Tax to
be assessed and paid on or prior to the Closing Date in accordance with any
available pre-sale filing procedure. The Purchaser shall execute and
deliver all instruments and certificates necessary to enable the Seller to
comply with the foregoing. The Purchaser shall complete and execute a
resale or other exemption certificate with respect to the inventory items
sold hereunder, and shall provide the Seller with an executed copy thereof.
SECTION 5.05. EXCLUDED LIABILITIES. The Seller will, and the Shareholders
will cause the Seller to, pay and discharge the Excluded Liabilities as and
when the same become due and payable.
SECTION 5.06. BULK TRANSFER LAWS. The Purchaser hereby waives compliance
by the Seller with any applicable bulk sale or bulk transfer laws of any
jurisdiction in connection with the sale of the Assets to the Purchaser
(other than any obligations with respect to the application of the proceeds
herefrom). Pursuant to Article VI, the Seller has agreed to indemnify the
Purchaser against any and all liabilities which may be asserted by third
parties against the Purchaser as a result of the Seller's noncompliance
with any such law.
SECTION 5.07. EMPLOYEE MATTERS. (a) As of the Closing Date, the
Purchaser shall offer employment to those employees of the Seller listed on
Schedule 5.07 of the Disclosure Schedule. As used herein, "TRANSFERRED
EMPLOYEE" shall mean each such employee who accepts such offer.
(b) As of the Closing Date, the Seller shall provide the Purchaser
with a complete and accurate statement of any amounts expected to be
payable by the Purchaser following the Closing that relate to any service
by any Transferred Employee with the Seller through the Closing Date,
including, without limitation, any salary or wages, any accrued vacation,
sick or personal days or any bonuses, except to the extent that such
amounts are reflected as Liabilities on the Closing Balance Sheet (the
"EMPLOYEE AMOUNTS"). In the event that the amounts payable by the
Purchaser following the Closing Date that relate to service by any
Transferred Employee with the Seller through the Closing Date exceed the
Employee Amounts, the Seller shall indemnify the Purchaser for such excess.
(c) The Purchaser shall be responsible for complying with the
notification requirements of WARN in connection with the termination of
employment of a Transferred Employee on or after the Closing Date.
(d) The Purchaser shall assume all of the rights and obligations of
the Seller under the employment agreements to which the Seller is a party
listed on Section 5.07 of the Disclosure Schedule, forms of which are
included in Section 5.07 of the Disclosure Schedule.
SECTION 5.08. NON-COMPETITION. (a) For a period of three years after the
Closing (the "RESTRICTED PERIOD"), none of Seller, Xxxxxxx Xxx, Xxxxx
Xxxxxxx and Xxxxx Xxxxxx shall engage, directly or indirectly, in any
business anywhere in the world that manufactures, produces or supplies
products or services of the kind manufactured, produced or supplied by the
Business as of the Closing Date or, without the prior written consent of
the Purchaser, directly or indirectly, own an interest in, manage, operate,
join, control, lend money or render financial or other assistance to or
participate in or be connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, any Person that competes with the
Purchaser, the Seller or Atlas Texas in manufacturing, producing or
supplying products or services of the kind manufactured, produced or
supplied by the Business as of the Closing; PROVIDED, HOWEVER, that, for
the purposes of this Section 5.08, ownership of securities having no more
than one percent of the outstanding voting power of any competitor which
are listed on any national securities exchange or traded actively in the
national over-the-counter market shall not be deemed to be in violation of
this Section 5.08 so long as the Person owning such securities has no other
connection or relationship with such competitor.
(b) As a separate and independent covenant, the Seller and each
Executive listed in Section 5.08(a) agrees with the Purchaser that, for a
period of three years following the Closing, neither the Seller nor any
such Executive will in any way, directly or indirectly, for the purpose of
conducting or engaging in any business that manufactures, produces or
supplies products or services of the kind manufactured, produced or
supplied by the Business as of the Closing, call upon, solicit, advise or
otherwise do, or attempt to do, business with any customers of the Business
with whom the Seller or any such Executive had any dealings during the
period of time in which such Executive was an Executive of the Seller;
PROVIDED that the restrictions in this Section 5.08 shall not apply to
Xxxxxxx Xxx and Xxxxx Xxxxxxx when performing their duties pursuant to
their respective Employment Agreements. Each of the Seller and the
Executives further agrees with the Purchaser that, for a period of three
years following the Closing, neither the Seller nor any such Executive will
take away or interfere or attempt to interfere with any custom, trade,
business or patronage of the Business, or interfere with or attempt to
interfere with any officers, employees, representatives or agents of the
Business, or induce or attempt to induce any of them to leave the employ of
the Purchaser or violate the terms of their contracts, or any employment
arrangements, with the Purchaser.
