EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
AGREEMENT made and entered into as of July 31, 2000, by NORWESCO, INC, a
Minnesota corporation ("Purchaser"), and RAVEN INDUSTRIES, INC., a South Dakota
corporation ("Seller").
BACKGROUND
A. Seller is engaged in the business of manufacturing fiberglass,
polyethylene and dual laminate storage tanks and related accessories for use in
a variety of industries throughout the United States through one of its
unincorporated divisions (the "Plastics Division").
B. Seller maintains manufacturing facilities in connection with its
Plastics Division located in Sioux Falls, South Dakota (the "South Dakota
Facilities"), Washington Court House, Ohio (the "Ohio Facility"), Albertville,
Alabama (the "Alabama Facility" and, together with the South Dakota and Ohio
Facilities, the "Facilities"), and Tacoma, Washington (the "Excluded Facility").
C. Seller desires to sell and assign to Purchaser, and Purchaser desires
to purchase and assume from Seller, on the terms and conditions set forth in
this Agreement, substantially all of the assets and certain liabilities of
Seller that are currently being used by the Plastics Division in or related to
the conduct of its business at the Facilities (the "Business"), but specifically
excluding any assets or liabilities related exclusively to its operations at the
Excluded Facility.
AGREEMENT
In consideration of the background and of the mutual agreements set forth
in this Agreement, Seller and Purchaser agree as follows:
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1. PURCHASE AND SALE OF ASSETS.
(a) Seller shall sell, assign, transfer, and deliver to Purchaser on
the Closing Date (as defined in this Agreement), and Purchaser shall purchase
from Seller on the Closing Date, all of the assets (other than the Excluded
Assets as defined in Section 1(d)) used in the operation of the Business,
including without limitation the following:
(i) all manufacturing equipment as described on Schedule
1(a)(i) attached hereto (the "Equipment");
(ii) the real estate and all improvements thereon described on
Schedule 1(a)(ii) attached hereto (the "Real Estate");
(iii) the vehicles described on Schedule 1(a)(iii) attached
hereto (the "Vehicles");
(iv) all product molds described on Schedule 1(a)(iv) attached
hereto (the "Molds");
(v) all inventory of finished goods, work in progress, and
materials used in the Business described on Schedule 1(a)(v) attached
hereto (the "Inventory");
(vi) all customer lists, customer files, non-compete
agreements, if any, computer software, and intangible property, except,
in the case of intangible property that Seller needs to continue the
operation of its remaining businesses and the Excluded Facility,
including without limitation, customer records, employee and other
corporate policy manuals, vendor records, production records, Seller's
financial information, and Seller's tax information, Seller shall
retain ownership and possession of such intangible property and
Purchaser shall be given, upon reasonable notice to Seller, unlimited
access to, and the right to make and retain copies of such intangible
property as needed for Purchaser's operation of the Business. Seller
agrees
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to maintain all such intangible property for a minimum of 3 years
following the date of this Agreement and for any such longer period
required by the applicable statute of limitations.
(vii) all open orders, contracts or agreements described on
Schedule 1(a)(vii);
(viii) all accounts receivable as described on Schedule
1(a)(viii) attached hereto (the "Accounts Receivable"); and
(ix) all other assets used in the Business.
All items described in Sections 1(a)(i) through 1(a)(ix), other than the
Excluded Assets, are collectively referred to as the "Assets."
(b) Seller shall deliver the Assets to Purchaser free and clear of any
lien, claim or encumbrance of any nature whatsoever, other than the Contracts
(as defined below) and the Current Liabilities (as defined below) and, with
respect to the Real Estate, other than the Permitted Encumbrances (as defined
below).
(c) Seller's sale, assignment, transfer, conveyance, and delivery of
the Assets shall be effected by Seller's execution and delivery at the Closing
(as defined below) of the following:
(i) a Bill of Sale in the form attached to this Agreement as
Exhibit A;
(ii) General Warranty Deeds in a form satisfactory to
Purchaser conveying the Real Estate (including all buildings and
improvements located on the Real Estate, all easements and other rights
benefiting or appurtenant to the Real Estate, all contracts,
warranties, permits, variances, licenses and approvals benefiting the
Real Estate, and copies of all blueprints, surveys and plans and
specifications relating to the Real Estate currently in the possession
of Seller, Seller's counsel, or other consultants or advisors of
Seller), subject only to the Permitted Encumbrances;
(iii) Title Insurance Policies or marked-up Title Insurance
Commitments
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meeting the requirements of Section 10 hereof and any abstracts or
certificates of title for the Real Estate currently in the possession
of Seller, Seller's counsel, other consultants or advisors of Seller,
or any title company;
(iv) an Assignment and Assumption Agreement attached to this
Agreement as Exhibit B; and
(v) such other instruments of transfer as may be reasonably
required by Purchaser to effect such transfers, including assignments
of motor vehicle certificates of title and any affidavits required by
law or by the title company in connection with the Real Estate.
(d) Excluded Assets. The following property and assets of Seller used
in connection with the Business are excluded from sale to the Purchaser:
(i) the "Raven" brand name and all trademarks, trade names,
service marks and related marks and logos with respect thereto;
(ii) all corporate computer and telephonic networking hardware
and software required in the operation of Seller's business that is not
being acquired in the transactions contemplated under this Agreement,
all of which is described on Schedule 1(d); and
(iii) any open order, contract or agreement not listed on
Schedule 1(a)(vii).
(e) Notwithstanding Section 3(d):
(i) Purchaser shall have the right to use Registered trademark
#815,264 and the "Raven" name, but not "Raven Industries," "Raven,
Inc." or "Raven Industries, Inc.", for a period of 24 months following
the Closing Date, under the License Agreement attached hereto as
Exhibit C (the "License Agreement");
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(ii) Seller agrees to continue to provide telephone service to
the South Dakota Facilities acquired by Purchaser, and Purchaser agrees
to reimburse Seller for the cost of such telephone service, for such
time as is required for Purchaser to establish independent telephone
services to such facilities; and
(iii) Seller agrees to allow Purchaser to use the parking lot
located at the corner of North "E" Avenue and West Algonquin Street at
the South Dakota Facilities, on a non-exclusive basis and in a manner
consistent with Seller's use of the parking lot in connection with the
polyethylene plant at the South Dakota Facilities prior to the Closing
Date, and to provide Purchaser an easement across such parking lot from
North "E" Avenue to the polyethylene plant at the South Dakota
Facilities, for a period of up to 12 months after the Closing Date, to
allow for the construction of new street access and a parking lot for
use of the polyethylene plant at the South Dakota Facilities.
2. ASSUMED LIABILITIES. At the Closing, Purchaser shall assume the
obligations of Seller (a) accruing under any contracts assumed by Purchaser as
described on Schedule 2(a) hereto (the "Contracts"), and (b) the current
liabilities of the Business as of the Closing Date as shown on Schedule 2(b)
attached to this Agreement and updated as of the Closing Date (the "Current
Liabilities"), except:
(i) current liabilities in connection with the employment or
termination of the employment of Seller's employees;
(ii) current liabilities in connection with workers'
compensation benefits;
(iii) current liabilities in connection with Sellers' general
liability insurance; and
(iv) current liabilities in connection with any extended
product warranty or performance guarantee.
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3. EXCLUDED LIABILITIES.
(a) Except for the Contracts and the Current Liabilities, Purchaser
shall not assume and shall not be liable for any debts, obligations, or
liabilities of Seller of any nature whatsoever. Without limiting the generality
of the foregoing Purchaser is not assuming, and shall not be liable for, any
debts, liabilities, or obligations (contractual or otherwise) of Seller of any
kind other than the Contracts and the Current Liabilities whether now existing
or hereafter arising, whether accrued or contingent, arising directly or
indirectly from or in connection with:
(i) the operation of the Business on or prior to the Closing
Date (including without limitation any violations of or liabilities
under any Environmental Law (as defined herein) and any warranty,
performance guarantee, or other liability for products sold on or prior
to the Closing Date);
(ii) the condition of the Real Estate (including groundwater),
buildings or other improvements on or prior to the Closing Date;
(iii) any breach or default by Seller with respect to
obligations to third parties;
(iv) any liability or obligation of Seller in connection with
any federal, state, or local taxes (whether in the nature of income,
sales, use, employment, withholding, excise, property, customs, gross
receipts, levied special assessments that relate to pre-closing periods
and are not included in Current Liabilities, or other taxes or duties
of any nature whatsoever), or penalties, interest or fines in respect
of any such taxes, or any reporting requirement or estimated tax
payable with respect to this Agreement or the transactions contemplated
in this Agreement;
(v) any litigation, investigation or other proceeding pending
or threatened
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in connection with Seller or the Business;
(vi) any liability or obligation of Seller to or with respect
to any employee or employee benefit plan of Seller, including without
limitation any such liability listed as a current liability on any of
Seller's financial statements;
(vii) any liability or obligation with respect to any workers'
compensation claims arising from activities undertaken prior to the
Closing Date, including without limitation any such liability listed as
a current liability on any of Seller's financial statements;
(viii) any liability or obligation with respect to Seller's
general liability insurance; including without limitation any such
liability listed as a current liability on any of Seller's financial
statements;
(ix) any liability or obligation with respect to any
performance guarantee of Seller, including without limitation any such
liability listed as a current liability on any of Seller's financial
statements; or
(x) any liability or obligation relating to the Excluded
Assets.
