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EXHIBIT 10.17
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (the "Agreement") is made as of
the 3d day of April, 1998 by and between APPLIED EXTRUSION TECHNOLOGIES, INC., a
Delaware corporation ("Seller"), and PRONET CORPORATION, a South Carolina
corporation ("Buyer") (Buyer and Seller each being referred to as a "Party" and
collectively as the "Parties").
WHEREAS, Seller is currently engaged, through its operations in Salem,
Massachusetts, in the business of owning and operating certain assets used
primarily in the manufacture and sale of various specialized extruded plastic
netting and extruded plastic profile products and related activities; and
through certain of its operations in Middletown, Delaware (the "Middletown
Facility"), in the business of owning and operating certain assets used
primarily in the manufacture and sale of extruded plastic profile products used
primarily in the utility industry (the "Utility Assets"), each on a
going-concern basis (collectively, the "Business"); and
WHEREAS, Buyer desires to buy and Seller wishes to sell all of the
assets of Seller primarily used in or relating to the Business, except for those
assets specifically excluded by this Agreement, on the terms and conditions set
forth herein; and
WHEREAS, Seller wishes to assign and the Buyer wishes to assume certain
liabilities, agreements and rights of Seller on the terms and conditions set
forth herein; and
WHEREAS, Buyer and Seller agree that it is in their mutual best
interests to effect an orderly transfer of the Business and all of the rights
arising in connection therewith from Seller to Buyer; and
WHEREAS, a majority of the outstanding capital stock of Buyer is owned
by The Founders Fund of South Carolina, LP ("Founders Fund"), of which Vaxa
Capital Management, LLC is the general partner and which is located in
Greenville, South Carolina; and
WHEREAS, to induce Seller to enter into this Agreement with Buyer,
Founders Fund has agreed to execute and deliver to Seller a guarantee of all of
Buyer's obligations hereunder, such guarantee to remain in full force and effect
unless and until the Closing Date (as hereinafter defined) shall occur,
whereupon it shall terminate and be of no further force or effect;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, and each intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE 1. PURCHASE AND SALE
Section 1.01. Assets. In reliance on the representations, warranties,
covenants and agreements herein, and subject to the terms and conditions hereof,
at the Closing (as defined below),
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Seller shall sell, convey, transfer and assign to Buyer, and Buyer shall
purchase from Seller, free and clear of all liens, security interests and
encumbrances (except as otherwise provided herein), all of Seller's right, title
and interest in and to the assets of Seller used primarily in connection with
the Business as at the Closing, as set forth below and subject to the exclusions
contained in Section 1.02 hereof (the assets being so conveyed being referred to
herein as the "Purchased Assets"):
(a) Real Estate. Seller's fee simple estate in that parcel of
real property located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ in Salem, Massachusetts,
that is shown as ▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇-▇▇ (the "Salem
Facility"), including all buildings, improvements and structures
located thereon and all rights of way, easements and other
appurtenances thereto as more fully described on Schedule 1.01(a)
attached hereto;
(b) Fixed Assets. All tangible assets used primarily for the
operation of the Business and located at the Salem Facility or the
Middletown Facility or included in the Aero Safe Assets (as hereinafter
defined), including without limitation, manufacturing machinery and
equipment, production lines, tools, dies, fixtures, engineering and
office equipment, substations, and furniture, including but not limited
to the Material Fixed Assets (as hereinafter defined) listed on
Schedule 1.01(b) attached hereto (collectively, the "Fixed Assets");
Seller shall be responsible for, and shall bear the cost of, removing,
crating and delivering the Utility Assets to Buyer's shipper F.O.B. the
Seller's loading dock at the Middletown Facility; Buyer shall be
responsible for, and shall bear the cost of, transporting the Utility
Assets from the Middletown Facility to such other location as Buyer
shall desire, such delivery to Buyer's shipper by Seller to occur on
such date as Buyer may specify by not less than seven business days'
prior written notice given to Seller on or after the Closing Date; such
removal, crating and delivery by Seller of the Utility Assets shall be
completed by Seller in a first-class ▇▇▇▇▇▇▇-like manner and without
material damage of any kind to the Utility Assets; Buyer hereby agrees
and covenants to indemnify, defend and hold Seller harmless for all
costs (including without limitation, attorneys' fees) associated with
its relocation of the Utility Assets, other than such removal, crating
and delivery by Seller of the Utility Assets, unless and then not to
the extent such costs arise from Seller's negligence or wilful
misconduct;
(c) Inventories. All inventories of the Business as of the
Closing Date, including without limitation raw materials,
work-in-process, finished goods, processing materials, purchased parts,
machine parts, maintenance parts, tools, testing equipment and
supplies, all to the extent used primarily in the Business (the
"Inventory"); the removal and shipping of any Inventory located at the
Middletown Facility shall be effected in the same manner and on the
same basis as the removal and shipping of the Utility Assets;
(d) Data and Records. All financial, accounting and operating
data and records relating primarily to the Business, including without
limitation all books, records, notes, sales and sales promotional data,
advertising materials, credit information, cost and pricing
information, customer list, supplier list, business plans, projections,
reference catalogs,
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payroll and personnel records and other similar property, rights and
information (collectively the "Books and Records"); the removal and
shipping of any Books and Records located at the Middletown Facility
shall be effected in the same manner and on the same basis as the
removal and shipping of the Utility Assets;
(e) Intellectual Property. All commercial and technical trade
secrets, engineering, production and other designs, drawings,
specifications, formulae, technology, computer and electronic data
processing programs and software, inventions, processes, know-how,
confidential information and other proprietary property, rights and
interests used primarily in the Business, including without limitation
those patents, trademarks and/or service marks set forth on Schedule
1.01(e) attached hereto, (collectively "Intellectual Property");
(f) Contracts and Rights. All leases, license agreements,
contracts, agreements, sale orders, purchase orders, open bids and
other commitments, warranties and warranty claims and awards relating
primarily to the Business including the Material Contracts (as defined
herein) as set forth on Schedule 1.01(f) attached hereto;
(collectively, the "Contracts and Rights");
(g) Licenses and Permits. All licenses, permits,
authorizations, approvals and similar items relating primarily to the
Business (collectively, the "Licenses"); and
(h) Accounts Receivable; Prepaid Expenses. All accounts
receivable and prepaid expenses relating primarily to the Business.
Section 1.02. Exclusions. The Purchased Assets shall not include:
(a) The trademark "Plastinet" and all derivatives thereof (all
previously-used derivatives thereof being listed on Schedule 1.02(a)
attached hereto); provided, however, that Buyer shall be entitled to
use such trademark and derivatives with respect to the "Rockshield"
product line to the extent currently used by Seller with respect to
such product line and on products currently included in such product
line, and a license to this effect shall be included in the Trademark
and Service ▇▇▇▇ Assignment (as hereinafter defined).
(b) The cash and cash equivalents related to the Business;
(c) Corporate records;
(d) Tax returns, workpapers and other documents related
thereto;
(e) All rights, claims and awards (including without
limitation rights, claims and awards under insurance agreements) which
relate to any liability or obligation of Seller which is not an Assumed
Liability or an asset which is not a Purchased Asset; and
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(f) All other assets, properties, contracts or contract
rights, whether tangible or intangible, except as specifically
identified herein as Purchased Assets.
ARTICLE 2. PURCHASE PRICE AND PAYMENT; ASSUMED LIABILITIES
Section 2.01. Purchase Price. Subject to Section 2.06 hereof, the
purchase price ("Purchase Price") for the Purchased Assets shall be $26,500,000
in cash, which shall be paid by Buyer to Seller on the Closing Date in
immediately available funds by federal wire transfer to an account designated by
Seller.
Section 2.02. Assumption of Certain Liabilities. In reliance on the
representations, warranties, covenants and agreements herein, and subject to the
terms and conditions hereof, at and after the Closing, and in addition to the
payment of the Purchase Price, Buyer will assume and satisfy, pay or perform
when due in accordance with the terms thereof and without recourse to Seller,
the following obligations and liabilities (collectively, the "Assumed
Liabilities"):
(a) All obligations and liabilities relating to the Contracts
and Rights;
(b) All accounts payable and accrued expenses of the Business;
(c) All obligations and liabilities assumed by Buyer pursuant
to Section 7.02 hereof; and
(d) All obligations and liabilities arising in connection with
the conduct of the Business after the Closing.
Section 2.03.[Deleted.]
Section 2.04. No Other Liabilities Assumed. Seller shall not assign to
Buyer, and Buyer will not assume from Seller, any liabilities or obligations of
Seller of any kind except for the Assumed Liabilities and except as may be
otherwise specifically set forth in this Agreement or in another document
executed by the Parties. Without limiting the generality of the foregoing
sentence, Buyer shall assume neither any product liability or warranty claims
relating to products sold by Seller in the conduct of the Business prior to the
Closing Date nor any of Seller's obligations under the $6,500,000 principal
amount of City of Salem, Massachusetts Flexible Mode Industrial Development
Revenue Bonds (Applied Extrusion Technologies, Inc. Issue) dated as of December
6, 1990.
Section 2.05. Allocation of Purchase Price. Schedule 2.05 attached
hereto sets forth the preliminary agreement of the Parties with respect to the
allocation of the Purchase Price for tax purposes. The Parties will negotiate in
good faith to reach final agreement with respect to such allocation at or prior
to the Closing.
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Section 2.06. Post-Closing Adjustment.
(a) Promptly after the Closing Date, and in any event within
60 days of the Closing Date, Seller will deliver a balance sheet of the
Business as conveyed to and assumed by Buyer hereunder as of the
Closing Date (the "Closing Date Balance Sheet"), which shall be audited
by Seller's auditors. All fees, costs and expenses of Seller's auditors
incurred in connection with such audit, and all fees, costs and
expenses of Buyer's auditors (subject to an aggregate maximum of
$10,000, with any excess to be paid solely by Buyer) incurred in
connection with the valuation of Inventory as shown on the Closing Date
Balance Sheet, will be paid 50% by Buyer and 50% by Seller.
(b) The Closing Date Balance Sheet will be prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with their application in Seller's September 30, 1997
audited consolidated financial statements and Seller's accounting
practices and procedures followed in the preparation of such financial
statements ("GAAP"), and based on a physical count of the Inventory as
of the Closing Date; provided, however, that, for purposes of preparing
the Closing Date Balance Sheet, there shall be excluded from Inventory
all Inventory which was acquired or produced primarily to supply
products to Samsonite (it being understood that all reserves relating
to such Inventory so excluded shall also be excluded from the Closing
Date Balance Sheet).
(c) In addition, Seller will determine the amount of Net
Assets (as hereinafter defined), and shall deliver a computation
thereof with the Closing Date Balance Sheet to Buyer. "Net Assets"
shall mean the excess of the book value (as shown on the Closing Date
Balance Sheet) of the Purchased Assets over the book value (as shown on
the Closing Date Balance Sheet) of the accounts payable and accrued
expenses assumed by Buyer pursuant hereto.
(d) Buyer's representatives may be present for the physical
count of the Inventory referred to in Section 2.06(b) hereof and may
review all pricing extensions and work papers of Seller and of Seller's
accountants prepared in connection with the determination of Net Assets
and the Closing Date Balance Sheet. If Buyer disputes Seller's
determination of Net Assets or the Closing Date Balance Sheet, Buyer
shall so notify Seller in writing not more than 20 days after the date
on which Buyer receives Seller's determination of Net Assets and the
Closing Date Balance Sheet, and in such notice Buyer shall state any
points of disagreement. Failure of Buyer to deliver such a notice
within such 20-day period shall mean conclusively that Seller's
determination of Net Assets and Closing Date Balance Sheet has been
accepted by Buyer.
(e) Upon receipt by Seller of a notice referred to in Section
2.06(d) hereof, Seller shall promptly consult with Buyer with respect
to any points of disagreement in an effort to resolve the dispute and
reach agreement in writing as to the Net Assets and Closing Date
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Balance Sheet. If such dispute is not resolved by Buyer and Seller
within 10 days after Seller receives such notice, it will be resolved
by submission within 5 business days to Price Waterhouse (the
"Independent Accountants") with instructions to the Independent
Accountants to resolve such dispute within 30 days after receipt of
relevant information.
(f) For purposes of such arbitration, Buyer and Seller shall
each submit to the Independent Accountants a proposed determination of
Net Assets and a proposed Closing Balance Sheet. The Independent
Accountants shall determine Net Assets and the Closing Balance Sheet in
accordance with GAAP and the proviso to Section 2.06(b) hereof, and
shall otherwise conduct the arbitration under such procedures as to
which the parties may agree or, failing such agreement, under the
Commercial Rules of Arbitration of the American Arbitration
Association. The fees and expenses of the Independent Accountants shall
be allocated between Buyer and Seller by the Independent Accountants in
proportion based on the extent that either Party does not prevail on
items in dispute with respect to the determination of Net Assets. The
decision of the Independent Accountants shall be final, conclusive and
binding with respect to the determination of Net Assets and the
allocation of fees and expenses, and the decision of the Independent
Accountants shall be enforceable as an arbitration award by a court of
competent jurisdiction.
(g) Within two business days of the determination of Net
Assets in accordance with Section 2.06(d), (e) or (f) above (as
applicable):
(i) If Net Assets exceed $24,283,000, Buyer shall pay to
Seller such excess, and
(ii) If $24,283,000 exceeds Net Assets, Seller will pay to
Buyer such excess. Such payment shall be made within two business days
of such determination of Net Assets by wire transfer of immediately
available funds to an account designated by the transferee.
Section 2.07. Aero-Safe. Buyer is aware that Aero-Safe, Inc., a
Canadian corporation ("Aero Safe"), performs certain die cutting for both the
Business and other parts of Seller's business and that the Purchased Assets
include certain assets of Seller used by Aero Safe (the "Aero Safe Assets").
Buyer agrees to provide Seller access, through Aero-Safe, to the Aero-Safe
Assets to the extent reasonably necessary or desirable in connection with the
conduct of the Seller's business after the Closing. Buyer and Seller will share
equitably, based upon Buyer's and Seller's annual usage of the Aero-Safe Assets,
in the costs of maintaining and using the Aero-Safe Assets, all pursuant to an
agreement reasonably satisfactory to both Parties and to Aero-Safe (the
"Aero-Safe Sharing Agreement").
Section 2.08. Sharing of Taxes. Buyer and Seller shall share equally
any tax or other levy payable in connection with the conveyance of the Salem
Facility to Buyer.
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ARTICLE 3. CLOSING
Section 3.01. Closing. Subject to the prior or contemporaneous
satisfaction (or waiver in accordance with the terms hereof) of the conditions
set forth in Articles 8 and 9 hereof, the Closing ("Closing") for the sale and
purchase of the Purchased Assets shall occur at the offices of Ropes & ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, at 11:00 a.m. on April 24, 1998, or
on such other date as Buyer and Seller may mutually agree in writing (the
"Closing Date").
Section 3.02. Deliveries by Seller. At the Closing, Seller shall
deliver to Buyer:
(a) a ▇▇▇▇ of Sale and Assumption Agreement in the form of
Exhibit 3.02(a) (the "▇▇▇▇ of Sale and Assumption Agreement");
(b) an assignment of service marks and/or trademarks in the
form of Exhibit 3.02(b) (the "Trademark and Service ▇▇▇▇ Assignment"),
and any other reasonable assignments and other instruments of transfer
for the Purchased Assets sufficient to convey to Buyer all right, title
and interest in and to the Purchased Assets, including, where
necessary, consents to assignment or transfer by interested third
parties;
(c) a special warranty deed transferring to Buyer title to the
Salem Facility, in form and substance reasonably satisfactory to both
Buyer and Seller (the "Deed");
(d) certified copies of resolutions duly adopted by the Board
of Directors of Seller approving and authorizing the transactions
contemplated in this Agreement, the execution hereof and the
performance of all acts required herein accompanied by an appropriate
certificate of incumbency;
(e) a certificate of good standing of Seller from the
Secretary of State of the State of Delaware;
(f) the UCC-3 Release(s) listed on Schedule 3.02(e) attached
hereto; and
(g) the Aero-Safe Sharing Agreement, duly executed by Seller
and Aero Safe;
and, except for Buyer's obligations to relocate the Utility Assets, Inventory
and Books and Records from the Middletown Facility, Seller shall have taken all
steps reasonably necessary to put Buyer in possession and control of the
Purchased Assets (other than the Aero Safe Assets).
Section 3.03. Deliveries by Buyer. At the Closing, Buyer shall deliver
to Seller:
(a) the Cash Purchase Price by wire transfer as specified in
Section 2.01 hereof;
(b) the ▇▇▇▇ of Sale and Assumption Agreement;
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(c) certified copies of resolutions duly adopted by the Board
of Directors of Buyer approving and authorizing the transactions
contemplated in this Agreement, the execution hereof and the
performance of all acts required herein accompanied by an appropriate
certificate of incumbency;
(d) a certificate of good standing of Buyer from the Secretary
of State of the State of South Carolina; and
(e) the Aero-Safe Sharing Agreement, duly executed by Buyer
and Aero Safe.
Section 3.04. Simultaneous Closing. All actions taken at the Closing
shall be deemed to be performed simultaneously. The Parties shall deliver such
additional documents and take such additional actions as may be reasonably
necessary to complete the transactions contemplated hereby.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that each of the
statements contained in this Article 4 (including any Schedules hereto) is true
and correct as of the date hereof and will be true and correct at and as of the
Closing Date (except as to the effects of transactions not prohibited hereby).
Section 4.01. Organization, Power and Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with all requisite corporate power and authority to own its
properties and engage in the Business as it is now conducted, and is duly
qualified to do business in The Commonwealth of Massachusetts.
Section 4.02. Power and Authority Relative to Sale of Purchased Assets.
Seller has full corporate power and authority and has taken all required action
necessary to permit it to execute and deliver and to carry out the terms of this
Agreement and all other documents or instruments required or contemplated hereby
and none of such actions will (a) materially violate any material law, rule,
statute or ordinance applicable to Seller (except that Seller makes no
representation with respect to the applicability of any federal or state
antitrust laws), violate any provisions of Seller's Certificate of Incorporation
or Bylaws, as amended, or (b) result in any material breach of any material
agreement, instrument, order or judgment to which Seller is a party or by which
any of its assets may be bound.
Section 4.03. Valid and Binding Obligation. This Agreement constitutes,
and each other instrument or agreement to be executed and delivered by Seller in
accordance herewith will constitute, the valid and legally binding obligation of
Seller enforceable against Seller in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, moratorium, reorganization and
other general laws affecting the rights and remedies of creditors and general
principles of equity, whether considered in a proceeding in equity or at law.
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Section 4.04. Assets. The Seller has valid and marketable title to the
Purchased Assets free and clear of any lien, charge, security interest, option,
restriction or other encumbrance ("Liens") except for Liens listed on Schedule
4.04 attached hereto (the "Permitted Encumbrances"), and Buyer will receive
valid and marketable title to the Purchased Assets, free and clear of any Lien
(other than Liens securing the Assumed Liabilities and other than Permitted
Encumbrances specified by an asterisk in said Schedule 4.04). Schedule 1.01(b)
hereto sets forth all fixed assets of the Business, the individual absence of
which would have a material adverse effect on the conduct of Business as
currently conducted by Seller (the "Material Fixed Assets"). The Purchased
Assets include all the assets used by Seller primarily in connection with the
Business and materially necessary or useful to conduct the Business in the
present locations of the Business as of the date hereof consistent with the past
conduct of the Business. There is no asset not used by Seller primarily in
connection with the conduct of the Business that is materially necessary or
useful for the conduct the Business as of the date hereof consistent with the
past conduct of the Business.
Section 4.05. Financial Statements; Books and Records. The internal
financial statements prepared in the ordinary course of the Business for the
Seller's operations in Salem, Massachusetts and the operations respecting the
Utility Assets for the fiscal year and quarter ended September 30, 1997, and for
the fiscal quarter ended December 31, 1997, are complete and accurate in all
material respects and fairly present the financial condition of said operations
at the dates indicated and the results of said operations for the periods
indicated and were prepared in accordance with GAAP (except as otherwise stated
therein). The historical Books and Records of Seller are complete and accurate
in all material respects and properly reflect all transactions of Seller
relating to the Business. Notwithstanding anything contained herein, Seller
makes no representation or warranty with respect to any forward looking
statements or financial projections of any kind relating to the Business.
Section 4.06. No Material Adverse Change. Except as described on
Schedule 4.06 hereto, since December 28, 1997, there has not been any Material
Adverse Change (as hereinafter defined). For the purposes of this Section 4.06:
(a) a "Material Adverse Change" shall mean any of the following: (i) any loss,
destruction or damage which causes the permanent or extended (for more than five
consecutive business days) shutdown of any Material Fixed Asset; (ii) any
material default under, or any termination of, or written notice of any pending
termination of, or (to the Knowledge (as hereinafter defined) of Seller) any
threat by a party thereto which poses a material risk of any termination of, any
Material Contract (as hereinafter defined); (iii) the loss or more than 20%
decline in the year-over-year purchases of, or (to the Knowledge of Seller) any
threat by any customer which poses a material risk of the loss or more than 20%
decline in the year-over-year purchases of, any customer of the Business, in
each case whose purchases constituted two percent (2%) or more of the gross
sales of the Business in Seller's most recently completed fiscal year, or
written notice from any such customer of its intent to terminate its
relationship with the Business or reduce such customer's year-over-year
purchases by more than 20% as compared to such fiscal year; and (iv) the
inability of Seller to obtain in the open marketplace, for a period of five
consecutive business days or more, any raw material necessary for the conduct of
the Business; and (b) "Knowledge" of the Company shall mean the actual,
conscious knowledge of Messrs. Allott, ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ and, in the case of
▇▇. ▇▇▇▇▇▇, after having made reasonable inquiry of Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
and ▇▇. ▇▇▇▇▇▇.
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Section 4.07. Pending or Threatened Litigation. To the best of Seller's
knowledge, there is no pending or threatened litigation relating to the Business
or the Purchased Assets which would materially either affect the ability of
Seller to consummate the transactions contemplated herein or impair or affect
title to or the value of the Purchased Assets. Schedule 4.07 hereto sets forth a
complete list of all litigation currently pending or threatened respecting the
Business, including without limitation all litigation relating to any charge of
any unfair labor practice or of employment discrimination against Seller, any
union representation question that involves any of Seller's employees in the
Business or any claim (including without limitation any claim relating to unfair
employment practices, past due wages or benefits or injuries arising out of
employment) filed by or on behalf of any present or former employee of Seller in
the conduct of the Business.
Section 4.08. Brokers. Seller has engaged New England Business
Exchange, Inc. ("NEBEX") to act as its broker in connection with the
transactions contemplated herein, and any amounts payable to NEBEX pursuant to
that certain Services Agreement between Seller and NEBEX shall be the sole and
exclusive obligation of Seller. Seller has not dealt with any other broker,
finder or similar agent with respect to the transactions contemplated by this
Agreement.
Section 4.09. List of Agreements, Etc. Schedule 1.01(f) attached hereto
lists certain Contracts and Rights, the individual absence of which would have a
material adverse effect on the Business (the "Material Contracts"). The
Contracts and Rights are all the contracts to which the Seller is a party which
are in force as of the date hereof and which relate primarily to the Business.
Except as provided in Schedule 1.01(f), no consent of any party to any of the
Contracts and Rights or any other person is required as a condition to
transferring to Buyer the rights of Seller under any Contract and Rights. True
and complete copies of all Material Contracts have been delivered to Buyer.
Seller is not a party to any agreement, and does not have any right or claim, in
each case not primarily related to the Business, the absence of which would have
a material adverse effect on the Business.
Section 4.10. Intellectual Property. The Intellectual Property is all
the material intellectual property used by Seller primarily in connection with
the conduct of Business and includes all intellectual property necessary to
conduct the Business as of the date hereof in accordance with the Seller's past
practice. None of the Intellectual Property is subject to any license. As of the
date hereof, there are no proceedings currently pending which claim that
Seller's use of the Intellectual Property infringes on or violates any third
party's intellectual property, and Seller has not received any written notice
that any such proceedings are threatened alleging such violation or
infringement.
Section 4.11. Fixed Assets. All material Fixed Assets shall, at
Closing, be in all material respects in good condition and operational and
useable in the Business as presently conducted by Seller; provided, however,
that the Utility Assets have to be moved from the Middletown Facility as
contemplated by Section 1.01(b) hereof.
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Section 4.12. Bulk Sales Act. The transactions contemplated by this
Agreement are not subject to any bulk sales or similar law.
Section 4.13. Taxes. Seller has filed all property or similar tax
returns that are required to be filed and has paid, or made provisions for the
payment of, all taxes, interest and penalties that have or may become due
pursuant to said returns or to assessments for such taxes received. All such
returns are complete and accurate. All monies withheld or required to be
withheld by Seller from payments to its employees for income taxes, social
security and unemployment insurance taxes or other similar charges or
assessments have been collected or withheld and paid to the appropriate
governmental agencies, other than as set forth on Schedule 4.13 hereto. Schedule
4.13 describes all property taxes applicable to any of the Purchased Assets
(including the identity of the taxing authority, the date the tax is due, the
period covered by the tax due on such date, the date of last payment and the
amount of tax paid on such date).
Section 4.14. Employee Benefits. Schedule 4.14 hereto describes all
employee benefit plans or arrangements for any employee of Seller in the
Business to or by which Seller is a party or may be bound or that Seller
sponsors, copies of which have been delivered to Buyer prior to the execution of
this Agreement. As used herein, "employee benefit plans" shall mean and include
any retirement, profit sharing, money purchase pension, defined benefit, bonus,
thrift savings, stock purchase, deferred compensation, health or medical
insurance, dental insurance, incentive, group insurance, death benefit, fringe
benefit, disability, split-dollar, severance, medical reimbursement or similar
type of plan, whether or not qualified or required to be qualified under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Except as
disclosed on Schedule 4.14, no unfunded liability, including unfunded past
service liability, exists under any such plan and, to the extent that any plan
maintained by the Seller or benefitting any employee of the Seller in the
Business is subject to the provisions of ERISA, or any United States, foreign,
state or local statute, law, ordinance, rule or regulation relating to employee
benefit plans, each of the Seller and such plan is in material compliance with
all applicable provisions thereof.
Section 4.15. Certain Labor Matters. Except as listed on Schedule 4.15
hereto, none of Seller's employees in the Business is currently represented by
any unit or group as his or her representative for collective bargaining or
other labor purposes. Seller is not currently, nor since January 1, 1995 has
Seller been, involved in any labor discussion with any unit or group seeking to
become the bargaining unit for any of its employees.
Section 4.16. Employees. Schedule 4.16 hereto contains a complete and
accurate list as of a date not more than five business days prior to the date
hereof of all employees of Seller in the Business, whether full or part-time,
temporary or otherwise, setting forth for each such employee (a) his or her job
position and (b) his or her hourly or annual compensation. Except as described
on Schedule 4.16, there is no oral or written contract for employment (other
than an employment-at-will arrangement terminable at any time without penalty or
payment) or employee handbook or manual respecting any employee of Seller in the
Business. Except as specified on Schedule 4.16, none of the employees of the
business has any job related disease or disability incurred while an employee
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of the Seller. Since the date of the listing set forth in Schedule 4.16, the
Seller has not hired or terminated the employment of any person in the Business
and has not modified the compensation of any employee of the Seller in the
Business, except for hirings at usual compensation rates and terminations of
employment in each case in the ordinary course of business.
Section 4.17. Other Names; Principal or Chief Executive Offices. Except
as listed on Schedule 4.17 hereto, neither Seller nor any of its divisions has
during the last five years been known by or used (directly or through any
predecessor, affiliate, partnership or joint venture) any other corporate or
fictitious name. Schedule 4.17 lists all the principal and chief executive
offices of the Seller and/or the Business during the last five years.
Section 4.18. Environmental. Seller is in material compliance with all
material local, state and federal environmental statutes, laws, ordinances,
rules, regulations and permits, including but not limited to the Federal Water
Pollution Control Act, 33 U.S.C. 1251 et seq., the Solid Waste Disposal Act, 42
U.S.C. 6901 et seq., the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. 9601 et seq., ("CERCLA"), and the Toxic Substances
Control Act, 15 U.S.C. 2601 et seq.. Except as disclosed on Schedule 4.18
hereto: no "hazardous substance" (as such term is defined in CERCLA), petroleum
hydrocarbon, polychlorindated biphenyl, asbestos or radioactive material
(collectively hereinafter referred to as "Hazardous Substances") has been used,
placed, spilled, stored, treated, disposed or of permitted to remain at, on, in
or under the Salem Facility (including without limitation any improvement,
building or structure located thereon); no Hazardous Substance has been
transported to or from any of such property; and no underground storage tank has
been operated on, in or under any of such property. No asbestos or
asbestos-containing material has been installed, used, incorporated into or
disposed of on, in or under the Salem Facility (including without limitation any
of the improvements, buildings or structures located thereon). The Seller has
provided the Buyer with copies of all written complaints, citations, orders,
reports, written data, notices or other communications sent or received by it
with respect to any local, state or federal environmental law, ordinance, rule
or regulation as any of them related to the Business.
Section 4.19. Inventories. Except as set forth on Schedule 4.19 hereto
or as may be reserved against in the Closing Date Balance Sheet, the Inventory
at Closing will consist in all material respects of materials and supplies of a
quality and quantity usable or salable in the ordinary course of the Business as
conducted by Seller; provided, however, that no representation or warranty is
made herein with respect to Inventory excluded from the Closing Date Balance
Sheet in accordance with the proviso to Section 2.06(b) hereof. Except as
provided in Schedule 4.19, none of the Inventory at the Closing will be subject
to any consignment or similar arrangement.
Section 4.20. Insurance. Schedule 4.20 contains a complete and accurate
list and description of all liability insurance policies currently in effect,
including whether such policies are "occurrence" or "claims made", of all
workers' compensation arrangements and of all hazard and property insurance
policies of Seller currently in effect which relate in any way to the Business.
Complete copies of each such insurance policy or arrangement and its attachments
have been delivered to
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Buyer. Such insurance policies or arrangements are valid, outstanding and
enforceable and all premiums with respect thereto which have become due have
been paid.
Section 4.21. No Orders. Neither the Seller, with respect to the
Business, nor any of the Purchased Assets is subject to any order of any court
or other adjudicatory body.
Section 4.22. Compliance With Laws. Seller has complied in all material
respects with all requirements of applicable material laws in or with respect to
the conduct of the Business. The Salem Facility, and its current use, conform in
all material respects to all zoning and similar ordinances.
Section 4.23. No Related Party Transaction. Except as set forth in
Schedule 4.23 hereto, the Business, in the ordinary course, makes no purchases
from, makes no sales to, receives no payments from and makes no payments to the
portions of Seller not included in the Business or any affiliate of Seller.
Section 4.24. No Notification. Neither Seller nor Buyer is required by
any law to provide advance notification of the transactions contemplated by this
Agreement to any person who is employed in the Business.
Section 4.25. No Transfer Tax. No sales, use, transfer or similar tax
or governmental charge will apply to the transfer pursuant to this Agreement of
any of the Purchased Assets, other than taxes payable in connection with the
conveyance of the Salem Facility to Buyer.
Section 4.26. Accounts Receivable. All accounts receivable included on
the Closing Date Balance Sheet, net of any reserves with respect thereto, will
be paid in full by the account debtors thereof on or prior to the date which is
nine months after the Closing Date.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that each of the
statements contained in this Article 5 is true and correct as of the date hereof
and will be true at and as of the Closing Date.
Section 5.01. Organization, Power and Standing. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of South Carolina, with all requisite power and authority (corporate or
otherwise) to own its properties and to carry on its business as such business
is now conducted and presently proposed to be conducted. As of the Closing Date,
Buyer shall be duly qualified to do business as a foreign corporation in The
Commonwealth of Massachusetts.
Section 5.02. Power and Authority Relative to Transaction. Buyer has
full corporate power and authority and has taken all required action necessary
to permit it to execute and deliver and to
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carry out the terms of this Agreement and all other documents or instruments
required or contemplated hereby and none of such actions will (a) materially
violate any law, rule, statute or ordinance applicable to Buyer (except that
Buyer makes no representation with respect to the applicability of any federal
or state antitrust law), violate any provisions of Buyer's Certificate or
Articles of Incorporation or Bylaws, as amended, or (b) result in any breach of
any material agreement, instrument, order or judgment to which Buyer is a party
or by which its assets may be bound.
Section 5.03. Valid and Binding Obligation. This Agreement constitutes,
and each other instrument or agreement to be executed and delivered by Buyer in
accordance herewith (including without limitation the Assumption of Liabilities)
will constitute, the valid and legally binding obligation of Buyer, enforceable
against it in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization and other general laws
affecting the rights and remedies of creditors and general principles of equity,
whether considered in a proceeding in equity or at law.
Section 5.04. Brokers. Buyer has not dealt with any broker, finder or
similar agent engaged by Buyer with respect to the transactions contemplated by
this Agreement.
Section 5.05. Pro-Forma Capitalization; Solvency. Attached hereto as
Schedule 5.05 is the pro forma capitalization of the Buyer immediately after
giving effect to the Closing. After giving effect to the consummation of the
transactions contemplated hereby and the financing thereof, Buyer is and will be
solvent (within the meaning of Section 548 of Title 11 of the United States Code
and any similar state statute which may be applicable), has and will have assets
having a fair value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured, and has
and will have access to adequate capital for the conduct of its business and the
ability to pay its debts from time to time incurred in connection therewith as
such debts mature.
Section 5.06. ▇▇▇▇-▇▇▇▇▇ Filing. No filings are required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"▇▇▇▇-▇▇▇▇▇ Act"), because Buyer has less than $10,000,000 in assets and
revenues, determined in accordance with the ▇▇▇▇-▇▇▇▇▇ Act and rules,
regulations and interpretations thereunder, including without limitation such
assets and revenues of Founders Fund.
ARTICLE 6. COVENANTS OF SELLER
Section 6.01. Access to Information. Subject to Section 7.07 hereof,
pending Closing, Seller shall permit Buyer, its financing sources and their
respective counsel, accountants and other representatives access to such of the
books, accounts, contracts, commitments, records, documents and personnel of or
concerning the Business, and shall furnish Buyer during such period all such
information concerning the Business, as Buyer, its financing sources and their
respective counsel,
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15
accountants and other representatives may reasonably request, all at times and
in a manner so as not to interfere with the conduct of the Business in any
material respect. Seller shall make available to Buyer, its financing sources
and their respective counsel, accountants and other representatives, Seller's
employees, accountants, and other advisors for consultation, and shall permit
access to other third parties reasonably requested for confirmation of any
information obtained, all at times and in a manner so as not to interfere with
the conduct of the Business in any material respect.
Section 6.02. Conduct of Business. Between the date of this Agreement
and the Closing, unless Buyer shall otherwise consent, Seller shall:
(a) conduct the Business only in the ordinary course,
including retaining any requisite permits, licenses, and
authorizations, and use reasonable efforts to preserve the existing
contracts and goodwill of those having business relations with the
Business;
(b) maintain the books, accounts and records of the Business
in their usual, regular and ordinary manner and post all entries
therein promptly in compliance with accepted practice and all
applicable laws;
(c) maintain sufficient inventory to conduct the Business in
the ordinary course, including without limitation sufficient inventory
of finished goods to fill orders (in the ordinary course of business,
and consistent with past practices and quantities) from customers of
goods manufactured utilizing the Utility Assets during the two months
following the Closing Date;
(d) not dispose of any Material Asset other than inventory in
the ordinary course of business;
(e) not enter into any material agreement respecting the
Business except in the ordinary course of business;
(f) without limiting the generality of Section 6.02(e) above,
not enter into any contract with any supplier of "Super Corflo" smooth
wall flexible pipe, without the prior consent of Buyer which shall not
be unreasonably withheld;
(g) make no material change in the compensation of any
employee of the Business; and
(h) refrain from entering into any agreement or commitment for
capital expenditures in excess of $100,000.00 in the aggregate.
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Section 6.03. Filings, Consents and Approvals. Seller shall, as
promptly as practicable, make or cause to be made all governmental filings
required to be made by it, and will comply with all applicable governmental
waiting periods or notification or other procedures required to be complied with
by it in connection with the transactions contemplated by this Agreement.
Section 6.04. Non-Competition. Seller agrees that, in consideration of
the purchase by Buyer hereunder, neither Seller nor any of its subsidiaries
shall, on or prior to the date which is three years after the Closing Date,
directly or indirectly, run, own, manage, operate or control any business,
venture or activity which sells, to persons or entities which are customers of
the Business on, or have been customers of the Business during the two years
immediately preceding, the Closing Date, products which are materially
equivalent to those products sold by the Business as conducted by Seller at the
Closing Date; provided, however, that Seller shall not be considered to be in
default of this Section 6.04 solely by virtue of holding for portfolio purposes
as a passive investor not more than five percent (5%) (on a fully-diluted basis)
of the issued and outstanding equity securities of a corporation, so long as
such equity securities are listed or quoted on a stock exchange or an
over-the-counter market within the United States; and provided, further, that
Seller shall not be considered to be in default of this Section 6.04 if, after
the Closing Date, (i) Seller or a subsidiary thereof purchases an entity (by
purchase of stock, assets, merger or otherwise), and such entity continues to
sell products sold by it on the date of such acquisition or within the two years
immediately preceding such acquisition to customers of such entity on the date
of such acquisition or within the two years immediately preceding such
acquisition, or (ii) Seller or a subsidiary thereof is acquired by an entity (by
purchase of stock, assets, merger or otherwise), and such entity continues to
sell products sold by it on the date of such acquisition or within the two years
immediately preceding such acquisition to customers of such entity on the date
of such acquisition or within the two years immediately preceding such
acquisition.
Section 6.05. Non-Solicitation. For a period of three years from the
Closing Date, Seller will not, without the prior written consent of Buyer,
either directly or through some other person or entity, seek to contract with,
hire or solicit the employment of any of Buyer's salaried management personnel
who were previously employed by Seller, or otherwise solicit termination of
their employment.
Section 6.06. Exclusivity. In consideration of the time and resources
that Buyer will devote to the transactions contemplated hereby, Seller agrees
that, until April 24, 1998 (so long as good faith negotiations are continuing
between the parties), Seller will not, and Seller will cause its affiliates,
directors, officers, employees, representatives and agents (including without
limitation NEBEX) not to, directly or indirectly, solicit or initiate or enter
into discussions or transactions with, or encourage, or provide any information
to, any corporation, partnership or other entity or group (other than Buyer and
its designees) concerning any sale of stock by the stockholders of, or any
merger, recapitalization, spin-off or sale of securities or substantial assets
of, or any similar transaction or alternative to the transactions contemplated
hereby involving, the Business. Seller represents that neither it nor any of its
affiliated entities is party to or bound by any agreement with respect to any
such transaction other than as contemplated by this Agreement.
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Section 6.07. Certain Transitional Matters Relating to the Utility
Assets.
(a) In connection with the installation by Buyer of the
Utility Assets in the Salem Facility, Seller shall from time to time
make available to Buyer such employees from the Middletown Facility as
Buyer may reasonably request in order to provide to Buyer the technical
experience and know-how Buyer may reasonably require in order to be
able to begin production using the Utility Assets in the Salem Facility
in substantially the same manner as the Utility Assets were used by
Seller in the Middletown Facility; provided, however, that (i) Seller
shall not be required to provide more than an aggregate of 20 man-days
of assistance under this Section 6.07(a), (ii) Seller shall not be
required to provide any assistance under this Section 6.07(a) more than
two months after the Closing Date (the "Transition Termination Date"),
(iii) Buyer shall reimburse Seller for all direct and indirect costs of
the employees so provided by Seller (including without limitation
salaries, benefits and travel expenses) promptly upon demand therefore
by Seller, and (iv) Seller shall not be required to provide any such
employees if doing so would disrupt, in any material manner, Seller's
conduct of its own business. Seller shall have no liability whatsoever
to Buyer for any of the acts of, or advice rendered by, such employees
to Buyer.
(b) Until the Transition Termination Date, Seller will
cooperate with Buyer's reasonable requests to coordinate the orderly
transition to the Salem Facility of the customer/sales service and
invoicing functions relating to the Business which have been conducted
by Seller in the Middletown Facility, and Seller will make available
shipments of Inventory retained in the Middletown Facility and referred
to in Section 6.02(c) hereof; provided, however, that (i) Buyer shall
reimburse Seller for all of Seller's out-of-pocket costs incurred in
providing such assistance to Buyer, (ii) Seller shall not be required
to provide any such assistance if doing so would disrupt, in any
material manner, Seller's conduct of its own business and (iii) Seller
shall have no liability whatsoever to Buyer by reason of rendering such
assistance, except for Seller's gross negligence or wilful misconduct.
On the Transition Termination Date, or such earlier date as Buyer may
specify by notice to Seller, any Inventory remaining at the Middletown
Facility shall be removed and shipped to the Salem Facility in the same
manner and on the same basis as the removal and shipping of the Utility
Assets.
ARTICLE 7. COVENANTS OF BUYER
Section 7.01. Assumed Liabilities. Buyer shall pay, perform in full and
discharge in accordance with the terms thereof all of the Assumed Liabilities.
Section 7.02. Employment Matters. In connection with the transition of
the Business from Seller to Buyer:
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(a) It is acknowledged by the Buyer that the employees listed
on Schedule 7.02(a) attached hereto (the "Retained Employees") shall
continue to be employed by the Seller after the Closing Date. Buyer
shall offer employment to all employees listed on Schedule 4.16 hereto
and marked with an asterisk (the "Transferred Employees").
(b) Buyer will make bona fide offers of employment to
Transferred Employees in good faith and will not discriminate in
violation of any applicable employment or other laws; provided,
however, that such offers to the persons named in Section 9.09 hereof
may be made subject to the execution and delivery by such persons of
the employment and/or non-competition and non-disclosure agreements
referred to therein. Pursuant to such offers, Buyer agrees to use its
best efforts (which efforts shall not, however, be deemed to require
Buyer to offer higher compensation) to hire all Transferred Employees
on or before the Closing Date and on terms consistent with all
provisions of this Section 7.02
(c) Buyer agrees that each offer of employment made to
Transferred Employee shall include (i) base salary compensation at
least equal to the current base salary compensation paid to said
Transferred Employee by Seller as of January 31, 1998, (ii) medical
benefits which in the aggregate are substantially equivalent to those
offered by Seller to its employees generally as of the date hereof
(provided, however, that such coverage can be obtained by Buyer at
substantially the same cost as to Seller), and (iii) the right to
participate in a retirement benefit plan qualified under the provisions
of Section 401(k) of the Internal Revenue Code of 1986, as amended,
that Buyer intends to establish shortly after the Closing, and such
Transferred Employees will be credited by Buyer for all prior years of
service with the Seller for purposes of eligibility and vesting, under
such Plan. Buyer's Section 401(k) plan shall accept, subject to
applicable law, roll-over contributions of distributions from Seller's
savings plan for employees who accept Buyer's offers of employment and
commence employment with Buyer.
(d) Seller shall be responsible for, and shall indemnify and
hold Buyer harmless from, any severance benefits that may become
payable to any Transferred Employee who declines Buyer's good faith
offer of employment made in accordance with this Section 7.02.
(e) Notwithstanding any other provision of this Section 7.02,
Buyer shall have the right to terminate the employment, and adjust the
compensation, of any Employee hired by Buyer at will at any time for
any or no reason.
Section 7.03. Filings, Consents and Approvals. Buyer shall, as promptly
as practicable, make or cause to be made all governmental filings required to be
made by it, and will comply with all applicable governmental waiting periods or
notification or other procedures required to be complied with by Buyer in
connection with the transactions contemplated by this Agreement.
Section 7.04. Non-Competition. Buyer agrees that, in consideration of
the sale by Seller hereunder, neither it, nor Founders Fund, nor any subsidiary
of Buyer or Founders Fund shall, on
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or prior to the date which is three years after the Closing Date, directly or
indirectly, run, own, manage, operate or control any business, venture or
activity which sells, to persons or entities which are customers of Seller on,
or have been customers of the Business during the two years immediately
preceding, the Closing Date, products which are produced by the same process and
to the same general specifications as those products which have been produced,
and which are or have been during the year immediately preceding the Closing
Date provided to such customers, and are identified on Schedule 7.04 attached
hereto (the "Restricted Products"); provided, however, that Buyer and Founders
Fund shall not be considered to be in default of this Section 7.04 solely by
virtue of holding for portfolio purposes as a passive investor not more than
five percent (5%) (on a fully diluted basis) of the issued and outstanding
equity securities of a corporation, so long as such equity securities are listed
or quoted on a stock exchange or an over-the-counter market within the United
States; and provided, further, that Buyer and Founders Fund shall not be
considered to be in default of this Section 7.04 if, after the Closing Date, (i)
Buyer or Founders Fund or a subsidiary thereof purchases an entity (by purchase
of stock, assets, merger or otherwise), and such entity continues to sell
Restricted Products sold by it on the date of such acquisition or within the two
years immediately preceding such acquisition to customers of such entity on the
date of such acquisition or within the two years immediately preceding such
acquisition, or (ii) Buyer or a subsidiary thereof is acquired by an entity (by
purchase of stock, assets, merger or otherwise), and such entity continues to
sell Restricted Products sold by it on the date of such acquisition or within
the two years immediately preceding such acquisition to customers of such entity
on the date of such acquisition or within the two years immediately preceding
such acquisition.
Section 7.05. Non-Solicitation. Except to the extent required by
Section 7.02, for a period of three years from the Closing Date, Buyer will not,
without the prior written consent of Seller either directly or through some
other person or entity, seek to contract with, hire or solicit the employment of
any of Seller's employees (including without limitation, the Retained Employees)
or otherwise solicit termination of their employment; provided, however, that
the foregoing shall not prohibit Buyer from entertaining and accepting requests
for employment by such employees or their agents if such requests are not the
result of direct or indirect efforts by Buyer to solicit their termination and
employment, and such hiring does not violate any valid non-compete or other
agreement with Seller.
Section 7.06. Post-Closing Records Availability. From the Closing Date
through the third anniversary of the Closing Date (the "Maintenance Period"),
Buyer shall maintain and preserve the data, books and records of the Business
referred to in Section 1.01(d), and shall upon reasonable notice and at
reasonable times in the presence of an officer or other authorized
representative of Buyer, permit Seller to inspect and copy said data, books and
records to the extent that they relate to periods prior to the Closing Date.
Following the Maintenance Period, Buyer may dispose of or destroy such data,
books and records in accordance with its normal policies and procedures.
Section 7.07. Confidentiality. Buyer will not, and will not permit any
of its counsel, accountants or other representatives, to, without the prior
written consent of Seller, disclose any confidential information relating to the
Business furnished to Buyer or such counsel, accountants
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or other representatives by or on behalf of Seller or use any such information
for any purpose otherwise than in evaluating the Business in connection with the
transactions contemplated hereby. In the event of any termination of this
Agreement, each of Buyer and such counsel, accountants and other representatives
will return all copies of any written materials in their possession furnished by
or on behalf of Seller or which summarize or otherwise reflect any confidential
information relating to the Business furnished by or on behalf of Seller. Buyer
will advise its investors and its prospective lenders, of the confidential
nature of any confidential information relating to the Business furnished by
Seller to Buyer and then furnished by Buyer to such investors and prospective
lenders and shall request such investors and prospective lenders to keep such
confidential information in confidence and not disclose or use such confidential
information for any purpose otherwise than in evaluating the Business in
connection with their investment or proposed loans, and in the event of
termination of this Agreement further request such investors and prospective
lenders to return all copies of any written materials in their possession
furnished by or on behalf of Buyer or which summarize or otherwise reflect any
confidential information relating to the Business furnished by or on behalf of
Buyer; provided, however, that such information may be furnished to Buyer's
investors and its prospective lenders only with Seller's prior written consent,
which shall not be unreasonably withheld; and provided, further, that Seller may
grant or withhold such consent in the exercise of its sole and absolute
discretion with respect to information regarding the identity of the customers
of the Business or other competitively-sensitive information. Pending closing of
the transaction, neither of the Parties will, without the consent of the other
Party, make any announcement about such transaction to the public, to the
Business' customers or employees, or to any other person or entity; provided,
however, that Seller may disclose this transaction and the terms thereof to the
extent it reasonably determines that it is required to do so under applicable
securities laws or its agreements with the National Association of Securities
Dealers, Inc. The provisions of this Section 7.07 shall supersede the provisions
of the letter agreement relating to confidentiality dated November 12, 1997
between Seller and Founders Fund.
Section 7.08. Application of Payments to Accounts Receivable. From and
after the Closing Date, Buyer shall apply each payment received from an account
debtor to the payment of the account receivable owed by such account debtor
which arose earliest in time and which is still outstanding and unpaid, and, if
any such payment is received from an account debtor while there is an Unpaid
Receivable (as hereinafter defined) with respect to such account debtor, Buyer
shall turn such payment over to the collection agency referred to in Section
10.01(d) hereof for such application; provided, however, that application to an
account receivable shall not be required to be made under this Section 7.08 if
and to the extent that there exists, at the time such application would
otherwise be made, a good faith dispute with respect to the amount thereof which
is due and owing which has been raised by the account debtor with respect
thereto.
Section 7.09. Minimum Equity Contribution; Financing.
(a) Buyer covenants that, in connection with its
capitalization, it will receive a minimum of $6,500,000 of equity
capital from Founders Fund; provided, however, that, at the Closing,
such equity capital may actually be received from sources other than
Founders
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Fund so long as such other sources are not included in the commitment
letters referred to Section 7.09(b) hereof.
(b) Buyer represents and warrants that it has received and
accepted from Gleacher Natwest Inc. and National Westminster Bank Plc
and from Fleet Capital Corporation commitments for debt financing, in
addition to that equity capital to be contributed pursuant to Section
7.09(a) hereof, in an aggregate amount sufficient for Buyer to
consummate the transactions contemplated hereby to be consummated by
Buyer. Buyer has accepted such commitments and has furnished to Seller
correct and complete copies of the fully-executed commitment letters
relating thereto.
ARTICLE 8. CONDITIONS TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated
hereby is subject to the satisfaction at or prior to the Closing Date of the
following conditions, any or all of which may be waived in whole or in part by
Seller:
Section 8.01. Representations and Warranties True and Correct. The
representations and warranties of Buyer set forth herein or in any certificate
or document delivered in connection herewith shall have been true and correct in
all material respects when made and shall be repeated and shall be true and
correct in all material respects at and as of the Closing Date.
Section 8.02. Good Standing; Resolutions. Seller shall have received
appropriate evidence as to the continued existence and good standing on the
Closing Date of the Buyer in its jurisdiction of organization and copies of the
resolution or resolutions of the Board of Directors of Buyer with respect to the
authorization and approval of the consummation of the transactions contemplated
hereby certified by the Corporate Secretary of Buyer as of the Closing Date.
Section 8.03. Compliance with Agreement. Buyer shall have performed and
complied with all covenants and conditions required by this Agreement to be
performed and complied with by Buyer prior to or at the Closing Date.
Section 8.04. Proceedings and Instruments. All proceedings with respect
to the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including any and all certificates or other
documents delivered in connection therewith, shall have been, in form and
substance, reasonably satisfactory to Seller's counsel.
Section 8.05. [Deleted.]
Section 8.06. Payment of Purchase Price and Assumption of Liabilities.
Seller shall have received from Buyer: (a) the Purchase Price; and (b) the ▇▇▇▇
of Sale and Assumption Agreement.
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Section 8.07. Closing Certificates. Buyer shall provide to Seller such
closing certificates with respect to representations and warranties and
compliance with covenants, and such incumbency certificates, as shall be
reasonably satisfactory to Seller.
Section 8.08. Opinion of Counsel. Buyer shall provide to Seller an
opinion of Buyer's counsel reasonably satisfactory to Seller.
Section 8.09. Final Agreement on Allocation of Purchase Price. Buyer
and Seller shall have reached final agreement on the Allocation of Purchase
Price set forth in preliminary form on Schedule 2.05 hereto.
Section 8.10. Aero-Safe Agreement. Seller shall have received a copy of
the Aero-Safe Sharing Agreement duly authorized, executed and delivered by Buyer
and Aero Safe.
ARTICLE 9. CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions contemplated
hereby is subject to the satisfaction at or prior to the Closing Date of the
following conditions, any or all of which may be waived in whole or in part by
Buyer:
Section 9.01. Representations and Warranties True and Correct. The
representations and warranties of Seller set forth herein and in any certificate
or document delivered pursuant to the provisions hereof shall have been true and
correct in all material respects when made and shall be repeated and shall be
true and correct in all material respects at and as of the time of the Closing.
Section 9.02. Good Standing; Resolutions. Buyer shall have received
appropriate evidence as to the continued existence and good standing on the
Closing Date of the Seller in its jurisdiction of organization and qualification
in the Commonwealth of Massachusetts and copies of the resolution or resolutions
of the Board of Directors of Seller with respect to the authorization and
approval of the consummation of the transactions contemplated hereby certified
by Seller's Corporate Secretary, as of the Closing Date.
Section 9.03. Compliance with Agreement. Seller shall have performed
and complied with all covenants and conditions required by this Agreement to be
performed and complied with by it at or prior to the Closing Date.
Section 9.04. Required Consents; Discharge of Liens. (a) All consents
of third parties which are required pursuant to the terms hereof shall have been
obtained; (b) the Seller shall have discharged (or made other arrangements
reasonably satisfactory to Buyer with respect to) all Liens on each of the
Purchased Assets (except for Liens securing the Assumed Liabilities and
Permitted Encumbrances marked with an asterisk on Schedule 4.04 hereto); and (c)
to the extent required, the other party to each Material Contract shall have
consented, to Buyer's satisfaction, to Buyer's
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23
assumption of such Material Contract or entered into an agreement satisfactory
to Buyer in substitution of such Material Contract.
Section 9.05. Bills of Sale; Deed; Assignments. Buyer shall have
received from Seller: (a) the ▇▇▇▇ of Sale and Assumption Agreement; (b) the
Deed; (c) the Trademark and Service ▇▇▇▇ Assignment; and (d) such other
assignments as shall be reasonably necessary to vest in Buyer title to the
Purchased Assets.
Section 9.06. Proceedings and Instruments. All proceedings with respect
to the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including any and all certificates or other
documents delivered in connection therewith, shall have been, in form and
substance, reasonably satisfactory to Buyer's counsel.
Section 9.07. [Deleted.]
Section 9.08. [Deleted.]