(c) The Restricted Period shall be extended by the length of any
period during which any Executive is in breach of the terms of this
Section 5.08.
(d) The Seller acknowledges that the covenants of the Seller set
forth in this Section 5.08 are an essential element of this Agreement and
that, but for the agreement of the Seller to comply with these covenants,
the Purchaser would not have entered into this Agreement. The Seller
acknowledges that this Section 5.08 constitutes an independent covenant and
shall not be affected by performance or nonperformance of any other
provision of this Agreement by the Purchaser. The Seller has independently
consulted with counsel and after such consultation agree that the covenants
set forth in this Section 5.08 are reasonable and proper.
SECTION 5.09. INDEMNITY REGARDING LEASE AND CONTRACT ASSIGNMENTS. The
Seller and the Shareholders, jointly and severally, shall indemnify the
Purchaser and hold it harmless, without regard to the limitations on
indemnification set forth in Article VI, from any and all damages, claims,
losses and liabilities arising out of or resulting from the failure of the
Seller to obtain consents, at or prior to the Closing, under any and all
leases and contracts of the Seller.
SECTION 5.10. FURTHER ACTION. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action,
do or cause to be done all things necessary, proper or advisable under
applicable Laws, and execute and deliver such documents and other papers,
as may be required to carry out the provisions of this Agreement and
consummate and make effective the transactions contemplated by this
Agreement.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. SURVIVAL. The representations, warranties, covenants and
agreements of the Seller contained in this Agreement and the Ancillary
Agreements to which the Seller and the Purchaser are party, and all
statements contained in the Acquisition Documents, shall survive the
Closing until the second anniversary thereof; PROVIDED, HOWEVER, that
(a) the representations and warranties dealing with Tax matters shall
survive until thirty calendar days after the expiration of the applicable
period under the statute of limitations therefor has expired and
(b) insofar as any claim is made by the Purchaser for the breach of any
representation or warranty of the Seller contained herein, which claim
arises out of allegations of personal injury or property damage suffered by
any third party on or prior to the Closing Date or attributable to products
or Inventory sold or shipped, or activities or omissions that occur, on or
prior to the Closing Date, such representations and warranties shall, for
purposes of such claim by the Purchaser, survive until thirty calendar days
after the expiration of the applicable period under the statute of
limitations governing such claims, and (c) the agreements set forth in
Article V shall remain in full force and effect for the applicable periods
specified in such Article or, if no such period is specified, until the
applicable period under the statute of limitations therefor has expired.
Neither the period of survival nor the liability of the Seller with respect
to the Seller's representations and warranties shall be reduced by any
investigation made at any time by or on behalf of the Purchaser. If
written notice of a claim has been given by the Purchaser to the Seller
prior to the expiration of the applicable representations and warranties,
then the relevant representations and warranties shall survive as to such
claim until the claim has been finally resolved.
SECTION 6.02. INDEMNIFICATION BY THE SELLER. The Purchaser and its
Affiliates, officers, directors, employees, agents, successors and assigns
shall be indemnified and held harmless by the Seller and each of the
Shareholders, jointly and severally, for any and all Liabilities, losses,
damages, claims, costs and expenses, interest, awards, judgments and
penalties (including, without limitation, attorneys' and consultants' fees
and expenses) actually suffered or incurred by them (including, without
limitation, any Action brought or otherwise initiated by any of them)
(hereinafter a "LOSS"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the Seller
or the Shareholders contained in the Acquisition Documents; or
(ii) the breach of any covenant or agreement by the Seller contained
in the Acquisition Documents; or
(iii) any and all Losses suffered or incurred by the Purchaser by
reason of or in connection with any claim or cause of action of any third
party to the extent arising out of any action, inaction, event, condition,
liability or obligation of the Seller occurring or existing prior to the
Closing; or
(iv) Liabilities, whether arising before or after the Closing Date,
that are not expressly assumed by the Purchaser pursuant to this Agreement,
including, without limitation, the Excluded Liabilities;
PROVIDED, HOWEVER, that any liability of the Seller and each Shareholder
pursuant to Section 5.08 shall be several.
To the extent that the Seller's and the Shareholder's undertakings set
forth in this Section 6.02 may be unenforceable, the Seller and each
Shareholder shall contribute the maximum amount that it is permitted to
contribute under applicable Law to the payment and satisfaction of all
Losses incurred by the Purchaser.