All of the liabilities described in this Section 3(a) are collectively
referred to as the "Excluded Liabilities".
(b) Seller covenants and agrees that Seller shall perform or pay
promptly when due, all of the Excluded Liabilities, except, if Seller or
Purchaser receives a warranty claim for product sold by Seller that is either
produced by, or in the inventory of, Purchaser at the time of such claim,
Purchaser agrees to process such claim and provide replacement product to the
customer unless the cost of any such replacement product will exceed $5,000.
Purchaser shall invoice Seller, on a monthly basis, for Purchaser's cost to
provide such replacement product. Seller agrees to promptly pay each such
invoice. If Seller or Purchaser receives a warranty claim (i) that is disputed,
(ii) that is not for product
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that is either currently produced by, or in the inventory of, Purchaser, or
(iii) for which the cost of replacement product will exceed $5,000, Seller shall
process and pay all costs and expenses associated with such claim.
4. PURCHASE PRICE. The aggregate purchase price to be paid by Purchaser to
Seller for the Assets shall be $12,500,000 subject to adjustment under Section 5
of this Agreement (the "Purchase Price").
(a) Payment of Purchase Price. The Purchase Price shall be paid as
follows:
(i) On the Closing Date, by wire transfer of immediately
available funds (on the basis of the Estimated Balance Sheet prepared
under Paragraph 5(a)(ii) below), $12,250,000, as adjusted under Section
5 of this Agreement, less the cost of construction of new street access
and a parking lot for use of the Sioux Falls, South Dakota polyethylene
plant, as shown on a fixed price contractor's bid to be provided by
Seller to Purchaser prior to Closing, that is reasonably acceptable to
Purchaser and in compliance with all legal requirements for
construction of same, (the "Closing Payment"); and
(ii) $250,000 by a promissory note in the form of Exhibit D
attached hereto (the "Promissory Note"). The Promissory Note shall bear
interest at a rate equal to the prime rate of interest as published in
the Wall Street Journal as of the Closing Date, which rate shall be
adjusted on a quarterly basis, with the principal balance plus accrued
interest payable to Seller on August 1, 2005. If Purchaser sells the
assets of the Sioux Falls, South Dakota fiberglass tank manufacturing
plant within 60 days of the Closing Date (the "Fiberglass Plant"), the
Promissory Note shall be assigned to such purchaser of the Fiberglass
Plant by Purchaser and Purchaser shall be relieved of all obligations
for the remaining principal balance and accrued interest on the
Promissory Note. If Purchaser does not sell the assets of the
Fiberglass
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Plant within 60 days of the Closing date, the Promissory Note shall be
cancelled and Purchaser shall be relieved of all obligations for the
remaining principal balance and accrued interest on the Promissory
Note.
(iii) Within 5 days of delivery of the Closing Balance Sheet
(as defined below) to Purchaser, Purchaser shall pay to Seller, by wire
transfer or other immediately available funds, the amount by which the
Purchase Price as adjusted under Section 5(b) exceeds the sum of the
Closing Payment plus the principal amount of the Promissory Note, or,
if the Purchase Price as adjusted under Section 5(b) is less than the
sum of the Closing Payment plus the Principal Amount of the Promissory
Note, Seller shall pay to Purchaser, by wire transfer or other
immediately available funds, the amount by which such sum exceeds the
Purchase Price as adjusted.
(b) At the Closing, Purchaser shall assume the Contracts and the
Current Liabilities under an Assignment and Assumption Agreement in the form
attached to this Agreement as Exhibit B.
(c) Within 5 days of the receipt by Purchaser of the Closing Balance
Sheet (as defined below) and the accompanying working papers used in calculating
the amount of any accruals on the Closing Balance Sheet for (i) amounts owing to
employees or former employees of the Business (including self-insurance accruals
for employee welfare plans and workers' compensation benefits), (ii)
self-insurance accruals for Seller's general liability insurance, and (iii) any
performance guarantee, Purchaser agrees to pay to Seller an amount equal to the
sum of such accrued liabilities, provided that such amounts are consistent with
such liabilities and accruals as shown on the Financial Statements (as defined
below). Thereafter, Purchaser shall be under no further obligation to pay to
Seller any amounts for any employee-related liabilities, any self-insurance
accruals, or any performance guarantees.
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(d) Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets by the parties upon final determination of the Closing Balance
Sheet. Each party agrees not to assert in connection with any tax return, audit
or other similar tax proceeding any allocation of the Purchase Price or portion
of the Purchase Price that differs from such allocation.
5. ADJUSTMENTS OF CLOSING PAYMENT AND PURCHASE PRICE.
(a) Closing Payment Adjustment. The Closing Payment shall be increased
by any amount by which the Estimated Working Capital (as defined below) exceeds
the Average Working Capital (as defined below), or reduced by any amount by
which Average Working Capital exceeds the Estimated Working Capital.
(b) Purchase Price Adjustment. The Purchase Price shall be increased by
any amount by which the Working Capital of the Business (as defined below) as of
the Closing Date exceeds the Average Working Capital, or reduced by any amount
by which Average Working Capital exceeds the Working Capital of the Business as
of the Closing Date.
(c) Calculation of Adjustments. The adjustments to the Closing Payment
under Section 5(a) and the Purchase Price under Section 5(b) shall be calculated
in accordance with the following provisions:
(i) Calculation of Working Capital. Working Capital of the
Business shall mean the amount calculated by adding the accounts
receivable and inventory of the Business, to the extent such accounts
receivable and inventory are consistent in nature and type with the
accounts receivable and inventory shown on the Financial Statements,
and subtracting from that amount the current liabilities of the
Business, to the extent such current liabilities are consistent in
nature and type with the current liabilities shown on the Financial
Statements, all determined in accordance with generally accepted
accounting principles consistently applied (except for
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the exclusion of footnotes and normal year-end adjustments) and in a
manner consistent with the preparation of the Financial Statements.
(ii) Estimated Working Capital. Not later than 5 days prior to
the Closing Date, Seller shall prepare and deliver to Purchaser an
estimated balance sheet as of the Closing Date (the "Estimated Balance
Sheet"), prepared in accordance with generally accepted accounting
principles consistently applied (except for the exclusion of footnotes
and normal year-end adjustments) and in a manner consistent with the
preparation of the Financial Statements, showing Seller's estimate of
the Working Capital of the Business as of the Closing Date (the
"Estimated Working Capital"), together with Seller's work papers used
in the preparation of the Estimated Balance Sheet. If Purchaser does
not deliver to Seller, within 3 days of Purchaser's receipt of such
balance sheet, written notice specifying objections to Seller's
estimate of the Working Capital of the Business as of the Closing Date,
the Estimated Working Capital shown on the Estimated Balance Sheet
shall be used at the Closing for purposes of determining the amount of
the Closing Payment under Section 5(a). If Purchaser objects to such
balance sheet, the parties shall negotiate in good faith to resolve
such objections and agree upon the Estimated Working Capital prior to
the Closing.
(iii) Average Working Capital. Not later than 5 days prior to
the Closing Date, Seller shall deliver to Purchaser balance sheets for
each of the 12 months preceding the Closing Date prepared in accordance
with generally accepted accounting principles consistently applied
(except for the exclusion of footnotes and normal year-end adjustments)
and in a manner consistent with the preparation of the Financial
Statements, showing the Working Capital of the Business as of the last
business day of each such month (the "Monthly Balance Sheets"),
together with Seller's working papers used in the preparation of the
Monthly Balance
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Sheets showing Seller's calculation the amount of any accruals for (i)
amounts owing to employees or former employees of the Business
(including self-insurance accruals for employee welfare plans and
workers' compensation benefits), (ii) self-insurance accruals for
Seller's general liability insurance, and (iii) any performance
guarantee. In addition, Seller shall calculate the average Working
Capital of the Business over the 12 months shown on the Monthly Balance
Sheets (the "Average Working Capital"). If Purchaser does not deliver
to Seller, within 3 days of Purchaser's receipt of the Monthly Balance
Sheets, written notice specifying objections to the Monthly Balance
Sheets or Seller's calculation of Average Working Capital, the Average
Working Capital shown on the Monthly Balance Sheets shall be used at
the Closing for purposes of determining the amount of the Closing
Payment under Section 5(a). If Purchaser objects to such balance sheet,
the parties shall negotiate in good faith to resolve such objections
and agree upon the Average Working Capital prior to the Closing. If
Seller and Purchaser are unable to agree upon the Average Working
Capital prior to the Closing, the Closing Payment shall be based on the
Average Working Capital calculated by Seller and the final calculation
of the Average Working Capital for purposes of Section 5(b) shall be
resolved in accordance with Section 5(d) below.
