ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of March 29, 1999, by and
between XXXXX MICROCOMPUTER PRODUCTS, INC., a Delaware corporation with its
principal executive offices located at 0000 Xxxxxx Xxxxxxx Xxxxxxxxx,
Xxxxxxxxxxxx, Xxxxxxxx 00000, and its affiliated debtors and debtors in
possession (collectively, "Seller") and Zoom Telephonics, Inc., a Delaware
corporation with its principal executive offices located at 000 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 ("Buyer").
R E C I T A L S
1. Seller has been engaged in the business of the design,
manufacture, and support of computer communication
products for business, government, small office and
individual consumers worldwide (the "Business").
2. On October 9, 1998, Seller filed for reorganization under
Chapter 11 of the United States Bankruptcy Code, Case No.
98-2276 through 98-2281(MFW) (the "Bankruptcy Case") in
the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court").
3. Buyer desires to purchase from Seller as debtors and debtors in possession in
the Bankruptcy Case, and Seller desires to sell to Buyer, certain assets of
Seller for the consideration and in accordance with the terms and conditions set
forth herein.
A G R E E M E N T
NOW THEREFORE, in consideration of the premises and their respective
undertakings, Seller and Buyer agree as follows:
1. Purchase and Sale.
a. The Assets. Buyer shall purchase from Seller, and Seller
shall sell to Buyer, subject to the terms and conditions of this Agreement and
the Order of the Bankruptcy Court dated February 22, 1999 approving the sale of
the assets from Seller to Buyer pursuant to Section 363 of the Bankruptcy Code
and authorizing and directing the Seller to close the transaction on terms
substantially similar to this agreement (the "Sale Order") of all of Seller's
right, title and interest in and to the assets set forth on Schedule 1 hereto
(the "Assets"). In addition, in accordance with the terms of the Confidential
Bidding Packages and Procedures (the "Bidding Packages") and the Addendum to
Bidding Packages and Procedures ("Addendum") prepared by Xxxxx Xxxxx Xxxxxx &
Company, LLC on behalf of Seller in connection with that certain auction held on
February 19, 1999 and subsequently, all patents which were referred to in both
Package 14 and Package 1 shall be available for use on a royalty free basis to
the Buyer.
b. Cure of Executory Contracts. To the extent that the Buyer
requests the Seller to assume and assign to it any executory contracts
associated with the Assets purchased by the Buyer pursuant to this Agreement
("Assigned Contracts"), Buyer shall cure (to the extent necessary) the Assigned
Contracts in the cure amount set forth in the Debtor's notice of default amount
exclusively at Buyer's cost and expense (which shall be in addition to the
Purchase Price); provided, however, and subject to the foregoing, that Seller
agrees to use reasonable efforts to achieve the assumption and assignment of
such Assigned Contracts to the Buyer. The Assigned Contracts are included in
Schedule 1.
c. Assumption of Performance Obligations. Buyer and Seller
agree that Buyer is not assuming any liabilities or obligations whatsoever
except as expressly provided in paragraph b of this Section 1. Buyer and
Seller further agree that Seller shall have no obligations or liabilities
with respect to the Assets from and after the date of this Agreement; any
obligations or liabilities with respect to the Assets incurred after the date
of this Agreement shall be the responsibility of Buyer.
d. No Liens. Subject to paragraphs b and c of this Section 1,
the Assets shall be transferred to Buyer free and clear of all liens, claims
interests, liabilities, mortgages, debts, obligations, and encumbrances or other
claims or interests of whatever nature, including without limitation, the lien
of NationsCredit.
e. Excluded Assets. Except as specifically set forth herein,
Buyer is not and shall not be obligated to purchase any assets of Seller other
than the Assets. Buyer and Seller hereby acknowledge and agree that the Assets
do not include any assets of Seller other than those assets listed on Schedule 1
and specifically do not include: any tax refunds due or which may become due to
Seller, contracts or leases of Seller other than the Assigned Contracts, other
obligations of Seller not specifically assumed by Buyer, claims and causes of
action, and dividends.
2. Purchase Price.
a. Amount. The purchase price for the Assets shall be
$2,000,000, payable in cash at Closing (the "Purchase Price"), provided that the
Buyer's previous deposits in the amount of $200,000 deposited with Seller's
counsel shall be credited against the Purchase Price.
b. Payment. Buyer shall pay the Purchase Price at Closing by
wire transfer or other immediately available funds.
c. Taxes; Utilities. The Sale Order approving the transaction
herein provides that 11 U.S.C. [C167] 1146(c) applies to the sale of the Assets.