SECTION 6.03. INDEMNIFICATION BY THE PURCHASER. The Seller and its
Affiliates, officers, directors, employees, agents, successors and assigns
shall be indemnified and held harmless by the Purchaser for any and all
Liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
(including, without limitation, any Action brought or otherwise initiated
by any of them) (hereinafter a "LOSS"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Purchaser contained in this Agreement or the Assumption Agreement; or
(ii) the breach of any covenant or agreement by the Purchaser
contained in this Agreement or the Assumption Agreement;
(iii) the conduct of the Business by the Purchaser following the
Closing; or
(iv) the Assumed Liabilities, except to the extent that the Seller or
the Shareholders are obligated to indemnify the Purchaser with respect
thereto.
SECTION 6.04. GENERAL INDEMNIFICATION PROVISIONS. (a) Any Person seeking
indemnification under this Article VI (an "INDEMNIFIED PARTY") shall give
prompt notice to the party or parties from whom such indemnification is
sought (the "INDEMNIFYING PARTY"), stating the amount of the Loss, if
known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of
indemnification is claimed or arises. The obligations and Liabilities of
the Indemnifying Party under this Article VI with respect to Losses arising
from claims of any third party which are subject to the indemnification
provided for in this Article VI ("THIRD PARTY CLAIMS") shall be governed by
and contingent upon the following additional terms and conditions: if an
Indemnified Party shall receive notice of any Third Party Claim, the
Indemnified Party shall give the Indemnifying Party notice of such Third
Party Claim within 30 days of the receipt by the Indemnified Party of such
notice; PROVIDED, HOWEVER, that the failure to provide such notice shall
not release the Indemnifying Party from any of its obligations under this
Article VI except to the extent the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party
from any other obligation or liability that it may have to any Indemnified
Party otherwise than under this Article VI. If the Indemnifying Party
acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim,
then the Indemnifying Party shall be entitled to assume and control the
defense of such Third Party Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified
Party within 15 days of the receipt of such notice from the Indemnified
Party; PROVIDED, HOWEVER, that if there exists or is reasonably likely to
exist a conflict of interest that would make it inappropriate in the
reasonable good faith judgment of the Indemnified Party for the same
counsel to represent both the Indemnified Party and the Indemnifying Party,
then the Indemnified Party shall be entitled to retain its own counsel, in
each jurisdiction for which the Indemnified Party determines counsel is
required, at the expense of the Indemnifying Party. In the event the
Indemnifying Party exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party, at the Indemnifying Party's expense,
all witnesses, pertinent records, materials and information in the
Indemnified Party's possession or under the Indemnified Party's control
relating thereto as is reasonably required by the Indemnifying Party.
Similarly, in the event the Indemnified Party is, directly or indirectly,
conducting the defense against any such Third Party Claim, the Indemnifying
Party shall cooperate with the Indemnified Party in such defense and make
available to the Indemnified Party, at the Indemnifying Party's expense,
all such witnesses, records, materials and information in the Indemnifying
Party's possession or under the Indemnifying Party's control relating
thereto as is reasonably required by the Indemnified Party. No such Third
Party Claim may be settled by the Indemnifying Party without the written
consent of the Indemnified Party.
(b) To the extent that the undertakings of the Indemnifying Party
Seller or the Purchaser set forth in this Article VI may be unenforceable,
the Seller or the Purchaser, as the case may be, shall contribute the
maximum amount that it is permitted to contribute under applicable Law to
the payment and satisfaction of all Losses incurred by the Purchaser or the
Seller, as the case may be.
SECTION 6.05. LIMITATION OF INDEMNIFICATION. (a) In order to satisfy any
amount determined to be owed to the Purchaser under this Article VI, the
Purchaser's first but not sole recourse shall be to offset such amount
against any Subsequent Payments remaining to be paid; PROVIDED that the
Seller and the Shareholders shall not be required to indemnify, defend or
hold the Purchaser harmless against or reimburse any losses or claims
pursuant to Section 6.02 unless and until the aggregate amount of such
losses or claims exceeds $50,000, after which the Seller shall be obligated
for the entire amount of all such losses or claims in excess of $25,000;
and PROVIDED, FURTHER that Seller and the Shareholders shall not be
obligated for any portion of such amount that is in excess of 75% of the
Purchase Price that is paid to the Seller and the Shareholders.