(iv) Closing Balance Sheet. Not more than 60 days after the
Closing Date, Seller shall deliver to Purchaser a final, unaudited
balance sheet as of the Closing Date prepared in accordance with
generally accepted accounting principles consistently applied (except
for the exclusion of footnotes and normal year-end adjustments) and in
a manner consistent with the preparation of the April 30 Financial
Statements, showing the Working Capital of the Business as of the
Closing Date (the "Closing Balance Sheet"). If Purchaser does not
deliver to Seller, within ten days of Purchaser's receipt of the
Closing Balance Sheet, written notice
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specifying Purchaser's objections to the Closing Balance Sheet,
Purchaser shall be deemed to have accepted the Closing Balance Sheet as
prepared by Seller and such Closing Balance Sheet shall be final and
binding for purposes of determining the final adjustments to the
Purchase Price pursuant to Section 5(b). If Purchaser delivers to
Seller, within ten days of Purchaser's receipt of the Closing Balance
Sheet, written notice specifying objections to the Closing Balance
Sheet, such objections shall be resolved in accordance with Section
5(d) below.
(d) Resolution of Objection. If Purchaser objects in writing to the
Closing Balance Sheet under Section 5(c)(iv) or Seller's calculation of Average
Working Capital under Section 5(c)(iii), Seller and Purchaser shall attempt in
good faith to resolve any dispute by negotiation within 15 days after the
delivery of Purchaser's statement of objection. If Seller and Purchaser are
unable to resolve the dispute within 15 days, Seller and Purchaser shall engage
PriceWaterhouseCoopers LLP to calculate the Working Capital of the Business as
of the Closing Date or the Average Working Capital, as the case may be. The
calculation of Working Capital of the Business as of the Closing Date or Average
Working Capital by such accounting firm shall be final and binding upon
Purchaser and Seller. The fees and expenses of such accounting firm shall be
paid 50 percent by Seller and 50 percent by Purchaser.
6. SELLER'S REPRESENTATIONS AND WARRANTIES. In order to induce Purchaser
to enter into this Agreement and to consummate the transactions contemplated in
this Agreement, Seller makes the representations and warranties set forth in
this Section 6. For purposes of this Agreement "the best of Seller's knowledge"
or similar terms shall include all facts, circumstances, or other information
known to any director, officer, executive, or manager of Seller.
(a) Corporate Standing and Authority; Binding Agreement. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of
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South Dakota and has full corporate power to own all of its properties and
assets and to conduct its business as it is now being conducted. Seller is duly
qualified to transact business and is in good standing in every jurisdiction in
which the nature of the Business or the character of the properties related to
the Business requires qualification, except where the failure to be so qualified
does not and will not have an adverse material effect on the Business.
(b) Authorization. The execution of this Agreement and consummation of
the transactions contemplated in this Agreement will not violate any provision
of Seller's Articles of Incorporation or Bylaws, and Seller has obtained all
necessary authorization and approval from its Board of Directors and
Shareholders for the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this Agreement. This
Agreement is a legal, valid and binding agreement of Seller enforceable against
Seller in accordance with its terms, subject to the laws of bankruptcy,
insolvency and moratorium and other laws or equitable principles generally
affecting creditors' rights.
(c) Absence of Conflicting Agreements or Required Consents. Except as
set forth in Schedule 6(c), the execution, delivery and performance of this
Agreement by Seller, including without limitation, the assignment of the
Contracts to Purchaser, do not and will not: (i) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Seller or by
which Seller or any of Seller's assets is bound or affected, (ii) result in any
breach of or constitute a default under any Contract or other agreement or note,
bond, mortgage, indenture, lease, license, franchise or other instrument or
obligation to which Seller is a party or by which any of them or any of Seller's
assets is bound or affected, or (iii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, or any person or entity not a
party to this Agreement.
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(d) Licenses. Seller has all material licenses, permits, approvals and
other governmental authorizations necessary to own all of the assets of the
Business and carry on the Business as now being conducted (collectively, the
"Licenses") all of which Licenses are listed in Schedule 6(d). To the best of
Seller's knowledge, Seller has not breached any provision of, is not in default
under the terms of, and has not engaged in any activity that would cause
revocation or suspension of, any License. No action or proceeding looking to or
contemplating the revocation or suspension of any License is pending or, to the
best of Seller's knowledge, threatened.
(e) Validity and Existence of Agreements. Schedule 6(e) sets forth and
briefly describes all the following with respect to the Business:
(1) All material written or oral agreements, contracts,
arrangements, commitments, understandings or obligations to which Seller, in
connection with the Business, is a party or by which any of the properties of
the Business is or may be bound, including, but not limited to, all contracts
being transferred to Purchaser under this Agreement, each of which is separately
identified as an assumed contract;
(2) All material agreements, contracts, arrangements,
commitments, understandings, or obligations, oral or written, relating to the
Business in which any of the Seller's affiliates has any interest, direct or
indirect, including a description of any transactions of such Affiliates with
the Business.
Seller has delivered to Purchaser a true and complete copy of
each material written contract, lease, agreement, instrument or other document,
which copies accurately reflect the understanding of Seller with respect to
those instruments. For purposes of this Section 6(e), a contract is "material"
if, as of the date of this Agreement, it has a term or remaining term of greater
than 6 months, or obligates Seller to provide or entitles Seller to receive,
payment, products or
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services with a value greater than $10,000. Seller has delivered to Purchaser a
fair and accurate summary of the material terms of each oral contract, agreement
or understanding listed on Schedule 6(e). To the best of Seller's knowledge,
each of the contracts being transferred to Purchaser under this Agreement is a
valid and binding obligation of the parties to each contract in accordance with
its terms. Seller has performed and complied in all material respects with all
the provisions of each of the contracts, and to the best of Seller's knowledge,
no party is in material default or would be in material default with the lapse
of time or notice under the terms of any of the contracts.
(f) Financial Statements. The "Plastics Division Balance Sheet, Month
Ending April 30, 2000" and the "Plastics Division Income Statement, Period
Ending 4/30/00" (collectively the "Financial Statements") which Seller has
previously provided to Purchaser and have been prepared from Seller's books and
records in accordance with generally accepted accounting principles applied on a
consistent basis and on a basis consistent with that of its audited consolidated
financial reporting (except for the exclusion of footnotes and normal year-end
adjustments), and fairly present the financial position of Seller and the
results of its operations for the period indicated. To the best of Seller's
knowledge, there is no liability of any nature whatsoever, accrued or unaccrued,
absolute or contingent, with respect to the Business, except (i) as set forth in
the Financial Statements, (ii) those incurred since April 30, 2000, in the
ordinary course of business, all of which are, individually and in the
aggregate, consistent in nature and amount with the liabilities reflected in the
Financial Statements, and (iii) liabilities expressly identified in Schedule
6(f) to this Agreement.
(g) Employees. Attached to this Agreement as Schedule 6(g) is a list of
all employees of the Business showing their names, whether they are employed
full-time or part-time, their positions, current annual salaries or rate of
compensation (including bonus and incentive compensation), all benefits they are
eligible to receive, and specifically identifying each such
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employee whose primary work responsibilities are in connection with the
Fiberglass Plant.
(h) Real Estate.
(i) Subject, as of the Date of this Agreement, only to the
Existing Encumbrances set forth on Schedule 6(h)(i) and, as of the
Closing Date, only to the Permitted Encumbrances (as defined below),
Seller holds marketable title to the Real Estate at the addresses of
1813 "E" Avenue, Sioux Falls, South Dakota; 1810 "E" Avenue, Sioux
Falls, South Dakota; 2424 Kenskill Avenue, Washington Court House,
Ohio; and 709 Railroad Avenue, Albertville, Alabama, the address and
accompanying legal description of which is described on Schedule
1(a)(ii). There exists no lien, encumbrance or adverse claim with
respect to, any item of personal property, equipment or fixtures
necessary for the operation of the Real Estate.
(ii) Seller (A) has, or by the Closing will have, direct
access to the Real Estate over public roads or access to the Real
Estate by means of a perpetual access easement, such access to the Real
Estate being sufficient to satisfy the current and reasonably
anticipated normal requirements of the Business; and (B) the Real
Estate is, or by the Closing Date will be, served by all public
utilities, including but not limited to water, electricity, natural
gas, sewer and telephone, in such quantity and quality as are
sufficient to satisfy the current normal Business levels.
(iii) Except as set forth on the Surveys to be delivered
within 7 days of the date of this Agreement, no portion of the Real
Estate is in a flood plain.
(iv) There are no leases or occupancy agreements or any other
purchase contracts or agreements whether written or oral pertaining to
any portion of the Real Estate and, except as set forth on Schedule
6(h)(iv), Seller is in sole possession of the Real Estate.
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There is in effect no service, maintenance or other contract or
agreement or equipment lease relating to the Real Estate that cannot be
terminated on or prior to the Closing Date.