Any sales, use, transfer or other taxes not addressed by 11 U.S.C. [C167]
1146(c) that are due as a result of this transaction or imposed on the transfer
of the Assets by Seller shall be paid by Buyer.
d. Risk of Non-Assignability. The Sale Order (i) includes a
finding that adequate and sufficient notice of the Motion and Sale Hearing (as
defined in the Sale Order) was given to all parties with an interest in the
assets being sold and that no further notice of the Motion or the Sale Hearing
was necessary, (ii) authorizes the Seller to assume and assign and sell to Buyer
the Assigned Contracts identified herein and (iii) overrules any objections to
the assumption and assignment and sale of the Assigned Contracts that were not
either resolved or withdrawn at the Sale Hearing. As of the date hereof, neither
the Buyer nor the Seller are aware of any party to an Assigned Contract that is
contesting the assumption and assignment of any Assigned Contract, nor are they
aware of any basis upon which such party could succeed with such a challenge,
except that Refac Corporation has disputed the amount necessary to cure pre- and
post-petition breaches of its agreement with the Seller.
3. Seller's Representations. Seller hereby represents, warrants and
covenants to Buyer the following:
a. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business and is in good standing in the States of Georgia
and Maryland. Seller has full corporate power and authority to execute and
deliver this Agreement and all documents and instruments specified in it and to
perform its obligations under this Agreement and under such instruments and
documents.
b. Authorization. The execution, delivery and performance of
this Agreement and all other documents and instruments specified herein, have
been, or prior to the Closing shall be, duly authorized by the Sale Order.
c. Binding Obligation. As provided by the Sale Order, this
Agreement and the other instruments and documents specified herein constitute
legal, valid and binding obligations of Seller, enforceable in accordance with
their respective terms.
d. Title. At the Closing, Buyer will acquire all of Seller's
right, title and interest in and to all the Assets, subject to Section 1(b) and
Section 1(c) hereof. With respect to the trademarks identified on Schedule 1,
Seller also transfers to Buyer all of Seller's right, title and interest to
elect whether, when, where and how such trademarks will be enforced, including,
without limitation, the initiation, prosecution and settlement of any action to
enforce such rights and to the proceeds of any action to enforce and/or for
infringement of the trademarks. With respect to the patents identified on
Schedule 2, Seller also transfers to Buyer all of Seller's right, title and
interest to elect whether, when, where and how such patents will be enforced,
including, without limitation, the initiation, prosecution and settlement of any
action to enforce such rights and to the proceeds of any action to enforce
and/or for infringement of the patents.
e. Interim Maintenance of Assets. Since the date of the Sale
Order, Seller has used reasonable efforts to maintain and preserve the Assets in
the manner and to the extent contemplated in the Bankruptcy Case and by the
Bankruptcy Court.
f. Interim Operations. Since the date of the Sale Order,
Seller has not, without an order of the Bankruptcy Court after notice to Buyer,
except in connection with debtor-in-possession financing:
(i) Made any substantial change in any Assets;
(ii) Sold, leased, transferred or otherwise
disposed of any Assets, except in the ordinary course of business;
(iii) Mortgaged, pledged or encumbered any Assets;
(iv) Waived or agreed to waive any rights of
material value to any Assets or allowed to lapse or failed to
keep in force any material license, permit,authorization or other
material right relating to any Assets; or
(v) Except in the ordinary course of business,
made or permitted any amendment or termination of any material
contract, agreement or license included in the Assets.
g. Confidential, Proprietary Information. Seller agrees to
maintain any and all information concerning and/or relating to the assets
purchased by Zoom and the business of Seller related to the assets purchased by
Zoom (the "Information") in strict confidence, except as specifically set forth
herein. Seller may make the Information available to NationsCredit Commercial
Corporation ("NationsCredit"), a bankruptcy trustee appointed by the Bankruptcy
Court and to such other person or entity as required by final order of a court
of competent jurisdiction after notice to and opportunity to participate by the
Buyer (collectively, the "Authorized Persons"), provided that Seller shall
require such Authorized Persons to hold the Information in strict confidence and
shall not duplicate, use or disclose the Information except to the limited
extent specifically permitted herein. NationsCredit may use the Information to
the extent necessary to determine, confirm or enforce its rights as a secured
creditor of the Seller but may not disclose, publish or make known the
Information without the prior written consent of Buyer or an order of a court of
competent jurisdiction after notice to and an opportunity to participate by
Buyer. A bankruptcy trustee may use the Information in the course of his or her
statutory duties, provided that such bankruptcy trustee does not disclose,
publish or make known the Information without the prior written consent of Buyer
or an order of the Bankruptcy Court after notice to and an opportunity to
participate by Buyer. If and to the extent that Seller sells, transfers, sells
or otherwise makes available or accessible to any person or entity other than
the Authorized Persons that certain computer system known as the Oracle System,
Seller shall do so only after erasing or otherwise eliminating from the Oracle
System the Information.
4. Buyer's Representations. Buyer hereby represents, warrants
and covenants to Seller the following:
a. Organization. Buyer is a corporation duly organized under
the laws of the state of Delaware. Buyer has full corporate power and authority
to execute and deliver this Agreement and all documents and instruments
specified in it and to perform its obligations under this Agreement and under
such instruments and documents.
b. Authorization. The execution, delivery and performance of
this Agreement, and all other documents and instruments specified herein have
been duly authorized by all necessary corporate action.
c. Binding Obligation. Subject to the entry of the Sale Order,
this Agreement and the other instruments and documents specified herein, when
executed and delivered by Buyer, will constitute legal, valid and binding
obligations to Buyer, enforceable in accordance with their respective terms,
except to the extent that the enforcement thereof may be limited by bankruptcy,
reorganization, insolvency or similar laws of general applicability governing
the enforcement of the rights of creditors or by general principles of equity
(regardless of whether considered in a proceeding at law or in equity).
5. Transition Cooperation. Seller shall use reasonable efforts to
cooperate with Buyer in all respects to ensure an efficient and convenient
transition of the Assets from Seller to Buyer.
6. Further Assurances. Subject to the terms and conditions of this
Agreement, each of the parties shall use all reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws, regulations, and contracts
to consummate and make effective the transactions contemplated by this
Agreement. Seller represents that it has back up tapes containing information
that Seller maintained on computer concerning and/or relating to the Assets (the
"Back Up Tapes"). Seller agrees, on its own behalf and for and on behalf of its
successors and assigns, to provide Buyer with access to the Information as Buyer
reasonably requires to maximize the full use and value of the Assets. To the
extent Buyer requires Information contained on the Back Up Tapes, Seller agrees
to provide access to the Back Up Tapes within 10 calendar days following Buyer's
request. Buyer's request shall be directed to the following individuals under
the following circumstances: (a) while the Seller remains a debtor in
possession, Buyer shall contact Xxxxxx Xxxx and/or counsel for Buyer; (b) to the
extent that a bankruptcy trustee is appointed by the Bankruptcy Court, Buyer
shall contact the bankruptcy trustee and/or his or her counsel; (c) to the
extent that a third party has physical possession of the Back Up Tapes in
connection with efforts to collect the accounts receivable of the Seller, Buyer
shall contact such third party for access; and (d) to the extent that
NationsCredit has physical possession of the Back Up Tapes, Buyer shall contact
Xxxxxx Xxxxxxxx and/or counsel for NationsCredit. Seller will take and will
require that reasonable care be exercised to maintain and preserve the Back Up
Tapes. Seller makes no representation concerning computer technology or
personnel to assist Buyer in obtaining the information it requests from the Back
Up Tapes.
7. Assignment. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors,
legal representatives and assigns.
8. Limitation on Liability. BUYER ACKNOWLEDGES AND AGREES THAT BUYER
AND ITS REPRESENTATIVES HAVE THE EXPERIENCE AND KNOWLEDGE TO EVALUATE THE
ASSETS; THAT BUYER AND ITS REPRESENTATIVES HAVE HAD ACCESS TO SUCH OF THE
INFORMATION AND DOCUMENTS AND TO SUCH OF THE ASSETS AS BUYER AND ITS
REPRESENTATIVES HAVE REQUESTED TO SEE AND/OR REVIEW; THAT BUYER AND ITS
REPRESENTATIVES HAVE HAD A FULL OPPORTUNITY TO MEET WITH APPROPRIATE MANAGEMENT
AND EMPLOYEES OF SELLER TO DISCUSS THE ASSETS; AND THAT, IN DETERMINING TO
ACQUIRE THE ASSETS, BUYER HAS MADE ITS OWN INVESTIGATION INTO, AND BASED THEREON
BUYER HAS MADE ITS OWN INDEPENDENT JUDGMENT CONCERNING THE ASSETS. IT IS
THEREFORE EXPRESSLY UNDERSTOOD AND AGREED THAT THE BUYER ACCEPTS THE CONDITION
OF THE ASSETS "AS IS, WHERE IS" WITHOUT ANY REPRESENTATION, WARRANTY OR
GUARANTEES, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR TITLE OR OTHERWISE AS TO THE CONDITION, SIZE, EXTENT, QUANTITY, TYPE
OR VALUE OF SUCH PROPERTY, EXCEPT ONLY AS MAY BE OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT AND SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL SUCH
REPRESENTATIONS, WARRANTY OR GUARANTEES.
9. Expenses. Buyer and Seller shall each pay their own expenses
incurred in connection with this Agreement and the transactions contemplated
herein, whether or not the transactions contemplated herein are consummated.
Except as set forth in Section 9 of this Agreement, Seller and Buyer shall
indemnify each other against any claim or third parties for brokerage
commissions, finder's fees or the like in connection with the transactions
contemplated herein insofar as such claims are alleged to be based on
arrangements or agreements made by the other party.
10. Buyer as Good Faith Buyer. The Seller agrees that (i) the Buyer is
a "good faith Buyer" within the meaning of Section 363(m) of the Bankruptcy Code
and is thereby entitled to the protection afforded good faith, arm's-length
Buyers, (ii) the purchase price is fair and reasonable, (iii) this Agreement was
negotiated at arm's-length and (iv) the Buyer does not have any agreement or
understanding with a present or former officer or director of the Seller unless
specifically disclosed to the Seller in writing. The Sale Order shall contain a
finding that the Buyer is a "good faith Buyer" within the meaning of Section
363(m) of the Bankruptcy Code.
11. No Broker's Fees. Other than fees payable to Xxxxx Xxxxx Xxxxxx &
Company, LLL, the Seller has not agreed to pay any broker's or finder's fee or
commission with respect to the purchase of the Assets or the transactions
contemplated hereby. Buyer shall have no responsibility for payment of the fees
of Xxxxx Xxxxx Xxxxxx & Company with respect to sale of the Assets and the
transactions contemplated hereby.
12. Governing Law; Venue and Jurisdiction. This Agreement shall be
governed by the laws of the State of Delaware, without regard to its choice of
law provisions. In the event either party shall institute a legal action as a
result of the default in the other party's performance under this Agreement, or
for any breach of this Agreement, any such action shall be brought exclusively
in the Bankruptcy Court.
13. Binding. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective representatives,
successors and assigns, including any trustee appointed pursuant to Title 11 of
the United States Code.
14. Entire Agreement. This Agreement and accompanying schedules contain
the full and complete understanding of the parties hereto with respect to the
acquisition of the Assets and all other transactions contemplated herein and
supersede all prior agreements or understandings among the parties hereto
relating to the subject matter hereof.
15. Amendment. This Agreement may be amended, modified or
supplemented only by written instruments signed by both Buyer and Seller.
16. Notices. All notices, requests, demands and other communications
under this Agreement to the parties shall be in writing and shall be personally
delivered or sent by commercial courier, facsimile (with the original by mail)
or certified or registered mail, postage prepaid, to the following addresses:
Seller: Xxxxx Microcomputer Products, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
with copies to: Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
Buyer: Zoom Telephonics Inc.
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
with copies to: Montgomery, McCracken, Xxxxxx & Xxxxxx LLP
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Any party may change its address for purposes of this Section 13 by
giving all the other parties notice of the new address in the manner set forth
herein. Any notice given as set forth herein shall be deemed to be received on
the earlier of actual receipt or four (4) business days after being sent.
17. Time of Essence. Time is of the essence with respect to this
Agreement and the transactionscontemplated hereby.
18. Severability. In the event any one or more of the provisions herein
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this Agreement and
any application thereof shall not in any way be affected or impaired thereby.
19. Counterparts. This Agreement may be executed in one or more
counterparts by original or facsimile signature, each of which shall be deemed
to be an original and all of which together shall constitute one and the same
agreement.
Schedules
Schedules to this Exhibit have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. The Company agrees to provide the Commission with a copy of any
omitted schedule to this Exhibit upon the Commission's request.
* * * * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective duly authorized officers as of the date first above written.
SELLER:
XXXXX MICROCOMPUTER PRODUCTS, INC.
By: /s/Xxxxxxx X. Xxxx
--------------------------
Xxxxxxx X. Xxxx, Chief Executive Officer
BUYER:
ZOOM TELEPHONICS, INC.
By: /s/ Xxxxx Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx, President
