Exhibit 2.1
EXECUTION COPY
________________________________________________________________________________
ASSET PURCHASE AGREEMENT
Dated as of May 3, 2001
Among
Applied Extrusion Technologies, Inc.,
QPF, LLC
and
Hood Companies, Inc.
________________________________________________________________________________
TABLE OF CONTENTS
1. Definitions.................................................................................................... 1
1.1. Defined Terms........................................................................................... 1
1.2. Rules of Construction................................................................................... 7
2. Acquisition of Assets by Buyer................................................................................. 7
2.1. Purchase and Sale of Assets............................................................................. 7
2.2. Excluded Assets......................................................................................... 8
2.3. Assumption of Liabilities............................................................................... 9
2.4. Liabilities Not Assumed................................................................................. 10
2.5. Purchase Price.......................................................................................... 10
2.6. Inventory Amount Calculations........................................................................... 12
2.7. Determination of Amounts................................................................................ 12
2.8. The Closing............................................................................................. 13
2.9. Deliveries at the Closing............................................................................... 13
2.10. Preliminary Allocation of Purchase Price................................................................ 14
2.11. Employees............................................................................................... 14
3. Representations and Warranties of the Selling Parties.......................................................... 14
3.1. Organization of the Selling Parties..................................................................... 14
3.2. Authorization of Transaction............................................................................ 15
3.3. Noncontravention........................................................................................ 15
3.4. Brokers' Fees........................................................................................... 15
3.5. Title to Assets......................................................................................... 15
3.6. All Assets Necessary to Conduct Business................................................................ 15
3.7. Absence of Changes...................................................................................... 16
3.8. Legal and Other Compliance.............................................................................. 17
3.9. No Seller Material Adverse Effect....................................................................... 17
3.10. Intellectual Property................................................................................... 17
3.11. Inventories............................................................................................. 18
3.12. Contracts............................................................................................... 18
3.13. Litigation.............................................................................................. 19
3.14. Product Warranties; Defects; Liability.................................................................. 19
3.15. Distributors, Customers, Suppliers...................................................................... 19
3.16. No Illegal Payments, Etc................................................................................ 19
3.17. Consents................................................................................................ 20
3.18. Financial Statements.................................................................................... 20
4. Representations and Warranties of the Buyer.................................................................... 20
4.1. Organization of the Buyer............................................................................... 20
4.2. Authorization for Transaction........................................................................... 20
4.3. Noncontravention........................................................................................ 21
4.4. Legal and Other Compliance.............................................................................. 21
4.5. Litigation.............................................................................................. 21
4.6. No Illegal Payments, Etc................................................................................ 21
4.7. Brokers' Fees........................................................................................... 22
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4.8. Security Documents...................................................................................... 22
4.9. Financial Statements.................................................................................... 22
4.10. No Buyer Material Adverse Effect........................................................................ 22
5. Covenants...................................................................................................... 22
5.1. General................................................................................................. 22
5.2. Notices and Consents.................................................................................... 23
5.3. Operation of Business................................................................................... 23
5.4. Employees............................................................................................... 23
5.5. Full Access............................................................................................. 23
5.6. Notice of Developments.................................................................................. 23
5.7. Exclusivity............................................................................................. 23
5.8. Access to Records after Closing......................................................................... 23
5.9. Transfer Taxes.......................................................................................... 24
5.10. Slitting and Shipping Operations........................................................................ 24
5.11. Accounts Receivable..................................................................................... 24
5.12. Closing of Streamwood Facility; Maintenance, Storage, Removal and Shipment of Acquired Assets........... 25
5.13. Audited Financial Statements............................................................................ 28
5.14. Prepayment of Purchase Note............................................................................. 28
5.15. Future Assurances....................................................................................... 28
6. Conditions to Obligation to Close.............................................................................. 28
6.1. Conditions to Obligation of the Buyer................................................................... 29
6.2. Conditions to Obligations of the Selling Parties........................................................ 30
7. Confidentiality................................................................................................ 30
8. Noncompetition................................................................................................. 31
8.1. Agreements Not to Compete................................................................................ 31
8.2. Solicitation of the Buyer's Employees by the Seller...................................................... 32
8.3. Solicitation of the Seller's Employees by the Buyer...................................................... 32
9. Indemnification................................................................................................ 32
9.1. Survival of Representations and Warranties.............................................................. 32
9.2. Indemnity by Selling Parties............................................................................ 33
9.3. Indemnity by Buyer...................................................................................... 34
9.4. Matters Involving Third Parties......................................................................... 34
10. Termination.................................................................................................... 35
10.1. Termination of Agreement................................................................................ 35
10.2. Effect of Termination................................................................................... 36
11. Miscellaneous.................................................................................................. 36
11.1. Press Releases and Public Announcements................................................................. 36
11.2. No Third Party Beneficiaries............................................................................ 36
11.3. Entire Agreement........................................................................................ 36
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11.4. Succession and Assignment...................................... 36
11.5. Counterparts................................................... 37
11.6. Headings....................................................... 37
11.7. Notices........................................................ 37
11.8. Governing Law.................................................. 38
11.9. Amendments and Waivers......................................... 38
11.10. Severability................................................... 38
11.11. Expenses....................................................... 38
11.12. Construction................................................... 38
11.13. Incorporation of Exhibits and Schedules........................ 39
11.14. Specific Performance........................................... 39
11.15. Arbitration.................................................... 39
11.16. Waiver of Jury Trial........................................... 40
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Exhibits
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A - Form of Purchase Note
B - Form of Purchase Security Agreement
C - Form of Inventory Note
D - Form of Inventory Security Agreement
E - Inventory Valuation Method
F - [Intentionally Omitted]
G - Xxxx of Sale
H - Assignment and Assumption Agreement
I - [Intentionally Omitted]
J - Financial Statements
K - Form of Opinion of Xxxx X. Xxxxxx, Esq.
L - Form of Opinion of Ropes & Xxxx
M - Form of Escrow Agreement
Schedules
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Schedule 2.1(a) - Encumbrances on Acquired Assets
Schedule 2.1(b) - Permits
Schedule 2.1(c) - Intellectual Property
Schedule 2.1(e) - Contracts
Schedule 2.2(i) - Other Excluded Assets
Schedule 5.10 - Wage Rates
Disclosure Schedules -- Exceptions to Representations and Warranties
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of May
3, 2001, by and among (i) Applied Extrusion Technologies, Inc., a Delaware
corporation (the "Buyer"), and (ii) QPF, LLC, a Mississippi limited liability
company (the "Seller"), and Hood Companies, Inc., a Mississippi corporation (the
"Parent"; each of the Seller and the Parent is sometimes referred to herein as
"Selling Party" and collectively as the "Selling Parties"). The Buyer and the
Selling Parties are collectively referred to herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will purchase
certain of the assets (and assume certain of the liabilities) of the Seller in
consideration of the Purchase Price (as defined below). The assets to be
purchased by the Buyer all relate to the Seller's oriented polypropylene films
business, known as its QPF Business (the "Business"). The Selling Parties will
continue to engage in its businesses other than the Business after the
consummation of the transactions contemplated hereby. The Seller is a wholly-
owned subsidiary of the Parent.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
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1.1. Defined Terms.
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"AAA" has the meaning set forth in (S) 11.15(a).
"Acquired Assets" has the meaning set forth in (S) 2.1.
"Acquired Intellectual Property" means all Intellectual Property included
in the Acquired Assets.
"Action" means any claim, action, cause of action or suit (in contract or
tort or otherwise), litigation, arbitration, investigation, hearing, charge,
complaint, demand, notice or proceeding to, from, by or before any Governmental
Authority.
"Affiliate" means, as to any specified Person at any time, (i) each Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person at such time, (ii) each Person who is
or has been within two years prior to the time in question an officer, director
or direct or indirect beneficial holder of at least 10% of any class of the
outstanding capital stock of such specified Person and the Members of the
Immediate Family of each such officer, director or holder (and, if such
specified Person is a natural person, of such specified Person) and (iii) each
Person of which such specified Person or an Affiliate (as defined in clauses (i)
or (ii) above) thereof shall, directly or indirectly, beneficially own at least
10% of any class of outstanding capital stock or other evidence of beneficial
interest at such time.
"Agreement" has the meaning set forth in the preamble above.
"Asset Purchase Price" has the meaning set forth in (S) 2.5.
"Assumed Liabilities" has the meaning set forth in (S) 2.3.
"Balance Sheet Date" means December 31, 2000, the date of the last audited
balance sheet of the Seller relating solely to the Business.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act or transaction that forms or could reasonably form the basis for
any specified consequence.
"Business" has the meaning set forth in the preamble above.
"Business Day" means any day on which banking institutions in Boston,
Massachusetts are customarily open for the purpose of transacting business.
"Buyer" has the meaning set forth in the preamble above.
"Buyer Material Adverse Effect" means any change in or effect on the
business, operations, prospects or condition (financial or otherwise) of the
Buyer and its Subsidiaries (taken as a whole) which, when considered either
singly or in the aggregate together with all other adverse changes or effects
with respect to which such phrase is used in this Agreement, is, or poses a
material risk of being, materially adverse to the business, operations,
prospects or condition (financial or otherwise) of the Buyer and its
Subsidiaries (taken as a whole).
"By-laws" means, with respect to any Person (other than an individual), all
by-laws relating to such Person, as from time to time in effect.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments).
"Charter" means the certificate or articles of incorporation or
organization, statute, constitution, joint venture, limited liability company or
partnership agreement or articles or other charter documents of any Person
(other than an individual), each as from time to time in effect.
"Closing" has the meaning set forth in (S) 2.8.
"Closing Date" has the meaning set forth in (S) 2.8.
"Code" means the federal Internal Revenue Code of 1986 or any successor
statute, and the rules and regulations thereunder, and in the case of any
referenced section of any such statute, rule or regulation, any successor
section thereto, collectively and as from time to time amended and in effect.
"Confidential Information" means any and all information concerning the
Business other than that information which is already generally or readily
obtainable by the public or is publicly known or becomes publicly known through
no fault of either Selling Party or any Affiliate thereof.
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"Contracts" has the meaning set forth in (S) 2.1(e).
"Contractual Obligation" means, with respect to any Person, any contract,
agreement, deed, mortgage, lease, license, commitment, undertaking, arrangement
or understanding, written or oral, or other document or instrument, including
without limitation any document or instrument evidencing or otherwise relating
to any indebtedness or guarantee but excluding the Charter and By-laws of such
Person, to which or by which such Person is a party or otherwise subject or
bound or to which or by which any property or right of such Person is subject or
bound.
"Deposit" has the meaning set forth in (S) 2.5.
"Disclosure Schedule" has the meaning set forth in (S) 3.
"Disputed Amount" has the meaning set forth in (S) 2.7.
"Enforceable" means, with respect to any Contractual Obligation stated to
be Enforceable by or against any Person, that such Contractual Obligation is a
legal, valid and binding obligation enforceable by or against such Person in
accordance with its terms, except to the extent that enforcement of the rights
and remedies created thereby is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
"Escrow Agent" has the meaning set forth in (S) 2.5.
"Escrow Agreement" has the meaning set forth in (S) 2.5.
"Escrow Amount" has the meaning set forth in (S) 2.5.
"Excluded Assets" has the meaning set forth in (S) 2.2.
"Excluded Liability" means any Liability to the extent that it relates to
or arises out of any of the following: (a) any Excluded Asset; (b) any Liability
of either Selling Party which is not an Assumed Liability, including, without
limitation, any Liability specified in (S) 2.4; (c) any inaccuracy in or breach
of any representation or warranty made by either Selling Party in this Agreement
or any other certificate or document executed in connection herewith; and (d)
the non-performance of any covenant or obligation to be performed under this
Agreement by either Selling Party at any time.
"Financial Statements" has the meaning set forth in (S) 3.18.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with their application
in the audited financial statements for the year ended December 31, 2000
referred to in (S) 3.18.
"Governmental Authority" means any United States federal, state or local or
any foreign government, governmental authority, regulatory or administrative
agency, governmental
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commission, court or tribunal (or any department, bureau or division thereof) or
any arbitral body.
"Indemnified Party" has the meaning set forth in (S) 9.4(a).
"Indemnifying Party" has the meaning set forth in (S) 9.4(a).
"Independent Accountant" has the meaning set forth in (S) 2.7.