(b) In the event of any indemnity claim by the Purchaser,
notwithstanding the provisions of Section 2.03(b), the Purchaser may
withhold an amount from any Subsequent Payments that in the Purchaser's
good faith estimate is sufficient to cover the amount of such claim. Upon
resolution of such claim, the Purchaser shall pay the remainder of such
Subsequent Payment after the satisfaction of such claim to the Sellers
together with interest thereon at the Interest Rate for the period
withheld.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. EXPENSES. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses, whether or
not the Closing shall have occurred.
SECTION 7.02. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram,
by telex or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or
at such other address for a party as shall be specified in a notice given
in accordance with this Section 7.02):
(a) if to the Seller and to the Shareholders:
Atlas Bag, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxx
with a copy to:
Xxxxxxx Xxxxxx & Xxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
(b) if to the Purchaser:
Marino Technologies Inc.
c/o Consoltex (USA) Inc.
1040 Avenue of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx O'X. Xxxxxx, Esq.
SECTION 7.03. PUBLIC ANNOUNCEMENTS. No party to this Agreement shall
make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or
otherwise communicate with any news media without the prior written consent
of the other party, and the parties shall cooperate as to the timing and
contents of any such press release or public announcement.
SECTION 7.04. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 7.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the
greatest extent possible.
SECTION 7.06. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and
oral, between the Seller and the Purchaser with respect to the subject
matter hereof.
SECTION 7.07. ASSIGNMENT. This Agreement may not be assigned by operation
of Law or otherwise without the express written consent of the Seller and
the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller and the Purchaser); PROVIDED, HOWEVER, that the
Purchaser may assign this Agreement to an Affiliate of the Purchaser
without the consent of the Seller.
SECTION 7.08. NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended
to or shall confer upon any other Person, including, without limitation,
any union or any employee or former employee of the Seller, any legal or
equitable right, benefit or remedy of any nature whatsoever, including,
without limitation, any rights of employment for any specified period,
under or by reason of this Agreement.
SECTION 7.09. AMENDMENT This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Seller
and the Purchaser.
SECTION 7.10. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK, EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE OF
LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY NEW YORK
STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK. EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY.
SECTION 7.11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (a "CLAIM") that cannot be mutually resolved
by the parties hereto and their respective advisors and representatives
shall be finally settled by binding arbitration in Chicago, Illinois
administered by the American Arbitration Association ("AAA") under its
Commercial Arbitration Rules as then in effect (the "RULES"). The
arbitration shall be conducted before a single arbitrator of exemplary
qualifications and stature, who shall be selected jointly by the Purchaser,
and the Seller. In the event that the parties or their selected
arbitrators are unable to selected such an arbitrator, selection of the
arbitrator shall be in accordance with the Rules. Judgment may be entered
on the arbitrator's award in any court have competent jurisdiction. At the
request of either the Sellers or the Purchaser, the arbitrator may take any
interim measure he deems necessary, including measures for the conservation
of any items forming the subject matter in dispute, which measures may take
the form of an interim award. The arbitrator's power to grant interim
measures shall not be interpreted as precluding the jurisdiction of
competent courts to grant such relief. The parties waive any form of
notification or deposit of the award except as required by the Rules.
Judgment on the award may be entered in any court having jurisdiction over
it or having jurisdiction over the Sellers or the Purchaser or their
respective assets. The laws of the State of Illinois shall govern any
arbitration and the validity, scope and effect of this Section 7.11. The
non-prevailing party shall bear all expenses of the arbitrator incurred in
any arbitration hereunder. In the event of arbitration or litigation
arising under this Agreement, the prevailing party shall be entitled to
recover from the non-prevailing party its reasonable attorney's fees and
expenses incurred in connection with such arbitration or litigation,
including before the filing of a demand for arbitration or a lawsuit.
Arbitration pursuant to this Section 7.11 shall constitute the sole remedy
of the parties hereto, PROVIDED, that the parties agree that monetary
damages may be inadequate and that any party shall be entitled to seek
specific performance of the arbitrator's decision from a court of competent
jurisdiction.
SECTION 7.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
SECTION 7.13. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition
to any other remedy at Law or equity without the necessity of demonstration
the inadequacy of monetary damages.
IN WITNESS WHEREOF, the Seller, the Shareholders and the Purchaser have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
ATLAS BAG, INC.
By:
Name:
Title:
XXXXXXX X. XXX
_______________________________
Xxxxxxx X. Xxx
XXXXX XXXXXXX
_______________________________
Xxxxx Xxxxxxx
XXXXX X. XXXXXX
_______________________________
Xxxxx X. Xxxxxx
XXXXXX TECHNOLOGIES INCORPORATED
By:
Name:
Title:
By:
Name:
Title:
