Exhibit 99.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 13th day of August, 2004, by
and
between Ag-Bag International Limited, a
Delaware corporation ("Seller") and
Miller St. Nazianz, Inc., a Wisconsin
corporation ("Buyer").
RECITALS
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WHEREAS, Seller is engaged in the manufacture and sale of
complete
sealed plastic storage systems for
agricultural and environmental uses (the
"Business"). Buyer desires to purchase and
Seller desires to sell substantially
all of the assets owned by and/or used by
Seller in the operation of the
Business, upon the terms and conditions
hereinafter set forth.
AGREEMENT
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NOW, THEREFORE, in consideration of the warranties, covenants
and
agreements set forth herein, and for other
good and valuable consideration, the
receipt and sufficiency of which is hereby
acknowledged, the parties hereto
agree as follows:
1. PURCHASE AND
ASSIGNMENT OF ASSETS OF SELLER.
1.1 PURCHASED ASSETS.
Seller shall sell, transfer, assign, convey
and deliver to Buyer, free and clear of all
liens, security interests, claims
and encumbrances, except for (i) taxes not
yet due and payable and (ii) those
liens, security interests and the rights of
lessors under certain leases and of
licensors under certain licenses, none of
which, alone or in the aggregate
materially interfere with the present use
of the following or the operation of
the Business (as scheduled on Schedule 1.1,
the "Permitted Encumbrances"), taken
as a whole, and Buyer will acquire, on the
Closing Date (as hereinafter defined)
all right, title and interest in and to all
of the assets owned by or used by
Seller in the operation of the Business
(the "Purchased Assets"), except those
Excluded Assets set forth in Section 1.2
below, as follows:
(a) All inventory
usable by Seller in the operation of the
Business and accepted by Buyer
("Inventory");
(b) All machinery,
equipment, cranes and other building
fixtures, jigs and manufacturing fixtures,
furniture, office supplies, vehicles,
software programs, computer printouts,
telephone systems and numbers, data bases
and all related maintenance parts
("Equipment");
(c) All software
products and any other proprietary products
and related object, source, and all other
computer programming codes, graphics
sources, scripts, user manuals and
instructions, and related items developed by
Seller or used in Seller's business,
subject, however, to the rights of the
licensors under all applicable
licenses;
(d) All technical
information, documentation and descriptive
materials used in connection with or
otherwise related to the Seller's business;
(e) All patents,
trademarks, service marks, trade names,
copyrights, inventions, trade secrets,
discoveries, and all rights to sue for
past, present or future infringement
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or appropriation thereof, internet domain
names, formulas and other proprietary
know-how, whether or not patentable and any
other intellectual property;
(f) All rights and
interests in and to purchase orders,
license agreements, maintenance and service
agreements and other contracts with
Seller's customers, sales orders issued to
Seller's suppliers, leases of
personal and real property, and other
contracts with Seller's suppliers (the
parties expressly acknowledge herein that
Seller's existing contract with Up
North Plastics, Inc. dated December 20,
1991, and as amended June 19, 2002,
February 1, 1993, November 17, 1993,
December 20, 1995, and February 2, 2000
shall not be assigned to Buyer and Buyer
shall not assume said contract) and, in
addition to the foregoing, any other
contracts of Seller which Buyer expressly
elects to assume, provided that in each
case Seller obtains any required consent
of third parties to the assignment thereof
to Buyer, or Buyer in its sole
discretion waives same ("Contracts");
(g) All books and
records, including all customer lists,
sales and promotional materials, warranty
records, personnel records, payroll
records, product engineering and
development records and research and
development records; and
(h) All other assets
and rights of Seller, unless expressly
listed as Excluded Assets in Section
1.2.
1.2 EXCLUDED ASSETS.
The following assets and rights owned or
leased by Seller, as the case may be, shall
not be sold by Seller to Buyer and
shall be retained by Seller following the
Closing ("Excluded Assets"):
(a) All cash;
(b) All accounts
receivable;
(c) All real
estate;
(d) The paint booths
and systems;
(e) The Visual
computer system;
(f) Seller's corporate
minute and stock record books and
corporate seal, general accounting records
and books of original entries,
checkbooks and cancelled checks, and tax
returns, reports and related records;
and
(g) Seller's rights
and interest in and to any contracts not
assumed by Buyer, if any.
1.3 DELIVERY OF
PURCHASED ASSETS. At the Closing, Seller shall
transfer and assign all of the Purchased
Assets to Buyer by delivery to Buyer of
an appropriate bill of sale, assignment
documents and such other instruments of
transfer and conveyance as shall be
necessary to vest in Buyer full and complete
ownership, and legal and equitable title,
to the Purchased Assets free and clear
of any and all liens and encumbrances of
any kind or nature whatsoever except
for the Permitted Encumbrances; all such
documents to be in form and substance
satisfactory to counsel for Buyer.
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2. PURCHASE
PRICE.
2.1 AMOUNT OF PURCHASE
PRICE. As consideration for the Purchased
Assets, Buyer will assume the Assumed
Liabilities and will pay to Seller an
amount equal to the following (the
"Purchase Price"):
(a) The amount of
inventory on hand of new finished goods
and components equal to the amount of such
inventory items that were sold or
used in the manufacturing process during
the twelve (12) month period prior to
Closing, valued at actual cost; plus the
amount of other inventory items,
accepted by Buyer, valued at Seller's cost
less accumulated reserve; plus
(b) The amount of
inventory on hand of new repair parts
equal to the sales of such repair parts
during the twenty-four (24) month period
prior to Closing valued at actual cost;
plus the amount of other repair parts
inventory, accepted by Buyer, valued
Seller's cost less accumulated reserve;
plus
(c) The amount of
inventory on hand of used finished goods,
accepted by Buyer, valued at the lower of
cost or net book value (cost minus
accumulated reserves for each machine)
times 85%; plus
(d) The amount of
Equipment valued at the depreciated book
value of each item; plus
(e) One Million Two
Hundred Thousand Dollars ($1,200,000);
minus
(f) The amount of the
warranty expense accrued by Seller
during the twelve (12) month period prior
to Closing.
2.2 ALLOCATION OF
PURCHASE PRICE. The Purchase Price should be
allocated among the Purchased Assets as
provided on Schedule 2.2 to be attached
hereto at the Closing and incorporated
herein by this reference to be prepared
by mutual agreement of Seller and
Buyer.
3. ASSUMPTION OF
LIABILITIES. At the Closing, Buyer will only assume
and perform the obligations of Seller (i)
arising from and after the Closing
associated with the ownership of the
Purchased Assets, including, but not
limited to, the Contracts and (ii) arising
from and after the Closing associated
with the operation of the Business
(collectively, the "Assumed Liabilities").
Except for the Assumed Liabilities, Seller
is retaining all of its debts,
liabilities and obligations existing as of
the Closing and Buyer will not assume
and will not be obligated to pay, perform
or discharge any debts, liabilities or
obligations of Seller, whether actual or
contingent including, without
limitation and if any, obligations relating
to Seller's plastic supply agreement
with Up North Plastics, Inc., employee
pension, profit sharing, vacation, health
insurance or any other employee benefits,
income taxes, sales or use taxes, or
product warranty or product liability
claims arising prior to or as a result of
the Closing.
4. CLOSING DATE.
The closing (consummation of the transactions
contemplated by this Agreement) ("Closing")
shall take place at Seller's
corporate office on October 29, 2004, or at
such other time and place as the
parties may agree ("Closing Date").
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5.
REPRESENTATIONS OF SELLER. For purposes of this Section 5:
(a) References to the
"knowledge" of Seller means the actual
knowledge of Seller's management personnel;
and
(b) No specific
representation or warranty shall limit the
applicability of a more general
representation or warranty.
Seller hereby represents to the Buyer as follows:
5.1 SELLER'S
ORGANIZATION. Seller is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
Delaware, and has the corporate power to
own the Purchased Assets associated
with the Business as it is now being
conducted and is qualified to do business
and is in good standing in all states where
it does business.
5.2 SELLER'S
AUTHORITY. The execution and delivery of this
Agreement, and all documents to be executed
and delivered by Seller pursuant to
this Agreement, have been duly and validly
authorized Board of Directors of
Seller, and at the Closing, will have been
duly approved by the stockholders of
Seller. This Agreement is, and such other
documents when executed and delivered
by Seller will be, valid and binding
obligations of Seller enforceable in
accordance with their respective terms.
5.3 TITLE TO AND
CONDITION OF PROPERTY. On the Closing Date, (a)
Seller shall have good and marketable title
to, undisputed possession of and
complete and unrestricted power to sell,
assign, transfer, convey and deliver
all of the Purchased Assets free and clear
of all options, adverse claims,
restrictions, debts, claims, security
interests, defects of title, liens,
pledges, charges or encumbrances of any
nature whatsoever, except for the
Permitted Encumbrances and (b) there shall
not be as of the Closing Date any
fact or circumstance known to Seller which
may or could result in any liability
to Buyer, Seller or the Business by reason
of any local, state or federal
statute or ordinance.
5.4 CONDITION OF
PURCHASED ASSETS. To the knowledge of Seller,
all of the Purchased Assets shall be, as of
the Closing Date, in good working
condition in all material respects.
5.5 NO CONSENT
REQUIRED. Seller shall be solely responsible for
any consent, approval, order or
authorization of, or declaration, filing or
registration with, any person or
governmental authority as may be required to be
made or obtained in connection with the
authorization, execution, delivery or
performance of this Agreement or the
transactions contemplated hereby and
thereby, other than (i) such as will have
been made or obtained as of the
Closing Date, and (ii) such consents,
approvals, orders, authorizations,
declarations, filings, or registrations the
failure to make or obtain will not
have a material adverse effect on Seller,
its business, operations or financial
condition, or on the Purchased Assets (a
"Material Adverse Effect").
5.6 FINANCIAL
STATEMENTS. Seller has delivered annual income
statements and balance sheets for its three
most recent fiscal years (the
"Annual Financial Statements") to Buyer.
The Annual Financial Statements have
been prepared in accordance with generally
accepted accounting principles,
consistently applied. To Seller's
knowledge, the books, records
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and accounts of the Business accurately and
fairly reflect in all material
respects the activities, transactions and
dispositions of assets relating to the
Business.
5.7 CHANGES SINCE
RECENT BALANCE SHEET DATE. With respect to the
period from and after the date of the June
30, 2004 Balance Sheet (the "Recent
Balance Sheet"), to Seller's knowledge,
there has not been any material adverse
change in the condition of the Purchased
Assets or the Business of Seller,
except changes in the ordinary course of
business.
5.8 TAXES. Seller has
duly filed or caused to be filed all
federal, state, local and foreign tax
returns, reports and declarations required
to be filed by it, and has paid or made
adequate provisions on the books and
records of Seller for the payment of all
Taxes (as hereinafter defined) due in
respect thereof. As used herein, "Taxes"
shall mean all taxes, fees, levies or
other assessments including but not limited
to income, excise, property, sales,
social security and unemployment
compensation taxes imposed by the United
States, any state, county or local
government, and any interest or penalty
relating to such taxes or other
assessments, in each case that relate to the
Purchased Assets or the Business or could
become a lien thereon.
5.9 LITIGATION AND
PROCEEDINGS. There is no action, suit or
proceeding pending or, to the knowledge of
the Seller, threatened against the
Seller, that would prevent the consummation
of the transactions contemplated by
this Agreement. Except as otherwise
disclosed on Schedule 5.9, there is no suit,
action or legal, administrative,
arbitrative or other proceeding pending, nor
does Seller have written notice or actual
notice of any threatened suit, action
or legal, administrative, arbitrative or
other proceeding in connection with the
Seller's Business or Purchased Assets; and
to Seller's actual knowledge, Seller
is not under governmental investigation
with respect to any violation of any law
or administrative regulation, federal,
local or state, with respect to its
design, manufacture or sale of any of the
items sold and Seller has no actual
knowledge of any existing facts or
circumstances which would constitute a basis
for such action, proceeding, investigation,
suit or arbitration.
5.10 LABOR AGREEMENTS. Seller has no obligations, contingent or
otherwise, under any written employment
contract (and to Seller's knowledge, any
oral employment contracts), collective
bargaining agreement, executive
employment agreement, executive
compensation agreement, employees' pension or
retirement plan, thrift plan, employees'
insurance plan, employees' profit
sharing or employees' stock purchase
plan.
5.11 COMPLIANCE WITH LAW. To the knowledge of Seller, Seller
and
the methods and means employed by it in the
operation of the Business and its
ownership of the Purchased Assets are in
compliance with all applicable federal,
state, local and foreign laws, regulations
or orders of any court, or federal,
state, municipal or other governmental
department, commission, board, agency or
other instrumentality (including without
limitation, laws and regulations
applicable to environmental standards,
wages and hours, civil rights and
occupational health and safety), except
where such non-compliance would not have
or result in a Material Adverse Effect.