"Intellectual Property" means the entire right, title and interest in and
to all proprietary rights of every kind and nature, including patents,
copyrights, Trademarks, mask works, trade secrets and proprietary information,
all applications for any of the foregoing, and any Contractual Obligations
granting rights related to the foregoing (i) subsisting in, covering, reading
on, directly applicable to or existing in the Products or Technology, including,
without limitation, all Intellectual Property identified in Schedule 2.1(c);
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(ii) that are owned, licensed or controlled in whole or in part by the Seller
and relate to the Business; or (iii) that are used or useful in or necessary or
desirable to the development, manufacture, sales, marketing or testing of the
Products.
"Inventory" has the meaning set forth in (S) 2.1(f).
"Inventory Note" has the meaning set forth in (S) 2.5.
"Inventory Security Agreement" has the meaning set forth in (S) 2.5.
"Knowledge" means actual knowledge after reasonable investigation.
"Legal Requirement" means any federal, state, local or foreign law,
statute, standard, ordinance, code, order, rule, regulation, resolution or
promulgation, or any order, judgment or decree of any Governmental Authority, or
any license, franchise, permit or similar right granted under any of the
foregoing, or any similar provision having the force and effect of law.
"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, whether incurred or
consequential and whether due or to become due), including, without limitation,
any liability for Taxes.
"Lien" means any mortgage, pledge, lien, security interest, charge, adverse
or prior claim, encumbrance, restriction on transfer, conditional sale or other
title retention device or arrangement (including without limitation a capital
lease), transfer for the purpose of subjection to the payment of any Debt or
other obligation, or restriction on the creation of any of the foregoing,
whether relating to any property or right or the income or profits therefrom;
provided, however, that the term "Lien" shall not include (i) statutory liens
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for Taxes to the extent that the payment thereof is not in arrears or otherwise
due, (ii) encumbrances in the nature of zoning restrictions, easements, rights
or restrictions of record on the use of real property if the same do not detract
from the value of such property or impair its use in the Business as currently
conducted, (iii) statutory or common law liens to secure landlords, lessors or
renters under leases or rental agreements confined to the premises rented to the
extent that no payment or
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performance under any such lease or rental agreement is in arrears or is
otherwise due, (iv) deposits or pledges made in connection with, or to secure
payment of, worker's compensation, unemployment insurance, old age pension
programs mandated under applicable Legal Requirements or other social security,
(v) statutory or common law liens in favor of carriers, warehousemen, mechanics
and materialmen, statutory or common law liens to secure claims for labor,
materials or supplies and other like liens, which secure obligations to the
extent that payment thereof is not in arrears or otherwise due, and (vi) Liens
created by the Security Agreements.
"Losses" has the meaning set forth in (S) 9.2.
"Members of the Immediate Family" with respect to any individual, means
each spouse, parent, brother, sister or child of such individual, each spouse of
any such Person, each child of any of the aforementioned Persons, each trust
created in whole or in part for the benefit of one or more of the aforementioned
Persons and each custodian or guardian of any property of one or more of the
aforementioned Persons.
"Note" means each of the Inventory Note and the Purchase Note.
"Ordinary Course of Business" means the ordinary course of business with
respect to the Business, consistent with past custom and practice (including
with respect to quantity and frequency).
"Parent" has the meaning set forth in the Preamble.
"Party" and "Parties" have the meanings set forth in the preamble above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization, or a Governmental Authority.
"Products" means all current products and services of the Seller relating
to the Business, any subsequent versions of such products currently being
developed, any products currently being developed by the Seller which are
designed to supersede, replace or function as a component of such products, and
any upgrades, enhancements, improvements and modifications to the foregoing.
"Purchase Note" has the meaning set forth in (S) 2.5.
"Purchase Price" has the meaning set forth in (S) 2.5.
"Purchase Security Agreement" has the meaning set forth in (S) 2.5.
"Raw Materials and Supply Inventory Amount" has the meaning set forth in
(S) 2.6.
"Security Agreement(s)" means each of the Purchase Security Agreement and
the Inventory Security Agreement.
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"Seller" has the meaning set forth in the preamble.
"Seller Material Adverse Effect" means any change in or effect on the
Acquired Assets or the Business which, when considered either singly or in the
aggregate together with all other adverse changes or effects with respect to
which such phrase is used in this Agreement, is, or poses a material risk of
being, materially adverse to the Acquired Assets or the Business, including
without limitation with respect to the use, operation, value or condition of the
Acquired Assets or the business, operations, prospects or condition (financial
or otherwise) of the Business.
"Selling Parties" has the meaning set forth in the Preamble.
"Streamwood Facility" means the real property and buildings owned by the
Seller located in Streamwood, Illinois and used in the conduct of the Business.
"Subsidiary" means with respect to any Person, (i) any corporation at least
a majority of whose outstanding voting stock is owned, directly or indirectly,
by such Person or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries; (ii) any general partnership, joint venture or
similar entity, at least a majority of whose outstanding partnership or similar
interests shall at the time be owned by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; and (iii)
any limited partnership of which such Person or any of its Subsidiaries is a
general partner. For the purposes of this definition, "voting stock" means
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person other
than shares, interests, participations or other equivalents having such power
only by reason of the occurrence of a contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code (S) 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar, including FICA), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Technology" means all inventions, copyrightable works, discoveries,
innovations, know-how, information (including ideas, research and development,
know-how, formulas, compositions, processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and cost
information, business and marketing plans and proposals, documentation, and
manuals), computer software, computer hardware, integrated circuits and
integrated circuit masks, electronic, electrical and mechanical equipment and
all other forms of technology, including improvements, modifications,
derivatives or changes,
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whether tangible or intangible, embodied in any form, whether or not protectible
or protected by patent, copyright, mask work right, trade secret law or
otherwise.
"Third Party Claim" has the meaning set forth in (S) 9.4(a).
"Trademarks" means any trademarks, service marks, trade dress, and logos,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith.
"Transaction Document" means each of this Agreement, each Note, each
Security Agreement, the Xxxx of Sale referred to in (S) 2.9(a), the Assignment
and Assumption Agreement referred to in (S) 2.9(b) and the Escrow Agreement.
"WARN" means the Worker Adjustment and Retraining Act of 1988, as from time
to time in effect.
"Work-in-Process and Finished Goods Inventory Amount" has the meaning set
forth in (S) 2.6.
1.2. Rules of Construction. The following provisions shall be applied
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wherever appropriate herein: (a) "herein", "hereby", "hereunder", "hereof" and
other equivalent words shall refer to this Agreement as an entirety and not
solely to the particular portion of this Agreement in which any such word is
used; (b) all definitions set forth herein shall include the singular and the
plural; (c) wherever used herein, any pronoun shall be deemed to include both
the singular and plural and to cover all genders; (d) except as otherwise stated
herein, all references or citations in this Agreement to statutes or regulations
or statutory regulatory provisions, shall, when the context requires, be
considered citations to such statutes, regulations or provisions as in effect as
of the Closing Date; and (e) any references herein to a particular Section,
Article, Exhibit or Schedule means a Section or Article of, or Schedule or
Exhibit to, this Agreement unless another agreement is specified.
2. Acquisition of Assets by Buyer.
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2.1. Purchase and Sale of Assets. The Seller agrees to sell and transfer
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to the Buyer, and the Buyer agrees to purchase from the Seller at the Closing,
subject to the exclusions contained in (S) 2.2 and subject to and upon the other
terms and conditions contained herein, free and clear of any Lien whatsoever,
except those Liens listed on Schedule 2.1(a), the following assets of the Seller
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(collectively, the "Acquired Assets"), and no other assets of the Seller:
(a) All assets of the Seller which were used or useful in the
conduct of the Business on the Balance Sheet Date, and all assets of the
Seller that have been acquired since the Balance Sheet Date for use or used
in the Business (other than assets that have been disposed of in the
Ordinary Course of Business since the Balance Sheet Date), including
without limitation all such assets as constitute tangible personal property
(such as machinery, equipment, control systems, inventories, raw materials,
supplies, manufactured and purchased parts, works in process, finished
goods, computer and office equipment, furniture, automobiles, trucks,
tractors, trailers, tools, jigs and dies) used or useful in connection with
the conduct of the Business, provided that if on the Closing
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Date the court order referred to in (S) 3.13 of the Disclosure Schedule
remains in effect, the assets subject thereto shall be excluded from the
Acquired Assets and retained by the Seller, the Seller thereafter shall use
its best efforts to cause such court order to be vacated so that it is no
longer in effect, the Seller shall as promptly as practicable after such
court order is no longer in effect convey such assets to the Buyer and
thereupon such assets shall constitute part of the Acquired Assets;
(b) All rights of the Seller under all licenses (other than as
set forth in (S) 2.1(c)), permits, authorizations, orders, registrations,
certificates, approvals, consents and franchises used or useful in
connection with the conduct of the Business or any pending applications
relating to any of the foregoing, except in each case those which would not
be required by the Buyer to own and operate the Acquired Assets and conduct
the Business in a location other than the Streamwood Facility or which are
applicable solely to the Streamwood Facility, including without limitation
all governmental permits, licenses, authorizations, approvals and consents
described on Schedule 2.1(b);
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(c) All Intellectual Property used or useful in connection with
the conduct of the Business, goodwill associated therewith, licenses and
sublicenses granted in respect thereto and rights thereunder, remedies
against infringements thereof and rights to protection of interest therein,
including, without limitation, the Intellectual Property described on
Schedule 2.1(c);
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(d) All customer, distributor, supplier and mailing lists used
or useful in connection with the conduct of the Business;
(e) All rights of the Seller under Contractual Obligations
relating to the conduct of the Business (the "Contracts") described on
Schedule 2.1(e);
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(f) All raw materials, supply, work-in-process and finished
goods inventories of the Seller, whether or not located on premises owned
or leased by the Seller (together, the "Inventory");
(g) All files, plans, documents, correspondence, lists,
drawings, notebooks, specifications, creative materials, advertising and
promotional materials, marketing materials, studies, reports, equipment
repair, maintenance or service records relating to the conduct of the
Business whether written or electronically stored or otherwise recorded;
and
(h) All of the Seller's rights to the use of the name "QPF" and
any variations thereof.
2.2. Excluded Assets. There shall be excluded from the Acquired Assets to
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be sold, assigned, transferred, conveyed and delivered to Buyer hereunder, and
to the extent in existence on the Closing Date, there shall be retained by the
Seller, the following assets, properties and rights (collectively, the "Excluded
Assets"):
(a) Cash;
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(b) All real property, buildings thereon, and easements, rights-
of way, and other appurtenant rights thereto (such as appurtenant rights in
and to public streets), including, without limitation, the Streamwood
Facility ;
(c) All rights with respect to leasehold interests and subleases
and rights thereunder, in each case relating to real property;
(d) All accounts receivable and notes receivable;
(e) All claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of set off and rights
of recoupment which have arisen in connection with the conduct of the
Business by the Seller and do not relate specifically to the Acquired
Assets;
(f) All rights in and with respect to the assets associated with
all employee plans;
(g) All rights in and with respect to insurance policies, except
for any proceeds of such insurance and claims therefor relating to the
Acquired Assets in an aggregate amount not exceeding the Asset Purchase
Price;
(h) All corporate financial, computer, real estate and human
resource systems that are used by the Seller in other aspects of its
business or that relate primarily to an Excluded Asset (without giving
effect to this clause (h));
(i) All assets described on Schedule 2.2(i); and
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(j) All other assets as the Buyer and Seller may mutually agree
upon at any time at or prior to the later of (i) the Closing or (ii) 30
days after all manufacturing activities have ceased at the Streamwood
Facility.
2.3. Assumption of Liabilities. On the terms and subject to the
-------------------------
conditions set forth herein, from and after the Closing, the Buyer will assume
and satisfy or perform when due only the following Liabilities of the Seller
(the "Assumed Liabilities"):
(a) All Liabilities under the Contracts listed in Schedule
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2.1(e) arising after the Closing other than Liabilities arising from any
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breach or default occurring prior to the Closing;
(b) All Liabilities for Products manufactured or sold, or
services rendered, by the Buyer after the Closing; and
(c) All Liabilities relating to or arising out of the ownership
or use by the Buyer of the Acquired Assets, or the conduct by the Buyer of
the Business, in each case after the Closing, including without limitation
all such Liabilities of the Buyer in respect of Taxes;
provided, however, that the Assumed Liabilities shall in no event include any
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Excluded Liability.