(v) There is no litigation affecting the Real Estate and
Seller has not received notice of (A) any condemnation proceeding with
respect to the Real Estate, and to the best of Seller's knowledge no
such proceeding is contemplated by any governmental authority; or (B)
any special assessment that may affect the Real Estate and, to the best
of Seller's knowledge, no such special assessment is contemplated by
any such governmental authority. Seller has received no notice, order
or other written communication from any governmental body having
jurisdiction over the Real Estate requiring any repair or improvement
to or alteration of the Real Estate.
(vi) The buildings, including, without limitation, the roof
and structural elements of the buildings and all systems and components
serving the buildings, located on the Real Estate are in good operating
condition, normal wear and tear excepted, free from material defects,
and are each sufficient for the current operation of the Business. The
cooling systems located at the Real Estate do not utilize a groundwater
extraction system.
(vii) Seller has paid for, or will pay for on or before the
Closing Date, all work, supplies and materials, performed upon and
supplied to the Real Estate.
(i) Taxes. Except as set forth on Schedule 6(i) attached hereto, since
1990 and in connection with the Business:
(i) Seller has filed all tax returns and reports which are
required by law to have been filed and has fully paid any and all taxes
(including, but not limited to, income, franchise, property, sales, use
and employment taxes) required to be paid in respect of the periods
covered by those returns and reports;
18
(ii) Seller's income, sales and use and employment tax returns
have not been examined by the Internal Revenue Service of the Federal
Government or any taxation agency or authority of any other
jurisdiction; and
(iii) all filed tax returns and reports of Seller are correct
and true in all material respects and there is no outstanding claimed
deficiency with respect to any tax period, no formal or informal notice
of a proposed deficiency, no notification of any pending audit of tax
returns and reports and no waiver or extension granted by Seller with
respect to any period of limitations affecting assessment of any tax.
(j) Inventories. The Inventory of the Business: (i) complies in all
material respects with all applicable federal laws and regulations and with all
applicable laws and regulations of each of the states of the United States into
which any product may be shipped; (ii) except as set forth on Schedule 6(j),
does not contain any Hazardous Material, as defined below, or any substance
which was the subject of a pre-manufacturing notice filed with the United States
Environmental Protection Agency under the Toxic Substance Control Act, as
amended, 15 U.S.C. ss.ss.2601 et seq.; and (iii) does not consist of any damaged
or obsolete items in excess of any allowances relating to same as represented on
the Financial Statements. Each item of finished goods Inventory is usable and
saleable in the normal and ordinary course of business.
(k) Operations and Use of Properties. The operations, Business and
properties, including leased properties, of the Business have at all times been
and are in material conformity with all applicable laws or orders or other
governmental or administrative laws, ordinances, regulations or orders,
including without limitation zoning, land use and building codes, the American
With Disabilities Act and motor vehicle registration, permitting, inspection and
operation.
(l) Insurance Requirements. All insurance coverage customarily carried
by Seller
19
for the Assets is in effect as of the date of this Agreement, and will remain in
effect up to and including the Closing Date and Seller has been insured with all
such coverage since January 1, 1995.
(m) Environmental Matters. Attached to this Agreement as Schedule 6(m)
is a list of all permits, reports, studies, analyses, and testing or monitoring
data possessed or commissioned by Seller pertaining to the physical condition of
the Real Estate or improvements thereon, including the presence of any Hazardous
Material (as defined below) in, on, or under Seller's facilities, or concerning
compliance with Environmental Laws (as defined below) (collectively,
"Environmental Reports"), and Seller has delivered to Buyer true and complete
copies of all such Environmental Reports.
Except as disclosed in the Environmental Reports or set forth in Schedule
6(m) to this Agreement: (i) Seller and the Business have at all times been and
remain in material compliance with all Environmental Laws; (ii) Seller has not
manufactured, processed, distributed, used, treated, stored, disposed of,
transported or handled any Hazardous Material at any property or facility ever
owned, leased or used by Seller in connection with the Business (collectively,
the "Business Facilities") in material violation of any Environmental Laws, and
to the best of Seller's knowledge, no such event occurred at any of the Business
Facilities prior to Seller's ownership or leasing of same; (iii) there has been
no material Release (as defined below) or threat of Release of any Hazardous
Material at, to, or from the Business Facilities, whether by Seller or any other
person; (iv) with respect to any disposal of Hazardous Material, Seller has at
all times disposed of Hazardous Material off-site and in accordance with all
Environmental Laws; (v) there are no pending or threatened inquiries, citations,
orders, notices, claims or other communications (collectively, "Claims")
concerning the presence of Hazardous Material at, or the actual or potential or
alleged violation of any Environmental Laws relating to, any of the Business
Facilities or arising in
20
connection with or relating to any operations of Seller, and Seller is not aware
of any basis for any Claims being made against Seller with respect to any such
Hazardous Material or violation of any Environmental Laws; and (vi) there are
not now, nor to Seller's best knowledge have there ever been any, underground
storage tanks, wells (operating or abandoned), friable or damaged
asbestos-containing materials, or PCB-containing equipment or fluids present at
any of the Business Facilities.
For purposes of this Agreement, "Hazardous Material" shall mean (i) any
hazardous substance as now defined in or regulated by the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the
regulations promulgated thereunder, all as amended; (ii) any hazardous waste,
pollutant or contaminant as now defined in or regulated by the federal Resource
Conservation and Recovery Act; (iii) any petroleum, including crude oil and any
fraction thereof; natural or synthetic crude oil and any fraction thereof; (iv)
any natural or synthetic gas usable for fuel; (v) any hazardous chemical as
defined in or regulated by the federal Occupational Safety and Health Act; (vi)
any asbestos, polychlorinated biphenyl or isomer of dioxin, or any material or
thing containing or composed of such substance or substances; and (vii) any
other substance, regardless of physical form that is subject to any
Environmental Laws.
For purposes of this Agreement, "Environmental Laws" shall mean all
statutes, rules, regulations, requirements, orders, ordinances, rules of
liability, standards of conduct, licenses, permits, authorizations, approvals,
orders, judgments, decrees, injunctions or agreements under or issued or
required by any federal, state or local government, or common law relating to
(i) the protection, preservation or restoration of human health, plant life,
animal life, natural resources or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
or building structures), or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of any Hazardous
21
Material. The term Environmental Laws includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C.ss. 9601 et seq., as amended; the Resource Conservation and Recovery Act,
as amended, 42 U.S.C.ss. 9601 et seq.; the Clean Air Act, as amended, 42
U.S.C.ss. 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33
U.S.C.ss. 1251 et seq.; the Toxic Substances Control Act, as amended, 15
U.S.C.ss. 9601 et seq.; the Emergency Planning and Community Right to Know Act,
42 U.S.C.ss. 11101 et seq.; the Safe Drinking Water Act, 42 U.S.C.ss. 300f et
seq.; and all comparable state and local laws; and any common law that imposes
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Material.
For purposes of this Agreement, "Release" means any spilling, leaking,
emitting, discharging, depositing, escaping, leaching, dumping, migration or
other releasing into the environment, whether intentional or unintentional in
violation of any Environmental Laws.
(n) Employees and Labor Laws. There have been no strikes, lockouts, or
other material labor disputes or demands for recognition of a union as
collective bargaining agent for all or any part of the employees of the
Business, and Seller is not a party to any collective bargaining or other labor
agreement. Seller is in material compliance with all federal, state and local
governmental laws and regulations relating to employment or labor, including
provisions relating to wages, fringe benefits, hours, working conditions,
occupational safety and health, safety of the premises, collective bargaining,
payment of social security and unemployment taxes, civil rights and
discrimination in hiring, retention, promotion, pay and other conditions of
employment; and Seller is not liable for arrears on wages or any tax or
penalties for failure to comply with those laws or regulations. There are no
oral agreements or understandings with any employee of the Business, except as
to current salary or wage rates, and no other oral agreements or understandings
which will
22
affect the employment practices or operations of the Business. Seller is, and at
all times has been, in material compliance with the Immigration Reform and
Control Act of 1986.
(o) Product Labeling and Product Liability. The Business is in material
compliance with all federal, state and local laws and regulations relating to
product labeling, product safety and public health and safety. Seller has not
received, in connection with the Business, any notice of any claim that any
product now or previously offered for sale or sold or distributed in connection
with the Business is injurious to the health and safety of any person, is not in
conformity with its specifications, or is not suitable for any purpose or
application for which it is offered for sale, sold or distributed.
(p) Litigation. Except as disclosed in Schedule 6(p), there are no (i)
claims, suits, actions, citations, administrative or arbitration or other
proceedings or governmental investigations pending or, to the best knowledge of
Seller, threatened against Seller in connection with the Business or affecting
any of the Assets, or in connection with the transactions contemplated by this
Agreement (including without limitation proceedings and investigations related
to Environmental Laws, civil rights, discrimination in employment and
occupational safety and health) or (ii) judgments, orders, writs, injunctions or
decrees of any court or administrative agency involving the Business or
affecting the Assets.
(q) Continuation of Business. Seller knows of no facts or circumstances
which might reasonably be expected to have an adverse effect on Purchaser's
ability to continue the Business after the Closing in the same manner as the
Business was conducted by Seller prior to Closing.
(r) Absence of Changes. Since April 30, 2000, there has not
been, individually or in the aggregate, (i) any material adverse change in the
financial condition, assets, liabilities,
23
business or properties of the Business, (ii) any damage to, destruction of or
loss of property, whether or not covered by insurance, having a material adverse
effect on the property, assets or business of the Business, (iii) any material
changes in compensation or bonus payments or arrangements for any employees of
the Business, (iv) any sale or transfer of any assets of the Business other than
in the ordinary course of its business, (v) any cancellation or compromise of
any debts or claims owed to Seller in connection with the Business other than in
the ordinary course of business, (vi) any transaction in connection with the
Business not in the ordinary course of business, or (vii) any amendment or
termination of any contract or agreement having a material adverse effect on the
Assets or the Business. Since April 30, 2000, there have been no material
changes in the Assets other than with respect to the sale or acquisition of
inventory in the usual and ordinary course of business.
(s) Customers. Except as disclosed in Schedule 6(s), no single customer
or group of affiliated customers has accounted for more than five percent (5%)
of the gross sales of the Business during any of the last three fiscal years.
(t) Suppliers. Except as disclosed on Schedule 6(t), no single supplier
or group of affiliated suppliers has supplied the Business with products which
would account for more than five percent (5%) of gross purchases during any of
the last three fiscal years.
(u) The Assets, plus Purchaser's license to use the "Raven" name and
Seller's agreement to continue to provide telephone service to Purchaser, and
assuming Purchaser also acquired the computer and telephonic networking
equipment that is an Excluded Asset, and provides adequate working capital and
corporate-level management, would, as of the Closing Date, include all of the
assets used in the Business and would be sufficient for the conduct of the
Business in a manner consistent with the operation of the Business by Seller
since February 1, 1999.
24
(v) Title to Assets. Except for (i) security interests described on
Schedule 6(v), (ii) as of the date of this Agreement, the Existing Encumbrances,
and (iii) as of the Closing Date, the Permitted Encumbrances (as defined below)
there are no liens, claims, security interests, mortgages, easements,
restrictions, charges or encumbrances affecting any of the Assets and, at the
Closing and as of the Closing Date, Seller will have good and marketable title
to all of the Assets free and clear of all liens, claims, security interests,
mortgages, easements, restrictions, charges or encumbrances.
(w) Tangible Assets. All of the tangible Assets are in good operating
condition and repair (excluding normal wear and tear) and are usable in the
normal course of the Business.
(x) Capital Expenditures There are no material capital expenditures
that Seller now anticipates will be required to be made in connection with the
Business as now conducted or the Assets as now used in the Business in order to
comply with any existing laws, regulations or other governmental requirements
applicable to the Business, including without limitation requirements relating
to occupational health and safety or the environment.
(y) Receivables. All accounts receivable of the Business have been
properly recorded on Seller's books and arose in connection with the bona fide
sale of goods or services in the ordinary course of business.
(z) Intellectual Property. To the best of Seller's knowledge, the
Assets and Seller's ownership and use of the Assets does not violate or infringe
upon the actual or asserted patent, trademark, servicemark, trade name,
copyright, privacy or other proprietary rights of any person or entity, and
Seller has not received notice of any claim of any such violation or
infringement.
(aa) Year 2000 Compliance. All software and hardware related to the
conduct of the Business as well as any services related thereto ("Computer Wares
and Services") are Year 2000 compliant. Seller has not experienced any loss of
or inaccuracy in its computer data due to the
25
change of the year from 1999 to 2000 or the need to process dates, including
February 29, 2000, in the year 2000, and separate Computer Wares and Services
that may interact with one another through the delivery and receipt of records
have continued to operate, interact and record, store, process, calculate and
present data properly on dates falling on or after January 1, 2000.
(bb) Broker Fees. No third party is entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services, or similar
compensation in connection with the transactions contemplated in this Agreement
based on any arrangement or agreement made by or on behalf of Seller.
(cc) Truth of Representations. No material representation or warranty
of Seller in this Agreement or any written statement or certificate executed by
Seller and furnished or to be furnished to Purchaser under this Agreement or in
connection with the transactions contemplated by this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained therein not misleading;
provided, however, that each representation that is specifically qualified as to
materiality does not contain any untrue statement of fact or omit to state a
fact necessary to make such representation not materially misleading.
(dd) Assignment of Representations and Warranties. If Purchaser sells
the Fiberglass Plant within one year from the Closing Date, Seller agrees that
Purchaser shall have the right to assign all of Purchaser's rights and interest
in the representations and warranties of Seller in this Agreement to the effect
that such representations and warranties were made by Seller directly to such
purchaser, subject to the limitations set forth herein.
7. PURCHASER'S REPRESENTATIONS AND WARRANTIES. In order to induce Seller
to enter into this Agreement and to consummate the transaction contemplated in
this Agreement, Purchaser makes
26
the representations and warranties set forth below.
(a) Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of Minnesota, with full power and
authority to enter into this Agreement and consummate the transactions
contemplated in this Agreement. Purchaser is or as of the Closing Date will be
duly qualified to do business in, and is in good standing under, the laws of
each jurisdiction in which the property owned or leased by it or the nature of
its business requires such qualification, except where the failure to be so
qualified does not and will not have an adverse material effect on the Business.
(b) Authority. The execution, delivery, and performance by Purchaser of
this Agreement and all transactions contemplated in this Agreement have been
duly authorized and approved by all necessary corporate action of Purchaser.
This Agreement, when executed and delivered by Purchaser, shall be a valid and
binding obligation of Purchaser, enforceable against it in accordance with the
terms of this Agreement.
(c) Absence of Conflicting Agreements or Required Consents. Except as
set forth on Schedule 7(c), the execution, delivery and performance of this
Agreement by Purchaser do not and will not: (i) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Purchaser or by
which Purchaser is bound or affected, (ii) result in any breach of or constitute
a default under any contract or other agreement or note, bond, mortgage,
indenture, lease, license, franchise or other instrument or obligation to which
Purchaser is a party, or (iii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, or any person or entity not a party to this
Agreement.
(d) Broker Fees. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services, or
similar compensation in connection
27
with the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Purchaser.
8. ADDITIONAL COVENANTS OF SELLER AND PURCHASER.
(a) Examination and Access. Between the date of this Agreement and the
Closing Date, Seller shall, upon reasonable advance notice, permit Purchaser and
its employees, representatives, agents, and accountants to enter the Real Estate
and commence site visits during normal business hours, shall furnish Purchaser
and its employees, representatives, agents, and accountants with free access to
all books, records, plans, and specifications related to the Assets, provided
that such examination by Purchaser shall not unreasonably disrupt Seller's
operation of the Business, shall, in accordance with the Temporary Access
Agreement between Seller and Purchaser dated July 7, 2000 (the "Temporary Access
Agreement"), permit Purchaser to conduct such physical inspections, including
environmental assessments and engineering studies, as Purchaser deems advisable,
and Seller shall provide to Purchaser such written consents as may be necessary
to gain access to statutory lien and other appropriate due diligence searches.
Such examination by Purchaser or its agents shall not affect any representations
or warranties made by Seller or Purchaser's right to rely on such
representations and warranties, unless Purchaser had actual knowledge, prior to
the execution of this Agreement, that such representations or warranties were
untrue in any material respects.
(b) No Other Negotiations. Seller and its officers and directors shall
not make any offers to, solicit any offers from, or discuss or negotiate with,
any person or entity, other than Purchaser, for the sale or disposition of the
Business or all or any portion of the Assets (other than sales of inventory in
the ordinary course of business).
(c) Preservation of Business. Between the date of this Agreement and
the Closing Date, Seller shall take or cause to be taken all actions that are
reasonably necessary and appropriate to
28
preserve the Business and the Assets, and Seller shall not do anything to impair
Seller's ability to keep and preserve the Business and the Assets existing on
the date of this Agreement.
(d) Confidential Information. Each party acknowledges that it has, will
or may have access to and become informed of Confidential Information which is a
competitive asset of the other (whether or not included in the Assets). As used
herein, "Confidential Information" shall mean information that is proprietary to
Purchaser, Seller or the Business or proprietary to others and entrusted to
Purchaser or Seller, whether or not trade secrets. Confidential Information
includes, but is not limited to, information relating to business plans and to
business as conducted or anticipated to be conducted by the parties hereto and
to their past, current or anticipated business (including without limitation
information relating to the Business). Confidential Information also includes,
without limitation, customer lists and information concerning purchasing,
accounting, marketing, selling, products and services of Seller and Purchaser,
and shall further include the same aforementioned Confidential Information with
respect to the assets purchased by Purchaser pursuant to this Agreement.
Confidential Information shall not include any information that (i) is or
becomes available to the public without a breach of this Agreement or rights of
the disclosing party, (ii) is lawfully obtained from a third party without
breach of this Agreement or any other agreement; or (iii) is required by law to
be disclosed in response to a valid order of a court or a government agency, if
the disclosing party receives prompt notice of such order and the receiving
party reasonably cooperates with attempts to receive a protective order. Each
party agrees that, for a period of 24 months after the date of this Agreement,
it will keep all Confidential Information in strict confidence and to not
directly or indirectly make known, divulge, reveal, furnish, make available, or
use (except that each party may continuing to use any Confidential Information
that is proprietary to such party) any Confidential Information; provided, that
Purchaser shall be under no such obligation with respect to Confidential
Information relating to the
29
Business or the Assets subsequent to the Closing.
(e) Termination of Employees by Seller. Prior to the Closing Date,
Seller shall notify all employees of the Business that, effective immediately
prior to the Closing, their employment with Seller is terminated. Seller shall
retain any and all liabilities owed to these employees arising on or before the
Closing Date, including all liabilities for sick leave, personal holidays,
vacation benefits or other paid time off not used by any such employee prior to
their termination and all liabilities or potential liabilities under the Worker
Adjustment and Retraining Notification Act (WARN Act, 29 U.S.C. ss.2101 et
seq.).
(f) Hiring of Employees by Purchaser. Purchaser shall be under no
obligation, contractual or otherwise, to employ any of the employees of the
Business after the Closing. At least 10 days prior to the Closing Date,
Purchaser shall notify Seller and the individual employees that Purchaser
intends to hire after the Closing. Seller shall not make any offer of future
employment to any employee of the Business until after Purchaser has notified
Seller who Purchaser intends to hire and Seller agrees not to offer future
employment to any employee of the Business unless such employee has been
formally offered employment by Purchaser and rejected such offer, or has not
been offered such employment. Seller shall not take any action to discourage
employees of the Business from accepting offers of employment with Purchaser.
Purchaser shall have the absolute right to establish the terms and conditions of
such employees' employment with Purchaser, including wages, benefits, and
benefit plans.
(g) Noncompetition Agreement. Seller and Purchaser shall enter into a
Noncompetition Agreement in the form attached hereto as Exhibit F, under which
Seller agrees not to compete with Purchaser in the production or sale of
polyethylene products, including without limitation tanks and related
accessories, throughout the continental United States and Canada for a period of
30
5 years after the Closing Date. In addition, Seller shall, as part of the
Contracts, assign to Purchaser all of Seller's rights under any noncompetition
or similar agreement between Seller and any employee or former employee of the
Business.
(h) Ordinary Operation of Business. Between the date of this Agreement
and the Closing Date, Seller shall: (i) keep the Assets insured in the amounts
and with coverage at least as great as the amounts and coverage in effect on the
date of this Agreement, but not less than the amount and coverage customary for
the type of business of the Business; (ii) maintain all of properties of the
Business in customary repair, order and condition, reasonable wear and use and
damage by unavoidable casualty excepted; (iii) not sell or transfer any of
Assets other than in the ordinary course of business; (iv) not incur any
material obligations or liabilities or enter into any material transaction in
connection with or secured by the Assets; (v) not enter into any leases or
occupancy agreements or any other purchase contracts or agreements whether
written or oral pertaining to any portion of the Real Estate and (vi) not enter
into service, maintenance or other contract or agreement or equipment lease
relating to the Real Estate that cannot be terminated on or prior to the Closing
Date.
(i) Best Efforts. Purchaser and Seller shall use their respective best
efforts to cause each of the conditions precedent set forth in Sections 9 and 11
of this Agreement to be fulfilled at or prior to the Closing, to the extent such
conditions are within their reasonable control.
9. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE. The
obligations of Purchaser to purchase the Assets and assume the Current
Liabilities are subject to the satisfaction at or before the Closing of all of
the conditions set out below in this Section 9. Purchaser may waive any or all
of these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by Purchaser of any
of its other rights or remedies at law or in equity if Seller shall be in
default in any of its representations, warranties, or covenants under this
Agreement.
31
(a) All representations and warranties by Seller in this Agreement or
in any written statement delivered to Purchaser by Seller subsequent to the date
of this Agreement shall be true and correct when made and on the Closing Date as
though made on the Closing Date.
(b) Seller shall have performed, satisfied, and complied with all
covenants, agreements, and conditions required by this Agreement to be
performed, satisfied or complied with by Seller on or prior to the Closing Date,
including Seller's agreement to terminate the employees of the Business
effective as of the Closing Date.
(c) Seller shall have executed and delivered to Purchaser a
Noncompetition Agreement on terms reasonably acceptable to Purchaser.
(d) Seller shall have executed and delivered to Purchaser the License
Agreement on terms reasonably acceptable to Purchaser.
(e) During the period from the date of this Agreement to the Closing
Date, Seller shall not have sustained any material losses or damage to the
Assets, whether or not insured.
(f) There shall not have been any event or condition of any character
occurring subsequent to the execution and delivery of this Agreement and on or
before the Closing Date materially adversely affecting the Assets or the
Business.
(g) Seller shall have provided to Purchaser the consent of each party
identified on Schedule 6(c) of this Agreement in form or substance acceptable to
Purchaser.
(h) Purchaser shall have secured such consents as may be required in
connection with its financing of the transactions contemplated in this
Agreement.
(i) No action, suit or proceeding before any court or other
governmental body or authority pertaining to the transactions contemplated by
this Agreement or to their consummation shall
32
have been instituted or threatened on or before the Closing Date.
(j) Purchaser shall have completed and been satisfied with the results
of its review of the Title Commitments and the Surveys (as defined below) and
Purchaser's objections to title to the Real Estate shall have been satisfied by
the Seller or waived by Purchaser, in accordance with Section 10.
(k) Purchaser shall have obtained, on terms reasonably acceptable to
Purchaser, such rights to use any railroad tracks currently serving the Real
Estate as Purchaser reasonably determines necessary for Purchaser to conduct the
Business after the Closing Date.
(l) Purchaser shall have obtained, on terms reasonably acceptable to
Purchaser, such easements and other rights to use the Real Estate, including
without limitation access easements, utility easements, and parking rights, as
Purchaser reasonably determines necessary for Purchaser to conduct the Business
after the Closing Date.
(m) Seller shall have provided to Purchaser a fixed price contractor's
bid for construction of new street access and a parking lot for use of the Sioux
Falls, South Dakota polyethylene plant that is reasonably acceptable to
Purchaser and in compliance with all legal requirements for construction of
same.
(n) Purchaser shall have received or been issued all licenses, permits,
and governmental authorizations necessary to own and operate the Business and
the Assets, including any zoning, subdivision or other approvals required in
connection with the acquisition of the Real Estate to be acquired under this
Agreement, if any. Purchaser agrees to use commercially reasonable efforts to
receive or be issued such licenses, permits and governmental authorizations
prior to the Closing Date.
(o) In connection with the Purchaser's examinations of the Business,
the Assets,
33
and Seller's books and records relating to the Business and the Assets,
Purchaser shall not have discovered any information inconsistent in any material
respect with the representations and warranties set forth in this Agreement or
the information previously provided by Seller to Purchaser in connection with
this Agreement, nor shall Purchaser have determined, in Purchaser's sole
discretion, that any material liability or potential liability exists with
respect to the Business or the Assets.
(p) Seller shall have provided to Purchaser schedules accompanying this
Agreement, along with Schedule 10(a), Permitted Encumbrances, all reasonably
acceptable to Purchaser, updated to the Closing Date.
(q) Seller shall have provided to Purchaser such bills of sale, deeds
and other assignments, agreements, affidavits or documents as Purchaser finds
reasonably necessary to transfer to it the Assets, and such tax and other
clearance certificates, elections and instruments as Purchaser may reasonably
request in order to effect the purposes of this Agreement.
(r) Seller shall have provided to Purchaser an opinion of Sellers'
counsel in the form attached hereto as Exhibit F.
(s) Seller shall have provided to Purchaser a certificate of its
corporate secretary, in the form attached hereto as Exhibit G, attesting to the
due authorization by Seller of the execution and delivery of this Agreement and
the consummation of the transactions contemplated in this Agreement, the
accuracy, as of the Closing Date, of the representations and warranties of
Seller contained in this Agreement and any Exhibit or Schedule hereto, and the
performance by Seller of all of the covenants to be performed by them on or
prior to the Closing Date.
(t) Seller and Purchaser shall have entered into (i) a reciprocal
easement and maintenance agreement for the railroad spur track at the South
Dakota Facilities, and (ii) a declaration of easements, covenants and conditions
relating to the South Dakota Facilities.
34
10. TITLE EXAMINATION. Title examination with respect to the Real Estate
shall be conducted as follows:
(a) Seller's Title Evidence. Seller shall, within seven (7) days after
the date of this Agreement, furnish to Purchaser (i) title commitments ("Title
Commitments") for ALTA owner's policies of title insurance, issued by
Commonwealth Land Title Insurance Company ("Title Company"), committing Title
Company to insure title to the Real Estate, free and clear of liens, mortgages,
charges or encumbrances, subject only to the "Permitted Encumbrances" listed in
Schedule 10(a) to be attached hereto prior to or at the Closing and (ii)
currently-certified "as built" surveys of the Real Estate, meeting ALTA/ASCM
requirements, showing all easements of record and all improvements and
encroachments (the "Surveys"). Seller shall request the Title Company to issue
endorsements to the Title Commitments deleting any general exceptions from
coverage based on mechanics or materialmen's liens, matters affecting title that
may be disclosed by an accurate survey, the rights of parties in possession, and
affirmatively guaranteeing (i) access to the Real Estate from a public road
and/or across any appurtenant easements and (ii) that Purchaser's use and
enjoyment of the improvements on the Real Estate shall not be disturbed or
interfered with by reason of any easements or reservations of record.
(b) Purchaser's Objections. Within seven (7) days after receiving all
of (i) the Title Commitments, (ii) Surveys, and (iii) copies of any documents
listed in Schedule B of the Title Commitments for the Facilities, Purchaser
shall make any written objections to title it may have ("Objections").
Purchaser's failure to make Objections within such time period will constitute a
waiver of Objections with respect to matters disclosed in Schedule B of the
Title Commitment (and any Survey heretofore delivered to Purchaser).
11. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS TO CLOSE. The obligations
of Seller to
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sell the Assets are subject to the satisfaction at or before the Closing of all
of the conditions set out below in this Section 11. Seller may waive any or all
of these conditions in whole or in part without prior written notice.
(a) All representations and warranties by Purchaser in this Agreement,
or in any written statement that shall be delivered to Seller by Purchaser under
this Agreement, shall be true and correct when made and on the Closing Date as
though made on the Closing Date.
(b) Purchaser shall have performed, satisfied, and complied, in all
material respects, with all covenants, agreements, and conditions required by
this Agreement to be performed, satisfied, or complied with by it on or before
the Closing Date.
(c) No action, suit or proceeding before any court or governmental
body or authority shall have been instituted seeking to restrain or prohibit the
transactions contemplated in this Agreement.
(d) Purchaser shall have executed and delivered to Seller a
Noncompetition Agreement on terms reasonably acceptable to Seller.
(e) Purchaser shall have provided to Seller a certificate of its
secretary, in the form attached hereto as Exhibit H, attesting to the due
authorization by Purchaser of the execution and delivery of this Agreement and
the consummation of the transactions contemplated in this Agreement, the
accuracy, as of the Closing Date, of the representations and warranties of
Purchaser contained in this Agreement, and the performance by Purchaser of all
of the covenants to be performed by it on or prior to the closing date.
(f) On the Closing Date, Purchaser will deliver to Seller:
(i) a wire transfer in immediately available funds in the
amount of the Closing Payment;
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(ii) an executed copy of the Assignment and Assumption
Agreement;
(iii) a copy of the text of the resolutions adopted by the
Purchaser's board of directors authorizing the execution, delivery and
performance of this Agreement and the consummation of all of the
transactions contemplated hereby, along with a certificate executed on
behalf of Purchaser, by its corporate secretary certifying to Seller
that such copy is a true, correct and complete copy of such
resolutions, and that such resolutions were duly adopted by the board
of directors of Purchaser and have not been amended or rescinded;
(iv) an incumbency certificate executed on behalf of Buyer
by its corporate secretary certifying the signature and office of each
officer executing this Agreement or any agreement or instrument
related thereto; and
(v) such other certificates, documents, instruments and
opinions of counsel as Seller reasonably requests related to the
transactions contemplated hereby.
(g) Seller and Purchaser shall have entered into (i) a reciprocal
easement and maintenance agreement for the railroad spur track at the South
Dakota Facilities, and (ii) a declaration of easements, covenants and conditions
relating to the South Dakota Facilities.
12. TERMINATION. In the event that the Closing shall not have occurred on
or prior to August 31, 2000, then either Purchaser or Seller shall have the
right to terminate this Agreement upon the delivery of written notice of such
termination to the other; provided, however, that (a) Purchaser shall not so
terminate this Agreement if Purchaser is then in material breach of any of its
covenants under this Agreement; (b) Seller shall not so terminate this Agreement
if Seller is then in material breach of any of its covenants under this
Agreement; and (c) no such termination shall relieve any party to this Agreement
from liability for the breach of any representation, warranty, or covenant
occurring prior to such termination. If any party terminates this Agreement
pursuant to this Section 12, all rights
37
and obligations of both parties hereunder shall terminate without any liability
to the other (except for any liability of any party then in breach).
13. THE CLOSING. The closing of the transactions contemplated in this
Agreement shall take place on August 15, 2000, at 1:00 p.m. local time, at the
offices of Maslon Edelman Borman & Brand, LLP, 90 South Seventh Street, Suite
3300, Minneapolis, Minnesota; at such later date which is two (2) business days
after satisfaction or waiver of all conditions precedent; or at such other time,
date and place as to which the parties may agree. Such event is referred to in
this Agreement as the "Closing" and such date is referred to in this Agreement
as the "Closing Date". Seller agrees to deliver possession of the Real Estate to
Purchaser on the Closing Date.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations, warranties and covenants of the parties contained in this
Agreement shall survive for a period of two (2) years following the Closing
Date.
15. INDEMNIFICATION BY SELLER.
(a) Seller agrees to defend, indemnify and hold Purchaser harmless
from and against any liabilities, losses, claims, damages, costs and expenses
(including, but not limited to, reasonable attorney's fees) arising out of,
resulting from, or in any way related to:
(i) any misrepresentation or breach of any warranty,
covenant or agreement made by Seller in this Agreement or in any other
document, certificate or agreement delivered under this Agreement;
(ii) the assertion against Purchaser of any liability of
Seller other than the Current Liabilities, including without
limitation, claims arising out of or in any way related to the
condition of the Real Estate and its groundwater, any claim that
exists on or before the Closing Date under, or for violation of, any
Environmental Law, liabilities for any product
38
produced on or before the Closing Date, including warranties or
performance guarantees on such products, and any liabilities to past
or present employees of Seller; or
(iii) the existence or operation of the Business on or prior
to the Closing Date, whether or not material, whether or not known to
Seller, excluding Current Liabilities but including without limitation
claims arising out of or in any way related to the condition of the
Real Estate and its groundwater, any claim that exists on or before
the Closing Date under, or for any violation of, any Environmental
Law, liabilities for any product produced on or before the Closing
Date including warranties or performance guarantees on such products,
any liabilities to past or present employees of Seller, or any
liability or obligation of Seller in connection with federal, state or
local taxes.
(b) Without limiting the generality of Section 14(a), with respect to
any measurement of damages or costs or expenses owing to Purchaser under this
Agreement, the Purchaser shall have the right to be put in the same financial
position as it would have been had the matter leading to the claim of
indemnification never occurred or arose. Purchaser will be reimbursed by Seller
for all liabilities and damages incurred by Purchaser and all reasonable costs
and reasonable expenses incurred by Purchaser in enforcing this indemnity.
(c) In enforcing this indemnity, Purchaser shall have the right to
set-off against any amounts owing by it to Seller under this Agreement or any
other document, certificate or agreement delivered under this Agreement, the
amount of any liabilities, losses, claims, damages, costs and expenses for which
Purchaser is entitled to indemnification under this Agreement. Notwithstanding
any other provision in this Agreement, Purchaser shall be entitled to obtain
equitable relief in any appropriate indemnification claim.
(d) If any action, suit or proceeding shall be commenced against
Purchaser or any
39
claims, demand or assessment be asserted against Purchaser in respect of which
Purchaser proposes to demand defense and indemnification, Seller shall be
notified to that effect with reasonable promptness and shall have the right, but
not the obligation, to assume the entire control of the defense, compromise or
settlement thereof, including, at the expense of Seller, employment of counsel
reasonably satisfactory to Purchaser, and in connection therewith, Purchaser
shall cooperate fully to make available to Seller all pertinent information
under its control. Provided, however, that no delay in providing any such notice
shall affect the rights of Purchaser to recover damages or equitable relief
under this Agreement.
16. INDEMNIFICATION BY PURCHASER.
(a) Purchaser agrees to defend, indemnify and hold Seller harmless
from and against any liabilities, losses, claims, damages, costs and expenses
(including, but not limited to, reasonable attorney's fees) arising out of,
resulting from, or in any way related to:
(i) any misrepresentation or breach of any warranty,
covenant or agreement made by Purchaser in this Agreement or in any
other document, certificate or agreement delivered under this
Agreement;
(ii) the assertion against Seller of any of the Current
Liabilities after the Closing;
(iii) the existence or operation of the Business after the
Closing Date and not related to the operation of the Business prior to
the Closing, the transactions contemplated in this Agreement, or the
Excluded Liabilities; or
(iv) Purchaser's use of Seller's parking lot at the South
Dakota Facilities as provided in Section 3(e)(iii).