5.12 CUSTOMERS AND SUPPLIERS. As soon as possible after the
date
of this Agreement, but in no event later
than September 1, 2004, Seller shall
provide Buyer with a list of the twenty
(20) largest customers of the Business
in terms of dollar volume of sales for the
three (3) preceding fiscal years and
for the current fiscal year-to-date,
showing the approximate total dollar amount
of sales by Seller to each such customer
during each such fiscal year and a list
of the twenty (20) largest suppliers of the
Business in terms of dollar volume
of purchases for the
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three (3) preceding fiscal years and for
the current fiscal year-to-date,
showing the approximate total dollar amount
of purchases by Seller from each
supplier during each such fiscal year. In
the event the listed customers do not
represent at least eighty percent (80%) of
the total sales volume in any fiscal
year, the listing of customers shall be
expanded to include the next largest
customers such that the total list of
customers in the fiscal year represent at
least eighty percent (80%) of the total
sales volume for that fiscal year. To
Seller's knowledge, there has not been any
material adverse change in the
Business relationship of Seller with any of
such customers or suppliers since
the date of the Recent Balance Sheet.
5.13 CONTRACTS AND COMMITMENTS. Each of the Contracts is in
full
force and effect and has not been modified
or amended. Seller is not and no
other party is in material breach or
default under any Contract, and, to
Seller's knowledge, no event has occurred
which constitutes, or with the lapse
of time or the giving of notice, or both,
would constitute such a breach or
default by Seller thereunder. True, correct
and complete copies of all of the
Contracts have been delivered to Buyer.
Except as specifically disclosed
pursuant to other provisions of this
Agreement or in Schedule 5.13, Seller is
not a party to any:
(a) Purchase Order
which by its terms will not be filled
within sixty (60) days of its date, is in
excess of the normal, ordinary and
usual requirements of the Business or
provides for the purchase of
goods/services at a price in excess of
$25,000;
(b) Sales Order which
by its terms will not be filled within
sixty (60) days of its date, quotes prices
which are not in the ordinary course
of Business or provides for the sale of
goods/services at a price in excess of
$25,000;
(c) agreement with any
agent, consultant, advisor,
salesperson, sales agent or representative,
distributor or dealer, or any
agreement or arrangement providing for the
payment of any bonus or commission
based on sales or earnings;
(d) except for
Seller's standard limited warranty, any
agreement requiring Seller to accept the
return of inventory or merchandise in
the possession of wholesalers,
distributors, retailers or other customers;
(e) agreement
requiring Seller to assign any interest in any
trade secret or prohibiting or restricting
Seller from competing in any Business
or geographical area or soliciting
customers or otherwise restricting it from
carrying on its Business anywhere in the
world;
(f) any other
agreement, lease, license or commitment which
is material to the Purchased Assets or the
conduct of the Business.
5.14 INTELLECTUAL PROPERTY. As soon as possible after the date
of
this Agreement, but in no event later than
September 1, 2004, Seller shall
provide Buyer with a schedule that contains
all of the patents, trademarks,
copyrights, and similar rights and
applications therefor, expired or currently
in effect, ever owned or obtained by
Seller, or any affiliate of Seller. No
claims of infringement are presently
pending or, to Seller's knowledge,
threatened with respect to any of such
rights.
5.15 ALL NECESSARY ASSETS. The Purchased Assets constitute all
of
the tangible and intangible assets, rights,
and properties necessary to permit
Buyer to conduct the Business in
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all material respects in the same manner as
the Business has been conducted by
the Seller prior to the date hereof.
5.16 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Closing
Date,
the Seller will not have any material
debts, liabilities or obligations of any
nature affecting the Business, or the
Purchased Assets (whether accrued,
absolute, contingent, direct, indirect,
perfected, inchoate, unliquidated or
otherwise and whether due or to become due)
arising out of transactions entered
into on or prior to the Closing Date, or
any transaction, series of
transactions, action or inaction occurring
on or prior to the Closing Date, or
any state of facts or condition known to it
existing on or prior to the Date
Closing (regardless of when such liability
or obligation is asserted), including
but not limited to liabilities or obl