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2.4. Liabilities Not Assumed. Except as expressly set forth in this
-----------------------
Agreement, and without increasing the scope of the Assumed Liabilities by
implication, the Buyer will not assume or perform any Liabilities not
specifically contemplated by (S) 2.3 to be Assumed Liabilities nor any of the
following Liabilities (whether or not so contemplated by (S) 2.3):
(a) Any Liability relating to or arising out of products
manufactured and sold or services rendered by the Seller prior to the
Closing Date, and any liability to the extent it relates to or arises out
of products manufactured by the Seller prior to the Closing Date and sold
by the Buyer after the Closing Date which were not in conformity with the
Seller's written specifications therefor;
(b) Any Liability of the Seller for making payments or providing
benefits of any kind to its employees or former employees, including,
without limitation, (i) as a result of the sale of the Acquired Assets or
as a result of the termination by the Seller of any employees, (ii) any
Liability arising out of, or relating to, WARN, (iii) any Liability to
provide former employees so-called COBRA continuation coverage, (iv) any
Liability in respect of medical and other benefits for existing and future
retirees, and (v) any Liability in respect of work-related employee
injuries or worker's compensation claims; and
(c) Any Liability in respect of the Seller for accounts payable,
Taxes or other accrued liabilities, except for any liability in respect of
transfer taxes pursuant to (S) 5.9.
2.5. Purchase Price. In consideration for the Acquired Assets, the Buyer
--------------
agrees to assume the Assumed Liabilities and to deliver to the Seller as set
forth below in this (S) 2.5, (i) $15,000,000 (the "Asset Purchase Price") plus
----
(ii) a note, in substantially the form attached hereto as Exhibit C (the
"Inventory Note"), payable to the Buyer in an amount equal to the sum of the Raw
Materials and Supply Inventory Amount plus the Work-in-Process and Finished
----
Goods Inventory Amount, ((i) and (ii) together, the "Purchase Price").
(a) The Purchase Price shall be payable by the Buyer to the
Seller as follows:
(i) Concurrently with the execution and delivery of this
Agreement, the Buyer is delivering to the Seller, by wire transfer
of immediately available funds, the amount of $2,000,000 (the
"Deposit") in prepayment of a portion of the Asset Purchase Price.
The Seller shall be entitled to retain the Deposit whether or not
the Closing actually occurs, unless any of the following shall have
occurred: (A) the Seller shall have failed to issue a WARN notice
with respect to all of the employees at the Streamwood facility not
more than five (5) Business Days after the date hereof; (B) the
Seller shall have failed to publicly announce the transactions
contemplated hereby not more than five (5) Business Days after the
date hereof; (C) after the date hereof, the Seller shall have failed
to provide the Buyer and its representatives with full access to the
Streamwood Facility, all of the Acquired Assets and all employees
engaged in the Business; or (D) the Selling Parties shall have
failed to assist the Buyer in conducting an orderly transition of
the Business from the Seller to the Buyer in accordance with the
last sentence of (S) 5.3; provided, however, that, if the Closing
-------- -------
shall not occur by virtue of either (A)
10
a willful or grossly negligent failure by either of the Selling
Parties to satisfy any condition set forth in (S) 6.1 or (B) the
Buyer having terminated this Agreement pursuant to (S) 10.1(b) and
if a basis for such termination arose by virtue of a willful or
grossly negligent act, failure to act or omission by either of the
Selling Parties, then the Seller shall promptly, and in any event
within two (2) Business Days, return the Deposit to the Buyer.
(ii) Concurrently with the execution and delivery of this
Agreement, the Buyer is delivering to State Street Bank and Trust
Company, as Escrow Agent (the "Escrow Agent"), pursuant to the
Escrow Agreement in substantially the form attached hereto as
Exhibit M (as from time to time in effect, the "Escrow Agreement")
the amount of $4,000,000 (the "Escrow Amount"). Such funds shall be
held by the Escrow Agent in accordance with the terms of the Escrow
Agreement and shall be delivered to the Seller at the Closing in
payment of a portion of the Asset Purchase Price. The Seller shall
be paid the Escrow Amount whether or not the Closing actually
occurs, unless the Closing shall not occur by virtue of either (A) a
failure by the Selling Parties to satisfy any condition set forth in
(S) 6.1 or (B) the Buyer having terminated this Agreement pursuant
to (S) 10.1(b), in which event the Escrow Amount shall be returned
to the Buyer.
(iii) At the Closing, the Buyer shall pay the balance of
the Asset Purchase Price ($9,000,000) by executing and delivering to
the Seller a note in substantially the form attached hereto as
Exhibit A (the "Purchase Note"). The Buyer's payment of the Purchase
Note shall be secured by a security interest in all of the Acquired
Assets other than the Inventory pursuant to a Purchase Security
Agreement (the "Purchase Security Agreement") in substantially the
form of Exhibit B hereto, which the Buyer shall execute and deliver
to the Seller at the Closing.
(iv) At the Closing, the Buyer shall execute and deliver
to the Seller the Inventory Note. The Buyer's payment of the
Inventory Note shall be secured by a security interest in the
Inventory pursuant to an Inventory Security Agreement (the
"Inventory Security Agreement") in substantially the form of Exhibit
D hereto, which the Buyer shall execute and deliver to the Seller at
the Closing.
(b) The Buyer will use its reasonable commercial efforts to
consume or sell the Inventory. The Buyer will remit cash payments to the
Seller in the amount of the purchase price paid by the Buyer for any
Inventory determined pursuant to Exhibit E which is consumed or sold, such
payments to be made within forty-five (45) days of consumption or shipment
(as applicable) of such Inventory as a mandatory prepayment of the
Inventory Note. Each such payment shall automatically reduce the balance
outstanding on the Inventory Note by the amount of such payment, and the
Buyer shall pay the outstanding balance on the Inventory Note, if any, to
the Seller on the date which is 230 days after the Closing Date.
11
2.6. Inventory Amount Calculations.
-----------------------------
(a) Raw Materials and Supply Inventory. On the Business Day
----------------------------------
prior to the Closing Date, the Buyer and the Seller shall together conduct
a physical count of that portion of raw materials and supply inventory
acquired and held by the Seller for use in the Business in the Ordinary
Course of Business that will not be slow moving or obsolete as of the
Closing Date. The Seller shall prepare, and shall furnish to the Buyer on
the Business Day prior to the Closing Date, a certificate, executed by the
Chief Financial Officer of the Seller, that sets forth the aggregate cost
of such raw materials and supply inventory calculated in accordance with
Exhibit E (the "Raw Materials and Supply Inventory Amount") and that sets
forth the book value of such raw materials and supply inventory calculated
in accordance with GAAP.
(b) Work-in-Process and Finished Goods Inventories. On the
----------------------------------------------
Business Day prior to the Closing Date, the Buyer and the Seller shall
together conduct a physical count of work-in-process inventory and finished
goods inventory acquired and held by the Seller for use in the Business in
the Ordinary Course of Business. The Seller shall prepare, and shall
furnish to the Buyer on the Business Day prior to the Closing Date, a
certificate, executed by the Chief Financial Officer of the Seller, that
sets forth the aggregate cost of such work-in-process and finished goods
inventory calculated in accordance with Exhibit E (the "Work-in-Process and
Finished Goods Inventory Amount") and that sets forth the book value of
such work-in-process and finished goods inventory calculated in accordance
with GAAP.
2.7. Determination of Amounts. The Buyer and the Seller, on the Business
------------------------
Day prior to the Closing Date, will agree upon each of the Raw Materials and
Supply Inventory Amount and the Work-in-Process and Finished Goods Inventory
Amount. The principal amount of the Inventory Note shall be equal to the sum of
the Raw Materials and Supply Inventory Amount plus the Work-in-Process and
----
Finished Goods Inventory Amount. If the Parties disagree as to any of such
amounts: (a) the Closing shall occur as contemplated in (S) 2.8; (b) the Buyer
and the Seller shall each deliver to the other its determination of the sum of
the Raw Materials and Supply Inventory Amount plus the Work-in-Process and
----
Furnished Goods Inventory Amount (each a "Disputed Amount"); (c) the Buyer shall
deliver to the Seller at the Closing the Inventory Note in an amount equal to
(x) the sum of the Buyer's Disputed Amount plus the Seller's Dispute Amount
----
divided by (y) 2.0; (d) PricewaterhouseCoopers (the "Independent Accountant")
----------
shall review the Disputed Amounts and shall, within ten (10) days of the Closing
Date, select either the Buyer's Disputed Amount or the Seller's Disputed Amount
as most closely being equal to the sum of the actual Raw Materials and Supply
Inventory Amount plus the Work-in-Process and Finished Goods Inventory Amount,
----
and this determination will be final and binding on the Parties; (e) the Parties
shall co-operate with the Independent Accountant in responding to requests for
information; (f) the expenses of the Independent Accountant shall be borne by
the Party whose Disputed Amount was not so selected by the Independent
Accountant; and (g) the Buyer shall deliver to the Seller a new Inventory Note
reflecting the Disputed Amount chosen by the Independent Accountant in exchange
for the Inventory Note delivered to the Seller at the Closing, which the Seller
shall deliver to the Buyer marked "Cancelled".
12
2.8. The Closing. The closing of the transactions contemplated by this
-----------
Agreement (the "Closing") shall take place at the offices of Ropes & Xxxx in New
York, New York, commencing at 10:00 a.m. eastern time on June 29, 2001 or such
other date as the Parties may mutually determine (the "Closing Date"); provided,
--------
however, that, subject to (S) 10, if any Party shall have failed to satisfy any
-------
of the conditions specified to the obligations of any other Party in (S) 6, the
Closing shall occur three (3) Business Days after the Party so failing shall
give notice to the other Parties that such conditions are able to be satisfied,
in which event the Closing shall occur on the third Business Day after such
notice so long as all of the conditions specified in (S) 6 are satisfied or (in
accordance with (S) 6) waived on such date.
2.9. Deliveries at the Closing.
-------------------------
(a) At the Closing, the Selling Parties will deliver to the
Buyer properly executed and acknowledged, if requested by the Buyer, (i)
each Security Agreement, the Xxxx of Sale in the form attached hereto as
Exhibit G and the Assignment and Assumption Agreement in the form attached
hereto as Exhibit H, (ii) the various certificates, instruments, and
documents referred to in (S) 6.1 and elsewhere herein, (iii) such other
instruments of sale, transfer, conveyance and assignment as the Buyer and
its counsel may reasonably request).
(b) At the Closing, the Buyer will deliver to the Selling
Parties properly executed and acknowledged, if requested by the Selling
Parties, (i) each Note, each Security Agreement and the Assignment and
Assumption Agreement in the form attached hereto as Exhibit H, (ii) the
various certificates, instruments, and documents referred to in (S) 6.2 and
elsewhere herein, (iii) such other instruments of sale, transfer,
conveyance and assignment as the Selling Parties and their counsel may
reasonably request, and (iv) the consideration specified in (S) 2.5 to be
delivered by the Buyer to the Seller at the Closing.
(c) Prior to the Closing, the Seller shall collect and assemble
all of the Acquired Assets which are tangible into the Streamwood Facility,
provided that finished goods Inventory may continue to be stored with
--------
warehousemen and at the locations specified by the Seller in a certificate
given by the Seller to the Buyer at the Closing.
(d) It is understood and agreed that, although the Buyer will
acquire title to, and ownership of, all of the Acquired Assets at the
Closing, the Acquired Assets not constituting Inventory shall remain in the
possession of the Seller and, in the case of such Acquired Assets as are
tangible, located at the Streamwood Facility until such time as the
Purchase Note has been paid in full, at which time the Buyer shall be
entitled to possession thereof. The Seller shall take all actions
reasonably requested by the Buyer in order to identify such Acquired Assets
as the property of the Buyer, subject to the Lien of the Seller thereon
pursuant to the Purchase Security Agreement. From time to time the Buyer
and the Seller may mutually agree to allow the Buyer to remove a portion of
such tangible Acquired Assets from the Streamwood Facility in order to use
such Acquired Assets in the conduct of the Buyer's business, and the Seller
agrees not to unreasonably withhold its consent to such removal. The Buyer
agrees that it shall remove all Inventory from the Streamwood Facility
within 120 days after the Closing. The Acquired Intellectual Property shall
remain recorded in the name of the Selling Parties for purposes
13
of perfecting the Seller's Lien thereon pursuant to the Purchase Security
Agreement, and the Selling Parties shall execute proper instruments for the
transfer thereof to the Buyer, as reasonably requested by the Buyer,
promptly after the Purchase Note has been paid in full. Notwithstanding the
immediately preceding sentence, the Buyer may use any of the Acquired
Intellectual Property in the conduct of its business from time to time
after the Closing.
2.10. Preliminary Allocation of Purchase Price. The Parties agree that the
----------------------------------------
preliminary allocation of the Purchase Price for the Acquired Assets of the
Seller shall be determined prior to the Closing by an allocation formula that is
reasonably acceptable to the Parties. The Parties agree that the allocation may
be amended or modified by mutual agreement to establish a final allocation prior
to the filing of the applicable Tax Returns of the Parties. The Parties shall
use such final allocation in all Tax Returns.
2.11. Employees. The Selling Parties acknowledge and agree that the Buyer
---------
is not obligated to hire any employee of the Seller who is currently engaged in
the conduct of the Business, and that the Seller shall retain all Liabilities
with respect to such employees. The Buyer shall bear no responsibility or
liability for any Liabilities owed to the Seller's employees on account of any
termination of their employment with the Seller, including but not limited to
separation and severance pay, vacation pay and other accrued paid time off, and
payments and other costs or expenses due under WARN or any other applicable
Legal Requirement, or for any employment-related Liabilities, including but not
limited to any Liabilities in respect of salary, wages, sick leave, holiday pay,
vacation benefits, medical, dental, disability, life, retirement and other
fringe benefits, or for any Liabilities arising under any Contractual Obligation
or Legal Requirement; and each Selling Party, jointly and severally with the
other Selling Party, will indemnify and hold harmless the Buyer from any and all
such Liabilities. Notwithstanding the foregoing, upon written notice to the
Seller within thirty (30) days from the date hereof, the Buyer may employ, or
retain as consultants, a limited number of the Seller's employees currently
engaged in the conduct of the Business. In the event the Buyer desires to employ
a limited number of the Seller's employees, the Buyer and the Seller shall
cooperate to effect an orderly transition with respect to such employees.
3. Representations and Warranties of the Selling Parties. Each Selling Party,
-----------------------------------------------------
jointly and severally with the other Selling Party, represents and warrants to
the Buyer that the statements contained in this (S) 3 are correct and complete
as of the date of this Agreement and, with respect to representations and
warranties set forth in (S)(S) 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.11, 3.14, 3.16
and 3.17, will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this (S) 3), except as set forth in the disclosure schedule
attached to this Agreement (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this (S) 3.
3.1. Organization of the Selling Parties. The Parent is a corporation,
-----------------------------------
and the Seller is a limited liability company, in each case duly organized,
validly existing, and in good standing under the laws of Mississippi. All of the
outstanding equity interests in the Seller are owned, beneficially and of
record, by the Parent. Copies of the Charter and By-Laws of each Selling Party,
each as amended to date, have been heretofore delivered to Buyer (or will be so
delivered
14
prior to the Closing) and are (or will be) accurate and complete. The Seller is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of the activities conducted by it in the
conduct of the Business or the character of the property owned, leased or
operated by it in the conduct of the Business make such qualification necessary
or appropriate except for those jurisdictions where the failure to be so
qualified has not had and could not reasonably be expected to have a Seller
Material Adverse Effect.
3.2. Authorization of Transaction. Each Selling Party has the power and
----------------------------
authority (including full limited liability company or corporate power and
authority, as applicable) to execute and deliver each Transaction Document to
which it is a party and to perform its obligations thereunder. All corporate and
other actions or proceedings to be taken by or on the part of each Selling Party
to authorize and permit the execution and delivery by each Selling Party of each
Transaction Document to which it is a party and the instruments required to be
executed and delivered by each Selling Party pursuant thereto, the performance
each Selling Party of its obligations thereunder, and the consummation by each
Selling Party of the transactions contemplated therein, have been duly and
properly taken. Each Transaction Document to which it is a party has been duly
executed and delivered by each Selling Party and is Enforceable against each
Selling Party.
3.3. Noncontravention. Neither the execution and the delivery of any
----------------
Transaction Document to which it is a party, nor the consummation of the
transactions contemplated thereby (including the assignments and assumptions
referred to in (S) 2), will (i) violate any Legal Requirement to which either
Selling Party or any of its property is subject or any provision of the Charter
or By-laws of either Selling Party or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any Contractual Obligation to which either Selling Party is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Lien upon any of its assets). Neither Selling Party needs to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any Governmental Authority in order for the Parties to consummate
the transactions contemplated by any Transaction Document (including the
assignments and assumptions referred to in (S) 2), other than filings to perfect
the Liens granted by the Security Agreements.
3.4. Brokers' Fees. Neither Selling Party has any Liability to pay any
-------------
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by any Transaction Document for which the Buyer could
become liable or obligated.
3.5. Title to Assets. The Seller has good and marketable title to, and the
---------------
power to sell or transfer to the Buyer, all of the Acquired Assets, free and
clear of all Liens and not subject to any Liabilities (other than Assumed
Liabilities).
3.6. All Assets Necessary to Conduct Business. The Acquired Assets and the
----------------------------------------
Excluded Assets together comprise all of the assets, properties and rights of
every type and description, real, personal, tangible and intangible used by the
Seller and used or useful in the conduct of the Business on the Balance Sheet
Date, and all assets of the Seller which have been acquired since the Balance
Sheet Date for use or used in the Business (other than assets which have been
disposed of since the Balance Sheet Date in the Ordinary Course of Business).
The
15
Seller holds directly, and not through any Subsidiary or any other Person, all
of the assets used or useful by the Parent and its Affiliates in the conduct of
the Business. Since January 1, 2000, the Business has at all times been
conducted directly by the Seller and neither the Parent nor any Subsidiary of
the Parent other than the Seller has ever taken any part in the conduct of the
Business.
3.7. Absence of Changes.
------------------
(a) Since the Balance Sheet Date, the Seller has conducted the
Business only in the Ordinary Course of Business and there has not been:
(i) any sale, lease, transfer, or assignment of any of the
Seller's assets, tangible or intangible, used or useful in the conduct
of the Business, other than sales of inventory for a fair
consideration in the Ordinary Course of Business and other than
dispositions of assets having a fair market value of less than
$100,000;
(ii) any Contractual Obligation (or series of related
Contractual Obligations) related to the conduct of the Business other
than in the Ordinary Course of Business;
(iii) any acceleration, termination, modification, or
cancellation of any Contractual Obligation (or series of Contractual
Obligations) relating to the conduct of Business;
(iv) creation or imposition of any Lien upon any Acquired
Asset;
(v) any capital investment in, any loan to, or any acquisition
of the securities or assets of, any other Person (or series of related
capital investments, loans and acquisitions), in each case relating to
the conduct of the Business, other than purchases of inventory,
materials and supplies in the Ordinary Course of Business;
(vi) any cancellation, compromise, waiver, or release of any
right or claim or Debt (or series of related rights and claims)
relating to the conduct of the Business;
(vii) any grant of any license or sublicense of any rights or
modified any rights under or with respect to, or entered into any
settlement regarding any infringement of the Seller's rights to, any
Intellectual Property relating to the conduct of the Business;
(viii) any threat or notification, orally or in writing, that,
and there has not been, one or more distributors, customers or
suppliers relating to the Business that have terminated or intend to
terminate their respective business relationships or have modified or
intend to modify such relationships with the Seller in a manner which
is less favorable to the Business or have agreed not to or will not
agree to do business on such terms and subject to conditions at least
as favorable as provided to the Business on the Balance Sheet Date,
and the Seller has no
16
knowledge of any Basis for any such termination or modification, in
each case which could reasonably be expected to have a Seller Material
Adverse Effect;
(ix) any damage, destruction, or loss (whether or not covered
by insurance) to its property used or useful in the conduct of the
Business; or
(x) any other occurrence, event, incident, action, failure to
act, or transaction outside the Ordinary Course of Business involving
the conduct of the Business, which could reasonably be expected to
have a Seller Material Adverse Effect.
(b) There are no outstanding claims with respect to any damage,
destruction or loss to any of the Seller's property used or useful in the
conduct of the Business, which could reasonably be expected to have a
Seller Material Adverse Effect.
3.8. Legal and Other Compliance. The Seller is in compliance with all
--------------------------
applicable Legal Requirements relating to the conduct of the Business, the
violation of which could have a Seller Material Adverse Effect, and no Action
has been filed or commenced against it alleging any failure so to comply.
Neither the ownership nor use of the Acquired Assets nor the conduct of the
Business conflicts with the rights of any other Person or violates, or with the
giving of notice or the passage of time or both will violate, conflict with or
result in a default, right to accelerate or loss of rights under, any terms or
provisions of either Selling Party's Charter or By-laws or any Lien, Contractual
Obligation or Legal Requirement to which either Selling Party is a party or by
which it may be bound or affected, except in each such case as could not
reasonably be expected to have a Seller Material Adverse Effect.
3.9. No Seller Material Adverse Effect. Between the Balance Sheet Date and
---------------------------------
the date hereof, there has not been any Seller Material Adverse Effect.
3.10. Intellectual Property.
---------------------
(a) The Seller owns or has the right to use pursuant to an
Enforceable Contractual Obligation all Intellectual Property necessary for
or used in the operation of the Business as presently conducted and as
presently proposed to be conducted. Subject to obtaining all necessary
consents as disclosed in (S) 3.17 of the Disclosure Schedule and subject to
(S) 2.9 hereof, each item of Acquired Intellectual Property will be owned
or available for use by the Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder. The Seller has taken all
necessary and desirable action to maintain and protect each item of
Intellectual Property that the Seller owns or uses in the conduct of the
Business.
(b) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties in connection with the conduct of the
Business, and there has never been any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Seller must license or refrain from
using any Intellectual Property rights of any third party). To the
Knowledge of the Selling Parties, no third party has interfered with,
infringed upon, misappropriated, or
17
otherwise come into conflict with any Intellectual Property rights of the
Seller relating to the conduct of the Business.
(c) Section 3.10(c) of the Disclosure Schedule identifies each patent
or registration which has been issued to the Seller with respect to the
Acquired Intellectual Property, identifies each pending patent application
or application for registration which has been made with respect to the
Acquired Intellectual Property, and identifies each license, agreement, or
other permission which the Seller has granted to any third party with
respect to any of the Acquired Intellectual Property (together with any
exceptions). The Seller will make available to the Buyer correct and
complete copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and has made available to
the Buyer correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such item.
Section 3.10(c) of the Disclosure Schedule also identifies each trade name
or unregistered Trademark used by the Seller in the conduct of the
Business.
(d) Section 3.10(d) of the Disclosure Schedule identifies each item
of Acquired Intellectual Property that any third party owns and that the
Seller uses or could use pursuant to an existing Contractual Obligation.
The Seller has delivered to the Buyer correct and complete copies of all
such Contractual Obligations (as amended to date).
(e) To the Knowledge of the Selling Parties, the Seller would not
interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties as a
result of the continued operation of the Business as presently conducted.
(f) Notwithstanding the foregoing provisions of this (S) 3.10, the
Selling Parties make no representation or warranty in this (S) 3.10 with
respect to the effect of any Contractual Obligation marked with an asterisk
on (S) 3.10(c) or (S) 3.10(d) of the Disclosure Schedule.
3.11. Inventories. The inventory of the Seller included in the Acquired
-----------
Assets consists of all manufactured and purchased parts, raw materials,
supplies, works-in-process and finished goods owned by Seller and used or useful
in the conduct of the Business, all of which are in conformity with the Seller's
written specifications therefor, are merchantable and fit or suitable and usable
for the production or completion of merchantable products for sale in the
Ordinary Course of Business, and none of which is obsolete, below standard
quality, damaged, or defective, except in each case to the extent of the
reserves therefore established in calculating the Raw Materials and Supply
Inventory Amount and the Work-in-Process and Finished Goods Inventory Amount.
3.12. Contracts. Schedule 2.1(e) and (S)(S) 3.10 and 3.12 of the Disclosure
---------
Schedule lists the following Contractual Obligations to which the Seller is a
party and which either (x) is in any way material to the conduct of the Business
or (y) relates to the conduct of the Business and is:
(a) any Contractual Obligation concerning confidentiality or
noncompetition;
18
(b) any Contractual Obligation between or among the Seller and any of
its Affiliates which is not on arms-length terms; or
(c) any Contractual Obligation under which the consequences of a
default or termination could have an Seller Material Adverse Effect.