(b) Without limiting the generality of the Section 16(a), with respect
to any
40
measurement of damages or costs or expenses owing to Seller under this
Agreement, the Seller shall have the right to be put in the same financial
position as it would have been had the matter leading to the claim of
indemnification never occurred or arose. Seller will be reimbursed by Purchaser
for all liabilities and damages incurred by Seller and all reasonable costs and
reasonable expenses incurred by Seller in enforcing this indemnity.
(c) In enforcing this indemnity, Seller shall have the right to
set-off against any amounts owing by it to Purchaser under this Agreement or any
other document, certificate or agreement delivered under this Agreement, the
amount of any liabilities, losses, claims, damages, costs and expenses for which
Seller is entitled to indemnification under this Agreement. Notwithstanding any
other provision in this Agreement, Seller shall be entitled to obtain equitable
relief in any appropriate indemnification claim.
(d) If any action, suit or proceeding shall be commenced against
Seller or any claims, demand or assessment be asserted against Seller in respect
of which Seller proposes to demand defense and indemnification, Purchaser shall
be notified to that effect with reasonable promptness and shall have the right,
but not the obligation, to assume the entire control of the defense, compromise
or settlement thereof, including, at the expense of Purchaser, employment of
counsel reasonably satisfactory to Seller, and in connection therewith, Seller
shall cooperate fully to make available to Purchaser all pertinent information
under its control. Provided, however, that no delay in providing any such notice
shall affect the rights of Seller to recover damages or equitable relief under
this Agreement.
17. INDEMNIFICATION LIMITATIONS.
(a) Neither Seller, on the one hand, nor Purchaser, on the other hand,
shall be obligated to indemnify the other hereunder unless and until the
aggregate amount of all liabilities,
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losses, claims, damages, costs or expenses (including, but not limited to,
reasonable attorneys' fees) incurred by the aggrieved party reaches One Hundred
Thousand Dollars ($100,000)(the "Threshold Amount"), in which case the offending
party shall be obligated to indemnify only for the excess of the aggregate
amount of all such liabilities, losses, claims, damages, costs or expenses over
the Threshold Amount. Notwithstanding the foregoing, the limitations of this
Section 17 shall not apply to the Excluded Damages and Seller shall be liable to
Purchaser for all Excluded Damages from the first dollar of Excluded Damages.
For purposes of this Section 17, "Excluded Damages" shall mean any liabilities,
losses, claims, damages, costs or expenses (including, but not limited to,
reasonable attorneys' fees) (i) incurred by Purchaser arising from (A) matters
pertaining to taxes, title to the Assets, or any claim under or for violation of
any Environmental Law, or (B) any liabilities or obligations of Seller that are
retained or assumed by Seller under this Agreement, including without
limitation, the Excluded Liabilities, and (ii) incurred by Seller arising from
any liabilities expressly assumed by Purchaser under this Agreement.
(b) No party's liability under the indemnification provisions of this
Agreement shall exceed the aggregate amount of Eight Million Dollars
($8,000,000), except, no such limitation shall apply to Seller's indemnification
of Purchaser for any liabilities, losses, claims, damages, costs or expenses
(including, but not limited to, reasonable attorneys' fees) arising from any
claim under or for violation of any Environmental Law, and any amounts paid in
respect to such liabilities, losses, claims, damages, costs or expenses shall
not be counted toward such limitation.
18. TAXES.
(a) Seller shall pay all personal property, sales, use, and transfer
taxes, and other similar taxes, if any, payable in connection with the sale,
transfer, delivery, and assignments to be made pursuant to this Agreement.
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(b) With respect to the Real Estate, general real estate taxes and
installments of special assessments payable therewith payable in the year prior
to the year of Closing and all prior years will be paid by Seller. All levied
special assessments for the current year that relate to pre-closing periods and
are not included in Current Liabilities shall be paid by Seller. All special
assessments which become pending or levied after the Closing Date shall be paid
by Purchaser.
19. EXPENSES.
(a) Purchaser and Seller each pay the costs and expenses incurred or
to be incurred by each of them, respectively, in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement.
(b) Seller shall pay all costs of the Title Commitments and the
Surveys. Purchaser shall pay all premiums required for the issuance of the Title
Policies. Seller and Purchaser shall each pay one-half of any reasonable and
customary closing fee or charge imposed by the Title Company.
(c) Seller shall pay any state deed tax or other transfer tax on the
Warranty Deeds to be delivered by Seller under this Agreement.
(d) Purchaser shall pay the cost of recording the Warranty Deeds.
Seller shall pay the cost of recording any documents necessary to perfect its
own title or which release encumbrances other than Permitted Encumbrances.
20. MISCELLANEOUS.
(a) Entire Agreement. This Agreement, together with the schedules to
this Agreement and the documents to be delivered pursuant to this Agreement,
supersedes all other agreements and understandings among the parties, either
oral or written (other than the Temporary Access Agreement which shall remain in
full force and effect), constitutes the entire agreement of the parties with
respect to the purchase and sale of the Assets, and shall be amended only by an
instrument in writing executed by all parties.
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(b) Binding Effect. This Agreement, and the covenants contained in
this Agreement, shall be binding upon, and inure to the benefit of, the parties
to this Agreement and their respective permitted successors, assigns and legal
representatives.
(c) Notices. Any notices under this Agreement shall be deemed given
when personally delivered in writing, when dispatched via overnight courier or
five days after being deposited in the United States Mail, registered or
certified, postage prepaid, properly addressed to the party to whom it is
intended at the address set forth below or at such other address to which notice
is given in accordance herewith:
In the case of Purchaser, to:
Norwesco, Inc.
4365 Steiner Street, P.O. Box 439
St. Bonifacius, Minnesota 55375-1439
Attn: Thomas J. Smith, CEO
With a copy to:
Leonard, Street and Deinard, P.A.
Suite 2300
150 South Fifth Street
Minneapolis, Minnesota 55402
Attn: Richard G. Pepin, Jr., Esq.
In the case of Seller, to:
Raven Industries, Inc.
205 East Sixth Street
Sioux Falls, South Dakota 57117
Attn: Thomas Iacarella, CFO
44
With a copy to:
Maslon Edelman Borman & Brand, LLP
3300 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Attn: William M. Mower, Esq.
(d) Arbitration. Any controversy or claim arising out of or relating
to this Agreement or the performance of this Agreement shall be settled by
arbitration conducted in Minneapolis, Minnesota by a panel of three arbitrators
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The prevailing parties' costs and fees, including reasonable
attorneys' fees, shall be paid by the non-prevailing party. The award rendered
by the arbitrators shall be final, and judgment may be entered in accordance
with applicable law and in any court having jurisdiction over the dispute.
(e) Section Headings. Section headings throughout this Agreement are
for the convenience of the parties and do not constitute a part of this
Agreement. Personal pronouns shall be deemed masculine, feminine or neuter,
singular or plural, as the context requires.
(f) Governing Law. This Agreement shall be governed by the laws of the
State of Minnesota.
(g) Counterparts. This Agreement may be executed in several
counterparts, including execution by facsimile counterparts, each of which shall
be deemed an original but all of which counterparts collectively shall
constitute one instrument representing the Agreement among the parties.
(h) Further Assurances. Purchaser and Seller each agree to execute and
deliver, or cause to be executed and delivered, all instruments, certificates,
and documents, and to take all such other actions, as the other party to this
Agreement may reasonably request from time to time in order
45
to effectuate the purpose and intent of this Agreement.
(i) Press Releases and Public Announcements. Neither party shall issue
any press release or public announcement relating to the subject matter of this
Agreement after the Closing without the prior written approval of the other,
which approval will not be unreasonably withheld or delayed.
(j) Third Party Beneficiaries. Except for any third party purchaser of
the Fiberglass Plant, this Agreement shall not confer any rights or remedies
upon any other person or entity other than the parties hereto and their
respective successors and permitted assigns.
(k) Bulk Sales. The Purchaser acknowledges that Seller will not comply
with the provisions of any bulk transfer laws of any jurisdiction in connection
with the transactions contemplated by this Agreement.
(l) Incorporation of Disclosure Schedules and Exhibits. The schedules
and exhibits and any other annexes and schedules identified in this Agreement
are incorporated herein by reference and made a part hereof.
REMAINDER OF PAGE INTENTIONALLY BLANK
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SIGNATURES
IN WITNESS WHEREOF, the parties have caused this instrument to be signed
by their authorized officers as of the day and year first above written.
SELLER: PURCHASER:
RAVEN INDUSTRIES, INC. NORWESCO, INC.
By: /s/ Ronald M. Moquist By: /s/ Thomas Smith
--------------------------------- ---------------------------------
Its: Executive Vice President Its: Chief Financial Officer
--------------------------------- ---------------------------------
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