Section 9.09. Employment and Non-Competition Agreements. The following
persons shall have executed employment, non-competition and non-disclosure
agreements in substantially the form of Exhibit 9.09(a) attached hereto: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇; and the following persons shall
have executed non-competition and non-disclosure agreements in substantially the
form of Exhibit 9.09(b) attached hereto: ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, provided
that the condition contained in this Section 9.09 shall be deemed to have been
satisfied if only one of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇ shall have failed to
execute such a non-competition and non-disclosure agreement.
Section 9.10. Closing Certificates. Seller shall provide to Buyer such
closing certificates with respect to representations and warranties and
compliance with covenants, and such incumbency certificates, as shall be
reasonably satisfactory to Buyer.
Section 9.11 Opinion of Counsel. Seller shall provide to Buyer an
opinion of Seller's counsel reasonably satisfactory to Buyer.
Section 9.12. Financing. Buyer shall have obtained the financings
contemplated by the commitment letters referred to in Section 7.09 hereof (or
such portions of such financings as may be required for Buyer to have sufficient
funds to consummate the transactions contemplated hereby if not all of the
proceeds of such financings are so required) on substantially the terms set
forth in such letters and subject to the negotiation and execution of
documentation relating to such financings which is reasonably satisfactory to
Buyer.
Section 9.13. Due Diligence. The results of such additional due
diligence, including without limitation with respect to environmental matters
and customer investigations and interviews, as
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24
Buyer undertakes with respect to the Business and the Purchased Assets shall be
satisfactory to Buyer; provided, however, that this condition shall be deemed
deleted from this Agreement on April 15, 1998 unless, on or prior to such date,
Buyer has given written notice to Seller that this condition has not been
satisfied and, in the event Buyer gives Seller such notice, Seller or Buyer may
terminate this Agreement.
Section 9.14. Final Agreement on Allocation of Purchase Price. Buyer
and Seller shall have reached final agreement on the Allocation of Purchase
Price set forth in preliminary form on Schedule 2.5.
Section 9.15. Aero-Safe Agreement. Buyer shall have received a copy of
the Aero-Safe Sharing Agreement duly authorized, executed and delivered by
Seller and Aero Safe.
ARTICLE 10. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 10.01. Survival; Certain Limitations.
(a) The Parties hereto agree that the covenants, agreements,
guarantees, representations and warranties contained in this Agreement
shall survive the Closing until all obligations of the parties
hereunder and under the other closing documents have been satisfied in
full, except that no claim by Buyer against Seller based upon a breach
of any representation or warranty contained in Article 4 of this
Agreement (other than Sections 4.01, 4.02 (other than clause (b)
thereof), 4.03, 4.04, 4.08, 4.13 and 4.18) may be made unless Buyer
gives notice thereof to the Seller no later than 18 months following
the Closing Date, and no claim by Seller against Buyer based upon a
breach of any representation or warranty contained in Article 5 of this
Agreement (other than Sections 5.01, 5.02 (other than clause (b)
thereof), 5.03 and 5.04) may be made unless Seller gives notice thereof
to Buyer no later than 18 months following the Closing Date. No claim
by Buyer against Seller based upon a breach of any representation or
warranty contained in Section 4.13 hereof may be made unless the Buyer
give notice thereof to Seller no later than the expiration of the
applicable statute of limitations relating to the tax in question. No
claim by Buyer against Seller based upon a breach of any representation
or warranty contained in Section 4.18 hereof may be made unless the
Buyer give notice thereof to Seller no later than six years following
the Closing Date.
(b) Notwithstanding any other provision of this Agreement, (i)
Seller shall have no liability to Buyer for breaches of representations
and warranties contained in Article 4 of this Agreement or in any
certificate or other document making such representations and
warranties (except with respect to Section 4.26 hereof) except to the
extent that the aggregate amount of such liabilities exceeds
$100,000.00 and (ii) the aggregate liability of the Seller for breaches
of representations and warranties contained in Article 4 of this
Agreement (other than Sections 4.01, 4.02 (other than clause (b)
thereof), 4.03, 4.04 or 4.08) or in any
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25
certificate or other document making such representations and
warranties shall not exceed $6,500,000.00.
(c) Notwithstanding any other provision of this Agreement, (i)
Buyer shall have no liability to Seller for breaches of representations
and warranties contained in Article 5 of this Agreement or in any
certificate or other document making such representations and
warranties except to the extent that the aggregate amount of such
liabilities exceeds $50,000.00 and (ii) the aggregate liability of the
Buyer for breaches of representations and warranties contained in
Article 5 of this Agreement (other than Sections 5.01, 5.02 (except
clause (b) thereof), 5.03 or 5.04) or in any certificate or other
document making such representations and warranties shall not exceed
$6,500,000.00.
(d) If Buyer shall make any claim against Seller with respect
to a breach of the representation and warranty contained in Section
4.26 hereof (or in any certificate or other document making such
representation and warranty), then Buyer shall (i) take all action to
vest ownership of all of the accounts receivable with respect to which
such claim is made (the "Unpaid Receivables") in the Seller, and (ii)
assign the collection of the Unpaid Receivables to a collection agency
reasonably satisfactory to both Buyer and Seller with instructions to
collect such Unpaid Receivables in a commercially reasonable manner.
Section 10.02. Indemnification of Buyer by Seller. Seller agrees to
indemnify, defend and hold Buyer harmless from and against any and all losses,
claims, damages and liabilities (including interest, penalties and reasonable
attorneys' fees) that Buyer or its affiliates may suffer, sustain, incur or
become subject to arising out of or relating or due to (i) the breach of any
representation, warranty, covenant, undertaking or other agreement of Seller
contained in this Agreement or any other document delivered by Seller in
connection herewith, including without limitation any failure to pay or perform
any Assumed Liability; (ii) employment discrimination, wrongful termination,
severance benefits, workers compensation or other employee or employment matters
or claims by or with respect to employees or former employees of Seller for
claims arising out of or relating to such person's employment by Seller and
occurring prior to the Closing Date; (iii) the Contracts and Rights, to the
extent that such losses, claims, damages and liabilities arise out of or relate
to any act, omission, default, transaction, event or circumstance occurring
before the Closing; and (iv) claims or liability in connection with products of
the Business sold by Seller prior to the Closing.
Section 10.03. Indemnification of Seller by Buyer. Buyer agrees to
indemnify, defend and hold Seller harmless from and against any and all losses,
claims, damages and liabilities (including interest, penalties and reasonable
attorneys' fees) that Seller or its affiliates may suffer, sustain, incur or
become subject to arising out of or relating or due to (i) the breach of any
representation, warranty, covenant, undertaking or other agreement of Buyer
contained in this Agreement or any other document delivered by Buyer in
connection herewith; (ii) employment discrimination, wrongful termination,
severance benefits, workers compensation or other employee or employment matters
or claims by or with respect to former employees of Seller for claims arising
out of or relating to such person's employment by Buyer; (iii) the Contracts and
Rights, to the extent that
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26
such losses, claims, damages and liabilities arise out of or relate to any act,
omission, default, transaction, event or circumstance occurring after the
Closing; or (iv) claims or liability in connection with products of the Business
sold by Buyer after the Closing.
Section 10.04. Procedure for Indemnification.
(a) Any Party making a claim for indemnification hereunder
shall notify the indemnifying Party of the claim in writing, describing
the claim, the amount thereof, and the basis therefor. Such notice
shall be a condition precedent to any liability of the indemnifying
Party hereunder. The Party from whom indemnification is sought shall
respond to each such claim within 30 days of receipt of such notice.
Failure to so respond within such time period shall constitute an
admission of liability for the claim or claims to which the notice
related. No action shall be taken pursuant to the provisions of this
Agreement or otherwise by the Party seeking indemnification until the
expiration of the 30-day response period (unless reasonably necessary
to protect the rights of the Party seeking indemnification). If such
demand is based on a claim by a third party, the indemnifying Party
shall have the right to assume the entire control of the defense
thereof, including at its own expense, employment of counsel reasonably
satisfactory to the indemnified Party, and, in connection therewith,
the Party claiming indemnification shall cooperate fully to make
available to the indemnifying Party all pertinent information under its
control; provided, however, that such assumption shall not constitute,
or be deemed to be any evidence of, the indemnifying Party's admission
of liability to the indemnified Party with respect to such matter. No
settlement may be made by any indemnifying Party without the consent of
the indemnified Party, unless such settlement only requires the payment
of money damages and such amounts are paid in full by the indemnifying
Party. The indemnified Party may, at its own expense, participate in
any proceeding relating to any such claims as to which the indemnifying
Party has assumed control pursuant to this Agreement.
(b) The indemnified Party agrees to cooperate fully with the
indemnifying Party and its counsel in the defense against any asserted
liability for which indemnification is claimed. Subject to the
immediately preceding paragraph, any compromise of any asserted
liability by the indemnifying Party shall require the prior written
consent of the indemnified Party. If, however, the indemnified Party
refuses its consent to a bona fide offer of settlement which the
indemnifying Party wishes to accept and that involves no payment by or
limitation on the indemnified Party, the indemnified Party may continue
to pursue such matter, free of any participation by the indemnifying
Party, at the sole expense of the indemnified Party. In such event, any
obligation of the indemnifying Party to the indemnified Party shall be
equal to the lesser of (i) the amount of the offer of settlement which
the indemnified Party refused to accept plus the costs and expenses of
the indemnified Party prior to the date the indemnifying Party notifies
the indemnified Party of the offer of settlement, or (ii) the actual
out-of-pocket amount the indemnified Party is obligated to pay as a
result of such Party's continuing to pursue such matter. An
indemnifying Party shall be
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27
entitled to recover from the indemnified Party any additional expenses
incurred by such indemnifying Party as a result of the decision of the
indemnified Party to pursue such matter.