The Seller has delivered to the Buyer a correct and complete copy of each
written Contractual Obligation (as amended to date) listed on Schedule 2.1(e) or
---------------
listed in (S)(S) 3.10 or 3.12 of the Disclosure Schedule and a written summary
setting forth the terms and conditions of each oral Contractual Obligation
referred to on Schedule 2.1(e) or listed in (S)(S) 3.10 or 3.12 of the
---------------
Disclosure Schedule. Except as disclosed in (S) 3.17 of the Disclosure
Schedule, with respect to each Contractual Obligation listed on Schedule 2.1(e):
---------------
(i) the Contractual Obligation is Enforceable and in full force and effect; (ii)
subject to the Buyer obtaining the necessary consents disclosed in (S) 3.17 of
the Disclosure Schedule, the Contractual Obligation will continue to be
Enforceable and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in (S) 2); (iii) no party is in breach or default,
and no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the Contractual Obligation; (iv) no party has repudiated any provision of the
Contractual Obligation; and (v) none of such Contractual Obligations is, when
considered singly or in the aggregate with others, unduly burdensome, onerous or
materially adverse to the Business.
3.13. Litigation. There are no Actions pending or, to the Knowledge of the
----------
Selling Parties, threatened that question the validity of any Transaction
Document or of any action taken or to be taken pursuant to or in connection with
the provisions of any Transaction Document nor, to the Knowledge of the Selling
Parties, is there any Basis for any such Action.
3.14. Product Warranties; Defects; Liability. Each product manufactured,
--------------------------------------
sold, leased, or delivered by the Seller in the conduct of the Business has been
in conformity in all material respects with all applicable Legal Requirements
and Contractual Obligations and all express and implied warranties.
3.15. Distributors, Customers, Suppliers. Section 3.15 of the Disclosure
----------------------------------
Schedule sets forth a complete and accurate list of (i) all of the distributors
for the Products indicating the Contractual Obligation existing, if any, with
each such distributor and the volume of Products distributed, (ii) the ten
largest customers (by dollar volume) of the Products during the Most Recent
Fiscal Year, indicating the existing Contractual Obligation with each such
customer by Product and (iii) all suppliers of significant materials or services
to the Seller in connection with the conduct of the Business, indicating the
Contractual Obligation for continued supply from such Person.
3.16. No Illegal Payments, Etc. In connection with the conduct of the
------------------------
Business, neither of the Selling Parties nor any of their respective directors,
officers, employees or agents, has (a) directly or indirectly given or agreed to
give any illegal gift, contribution, payment or similar benefit to any supplier,
customer, governmental official or employee or other person who was, is or may
be in a position to help or hinder the Seller (or assist in connection with any
actual or proposed transaction) or made or agreed to make any illegal
contribution, or reimbursed any
19
illegal political gift or contribution made by any other person, to any
candidate for federal, state, local or foreign public office (i) which might
subject the Seller or the Buyer to any damage or penalty in any civil, criminal
or governmental litigation or proceeding or (ii) the non-continuation of which
has had or could reasonably be expected to have a Seller Material Adverse Effect
or (b) established or maintained any unrecorded fund or asset or made any false
entries on any books or records for any purpose.
3.17. Consents. Section 3.17 of the Disclosure Schedule sets forth a true,
--------
correct and complete list of the identities of any Person whose consent or
approval is required and the matter or Contractual Obligation to which such
consent relates in connection with the transfer, assignment or conveyance by the
Seller of any of the Acquired Assets.
3.18. Financial Statements. Attached hereto as Exhibit J are (i) the
--------------------
unaudited balance sheet and statements of income, changes in stockholders'
equity and cash flow relating solely to the Business for the fiscal year ended
December 31, 2000 and (ii) the unaudited balance sheets and statements of
income, changes in stockholders' equity and cash flow relating solely to the
Business for the 3 months ended March 31, 2001 ((i) and (ii) together, the
"Financial Statements"). The Financial Statements (including with respect to the
financial statements referred to in clause (i) only, the notes thereto) have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, are correct and complete and present fairly the
financial condition of the Business for such periods and are consistent with the
books and records of the Seller, subject to normal and recurring year end
adjustments and in the case of the unaudited financial statements as of March
31, 2001, the absence of notes.
4. Representations and Warranties of the Buyer. The Buyer represents and
-------------------------------------------
warrants to each Selling Party that the statements contained in this (S) 4 are
correct and complete as of the date of this Agreement and, with respect to
representations and warranties set forth in (S)(S) 4.1, 4.2, 4.3, 4.6, 4.7 and
4.8, will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this (S) 4).
4.1. Organization of the Buyer. The Buyer is a corporation duly organized,
-------------------------
validly existing, and in good standing under the laws of the State of Delaware.
Copies of the Charter and By-laws of the Buyer, each as amended to date, have
been heretofore delivered to Seller (or will be so delivered prior to the
Closing) and are (or will be) accurate and complete. The Buyer is qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of the activities conducted by it in the conduct
of its business or the character of the property owned, leased or operated by it
in the conduct of its business make such qualification necessary or appropriate,
except for those jurisdictions where the failure to be so qualified has not had
and could not reasonably be expected to have a Buyer Material Adverse Effect.
4.2. Authorization for Transaction. The Buyer has the power and authority
-----------------------------
(including full corporate power and authority) to execute and deliver each
Transaction Document to which it is a party and to perform its obligations
thereunder. All corporate and other actions and proceedings to be taken by or on
the part of the Buyer to authorize and permit the execution and delivery by the
Buyer of each Transaction Document to which it is a party and the instruments to
be executed and delivered by the Buyer pursuant thereto, and the performance of
the Buyer of its
20
obligations thereunder, and the consummation by the Buyer of the transactions
contemplated therein, have been duly and properly taken. Each Transaction
Document to which the Buyer is a party has been duly executed and delivered by
the Buyer an is Enforceable against the Buyer.
4.3. Noncontravention. Neither the execution and the delivery of any
----------------
Transaction Document to which it is a party, nor the consummation of the
transactions contemplated thereby (including the assignments and assumptions
referred to in (S) 2), will (i) violate any Legal Requirement to which the Buyer
is subject or any provision of its Charter or Bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any Contractual Obligation to which the Buyer is a
party or by which it is bound or to which any of its assets is subject. The
Buyer does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Agency in order for the
Parties to consummate the transactions contemplated by any Transaction Document
(including the assignments and assumptions referred to in (S) 2), other than
filings to perfect the Liens granted by the Security Agreements.
4.4. Legal and Other Compliance. The Buyer is in compliance with all
--------------------------
applicable Legal Requirements relating to the conduct of its business, the
violation of which could have a Buyer Material Adverse Effect, and no Action has
been filed or commenced against it alleging any failure so to comply. The
conduct of its business does not conflict with the rights of any other Person or
violates, or with the giving of notice or the passage of time or both will
violate, conflict with or result in a default, right to accelerate or loss of
rights under, any terms or provisions of the Buyer's Charter or By-laws or any
Lien, Contractual Obligation or Legal Requirement to which the Buyer is a party
or by which it may be bound or affected, except in each such case as could not
reasonably be expected to have a Buyer Material Adverse Affect.
4.5. Litigation. There are no Actions pending or, to the Knowledge of the
----------
Buyer, threatened that question the validity of any Transaction Document or of
any action taken or to be taken pursuant to or in connection with the provisions
of any Transaction Document nor, to the Knowledge of the Buyer, is there any
Basis for any such Action.
4.6. No Illegal Payments, Etc. In connection with the conduct of its
------------------------
business, neither the Buyer nor any of its respective directors, officers,
employees or agents, has (a) directly or indirectly given or agreed to give any
illegal gift, contribution, payment or similar benefit to any supplier,
customer, governmental official or employee or other person who was, is or may
be in a position to help or hinder the Buyer (or assist in connection with any
actual or proposed transaction) or made or agreed to make any illegal
contribution, or reimbursed any illegal political gift or contribution made by
any other person, to any candidate for federal, state, local or foreign public
office (i) which might subject the Buyer to any damage or penalty in any civil,
criminal or governmental litigation or proceeding or (ii) the non-continuation
of which has had or could reasonably be expected to have a Buyer Material
Adverse Effect or (b) established or maintained any unrecorded fund or asset or
made any false entries on any books or records for any purpose.
21
4.7. Brokers' Fees. The Buyer does not have any Liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by any Transaction Document for which either Selling
Party could become liable or obligated.
4.8. Security Documents. Each Security Agreement will create in favor of
------------------
the Seller a legal, valid and enforceable first priority security interest in
the Acquired Assets subject thereto. When financing statements in appropriate
form are filed in the appropriate jurisdictions, each Security Agreement shall
provide a fully perfected, first priority purchase money Lien on, and security
interest in, all right, title and interest of the Buyer in the Acquired Assets
subject thereto, as security for the obligations of the Company under the Note
secured thereby, in each case prior and superior in right to any other.
4.9. Financial Statements. The Buyer has heretofore furnished to the
--------------------
Seller copies of the following:
(a) the Buyer's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000; and
(b) the Buyer's Quarterly Report on Form 10-Q for each of the fiscal
quarters ended December 31, 2000 and March 31, 2001.
The audited consolidated balance sheets of the Buyer and its Subsidiaries
at September 30, 2000 and September 30, 1999 and the related audited
consolidated statements of operations, changes in stockholders' equity and cash
flows for the fiscal years then ended included in the 2000 Form 10-K of the
Buyer were prepared in conformity with generally accepted accounting principles
applied on a consistent basis (except for changes, if any, disclosed therein and
subject to the effects of the contingencies described therein). The unaudited
consolidated balance sheets of the Buyer and its Subsidiaries at December 31,
2000 and March 31, 2001 and the related unaudited consolidated statements of
operations, changes in stockholders' equity and cash flows for the fiscal
quarters then ended included in the December 31, 2000 and March 31, 2001 Forms
10-Q of the Buyer were prepared in conformity with generally accepted accounting
principles applied on a consistent basis (except for changes, if any, disclosed
therein and the absence of full footnotes, and subject to the effects of the
contingencies described therein). Such statements of operations and cash flows,
together with the notes thereto, present fairly the consolidated results of
operations and cash flows of the Buyer and its Subsidiaries for the respective
periods covered, and such balance sheets, together with the notes thereto,
present fairly the consolidated financial condition of the Buyer and its
Subsidiaries as of their respective dates.
4.10. No Buyer Material Adverse Effect. Except as disclosed in the December
--------------------------------
31, 2000 or the March 31, 2001 Forms 10-Q of the Buyer, between September 30,
2000 and the date of this Agreement, there has been no Buyer Material Adverse
Effect.
5. Covenants. The Parties agree as follows:
---------
5.1. General. Each of the Parties will use its best efforts to take all
-------
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
(S) 6).
22
5.2. Notices and Consents. The Selling Parties will give any notices to
--------------------
third parties, and will use its best efforts to obtain any third party consents,
that are necessary or desirable to transfer the Acquired Assets to the Buyer.
5.3. Operation of Business. Until the Closing Date, the Seller will not
---------------------
engage in any practice, take any action, or enter into any transaction with
respect to the conduct of the Business outside the Ordinary Course of Business,
and will continue to operate the Business in the Ordinary Course of Business.
Without limiting the generality of the foregoing, the Seller will use reasonable
efforts to preserve for the benefit of Buyer the goodwill of the Seller's
customers, suppliers and others having business relations with it relating to
the Business. Notwithstanding the foregoing, the Seller will take all actions
reasonably requested by the Buyer to transfer all or any part of the Business to
the Buyer in anticipation of the Closing.
5.4. Employees. As previously disclosed by the Selling Parties to the
---------
Buyer, the Seller will provide cash incentives to employees in order to induce
them to continue to remain employees until the Streamwood Facility is closed.
5.5. Full Access. The Selling Parties will permit representatives of the
-----------
Buyer to have reasonable access to all premises, properties, personnel, books,
records (including Tax records), Contractual Obligations, and documents of or
pertaining to the Business.
5.6. Notice of Developments. Each Party will give prompt written notice to
----------------------
the other Party of any development causing a breach of any of its own
representations and warranties in (S) 3 and (S) 4. No disclosure by any Party
pursuant to this (S) 5.6, however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentations, breach of
warranty, or breach of covenant.
5.7. Exclusivity. Except to the extent contemplated by the Security
-----------
Agreements, the Seller will not (and the Seller will not cause or permit any of
its officers, directors, agents or Affiliates to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating or
enter into or consummate any transaction relating to the acquisition of any
portion of the Acquired Assets (other than sales of inventory in the Ordinary
Course of Business), including any acquisition structured as a merger,
consolidation, or share exchange or (ii) participate in any discussions or
negotiations regarding the foregoing.
5.8. Access to Records after Closing.
-------------------------------
(a) For a period of five (5) years after the Closing Date, either of
the Selling Parties or their respective representatives shall have
reasonable access to all of the books and records of the Seller to the
extent that such access may reasonably be required by either of the Selling
Parties in connection with matters relating to or affected by the
operations of the Seller in the conduct of the Business prior to the
Closing Date. In addition, either of the Selling Parties or their
respective representatives shall have reasonable access to all of the books
and records of the Buyer to the extent that such access may reasonably be
required by either of the Selling Parties in connection with verifying the
timing and amounts of payments to be made by the Buyer pursuant to (S)
2.5(b) above. Such access shall be afforded by the Buyer upon receipt of
reasonable
23
advance notice and during normal business hours. The Selling Parties shall
be solely responsible for any costs or expenses incurred by it pursuant to
this (S) 5.8(a). If the Buyer shall desire to dispose of any of such books
and records prior to the expiration of such five-year period, the Buyer
shall, prior to such disposition, give the Selling Parties a reasonable
opportunity, at the Selling Parties' expense, to segregate and remove such
books and records as the Selling Parties may select.
(b) For a period of five (5) years after the Closing Date, the Buyer
and its representatives shall have reasonable access to all of the books
and records of the Seller to the extent that such access may reasonably be
required by the Buyer in connection with matters relating to or affected by
the operations of the Seller in the conduct of the Business prior to the
Closing Date. Such access shall be afforded by the Selling Parties upon
receipt of reasonable advance notice and during normal business hours. The
Buyer shall be solely responsible for any costs or expenses incurred by it
pursuant to this (S) 5.8(b). If the Selling Parties shall desire to dispose
of any of such books and records prior to the expiration of such five-year
period, the Selling Parties shall, prior to such disposition, give the
Buyer a reasonable opportunity, at the Buyer's expense, to segregate and
remove such books and records as the Buyer may select.
5.9. Transfer Taxes. Each of the Seller and the Buyer agrees to pay one-
--------------
half of all Taxes on the transfer of the Acquired Assets hereunder; provided,
--------
however, that any such Taxes based upon, or measured by, profits, revenues,
-------
gains, depreciation or income shall be borne solely by the Party on which they
are imposed.
5.10. Slitting and Shipping Operations. For a period of four (4) months
--------------------------------
from the Closing Date, the Seller shall maintain the necessary staff of
employees at the Streamwood Facility to slit and ship the Inventories when sold.
The Buyer shall reimburse the Seller for the direct labor costs at the
prevailing wage rates and benefit percentages in the monthly amounts specified
in Schedule 5.10 and shall pay $128,000 per month (or $116,000 per month should
-------------
Xxxxxx Xxxxx accept employment with the Buyer) for four (4) months, payable on
the 15th day after the end of each month. In addition, the Buyer shall reimburse
the Seller for any out-of-pocket cost of supplies, third-party cost of repairs,
warehousing and other similar costs incurred by the Seller in slitting and
shipping the Inventories pursuant to this (S) 5.10 and not otherwise paid by the
Buyer.
5.11. Accounts Receivable. For a period not exceeding six (6) months after
-------------------
the Closing Date, the Buyer shall be responsible for managing the collection of
accounts receivable retained by the Seller and relating to the Business;
provided, however, that the Buyer shall not be required to condition any sale to
-------- -------
a customer on the payment by such customer of all or any part of such an account
receivable, commence any collection proceedings in the nature of litigation, or
to take any other action which is or may be adverse to such customer or the
Buyer's relationship with such customer.
(a) The Buyer shall be required to use good faith reasonable
commercial efforts, including following its own internal collection
policies, to collect such accounts receivable. Upon the Buyer's request,
the Seller will provide the temporary services of certain of the Seller's
employees to assist in the collection of accounts receivable. The
24
Buyer shall reimburse the Seller for the direct labor costs of such
employees at the prevailing wage rates.
(b) Seller shall establish and maintain a lock box account. Receipts
for the accounts receivable will be directed to the Seller's lock box
account as indicated by the accompanying invoice. Cash received in either
Party's account that is intended to pay a receivable of the other Party, as
indicated by the accompanying invoice, shall be remitted to the other Party
within ten (10) Business Days. Receipts for accounts receivable that do not
indicate a specific invoice will be applied to the oldest balance not in
specific customer dispute.
(c) Six (6) months after the Closing Date, the Seller will assume
all collection activities and responsibilities for uncollected accounts
receivable retained by the Seller. After the Seller assumes all collection
activities and responsibilities for uncollected accounts receivable
retained by the Seller, the Seller shall give the Buyer not less than two
(2) Business Days' notice of its intent to commence any collection
proceeding in the nature of litigation to collect any such accounts
receivable. The Seller shall not commence such proceeding until two (2)
Business Days have elapsed since the Buyer has received notice. The Buyer
may, in its sole discretion, give notice to the Seller within two (2)
Business Days of the receipt of notice from the Seller that the Buyer may
wish to purchase the accounts receivable in questions and, if the Buyer
gives such notice, the Seller and the Buyer shall in good faith negotiate
the possible terms and conditions of such a purchase. If the Buyer and the
Seller have not been able to agree on such terms and conditions within five
(5) Business Days of the date the Buyer gives such notice, the Seller shall
thereupon be free to commence such proceeding.
5.12. Closing of Streamwood Facility; Maintenance, Storage, Removal and
-----------------------------------------------------------------
Shipment of Acquired Assets.
---------------------------
(a) The parties acknowledge that the Acquired Assets are located on
real property and in buildings which, at and after the Closing, either will
be owned by Seller or will be owned by a third party to which Seller has
sold such real property and buildings (the "Third Party Owner") either as
of the Closing or sometime after the Closing. The parties further
acknowledge that, as of the Closing, substantially all of the Acquired
Assets which are tangible (excluding Inventory which is held in third party
warehouses or on consignment) will be located at the Streamwood Facility.
(b) On or prior to the Closing Date, Seller shall discontinue all
manufacturing activities at the Streamwood Facility, except for its
slitting and shipping operations, as contemplated in Section 5.10 hereof,
and except as may be mutually agreed to in writing by the parties.
(c) Seller shall, and (if applicable) shall cause the Third Party
Owner to, continue to allow the Acquired Assets to remain in the Streamwood
Facility as follows:
(i) In the event the Asset Purchase Price is paid in full at
Closing, then Seller shall, and (if applicable) shall cause the Third
Party Owner to, continue to
25
allow the Acquired Assets to remain in the Streamwood location for a
period of not less than six (6) months after the Closing.
(ii) In the event Buyer delivers a Purchase Note to Seller as
part of the Asset Purchase Price, the Acquired Assets shall remain in
the Streamwood Facility and Buyer shall not be allowed to remove any
of the Acquired Assets (other than (x) Inventory located at the
Streamwood Facility which is to be sold or consumed by Buyer and (y)
Acquired Assets sold pursuant to Section 5.12(c)(iii) below) until
such time as the Purchase Note is paid in full. Once the Purchase Note
is paid in full, then Seller shall, and (if applicable) shall cause
the Third Party Owner to, continue to allow the Acquired Assets to
remain in the Streamwood Facility until the date which is the earlier
of (x) six (6) months after the date on which the Purchase Note is
paid in full or (y) one (1) year after the Closing Date; provided,
--------
however, that such date shall in no event be earlier than the date
-------
which is three (3) months after the date on which the Purchase Note is
paid in full. At such time as the Acquired Assets are no longer
allowed to remain in the Streamwood Facility pursuant to the
immediately preceding sentence, the Buyer will remove all Acquired
Assets from the Streamwood Facility in accordance with the other
provisions of this (S) 5.12.
(iii) If Buyer and Seller mutually agree, Seller will, and will
(if applicable) cause the Third Party Owner to, from time to time
allow Buyer reasonable access to the Acquired Assets for the express
intent of selling all or a portion of the Acquired Assets. In the
event Seller and Buyer agree to the sale of any Acquired Assets in
accordance this Section 5.12(c)(iii), the proceeds of such sale will
be paid to Seller as a prepayment of the Purchase Note. Seller shall
not unreasonably withhold its consent to any such sale proposed by
Buyer.
In the event the Asset Purchase Price is paid in full at Closing as set
forth in (i) above or when the Purchase Note is paid in full as set forth
in (ii) above, or if all or any portion of the Acquired Assets are to be
sold as set forth in (iii) above, Seller shall, and (if applicable) shall
cause the Third Party Owner to, give Buyer and its representatives all
reasonable access to the Acquired Assets for the purposes of dismantling,
crating and shipping any equipment included in the Acquired Assets. From
and after the Closing, Seller shall use reasonable efforts to keep Seller's
employees, agents and representatives away from the Acquired Assets to the
extent that they remain in Seller's Streamwood Facility, except as
contemplated in Section 5.10 hereof. From and after the date that the Note
is paid in full, Buyer shall be solely responsible for the Acquired Assets,
including without limitation the protection and insuring thereof and all
Taxes relating thereto.
(d) Seller shall, and (if applicable) shall cause the Third Party
Owner to, maintain all insurance, security, services and utilities relating
to the Streamwood Facility so long as any of the Acquired Assets remain
therein, and, prior to the Closing, Seller shall maintain all insurance on
the Acquired Assets on the same terms and conditions as such insurance
exists on the date hereof.
26
(e) From and after the Closing, Buyer shall maintain all insurance
relating to the Acquired Assets in an amount sufficient to cover the
Purchase Note in the event of a property loss and consistent with Buyer's
customary insurance practice for other types of loss, and shall name the
Selling Parties and (if applicable) the Third Party Owner as additional
insureds and lienholders on any polices of insurance covering only the
Acquired Assets.
(f) When Buyer removes the Acquired Assets from the Streamwood
Facility, Buyer shall not be required to restore or repair those areas of
the Streamwood Facility which may be required to be damaged in order to
separate and remove the Acquired Assets from the Streamwood Facility.
Notwithstanding the immediately preceding sentence, Buyer shall be
responsible for any and all other damage caused by Buyer, its employees,
agents and contractors to the Streamwood Facility other than such damage as
may be reasonably necessary in connection with the separation and removal
of the Acquired Assets from the Streamwood Facility.
(g) Prior to commencing removal of any of the Acquired Assets, Buyer
shall furnish to the Selling Parties and (if applicable) the Third Party
Owner certificates of insurance from Buyer's insurance carrier and from the
insurance carrier of the Person which is to perform the removal activity.
Such certificates of insurance shall be in such amounts and with such
deductibles as may be reasonably required by the Selling Parties and (if
applicable) the Third Party Owner; provided, however, that such amounts of
-------- -------
coverage and deductibles must be reasonable in light of the removal
activity to be performed and shall name the Selling Parties and (if
applicable) the Third Party Owner as an additional insured.
(h) Each Person, including without limitation Buyer, which is
removing any of the Acquired Assets shall carrier workers compensation as
required by the law of the State of Illinois and shall furnish evidence of
the same to the Selling Parties and (if applicable) the Third Party Owner
prior to commencing any work at the Streamwood Facility.
(i) All Persons while on the Streamwood Facility shall comply with
all Federal, state and local laws, rules and regulations and shall further
comply with Seller's and (if applicable) the Third Party Owner's reasonable
general safety rules while on the Streamwood Facility.
(j) After the Closing, the Selling Parties and (if applicable) the
Third Party Owner shall have no obligation whatsoever to maintain, repair
and replace any Equipment included in the Acquired Assets, including but
not limited to the Equipment used for the slitting and shipping operations
contemplated in Section 5.10 hereof and any Equipment used for
manufacturing if the parties have mutually agreed in writing to continue
manufacturing operations after the Closing. Buyer specifically understands,
agrees and acknowledges that from and after the Closing Date all costs and
expenses for repairing and maintaining repairing the Equipment shall be at
the sole cost and expense of Buyer and all obligation to repair and
maintain the Equipment shall be the sole responsibility of Buyer.
27
(k) Buyer agrees to save harmless and indemnify the Selling Parties
and their successors and assigns for any loss, cost, damage or injury
arising or resulting from acts or omissions of the Buyer or its agents in
connection with their activities in the Streamwood Facility and all work
and activities undertaken by the Buyer pursuant to this Agreement shall be
undertaken by qualified personnel. Buyer agrees to use reasonable
commercial efforts to obtain the agreement of any third party contractors
performing work on Buyer's behalf at the Streamwood Facility to indemnify
the Selling Parties and their successors and assigns for any loss, cost,
damage or injury arising or resulting from acts or omissions of such third
party contractor. The provisions of this (S) 5.12(k) are in addition to the
indemnities provided elsewhere in this Agreement.
(l) Each Selling Party, jointly and severally with the other Selling
Party, agrees to save harmless and indemnify the Buyer and its successors
and assigns for any loss, cost, damage or injury arising or resulting from
acts or omissions of either Selling Party or the agents of either of them
in connection with their activities in the Streamwood Facility and all work
and activities undertaken by each Selling Party pursuant to this Agreement
shall be undertaken by qualified personnel. Buyer agrees to use reasonable
commercial efforts to obtain the agreement of any third party contractors
performing work on behalf of either Selling Party at the Streamwood
Facility to indemnify the Buyer and its successors and assigns for any
loss, cost, damage or injury arising or resulting from acts or omissions of
such third party contractor. The provisions of this (S) 5.12(l) are in
addition to the indemnities provided elsewhere in this Agreement.
5.13. Audited Financial Statements. On or prior to May 31, 2001, the Seller
----------------------------
shall provide to the Buyer the audited balance sheet and statements of income,
changes in stockholders' equity and cash flow relating solely to the Business
for the fiscal year ended December 31, 2000. Such financial statements
(including the notes thereto) shall have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, shall be
correct and complete and present fairly the financial condition of the Business
for such periods, shall be are consistent with the books and records of the
Seller and shall not differ in any material respect from the financial
statements for such fiscal year attached hereto as Exhibit J.
5.14. Prepayment of Purchase Note. The Buyer shall use reasonable
---------------------------
commercial efforts to prepay the Purchase Note in full at such time, if any, as
such prepayment will not be in violation of, or cause a default under, any
Contractual Obligation of the Buyer and, after giving effect thereto, the
Company believes that it will have sufficient liquidity to fund its ongoing
operations and working capital needs.
5.15. Future Assurances. At any time and from time to time after the
-----------------
Closing, at the request of any Party and without further consideration, each
other Party will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such action as the requesting
Party may reasonably determine is necessary to effect the transfer of the
Acquired Assets and the other terms and conditions of the Transaction Documents.
6. Conditions to Obligation to Close.
---------------------------------
28
6.1. Conditions to Obligation of the Buyer. The obligation of the Buyer to
-------------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties set forth in (S) 3 shall have been true and correct in all
respects as of the date of this Agreement, and the representations and
warranties set forth in (S)(S) 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.11, 3.14,
3.16 and 3.17 shall be deemed to have been made again at and as of the
Closing Date and shall then be true and correct in all respects;
(b) Performance by Selling Parties. The Selling Parties shall have
------------------------------
performed and complied in all material respects with all of their
covenants, agreements and obligations hereunder through the Closing;
(c) Closing of the Streamwood Facility. Except solely to the extent
----------------------------------
required to comply with (S) 5.10, the Selling Parties shall have: (i)
ceased all manufacturing operations at the Streamwood Facility; (ii) closed
the Streamwood Facility in accordance with (S) 5.12; and (iii) terminated
the employment of all of the employees of the Seller except those employees
that are to be retained by the Seller.
(d) Consents. The Selling Parties shall have procured all of the
--------
governmental approvals, consents or authorizations and third party consents
specified in (S) 3.17 and (S) 5.2;
(e) Absence of Litigation. No Action shall be pending or threatened
---------------------
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement or (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation;
(f) Certificates. The Selling Parties shall have delivered to the
------------
Buyer a certificate to the effect that each of the conditions specified in
(S)(S) 6.1(a)-(e) are satisfied in all respects;
(g) Opinion. The Buyer shall have received from counsel to the
-------
Selling Parties an opinion in form and substance as set forth in Exhibit K
attached hereto, addressed to the Buyer, and dated as of the Closing Date;
(h) All Necessary Actions. All actions reasonably necessary or
---------------------
desirable to be taken by either Selling Party in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents reasonably required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer.
The Buyer may waive any condition specified in this (S) 6.1 if it executes
a writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.
29
6.2. Conditions to Obligations of the Selling Parties. The obligation of
------------------------------------------------
the Selling Parties to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties set forth in (S) 4 shall have been true and correct in all
respects as of the date of this Agreement, and the representations and
warranties set forth in (S)(S) 4.1, 4.2, 4.3, 4.6, 4.7 and 4.8 shall be
deemed to have been made again at and as of the Closing Date and shall then
be true and correct in all respects;
(b) Performance by Buyer. The Buyer shall have performed and
--------------------
complied in all material respects with all of its covenants, agreements and
obligations hereunder through the Closing;
(c) Absence of Litigation. No Action shall be pending or threatened
---------------------
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement or (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(d) Certificate. The Buyer shall have delivered to the Selling
-----------
Parties a certificate to the effect that each of the conditions specified
in (S)(S) 6.2(a)-(c) is satisfied in all respects;
(e) Opinion. The Seller shall have received from counsel to the
-------
Buyer an opinion in form and substance as set forth in Exhibit L attached
hereto, addressed to the Selling Parties, and dated as of the Closing Date;
and
(f) All Necessary Actions. All actions reasonably necessary or
---------------------
desirable to be taken by Buyer in connection with the consummation of the
transactions contemplated hereby and all certificates, opinions,
instruments and other documents reasonably required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Selling Parties.
The Selling Parties may waive any condition specified in this (S) 6.2 if it
executes a writing so stating at or prior to the Closing and such waiver shall
not be considered a waiver of any other provision in this Agreement unless the
writing specifically so states.
7. Confidentiality. Each Selling Party will treat and hold as such all of the
---------------
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and, subject to (S) 5.8 above, deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession. In the event that either Selling Party is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, the Selling Parties will
notify the Buyer promptly of the request or requirement so that the Buyer may
seek an appropriate protective order or waive compliance
30
with the provisions of this (S) 7. If, in the absence of a protective order or
the receipt of a waiver hereunder, either Selling Party is compelled to disclose
any Confidential Information to any tribunal or else stand liable for contempt,
the Selling Parties may disclose the Confidential Information to the tribunal;
provided, however, that the Selling Parties shall use their best efforts to
-------- -------
obtain, at the request of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate.
8. Noncompetition.
--------------
8.1. Agreements Not to Compete.
-------------------------
(a) Each Selling Party, jointly and severally with the other Selling
Party, agrees that, in consideration of the purchase by the Buyer
hereunder, neither it nor any of its Subsidiaries or Affiliates shall, on
or prior to the date which is four (4) years after the Closing Date,
directly or indirectly, install, begin to install, or assist others in
installing any oriented polypropylene films production equipment; provided,
--------
however, that the foregoing provisions of this clause shall not be
-------
construed to prevent: (i) the Parent, a Subsidiary of the Parent or any
other Affiliate of the Parent from engaging in any business in competition
with the Business as a result of an acquisition of the assets or business
of another Person if no more than 10% of the revenues of such assets or
business are derived from business competing with the Business, and if the
revenues of such assets or business derived from business competing with
the Business constitute less than 10% of the revenues of the Buyer,
determined in each case for each of the three fiscal years most recently
ended after giving effect on a pro forma basis to any acquisitions or
dispositions of businesses or assets; or (ii) any Person who is not an
Affiliate of the Parent that acquires the Parent, an Affiliate of the
Parent, or a Subsidiary of the Parent from engaging in any business in
competition with the Business, provided that no person who ever had any
--------
managerial responsibilities in connection with the conduct of the Business
shall be employed by, a consultant to or affiliated with such acquiror.
(b) Each Selling Party, jointly and severally with the other Selling
Party, agrees that, in consideration of the purchase by the Buyer
hereunder, neither it nor any of its Subsidiaries or Affiliates shall, on
or prior to the date which is two (2) years after the Closing Date,
directly or indirectly, run, own, manage, operate, control, be employed by,
provide consulting services to, be an officer or director of, participate
in, lend its name to, invest in or be connected in any manner with the
management, ownership, operation or control of any business, venture or
activity which is engaged in the oriented polypropylene films business
(including parts and accessories therefor), except for conducting its
slitting and shipping operations as contemplated by (S) 5.10; provided,
--------
however, that the foregoing provisions of this clause (a) shall not apply
-------
to: (i) any business other than the Business in which the Parent or any of
its Subsidiaries or Affiliates other than the Seller was engaged on
December 31, 2000, and any other businesses other than the Business
reasonably related thereto; (ii) prohibit the Parent, an Affiliate of the
Parent, or a Subsidiary of the Parent from engaging in any business in
competition with the Business as a result of an acquisition of the assets
or business of another Person if no more than 10% of the revenues of such
assets or business are derived
31
from business competing with the Business, and if the revenues of such
assets or business derived from business competing with the Business
constitute less than 10% of the revenues of the Buyer, determined in each
case for each of the three fiscal years most recently ended after giving
effect on a pro forma basis to any acquisitions or dispositions of
businesses or assets; or (iii) to prevent any Person who is not an
Affiliate of the Parent that acquires the Parent, an Affiliate of the
Parent, or a Subsidiary of the Parent from engaging in any business in
competition with the Business, provided that no person who ever had any
--------
managerial responsibilities in connection with the conduct of the Business
shall be employed by, a consultant to or affiliated with such acquiror.
8.2. Solicitation of the Buyer's Employees by the Seller. Each Selling
---------------------------------------------------
Party, jointly and severally with the other Selling Party, further agrees that
for a period of two (2) years after the Closing Date the neither it nor any of
its Affiliates will directly or indirectly without the prior written consent of
the Buyer, recruit, offer employment, employ, engage as a consultant, lure or
entice away or in any other manner persuade or attempt to persuade any person
who is an employee of the Buyer or any Subsidiary, group, or division of Buyer
or any Affiliate thereof, to leave the employ of Buyer unless such person has
been terminated by the Buyer or an Affiliate of Buyer; provided, however, that
-------- -------
the Parent shall have no obligations under this (S) 8.2 with respect to any such
employee with whom the Parent had no contact during the negotiation of this
Agreement or the consummation of the transactions contemplated hereby.
8.3. Solicitation of the Seller's Employees by the Buyer. The Buyer agrees
---------------------------------------------------
that for a period of two (2) years after the Closing Date, neither it nor any of
its Affiliates will directly or indirectly without the prior written consent of
the Parent, recruit, offer employment, employ, engage as a consultant, lure or
entice away or in any other manner persuade or attempt to persuade any person
who is an employee of the Parent or any Subsidiary, group, or division of Parent
or any Affiliate thereof (except for those employees of the Seller identified
pursuant to (S) 2.11 hereof), to leave the employ of Parent unless such person
has been terminated by the Parent or an Affiliate of Parent; provided, however,
-------- -------
that the Buyer shall have no obligations under this (S) 8.3 with respect to any
such employee with whom the Buyer had no contact during the negotiation of this
Agreement or the consummation of the transactions contemplated hereby.
9. Indemnification.
---------------
9.1. Survival of Representations and Warranties.
------------------------------------------
(a) All of the representations and warranties of the Selling Parties
(except for those contained in (S)(S) 3.1 (Organization of the Selling
Parties), 3.2 (Authorization of Transaction), 3.3 (Noncontravention), 3.4
(Brokers' Fees) and 3.5 (Title to Assets)), contained herein or in any
document, certificate or other instrument required to be delivered
hereunder shall survive the Closing and continue in full force and effect
until one (1) year after the Closing Date. The representations and
warranties of the Selling Parties contained in (S)(S) 3.3 and 3.4 shall
survive the Closing and shall continue in full force and effect for a
period of three (3) years thereafter. The representations and warranties of
the Selling Parties contained in (S)(S) 3.1, 3.2 and 3.5 shall survive the
Closing and shall continue in full force and effect without limit as to
time (subject to any applicable statutes of limitations and any extensions
or waivers thereof).
32
(b) All of the representations and warranties of the Buyer (except
for those contained in (S)(S) 4.1 (Organization of the Buyer), 4.2
(Authorization of Transaction), 4.3 (Noncontravention), 4.7 (Brokers' Fees)
and 4.8 (Security Documents)) contained herein or in any document,
certificate or other instrument required to be delivered hereunder shall
survive the Closing and shall continue in full force and effect until one
(1) year after the Closing Date. The representations and warranties of the
Buyer contained in (S)(S) 4.3 and 4.7 shall survive the Closing and shall
continue in full force and effect for a period of three (3) years
thereafter. The representations and warranties of the Buyer contained in
(S)(S) 4.1, 4.2 and 4.8 shall survive the Closing and shall continue in
full force and effect without limit as to time (subject to any applicable
statutes of limitations and any extensions or waivers thereof).
(c) The termination of any such representation and warranty,
however, shall not affect any claim for breaches of representations or
warranties if written notice thereof is given to the breaching party or
parties prior to such termination date.
(d) All covenants and indemnities of any Party in this Agreement or
in any document or certificate delivered hereunder shall, unless otherwise
specifically provided therein, remain in full force and effect forever.
9.2. Indemnity by Selling Parties. Each Selling Party, jointly and
----------------------------
severally with the other Selling Party, hereby agrees to indemnify, defend and
hold harmless the Buyer and its directors, officers and Affiliates against and
in respect of all Liabilities, obligations, judgments, Liens, injunctions,
charges, orders, decrees, rulings, damages, dues, assessments, Taxes, losses,
fines, penalties, expenses, fees, costs, amounts paid in settlement (including
reasonable attorneys' and expert witness fees and disbursements in connection
with investigating, defending or settling any action or threatened action)
(collectively, the "Losses") and that result from:
(a) the inaccuracy of any representation or warranty made by either
Selling Party herein, or resulting from any misrepresentation, breach of
warranty, in each case as if all materiality provisions were not contained
therein, or nonfulfillment of any agreement or covenant of either Selling
Party contained herein or in any agreement or instrument required to be
entered into in connection herewith or from any misrepresentation in or
omission from any schedule, document, certificate or other instrument
required to be furnished by the either Selling Party hereunder; provided,
--------
however, that the Selling Parties shall be liable under this (S) 9.2(a) in
-------
respect of Losses only if the aggregate of such Losses exceeds $250,000 in
which case the Selling Parties will be liable for all Losses; and provided,
--------
further, that the maximum aggregate liability of the Selling Parties under
-------
this (S)9.2(a) shall not exceed the sum of the Asset Purchase Price plus
----
the Raw Materials and Supply Materials Inventory Amount plus the
----
Work-in-Process and Furnished Goods Inventory Amount; and
(b) any Liability of the Selling Parties which is not an Assumed
Liability or which is an Excluded Liability (including, without limitation,
any Liability of the Selling Parties that becomes a Liability of the Buyer
under any bulk transfer law of any jurisdiction, under any common law
doctrine of de facto merger or successor liability, or otherwise by
operation of law); provided that the Selling Parties will have no
--------
obligation
33
to so indemnify the Buyer with respect to any Liability described in
clauses (a) or (b) of (S) 9.3 below.
In the event that the Selling Parties may be obliged to indemnify Buyer
under both subsection (a) and subsection (b) of this (S) 9.2, their obligations
under subsection (b) shall be controlling and the limitations provided in (S)(S)
9.1 and 9.2(a) hereof relating to their obligations in respect of Losses
resulting from the inaccuracy of any representation and warranty, or any
misrepresentation, breach of warranty or non-fulfillment of an agreement or
covenant as described in (S) 9.2(a), shall not apply. The Buyer shall provide
the Selling Parties written notice for any claim made in respect of the
indemnification provided in this (S) 9.2, whether or not arising out of a claim
by a third party.
9.3. Indemnity by Buyer. The Buyer hereby agrees to indemnify, defend
------------------
and hold harmless each Selling Party and its respective directors, officers and
Affiliates against and in respect of all Liabilities, obligations, judgments,
liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, Taxes, losses, fines, penalties, damages, expenses, fees, costs,
amounts paid in settlement (including reasonable attorneys' and expert witness
fees and disbursements in connection with investigating, defending or settling
any action or threatened action) (collectively, the "Losses") and that result
from:
(a) the inaccuracy of any representation or warranty made by the
Buyer herein, or resulting from any misrepresentation, breach of warranty,
in each case as if all materiality provisions were not contained therein,
or nonfulfillment of any agreement or covenant of the Buyer contained
herein or in any agreement or instrument required to be entered into in
connection herewith or from any misrepresentation in or omission from any
schedule, document, certificate or other instrument required to be
furnished by the Buyer hereunder; provided, however, that the Buyer shall
-------- -------
be liable under this (S) 9.3(a) in respect of Losses only if the aggregate
of such Losses exceeds $250,000 in which case the Buyer will be liable for
all Losses; and provided, further, that the maximum aggregate liability of
-------- -------
the Buyer under this (S)9.3(a) shall not exceed the sum of the Asset
Purchase Price plus the Raw Materials and Supply Materials Inventory Amount
----
plus the Work-in-Process and Furnished Goods Inventory Amount; and
----
(b) the failure of Buyer to pay or satisfy or cause to be paid or
satisfied any Assumed Liabilities or any other Liabilities of the Buyer
related to the Business or the Acquired Assets to the extent arising out of
circumstances or events occurring after the Closing Date; provided that the
--------
Buyer will have no obligation to so indemnify the Seller with respect to
any Excluded Liability.
9.4. Matters Involving Third Parties.
-------------------------------
(a) If any third party shall notify either Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against the other Party (the
"Indemnifying Party") under this (S) 9, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided,
--------
however, that no delay on the part of the Indemnified Party in notifying
-------
the
34
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(b) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within twenty
(20) days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder,
(iii) the Third Party Claim involves only money damages and does not seek
an injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with (S) 9.4(b), (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which consent shall not unreasonably be
withheld), and (iii) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim unless written agreement is obtained releasing the Indemnified
Party from all liability thereunder.
(d) In the event any of the conditions in (S) 9.4(b) is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it may reasonably deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (iii) the
Indemnifying Party will remain responsible for any Losses the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim to the fullest extent provided in
this (S) 9.
10. Termination.
-----------
10.1. Termination of Agreement. Either of the Parties may terminate this
------------------------
Agreement as provided below:
35
(a) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing (i) in the event either
Selling Party would be unable to satisfy the conditions specified in (S)(S)
6.1(a) or (b), the Buyer has notified the Seller of such inability, and
such inability has continued without cure for a period of thirty (30) days
after the notice of such inability or (ii) if the Closing shall not have
occurred on or before September 30, 2001 (unless the failure results
primarily from the Buyer being unable to satisfy the conditions specified
in (S)(S) 6.2(a) or (b)); and
(c) the Selling Parties may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (i) in the
event the Buyer would be unable to satisfy the conditions specified in
(S)(S) 6.2(a) or (b), the Seller has notified the Buyer of such inability,
and such inability has continued without cure for a period of thirty (30)
days after the notice of such inability or (ii) if the Closing shall not
have occurred on or before September 30, 2001 (unless the failure results
primarily from either Selling Party being unable to satisfy the conditions
specified in (S)(S) 6.1(a) or (b)).
10.2. Effect of Termination. If any Party terminates this Agreement
---------------------
pursuant to (S) 10.1, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach and except as specified herein and in the
Escrow Agreement).
11. Miscellaneous.
-------------
11.1. Press Releases and Public Announcements. Upon the execution of this
---------------------------------------
Agreement, the Parties may issue press releases or make public announcements so
long as the content of such press releases or public announcements have been
agreed upon by the Parties. Either Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will provide the other Party with the opportunity to review in
advance the disclosure).
11.2. No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3. Entire Agreement. This Agreement (including the documents referred
----------------
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
11.4. Succession and Assignment. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that the Buyer may (i) assign any or all
-------- -------
of its rights and interests hereunder to one or more of its Affiliates and (ii)
36
designate one or more of its Affiliates to perform its obligations hereunder,
but no such assignment shall relieve the Buyer of any of its obligations
hereunder.
11.5. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6. Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
confirmation of facsimile, (ii) one (1) Business Day following the date sent
when sent by overnight delivery by recognized overnight courier service for
delivery on the next Business Day and (iii) five (5) Business Days following the
date mailed when mailed by registered or certified mail return receipt requested
and postage prepaid at the following address:
If to either Selling Party:
--------------------------
Hood Companies, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
XX Xxx 000
Xxxxxxxxxxx, Xxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
Chief Financial Officer
Copy to:
-------
Xxxx X. Xxxxxx, Esq.
000 Xxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxxxx, Xxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
If to the Buyer:
---------------
Applied Extrusion Technologies, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
General Counsel
37
Copy to:
-------
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
11.8. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York. Notwithstanding the above,
any dispute relating to the provisions of (S) 11.15 hereof shall be governed by
the American Arbitration Act as then in force.
11.9. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and each Selling Party. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.10. Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.11. Expenses. Each of the Buyer and the Selling Parties will bear
--------
their own costs and expenses (including legal and accounting fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby. The Buyer shall bear all expenses incurred with respect to the transfer
to the Buyer of any Acquired Intellectual Property.
11.12. Construction. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring either Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the
38
context requires otherwise. The word "including" shall mean including without
limitation. Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception. Without limiting the generality of
the foregoing, the mere listing (or inclusion of a copy) of a document or other
item shall not be deemed adequate to disclose an exception to a representation
or warranty made herein (unless the representation or warranty has to do with
the existence of the document or other item itself). The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
11.13. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
---------------------------------------
identified in this Agreement are incorporated herein by reference and made a
part hereof.
11.14. Specific Performance. Each of the Parties acknowledges and agrees
--------------------
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
each of the other Parties shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy (subject to the
provisions set forth in (S) 11.15 below) to which it may be entitled, at law or
in equity.
11.15. Arbitration.
-----------
a (a) Generally. Except solely as set forth in (S) 11.14 and (S)
---------
11.15(c) hereof, each dispute, difference, controversy or claim arising in
connection with or related or incidental to, or question occurring under,
this Agreement or the subject matter hereof shall be finally settled under
the Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") by an arbitral tribunal composed of three arbitrators, at
least one of whom shall be an attorney experienced in corporate
transactions and one shall be experienced in the plastic film business,
appointed by agreement of the parties in accordance with said Rules. In
the event the parties fail to agree upon a panel of arbitrators from the
first list of potential arbitrators proposed by the AAA, the AAA will
submit a second list in accordance with said Rules. In the event the
parties shall have failed to agree upon a full panel of arbitrators from
said second list, any remaining arbitrators to be selected shall be
appointed by the AAA in accordance with said Rules. If, at the time of the
arbitration, the parties agree in writing to submit the dispute to a single
arbitrator, said single arbitrator shall be appointed by agreement of the
parties in accordance with the foregoing procedure, or, failing such
agreement, by the AAA in accordance with said Rules. The foregoing
arbitration proceedings may be commenced by either party by notice to the
other party.
39
(b) Place of Arbitration. The venue of such arbitration shall be
--------------------
Chicago, Illinois or any other place mutually agreed to by the Buyer and
Selling Parties.
(c) Recourse to Courts. Subject to (S) 11.14 hereof, the parties
------------------
hereby exclude any right of appeal to any court on the merits of the
dispute. The provisions of this (S) 11.15 may be enforced in any court
having jurisdiction over the award or any of the parties or any of their
respective assets, and judgment on the award (including without limitation
equitable remedies) granted in any arbitration hereunder may be entered in
any such court. Nothing contained in this (S) 11.15 shall prevent any party
from seeking interim measures of protection in the form of pre-award
attachment of assets or preliminary or temporary equitable relief.
11.16. Waiver of Jury Trial.
--------------------
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE
PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE.
40
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
__________________________________________
Title: Senior Vice President and
Chief Financial Officer
________________________________________
HOOD COMPANIES, INC.
By: /s/ Xxxxx X. Xxxxx
__________________________________________
Title: Vice President
________________________________________
QPF, LLC
By: /s/ Xxxxx X. Xxxxx
__________________________________________
Title: Vice President
________________________________________