(c) The gross amount which an indemnifying Party is liable to,
for, or on behalf of the indemnified Party pursuant to this Section
(the "Indemnifiable Loss") shall not be reduced by any insurance
proceeds actually recovered by or on behalf of such indemnified Party
related to the Indemnifiable Loss or by any tax benefit to the
indemnified Party arising from the Indemnifiable Loss; provided,
however, that, if an indemnified Party shall have received or shall
have had paid on its behalf an indemnity payment in respect of an
Indemnifiable Loss and shall subsequently actually receive directly or
indirectly insurance proceeds or tax reductions in respect of such
Indemnifiable Loss, then such indemnified Party shall pay to such
indemnifying Party the amount of such insurance proceeds (subject to a
reasonable reduction representing a good-faith estimate of any increase
in insurance premiums caused by the payment of such insurance proceeds)
and tax reductions or, if less, the amount of such indemnity payment.
For purposes of this Section, tax reductions arising from an
Indemnifiable Loss shall be determined after taking into account the
tax increase, if any, arising from the receipt of insurance proceeds or
indemnification payments by or on behalf of the indemnified Party.
Section 10.05. Exclusivity. The indemnification provisions of this
Article 10 shall be the exclusive remedy of the Parties with respect to claims
under this Agreement or the certificates or other documents delivered in
connection herewith.
ARTICLE 11. MISCELLANEOUS
Section 11.01. Notices. All notices to a Party hereto shall be in
writing and delivered in person or mailed by certified mail, return receipt
requested, or sent by facsimile, or sent by Federal Express delivery, with
receipt showing acceptance signature, to such Party at its address set forth
below (or such other address as it may from time to time designate in writing to
the other parties hereto):
(a) If to Seller:
Applied Extrusion Technologies, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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28
With a copy to:
Applied Extrusion Technologies, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and with additional copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer:
▇/▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LP
Overlook Executive Park, Suite 1-D
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wyche, Burgess, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notice shall be deemed given upon receipt, on the next business day in the case
of Federal Express delivery, on the third business day after mailing in the case
of mailing and upon receipt in the case of fax transmission
Section 11.02. Reasonable Assurances. Each Party agrees that it will
execute and deliver, or cause to be executed and delivered, on or after the date
of this Agreement, all such other instruments and will take all reasonable
actions as the other Party may reasonably request from time to time in order to
effectuate the provisions and purposes of this Agreement.
Section 11.03. No Waiver. Each of the parties hereto shall have the
right at all times to enforce the provisions of this Agreement in strict
accordance with its terms and to pursue remedies
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for breach by any legal and equitable means, including by an action for specific
performance, notwithstanding any conduct or custom on its part in refraining
from doing so at any time or times. No failure to exercise and no delay in
exercising, on the part of Buyer or Seller, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The rights provided
are cumulative and not exclusive of any rights provided by law.
Section 11.04. Amendments and Waivers. This Agreement may be modified
or amended only by a writing signed by Buyer and Seller. No waiver of any term
or provision hereof shall be effective unless in writing signed by the Party
waiving such term or provision.
Section 11.05. Construction. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of the Commonwealth
of Massachusetts without regard to principles of conflicts of laws which would
cause the application of the domestic substantive laws of any other
jurisdiction. The non-exclusive forum for any dispute arising under this
Agreement shall be the state or federal courts sitting in Boston, Massachusetts.
The descriptive headings of the several Articles and Sections hereof are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 11.06. Binding Effect and Benefits; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective heirs, successors and assigns, except that this Agreement may not be
assigned by Buyer without the express written consent of Seller.
Section 11.07. Prior Agreements. This writing embodies the entire
agreement and understanding between the parties with respect to the transaction
contemplated herein and supersedes all prior discussions, understandings and
agreements concerning such matters.
Section 11.08. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
taken together shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
Section 11.09. Incorporation of Schedules. The Exhibits and Schedules
attached hereto are incorporated into this Agreement and shall be deemed a part
hereof as if set forth herein in full. References herein to "this Agreement" and
the words "herein," "hereof" and words of similar import refer to this Agreement
(including its Exhibits and Schedules as an entirety). In the event of any
conflict between the provisions of this Agreement and any such Schedule, the
provisions of this Agreement shall control.
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Section 11.10. No Third Party Rights. This Agreement is not intended
and shall not be construed to create any rights in any persons other than Seller
and Buyer and no person shall assert any rights as third party beneficiary
hereunder.
Section 11.11. Expenses. Each of the Parties hereto shall bear the
expenses incurred by it relating to the transactions contemplated by this
Agreement, including without limitation fees and expenses of counsel, subject to
such other arrangements as may be expressly set forth in the other documents
executed or to be executed in connection with this Agreement.
Section 11.12. Termination. This Agreement may be terminated at any
time before Closing:
(i) by the mutual written consent of the parties hereto; or
(ii) by Seller if the Closing shall not have taken place on or
before the date that is 45 days after the date hereof; or
(iii) automatically if the Closing shall not have taken place on or
before the date that is 75 days after the date hereof, unless
extended by written agreement of the parties hereto; or
(iv) by Seller if any of the representations, warranties or
covenants made by Buyer under this Agreement is not true or is
breached in any material respect, or by Buyer if any of the
representations, warranties or covenants made by Seller under
this Agreement is not true or is breached in any material
respect and, in either case, such untruth or breach remains
uncured for more than five business days following written
notice of the untruth or breach; or
(v) by Seller or Buyer pursuant to Section 9.12 or 9.13 hereof.
Upon termination of this Agreement under this Section 11.12, the Parties shall
be released from all obligations arising under this Agreement except for
obligations arising under Section 7.07 and Article 10 hereof and except as to
liability (A) for willful misrepresentation or nondisclosure in connection with
any representation or warranty made herein, (B) for any breach of the
representations or covenants contained in Section 7.09 hereof or (C) for willful
breach of any other covenant or agreement herein contained.
Section 11.13. Assignments of Certain Instruments. Notwithstanding any
other provision of this Agreement, to the extent that the assignment by Seller
of any Contract or Right to be assigned hereunder shall require the consent or
approval of another party thereto, this Agreement and the ▇▇▇▇ of Sale shall not
constitute an assignment or an attempted assignment thereof if such assignment
or attempted assignment would constitute a breach thereof. Seller shall use its
reasonable commercial efforts to obtain the written consent or approval to the
assignment to Buyer of each such instrument with respect to which such consent
is required for such assignment. If such consent or approval has
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31
not been obtained on or prior to the Closing Date, each Party agrees to
cooperate with the other Party in any reasonable arrangement necessary or
desirable to provide to Buyer the benefits of the instrument (subject to the
assumption by Buyer of Seller's obligations thereunder).
Section 11.14. Disclaimer of Other Representations and Warranties.
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, THE PURCHASED
ASSETS WILL BE SOLD BY SELLER TO BUYER ON AN "AS IS, WHERE IS" BASIS AND WITHOUT
ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE,
EXCEPT AS MAY BE SPECIFICALLY SET FORTH HEREIN, SELLER MAKES NO REPRESENTATION
OR WARRANTY AS TO THE COMPLETENESS OR ACCURACY OF ANY INFORMATION PREPARED FOR
OR PRESENTED TO BUYER IN CONNECTION WITH THE SALE AND PURCHASE OF THE BUSINESS
OR ANY DISCUSSIONS OR NEGOTIATIONS RELATING THERETO.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as a sealed instrument as of the date first above written.
PRONET CORPORATION
By: /s/ M. ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Print Name: M. ▇▇▇▇▇▇ ▇▇▇▇
Title: President
APPLIED EXTRUSION TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Chief Financial Officer
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the undersigned Founders Fund of South Carolina,
LP ("Founders Fund") hereby guarantees to Applied Extrusion Technologies, Inc.
("Seller") the punctual payment and performance of all of the obligations of
ProNet Corporation ("Buyer") under the foregoing Asset Purchase and Sale
Agreement, this guarantee being a guarantee of payment and not of collectibility
and being in no way conditional or contingent; and, in the event any of Buyer's
obligations under such Agreement are not paid and performed in full in
accordance with such Agreement, Founders Fund will, without demand, protest or
other notice of any kind whatsoever, from Seller or otherwise,
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32
immediately pay and perform the same in full; provided, however, that this
guarantee shall terminate and shall be of no further force or effect if and when
the Closing (as defined in such Agreement) shall occur.
IN WITNESS WHEREOF, Founders Fund has duly executed and delivered this
joinder as a sealed instrument as of the date of such Agreement.
FOUNDERS FUND OF SOUTH CAROLINA, LP
By Vaxa Capital Management, LLC,
its general partner
By /s/ M. ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Print Name: M. ▇▇▇▇▇▇ ▇▇▇▇
Title: Principal
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